/raid1/www/Hosts/bankrupt/TCR_Public/090102.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, January 2, 2009, Vol. 13, No. 1
Headlines
360NETWORKS INC: Lost $38.5M Dreier Transfer Delays Emergence
A&F PROPERTIES: Lake Caroline Golf Course Could be Auctioned
AMACORE GROUP: Balance Sheet Upside Down by $6 Million
AMACORE GROUP: Shafer Steps Down as President, Keeps CEO Post
AMERICAN APPAREL: Names Adrian Kowalewski as Executive Vice Pres.
AMERISRV FINANCIAL: Fitch Assigns 'B+' Rating on $21MM Pref. Stock
ANTIOCH COMPANY: Creditors Committee Oppose Ch. 11 Plan
ANTIOCH COMPANY: Files Pre-Packaged Ch. 11 Reorganization Plan
APEX SILVER: Fails to Comply NYSE Alternext Listing Standard
ASARCO LLC: Court OKs Manchester Environmental Claims Settlement
ASARCO LLC: Bankruptcy Court Approves Tersigni Settlement
ASARCO LLC: Sterlite May Face Competition In Asset Acquisition
ASARCO LLC: Wants Deadline to Decide on Leases Moved to Aug. 1
ASARCO LLC: Deadline to Remove Actions Extended to May 1
ATA AIRLINES: Sets Protocol to Gather Sufficient Info on Claims
ATA AIRLINES: Seeks Approval of Settlement Deal with Airliance
ATA AIRLINES: Signature Flight Opposes Indemnity Claim Dismissal
AVADO BRANDS: Wants to Sell Liquor License to Blazing Wings
AXESSTEL INC: Bryan Min Steps Down as Director to Focus on Own Co.
BAKERS FOOTWEAR: Posts $15.4 Million Net Loss in Last Nine Months
BERNARD L. MADOFF: Union Bancaire Confirms US$700-Mil. Investment
BERRY PETROLEUM: S&P Cuts Subordinated Debt Rating to 'B'
BOSCOV'S INC: Court Sets March 2, 2009, as Claims Bar Date
BOSCOV'S INC: North Hanover Mall Owner Lends $10 Million
BOSCOV'S INC: Snyder County Won't Back Family's State Loans
BOSCOV'S INC: Versa Seeks Payment of $4MM Sale Breakup Fee
BRAINTECH INC: Continuing Losses Raise Substantial Doubt
BROOKE CORP: Sells First Life to First Trinity for $2.5 Million
CEDAR FAIR LP: Bank Loan Sells at Substantial Discount
CHAPARRAL ENERGY: Edge Merger Collapses; Covenant Trouble Ahead
CHARTER COMMUNICATIONS: Bank Loan Sells at Substantial Discount
CHARTER COMM: Chance of Financial Distress Up 75%, Says Analyst
CHATHAM LIGHT: Moody's Cuts Ratings on $24MM Subor. Notes to 'Ba2'
CHEROKEE INT'L: Completes $62.3MM Merger w/ Lineage Power's Unit
CHEROKEE INTERNATIONAL: Pays $46.6MM of 5.25% Senior Notes Debt
CHESAPEAKE CORP: Files for Bankruptcy to Consummate Asset Sale
CHESAPEAKE CORP: Can Access $18.55MM Wachovia Facility on Interim
CHESAPEAKE CORP: Case Summary & 50 Largest Unsec. Creditors
CHRYSLER LLC: Awaits Gov't Loans; Seeks to Eliminate Dealerships
CITATION CORP: Settles Parts Dispute with Dana Holdings
CITIGROUP INC: Chairperson & CEO Won't Get Bonuses for 2008
COMMUNITY HEALTH: Bank Loan Sells at Substantial Discount
CLARIENT INC: September 30 Balance Sheet Upside-Down by $2.7MM
COMBIMATRIX CORP: Posts $11 Million Net Loss ir Last Nine Months
COMPLIANCE SYSTEMS: Inks Consulting Deal with Summit Trading
CONSTAR INT'L: Files for Chapter 11 to Swap Debt for Equity
CONSTAR INTERNATIONAL: Case Summary & 30 Largest Unsec. Creditors
COOPER-STANDARD AUTOMOTIVE: S&P Junks Corporate Credit Rating
CV THERAPEUTICS: SVP Amends Trading Plan with E*TRADE Securities
DANA HOLDING: Settles Parts Dispute with Citation Corp.
DANA HOLDING: Falls Below NYSE's Listing Standards
DANA HOLDING: District Court Reinstates Fraud Case vs. Ex-Officers
DBSI INC: Asks Court to Approve Procedures for Sale of PMB Assets
DEX MEDIA EAST: Bank Loan Sells at Substantial Discount
DHP HOLDINGS: Files for Ch. 11 Due to Inability to Access Funding
DHP HOLDINGS: Section 341(a) Meeting Slated for February 12
DHP HOLDINGS: Wants to Access Cash Collateral to Liquidate Assets
DREIER LLP: Court Orders Appointment of Ch. 11 Trustee
DREIER LLP: Lost Creditor Payment Keeps 360networks in Bankruptcy
ECLIPSE AVIATION: Deadline for Bids on Jan. 13; Auction Jan. 14
EINSTEIN NOAH: Board Approves Jeffrey O'Neill as CEO and Director
ELCOM INTERNATIONAL: Has Not Filed Sept. 2008 Quarterly Report
EMISPHERE TECH: To Close Tarrytown, NY Facility and Cut Workforce
EMISPHERE TECHNOLOGIES: Names Kenneth Moch to Board of Directors
EMISPHERE TECHNOLOGIES: Receives Nasdaq Non-Compliance Notice
EZRI NAMVAR: Sent to Chapter 11 Bankruptcy by Creditors
FLYING J: May Have to Shut Down Big West Plant
GENERAL MOTORS: Bank Loan Sells at Substantial Discount
GENERAL MOTORS: Gets $4 Billion in Low-Interest Loans From Gov't
GENERAL MOTORS: Receives $1.5-Billion Payment from GMAC
GEORGIA PACIFIC: Bank Loan Sells at Substantial Discount
GMAC LLC: Completes Debt-Exchange, Falls Short of $38B Target
GMAC LLC: Makes $1.5-Billion in Deferred Payments
HARRAH'S ENTERTAINMENT: S&P Ups Unsec. & Sub. Debt Ratings to CCC
HAWAIIAN TELCOM: Seeks to Reject Hyp Media Co-Marketing Pact
HAWAIIAN TELCOM: Sued By HYP Media Finance for Publisher Payments
HAWAIIAN TELCOM: Seeks to Hire Lazard as Financial Advisor
HAWAIIAN TELCOM: Seeks to Hire Kirkland as Lead Counsel
HAWKER BEECHCRAFT: Bank Loan Sells at Substantial Discount
HCA INC: Bank Loan Sells at Substantial Discount
HEARTLAND AUTOMOTIVE: Court OKs Adequacy of Disclosure Statement
HUNTSMAN ICI: Bank Loan Sells at Substantial Discount
IMARX THERAPEUTICS: Ernst & Young Out; McKennon In as Accountants
IMAX CORPORATION: Appoints Richard L. Gelfond as Sole CEO
IMPLANT SCIENCES: Amends Securities Purchase Deal with Laurus
IMPLANT SCIENCES: Completes Core Systems' Assets Sale for $3MM
IMPLANT SCIENCES: Inks Note, Warrant Purchase Agreement with DMRJ
IMPLANT SCIENCES: Relocates Headquarters and Massachusetts Ops.
ISCO INTERNATIONAL: Can't Comply with NYSE Rules; Faces Delisting
JIM PALMER: ActionView to Disapprove Reorganizational Plan
KOOSHAREM CORP: S&P Downgrades Corporate Credit Rating to 'B-'
L TERSIGNI: Settlement With Asarco Receives Court Approval
LANDSBANKI ISLANDS: Court to Hear Chapter 15 Petition on Jan. 28
LAS VEGAS SANDS: Bank Loan Sells at Substantial Discount
LEVEL 3: S&P Downgrades Corporate Credit Rating to 'SD'
LIBERTY TAX III: Sept. 30 Balance Sheet Upside-Down by $7.7MM
LINCOLN LOGS: To Stop Reorganization Efforts; Auction on Jan. 28
LYONDELLBASELL INDUSTRIES: Mulls Filing for Chapter 11
MANITOWOC CO: Bank Loan Sells at Substantial Discount
MASONITE INTERNATIONAL: Bank Loan Sells at Substantial Discount
MDWERKS INC: Outside Counsel Quits Due to Conflict of Interest
METRO PCS: Bank Loan Sells at Substantial Discount
MICROMET INC: Defers CFO's Incentives Eligibility to Jan. 2010
MOVIDA COMMS: To Seek Approval of Disclosure Statement on Jan. 5
MOVIDA COMMS: To Sell Remaining Inventory for $900,000
MPC CORP: Will Close Offices at North Sioux City
NETVERSANT SOLUTIONS: Court OKs Patriarch Sale and Settlement
OAKRIDGE HOMES: May Employ RE/MAX as Real Estate Broker
PARENT CO: Wants to Access $10.9MM of D.E. Shaw DIP Financing
PETTERS GROUP: Court OKs Appointment of Ch. 11 Trustee
PILGRIM'S PRIDE: Gets Final Approval to Use $450MM DIP Facility
PROPEX INC: Gets Go-Signal for $65MM Exit Financing from Wayzata
QUEBECOR WORLD: Gets Conversion Notice of Issued Preferred Shares
REALOGY CORP: Withdraws $500MM Exchange Offer After Court Defeat
RESERVE MANAGEMENT: SEC to Charge Co. with Securities Law Breach
RIVIERA HOLDINGS: Allows Two Shareholders to Acquire 15% Stake
SENTINEL MANAGEMENT: Ct. Confirms 4th Amended Plan of Liquidation
TARGA RESOURCES: Bank Loan Sells at Substantial Discount
TELTRONICS INC: September 30 Balance Sheet Upside Down by $6.8MM
TRANSPORTATION INVESTMENTS: Moody's Changes Outlook on Ba3 CPR
TULLY'S COFFEE: $6,500,000 Northrim Loan Extended to March 31
TULLY'S COFFEE: No Final Date Yet on Special Shareholders Meeting
TWEETER OPCO: Ch. 7 Trustee Affirms Asset Case, Seeks Bar Date
TWEETER OPCO: Ch. 7 Trustee to Sell Inventory in Apto Warehouse
TWEETER OPCO: Seeks to Retain Apto Solutions as Sales Agent
TWEETER OPCO: Trustee Seeks to Sell 65 Vehicles
TWEETER OPCO: Seeks to Use Lenders' Collateral for Warehouse Sale
UNITED SPORTS: Case Summary & 24 Largest Unsecured Creditors
UNIVERSITY MILLENIUM: Court Dismisses Chapter 7 Case
VERASUN ENERGY: Proposes Procedures for Claims Set-Off
WAVE SYSTEMS: Issues Series K Preferred Stock & Raises $1.2MM
WELLMAN INC: Makes Modifications to Creditors-Backed Plan
WELLMAN INC: Stakeholders Vote To Accept Reorganization Plan
WEST CORP: Bank Loan Sells at Substantial Discount
WESTSHORE COVE: Files for Chapter 11 Protection
WESTSHORE COVE: Case Summary & 20 Largest Unsecured Creditors
WOLVERINE TUBE: Facing $100MM Notes Maturity in April
* Housing Stimulus Needed to Spark Weakening Economy, Says NAR
* BOOK REVIEW: How To Measure Managerial Performance
*********
360NETWORKS INC: Lost $38.5M Dreier Transfer Delays Emergence
-------------------------------------------------------------
Daniel Wise at New York Law Journal reports that 360networks
inc. (USA)'s emergence from bankruptcy was held up when a
$38.5 million payment supposed to be wired to unsecured creditors
from the Dreier LLP's trust account went missing.
Law.com says that there weren't enough funds in the trust account
to cover the transaction. Law.com relates that Dreier, who
represented the unsecured creditor's committee, has now gone
bankrupt.
According to Law.com, Norman N. Kinel at Dreier, the attorney for
the unsecured creditors committee in the 360networks bankruptcy,
requested on Dec. 1 and 2 that Dreier wire the money from a
company client trust account so it could be distributed to
creditors, but his requests went unheeded. The report says that
Mr. Kinel told the Securities and Exchange Commission that he had
been advised by Dreier's comptroller that "substantially less"
than the $38.5 million was available in all firm accounts to which
he had access.
Law.com states that the unsecured creditors committee in
360networks' bankruptcy estimated that it had collected enough
money to pay 15% of $275 million in unsecured claims. Mr. Kinel,
according to the report, said that the committee had recovered
about $65 million through the commencement of 200 preference
actions. Mr. Kinel said in a statement that since September,
360networks made two distributions to unsecured creditors totaling
$16.4 million, leaving $38.5 million in the trust account to
distribute before Dreier's collapse. The remaining $10.1 million
of the $65 million recoveries was used to pay for the costs of the
recovery actions, including fees of lawyers, accountants, and
experts, Law.com says, citing Mr. Kinel.
About 360Networks
Headquartered in Vancouver, British Columbia, 360networks, Inc.
-- http://www.360.net/-- provides fiber optic communications
network products and services worldwide. The company, together
with 22 affiliates, filed for chapter 11 protection on June 28,
2001 (Bankr. S.D.N.Y. Case No. 01-13721), obtained confirmation of
their plan on October 1, 2002, and emerged from chapter 11 on
November 12, 2002. Alan J. Lipkin, Esq., and Shelley C. Chapman,
Esq., at Willkie Farr & Gallagher, represent the company in this
case. Lawyers at Dreier LLP represent the Official Committee of
Unsecured Creditors. When the Debtors filed for protection from
their creditors, they listed $6,326,000,000 in assets and
$3,597,000,000 in liabilities.
A&F PROPERTIES: Lake Caroline Golf Course Could be Auctioned
------------------------------------------------------------
Steven G. Watson at Madison County Journal reports that A&F
Properties' Lake Caroline golf course could be foreclosed and
auctioned.
Madison County Journal relates that A&F Properties filed for
Chapter 11 protection earlier this year, which put a stay on
foreclosure proceedings on the property. The report says that the
U.S. Bankruptcy Court for the Southern District of Mississippi
lifted the stay.
A&F Properties developer Craig Foshee, according to Madison County
Journal, wanted to turn the golf course into a subdivision but
homeowners and other developers in the Lake Caroline area opposed
his plan. With the current economy and the makeup of the Lake
Caroline housing market, anyone couldn't develop the property the
way Mr. Foshee had proposed, the report says, citing Steven H.
Smith, the attorney for the Lake Caroline Owners Association.
Mr. Smith said that the court lifted the stay because A&F had no
way to fund their planned development, Madison County Journal
relates. Mr. Smith said that his client is waiting to see how the
foreclosure proceedings pan out and who ultimately secures
ownership of the property, the report states.
Madison County Journal quoted Mr. Smith as saying, "We hope that
someone will buy it with the intent and purpose of reestablishing
the golf course."
According to Madison County Journal, if Mr. Foshee doesn't file an
appeal in 10 business days, the creditor can advertise its intent
to foreclose on the property and then auction it off. Foreclosure
auctions are performed at the front door of the Madison County
Circuit Court, the report says, citing Chancery Clerk Arthur
Johnston.
Jackson, Mississippi-based A&F Properties, Inc., filed for Chapter
11 protection on Aug. 27, 2008 (Bankr. S. D. Miss. Case No.: 08-
02524). J. Walter Newman, IV, Esq., who has an office at Jackson,
Mississippi, assists the company in its restructuring effort. The
company listed assets of $1 million to $10 million and debts of
$1 million to $10 million.
AMACORE GROUP: Balance Sheet Upside Down by $6 Million
------------------------------------------------------
The Amacore Group, Inc., bared an insolvent balance sheet as of
September 30, 2008, in a December 22, 2008 regulatory filing with
the Securities and Exchange Commission. As of September 30, the
company had $18,523,198 in total assets, and $25,359,274 in total
liabilities, resulting in $6,836,076 in stockholders' deficit.
At September 30, 2008, the company also had negative working
capital of $6,353,348 and an accumulated deficit of $108,102,196.
For the three months ended September 30, the company had a net
loss of $11,175,656. For the nine months ended September 30, the
company had a net loss of $29,849,189.
"We believe that without significant equity and debt investment
from outside sources, the Company will not be able to sustain our
current planned operations for the next 12 months," Amacore said.
During 2008, the company has raised from an outside source
$19,500,000 of equity funding.
To raise capital, the company said it may sell additional equity
or convertible debt securities which would result in additional
dilution to shareholders. The issuance of additional debt would
result in increased expenses and could subject the company to
covenants that may have the effect of restricting operations.
"We can provide no assurance that additional financing will be
available in an amount or on terms acceptable to us, if at all.
If we are unable to obtain additional funds when they are needed
or if such funds cannot be obtained on terms favorable to us, we
may be unable to execute upon our business plan or pay our costs
and expenses as they are incurred, which could have a material,
adverse effect on our business, financial condition and results of
operations," Amacore noted.
"Currently, the Company does not maintain a line of credit or term
loan with any commercial bank or other financial institution. The
Company has $1,320,042 of outstanding notes payable as of
September 30, 2008."
A full-text copy of Amacore's financial report for the period
ended September 30, 2008, is available at no charge at:
http://ResearchArchives.com/t/s?370e
About Amacore Group Inc.
Based in Tampa, Florida, The Amacore Group Inc. (OTC BB: ACGI) --
http://www.amacoregroup.com/-- provides health-related membership
benefit programs, insurance programs, and other innovative and
high-quality solutions to individuals, families and employer
groups nationwide.
Through its wholly owned subsidiary, LifeGuard Benefit Solutions
Inc., Amacore now has the ability to provide administrative and
back-office services to other healthcare companies in addition to
expanding its own call center capability through its wholly-owned
subsidiary, JRM Benefits Consultants LLC and US Heath Benefits
Group Inc., a call center-based marketing company. Zurvita Inc.,
Amacore's newly formed, wholly-owned subsidiary specializing in
direct to consumer multi-level marketing, provides yet another
channel for Amacore's ever-increasing range of healthcare and
healthcare-related products.
Going Concern Doubt
As reported by the Troubled Company Reporter on June 17, 2008, the
company believes that existing conditions raise substantial doubt
about the company's ability to continue as a going concern. The
company cited sustained operating losses in recent years.
AMACORE GROUP: Shafer Steps Down as President, Keeps CEO Post
-------------------------------------------------------------
Jay Shafer resigned from his position as President of The Amacore
Group, Inc., effective December 17, 2008. Mr. Shafer continues to
serve as the Company's Chief Executive Officer.
Effective December 17, 2008, Guy Norberg, 48, was appointed as
President to fill the vacancy created by Mr. Shafer's resignation.
Mr. Norberg has been a member of the Company's Board of Directors
since August 29, 2008, and has served as the Company's Senior Vice
President, Sales and Marketing since January 2007. Prior to
joining the Company, Mr. Norberg was Vice President, Sales and
Marketing of Protective Marketing Enterprises, Inc. and prior to
that he was a founder and President of US Health
Options/Innovative Health Benefits.
About Amacore Group Inc.
Based in Tampa, Florida, The Amacore Group Inc. (OTC BB: ACGI) --
http://www.amacoregroup.com/-- provides health-related membership
benefit programs, insurance programs, and other innovative and
high-quality solutions to individuals, families and employer
groups nationwide.
Through its wholly owned subsidiary, LifeGuard Benefit Solutions
Inc., Amacore now has the ability to provide administrative and
back-office services to other healthcare companies in addition to
expanding its own call center capability through its wholly-owned
subsidiary, JRM Benefits Consultants LLC and US Heath Benefits
Group Inc., a call center-based marketing company. Zurvita Inc.,
Amacore's newly formed, wholly-owned subsidiary specializing in
direct to consumer multi-level marketing, provides yet another
channel for Amacore's ever-increasing range of healthcare and
healthcare-related products.
Going Concern Doubt
As reported by the Troubled Company Reporter on June 17, 2008, the
company believes that existing conditions raise substantial doubt
about the company's ability to continue as a going concern. The
company has sustained operating losses in recent years. In
addition, the company reported a net loss of $2,592,655 for the
quarter ended March 31, 2008, and had negative working capital of
$3,769,687 as of March 31, 2008.
As of September 30, the company had $18,523,198 in total assets,
and $25,359,274 in total liabilities, resulting in $6,836,076 in
stockholders' deficit. At September 30, 2008, the company also
had negative working capital of $6,353,348 and an accumulated
deficit of $108,102,196. For the three months ended September 30,
the company had a net loss of $11,175,656. For the nine months
ended September 30, the company had a net loss of $29,849,189.
The company has indicated that without significant equity and debt
investment from outside sources, it will not be able to sustain
current planned operations for the next 12 months.
AMERICAN APPAREL: Names Adrian Kowalewski as Executive Vice Pres.
-----------------------------------------------------------------
American Apparel, Inc., has appointed Adrian Kowalewski as
executive vice president and chief financial officer effective
immediately.
Mr. Kowalewski joined American Apparel in 2006 and has served as
the company's director of corporate finance and development for
the past two years, where his responsibilities have included
finance, corporate strategy, and investor relations.
Mr. Kowalewski has been a member of American Apparel's board of
directors since the completion of the merger with Endeavor
Acquisition Corp. in December 2007. In his new role as CFO, he
will also have oversight over financial management, accounting,
and financial reporting, including Sarbanes-Oxley compliance.
Dov Charney, American Apparel's chairperson and chief executive
officer, stated, "The board of directors is very pleased that
Adrian has agreed to take on the added responsibility of serving
as CFO. In light of his past contributions to American Apparel,
and his efforts over the past six months in helping to build the
accounting and finance functions at the company, both I and the
rest of the board have full confidence that he will serve the
company well in this new leadership role."
Mr. Kowalewski began his career in investment banking at CIBC
World Markets in mergers & acquisitions. He also worked at
Houlihan Lokey Howard & Zukin and Lazard Freres & Co., both
investment banking firms, where he was involved in mergers &
acquisitions and financial restructurings. He received a
bachelor's degree with honors in economics from Harvard
University, and an MBA from the University of Chicago Graduate
School of Business.
Aja Carmichael at The Wall Street Journal reports that at 4:00
p.m. on Monday, American Apparel shares had dropped 13% to $1.59,
the lowest the shares have traded, after falling earlier to $1.55.
About American Apparel
American Apparel, Inc. (NYSE Alternext US: APP) --
http://store.americanapparel.net-- is a vertically integrated
manufacturer, distributor, and retailer of branded fashion basic
apparel based in downtown Los Angeles, California. As of October
31, 2008, American Apparel employed more than 10,000 people and
operated more than 230 retail stores in 19 countries, including
the United States, Canada, Mexico, United Kingdom, Belgium,
France, Germany, Italy, the Netherlands, Spain, Sweden,
Switzerland, Israel, Australia, Japan, South Korea, Austria,
China, and Brazil. American Apparel also operates a leading
wholesale business that supplies T-shirts and other casual wear to
distributors and screen printers. In addition to its retail
stores and wholesale operations, American Apparel operates an
online retail e-commerce Web site at
http://store.americanapparel.net.
American Apparel had $329.0 million in total assets, including
$201.3 million in current assets; and $196.3 million in total
debts, including $172.1 million in current debts as of
September 30, 2008.
As reported by the Troubled Company Reporter on Nov. 18, 2008,
American Apparel said that it violated a covenant in its SOF
Credit Agreement that prohibited it from making capital
expenditures in excess of $50 million for the fiscal year ending
December 31, 2008. The default under the SOF Credit Agreement
also resulted in a cross default under the revolving credit
facility with LaSalle Bank.
AMERISRV FINANCIAL: Fitch Assigns 'B+' Rating on $21MM Pref. Stock
------------------------------------------------------------------
Fitch Ratings has assigned a rating of 'B+' to the $21 million in
preferred stock issued by AmeriServ Financial Inc. (rated 'BB/B'
by Fitch) under the Treasury's Capital Purchase Program. The CPP
is one of the U.S. Government programs established to help
stabilize and restore confidence in the U.S. banking system. This
preferred issuance represents 3% of ASRV's total risk-weighted
assets.
Ratings Assigned:
AmeriServ Financial Inc.
-- Preferred Stock 'B+'.
ANTIOCH COMPANY: Creditors Committee Oppose Ch. 11 Plan
-------------------------------------------------------
The official committee of unsecured creditors formed in Antioch
Co.'s Chapter 11 cases objects to approval of the Debtor's pre-
packaged Chapter 11 plan.
According to Bloomberg's Bill Rochelle, the Committee says the
Plan, in its current form, unfairly discriminates against its
constituents who receive a small distribution while other
creditors, deemed essential to the ongoing business, are to be
paid in full.
The Committee requested for an adjournment of the confirmation
hearing from Dec. 18 to Jan. 9. The unsecured committee is
performing an investigation in advance of filing papers in early
January against plan approval, according to Mr. Rochelle.
The unsecured creditors not paid fully can only receive a
distribution if they agree not to sue the lenders. The Plan is
structured to provide that their distribution is to come from the
secured lenders out of their collateral.
About Antioch Co.
The Antioch Co. -- http://www.antiochcompany.com/-- owns St.
Cloud-based Creative Memories. The company was founded in 1926.
It consists of operating and business units located in Ohio,
Minnesota, Nevada, and Virginia. The direct-selling division
encompasses the U.S. and Puerto Rico, Canada, Australia, New
Zealand, Germany, Japan and the United Kingdom, with expansion
planned in other European countries. The Antioch employs more
than 1,090 people and manufactures, packages and markets more than
3,000 products to tens of thousands of independent sales
consultants and retail dealers. As reported in the Troubled
Company Reporter on Nov. 17, 2008, The Antioch reached an
agreement with lenders to restructure its debt. To facilitate
this agreement, Antioch and six of its subsidiaries filed
voluntary petitions for Chapter 11 protection on Nov. 13, 2008
(Bankr. S.D. Ohio Lead Case No. 08-35741). McDonald Hopkins LLC
represents the Debtors in their restructuring efforts. The United
States Trustee for Region 9 appointed creditors to serve on an
Official Committee of Unsecured Creditors. In their summary of
schedules, the Debtors listed $66,388,321 in total assets and
$141,142,236 in total liabilities.
ANTIOCH COMPANY: Files Pre-Packaged Ch. 11 Reorganization Plan
--------------------------------------------------------------
The Antioch Company, together with its debtor-subsidiaries, filed
before the U.S. Bankruptcy Court for the Southern District of Ohio
a Chapter 11 plan it had negotiated with its secured lenders
prepetition.
The company said the current economic and competitive environment
has hindered its ability to achieve adequate performance levels.
As a result, the company's balance sheet is overly leveraged
relative to the company's operating performance. In this regard,
the company defaulted with respect to certain covenants under its
secured credit facilities. The secured lenders agreed to forbear
from exercising certain default remedies while they negotiated the
terms of a restructuring plan for the company. The terms of the
Chapter 11 plan negotiated by Antioch and its secured lenders
allows the company to reduce its debt by $75 million.
Antioch says that it owes $41 million to lenders, led by Bank of
America, N.A., as successor to LaSalle Bank, N.A., as agent.
Antioch's obligations to these lenders are guaranteed by its
debtor-subsidiaries and secured by substantially all of its
assets. The company also owes (i) $21.3 million under certain
notes issued to fund repurchase obligations for terminated
employees pursuant to the company's employee stock ownership plan,
and (ii) $56.2 million under certain subordinated notes issued to
holders of shares of its stock or warrants.
Sale Efforts
Prior to the covenant default, faced with high debt and declining
revenues, the company began evaluating strategic alternatives. To
that end, in 2007, the company retained the investment banking
firm of Houlihan Lokey to assist it in identifying potential
purchasers of substantially all of the company's assets or stock
and potential sources of refinancing of the company's debt. In
addition, the then-holder of a substantial portion of the
company's common stock and subordinated debt retained the
investment banking firm Candlewood Partners, LLC to augment the
search for potential buyers and financing sources. "Those efforts
were also unsuccessful," Antioch said.
In May 2008, with the assistance of Houlihan, the company received
a non-binding indication of interest from J. H. Whitney & Co.,
subject to due diligence and numerous other contingencies, with a
nominal value of $54 million less certain reductions. The
proposed purchase price was less than the amount then owed to the
creditors of the company. The company's shareholders, however,
concluded that the transaction was not in their interests, as the
proposed sale be accomplished through a bankruptcy filing and
would (i) provide less than full payment of claims of the
company's unsecured creditors and (ii) yield no proceeds for the
company's shareholders.
In September 2008, with no refinancing or recapitalization option
available, the company, in consultation with its secured lenders,
again sought to identify potential purchasers. The company
received one offer to purchase all of its assets, again from J. H.
Whitney for approximately $22 million. The company determined
that the offer was inadequate.
Pre-Packaged Ch. 11 Plan
The company, after discussions with the secured lenders, concluded
that the proposed restructuring should be implemented through a
prepackaged plan of reorganization. The company believes that the
value of its businesses would be damaged significantly by a
prolonged Chapter 11 case.
Under the Plan, the secured lenders will receive (a) new term loan
promissory notes in the principal amount of $30 million, and (ii)
the new preferred member interests of reorganized Antioch.
Antioch only proposes to send ballots to holders of secured
claims. The company says other lower ranked parties, including
holders of existing equity interests, are not entitled to receive
any recovery under the Plan and are deemed to reject the Plan.
According to the disclosure statement explaining the Plan, the
value of the company is substantially less than the aggregate
amount of the claims held by the secured lenders. CRG Partners'
valuation establishes the value of reorganized Antioch on a going
concern basis as between $31.6 million and $38.0 million.
In that light, holders of unsecured claims, including ESOP
participants, would not be entitled to receive or retain any
property on account of under the Plan. The company and the
secured lenders, however, recognize that the continued dedication
of the company's employees, consultants, trade, and other
unsecured creditors to the company's business is critical to
maximizing value. In this regard, the secured lenders have
authorized and consented to a carve-out from their collateral to
provide for recovery to the two groups of unsecured creditors:
(i) Unimpaired Unsecured Creditors. The payment in full of
unsecured creditors who are expected to continue to provide
goods and services to Antioch post-emergence, hold
intercompany claims, or indemnification claims; and
(ii) Impaired Unsecured Creditors. The transfer of shares of
common stock of reorganized Antioch to an intermediate
holding company that will be owned by a trust established
for the benefit of the holders of ESOP Notes, the
Subordinated Notes, and the remaining unsecured claimants.
The Impaired Unsecured Creditors, however, will receive the shares
if they sign before the confirmation hearing a form agreement,
providing that they will forever release Antioch and the secured
lenders from any claims and obligations. These creditors will
have until Jan. 6, 2009 to make their election under the Plan.
Judge Guy R. Humphrey has agreed to hold a combined hearing to
consider approval of the Disclosure Statement and confirmation of
the Plan on Jan. 9, 2009 at 9:30 a.m. Objections are due Jan. 7,
2009 at 4:00 p.m. (prevailing Eastern Time).
The official committee of unsecured creditors formed in Antioch
Co.'s Chapter 11 cases objects to approval of the Debtor's pre-
packaged Chapter 11 plan.
About Antioch Co.
The Antioch Co. -- http://www.antiochcompany.com/-- owns St.
Cloud-based Creative Memories. The company was founded in 1926.
It consists of operating and business units located in Ohio,
Minnesota, Nevada, and Virginia. The direct-selling division
encompasses the U.S. and Puerto Rico, Canada, Australia, New
Zealand, Germany, Japan and the United Kingdom, with expansion
planned in other European countries. The Antioch employs more
than 1,090 people and manufactures, packages and markets more than
3,000 products to tens of thousands of independent sales
consultants and retail dealers. As reported in the Troubled
Company Reporter on Nov. 17, 2008, The Antioch reached an
agreement with lenders to restructure its debt. To facilitate
this agreement, Antioch and six of its subsidiaries filed
voluntary petitions for Chapter 11 protection on Nov. 13, 2008
(Bankr. S.D. Ohio Lead Case No. 08-35741). McDonald Hopkins LLC
represents the Debtors in their restructuring efforts. The United
States Trustee for Region 9 appointed creditors to serve on an
Official Committee of Unsecured Creditors. In their summary of
schedules, the Debtors listed $66,388,321 in total assets and
$141,142,236 in total liabilities.
APEX SILVER: Fails to Comply NYSE Alternext Listing Standard
------------------------------------------------------------
Apex Silver Mines Limited has received notice from NYSE Alternext
US LLC that it is not in compliance with the Exchange's continued
listing standards in that it has sustained losses that are so
substantial in relation to its overall operations or its financial
condition has become so impaired that it appears questionable, in
the opinion of the Exchange, as to whether it will be able to
continue operations and meetits obligations as they mature.
The company said it does not expect that it will be able to regain
compliance with this listing standard and expects that the
Exchange will commence delisting proceedings with respect to the
Company's ordinary shares in early January 2009. The company
further said it does not expect that it will appeal any decision
by the Exchange to delist the ordinary shares.
The company expects that upon delisting of the ordinary shares,
the ordinary shares will commence trading in the over-the-counter
market.
The delisting of the ordinary shares from the Exchange will not
affect the company's reporting obligations under the rules of the
Securities and Exchange Commission.
About Apex Silver Mine
Apex Silver Mines Ltd. explores and develops silver and other
mineral properties in Central and South America. The Company is
based in George Town, Cayman Islands.
ASARCO LLC: Court OKs Manchester Environmental Claims Settlement
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas
approved a compromise and settlement among ASARCO, LLC, Heritage
Minerals Inc., Hovsons Inc., and the New Jersey Department of
Environmental Protection, in connection with Asarco former's
Manchester, New Jersey site.
Heritage Minerals purchased the Manchester Site from ASARCO in
1984. Hovsons Inc. is the owner of Heritage.
In 2005, NJDEP filed its original Claim No. 8056, alleging natural
resource damages at a site in South Plainfield, New Jersey.
Subsequently, after the Bar Date, NJDEP amended the original claim
as Claim No. 18320, alleging natural resource damages in an
unspecified amount for property located at the Manchester Site.
Three proofs of claim relating to the Manchester Site were
thereafter filed in the Debtors' bankruptcy cases:
(1) Claim No. 11062 filed by Heritage Minerals,
(2) Claim No. 17772 filed by Hovsons Inc., and
(3) Claim No. 18320 filed by the NJDEP.
The parties subsequently negotiated and mediated regarding the
Claims. As a result, they agree to resolve their disputes by
entering into a settlement, the salient terms of which are:
(a) Heritage and Hovsons will have an allowed general
unsecured claim aggregating $12,000,000 in settlement and
satisfaction of all the claims and causes of action of
NJDEP, Heritage, and Hovsons against ASARCO;
(b) Upon payment of the Settlement Amount, Heritage, Hovsons,
and NJDEP covenant not to sue or assert claims or causes
of action against the Debtors, and the parties provide
each other with mutual releases;
(c) All of the Debtors' obligations and liabilities at the
Manchester Site and under certain other agreement or
document relating to the Manchester Site are fully
resolved and satisfied;
(d) ASARCO will receive contribution protection under Section
113(f)(2) of the Comprehensive Environmental Response,
Compensation, and Liability Act for matters addressed in
the Settlement;
(e) The parties' Settlement is subject to approval by the
Court and will be submitted for public comment following
notice; and
(f) The NJDEP reserves the right to withdraw or withhold
consent if the public comments disclose facts or
considerations, which indicate that the settlement
agreement is inappropriate, improper, or inadequate.
About ASARCO LLC
Based 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 US$600 million in total assets and
US$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. Stutzman,
Bromberg, Esserman & Plifka, APC, represents the Official
Committee of Unsecured Creditors for the Asbestos Debtors.
Former judge Robert C. Pate was appointed as the future claims
representative. Details about their asbestos-driven Chapter 11
filings have appeared in the Troubled Company Reporter since
April 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's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774
to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
The Debtors submitted to the Court a joint plan of reorganization
and disclosure statement on July 31, 2008. The plan incorporates
the sale of substantially all of the Debtors' assets to Sterlite
Industries Ltd. for US$2,600,000,000.
ASARCO LLC: Bankruptcy Court Approves Tersigni Settlement
---------------------------------------------------------
ASARCO LLC, Lac d'Amiante du Quebec Ltee, CAPCO Pipe Company,
Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec,
Ltd., and LAQ Canada, Ltd., obtained approval from the U.S.
Bankruptcy Court for the Southern District of Texas of a
settlement agreement they entered into with L. Tersigni Consulting
CPA, P.C., also known as L. Tersigni Consulting, P.C.
Before November 2007, Tersigni provided accounting and financial
advisory services primarily to creditor committees in various
asbestos-related Chapter 11 proceedings, including the ASARCO
Asbestos Creditors' Committee. However, in May 2007, Tersigni
had allegedly falsified some of the time billed for the work
performed for its clients by increasing the actual time spent
working. To this end, Tersigni engaged Heller Ehrman LLP to
conduct an investigation into its billings. Heller Ehrman issued
a report identifying certain matters, in which time shown on the
fee applications was greater than the time recorded on some of
Tersigni's employee time sheets.
By then, several of the asbestos creditors began or continued
legal proceedings against Tersigni, including claims for
disgorgement of all fees paid to Tersigni. Against this
backdrop, Nancy A. Tersigni, executrix of the Estate of firm
founder Loreto Tersigni, elected sought bankruptcy protection for
the Tersigni firm in the U.S. Bankruptcy Court for the District
of Connecticut in November 2007.
Hugh M. Ray was later appointed by the Office of the U.S.
Trustee, as an examiner, to further investigate, report on and
made recommendations regarding, the claims of the Asbestos
Creditors and potential claims against the Tersigni Estate. On
March 26, 2008, the Examiner filed its first report recommending
that rather than engage in protracted and expensive litigation,
ASARCO, the Tersigni Estate and the Asbestos Creditors should
attempt to negotiate a settlement of the Asbestos Creditors'
claims based on reimbursement for actual damages, not
disgorgement, claimed to have been incurred by the Asbestos
Creditors.
The ASARCO Parties had paid approximately $3,250,000 to Tersigni
over the years for work the firm had done for the Asbestos
Committee. Tersigni had $476,410 in fees that had been billed
and remained unpaid, despite the fact that the fees had been
partially approved by the Bankruptcy Court.
Following negotiations, the ASARCO parties and the Tersigni
parties reached at a settlement agreement, which provides that:
(1) The ASARCO Parties agreed to take an 11.1% refund of the
fees previously paid, and the $476,410 that remain unpaid
as compensation for the alleged fraudulent fee write ups.
With the refund credited against the unpaid fees, it
reduced the amount owed to Tersigni to $63,037, which is
the agreed settlement payment.
(2) By virtue of the refund, the ASARCO Parties will get
$413,373 in credit against an outstanding administrative
Expense;
(3) The Tersigni Bankruptcy Estate will waive its claim for
unpaid fees, if any; and
(4) "Cross releases" will be exchanged among the Tersigni
Parties, Tersigni and the Tersigni Bankruptcy Estate, and
the Asbestos Creditors.
About ASARCO LLC
Based 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
US$600 million in total assets and US$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. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 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's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774
to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
The Debtors submitted to the Court a joint plan of reorganization
and disclosure statement on July 31, 2008. The plan incorporates
the sale of substantially all of the Debtors' assets to Sterlite
Industries, Ltd., for US$2,600,000,000.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted a reorganization plan to retain its equity interest
in ASARCO LLC, by offering full payment to ASARCO's creditors in
connection with ASARCO's Chapter 11 case. AMC would provide up to
US$2.7 billion in cash as well as a US$440 million guarantee to
assure payment of all allowed creditor claims, including payment
of liabilities relating to asbestos and environmental claims.
AMC's plan is premised on the estimation of the approximate
allowed amount of the claims against ASARCO.
Asarco Inc. and AMC are represented by Luc A. Despins, Esq., at
Milbank, Tweed, Hadley & McCloy LLP, in New York.
(ASARCO Bankruptcy News Issue No. 94; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
ASARCO LLC: Sterlite May Face Competition In Asset Acquisition
--------------------------------------------------------------
Potential new parties may counter the revised offer of Sterlite
(USA), Inc., for ASARCO LLC's operating assets, according to
Business Standard.
Sterlite previously withdrew its $2.6 billion offer, and proposed
a $500 million reduction to its original bid, for ASARCO's
operating assets. Anil Agarwal, chairman of Sterlite's parent,
Vedanta Resources Plc, previously related to Business Standard in
an interview that his company could reconsider acquiring ASARCO
if the parties agree at a reasonable price.
An ASARCO representative has confirmed that the Company is in
talks with potential buyers. "We are in hot and heavy
discussions with multiple parties on multiple plans," ASARCO's
attorney, Jack Kinzie, Esq., has told the Court. He added that
ASARCO is also negotiating with Sterlite.
"A slew of metal firms from the US and Europe are negotiating
with Asarco. However, Sterlite Industries continues to be the
favorite of workers' union and legislators," an unnamed source
has been quoted by Business Standard.
About ASARCO LLC
Based 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
US$600 million in total assets and US$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. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 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's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774
to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
The Debtors submitted to the Court a joint plan of reorganization
and disclosure statement on July 31, 2008. The plan incorporates
the sale of substantially all of the Debtors' assets to Sterlite
Industries, Ltd., for US$2,600,000,000.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted a reorganization plan to retain its equity interest
in ASARCO LLC, by offering full payment to ASARCO's creditors in
connection with ASARCO's Chapter 11 case. AMC would provide up to
US$2.7 billion in cash as well as a US$440 million guarantee to
assure payment of all allowed creditor claims, including payment
of liabilities relating to asbestos and environmental claims.
AMC's plan is premised on the estimation of the approximate
allowed amount of the claims against ASARCO.
Asarco Inc. and AMC are represented by Luc A. Despins, Esq., at
Milbank, Tweed, Hadley & McCloy LLP, in New York.
(ASARCO Bankruptcy News Issue No. 94; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
ASARCO LLC: Wants Deadline to Decide on Leases Moved to Aug. 1
--------------------------------------------------------------
ASARCO LLC and its affiliated debtors ask the U.S. Bankruptcy
Court for the Southern District of Texas to extend the time by
which they must decide on whether to assume or reject unexpired
non-
residential real property leases until August 1, 2009.
Judith W. Ross, Esq., at Baker Botts L.L.P., in Dallas, Texas,
says extension of the lease decision deadline is necessary to
give the Debtors adequate time to evaluate the Leases in
anticipation of a Court-approved exit from bankruptcy.
Ms. Ross tells the Court that the Debtors' proposed form of order
expressly provides that nothing in it will limit the right of any
lessor under any lease to seek to compel the Debtors to assume or
reject a lease prior to the date of extension set by the Court.
The inclusion of that provision, Ms. Ross points out, eliminates
potential harm by expressly preserving the right of parties to
seek judicial relief in the event of changing circumstances.
About ASARCO LLC
Based 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
US$600 million in total assets and US$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. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 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's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774
to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
The Debtors submitted to the Court a joint plan of reorganization
and disclosure statement on July 31, 2008. The plan incorporates
the sale of substantially all of the Debtors' assets to Sterlite
Industries, Ltd., for US$2,600,000,000.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted a reorganization plan to retain its equity interest
in ASARCO LLC, by offering full payment to ASARCO's creditors in
connection with ASARCO's Chapter 11 case. AMC would provide up to
US$2.7 billion in cash as well as a US$440 million guarantee to
assure payment of all allowed creditor claims, including payment
of liabilities relating to asbestos and environmental claims.
AMC's plan is premised on the estimation of the approximate
allowed amount of the claims against ASARCO.
Asarco Inc. and AMC are represented by Luc A. Despins, Esq., at
Milbank, Tweed, Hadley & McCloy LLP, in New York.
(ASARCO Bankruptcy News Issue No. 94; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
ASARCO LLC: Deadline to Remove Actions Extended to May 1
--------------------------------------------------------
ASARCO LLC and its affiliated debtors won approval from the U.S.
Bankruptcy Court for the Southern District of Texas of their
request to extend the deadline within which they may remove
pending civil actions, through and including May 1, 2009.
Since they are parties in myriad lawsuits with complex issues, the
Debtors told the Bankruptcy Court they need additional time to
review the civil lawsuits to determine whether removal of the
various cases is in the best interest of their bankruptcy estates.
The Debtors assert that their need for additional time is
sufficient cause to extend the requested deadline. They add that
the extension would aid in the efficient and economical
administration of their estates.
About ASARCO LLC
Based 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
US$600 million in total assets and US$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. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 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's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774
to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
The Debtors submitted to the Court a joint plan of reorganization
and disclosure statement on July 31, 2008. The plan incorporates
the sale of substantially all of the Debtors' assets to Sterlite
Industries, Ltd., for US$2,600,000,000.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted a reorganization plan to retain its equity interest
in ASARCO LLC, by offering full payment to ASARCO's creditors in
connection with ASARCO's Chapter 11 case. AMC would provide up to
US$2.7 billion in cash as well as a US$440 million guarantee to
assure payment of all allowed creditor claims, including payment
of liabilities relating to asbestos and environmental claims.
AMC's plan is premised on the estimation of the approximate
allowed amount of the claims against ASARCO.
Asarco Inc. and AMC are represented by Luc A. Despins, Esq., at
Milbank, Tweed, Hadley & McCloy LLP, in New York.
(ASARCO Bankruptcy News Issue No. 94; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
ATA AIRLINES: Sets Protocol to Gather Sufficient Info on Claims
---------------------------------------------------------------
ATA Airlines, Inc., sought court approval to implement a set of
protocol that would allow its creditors to provide sufficient
information in their proofs of claim.
"The procedures will allow the claimants to cure defects in their
proofs of claims by providing additional information to [ATA
Airlines] about the basis for the priority claim and amount,"
Terry Hall, Esq., at Baker & Daniels, in Indianapolis,
Indiana, informs the U.S. Bankruptcy Court for the Southern
District of Indiana.
About 1,100 proofs of claim alleging priority and secured claims
had been filed against ATA Airlines, most of which resulted from
the cancellation of flights scheduled with the bankrupt company.
Most of the claims reportedly do not provide sufficient
information to determine if they are entitled to priority
payment, if they had been reimbursed by a credit company or
travel agency, or if the asserted amount is correct.
Ms. Hall said that through the procedures, the claimants would
not have to hire a lawyer and formally respond to an omnibus
objection to their claims, which ATA Airlines intends to file
following approval of the proposed procedures.
ATA Airlines proposes this set of procedures:
(1) ATA Airlines will file and serve upon each claimant the
omnibus objection no later than Jan. 16, 2009. It will
serve each claimant with a notice detailing the
procedures. Each holder of an unsupported claim will be
required to complete the customer claim information form.
(2) The customer claim information form must be served on ATA
Airlines not later than Feb. 13, 2009.
(3) The court will conduct an initial hearing on the omnibus
objection as soon as its schedule permits after Feb.13,
2009.
(4) By signing the form, a claimant affirms under penalty of
perjury that his claim is valid and that he has not been
paid via refund or reimbursement from a travel agency,
credit card company or any other source.
(5) The proof of claim will be disallowed if the holder fails
to complete and serve the form by the deadline.
(6) Upon review of the form, ATA Airlines will determine
if the information provided is adequate. At the initial
hearing, ATA Airlines will advise the court which
claimants failed to complete and serve the form; which of
them completed and served the form but failed to provide
sufficient information or documentation to support an
allowable claim; and which of them completed and served
the form with adequate information and documentation to
support an allowable claim.
(7) At the initial hearing, ATA Airlines will seek court
ruling disallowing and expunging the claims of those who
failed to complete and serve the form. It will also
inform the court of the status of all claimants who filed
and served the form and ask the court to set further
hearings as appropriate.
A hearing to consider approval of the proposed procedures is
scheduled for Jan. 28, 2009.
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., is a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for Chapter 11 protection on
Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on Jan. 31, 2006. The Debtors'
emerged from bankruptcy on Feb. 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2, 2008 (Bankr. S.D.
Ind. Case No. 08-03675), citing the unexpected cancellation of a
key contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition lists assets and liabilities each in the range
of $100 million to $500 million.
The Debtor is represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors. Otterbourg,
Steindler, Houston & Rosen, P.C., serves as bankruptcy counsel to
the Committee. FTI Consulting, Inc., acts as the panel's
financial advisors. The Court gave ATA Airlines Inc. until
Feb. 26, 2009, to file its Chapter 11 plan and April 27, 2009, to
solicit acceptances of that plan.
(ATA Airlines Bankruptcy News, Issue No. 96; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000).
ATA AIRLINES: Seeks Approval of Settlement Deal with Airliance
--------------------------------------------------------------
ATA Airlines has signed an agreement with Airliance Materials LLC
in a bid to settle their dispute over the ownership of certain
DC-10 spare parts.
Under the settlement deal, ATA Airlines agreed to return to
Airliance Materials the inventory of spare parts which Airliance
provided to the airline prior to its bankruptcy. ATA Airlines
also agreed to pay $65,000 to Airliance Materials on account of
its mechanics' lien claim on 139 spare parts that it received
from the bankrupt company for repair.
In exchange, Airliance Materials will return the 139 spare parts
to ATA Airlines and will waive its contingent claim of $563,000
for the estimated value of the inventory, after the bankrupt
company fulfills its obligations under the settlement deal.
Airliance Materials also agreed to "recharacterize" its statutory
secured claim of $84,148 for unpaid services, to a general
unsecured claim.
ATA asks the U.S. Bankruptcy Court for the Southern District of
Indiana to approve its settlement with Airliance Materials.
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., is a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for Chapter 11 protection on
Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on Jan. 31, 2006. The Debtors'
emerged from bankruptcy on Feb. 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2, 2008 (Bankr. S.D.
Ind. Case No. 08-03675), citing the unexpected cancellation of a
key contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition lists assets and liabilities each in the range
of $100 million to $500 million.
The Debtor is represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors. Otterbourg,
Steindler, Houston & Rosen, P.C., serves as bankruptcy counsel to
the Committee. FTI Consulting, Inc., acts as the panel's
financial advisors. The Court gave ATA Airlines Inc. until
Feb. 26, 2009, to file its Chapter 11 plan and April 27, 2009, to
solicit acceptances of that plan.
(ATA Airlines Bankruptcy News, Issue No. 96; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000).
ATA AIRLINES: Signature Flight Opposes Indemnity Claim Dismissal
----------------------------------------------------------------
Signature Flight Support Corporation urged the U.S. Bankruptcy
Court for the Southern District of Indiana to deny the proposed
dismissal of its indemnity claim against ATA Airlines, saying its
claim arose after the airline's bankruptcy in 2004 pursuant to
Indiana and Florida laws.
ATA Airlines asked the Court to compel Signature to dismiss its
indemnity claim on grounds that the lawsuit it filed to prosecute
its claim violates the Court's prior order confirming the
airline's Chapter 11 plan. The order dated Jan. 31, 2006
prohibited anybody from asserting claims against ATA Airlines and
its affiliates involving actions that took place before their
bankruptcy.
"Signature's claim for indemnity against ATA [Airlines] is
governed by either Indiana law or Florida law. Under both
Indiana law and Florida law, claims for indemnification do not
arise until the party seeking indemnity pays the underlying claim
to the claimant," attorney for Signature, John Murray, Esq., at
Murray, Morin & Herman, P.A., in Tampa, Florida, said in court
papers.
According to Mr. Murray, Signature's indemnity claim arose on
Jan. 31, 2007, under both laws, since it made payment to Willie
McCafferty on that date as settlement for his claim against the
company.
Mr. McCafferty, a former employee of ATA Airlines, brought a
personal injury action against Signature for alleged negligence
which resulted in his accident sometime in 2004. Consequently,
Signature filed a lawsuit against the airline before a district
court in Florida, seeking payment for damages it sustained from
Mr. McCafferty's lawsuit.
In its complaint, Signature alleged that ATA Airlines is
obligated to indemnify the company from lawsuits of its employees
pursuant to their baggage handling agreement dated Feb. 1, 1996.
The lawsuit was stayed following the second bankruptcy filing of
ATA Airlines on April 2.
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., is a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for Chapter 11 protection on
Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on Jan. 31, 2006. The Debtors'
emerged from bankruptcy on Feb. 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2, 2008 (Bankr. S.D.
Ind. Case No. 08-03675), citing the unexpected cancellation of a
key contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition lists assets and liabilities each in the range
of $100 million to $500 million.
The Debtor is represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors. Otterbourg,
Steindler, Houston & Rosen, P.C., serves as bankruptcy counsel to
the Committee. FTI Consulting, Inc., acts as the panel's
financial advisors. The Court gave ATA Airlines Inc. until
Feb. 26, 2009, to file its Chapter 11 plan and April 27, 2009, to
solicit acceptances of that plan.
(ATA Airlines Bankruptcy News, Issue No. 96; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000).
AVADO BRANDS: Wants to Sell Liquor License to Blazing Wings
-----------------------------------------------------------
Avado Brands, Inc., asks the U.S. Bankruptcy Court for the
District of Delaware for authority to sell its liquor license
issued for the premises at 205 Charlotte Drive, Logan Township,
Blair county, Pennsylvania, to Blazing Wings, Inc. for the
purchase price of $76,500, free and clear of all liens, debts,
taxes and encumbrances. The sale of the license is subject to and
conditioned upon approval of the Pennsylvania Liquor Control
Board.
The Debtors tell the Court that that, other than the liens held by
their postpetition lender, DDJ Capital Management LLC, there are
no liens on the Blazing Wings License and that DDJ will not oppose
the proposed sale.
About Avado Brands
Madison, Georgia-based Avado Brands Inc., aka Applesouth, --
http://www.avado.com/-- operates about 120 casual dining
restaurants under the banners Don Pablo's Mexican Kitchen and Hops
Grillhouse & Brewery. The restaurants are located in 22 states in
the U.S. As of Sept. 5, 2007, the Debtors employed about 9,970
people. For the year ended July 31, 2007, the Debtors generated
about $227.8 million in revenues and a negative EBITDA of
$7.8 million.
The Debtor filed for chapter 11 protection on Feb. 4, 2004 (Bankr.
N.D. Tex. Case No. 04-1555). On April 26, 2005, Judge Steven
Felsenthal confirmed Avado's Modified Plan of Reorganization and
that Plan became effective on May 19, 2005.
On Sept. 5, 2007, Avado filed a voluntary chapter 22 petition
(Bankr. D. Del. Case No. 07-11276) to complete an orderly sale of
its assets, via Section 363 of the Bankruptcy Code. About 10 of
Avado's affiliates also filed for bankruptcy protection on the
same date (Bankr. D. Del. Case Nos. 07-11277 through 07-11286).
Michael Tuchin, Esq., and Stacia A. Neeley, Esq., at Klee, Tuchin,
Bogdanoff & Stern LLP, represent the Debtors as counsel. Donald
J. Detweiler, Esq., at Greenberg Traurig, LLP, is the Debtors'
local counsel. Kurtzman Carson Consultants LLC acts as the
Debtors claims and noticing agent. The U.S. Trustee for Region 3
has appointed creditors to serve on an Official Committee of
Unsecured Creditors to these cases. Scott L. Hazan, Esq., at
Otterbourg, Steindler, Houston & Rosen, P.C.; and David B.
Stratton, Esq., at Pepper Hamilton LLP, represent the Committee of
Unsecured Creditors as co-counsel. In their second filing, the
Debtors disclosed estimated assets of between $1 million and
$100 million, and estimated debts of between $1 million and
$100 million.
AXESSTEL INC: Bryan Min Steps Down as Director to Focus on Own Co.
------------------------------------------------------------------
Bryan B. Min, the chairman of the board of directors of Axesstel,
Inc., resigned from the company's board of directors effective
Dec. 31, 2008. Mr. Min's resignation from the board is not
because of any disagreement with the company on any matter
relating to its operations, policies or practices. Mr. Min is the
founder and CEO of Epsilon Systems Solutions, Inc., a privately
held professional and technical services company serving
government and industry clients. Mr. Min is resigning to devote
additional time to his responsibilities with Epsilon Systems.
The board expects to name a replacement in early 2009, and after
the replacement is named, the board will continue to have five
members.
"I have thoroughly enjoyed the opportunity to serve Axesstel,"
stated Mr. Min. "During the past several years, the company
resolved many challenges and stayed the course in pursuit to
become a world leader in the fixed wireless and broadband data
products business. 2008, in particular, has been rewarding as we
delivered three consecutive profitable quarters for the first time
in our business and we are on target to exceed our 2008 annual
revenue goal of $100 million. I believe Axesstel has a better
foundation from which to build in the coming years, and I wish the
company continued success."
Mr. Min became a director in November 2005 and served as chairman
since June 2006.
Clark Hickock, CEO of Axesstel, said, "Bryan is an extremely
talented executive, and Axesstel was fortunate to have had the
benefit of his expertise and leadership on the board. We wish him
the best as he turns his focus to Epsilon Systems Solutions and
other matters requiring his attention."
Going Concern Doubt
The company experienced losses from operations from 2004 to 2007.
Because of the company's continuing net losses and negative
working capital position, Gumbiner Savett Inc., the company's
independent auditors, in their report on the company's
consolidated financial statements for the year ended Dec. 31,
2007, expressed substantial doubt about the company's ability to
continue as a going concern.
Commencing in 2007, the company's sales shifted from predominantly
Asian countries, where commercial practices use letters of credit,
to Latin American countries, where standard commercial terms are
open accounts. The company's largest account in 2007 was a
customer in Venezuela, which does not provide letters of credit
and for which the company could not obtain credit insurance or
secure accounts receivable financing. Accordingly, the company
could not borrow against its accounts receivable from that
customer to pay the company's contract manufacturer for costs of
goods sold. This problem was compounded when the Venezuelan
government's exchange control arm, CADIVI, substantially delayed
payments in 2007. The delay in payment caused the company to fall
behind in payments to its contract manufacturer, who imposed
shipment delays and stopped ordering long lead time parts in the
fourth quarter of 2007.
In a regulatory filing with the Securities and Exchange Commission
in November, the company said it has subsequently collected the
delayed payments from 2007, made payments to the contract
manufacturer, and resumed normal production levels.
Axesstel Sees Sufficient Liquidity
In January 2008, the company entered into a distribution agreement
with a third party distributor to sell products in Venezuela.
Under the terms of the distribution agreement, the company's
customers submit their purchase orders to the distributor. The
distributor then submits a purchase order to the company, secured
by a letter of credit. According to the company, it can finance
the account receivable from the distributor, and the distributor
assumes the credit risk of the customer in Venezuela. Under this
arrangement the distributor receives a commission for
accommodating the sale. This arrangement allows the company to
secure commercial financing for the receivable that covers product
being sold to Venezuela and eliminate risk of collection and
payment delays from the Venezuelan customer.
Other than cash and cash equivalents, the company said its primary
source of capital is borrowings which are secured by accounts
receivable. In January 2008, the company entered into two new
commercial credit agreements with affiliates of Wells Fargo Bank.
One of the credit arrangements provides working capital financing
for the company's accounts receivable which are secured by credit
insurance. The other provides working capital financing for the
company's accounts receivable which are secured by letters of
credit. During the quarter ended September 30, 2008, the company
increased its eligible credit limit to $12.0 million, subject to
qualified receivables and had utilized $2.9 million at Sept. 28,
2008. The company's ability to borrow under these facilities is
predicated upon a borrowing base of qualified accounts receivable.
The company said the credit agreements constitute the only source
of borrowing currently available to it.
For 2008, the company said it expects revenue to exceed
$100 million; its gross margin from product sales to be in the low
twenties, and to be profitable. Accordingly, the company expects
its operating activities and existing credit resources will be
sufficient to provide liquidity to grow the business and to fund
operating expenses.
The company said it is evaluating additional localized
distribution and financing arrangements to increase available
working capital and allow it to continue to grow the business
without the sale of additional debt or equity securities.
"However, if we fail to generate sufficient product sales, we will
not generate sufficient cash flows to cover our operating
expenses. If needed, we intend to secure additional working
capital through the sale of debt or equity securities. No
arrangements or commitments for any such financing are in place at
this time, and we cannot give any assurances about the
availability or terms of any future financing," the company said.
About Axesstel Inc.
Headquartered in San Diego, Calif., Axesstel Inc. (AMEX: AFT) --
http://www.axesstel.com/-- designs and develops fixed wireless
voice and broadband data products. Axesstels product portfolio
includes broadband modems, 3G gateways, voice/data terminals,
fixed wireless desktop phones and public call office phones for
high-speed data and voice calling services. The company delivers
innovative fixed wireless solutions to leading telecommunications
operators and distributors worldwide. Axesstel's research and
development center is located in Seoul, South Korea.
As of September 28, 2008, the company had $39,184,340 in total
assets, including $36,325,921 in total current assets, and
$36,171,344 in total liabilities, all current. The company also
had $35,783,796 in accumulated deficit as of September 30, 2008.
The company reported $433,077 in net income on $30,051,128 in
revenues.
BAKERS FOOTWEAR: Posts $15.4 Million Net Loss in Last Nine Months
-----------------------------------------------------------------
Bakers Footwear Group, Inc., reported results for the thirteen
weeks and thirty nine-weeks ended Nov. 1, 2008. For thirteen
weeks ended Nov. 1, 2008, the company posted net loss of $8.3
million compared with net loss of $15.2 million for the same
period in the previous year.
Net sales were $41.1 million, an increase of 1.9% from
$40.3 million for the thirteen-week period ended Nov. 3, 2007.
Gross profit was $9.0 million, or 21.9% of net sales, up from
$3.5 million, or 8.7% of net sales in the third quarter of 2007.
Impairment expense was $2.6 million, reflecting non-cash charges
in connection with specific underperforming stores, compared to
impairment expense of $2.4 million in the third quarter of 2007.
Operating loss was $7.6 million, compared to $14.9 million in the
third quarter of 2007.
Peter Edison, chairman and chief executive officer of Bakers
Footwear Group, commented, "We are pleased with our improved third
quarter performance that included a 4.5% increase in comparable
store sales, a substantial increase in gross profit margin and a
significant reduction in our operating loss compared to last year.
This was driven by the strong acceptance of our footwear styles
across categories and through the benefits of our expense and
inventory management discipline. Despite the challenging consumer
environment, our sales strengthened throughout the quarter, with
healthy regular price selling led by our dress shoes, boots and
branded athletic categories."
Mr. Edison continued, "As we look ahead, we remain optimistic
about our ability to maintain our positive momentum. We are
experiencing favorable customer response to our holiday
assortments, with November comparable store sales up 3.6%,
including a 13.4% increase for the Thanksgiving weekend of Black
Friday, Nov. 28, 2008, and Saturday, Nov. 29, 2008, compared to
the Friday and Saturday after Thanksgiving last year. At the same
time, we are operating the business with prudent control of our
inventory and expenses. Our inventory level is well controlled,
the increase at the end of the third quarter reflects the
acceleration of fourth quarter deliveries as well as our expected
sales increase during the holiday season. We plan to end the
fourth quarter with inventory flat compared to the prior year. We
will continue to maintain our financial discipline and believe we
are positioned to report improved operating results for the
balance of the year."
Based on its business plan, the company believes it has adequate
liquidity to fund anticipated working capital requirements and
expects to be in compliance with its financial covenants
throughout the remainder of 2008.
For thirty-nine weeks ended Nov. 1, 2008, the company posted net
loss of $15.4 million compared with net loss of $25.0 million for
the same period in the previous year.
Net sales were $128.2 million, compared to $131.5 million for the
thirty-nine weeks ended Nov. 3, 2007. Comparable store sales
decreased 0.8%, compared to a 14.6% decrease in the first nine
months of 2007;
Gross profit was $33.1 million, or 25.8% of net sales, compared to
$28.1 million, or 21.3% of net sales in the first nine months of
2007;
Impairment expense was $2.6 million, reflecting non-cash charges
in connection with specific underperforming stores, compared to
impairment expense of $3.1 million last year.
Operating loss was $13.1 million, compared to $23.2 million in the
first nine months of 2007.
Liquidity
The company's losses in the thirty-nine weeks of fiscal year 2008
and in fiscal year 2007 have had a significant negative impact on
the company's financial position and liquidity. As of Nov. 1,
2008, the company had negative working capital of $17.0 million,
unused borrowing capacity under its revolving credit facility of
$1.4 million, and shareholders' equity had declined to
$9.8 million.
The company continues to face considerable liquidity constraints.
Comparable store sales for the first five weeks of the fourth
quarter increased 2.2% and the business plan contemplates double-
digit increases in comparable store sales for the remainder of
fiscal year 2008. Although the company believes its business plan
is achievable, should the company fail to achieve the sales or
gross margin levels it anticipates, or if the company were to
incur significant unplanned cash outlays, it would become
necessary for the company to obtain additional sources of
liquidity or make further cost cuts to fund operations. However,
there is no assurance that the company would be able to obtain
such financing on favorable terms, if at all, or to successfully
further reduce costs in such a way that would continue to allow it
to operate its business.
The company met all financial covenants as of the end of the third
quarter of fiscal year 2008. The minimum adjusted EBITDA covenant
for the first quarter of fiscal year 2008 was reduced as part of
the amendment made on May 9, 2008, in order to maintain compliance
at May 3, 2008.
At Nov. 1, 2008, the company's balance sheet showed total assets
of $66.6 million, total liabilities of $56.8 million and
shareholders' equity of $9.8 million.
A full-text copy of the 10-Q filing is available for free at:
http://ResearchArchives.com/t/s?36fe
About Bakers Footwear
Based in St. Louis, Misouri, Bakers Footwear Group Inc. (Nasdaq:
BKRS) -- http://www.bakersshoes.com/-- is a national, mall-based,
specialty retailer of distinctive footwear and accessories for
young women. The company's merchandise includes private label and
national brand dress, casual and sport shoes, boots, sandals and
accessories. The company currently operates over 240 stores
nationwide.
Going Concern Doubt
Ernst & Young LLP, in St. Louis, Missouri, expressed substantial
doubt about Bakers Footwear Group Inc.'s ability to continue as a
going concern after auditing the company's financial statements
for the years ended Feb. 2, 2008, and Feb. 3, 2007. The auditing
firm reported that the company has incurred substantial losses
from operations in recent years. In addition, the company is
dependent on its various debt agreements to fund its working
capital needs. The debt agreements contain certain financial
covenants with which the company must comply, and compliance
cannot be assured.
BERNARD L. MADOFF: Union Bancaire Confirms US$700-Mil. Investment
-----------------------------------------------------------------
Union Bancaire Privee said it had invested about US$700 million in
Bernard L. Madoff Investment Securities LLC through its funds of
funds and client portfolios, The Wall Street Journal's Cassell
Bryan-Low and Carrick Mollenkamp report.
UBP confirmed in a December 15 statement that its exposure to
Madoff represents less than 1% of the total assets under
management of the bank, which itself had no own-account
investments in the Madoff group.
WSJ relates that according to a recent letter from the bank to
investors, half of UBP's 22 funds of funds, which channeled
clients' money into other hedge funds, put at least some of that
money into Madoff-related investment vehicles, including one run
by J. Ezra Merkin, chairman of car-loan company GMAC LLC.
At the same time, the Journal says UBP provided an array of
services such as investment advice and loans to a division of
Fairfield Greenwich Group, a New York firm that funneled
investors' money into Madoff funds.
Some outside fund managers also looked to UBP in making their own
investments, the Journal adds.
In a Dec. 17 letter to investors obtained by the WSJ, UBP, while
admitting that it is a victim of a "massive fraud," said it had
reservations about the way Mr. Bernard L. Madoff ran his
investment firm, particularly the lack of an outside administrator
and custodian. But UBP said it overcame those concerns because of
Mr. Madoff's firm's status as a "reputable" broker-dealer that was
registered with the Securities and Exchange Commission, as well as
Mr. Madoff's "longstanding reputation in building Wall Street's
financial markets infrastructure," in part, as a former chairman
of the Nasdaq Stock Market.
According to the Journal, the UBP funds gained exposure to
Mr. Madoff through at least four intermediaries:
-- Fairfield Sentry Ltd;
-- Ascot Fund Ltd., run by Mr. Merkin of GMAC;
-- Kingate Global Fund Ltd., run by FIM Advisers LLP of
London; and
-- M-Invest Ltd., UBP's Cayman Islands vehicle.
About Union Bancaire Privee
Union Bancaire Privee (UBP) -http://www.ubp.ch/-- is based in
Geneva and is one of Switzerland's leading private banks. As
global asset manager for private and institutional clients, the
Group held over CHF 126 billion (USD 124.5 billion) under
management at June 30, 2008. UBP employs about 1,300 people in
some 20 locations worldwide and provides a complete range of
investment products and services.
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC was a market maker in
US stocks, including all of the S&P 500 and more than 350 Nasdaq
stocks. The firm moved large blocks of stock for institutional
clients by splitting up orders or arranging off-exchange
transactions between parties. It also performed clearing and
settlement services. Clients included brokerages, banks, and
other financial institutions. In addition, Madoff Securities
managed assets for high-net-worth individuals, hedge funds, and
other institutional investors.
The firm is being liquidated in the aftermath of a fraud scandal
involving founder Bernard L. Madoff.
As reported by the Troubled Company Reporter on Dec. 15, 2008, the
Securities and Exchange Commission charged Bernard L. Madoff and
his investment firm, Bernard L. Madoff Investment Securities LLC,
with securities fraud for a multi-billion dollar Ponzi scheme that
he perpetrated on advisory clients of his firm. The
estimated the losses from Madoff's fraud were at least
US$50 billion.
As reported by the TCR on Dec. 16, 2008, the Securities Investor
Protection Corporation, which maintains a special reserve fund
authorized by Congress to help investors at failed brokerage
firms, announced on Mon., Dec. 15, that it is liquidating Bernard
L. Madoff Investment Securities LLC of New York, N.Y., under the
Securities Investor Protection Act.
BERRY PETROLEUM: S&P Cuts Subordinated Debt Rating to 'B'
---------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
corporate credit rating on Berry Petroleum Co. to 'BB-' from 'BB'.
At the same time, S&P placed the company's ratings on CreditWatch
with negative implications. S&P also lowered the issue-level
rating on the company's subordinated debt to 'B' from 'B+', while
leaving the recovery rating unchanged at '6', indicating
negligible (0%-10%) recovery in the event of a payment default.
"The downgrade reflects the company's halted, or shut in,
production following the bankruptcy filing of Big West Oil LLC,
concerns regarding liquidity and potential covenant violations,
and weaker financial measures," said Standard & Poor's credit
analyst Aniki Saha-Yannopoulos.
Berry sold all of its California oil production to Big West of
California LLC (unrated) under a crude oil contract. Following
the Dec. 22, 2008, bankruptcy filing of parent company Big West
Oil LLC (D/--/--) and its other affiliates, the refiner Big West
of California said that it would be unable to receive Berry's
production. As a result, Berry is currently producing only
5,000 barrels of oil per day in California and has shut in almost
12,000, which is 30% of its daily production. At the same time,
Big West owes Berry almost $38 million in pre-petition claims for
previous production sold by Berry. Big West has said that it will
seek bankruptcy court approval of "critical vendor" status for
Berry. It's unclear how long the issues at Big West will continue
to limit Berry's production.
"We could lower the ratings if a significant portion of the
company's production continues to remain shut in, or if there is a
significant decrease in liquidity," Ms. Saha-Yannopoulos said.
"We could also lower the ratings if Berry's financial measures
worsen and headroom under the covenants decreases significantly."
BOSCOV'S INC: Court Sets March 2, 2009, as Claims Bar Date
----------------------------------------------------------
Judge Kevin Gross of the U.S. Bankruptcy Court for the District of
Delaware has set March 2, 2009 at 5:00 p.m. Pacific Time as the
general and administrative claims bar date in Boscov's Inc., and
its debtor-affiliates' cases.
The Debtors submitted a final proposed bar date order, including
a proposed bar date notice, publication notice and proof of claim
form, with the Court on December 18, 2008, to incorporate the
objections raised by the United States Trustee. The U.S. Trustee
has reviewed and approved the final proposed order, the Debtors
said. Among others, the final proposed order reflected the
changes in the Debtors' corporate names.
Any entity seeking allowance and payment of an administrative
claim arising between August 4, 2008, through and including
December 4, 2008, pursuant to Sections 503 and 507(a)(2) of the
Bankruptcy Code must file a request for approval of
administrative expense claim with the Court on or before the
Administrative Claims Bar Date.
These entities, whose Administrative Claims otherwise would be
subject to the Administrative Claims Bar Date, need not file
requests for allowance of Administrative Claims:
(a) any professional retained in the Chapter 11 cases pursuant
to Section 327 or 1103;
(b) the U.S. Trustee, on account of claims for fees payable
pursuant to Section 1930 of Title 28;
(c) any entity who has an Administrative Claim that has been
allowed by an order of the Court that previously was paid,
including by the purchaser of the Debtors' assets; and
(d) any Debtor that holds an Administrative Claim against one
Debtor.
The Debtors, through its claims agent, will serve the Bar Date
Notice Package no later than December 31, 2008.
A black lined copy of the final proposed order, at page 32 of the
certificate of counsel, is available for free at:
http://bankrupt.com/misc/CounselCert_BarDateORD.pdf
A full-text copy of the Bar Date Order is available for free
at http://bankrupt.com/misc/BSCV_RvsdBarDateORD.pdf
About Boscov's Inc.
Headquartered in Reading, Pennsylvania, Boscov's Inc. --
http://www.boscovs.com/-- is America's largest family-owned
independent department store, with 49 stores in Pennsylvania, New
York, New Jersey, Maryland, Delaware and Virginia.
Boscov's Inc. and its debtor-affiliates filed for Chapter 11
protection on Aug. 4, 2008 (Bankr. D. Del. Case No.: 08-11637).
Judge Kevin Gross presides over the cases.
David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day,
serve as the Debtors' lead counsel. The Debtors' financial
advisor is Capstone Advisory Group and their investment banker is
Lehman Brothers, Inc. The Debtors' claims agent is Kurtzman
Carson Consultants L.L.C.
Boscov's listed assets of $318.9 million against debt totaling
$412.8 million. Secured creditors are owed $196.2 million.
On November 21, Judge Kevin Gross approved the sale of the
Debtors' assets to a family group led by former company chairman
Albert Boscov and former company executive Edwin Lakin. The deal,
valued at $300 million, was completed in December. Following the
sale Boscov's Inc., and Boscov's Department Store, LLC, revised
their corporate names to BSCV, Inc., and BSCV Department Store,
LLC.
(Boscov's Bankruptcy News, Issue No. 16; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
BOSCOV'S INC: North Hanover Mall Owner Lends $10 Million
--------------------------------------------------------
The Evening Sun, on December 19, 2008, said PREIT, the owner of
the North Hanover Mall, has provided Boscov's Department Stores
$10,000,000 in unsecured loans.
The report said that, according to analysts, PREIT might be
trying to keep Boscov's from failing and lowering retail rental
rates. PREIT, according to the report, plans to open a Boscov's
in Willow Grove, Pennsylvania, in addition to the one in Hanover.
PREIT has eight Boscov's stores among its 38 regional malls, the
report said.
About Boscov's Inc.
Headquartered in Reading, Pennsylvania, Boscov's Inc. --
http://www.boscovs.com/-- is America's largest family-owned
independent department store, with 49 stores in Pennsylvania, New
York, New Jersey, Maryland, Delaware and Virginia.
Boscov's Inc. and its debtor-affiliates filed for Chapter 11
protection on Aug. 4, 2008 (Bankr. D. Del. Case No.: 08-11637).
Judge Kevin Gross presides over the cases.
David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day,
serve as the Debtors' lead counsel. The Debtors' financial
advisor is Capstone Advisory Group and their investment banker is
Lehman Brothers, Inc. The Debtors' claims agent is Kurtzman
Carson Consultants L.L.C.
Boscov's listed assets of $318.9 million against debt totaling
$412.8 million. Secured creditors are owed $196.2 million.
On November 21, Judge Kevin Gross approved the sale of the
Debtors' assets to a family group led by former company chairman
Albert Boscov and former company executive Edwin Lakin. The deal,
valued at $300 million, was completed in December. Following the
sale Boscov's Inc., and Boscov's Department Store, LLC, revised
their corporate names to BSCV, Inc., and BSCV Department Store,
LLC.
(Boscov's Bankruptcy News, Issue No. 16; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
BOSCOV'S INC: Snyder County Won't Back Family's State Loans
-----------------------------------------------------------
Snyder County, in Pennsylvania, refused to guarantee $5,000,000 of
the $35,000,000 loans that Alfred Boscov has been lobbying for to
help him buy-out Boscov's Department Stores and its affiliates
from bankruptcy, Pennlive.com said on December 23, 2008.
The $35,000,000 Section 108 loans will be sourced from the U.S.
Department of Housing and Urban Development. Section 108,
according to the U.S. Department of Housing and Urban Development,
is the loan guarantee provision of the Community Development Block
Grant program. Section 108 provides communities with a source of
financing for economic development, housing rehabilitation, public
facilities, and large-scale physical development projects. In
Section 108 loans, local governments borrowing funds guaranteed by
Section 108 must pledge their current and future CDBG allocations
to cover the loan amount as security for the loan.
Pennlive.com previously reported that Snyder County expressed
concern over potential risk in its role as guarantor to
Mr. Boscov's state loans.
A public hearing on Mr. Boscov's request was held in Snyder
County on December 19, 2008, the Patriot-News related.
Mr. Boscov, chief executive officer of the Boscov's Department
Store and affiliates, assured Snyder County commissioners during
the hearing that the company will be able to repay the loans the
county provided to the retailer.
Mr. Boscov's, who according to The Daily Item was chocking back
his emotions when he spoke at the hearing, said it was an
excellent hearing, and that a lot of things came out. However,
the county commissioners have not reached a decision after the
90-minute hearing, the report said.
Lebanon County is set to convene a second public hearing on
January 8, 2009, on whether to give Mr. Boscov the needed state
loan, the Lebanon Daily News reported. The Lebanon County
commissioners, the report said, signed off a loan but failed to
go take the proper steps so that it has to go through the motions
again. Two public hearings are required, the report said.
Boscov's employs 5,000 workers at 25 stores in Pennsylvania, more
than half of 9,000 personnel it employs in all of its stores,
including those in Delaware and Maryland.
About Boscov's Inc.
Headquartered in Reading, Pennsylvania, Boscov's Inc. --
http://www.boscovs.com/-- is America's largest family-owned
independent department store, with 49 stores in Pennsylvania, New
York, New Jersey, Maryland, Delaware and Virginia.
Boscov's Inc. and its debtor-affiliates filed for Chapter 11
protection on Aug. 4, 2008 (Bankr. D. Del. Case No.: 08-11637).
Judge Kevin Gross presides over the cases.
David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day,
serve as the Debtors' lead counsel. The Debtors' financial
advisor is Capstone Advisory Group and their investment banker is
Lehman Brothers, Inc. The Debtors' claims agent is Kurtzman
Carson Consultants L.L.C.
Boscov's listed assets of $318.9 million against debt totaling
$412.8 million. Secured creditors are owed $196.2 million.
On November 21, Judge Kevin Gross approved the sale of the
Debtors' assets to a family group led by former company chairman
Albert Boscov and former company executive Edwin Lakin. The deal,
valued at $300 million, was completed in December. Following the
sale Boscov's Inc., and Boscov's Department Store, LLC, revised
their corporate names to BSCV, Inc., and BSCV Department Store,
LLC.
(Boscov's Bankruptcy News, Issue No. 16; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
BOSCOV'S INC: Versa Seeks Payment of $4MM Sale Breakup Fee
----------------------------------------------------------
Versa Capital Management, Inc., and its affiliate Regio BDS, LLC,
ask the U.S. Bankruptcy Court for the District of Delaware to
grant them a superpriority administrative expense claim for the
$4,000,000 breakup fee under the terms of their asset purchase
agreement with Boscov's Inc., and its affiliates.
In the alternative, Versa and Regio ask the Court to allow an
administrative expense claim of no less than $4,000,000 on
account of Versa's role as a stalking horse bidder in the sale of
substantially all of the Debtors assets.
On November 21, Judge Kevin Gross approved the sale of the
Debtors' assets to a family group led by former company chairman
Albert Boscov and former company executive Edwin Lakin. The deal,
valued at $300 million, was completed earlier this month.
Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in
Wilmington, Delaware, asserts that Versa is entitled to the break-
up fee as the Debtors' pursuit of a closed, private sale process
triggered the provision of the Purchase Agreement for a break-up
fee to Versa. Mr. Brady argues that Versa delivered sufficient
commitments to close the deal contrary to the contentions of the
Debtors and the Official Committee of Unsecured Creditors.
Versa explains that the time and resources expended in attempting
to consummate the transaction under the Regio Purchase Agreement
could have been devoted to another acquisition in which the seller
was actually committed to the transaction.
Mr. Brady notes that Section 503(b)(1)(A) of the Bankruptcy Code
provides for administrative expense priority for actual, necessary
costs and expenses of the Debtors' estates. He asserts that Versa
has provided many benefits to the Debtors' estates and has averted
a liquidation of the estates.
On these grounds, Versa and Regio ask the Court to grant the
request.
About Boscov's Inc.
Headquartered in Reading, Pennsylvania, Boscov's Inc. --
http://www.boscovs.com/-- is America's largest family-owned
independent department store, with 49 stores in Pennsylvania, New
York, New Jersey, Maryland, Delaware and Virginia.
Boscov's Inc. and its debtor-affiliates filed for Chapter 11
protection on Aug. 4, 2008 (Bankr. D. Del. Case No.: 08-11637).
Judge Kevin Gross presides over the cases.
David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day,
serve as the Debtors' lead counsel. The Debtors' financial
advisor is Capstone Advisory Group and their investment banker is
Lehman Brothers, Inc. The Debtors' claims agent is Kurtzman
Carson Consultants L.L.C.
Boscov's listed assets of $318.9 million against debt totaling
$412.8 million. Secured creditors are owed $196.2 million.
On November 21, Judge Kevin Gross approved the sale of the
Debtors' assets to a family group led by former company chairman
Albert Boscov and former company executive Edwin Lakin. The deal,
valued at $300 million, was completed in December. Following the
sale Boscov's Inc., and Boscov's Department Store, LLC, revised
their corporate names to BSCV, Inc., and BSCV Department Store,
LLC.
(Boscov's Bankruptcy News, Issue No. 16; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
BRAINTECH INC: Continuing Losses Raise Substantial Doubt
--------------------------------------------------------
In a November regulatory filing with the Securities and Exchange
Commission, Braintech, Inc., noted that its history of losses and
significant deficit raises substantial doubt about its ability to
continue as a going concern.
The company noted that it has generated only roughly $11.4 million
in revenues since the inception its current operations January 3,
1994. The company expects to incur operating losses in the
future.
As of September 30, 2008, Braintech had $5.8 million in total
assets, including $3.7 million in total current liabilities; $5.4
million in total liabilities, all current; and $34.2 million in
accumulated deficit.
Braintech posted in $2.1 million in net losses for the three
months ended, and $3.4 million in net losses for the nine months
ended, September 30, 2008.
"Our net loss from inception of our current operations in 1994 to
September 30, 2008 was roughly $34 million. We had cash in the
amount of $2,113,266 as of September 30, 2008. We estimate our
average monthly operating expenses to be roughly $400,000 each
month for the balance of 2008," according to the company. "We
cannot provide assurances that we will be able to successfully
develop our business. These circumstances raise doubt about our
ability to continue as a going concern as described in . . . our
independent auditors' report on our audited financial statements,
dated February 29, 2008. If we are unable to continue as a going
concern, investors will likely lose all of their investments in
our Company."
The company also noted that it relies chiefly on ABB Inc. to
purchase its products and distribute them to end users pursuant to
an Exclusive Global Channel Partner Agreement entered into in May
2006. The company explained, "This Channel Partner Agreement
expires in accordance with its terms on December 31, 2008 and ABB
has accumulated ongoing unsold inventory under the existing
Channel Partner agreement."
"We cannot assure . . . that we will be able to enter into an
extension of the existing Channel Partner Agreement, or a new
distribution agreement with ABB, on terms satisfactory to us, or
at all. Among other things, ABB may not be willing to extend the
existing Channel Partner Agreement, or enter into a new
distribution agreement with us, if it is unable to sell the large
amount of the inventory it has purchased from us pursuant to the
current Channel Partner Agreement.
"If ABB is unsuccessful in generating sales of our products or
reduces its purchases from us, if our Channel Partner Agreement is
not extended or if we do not enter into a new distribution
agreement with ABB, or if our relationship with ABB is otherwise
terminated and we are unsuccessful in establishing a relationship
with an alternative channel partner who offers to purchase and
distribute our products for similar prices, or if we fail to
introduce our products into other markets with other customers,
our results of operations could be adversely affected, our
business may fail and investors may lose their entire investment.
Braintech also noted it may need to raise additional funds through
public or private debt or sale of equity to achieve its current
business strategy.
"The financing we need may not be available when needed. Even if
this financing is available, it may be on terms that are
materially adverse to your interests with respect to dilution of
book value, dividend preferences, liquidation preferences, or
other terms," the company said. "Our inability to obtain
financing will inhibit our ability to implement our business
strategy, and as a result, could require us to diminish or suspend
our business strategy and possibly cease our operations. If we are
unable to obtain financing on reasonable terms, we could be forced
to delay, scale back or cease our operations. . . ."
A full-text copy of Braintech's financial report is available at
no charge at:
http://ResearchArchives.com/t/s?3711
Headquartered in North Vancouver, B.C., Canada, Braintech Inc.
(OTC BB: BRHI) -- http://www.braintech.com/-- has four wholly
owned subsidiaries: Braintech Canada Inc., a British Columbia
corporation, Braintech Government & Defense Inc., a Delaware
corporation, Braintech Consumer & Service Inc., a Delaware
corporation, and Braintech Industrial Inc., a Delaware
corporation. Braintech Canada Inc. carries out the company's
research and development activities, and employs a majority of the
company's technical personnel.
The company generates the majority of its revenues from the sale
of robotic vision software that it has developed. The company's
software sales have principally involved computerized vision
systems used for the guidance of industrial robots performing
automated assembly, material handling, and part identification and
inspection functions.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 14, 2008,
Smythe Ratcliffe LLP, in expressed substantial doubt about
Braintech Inc.'s ability to continue as a going concern after
auditing the company's consolidated financial statements for the
years ended Dec. 31, 2007, and 2006. The auditor pointed to the
company's recurring losses from operations.
BROOKE CORP: Sells First Life to First Trinity for $2.5 Million
---------------------------------------------------------------
Reuters reports that First Trinity Financial Corp. said it
acquired First Life American Corp. from Brooke Capital Corp. for
$2.5 million in cash.
As previously reported, on July 18, 2008, First Trinity entered
into a Stock Purchase Agreement with Brooke Capital, pursuant to
which the company was to acquire, for a purchase price not to
exceed $8,000,000 adjusted in accordance with the Agreement, all
of the outstanding shares of capital stock of First Life. First
Life is the wholly owned subsidiary of Brooke. The purchase was
subject to approval by the Kansas Insurance Commissioner.
On August 29, 2008, the company and Brooke entered into Amendment
No. 1 to the Agreement in which the company and Brooke agreed to
amend Section 2.2 of the Agreement. The Amendment changed the
Agreement by changing the source to be used in determining the
"Estimated Closing Date Adjusted Capital and Surplus."
The acquisition was approved by the Kansas Insurance Commissioner
on October 17, 2008. However, on October 28, 2008, Brooke filed a
voluntary petition for relief under Chapter 11 of the Bankruptcy
Code in the U.S. Bankruptcy Court for the District of Kansas. The
filing occurred before the purchase of First Life was closed.
On December 9, 2008, the company and the bankruptcy court-
appointed Trustee for Brooke Capital entered into Amendment No. 2
to the Agreement. This second amendment made several changes to
the Agreement. Among others, it rescinded Amendment No. 1,
changed the purchase price to a fixed price of $2,500,000, and
made the sale subject to Bankruptcy Court approval pursuant to
Section 363(c) of the Bankruptcy Code. A hearing on the sale has
been set in the Bankruptcy Court for December 22, 2008. The
approval of the sale by the Kansas Insurance Commissioner expires
after 60 days from October 17, 2008. The company and the trustee
have each requested extensions and approval is anticipated.
On December 22, 2008, the Bankruptcy Court approved the sale of
First Life to the Company.
The Kansas Insurance Department granted an extension of time for
the acquisition of First Life and approved Amendment No. 2 to the
Agreement. On December 23, 2008, the company completed its
acquisition of First Life. The company acquired all of the
outstanding shares of common stock of First Life in exchange for
$2,500,000 in cash. The purchase price was funded with cash on
hand.
About Brooke Corp.
Headquartered in Kansas, Brooke Corp. (NASDAQ: BXXX) --
http://www.brookebanker.com-- is an insurance agency and finance
company. The company owns 81% of Brooke Capital. The majority of
the company's stock was owned by Brooke Holding Inc., which, in
turn was owned by the Orr Family. A creditor of the family, First
United Bank of Chicago, was foreclosed on the BHI stock. The
company's revenues are generated from sales commissions on the
sales of property and casualty insurance policies, consulting,
lending and brokerage services.
Brooke Corp. and its affiliate, Brooke Capital Corp. filed for
Chapter 11 protection on Oct. 28, 2008 (Bankr. D. Kan. Case No.
08-22786). Angela R Markley, Esq., is the Debtors' in-house
counsel. The Debtors listed assets of $512,855,000 and debts of
$447,382,000.
CEDAR FAIR LP: Bank Loan Sells at Substantial Discount
------------------------------------------------------
Participations in a syndicated loan under which Cedar Fair LP is a
borrower traded in the secondary market at 61.94 cents-on-the-
dollar during the week ended December 26, 2008, according to data
compiled by Loan Pricing Corp. and reported in The Wall Street
Journal. This represents an increase of 2.17 percentage points
from the previous week, the Journal relates. Cedar Fair LP pays
interest at 200 basis points above LIBOR. The syndicated loan
matures on August 30, 2012. The bank loan carries Moody's Ba3
rating and Standard & Poor's BB- rating.
About Cedar Fair LP
Headquartered in Sandusky, Ohio, Cedar Fair LP (NYSE: FUN) --
http://www.cedarfair.com/-- is a publicly traded partnership and
one of the largest regional amusement-resort operators in the
world. The Partnership owns and operates 12 amusement parks, five
outdoor water parks, one indoor water park and six hotels.
Cedar Fair is the second-largest regional theme park company in
the U.S. in terms of attendance, according to Standard & Poor's
Ratings Services.
* * *
As reported by the Troubled Company Reporter on November 28, 2008,
Standard & Poor's Ratings Services revised its outlook on Cedar
Fair L.P. to negative from stable. Standard & Poor's affirmed its
'B+' corporate credit rating on the company. In addition,
Standard & Poor's lowered its rating on Cedar Fair's $2.1 billion
first-lien facilities to 'BB-' (one notch above the corporate
credit rating) from 'BB'. The recovery rating is revised to '2'
from '1', indicating S&P's expectation of substantial (70%-90%)
recovery in the event of a payment default. The downgrade was
driven principally by a change in the emergence valuation
multiple, taking into account current market conditions, recent
transaction multiples, and current trading multiples. Total debt
was $1.71 billion as of Sept. 28, 2008.
"The outlook revision is based on S&P's expectation that the
company's operating performance that could deteriorate in the peak
summer 2009 operating season given S&P's forecast of an extended
period of difficult economic conditions," explained Standard &
Poor's credit analyst Hal Diamond. "This would result in a
narrowing margin of compliance with the company's debt leverage
covenant, which steps down twice through the end of 2009,
especially in light of the company's high distribution payout."
CHAPARRAL ENERGY: Edge Merger Collapses; Covenant Trouble Ahead
---------------------------------------------------------------
Chaparral Energy Inc. terminated a merger agreement dated July 14,
2008, with Edge Petroleum Corp. The company, together, with
subsidiary Chaparral Exploration, L.L.C., signed a termination
agreement with Edge Petroleum.
Chaparral and Edge entered into the merger termination agreement
following the parties' conclusion that there was no reasonable
expectation that all of the closing conditions set forth in the
merger agreement would be met on or prior to December 31, 2008,
the date on which either party could terminate the merger
agreement unilaterally. A copy of the Merger Termination
Agreement is available at http://researcharchives.com/t/s?36ed
Chaparral also executed a termination and settlement agreement
with Magnetar Financial LLC on behalf of itself and its affiliates
to terminate their previously announced stock purchase agreement
dated July 14, 2008. The stock purchase agreement provided for
the sale of 1.5 million shares of Chaparral Series B convertible
preferred stock for an aggregate purchase price of $150 million.
In conjunction with the termination of the stock agreement with
Magnetar, Magnetar will pay Chaparral a $5.0 million termination
payment, of which $1.5 million will be paid to Edge for
reimbursement of certain expenses. A copy of the agreement is
available for free at http://researcharchives.com/t/s?36ee
Bloomberg's Bill Rochelle notes that Chaparral announced the
termination a month after admitting last month it will bust
covenants on its $650 million in senior notes unless energy prices
rise from November levels.
Covenant Breach by 1stQ 2009;
Two Notch Downgrades
As reported by the Dec. 23 issue of the Troubled Company Reporter,
Moody's Investors Service downgraded Chaparral Energy, Inc.'s
$325 million of senior unsecured notes due 2015 and $325 million
of senior unsecured notes due 2017 to Caa3 (LGD 5, 76%) from Caa1
(LGD 5, 75%). Moody's also downgraded Chaparral's Corporate
Family Rating to Caa2 from B3, its Probability of Default Rating
to Caa2 from B3 and its Speculative Grade Liquidity rating from
SGL-3 to SGL-4. The ratings have been placed on review for
further possible downgrade.
The downgrade, according to Moody's reflects Chaparral's lack of
liquidity and significant leverage. It notes that presently,
Chaparral has approximately $30 million available under its
$600 million borrowing base facility. While this $30 million
could be available to be drawn before December 31, 2008, Moody's
believes that as of the first quarter 2009 Chaparral may breach a
covenant.
Standard & Poor's Ratings Services, on the other hand, removed the
ratings on exploration and production company Chaparral Energy
from CreditWatch with negative implications, where they were
placed on Nov. 14, and lowered the corporate credit rating to
'CCC+' from 'B'. These rating actions follow the announcement of
the termination agreement. "The ratings on Chaparral reflect
near-term concerns about its weak liquidity, potential for
covenant violations, and a lack of flexibility in its capital
structure brought on by its very high debt leverage," said
Standard & Poor's credit analyst Paul B. Harvey.
$600MM Borrowing Base Reaffirmed
In a filing with the Securities and Exchange Commission, Chaparral
Energy, Inc., said that, effective Dec. 24, 2008, it entered into
a Fourth Amendment to Seventh Restated Credit Agreement dated
October 31, 2006, with Chaparral Energy, L.L.C., in its capacity
as representative for the borrowers, JPMorgan Chase Bank, N.A., as
administrative agent, and each of the lenders party thereto.
The company entered into the Fourth Amendment in connection with
the semi-annual redetermination of its borrowing base under the
Credit Agreement. The company's current borrowing base of
$600,000,000 was reaffirmed by the Fourth Amendment.
The company added that it plans to draw the remaining availability
under the Credit Agreement up to $596 million to increase
liquidity before year-end 2008. The company's publicly traded
corporate bonds include an annual indebtedness incurrence covenant
which could limit future borrowings in early 2009. With an
expected borrowing base utilization of greater than 90%, the
interest rate for borrowings under the Credit Agreement will be
LIBOR plus 2.75% or a minimum of 4.75%. The company's next
scheduled borrowing base redetermination under the Credit
Agreement is May 1, 2009.
$31MM from Derivatives
As part of the affirmation of its borrowing base under the Credit
Agreement, Chaparral Energy received approval from its Lenders to
monetize a portion of its derivatives which were scheduled to
settle in the period of January 2009 to June 2009.
According to CEO and President Mark A. Fischer, based on current
prices, the estimated net proceeds to be received from these sales
will be in the range of $31 million to $34 million. Due to the
near-term maturities of these derivatives, the recent
redetermination of the company's borrowing base was not dependent
on their value. The Company plans to use the proceeds from these
sales for general corporate purposes. The company is also
planning to add additional hedges for the second half of 2009 and
calendar 2010 and 2011.
In January 2009, the company plans to provide a comprehensive
update on its operations, production and cost guidance.
About Chaparral Energy
Oklahoma City, Oklahoma-based Chaparral Energy, Inc. is an
independent oil and natural gas company engaged in the production,
acquisition and exploitation of oil and natural gas properties.
Its areas of operation include the Mid-Continent, Permian Basin,
Gulf Coast, Ark-La-Tex, North Texas and the Rocky Mountains. The
company -- http://www.chaparralenergy.com-- maintains a portfolio
of proved reserves, development and exploratory drilling
opportunities, and enhanced oil recovery (EOR) projects. As of
Dec. 31, 2007, Chaparral had estimated proved reserves of
987 billion cubic feet of natural gas equivalent (Bcfe). Its
reserves were 65% proved developed and 60% crude oil. The company
also had an average daily production of 111.3 million cubic feet
of natural gas equivalent (MMcfe) during the year.
CHARTER COMMUNICATIONS: Bank Loan Sells at Substantial Discount
---------------------------------------------------------------
Participations in a syndicated loan under which Charter
Communications is a borrower traded in the secondary market at
71.30 cents-on-the-dollar during the week ended December 26, 2008,
according to data compiled by Loan Pricing Corp. and reported in
The Wall Street Journal. This represents an increase of 1.70
percentage points from the previous week, the Journal relates.
Charter Communications pays interest at 200 basis points above
LIBOR. The syndicated loan matures on March 6, 2014. The bank loan
carries Moody's B1 rating and Standard & Poor's B+ rating.
Headquartered in St. Louis, Missouri, Charter Communications Inc.
(Nasdaq: CHTR) -- http://www.charter.com/-- is a broadband
communications company and the third-largest publicly traded cable
operator in the United States. Charter provides a full range of
advanced broadband services, including advanced Charter Digital
Cable(R) video entertainment programming, Charter High-Speed(R)
Internet access, and Charter Telephone(R). Charter Business(TM)
similarly provides broadband communications solutions to business
organizations, such as business-to-business Internet access, data
networking, video and music entertainment services, and business
telephone. Charter's advertising sales and production services
are sold under the Charter Media(R) brand.
As reported by the Troubled Company Reporter on Nov. 11, 2008,
Charter Communications' balance sheet at Sept. 30, 2008, showed
total assets of $15.1 billion, total liabilities of
$23.9 billion, resulting in a shareholders' deficit of
$8.8 billion.
* * *
TCR reported on Dec. 22, 2008, Fitch Ratings has placed Charter
Communications, Inc.'s 'CCC' Issuer Default Rating and the IDRs
and individual issue ratings of Charter's subsidiaries on Rating
Watch Negative. Approximately $21.1 billion of debt outstanding
as of Sept. 30, 2008 is effected by Fitch's action.
CHARTER COMM: Chance of Financial Distress Up 75%, Says Analyst
---------------------------------------------------------------
Citigroup analyst David Hamburger said that the likelihood of
Charter Communications Inc.'s financial distress in 2009 has
increased to 75% from 20%, Kelsey Volkmann at St. Louis Business
Journal reports.
The Business Journal quoted Mr. Hamburger as saying, "In the
current credit environment, planned negotiations with a diffuse
set of bondholders with varied interests might not be successful
given the company's significant liquidity needs and need to
refinance 2010 maturities. Likelihood of financial distress rises
to 75%, versus 20% under our prior view."
Charter Communications asked its financial adviser, Lazard LLC, in
December to start talks with its bondholders about financial
alternatives to boost its balance sheet, the Business Journal
relates.
According to the Business Journal, Charter Communications has
never made a profit since it went public in 1999, mainly due to
its $24 billion debt. The report says that Charter Communications
stock price has dropped to its 52-week low to 9 cents per share on
Dec. 27, 2008. According to the report, Charter Communications
has traded below $1 a share for more than a month, which would
qualify it for a notice of possible delisting by NASDAQ, but the
stock exchange has temporarily waived its rules due to current
volatility in the markets.
Mr. Hamburger downgraded Charter Communications to "sell" from
"buy", and reduced the price target to 5 cents from $1, the
Business Journal reports.
About Charter Communications
Headquartered in St. Louis, Missouri, Charter Communications Inc.
(Nasdaq: CHTR) -- http://www.charter.com/-- is a broadband
communications company and the third-largest publicly traded cable
operator in the United States. Charter provides a full range of
advanced broadband services, including advanced Charter Digital
Cable(R) video entertainment programming, Charter High-Speed(R)
Internet access, and Charter Telephone(R). Charter Business(TM)
similarly provides broadband communications solutions to business
organizations, such as business-to-business Internet access, data
networking, video and music entertainment services, and business
telephone. Charter's advertising sales and production services
are sold under the Charter Media(R) brand.
As reported by the Troubled Company Reporter on Nov. 11, 2008,
Charter Communications' balance sheet at Sept. 30, 2008, showed
total assets of $15.1 billion, total liabilities of
$23.9 billion, resulting in a shareholders' deficit of
$8.8 billion.
As reported by the Troubled Company Reporter on Dec. 22, 2008,
Fitch Ratings placed Charter Communications, Inc.'s 'CCC' Issuer
Default Rating and the IDRs and individual issue ratings of
Charter's subsidiaries on Rating Watch Negative. Approximately
$21.1 billion of debt outstanding as of Sept. 30, 2008 is effected
by Fitch's action.
As reported by the TCR on Dec. 16, 2008, Moody's Investors Service
lowered the Probability-of-Default Rating for Charter
Communications, Inc. to Ca from Caa2 and placed all ratings (other
than the SGL3 Speculative Grade Liquidity Rating) for the company
and its subsidiaries under review for possible downgrade.
As reported by the Troubled Company Reporter on Dec. 16, 2008,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Charter Communications Inc. to 'CC' from 'B-'. S&P said
that the rating outlook is negative.
CHATHAM LIGHT: Moody's Cuts Ratings on $24MM Subor. Notes to 'Ba2'
------------------------------------------------------------------
Moody's Investors Service announced that it has downgraded these
notes issued by Chatham Light CLO, Limited:
Class Description: US$26,000,000 Class A-1 Floating Rate Senior
Notes due 2017
-- Prior Rating: Aaa, on review for possible downgrade
-- Prior Rating Action Date: 10/15/2008
-- Current Rating: A1
Class Description: US$28,500,000 Class A-2 Floating Rate Senior
Notes due 2017
-- Prior Rating: Aa2
-- Prior Rating Action Date: 12/15/2004
-- Current Rating: A2
Class Description: US$27,000,000 Class B Fixed Rate Deferrable
Senior Subordinate Notes due 2017
-- Prior Rating: A2
-- Prior Rating Action Date: 12/15/2004
-- Current Rating: Baa2
Class Description: US$19,000,000 Class C-1 Floating Rate
Deferrable Senior Subordinate Notes due 2017
-- Prior Rating: Baa2
-- Prior Rating Action Date: 12/15/2004
-- Current Rating: Ba2
Class Description: US$5,000,000 Class C-2 Fixed Rate Deferrable
Senior Subordinate Notes due 2017
-- Prior Rating: Baa2
-- Prior Rating Action Date: 12/15/2004
-- Current Rating: Ba2
According to Moody's, the rating action on Class A-1 and Class A-2
Notes is a result of the additional risk posed to the noteholders
due to the action taken by Moody's on the insurance financial
strength rating of Financial Security Assurance Inc., which acts
as Guarantor under the Investment Agreement in the transaction.
On November 21, 2008, Moody's downgraded the financial strength
rating of Financial Security Assurance to Aa3 from Aaa. The
rating action taken on Class B and Class C Notes is due to the
decline in the average credit rating of the underlying pool as
evidenced by the increase in the percentage of Caa1 and below
rated securities as well as the increase in the dollar amount of
defaulted securities.
CHEROKEE INT'L: Completes $62.3MM Merger w/ Lineage Power's Unit
----------------------------------------------------------------
Cherokee International Corporation disclosed in a filing with the
Securities and Exchange Commission that Lineage Power Corporation
has completed the acquisition of the company. Cherokee is now a
subsidiary of Lineage Power Holdings, Inc.
On Sept. 24, 2008, Cherokee entered into an Agreement and Plan of
Merger with Lineage Power Holdings, Inc., a portfolio company of
The Gores Group, LLC, and Birdie Merger Sub, Inc., a subsidiary of
Lineage Power Holdings, Inc.
Cherokee entered into a $67,500,000 Credit Agreement with Wells
Fargo Foothill, LLC, as lender and agent, Lineage Power Holdings,
Inc., and Lineage Power Corporation. The proceeds from the Credit
Agreement were used by Cherokee, among other ways, in connection
with the consummation of the Merger, and for general corporate
purposes.
Cherokee's stockholders, at a special meeting held on Nov. 18,
voted for the adoption and approval of the merger agreement, dated
Sept. 24, 2008, with Lineage Power Holdings, Inc. and Birdie
Merger Sub, Inc., and the transactions contemplated therein,
including the merger of the company with Birdie Merger Sub, Inc.
Pursuant to the terms of the Merger Agreement, at the Effective
Time:
1) each share of common stock of Cherokee, other than shares
owned by Cherokee, Lineage Power Holdings, Inc., Birdie
Merger Sub, Inc. or any subsidiary of Cherokee, Lineage
Power Holdings, Inc. or Birdie Merger Sub, Inc., par value
$0.001 per share, was canceled and automatically converted
into the right to receive $3.20, without interest;
2) each unexercised Cherokee stock option that was outstanding
at the Effective Time of the Merger (whether or not then
vested) was canceled and converted into the right to
receive an amount in cash (subject to applicable
withholding taxes) equal to (x) the excess, if any, of
$3.20 per share over the per share exercise or purchase
price of such outstanding Cherokee stock option, multiplied
by (y) the number of shares of Cherokee common stock
underlying such Cherokee stock option; and
3) shares of Cherokee common stock purchased under Cherokee's
Employee Stock Purchase Program were canceled and converted
into the right to receive $3.20 per share.
As a result of the Merger, Cherokee no longer fulfills the
numerical listing requirements of the Nasdaq Global Market.
Accordingly, after completion of the Merger, Cherokee requested
that Nasdaq (i) suspend trading in Cherokee's common stock
starting Nov. 21, 2008, and (ii) file with the Securities and
Exchange Commission an application on Form 25 to report that the
Shares are no longer listed on Nasdaq. As a result, the Shares
will no longer be listed on Nasdaq. Cherokee also intends to file
with the SEC a certification on Form 15 under the Securities
Exchange Act of 1934, as amended, requesting that the Shares be
deregistered and that Cherokee's reporting obligations under
Sections 13 and 15(d) of the Exchange Act be suspended.
The aggregate consideration paid in respect of the Shares was
approximately $62,322,854. The aggregate consideration was funded
by Lineage Power Holdings, Inc. and proceeds from the Credit
Agreement.
Pursuant to the terms of the Merger Agreement, the directors of
Birdie Merger Sub, Inc. immediately prior to the Effective Time
became the directors of Cherokee, the surviving corporation in the
Merger. Accordingly, upon consummation of the Merger, each of
Andrew P. Freedman, Timothy P. Meyer, Mark R. Stone, Frank
Stefanik, Ryan D. Wald, Craig A. Witsoe and Steven C. Yager became
members of the board of directors of Cherokee. As of the
Effective Time, these individuals ceased to be members of the
board: Raymond Meyer, Jeffrey M. Frank, John Michal Conaway,
Clark Michael Crawford, Larry Schwerin, Edward Philip Smoot, and
David H. Robbins. Moreover, effective as of the Effective Time,
each of these resigned as an officer of Cherokee: Mr. Frank,
Linster W. Fox, Mukesh Patel, Alex Patel, Howard Ribaudo and
Michael Wagner.
In connection with the consummation of the Merger, Cherokee's
certificate of incorporation was amended, effective as of the
Effective Time.
About Cherokee International Corp.
Based in Tustin, California, Cherokee International Corp.
(NASDAQ:CHRK) -- http://www.cherokeellc.com/-- is a designer
and manufacturer of a range of switch mode power supplies for
original equipment manufacturers in the telecommunications,
networking, high-end workstations and other electronic equipment
industries. The company has offices and manufacturing plants in
Tustin and Irvine, California, Wavre, Belgium, Bombay, India,
Guadalajara, Mexico, and Penang, Malaysia.
Net income for the third quarter of 2008 was $126,000 compared to
a net loss of $1,309,000 for the third quarter a year ago.
Net loss for the nine months ended Sept. 28, 2008, was $431,000
compared to a net loss of $4.9 million for the nine months ended
Sept. 30, 2007.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $94.4 million, total liabilities of $82.7 million and
stockholders' equity of about $11.7 million.
As of Sept. 28, 2008, the company has cash and cash equivalents of
$15.3 million and negative working capital of $2.8 million due to
the $46.6 million of senior notes in payment default as of Nov. 1,
2008, being classified to current liabilities. The company's
revolving line of credit with General Electric Capital Corporation
matured on Aug. 25, 2008. The company does not have an existing
line of credit for its US domestic company.
Going Concern Doubt
Mayer Hoffman McCann P.C. in Orange County, California, expressed
substantial doubt about the company's ability to continue as a
going concern after auditing the consolidated financial statements
of Cherokee International Corporation and subsidiaries as of
Dec. 30, 2007, and Dec. 31, 2006. The company's management
anticipates that there will be insufficient cash balances
available to repay the outstanding debt at its maturity.
On Nov. 1, 2008, the $46.6 million aggregate principal amount
outstanding under the company's 5.25% Senior Notes will become due
and payable. The company does not expect to have sufficient cash
available at the time of maturity to repay this indebtedness and
are currently working on a variety of possible alternatives to
satisfy this obligation. The company also cannot be certain that
it will have sufficient assets or cash flow available to support
refinancing these notes at current market rates or on terms that
are satisfactory to the company. If the company is unable to
refinance on terms satisfactory to it, it may be forced to
refinance on terms that are materially less favorable, seek funds
through other means such as a sale of some of assets, or otherwise
significantly alter its operating plan, any of which could have a
material adverse effect on its business, financial condition and
results of operation. These circumstances create substantial
doubt about the company's ability to continue as a going concern.
CHEROKEE INTERNATIONAL: Pays $46.6MM of 5.25% Senior Notes Debt
---------------------------------------------------------------
Cherokee International Corporation anticipates that the
outstanding amounts due and payable under the 5.25% Senior Notes,
together with default interest on overdue principal, will be paid
after the closing of the merger with Birdie Merger Sub, Inc., a
subsidiary of Lineage Power Holdings, Inc.
The company related that the senior notes will remain an
obligation of the company even after the merger transaction.
On Nov. 1, 2008, the $46.6 million aggregate principal amount
outstanding under the 5.25% Senior Notes of Cherokee became due
and payable. The company did not have sufficient cash available
to repay this indebtedness. The company made the interest payment
due on November 1 but was unable to pay the principal amount
outstanding at maturity and a payment default occurred.
As a result of the payment default, in addition to the aggregate
principal amount outstanding under the Senior Notes, the company
is required to pay interest on overdue principal at the default
rate of 6.25% per annum.
About Cherokee International Corp.
Based in Tustin, California, Cherokee International Corp.
(NASDAQ:CHRK) -- http://www.cherokeellc.com/-- is a designer
and manufacturer of a range of switch mode power supplies for
original equipment manufacturers in the telecommunications,
networking, high-end workstations and other electronic equipment
industries. The company has offices and manufacturing plants in
Tustin and Irvine, California, Wavre, Belgium, Bombay, India,
Guadalajara, Mexico, and Penang, Malaysia.
Net income for the third quarter of 2008 was $126,000 compared to
a net loss of $1,309,000 for the third quarter a year ago.
Net loss for the nine months ended Sept. 28, 2008, was $431,000
compared to a net loss of $4.9 million for the nine months ended
Sept. 30, 2007.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $94.4 million, total liabilities of $82.7 million and
stockholders' equity of about $11.7 million.
As of Sept. 28, 2008, the company has cash and cash equivalents of
$15.3 million and negative working capital of $2.8 million due to
the $46.6 million of senior notes in payment default as of Nov. 1,
2008, being classified to current liabilities. The company's
revolving line of credit with General Electric Capital Corporation
matured on Aug. 25, 2008. The company does not have an existing
line of credit for its US domestic company.
Going Concern Doubt
Mayer Hoffman McCann P.C. in Orange County, California, expressed
substantial doubt about the company's ability to continue as a
going concern after auditing the consolidated financial statements
of Cherokee International Corporation and subsidiaries as of Dec.
30, 2007, and Dec. 31, 2006. The company's management
anticipates that there will be insufficient cash balances
available to repay the outstanding debt at its maturity.
On Nov. 1, 2008, the $46.6 million aggregate principal amount
outstanding under the company's 5.25% Senior Notes will become due
and payable. The company does not expect to have sufficient cash
available at the time of maturity to repay this indebtedness and
are currently working on a variety of possible alternatives to
satisfy this obligation. The company also cannot be certain that
it will have sufficient assets or cash flow available to support
refinancing these notes at current market rates or on terms that
are satisfactory to the company. If the company is unable to
refinance on terms satisfactory to it, it may be forced to
refinance on terms that are materially less favorable, seek funds
through other means such as a sale of some of assets, or otherwise
significantly alter its operating plan, any of which could have a
material adverse effect on its business, financial condition and
results of operation. These circumstances create substantial
doubt about the company's ability to continue as a going concern.
CHESAPEAKE CORP: Files for Bankruptcy to Consummate Asset Sale
--------------------------------------------------------------
Chesapeake Corporation has reached an agreement to sell all of its
operating businesses to a group of investors including affiliates
of Irving Place Capital Management, L.P., and Oaktree Capital
Management, L.P., who intend to continue operating these
businesses as a going concern. To consummate this sale,
Chesapeake and its U.S. operating subsidiaries filed voluntary
Chapter 11 petitions on Dec. 29 in the Eastern District of
Virginia in Richmond.
All of the company's operations -- including all of its
manufacturing and distribution facilities in the U.S. and around
the world -- are open and operating on normal schedules,
fulfilling customer orders as usual and providing uninterrupted
customer service. The company's non-U.S. subsidiaries were not
included in the Chapter 11 filing and there are no plans to place
them in administration.
"After exploring a range of possible alternatives to improve our
balance sheet and maintain the liquidity we need to operate our
businesses in an extremely difficult economic environment, the
management and Board of Directors of Chesapeake concluded that a
court-supervised sale of our business operations is in the best
interest of the Company and its stakeholders," said Andrew J.
Kohut, President and Chief Executive Officer of Chesapeake. "In
particular, the sale transaction and Chapter 11 process will help
us meet several critical objectives, including allowing ongoing
operation of all of our businesses without interruption to
supplier and customer relationships, providing a permanent
solution to the high leverage at the parent company level and
constrained liquidity, providing the most rapid path to a new
organization with a much healthier balance sheet, and providing a
bright future for our operating companies and their employees,
customers and suppliers."
Chesapeake has filed a variety of first day motions with the Court
that will allow it to continue to conduct business as usual while
it completes the sale of the business operations to the investor
group. In addition, the company will seek preliminary approval
from the Court for a new debtor-in-possession financing facility
of up to $37 million provided by certain members of its current
revolving lender group. The new facility will provide an
immediate source of funds to the company, enabling it to satisfy
customary obligations associated with ongoing operations of its
business, including the timely payment of employee obligations,
materials purchases, normal operating expenses and other
obligations. Availability under the debtor-in-possession
financing is initially limited to $18.55 million, subject to
increase (i) upon entry of an order in the company's Chapter 11
case approving the new facility and (ii) the unanimous approval of
the lenders under the new facility. The company expects that cash
flows from the ongoing business and the initial availability under
the new facility will allow it to meet its liquidity needs until
such time as the conditions are satisfied for the availability of
increased financing.
Under terms of the transaction, the investor group will purchase
substantially all of the assets of the U.S. operating subsidiaries
of Chesapeake and the outstanding capital stock or other equity
securities of Chesapeake's foreign subsidiaries. The proposed
aggregate purchase price is $485 million, with cash proceeds to be
paid to the seller to be reduced by amounts in respect of certain
pension and severance obligations of the company and its
subsidiaries, amounts outstanding as of closing under the
company's Senior Secured Credit Facility and certain other fees
and obligations. The definitive Asset Purchase Agreement with
respect to the proposed transaction between the company and the
investor group was filed with the Court today.
The transaction is subject to the approval of the Bankruptcy Court
under Section 363(b) of the U.S. Bankruptcy Code and the
satisfaction of specified closing conditions, including the
purchasers reaching definitive agreement on exit financing.
Following the completion of a court-supervised competitive auction
process, a final sale hearing and closing are anticipated to take
place during the first quarter of 2009.
The company's financial advisor is Goldman Sachs & Co., its
restructuring advisor is Alvarez & Marsal, and its legal advisor
in the U.S. is Hunton & Williams LLP.
Debt Structure Main Reason for Filing
President and Chief Executive Officer Andrew J. Kohut says the
principal contributing factor to the Debtors' filing for relief
under Chapter 11 is the Debtors' debt structure. The Debtors have
been, and currently are, significantly levered.
The Debtors have approximately $520,744,903 in non-trade, interest
bearing debt, which results in annual interest expense of
approximately $49,500,000. The Debtors require access to capital
to support the company's operations; however, the Debtors no
longer have access to borrowings or other capital and have
determined that they can no longer support their current level of
debt.
In addition, the overall condition of the economy, aggressive
competition in the businesses within which the company operates
and other unforeseen matters generally outside its control have
seriously depleted its cash reserves, prevented it from executing
on its business plans, tightened its operating margins and
threatened its ability to survive as a going concern.
Pre-Bankruptcy Restructuring Efforts
In December 2007, in anticipation of the Prepetition Credit
Agreement's February 2009 expiration date, the Debtors started
negotiations with GE Commercial Finance Limited and affiliated
entities regarding the terms of an asset based lending facility
that would replace a prepetition credit agreement.
Chesapeake entered into the Prepetition Credit Agreement on Feb.
23, 2004, with Wachovia Bank, N.A., as administrative agent and
other financial institutions. In its original form, the
Prepetition Credit Agreement allowed the company to borrow and
guaranty loan balances up to $250 million. The company owes
$245,984,567 plus accrued interest and expenses under the
Prepetition Credit Agreement. The Prepetition Credit Agreement is
secured by a pledge of owned real property, inventory, equipment,
receivables, intellectual property, collateral accounts,
investment property, books and records and related proceeds of
Chesapeake and its U.S. subsidiaries.
As a result of certain of the economic and liquidity issues, in
June 2008, the Debtors began discussions with Goldman Sachs & Co.,
as their investment banker, to assist the Debtors with, among
other things, their efforts to address the scheduled maturity of
the Prepetition Credit Agreement in February 2009 and to explore
options for noncore or underperforming assets of the company.
During the spring and early summer of 2008, contemporaneously with
their efforts to refinance the Prepetition Credit Agreement, the
Debtors continued to pursue options for certain non-core or
underperforming assets. The Debtors also continued to review the
Company's balance sheet and to explore alternatives for reducing
leverage and improving their capital structure to better position
the Debtors and the non-debtor Subsidiaries for growth and
profitability for the benefit of their stakeholders.
The Debtors, during negotiations, obtained waivers from certain
financial condition covenants in the Prepetition Credit Agreement.
During the period from May through December 2008, both Goldman
Sachs and the Company discreetly contacted numerous potential
purchasers of some or all of the company's assets in an effort to
maximize the value of those assets.
As a result of discussions, the Debtors have entered into the
Agreement with entities controlled by Irving Place Capital
Management, L.P. and Oaktree Capital Management, L.P. to sell
substantially all of the Debtors' assets.
In particular, the APA or a similar transaction would preserve the
jobs of approximately 350 employees of the Debtor US Operating
Subsidiaries and the jobs of approximately 4,900 employees of non-
debtor Foreign Subsidiaries.
About Chesapeake Corp.
Chesapeake Corporation protects and promotes the world's great
brands as a leading international supplier of value-added
specialty paperboard and plastic packaging. Headquartered in
Richmond, Va., the company is one of Europe's premier suppliers of
folding cartons, leaflets and labels, as well as plastic packaging
for niche markets. Chesapeake has 44 locations in Europe, North
America, Africa and Asia and employs approximately 5,400 people
worldwide.
As of September 30, 2008, Chesapeake's consolidated balance sheets
showed $936.4 million in total assets, including $340.7 million in
current assets; and $937.1 million in total liabilities, including
$469.2 million in current liabilities, resulting in $500,000 in
stockholders' deficit.
CHESAPEAKE CORP: Can Access $18.55MM Wachovia Facility on Interim
-----------------------------------------------------------------
The United States Bankruptcy Court for the Eastern District of
Virginia authorized Chesapeake Corporation and its debtor-
affiliates to obtain, on an interim basis, up to $18,550,000 in
postpetition financing under a third amended and restated credit
agreement dated Dec. 30, 2008, with Wachovia Bank, National
Association, as administrative agent, and Wachovia Capital Markets
LLC, as sole lead arranger and book runner.
The Court also authorized the Debtors to access cash collateral
securing repayment of secured loan to the lenders.
The proceeds of the facility will be used for general corporate
and working capital purposes including repayment of intercompany
loans owed to the Debtors; Provided that:
a) no proceeds of any borrowing under the credit agreement
will be received by any subsidiary of the Debtors other
than in the form of either a secured intercompany loan or
an unsecured loan subject to an aggregate cap of $5,000,000
for all such unsecured loans; and
b) each Debtor will borrow directly under the DIP facility
and will not receive proceeds on lent from other Debtors.
The credit agreement provides as much as $37,100,000 revolving
credit facility -- with availability in British pounds sterling
subject to weekly true-ups. Furthermore, the credit agreement
will expire on the earliest to occur of:
a) May 31, 2009;
b) 40 days after the Debtor's bankruptcy filing, if a final
DIP order has not been entered by such date;
c) the substantial consummation of a plan of reorganization
that is confirmed pursuant to an order entered by the
Court;
d) the consummation of the 363 sale; or
e) the acceleration of the loans and the termination of the
commitment with respect to the credit agreement in
accordance with the terms of that agreement.
The lenders will be granted first lien on unencumbered property of
the Debtors and superpriority administrative claims with priority
in payment over any and all administrative expenses.
The facility is subject to carve-outs for payment of (i) all
fees to the clerk of the Court and the Office of the United
States Trustee; and (ii) all allowed fees and expenses incurred by
professionals retained by the Debtors and any statutory committee.
The DIP agreement contains customary and appropriate events of
defaults.
A hearing is set for Jan. 12, 2009, at 11:00 a.m., to consider
final approval of the Debtors' motion.
Prepetition Indebtedness
The Debtors entered into second amended and restated
credit agreement dated Feb. 23, 2004, with Wachovia Bank,
as administrative agent, together with Citicorp North America,
Inc., as syndication agents; HSBC Bank plc, as documentation
agent; Wachovia Capital Markets LLC, as a co-lead arranger
and sole book runner; Banc of America Securities LLC and
Citicorp North America Inc., as co-lead arrangers.
The facility will mature by February 2009.
The Debtors owe $245,984,567 plus accrued and unpaid interest
including attorneys' fees and disbursements under the agreement.
A full-text copy of the Third Amended and Restated Credit
Agreement dated Dec. 30, 2008, is available for free at:
http://ResearchArchives.com/t/s?370f
Headquartered in Richmond, Virginia, Chesapeake Corporation (NYSE:
CSK) -- http://www.cskcorp.com-- supplies specialty paperboard
packaging products in Europe and an international supplier of
plastic packaging products to niche end-use markets. The Debtors
have 44 locations in Europe, North America, Africa and Asia and
employs approximately 5,400 people worldwide. The company
directly owns 100% of each of the other Debtors.
The company owns, directly or indirectly, 100% of each of the non-
debtor subsidiaries except: (i) Chesapeake Plastics Kft, a
Hungarian joint venture which is 49% owned by Chemark Kft; and
(ii) Rotam Boxmore Packaging Co. Ltd., a British Virgin Islands
company which is 50% owned by Canada Rotam International Co. Ltd.
The company's certificate of authorization authorizes the issuance
of 60,000,000 shares of common stock. About 20,559,115 shares of
common stock are issued and outstanding with par value of $1.00
per share as of Dec. 26, 2008. Moreover, the company's
certificate allows the issuance of 500,000 shares of preferred
stock, and no shares are outstanding.
As of Dec. 31, 2007, Dimensional Fund Advisors LLP owns 7.98% of
the company; T. Rowe Price Associates Inc., 8.4%; and Wells Fargo
& Company, 14.71%. Edelmann GmbH & Co. KG and Joachim W. Dziallas
owns 13.5% of the
company as of Sept. 19, 2008.
New York Stock Exchange suspended the listing of the company's
common stock effective Oct. 8, 2008, due to its inability to meet
the global market capitalization requirements for continued
listing on the exchange. Subsequently, the company's stock began
to be quoted on the over-the-counter bulletin board under the
trading symbol "CSKE.PK."
CHESAPEAKE CORP: Case Summary & 50 Largest Unsec. Creditors
-----------------------------------------------------------
Debtor: Chesapeake Corporation
1021 East Cary Street, 22nd Floor
Richmond, Virginia 23219
Bankruptcy Case No.: 08-36642
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Chesapeake Corporation (Louisiana) 08-36652
Chesapeake Corporation (Wisconsin) 08-36643
Delmarva Properties, Inc. 08-36653
Chesapeake Corporation (Massachusetts) 08-36644
Chesapeake Recycling Company 08-36654
Stonehouse, Inc. 08-36645
Sheffield, Inc. 08-36655
Chesapeake Pharmaceutical Packaging Company, Inc. 08-36646
Chesapeake Forest Products Company LLC 08-36656
Chesapeake Corporation (Illinois) 08-36647
The Chesapeake Corporation of Virginia 08-36657
Chesapeake International Holding Company 08-36648
Cary St. Company 08-36658
WTM I Company 08-36649
Chesapeake Printing and Packaging Company 08-36659
Chesapeake Assets Company 08-36650
Chesapeake Display and Packaging Company 08-36660
Chesapeake Corporation (D.C.) 08-36651
Related Information: The Debtors (NYSE: CSK) supply specialty
paperboard packaging products in Europe and
an international supplier of plastic
packaging products to niche end-use markets.
The Debtors have 44 locations in Europe,
North America, Africa and Asia and employs
approximately 5,400 people worldwide.
Chesapeake Corp. directly owns 100% of each
of the other Debtors. The company owns,
directly or indirectly, 100% of each of the
non-debtor subsidiaries except:
i) Chesapeake Plastics Kft, a Hungarian
joint venture which is 49% owned by
Chemark Kft; and
ii) Rotam Boxmore Packaging Co. Ltd., a
British Virgin Islands company which is
50% owned by Canada Rotam International
Co. Ltd.
The company's certificate of authorization
authorizes the issuance of 60,000,000 shares
of common stock. About 20,559,115 shares of
common stock are issued and outstanding with
par value of $1.00 per share as of Dec. 26,
2008. Moreover, the company's certificate
allows the issuance of 500,000 shares of
preferred stock, and no shares are
outstanding.
As of Dec. 31, 2007, Dimensional Fund
Advisors LLP owns 7.98% of the company; T.
Rowe Price Associates Inc., 8.4%; and Wells
Fargo & Company, 14.71%. Edelmann GmbH &
Co. KG and Joachim W. Dziallas owns 13.5% of
the company as of Sept. 19, 2008.
New York Stock Exchange suspended the
listing of the company's common stock
effective Oct. 8, 2008, due to its inability
to meet the global market capitalization
requirements for continued listing on the
exchange. Subsequently, the company's stock
began to be quoted on the over-the-counter
bulletin board under the trading symbol
"CSKE.PK."
See: http://www.cskcorp.com/
Chapter 11 Petition Date: December 29, 2008
Court: Eastern District of Virginia (Richmond)
Judge: Douglas O. Tice, Jr.
Debtor's Counsel: Benjamin C. Ackerly, Esq.
Jason W. Harbour, Esq.
Peter S. Partee, Esq.
Hunton & Williams LLP
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, VA 23219-4074
Tel: (804) 788-8200
Fax: (804) 788-8218
http://www.hunton.com
Financial Advisor: Alvarez and Marsal North America LLC, and
Goldman Sachs & Co.
Conflicts Counsel: Tavenner & Beran PLC
Claims, Noticing and Balloting Agent: Kurtzman Carson Consultants
LLC
Special Counsel: Hammonds LLP
Total Assets: $936,600,000 as of September 28, 2008
Total Debts: $937,100,000 as of September 28, 2008
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
US Bank National Association 7% Corporate $103,230,769
Corporate Trust Services Debenture
1021 E. Cary Street, Ste. 1850
Richmond, VA 23219
Tel: (804) 343-1567
Fax: (804) 343-1572
Bank of New York Mellon 10.375% Corp. $70,838,009
101 Barclay Street 4E Debenture
New York, NY 10286
Tel: (212) 495-1784
Fax: (212) 495-2546
Bank of New York IDA Debenture $50,847,656
Mellon Global Corporate
Trust
Corporate Trust Muni
Mid/Ad
One Wall Street
New York, NY 10286
Tel: (973) 247-4742
Fax: (973) 357-7840
Samuel Taylor Retirement Plan $1,071,502
2900 Park Ridge Road Participant
Midlothian, VA
23113
Tel: (804) 330-4166
Thomas Johnson Retirement Plan $481,242
Participant
William M. Noftsinger Retirement Plan $417,629
Participant
Robert Argabright Retirement Plan $360,653
Participant
Edwin Carlstrom Retirement Plan $359,517
Participant
Bryce Adie Retirement Plan $299,279
Participant
Charles Cianciola Retirement Plan $292,728
Participant
Jack Creech Retirement Plan $291,195
Participant
Joseph Viviano Retirement Plan $279,338
Participant
Harry Warner Retirement Plan $279,338
Participant
Pete Chierieozzi Retirement Plan $273,620
Participant
Dr. Frank Royal Retirement Plan $265,013
Participant
Shirley Olsson Retirement Plan $207,148
Participant
Franklyn Scharf Retirement Plan $196,901
Participant
Richard Tilghman Retirement Plan $193,388
Participant
Robert Brake Retirement Plan $176,509
Participant
Louis Matherne Retirement Plan $164,262
Participant
Garland Edmonds Retirement Plan $136,158
Participant
Wallace Stettinius Retirement Plan $136,088
Participant
James Nagy Retirement Plan $122,492
Participant
Alvah Eubank Retirement Plan $111,142
Participant
Duff & Phelps Consultant $110,930
John Harper Retirement Plan $108,980
Participant
Matrinez, Odell & Calabria Retirement Plan $91,472
Participant
Richard Harrison Retirement Plan $74,857
Participant
Clifford Paper Inc. Trade $70,143
Rae Ehlen Retirement Plan $66,187
Participant
Mac Papers Inc. Trade $65,907
Gloria Hiatz Retirement Plan $64,463
Internal Revenue Service Taxing Authority unknown
Pension Benefit Guaranty Pension unknown
Corporation
Wisconsin Department of Taxing Authority unknown
Revenue
Neil Rylance Severance unknown
Twentieth Century Refuse Environmental unknown
Removal Company Inc.
Pennsauken Solid Waste Environmental unknown
Management Authority
Pollution Control Financing Environmental unknown
Authority of Camden County
Township of Pennsauken Environmental unknown
Public Works Department
A. Mariani's Sons Inc. Environmental unknown
New York State Department of Environmental unknown
Environmental Conservation
United States Environmental Environmental unknown
Protection Agency Region III
United States Environmental Environmental unknown
Protection Agency Region V
Wisconsin Department of Environmental unknown
Natural Resources
United States Department of Environmental unknown
the Interior U.S. Fish and
Wildlife Service
United States Department of Environmental unknown
Commerce National Oceanic and
Atmospheric
Menominee Indian Tribe of Environmental unknown
Wisconsin
State of Michigan Environmental unknown
Oneida Tribe of Indians of Environmental unknown
Wisconsin
The petition was signed by the company president and chief
executive officer, Andrew J. Kohut.
CHRYSLER LLC: Awaits Gov't Loans; Seeks to Eliminate Dealerships
----------------------------------------------------------------
Jeff Bennett at The Wall Street Journal reports that Chrysler LLC,
slowed by the application process, is still waiting for
$4 billion in loans from the U.S. government.
According to WSJ, Chrysler secured loan guarantees earlier in
December 2009 after President George W. Bush gave automakers
permission to use the $700 billion bank bailout passed by Congress
in September 2008. The loans, says the report, will last for
three years and will be called by the government if the companies
haven't proven their viability by March 31. Chrysler, according
to the report, said that it needed the money by the end of 2008 to
pay workers and parts suppliers.
Chrysler CEO Robert Nardelli said in a statement, "We continue to
work with the Treasury Department and the dialogue has been
positive and productive. We look forward to finalizing the
details and terms of our financial assistance, and complete our
bridge loan agreement in the immediate future." The U.S. Treasury
Department said in a statement on Wednesday that it is "working
expeditiously with Chrysler to finalize that transaction. We
remain committed to closing it on a timeline that will meet near
term funding needs."
Seeks Ways to Eliminate Dealerships
Chrysler wants to eliminate dealerships, says WXYZ.com. According
to the report, a glut of dealers are limiting profits and crimping
spending on marketing, facilities, and vehicles.
WXYZ.com relates that Chrysler is negotiating dealership closures
on a market by market basis. It is also reportedly offering cash
payments as incentives, says the report.
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K., Argentina,
Brazil, Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter on Dec. 3, 2008,
Dominion Bond Rating Service downgraded the ratings of Chrysler
LLC, including Chrysler's Issuer Rating to CC from CCC (high).
Chrysler's First Lien Secured Credit Facility and Second Lien
Secured Credit Facility have also been downgraded to CCC and CC
(low) respectively. All trends are Negative. The ratings action
reflects Chrysler's challenge to maintain sufficient liquidity
balances amid severe industry conditions that have deteriorated
alarmingly over the past few months and are not expected to
improve in the near term. With this ratings action, Chrysler is
removed from Under Review with Negative Implications, where it was
placed on Nov. 7, 2008.
As reported in the Troubled Company Reporter on Aug. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings on Chrysler
LLC, including the corporate credit rating, to 'CCC+' from 'B-'.
On July 31, 2008, TCR said that Fitch Ratings downgraded the
Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The
Rating Outlook is Negative. The downgrade reflects Chrysler's
restricted access to economic retail financing for its vehicles,
which is expected to result in a further step-down in retail
volumes. Lack of competitive financing is also expected to result
in more costly subvention payments and other forms of sales
incentives. Fitch is also concerned with the state of the
securitization market and the ability of the automakers to access
this market on an economic basis over the near term, given the
steep drop in residual values, higher default rates, higher loss
severity being experienced and jittery capital market.
As reported in the TCR on Dec. 3, 2008, Dominion Bond Rating
Service downgraded on Nov. 20, 2008, the ratings of Chrysler LLC,
including Chrysler's Issuer Rating to CC from CCC (high).
Chrysler's First Lien Secured Credit Facility and Second Lien
Secured Credit Facility have also been downgraded to CCC and CC
(low) respectively. All trends are Negative. The ratings action
reflects Chrysler's challenge to maintain sufficient liquidity
balances amid severe industry conditions that have deteriorated
alarmingly over the past few months and are not expected to
improve in the near term. With this ratings action, Chrysler is
removed from Under Review with Negative Implications, where it was
placed on Nov. 7, 2008.
CITATION CORP: Settles Parts Dispute with Dana Holdings
-------------------------------------------------------
Dana Holding Corp., formerly Dana Corp., has settled a contract
dispute with Citation Corp., the Toledo Blade reported. Dana
also dismissed the lawsuit it filed against Citation before the
U.S. District Court for the Northern District of Ohio.
Dana dismissed the lawsuit saying issues had been "amicably
resolved," the report said citing documents Dana filed with the
District Court. Terms of the settlement, however, were not
disclosed in public.
Dana filed the lawsuit against Citation asking the District Court
to direct Citation to continue supplying Dana certain auto and
truck parts. The Toledo Blade reported that Citation told Dana
that it would no longer provide the metal yokes Dana uses to make
vehicle driveshafts.
Toledo Blade said Dana would lose $600,000 a day if it is forced
to suspend production and could face penalties of $5,000,000 a
day in the event a disruption in its own supply hampers its
customers' business. Dana also sought an unspecified amount of
damages, the newspaper added.
About Dana Holding Corporation
Based in Toledo, Ohio, Dana Corporation -- 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.
Dana has facilities in China in the Asia-Pacific, Argentina in
the Latin-American regions and Italy in Europe.
The company and its affiliates filed for chapter 11 protection
on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of
Nov. 30, 2007, the Debtors listed $7,131,000,000 in total assets
and $7,665,000,000 in total debts resulting in a shareholders'
deficit of $534,000,000.
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, represented the Debtors. Henry S. Miller at
Miller Buckfire & Co., LLC, served as the Debtors' financial
advisor and investment banker. Ted Stenger from AlixPartners
served as Dana's Chief Restructuring Officer.
Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel
LLP, represented the Official Committee of Unsecured Creditors.
Fried, Frank, Harris, Shriver & Jacobson, LLP served as counsel
to the Official Committee of Equity Security Holders. Stahl
Cowen Crowley, LLC served as counsel to the Official Committee
of Non-Union Retirees.
The Debtors filed their Joint Plan of Reorganization on Aug. 31,
2007. On Oct. 23, 2007, the Court approved the adequacy of the
Disclosure Statement explaining their Plan. Judge Burton Lifland
of the U.S. Bankruptcy Court for the Southern District of New York
entered an order confirming the Third Amended Joint Plan of
Reorganization of the Debtors on Dec. 26, 2007.
The Debtors' Third Amended Joint Plan of Reorganization was deemed
effective as of Jan. 31, 2008. Dana Corp., starting on
the Plan Effective Date, operated as Dana Holding Corporation.
(Dana Corporation Bankruptcy News; Bankruptcy Creditors' Service
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported by the TCR on Dec. 22, 2008, Moody's Investors Service
has lowered the ratings of the Dana Holding Corporation --
Corporate Family Rating and Probability of Default Rating to Caa1
from B2. Moody's also lowered the ratings on the company's senior
secured asset based revolving credit facility to B2 from Ba3, and
lowered the rating for the senior secured term loan to B3 from B1.
The ratings remain under review for possible further downgrade.
The Speculative Grade Liquidity Rating of SGL-3 was affirmed.
The downgrades result from the expectation of continued erosion in
the North American market for SUVs and light trucks over the near
term. Reduced demand, according to Moody's, is expected to be
driven by weakening economic conditions and consumer aversion of
purchasing automobiles from distressed OEMs.
About Citation Corporation
Headquartered in Birmingham, Alabama, Citation Corporation --
http://www.citation.net/-- designs, develops and manufactures
cast, forged and machined components for the capital and durable
goods industries, including the automotive and industrial markets.
Citation uses aluminum, steel, gray iron, and ductile iron as the
raw materials in its various manufacturing processes. Citation
employs 2,900 in Alabama, Texas, Indiana, Michigan, North Carolina
and Wisconsin. The Debtor and its debtor-affiliates filed for
protection on Sept. 18, 2004 (Bankr. N.D. Ala. Case No. 04-08130).
Michael Leo Hall, Esq., and Rita H. Dixon, Esq., at Burr & Forman
LLP, represented the Debtors in their first bankruptcy. Judge
Tamara O. Mitchell confirmed the company's Second Amended Joint
Plan of Reorganization on May 18, 2005.
The Debtor and 11 debtor-affiliates filed a voluntary petition for
a prepackaged reorganization under Chapter 11 on March 12, 2007
(Bankr. N.D. Ala. Case Nos. 07-01153 to 07-01162). David S.
Heller, Esq., at Latham & Watkins LLP, and Michael Leo Hall, Esq.,
at Burr & Forman LLP, represented the Debtors. Carl Marks
Advisory Group LLC, the New York-based investment banking and
corporate revitalization firm, served as financial advisor.
Citation's schedules filed with the Court showed total assets of
$157,242,049 and total debts of $253,270,918.
Less than a month after Citation filed a voluntary petition for a
prepackaged reorganization under Chapter 11 in U.S. Bankruptcy
Court for the Northern District of Alabama, the company emerged
from bankruptcy on April 6, 2007.
Under its confirmed Plan of Reorganization, the company's lenders,
led by JPMorgan Chase & Co., exchanged $191 million in debt for
all reorganized company common stock and a new $30 million loan.
As reported by the TCR on Aug. 5, 2008, Standard & Poor's Ratings
Services has withdrawn its 'B' corporate credit rating and issue-
level ratings on Citation Corp. at the company's request. The
Novi, Mich.-based auto supplier had total balance sheet debt of
about $81 million as of March 31, 2008.
CITIGROUP INC: Chairperson & CEO Won't Get Bonuses for 2008
-----------------------------------------------------------
David Enrich at The Wall Street Journal reports that Citigroup
Inc.'s chairperson Win Bischoff and CEO Vikram Pandit won't get
bonuses for 2008.
Citigroup director and senior counselor Robert Rubin will also
forego his annual bonus, WSJ relates. Citing Mr. Pandit, WSJ
states that bonuses for other top executives will be decreased
"substantially."
Citigroup, according to WSJ, has received about $45 billion in
federal capital infusions and a government-financed arrangement to
insulate it from hundreds of billions of dollars in potential
losses. The company was expected to substantially curtail its
compensation costs, the report says.
WSJ relates that under the terms of the latest capital infusion by
the government, Citigroup must award at least 60% of any 2008
bonuses to top executives in the form of deferred stock or cash.
Citigroup implements a "clawback" provision to bonuses that will
let the firm to recoup payments under certain circumstances,
according to the report. The report says that the agreement with
Treasury requires Citigroup to keep its current policies on
federal lobbying activities and to keep a tight leash on expenses.
Citigroup, states the report, must also submit a report detailing
compensation of risk-management officials and potential problems
with that pay system.
Citigroup Global Sale Completed
Citigroup has successfully completed the sale of Citigroup Global
Services Limited (CGSL), the India-based captive business
processing outsourcing business, to Tata Consultancy Services for
all cash consideration of $512 million.
In addition to the sale, Citigroup has signed an agreement for TCS
to provide through CGSL, process outsourcing services to Citigroup
and its affiliates over a period of 9.5 years. The agreement
builds upon the existing relationship between Citigroup and TCS
whereby TCS provides application development, infrastructure
support, help desk and other process outsourcing services to
Citigroup.
The transaction is expected to help reduce operating expenses
related to business processing and will allow Citigroup to focus
on its core financial services competencies. Further, it will
reduce Citigroup's total headcount by more than 12,000 employees,
all of whom are located in India.
About Citigroup
Based in New York, Citigroup Inc. (NYSE: C) --
http://www.citigroup.com-- is organized into four major segments
-- Consumer Banking, Global Cards, Institutional Clients Group,
and Global Wealth Management. Citi had $2.0 trillion in total
assets on $1.9 trillion in total liabilities as of Sept. 30, 2008.
As reported in the Troubled Company Reporter on Nov. 25, 2008, the
U.S. government entered into an agreement with Citigroup to
provide a package of guarantees, liquidity access, and capital.
As part of the agreement, the U.S. Treasury and the Federal
Deposit Insurance Corporation will provide protection against the
possibility of unusually large losses on an asset pool of
approximately $306 billion of loans and securities backed by
residential and commercial real estate and other such assets,
which will remain on Citigroup's balance sheet. As a fee for this
arrangement, Citigroup will issue preferred shares to the Treasury
and FDIC. In addition and if necessary, the Federal Reserve will
backstop residual risk in the asset pool through a non-recourse
loan.
COMMUNITY HEALTH: Bank Loan Sells at Substantial Discount
---------------------------------------------------------
Participations in a syndicated loan under which Community Health
Systems, Inc., is a borrower traded in the secondary market at
70.94 cents-on-the-dollar during the week ended December 26, 2008,
according to data compiled by Loan Pricing Corp. and reported in
The Wall Street Journal. This represents an increase of 2.69
percentage points from the previous week, the Journal relates.
The syndicated loan matures on May 1, 2014. The bank loan carries
Moody's Ba3 rating and Standard & Poor's BB rating.
Based in Franklin, Tennessee, Community Health Systems, Inc. --
http://www.chs.net/-- is the largest publicly traded operator of
hospitals in the United States in terms of number of facilities
and net operating revenues. The company provides healthcare
services through these hospitals that it owns and operates in non-
urban and selected urban markets throughout the United States.
The company also owns and operates home health agencies, including
four home health agencies located in markets where it does not
operate a hospital. Through its wholly owned subsidiary, Quorum
Health Resources, LLC, the company provides management and
consulting services to non-affiliated general acute care hospitals
located throughout the United States.
Effective July 25, 2007, Community Health completed its
acquisition of Triad Hospitals, Inc. Of the 115 hospitals
included in its continuing operations as of December 31, 2007, 43
of them were acquired as part of the acquisition of Triad. The
acquisition of Triad also expanded the company's operations into
five states where it previously did not own any facilities.
CLARIENT INC: September 30 Balance Sheet Upside-Down by $2.7MM
--------------------------------------------------------------
Clarient, Inc.'s balance sheet as of Sept. 30, 2008, showed total
assets of $32.3 million, total liabilities of $35.0 million,
resulting in a stockholders' deficit of $2.7 million.
For three months ended Sept. 30, 2008, the company posted net loss
of $2.2 million compared to net loss of $2.8 million for the same
period in the previous year.
For nine months ended Sept. 30, 2008, the company posted net loss
of $7.4 million compared with net loss of $4.8 million for the
same period in the previous year.
As of Sept. 30, 2008, the company's cash and cash equivalents were
$1.9 million compared with $1.5 million as of Dec. 31, 2007. In
addition, the company ended the quarter with a total of
$10.6 million available under existing lines of credit.
At Sept. 30, 2008, the company has a working capital deficiency of
$10.1 million.
A full-text copy of the 10-Q filing is available for free at:
http://ResearchArchives.com/t/s?3701
About Clarient Inc.
Based in Aliso Viejo, California, Clarient Inc. (Nasdaq: CLRT) --
http://www.clarientinc.com/-- is an advanced oncology diagnostics
services company. The company's principal customers include
pathologists, oncologists, hospitals and biopharmaceutical
companies.
Going Concern Doubt
KPMG LLP, in Costa Mesa, California, expressed substantial doubt
about Clarient Inc.'s ability to continue as a going concern after
auditing the company's consolidated financial statements for the
years ended Dec. 31, 2007, and 2006. The auditing firm pointed to
the company's recurring losses, negative cash flows from
operations, and working capital and net capital deficiencies.
In addition, KPMG said it is not probable that the company can
remain in compliance with the restrictive monthly financial
covenant in its bank credit facility.
In order to comply with the covenants in the current debt
agreement, the company must achieve operating results at levels
not historically achieved by the company.
COMBIMATRIX CORP: Posts $11 Million Net Loss ir Last Nine Months
----------------------------------------------------------------
CombiMatrix Corporation reported its financial results for the
three and nine months ended Sept. 30, 2008.
Net loss for the third quarter of 2008 was $4.2 million versus
$3.4 million in the comparable 2007 period. The 2008 results
included $403,000 of interest and amortization costs associated
with the company's convertible debenture, vs. $0 interest costs in
the comparable 2007 period. The 2007 results included non-cash
benefits of $290,000 related to the adjustment of the company's
long-term warrant liability for changes in fair value. There were
no adjustments during the third quarter of 2008 as the company no
longer classify its outstanding warrants as liabilities, but
instead as a component of permanent equity.
Net loss for the nine months ended Sept. 30, 2008, was
$10.9 million versus $9.1 million in the comparable 2007 period.
The 2008 results included $403,000 of interest and amortization
costs associated with the company's convertible debenture, vs.
$0 interest costs in the comparable 2007 period. The 2007 results
included non-cash gains of $2.5 million related to the adjustment
of its long-term warrant liability for changes in fair value.
There were no adjustments for the nine months ended Sept. 30,
2008.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $37.4 million, total liabilities of $10.7 million and
shareholders' equity of about $26.7 million.
Cash, cash equivalents and available-for-sale investments totaled
$11.1 million as of Sept. 30, 2008, compared to $8.2 million as of
Dec. 31, 2007. Of the $11.1 million of cash and investments,
$1.7 million were held in certain auction rate securities,
$751,000 of which were classified as a long-term asset as of
Sept. 30, 2008. In mid-February of 2008, the market for auction
rate securities collapsed and our holdings in these securities are
currently illiquid. For the three and nine months ended Sept. 30,
2008, the company recorded temporary, unrealized holding losses of
$31,000 and $166,000, to reflect its auction rate securities at
fair value as of Sept. 30, 2008.
A full-text copy of the 10-Q filing is available for free at
http://ResearchArchives.com/t/s?3707
About CombiMatrix Corp.
Headquartered in Mukilteo, Washington, CombiMatrix Corp.
(NasdaqGM: CBMX) -- http://www.combimatrix.com/-- is a
diversified biotechnology company that develops and sells
proprietary technologies, products and services in the areas of
drug development, genetic analysis, molecular diagnostics,
nanotechnology research, defense and homeland security, as well as
other potential markets where the company's products and services
could be utilized.
Going Concern Doubt
Peterson Sullivan PLLC, in Seattle, Washington, expressed
substantial doubt about the company's ability to continue as a
going concern after auditing CombiMatrix's financial statements
for the year ended Dec. 31, 2007. The firm pointed to the
company's history of incurring net losses and net operating cash
flow deficits.
COMPLIANCE SYSTEMS: Inks Consulting Deal with Summit Trading
------------------------------------------------------------
Compliance Systems Corporation entered into a Consulting Agreement
on December 1, 2008, with Summit Trading Limited. The Corporation
retained Summit to provide one or more plans, for coordination in
executing the agreed-upon plan, and for using various business
services as agreed by both the Corporation and Summit. Under the
Consulting Agreement, the plans and services may include:
-- consulting with the Corporation's management concerning
marketing surveys,
-- availability to expand investor base,
-- investor support,
-- strategic business planning,
-- broker relations,
-- conducting due diligence meetings,
-- attendance at conventions and trade shows,
-- assistance in the preparation and dissemination of press
releases and stockholder communications,
-- review and assistance in updating a business plan,
-- review and advise on the capital structure for the
company,
-- assistance in the development of an acquisition profile
and structure,
-- recommending financing alternatives and sources, and
-- consulting on corporate finance or investment banking
issues.
The Consulting Agreement is limited to the United States.
The Consulting Agreement further provides that, in no event, shall
Consultant engage in any "regulated services." The Consulting
Agreement defines "regulated services," among other matters, as
being in the business of stock brokerage, providing investment
advice or any other activities which require registration under
either the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, providing underwriting or
banking services, acting as an insurance company, or providing
other services which may require regulation under federal or state
securities laws.
The Consulting Agreement has a term of two years and the
Corporation has the right, but not the obligation, to renew the
Consulting Agreement.
The Corporation has agreed to compensate Summit for agreeing to
provide its services through the issuance of an aggregate of
26,666,667 shares of the common stock, par value $0.001 per share,
of the Corporation. The Corporation has valued each Share at
$0.00525, or $140,000 in total. The 26,666,667 Shares are being
issued as of the date of the Consulting Agreement with delivery to
be made in four equal installments, the first installment being
delivered in connection with the execution of the Consulting
Agreement and the remaining installments to be delivered 90, 180
and 270 days from the date of the execution of the Consulting
Agreement. The Consulting Agreement provides that if a named
individual, who is to be personally available to perform Summit's
services under the Consulting Agreement, dies or becomes disabled,
the Corporation has the right to terminate the Consulting
Agreement. Upon such a termination of the Consulting Agreement,
Summit's right to receive all Shares not previously delivered
shall be forfeited.
About Compliance Systems
Based in Glen Cove, N.Y., Compliance Systems Corp. (OTC BB: COPI)
-- http://www.callcompliance.com/-- is a developer of technology-
based compliance solutions for the teleservices industry. The
company's primary proprietary product, TeleBlock(R) Call Blocking
System, automatically screens and blocks outbound calls against
federal, state, and in-house Do-Not-Call lists. Compliance
Systems also offers a Regulatory Guide, an up-to-date, online
compilation of state and federal telemarketing laws, as well as
ongoing compliance auditing services.
Going Concern Doubt
As reported in the Troubled company Reporter on April 14, 2008,
Holtz Rubenstein Reminick LLP, in Melville, New York, expressed
substantial doubt about Compliance System Corporation's ability
to continue as a going concern after auditing the company's
consolidated financial statements for the year ended Dec. 31,
2007.
In a November regulatory filing with the Securities and Exchange
Commission, the company noted that it has suffered losses from
operations in its last five fiscal years:
2007 $1,190,153;
2006 $1,242,531;
2005 $1,241,945;
2004 $1,293,769; and
2003 $1,880,508.
The company incurred a net loss of $916,272 for the nine months
ended September 30, 2008. The company had a stockholders'
deficiency of $288,034 and working capital of $93,824 at September
30, 2008.
According to the company, the continuous net losses incurred over
the last five fiscal years raise substantial doubt about its
ability to continue as a going concern. The continuation, the
company said, is dependent upon its ability to increase revenues,
control costs and operate profitably. To this end, the company
has (a) employed a sales executive to market the company's
services and (b) retained an investment banking firm to explore
acquisition opportunities that may diversify the company's
existing range of services, as well as to assist the company in
obtaining additional financing as required. There is no assurance
that the company will be successful in attaining these objectives
or that attaining such objectives will result in operating
profits, positive cash flows or an overall improvement in the
company's financial position in future periods.
As of September 30, 2008, the company had $950,000 in total assets
and $1.2 million in total liabilities, resulting in $288,000 in
stockholders' equity; and $6.2 million in stockholders'
deficiency. For the three months ended September 30, 2008, the
company posted $295,000 in net losses on $480,000 in revenues.
CONSTAR INT'L: Files for Chapter 11 to Swap Debt for Equity
-----------------------------------------------------------
Constar International Inc. and certain of its subsidiaries filed
voluntary petitions for reorganization under Chapter 11 in the
United States Bankruptcy Court for the District of Delaware to
implement a pre-arranged restructuring.
The company said it has received support from the holders of a
majority in principal amount of its subordinated notes regarding a
debt-for-equity exchange that will reduce its outstanding
indebtedness by $175 million and reduce its annual interest
expense by approximately $19.3 million.
The company proposed a plan of reorganization under which holders
of the subordinated notes will convert 100% of the face amount of
the subordinated notes and the full amount of the interest payment
due Dec. 1, 2008, which will not be paid, into common stock of the
reorganized company. The company's current equity will be
cancelled, but all other creditor classes will be unimpaired. All
obligations owed by the company to trade creditors in the ordinary
course of business will be paid in full under the plan. The
company expects that the restructuring will be completed by early
spring of 2009.
Furthermore, the company said it has secured commitments from
its existing bank lenders to provide it with debtor-in-possession
and exit financing of $75 million. The DIP financing will help
enable it to continue to satisfy customary obligations associated
with ongoing operations of its business, including the timely
payment of employee obligations, materials purchases, normal
operating expenses and other obligations. The $75 million exit
financing facility provides for committed financing for the three
years following the closing of the DIP financing.
On Dec. 31, 2008, the Court authorized the company to access the
DIP facility on an interim basis.
The company said it has filed a variety of customary first day
motions with the Court that will allow it to continue to conduct
business as usual while it completes the debt-for-equity
restructuring.
"We are pleased to have received support from the holders of a
majority in principal amount of our subordinated notes for a pre-
arranged and consensual restructuring that significantly improves
our balance sheet by eliminating $175 million in debt, reduces our
annual cash interest obligations by approximately $19.3 million,
and frees up cash to reinvest in our business to support future
growth. We intend to continue to operate as usual during the
restructuring process with minimal disruption to the business and
our constituencies," Michael Hoffman, President and CEO of
Constar, said. "We intend to pay all of our obligations in full
-- which includes providing pay and benefits to our employees as
usual, honoring all contracts, and paying suppliers in full," Mr.
Hoffman said.
"Our clients support the Company's efforts to deleverage through a
debt-for-equity exchange under a plan that proactively fixes the
balance sheet and allows the company to realize its full
potential," Allan Brilliant, partner at Goodwin Procter LLP,
counsel to an ad hoc committee of holders of the Subordinated
Notes, said,
"As the largest holder of Subordinated Notes, we support the
deleveraging under the plan. We look forward to working with
Constar to consummate the debt-for-equity exchange promptly to
allow the Company to maximize its potential prospects going
forward," Christopher Pucillo, Chief Investment Officer of Solus
Alternative Asset Management LP, the largest holder of Constar's
Subordinated Notes, said,
The Company's financial advisor is Greenhill & Co. and its legal
advisors are Wilmer Cutler Pickering Hale and Dorr LLP and Bayard,
P.A.
All of Constar's global operations -- including all of its
manufacturing and distribution facilities in the U.S. and Europe
-- are open and operating on normal schedules, and the Company
expects to continue to fulfill all customer orders as usual and
provide uninterrupted customer service.
About Constar International
Philadelphia-based Constar International Inc. (NASDAQ: CNST)
-- http://www.constar.net/-- produces polyethylene terephthalate
plastic containers for food, soft drinks and water. The company
provides full-service packaging services.
CONSTAR INTERNATIONAL: Case Summary & 30 Largest Unsec. Creditors
-----------------------------------------------------------------
Debtor: Constar International Inc.
One Crown Way
Philadelphia, PA 19154
Bankruptcy Case No.: 08-13432
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
BFF Inc. 08-13434
Constar Foreign Holdings, Inc. 08-13435
Constar, Inc. 08-13436
DT, Inc. 08-13437
Constar International U.K. Limited 08-13438
Type of Business: The Debtors (NASDAQ: CNST) produces polyethylene
terephthalate plastic containers for food,
soft drinks and water. The company provides
full-service packaging services.
See: http://www.constar.net/
Chapter 11 Petition Date: December 30, 2008
Court: District of Delaware (Delaware)
Judge: Peter J. Walsh
Debtor's Bankruptcy Counsel: Wilmer Cutler Pickering Hale and
Dorr LLP
Debtors' Local Counsel: Neil B. Glassman, Esq.
bankserve@bayardfirm.com
Bayard, P.A.
222 Delaware Avenue, Ste. 900
Wilmington, DE 19801
Tel: (302) 655-5000
Fax: (302) 658-6395
Auditors and Accountants: Pricewaterhouse Coopers
Financial Advisor: Greenhill & Co. LLC
Claims and Balloting Agent: Epiq Systems Inc.
Total Assets: $420,000,000 as of November 30, 2008
Total Debts: $538,000,000 as of November 30,2008
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
US Bank Corp 11% senior $175,000,000
US Bancorp Center subordinated
800 Nicollet Mall
Minneapolis, MN 55402
Tel: (651) 466-3000
Fax: (612) 303-0735
M&G Polymers USA LLC trade $2,274,578
6540 Cherie Lane
Atlanta, GA 30349
Tel: (770) 598-6560
Crown Cork & Seal Co. trade $312,094
1 Corwn Way
Philadelphia, PA 19154
Tel: (215) 698-5100
Fax: (215) 698-7050
Progress Energy Florida Inc. trade $243,972
R&D Tool & Engineering trade $208,275
Biehles Systems Incorporated trade $177,869
Electra Form Inc. trade $166,038
Mitsubishi Gas Chemical Co. trade $159,268
XL Engineering LLC trade $110,309
Incline Construction Inc. trade $99,092
ROI Technologies trade $95,254
Advanced Manufacturing Tech trade $76,672
Chempoint.com Inc. trade $73,745
Sidel Incorporated trade $62,483
Alloy Polymers Inc. trade $59,835
Prime Graphics trade $50,817
AF USA Incorporated trade $50,791
Standard & Poors trade $50,000
GE Capital trade $46,033
Project Management Systems trade $44,030
LLC
Operational Solutions Inc. trade $43,126
KHS Corpoplast North trade $42,058
Ram Air trade $41,313
Base Plastics trade $39,649
Oneneck It Services Corp. trade $38,633
National Starch & Chemical Co. trade $36,652
Robot Packaging trade $36,177
Pet Terra Systems Inc. trade $36,100
Pinnacle Films Inc. trade $35,455
RCD Timber Products trade $34,091
The petition was signed by David Waksman, Esq., the company's
general counsel and senior vice president.
COOPER-STANDARD AUTOMOTIVE: S&P Junks Corporate Credit Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services said it has lowered its
corporate credit rating on Cooper-Standard Automotive Inc. to 'CC'
from 'B'. At the same time, S&P lowered the ratings on the
company's various debt issues. All ratings remain on CreditWatch
with negative implications, were they were placed on Nov. 13,
2008.
These actions follow the company's announcement that it has
received bank permission to repurchase term loan debt at a
discount from par using an auction. S&P expects Cooper-Standard
to commence an auction for up to $150 million of term loan debt at
a discount. Under its criteria, S&P views a formal cash tender
offer or exchange offer at a discount by a company under
substantial financial pressure as a distressed debt exchange and
tantamount to a default. S&P will lower its corporate credit
rating on Cooper-Standard to 'SD' (selective default) and lower
S&P's ratings on issues repurchased under the tender offer to 'D'
(default) upon completion of the offer. S&P will then, shortly
thereafter, assign a new corporate credit rating, representative
of the default risk, after the financial restructuring.
"Our downgrade does not reflect a perceived increase in
Cooper-Standard's bankruptcy risk," said Standard & Poor's credit
analyst Robert Schulz. The tender offer, if successful, will
reduce debt and cash interest expense, and will decrease the risk
of a default. "Rather, our downgrade is based on the financial
pressure that Cooper-Standard is under to reduce its debt burden
by retiring debt for less than originally contracted,"
he continued. "Similarly, investors' potential willingness to
accept a substantial discount to contractual terms provides
evidence that they have significant doubts about receiving full
payment on obligations, even though the term loan debt is secured
and senior to some $530 million of junior debt." Cooper-Standard
is likely to use cash received from its equity sponsor to
complete any repurchase offer because the company's $125 million
revolving credit agreement cannot be used to fund the term loan
repayment.
It is S&P's preliminary expectation that, if the term loan
repurchase reaches the permitted maximum of $150 million, S&P's
new corporate credit rating on Cooper-Standard could return to the
'B' category despite immense industry challenges for 2009. The
revised capital structure could substantially reduce Cooper-
Standard's cash interest expense during the next few years and
meaningfully lower the company's outstanding debt.
CV THERAPEUTICS: SVP Amends Trading Plan with E*TRADE Securities
----------------------------------------------------------------
Brent K. Blackburn, Ph.D., the senior vice president, drug
discovery and development, of CV Therapeutics, Inc., amended his
written trading plan dated Nov. 15, 2007, with E*TRADE Securities,
LLC in accordance with Rule 10b5-1 of the Securities Exchange Act
of 1934, as amended. Trading under Dr. Blackburn's amended plan
will begin as early as Jan. 7, 2009, and end on May 13, 2009,
unless terminated earlier, and authorizes the sale of up to 7,199
shares (prior to tax withholding) of common stock of CV
Therapeutics.
Reports of the details of actual sales under the amended plan will
be filed by Dr. Blackburn in accordance with the Securities and
Exchange Commission's regulations. The shares subject to the
amended trading plan do not represent all of Dr. Blackburn's
holdings in CV Therapeutics' securities. During the term of the
amended trading plan, Dr. Blackburn may from time-to-time buy or
sell CV Therapeutics' securities outside of the amended plan.
Headquartered in Palo Alto, California, CV Therapeutics Inc.
(NasdaqGM: CVTX) -- http://www.cvt.com/-- is a biopharmaceutical
company focused on applying molecular cardiology to the discovery,
development and commercialization of novel, small molecule drugs
for the treatment of cardiovascular diseases.
CV Therapeutics' approved products include Ranexa(R) (ranolazine
extended-release tablets), indicated for the treatment of chronic
angina in patients who have not achieved an adequate response with
other antianginal drugs, and Lexiscan(TM) (regadenoson) injection
for use as a pharmacologic stress agent in radionuclide myocardial
perfusion imaging in patients unable to undergo adequate exercise
stress.
For three months ended Sept. 30, 2008, the company posted net loss
of $25.3 million compared with net loss of $34.2 million for the
same period in the previous year.
For nine months ended Sept. 30, 2008, the company posted net loss
of $61.5 million compared with net loss of $146.8 million for the
same period in the previous year.
The company's cash utilized for the quarter ended Sept. 30, 2008,
was $14.8 million. This compares to its cash utilized for the
prior quarter of $21.7 million. The decrease in cash utilization
in the quarter ended Sept. 30, 2008, compared to the prior quarter
was due to higher cash receipts in the current quarter associated
with higher quarter-over-quarter product revenue. At Sept. 30,
2008, the company had cash, cash equivalents and marketable
securities of $301.9 million compared to cash, cash equivalents,
marketable securities and restricted cash of
$274.7 million at June 30, 2008.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $391.9 million and total liabilities of $617.5 million,
resulting in a stockholders' deficit of $225.6 million.
DANA HOLDING: Settles Parts Dispute with Citation Corp.
-------------------------------------------------------
Dana Holding Corp., formerly Dana Corp., has settled a contract
dispute with Citation Corp., the Toledo Blade reported. Dana
also dismissed the lawsuit it filed against Citation before the
U.S. District Court for the Northern District of Ohio.
Dana dismissed the lawsuit saying issues had been "amicably
resolved," the report said citing documents Dana filed with the
District Court. Terms of the settlement, however, were not
disclosed in public.
Dana filed the lawsuit against Citation asking the District Court
to direct Citation to continue supplying Dana certain auto and
truck parts. The Toledo Blade reported that Citation told Dana
that it would no longer provide the metal yokes Dana uses to make
vehicle driveshafts.
Toledo Blade said Dana would lose $600,000 a day if it is forced
to suspend production and could face penalties of $5,000,000 a
day in the event a disruption in its own supply hampers its
customers' business. Dana also sought an unspecified amount of
damages, the newspaper added.
About Dana Holding Corporation
Based in Toledo, Ohio, Dana Corporation -- 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.
Dana has facilities in China in the Asia-Pacific, Argentina in
the Latin-American regions and Italy in Europe.
The company and its affiliates filed for chapter 11 protection
on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of
Nov. 30, 2007, the Debtors listed $7,131,000,000 in total assets
and $7,665,000,000 in total debts resulting in a shareholders'
deficit of $534,000,000.
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, represented the Debtors. Henry S. Miller at
Miller Buckfire & Co., LLC, served as the Debtors' financial
advisor and investment banker. Ted Stenger from AlixPartners
served as Dana's Chief Restructuring Officer.
Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel
LLP, represented the Official Committee of Unsecured Creditors.
Fried, Frank, Harris, Shriver & Jacobson, LLP served as counsel
to the Official Committee of Equity Security Holders. Stahl
Cowen Crowley, LLC served as counsel to the Official Committee
of Non-Union Retirees.
The Debtors filed their Joint Plan of Reorganization on Aug. 31,
2007. On Oct. 23, 2007, the Court approved the adequacy of the
Disclosure Statement explaining their Plan. Judge Burton Lifland
of the U.S. Bankruptcy Court for the Southern District of New York
entered an order confirming the Third Amended Joint Plan of
Reorganization of the Debtors on Dec. 26, 2007.
The Debtors' Third Amended Joint Plan of Reorganization was deemed
effective as of Jan. 31, 2008. Dana Corp., starting on
the Plan Effective Date, operated as Dana Holding Corporation.
(Dana Corporation Bankruptcy News; Bankruptcy Creditors' Service
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported by the TCR on Dec. 22, 2008, Moody's Investors Service
has lowered the ratings of the Dana Holding Corporation --
Corporate Family Rating and Probability of Default Rating to Caa1
from B2. Moody's also lowered the ratings on the company's senior
secured asset based revolving credit facility to B2 from Ba3, and
lowered the rating for the senior secured term loan to B3 from B1.
The ratings remain under review for possible further downgrade.
The Speculative Grade Liquidity Rating of SGL-3 was affirmed.
The downgrades result from the expectation of continued erosion in
the North American market for SUVs and light trucks over the near
term. Reduced demand, according to Moody's, is expected to be
driven by weakening economic conditions and consumer aversion of
purchasing automobiles from distressed OEMs.
About Citation Corporation
Headquartered in Birmingham, Alabama, Citation Corporation --
http://www.citation.net/-- designs, develops and manufactures
cast, forged and machined components for the capital and durable
goods industries, including the automotive and industrial markets.
Citation uses aluminum, steel, gray iron, and ductile iron as the
raw materials in its various manufacturing processes. Citation
employs 2,900 in Alabama, Texas, Indiana, Michigan, North Carolina
and Wisconsin. The Debtor and its debtor-affiliates filed for
protection on Sept. 18, 2004 (Bankr. N.D. Ala. Case No. 04-08130).
Michael Leo Hall, Esq., and Rita H. Dixon, Esq., at Burr & Forman
LLP, represented the Debtors in their first bankruptcy. Judge
Tamara O. Mitchell confirmed the company's Second Amended Joint
Plan of Reorganization on May 18, 2005.
The Debtor and 11 debtor-affiliates filed a voluntary petition for
a prepackaged reorganization under Chapter 11 on March 12, 2007
(Bankr. N.D. Ala. Case Nos. 07-01153 to 07-01162). David S.
Heller, Esq., at Latham & Watkins LLP, and Michael Leo Hall, Esq.,
at Burr & Forman LLP, represented the Debtors. Carl Marks
Advisory Group LLC, the New York-based investment banking and
corporate revitalization firm, served as financial advisor.
Citation's schedules filed with the Court showed total assets of
$157,242,049 and total debts of $253,270,918.
Less than a month after Citation filed a voluntary petition for a
prepackaged reorganization under Chapter 11 in U.S. Bankruptcy
Court for the Northern District of Alabama, the company emerged
from bankruptcy on April 6, 2007.
Under its confirmed Plan of Reorganization, the company's lenders,
led by JPMorgan Chase & Co., exchanged $191 million in debt for
all reorganized company common stock and a new $30 million loan.
DANA HOLDING: Falls Below NYSE's Listing Standards
--------------------------------------------------
Dana Holding Corporation (NYSE: DAN) announced Dec. 19, 2008, that
it was notified by the New York Stock Exchange (NYSE) that the
company has fallen below its continued listing standards. During
a consecutive 30-day trading period -- under NYSE rules -- the
average closing price of Dana's common stock must be a minimum of
$1 per share and its market capitalization must equal or exceed
$100 million.
Dana plans to notify the NYSE that it intends to resolve these
matters. The company has six months to return its average share
price above the required threshold, and 45 days to submit a plan
demonstrating its ability to comply with the market capitalization
standard. Under NYSE rules, Dana's common stock will continue to
be listed on the exchange during this period, subject to ongoing
monitoring and the company's compliance with other continued
listing requirements.
Dana's operations, Securities and Exchange Commission reporting
requirements, credit agreements, and other debt obligations are
not otherwise affected by this NYSE notification.
About Dana Holding Corporation
Based in Toledo, Ohio, Dana Corporation -- 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.
Dana has facilities in China in the Asia-Pacific, Argentina in
the Latin-American regions and Italy in Europe.
The company and its affiliates filed for chapter 11 protection
on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of
Nov. 30, 2007, the Debtors listed $7,131,000,000 in total assets
and $7,665,000,000 in total debts resulting in a shareholders'
deficit of $534,000,000.
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, represented the Debtors. Henry S. Miller at
Miller Buckfire & Co., LLC, served as the Debtors' financial
advisor and investment banker. Ted Stenger from AlixPartners
served as Dana's Chief Restructuring Officer.
Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel
LLP, represented the Official Committee of Unsecured Creditors.
Fried, Frank, Harris, Shriver & Jacobson, LLP served as counsel
to the Official Committee of Equity Security Holders. Stahl
Cowen Crowley, LLC served as counsel to the Official Committee
of Non-Union Retirees.
The Debtors filed their Joint Plan of Reorganization on Aug. 31,
2007. On Oct. 23, 2007, the Court approved the adequacy of the
Disclosure Statement explaining their Plan. Judge Burton Lifland
of the U.S. Bankruptcy Court for the Southern District of New York
entered an order confirming the Third Amended Joint Plan of
Reorganization of the Debtors on Dec. 26, 2007.
The Debtors' Third Amended Joint Plan of Reorganization was deemed
effective as of Jan. 31, 2008. Dana Corp., starting on
the Plan Effective Date, operated as Dana Holding Corporation.
(Dana Corporation Bankruptcy News; Bankruptcy Creditors' Service
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported by the TCR on Dec. 22, 2008, Moody's Investors Service
has lowered the ratings of the Dana Holding Corporation --
Corporate Family Rating and Probability of Default Rating to Caa1
from B2. Moody's also lowered the ratings on the company's senior
secured asset based revolving credit facility to B2 from Ba3, and
lowered the rating for the senior secured term loan to B3 from B1.
The ratings remain under review for possible further downgrade.
The Speculative Grade Liquidity Rating of SGL-3 was affirmed.
The downgrades result from the expectation of continued erosion in
the North American market for SUVs and light trucks over the near
term. Reduced demand, according to Moody's, is expected to be
driven by weakening economic conditions and consumer aversion of
purchasing automobiles from distressed OEMs.
DANA HOLDING: District Court Reinstates Fraud Case vs. Ex-Officers
------------------------------------------------------------------
The U.S. District Court for the Northern District of Ohio
reinstated the securities fraud lawsuit filed by Howard Frank
against Dana's former officials Michael J. Burns and Robert C.
Richter, the Toledo Blade reported.
The securities fraud lawsuit was filed on behalf of all investors
who bought Dana Corporation stock between April 21, 2004, and
October 7, 2005.
The reinstatement, according to the report, came after the U.S.
Court of Appeals in Cincinnati overturned a decision by federal
Judge Carr dismissing the lawsuit in August 2007.
The lawsuit, filed in August 2006, alleges Mr. Burns, former
chief executive officer, and Mr. Richter, former chief finance
officer, misled investors about the financial health of Dana.
About Dana Holding Corporation
Based in Toledo, Ohio, Dana Corporation -- 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.
Dana has facilities in China in the Asia-Pacific, Argentina in
the Latin-American regions and Italy in Europe.
The company and its affiliates filed for chapter 11 protection
on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of
Nov. 30, 2007, the Debtors listed $7,131,000,000 in total assets
and $7,665,000,000 in total debts resulting in a shareholders'
deficit of $534,000,000.
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, represented the Debtors. Henry S. Miller at
Miller Buckfire & Co., LLC, served as the Debtors' financial
advisor and investment banker. Ted Stenger from AlixPartners
served as Dana's Chief Restructuring Officer.
Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel
LLP, represented the Official Committee of Unsecured Creditors.
Fried, Frank, Harris, Shriver & Jacobson, LLP served as counsel
to the Official Committee of Equity Security Holders. Stahl
Cowen Crowley, LLC served as counsel to the Official Committee
of Non-Union Retirees.
The Debtors filed their Joint Plan of Reorganization on Aug. 31,
2007. On Oct. 23, 2007, the Court approved the adequacy of the
Disclosure Statement explaining their Plan. Judge Burton Lifland
of the U.S. Bankruptcy Court for the Southern District of New York
entered an order confirming the Third Amended Joint Plan of
Reorganization of the Debtors on Dec. 26, 2007.
The Debtors' Third Amended Joint Plan of Reorganization was deemed
effective as of Jan. 31, 2008. Dana Corp., starting on
the Plan Effective Date, operated as Dana Holding Corporation.
(Dana Corporation Bankruptcy News; Bankruptcy Creditors' Service
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported by the TCR on Dec. 22, 2008, Moody's Investors Service
has lowered the ratings of the Dana Holding Corporation --
Corporate Family Rating and Probability of Default Rating to Caa1
from B2. Moody's also lowered the ratings on the company's senior
secured asset based revolving credit facility to B2 from Ba3, and
lowered the rating for the senior secured term loan to B3 from B1.
The ratings remain under review for possible further downgrade.
The Speculative Grade Liquidity Rating of SGL-3 was affirmed.
The downgrades result from the expectation of continued erosion in
the North American market for SUVs and light trucks over the near
term. Reduced demand, according to Moody's, is expected to be
driven by weakening economic conditions and consumer aversion of
purchasing automobiles from distressed OEMs.
DBSI INC: Asks Court to Approve Procedures for Sale of PMB Assets
-----------------------------------------------------------------
DBSI, Inc., and its debtor affiliates ask the U.S. Bankruptcy
Court for the District of Delaware to:
a) approve the sale of certain assets relating to the Debtors'
property management business, free and clear of liens,
claims, encumbrances and other interests (excluding the TIC
[tenant-in-common] Lenders' Lien);
b) approve the sale procedures;
c) schedule a hearing on the sale and set objection and
bidding deadlines.
The PMB Assets being offered for Sale through the procedures are
certain Masterleases, subleases and related executory contracts
and non-real property leases associated with the operation of the
TIC Properties.
Pursuant to the Sale Procedures, parties will be afforded until
Jan. 23, 2009, to submit a bid for any or all of the PMB Assets.
If bids are received by the Bid Deadline, an open auction will be
held on Jan. 28, 2009, at the offices of the Debtors' counsel.
The results of the auction will be presented at a hearing to be
held before the Court on Feb. 4, 2009. Under all circumstances,
the closing of any sale or other disposition of a PMB Assets must
be effective no later than Jan. 30, 2009.
The TIC Investors on any particular TIC Property (excluding,
however, the Sold Unchanged MasterLeases) may choose -- not later
than 4:00 p.m. on Jan. 26, 2009 -- to opt their Masterleases out
of the Sale Procedures and make several elections, as described
more fully in Exhbit B to the Sale Procedures.
If and to the extent the TIC Investors on a particular TIC
Property (except for the Sold Unchanged MasterLeases) do not elect
any of the options available to it and opt out of the sale
process, the PMB Assets for that TIC Property will be sold at an
auction pursuant to the Sale Procedures.
Any Qualified Bidder who makes a bid irrevocably agrees to pay to
the Debtors an amount equal to the greater of the average or the
median price for bids by all of the Successful Bidders (as
calculated based upon a per square foot basis by Property) for all
Properties (with respect to a transaction and type of Property
comparable to the type of transaction contemplated by such
Qualified Bidder's bid), but in no event less than the Minimum
Price Per Property plus the Transaction Fee, if such Qualified
Bidder enters into any transaction involving a Property, on or
before June 30, 2010, with the TIC Investors to manage, to provide
services in connection with, or to otherwise be engaged with
respect to, a Property; provided, however, if the Qualified Bidder
enters into a transaction with a TIC Investor pursuant to and
concurrent with the TIC Investor Options, no such fee shall be due
and payable.
The Debtors tell the Court that it is necessary to promptly sell
the PMB assets to avoid a deterioration in the value of the PMB
Assets and improve the Debtors' liquidity position.
A full-text copy of the Motion, dated Dec. 19, 2008, containing
the Sales Procedures, annexed as Exhibit 2 to the Motion, with
respect to the sale of certain assets relating to the PMB Assets,
annexed as Exhibit A to the Sale Procedures, is available for
free at:
http://bankrupt.com/misc/DBSI_SaleMotion.pdf
About DBSI Inc.
Headquartered in Meridian, Idaho, DBSI Inc. -- http://www.dbsi.com
-- operates a real estate company. DBSI and 145 of its affiliates
filed for Chapter 11 protection on Nov. 10, 2008 (Bankr. D. Del.
Lead Case No. 08-12687). The Debtors tapped Young Conaway
Stargatt & Taylor LLP as their counsel. Kurtzman Carson
Consultants LLC is the Debtors' notice claims and balloting agent.
When the Debtors filed for protection from their creditors, they
listed assets and debts between $100 million and $500 million
each.
DEX MEDIA EAST: Bank Loan Sells at Substantial Discount
-------------------------------------------------------
Participations in a syndicated loan under which Dex Media East LLC
is a borrower traded in the secondary market at 38.33 cents-on-
the-dollar during the week ended December 26, 2008, according to
data compiled by Loan Pricing Corp. and reported in The Wall
Street Journal. This represents a drop of 1.33 percentage points
from the previous week, the Journal relates. Dex Media East LLC
pays interest at 200 basis points above LIBOR. The syndicated loan
matures on November 8, 2009. The bank loan carries Moody's Ba2
rating and Standard & Poor's BB rating.
Dex Media East LLC is a subsidiary of Dex Media East, Inc., and an
indirect wholly owned subsidiary of Dex Media, which is a direct
wholly owned subsidiary of R.H. Donnelley Corporation. Dex Media
East is the exclusive publisher of the "official" yellow pages and
white pages directories for Qwest Corporation, the local exchange
carrier of Qwest Communications International Inc., in Colorado,
Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South
Dakota -- the Dex East States. Together with its parent, RHD, Dex
Media is one of the nation's largest Yellow Pages and online local
commercial search companies, based on revenue. During 2006, Dex
Media East's print and online solutions helped more than 200,000
national and local businesses in seven states reach consumers who
were actively seeking to purchase products and services. During
2006, Dex Media East published and distributed more than 23
million print directories. Two of its largest markets are
Albuquerque and Denver.
DHP HOLDINGS: Files for Ch. 11 Due to Inability to Access Funding
-----------------------------------------------------------------
DHP Holdings II Corp. together with six of its affiliates made a
voluntary filing under Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy Court for the District of
Delaware citing liquidity problem coupled with declining economy
resulting to the company's inability to access additional funds.
The Debtors proposed on Dec. 5, 2008, to their senior lenders a
funding scheme that would provide the financing necessary to
maintain their operations but the lenders rejected the proposal
and cease all cash in the Debtors' bank accounts -- including
payroll and health benefits accounts. However, the lenders
allowed the Debtors to access cash collateral on a limited basis.
In light of the liquidity crisis, the Debtors said they were
compelled to substantially restrict their business, lay off
employees and terminate health benefits. The Debtors notified 331
employees -- including union employee -- in their facilities
located in Bowling Green, Kentucky, about the planned terminations
under the Workers Adjustment and Retraining Notification Act.
According to Craig S. Dean, Debtors' chief restructuring officer,
the Debtors defaulted on their obligations under the prepetition
senior credit agreement several times since February 2005. The
senior lenders provided more funding to the Debtors as well as
extended the termination of the agreement and waived certain
defaults in exchange for a higher interest and fees, under various
amendments and forbearance agreements entered from time to time.
The senior indebtedness became due and payable in full in cash and
all commitments lend under the agreement terminated on Nov. 29,
2008, Mr. Dean said.
Moreover, the Debtors said the plan to liquidate their business
for the benefit of all of their creditors.
The company listed assets and debts between $100 million and
$500 million in its filing. Reuters' Chelsea Emery reports that
the company, along with its non-debtor subsidiaries and
affiliates, has $132.5 million in assets and $133.2 million in
liabilities as of Nov. 29, 2008.
The company's foreign units did not filed for bankruptcy, Bob Van
Voris of Bloomberg News reports.
Former DESA Entities Chapter 11 Cases
DESA Holdings Corporation and DESA International LLC filed
voluntary petitions on June 8, 2002. HIG-DESA Acquisition nka
DESA LLC acquired on Dec. 13, 2002, substantially all assets of
the DESA Entities for $198 million comprised of $185 million in
cash plus unsecured subordinated notes in the original aggregate
amount of $13 million priced at 10% per annum due payable on
Dec. 24, 2007. The sale closed on Dec. 24, 2002.
The Chapter 11 cases of the form DESA Entities is still
active; However, activity occurring in those cases consists of
limited claims resolution, and required filing of necessary
postconfirmation reports and payment of postconfirmation fees. No
claims of ther issues remain open between the Debtors and the
former DESA Entities.
According to the Troubled Company Reporter on April 22, 2005,
the Hon. Walter Shapero of the United States Bankruptcy Court
for the District of Delaware confirmed the Second Amended Joint
Plan of Liquidation of DESA Holdings Corporation and its debtor-
affiliate -- DESA International LLC. The Court confirmed the Plan
on April 1, 2005, and Plan took effect the same day.
Kirkland & Ellis, LLP, and Pachulski, Stang, Ziehl Young Jones &
Weintraub, P.C., represented the DESA entities.
Headquartered in Bowling Green, Kentucky DHP Holdings II Corp.
sells and distributes heating commercial products in Europe and
Mexico. The Debtors have manufacturing, storage and distribution
facilities in Alabama and California.
DHP HOLDINGS: Section 341(a) Meeting Slated for February 12
-----------------------------------------------------------
Roberta A. DeAngelis, the United States Trustee for Region 3, will
convene a meeting of creditors of DHP Holdings II Corporation and
its debtor-affiliates on Feb. 12, 2009, at 1:30 p.m., at J. Caleb
Boggs Federal Building, 2nd Floor, Room 2112 in Wilmington,
Delaware.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible officer of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Bowling Green, Kentucky, DHP Holdings II
Corporation sells and distributes heating commercial products in
Europe and Mexico. The Debtors have manufacturing, storage and
distribution facilities in Alabama and California. The company
and six of its affiliates filed for Chapter 11 protection on
December 29, 2008 (Bankr. D. Del. Lead Case No. 08-13422). Bruce
Grohsgal, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns,
Esq., at Pachulski, Stang, Ziehl Young & Jones LLP, represents the
Debtors. The Debtor proposeed AEG Partners as restructuring
officer, and Craig S. Dean as chief restructuring officer and
Kevin Willis as assistant chief restructuring officer. The Debtor
also proposed Epiq Bankruptcy Solutions LLC as claims agent. When
the Debtors filed for protection from their creditors, they listed
assets and debts between $100 million to $500 million each.
DHP HOLDINGS: Wants to Access Cash Collateral to Liquidate Assets
-----------------------------------------------------------------
DHP Holdings II Corporation and its debtor-affiliates ask the
United States Bankruptcy Court for the District of Delaware for
authority to access collateral pledged to senior lenders.
The proceeds of the cash collateral will enable the Debtors the
necessary fund to operate and liquidate their business, pay
employees and other expenses including professionals fees, and
maximize the value of their estates for the benefit of their
creditors.
Lenders with interest on the collateral include (i) GE Business
Financial Services fka Merrill Lynch Business Services Inc. under
a credit agreement dated Dec. 6, 2004, as amended, and (ii) HIG
Capital Partners III LP under a credit agreement dated June 11,
2007, as amended.
As adequate protection, the Debtors will grant the lenders (i) a
replacement security interest in and lien upon all of the
postpetition collateral excluding avoidance actions, among other
things; and (ii) superpriority claims status in accordance to
Section 507(b) of the Bankruptcy Code.
The cash collateral is subject to carve-out to pay unpaid fees
payable to the United States Trustee and clerk of the Court,
professionals retained by the Debtors or any committee. There is
a $200,000 carve-out for expenses incurred by professionals
employed by the Debtors or any committee.
The Debtors funded their operations through the credit facility
comprised of:
i) a $150 million term;
ii) a $22.6 million revolving credit line;
iii) unissued swing loans; and
iv) $3.8 million issued letters of credit
All related obligations are secured by first priority liens on
substantially all of the Debtors' assets, inventories and
receivables, including, without limitation, 65% of the equity
interests held by DESA LLC in non-debtor subsidiary HIG-DHP
Barbados, Ltd.
A full-text copy of the Debtors' cash collateral budget is
available for free at: http://ResearchArchives.com/t/s?36ff
Headquartered in Bowling Green, Kentucky, DHP Holdings II
Corporation sells and distributes heating commercial products in
Europe and Mexico. The Debtors have manufacturing, storage and
distribution facilities in Alabama and California. The company
and six of its affiliates filed for Chapter 11 protection on
December 29, 2008 (Bankr. D. Del. Lead Case No. 08-13422). Bruce
Grohsgal, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns,
Esq., at Pachulski, Stang, Ziehl Young & Jones LLP, represents the
Debtors. The Debtor proposeed AEG Partners as restructuring
officer, and Craig S. Dean as chief restructuring officer and
Kevin Willis as assistant chief restructuring officer. The Debtor
also proposed Epiq Bankruptcy Solutions LLC as claims agent. When
the Debtors filed for protection from their creditors, they listed
assets and debts between $100 million to $500 million each.
DREIER LLP: Court Orders Appointment of Ch. 11 Trustee
------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
has directed the appointment of a Chapter 11 trustee in Dreier
LLP's Chapter 11 cases.
As reported in the Dec. 17 issue of the Troubled Company Reporter,
Mark F. Pomerantz was named receiver for Dreier Founder Marc
Dreier's assets after the Securities and Exchange Commission filed
charges and asked the District Court to freeze the firm's assets.
The receiver put the firm in Chapter 11 on Dec. 16, 2008, before
the U.S. Bankruptcy Court for the Southern District of New York,
in Manhattan, saying an "orderly liquidation" could not take place
otherwise.
The United States Attorney for the Southern District of New York
filed a criminal complaint against Marc Dreier for securities and
wire fraud. Mr. Dreier, however, has not filed for bankruptcy.
According to Bloomberg's Bill Rochelle, Dreier's receiver, which
requested for the Ch. 11 Trustee, told the Bankruptcy Court the
firm has about $1 million cash, all representing collateral for a
bank owed $9 million. The bank's only other collateral is
whatever receivables the trustee will be able to collect.
The receiver's lawyer said efforts would be made to put Mr. Dreier
in bankruptcy either voluntarily or involuntarily.
About Dreier LLP
Headquartered in New York, Dreier LLP -- http://www.dreierllp.com/
-- is a law firm, which was found in 1996 by Marc Dreier. Dreier
LLP filed for Chapter 11 on Dec. 16, 2008 (Bankr. S. D. N.Y., Case
No. 08-15051). Judge Robert E. Gerber handles the case. Stephen
J. Shimshak, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison
LLP, has been retained as counsel. The Debtor listed assets
between $100 million to $500 million, and debts between
$10 million to $50 million in its filing.
DREIER LLP: Lost Creditor Payment Keeps 360networks in Bankruptcy
-----------------------------------------------------------------
Daniel Wise at New York Law Journal reports that 360networks inc.
(USA)'s emergence from bankruptcy was held up when a
$38.5 million payment supposed to be wired to unsecured creditors
from the Dreier LLP's trust account went missing.
Law.com says that there weren't enough funds in the trust account
to cover the transaction. Law.com relates that Dreier, who
represented the unsecured creditor's committee, has now gone
bankrupt.
According to Law.com, Norman N. Kinel at Dreier, the attorney for
the unsecured creditors committee in the 360networks bankruptcy,
requested on Dec. 1 and 2 that Dreier wire the money from a
company client trust account so it could be distributed to
creditors, but his requests went unheeded. The report says that
Mr. Kinel told the Securities and Exchange Commission that he had
been advised by Dreier's comptroller that "substantially less"
than the $38.5 million was available in all firm accounts to which
he had access.
Law.com states that the unsecured creditors committee in
360networks' bankruptcy estimated that it had collected enough
money to pay 15% of $275 million in unsecured claims. Mr. Kinel,
according to the report, said that the committee had recovered
about $65 million through the commencement of 200 preference
actions. Mr. Kinel said in a statement that since September,
360networks made two distributions to unsecured creditors totaling
$16.4 million, leaving $38.5 million in the trust account to
distribute before Dreier's collapse. The remaining $10.1 million
of the $65 million recoveries was used to pay for the costs of the
recovery actions, including fees of lawyers, accountants, and
experts, Law.com says, citing Mr. Kinel.
About Dreier LLP
Headquartered in New York, Dreier LLP -- http://www.dreierllp.com/
-- is a law firm. The company filed for Chapter 11 protection on
December 16, 2008 (Bankr. S.D. N.Y. Case No. 08-15051). Stephen
J. Shimshak, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison
LLP, represents the Debtor. When the Debtor filed for protection
from its creditors, it listed assets between $100 million to $500
million, and debts between
$10 million and $50 million.
ECLIPSE AVIATION: Deadline for Bids on Jan. 13; Auction Jan. 14
---------------------------------------------------------------
The Associated Press reports that the deadline for bids for
Eclipse Aviation Corp. is on Jan. 13, 2009.
Court documents say that if there is more than one bid for Eclipse
Aviation, the public auction of the company will be on Jan. 14,
2009. The AP relates that the auction is part of a restructuring
plan Eclipse Aviation proposed after filing for Chapter 11
bankruptcy protection.
The AP states that an ETIRC Aviation affiliate, Eclipse Aviation's
largest shareholder, wants to purchase Eclipse Aviation for $198
million.
About Eclipse Aviation
Albuquerque, New Mexico-based Eclipse Aviation Corporation --
http://www.eclipseaviation.com/-- makes six-passenger planes
powered by two Pratt & Whitney turbofan engines. The company
filed for Chapter 11 protection on Nov. 25, 2008 (Bankr. D.
Delaware Case No. 08-13031). The company listed assets of
$100 million to $500 million and debts of more than $1 billion.
EINSTEIN NOAH: Board Approves Jeffrey O'Neill as CEO and Director
-----------------------------------------------------------------
Paul J.B. Murphy III, the president and chief executive officer of
Einstein Noah Restaurant Group, Inc., resigned his positions as an
officer of the company and from the board of directors, effective
Dec. 3, 2008. Mr. Murphy did not serve on any of the board's
committees at the time of his resignation.
The company has entered into a severance agreement with Mr. Murphy
dated as of Dec. 3, 2008, pursuant to which Mr. Murphy will
receive certain payments and benefits. The company will pay
Mr. Murphy severance compensation of $708,333 over a 20-month
period; $20,311.87 for legal fees, a tax gross up and insurance;
his pro rata-share of the 2008 bonus; and COBRA for 18 months.
In addition, the company agreed to vest 26,607 unvested options
and to extend the option exercise period for all options through
the end of 2009. Mr. Murphy agreed to confidentiality and non-
competition covenants, a full release of any claims and to provide
consulting services for two months and reasonable litigation
assistance to the company after the resignation date.
On Dec. 1, 2008, the board approved the appointment of Jeffrey
O'Neill as chief executive officer and a director of the company,
effective December 3, 2008. Mr. O'Neill has not been named to
serve on any of the board's committees at this time.
Mr. O'Neill is a 20-year industry veteran with an leadership
background in marketing, strategic planning and operations. In
May 2005, Mr. O'Neill joined Priszm Income Fund in Toronto,
Ontario, Canada. Priszm Income Fund holds an approximate 60%
interest in Priszm Limited Partnership, which employs more than
9,000 people and owns and operates 465 quick service and quick
casual restaurants (KFC, Taco Bell and Pizza Hut) across seven
Canadian provinces. From January 2008 to October 2008, he served
as chief executive officer, and from May 2005 to January 2008, he
served as president and chief operating officer of Priszm Income
Fund. From February 2003 until February 2005, he acted as Vice
President of Sales for Quaker Foods USA, and from March 1999 to
January 2003, he served as president of Pepsi Cola Canada.
Mr. O'Neill and the company entered into an employment offer
letter dated effective Dec. 3, 2008. Pursuant to the offer
letter, Mr. O'Neill will receive an annual salary of $460,000, and
will be eligible to earn an annual cash bonus of 100% of his
salary if the company achieves its annual EBITDA budget. The
actual bonus awarded may be higher or lower than this target
amount based on the company's actual results versus budget and
individual performance. Mr. O'Neill also will be entitled to
receive vacation, health and other benefits available to the
company's employees generally. The company has agreed to provide
Mr. O'Neill with a moving allowance of $70,000 and to reimburse
the costs of a visit to Denver, Colorado by Mr. O'Neill and his
wife.
Mr. O'Neill will be entitled to a severance payment in an amount
equal to one year's annual salary if the company terminates his
employment without cause.
In connection with Mr. O'Neill's appointment, the company's
Compensation Committee has agreed to grant to Mr. O'Neill:
-- an option to purchase 100,000 shares of the company's
common stock, with an exercise price equal to $4.60, the
closing price of the company's common stock on the Nasdaq
Global Market on Dec. 3, 2008. The option will vest and
become exercisable in three equal annual installments on
the first, second and third anniversaries of the grant date
provided that Mr. O'Neill remains employed by the company.
-- shares of restricted stock with a value of $375,000 which
will vest in three equal annual installments provided that
Mr. O'Neill remains employed by the company. The number of
shares to be issued will be determined by the closing price
of the company's common stock on Jan. 9, 2009, the
effective date of the grant.
During his first three years of employment with the company,
Mr. O'Neill will be entitled to additional grants of stock options
and shares of restricted stock on an annual basis, with a minimum
of 25,000 options granted annually, and may receive further
incentive options or grants in accordance with the company's
performance. In the event of a change of control of the company,
all stock options and restricted stock held by Mr. O'Neill will
vest immediately.
The company also disclosed that James W. Hood, chief marketing
officer, has left the company effective Nov. 25, 2008.
About Einstein Noah Restaurant Group Inc.
Based in Lakewood, Colorado, Einstein Noah Restaurant Group Inc.
(Nasdaq: BAGL) -- http://www.einsteinnoah.com/-- operates a
a retail chain of quick casual restaurants in the United States,
specializing in foods for breakfast and lunch. The company
operates locations primarily under the Einstein Bros.(R) Bagels
and Noah's New York Bagels(R) brands and primarily franchises
locations under the Manhattan Bage(R) brand. The company's retail
system consists of more than 600 restaurants, including more than
100 license locations, in 35 states plus the District of Columbia.
Net income was $4.5 million in the third quarter of 2008 compared
to net income of $4.9 million in the same period last year.
On Sept. 30, 2008, the company has unrestricted cash of
$22.2 million and restricted cash of $0.9 million. Under the
Revolving Facility, there were no outstanding borrowings,
$7.0 million in letters of credit outstanding and borrowing
availability of $13.0 million. On June 30, 2008, the company
reclassified the $57 million Mandatorily Redeemable Series Z
Preferred Stock as a short term liability which resulted in its
working capital shifting to a deficit, which was $54.7 million on
Sept. 30, 2008, compared to a surplus of $3.7 million on Jan. 1,
2008.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $148.5 million and total liabilities of $182.1 million,
resulting in a stockholders' deficit of $33.6 million.
ELCOM INTERNATIONAL: Has Not Filed Sept. 2008 Quarterly Report
--------------------------------------------------------------
Elcom International, Inc., has yet to file its financial report on
Form 10-Q for the quarter ended September 30, 2008.
In a November regulatory filing with the Securities and Exchange
Commission, Elcom International said its quarterly report cannot
be filed within the prescribed time period without unreasonable
effort or expense. The company explained that on November 14,
2008, it filed a Form 15 to deregister its common stock under
Section 12(g) of the Securities Exchange Act of 1934 and suspend
its duty to file reports under Section 13(a) and 15(d) of the
Exchange Act. The Company is no longer certain that it meets the
number of holders of record requirement to be eligible to file a
Form 15.
The Company said it is performing additional due diligence and
awaiting supplemental information to verify the number of holders
of record. If the Company does not meet the eligibility
requirements for filing Form 15, the Company will still be
required to file its Quarterly Report. If so required, the
Company will file its Quarterly Report.
As of June 30, 2008, the company had $3.0 million in total assets
and $4.9 million in total liabilities, resulting in $1.8 million
in stockholders' deficit.
In its quarterly report for the period ended June 30, 2008, Elcom
noted it has incurred net losses every year since 1998, has an
accumulated deficit of $134,383,000 as of June 30, 2008, and
expects to incur a loss in fiscal year 2008. However, this loss
is forecast to be substantially lower than that incurred in 2007.
As of June 30, 2008, Elcom had $1.6 million of cash and cash
equivalents, current assets of approximately $2.56 million and
current liabilities of approximately $4.8 million.
Elcom noted that its ultimate success is dependent upon achieving
additional revenues by marketing its eCommerce software solutions,
typically through channel partners, until Elcom is operating
profitably. Elcom has incurred significant operating losses and
has used cash in operating activities in each of the last several
years, including $3.7 million of cash used in operating activities
in fiscal year 2007, and $213,000 of cash used in operating
activities in the first six months of fiscal year 2008. Elcom's
ability to continue as a going concern is primarily dependent upon
its ability to grow revenue and attain further operating
efficiencies and, if necessary, to also attract additional
capital. Elcom will incur a net loss in fiscal year 2008;
however, this loss will be significantly lower than the net loss
incurred in fiscal year 2007.
To achieve profitable operations, Elcom said it is dependent upon
generating significant new revenues from existing and future
contracts. During March, May and June 2008, Elcom received
convertible loans from a non-US investor of GBP500,000
(approximately $1,000,000 and net of repayments). The loans are
repayable upon demand and convertible at the option of the Payee
into shares of common stock, at the price of 3.5p per share,
subject to adjustment, downwards only, in the event that common
stock or any equity instruments are issued at a price lower than
3.5p at anytime. The loans are expected to be converted into
shares prior to their maturity in 2012.
Elcom believes that as a result of these loans, it has the funds
required to perform under its current contracts. Elcom cannot
assure that additional financing will be available on favorable
terms, or at all. If funds are not available when required for
working capital needs or other transactions, Elcom's ability to
carry out its business plan could be adversely affected, and Elcom
may be required to further scale back its operations to reflect
the extent of available funding. If Elcom is able to arrange for
additional credit facilities from lenders, the debt instruments
are likely to include limitations on Elcom's ability to incur
other indebtedness, to pay dividends, to create liens, to sell its
capital stock, or enter into other transactions. The restrictions
may adversely affect Elcom's ability to finance its future
operations or capital needs or to grow its business.
If Elcom raises additional funds by issuing equity or convertible
debt securities, the percentage ownership of the Company's
existing stockholders will be reduced. These securities may have
rights, preferences or privileges senior to those of the common
stockholders. If Elcom is unable to consummate any equity
financing or receive additional loaned monies to provide
sufficient working capital, Elcom would likely be forced to
curtail operations or seek protection under bankruptcy laws.
Going Concern Doubt
According to the Troubled Company Reporter on Sept. 22, 2008,
Houston-based Malone Bailey PC raised substantial doubt about
the ability of Elcom International, Inc., to continue as a going
concern after it audited the company's financial statements for
the year ended Dec. 31, 2007. According to the auditing firm,
Elcom has suffered recurring losses from operations and has an
accumulated deficit.
About Elcom International
Elcom International, Inc. -- http://www.elcom.com/-- develops
online managed services for eProcurement and eMarketplaces that
enable buyers and sellers to transact seamlessly over the Internet
and create additional sources of revenue and increase market share
for partners.
Its core products and services include application software
designed to automate the entire procurement process from sourcing
to spend analysis, hosting and application management services
including all hardware and software required to operate an
eProcurement and eMarketplace system and ongoing support to manage
catalogues and designated end users. Elcom is headquartered
outside of Boston, in Norwood, Mass. Its main country of
operation is the US, however it also provides additional support
to its UK customer base through home based employees.
Elcom International Inc.'s stock trades on the Pink Sheets in the
United States under the symbol ELCO.
EMISPHERE TECH: To Close Tarrytown, NY Facility and Cut Workforce
-----------------------------------------------------------------
Emisphere Technologies, Inc., disclosed in a regulatory filing
with the Securities and Exchange Commission its plans to
strengthen its financial foundation, bolster its long-term
prospects, and maintain its focus on advancing and commercializing
its Eligen(R) Technology. These plans will allow Emisphere to
continue with its programs while reducing its cash burn rate by
over 60% from levels. The company estimates it will reduce cash
expenditures by over $11 million annually, with a targeted cash
burn rate of between $7 and $8 million per year.
"The product pipeline and the value of the company and its
technology have been overshadowed by the issues in the financial
markets that many companies are facing today," stated Michael V.
Novinski, president and chief executive officer of Emisphere.
Emisphere has two products in Phase III for osteoporosis and
osteoarthritis with its partner, Novartis AG. Plans are also in
place to commercialize the technology by applying it to Vitamin
B12, thereby addressing problems with oral supplementation of this
critical vitamin. Also, a new early-stage partnership was
disclosed this year with Novo Nordisk for the treatment of Type 2
diabetes and the oral administration of GLP-1 analogues. Finally,
the company also reported encouraging data on an oral formulation
of PTH with its partner Novartis AG.
Effective Jan. 1, 2009, Emisphere will adopt a business model that
uses third-party contractors more so than in the past. The
company will maintain and utilize its scientific expertise in
chemistry, process chemistry, applied biology, formulation and
animal testing, well as commercial and business development.
Outside resources, under the supervision of Emisphere staff, will
be used for tasks as they relate to the requests of existing and
potential partners rather than maintaining these facilities
internally. The company, which has over 4,000 proprietary
carriers in its Eligen(R) carrier library, will focus on existing
and new partnerships and applying the technology to new molecules
and nutrients.
Plans are to maintain one corporate location in Cedar Knolls, New
Jersey. The company's facility in Tarrytown, New York will be
closed with key employees relocating to Cedar Knolls, New Jersey.
The overall headcount will be reduced while maintaining
scientific, financial and commercial development capabilities.
The amount of savings realized in 2009 depends on how quickly
these actions can be fully implemented. Implementation will begin
immediately and is expected to be completed during the second
quarter 2009. The company estimates its existing capital will be
sufficient to support the implementation of its plans and continue
operations through August 2009.
Furthermore, if the company can accelerate implementation,
additional cost savings could be realized which could enable
existing capital to support operations through October 2009. By
reducing the company's future capital requirements, this plan
reduces the company's reliance on capital markets for new funding.
The company expects to incur approximately $250,000 in severance
and employee benefits costs in addition to the payment of
approximately $150,000 of previously accrued employee benefits for
a total of approximately $400,000; all of which will be paid
during December 2008.
"We have made substantial progress over the last year, but we need
to continue to address the organizational efficiencies and reduce
expenses associated with unused capacity and costly overhead,"
said Mr. Novinski. "We expect to gain significant efficiencies by
accessing more advanced scientific processes and accelerate the
progress of the organization by focusing on the application of the
technology with not only existing partnerships, but through the
enhanced interest we have seen from the industry for Eligen(R) as
a solution in pharmaceutical development."
About Emisphere Technologies Inc.
Based in Cedar Knolls, New Jersey, Emisphere Technologies Inc.,
(NasdaqGM: EMIS) -- http://www.emisphere.com/-- is a
biopharmaceutical company that focuses on a unique and improved
delivery of therapeutic molecules using its eligen(R) technology.
These molecules and compounds could be currently available or are
under development. The molecules are usually delivered by
injection; in many cases, their benefits are limited due to poor
bioavailability, slow on-set of action or variable absorption. The
eligen(R) technology can be applied to the oral route of
administration as well other delivery pathways, like buccal,
rectal, inhalation, intra-vaginal or transdermal.
Emisphere reported a net loss of $5.1 million for the three months
ended Sept. 30, 2008, compared to net income of
$3.0 million for the three months ended Sept. 30, 2007, which
included $11.9 million income (net) from the settlement of the
lawsuit between Eli Lilly and the company.
Emisphere reported a net loss of $16.7 million for the nine months
ended Sept. 30, 2008, compared to a net loss of
$13.0 million for the nine months ended Sept. 30, 2007, which
included $11.9 million income (net) from the settlement of the
lawsuit between Eli Lilly and the company.
Cash, cash equivalents, and investments as of Sept. 30, 2008, were
$11.0 million compared to $13.9 million at Dec. 31, 2007.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $15.6 million, total liabilities of $45.0 million and
stockholders' deficit of about $29.4 million.
Going Concern Doubt
PricewaterhouseCoopers LLP expressed substantial doubt about
Emisphere Technologies Inc.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007. The auditing firm
reported that the company has experienced sustained operating
losses, has limited capital resources, and has significant future
commitments.
The company has limited capital resources and operations to date
have been funded primarily with the proceeds from collaborative
research agreements, public and private equity and debt financings
and income earned on investments.
EMISPHERE TECHNOLOGIES: Names Kenneth Moch to Board of Directors
----------------------------------------------------------------
Emisphere Technologies, Inc., disclosed in a regulatory filing
with the Securities and Exchange Commission that Kenneth I. Moch
has been appointed to its board of directors. Mr. Moch will also
serve on the Emisphere Audit Committee. He will fill the vacancy
created by the death of Howard M. Pack, with a term that will
continue until the company's 2010 Annual Meeting.
On Dec. 15, 2008, Emisphere reported the death of Mr. Pack.
Mr. Pack served as a member of the board of directors of the
company since its inception in 1986, well as serving as executive
vice president of Finance from 1986 until his retirement in
October 1988.
"[Mr.] Moch has an impressive record advising the management and
governing boards of biotechnology companies," said Michael V.
Novinski, president and chief executive officer of Emisphere.
"His past experiences will provide leadership and benefit to
Emisphere."
Mr. Moch is the founder and president of Euclidean Life Science
Advisors, which provides strategic advisory services to life
sciences companies. He is a former managing director of
ThinkEquity Partners, an investment bank focusing on high-growth
companies, and former chairman, president and chief executive
officer of Alteon, a biotech company specializing in small
molecule therapeutics for cardiovascular aging and diabetic
complications. He served as president and chief executive officer
of Biocyte Corporation, the cellular therapy company that
pioneered the collection and commercial application of cord blood
stem cells in transplantation and cellular therapy.
Mr. Moch holds a degree in biochemistry from Princeton University
and received his MBA from the Stanford Graduate School of
Business.
About Emisphere Technologies Inc.
Based in Cedar Knolls, New Jersey, Emisphere Technologies Inc.,
(NasdaqGM: EMIS) -- http://www.emisphere.com/-- is a
biopharmaceutical company that focuses on a unique and improved
delivery of therapeutic molecules using its eligen(R) technology.
These molecules and compounds could be currently available or are
under development. The molecules are usually delivered by
injection; in many cases, their benefits are limited due to poor
bioavailability, slow on-set of action or variable absorption. The
eligen(R) technology can be applied to the oral route of
administration as well other delivery pathways, like buccal,
rectal, inhalation, intra-vaginal or transdermal.
Emisphere reported a net loss of $5.1 million for the three months
ended Sept. 30, 2008, compared to net income of
$3.0 million for the three months ended Sept. 30, 2007, which
included $11.9 million income (net) from the settlement of the
lawsuit between Eli Lilly and the company.
Emisphere reported a net loss of $16.7 million for the nine months
ended Sept. 30, 2008, compared to a net loss of
$13.0 million for the nine months ended Sept. 30, 2007, which
included $11.9 million income (net) from the settlement of the
lawsuit between Eli Lilly and the company.
Cash, cash equivalents, and investments as of Sept. 30, 2008 were
$11.0 million compared to $13.9 million at Dec. 31, 2007.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $15.6 million, total liabilities of $45.0 million and
stockholders' deficit of about $29.4 million.
Going Concern Doubt
PricewaterhouseCoopers LLP expressed substantial doubt about
Emisphere Technologies Inc.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007. The auditing firm
reported that the company has experienced sustained operating
losses, has limited capital resources, and has significant future
commitments.
The company has limited capital resources and operations to date
have been funded primarily with the proceeds from collaborative
research agreements, public and private equity and debt financings
and income earned on investments.
EMISPHERE TECHNOLOGIES: Receives Nasdaq Non-Compliance Notice
-------------------------------------------------------------
Emisphere Technologies, Inc., received notice from the NASDAQ
Listing Qualifications Department on Nov. 21, 2008, stating that
the company was in violation of the requirement for continued
listing on The NASDAQ Capital Market. The company was not
compliant with the Rule by Nov. 20, 2008.
The company disclosed that it received a letter from the NASDAQ
Stock Market advising that, for the 10 consecutive trading days
prior to Oct. 21, 2008, the company's market value of listed
securities had been below the minimum $35,000,000 requirement for
continued inclusion on the NASDAQ Capital Market pursuant to
NASDAQ Marketplace Rule 4310(c)(3)(B).
In accordance with NASDAQ Marketplace Rule 4310(c)(8)(C), the
company was provided thirty calendar days, or until Nov. 20, 2008,
to regain compliance with the Rule. This required, at a minimum,
that the market value of listed securities of the company's common
stock remained above $35,000,000 for a minimum of 10 consecutive
business days at anytime prior to Nov. 20, 2008.
The company is in the process of appealing this decision with the
NASDAQ Listing Qualifications Department. The company's
securities will remain listed on The NASDAQ Capital Market
throughout the appeal process.
If the company is unsuccessful in maintaining its NASDAQ listing,
then the company may pursue listing and trading of the company's
common stock on another securities exchange or association with
different listing standards than NASDAQ.
About Emisphere Technologies Inc.
Based in Cedar Knolls, New Jersey, Emisphere Technologies Inc.,
(NasdaqGM: EMIS) -- http://www.emisphere.com/-- is a
biopharmaceutical company that focuses on a unique and improved
delivery of therapeutic molecules using its eligen(R) technology.
These molecules and compounds could be currently available or are
under development. The molecules are usually delivered by
injection; in many cases, their benefits are limited due to poor
bioavailability, slow on-set of action or variable absorption. The
eligen(R) technology can be applied to the oral route of
administration as well other delivery pathways, like buccal,
rectal, inhalation, intra-vaginal or transdermal.
Emisphere reported a net loss of $5.1 million for the three months
ended Sept. 30, 2008, compared to net income of
$3.0 million for the three months ended Sept. 30, 2007, which
included $11.9 million income (net) from the settlement of the
lawsuit between Eli Lilly and the company.
Emisphere reported a net loss of $16.7 million for the nine months
ended Sept. 30, 2008, compared to a net loss of
$13.0 million for the nine months ended Sept. 30, 2007, which
included $11.9 million income (net) from the settlement of the
lawsuit between Eli Lilly and the company.
Cash, cash equivalents, and investments as of Sept. 30, 2008 were
$11.0 million compared to $13.9 million at Dec. 31, 2007.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $15.6 million, total liabilities of $45.0 million and
stockholders' deficit of about $29.4 million.
Going Concern Doubt
PricewaterhouseCoopers LLP expressed substantial doubt about
Emisphere Technologies Inc.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007. The auditing firm
reported that the company has experienced sustained operating
losses, has limited capital resources, and has significant future
commitments.
The company has limited capital resources and operations to date
have been funded primarily with the proceeds from collaborative
research agreements, public and private equity and debt financings
and income earned on investments.
EZRI NAMVAR: Sent to Chapter 11 Bankruptcy by Creditors
-------------------------------------------------------
Creditors with $7.7 million in claims filed involuntary Chapter 11
petitions on Dec. 22 against Ezri Namvar and his company Namco
Capital Group Inc., Bloomberg's Bill Rochelle reports.
Namvar, according to Bloomberg, has been accused in civil lawsuits
of losing $400 million in investments from the Persian-Jewish
community in Los Angeles. Namvar is part owner of the Marriott
Hotel in downtown Los Angeles.
The Los Angeles Business Journal reported Dec. 20, that some of
the investors were negotiating with Mr. Namvar to resolve their
claims outside the bankruptcy court. According to the report, A.
David Youssefyeh, who represented about 20 investors, acknowledged
that a formal bankruptcy likely would delay and diminish any
payments to the investors -- some of whom are said to have given
their life savings to Namvar and are struggling financially.
However, according to the L.A. Business Journal, investors were
considering on an involuntary Chapter 11 filing due to the slow
progress of the negotiations, and amid concerns that certain
investors will be paid ahead of the others.
Ezri Namvar, Chairman, CEO, is founder and principal shareholder
of Namco Capital Group, Inc., a privately held holding company for
companies engaged in real estate investments and financial
services. The cases are In re Ezri Namvar, 08-32349, and Namco
Capital Group Inc., 08-32333, (Bankrupt. D. Cal.).
FLYING J: May Have to Shut Down Big West Plant
----------------------------------------------
John Cox at Bakersfield.com reports that Flying J Inc. may have to
shut down its Big West refinery on Rosedale Highway unless the
company persuades members of the local oil industry that they will
continue to be paid for new deliveries despite its bankruptcy
filing.
Citing local oil executives, Bakersfield.com relates that Flying J
tentatively proposed paying for oil every eight days, instead of
the existing terms of payment every 50 days, to ease suppliers'
fears that they won't be paid for their oil due to the company's
financial constraints.
According to Bakersfield.com, oil producers said that they are
worried that the plant may have to close if it couldn't purchase
enough oil to sustain operations. Bakersfield.com quoted E & B
Natural Resources President Steve Layton as saying, "There is a
critical mass that they need to operate the refinery." Court
documents say that Flying J owes E & B Natural more than
$3 million.
Bakersfield.com quoted Vaquero Energy Inc. President Ken Hunter as
saying, "As everybody else is involved in this bankruptcy, I think
there's a willingness of most of the crude oil suppliers to work
with Big West as long as Big West can provide adequate financial
arrangements to assure us that we'll be paid for our oil going
forward." According to the report, the plant provides 6% of the
state's diesel and 2% of its gasoline.
Bakersfield.com reports that the plant has about 200 full-time and
150 part-time workers.
About Flying J
Headquartered in in Ogden, Utah, Flying J Inc. --
http://www.flyingj.com-- operates an oil company with operations
in the filed of exploration and refining of petroleum products.
The company engages in online banking, card processing truck
and trailer leasing, and payroll services. The company also
operate about 200 travel plazas in 41 states and six Canadian
provinces.
GENERAL MOTORS: Bank Loan Sells at Substantial Discount
-------------------------------------------------------
Participations in a syndicated loan under which General Motors
Corporation is a borrower traded in the secondary market at 44.20
cents-on-the-dollar during the week ended December 26, 2008,
according to data compiled by Loan Pricing Corp. and reported in
The Wall Street Journal. This represents an increase of 1.95
percentage points from the previous week, the Journal relates.
General Motors pays interest at 275 basis points above LIBOR. The
syndicated loan matures on November 27, 2013. The bank loan
carries Moody's B3 rating and Standard & Poor's CCC rating.
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
General Motors Latin America, Africa and Middle East, with
headquarters in Miramar, Florida, is one of GM's four regional
business units. GM LAAM employs approximately 37,000 people in
18 countries and has manufacturing facilities in Argentina,
Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and
Venezuela. GM LAAM markets vehicles under the Buick,
Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and
Suzuki brands.
As reported in the Troubled Company Reporter on Nov. 10,
2008, General Motors Corporation's balance sheet at
Sept. 30, 2008, showed total assets of $110.425 billion, total
liabilities of $170.3 billion, resulting in a stockholders'
deficit of $59.9 billion.
* * *
As reported in the Troubled Company Reporter on Nov. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings, including
the corporate credit rating, on General Motors Corp. to 'CCC+'
from 'B-' and removed them from CreditWatch, where they had been
placed with negative implications on Oct. 9, 2008. S&P said that
the outlook is negative.
Fitch Ratings, as reported in the Troubled Company Reporter on
Nov. 11, 2008, placed the Issuer Default Rating of General Motors
on Rating Watch Negative as a result of the company's rapidly
diminishing liquidity position. Given the current liquidity level
of $16.2 billion and the pace of negative cash flows, Fitch
expects that GM will require direct federal assistance over the
next quarter and the forbearance of trade creditors in order to
avoid default. With virtually no further access to external
capital and little potential for material asset sales, cash
holdings are expected to shortly reach minimum required operating
levels. Fitch placed these on Rating Watch Negative:
-- Senior secured at 'B/RR1';
-- Senior unsecured at 'CCC-/RR5'.
As reported in the Troubled Company Reporter on June 24, 2008,
DBRS has placed the ratings of General Motors Corp. and General
Motors of Canada Limited Under Review with Negative Implications.
The rating action reflects the structural deterioration of the
company's operations in North America brought on by high oil
prices and a slowing U.S. Economy.
GENERAL MOTORS: Gets $4 Billion in Low-Interest Loans From Gov't
----------------------------------------------------------------
Jeff Bennett at The Wall Street Journal reports that General
Motors Corp. said it received $4 billion in low-interest loans
from the federal government on Wednesday, the first installment of
$9.4 billion in loans that the company would receive through
January.
According to WSJ, GM secured loan guarantees earlier in December
2008 after President George W. Bush gave automakers permission to
use the $700 billion bank bailout passed by Congress in September.
The report says that the loans will last for three years and will
be called by the government if the companies haven't proven their
viability by March 31, 2009.
WSJ relates that GM will use the money to fund its continuing
operations. The company will receive another $4 billion loan in
February, says the report.
GM said in a statement, "We appreciate the administration
extending a financial bridge to GM at this critical time for the
U.S. auto industry. We are committed to successfully executing
the viability plan we submitted on Dec. 2 and remain confident in
the future of GM."
New Reduced Rate Financing
GM disclosed a new reduced rate financing as low as 0% APR for up
to 60 months on select new cars and trucks. The reduced rate
financing is available to qualified buyers through Jan. 5, 2009 on
many 2008 and select 2009MY vehicles. Of note, many of the GM
vehicles have stackable bonus cash and/or dealer cash ranging from
$500 to $4,250.
"We're very excited to offer this reduced rate financing through
GMAC to encourage our customers to get back into the game," said
Mark LaNeve, vice president, GM North America Vehicle Sales,
Service and Marketing. "This enables even more qualified
customers to finance through GMAC at their local GM dealership,
and provides additional financing capacity with conventional and
reduced rate APRs for our dealers to make sales. With GM's
Financing That Fits, and the Red Tag Sale now underway that offers
supplier pricing, customers have an opportunity to get a variety
of extremely attractive offers through the end of the year."
2008MY vehicles and offers for qualified buyers:
-- 0% APR for up to 60 months on '08 Chevrolet TrailBlazer;
GMC Envoy; and Saab 9-3, 9-5, 9-7X;
-- 0.9% APR for up to 60 months on '08 Buick Lucerne;
-- 1.9% APR for up to 60 months on '08 GMC Yukon and Yukon
XL; Chevrolet Tahoe, Suburban and Avalanche; Cadillac
CTS, SRX, Escalade, DTS, STS and XLR;
-- 2.9% APR for up to 60 months on '08 Buick Lacrosse;
HUMMER H2 and H3;
-- 3.9% APR for up to 60 months on '08 Chevrolet Equinox,
Colorado Ext and Crew cab and Light Duty Silverado;
Pontiac Torrent; GMC Canyon Ext and Crew cab, and Light
Duty Sierra; and
-- 4.9% APR for up to 60 months on '08 Saturn Astra and Sky;
Pontiac Solstice; Chevrolet Corvette and Heavy Duty
Silverado; and Heavy Duty GMC Sierra
2009MY vehicles and offers for qualified buyers:
-- 3.9% APR for up to 60 months on '09 Chevrolet Cobalt;
Pontiac G5; and Cadillac CTS;
-- 4.9% APR for up to 60 months on '09 Pontiac G6; Chevrolet
Malibu, Light Duty Silverado and HHR; Saturn Aura; and
Light Duty GMC Sierra; and
-- 5.9% APR for up to 60 months on '09 Chevrolet Avalanche
and Heavy Duty Silverado; and Heavy Duty GMC Sierra.
Seeks Ways to Eliminate Dealerships
GM wants to eliminate dealerships, WXYZ.com reports. The report
says that a glut of dealers are limiting profits and crimping
spending on marketing, facilities, and vehicles.
According to WXYZ.com, GM wants to close about 1,750 showrooms,
about 27% of its total dealership ranks. The report states that
GM is negotiating dealership closures on a market by market basis,
offering cash payments as incentives.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
General Motors Latin America, Africa and Middle East, with
headquarters in Miramar, Florida, is one of GM's four regional
business units. GM LAAM employs approximately 37,000 people in
18 countries and has manufacturing facilities in Argentina,
Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and
Venezuela. GM LAAM markets vehicles under the Buick,
Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and
Suzuki brands.
As reported in the Troubled Company Reporter on Nov. 10,
2008, General Motors Corporation's balance sheet at
Sept. 30, 2008, showed total assets of $110.425 billion, total
liabilities of $170.3 billion, resulting in a stockholders'
deficit of $59.9 billion.
* * *
As reported in the Troubled Company Reporter on Nov. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings, including
the corporate credit rating, on General Motors Corp. to 'CCC+'
from 'B-' and removed them from CreditWatch, where they had been
placed with negative implications on Oct. 9, 2008. S&P said that
the outlook is negative.
Fitch Ratings, as reported in the Troubled Company Reporter on
Nov. 11, 2008, placed the Issuer Default Rating of General Motors
on Rating Watch Negative as a result of the company's rapidly
diminishing liquidity position. Given the current liquidity level
of $16.2 billion and the pace of negative cash flows, Fitch
expects that GM will require direct federal assistance over the
next quarter and the forbearance of trade creditors in order to
avoid default. With virtually no further access to external
capital and little potential for material asset sales, cash
holdings are expected to shortly reach minimum required operating
levels. Fitch placed these on Rating Watch Negative:
-- Senior secured at 'B/RR1';
-- Senior unsecured at 'CCC-/RR5'.
As reported in the Troubled Company Reporter on June 24, 2008,
DBRS has placed the ratings of General Motors Corp. and General
Motors of Canada Limited Under Review with Negative Implications.
The rating action reflects the structural deterioration of the
company's operations in North America brought on by high oil
prices and a slowing U.S. Economy.
GENERAL MOTORS: Receives $1.5-Billion Payment from GMAC
-------------------------------------------------------
As of December 30, 2008, GMAC LLC had paid to General Motors Corp.
the $1.5 billion in advanced payments, which terms were
temporarily adjusted to allow GMAC to defer payments.
As reported by the Troubled Company Reporter Dec. 15, 2008, GMAC
said that as a result of the change in payment terms, GMAC will be
able to defer payment until Dec. 30, 2008, of up to $1.5 billion
in cash due to General Motors. During the shipping period GM will
have a security interest in the financed vehicles.
GM and GMAC LLC agreed on a temporary basis to adjust GMAC's terms
for making advance payments to GM for wholesale financing of
vehicles sold to GM dealers. GM typically has an increase in its
inventory levels in advance of the year-end shut down and this
adjustment will help finance purchases of this inventory.
Ordinarily, GMAC pays GM the invoice amount for a vehicle shipped
by GM to a GMAC financed dealer on the first business day after
the shipping date. Beginning on Dec. 9, 2008, GMAC will be
obligated to pay GM the invoice amount when the amounts are due
from dealers.
About GMAC LLC
GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors
Acceptance Corporation, is a global, diversified financial
services company that operates in approximately 40 countries in
automotive finance, real estate finance, insurance and other
commercial businesses. GMAC was established in 1919 and employs
approximately 26,700 people worldwide.
GMAC Financial Services is in turn wholly owned by GMAC LLC.
Cerberus Capital Management LP led a group of investors that
bought a 51% stake in GMAC LLC from General Motors Corp. in
December 2006 for $14 billion.
For three months ended Sept. 30, 2008, the company reported net
loss of $2.5 billion compared to net loss of $1.5 billion for the
same period in the previous year.
For nine months ended Sept. 30, 2008, the company incurred net
loss of $5.5 billion compared to $1.6 billion for the same period
in the previous year.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $211.3 billion, total liabilities of $202.0 billion and
members' equity of about $9.3 billion.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
General Motors Latin America, Africa and Middle East, with
headquarters in Miramar, Florida, is one of GM's four regional
business units. GM LAAM employs approximately 37,000 people in
18 countries and has manufacturing facilities in Argentina,
Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and
Venezuela. GM LAAM markets vehicles under the Buick,
Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and
Suzuki brands.
As reported in the Troubled Company Reporter on Nov. 10,
2008, General Motors Corporation's balance sheet at
Sept. 30, 2008, showed total assets of $110.425 billion, total
liabilities of $170.3 billion, resulting in a stockholders'
deficit of $59.9 billion.
GEORGIA PACIFIC: Bank Loan Sells at Substantial Discount
--------------------------------------------------------
Participations in a syndicated loan under which Georgia Pacific
Corporation is a borrower traded in the secondary market at 77.68
cents-on-the-dollar during the week ended December 26, 2008,
according to data compiled by Loan Pricing Corp. and reported in
The Wall Street Journal. This represents an increase of 1.37
percentage points from the previous week, the Journal relates.
Georgia Pacific pays interest at 175 basis points above LIBOR. The
syndicated loan matures on December 22, 2012. The bank loan
carries Moody's Ba2 rating and Standard & Poor's BB+ rating.
Headquartered at Atlanta, Georgia-Pacific -- http://www.gp.com/--
is one of the world's leading manufacturers and marketers of
tissue, packaging, paper, building products and related chemicals.
In 2004, the company employed 55,000 people at more than 300
locations in North America and Europe, and had annual sales of
approximately $20 billion. Its familiar consumer tissue brands
include Quilted Northern(R), Angel Soft(R), Brawny(R), Sparkle(R),
Soft 'n Gentle(R), Mardi Gras(R), So-Dri(R) and Vanity Fair(R), as
well as the Dixie(R) brand of disposable cups, plates and cutlery.
On December 23, 2005, Koch Industries, Inc., completed its $21
billion acquisition of Georgia-Pacific Corp. Koch Industries'
wholly owned subsidiary, Koch Forest Products, Inc., merged with
and into Georgia-Pacific. Georgia-Pacific retained its name and
continued operations from its Atlanta headquarters as a privately
held, indirect wholly owned subsidiary of Koch Industries.
Koch Industries, Inc., based in Wichita, Kan., --
http://www.kochind.com-- owns a diverse group of companies
engaged in trading, operations and investments worldwide,
including a presence in 50 countries in such core industries as
trading, petroleum, chemicals, energy, fibers, resins,
fertilizers, pulp and paper, ranching, securities and finance.
GMAC LLC: Completes Debt-Exchange, Falls Short of $38B Target
-------------------------------------------------------------
Bryan Keogh at Bloomberg News reports that GMAC Financial Services
has completed its debt exchange offer, after falling short of its
$38 billion debt swap goal.
GMAC has consummated its separate private exchange offers and cash
tender offers to purchase and/or exchange certain of its and its
subsidiaries' and Residential Capital, LLC's outstanding notes.
Approximately $17.5 billion in aggregate principal amount (or 59%)
of the outstanding GMAC old notes were validly tendered and
accepted in the GMAC offers and approximately $3.7 billion in
aggregate principal amount (or 39%) of the outstanding ResCap old
notes were validly tendered and accepted in the ResCap offers.
Bloomberg relates that the goal was 75%.
Consummation of the GMAC offers will result in the issuance of
approximately $11.9 billion aggregate principal amount of new GMAC
senior guaranteed notes of various series and approximately $2.6
billion aggregate liquidation preference of new GMAC cumulative
perpetual preferred stock.
For each series of existing GMAC notes, the aggregate principal
amount tendered and accepted and the related aggregate principal
amount of new senior guaranteed notes that will be issued.
Principal
Amount of
Related New
Senior
Principal Amount Guaranteed
Tendered and Notes
Series of Old Notes Accepted Issued
Euribor + 1.250% Notes
due 2009 EUR 309,193,000 US$323,103,000
4.750% Notes due 2009 EUR 225,680,000 US$211,885,000
6.500% Notes due 2009 US$149,677,000 US$126,982,000
7.750% Notes due 2010 US$1,181,709,000 US$778,854,000
5.750% Notes due May 2010 EUR 36,734,000 US$34,327,000
5.750% Notes due Sept. 2010 EUR 456,475,000 US$448,949,000
6.625% Notes due 2010 GBP 51,833,000 US$48,830,000
7.250% Notes due 2011 US$1,202,931,000 US$802,159,000
6.000% Notes due Apr. 2011 US$174,284,000 US$122,605,000
5.375% Notes due 2011 EUR 594,069,000 US$570,441,000
6.875% Notes
due 2011 US$4,347,883,000 US$3,087,771,000
6.000% Notes due Dec. 2011 US$871,998,000 US$562,268,000
7.000% Notes due 2012 US$544,784,000 US$357,492,000
6.625% Notes due 2012 US$613,701,000 US$407,348,000
6.000% Notes due 2012 EUR 136,772,000 US$129,264,000
6.875% Notes due 2012 US$1,198,666,000 US$784,677,000
6.750% Notes due 2014 US$1,194,091,000 US$764,653,000
Libor + 2.200% Notes
due 2014 US$471,615,000 US$294,768,000
8.000% Notes due 2031 US$3,034,460,000 US$1,995,021,000
Consummation of the ResCap offer will result in the issuance of
approximately $688 million aggregate principal amount of new GMAC
7.50% senior notes due 2013 and approximately $483 million
aggregate principal amount of new GMAC 8.00% subordinated notes
due 2018.
Each series of existing ResCap notes the aggregate principal
amount tendered and accepted:
Principal Amount
Series of Old Notes Tendered and
Accepted
Libor + 3.10% Floating Rate Notes
due April 2009 US$6,225,000
Libor + 3.83% Floating Rate
Subordinated Notes due April 2009 US$15,000,000
Libor + 3.10% Floating Rate Notes
due May 2009 US$12,940,000
8.500% Senior Secured Guaranteed
Notes due 2010 US$830,511,000
8.375% Notes due 2010 US$429,211,000
Euribor + 3.45% Floating Rate Notes
due 2010 EUR 18,100,000
8.000% Notes due 2011 US$9,372,000
7.125% Notes due 2012 EUR 12,295,000
8.500% Notes due 2012 US$15,089,000
8.500% Notes due 2013 US$401,417,000
8.375% Notes due 2013 GBP 3,965,000
9.875% Notes due 2014 GBP 1,000,000
9.625% Junior Secured Guaranteed
Notes due 2015 US$1,889,828,000
8.875% Notes due 2015 US$38,728,000
The cash elections for each of the GMAC offers and the ResCap
offers were oversubscribed. As a result, each eligible holder who
made a cash election in the GMAC offers will have approximately
23.2% of the amount of old notes it tendered accepted for cash,
and the balance of old notes each such holder tendered that was
not accepted for purchase for cash will be exchanged into new
securities, in the amount determined pursuant to the applicable
new securities exchange ratios, as if such holder had made a new
securities election with respect to such balance of old notes.
Furthermore, each eligible holder who made a cash election in the
ResCap offers will have approximately 47.8% of the amount of old
notes it tendered accepted for cash, and the balance of old notes
each such holder tendered that was not accepted for purchase for
cash will be exchanged into new securities, in the amount
determined pursuant to the applicable new securities exchange
ratios, as if such holder had made a new securities election with
respect to such balance of old notes.
To determine the consideration paid, the principal amounts of old
notes denominated in Euros and Sterling have been converted to
U.S. dollars at currency exchange rates set on Dec. 24, 2008, of
$1.3964/EUR and $1.4673/GBP.
About GMAC LLC
GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors
Acceptance Corporation, is a global, diversified financial
services company that operates in approximately 40 countries in
automotive finance, real estate finance, insurance and other
commercial businesses. GMAC was established in 1919 and employs
approximately 26,700 people worldwide.
GMAC is the biggest lender to GM's 6,500 dealers nationwide, most
of which get the financing they need to operate and buy vehicle
inventory from the automaker, CNNMoney.com notes.
GMAC Financial Services is in turn wholly owned by GMAC LLC.
Cerberus Capital Management LP led a group of investors that
bought a 51% stake in GMAC LLC from General Motors Corp. in
December 2006 for $14 billion.
On December 24, 2008, GMAC Financial Services' application to
become a bank holding company under the Bank Holding Company Act
of 1956, as amended, was approved by the Board of Governors of the
Federal Reserve System. In addition, GMAC Bank received approval
from the Utah Department of Financial Institutions to convert to a
state bank. As a bank holding company, GMAC will have expanded
opportunities for funding and access to capital, which will
provide increased flexibility and stability.
For three months ended Sept. 30, 2008, the company reported net
loss of $2.5 billion compared to net loss of $1.5 billion for the
same period in the previous year.
For nine months ended Sept. 30, 2008, the company incurred net
loss of $5.5 billion compared to $1.6 billion for the same period
in the previous year.
At Sept. 30, 2008, GMAC's balance sheet showed total assets of
$211.3 billion, total liabilities of $202.0 billion and members'
equity of about $9.3 billion.
* * *
As reported in the Troubled Company Reporter on Dec. 15, 2008,
Standard & Poor's Ratings Services said that its ratings on GMAC
LLC (CC/Watch Neg/C) and its 100% owned subsidiary, Residential
Capital LLC (CC/Watch Neg/C) are not affected by GMAC's
announcement that it extended the early delivery time with respect
to separate private exchange offers and cash tender offers to
purchase or exchange certain of its and its subsidiaries' and
Residential Capital's outstanding notes to provide investors with
a final opportunity to consider the GMAC and Residential Capital
LLC offers.
GMAC LLC: Makes $1.5-Billion in Deferred Payments
-------------------------------------------------
As of December 30, 2008, GMAC LLC had paid to General Motors Corp.
the $1.5 billion in advanced payments, which terms were
temporarily adjusted to allow GMAC to defer payments.
As reported by the Troubled Company Reporter Dec. 15, 2008, GMAC
said that as a result of the change in payment terms, GMAC will be
able to defer payment until Dec. 30, 2008, of up to $1.5 billion
in cash due to General Motors. During the shipping period GM will
have a security interest in the financed vehicles.
GM and GMAC LLC agreed on a temporary basis to adjust GMAC's terms
for making advance payments to GM for wholesale financing of
vehicles sold to GM dealers. GM typically has an increase in its
inventory levels in advance of the year-end shut down and this
adjustment will help finance purchases of this inventory.
Ordinarily, GMAC pays GM the invoice amount for a vehicle shipped
by GM to a GMAC financed dealer on the first business day after
the shipping date. Beginning on Dec. 9, 2008, GMAC will be
obligated to pay GM the invoice amount when the amounts are due
from dealers.
About GMAC LLC
GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors
Acceptance Corporation, is a global, diversified financial
services company that operates in approximately 40 countries in
automotive finance, real estate finance, insurance and other
commercial businesses. GMAC was established in 1919 and employs
approximately 26,700 people worldwide.
GMAC Financial Services is in turn wholly owned by GMAC LLC.
Cerberus Capital Management LP led a group of investors that
bought a 51% stake in GMAC LLC from General Motors Corp. in
December 2006 for $14 billion.
For three months ended Sept. 30, 2008, the company reported net
loss of $2.5 billion compared to net loss of $1.5 billion for the
same period in the previous year.
For nine months ended Sept. 30, 2008, the company incurred net
loss of $5.5 billion compared to $1.6 billion for the same period
in the previous year.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $211.3 billion, total liabilities of $202.0 billion and
members' equity of about $9.3 billion.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
General Motors Latin America, Africa and Middle East, with
headquarters in Miramar, Florida, is one of GM's four regional
business units. GM LAAM employs approximately 37,000 people in
18 countries and has manufacturing facilities in Argentina,
Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and
Venezuela. GM LAAM markets vehicles under the Buick,
Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and
Suzuki brands.
As reported in the Troubled Company Reporter on Nov. 10,
2008, General Motors Corporation's balance sheet at
Sept. 30, 2008, showed total assets of $110.425 billion, total
liabilities of $170.3 billion, resulting in a stockholders'
deficit of $59.9 billion.
HARRAH'S ENTERTAINMENT: S&P Ups Unsec. & Sub. Debt Ratings to CCC
-----------------------------------------------------------------
Standard & Poor's Ratings Services said it raised its corporate
credit rating on Las Vegas-based Harrah's Entertainment Inc. and
its wholly owned subsidiary, Harrah's Operating Co. Inc. to 'B-'
from 'SD'. At the same time, S&P raised its issue-level rating on
the senior unsecured and subordinated debt issues of HET's
subsidiaries to 'CCC' (two notches lower than the 'B-' corporate
credit rating on HET) from 'D'. The recovery rating on these
securities remains at '6', indicating S&P's expectation for
negligible (0% to 10%) recovery for lenders in the event of a
payment default. The rating outlook is negative.
The upgrade of Harrah's follows the conclusion of S&P's review of
the company's new capital structure following the settlement of
its below-par debt tender offer, which S&P viewed as being
tantamount to default given the distressed financial condition of
the company.
"While the post-exchange capital structure reflects approximately
$435 million less in 2010 debt maturities, in addition to nearly
$1.2 billion less in total outstanding debt," said Standard &
Poor's credit analyst Ben Bubeck, "Harrah's ability to
successfully service its debt obligations over the intermediate
term still relies on a substantial moderation of declines recently
observed in the gaming sector." The 'B-' rating does, however,
acknowledge that the post-exchange capital structure, combined
with management's efforts to cut costs and pull back on capital
spending, allows the company greater capacity to weather the
current downturn over at least the next several quarters.
HAWAIIAN TELCOM: Seeks to Reject Hyp Media Co-Marketing Pact
------------------------------------------------------------
Hawaiian Telcom Communications, Inc., seeks approval from the U.S.
Bankruptcy Court for the District of Hawaii to reject a Co-
Marketing Agreement dated March 2008, with Hyp Media, LLC.
Pursuant to the Co-Marketing Agreement, HYP Media provides
advertising and other related services for the promotion of the
Debtors' products and services. In turn, the Debtors were
obligated to purchase certain minimum amounts of advertising and
related service, which minimum amounts were $2 million for 2008,
$1.5 million for 2009, and $1.4 million for each successive year
until 2017, when the parties' Agreement expires.
The Debtors, however, estimate they currently require only
$300,000 per year of the advertising and services that are
provided under the Agreement.
The Debtors believe that the rejection of the Agreement will
allow them the flexibility to purchase advertising and services on
an as-needed basis, while their business plan develops. The
Debtors point out that the annual minimum costs, ranging from $2
million
to $1.4 million, far exceed their yearly advertising and services
needs.
The Debtors add that the potential rejection claims against their
estates against the potential cost savings of shedding the
minimum amounts under the Co-Marketing Agreement prove that it
would be economically beneficial for them to reject the
Agreement. The Debtors assure the Court that they will still be
able to obtain the amount of advertising and service needed even
if the HYP Agreement is rejected.
HAWAIIAN TELCOM: Sued By HYP Media Finance for Publisher Payments
-----------------------------------------------------------------
HYP Media Finance LLC initiated a complaint before the bankruptcy
court against Hawaiian Telcom, Inc., on December 19, 2008, for
declaratory judgment, accounting, turnover of non-estate property,
allowance and payment of an administrative expense claim, and
relief from the automatic stay.
Before Hawaiian Telcom's bankruptcy filing, HYP Media, LLC, and
the Debtor entered into Publishing Agreement for Official
Listings/Directories and Billing and Collection Services
Agreement. HYP Media subsequently sold and assigned its rights,
title and interest in and to the Publishing Agreement and BCS
Agreement to HYP Finance Media LLC.
A. The Publishing Agreement
Under the Publishing Agreement, HYP Finance publishes white
and yellow pages print telephone directories under the
Hawaiian Telcom brand. HYP Finance sells Advertising in the
Directory products who are also subscribers to the Debtor's
telephone exchange services.
B. The Billing and Collection Services Agreement
Under the B&CS Agreement, HYP Finance's Publisher Charges to
Advertisers in connection with the sale of Advertising to
Advertisers are billed by the Debtor on behalf of HYP
Finance.
The Debtor is obligated to include the unaltered amount of
the relevant Publisher Charges in HT Bundled Invoices
delivered to applicable Advertisers and to attempt to
collect payment due on all those Publisher Charges in the HT
Bundled Invoices. HYP Finance, on the other hand, delivers
periodic data feeds to the Debtor containing Publisher
Charges to be billed on the Debtor's Bundled Invoices. HYP
Finance delivered its most recent data feed to the Debtor on
December 9, 2008.
Publisher Charges billed on behalf of HYP Finance are
defined as Accounts Receivable under the BCS Agreement.
The BCS Agreement currently requires the Debtor to make
Publisher Payments to HYP Finance, on or before the 15th day
of the month, in an amount equal to 45% of the Publisher
Payments made for each month over the last three months.
The Debtor is also obligated to make Publisher Payments on
or before the last day of the each month based on Publisher
Charges billed during the preceding month, less than the
Publisher Payment made on the 15th of the current month and
certain deductions. Except for periodic adjustments for Bad
Debt, the Publisher Payments are calculated on Publisher
Charges billed, not collected.
According to Scott R. Haiber, Esq., at Hogan & Hartson L.L.P., in
Baltimore, Maryland, as of December 15, 2008, the Debtor has
failed and refused to pay to HYP Finance certain Publisher
Payments, aggregating $1,480,000. The Debtor's failure to pay
constitutes a default under the BCS Agreement. HYP Finance adds
that when it served a notice of default, the Debtor also advised
it will not make payments due on December 31, 2008.
HYP Finance is concerned that the Debtor is not segregating the
HYP Accounts Receivable and is commingling the HYP Accounts
Receivable with the Debtor's other funds and assets.
Mr. Haiber asserts that the Debtor has continuing obligations
under the Publishing and BCS Agreements, and that either the
Debtor's or HYP Finance's failure to perform obligations under
the BCS Agreement excuses the other party from performance of
future obligations.
Mr. Haiber informs the Court that the records evidencing the
exact amount, status and disposition of the HYP Accounts
Receivable are solely within the control of the Debtor.
Nevertheless, he argues, the Accounts Receivable, being not
property of the Debtor's estate, should not be held by the
Debtor. The Debtor, however, continues to refuse to remit the
HYP Accounts Receivable despite HYP Finance's demand. "By
retaining the HYP Accounts Receivable and refusing to remit it to
HYP Finance, the Debtor is misappropriating and converting HYP
Finance's property in which the Debtor has no right, title or
interest and is thus causing harm to HYP," Mr. Haiber contends.
Mr. Haiber adds that the B&CS Agreement has become an asset of
the Debtor's estate and the automatic stay enforced by Chapter 11
prevent HYP Finance from exercising any control over the asset,
including its exercise to a right to terminate the BCS Agreement.
He avers that HYP Finance is entitled to relief from automatic
stay to permit it to terminate the BCS Agreement without cause or
cause.
Against these backdrop, HYP Finance asks the Court to:
(a) declare that the B&CS Agreement constitutes an executory
contract under Section 365 of the Bankruptcy Code;
(b) declare that the Debtor's failure to make the Publisher
Payment due on December 15 and thereafter constitute
defaults under the B&CS Agreement;
(c) declare that the existence of Chapter 11 case neither
authorizes nor excuses the Debtor to default on its
obligation in making Publisher Payments;
(d) declare that the HYP Accounts Receivable are not property
of the Debtor's estate;
(e) direct the Debtor to provide an accounting of (i) the
Publisher Charges billed under the B&CS Agreement; (ii)
amount of Accounts Receivable collected under the B&CS
Agreement; and (iii) the amount of HYP Accounts Receivable
and their disposition;
(f) direct the Debtor to remit and turnover the HYP Accounts
Receivable to HYP Finance;
(g) allow it an administrative expense claim for all amounts
due to it postpetition under the B&CS Agreement and
direct immediate payment to the allowed claim;
(h) lift the automatic stay to permit it to terminate the B&CS
Agreement with or without cause; and
(i) award it costs and attorneys' fees incurred in relation to
its Complaint against the Debtor.
HAWAIIAN TELCOM: Seeks to Hire Lazard as Financial Advisor
----------------------------------------------------------
Hawaiian Telcom Communications Inc. and its units seek permission
from the U.S. Bankruptcy Court for the District of Hawaii to
employ Lazard Freres & Co. LLC, as their investment banker and
financial advisor.
The Debtors engaged Lazard Freres in September 2008 to provide
general investment banking and financial advice in connection
with the Debtors' restructuring and transition to Chapter 11.
As the Debtors' investment banker, Lazard Freres will:
* review and analyze the Debtors' business, operations and
financial projections;
* evaluate the Debtors' potential debt capacity in light with
their projected cash flows;
* assist in the determination of a capital structure for the
Debtors;
* assist in the determination of a range of values for the
Debtors on a going concern basis;
* assist the Debtors on tactics and strategies for negotiating
with the stakeholders;
* render financial advice to the Debtors and participate in
meetings or negotiations with the stakeholders and rating
agencies or other appropriate parties related to
restructuring;
* advise the Debtors on the timing, nature and terms of new
securities, other consideration or other inducements to be
offered pursuant to restructuring;
* advise and assist the Debtors in evaluating potential
financing transactions, and subject to Lazard's discretion,
to execution of appropriate agreements, contact potential
sources of capital as the Debtors may designate and assist
the Debtors in implementing the financing;
* assist the Debtors in preparing documentation within
Lazard's area of expertise that is required in connection
with restructuring;
* attend meetings of the Debtors' Board of Directors and its
committees on matters Lazard has been engaged to offer
advice;
* upon the Debtors' Board of Directors' request, make a
presentation to the Board regarding the financial terms
involving material transaction involving the Debtors and
provide views on it;
* provide testimony with respect in any proceeding before the
Court; and
* provide the Debtors with other financial restructuring
advice.
In exchange for its services, the Debtors propose to entitle
Lazard Freres to:
(a) A $200,000 monthly fee, payable on the first day of each
month until the earlier of the consummation of a
"restructuring" of the substantially all of the Debtors'
assets or a majority to the Debtors' controlling interest,
or at termination of the firm's engagement with the
Debtors.
All Monthly Fees paid for months after November 2008 will
be credited against any Restructuring Fee; provided that
the credit will only apply to the extent the fees are
approved by the Court.
(b) A fee equal to $4 million as Restructuring Fee, 50% of
which is payable when an agreement in respect of a
"Restructuring" is entered into. The remaining 50% of the
Fee will be earned and paid upon consummation of the
Restructuring.
In the event Lazard is paid a portion of the Restructuring
Fee and the Restructuring is not consummated, Lazard will
return the fee to the Debtors.
(c) Reimbursement of the firm's necessary and reasonable
expenses incurred or to be incurred on the Debtors'
behalf.
David S. Kurtz, managing director of Lazard Freres, disclosed
that his firm has conducted an extensive review of entities to
determine connections related to the Debtors' bankruptcy
proceedings. He assures the Court that Lazard Freres does not
hold an interest adverse to the Debtors' estates and is a
"disinterested person" as the term is defined under Section
101(14) of the Bankruptcy Code.
HAWAIIAN TELCOM: Seeks to Hire Kirkland as Lead Counsel
-------------------------------------------------------
Hawaiian Telcom Communications Inc. and its units seek permission
from the U.S. Bankruptcy Court for the District of Hawaii to
employ Kirkland & Ellis LLP as their counsel nunc pro tunc to
their bankruptcy filing.
As the Debtors' counsel, Kirkland & Ellis will:
(1) advise the Debtors with respect to their powers and duties
as debtors in possession in the continued management and
operation of their business and properties;
(2) advise the Debtors on the conduct of these Chapter 11
cases, including all of the legal and administrative
requirements of operating in Chapter 11;
(3) attend meetings and negotiate with creditors and other
parties-in-interest;
(4) prosecute actions on the Debtors' behalf, defend actions
commenced against the Debtors and represent the Debtors'
interest in negotiations concerning litigation in which
the Debtors are involved including objections to claims
filed against the estates;
(5) prepare pleadings related to these bankruptcy proceedings,
including motions, and papers beneficial to the
administration of the Debtors' estates;
(6) advise the Debtors in connection with any potential sale
of assets;
(7) appear before the courts on the Debtors' behalf;
(8) advise the Debtors regarding tax matters;
(9) assist the Debtors in obtaining approval of a disclosure
statement and confirmation of a Chapter 11 plan and all
documents related to it; and
(10) perform all other necessary or appropriate legal services
for the Debtors in connection with the prosecution of
these Chapter 11 cases, including (x) analyzing the
Debtors' leases and contracts and whether to assume and
assign or reject hereof, (y) analyzing validity of liens
against the Debtors, and (z) advising the Debtors on
transactional and litigation matters.
The Debtors will pay for Kirkland & Ellis' contemplated services
according to the firm's current hourly rates:
Title Hourly Rate
----- -----------
Partners $590 to $975
Counsel $490
Associates $275 to $800
Paraprofessionals $125 to $270
These K&E professionals are expected to have primary
responsibility for providing services to the Debtors:
Professional Hourly Rate
------------ -------------
Richard M. Cieri $925
Paul M. Basta $845
Christopher J. Marcus $675
The Firm will also be reimbursed for its actual and necessary
expenses.
The Debtors relate that they advanced $200,000 in August 2008 to
K&E as an advance payment retainer. In October 2008, the Debtors
increased K&E's retainer to $750,000, and in November 2008, to
$1.25 million. As of the Petition Date, about $250,000 of the
Retainer remain in K&E's general cash account. The Debtors
disclose that they have paid K&E an aggregate of $2,251,691 as
payment for the Firm's prepetition professional services and
reimbursement of reasonable and necessary expenses. As of the
Petition Date, the Debtors do not owe K&E any amounts for legal
services rendered prepetition.
Paul M. Basta, Esq., partner at K&E, tells the Court that based
on the conflicts search conducted by his firm, K&E does not hold
or represent an interest adverse to the Debtors' estates. He
maintains that K&E has no connection to the Debtors, their
creditors or related parties and is a "disinterested person" as
the term is defined under Section 101(14) of the Bankruptcy Code.
Mr. Basta assures the Court that K&E will periodically review its
files during the pendency of the Debtors' bankruptcy cases to
ensure that no conflicts or disqualifying circumstances exist or
arise. If any new relevant facts or relationships are
discovered, K&E will supplement its declaration under Rule
2014(a) of the Federal Rules of Bankruptcy Procedure.
HAWKER BEECHCRAFT: Bank Loan Sells at Substantial Discount
----------------------------------------------------------
Participations in a syndicated loan under which Hawker Beechcraft
is a borrower traded in the secondary market at 50.08 cents-on-
the-dollar during the week ended December 26, 2008, according to
data compiled by Loan Pricing Corp. and reported in The Wall
Street Journal. This represents an increase of 2.15 percentage
points from the previous week, the Journal relates. Hawker
Beechcraft pays interest at 200 basis points above LIBOR. The
syndicated loan matures on March 26, 2014. The bank loan carries
Moody's Ba3 rating and Standard & Poor's BB rating.
Hawker Beechcraft Acquisition Company, LLC, headquartered in
Wichita, Kansas, manufactures business jets, turboprops and piston
aircraft for corporations, governments and individuals worldwide.
* * *
As reported by the Troubled Company Reporter on April 24, 2008,
Moody's Investors Service raised Hawker Beechcraft Acquisition
Company, LLC's Speculative Grade Liquidity Rating to SGL-1 from
SGL-3. At the same time, the rating agency affirmed the company's
Corporate Family and Probability of Default ratings of B2 and the
individual instrument ratings, and refreshed Loss Given Default
estimates. The outlook is stable.
HCA INC: Bank Loan Sells at Substantial Discount
------------------------------------------------
Participations in a syndicated loan under which HCA Inc. is a
borrower traded in the secondary market at 72.61 cents-on-the-
dollar during the week ended December 26, 2008, according to data
compiled by Loan Pricing Corp. and reported in The Wall Street
Journal. This represents an increase of 1.80 percentage points
from the previous week, the Journal relates. HCA Inc. pays
interest at 225 basis points above LIBOR. The syndicated loan
matures on November 6, 2013. The bank loan carries Moody's Ba3
rating and Standard & Poor's BB rating.
Headquartered in Nashville, Tennessee, HCA Inc. --
http://www.hcahealthcare.com/-- is the nation's leading provider
of healthcare services. As of June 30, 2008, HCA operated 169
hospitals and 107 freestanding surgery centers, including eight
hospitals and eight freestanding surgery centers operated through
equity method joint ventures.
At September 30, 2008, the company's consolidated balance sheet
showed $23.7 billion in total assets and $32.6 billion in total
liabilities, $969.0 million in minority interests, and $163.0
million in equity securities with contingent redemption rights,
resulting in a $10.1 billion shareholders' deficit. As of
September 30, the company had retained deficit of $10.1 billion.
Net income for the third quarter of 2008 totaled $86.0 million,
compared to $300.0 million in the prior year's third quarter.
* * *
As reported in the Troubled company Reporter on May 23, 2008,
Fitch Ratings affirmed HCA Inc.'s Issuer Default Rating at 'B';
Secured bank credit facility at 'BB/RR1'; and Senior unsecured
notes at 'CCC+/RR6'.
HEARTLAND AUTOMOTIVE: Court OKs Adequacy of Disclosure Statement
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas
approved on Dec. 23, 2008, the Disclosure Statement filed in
support of the Joint Chapter 11 Plan of Reorganization of
Heartland Automotive Holdings, Inc., and its debtor-affiliates, as
amended on Dec. 23, 2008.
The hearing to consider confirmation of the Plan will be held on
Jan. 16, 2009, at 9:30 a.m., Central Standard Time. The deadline
for filing objections to confirmation of the Plan will be Jan. 12,
2009, at 4:00 p.m., Central Standard Time.
As reported in the Troubled Company Reporter on Nov, 26, 2008,
Heartland Automotive Holdings Inc. filed on Nov. 21, 2008, a
reorganization plan calling for 100% payment to all creditors, and
providing that the company will be keeping its 30-year
relationship with Jiffy Lube International Inc. intact.
In the disclosure statement explaining the terms of their Plan,
the Debtors said that their emergence from Chapter 11 under the
service mark Jiffy Lube is based upon amended Franchise Agreements
with JLI and a new oil supply agreement with SOPUS, an affiliate
of JLI.
A full-text copy of the Disclosure Statement, as amended on
Dec. 23, 2008, is available for free at:
http://bankrupt.com/misc/HeartlandAutomotive_AmendedDS.pdf
About Heartland Automotive
Based in Omaha, Nebraska, Heartland Automotive Holdings Inc. --
http://www.heartlandjiffylube.com/-- and its debtor-affiliates
are franchisees of Jiffy Lube International Inc. since 1980. The
Debtors operate 438 quick-oil-change stores in 20 states across
the Eastern, Midwestern and Western U.S. They employed in excess
of 4,000 employees.
The company and its nine affiliates filed for Chapter 11
protection on Jan. 7, 2008 (Bank. N.D. Tex. Lead Case No. 08-
40057). Thomas E. Lauria, Esq., Patrick Mohan, Esq., Gerard
Uzzi, Esq., and Lisa Thompson, Esq., at White & Case LLP; and Jeff
P. Prostok, Esq., at Forshey & Prostok, LLP, represent the Debtors
in their restructuring efforts. The Debtors selected Epiq
Bankruptcy Solutions LLC as claims, noticing and balloting agent.
The U.S. Trustee for Region 6 appointed seven creditors to serve
on an Official Committee of Unsecured Creditors on these cases.
Cadwalader, Wickersham & Taft LLP, and Munsch, Hardt, Kopf & Harr,
PC represent the Commitee as co-counsel.
As of Nov. 29, 2007, the Debtors' financial statements reflected
assets totaling about $334 million and liabilities totaling about
$396 million.
HUNTSMAN ICI: Bank Loan Sells at Substantial Discount
-----------------------------------------------------
Participations in a syndicated loan under which Huntsman ICI is a
borrower traded in the secondary market at 58.93 cents-on-the-
dollar during the week ended December 26, 2008, according to data
compiled by Loan Pricing Corp. and reported in The Wall Street
Journal. This represents an increase of 3.93 percentage points
from the previous week, the Journal relates. Huntsman ICI pays
interest at 150 basis points above LIBOR. The syndicated loan
matures on April 23, 2014. The bank loan carries Moody's Ba1
rating and Standard & Poor's BB+ rating.
About Huntsman
Headquartered in Salt Lake City, Utah, Huntsman Corporation
(NYSE: HUN) -- http://www.huntsman.com/-- is a manufacturer of
differentiated chemical products and inorganic chemical
products. The company operates in four segments: Polyurethanes,
Materials and Effects, Performance Products and Pigments. Its
products are used in a range of applications, including those in
the adhesives, aerospace, automotive, construction products,
durable and non-durable consumer products, electronics, medical,
packaging, paints and coatings, power generation, refining,
synthetic fiber, textile chemicals and dye industries. Its Latin
American operations are in Argentina, Brazil, Chile, Colombia,
Guatemala, Panama and Mexico.
At September 30, 2008, the company's consolidated balance sheet
showed US$8.41 billion in total assets, US$6.64 billion in total
liabilities, US$33.5 million in minority interests, and
US$1.73 billion in total stockholders' equity.
* * *
As reported by the Troubled Company Reporter on Dec. 18, 2008,
Standard & Poor's Ratings Services kept its ratings on Huntsman
Corp., including the 'BB-'
corporate credit rating, on CreditWatch, where they were placed on
June 26, 2007, with negative implications. S&P said: "This update
follows Huntsman's announcement that it has terminated its merger
agreement with Hexion Specialty Chemicals Inc. Under the terms of
a settlement with Hexion and Apollo
Management L.P., Huntsman expects to receive cash payments of $1
billion, consisting of $750 million of settlement payments and
$250 million of cash proceeds from the issuance of 10-year
convertible notes to Apollo affiliates, which Huntsman can repay
in cash or common stock. The settlement payments consist of $325
million from a break-up fee due from Hexion, which Hexion will
fund through an existing committed credit facility, and $425
million that Apollo affiliates will fund. At least $500 million
of the payments are to be paid to Huntsman on or before Dec. 31,
2008.
IMARX THERAPEUTICS: Ernst & Young Out; McKennon In as Accountants
-----------------------------------------------------------------
ImaRx Therapeutics, Inc., engaged McKennon Wilson & Morgan LLP as
its new independent registered public accounting firm on Dec. 19,
2008, to audit the company's consolidated financial statements for
the fiscal year ending Dec. 31, 2008, and to perform procedures
related to the financial statements included in the company's
quarterly reports on Form 10-Q, beginning with the quarter ending
March 31, 2009.
During the fiscal years ended Dec. 31, 2006 and 2007 and the
subsequent interim period preceding MW&M's engagement, the company
has not consulted with MW&M regarding either (i) the application
of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be
rendered on the company's financial statements; or (ii) any matter
that was either the subject of a disagreement.
On Dec. 19, 2008, the company notified Ernst & Young LLP that it
will not be retained as the independent registered public
accounting firm for the company to audit consolidated financial
statements for the fiscal year ending Dec. 31, 2008.
The Board of Directors of Company approved the decision to engage
MW&M as its new independent registered public accounting firm and
to dismiss E&Y from such duties.
The reports of E&Y on the company's financial statements for the
fiscal years ended Dec. 31, 2006, and Dec. 31, 2007, did not
contain an adverse opinion or a disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting
principle, except that the reports include explanatory paragraphs
in 2007 and 2006 describing conditions that raise substantial
doubt about the company's ability to continue as a going concern.
During the company's fiscal years ended Dec. 31, 2006 and 2007,
and through Dec. 19, 2008, there were no disagreements with E&Y on
any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which, if
not resolved to E&Y's satisfaction, would have caused E&Y to make
reference thereto in its reports on the company's financial
statements for such years.
During the fiscal years ended Dec. 31, 2006 and 2007 and through
Dec. 19, 2008, there were no "reportable events" except that in
2008, the Audit Committee discussed with E&Y the existence of a
material weakness, as more fully described in the Company's
Quarterly Report on Form 10-Q for the three and six month periods
ended June 30, 2008 filed on August 14, 2008 with the Securities
and Exchange Commission and the Quarterly Report on Form 10-Q for
the three and nine month periods ended Sept. 30, 2008 filed on
Nov. 13, 2008 with the SEC. The Company authorized E&Y to respond
fully to the inquiries of MW&M concerning this matter.
About ImaRx Therapeutics
Based in Tucson, Arizona, ImaRx Therapeutics Inc. (Nasdaq: IMRX)
-- http://www.imarx.com/-- is a biopharmaceutical company
developing and commercializing therapies for vascular disorders.
The company's research and development efforts are focused on
therapies for stroke and other vascular disorders using its
proprietary microbubble technology. The company's
commercialization efforts are currently focused on its product,
urokinase, for the treatment of acute massive pulmonary embolism.
As reported by the Troubled Company Reporter on October 21, 2008,
ImaRx Therapeutics was advised by The Nasdaq Stock Market pursuant
to Marketplace Rule 4300 that, in view of the company's recent
business dispositions, it no longer has an operating business.
Consequently, trading of the company's common stock were suspended
at the opening of business on Oct. 22, 2008, and a Form 25-NSE was
filed with the Securities and Exchange Commission removing the
company's securities from listing and registration on The Nasdaq
Stock Market.
The company's revenue decreased to $1.7 million for the third
quarter ended September 30, 2008, from $2.3 million for the same
period last year. Net loss for the third quarter of 2008 was
$200,000 compared to a net loss of $2.7 million for the same
period last year. Net loss for the nine months ended September
30, 2008, was $10.0 million compared to a net loss of $6.6 million
for the same period last year.
As of September 30, 2008, the company had $3.4 million in total
assets, including $3.3 million in total current assets; $2.9
million in total liabilities, all current; $455,000 in
stockholders' equity; and $91.1 million in accumulated deficit.
Going Concern Doubt
Ernst & Young LLP, in Phoenix, Arizona, expressed substantial
doubt about ImaRx Therapeutics Inc.'s ability to continue as a
going concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007. The auditing firm
said that the company has recurring losses, which has resulted in
an accumulated deficit of $81.2 million at Dec. 31, 2007.
Subsequent to the end of the quarter, the company paid
$5.2 million to satisfy all outstanding liabilities to Abbott
Laboratories, including the $10.8 million balance on the
$15.0 million non-recourse note.
Microbix Deal
On September 23, 2008, Microbix Biosystems, Inc., purchased the
company's remaining urokinase inventory and related assets and
assumed full responsibility for all ongoing commercial and
regulatory activities associated with the product for an upfront
payment of $2.0 million and the assumption of up to $500,000 in
chargeback liabilities for commercial product currently in the
distribution channel. In a November filing with the Securities
and Exchange Commission, the company held that if the assumed
chargeback liabilities paid by Microbix are less than the $500,000
assumed, Microbix will issue payment to the company for the
difference. Microbix also agreed to pay an additional $2.5
million upon the release of certain inventory of urokinase
currently under review by the FDA. In light of this transaction,
the company will receive no cash from future sales of urokinase.
As a result, the company said it may not have sufficient capital
resources to support operations and continue as a going concern.
The company said its ability to continue as a going concern
depends on its ability to enter into a strategic transaction for
SonoLysis, its lead program, that results in significant cash
proceeds to the company and whether Microbix is successful in
securing the release of the urokinase inventory by the FDA thereby
triggering the $2.5 million payment. The company has had
recurring losses, which have resulted in an accumulated deficit of
$91.2 million at September 30, 2008. The company said these
conditions, among others, raise substantial doubt about its
ability to continue as a going concern.
IMAX CORPORATION: Appoints Richard L. Gelfond as Sole CEO
---------------------------------------------------------
IMAX Corporation disclosed in a regulatory filing with the
Securities and Exchange Commission that effective April 1, 2009,
Bradley J. Wechsler, co-chairman and co-CEO of the company, will
become the sole chairman of the board. Richard L. Gelfond, co-
chairman and co-CEO, will become the sole CEO, reporting to the
board of directors, and will also retain his seat on the board.
This new management structure will be put in place as the company
continues to implement its Hollywood and digital strategies and
enters a new phase in IMAX's growth. With the anticipated rapid
growth of the IMAX network over the next several years,
Messrs. Wechsler and Gelfond also disclosed that IMAX will begin a
search for a chief operating officer to help manage the company's
expanded operations. The chief operating officer will report to
Mr. Gelfond.
Mr. Wechsler initiated discussions with Mr. Gelfond and the board
about a new role several months ago as the company's new digital
strategy and key joint ventures entered their implementation
phase. With the execution of the digital rollout on track, IMAX's
feature film slate and studio relationships expanding, a robust
systems backlog, and a strong pipeline of new business and joint
ventures in place, Messrs. Wechsler and Gelfond and the board
believe this is the right time for the management transition. Mr.
Wechsler has helped build and run IMAX for more than a decade --
providing strategic and market leadership; developing important
relationships with major studio and joint venture partners;
building teams both inside and outside the company; and leading
some of the company's important business initiatives. He has
played a vital role in developing and executing the company's
digital strategy -- well as in forging some of the original
relationships that led to its new business model-changing joint
ventures, which will help to drive IMAX's growth and financial
performance going forward.
In his new role, Mr. Wechsler will focus on broader strategic
issues, including capital market strategies, corporate governance
and business development opportunities for the company, while
Mr. Gelfond will have responsibility for running the business,
executing company strategy, overseeing relationships with the
financial community and ensuring the continued success of IMAX's
Hollywood film strategy, digital theatre system roll-out and
joint-venture theater businesses.
Messrs. Wechsler and Gelfond said, "We have been close business
partners for more than 14 years, acquiring IMAX in March 1994 and
bringing the Company public in June of that year. Together, we
have developed the strategy that transformed the IMAX business
from a niche film entertainment experience found in museums and
institutions into one of the world's leading entertainment
technology companies. IMAX is rapidly expanding its theatrical
distribution platform worldwide by exhibiting blockbuster
Hollywood films in the best format available for consumers in more
than 300 theatres and multiplexes around the world. We have a
strong management team in place and have made tremendous progress
over the past year. The implementation of our new digital theatre
systems and our joint-venture business model with commercial
theatre operators has advanced considerably. Our strategy is
taking hold, and we are on our way to delivering improved
financial performance."
Mr. Wechsler continued, "Now that we have begun to successfully
implement IMAX's Hollywood and digital strategies, I think this is
the ideal time for me to transition into the chairman's role.
This will allow me to continue to use my energy and talents to
benefit IMAX, while also pursuing other opportunities of interest
to me. This is a natural evolution for the company, and I look
forward to continuing to work closely with [Mr. Gelfond] to
achieve our goals over the short and long term."
Mr. Gelfond added, "[Mr. Wechsler] has been and will continue to
be a tremendous partner who has brought significant value to the
business in many ways over the years. This restructuring will
allow each of us to continue to apply our respective strengths to
create even more value for IMAX shareholders, customers and
consumers around the world. [Mr. Wechsler] has great strategic
skills and business development acumen, and freeing him up to
focus on these areas will benefit the company over the long term."
As of Sept. 30, 2008, IMAX has signed contracts for 207 IMAX
digital theatre systems. IMAX has 38 digital joint-revenue
sharing theatre systems in operation and is on track to install
approximately 45 digital theatre systems by the end of the year.
Reflecting only those scheduled installations already in backlog,
the company estimates having between 115 and 125 joint revenue
sharing systems in operation at the end of 2009. In addition, the
company has filled out the majority of its film slate through 2009
and into 2010 with major Hollywood films from almost every
significant studio including Dreamworks, Paramount, Warner Bros.
and 20th Century Fox. On November 19, IMAX disclosed a new five-
picture arrangement with Walt Disney Studios.
Messrs. Wechsler and Gelfond concluded, "We are excited about the
opportunities we see for IMAX as we enter a new phase of growth.
Our digital roll-out is on track and we have a strong Hollywood
feature film slate, with virtually every major film studio
releasing blockbuster films in IMAX. These changes in the
leadership and management of IMAX are being done at the ideal
time, and we believe they will ensure our continued growth and
long-term success."
About IMAX
Headquartered in Ontario, Canada, IMAX Corporation (Nasdaq:
IMAX)(TSX: IMX) -- http://www.imax.com/-- is a digital
entertainment and technology company. As of Dec. 31, 2007, there
were 299 IMAX theatres operating in 39 countries. The company's
groundbreaking IMAX DMR digital remastering technology allows it
to digitally transform virtually any conventional motion picture
into the unparalleled image and sound quality.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $238.2 million and total liabilities of $328.8 million,
resulting in a stockholders' deficit of about $90.6 million.
For three months ended Sept. 30, 2008, the company posted net loss
of $2.1 million compared with net loss of $7.5 million for the
same period in the previous year.
For nine months ended Sept. 30, 2008, the company posted net loss
of $24.5 million compared with net loss of $16.7 million for the
same period in the previous year.
As at Sept. 30, 2008, the company's principal sources of liquidity
included cash and cash equivalents of $37.7 million, the Credit
Facility, trade accounts receivable of $25.2 million and
anticipated collection from financing receivables due in the next
12 months of $10.2 million. The company had cash and cash
equivalents of $16.9 million as at Dec. 31, 2007.
IMPLANT SCIENCES: Amends Securities Purchase Deal with Laurus
-------------------------------------------------------------
Implant Sciences Corporation and LV Administrative Services, Inc.,
as administrative and collateral agent for each of Laurus Master
Fund, Ltd. and Valens Offshore SPV I, Ltd., entered into an
amendment, effective as of Oct. 31, 2008, to the Securities
Purchase Agreement dated as of Sept. 29, 2005, as amended on
Sept. 29, 2008, between the company and Laurus.
Pursuant to the terms of the amendment, the company paid $250,000
cash and agreed to issue 929,535 shares of the company's common
stock, valued at approximately $268,000, in partial satisfaction
of the company's outstanding obligation of $2,461,000 to the
Holders. In addition, the company agreed to repay the remaining
principal balance due of approximately $1,943,000 over a specific
monthly schedule, as set forth in the amendment, through April 10,
2009, the amended mandatory redemption date. With respect to the
Stock Payment Shares, the Holders agreed to a 6 month lock up,
subject to the terms and condition of the amendment. The company
has the option to repurchase up to 1/2 of the Stock Payment Shares
at any time prior to April 30, 2009, at a price equal to 110% of
the value of the shares at the time of the repurchase.
A full-text copy of the OMNIBUS AMENDMENT is available for free at
http://ResearchArchives.com/t/s?370c
On Nov. 4, 2008, the company and Dr. Anthony Armini entered into
an amendment to the Transition Agreement dated as of Sept. 27,
2007, between the company and Dr. Armini, pursuant to which the
annual rate of compensation payable to Dr. Armini will be reduced
from $250,000 to $200,000 from Nov. 4, 2008, and through the
expiration of the Transition Agreement.
A full-text copy of the AMENDMENT TO TRANSITION AGREEMENT is
available for free at http://ResearchArchives.com/t/s?370b
About Implant Sciences
Based in Massachusetts, Implant Sciences Corporation --
http://www.implantsciences.com/-- develops, manufactures and
sells products through its primary business units: (i) explosives
trace detection systems for homeland security, defense, and other
security related applications and (ii) state of the art services
for the medical and semiconductor industries. The company has
developed proprietary technology used in its commercial portable
and bench-top ETD systems, which ship to a growing number of
locations domestically and around the world.
Net income for the three months ended Sept. 30, 2008, was
$356,000 as compared to a net loss of $2,202,000 for the
comparable prior year period. During the three months ended
Sept. 30, 2008, net income was a result of increased sales and
income from discontinued operations, which included approximately
$931,000 of gain on sale of assets of its medical business unit.
As of Sept. 30, 2008, the company's cash position improved to
$2,013,000 as compared to $412,000 as of June 30, 2008.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $13,681,000, total liabilities of $11,268,000 and stockholders'
equity of $2,413,000.
Going Concern Doubt
UHY LLP on Oct. 14, 2008, expressed substantial doubt about
Implant Sciences Corporation's ability to continue as a going
concern after auditing the company's consolidated financial
statements for the fiscal year ended June 30, 2008 and 2007.
The auditing firm pointed to the company's recurring losses from
operations.
IMPLANT SCIENCES: Completes Core Systems' Assets Sale for $3MM
--------------------------------------------------------------
Implant Sciences Corporation and its subsidiary, C Acquisition
Corp. dba Core Systems, closed the transaction to sell
substantially all of Core Systems' assets for a purchase price of
$3,000,000 plus the assumption of certain liabilities.
On Nov. 14, 2008, Implant Sciences and its subsidiary have signed
a definitive agreement to sell substantially all of Core Systems'
assets.
The buyer, an entity newly formed by Core Systems' general manager
and certain other investors, made cash payments of $1,375,000
prior to and upon the closing. The balance of the purchase price
was paid at the closing by the buyer's delivery of a promissory
note in the principal amount of $1,625,000. The promissory note
required the buyer to pay $125,000 of liabilities retained by the
company on or before Nov. 28, 2008, an additional $500,000 on or
before Dec. 24, 2008, and the remaining principal balance,
together with accrued interest, in equal monthly installments over
a period of 60 months commencing Feb. 1, 2009. The note is
collateralized by a security interest in all of the buyer's Core
Systems assets. The company was advised in the transaction by the
Noblemen Group of Dallas, Texas.
"We are pleased to have completed the sale of Core Systems marking
the company's total withdrawal from the semiconductor business,"
said Glenn D. Bolduc, chief financial officer of Implant Sciences.
"In combination with statements to withdraw from all medical
business operations by the end of the calendar year, we will have
successfully repositioned the company as a pure-play in the
Security, Safety and Defense industries. With the distractions of
divesting the company of its non-strategic operations behind us,
we can now channel all of our energies and resources into the
funding and growth of our SS&D business."
NYSE Compliance Plan
On December 5, Implant Sciences submitted a revised plan of
compliance to the NYSE Alternext US, LLC on Nov. 26, 2008, in
response to a Nov. 5, 2008, notification by the Exchange of non-
compliance with its continued listing requirements.
The Revised Plan outlines the actions the company has taken and
will take that would bring it into compliance with Section
1003(a)(iv) of the Exchange's Company Guide by Feb. 5, 2009, and
all continued listing standards by Oct. 9, 2009. The company
intends to issue a follow-up statement once it receives
notification from the Exchange as to the status of acceptance of
the plan. The company's common stock continues to be listed on
the NYSE Alternext US under the ticker symbol "IMX."
About Implant Sciences
Based in Massachusetts, Implant Sciences Corporation --
http://www.implantsciences.com/-- develops, manufactures and
sells products through its primary business units: (i) explosives
trace detection systems for homeland security, defense, and other
security related applications and (ii) state of the art services
for the medical and semiconductor industries. The company has
developed proprietary technology used in its commercial portable
and bench-top ETD systems, which ship to a growing number of
locations domestically and around the world.
Net income for the three months ended Sept. 30, 2008, was
$356,000 as compared to a net loss of $2,202,000 for the
comparable prior year period. During the three months ended
Sept. 30, 2008, net income was a result of increased sales and
income from discontinued operations, which included approximately
$931,000 of gain on sale of assets of its medical business unit.
As of Sept. 30, 2008, the company's cash position improved to
$2,013,000 as compared to $412,000 as of June 30, 2008.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $13,681,000, total liabilities of $11,268,000 and stockholders'
equity of $2,413,000.
Going Concern Doubt
UHY LLP on Oct. 14, 2008, expressed substantial doubt about
Implant Sciences Corporation's ability to continue as a going
concern after auditing the company's consolidated financial
statements for the fiscal year ended June 30, 2008 and 2007.
The auditing firm pointed to the company's recurring losses from
operations.
IMPLANT SCIENCES: Inks Note, Warrant Purchase Agreement with DMRJ
-----------------------------------------------------------------
Implant Sciences Corporation executed a Note and Warrant Purchase
Agreement with DMRJ Group, LLC on Dec. 10, 2008. DMRJ Group, LLC
is affiliated with Platinum Partners Value Arbitrage Fund L.P., an
accredited institutional investor with its investment manager
headquartered in New York, New York.
The company issued a Senior Secured Convertible Promissory Note to
DMRJ in the principal amount of $5.6 million, which bears interest
at the rate of 11% per annum and is initially convertible at a
price of $0.26 per share. The terms of the Note required the
company to prepay $616,000 of interest upon the issuance of the
Note; repay $1,000,000 of principal on Dec. 24, 2008; and repay
the remaining principal, together with all outstanding interest
and all other amounts due and owing under the Note, on Dec. 10,
2009.
In addition, the company issued a five-year warrant to purchase
1.00 million shares of the company's common stock at an initial
exercise price of $0.26 per share. In lieu of paying DMRJ any
commitment fees, closing fees or other fees in connection with
this transaction, the company transferred to DMRJ its holdings of
1,500,000 shares of common stock of CorNova, Inc., a privately-
held, development stage medical device company in which the
company held an approximate 15% ownership interest.
The company used approximately $477,000 of the proceeds from the
sale of the Note and Warrant to repay all of its outstanding
indebtedness to Bridge Bank, N.A. and approximately $1,161,000 of
the proceeds to redeem all of the Series D Preferred Stock held by
Laurus Master Fund, Ltd. and its affiliates. The company intends
to use the balance of the net proceeds for working capital and
general corporate purposes. Additionally, as a condition of this
financing, the company agreed to replace two members of its Board
of Directors agreeable to DMRJ Group. Dr. Michael Szycher and Mr.
David Eisenhaure have resigned from the Board of Directors
effective Dec. 31, 2008.
Phillip C. Thomas, president and CEO of Implant Sciences, stated,
"We are pleased to have completed this financing in a very
difficult credit and capital-raising environment. This financing
supports our continuing efforts to strengthen the company's
balance sheet while providing the working capital needed to grow
our Security, Safety, and Defense business. In addition to the
provision of capital, the financing also facilitated our ability
to retire our obligations to Laurus and Bridge Bank."
Mr. Thomas added, "The road to restructuring Implant Sciences has
been long and we have had to overcome many obstacles. While
Implant Sciences is a much better company than it was a year ago,
there is still much work to be done to achieve our goals of
aggressive revenue growth, sustained profitability and market
leadership. However, we are stronger, more focused, and have
improved our financial position in a number of ways. As such, we
continue to feel a sense of notable progress and look forward to
eventual success in our endeavors. We are also appreciative of
the many years of Board service rendered by Dr. Michael Szycher
and David Eisenhaure. They have helped navigate the company
through some difficult times. As we move forward, we will be
seeking new Board members who have business experience relevant to
our current direction and who can build upon the foundation set in
place by these two business leaders."
A full-text copy of the NOTE AND WARRANT PURCHASE AGREEMENT is
available for free at http://ResearchArchives.com/t/s?370a
About Implant Sciences
Based in Massachusetts, Implant Sciences Corporation --
http://www.implantsciences.com/-- develops, manufactures and
sells products through its primary business units: (i) explosives
trace detection systems for homeland security, defense, and other
security related applications and (ii) state of the art services
for the medical and semiconductor industries. The company has
developed proprietary technology used in its commercial portable
and bench-top ETD systems, which ship to a growing number of
locations domestically and around the world.
Net income for the three months ended Sept. 30, 2008, was
$356,000 as compared to a net loss of $2,202,000 for the
comparable prior year period. During the three months ended
Sept. 30, 2008, net income was a result of increased sales and
income from discontinued operations, which included approximately
$931,000 of gain on sale of assets of its medical business unit.
As of Sept. 30, 2008, the company's cash position improved to
$2,013,000 as compared to $412,000 as of June 30, 2008.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $13,681,000, total liabilities of $11,268,000 and stockholders'
equity of $2,413,000.
Going Concern Doubt
UHY LLP on Oct. 14, 2008, expressed substantial doubt about
Implant Sciences Corporation's ability to continue as a going
concern after auditing the company's consolidated financial
statements for the fiscal year ended June 30, 2008 and 2007.
The auditing firm pointed to the company's recurring losses from
operations.
IMPLANT SCIENCES: Relocates Headquarters and Massachusetts Ops.
---------------------------------------------------------------
Implant Sciences Corporation disclosed in a regulatory filing with
the Securities and Exchange Commission that the company has
vacated approximately 51,000 square feet of space located at
107 Audubon Road, Wakefield, Massachusetts, and has relocated its
headquarters and Massachusetts operations. The company's
telephone and telefax numbers will remain unchanged.
On Dec. 11, 2008, Implant Sciences executed an agreement with
Wakefield Investments, Inc. to lease a 23,000 square-foot
facility, at 600 Research Drive, Wilmington, Massachusetts. The
Agreement has a one-year initial term at an annual base rent of
$368,000, plus a proportionate share of the common area expenses
associated with the facility. The company has an option to extend
the lease for one three-year term at a base rent equal to the fair
market rental value at the time of the extension. The company
plans to have the relocation completed and facility fully
operational by the end of December 2008 with minimal disruption to
its operations. The lease for the company's Wakefield,
Massachusetts facility expires Dec. 31, 2008.
Phillip C. Thomas, president and CEO of Implant Sciences,
commented, "In connection with our strategy to transform Implant
Sciences into a sustainable enterprise, moving into a smaller,
more modern facility will significantly lower our expenses and
provide a more efficient operating environment. We expect to
realize annual cost savings of approximately 50% over our current
facility expenses. As an additional benefit, our new corporate
headquarters will also aid in our continuing efforts to improve
the company's image with our customers, vendors, investors and
shareholders."
Mr. Thomas added, "We continue to make good progress with the near
completion of our divestiture objectives, recent financing
efforts, and improving our reputation in the security market.
As a result, we will be entering the new calendar year with a lean
operating structure, a focus on aggressive revenue growth and the
goal of sustained profitability and increased market share."
About Implant Sciences
Based in Massachusetts, Implant Sciences Corporation --
http://www.implantsciences.com/-- develops, manufactures and
sells products through its primary business units: (i) explosives
trace detection systems for homeland security, defense, and other
security related applications and (ii) state of the art services
for the medical and semiconductor industries. The company has
developed proprietary technology used in its commercial portable
and bench-top ETD systems, which ship to a growing number of
locations domestically and around the world.
Net income for the three months ended Sept. 30, 2008, was
$356,000 as compared to a net loss of $2,202,000 for the
comparable prior year period. During the three months ended
Sept. 30, 2008, net income was a result of increased sales and
income from discontinued operations, which included approximately
$931,000 of gain on sale of assets of its medical business unit.
As of Sept. 30, 2008, the company's cash position improved to
$2,013,000 as compared to $412,000 as of June 30, 2008.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $13,681,000, total liabilities of $11,268,000 and stockholders'
equity of $2,413,000.
Going Concern Doubt
UHY LLP on Oct. 14, 2008, expressed substantial doubt about
Implant Sciences Corporation's ability to continue as a going
concern after auditing the company's consolidated financial
statements for the fiscal year ended June 30, 2008 and 2007.
The auditing firm pointed to the company's recurring losses from
operations.
ISCO INTERNATIONAL: Can't Comply with NYSE Rules; Faces Delisting
-----------------------------------------------------------------
ISCO International, Inc., received notice on Dec. 18, 2008, from
the Corporate Compliance Department of NYSE Alternext US LLC,
which was formerly known as the American Stock Exchange,
indicating that the company no longer complies with certain of the
Exchange's continued listing standards, as set forth in Part 10 of
the NYSE Alternext US LLC Company Guide, and has therefore become
subject to the procedures and requirements of Section 1009 of the
Company Guide.
The Staff provided notice that:
-- The company had stockholders' equity of less than
$2,000,000 and losses from continuing operations and net
losses in two of its three most recent fiscal years
(Section 1003(a)(i) of the Company Guide);
-- The company had stockholders' equity of less than
$4,000,000 and losses from continuing operations and net
losses in three of its four most recent fiscal years
(Section 1003(a)(ii) of the Company Guide);
-- The company had stockholders' equity of less than
$6,000,000 and losses from continuing operations and net
losses in its five most recent fiscal years (Section
1003(a)(iii) of the Company Guide); and
-- The company has sustained losses which are so substantial
in relation to its overall operations or its existing
financial resources, or its financial condition has become
so impaired and its appears questionable, in the opinion of
the Exchange, as to whether the company will be able to
continue operations or meet its obligations as they mature
(Section 1003(a)(iv) of the Company Guide).
The Staff has also advised the company of non-compliance with
Section 1003(f)(v) of the Company Guide since the company's common
stock has been trading at a low price per share for a significant
period of time.
The company was further advised that within five days of the date
of the letter from the Exchange, the company would be included in
a list of issuers that are not in compliance with the Exchange's
continued listing standards, which is posted at
http://www.amex.com/and includes the specific listing standards
with which a company does not comply.
To maintain its listing on the Exchange, the company will be
required to submit a plan of compliance to the Exchange by
Jan. 19, 2009, addressing how it intends to regain compliance with
Section 1003(a)(iv) of the Company Guide by June 18, 2009, and
Sections 1003(a)(i)-(iii) of the Company Guide within a maximum of
18 months. The company's continued listing on the Exchange is
also predicated on the company effecting a reverse stock split of
its common stock no later than June 18, 2009.
The company informed the Exchange that it does not have available
resources to bring the company into compliance within the
prescribed time periods, and accordingly does not anticipate that
it will submit a Plan. Because the company does not intend to
submit a Plan, the company will be subject to delisting procedures
as set forth in Section 1010 and Part 12 of the Company Guide.
The company, therefore, expects that the Exchange will notify the
company of the involuntary delisting of its common stock.
TAA Group Acquires Clarity Unit
On December 5, 2008, ISCO International entered into a definitive
stock purchase agreement with TAA Group Inc. pursuant to which TAA
acquired all of the outstanding shares of stock of Clarity
Communication Systems Inc., ISCO's wholly owned subsidiary. ISCO
acquired Clarity through a merger in January 2008, and Clarity's
operations and assets constituted the software segment of ISCO's
business.
The purchase price consists of (i) cash payments totaling
$325,000; (ii) a deferred payment of $175,000 to be made by TAA on
or after March 5, 2009; and (iii) a percentage of future revenues
of Clarity in an amount up to $5,000,000. ISCO may elect to take
equity in TAA or one of its affiliates in lieu of the $175,000
payment. The revenue payments described above are payable on a
monthly basis, as applicable, in accordance with a formula set
forth in the Agreement.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 18, 2008,
Grant Thornton LLP, in Chicago, expressed substantial doubt about
ISCO International Inc.'s ability to continue as a going concern
after auditing the company's consolidated financial statements for
the years ended Dec. 31, 2007, and 2006.
The auditing firm reported that the company incurred a net loss of
approximately $6.4 million during the year ended Dec. 31, 2007,
and, as of that date, the company's accumulated deficit was
approximately $171.0 million. The auditing firm also said that
the company has consistently used, rather than provided, cash in
its operations.
ISCO International Inc. reported a consolidated net loss of
$8.5 million for the third quarter ended Sept. 30, 2008, versus a
consolidated net loss of $1.7 million during the same period of
2007.
ISCO reported consolidated net sales of $1.8 million for the
quarter ended September 30, 2008, versus $1.9 million during the
comparable period of 2007.
At Sept. 30, 2008, the company's consolidated balance sheet showed
$21.4 million in total assets; $14.5 million in total current
liabilities, $80,000 in deferred facility reimbursement, $115,280
in deferred revenue-non current and $8.5 million in notes and
related accrued interest with related parties, net; and
$1.8 million in stockholders' deficit. The company also had
$184.4 million in accumulated deficit.
About ISCO International
Headquartered in Elk Grove Village, Ill., ISCO International Inc.
(AMEX: ISO) -- http://www.iscointl.com/-- is a supplier of RF
management and interference-control solutions for the wireless
telecommunications industry.
JIM PALMER: ActionView to Disapprove Reorganizational Plan
----------------------------------------------------------
ActionView International Inc. intends to disapprove the plan of
reorganization filed by Jim Palmer Trucking, Inc. in its Chapter
11 bankruptcy case.
ActionView International said it provided a $250,000 loan to Jim
Palmer Trucking in May 2008 and is now seeking repayment of the
loan.
The plan filed by Jim Palmer Trucking calls for paying unsecured
creditors 34% of the allowed claim through 48 monthly payments
commencing 180 days after the Order of Confirmation. A hearing is
scheduled for Jan. 15, 2009. Objections, if any, are due
Jan. 12, 2009.
ActionView International said it is acting as chairman of the
unsecured creditors committee. "While we are pleased that the
debt to ActionView International, as part of a class of unsecured
creditors, was addressed in the plan filed by Jim Palmer Trucking,
the amount and timetable of the repayment are not satisfactory,
and on that basis alone, we expect to disapprove of the
reorganization plan," commented ActionView International CEO
Steven R. Peacock. "We do look forward to working through this
process so that company receives all that it is entitled to," Mr.
Peacock said.
ActionView International management said it has expressed several
issues of concern, including its close proximity in time to Jim
Palmer Trucking's acceptance of the loan from ActionView
International. "ActionView is also continuing to review
information on additional acquisition candidates, and we hope to
have a specific company targeted in the near future," Mr. Peacock
added.
About ActionView International Inc.
Based in Vancouver, British Columbia, ActionView International
Inc. (OTCBB: AVWI) -- http://www.actionviewinternational.com/--
through ActionView, its wholly owned subsidiary, is engaged in the
business of designing, marketing and manufacturing proprietary
illuminated, programmable, motion billboard signs for use in
airports, mass transit stations, shopping malls, and other high
traffic locations to reach people on-the-go with targeted
messaging.
About Jim Palmer Trucking
Headquartered in Missoula, Montana, Jim Palmer Trucking Inc. --
http://www.jimpalmertrucking.com/-- offers truckload
transportation of temperature-controlled cargo. The company
operates throughout the US from terminals in Missoula, Montana;
Salina, Kansas; and Tampa.
The Debtor and two of its affiliates filed for separate Chapter 11
protection on July 15, 2008, (Bankr. D. Mont. Lead Case No.: 08-
60922). James A. Patten, Esq., represents the Debtors in their
restructuring efforts. The Debtors have $11,897,554 in total
assets and $12,089,808 in total debts.
KOOSHAREM CORP: S&P Downgrades Corporate Credit Rating to 'B-'
--------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its corporate
credit on staffing firm Koosharem Corp. to 'B-' from 'B' and
removed the ratings from CreditWatch, where they were placed with
negative implications on June 17, 2008. The outlook is stable.
In addition, S&P lowered the issue-level ratings on Koosharem's
$509 million senior secured credit facilities. S&P lowered the
bank loan rating on the $409 million first-lien credit facility
'B-' from 'B+' and revised the recovery rating on that debt to '3'
from '2'. The first-lien recovery rating of '3' indicates S&P's
expectation of meaningful (50%-70%) recovery of principal in the
event of a payment default. Standard & Poor's also lowered the
issue-level rating on the company's $100 million second-lien term
loan B due 2014 to 'CCC' from 'CCC+. The second-lien recovery
rating remains at '6', indicating S&P's expectation of negligible
(0%-10%) recovery of principal in the event of a payment default.
"The downgrade reflects the recession's effect on the company's
operating performance," said Standard & Poor's credit analyst Hal
F. Diamond, "along with its high debt leverage and its narrow
margin of compliance with its total leverage covenant under the
first-lien credit agreement."
L TERSIGNI: Settlement With Asarco Receives Court Approval
----------------------------------------------------------
ASARCO LLC, Lac d'Amiante du Quebec Ltee, CAPCO Pipe Company,
Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec,
Ltd., and LAQ Canada, Ltd., obtained approval from the U.S.
Bankruptcy Court for the Southern District of Texas of a
settlement agreement they entered into with L. Tersigni Consulting
CPA, P.C., also known as L. Tersigni Consulting, P.C.
Before November 2007, Tersigni provided accounting and financial
advisory services primarily to creditor committees in various
asbestos-related Chapter 11 proceedings, including the ASARCO
Asbestos Creditors' Committee. However, in May 2007, Tersigni
had allegedly falsified some of the time billed for the work
performed for its clients by increasing the actual time spent
working. To this end, Tersigni engaged Heller Ehrman LLP to
conduct an investigation into its billings. Heller Ehrman issued
a report identifying certain matters, in which time shown on the
fee applications was greater than the time recorded on some of
Tersigni's employee time sheets.
By then, several of the asbestos creditors began or continued
legal proceedings against Tersigni, including claims for
disgorgement of all fees paid to Tersigni. Against this
backdrop, Nancy A. Tersigni, executrix of the Estate of firm
founder Loreto Tersigni, elected sought bankruptcy protection for
the Tersigni firm in the U.S. Bankruptcy Court for the District
of Connecticut in November 2007.
Hugh M. Ray was later appointed by the Office of the U.S.
Trustee, as an examiner, to further investigate, report on and
made recommendations regarding, the claims of the Asbestos
Creditors and potential claims against the Tersigni Estate. On
March 26, 2008, the Examiner filed its first report recommending
that rather than engage in protracted and expensive litigation,
ASARCO, the Tersigni Estate and the Asbestos Creditors should
attempt to negotiate a settlement of the Asbestos Creditors'
claims based on reimbursement for actual damages, not
disgorgement, claimed to have been incurred by the Asbestos
Creditors.
The ASARCO Parties had paid approximately $3,250,000 to Tersigni
over the years for work the firm had done for the Asbestos
Committee. Tersigni had $476,410 in fees that had been billed
and remained unpaid, despite the fact that the fees had been
partially approved by the Bankruptcy Court.
Following negotiations, the ASARCO parties and the Tersigni
parties reached at a settlement agreement, which provides that:
(1) The ASARCO Parties agreed to take an 11.1% refund of the
fees previously paid, and the $476,410 that remain unpaid
as compensation for the alleged fraudulent fee write ups.
With the refund credited against the unpaid fees, it
reduced the amount owed to Tersigni to $63,037, which is
the agreed settlement payment.
(2) By virtue of the refund, the ASARCO Parties will get
$413,373 in credit against an outstanding administrative
Expense;
(3) The Tersigni Bankruptcy Estate will waive its claim for
unpaid fees, if any; and
(4) "Cross releases" will be exchanged among the Tersigni
Parties, Tersigni and the Tersigni Bankruptcy Estate, and
the Asbestos Creditors.
About ASARCO LLC
Based 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
US$600 million in total assets and US$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. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 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's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774
to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
The Debtors submitted to the Court a joint plan of reorganization
and disclosure statement on July 31, 2008. The plan incorporates
the sale of substantially all of the Debtors' assets to Sterlite
Industries, Ltd., for US$2,600,000,000.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted a reorganization plan to retain its equity interest
in ASARCO LLC, by offering full payment to ASARCO's creditors in
connection with ASARCO's Chapter 11 case. AMC would provide up to
US$2.7 billion in cash as well as a US$440 million guarantee to
assure payment of all allowed creditor claims, including payment
of liabilities relating to asbestos and environmental claims.
AMC's plan is premised on the estimation of the approximate
allowed amount of the claims against ASARCO.
Asarco Inc. and AMC are represented by Luc A. Despins, Esq., at
Milbank, Tweed, Hadley & McCloy LLP, in New York.
(ASARCO Bankruptcy News Issue No. 94; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
LANDSBANKI ISLANDS: Court to Hear Chapter 15 Petition on Jan. 28
----------------------------------------------------------------
On December 9, 2008, Kristinn Bjarnason in his capacity as the
foreign representative of Landsbanki Islands hf., filed a Verified
Petition for Recognition of a Foreign Main Proceeding and Motion
for Permanent Injunction, and Related Relief Pursuant to 11 U.S.C.
SS 1504, 1515, 1517, 1520, and 1521, pursuant to Chapter 15 of
title 11 of the United States Code, with the United States
Bankruptcy Court for the Southern District of New York.
The Petition and Motion seeks the entry of an order granting
recognition to the Icelandic Proceeding currently pending in
Iceland as a foreign main proceeding and granting injunctive and
related relief in aid thereof.
The Bankruptcy Court has scheduled a hearing with respect to the
Petition and Motion for 10:00 a.m. on January 28, 2009. Copies of
the Petition and Motion, the Declaration of Kristin Bjarnason in
Support of the Petition and Motion, the Memorandum of Law Support
of the Verified Petition and Motion, and the form of order
requested are available to parties-in-interest on the Bankruptcy
Court's Electronic Case Filing System, which can be accessed from
the Bankruptcy Court's Web site at http://www.nysb.uscourts.gov(a
PACER login and password are required to retrieve a document) or
upon written request to the Petitioner's United States counsel
(including by facsimile or e-mail) addressed to:
Morrison & Foerster LLP
Attn: Gary S. Lee
glee@mofo.com
1290 Avenue of the Americas
New York 10104
Fax: (212) 468-7900
Any party-in-interest wishing to submit a response or objection to
the Petition and Motion or the relief requested by the Petitioner
must do so in accordance with the Bankruptcy Order and the Federal
Rules of Bankruptcy Procedure, in writing, setting forth the basis
therefore, which response or objection must be filed
electronically with the Court by registered users of the Court's
electronic case filing system in accordance with General Order M-
242 (a copy of which may be viewed on the Court's Web site,
http://www.nysb.uscourts.gov)and by all other parties-in-interest
on a 3.5 inch disc, preferably in Portable Document Format (PDR),
Word Perfect or any other Windows-based word processing format,
which disc shall be sent to the Office of the Clerk of the Court,
One Bowling Green, New York, New York 10004-1408. A hard copy of
the response or objection shall be sent to the Chambers of the
Honorable Robert D. Drain, United States Bankruptcy Judge, One
Bowling Green, New York, New York 10004-1408 and served upon
Morrisson & Foerster LLP, 1290 Avenue of the Americas, New York,
New York 10104 (Attention: Gary S. Lee), United States counsel to
the Petitioner, so as to be received no later than 4:00 p.m.
(Eastern Times), January 21, 2008.
All parties-in-interest opposed to the Petition and Motion or the
Petitioner's request for relief must appear at the Recognition
Hearing at the time and place set forth above.
If no response or objection is timely filed and served as provided
above, the Court may grant the recognition and relief requested in
the Petition and Motion without further notice.
The Recognition Hearing may be adjourned from time to time without
further notice other than an announcement in open court, or a
notice of adjournment filed with the Court, of the adjourned date
or dates at the hearing or any other further adjourned hearing.
About Landsbanki
Headquartered in Reykjavik, Iceland, Landsbanki Islands hf. --
http://www.landsbanki.is/-- is a financial institution. The Bank
filed for Chapter 15 protection on Dec. 9, 2008 (Bankr. S.D. N.Y.
Case No.: 08-14921). Gary S. Lee, Esq., at Morrison & Foerster
LLP, represents the Debtor. When it filed for protection from its
creditors, it listed assets and debts of more than US$1 billion
each.
LAS VEGAS SANDS: Bank Loan Sells at Substantial Discount
--------------------------------------------------------
Participations in a syndicated loan under which Las Vegas Sands
is a borrower traded in the secondary market at 42.05 cents-on-
the-dollar during the week ended December 26, 2008, according to
data compiled by Loan Pricing Corp. and reported in The Wall
Street Journal. This represents an increase of 3.64 percentage
points from the previous week, the Journal relates. Las Vegas
Sands pays interest at 175 basis points above LIBOR. The
syndicated loan matures on May 1, 2014. The bank loan carries
Moody's B2 rating and Standard & Poor's B+ rating.
About Las Vegas Sands
Based in Las Vegas, Nevada, Las Vegas Sands Corp. (NYSE: LVS) --
http://www.lasvegassands.com/-- owns and operates The Venetian
Resort Hotel Casino, The Palazzo Resort Hotel Casino, and an expo
and convention center. The company also owns and operates the
Sands Macao, the first Las Vegas-style casino in Macao, China.
As of Sept. 30, 2008, the company has $14.7 billion in total
assets, and $12.4 billion in total liabilities. Unrestricted cash
balances as of September 30, stood at $1.28 billion while
restricted cash balances were $239.1 million. Of the restricted
cash balances, $199.6 million is restricted for Macao-related
construction and $32.3 million is restricted for construction of
Marina Bay Sands in Singapore. As of Sept. 30, total debt
outstanding, including the current portion, was $10.35 billion.
* * *
As reported by the Troubled company Reporter on November 14, 2008,
Moody's Investors Service lowered the ratings of Las Vegas Sands,
Corp. and its subsidiaries, including Venetian Casino Resort, LLC
and Venetian Macao Limited. The ratings Moody's re also placed on
review for possible further downgrade. The two-notch downgrade
reflects Las Vegas Sands' considerable leverage, the continuation
of significant negative trends in Las Vegas, and expectation that
these trends will continue in the foreseeable future. The
downgrade also considers recent visitation restrictions in Macao,
China that will likely slow Las Vegas Sands' rate of growth in
that market, at least until the Chinese government decides to
relax these travel restrictions.
Las Vegas Sands, Corp. ratings lowered and placed on review for
possible downgrade:
-- Corporate family rating to B2 from Ba3
-- Probability of default rating to B2 from Ba3
-- $250 million 6.375% senior notes to B2 from Ba3
Venetian Casino Resort, LLC (and its co-issuer Las Vegas Sands,
LLC) ratings lowered and placed on review for possible downgrade:
-- $1 billion revolver expiring 2012 to B2 from Ba3
-- $3 billion term loan due 2014 to B2 from Ba3
-- $600 million delay draw term loan due 2014 to B2 from Ba3
-- $400 million delay draw term loan due 2013 to B2 from Ba3
Venetian Macao Limited ratings lowered and placed on review for
possible downgrade:
-- $700 million revolver expiring 2011 to B2 from B1
-- $1.8 billion term loan due 2013 to B2 from B1
-- $100 million term loan due 2011 to B2 from B1
-- $700 million delay draw term loan due 2012 to B2 from B1
LEVEL 3: S&P Downgrades Corporate Credit Rating to 'SD'
-------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its corporate
credit rating on Level 3 Communications Inc. to 'SD' from 'CC'.
In addition, S&P lowered the ratings on the company's 6%
convertible subordinated notes due 2010 and 2.875% convertible
senior notes due 2010 to 'D' from 'C'. At the same time, S&P
removed these ratings from CreditWatch, where they were placed
with negative implications on Nov. 18, 2008, following Level 3's
announcement of tender offers for three convertible debt issues
due in 2009 and 2010.
The 'C' issue rating on the company's 6% convertible subordinated
notes due 2009 remains on CreditWatch with negative implications
until the below-par tender offer for this issue, which was
extended until Dec. 30, 2008, is completed. Following the
completion of this offer, S&P will lower the issue rating on these
notes to 'D'.
"These rating actions follow the completion of below-par debt
tender offers for two of the three issues," said Standard & Poor's
credit analyst Susan Madison, "and Standard & Poor's viewed these
offers as distressed and, as such, tantamount to default."
LIBERTY TAX III: Sept. 30 Balance Sheet Upside-Down by $7.7MM
-------------------------------------------------------------
Liberty Tax Credit Plus III L.P.'s balance sheet at Sept. 30,
2008, showed total assets of $31,514,578 and total liabilities of
$39,224,140, resulting in a partners' deficit of $7,709,562.
For three months ended Sept. 30, 2008, the company reported net
income of $1,969,093 compared to net income of $79,852,294 for the
same period last year.
For six months ended Sept. 30, 2008, the company reported net
income of $3,540,897 compared to $85,649,404 for the same period
in the previous year.
As of Sept. 30, 2008, the Partnership believes it has sufficient
liquidity and ability to generate cash and to meet existing and
known or reasonably likely future cash requirements over both the
short and long term. In addition, accounts payable from
discontinued operations as of Sept. 30, 2008, and March 31, 2008,
totaled $919,412 and $120,515.
A full-text copy of the 10-Q filing is available for free at
http://ResearchArchives.com/t/s?3700
About Liberty Tax Credit Plus III
Based in New York, Liberty Tax Credit Plus III L.P. is a limited
partnership which was formed under the laws of the State of
Delaware on Nov. 17, 1988. The general partners of the
partnership are Related Credit Properties III L.P., a Delaware
limited partnership, and Liberty GP III Inc., a Delaware
corporation. The general partner of Related Credit Properties III
L.P. is Related Credit Properties III Inc., a Delaware
corporation. The ultimate parent of the general partners is
Centerline Holding Company.
On May 2, 1989, the partnership commenced a public offering of
Beneficial Assignment Certificates representing assignments of
limited partnership interests in the Partnership.
The partnership was formed to invest, as a limited partner, in
other limited partnerships each of which owns one or more
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 some of which may also be eligible for the
historic rehabilitation tax credit.
LINCOLN LOGS: To Stop Reorganization Efforts; Auction on Jan. 28
----------------------------------------------------------------
Adam Sichko at The Business Review (Albany) reports that Lincoln
Logs Ltd., will stop efforts to reorganize.
The Business Review relates that Lincoln Logs will close and will
be sold at auction in Jan. 28, 2009. According to Court
documents, Lincoln Logs is valued at $3.5 million.
The Business Review states that Angela Miller, the attorney for
Lincoln Logs, said that the company found it difficult to secure
necessary credit to emerge from bankruptcy during the ongoing
recession. The report says that sluggish housing market has also
lessened chances for Lincoln Logs' emergence from bankruptcy. The
report quoted Ms. Miller as saying, "It's the liquidity crisis
that we are experiencing." Ms. Miller said that she hopes Lincoln
Logs will be bought as one unit, the report states.
Citing Ms. Miller, The Business Review says that Lincoln Logs has
three part-time workers.
About Lincoln Logs
Richard Considine founded Lincoln Logs Ltd. --
http://www.lincolnlogs.com/-- in 1977. The company has more than
80 dealers nationwide including six in New York. The company
remained small and family-owned until investors entered the
picture in 1982, about a year before Lincoln Logs went public.
The company has a manufacturing facility and a sawmill in
Chestertown. Its main products are log home building packages and
insulated, panelized-wall home building systems. The company is
headquartered in Chestertown, New York.
LYONDELLBASELL INDUSTRIES: Mulls Filing for Chapter 11
------------------------------------------------------
LyondellBasell Industries told lenders on Monday that it is
considering filing for Chapter 11 bankruptcy protection, Jeffrey
McCracken and Ben Casselman at The Wall Street Journal report,
citing people familiar with the matter.
The sources said that LyondellBasell has hired Cadwalader,
Wickersham & Taft LLP as bankruptcy counsel and told lenders it is
trying to line up as much as $2 billion in bankruptcy financing,
WSJ relates. The report says that LyondellBasell has retained
Evercore Partners Inc. as financial adviser and AlixPartners LLC
to assist in the restructuring.
According to WSJ, privately held LyondellBasell was formed in 2007
when Basell International Holdings BV acquired Lyondell Chemical
Co. for $12.7 billion. The report says that Basell International
paid about $48 per share, a premium of 20%, and the resulting debt
burden is proving too heavy amid a drop in sales. Basell
International is a division of Access Industries, which hired the
law firm of Skadden, Arps, Slate, Meagher & Flom LLP as bankruptcy
adviser, the report states.
WSJ relates that LyondellBasell's situation has deteriorated
rapidly over the past three months as global industrial production
has dropped. Falling oil and gas prices made it harder for
LyondellBasell to borrow because its credit is based, in part, on
the value of its inventory, which has also declined, says WSJ.
LyondellBasell has been forced to pay back lenders to remain in
compliance on loans, as chemical and commodity prices fall, WSJ
reports, citing people familiar with the matter.
LyondellBasell, according to WSJ, said in December 2008 that its
subsidiary Equistar Chemicals LP would temporarily idle a
chemicals plant in Chocolate Bayou, Texas, "due to declining
market and economic conditions." WSJ quoted LyondellBasell base
chemicals vice president Vaughn Deasy as saying, "Demand for
petrochemical derivatives continues to be very weak."
WSJ reports that LyondellBasell said on Monday that lenders had
agreed to postpone $160 million in payments to Dec. 29 from
Dec. 19, and that it was "working collaboratively with lenders" on
a further extension. According to the report, LyondellBasell said
that it hired Evercore Partners "to assist in the restructuring
process."
WSJ relates that LyondellBasell's largest lenders include Merrill
Lynch & Co. and Goldman Sachs Group Inc.
Standard & Poor's Selected Default Rating
After Standard & Poor's press release on Dec. 30, 2008,
LyondellBasell said, "Standard & Poor's definition of 'selected
default' related to our corporate credit rating should not be
misinterpreted to suggest that LyondellBasell is currently in
default of its bank agreements. As they stated in their press
release, 'This is a default in our opinion according to our
definitions and criteria.' LyondellBasell is not currently in
default according to its agreements with its lenders."
About LyondellBasell
LyondellBasell Industries -- http://www.lyondellbasell.com/-- is
a refiner of crude oil; a significant producer of gasoline
blending components; a global manufacturer of chemicals and
polymers, including polyolefins and advanced polyolefins; and the
leading developer and licensor of technologies for the production
of polymers.
Following the acquisition of Lyondell in 2007, LyondellBasell
became the world's largest independent producer of polypropylene
and advanced polyolefins products, a leading supplier of
polyethylene, and a global leader in the development and licensing
of polypropylene and polyethylene processes and related catalyst
sales. The group is estimated to generate 2007 revenues of US$44
billion and EBITDA of US$4.1 billion reflecting strong performance
of Lyondell and Basell businesses at the top of the cycle.
As reported by the Troubled Company Reporter on Nov. 18, 2008,
Moody's Investors Service downgraded the Corporate Family Rating
of LyondellBasell Industries AF SCA to B3 from B1. The ratings on
the first lien facilities have been downgraded to B1/ LGD 2(27)
and the ratings on the legacy notes of Basell and Lyondell have
been downgraded to Caa2, with various LGD rates. LBI has
rearranged its USD 8 billion second lien facility into
US$5.5 billion second lien facilities and USD 2.5 billion third
lien facility. The new facilities have been rated Caa1/ LGD 5
(73) and Caa2/ LGD 5 (86) respectively. The outlook on the
ratings remains negative.
As reported by the TCR Europe on Nov. 26, 2008, Fitch Ratings
downgraded Netherlands-based petrochemicals company Lyondell
Basell Industries AF SCA's Long-term Issuer Default rating to 'B-
'(B minus) from 'B+' while maintaining a Negative Outlook. At the
same time, Fitch affirmed LBI's Short-term IDR at 'B'.
MANITOWOC CO: Bank Loan Sells at Substantial Discount
-----------------------------------------------------
Participations in a syndicated loan under which Manitowoc Co. Inc.
is a borrower traded in the secondary market at 66.42 cents-on-
the-dollar during the week ended December 26, 2008, according to
data compiled by Loan Pricing Corp. and reported in The Wall
Street Journal. This represents an increase of 1.29 percentage
points from the previous week, the Journal relates. Manitowoc Co.
pays interest at 350 basis points above LIBOR. The syndicated
loan matures on April 14, 2014. The bank loan carries Moody's Ba2
rating and Standard & Poor's BB+ rating.
Headquartered in Maniwotoc, Wisconsin, The Manitowoc company
Inc. (NYSE: MTW) -- http://www.manitowoc.com/-- provides
lifting equipment for the global construction industry,
including lattice-boom cranes, tower cranes, mobile telescopic
cranes, and boom trucks. As a leading manufacturer of ice-cube
machines, ice/beverage dispensers, and commercial refrigeration
equipment, the company offers the broadest line of cold-focused
equipment in the foodservice industry. In addition, the company
is a provider of shipbuilding, ship repair, and conversion
services for government, military, and commercial customers
throughout the maritime industry. The company has regional
offices in Mexico and Brazil. Revenues for the twelve months
ended March 31, 2008 totaled about US$4.2 billion.
* * *
On July 31, TCR reported that Moody's Investors Service affirmed
the Ba2 Corporate Family and Probability of Default ratings of
Manitowoc following its announced syndication of a new credit
facility to fund its acquisitions of Enodis plc. Moody's also
assigned a Ba2 rating to the proposed $2.925 billion senior
secured bank credit facility and lowered the senior unsecured
notes to B1 from Ba3. The outlook remains stable.
MASONITE INTERNATIONAL: Bank Loan Sells at Substantial Discount
---------------------------------------------------------------
Participations in a syndicated loan under which Masonite
International is a borrower traded in the secondary market at
45.60 cents-on-the-dollar during the week ended December 26, 2008,
according to data compiled by Loan Pricing Corp. and reported in
The Wall Street Journal. This represents an increase of 1.50
percentage points from the previous week, the Journal relates.
Masonite International pays interest at 200 basis points above
LIBOR. The syndicated loan matures on April 6, 2103. The bank
loan carries Moody's Caa3 rating and Standard & Poor's CC rating.
About Masonite International Corporation
Based in Ontario, Canada, Masonite International Corporation --
http://www.masonite.com/-- (TSE:MHM) is a vertically integrated
producer, manufacturing key components of doors, including
composite molded and veneer door facings, glass door lites and cut
stock. The company provides these products to its customers in
more than 70 countries around the world. The company is a wholly
owned subsidiary of Masonite International Inc. It offers a range
of interior and exterior doors. Masonite Canada operates Masonite
International's Canadian subsidiaries, well as certain other non-
United States subsidiaries.
Default Under Credit Facilities
The company was not in compliance with the financial covenants
contained under its senior secured credit agreement as at Sept.
30, 2008. The company has said it continues to negotiate with the
lenders party to the senior secured credit agreement regarding an
amendment to the terms of the agreement and a waiver of its non-
compliance.
On November 25, 2008, the company entered into an amendment to its
credit agreement and an extension of the forbearance agreement
dated September 16, 2008, with its bank lenders. The extension
provides the company time to develop a revised business plan for
2009, which will serve as the basis of its efforts to create an
appropriate capital structure to support Masonite's long-term
business objectives. The forbearance agreement termination date
is the earliest of December 19, 2008, any other Event of Default,
and any Termination Event as defined in the Bondholder Forbearance
Agreement dated November 17, 2008. The forbearance agreement can
also be terminated if the company fails to deliver certain
financial information by agreed upon dates.
The amendment with the lenders provides for the December 19, 2008
deadline to be further extended to January 15, 2009, provided that
Masonite (1) delivers a draft business plan by December 19, 2008,
(2) reviews the plan with the bank lenders by December 22, 2008,
(3) delivers a final business plan by January 15, 2009; and (4)
complies with a number of other provisions related to the
negotiation of a consensual restructuring plan. As of December
23, 2008, no agreement has been reached and there can be no
guarantee that an agreement will be reached on terms acceptable to
the company or its lenders.
On September 16, 2008, the Agent, on behalf of the lenders, under
the company's credit facility provided notice under the company's
senior subordinated note indentures of the imposition of a payment
blockage period with respect to the company's Notes. Such notice
was permitted by the terms of the indentures as a result of the
company's non-compliance with certain financial covenants under
its credit facility. The company is not permitted for a period of
up to 179 days from September 16, 2008 to make interest or
principal payments under the Notes. In accordance with this
restriction, the company did not make a scheduled payment of
interest on the Notes when due on October 15, 2008 although it had
sufficient cash on hand to make such payment. Failure to make
such interest payment within 30 days of October 15, 2008
constituted an event of default under the note indentures,
permitting holders of at least 30% in principal amount of
outstanding notes to declare the full amount of the notes
immediately due and payable.
On November 17, 2008, the company entered into a forbearance
agreement with holders of a majority of the Notes issued by two of
the company's subsidiaries. Masonite expects that the forbearance
agreement will provide the company additional time and flexibility
as it continues to pursue opportunities to develop an appropriate
capital structure to support its long-term strategic plan and
business objectives. The forbearance agreement was effective
through December 31, 2008.
The company has said its ability to continue as a going concern is
dependent upon its ability to complete a successful renegotiation
of its Credit Agreement terms and Notes.
* * *
As reported in the Troubled company Reporter on Sept. 1, 2008,
Standard & Poor's Ratings Services lowered its long-term corporate
credit ratings on Masonite International Inc. (Masonite) and its
subsidiaries, Masonite International Corp. and Masonite US Corp.,
to 'CCC+' from 'B-'. S&P also lowered the senior secured debt
rating on Masonite to 'B' from 'B+'. The ratings remain on
CreditWatch with negative implications, where they were placed
April 18, 2008.
MDWERKS INC: Outside Counsel Quits Due to Conflict of Interest
--------------------------------------------------------------
MDwerks, Inc., on December 18, 2008, was given Notice of
Withdrawal of Representation by its outside counsel due to a
conflict of interest. On December 19, the company's now former
outside counsel advised the company's transfer agent, Corporate
Stock Transfer, of their resignation as counsel and their
withdrawal of their standing opinion issued on December 6, 2006,
regarding the Notice of Effectiveness of Registration Statement.
According to Howard B. Katz, the company's Chief Executive
Officer, management is conducting a search for new counsel, which
it hopes to retain within the next 30 days, and will provide any
additional disclosure required to be made as a result of the
change of counsel or withdrawal of the standing opinion of counsel
issued on December 6, 2006.
MDwerks also disclosed that effective December 1, 2008, David M.
Barnes entered into an employment agreement as President of the
Company. Under the terms of the employment agreement that extends
for a term expiring on December 31, 2010, Mr. Barnes has agreed to
devote substantially all of his time, attention and ability, to
the business of the Company. The employment agreement provides
that Mr. Barnes will receive a base salary for such services
during the balance of 2008 and all of 2009 at an annual rate of
$210,000 and at an annual rate of $231,000 for calendar 2010.
Mr. Barnes was also granted the right to extend the term of his
employment agreement for up to two years at any time up to
December 31, 2010 with 10% increases in annual base salary. In
addition, Mr. Barnes may be entitled to receive, at the sole
discretion of the company's Board of Directors, cash bonuses based
on the executive meeting and exceeding performance goals of the
Company. The cash bonuses may range up to 100% of the executive's
annual base salary. Mr. Barnes is entitled to participate in the
company's 2005 Incentive Compensation Plan and receive other
company-paid employee benefits. The company also agreed to pay or
reimburse Mr. Barnes up to a specified monthly amount for the
business use of his personal car and cell phone and for
reimbursement of relocation expenses to South Florida.
Mr. Barnes has served as a member of the company's Board of
Directors, Audit Committee and Compensation Committee of the
Company since November 16, 2005. Mr. Barnes will continue to
serve as a member of the Board, but has resigned his memberships
in the Audit and Compensation Committees. Mr. Barnes has also
served as Chief Financial Officer of Neah Power Systems, Inc.,
(NPWS:OTCBB), from April 2006 through August 2008, and was Chief
Financial Officer of Cyber Defense Systems, Inc., (CYDF:OTCBB),
from August 2005, through November 2007. In addition, Mr. Barnes
was a Director, Executive Vice President and Chief Financial
Officer of American United Global, Inc., now Solar Thin Films,
Inc. (SLTN:OTCBB), from April 1996, through July 2006. Mr. Barnes
is also a member of the Board, Audit Committee and Compensation
Committee of China Direct, Inc. (CDS:NASDAQ), Searchhelp, Inc.
(SHLP:OTCBB), and Thinkpath, Inc. (THPHF:OTCBB).
Mr. Katz served as President of the Company since October 10,
2008, when he was appointed by the Board to also serve as
President, a position that had been vacant since June 20, 2008.
Mr. Katz has been Chief Executive Officer of the Company since
November 16, 2005.
About Mdwerks Inc.
Based in Deerfield Beach, Florida, MDwerks Inc. (OTC BB: MDWK)
-- http://www.mdwerks.com/-- provides healthcare professionals
with automated electronic insurance claims management solutions
and advance funding of medical claims.
Going Concern Doubt
As reported in the Troubled Company Reporter on Oct. 23, 2008,
Sherb & Co., LLP, in Boca Raton, Florida, expressed substantial
doubt about MDwerks Inc.'s ability to continue as a going concern
after auditing the company's consolidated financial statements for
the year ended Dec. 31, 2007. The auditing firm pointed to the
company's recurring losses from operations.
Revenues have not been significant enough to support the company's
daily operations. Management may need to raise additional funds
by way of a public or private offering and make strategic
acquisitions.
For three months ended Sept. 30, 2008, the company reported net
loss of $2,605,510 compared to net loss of 2,184,840 for the same
period in the previous year. For the nine months ended Sept. 30,
2008, the company incurred net loss of $9,374,052 compared to net
loss of $7,259,932 for the same period in the previous year.
MDwerks' balance sheet at Sept. 30, 2008, showed total assets of
$5,950,271, total liabilities of $5,600,729 and stockholders'
equity of $349,542.
METRO PCS: Bank Loan Sells at Substantial Discount
--------------------------------------------------
Participations in a syndicated loan under which Metro PCS Wireless
is a borrower traded in the secondary market at 77.70 cents-on-
the-dollar during the week ended December 26, 2008, according to
data compiled by Loan Pricing Corp. and reported in The Wall
Street Journal. This represents an increase of 1.55 percentage
points from the previous week, the Journal relates. Metro PCS
Wireless pays interest at 225 basis points above LIBOR. The
syndicated loan matures on October 11, 2013. The bank loan
carries Moody's Ba3 rating and Standard & Poor's BB- rating.
MetroPCS Wireless Inc., a wholly owned subsidiary of MetroPCS
Communications Inc., provides unlimited use wireless service for a
flat monthly fee with no signed contract in major metropolitan
markets of the U.S. The company is based in Dallas, Texas.
MICROMET INC: Defers CFO's Incentives Eligibility to Jan. 2010
--------------------------------------------------------------
Micromet, Inc. disclosed in a regulatory filing with the
Securities and Exchange Commission that it amended the employment
agreement with Barclay Phillips, senior vice president and chief
financial officer of the company.
On Aug. 30, 2008, Micromet Inc. and Mr. Phillips entered into an
employment agreement.
The amendment to the employment agreement provides that
Mr. Phillips' eligibility to participate in the company's
Management Incentive Compensation Plan, or in other bonus plan as
may be adopted by the board of directors for the senior executive
officers of the company, will be deferred until calendar year
beginning Jan. 1, 2010. In addition, the amendment to the
employment agreement provides that certain relocation benefits
payable to Mr. Phillips may be extended to Dec. 31, 2010.
The description of the amendment to Mr. Phillips' employment
agreement is not complete and is qualified in its entirety by
reference to the amendment, which will be filed as an exhibit to
the company's Annual Report on Form 10-K for the year ending
Dec. 31, 2008.
About Micromet Inc.
Micromet Inc. (Nasdaq: MITI) -- http://www.micromet-inc.com/-- is
a biopharmaceutical company developing novel, proprietary
antibodies for the treatment of cancer, inflammation and
autoimmune diseases. Four of its antibodies are currently in
clinical trials, while the remainder of the product pipeline is in
preclinical development.
For the three months ended September 30, 2008, Micromet reported a
net loss of $12.9 million, or $0.31 per basic and diluted common
share, compared to a net loss of $2.3 million, or $0.06 per basic
and diluted common share, for the same period in 2007. The net
loss for the three months ending September 30, 2008 includes a
non-cash charge of $6.8 million reflecting a change in the fair
value of warrants issued in connection with a 2007 PIPE financing.
The Company recorded a $1.2 million non-cash gain for this item in
the third quarter of 2007.
For the nine months ended September 30, 2008, Micromet reported a
net loss of $27.4 million, or $0.67 per basic and diluted common
share, compared to a net loss of $16.3 million, or $0.47 per basic
and diluted common share, for the same period in 2007. The net
loss for the nine months ending September 30, 2008 includes a non-
cash charge of $8.5 million reflecting a change in the fair value
of warrants issued in connection with a 2007 PIPE financing,
compared to a $1.7 million non-cash gain for this item in the same
period of 2007.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $39.0 million, total liabilities of $37.1 million and
stockholders' equity of about $1.9 million.
The company has cash and cash equivalents of $15.9 million and
$27.1 million as of Sept. 30, 2008, and Dec. 31, 2007. The
decrease resulted from its net loss of $27.4 million for the nine
months ended Sept. 30, 2008, partially offset by $14.2 million in
non-cash expenses and $4.5 million in changes in working capital.
Going Concern Doubt
The company disclosed in its Form 10-Q for the second quarter of
2008, that as of June 30, 2008, it had an accumulated deficit of
$179.4 million, and that it expects to continue to incur
substantial, and possibly increasing, operating losses for the
next several years. These conditions create substantial doubt
about our ability to continue as a going concern.
The company is continuing its efforts in research and development,
preclinical studies and clinical trials of its product candidates.
These efforts, and obtaining requisite regulatory approval prior
to commercialization, will require substantial expenditures. Once
requisite regulatory approval has been obtained, substantial
additional financing will be required to manufacture, market and
distribute its products in order to achieve a level of revenues
adequate to support its cost structure.
Management believes it has sufficient resources to fund its
required expenditures into the second quarter of 2009, without
considering any potential milestone payments that it may receive
under current or future collaborations, or any future capital
raising transactions or drawdowns from the committed equity
financing facility with Kingsbridge Capital Limited.
MOVIDA COMMS: To Seek Approval of Disclosure Statement on Jan. 5
----------------------------------------------------------------
KCMVNO, Inc. formerly known as Movida Communications, Inc. asks
the U.S. Bankruptcy Court for the District of Delaware to approve
the Disclosure Statement filed in support of its Chapter 11 Plan
of Liquidation, as containing "adequate information" as that term
is defined in Sec. 1125(a)(1) of the Bankruptcy Code.
KCMVNO, Inc. intends to present the Disclosure Statement, and any
changes or modifications thereto, for approval at a hearing before
the Hon. Brendan Linehan Shannon on Jan. 5, 2009, at 10:00 a.m.
(prevailing Eastern Time).
The Debtor proposes that the Court establish Feb. 13, 2009, at
4:00 p.m. (prevailing Eastern time) as the voting deadline, which
will serve as the deadline by which all ballots accepting or
rejecting the Plan shall be receved at the Ballot Tabulation
Center, unless extended by the Debtor.
The Debtor also proposes the Court set Feb. 13, 2008, at 4:00 p.m.
(prevailing Eastern Time) as the last date for filing and serving
written objections, comments or responses to confirmation of the
Plan.
Settlement
The Plan implements a compromise and settlement with respect to
the Prepetition Lenders Claim and the Prepetition Lenders
Deficiency Claim. The Debtor, the Official Committee of Unsecured
Creditors and the Prepetition Lenders have negotiated and propose
to settle certain disputes regarding potential causes of action
the Debtor and the Committee may hold against the Prepetition
Lenders and the validity of the Prepetition Lenders Claim and the
Prepetition Lenders Deficiency Claim. The Committee has
investigated the potential claims against the Prepetition Lenders
and notwithstanding that investigation, the Committee, the Debtor
and the Prepetition Lenders have each recognized that litigating
the Prepetition Lenders Claim and the claims of the Debtor against
the Prepetition Lenders would involve substantial costs and
significant risk. Accordingly, the parties agreed to the
Settlement.
The Settlement provides that in consideration for the waiver and
release of claims as provided in section 7.2 of the Plan, the
Prepetition Lenders have agreed to the creation of a Class 5
Distribution Fund and to waive their rights to receive their Pro
Rata share of the Class 5 Distribution Fund on account of their
Class 3 Prepetition Lenders Claim. The Class 5 Distribution Fund
is comprised of 11% of the net proceeds of Causes of Action
(subject to an aggregate cap of $1 million unless Class 3
Prepetition Lenders Claims are paid in full), thereby enabling the
holders of Allowed Class 5 General Unsecured Claims to share in
such litigation recoveries.
The Settlement additionally provides for the creation of the
Liquidation Trust to, among other things, prosecute, collect,
compromise and settle Liquidation Trust Causes of Action;
prosecute, compromise and settle objections to Claims; and
distribute the Class 5 Distribution Fund in accordance with the
terms of the Plan. The Litigation Trust will be funded by the
residual of the $125,000 carve-out for Committee professionals.
Overview of the Plan
The Plan provides for the Debtor's assets to be liquidated and for
the proceeds of such liquidation to be distributed to holders of
Allowed Claims in accordance with the terms of the Plan and the
priority of claims provisions of the Bankruptcy Code. Except as
otherwise provided by order of the Bankruptcy Court, distributions
will occur on the Effective Date or as soon thereafter as is
practicable and at various intervals thereafter. The Post-
Confirmation Debtor will be dissolved as soon as practicable after
the final distributions under the Plan.
As of Oct. 1, 2008, the Debtor had $1,168,555 of Cash on hand. As
of Dec. 6, 2008, the Debtor estimates that it will have
approximately $1,116,129 of Cash on hand to fund the Plan and make
distributions to holders of Allowed Claims in accordance with the
Plan.
On the Effective Date and automatically and without further
action, (i) each existing member of the board of directors of the
Debtor will be deemed to have resigned, (ii) the new board members
shall be elected, and (iii) the Plan Administrator and the Post-
Confirmation Debtor shall be authorized and empowered to take all
such actions and measures necessary to implement and administer
the terms and conditions of the Plan.
Classification and Treatment of Claims and Interests
A. Unclassified Claims
Administrative Claims, Priority Tax Claims entitled to priority in
payment pursuant to Sec. 507(a)(8) of the Bankruptcy Code, and Fee
Claims pursuant to Sections 328, 330(a), 503 or 1103 of the
Bankruptcy Code, are unclassified under the Plan. Holders of
these claims will receive 100% distribution under the Plan.
Class 1 Other Priority Claims, entitled to priority in payment
pursuant to Sec. 507(a) of the Bankruptcy Code, will receive 100%
distribution under Plan. Class 1 Claims are unimpaired under the
Plan and holders thereof are conclusively deemed to have accepted
the Plan.
Class 2 Miscellaneous secured Claims will receive 100%
distribution or return of the collateral securing such claim.
Holders of Claims in Class 2 are not impaired and are therefore
not entitled to vote.
Class 3 Prepetition Lenders Claim will receive between 13% and 22%
of their estimated allowed claim of $18,158,387. The holders of
the Class 3 Prepetition Lenders Claim shall receive the Cash on
hand after all distributions have been made pursuant to the Plan,
plus the Proceeds of the Causes of Action, less (i) the aggregate
distributions to holders of Allowed Administrative Claims,
Allowed Fee Claims, Allowed Priority Claims, Allowed Other
Priority Claims, and Allowed Miscellaneous Secured Claims, (ii)
the Class 5 Distribution Fund, and (iii) the funds transferred
to the Post-Confirmation Debtor Reserve. Upon the closing of the
Chapter 11 Case, the Plan Administrator shall distribute any
balance remaining in the Post-Confirmation Debtor Reserve to
the holder of the Allowed Class 3 Prepetition Lenders Claim in
accordance with the terms of the Plan and the Settlement.
Class 4 Senior Subordinated Notes Claim, with an estimated allowed
amount of $31,480,000, will receive a still undetermined
distribution dependent upon the proceeds received from the
successful prosecution of the Causes of Action. In connection
with the Settlement, the Class 4 Senior Subordinated Notes Claims
shall be treated pari passu with the Class 5 General Unsecured
Claims.
Class 5 General Unsecured Claims, with an estimated claim of
between $38,000,000 and $40,000,000, will receive a yet
undetermined distribution dependent upon the proceeds received
from the successful prosecution of the Causes of Action.
The holders of Allowed Class 5 General Unsecured Claims against
the Debtor shall receive their Pro Rata share of the Class 5
Distribution Fund.
Class 6 Interests, which represents all Interests in the Debtor
will receive 0% distribution under the Plan. On the Effective
Date, all Class 6 Interests shall be deemed canceled, null and
void and of no force and effect.
Under the Plan, Claims in Classes 3, 4 and 5 are or may be
impaired and are entitled to vote on the Plan. Holders of
Interests in Class 6 will receive no distribution and accordingly
such holders are deemed not to have accepted the Plan.
A full-text copy of the Debtor's Disclosure Statement and the
Debtor's Chapter 11 Plan of Liquidation, annexed at Exhibit A to
the Disclosure Statement, is available for free at:
http://bankrupt.com/misc/KCMVNO_DisclosureStatement.pdf
About Movida Communications
Headquartered in Kansas City, Missouri, Movida Communications Inc.
-- http://www.movidacellular.com/-- now known formally as KCMVNO
Inc., is a wireless service provider that offers pay-as-you-go
wireless voice and data communications services using a national
providers digital network. The company filed for Chapter 11
protection on March 31, 2008 (Bankr. D. Del. Case No. 08-10600).
Michael R. Nestor, Esq., at Young Conaway Stargatt & Taylor, in
Wilmington, Delaware, represents the Debtor. The U.S. Trustee for
Region 3 appointed creditors to serve on an Official Committee
of Unsecured Creditors. David W. Carickhoff, Jr., Esq., at Blank
Rome LLP represents the Committee. When the Debtor filed
for protection from its creditors, it listed asstes between
$10 million to $50 million and debts between $50 million to
$100 million. No trustee, examiner or official committee of
unsecured creditors has been appointed in this case.
MOVIDA COMMS: To Sell Remaining Inventory for $900,000
------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
has authorized Movida Communications Inc., nka KCMVNO Inc., to
sell its remaining inventory for at least $900,000.
According to Bloomberg's Bill Rochelle, the Bankruptcy Court
authorized the disposal of the assets through a private sale and
without an auction under a formula containing a minimum price of
$900,000.
As reported by the Troubled Company Reporter on Nov. 3, 2008, the
Debtor has told the Court that it has prepared a Chapter 11 plan
and a disclosure statement, which have been distributed for review
to the Debtor's board of directors and its professionals, and the
Official Committee of Unsecured Creditors, but unable to finalize
the plan and disclosure statement before the current plan filing
deadline.
About Movida Communications
Headquartered in Kansas City, Missouri, Movida Communications Inc.
-- http://www.movidacellular.com/-- now known formally as KCMVNO
Inc., is a wireless service provider that offers pay-as-you-go
wireless voice and data communications services using a national
providers digital network. The company filed for Chapter 11
protection on March 31, 2008 (Bankr. D. Del. Case No. 08-10600).
Michael R. Nestor, Esq., at Young Conaway Stargatt & Taylor, in
Wilmington, Delaware, represents the Debtor. The U.S. Trustee for
Region 3 appointed creditors to serve on an Official Committee
of Unsecured Creditors. David W. Carickhoff, Jr., Esq., at Blank
Rome LLP represents the Committee. When the Debtor filed
for protection from its creditors, it listed asstes between
$10 million to $50 million and debts between $50 million to
$100 million. No trustee, examiner or official committee of
unsecured creditors has been appointed in this case.
MPC CORP: Will Close Offices at North Sioux City
------------------------------------------------
MPC Corp. will close its North Sioux City, Dakota, offices as part
of a liquidation process, Kcautv.com reports, citing Kory Menken,
an official at North Sioux City Economic Development.
According to Kcautv.com, about 50 workers will be laid off.
Mr. Menken said in a statement, "Today's announcement is the final
chapter in an important segment of North Sioux City's history.
However, instead of dwelling on the past and on things that we
cannot change, we as a community must continue to move forward and
focus on the future. Despite the significant changes at Gateway
and its successors, the technology industry remains an important
component of our local economy. We sincerely hope the individuals
impacted by today's events and previous reductions in force will
find new employment opportunities within our area, and encourage
them to contact the South Dakota Department of Labor at (605) 242-
5445."
About MPC Corporation
Headquartered in Nampa, Idaho, MPC Corporation --
http://www.mpccorp.com-- sells personal computer and provides
computer softwares and hardwares to mid-size businesses,
government agencies and education organizations. The Debtors
acquired Gateway Professional Divison from Gateway Inc. and
Gateway Technologies Inc. in October 1, 2007. The company and
eight of its affiliates filed for Chapter 11 protection on
Nov. 6, 2008 (Bankr. D. Del. Lead Case No. 08-12673). Richard A.
Robinson, Esq., at Reed Smith LLP, represents the Debtors in
their restructuring efforts. The Debtor selected Focus Management
Group USA, LLC, as its financial advisor. As of
June 30, 2008, the Debtors have $258.3 million in total assets and
$277.8 million in total debts.
NETVERSANT SOLUTIONS: Court OKs Patriarch Sale and Settlement
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware has
authorised NetVersant Solutions Inc. to sell its assets to its
secured lenders, led by Patriarch Partners, Bloomberg's Bill
Rochelle reports.
NetVersant's asset purchase agreement with Patriarch allowed it to
further market test its assets through a Dec. 17 auction, but no
additional qualified bids were submitted at the auction.
Patriarch Partners will release certain of its secured claims as
and will assume certain liabilities as consideration to the
Debtor. NetVersant, according to Mr. Rochelle, owes $110 million
on a credit agreement secured by substantially all of its assets.
At the Dec. 19 hearing, the Bankruptcy Court also approved a
settlement between Patriarch and the official committee of
unsecured creditors. In return for not objecting to the sale,
Patriarch set aside $3 million for payment exclusively to
unsecured creditors, Mr. Rochelle reports. If Patriarch is able
to resell the business within 18 months for enough to repay its
pre-bankrupt debt in full, it must pay unsecured creditors another
$2 million, the report adds.
About NetVersant Solutions
Headquartered in Houston, Texas, NetVersant Solutions, Inc. --
http://www.netversant.com/-- provides wireless network
infrastructure services. The company also provides an array of
voice, video and data communication services. The company and 20
of its affiliates filed for Chapter 11 protection on November 19,
2008 (Bankr. D. Del. Lead Case No. 08-12973). Daniel B. Butz,
Esq., and Gregory W. Werkheiser, Esq., at Morris, Nichols, Arsht &
Tunnell, represents the Debtors in their restructuring efforts.
The Debtor selected Porter & Hedges LLP as local counsel. When
they filed for protection from their creditors, they listed
assets and debts between $100 million and $500 million each.
OAKRIDGE HOMES: May Employ RE/MAX as Real Estate Broker
-------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
granted Oakridge Homes, LLC permission to employ RE/MAX of Santa
Clarita as its real estate broker.
As reported in the Troubled Company Reporter on Nov. 10, 2008,
RE/MAX of Santa Clarita will market 15 of the 20 lots at
the Debtor's residential subdivision in Stevenson Ranch, in
California.
Any sale of lots at the Property by the Debtor will be subject of
a separately filed motion to obtain Court authority to sell the
property or by way of a Chapter 11 plan of reorganization.
Pursuant to the Listing Agreements, the Debtor shall pay RE/MAX an
8% commission, to be shared up to 4% with the buyer's agent. The
initial term of the listing will be from Sept. 29, 2008, to Sept.
29, 2009.
Patricia Rose, a realtor with RE/MAX of Santa Clarita, assured the
Court that RE/MAX does not hold or represent any interest adverse
to the Debtor or its estate and that her position with respect to
WRA Engineering, which filed a mechanic's lien against the
Property for unpaid services rendered to the Debtor, does not
alter her status or RE/MAX's status as a "disinterested person" as
that term is defined in Sec. 101(14) of the Bankruptcy Code.
Ms. Rose disclosed that she and her husband were the former owners
of WRA Engineering. Ms. Rose informed the Court they continue to
receive regular payments from WRA for the unpaid balance of the
full purchase price, and that they continue to work for WRA and
draw regular salaries from the company.
Based in Valencia, California, Oakridge Homes, LLC is a
homebuilder. The company filed for Chapter 11 on June 13, 2008
(C.D. Calif. Case No. 08-13977). Gil Hopenstand, Esq., Ron
Bender, Esq., and Tania M. Moyron, Esq., at Levene,
Neale, Bender, Rankin & Brill LLP, represent the Debtor as
counsel. The company listed assets of $20,038,129 and liabilities
of $28,552,123.
PARENT CO: Wants to Access $10.9MM of D.E. Shaw DIP Financing
-------------------------------------------------------------
The Parent Company and its debtor-affiliates ask the United States
Bankruptcy Court for the District of Delaware for authority to
obtain up to $10.9 million in postpetition financing under a
debtor-in-possession agreement with D.E. Shaw Laminar Portfolios
LLC and D.E. Shaw Laminar Lending 3 (C) LLC, as administrative
agent.
The Debtors want to access $3.5 million under lenders' facility on
the interim. According to the motion, the proceeds of the
financing will be used to:
i) refinance and "roll-up" the Debtors' existing senior first
lien revolving credit facility;
ii) provide general working capital; and
iii) pay ordinary operating costs and expenses of the Debtors
during the term of the DIP facility in accordance to the
proposed budget.
The DIP facility will mature by Feb. 6, 2009.
The Debtors' cash flow projection showed that they need to make
$3.5 million cash disbursements to pay salaries, wages and
benefits, inventory purchases and other operating expenses. The
absent of financing would disable the Debtors to continue
operations and suffer immediate harm to their estate and
creditors.
Under the agreement, the loan incurs a floating rate coupon equal
to one-month LIBOR plus 1400 basis points per annum -- 4% LIBOR
floor -- compounded on the basis of a 360-day year payable in cash
monthly in arrears. The loan will bear interest at applicable
interest rate plus 2% per annum in the event of default.
The Debtors granted the lenders superpriority administrative
expense claim status priority over and all administrative
expenses.
The Debtors said they were unable to satisfy their financing needs
with unsecured administrative priority loan as such funding is not
available. "The Debtors attempted to negotiate a debtor-in-
possession arrangement with The CIT Group/Business Credit Inc.,
who provided the Debtors' revolving credit facility pursuant to
the prepetition senior credit agreement until the assignment of
that facility to D.E. Shaw on Dec. 12, 2008," Laura Davis Jones,
Esq., at Pachulski Stang Ziehl & Jones LLP, said. "CIT was
unwilling to enter into an arrangement with the Debtors,"
Ms. Jones added.
Klee, Tuchin, Bogdanoff & Stern LLP represents D.E. Shaw.
A full-text copy of the Debtor-In-Possession Agreement is
available for free at http://ResearchArchives.com/t/s?3702
A full-text copy of the Debtor-In-Possession Budget is available
for free at http://ResearchArchives.com/t/s?3703
Headquartered in Denver, Colorado The Parent Company --
http://www.etoys.com-- sells toys and children's products through
its websites. Debtor-affiliate Parent Company is publicly traded
on the NASDAQ under the ticker symbol KIDS. The Debtors lease two
distribution centers in Blairs, Virginia, which holds inventory
and ship products, and Ringgold, Virginia, which is used primarily
for ship-alone items off-site storage. The company and eight of
its affiliates filed for Chapter 11 protection on December 28,
2008 (Bankr. D. Del. Lead Case No. 08-13412). Laura Davis Jones,
Esq., and Michael Seidl, Esq., at Pachulski Stang Ziehl & Jones
LLP, represent the Debtors. The Debtors proposed Clear Thinking
Group LLC as financial advisor; Omni Management Group LLC as
claims agent; and Gibson & Rechan LLC as chief restructuring
officer. When the Debtors filed for protection from their
creditors, they listed $20,633,447 in total assets and
$35,722,280 in total debts.
PETTERS GROUP: Court OKs Appointment of Ch. 11 Trustee
------------------------------------------------------
The U.S. Bankruptcy Court for the District of Minnesota has agreed
to order the appointment of a trustee in the Chapter 11 cases of
Petters Group Worldwide and affiliate Petters Co. The U.S.
Trustee and the official committee of unsecured creditors in the
cases have requested the appointment.
As reported by the Troubled Company Reporter on Dec. 3, 2008,
Petters Group Worldwide and founder Tom Petters were indicted on
charges of mail and wire fraud, and money laundering involving as
much as $2 billion at the company. The indictment alleges
Mr. Petters used the company and its unit, Petters Company Inc.,
to use fake documents to lure hedge funds to invest $1 billion in
bogus transactions between 1995 and 2008.
The Court, though, has not decided if a single trustee would
suffice for both cases, or each company should have its own
trustee, according to Bloomberg's Bill Rochelle. The judge is
concerned there may be conflicts of interest between the two
companies so that one trustee wouldn't be proper.
After the U.S. Trustee makes a decision on whether two report one
or two Ch. 11 trustees, the Court will hold a hearing the week of
Jan. 26 to hear objections to the appointment/s, Mr. Rochelle
reports.
About Petters Group Worldwide
Based in Minnetonka, Minn., Petters Group Worldwide LLC is named
for founder and chairman Tom Petters. The group is a collection
of some 20 companies, most of which make and market consumer
products. It also works with existing brands through licensing
agreements to further extend those brands into new product lines
and markets. Holdings include Fingerhut (consumer products via
its catalog and Web site), SoniqCast (maker of portable, WiFi MP3
devices), leading instant film and camera company Polaroid
(purchased for $426 million in 2005), Sun Country Airlines
(acquired in 2006), and Enable Holdings (online marketplace and
auction for consumers and manufacturers' overstock inventory).
Petters formed the company in 1988.
Petters Company, Inc. is the financing and capital-raising unit of
Petters Group Worldwide, LLC. Petters Company, Inc. and Petters
Group Worldwide, LLC, filed separate petitions for Chapter 11
relief on Oct. 11, 2008 (Bankr. D. Minn. Case No. 08-45257 and
08-45258, respectively). James A. Lodoen, Esq., at Lindquist &
Vennum P.L.L.P., represents the Debtors as counsel. In its
petition, Petters Company, Inc. listed debts of between
$500 million and $1 billion, while its parent, Petters Group
Worldwide, LLC listed debts of not more than $50,000.
As reported in the Troubled Company Reporter on Oct. 7, 2008,
Petters Aviation, LLC,, and affiliates MN Airlines, LLC, doing
business as Sun Country Airlines, Inc., and MN Airline Holdings,
Inc., filed for Chapter 11 bankruptcy protection with the U.S.
Bankruptcy Court for the District of Minnesota on Oct. 6, 2008
(Lead Case No. 08-45136). Petters Aviation, LLC is a wholly owned
unit of Thomas Petters Inc. and owner of MN Airline Holdings,
Inc., Sun Country's parent company.
Polaroid Corp., which was owned by Petters since 2005, filed its
second voluntary petition for Chapter 11 on Dec. 18, 2008 (Bankr.
D. Minn., Lead Case No. 08-46617).
PILGRIM'S PRIDE: Gets Final Approval to Use $450MM DIP Facility
---------------------------------------------------------------
The United States Bankruptcy Court for the Northern District of
Texas authorized Pilgrim's Pride Corporation to access, on a final
basis, $450 million debtor-in-possession financing facility
arranged by Bank of Montreal as lead agent.
The company said it has received interim approval, earlier this
month, to access up to $365 million of its $450 million debtor-in-
possession financing facility pending a final hearing.
The DIP financing facility, combined with cash flows generated
from ongoing operations, allows the company to continue its
business operations on a normalized basis consistent with its pre-
bankruptcy practices.
Although the Debtors' businesses generally generate sufficient
cash to fund their operations on a long-term basis, in the short-
term the Debtors project that they will need the liquidity
provided by the proposed postpetition financing in addition to the
use of the cash that they generate to fund their operations and to
pay the costs and expenses of administering their Chapter 11
cases.
Before the Petition Date, the Debtors and their financial
advisors, Lazard Freres & Co., surveyed various sources of
postpetition financing. Of the possible sources they approached,
they were only able to solicit proposals from two parties who
indicated interest in providing postpetition financing and
provided concrete pricing and structure proposals.
Ultimately, the prepetition lenders led by Bank of Montreal as
agent, were willing to extend postpetition financing. Pursuant
to DIP Financing documents that are subject to definitive
documentation, the consortium of lenders agreed to extend up to
$365,000,000 of postpetition financing on an interim basis and up
to $450,000,000 on a final basis. The Lenders' commitments:
Lender DIP Commitment
------ --------------
Bank of Montreal $100,000,000
Wells Fargo Bank National Association $100,000,000
Cooperatieve Centrale
Raiffeisen-Boerenleenbank, B.A.,
"Rabobank Nederland" New York Branch $100,000,000
U.S. Bank National Association $45,000,000
ING Capital LLC $30,000,000
Calyon New York Branch $30,000,000
Natixis New York Branch $30,000,000
SunTrust Bank $10,000,000
First National Bank of Omaha $5,000,000
--------------
Total $450,000,000
==============
The Debtors and the DIP Lenders have agreed on a budget
projecting cash flow for thirteen weeks beginning the week ended
December 6, 2008, to the week ending February 28, 2009. A full-
text copy of the DIP Budget is available for free at:
http://bankrupt.com/misc/pilgrims_DIPBudget.pdf
According to the Debtors' proposed counsel, Martin A. Sosland,
Esq., at Weil, Gotshal & Manges, LLP, in Dallas, Texas, the DIP
Credit will be available solely for, among others, loans and
letters of credit for payment of normal operating expenses
consistent with the Budget, loans for payment of payment of the
professional fees and expenses of the DIP Agent and the
prepetition BMO Lenders.
The salient terms of the DIP Financing are:
DIP Loan Borrower: Pilgrim's Pride Corporation
Guarantors: Each of the direct and indirect domestic
subsidiaries of PPC, which are debtors-
in-possession
DIP Agent: Bank of Montreal, as administrative and
collateral agent
DIP Commitment: A non-amortizing revolving credit
facility in an aggregate principal amount
of $450,000,000 for revolving advances to
the Borrower, and a $20,000,000 Letter of
Credit Sublimit
Available
Borrowing Base: The lesser of (i) the DIP Commitment or
(ii) the Borrowing Base, which is the sum
of:
* 80% of the then outstanding unpaid
amount of Eligible Receivables; plus
* 65% of the value of Eligible
Inventory consisting of feed grains,
feed and ingredients located at the
Borrower's or a Guarantor's feed
mills or is prepaid in full and is
in transit from the seller thereof
to the Borrower or Guarantor; plus
* 65% of the lower of cost or fair
wholesale market value of Eligible
Inventory consisting of dressed
broiler chickens and commercial
eggs; plus
* 65% of the Value of Eligible
Inventory consisting of live broiler
chickens; plus
* 65% of the standard cost value of
Eligible Inventory consisting of
prepared food products; plus
* 100% of the Agreed Upon Values of
Eligible Inventory consisting of
breeder hens, breeder pullets,
commercial hens, commercial pullets
and hatching eggs; plus
* 40% of the actual costs of Eligible
Inventory consisting of packaging
materials, vaccines, general
supplies, and maintenance supplies;
minus
* the aggregate principal amount of
all loans, letters of credit and
unreimbursed drawings under letters
of credit outstanding under the
Prepetition BMO Credit Facilities;
minus
* the outstanding amount of Secured
Grower Payables that are more than
15 days past due; minus
* a good-faith estimate of the Carve-
Out Amount acceptable to the
Required Lenders; minus
* a good faith estimate of all claims
under Section 503(b)(9) of the
Bankruptcy Code; provided that the
Borrowing Base as determined on any
date will not exceed 222% of the
amount included.
Closing Date: The Closing Date will occur immediately
upon entry of an Interim Financing Order
but no later than December 10, 2008.
Maturity Date: December 1, 2009, subject to extension
for up to an additional six months.
Termination Date: The DIP Commitment will terminate on the
earliest to occur of the (a) Maturity
Date; (b) the date that a plan of
reorganization of any Debtor confirmed by
the Court becomes effective; or (c) the
date the DIP Lenders terminate the DIP
Commitment based on the occurrence of an
Event of Default.
Interest Rate: Principal accrues at 8.0% per annum plus
the Base Rate.
Fees: Fees include (a) a closing fee in an
amount equal to 2.5% of the DIP
Commitment, (b) a DIP Agent's fee in the
amount of $125,000, payable to the DIP
Agent for its own use and benefit, and
(c) a fee of 0.50% per annum on the
unused available DIP Commitment, payable
monthly in arrears to the DIP Agent.
Indemnification: PPC and the Subsidiary Guarantors agree
to indemnify the DIP Agent, the L/C
Issuer, each Lender, and any security
trustee against all losses, claims,
damages, penalties, judgments,
liabilities and expenses.
All obligations of PPC and the Subsidiary Guarantors to the DIP
Lenders in respect of the DIP Credit, including, without
limitation, all accrued interest, costs, fees and expenses will
be secured by:
(a) First priority liens, mortgages and security interests, in
all of the Debtors' property, including, without
limitation, real property, the Cash Collateral Account,
other than any equity interest of Avicola Pilgrim's Pride
de Mexico, S. de. R.L. de C.V.;
(b) A valid, binding, continuing, enforceable, fully-priming
lien, and security interest in the BMO Prepetition
Collateral and the CoBank Prepetition Collateral.
The DIP Priming Liens on the Prepetition Collateral is senior in
all respects to the security interests in, and liens on, the
Prepetition Collateral of the Prepetition Lenders.
The liens and security interests granted to the DIP Lenders are
subject to a Carve-Out, which means an administrative expense
carve-out in the amount of $5,000,000 for (a) the payment of
costs of winding up the Chapter 11 cases and the professional
fees and disbursements of professionals hired by the Debtors and
any official committee appointed in the Chapter 11 cases incurred
after the Termination Date, plus (b) professional fees and
disbursements incurred or accrued and pending applications for
professional fees and disbursements of the Debtors' and any
official committee's professionals prior to the Termination Date
and U.S. Trustee fees.
No part of the Carve-Out, however, will be used to object to or
contest any postpetition lien or Postpetition Obligations or to
challenge any prepetition lien of the Prepetition BMO Agent or
the Prepetition BMO Lenders, or to otherwise seek affirmative
relief against the DIP Agent, the Lenders, the Prepetition BMO
Agent or the Prepetition BMO Lenders.
Events of Default include the usual provisions as deemed
appropriate by the DIP Lenders, together with the Events of
Default which are substantially the same as those in the
Prepetition BMO Credit Agreement. Among others, the DIP
Agreements provide that a default will occur if:
(a) the Borrower or any Subsidiary, or any member of its
Controlled Group, will fail to pay when due an amount or
amounts aggregating in excess of $10,000,000, which it
will have become liable to pay to the Pension Benefit
Guaranty Corporation or to a Plan under Title IV of the
Employee Retirement Income Security Act;
(b) a trustee under Chapter 11 will be appointed in any of the
Chapter 11 cases;
(c) an order of the Court will be entered in any of the
Chapter 11 cases appointing an examiner or other person
with enlarged powers relating to the operation of the
business under Section 1106(b); or
(d) the DIP Orders are be amended, reversed, stayed, vacated
or modified, in the case of an amendment or modification
in a manner which materially and adversely affects the
rights of the Lenders or the DIP Agent.
The Borrower and each Guarantor unconditionally agrees to forever
indemnify and covenants not to sue for any claim for contribution
against, each Indemnitee for any damages arising out of any of:
-- any presence, Release, threatened Release or disposal of
any hazardous or toxic substance or petroleum by the
Borrower or any Subsidiary or otherwise occurring on or
with respect to its Property;
-- the operation or violation of any Environmental Law,
whether federal, state, or local, and any regulations
promulgated thereunder, by the Borrower or any Subsidiary
or otherwise occurring on or with respect to its Property;
-- any claim for personal injury or property damage in
connection with the Borrower or any Subsidiary or otherwise
occurring on or with respect to its Property; or
-- the inaccuracy or breach of any environmental
representation, warranty or covenant by the Borrower.
A full-text copy of the DIP Agreement, subject to definitive
documentation, is available for free at:
http://bankrupt.com/misc/pilgrims_DIPPact.pdf
In support of the Debtors' DIP Financing and Cash Collateral
request, they filed with the Court a declaration of Barry
Stratton, a vice president of the Bank of Montreal in its special
assets division. A full-text copy of the Stratton Declaration is
available for free at:
http://bankrupt.com/misc/pilgrims_strattondecl.pdf
About Pilgrim's Pride
Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation
(NYSE: PPC) -- http://www.pilgrimspride.com/-- produces,
distributes and markets poultry processed products through
retailers, foodservice distributors and restaurants in the U.S.,
Mexico and in Puerto Rico. In addition, the company owns 34
processing plants in the United States and 3 processing plants
n Mexico. The processing plants are supported by 42 hatcheries,
31 feed mills and 12 rendering plants in the United States and 7
hatcheries, 4 feed mills and 2 rendering plants in Mexico.
Moreover, the company owns 12 prepared food production facilities
in the United States. The company employs about 40,000
people and has major operations in Texas, Alabama, Arkansas,
Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania,
Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with
other facilities in Arizona, Florida, Iowa, Mississippi and Utah.
Pilgrim's Pride Corporation and six other affiliates filed Chapter
11 petitions on December 1, 2008 (Bankr. N. D. of Texas, Lead Case
No. 08-45664). Pilgrim's Pride has engaged Stephen A. Youngman,
Esq., Martin A. Sosland, Esq., and Gary T. Holzer, Esq., at Weil,
Gotshal & Manges LLP, as bankruptcy counsel. The Debtors have
also tapped Baker & McKenzie LLP as special counsel. Lazard
Freres & Co., LLC is the company's investment bankers and William
K. Snyder of CRG Partners Group LLC as chief restructuring
officer. The company's claims and noticing agent is Kurtzman
Carson Consulting LLC. Pilgrim's Pride had total assets of
$3,847,185,000, and debts of $2,700,139,000 as of June 28, 2008.
A nine-member committee of unsecured creditors has been appointed
in the case.
PROPEX INC: Gets Go-Signal for $65MM Exit Financing from Wayzata
----------------------------------------------------------------
Bankruptcy Data reports that the U.S. Bankruptcy Court for the
Eastern District of Tennessee approved Propex Inc.'s request to
enter into a proposed exit financing agreement with Wayzata
Investment Partners LLP and to pay a work fee of $150,000 and
related expenses. According to Bankruptcy Data, on December 11,
2008, Wayzata sent the Debtors a non-binding letter agreement
expressing interest in providing the Debtors with a delayed draw
term exit facility in the amount of $65,000,000 that will mature
in four years after the effective date of the Plan. Wayzata is a
19% holder of the Debtors' pre-petition secured term debt facility
and has had ongoing access to the Debtors' financial information.
About Propex Inc.
Headquartered in Chattanooga, Tennessee, Propex Inc. --
http://www.propexinc.com/-- produces geosynthetic, concrete,
furnishing, and industrial fabrics and fiber. It also produces
primary and secondary carpet backing. Propex operates in North
America, Europe, and Brazil.
The company and its debtor-affiliates filed for Chapter 11
protection on Jan. 18, 2008 (Bankr. E.D. Tenn. Case No.
08-10249). The Debtors have selected Edward L. Ripley, Esq.,
Henry J. Kaim, Esq., and Mark W. Wege, Esq. at King & Spalding, in
Houston, Texas, to represent them. The Official Committee of
Unsecured Creditors have tapped Ira S. Dizengoff, Esq., at Akin
Gump Strauss Hauer & Feld, LLP, in New York, to be its counsel.
Propex Inc., and its affiliates delivered to the Court a Joint
Plan of Reorganization and Disclosure Statement on October 29,
2008. Propex's exclusive period to solicit acceptances of the
Plan expires Dec. 29, 2008.
As of June 29, 2008, the Debtors' balance sheet showed total
assets of US$562,700,000, and total debts of US$551,700,000.
The Debtors have filed their Disclosure Statement and Plan of
Reorganization on October 29, 2008.
(Propex Bankruptcy News; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
QUEBECOR WORLD: Gets Conversion Notice of Issued Preferred Shares
-----------------------------------------------------------------
Quebecor World Inc. received notices in respect of 256,364 of its
remaining 1,696,428 issued and outstanding Series 5 Cumulative
Redeemable First Preferred Shares requesting conversion into the
company's Subordinate Voting Shares.
In accordance with the provisions governing the Series 5 Preferred
Shares, registered holders of such shares are entitled to convert
all or any number of their Series 5 Preferred Shares into a number
of Subordinate Voting Shares effective as of March 2, 2009,
provided such holders gave notice of their intention to convert at
least 65 days prior to the Conversion Date.
The Series 5 Preferred Shares are convertible into that number of
the company's Subordinate Voting Shares determined by dividing
CDN$250 together with all accrued and unpaid dividends on such
shares up to February 28, 2009 by the greater of:
i) CDN$C2; and
ii) 95% of the weighted average trading price of the Series 5
Preferred Shares on the Toronto Stock Exchange during the
period of twenty trading days ending on Feb. 26, 2009.
The next conversion date on which registered holders of the Series
5 Preferred Shares will be entitled to convert all or any number
of such shares into Subordinate Voting Shares is June 1, 2009, and
notices of conversion in respect thereof must be deposited with
the company's transfer agent, Computershare Investor Services
Inc., by March 27, 2009.
About Quebecor World
Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE:
IQW) -- http://www.quebecorworldinc.com-- provides market
solutions, including marketing and advertising activities, as well
as print solutions to retailers, branded goods companies,
catalogers and to publishers of magazines, books and other
printed media. It has 127 printing and related facilities
located in North America, Europe, Latin America and Asia. In
the United States, it has 82 facilities in 30 states, and is
engaged in the printing of books, magazines, directories, retail
inserts, catalogs and direct mail.
The company has operations in Mexico, Brazil, Colombia, Chile,
Peru, Argentina and the British Virgin Islands.
Ernst & Young, Inc., the monitor of Quebecor World Inc., and its
affiliates' reorganization proceedings under the Canadian
Companies' Creditors Arrangement Act, filed a petition under
Chapter 15 of the Bankruptcy Code before the U.S. Bankruptcy Court
for the Southern District of New York on September 30, 2008, on
behalf of QWI (Bankr. S.D.N.Y. Case No. 08-13814). The Chapter 15
case is before Judge James M. Peck. Kenneth P. Coleman, Esq., at
Allen & Overy LLP, in New York, serves as counsel to the Chapter
15 petitioner.
QWI and certain of its subsidiaries commenced the CCAA proceedings
before the Quebec Superior Court (Commercial Division) on Jan. 20,
2008. The following day, 53 of QWI's U.S. subsidiaries, including
Quebecor World (USA), Inc., filed petitions under Chapter 11 of
the U.S. Bankruptcy Code.
The Honorable Justice Robert Mongeon oversees the CCAA case.
Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the
company in the CCAA case. Ernst & Young Inc. was appointed as
Monitor.
Quebecor World (USA) Inc., its U.S. subsidiary, along with other
U.S. affiliates, filed for chapter 11 bankruptcy before the U.S.
Bankruptcy Court for the Southern District of New York (Lead Case
No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter
LLP, represents the Debtors in their restructuring efforts. The
Official Committee of Unsecured Creditors is represented by Akin
Gump Strauss Hauer & Feld LLP.
Based in Corby, Northamptonshire, Quebecor World PLC --
http://www.quebecorworldplc.com-- is the U.K. subsidiary of
Quebecor World Inc. that specializes in web offset magazines,
catalogues and specialty print products for marketing and
advertising campaigns. The company employs around 290 people.
Quebecor PLC was placed into administration with Ian Best and
David Duggins of Ernst & Young LLP appointed as joint
administrators effective Jan. 28, 2008.
QWI is the only entity involved in the CCAA proceedings that is
not a Debtor in the Chapter 11 Cases.
As of June 30, 2008, Quebecor World's unaudited consolidated
balance sheet showed total assets of $3,412,100,000 total
liabilities of $4,326,500,000 preferred shares of $62,000,000
and total shareholders' deficit of $976,400,000.
The Hon. Robert Mongeon of the Quebec Superior Court has extended
until Dec. 14, 2008, the stay under the Canadian Companies'
Creditors Arrangement Act.
REALOGY CORP: Withdraws $500MM Exchange Offer After Court Defeat
----------------------------------------------------------------
Realogy Corp. said it is immediately terminating its invitations
for commitments of up to $500,000,000 aggregate principal amount
of new second lien incremental term loans from holders of each of
its 10.50% Senior Notes due 2014, 12.375% Senior Subordinated
Notes due 2015 and 11.00%/11.75% Senior Toggle Notes due 2014.
Existing Notes previously delivered will be promptly returned to
the holders.
According to Bloomberg's Bill Rochelle, Realogy withdrew the
exchange offer after the Delaware Chancery Court ruled that the
offer violated the trust indenture and ignored governing payment
priority rules. Mr. Rochelle notes that the offer would have
given debtholders new securities in exchange for roughly
$1.1 billion in the three existing note issues that total about
$3.16 billion. If fully subscribed, the offer would have reduced
debt by $592 million, he added.
On Nov. 26, 2008, Bank of New York Mellon, the trustee under the
Indenture, dated as of April 10, 2007, pursuant to which the
Senior Toggle Notes were issued, and High River Limited
Partnership, a holder of Senior Toggle Notes, filed a complaint in
the Court of Chancery of the State of Delaware seeking, among
other things, declaratory relief that the incurrence of the Second
Lien Incremental Loans constitute a breach of the Senior Toggle
Notes Indenture. On December 18, the Court granted the
plaintiffs' motion for partial summary judgement with respect to
the Contract Claim, Realogy said in a filing with the Securities
and Exchange Commission.
In a news release, Realogy said it anticipates it will continue to
explore other opportunities to reduce its outstanding indebtedness
and improve its capital structure. "The termination of the
transaction will have no impact on the operations of the Company,"
it added.
As reported in the Dec. 23, 2008 edition of the Troubled Company
Reporter, Moody's lowered the Corporate Family Rating of Realogy
to Caa3 from Caa2 following the withdrawal of its offer to
exchange new second lien term loans to holders of its senior
unsecured cash pay, unsecured toggle and subordinated notes at a
significant haircut. Moody's also lowered the senior secured
credit facility to Caa1 from B3 and affirmed the SGL-4 speculative
grade liquidity rating. Moody's Senior Credit Officer Lenny
Ajzenman stated that "the lower CFR and senior secured rating
reflect Moody's view that there is a significant risk of a default
or balance sheet restructuring over the medium term. Realogy,
according to Moody's has weak credit metrics with leverage of over
13 times for the twelve months ended September 30, 2008."
Standard & Poor's Ratings Services affirmed its 'CC' corporate
credit rating on Realog, and lowered its issue-level rating on the
company's first-lien senior secured credit facility to 'CCC-' from
'CCC+' to bring it one notch higher than the corporate credit
rating, in line with S&P's notching criteria for a '2' recovery
rating. The '2' recovery rating indicates S&P's expectation of
substantial (70% to 90%) recovery for lenders in the event of a
payment default. "The 'CC' corporate credit rating reflects our
previously stated view that Realogy's ability to service its
current capital structure over the intermediate term will be
challenged, and that it will need to adopt a financial strategy of
recapitalization in some form," said Standard & Poor's credit
analyst Emile Courtney.
About Realogy Corp.
Realogy Corporation, a global provider of real estate and
relocation services, has a diversified business model that
includes real estate franchising, brokerage, relocation and title
services. Realogy's world-renowned brands and business units
include Better Homes and Gardens(R) Real Estate, CENTURY 21(R),
Coldwell Banker(R), Coldwell Banker Commercial(R), The Corcoran
Group(R), ERA(R), Sotheby's International Realty(R), NRT LLC,
Cartus and Title Resource Group. Headquartered in Parsippany,
N.J., Realogy has approximately 12,000 employees worldwide.
Realogy is owned by affiliates of Apollo Management, L.P., a
leading private equity and capital markets investor.
RESERVE MANAGEMENT: SEC to Charge Co. with Securities Law Breach
----------------------------------------------------------------
All Headline News reports that Reserve Management Co. said that
the U.S. Securities and Exchange Commission will bring an
enforcement action against the company, charging it and its senior
executives with violations of securities law, in connection with
the collapse Reserve Primary Fund in September.
According to AHN, SEC said that it will file civil charges against
Reserve Management President Bruce R. Bent; his two sons, Bruce
Bent II and Arthur Bent III, who are senior executives at the
company; and the management company.
As reported by the Troubled Company Reporter on Dec. 9, 2008,
Reserve Primary Fund admitted that it gave inaccurate information
in its initial disclosure of fund trouble in September 2008.
Primary Fund said that the price actually dropped below the $1 per
share that money-market funds must maintain five hours earlier
than previously stated.
Reserve Management said in a statement, "An investment in the Fund
is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. Although the Fund
seeks to preserve the value of your investment at $1.00 per share,
it is possible to lose money by investing in the Fund."
AHN relates that shareholders have filed at least 19 lawsuits
against Reserve Management, causing the firm's clients to leave
the fund before it dropped below the $1-per-share price.
* * *
As reported in the Troubled Company Reporter on Sept. 25, 2008,
Moody's Investors Service downgraded and left on review for
further downgrade 10 money market and bond funds managed by
Reserve Management Company, Inc., including The Reserve Primary
Fund's 'Caa' rating.
RIVIERA HOLDINGS: Allows Two Shareholders to Acquire 15% Stake
--------------------------------------------------------------
Riviera Holdings Corporation signed definitive agreements with two
existing shareholders enabling them to increase their holdings to
up to 15% of the company's outstanding common stock.
Under the agreements, which are separate but substantially
identical, Plainfield Special Situations Master Fund Limited and
Desert Rock Enterprises LLC, each of whom own under 10% of the
company's outstanding shares, may acquire common stock from
Riviera or from a seller or sellers other than the company.
Among other things, the agreements provide for:
-- the waiver of the company's voting limitation set forth in
its Articles of Incorporation;
-- an agreement by both Plainfield and Desert Rock not to
acquire over 15% of Riviera's common stock, unless approved
by the company's board of directors;
-- a standstill agreement which ends on either the day after
the company's 2010 annual stockholders' meeting, Sept. 1,
2010, or the ending of any period during which another
investor is subject to a similar standstill, whichever
comes first; and
-- that Plainfield and Desert Rock obtain any approvals that
may be required from the Nevada and Colorado gaming
authorities in connection with any acquisition.
Riviera has no plans at the present time to issue and sell any
shares of its common stock to either Plainfield or Desert Rock.
The company also disclosed that effective Nov. 19, 2008, the
board has, in connection with the Acquisition, (i) waived, in
accordance with subsection 7(g) of Article III of the Articles,
the voting limitation set forth in subsection 7(b) of Article III
of the Articles with respect to each Investor Group, and (ii)
approved the Acquisition in accordance with the provisions of
subsection 78.438(1) of Title 7 of the Nevada Revised Statutes.
A full-text copy of the Agreement with Plainfield Special
Situations Master Fund Limited is available for free at
http://ResearchArchives.com/t/s?36f9
A full-text copy of the Agreement with Desert Rock Enterprises LLC
is available for free at http://ResearchArchives.com/t/s?36fb
About Riviera Holdings Corporation
Headquartered in Las Vegas, Riviera Holdings Corporation (Amex:
RIV) -- http://www.rivierahotel.com/-- owns and operates the
Riviera Hotel and Casino on the Las Vegas Strip and the Riviera
Black Hawk Casino in Black Hawk, Colorado.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $218.2 million and total liabilities of $264.5 million,
resulting in a stockholders' deficit of about $46.3 million.
For three months ended Sept. 30, 2008, the company posted net loss
of $3.4 million compared with net loss of $18.2 million for the
same period in the previous year.
For nine months ended Sept. 30, 2008, the company posted net loss
of $826 million compared with net loss of $12.1 million for the
same period in the previous year.
At Sept. 30, 2008, the company has cash and cash equivalents of
$20.5 million. The company's cash and cash equivalents
decreased by $8.3 million during the nine months ended Sept. 30,
2008 due to $18.0 million in net cash used in investing activities
partially offset by $7.2 million in net cash provided by operating
activities and $2.5 million in net cash provided by financing
activities. Cash and cash equivalents increased
$7.7 million during the nine months ended Sept. 30, 2007, due to
$17.3 million in net cash from provided by operating activities
partially offset by $8.9 million in net cash used in investing
activities and $0.7 million in net cash used in financing
activities.
* * *
As reported in the Troubled Company Reporter on Nov. 14, 2008,
Moody's Investors Service downgraded Riviera Holding Corporation's
corporate family, probability of default, and senior secured
ratings to B3 from B2. The rating outlook is negative.
SENTINEL MANAGEMENT: Ct. Confirms 4th Amended Plan of Liquidation
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois
confirmed on Dec. 15, 2008, the Fourth Amended Chapter 11 Plan of
Liquidation filed by Frederick J. Grede, the Chapter 11 trustee
for Sentinel Management Group, Inc., and the Official Committee of
Unsecured Creditors on Dec. 11, 2008.
Frederick J. Grede is appointed as the Liquidation Trustee in
accordance with the Plan.
A full-text copy of the Sentinel Management Group, Inc. and the
Official Committee of Unsecured Creditors' Fourth Amended Plan of
Liquidation, dated Dec. 11, 2008, is available for free at:
http://bankrupt.com/misc/SentinelManagement_4thAmendedPlan.pdf
About Sentinel Management
Based in Northbrook, Illinois, Sentinel Management Group Inc. --
http://www.sentinelmgi.com/-- is a full service firm offering a
variety of security solutions. The company filed a voluntary
chapter 11 petition on Aug. 17, 2007 (Bankr. N.D. Ill. Case No.
07-14987). Ronald Barliant, Esq., Randall Klein, Esq., and
Kathryn A. Pamenter, Esq., at Goldberg, Kohn, Bell & Black
Rosenbloom & Moritz, Ltd. represent the Debtor as counsel. Quinn,
Emanuel Urquhart Oliver & Hedges, LLP, represents the Official
Committee of Unsecured Creditors as counsel. DLA Piper US LLP is
the Committee's co-counsel. When the Debtor sought bankruptcy
protection, it listed assets and debts of more than $100 million.
On Aug. 28, 2007, the Court approved Frederick Grede as the
Debtor's Chapter 11 Trustee. Marc I. Fenton, Esq., at DLA Piper
US LLP, and Vincent E. Lazar, Esq, at Jenner & Block LLP,
represent the Chapter 11 Trustee as counsel.
TARGA RESOURCES: Bank Loan Sells at Substantial Discount
--------------------------------------------------------
Participations in a syndicated loan under which Targa Resources
Incorporation is a borrower traded in the secondary market at
66.17 cents-on-the-dollar during the week ended December 26, 2008,
according to data compiled by Loan Pricing Corp. and reported in
The Wall Street Journal. This represents a drops of 4.00
percentage points from the previous week, the Journal relates.
Targa Resources pays interest at 237.5 basis points above LIBOR.
The bank loan carries Moody's B1 rating and Standard & Poor's BB-
rating.
Targa Resources, Inc. is headquartered in Houston, Texas.
As of March 31, 2008, TRI had consolidated total assets of $3.6
billion and LTM EBITDA of approximately $377 million. On a
consolidated basis, it owns or operates approximately 11,000 miles
of natural gas pipelines, approximately 700 miles of NGL
pipelines, and 22 natural gas processing plants with access to
natural gas supplies in the Permian Basin, north Texas, onshore
southern Louisiana, and the Gulf of Mexico. In addition, TRI has a
NGL logistics and marketing business, with 16 storage, marine and
transport terminals with above ground NGL storage capacity of
approximately 900 MBbl, net NGL fractionation
capacity of approximately 300 MBbl/d, and NGL storage wells with a
capacity of approximately 67 MMBbl.
TRI owns 24.5% of the outstanding units and the 2% GP interest in
Targa Resources Partners LP (NGLS). Because it is the GP and
therefore has control, TRI consolidates NGLS in its financial
statements. NGLS' assets include natural gas gathering and
processing operations in north Texas, the Permian Basin, and
southwest Louisiana. NGLS had total assets of approximately $1.5
billion and LTM EBITDA of approximately $199 million as of March
31, 2008.
TELTRONICS INC: September 30 Balance Sheet Upside Down by $6.8MM
----------------------------------------------------------------
Teltronics Inc. bared an upside down balance sheet in a regulatory
filing in November with the Securities and Exchange Commission.
As of September 30, 2008, Teltronics had $12.3 million in total
assets and $19.1 million in total liabilities, resulting in
$6.8 million in shareholders' deficiency. The company's balance
sheet also showed strained liquidity with $10.7 million in total
current assets against $13.7 million in total current liabilities.
The company also had $31.5 million in accumulated deficit and
other comprehensive losses as of September 30.
The company reported $75,000 in net income on $8.0 million in net
sales during the three months ended September 30, 2008. The
company had $1.4 million in net losses on $11.7 million in net
sales the past nine months ended September 30, 2008.
A full-text copy of Teltronics' financial report is available at
no charge at:
http://ResearchArchives.com/t/s?3710
Teltronics noted that it has designed plans to increase gross
margin and decrease operating cost. If the plans are not
successful it may impair the Company's ability to meet the
financial covenants associated with the Company's credit facility.
"Should these plans not meet our objectives, the Company may need
to raise additional funds through debt or equity offerings. There
can be no assurance as to the availability of any needed funding
and, if available, that the source of funds would be available on
terms and conditions acceptable to us," Teltronics said.
"If the Company is unable to increase sales, lower costs, or raise
additional funds this will have a material adverse effect on our
business. No adjustments have been made to the Company's
condensed Consolidated Financial Statements based upon these plans
and assumptions."
About Teltronics Inc.
Headquartered in Sarasota, Florida, Teltronics Inc. (OTC BB: TELT)
-- http://www.teltronics.com/-- designs, develops, installs,
manufactures and markets electronic hardware and application
software products, and engages in electronic manufacturing
services primarily in the telecommunication industry. The company
focuses on three major telecommunications markets. The first is
the monitoring of alarms from PBXs, voice mail systems and data
networks. The second telecommunications market is in the Digital
Switching Systems arena which involves providing telephone
switches to Small and Medium Business Markets as well as advanced
Automatic Call Distribution. The company's premier product in
this market is the 20-20(TM) switching system. The third
telecommunications market is VoIP.
TRANSPORTATION INVESTMENTS: Moody's Changes Outlook on Ba3 CPR
--------------------------------------------------------------
Moody's Investors Service has changed the outlook on the Ba3
Corporate Family Rating Transportation Investments Holding Ltd.,
which is the parent company of National Transportation Group, or
N-Trans, to negative.
The rating action reflects a negative pressure on the domestic
transportation industry under the global financial crisis and
weakening economic conditions in Russia and hence on NT's business
and cash generation, which may result in a tightening liquidity
later in 2009, given the company's relatively short debt maturity
profile.
Moody's acknowledges NT's consistently strong operating
performance supported by a significant investment in its high-
margin port terminal operations, with the group's adjusted EBITA
margin expected to reach 25% this year. NT is confident in this
achievement despite negative trends evolving from the end of 3Q
2008 in Russia's rail transportation industry, the group's key
business segment. NT benefits from its strong market position in
this industry and port terminal operations, which should maintain
a long-term growth potential, even if its implementation were
delayed in the current environment. Though its rail
transportation business may be affected by a further reduction in
demand from large industrial customers, in particular from steel
producers, and by potentially depressed pricing, NT is expected to
continue to enjoy sustainable revenues from oil-related
transportation operations and remain a rail transportation and
terminal service provider of choice for Russian largest oil
companies. The company has built up a cushion under its
relatively strong financial profile (with Debt/EBITDA expected to
be around 2.0x and FFO/Net Debt at above 35% at the end of 2008)
to withstand some further negative pressure from the weakening
economic conditions.
Moody's understands that NT's liquidity management is largely
based on its ability to maintain a strong cash generation and
control very tightly its discretionary expenses such as capex and
dividends. However, with NT's short-term maturities accounting
for approximately a half of the company's debt as of the end of 3Q
2008, a potentially increasing pressure on revenues and cash
generation may make its liquidity position tighter going forward.
The largest portion of these maturities is represented by TIHL's
US$175 million bond, which TIHL may be required to buy back in
June 2009 under the put option incorporated into the bond formally
due 2010. As of the beginning of 4Q 2008, following large
dividend payments, the short-term maturities of around US$514
million, including the mentioned bond, were not covered by the
company's sizable cash balance (US$204 million) and available
credits lines (US$43 million, excluding additionally available
funding for a special project).
Moody's rating currently anticipates that the company will be able
to timely fill in its liquidity resources from operating cash flow
to meet its 2009 debt obligations. The agency positively notes
NT's flexibility with its capex programme, which is highly
discretionary after heavy investments of the past two years, and
takes additional comfort from the stated commitment of the group's
private shareholders to adjust, if necessary, dividend payments to
prioritize debt obligations and the company's de-leveraging.
Moody's understands that the 2008 significant dividend payments
should be regarded as extraordinary, supported by proceeds from
the successful IPO of Globaltrans, NT's rail transportation
subsidiary and from sale of some non-core assets on the background
NT's strong operating cash flow generation. Nevertheless, the
liquidity profile may be challenged going forward by a weakening
economic environment, possible reduction of cushion under
financial covenants and difficult access to external funding.
Exposure to the ruble depreciation driven by the predominance of
foreign currency debt vs. the company's largely ruble revenues
appears currently manageable under NT's adequate financial
profile. However, the foreign currency risk may increase, if the
ruble depreciation were to speed up, in particular for some
companies of the group with a smaller cushion under financial
covenants.
In the current market environment, no upward pressure on the Ba3
rating could be envisaged. The outlook could be stabilized should
the company demonstrate its ability to withstand negative market
trends and develop in line with its projections, in particular
maintain its EBITDA, keep its leverage below 2.0x, and have short-
term refinancing needs addressed well in advance.
The rating would be under pressure should there be a persistent
reduction in the demand for the company's services and the
respective deterioration of the company's cash generation, with
(i) EBITA margins falling below 25%, (ii) Debt/EBITDA trending
back towards 2.5x; (iii) FFO/Net Debt decreasing materially below
35%. Moody's would expect the company to prioritize debt
reduction in the determination of its dividend policy in 2009 to
have RCF/Net Debt improve to more than 25%. Failure to manage its
liquidity profile in a proactive manner would put downward
pressure on the rating as well.
TULLY'S COFFEE: $6,500,000 Northrim Loan Extended to March 31
-------------------------------------------------------------
Tully's Coffee Corporation executed on Dec. 22, 2008, amendments
to its secured credit facility with Northrim Funding Services, a
division of Northrim Bank. The Northrim Facility provides a
credit facility of up to $6,500,000, subject to the amount of
eligible accounts receivable. The extended term of the agreement
is March 31, 2009, unless terminated earlier by either party.
Borrowings under the facility bear interest at the prime rate plus
7% with a floor of 12% and a ceiling of 14% during the contract
term and are secured by the company's inventories and the
assignment, with recourse, of the company's accounts receivable.
Fees in the amount of $43,958 were paid to Northrim in relation to
the extension of the Northrim Facility.
A full-text copy of the amendment to the Northrim Facility is
available at no charge at:
http://ResearchArchives.com/t/s?370d
About Tully's Coffee
Headquartered in Seattle, Tully's Coffee Corporation --
http://www.tullys.com/-- is a specialty retailer and wholesaler
of fully handcrafted roasted, gourmet coffees.
Going Concern Doubt
As reported in the Troubled Company Reporter on Sept. 24, 2008,
Moss Adams LLP of Seattle, Washington, expressed substantial doubt
about Tully's Coffee Corporation's ability to continue as a going
concern after auditing the company's consolidated financial
statements for the periods ended March 30, 2008, and April 1,
2007. The firm reported that the company has incurred recurring
operating losses, an accumulated, and total stockholders' and
working capital deficit.
Tully's Coffee Corporation's consolidated balance sheet at
September 28, 2008, showed $19.8 million in total assets and
$32.4 million in total liabilities, resulting in a $12.6 million
stockholders' deficit. The company's September 30 balance sheet
also showed strained liquidity with $16.0 million in total current
assets available to pay $28.7 million in total current
liabilities. The company also had $104.4 million in accumulated
deficit. Tully's Coffee posted $801,000 in net losses on
$10.0 million in net sales for the 13-week period ended Sept. 28,
2008.
TULLY'S COFFEE: No Final Date Yet on Special Shareholders Meeting
-----------------------------------------------------------------
Tully's Coffee Corporation filed a Form PRER14A (Preliminary Proxy
Soliciting materials) with the Securities and Exchange Commission
on December 26, 2008, indicating that it will hold a special
meeting of shareholders to, among others, consider and approve the
company's sale of assets associated with its wholesale business
and supply chain to Green Mountain Coffee Roasters, Inc.
According to the Form PRER14A, the special shareholders' meeting
will be held at a yet-to-be-determined date in 2008. The company
has not provided any updates on the exact schedule of the meeting
or whether it has been adjourned to some later date in 2009.
According to information posted on the company's Web site, the
company's new bylaws approved in July 2007 give the company more
flexibility to hold the annual shareholder meeting anytime during
each calendar year. "This means that we can hold our annual
shareholders meeting anytime in 2008. Previously, the company was
required to hold the annual shareholders meeting before the end of
each fiscal period," the information said.
The company agreed on September 15, 2008, to sell the assets
associated with its wholesale business and supply chain to Green
Mountain for $40.0 million, subject to adjustment based on the
value of the assets being sold as of the closing date. In
addition to applying the proceeds of the transaction to repay in
full the company's outstanding indebtedness and all trade payables
related to the wholesale business, the company intends to use the
remaining proceeds to satisfy current liabilities and fund the
operation of its domestic retail and specialty businesses. The
company also intends to make a cash distribution to shareholders,
subject to availability of funds and restrictions under applicable
law.
As a condition to closing the transaction, Green Mountain requires
the company to obtain shareholder approval of the asset sale and
of an amendment to the company's current article of incorporation
pursuant to which the shareholders acknowledge that completion of
the transaction with Green Mountain would not cause a distribution
under the liquidation preferences of the company's articles of
incorporation.
D.A. Davidson & Co. served as the exclusive financial advisor to
Tully's in the transaction.
Tully's wholesale division distributes handcrafted coffees and
related products via office coffee services, food service
distributors and more than 5,000 supermarkets primarily located in
the Western states. The agreement between the two companies
leverages an existing relationship through Green Mountain's
ownership of Keurig(R) Single-Cup Brewing system. Tully's
produces a branded, successful line of K-Cup portion packs and has
been a Keurig licensee since November 2005.
Green Mountain Coffee Roasters, Inc. (NASDAQ: GMCR) is recognized
as a leader in the specialty coffee industry for its award-winning
coffees, innovative brewing technology and socially responsible
business practices. GMCR manages its operations through two wholly
owned business segments: Green Mountain Coffee and Keurig. Its
Green Mountain Coffee division sells more than 100 high-quality
coffee selections, including Fair Trade Certified(TM) organic
coffees, under the Green Mountain Coffee(R) and Newman's Own(R)
Organics brands through its wholesale, direct mail and e-commerce
operations -- http://www.GreenMountainCoffee.com/ Green Mountain
Coffee also produces its coffee as well as hot cocoa and tea in K-
Cup(R) portion packs for Keurig(R) Single-Cup Brewers. Keurig,
Incorporated is a pioneer and leading manufacturer of gourmet
single-cup coffee brewing systems for offices, homes and hotel
rooms. Keurig markets its patented brewers and K-Cups(R) through
office distributors, retail and direct channels --
http://www.Keurig.com/ K-Cups are produced by a variety of
licensed roasters including Green Mountain Coffee and Tully's.
Green Mountain Coffee Roasters, Inc. has been recognized
repeatedly by CRO Magazine, Forbes and SustainableBusiness.com as
a good corporate citizen and an innovative, high-growth company.
About Tully's Coffee
Headquartered in Seattle, Tully's Coffee Corporation --
http://www.tullys.com/-- is a specialty retailer and wholesaler
of fully handcrafted roasted, gourmet coffees.
Going Concern Doubt
As reported in the Troubled Company Reporter on Sept. 24, 2008,
Moss Adams LLP of Seattle, Washington, expressed substantial doubt
about Tully's Coffee Corporation's ability to continue as a going
concern after auditing the company's consolidated financial
statements for the periods ended March 30, 2008, and April 1,
2007. The firm reported that the company has incurred recurring
operating losses, an accumulated, and total stockholders' and
working capital deficit.
Tully's Coffee Corporation's consolidated balance sheet at
September 28, 2008, showed $19.8 million in total assets and
$32.4 million in total liabilities, resulting in a $12.6 million
stockholders' deficit. The company's September 30 balance sheet
also showed strained liquidity with $16.0 million in total current
assets available to pay $28.7 million in total current
liabilities. The company also had $104.4 million in accumulated
deficit. Tully's Coffee posted $801,000 in net losses on
$10.0 million in net sales for the 13-week period ended Sept. 28,
2008.
TWEETER OPCO: Ch. 7 Trustee Affirms Asset Case, Seeks Bar Date
--------------------------------------------------------------
George L. Miller, the interim Chapter 7 Trustee overseeing the
Tweeter Opco, LLC's liquidation proceeding, clarified with the
U.S. Bankruptcy Court for the District of Delaware in a December
18, 2008 notice that the Opco Debtors' bankruptcy cases are asset
cases. Mr. Miller also asks the Clerk of the Court to fix a bar
date for the filing of claims against the Opco Debtors' estates.
On December 18, 2008, Epiq Bankruptcy Solutions, LLC, filed with
the Court a consolidated list of 295 claims filed during the
Chapter 11 cases of Tweeter Opco, LLC, and its debtor affiliates,
totaling $1,939,572:
Claim Classification Aggregate Claim Amount
-------------------- ----------------------
Unsecured $1,326,935
Secured 381,090
Priority 192,443
Administrative 39,104
A more detailed list of the Opco Claims can be accessed for free
at: http://bankrupt.com/misc/TweeterOpco_ClaimsRegister.pdf
About Tweeter Opco
Tweeter Opco, LLC, was formed in July 2007 to acquire the business
operations and assets of Tweeter Home Entertainment Group, Inc.
The company filed for Chapter 11 protection on Nov. 5, 2008
(Bankr. D. Delaware Case No. 08-12646). Chun I. Jang, Esq., and
Cory D. Kandestin, Esq., at Richards, Layton & Finger, P.A.,
assisted the company in its restructuring effort. The company
listed assets of $50 million to $100 million and debts
of $50 million to $100 million.
Judge Mary Walrath of the U.S. Bankruptcy Court for the District
of Delaware converted the Opco Debtors' Chapter 11 cases to
Chapter 7 liquidation proceedings effective as of December 5,
2008. George L. Miller from the accounting firm Miller Coffey
Tate has been appointed to serve as interim trustee of the Chapter
7 proceedings of Tweeter Opco, LLC, and its affiliates.
(Tweeter Bankruptcy News, Issue No. 32; Bankruptcy Creditors'
Service, Inc., <http://bankrupt.com/newsstand/>or 215/945-7000).
TWEETER OPCO: Ch. 7 Trustee to Sell Inventory in Apto Warehouse
---------------------------------------------------------------
George L. Miller, as interim Chapter 7 Trustee of Tweeter Opco
LLC and its debtor affiliates, asked for permission from the U.S.
Bankruptcy Court for the District of Delaware to sell the Opco
Debtors' equipment, inventory, fixtures and other property, free
and clear of liens, claims and encumbrances.
Upon hearing the merits of the request, Judge Mary Walrath
authorized the Chapter 7 Trustee to conduct a sale of the Opco
Debtors' property at a warehouse owned by Apto Solutions.
Various parties aired objections to the terms of the Warehouse
Sale. Richard Blumenthal, attorney general for the State of
Connecticut, said the Warehouse Sale violates Section 363 of the
Bankruptcy Code to the extent that it includes property in
Connecticut which has already been sold to consumers. Universal
Remote Control, Inc., stated it has a valid and properly perfected
consignment interest and is therefore entitled to the return of
its consigned inventory.
The Opco Debtors commenced going out of business sales at their
retail locations before December 2008. The Opco Debtors' cases,
however, were converted to Chapter 7 proceedings before the GOB
sales were consummated. Mr. Miller says several utility
providers have threatened or have actually cut off utility
services. He also informs the Court that he has investigated the
possibility of re-opening the Opco Debtors' retail locations to
complete the GOB sales, but the anticipated expenses and the
logical difficulties in re-opening the retail stores have been
daunting. Thus, Mr. Miller is compelled to vacate as many store
locations as possible before December 31, 2008, to maximize or
eliminate any further rent charges.
Mr. Miller has also deemed it appropriate to retain a sales agent,
Apto Solutions, Inc., to assist in the liquidation of the Opco
Debtors' property as the property is located at a number of
facilities across the U.S.
Mr. Miller believes that there is value in the Opco Debtors'
property, which could be recovered. The Property is subject to a
blanket lien held by Schultze Asset Management. Schultze has
agreed to a carve out from the proceeds of the Warehouse Sale for
the Chapter 7 Trustee's compensation, compensation for the
Trustee's counsel, and a distribution to the Opco Debtors'
general unsecured creditors.
Pursuant to the Carve Out Agreement, 70% of the net sale proceeds
from the auction sale will be available after Apto Solutions'
commission is deducted. From the 70% of the sale proceeds, fee
for the Chapter 7 Trustee and his counsel's fee will be deducted.
Schultze will get 87.5% of the remaining funds while the Opco
Debtors' bankruptcy estates will get the remaining 12.5%.
In addition, the Opco Debtors are in possession of certain
property that is on consignment from various third parties. Mr.
Miller is willing to include the Consignment Property in the
Warehouse Sale. To the extent the Consignment Parties do not
wish for their Consignment Property to be included in the sale,
Mr. Miller required the Consignment Parties to pick up the
Consignment Property from the various store locations.
Mr. Miller also proposes to apply the same carve out terms with
regards to the Consignment Properties.
* * *
The Warehouse Sale will take place at a warehouse owned by Apto
Solutions, the Court rules. No sales of property will be
conducted at the store locations. The pick up of property and
the store locations may occur at any time, including operating
hours of any mall.
The Court, however, clarifies that within 48 hours prior to the
pick up of any property by Apto Solutions at a store location in
Connecticut, the Chapter 7 Trustee must provide:
(i) notice to the attorney general of the state of Connecticut
of the date of the pick-up and a two hour period during
which owners of consumer-owned property may pick up their
respective property; and
(ii) a similar notice to residents known by the Chapter 7
Trustee who owned property located at Connecticut store.
Judge Walrath orders the Connecticut Attorney General to provide a
notice of the pick up date and time as he deems appropriate to
Connecticut residents. Judge Walrath directs the Attorney General
to arrange an agent from his office to assist in the review of
receipts and other documentation identifying consumer-owned
property and to collect affidavits from consumers.
To the extent any Consignment Parties do not consent to the
inclusion of their property in the Warehouse Sale, Judge Walrath
orders Apto Solutions to ship to those Parties the property after
it is being sorted and inventoried. The consignment party will
be responsible for all shipping costs.
The Court acknowledges that Consignment Party Polk Audio, Inc.,
has consented to the inclusion of its Consigned Property in the
Warehouse Sale.
The Connecticut Post reports that customers of Tweeter stores in
Avon, Newington and Manchester, Connecticut, are given until
December 30, 2008, to pick up goods they bought during the
Company's going-out-of-business sale but hadn't pick up yet.
About Tweeter Opco
Tweeter Opco, LLC, was formed in July 2007 to acquire the business
operations and assets of Tweeter Home Entertainment Group, Inc.
The company filed for Chapter 11 protection on Nov. 5, 2008
(Bankr. D. Delaware Case No. 08-12646). Chun I. Jang, Esq., and
Cory D. Kandestin, Esq., at Richards, Layton & Finger, P.A.,
assisted the company in its restructuring effort. The company
listed assets of $50 million to $100 million and debts
of $50 million to $100 million.
Judge Mary Walrath of the U.S. Bankruptcy Court for the District
of Delaware converted the Opco Debtors' Chapter 11 cases to
Chapter 7 liquidation proceedings effective as of December 5,
2008. George L. Miller from the accounting firm Miller Coffey
Tate has been appointed to serve as interim trustee of the Chapter
7 proceedings of Tweeter Opco, LLC, and its affiliates.
(Tweeter Bankruptcy News, Issue No. 32; Bankruptcy Creditors'
Service, Inc., <http://bankrupt.com/newsstand/>or 215/945-7000).
TWEETER OPCO: Seeks to Retain Apto Solutions as Sales Agent
-----------------------------------------------------------
George L. Miller, the interim Chapter 7 Trustee of Tweeter Opco,
LLC, and its debtor affiliates, obtained authority from the U.S.
Bankruptcy Court for the District of Delaware to retain Apto
Solutions, Inc., as agent for the sale of the Opco Debtors'
equipment and inventory.
As sales agent, Apto Solutions will collect the Opco Debtors'
property from the various store locations and the Opco Debtors'
corporate headquarters and ship the property to its warehouse,
where it will conduct a sale over a period of time. In
connection with its removal of the Opco Debtors' property, Apto
solutions will "broom clean" the store locations.
Pursuant to a certain Re-marketing Agreement, Apto Solutions will
receive a fee equal to 30% of the net sale price or of any amount
recovered for the property. Apto Solutions will also receive a
reimbursement of all out-of-pocket costs associated with its
services, plus 15% of out-of-pocket costs to cover the overhead
costs of arranging for pick-up of the property. The expense
charge will be deducted from 70% of the sale proceeds is payable
to the Opco Debtors' estates.
Given the limited scope of Apto Solutions' services, the Chapter
7 Trustee believes it is appropriate that the firm not be
required to comply with the requirements of Rule 2016-2 of the
Federal Rules of Bankruptcy Procedure relating to forms for fee
applications, time entries, and expense information. However,
Apto Solutions will still be required to file a final fee
application.
Jeffrey A. Jones, chief executive officer of Apto Solutions,
Inc., had assured the Court that his firm does not hold or
represent any interest adverse to the Opco Debtors or their
estates with respect to the mattes on which the firm is to be
employed.
About Tweeter Opco
Tweeter Opco, LLC, was formed in July 2007 to acquire the business
operations and assets of Tweeter Home Entertainment Group, Inc.
The company filed for Chapter 11 protection on Nov. 5, 2008
(Bankr. D. Delaware Case No. 08-12646). Chun I. Jang, Esq., and
Cory D. Kandestin, Esq., at Richards, Layton & Finger, P.A.,
assisted the company in its restructuring effort. The company
listed assets of $50 million to $100 million and debts
of $50 million to $100 million.
Judge Mary Walrath of the U.S. Bankruptcy Court for the District
of Delaware converted the Opco Debtors' Chapter 11 cases to
Chapter 7 liquidation proceedings effective as of December 5,
2008. George L. Miller from the accounting firm Miller Coffey
Tate has been appointed to serve as interim trustee of the Chapter
7 proceedings of Tweeter Opco, LLC, and its affiliates.
(Tweeter Bankruptcy News, Issue No. 32; Bankruptcy Creditors'
Service, Inc., <http://bankrupt.com/newsstand/>or 215/945-7000).
TWEETER OPCO: Trustee Seeks to Sell 65 Vehicles
-----------------------------------------------
George L. Miller, the Chapter 7 Trustee overseeing the Chapter 7
proceedings of Tweeter Opco, LLC, asks the U.S. Bankruptcy Court
for the District of Delaware for permission to sell 65 vans owned
by the Opco Debtors at no less than $2,000 per vehicle, free and
clear of any liens, claims, interest and encumbrances. The
Trustee seeks to sell the Vans on an "as is, where is" basis,
without any warranty.
The Vans are of various models, previously used in the operation
of the Opco Debtors' business. The Vans are no longer needed by
the Opco Debtors, according to Mr. Miller. The Opco Debtors have
ceased operations and the Chapter 7 Trustee has begun the process
of liquidating the Opco Debtors' assets.
Mr. Miller avers that his ability to sell the Vans will not only
avoid storage costs and additional insurance costs of about
$40,000 as of January 1, 2009, but will enable the estates to
receive additional funds through the sale of the assets.
Mr. Miller says he does not seek to sell any van that was owned
by the Opco Debtors but has been previously sold to a third
party.
Given the urgency of selling the Vans, Mr. Miller tells the Court
that he does not intend to conduct an advertised sale or formal
auction, but will sell the vans at the best prices he can obtain
in a private sale.
Moreover, because the Opco Debtors' estates will incur additional
cost of approximately $600 per van to insure the Vans as of
January 1, 2009, Mr. Miller says he intends to sell the Vans
before December 31, 2009, for the highest and best offer in
excess of $2,000 per Van.
About Tweeter Opco
Tweeter Opco, LLC, was formed in July 2007 to acquire the business
operations and assets of Tweeter Home Entertainment Group, Inc.
The company filed for Chapter 11 protection on Nov. 5, 2008
(Bankr. D. Delaware Case No. 08-12646). Chun I. Jang, Esq., and
Cory D. Kandestin, Esq., at Richards, Layton & Finger, P.A.,
assisted the company in its restructuring effort. The company
listed assets of $50 million to $100 million and debts
of $50 million to $100 million.
Judge Mary Walrath of the U.S. Bankruptcy Court for the District
of Delaware converted the Opco Debtors' Chapter 11 cases to
Chapter 7 liquidation proceedings effective as of December 5,
2008. George L. Miller from the accounting firm Miller Coffey
Tate has been appointed to serve as interim trustee of the Chapter
7 proceedings of Tweeter Opco, LLC, and its affiliates.
(Tweeter Bankruptcy News, Issue No. 32; Bankruptcy Creditors'
Service, Inc., <http://bankrupt.com/newsstand/>or 215/945-7000).
TWEETER OPCO: Seeks to Use Lenders' Collateral for Warehouse Sale
-----------------------------------------------------------------
To ensure that the contemplated warehouse sale proceeds in an
efficient manner, George L. Miller, as interim Chapter 7 Trustee
of Tweeter Opco LLC and its debtor affiliates, asked the U.S.
Bankruptcy Court for the District of Delaware to:
(i) approve the carve-out agreement in connection with their
proposed warehouse sale of Tweeter Opco's inventory; and
(ii) authorize his use of cash collateral, on an interim basis,
in connection with the Warehouse Sale.
Following a hearing, Judge Mary Walrath permitted the Chapter 7
Trustee, on an interim basis, to use cash collateral of the
Prepetition Second Lien Secured Parties beginning December 5,
2008, up to the conclusion of the disposition and liquidation of
the Opco Debtors' property by Apto Solutions. Judge Walrath also
approved the Carve Out Agreement. A final hearing on the matter
will be held on January 13, 2009.
Pursuant to the Carve-Out Agreement, 70% of the net proceeds from
the auction sale of the Opco Debtors' property will be available
after the commission of Apto Solutions, Inc., as sales agent, is
deducted. From that 70%, fees will be deducted for Mr. Miller's
compensation and his counsel's fees. About 87.5% of the
remaining funds will be allocated to Schultze Asset Management
and 12.5% will be alloted to the Opco Debtors' estates.
Mr. Miller says he is aware of two parties that assert blanket
line on the Opco Debtors' cash collateral -- (1) Schultze and (2)
the Opco Debtors' postpetition lender, Wells Fargo Retail
Finance, LLC.
Mr. Miller notes that pursuant to Section 363 of the Bankruptcy
Code, a trustee is permitted to use cash collateral where a
secured party consents or the secured party is adequately
protected. According to Mr. Miller, Schultze consents to the use
of cash collateral, and Wells Fargo has been paid in full and is
thus adequately protected and has no basis to object.
About Tweeter Opco
Tweeter Opco, LLC, was formed in July 2007 to acquire the business
operations and assets of Tweeter Home Entertainment Group, Inc.
The company filed for Chapter 11 protection on Nov. 5, 2008
(Bankr. D. Delaware Case No. 08-12646). Chun I. Jang, Esq., and
Cory D. Kandestin, Esq., at Richards, Layton & Finger, P.A.,
assisted the company in its restructuring effort. The company
listed assets of $50 million to $100 million and debts
of $50 million to $100 million.
Judge Mary Walrath of the U.S. Bankruptcy Court for the District
of Delaware converted the Opco Debtors' Chapter 11 cases to
Chapter 7 liquidation proceedings effective as of December 5,
2008. George L. Miller from the accounting firm Miller Coffey
Tate has been appointed to serve as interim trustee of the Chapter
7 proceedings of Tweeter Opco, LLC, and its affiliates.
(Tweeter Bankruptcy News, Issue No. 32; Bankruptcy Creditors'
Service, Inc., <http://bankrupt.com/newsstand/>or 215/945-7000).
UNITED SPORTS: Case Summary & 24 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: United Sports Equities, LLC
1825 Main Street
Weston, FL 33326
Bankruptcy Case No.: 08-29930
Type of Business: The Debtor sells athletic products.
Chapter 11 Petition Date: December 29, 2008
Court: Southern District of Florida (Fort Lauderdale)
Judge: John K. Olson
Debtor's Counsel: Kevin C Gleason, Esq
kgpaecmf@aol.com
Kevin Gleason, P.A.
4121 N. 31 Ave.
Hollywood, FL 33021
Tel: (954) 893-7670
Total Assets: unstated
Total Debts: $264,494
The Debtor's Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Byron Pierce $60,000
c/o Paul H. Cross, Esq.
9603 White Rock Trail #205
Dallas, TX 75238
Amie Nappi $52,000
1621 NE 17th Avenue
Fort Lauderdale, FL 33305
City of Harlingen $22,000
Attn.: City Manager
118 East Tyler
Harlingen, TX 78550
Trend Offset Printing $20,000
Regent Sports $18,090
South Texas Balfour $12,204
Atlas Enterprises $12,000
Kent Hale, Esq., at $11,000
Craig, Terrill, Hale & Grantham
CBIZ Accounting & Tax $8,500
Spectrum Graphics $8,334
Tom Adam, Esq. $6,300
Summit Surgical Center $5,399
Orthopedic Specialty Associates $3,619
McCormick Graphics $3,619
Clarksdale Physical Therapy $3,327
Christus St. Francis Cabrini $3,055
AMA Techtel $2,900
Clear For Surgery Center $2,900
Westaff $2,461
Comfort Inn of Alexandria $2,152
Louisiana Fountain Supply $1,725
Grandstand Trading Cards $1,143
Hi Tech $1,118
Elaine Schultz $900
The petition was signed by chief executive officer Bradley W.
Wendt.
UNIVERSITY MILLENIUM: Court Dismisses Chapter 7 Case
----------------------------------------------------
Michael Hinman at Tampa Bay Business Journal reports that Judge
Michael G. Williamson at U.S. Bankruptcy Court for the Middle
District of Florida has dismissed Benjamin Handa and Ludvik
Capital Inc.'s involuntary Chapter 7 petition against University
Millennium Park LLC.
According to the Business Journal, Mr. Handa and Ludvik Capital
had filed the case "pro se" on Dec. 25, 2008, claiming that they
were owed about $5.1 million through an unsecured claim and a
promissory note, and
Mr. Handa and Ludvik Capital's petition lacked a filing fee,
summons, attorney of record and statement of ownership, and was
unsigned by the petitioning creditors, the Business Journal
reports, citing Judge Williamson.
The Business Journal relates that Carter McCain at Macfarlane
Ferguson & McMullen, who represents University Millennium, said
that he had not yet seen the petition and had been unaware of it
before being notified by the Tampa Bay Business Journal. Mr.
McCain said that University Millennium wasn't seeking any type of
bankruptcy protection, says the report.
Valrico developer University Millennium Park is operated by
Darrell Hanson of Fort Myers. It has operated under Sydney Mines
Reclamation LLC, Sydney Mines Development Co. LLC, and SS Group
Investments LLC. Through Sydney Mines Development, Mr. Hanson
bought about 1,754 acres of land off State Road 60 just outside of
Valrico for $5.7 million, or just over $3,200 an acre, in August
2005 from Waste Management Inc. of Florida. It had been the site
of phosphate mining in the 1930s and 1950s, and later served as a
waste disposal site for automobile oil, septic waste and
restaurant grease traps in the 1970s and 1980s.
VERASUN ENERGY: Proposes Procedures for Claims Set-Off
------------------------------------------------------
VeraSun Energy Corporation and 24 of its subsidiaries and
affiliates have asked the U.S. Bankruptcy Court for the District
of Delaware to approve procedures that would allow the resolution
of set-off disputes.
Before their voluntary Chapter 11 filing, the Debtors entered into
and performed contracts with numerous counterparties to perform
specific functions. In many cases, as of the Petition Date, the
Debtors owed to and were owed by the same counterparty. Some of
the counterparties already have asserted, and it is expected that
many more will assert prepetition rights of setoff against one or
more of the Debtors under, inter alia, Section 553 of the
Bankruptcy Code. Prior to exercising any asserted rights of
setoff, however, these counterparties and their affiliates are
required to seek relief from the automatic stay and a
determination as to the validity of their setoff rights under
Section 553(a).
Accordingly, the Debtors propose to implement exclusive global
procedures for resolution of set-off rights asserted by creditors.
According to Davis Lee Wright, Esq., at Skadden, Arps, Slate,
Meagher & Flom LLP, in Wilmington, Delaware, the requested setoff
procedures will address issues raised by the assertion of any type
of set-off. He adds that the proposed comprehensive procedures
will provide an expeditious and efficient means for resolving what
is expected to be numerous setoff claims from many Setoff
Claimants.
The proposed procedures include:
-- Any Setoff Claimant seeking to exercise a setoff right
against payables shall submit a written request within 60
calendar days.
-- The Setoff Request will include, the basis for the setoff
right and reasonably detailed documentation.
-- Each Setoff Claimant will bear the burden of proof with
respect to supporting its setoff claim under Section 553 of
the Bankruptcy Code or otherwise.
-- The determination as to whether a Setoff Claimant may
exercise a setoff right will be made solely by (i) the
agreement of the Setoff Claimant and the Debtors, (ii)
pursuant to the procedures forth or (iii) order of the
Court.
-- the official committee of unsecured and the DIP lenders will
have 20 days to object to a Setoff Agreeement.
Mr. Wright asserts that the Debtors' ability to negotiate with the
Setoff Claimants will expedite the settlement of Setoff Claims and
will assist with the efficient administration of the Chapter 11
cases.
The Court will convene a hearing to consider the request on
Jan. 8, 2009. Objections are due Dec. 30.
About VeraSun Energy
Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp.
-- http://www.verasun.comor http://www.VE85.com/-- produces and
markets ethanol and distillers grains. Founded in 2001, the
company has a fleet of 16 production facilities in eight states,
with 14 in operation.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 31, 2008, (Bankr. D. Del. Case No. 08-12606)
Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP
represents the Debtors in their restructuring efforts.
AlixPartners LLP serves as their restructuring advisor. Rothschild
Inc. is their investment banker and Sitrick & Company is their
communication agent. The Debtors' claims noticing and balloting
agent is Kurtzman Carson Consultants LLC. The Debtors'
total assets as of June 30, 2008, was $3,452,985,000 and their
total debts as of June 30, 2008, was $1,913,214,000.
VeraSun Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000).
WAVE SYSTEMS: Issues Series K Preferred Stock & Raises $1.2MM
-------------------------------------------------------------
Wave Systems Corp. has entered into Subscription Agreements with
certain purchasers pursuant to which Wave will sell a total of 456
shares of Series K Convertible Preferred Stock, for an aggregate
purchase price of roughly $1,276,800. Each share of Preferred
Stock is convertible into 10,000 shares of Class A common stock.
For each share of Preferred Stock purchased, the Purchaser will
also receive warrants to purchase 2,500 shares of Common Stock at
an exercise price of $0.28 per share. The Warrants are
exercisable for three years beginning on the date of the initial
issuance of the Warrants. The purchase price per share of
Preferred Stock is $2,800.
Each share of the Preferred Stock will be convertible into 10,000
shares of Common Stock (i) at the election of the holder thereof
at any time or (ii) automatically on the date on which the average
closing price per share of Common Stock for the 15 consecutive
trading day period then ended equals or exceeds $0.70. Dividends
will accrue at 8% per annum, payable semi-annually in cash on
December 31 and June 30 of each calendar year beginning on
June 30, 2009. The Preferred Stock will participate on an as
converted basis with respect to any dividends paid in respect of
the Common Stock. There will be no anti-dilution protection
(other than proportionate adjustments for stock splits and similar
events). Prior to conversion, the Preferred Stock will have no
voting rights other than consent rights in respect of
modifications to the terms of the Preferred Stock. On liquidation
or similar event, the Preferred Stock will rank (i) pari passu
with Wave's Series J Convertible Preferred Stock and with any
other series of preferred stock that may be designated by the
board of directors as pari passu with the Preferred Stock and (ii)
senior to the Common Stock and Wave's Series I Convertible
Preferred Stock. The liquidation value of a share of Preferred
Stock is $2,800 per share.
The Preferred Stock and Warrants (including the Common Stock
issuable upon conversion of the Preferred Stock and upon exercise
of the Warrants) are to be drawn-down off of a shelf registration
statement declared effective by the Securities and Exchange
Commission on June 23, 2008.
Security Research Associates, Inc., has entered into a placement
agency agreement with Wave in which the Placement Agent agreed to
act as placement agent in connection with the offering. In
connection with this offering, Wave agreed to pay the Placement
Agent a cash fee of $76,608 (6% of the gross proceeds paid to Wave
in connection with this offering) and will issue to the Placement
Agent a Warrant to purchase up to a total of 273,600 shares of
Common Stock (6% of the shares of Common Stock into which the
shares of Preferred Stock issued in this transaction are
convertible) at an exercise price of $0.28 per share. The warrant
is exercisable for 36 months beginning on the date of initial
issuance of the Warrants. The Placement Agent has no obligation
to buy any Preferred Stock from the company.
About Wave Systems
Headquartered in Lee, Mass., Wave Systems Corp. (Nasdaq : WAVX)
-- http://www.wave.com/-- provides software to help solve
critical enterprise PC security challenges such as strong
authentication, data protection, network access control and the
management of these enterprise functions.
Wave's balance sheet at Sept. 30, 2008, showed total assets of
$2,985,012 and total liabilities of $7,979,702, resulting in a
stockholders' deficit of $4,994,690. Net loss for three months
ended Sept. 30, 2008, was 5,604,732 compared to net loss of
$4,777,700 for the same period in the previous year.
Going Concern Doubt
As reported in the Troubled Company Reporter on March 28, 2008,
KPMG LLP, in Boston, expressed substantial doubt about Wave
Systems Corp.'s ability to continue as a going concern after
auditing the company's consolidated financial statements for the
years ended Dec. 31, 2007, and 2006. The auditing firm pointed to
the company's recurring losses from operations and accumulated
deficit.
WELLMAN INC: Makes Modifications to Creditors-Backed Plan
---------------------------------------------------------
Wellman Inc. and its debtor subsidiaries delivered to the U.S.
Bankruptcy Court for the Southern District of New York their
modified Third Amended Joint Plan of Reorganization dated
December 24, 2008.
The Modified 3rd Amended Plan contemplates:
(1) Wellman's entry into a Plan Sponsorship Agreement, whereby
SOLA Ltd. and certain of its affiliates, funds and managed
Accounts or the "Plan Sponsor" will contribute to the
Debtors $35 million in cash on the Effective Date. In
exchange, Reorganized Wellman will distribute to the Plan
Sponsor:
-- 40,000,000 in Second Lien Convertible Notes; and
-- 60,000 shares of New Common Stock.
(2) The use of Plan Sponsor Funds by Reorganized Wellman to
fund administrative costs and unsecured creditor
recoveries; to fund payment of cure costs under contracts
to be assumed; to pay all or a portion of its DIP facility
obligations; and to fund a liquidating trust.
(3) The elimination of the Rights Offering provision in favor
of the Plan Sponsorship Agreement.
(4) The Company's access to an Exit Financing Facility, which
will be secured by a first lien on all of the assets of
Reorganized Wellman.
(5) The creation of a liquidating trust in place of the
Distribution Trust noted in the previous Plans. The
Liquidation Trust will contain $250,000 cash and certain
causes of action or proceeds from those actions, net of
associated costs and taxes.
(6) Holders of Class 2 First Lien Loan Claims will receive
their pro rata share of $36 million in principal amount of
the Third Lien Convertible Notes, 36,000 shares of New
Common Stock, and a portion of proceeds of the sale of
Company's Palmetto facility.
(7) Holders of Class 3 Second Lien Loan Claims will receive
its pro rata share of $24 million in principal amount of
the Third Lien Convertible Notes, the Second Lien Trust
Interests and 24,000 shares of New Common Stock, and
proceeds of the sale of the Palmetto Facility to the
extent the DIP Facility Claims have been satisfied in
full.
The Second Lien Convertible Notes will be secured by a second
priority lien in all of Wellman's assets; will be paid 10% cash
interest per annum; will mature 10 years after the Plan Effective
Date; and will be convertible into 50% of New Common Stock as of
the Effective Date.
The Third Lien Convertible Notes will be secured by a third
priority lien in all of Wellman's assets; will be paid 5% cash
interest per annum; will mature 10 years after the Plan Effective
Date; and will be convertible into 50% of New Common Stock as of
the Effective Date.
Under the Modified 3rd Amended Plan, the total number of shares
of capital stock authorized under the New Certificate of
Incorporation of Wellman Holdings will be 30 million shares. On
the Plan Effective Date:
-- 60,000 shares of New Common Stock will be issued to the
Plan Sponsor;
-- 36,000 shares of New Common Stock will be issued to Second
Lien Loan Claimholders; and
-- 24,000 shares of New Common Stock will be issued to Third
Lien Loan Claimholders.
The Modified 3rd Amended Plan provides that Wellman will emerge
from bankruptcy provided these events occur:
(1) The Plan Sponsorship Agreement will have been fully
consummated and Wellman will have received $35 million in
total proceeds.
(2) Payments required for Allowed General Administrative
Claims do not exceed $12 million.
(3) Wellman will have entered into an exit financing facility
and funding under that Facility will have occurred.
A full-text copy of the Modified Third Amended Wellman Plan is
available for free at http://ResearchArchives.com/t/s?36eb
About Wellman Inc.
Headquartered in Fort Mill, South Carolina, Wellman Inc. ([OTC]:
WMANQ.OB) -- http://www.wellmaninc.com/-- manufactures and
markets packaging and engineering resins used in food and beverage
packaging, apparel, home furnishings and automobiles. They
manufacture resins and polyester staple fiber a three major
production facilities.
The company and its debtor-affiliates filed for Chapter 11
protection on Feb. 22, 2008 (Bankr. S.D. N.Y. Case No. 08-10595).
Jonathan S. Henes, Esq., at Kirkland & Ellis, LLP, in New York
City, represents the Debtors. Lazard Freres & Co., LLC, acts as
the Debtors' financial advisors and investment bankers. Conway,
Del Genio, Gries & Co., LLC, was also retained as the Debtors'
chief restructuring advisor.
The United States Trustee for Region 2 has appointed seven members
to the Official Committee of Unsecured Creditors. Mark R.
Somerstein, Esq., at Ropes & Gray LLP, serves as the Committee's
bankruptcy counsel. FTI Consulting, Inc., acts as the panel's
financial advisors.
Wellman Inc., in its bankruptcy petition, listed total assets of
$124,277,177 and total liabilities of $600,084,885, as of Dec. 31,
2007, on a stand-alone basis. Debtor-affiliate ALG, Inc., listed
assets between $500 million and $1 billion on a stand-alone basis
at the time of the bankruptcy filing. Debtor-affiliates Fiber
Industries Inc., Prince Inc., and Wellman of Mississippi Inc.,
listed assets between $100 million and $500 million at the time of
their bankruptcy filings.
On a consolidated basis, Wellman Inc., and its debtor-affiliates
listed $512,400,000 in total assets and $730,500,000 in
liabilities as of June 30, 2008.
Wellman filed a restructuring plan before the Bankruptcy Court on
June 25, 2008. (Wellman Bankruptcy News, Issue No. 28; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
WELLMAN INC: Stakeholders Vote To Accept Reorganization Plan
------------------------------------------------------------
Wellman, Inc. ([OTC]: WMANQ.OB) announced that its stakeholders
have overwhelmingly voted to support a modified plan of
reorganization (the "Plan"), which would allow Wellman, Inc. to
emerge from bankruptcy in January 2009. More than 80% of eligible
voting creditors voted to accept the Plan.
The Plan has been modified slightly from the Plan filed on
November 10, 2008 and includes the following minor changes:
* The first and second lien holders will receive Third Lien
Convertible Notes in the reorganized company in exchange for
their pre-petition claims. These Notes can be converted
into 50% of Reorganized Wellman.
* The Plan Sponsor, SOLA LTD, will provide the Company with
$35 million in cash in exchange for $40 million of Second
Lien Convertible Notes. These Notes can be converted into
50% of Reorganized Wellman.
In order to allow the Company the time to provide notice of the
modifications, the lenders under the Company's DIP Facility
amended the DIP agreement to provide the Company until January 19,
2009 to confirm the Plan and January 31st to emerge from
bankruptcy. Since the revisions to the Plan are not material and
are not adverse to any of the constituents, the Company does not
anticipate significant changes to the current voting results. The
hearing on confirmation of the Plan is currently scheduled to
occur on January 12, 2009.
Reorganized Wellman will maintain a Board of Directors which will
include Mr. Ruday as well as six other individuals chosen by the
Plan sponsor and the existing lien holders.
Mark Ruday, Wellman's Chief Executive Officer, stated "now that we
have a Plan that has the support of both groups of lien holders,
we expect to emerge from bankruptcy as a stronger, more profitable
and highly competitive company. We look forward to continue
working with our customers, vendors, employees and stakeholders
who have helped us to emerge from bankruptcy."
Jonathan Henes, a partner at Kirkland and Ellis, stated, "the
Company worked through unbelievably difficult circumstances
in this bankruptcy, and will emerge because all its stakeholders
worked together to develop an economically viable plan that
maximizes their recovery."
Exhibit A
Results of Voting
First Lien Second Lien Unsecured
Class Holders Holders Creditors
----- ---------- ----------- ---------
Votes to Confirm the Plan
-------------------------
% of Dollars 84.1% 83.3% 99.0%
% of Number of Voters 90.0% 81.3% 94.6%
Votes to Reject the Plan
-------------------------
% of Dollars 15.9% 16.7% 1.0%
% of Number of Voters 10.0% 15.9% 5.4%
About Wellman Inc.
Headquartered in Fort Mill, South Carolina, Wellman Inc. ([OTC]:
WMANQ.OB) -- http://www.wellmaninc.com/-- manufactures and
markets packaging and engineering resins used in food and beverage
packaging, apparel, home furnishings and automobiles. They
manufacture resins and polyester staple fiber a three major
production facilities.
The company and its debtor-affiliates filed for Chapter 11
protection on Feb. 22, 2008 (Bankr. S.D. N.Y. Case No. 08-10595).
Jonathan S. Henes, Esq., at Kirkland & Ellis, LLP, in New York
City, represents the Debtors. Lazard Freres & Co., LLC, acts as
the Debtors' financial advisors and investment bankers. Conway,
Del Genio, Gries & Co., LLC, was also retained as the Debtors'
chief restructuring advisor.
The United States Trustee for Region 2 has appointed seven members
to the Official Committee of Unsecured Creditors. Mark R.
Somerstein, Esq., at Ropes & Gray LLP, serves as the Committee's
bankruptcy counsel. FTI Consulting, Inc., acts as the panel's
financial advisors.
Wellman Inc., in its bankruptcy petition, listed total assets of
$124,277,177 and total liabilities of $600,084,885, as of Dec. 31,
2007, on a stand-alone basis. Debtor-affiliate ALG, Inc., listed
assets between $500 million and $1 billion on a stand-alone basis
at the time of the bankruptcy filing. Debtor-affiliates Fiber
Industries Inc., Prince Inc., and Wellman of Mississippi Inc.,
listed assets between $100 million and $500 million at the time of
their bankruptcy filings.
On a consolidated basis, Wellman Inc., and its debtor-affiliates
listed $512,400,000 in total assets and $730,500,000 in
liabilities as of June 30, 2008.
Wellman filed a restructuring plan before the Bankruptcy Court on
June 25, 2008. (Wellman Bankruptcy News, Issue No. 28; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000).
WEST CORP: Bank Loan Sells at Substantial Discount
--------------------------------------------------
Participations in a syndicated loan under which West Corporation
is a borrower traded in the secondary market at 59.82 cents-on-
the-dollar during the week ended December 26, 2008, according to
data compiled by Loan Pricing Corp. and reported in The Wall
Street Journal. This represents an increase of 1.54 percentage
points from the previous week, the Journal relates. West
Corporation pays interest at 237.5 basis points above LIBOR. The
The bank loan carries Moody's B1 rating and Standard & Poor's BB-
rating.
Founded in 1986 and headquartered in Omaha, Nebraska, West
Corporation -- http://www.west.com/-- provides outsourced
communication solutions to many of the world's largest companies,
organizations and government agencies. West has a team of 41,000
employees based in North America, Europe and Asia.
WESTSHORE COVE: Files for Chapter 11 Protection
-----------------------------------------------
Janet Leiser at Tampa Bay Business Journal reports that Westshore
Cove Acquisition Group LLC filed for Chapter 11 protection in the
U.S. Bankruptcy Court for the Middle District of Florida on
Dec. 29, 2008.
According to Tampa Bay Business, Westshore Cove listed
$50 million to $100 million in assets and $50 million to
$100 million in debts.
Tampa Bay relates that Westshore Cove purchased The Cove, a 52-
building apartment complex at 4001 S. Westshore Boulevard in 2005
through a $61 million loan from LaSalle Bank, says the report.
LaSalle Bank is seeking to foreclose on that loan, according to
the report.
WESTSHORE COVE: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Westshore Cove Acquisition Group LLC
aka The Cove Apartments
11300 Fourth Street North, Suite 200
Saint Petersburg, FL 33716
Bankruptcy Case No.: 08-20718
Chapter 11 Petition Date: December 29, 2008
Court: Middle District of Florida (Tampa)
Judge: Michael G. Williamson
Debtor's Counsel: Daniel R. Fogarty, Esq.
dfogarty.ecf@srbp.com
Stichter, Riedel, Blain & Prosser, PA
110 East Madison Street, Suite 200
Tampa, FL 33602
Tel: (813) 229-0144
Estimated Assets: $50 million to $100 million
Estimated Debts: $50 million to $100 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
West Coast Master Painters trade debt $39,257
Inc.
4804 West Gandy Boulevard
Tampa, FL 33611
Lifestyle Carpets, Inc. trade debt $39,006
5723 Benjamin Center Drive
Tampa, FL 33634-5237
City of Tampa Utilities utility services $20,950
PO Box 30191
Tampa, FL 33630-3191
Chadwell Supply, Inc. trade debt $20,765
Brighthouse Networks, LLC trade debt $17,831
ARD Distributors, Inc. trade debt $11,454
Apartment Locators trade debt $8,446
Ameriscape USA, Inc. trade debt $7,800
Biological Research Assoc. trade debt $6,980
Entrix Inc.
Tampa Electric Company utility services $5,355
Diamond Detective Agency trade debt $4,724
Jobrite trade debt $3,595
Tropical Carpet Cleaning trade debt $2,780
Rent.com trade debt $2,723
1-800-GOT-JUNK? trade debt $2,377
Kevin McKinnon Inc. trade debt $1,725
Lea's Pest Control trade debt $1,709
Tampa
For Dent United trade debt $954
Advertising
Publication
First Advantage trade debt $782
Saferent
Apartment Home Locators trade debt $780
Inc.
The petition was signed by Julie V. Fanelli.
WOLVERINE TUBE: Facing $100MM Notes Maturity in April
-----------------------------------------------------
Wolverine Tube Inc. has almost $100 million in 10.5% notes
maturing April 1, Bloomberg's Bill Rochelle reports.
Mr. Rochelle notes that Wolverine is late in filing third-quarter
financial statements while working on a restatement of the second-
quarter numbers. The company, according to the report, is also
affected by the contraction in the housing industry and in
consumer spending.
As reported by the Dec. 23 issue of the Troubled Company Reporter,
Moody's Investors Service downgraded Wolverine Tube Inc.'s ratings
including its corporate family rating to Caa3 from Caa2). The
ratings outlook remains negative. The downgrade reflects
increasing refinancing risk ahead of substantial debt maturities
in early 2009. While WLV continues to execute on the
recapitalization plan announced on February 1, 2007 and believes
it will be able to execute on its refinancing plan, in Moody's
opinion, the refinancing risk has been heightened by the adverse
credit market conditions.
On February 1, 2007, Wolverine announced a recapitalization plan
which would provide significant equity proceeds to Wolverine. The
company completed the first phase of this recapitalization plan, a
private placement of 50,000 shares of Series A Convertible
Preferred Stock, for $50 million, purchased by The Alpine Group,
Inc. and a fund managed by Plainfield Asset Management LLC on
February 16, 2007, pursuant to a Preferred Stock Purchase
Agreement. Pursuant to the recapitalization plan, in August 2007,
the company commenced a common stock rights offering which expired
on Oct. 29, 2007. Its stockholders purchased 25,444,592 shares of
common stock in the rights offering, resulting in gross proceeds
of $28.0 million. Additionally, under a call option, Alpine
purchased an additional 4,494 shares of Series A Convertible
Preferred Stock on January 25, 2008 for $4.5 million in order to
maintain the fully diluted ownership by Alpine and Plainfield in
Wolverine at 55%.
The company has pursued a global refinancing transaction with
respect to our 10.5% and 7.375% Senior Notes, its secured
revolving credit facility and its receivables sale facility. In
light of market conditions which have negatively affected our
ability to execute such a global refinancing strategy, it took
certain actions to be in a position to retire the 7.375% Senior
Notes on their maturity date of August 1, 2008. In February 2008,
the company extended the maturity of its secured revolving credit
facility and its receivables sale facility to April 28, 2009 and
February 19, 2009, respectively, and it sold substantially all of
the assets of its STP business for net proceeds of approximately
$22.4 million plus an anticipated working capital payment of
approximately $3.0 million. In March 2008, the company sold 30.0%
of our WTS subsidiary for $9.5 million. On March 20, 2008,
Plainfield refinanced $38.3 million of the 7.375% Senior Notes
held by it by exchanging them for 10.5% Senior Exchange Notes due
March 28, 2009, and Alpine purchased 10,000 shares of our Series B
Convertible Preferred Stock, for $10.0 million, under terms
substantially similar to the Series A Convertible Preferred Stock
(except for an initial annual dividend rate of 8.5%). On
April 21, 2008, the company sold its Booneville, Mississippi
facility, which was closed in January 2008, for $1.4 million. In
July 2008, it sold its London, Ontario wholesale and commercial
tube business for net proceeds of approximately $41.2 million.
These actions provided the liquidity required to repurchase or
repay the outstanding 7.375% Senior Notes on or before their
maturity in August 2008. On February 29, 2008, the company
repurchased $12.0 million in face amount of our 7.375% Senior
Notes at a discount below the face value of the notes, and on
April 8, 2008 it repurchased an additional $25.0 million in face
amount of its 7.375% Senior Notes, also at a discount below the
face value of the notes, leaving $61.4 million in face amount of
our 7.375% Senior Notes, which we paid at maturity on August 1,
2008.
The company says its is continuing to pursue a refinancing plan
with respect to the 10.5% Senior Notes, the 10.5% Senior Exchange
Notes, our secured revolving credit facility and its receivables
sale facility prior to their maturities in 2009.
"However, there can be no assurance that current and future
discussions and negotiations with financial institutions and
current and future credit market conditions will result in the
refinancing of these facilities under terms acceptable to us prior
to the applicable maturity dates," the company said in a recent
filing with the Securities and Exchange Commission
About Wolverine Tube
Huntsville, Alabama-based Wolverine Tube, Inc. --
http://www.wlv.com-- is a global manufacturer and distributor of
copper and copper alloy tube, fabricated products, and metal
joining products. The company's focus is on custom-engineered,
tubular products, including fabricated copper components and metal
joining products, which enhance performance and energy efficiency
in applications, including commercial and residential heating,
ventilation and air conditioning, refrigeration, home appliances,
industrial equipment, power generation, petrochemicals and
chemical processing. Wolverine classified its products as
commercial products and wholesale products. On Feb. 29, 2008, the
company closed on the sale of its Small Tube Products business.
On Nov. 6, 2007, Wolverine announced the planned closing of its
manufacturing facilities located in Decatur, Alabama and
Booneville, Mississippi.
* Housing Stimulus Needed to Spark Weakening Economy, Says NAR
--------------------------------------------------------------
Existing-home sales weakened against a backdrop of an eroding
economy, according to the National Association of Realtors(R).
Existing-home sales -- including single-family, townhomes,
condominiums and co-ops -- fell 8.6 percent to a seasonally
adjusted annual rate of 4.49 million units in November from a
downwardly revised level of 4.91 million in October, and are 10.6%
percent below the 5.02 million-unit pace in November 2007.
Lawrence Yun, NAR chief economist, expected a decline. "The
quickly deteriorating conditions in the job market, stock market,
and consumer confidence in October and November have knocked down
home sales to another level. We hope the home sales impact from
the stock market crash turns out to be short-lived, as was the
case in 1987 and 2001," he said.
"It is, therefore, imperative to provide incentives for homebuyers
to get back into the market. It also depends on how effectively
Congress and the new administration can help facilitate the short
sales process and unclog the mortgage pipeline -- impediments
remain for some buyers with good credit," Mr. Yun said.
According to Freddie Mac, the national average commitment rate for
a 30-year, conventional, fixed-rate mortgage fell to 6.09 percent
in November from 6.20 percent in October; the rate was 6.21
percent in November 2007. Last week, Freddie Mac reported the 30-
year rate fell to 5.19 percent -- the lowest on record since the
series began in 1971.
NAR President Charles McMillan, a broker with Coldwell Banker
Residential Brokerage in Dallas-Fort Worth, said it's crucial to
enact sufficient housing stimulus to spark an economic recovery.
"We need more than low interest rates to encourage enough buyers
to enter the market and meaningfully draw down inventory, which
would stabilize home prices - that, in turn, would help the
economy to recover," he said.
"We should extend the first-time buyer tax credit to all
homebuyers and eliminate the repayment feature, and make permanent
the higher loan limits that are vital in high-cost markets -- the
faster we do this, the faster housing and the economy can
recover," Mr. McMillan said.
Mr. McMillan said NAR is grateful that the Treasury, the Federal
Housing Finance Agency and the Federal Reserve have been working
to bring interest rates down on most mortgages to historic lows.
Total housing inventory at the end of November rose 0.1 percent to
4.20 million existing homes available for sale, which represents
an 11.2-month supply at the current sales pace, up from a 10.3-
month supply in October.
Despite an overall softening in sales, there has been a solid
trend of rising activity in California, Nevada, Arizona and
Florida markets. "Sales are rising only in areas with large
numbers of distressed properties as bargain hunters take advantage
of discounted home prices," Yun said.
The national median existing-home price for all housing types was
$181,300 in November, down 13.2 percent from November 2007 when
the median was $208,800. There remains a significant downward
distortion in the current price from a large number of distress
sales at discounted prices; the median is where half of the homes
sold for more and half sold for less.
Mr. Yun cautioned that there will be negative consequences if
housing stimulus is delayed. "Falling home prices would lead to
faster contraction in consumer spending and further deterioration
in bank balance sheets. More importantly, falling home values
would lead to higher loan defaults, including those recently
modified distressed mortgages."
Single-family home sales fell 8.0 percent to a seasonally adjusted
annual rate of 4.02 million in November from a level of 4.37
million in October, and are 8.8 percent below a
4.41 million-unit pace a year ago. The median existing single-
family home price was $180,800 in November, down 12.8 percent from
November 2007.
Existing condominium and co-op sales dropped 13.0 percent to a
seasonally adjusted annual rate of 470,000 units in November from
540,000 in October, and are 23.1 percent below the 611,000-unit
pace in November 2007. The median existing condo price4 was
$185,400 in November, down 15.5 percent from a year ago.
Regionally, existing-home sales in the Northeast dropped 12.0
percent to an annual pace of 730,000 in November, and are 18.0
percent lower than a year ago. The median price in the Northeast
was $257,700, down 0.1percent from November 2007.
Existing-home sales in the Midwest fell 7.4 percent in November to
a pace of 1.00 million and are 16.0 percent below November 2007.
The median price in the Midwest was $142,400, down 11.2 percent
from a year ago.
In the South, existing-home sales dropped 10.9 percent to an
annual pace of 1.64 million in November, and are 17.6 percent
below a year ago. The median price in the South was $154,500,
which is 10.6 percent lower than November 2007.
Existing-home sales in the West declined 4.3 percent to an annual
rate of 1.12 million in November but are 17.9 percent higher than
November 2007. The median price in the West was $242,500, down
25.5 percent from a year ago.
* BOOK REVIEW: How To Measure Managerial Performance
----------------------------------------------------
Author: Richard S. Sloma
Publisher: Beard Books
Paperback: 272 pages
List Price: $34.95
Order your personal copy at:
http://www.amazon.com/exec/obidos/ASIN/1893122646/internetbankrupt
How to Measure Managerial Performance by Richard S. Sloma is a
valuable reference tool. This practical handbook provides new
insights into enterprising management techniques.
This book is a compendium of principles and techniques to improve
and measure managerial performance in a number of areas important
to the successful operation of a business.
Rigorous application of the concepts of this instructive book will
enable an organization to perform at several levels higher in
efficiency and effectiveness.
*********
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. Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa,
Luke Caballos, Sheryl Joy P. Olano, Carlo Fernandez, Christopher
G. Patalinghug, and Peter A. Chapman, Editors.
Copyright 2009. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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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.
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are $25 each. For subscription information, contact Christopher
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*** End of Transmission ***