/raid1/www/Hosts/bankrupt/TCR_Public/010327.MBX
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, March 27, 2001, Vol. 5, No. 60
Headlines
AMERICAN SKIING: Termination of Merger Causes Dive in Ratings
AMES DEPARTMENT: Standard & Poor's Cuts Credit Rating to CCC
BRIDGE INFORMATION: Reaches Payment Agreements With SAVVIS
BRIDGE: Accepts SunGard's $165 Million Bid for Certain Assets
CALIFORNIA WEBBING: Converts Bankruptcy Case to Chapter 7
CHROMATICS COLOR: Lacks Funds To Continue Operations
CHROMATICS COLOR: Nasdaq Halts Trading of Common Stocks
CT HOLDINGS: Receives Nasdaq's Delisting Notice
DRUG EMPORIUM: Intends To File Pre-Negotiated Chapter 11 Plan
FINOVA GROUP: Court Okays Payment Of Foreign Creditors' Claims
FLORSHEIM GROUP: Posts Weak Fourth Quarter and Annual Results
FRUIT OF THE LOOM: Creditors Object Mr. Lee's Motion For Relief
GLOBAL iTECHNOLOGY: Ceases Operations Due To Cash Shortfall
GREATE BAY: Talking To Hollywood Casino to Restructure Debt
HARNISCHFEGER: Equity Committee Contends Plan Is Undervalued
HEADLIGHT: Lays Off Staff And Prepares To File For Bankruptcy
HOMECOM: Sells Internet Asset & Decides To Wind Down Operations
HOMES.COM: Files Chapter 11 Petition in N.D. California
INGENUUS CORP.: Fails To Comply With Nasqaq Listing Requirement
INTEGRATED HEALTH: Asks To Extend Time To Assume & Reject Leases
KERAVISION INC.: Files For Chapter 11 Bankruptcy Protection
LIBERTY HOUSE: Expects To Pay Off Vendors in Full by Month's End
LOEWEN GROUP: Moves To Disallow & Reduce Claims Resolved by ADR
MARINER: Implementing Alternative Dispute Resolution Scheme
MSV RESOURCES: Says Debt Restructuring Completed
NORTHPOINT: Covad Provides Safety Net Program For Customers
ORYX TECHNOLOGY: Nasdaq Looks To Delisting Shares
OWENS CORNING: Wants To Assume Joplin Warehouse Lease
PSS WORLD: Moody's Downgrades Senior Ratings to Low-B Levels
REGAL CINEMAS: Battle Breaks Out for Control of Theatre Chain
SAFETY-KLEEN: Appoints Peter Lengyel & David Wallace To BOD
SEQUA CORPORATION: Moody's Assigns Ba2 Rating to Senior Notes
SNICKELWAYS INTERACTIVE: Cuts Jobs & Prepares for Shutdown
SOUTHERN CALIFORNIA: Resumes Payments To Small Generators
SOUTHERN CALIFORNIA: Money Owed Exceeds Cash Reserves by $722MM
STAGE STORES: Court Extends Exclusive Period To June 30
SUN HEALTHCARE: Obtains Approval To Transfer Washington Facility
TRICO STEEL: Alabama Steelmaker Stops Operations
VENCOR INC.: Terminates Lease Agreement With York Estate
VLASIC FOODS: Court Approves Employee Retention Plan
VLASIC: FTC Okays Heinz Purchase Of Pickles & Open Pit Business
*********
AMERICAN SKIING: Termination of Merger Causes Dive in Ratings
-------------------------------------------------------------
The cancellation of a merger deal that could have afforded
stability to American Skiing Company caused the lowering of its
ratings by Moody's Investors Service.
According to Moody's the proposed merger with MeriStar Hotels &
Resorts would have made the American Skiing Company a more
diversified, less cyclical, and somewhat less leveraged company.
The following ratings of American Skiing have been affected:
-- Senior implied rating to B3 from B2;
-- $100 million secured revolving credit facility and $65
million secured term loan to B2 from B1;
-- $120 million 12% guaranteed senior subordinated notes
due 2006 to Caa3 from Caa1;
-- Senior unsecured issuer rating to Caa1 from B3.
Moody's had upgraded these ratings last February 15, under the
explicit assumption that the merger would take place.
Liquidity would have been improved by the conversion of $179
million of preferred stock and loans to common equity, and by
extending the maturity of $50 million 10.5% preferred stock from
November 2002 to August 2006.
Termination of the merger eliminates the proposed benefits and
restores near term refinancing risk, analysts at Moody's said.
The ratings reflect American Skiing's highly leveraged capital
structure, as well as the seasonality and unpredictability of
its core skiing business. The ratings are supported by the value
of the company's properties and its geographic diversification.
The B2 rating of the bank debt recognizes the value of
collateral which consists of virtually all of American Skiing's
resort assets. The rated obligations are the sole responsibility
of American Skiing and its resort operations.
In addition to its ski resort business, American Skiing owns
considerable real estate interests, financed on a non-recourse
basis to the parent company and the resorts.
The value of land in the real estate subsidiaries accrues first
to those creditors, and is not available to American Skiing's
creditors until the contractual needs of real estate creditors
have been satisfied.
The subordinated notes have a subordinated guarantee from the
real estate subsidiaries. However, Moody's believes that
recovery of principal in case of default would be severely
impaired because of the large amount of obligations senior to
those notes.
The rating outlook is negative. Future ratings actions will
depend on American Skiing's ongoing operating results, as well
as its ability to improve financial flexibility, and to maintain
appropriate liquidity to manage seasonal and longer term needs.
American Skiing Company, Inc., headquartered in Bethel, Maine,
is the owner and operator of ski resorts throughout the U.S. The
company also develops real estate in areas adjoining its
resorts.
AMES DEPARTMENT: Standard & Poor's Cuts Credit Rating to CCC
------------------------------------------------------------
The slowing U.S. economy has put the outlook of several U.S.
retailers uncertain.
In a recent rating action, Standard & Poor's cut its credit
rating on Ames Department Stores Inc. to "CCC-plus" from B,
according to Reuters. It also lowered the company's senior
unsecured debt rating three notches to "CCC-minus" from "B-
minus." The new ratings are considered low junk grades.
Earlier, the ratings of J.C. Penney Co. Inc., the No.5 U.S.
retailer, were also cut to junk status by Moody's Investors
Service, Reuters reported.
Ames, a retailer based in Rocky Hill, Conn. and runs 452
discount stores in the northeastern and mid-Atlantic portions of
the United States, became the second big retailer this week to
see a sizable cut in its ratings, Reuters noted.
The rating outlook by S&P, is negative, meaning more cuts may be
in Ames' future. S&P had also cut the company's ratings in
February.
On Thursday, Ames reported a fourth-quarter net loss of $152
million, which accordingly was caused primarily by the slowing
economy and costs associated with the closing of 32 former Hills
stores and the cutting of 2,000 jobs.
For all of 2000, Ames reported net losses amounting to $241
million, or $8.19 per share, on net sales of $4 billion.
Comparable store sales fell 2.1 percent from a year earlier.
According to analysts at S&P, the downgrade "reflects the
deterioration in cash flow protection due to very weak results
in the fourth quarter of 2000 and an uncertain outlook for
2001."
The rating agency said Ames has trouble holding its own against
the much larger and higher-rated discounters like Wal-Mart
Stores Inc., Kmart Corp. and Target Corp.
Also, Ames has not yet developed a cost structure to help it
compete profitably, the rating agency noted.
BRIDGE INFORMATION: Reaches Payment Agreements With SAVVIS
----------------------------------------------------------
SAVVIS Communications Corp. (NASDAQ: SVVS), a premier global
network services provider, reached a settlement agreement with
Bridge Information Systems Inc. which provides for continued
payments by Bridge to SAVVIS for networking services. In
conjunction with this agreement, SAVVIS has resolved its payment
disputes with WorldCom, Inc. and Sprint Corp. The stipulation
was agreed to by all parties and the order was signed by Judge
David McDonald in the U.S. Bankruptcy Court for the Eastern
District of Missouri in St. Louis.
About SAVVIS
SAVVIS Communications (NASDAQ: SVVS) is the premier service
provider of Intelligent IP solutions, and the first to deliver
Internet economics to private IP networks. As a result, the
benefits of high-end private networks are now accessible to
small and medium-sized businesses, while the Fortune 1000 can be
more nimble in the execution of their e-commerce strategies.
SAVVIS' state-of-the-art global IP platform provides a full
range of customer-specified Internet, intranet and extranet
networks, combining the flexibility and fast time-to-market of
the Internet, with the QoS, security and reliability of Private
IP networks. The company also provides managed hosting and
colocation services.
BRIDGE: Accepts SunGard's $165 Million Bid for Certain Assets
-------------------------------------------------------------
SunGard (NYSE:SDS) and Bridge Information Systems, Inc.
(BRIDGE(R)) announced that BRIDGE has accepted a bid from
SunGard to purchase certain assets of BRIDGE`s financial
information businesses.
The assets included in the SunGard bid are the Bridge
information business, the EJV bond data and analytics business,
and the BridgeNews LiveWire Company News service serving the
institutional and retail brokerage markets in the U.S., as well
as the Bridge Trading Company brokerage business and the eBRIDGE
Internet software enabling business on a global basis.
The transaction is expected to close by May 31, 2001. The
purchase price is up to $165 million in cash with no assumption
of debt.
The transaction remains subject to higher and better offers for
BRIDGE. BRIDGE expects to submit an order setting forth
competitive bidding procedures for the sale of the company to
the United States Bankruptcy Court for the Eastern District of
Missouri in St. Louis shortly.
BRIDGE will also submit a so-called "363" motion to obtain
Bankruptcy Court approval of the sale to SunGard, subject to
receipt of other bids. Those competitive bids will be considered
and, if deemed complementary or superior, would be accepted by
BRIDGE.
Consummation of the transaction is subject to finalizing a
definitive sale agreement, court approval, regulatory reviews
and approvals, due diligence, and various other closing
conditions specified in the proposal.
BRIDGE said that other parties have expressed interest in
bidding for BRIDGE including BRIDGE's other businesses, which
include Telerate(R), Bridge Commodity News, BRIDGE's non-U.S.
operations and various other BRIDGE assets including holdings in
Savvis Communications and BridgeDFS.
BRIDGE said that it will continue to solicit and evaluate
proposals for these assets. In the meantime, BRIDGE continues
operating the businesses that are not part of the SunGard
proposal under Chapter 11 with a view to their sale.
James L. Mann, SunGard's chairman and chief executive officer,
commented, "Acquisitions are an important part of SunGard's
business model, and our practice is to look to acquire only
where there is a strategic fit and when a deal is not dilutive.
Most of BRIDGE's subsidiaries have operated independently in
distinct market segments, and we have chosen to acquire
separately only those businesses that we believe can be
profitably integrated with SunGard's existing initiatives."
David Roscoe, BRIDGE president, said, "This proposed sale, if
consummated, would exploit the opportunities of two companies
with very compatible visions of how the market data and
financial software and service markets are rapidly converging.
By combining BRIDGE's strong institutional desktop presence and
trading-related activities and services with SunGard's full
suite of software, trading and services throughout the
institutional trading cycle, we would have an integrated suite
of end-to-end services second to none. SunGard's financial
soundness and its record of sustained strong financial
performance would be an additional source of benefit for our
clients."
SunGard anticipates that its acquisition of BRIDGE, if
consummated, would put it in a leading position in the buy-side
to sell-side transaction routing business. With over three
hundred institutional customers, the Bridge Institutional Order
Entry (IOE) system has the broadest institutional presence.
Combined with SunGard's sell-side footprint with BRASS and
SunGard's marketing relationship with Advent Software, Inc. with
respect to buy-side portfolio managers, this presence is
expected to position SunGard to compete aggressively in the
marketplace for transaction services.
BRIDGE said it selected SunGard's bid because of SunGard's
leadership position as a provider of technology and other
services to financial services professionals, the principal
target for BRIDGE products and services.
SunGard offers BRIDGE a great opportunity to build upon its
position as a leading provider of financial information services
to equity and capital markets in the U.S. The SunGard
transaction also preserves BRIDGE's ability to continue its
other operations through sales to other strategic investors.
Mr. Mann continued, "The BRIDGE workstation has traditionally
been regarded as the gold standard in both the buy-side and
sell-side institutional marketplace. We view this deal as an
opportunity to increase SunGard's footprint in the front office,
particularly with respect to transaction initiation. We expect
BRIDGE's information and order-routing services to considerably
extend the reach of the SunGard Transaction Network, SunGard's
e-business network connecting our buy-side and sell-side
clients. The success of the network depends on critical mass and
order flow, and BRIDGE offers both."
Already around 70% of Nasdaq trade orders flow through one or
more SunGard solutions for order management, routing, exchange
interfaces and execution services. Financial services
institutions already able to use SunGard Transaction Network
services include more than 700 banks, 1,000 money managers, 35
million 401K participants, 1,500 insurance companies, and 180
brokers.
With a leading position in the U.S. for institutional equities
market data and soft-dollar brokerage, Bridge Information
Systems is expected to enhance the activities of SunGard Global
Execution Services.
In addition, SunGard expects the acquisition to generate
synergies with the recently announced SunGard portal for high-
net worth individuals and SunGard PowerStation, an integrated
broker/dealer workstation.
Both initiatives will benefit from the integration of BRIDGE's
world-class content, as well as BRIDGE's advanced technology for
financial portals that is used by a large number of the leading
financial sites.
Mr. Mann concluded, "With over $400 million in cash, no long
term debt and cash flow twice net income, SunGard has the
financial strength, client base and operational ability to
realize the value in BRIDGE's assets. Our strategy is to enable
the financial services industry to achieve straight-through
processing by automating the information flows between the buy-
side and sell-side. We believe that the acquisition of these
BRIDGE businesses supports that strategy and enhances SunGard's
ability to succeed."
If the acquisition proceeds, SunGard plans to host a conference
call for investors immediately following the closing. Details
will be announced at that time.
About BRIDGE
BRIDGE, together with its principal operating units, Bridge
Information Systems, Telerate(R), Inc., eBRIDGE(SM), Bridge
Trading, and BridgeNews, is one of the world's largest providers
of financial information and related services including trading,
transaction, e-commerce, Internet and wireless technologies.
BRIDGE information products include a wide range of
workstations, market data feeds and Web-based applications,
combined with comprehensive market data, in-depth news, powerful
analytic tools and trading room integration systems.
BRIDGE, with over a quarter of a million users in over 65
countries, is headquartered in New York City with the BRIDGE
Trading and Technology center in St. Louis, and major regional
centers in Europe, the Middle East, Africa, and the Pacific Rim.
For more information visit www.bridge.com.
About SunGard
SunGard (NYSE:SDS) is a global leader in integrated IT solutions
and eProcessing for financial services. SunGard is also the
pioneer and a leading provider of high-availability
infrastructure for business continuity.
With annual revenues in excess of $1 billion, SunGard serves
more than 10,000 clients in over 50 countries, including 47 of
the world's 50 largest financial services institutions. Visit
SunGard at www.sungard.com.
Trademark Info: SunGard and the SunGard logo are trademarks or
registered trademarks of SunGard Data Systems Inc. or its
subsidiaries in the U.S. and other countries. All other trade
names are trademarks or registered trademarks of their
respective holders.
CALIFORNIA WEBBING: Converts Bankruptcy Case to Chapter 7
---------------------------------------------------------
The company that runs one of the largest textile mills in Rhode
Islands converted to Chapter 7 its earlier Chapter 11 petition
in April last year, relates the Providence Journal-Bulletin.
California Webbing Industries Inc., which runs Elizabeth Webbing
Mills in Central Falls, R.I., filed the petition documents last
Wednesday at the U.S. Bankruptcy Court in Providence.
The company has been trying to reorganize its finances to stay
afloat. In fact, the textile had filed a Chapter 11 petition
last year to protect it from creditors while reorganizing.
According to a Providence Journal report, Elizabeth Webbing,
which employed about 280 people last year, is one of the largest
employers in Central Falls and among a generation of aging mills
in Rhode Island's shrinking textile industry.
Until about six years ago, Elizabeth Webbing seemed to be
thriving where other textile companies were failing, the report
added.
Court papers filed last year show that California Webbing had
more than $36.9 million in "secured" debt, which is usually
loans backed by assets. It also had about $16.4 million in
unsecured debt, as of Dec. 31, 1999.
CHROMATICS COLOR: Lacks Funds To Continue Operations
----------------------------------------------------
Chromatics Color Sciences International, Inc. (Nasdaq: CCSI)
said that it is currently lacking funds to continue material
aspects of the Company's operations and business plan, including
funds and necessary personnel to complete R&D on its new LED
instrument and technology recently required during its first
mass manufacturing process; complete filings, administration and
maintenance for certain intellectual properties and regulatory
requirements; supply upgraded products and sales support to its
medical distributor; and complete FDA regulatory filings for
upgrades to its medical products.
Additionally, a CCSI subsidiary has been notified of a default
on payment due for an approximately $3,000,000 loan, in addition
to acceleration of the maturity date of that loan. The Company
is currently downsizing its corporate offices and the Board of
Directors is reviewing potential proposals for financing the
Company, along with contingency plans in the event such
financing cannot be completed. The Board of Directors voted last
week to review proposals, including financings, submitted to the
Board (or requests for extensions from any interested investors)
no later than 4:00 pm, March 23, 2001.
Chromatics Color Sciences is in the business of color science
and has developed technologies and intellectual properties in
this field. The Company has received clearance from the Food and
Drug Administration (FDA) for the commercial use of its medical
device for the non-invasive monitoring of hyperbilirubinemia in
newborn infants by healthcare professionals in hospitals,
clinics, pediatrician offices and the home environment. The
Company believes its technologies and intellectual properties
may also have medical applications in the detection and
monitoring of other chromogenic diseases which the Company
defines as those diagnosed or monitored by the coloration of the
human skin, tissue or fluid being affected. Medical application,
in addition to the non-invasive monitoring of hyperbilirubinemia
in newborns, will require clinical trials and FDA clearances for
commercial use.
The Company's technologies and intellectual properties also have
other applications including the scientific color measurement
and classification of human skin and certain color-sensitive
consumer products, and in determining the color compatibility of
such skin and product color classification for use in a variety
of industries including the cosmetic, beauty-aid and fashion
industries.
CHROMATICS COLOR: Nasdaq Halts Trading of Common Stocks
-------------------------------------------------------
The Nasdaq Stock Market(SM) announced that trading was halted in
Chromatics Color Sciences International, Inc. (Nasdaq: CCSI),
Friday at 10:20 a.m., Eastern Time, for "additional information
requested" from the company at a last price of 3/32. Trading
will remain halted until Chromatics Color Sciences
International, Inc. has fully satisfied Nasdaq's request for
additional information.
CT HOLDINGS: Receives Nasdaq's Delisting Notice
-----------------------------------------------
CT Holdings, Inc. (Nasdaq:CITN) said it received a Nasdaq Staff
Determination on March 16, 2001 indicating that the Company
fails to comply with the minimum bid price requirements for
continued listing set forth in Marketplace Rule 4310(c)(4), and
that its securities are, therefore, subject to delisting from
The Nasdaq SmallCap Market.
The Company has requested a hearing before the Nasdaq Listing
Qualifications Panel to review the Staff Determination. There
can be no assurance that the Panel will grant the Company's
request for continued listing. In the event the Panel determines
to delist the Company's common stock, the Company's common stock
may continue to trade on the OTC Bulletin Board's electronic
quotation system. If they do, shareholders will still be able to
obtain current trading information, including the last trade bid
and ask quotations and share volume.
Steve Solomon, CT's Chief Executive Officer, stated, "I remain
disappointed in the performance of our share price in the
current adverse market conditions. I wish to unequivocally state
that we are committed to enhancing shareholder value, and we
remain excited about our investments in Parago and River Logic.
We have requested a hearing with the Nasdaq to request that we
remain listed as a Nasdaq issuer."
About CT Holdings
CT Holdings, Inc. (Nasdaq:CITN), is an incubator of early stage
Internet companies. (www.ct-holdings.com).
DRUG EMPORIUM: Intends To File Pre-Negotiated Chapter 11 Plan
-------------------------------------------------------------
Drug Emporium, Inc. (OTCBB:DEMP) announced that it has entered
into a definitive agreement with Snyder's Drug Stores, Inc. for
the acquisition by Snyder's of a 100% equity ownership in Drug
Emporium.
Snyder's was founded in 1929, and is headquartered in
Minnetonka, Minnesota. Snyder's owns and operates 81 corporate
stores and supports over 100 independent retailers in Illinois,
Michigan, Minnesota, Montana, South Dakota, Iowa, and Wisconsin
under the Snyder's name. Snyder's is part of the Katz Group of
Edmonton, Alberta, Canada. With sales in excess of $2 billion,
the Katz Group, controlled by its Chairman Daryl Katz, operates
over 400 company owned stores, and supports approximately 200
independent retailers in Canada and the United States.
Because of the need to restructure Drug Emporium's
capitalization and certain of its financial obligations, the
acquisition will be effected through a pre-negotiated Chapter 11
filing by Drug Emporium. The plan of reorganization in the
Chapter 11 proceedings will provide for the cancellation of all
of Drug Emporium's existing common stock, options and other
equity rights, with nominal or no consideration payable to the
Company's current shareholders, and the purchase by Snyder's of
new equity in the reorganized Company. The agreement and the
plan contemplate the sale or disposal of Company stores in
Atlanta, California and certain other locations with the
expectation that the reorganized Company will continue to
operate a majority of the stores in Drug Emporium's current
store base. The agreement is subject to customary conditions,
including the approval of the plan of reorganization by the
Bankruptcy Court.
David Kriegel, Chairman of the Board and CEO of Drug Emporium,
was quoted as follows: "The acquisition of Drug Emporium by a
high quality, well regarded firm like Snyder's through a pre-
negotiated reorganization process should allow the Company to
emerge quickly as a sound and financially viable organization.
We are confident that we will be able to maintain normal store
operations through the course of this process, and preserve the
interests of our customers, employees and suppliers in a strong
and stable Drug Emporium."
Gordon Barker, CEO of Snyder's, commented, "We are extremely
pleased to be able to grow our company with the addition of the
Drug Emporium stores. These stores closely approximate the
physical size of stores that my management team and I operated
when at Thrifty Payless Drug Stores on the West Coast. We feel
confident about the opportunity to build new excitement into the
core Drug Emporium markets. The synergies derived from the
combination of Snyder's and Drug Emporium should assist both
companies in becoming more profitable, and also will provide
more opportunities and better security for many of the employees
and their families of both companies as we grow larger
together."
Drug Emporium is filing a report on Form 8-K with the Securities
and Exchange Commission providing additional detail regarding
the Snyder's transaction and Drug Emporium's plan of
reorganization.
About Drug Emporium, Inc.
Drug Emporium, Inc. (NASDAQ: DEMP) owns and operates 131 brick-
and-mortar stores under the names Drug Emporium, F&M Super Drug
Stores and Vix Drug Stores. All brick-and-mortar stores operate
full-service pharmacies and specialize in discount-priced
merchandise including health and beauty aids, cosmetics and
greeting cards. The company also franchises an additional 34
stores under the Drug Emporium name. Drug Emporium, Inc. is
headquartered in Powell, Ohio.
FINOVA GROUP: Court Okays Payment Of Foreign Creditors' Claims
--------------------------------------------------------------
The FINOVA Group, Inc., maintain offices and conduct business in
Canada, through FINOVA (Canada) Capital Corporation, and in the
United Kingdom, through FINOVA Capital plc. In addition, the
Debtors, primarily through FINOVA Capital Corporation, from time
to time engage in foreign business operations or transactions,
incident to which they may hold ownership, security or other
interests in property located in foreign countries around the
world. As a consequence, the Debtors incur obligations to
creditors in foreign countries for, among other things, taxes,
fees, rents, goods and services.
For purposes of this motion, the term "Foreign Creditors"
specifically excludes the foreign members of the bank groups
that are lenders to FINOVA Capital Corporation, FINOVA (Canada)
Capital Corporation and/or FINOVA Capital plc. All of such
members conduct business within the United States and otherwise
have sufficient contacts with the United States and the Debtors
to subject them to the jurisdiction of this Court. The term
"Foreign Creditors" also specifically excludes foreign holders
of debt securities issued by FINOVA Capital Corporation. Such
holders are also believed to be subject to the jurisdiction of
this Court by reason of the applicable indenture and transaction
or otherwise due to their contacts with the United States.
As of the Petition Date, the Debtors were generally current on
all payments due and owing to Foreign Creditors. To the extent
that the Debtors have foreign obligations that will constitute
prepetition claims in these cases, the Debtors believe that such
obligations relate to items that had accrued but not become due
and payable before the time of filing. Because the Foreign
Creditors are not subject to the jurisdiction of this Court, the
Debtors cannot rely on the automatic stay to protect themselves
or their foreign assets from actions in foreign jurisdictions to
collect obligations that remain unpaid .s Therefore, the Debtors
seek authorization to pay, when due in the ordinary course, all
prepetition claims owing to foreign creditors.
Absent payment to Foreign Creditors, the Debtors' foreign
business operations could be severely disrupted. Foreign
suppliers of goods and services may refuse to engage in any
further transactions with the Debtors. Moreover, the Debtors
will be at risk that the Foreign Creditors, including foreign
taxing and licensing authorities, will seize or impound assets
within their respective jurisdictions and seek to invoke civil
or criminal penalties against the Debtors and their employees
and agents in the area. Such actions would seriously impair the
value of the Debtors' foreign assets and potentially diminish
the recoveries of all creditors. The Debtors estimate that the
amount of prepetition claims owing to Foreign Creditors is less
than $250,000. That amount is de minimis in the context of these
cases, particularly in view of the potential consequences of
nonpayment.
Certain Foreign Creditors, the Debtors noted, may be subject to
the jurisdiction of this Court on various grounds. However,
Jonathan M. Landers, Esq., from Gibson, Dunn & Crutcher LLP,
told Judge Wizmur, it would be impractical and time-consuming
for the Debtors to investigate the connections of each Foreign
Creditor with the United States. Therefore, the Debtors sought
authorization to treat any creditor with a foreign address, or
any apparently foreign creditor who is providing goods or
services to the Debtors in a foreign country, as a foreign
creditor for purposes of this motion.
Without comment, Judge Wizmur granted the Debtors' motion in all
respects. (Finova Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
FLORSHEIM GROUP: Posts Weak Fourth Quarter and Annual Results
-------------------------------------------------------------
Florsheim Group Inc. (NASDAQ: FLSC) reported a net loss of $6.5
million or $0.76 per share, excluding non-recurring costs, for
the fourth quarter of 2000. That compared to net earnings of
$111,000, or $0.01 per share, excluding non-recurring costs and
year-end inventory adjustments, for the fourth quarter of 1999.
For the year ended December 30, 2000, the net loss was $17.4
million or $2.05 per share, excluding non-recurring items,
compared to a net loss of $1.8 million or $0.22 per share, on a
pro forma basis, for the comparable prior year period.
The fiscal 2000 fourth quarter loss excludes non-recurring cost
of sales of $1.1 million and non-recurring expenses of $5.2
million. Non-recurring cost of sales resulted from additional
costs associated with the closing of the Company's Golf product
line, costs associated with the exit from the Joseph Abboud
product line and the write-off of remaining raw materials
associated with the closing of the Company's manufacturing
facility in December 1999. Non-recurring expenses for the
quarter resulted primarily from the previously announced
curtailment of the Company's defined benefit plan, severance
charges associated with a downsizing during the quarter and
costs associated with the Abboud product line. Non-recurring
cost of sales were $3.1 million for the year ended December 30,
2000. Non-recurring expenses for the full year were $11.1
million. The 1999 fourth quarter loss excluded non-recurring
charges of $1.9 million relating to the planned sale of the
Company's Golf product line and facility downsizing and a $3.2
million adjustment related to year-end inventory. For the full
year 1999, non-recurring cost of sales were $2.7 million and
non-recurring expenses were $2.4 million.
Thomas P. Polke, Executive Vice President and Chief Financial
Officer, commented "Despite our clearly unacceptable results, we
have taken significant actions to bring much needed liquidity
into the Company during the last six months. Inventory has been
reduced over $10.0 million since July. In November, we announced
that we reached an agreement with our bank group that provided
$15.0 million of additional liquidity to the business and
announced a plan that will revert over $20.0 million in excess
assets currently residing in the Company's pension plan back to
the Company. We have taken numerous steps to further reduce
expenses, including staff reductions and the consolidation of
our Company headquarter space by one-third."
Net sales were $47.5 million for the fourth quarter of 2000,
compared to $62.2 million in the fourth quarter of 1999. For the
year ended December 30, 2000, net sales were $205.2 million
compared to $245.7 million for the prior year.
U.S. Wholesale net sales for the fourth quarter were $15.1
million, a 31.4% decrease from the comparable 1999 period. For
the year, net sales were $76.7 million, 20.7% lower than the
$96.7 million reported in 1999. This decrease resulted from the
bankruptcy of several accounts during the year, a continued
slowdown in core dress shoe styles and strong sales of close-out
merchandise in the prior year that were not repeated in 2000. In
addition, fourth quarter wholesale sales were reduced by $2.7
million for anticipated product returns from the Company's
largest customer as they convert to the FLS label. U.S. Retail
net sales for specialty and outlet stores decreased 16.0% to
$23.6 million for the fourth quarter and decreased 13.8% to
$88.9 million for the year, due to planned store closings and a
continued weakening in the dress shoe market. U.S. same store
sales declined 4.7% for the fourth quarter and decreased 2.8%
for the year. International net sales decreased 27.7% to $8.7
million in the fourth quarter and were off 13.7%, to $39.6
million for the full year. Currency devaluation and the impact
of the Goods and Services Tax on the retail market in Australia
resulted in a 31.2% decline in sales in Australia during the
quarter. Sales in Europe were down 15.7% during the quarter, due
in part to exchange rates and a weakening in the dress shoe
market.
Peter Corritori, Chairman and Chief Executive Officer, commented
"Our results for 2000 reflect the misalignment of our products
with the needs of the consumer. In a market that has become soft
and casual, we remained a hard leather dress shoe company. We
did not have the casual and refined casual products necessary to
offset the accelerating decline in the dress shoe market.
Additionally, our results clearly indicate the cost of change to
the organization. We believe the strategic initiatives
undertaken during the year place Florsheim in the best possible
position to succeed. However, it is a long road back and,
ultimately, success will be measured in the marketplace by our
ability to gain and secure meaningful distribution of new styles
that meet the current needs of our customers for casual, refined
casual and dress shoes."
The Company previously announced that the fourth quarter 2000
results might reflect an estimated $12.0-$15.0 million gain as a
result of the termination and curtailment of the Company's
pension plan. The Company curtailed benefits and terminated the
plan in the first quarter of 2001 and expects to revert excess
assets and realize the gain during 2001.
Florsheim Group Inc. designs, markets and sources a diverse and
extensive range of products in the middle to upper price range
of the men's quality footwear market. Florsheim distributes its
products in more than 6,000 department and specialty store
locations worldwide, through 241 Company-operated specialty and
outlet stores and 43 licensed stores worldwide.
FRUIT OF THE LOOM: Creditors Object Mr. Lee's Motion For Relief
---------------------------------------------------------------
Fruit of the Loom, Ltd.'s Informal Committee of Senior Secured
Creditors objected to Ki Young Lee's motion for relief from the
automatic stay. Christopher J. Lhulier, Esq., of Pachulski,
Stang, Ziehl, Young & Jones told Judge Walsh, first, that Mr.
Lee has not met the requirements for imposition of a
constructive trust. In order for a constructive trust to be
imposed, one must (a) provide evidence that the opposing party's
fraudulent conduct caused such party to be unjustly enriched at
the expense of the plaintiff to whom some duty was owed; and (b)
have a direct interest in the property that is subject to the
constructive trust. Lasalle Nat'l Bank v. Perelman, 82 F. Supp.
279, 295 (D. Del. 2000). However, Fruit of the Loom has not been
unjustly enriched through fraudulent conduct. Fruit of the Loom
is merely keeping what appropriately belongs to its estate. In
fact, a constructive trust would unjustly enrich Mr. Lee by
converting him from an unsecured creditor into a secured one.
Second, Mr. Lee comes to the Court with "unclean hands." Mr. Lee
is accused of committing extensive fraud against Pro Player,
including payment of bribes to Pro Player's largest customers.
If granted relief, Mr. Lee would benefit at the expense of Fruit
of the Loom's innocent unsecured creditors, to their detriment.
Not to be outdone, the Official Committee of Unsecured Creditors
chimed in with an objection also. David B. Hamilton Esq., of
Pepper Hamilton, stated that Mr. Lee attempts to convince the
Court that the cash deposited by Fruit of the Loom into the
Court Registry is no different from the proceeds of the
irrevocable letter of credit issued by Bank of Nova Scotia. Mr.
Lee conveniently ignores the fact that he failed to comply with
the conditions for drawing on the letter of credit prior to the
bankruptcy filing. Mr. Hamilton asserted that the only way he
could have drawn on the letter was if funds were actually owed
to him by Pro Player under the employment contract. Given the
pending fraud litigation against him, Mr. Lee could not have
made such a declaration.
Mr. Lee denies Fruit of the Loom's legitimate protection from
creditors, a cornerstone of the Bankruptcy Code. He attempts to
usurp this Court's authority over the equitable distribution of
property by asking the Court to pretend the Chapter 11
proceedings do not exist. The objection also reiterates the
"unclean hands" claim of defense forwarded by the Informal
Committee. (Fruit of the Loom Bankruptcy News, Issue No. 25;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
GLOBAL iTECHNOLOGY: Ceases Operations Due To Cash Shortfall
-----------------------------------------------------------
Global iTechnology, Inc. announced Friday that it has ceased
operations because it has been unable to raise additional
capital.
In addition, the company has defaulted in its obligation to
provide up to $900,000 in working capital to its subsidiary,
Certificate Express Inc. (CEI).
Based upon that default, the company is required to transfer the
assets of CEI to the former CEI shareholders. The assets of CEI
represented the only remaining assets of the Global.
Earlier, the company's other subsidiaries, all of which had been
in the prepaid phone card business, filed for bankruptcy court
protection in October 1999. All members of the Company's board
of directors and all of its officers have resigned effective
March 22, 2001.
The Global will file a Form 8-K with the U.S. Securities and
Exchange Commission detailing these circumstances.
Because the company will not have sufficient resources to
prepare and file a Form 10-KSB Report by March 31, 2001, the
Company anticipates that its shares of common stock will be
removed from quotation on the Nasdaq Over-the-Counter Bulletin
Board on or about April 30, 2001.
GREATE BAY: Talking To Hollywood Casino to Restructure Debt
-----------------------------------------------------------
Greate Bay Casino Corporation (OTC Bulletin Board: GEAA)
reported income from operations of $301,000 for the fourth
quarter of 2000 compared to a loss from operations of $1.1
million for the fourth quarter of 1999. Revenues for the fourth
quarter of 2000 amounted to $4.6 million compared to revenues of
$745,000 for the fourth quarter of 1999.
The increases in revenues and income from operations were
attributable to an increase in software installation revenues at
Advanced Casino Systems Corporation, the Company's sole
remaining operating subsidiary.
For the year ended December 31, 2000, the Company reported
income from operations of $74,000 on revenues of $14.1 million
compared to a loss from operations of $2.3 million on revenues
of $6.4 million for 1999.
The net loss from all sources amounted to $1.4 million ($0.26
per share) for the fourth quarter of 2000, and $6.6 million
($1.27 per share) for the year ended December 31, 2000 compared
to a net loss of $3.1 million ($0.59 per share) and net income
of $76.1 million ($14.68 per share) for the comparable twelve
months ended December 31, 1999, respectively.
Net income for the year ended December 31, 1999 was due to a one
time non-cash credit of $85.6 million resulting from elimination
of the Company's negative equity in Pratt Casino Corporation
when Pratt Casino Corporation and its subsidiaries filed for
Chapter 11 protection in May 1999 as part of a prenegotiated
plan of reorganization. The reorganization, which was
consummated in October 1999, eliminated ownership and operating
control of these entities by Greate Bay.
Greate Bay had outstanding indebtedness to Hollywood Casino
Corporation of $56 million on December 31, 2000 including $9.3
million in demand notes and accrued interest. Because the
operations of Advanced Casino Systems Corporation do not
generate sufficient cash flow to provide debt service on the
Hollywood obligations, Greate Bay is insolvent. Accordingly,
Greate Bay is currently negotiating with Hollywood to
restructure its obligations and, in that connection, has entered
into a standstill agreement with Hollywood. Under the standstill
agreement, all payments of principal and interest from March 1,
2000 through March 1, 2001 with respect to a note due from
Hollywood have been deferred until April 1, 2001 in
consideration of Hollywood's agreement not to demand payment of
principal or interest on the demand notes owed by Greate Bay.
The fair market value of Greate Bay's assets is substantially
less than its existing obligations to Hollywood. Accordingly,
management anticipates that any restructuring of Greate Bay's
obligations will result in the conveyance of all of its assets
(or the proceeds from the sale of its assets) to Hollywood,
resulting in no cash or other assets remaining available for
distribution to the Company's shareholders. Any restructuring of
Greate Bay's obligations, consensual or otherwise, will require
the Company to file for protection under federal bankruptcy laws
and will ultimately result in liquidation of the Company.
HARNISCHFEGER: Equity Committee Contends Plan Is Undervalued
------------------------------------------------------------
The Official Committee of Equity Security Holders of
Harnischfeger Industries, Inc., told Judge Walsh that it will
prove at the confirmation hearing that the value of the
Reorganized Debtors is higher than $1.6 billion. Based on a
valuation of the reorganized debtors well in excess of $1.6
billion, the official equity of HII objected to the Plan on the
ground that it fails to satisfy the fair and equitable
requirement of section 1129(b) of the Bankruptcy Code because it
provides creditors with a recovery in excess of 100% of their
claims while eliminating the interests of HII's current
shareholders over their dissent.
The facts, Erica M. Ryland, Esq., Andrew S. Dash, Esq., at
Berlack and Israels & Liberman LLP explained, belie
Harnischfeger management's projections and the resulting less-
than-$1.6 billion valuation because:
(a) Joy is the global market leader in its business;
(b) Joy has always generated a substantial, positive
EBITDA;
(c) Joy has experienced improving profit margins since a
cyclical low in 1999; and
(d) experts say that demand for coal will grow more rapidly
than in the past, and more significantly than previously
anticipated.
In short, Joy Technologies Inc. and Harnischfeger Corporation
(P&H), principal subsidiaries of HII, were strong companies
going into chapter 11 and are even stronger coming out.
Moreover, now that HII, Joy, and P&H have been disentangled from
HII's disastrous investment in Beloit Corporation, they are no
longer affected by the devaluation that investors attributed to
Beloit.
This makes the case highly unusual, the Equity Committee of HII
asserted. Unlike the typical scenario, where official equity
committees proffer valuation testimony that a dying business
forced into chapter 11 case will perform like the proverbial
"hockey stick" after reorganization, here, in the HII cases, the
Equity Committee told the Judge, it is HII's management who is
proffering a reverse "hockey stick" by projecting that after
rising this year and next, Joy's sales will decline and Joy will
suffer an inexplicable substantial and permanent diminution in
business and profitability.
The Equity Committee contended that management has premised its
plan of reorganization on flawed financial projections showing
that Joy's sales will rise this year and next, and then suffer
from an inexplicable substantial and permanent diminution in
profitability and demand for its products.
The Equity Committee asserted that Harnischfeger's plan can't
achieve confirmation because it is not fair and equitable as
required under 11 U.S.C. Sec. 1129(b). Creditors, the Equity
Committee charged, will walk away under Harnischfeger's plan
with a recovery in excess of 100% of their claims.
The Equity Committee is ready for a contested confirmation
hearing on April 3, 2001, and ready to tell Judge Walsh more
about the future of coal production. Total enterprise value will
be the issue of the day, with the equity Committee on one end of
the spectrum and the Debtors and their creditors on the other.
The parties see a $627 million difference in the value of
Reorganized HII attributable to assumptions about Joy and coal
production.
As previously reported, the Debtors filed their Third Amended
Plan of Reorganization and a Third Amended Disclosure Statement
in support of that plan on December 26, 2000. That Third Amended
Plan is premised on a valuation report prepared by The
Blackstone Group. Blackstone estimated that the enterprise value
of the New Company falls between $925 million and $1.115
billion, with a pinpoint value of $1.02 billion. Blackstone
further estimated that the aggregate value attributable to the
New HII Common Stock to be issued under the plan falls between
$598 and $783 million, with a pinpoint value of $688 million.
The Debtors' best estimate of unsecured claims against its
estates is $1.162 billion. Because the absolute priority rule
encompassed in Section 1129(b)(2)(B) of the U.S. Bankruptcy Code
requires full payment of all creditors' claims plus post-
petition interest before any shareholder could collect a dime,
the plan must deliver $1.315 billion (assuming a 7.5% interest
rate applied over a 21 month period) to the Debtors' unsecured
creditors or shareholders, plainly and simply, are out of the
money. Blackstone's valuation leaves a $627 million shortfall.
Black letter bankruptcy law based on Blackstone's valuation says
shareholders take nothing when Harnischfeger emerges from
chapter 11.
Houlihan Lokey Howard & Zulkin, representing the Official
Committee of Unsecured Creditors appointed in HII's chapter 11
cases, undertook its own independent valuation and reviewed
Blackstone's valuation. Houlihan reached the same material
conclusions as did Blackstone.
The Equity Committee, however, is convinced that the Debtors,
Blackstone, the HII Creditors' Committee and Houlihan are wrong
because their assumptions are flawed. Goldin Associates, L.L.C.,
representing the Equity Committee, points to two things that
boost the value of Reorganized HII by at least $627 million:
(1) the outlook for coal production has materially improved
during the past year; and
(2) President-elect Bush has pledged to reverse the
policies of the Clinton Administration that discouraged domestic
coal production and use of coal.
James H.M. Sprayregan, Esq., at Kirkland & Ellis in Chicago,
said that the Debtors have asked the Equity Committee to
quantify how the outlook for coal production changes
Blackstone's analysis and to explain their speculative assertion
that the new President will be able to change policies that
affect the coal industry, but they've not received a complete
answer. Seymour Preston, Jr., the Managing Director at Goldin
who leads the Harnischfeger Engagement at a cost of $54,000 per
month did share with the Debtors, the Committees, and their
professionals a copy of a four-page article entitled, "A
Comeback for Coal; With Oil Prices High, It's Looking Cheap --
And It's Abundant" appearing in the December 11, 2000 edition of
Business Week.
Each side has lined-up a coal market expert:
(a) Mark T. Morey at Resource Data International, Inc. --
billing $275 per hour -- is ready to debunk the Equity
Committee's fantasies and testify that the Debtors' assumptions
are rock solid; and
(b) Seth Schwartz at Energy Ventures Analysis, Inc. --
billing $230 an hour -- will champion the Equity Committee's
views about the favorable macroeconomic climate for coal demand,
production and related mining activity.
The Official Committee of Equity Security Holders told
Harnischfeger that it will show all of its cards before Judge
Walsh at the hearing to consider confirmation of the Third
Amended Plan.
Ms. Ryland said her team of lawyers representing the Equity
Committee will put Goldin professionals and a parade of other
experts on the witness stand to testify that the projections and
macroeconomic assumptions contained in the Debtors' business
plan are flawed and to prove that the demand for coal has
changed dramatically due to rapidly rising prices (and threats
of shortages) of alternative energy sources such as natural gas
and oil.
Blackstone's valuation "is premised on a business plan developed
by the Debtors nearly a year ago," Ms. Ryland explained. "The
business plan and the derivative valuation fail to reflect that
the outlook for coal production (a key driver of the Debtors'
business plan has changed dramatically over the past year
because of a growing energy crisis in this country and around
the world," Ms. Ryland continued. Additionally, the Equity
Committee will argue at the confirmation hearing that HII has
understated projected sales to growth markets such as China,
Russia, India and Poland will be materially higher than what
management told Blackstone.
The HII Creditors' Committee, represented by Lindsee P.
Granfield, Esq., at Cleary, Gottlieb, Steen & Hamilton, will
likely lend its support to the argument that, while the value of
Reorganized HII might be higher than what Blackstone concluded,
the suggestion that the value is 60% higher is ludicrous. The
Beloit Creditors' Committee, represented by Wendell H. Adair,
Esq., at Stroock & Stroock & Lavan LLP, would be expected to
provide a measure of harmony to that refrain.
Procedurally, Laura Davis Jones, Esq., at Pachulski, Stang,
Ziehl, Young & Jones P.C., serving as local counsel to the
Debtors, related, Harnischfeger obtained Judge Walsh's approval
of their Third Amended Disclosure Statement on December 20,
2000.
The Court found that the Disclosure Statement provides creditors
with information of a kind, and in sufficient detail, to enable
a hypothetical reasonable investor to make an informed judgment
about the plan and to decide whether they should vote to accept
or reject the plan. Copies of the Plan and Disclosure Statement
were mailed to all of the Debtors' creditors together with
customized ballots and solicitation letters from the various
constituencies.
Although the official tally is still under wraps, it is more
probable than not that creditors voted to accept the Debtors'
plan by a wide, wide margin. That fact, of course, cuts both
ways. The Debtors and the Creditors' Committees would say that
creditors have consented to the debt-compromising haircut the
plan calls for while the Equity Committee would say that the
creditors have banded together in a conspiracy to steal value
from HII shareholders. (Harnischfeger Bankruptcy News, Issue No.
39; Bankruptcy Creditors' Service, Inc., 609/392-0900)
HEADLIGHT: Lays Off Staff And Prepares To File For Bankruptcy
-------------------------------------------------------------
Headlight, a San Fransisco-based e-learning company, has laid
off its staff and is preparing to file for bankruptcy, said
several of the company's partners, according to CNET News.com.
The company last week informed its partners that it had not been
able to secure additional funding. Headlight co-founder Scott
Mitic told a company executive last week that Headlight is
laying off its staff and would file for bankruptcy by this week.
The company declined to respond to questioning, but an outgoing
voice mail message for an executive said the company ceased
operations on March 14. (ABI World, March 23, 2001)
HOMECOM: Sells Internet Asset & Decides To Wind Down Operations
---------------------------------------------------------------
HomeCom Communications, Inc. (OTCBB: HCOM) announced that it
recently sold its Internet banking operations to Netzee, Inc.
(NASDAQ: NETZ).
The sale generated net proceeds to HomeCom of approximately
$275,000.
HomeCom also announced that it has decided to wind down its
operations. According to Harvey Sax, President and CEO of
HomeCom, "The sale of Internet banking operations, although it
will ensure an orderly migration of service for our customers,
will not provide us with any significant operating capital."
HomeCom has been unable to obtain additional financing and has
insufficient assets to completely satisfy its obligations to its
creditors and the liquidation preferences of its preferred
stock. HomeCom continues to explore other opportunities, which
may include the sale of other assets.
HOMES.COM: Files Chapter 11 Petition in N.D. California
-------------------------------------------------------
After announcing the lay-off of 40% of its staff on March 14,
Homes.com has now filed Chapter 11 in the Northern District of
California. According to the company, the job cuts were "due to
disappointing operating results in January and February combined
with the very difficult environment for raising capital." "With
the markets being what they are, we found it necessary to reduce
our operating expenses in order to continue as a viable
business," Homes.com president Tom Orsi said. (New Generation
Research, March 23, 2001)
INGENUUS CORP.: Fails To Comply With Nasqaq Listing Requirement
---------------------------------------------------------------
Ingenuus Corporation (Nasdaq:INGE), a provider of business-to-
business collaboration applications, received a Nasdaq Staff
Determination dated March 20, 2001 indicating that the Company
failed to comply with the minimum bid price requirement for
continued listing set forth in Marketplace Rule(s) 4450(a)(5),
and that its securities are, therefore, subject to delisting
from The Nasdaq National Market. The Company has requested a
hearing before a Nasdaq Listing Qualifications Panel to review
the Staff Determination. There can be no assurance the Panel
will grant the Company's request for continued listing.
About Ingenuus:
Ingenuus Corporation (Nasdaq:INGE) is the technology leader in
Intelligent Manufacturing Collaborative Commerce(TM). Ingenuus
allows manufacturers to take command, and take control of the
complete manufacturing change life cycle, whether a discrete
manufacturer in electronics or mechanical assembly and test, or
a process manufacturer in semiconductors or pharmaceuticals. For
Original Equipment Manufacturers (OEM), Contract Manufacturing
Services (CMS), customers or suppliers, Ingenuus provides real
time Intelligent Collaboration(TM) throughout the entire supply
chain, globally. Using Manufacturing Change Manager(TM), the
entire organization will speak the same language, plan together,
transact together, and execute together. All departments,
divisions, and members of the supply chain will function
together at the same optimized pace and speed, while eliminating
friction of all types across the complete supply chain.
Ingenuus' Manufacturing Change Manager solution is a state of
the art, next-generation product that surpasses all of its
competitors, especially those who offer c-platforms and c-tool
kits. Ingenuus corporate headquarters are located at 830 East
Arques Avenue, Sunnyvale, CA 94086. More information is
available at www.ingenuus.com.
INTEGRATED HEALTH: Asks To Extend Time To Assume & Reject Leases
----------------------------------------------------------------
Integrated Health Services, Inc. requested, pursuant to section
365(d)(4) of the Bankruptcy Code, that the Court further extend
the date by which the Debtors must assume or reject their
Unexpired Leases to and including October 1, 2001, without
prejudice to their ability to request a further extension.
The Debtors reminded the Court that they were parties to more
than 1,567 unexpired nonresidential real property leases and
subleases as at petition date. During their reorganization
process, they have assumed or rejected or assumed and assigned
some of these leases. Currently, there are more than 1,360
Unexpired Leases which they have to review before making a
decision whether to assume or reject.
The Debtors do not think they will be able to make informed
decisions with respect to this matter prior to the expiration of
the Second Extension Period. However, these Unexpired Leases are
valuable assets of the estates and are integral to the continued
operation of their businesses. In order not to inadvertently
reject valuable leases or prematurely assume burdensome leases
with the resultant imposition of potentially substantial
administrative expenses to their estates, the Debtors believe it
is prudent and in the best interest of their estates to request
for an extension of the period to enable them to make reasoned
decisions to assume or reject such leases.
The debtors believe they meet the requirements for being granted
the extension. First, their cases are large and complex. Second,
they have continued to make significant progress in their
reorganization efforts. Moreover, the lessors will not be
prejudiced by the relief requested because the Debtors have
performed and will continue to perform post-petition obligations
under the leases except in the event of bona fide disputes and
any lessor may request that the Court fix an earlier date by
which the Debtors must assume or reject its lease in accordance
with section 365(d)(4) of the Bankruptcy Code.
The Debtors also noted that, decisions to assume or reject
facility leases necessarily involve complex negotiations not
only with the affected landlord, but also with the Health Care
Financing Administration, the Department of Justice and the
relevant state Medicaid agency. Moreover, as providers of post-
acute and related specialty healthcare services, the Debtors
believe that they must avert any inadvertent or forced closure
of a long-term care facility that would adversely affect the
health and welfare of the facility's residents and make
decisions to assume or reject the Unexpired Leases in an orderly
manner without adverse consequences for such residents.
The Debtors also reminded the Court that, by virtue of the
testimony of their Chief Executive Officer, Joseph A. Bondi, at
the Exclusivity Hearing, the Court is well aware that the
Debtors have engaged in an extensive facility- by-facility
review and evaluation of their long-term care facility
portfolio. The Debtors' portfolio analysis has served, and will
continue to serve, as the basis for ongoing and anticipated
lease restructuring negotiations.
For these reasons, the Debtors believe that the requested
extension of the time period to assume or reject the Unexpired
Leases is both necessary and well justified. (Integrated Health
Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
KERAVISION INC.: Files For Chapter 11 Bankruptcy Protection
-----------------------------------------------------------
KeraVision, Inc. (Nasdaq:KERA), a vision correction company,
has filed in the U.S. Bankruptcy Court, Oakland Division, for
protection pursuant to Chapter 11 of the U.S. Bankruptcy Code.
KeraVision and its Board of Directors have explored a number of
options before determining that an orderly wind-down of
operations and sale of its assets offered the best alternative
to maximizing the value of the Company.
The Company intends to file a motion to sell all of its
inventory, equipment and intellectual property to the highest
bidder and expects a sale to close in the next two months. In
its filing papers, the Company cited its inability to obtain
sufficient financing and the large capital expenditures required
to develop its business as factors that have had an adverse
affect on the Company's ability to continue to operate.
KeraVision, founded in 1986, is the developer of INTACS micro-
thin prescription inserts for people with -1.0 to -3.0 diopters
of myopia and up to +1.0 diopter of astigmatism. Approved by the
FDA in 1999, INTACS inserts were named one of "The Year's Top 10
Medical Advances" by both CNN and Health magazine. INTACS
inserts are a flexible and convenient option eyeglasses, contact
lenses and vision correction surgeries that alter the eye's
central optical zone. The Company's patented vision correction
technology is also being developed for the possible treatment of
hyperopia (farsightedness); myopia (nearsightedness) in wider
ranges than presently approved by the FDA; astigmatism; and
keratoconus, a corneal thinning disease.
LIBERTY HOUSE: Expects To Pay Off Vendors in Full by Month's End
----------------------------------------------------------------
According to Honolulu Star-Bulletin, Liberty House, Inc.'s more
than 1,500 vendors should receive payment shortly. According to
John Monahan, president, chief executive officer of Liberty
House, the 1,100 vendors owed $5,000 or less will be paid off in
full by month's end; the 500 vendors owed more than $5,000 will
receive a check for 40% of their total claim, in addition to a
five-year note to pay off another 50%. Monahan also commented,
"By and large, the initial cash payments will be made by the
31st of March." Liberty House recently emerged from Chapter 11
protection. (New Generation Research, March 23, 2001)
LOEWEN GROUP: Moves To Disallow & Reduce Claims Resolved by ADR
---------------------------------------------------------------
The Loewen Group, Inc. requested that the Court disallow or
reduce certain proofs of claim that have been liquidated and
fixed pursuant to the Alternative Dispute Resolution Procedures
approved by the Court.
Because each of the Claims has been fully resolved pursuant to
the ADR Procedures, to the extent that a Claim asserts
liabilities greater than the outcome of the resolution of the
Claim under the ADR Procedures, there is no right to payment
from the Debtors' estates.
Based on this, the Debtors have identified 44 Claims that should
be disallowed and 7 Claims that should be reduced.
Accordingly, the Debtors requested that the Court (a) disallow
the 44 Claims identified on Exhibit A attached to this Motion
and (b) reduce 7 Claims identified on Exhibit B attached to this
Motion. (Loewen Bankruptcy News, Issue No. 35; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
MARINER: Implementing Alternative Dispute Resolution Scheme
-----------------------------------------------------------
As previously reported, numerous objections were filed by Tort
Claimants and others affected by the proposed ADR Procedures.
The Court considered testimony and argument of counsel at
hearings on the ADR Motion.
Mariner Post-Acute Network, Inc. subsequently filed an Amended
Proposed Form of Order and Alternate Dispute Resolution Term
Sheet which addressed and resolved some of the objections. The
Amended ADR Term Sheet still was met with numerous objections. A
hearing was held on November 13, 2000, at which these objections
were discussed and ruled upon.
Subsequent to the hearing, the Debtors filed a revised
Alternative Dispute Resolution Term Sheet which is approved in
all respects.
The Court's ADR Order of approval provides that:
(1) A claim listed on the Preliminary ADR Claims List may
be designated as an ADR Claim through the service of an ADR
Notice upon the holder of such claim for purposes of the ADR
Procedure.
(2) Any Claimant in a current action against the Debtors
who has been omitted from the Preliminary ADR Claims List may
request inclusion, and such Claimant's claim shall be treated as
an Additional ADR Claim.
(3) Any personal injury, employment law or similar claim
filed against the Debtors' estates or otherwise asserted against
the Debtors that is not listed on the Preliminary ADR Claims
List may be designated as an Additional ADR Claim by the Debtors
by the service of:
(a) a copy of the ADR Term Sheet;
(b) the ADR Notice; and
(c) an Opt-Out Notice.
(4) The holders of such additional ADR Claims may object to
inclusion in the ADR Procedure by filing an objection with the
Bankruptcy Court within 20 days after the date of service of the
ADR Notice, and if no objection is timely received from such
Claimant, the Claimant will be deemed to have consented to
inclusion in the ADR Procedure.
(5) The Debtors intend to designate all claims of which
they are aware and which are not in active litigation as
Additional ADR Claims.
(6) Upon the designation of any claim as an ADR Claim
through the service of an ADR Notice on a Claimant (other than
the claims on the Preliminary ADR Claims List), the Debtors
shall file with the Court, and serve on all parties on the
General Service List maintained in these cases, a Notice of
Designation of ADR Claims.
(7) With respect to claims listed on the Preliminary ADR
Claims List, commencing on the date of service of the ADR Notice
on a Claimant, a holder of an ADR Claim and any such holder's
agents, attorneys and representatives will be enjoined from,
among other things, commencing or continuing any action or
proceeding in any manner or any place to collect or otherwise
enforce such ADR Claim holder's claims against the Debtors or
their property other than through the ADR Procedure (the ADR
Injunction).
(8) The ADR Injunction includes, without limitation, an
injunction against proceeding against non-debtor defendants to
any ADR Claim who are current or former employees of the
Debtors, are named insureds under the Debtors' applicable
insurance policies, are affiliated with or indemnified by the
Debtors or for the claims against whom the Debtors will have
ultimate liability, and direct actions against the Debtors'
insurance carriers.
With respect to Additional ADR Claims, the ADR Injunction shall
commence:
(a) if the claimant does not timely file an objection ; and
(b) if the claimant timely filed an objection to inclusion
in the ADR Procedure, on such date that the Court
enters an order approving the inclusion of the claim in
the ADR Procedure.
The ADR Injunction shall not prohibit a Claimant from naming and
serving additional third parties, but if such third parties are
named and served, the ADR Injunction shall immediately upon
naming and service of process apply to proceedings against the
additional third parties.
The ADR Injunction shall expire with respect to an ADR Claim
upon the earliest of:
(i) One year from the date of the Court's order;
(ii) the comp1etion of the ADR Procedure as to such ADR
Claim; or
(iii) the approval by the Court of the parties'
stipulation to modify the automatic stay;
(iv) the Court's entry of an order modifying the
automatic stay to permit the Claimant to liquidate
its claim(s) against any of the Debtors or
(v) further order of the Court.
(9) The automatic stay will be modified pursuant to the
terms of the ADR Procedure through the Opt-Out Provision or upon
the good faith completion of the ADR Procedure.
(10) If a Claimant exercises the Opt-Out Provision by
agreeing to the Opt-Out Stipulation or otherwise executes a
Stipulation in the Debtors' chapter 11 cases agreeing to limit
their recovery to available insurance proceeds, the insurers (or
any individual insurer) will not deny coverage as to any
Claimant who does not argue or contend that the insurer must pay
any amount of its claim that falls with the self-insured
retention/deductible on the basis that the Claimant has agreed
to seek recovery only against available insurance proceeds and
that the Debtors therefore have not satisfied their self-insured
retention/deductible obligation under the applicable policy or
policies. The insurers have reserved their right to deny
coverage on any basis.
(11) Any of the deadlines contained in the ADR Procedure may
be modified by: (a) the Debtors and the holder of an ADR Claim,
by mutual consent of the parties; (b) an arbitrator (if the
Claimant has agreed to arbitration), for good cause shown; or
(c) the Court.
(12) The Debtors' authority to enter into settlements under
the ADR Procedure shall be subject to the parameters of the
Omnibus Order Granting Debtors Settlement Authority previously
approved by the Court.
(13) Coverage disputes will not be litigated in this ADR
procedure, but the Debtors reserve their right to litigate
coverage disputes. (Mariner Bankruptcy News, Issue No. 13;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
MSV RESOURCES: Says Debt Restructuring Completed
------------------------------------------------
MSV Resources Inc. announced that it has met with all conditions
set forth in the Proposal to Creditors ratified last December 21
in Montreal. On September 12, 2000, the Board of Directors of
MSV Resources had authorized the filing, with Raymond Chabot
Inc., of a notice of its intentionto make a proposal to its
creditors in conformity with section 50.4(1) of Bankruptcy and
Insolvency Act. All obligations to its creditors having been
met, the Company no longer has to avail itself of this Act.
MSV can now concentrate its efforts on the Copper Rand 5000
project in which the Solidarity Fund QFL, the Soci,t, de
d,veloppement de la Baie James (SDBJ) and SOQUEM INC. (a
subsidiary of SGF Mineral) are partners. The four partners have
formed a new company, Corporation Copper Rand Inc. (CCR), who
willdevelop and exploit, in depth, a copper and gold deposit in
the Chibougamau area.
"Our partners in the Copper Rand project have accepted our offer
of an increased participation in the new company," explains Mr.
Andr, Fortier, President of MSV Resources. Therefore, the
Solidarity Fund QFL, the SDBJ and SOQUEM have each acquired an
additional 8% of the capital for approximately $2M. "With these
additional sums the Company was able to meet its obligations
towards its creditors while maintaining a significant
participation in CCR". MSV Resources retains a 16% participation
in CCR and each of the other partners will hold a 28%
participation in the new company.
MSV Resources is based in Montreal and exploits gold and base
metal deposits as well as specializing in exploration of mining
properties. The company holds various properties, mainly in the
Chigougamau area, in northern Qu,bec (Eastmain, Corner Bay, Lac
Tach,).
NORTHPOINT: Covad Provides Safety Net Program For Customers
-----------------------------------------------------------
Covad Communications (Nasdaq:COVD), the leading national
broadband services provider utilizing DSL (Digital Subscriber
Line) technology, announced the Covad Safety Net Promotion for
NorthPoint Users. The promotion is designed to help most
NorthPoint broadband users who may lose their connection on the
NorthPoint network get connected to the Covad network with a
modem trade-in and without having to pay for installation.
"Covad has always stood for choice in broadband services," said
Chuck McMinn, chairman of Covad. "This program helps ease the
financial burden for end users who wish to choose Covad and
provides as fast a path as possible for them to get reconnected
to the largest national DSL network so they can get their
businesses and lives back on track."
The Covad Safety Net Promotion for NorthPoint Users was
developed in response to AT&T's purchase of substantially all of
NorthPoint's assets that was approved by the United States
Bankruptcy Court this week. In its press release, NorthPoint
indicated "imminent termination of network services to
customers" and its web site urges customers to take immediate
action to secure alternative services.
Details on the Covad Safety Net Promotion for NorthPoint Users
The Covad Safety Net Promotion for NorthPoint Users is
immediately available to NorthPoint customers on two
participation levels. For those who currently have an Internet
Service Provider (ISP) that is also a Covad ISP, Covad will
waive the installation charge to the ISP. Once the Covad service
has been successfully installed, customers also can participate
in a modem trade-in program. Customers who are currently with
NorthPoint-only ISPs are eligible to participate only in the
modem trade-in program and will be switched to a Covad ISP.
To participate in the Covad Safety Net Promotion for NorthPoint
Users, current NorthPoint customers must contact their ISP and
request a transfer to Covad's network by May 1, 2001. They can
then go to the Covad Safety Net site located at www.covad.com
and follow instructions to make the network switch or find out
more details about the promotion.
The trade-in program is for customers who have successfully
installed Covad services. The customer must return a trade-in
package, including the old NorthPoint modem, to Covad's
fulfillment center by September 30, 2001. Upon verification of
eligibility, the customer will receive a check equal to the cost
of the modem provided by Covad.
About Covad Communications
Covad is the leading national broadband services provider of
high-speed Internet and network access utilizing Digital
Subscriber Line (DSL) technology. It offers DSL, IP and dial-up
services through Internet Service Providers, telecommunications
carriers, enterprises, affinity groups, PC OEMs and ASPs to
small and medium-sized businesses and home users. Covad services
are currently available across the United States in 109 of the
top Metropolitan Statistical Areas (MSAs). Covad's network
currently covers more than 40 million homes and business and
reaches approximately 40 to 45 percent of all US homes and
businesses. Corporate headquarters is located at 4250 Burton
Drive, Santa Clara, CA 95054. Telephone: 1-888-GO-COVAD. Web
Site: www.covad.com.
ORYX TECHNOLOGY: Nasdaq Looks To Delisting Shares
-------------------------------------------------
Oryx Technology Corporation (Nasdaq:ORYX), a technology
management company, received a Nasdaq Staff Determination on
March 20, 2001 indicating that the Company fails to comply with
the minimum bid price requirement for continued listing set
forth in the Marketplace Rule 4310(c)(4), and that its
securities are, therefore, subject to delisting from The Nasdaq
SmallCap Market.
The Company has requested a hearing before a Nasdaq Listing
Qualifications Panel to review the Staff Determination. There
can be no assurance the Panel will grant the Company's request
for continued listing.
Company Profile
Headquartered in Fremont, California, Oryx Technology Corp. is a
technology management company with a proprietary portfolio of
high technology products in surge protection. Oryx also provides
management services to early-stage technology companies through
its affiliate, Oryx Ventures, LLC. Oryx's common stock trades on
the Nasdaq SmallCap Market under the symbol ORYX.
OWENS CORNING: Wants To Assume Joplin Warehouse Lease
-----------------------------------------------------
In 2000, Owens Corning sold a parcel of property in Joplin,
Missouri, to a developer who subsequently constructed the Joplin
Warehouse on the property. The warehouse was leased back to the
Debtors. The Joplin Warehouse is physically attached to the
Debtors' vinyl plant via an enclosed transit way. The Debtors
consider the Joplin Warehouse as a fundamental part of the
Debtors' vinyl distribution strategy. The warehouse's location
and easy plant access make it an important component of the
Debtors' manufacturing operations at the Joplin, Missouri plant.
The Debtors will require the use of the Joplin Warehouse in the
foreseeable future.
Under the Lease, the developer is permitted to sell the Joplin
Warehouse to an investor. Assumption of the Joplin Lease is
required to complete this transaction. The Debtors assured Judge
Fitzgerald that the conveyance will have no impact on the terms
and conditions of the Debtors' current lease agreement.
Furthermore, Debtors do not owe any pre-petition "cure" amounts
with respect to the Joplin Lease.
Accordingly, Kate Stickles and Norman Pernick of the firm Saul
Ewing LLP, together with Peter Neckles, with Mark Chehi and
David Hurst, of the firm Skadden, Arps, Slate, Meagher & Flom,
on behalf of the Debtors, sought Judge Fitzgerald's authority to
assume the Joplin Lease. (Owens Corning Bankruptcy News, Issue
No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900)
PSS WORLD: Moody's Downgrades Senior Ratings to Low-B Levels
------------------------------------------------------------
Moody's Investors Service downgraded the ratings of PSS World
Medical, Inc, citing the deterioration in the company's
operating performance and credit profile.
The ratings affected are as follows:
* $120 million senior secured credit facility due 2004 to
Ba3 from Ba1,
* $125 million 8.5% senior subordinated notes due 2007 to
B2 from Ba3,
* senior implied rating to Ba3 from Ba1,
* senior unsecured issuer rating to B1 from Ba2.
According to Moody's, operations were first noticeably impacted
by vendor problems at two of the company's business segments.
Product recalls and manufacturing issues at two suppliers
materially impacted revenues and expenses at the end of last
fiscal year. Those problems were compounded by the weakness
experienced in the long-term care division due to financial
difficulties at many of its customers.
PSS's performance rebounded slightly in the quarter that ended
on June 30, 2000. However, it declined further in the following
quarters due to employee turnover issues and disruptions
surfacing from the eventually terminated transaction with Fisher
Scientific.
As a result, already thin margins continued to erode, leading to
a significant decrease in coverage and an increase in leverage.
PSS has since undertaken many initiatives to turn around the
company, starting with recent changes made to senior management.
The company has also decided to exit European markets,
restructured compensation for the sales force, tightened credit
standards at its long-term care division, and started to
implement new marketing programs.
In addition, the company has turned its attention to improving
operating efficiency and cash flow. In the past, the company was
more focused on acquisitions and building up a national
infrastructure.
The most recent quarter did reveal some improvements in
performance. The company generated $21 million in cash flow from
operations, a figure quite significant relative to historical
levels.
This allowed the company to pay down $20 million in debt, though
availability is still modest following an amendment to the
credit facility which reduced commitments to $120 million from
$140 million.
Operations at the physician division appeared to have stabilized
as well. Offsetting this is the continued weakness at the
diagnostic imaging division, which represents roughly 40% of
sales.
Moreover, operations in the long-term care division, which
represents 20% of sales, will continue to be hampered until the
industry and its customers, of which several large accounts are
in bankruptcy, recover from the financial problems caused by
PPS, nursing shortages and rising liability costs.
Looking forward, Moody's believes that operations will
eventually stabilize due to management's efforts and due to the
recovery in many sectors in healthcare.
However, there isn't any evidence yet of an overall improvement
in the company's financial performance. PSS still has many
issues to tackle, and EBITDA visibility remains limited as well.
As a result, Moody's remains cautious and believes that the
company's credit statistics may weaken further before
stabilizing.
PSS World Medical, Inc., headquartered in Jacksonville, Florida,
is a leading specialty marketer and distributor of medical
products to physicians, alternate-site imaging centers, long-
term care providers and hospitals nationwide.
REGAL CINEMAS: Battle Breaks Out for Control of Theatre Chain
-------------------------------------------------------------
Henry Kravis and Tom Hicks are battling it out against Denver
billionaire Philip Anschutz for control of Regal Cinemas Inc.,
the No. 1 U.S. theater chain, according to The Wall Street
Journal. After losing about $1 billion of their partners'
capital the first time they purchased the company in 1998,
Kohlberg Kravis Roberts & Co. (KKR) and Hicks, Muse, Tate &
Furst Inc. (Hicks Muse) are attempting to effectively re-acquire
the theater chain with a new buyout plan. Technically KKR and
Hicks Muse still own the company, but Anschutz, in conjunction
with a partner, owns a controlling stake in Regal's debt. The
debt totals more than $1.8 billion. In order for KKR/Hicks Muse
to regain full control, they must buy out Anschutz. Bondholders
Greenwich Street Capital Partners and Putnam Investment
Management have also proposed their own $1.1 billion deal to
take over Regal. (ABI World, March 23, 2001)
SAFETY-KLEEN: Appoints Peter Lengyel & David Wallace To BOD
-----------------------------------------------------------
Safety-Kleen Corp. announced the appointment of Peter E. Lengyel
and David W. Wallace to its Board of Directors. Both additions
fill vacant positions on the Board.
"The addition of Peter and David to the Board is a sign of our
continued efforts to revitalize and reinvigorate Safety-Kleen,"
said CEO David E. Thomas, Jr. "Their experiences in the business
and finance communities will allow them to make valuable
contributions in reorganizing the Company and moving us
forward."
Mr. Lengyel has more than thirty years of experience in
management and asset-based financing. He was personally involved
in the restructuring of Penn Central Railroad, and prior to that
held executive positions with Bankers Trust Company and the
Chase Manhattan Bank. Most recently Mr. Lengyel was active in
venture capital investing, serving on the board of advisors of a
technology firm in New York City. Mr. Lengyel holds an MBA from
Amos Tuck School of Business at Dartmouth College and a degree
in Industrial Engineering from NYU.
Mr. Wallace is the former Chairman and CEO of Lone Star
Industries and was Chairman of the Putnam Trust Company. His
career also includes being the Chairman of National Securities
and Research Corporation, CEO of United Brands and Chairman,
President and CEO of Bangor Punta Corporation.
Mr. Wallace is currently a Director of Emigrant Savings Bank. He
is also the President and a Trustee of the Robert R. Young
Foundation and is a member of the Board of Governors of The New
York Hospital as well as a member of the Board of Greenwich
Hospital. Mr. Wallace has an Engineering degree from Yale
University and a law degree from Harvard University.
Based in Columbia, South Carolina, Safety-Kleen Corp. is the
largest industrial and hazardous waste management company in
North America, serving more than 400,000 customers. The Company
filed for protection under Chapter 11 of the U.S. Bankruptcy
Code in June 2000.
SEQUA CORPORATION: Moody's Assigns Ba2 Rating to Senior Notes
-------------------------------------------------------------
Moody's Investors Service has assigned a Ba2 rating to Sequa
Corporation's new $200 million senior notes due 2008.
Approximately US$ 200 million of debt securities were affected
by the rating action.
The notes are an add-on to the company's existing 9% $500
million 10-year senior notes issued in July 1999, the rating of
which was also affirmed at Ba2.
Proceeds of the add-on note issue will be used, in part, to
cover $66.4 million in maturing medium term notes due May 14 and
15, 2001, and reduce outstanding amounts under the company's
revolving credit agreement.
Moody's also affirmed the Ba2 rating on Sequa's $150 million
senior unsecured revolving credit and its senior implied and
issuer ratings. The new senior notes will be issued under Rule
144A.
The new senior notes, which are direct obligations of Sequa
Corporation, will rank pari-passu with the company's other
unsecured and unsubordinated debt. The notes will be
subordinated to all secured indebtedness and to the claims of
creditors of the company's subsidiaries.
The ratings continue to recognize the company's diverse sources
of revenue and cash flow and its substantial positions in a
majority of its market segments.
However, the ratings outlook remains negative, reflecting the
company's record of modest operating margins and cash flow and
the results of a weakening U.S. economy which is adversely
impacting the performance of the company's building products of
the Precoat Metals Division and the automotive airbag inflator
portion of ARC's (Atlantic Research Corporation) business.
The company expects the negative financial impact for these
divisions to be most severe in the 1st quarter of 2001.
Sequa Corporation, headquartered in New York, NY, is a
diversified industrial company. Its operations manufacture and
repair jet engine components, do metal coating, produce rocket
propulsion systems and automotive airbag inflators, chemical
detergent additives, auxiliary press equipment, machinery for
the two-piece can industry, men's formalwear, and automotive
cigarette lighters and power outlets.
SNICKELWAYS INTERACTIVE: Cuts Jobs & Prepares for Shutdown
----------------------------------------------------------
Snickelways Interactive, one of Silicon Alley's oldest web
consulting shops, laid off its remaining employees and said that
it would gradually wind down operations in the coming weeks,
according to Internet.com. The cash-flow crisis, which was
confirmed by Chief Executive Officer Hank Satterthwaite, forced
the shutdown decision. "I can't comment further until we work
out our going-forward position with our creditors," he said.
Snickelways specialized in creating e-commerce web sites. (ABI
World, March 23, 2001)
SOUTHERN CALIFORNIA: Resumes Payments To Small Generators
---------------------------------------------------------
In anticipation of pending action by the California Public
Utilities Commission to restructure the way qualifying facility
generators (QFs) will be paid, Southern California Edison (SCE)
announced that it will resume payments to QFs on a going-forward
basis.
SCE has set aside funds in a separate account and will make
payments in advance of the QFs' expected April deliveries.
Payment processing would begin immediately after the CPUC
approves today, Tuesday, a proposed decision restructuring QF
prices. The advance payments will be based on the QFs'
historical level of production and the Commission's QF pricing
order.
"While SCE continues to operate under conditions of financial
distress, we want to do what we can to enable QFs to continue
providing electric power for our customers in light of strained
electricity supplies statewide," said SCE Chairman, President
and CEO Stephen E. Frank. "We will be able to make payments only
up to an aggregate amount that is available to us from rates
actually received for QF payments."
SCE is taking these immediate steps despite the ongoing delays
in the long-promised legislative and regulatory QF reform
packages that have stalled in the California Legislature and the
CPUC. During the past year, both policy-making bodies recognized
the need for QF reform and began proceedings to revise the QF
pricing formula.
Unfortunately this process has stalled. Faced with billions of
dollars of overcharges and QF prices that had risen 500% since
1999, SCE, in its weakened financial condition, had no choice
but to stop making payments to QFs and other high-priced
generators.
Many QFs have continued to deliver their electricity to SCE
during the past few months even while SCE was unable to pay
them. In recognition of the state's need for all the electricity
it can get during these times, SCE is hereby instituting a
program to pay those QFs that continue to provide electricity to
the utility.
QF generation represents about one-third, or 9,700 MW of the
state's total power supply. Roughly 5,400 MW are produced by
natural gas-fired facilities. The rest is generated by wind,
solar, geothermal and biomass sources.
QFs came into existence in the 1980s as part of a regulatory
program designed to encourage additional sources of electricity
at a time when it was feared that oil and gas supplies would be
low and prices high. Over the years, due to a flaw in the
formula adopted by the CPUC to calculate the prices charged by
QFs, these generators have come to be paid at prices that far
exceed the costs of utilities' own generation and that far
exceed the QFs' own costs.
"We have a responsibility to reduce these costs to the extent
possible for our customers," Frank said. "So we are leaving it
up to the discretion of the CUPC as to how the payment structure
will be revamped and how we should allocate the payments to
QFs."
An Edison International company, Southern California Edison is
one of the nation's largest investor-owned electric utilities,
serving more than 11 million people in a 50,000-square-mile area
within central, coastal and Southern California.
SOUTHERN CALIFORNIA: Money Owed Exceeds Cash Reserves by $722MM
---------------------------------------------------------------
Edison International utility unit Southern California Edison
(SoCal Edison) said that it had estimated cash reserves of about
$1.91 billion as of Tuesday, which is about $722 million less
than its outstanding unpaid obligations, according to Dow Jones.
SoCal Edison expects to have a total of about $428.6 million of
additional obligations that will become due and payable through
April 30, according to a filing Thursday with the Securities and
Exchange Commission.
The obligations include about $100 million to the California
Power Exchange, about $231.4 million to qualifying facilities,
about $2.9 million of Power Exchange energy credits for energy
service providers, $37.4 million of maturing commercial paper,
$27.8 million of interest on debt securities, and $29.1 million
of interest on bank loans. SoCal Edison also said that it would
accrue an additional $4.7 million in additional unpaid preferred
stock dividends as of April 30. (ABI World, March 23, 2001)
STAGE STORES: Court Extends Exclusive Period To June 30
-------------------------------------------------------
U.S. Bankruptcy Judge Wesley W. Steen granted Stage Stores
Inc.'s request to extend its exclusive periods to file a
reorganization plan and solicit plan votes, counsel for the
company told DBR Tuesday. A hearing was held Monday before the
U.S. Bankruptcy Court in Houston. The Houston-based apparel
retailer now has the exclusive right to file a plan until June
30 and until Sept. 15 to get acceptances of the plan. The
company expects to file its plan in April and confirm it by late
summer, according to the motion. (ABI World, March 23, 2001)
SUN HEALTHCARE: Obtains Approval To Transfer Washington Facility
----------------------------------------------------------------
Previously, S.C. Bellevue/Lynn Joint Venture, Lessor of property
at the Eastside Medical and Rehabilitation Center in Bellevue,
Washington, objected to the Sun Healthcare Group, Inc.'s motion
for the extension of time for assuming/rejecting leases to the
extent this affected the Eastside lease.
The lessor alleged that because of the Debtor's repeated failure
in maintaining the operation of the Eastside Facility in
compliance with state and federal statutes and regulations, the
State of Washington has placed new management at the Eastside
Facility. The lessor was concerned that if the Debtor's license
were revoked, the Debtor might have to reapply to the State of
Washington to obtain recertification as an approved facility,
jeopardizing the Lessor's interest in the Eastside Facility.
Therefore the lessor asked the Court to set a deadline for the
Debtors to assume/reject the lease for the Eastside Facility
before the expiry of the period for the Debtors to assume/reject
unexpired non-residential leases in general.
After a period of continuance of the matter, the Debtors issued
a notice of transfer, pursuant to the Order Establishing
Procedures for the Disposition of Certain Healthcare Facilities
and the Leases and Provider Agreements Related Thereto, and
sought and obtained the Court's approval for the transfer of the
Facility (Eastside Medical & Rehab Center) located at 2424
156th Avenue NE, Bellevue, Washington.
Specifically, the Debtors sought and obtained the Court's
approval for:
(1) the rejection of a lease of real property by and
between Living Services, Inc., one of the Debtors, and Gene E.
Lynn and Michael S. Lynn, as predecessor in interest to Mission
Healthcare at Bellevue Joint Venture;
(2) the rejection of an equipment lease; (3) the assumption
and assignment of a related Medicare Provider Agreement and a
Medicaid Provider Agreement; and (4) the entry into the Lease
Modification, Termination and Release Agreement, and the
Operations Transfer Agreement, and an Assumption of Liability
Agreement, approved by the Department of Social and Health
Services for the State of Washington, all related to the nursing
facility.
The Court directed that, pursuant to the State Agreement, the
Debtors are to place in escrow, for the benefit of the Landlord,
cash or certificates of deposit in the amount of $77,885, upon
which the New Operator will have the right to draw in the event
its liability to the State of Washington under the State
Agreement for any overpayment obligations owing from Living
Services, Inc. to DSHS with respect to the operation of the
Facility exceeds the sum of $296,595.
The Court's order expressly provides that, pursuant to sections
363(b) and (f) of the Bankruptcy Code, any sale of the inventory
contemplated by the Operations Transfer Agreement is free and
clear of liens, claims and encumberances. (Sun Healthcare
Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
TRICO STEEL: Alabama Steelmaker Stops Operations
------------------------------------------------
Trico Steel Co., the Alabama-based steelmaking affiliate of
Sumitomo Metal Industries Ltd. (SMI) has ceased operations due
to the impact of the U.S. steel industry slump, according to the
Kyodo News Service.
SMI disclosed that TRICO intends to file for Chapter 11 petition
under the U.S. federal bankruptcy law to protect its assets from
creditors. Trico's liabilities reportedly amount to $350
million. SMI further related that Trico's bankruptcy filing
could cause the company to suffer a loss of up to $70 million.
According to the Kyodo News Service, half of Trico is owned by
U.S. steelmaker LTV-Trico Inc., with the remaining 50% evenly
owned by SMI and British Steel Trico Holding Inc. Since 1997,
Trico has been a manufacturer of hot-rolled steel sheets.
VENCOR INC.: Terminates Lease Agreement With York Estate
--------------------------------------------------------
Vencor, Inc. sought and obtained the Court's approval, pursuant
to Rules 6004 and 9019 of the Bankruptcy Rules, of the Lease
Termination Agreement With The York Estate pertaining to two
vacant lots of property that the Debtors have no intention of
developing or utilizing in their going-forward operations.
On August 14, 1968, Herbert York and Hazel York, as lessors, and
United Convalescent Hospitals, Inc., as leasees, executed a land
lease for lots 52 and 53 of the College Acres Addition to the
City of Beaumont Jefferson County, Texas. York is the successor-
in-interest to Herbert York and Hazel York. Vencor Operating is
the successor-in-interest to United Convalescent Hospitals, Inc.
The Lease terminates on October 31, 2018. The Lease provides for
monthly payments to York based on 1/12th of the annual interest
on the sum of $90,000, the interest rate to be the 'Prime Rate'
as established by the New York banks in effect at the beginning
of the applicable ten year period. The Lease, moreover, provides
that minimum monthly payment shall be $400.
The Lease further provides that in the event of default or
breach, York "may enforce the performance hereof in any manner
provided by law..." The Debtors do not admit that they are in
default under, or in breach of, the Lease.
The Debtors have determined in their business judgment that the
improvement or development of the Property would not be
profitable. In addition, the Debtors would have to incur
significant capital and licensing expenses to develop the
Property. Accordingly, termination of the Lease and its related
costs is in the best interests of the Debtors' estates and
creditors.
The Lease Termination Agreement
Negotiations between York and the Debtors have resulted in a
Lease Termination Agreement which provides that:
(1) The Lease Termination Fee payable in consideration for
York's execution of the Settlement Agreement is $15,000, plus
$2,189 for delinquent real estate taxes;
(2) The Original Lease will terminate upon the Court's
order approving the Settlement Agreement becoming a final non-
appellable order;
(3) Effective on the Terminatio Date, the obligations of
Lessor and Lessee (and its predecessors in interest including,
without limitation, Ventas, Inc., Ventas Realty Limited
Partnership, and their affiliated entities) under the Original
Lease will cease; and
(4) the effectiveness of the Settlement Agreement is
conditioned on the approval by this Court of the terms of the
Settlement Agreement. (Vencor Bankruptcy News, Issue No. 26;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
VLASIC FOODS: Court Approves Employee Retention Plan
----------------------------------------------------
Vlasic Foods International, Inc. told Judge Walrath that their
ability to sustain their current operations and preserve their
estates is wholly dependent upon the continued retention, active
participation, and dedication of certain of the Debtors' non-
union employees in the Debtors' corporate and sales offices, as
well as designated senior managers at its manufacturing
facilities. The premature departure of these employees could
have what the Debtors describe as a ruinous effect their
businesses and substantially decrease the likelihood of success
of -- or at the very least considerably delay -- the Debtors'
reorganization plan. The Debtors believe that many of their
employees, understandably motivated by the lack of long-term job
security, are actively pursuing alternative employment and are
resigning from their current positions with the Debtors, despite
the Debtors' urgent need for their continued service.
To alleviate this situation, the Debtors asked that Judge
Walrath approve and authorize their implementation of an
employee retention plan under which the Debtors would provide
certain critical employees a retention bonus at a projected cost
of between $5.5 and $6.5 million. This plan is intended to be an
incentive to certain non-union employees to remain in the
Debtors' employ during these Chapter 11 cases, and replaces
several more generous programs already in place but being
discontinued. The retention bonus would be payable on the
earlier of (i) consummation of a reorganization plan, (ii) an
employee's termination for other than cause, or (iii) three
months after the disposition of substantially all of the
Debtors' assets. Thirty percent of the accrued retention bonus
will be paid on the four-month anniversary of the effective date
of this plan.
The Debtors have initially assigned 49 employees to Group A and
59 employees to Group B. The Debtors have assigned 13 employees
to the Senior Management Group. The Debtors may assign
additional employees to Group A, Group B, or the Senior
Management Group provided that such designations do not increase
the projected cost of the employee retention plan by more than
$250,000.
Employees in Group A will receive a retention bonus equal to
eight months' base salary, deemed accrued as of the effective
date of the retention plan. The maximum amount that could be
paid to Group A employees is approximately $3.4 million, but the
Debtors believe the actual amount will be considerably less.
The thirteen members of the senior management group will receive
a retention bonus equal to approximately $2.5 million. Eight
members will receive a retention bonus equal to a year's salary,
and five members will receive a retention bonus equal to
$275,000.
Employees in Group B will receive a retention bonus equal to
four months' base salary, deemed accrued as of the effective
date of the retention plan, plus one additional week of base
salary for every four weeks worked since the employee retention
plan became effective. The Debtors' maximum retention bonus that
would be paid to Group B employees is approximately $2.6
million; however, the Debtors again believe the actual amount
will be less.
Any non-union employee not otherwise covered by the employee
retention plan, including all employees hired after the
effective date, will be entitled to four weeks severance pay
upon termination without cause. New hires will accrue the first
two weeks after two months of work, and the second two weeks
after four months of work. Employees not terminated for cause
will also receive certain health benefits after termination of
employment.
If vacancies arise in the positions for which retention bonuses
have been authorized the Debtors may, in their sole discretion,
pay retention bonuses to any individual who subsequently
performs the duties with respect to such position, on the same
terms as the proposed retention bonuses will be paid to current
employees in similar positions. Finally, the Debtors requested
that the retention bonus or severance pay be granted
administrative expense status.
In granting this Motion, Judge Robinson directed that monies
paid under the employee retention program will be deemed to
reduce either the claims or distributions to which these
employees might otherwise be entitled arising out of the
discontinued prepetition employee severance plans or the special
bonus plan. (Vlasic Foods Bankruptcy News, Issue No. 3;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
VLASIC: FTC Okays Heinz Purchase Of Pickles & Open Pit Business
---------------------------------------------------------------
The Federal Trade Commission disclosed it had decided not to
challenge the H.J. Heinz Company's acquisition of two leading
brands from Vlasic Foods International, Vlasic(R) pickles and
Open Pit(R) barbecue sauce.
The Commission in a 3 to 1 vote did not accept the
recommendation of its own staff to block the transaction, valued
at $195 million.
The FTC merger review and investigation was put on a fast track,
according to Heinz attorney, Ted Henneberry of Howrey, Simon
Arnold and White, because Vlasic was in bankruptcy.
"Heinz made the case that it was imperative to move this matter
quickly to preserve the value of the transaction, for all
parties involved. We are pleased to see that the Commission
agreed, " Henneberry said.
Founded in 1956, Howrey Simon Arnold & White, LLP, is a national
law firm with over 400 attorneys and more than 50 economic,
financial, and environmental consultants.
As one of the top two most frequently used law firms in the
nation among Fortune 250 companies according to the National Law
Journal's recent survey of "Who Represents Corporate America,"
Howrey is "Where Leaders Go" for expertise in intellectual
property, antitrust, and complex business dispute resolution.
For more information, visit our website: http://www.howrey.com.
*********
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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
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Editors.
Copyright 2001. All rights reserved. ISSN: 1520-9474.
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