/raid1/www/Hosts/bankrupt/TCR_Public/060811.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, August 11, 2006, Vol. 10, No. 190
Headlines
2135 GODBY: Unsec. Creditors Likely to Receive 10% of Claims
ABRAXAS PETROLEUM: Reports $20.86 Mil. Equity Deficit at June 30
ACCESS WORLDWIDE: Sells Telemanagement Assets for $10.5 Million
AFFINITY TECH: Noteholders Agree to Extend Notes' Maturity to 2008
ALERIS INTERNATIONAL: Texas Pacific Deal Cues S&P's Negative Watch
ALEXIS NIHON: DBRS Holds Issuer Ratings at BB (low) Stable
ALLIED HOLDINGS: Has Until Nov. 1 to File Reorganization Plan
ALLIED HOLDINGS: Wants Ct. to Hold Stephan Newlin in Contempt
APHTON CORP: Court Schedules September 15 as Claims Bar Date
AQUILA INC: Posts $155 Million Net Loss in Quarter Ended June 30
ARMOR HOLDINGS: Reports $34 Million Net Income in Second Quarter
ASARCO LLC: Wants to Pay USW Professionals' Fees & Expenses
ASARCO LLC: Wants to Extend CBA for Globe Plant Employees
ASTRATA GROUP: Posts $2.8 Million Net Loss in Quarter Ended May 31
B/E AEROSPACE: Completes Tender Offer for 8-1/2% Senior Notes
BELL CANADA: Sells Wholly Owned Subsidiary for EUR2.5 Million
BEST MANUFACTURING: Case Summary & 61 Largest Unsecured Creditors
BOWNE & CO: Board Appoints John J. Walker as Senior VP and CFO
BUCKEYE TECHNOLOGIES: Earns $1.2 Mil. in Quarter Ended June 30
CALPINE CORP: Panel Hires Fasken Martineau as Canadian Counsel
CALPINE CORP: Court Approves Bidding Procedures for Contract Sale
CALYPTE BIOMEDICAL: June 30 Capital Deficit Increases to $8.8 Mil.
CATHOLIC CHURCH: Spokane Wants Indiana Insurance Pact Approved
CATHOLIC CHURCH: Morning Star Whines About Spokane & GICA Pact
CENVEO INC: $1.1 Billion Banta Bid Prompts S&P's Negative Watch
CERADYNE INC: Receives $38.6 Million Ceramic Body Armor Orders
CHEMTURA CORP: Earns $420,000 in Second Quarter of 2006
CHESAPEAKE CORP: Moody's Rates $400 Million Senior loan at Ba3
CITGO PETROLEUM: Faces Criminal Charges for Environmental Neglect
COLLINS & AIKMAN: Selling MOBIS Joint-Venture Interest for $3.9MM
COLLINS & AIKMAN: SW Foam Offers to Buy Laminates Asset for $740K
COMDISCO HOLDING: Total Assets Decreased by $23 Mil. at June 30
COMPLETE RETREATS: Can Continue to Honor Existing Reservations
COTT CORPORATION: Second Quarter Earnings Down to $7.6 Million
CREDIT SUISSE: S&P's Rating on Class H Certificates Tumbles to D
D&G INVESTMENTS: Court Enters Final Decree Closing Chapter 11 Case
DANA CORP: Dana Credit Corp. to Ink New Forbearance Agreement
DANA CORP: Gets Court Okay to Reject 13 Contracts and Leases
DEATH ROW: Court Approves Pachulski Stang as Panel's Counsel
DELPHI CORP: BorgWarner Withdraws Request for Claims Liquidation
DELPHI CORP: Court OKs A.T. Kearney Cost Restructuring Plan
DENBURY RESOURCES: Earns $44.3 Million in 2006 Second Quarter
DENNY'S CORP: June 30 Balance Sheet Upside-Down by $257.9 Million
DOE RUN: 2nd Quarter Stockholders' Deficit Narrows to $112 Million
DOLE FOOD: Poor Performance Prompts S&P's Negative Watch
EASTMAN KODAK: Moody's Reviews Low-Ratings and May Downgrade
ENESCO GROUP: Continues to Seek Long-Term Debt Financing
ENTERGY NEW ORLEANS: IRS Files $2.5 Billion Tax Claim
ENTERGY NEW: Wants DIP Maturity Date Extended to Aug. 23, 2007
EVERGREEN INTERNATIONAL: S&P Lifts Rating on Credit Facility to B+
EXIDE TECHNOLOGIES: Posts $38 Mil. Net Loss in FY 2007 1st Quarter
EXIDE TECHNOLOGIES: Wants Until January 15 to Object to Claims
FALCONBRIDGE LTD: Extends Novicourt Shares Tender to August 22
FALCONBRIDGE LTD: Commits to Major Investment Plan for Raglan Mine
FTD INC: Moody's Rates New $75 Mil. Sr. Secured Term Loan at Ba3
FUNCTIONAL RESTORATION: Committee Can Prosecute Causes of Actions
GIBRALTAR INDUSTRIES: S&P Removes BB+ Rating from Positive Watch
GOODING'S SUPERMARKETS: Sells Some Assets for $1.819 Million
GOODYEAR TIRE: Reports $2 Million Net Income in Second Quarter
HERBST GAMING: Cardivan Inks Pact with Albertson's and Supervalu
HERBST GAMING: Cardivan and CVS Affiliates Ink Gaming License Pact
HONEY CREEK: MuniMae Wants Modified 2nd Amended Plan Stricken Out
INTERMEC INC: 2005 Spin-Off Prompts Moody's to Upgrade Ratings
INTERNATIONAL PAPER: Earns $115 Million in Second Quarter of 2006
KANA SOFTWARE: Incurs $1,078,000 Net Loss in First Quarter
KIDSFUTURES INC: Completes $1.4 Million Debenture Financing
LE GOURMET: Case Summary & 20 Largest Unsecured Creditors
LIBERTY TAX: June 30 Partners' Deficit Increases to $10.2 Million
LONDON FOG: Has Until Aug. 25 to Question Sub. Lenders' Lien
MAGELLAN HEALTH: Earns $21.71 Million in Second Quarter of 2006
MIDWAY AIRLINES: Court Approves Settlement with ALPA Pilots
MIRANT CORP: Earns $99 million in Quarter Ended June 30
MONONGAHELA POWER: Moody's Puts Low-B Ratings on Review
MOUNT REAL: Chapter 15 Petition Summary
NELLSON NUTRACEUTICAL: Wants $10M Bariatrix Escrow Fund Released
NETWORK INSTALLATION: Inks Loan Restructure Pact with Dutchess
NORTHWEST AIRLINES: Moody's Rates $1.225 Bil. DIP Funding at Ba2
OMEGA HEALTHCARE: Earns $11.3 Million in 2nd Quarter Ended June 30
ORBITAL SCIENCES: Common Stock Warrants Expire on August 15
ORTHOMETRIX INC: June 30 Balance Sheet Upside-Down by $1 Million
PANTRY INC: Earns $20.3 Million in Third Fiscal Quarter
PARAMOUNT RESOURCES: S&P Junks Rating on $150 Million Term Loan
PARMALAT GROUP: Banca Popolare Settles Parmalat Suit for EUR69 MM
PHOTOWORKS INC: Balance Sheet Upside-Down by $2MM at June 30
PROFESSIONAL INVESTORS: Case Summary & Four Largest Creditors
QUEBECOR WORLD: DBRS Downgrades Low-Ratings on Long-Term Debt
REFCO INC: Investors Buy $69.9 Million in Claims
REFCO INC: Chapter 7 Trustee Can Sublease Space to F.S. Trading
RESIDENTIAL ASSET: S&P Affirms Low-B Ratings on 12 Cert. Classes
REVLON INC: June 30 Balance Sheet Upside-Down by $1.1 Billion
ROTECH HEALTHCARE: Posts $430.7 Million Net Loss on 2006 2nd Qtr.
ROTECH HEALTHCARE: Lender Waiver Prompts S&P to Junk Rating
SAFETY-KLEEN CORP: Completes $495 Million Recapitalization
SAINT VINCENTS: Can Access Sun Life's Cash Collateral Until Dec. 4
SAINT VINCENTS: Resolves Environmental Dispute with New York DEC
SAXON CAPITAL: Earns $8.6 Million in FY 2006 Second Quarter
SAXON CAPITAL: Morgan Purchase Cues Moody's to Review Ratings
SAXON CAPITAL: Morgan Stanley Deal Prompts S&P's Positive Watch
SEAGATE TECHNOLOGY: Quarter Ended June 30 Earnings Down to $7 Mil.
SILICON GRAPHICS: Agrees to Extend Intel Corp. Bar Date to Aug. 17
SILICON GRAPHICS: Gets Okay to File Plan Supplements Under Seal
SOUTHERN UNION: Second Quarter Net Income Down to $9.3 Million
TANGER FACTORY: Unit Plans $100 Mil. Exchangeable Notes Offering
TIME WARNER: Xspedius Merger Prompts Moody's to Hold Ratings
TITANIUM METALS: Earns $56.2 Mil. in Second Quarter Ended June 30
TUCSON ELECTRIC: Moody's Places Ba2 Corp. Family Rating on Review
TXU CORP: Earns $497 Million in Quarter Ended June 30
UNISOURCE ENERGY: Moody's Reviews Low-B Ratings on Credit Facility
UWINK INC: Restates 2005 Quarterly Reports Due to Errors
VERITEC INC: Receives Final Decree Closing Chapter 11 Case
VERTIS INC: June 30 Working Capital Deficit Tops $33.3 Million
VESTA INSURANCE: List of 20 Largest Unsecured Creditors
WORLD HEALTH: Panel Wants Liquidation Under Ch. 11, Not Ch. 7
* BOOK REVIEW: Full Faith and Credit: The Great S & L Debacle
and Other Washington Sagas
*********
2135 GODBY: Unsec. Creditors Likely to Receive 10% of Claims
------------------------------------------------------------
2135 Godby Property, LLC, filed its Plan of Reorganization with
the U.S. Bankruptcy Court for the Northern District of Georgia on
July 31, 2006. No disclosure statement explaining the Plan has
been filed yet.
Under the Plan, holders of administrative claims will be paid in
full on the effective date of the Plan. Secured creditors will be
paid from the proceeds of the sale or refinancing of the Debtor's
property. Unsecured Creditors will be paid out of the Debtor's
operations following payments to administrative claimholders and
secured creditors. In the even that sufficient funds are not
available to pay unsecured creditors in full, the Debtor will make
a pro rata distribution to those creditors until such time as
those creditors will receive a minimum of 10% of their claims.
Holders of equity interests "will not receive a distribution
under the Debtor's Plan," according to Howard Regon, the Debtor's
co-manager.
The Debtor will fund Plan distributions from monies and other
assets on hand on the effective date, and based on continuing
operation until the time unsecured creditors receive a minimum of
10% of their claims.
A copy of the Plan is available for a fee at:
http://www.researcharchives.com/bin/download?id=060810043859
Headquartered in Calabasas, California, 2135 Godby Property, LLC,
dba Quail Creek Apartments, owns and operates a 486-unit apartment
in 2135 Godby Road, College Park, Georgia. The company filed for
chapter 11 protection on May 1, 2006 (Bankr. N.D. Ga. Case No.
06-65007). Todd E. Hennings, Esq., at Macey, Wilensky, Kessler,
Howick & Westfall, LLP, represents the Debtor in its restructuring
efforts. No Committee of Unsecured Creditors has been appointed
in the Debtor's case. When the Debtor filed for protection from
its creditors, it estimated assets and debts between $10 million
and $50 million.
ABRAXAS PETROLEUM: Reports $20.86 Mil. Equity Deficit at June 30
----------------------------------------------------------------
Abraxas Petroleum Corporation reported its financial and operating
results for the quarter and six months ended June 30, 2006, to the
Securities and Exchange Commission on Form 8-K.
The Company's balance at June 30, 2006, showed a stockholders'
deficit of $20.86 million and a working capital deficit of $5.48
million.
The Company disclosed net earnings from continuing operations for
the second quarter of 2006 of $983,000, compared to a net loss for
the same quarter in 2005 of $37,000. Net earnings from continuing
operations for the six months ended June 30, 2006, were
$2.2 million, as compared to a net loss during the same six-month
period of 2005 of $973,000.
Continuing operations represent financial and operating results
from operations in the U.S. only since all of Grey Wolf
Exploration Inc.'s historical performance and results are treated
as discontinued operations as a result of the sale of Grey Wolf
shares owned by the Company in Grey Wolf's initial public offering
that closed on Feb. 28, 2005. Abraxas currently owns less than 1%
of the outstanding capital stock of Grey Wolf.
A full-text copy of Abraxas Petroleum's quarterly report is
available for free at http://ResearchArchives.com/t/s?f60
Headquartered in San Antonio, Texas, Abraxas Petroleum Corp
(AMEX:ABP) -- http://www.abraxaspetroleum.com/-- is an
independent natural gas and crude oil exploitation and production
company with operations concentrated in Texas and Wyoming.
Abraxas was founded in 1977.
ACCESS WORLDWIDE: Sells Telemanagement Assets for $10.5 Million
---------------------------------------------------------------
Access Worldwide Communications, Inc., has closed on the sale of
all the assets of its Telemanagement Services, Inc., dba TMS
Professional Markets Group, division to TMS Professional Markets
Group, LLC, in a transaction valued at $10.5 million.
The company has relocated its corporate office to Arlington,
Virginia.
"We now operate approximately 700 communications seats in three
locations in the U.S. and 350 seats in Manila, Philippines,"
Shawkat Raslan, chairman and chief executive officer, commented.
"With the sale of Telemanagement Services we have fully paid our
outstanding banking facility and have the necessary resources to
continue to expand our offshore capability and capacity. We are
actively negotiating for additional capacity in the Philippines."
Headquartered in Arlington, Virginia, Access Worldwide
Communications, Inc. (OTCBB: AWWC) -- http://www.accessww.com/--
is an established marketing company that provides a variety of
sales, communication and medical education services. Our spectrum
of services includes multilingual teleservices, customer service,
telecom services, financial services, medical meetings management,
medical publishing, editorial support, and database management.
Access Worldwide has about 700 employees in offices throughout the
United States and the Philippines.
* * *
As reported in the Troubled Company Reporter on June 23, 2006
Access Worldwide Communications, Inc., disclosed that on
June 15, 2006, it received confirmation from CapitalSource
Finance, LLC, of a default on a certain Revolving Credit, Term
Loan and Security Agreement dated as of June 10, 2003. The
default was a result of the Company's non-compliance with the
minimum EBITDA financial covenant, as defined in the Debt
Agreement.
AFFINITY TECH: Noteholders Agree to Extend Notes' Maturity to 2008
------------------------------------------------------------------
Affinity Technology Group, Inc., reached an agreement with the
holders of its convertible notes, which were in default, to extend
the maturity of the notes until Aug. 8, 2008. Under the terms of
the agreement, the Company exchanged the outstanding notes for new
notes due August 2008 in the aggregate principal amount of
$1,268,027.
Other than the new maturity date, the terms of the new notes are
the same as the original notes. Of the new notes issued, notes
with a principal amount of $1,115,068 and $152,959 are convertible
into the Company's common stock at the original conversion prices
of $0.20 and $0.50, respectively. The notes are secured by the
Company's equity interest in decisioning.com, Inc., which owns the
Company's patents.
"We are very pleased that we have been able to reach an agreement
with the holders of our notes that resolves their default status"
Joe Boyle, Chairman, President and Chief Executive Officer,
stated. "This is significant for us as we continue our efforts to
strengthen the financial base of the company. Over the past
several years, our noteholders have exhibited patience and a
high degree of commitment to the Company as we prosecuted the
reexaminations of the Company's patents and we are grateful for
their willingness to work with us."
About Affinity Technology
Through its subsidiary, decisioning.com, Inc., Affinity Technology
Group, Inc. (OTCBB:AFFI) -- http://www.affi.net/-- owns a
portfolio of patents that covers the automated processing and
establishment of loans, financial accounts and credit accounts
through an applicant-directed remote interface, such as a personal
computer or terminal touch screen. Affinity's patent portfolio
includes U. S. Patent No. 5,870,721C1, No. 5,940,811, and No.
6,105,007.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 19, 2006,
Scott McElveen, L.L.P., expressed substantial doubt about Affinity
Technology Group, Inc.'s ability to continue as a going concern
after it audited the Company's financial statements for the year
ended Dec. 31, 2005. The auditing firm pointed to the company's
recurring operating losses, accumulated deficit, and default on
certain convertible.
ALERIS INTERNATIONAL: Texas Pacific Deal Cues S&P's Negative Watch
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB-' corporate
credit and other ratings on Beachwood, Ohio-based Aleris
International Inc. on CreditWatch with negative implications.
The rating action follows the announcement that Texas Pacific
Group has come to an agreement to acquire the outstanding stock of
Aleris for approximately $1.7 billion plus assume or repay
approximately $1.6 billion of debt. The CreditWatch placement
reflects our concerns of additional debt in the capital structure.
Details of Texas Pacific's financing for this acquisition were not
disclosed.
Aleris produces aluminum alloys, aluminum sheet, zinc oxide, and
zinc dust. The company also recycles aluminum and zinc. On Aug.
1, 2006, Aleris completed the purchase of the downstream aluminum
business of Corus Group PLC (BB/Stable/B) for approximately $887
million. Texas Pacific is a private investment firm with more
than $30 billion of assets under management.
"We could lower the ratings if financial leverage materially
increases. The ratings could be affirmed if financial leverage
remains unchanged after the acquisition and we continue to expect
financial leverage to decline to less than 4x," said Standard &
Poor's credit analyst Marie Shmaruk.
Resolution of the CreditWatch will entail a review of Texas
Pacific's financial policies and Aleris' final capital structure.
The transaction is expected to close early in 2007 pending the
receipt of stockholder approval, the expiration of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, and the satisfaction of other customary closing conditions.
ALEXIS NIHON: DBRS Holds Issuer Ratings at BB (low) Stable
----------------------------------------------------------
Dominion Bond Rating Service confirmed the Issuer ratings of
Alexis Nihon Real Estate Investment Trust at BB (low) with a
Stable trend.
Some of the challenges DBRS takes into consideration for Alexis
Nihon's current rating:
(1) The Trust has market concentration risk and exposure to
oversupply issues, with 55 properties mainly located in
the Greater Montreal Area.
(2) The Trust's portfolio remains at the smaller end compared
with other Canadian REITs, with approximately 8.3 million
square feet of net leasable area as at Q1 2006. In
addition, the Trust is vulnerable to specific performance
with two key properties, Place Alexis Nihon and Centre
Laval, accounting for 15.7% and 8.4% of the total
portfolio leasable area, respectively.
(3) Alexis Nihon's balance sheet leverage has become more
aggressive to support portfolio growth and cash
distributions. As at first quarter 2006, the Trust had a
debt-to-gross book value ratio of 60.4%, which is at the
upper end of its peer range. This has also deteriorated
EBITDA interest coverage to 2.23 times for the LTM first
quarter 2006; however, this metric remains reasonable for
the rating level. DBRS expects the Trust to operate at a
more appropriate level within the 55% to 60% range
considering the underlying portfolio risks.
Despite these rating constraints the Trust's credit profile is
underpinned by:
(1) The Trust has a well-maintained real estate portfolio
comprising 8.3 million square feet of Class A and Class B
midrise office buildings, stable light per flex industrial
space, midmarket retail properties and a small residential
component as at Q1 2006. Over the past few years, the
Trust has focused its growth in the industrial segment
and, more recently, in the retail segment by acquiring six
retail properties for $15 million at an average cap rate
of 8.1% post first quarter 2006. Going forward, these
segments should provide greater stability to cash flow
compared with office and generally require less cost to
re-tenant the space.
(2) Portfolio occupancy levels remain reasonably high at 91.9%
as at Q1 2006. The Trust achieved modest same-portfolio
net operating income growth of 1.5% mainly due to
occupancy gains in the industrial retail portfolio and
incremental cash flow from redeveloped retail space on a
year-over-year basis.
(3) Alexis Nihon's scheduled lease maturities are manageable
over the next five years, providing reasonable support to
current cash flow with an average lease term to maturity
of 4.55 years as at Q1 2006. Although the Trust's office
markets remain soft, office lease maturities are minimal
at 4% for the remainder of 2006. However, the Trust has a
moderate amount of office space maturing over the 2007-
2008 period, which could put pressure on cash flow and
increase leasing costs if conditions remain soft.
Overall, DBRS expects the credit profile to remain stable
throughout 2006 because of the underlying support from a
manageable lease profile and gradually improving leasing
conditions for the Trust's markets in 2006.
ALLIED HOLDINGS: Has Until Nov. 1 to File Reorganization Plan
-------------------------------------------------------------
The Honorable Coleman Ray Mullins of the U.S. Bankruptcy Court for
the Northern District of Georgia extends Allied Holdings, Inc.,
and its debtor-affiliates exclusive period to:
-- file a plan of reorganization through and including
Nov. 1, 2006; and
-- solicit acceptances of that plan through and including
Jan. 2, 2007.
The Order is without prejudice to the rights of the Debtors to
seek further extensions, Judge Mullins says.
Harris B. Winsberg, Esq., at Troutman Sanders LLP, in Atlanta, had
informed the Court that the Debtors have successfully stabilized
their business operations, obtained commitments for additional
financing, continued to cultivate critical business relationships
and maintained the quality of customer service.
An extension is justified by the existence of certain unresolved
contingencies in the Debtors' Chapter 11 cases including obtaining
price increases from customers and seeking wage and benefit relief
from the Teamsters, Mr. Winsberg added.
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. 27;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ALLIED HOLDINGS: Wants Ct. to Hold Stephan Newlin in Contempt
-------------------------------------------------------------
Allied Holdings, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Northern District of Georgia to hold
Stephan G. Newlin in civil contempt because if his violation of
the automatic stay.
The Debtors filed for bankruptcy protection on July 31, 2005,
triggering the automatic stay and barring the institution or
continuation of any actions against them until that stay was
lifted.
On Feb. 17, 2006, Mr. Newlin filed a complaint in the Superior
Court of Paulding County, Georgia, seeking to recover monetary
damages against Allied Automotive Group. The Complaint alleges
that Aaron Allen, an employee of AAG, caused an automobile
collision on Sept. 9, 2004. Mr. Allen denied any involvement in
the alleged accident. Mr. Newlin obtained a default judgment
against AAG for $1,575,000 on June 21, 2006.
Harris B. Winsberg, Esq., at Troutman Sanders LLP, in Atlanta,
Georgia, relates that despite the Debtors' repeated demand, Mr.
Newlin refuses to vacate the judgment and may seek enforcement of
the postpetition judgment on a prepetition claim.
Mr. Winsberg notes that the Complaint was filed and prosecuted in
violation of the stay. Mr. Newlin continues to violate the stay
by attempting to collect on an alleged prepetition claim.
Mr. Newlin has taken the actions without ever seeking for judicial
relief from the stay, Mr. Winsberg tells the Court.
Because Mr. Newlin's violation of the stay is both willful and
ongoing, the Debtors ask the Court to hold Mr. Newlin in civil
contempt.
In addition, the Debtors ask the Court to:
* direct Mr. Newlin to withdraw the postpetition judgment;
* require Mr. Newlin to reimburse them for attorneys' fees and
costs incurred in the prosecution of the issue; and
* impose coercive sanctions upon Mr. Newlin in an amount equal
to a reasonable per diem amount multiplied by the number of
days that will have passed between August 7, 2006, and the
date of the vacatur of the judgment.
Mr. Winsberg asserts that coercive sanctions and other monetary
damages are necessary and appropriate in the case. Mr. Newlin's
blatant disregard for bankruptcy law suggests that he may continue
to violate the stay even where the Court publicly finds him in
violation of the stay.
Moreover, Mr. Winsberg explains that without the sanctions, the
Debtors will continue to suffer damage on account of Mr. Newlin's
efforts to collect upon an alleged prepetition claim.
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. 27;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
APHTON CORP: Court Schedules September 15 as Claims Bar Date
------------------------------------------------------------
The Honorable Christopher S. Sontchi of the U.S. Bankruptcy Court
for the District of Delaware set 4:00 p.m. Eastern Time, on
Sept. 15, 2006, as the deadline for Aphton Corp.'s creditors to
file proofs of claim.
The proofs of claim must be filed with the Clerk of Court at:
Clerk of Court
U.S. Bankruptcy Court
District of Delaware
824 North Market St., 3rd Floor
Wilmington, DE 19801
Creditors who fail to have their proofs of claim received on or
before the bar date are forever barred from asserting their
claims.
Headquartered in Philadelphia, Pennsylvania, Aphton Corporation
-- http://www.aphton.com/-- is a clinical stage biopharmaceutical
company focused on developing targeted immunotherapies for cancer.
Aphton filed for chapter 11 protection on May 23, 2006. (Bankr. D.
Del. Case No. 06-10510). Michael G. Busenkell, Esq., at Eckert
Seamans Cherin & Mellot, LLC, represents the Debtor in its
restructuring efforts. William J. Burnett, Esq., at Flaster
Greenberg, represents the Official Committee of Unsecured
Creditors. Aphton estimated its assets and debts at $1 million to
$10 million when it filed for protection from its creditors.
At Dec. 31, 2005, Aphton's balance sheet showed assets totaling
$6,775,858 and debts totaling $11,641,182.
AQUILA INC: Posts $155 Million Net Loss in Quarter Ended June 30
----------------------------------------------------------------
The improved performance of Aquila Inc.'s electric and natural gas
utility businesses in five states was offset by costs associated
with the company's repositioning program. As a result, Aquila
reported a net loss of $155 million for the second quarter ending
June 30, 2006, compared to a net loss of $27.2 million in the
second quarter of 2005. Primary factors in the current quarter's
net loss were $218 million of charges related to an assignment of
the company's Elwood tolling contracts and $22.7 million of costs
associated with the early retirement of $350 million in debt.
These charges were partially offset by gains on three asset sales,
which closed during the quarter.
"Our employees continue to deliver improved customer service and
financial performance in the utility operations while we continue
to execute on our repositioning plan. We have executed the
initial phase of our debt reduction plan using proceeds received
from asset sales through June," said Richard C. Green, Aquila
chairman and chief executive officer. "Our repositioning plan
continues to strengthen the company's financial position, creating
a stable platform to provide the energy needed to meet the growing
demand in the communities we serve."
Second quarter 2006 earnings before interest, taxes, depreciation
and amortization was a loss of $206.6 million compared to 2005
EBITDA of $30.2 million primarily due to the significant
repositioning activities during the quarter. In contrast, second
quarter 2006 utility EBITDA of $41.5 million was $14.3 million
higher than the same quarter in 2005.
Continuing operations produced sales in the second quarter of
$283 million, an increase of $20.3 million from a year ago. Much
of that growth was provided by the company's utility businesses,
where sales for the quarter rose $33.1 million.
Results for the six-month period ending June 30, 2006 were a net
loss of $156.1 million, compared to a 2005 year-to-date net loss
of $26.5 million. The repositioning activities that occurred in
the second quarter were also the primary reasons for the change in
six month earnings. Year-to-date sales increased to $714 million,
or $98.4 million higher than 2005 sales of $615.6 million.
Utility sales accounted for $94.3 million of the six-month
increase. The company reported a year-to-date loss before
interest, taxes, depreciation and amortization of $170.9 million
in 2006 compared to EBITDA of $73.4 million in 2005.
Discontinued Operations
Discontinued Operations reported EBITDA of $169.9 million in the
second quarter of 2006, compared to $25.9 million in the second
quarter of 2005. Included in discontinued operations are the
company's Kansas electric utility operations; its former Michigan,
Minnesota, and Missouri gas utility operations; its former Everest
Connections telecommunications subsidiary; and its former Goose
Creek and Raccoon Creek merchant peaking plants in Illinois.
About Aquila
Based in Kansas City, Missouri, Aquila, Inc. (NYSE:ILA) --
http://www.aquila.com/-- operates electricity and natural
gas transmission and distribution utilities serving customers
in Colorado, Iowa, Kansas, Michigan, Minnesota, Missouri and
Nebraska. The company also owns and operates power generation
assets.
* * *
The Company's 6-5/8% Convertible Subordinated Debentures due 2011
carry Moody's Investors Service's and Standard & Poor's Rating
Services' junk ratings.
ARMOR HOLDINGS: Reports $34 Million Net Income in Second Quarter
----------------------------------------------------------------
Armor Holdings, Inc., reported its financial results for the
second quarter ended June 30, 2006, to the Securities and Exchange
Commission on Aug. 4, 2006.
For the three months ended June 30, 2006, the Company earned
$34 million of net income on $551.9 million of net revenues,
compared to $37.4 million of net income on $371.6 million of net
revenues in 2005.
The Company's June 30 balance sheet showed strained liquidity with
$699.4 million in total current assets available to pay
$752 million in total current liabilities coming due within the
next 12 months.
A full-text copy of the Company's Quarterly Report is available
for free at http://researcharchives.com/t/s?f46
Armor Holdings, Inc. (NYSE: AH) -- http://www.armorholdings.com/
-- is a diversified manufacturer of branded products for the
military, law enforcement and personnel safety markets.
* * *
As reported in the Troubled Company Reporter on June 23, 2006,
Standard & Poor's Ratings Services affirmed its ratings, including
the 'BB' corporate credit rating, on Armor Holdings Inc. The
outlook is revised to positive from stable. At the same time,
Standard & Poor's assigned its 'B+' rating to the company's
proposed $400 million subordinated notes due 2016.
ASARCO LLC: Wants to Pay USW Professionals' Fees & Expenses
-----------------------------------------------------------
ASARCO LLC seeks permission from the U.S. Bankruptcy Court for the
Southern District of Texas in Corpus Christi to pay up to
$500,000 of professional fees and expenses of United Steel, Paper
and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and
Service Workers International Union, specifically:
-- $45,000 per month to Potok and Co., Inc., USW's investment
banker and financial advisor, for the months of July,
August and September 2006;
-- $30,000 to Potok for every month after September 2006 until
the conclusion of Potok's work;
-- a success fee to Potok, the amount of which will still be
addressed in further negotiations with USW; and
-- the fees and reasonable expenses of USW's other
professionals working on the labor negotiations.
ASARCO LLC's bargaining unit employees are represented by several
labor organizations. The United Steel, Paper and Forestry,
Rubber, Manufacturing, Energy, Allied Industrial and Service
Workers International Union represents majority of ASARCO's
employees.
In August 2005, ASARCO experienced labor stoppage as hundreds of
hourly employees went on strike. The issues were not resolved
until November 2005 pursuant to a Memorandum of Agreement, which
provided for the extension of the labor contracts with ASARCO's
labor unions until the end of 2006.
With ASARCO's collective bargaining agreement expiring at the end
of this year, James R. Prince, Esq., at Baker Botts L.L.P., in
Dallas, Texas, says, it is imperative that ASARCO and Union
officials commence negotiations immediately regarding ASARCO's
collective bargaining agreements and benefit programs. "These
negotiations will not only involve complex financial and legal
issues relating to ASARCO's labor contracts, but will also
require legal and financial analysis relating to ASARCO's
business plan and ultimate strategy for confirming a plan of
reorganization."
To adequately represent the interests of ASARCO's bargaining unit
employees and retirees, the USW has expressed its need for
assistance from qualified professionals to address legal and
financial issues.
While relations between ASARCO and the Unions that represent its
bargaining unit employees have improved since the resolution of
the labor strike in November 2005, ASARCO must continue to build
on good will it has recently generated, especially leading up to
and during the upcoming labor negotiations, Mr. Prince asserts.
Headquartered in Tucson, Arizona, ASARCO LLC --
http://www.asarco.com/-- is an integrated copper mining,
smelting and refining company. Grupo Mexico S.A. de C.V. is
ASARCO's ultimate parent. The Company filed for chapter 11
protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207).
James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A.
Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter
Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq.,
at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor
in its restructuring efforts. Lehman Brothers Inc. provides the
ASARCO with financial advisory services and investment banking
services. Paul M. Singer, Esq., James C. McCarroll, Esq., and
Derek J. Baker, Esq., at Reed Smith LLP give legal advice to
the Official Committee of Unsecured Creditors and David J.
Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and
$1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No.
05-21346) also filed for chapter 11 protection, and ASARCO has
asked that the three subsidiary cases be jointly administered
with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case
was converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7
Trustee. (ASARCO Bankruptcy News, Issue No. 26; Bankruptcy
Creditors' Service, Inc., 215/945-7000).
ASARCO LLC: Wants to Extend CBA for Globe Plant Employees
---------------------------------------------------------
ASARCO LLC seeks authority from the U.S. Bankruptcy Court for the
Southern District of Texas in Corpus Christi to:
(a) extend the collective bargaining agreement with United
Steelworkers of America Local 8031-07 in connection with
the Globe Plant employees; and
(b) honor its employee benefit obligations to the Globe Plant
employees.
ASARCO LLC owns and operates a specialty-chemicals plant in
Globeville, Colorado. The Globe Plant, which was originally
purchased by American Smelting and Refining Company and converted
to a lead production facility in 1901, produces high-purity metal
alloys and specialty metals for advanced electronic applications.
In 1983, the state of Colorado sued ASARCO for damages to natural
resources under the Comprehensive Environmental Response,
Compensation and Liability Act. Remedial action in the Facility
is in progress in connection with a settlement reached between
Colorado and ASARCO in 1993.
At present, ASARCO is negotiating to sell the Globe Plant to a
third-party, James R. Prince, Esq., at Baker Botts L.L.P., in
Dallas, Texas, tells the Court. In connection with the proposed
sale, ASARCO has announced that it will close the Globe Plant in
August 2006.
To meet its contractual obligations to customers and remediation
obligations, ASARCO will continue to perform general clean-up
work and run the water treatment plant that is part of the Globe
Plant through the end of 2006, Mr. Prince relates.
To fulfill these tasks, ASARCO needs to retain the four hourly
employees who are currently working at the Globe Plant. ASARCO
plans to release two of the hourly employees at the end of
September and the other two at the end of December 2006. The
Agreement covering these hourly workers expired on May 31, 2006.
Accordingly, ASARCO and the United Steelworkers of America Local
8031-07 have agreed to extend the existing Agreement for one year
covering the period from June 1, 2006, through May 31, 2007. The
Official Committee of Unsecured Creditors supports the extension
of the Agreement.
Extending the Agreement will benefit ASARCO's estate by ensuring
that ASARCO has the necessary workforce to comply with its
remediation obligations, Mr. Prince contends.
Headquartered in Tucson, Arizona, ASARCO LLC --
http://www.asarco.com/-- is an integrated copper mining,
smelting and refining company. Grupo Mexico S.A. de C.V. is
ASARCO's ultimate parent. The Company filed for chapter 11
protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207).
James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A.
Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter
Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq.,
at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor
in its restructuring efforts. Lehman Brothers Inc. provides the
ASARCO with financial advisory services and investment banking
services. Paul M. Singer, Esq., James C. McCarroll, Esq., and
Derek J. Baker, Esq., at Reed Smith LLP give legal advice to
the Official Committee of Unsecured Creditors and David J.
Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and
$1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No.
05-21346) also filed for chapter 11 protection, and ASARCO has
asked that the three subsidiary cases be jointly administered
with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case
was converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7
Trustee. (ASARCO Bankruptcy News, Issue No. 26; Bankruptcy
Creditors' Service, Inc., 215/945-7000).
ASTRATA GROUP: Posts $2.8 Million Net Loss in Quarter Ended May 31
------------------------------------------------------------------
Astrata Group Inc. reported a $2.8 million net loss for the three
months ended May 31, 2006, compared with a net loss of
$2.8 million for the three months ended May 31, 2005.
The Company's continuing operations resulted in a net loss of
approximately $1.8 million for the three months ended May 31,
2006, and approximately $2.3 million for the three months ended
May 31, 2005.
Discontinued operations resulted in a net loss of approximately
$900,000 for the quarter ended May 31, 2006, and approximately
$500,000 for the three months ended May 31, 2005.
Net revenues for the three months ended May 31, 2006 were
approximately $426,000, a decrease of approximately $29,000
compared to the three months ended May 31, 2005 of approximately
$455,000.
On June 14, 2006, the Company disclosed that it received a
purchase order from AST Europe Group AB for 50,000 Fleet
Management/AVL devices plus associated software. The order is
expected to produce revenues of approximately $17 million, making
it the largest sales order Astrata has received to date. It is
anticipated that delivery for all the units will be completed
during fiscal 2007.
During the three months ended May 31, 2006, the Company
determined it would withdraw from Geomatics and focus exclusively
on Telematics. The Geomatics business represents the vast
majority of the revenue of Astrata South Africa (Pty) Ltd.
On May 31, 2006, the Company closed its subsidiary, Astrata
Systems (Pty) Ltd. and also elected to sell the remaining assets
of ASA.
At May 31, 2006, the Company's balance sheet showed $7,392,083 in
total assets, $18,858,806 in total liabilities and $40,449 of
minority interest, resulting in a stockholders' deficit of
$11,507,172.
A full-text copy of the Company's quarterly report is available
for free at http://researcharchives.com/t/s?f5c
Going Concern Doubt
Squar, Milner, Reehl & Williamson, LLP, expressed substantial
doubt about Astrata's ability to continue as a going concern after
auditing the Company's financial statements for the fiscal year
ended Feb. 28, 2006. The auditing firm pointed to the Company's
negative working capital of approximately $11.5 million at
Feb. 28, 2006, a net loss of $14.9 million for fiscal 2006,
negative operating cash flow in fiscal 2006 of $3.6 million, and a
stockholders' deficit of $9.6 million as of Feb. 28, 2006.
A full-text copy of the Company's annual report is available for
free at http://researcharchives.com/t/s?f5d
About Astrata Group
Astrata Group Inc. -- http://www.astratagroup.com/-- engaged in
the telematics and Global Positioning System industry, is focused
on advanced location-based IT products and services that combine
positioning, wireless communications, and information
technologies. The Company provides advanced positioning products,
as well as monitoring and airtime services to industrial,
commercial, governmental entities, academic/research institutions,
and professional customers in a number of markets including
surveying, utility, construction, homeland security, military,
intelligence, mining, agriculture, marine, public safety, and
transportation.
B/E AEROSPACE: Completes Tender Offer for 8-1/2% Senior Notes
-------------------------------------------------------------
B/E Aerospace, Inc.'s cash tender offer for its outstanding
$175 million aggregate principal amount of its 8-1/2% Senior Notes
due 2010 expired at 5:00 p.m., New York City time, on Aug. 7,
2006.
As reported in the Troubled Company Reporter on July 28, 2006, the
Company accepted for payment and paid for $174.94 million
aggregate principal amount of the Notes, which were tendered by
holders on or prior to the expiration of the related consent
solicitation at 5:00 p.m. New York City time on July 21, 2006,
representing 99.97% of the outstanding Notes. In addition, as
previously reported, the related consent solicitation expired at
5:00 p.m. New York City time on July 21, 2006, after which the
Company and The Bank of New York Trust Company, NA, the trustee
under the indenture governing the Notes, entered into a
supplemental indenture, which amended the indenture governing the
notes to, among other things, eliminate substantially all of the
restrictive covenants, certain events of default and other related
provisions.
UBS Securities LLC, Credit Suisse Securities (USA) LLC and J.P.
Morgan Securities Inc. served as Dealer Managers, and Global
Bondholder Services Corporation served as Depositary and
Information Agent. Persons with questions regarding the tender
offer and consent solicitation should contact:
1) UBS Securities LLC
Telephone (203) 719-4210 (collect)
Toll Free (888) 722-9555 ext. 4210
2) Credit Suisse Securities (USA) LLC
Telephone (212) 325-7596 (collect)
Toll Free (800) 820-1653
3) J.P. Morgan Securities Inc.
Telephone (212) 270-7407 (collect)
4) Global Bondholder Services Corporation
Telephone (866) 804-2200
Based in Wellington, Florida, B/E Aerospace, Inc. (Nasdaq:BEAV)
-- http://www.beaerospace.com/-- manufactures aircraft cabin
interior products, and is an aftermarket distributor of aerospace
fasteners. B/E designs, develops and manufactures a broad range
of products for both commercial aircraft and business jets. B/E
manufactured products include aircraft cabin seating, lighting,
oxygen, and food and beverage preparation and storage equipment.
The company also provides cabin interior design, reconfiguration
and passenger-to-freighter conversion services. B/E sells and
supports its products through its own global direct sales and
product support organization.
* * *
As reported in the Troubled Company Reporter on Aug. 9, 2006,
Moody's Investors Service assigned a Ba3 rating to B/E Aerospace,
Inc.'s new $450 million senior secured credit facilities,
consisting of a $150 million revolving credit facility due 2011
and a $300 million term loan due 2012. In addition, Moody's
affirmed the company's existing ratings, including its Corporate
Family Rating of B1, the B3 rating on B/E's senior subordinated
notes, and the B1 rating on the company's senior unsecured notes,
to the extent that any amounts remain outstanding following close
of the tender for these notes. The company has a Speculative
Grade Liquidity Rating of SGL-2. The ratings outlook has been
changed to positive.
BELL CANADA: Sells Wholly Owned Subsidiary for EUR2.5 Million
-------------------------------------------------------------
As part of the windup and dissolution of its subsidiaries, Bell
Canada International Inc. disposed of an indirect, wholly owned,
foreign-based and non-operating subsidiary for proceeds of EUR2.5
million (approximately CDN $3.6 million). The value received in
this transaction was based solely on the tax attributes of the
subsidiary. With the exception of Canbras Communications Corp.,
in which BCI continues to hold a 75.6% interest, no further
proceeds are expected to be realized from the ongoing windup and
dissolution of BCI's subsidiaries.
BCI had previously estimated a final shareholder distribution of
$0.56 per share with such distribution to be made by June 30,
2007. In light of the disposition announced today, the final
distribution to shareholders is currently expected to be
approximately $0.65 per share.
Prior to making a final distribution to shareholders, BCI will
need to resolve all remaining contingencies, receive final tax
clearance certificates, dissolve all of its remaining investee
companies and obtain Court approval in the context of the Plan of
Arrangement. While it is currently anticipated that these steps
can be completed by June 30, 2007, readers are encouraged to refer
to BCI's 2005 Annual Report and other filings with Canadian
securities commissions to more fully understand the risks that
could cause such date to be delayed as well as for the amount to
be reduced.
Headquartered in Montreal, Canada, Bell Canada International Inc.
(NEX:BI.H) -- http://www.bci.ca/-- is operating under a court
supervised Plan of Arrangement, pursuant to which BCI intends to
monetize its assets in an orderly fashion and resolve outstanding
claims against it in an expeditious manner with the ultimate
objective of distributing the net proceeds to its shareholders and
dissolving the company.
BEST MANUFACTURING: Case Summary & 61 Largest Unsecured Creditors
-----------------------------------------------------------------
Lead Debtor: Best Manufacturing Group LLC
10 Exchange Place
Jersey City, NJ 07302
Bankruptcy Case No.: 06-17415
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Best Realty of New Jersey LLC 06-17416
Best:Artex LLC 06-17417
H.W. Baker Linen Co. LLC 06-17420
H.W. Baker U.S., Inc. 06-17422
Type of Business: The Company and its subsidiaries manufacture
and distribute textiles, career apparel and
other products for the hospitality, healthcare
and textile rental industries. See
http://www.bestmfg.com/
Chapter 11 Petition Date: August 9, 2006
Court: New Jersey (Newark)
Judge: Donald H. Steckroth
Debtor's Counsel: Michael D. Sirota, Esq.
Cole, Schotz, Meisel, Forman & Leonard, P.A.
25 Main Street
Hackensack, NJ 07601
Tel: (201) 489-3000
Fax: (201) 489-1536
Estimated Assets: More than $100 Million
Estimated Debts: More than $100 Million
A. Best Manufacturing Group LLC's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Milliken & Company $11,150,587
P.O. Box 1926
Spartanburg, SC 29304-1926
Al Karam $1,188,844
18222 East Petroleum Drive
Baton Rouge, LA 70809
Springfield LLC (CIT) $826,609
30 Jericho Executive Plaza, Suite 500E
Jericho, NY 11753
CIT Group/Comm. Services Inc. $815,030
301 South Tyron Street, Suite 2200
2 Wachovia Center
Charlotte, NC 28202
Mount Vernon (Div) 96 $802,506
P.O. Box 100
503 Main Street
Mauldin, SC 29662
International Textile Group $755,633
Shahrea Firdousi
Clifton, Karachi-76500
Pakistan
Terry World Textiles, LLC $535,124
2970 Shawnee Ridge Road, Suite 300
Suwanee, GA 30024-4612
UTI Ltd. $485,641
Anum Estate, Suite 801-802
Main Shahrah-e-Faisal,
Karachi
Pakistan 75350
Dan River Inc. $364,261
P.O. Box 261
Danville, VA 24543
Central Textiles, Inc. $338,858
10 East 40th Street, Room 3410
New York, NY 10016
Masha Bus. $320,462
2301 Dupont Drive, Suite 520
Irvine, CA 92612
Westpoint Home, Inc. $289,431
2401-B 1st Avenue
Opelika, AL 36801
Anwar Tex $222,401
B-39, Block L
North Nazimabad, Karachi
Pakistan
Alice Mfg., Co. $219,578
3 Thorndal Circle
Darien, CT 06820
Johnston Textiles, Inc. $204,578
3101 23rd Drive
P.O. Box 220
Valley, AL 36854
Textilemaster LLC $129,081
P.O. Box 2816
Norcross, GA 30091
Loyaltex Apparel USA Inc. $125,015
135 West 36th Street, 9th Floor
New York, NY 10018
Edwards Garment Co. $122,062
4900 South 9th Street
Kalamazoo, MI 49009
New River Industries, Inc. $121,195
1430 Broadway, 13th Floor
New York, NY 10018
Intermarket $115,314
401 A. Gokul Arcade
Andheri Sahar road Parle East
Mumbai 4000057
B. Best:Artex LLC's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
KSR $2,942,565
176/2A Kozhikkanatham Road
Tirucmengone, 637211
Namakkal Dt.
Tamil, Nadu, India
Central Textiles, Inc. $640,111
10 East 40th Street, Room 3410
New York, NY 10016
CIT Group/Comm. Services Inc. $427,348
301 South Tyron Street, Suite 2200
2 Wachovia Center
Charlotte, NC 28202
Inman Mills $307,732
214 Merritt Drive
Oradell, NJ 07549
Royal Trucking Co. $160,116
Lucky Textile Mills $146,136
Atmos Energy Corporation $74,653
Jani King of St. Louis, Inc. $60,259
City of West Point Water & Light $56,544
Passaic Color & Chemical Co. $55,565
Harcros Chemicals Inc. $35,116
Rusken Packaging Inc. $18,183
Smith & Williams Company $13,863
Mississippi Plastic Bag & Pkg. $10,374
UPS $8,512
Applied Induct. Tech. $6,245
Fabrite Laminating $4,209
Air Liquide America Corp. $3,826
Capital Security Services, Inc. $3,758
Western Non Wovens $2,763
C. H.W. Baker Linen Co. LLC's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Dan River $2,180,683
P.O Box 261
Danville, VA 24543
1888 Mills, LLC $1,890,985
One South 660 Midwest Road, Suite 320
Oakbridge Terrace
Villa Park, IL 60181
Blair Mills Incorporated $1,807,262
P.O. Box 97
Belton, SC 29627
Homestead Hospitality $1,180,222
A Division of Lon Fog Group
1700 Westlake Avenue, Suite 100
Seattle, WA 98109
CIT Group/Comm. Services Inc. $879,441
301 South Tyron Street, Suite 2200
2 Wachovia Center
Charlotte, NC 28202
Pillow Factory $877,657
955 Campus Drive
Mundelein, IL 60060
Westpoint Home, Inc. $843,976
2401-B 1st Avenue
Opelika, AL 36801
Mount Vernon Mills Inc. $341,612
P.O. Box 100
503 Main Street
Mauldin, SC 29662
Dohler $329,732
CEP: 89219-902-CNPJ,84.683.408/0001-03
Joinville-Santa Catarina
Brazil
Hilden America $275,000
P.O. Box 1098
South Boston, VA 24592
Hospi-Tel Mfg. Corp. $219,269
Pacific Coast Feather $137,004
Fabricut Contract $102,972
Edwards Garment Co. $92,767
Snap Drape $79,783
Charles D. Owen Mfg. Co. Inc. $76,190
Kartri Sales Co., Inc. $74,229
Kojo Worldwide, Inc. $51,158
National Fast Freight $26,125
Springs Industries, Inc. $21,641
D. Largest Unsecured Creditor of:
-- Best Realty of New Jersey LLC's
-- H.W. Baker U.S., Inc.
Entity Claim Amount
------ ------------
Marathon Structured Finance Fund L.P. Unknown
461 Fifth Avenue, 14th Floor
New York, NY 10017
BOWNE & CO: Board Appoints John J. Walker as Senior VP and CFO
--------------------------------------------------------------
Bowne & Co., Inc's Board of Directors appointed John J. Walker, as
Senior Vice President and Chief Financial Officer.
The Company disclosed that Mr. Walker's employment commences on
Sept. 18, 2006. Mr. Walker served as senior vice president, chief
financial officer and treasurer of Loews Cineplex Entertainment
Corp. during the past five years.
The Company further disclosed that, Mr. Walker's compensation
includes a base salary at the rate of $325,000 per annum. He is
eligible to participate in the Company's Annual Incentive Plan, as
well as other benefits including participation in the Company's
Long-Term Equity Incentive Plan, participation in the Company's
Supplemental Executive Retirement Plan and a company car in
accordance with the Company's automobile policy.
Based in New York City, Bowne & Co., Inc. (NYSE: BNE)
-- http://www.bowne.com/-- is a printing company, which
specializes in financial documents such as prospectuses, annual
and interim reports, and other paperwork required by the SEC.
Bowne also handles electronic filings via the SEC's EDGAR system
and provides electronic distribution and high-volume mailing
services. The financial printing business accounts for the bulk
of the company's sales. Bowne also offers marketing and business
communications services and litigation support software.
* * *
As reported in the Troubled Company Reporter on Feb. 8, 2006,
Moody's Investors Service affirmed the rating on Bowne & Co.,
Inc.'s $75 million Convertible Subordinated Debentures due 2033 at
B2 and affirmed Bowne's Corporate Family Ba3 rating. Moody's
changed the outlook to positive from stable.
BUCKEYE TECHNOLOGIES: Earns $1.2 Mil. in Quarter Ended June 30
--------------------------------------------------------------
Buckeye Technologies, Inc., earned $1.2 million after tax in the
quarter ended June 30, 2006.
The Company disclosed that the results included a $800,000 tax
benefit and restructuring and impairment expenses of $500,000
after tax on equipment sales at its closed operations in
Lumberton, North Carolina, and Glueckstadt, Germany.
During the same quarter of the prior year, the Company earned
$8.8 million after tax, which included a $5.5 million tax benefit
and $1.7 million after tax, in restructuring and impairment
expenses.
The Company also disclosed that, during fiscal year 2006 it earned
$2 million after tax, including restructuring and impairment
expenses of $3.6 million after tax, compared to fiscal year 2005
earnings of $20.2 million after tax.
Net sales for the April-June quarter were $193.4 million, 5% above
the $183.9 million achieved in the same quarter of the prior year.
Net sales for fiscal year 2006 were $728.5 million, 2% above the
$712.8 million achieved in the prior year.
John B. Crowe, the Company's chairman, said, "Fiscal year 2006 was
highlighted by the completion of the restructuring programs that
began three years ago. The closure of the Glueckstadt, Germany
cotton cellulose pulp plant and the start of market pulp
production at our Americana, Brazil cotton cellulose pulp plant
completed the planned consolidation necessary to improve our cost
structure. While the Americana ramp-up has been slower than we
expected, the facility is building revenue and we expect to
improve financial performance in fiscal 2007. With the
restructuring program completed, we are positioned for growth in
fiscal year 2007."
Mr. Crowe went on to say, "During fiscal year 2006 high energy,
chemical, and transportation costs coupled with the Americana
startup compressed our margins. However, cash flow in the second
half of the fiscal year was encouraging. Net cash provided by
operating activities for fiscal 2006 totaled $58.7 million, which
enabled us to complete the investment in Americana and reduce debt
by $16 million (from $537 million to $521 million). We intend to
continue to reduce debt in fiscal 2007."
Headquartered in Memphis, Tennessee, Buckeye Technologies, Inc.
(NYSE:BKI) -- http://www.bkitech.com/-- is a leading manufacturer
and marketer of specialty fibers and nonwoven materials. The
Company currently operates facilities in the United States,
Germany, Canada, and Brazil. Its products are sold worldwide to
makers of consumer and industrial goods.
* * *
As reported in the Troubled Company Reporter on March 9, 2006,
Standard & Poor's Ratings Services revised its outlook on Buckeye
Technologies Inc. to negative from stable. At the same time,
Standard & Poor's affirmed its ratings, including the 'BB-'
corporate credit rating, on the Memphis, Tennessee-based specialty
pulp producer.
CALPINE CORP: Panel Hires Fasken Martineau as Canadian Counsel
--------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in
Calpine Corp. and its debtor-affiliates' bankruptcy cases obtained
permission from the U.S. Bankruptcy Court for the Southern
District of New York to retain Fasken Martineau DuMoulin as its
Canadian bankruptcy counsel.
At the direction of the Committee's lead counsel, Akin Gump
Strauss Hauer & Feld LLP, Fasken Martineau is expected to:
(a) advise the Committee with respect to its rights, duties
and powers in the Debtors' Chapter 11 cases as they relate
to the Canadian Proceedings;
(b) assist and advise the Committee in its consultations with
the Canadian Debtors relative to the administration of
their Chapter 11 cases;
(c) assist the Committee in analyzing the claims of the US
Debtors' Canadian creditors and the Canadian Debtors'
capital structure and in negotiating with holders of
claims and equity interests;
(d) assist the Committee in its investigation of the acts,
conduct, assets, liabilities and financial conditions of
the Canadian Debtors and the operation of the Canadian
Debtors' businesses;
(e) assist the Committee in its analysis of, and negotiations
with, the Canadian Debtors or any third party concerning
matters related to, among other things, the assumption or
rejection of certain non-residential real property leases
and executory contracts, asset dispositions, financing of
other transactions and the terms of one or more plans of
reorganization for the Canadian Debtors and accompanying
disclosure statements and related plan documents;
(f) assist and advise the Committee as to its communications
to the general creditor body regarding significant matters
in the Debtors' Chapter 11 cases as they relate to the
Canadian proceedings;
(g) represent the Committee at all hearings and other
proceedings related to the Canadian Proceedings;
(h) review and analyze applications, orders, statements of
operations and schedules filed with the Canadian Court and
advise the Committee as to their propriety, and to the
extent deemed appropriately by the Committee, support,
join or object to it;
(i) advise and assist the Committee with respect to any
Canadian legislative, regulatory or government activities;
(j) assist the Committee in preparing pleadings and
applications as may be necessary in furtherance of its
interests and objectives insofar as they relate to the
Canadian proceedings;
(k) assist the Committee in its review and analysis of the
Canadian Debtors' various power agreements;
(l) prepare any pleadings, including motions, memoranda,
complaints, adversary complaints, objections or comments
in connection with any of the Canadian Proceedings or
Canadian claims against the US Debtors;
(m) investigate and analyze any Canadian claims against the US
Debtors' non-debtor affiliates; and
(n) perform other legal services as may be required or are
otherwise deemed to be in the interests of the Committee
in accordance with the Committee's powers and duties.
Jonathan A. Levin, Esq., a partner at Fasken Martineau Dumoulin
LLP, disclosed that the Firm's professionals bill:
Professional Hourly Rate
------------ -----------
Partners $360 - $775
Counsel $300 - $775
Associates $235 - $500
Students at Law $100 - $150
Mr. Levin further disclosed that the Firm's professionals
primarily expected to provide services to the Committee bill:
Professional Designation Hourly Rate
------------ ----------- -----------
Jonathan A. Levin Partner $775
David E. Baird Counsel $775
Edmond F.B. Lamek Partner $650
Alex Kotkas Partner $370
The Debtors will also reimburse Fasken's necessary out-of-pocket
expenses.
Mr. Levin assured the Court that his Firm does not hold any
interest adverse to the US Debtors' estates or their creditors,
and is "disinterested " as defined in Section 101(14) of the
Bankruptcy Code.
About Calpine Corp.
Headquartered in San Jose, California, Calpine Corporation --
http://www.calpine.com/-- supplies customers and communities with
electricity from clean, efficient, natural gas-fired and
geothermal power plants. Calpine owns, leases and operates
integrated systems of plants in 21 U.S. states and in three
Canadian provinces. Its customized products and services include
wholesale and retail electricity, gas turbine components and
services, energy management and a wide range of power plant
engineering, construction and maintenance and operational
services.
The Company filed for chapter 11 protection on Dec. 20, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq.,
Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G.
Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their
restructuring efforts. Michael S. Stamer, Esq., at Akin Gump
Strauss Hauer & Feld LLP, represents the Official Committee of
Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed
$26,628,755,663 in total assets and $22,535,577,121 in total
liabilities. (Calpine Bankruptcy News, Issue No. 21; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
CALPINE CORP: Court Approves Bidding Procedures for Contract Sale
-----------------------------------------------------------------
The Hon. Burton R. Lifland of the U.S. Bankruptcy Court for the
Southern District of New York approved the proposed Bidding
Procedures for the sale of the Firm Transportation Service
Contract between Debtor Rumford Power Associates Limited, Calpine
Corp. and its debtor-affiliates, and TransCanada Pipelines
Limited.
As reported in the Troubled Company Reporter on July 26, 2006,
Rumford Power Associates Limited owned certain real property in
Rumford, Maine. Rumford Power is also a party to certain Leases
related to a gas-fired combined cycle electric generating
facility. Under the Leases, Rumford Power leased its real
property to PMCC Calpine New England Investment, LLC, who owned
the Power Plant, and subleased the same property and leased the
Power Plant back to Rumford Power.
Rumford Power attempted to reject the Leases. On June 8, 2006,
the Court approved the Transition Agreement between Rumford Power
Associates Limited, James A. Goodman, the receiver of PMCC, and
the U.S. Bank National Association, as trustee.
Pursuant to the Transition Agreement, Rumford Power transferred
and surrendered possession of its rights under certain contracts.
The contracts not listed in the Transition Agreement remained the
property of Rumford Power.
Among the contracts not included in the Transition Agreement was a
Firm Transportation Service Contract, dated Jan. 7, 2000, between
Rumford Power and TransCanada Pipelines Limited. Under the FT
Contract, which expires at the end of October 2010, TransCanada
transports 46,403 gigajoules of natural gas daily.
Since Rumford Power is no longer operating the Rumford Power
Plant, it has no further need for the firm transportation capacity
from TransCanada, Bennett L. Spiegel, Esq., at Kirkland & Ellis
LLP, in New York, contends. The FT Contract is a drain on Rumford
Power's estate, Mr. Spiegel adds, as Rumford Power incurs
approximately CDN$521,000 per month of firm demand charges under
the FT Contract.
However, while Rumford Power no longer requires natural gas
transportation from TransCanada, third parties may still be able
to derive significant value from the firm transportation capacity
provided under the FT Contract, Mr. Spiegel says.
After examining all of their alternatives, the Debtors concluded
that a prompt sale of the FT Contract is in the best interests of
Rumford Power's creditors and estate, and will maximize the value
received for the Assets.
Before the consummation of an Asset Purchase Agreement and the
Sale of the FT Contract, Rumford Power intends to assume the FT
Contract and pay its cure amount. The assumption and assignment
of the FT Contract is a precondition to the effectiveness of the
APA, Mr. Spiegel says.
The APA provides that:
(a) Rumford Power will assign, transfer and convey to the
Buyer, free and clear of all Liens, its rights, benefits
and privileges under the FT Contract;
(b) Buyer will pay the purchase price, still to be determined
by the Debtors, at Closing Date by cashier's check,
certified check or wire transfer; and
(c) the Sale Assets excludes:
* assets of any kind other than the FT Contract,
including trade names, trademarks, service marks or
logos owned by Rumford Power or any of its
affiliates;
* all trade credits and all accounts, deposits,
collateral, credit support, instruments and general
intangibles attributable to the FT Contract to any
period before the Closing Date;
* all of Rumford Power's claims and causes of action
arising under the FT Contract in the period before
the Closing Date;
* all of Rumford Power's rights and interests under any
agreement of insurance, indemnity, bond or guaranty
arising from acts occurring before the Closing Date
or attributable to the FT Contract or any Excluded
Assets;
* all proceeds, income or revenues attributable to the
FT Contract for any period before the Closing Date;
* any cumulative variances as of the Closing Date and
associated rights to nominate Payback Quantities and
to receive other payments for the cumulative
variances; and
* any other assets, rights, demands, claims, credits,
allowances, rebates or causes of action of Rumford
Power or any of its affiliates except for the FT
Contract.
A full-text copy of the APA is available for free
at http://ResearchArchives.com/t/s?e59
Rumford Power sent solicitations of interest to 68 third parties.
To participate in the bidding process and be deemed a "Qualifying
Bidder," a potential bidder must deliver to Rumford Power, the
Official Committee of Unsecured Creditors, the Official Committee
of Equity Security Holders and the Unofficial Committee of Second
Lien Debtholders, a written offer to be deemed a "Qualifying Bid,"
no later than 5:00 p.m., on Aug. 10, 2006.
The written offer, among other things, must state the Bidder's
offer to purchase the FT Contract, and must state that the Bidder
is financially capable of consummating the transactions
contemplated in the APA or in a modified APA.
A Bidder's offer must be is irrevocable until the Closing Deadline
if the Bidder is the Prevailing Bidder or the Back-up Bidder.
A Bidder must be willing to consummate and fund the proposed sale
before 4:00 p.m., on Aug. 21, 2006, and to commence operations
under the FT Contract on Sept. 1, 2006, provided that the Bidder's
offer should also include a bid based on an Oct. 1, 2006,
alternative Operations Commencement Date for purposes of providing
a Back-up Bid.
Rumford Power will also consider written offers Qualifying Partial
Bids at the Auction. Qualifying Partial Bidders will be allowed
to participate as Qualifying Bidders in the Auction.
Qualifying Partial Bids will be considered either singly or in
combination with other non-overlapping Qualifying Partial Bids so
that the combination of the Qualifying Partial Bids would amount
to the sale of substantially all of the Sale Assets.
Judge's Ruling
Judge Lifland makes it clear that no affiliate of Rumford Power,
including Calpine Energy Services, L.P., may participate in the
Sale.
All proceeds from the Sale will be placed in a segregated account
under the exclusive control of Rumford Power for the benefit of
its estate, Judge Lifland adds.
If two or more bids are received, an Auction will be held on
Aug. 14, 2006, at Calpine Corporation's offices at 717 Texas
Avenue, Suite 1000, in Houston, Texas.
If there are no competing bids, a sale hearing will be conducted
on Aug. 15, 2006, at 10:00 a.m.
About Calpine Corp.
Headquartered in San Jose, California, Calpine Corporation --
http://www.calpine.com/-- supplies customers and communities with
electricity from clean, efficient, natural gas-fired and
geothermal power plants. Calpine owns, leases and operates
integrated systems of plants in 21 U.S. states and in three
Canadian provinces. Its customized products and services include
wholesale and retail electricity, gas turbine components and
services, energy management and a wide range of power plant
engineering, construction and maintenance and operational
services.
The Company filed for chapter 11 protection on Dec. 20, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq.,
Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G.
Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their
restructuring efforts. Michael S. Stamer, Esq., at Akin Gump
Strauss Hauer & Feld LLP, represents the Official Committee of
Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed
$26,628,755,663 in total assets and $22,535,577,121 in total
liabilities. (Calpine Bankruptcy News, Issue No. 23; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
CALYPTE BIOMEDICAL: June 30 Capital Deficit Increases to $8.8 Mil.
------------------------------------------------------------------
Calypte Biomedical Corporation filed its second quarter financial
statements for the three months ended June 30, 2006, with the
Securities and Exchange Commission on Aug. 7, 2006.
The Company reported a $3,721,000 net loss on $49,000 of revenues
for the second quarter ended June 30, 2006, compared with a
$1,717,000 net loss on $89,000 of revenues for the same period in
2005.
At June 30, 2006, the Company's balance sheet showed $8,028,000 in
total assets and $16,849,000 in total liabilities, resulting in an
$8,821,000 stockholders' deficit, as compared to a $7,151,000
deficit at Dec. 31, 2005.
The Company's June 30, 2006 balance sheet also showed strained
liquidity with $757,000 in total current assets available to pay
$13,053,000 in total current liabilities coming due within the
next 12 months.
Full-text copies of the Company's second quarter financials are
available for free at http://ResearchArchives.com/t/s?f44
Going Concern Doubt
As reported in the Troubled Company Reporter on May 1, 2006,
Odenberg, Ullakko, Muranishi & Co. LLP, expressed substantial
doubt about Calypte Biomedical Corporation's ability to continue
as a going concern after it audited the company's financial
statement for the year ended Dec. 31, 2005. The auditing firm
points to the company's recurring losses from operations and
negative cash flows.
Headquartered in Lake Oswego, Oregon, Calypte Biomedical
Corporation -- http://www.calypte.com/-- manufactures testing
solutions for HIV, STDs, and other chronic diseases.
CATHOLIC CHURCH: Spokane Wants Indiana Insurance Pact Approved
--------------------------------------------------------------
The Catholic Diocese of Spokane asks the U.S. Bankruptcy Court for
the Eastern District of Washington to approve a Settlement,
Release and Policy Buyback Agreement with Indiana Insurance
Company.
The Spokane Diocese has asserted that Indiana issued two
comprehensive general liability insurance policies, with effective
dates between 1977-78 and 1978-79. Despite an exhaustive search
for the policies, neither the Diocese nor Indiana has been able to
locate copies of the putative policies.
Prior to the Petition Date, the Diocese tendered to Indiana the
defense of certain tort claims arising within the coverage years
of the Policies. Indiana accepted the defense of those claims,
subject to a reservation of all Indiana's rights. Indiana has
paid over $325,000 in connection with defense and indemnity costs
for Tort Claims against the Diocese.
In addition, Morning Star Boys' Ranch, a separately incorporated
nonprofit residential group home for boys, has asserted that
certain tort claims against it are covered by the Policies. The
tender of those claims is under consideration.
Spokane and Indiana are also defendants in litigation concerning
the Diocese's insurers' position regarding the nature and scope of
their responsibilities, if any, to provide coverage to Spokane and
other parties under the various insurance policies with respect to
tort claims filed against the Diocese.
The Coverage Action was filed by certain insurers, including
Pacific Insurance Company, before the Spokane County Superior
Court in November 2004. The Coverage Action has been removed to
the Bankruptcy Court and is currently pending before Judge Justin
L. Quackenbush of the U.S. District Court for the Eastern District
of Washington.
Indiana has asserted various defenses in the Coverage Action,
including that:
1. neither the Diocese nor Indiana has located copies of the
putative policies and that the Diocese will have the
burden trial of establishing the existence and terms of
any issued by Indiana, including the applicable limits
of those policies;
2. If the Diocese establishes the existence and terms of the
putative policies, it must in addition prove an insurable
event;
3. the Diocese also must establish the existence of an
occurrence during the policy period -- that there is
bodily injury during the timeframe that Indiana insured
the Diocese;
4. the Diocese failed to comply with the condition common in
CGL forms requiring that the insured promptly notify the
insurer of any claim; and
5. the Diocese failed to disclose any knowledge as to priest
abuse allegations at the time it applied for or sought
renewal of any insurance policies with Indiana.
The Diocese, Indiana, and the other parties in the Coverage Action
have been engaged in extensive discovery. To date, the Diocese
has incurred over $1,000,000 in fees and expenses in pursuing the
Coverage Action. The District Court has set an October 23, 2006
trial date.
According to Shaun M. Cross, Esq., at Paine, Hamblen, Coffin,
Brooke & Miller, LLP, in Spokane, Washington, the Diocese decided
to reach an expedited resolution of all the disputes with Indiana
in light of:
-- the significant costs to the Diocese's estate to litigate
its coverage claims against Indiana and establish the
existence and material terms of the Indiana Policies;
-- the considerable time it will take to obtain a final
determination of the Diocese's rights and claims under the
Policies;
-- the risk that the Diocese will not prevail in a litigation
of the issues and that, as a result, coverage under the
Policies may not exist; and
-- the Diocese's desire to obtain maximum value from its
insurers under Policies for the purpose of making payments
to the holders of Tort Claims.
The principal terms of the Settlement Agreement are:
(a) Indiana will pay $2,750,000 to the Diocese;
(b) The Diocese will use the settlement amount solely for
indemnity payments for Tort Claims related to individuals
alleging injury;
(c) The Diocese and Indiana will execute mutual releases,
including that:
-- The Diocese will dismiss, with prejudice, its claims
against Indiana in the Coverage Action and sell the
Policies back to Indiana free and clear of all liens,
claims, encumbrances and other interests, with the sole
exception of the rights, if any, held by Morning Star;
and
-- Indiana will release all claims for reimbursement of
the $325,000 in defense and indemnity claims already
paid for Tort Claims against the Diocese; and
(d) If the Diocese proposes a plan of reorganization that
channels Tort Claims to a trust, it will use its best
efforts to include a channeling injunction that protects
Indiana against the assertion of Tort Claims.
The Settlement Agreement is subject to a District Court order
barring all equitable contribution or other claims against Indiana
by other parties to the Coverage Action, unless Indiana waives the
condition.
A full-text copy of the Indiana Insurance Settlement Agreement is
available at no charge at http://researcharchives.com/t/s?f4d
The Roman Catholic Church of the Diocese of Spokane filed for
chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on
Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen,
Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed $11,162,938 in total assets and
$81,364,055 in total debts. (Catholic Church Bankruptcy News,
Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000)
CATHOLIC CHURCH: Morning Star Whines About Spokane & GICA Pact
--------------------------------------------------------------
As reported in the Troubled Company Reporter on July 12, 2006, the
Diocese of Spokane and General Insurance Company of America
entered into a settlement agreement to resolve their disputes.
The Diocese asked the U.S. Bankruptcy Court for the Eastern
District of Washington to:
(i) approve the Settlement Agreement with GICA;
(ii) permit the Diocese to sell back the GICA Policies
pursuant to the terms of the Settlement Agreement, free
and clear of liens, claims, encumbrances, and other
interests, other than the alleged rights, claims, or
interest of Morning Star Boys' Ranch, if any;
(iii) find that claims held by "causal link" claimants are
"claims" as that term is defined in Section 101(5) of
the Bankruptcy Code; and
(iv) find that GICA is a good faith purchaser entitled
to the protections of Section 363(m).
Objections
(A) Morning Star
Morning Star complains that the Diocese of Spokane's proposed
Settlement, Release and Policy Buy Back Agreement with General
Insurance Company of America is silent or otherwise inconclusive
with respect to Morning Star's rights in the GICA policy with
respect to:
-- obligations for payment past and future defense costs
associated with any and all sexual abuse claims against
Morning Star or its agents or employees; or
-- payment of judgments obtained for successful prosecution,
if any, of sexual abuse claims or settlements of sexual
abuse claims against Morning Star.
Morning Star has been individually named as defendant in
proceedings arising from sexual abuse involving priests or clergy
affiliated or associated with the Spokane Diocese.
Christopher J. Kerley, Esq., at Keefe, King & Bowman, P.S., in
Spokane, Washington, contends that Morning Star has a legally
protected interest in the GICA policy. Morning Star, Mr. Kerley
explains, paid for and is entitled to all benefits under the
insurance coverage afforded under the policy, is or may be an
additional named insured under each policy, and is an intended
beneficiary under any and all relevant and applicable policies
issued by GICA.
Morning Star takes no position with respect to the "buy back"
deal. Morning Star, however, objects to any finding that:
(1) the buy-back affects GICA's duty to defend or provide a
defense on Morning Star's behalf in existing or future
sexual abuse claims; or
(2) settlement affect or limit the indemnity coverage
available to Morning Star for pending or threatened or
future sexual abuse claims.
To the extent that there are any pending claims against Morning
Star covered under the GICA policy, Mr. Kerley asserts that
Morning Star is entitled to:
(i) coverage, among others, for payment of reasonable
attorney's fees for defenses and costs of litigation
against the claims asserted by third parties; and
(ii) indemnity pursuant to the terms and conditions of the
policy for any judgments or recoveries obtained or for
settlements reached.
(B) Future Claims Representative
Gayle E. Bush, in his capacity as Future Claims Representative,
points out that the Diocese's Settlement Agreement with GICA
provides no assurance that Future Tort Claimants' interests are
protected in a case of a sale of the insurance policies as
proposed.
The FCR notes that GICA is required to pay the settlement fund
immediately. The Settlement Effective Date, however, is set for
October 1, 2007. Until that time, under the Settlement
Agreements, the Diocese would have no right, title or interest in
the settlement fund.
Given the estate's financial needs, and absent any practical
reason to delay vesting of the settlement proceeds in the Diocese
for over a year, the Effective Date should occur commensurate with
GICA's payment, Mr. Bush asserts.
In contrast, the FCR points out, the Diocese's release of GICA
contains no waiting period to become effective. The Settlement
Agreement provides that, to the extent the Effective Date does not
occur, the settlement funds will remit to GICA. Therefore,
interested parties may forgo exercising their rights against GICA
for over a year, only to have the settlement funds remitted to
GICA in October 2007. "Potentially, this would be extremely
prejudicial to parties with rights against the insurance
companies," Mr. Bush contends.
The FCR also objects to provisions relating to "indemnity for Tort
Claims" and "Causal link" claimants. Mr. Bush explains that the
GICA Settlement Agreement is unclear precisely what "indemnity for
Tort Claims" would encompass. The FCR objects to the extent this
could in any way serve as a restriction on Future Tort Claimants'
right to share in the settlement proceeds and would result in
greater restrictions regarding the use of funds than are present
in the insurance policies themselves.
The FCR notes that "causal link" claimants are not defined in the
Settlement Agreement or the Diocese's Motion. There is no
discussion of whether "causal link claimants" is intended to refer
to Future Tort Claimants represented by the FCR or some subset.
More importantly, there is no discussion of the significance or
impact of the provision on the FCR's constituency.
(C) Association of Parishes
The Association of Parishes asserts that any settlement and
release of GICA contemplated under the Settlement Agreement should
include and provide for the parishes' right to claim against the
settlement proceeds to the extent that the parishes are entitled
to defense or indemnification.
To the extent the settlement purports to prevent any use of the
proceeds for the defense or indemnification of parishes, and the
settlement purports to earmark the proceeds for payment of sexual
abuse tort claims in the bankruptcy proceeding, then its terms and
conditions impair the parishes' abilities to assert their rights
to the settlement proceeds, Ford Elsaesser, Esq., at Elsaesser
Jarzabek Anderson Marks Elliott & McHugh, contends.
Mr. Elsaesser argues that the parishes' rights must be protected
particularly since the GICA Settlement Agreement purports to "sell
free and clear of liens" the liability policies impacted by the
Settlement to the insurer, with the limited exception of Morning
Star's claims. He asserts that the parishes should either be
subject to the same exclusion as is being made for Morning Star or
the order approving the Settlement should reserve the parishes'
right to make legal claim to the insurance settlement proceeds, if
and when the parishes' rights to defense and indemnity are ever
implicated.
The Roman Catholic Church of the Diocese of Spokane filed for
chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on
Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen,
Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed $11,162,938 in total assets and
$81,364,055 in total debts. (Catholic Church Bankruptcy News,
Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000)
CENVEO INC: $1.1 Billion Banta Bid Prompts S&P's Negative Watch
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on
Englewood, Colorado-based commercial printer Cenveo Inc. on
CreditWatch with negative implications, including its 'B+'
corporate credit rating.
The CreditWatch listing follows Cenveo's announcement that it has
sent a proposal to Banta Corporation's board of directors to
acquire Banta for $46 per common share in cash, or $1.1 billion.
In addition, Banta reported about $140 million in lease adjusted
debt and about $160 million in cash and short-term investments as
of June 2006, making the current estimated total purchase price
$1.1 billion. If the proposed purchase is funded entirely with
debt (net of existing cash balances at Banta), and assuming $300
million in combined EBITDA before synergies, total leverage at
Cenveo would be just under 6x.
CERADYNE INC: Receives $38.6 Million Ceramic Body Armor Orders
--------------------------------------------------------------
Ceradyne, Inc., received two ceramic body armor delivery orders
totaling $38.6 million.
The Company disclosed that the U.S. Marine Corps, Quantico,
Virginia, placed a delivery order for ESAPI for $8.4 million, and
the U.S. Army, Aberdeen Proving Ground, Maryland, placed a
delivery order for $30.2 million of ESAPI. Both orders are
expected to be shipped in the third and fourth quarters of 2006.
"We are pleased that the Army and Marines continue to issue ESAPI
orders to our Company, and we expect additional delivery order
releases later this year. We intend to produce these ESAPI orders
as well as the ESBI (side plates) order announced earlier this
month at our Lexington, Kentucky, and Costa Mesa, California,
armor facilities," Dave Reed, the Company's president of North
American operations, commented.
Ceradyne, Inc. (Nasdaq: CRDN) -- http://www.ceradyne.com/--
develops, manufactures and markets advanced technical ceramic
products and components for defense, industrial, automotive/diesel
and consumer applications.
* * *
As reported in the Troubled Company Reporter on July 24, 2006
Ceradyne's $50 million revolving credit facility due 2009 carries
Standard & Poor's BB- rating. The Company's credit rating is also
rated BB- by Standard & Poor's.
CHEMTURA CORP: Earns $420,000 in Second Quarter of 2006
-------------------------------------------------------
Chemtura Corporation filed its second quarter financial statements
for the three months ended June 30, 2006, with the Securities and
Exchange Commission on Aug. 7, 2006.
The Company reported net income of $420,000 on $1,016,323,000 of
net sales for the second quarter ended June 30, 2006, compared
with a $16,998,000 net loss on $602,329,000 of net sales for the
same period in 2005.
For the six months ended June 30, 2006, the Company reported net
income of $13,625,000 on $1,932,084,000 of net sales compared with
$3,437,000 of net income on $1,192,059,000 of net sales for the
same period in 2005.
The Company's net sales and operating profit increased for both
the quarter and six month periods ended June 30, 2006, as compared
with the same periods in 2005, notwithstanding increases in
general corporate expense, antitrust costs, a charge for
impairment of long-lived assets and merger costs for the six-month
period, which were partially offset by decreases to facility
closures, severance and related costs for the quarter period.
At June 30, 2006, the Company's balance sheet showed
$4,885,289,000 in total assets, $3,027,349,000 in total
liabilities, and $1,857,940,000 in total stockholders' equity.
Significant Transactions
The Company continues to assess its business portfolio and debt
position. To date, the Company has undertaken these initiatives:
1. In July 2006, the Company completed the redemption of the
remaining $158.9 million of outstanding 9.875% Senior Notes
due 2012, which was funded through the revolving credit
facility, the uncommitted working capital facilities and
available cash. The purchase price to tender the notes was
$1,123.87 per $1,000 principal amount. The Company
anticipates that the premium and other costs associated with
the redemption will be approximately $25.0 million and will
be recorded as a loss on early extinguishment of debt in the
third quarter of 2006.
2. On June 23, 2006, the Company sold a significant portion of
the real estate at the West Lafayette, Indiana location, for
net proceeds of $6.1 million, inclusive of $400,000 of
associated costs. There was no gain or loss recognized on
this sale.
3. On May 12, 2006, the Company sold its Industrial Water
Additives business to BWA Water Additives for $85 million,
exclusive of a $10.2 million adjustment for retained
accounts receivable and payable. A reduction in net assets
of $81.0 million, primarily related to $33.6 million of
goodwill; $32.5 million of net intangibles related to
technology, brands and customer relationships; and
$12.2 million of finished goods inventory was a result of
this sale. Additionally, the Company incurred $3.3 million
in associated costs, $400,000 related to employee retention
agreements, $2.3 million due to future losses related to
supply agreements with BWA, and $400,000 related to other
expenses. A loss of $12.5 million ($14.1 million after-tax)
has been included in other expense, net on the condensed
consolidated statement of earnings.
No facilities or manufacturing assets were included in this
transaction and Chemtura will continue to manufacture and
sell products to BWA via supply agreements. These assets
were reviewed for recoverability under the requirements of
Financial Accounting Standards Board Statement No. 144,
"Accounting for the Impairment of Disposal of Long-Lived
Assets," and a charge of $5.6 million related to the
impairment of the fully-dedicated manufacturing assets
retained was recorded in operating profit.
Contemporaneous with the sale, the Company entered into an
exclusive distribution agreement with BWA related to the
Liquibrom product line.
4. On May 24, 2006, the Company completed a tender offer to
repurchase the remaining $164.8 million of its outstanding
Senior Floating Rate Notes due 2010. The purchase price to
tender notes was $1,095.83 per $1,000 principal amount.
As a result of the tender, the Company recorded a loss on
early extinguishment of debt of $19.5 million during the
second quarter of 2006. The loss includes a premium of
$15.8 million and the write-off of unamortized deferred
costs of $3.7 million.
5. On April 19, 2006, the Company and certain of its
consolidated subsidiaries entered into an underwriting
agreement with several financial institutions for the sale
of $500 million aggregate principal amount of 6.875% Senior
Notes due 2016. The offering closed on April 24, 2006, and
the Company received net proceeds from the offering of
$492.3 million after expenses. The proceeds were utilized
to repay the outstanding balance on the Company's revolving
credit facility of $364 million, the outstanding balance on
uncommitted lines of credit of $50 million and to repurchase
receivables under the domestic receivable securitization
programs of $60 million, with the remaining proceeds used
for general corporate purposes.
6. On March 24, 2006, the Company acquired the Trace Chemicals
business from Bayer CropScience LP for net cash of
$6.7 million. Trace Chemicals is a leader in farmer-applied
seed treatments in markets serving the United States of
America. The acquisition will serve to enhance the
Company's offerings in the Crop Protection business.
Full-text copies of the Company's second quarter financials are
available for free at http://ResearchArchives.com/t/s?f4f
About Chemtura Corporation
Headquartered in Middlebury, Connecticut, Chemtura Corporation
(NYSE: CEM) -- http://www.chemtura.com/-- is a global
manufacturer and marketer of specialty chemicals, crop protection
and pool, spa and home care products. The Company has
approximately 6,400 employees around the world and sells its
products in more than 100 countries.
* * *
As reported in the Troubled Company Reporter on April 21, 2006,
Moody's Investors Service assigned a Ba1 rating to Chemtura
Corporation's $400 million of senior notes due 2016 and affirmed
the Ba1 ratings for its other debt and the corporate family
rating.
As reported in the Troubled Company Reporter on April 21, 2006,
Standard & Poor's Ratings Services assigned its 'BB+' senior
unsecured debt rating to Chemtura Corp.'s $400 million notes due
2016. Standard & Poor's affirmed Chemtura's 'BB+' long-term
corporate credit rating. The outlook remains positive.
CHESAPEAKE CORP: Moody's Rates $400 Million Senior loan at Ba3
--------------------------------------------------------------
Moody's Investors Service rated Chesapeake Corporation's new
$400 million senior secured credit facilities Ba3. The credit
facilities are being arranged on a best efforts basis and are
comprised of a GBP70 million term loan, a GBP70 million delayed-
draw term loan and a $125 million revolving credit facility that
is expected to be un-drawn at closing. Should the transaction
close as planned, the commitments will be used to replenish
liquidity, refinance amounts outstanding under the existing credit
facilities, and to redeem GBP67 million of remaining outstanding
10.375% senior subordinated notes due 2011.
Concurrently, Moody's downgraded the company's corporate
family rating to B1, ratings on the company's senior unsecured
IRB's to B2 and the rating on its senior subordinated notes
to B3. With the rating changes, the outlook was restored
to stable.
The rating action was prompted by increased debt levels that are
expected to persist over the near-to-mid term and by expectations
that Chesapeake will be modestly cash flow negative through 2006
and 2007, with break-even levels reached only in 2008. Over the
past year, Chesapeake's book debt has increased substantially
in order to fund the acquisition of Arlington Press and
restructuring activities that were initiated last fall. While
these initiatives may eventually increase the company's cash flow
generating capacity, competing uses for cash flow such as pension
funding, capital expenditures, dividends and additional
restructuring costs will preclude any meaningful generation of
free cash flow well into 2008.
Given this forecast Moody's downgraded Chesapeake's corporate
family rating by one notch to B1. The new credit facilities
benefit from security in a limited amount domestic assets, a
guarantee and share pledge package from the vast majority of its
European subsidiaries and limitations on additional indebtedness,
Moody's has rated them one notch above the corporate family rating
at Ba3. Ratings for the company's other debt securities were
downgraded by one notch in line with the downgrade of the
corporate family rating.
Downgrades:
Issuer: Chesapeake Corporation
* Corporate Family Rating, Downgraded to B1 from Ba3
* Senior Subordinated Regular Bond/Debenture, Downgraded to B3
from B2
* Senior Unsecured Revenue Bonds, Downgraded to B2 from B1
Assignments:
Issuer: Chesapeake Corporation
* Senior Secured Bank Credit Facility, Assigned Ba3
Outlook Actions:
Issuer: Chesapeake Corporation
* Outlook, Changed To Stable From Negative
Moody's plans to supplement its traditional assessment
of expected loss with a proposed Loss-Given-Default Methodology
for which a request for comment was circulated during January
2006. Research by Moody's suggests that the realized credit losses
on loans have tended to be lower than losses on similarly rated
bonds.
Moody's research further suggests that the application of a
rigorous estimation model for LGD could support a higher degree of
up-notching for bank facilities than has been the case with
Moody's traditional notching methodology which ascribes
considerable importance to asset coverage.
Additionally, ratings on senior unsecured and subordinated
may change as a result of the LGD methodology. Upon the
implementation of this new methodology, Moody's will adjust the
ratings of Chesapeake's debt and credit facilities accordingly.
Chesapeake Corporation, headquartered in Richmond, Virginia, is a
leading international supplier of specialty paperboard and plastic
packaging.
CITGO PETROLEUM: Faces Criminal Charges for Environmental Neglect
-----------------------------------------------------------------
The U.S. Department of Justice has brought criminal charges
against CITGO Petroleum Corporation for alleged violations of
environmental regulations applicable at the CITGO refinery in
Corpus Christi, Texas.
CITGO's manager for environmental compliance at the refinery, Phil
Vrazel, is also charged. CITGO is confident that once the
evidence is heard and the judicial process concluded, no criminal
conduct will be found. Accordingly, CITGO intends to defend
itself vigorously against these charges.
The charges break down into three categories.
One relates to whether certain tanks were "oil-water separators"
as defined by federal regulation. CITGO, relying on the wording
of the regulation, Environmental Protection Agency memoranda on
the subject, and the advice of expert legal counsel retained in
1999, has always believed that the regulation does not apply to
those tanks. There is no legal precedent supporting the
government's position on this issue.
The second category relates to highly technical rules concerning
the measurement of benzene present in the waste water streams at
the Corpus Christi Refinery. Since at least 1993, CITGO had
advised state and federal regulators, including the EPA, as to the
method by which it was calculating the amount of benzene present
in certain waste water streams at the refinery. In addition,
numerous inspectors from the state and EPA were advised by CITGO
as to the method used, and after a 1998 inspection, the EPA
expressly found that CITGO was in compliance with these
regulations. In 2001, two years before the government's
investigation even began, CITGO changed its methodology to the
methodology the government now advocates.
The last category relates to the death of migratory birds in
certain tanks. Throughout the investigation leading to these
charges, CITGO has maintained its innocence and continues to
maintain that none of these issues warrants criminal prosecution.
At most, they involve a good faith dispute over the interpretation
of highly complex and vague environmental regulations. Moreover,
throughout this protracted investigation, CITGO and its employees
have fully cooperated with the authorities. CITGO takes its
environmental responsibilities seriously and, in fact, the Corpus
Christi Refinery has in the past won an award from the EPA for
environmental excellence.
Headquartered in Houston, Texas, CITGO Petroleum Corporation --
http://www.citgo.com/-- is owned by PDV America, an indirect,
wholly owned subsidiary of Petroleos de Venezuela S.A., the state-
owned oil company of Venezuela.
PDVSA is Venezuela's state oil company in charge of the
development of the petroleum, petrochemical and coal industry, as
well as planning, coordinating, supervising and controlling the
operational activities of its divisions, both in Venezuela and
abroad.
* * *
As reported at the Troubled Company Reporter on Feb. 16, 2006,
Standard and Poor's Ratings Services assigned a 'BB' rating on
CITGO Petroleum Corp.
Citgo carries Fitch's BB- Issuer Default Rating. Fitch also rates
the Company's $1.15 billion senior secured revolving credit
facility maturing in 2010 at 'BB+', its $700 million secured term-
loan B maturing in 2012 at 'BB+', and its senior secured notes at
'BB+'.
COLLINS & AIKMAN: Selling MOBIS Joint-Venture Interest for $3.9MM
-----------------------------------------------------------------
Collins & Aikman Corporation and its debtor-affiliates ask the
U.S. Bankruptcy Court for the Eastern District of Michigan to
approve an agreement related to the sale of their joint venture
interests in Collins & Aikman MOBIS, LLC, to OBIS Alabama, LLC.
Marc J. Carmel, Esq., at Kirkland & Ellis LLP, in Chicago,
Illinois, tells the Court that Collins & Aikman MOBIS, LLC, a
joint venture between Collins & Aikman Products Co. and MOBIS
Alabama, has not been a profitable investment so the Debtors have
explored options to make it beneficial to their estates.
The Joint Venture currently sells products exclusively to
affiliates of MOBIS Alabama. Thus, the Debtors and their advisors
determined that a sale of their stake in the JV to their partner
would maximize the value of this asset.
Collins & Aikman Products owns a 69% membership interests in the
JV and MOBIS, a non-debtor third party, owns the remaining 31%.
After conducting extensive arm's-length negotiations, the Debtors
and MOBIS Alabama have agreed to enter into an agreement, the
material terms of which are:
(a) Collins & Aikman Products will sell to MOBIS Alabama for
$3,924,000 its Acquired Membership Interest in the JV;
(b) The JV will pay Collins & Aikman Products $7,538,081 for
certain intercompany payables, subject to certain
adjustments;
(c) Collins & Aikman Products will indemnify MOBIS Alabama and
other related entities with respect to certain aspects of
the transaction, up to a maximum of $785,000;
(d) Collins & Aikman Products will continue to supply the JV
and MOBIS Alabama their requirements for products, and the
JV and MOBIS Alabama will continue to purchase their
product requirements from C&A provided that C&A remains
competitive with respect to those products;
(e) Collins & Aikman Products will be considered a preferred
supplier to MOBIS Alabama and Hyundai MOBIS for their
requirements for certain new products with C&A receiving
certain preferred rights to bid on those products;
(f) Collins & Aikman Products and the JV will enter into a
license agreement to provide non-exclusive, non-
transferable licenses with respect to certain intellectual
property to be used by the JV;
(g) MOBIS Alabama will waive all claims against Collins &
Aikman Products and its affiliates, including
Claim No. 6429 filed on January 11, 2006, for $31,240,000;
(h) The Joint Venture Agreement dated as of April 9, 2003,
between the parties will be mutually terminated at
closing; and
(i) The parties will exchange mutual releases.
Mr. Carmel relates that the agent for the Debtors' senior,
secured postpetition lenders consent to the Debtors' entry into
the Agreement.
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. 36; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
COLLINS & AIKMAN: SW Foam Offers to Buy Laminates Asset for $740K
-----------------------------------------------------------------
Collins & Aikman Corporation and its debtor-affiliates seek
authority from the U.S. Bankruptcy Court for the Eastern District
of Michigan to:
-- sell certain assets of Southwest Laminates, Inc., to SW
Foam, L.P. pursuant to the terms of an Purchase Agreement;
-- pay a $29,600 break-up fee to SW Foam in the event a sale is
consummated with another bidder; and
-- reject the lease of the SW Laminates facility.
SW Laminates, part of the Debtors' Fabrics Business Unit,
laminates rolled textile goods for the North American automotive
industry. By utilizing flame lamination technology, SW Laminates
fastens foam to fabric for use in automotive seats and other
interior automotive parts.
The Debtors have sought and obtained Court approval to wind down
their Fabrics Business, including the closing of certain
facilities, the sale and abandonment of certain assets, and the
rejection of certain executory contracts and unexpired leases.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in Chicago,
Illinois, relates that although no party was interested in
acquiring the entire Fabrics Business as a going concern, certain
parties did express an interest in some of the assets and business
lines.
Three parties expressed an interest in acquiring the assets at
the SW Laminates facility. After conducting due diligence, only
SW Foam submitted an offer. The Debtors notified the other two
interested parties of the offer but both of the parties declined
to pursue an acquisition any further.
As a result of extensive, arm's-length negotiations, the Debtors
and SW Foam, in consultation with the agent for the Debtors'
senior, secured prepetition lenders and the Official Committee of
Unsecured Creditors, are prepared to enter into a Purchase
Agreement.
The salient terms of the Purchase Agreement are:
(1) The aggregate cash consideration for the acquired assets
is equal to $740,000.
(2) The Acquired Assets include all of the assets and
properties that are being sold and transferred to SW Foam,
including a Technology License Agreement, Permit No.
38517, any Intellectual Property of SW Laminates relating
exclusively to the Acquired Assets and all of the fixed
assets of the business of SW Laminates at its facility.
(3) Assets that are being retained by the Debtors and are
not being sold or transferred to SW Foam include cash,
certain claims and causes of action, rights under
insurance policies and certain corporate documents.
(4) SW Foam will assume a $19,795 administrative penalty
assessed against SW Laminates by the Texas Commission on
Environmental Quality.
(5) Excluded liabilities in the sale include accounts payable,
certain tax liabilities, employee liabilities and
environmental claims.
(6) SW Laminates has the right to market the Acquired Assets
to third parties and is entitled to consider and enter
into alternative transactions with them.
(7) In the event that SW Laminates accepts an Alternative
Transaction and the Purchase Agreement is terminated, SW
Laminates will pay to SW Foam $29,600, which is 4% of the
Purchase Price. The Break-Up Fee will constitute an
allowed administrative expense and will be paid from the
proceeds of an Alternative Transaction, at the time that
transaction is consummated.
The Debtors have given notice of the sale to other potentially
interested parties. In the unlikely event another party submits
a higher and better offer for the SW Laminates assets, the
Debtors would then seek approval of the alternative offer from
the Court by separate motion, Mr. Schrock says.
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. 36; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
COMDISCO HOLDING: Total Assets Decreased by $23 Mil. at June 30
---------------------------------------------------------------
Comdisco Holding Company, Inc., reported its financial results for
fiscal third quarter ended June 30, 2006. Comdisco emerged from
Chapter 11 on Aug. 12, 2002. Under its Plan of Reorganization,
Comdisco's business purpose is limited to the orderly runoff or
sale of its remaining assets.
Operating Results
For the three months ended June 30, 2006, the company reported net
earnings of approximately $3 million. The per share results for
Comdisco Holding Company, Inc., are based on approximately
4 million shares of common stock outstanding for the quarter ended
June 30, 2006.
For the quarter ended June 30, 2006, total revenue decreased by
14% to $6 million from $7 million for the quarter ended June 30,
2005.
Total assets decreased $23 million to $102 million as of June 30,
2006 compared to $125 million at Sept. 30, 2005. The $102 million
of total assets as of June 30, 2006, included $90 million of
unrestricted cash.
As a result of bankruptcy restructuring transactions, adoption of
fresh-start reporting and multiple asset sales, Comdisco Holding
Company, Inc.'s financial results are not comparable to those of
its predecessor company, Comdisco, Inc.
Full-text copies of the Company's third fiscal quarter financials
are available for free at http://ResearchArchives.com/t/s?f62
Comdisco filed for chapter 11 protection on July 16, 2001
(Bankr. N.D. Ill. Case No. 01-24795), and emerged from chapter 11
bankruptcy proceedings on August 12, 2002. The purpose of
reorganized Comdisco is to sell, collect or otherwise reduce to
money in an orderly manner the remaining assets of the
corporation. Pursuant to Comdisco's plan of reorganization and
restrictions contained in its certificate of incorporation,
Comdisco is specifically prohibited from engaging in any business
activities inconsistent with its limited business purpose.
Accordingly, within the next few years, it is anticipated that
Comdisco will have reduced all of its assets to cash and made
distributions of all available cash to holders of its common stock
and contingent distribution rights in the manner and priorities
set forth in the Plan. At that point, the company will cease
operations and no further distributions will be made. The company
filed Aug. 12, 2004, a Certificate of Dissolution with the
Secretary of State of the State of Delaware to formally extinguish
Comdisco Holding Company, Inc.'s corporate existence with the
State of Delaware except for the purpose of completing the wind-
down contemplated by the Plan.
John Wm. "Jack" Butler, Jr., Esq., Charles W. Mulaney, Esq.,
George N. Panagakis, Esq., Gary P. Cullen, Esq., N. Lynn Heistand,
Esq., Seth E. Jacobson, Esq., Andre LeDuc, Esq., Christina M.
Tchen, Esq., L. Byron Vance, III, Esq., Marian P. Wexler, Esq.,
and Felicia Gerber Perlman, Esq., at Skadden, Arps, Slate, Meagher
& Flom, LLP, represented Comdisco before the Bankruptcy Court.
Evan D. Flaschen, Esq., and Anthony J. Smits, Esq., at Bingham
Dana LLP, served as Comdisco's International Counsel.
COMPLETE RETREATS: Can Continue to Honor Existing Reservations
--------------------------------------------------------------
Complete Retreats LLC and its debtor-affiliates obtained
permission from the U.S. Bankruptcy Court for the District of
Connecticut to continue to honor existing reservations of their
destination clubs members.
The Debtors also obtained authority to accept new reservations,
and provide services through use of the Visa credit card in the
ordinary course of their business, under the terms and conditions
as they may require in their discretion.
The Troubled Company Reporter on Aug. 4, 2006 stated that members
of the Debtors' destination clubs pay annual dues and daily usage
fees. Annual dues are paid semi-annually, at the end of either
the first and third quarters or the second and fourth quarters,
while daily usage fees are paid upon completion of a member's
retreat.
Nicholas H. Mancuso, Esq., at Dechert LLP, in Hartford,
Connecticut, told the Court that thus far, the Debtors have
received approximately $15,400,000 in annual dues from members
during 2006. The next installment of dues, totaling
approximately $2,200,000, is due at the end of September.
Currently, Mr. Mancuso said, members have pending reservations
for an aggregate of more than 10,000 room nights, which would
translate into an estimated $1,700,000 in daily usage fees.
In the past, the Debtors have made every effort to honor members'
travel requests, including, if necessary, entering into costly
short-term leases with third parties. The Debtors have recently
discontinued this practice since it is one of the major causes of
their financial difficulties.
According to Mr. Mancuso, the Debtors are in the process of re-
evaluating their business model.
The Debtors have determined that it may not be economical for them
to honor each and every pending reservation or to accept each new
reservation, especially in light of the relatively low annual fees
and daily usage fees that certain members currently enjoy. In
some instances, Mr. Mancuso noted, even the marginal daily costs
of accommodating a member significantly exceed the associated
daily usage fees.
"The Debtors also recognize, however, that if they fail to honor
pending reservations and routinely decline new ones during the
course of these [Chapter 11] cases, their members will likely
cease paying annual dues and/or attempt to resign from the
destination clubs, which could be disastrous to their business,"
Mr. Mancuso said.
Thus, Mr. Mancuso contended, while the Debtors ultimately may not
honor 100% of existing reservations, or accept every new
reservation going forward, especially with respect to popular
winter weeks, they need to have the discretion to do so, should
circumstances warrant.
The Debtors typically provide their members with certain amenities
during their retreats, including fine wine, ski passes, and
personal chefs. The Debtors pay for these amenities with a Visa
corporate credit card. The credit card has a $400,000 limit, and
the Debtors' obligations to Visa are secured by a $300,000 bond
posted by Bank of America. The Debtors make frequent payments on
the credit card. Upon completion of a member's retreat, the
Debtors are reimbursed by that member for expenses incurred during
the retreat.
As of July 22, 2006, the Debtors had incurred but not yet paid
approximately $267,000 to Visa.
Mr. Mancuso clarified that the Debtors are not yet seeking to
assume any executory contracts or unexpired leases to which any of
the Debtors may be a party.
Headquartered in Westport, Connecticut, Complete Retreats LLC
operates five-star hospitality and real estate management
businesses. In addition to its mainline destination club
business, the Debtor also operates an air travel program for
destination club members, a villa business, luxury car rental
services, wine sales services, fine art sales program, and other
amenity programs for members. Complete Retreats and its debtor-
affiliates filed for chapter 11 protection on July 23, 2006
(Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq.
and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in
their restructuring efforts. Michael J. Reilly, Esq., at Bingham
McCutchen LP, in Hartford, Connecticut, serves as counsel to the
Official Committee of Unsecured Creditors. No estimated assets
have been listed in the Debtors' schedules, however, the Debtors
disclosed $308,000,000 in total debts. (Complete Retreats
Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
COTT CORPORATION: Second Quarter Earnings Down to $7.6 Million
--------------------------------------------------------------
Cott Corporation's net income for the second quarter ended July 1
was $7.6 million, compared to $25 million in the second quarter of
2005.
The Company disclosed that the decline in net income reflects
pre-tax charges of $8.9 million related to the Company's recent
chief executive officer change, the expensing of stock options and
charges related to unusual items.
Revenue increased 2% in the quarter to $502 million compared to
$492.7 million in the second quarter of last year. However,
excluding the impact of acquisitions and foreign exchange, second
quarter revenue declined 5% when compared to the second quarter of
2005.
Gross margin as a percentage of revenue declined to 14.4% in the
quarter from 16.4% in the second quarter of last year, but
increased from 13.4% in the first quarter of 2006.
The Company disclosed, revenue in the first six months increased
1% to $896.2 million from $888.2 million in the first six months
of the prior year and gross margin as a percentage of revenue for
the first half of the year was 13.9%, compared to 15.4% during the
first half of last year.
Net income for the first half of 2006 declined to $5.5 million
compared with $33.3 million in the first half of 2005.
The Company also reported that it has initiated an extensive
ongoing cost reduction program designed to transform business
practices and support its goal of being the lowest cost producer
in its segments.
The Company further reported, it is making progress expanding its
portfolio of energy drinks with new flavors and packaging formats
to new customers and channels in the U.K., Canada, and the U.S.,
has developed a line of premium ready-to-drink single serve teas
and has gained authorizations from major North American customers.
The teas, offered in 20-ounce PET bottles, will begin shipping in
the third quarter.
The Company's new business in Brazil is on track and expected to
expand further in that country through the balance of the year and
that it has also entered into arrangements with three bottlers in
China.
Headquartered in Toronto, Ontario, Canada, Cott Corporation
(NYSE:COT; TSX:BCB) -- http://www.cott.com/-- is a non-alcoholic
beverage company and a retailer brand beverage supplier. The
Company commercializes its business in over 60 countries
worldwide, with its principal markets being the United States,
Canada, the United Kingdom and Mexico. Cott markets or supplies
over 200 retailer and licensed brands, and Company-owned brands
including Cott, Royal Crown, Vintage, Vess and So Clear. Its
products include carbonated soft drinks, sparkling and flavoured
mineral waters, energy drinks, juices, juice drinks and smoothies,
ready-to-drink teas, and other non-carbonated beverages.
* * *
As reported in the Troubled Company Reporter on Feb. 3, 2006,
Moody's Investors Service downgraded Cott Beverages, Inc.'s Senior
Subordinated Regular Bond/Debenture rating to B1 from Ba3 and Cott
Corporation's Corporate Family Rating, to Ba3 from Ba2. The
ratings outlook is stable, Moody's said.
As reported in the Troubled Company Reporter on Jan. 31, 2006,
Standard & Poor's Ratings Services lowered its ratings on Cott
Corp. by one notch, including its corporate credit rating, to
'BB-' from 'BB'. S&P said the outlook is negative.
CREDIT SUISSE: S&P's Rating on Class H Certificates Tumbles to D
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its rating on class D of
Credit Suisse First Boston Mortgage Securities Corp.'s commercial
mortgage pass-through certificates series 1998-C1. Concurrently,
the rating on one other class is lowered, and the ratings on eight
classes are affirmed.
The raised and affirmed ratings reflect credit enhancement levels
that provide adequate support through various stress scenarios, as
well as the defeasance of an additional $210.7 million (11%) in
collateral since Standard & Poor's last review. Several of the
ratings are constrained by concerns regarding the specially
serviced assets.
The downgrade of class H to 'D' reflects credit support
deterioration due to anticipated principal losses upon the
resolution of the assets with the special servicer and expected
continued interest shortfalls to class H. As of the remittance
report dated July 17, 2006, there were 13 delinquent assets
($76 million, 4%) in the transaction, and 13 appraisal reduction
amounts (ARAs) totaling $22.2 million (1%) were in effect.
According to the July 17 remittance report, the trust collateral
consisted of 269 mortgage loans and four REO assets with an
outstanding principal balance of $1.873 billion, down from 324
loans totaling $2.483 billion at issuance. The master servicer,
KeyBank Real Estate Capital, reported mainly full-year 2005
financial information for 94% of the pool. Based on this
information, Standard & Poor's calculated a weighted average debt
service coverage ratio (DSCR) of 1.61x for the pool, up from 1.51x
at issuance. Credit tenant leases (CTLs) accounted for 55 loans
($264.9 million, 14%), while the collateral for 50 loans ($495.6
million, 26%) has been defeased.
The top 10 loan exposures secured by real estate have a balance of
$454.7 million (24%). Year-end 2005 financial information was
provided for eight of the top 10 loans. Based on this
information, Standard & Poor's calculated a weighted average DSCR
of 1.83x, up from 1.58x at issuance. DSCRs for eight of the top
10 loans have improved since issuance, while the DSCR for the
second-largest loan has declined. This loan is on the master
servicer's watchlist and is discussed below. Standard & Poor's
reviewed the property inspection reports obtained from KeyBank,
and all properties were said to be in "good" or "excellent"
condition.
As of Aug. 4, 2006, 19 assets totaling $103.8 million (6%) were
with the special servicer, LNR Partners Inc., including 12 of the
delinquent assets in the pool. The delinquent assets include:
* two REO assets ($4.9 million),
* three loans ($21 million) in foreclosure,
* three loans ($22.3 million) over 90 days delinquent,
* one loan ($18.7 million) that is 60-90 days delinquent, and
* one loan ($2.5 million) that is 30-60 days delinquent.
The remaining nine loans ($34.4 million) with LNR are current or
less than 30 days delinquent. In addition, two REO assets ($5.3
million aggregate total exposure) were liquidated for
approximately $3.5 million after the remittance report was
released. The larger loans with the special servicer (those with
balances over $5 million) are discussed in detail below, while the
remaining assets with LNR were stressed according to valuation
information obtained by Standard & Poor's.
Kmart - Virginia Beach No. 4986 is a 190,500-sq.-ft. retail
property solely occupied by Kmart in Virginia Beach, Va. The
property secures a 60-90 days delinquent loan ($18.7 million) with
a total exposure of $19.1 million. The loan was transferred to
LNR in January 2003 following Kmart's bankruptcy filing. While
Kmart did not vacate the property, it did enter into a three-year
rent modification agreement. Kmart has extended its lease for
another three years at a rate that is lower than the principal and
interest payment, and the borrower is unwilling to fund the
difference. LNR is pursuing foreclosure.
Embassy Suites - Milwaukee, Wisconsin, is a 203-room independently
operated hotel in the Milwaukee suburb of Brookfield. The loan
($14.7 million) is in foreclosure and has a total exposure of
$15.5 million. The loan was transferred to LNR in November 2005
after the borrower terminated its franchise agreement without
consent. Reported occupancy was 51% as of year-end 2005. An ARA
of $1.5 million is in effect, and the property was appraised at
$15.1 million in March 2006.
Valley Stream Village Apartments and Perry Lake Village are
multifamily properties in Ohio that secure two loans ($20.3
million) with the same sponsor. The loans are over 90 days
delinquent and were transferred to LNR in January 2006 for
nonpayment resulting from the borrower's reported cash flow
problems. Year-end 2005 occupancies were 53% and 54%,
respectively. The total exposure on the loans is $21.1 million,
and ARAs totaling $7.1 million are in effect. The properties were
recently appraised for a total of $18.2 million.
Logan Manor Nursing Home, a 180-bed skilled nursing facility in
Whiting, New Jersey, secures a $6 million loan that is operating
under a forbearance agreement. The loan was transferred to LNR in
February 2003 due to the borrower's inability to service the debt.
An ARA of $3.7 million is in effect on the loan.
The Best Western Oak Manor Inn, a 116-room, limited-service hotel
in Biloxi, Mississippi, secures a loan for $5.6 million. The loan
was transferred to the special servicer in September 2005
following Hurricane Katrina. Repairs to 37 rooms damaged by the
hurricane are underway and should be completed this month.
Occupancy was reported at 83% as of June 2005.
Winfield Landing Apartments and Wisteria Gardens Apartments, both
multifamily properties in or around Houston, Texas, secure loans
($9.4 million) that are less than 30 days delinquent and which
were recently transferred to LNR due to imminent default.
Occupancies were 75% as of March 2006 for Winfield Landing
Apartments and 91% as of June 2006 for Wisteria Gardens
Apartments.
RHC - Capistrano is a 152-unit mobile home park in San Juan
Capistrano, California, securing a $5.1 million loan that is in
foreclosure, with a total exposure of $5.5 million. The loan was
transferred to LNR in July 2005 after the borrower informed the
master servicer that it was unable to pay due to structural
property damage resulting from California's rainy season. A
receiver was appointed in March 2006. The property still has
structural problems, and an appraisal is pending upon the
completion of a seismic report and a slope stability evaluation.
An ARA of $1.8 million is in effect on the loan.
The master servicer reported 49 loans totaling $239.2 million
(13%) on its watchlist. Ritz-Carlton Cancun, the second-largest
loan exposure, has a current balance of $66.4 million (4%). The
loan is secured by a mortgage on a nine-story, 365-room, full-
service luxury resort in Cancun, Mexico, that received AAA's five-
diamond rating. The loan was placed on the watchlist due to a
significant drop in the DSCR to 1.16x at year-end 2005 from 1.63x
at issuance as a result of extensive damage to the property during
Hurricane Wilma in the fall of 2005. According to KeyBank, the
property is currently undergoing major renovations and was 100%
vacant for most of 2006; however, the hotel is scheduled to reopen
in August 2006.
The remaining loans on the watchlist appear there due to low
occupancies, low DSCRs, or upcoming lease expirations.
Standard & Poor's stressed various assets in the mortgage pool,
including those with the special servicer and on the watchlist, as
part of its analysis. The resultant credit enhancement levels
adequately support the raised, lowered, and affirmed ratings.
Rating Raised
Credit Suisse First Boston Mortgage Securities Corp.
Commercial mortgage pass-through certificates series 1998-C1
Rating
------
Class To From Credit enhancement(%)
----- -- ---- ---------------------
D AA- A+ 13.97
Rating Lowered
Credit Suisse First Boston Mortgage Securities Corp.
Commercial mortgage pass-through certificates series 1998-C1
Rating
------
Class To From Credit enhancement(%)
----- -- ---- ---------------------
H D CCC 0.72
Ratings Affirmed
Credit Suisse First Boston Mortgage Securities Corp.
Commercial mortgage pass-through certificates series 1998-C1
Class Rating Credit enhancement(%)
----- ------ ---------------------
A-1B AAA 35.85
A-2MF AAA 35.85
B AAA 28.56
C AAA 21.26
E A- 11.98
F BB- 4.36
G B 3.36
A-X AAA N/A
N/A - Not applicable.
D&G INVESTMENTS: Court Enters Final Decree Closing Chapter 11 Case
------------------------------------------------------------------
The Hon. Alexander L. Paskay of the U.S. Bankruptcy Court for the
Middle District of Florida entered an order of final decree
closing D & G Investments of West Florida, Inc.'s chapter 11 case.
The Debtor's Amended Chapter 11 Plan of Reorganization was
confirmed on June 9, 2006.
The Court found that the terms of the Plan relating to the payment
of all creditors have been complied and the Plan has been fully
consummated.
Headquartered in Seminole, Florida, D & G Investments of West
Florida, Inc., filed for chapter 11 protection on July 20, 2005
(Bankr. M.D. Fla. Case No. 05-14434). Thomas C. Little, Esq., at
Thomas C. Little, PA, represents the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it estimated assets of $10 million to $50 million and debts of
$1 million to $10 million.
DANA CORP: Dana Credit Corp. to Ink New Forbearance Agreement
-------------------------------------------------------------
Dana Credit Corporation, a wholly owned subsidiary of Dana
Corporation, will enter into another forbearance agreement with
an ad hoc committee composed of holders of majority of notes
issued by Dana Credit.
On Apr. 28, 2006, the Troubled Company Reporter noted that Dana
Credit and the Ad Hoc Noteholders Committee entered into a 30-day
forbearance agreement under which the Ad Hoc Committee agreed to
work with Dana Credit toward a global consensual restructuring of
the Dana Credit Notes, and to forbear from exercising rights and
remedies with respect to any default or event of default under the
Dana Credit Notes. The April Forbearance Agreement expired on
May 9, 2006.
Dana Credit has issued notes from time to time under a number of
note agreements. At present, the aggregate principal amount of
Dana Credit Notes outstanding is approximately $399,000,000.
In a regulatory filing with the Securities and Exchange
Commission, dated Aug. 4, 2006, Michael DeBacker, vice president
of Dana Corporation, disclosed that the proposed Forbearance
Agreement will, among other things, allow Dana Credit to market,
sell and monetize the value of its lease and other portfolio
assets, and use the proceeds of the asset sales to make payments
to certain holders of Dana Credit Notes.
Furthermore, under the proposed Forbearance Agreement, Dana Credit
Noteholders that are signatories would forbear from exercising any
rights under their respective Dana Credit Notes:
(i) until the earlier of an event of default under the August
Forbearance Agreement;
(ii) the later of the allowance of all claims of Dana Credit
against Dana and the effective date of a plan of
reorganization for Dana; or
(iii) two years after the effective date of the August
Forbearance Agreement.
In exchange for the forbearance, Dana Credit would:
(a) grant to the Forbearance Noteholders security interests in
its assets and a pledge of the stock of its subsidiaries;
(b) pay to the Forbearance Noteholders an amount equal to all
then accrued and unpaid interest at the non-default
contract rate on the Dana Credit Notes held by the
Forbearance Noteholders;
(c) accrue interest on the principal amount outstanding under
each Dana Credit Note held by each Forbearance Noteholder
at the non-default contract rate provided for under the
Dana Credit Note;
(d) use commercially reasonable efforts to sell its lease and
portfolio assets within the next two years and pay the
aggregate proceeds of the sales to the Forbearance
Noteholders on a quarterly basis to be applied first to
the accrued and unpaid interest at the non-default
contractual rate and then on a pro rata basis to the
outstanding principal amount of the Dana Credit Notes held
by the Forbearance Noteholders;
(e) use cash only to pay operating expenses and for the
quarterly payments, and to not make any acquisitions or
investments or loans, dividends or similar payments to
Dana; and
(f) pay certain fees of the professionals retained by the Ad
Hoc Committee.
A full-text copy of the proposed Forbearance Agreement is
available for free at http://researcharchives.com/t/s?f45
As of Aug. 1, 2006, Mr. DeBacker disclosed that Dana Credit had
approximately $50,000,000 in cash on hand from previous asset
sales and operations. Dana Credit believes that the marketing and
sale of its portfolio of remaining assets could generate aggregate
sale proceeds of approximately $200,000,000 to $300,000,000.
The continued sale of Dana Credit's assets is expected to generate
additional tax liabilities owed to Dana by Dana Credit under their
Tax Sharing Agreement of approximately $80,000,000 to
$115,000,000, Mr. DeBacker said.
Current Tax Audits
From time to time, Dana and Dana Credit amend their Tax Sharing
Agreement. Among others, the amendments have eliminated Dana
Credit's liability to pay Dana for capital gains generated by Dana
Credit in years 2002 through 2004 in connection with the sale of
Dana Credit investments.
As of June 30, 2006, Mr. DeBacker said Dana Credit had recorded
approximately $47,000,000 as a net tax sharing receivable from
Dana under the Tax Sharing Agreement. The amount includes certain
assessments in connection with tax audit adjustment settlements
that have been agreed to by Dana, Dana Credit and the Internal
Revenue Service. However, the amount does not reflect matters
subject to current tax audits by the IRS because the outcome of
the audits has not yet been agreed to or determined to be probable
by Dana.
The IRS is currently examining certain stock sale transactions
completed by Dana Credit during the years 2002 through 2004. Dana
Credit did not recognize any tax liability for the approximately
$640,000,000 capital gain on these stock sales transactions at the
time because Dana Credit utilized Dana's capital loss carryforward
as an offset.
Furthermore, pursuant to the modified Tax Sharing Agreement, Dana
Credit incurred no obligation to the extent the obligation arose
with respect to capital gains, Mr. DeBacker said. Dana believes
that these stock sale transactions were completed in accordance
with appropriate tax regulations and that the likelihood of an
adverse outcome is remote.
If, however, the IRS determines that gains from these transactions
were not capital in nature, then Dana Credit's gains on the
transactions would be re-characterized as ordinary gains, and Dana
Credit would not be able to avail itself under the modified Tax
Sharing Agreement of any benefit associated with Dana's capital
loss carryforward. If the entire $640,000,000 were re-
characterized as ordinary gain, and assuming a 35% tax rate, the
Tax Sharing Agreement would provide for an additional Dana Credit
liability to Dana of approximately $224,000,000, Mr. DeBacker
said.
Toledo, OH-based Dana Corp. -- http://www.dana.com/-- designs and
manufactures products for every major vehicle producer in the
world, and supplies drivetrain, chassis, structural, and engine
technologies to those companies. Dana employs 46,000 people in 28
countries. Dana is focused on being an essential partner to
automotive, commercial, and off-highway vehicle customers, which
collectively produce more than 60 million vehicles annually. The
company and its affiliates filed for chapter 11 protection on
Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball,
Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and
Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black,
Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio,
represent the Debtors. Henry S. Miller at Miller Buckfire & Co.,
LLC, serves as the Debtors' financial advisor and investment
banker. Ted Stenger from AlixPartners serves as Dana's Chief
Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel LLP, represents the Official Committee of
Unsecured Creditors. When the Debtors filed for protection from
their creditors, they listed $7.9 billion in assets and $6.8
billion in liabilities as of Sept. 30, 2005. (Dana Corporation
Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service,
Inc., 215/945-7000).
The Debtors' consolidated balance sheet at March 31, 2006, showed
a $456,000,000 total shareholder' equity resulting from total
assets of $7,788,000,000 and total liabilities of $7,332,000,000.
DANA CORP: Gets Court Okay to Reject 13 Contracts and Leases
------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized Dana Corporation and its debtor-affiliates to reject
these contracts and leases, effective as of July 31, 2006:
Contracting Party Description
----------------- -----------
Global eXchange Services, Inc. Service Agreement
Ryder Truck Rental, Inc. Equipment Leases
Ryder Truck Rental, Inc. Equipment Leases
Ryder Truck Rental, Inc. Equipment Leases
Ryder Truck Rental, Inc. Equipment Leases
Ryder Truck Rental, Inc. Equipment Leases
Ryder Truck Rental, Inc. Equipment Leases
Ryder Truck Rental, Inc. Equipment Leases
Ryder Truck Rental, Inc. Equipment Leases
Ryder Truck Rental, Inc. Equipment Leases
Ryder Truck Rental, Inc. Equipment Leases
Kenworth, Indianapolis Leasing Div. Equipment Leases
Kenworth, Indianapolis Leasing Div. Equipment Leases
With respect to the Ryder Leases, the Court directed the Debtors
to return the leased equipment to their places of domicile.
To the extent the Debtors return any item of leased equipment
after July 31, 2006, Ryder Truck will charge the Debtors and the
Debtors will be liable to promptly pay Ryder Truck only a per
diem charge for each day after July 31, 2006, until the date the
equipment is returned. Those payments will be entitled to
administrative expense treatment as long as they will remain
unpaid. No further monthly rental charges will accrue or will be
payable.
Ryder Truck withdrew its objection to the Debtors' request, with
prejudice.
The Troubled Company Reporter on Aug. 2, 2006, relates that
Ryder Truck opposed the Debtors' rejection of the 10 Ryder
Equipment Leases, contending that under the Truck Lease and
Service Agreement the Debtors entered into with Ryder Truck on
Jan. 14, 1983, the Debtors must choose to reject or assume the
TLSA as a whole.
As a unitary contract, the TLSA could not exist without the
schedules showing the vehicles leased to the customer, nor could
the schedules exist without the TLSA, which sets the contractual
terms between the parties. Thus, Ryder Truck argued, the various
schedules to the TLSA cannot be severed to allow the Debtors to
cherry pick those parts of the TLSA that they deem necessary from
those parts they deem unnecessary to their on-going business
operations.
The Debtors rebutted, asserting that the circumstances surrounding
the lease transactions also demonstrate the parties' intention to
treat the Lease separately.
Toledo, OH-based Dana Corp. -- http://www.dana.com/-- designs and
manufactures products for every major vehicle producer in the
world, and supplies drivetrain, chassis, structural, and engine
technologies to those companies. Dana employs 46,000 people in 28
countries. Dana is focused on being an essential partner to
automotive, commercial, and off-highway vehicle customers, which
collectively produce more than 60 million vehicles annually. The
company and its affiliates filed for chapter 11 protection on
Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball,
Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and
Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black,
Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio,
represent the Debtors. Henry S. Miller at Miller Buckfire & Co.,
LLC, serves as the Debtors' financial advisor and investment
banker. Ted Stenger from AlixPartners serves as Dana's Chief
Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel LLP, represents the Official Committee of
Unsecured Creditors. When the Debtors filed for protection from
their creditors, they listed $7.9 billion in assets and $6.8
billion in liabilities as of Sept. 30, 2005. (Dana Corporation
Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service,
Inc., 215/945-7000).
The Debtors' consolidated balance sheet at March 31, 2006, showed
a $456,000,000 total shareholder' equity resulting from total
assets of $7,788,000,000 and total liabilities of $7,332,000,000.
DEATH ROW: Court Approves Pachulski Stang as Panel's Counsel
------------------------------------------------------------
The Honorable Ellen Carroll of the U.S. Bankruptcy Court for the
Central District of California authorized the Official Committee
of Unsecured Creditors of Death Row Records, Inc., to retain
Pachulski Stang Ziehl Young Jones & Weintraub, L.L.P, as its
bankruptcy counsel, nunc pro tunc to May 16, 2006.
Pachulski Stang will:
a) assist, advise and represent the Committee in its
consultations with the Debtor regarding the
administration of this case;
b) assist, advise and represent the Committee in analyzing
the Debtor's assets and liabilities, investigating the
extent and validity of liens and participating in
and reviewing any proposed asset sales, any asset
disposition, financing arrangements and cash collateral
stipulations or proceedings;
c) assist, advise and represent the Committee in any manner
relevant to reviewing and determining Debtor's rights and
obligations under leases and other executory contracts;
d) assist, advise and represent the Committee in connection
with any review of management, compensation issues,
analysis of retention or severance benefits, or other
management related issues;
e) assist, advise and represent the Committee in
investigating the acts, conduct, assets, liabilities
and financial condition of the Debtor, the operation of
the Debtor's business and the desirability of the
continuance of any portion of the business, and any
other matters relevant to this case or to the formulation
of a plan;
f) assist, advise and represent the Committee in its
participation in the negotiation, formulation and
drafting of a plan of liquidation or reorganization;
g) provide advice to the Committee on the issues concerning
the appointment of a trustee or examiner under Section
1104 of the Bankruptcy Code;
h) assist, advise and represent the Committee the
performance of all of its duties and powers under
Bankruptcy Code and the Bankruptcy Rules and in the
performance of such other services as are in the interest
of those represented by the Committee.
i) assist, advise an represent the Committee in the
evaluation of claims and on any litigation matters; and
j) advise the Committee on issues regarding conflicts of
interest.
Debra I. Grassgreen, Esq., a partner at Pachulski Stang, will bill
$495 per hour for this engagement. Ms. Grassgreen stated that J.
Rudy Freeman, Esq., will also be rendering services and bills at
$350 per hour.
The firm's other professionals bill:
Designations Hourly Rate
------------ -----------
Partners $375 - $675
Of-counsel $325 - $445
Associates $235 - $365
Paralegal $120 - $185
Ms. Grassgreen assured the Court that her firm does not hold any
interest adverse to the Debtor or its estate.
Headquartered in Compton, California, Death Row Records Inc. --
http://www.deathrowrecords.net/-- is an independent record
producer. The company and its owner, Marion Knight, Jr., filed
for chapter 11 protection on April 4, 2006 (Bankr. C.D. Calif.
Case No. 06-11205 and 06-11187). Daniel J. McCarthy, Esq., at
Hill, Farrer & Burrill, LLP, and Robert S. Altagen, Esq.,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
total assets of $1,500,000 and total debts of $119,794,000.
DELPHI CORP: BorgWarner Withdraws Request for Claims Liquidation
----------------------------------------------------------------
BorgWarner Turbo Systems, Inc., has withdrawn its motion asking
the U.S. Bankruptcy Court for the Southern District of New York
to lift the automatic stay to permit it to liquidate its
prepetition warranty claim against Delphi Corporation in the
proper non-bankruptcy forum.
BorgWarner designs, manufactures and distributes a wide variety
of parts and components to automotive and commercial vehicle
OEMs. Under certain prepetition purchase orders, BorgWarner
purchased components from the Debtors, which it incorporated into
its turbo chargers and actuator kits for sale to customers.
Seth A. Drucker, Esq., at Clark Hill PLC, in Detroit, Michigan,
related that BorgWarner incurred significant costs and damages
resulting from failures of the Turbos allegedly caused by Delphi's
parts.
To protect its right to set off the Warranty Claim against its
accounts payable to the Debtors, BorgWarner informed them that it
would administratively freeze its accounts payable to Delphi to
the extent necessary to protect its set-off and recoupment rights.
In November 2005, Delphi had completed the analysis of a
sufficient number of returned defective Turbos to determine their
warranty obligations and conclude negotiations with BorgWarner.
BorgWarner noted that negotiations with Delphi seemed to have
stalled and consequently raised the matter to the Bankruptcy
Court.
Based in Troy, Mich., Delphi Corporation -- http://www.delphi.com/
-- is the single largest global supplier of vehicle electronics,
transportation components, integrated systems and modules, and
other electronic technology. The Company's technology and
products are present in more than 75 million vehicles on the road
worldwide. The Company filed for chapter 11 protection on Oct. 8,
2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler
Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell
A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins
LLP, represents the Official Committee of Unsecured Creditors.
As of Aug. 31, 2005, the Debtors' balance sheet showed
$17,098,734,530 in total assets and $22,166,280,476 in total
debts. (Delphi Bankruptcy News, Issue No. 34; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
DELPHI CORP: Court OKs A.T. Kearney Cost Restructuring Plan
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approved an agreement between Delphi Corporation, its debtor-
affiliates and A.T. Kearney Inc. that provides for the
restructuring of various costs including the review and analysis
of certain executory contracts.
As part of their transformation through the Chapter 11 process,
the Debtors are reviewing a substantial portion of their executory
contracts covering the purchase of items required to sustain
operations, known as the "indirect spend."
Indirect spend includes items related to maintenance, repair, and
operation as well as support services that do not contribute
directly to revenue generating products or services.
A.T. Kearney suggests that the Debtors can significantly reduce
their total indirect spend in North America through strategic
sourcing, outsourcing, and demand management, combined with the
use, where appropriate, of the authority that can be granted under
Section 365 of the Bankruptcy Code to reject executory contracts
and unexpired leases.
Under A.T. Kearney's proposal, the Debtors are estimated to
achieve $30,000,000 to $60,000,000 in annual savings.
A.T. Kearney's Proposal is divided into two parallel phases --
Phase 1A and Phase 1B.
In Phase 1A, A.T. Kearney will immediately begin strategically
sourcing $700,000,000 of the Debtors' North American indirect
spend. This phase will cover certain categories with a high
potential for savings, specifically those categories:
-- with a large amount of spending, i.e., greater than
$10,000,000 per item of indirect spend;
-- which contain few sub-categories; and
-- with a high proportion of spending under contract.
Phase 1A is expected to last up to 24 weeks and will address
indirect spend across 12 categories.
Phase 1B will run concurrently with Phase 1A but is anticipated to
last only 12 weeks. In this phase, A.T. Kearney will identify
opportunities for savings with respect to contracts comprising
$2,300,000,000 in the Debtors' North American indirect spend.
A.T. Kearney will analyze, prioritize, and develop strategies for
these contracts.
The Debtors retain the right to direct A.T. Kearney as to which
categories, sub-categories, and contracts will be included in the
review under Phase 1B.
The contractual review process for Phase 1B will consist of two
primary activities:
(1) contract review and analysis; and
(2) functional workshops.
The Debtors and A.T. Kearney estimate that the execution of those
strategies in subsequent phases could realize annual savings of
$80,000,000 to $150,000,000 in addition to the Phase 1A savings,
and even more if the scope of those subsequent phases is expanded
to include global indirect spend.
To manage the indirect spend review, the Debtors and A.T. Kearney
will establish a program management office to be run by Delphi's
director of purchasing and A.T. Kearney's principal consultant on
the engagement. The program management office will report to an
executive steering committee, which will include Delphi's chief
financial officer, general director of purchasing, and general
counsel in addition to the two persons overseeing the program
management office.
The Executive Steering Committee will ensure that the project is
completed on time and that the necessary organizational support
is in place to enable successful implementation, Mr. Butler says.
Most importantly, Mr. Butler adds, the Executive Steering
Committee will be asked to approve the recommendations of the
project team and ensure organizational alignment behind these
recommendations.
The Debtors will pay A.T. Kearney:
(a) A $3,900,000 fixed fee, including expenses, due in six
monthly installments. The first five fee payments would
be $700,000. The sixth and final fee payment would be
$400,000.
(b) A $300,000 contingent fee if the project team recommends,
and the Executive Steering Committee approves,
recommendations totaling at least $30,000,000 in
annualized savings.
The Debtors will pay A.T. Kearney an additional $200,000
if the project team recommends, and the Executive Steering
Committee approves, recommendations totaling at least
$45,000,000 in annualized savings. Any contingent
payments earned would be due as part of the sixth and
final monthly invoice.
Based in Troy, Mich., Delphi Corporation -- http://www.delphi.com/
-- is the single largest global supplier of vehicle electronics,
transportation components, integrated systems and modules, and
other electronic technology. The Company's technology and
products are present in more than 75 million vehicles on the road
worldwide. The Company filed for chapter 11 protection on Oct. 8,
2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler
Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell
A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins
LLP, represents the Official Committee of Unsecured Creditors.
As of Aug. 31, 2005, the Debtors' balance sheet showed
$17,098,734,530 in total assets and $22,166,280,476 in total
debts. (Delphi Bankruptcy News, Issue No. 34; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
DENBURY RESOURCES: Earns $44.3 Million in 2006 Second Quarter
-------------------------------------------------------------
Denbury Resources Inc. reported $44.3 million of net income for
the second quarter ended June 30, 2006, compared with net income
of $40.7 million during the second quarter of 2005.
Net income for the first six months of 2006 was $88 compared with
$70.7 million of net income during the first six months of 2005.
The incremental net income during the first half of 2006 was
attributable principally to higher commodity prices and higher
production, partially offset by higher costs.
Production in the second quarter of 2006 was a Company record
37,474 BOE/d, a 23% increase over second quarter of 2005
production, and a 6% increase over the first quarter 2006 average
of 35,454 BOE/d.
Adjusted cash flow from operations for the second quarter of 2006
was $128.8 million, a 57% increase over second quarter of 2005
adjusted cash flow from operations of $82.0 million. Net cash
flow provided by operations, the GAAP measure, totaled
$106.4 million during the second quarter of 2006, as compared to
$88.4 million during the second quarter of 2005. The difference
between the adjusted cash flow and cash flow from operations is
due to the changes in receivables, accounts payables and accrued
liabilities during the quarter.
Oil and natural gas revenues, excluding any derivative contracts,
increased 51% between the respective second quarters as a result
of higher commodity prices and increased production. Cash
payments on derivative contracts were $2.2 million in the second
quarter of 2006, up slightly from the $1.8 million paid in the
second quarter of 2005 as only a small percentage of the Company's
total production was covered by derivative contracts in either
period. In addition to the cash payments, the Company expensed
$9.3 million of mark-to-market and other charges related to
derivative contracts in the second quarter of 2006, as compared to
a gain of $2.8 million on these contracts in the second quarter of
2005.
2006 Outlook
The Company reaffirms its production guidance for 2006 of 37,000
BOE/d which represents total growth of 24% over average 2005
production levels, with approximately 72% of that growth coming
from internal organic projects. However, since production from
the Company's tertiary operations has been a little behind its
original schedule, primarily due to injection delays at McComb
Field early in the year and overall industry delays in obtaining
goods and services, the Company is adjusting its 2006 tertiary
production guidance to a revised forecast of between 10,500 BOE/d
to 11,500 BOE/d.
Denbury's 2006 development and exploration budget is currently
approximately $550 million. Any acquisitions made by the Company
would be in addition to these capital budget amounts. Denbury's
total debt as of July 31, 2006 was approximately $445 million.
Gareth Roberts, Chief Executive Officer, said: "We are pleased
with our overall operational results this quarter and believe our
future continues to look bright. Overall production is still on
target thanks to strong growth in the Barnett Shale area and in
Louisiana. Production from our tertiary operations has been a
little behind our original production guidance, primarily due to
injection delays at McComb Field, but this has not affected
reserves at all, and we believe we have resolved this issue as
evidenced by production rates that are now responding to our
higher injection pressures.
"Operating expenses have increased on a per barrel basis,
primarily because of higher commodity prices, but also because we
are in the early injection stages of the three new East
Mississippi floods which will not be producing oil until late this
year. Despite these increases in cost, we have been able to
maintain an almost identical gross margin percentage this quarter
as compared to the second quarter of 2005.
"We continue to pursue the acquisition of additional potential
flood properties to further our extensive project inventory. Our
program is working in spite of overall industry cost pressure and
ever increasing delays in the procurement of goods and services."
A full-text copy of the Company's quarterly report is available
fir free at http://researcharchives.com/t/s?f5f
Denbury Resources, Inc. -- http://www.denbury.com/-- is a growing
independent oil and gas company. The Company is the largest oil
and natural gas operator in Mississippi, owns the largest reserves
of CO2 used for tertiary oil recovery east of the Mississippi
River, and holds key operating acreage in the onshore Louisiana
and Texas Barnett Shale areas. The Company increases the value of
acquired properties in its core areas through a combination of
exploitation drilling and proven engineering extraction practices.
* * *
Denbury Resources, Inc.'s 7-1/2% Senior Subordinated Notes due
2013 carry Moody's Investors Service's and Standard & Poor's
single-B rating.
DENNY'S CORP: June 30 Balance Sheet Upside-Down by $257.9 Million
-----------------------------------------------------------------
Denny's Corporation reported its financial results for the second
quarter ended June 28, 2006, to the Securities and Exchange
Commission on Aug. 4, 2006.
For the three months ended June 28, 2006, the Company earned
$1.8 million of net income on $243.5 million of net revenues,
compared with $2 million of net income on $246.6 million of net
revenues in 2005.
At June 28, 2006, the Company's balance sheet showed
$500.3 million in total assets and $758.2 million in total
liabilities, resulting in a $257.9 million stockholders' deficit.
The Company's June 28 balance sheet showed strained liquidity
with $65.7 million in total current assets available to pay
$133.9 million in total current liabilities coming due within the
next 12 months.
The Company disclosed that, it received amendments to its credit
agreements allowing for the sale of the 84 properties, including
two company locations, in its prospective pool of asset sales.
The net cash proceeds from the potential sale of the properties
will be applied to reduce outstanding indebtedness under its
credit facility.
The Company further disclosed that its initial sales efforts began
with the franchisees that operate the respective restaurant
properties. The first of the agreements closed in late June, with
an additional two properties sold in July for gross proceeds of
approximately $2.4 million. In addition to further sales directly
to franchisees, discussions have been held with various third
parties that have expressed an interest in purchasing a portion of
the properties and the associated lease income.
Mark Wolfinger, chief financial officer, stated, "Our focus on
strengthening our balance sheet and enhancing cash generation is
supported through targeted asset sales and strict allocation of
capital expenditures. The execution of our real estate sale plans
is underway, marked by the divestiture of 13 surplus and operating
properties through July for proceeds of approximately $14 million.
While we would like to complete this sale process promptly, there
are logistical challenges involved in negotiating with more than
30 separate franchisees or with third party due diligence on this
number of prospective tenants. Until we have definitive sale
agreements on the properties, we cannot predict with certainty the
timetable for completion. It is our hope that the majority of
these properties will be sold within the next twelve months."
A full-text copy of the Company's Quarterly Report is available
for free at http://researcharchives.com/t/s?f49
Headquartered in Spartanburg, South Carolina, Denny's Corporation
-- http://www.dennys.com/-- is America's largest full-service
family restaurant chain, consisting of 543 company-owned units and
1,035 franchised and licensed units, with operations in the United
States, Canada, Costa Rica, Guam, Mexico, New Zealand and Puerto
Rico.
DOE RUN: 2nd Quarter Stockholders' Deficit Narrows to $112 Million
------------------------------------------------------------------
The Doe Run Resources Corporation filed its second fiscal quarter
ended April 30, 2006, with the Securities and Exchange Commission
on Aug. 7, 2006.
Financials
The Company reported $46,550,000 of net income on $380,221,000 of
net sales for the second fiscal quarter ended April 30, 2006,
compared with $5,875,000 of net income on $247,716,000 of net
sales for the same period in 2005.
At April 30, 2006, the Company's balance sheet showed $626,093,000
in total assets and $708,006,000 in total liabilities, resulting
in a $112,189,000 shareholders' deficit, as compared to higher
shareholders' deficit of $167,905,000 at April 30, 2005.
The Company's April 30, 2006 balance sheet also showed strained
liquidity with $354,745,000 in total current assets available to
pay $378,490,000 in total current liabilities coming due within
the next 12 months.
The Company is highly leveraged and has significant commitments
both in the U.S. and Peru for environmental matters and for
Environmental Remediation and Management Program expenditures,
including the financial guarantee, that require it to dedicate a
substantial portion of cash flow from operations to the payment of
these obligations, which will reduce funds available for other
business purposes.
These factors also increase the Company's vulnerability to general
adverse conditions, limit the Company's flexibility in planning
for, or reacting to, changes in its business and industry, and
limit the Company's ability to obtain financing required to fund
working capital and capital expenditures and for other general
corporate purposes.
An unfavorable outcome to certain contingencies, would have a
further adverse effect on the Company's ability to meet its
obligations when due. The Company's ability to meet its
obligations is also dependent upon future operating performance
and financial results, which are subject to financial, economic,
political, competitive and other factors affecting Doe Run, many
of which are beyond the Company's control.
Doe Run Peru Going Concern Doubt
Doe Run Peru has significant capital requirements under
environmental commitments and guarantees and substantial
contingencies related to taxes and has significant debt service
obligations under the revolving credit facility, each of which, if
not satisfied, could result in a default under Doe Run Peru's
credit agreement and collectively raise substantial doubt about
Doe Run Peru's ability to continue as a going concern.
Management believes that the price improvements seen through
fiscal year 2005 and in the first two quarters of fiscal year
2006, the potential revenues and cash flow enhancements from the
new ferrite project and the approval obtained on May 29, 2006, to
extend certain Environmental Remediation and Management Program
projects, will enable Doe Run Peru to continue as a going concern.
However, there can be no assurance that these actions will achieve
the desired results.
Doe Run Peru continues to have substantial cash requirements in
the future, including the maturity of the revolving credit
facility on Sept. 22, 2006, and significant capital requirements
under environmental commitments. In addition, there are
substantial contingencies related to taxes.
Net unused availability at April 30, 2006, under the Doe Run Peru
Revolving Credit Facility was approximately $200. In addition to
the availability under its revolving credit facility, the cash
balance of Doe Run Peru was $22,840 at April 30, 2006. Doe Run
Peru has reached and maintained its maximum borrowing level under
the Doe Run Peru Revolving Credit Facility due in part to the
higher metal prices resulting in higher outlays for concentrate
purchases and higher Value-Added Tax payments funded by cash from
operations.
The Doe Run Peru Revolving Credit Facility expires on Sept. 22,
2006, and will require negotiations to extend its terms. There
can be no assurance that Doe Run Peru will be successful in
extending the existing credit agreement or negotiating a new
agreement, or if it is successful, that the extended or new credit
agreement would be at terms that are favorable to Doe Run Peru.
Any default under the requirements of the Environmental
Remediation and Management Program could result in a default under
the Doe Run Peru Revolving Credit Facility. A default under the
requirements of the Doe Run Peru Revolving Credit Facility results
in defaults under the Doe Run Revolving Credit Facility and the
indenture governing the bonds.
Recent Events
On May 29, 2006, the Peruvian Ministry of Energy and Mines
approved the extension of certain Environmental Remediation and
Management Program (PAMA) projects through Oct. 31, 2009.
Pursuant to the terms of the Modified PAMA, Doe Run Peru is now
required to complete the acid plant projects for the lead circuit
and the copper circuit by Sept. 30, 2008, and Oct. 31, 2009,
respectively and Doe Run Peru remains obligated under the original
PAMA to implement nine projects at its La Oroya smelter by
Dec. 31, 2006:
-- Upgrade the acid plant for the zinc circuit;
-- Construct a treatment plant for the copper refinery
effluent;
-- Construct an industrial wastewater treatment plant for the
smelter and refinery;
-- Improve the slag handling system;
-- Improve Huanchan lead and copper slag deposits;
-- Construct an arsenic trioxide deposit;
-- Improve the zinc ferrite disposal site;
-- Construct domestic wastewater treatment and domestic waste
disposal; and
-- Construct a monitoring station.
The Modified PAMA also requires Doe Run Peru to comply with
certain special measures not previously required. These measures
include, but are not limited to:
-- implementation of projects to reduce stack and fugitive
emissions, which are designed to meet certain air quality
objectives, and
-- a continuing improvement provision that provides for
additional pollution controls to address the shortfalls in
meeting objectives or to further reduce risks and certain
measures regarding protection of public health, including,
among others:
* actions for the reduction of lead in blood levels, and
* special health programs for children and expectant women.
The Ministry of Energy and Mines has also required that the cost
of a planned replacement of the oxy-fuel reverberatory furnace
with a submerged lanced reactor furnace that will reduce gas
volume while enriching sulfurous gas feed to the copper circuit
sulfuric acid plant be included as part of the cost of the
Modified PAMA acid plant projects. The estimated cost of this
reactor furnace is $57,000, which brings the total remaining
investment needed to build the sulfuric acid plants to
approximately $152,590.
Additional PAMA projects required for fiscal year 2006 include an
upgrade of the ventilation system in the Sinter plant, completion
of the enclosure work around the lead and dross furnace, the
enclosure of the anode residue plant along with the elimination of
its nitrous gases, and the reduction of fugitive emissions from
the copper and lead beds. The total cost of the currently
remaining Modified PAMA projects as of April 30, 2006, was
approximately $175,000 of which $31,500 remains to be spent in the
2006 calendar year.
Doe Run Peru's ability to complete the required projects by the
specific deadlines depends in large part upon the availability of
sufficient funds. Doe Run Peru believes that sufficient funds
will be available on a timely basis, but the availability of
sufficient funds is largely dependent upon the results of its
business operations and the possibility of additional financing;
therefore, there can be no assurance that sufficient funds will be
available for these projects.
Doe Run Peru had obtained a ten-year tax stabilization agreement
with the Peruvian government, which provides for Peruvian taxation
based on tax statutes and regulations prevailing on Nov. 6, 1997,
beginning with the Peruvian tax year ending on Dec. 31, 1997,
through Dec. 31, 2006. On Dec. 30, 1997, Doe Run Peru signed a
Contract of Guarantees and Measures to Promote Investments with
the government of Peru. This contract, which has been modified
various times through 2006, committed Doe Run Peru to making
certain investments related to the improvements of its facilities
in order to receive certain tax benefits. This contract provided
that if the investments were completed according to the schedule
by Dec. 31, 2006, Doe Run Peru would receive an additional tax
stability agreement covering the period beginning Jan. 1, 2007,
and ending Dec. 31, 2021. Doe Run Peru will be unable to complete
the required investments and as a result Doe Run Peru will not
receive the benefits of the additional tax stabilization agreement
through 2021.
Doe Run received a notice from the U.S Environmental Protection
Agency of a potential unilateral order concerning transportation
matters under the Resource Conservation and Recovery Act of 1976,
section 7003 on July 5, 2006. It included an offer to negotiate
the terms to a voluntary agreement. The Company is evaluating the
issues presented in the letter and has arranged to meet with the
agency to explore the matter. It is too early to understand any
impact such an agreement will have.
On June 19, 2006, Doe Run Peru, the Ministry of Health and the
Regional Government of Junin signed a cooperation agreement for
the implementation of the plan to reduce contamination at La
Oroya. This agreement is an extension of a previous one signed
between Doe Run Peru and the Ministry of Health in 2003.
In the agreement Doe Run Peru commits to support the Ministry of
Health's environmental health clinic, supplemental educational
program, family environmental health training, and community
cleaning programs. Doe Run Peru will continue to make certain
building space and equipment available and provide specified
professional and support personnel.
On July 31, 2006, the majority warrant holders exercised their
right to require Doe Run to repurchase all of the warrants as
promptly as practicable in the manner specified by the Warrant
Agreement dated Oct. 29, 2002, between Doe Run and State Street
Bank and Trust, as Warrant Agent. Doe Run is in the process of
engaging an appraiser to value the warrants.
Full-text copies of the Company's second quarter financials are
available for free at http://ResearchArchives.com/t/s?f3a
About The Doe Run Resources Corp.
The Doe Run Resources Corporation is one of the world's providers
of premium lead and associated metals and services. The Company
is the largest integrated lead producer in North America and the
largest primary lead producer in the western world.
Doe Run operates an integrated primary lead operation and a
recycling operation located in Missouri, referred to as Buick
Resource Recycling.
Fabricated Products, Inc., a wholly owned subsidiary of Doe Run,
operates a lead fabrication operation located in Arizona and a
lead oxide business located in Washington.
Doe Run Peru S.R.L., an indirect Peruvian subsidiary, operates a
smelter in La Oroya, Peru, one of the largest polymetallic
processing facilities in the world, producing an extensive product
mix of non-ferrous and precious metals, including silver, copper,
zinc, lead and gold. Doe Run Peru also has a copper mining and
milling operation in Cobriza, Peru in the region of Huancavelica,
which is approximately 200 miles southeast of La Oroya in Peru.
DOLE FOOD: Poor Performance Prompts S&P's Negative Watch
--------------------------------------------------------
Standard & Poor's Ratings Services placed its corporate credit and
other ratings on Westlake Village, California-based Dole Food Co.
Inc. (B+/Watch Neg/B-2) on CreditWatch with negative implications,
meaning that the ratings could be lowered or affirmed following
the completion of S&P's review. Total debt outstanding at the
company was about $2.3 billion as of June 17, 2006.
"The CreditWatch placement follows materially weaker-than-expected
financial performance in the first half of 2006, which typically
represents a substantial portion of Dole's cash flow," said
Standard & Poor's credit analyst Alison Sullivan.
Performance was hurt by higher production, shipping, and
distribution costs. Given expected ongoing challenging industry
conditions, Standard & Poor's believes that Dole will be
challenged to meet prior expectations of leverage and EBITDA
interest coverage.
S&P will review Dole's operating and financial plans with
management before resolving the CreditWatch listing.
EASTMAN KODAK: Moody's Reviews Low-Ratings and May Downgrade
------------------------------------------------------------
Moody's Investors Service comments that its review for possible
downgrade for the Eastman Kodak Company continues to focus on the
company's potential sale of the Kodak Health Group as well as the
fundamental operating performance of the company.
In Moody's view, the company's overall operating results for the
June 2006 quarter reflected pre-restructuring charge operating
profit which was weaker than Moody's anticipated, negatively
impacted by weak performance in its Consumer Digital Group, yet
supported by encouraging results in its consumer Film Products
Group and commercial Graphic Communications Group.
Moody's notes that FPG, whose business is supported by motion
picture film sales, GCG, CDG, and a new technologies division
are the businesses the company expects to retain subsequent to
its potential sale of KHG. The review for possible downgrade
continues to focus on any potential KHG sale consummation
and any application of proceeds from a KHG sale toward debt
reduction, the company's management of recurring restructuring
costs associated with its business as it continues to transition
from film to digital, and its attainment of at least $300 million
in digital earnings in 2006. Moody's notes that the ratings could
be downgraded if the company's prospects for digital earnings
remain muted upon the release of September 2006 quarterly
earnings.
Ratings on Review for Possible Downgrade:
* Corporate Family Rating B1
* Senior Unsecured Rating B2
* Senior Secured Credit Facilities Ba3
Headquartered in Rochester, New York, the Eastman Kodak Company is
a worldwide provider of imaging products and services.
ENESCO GROUP: Continues to Seek Long-Term Debt Financing
--------------------------------------------------------
Enesco Group, Inc. is continuing to aggressively pursue
long-term debt financing. Enesco previously had agreed to
obtain a commitment for long-term financing by Aug. 7, 2006.
Because Enesco has not obtained a commitment, the Company is in
default of its current credit facility agreement.
The Company is working with the lenders for possible additional
loans or terms and conditions, but has been advised that the
lenders are not committing to waive the default.
As reported on the Troubled Company Reporter on Aug. 4, 2006,
On May 17, 2005, the Company terminated its license agreement with
Precious Moments, Inc., to sell Precious Moments(R) products in
the U.S. On July 1, 2005, the Company we began operating under an
agreement with PMI where Enesco provided PMI transitional services
related to its licensed inventory through Dec. 31, 2005. In
conjunction with the PMI agreement, in June 2005 the Company
incurred a loss of $7.7 million equal to the cost of inventory
transferred to PMI. The Company has not recorded any revenues for
transition services in 2006, as PMI has exercised its option to
perform the services in-house beginning Jan. 1, 2006.
During the transition period, Enesco maintained inventories of PMI
products on a consignment basis and processed sales orders on
PMI's behalf. Enesco recorded the gross sale and cost of sale of
PMI products and, additionally, recorded a charge to cost of sales
for the sale amounts to be remitted to PMI, net of the amounts due
from PMI for inventory purchases. Enesco also earned sales
commissions and service fees from PMI for product fulfillment,
selling and marketing costs. In the three months ended June 30,
2006, Enesco and PMI reconciled the amounts owed to each other
and, as a result, the Company recorded an additional charge of
$355,000 to cost of sales to properly reflect amounts due to PMI.
At June 30, 2006, the net amount owed PMI was $1 million, payable
in three equal installments in July, August and September.
Enesco Group, Inc. --- http://www.enesco.com/-- is a world leader
in the giftware, and home and garden decor industries. Serving
more than 44,000 customers worldwide, Enesco distributes products
to a wide variety of specialty card and gift retailers, home decor
boutiques, as well as mass-market chains and direct mail
retailers. Internationally, Enesco serves markets operating in
the United Kingdom, Canada, Europe, Mexico, Australia and Asia.
With subsidiaries located in Europe and Canada, and a business
unit in Hong Kong, Enesco's international distribution network is
a leader in the industry. Enesco's product lines include some of
the world's most recognizable brands, including Border Fine Arts,
Bratz, Circle of Love, Foundations, Halcyon Days, Jim Shore
Designs, Lilliput Lane, Pooh & Friends, Walt Disney Classics
Collection, and Walt Disney Company, among others.
ENTERGY NEW ORLEANS: IRS Files $2.5 Billion Tax Claim
-----------------------------------------------------
The U.S. Internal Revenue Service filed three proofs of claim in
Entergy New Orleans, Inc.'s bankruptcy case:
(1) Claim No. 88 for Federal Insurance Contributions Act and
withholding taxes, in the amount of $5,292;
(2) Claim No. 172, which was replaced by Claim No. 176; and
(3) Claim No. 176, which asserts both general unsecured
claims for $348,024,300 and unsecured priority tax claims
for $2,174,811,897.
The General Unsecured Claims asserted in Claim No. 176 arise out
of "corp-inc." taxes for the years 1997 through 2000, with each
year being an "estimated liability" based on "an examination
determination . . . being made at this time," including these:
Principal Interest to
Tax Period Amount the Petition Date
---------- --------- -----------------
12/31/1997 $97,373,742 $63,229,960
12/31/1998 63,082,786 33,117,149
12/31/1999 48,703,221 19,876,625
12/31/2000 17,577,556 5,057,968
The General Unsecured Claims also include "penalties" to the
Petition Date of $5,297.
The Unsecured Priority Tax Claims asserted in Claim No. 176 arise
out of these estimated corp-inc." taxes:
Principal Interest to
Tax Period Amount the Petition Date
---------- --------- -----------------
12/31/2002 $959,975,933 $126,288,901
12/31/2003 515,225,021 41,828,720
12/31/2004 515,225,021 $41,828,720
Elizabeth J. Futrell, Esq., at Jones, Walker, Waechter,
Poitevent, Carrere & Denegre LLP, in New Orleans, Louisiana,
asserts that Claim No. 88 should be disallowed and expunged
because ENOI does not owe any withholding or FICA tax, as
indicated by IRS Claim Nos. 172 and 175.
Ms. Futrell adds that Claim No. 172 should be disallowed and
expunged because it is replaced, as opposed to amended, by Claim
No. 176.
Moreover, according to Ms. Futrell, pursuant to Section 502(d) of
the Bankruptcy Code, Claim No. 176 should be estimated at zero,
because both the General Unsecured Claims and the Priority Tax
Claims asserted therein are unliquidated and liquidation would
unduly delay the administration of the bankruptcy case.
Pursuant to an Entergy Corporation and Subsidiary Companies
Intercompany Income Tax Allocation Agreement, dated April 28,
1988, as amended, the Debtor is one of many members of a federal
income tax consolidated group, Ms. Futrell notes.
The General Unsecured Claims and Priority Tax Claims asserted in
Claim No. 176 arise out of potential tax liability of the Entergy
Consolidated Tax Group. For this reason, Claim No. 176 exceeds
$2,500,000,000, Ms. Futrell relates.
Not only do the General Unsecured Claims in Claim No. 176
represent a tax liability of the entire Entergy Consolidated Tax
Group, the General Unsecured Claims also arise out of "estimated"
tax liabilities. "On information and belief, the IRS cannot
determine when, if ever, the estimated liability will be
liquidated," Ms. Futrell says.
Similarly, not only do the Priority Tax Claims asserted in IRS
Claim No. 176 represent a tax liability of the entire Entergy
Consolidated Tax Group, but those Priority Tax Claims arise out of
"estimated" tax liabilities or "unassessed" tax liabilities,
Ms. Futrell points out.
In addition, according to Ms. Futrell, Claim No. 176 fails to
disclose the basis of the estimated taxes, and appears to be
wholly arbitrary and excessive.
Determining the tax liability of the Entergy Consolidated Tax
Group will a lengthy process, including administrative appeal
rights and possible litigation, Ms. Futrell avers. Based upon
past experience, the entire process could take years to conclude.
ENOI asks the Court to enter an order:
(a) disallowing and expunging Claim Nos. 88 and 172; and
(b) either:
(i) estimating Claim No. 176 at zero for the purposes
of voting, feasibility of the Debtor's plan of
reorganization, and distributions under the plan,
or
(ii) providing that, as long as the IRS Claims are
disputed claims, excusing the Debtor from any and
all obligations to reserve any property for
distribution to the IRS under the plan.
Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc.
-- http://www.entergy-neworleans.com/-- is a wholly owned
subsidiary of Entergy Corporation. Entergy New Orleans provides
electric and natural gas service to approximately 190,000 electric
and 147,000 gas customers within the city of New Orleans. Entergy
New Orleans is the smallest of Entergy Corporation's five utility
companies and represents about 7% of the consolidated revenues and
3% of its consolidated earnings in 2004. Neither Entergy
Corporation nor any of Entergy's other utility and non-utility
subsidiaries were included in Entergy New Orleans' bankruptcy
filing. Entergy New Orleans filed for chapter 11 protection on
Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J.
Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker,
Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the
Debtor in its restructuring efforts. Carey L. Menasco, Esq.,
Philip Kirkpatrick Jones, Jr., Esq., and Joseph P. Hebert, Esq.,
at Liskow & Lewis, APLC, represent the Official Committee of
Unsecured Creditors. When the Debtor filed for protection from
its creditors, it listed total assets of $703,197,000 and total
debts of $610,421,000. (Entergy New Orleans Bankruptcy News,
Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ENTERGY NEW: Wants DIP Maturity Date Extended to Aug. 23, 2007
--------------------------------------------------------------
Pursuant to their $200,000,000 DIP Financing Agreement, Entergy
New Orleans, Inc., is required to repay Entergy Corporation all
loans together with any accrued and unpaid interest on the
principal being repaid by the Aug. 23, 2006, maturity date.
As of June 30, 2006, ENOI owes Entergy Corp. $39,748,803 under the
DIP Agreement, relates R. Patrick Vance, Esq., at Jones, Walker,
Waechter, Poitevent, Carrere & Denegre, LLP, in New Orleans,
Louisiana.
ENOI asks the U.S. Bankruptcy Court for the Eastern District of
Louisiana for authority to extend the maturity date of the DIP
Financing Agreement to August 23, 2007, without any changes to the
other terms of the Final DIP Order, the DIP Agreement and the
Promissory Note.
ENOI has reached an agreement with Entergy Corp. to extend the
terms of the DIP Agreement through Aug. 23, 2007.
Mr. Vance explains that Hurricane Katrina left substantial
portions of ENOI's facilities destroyed and the limited return to
New Orleans by residents and businesses have negatively impacted
ENOI's revenue stream.
Notwithstanding the continued disruption to its operations and
revenue stream, ENOI still needs to make cash payments for
recurring obligations under fuel and purchase power contracts.
The extension of the DIP Agreement's maturity date is necessary to
permit ENOI to continue its business operations and business
relationships with its vendors and suppliers, make payroll and
capital expenditures, and satisfy other working capital and
operational needs, Mr. Vance says.
It would be detrimental to the estate if ENOI were required to
repay the outstanding balance due on the DIP Agreement on
August 23, 2006. Also, without the continued access to the DIP
Agreement, the Debtor could be compelled to curtail some or all of
its business operations. This scenario would be detrimental to
the Debtor's creditors, customers, employees and other parties-in-
interest, Mr. Vance avers.
Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc.
-- http://www.entergy-neworleans.com/-- is a wholly owned
subsidiary of Entergy Corporation. Entergy New Orleans provides
electric and natural gas service to approximately 190,000 electric
and 147,000 gas customers within the city of New Orleans. Entergy
New Orleans is the smallest of Entergy Corporation's five utility
companies and represents about 7% of the consolidated revenues and
3% of its consolidated earnings in 2004. Neither Entergy
Corporation nor any of Entergy's other utility and non-utility
subsidiaries were included in Entergy New Orleans' bankruptcy
filing. Entergy New Orleans filed for chapter 11 protection on
Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J.
Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker,
Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the
Debtor in its restructuring efforts. Carey L. Menasco, Esq.,
Philip Kirkpatrick Jones, Jr., Esq., and Joseph P. Hebert, Esq.,
at Liskow & Lewis, APLC, represent the Official Committee of
Unsecured Creditors. When the Debtor filed for protection from
its creditors, it listed total assets of $703,197,000 and total
debts of $610,421,000. (Entergy New Orleans Bankruptcy News,
Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000)
EVERGREEN INTERNATIONAL: S&P Lifts Rating on Credit Facility to B+
------------------------------------------------------------------
Standard & Poor's Ratings Services raised its rating on Evergreen
International Aviation Inc.'s first-lien bank loan rating to 'B+'
from 'B' and changed the recovery rating to '1' from '2'. The
rating action reflects a change in the structure of the proposed
credit facility.
The first-lien term loan facility is being reduced to $250 million
from $300 million and the second-lien term loan facility is being
increased to $100 million from $50 million. The credit facility
will now consist of a:
* $50 million first-lien revolving credit facility maturing in
2011,
* $250 million first-lien term loan facility maturing in 2011,
and
* $100 million second-lien credit facility maturing in 2013.
"The rating actions reflect the improved recovery prospects for
lenders under the first-lien credit facility," said Standard &
Poor's credit analyst Lisa Jenkins. "With the change in the
structure of the facility, Standard & Poor's now believes that
first-lien lenders have a high expectation of full recovery of
principal."
The rating actions reflect the improved recovery prospects for
lenders under the first-lien credit facility. With the change in
the structure of the facility, Standard & Poor's now believes that
first-lien lenders have a high expectation of full recovery of
principal.
The existing ratings on Evergreen, including the 'B-' corporate
credit and 'CCC+' senior secured debt ratings, remain on
CreditWatch with positive implications where they were placed
July 21, 2006. Once Evergreen completes its proposed refinancing,
the corporate credit rating will be raised to 'B' from 'B-' and
removed from CreditWatch. The outlook will be stable. The rating
on the senior secured notes will be withdrawn at that time. The
anticipated upgrade of the corporate credit rating and the new
bank ratings, which already incorporate the anticipated upgrade,
reflect the favorable near-term operating outlook for the company
and its improved liquidity position.
Ratings List
Rating Still On CreditWatch Positive
Evergreen International Aviation Inc.
Corporate credit rating B-/Watch Pos/--
Senior secured debt ratings CCC+/Watch Pos
Ratings Raised
To From
Evergreen International Aviation Inc.
First-lien bank loan rating B+ B
Recovery rating 1 2
EXIDE TECHNOLOGIES: Posts $38 Mil. Net Loss in FY 2007 1st Quarter
------------------------------------------------------------------
For fiscal 2007 first quarter ended June 30, 2006, Exide
Technologies reported a $37.9 million net loss, compared with a
net loss of $35.7 million for the 2006 first quarter.
The increase in net loss, according to Exide, is primarily
attributable to an increase in restructuring charges of
approximately $6 million driven principally by the April 2006
closing of the Company's automotive battery plant in Shreveport,
Louisiana, and to a $6.2 million increase in interest expense
resulting from higher debt and higher rates principally as a
result of amendments to the Company's credit agreement at the end
of the last fiscal year. These were offset, to a degree, by
improved margins.
Consolidated net sales for the 2007 first quarter were
$683.2 million versus $669.3 million for first quarter 2006.
A slight drop in sales volume, primarily in the Transportation
segments during the quarter was offset by pricing improvements
that have been phased in throughout all segments over the past
fiscal year.
Combined adjusted EBITDA in the first quarter of fiscal 2007
was $27.2 million, which includes $3 million of expenses for
professional fees relating to the now withdrawn potential sale of
the Company's Industrial Energy Europe and Rest of World business
segment, still a 43 percent increase from $19 million in the
first quarter of fiscal year 2006. All business segments
contributed to the over all increase.
Commenting on the results, Gordon A. Ulsh, Exide's president and
chief executive officer, said, although Exide continued to show
improvement in the first quarter of fiscal 2007, the Company still
has much work to do.
"We are now beginning to realize some tangible benefits from the
actions that we took during the past year. Although our pricing
adjustments have caused a slight reduction in sales volume, the
net effect is an overall increase in year-over-year revenue, gross
profit, gross margin and adjusted EBITDA," Mr. Ulsh added.
"Additionally, increases in the cost of lead have been offset by
our more favorable pricing structure. We are also seeing a
leveling off and greater stability of lead prices as we continue
to pursue more cost effective lead procurement methods including
continued emphasis on securing spent batteries from our customers
as well as from targeted long-term contracts with core brokers."
"First quarter 2007 also marked the first period in which we
allocated certain corporate expenses of an operational nature to
the individual business segments that incurred them. This
provides us with a more accurate picture of segment adjusted
EBITDA," Mr. Ulsh stated. "We are encouraged by our 2007 first
quarter results but recognize that much remains to be done as we
strive to achieve our full year objectives."
Exide Technologies and Subsidiaries
Consolidated Balance Sheet
As of June 30, 2006
(in thousands)
ASSETS
Current Assets
Cash and cash equivalents $37,029
Restricted cash 629
Accounts receivable 589,628
Inventories 437,663
Prepaid Expenses and Other 26,503
Deferred financing costs, net 3,248
Deferred income taxes 11,341
----------
Total Current Assets 1,106,041
----------
Property, Plant, and Equipment, Net 684,717
Other Assets
Intangible assets, net 191,322
Investment in affiliates 4,863
Deferred financing costs, net 14,716
Deferred income taxes 58,974
Other assets, net 23,100
----------
292,975
----------
Total Assets $2,083,733
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings $11,794
Current maturities of long-term debt 5,209
Accounts payable 353,374
Accrued expenses 294,689
Warrants liability 1,250
----------
Total current liabilities 666,316
----------
Long-term debt 701,827
Non-current retirement obligations 342,355
Deferred income tax liability 34,398
Other non-current liabilities 116,412
----------
Total liabilities 1,861,308
----------
Commitments and Contingencies -
Minority Interest 13,413
Stockholders' equity:
Preferred Stock -
Common stock, par value $.01 245
Additional paid-in-capital 889,048
Accumulated deficit (677,551)
Accumulated other comprehensive (loss) income (2,730)
----------
Total Stockholders' equity 209,012
----------
Total Liabilities and Stockholders' equity $2,083,733
==========
Exide Technologies and Subsidiaries
Statement of Consolidated Operations
Three Months Ended June 30, 2006
(in thousands)
Net Sales $683,190
Cost of sales 573,511
----------
Gross profit 109,679
----------
Expenses
Selling, marketing and advertising 68,506
General and administrative 45,994
Restructuring and impairment 8,884
Other expense (income), net (3,492)
Interest expense, net 22,287
----------
142,179
----------
Income (loss) before reorganization items,
income tax, minority interest (32,500)
Reorganization items, net 1,607
Income tax provision 3,578
Minority interest 211
----------
Net income (loss) ($37,896)
==========
Exide Technologies and Subsidiaries
Statement of Consolidated Cash Flows
Three Months Ended June 30, 2006
(in thousands)
Cash Flows From Operating Activities:
Net income (loss) ($37,896)
Adjustments to reconcile net income (loss) to net
cash provide by (used in) operating activities:
Depreciation and amortization 30,464
Unrealized gain on Warrants (813)
Net loss (gain) on asset sales 2,804
Provision for doubtful accounts 1,956
Deferred income taxes (591)
Non-cash provision for restructuring 1,207
Reorganization items, net 1,607
Minority interest 211
Amortization of deferred financing costs 814
Changes in Assets and Liabilities
Receivables 47,526
Inventories (9,388)
Prepaid expenses and other 4,643
Payables (19,520)
Accrued expenses (15,245)
Non-current liabilities (3,318)
Other, net (3,827)
----------
Net cash provided by operating activities 634
Cash Flows From Investing Activities:
Capital expenditures (7,967)
Proceeds from sales of assets 97
----------
Net cash used in investing activities (7,870)
Cash Flows From Financing Activities:
Increase in short-term borrowings 9
Borrowings under Credit Facility 152
Currency Swap -
Increase (decrease) in other debt 11,005
Financing costs and other 4
----------
Net cash provided by financing activities 11,170
Effect of exchange rate changes on cash 934
----------
Net increase (decrease) in cash 4,868
Cash and cash equivalents, beginning of period 32,161
----------
Cash and cash equivalents, end of period $37,029
==========
A full-text copy of Exide's quarterly report for the Quarter
ending June 30, 2006, filed with the Securities and Exchange
Commission is available for free at:
http://researcharchives.com/t/s?f52
Headquartered in Princeton, New Jersey, Exide Technologies
(NASDAQ: XIDE) -- http://www.exide.com/-- manufactures and
distributes lead acid batteries and other related electrical
energy storage products. The Company filed for chapter 11
protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125).
Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland &
Ellis, represented the Debtors in their successful restructuring.
Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On
April 14, 2002, the Debtors listed $2,073,238,000 in assets and
$2,524,448,000 in debts. (Exide Bankruptcy News, Issue No. 89;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
EXIDE TECHNOLOGIES: Wants Until January 15 to Object to Claims
--------------------------------------------------------------
Exide Technologies and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to further
extend the period within which they can object to claims
until Jan. 15, 2007, without prejudice to their rights to seek
additional extensions.
Sandra G.M. Selzer, Esq., at Pachulski, Stang, Ziehl, Young,
Jones & Weintraub, P.C., in Wilmington, Delaware, informs the
Court that more than 6,000 proofs of claim have been filed in the
Debtors' Chapter 11 cases totaling $4,400,000,000. To date, the
Reorganized Debtors have filed 31 omnibus claims objections and
two individual objections to claims, and have consensually
resolved numerous other claims.
In addition, the Reorganized Debtors, the Postconfirmation
Creditors Committee, and each of their professionals have:
(i) reviewed, reconciled and resolved about 5,150 claims,
reducing the total amount of outstanding claims by more
than $2,600,000; and
(ii) completed nine quarterly distributions to creditors under
the confirmed Plan of Reorganization, consisting of
distributions on 2,200 claims totaling $1,800,000.
However, Ms. Selzer notes that despite the substantial progress,
the Reorganized Debtors need more time to review and resolve the
remaining 750 Filed Claims and 400 Scheduled Claims.
Ms. Selzer explains that the extension will allow the Reorganized
Debtors and the Postconfirmation Creditors Committee more time to
continue evaluating the claims filed against the estate, prepare
and file additional objections, and consensually resolve the
claims.
The Reorganized Debtors assure the Court that they have consulted
with the Postconfirmation Creditors Committee regarding their
request, and the Committee supports the extension.
Headquartered in Princeton, New Jersey, Exide Technologies
(NASDAQ: XIDE) -- http://www.exide.com/-- manufactures and
distributes lead acid batteries and other related electrical
energy storage products. The Company filed for chapter 11
protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125).
Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland &
Ellis, represented the Debtors in their successful restructuring.
Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On
April 14, 2002, the Debtors listed $2,073,238,000 in assets and
$2,524,448,000 in debts. (Exide Bankruptcy News, Issue No. 89;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
FALCONBRIDGE LTD: Extends Novicourt Shares Tender to August 22
--------------------------------------------------------------
Following the expiry, on Aug. 9, 2006, of Falconbridge Limited's
offer dated June 26, 2006, to purchase all of the outstanding
common shares of its subsidiary Novicourt Inc. that Falconbridge
does not already own, all of the conditions set out in the Offer
had been met. A total of 5,068,720 Novicourt Shares, representing
approximately 66.5% of all Novicourt Shares that were not already
owned by Falconbridge, were tendered to the Offer. Accordingly,
Falconbridge has taken up and intends to pay for all Novicourt
Shares deposited under the Offer on Aug. 14, 2006.
Falconbridge granted additional time to Novicourt shareholders who
have not yet tendered their Novicourt Shares, by extending its
offer to 6:00 p.m. (Toronto time) on Aug. 22, 2006. Falconbridge
intends to acquire all outstanding Novicourt Shares not tendered
by that date pursuant to rights of compulsory acquisition, if
available, or pursuant to a subsequent acquisition transaction,
with the result that Novicourt will become a wholly owned
subsidiary of Falconbridge.
Headquartered in Toronto, Ontario, Falconbridge Limited
(TSX:FAL.LV)(NYSE: FAL) -- http://www.falconbridge.com/-- is a
leading copper and nickel company with investments in fully
integrated zinc and aluminum assets. Its primary focus is the
identification and development of world-class copper and nickel
orebodies. It employs 14,500 people at its operations and
offices in 18 countries. The Company owns nickel mines in
Canada and the Dominican Republic and operates a refinery and
sulfuric acid plant in Norway. It is also a major producer of
copper (38% of sales) through its Kidd mine in Canada and its
stake in Chile's Collahuasi mine and Lomas Bayas mine. Its
other products include cobalt, platinum group metals, and zinc.
* * *
As reported in the Troubled Company Reporter on Aug. 4, 2006,
Standard & Poor's Ratings Services revised the CreditWatch
implications on Inco Ltd. and Falconbridge Ltd. to positive from
developing, where they were placed July 18, 2006. This action
stems from the lower probability under all current takeover
scenarios that ratings will be lowered into the speculative-grade
category.
The ratings on Falconbridge will likely be raised or affirmed at
'BBB-', assuming that Xstrata PLC (parent of Xstrata Queensland
Ltd. (BBB+/Watch Neg/--)) is successful in acquiring Falconbridge
on Aug. 14, 2006, which now appears highly probable after Inco
dropped its bid last week.
Falconbridge Ltd.'s CDN$0.9 Million Cumulative Preffered Shares
Series 1, CDN$119.7 Million Cumulative Preferred Shares Series 2,
and CDN$150 Million Preferred Shares Series H, all carry Standar &
Poor's BB rating.
FALCONBRIDGE LTD: Commits to Major Investment Plan for Raglan Mine
------------------------------------------------------------------
Falconbridge reported a major investment program for its nickel
installations in Northern Quebec, at the Raglan Mine in Nunavik
Territory. The declaration was made in the presence of Quebec
Premier Jean Charest and the Minister of Natural Resources and
Fauna Pierre Corbeil.
Falconbridge disclosed the launch of two important studies for the
Raglan Mine expansion. The first will focus on developing new ore
reserves to replace those depleted since the mine's opening in
1997. This investment will likely reach nearly CDN$240 million
over six years.
The second study is to support the expansion of nickel ore
production from one million tonnes per year to 1.3 million tonnes
as early as 2009. This 30% increase, requiring an additional
investment of roughly CDN$250 million, would create 50 additional
jobs and increase the value of annual royalties Falconbridge pays
to local Inuit communities. On April 7, 2006, Falconbridge
presented a CDN$9.3 million cheque to the Makivik Corporation
covering the payment of the first royalties as part of the Raglan
Agreement.
This amount is in addition to the nearly CDN$200 million in
equipment and upgrades Falconbridge has invested at the Raglan
Mine in the past two years. The initial investment in the
construction of Raglan was in excess of US$600 million.
Falconbridge also reported the start of major renovations to its
Deception Bay loading dock. The CDN$50 million investment will
extend the dock's service life and support the production
increases.
"These studies will enable the Raglan Mine to expand production
while maintaining the flow of benefits to local Inuit communities,
and also respecting the environment", stated Ian Pearce, Chief
Operating Officer of Falconbridge. "Falconbridge has strong roots
in the immense Abitibi-Temiscamingue region of Quebec, through its
predecessor company Noranda. Over the past 75 years we have made
every effort to combine economic and community benefits in all our
projects, while continuously improving our environmental
performance. In recent years, Quebec has demonstrated its
unequivocal support for the mining sector and is today one of the
world's most attractive jurisdictions for our industry."
Inaugurated in 1997, the Falconbridge nickel mining camp at Raglan
comprises three underground mines, one open-pit mine, as well as a
concentrator. The site enjoys year-round road connections to a
landing strip at Donaldson and to harbour facilities at Deception
Bay. Ore from the mine is crushed, ground and processed into
nickel-copper concentrate at the Raglan plant.
Headquartered in Toronto, Ontario, Falconbridge Limited
(TSX:FAL.LV)(NYSE: FAL) -- http://www.falconbridge.com/-- is a
leading copper and nickel company with investments in fully
integrated zinc and aluminum assets. Its primary focus is the
identification and development of world-class copper and nickel
orebodies. It employs 14,500 people at its operations and
offices in 18 countries. The Company owns nickel mines in
Canada and the Dominican Republic and operates a refinery and
sulfuric acid plant in Norway. It is also a major producer of
copper (38% of sales) through its Kidd mine in Canada and its
stake in Chile's Collahuasi mine and Lomas Bayas mine. Its
other products include cobalt, platinum group metals, and zinc.
* * *
As reported in the Troubled Company Reporter on Aug. 4, 2006,
Standard & Poor's Ratings Services revised the CreditWatch
implications on Inco Ltd. and Falconbridge Ltd. to positive from
developing, where they were placed July 18, 2006. This action
stems from the lower probability under all current takeover
scenarios that ratings will be lowered into the speculative-grade
category.
The ratings on Falconbridge will likely be raised or affirmed at
'BBB-', assuming that Xstrata PLC (parent of Xstrata Queensland
Ltd. (BBB+/Watch Neg/--)) is successful in acquiring Falconbridge
on Aug. 14, 2006, which now appears highly probable after Inco
dropped its bid last week.
Falconbridge Ltd.'s CDN$0.9 Million Cumulative Preffered Shares
Series 1, CDN$119.7 Million Cumulative Preferred Shares Series 2,
and CDN$150 Million Preferred Shares Series H, all carry Standar &
Poor's BB rating.
FTD INC: Moody's Rates New $75 Mil. Sr. Secured Term Loan at Ba3
----------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to the new senior
secured term loan of FTD, Inc. and affirmed other ratings. The
outlook remains positive.
Rating assigned:
* $75 million Senior Secured Revolving Credit Facility
maturing 2012 at Ba3.
Ratings affirmed:
* $150 million Senior Secured Term Loan B maturing 2013 at
Ba3;
* Corporate family at B1,
* Senior subordinated notes at B3, and
* Speculative grade liquidity rating of SGL-2.
Rating affirmed and to be withdrawn:
* Senior secured bank credit facility at Ba3.
The Ba3 rating on the revolving credit facility, representing
one notch above the corporate family rating, reflects its
preferential position in the capital structure, with the Ba3-rated
$150 million senior secured term loan B ranking pari passu, though
the revolving facility has a shorter maturity date. The B1
corporate family rating balances FTD's solid franchise against its
leverage, which is moderate for the B1 rating category, taking
into consideration the expected increase to a pro-forma level of
4.2x with the 100% debt financed acquisition of UK-based
Interflora for approximately $125 million, representing a 9x
multiple. This acquisition will be financed via a $25 million
draw on the $75 million revolving credit facility, plus $100
million of the $150 million senior secured term loan B, with the
remaining $50 million in new term loan proceeds paying off
existing term debt.
The positive outlook reflects Moody's expectation that the risk
with respect to the integration of Interflora will be de minimus,
and will be handled without difficulty. Recent improvements in
operating performance have created sufficient cushion in the
ratings to facilitate this fully-priced, debt-financed
acquisition. Upward rating momentum will continue if reductions
in leverage and improvements in cash flow generation continue.
Quantitatively, if leverage falls below 4x, and free cash flow to
debt exceeds 10%, and is sustainable at or better than these
levels, an upgrade would result. Downward rating pressure would
result from leverage trending toward 5x, or free cash flow to debt
reducing below 5%.
The SGL-2 speculative grade liquidity rating reflects Moody's
expectation that FTD will maintain good liquidity, and that its
internally generated cash flow and cash on hand will be sufficient
to fund its working capital, capital expenditure and debt
amortization requirements for the next 12 to 18 months, including
seasonal peaks.
FTD, Inc., headquartered in Downers Grove, Illinois, is a leading
retailer and order facilitator of flowers and gifts, with revenues
of $465 million for the fiscal year ended June 30, 2006. It
operates the FTD.com website and the 1-800-SEND-FTD telephone
line, and has relationships with approximately 19,000 florists.
FUNCTIONAL RESTORATION: Committee Can Prosecute Causes of Actions
-----------------------------------------------------------------
The Honorable Geraldine Mund of the U.S. Bankruptcy Court for the
Central District of California approved a stipulation between
Functional Restoration Medical Center, Inc., and the Official
Committee of Unsecured Creditors allowing the Committee to pursue
claims against certain parties in behalf of the Debtor.
The Debtor was formed and incorporated in 1993 by Dr. Moosa
Heikali. Based on the information the Committee has obtained, the
Debtor has claims against Dr. Heikali, his family and other
insiders and affiliates of those insiders.
The parties agreed that the Committee should be the party to
investigate or pursue, in its discretion, affirmative claims,
including, avoidance power claims.
Headquartered in Encino, California, Functional Restoration
Medical Center, Inc., is the second largest owner and operator of
MRI centers in Southern California. The Debtor filed for chapter
11 protection on Mar. 9, 2006 (Bankr. C.D. Calif. Case No. 06-
10306). Daniel A. Lev, Esq., at SulmeyerKupetz, represents the
Debtor in its restructuring efforts. When the Debtor filed for
protection from its creditors, its estimated assets and debts
between $10 million and $50 million.
GIBRALTAR INDUSTRIES: S&P Removes BB+ Rating from Positive Watch
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB' bank loan
rating on Gibraltar Industries Inc. and Gibraltar Steel Corp.'s
$300 million first-lien revolving credit facility and $125 million
term loan B (current amount outstanding). The 'BB' bank loan
rating, which is the same as the corporate credit rating on
Gibraltar Industries, was removed from CreditWatch where it was
placed with positive implications on June 9, 2006.
At the same time, S&P raised the recovery rating to '2',
indicating our expectation for 80%-100% of recovery of principal
in the event of a payment default, from '3'.
Buffalo, New York-based Gibraltar Industries had total debt
outstanding of $406 million, including capitalized operating
leases, as of June 30, 2006.
"The ratings on building products manufacturer and metal processor
Gibraltar Industries reflect its mature and cyclical markets,
customer concentration, volatile raw material costs, and
aggressive growth strategy. These risks are tempered by the
company's leading positions in niche markets, relatively
consistent profitability, and variable cost structure," said
Standard & Poor's credit analyst Lisa Wright.
Ratings List
Gibraltar Industries Inc.
Corporate credit rating BB/Stable/--
Senior subordinated notes due 2015 B+
Ratings Revised
Gibraltar Industries Inc. and Gibraltar Steel Corp.
To From
Senior secured bank debt BB BB/Watch Pos
Recovery rating 2 3/Watch Pos
GOODING'S SUPERMARKETS: Sells Some Assets for $1.819 Million
------------------------------------------------------------
The Honorable Arthur B. Briskman of the U.S. Bankruptcy Court for
the Middle District of Florida allowed Gooding's Supermarkets,
Inc. to sell the combination food and drug store consisting of
approximately 46,000 square feet of commercial space located at
1024 E. Highway 436, Casselberry, Fla., to Greater Properties,
Inc. and The Greater Construction Corp., the lessors who own the
real property upon which the Casselberry Store is situated.
Greater Properties will pay $1.6 million for the store.
In a separate order, the Court also allowed the Debtor to sell its
liquor license obtained for its closed market in Celebration,
Florida to Millenium Billiards, Inc., for $219,000.
Headquartered in Orlando, Florida, Gooding's Supermarkets, Inc.,
dba Gooding's, offers catering services and operates a chain of
supermarkets in Central Florida. The Company filed for chapter 11
protection on Dec. 30, 2005 (Bankr. M.D. Fla. Case No. 05-17769).
R. Scott Shuker, Esq., at Gronek & Latham LLP represents the
Debtor. W. Glenn Jensen, Esq., at Akerman Senterfitt represents
the Official Committee of Unsecured Creditors. When the Debtor
filed for protection from its creditors, it estimated assets of $1
million to $10 million and debts of $10 million to $50 million.
GOODYEAR TIRE: Reports $2 Million Net Income in Second Quarter
--------------------------------------------------------------
The Goodyear Tire & Rubber Company filed its financial results for
the second quarter ended June 30, 2006, with the Securities and
Exchange Commission on Aug. 4, 2006.
For the three months ended June 30, 2006, the Company earned
$2 million of net income on $5.14 billion of net revenues,
compared to $69 million of net income on $5 billion of net
revenues in 2005.
At June 30, 2006, the Company had $1,564 million in cash and cash
equivalents as well as $1,679 million of unused availability under
the company's various credit arrangements, compared to $2,162
million and $1,677 million at Dec. 31, 2005, respectively. Cash
and cash equivalents decreased primarily due to payments of debt
maturities and funding of seasonal working capital. Cash and cash
equivalents do not include restricted cash. Restricted cash
primarily consists of Goodyear contributions made related to the
settlement of the Entran II litigation and proceeds received
pursuant to insurance settlements. In addition, the Company will,
from time to time, maintain balances on deposit at various
financial institutions as collateral for borrowings incurred by
various subsidiaries, as well as cash deposited in support of
trade agreements and performance bonds.
As of June 30, 2006, cash balances totaling $224 million were
subject to restrictions, compared to $241 million at Dec. 31,
2005.
A full-text copy of the Company's Quarterly Report is available
for free at http://researcharchives.com/t/s?f3b
Headquartered in Akron, Ohio, The Goodyear Tire & Rubber Company
(NYSE: GT) -- http://www.goodyear.com/-- is the world's largest
tire company. The company manufactures tires, engineered rubber
products and chemicals in more than 90 facilities in 28 countries.
It has marketing operations in almost every country around the
world. Goodyear employs more than 80,000 people worldwide.
* * *
As reported in the Troubled Company Reporter on June 8, 2006,
Fitch affirmed The Goodyear Tire & Rubber Company's Issuer Default
Rating at 'B'; $1.5 billion first lien credit facility at
'BB/RR1'; $1.2 billion second lien term loan at 'BB/RR1'; $300
million third lien term loan at 'B/RR4'; $650 million third lien
senior secured notes at 'B/RR4'; and Senior Unsecured Debt at
'CCC+/RR6'.
As reported in the Troubled Company Reporter on June 23, 2005,
Moody's Investors Service assigned a B3 rating to Goodyear Tire &
Rubber Company's $400 million ten-year senior unsecured notes.
As reported in the Troubled Company Reporter on June 22, 2005,
Standard & Poor's Ratings Services assigned its 'B-' rating to
Goodyear Tire & Rubber Co.'s $400 million senior notes due 2015
and affirmed its 'B+' corporate credit rating.
HERBST GAMING: Cardivan Inks Pact with Albertson's and Supervalu
----------------------------------------------------------------
Herbst Gaming, Inc.'s wholly owned subsidiary, Cardivan Company
entered into a Letter Agreement with Albertson's, Inc., SUPERVALU
INC. and AB Acquisition LLC.
The Company disclosed that, pursuant to the agreement, Cardivan's
existing route contracts with Albertson's were terminated and
immediately reconstituted as two identical contracts, with one
contract applicable to stores owned by SUPERVALU and the other
contract applicable to stores owned by AB Acquisition.
A full text-copy of the letter agreement may be viewed at no
charge at http://ResearchArchives.com/t/s?f50
Herbst Gaming, Inc. -- http://www.herbstgaming.com/-- is a slot
route operator in Nevada with over 8,400 slot machines and owns
and operates eight casinos in Nevada, Missouri and Iowa.
* * *
As reported in the Troubled Company Reporter on April 18, 2006,
Standard & Poor's Ratings Services revised its outlook on Herbst
Gaming Inc. to positive from stable. At the same time, Standard &
Poor's affirmed its ratings on the company, including its 'B+'
corporate credit rating.
HERBST GAMING: Cardivan and CVS Affiliates Ink Gaming License Pact
------------------------------------------------------------------
Herbst Gaming, Inc.'s wholly-owned subsidiary Cardivan, entered
into a Gaming License Agreement with affiliates of CVS Corporation
with respect to Albertson's and SAV ON stores acquired by CVS.
The terms of the License Agreement provide for the right of
Cardivan to place a specified number of gaming devices in
designated SAV ON stores.
A text-copy of the Gaming License Agreement may be viewed at no
charge at http://ResearchArchives.com/t/s?f50
Herbst Gaming, Inc. -- http://www.herbstgaming.com/-- is a slot
route operator in Nevada with over 8,400 slot machines and owns
and operates eight casinos in Nevada, Missouri and Iowa.
* * *
As reported in the Troubled Company Reporter on April 18, 2006,
Standard & Poor's Ratings Services revised its outlook on Herbst
Gaming Inc. to positive from stable. At the same time, Standard &
Poor's affirmed its ratings on the company, including its 'B+'
corporate credit rating.
HONEY CREEK: MuniMae Wants Modified 2nd Amended Plan Stricken Out
-----------------------------------------------------------------
MuniMae Portfolio Services, LLC -- the authorized servicing agent
for The Bank of New York Trust Company, N.A., as indenture trustee
under a $20,485,000 bond issued by the Texas Department of Housing
and Community Affairs to secure a loan owed by Honey Creek Kiwi
LLC -- asks the U.S. Bankruptcy Court for the Northern District of
Texas to strike out the First Modification of Debtor's Second
Amended Plan of Reorganization and Supplemental Disclosure
Statement.
John N. Schwartz, Esq., at Fulbright & Jaworski L.L.P., in Dallas,
Texas, points out that the Debtor substantially modified its Plan
only after the Court approved a Disclosure Statement describing
the pre-modified plan. Nevertheless, without seeking approval of
the Court to further amend the disclosure statement so that it
would describe the Modification, the Debtor simultaneously
distributed to creditors the Modification, the plan itself, a
ballot, and an outdated disclosure statement describing a plan
that is entirely different from the modified version. This type
of solicitation violates Section 1127(c) of the Judiciary
Procedures Code and circumvents the Court's statutorily mandated
scrutiny of the Debtor's disclosure statement, Mr. Schwartz
laments.
Proceedings on the Debtor's Plan
On March 27, 2006, the Debtor filed its initial Plan of
Reorganization, Disclosure Statement, and exhibits. Immediately
prior to the commencement of the hearing on the adequacy of the
Disclosure Statement, the Debtor amended the Disclosure Statement
and Plan of Reorganization. Under the initial and amended
versions of the Debtor's Plan, the Debtor proposed an "equity
auction" that would have triggered only if MuniMae did not make an
election under Section 1111(b) of the Bankruptcy to have its
entire claim treated as secured. The equity auction was flawed
principally because it was open to only one bidder -- the Debtor's
current equity holder, Alternative Building Concepts Group.
At the conclusion of the June 7, 2006 continued hearing on the
adequacy of the Disclosure Statement, the Court ordered, among
other things, that the Debtor must modify the equity auction
feature in its plan to permit an open bidding process. The Court
also extended the time for MuniMae to exercise its election under
Section 1111(b) to within five days after the Court's approval of
the Disclosure Statement. The Court approved for distribution to
creditors the Debtor's Second Amended Disclosure Statement, which
described the Debtor's Second Amended Plan of Reorganization.
MuniMae determined not to make an election under Section 1111(b),
thereby choosing Alternative Treatment 1 offered under the Second
Amended Plan of Reorganization. Based upon the express terms of
the Second Amended Plan of Reorganization, MuniMae believed that
it had the option to choose its own treatment. Alternative
Treatment 1 provided MuniMae with a potential deficiency claim, if
there should be one, which would be paid at 10% of the allowed
claim amount. More importantly, Alternative Treatment 1 provided
for the equity auction that MuniMae successfully urged the Court
to open to all bidders. However, on June 30, 2006 -- within a few
days after MuniMae declined to elect treatment under 1111(b) --
the Debtor "modified" the Second Amended Plan of Reorganization
by, among other things, removing Alternative Treatment 1 in its
entirety, Mr. Schwartz tells the Court. Mr. Schwartz asserts that
this maneuver purportedly left MuniMae without a deficiency claim
and without the ability to bid for the equity interest in a
competitive auction.
According to Mr. Schwartz, the modification also rendered
meaningless much of the Court's consideration of the premodified
versions of the Debtor's Plan of Reorganization during the hearing
on the Debtor's Disclosure Statement.
Headquartered in Mesquite, Texas, Honey Creek Kiwi LLC owns a
656-unit apartment complex known as the Honey Creek Apartments.
The company filed for chapter 11 protection on August 24, 2005
(Bankr. N.D. Tex. Case No. 05-39524). Richard G. Grant, Esq., at
Roberts & Grant, P.C., represents the Debtor in its restructuring
efforts. No Official Committee of Unsecured Creditors has been
appointed in the Debtor's case. When the Debtor filed for
protection from its creditors, it estimated assets and debts
between $10 million and $50 million.
INTERMEC INC: 2005 Spin-Off Prompts Moody's to Upgrade Ratings
--------------------------------------------------------------
Moody's Investors Service upgraded the corporate family rating
of Intermec Inc. to Ba2 from B1 and its senior unsecured rating to
Ba3 from B2. The rating outlook is stable. The rating action
reflects the company's improved financial performance, increased
cash flow generation and strong liquidity following the
divestiture of its Cincinnati Lamb and Landis Grinding System
businesses during 2005.
The key rating factors driving the upgrade and stable outlook
include:
1) the completion of the IAS divestiture and significant
intellectual property settlements should enable management
to focus on growing its core business,
2) favorable growth prospects for new products and services
should foster continued improvement in revenue, margin and
cash flow generation,
3) Intermec's diverse customer base, robust intellectual
property portfolio, and global diversification solidify its
position in a competitive marketplace,
4) potential for commercialization of radio frequency
identification technologies providing increasing profit
contribution and
5) Intermec's strong balance sheet, which benefits from
manageable debt maturities and significant cash balances,
should be sufficient to fund the recently announced
$100 million share repurchase programs.
Ratings upgraded with a stable outlook include:
Intermec Inc. -- senior unsecured notes totaling $100 million to
Ba3 from B2 and (P)Ba3/(P)B1/(P)B2 from (P)B2/(P)Caa1/(P)Caa3 for
securities to be issued under its 415 shelf registration in the
amount of $400 million.
Moody's previous rating action on Intermec was the May 17, 2005
assignment of a B1 corporate family rating and upgrade of the
senior unsecured long term rating to B2 from Caa1.
Intermec Inc., headquartered in Everett, Washington, is a leader
in global supply chain solutions and the design, development,
manufacture and integration of wired and wireless automated data
collection, mobile computing systems, bar code printers, label
media and RFID. The company generated revenues of $920 million
for the 12 months ending June 2006.
INTERNATIONAL PAPER: Earns $115 Million in Second Quarter of 2006
-----------------------------------------------------------------
International Paper Company filed its second quarter financial
statements for the three months ended June 30, 2006, with the
Securities and Exchange Commission on Aug. 7, 2006.
For the second quarter of 2006, International Paper reported net
sales of $6.3 billion, compared with $5.9 billion in the second
quarter of 2005 and $6.1 billion in the first quarter of 2006.
Net income totaled $115 million in the second quarter of 2006.
This compared with net income of $77 million in the second quarter
of 2005 and a net loss of $1.2 billion in the first quarter of
2006. The first quarter 2006 net loss included a $1.3 billion
pre-tax charge to reduce the carrying values of the net assets of
the Coated and Supercalendered Papers businesses to their
estimated fair value. Amounts include the effects of special
items in all periods.
At June 30, 2006, the Company's balance sheet showed
$26.154 billion in total assets, $18.853 billion in total
liabilities, $200 million in minority interests, and
$7.101 billion in total stockholders' equity.
Antitrust Matters
The Company is party to a class action lawsuit by a group of
private landowners alleging that the Company and certain of its
fiber suppliers, known as Quality Suppliers, engaged in an
unlawful conspiracy to artificially depress the prices at which
the Company procures fiber for its mills.
While the Company continues to maintain that its Quality Supplier
program did not violate any antitrust laws, International Paper
agreed to settle this case in the second quarter by paying
$12.4 million, including plaintiff counsel fees.
The Federal District Court in Columbia, South Carolina, has
preliminarily approved the settlement. A final hearing for court
approval is scheduled for Sept. 25, 2006.
The Company was a defendant in a purported antitrust class action
brought by purchasers of coated publication papers in various U.S.
federal and state courts. These cases are based on alleged cartel
activity by various U.S. and European manufacturers of coated
papers. The Company believed it was not a proper party to these
cases, and in the second quarter, has been dismissed with
prejudice from all but one remaining California indirect-purchaser
case. In that case, the Company and the California indirect-
purchaser class counsel have filed a stipulation to dismiss the
Company as a defendant, which is pending court approval.
Full-text copies of the second quarter financials are available
for free at http://ResearchArchives.com/t/s?f51
Based in Stamford, Connecticut, International Paper Company
(NYSE: IP) -- http://www.internationalpaper.com/-- is in the
forest products industry for more than 100 years. The company is
currently transforming its operations to focus on its global
uncoated papers and packaging businesses, which operate and serve
customers in the U.S., Europe, South America and Asia. These
businesses are complemented by an extensive North American
merchant distribution system. International Paper is committed to
environmental, economic and social sustainability, and has a long-
standing policy of using no wood from endangered forests.
* * *
Moody's Investors Service assigned a Ba1 senior subordinate rating
and Ba2 Preferred Stock rating on International Paper Company on
Dec. 5, 2005.
KANA SOFTWARE: Incurs $1,078,000 Net Loss in First Quarter
----------------------------------------------------------
KANA Software, Inc., filed its first quarter financial report for
the three months ended March 31, 2006, with the Securities and
Exchange Commission.
The Company reported a $1,078,000 net loss on $11,433,000 of total
revenues for the first quarter ended March 31, 2006, compared with
a $13,800,000 net loss on $10,071,000 of total revenues for the
same period in 2005.
At March 31, 2006, the Company's balance sheet showed $32,454,000
in total assets and $42,414,000 in total liabilities, resulting in
a $9,960,000 stockholders' deficit. The Company also had
$4,304,486,000 of accumulated deficit on that date.
The Company's March 31 balance sheet also showed strained
liquidity with $18,297,000 in total current assets available to
pay $36,671,000 in total current liabilities coming due within the
next 12 months.
Full-text copies of the Company's financials are available for
free at http://ResearchArchives.com/t/s?efd
Going Concern Doubt
As reported in the Troubled Company Reporter on July 12, 2006,
KANA Software, Inc.'s auditor, Burr, Pilger & Mayer LLP,
expressed substantial doubt about the Company's ability to
continue as a going concern after auditing the Company's
financial statement for the year ending Dec. 31, 2005. Burr
Pilger pointed to the Company's recurring losses from operations,
net capital deficiency, negative cash flow from operations and
accumulated deficit.
KANA Software, Inc., provides multi-channel customer service
software applications. KANA's integrated solutions allow
companies to deliver service across all channels, including email,
chat, call centers and Web self-service, so customers have the
freedom to choose the service they want, how and when they want
it. The Company's target market is the Global 2000 with a focus
on large enterprises with high volumes of customer interactions,
such as banks, telecommunications companies, high-tech
manufacturers, healthcare organizations and government agencies.
The Company is headquartered in Menlo Park, California, with
offices in Japan, Hong Kong, Korea and throughout the United
States and Europe.
KIDSFUTURES INC: Completes $1.4 Million Debenture Financing
-----------------------------------------------------------
KidsFutures Inc. completed a first closing of a convertible
debenture financing in the amount of $1,400,000. Additional
closings may occur subject to investor interest.
The Company issued a series of discounted convertible debentures
with a 10% yield in the aggregate principal amount of $1,849,000
maturing on Aug. 3, 2009, for gross cash proceeds of $1,400,000.
The debentures are convertible at any time after Aug. 3, 2007, at
a price equal to the average closing price of the Company's common
shares over the 20 trading days prior to the conversion date, less
the applicable market discount permitted by the TSX Venture
Exchange.
The Company also issued 751 common share purchase warrants per
$1,000 principal amount of debentures issued. Each Warrant is
exercisable at any time after Aug. 3, 2007, and prior to 5:00 p.m.
(Toronto time) on Aug. 3, 2008, at a price equal to the lesser of:
(i) $1.00 per Common Share; and
(ii) the greater of (a) the market price per common share on the
exercise date and (b) $0.35.
In the event that a debenture holder elects to convert its
debenture to common shares prior to the maturity date, the
debenture holder will receive a bonus interest of 10% per annum on
the original amount invested (to be added to the amount converted)
and 500 bonus shares per $1,000 of debenture.
The hold period for the debentures and the warrants expires on
Dec. 4, 2006. The hold periods, if any, on the underlying common
shares issuable upon conversion or exercise of the debentures and
warrants, as the case may be, are subject to the TSX Venture
Exchange's applicable policies. The Company has paid a commission
of 4% on $785,056 of the amount invested pursuant to the first
closing.
"We are pleased to be involved in this round of financing and as
children's futures are bright and exciting, so is the Company's,"
said Richard Stone of Stone Asset Management Limited, the lead
investor in this debenture financing.
Based in Toronto, Ontario, KidsFutures Inc. (TSX VENTURE: FUT) --
www.kidsfutures.ca/ -- is a national loyalty rewards and financial
services company that helps families save money for their
children's post-secondary education. The Company operates the
KidsFutures Rewards Program that helps members earn rewards, which
can be easily converted to cash and directed into an existing or
new education savings plan, such as an RESP, at any financial
institution. Members can also purchase a range of financial
products (such as mutual funds or GICs) from KidsFutures'
subsidiary, KidsFutures Investments Inc.
At Dec. 31, 2005, KidsFutures Inc.'s balance sheet showed a
stockholders' deficit of CDN$2,336,316, compared to positive
equity of CDN$1,003,394 at Dec. 31, 2004.
LE GOURMET: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Le Gourmet Chef, Inc.
Aka Houseware Stores, Inc.
700 Paramus Park Space 1400
Paramus, NJ 07652
Bankruptcy Case No.: 06-17364
Type of Business:
Chapter 11 Petition Date: August 8, 2006
Court: District of New Jersey
Judge: Donald H. Steckroth
Debtor's Counsel: John DiIorio, Esq.
Shapiro & Croland
Continental Plaza II, 6th Floor
411 Hackensack Avenue
Hackensack, NJ 07601-6328
Tel: (201) 488-3900
--- and ---
Wendy G. Marcari, Esq.
Traub, Bonacquist, & Fox, LLP
655 Third Avenue
New York, NY 10017
Tel: (212) 476-4770
Fax: (212) 476-4787
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $10 Million to $50 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
TBB Global Logistics Inc. Transportation Broker $652,329
Attn: Theresa Giordano
P.O. Box 643508
Pittsburgh, PA 15264-3508
Rothschild Berry Farm Inc. Trade Debt $521,476
Attn: Dominic Maxwell
3143 East Route 36
P.O. Box 767
Urbana, OH 43078
X Cell International Corp. Trade Debt $247,485
Attn: Yvonne Martinez
181 Shore Court
Burr Ridge, IL 60521
Calphalon Corporation Trade Debt $194,609
TLC Candle Corp. Trade Debt $184,334
Design Design Inc. Trade Debt $160,966
OXO World Kitchen Trade Debt $134,448
J.A. Henckels Trade Debt $134,070
Unisource Trade Debt $126,294
Stonewall Kitchen Trade Debt $123,612
Chelsea GCA Realty Landlord $122,272
Partnership
Frontera Foods Inc. Trade Debt $115,507
East Shore Specialty Foods Trade Debt $114,066
Northwest Fragrance Trade Debt $103,191
Salton/Toastmaster Trade Debt $97,601
Lodge Manufacturing Co. Trade Debt $95,640
Trudeau Trade Debt $91,907
Officemax Contract Inc. Trade Debt $90,851
Nantucket Offshore Trade Debt $90,791
Seasonings
Progressive International Trade Debt $89,779
LIBERTY TAX: June 30 Partners' Deficit Increases to $10.2 Million
-----------------------------------------------------------------
Liberty Tax Credit Plus II L.P. filed its first fiscal quarter
financial statements for the three months ended June 30, 2006,
with the Securities and Exchange Commission on Aug. 7, 2006.
The Partnership reported a $3,403,246 net loss on $2,587,885 of
total revenues for the first fiscal quarter ended June 30, 2006,
compared with a $1,531,442 net loss on $2,500,849 of total
revenues for the same period in 2005.
At June 30, 2006, the Partnership's balance sheet showed
$80,581,116 in total assets, $90,769,463 in total liabilities, and
$84,009 in minority interests, resulting in a $10,272,356
partners' deficit, as compared to a partners' deficit of
$6,869,110 at March 31, 2006.
Full-text copies of the Partnership's first quarter financials are
available for free at http://ResearchArchives.com/t/s?f3d
Liberty Tax Credit Plus II L.P. invests in other limited
partnerships owning leveraged low-income multifamily residential
complexes that are eligible for the low-income housing tax credit
enacted in the Tax Reform Act of 1986, and to a lesser extent in
Local Partnerships owning properties that are eligible for the
historic rehabilitation tax credit.
LONDON FOG: Has Until Aug. 25 to Question Sub. Lenders' Lien
------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
chapter 11 cases of London Fog Group, Inc., and its debtor-
affiliates has until Aug. 25, 2006, to question the lien held by
lenders under the Debtors' junior secured financing agreement.
The Debtors owed the subordinated lenders approximately
$39,500,000 when they filed for bankruptcy.
The Honorable Gregg W. Zive of the U.S. Bankruptcy Court for the
District of Nevada in Reno approved the stipulation on the
extension between the Committee and DDJ Capital Management, LLC,
as the agent for the financing agreement.
By allowing the Debtors to use the cash collateral securing
repayment of their debts to the subordinated lenders, the Court
granted the subordinated lenders an allowed superpriority
administrative claim under Sections 364(c)(1) and 507(b),
subordinate to the claim of Wachovia Bank National Association,
the debtor-in-possession lender.
Headquartered in Seattle, Washington, London Fog Group, Inc. --
http://londonfog.com/-- designs and retails the latest styles in
jackets and other professional apparel. The company and six of
its affiliates filed for chapter 11 protection on March 20, 2006
(Bankr. D. Nev. Case No. 06-50146). Stephen R. Harris, Esq., at
Belding, Harris & Petroni, Ltd., represents the Debtors in their
restructuring efforts. Avalon Group, Ltd., serves as the Debtors'
financial advisor. When the Debtors filed for protection from
their creditors, they estimated assets and debts between
$50 million to $100 million.
MAGELLAN HEALTH: Earns $21.71 Million in Second Quarter of 2006
---------------------------------------------------------------
Magellan Health Services, Inc., earned a $21.71 million net income
on $464.54 of net revenues for the quarter ending June 30, 2006,
the Company informed the Securities and Exchange Commission in a
Form 10-Q filing.
Net revenue related to the Company's Health Plan Segment decreased
by 31.7$ or $74.1 million from the previous year quarter to the
current year quarter. Net revenue related to the Company's
Managed Behavioral Healthcare Employer segment increased by 1% or
$0.3 million from the prior year quarter to the current year
quarter. Net revenue related to Managed Behavioral Healthcare
Public Sector Segment decreased by 2.1% or $4.2 million from the
prior year quarter to the current year quarter. Net revenue
related to the Radiology Benefits Management Segment was
$12.4 million for the current year quarter.
As of June 30, 2006, the Company's balance sheet disclosed
assets totaling $1.069 billion, liabilities amounting to
$436.41 million, and $633.08 million stockholders equity.
Historical Liquidity and Capital Resources
Operating Activities
Net cash provided by operating activities decreased by around
$20.4 million from the prior year period to the current year
period, primarily due to a decrease in segment profit between
periods of $20.9 million, and payments of $24.4 million in the
current year period associated with claims run-out for terminated
contracts, with such unfavorable variances partially offset by net
positive working capital changes of $24.9 million (which mainly
relates to favorable timing of cash flows from Public Sector
segment regulated entities).
Investing Activities
The Company utilized $8.6 million and $8.9 million during the
prior year period and current year period, for capital
expenditures. The majority of capital expenditures for both
periods related to management information systems and related
equipment.
During the current year period, the Company received proceeds of
$22.2 million related to the sale of assets, mainly the sale of
its investment in Royal. Additionally, during the current year
period, the Company used net cash of $120.7 million related to the
acquisition of National Imaging Associates, Inc.
During the prior year period, the Company utilized net cash of
$50.9 million for the purchase of "available-for-sale" investments
and during the current year period, the Company received net cash
of $183.1 million from the net maturity of "available-for-sale"
investments a portion of which was utilized to fund the NIA
acquisition. The Company's investments consist of U.S. government
and agency securities, corporate debt securities and certificates
of deposit.
During the prior year period and the current year period, the
Company received proceeds of $7 million and $3 million,
respectively, related to a previously outstanding $10 million note
receivable.
Financing Activities
During the prior year period, the Company repaid $11.2 million of
indebtedness outstanding under the Credit Agreement and made
payments on capital lease obligations of $2.3 million. In
addition, the Company received $12 million from the exercise of
stock options and warrants. During the current year period, the
Company repaid $12.5 million of indebtedness outstanding under the
Credit Agreement and made payments on capital lease obligations of
$0.2 million. In addition, the Company received $7.8 million from
the exercise of stock options and warrants.
Outlook
During fiscal 2006, the Company expects to fund its capital
expenditures with cash from operations. The Company estimates
that it will spend approximately $13 million to $23 million of
additional funds in fiscal 2006 for capital expenditures. The
Company does not anticipate that it will need to draw on amounts
available under the revolving loan facility of the Credit
Agreement for its operations, capital needs or debt service in
fiscal 2006. The Company also currently expects to have adequate
liquidity to satisfy its existing financial commitments over the
periods in which they will become due.
A full-text copy of the regulatory filing is available for free
at http://ResearchArchives.com/t/s?f4e
About Magellan Health
Headquartered in Avon, Connecticut, Magellan Health Services, Inc.
(NASDAQ: MGLN) is the United States' leading manager of behavioral
health care and radiology benefits. Its customers include health
plans, corporations and government agencies. The Company filed
for chapter 11 protection on March 11, 2003 (Bankr. S.D.N.Y. Case
No. 03-40515). The Court confirmed the Debtors' Third Amended
Plan on Oct. 8, 2003, allowing the Company to emerge from
bankruptcy protection on Jan. 5, 2004.
* * *
As reported in the Troubled Company Reporter on May 25, 2006,
Moody's Investors Service changed the ratings outlook for Magellan
Health Services Inc. to positive from stable. Moody's affirmed
the Company's Senior Secured Bank Credit Facility rating at B1 and
Corporate Family Rating at B1.
As reported in the Troubled Company Reporter on April 27, 2006,
Standard & Poor's Ratings Services raised its counterparty credit
rating on Magellan Health Services Inc. to 'BB' from 'B+'. The
outlook is stable.
MIDWAY AIRLINES: Court Approves Settlement with ALPA Pilots
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of North
Carolina approved a settlement agreement between Joseph N.
Callaway, the chapter 7 Trustee liquidating the estates of Midway
Airlines Corp., and Midway Airlines Parts, LLC, and the Air Line
Pilots Association, International.
To settle ALPA's claims, the Debtors agree to make a $500,000
settlement payment. The settlement amount is a net cost to the
bankruptcy estate, meaning that it includes all applicable
employer and employee withholding taxes incurred by the estate as
the former employer of the ALPA pilots.
ALPA's Claims
ALPA served as the exclusive collective bargaining representative
of the bargaining unit pilots employed by Midway and was a party
to a collective bargaining agreement with Midway in effect when
the Debtors filed for bankruptcy. ALPA sought $12 million in
administrative claims. The ALPA Claims are based on, among other
things, alleged:
a. damages caused by lay offs, furloughs, and termination of
the Debtors' employees on:
* August 13, 2001,
* September 12, 2001,
* June 2002, and
* October 30, 2003;
b. prepetition claims arising from the asserted assumption
under Sections 365 and 1113 by Debtor of the ALPA collective
bargaining agreement during the Chapter 11 case by operation
of law;
c. accrued and unpaid postpetition, pre-Chapter 7 conversion
claims, i.e., from Aug. 13, 2001, to Oct. 30, 2003,
which includes wages, vacation pay, and grievance claims
arising from the ALPA collective bargaining agreement.
The Chapter 7 Trustee challenged ALPA's claims and pleaded
substantive defenses. The Chapter 7 Trustee asserted that the
proper administrative claim of ALPA is less than $2 million.
The Debtors and ALPA agreed to amicably settle their dispute. The
final settlement agreement stipulates that:
a. Each former pilot will receive 30% of the greater of:
(1) the amounts for vacation pay on any proof of claim forms
filed by the individual; and
(2) the amounts for vacation pay stipulated between the
Debtor and the North Carolina Department of Labor;
b. Pilots will also receive around $158.33 for each date of the
four furlough events that he or she was employed by Midway.
No pilot will receive pay for more than three furlough pay
events.
c. Two individuals whose individual proof of claim form listed
a bounced postpetition wage check, and three individuals
whose individual proof of claim forms listed medical flex
amounts they were not able to access, will receive 100% of
those amounts without necessity of withholding taxes; and
d. Several prepetition individual grievances and an ALPA claim
based on a bounced check for postpetition dues will be paid
at 30%.
To be eligible for payment, each participating former employee
must complete and provide his or her current address, contact
information and social security number. Parties are also required
to sign an information and release form releasing the Debtors and
ALPA from any liability in the case upon payment.
The settlement amount does not include any funds from the pilots'
401K plans as that matter is the subject of separate motions.
A table listing the amounts due to each eligible ALPA pilot is
available for free at http://researcharchives.com/t/s?f61
Headquartered in Morrisville, North Carolina, Midway Airlines
Corp., is in the commercial passenger airline business and also
provides cargo and charter transportation on a limited bases. The
Company and its debtor-affiliate, Midway Airlines Parts, LLC,
filed for chapter 11 protection on Aug. 13, 2001 (Bankr. E.D.N.C.
Case No. 01-02319-5-ATS). The Court converted the case to a
Chapter 7 liquidation proceeding on Oct. 30, 2003. Joseph N.
Callaway served as the Debtors' Chapter 7 Trustee. Gerald A.
Jeutter, Jr., Esq., at Kilpatrick Stockton LLP, represents the
Debtors. When the Debtors filed for chapter 11 protection, they
listed total assets of $318,291,000 and total debts of
$231,952,000.
MIRANT CORP: Earns $99 million in Quarter Ended June 30
-------------------------------------------------------
Mirant Corporation reported net income of $99 million for the
quarter ended June 30, 2006, compared with a net loss of
$10 million for the same period in 2005. For the first six months
of 2006, Mirant reported net income of $566 million, compared with
$1 million for the first six months of 2005.
Adjusted EBITDA for the quarter was $255 million, compared to
$119 million for the same period in 2005. For the first six
months of 2006, adjusted EBITDA was $595 million, compared to
$288 million for the same period in 2005. The period over period
increases for the quarter and the first half of the year resulted
primarily from the strong performance of the U.S. business.
"Our U.S. business performed well during the quarter and the first
half of 2006," Edward R. Muller, chairman and chief executive
officer, said.
"This performance is due primarily to hedges entered into in
earlier periods, which protected Mirant from lower market prices
during the first half of the year resulting from milder than
normal weather in many parts of the country and a significant drop
in natural gas prices. The company's hedging strategy continues
to be effective in helping to produce predictable financial
results."
Net cash provided by operating activities during the second
quarter was $132 million. Adjusting for bankruptcy payments
during the period, net cash provided by operating activities was
$643 million in the first six months of 2006.
As of June 30, 2006, the company had cash and cash equivalents of
$1.8 billion, total available liquidity of $2.13 billion, and
total outstanding debt of $4.5 billion.
Asset Sales
On Aug. 9, 2006, Mirant reported an auction process to sell
various U.S. intermediate and peaking gas fired assets. The U.S.
assets to be sold are these intermediate and peaking gas fired
plants: Zeeland (837 MW), West Georgia (605 MW), Shady Hills (468
MW), Sugar Creek (535 MW), Bosque (532 MW) and Apex (527 MW),
representing a total of 3,504 MW. In 2005, on a pro-forma basis,
these assets contributed $77 million in adjusted EBITDA. For the
first six months of 2006, on a pro-forma basis, these assets
contributed $25 million in adjusted EBITDA. Initial estimates
indicate that an impairment loss will need to be recorded in the
third quarter of 2006 to reduce the carrying value of these assets
to fair value. While the amount of the impairment loss has not
yet been determined, the company currently estimates the total
impairment loss for the six plants will range from $500 to
$700 million. JPMorgan will serve as financial advisor for the
sale of these U.S. assets.
The decision is in addition to the one reported in the Troubled
Company Reporter on July 13, 2006, to commence auction processes
to sell Mirant's international businesses in the Philippines
(2,203 MW) and the Caribbean (1,050 MW). In 2005, on a pro-forma
basis, the Philippines and Caribbean businesses contributed
$371 million and $155 million in adjusted EBITDA, respectively.
For the first six months of 2006, on a pro-forma basis, the
Philippines and Caribbean businesses contributed $206 million and
$92 million in adjusted EBITDA, respectively.
Certain of the sales will be subject to regulatory and other
approvals and consents. The planned sales will result in these
businesses and assets being reported as discontinued operations
beginning in the third quarter of 2006. The sales are expected to
close by mid-2007.
Asset Sale Proceeds and Continuing Business
The continuing business of Mirant will consist of 10,657 MW that
are well positioned in key U.S. markets in the Mid-Atlantic, the
Northeast and California.
As previously reported, Mirant plans to continue returning cash to
its shareholders upon completion of the planned sales. The amount
of cash returned will be determined based on the outlook for the
continuing business (1) to preserve the credit profile of the
continuing business, (2) to maintain adequate liquidity for
expected cash requirements including, among other things, capital
expenditures for the continuing business, and (3) to retain
sufficient working capital to manage fluctuations in commodity
prices. Proceeds from the sales of the Zeeland and Bosque plants
will be utilized pursuant to the covenants contained in the Mirant
North America debt instruments.
Guidance
Mirant provided adjusted 2006 EBITDA guidance of $1.282 billion,
which is comprised of $645 million for the continuing business and
$637 million for the assets and businesses to be sold. For 2007,
Mirant provided adjusted EBITDA guidance of $1.585 billion, which
is comprised of $924 million for the continuing business and
$661 million for the assets and businesses to be sold. The
guidance provided for 2007 includes the adjusted EBITDA for the
full year of the businesses and assets to be sold, even though the
sales are expected to close by mid-2007. The actual financial
results for 2007 will depend on the closing dates of the sales of
those businesses and assets.
About Mirant Corp.
Headquartered in Atlanta, Georgia, Mirant Corporation (NYSE: MIR)
-- http://www.mirant.com/-- is an 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 Jan. 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.
The Debtors emerged from bankruptcy on Jan. 3, 2006.
* * *
As reported in the Troubled Company Reporter on July 17, 2006,
Moody's Investors Service downgraded the ratings of Mirant
Corporation and its subsidiaries Mirant North America, LLC and
Mirant Americas Generation, LLC. The Ba2 rating for Mirant Mid-
Atlantic, LLC's secured pass through trust certificates was
affirmed. Additionally, Mirant's Speculative Grade Liquidity
rating was revised to SGL-2 from SGL-1. The rating outlook is
stable for Mirant, MNA, MAG, and MIRMA.
Moody's downgraded Mirant Americas Generation, LLC's Senior
Unsecured Regular Bond/Debenture, to B3 from B2. Moody's also
downgraded Mirant Corporation's Corporate Family Rating, to B2
from B1, and Speculative Grade Liquidity Rating, to SGL-2 from
SGL-1. Mirant North America, LLC's Senior Secured Bank Credit
Facility, was also downgraded to B1 from Ba3 and its Senior
Unsecured Regular Bond/Debenture, to B2 from B1.
As reported in the Troubled Company Reporter on July 13, 2006,
Fitch Ratings placed the ratings of Mirant Corp., including the
Issuer Default Rating of 'B+', and its subsidiaries on Rating
Watch Negative following its announced plans to buy back stock and
sell its Philippine and Caribbean assets.
Ratings affected are Mirant Corp.'s 'B+' Issuer Default Rating and
Mirant Mid-Atlantic LLC's 'B+' Issuer Default Rating and the Pass-
through certificates' 'BB+/Recovery Rating RR1'.
Fitch also placed Mirant North America, Inc.'s Issuer Default
Rating of 'B+', Senior secured bank debt's 'BB/RR1' rating, Senior
secured term loan's 'BB/RR1' rating, and Senior unsecured notes'
'BB-/RR1' rating on Rating Watch Negative. Mirant Americas
Generation, LLC's Issuer Default Rating of 'B+' and Senior
unsecured notes' 'B/RR5' rating was included as well.
Standard & Poor's Ratings Services also placed the 'B+' corporate
credit ratings on Mirant Corp. and its subsidiaries, Mirant North
American LLC, Mirant Americas Generating LLC, and Mirant Mid-
Atlantic LLC, on CreditWatch with negative implications.
MONONGAHELA POWER: Moody's Puts Low-B Ratings on Review
-------------------------------------------------------
Moody's Investors Service placed the ratings of Monongahela Power
Company's Ba1 senior unsecured under review for possible upgrade,
including the Baa3 rating for its senior secured debt. In
addition, Moody's revised the rating outlook for Potomac Edison
Company's Baa3 senior unsecured to negative from stable. Moody's
also assigned a Baa2 rating to the $145 million of First Mortgage
Bonds to be issued by West Penn Power Company. The ratings and
stable rating outlook are unchanged for the parent company,
Allegheny Energy, Inc.'s Ba2 senior unsecured, and its other
subsidiaries, including its unregulated generation supply
business, Allegheny Energy Supply, LLC's Ba3 senior unsecured.
The review of MP is prompted by improvements in its financial
position and regulatory outlook. The review considers positive
regulatory developments in the State of West Virginia, including
the Public Service Commission's approval of MP's construction of
flue gas desulfurization equipment to reduce sulfur dioxide
emissions at the company's Ft. Martin power plant in West
Virginia. In addition, legislation was enacted enabling the use
of securitization as a financing mechanism for this construction.
The review will focus on the sustainability of recent improvements
in MP's cash flow generation and balance sheet ratios. The review
will also focus on the likely timing and magnitude of the rate
case pending with the PSC in West Virginia. The review will also
consider MP's relationship with its parent AYE and the other
entities within the AYE family, which effectively operate as a
single system and share resources through a regulated money pool.
The change in PE's rating outlook to negative from stable reflects
uncertainty with respect to the transition to market prices to
supply power for residential customers in Maryland in 2009 and for
all customers in Virginia in July 2007. While PE has several
years to deal with these issues, in conjunction with each state's
relevant authorities, the magnitude of expected cost increases for
purchased power suggests that a very substantial rate increase
will be needed to maintain the company's financial profile.
Moody's expects that there will be a negotiated resolution, as has
happened in other cases with large rate increase requests,
including the possibility of a phasing-in of the increases that is
more gradual. However, the final outcome is uncertain at this
time. There is the risk that the full amount of the increased
costs might not ultimately be recovered, and a deferral
arrangement could also reduce PE's flexibility to seek higher
rates for other increased costs in the future.
Moody's assigned a Baa2 senior secured rating to WPP's proposed
issuance of $145 million of First Mortgage Bonds. The rating
outlook is stable. The bonds will be secured by a lien on all
real property and tangible personal property located in the
Commonwealth of Pennsylvania that WPP now owns or may own in the
future, other than property specifically excepted from the lien.
The Baa2 rating is one notch above the company's Baa3 rating on
the company's existing senior unsecured debt.
Headquartered in Greensburg, Pennsylvania, Allegheny Energy, Inc.
is an integrated energy company that owns various regulated and
unregulated subsidiaries engaged in generation and distribution of
electricity, and other businesses. Its utility subsidiaries
deliver electricity to customers in Pennsylvania, West Virginia,
Maryland and Virginia.
MOUNT REAL: Chapter 15 Petition Summary
---------------------------------------
Petitioner: Jean Robillard
President, Raymond Chabot Inc.
Foreign Representative
600, De La Gauchetiere Street West, Suite 1900
Montreal H3b 4l8
Quebec, Canada
Debtors: Mount Real Corporation,
MRACS Management Ltd.,
aka Mount Real Acceptance Corporation
Real Vest Investment Ltd.,
Real Assurance Acceptance Corporation
aka Mount Real Assurance Acceptance Corporation
c/o Raymond Chabot Inc.
600, De La Gauchetiere Street West, Suite 1900
Montreal H3b 4l8
Quebec, Canada
Case No.: 06-41636
Type of Business: The Debtors sold magazine subscription contracts
through sales management organizations, which
essentially consist of telemarketing companies.
Chapter 15 Petition Date: August 9, 2006
Canadian Court: Quebec Superior Court (Commercial Division)
Canadian Judge: Jean-Yves Lalonde
U.S. Court: District of Minnesota (Minneapolis)
U.S. Judge: Robert J. Kressel
Petitioner's Counsel: John C. Thomas, Esq.
Monica L. Clark, Esq.
Dorsey & Whitney LLP
50 South Sixth Street, Suite 1500
Minneapolis, MN 55402-1498
Tel: (612) 340-5647
Fax: (612) 340-2868
Estimated Assets: More than $100 Million
Estimated Debts: More than $100 Million
NELLSON NUTRACEUTICAL: Wants $10M Bariatrix Escrow Fund Released
----------------------------------------------------------------
Nellson Nutraceutical, Inc., and its debtor-affiliates ask the
U.S. Bankruptcy Court for the District of Delaware to approve its
stipulation with Bariatrix Products International Inc. lifting the
automatic stay to allow the release of an escrow fund to
Bariatrix.
The Debtors bought certain assets from Bariatrix in July 2003 for
$10,031,924. Under the Assets Purchase Agreement governing the
sale, Bariatrix would indemnify the Debtors for certain claims.
In connection with that indemnity provision, the Purchase
Agreement required Bariatrix to establish an escrow fund from the
purchase amount. The purpose of the Escrow Fund was to secure
Bariatrix's indemnity obligations to the Debtors for any claims
that arose within a year after the sale closing.
The Debtors notified Bariatrix of a potential claim for indemnity
in November 2003. The claims notice identified the claim asserted
by New Era Nutrition, Inc., against the Debtors as a result of the
Debtors' acquisition of Bariatrix's assets. At that time, the
Debtors were informed that New Era and Bariatrix were also parties
to a pending lawsuit. In that lawsuit, New Era asserted the same
claims they asserted against the Debtors. To date, the escrow
fund has not been released to Bariatrix given the pendency of the
claims asserted by the Debtors based on New Era's alleged claims.
Bariatrix and New Era, recently, have entered into an agreement to
settle the New Era litigation and New Era claim. As part of the
settlement, Bariatrix obtained a release from New Era. New Era
has also released the Debtors from its claims.
Headquartered in Irwindale, California, Nellson Nutraceutical,
Inc., formulates, makes and sells bars and powders for the
nutrition supplement industry. The Debtors filed for chapter 11
protection on Jan. 28, 2006 (Bankr. D. Del. Case No. 06-10072).
Laura Davis Jones, Esq., Rachel Lowy Werkheiser, Esq., Richard M.
Pachulski, Esq., Brad R. Godshall, Esq., and Maxim B. Litvak,
Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C.
represent the Debtors in their restructuring efforts. Lawyers at
Young, Conaway, Stargatt & Taylor, LLP, represent an informal
committee of which General Electric Capital Corporation and
Barclays Bank PLC are members. In its Schedules of Assets and
Liabilities filed with the Court, Nellson Nutraceutical reports
$312,334,898 in total assets and $345,227,725 in total liabilities
when it filed for bankruptcy.
NETWORK INSTALLATION: Inks Loan Restructure Pact with Dutchess
--------------------------------------------------------------
Network Installation Corp. and its subsidiary, Kelley
Communication Corp. entered into a Loan Restructure Agreement with
Dutchess Private Equities Fund LP, Dutchess Private Equities Fund
II LP and Dutchess Advisors Ltd., which restructured the terms of
its outstanding loans from Dutchess.
The Company disclosed that, pursuant to the terms of the
restructuring agreement, which is effective June 30, 2006:
-- All of the Company's outstanding loans from Dutchess
totaling approximately $7.3 million in face amount and
approximately $500,000 of accrued interest as of June 30,
2006 are superceded by the Promissory Note dated August 1,
2006 with principal amount of $6,254,960;
-- The New Note bears interest at a rate of 7% per annum and is
secured by all the assets of the Company.
The Company further disclosed that payments on the new note are to
be made based on their agreed payment schedule with a final
balloon payment in the amount of $1,460,641.86 on July 1, 2011.
A text-copy of the Loan Restructure Agreement may be viewed, at no
charge, at http://ResearchArchives.com/t/s?f54
Headquartered in Irvine, California, Network Installation Corp.
-- http://www.networkinstallationcorp.net/-- is a single source
provider of communications infrastructure, specializing in the
design, installation, deployment and integration of specialty
systems and computer networks. Through its wholly-owned
subsidiaries, Com Services and Kelley Technologies, the Company
provides its services to these customers and industries: Gaming &
casinos, local and regional municipalities, K-12 and education.
Going Concern Doubt
Jaspers + Hall, PC, in Denver, Colorado, raised substantial doubt
about Network Installation Corp.'s ability to continue as a going
concern after auditing the Company's financial statements for the
year ended Dec. 31, 2005. The auditor pointed to the Company's
recurring losses from operations and stockholders deficiency.
NORTHWEST AIRLINES: Moody's Rates $1.225 Bil. DIP Funding at Ba2
----------------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to the
$1.225 billion Debtor-In-Possession financing of Northwest
Airlines Inc. as a debtor-in-possession. The rating is on a
point-in-time basis and will not be monitored going forward.
In Moody's view it is highly probable that Northwest will emerge
from bankruptcy protection, perhaps in early 2007. While under
the protection of the bankruptcy court since September of 2005,
Northwest has made measured progress in resetting its cost
structure to competitive levels by revising its labor agreements,
reducing its fleet and restructuring aircraft leases and debt. In
addition, under pension reform legislation that is likely to be
enacted, Northwest will benefit from the special provisions
to be directed to airlines.
If Northwest is not successful in emerging from bankruptcy under
its current timetable, however, Moody's believes that the
collateral supporting the DIP facility is of sufficient value that
the DIP lenders will be repaid in full. Northwest has pledged its
Pacific Route Authorities, including the particularly valuable
U.S. to Japan routes in which the airline benefits from "Fifth
Freedom" rights. The DIP facilities benefit from a super-priority
status over all other obligations of Northwest, NWAC, Holdings and
all subsidiaries.
Northwest's restructuring has focused on labor savings, debt
restructuring, optimizing its fleet, pension relief and other cost
savings initiatives. For example, the company recently achieved
an estimated $1.4 billion in labor cost savings. Contracts are
ratified by all unions with the exception of the flight
attendants, although Northwest has implemented new contract terms
for the flight attendants consistent with bankruptcy court
approval in June 2006.
Additionally, the company successfully restructured certain
aircraft leases and reduced its debt levels, and achieved cost
savings due to aircraft ownership reductions. Importantly, under
revised pension legislation the airline will be able to fund
frozen defined benefit pension plans over a seventeen-year
horizon.
Moody's views the Pacific Route Authorities as adequate collateral
protection, and these "Fifth Freedom" rights include passenger and
cargo landing rights which could be sold separately. The
realizable value of the passenger rights is much less certain than
that of the cargo rights. For the passenger rights, Northwest's
operations between the U.S. and Japan are highly-desirable, not
only because of the size of the U.S. and Japanese economies, but
also the authority to carry passengers beyond Japan and to serve
passengers originating in Japan.
While attractive to a number of U.S. operators, the value
could be constrained due to the current limited incremental
debt capacity of many U.S. passenger airlines. Although the
separation of cargo and passenger rights is a complex process,
in Moody's opinion the cargo rights have a more predictable
realizable value for a freight carrier as they provide immediate
access to lucrative air cargo markets and there are a number of
financially strong bidders.
The DIP facility covenants provide further strength to the
financing by mandating an annual appraisal, as well as a
minimum ratio of appraised value to the loan amount of 1.5x.
Additionally, Northwest is required to maintain minimum
unrestricted cash and cash equivalents of $750 million, and
EBITDAR to fixed charges initially of 1.15x escalating to 1.5x
by the fourth quarter of 2007.
Northwest Airlines, Inc. and its parent company, Northwest
Airlines Corporation, are headquartered in Eagan, Minnesota.
OMEGA HEALTHCARE: Earns $11.3 Million in 2nd Quarter Ended June 30
------------------------------------------------------------------
Omega HealthCare Investors, Inc., filed its financial results for
the second quarter ended June 30, 2006, with the Securities and
Exchange Commission on Aug. 4, 2006.
For the three months ended June 30, 2006, the Company earned
$11.3 million of net income on $31 million of net revenues,
compared with $2.2 million of net income on $25.3 million of net
revenues in 2005.
Cash and cash equivalents totaled $14.1 million as of June 30,
2006, an increase of $10.1 million as compared to the balance at
Dec. 31, 2005.
As of June 30, 2006, the company has no outstanding borrowings
under the new $200 million revolving senior secured credit
facility that matures in March 2010.
A full-text copy of the Company's Quarterly Report is available
for free at http://researcharchives.com/t/s?f3f
Headquartered in Timonium, Maryland, Omega HealthCare Investors,
Inc. (NYSE:OHI) -- http://www.omegahealthcare.com/-- is a real
estate investment trust investing in and providing financing to
the long-term care industry. At September 30, 2005, the Company
owned or held mortgages on 216 skilled nursing and assisted living
facilities with 22,407 beds located in 28 states and operated by
38 third-party healthcare operating companies.
* * *
As reported in the Troubled Company Reporter on June 29, 2006,
Fitch upgraded Omega Healthcare Investors' senior unsecured notes
to 'BB' from 'BB-' and its preferred stock to 'B+' from 'B'.
Additionally, Fitch assigned the Company's secured credit facility
at 'BB+'. The Outlook on all Ratings is Stable.
ORBITAL SCIENCES: Common Stock Warrants Expire on August 15
-----------------------------------------------------------
Orbital Sciences Corporation disclosed the pending expiration of
its outstanding warrants to purchase the Company's common stock,
which it issued in August 2002.
The Company further disclosed, the warrants were issued pursuant
to a warrant agreement, dated Aug. 22, 2002, between the Company
and U.S. Bank, N.A., as warrant agent. The warrants will expire
at 5:00 p.m., New York City time, on Aug. 15, 2006. Warrants not
exercised by such date and time, will become void.
The Company also disclosed that, each warrant, when exercised,
entitles the holder to purchase 122.23 shares of its common stock
at an exercise price equal to $3.86 per share.
Further information regarding the exercise of the Warrants can be
obtained by calling the Warrant Agent at (651) 495-3520.
Orbital Sciences Corporation (NYSE: ORB) develops and manufactures
small space and rocket systems for commercial, military and civil
government customers. The company's primary products are
satellites and launch vehicles, including low-orbit,
geosynchronous and planetary spacecraft for communications, remote
sensing, scientific and defense missions; ground- and air-launched
rockets that deliver satellites into orbit; and missile defense
systems that are used as interceptor and target vehicles. Orbital
also offers space-related technical services to government
agencies and develops and builds satellite-based transportation
management systems for public transit agencies and private vehicle
fleet operators.
* * *
As reported in the Troubled Company Reporter on May 9, 2006,
Standard & Poor's Ratings Services raised its ratings, including
the corporate credit rating to 'BB' from 'BB-', on Orbital
Sciences Corp. The outlook is stable.
ORTHOMETRIX INC: June 30 Balance Sheet Upside-Down by $1 Million
----------------------------------------------------------------
Orthometrix, Inc., filed its second quarter financial statements
for the three months ended June 30, 2006, with the Securities and
Exchange Commission on June 30, 2006.
The Company reported a $649,244 net loss on $1,460,022 of revenues
for the second quarter ended June 30, 2006, compared with a
$958,599 net loss on $862,464 of revenues for the same period in
2005.
At June 30, 2006, the Company's balance sheet showed $1,379,281 in
total assets and $2,441,481 in total liabilities, resulting in a
$1,062,200 stockholders' deficit.
The Company's June 30 balance sheet also showed strained liquidity
with $1,271,447 in total current assets available to pay
$2,394,888 in total current liabilities coming due within the next
12 months.
Full-text copies of the Company's second quarter financials are
available for free at http://ResearchArchives.com/t/s?f48
Orthometrix, Inc., markets, sells and services several
musculoskeletal product lines used in pharmaceutical research,
diagnosis and monitoring of bone and muscle disorders, sports
medicine, rehabilitative medicine, physical therapy and pain
management.
PANTRY INC: Earns $20.3 Million in Third Fiscal Quarter
-------------------------------------------------------
The Pantry, Inc.'s net income for the quarter ended June 29, 2006,
rose 22.2% to $20.3 million, from $16.6 million for the same
period a year ago. Total revenues for the quarter were
approximately $1.6 billion, up 41% from the corresponding period
last year.
The Company disclosed that net income for the first nine months of
fiscal 2006 was $62.5 million, compared with $32.4 million in the
corresponding period last year. EBITDA for the first nine months
of fiscal 2006 was $204.1 million, up 44.6% from a year ago.
Peter J. Sodini, chairman and chief executive officer, said,
"These record results reflect our continued solid execution of the
basics at the store level, the impact of successful acquisitions
over the past year, and a favorable industry environment in the
gasoline business. We are particularly pleased with the strong
5.8% increase in comparable store merchandise sales and the 17.3%
increase in overall merchandise gross profits. Our results
continue to benefit from the rebranding of most of our stores
under the Kangaroo Express(SM) banner over the last few years, the
ongoing fine-tuning of our merchandise offerings to meet
consumers' convenience needs, and our focus on higher-margin
opportunities in food service and private label products."
The Company further disclosed that, during the third quarter, it
completed the acquisition of Shop-A-Snak Food Mart, Inc., which
operated 38 convenience stores in Alabama. The Company also
signed a definitive agreement to acquire six stores operating
under the Fuel Mate banner in North Carolina, two additional
stores in Florida and one in Mississippi. The acquisitions are
expected to close in the fourth quarter and bring the total number
of stores acquired for the fiscal year to date to 111 stores,
exceeding the 96 stores acquired in fiscal 2005. The Company also
expects to develop and open a total of seven new large store
format locations this fiscal year, and to accelerate new store
openings in fiscal 2007 and beyond.
Full text-copies of the Company's financial statements for the
third fiscal quarter and nine months ended June 29, 2006, may be
viewed at no charge at http://ResearchArchives.com/t/s?f47
Headquartered in Sanford, North Carolina, The Pantry, Inc.
(NASDAQ: PTRY) -- http://www.thepantry.com/-- is an independently
operated convenience store chain in the southeastern United
States. As of June 29, 2006, the Company operated 1,499 stores in
eleven states under select banners including Kangaroo Express(SM),
its primary operating banner. The Pantry's stores offer a broad
selection of merchandise, as well as gasoline and other ancillary
services designed to appeal to the convenience needs of its
customers.
* * *
As reported in the Troubled Company Reporter on May 16, 2006,
Standard & Poor's Ratings Services raised its corporate credit
rating on The Pantry Inc. to 'BB-' from 'B+'. At the same time,
the bank loan rating was raised to 'BB' from 'BB-', with the
recovery rating unchanged at '1', indicating expectations for full
recovery of principal in the event of a default. The subordinated
debt rating was also raised to 'B' from 'B-'. The outlook is
stable.
PARAMOUNT RESOURCES: S&P Junks Rating on $150 Million Term Loan
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC+' senior
secured debt rating, with a recovery rating of '3', to Calgary,
Alberta-based Paramount Resources Ltd.'s six-year $150 million
secured term loan B. The '3' recovery rating reflects the
expectation of meaningful recovery (50%-80%) of principal in a
payment default scenario. The 'CCC+' long-term corporate credit
and 'CCC' senior unsecured debt ratings on the company are
unchanged. The outlook is stable.
"Proceeds from the term loan B facility will be used by Paramount
to repay its existing credit facility, which will provide the
company with cash availability to fund the shortfall between its
2006 capital program and its projected internal cash flows," said
Standard & Poor's credit analyst Jamie Koutsoukis. "Although
Paramount continues to spend significantly more than its operating
cash flows on its capital program, the company has yet to realize
the reserves and production growth we deem necessary to strengthen
its business profile. Furthermore, as Paramount will be funding a
large part of its capital program through the use of debt, this
incremental leverage also limits its ability to strengthen its
financial profile," Ms. Koutsoukis added.
The ratings on Paramount reflect the company's low reserve life
index, high finding and development costs, high leverage when
measured on a debt per net proven barrels of oil equivalent basis,
and near-term negative free cash flow.
The stable outlook reflects Standard & Poor's expectation that
Paramount's credit profile will remain relatively unchanged in the
near term. Although the company will outspend its internally
generated cash flows as it works to increase its production and
reserves, debt levels should not rise significantly. Overall,
leverage should remain in line for the ratings category, as the
company could use a mix of debt, equity, and asset
rationalizations to fund the shortfall. A negative rating action
could occur if the company's negative cash flow exceeds expected
levels, and there is a sustained weakness in financial metrics, or
if Paramount is unable to economically develop its proven
reserves. Alternatively, a positive rating action would depend on
Paramount successfully demonstrating internal reserve and
production growth while improving its financial flexibility by
materially improving and maintaining a stable break-even cost
profile.
PARMALAT GROUP: Banca Popolare Settles Parmalat Suit for EUR69 MM
-----------------------------------------------------------------
Parmalat SpA and Banca Popolare Italiana Scrl agreed to settle
lawsuits over the bank's alleged role in the Italian dairy's
collapse.
Pursuant to the settlement, BPI will pay Parmalat EUR59.5 million
in cash and EUR10 million in receivables. The parties will
withdraw claims against each other.
BPI is just one of the many financial institutions that Parmalat
has asserted claw-back claims. Parmalat expects to recover up to
EUR7,500,000,000 from banks for their part in Parmalat's going to
bankruptcy.
In 2004, Nextra Investment Management SGR, or Intesa Group,
settled with the Italian dairy for EUR160 million. In mid-2005,
Morgan Stanley paid Parmalat EUR155 million for a global
settlement of their mutual claims.
Parmalat could reach settlements totaling EUR2 billion with banks
including Capitalia SpA, Banca Intesa SpA, UniCredit SpA and
Deutsche Bank AG, Dow Jones Newswire says, citing the Il Corriere
newspaper.
Parties' Statement
Parmalat SpA ("Parmalat"), assisted by Studio Maffei Alberti, and
Banca Popolare Italiana Societ. Cooperativa ("BPI"), assisted by
Studio Iannaccone e Associati, communicate that the agreement was
reached and two contracts have been signed by which there will be
a settlement of all reciprocal claims that had led to litigation
arising from operations in the period preceding placement of the
Parmalat Group in Extraordinary Administration (December 2003).
The contracts, which cover BPI and its direct and indirect
subsidiaries, and Parmalat and its originating "procedures", bring
all pending revocatory actions and all further reciprocal claims
to an end, according to the following structural framework:
First Contract
1. The BPI Group will pay Parmalat EUR59.5 million in two
installments:
-- at the execution of the agreement, the first
installment of EUR44.5 million will be paid; and
-- the remaining EUR15 million will be paid by
March 31, 2007;
2. Receivables towards third parties, approximating
EUR10 million -- which had been assigned as collateral to
BPI -- will revert to Parmalat;
3. BPI withdraws the objections that it filed against the
proof of claims of Parmalat Finanziaria in Extraordinary
Administration for credit claims in excess of
EUR30 million and will abstain from claiming in
bankruptcy credits originated as a result of restitution
of the agreed upon amounts;
Effective as of the date of full and timely payment of the first
installment of EUR44.5 million, Parmalat and its originating
"procedures" will withdraw from all actions and complaints it had
initiated before the Tribunal of Parma, and will abstain from
submitting against the BPI Group, new complaints aiming to obtain
claw back of preferential payments effected during the period
provided for in Art. 67 of the B.L.
Furthermore, Parmalat and the originating "procedures" undertake,
effective the date of payment of the first installment:
-- to abstain from filing as a "private party" against the
BPI Group in any of the pending and future criminal
proceedings that are linked in whatever manner to the
Parmalat Group insolvency; and
-- to withdraw from all revocatory, restitution and/or
damages and/or indemnity actions, and from all other
actions of whatever nature or title, including actions
that have resulted from facts that might hypothetically
have criminal relevance and are referable to the
declaration of insolvency of the Parmalat Group.
Second Contract
Parmalat will take the share parts of Sata Srl (a company
traceable to the Tanzi family, presently in receivership) from
which it claims credits of EUR149 million compared to total Sata
debits of ?157 million. The assignment of the share parts will
take place for a consideration of EUR1. The Parmalat credit is
presently objected to by a third party creditor, as per Art. 100
B.L.
In this connection, in furtherance of the contracts, the BPI Group
undertakes to support the emergence of Sata from bankruptcy
through (i) waiver of a credit of approximately EUR2.5 million it
claims against the above mentioned third party creditor, and (ii)
cancellation of a mortgage collateral
valued EUR28 million recorded against the real estate of Azienda
Agricola Pisorno Srl, a company controlled by Sata, upon payment
by this company and/or by Parmalat, in favor of BPI, of an amount
of EUR15 million by March 31, 2007, this term being of the
essence.
Parmalat communicates that Sata has liquidity of EUR28 million,
and that the Azienda Agricola Pisorno has an estimated value of
EUR40 million.
BPI Also Settles Parmatour Claims
The BPI Group communicates further that it has executed a contract
with the companies Parmatour S.p.A. in a.s., Nuova Holding S.p.A.
in a.s., Hit S.p.A. in a.s., Hit International S.p.A. in a.s.
(hereinafter the "Parmatour Procedures"), assisted by Studio
Tracanella.
In accordance with said contract, the BPI Group undertakes to pay
Parmatour EUR12 million in full satisfaction of all and any claims
filed, or to be filed, by the Parmatour Procedures, to renounce
its credits that have been admitted as unsecured credits in the
claims role of Parmatour for EUR26,912,783.15, and to return to
Parmatour EUR715,194.15 which is being held in a certain
restricted bank account that was opened according to a Interbank
Treaty dated April 29, 2003, among some banking institutions and
Parmatour.
The Parmatour Procedures:
-- undertake to abstain from filing as a "private party"
against the BPI Group in any of the pending and future
criminal proceedings that are linked in whatever manner
to the Parmatour insolvency; and
-- withdraw, with respect to the BPI Group, from all
revocatory, restitution and/or damages and/or indemnity
actions, and from all other actions of whatever nature or
title, including actions that have resulted from facts
that might hypothetically have criminal relevance, which
are referable to the declaration of insolvency of
Parmatour, and from whatever claim which may consist of
possible charges of responsibility in the causation
and/or the deepening and/or the delayed declaration of
insolvency of Parmatour.
The Boards of Parmalat and Banca Popolare Italiana have expressed
their satisfaction that agreement has been reached.
Headquartered in Wallington, New Jersey, Parmalat USA Corporation
-- http://www.parmalatusa.com/-- generates more than 7 billion
euros in annual revenue. The Parmalat Group's 40-some brand
product line includes milk, yogurt, cheese, butter, cakes and
cookies, breads, pizza, snack foods and vegetable sauces, soups
and juices and employs over 36,000 workers in 139 plants located
in 31 countries on six continents. The Company filed for chapter
11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No.
04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at
Weil Gotshal & Manges LLP, represent the Debtors. When the U.S.
Debtors filed for bankruptcy protection, they reported more than
$200 million in assets and debts. The U.S. Debtors emerged from
bankruptcy on April 13, 2005. (Parmalat Bankruptcy News, Issue
No. 75; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PHOTOWORKS INC: Balance Sheet Upside-Down by $2MM at June 30
------------------------------------------------------------
PhotoWorks, Inc's balance sheet at June 30, 2006 showed total
assets of $2.34 million and total liabilities of $4.39 million
resulting in a total stockholders' deficit of $2.05 million.
The Company's stockholders' deficit widened from a deficit of
$189,000 at Sept. 24, 2005.
The Company disclosed a net loss of $1.28 million for the third
fiscal quarter ended June 30, 2006, compared to a net loss of
$1.63 million in the 3rd quarter of fiscal year 2005. For the
fiscal year to date, the Company reduced its net loss by 39% to
$2.54 million, from $4.17 million over the same period last year.
The Company further disclosed that, gross margin as a percentage
of net revenues increased to 36.1% compared to 29.9% in the 3rd
quarter of fiscal year 2005. For the fiscal year to date, gross
margin increased to 39.7% compared to 31.5% over the same period
last year. The increase of gross margin is the result of higher
margin sales and the streamlining of operations.
"PhotoWorks is continuing to show strong demand for its online
digital photography services with our third consecutive quarter
with over 75% growth," Joseph W. Waechter, chairman of the
Company, said. "Our restructuring and investments in our new
digital product line are continuing to show good results."
Headquartered in Seattle, Washington, PhotoWorks(R), Inc.
(OTCBB: FOTO) -- http://www.photoworks.com/-- is an Internet
based digital photo-publishing company. The company's web based
services allow PC and Mac users to create hard bound photo books,
customized greeting cards, calendars, prints and other photography
sourced products straight from their computers. Formerly known as
Seattle Film Works, PhotoWorks has a 30-year national heritage of
helping photographers share and preserve their memories with
innovative and inspiring products and services.
Going Concern Doubt
Williams & Webster, PS, expressed substantial doubt about the
Company's ability to continue as a going concern after it audited
the financial statements for the fiscal year ending Sept. 30,
2005. The auditing firm pointed to the Company's net losses and
cash flow shortages.
PROFESSIONAL INVESTORS: Case Summary & Four Largest Creditors
-------------------------------------------------------------
Debtor: Professional Investors Insurance Group, Inc.
555 Republic Drive, Suite 490
Plano, TX 75074
Bankruptcy Case No.: 06-33278
Chapter 11 Petition Date: August 9, 2006
Court: Northern District of Texas (Dallas)
Debtor's Counsel: John P. Lewis, Jr., Esq.
1412 Main Street, Suite 210
Dallas, TX 75202
Tel: (214) 742-5925
Fax: (214) 742-5928
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 4 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Western General Insurance Judgment against $1,000,000
Company Encino Executive
Joseph Fishbach Plaza, LP,
9595 Wilshire Boulevard Debtor's affiliate
Suite 410
Beverly Hills, CA 90212
City of Irving, Texas Claims against ART $250,000
c/o Michael L. Raiff Valley Corp.,
Suite 3700 Debtor's wholly
Trammel Crow Center owned subsidiary
2001 Ross Avenue
Dallas, TX 75201
William G. Gibbs $200,000
111 East Broadway
Suite 900
Salt Lake City, UT 84111
Miller Guymon, PC Attorneys fess Unknown
165 South Regent Street
Salt Lake City, UT 84111
QUEBECOR WORLD: DBRS Downgrades Low-Ratings on Long-Term Debt
-------------------------------------------------------------
Dominion Bond Rating Service downgraded the long-term debt ratings
of Quebecor World Inc. and related entities to BB from BB (high)
and downgraded the Cumulative Redeemable Preferred Shares to Pfd-4
from Pfd-4 (high). The trends remain Negative. The downgrade
reflects a greater than expected weakening of the financial
profile due to (1) continuing market disequilibrium
and secular adversity, including further pricing pressure and
reduced volume, and (2) free cash flow pressure as a result of
declining earnings together with higher capital expenditure.
* Senior Unsecured Notes Downgraded BB Neg
* Senior Debentures and Debt Securities Downgraded BB Neg
* Senior Debentures Downgraded BB Neg
* Debt Securities Downgraded BB Neg
* Cumulative Redeemable Preferred Shares Downgraded Pfd-4 Neg
The Company's financial profile has deteriorated more than
expected in 2006, with EBITDA margins falling below 10%, cash
flow-to-debt decreasing to 0.15 times, and gross debt-to-EBITDA
increasing to 4.7 times. While DBRS acknowledges the Company is
experiencing temporary inefficiencies related to the upgrading of
its plants which is depressing results, DBRS is concerned with
Quebecor World's ability to grow revenue and improve margins in an
environment where competitors are leveraging their updated
manufacturing platforms during Quebecor World's upgrade cycle.
DBRS notes the Negative trend reflects that Quebecor World
will continue to be pressured until it can realize efficiencies
related to the installation of state-of-the-art presses that
should improve the Company's competitive position and improve
efficiencies, which should manifest by way of improving EBITDA
margins and cash flow.
Two key metrics of the commercial print industry's health, low
U.S. Capacity Utilization and stagnant U.S. Advertising Pages
growth, continue to reflect difficult industry conditions. In
short, there continues to be oversupply. DBRS believes that
oversupply may continue to be a concern, as new presses have great
capacity and demand remains stagnant due to the Internet and
digital technology, which have resulted in a secular shift away
from print products. Print-based media are increasingly used less
as information sources and thus advertisers are reducing their
allocation to print media and rapidly accelerating their spending
on Internet advertising. As a result, Quebecor World has to price
aggressively to maintain or win contracts.
DBRS notes the Company appears to be committed to strengthening
the balance sheet; hence, share repurchase or increase of
dividends are not expected. Liquidity seems reasonable, given
availability under the bank facilities.
REFCO INC: Investors Buy $69.9 Million in Claims
------------------------------------------------
More than $69,900,000 in claims against Refco, Inc., and its
debtor-affiliates' estates have changed hands since they filed for
bankruptcy.
Investors capitalized on the decision of about 50 Refco claimants
to cash in on their claims now instead of waiting for the
Bankruptcy Court to confirm a plan of reorganization for Refco,
to recover what they're owed.
Total Claims
Investor Acquired % Acquired
-------- ------------ ----------
Abadi & Co. $27,523,369 39% +++++++++++++++++++-
Contrarian Funds 15,572,016 22% ++++++++++++
Hain Capital 8,823,133 13% ++++++-
Deutsche Bank 8,781,246 13% ++++++-
Fimex Int'l 4,206,762 6% +++
DK Acquisition 1,374,812 2% +
QVT Fund LP. 1,006,491 2% +
Others 3,992,643 5% ++-
Abadi & Co. was the biggest spender, taking home $27,523,369 in
aggregate claims from 11 claimants, including:
Transferor Claim Amount
---------- ------------
NKB Investments Ltd. $11,303,266
Aldesa Valores Puesto 1,961,934
Atlantic Global 2,143,762
Union Bank for Savings& Investment 2,063,000
Hain Capital Holdings LLC filed on January 13, 2006, the first
notice of transfer agreement pursuant to Rule 3001(e) of the
Federal Rules of Bankruptcy Procedure, after acquiring an
$858,014 claim by Arbitrade 2003. Hain also bought claims from
five other claimants, including a $6,000,000 claim by Prism Ltd.
Contrarian Funds LLC acquired four claims totaling $7,603,741
from Denali Master Fund LP and a $7,968,275 claim from KPC Corp.
Deutsche Bank Securities, Inc., bought $8,781,246 in claims from
Frankfurt FX, LP, Alphix Co. Ltd., and North Hills Management
LLC.
Fimex International got two $2,000,000 claims from Abadi & Co.
QVT Fund bought claims from Ralph Hervarac, Inc., and Hibernia
Investment & Finance, S.A. DK Acquisition got a $1,374,812 claim
by Capital Returns.
Other investors that purchased claims against Refco are:
Investor Total Amount
-------- ------------
SPCP Group LLC $965,361
Dresdner Bank AG 751,768
ASM Capital II, LP 213,832
Trade-Debt.net 74,934
ASM Capital, LP 72,950
Argo Partners 36,228
Liquidity Solutions 5,171
About Refco Inc.
Based in 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. Luc A.
Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents
the Official Committee of Unsecured Creditors. 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 LLC, an affiliate, filed for chapter 7 protection on
Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is
a regulated commodity futures company that has businesses in the
United States, London, Asia and Canada. Refco, LLC, filed for
bankruptcy protection in order to consummate the sale of
substantially all of its assets to Man Financial Inc., a wholly
owned subsidiary of Man Group plc. Albert Togut, the chapter 7
trustee, is represented by Togut, Segal & Segal LLP.
On April 13, 2006, the Court appointed Marc S. Kirschner as Refco
Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is
represented by Bingham McCutchen LLP. RCM is Refco's operating
subsidiary based in Bermuda.
Three more affiliates of Refco, Westminster-Refco Management LLC,
Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed
for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case
Nos. 06-11260 through 06-11262). (Refco Bankruptcy News, Issue
No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000).
REFCO INC: Chapter 7 Trustee Can Sublease Space to F.S. Trading
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of California
gave Albert Togut, the Chapter 7 Trustee overseeing the
liquidation of Refco, LLC's estate, authority to assume and
assign the Sublease to S. French Enterprises, Inc., dba F.S.
Trading.
Refco LLC subleases a portion of the 47th floor of a building at
1 North Wacker Drive, in Chicago, Illinois, from Citadel
Investment Group, L.L.C. The lease is for five years, from
Dec. 1, 2003, through Nov. 30, 2008.
The Sublease calls for payment of:
(a) $4,463.13 per month through Nov. 30, 2004;
(b) $4,583.75 per month from Dec. 1, 2004, through
Nov. 30, 2005;
(c) $4,704.38 per month from Dec. 1, 2005, through
Nov. 30, 2006;
(d) $4,825 per month from Dec. 1, 2007, through
Nov. 30, 2007; and
(e) $4,945.63 per month from Dec. 1, 2007, through
Nov. 30, 2008.
Refco LLC is also required to pay a portion of taxes and
operating expenses, including certain utility costs.
Albert Togut, the Chapter 7 Trustee overseeing the liquidation of
Refco, LLC's estate, evaluated the Sublease to ensure that it
remained subject to possible assumption and assignment to Man
Financial, Inc., which acquired Refco's regulated commodities
futures merchant business and certain contracts. However, Man
advised Mr. Togut that it did not want to take an assignment of
the Sublease.
The Chapter 7 Trustee says assuming and assigning the lease will
minimize the Refco LLC estate's liabilities and maximize its
Assets.
FS Trading is willing to assume the Sublease, including Refco
LLC's obligations to pay the monthly rent for the remainder of
the Sublease term, Scott E. Ratner, Esq., at Togut, Segal & Segal
LLP in New York, informs the Court.
Mr. Ratner also notes that Citadel is willing to accept FS
Trading as replacement tenant, including the payment of rent
directly from -- and the performance of any other obligations
under the Sublease by -- FS Trading.
About Refco Inc.
Based in 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. Luc A.
Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents
the Official Committee of Unsecured Creditors. 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 LLC, an affiliate, filed for chapter 7 protection on
Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is
a regulated commodity futures company that has businesses in the
United States, London, Asia and Canada. Refco, LLC, filed for
bankruptcy protection in order to consummate the sale of
substantially all of its assets to Man Financial Inc., a wholly
owned subsidiary of Man Group plc. Albert Togut, the chapter 7
trustee, is represented by Togut, Segal & Segal LLP.
On April 13, 2006, the Court appointed Marc S. Kirschner as Refco
Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is
represented by Bingham McCutchen LLP. RCM is Refco's operating
subsidiary based in Bermuda.
Three more affiliates of Refco, Westminster-Refco Management LLC,
Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed
for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case
Nos. 06-11260 through 06-11262). (Refco Bankruptcy News, Issue
No. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000).
RESIDENTIAL ASSET: S&P Affirms Low-B Ratings on 12 Cert. Classes
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on 87
classes of mortgage pass-through certificates from six
transactions issued by Residential Asset Securitization Trust.
The affirmations are based on credit support percentages that are
sufficient to maintain the current ratings. As of the July 2006
distribution date, total delinquencies for these transactions
ranged from 2.77% to 3.89% of the current pool balances. None of
the transactions have experienced more than 0.01% in cumulative
realized losses.
The certificates represent an undivided ownership interest in a
trust fund consisting of 30-year, fixed-rate mortgage loans
secured by first liens on one- to four-family residential
properties. Credit support is provided by subordination.
Ratings Affirmed
Residential Asset Securitization Trust
Trust Series Class Rating
----- ------ ----- ------
2005-A4 2005-D A-1, A-2, PO, A-X AAA
2005-A4 2005-D B-1 AA
2005-A4 2005-D B-2 A
2005-A4 2005-D B-3 BBB
2005-A4 2005-D B-4 BB
2005-A4 2005-D B-5 B
2005-A5 2005-E A-1, A-2, A-3, A-4, A-5, A-6 AAA
2005-A5 2005-E A-7, A-8 A-9, A-10, A-11, A-12 AAA
2005-A5 2005-E A-13, PO, A-X AAA
2005-A5 2005-E B-1 AA
2005-A5 2005-E B-2 A
2005-A5 2005-E B-3 BBB
2005-A5 2005-E B-4 BB
2005-A5 2005-E B-5 B
2005-A6CB 2005-F A-1, A-2, A-3, A-4, A-5, A-6 AAA
2005-A6CB 2005-F A-7, A-8, A-9, PO, A-X AAA
2005-A6CB 2005-F B-1 AA
2005-A6CB 2005-F B-2 A
2005-A6CB 2005-F B-3 BBB
2005-A6CB 2005-F B-4 BB
2005-A6CB 2005-F B-5 B
2005-A7 2005-G A-1, A-2, A-3, A-4, A-5, A-6 AAA
2005-A7 2005-G A-7, PO, A-X AAA
2005-A7 2005-G B-1 AA
2005-A7 2005-G B-2 A
2005-A7 2005-G B-3 BBB
2005-A7 2005-G B-4 BB
2005-A7 2005-G B-5 B
2005-A8CB 2005-H A-1, A-2, A-3, A-4, A-5, A-6 AAA
2005-A8CB 2005-H A-7, A-8 A-9, PO, A-X AAA
2005-A8CB 2005-H B-1 AA
2005-A8CB 2005-H B-2 A
2005-A8CB 2005-H B-3 BBB
2005-A8CB 2005-H B-4 BB
2005-A8CB 2005-H B-5 B
2005-A9 2005-I A-1, A-2, A-3, A-4, A-5, PO, A-X AAA
2005-A9 2005-I B-1 AA
2005-A9 2005-I B-2 A
2005-A9 2005-I B-3 BBB
2005-A9 2005-I B-4 BB
2005-A9 2005-I B-5 B
REVLON INC: June 30 Balance Sheet Upside-Down by $1.1 Billion
-------------------------------------------------------------
Revlon, Inc., disclosed its financial results for the second
quarter ended June 30, 2006, to the Securities and Exchange
Commission on Aug. 4, 2006.
For the three months ended June 30, 2006, the Company incurred an
$87.1 million net loss on $321.1 million of net revenues, compared
to a $35.8 million net loss on $318.3 million of net revenues for
the same period in 2005.
At June 30, 2006, the Company's balance sheet showed
$960.7 million in total assets and $2.09 billion in total
liabilities, resulting in a $1.1 billion stockholders' deficit.
A full-text copy of the Company's Quarterly Report is available
for free at http://researcharchives.com/t/s?f41
About Revlon
Revlon, Inc. (NYSE:REV) -- http://www.revloninc.com/-- is a
worldwide cosmetics, skin care, fragrance, and personal care
products company. The Company's vision is to deliver the promise
of beauty through creating and developing the most consumer
preferred brands. The Company's brands include Revlon(R),
Almay(R), Vital Radiance(R), Ultima(R), Charlie(R), Flex(R), and
Mitchum(R).
ROTECH HEALTHCARE: Posts $430.7 Million Net Loss on 2006 2nd Qtr.
-----------------------------------------------------------------
Rotech Healthcare Inc.'s net revenues for the quarter ended June
30, 2006, were $111.8 million, versus net revenues of $133 million
for the quarter ended June 30, 2005.
The Company reported a net loss of $430.7 million for the quarter
ended June 30, 2006, compared with net earnings of $1.1 million
for the quarter ended June 30, 2005.
For the six months ended June 30, 2006, net revenues were
$244.3 million versus $256.3 million for the six months ended
June 30, 2005. The Company reported a net loss of $433.7 million
for the six months ended June 30, 2006 as compared with a net loss
of $1.9 million for the comparable period last year.
The Company recorded a non-cash impairment charge of $449 million
for the three months and six months ended June 30, 2006, due to
the Company's decline in market capitalization. The impairment
charge was recorded as an operating expense and reduced the
Company's goodwill. While the $449 million impairment charge will
not represent any current or future cash expenditures, it did
affect compliance with certain financial covenants under the
Company's credit agreement.
Net revenues for the three months and six months ended June 30,
2006, were negatively impacted by a $17.5 million increase in
provision for accounts receivable contractual allowances
reflecting a slow down in collection of accounts receivable.
In addition, Medicare reimbursement reductions for respiratory
medications and other non-oxygen home medical equipment items
reduced net revenue by $13.9 million and $28.5 million for the
three months and six months ended June 30, 2006, respectively.
The Company has been engaged in discussions regarding potential
strategic transactions. In connection with these discussions, the
Company entered into confidentiality agreements with several of
its major shareholders representing, in the aggregate, holders of
approximately 76% of the Company's outstanding shares as of June
30, 2006. Pursuant to the terms of these agreements, the Company
disclosed material non-public information to such shareholders.
Accordingly, the Company believes these shareholders have been
prohibited from open market trading in the Company's securities
during the period of these discussions. Discussions related to
one such strategic transaction have terminated and the Company
recorded a $3.2 million charge in the second quarter of 2006
related to expenses incurred in connection with such discussions.
EBITDA was $1.5 million for the quarter ended June 30, 2006 as
compared to $26.4 million for the quarter ended June 30, 2005.
The decrease resulted primarily from the provision for accounts
receivable contractual allowances and Medicare reimbursement
reductions described above.
Rotech Healthcare, Inc. (NASDAQ:ROHI) is a provider of home
respiratory care and durable medical equipment and services to
patients with breathing disorders such as chronic obstructive
pulmonary diseases. The Company provides its equipment and
services in 48 states through approximately 485 operating centers,
located principally in non-urban markets. The Company's local
operating centers ensure that patients receive individualized
care, while its nationwide coverage allows the Company to benefit
from significant operating efficiencies.
Lender Waiver
The Company reports that as of June 30, 2006, it was not in
compliance with certain financial condition covenants set forth in
its credit agreement. These financial covenants are based upon
"Consolidated EBITDA" which was negatively impacted by charges,
due to a $10 million limitation on the add back of such non-cash
charges to EBITDA. As of June 30, 2006, the Company had
$39 million outstanding under its revolving credit facility and
$42.0 million outstanding under its term loan. O n July 10, 2006,
the Company drew an additional $10 million on the revolving credit
facility, leaving $13.3 million available. The Company also has
$28 million in cash as of July 31, 2006. The Company is currently
working with its lenders to refinance these amounts.
On August 9, 2006, the Company entered into the fifth amendment
and limited waiver to its credit agreement, pursuant to which,
among other things, the Company's noncompliance with its financial
covenants was waived until Sept. 15, 2006. The Company was
granted the waiver in order to allow it to complete the
refinancing of outstanding amounts under its revolving credit
facility and term loan. If the Company is not able to complete a
refinancing prior to the end of the waiver period, it will be in
default under the credit agreement, and the lenders will be able
to accelerate the Company's obligations, requiring immediate
repayment of the amounts borrowed. The Company's cash flow from
operations would not be adequate to meet its debt service
requirements if the indebtedness is accelerated.
ROTECH HEALTHCARE: Lender Waiver Prompts S&P to Junk Rating
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Orlando,
Florida-based home respiratory care and durable medical equipment
and services provider Rotech Healthcare Inc. The corporate credit
rating was lowered to 'CCC' from 'B-'. The outlook is developing.
The rating action reflects the identifiable risk of default that
currently exists. The company disclosed that it was in violation
of certain financial covenants at June 30, 2006. While a waiver
was received through Sept. 15, 2006, the company will be in
default of its agreement at that date unless a refinancing can be
achieved with its lenders. In addition, Standard & Poor's is
concerned that the company was unsuccessful in its attempt to
negotiate a strategic transaction with one significant
shareholder. Further concern exists related to a slowdown in the
collection of accounts receivable.
The company borrowed some $27 million under its revolving credit
agreement during the quarter, and another $10 million subsequent
to quarter-end. This rating action follows the May 25, 2006
rating downgrade (when the corporate credit rating was cut to 'B-'
from 'B+') related to concerns about tightening covenants and the
potential impact of future reimbursement cuts.
Rotech emerged from its parent's bankruptcy as an independent
company in March 2002. "The rating reflects the company's more
clouded operating prospects, given the greater-than-anticipated
impact of Medicare reimbursement reductions for respiratory drugs
in 2006," said Standard & Poor's credit analyst Alain Pelanne.
"The rating also reflects Rotech's narrow business focus,
vulnerability to third-party reimbursement and regulatory reform,
and severely weakened financial profile. These challenges are
partially offset by the company's position as the third-largest
provider in its niche industry segment."
SAFETY-KLEEN CORP: Completes $495 Million Recapitalization
----------------------------------------------------------
As part of a plan to significantly reduce Safety-Kleen's annual
interest expense and enhance the company's capital structure,
Safety-Kleen HoldCo., Inc., completed a major recapitalization of
the company.
Under the recapitalization, which included a $100 million rights
offering to purchase the company's common stock and a new, six-
year $395 million debt facility, Safety-Kleen eliminated its
senior subordinated debt, repaid its current bank credit
facilities issued in 2005, and redeemed its preferred stock. The
new debt facilities significantly increase the company's financial
flexibility and reduce interest obligations going forward.
"This is a very significant step in enhancing Safety-Kleen's
current financial strength and future profitability," said
Frederick J. Florjancic, Jr., the company's President and Chief
Executive Officer. "This transaction restructures our long-term
debt, which saves $27 million annually in interest, and allows us
to continue increasing our profitability and consider acquisitions
as part of our growth strategy."
Mr. Florjancic noted that 97% of the holders of the company's
common stock elected to participate in the rights offering and
purchase additional equity in the company.
"We see that as a strong vote of confidence in Safety-Kleen's
future," Mr. Florjancic said.
The new financial package includes:
* $230 million term loan;
* $65 million letter of credit facility;
* $100 million revolving credit facility, with no money drawn
at closing; and,
* $100 million expansion feature.
"The company's improving operational results over the past 24
months have allowed us to refinance our debt on two occasions,"
said Dennis McGill, Safety-Kleen's Executive Vice President and
Chief Financial Officer. "That has eliminated approximately
$45 million in annual interest obligations, which now gives us
access to up to $200 million for strategic growth opportunities."
"Our ability to complete this recapitalization, which was enhanced
by the solid credit ratings recently issued to Safety-Kleen by
Standard & Poor's and Moody's, is a very clear indicator that this
company is getting healthier and stronger every quarter," Mr.
McGill added.
JP Morgan Securities and Credit Suisse Securities were co-lead
arrangers of the Safety-Kleen refinancing.
Headquartered in Plano, Texas, Safety-Kleen Corporation nka
Safety-Kleen Systems Inc. -- http://www.safety-kleen.com/--
provides specialty services such as parts cleaning, site
remediation, soil decontamination, and wastewater services. The
Company, along with its affiliates, filed for chapter 11
protection (Bankr. D. Del. Case No. 00-02303) on June 9, 2000.
Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$3,031,304,000 in assets and $3,333,745,000 in liabilities.
* * *
As reported in the Troubled Company Reporter on June 16, 2006,
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating and stable outlook to parts cleaning, oil recycling
and re-refining, and industrial waste management company Safety-
Kleen Systems Inc.
At the same time, Standard & Poor's assigned its 'BB-' bank loan
rating and recovery rating of '3' to Safety-Kleen's $395 million
senior secured credit facility. The credit facility will consist
of a $100 million revolving credit facility due 2012; a $65
million letter of credit facility due 2013; and a $230 million
term loan B due 2013. The 'BB-' bank loan rating is the same as
the corporate credit rating. This and the '3' recovery rating
indicate that lenders can expect meaningful recovery of principal
in the event of a payment default.
As reported in the Troubled Company Reporter on June 15, 2006,
Moody's Investors Service assigned B1 ratings to the proposed
senior secured credit facilities of Safety-Kleen Systems, Inc., an
indirect, wholly owned subsidiary of Safety-Kleen HoldCo., Inc.
Concurrently, Moody's assigned a B1 Corporate Family Rating to
HoldCo. The outlook for the ratings is stable.
Moody's assigned the B1 rating to Safety-Kleen HoldCo., Inc.; and
the B1 rating of Safety-Kleen Systems, Inc.'s $100 million senior
secured revolving credit facility due 2012; the B1 rating of its
$230 million senior secured term loan B due 2013; and the B1
rating of its $65 million pre-funded letter of credit facility due
2013.
SAINT VINCENTS: Can Access Sun Life's Cash Collateral Until Dec. 4
------------------------------------------------------------------
At Saint Vincents Catholic Medical Centers of New York and its
debtor-affiliates' request, and with the consent of Sun Life
Assurance Company of Canada and Sun Life Assurance Company of
Canada (U.S.), the U.S. Bankruptcy Court for the Southern District
of New York extends the Termination Date for the Debtors' use of
the Sun Life Cash Collateral through and including Dec. 4, 2006.
On September 1, October 1, November 1, and December 1, 2006, the
Debtors will pay to Sun Life a $368,404 monthly interest due under
the Loan Documents.
As reported in the Troubled Company Reporter, Saint Vincent
Catholic Medical Centers of New York issued $78.3 million in
promissory notes to the order of Sun Life Assurance Company of
Canada and Sun Life Assurance Company of Canada (U.S.) prior to
its bankruptcy filing. The Promissory Notes are secured by first
priority liens to the Debtors' various properties.
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. 31
Bankruptcy Creditors' Service, Inc., 215/945-7000)
SAINT VINCENTS: Resolves Environmental Dispute with New York DEC
----------------------------------------------------------------
Saint Vincents Catholic Medical Centers of New York and its
debtor-affiliates seek the U.S. Bankruptcy Court for the Southern
District of New York's authority to enter into an "Order on
Consent" with The New York State Department of Environmental
Conservation.
SVMC owns a petroleum bulk storage facility, including six active
registered tanks, at St. Vincent's Hospital, Staten Island,
located at 355 Bard Avenue, Staten Island, New York.
The Tanks are subject to regulation pursuant to the Environmental
Conservation Law of the State of New York, the Navigation Law of
the State of New York, and Titles 6 and 17 of the Official
Compilation of the Codes, Rules and Regulations of the State of
New York.
The DEC has jurisdiction over the environmental laws of the state
of New York, and is authorized to regulate the storage and
handling of petroleum in the state.
The DEC alleged that the Debtors committed several violations of
state law arising from the Debtor's operation of the Tanks,
including:
* a petroleum discharge in the Kill Van Kull, Staten Island,
detected by the United States Coast Guard in March 2001.
SVCMC notified the DEC of a petroleum discharge at the
Staten Island Hospital caused by equipment failure;
* the site remains contaminated; and
* one 2,000-gallon underground storage tank, one 1,500-gallon
UST, and one 4,275-gallon UST at the Facility have not been
tested as required.
In addition, the DEC alleges that SVCMC violated and continue to
violate:
(1) ECL Sections 17-0501 and 17-0503;
(2) NL Sections 173 and 176; and
(3) 17 NYCRR Section 32.5 and 6 NYCRR Section 613.5 (a).
To resolve the allegations without the risk or expense of
litigation, the Debtors entered into the "Order on Consent"
with the DEC.
The Order on Consent
For its violations, the Debtors have agreed to pay a civil
penalty for $37,500. The Debtors have agreed to grant New York:
-- an allowed administrative expense claim for $25,000, which
will be payable on the effective date of the Debtors' Plan
of Reorganization. The claim will not be subordinated for
any reason; and
-- an additional allowed administrative expense claim for
$12,500, upon service on the Debtors of a Notice of Non-
Compliance with the terms of the Order on Consent, to be
paid on the Plan Effective Date.
In addition to payment of the civil penalty, the Order on
Consent requires the Debtors to achieve compliance with
applicable environmental laws by carrying out corrective
measures.
Resolution is Reasonable
Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in New
York, asserts that SVCMC's decision to resolve the alleged
violations is reasonable and in the best interests of the estate
and creditors.
Mr. Troop points out that the proposed civil penalty is
considerably lower than the aggregate amount that the civil
penalty could be if the statutory maximum per day penalty of
$25,000 were imposed. Calculating the maximum per-day violations
from the Petition Date through the execution date of the Order on
Consent would yield a possible civil penalty -- solely for
postpetition violations -- in excess of $17,600,000.
Furthermore, Mr. Troop relates that:
(a) treating the compromise civil penalty as an administrative
expense is both fair and appropriate;
(b) the injunctive requirements contained in the Order on
Consent simply memorialize the obligations the Debtors
have under applicable state and federal laws as current
owners and operators of the USTs; and
(c) the Order on Consent will allow the estate to sell the
Staten Island Hospital, free and clear from potential
claims and liens, and in a manner that will maximize the
potential proceeds from the sale to the benefit of the
estate and the creditors.
A full-text copy of the parties' Order on Consent is available
for free at http://researcharchives.com/t/s?f55
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. 31
Bankruptcy Creditors' Service, Inc., 215/945-7000)
SAXON CAPITAL: Earns $8.6 Million in FY 2006 Second Quarter
-----------------------------------------------------------
Saxon Capital, Inc., reported net income for the second quarter
ended June 30, 2006 of $8.6 million, up 23% from the second
quarter of 2005.
The net mortgage loan portfolio grew to $6.7 billion at June 30,
2006, an increase of 10% from June 30, 2005. The second quarter
net income also included $4.4 million of one-time expense items.
"Despite a consistently competitive operating environment and a
number of one-time expense items, we have continued to make great
strides in implementing our business plan," Michael L. Sawyer,
chief executive officer of Saxon, said.
"The refinement of our origination platform has resulted in a cost
to produce of 1.92%, the lowest in our operating history. And our
premier servicing platform continues to provide us with positive
short and long-term growth opportunities, which we are intently
focused on capturing"
Financial and Operational Highlights
-- Second quarter 2006 net income of $8.6 million compared
with $7 million for the second quarter of 2005 and
$26.4 million for the first quarter of 2006.
-- Second quarter 2006 included $4.4 million of one time
expense items consisting of a $2.5 million write-off of
deferred tax assets due to a change in certain tax laws in
Texas, a $1.4 million reduction in servicing income due to
an accrual to reimburse a sponsor of a securitized mortgage
loan pool, and $500,000 to provide for the settlement
of a previously disclosed lawsuit.
-- Second quarter 2006 net cost to produce was 1.92%, compared
with 2.84% for the second quarter of 2005 and 2.46% for the
first quarter of 2006.
-- The net mortgage loan portfolio at June 30, 2006, was
$6.7 billion, an increase of 10% from June 30, 2005, and an
increase of 3% from March 31, 2006.
-- Second quarter 2006 mortgage loan production was
$920 million, an increase of 17% from the second quarter of
2005 and an increase of 23% from the first quarter of 2006.
-- Completed first "conduit" mortgage purchase of
$119.4 million.
-- Second quarter 2006 cost to service was 17 basis points,
compared with 17 basis points for both the second quarter of
2005 and the first quarter of 2006.
Headquartered in Glen Allen, Virginia, Saxon Capital, Inc. (NYSE:
SAX) is a mortgage REIT which invests in and services subprime
residential mortgages. At Dec. 31, 2005, Saxon had assets
of $7.2 billion and equity of $600 million.
SAXON CAPITAL: Morgan Purchase Cues Moody's to Review Ratings
-------------------------------------------------------------
Moody's Investors Service placed Saxon Capital's corporate family
rating of B1, and senior unsecured rating of B2, on review for
upgrade following the mortgage REIT's announcement of its proposed
acquisition by Morgan Stanley. The rating agency said that
proposed merger into a large, diversified, highly rated financial
services firm would boost Saxon's access to financial and
operational resources, as well as new customers, in the
increasingly competitive subprime mortgage market. Despite
uncertainty with regard to organizational structure and any
explicit support for the senior unsecured notes of Saxon, Moody's
believes that, given Morgan Stanley's strategic approach to this
transaction, the acquisition is a likely material credit plus
for Saxon's debtholders.
On Aug. 9, 2006, Saxon announced that it reached an agreement for
Morgan Stanley to acquire all of its outstanding shares for $14.10
per share in cash, for a total value of approximately
$706 million. The transaction is expected to be completed by
the end of 2006.
Moody's would anticipate raising Saxon's rating multiple notches
if the merger is consummated. Should the transaction not proceed
as expected, the agency would most likely revise Saxon's rating
outlook to stable.
The last rating action with respect to Saxon was taken on
April 18, 2006, when the corporate family rating of B1 and
senior unsecured debt rating of B2 were assigned.
These ratings were placed on review for upgrade:
Saxon Capital, Inc.
* corporate family rating at B1
* senior unsecured rating at B2
Saxon Capital, Inc. is a mortgage REIT headquartered in Glen
Allen, Virginia, USA, that invests in and services subprime
residential mortgages. At June 30, 2006, Saxon had assets of
$7.5 billion. Morgan Stanley is a global financial services
firm in securities, investment management and credit services.
Headquartered in New York City, Morgan Stanley reported net income
for the second quarter ended May 31, 2006 of $1,957 million on net
revenues of $8.9 billion.
SAXON CAPITAL: Morgan Stanley Deal Prompts S&P's Positive Watch
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B+/B' counterparty
credit rating on Saxon Capital Inc. on CreditWatch Positive.
The CreditWatch placement follows the announcement that Morgan
Stanley (A+/Stable/A-1) plans to acquire Saxon for $706 million,
pending regulatory and shareholder approvals, and other customary
closing conditions. S&P expects the transaction to be completed
by the end of 2006.
"This acquisition would greatly improve Saxon's business prospects
given that it is highly dependent on third-party sources for
mortgage loan production," said Standard & Poor's credit analyst
Ernest D. Napier. Having access to the U.S. mortgage franchise of
Morgan Stanley should alleviate this concern. In addition, the
transaction will provide Saxon with a wider range of funding
alternatives since, as a REIT, the company has historically relied
on wholesale funding. Saxon is a major servicer for the U.S.
subprime residential mortgage market.
Standard & Poor's will monitor the progress of this acquisition to
resolve the CreditWatch in a timely manner.
SEAGATE TECHNOLOGY: Quarter Ended June 30 Earnings Down to $7 Mil.
------------------------------------------------------------------
Seagate Technology reported net income for the quarter ended June
30, 2006 of $7 million compared to $280 million for the three
months ended July 1, 2005.
The Company reported net income of $840 million for the fiscal
year ended June 30, 2006, versus net income of $707 million for
the previous fiscal year.
The Company disclosed that the reported financial results, for its
fiscal fourth quarter and full year 2006, includes both accounting
charges related to the Maxtor acquisition of $146 million and a
loss from Maxtor's operating results, from May 19 through June 30,
2006, of approximately $72 million.
The Company reported revenue of $2.53 billion for the quarter
ended June 30, 2006, of which $279 million was Maxtor product
based, and in the year-ago quarter, reported revenues of
$2.18 billion.
For the fiscal year ended June 30, 2006, the Company reported
revenue of $9.2 billion, of which $279 million was from Maxtor
based products and revenue of $7.55 billion for fiscal year ended
July 1, 2005.
The Company disclosed it has declared a quarterly cash
distribution of $0.08 per share to be paid on or before Sept. 1,
2006.
During the quarter ended June 30, 2006, the Company further
disclosed that, it repurchased approximately 16.7 million common
shares worth approximately $400 million and also that its board of
directors has approved an additional share repurchase of up to
$2.5 billion of the company's common shares over the next two
years.
A full text-copy of the Company's financial results for its fiscal
fourth quarter and full year 2006 may be viewed, at no cost, at
http://ResearchArchives.com/t/s?f5a
A podcast featuring Bill Watkins discussing the Company's
performance during the year and the outlook going forward can be
heard and downloaded from http://www.podtech.net/seagate.
Headquartered in Scotts Valley, California, Seagate Technology
(NYSE: STX) -- http://www.seagate.com/-- is the worldwide leader
in the design, manufacturing and marketing of hard disc drives,
providing products for a wide-range of Enterprise, Desktop, Mobile
Computing, and Consumer Electronics applications. Seagate's
business model leverages technology leadership and world-class
manufacturing to deliver industry-leading innovation and quality
to its global customers, and to be the low cost producer in all
markets in which it participates. The company is committed to
providing award-winning products, customer support and reliability
to meet the world's growing demand for information storage.
* * *
Moody's confirmed Seagate's Corporate Family Rating of Ba1 and
upgraded ratings of Seagate's $400 million senior notes 8%, due
2009 to Ba1, Maxtor's remaining $135 million of the $230 million
6.8% convertible senior notes, due 2010 to Ba1 from B2 and Maxtor
Corporation's $60 million 5-3/4% convertible subordinated
debentures, due 2012 to Ba2 from Caa1. The rating outlook is
stable.
SILICON GRAPHICS: Agrees to Extend Intel Corp. Bar Date to Aug. 17
------------------------------------------------------------------
Silicon Graphics, Inc., its debtor-affiliates and Intel
Corporation are currently in negotiations to resolve certain
claims each has against the other.
To enable the parties to continue to negotiate and reach a
consensual resolution with respect to the claims -- and to avoid
the costs and expenses associated with Intel's filing of a proof
of claim -- the parties agreed that the Aug. 4, 2006 Bar Date,
solely as it applies to Intel, is extended to August 17.
Headquartered in Mountain View, California, Silicon Graphics, Inc.
(OTC: SGID) -- http://www.sgi.com/-- offers high-performance
computing. SGI helps customers solve their computing challenges,
whether it's sharing images to aid in brain surgery, finding oil
more efficiently, studying global climate, providing technologies
for homeland security and defense, enabling the transition from
analog to digital broadcasting, or helping enterprises manage
large data. The Debtor and 13 of its affiliates filed for chapter
11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977
through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq.,
at Weil Gotshal & Manges LLP, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed total assets of $369,416,815 and
total debts of $664,268,602. (Silicon Graphics Bankruptcy News,
Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000)
SILICON GRAPHICS: Gets Okay to File Plan Supplements Under Seal
---------------------------------------------------------------
Silicon Graphics, Inc., and its debtor-affiliates sought and
obtained the U.S. Bankruptcy Court for the Southern District of
New York's authority to file portions of affidavits of service and
supplemental documents to their First Amended Plan of
Reorganization containing lists of their customer contracts under
seal.
The Customer Lists contain highly sensitive commercial information
that, if made available to competitors, would put the Debtors at
an enormous competitive disadvantage and potentially undermine
their entire reorganization effort, Shai Y. Waisman, Esq., at
Weil, Gotshal & Manges LLP, in New York, explains.
The Debtors will serve copies of the Confidential Information on
the Office of the U.S. Trustee, the attorneys for the Official
Committee of Unsecured Creditors, and the attorneys for the Ad
Hoc Committee of the Debtor' secured bondholders.
Headquartered in Mountain View, California, Silicon Graphics, Inc.
(OTC: SGID) -- http://www.sgi.com/-- offers high-performance
computing. SGI helps customers solve their computing challenges,
whether it's sharing images to aid in brain surgery, finding oil
more efficiently, studying global climate, providing technologies
for homeland security and defense, enabling the transition from
analog to digital broadcasting, or helping enterprises manage
large data. The Debtor and 13 of its affiliates filed for chapter
11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977
through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq.,
at Weil Gotshal & Manges LLP, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed total assets of $369,416,815 and
total debts of $664,268,602. (Silicon Graphics Bankruptcy News,
Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000)
SOUTHERN UNION: Second Quarter Net Income Down to $9.3 Million
--------------------------------------------------------------
Southern Union Company filed its second quarter financial
statements for the three months ended June 30, 2006, with the
Securities and Exchange Commission on Aug. 7, 2006.
The Company reported net income of $9,393,000 on $552,355,000 of
operating revenues for the second quarter ended June 30, 2006,
compared with $11,335,000 of net income on $195,236,000 of
operating revenues for the same period in 2005.
For the six months ended June 30, 2006, the Company reported net
income of $103,000,000 on $1,099,521,000 of operating revenues
compared with $99,190,000 of net income on $647,336,000 of
operating revenues for the same period in 2005.
The $14.4 million EBIT improvement in the three-month period ended
June 30, 2006, versus the same period in 2005 was primarily due to
improved contributions from Panhandle Eastern Pipe Line Company,
LP totaling $18.8 million, partially offset by $4.4 million of
lower equity earnings from the Company's investment in CCE
Holdings, LLC.
Panhandle's $18.8 million EBIT improvement was primarily related
to these items:
-- Higher operating revenues of $23.7 million primarily due to:
* A $13.5 million increase in Trunkline LNG Holdings, LLC,
terminalling revenue due to expanded vaporization
capacity, a base capacity increase on the BG LNG Services
contract, and higher commodity revenues resulting from an
increase in cargoes;
* Increased transportation and storage revenues of
$7.0 million due to higher average reservation revenues of
$4.7 million which were primarily driven by higher average
rates on contracts, higher parking revenues of
$2.7 million, and higher storage revenue of $1.8 million
due to increased contracted capacity. These increases
were partially offset by lower revenues of $2.2 million,
primarily on Sea Robin resulting from the impact of the
hurricanes that occurred in the third quarter of 2005; and
* Increased other revenue of $3.2 million primarily due to
non-recurring operational sales of gas;
-- Higher operating expenses of $3.2 million primarily due to
$1.3 million of cost for inspections of facilities due to
Hurricane Rita, higher Trunkline LNG Holdings, LLC, electric
power costs of $1.0 million due to more cargoes, and a Sea
Robin fuel overrecovery in 2005 of $1.5 million;
-- A $2.0 million increase in depreciation and amortization
expense primarily due to an increase in property, plant and
equipment placed in service, including the Trunkline LNG
Holdings, LLC Phase I expansion; and
-- Higher taxes other than on income and revenues of $500,000
primarily due to higher property taxes.
Equity earnings were lower by $4.4 million primarily due to these
items in equity contributions from CCE Holdings, which have been
adjusted to reflect the Company's related 50% equity share:
-- Higher operating expense of $2.8 million primarily due to
the higher system balancing expenses of approximately
$1.3 million and $600,000 of higher electricity costs due to
the addition of San Juan compression, and $700,000 of
Calpine bankruptcy-related bad debt expense;
-- Lower net revenues of $1.5 million primarily due to lower
transportation revenues of $2.5 million associated with the
replacement of expired contracts at discounted rates,
partially offset by $900,000 of increased operational gas
sales revenue at Transwestern driven by a 14% increase in
sales volumes and a 2% increase in average pricing;
-- Higher depreciation and amortization expense of $600,000
primarily due to additions associated with the San Juan
expansion project and implementation of financial systems to
replace systems previously provided by Enron;
-- Lower capitalized equity cost during construction of
$500,000 primarily due to the completion of the San Juan
expansion project in May 2005; and
-- Higher offsetting equity earnings of $1.0 million associated
with CCE Holdings' equity investment in Citrus Corp,
primarily due to higher interruptible revenues and lower
interest expense, partially offset by higher operating
expenses and income taxes.
The $22.9 million EBIT improvement in the six-month period ended
June 30, 2006, versus the same period in 2005 was primarily due to
improved contributions from Panhandle totaling $31.2 million,
partially offset by $8.3 million of lower equity earnings from the
Company's investment in CCE Holdings.
Panhandle's $31.2 million EBIT improvement was primarily related
to these items:
-- Higher operating revenues of $32.9 million primarily due to:
* A $19.8 million increase in Trunkline LNG Holdings, LLC
terminalling revenue due to expanded vaporization
capacity, a base capacity increase on the BG LNG Services
contract, and higher commodity revenues resulting from an
increase in cargoes;
* Increased transportation and storage revenues of
$8.4 million due to higher average reservation revenues
of $8.8 million, which were primarily driven by higher
average rates on contracts, higher parking revenues of
$1.5 million, and higher storage revenue of $1.4 million
due to increased contracted capacity. These increases
were partially offset by lower revenues of $3.3 million,
primarily on Sea Robin resulting from the impact of the
hurricanes that occurred in the third quarter of 2005; and
* Increased other revenue of $4.8 million primarily due to
non-recurring operational sales of gas in 2006;
-- A $4.0 million increase in depreciation and amortization
expense primarily due to an increase in property, plant and
equipment placed in service, including the Trunkline LNG
Holdings, LLC, Phase I expansion;
-- A $0.9 million decrease in operation, maintenance and
general expenses primarily due to a $3.7 million reduction
in benefit costs including Medicare Part D subsidies and
lower headcounts and lower insurance costs of $1.7 million,
partially offset by $2.0 million of higher fuel and electric
power tracker costs and $1.3 million for inspections of
facilities due to Hurricane Rita; and
-- A $500,000 increase in taxes other than on income and
revenues primarily due to higher property taxes.
Equity earnings were lower by $8.3 million primarily due to these
items in equity contributions from CCE Holdings, which have been
adjusted to reflect the Company's related 50% equity share:
-- Higher operating expense of $3.6 million primarily due to
the higher system balancing expenses of $1.9 million,
$1.0 million of higher electricity costs due to the addition
of San Juan compression, and $700,000 of Calpine
bankruptcy-related bad debt expense;
-- Lower capitalized equity cost during construction of
$1.6 million primarily due to the completion of the San Juan
expansion project in May 2005;
-- Higher depreciation and amortization expense of $1.3 million
primarily due to additions associated with the San Juan
expansion project and implementation of financial systems to
replace services previously provided by Enron;
-- Lower equity earnings of $200,000 associated with CCE
Holdings' equity investment in Citrus Corp., primarily due
to higher depreciation and property taxes, partially offset
by higher interruptible revenues, lower interest expense and
income taxes;
-- A $500,000 increase in taxes other than on income primarily
due to higher property taxes; and
-- Lower net revenues of $600,000 primarily due to lower
transportation revenues of $4.7 million associated with the
replacement of expired contracts at discounted rates,
partially offset by $3.8 million of increased operational
gas sales revenue at Transwestern driven by a 21% increase
in sales volumes and a 14% increase in average pricing. The
level of Transwestern's transportation rates, fuel retention
percentages and operational gas sales could be affected by
Transwestern's rate case to be filed in the fourth quarter
of 2006. It is anticipated that lower average fuel
retention factors than are currently in effect will be
proposed and, if adopted, would reduce operational gas
sales. The outcome of this and other rate matters will be
decided through litigation or settlement of the rate case
and is impossible to determine at this time.
At June 30, 2006, the Company's balance sheet showed
$7,372,877,000 in total assets, $5,423,698,000 in total
liabilities, and $1,949,179,000 in total stockholders' equity.
The Company's June 30 balance sheet showed strained liquidity with
$1,906,906,000 in total current assets available to pay
$3,182,409,000 in total current liabilities coming due within the
next 12 months.
Full-text copies of the Company's second quarter financials are
available for free at http://ResearchArchives.com/t/s?f53
Southern Union Company (NYSE: SUG) -- http://www.sug.com/-- is
engaged primarily in the transportation, storage and distribution
of natural gas. Through Panhandle Energy, the Company owns and
operates 100% of Panhandle Eastern Pipe Line Company, Trunkline
Gas Company, Sea Robin Pipeline Company, Southwest Gas Storage
Company and Trunkline LNG Company -- one of North America's
largest liquefied natural gas import terminals. Through CCE
Holdings, LLC, Southern Union also owns a 50% interest in and
operates the CrossCountry Energy pipelines, which include 100% of
Transwestern Pipeline Company and 50% of Citrus Corp. Citrus
Corp. owns 100% of the Florida Gas Transmission pipeline system.
Through its local distribution companies, Missouri Gas Energy, PG
Energy and New England Gas Company, Southern Union also serves
approximately one million natural gas end-user customers in
Missouri, Pennsylvania, Rhode Island and Massachusetts.
* * *
As reported in the Troubled Company Reporter on Feb. 27, 2006,
Moody's Investors Service confirmed the Baa3 senior unsecured debt
ratings of Southern Union Company with negative outlook and its
transportation and storage subsidiary, Panhandle Eastern Pipe Line
Company, LLC, with stable outlook. Moody's also confirmed the Ba2
rating on Southern Union Company's non-cumulative perpetual
preferred securities.
TANGER FACTORY: Unit Plans $100 Mil. Exchangeable Notes Offering
----------------------------------------------------------------
Tanger Factory Outlet Centers, Inc.'s subsidiary, Tanger
Properties Limited Partnership, intends to make a public offering
of $100 million principal amount of exchangeable senior notes due
2026. As part of the offering, TPLP expects to grant the
underwriters an overallotment option to buy up to an additional
$15 million principal amount of notes.
The notes will be senior unsecured obligations of TPLP, will be
guaranteed on a senior unsecured basis by Tanger Factory Outlet
Centers, Inc., and will be exchangeable subject to various
conditions into a combination of cash and at TPLP's option cash
and Tanger Factory Outlet Centers, Inc. common shares. TPLP
expects to use the net proceeds from the sale of the notes to
repay the outstanding balances under its revolving credit
facilities and certain other indebtedness, to make additional
investments and for general corporate purposes.
Citigroup Global Markets Inc. and Banc of America Securities LLC
are the joint bookrunning managers for the proposed offering.
The exact timing and terms of the offering will depend on market
conditions and other factors.
Headquarteres in Greensboro, North Carolina, Tanger Factory Outlet
Centers, Inc. (NYSE: SKT) -- http://www.tangeroutlet.com/-- is a
fully integrated, self-administered and self-managed publicly
traded REIT. The Company presently owns 29 centers in 21 states
coast to coast, totaling 8 million square feet of gross leasable
area. Tanger also manages for a fee and owns a 50% interest in
one center containing 402,000 square feet and manages for a fee
three centers totaling 293,000 square feet.
* * *
Moody's Investors Service assigned a Ba1 rating on Tanger
Factory's Preferred Stock in June 2005.
TIME WARNER: Xspedius Merger Prompts Moody's to Hold Ratings
------------------------------------------------------------
Moody's Investors Service affirmed the B2 corporate family rating
and the existing debt ratings at Time Warner Telecom Inc., and its
wholly owned subsidiary Time Warner Telecom Holdings, Inc. The
affirmation follows the company's announcement to acquire Xspedius
Communications for total consideration of about $540 million,
consisting of $110 million of cash on hand, a $110 million draw
under the company's revolver and about $319 million in stock. As
the cash portion of the acquisition will negatively impact the
company's near term liquidity, Moody's has downgraded TWT's
liquidity rating to SGL-2 from SGL-1. The outlook remains stable.
Moody's took these rating actions:
At Time Warner Telecom, Inc.:
* Speculative grade liquidity rating -- Downgraded to SGL-2
from SGL-1
* Corporate family rating -- Affirmed B2
* Convertible senior notes due 2026 -- Affirmed Caa1
At Time Warner Telecom Holdings Inc.:
* Sr. Secured Revolver due 2009 -- Affirmed B1
* Sr. Secured Term Loan B due 2010 -- Affirmed B1
* Second Priority Senior Secured Floating Rate Notes due 2011
-- Affirmed B2
* Senior Notes due 2014 -- Affirmed B3
The rating outlook remains stable
Although the company's leverage at year-end 2006 is expected to
modestly increase to 4.8x from about 4.5x at June 30, 2006, the
addition of Xspedius' fiber assets will provide a growth platform
for TWT to serve an additional 31 markets and to expand its
facilities in 13 existing markets. The rating is tempered by the
complexity of integrating Xspedius, the planned integration costs
and the expected increase in capital expenditures to connect more
buildings to Xspedius' metro fiber network, which will push out
sustained free cash flow generation past 2007.
The stable rating outlook considers the company's growth plans and
the reasonable likelihood of achieving merger synergies.
Time Warner Telecom Inc., headquartered in Littleton, Colorado,
provides data, dedicated Internet access, and local and long
distance voice services to business customers in 44 metropolitan
markets in the United States. Xspedius, a privately held
telecommunications company, is headquartered in O'Fallon, Montana.
TITANIUM METALS: Earns $56.2 Mil. in Second Quarter Ended June 30
-----------------------------------------------------------------
Titanium Metals Corporation delivered its financial results for
the second quarter ended June 30, 2006, to the Securities and
Exchange Commission on Aug. 4, 2006.
For the three months ended June 30, 2006, the Company earned
$56.2 million of net income on $300.9 million of net revenues,
compared with $36.9 million of net income on $183.7 million of net
revenues in 2005.
As of June 30, 2006, the Company had outstanding borrowings of
$45.2 million under its U.S. credit agreement and $3.3 million
under its U.K. credit facility. As of June 30, 2006, the weighted
average interest rates on borrowings outstanding under its U.S.
and U.K. credit facilities were 6.1% and 5.6%, respectively.
At June 30, 2006, the Company had $4.1 million of letters of
credit outstanding under its U.S. credit facility required by
various utilities and government entities for performance and
insurance guarantees, and the Company had $3.7 million of letters
of credit outstanding under its European credit facilities as
collateral under certain inventory purchase contracts. These
letters of credit reduce the Company's borrowing availability
under its credit facilities. Aggregate unused borrowing
availability under its U.S. and U.K. credit facilities was
approximately $164 million as of June 30, 2006. The Company also
has overdraft and other credit facilities at certain of the
Company's other European subsidiaries, with aggregate unused
borrowing availability of $15.7 million at June 30, 2006.
A full-text copy of the Company's Quarterly Report is available
for free at http://researcharchives.com/t/s?f4c
Headquartered in Denver, Colorado, Titanium Metals Corporation --
http://www.timet.com/-- is a worldwide producer of titanium metal
products.
* * *
Moody's Investors Services placed a Caa1 issuer rating and B3 LT
Corp Family Rating on Titanium Metals.
TUCSON ELECTRIC: Moody's Places Ba2 Corp. Family Rating on Review
-----------------------------------------------------------------
Moody's Investors Service placed the ratings of UniSource Energy
Corporation's Ba2 Corporate Family Rating, and its subsidiary
Tucson Electric Power Company's Baa3 senior secured under review
for possible upgrade. UniSource's Speculative Grade Liquidity
rating of SGL-2 is unchanged.
The review reflects improved financial performance by both
UniSource and TEP and Moody's expectation that this will be
sustainable over the next several years. The improvements in
financial performance result from deleveraging and refinancing
activity that has reduced interest expense and from revenue growth
that is underpinned by a customer growth rate that is
well above average.
Over the past year, UniSource has made gradual progress
in reducing debt and refinancing at lower interest rates.
UniSource's leverage remains high, with an adjusted debt to
capital ratio of about 73%. However, we expect modest additional
improvement in balance sheet leverage in the near-to-medium term,
and cash flow coverage ratios have improved to a level that would
be consistent with a higher rating. For the next several years,
assuming generally normal operating performance, we expect that
the ratio of consolidated funds from operations to debt will be
more than 15%.
Although TEP is operating under a rate freeze through 2008,
the company's low-cost predominately coal-fired generation base
positions it relatively well for the period beyond 2008. The
Arizona Corporation Commission has scheduled proceedings to review
matters relating to the method for establishing rates for TEP
beyond 2008, when the current rate freeze is scheduled to expire.
UniSource's smaller regulated subsidiaries, UNS Gas, Inc. and UNS
Electric, Inc. are growing rapidly and are seeking increases in
base rates beginning in 2007.
The review will focus on the expected sustainability of the
company's higher cash flow generation, the regulatory outlook, and
the company's prospects for continued success in cost management.
Ratings placed under review include:
* TEP's secured bonds and secured credit facility rated Baa3,
its unsecured bonds rated Ba1, and its Ba1 Issuer Rating;
* UniSource's Corporate Family Rating and secured bank credit
facility, both Ba2.
Headquartered in Tucson, Arizona, UniSource Energy Corporation is
a holding company that provides electricity and natural gas to
approximately 593,000 customers across Arizona through its primary
subsidiaries: Tucson Electric Power Company, a vertically
integrated electric utility, and UniSource Energy Services . The
principal subsidiaries of UES are UNS Gas, Inc. and UNS Electric,
Inc.
TXU CORP: Earns $497 Million in Quarter Ended June 30
-----------------------------------------------------
TXU Corp. reported earnings of $497 million for the second quarter
ended June 30, 2006, compared to net income available to common
shareholders of $375 million in the second quarter 2005. Second
quarter 2005 reported earnings included a loss from discontinued
operations of $4 million.
Income from continuing operations was $497 million for second
quarter 2006 compared to income from continuing operations of
$383 million for the comparable prior-year period. Second quarter
2006 income from continuing operations included net charges of
$242 million that are treated as special items and 2005 income
from continuing operations included net charges of $2 million that
are treated as special items.
For year-to-date 2006, TXU's reported earnings were $1.07 billion,
as compared to net income available to common shareholders of
$791 million for year-to-date 2005.
Income from continuing operations was $1.0 billion for year-to-
date 2006, compared to $790 million for the comparable prior-year
period. Year-to-date 2006 income from continuing operations
included net charges of $242 million, treated as special items.
Year-to-date 2005 income from continuing operations included net
credits totaling $152 million, treated as special items.
"We had another solid quarter, with underlying results in line
with expectations, reflecting ongoing progress in the execution of
the company's three-year restructuring program," C. John Wilder,
TXU chairman and chief executive officer, said.
"I'm particularly proud of our record nuclear plant production.
We're also progressing well with the Power the Future of Texas
program, investing in new power generation that uses the best
available control technology to meet the state's pressing need for
a new large supply of low-cost power. On average, electricity
demand is growing in Texas at a rate equal to adding two large new
power generation units each year, and in 2006 we have already set
a record peak that is equal to four new units of capacity relative
to 2005. The system operator, the Electric Reliability Council of
Texas, has predicted that without new generation, state reserve
margins will be below safe levels as early as 2008. Our plan will
double TXU's baseload generation supply, while at the same time
cutting our overall key emissions by 20 percent and provide
customers with reliable, cheaper electricity and cleaner air."
A full-text copy of the Company's quarterly report is available
for free at http://researcharchives.com/t/s?f5b
About TXU Corp.
Based in Dallas, Texas, TXU Corp. -- http://www.txucorp.com/--
is an energy company that manages a portfolio of competitive and
regulated energy businesses in North America. In TXU Corp.'s
unregulated business, TXU Energy provides electricity and related
services to 2.5 million competitive electricity customers in
Texas, more customers than any other retail electric provider in
the state. TXU Power has over 18,300 megawatts of generation in
Texas, including 2,300 MW of nuclear and 5,837 MW of lignite/coal-
fired generation capacity. The company is also one of the largest
purchasers of wind-generated electricity in Texas and North
America. TXU Corp.'s regulated electric distribution and
transmission business, TXU Electric Delivery, complements the
competitive operations, using asset management skills developed
over more than one hundred years, to provide reliable electricity
delivery to consumers. TXU Electric Delivery operates the largest
distribution and transmission system in Texas, providing power to
more than 2.9 million electric delivery points over more than
99,000 miles of distribution and 14,000 miles of transmission
lines.
TXU Corp.'s 6.55% Senior Notes due 2034 carry Moody's Investors
Service's Ba1 rating and Standard & Poor's BB+ rating.
UNISOURCE ENERGY: Moody's Reviews Low-B Ratings on Credit Facility
------------------------------------------------------------------
Moody's Investors Service placed the ratings of UniSource Energy
Corporation's Ba2 Corporate Family Rating, and its subsidiary
Tucson Electric Power Company's Baa3 senior secured under review
for possible upgrade. UniSource's Speculative Grade Liquidity
rating of SGL-2 is unchanged.
The review reflects improved financial performance by both
UniSource and TEP and Moody's expectation that this will be
sustainable over the next several years. The improvements in
financial performance result from deleveraging and refinancing
activity that has reduced interest expense and from revenue growth
that is underpinned by a customer growth rate that is
well above average.
Over the past year, UniSource has made gradual progress in
reducing debt and refinancing at lower interest rates.
UniSource's leverage remains high, with an adjusted debt to
capital ratio of about 73%. However, we expect modest additional
improvement in balance sheet leverage in the near-to-medium term,
and cash flow coverage ratios have improved to a level that would
be consistent with a higher rating. For the next several years,
assuming generally normal operating performance, we expect that
the ratio of consolidated funds from operations to debt will be
more than 15%.
Although TEP is operating under a rate freeze through 2008,
the company's low-cost predominately coal-fired generation base
positions it relatively well for the period beyond 2008. The
Arizona Corporation Commission has scheduled proceedings to review
matters relating to the method for establishing rates for TEP
beyond 2008, when the current rate freeze is scheduled to expire.
UniSource's smaller regulated subsidiaries, UNS Gas, Inc. and UNS
Electric, Inc. are growing rapidly and are seeking increases in
base rates beginning in 2007.
The review will focus on the expected sustainability of the
company's higher cash flow generation, the regulatory outlook, and
the company's prospects for continued success in cost management.
Ratings placed under review include:
* TEP's secured bonds and secured credit facility rated Baa3,
its unsecured bonds rated Ba1, and its Ba1 Issuer Rating;
* UniSource's Corporate Family Rating and secured bank credit
facility, both Ba2.
Headquartered in Tucson, Arizona, UniSource Energy Corporation is
a holding company that provides electricity and natural gas to
approximately 593,000 customers across Arizona through its primary
subsidiaries: Tucson Electric Power Company, a vertically
integrated electric utility, and UniSource Energy Services . The
principal subsidiaries of UES are UNS Gas, Inc. and UNS Electric,
Inc.
UWINK INC: Restates 2005 Quarterly Reports Due to Errors
--------------------------------------------------------
uWink, Inc., amended its Quarterly Reports on Form 10-QSB for the
periods ended Sept. 30, June 30 and March 31, 2005, to correct
certain errors in the financial statements.
On March 7, 2006, the Company's Chief Executive Officer concluded
that its previously issued financial statements for the fiscal
year ended Dec. 31, 2004 and the first three quarters of 2004 and
2005 should not be relied upon because of errors in those
financial statements.
Subsequent to the issuance of the Company's financial statements
as of and for the year ended Dec. 31, 2004, the Company engaged in
a comprehensive re-audit of its financial condition and results of
operations as of and for the year ending Dec. 31, 2004.
Pursuant to this re-audit, uWink discovered a number of errors in
its 2004 financial statements, as originally filed. As a result,
the Company restated its 2004 financial statements and presented
the restated 2004 financial statements in the Form 10-KSB for the
2005 fiscal year filed by the Company on April 17, 2006.
In respect of its revenue for the fiscal year ended Dec. 31, 2004,
the Company determined that $200,200 was incorrectly recorded as
revenue. This $200,200 related to the potential licensing of Bear
Shop technology to Bell-Fruit Games of the United Kingdom. The
revenue was booked prematurely prior to the entry into definitive
documentation relating to the transaction. The transaction was
subsequently finalized in early 2005 as a licensing transaction
with a $24,980 advance against royalty payments based on future
sales.
The $24,980 payment received in 2005 was booked as an advance from
customers on the Dec. 31, 2005 balance sheet. In addition, the
Company, in consultation with its external auditors, determined
that, given the software problems associated with the original
Microsoft Windows version of the Bear Shop machines sold in 2004,
a $150,000 provision for sales returns should have been recorded
at Dec. 31, 2004.
The Company also discovered that $62,249 of Snap! and Bear Shop
machines shipped to distributors on consignment was incorrectly
recorded as revenue and should have been recorded as consignment
inventory. The Company also determined to reduce revenue by an
additional $10,114 to properly record customer credits in 2004
rather than 2005.
As a result, the Company restated its 2004 financial statements to
reverse the amounts incorrectly booked as revenue and to record
the provision for sales returns. The effect of this restatement
is to reduce revenue by $422,563 and cost of goods sold by $44,845
(including approximately $6,000 of vendor credits recorded in 2004
rather than 2005); and to increase inventory by $39,223. These
adjustments, combined with a reduction in the bad debt reserve of
$44,848 resulting from the lower, restated level of accounts
receivable, also resulted in a reduction in accounts receivable of
$377,741.
The Company also determined that the market price used to value
shares of its common stock issued for certain services in 2004 was
incorrect and that, as a result, the expense relating to such
services was undervalued by $90,000. In addition, the Company, in
consultation with its external auditors, determined that 150,000
warrants to purchase common stock issued to a public relations
firm in 2004 were issued for services rather than in connection
with a financing and that, as a result, financial consulting
expense of $474,216 based on the Black Scholes value of those
warrants should be recorded. Further, the Company determined that
the calculation of 2004 nominal stock option expense was incorrect
and, in consultation with its external auditors, determined that
nominal stock option expense was more properly classified as an
administrative expense under selling, general and administrative
expenses rather than other expense.
As a result, the Company restated its 2004 financial statements to
record the additional expense and to restate and reclassify
nominal stock option expense as selling, general and
administrative expenses. The effect of this restatement, together
with certain additional adjustments to selling, general and
administrative expenses and other income (expense), is to increase
selling, general and administrative expenses by $805,030 and
increase other income (expense) by $186,406.
uWink also determined that there was insufficient documentation to
support recording a gain on the settlement of debt in respect of
certain of its accounts payable in 2004. As a result, the Company
determined to restate gain on settlement of debt income for 2004.
The effect of this restatement is to reduce gain on settlement of
debt income by $38,961.
The Company also determined that the beneficial conversion feature
on $225,003 of convertible notes issued in November and December
2004 was overstated by $182,144 as a result of an incorrect
conversion price being used in the beneficial conversion feature
calculation and that a $50,000 convertible note issued to a
director of the Company was a related party transaction and,
therefore, should be reclassified from convertible notes to due to
related parties. As a result, the Company determined to restate
convertibles notes and due to related parties on the balance sheet
as of December 31, 2004 and to restate debt discount amortization
expense for 2004. The effect of this restatement is to increase
convertible notes by $119,348; increase due to related parties by
$50,000; and reduce debt discount expense by $12,797.
The $90,000 increase in the value of common stock issued for
services, the recording of $474,216 in expense relating to
warrants issued for services, the restatement of nominal stock
option expense ($44,599 effect on additional paid in capital) and
the $182,144 correction of the beneficial conversion feature on
$225,003 of convertible notes, each described above, resulted in
an increase in the additional paid in capital account of $426,691
(taking into account $21 of additional adjustments).
In addition, the Company determined that common stock certificates
relating to $176,808 of equity capital previously received were
still to be issued as of Dec. 31, 2004 and, as a result, the
Company reclassified $176,808 of additional paid in capital to the
shares to be issued account in the stockholder's deficit section
of the balance sheet at Dec. 31, 2004 (shares to be issued
amounted to $176,930 on the restated balance sheet, taking into
account an additional reclassification of $120 from the
common stock account).
The adjustments resulted in a restatement of additional paid in
capital to the effect of increasing additional paid in capital by
an aggregate of $249,883.
The Company also determined that the weighted average common
shares outstanding calculation for 2004 was incorrect. As a
result, the Company restated the weighted average common shares
outstanding for 2004. The effect of this restatement is to reduce
the weighted average common shares outstanding for 2004 by
1,662,706.
Finally, the Company, in consultation with its external auditors,
determined that the cash invested in a deposit relating to the
Company's pursuit of the assets of Sega Gameworks out of
bankruptcy was more properly classified as an investing activity
rather than an operating activity. As a result, the Company
determined to reclassify the cash effect of Deposits - Sega
Gameworks to cash flow from investing activities from cash flow
from operating activities. As a result, cash flow from operating
activities was increased by $615,000 and cash flow from investing
activities was reduced by $615,000 on the restated 2004 statement
of cash flows.
A full-text copy of the amended Form 10-QSB for the period ended
Sept. 30, 2005, is available for free at:
http://researcharchives.com/t/s?f57
A full-text copy of the amended Form 10-QSB for the period ended
June 30, 2005, is available for free at:
http://researcharchives.com/t/s?f58
A full-text copy of the amended Form 10-QSB for the period ended
March 31, 2005, is available for free at:
http://researcharchives.com/t/s?f59
Going Concern Doubt
Kabani & Company, Inc., in Los Angeles, California, raised
substantial doubt about uWink's ability to continue as a going
concern after auditing the Company's consolidated financial
statements for the year ended Dec. 31, 2005. The auditor pointed
to the Company's significant losses and negative cash flow from
operations since its inception, its working capital deficit and
its difficulty in developing a substantial source of revenue.
At March 31, 2006, the Company's balance sheet showed $1,444,330
in total assets, $1,733,147 in total liabilities, and $288,817 in
stockholders' equity deficit.
About uWink, Inc.
Based in Los Angeles, California, uWink, Inc. --
http://www.uwink.com/-- designs, develops and markets
entertainment software and platforms for restaurants, bars and
mobile devices, and manufactures and sells touch screen
pay-for-play game terminals and amusement vending machines.
The Company constructed a uniform development platform to create
over 70 short-form video games and interactive entertainment that
can be used in multiple products.
VERITEC INC: Receives Final Decree Closing Chapter 11 Case
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Minnesota issued its
"Order and Final Decree Closing Chapter 11 Case" as to Veritec,
Inc.'s bankruptcy on Aug. 10, 2006.
"I was so pleased to see those words written by Judge Kressel when
he wrote: 'the estate having been fully administered: IT IS
ORDERED, that, the chapter 11 trustee is discharged and the case
is closed'," Ms. Van Tran, Veritec's CEO, commented.
"Judge Kressel's words were a breath of fresh air," Jerry Fors,
Veritec's Chief Financial Officer stated. "Now I look forward to
the day when we will file all past due 10-Q's and K's and once
again become compliant with our reporting requirements."
About Veritec Inc.
Based in Golden Valley, Minnesota, Veritec Inc. (OTC: VRTC) --
http://www.veritecinc.com/-- is the pioneer and patent holder of
two dimensional (2D) matrix coding technology. The company
developed and markets its patented VeriCode(R) and VSCode(R).
These codes are machine writeable and readable, have high data
density capabilities, and can be used as a secure portable data
storage system.
The company filed for chapter 11 protection on Feb. 28, 2005
(Bankr. D. Minn. Case No. 05-31119). On Mar. 2, 2005, the case
was transferred from the St. Paul Division to the Minneapolis
Division and was assigned Case No. 05-41161. On Dec. 5, 2005, the
Debtor filed its amended chapter 11 plan of reorganization which
was denied confirmation by the Court on Dec. 19, 2005. At the
request of the U.S. Trustee for Region 12, on Dec. 19, 2005, the
Court entered an order converting the Debtor's chapter 11
proceedings to a chapter 7 liquidation. The Court reconverted the
case back to a chapter 11 reorganization on Mar. 8, 2006.
Matthew R. Burton, Esq., at Leonard, O'Brien, Spencer, Gale &
Sayre, Ltd., represent the Debtor. When the Debtor filed for
protection from its creditors, it listed assets totaling
$1,662,752 and debts totaling $10,227,311.
VERTIS INC: June 30 Working Capital Deficit Tops $33.3 Million
--------------------------------------------------------------
Vertis, Inc., disclosed its financial results for the second
quarter ended June 30, 2006, to the Securities and Exchange
Commission on Aug. 4, 2006.
For the three months ended June 30, 2006, the Company incurred a
$5,042,000 net loss on $356 million of net revenues, compared to a
$29,023,000 net loss on $363.4 million of net revenues in 2005.
At June 30, 2006, the Company's balance sheet showed $859.3
million in total assets and $1.4 billion in total liabilities,
resulting in a $552.4 million stockholders' deficit.
The Company's June 30 balance sheet showed strained liquidity with
$216.8 million in total current assets available to pay $250
million in total current liabilities coming due within the next 12
months.
A full-text copy of the Company's Quarterly Report is available
for free at http://researcharchives.com/t/s?f43
About Vertis
Headquartered in Baltimore, Maryland, Vertis, Inc. --
http://www.vertisinc.com/-- is the premier provider of targeted
advertising, media and marketing services. Its products and
services include consumer research, audience targeting, media
planning and placement, creative services and workflow management,
targeted advertising inserts, direct mail, interactive marketing,
packaging solutions, and digital one-to-one marketing and
fulfillment. With facilities throughout the U.S., Vertis combines
technology, creative resources and innovative production to serve
the targeted marketing needs of companies worldwide.
* * *
As reported in the Troubled Company Reporter on March 28, 2006,
Moody's Investors Service downgraded the Corporate Family rating
of Vertis, Inc., to Caa1 from B3 and changed the rating outlook to
stable from negative.
VESTA INSURANCE: List of 20 Largest Unsecured Creditors
-------------------------------------------------------
Vesta Insurance Group, Inc. released a list of its 20 Largest
Unsecured Creditors with the U.S. Bankruptcy Court for the
Northern District of Alabama, disclosing:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
1995 - 8-3/4% Senior Debt Indenture dated $43,650,000
Holders July 19, 1995
c/o U.S. Bank, N.A. 8-3/4% Senior
401 South Tyron, 12th Floor Debentures
Charlotte, NC 28288-1179 (Claim amount
excludes insiders
& petition creditors)
1997 - 8.525% Debenture Indenture dated $15,252,000
Holder January 31, 1997
c/o Wilmington Trust 8.525% Junior
Trustee Subordinated
1100 North Market Street Deferrable Interest
Wilmington, DE 19890 Debentures
Haskell, Wyatt R. Indenture dated $7,000,000
2001 Park Place North July 19, 1995
Suite 1400 8-3/4% Senior
Birmingham, AL 35203 Debentures
Costa Brava Partnership III Indenture dated $4,000,000
c/o Roark, Rearden & July 19, 1995
Hamot, LLC 8-3/4% Senior
420 Boylston Street Debentures
Boston, MA 02116
Pate, Luther S. Indenture dated $1,250,000
P.O. Box 468 July 19, 1995
Northport, AL 35476 8-3/4% Senior
Debentures
BDO Seidman, LLP Accounting Services $470,983
P.O. Box 642743
Pittsburgh, PA 15264-2743
PricewaterhouseCoopers, LLP Accounting Services $190,137
P.O. Box 65640
Charlotte, NC 28265
Crowe Chizek and Company LLC Consulting Services $138,014
P.O. Box 145415
Cincinnati, OH 45250
Houlihan Lokey Investment Consulting Services $118,004
Banking Services
245 Park Avenue
New York, NY 10167-0001
R.R. Donnelley Receivable Printing and filing $47,700
P.O. Box 905151 services
Charlotte, NC 28290
Baumann, Raymando & Co. Consulting Services $33,787
405 North Reo Street
Suite 200
Tampa, FL 33609
Sterne, Agee & Leach, Inc. Consulting Services $26,620
Attn: Fred Wagstaff
800 Shades Creek Parkway
Suite 700
Birmingham, AL 35209
The Siegfried Group, LLP Consulting Services $24,488
P.O. Box 848
Wilmington, DE 19899-9645
Cabaniss, Johnston, Gardner Legal Services $15,000
2001 Park Place Tower
Suite 700
Birmingham, AL
Jones Lang LaSalle Rent $11,915
Americas, Inc.
36410 Treasury Center
Chicago, IL 60694
The Cahaba Group Consulting Services $11,440
1200 Corporate Parkway
Suite 250
Birmingham, AL 35242
Baker, Donelson, Bearman Legal Services $3,742
420 North 20th Street
Suite 1600
Birmingham, AL 35203-5202
Computershare Shareholder Services $3,585
4229 Collection Ctr. Drive
Chicago, IL 60693
Ilios Group, Inc. Investor relations $1,334
550 West Van Buren Street
Suite 1120
Chicago, IL 60607
Maynard, Cooper & Gale, P.C. Legal Services $684
2400 Amsouth/Harbert Plaza
1901 6th Avenue North
Birmingham, AL 35203-2602
About Vesta Insurance
Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc.
(Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding
company for a group of insurance companies that primarily offer
property insurance in targeted states.
Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership
III, L.P., filed an involuntary chapter 7 petition against the
Company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517). R.
Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC,
represents the petitioners. Eric W. Anderson, Esq., at Parker
Hudson Rainer & Dobbs, LLP, represents the Debtor.
On Aug. 8, 2006, the Court converted the Debtor's case into a
chapter 11 bankruptcy proceeding.
On Aug. 1, 2006, the District Court of Travis County, Texas
entered the Order appointing the Texas Commissioner of Insurance
as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries:
Vesta Fire Insurance Corporation; The Shelby Insurance Company;
Shelby Casualty Insurance Corporation; Texas Select Lloyds
Insurance Company; and Select Insurance Services, Inc.
At Dec. 31, 2004, Vesta Insurance's balance sheet showed
$1,764,247,000 in total assets and $1,810,022,000 in total
liabilities resulting in a $45,775,000 stockholders' deficit.
WORLD HEALTH: Panel Wants Liquidation Under Ch. 11, Not Ch. 7
-------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
chapter 11 cases of World Health Alternatives, Inc., and its
debtor-affiliates objected to the proposed conversion of the
Debtors' cases to chapter 7 liquidation proceedings.
Both the Debtors and the U.S. Trustee for Region 3 have sought for
the conversion.
As reported in the Troubled Company Reporter on July 7, 2006, the
Debtors explained that engaging in a plan process would
unnecessarily deplete the Debtors' limited assets and will not
result in any economic benefit for the estates. Instead, the
Debtors believe that the interests of the estates are best served
by the conversion of these chapter 11 cases to chapter 7
proceedings so that the Debtors' remaining assets can be
effectively liquidated and distributed to stakeholders.
As reported in the Troubled Company Reporter on June 2, 2006,
Joseph J. McMahon, Jr., Esq., Trial Attorney for the U.S.
Department of Justice Office, U.S. Trustee Program, argued that
there are two grounds for appointing a chapter 11 trustee. First,
given the extraordinary accounting and financial statement
irregularities disclosed by the Debtors in the wake of Richard E.
McDonald's resignation from the President and Chief Executive
Officer posts of World Health Alternatives, Inc., it appears that
the Debtors' "precipitous collapse" was caused in part by
inadequate oversight by the Debtors' Board of Directors and its
Audit Committee. As members of the Board and, in John W. Higbee's
case, its Audit Committee during the Debtors' rapid expansion and
sudden decline, Mr. Higbee and Frederick R. Jackson, Sr., a
Company director bears responsibility for results, which, at a
minimum, reflect the inadequacies of the Board and the Audit
Committee.
Committee Wants to Remain in Existence
The U.S. Trustee has appealed the Court' opinion approving the
letter agreement among the Debtors, the Committee and
CapitalSource Finance, LLC. The Letter Agreement resolves
disputes regarding the proceeds of the $43 million sale of
substantially all of the Debtors' assets to Jackson Healthcare
Staffing, LLC, the validity of CapitalSource lien, and the debtor-
in-financing loan provided by CapitalSource.
The parties agreed that the cash proceeds from the asset sale,
together with all cash that has not been swept into a
concentration account, would be paid to CapitalSource in
satisfaction of the Debtors' prepetition and postpetition debt up
to a maximum amount of $42.5 million. CapitalSource will pay
$1.625 million for the benefit of the Debtors' general unsecured
creditors from a carve-out from its lien.
Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor, LLP,
in Wilmington, Del., contends that because of the pending appeal,
conversion of the cases would not serve to preserve the estate
assets or benefit creditors. To the contrary, creditors will
actually suffer harm if the Debtors' cases are converted. Upon
conversion, the Committee will cease to exist, along with its
ability to be a party of the Letter Agreement, and creditors and
the estates would not receive any benefits under that agreement.
Most importantly, upon conversion, the Committee's ability to
assert claims or causes of action against CapitalSource in the
event that the Letter Agreement is ultimately not approved will be
extinguished. These rights cannot be revived by a Chapter 7
Trustee because only the Committee preserved its ability to pursue
any causes of action against CapitalSource, Mr. Morgan points out.
According to Mr. Morgan, contrary to the U.S. Trustee's
contention, the Debtors can still formulate a plan. There is no
requirement that the Plan contemplate reorganization, as a
liquidating plan is an acceptance alternative in a chapter 11
case, and thus liquidation is a form of rehabilitation.
Headquartered in Pittsburgh, Pennsylvania, World Health
Alternatives, Inc. -- http://www.whstaff.com/-- is a premier
human resource firm offering specialized healthcare personnel for
staffing and consulting needs in the healthcare industry. The
company and six of its affiliates filed for chapter 11 protection
on Feb. 20, 2006 (Bankr. D. Del. Case Nos. 06-10162 to 06-10168).
Stephen M. Miller, Esq., at Morris, James, Hitchens & Williams
LLP, represents the Debtors in their restructuring efforts.
Lawyers at Young, Conaway, Stargatt & Taylor, LLP, represent the
Official Committee of Unsecured Creditors. When the Debtors filed
for protection from their creditors, they estimated assets and
debts between $50 million and $100 million.
* BOOK REVIEW: Full Faith and Credit: The Great S & L Debacle
and Other Washington Sagas
----------------------------------------------------------------
Publisher: Beard Books
Softcover: 300 pages
List Price: $34.95
Order your personal copy at
http://amazon.com/exec/obidos/ASIN/1893122492/internetbankrupt
"My friends, there is good news and bad news. The good news is
that the full faith and credit of the Federal Deposit Insurance
Corp. and the U.S. government stands behind your money at the
bank. But the bad news is that you, my fellow taxpayers, stand
behind the U.S. government."
Take it from L. William Seidman, former chairman of the FDIC under
Reagan and Bush, in his irreverent Washington memoir. Chosen by
Congress to lead the S&L cleanup, the author describes how the
debacle was created and nurtured and the lawsuits against Charles
Keating, Michael Milken, and Neil Bush that it spawned.
The story begins in the summer of 1973 when Seidman, then a Grand
Rapids, Michigan, businessman and managing partner of one of the
country's 10 largest accounting firms, which bore his family's
name, was tapped by Nixon to be undersecretary of Housing and
Urban Development.
Seidman had scarcely unpacked his bags when "the summer of 1973"
took on new meaning in Washington and across the country.
Confirmation of any of the precarious president's nominations
looked dubious in the extreme, and Seidman prepared to pack up
again. Then came a call from the office of newly appointed Vice
President Ford. Spiro Agnew, hastily departing, had left the
office in shambles. (Not least to be disposed of were large cases
of Scotch whiskey, presented to Agnew by supplicants.) Would
Seidman lend his managerial expertise for a few weeks to help a
fellow Grand Rapidan get organized?
One thing led to another in the usual Potomac way, and when Ford
advanced to the presidency, Seidman was made his assistant for
economic affairs. That job, too, was relatively short-lived, but
a decade later he returned to Washington to head the FDIC under
Reagan. What the author found was plenty disturbing. The over-
optimism of the 1970s ad 1980s- in particular, he believes, a
speculative binge of real estate investing -- followed by
recession, was resulting in numerous bank failures, more than
1,000 between 1986 and 1991. Worse, disaster loomed in the sister
agency that insured savings and loan institutions: a majority of
the nation's 4,000 S&Ls were on their way to bankruptcy.
What caused the S&L crisis? Seidman, although a small-government
advocate, blames a combination of deregulation and cutbacks in the
oversight agencies. One of his many battles, for example, was
with Office of Management and Budget, which sought to cut the
FDIC's bank supervision staff just as it had tried to reduce the
number of S&L examiners. But he finds a silver lining in the near
catastrophe: proof of resilience. The diversity of the U.S.
financial system is also its strength.
Seidman's memoir is as much about life inside the Beltway as it is
about financial crises, making this book, first published in 1990,
no less entertaining today. Included are lively anecdotes of
confrontations with heavy-weight White House chief of staff John
Sununu, an interview with a wild-eyed Wyoming purchaser of FDIC
property from a liquidated bank who arrived in Seidman's office
armed with a gun to register his displeasure with the purchase (a
valid objection, the author discovered), and ambush by Secret
Service agents who converged on Seidman as he opened his window
and leaned out to watch the president's helicopter take off.
*********
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/
On Thursdays, the TCR delivers a list of recently filed chapter 11
cases involving less than $1,000,000 in assets and liabilities
delivered to nation's bankruptcy courts. The list includes links
to freely downloadable images of these small-dollar petitions in
Acrobat PDF format.
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, Robert Max Victor M. Quiblat II,
Shimero R. Jainga, Joel Anthony G. Lopez, Emi Rose S.R. Parcon,
Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Christian Q.
Salta, Jason A. Nieva, Lucilo M. Pinili, Jr., 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 ***