/raid1/www/Hosts/bankrupt/TCR_Public/010215.MBX
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, February 15, 2001, Vol. 5, No. 33
Headlines
AGRIBIOTECH: State Board Discloses 18.6% Equity Stake
ARMSTRONG WORLD: Has Until August 6 To Decide On Leases
CAVION: Liberty Moves on to Final Steps of Asset Acquisition
CHIQUITA BRANDS: Reports $75 Million Loss For Fiscal 2000
CITYSCAPE HOME: S&P Puts Junk Rating on Certain Home Loan Notes
COHO ENERGY: Harvard Lightens Equity Stake to Mere 0.5%
DIMAC Holdings: Completes Asset Sale Of Label Art Business
EMPIRE FUNDING: S&P Puts Junk Rating on Certain Home Loan Notes
GULF STATES: Ableco Says "No, No" to Sharing its Collateral
HARNISCHFEGER INDUSTRIES: Taps Quarles & Brady as Special Counsel
HOMEPLACE: Ceases Operations in Atlanta
IMPERIAL SUGAR: Court Okays $110 Million Securitization Facility
INTEGRATED HEALTH: Agrees To Modify Stay For Insured Claim
JUST FOR FEET: State Board Divests All Common Shares
KOMAG: State Board Holds 16.57% of Common Stock
KPN NV: Moody's Cuts Senior Debt Ratings TO Baa2
LERNOUT & HAUSPIE: Trustee Balks at Separate Dictaphone Committee
LERNOUT & HAUSPIE: DIP Financing Hearing Postponed To February 20
LERNOUT & HAUSPIE: Trustee Sought for Dragon Unit
LEVITZ: Proposes March 5 Record Date for Plan Distributions
LOEWEN GROUP: Minor Changes to Creditors' Committee Membership
LTV CORP.: Paying Workers & Ordinary Course Professionals
MARINER POST-ACUTE: Wants Court To Okay Charleston Manor Sale
MAXICARE HEALTH PLANS: Proposes Reverse Split Of Common Stock
MESA AIR GROUP: State Board Holds 10.14% Of Outstanding Stock
NEWMONT MINING: T. Rowe Price Owns 4.6% Of Common Stock
OWENS CORNING: To Expand Preferred Contractor Program
PAUL HARRIS: After Closing 100 Stores, Files Chapter 11 Plan
PILLOWTEX CORP.: Trustee Objects To E&Y As Restructuring Advisors
PLANETGOOD: Files Chapter 11 Petition in Indiana
RURAL/METRO: EBITDA is Positive, But Losses & Strains Continue
SAFETY-KLEEN: Closing Hilliard Ohio Wastewater Facility
SOLV-EX: Files "Chapter 22" Case in Albuquerque
STELLAR FUNDING: S&P Lowers Ratings on Class A-3 & A-4 Notes
SUNSHINE MINING: Temporary Trading Symbol Is SSCFQ
TEAM COMMUNICATIONS: Asks Lenders for Waiver of Debt Covenants
TELESCENE: Posts Weak Q3 Results in Midst of Bankruptcy Case
U.S. INTERACTIVE: Discloses Senior Management Shake-Up
VENCOR INC.: Stay Modified For Insured Litigation Claim
VLASIC FOODS: Honoring Prepetition Employee Obligations
*********
AGRIBIOTECH: State Board Discloses 18.6% Equity Stake
-----------------------------------------------------
The State of Wisconsin Investment Board is a government agency
which manages public pension funds subject to provisions
comparable to ERISA. The Board beneficially owns 9,496,617, or
18.60%, of the shares of the common stock of AgriBiotech Inc.
The State of Wisconsin Investment Board retains sole voting and
dispositive power for all shares.
ARMSTRONG WORLD: Has Until August 6 To Decide On Leases
-------------------------------------------------------
Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., from Weil,
Gotshal & Manges, LLP, told the Court that Armstrong World
Industries, Inc. is a party to approximately twenty unexpired
non-residential real property leases, including railway,
warehouse, office space and other agreements.
AWI asked Judge Farnan to extend the deadline imposed under 11
U.S.C. Sec. 365(d)(4) within which it must decide whether to
assume, assume and assign, or reject these leases and contracts.
AWI noted that it is not making any determination that each of
the agreements listed above constitutes an unexpired lease of
non-residential real property; instead, AWI stated it includes
these properties out of an abundance of caution.
AWI asked Judge Farnan for an additional six months in which to
make their decision regarding the ultimate acceptance or
rejection of these leases, through and including August 6, 2001.
As justification for this extension, and subject to the rights of
any lessor to request, for cause shown, that the extension
granted should be shortened as to a particular lease, AWI told
Judge Farnan that the properties subject to these leases are used
by AWI for warehouse space, office space, land, and parking lots,
and are valuable assets of this estate. AWI stores many of its
products, which are shipped throughout the United States, in the
warehouses covered by these leases. In addition, AWI uses its
leased railway space to transport many of its products, and
carries out essential administrative functions out of its leased
offices. These important assets are integral to the continued
operation of AWI's business. Accordingly, any decisions with
respect to assuming or rejecting those leases will be central to
any plan of reorganization.
Since the Petition Date, AWI has been consumed with handling a
vast number of crucial administrative and business decisions.
Moreover, AWI has been working diligently to continue to operate
its business and to comply with the filing requirements imposed
by the Bankruptcy Code and the Office of the United States
Trustee. As a result, AWI simply has not had an adequate
opportunity to review completely each of the unexpired leases and
determine the economics of each such lease, whether it is
burdensome to the estate, and how it will fit in with the
Debtor's ongoing business operations. Accordingly, without an
extension of time, AWI runs the risk of prematurely and
improvidently assuming unexpired leases that AWI could alter
discover to be burdensome, thus creating large uncapped potential
administrative claims against the Debtors' estates. AWI also
risks prematurely and improvidently rejecting leases that could
later be discovered to be critical to AWI's reorganization
efforts. Rather, this process should be addressed in a rational
and practical manner which will be for the benefit of all parties
in interest.
Persuaded by the Debtor's arguments, Judge Farnan has granted an
extension of time for assumption or rejection of these leases to
August 6, 2001, subject to the right of any party to separately
request a modification or shortening of this time as to a
particular lease for cause shown. (Armstrong Bankruptcy News,
Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900)
CAVION: Liberty Moves on to Final Steps of Asset Acquisition
------------------------------------------------------------
Liberty Enterprises has reached a sufficient number of signed
credit union and secured creditor commitments to move forward
toward the final steps of acquiring the assets of Cavion
Technologies. The credit union movement's top provider of payment
systems, marketing services and technology solutions announced
the developments Tuesday.
"The credit union affirmation and key secured creditors'
agreements, plus the strong support from Cavion leaders and
staff, and major suppliers, allow us to begin the final steps in
this acquisition process," Liberty President and CEO Robert D.
Anderson said. "Though we are still not certain of Court approval
for the proposed acquisition, we are hopeful that we have put
together many significant pieces of an agreement that satisfies
central participants in the Cavion situation and allows for
service continuity for credit unions and their members."
Anderson emphasized Liberty continues to seek and accept credit
union customer commitments.
Liberty's agreements with key creditors sets the base for a
Friday, Feb. 16 Bankruptcy Court hearing to consider allowing
Cavion to sell its assets to Liberty. The agreements also allow
Liberty to advance additional cash to Cavion to pay staff and
allow credit unions to continue to be served by Cavion. This
would be the third cash infusion to Cavion from Liberty in the
past 30 days.
"We have given resources to Cavion in an effort to support credit
unions so that they will not suddenly find their members cut off
from home banking and other services," Anderson said. "Though
there has been considerable risk in this, we believe that we have
reached a point where the momentum will carry the situation to a
successful conclusion for credit unions and their members.
"We also believe our solution serves Cavion staff, creditors and
Cavion suppliers as broadly as is financially realistic under the
circumstances in which Cavion finds itself."
Anderson said that Liberty has also dedicated financial and human
resources to its own acquisition strategies, including the
formation of a team focused on securing credit union agreements
and other due diligence activities.
Anderson noted that Liberty Executive Vice President for Internet
Applications Michael J. Provenzano will be in Denver later this
week to continue meetings with creditors, suppliers and Cavion
staff. Provenzano, who will head the Cavion unit if the
acquisition is completed, is continuing evaluation and planning
for a transition to Liberty.
Liberty, the credit union movement's leading provider of payment
systems, marketing services and technology services, signed a
letter of intent to purchase the assets of the Denver-based
credit union technology provider on Jan. 19. Cavion filed for
Chapter 11 bankruptcy protection on Dec. 21, 2000.
CHIQUITA BRANDS: Reports $75 Million Loss For Fiscal 2000
---------------------------------------------------------
Chiquita Brands International, Inc. (NYSE: CQB) reported a fourth
quarter 2000 loss of $69 million before approximately $20 million
of charges and write-downs of production and sourcing assets in
the Company's Fresh Produce operations. For the year, Chiquita
reported a loss of $75 million before the charges and write-
downs.
In 1999, the Company reported a fourth quarter loss of $75
million before a $3 million charge associated with the Company's
1999 workforce reduction program. For the year, Chiquita reported
a loss of $49 million before $9 million of total charges
associated with the workforce reduction program.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) for 2000 was $145 million compared to $149 million in
1999. The Company's results for 2000 were negatively impacted by
the strongest dollar in relation to major European currencies in
the last fourteen years, higher fuel costs and lower banana
volume in North America. These effects were mostly offset by the
Company's substantial improvements in production and logistics
costs of its Fresh Produce business and benefits from the
workforce reduction program. Operating results for the Processed
Foods group were comparable to the prior year.
Net sales for the fourth quarter decreased $90 million to $528
million and for the year decreased $302 million to $2.3 billion.
The sales decrease was primarily attributable to the stronger
dollar, lower banana volume in North America and non-core trading
markets, and the deconsolidation of the Company's Australian
operations.
As previously indicated, the European Commission announced its
intention to issue regulations to implement a "first-come, first-
served" banana import quota system as early as April 1. If
implemented, this quota system would likely result in further
harm to Chiquita's business as well as to other Latin American
banana exporters. The "first-come, first-served" system is
opposed by the African and Caribbean banana industries, the very
sectors the European Commission purports to support and protect,
the U.S., seven Latin American banana supplying countries, and
the overwhelming majority of European banana operators.
Chiquita's recently announced lawsuit against the European
Commission for over $500 million in damages reserves the right to
claim additional future damages that would arise from
implementation of the "first- come, first-served" system.
Chiquita is a leading international marketer, producer and
distributor of quality fresh fruits and vegetables and processed
foods.
CITYSCAPE HOME: S&P Puts Junk Rating on Certain Home Loan Notes
---------------------------------------------------------------
Standard & Poor's lowered its ratings on various classes of
Cityscape Home Loan Owner Trust 1997-2's home loan asset-backed
notes. Concurrently, ratings were affirmed on the remaining
classes of the same series (see list). Approximately $42 million
of debt is affected for these combined high loan-to-value
transactions.
Credit support provided to the class B and M-2 certificates has
insufficient levels of excess interest and overcollateralization
to cover projected losses and to maintain the assigned ratings.
Based on current and projected performance trends for this pool,
Standard & Poor's expects continued losses to outpace excess
interest. Continued reductions in overcollateralization may
result in the default of the class B certificate within the next
12 months. During the last 12 months, realized losses have
averaged approximately 1.8 times greater than excess interest
production.
Credit support for the affected certificates is provided by
subordination, excess interest, and overcollateralization derived
from excess interest.
The affirmed ratings reflect actual and projected credit support
percentages that meet or exceed suggested loss coverage levels
for their current ratings.
As of the January 2001 remittance date, the delinquency rate in
the pool is 14.29%, with approximately 4% seriously delinquent
loans. To date, defaults have resulted in cumulative losses to
equal 14.30% of the original pool balance.
The collateral backing these transactions generally consist of
loans originated for the purpose of debt consolidation, home
improvement, refinancing of existing mortgage loans, or other
reasons not specified by the borrower, with loan-to-value ratios
in excess of 100%. These loans are secured primarily by junior
liens on one- to four-family residential properties, Standard &
Poor's said. -- CreditWire
OUTSTANDING RATINGS LOWERED
Cityscape Home Loan Owner Trust 1997-2
Home loan asset-backed notes
Class Rating
To From
B CCC BB
M-2 BBB A
OUTSTANDING RATINGS AFFIRMED
Cityscape Home Loan Owner Trust 1997-2
Home loan asset-backed notes
Class Rating
A-5 AAA
A-6 AAA
M-1 AA
COHO ENERGY: Harvard Lightens Equity Stake to Mere 0.5%
-------------------------------------------------------
President and Fellows of Harvard College beneficially own 93,926
shares of the common stock of Coho Energy Inc, representing 0.5%
of the outstanding common stock shares of the company. President
and Fellows of Harvard College is an employee benefit plan or
endowment exercising sole voting and dispositive power over the
stock held.
DIMAC Holdings: Completes Asset Sale Of Label Art Business
----------------------------------------------------------
DIMAC Holdings, Inc. completed the sale of the assets of Label
Art, a division of Americomm Direct Marketing, Inc., to W/S
Packaging Group Inc., an industry leader in promotional, primary
and industrial pressure sensitive labels.
The sale was consummated on February 9, 2001. The new owner will
retain the Label Art, Inc. name and operate the business, which
has manufacturing locations in Wilton, NH; Tucker, GA; San
Carlos, CA; and Fort Smith, AR. The new owner also has agreed to
hire substantially all of the Company's employees.
Robert "Kam" Kamerschen, Chairman and Chief Executive Officer,
said: "The completion of this sale reflects our ongoing
activities to eliminate excess debt on our balance sheet and
position the Company to be a major player in the direct value-
added direct response marketing services industry as it prepares
to emerge from Chapter 11."
DIMAC's Plan of Reorganization, which involved the sales of
DIMAC's non-core assets, was approved by the U.S. Bankruptcy
Court in Wilmington, Delaware, on December 19, 2000 and is
expected to become effective shortly, at which time the Company
would formally exit Chapter 11. The Plan was consensual, having
received the support of all major constituencies, including the
Company's secured bank lenders and its Official Unsecured
Creditors Committee.
DIMAC Marketing Corporation provides a comprehensive range of
integrated and insightful direct response marketing solutions,
which are supported by creative strategy/agency services,
database strategy/ management services, value-added direct
response management and fulfillment services, and "Total Program
Management" direct mail services and products to improve client
ROI on direct marketing spending, enhance client competitive
position, and provide single source convenience.
EMPIRE FUNDING: S&P Puts Junk Rating on Certain Home Loan Notes
---------------------------------------------------------------
Standard & Poor's lowered its ratings on various series and
classes of Empire Funding Home Loan Owner Trust's and Empire
Funding Home Loan REMIC Trust 1997-A's residential mortgage-
backed certificates. Concurrently, ratings were affirmed on the
remaining classes of the same series (see list). Approximately
$227.5 million of debt is affected for these combined high loan-
to-value transactions.
The lowered ratings reflect continued erosion of credit support.
Support for the affected certificates has insufficient levels of
excess interest and overcollateralization to cover projected
losses at Standard & Poor's suggested loss coverage levels.
Monthly losses averaged approximately 1.98 times excess interest
production in the previous 12 months, resulting in a reduction of
overcollateralization to cover losses. Using historical loss
projections, Standard & Poor's expects continued defaults and
losses, therefore, increasing the risk of a default to the most
subordinate certificates (series 1997-1 class B and series 1997-A
class B).
Credit support for the certificates with lowered ratings is
provided by subordination, excess interest, and
overcollateralization derived from excess interest.
The affirmed ratings reflect actual and projected credit support
percentages that meet or exceed suggested loss coverage levels
for their current ratings. Stress analyses indicate the current
levels of subordination, overcollateralization, and excess
interest are sufficient to support each of the classes.
As of the January 2001 remittance date, total delinquencies
ranged from 11.86% (series 1997-2) to 17.51% (series 1997-A). To
date, cumulative realized losses as a percentage of original pool
balance ranged from 11.41% (series 1997-2) to 13.62% (series
1997-1). The outstanding pool balances are no greater than 49% of
their original size.
The collateral backing these transactions generally consist of
loans originated for the purpose of debt consolidation, home
improvement, refinancing of existing mortgage loans, or other
reasons not specified by the borrower, with loan-to-value ratios
in excess of 100%. These loans are secured primarily by junior
liens on one- to four-family residential properties, Standard &
Poor's said.
OUTSTANDING RATINGS LOWERED
Empire Funding Home Loan Owner Trust
Residential mortgage-backed certs
Series Class Rating To From
1997-1 B CCC B
1997-1 M-2 BBB- A-
1997-2 M-2 BBB A-
1997-4 B-1 BB BBB
Empire Funding Home Loan REMIC Trust 1997-A
Residential mortgage-backed certs
Class Rating
To From
B B BB
M-2 BBB- A-
OUTSTANDING RATINGS AFFIRMED
Empire Funding Home Loan Owner Trust
Residential mortgage-backed certs
Series Class Rating
1997-1 A-4 AAA
1997-1 A-5 AAA
1997-1 M-1 AA
1997-2 A-5 AAA
1997-2 A-6 AAA
1997-2 M-1 AA
1997-4 A-4 AAA
1997-4 A-5 AAA
1997-4 M-1 AA
1997-4 M-2 A
Empire Funding Home Loan REMIC Trust 1997-A
Residential mortgage backed certs
Class Rating
A-3 AAA
M-1 AA
GULF STATES: Ableco Says "No, No" to Sharing its Collateral
-----------------------------------------------------------
Jeffery D. Hermann, Esq., at Brobeck, Phleger & Harrison, told
the U.S. Bankruptcy Court for Northern District of Alabama that
Ableco Finance LLC has no objection to granting personal injury
claimants relief from the automatic stay in Gulf States Steel,
Inc., of Alabama's chapter 7 proceeding in order to allow those
claimants to obtain judgments and collect applicable insurance
proceeds. Ableco says it does not and will not, however, consent
to allowing those claimants to dip into any of Gulf States'
assets. Ableco has a first priority lien on all of the assets of
the Estate, pursuant to the Final DIP Financing Order entered on
July 20, 1999. Ableco intends to foreclose on every asset it can
find.
HARNISCHFEGER INDUSTRIES: Taps Quarles & Brady as Special Counsel
-----------------------------------------------------------------
Harnischfeger Industries, Inc. sought and obtained the Court's
authority, pursuant to section 327(e) of the Bankruptcy Code, for
the retention of Quarles & Brady LLC, affiliated with Quarles &
Brady LLP, as special national product liability litigation
counsel for the Debtors as of October 27, 2000 in place of
Brand & Novak, Ltd. The reason for the substitution of counsel
requested, the Debtors explained, is that the lawyers from B&N
responsible in this capacity for the Debtors have joined Quarles
& Brady, and B&N is winding up its operations.
The Debtors reminded the Court that Quarles & Brady is authorized
to provide services to the Debtors as Professionals Utilized in
the Ordinary Course of the Debtors' businesses.
Pursuant to this Application, the Debtors contemplate that
Quarles & Brady will defend and prosecute, and coordinate the
defense and prosecution of lawsuits and other claims and issues
involving the alleged liability or safety of the products of
Beloit Corporation, Harnischfeger Corporation and other Debtors
in these cases, and to advise them with respect to design,
manufacturing, safety and other product-related matters.
The Debtors represented that they sought to retain Quarles &
Brady as special national product liability litigation counsel
because of Quarles & Brady's extensive experience and expertise
in product liability and related litigation, as well as other
areas of law. In particular, Quarles & Brady will be advising and
assisting the Debtors in the United States and Canada by
defending and prosecuting product liability lawsuits and related
claims and other matters involving Beloit Corporation,
Harnischfeger Corporation and related Debtor entities, as well as
advising on product safety and other preventive matters for those
entities. The Debtors further believe that the engagement of
Quarles & Brady is essential to the Debtors' reorganization.
As stated in the affidavit of Mr. Mark A. Brand, partner in
Quarles & Brady, Q&B will not represent the Debtors or conduct
negotiations on behalf of the Debtors in connection with its
reorganization cases of the Plan. Those services will be
conducted by Kirkland & Ellis and Pachulski, Stang, Ziehl, Young
and Jones, P.C., the Debtors' bankruptcy co-counsel.
In accordance with Section 330(a) of the Bankruptcy Code, the
Debtors have agreed to compensate Quarles & Brady for their
professional services on an hourly basis, plus reimbursement of
actual, necessary expenses. The primary attorneys who will be
responsible for this engagement are:
Attorney Hourly Rate
-------- -----------
Mark A. Brand $ 300 per hour
Monica M. Tynan $ 215 per hour
Other attorneys or paralegals may from time to time serve the
Debtors in connection with the matters described in the
application as well.
In accordance with Quarles & Brady's policy, the law firm will
charge the Debtors for expenses incurred in connection with the
retention, including, among other things, document copying, mail
and delivery charges, travel expenses, expenses for "working
meals," witness fees and other fees related to trials and
hearings, transcription costs, and non-ordinary overhead expenses
such as secretarial and other overtime.
The Debtors submit that, to the best of their knowledge,
information and belief, Quarles & Brady is a "disinterested
person" as that term is defined in section 101(14), as modified
by section 1107(b) of the Bankruptcy Code. (Harnischfeger
Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
HOMEPLACE: Ceases Operations in Atlanta
---------------------------------------
HomePlace of America Inc., the bankrupt Myrtle Beach, S.C.
retailer, is pulling out of the Atlanta, Ga. market completely,
as part of its earlier-announced plan to shutter thirty-eight
locations. The company filed Chapter 11 last month, listing
assets and liabilities of $325 million and $256 million
respectively. (New Generation Research, February 13, 2001)
IMPERIAL SUGAR: Court Okays $110 Million Securitization Facility
----------------------------------------------------------------
Prior to the Petition Date, Imperial Distributing, Inc., Imperial
Sugar Company, Diamond Crystal Brands, Inc., Diamond Crystal
Specialty Foods, Inc., Great lakes Sugar Company, Holly Sugar
Corporation, Imperial-Savannah L.P., King Packaging Co., Inc.,
Michigan Sugar Company, Wholesome Sweeteners L.L.C., used a
receivables securitization facility as a method of providing
sufficient liquidity to fund their operations.
The Debtors told Judge Robinson that the securitization
fundamentally benefits the Debtors and their other creditors
where the subject financial assets are more creditworthy than the
general creditworthiness of the Debtors themselves. In a properly
structured securitization, the subject financial assets are
believed to have been removed from the general credit risks
(including any bankruptcy risks) associated with the originators
of the financial assets through the absolute transfer of the
assets by the originators to their special purpose "bankruptcy
remote" affiliate. Thus, the assets may be financed based on
their creditworthiness instead of the general creditworthiness of
the originators, which, by definition, should result in a lower
overall funding cost than the originators' general
creditworthiness otherwise would have warranted. The Debtors
advised that this was their prepetition experience, as the
effective interest rate the securitization facility was lower
than the applicable interest rate under the prepetition credit
facility.
Description of the Securitization Facility
Imperial Securitization Corporation is an entity which was
created in connection with the funding of the ongoing business
operations of Imperial and its subsidiaries under the
securitization facility. Specifically, ISC is a special purpose,
"bankruptcy remote" corporation which has purchased the
receivables generated by the processing, and sale of sugar by the
originators pursuant to the provisions of the Purchase and
Contribution Agreement dated as June 30, 1999 among ISC, Imperial
Distributing and the originators. Fairway Finance Corporation is
a commercial paper conduit managed by BMO Nesbitt Bums Corp.,
formerly known as Nesbitt Bums Securities, Inc., as Agent for the
Purchaser Fairway. The Purchaser issues short-term commercial
paper notes, the proceeds of which have been used to, among other
things, purchase an undivided ownership interest in receivables
under the provisions of the Receivables Purchase Agreement dated
as of June 30, 1999, as amended by Amendment No. 1, dated as of
December 13, 1999 and Amendment No. 2 dated as March 27, 2000,
among Imperial, Imperial Distributing, ISC, the Purchaser and
Agent. The Receivables Purchase Agreement, together with the
Purchase and Contribution Agreement, are the "Securitization
Facility". By its terms, the Securitization Facility is governed
by Texas law.
The Securitization Facility provides the following structure:
(a) The Receivables and Related Rights are sold daily on a
non-recourse basis to ISC. The purchase price paid by ISC must be
an amount equal to the face amount of the purchased receivables,
less a fair market discount, and must be paid in cash or by
creation of subordinated intercompany indebtedness from ISC.
Contemporaneously with the purchase of the receivables, ISC may
sell, through ISC's irrevocable written notice delivered to the
Agent, and the Purchaser may purchase, on an ongoing basis, an
undivided ownership interest with regard to the Participation, at
a price determined pursuant to a particular funding formula.
(b) The Purchaser may fund its acquisition of (and increases
in) the participation through the issuance of short-term
commercial paper notes, through the borrowing of loans or the
obtaining of other extensions of credit from various banks and
other financial institutions, or by the selling of undivided
interests in the participation to the purchasers from time to
time a party to the Liquidity Asset Purchaser Agreement, dated as
of December 13, 1999, as Amended by Amendment No. 1 dated as of
April 17, 2000, Amendment No. 2 dated as of October 31, 2000,
Amendment No. 3 dated as of January 8, 2001 (and as further
amended and restated, supplemented or otherwise amended from time
to time). Pursuant to this Liquidity Agreement, liquidity funding
maximum amount is $112,200,000 of which $110,000,000 was made
available to the Purchaser.
An important and fundamental element of the Securitization
Facility is the true sale nature of the transaction. To that end,
all parties to the Securitization Facility intended the
transaction to constitute a true sale and to evidence that intent
the Securitization Facility characterized the transaction as a
true sale.
Provision of Financing for Sugar Processing
Prior to the Petition Date, as a result of the Securitization
Facility, the Originators were able to finance a significant
portion of the sugar processing operations through the sale of
receivables to ISC. ISC, in turn, sold undivided percentage
ownership interests to the Purchaser in
(i) each and every Pool Receivable existing or arising,
other than any Pool Receivable that arose on or after
the Facility Termination Date,
(ii) all Related Security with respect to such Pool
Receivables, and
(iii) all Collections with respect to, and other proceeds of
such Pool Receivables and Related Security in accordance
with the Receivables Purchase Agreement.
Pursuant to the Securitization Facility, the liquidity funding
maximum amount is $112,200,000, of which $110,000,000 was made
available to Imperial.
Need to Continue the Securitization Facility
The Debtors must be able to operate their businesses as they seek
confirmation of their joint plan of reorganization. The DIP
Financing Facility is not intended to provide and does not
provide sufficient availability to replace the liquidity provided
to date by the Securitization Facility, but instead contemplates
and is conditioned upon the post-petition continuation of the
Securitization Facility on the terms and conditions described
herein.
The Securitization Facility terminated by its own terms on
January 16, 2001. Absent a modification thereto extending such
termination date, the facility will go into liquidation mode
whereby instead of ISC continuing to fund purchases of new
receivables from the Originators through concomitant sales of
those receivables to the Purchaser, Imperial Distributing as
servicer will be obligated to collect and turn over proceeds from
the collection of the existing receivables to the Purchaser. The
Debtors argue this would not be in their best interests as it
would remove a significant component of their liquidity for which
they do not have a committed replacement funding. The Purchaser
(and the liquidity lenders) are prepared to continue the
Securitization Facility on modified terms (including a new stated
Termination Date of August 31, 2001), but only upon the terms and
conditions described herein. In addition, the Debtors will
realize substantial savings from prompt assumption of the
modified Securitization Facility because the interest rate
charged to the Debtors pursuant to the modified Securitization
Facility will be 50 basis points lower than the interest rate
provided in the DIP Financing Facility.
Modified Securitization Facility Terms
As a result of what the Debtors described as arm's-length
negotiations conducted by and between the Debtors and the Agent
on behalf of the Purchaser, the Purchaser has agreed to continue
to provide ISC with receivables financing pursuant to a modified
Securitization Facility on the terms and conditions described
below. Except for the modifications expressly set forth herein
(including, without limitation the extension of the stated
Termination Date from its present date of January 16, 2001, to
August 31, 2001), these terms and conditions are essentially a
continuation of the Securitization Facility as it existed prior
to the commencement of these Chapter 11 cases.
Seller. ISC shall continue to be the purchaser under the
Purchase and Contribution Agreement and the seller under the
Receivables Purchase Agreement.
Purchase of receivables and undivided ownership interest.
The Originators shall continue to sell, assign and transfer to
ISC all receivables now existing or hereafter arising, and all
related rights, without recourse, representation or warranty,
with some exceptions specified in the Purchase and Contribution
Agreement. The receivables and related rights will be sold daily
upon the creation of receivables and related rights. The sales of
the receivables and related rights from the Originators to ISC
shall be deemed true sales or true contributions (i.e., the
transfers will be sufficient to terminate any legal or beneficial
interests under applicable nonbankruptcy law that Imperial,
Imperial Distributing, or any of the Originators have), and upon
these sales or contributions, all receivables and related rights
shall become the sole property of ISC. Contemporaneously with the
purchase of these receivables and related rights, ISC will sell,
under ISC's irrevocable written notice delivered to the Agent,
and the Purchaser will purchase, on an ongoing basis, an
undivided ownership interest with regard to the participation, at
a price determined under a funding formula as described below.
Purchase Limit. The Receivables Purchase Agreement provides
for a purchase limit which is presently $110 million.
Use of Proceeds. The proceeds of all purchases under the
Receivables Purchase Agreement are to be used only to purchase
receivables from the Originators under the Purchase and
Contribution Agreement.
Stated Termination Date. The stated Termination Date shall
be August 31, 2001.
Receivables. The Receivables Purchase Agreement defines a
receivable as any indebtedness or other obligation owed to any
Originator or ISC, or any right of any Originator or ISC to
payment from or on behalf of an obligor, whether constituting an
account, chattel paper, instrument or general intangible, arising
in connection with the sale of goods or the rendering of services
by any Originator or ISC, and includes, without limitation, the
obligation to pay any finance charges, fees and other charges
with respect thereto.
Indebtedness and other obligations arising from any one
transaction, including, without limitation, indebtedness and
other obligations represented by an individual invoice or
agreement, shall constitute a receivable separate from a
receivable consisting of the indebtedness and other obligations
arising from any other transaction. A "Pool Receivable" means a
Receivable in the Receivables Pool. The "Receivables Pool" means,
at any time, the then outstanding Receivables purchased by ISC
pursuant to the Purchase and Contribution Agreement prior to the
Facility Termination Date, excluding Receivables reconveyed by
ISC to any Originator under the terms of the Purchase and
Contribution Agreement.
Eligible Receivables. Under the Receivables Purchase
Agreement, ISC shall purchase all Receivables that as of its
purchase date satisfy certain criteria, the most important of
which are:
(i) The Obligor of which is:
(1) a United States resident or OECD resident; provided,
however, if the Obligor of such Receivable is a
resident of a jurisdiction other than the United
States or OECD, the Obligor's obligations with
respect to such Receivables are supported by a
letter of credit or guaranty from an entity with a
rating of at least (A) A by Standard & Poor's and
(B) A2 by Moody's;
(2) not a government or a governmental subdivision,
affiliate or agency; provided, however, if the
Obligor of such Receivable is a government or a
governmental subdivision, affiliate or agency, the
aggregate Outstanding Balance of all Pool
Receivables of such Obligor that are Eligible
Receivables, when added to the aggregate Outstanding
Balance of all other Eligible Receivables of
Obligors that are governments or governmental
subdivisions, affiliates or agencies shall not
exceed three percent of the Net Receivables Pool
Balance;
(3) not an Affiliate of Imperial or any Affiliate of
Imperial;
(4) not subject to an exchange agreement with any
Originator; and
(5) not deemed unacceptable by the Agent;
(ii) Which have a stated maturity of not more than sixty days
after the date on which the receivable was invoiced;
(iii) Which are not the subject of any asserted dispute,
offset, hold back defense, adverse claim or other claim,
and which do not arise form the sale of inventory which
is subject to any adverse claim;
(iv) Which arise from the sale and delivery of goods or
services in the ordinary course of the originator's
business;
(v) In which ISC owns good and valid title and which are
freely assignable by ISC;
(vi) For which the Purchaser shall have a valid and
enforceable undivided percentage ownership interest or a
first-priority perfected security interest, to the
extent of the participation, and a valid and enforceable
first priority perfected security interest therein and
in the related security and collections with respect
thereto, in each case free and clear of any adverse
claim; and
(vii) which are not defaulted or delinquent, and which do not
constitute "bill and hold" or "goods on consignment"
receivables.
Purchase Price. The purchase price payable by the Purchaser
shall be calculated pursuant to the following funding formula:
the Purchaser shall continue to make purchases and reinvestments
in an undivided ownership interest with regard to the
participation; provided that the conditions precedent to
purchases and reinvestments described in summary above are
satisfied including the condition that after giving effect to any
purchases or reinvestments on such date (a) the sum of (i) the
Investment, plus (ii) the Total Reserves does not exceed (b) the
sum of (i) the Net Receivables Pool Balance at such time, plus
(ii) the Purchaser's share of the amount of Collections and
Permitted Investments then on deposit in the Collection Account
(other than amounts representing discount and fees). Such
undivided percentage interest shall be computed as
1 + DR + LR + SFR
-----------------
NRB
where:
I = the Investment of the Participation
DR = the Discount Reserve of the Participation
LR = the Loss Reserve of the Participation
SFR = the Servicing Fee Reserve of the Participation
NRB = the Net Receivables Pool Balance
Servicer. Imperial Distributing shall continue to act as
Servicer of the Receivables. As compensation for its services,
Imperial Distributing shall be paid a servicing fee in respect of
any yield period equal to one percent per annum of the average
outstanding Net Receivables Pool Balance during the yield period.
Termination Event. Upon the occurrence of a Termination
Event, the Purchaser may terminate its obligation to make
investments and reinvestments in an undivided ownership interest
with respect to the Participation; provided, however, that upon
termination of the DIP Financing Facility, the Purchaser's
obligation to make such investments and reinvestments in an
undivided ownership interest with respect to the Participation
shall automatically terminate. The Receivables Purchase Agreement
as modified will define Termination Event to include, in addition
to the Termination Events presently set forth in the Receivables
Purchase Agreement, the following bankruptcy-specific events:
(i) The Court dismisses or converts to chapter 7 the
Debtors' Chapter 11 cases;
(ii) Either Imperial, Imperial Distributing, ISC or any
Originator files an application, or there shall arise,
any other claim which is pari passu with or senior to
the claims of the Purchaser to the Receivables and
Related Security arising under the Receivables Purchase
Agreement other than the claims of the DIP Lenders;
(iii) A reorganization plan becomes effective for Imperial,
Imperial Distributing, ISC or any Originator under a
reorganization plan;
(iv) A reorganization plan becomes effective for Imperial,
Imperial Distributing, ISC or any Originator pursuant to
an order of the Court, or distributions shall have
commenced under a reorganization plan;
(v) This Court enters an order reversing, modifying,
amending, staying for a period in excess of ten days,
vacating or rescinding the order approving the Modified
Securitization Facility (as modified);
(vi) The DIP Financing Facility shall cease to be in full
force and effect or the commitments thereunder shall
have been terminated or an event of default shall have
occurred under the DIP Financing Facility; or
(vii) This Court enters an Order in any of the Chapter 11
cases of the Debtors appointing, a trustee or an
examiner with enlarged powers.
Remedies. If a Termination Event has occurred and is
continuing, some of the remedies provided are:
(i) The Purchaser shall have all the rights and remedies of
a secured creditor or a purchaser of accounts under the
UCC;
(ii) The Agent may direct the Obligors that payment of all
amounts payable under any Pool Receivable be made
directly to the Agent or its designee;
(iii) The Agent may instruct ISC or Imperial Distributing to
give notice of the Purchaser's interest in Pool
Receivables to each Obligor, which notice shall direct
that payments be made directly to the Agent or its
designee, and upon this instruction from the Agent, ISC
or the Imperial Distributing, as applicable, shall give
this notice at the expense of ISC; provided, however,
that if ISC or Imperial Distributing fails to so notify
each Obligor, the Agent may so notify the Obligors;
(iv) exercise any and all other remedies under the
Transaction Documents or applicable law.
Interest Rate. The Receivables Purchase Agreement as it is
to be modified provides that ISC shall pay a discount rate equal
to the rate of interest most recently announced by the Bank of
Montreal at its branch in Chicago, Illinois as its prime
commercial rate for United States loans made in the United
States, plus two percent; provided, however, that during the
occurrence and continuance of a Termination Event, the rate of
interest shall be equal to the Prime Rate plus four percent.
Collateral. Under the terms of the Receivables Purchase
Agreement, ISC's obligations to the Purchaser will be secured by
a first priority, perfected security interest in the following
collateral, none of which may be subject to any other lien
(except as consented to by the Agent): all of ISC's right, title
and interest (including without limitation any undivided interest
of ISC) in, to and under all of the following, whether now or
hereafter owned, existing or arising: (i) all Pool Receivables,
(ii) all Related Security with respect to each such Pool
Receivable, (iii) all Collections with respect to each such Pool
Receivable, (iv) all Lock Box Accounts and all amounts on deposit
representing proceeds of the Pool Receivables and proceeds of the
Related Security, the Collection Account and Liquidation Account
and all amounts on deposit therein and all certificates and
instruments, if any, from time to time evidencing such Lock Box
Accounts, Collection Account and Liquidation Account and such
amounts on deposit therein, and (v) all proceeds of, and all
amounts received or receivable under any or all of, the
foregoing.
Priority. All of the obligations of the Originators and
Imperial Distributing under the Purchase and Contribution
Agreement (which the Purchaser shall be entitled under the
Modified Securitization Facility to assert derivatively) and all
of the obligations of Imperial under the performance guaranty
shall constitute superpriority claims, with priority over any and
all administrative expenses other than the claims specified in
(i) - (iv) below. The superpriority claims and liens shall be
subject, upon the occurrence and during the continuance of an
Termination Event, or an event which with the lapse of time or
giving of notice or both would become a Termination Event, to:
(i) The prior payment in full of all obligations of the
Debtors under the DIP Financing Facility whether for
principal, interest, fees or otherwise;
(ii) Following the occurrence and during the continuance of
a "Default" or an "Event of Default" under the DIP
Financing Facility, or an event that would constitute a
"Default" or an "Event of Default" thereunder with the
giving of notice or lapse of time or both, the Carve-Out
(as defined in the motion to approve the DIP Facility);
(iii) The payments of fees represented charges by the United
States Trustee and the Clerk of the Court; and
(iv) Amounts for accrued and unpaid wages and salaries
(including, payroll taxes) to employees of the Debtors
incurred in the ordinary course of business immediately
prior to the occurrence of a Termination Event or an
event that with the giving of notice or lapse of time or
both would constitute a Termination Event, plus
$250,000.
So long as a Termination Event or an event which, with the giving
of notice or lapse of time or both, would constitute a
Termination Event shall not have occurred, the Debtors are
permitted to pay any administrative expenses incurred in the
ordinary course of business of the Debtors, and compensation and
reimbursement of expenses authorized by this Court, as the same
may be due and payable, without any reduction of the Cap.
Performance Guaranty. In consideration of the benefits
received and to be received by Imperial as a result of the sale
by ISC of the Receivables, Imperial agrees to unconditionally and
irrevocably reaffirm its (a) guaranty to the Agent, each Program
Support Provider, and the Purchaser and their respective
successors and assigns of the punctual payment and performance,
as the case may be, when due of all covenants, obligations,
agreements, terms, conditions and indemnities to be performed and
observed by ISC, Imperial Distributing or any Originator under
the Securitization Agreement, the increase in the Commitment Fee
described below, and the conditions precedent described below.
Fees. The following fees and costs are to be paid by ISC to
the Agent on behalf of the Purchaser in connection with the
Securitization Facility:
(a) Modification extension fee. This fee, equal to a 1.00%
times the Purchase Limit, to be paid to the Agent upon
the earlier of (i) August 31, 2001, (ii) confirmation
and consummation of a plan of reorganization, or (iii)
the Termination Date;
(b) Commitment fee. This fee for each day from and including
the assumption of the Securitization Facility until, but
excluding, the date following the Termination Date, on
which the Investment shall be reduced to zero, for each
day in this period equal to the product of (x) the
excess of 102% of the Purchase Limit over the daily
outstanding Investment on such day, times (y) 0.65%
times (z) 1/360. This fee is payable monthly in arrears
on the first business day of each month, and on the
date, following the Termination Date, on which the
Investment shall be reduced to zero, in amount of the
commitment fee that shall have occurred during the prior
month or other period then ending, and which shall not
have been previously paid;
(c) Expenses. All reasonable out-of-pocket expenses and
costs of the Agent (including, without limitation,
reasonable legal fees and disbursements), whether or not
the assumption of the transactions contemplated by the
Securitization Facility are consummated.
Conditions Precedent. The conditions precedent to the
effectiveness of this Modified Securitization Facility include
(i) the granting of this Motion and entry of an approved order,
(ii) the approval of the DIP Financing Facility through entry of
interim and final orders that provide for and allow the
continuing sale and purchase of the receivables under the
continuation of the Securitization, and (iii) the entry of an
Order authorizing the Debtors to continue consolidated cash
management system, maintenance and use of existing bank accounts,
use of existing business forms, and use of investment and deposit
guidelines that authorizes the continued maintenance of the bank
accounts (including the Lock Boxes) used in connection with the
Securitization Facility.
The Debtors sought entry of interim and final orders approving
all aspects of the obligations under a modified Securitization
Facility including, without limitation, a modified Receivables
Purchase Agreement, a modified Purchase and Contribution
Agreement (including the reaffirmation of the performance
guaranty set forth in the Receivables Purchase Agreement), and a
modified Liquidity Agreement. Upon this Court's authorization of
such a continuation of a modified Securitization Facility, the
Debtors, together with the DIP Financing Facility, will have the
funding in place which is necessary to their continued operations
in accordance with their current business plan as they seek
confirmation of their proposed joint plan of reorganization.
After consideration of the Debtors' evidence and arguments, Judge
Robinson entered an interim order approving assumption by the
Debtors of the modified securitization facility, subject to
further review and entry of a final order at a later date.
(Imperial Sugar Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
INTEGRATED HEALTH: Agrees To Modify Stay For Insured Claim
----------------------------------------------------------
In connection with a traffic accident involving the collision of
two vehicles when traffic lights became inoperative, Julia A.
Gomez and Humberto Gomez, her husband, individually and as
parents and natural guardians of Alexandra Gomez, a minor, moved
the Court for relief from the automatic stay in order to proceed
with a complaint pending before the State Court in Florida,
against Integrated Health Services, Inc. and Symphony Diagnostic
Services, No. 1, Inc., formerly known as Chase Portable X-Ray,
Inc.
According to the movants, the accident happened in August, 1994
when Julia A. Gomez was operating her vehicle westbound on State
Road 860 in Miami Dade County. Her daughter, Alexandria Gomez was
a passenger in her vehicle. As she approached the intersection of
State Road 860 and State Road 823, she became aware that the
traffic signal was not working. Under Florida Statute, operators
in vehicles approaching an intersection in which traffic lights
are inoperative must treat the intersection as if it is a four
way stop sign intersection. Mrs. Gomez came to a stop, determined
it was safe to travel through the intersection, and proceeded to
move through it. At this time, a vehicle owned and/or leased by
IHS, and operator by an employee of IHS, was approaching the same
intersection while traveling southbound on State Road 823.
The Gomezes alleged that the operator of the IHS van was
negligent in that she failed to stop at the intersection, and as
a result struck the vehicle in which Mrs. Gomez and her daughter
were travelling.
Movants claimed that the alleged negligence caused Julia A. Gomez
and Alexandria Gomez, a minor, severe suffering and pain, bodily
injuries, mental anguish, disability, loss of capacity to enjoy
life, medical and rehabilitation expenses, and lost earnings, as
well as earning capacity. Mr. Gomez has suffered too, in being
deprived of his wife's services, and in having to incur the
expense of past hospitalization and future medical care for his
wife.
On August 17, 1998, Movants filed a complaint against IHS and
Symphony to recover damages arising from the alleged negligent
conduct of the operator of the van in her capacity as an employee
of IHS. The movants told Judge that to their knowledge, the
Debtors have a one million dollar policy, through American
international Group (AIG), covering such loss, and maybe other
insurance as well.
As a consequence of the filing of the Debtors' Chapter 11
petitions, the District Court Litigation has been enjoined.
Accordingly, the movants sought relief from the automatic stay to
proceed with the State Court action because they believe that it
is likely that the case will proceed more quickly in the Circuit
Court in Dade County, Florida than in the bankruptcy proceedings,
given the Bankruptcy Court's caseload.
The Movants specified that they seek to recover from the Debtors
compensation only within and up to the limits of the Debtors'
respective insurance policy with AIG.
Debtors' Response to Relief Requested
Considering that the particular insurance coverage available
relieves them of any financial burden from the continuation of
the State Court Litigation if the automatic stay is modified, the
Debtors indicate that they do not object to the Motion to the
extent that it seeks to modify the automatic stay to permit the
Plaintiffs to proceed to trial or settlement, and thereby to
liquidate the amount of their claims, if any, and to recover any
such judgment or settlement from available insurance proceeds.
The Debtors advised that, for 1994, IHS is covered by an
insurance policy from AIG which provides automobile liability
coverage of up to $1,000,000 per occurrence with no aggregate
limit. The Auto Policy is backed up by excess insurance policies
which provide the Debtors with additional coverage of over
$25,000,000.
However, the Debtors made it clear that with regard to any part
of the plaintiffs' liquidated claim in excess of available
insurance proceeds, the automatic stay should stay in effect, and
the plaintiffs' claims, if any, should be administered as general
unsecured claims in the IHS chapter 11 cases.
The Court's Order
Judge Walrath entertained the motion and the Debtors's response
and ordered that the automatic stay be modified to permit the
movants to proceed to trial or settlement in the State Court
Litigation, and to liquidate their claims, and to recover any
such judgment or settlement from available insurance proceeds.
Judge Walrath makes it clear in her order that with regard to any
portion of the movants' liquidated claim in excess of, or not
covered by, available insurance proceeds, the automatic stay
provisions of 11 U.S.C. section 362 are not modified and the
Excess Claim will be administered as a general unsecured claim in
the IHS chapter 11 proceedings. (Integrated Health Bankruptcy
News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
JUST FOR FEET: State Board Divests All Common Shares
----------------------------------------------------
The State of Wisconsin Investment Board, a government agency
which manages public pension funds, has divested itself of all
formerly held common shares of Just For Feet Inc.
KOMAG: State Board Holds 16.57% of Common Stock
-----------------------------------------------
The State of Wisconsin Investment Board, a government agency
which manages public pension funds, beneficially owns 11,067,676
shares of the common stock of Komag Inc, representing 16.57% of
the outstanding common stock of the company. The State of
Wisconsin Investment Board retains sole voting and dispositive
power for all shares.
KPN NV: Moody's Cuts Senior Debt Ratings TO Baa2
------------------------------------------------
Moody's Investors Service downgraded Koninklijke KPN NV's (KPN's)
senior unsecured debt ratings from A3 to Baa2 and subordinated
debt ratings from Baa1 to Baa3. According to Moody's, these
ratings reflect the concern that KPN will be unable to reduce its
indebtedness significantly during 2001 due to a combination of a
reduction in anticipated proceeds from asset disposals and the
IPO of KPN Mobile, as well as potential delays in the
implementation of such events.
Accordingly, the following ratings are affected by the downgrade:
From A3 to Baa2:
* 0.84% JpnY 1.8 billion medium-term notes due 2001,
* the 0.57% JpnY 30 billion medium-term notes due 2001,
* the 0.57% JpnY 100 billion June 2001,
* JpnY 85 billion July 2001,
* the 5.75% EUR1.5 billion eurobonds due in 2003,
* the EUR3.5 billion floating rate note due in 2002,
* the EUR1 billion floating rate note due in 2001,
* the US$1 billion floating rate note due in 2001,
* the 4% EUR1.25 billion medium-term notes due 2004,
* the 4.75% EUR1.5 billion medium-term notes due 2008,
* the 6.5% NLG1.3 billion Eurobonds due 2006 and the
remaining availability under the Euro5 billion MTN
program.
From Baa1 to Baa3:
* the subordinated rating on the remaining availability
under the Euro MTN program, and
* the 3.5% to 4% EUR 1.5 billion subordinated convertible
notes due 2005.
LERNOUT & HAUSPIE: Trustee Balks at Separate Dictaphone Committee
-----------------------------------------------------------------
Patricia A. Staiano, the United States Trustee, appearing through
her counsel Mark S. Kenney, Esq., objected to the Dictaphone
Corp. Creditors' pitch for appointment of a separate official
committee. After reviewing the procedures for solicitation and
appointment of the Official Committee in these cases, together
with the debtors who appear to be obligated on their respective
debts, the Trustee stated her belief that the Committee as formed
adequately represents the interests of all of the Debtors'
unsecured creditors. The Trustee noted that, as to the
Noteholders' allegations of failures to investigate, these
allegations are based on the prediction of future events, such as
the Committee's refusal to investigate and the success of any
anticipated challenge to the Dictaphone guaranty of L&H's
obligations. The Trustee urged Judge Wizmur not to appoint a
committee based on unproven allegations, suppositions, and
predictions of the future. (L&H/Dictaphone Bankruptcy News, Issue
No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900)
LERNOUT & HAUSPIE: DIP Financing Hearing Postponed To February 20
-----------------------------------------------------------------
Lernout & Hauspie Speech Products NV (EASDAQ: LHSP, OTC: LHSPQ),
a world leader in speech and language technology, products and
services, said that the hearing that was scheduled for February
13 before the Bankruptcy Court in Camden, N.J. to approve the
Debtor In Possession (DIP) financing was adjourned to February
20, 2001. The Company requested the postponement because the DIP
lender had not completed its due diligence and documentation in
time for today's hearing.
L&H indicated that the postponement should be beneficial to the
Company. The Company believes that the bankruptcy court will
approve the DIP financing at the subsequent hearing, after the
DIP lender has completed its due diligence and documentation.
L&H will have sufficient funds to continue to operate normally in
the interim period including payments to be made to employees due
on February 15.
LERNOUT & HAUSPIE: Trustee Sought for Dragon Unit
-------------------------------------------------
The former majority owners of troubled Lernout & Hauspie Speech
Products NV's (L&H) Dragon Systems Inc. unit have asked that a
federal trustee be appointed for Dragon, charging that management
of the bankrupt L&H is raiding Dragon's assets, according to
Reuters. According to papers filed last week, plaintiffs Janet
and James Baker allege that employee morale at Dragon is down and
key employees have left, in part because of current management's
plans to withdraw commercially successful products and its
failure to ship new products despite a backlog of orders. A
hearing on the trustee request is scheduled for March 6.
L&H attorney Luc Despins said that unless the Bakers are
creditors of Dragon, they do not have standing to request a
trustee for Dragon. In June, the Bakers swapped their 51 percent
stake in Massachusetts-based Dragon, a leading maker of speech
recognition products, for 5.1 million shares of L&H, then worth
about $43 a share. The stock is now down to less than $4 a share,
battered by investigations by the U.S. Securities and Exchange
Commission and by Belgian authorities into two years' of possibly
overstated revenues. In addition, 13 shareholder lawsuits
alleging fraud have been filed against L&H, and in November the
Belgian parent company filed for bankruptcy along with its
Dictaphone Inc. and Dragon units.
The Bakers, as well as the former owners of the Dictaphone unit,
have sued to rescind their stock-swaps with L&H and have also
filed objections to its proposed $60 million debtor-in-possession
(DIP) financing agreement with Cerberus Capital Management LP.
(ABI World, February 13, 2001)
Moreover, BankruptcyData.Com reports, the Bakers have also filed
a motion seeking a Court order disqualifying the law firm
Milbank, Tweed, Hadley & McCloy, LLP from representing Dragon in
the bankruptcy case due to potential conflict of interest.
LEVITZ: Proposes March 5 Record Date for Plan Distributions
-----------------------------------------------------------
Preparing to make distribution under their Third Amended Joint
Plan of Reorganization dated October 30, 2000, Levitz Furniture,
Incorporated, et al., asked Judge Walrath to approve a "non-
material, technical modification" that changes the Record Date
for determining who receives a distribution under the Plan from
the fifth Business Day following the date the Bankruptcy Court
enters the Confirmation Order to March 5, 2001. This
modification, Sally McDonald Henry, Esq., at Skadden, Arps,
Slate, Meagher & Flom LLP explains, will allow the Debtors to
distribute the LHFI Stock or Cash, as appropriate, to the
appropriate holders of the Debt Securities, without unnecessary
difficulties for the DTC and the Indenture Trustees. The March 5
Record Date, Ms. Henry relates, is six days after the February
27, 001 objection deadline and after the anticipated Effective
Date.
Levitz's lawyers argued that this modification is permitted under
11 U.S.C. Sec. 1127(b) because it does not adversely affect the
treatment of creditors' claims. Moreover, Article XI of the the
Plan contemplates technical changes as necessary and appropriate
for the smooth functioning of the Plan.
LOEWEN GROUP: Minor Changes to Creditors' Committee Membership
--------------------------------------------------------------
Pursuant to 11 U.S.C. Sec. 1102(a)(1), the United States Trustee
for Region III appointed the following creditors to the Official
Committee of Unsecured Creditors in the chapter 11 cases of The
Loewen Group, Inc.:
(1) TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
730 Third Avenue
New York, NY 10017
Attn: Roi Chandy, Co-Chair
Tel. (212) 916-5967/Fax # (212) 916-6140
(2) CALIFORNIA PUBLIC EMPLOYEE'S RETIREMENT SYSTEM
400 P Street, Suite 3492
Sacramento, CA 95814
Attn: Curtis Ishii, Sr. Principal Investment Office
Tel. (916) 326-3138/Fax # (916) 326-3330
(3) WACHOVIA BANK, N.A.
191 Peachtree Street, 28th Floor
Atlanta, GA 30303
Attn: David K. Alexander, Sr. Vice President
Tel. (404) 332-1474/Fax # (404) 332-6898
(4) UBS AG, Warburg Dillon Read
677 Washington Boulevard
Stamford, CT 06901
Attn: Mark B. Cohen, Dir., Co-Chair
Tel. (203) 719-1261/Fax # (203) 719-3162
(5) BANK ONE TRUST COMPANY, N.A. as Successor Indenture
Trustee,
100 E. Broad Street
Columbus, OH 43271-0181
Attn: Jeffery A. Ayres
Tel. (614) 248-2566/Fax (614) 248-5195
(6) NORWEST BANK
406 Farmington Avenue
Farmington, CN 06032
Attn: Vito Iacovazzi, Vice President
Tel. (860) 676-7808/Fax # (860) 676-7814
State Street Bank and Trust Company has resigned from the
Official Committee as Indenture Trustee, Bank One Trust Company,
N.A. has been added to the Committee as Successor Indenture
Trustee. William R. Eldridge has also resigned from the
Committee.
Daniel K. Astin, Esq., is the Staff Attorney for the U.S. Trustee
assigned to the Debtors' cases; Phone: (302) 573-6491, Fax: (302)
573-6497 Debtor's Counsel: Eric D. Schwartz, Esquire, Phone:
(302) 658-9200, Fax: (302) 658-3989 (Loewen Bankruptcy News,
Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900)
LTV CORP.: Paying Workers & Ordinary Course Professionals
---------------------------------------------------------
Judge Bodoh granted LTV Corporation's Motion, subject to the
condition that no ordinary course professional have any material
involvement in the administration of a Debtor's estate without
first receiving a separate Order of the Court authorizing the
retention and employment of the professional, to pay up to
$25,000 per month to ordinary course professionals without the
need to file separate fee application. (LTV Bankruptcy News,
Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-00900)
MARINER POST-ACUTE: Wants Court To Okay Charleston Manor Sale
-------------------------------------------------------------
EH Acquisition Corp. II, one of the Mariner Post-Acute Network,
Inc. Debtors, told the Court that a buyer has emerged for the
Charleston Manor in Illinois, a vacant non-profitable facility
that is in disrepair. Coles County Mental Health Assoc., Inc. is
willing to pay $325,000 for the Facility and this is the single
offer received by the Debtor since the Facility was closed and
placed on the market in 1998. The Debtor anticipates net proceeds
of approximately $275,000 after deductions of pro-rations. The
Buyer has escrowed $25,000 that is non-refundable unless the
Debtor's postpetition senior secured lenders or the Court does
not approve the sale.
The Facility's land value has been appraised at $286,000. The
Debtor explained that it has agreed to sell the Facility for a
purchase price which is only slightly above this value because of
the significant amount of capital improvements that are required
to restore the building to a habitable facility. The Debtor
determined to close the Facility in 1998 in view of such capital
expenditures without which the Debtor would be at risk for
significant penalties, and in light of more attractive facilities
offered by competitors.
The Facility was built in 1964 and is comprised of approximately
13,000 square feet. Two additional structures, a 360 square foot
garage and a 960 square foot maintenance building, are located on
the property.
EH Acquisition believes that the divestiture is in the best
interests of the estate. Accordingly the Debtor asked the Court
to approve the Asset Purchase Agreement by and between Coles
County Mental Health Assoc., Inc. as buyer, and the Debtor as
Seller, with respect to the sale of Charleston Manor, and to
authorize the sale of the facility free and clear of liens,
claims, encumbrances and other interests. (Mariner Bankruptcy
News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
MAXICARE HEALTH PLANS: Proposes Reverse Split Of Common Stock
-------------------------------------------------------------
The Maxicare Health Plans, Inc., a Delaware corporation, will
solicit the consent of holders of its common stock on or after
March 6, 2001, with respect to the following proposal: the
approval of a one-for-five reverse split of the common stock.
The board of directors has fixed the close of business on
February 2,2001, as the record date for the determination of
stockholders entitled to consent to the proposal approving the
reverse split.
MESA AIR GROUP: State Board Holds 10.14% Of Outstanding Stock
-------------------------------------------------------------
The State of Wisconsin Investment Board, a public pension fund,
beneficially owns 3,290,000 shares of the common stock of Mesa
Air Group Inc. The State of Wisconsin Investment Board retains
sole voting and dispositive power for all shares. Said shares
represent 10.14% of the outstanding common stock of Mesa Air
Group Inc.
NEWMONT MINING: T. Rowe Price Owns 4.6% Of Common Stock
-------------------------------------------------------
T. Rowe Price Associates, Inc. beneficially owns 7,843,882 of the
common stock of Newmont Mining Corp, of which the investment
advisor holds sole voting power over 2,311,168 shares, and sole
dispositive power over the total shares held. The 7,843,882
shares represents 4.6% of the outstanding common stock of the
company.
OWENS CORNING: To Expand Preferred Contractor Program
-----------------------------------------------------
Owens Corning announced intentions to expand the Preferred
Contractor(TM) program with new member resources and marketing
tools that will continue to help contractors and remodelers meet
the homeowners' demands. "Over the past year, we asked our
contractors and remodelers how we can help their business grow
and improve the Preferred Contractor Program," commented Scott
McDonald, manager, contractor marketing. The Program will be
available in April 2001. Owens Corning is operating under Chapter
11 protection. (New Generation Research, February 13, 2001)
PAUL HARRIS: After Closing 100 Stores, Files Chapter 11 Plan
------------------------------------------------------------
Paul Harris Stores, Inc. (Nasdaq: PAUHQ), a lifestyle specialty
retailer known for its privately branded women's apparel and
accessories, submitted a plan of reorganization that contemplates
emerging from Chapter 11 within approximately 75 days, if the
company obtains required approval of its creditors and the
Bankruptcy Court.
The plan is based upon the downsizing of the company from 266 to
166 stores. The company began the implementation of the plan last
week by seeking Bankruptcy Court approval for the closing and
liquidation of the 100 stores. In addition, corporate overhead
will be reduced by roughly $4.6 million on an annualized basis
through downsizing of the corporate staff and expense reductions.
Glenn Lyon, president and chief executive officer said, "The
reorganization plan provides a platform for continued operations
and future growth. It is our path to success. The decision to
close additional stores has been very difficult, but is necessary
to enable Paul Harris to return to a sound financial position and
prepare for a future that is profitable."
Richard R. Hettlinger, senior vice president and chief financial
officer, indicated that under the proposed plan, if confirmed by
the court, most of the ownership in the reorganized company would
be divided between new investors who inject fresh capital and
creditors. The plan would also provide for equity incentives for
the management team keyed to the achievement of specified
financial goals. Finally, the plan is expected to create an
opportunity for existing shareholders to participate in the
ownership of the reorganized company. He noted that the company
anticipates modifications to the plan based on ongoing
negotiations with the various constituents. The company is
continuing discussions with banks, suppliers and landlords to
meet liquidity needs between now and consummation of the plan.
The company also reported that sales for the five-week month
ended February 3, 2001 were $11.5 million, a decrease of 2.4%
compared to sales of $11.7 million for the four weeks ended
January 29, 2000, which excludes $0.6 million in sales attributed
to the J. Peterman Company. On a comparable store, comparable
four-week basis, January sales decreased 9.6%.
Sales for the fourteen-week fiscal fourth quarter ended February
3, 2001 decreased 3.4% to $80.0 million compared to $82.9 million
for the thirteen weeks ended January 29, 2000, which excludes
$3.7 million in sales attributed to the J. Peterman Company.
Comparable sales decreased 0.8% for the thirteen week period
ended January 27, 2001.
Total sales for the 53 weeks of fiscal 2000 decreased 1.4% to
$251.6 million compared to $255.1 million for the 52 weeks of the
prior fiscal year, excluding $8.9 million in sales attributed to
the J. Peterman Company. Comparable store sales decreased 2.7%
for the fifty-two-week period ended January 27, 2001.
Paul Harris ( www.paulharris.com ) operates 266 Paul Harris and
Paul Harris Direct stores located in 28 states.
PILLOWTEX CORP.: Trustee Objects To E&Y As Restructuring Advisors
-----------------------------------------------------------------
Patricia A. Staiano, the United States Trustee for Region III,
through Frank J. Perch, Esq., Assistant U. S. Trustee, objected
to Pillowtex Corporation's application to engage and retain the
services of E&Y as financial and restructuring advisors.
This objection hinges upon the proposed $6.3 million
restructuring transaction fee to be paid regardless of the
outcome of the cases, without taking into account the creditors,
the benefits of E&Y's services to the estates, or the extent of
the value added by E&Y's services. The U.S. Trustee believes that
this fee should be subject to determination at the time of the
approval of the final fee application in the same manner as that
of any other professional person employed by or paid from the
estate.
Mr. Perch told Judge Robinson that the application should be
denied because E&Y does not measure up to the qualification of
disinterestedness as it has claims for unpaid balances for
prepetition services and/or payments on account of prepetition
services that are potentially avoidable as preferential transfer.
(Pillowtex Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
PLANETGOOD: Files Chapter 11 Petition in Indiana
------------------------------------------------
PlanetGood Technologies, Inc. (OTCBB:PGPG) disclosed that it has
received notices of default from its lenders and creditors. In
view of these defaults and in order to keep operations and
services from being interrupted, the Company and its subsidiary
have filed voluntary petitions with U.S. Bankruptcy Court for the
Southern District of Indiana to reorganize under chapter 11 of
the U.S. Bankruptcy Code.
A hearing to consider a $223,000 debtor-in-possession ("DIP")
credit facility has been requested and a hearing will be held
sometime this week. While under this protection, the Company will
continue exploring alternatives including, seeking additional
funding or a buyer to purchase the ongoing operations and assets
of the Company.
RURAL/METRO: EBITDA is Positive, But Losses & Strains Continue
--------------------------------------------------------------
Rural/Metro Corporation (Nasdaq:RURL) announced results for its
second quarter of fiscal 2001, ended December 31, 2000, reporting
revenue of $125.2 million.
On an EBITDA basis, the Company achieved $8.7 million for the
quarter, or an operating margin of 7 percent, excluding a one-
time, pre-tax charge of $5.2 million related to its 911 contract
loss in Lincoln, Nebraska, and a non-cash, pre-tax charge of an
additional $10 million to increase its normal provision for
doubtful accounts.
On a fully consolidated basis including the charges, net loss
after taxes for the quarter was $21.6 million compared to a net
loss of $42.4 million for the same period of the prior year.
Jack Brucker, President and Chief Executive Officer, said, "Cash
performance continued to improve, with collections averaging 3.3
percent greater than for the same quarter of the prior year. This
is significant when we consider today's collections are the
product of a smaller base of revenue and our proactive measures
to improve revenue quality.
"During the quarter, we continued to pursue profitable same-store
growth opportunities in established marketplaces, as well as new
specialty fire business. We have been successful in these
endeavors, and will continue to bid on strategic new business as
we build on the Company's fundamental strengths as a leading
provider of fire and ambulance services.
The Company continued to self-fund all expenses and other
obligations through the quarter and re-invested in the business
by funding the purchase of approximately $2 million in new
capital equipment.
Brucker continued, "The Company also has continued to service its
debt, paying regular monthly interest on its revolving credit
facility in full and on time, as well as making periodic
principal payments. During fiscal 2001, Rural/Metro has met its
operating demands, including peak season upswings, without the
need to borrow. Further, we intend to fully meet all of our
ongoing financial obligations with internally generated funds,
including our upcoming bond interest payment."
During the second quarter, the Company continued to experience
downward pressure on its EBITDA margin due to a number of
factors, including higher overall labor costs and economic
pressures in Latin America.
"The higher overall labor expenses reflect the cost for us to
remain competitive in the job market, particularly related to the
recruitment and retention of paramedics and emergency medical
technicians. As is the case for many U.S. companies, we are also
experiencing higher insurance costs than we have in the past."
Brucker continued, "Our operations in Argentina continue to
perform below expectations. While our business model is sound
during good economic times, we continue to struggle with
pressures related to the ongoing recession in the region. High
unemployment has forced many employer groups and individual
subscribers to drop coverage for this service. Management
continues to direct considerable effort to restructure and
downsize the business while still retaining our reputation as the
premier provider in the country. When the economy of the region
improves, as has been forecast, we expect profitability in
Argentina to return to its normal levels."
The Company reported a one-time, pre-tax charge of $5.2 million
related to its second-quarter 911 contract loss in Lincoln,
Nebraska. The charge consists primarily of a write-off of
goodwill associated to this operation and is largely non-cash in
nature. Brucker stated, "This contract loss was the result of a
long and difficult political debate with the municipal fire
department. However, I am pleased to share that Rural/Metro
remains in Nebraska, having relocated our base of operations to
Omaha, where we have been in business for more than 30 years."
Rural/Metro also reported a non-cash, pre-tax charge of an
additional $10 million to increase its normal provision for
doubtful accounts. "The charge is primarily associated with aging
accounts receivable for services provided by operations that were
closed or downsized as part of the Company's fiscal 2000
restructuring program," Brucker said. "We believed at the outset
of the restructuring program that we would recoup a larger
percentage of these aging accounts, however, that has not been
our experience to date, despite concentrated efforts to collect
the revenue. We believe our decision to remain conservative in
setting our reserves is prudent and responsible and will
fundamentally strengthen the Company in the future."
In line with efforts to strengthen its existing operational base,
the Company continued to scrutinize the ongoing financial
performance of each service area. Brucker continued, "Through
this program, we have identified additional operations where we
believe unfavorable reimbursement or other adverse market trends
are emerging. This supports our internal mandate to continuously
evaluate operations and take appropriate actions to minimize
exposure to uncompensated care."
Rural/Metro Corporation provides mobile health services,
including 911 and non-emergency ambulance transportation
services, fire protection and other safety-related services to
municipal, residential, commercial and industrial customers in
more than 400 communities in the United States and Latin America.
SAFETY-KLEEN: Closing Hilliard Ohio Wastewater Facility
-------------------------------------------------------
Safety-Kleen Corp. announced its intention to cease operations at
its Hilliard Wastewater Treatment facility, in Hilliard, Ohio.
The company said that since it acquired the facility in 1992, the
wastewater treatment market in the Ohio Valley area has changed
significantly.
"Increased competition, industrial waste minimization efforts,
and regulatory changes have created a situation in which the
Hilliard wastewater treatment facility is no longer economically
viable," said facility manager Craig Shell. "We regret having to
close the facility and layoff our employees, but that is the hard
reality."
According to Shell, the company has begun winding down daily
treatment operations on February 1, and began preparing for the
process of decommissioning the facility. Decommissioning
activities will take place during the next six months, Shell
said, and during that time the company will work with city
officials to determine the details of how the property will be
returned to the city of Hilliard. The facility encompasses a 10-
acre site, five acres of which are leased from the city.
Shell said the company will work with approximately 20 displaced
employees to assist them in finding employment in the local area,
or at other SK facilities within the company's extensive waste
management network, if possible.
The Hilliard facility stopped receiving waste from routine
customers after January 31, Shell said, but will continue to
receive waste from Corporate Account customers until February 16,
providing them a 30-day notice period during which the company
work with its customers to find alternative treatment options.
The facility will continue to process current inventories as part
of its decommissioning plan, Shell said. (Safety-Kleen Bankruptcy
News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
SOLV-EX: Files "Chapter 22" Case in Albuquerque
-----------------------------------------------
An Albuquerque, N.M.-based company founded to develop technology
for extracting oil from Canadian oil sands has filed chapter 11
for the second time in four years, according to Knight Ridder.
Solv-Ex Corp. filed a voluntary petition with the U.S. Bankruptcy
Court in Albuquerque on Feb. 1 and listed $2.9 million in
liabilities and $560,000 in assets. The petition also showed
Solv-Ex as having no income from its operations.
Solv-Ex listed seven creditors with secured claims against the
company for about $276,000 and unsecured claims of $2.6 million.
The court has scheduled a March 15 meeting of Solv-Ex's
creditors. Solv-Ex previously filed for chapter 11 during the
summer of 1997 and filed for similar protection in Canada the
same year. The company spent nearly a year under bankruptcy
protection and emerged in July 1998 after it sold several of its
assets and shares of leases it held for oil sands in Canada to
other oil companies. Prior to its 1997 bankruptcy, Solv-Ex
reported spending more than $130 million on its technology. The
company, however, never showed a profit. (ABI World, February 13,
2001)
STELLAR FUNDING: S&P Lowers Ratings on Class A-3 & A-4 Notes
------------------------------------------------------------
Standard & Poor's lowered its ratings on the class A-3 and class
A-4 notes issued by Stellar Funding Ltd. and co-issued by Stellar
Funding CBO Corp. (see list).
The lowered ratings reflect a significant deterioration in the
collateral pool credit quality, the recent increase in the pool
default rate, and the loss of collateral principal due to credit
risk sales.
Due to the significant credit deterioration in the collateral
pool, the transaction is currently failing two out of four
categories in Standard & Poor's issuer rating distribution test.
In addition, according to the Jan. 2, 2001 trustee report, a
total of $38.4 million, or approximately 14% of the total
collateral pool is in default. The weighted average market value
of the currently defaulted collateral is well below the assumed
recovery rate in the transaction. From April to December 2000, a
total of $44.4 million in the pool defaulted, $6 million of which
was sold in May 2000 at a distressed price of 15.5%. Another
factor contributing to further loss in the collateral principal
is the credit risk sales, which totaled approximately $48.9
million in the previous 20 months, with a weighted average sale
price of 54%. Standard & Poor's will continue to monitor the
recoveries achieved on future sales of defaulted and credit risk
securities.
Standard & Poor's has reviewed the results of recent cash flow
model runs. Various stress scenarios were assumed in the cash
flow runs in order to determine new breakeven cumulative loss
rates for the transaction. These breakeven loss rates were then
compared to the prevailing stressed gross loss distribution of
the current pool as generated by Standard & Poor's default model.
The credit deterioration in the collateral pool has increased the
current stressed gross loss rates above the current breakeven
loss rates. Therefore, the previous ratings on the class A-3 and
A-4 notes no longer reflect their credit risk exposure.
The increasing par loss due to the credit risk sales and
defaulted securities has resulted in the violation of the
overcollateralization test since April 2000. Defaulted securities
are excluded from the collateral pool for the calculation of the
overcollateralization ratio, which is currently 86.34%. In the
previous two payment periods, the required minimum
overcollateralization ratio was forced to step up from 101% to
116%, as high default rate triggered the step-up default test.
Due to the special redemption triggered by the
overcollateralization test failure, the class A-2 accreted
investment amount, roughly $13 million, has been fully paid down
in the previous two payment dates. The principal balance of the
class A-3 notes has also delevered for approximately $7 million
in January 2001. However, the improvement to the
overcollateralization ratio from this redemption is insufficient
to bring the overcollateralization test back into compliance.
Standard & Poor's will continue to monitor its ratings on the
class A-3 and A-4 notes.
OUTSTANDING RATINGS LOWERED
Stellar Funding Ltd./Stellar Funding CBO Corp.
Class Rating
To From
A-3 A- AAA
A-4 BB A
SUNSHINE MINING: Temporary Trading Symbol Is SSCFQ
--------------------------------------------------
Sunshine Mining and Refining Company (OTCBB: SSCFQ) announced
that the temporary trading symbol for its "old common stock" is
SSCFQ.
As previously reported, due to the bankruptcy reorganization, the
"old common stock" of Sunshine was cancelled (as are all issues
of previously issued warrants). Common stockholders with more
than 100 shares of "old common stock" in their accounts will
receive a pro rata distribution of approximately 3.4% of the "new
common stock." Of the total new shares of stock outstanding (50
million shares) "old common stock" holders will receive
approximately 1.7 million shares. (In other words, a holder of
1,000 shares of "old common stock" will receive approximately 35
shares of "new common stock.") No action by holders of "old
common stock" is required. The Company will make an announcement
when the "new common stock" is delivered and available to trade,
expected to happen in a few days. The Company will announce the
new symbol at that time.
Sunshine Mining news releases and information can be accessed on
the Internet at: www.sunshinemining.com.
TEAM COMMUNICATIONS: Asks Lenders for Waiver of Debt Covenants
--------------------------------------------------------------
TEAM Communications Group, Inc. (Nasdaq:TMTV) (Neuer Markt:TME)
reported that it currently expects to take a charge of
approximately $21,000,000 against its results of operations for
the year 2000. The Company stated that the amount of the expected
charge is subject to adjustment, including possible increase,
upon audit of the Company's year 2000 operations. It is also
subject to completion of an internal examination of whether
certain of the Company's film library acquisition and
distribution transactions during the past year lacked economic
substance. As a result of this charge, the Company anticipates
that it will report a loss for the year 2000 of between
$18,000,000 and $19,500,000 or a potentially larger amount. The
Company also disclosed that it has short-term liquidity needs,
which Mr. Solomon stated will receive his immediate attention.
Mr. Solomon stated, "I am gratified by the support of the Board.
I look forward to working with the executives of the Company,
including Jay Shapiro, the new President and Chief Operating
Officer, and Jamie Waldron, President of Production, in building
on the Company's core business activities. It is my hope that we
can build on the increased production activities of 2000 and
return the Company to profitability as soon as practicable." Mr.
Solomon further stated, "I intend to focus whatever time is
necessary to rebuild TEAM and make it a success."
The Company stated that the charges expected to be reflected in
its year 2000 results will include the establishment of
approximately $11,000,000 of reserves against long-term
receivables and $10,000,000 of reserves relating to the valuation
of its film programming inventory. The Company also expects to
record an adjustment of approximately $2,000,000 as a result of
the early adoption of certain new accounting requirements for
producers and distributors of films.
These adjustments include $9,000,000 related to the elimination
of the Company's investment associated with its 1999 acquisition
of Dandelion U.K. The Company stated that it intends to
restructure its present U.K. operations, and that Noel Cronin,
the Managing Director of Team Dandelion, has agreed to terminate
his employment agreement with the Company. The Company further
reported that it has instituted a strategic review of its
acquired film libraries, with a view to increasing the rates at
which the Company amortizes its investments in those libraries.
As a result of the anticipated adjustments and reserves, the
Company expects that it will not be in compliance with the terms
of its existing bank financing facilities, and is seeking
appropriate waivers of these potential covenant defaults. The
Company is also seeking to restructure its financing
arrangements.
Mr. Solomon is an established veteran of the entertainment
industry and one of the pioneers of television syndication. After
leaving Warner Bros., Mr. Solomon established Solomon
Entertainment, which currently owns production companies in Latin
America, Spain and Rumania. Mr. Solomon is also building
entertainment centers in Miami and Puerto Rico, and is also the
Chairman of the Board and Chief Executive Officer of Max
International (OTCBB:MXTI).
TEAM Communications Group, Inc. (Nasdaq:TMTV; Neuer Markt:TME) is
a leading multinational production and distribution company
specializing in family, action, adventure and reality-based
programming for worldwide distribution. TEAM Communications Group
currently owns and distributes over 4,000 hours of programming
worldwide. The Company also produces a wide variety of
programming for leading U.S. and international broadcasters. TEAM
maintains offices in Los Angeles, London through its TEAM
Dandelion Ltd. operations and Munich through its TEAM
Entertainment Germany (GmbH) operations. Its shares trade on
NASDAQ-NMS (TMTV) and on the German Neuer Markt (TME).
TELESCENE: Posts Weak Q3 Results in Midst of Bankruptcy Case
------------------------------------------------------------
Telescene Film Group Inc. reported its consolidated financial
results for the third quarter ended November 30, 2000. The net
losses were $29.6 million compared to earnings of $3.0 million
for the same period in 1999. Gross revenues were $13.8 million
compared to $24.2 million for the same period in 1999. Library
revenues for the third quarter were $0.3 million compared to $6.5
million for the same period in 1999.
The company's consolidated net losses for the nine-month period
ending November 30, 2000, were $87.7 million compared to earnings
of $4.7 million for the same period in 1999. Consolidated gross
revenues were $27.3 million compared to $47.2 million for the
same period in 1999. Library revenues for the nine-month period
were $5.7 million compared to $7.8 million for the same period in
1999. Losses per share were $7.52 based on 11,766,986 shares
outstanding for the nine month period as compared to earnings of
$0.47 in 1999 based on 9,846,590 weighted average number of
shares outstanding for the same period in 1999.
The high cost of sales in this quarter were driven by two primary
components: $13.3 million of amortization was due to the delivery
of new product described below, plus $1.8 million related to
distribution costs; $23.7 million was caused by a decrease in the
projected sales of the library and the resultant decrease in the
value of the investment in film. Telescene has filed for
protection under the Bankruptcy and Insolvency Act and because
its future as an on going concern is uncertain, our foreign sales
have slowed down markedly. Management has therefore decided to
reflect the potential impact of this slowdown in the revenue
estimates that are the basis for the valuation of our library.
Depending on the outcome of the reorganization of the Company,
further adjustments to assets and liabilities may be necessary.
Selling, general and administrative expenses were $4.6 million
vs.$0.9 million for the same period last year. The increase
resulted from the write-off of $2.7 million of certain loans and
investments in related companies, plus an increase in the
professional fees of $0.5 million paid to monitors brought in by
the bank to assist in the restructuring of the Company.
During the third quarter of fiscal 2001, Telescene delivered a
total of 30 half-hours of television, namely 8 one-hour episodes
of the second season of Sir Arthur Conan Doyle's The Lost World
to New Line TV, and 7 one-hour episodes of Live Through This to
MTV Networks.
U.S. INTERACTIVE: Discloses Senior Management Shake-Up
------------------------------------------------------
U.S. Interactive, Inc. (Nasdaq:USIT) appointed two new members to
senior management. Vinay Deshpande, co-founder of the Soft Plus
business component of the Company, has been named president and
chief executive officer-- a spot said to be vacated last month by
Mohan Uttarwar. Deshpande has also been appointed as a member of
the Board of Directors of U.S. Interactive and of its wholly-
owned subsidiary U.S. Interactive Corp. (Delaware). Sunil Mathur
has been named executive vice president of both companies.
Moreover, Gary Rhea has resigned as chief financial officer of
U.S. Interactive, the latest in a recent string of high-level
executives who have departed from the troubled Web consultancy,
CNET News.Com relates. Mr. Mathur will assume the duties of CFO
in addition to his other responsibilities.
US Interactive(R) (Nasdaq:USIT) is an Internet professional
services company that provides customer management solutions to
the communications and financial services industries.
On January 22, 2001, U.S. Interactive, Inc. (Nasdaq:USIT) and its
wholly-owned subsidiary U.S. Interactive Corp. (Delaware), have
filed voluntary petitions to reorganize the Companies under
Chapter 11 of the Bankruptcy Code with the U.S. Bankruptcy Court
of Delaware.
VENCOR INC.: Stay Modified For Insured Litigation Claim
-------------------------------------------------------
Vencor, Inc., et al, agreed with Brent D. Gable, surviving spouse
of Barda Ann Gable to lift the automatic stay to permit Brent
Gable to prosecute his claims to final judgment in the Underlying
Action captioned, Brent D. Gable, surviving spouse of Barda Ann
Gable, Deceased v. Vencor Hospital - Oklahoma City, trade name
Vencor, Inc. et. al., Case No., Civ. 99-422 R, in the United
States District Court for the Western District of Oklahoma.
The Debtors have determined that there is an insurance policy
issued in favor of the Vencor Defendant. The parties agree that
any settlement of or recovery of a judgment for damages in the
Underlying Action will be limited to applicable insurance
proceeds, and the plaintiffs will be permitted to continue to
assert an unsecured perpetition claim in the Debtors' chapter 11
cases solely for the portion of the judgment that cannot be
satisfied by available insurance proceeds.
It is also stipulated that, except as specifically provided in
the stipulation, the Plaintiffs shall not engage in any efforts
to collect any amount from the Debtors or any of the Debtors'
current and former employees, officers and directors, or any
person or entity indemnified by Debtors.
The parties also agree to mutual general release of claims over
the matter.
Judge Walrath has given her stamp of approval. (Vencor Bankruptcy
News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
VLASIC FOODS: Honoring Prepetition Employee Obligations
-------------------------------------------------------
Vlasic Foods Brands, Inc., and its debtor-affiliates, moved the
Court for an order pursuant to 11 U.S.C. Secs. 105 and 507:
(i) authorizing the Debtors to pay or otherwise honor their
prepetition obligations to their 2,690 employees;
(ii) authorizing the Debtors to continue postpetition the
employee benefit plans and programs in effect
immediately prior to the filing of these cases;
(iii) confirming that the Debtors are permitted to pay any and
all local, state and federal withholding and payroll-
related or similar taxes relating to prepetition
periods; and
(iv) directing all banks to honor prepetition checks for
payment of the Debtors' prepetition employee
obligations.
Joseph Adler, Vlasic's Vice President and Controller, told Judge
Robinson that the Company's Prepetition Employee Obligations
include, without limitation, (a) unpaid prepetition wages,
overtime pay, shift premium pay, fees, salaries, board of
directors' fees and expenses, car and parking allowance,
relocation assistance pay, holiday and vacation pay, sick leave
pay and other excused leave pay (including family care leave,
disability leave, military leave, bereavement leave, personal
leave and jury duty leave) earned before the Petition Date; (b)
workers' compensation claims arising before the Petition Date;
(c) reimbursable business expenses incurred before the Petition
Data; and employee benefit claims arising before the Petition
Date (including, without limitation, medical, dental, mental
health, vision, prescription and non-prescription drug
reimbursement, claims under the Debtors' group health care plan,
COBRA, employee life insurance, accidental death and
dismemberment, disability salary continuance, employee assistance
programs, short-term and long-term disability plans, educational
assistance, tuition reimbursement, expatriate expenses, adoption
assistance, disability insurance, safety-incentive plane
(including tool allowances and protective equipment), accident
insurance, business travel accident insurance, savings plans,
401K savings and retirement plans, personal choice program,
severance plan, deferred compensation plan, flex-time program,
leased car program, retiree medical program, award programs,
pension plans, flexible spending account programs, payments
pursuant to garnishment orders and miscellaneous other benefits).
Approximately 80% of the Debtors' workforce is paid by the hour.
Hourly Employees are paid on a weekly basis and Salaried
Employees are paid bi-monthly. The Debtors estimate that, as of
the Petition Date, they owe:
$3,000,000 for accrued unpaid wages, salaries,
commissions, other compensation and withholding
taxes;
4,000,000 for accrued vacation pay;
2,700,000 in workers' compensation coverage premiums;
2,900,000 under Employees' Medical and Dental Plans;
1,000,000 under Retirees' Medical Plans; and
100,000 for reimbursable employee business expenses.
If the Debtors fail to pay the Prepetition Employee obligations
in the ordinary course, Sally McDonald Henry, Esq., at Skadden,
Arps, Slate, Meagher & Flom argued, the Employees will suffer
extreme personal hardship and in many cases will be unable to pay
their basic living expenses. Such a result obviously would
destroy Employee morale and result in unmanageable Employee
turnover, Ms. Henry warns. The Debtors submitted that any
significant deterioration in morale at this time will
substantially and adversely impact the Debtors and their ability
to reorganize, thereby resulting in immediate and irreparable
harm to the Debtors and their estates. The Debtors argued that
the amounts to be paid to Employees pursuant to this Motion are
reasonable compared with the importance and necessity of
preserving Employee services and morale and with the difficulties
and losses the Debtors likely will suffer if those amounts are
not paid.
Ms. Henry reminded the Court that Bankruptcy Code sections
507(a)(3) and (a)(4) give priority up to $4,300 per individual
for prepetition claims for wages, salaries, vacation and sick
leave and claims for contributions to employee benefit plans. The
Debtors believe that almost all of the Prepetition Employee
Obligations are entitled to priority under sections 5D7la)(3) and
(a)(4), and that all but a few Employees are owed less than
$4,300 in wages, salaries, vacation, sick leave, commissions and
contributions to employee benefit plans as of the Petition Pate.
Further, Ms. Henry argued, the Court should authorize the Debtors
under Bankruptcy Code section 105(a) to pay the Prepetition
Employee Obligations in full. Section 105(a) provides that "[t]he
court may issue any order, process, or judgment that is necessary
or appropriate to carry out the provisions of this title." Under
the "necessity of payment" rule, first enunciated by the Supreme
Court in Miltenberger v. Logansport, C. S.W.R. Co., 105 U.S. 286
(1882), a bankruptcy court may use its section 105 equitable
powers to permit a debtor-in-possession to pay prepetition claims
when payment is necessary to effectuate a successful
reorganization. See In re Lehigh & New Eng. Ry. Co., 657
F.2d 570, 581 (3d Cir. 1981) (necessity of payment doctrine
"teaches no more than, if payment of a claim which arose prior to
reorganization is essential to the continued operation of the
business during reorganization, payment may be authorized even if
it is made out of corpus"). The continued service and dedication
of the Employees is critical to the Debtors. For instance, in In
re Ionosphere Clubs Inc., the court permitted Eastern Air Lines,
Inc. to pay its current employees' prebankruptcy wages, salaries,
medical benefits and business expense claims, relying on section
105 (a) to effectuate a restructuring of Eastern's finances to
provide jobs for its employees. See 98 H.R, 174, 177 (Bankr.
S.D.N.Y. 1989) (citing H.R. Rep. No. 95-595, at 16 (1977),
reprinted in 1978 U.S.C.C.A.N. 5963, 5977).
Finding that (1) the relief requested in this Motion is necessary
and should be authorized under Bankruptcy Code section 105, (2)
the Debtors' Employees are vital to the continued operation of
Vlasic's businesses and to the preservation of their estates, (3)
authorization to pay the Prepetition Employee Obligations is
necessary to maintain the Employees' morale and prevent many of
them from suffering extreme personal hardship or from seeking
other employment, and (4) the relief sought is consistent with
sections 105(a) and 507(a) of the Bankruptcy Code, Judge Robinson
granted the Debtors' Motion in all respects.
Judge Robinson made it clear, however, that nothing in her order
shall be deemed to constitute an assumption of any Employee
benefit plan, program or contract, or otherwise affect the
Debtors' rights under 11 U.S.C. Sec. 365 to assume or reject any
executory contract between the Debtors and any Employee. (Vlasic
Foods Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
*********
Bond pricing, appearing in each Monday's edition of the TCR, is
provided by DLS Capital Partners in Dallas, Texas.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
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., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Debra Brennan, Yvonne L.
Metzler, Aileen Quijano and Peter A. Chapman, Editors.
Copyright 2001. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $575 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 301/951-6400.
*** End of Transmission ***