/raid1/www/Hosts/bankrupt/TCR_Public/010402.MBX
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, April 2, 2001, Vol. 5, No. 64
Headlines
ALPHA COMPUTER: Permanently Closing Down & Filing For Chapter 7
ANKER COAL: Amends Credit Agreement With Senior Lenders
APPLIANCE RECYCLING: Shareholders To Meet April 26 in Minnesota
ARMSTRONG HOLDINGS: Reports Q4 And Full Year 2000 Results
ARMSTRONG: Obtains Approval To Continue Risk Hedging Facilities
AUDIOHIGHWAY.COM: Agrees to Merge With Shannon Technologies
BRIDGE INFORMATION: Bidding Process Begins
BURST.COM: Shares Subject To Nasdaq Delistment
DANKA BUSINESS: Extends Exchange Offer For Notes To April 30
EDUCATIONAL INSIGHTS: Files Non-Reporting Status With SEC
FINOVA GROUP: Seeks To Extend Time To File Schedules To May 7
FREEPORT MCMORAN: Annual Stockholders' Meeting Is On May 3
GENESIS HEALTH: Amends $250,000,000 DIP Financing Facility
HARNISCHFEGER: Beloit Enters Into Final Settlement With BE&K Co.
HOLLYWOOD ENTERTAINMENT: Posts $455 Million Net Loss In Q4 2000
HURLEY MEDICAL: Fitch Lowers Bond Rating To BBB From BBB+
IMPERIAL SUGAR: Court Gives Nod To Proposed Bidding Procedures
INTEGRATED HEALTH: Reaches Settlements with Pennsylvania
INTEGRATED PACKAGING: Reports Net Losses in Q4 And Fiscal 2000
ITEQ INC.: Tanglewood Acquires Three Operating Subsidiaries
LATTICE: Shareholders To Convene in Hillsboro, Oregon On May 1
LERNOUT & HAUSPIE: Court Approves C-REC Sale Despite Objections
LOEWEN GROUP: Day Mortuary Gets Court's Nod For Bidding Protocol
MATLACK SYSTEMS: Files Chapter 11 Petition in Wilmington
MATLACK SYSTEMS: Case Summary and 20 Largest Unsecured Creditors
MONSOUR MEDICAL: Files For Bankruptcy Protection Again
NATIONSLINK: S&P Puts Two Classes Of Securitizations On Watch
NORTHLAND CRANBERRIES: Lenders Amend Forbearance Agreement
NORTHPOINT: ISP Association Moves to Block Internet Blackout
NORTHPOINT: Telocity To Offer Free Service For Cut-Off Customers
NORTHSTAR: S&P Places Two Notes Ratings On Credit Watch
PARACELSUS HEALTHCARE: Ernst & Young Resigns As Auditor
PENN TREATY: Debt Ratings Suffer Downgrades From S&P
PLANETRX.COM: Board of Directors Endorses Plan of Liquidation
RACHEL'S: Owner Arrested & Charged With Money Laundering
RELIANT RESOURCES: Moody's Downgrades Issuer Rating to Baa3
RUSSELL CORP: Shareholders' Annual Meeting Set For April 25
SCUDDER WEISEL: Plans To Liquidate & Wind Down Operations
SYMPLEX COMMUNICATIONS: Ceasing Operations Due To Lack Of Funds
THERMOVIEW INDUSTRIES: Completes Debt Restructuring
UNIDIGITAL INC.: Seeks To Covert Bankruptcy Case To Chapter 7
WARNACO GROUP: Posts Fourth Quarter & Fiscal Year 2000 Losses
WARNACO GROUP: Ratings Plunge to Junk Levels
WEST MILGROVE: Columbia Gas To Temporarily Handle Operations
BOND PRICING: For the week of April 2-6, 2001
*********
ALPHA COMPUTER: Permanently Closing Down & Filing For Chapter 7
---------------------------------------------------------------
American Career Centers Inc. (OTCBB: ACCI), Thursday confirmed
that it will be permanently closing its Alpha Computers
Solutions Inc. operations; arrangements are being made to
provide students at that facility with alternative instruction
opportunities.
The decision has been made as a result of a lack of agreement
with the state of Utah over the current regulations regarding
the operation of the company's campus located in Salt Lake City.
The company introduced its technology training program at the
Alpha facility in June of 1998.
Ron Mears, chairman of American Career Centers Inc., said, "All
efforts are being made to ensure that Alpha's current students
find alternative instruction opportunities."
He added that, "A combination of pressures on the company
stemming from the inability to work out financial arrangements
with the State of Utah Board of Regents, the local business
environment, and stock market conditions all contributed to the
need to close Alpha's campus operations.
"The board of American Career Centers Inc. has decided that the
final disposition of these operations will best be determined in
an orderly liquidation of Alpha Computer Solutions Inc.'s assets
in a Chapter 7 bankruptcy proceeding."
Virtually all of the company's revenues have been derived from
the operations of the Alpha subsidiary. Future revenues are
expected to come from the continued pursuit of the company's
plan of introducing the Alpha Pyramid Curriculum in all major
cities where this type of technology-based training is in high
demand.
William Anthony, president of American Career Centers Inc.,
stated that, "We can most effectively and quickly leverage the
investment we have in this outstanding teaching model, through
the use of joint ventures. There are many training schools that
need advanced curriculum, but do not have the resources to
develop a broad program with the scope and depth offered by the
Alpha Pyramid Curriculum."
American Career Centers Inc. continues to be focused on the
acquisition of schools located in key markets. Management is
targeting high traffic markets in states with insurance funding
rather than bonding requirements for new schools.
Acquisitions of this nature will require the company to be
successful in obtaining the necessary capital infusions to
complete these acquisitions, as well as the ability to use its
equity to complete the purchases. No agreements for any
acquisitions are pending at this time.
In addition, the company will also provide training as a
consultant to corporate customers and continue the marketing of
its curriculum through its affiliation with a number of
traditional schools, as well as through the Internet.
About ACCI
American Career Centers Inc. is a post-secondary technological
education company which successfully graduated more than 14,000
students in its first two years of operation. American Career
Centers Inc. is the leader in post-secondary technology
education with an emphasis in Internet-related curricula.
ACCI is a leading innovator in providing instructor-led classes
that offer real-world knowledge, one computer to one student
curriculum, advanced hardware, the latest software applications,
and custom classes for corporate, government and individual
clients.
ANKER COAL: Amends Credit Agreement With Senior Lenders
-------------------------------------------------------
Anker Coal Group, Inc. reached an agreement with Foothill
Capital Corporation and its other senior lenders to amend the
Company's loan agreement.
Under the amendment, Foothill and the other senior lenders have
agreed to consent to the Company's proposed offer to exchange up
to 38,006 shares of Class E convertible preferred stock for up
to $38,006,000 principal amount of the Company's outstanding
14.25% Series B Second Priority Senior Secured Notes due 2007
(PIK through April 1, 2000).
In addition, Foothill and the other senior lenders have agreed
to temporarily reduce the excess availability requirement for
making intercompany advances to the Company from $5.0 million to
$2.5 million to allow the Company to make interest payments on
its 14.25% notes. This temporary reduction in excess
availability would be effective for the period beginning 30 days
prior to the closing date of the amendment through and including
November 1, 2001. Thereafter, the excess availability
requirement would return to $5.0 million.
The amendment would impose an additional temporary EBITDA
covenant. Under this covenant, the Company's EBITDA as of the
end of June, July, August, September and October, 2001, for the
immediately preceding three month period, must equal or exceed
80% of the Company's budgeted EBITDA. The amendment would not
make any adjustment to the $1.4 million equipment reserve.
The amendment is subject to several conditions, including the
consummation of the exchange offer on or before March 31, 2001.
The Company is also continuing negotiations with the holders of
the Company's outstanding preferred stock regarding proposed
amendments to the terms of that preferred stock. These
amendments are conditions to the closing of the Company's
exchange offer. The Company cannot give any assurance that it
will successfully complete these negotiations.
APPLIANCE RECYCLING: Shareholders To Meet April 26 in Minnesota
---------------------------------------------------------------
The annual meeting of the shareholders of Appliance Recycling
Centers of America, Inc. will be held on Thursday, April 26,
2001 at 3:30 p.m., at the Appliance Recycling Centers of
America, Inc. corporate offices located at 7400 Excelsior
Boulevard, Minneapolis, Minnesota 55426. At the meeting,
shareholders will act on the following matters:
* PROPOSAL ONE: The election of five directors to serve for
a term of one year expiring at the 2002 annual meeting of
shareholders.
* PROPOSAL TWO: The approval and adoption of the amendment
to the Company's Restated 1997 Stock Option Plan.
* PROPOSAL THREE: The ratification of the appointment of
McGladrey & Pullen, LLP as independent auditors for the
fiscal year ending December 29, 2001.
* To transact other business which properly comes before
the annual meeting.
Only shareholders of record at the close of business on March
16, 2001 are entitled to notice of and to vote at the annual
meeting.
ARMSTRONG HOLDINGS: Reports Q4 And Full Year 2000 Results
---------------------------------------------------------
Beset by a year ending with weaker sales and escalating raw
material and energy costs that took a toll on profitability,
Armstrong Holdings, Inc. (NYSE: ACK) reported its financial
results for the fourth quarter and full year of 2000.
Sales in the fourth quarter from continuing operations were
$659.1 million, a decrease from $722.8 million in the same
period a year earlier. Sales in the floor coverings segment
declined 26.0 percent. Weaker demand at retail and significant
customer inventory reductions in the U.S. combined with the
impact of foreign currency translation and lower pricing in
Europe to produce the sales decrease. Wood products segment
sales increased by 1.7 percent and building products segment
sales rose 8.7 percent. The increase in the building products
segment was the result of additional sales from its Gema metal
ceilings business, which was acquired in 2000.
A loss from continuing operations of $86.7 million in the fourth
quarter compared to a loss of $185.9 million in the same period
of 1999. The 2000 results include pre-tax charges of $103.3
million in reorganization costs related to the Chapter 11 filing
by Armstrong World Industries on Dec. 6th; and $2.3 million in
severance costs for positions eliminated in the quarter. The
1999 results include a pre-tax charge of $335.4 million to
increase the estimated asbestos-related liability. After
excluding these unusual items, the decline in earnings from
continuing operation was primarily the result of lower sales and
significantly higher raw material and energy costs.
The net loss for the fourth quarter was $100.3 million or $2.48
per share, compared to a net loss of $178.5 million or $4.46 per
share in the fourth quarter of 1999.
"The slowdown in the U.S. economy that we started to see at the
end of the third quarter came into full bloom during the final
three months of the year. This slowdown, coupled with the higher
costs of raw materials and energy hurt the business in the
fourth quarter, which in turn significantly affected our
performance for the entire year," said Chairman and CEO Michael
D. Lockhart.
"We expect this weakness to continue into 2001, which will mean
continued volume and pricing pressure," he said.
For the year ending December 31, 2000, Armstrong sales from
continuing operations were $3.00 billion or 1.5 percent below
sales of $3.05 billion in 1999. Both years' numbers were
restated to account for the textiles and sports flooring, and
insulation products segments as discontinued operations.
Excluding the impact of unfavorable foreign exchange rates in
2000 and the divestitures of the gasket and textile businesses
in 1999, Armstrong sales were $65.2 million or 2.2 percent above
the prior year.
Floor coverings' sales decreased 7.5 percent, but wood products
increased by 7.9 percent and building products were up 5.4
percent for the year.
The loss from continuing operations in 2000 was $89.0 million or
$2.21 per share. This includes a pre-tax charge of $236.0
million to increase the estimated liability for asbestos-related
claims and $103.3 million of Chapter 11 reorganization costs.
Additionally, results include a pre-tax gain of $60.2 million
from the sale of the Installation Products Group, which was part
of the floor coverings segment and a $19.4 million charge for
restructuring actions in Europe and the U.S. The 1999 loss from
continuing operations was $24.0 million or $0.60 per share.
Including the earnings from the discontinued operations,
Armstrong reported net earnings of $12.2 million or $0.30 per
share for 2000, compared to $14.3 million or $0.36 per share in
1999.
The details which follow elaborate on Armstrong's fourth-quarter
and calendar-year 2000 results which are presented on a
continuing operations basis.
Fourth Quarter 2000
Net sales of $659.1 million decreased from sales of $722.8
million in the fourth quarter of 1999. Wood products sales
increased 1.7%. Floor coverings sales decreased 26.0% with sales
in the Americas and Europe both down similar percentages.
Americas sales declined due to a slow down in retail sales and
significant inventory reductions within the wholesale and retail
channels while European sales declined due to translation losses
associated with weaker European currencies and lower pricing
driven by excess industry capacity. Building products sales
increased 8.7% due to the additional Gema sales.
A loss from continuing operations of $86.7 million in the fourth
quarter of 2000 compared to a loss from continuing operations of
$185.9 million in the fourth quarter of 1999. An additional 2000
pre-tax charge of $2.3 million primarily related to severance
and enhanced retirement benefits for 15 corporate and line-of-
business staff positions (all salaried positions) as a result of
streamlining the organization to reflect staffing needs for
current business conditions. The 2000 loss also reflects $3.8
million of lower ESOP compensation expense compared to 1999. A
pre-tax charge of $335.4 million was recorded in the fourth
quarter of 1999 to increase the estimated liability net of the
corresponding insurance asset for asbestos-related claims. In
1999, $1.4 million of the 1998 pre-tax reorganization charge was
reversed, related to severance accruals that were no longer
necessary.
For the fourth quarter, the cost of goods sold was 79.2% of
sales compared to 70.9% in 1999. Excluding a $5.4 million charge
to cost of goods sold in 2000 for write-downs of production-line
assets related to the reorganization efforts that were not
categorized as restructuring costs, the fourth quarter cost of
goods sold was 78.4%. These write-downs of production-line
assets primarily related to changes in production facilities and
product offerings.
The fourth quarter of 2000 included $103.3 million in
reorganization costs related to the Chapter 11 filing.
Other income in 1999 includes a $1.5 million reduction of the
gain on the second quarter sale of AISI and a $0.7 million
reduction of the loss on the third quarter 1999 sale of Textile
Products. Other income in 1999 also reflects proceeds from the
settlement of various legal actions totaling $3.0 million, net
of other items.
Armstrong's effective tax rate benefit in the fourth quarter of
2000 was 30.2% compared to an effective tax rate benefit of
35.2% in the fourth quarter of 1999.
A net loss of $100.3 million or $2.48 per share compared to a
net loss of $178.5 million or $4.46 per share in the fourth
quarter of 1999.
Full Year 2000 Consolidated Results
Net sales in 2000 of $3.00 billion were 1.5% lower when compared
with net sales of $3.05 billion in 1999. Excluding the impact of
unfavorable foreign exchange rates in 2000 and the divestitures
of the gasket and textile businesses in 1999, Armstrong sales
were $65.2 million, or 2.2%, above the prior year. Floor
coverings sales decreased 7.5%; Building products sales
increased 5.4%; Wood products sales increased by 7.9%. Further
excluding the 1999 divestitures, sales increased 1.0% in the
Americas and declined 3.1% in the Pacific Area. European sales
decreased 3.3% but would have increased 10.4% without the impact
of unfavorable foreign exchange rates.
The loss from continuing operations in 2000 was $89.0 million or
$2.21 per share. This included an after-tax charge of $153.4
million to increase the estimated liability for asbestos-related
claims and an after-tax gain of $44.1 million from the sale of
the Installation Products Group ("IPG"), which was part of the
floor coverings segment.
Also included in 2000 was a pre-tax restructuring charge of
$19.4 million, of which $8.6 million related to severance and
enhanced retirement benefits for more than 180 positions
(approximately 66% related to salaried positions) within the
European Flooring business. Restructuring actions also included
staff reductions due to the elimination of administrative
positions, the consolidation and closing of sales offices in
Europe and the closure of the Team Valley, England commercial
tile plant. $2.6 million of the restructuring charge related to
severance and enhanced retirement benefits for 15 salaried
positions due to cost savings initiatives. These 15 eliminated
positions were primarily in the U.S. The remaining $8.2 million
of the restructuring charge primarily related to the remaining
payments on a noncancelable operating lease for an office
facility in the U.S. The employees who occupied this office
facility are being relocated to the corporate headquarters. In
addition, $1.4 million of the remaining accrual for the 1998
restructuring charge was reversed, comprising certain severance
accruals that were no longer necessary as certain individuals
remained employed by Armstrong. An additional restructuring
charge of $5.4 million, covering 54 salaried positions, will be
recorded in the first quarter of 2001 to continue these cost
savings initiatives.
Armstrong also recorded $17.6 million to cost of goods sold in
2000 for write-downs of inventory and production-line assets
that were not categorized as restructuring costs. The inventory
write-downs were related to changes in product offerings while
the write-downs of production-line assets primarily related to
changes in production facilities and product offerings.
In addition, Armstrong recorded $10.1 million within selling,
general and administrative expenses ("SG&A") expense for CEO and
management transition costs during 2000. The components of this
amount included hiring a new CEO, expenses related to the
departure of the prior CEO, covenant agreements related to non-
compete arrangements and other management transition costs.
Armstrong also recorded costs within SG&A of $3.8 million for
severance payments to approximately 100 employees that could not
be classified as restructuring costs and $2.3 million for fixed
asset impairments related to the decision to vacate office space
in the U.S.
Armstrong recorded $103.3 million of Chapter 11 reorganization
costs.
Excluding the items impacting the 2000 results discussed above,
earnings from continuing operations for 2000 would have been
$121.1 million, or $2.99 per share.
The 1999 loss from continuing operations was $24.0 million, or
$0.60 per share. This included an after-tax charge of $218.0
million to increase the estimated liability for asbestos-related
claims, a $3.2 million loss from the sale of its textile
products business, a $6.0 million gain from the sale of its
gasket products subsidiary, a pre-tax restructuring reversal of
$1.4 million and proceeds from the settlement of various legal
actions totaling $3.0 million. Excluding these items, earnings
from continuing operations for 1999 would have been $188.4
million, or $4.69 per share.
Armstrong reported net earnings of $12.2 million, or $0.30 per
share in 2000, compared to net earnings of $14.3 million, or
$0.36 per share in 1999.
Cost of goods sold in 2000 was 73.2% of sales, higher than cost
of goods sold of 68.3% in 1999. Higher raw material costs
primarily in floor coverings and wood products and higher energy
costs in building products were the primary drivers of the
increase.
SG&A expenses in 2000 were $546.3 million, or 18.2% of sales
compared to $556.2 million, or 18.2% of sales in 1999. SG&A
expenses in 2000 contained lower employee incentive bonus
accruals and lower selling expense offset by CEO and management
transition costs, expenses related to the reorganization of
European flooring business, asset write-downs related to the
decision to vacate office space in Lancaster, PA and inventory
write-downs related to samples.
Equity earnings from affiliates of $18.0 million improved $1.2
million primarily reflecting an improvement in the WAVE ceiling
grid joint venture.
Goodwill amortization was $23.9 million for 2000 compared to
$25.5 million in 1999 primarily due to lower foreign currency
exchange rates.
Interest expense of $101.6 million in 2000 was lower than
interest expense of $104.0 million in 1999. In accordance with
SOP 90-7, Armstrong did not record $6.0 million of contractual
interest expense on prepetition debt after the Chapter 11 filing
date.
Other income in 2000 includes a $60.2 million gain from the sale
of IPG, which was part of the floor coverings segment and a gain
of $5.2 million resulting from the demutualization of an
insurance company with whom Armstrong has company-owned life
insurance policies and other items. 1999 other income includes a
$6.0 million gain on the divestiture of 65% of Armstrong
Industrial Specialties, Inc. ("AISI"), a loss of $5.0 million on
the divestiture of Textile Products, proceeds from the
settlement of various legal actions totaling $3.0 million and a
gain of $2.6 million resulting from the demutualization of an
insurance company with whom Armstrong has company-owned life
insurance policies and other items.
The 2000 effective tax rate benefit from continuing operations
was 31.7% versus 16.7% for 1999. Excluding the impact of the
asbestos charge, the gain on sale of Installation Products, the
reorganization charge and other related expenses in 2000, the
2000 effective tax rate was 39.3%. Excluding the asbestos charge
and the divestitures of the gaskets and textiles businesses, the
1999 effective tax rate from continuing operations was 37.8%.
The increase was due to nondeductible goodwill and foreign
source income.
Industry Segment Results
Floor Coverings
Worldwide floor coverings sales in 2000 of $1,263.9 million were
$101.8 million, or 7.5% below last year. Sales in the Americas
were 4.3% below 1999. European sales were 17.7% below prior year
as a result of unfavorable foreign exchange rate translation,
lower prices and a less favorable mix driven by continued market
weakness. Excluding the effects of foreign exchange rate
translation, sales in Europe were 6.9% below last year. Pacific
area sales were flat with last year.
Operating income of $78.8 million in 2000 compared to $204.6
million in 1999. Excluding expenses associated with reorganizing
the European business, other management changes and the $7.5
million fourth quarter impairments of production line assets and
samples inventory, the 2000 operating income was $107.3 million.
1999 operating income was $200.1 million excluding $4.8 million
for insurance settlements for past product claims, net of
inventory write-offs, $3.3 million of costs associated with
changes in the production location for some product lines and a
net benefit of $3.0 million from changes in employee
compensation policies. The annual operating margin decline is
primarily related to lower sales volume and the impact of higher
production costs, primarily higher raw material prices.
Building Products
Building products sales in 2000 were $837.2 million compared to
$794.5 million in 1999. Excluding the sales impact of the Gema
acquisition in 2000, sales increased 1.4%. Higher sales in the
U.S., primarily in the U.S. commercial channel, were mostly
offset by lower European sales. Pacific area sales increased
1.9%.
Operating income in 2000 was $113.9 million compared to $120.0
million in 1999. The operating income decrease was primarily
related to higher natural gas prices, partially offset by
positive earnings from the Gema acquisition. Results from
Armstrong's WAVE grid joint venture with Worthington Industries
continue to be strong, showing an 11% improvement over 1999.
Wood Products
Wood products sales in 2000 were $902.7 million compared to
$836.5 million in 1999. Cabinet sales increased 5.1% due to
higher volume. Wood flooring sales increased 8.5% versus 1999
driven primarily by volume growth and improved pricing.
Operating income in 2000 was $74.3 million compared to $85.0
million in 1999. The decrease was due to higher lumber costs
that offset sales volume growth.
All Other
Sales reported in this segment during 1999 comprised gasket
materials (through June 30, 1999) and textile mill supplies
(through September 30, 1999). As discussed previously, Armstrong
sold the textiles business and 65% of the gaskets business
during 1999. Operating income in 2000 related to Armstrong's
remaining 35% interest in Interface Solutions Inc.
Armstrong Holdings, Inc. is a global leader in the design,
innovation and manufacture of floors and ceilings. Based in
Lancaster, PA, Armstrong has approximately 15,000 employees
worldwide. In 2000, Armstrong's net sales totaled more than $3.0
billion. Additional information about the company can be found
on the Internet at www.armstrong.com.
ARMSTRONG: Obtains Approval To Continue Risk Hedging Facilities
---------------------------------------------------------------
Armstrong Holdings, Inc. constantly face the risk that
variations in the price of raw materials, energy, or currency
exchange rates, will adversely affect them. In order to limit
the effect of market volatility, Armstrong World Industries,
Inc., hedges its risks by entering into a variety of derivative
contracts.
Mark Collins, Deborah Spivack, and Russell Silberglied of the
Wilmington, Delaware firm Richards, Layton & Finger, P.A.,
together with Stephen Karotkin and Debra Dandeneau of the firm
Weil Gotshal & Manges LLP of New York, representing the Debtors,
told Judge Farnan that the Debtors do not use risk-hedging
transactions as a means of making profits or as investment.
Rather, the Debtors sought to continue to enter into these
facilities to protect themselves from market fluctuations:
Foreign Exchange Transactions
The Debtors routinely enter into contracts to buy and sell
products in foreign countries, where the Debtors sometimes must
agree to pay for goods purchased in the currency of the vendor.
In such situations, the Debtors assume the risk that the United
States dollar may decline in value, reducing the buying power of
the dollar. This has the effect of increasing the cost of such
products to the Debtors.
To reduce their exposure to fluctuations in foreign currency
exchange rates, the Debtors enter into foreign exchange
facilities. Under these facilities, the Debtors can fix the
amount of United States dollars that they are required to pay,
or to which they are entitled to receive, at a specified future
date according to the value at which the dollar is trading at
the time the Debtors enter into a contract to buy and sell
products overseas.
Interest Rate Swap Agreements
In the ordinary course of business, the Debtors enter into
interest swap agreements to alter the interest rate risk profile
of outstanding debt. This would alter the Debtors' exposure to
changes in interest rates. In these swaps, the Debtors agree to
exchange, at specified intervals, the difference between fixed
and variable interest amounts calculated by reference to a
notional principal amount.
When these interest swap agreements are terminated, differences
paid to or received on interest swap agreements are recognized
as adjustments to interest expense over the life of the
associated debt. The Debtors continually monitor developments in
the capital markets. The Debtors only enter into currency and
swap transactions with established counterparties having
investment-grade ratings. Exposure to individual counterparties
is controlled, and thus Armstrong considers the risk of
counterparty default to be negligible.
Raw Materials Contracts
The Debtors routinely enter into contracts to purchase raw
materials. In order to protect themselves from the volatility of
the market for such raw materials, the Debtors also enter into
these types of financial derivative contracts with third
parties:
(i) Forward contracts;
(ii) Swaps and option contracts; or
(iii) A combination of the above.
The Debtors enter into these contracts pursuant to standard
agreements that essentially allow the Debtors to "lock-in" a
specified price for raw materials.
Counsel reiterates that the Debtors enter into these contracts,
not to earn a profit, but rather to stop market volatility and
to limit the Debtors' exposure to market fluctuations. The
Debtors told Judge Farnan that authorizing the Debtors to
continue to enter into these risk-hedging transactions is in the
best interest of the Debtors, their estate, creditors, and
shareholders.
Furthermore, Armstrong believes that these risk-hedging
facilities constitute transactions in the ordinary course of
Armstrong's business. Thus, under the Bankruptcy Code these
transactions may be undertaken by the Debtors without court
approval. However, several financial institutions have expressed
reluctance to engage in such transactions with the Debtors
absent Judge Farnan's Order expressly authorizing the
transactions.
Accordingly, the Debtors asked Judge Farnan to authorize them to
engage in the risk-hedging transactions in all respects. The
Debtors also requested that the authorization be made to apply
retroactively to the Petition Date.
Upon a review of the conservation nature of these risk-hedging
facilities, and to preserve the assets of these estates, Judge
Farnan has granted the Debtors' Application. (Armstrong
Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
AUDIOHIGHWAY.COM: Agrees to Merge With Shannon Technologies
-----------------------------------------------------------
audiohighway.com (OTC: AHWYQ) has agreed to the terms of a
Merger Agreement with Shannon Technologies, Inc., a Seattle-
based provider of advanced electronics manufacturing and
distribution services.
Under the terms of the proposed transaction, Shannon
Technologies, Inc. will merge with and into audiohighway.com in
an all-stock transaction. Upon consummation of the merger, the
shareholders of Shannon Technologies, Inc. will own
approximately ninety percent (90 %) of the issued and
outstanding stock of audiohighway.com. The proposed merger is
subject to shareholder approval and is scheduled for completion
by the end of June 2001. audiohighway.com will also file a plan
of reorganization for approval by the U.S. Bankruptcy Court.
The two companies have also signed a letter of intent with an
investment banking firm to provide additional working capital.
The merged company, which will service the outsourced electronic
manufacturing and distribution needs for the telecommunications,
consumer electronics and computer industries, currently plans to
apply for re-listing on the Nasdaq SmallCap market upon
completion of the merger.
About Shannon Technologies, Inc.
Shannon Technologies, Inc., is a privately held company which
combines electronic manufacturing expertise with its
distribution business. Shannon Technologies is a leading
provider of advanced electronics manufacturing services to
electronic manufacturers primarily in the telecommunications and
networking, consumer electronics and computer industries.
Shannon Technologies' strategy is to provide customers with the
ability to outsource, on a global basis, a complete product
where it can take responsibility for supply chain management,
assembly, integration, test and logistics management. Shannon
Technologies provides certain product design services, including
electrical and mechanical, circuit and layout, radio frequency
and test development engineering services. Shannon Technologies
believes that it has developed specific operational efficiencies
by combining its electronic manufacturing business with a fully
integrated and diverse distribution capability. Shannon
Technologies offers logistics services, such as materials
procurement, inventory management, packaging and distribution
throughout the production process.
About audiohighway.com
audiohighway.com was a leading online media destination,
offering one of the internet's largest and most diverse
libraries of free audio content. On January 10, 2001
audiohighway.com filed a petition for protection from creditors
under Chapter 11 of the Federal Bankruptcy Laws.
audiohighway.com formerly was traded on the Nasdaq SmallCap
Market under the symbol AHWY and was delisted on March 25, 2001.
The stock is presently traded Over-the-Counter under the symbol
AHWYQ.
BRIDGE INFORMATION: Bidding Process Begins
------------------------------------------
Bridge Information Systems Inc. (BRIDGE(R)) has filed a section
363 motion with the U.S. Bankruptcy Court for the Eastern
District of Missouri in St. Louis that sets in motion the formal
competitive bidding process for the company's assets and also
seeks court approval of the previously announced sale of certain
BRIDGE(R) assets to SunGard, subject to higher and better
offers.
As previously announced, BRIDGE has reached an initial agreement
with SunGard regarding the sale of certain of its financial
information and related businesses. The company said that it
intends to continue to solicit bids for the company in whole or
part and if other bids are deemed superior or complementary,
they will be accepted by BRIDGE.
David Roscoe, president of BRIDGE, said, "The SunGard bid is the
first of what we believe will be several bids for our valuable
organization. We have begun serious discussions with other
parties, including several major international financial
institutions, regarding purchase of the entire company and are
hopeful that these discussions will result in additional bids in
the very near future."
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-browser-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 the BRIDGE web site at
http://www.bridge.com.
BURST.COM: Shares Subject To Nasdaq Delistment
----------------------------------------------
Burst.com Inc. (Nasdaq: BRST), developer of Faster-Than-Real-
Time(TM) media delivery technology, said that it received
notification from Nasdaq on March 22, 2001 that its common stock
is subject to delisting from the Nasdaq SmallCap Market for
failure to comply with Marketplace Rule 4310(c)(4), requiring
maintenance of a minimum bid price of $1 per share.
Burst.com has requested a hearing before the Nasdaq Listings
Qualification Panel to review the Nasdaq's decision.
This request will stay any delisting pending the Panel's
decision. There can be no assurance the Panel will grant the
company's request for continued listing.
Burst.com, headquartered in San Francisco, is the developer of
Faster-Than-Real-Time(TM) and Burst-Enabled(TM) video and audio
delivery software.
DANKA BUSINESS: Extends Exchange Offer For Notes To April 30
------------------------------------------------------------
Danka Business Systems PLC (NASDAQ: DANKY) has extended its
exchange offer for all $200 million of its outstanding 6.75%
convertible subordinated notes due April 1, 2002 (CUSIP Nos.
G2652NAA7, 236277AA7, and 236277AB5).
The expiration date for the exchange offer has been extended
from 5:00 p.m., New York City time, on March 20, 2001, to 5:00
p.m., New York City time, on April 30, 2001. The Company said
all other terms of the offer remain unchanged. As anticipated,
the registration statement filed by the Company in connection
with the exchange offer is subject to the review process of the
Securities and Exchange Commission.
The exchange offer is subject to certain conditions, including
participation by holders of at least 95% of the 6.75%
convertible subordinated notes, the refinancing of Danka's
existing senior bank debt, and the sale of Danka's outsourcing
subsidiary, Danka Services International ("DSI"). The Company
anticipates that it will close the exchange offer, the
refinancing of the senior bank debt, and the sale of DSI during
its next fiscal quarter. The complete terms of the offer are
contained in the Preliminary Prospectus and Exchange Offer dated
February 20, 2001.
The Company said that as of 5:00 p.m., New York City time, on
March 20, 2001, it had received tenders from holders of
$89,333,000 in aggregate principal amount of the 6.75%
convertible subordinated notes, representing approximately 44.7%
of the outstanding 6.75% convertible subordinated notes. Of the
notes tendered in accordance with the offer, $31,306,000
principal amount was tendered for the cash option, $751,000
principal amount was tendered for new 9% note option, and
$57,276,000 principal amount was tendered for new 10% note
option.
Danka's Chief Executive Officer, Lang Lowrey, commented: "We are
very encouraged by the participation to date in the exchange
offer by the noteholders."
Banc of America Securities LLC is the exclusive dealer manager
for the exchange offer. D.F. King & Co., Inc. is the information
agent and HSBC Bank USA is the exchange agent. Copies of the
Preliminary Prospectus and Exchange Offer may be obtained by
calling D.F. King at (800) 769-4414, except that Nebraska
residents should contact Banc of America Securities LLC at (888)
292-0070 for copies of the Preliminary Prospectus and Exchange
Offer. Additional information concerning the terms and
conditions of the offer may be obtained by contacting Banc of
America Securities LLC at (888) 292-0070.
Danka Business Systems PLC, headquartered in London, England and
St. Petersburg, Florida, is one of the world's largest
independent suppliers of office imaging equipment and related
services, parts and supplies. Danka provides office products and
services in approximately 30 countries around the world.
Danka Services International, the outsourcing division of Danka
Business Systems PLC, provides on- and off-site document
management services, including the management of central
reprographics departments, the placement and maintenance of
photocopiers, print-on-demand operations and document archiving
and retrieval services.
EDUCATIONAL INSIGHTS: Files Non-Reporting Status With SEC
---------------------------------------------------------
Educational Insights, Inc. (Nasdaq: EDIN) has filed a
Certification and Notice of Termination of Registration under
Section 12(g) of the Securities and Exchange Act of 1934 on Form
15, seeking to terminate the Company's reporting obligations.
As a result of the filing, the Company's obligations to file
quarterly, annual, and special reports with the Securities and
Exchange Commission (SEC) have been temporarily halted.
Reid Calcott, the Company's President and CEO stated that: "In
view of the Company's pending delisting from Nasdaq, as well as
the low trading volume and the limited number of shareholders,
the Board unanimously agreed that the benefits of reducing the
costs and management's time associated with preparing and filing
the forms required of a reporting company far outweigh any
drawbacks. Without the obligation of filing these reports,
management can focus all of its attention on returning the
Company to profitability."
Unless the Form 15 is rejected by the SEC, the Company's
obligations to file any reports with the SEC will permanently
cease within 90 days.
If the de-registration is successful, the trading and liquidity
of the Company's common stock will be significantly diminished
as the Company's common stock would no longer be eligible to be
traded on the Nasdaq stock market or the OTC Bulletin Board.
However, the Company's common stock would be eligible for
trading on the pink sheets.
Educational Insights, Inc. designs, develops and markets a
variety of educational products, including electronic learning
aids, electronic games, activity books, science kits, board
games and other materials for use in both schools and homes.
The Company's product line, including its most popular product,
GeoSafari, appeals to children as well as students ranging from
pre-kindergarten to adult and is designed to make learning fun.
FINOVA GROUP: Seeks To Extend Time To File Schedules To May 7
-------------------------------------------------------------
Due to the complexity of The FINOVA Group, Inc.'s businesses and
their significant assets, liabilities, financial and
transactional records, executory contracts and unexpired leases,
Mark D. Collins, Esq., at Richards, Layton & Finger, told the
Court, the Debtors will be unable to complete and file their
Schedules of Assets and Liabilities, Schedule of Current Income
and Expenditures, Statement of Financial Affairs and Statement
of Executory Contracts by March 22, as required by Rule 1007 of
the Federal Rules of Bankruptcy Procedure. The additional 15 day
grace period through April 6, available by way of recently-
promulgated Local Bankruptcy Rule 1007-1 for Delaware debtors
with more than 200 creditors, won't be sufficient either.
Mr. Collins said that the Debtors expect to have all information
necessary to enable them to complete the preparation of their
Schedules and Statements by May 7, 2001. (Finova Bankruptcy
News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
FREEPORT MCMORAN: Annual Stockholders' Meeting Is On May 3
----------------------------------------------------------
The notice of the annual meeting of stockholders of Freeport
McMoran Copper & Gold Inc. has gone out to stockholders to
advise them of the meeting.
Date: Thursday, May 3, 2001
Time: 1:00 p.m., Eastern Time
Place: Hotel du Pont
11th and Market Streets
Wilmington, Delaware
Purpose:
- To elect six directors;
- To ratify the appointment of the independent auditors;
- To vote on two stockholder proposals, if presented at
the meeting; and
- To transact such other business as may properly come
before the meeting.
Record Date: Close of business on March 15, 2001.
GENESIS HEALTH: Amends $250,000,000 DIP Financing Facility
----------------------------------------------------------
Genesis Health Ventures, Inc. & The Multicare Companies, Inc.
have filed with the Court the First Amendment To Revolving
Credit And Guaranty Agreement pursuant to which Mellon Bank N.A.
and the other Original Banks assign to other financial
institutions (the New Banks) a portion of the Original Banks'
interests, rights and obligations under the Credit Agreement.
Accordingly, the introductory paragraph of the Credit Agreement
is amended to read "Highland Capital Management, L.P., as Co-
Agent." Mellon Bank is the Arranger, First Union National Bank,
the Syndication Agent, Goldman Sachs Credit Partners L.P. is the
Documentation Agent, The Chase Manhattan Bank is the Co-Agent.
The Debtors, the Guarantors, the Original Banks, the New Banks
and the Agent have determined that the execution and delivery of
this Amendment to effectuate a reallocation of the Total
Commitment among the Original Banks and the New Banks will be
more expeditious and administratively efficient than the
execution and delivery of a separate Assignment and Acceptance
between the Original Banks and each of the New Banks.
-- On the Effective Date,
(a) each New Bank will pay to the Agent (for the account of
the Original Banks) its pro rata portion of the aggregate
principal amount of the Loans, if any, that are
outstanding on the Effective Date and its portion of the
aggregate amount of then unreimbursed drafts, if any,
that had been drawn under Letters of Credit, and
(b) the Agent will pay to each of the New Banks such fees as
have been previously agreed to between them.
The Amendment will not become effective until such payments have
been made and the Amendment is executed by the Borrower, the
Guarantors, the Original Banks, the New Banks and the Agent, and
the Agent has received evidence satisfactory to it of such
execution.
Notwithstanding anything to the contrary Set forth in Section
10.03(b) of the Credit Agreement, the processing and recordation
fee of $3,500 referred to there will not be payable by any party
in connection with this Amendment.
-- Upon the occurrence of the Effective Date of this Amendment,
the respective Commitment of each of the Original Banks and each
of the New Banks under the Credit Agreement will be:
Commitment Commitment
Bank Amount Percentage
---- ---------- ----------
Mellon Bank, N.A. $24,756,097.56 9.90%
First Union National Bank $41,260,162.60 16.50%
Goldman Sachs Credit Partners L.P. $41,260,162.60 16.50%
The Chase Manhattan Bank $30,945,121.95 12.38%
Highland Capital Management, L.P. $30,945,121.95 12.38%
Toronto Dominion (New York), Inc. $25,000,000.00 10.00%
The Bank of Nova Scotia $16,666,666.67 6.67%
Metropolitan Life Insurance Company $16,666,666.67 6.67%
General Electric Capital Corporation $10,000,000.00 4.00%
Credit Lyonnais New York Branch $8,333,333.33 3.33%
Silver Oak Capital, L.L.C. $2,916,666.67 1.17%
AG Capital Funding, L.P. $1,250,000.00 0.50%
Total: $250,000,000.00 100.00%
-- Promptly following the occurrence of the Effective Date, and
in accordance with Section 10.03(e) of the Credit Agreement, the
Agent will record in the Register the names and addresses of
each New Bank and the principal amount equal to such Bank's
Commitment.
By the execution and delivery of the First Amendment, each of
the New Banks
(a) agrees that any interest, Commitment Fees and Letter of
Credit Fees that accrued prior to the Effective Date will not be
payable to such New Bank and authorizes and directs the Agent to
deduct such amounts from any interest, Commitment Fees or Letter
of Credit Fees paid after such date and to pay such amounts to
the Original Banks but interest, Commitment Fees and Letter of
Credit Fees respecting the Commitment of the Original Banks and
each New Bank which accrue on or after the Effective Date will
be payable to such Bank in accordance with its Commitment;
(b) acknowledges that if such New Bank is organized under
the laws of a jurisdiction outside of the United States, such
New Bank has heretofore furnished to the Agent the forms
prescribed by the Internal Revenue Service of the United States
certifying as to such New Bank's exemption from United States
withholding taxes with respect to any payments to be made to
such New Bank under the Credit Agreement, or other documents
that are necessary to indicate that all such payments are
subject to such tax at a rate reduced by an applicable tax
treaty; and
(c) acknowledges that such New Bank has heretofore supplied
to the Agent the information requested on the administrative
questionnaire heretofore supplied by the Agent.
The Borrower agrees that its obligations set forth in the Credit
Agreement shall extend to the preparation, execution and
delivery of this Amendment, including the reasonable fees and
disbursements of counsel to the Agent.
The Second Amendment and
Motion for Approval of Amendment
The Debtors told the Court that they are in default of certain
reporting and financial covenants set forth in the DIP Credit
Agreement with respect to:
(a) Section 5.01(a), which requires, Inter alia, that the
Borrowers report and certify certain financial information
within 90 days after the end of the fiscal year ended September
30, 2000;
(b) Sections 5.01(b) and 5.01(d), which require that the
Borrowers report and certify certain financial information
within 45 days after the end of the fiscal quarter ended
December 31, 2000; and
(c) certain financial covenants, including the covenant
requiring that the Borrowers maintain minimum earnings before
interest, taxes, depreciation, and amortization (EBITDA) levels
set forth in Section 6.05, which were occasioned by certain
devaluation of assets and other nonrecurring charges recorded by
the Borrowers in the fiscal year ended September 30, 2000.
The Debtors have determined that certain adjustments were
necessary to accurately represent their current business
projections and operations.
Accordingly, the Debtors and the DIP Lenders negotiated
adjustments in the required minimum EBITDA levels, which are
based upon existing economic projections to reflect more
realistic projections of future performance.
To resolve the DIP Defaults and reflect the adjusted EBITDA
levels for future periods, the DIP Lenders and the Borrowers
executed a Second Amendment and Waiver to Revolving Credit and
Guaranty Agreement which provides, among other things, that:
(1) The DIP Lenders waive compliance by the Borrowers with
the provisions of Sections 5.01(b) and 5.01(d), which require
delivery of certain financial reports with respect to the fiscal
quarter ended December 31, 2000, provided that such information
is delivered no later than April 2, 2001.
(2) The DIP Lenders waive any default or Event of Default
under the DIP Credit Agreement (including, without limitation,
under Section 6.05) that was occasioned by specified devaluation
of assets and other non- recurring charges recorded by GHV in
the fiscal year ended September 30, 2000.
(3) Section 5.01 is amended by
(a) extending the date by which the Borrowers are
required to report and certify certain financial
information for the fiscal year ended September
30,2000, until April 2, 2001,
(b) allowing the Borrowers to report consolidating
schedules and financial information without the
certification of the Borrowers' auditors, and
(c) requiring the Borrowers to report certain financial
information on a major line of business basis.
(4) Section 6.05 is amended by revising downward the
minimum monthly EBITDA levels for each month during calendar
year 2001.
(5) Section 7.01(m) is amended to permit the Borrowers to
pay prepetition cure amounts owed for unexpired leases of
personal property that are assumed pursuant to section 365 of
the Bankruptcy Code.
(6) As consideration for the Second Amendment, the DIP
Lenders require, subject to the Court's approval, an Amendment
Fee of 1/2 1% of the total DIP Credit Facility ($250 million),
which is equal to $1.25 million.
(7) The DIP Lenders have agreed to defer payment of the
Amendment Fee until the effective date of the Debtors' plan of
reorganization, provided that any plan of reorganization
provides that the Amendment Fee is paid in full, in cash,
pursuant to sections 503(b)(1) and 507(a)(l) of the Bankruptcy
Code.
The Debtors represented that, absent the Second Amendment, they
are in danger of not being able to obtain additional borrowings
under the DIP Credit Facility.
However, they need working capital to continue to operate their
businesses, the credit under the DIP for them to obtain goods
and services in connection with their operations, continue to
post letters of credit needed to maintain the Debtors'
operations, pay their employees, and operate their businesses in
an orderly and reasonable manner and to give their vendors and
suppliers, as well as the numerous governmental regulatory
agencies that oversee their business operations the necessary
confidence that they are able to continue operating as going
concerns. More importantly, the Debtors noted, the availability
of credit under the DIP Credit Facility assures governmental
regulatory authorities and the Debtors' present and prospective
patients that the Debtors will be able to continue to honor
their commitments to them.
Therefore, absent the Second Amendment, their reorganization
efforts will be hampered, the Debtors represented.
With respect to the Amendment Fee, the Debtors submitted that
this was negotiated between DIP Lenders and Borrowers at arm's
length and in good faith, and is fair consideration for the
Second Amendment.
The Debtors also asserted that the Amendment Fee should be
accorded administrative expense priority pursuant to sections
503(b)(1) and 507(a)(l) because it is an actual and necessary
expense of preserving the Debtors' estates.
Accordingly, the Debtors requested approval of the Amendment Fee
payable to the DIP Lenders as an allowed administrative expense,
pursuant to sections 363(b)(1), 503(b), and 507(a)(1) of the
Bankruptcy Code, to be paid in full, in cash, on the effective
date of the Debtors' plan of reorganization. (Genesis/Multicare
Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
HARNISCHFEGER: Beloit Enters Into Final Settlement With BE&K Co.
----------------------------------------------------------------
Beloit Corporation and BE&K Engineering Company, Inc. previously
sought and obtained the Court's authority to execute a
settlement agreement, reached September 8, 2000, between the
parties related to work performed and materials furnished
through August 25, 2000 on a Project in which BE&K is the prime
contractor that hired Beloit as a subcontractor. The Project is
to rebuild a paper machine designated as Paper Machine #1 for
Premier Boxboard Limited, which is a joint venture of Caraustar
Industries, Inc. and Inland Container Board Corp.
This prior settlement agreement resolved all liquidated damages
claimed by BE&K and all delay costs incurred by Beloit related
to the Project.
In the prior settlement agreement, BE&K and Beloit agreed that
Beloit was liable to BE&K for $862.850 (consisting of $571,533
of BE&K backcharges to Beloit and $291,316.46 of claimed
liquidated damages for late equipment delivery). BE&K and Beloit
also agreed that the total amounts of costs chargeable to BE&K
were $387,850. Netting these two figures, Beloit owed BE&K
$475,000 for backcharges and liquidated damages. The Beloit
contract value is $16,081,148, of which $1,594,978 was unpaid
when the prior settlement agreement was reached. Netting the
$1,594,978 due Beloit and the $475,000 due BE&K, BE&K owed
Beloit $1,119,978.
Contract 99-047-B0007 required that a letter of credit be issued
to BE&K before BE&K pays Beloit the $1,119,978 balance, which is
a standard term of BE&K contracts and is customary in the
industry.
Pursuant to the prior settlement agreement, Beloit issued the
letter of credit and received the $1,119,978. BE&K and Beloit
mutually released claims that accrued on or before August 25,
2000, including BE&K's filed proof of claim against Beloit.
This release did not apply to claims for (1) breach of the
Beloit warranty that accrue after August 25, 2000 that are
brought by BE&K or Premier Boxboard; (2) contribution or
indemnity arising out of personal injury or wrongful death; or
(3) any currently known warranty items that are identified on
the punch list of September 21, 2000, on which work had yet to
be performed.
The Final Settlement Agreement
Since the court approved the prior settlement, Beloit's project
group has worked to resolve all operational issues related to
the Project. The Final Settlement Agreement will resolve all
disputes and issues in connection with the Project among, on the
one hand, Beloit, and, on the other hand, BE&K, Caraustar,
Premier and Inland.
The Final Settlement Agreement contemplates that:
(1) upon its execution,
(a) Beloit will stop working on the Project and
(b) Beloit will seek court approval of the Final Settlement
Agreement.
(2) If no one objects to the Final Settlement Agreement within
the time period specified by Bankruptcy Rule 8002, then
(a) Beloit will pay $750,000 in complete satisfaction of its
obligations under P0 No. 99-047-B007 and any other
obligations related to the Project,
(b) the letter of credit and performance bond in the matter
will be released, and
(c) the parties to the Final Settlement Agreement will
exchange mutual releases.
Beloit submitted that the Final Settlement Agreement resolves
existing disputes on machine performance and mechanical warranty
issues, and the settlement amount represents a reasonable sum to
liquidate those disputes and future warranty obligations.
Moreover, approval of the Final Settlement Agreement will
eliminate the risks resulting from contingent liabilities
associated with the performance bond and the letter of credit
related to the matter. Absent the Final Settlement Agreement,
Beloit's obligations under the contract extend to August 6,
2002. No other project obligation has been identified beyond
2001.
Thus, Beloit Corporation sought the Court's authority to execute
and consummate the final settlement agreement among Beloit, BE&K
Engineering Company, Inc., and Premier Boxboard Limited and its
joint venturers. Beloit said that at the hearing on this Motion,
it will present evidence as required by the Court to demonstrate
why the Final Settlement Agreement should be approved.
(Harnischfeger Bankruptcy News, Issue No. 39; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
HOLLYWOOD ENTERTAINMENT: Posts $455 Million Net Loss In Q4 2000
---------------------------------------------------------------
Hollywood Entertainment Corporation (Nasdaq: HLYW), owner of the
Hollywood Video chain of video superstores, announced financial
results for the fourth quarter ended December 31, 2000.
The Company reported consolidated revenue of $331.7 million
versus $296.5 million in the fourth quarter of 1999 (excluding
Reel.com), up 12%. Total same store revenue decreased by 1%;
same store rental revenue also decreased by 1%. Net loss was
$455.5 million in the fourth quarter of 2000 versus a loss of
$24.9 million in the year-ago quarter.
Diluted loss per share was $9.85 for the quarter versus a loss
of $0.54 in the year-ago quarter. Adjusted EBITDA (as defined in
the Company's credit agreement) was a loss of $21.7 million
compared to a gain of $53.0 million in the year-ago quarter
(excluding Reel.com). This earnings and EBITDA loss was
primarily due to write-downs associated with modifications to
rental product depreciation estimates, write-downs of excess and
obsolete inventory primarily due to the stoppage of new store
growth, impairments of goodwill and fixed assets, reserves
against receivables, reserves against deferred tax assets,
employee severance costs, litigation and other settlement costs,
costs associated with terminating existing leases, and a
restructuring charge for the anticipated closure of 43 stores in
2001. The Company added 22 new stores in the fourth quarter and,
as of December 31, had a total of 1,818 video superstores in 47
states and the District of Columbia.
On December 5, 2000, the commitment under the Company's
revolving credit facility stepped down by $37.5 million to
$262.5 million in accordance with the loan agreement. The
Company was able to reduce its debt balance to meet this
requirement. This facility also required a quarterly commitment
reduction of $37.5 million on March 5, 2001. The Company's
lenders agreed to reduce the $37.5 million due on March 5. The
Company made a $6 million amortization payment on March 6, and
deferred the remaining $31.5 million until May 5. During the
deferral period, the Company and its lenders are working on a
formal amendment, which will include a revised amortization
schedule. The Company has presented its lenders with a business
plan which provides for sufficient capital for competitive
levels of product in its stores and timely payment for vendors
while also giving the lenders meaningful debt reduction over the
next 24 to 36 months. The Company is targeting to have this
accomplished by May 5, although we may not be successful because
the final agreement requires an affirmative vote by 100% of the
approximately 20 lenders in the credit facility. Failure to
reach a satisfactory agreement with our lenders could have a
negative effect on our business and operations.
For the year ended December 31, 2000, the Company reported
consolidated revenue of $1.3 billion versus $1.1 billion in
1999, up 18%. Total same store sales increased by 2% on a year-
to-year basis; same store rental revenue increased by 2%. Net
loss was $530.0 million in 2000 versus a loss of $51.3 million
in 1999. Diluted loss per share was $11.48 for 2000 versus a
loss of $1.13 in 1999. Adjusted EBITDA (as defined in the
Company's credit agreement) was $120.8 million in 2000 compared
to $204.5 million in 1999 (excluding Reel.com). These earnings
and EBITDA decreases were primarily due to the fourth quarter
costs and write-downs described above.
The Company has significantly changed its business strategy
during 2000. It has changed from a strategy of high growth in
revenue through new store openings to one of revenue growth and
cash generation from existing stores. Over recent months, we
have made significant changes to our management, including
reinstating Mark Wattles, the Company's founder, full time as
President, hiring Scott Schultze as Chief Administration Officer
and Sam Ellis as Chief Information Officer and promoting Roger
Osborne to Executive Vice President of Store Operations. With
these changes, we have consolidated our field operations,
reorganized our management reporting relationships and moved
toward a more structured and financially disciplined operation.
After opening stores at the rate of nearly one per day for four
years through June 2000, we plan to open fewer than 10 stores
total in 2001.
The Company continues to negotiate the termination of signed
leases for unopened stores, thereby reducing capital
expenditures significantly. During 2001, we intend to focus
primarily on a disciplined approach to the quality of our store
operations, increasing same store revenue and store-level
profitability, and generating free cash flow.
The Company expects comparable store revenue for the first
quarter of 2001 to be between negative 1% and 0%. Comparable
store revenue for the second quarter of 2001 is expected to be
between negative 4% and negative 5% due to the comparison to a
positive 7% from the prior year's quarter, which had new
releases such as Star Wars: The Phantom Menace, The Sixth Sense,
The Green Mile, and American Beauty, among other hit titles.
Comparable store revenue for the third and fourth quarters is
expected to be approximately 1% and 2% respectively. Adjusted
EBITDA for 2001 is expected to be approximately $185 million.
A proxy statement was mailed to shareholders in connection with
a Special Meeting of Shareholders held on March 29, 2001. At the
meeting, the shareholders voted in favor of approval of the
Company's 2001 Stock Incentive Plan.
HURLEY MEDICAL: Fitch Lowers Bond Rating To BBB From BBB+
---------------------------------------------------------
Fitch has downgraded to `BBB' from 'BBB+' its rating on the
outstanding $45.8 million City of Flint Hospital Building
Authority's hospital revenue refunding bonds, series 1998A,
hospital revenue rental bonds, series 1998B, and revenue rental
bonds, series 1995A, issued on behalf of Hurley Medical Center.
The downgrade is based on Hurley's declining operating
performance over the past three years. Hurley had operating
margins of 1.6%, 1.3%, and 1.3% in 1998, 1999, and 2000,
respectively, down from 2.8% in 1997.
Debt service coverage in 1999 and 2000 was also light at 1.8
times (x) and 1.9x, respectively. In addition, days cash on hand
dropped to 59 days in 2000, down from 106.2 days in 1998.
Despite the three-year decline, Hurley did post improved numbers
for the 6 months ending Dec. 31, 2000. Unaudited numbers at 6
months show an operating margin of 2.5% and debt service
coverage of 2.6x.
Fitch's primary concerns include Hurley's ability to continue to
stabilize after difficult years in 1999 and 2000 which resulted
in decreased debt service coverage, weak margins and light
liquidity.
Ongoing strengths include stable and strong management and
improvements in utilization and operating performance in the
first 6 months of 2001.
Fitch believes that Hurley's future performance will be better
than fiscal 1999 and 2000, but will not likely reach the levels
of prior years in the near term.
Located in Flint, Michigan, Hurley is an acute care teaching
hospital with 476 licensed beds.
IMPERIAL SUGAR: Court Gives Nod To Proposed Bidding Procedures
--------------------------------------------------------------
Notwithstanding the months-long prepetition marketing efforts by
Imperial Sugar Company, which have induced the Initial Bidder's
offer, the Debtors intend to subject the proposed sale to the
possibility of a higher and better offer. To this end, the
Debtors asked Judge Robinson to:
(a) Approve bid procedures and set a sale hearing on the
sale of the assets associated with the Debtors' Diamond Crystal
Brands Nutritional Product Business;
(b) Approve the payment of a Topping Fee in connection with
the sale;
(c) Schedule a date, time and place for the auction; and
(d) Approve the form of notice of the sale procedures and
auction.
The Proposed Bid Procedures and Buyer Protections
The Debtors' obligations under the Asset Purchase Agreement are
conditioned upon, among other things, their filing of a motion
seeking the Court's approval of the bid procedures and buyer
protections as set forth in the Asset Purchase Agreement.
Consistent with the terms of the Agreement and in recognition of
their obligations to maximize value of their estates for their
creditors, the Sellers proposed the following solicitation
process and bid procedures:
(1) All competing bids submitted prior to the auction must
be in writing and executed by an individual authorized to bind
the prospective purchaser to its terms. All competing bids must
be served upon:
(i) Mark S. Kenney, Office of the US Trustee, 601
Walnut Street, Curtis Center, Suite 950W,
Philadelphia, Pennsylvania 19106;
(ii) Jack L. Kinzie and Brenda T. Rhoades, Baker Botts
LLP, 2001 Ross Avenue, Dallas Texas 75201;
(iii) Brendan Linehan Shannon, Young Conaway Stargatt &
Taylor, LLP, 11th Floor, Wilmington Trust Center,
1100 North Market Street, P.O. Box 391, Wilmington,
Delaware 19899-0391;
(iv) James E. Spiotto, Chapman and Cutler, 111 West
Monroe Street, Chicago, Illinois 60603;
(v) Fred S. Hodara, Akin, Gump, Strauss, Hauer & Feld,
LLP, 590 Madison Avenue, New York, New York 10022;
(vi) Katherine A. Constantine, Dorsey & Whitney LLP, 220
South 6th Street, Minneapolis, Minnesota 55402; and
(vii) William P. Bowden, Ashby & Geddes, 222 Delaware
Avenue, 17th Floor, Wilmington DE 19801.
(2) Competing bids must be binding and shall be for the
purchase of the assets and assigned contracts. Competing bids
made at the auction shall remain open and irrevocable until the
earlier of (i) closing date of the sale, or (ii) June 2, 2001,
and all bidders are deemed to have submitted to the Court's
exclusive jurisdiction covering all matters related to their
bids, the auction or the sale.
(3) Any competing bidder's initial purchase offer must have
a $4 million minimum initial incremental bid, in excess of the
$65 million purchase price stipulated in the Asset Purchase
Agreement;
(4) An initial competing bid shall be accompanied by:
(a) A certified or bank check, or non-contingent,
irrevocable letter of credit payable to Young
Conaway Stargatt & Taylor, LLP, as the Sellers'
Escrow Agent, for not less than $3 million,
considered as a refundable earnest money deposit to
be held in escrow by the Escrow Agent and applied
toward the purchase price if the competing bid is
accepted and the Court approves the sale, or
returned to the competing bidder if the bid is not
accepted and approved by the Court. If a competing
bid is accepted and approved by the Court, but
the closing of the sale does not occur by the
earlier of June 1, 2001 or such other date as
mutually agreed to by the parties, the Debtors
shall retain the deposit, and such deposit shall
not be applied toward the purchase price of any
future purchaser;
(b) Evidence acceptable to the Debtors demonstrating a
competing bidder's financial ability to close and
consummate the assets sale;
(c) Name and telephone number/s of the contact person
who will be available to answer queries regarding
the initial competing bid, as well as the names and
telephone numbers of any financial and legal
advisor retained by the competing bidder, as
applicable;
(d) A competing bidder's proposed mark-up of the Asset
Purchase Agreement, which the bidder intends to use
in connection with the sale and, which the bidder
is prepared to executed and deliver should that bid
be approved by the Court; provided that the
competing bid must be for substantially the same
assets and business as those included in the
Initial Bidder's bid. The Debtors reserve the right
to reject a competing bid in case a proposed change
to the Asset Purchase Agreement is not
satisfactory, based on the Debtors' sole business
judgment.
(e) A statement that the competing bidder has received
all necessary corporate governance approvals.
Without being subject to any due diligence
contingency, the competing bidder must describe and
detail in the bid any material condition to
closing, including any consent and approval that
the competing bidder views as essential to
completing the transaction. Competing bidders
should also note that the Debtors believe that time
is of the essence, so that the scope of any
representation, warranty, covenant and any
condition to closing which the Debtors deem
material may cause the Debtors to discount the
value of or reject an initial competing bid;
(f) A statement that the initial competing bid is fully
financed and including a source of financing
statement. Financing provided by any external
source/s must include with the initial competing
bid all the terms and present status of all
financing arrangements and the forms of all
commitment agreements anticipated to be obtained.
Competing bidders must provide the names and phone
numbers of the contact persons at the institutions
providing the financing and inform such persons
that they may be contacted by the Debtors or their
representatives;
(g) An executed Confidentiality Agreement in
substantially the same form as that executed by the
Initial Bidder; and
(h) Other information as reasonably may be requested by
the Debtors.
(5) Only initial competing bids that meet, in the Debtors'
sole discretion, the required minimum initial incremental bid
amount and that include all the required accompanying documents
shall constitute a Qualified Bid and the bidder of such a bid
considered as a Qualified Bidder. If an initial competing bid
is: (i) received by the Debtors; (ii) determined to be a
Qualified Bid by a Qualified Bidder; and (iii) acceptable to the
Debtors, the auction will be held. Only Qualified Bidders who
submit initial competing bids and the Initial Bidder may
participate in the auction.
(6) All bids during the auction for the assets by a
Qualified Bidder or the Initial Bidder shall be in increments of
at least $1 million in excess of the prior bid. All parties
desiring to participate in the auction shall be present through
representatives who are authorized to make binding bids on the
prospective purchaser's behalf.
(7) The Debtors shall present to the Court at the sale
hearing, their recommendation on the highest and best bid, as
they have determined in their business judgment. The Court, in
its discretion, shall approve the highest and best bid for the
assets. The Debtors are deemed to have accepted a bid only when
the bid has been approved by the Court at the sale hearing.
(8) If the Court approves a bid, which does not however
result in the assets sale by June 1, 2001 or such date as
mutually agreed to by the parties, other than because of
Debtors' default, the Debtors may close on the second highest
offer as determined by the Debtors, without need of further
Court Order.
(9) The Debtors will not conduct the auction if no
Qualified Bids are received, and the Court, in its discretion
will decide whether to approve the sale to the Initial Bidder
under the terms of the Asset Purchase Agreement.
In addition, the Sellers sought approval of the following
additional buyer protections:
(a) The Debtors shall pay an expense reimbursement, plus a
topping fee, if:
(i) The Debtor Imperial Sugar terminates the Asset
Purchase Agreement under the circumstances that the
bankruptcy case is dismissed or is converted to
liquidation;
(ii) The Asset Purchase Agreement is terminated by the
Buyer for the Debtors' breach of warranties and
representations or terminated by either party, if
(x) the closing does not occur on or prior to June
30, 2001, or (y) the Sale Order has not been
entered on or prior to June 1, 2001, and any of the
Debtors enters into a definitive agreement to sell
or transfer all or any portion of the assets, other
than sales in the ordinary business course, to a
person other than the Buyer within 12 months of
such termination; or
(iii) Buyer or the Debtors terminate the Asset Purchase
Agreement after the Court has approved the sale to
a person other than the Buyer.
The expense reimbursement is an amount equal to the Buyer's
reasonable, actual, out-of-pocket costs and expenses incurred in
connection with the Asset Purchase Agreement and the
transactions contemplated in it, including expenses for counsel,
financial advisors and consultants and the filing fee, but shall
not exceed $800,000. It is payable at the time that the Asset
Purchase Agreement is terminated. A $1,950,000 topping fee shall
be paid at and only upon a closing of a sale or transfer of the
Assets or the business for an aggregate consideration to any of
the Sellers that is greater than the Closing Date Purchase
Price.
(b) In the event that the Initial Bidder receives or is
entitled to expense reimbursement or the topping fee, that
amount or fee shall be given a superpriority administrative
claim status, senior to all other superpriority administrative
expense claims, but subordinated to the:
(i) Prepetition Lenders' adequate protection claims;
(ii) The Debtors' obligations under the Postpetition
Credit Agreement; and
(iii) The Modified Securitization Facility.
M. Blake Cleary at Young, Conaway, Stargatt & Taylor, LLP, in
Delaware, told Judge Robinson that the Debtors submit that the
proposed bid procedures, including the expense reimbursement and
the topping fee, are reasonable, appropriate and within the
Debtors' sound business judgment under the circumstances because
they will serve to maximize the value that the Debtors will
recover on account of the sale.
The Debtors believe that the bid procedures establish the
parameters under which the assets' value may be tested at a
public auction. Such procedures increase the likelihood that the
Debtors will receive the greatest possible consideration for the
assets because they will ensure a competitive and fair bidding
process.
One important component of the bid procedures is the "overbid"
provision, pursuant to which any initial competing bid for the
assets must be in an amount at least $4 million more than the
$65 million purchase price, and any subsequent bid must be in an
amount of at $1 million more than the prior bid. The Debtors are
convinced that a minimum initial overbid is necessary, not only
to compensate the Debtors for the risk that they assume in
foregoing a known, willing and able purchaser for a new
potential acquirer, but also to ensure that there is an increase
in the net proceeds received by the estate after deducting the
topping fee to be paid to the Initial Bidder in the event of a
prevailing overbid.
The Debtors submitted that the topping fee is normal and, as in
many cases, a necessary component of a significant sale.
Intended to encourage bidding and maximize the value of the
Debtors' assets, the topping fee in this case is appropriate,
and, the Debtors contend, should constitute a superpriority
administrative expense. The Initial Bidder had intimated that it
would not proceed with the assets purchase without reasonable
assurance that it would receive payment of the topping fee in
case a third party prevailed at the auction. If the Court does
not approve the proposed topping fee, the Debtors claim that
they would risk losing the offer of the Initial Bidder to the
detriment of their estates. The Debtors assert are of the belief
that the proposed topping fee of $1,950,000, representing only
3% of the purchase price, is appropriate under the
circumstances.
The proposed topping fee will permit the Debtors to proceed to
seek approval of the sale, which in turn establishes the
standard upon which other bidders may base their competing
offers. Without the topping fee, the Debtors' estates would not
have the benefit of the Initial Bidder's offer, and the Debtors
would not have the leverage necessary to require competing
bidders to make better offers.
Judge Wizmur found that the Debtors have articulated good and
sufficient reasons for the approval of the bid procedures and
the topping fee and, that they are reasonable and appropriate
and represent the best method for maximizing the return on the
assets. Accordingly, the motion is granted. However, where the
Debtors have sought approval for the payment of a $1,950,000
topping fee, Judge Wizmur only authorizes a topping fee of
$1,800,000.00. (Imperial Sugar Bankruptcy News, Issue No. 4;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
INTEGRATED HEALTH: Reaches Settlements with Pennsylvania
--------------------------------------------------------
In connection with reimbursement rates for Medicaid patients,
Integrated Health Services, Inc. asked the Court to approve,
pursuant to Sections 105 and 363 of the Bankruptcy Code and
Rules 6004 and 9019(a) of the Bankruptcy Rules, certain
settlements by and between the Commonwealth of Pennsylvania
Department of Public Welfare and each of the Facilities: IHS of
Erie at Bayside, IHS at Mountain View, IHS of Greater
Pittsburgh, IHS Greenery of Canonsburg, IHS of Pennsylvania
at Broomall, IHS of Bryn Mawr at Chateau, IHS of Pennsylvania at
Marple, IHS of Pennsylvania at Plymouth, and IHS at Julia
Ribaudo.
The Commonwealth of Pennsylvania Department of Public Welfare,
Office of Medical Assistance Programs (the DPW) administers the
Medicaid program in the state of Pennsylvania. Pursuant to
certain provider agreements, each of the Facilities is a
Medicaid participant.
On January 1, 1996, the DPW implemented a "Case-Mix" payment
system under which the DPW calculates a provider's reimbursement
rate by aggregating and averaging the individual reimbursement
rates of such provider's patients. Gravely ill patients command
a higher rate of reimbursement than less ill patients.
Accordingly, under the Case-Mix System, the illness spectrum of
a provider's patients is determinative of its reimbursement
rate.
Medicaid providers have the right to appeal the reimbursement
rates determined by the DPW. The appeals process generally spans
approximately four years. Each of the Facilities has appealed
certain of the DPW's reimbursement rate determinations. The DPW
has offered to settle the Appeals on favorable terms as set
forth in the Settlements. The Debtors believe that the
Settlement Agreements are fair and reasonable, and should be
approved by the Court.
The Settlements
The Settlements pertaining to the Facilities are on
substantially identical terms, varying only with respect to each
Settlement's particular Settlement Amount. Essentially, the
Settlements provide that the DPW wi1l pay the Facilities the
Settlement Amounts in full and final settlement of the Appeals.
In addition, the Settlements provide for the release of the DPW
and the withdrawal, with prejudice, of the Appeals.
As set forth in the Settlements, the Settlement Amounts are:
Facility Settlement Amount
-------- -----------------
IHS of Erir at Bayside $316,804.32
IHS at Mountain View $297,551.52
IHS of Greater Pittsburgh $119,689.92
IHS Greenery of Cannonsburg $242,161.92
IHS of Pennsylvania at Broomall $686,367.36
IHS of Bryn Mawr at Chateau $371,740.32
IHS of Pennsylvania at Marple $374,844.96
IHS of Pennsylvania at Plymouth $363,938.40
IHS at Julia Ribaudo $245,115.36
The Debtors believe that the settlements are exercises of sound
business judgment, and the most important factor to consider in
assessing the Debtors' business judgment is the effect of the
Settlements on the Debtors' estates and creditors. In this
regard, the Debtors asserted that the Settlements settle the
Appeals on favorable terms, allow the Debtors' estates to
realize the Settlement Amounts, and prevent the continued
expenditure of estate funds on prosecuting the Appeals.
Accordingly, the Debtors submitted that the Settlements benefit
the their estates and creditors,and foster no prejudice with
respect to either.
Moreover, the Debtors represent that the Settlements meet the
quadripartite standard by which courts evaluate a proposed
compromise and settlement, which essentially balances the
probability of litigation success and potential litigation costs
against the costs and benefits of a proposed settlement. In this
regard, the Debtors point out that the outcome of the Appeals is
uncertain and continued litigation will result in a financial
drain on the Debtors' estates. Furthermore, in light of the
lengthy appeals process, additional reimbursement resulting from
successful Appeals will likely be realized after the close of
the Debtors' cases. Accordingly, if they forgo the Settlements
and continue prosecuting the Appeals, they will be financing
fruitless endeavor with precious estate assets, to the detriment
of their creditors, the Debtors tell the Court.
Furthermore, the Debtors reminded the Court that, in large
complex cases such as the IHS cases, a debtor's successful
reorganization turns on its ability to remain focused on myriad
impending reorganization issues. Continued prosecution of the
Appeals will divert substantial attention from the Debtors, at
the expense of pressing reorganization issues, the Debtors
contend.
Accordingly, the Debtors submitted that the Settlements are
equitable, well reasoned, and in the best interests of the IHS
Debtors and their creditors and, therefore, should be approved
by the Court. (Integrated Health Bankruptcy News, Issue No. 15;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
INTEGRATED PACKAGING: Reports Net Losses in Q4 And Fiscal 2000
--------------------------------------------------------------
Integrated Packaging Assembly Corporation (OTC:IPAC), reported
its results for the fourth quarter and year ended December 31,
2000.
Revenues for the fourth quarter ended December 31, 2000 were
$4,295,000 compared with revenues of $5,605,000 for the same
periods one year ago. The Company reported a net loss of
($3,009,000) or ($0.05) per diluted share, for the fourth
quarter of 2000, compared with a net loss of ($2,205,000) or
($0.05) per diluted share, for the fourth quarter of 1999.
For 2000, IPAC reported revenues of $24,167,000 compared to
revenues of $17,441,000 for 1999. The Company reported a net
loss before preferred stock dividends of ($10,539,000) or
($0.19) per diluted share, for 2000 compared with a net loss of
($9,873,000) or ($0.40) per diluted share for 1999. The Company
reported a net loss applicable to common stockholders of
($10,952,000) or ($0.20) per diluted share, for 2000. The loss
for 2000 included a $1,389,000 charge for a writedown of
impaired assets and a $237,000 charge for severance agreements,
as a result of the Company wide reorganization. The loss for
1999 included extraordinary gains of $2,047,000 related to the
Company's restructuring of its secured debt. During the second
quarter of 1999, the Company recorded a deemed dividend on
preferred stock of $6.8 million. This is the result of the
conversion price of the convertible preferred stock issued
during the quarter being less than the market price of the
common stock on the date of the transaction. All deemed
dividends related to the transaction have been recognized during
the second quarter as a result of the preferred stock being
immediately convertible at the discretion of the holder.
During the fourth quarter of 2000, the Company issued 3,025,225
shares of IPAC Series B Preferred Stock to Orient Semiconductor
Electronics, Ltd for $6 million. During the fourth quarter of
1999, the Company acquired OSE, Inc., the North American
distributor of OSE. IPAC began reporting consolidated results
with OSEI from October 30, 1999.
IPAC an addition to the distribution operations of OSEI is an
independent North American semiconductor packaging foundry
dedicated to assembling surface mount integrated circuits in
high volumes with fast cycle times. The Company's close
proximity to its customers allows it to provide quick
turnaround, concurrent engineering, and timely delivery for both
high volume production orders as well as engineering samples.
ITEQ INC.: Tanglewood Acquires Three Operating Subsidiaries
-----------------------------------------------------------
Tanglewood Manufacturing LP's subsidiary TMI Manufacturing Inc.
has entered into a definitive agreement with the commercial bank
lending syndicate of Houston-based ITEQ, Inc. (OTC Bulletin
Board: ITEQ) and has acquired all the operating subsidiaries of
ITEQ in a private transaction for an undisclosed amount.
In a related transaction, ITEQ received a cash infusion from a
subsidiary of Tanglewood to satisfy its existing indebtedness
and expenses associated with the winding up of ITEQ's business.
ITEQ has also entered into a definitive merger agreement with a
subsidiary of Tanglewood, HNT Acquisition Inc., which when
approved by ITEQ's shareholders will result in the merger of HNT
and ITEQ. Pursuant to the merger agreement, ITEQ's shareholders
will receive approximately $0.03 per share of ITEQ common stock.
The only material condition to the merger is approval of the
merger by the shareholders of ITEQ.
Tanglewood is pleased to have the opportunity to facilitate the
financial restructuring of the businesses that formerly made up
ITEQ. The principal businesses acquired by Tanglewood are:
Ohmstede, Inc. the largest U.S. manufacturer of shell and tube
heat exchangers for the refining and petrochemical industries;
Ceilcote Air Pollution Control, a leading international design
and engineering firm in filtration systems and products for a
wide range of industrial clients; and
G.L.M. Tanks & Equipment Ltd., a Canadian manufacturer of steel
tanks and vessels for the oil and gas, mining, food processing,
chemical and pulp and paper industries.
These businesses are outstanding companies staffed by dedicated
employees who have a long tradition of serving their customers
with quality products. In recent years, these dedicated
employees have labored under the dual constraints of difficult
market conditions and the severe financial pressure on their
parent company, ITEQ. TMI Manufacturing, the new parent company
of Ohmstede, Ceilcote and GLM, is well capitalized with no debt,
allowing the managers and staff of its operating companies to
focus full time and attention on the needs of their customers
and the opportunities available in the marketplace. Tanglewood
looks forward to working with the employees of these fine
companies to identify and take advantage of the opportunities
presented by improving market conditions.
In the transaction, Tanglewood also acquired two small, well-run
and profitable vessel and tank fabrication facilities in Fresno,
California and Olympia, Washington. Because neither of these
businesses is directly related to the business of Ohmstede,
Ceilcote or GLM, Tanglewood's plans are to immediately seek a
buyer for these two businesses that can provide a better fit
with their capabilities and geographic location.
Tanglewood is an affiliate of Tanglewood Investments Inc. a
Houston-based private equity group focused on growth-oriented
investments in industrial manufacturing and service businesses.
Tanglewood Investments owns Ameri-Forge Corporation, a leading
manufacturer of flange forgings, flanges and specialty- forged
products used in the automotive and oil and gas industries.
Tanglewood Investments also holds a controlling interest in
Superior Holdings Inc., the parent company of Superior Wellhead
Inc. and SMI Manufacturing Inc., both of which are Houston-based
contract manufacturers of equipment for OEM suppliers of
products used for pressure control and subsea production in the
oil and gas industry.
LATTICE: Shareholders To Convene in Hillsboro, Oregon On May 1
--------------------------------------------------------------
The Annual Meeting of Stockholders of Lattice Semiconductor
Corporation will be held at the company's Corporate
Headquarters, 5505 NE Moore Court, Hillsboro, Oregon, on
Tuesday, May 1, 2001, at 1:00 p.m., Pacific Time, for the
following purposes:
(1) To elect two Class III directors, each for a term of
three years;
(2) To approve the 2001 Outside Directors' Stock Option
Plan;
(3) To approve the 2001 Stock Plan;
(4) To ratify the appointment of PricewaterhouseCoopers LLP
as independent accountants for the fiscal year ending
December 29, 2001; and
(5) To transact such other business as may properly come
before the meeting.
Only stockholders of record at the close of business on March
15, 2001 are entitled to vote at the meeting or any adjournment
thereof.
LERNOUT & HAUSPIE: Court Approves C-REC Sale Despite Objections
---------------------------------------------------------------
Lernout & Hauspie Speech Products N.V. (EASDAQ: LHSP, OTC:
LHSPQ), a world-leader in speech and language technology,
products, and services, announced that the U.S. Bankruptcy Court
for the District of Delaware denied the motions filed by James
and Janet Baker, former owners of Dragon Systems, Inc., to
appoint a trustee and to disqualify counsel for L&H.
In a separate decision, the court approved the sale of C-REC
speech recognition technology by L&H Holdings USA, Inc. to
Visteon Corp. for $13.1 million. In connection with this
decision, Visteon has released all prior claims against L&H.
About Lernout & Hauspie
Lernout & Hauspie Speech Products N.V. is a global leader in
advanced speech and language solutions for vertical markets,
computers, automobiles, telecommunications, embedded products,
consumer goods and the Internet. L&H is making the speech user
interface (SUI) the keystone of simple, convenient interaction
between humans and technology, and is using advanced translation
technology to break down language barriers. L&H provides a wide
range of offerings, including: customized solutions for
corporations; core speech technologies marketed to OEMs; end
user and retail applications for continuous speech products in
horizontal and vertical markets; and document creation, human
and machine translation services, Internet translation
offerings, and linguistic tools. L&H's products and services
originate in four basic areas: automatic speech recognition
(ASR), text-to-speech (TTS), digital speech and music
compression (SMC) and text-to-text (translation). For more
information, please visit Lernout & Hauspie on the World Wide
Web at www.lhsl.com.
LOEWEN GROUP: Day Mortuary Gets Court's Nod For Bidding Protocol
----------------------------------------------------------------
In light of interest expressed by more bidders in the Property
in addition to Original Bidders, the Selling Debtor (Day
Mortuary, Inc.) sought and obtained the Court's approval of the
Bidding Procedures to facilitate a Court-supervised auction of
the Property, and for approval of the manner of notice of the
Bidding Procedures, pursuant to sections 105 and 363 of the
Bankruptcy Code and Rule 6004 of the Bankruptcy Rules.
In June 2000, the Selling Debtor solicited bids from parties
with an interest in purchasing real and personal property at a
funeral home on approximately 3.06 acres of land located in 2701
East Third Street Bloomington, Indiana. Of the Potential
Purchasers invited to place bids, four parties submitted bids
for the Property. The Loewen Group, Inc. Debtors subsequently
entered into an intensive seven-month period of negotiations
with the two highest bidders (the Original Bidders). In January
2001, a third bidder expressed an interest in participating in
any future auction for the Property (together with the Original
Bidders, the Current Bidders).
Terms of the Transaction with Each of the Current Bidders
The Debtors anticipate that they, will soon enter into Term
Sheets with each Current Bidder that will outline the terms and
conditions for the purchase and sale of the Property. Each Term
Sheet will set forth the agreement in principle. In addition,
the Debtors will enter into a definitive real estate purchase
agreement with the bidder that first executes a Term Sheet (the
Initial Bidder) for the Property. Upon execution of the Purchase
Agreement, the Debtors will file a motion requesting an order
approving the proposed sale, to be heard at the next available
omnibus hearing.
The parties' agreement in principle is as follows:
(1) The Selling Debtor agrees to sell the Property to the
bidder for an amount equal to $2,750,000.00, subject to higher
and better bids received under the Bidding Procedures. The
Initial Bidder will agree to accept the Property on the terms
and subject to the conditions set forth in the Purchase
Agreement.
(2) The Initial Bidder will pay to the Selling Debtor a
deposit of $55,000.00 within five business days following
receipt of the fully executed Purchase Agreement from the
Selling Debtor and pay the remainder of the Purchase Price at
the closing.
(3) Contingent upon the outcome of the auction (as proposed
in the motion) and the Sale Hearing, the Debtors will proceed to
closing with the Successful Bidder within 30 days after the
Auction.
(4) If the Initial Bidder defaults under or breaches the
Purchase Agreement, the bidder will be liable to the Debtors for
whatever damages are available at law or equity and will forfeit
any and all rights that it may have to the Deposit.
(5) The Initial Bidder will enter into a twelve-month lease
with the Selling Debtor that will permit the Selling Debtor to
continue to use the Property while the Selling Debtor attempts
to secure an alternate place to conduct business in the
Bloomington, Indiana area.
The Selling Debtor will pay rent at an annual rate of 6% of the
Purchase Price, payable in monthly installments, plus additional
rent for taxes, insurance and maintenance costs.
The Selling Debtor will be entitled to extend the lease term for
a period of 45 days at the same rental rate if its new business
location is not ready for operations at the end of the initial
twelve-month period.
(6) The terms and conditions set forth in the Term Sheets
will be binding on the Current Bidders other than the Initial
Bidder pending the Auction, the Sale Hearing and the closing of
the sale of the Property.
Bidding Procedures and Notice
At the Auction, the Property will be auctioned to the highest
and best cash bidder. Any entity that desires to submit a
competing bid for the Property may do so in accordance with the
following Bidding Procedures.
The Selling Debtor believes that the Bidding Procedures will
permit the sale of the Property to be completed promptly and to
ensure that the Selling Debtor obtains the best possible price
for the Property. Therefore, the Bidding Procedures are designed
to accomplish in a limited time frame the consummation of the
sale of the Property to the Initial Bidder or any other
purchaser who makes a higher and better purchase offer. The
Debtor told the Court that the Bidding Procedures are modeled in
large part after the bidding procedures approved by the Court
with respect to the Debtors' asset disposition program and
provides that:
(a) Any competing bid for the Property must be in writing
and comply with the following:
(1) the bid must be served upon and actually received
by the parties identified on the Service List on or before 5:00
p.m., Eastern Time, five business days before the Auction;
(2) the bid must be at least 3% above the Purchase
Price;
(3) the bid must be on the same or more favorable terms
and conditions as set forth in the Purchase Agreement;
(4) the bid must not be contingent upon any due
diligence investigation (except, in the instance of a Current
Bidder, as provided in the applicable Term Sheet), the receipt
of financing or any board of directors, shareholders or other
corporate or partnership approval beyond that required by the
Purchase Agreement;
(5) the bid must be accompanied by proof, in a form
satisfactory to the Debtors, of the entity's financial ability
to consummate its offer to purchase the Property;
(6) the bid must contain an acknowledgment that the
successful bidder for the Property will be obligated to submit a
deposit and execute a purchase agreement containing terms and
conditions substantially similar to the Purchase Agreement; and
(7) the bid must contain an acknowledgment that the bid
shall remain open and irrevocable until (x) the Court approves
the sale of the Property to another entity and (y) the Debtors
close the sale with, and receive the Purchase Price from, such
entity.
(b) If one or more Qualified Competing Bids are received,
the Auction will be conducted for the Property at 2:00 p.m.,
Eastern Time, on the last business day prior to the Sale Hearing
(or such other day specified in the Notice), at the offices of
Morris, Nichols, Arsht & Tunnell, the Debtors Delaware counsel.
The Debtors will notify all bidder submitting Qualified
Competing Bids at least two business days before the date of the
Auction.
(c) At the Auction, competing bidders (including the
Initial Bidder) may submit bids for the Property in excess of
the Purchase Price, provided that such bids (1) are in
increments of 3% (subject to rounding) of the Purchase Price and
(2) otherwise comply with the requirements for Qualified
Competing Bids.
(d) At the Auction, the Debtors may select, after
consulting with the Creditors' Committee, the Successful Bid
that they, in their sole business judgment, determine to be the
highest and best bid for the Property.
(e) If no Qualified Competing Bids are received for the
Property, the Debtors may, after consulting with the Creditors'
Committee, seek the Court's approval of the Purchase Agreement
and the transaction contemplated without conducting the Auction.
The Debtors acknowledge that the Bidding Procedures contemplate
an aggressive timetable, but the Selling Debtor believes that
all entities that will be interested in submitting a bid have
been provided ample opportunity to conduct due diligence
investigations and evaluate the Property. Accordingly, the
prospective bidders should be able to determine readily the
amounts that they would be prepared to bid at the Auction.
Furthermore, the Bidding Procedures are highly similar to those
approved by the Court with respect to the Debtors' asset
disposition program.
The Selling Debtor believes that the implementation of the
Bidding Procedures and conduct of the Auction will fetch the
highest and best offer for the Property, thereby maximizing the
recovery of the asset for its estate. The Selling Debtor
therefore believes this is in the best interests of its estate
and creditors and should be approved. (Loewen Bankruptcy News,
Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900)
MATLACK SYSTEMS: Files Chapter 11 Petition in Wilmington
--------------------------------------------------------
Matlack Systems, Inc. (OTCBB Symbol:MLKI), one of the nation's
largest tank transporters for the chemical industry, filed a
petition in Delaware seeking protection under Chapter 11 of the
Federal Bankruptcy Code.
Management also reported that its bank lenders are supporting
the business through the Chapter 11 process by allowing the
Company to use the lenders' cash collateral while debtor in
possession financing is negotiated.
"Our customers should know that they can continue to rely on us
for the same high standards of service and safety, and our
employees should know that we will continue to do what's best
for the Company and for them." said President and CEO, Michael
Kinnard. "Also, our suppliers need to know that they can
continue to look to us in the future as a supportive revenue
source for their business operations."
"Many of our customers have told us that they need Matlack to
remain a vital and viable component of this industry," Kinnard
added. "Their willingness to continue to support our Company is
a source of great encouragement to us. Matlack is a key player
in this industry and getting its operations in line with current
economic and industry trends is essential, not only to us, but
also to the industry. Recent trends have been both volatile and
challenging, as the chemical industry has felt the constraints
of a shrinking economy. Any company that wants to remain viable
for the sake of customers, employees, and other stakeholders
needs to be flexible enough to adapt to rapid changes in the
economy. That is what we are doing."
Matlack currently has 53 fleet terminals operating throughout
the country, with about 1,500 employees the majority of which
are terminal employees, mechanics, drivers, account managers and
customer service representatives, who tend to the needs of our
customers.
Matlack Systems, Inc. is a specialized transportation company
serving the chemical industry with facilities throughout North
America.
MATLACK SYSTEMS: Case Summary and 20 Largest Unsecured Creditors
----------------------------------------------------------------
Lead Debtor: Matlack Systems, Inc.
One Rollins Plaza, 2200 Concord Pike
Wilmington, DE 19803
Debtor affiliates filing separate Chapter 11 petitions:
Matlack International, Inc.
Matlack, Inc.
Matlack (DE), Inc.
Matlack Leasing Corporation
Matlack Properties, Inc.
Bayone Terminals, Inc.
Bulk Terminals, Inc.
Distribution Center of Bayone, Inc.
Transporters Adjusters, Inc.
Type of Business: The company, through its direct and indirect
subsidiaries, is one of the largest bulk
transportation companies in the US, offering
such services as transportation of bulk
commodities in tank trailers and tank
containers to the nation's leading chemical
and dry bulk shippers.
Chapter 11 Petition Date: March 29, 2001
Court: District of Delaware
Bankruptcy Case Nos.: 01-01114 through 01-01123
Judge: Hon. Mary F. Walrath
Debtors' Counsel: Richard S. Cobb, Esq.
Klett Rooney Lieber & Schorling
1201 Market Street, Suite 1501
Wilmington, DE 19801
(302)552-4200
Total Assets: $105,337,000
Total Debts: $59,275,000
List of Debtors' 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
AT&T $ 850,246
7872 Collection Center Dr.
Chicago, Illinois 60693
AON Risk Services, Inc. $ 525,812
of Pennsylvania
P.O. Box 7247-7389
Philadelphia, PA 19170
Rollins Leasing Corp. $ 342,017
P.O. Box 1791
Wilmington, DE 19899
IBM Corporation $ 257,854
P.O. Box 7247-0276
Philadelphia, PA 19170
The Avicon Group, Inc. $ 228,876
Rollins Truck Leasing Corp. $ 200,326
Quala Systems, Inc. $ 196,266
Mack Sales & Services $ 147,502
Bofa Lockbox $ 142,119
E Partners, Inc. $ 140,946
Snider Gen Tire $ 126,123
Safety Kleen $ 118,928
Goodall Rubber Company $ 118,562
TMW Systems, Inc. $ 104,560
Ernst & Young LLP $ 100,000
Rollins Properties $ 99,434
Philip Services $ 94,221
J-Tech $ 92,094
Xerox Corp. $ 90,037
IPCO Safety $ 80,935
MONSOUR MEDICAL: Files For Bankruptcy Protection Again
------------------------------------------------------
Two decades after filing a bankruptcy petition, a hospital in
Pennsylvania goes to court once more.
Monsour Medical Center, a 150-bed hospital in Westmoreland
County, Pennsylvania, filed for Chapter 11 bankruptcy protection
on Wednesday, the Associated Press reported.
The hospital is seeking protection from being forced to pay its
obligations that include, among others, a $3.3 million claim
from its 20 largest unsecured creditors.
According to the Associated Press, the hospital has not been
enjoying "exceptionally strong financial success since it first
filed for bankruptcy court protection two decades ago."
NATIONSLINK: S&P Puts Two Classes Of Securitizations On Watch
-------------------------------------------------------------
Standard & Poor's placed two classes of NationsLink Funding
Corp.'s commercial loan pass-through certificates series 1999-
LTL-1 on CreditWatch with negative implications.
The CreditWatch placement reflects the weak financial
performance of one mortgage loan and the overall decline of the
credit ratings of the tenants/guarantors in the credit-tenant
lease (CTL) pool.
The loan pool consists of 128 mortgage loans with combined
principal balances of $469.6 million as of March 2001. Included
in the pool are 110 loans totaling $366.5 million that are
backed by CTLs. The leases are either bond type (22.6% of the
CTL loan pool), triple net (41.3%), or double net (36.1%).
There are 35 individual guarantors with an average credit rating
of triple-'B'-plus. The largest tenant concentrations are Rite
Aid Corp. (rated single-'B') and CVS Corp. (rated single-'A') at
9.5% and 9.3% of the CTL pool, respectively.
The CTL properties are located in 24 states and the District of
Columbia, with Massachusetts, New York, Texas, and Florida all
exceeding 10% concentrations. Retail buildings are the most
common property type and secure 74.0% of the CTL pool.
The non-CTL loan pool includes 18 mortgage loans that total
$103.1 million. The non-CTL properties are located in 12 states
with concentrations in South Carolina (40.0% of the non-CTL
pool) and Georgia (13.6%).
Retail and office are the most common collateral among the non-
CTL properties, representing 70.3% and 16.6% of the non-CTL
pool, respectively.
The weighted average debt service coverage (DSC) for the non-CTL
loans is 1.71 times (x) based on annualized 2000 net operating
income reported by the servicer.
Since issuance, public ratings on four credit tenants (9.7% of
the CTL pool) have been raised, and public ratings on seven
credit tenants (34.6%) have been lowered.
Among the non-CTL loans, the DSC of one loan, secured by a full-
service hotel in Tennessee (1.0% of the loan pool) has declined
significantly and stood at 0.08x in 2000.
Although debt service payments on the hotel loan remain current,
Standard & Poor's believes that the trust may incur a loss
related to this loan because of the low DSC and occupancy that
has trended downward since issuance, and was 55% in 2000,
Standard & Poor's said.
Outstanding Ratings Placed On CreditWatch With Negative
Implications:
NationsLink Funding Corp. (Commercial loan pass-thru certs
series 1999-LTL-1)
Class Ratings
To From
E BB/Watch Neg BB
F B/Watch Neg B
NORTHLAND CRANBERRIES: Lenders Amend Forbearance Agreement
----------------------------------------------------------
Northland Cranberries, Inc. (Nasdaq: CBRYA), manufacturer of
Northland 100% juice cranberry blends and Seneca fruit juice
products, has successfully negotiated an amendment to its
existing forbearance agreement with its bank group that allows
Northland to continue to defer principal and certain interest
payments under its $155 million revolving credit agreement until
April 30, 2001. During this period, the banks have agreed not to
exercise various remedies available to them as a result of
Northland's defaults under certain covenants and payment
requirements of its secured debt arrangements, provided
Northland remains in compliance with the terms of the amendment.
Pursuant to the amendment, Northland agreed to take certain
actions including, among others, a) paying interest on a weekly
basis at a rate of 5% per annum on the principal amount
outstanding under its revolving credit facility (although
interest on outstanding principal continues to accrue at the
higher default rate); b) delivering to the bank group certain
additional security agreements securing currently unencumbered
assets; c) making a principal payment on April 10, 2001; d)
continuing the process of exploring strategic alternatives; e)
retaining on behalf of the bank group an independent financial
advisor to assess Northland's operations; and f) complying with
certain financial covenants set forth in the amendment.
John Swendrowski, Northland's Chairman and Chief Executive
Officer, said, "As this amendment demonstrates, we continue to
work closely with our secured creditors in an effort to satisfy
our obligations under our debt agreements. The fact that our
turnaround plan now enables us to begin paying interest is a
positive indication of our progress, and we intend to continue
to pursue long-term solutions to our financial issues."
While the company has not yet finalized financial results for
the first six months of its fiscal year, Swendrowski stated "We
expect the first six months ended February 28, 2001 to show a
loss of less than $1.5 million, compared to a loss of $20.7
million for the comparable period last year. Obviously, we have
made some progress. However, we still have a significant number
of challenges ahead of us to return the company to
profitability. We will continue to implement operating changes
necessary to improve our results and aggressively pursue
strategic solutions to address our financial issues."
Northland is a vertically integrated grower, handler, processor
and marketer of cranberries and value-added cranberry products.
The company processes and sells Northland brand 100% juice
cranberry blends, Seneca brand fruit juice products, Northland
brand fresh cranberries and other cranberry products through
retail supermarkets and other distribution channels. Northland
also sells cranberry and other fruit concentrates to industrial
customers who manufacture juice products. With 24 growing
properties in Wisconsin and Massachusetts, Northland is the
world's largest cranberry grower. It is the only publicly-owned,
regularly-traded cranberry company in the United States, with
shares traded on the Nasdaq Stock Market under the listing
symbol CBRYA.
NORTHPOINT: ISP Association Moves to Block Internet Blackout
------------------------------------------------------------
The California ISP Association filed an emergency motion asking
the California Public Utilities Commission (CPUC) to block
NorthPoint Communications from summarily canceling the Internet
access of 40,000 California Internet users.
"The last thing we need is a rolling blackout for Internet
access," said Andrew Ulmer, an attorney for MBV Law which
represents the California ISP Association. "Smaller Internet
service providers can help bail these customers out, but we need
time."
CISPA has learned that Northpoint Communications, a bankrupt
high-speed Internet access company, is already shutting down its
Digital Subscriber Line network stage-by-stage in California.
However, those Internet customers have no way of knowing when,
or if their Internet access will be cut-off today.
CISPA requested that the CPUC issue a temporary restraining
order to prevent NorthPoint, a California public utility, from
discontinuing service without proper authority from the CPUC.
CISPA is seeking to extend NorthPoint's operations for at least
30 days to avoid massive service disruptions and allow ISPs and
their customers to migrate to other DSL providers.
"As competitive options for consumers decrease, we can expect to
see DSL prices jump up even further," said Ulmer.
NORTHPOINT: Telocity To Offer Free Service For Cut-Off Customers
---------------------------------------------------------------
After Telocity and a dozen other Internet Service Providers
(ISPs) raised more than $2.4 million to keep a portion of
NorthPoint's network operating for the next month, Telocity
(NASDAQ NM: TLCT) was informed by NorthPoint Communications via
email early Thursday that the network would come down. Telocity
has already begun to switch its customers to other last-mile
carriers it works with: Pacific Bell, Verizon, Southwestern Bell
Telephone, Bell South, and Rhythms Netconnections.
Telocity notified its customers who had their DSL line installed
by NorthPoint that they did not know how much longer the
connection would operate. Telocity estimates it will take three
weeks to switch customers over to other carriers. In the
meantime, Telocity will offer customers affected by the
NorthPoint bankruptcy one month of service at no charge once
their line has been transferred to another carrier.
"For the last week, Telocity has been working diligently on two
fronts: to transfer our customers served through NorthPoint to
other last-mile carriers; and to bring together a coalition of
ISPs to raise the funds to keep a portion of the NorthPoint
network operational," said Ned Hayes, Executive Vice President
and Chief Financial Officer of Telocity. "While we are
disappointed that NorthPoint and its bankers refused to accept
the $2.4 million offer the coalition had made, the efforts of
the ISP coalition helped keep the network up this past week so
we can better inform our customers of what they can expect."
"Telocity will continue to work around-the-clock so our
customers face the minimal amount of disruption possible. We are
fortunate to have such strong relationships with five other
last-mile carriers, so we can make this transition as smooth as
possible for our customers," Hayes added.
The ISP coalition had been negotiating to pay $2.4 million to
keep a significant portion of the network active for the next
month so that a majority of current NorthPoint customers could
be transitioned to other last-mile carriers. Telocity
spearheaded the coalition of more than a dozen ISPs last week in
an effort to minimize disruption and inconvenience for customers
who are served by NorthPoint. On March 22, the bankruptcy court
approved AT&T's purchase of substantially all of NorthPoint's
national network. AT&T did not purchase the subscriber portion
of the business. The AT&T deal requires regulatory approval
prior to closing.
Nationwide, Telocity works with five last-mile carriers on an
ongoing basis and the company is working around the clock to
make the transfer as painless as possible for its customers. At
year-end 2000, Telocity's subscriber base totaled 47,911. At the
time, NorthPoint was one of six last-mile carriers Telocity used
to install the DSL line to the home.
Telocity has offered its customers who had a line installed by
NorthPoint one month of Telocity service at no charge for their
inconvenience. In an effort to keep customers updated, Telocity
has established a special Web site (www.telocity.com/northpoint)
and a dedicated toll-free number, 877-629-4513 to help answer
customer questions.
Telocity's long-term viability in the residential broadband
space is assured with the announcement of Telocity's pending
acquisition by Hughes Electronics Corporation. HUGHES plans to
bundle Telocity's DSL services with DIRECTV(R) satellite
television entertainment services to create a "whole house"
entertainment and information solution that will offer consumers
the largest number of channels available plus value-added
broadband services -- all via one home portal and without
geographic limitations. The transaction is scheduled to close in
April.
About Telocity
Telocity is a leading nationwide provider of integrated
residential broadband services. Telocity improves today's dial-
up, or narrowband, experience through faster and reliable
services that enhance Internet surfing, shopping and
communications. Telocity intends to expand its broadband
services to packaged value-added services that may include
secure telecommuting, home monitoring and automation, voice
bundling, and entertainment services. Telocity currently
provides high-speed broadband services through DSL technology.
As Telocity expands its services nationwide, the company intends
to choose the most reliable, flexible and cost-effective
broadband access technologies (including DSL, cable, and
wireless) available in each local market. Telocity's current
broadband footprint covers over 150 major U.S. Metropolitan
Statistical Areas (MSAs) across the United States. Telocity
recent announced that Hughes Electronics Corp., the world's
leading provider of digital television entertainment, satellite
services and satellite-based private business networks, will
acquire Telocity to expand its ability to offer Internet and
broadband services to consumers throughout the United States.
With the acquisition of Telocity, HUGHES will be the country's
first provider to offer on a national basis a portfolio of
consumer entertainment and information services that includes
digital multi-channel television, and wired and satellite
broadband Internet access. For more information, contact
Telocity at phone (408) 863-6600; fax (408) 777-1451;
www.telocity.net, or mail at 10355 N. DeAnza Blvd.; Cupertino,
CA 95014.
NORTHSTAR: S&P Places Two Notes Ratings On Credit Watch
-------------------------------------------------------
Standard & Poor's placed its ratings on the class A-2 notes
(current balance of $133.588 million) and class A-3 notes
(current balance of $90 million) issued by Northstar CBO 1997-2
Ltd. and co-issued by Northstar CBO 1997-2 (Delaware) Corp. on
CreditWatch with negative implications.
The rating on the class A-2 notes had been previously lowered to
double-'A' from triple-'A' on Jan. 4, 2001. The rating on the
class A-3 notes had been previously lowered to triple-'B'-minus
from single-'A'-minus on July 28, 2000, and then to single-'B'-
plus from triple-'B'-minus on Jan. 4, 2001.
The CreditWatch placements result from additional defaults of
securities within the collateral pool that have occurred in
recent months, and the resulting decrease in the credit
enhancement available to support the rated notes.
As of the March 2, 2001 monthly report, $49.1 million, or 19.51%
of the assets within the collateral pool were in default. Of
these defaults, $11.35 million occurred since December 2000,
when the analysis for the Jan. 4, 2001 downgrade action was
performed.
As a result, the overcollateralization ratios for the
transaction have deteriorated over the period. As of the March
2, 2001 monthly report, the class A-2 and A-3
overcollateralization ratios were 101.10% (versus the minimum
required level of 118%), compared to 104.51% as of the Dec. 2,
2000 monthly report.
An overcollateralization test for a subordinate tranche not
rated by Standard & Poor's also deteriorated over the period:
the class B overcollateralization test, with a ratio of 86.84%
as of the March 2, 2001 monthly report (versus the minimum
required level of 104%), compared to 90.53% as of the Dec. 2,
2000 monthly report.
Standard & Poor's noted that Northstar CBO 1997-2 experienced an
event of default on its Jan. 2, 2001 calculation date due to the
transaction's failure to maintain its class A-2 and A-3 and
class B overcollateralization ratios at 90% or more of the
respective minimum required levels.
Standard & Poor's will review the results of current cash flow
runs generated for the transaction under various stress
scenarios and assumptions, and the output generated by Standard
& Poor's default model for the current portfolio, to determine
whether the credit enhancement available to support the class A-
2 and class A-3 notes remains consistent with the current
ratings assigned.
Outstanding Ratings Placed On CreditWatch Negative:
Northstar CBO 1997-2 Ltd./ Northstar CBO 1997-2 (Delaware) Corp
Class Ratings
To From
A-2 AA/Watch Neg AA
A-3 B+/Watch Neg B+
PARACELSUS HEALTHCARE: Ernst & Young Resigns As Auditor
-------------------------------------------------------
On March 15, 2001, the accounting firm, Ernst & Young LLP,
resigned as the auditor of the financial statements of
Paracelsus Healthcare Corporation. Ernst & Young resigned
because statements made by a representative of the Creditors
Committee in the Paracelsus bankruptcy could in the future
create the appearance that Ernst & Young lacks the necessary
independence to remain as the auditors for the Company.
Ernst & Young's report for the 1999 fiscal year included a
paragraph expressing substantial doubt about the Company's
ability to continue as a going concern.
On March 15, 2001, the Company engaged PricewaterhouseCoopers
LLP as its new accounting firm to audit the Company's financial
statements. The decision to engage PricewaterhouseCoopers was
approved by the Company's Board of Directors and is subject to
the approval of the Bankruptcy Court.
Given the above events, Paracelsus Healthcare has indicated it
will not be able to file its financial statements with the
Securities and Exchange Commission by the statutory due date of
March 31, 2001.
PENN TREATY: Debt Ratings Suffer Downgrades From S&P
----------------------------------------------------
Standard & Poor's lowered its ratings on Penn Treaty American
Corp. and its wholly owned subsidiary, Penn Treaty Network
America Insurance Co. and placed these ratings on CreditWatch
with developing implications.
This rating action is based on Standard & Poor's expectation
that the subsidiary's capital adequacy ratio will show a further
decline for year-end 2000, reflecting the inconsistent manner in
which the company has addressed ongoing capital needs associated
with faster than expected business growth.
The company has not matched the growth with a commensurate
increase in capital and surplus and, as of March 29, 2001, had
not filed its annual statement for 2000 with state regulators.
The placement of these ratings on CreditWatch with developing
implications means future ratings may be raised or lowered
contingent on Penn Treaty American Corp.'s ability to raise
additional equity.
Penn Treaty Network America Insurance Co.'s capital adequacy
ratio, on a consolidated basis with its affiliated operating
insurance companies, is expected to be well below 100% at year-
end 2000, as measured by Standard & Poor's model, and
significantly below earlier projections.
In addition, although Penn Treaty Network America Insurance Co.
has been in the long-term care insurance business for a long
time, reliable claims experience based on historical data is
still somewhat limited in the industry, which may cause
volatility in reported earnings.
Penn Treaty American Corp. announced in its 10-Q statement for
third quarter 2000, that it contemplated the need for raising
additional capital from a variety of funding plans before the
end of March 2001, in order to provide statutory surplus to its
insurance subsidiaries.
Standard & Poor's would view such capital-raising initiatives as
appropriate to improve the subsidiary's capital adequacy level.
However, the parent has not raised any additional capital to
date. Moreover, Penn Treaty Network America Insurance Co. will
likely continue to have long-term capital needs because of its
aggressive growth strategy, and the issue with ongoing capital
requirements, excluding financial reinsurance, remains
unaddressed in a consistent fashion.
Standard & Poor's will discuss Penn Treaty American Corp.'s
capital- raising initiatives, as well as its capital and surplus
position on a statutory basis, with company management.
Outstanding Ratings Lowered And Placed On CreditWatch With
Developing Implications:
To From
Penn Treaty American Corp.
Corporate credit rating B+ BB+
Subordinated debt B- BB-
Penn Treaty Network America Insurance Co.
Counterparty credit rating BB+ BBB+
Financial strength rating BB+ BBB+
PLANETRX.COM: Board of Directors Endorses Plan of Liquidation
-------------------------------------------------------------
PlanetRx.com, Inc. (www.PlanetRx.com) (OTC Bulletin Board:
PLRXOB), said its Board of Directors has authorized a plan of
liquidation and proxy statement to be submitted for shareholder
approval at a company meeting tentatively scheduled for June 12,
2001.
The company plans to liquidate all assets including the
company's distribution center in Memphis, Tennessee. In recent
weeks, the company has announced the listing of several valuable
domain names for sale under the GreatDomains.com website.
Michael Beindorff, chairman and chief executive officer said,
"After months of deliberations and evaluations, PlanetRx.com's
Board of Directors has concluded that a plan of liquidation
presents the best option to preserve remaining shareholder
value. Therefore, it is in the best interest of our shareholders
to develop a plan for the disposition of PlanetRx.com's assets
in an orderly and efficient manner."
The company's management is working with its attorneys,
accountants and financial advisors to draft a plan of
liquidation to present to the Board of Directors for approval,
and once approved, to shareholders by means of a proxy statement
for their approval.
About PlanetRx.com
PlanetRx.com, Inc. (www.planetrx.com), a leading Internet
healthcare destination for commerce, content, and community,
delivers a convenient, personalized, and informed health and
beauty shopping experience. With products ranging from
prescriptions to personal care items to the latest medical
information, PlanetRx.com gives consumers the ability to manage
their own healthcare in a convenient and secure environment.
PlanetRx.com is one of four online pharmacies to have received
the Verified Internet Pharmacy Practice Sites (VIPPS) seal of
approval from The National Association of Boards of Pharmacy
(NABP). The company is headquartered in Memphis, Tennessee.
RACHEL'S: Owner Arrested & Charged With Money Laundering
--------------------------------------------------------
The owner of Rachel's, a bankrupt Casselberry, Fla., adult-
entertainment club, turned himself in to authorities and was
charged with eight counts of money laundering and four other
offenses, according to news station WKMG. Jim Veigle was
arrested and charged with deriving support from proceeds of
prostitution, racketeering, conspiracy to commit racketeering,
eight counts of money laundering and an unknown prostitution
charge. If convicted, Veigle could face up to 30 years in
prison.
Rachel's was stripped of its license in February by the city of
Casselberry. The city voted to take away Rachel's license, after
an undercover police investigation in July resulted in 34
arrests. The club tried to stop the city of Casselberry from
taking its license by filing for bankruptcy several weeks ago,
but U.S. Bankruptcy Judge Arthur Briskman ruled that the city
was acting with valid authority. (ABI World, March 29, 2001)
RELIANT RESOURCES: Moody's Downgrades Issuer Rating to Baa3
-----------------------------------------------------------
Moody's Investors Service has conducted a credit assessment of
the plan by Reliant Energy, Incorporated (Reliant or REI) to
separate into two companies, Regco and Reliant Resources, Inc.
(RRI or Unregco). As a result, Moody's has assigned issuer
ratings to RRI (Baa3 senior unsecured) and to its subsidiary
Reliant Energy Services, Inc. (RES).
Moody's downgraded Reliant Energy Capital (Europe), Inc.
(RECE)'s issuer rating to Baa3 from Baa1, ending a review begun
on July 27, 2000.
Other rated entities in RRI -N.V. UNA (UNA) and Reliant Energy
Mid-Atlantic Power Holdings, LLC (REMA) - were not under review
and their ratings are confirmed. The rating actions taken are as
follows:
-- Reliant Resources, Inc. - Issuer ratings of Baa3 and
Prime-3 assigned.
-- Reliant Energy Mid-Atlantic Power Holdings, LLC - Baa3
senior secured rating confirmed.
-- Reliant Energy Services, Inc. - Issuer rating of Baa3
assigned.
-- Reliant Energy Capital (Europe), Inc. - Issuer rating
downgraded to Baa3 from Baa1. Short-term issuer rating
of Prime-3 assigned.
The issuer ratings are based upon the proposed separation plan
as presented to Moody's and will be reassessed upon modification
to it.
The Public Utility Commission of Texas has verbally approved the
proposed business separation plan. RRI has been formed, and
expects to consummate an IPO of 19.9% of its common stock.
The remaining RRI shares are expected to be distributed to
Reliant shareholders later in 2001. Rated subsidiaries of RRI
will consist of RES, REMA, and RECE and its subsidiary UNA.
There may be significant variability in RRI's results over the
next few years, since Moody's expect that RRI will expand its
fleet by acquiring merchant gencos and by building greenfield
power plants.
Capital expenditures could be substantial (they could exceed $1
billion a year), depending on the availability of growth
opportunities and capital to finance them.
A number of RRI's businesses (such as its European wholesale
energy, Texas retail power, and telecom businesses) are in
markets that are developing or do not yet exist, adding
uncertainty to its future results.
At the outset, RRI will have relatively modest debt, comprising
mostly project debt and some bank facilities. With the IPO, the
$1.9 billion of debt that RRI and its subsidiaries owed to REI
and its subsidiaries at December 31, 2000 will be converted into
equity without the issuance of any additional shares to REI.
This will give a few years for RRI to be relatively unburdened
with debt service requirements, while its existing businesses
develop further and its greenfield projects come on line and
begin generating cash.
Moody's expect that RRI will outspend its cash to rapidly grow
its merchant power business. With two-thirds of its medium-term
FFO coming from merchant power, and another 10% expected to come
from trading, there will be significant exposure to the market
price of power and fuel costs.
However, RRI's commodity price exposure will be mitigated by
forward sales, which analysts at Moody's expect will underlie a
good portion of its revenues in the near to medium-term.
Moody's expect RRI's median FFO-to-interest coverages over the
medium term to fall into the three-times range, which is typical
for gencos. Its actual coverages will depend on capital
expenditures made, new plants coming on line, and its ability to
access equity and debt markets to finance its growth.
The issuer rating for RES, the U.S. trading and marketing arm,
is Baa3, the same as RRI's. The ratings are the same, because
RRI will provide the liquidity and financial assurances that RES
will need to run its business.
Analysts at Moody's do not expect RES to incur external debt for
borrowed money. They believe that RRI will provide sufficient
liquidity to meet the volatile working capital requirements of
RES's trading operations.
Reliant Energy, Incorporated is headquartered in Houston, Texas,
which is where Regco and RRI will also be headquartered.
RECE is a holding company for RRI's wholesale energy business in
Europe. Its principal subsidiary is UNA. Although neither legal
requirements nor debt covenants restrict it, UNA currently pays
no dividends to RECE.
Thus, RECE services its debt through cash infusions from RRI.
Also, a default under RECE's bank facility could trigger a
cross-default at RRI. For these reasons, RECE is rated the same
as RRI.
RUSSELL CORP: Shareholders' Annual Meeting Set For April 25
-----------------------------------------------------------
The Annual Meeting of the Shareholders of Russell Corporation
will be held on Wednesday, April 25, 2001, at 11:00 a.m.,
Central Daylight Time, at the general offices of the Company in
Alexander City, Alabama, for the following purposes:
(1) To elect four (4) directors to the Board of Directors
for three-year terms ending in 2004, and one (1)
director to the Board of Directors for a one-year term
ending in 2002;
(2) To vote on the Russell Corporation 2000 Non-Employee
Directors' Compensation Plan; and
(3) To transact such other business as may properly come
before the meeting.
Holders of the common stock of the Company at the close of
business on March 7, 2001, are entitled to notice of and to vote
upon all matters at the Annual Meeting.
SCUDDER WEISEL: Plans To Liquidate & Wind Down Operations
---------------------------------------------------------
Zurich Scudder Investments, Inc. and Thomas Weisel Partners
Group LLC said they will wind down their joint venture, Scudder
Weisel Capital Holdings LLC, the parent of Scudder Weisel
Capital.
As both parties desire to independently execute an alternative
investments strategy through their respective distribution
channels, the joint venture is no longer strategically
appropriate. Market conditions also influenced the decision to
wind down Scudder Weisel Capital.
Scudder Weisel Capital was created to offer affluent investors
direct access to IPOs, original research and alternative
investments. Since its launch last year, Scudder Weisel's
business model evolved, focusing entirely on the distribution of
alternative investments products solely through a network of
advisors and brokers, which is consistent with Zurich Scudder's
recent decision to focus on intermediary distribution channels.
Under the original business plan, where distribution was
primarily 'direct', the complementary aspects of Thomas Weisel
Partners' and Zurich Scudder Investments' businesses and the
different strengths each brought to the table drove the joint
venture.
Scudder Weisel Capital serves as the investment manager and
distributor of Scudder Weisel Capital Entrepreneurs Fund.
Scudder Weisel Capital will recommend that the Board of Trustees
of the Fund approve a plan of liquidation and dissolution. Under
the plan, Fund shareholders will receive their pro rata interest
in the Fund, plus any additional amounts necessary to compensate
shareholders for sales commissions paid in connection with the
purchase of Fund shares. Since commencement of the offering
period on January 23rd, 2001, the Fund has been invested in cash
and short term liquid instruments. Zurich Scudder Investments
will provide administrative assistance necessary to achieve the
orderly liquidation and dissolution of the Fund. The business
affairs of Scudder Weisel Capital will be wound down after the
Fund's liquidation and dissolution.
As part of the wind-down of the business, Scudder Weisel Capital
will be eliminating positions. The firm will make every effort
to make this transition as smooth as possible for its employees.
It is anticipated that some employees involved in the product
development, sales and technology groups of Scudder Weisel
Capital will join Zurich Scudder Investments.
The alternative investments business remains important to the
asset management growth strategies of both Thomas Weisel
Partners and Zurich Scudder Investments. Both remain convinced
that there is long term viability in the manufacturing and
distribution of alternative investments through third party
intermediaries and will continue to explore future opportunities
to offer alternative investments products.
SYMPLEX COMMUNICATIONS: Ceasing Operations Due To Lack Of Funds
---------------------------------------------------------------
Symplex Communications Corporation (CDNX:SYC.U.) announced that
after unsuccessful efforts to sell the assets of the Company, it
is ceasing operations and will liquidate Symplex.
Tom Mayer, Interim President & CEO stated, "Since I assumed the
position of Interim President & CEO in September of 2000, we
have vigorously and exhaustively pursued all potential
opportunities to obtain a buyer of Symplex's assets. However, no
viable offer has been presented that would benefit the
shareholders. Since the beginning of 2001, a member of the Board
has provided interim financing to allow the Company to meet day
to day operating costs in anticipation that a buyer could be
found. But at this time Symplex has neither the cash to continue
the operations nor the financial ability to fulfill its
obligations to maintain its SEC registration and/or its CVE
listing. The lack of operating funds and the lack of any viable
offer or any anticipated offer to purchase its assets leaves
Symplex with no alternative but to cease operations as an on-
going entity. All employees will be terminated on March 30,
2001."
THERMOVIEW INDUSTRIES: Completes Debt Restructuring
---------------------------------------------------
ThermoView Industries, Inc. (Amex: THV), a diversified home
improvement company, has completed its debt restructuring with
the purchase of an outstanding bank loan obligation by a group
of ThermoView investors and GE Equity.
ThermoView's 8-K filing with the Securities and Exchange
Commission outlines the specific details of the transaction that
involves PNC Bank, N.A., GE Equity and certain ThermoView
officers, directors and employees.
"This transaction is the centerpiece of our restructuring
program, and it provides added flexibility for our company as we
move ahead," said President and Chief Executive Officer Charles
L. Smith. "This debt restructuring strengthens our balance sheet
and complements our actions to slash corporate overhead and
reduce operational expenses. While there's more to do,
completing this part of the restructuring allows us to more
fully focus on our mission to become one of America's top home
improvement companies."
Said Chairman Stephen Hoffmann: "This investment by management
and the board of directors represents a strong statement of
support for and confidence in ThermoView."
The agreement reached March 22 among PNC, GE Equity and a number
of ThermoView investors resolves the remaining $11.7 million
balance of an outstanding loan that in January had been declared
in default by PNC.
As part of the transaction, the company restructured its $10
million obligation to GE Equity, and favorably restructured two
classes of preferred stock. Also, the company entered into an
agreement with one of the four bank loan guarantors, covering
half of the $3 million collected by the bank. ThermoView issued
a $900,000 note as part of that agreement.
Members of the company who participated in the transaction
include President and CEO Charles L. Smith; Chairman Stephen A.
Hoffmann; Chief Financial Officer James J. TerBeest; directors
Rodney H. Thomas; Ronald L. Carmicle, Raymond C. Dauenhauer, J.
Sherman Henderson, Bruce C. Merrick and George C. Underhill; and
certain other employees.
About ThermoView Industries, Inc.
ThermoView Industries, America's Home Improvement Company,
designs, manufactures, markets and installs home improvements in
the $200 billion-plus home improvement/renovation industry. The
Company is headquartered in Louisville, Kentucky, and its common
stock is listed on the American Stock Exchange under the ticker
symbol "THV".
UNIDIGITAL INC.: Seeks To Covert Bankruptcy Case To Chapter 7
-------------------------------------------------------------
According to documents obtained by BankruptcyData.com,
UniDigital, Inc. filed notice with the U.S. Bankruptcy Court of
voluntary conversion from Chapter 11 reorganization to Chapter 7
liquidation status. The Company filed for Chapter 11 protection
on September 29, 2000. (New Generation Research, March 29, 2001)
WARNACO GROUP: Posts Fourth Quarter & Fiscal Year 2000 Losses
-------------------------------------------------------------
The Warnaco Group, Inc. (NYSE: WAC) announced a net loss of
$194.8 million, or $3.68 per common share, for the fourth
quarter of 2000, and a net loss of $338.3 million, or $6.41 per
share, for the full year 2000, inclusive of a non-cash tax
provision equal to $2.45 per share related to a valuation
allowance for deferred tax assets. This compares to the fourth
quarter 1999 with a profit of $0.6 million or $0.01 per share on
revenues of $603.2 million.
Warnaco said that its fourth quarter results reflect a loss from
operations equal to $0.71 per share, special charges equal to
$0.52 per share and a non-cash tax provision equal to $2.45 per
share. The operating loss for the fourth quarter of 2000
primarily reflects the impact of the weak retail economy on
Warnaco's operations, including additional chargeback reserves
and writeoffs equal to $0.28 per share and other operating
shortfalls equal to $0.20 per share. Also included in the fourth
quarter results are additional MIS system depreciation of $0.07
per share and incremental bank and legal fees of $0.06 per
share. These items which total $0.61 per share account for the
difference between the Company's actual operating results and
the Company's previous forecast. The special charges incurred in
the fourth quarter of $0.52 include legal expenses equal to
$0.08 per share related to the since-settled litigation with
Calvin Klein; costs equal to $0.11 per share for the termination
of the Fruit of the Loom license and the related manufacturing
facility closing; and charges equal to $0.33 per share related
to the continuation and completion of various elements of the
company's previously announced internal restructuring plan. In
light of its loss for the year 2000, Warnaco has reviewed its
tax planning strategies as they relate to the valuation of its
deferred tax assets and has determined that it is appropriate to
provide a non-cash valuation allowance of $129.2 million, or
$2.45 per share.
Warnaco also announced that, as part of its ongoing strategic
operating initiatives, it will exit its licensed Fruit of the
Loom bra business, and will close a manufacturing facility in
the Dominican Republic as a result of its decision to terminate
the license to produce Fruit of the Loom bras. The Company
reported that these and other new initiatives, together with the
strategic operating initiatives announced in the second and
third quarters, should yield annualized savings of nearly $100
million.
Warnaco said it has received a waiver of certain financial
covenants from its lenders through mid-April, which will be
filed with the Securities and Exchange Commission, and is in
discussions to secure permanent amendments to the covenants
which are necessary to avoid a possible default after expiration
of the waivers.
Warnaco also announced that it would restate its January 3, 1998
balance sheet reducing equity by $26 million. This restatement
reflects adjustments to accounts receivable reserves and other
items - net that the Company has determined to be appropriate at
that date and has no effect on reported net income in any
subsequent year. The 1998, 1999 and 2000 accounts have been
revised to be consistent with the accounting for the matters
that resulted in the adjustment to retained earnings and other
issues. The Company said that it was filing to permit an
extension of time through April 16, 2001 in order to complete
and file its Form 10-K for fiscal year 2000 and requisite
amended reports.
Warnaco said that its current financial operating performance
had been impacted by the retail slowdown, and particularly by
inventory reductions among the Company's largest customers. The
Company said that it had identified and taken actions with
respect to additional opportunities to reduce costs and improve
efficiency that the Company intends to take advantage of in
order to return to a fully competitive position in the
marketplace. Commenting on its 2001 outlook, Warnaco said that
it is not likely to return to profitability in 2001 principally
on account of the retail slowdown and lower than forecast sales.
Warnaco said that it retains its brand strength through its
portfolio of internationally recognized brands and the market
shares and marketplace positioning to enable it to achieve
profitable growth in the foreseeable future; but to do so, the
Company must successfully complete its internal restructuring
and strengthen its overall financial structure.
Revenues in 2000 were $546.3 million for the fourth quarter and
$2,249.9 million for the full year. Earnings per share for the
full year 2000 comprise the $3.68 fourth quarter loss, the loss
of $2.46 previously reported for the first three quarters
related to, and an additional loss of $0.25 reflecting the
cumulative effect of a change in accounting for retail
inventories.
The Warnaco Group, Inc., headquartered in New York, is a leading
manufacturer of intimate apparel, menswear, jeanswear, swimwear,
men's and women's sportswear, better dresses, fragrances and
accessories sold under such brands as Warner's(R), Olga(R),
Fruit of the Loom(R) bras, Van Raalte(R), Lejaby(R), Weight
Watchers(R), Bodyslimmers(R), Izka(R), Chaps by Ralph Lauren(R),
Calvin Klein(R) men's, women's, and children's underwear, men's
accessories, and men's, women's, junior women's and children's
jeans, Speedo(R)/Authentic Fitness(R) men's, women's and
children's swimwear, sportswear and swimwear accessories, Polo
by Ralph Lauren(R) women's and girls' swimwear, Oscar de la
Renta(R), Anne Cole Collection(R), Cole of California(R) and
Catalina(R) swimwear, A.B.S.(R) Women's sportswear and better
dresses and Penhaligon's(R) fragrances and accessories.
WARNACO GROUP: Ratings Plunge to Junk Levels
--------------------------------------------
Moody's Investors Service lowered the ratings of The Warnaco
Group, Inc. The affected ratings are:
* The Warnaco Group Inc.
-- Senior Implied Rating to Ca from B1;
-- Senior Unsecured Issuer Rating to Ca from B2.
* Designer Holdings, Ltd.
-- $120 million issue of 6% Convertible Subordinated
Debentures due 2016, to C from Caa1.
* Designer Finance Trust
-- $120 million issue of 6% Convertible Trust Preferred
Securities due 2016, to "c" from "caa".
The downgrade reflects the company's lack of profitable
operations in 2000, with no expected return to profitability in
2001; and uncertainties regarding both the company's liquidity
and the realizable value of the company's intangible assets.
The company reports that it has received a waiver of certain
financial covenants from its lenders through mid-April and that
it has retained advisors to, among other things, contemplate
potential asset sales whose proceeds could be used to reduce
debt.
Headquartered in New York, The Warnaco Group is a major
designer, manufacturer, and marketer of women's intimate
apparel, men's wear and accessories and designer jeans and jeans
related sportswear for men, women, juniors and children under a
variety of brand names.
WEST MILGROVE: Columbia Gas To Temporarily Handle Operations
------------------------------------------------------------
The Public Utilities Commission of Ohio (PUCO) directed Columbia
Gas of Ohio (COH) to operate the West Milgrove Gas Company until
a new owner is found or its customers secure alternative fuel
sources such as propane for their homes. West Milgrove Gas
Company provides natural gas to approximately 120 homes in Wood
County.
On February 13, 2001, West Milgrove filed a Chapter 7 bankruptcy
petition in the U.S. Bankruptcy Court, Northern District of
Ohio, Western Division. The bankruptcy court issued a
stipulation and order that same date, authorizing the bankruptcy
trustee to operate the company for a period of 45 days only. The
order noted that the Commission consented to the operation of
the company by the trustee for that fixed period of time. The
Commission staff has endeavored to locate potential buyers of
the utility; however, those efforts, to date, have been
unsuccessful.
In the order, the PUCO states: "It . . . appears to us that
without some further emergency action, West Milgrove's customers
may cease to receive gas service on March 30, 2001. We do not
believe it is in the public interest for those approximately 120
customers to lose their gas service on such short notice,
particularly without any ability to make alternative
arrangements for an alternative source of energy. Therefore, the
Commission concludes that, in this emergency situation, it is in
the public interest for the Commission to require a qualified
entity to temporarily operate West Milgrove. Columbia Gas of
Ohio, Inc. currently provides natural gas service in Wood County
and has personnel and expertise located in the area of West
Millgrove. Therefore, we direct Columbia Gas of Ohio to
temporarily operate the utility until otherwise ordered by this
Commission."
"This is an extraordinary measure due to the uniqueness of a
regulated utility facing closure due to bankruptcy," said PUCO
Chairman Alan Schriber. "Although customers may ultimately need
to find an alternative fuel source, the PUCO Staff will continue
to explore all options to prevent service interruptions."
In the order, the PUCO states, "In October, 2000, the Commission
initiated this investigation. The Commission staff believed that
West Milgrove may not be able to continue supplying its
customers' natural gas needs." Specifically, the Commission
indicated that Columbia Gas Transmission Company (Columbia
Transmission), the supplier of natural gas to West Milgrove, had
begun actions to cease service to West Milgrove due to
substantial debts owed to Columbia Transmission.
Columbia Gas of Ohio shall operate the utility in accordance
with West Milgrove's current rates and regulations.
BOND PRICING: For the week of April 2-6, 2001
-----------------------------------------------
Following are indicated prices for selected issues:
Amresco 9 7/8 '04 52 - 54
Arch Comm. 12 3/4 '07 32 - 34
Asia Pulp & Paper 11 3/4 '05 18 - 22(f)
Chiquita 9 5/8 '04 46 - 48(f)
Federal Mogul 7 1/2 '04 16 - 18
Friendly Ice Cream 10 1/2 '07 58 - 60
Globalstar 11 3/4 '04 6 - 8(f)
Oakwood Homes 7 7/8 '04 39 - 42
Owens Corning 7 1/2 '05 28 - 30(f)
PSI Net 11 '09 9 - 11(f)
Revlon 8 5/8 '08 46 - 48
Sterling 11 3/4 '06 44 - 47
Trump AC 11 1/2 '06 66 - 68
TWA 11 3/8 '06 4 - 7(f)
Weirton Steel 10 3/4 '05 38 - 40
*********
Bond pricing, appearing in each Monday's edition of the TCR, is
provided by DLS Capital Partners in Dallas, Texas.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of
Delaware, please contact Vito at Parcels, Inc., at 302-658-
9911. For bankruptcy documents filed in cases pending outside
the District of Delaware, contact Ken Troubh at Nationwide
Research & Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
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Group, Inc., Washington, DC USA. Debra Brennan, Yvonne L.
Metzler, Larri-Nil Veloso, Aileen Quijano and Peter A. Chapman,
Editors.
Copyright 2001. All rights reserved. ISSN: 1520-9474.
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