/raid1/www/Hosts/bankrupt/TCR_Public/010423.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 23, 2001, Vol. 5, No. 79
Headlines
24/7 MEDIA: Net Losses Continue Despite Increase In Revenues
ADVANTICA RESTAURANT: Stockholders' Annual Meeting Is On May 23
ARMSTRONG HOLDINGS: Rejecting Downtown Lancaster Leases
AVANI INTERNATIONAL: Needs More Money To Sustain Operations
AVENUE ENTERTAINMENT: Accumulated Deficit Tops $5.7MM in 2000
BAYOU STEEL: Moody's Cuts First Mortgage Notes To B3 From B2
BIG V: Retains Deloitte & Touche As Accountants
BRADLEES, INC.: Plans To Cease Filing Reports With SEC
CHANCE INDUSTRIES: Park Rides Manufacturer Files for Chapter 11
CKE RESTAURANTS: Names Dennis J. Lacey Chief Financial Officer
COMMUNITY DISTRIBUTORS: Moody's Junks Ratings On Senior Notes
CONVERGENT COMMUNICATIONS: Files Chapter 11 Petition in Colorado
CONVERGENT COMMUNICATIONS: Chapter 11 Case Summary
CRIIMI MAE: Fitch Withdraws `D' Senior Rating
CROWN VANTAGE: Asks Court To Extend Exclusive Period To May 28
E.SPIRE COMM.: Annual Report Further Delayed By Chapter 11 Case
EUROWEB INT'L: Shareholders To Meet In New York On May 29
FEGERAL-MOGUL: Reports First Quarter Loss
FINOVA GROUP: Committee Proposes Securities Trading Procedures
FREDERICK'S OF HOLLYWOOD: Investors and Purchasers Appear
FRIEDE GOLDMAN: Files Chapter 11 Petition in S.D. Mississippi
GST TELECOM: Seeks Okay For DoveBid's Retention As Auctioneer
HERITAGE SOUTH: Reaches Settlement With Texas Blue Cross, et al.
HOME HEALTH: Seeks Approval of Larry Kirk's Employment Agreement
ICG COMM.: Moves To Reject City Of Longmont Fiber Use License
JAWZ INC.: Fails To Comply With Nasdaq's Minimum Bid Requirement
KITTY HAWK: Files Reorganization Plan in N.D. Texas
LAROCHE INDUSTRIES: Plan Confirmation Hearing Set For May 22
LERNOUT & HAUSPIE: Has Until June 29 To Assume Or Reject Leases
LTV CORPORATION: Removal Deadline Extended To October 5, 2001
MMH HOLDINGS: Disclosure Statement Hearing Is Tomorrow
NBCi TRACES: Intends to Liquidate Following NBC's Acquisition
NETPLIANCE INC.: Shares Face Delisting From the Nasdaq Market
NETWORK COMMERCE: Insufficient Funds May Cause Bankruptcy Filing
OWENS CORNING: Wants To Assume FreeMarkets' Services Contract
PACIFIC GAS: Seeks Okay To Refund Main Line Extension Deposits
PHOENIX RESTAURANT: Defaults on Payment Of $22.3 Million Debt
PRESIDENT BROADWATER: Files For Chapter 11 in S.D. Mississippi
QUEENSWAY FINANCIAL: Selling U.S. Operations To Pay Debts
QUOKKA SPORTS: Filing For Chapter 11 Bankruptcy Protection
RESPONSE ONCOLOGY: Reports Fourth Quarter & FY 2000 Results
SAISON LIFE: S&P Gives Insurer 'BB+' Financial Strength Rating
STEEL COMPANY: Shuts Down Due To Lack Of Funds
TEMTEX INDUSTRIES: Nasdaq To Delist Common Stock On April 25
TEXAS EQUIPMENT: Recurring Losses Raise Going Concern Doubts
UNITED PAN-EUROPE: Moody's Slashes Senior Debt Rating To Caa1
USA FLORAL: Selling Domestic Operations & Stock of Canadian Unit
VENCOR INC.: Settles Gene Smith's Claim
VOICE MOBILITY: Posts $9.7 Million Loss For Year 2000
W.R. GRACE: Employs Pachulski Stang as Local Counsel
BOND PRICING: For the week of April 23-27, 2001
*********
24/7 MEDIA: Net Losses Continue Despite Increase In Revenues
------------------------------------------------------------
24/7 Media Inc. is a global provider of end-to-end advertising
and marketing solutions for Web publishers, online advertisers,
advertising agencies, e-marketers and e-commerce merchants. The
Company provides a comprehensive suite of media and technology
products and services that enable such Web publishers, online
advertisers, advertising agencies and e-marketers to attract and
retain customers worldwide, and to reap the benefits of the
Internet and other electronic media. Company solutions include
advertising and direct marketing sales, ad serving, promotions,
email list management, email list brokerage, email delivery,
email service bureau, data analysis, search engine result
optimization, and broadband/convergence solutions, all delivered
from its industry-leading data and technology platforms. Its
technology solutions are designed specifically for the demands
and needs of advertisers and agencies, Web publishers and e-
commerce merchants.
24/7's business is organized into three principal lines of
business: 24/7 Network, 24/7 Mail, and 24/7 Technology
Solutions.
On April 9, 2001, 24/7's Board of Directors approved a new
restructuring plan with the objective of leveraging its
infrastructure and improve and preserve its cash position. The
plan calls for the divestitures of certain non-core assets, a
reduction of the headcount of approximately 100 employees,
closing of one office and downsizing of four other offices as
well as the elimination of certain redundancies related to
technology costs.
On April 10, 2001, the last reported sale price for the
Company's common stock on the NASDAQ National Market was $0.31.
As of March 29, 2001, there were approximately 490 holders of
record of Company common stock.
24/7's shares of common stock are currently listed on the NASDAQ
national market, however, on April 6, 2001, 24/7 received a
letter from NASDAQ stating that they have determined that 24/7
has failed to meet NASDAQ's minimum listing requirements and as
a result its common stock could be delisted.
The Company's failure to meet NASDAQ's maintenance criteria may
result in the discontinuance of its securities in NASDAQ. In
such event, trading, if any, in the securities may then continue
to be conducted in the non-NASDAQ, over-the-counter market in
what are commonly referred to as the electronic bulletin board
and the "pink sheets". As a result, an investor may find it more
difficult to dispose of or obtain accurate quotations as to the
market value of the securities.
In addition, the Company would be subject to a Rule promulgated
by the Securities and Exchange Commission that, if it fails to
meet criteria set forth in such Rule, imposes various practice
requirements on broker-dealers who sell securities governed by
the Rule to persons other than established customers and
accredited investors. For these types of transactions, the
broker-dealer must make a special suitability determination for
the purchaser and have received the purchaser's written consent
to the transactions prior to sale. Consequently, the Rule may
have a materially adverse effect on the ability of the broker-
dealers to sell the securities, which may materially affect the
ability of the shareholders to sell the securities in the
secondary market.
Delisting of the shares could make trading of the Company's
shares more difficult for investors, potentially leading to
further declines in share price. It would also make it more
difficult for 24/7 to raise additional capital. The Company
would also incur additional costs under blue-sky laws to sell
equity if it is delisted.
Company network revenues increased 54.3% to $125.3 million for
the year ended December 31, 2000 from $81.2 million for the year
ended December 31,1999. The increase in network revenue was due
to an increase in online spending, an increase in volume across
24/7's network and strong international growth in Europe further
aided by acquisitions in Canada (July 1999) and Latin America
(December 1999).
Company mail revenues increased 230.6% to $29.3 million for the
year ended December 31, 2000 from $8.9 million for the year
ended December 31, 1999.
This increase in revenue was fueled by a significant expansion
in the types of email services that 24/7 offers to include email
list management and list brokerage services in addition to its
service bureau offerings, as well as a dramatic increase in the
number of opt-in email addresses under management. A significant
portion of 24/7's growth and the expansion into these new
service offerings was due to its acquisitions of Sift in the
first quarter of 1999 which was accounted for as a pooling of
interests and of ConsumerNet in the third quarter of 1999.
The Company's Technology Solutions segment was formed with its
acquisitions of Sabela Media, Inc. and IMAKE Software and
Service, Inc. in January 2000 and increased with its
acquisitions of Exactis.com, Inc. in June 2000 and Website
Results in August 2000. Technology revenues were $30.6 million
for the year ended December 31, 2000. Although revenues
increased substantially from 1999 to 2000, 24/7 experienced
declines quarter-to-quarter since the quarter ended June 30,
2000 and it anticipates that this trend will continue into the
first half of 2001 due to the downturn in advertising and
marketing spending on the internet. The significant increase in
technology revenues during the second half of 2000 was a result
of 24/7's acquisition of Exactis and Website Results.
Notwithstanding the substantial increase in revenues 24/7
experienced a net loss of ($779,922) for the year 2000, as
compared with a net loss of ($39,062) for the year 1999.
The Company believes that its current cash may not be sufficient
to meet its anticipated operating cash needs for the 12 months
commencing January 1, 2001 and there can be no assurance that
new funds can be secured by December 31, 2001. The support of
its vendors, customers, stockholders and employees will continue
to be key to its future success. There can be no assurance that
the Company will be able to monetize is non-core assets, raise
additional financing to meet its cash and operational needs or
reduce its operating expenses to address this going concern
issue.
Since its inception, 24/7 has incurred significant operating
losses and believes it will continue to incur operating losses
for the foreseeable future. The Company also expects to incur
negative cash flows for the foreseeable future as a result of
its operating losses and its need to fund future capital
expenditures.
The Company received a report from its independent accountants
containing an explanatory "going concern" paragraph stating that
recurring losses from operations since inception raise
substantial doubt about 24/7's ability to continue business as a
going concern. Management's plans to continue as a going concern
rely heavily on achieving revenue targets, further
rationalizations, the ability to monetize its non-core assets
which includes selling certain divisions and or raising
additional financing, as well as, reducing operating expenses.
Management is currently exploring a number of strategic
alternatives and is also continuing to identify and implement
internal actions to improve liquidity. These alternatives may
include selling core assets, which could result in significant
changes in the Company's business plan.
To the extent it encounters additional opportunities to raise
cash, to do so, it may need to sell a portion of its current
investments in affiliates, or it may sell additional equity or
debt securities which would result in further dilution of its
stockholders. Stockholders may experience extreme dilution due
to the Company's current stock price and the significant amount
of financing needed to be raised and these securities may have
rights senior to those of holders of 24/7's common stock. The
Company has no contractual restrictions on its ability to incur
debt. Any indebtedness could contain covenants which restrict
its operations.
ADVANTICA RESTAURANT: Stockholders' Annual Meeting Is On May 23
---------------------------------------------------------------
The Annual Meeting of Stockholders of Advantica Restaurant
Group, Inc. will be held at the Advantica Tower, 17th Floor
Auditorium, 203 East Main Street, Spartanburg, South Carolina on
Wednesday, May 23, 2001 at 10:00 a.m. for the following
purposes:
(1) To elect nine (9) directors.
(2) To consider and vote upon a proposal to ratify the
selection by the Board of Directors of Deloitte & Touche LLP as
the principal independent auditors of Advantica and its
subsidiaries for the year 2001.
(3) To consider and vote upon a proposal to approve
Advantica's 2001 Incentive Program for the Company's employees.
(4) To transact such other business as may properly come
before the meeting.
Only holders of record of Advantica's common stock at the close
of business on March 27, 2001 will be entitled to notice of, and
to vote at, the meeting.
ARMSTRONG HOLDINGS: Rejecting Downtown Lancaster Leases
-------------------------------------------------------
Armstrong Holdings, Inc., acting through Rebecca L. Booth,
Richards, Layton & Finger, P.A., in Delaware, asked Judge Farnan
for authority to reject unexpired leases of nonresidential real
property and agreements concomitant to the leases.
The Leases
The Debtor Armstrong World entered into a Lease Agreement with
North Queen Street Limited Partnership and Granite Investment
Corp., with respect to approximately 260,400 square feet of
office and light manufacturing space located at 150 North Queen
Street, Lancaster City, Pennsylvania. The original lease for the
premises provided for a term of eight years, commencing on April
1, 1997 and expiring on March 31, 2005. By a lease amendment,
the Debtor and the landlords agreed to extend the term of the
lease through July 31, 2005, and to grant the Debtor an option
to renew the lease for an additional 5 years. Under the terms of
the lease, if the Debtor chose to extend the lease for the
additional 5 years, the Debtor must provide the landlords with
written notice of such intent by August 1, 2002. The annual base
rent under the lease is approximately $1,455,000 for the lease
term, excluding common area maintenance charges for which the
Debtor is also obligated. If the Debtor exercises its option to
renew the lease, the annual base rent is to be determined by a
written agreement between the Debtor and the landlords. If the
Debtor and the landlords are unable to agree on an annual base
rent for the additional lease term within 3 months of the
Debtor's exercise of its option to renew, the lease will
automatically expire on July 31, 2005 and the renewal option
will be voided. In addition, the lease provides the Debtor with
the option to sublease the premises.
Simultaneously with amending the lease, the Debtor entered into
the Operating Costs Agreement with Conroy Development Corp., a
party related to the landlords, under which the Debtor is
obligated, within 4 years of the commencement of the lease term,
to give written notice identifying the portion of the premises
it intends to occupy during the final three years of the term,
and the period of such occupancy. To the extent the Debtor
intends to occupy more than 40,000 square feet, or two complete
floors of the premises, whichever is greater, the Operating
Costs Agreement obligates the Debtor to pay Conroy $8.00 per
square foot per year to cover the excess space occupied. In
relevant part, the Operating Costs Agreement provides that, to
the extent that portions of the premises are not subject to
valid sublease agreements, Conroy is obligated to pay the Debtor
a share of its operating costs relating to those portions of the
premises. Pursuant to the Operating Costs Agreement, during the
last 3 years of the term, the Debtor must remit to Conroy any
rents received under any sublease agreement relating to the
premises, subject to an offset by the Debtor of any operating
costs owed to it by Conroy.
The Debtor entered into the Leasehold Improvements Agreement, an
additional agreement with Conroy. The agreement refers to the
Downtown Lancaster Lease and the Operating Costs Agreement and
provides, in relevant part, that the Debtor and Conroy will
jointly evaluate requests for leasehold improvements and
determine the proportionate share of leasehold improvement costs
to be paid by the Debtor and Conroy prior to entering into a
sublease for the premises. The leasehold improvements agreement
further provides that, although the Debtor is not obligated to
perform leasehold improvements, but should the Debtor perform
such improvements, Conroy will reimburse the Debtor for that
portion of Conroy's share of the improvement cost plus interest.
This reimbursement is to be offset first against the sublease
payments that the Debtor is obligated to remit to Conroy under
the Operating Cost Agreement.
In connection with the sale of the premises, the landlords
assigned the Downtown Lancaster Lease to I&S Associates. I&S is
not related to Conroy and is not a party to the Operating Costs
Agreement or the Leasehold Improvements Agreement. The Operating
Costs Agreement and the Leasehold Improvement Agreement remain
in effect, notwithstanding that Conroy is no longer related to
I&S, the owner of the premises and the successor in interest to
the Landlord under the Downtown Lancaster Lease.
During the period dating January 1, 1998 through November 14,
2000, the Debtor entered into a total of 9 subleases by which
the Debtor subleased portions of the premises to the following
subtenants:
Smith Barney, Inc.
Spectra Marketing System, Inc.
Excel Productions, Inc.
Chesters & Miller LLP
Hcl, Inc., d/b/a Healthcarelink
Union National Community Bank
The Mortgage Source
McGeary Grain, Inc.
Integrated Benefit Solutions, Inc.
Accordingly, the Debtor seeks approval of its rejection of the
Downtown Lancaster Lease, the Operating Costs Agreement, the
Leasehold Improvements Agreement, and the Subleases, effective
as of April 30, 2001. The Debtor has reviewed and analyzed the
Downtown Lancaster Leases and related agreements to determine
their respective economic values to the Debtor's estate, and has
determined that their rejection is warranted as an exercise of
its sound business judgment.
After reviewing the terms of the Downtown Lancaster Lease and
the related agreements, the Debtor has determined that the
premises are no longer necessary for the Debtor's continued
operations. In addition, the Debtor has determined that
remaining as a party to the lease and the agreements would cause
it to operate at a loss, obviously diminishing the estate's
assets. While the Debtor currently pays approximately
$1,455,000.00 annually in order to lease the premises, the
maximum the Debtor could ever receive annually from its
subtenants, assuming the subtenants were to renew their leases
with the Debtor, is only about $960,000. Although the subleases
represent only a portion of the premises, the Debtor does not
believe it can successfully sublease additional portions of the
premises on terms that would justify the expenditures needed to
enter into such subleases, such as the payment of broker's fees
and the funding of tenant improvements, in light of the rent
payable by the Debtor. This is especially true in light of the
terms of the Leasehold Improvements Agreement and the Operating
Costs Agreement, under which the Debtor is obligated to remit
portions of, and at times all, the rents received from its
subtenants to Conroy during the final 3-year period of the lease
term.
Because the rejection of the lease, as a matter of law,
terminates the rights of the holders of the subleases, the
Debtor is not required to reject the subleases in order to
terminate the subtenants' rights to remain in possession.
However, to ensure that the Debtor no longer has any obligations
that it must perform under the subleases, and out of an
abundance of caution, the Debtor moves to formally reject the
subleases.
The Subleases
Tenant & Address Lease Term Annual Rent
----------------- ---------- -----------
Smith Barney, Inc. Initial term $62,580 per
Attn:: Michael F. Weinberg 01/01/1998 year (years 1
388 Greenwich Street through 01/31/2008, through 5)
New York, NY 10013 (option to renew) $71,520 per
year (years 6
to 10)
Spectra Marketing Initial term ranges from
Systems, Inc. 08/01/1998 $156,981.11
1851 William Penn Way through 08/01/2003 annually to
Lancaster, PA 17601 (option to renew) $187,427.74
annually at
end of renewal
term
Excel Productions, Inc. Initial term ranges from
30 West Chestnut Street 07/01/1999 $150,000.00
Lancaster, PA 17601 through 12/31/2004 annually to
(option to renew) $311,000.00
annually. Rent
during renewal
period to be
negotiated by
parties
Chesters & Millers LLP 02/01/2000 ranges from
150 North Queen Street through 01/31/2010 $40,098.90
Suite 101 (no renewal option) annually to
Lancaster, PA 17603 $54,826.80
annually
5. Healthcarelink Initial term $29,132.30 for
128 East Grant St., 07/01/2000 the first two
Suite 102 through 06/30/2005 years, subject
Lancaster, PA 17602 (option to renew) to an increase
based on
increase in
CPI-U of
Philadelphia,
commencing
July 1, 2002
Union National Initial term $18,487.44 for
Community Bank 07/01/2000 the first two
101 East Main St., through 06/30/2005 years, subject
Mount Joy, PA 17557 (option to renew) increase
Tenant has early based on
Termination option increase in
CPI-U of
Philadelphia,
commencing
July 1, 2002.
The Mortgage Source, Inc. Initial term $17,431.83 for
124 E. Main Street 07/01/2000 through the first two
Strasburg, PA 19579 06/30/2005 years, subject
(option to renew) to an increase
Tenant has early based on
Termination option increase in
CPI-U of
Philadelphia,
commencing
July 1, 2002.
McGeary Grain, Inc. 08/01/2000 $30,000
33 East Orange Street through 07/31/2005 annually to
Lancaster, PA 17602 (no renewal option) $33,600
annually at
end of term.
Integrated Benefits 11/20/2000 $235,658 per
Solutions, Inc. through 07/31/2005 year
202 North Prince St., (no renewal option).
Lancaster, PA 17603 Tenant has early
Termination option
The Debtor estimates that Conroy owes the Debtor about
$273,000.00, under the Operating costs Agreement, and that
nothing is owed by the Debtor to Conroy under either the
Operating costs Agreement or the Leasehold Improvements
Agreement. Rejection is therefore proper as performance under
the lease, related agreements, and subleases are burdensome to
these estates. (Armstrong Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
AVANI INTERNATIONAL: Needs More Money To Sustain Operations
-----------------------------------------------------------
Avani International Group Inc. was organized under the laws of
the State of Nevada on November 29, 1995.
Since its inception, the Company has constructed a bottling
facility and has been engaged in the business of manufacturing
and distributing oxygen enriched, purified bottled water under
the trade name "Avani Water".
However, since its inception, the Company has experienced
significant operating losses. Loss from operations for fiscal
years 2000 and 1999 exceeded $900,000 and $600,000,
respectively. Moreover, the Company cannot predict when it will
achieve profitable operations. The ability of the Company to
achieve profitable operations will be dependent upon many
factors, including the successful market development of its
super oxygenated water. Successful market development includes
establishing necessary sales channels in various geographical
markets through distributors and food brokers, and having funds
available for product marketing and slotting fees. As of
December 31, 2000, although the Company has distribution
agreements in place for various geographical markets, since its
inception, the Company has been unable to effect an appreciable
amount of sales through these channels.
The Company will be required to raise additional funds in the
near future to fund its operating deficits, including the
expansion of its marketing efforts. Although the Company has
entered into a product marketing agreement and joint venture
with two Malaysian companies, the Company cannot predict the
amount of sales resulting from these agreements. Consequently,
no assurances can be given that the Company will be able to
successfully develop the necessary markets for its product.
Avani has a present need for additional capital in order to
maintain its operations for the near term. In addition, the
Company will require additional capital in the future to sustain
its operations until it achieves profitable operations. No
assurances can be given that the Company will be successful in
raising the capital necessary for both near term and future
operations. In addition, if the Company is successful in raising
additional funds, it is likely that any such additional capital
will be in the form of the sale and issuance of the additional
Company's common stock. The sale and issuance of common stock
may substantially increase the number of shares of common stock
outstanding and cause significant dilution to shareholders.
As of December 31, 2000, the Company has limited distribution
channels in certain markets as described above. Although the
Company continues to seek distributors to advance sales, to date
it has been unsuccessful in establishing any meaningful
distributor arrangements. In the event the Company is unable to
establish any meaningful distribution channels, sales of its
water product will continue to languish.
Revenues for fiscal year ended December 31, 2000 were $534,195
representing a decrease of $79,771 or 13% from revenues of
$613,966 for the comparable period in 1999. The decrease was due
to a reduction in international sales principally to Japan and
Australia coupled with a reduction in domestic sales, partially
offset by increases in cooler sales and rentals. Revenues in
2000 consisted of $492,501 in water and supply sales (a decrease
of $94,627 or 16.12% from $587,128 for the prior period),
$15,137 in cooler and equipment sales (an increase of $9,178 or
154% from $5,959 for the prior period) and $26,557 in cooler
rentals (an increase of $5,678 or 27.2% from $20,879 for the
prior period). Of the total revenue for the 2000 period, $62,510
(or 11.69% of total revenues) represented sales to a Japanese
distributor.
Net losses for fiscal years 2000 and 1999, as mentioned above,
were ($960,124) and ($664,525) respectively. Working capital as
of December 31, 2000 was ($241,700), whereas working capital as
of December 31, 1999 was $706,629. The decrease of $948,329 in
working capital is a result of the loss experienced during year
2000 coupled with the increase in current liabilities as a
result of balloon payments on mortgages due during
2001.
Total assets as of December 31, 2000 were $2,340,207
representing a decrease of $828,912 from total assets of
$3,169,119 for the prior period.
AVENUE ENTERTAINMENT: Accumulated Deficit Tops $5.7MM in 2000
-------------------------------------------------------------
Avenue Entertainment Group, Inc. was originally called Wombat
Productions when it was founded in 1969 by Gene Feldman and his
wife, Suzette St. John Feldman. Wombat acquired Avenue Pictures
from Cary Brokaw. At the time of this acquisition, the Company's
name was changed to Avenue Entertainment Group. Prior to the
acquisition the Company's primary focus had been the production
of one-hour profiles of Hollywood Stars. The Company is an
independent entertainment company which produces feature films,
television films, series for televisions, made-for-
television/cable movies and one-hour-profiles of Hollywood stars
both domestically and internationally.
At December 31, 2000, the Company had approximately $162,000 of
cash. Revenues have been insufficient to cover costs of
operations in the past four years. The Company has a working
capital deficiency and has an accumulated deficit of $5,732,000
through December 31, 2000. The Company's continuation as a going
concern is dependent on its ability to ultimately attain
profitable operations and positive cash flows from operations.
The Company's management believes that it can satisfy its
working capital needs based on its estimates of revenues and
expenses, together with improved operating cash flows, as well
as additional funding whether from financial markets, other
sources or other collaborative arrangements. The Company
believes it will have sufficient funds available to continue to
exist through the next year, although no assurance can be given
in this regard.
Insufficient funds will require the Company to scale back its
operations. The Independent Auditor's Report dated April 10,
2001 on the Company's consolidated financial statements states
that the Company has suffered losses from operations, has a
working capital deficiency and has an accumulated deficit that
raises substantial doubt about its ability to continue as a
going concern.
Results of Operations
For the year ended December 31, 2000 the Company had a loss
before income taxes of $971,000 as compared to a loss of
$1,369,000 for the year ended December 31, 1999. Although the
loss remained virtually the same for both years, operating
revenues and film production cost decreased significantly.
Revenues for the year ended December 31, 2000 were approximately
$974,000as compared to $4,749,000 for the year ended December
31, 1999. The decrease in revenues for the year were primarily
the result of license fees related to the production of The
Timeshifters recognized in 1999. In 2000, the Company earned
$225,000 in producer fees related to the made for television
movie Wit, as well as $585,000 of revenue from the licensing of
rights to its programming in secondary markets through Janson
Associates and Bravo. In addition, the Company received
development fees during 2000 for various projects. Revenues for
the year ended December 31, 1999 were derived primarily from the
production of The Timeshifters. In addition, the Company earned
$332,000 of revenue from licensing of rights to its programming
in secondary markets through Janson Associates and Bravo.
BAYOU STEEL: Moody's Cuts First Mortgage Notes To B3 From B2
------------------------------------------------------------
Weak demand and low prices for its bar products and high natural
gas prices continue to negatively impact Bayou Steel
Corporation's cash flow and debt protection measurements. As a
result, Moody's Investors Service downgraded to B3 from B2, its
rating for Bayou's $120 million of 9.5% guaranteed first
mortgage notes due 2008.
The following were also downgraded:
* the company's senior implied rating was lowered to B3
from B2,
* its senior unsecured issuer rating was lowered to Caa1
from B3.
The rating outlook was changed to negative from stable as
approximately $120 million of debt securities were affected.
Also, Moody's said it withdrew its B1 rating for Bayou's $40
million revolving credit facility as this facility has been
terminated and replaced with a $50 million asset-backed credit
facility, which is yet unrated.
Accordingly, the rating actions reflect continuing weak
conditions for merchant bar products, which has necessitated
reduced operating schedules at both of the company's mills,
continuing high energy costs, and the likelihood that Bayou's
operating losses will persist for the remainder of the year.
Moody's related that lower scrap prices and a cost reduction
program have trimmed costs about as much as can be expected and
financial improvements now depend on a firming of the domestic
merchant bar market.
Louisiana-based Bayou Steel Corporation is a leading producer of
light structural steel products.
BIG V: Retains Deloitte & Touche As Accountants
-----------------------------------------------
BIG V Holdings Corp., et al. seeks entry of an order authorizing
the debtors to employ and retain Deloitte & Touche LLP to handle
certain auditing, tax, accounting and financial matters related
to the debtors' reorganization efforts.
The firm will render the following services, including others:
* Providing assistance and advice to the debtors with
respect to their cash management and cash flow forecasting
processes, including the monitoring of actual cash flow versus
projections;
* Assisting the debtors in preparing monthly operating
reports for submission to the court, and, as agreed, such other
reports as may be requested by parties in interest;
* Assisting the debtors in developing and providing
financial or related information as required in accordance with
their DIP financing agreement;
* Preparing the audit of the debtors' year-end financial
statements and pension plans;
* Assisting the debtors in responding to a tax audit by the
IRS;
* Preparing the debtors' quarterly and annual SEC filings,
and federal and state tax returns; and
* Providing additional services including advice and
recommendations with respect to financial advisory services,
bankruptcy tax planning, accounting, or other related matters as
the debtors or the professionals may request from time to time.
As described in the Frisch Affidavit, services shall be provided
at hourly rates of $500-$600 for partners, between $420 and $480
for Senior Managers, between $400 and $480 for Managers, between
$250 and $350 for Senior Accountants/Consultants, and $75 for
paraprofessionals.
A hearing on the application will be held on April 27, 2001 at
2:00 PM before the Honorable Raymond Lyons, US Bankruptcy Court,
District of Delaware.
BRADLEES, INC.: Plans To Cease Filing Reports With SEC
------------------------------------------------------
On December 26, 2000, Bradlees, Inc. and its subsidiaries filed
for protection under Chapter 11 of the United States Bankruptcy
Code. At that time, the Company disclosed that it planned to
cease all business operations and proceed with a liquidation of
its assets. The Company has completed its going-out-of-business
sales, closed all of its stores, disposed of all of its
inventory and is in the process of liquidating its remaining
physical assets and real estate interests.
In addition, on January 24, 2001 the Company's Common Stock was
de-listed from trading on the NASDAQ national market system. The
Company has disclosed that it is highly likely that there will
be no payout to the stockholders as a result of the liquidation;
therefore, trading in the Company's Common Stock is extremely
limited.
Under applicable bankruptcy requirements and procedures, the
Company prepares and files with the Bankruptcy Court monthly
operating statements, including summary unaudited consolidated
statements of operations, consolidated balance sheets and
consolidated statements of cash flow. In light of the
substantial expense and undue hardship that would be incurred by
the Company in preparing quarterly and annual reports, and in
consideration of the belief that the Monthly Bankruptcy
Statements provide investors with timely and sufficient
information, the Company intends in accordance with SEC Release
No. 34-9660 to cease filing Quarterly/Annual Reports with the
Securities and Exchange Commission and instead will file the
Monthly Bankruptcy Statements.
CHANCE INDUSTRIES: Park Rides Manufacturer Files for Chapter 11
---------------------------------------------------------------
The nation's largest manufacturer of amusement park rides,
Chance Industries Inc., filed for chapter 11 bankruptcy
protection, according to the Associated Press. "We've never had
to face anything quite this challenging, but we will adapt to
the marketplace and continue our growth," said Dick Chance,
company president and chief executive officer. He also said
despite the filing, the Wichita-based firm would stay in
business and endure the market. Chance Industries makes
amusement park rides such as the Inventor, the Big Dipper, Tin
Lizzies and the Aviator. (ABI World, April 19, 2001)
CKE RESTAURANTS: Names Dennis J. Lacey Chief Financial Officer
--------------------------------------------------------------
CKE Restaurants, Inc. (NYSE: CKR) announced the appointment of
Dennis J. Lacey as executive vice president and chief financial
officer.
Before joining CKE, Lacey was with Imperial Bancorp for two
years, most recently as executive vice president and chief
financial officer. Prior to that, he served as president and
chief executive officer of Capital Associates, Inc. where he was
instrumental in leading a business turnaround which resulted in
21 consecutive quarters of profits for the company. Before that,
Lacey was an audit partner at Coopers and Lybrand. Lacey holds a
bachelor's degree in finance and accounting from the University
of West Florida.
"We feel Dennis is uniquely qualified to serve as our chief
financial officer," said Andrew F. Puzder, CKE's president and
chief executive officer. "His financial expertise, coupled with
his CEO and turnaround experience make him ideally suited for
the role of CFO at CKE Restaurants, Inc."
Carl A. Strunk, who served as CKE's chief financial officer for
four years, has been named executive vice president, finance to
focus primarily on the Company's credit facility, banking
relationships and capital restructuring. Mr. Strunk also retains
his position as executive vice president-chief financial officer
of American National Financial, Inc. (Nasdaq: ANFI) where his
role has been expanded.
CKE Restaurants, Inc., through its subsidiaries, franchisees and
licensees, operates more than 3,700 quick-service restaurants,
including 980 Carl's Jr. restaurants located in 13 Western
states and Mexico; 2,657 Hardee's restaurants in 32 states and
11 foreign countries; and 125 Taco Bueno restaurants in Texas
and Oklahoma.
COMMUNITY DISTRIBUTORS: Moody's Junks Ratings On Senior Notes
-------------------------------------------------------------
Moody's Investors Service downgraded all ratings of Community
Distributors Inc. These include:
* the $74.0 million senior unsecured note (due 2004) to
Caa1 from B2,
* the senior implied rating to Caa1 from B2, and
* the issuer rating to Caa2 from B3.
The rating outlook is negative. Approximately $74.0 million of
debt securities are affected.
Moody's said that declining operational and debt protection
measures over the past four quarters and its belief that the
company faces significant challenges in restoring leverage and
cash flow to previous levels prompted the downgrades.
Accordingly, the ratings reflect the company's highly leveraged
financial condition, the company's constrained liquidity
position, the intense competition among pharmacy and discount
retailers in Northern New Jersey, the significant seasonality of
sales, and margin pressures both in the front end and pharmacy
departments. However, the company's important market position in
prosperous Northern New Jersey, the relatively modern store
base, and management's strategy of differentiating the company
from national pharmacy and discount chains supports the ratings,
according to Moody's.
The negative rating outlook considers the negative rating
consequences if the company cannot make meaningful progress at
improving operations, increasing free cash flow, and reducing
leverage or if liquidity concerns cause deviations from its
business plan, Moody's stated.
Based in Somerset, New Jersey, Community Distributors, Inc.,
operates 38 Drug Fair pharmacies and 15 Cost Cutters discount
stores across Northern and Central New Jersey.
CONVERGENT COMMUNICATIONS: Files Chapter 11 Petition in Colorado
----------------------------------------------------------------
Convergent Communications, Inc. (OTC Bulletin Board: CONV) and
Convergent Communications Services, Inc. filed a voluntary
petition for protection under Chapter 11 of the Bankruptcy code
with the U.S. Bankruptcy Court in Colorado.
The company was not successful in its efforts to raise the
financing needed to fund the company's ongoing operations. The
company will aggressively seek the sale or liquidation of its
assets.
CONVERGENT COMMUNICATIONS: Chapter 11 Case Summary
---------------------------------------------------
Debtor: Convergent Communications, Inc.
400 Inverness Dr. S.
Ste. 400
Englewood, CO 80112
Debtor affiliate filing separate chapter 11 petition:
Convergent Communications Services, Inc.
Chapter 11 Petition Date: April 19, 2001
Court: District of Colorado (Denver)
Bankruptcy Case Nos.: 01-15488 and 01-15489
Judge: Elizabeth E. Brown; A. Bruce Campbell (for affiliate)
Debtors' Counsel: George B. Curtis, Esq.
1801 California St.
Ste. 4100
Denver, CO 80202
303-298-5700
and
Tom H. Connolly, Esq. (for affiliate)
287 Century Cir.
Ste. 200
Louisville, CO 80027
303-661-9292
CRIIMI MAE: Fitch Withdraws `D' Senior Rating
---------------------------------------------
Fitch withdrew its 'D' rating for Criimi Mae Inc.'s $100 million
9.125% senior unsecured debt due 2002. The company announced it
emerged from bankruptcy protection on April 17, 2001. As part of
the reorganization, bondholders received consideration of
approximately $126 million which includes accrued interest
through a cash payment of approximately 30 cents on the dollar
and the issuance of two series of new notes which have not been
rated by Fitch.
CROWN VANTAGE: Asks Court To Extend Exclusive Period To May 28
--------------------------------------------------------------
Crown Vantage, Inc. seeks to extend its exclusive period in
which to file a plan or plans of reorganization and to seek
acceptances thereof for approximately 30 days, through and
including May 28, 2001 and July 27, 2001, respectively.
During the sixth extension period the debtors negotiated the
terms of the Asset Purchase Agreement with the agents for the
secured lenders and the official committee of unsecured
creditors appointed in these Chapter 11 cases.
The debtors and their advisors continue to negotiate with the
Agents and the Creditors' Committee in respect of the
development of a consensual plan of reorganization.
The debtors believe it is necessary to file the motion to
preserve and continue their efforts in developing a consensual
plan of reorganization and selling Crown Paper's assets.
E.SPIRE COMM.: Annual Report Further Delayed By Chapter 11 Case
---------------------------------------------------------------
E.Spire Communications Inc. said the filing of its annual report
for the year ended Dec. 31, will be further delayed because of
unforeseen delays caused by its recent chapter 11 case,
according to a not-timely Form 10-K filed Tuesday with the
Securities and Exchange Commission. "The bankruptcy and
reorganization process continues to place an enormous strain on
the company's accounting and administrative staff and has caused
unforeseen delays in the collection and review of information
and documents," the Herndon, Va.-based telephone service
provider said in the filing. Also, the company, its lenders and
its bondholders are discussing amendments to the senior secured
credit line and long-term debt obligations and the company only
recently obtained partial approval for debtor-in-possession
financing (DIP). (ABI World, April 19, 2001)
EUROWEB INT'L: Shareholders To Meet In New York On May 29
---------------------------------------------------------
The Annual Meeting of Stockholders of EuroWeb International
Corp., a Delaware corporation, will be held at 2:00 P.M. (New
York time), on May 29, 2001 at 445 Park Avenue, 15th Floor, New
York, New York 10022:
(1) To elect five (5) directors of the Company to serve
until the 2002 Annual Meeting of Stockholders or until their
successors have been duly elected and qualified;
(2) To ratify the appointment of KPMG HUNGARIA Kft. as
auditors of the Company for the fiscal year ending December 31,
2001; and
(3) To transact such other business as may properly come
before the Meeting and any adjournment or postponement thereof.
The Board of Directors is not aware of any other business to
come before the Meeting.
The Board of Directors has fixed April 10, 2001 as the record
date for the determination of stockholders entitled to notice
of, and to vote at, the Meeting and any adjournment or
postponement thereof.
FEGERAL-MOGUL: Reports First Quarter Loss
-----------------------------------------
Federal-Mogul Corporation (NYSE: FMO) announced first quarter
2001 sales of $1,451 million compared to $1,644 million in 2000.
In line with expectations announced on March 28, Federal-Mogul
reported a first quarter loss of $(.60) per share from
operations versus earnings of $.86 per share from operations in
2000. Excluded from earnings from operations were charges for
restructuring and impairment. Including these items, Federal-
Mogul reported a first quarter loss of $(.89) per share compared
to net earnings of $.18 in 2000. Cash flow from operations which
includes capital expenditures, restructuring, and asbestos
payments was a usage of $146 million.
By region, the Americas and Asia reported first quarter sales of
$937 million compared to $1,102 million in 2000. Europe and
Africa reported sales of $514 million compared to $542 million
in 2000. The original equipment market represented 58% of the
company's global sales with the replacement market accounting
for 42% of first quarter sales. Excluding exchange impacts,
original equipment sales were down by 10% and aftermarket sales
were down 7% compared to first quarter 2000.
"North American demand from both our aftermarket and original
equipment customers was significantly lower. Although we
intensified efforts to reduce our cost structure, we were not
able to match the pace and degree of our customer's volume
declines. A bright spot this quarter was our cash usage, which
historically has run much higher in the first quarter than it
did this year," said Frank Macher, chief executive officer. "We
are making progress on our efforts to run lean and competitive.
Our drive to be low cost, as evidenced by our announced
agreement to acquire WSK Gorzyce to expand our piston
manufacturing into Poland, reflects our company's global
commitment to operate more efficiently."
Federal-Mogul's asbestos liability payments were on track as
planned at $88 million, down from fourth quarter 2000 levels.
"As promised, we have changed our asbestos management strategy
and are actively pursuing some form of legislative relief," said
Macher. "Our outlook for estimated asbestos claim payments
remains $350 million in 2001."
Headquartered in Southfield, Michigan, Federal-Mogul is an
automotive parts manufacturer providing innovative solutions and
systems to global customers in the automotive, light truck,
heavy-duty, railroad, farm and industrial markets. The company
was founded in 1899. Visit the company's web site at
http://www.federal-mogul.comfor more information. Federal-
Mogul's press releases are available by fax through Company News
On-Call, call 800-758-5804, ext. 306225.
FINOVA GROUP: Committee Proposes Securities Trading Procedures
--------------------------------------------------------------
A Committee member who, as a regular part of its business,
trades in securities or provides advisory services has a
fiduciary duty to maximize returns for its clients and at the
same time a fiduciary duty to other creditors not to divulge any
confidential or "inside" information regarding The FINOVA Group,
Inc. Debtors. In the Committee's opinion, if a Securities
Trading Committee Member is barred from trading the Securities
during the pendency of the Bankruptcy Cases because of its
duties to other creditors, it may risk the loss of a beneficial
investment opportunity for its clients and hence breach its
fiduciary duty to such clients. Alternatively, if such a Member
resigns from the Committee, its company's interests may be
compromised due to its less active role in the reorganization
process.
To resolve this dilemma, the Committee suggested permitting
members of the Committee to trade in the Debtors' securities
upon the establishment and implementation of Trading Walls. In
general, the term "Trading Wall" refers to procedures
established by an institution to isolate its trading activities
from its activities as a member of an official creditors'
committee. A Trading Wall typically involves:
* separate personnel for performing committee and trading
functions;
* physical separation of the office;
* establishment of procedures for securing committee-
related files;
* separate telephone and facsimile lines for trading and
committee activities; and
* special procedures for the delivery and posting of
telephone messages.
Specifically, the Committee proposed that if a Securities
Trading Committee Member in the FINOVA cases wishes to trade in
the Debtors' Securities, the Member should employ Trading Wall
procedures whereby:
(1) the Securities Trading Committee Member should cause
all its Committee Personnel to execute a letter acknowledging
that they may receive non-public information and that they are
aware of the Order and the Trading Wall procedures which are in
effect with respect to the Securities;
(2) Committee Personnel should not share non-public
Committee information with any other employees of such
Securities Trading Committee Member (except regulators,
auditors, immediate supervisors and designated legal personnel
for the purpose of rendering legal advice to Committee Personnel
and who will not share such non-public Committee information
with other employees);
(3) Committee Personnel should keep non-public information
generated from Committee activities in files inaccessible to
other employees;
(4) Committee Personnel should receive no information
regarding Securities Trading Committee Member's trades in
Securities in advance of such trades, except usual and customary
internal and public reports showing the Securities Trading
Committee Member's purchases and sales and the amount and class
of claims and securities owned by such Securities Trading
Committee Member, including the Securities; and
(5) the Securities Trading Committee Member's compliance
department personnel should review from time to time the Trading
Wall procedures employed by the Securities Trading Committee
Member as necessary to insure compliance with the Order and
should keep and maintain records of their review.
The Committee further proposed that any Securities Trading
Committee Member's Committee Personnel or other personnel that
in the ordinary course of business receives directions from
clients to redeem investments managed by the Securities Trading
Committee Member, may sell any securities, including the
Debtors' Securities, to comply with such client's redemption
directions.
Citing precedent, the Committee drew the Court's attention to
the seminal case on this issue, In re Federated Department
Stores. Inc. in which the SEC filed a memorandum of law in
support of the requested relief:
"[C]onsistent with the requirements of the federal securities
laws and the bankruptcy laws, an entity that is engaged in the
trading of securities as a regular part of its business and that
has implemented procedures reasonably designed to prevent the
transmission to its trading personnel of information obtained
through service on an official committee is not precluded from
serving on the committee and, at the same time, trading in the
debtors' securities."
The SEC further stated, the Committee noted, that creditors that
were large institutional investors, such as investment advisors
and broker-dealers, "have skills and expertise that are likely
to be extremely valuable to the committee," concluding that
there is "no legal impediment to permitting the service of such
entities on official committees."
The Committee pointed out that the bankruptcy court in Federated
agreed with the SEC, stating in its order that the movant,
Fidelity Management & Research Company, "[W]ill not be violating
its fiduciary duties as a committee member and accordingly, will
not be subjecting its claims to possible disallowance,
subordination, or other adverse treatment, by trading in
securities of the Debtors . . . provided that Fidelity employs
an appropriate information blocking device or '[Trading] Wall' .
. ."
The Committee noted that the procedures that they propose
closely parallel those established in Federated case, which
included: (i) a written acknowledgement by personnel performing
committee work that they could receive nonpublic information and
were aware of the Trading Wall procedures in effect; (ii) a
prohibition on the sharing of non-public committee information
with other employees; (iii) separate file space for committee
work which is inaccessible to other employees; (iv) restrictions
on committee personnel's access to trading information; and (v)
a compliance review process.
The procedures in Federated, the Committee said, were then
followed by subsequent courts:
* In re GST Telecom, Inc., Case No. 00-1982 (GMS)(Bankr. D.
Del.);
* In re Vista Eyecare, Inc., No A00-65214 (Bankr. D. Ga.);
* In re Sun Healthcare Group. Inc., Case No. 99-3657 (MFW)
(Bankr. D. Del.);
* In re ICO Global Communications Services Inc., Case No.
99- 2933 (MFW) (Bank. D. Del.);
* In re Acme Metals Inc., Case No. 98-2179 (MFW) (Bankr. D.
Del.);
* In re Mid American Waste Systems Inc., Case No. 97-104
(PJW) (Bankr. D. Del.);
* In re Ace-Texas, Inc., Case No. 96-166 (PJW) (Bankr. D.
Del.);
* In re Farley, Inc., No. 91-15610 (Bankr. N.D. Ill.;
* In re America West Airlines, Inc., No. 91-07505 (Bankr.
D. Ariz.);
* In re Harvard industries, Inc., Nos. 91-104, 91-479
through 91-487 (Bankr. D. Del.; and
* In re Federated Dep't Stores, Inc., No. 1-90-00130, 1991
Bankr. LEXIS 288 (Bankr. S.D. Ohio).
Accordingly, the Committee moved the Court for an order
determining that any Committee member, acting in any capacity,
engaged in the trading of securities as a regular part of its
business (the Securities Trading Committee Member) will not
violate its fiduciary duties as a Committee member and,
therefore, will not subject their claims to possible
disallowance, subordination, or other adverse treatment by
trading in the Debtors' stocks, notes, bonds or debentures or
buying or selling participations in any of the Debtors' debt
obligations or any other claims or interests not covered by Rule
3001(e) of the Federal Rules of Bankruptcy Procedure
(collectively, the Securities) during the pendency of the
Debtors' chapter 11 cases, as long such Securities Trading
Committee Member establishes, effectively implements and
strictly adheres to information blocking policies and
procedures, such as a Trading Wall, to prevent the Securities
Trading Committee Member's trading personnel from use or misuse
of non-public information obtained through the performance by
such Securities Trading Committee Member's personnel engaged in
Committee-related activities and to prevent Committee Personnel
from receiving information regarding such Securities Trading
Committee Member's trading in Securities in advance of such
trades. (Finova Bankruptcy News, Issue No. 5; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
FREDERICK'S OF HOLLYWOOD: Investors and Purchasers Appear
---------------------------------------------------------
To explore a potential sale of Frederick's of Hollywood, Inc.,
or to link-up with a potential investor, the Debtors hired
Imperial Capital, LLC, as their investment bankers. Imperial,
according to bankruptcy court papers, has prepared a
confidential information memorandum regarding the Debtors'
operations and has sent it to a number of potential investors
and purchasers. At least one potential purchaser or investor has
emerged as a result of Imperial's efforts.
Of course, "the identity of these potential investors and
purchasers is confidential," Michael L. Tuchin, Esq., at Klee,
Tuchin, Bogdanoff & Stern LLP, tells the bankruptcy court in Los
Angeles presiding over Frederick's chapter 11 cases. While the
identity of any potential purchaser may be under wraps, at least
one investor/purchaser is on the scene. Mr. Tuchin was forced to
make this this disclosure to the Court because his Firm
represents one of those bidders in legal matters unrelated to
Frederick's cases. Mr. Tuchin can't disclose more, explaining
that could "adversely affect the investment banking process."
Counsel for the Committee knows the identity of the bidder, and
the Debtors indicate they'll advise the Court, if permitted to
do so under seal, but that's as much as they'll say today.
FRIEDE GOLDMAN: Files Chapter 11 Petition in S.D. Mississippi
-------------------------------------------------------------
Friede Goldman Halter, Inc. (NYSE:FGH) filed a petition for
relief under Chapter 11 of the United States Bankruptcy Code.
The petition, which allows for reorganization of the Company's
debts, was filed in the Bankruptcy Court of the Southern
District of Mississippi. Thirty-one (31) subsidiaries of the
Company that are co-borrowers or guarantors under the Company's
Amended and Restated Loan and Security Agreement, dated October
24, 2000, plan to file petitions for reorganization under
Chapter 11.
Concurrent with these filings, the Company is initiating efforts
to achieve a comprehensive restructuring of its obligations with
all its creditors. The objective of this restructuring will be
to position the Company to emerge from Chapter 11 with an
improved capital structure and sufficient resources to carry on
its business.
At this time, the Company believes a filing is in the best
interest of its employees, creditors, customers, and
shareholders.
Friede Goldman Halter is a world leader in the design and
manufacture of equipment for the maritime and offshore energy
industries. Its operating units are Friede Goldman Offshore
(construction, upgrade and repair of drilling units, mobile
production units and offshore construction equipment); Halter
Marine (construction of vessels for commercial and governmental
markets); FGH Engineered Products (design and manufacture of
cranes, winches, mooring systems and other types of marine
equipment); and Friede & Goldman Ltd. (naval architecture and
marine engineering).
GST TELECOM: Seeks Okay For DoveBid's Retention As Auctioneer
-------------------------------------------------------------
GST Telecom Inc., et al. seeks court authority to retain
DoveBid, Inc. as an auctioneer, and for the sale of specified
assets of the debtors and by a privately negotiated sale to be
conducted by DoveBid, Inc.
DoveBid will be compensated on a percentage basis of each asset
that is sold through the Proposed Sales pursuant to the terms of
the Agreement. DoveBid will charge a buyer's premium in the
amount of 10% of the purchase price of each asset sold. The
assets to be sold include two DCO telecommunication switches and
one Cyberlog telecommunications switch. The reserves for DCO
Switch 1 and 2 are set at $75,000 each and the reserve for the
Cyberlog switch is set at $96,000. If the purchase is for less
than the reserve, GST will withdraw the switch from the sale and
will seek independent disposition of that switch.
A hearing on the motion will be held before the Honorable
Gregory M. Sleet, Wilmington, DE on April 24, 2001.
The debtors are represented by The Bayard Firm and Latham &
Watkins.
HERITAGE SOUTH: Reaches Settlement With Texas Blue Cross, et al.
----------------------------------------------------------------
Heritage South West Medical Group (HSWMG) said it has reached a
settlement with Texas Blue Cross and others, which HSWMG
believes will resolve the filing of an involuntary bankruptcy
petition.
The settlement agreement will provide HSWMG with the opportunity
to demonstrate that the involuntary petition was not appropriate
and constituted an unwarranted litigation tactic. Approved by
the court, the agreement will allow HSWMG to continue to operate
its business and pursue its claims against Texas Blue and
others. The settlement provides for a 150-day period to
arbitrate the disputes with Texas Blue and other parties in
accordance with the arbitration provisions of the agreements
between HSWMG, Texas Blue Cross and others.
HSWMG looks forward to the resolution of this complex issue and
will continue to operate in the normal course of business while
these issues are resolved.
HOME HEALTH: Seeks Approval of Larry Kirk's Employment Agreement
----------------------------------------------------------------
The debtor, Home Health Corporation of America, Inc., et al.
seeks court approval of a certain employment agreement with
Larry Kirk, employed at HHCA as Vice President of IS Application
Systems. Kirk has the responsibility for the development,
implementation and integration of all software application
systems in support of the debtor's nursing business. Kirk shall
be paid a grass annual salary of $122,137 for a period of one
year, with an option to extend for one year. In addition Kirk
shall receive ordinary benefits and is able to participate in
the executive incentive plan to the extent such plan is
implemented.
A hearing on the motion will be held on May 2, 2001 at 4:00 PM
The debtors are represented by Charlene D. Davis and Elio
Battista, Jr., The Bayard Firm and Gary D. Bressler and Robert
J. Lenahan, Adelman Lavine Gold and Levin, Philadelphia, PA.
ICG COMM.: Moves To Reject City Of Longmont Fiber Use License
-------------------------------------------------------------
ICG Communications, Inc. requested that Judge Walsh permit them
to reject a fiber use license agreement between the City of
Longmont, acting on behalf of its Telecommunications Utility
Enterprise as licensor, and ICG Holdings, Inc., as licensee and
successor to ICG Telecom Group, Inc. The Debtors also requested
that the rejection be effective on the later of (a) the date the
Court grants this Motion, or (b) the Debtor's actual surrender
of the licensed fiber to Longmont. In bringing this Motion, the
Debtor reserves the issue of whether the fiber license is a
license, a real property lease, or a financing arrangement.
The City of Longmont is a Colorado municipal corporation which
owns a fiber optic communications network. Under the fiber
license, Holdings has an exclusive license to use certain fibers
along Longmont's fiber optic network. As part of the Debtor's
reorganization process, the Debtor has instituted an in-depth
evaluation of all aspects of its operations in an effort to
restore the Debtor to profitability. As a result of the
evaluation, the Debtor has determined that the fiber that
the Debtors have a right to use under the fiber license is
vastly underutilized and would remain so for the foreseeable
future. The Debtor is able to replace the capacity which it
utilizes under the fiber license without the burden of paying
for the excess portion. Having found no value in either
retaining the license or assigning it, the Debtor has determined
that rejection of the fiber license is in its best interest.
The Debtor reported that it has already begun to move traffic
off of the fiber ring licensed under the fiber license. The
Debtor anticipates having that process completed, including
removal from Longmont's facilities of any equipment owned by the
Debtors, prior to the hearing date on this Motion. To guard
against the possibility that circumstances could change and the
Debtor be unable to surrender the fiber prior to the hearing
date, which the Debtor assured Judge Walsh is unlikely, the
Debtor requested that the proposed Order not be effective until
the later of the hearing date or surrender of the license. (ICG
Communications Bankruptcy News, Issue No. 5; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
JAWZ INC.: Fails To Comply With Nasdaq's Minimum Bid Requirement
----------------------------------------------------------------
JAWZ Inc. (NASDAQ:JAWZ), a leading provider of secure
information management solutions, received a Nasdaq Staff
Determination on April 12, indicating that the Company does not
comply with the minimum bid price requirement for continued
listing set forth in Marketplace Rule 4450(a)(5), and that its
securities are, therefore subject to delisting from the Nasdaq
National Market.
JAWZ has requested a hearing before a Nasdaq Listing
Qualifications Panel to review the Staff Determination. The
hearing will be held on Thursday May 31, 2001 in Washington DC.
The company remains listed on the National Market until the
hearing date. If the minimum stock price is reached and
maintained for a minimum of ten consecutive days the hearing
will be cancelled.
The options available to JAWZ for public trading are: Nasdaq
National Market (under review), SmallCap Market, OTC Bulletin
Board or another exchange listing. The Company is currently
continuing with the appeal process, and will consider other
listing options.
Further, the letter "D" which was placed on the end of the
trading symbol JAWZ is used to denote that a share consolidation
has occurred. This notation will be removed during the week of
April 23, 2001.
About JAWZ Inc.: "JAWZ by Name - Protective by Nature"
JAWZ Inc. is a leading secure information management solutions
provider, specializing in the field of full service information
security. The company's products and services line includes
security software products, consulting services and secure
Internet and remote data storage services. These products are
offered to key client groups including healthcare providers,
governments, law enforcement, financial services, e-commerce
businesses, and telecom suppliers. JAWZ has approximately 50
established strategic partnerships and 400 corporate clients
including CU-Connect, Verizon Communications, Group Telecom,
TELUS, Oracle, among others. International headquarters for JAWZ
is located in Toronto, Canada with its US head office in
Fairfield, New Jersey.
KITTY HAWK: Files Reorganization Plan in N.D. Texas
---------------------------------------------------
On April 17, Dallas-based Kitty Hawk filed a disclosure
statement and reorganization plan in U.S. Bankruptcy Court,
Northern District of Texas, Fort Worth Division. According to
the plan noteholders will get 80 percent of the company's new
stock. The other 20 percent of the stock will go to suppliers.
Under the original reorganization plan, filed in August, the
ratio was 85 to 15 in favor of the noteholders. In the proposed
reorganization plan, Kitty Hawk intends to pay off the bank
group over time through revenues generated from operations. A
new board of directors will be elected. The board will comprise
of seven members, five of which will be selected by the
noteholders and the remaining two by Kitty Hawk. (New Generation
Research, April 19, 2001)
LAROCHE INDUSTRIES: Plan Confirmation Hearing Set For May 22
------------------------------------------------------------
By order entered on March 30, 2001, the Honorable Peter J.
Walsh, U.S. Bankruptcy Judge, District of Delaware approved the
Disclosure Statement of Laroche Industries, Inc. and Laroche
Fortier Inc.
The Court fixed May 22, 2001 at 2:00 PM as the date for the
hearing on the confirmation of the plan. May 11, 2001 at 4:00 PM
is fixed as the last date for filing and serving objections to
confirmation of the plan.
Counsel for the debtors are Alston & Bird LLP and Young Conaway
Stargatt & Taylor LLP. Counsel for the Committee are Wachtell
Lipton Rosen & Katz and Pachulski Stang Ziehl Young & Jones.
The plan provides for an estimated recovery of approximately
56.8% for claims under pre-petition credit agreement, 5% for
convenience class of unsecured claims, approximately 2% for
general unsecured claims, and approximately 2% for 9.5% notes
and 13% notes.
LERNOUT & HAUSPIE: Has Until June 29 To Assume Or Reject Leases
---------------------------------------------------------------
Lernout & Hauspie Speech Products N.V. and Dictaphone Corp.
sought an extension of the time period during which they may
assume, assume and assign, or reject unexpired nonresidential
real property leases. The Debtors are either lessees or
sublessees under a number of unexpired nonresidential real
property leases. At present, the Debtors told Judge Wizmur that
they have identified approximately 190 leases which relate to
corporate offices, storage facilities or consolidated warehouse
and office facilities. Of these leases, approximately 172 relate
to properties located in the United States and Canada, while 18
relate to properties located outside the United States and
Canada. The distribution of leases among the members of the
Debtors is:
L&H: 16 leases or subleases
Dictaphone: 166 leases or subleases
L&H Holdings: 8 leases or subleases
Accordingly, the Debtors asked for an extension of the time
period for determination of the disposition of these leases to
and including June 29, 2001. In support of this, the Debtors
advised Judge Wizmur that they are not in a position to make
final determinations regarding the proper disposition of the
leases. While the Debtors have initiated the assessment process,
the task is being performed as part of a re-evaluation of every
aspect of the Debtors' businesses, which operate in various
locations throughout the world. The evaluation must be completed
thoroughly and properly in the overall context of the Debtors'
long-term business and reorganization plan before an informed
decision of whether to assume or reject the leases may be made.
Since the Petition Date, the Debtors have been consumed with a
vast number of exigent administrative and business decisions.
The Debtors and their professionals have been focused on
intricate and volatile issues which are of paramount importance
to a successful completion of the reorganization effort,
including:
(a) securing and implementing long-term postpetition DIP
financing;
(b) assessing the role of certain foreign subsidiaries in
the overall reorganization plan;
(c) resolving issues relating to the appointment of
separate creditors' committees; and
(d) addressing issues raised by a motion seeking the
appointment of a trustee.
An improvident assumption or rejection could later prove
burdensome. Without an extension of time, the Debtors risk
prematurely and improvidently assuming leases that the Debtors
could later discover to be burdensome, possibly creating
uncapped administrative claims against the Debtors' estates.
Similarly, the Debtors also risk a premature and improvident
rejection of leases that the Debtors could later discover to be
critical to their reorganization efforts. The Debtors say that
cause clearly exists in the instant case to extend the period
within which the Debtors must assume or reject the leases. These
leases are important assets of the Debtors' estates, and any
decisions relating to their disposition will be central to any
plan of reorganization. The Debtors also requested that any
extension granted be without prejudice to the right of any
member of the Debtors to seek additional extensions of time.
Persuaded by these arguments, Judge Wizmur granted the extension
as requested. (L&H/Dictaphone Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
LTV CORPORATION: Removal Deadline Extended To October 5, 2001
-------------------------------------------------------------
As of the Petition Date, The LTV Corporation Debtors were
parties to numerous civil actions pending in multiple forums and
tribunals, and asserting a wide variety of claims. The Debtors
asked that Judge Bodoh order an extension to their deadline for
the removal of some or all of these actions to federal court to
the earliest of (a) October 5, 2001 and (b) 30 days after the
entry of any order terminating the automatic stay with respect
to the particular action sought to be removed.
To determine whether to remove any particular action, the
Debtors must examine and evaluate a variety of issues. At this
early stage in their Chapter 11 cases, the Debtors have not yet
had an opportunity to evaluate these issues and determine which
actions, if any, they will seek to remove. As a result of the
nature and complexity of these Chapter 11 cases, and the
exigencies attendant to the commencement of these cases, the
Debtors have devoted substantially all of their time and
resources since the Petition Date to completing the smooth
transition to operations in Chapter 11 and engaging in
discussions with their key constituencies. For this reason, the
Debtors told Judge Bodoh they have not had sufficient time to
analyze each of the actions and make the appropriate
determinations concerning their removal prior to the expiration
of the current deadline. The requested extension will afford the
Debtors a sufficient opportunity to make fully informed
decisions concerning the removal of each action and will assure
that the Debtors do not prematurely forfeit valuable rights. Any
extension will not prejudice the rights of the adverse parties
to the actions since, if the Debtors remove any action to
federal court, any affected party will retain its rights to seek
remand of the removed action back to state court.
Response by the City of Chicago
The City of Chicago, Illinois, appearing through L. Stewart
Hastings, Jr., and Gary S. Singletary of Cleveland Ohio, said it
does not oppose the extension, but does have an environmental
lawsuit pending against the Debtor LTV Steel which it intends to
pursue. This claim constitutes a civil action by a governmental
unit to enforce its police and regulatory power, and the City
simply wants to make clear that its non-opposition to the
Debtors' motion does not mean that it concedes that its
environmental lawsuit is removable.
In the absence of any opposition to the relief, Judge Bodoh
granted the requested extension. (LTV Bankruptcy News, Issue No.
7; Bankruptcy Creditors' Service, Inc., 609/392-00900)
MMH HOLDINGS: Disclosure Statement Hearing Is Tomorrow
------------------------------------------------------
MMH Holdings, Inc., et al. has been negotiating the terms of a
plan of reorganization with their primary creditor
constituencies and filed their Joint Plan of Reorganization
dated January 15, 2001 and related disclosure statement.
The hearing to consider approval of the Disclosure statement is
currently scheduled for tomorrow, April 24, 2001, and the
debtors are attempting to obtain a commitment for post-
bankruptcy financing and negotiate modifications to the plan and
disclosure statement with their creditor constituencies. The
debtors seek an extension of the Exclusive Period to solicit
votes on the plan through and including June 26, 2001.
The debtors are still attempting to obtain a commitment by a
lender to provide the debtors with financing to satisfy the
debtors' cash obligations under the plan and to provide the
debtors with working capital and letters of credits and
anticipates modifications to the plan to reflect such financing.
The debtors believe that cause exists to grant the proposed
extension due to the large size and complexity of the debtors'
affairs. Here, the debtors consist of 14 entities whose assets
and businesses are spread throughout the country and are parties
to numerous leases and other contracts. The debtors have
thousands of trade creditors, employ approximately 1,100
individuals for their domestic operations, and maintain numerous
bank accounts and a wide variety of business relations with
parties all over the world.
NBCi TRACES: Intends to Liquidate Following NBC's Acquisition
-------------------------------------------------------------
Internet portal, NBCi, and NBC announced on April 9 that they
had entered into a merger agreement under which NBC will acquire
all of NBCi and integrate its properties into NBC.
In connection with the completion of this merger, which the
companies expect to occur some time this summer, NBCi TRACES,
issued by the NBCi Automatic Common Exchange Security Trust
(NYSE:NIE), will liquidate and cash will be distributed to the
NBCi TRACES holders.
Formed in February 2000, the NBCi TRACES trust's investment
objective was to give each TRACES holder quarterly cash
distributions and, on an automatic exchange date in February
2003, 0.8333 to 1 shares of NBCi common stock for each TRACES
security. Under the terms of the trust's organizational
documents and a purchase agreement entered into by the trust and
an NBCi shareholder, the trust's automatic exchange date will
accelerate as a result of the NBC acquisition of NBCi common
stock to the date 5 business days after the completion of the
merger. On that date, the trust expects to pay to TRACES holders
cash for each TRACES security in an amount equal to the purchase
price per share of NBCi common stock paid by NBC in the NBC
merger. On that date, the trust will also liquidate its holdings
of stripped U.S. Treasury securities, which will be distributed
to TRACES holders on a pro rata basis. The trust purchased the
stripped U.S. Treasury securities in February 2000 to fund
quarterly cash distributions to TRACES holders.
Until the exchange date, the NBCi TRACES trust will continue to
pay quarterly cash distributions of $1.475 per share of TRACES
securities.
NETPLIANCE INC.: Shares Face Delisting From the Nasdaq Market
-------------------------------------------------------------
Netpliance Inc. (Nasdaq:NPLI) said that on April 18, 2001, it
received notice of a Nasdaq Staff Determination indicating that
the Company fails to comply with the minimum bid price as
required for continued listing on the Nasdaq National Market
under Nasdaq Marketplace Rule 4450(a)(5).
Accordingly, the Company's common stock is subject to delisting
from the Nasdaq National Market.
The Company has requested a hearing before the Nasdaq Listing
Qualifications Panel to review the Staff Determination. The
Company believes that the recent change in its business focus
and its relatively strong financial condition, among other
things, will lead to a recovery in the price of the Company's
common stock. There can be no assurance that the Panel will
grant the Company's request for continued listing.
During the review process, delisting will be stayed and the
Company's common stock will continue to be listed on the Nasdaq
National Market. Should the Company's common stock be delisted
from the Nasdaq National Market, it may be eligible for
inclusion on the OTC Bulletin Board operated by Nasdaq.
About Netpliance
Netpliance provides infrastructure products for next generation
premium residential IP voice, video and data applications.
Existing and emerging IP-based broadband service providers
including traditional telecom carriers, Internet Service
Providers (ISPs), cable multi-system operators (MSOs),
competitive local exchange carriers (CLECs), Internet
destination sites or portals, Internet Telephony Service
Providers (ITSPs) and application service providers (ASPs) will
be able to rapidly deploy new world services based on the
Netpliance Broadband Service Delivery platform.
NETWORK COMMERCE: Insufficient Funds May Cause Bankruptcy Filing
----------------------------------------------------------------
Internet infrastructure provider Network Commerce Inc. disclosed
its yearly earnings and said that it is considering bankruptcy,
according to TheDeal.com. The Seattle-based company reported an
annual net loss of about $262 million on revenue of $88.2
million and a total accumulated deficit of $367.3 million. In
its report, the company said it had enough cash -$49.1 million
as of Dec. 31, 2000 - to last through the first quarter of this
year but would need additional capital afterwards. Without this
financing the company said, "We may need to dramatically change
our business plan, sell or merge our business or face
bankruptcy." Network Commerce provides software that allows
companies to get their business online and sells additional
services such as web hosting and payment processing. (ABI World,
April 19, 2001)
OWENS CORNING: Wants To Assume FreeMarkets' Services Contract
-------------------------------------------------------------
FreeMarkets, Inc., is a business-to-business global marketplace
and e-sourcing solutions provider which creates on-line markets
for industrial parts, raw materials, commodities, and services
that allows suppliers and customers to conduct business with
each other through a virtual supply network of over 165 supply
sources. FreeMarkets combines its technology platform with
sourcing information and commodity-specific domain knowledge to
deliver what Owens Corning describes as fast, measurable savings
to its customers.
Owens Corning's relationship with FreeMarkets began on April 5,
1999, when the parties signed a short-term pilot program. In
August 1999, the parties signed a longer-term agreement when
Owens Corning entered into an access and services agreement with
FreeMarkets under which Owens Corning obtained:
(i) along with its suppliers, access to FreeMarkets'
proprietary global online bidding system on which FreeMarkets
conducts online auctions or "competitive bidding events" for
Owens Corning's procurement of parts, materials or services;
(ii) certain operational and training services related to
the competitive bidding events; and
(iii) certain "market making" services, including the
provision to Owens corning of two full-time equivalent
professionals to provide research services and services related
to determining opportunities where Owens Corning could save
money with respect to its competitive bidding events.
In exchange for the services FreeMarkets provides to Owens
Corning under the agreement, Owens Corning was required to pay a
monthly fee, plus a certain volume-based monthly fee, and a
performance-based monthly fee. The term of the agreement began
on august 1, 1999, and continued until July 31, 2002, with
either party having the ability to terminate the agreement
without cause after August 1, 2001, by providing advance written
notice of their intention to terminate.
In 2000, Owens Corning and FreeMarkets amended the agreement to
essentially give Owens Corning additional full-time equivalent
professional persons in exchange for additional monthly fees. As
a result of the agreement as amended, Owens Corning tells Judge
Fitzgerald it realized significant procurement contract savings.
In 2001 Owens Corning and FreeMarkets again amended their
agreement to modify the term so that the term began on January 1
2001, and continues for a period of two years with either party
having the one-time right to terminate the agreement for any
reason after January 1, 2002, by giving the other party certain
prior written notice. Further, the parties established a new fee
structure that incorporated terms more favorable to Owens
Corning in that the monthly base fee was eliminated. Further,
the parties are to produce and issue a joint press release
announcing the inclusion of Owens Corning as part of the
FreeMarkets on-line bidding marketplace. However, under these
amendments Owens Corning is required to obtain the Court's
approval of assumption of the agreement, as amended, and in
exchange for such assumption and the payment by Owens Corning to
FreeMarkets of the sum of $123,000,FreeMarkets will release and
waive any and all pre- and postpetition claims for all services
rendered prior to January 1, 2001, which claims total
approximately $420,000.
The actual agreement and its amendments between Owens Corning
and FreeMarkets has been filed under seal.
The Debtor Owens Corning, acting through J. Kate Stickles and
Norman L. Pernick, of the Wilmington firm of Saul Ewing LLP,
asked Judge Fitzgerald to permit the Debtor to assume the
agreement, as amended, with FreeMarkets as a benefit to these
estates. (Owens Corning Bankruptcy News, Issue No. 11;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
PACIFIC GAS: Seeks Okay To Refund Main Line Extension Deposits
--------------------------------------------------------------
Pacific Gas and Electric Company asked the Court for authority
to honor pre-petition requests for $3,004,297 of refundable pre-
petition main line extension deposits out of $258,345,002 held
in 30,935 separate MLX customers accounts, consistent with the
Company's deposit refund policies.
Jeffrey Butler, Vice President of Operations and Maintenance
Construction for PG&E, explained that customers developing bare
lots or adding new loads to their existing utility service must
have service or distribution lines designed and installed.
Customers can pay to have PG&E complete this engineering and
construction work, or they can pay to do the work themselves. In
either case, if the work includes a mainline extension ("MLX"),
PG&E will track the customer's payment in MLX accounts for a
possible future refund of credit to the customer. Rules 15 and
16 of PG&E's gas and electric tariff rules provide that revenue
credits are to be applied against the cost of the engineering
and construction work if the customer's new equipment will be
used within a reasonable period of time or if additional meters
are connected to the extension. These MLX credits, or
allowances, are based upon anticipated natural gas or
electricity billing revenues that PG&E can expect to receive
once the customer's new equipment is connected. MLX credits are
not applied to non-refundable costs such as trenching, land
rights, tree trimming, permits, and protective structures, which
are pre-paid by the customer.
In an application for service or distribution line extensions,
PG&E requires the customer to specify the new equipment to be
served, its operating characteristics, and the expected total
hours of operation of such equipment. PG&E uses this information
to design the facilities to be installed to serve the new loads
and to estimate the revenue that the customer's equipment will
generate. PG&E grants customers revenue-based allowances that
are credited against the cost of PG&E's engineering and
construction work.
Revenue-based allowances are calculated from the "Base Revenue,"
i.e. that portion of PG&E's billed revenues that support the
cost of distribution. Base Revenue does not include elements
such as fuel, generation, transmission, and public purpose
programs. Electric Base Revenues are published in PG&E's
Electric Rate Schedules and Gas Base Revenues are published in
Gas Preliminary Statement B. The revenue allowance for
residential accounts is a flat amount fixed by tariff, based
upon the average, state-wide energy usage per residential unit,
as calculated by the Federal Department of Energy. Base Revenue
for non-residential accounts is based upon the customer's
expected annual energy use, calculated from the load and
operating characteristics reported by the customer in its
initial application and confirmed by PG&E. Once PG&E determines
a customer's annual Base Revenue, it divides that amount by the
Cost of Service Factor, a ratio that adjusts the allowance to
account for PG&E's expected revenue over the life of the service
and distribution lines installed. The current Cost of Service
Factor for electric distribution projects is 0.1596; the
equivalent factor for gas is 0.1812.
Although customers are responsible for the cost of new and
additional service work, PG&E shares a portion of these costs
through allowances based upon the estimated Base Revenue derived
from that new or additional service.
PG&E offers customers two primary options for paying for the
cost of its engineering and construction work:
* Under the first option, the customer pays an amount equal
to the refundable portion of the project cost, less revenue
allowances.
* The second option uses the same calculation but allows
the customer to pay 50% of the amount due. By selecting the 50%
discount option, however, the customer waives any future refunds
that may be generated by actual Base Revenues exceeding its
estimated Base Revenue allowance or by other customers
connecting to its extension. In addition, the discount option
does not prevent deficiency billings.
PG&E initially credits the adjusted Base Revenue against the
refundable portion of the customer's payment.
If a residential customer does not begin generating revenues
within six months from the date that PG&E is ready to provide
service, PG&E issues a deficiency bill to the customer up to the
full amount of the initial revenue allowance. Once a residential
customer's equipment is online, however, the account is
subjected to an ongoing, computerized review based on the number
of residential units connected to the distribution line. PG&E
automatically issues a refund to residential customers each time
a qualifying new residential unit is connected to the
distribution lines. Increased revenues generated by residential
units already connected to the distribution lines -- through the
use of additional appliances, for example -- do not result in
additional refunds to residential customers.
PG&E grants non-residential customers an initial revenue
allowance based on the customer's estimated energy use. PG&E
verifies the actual revenues generated by non-residential
customers by means of a manual review on the first, second, and
third anniversaries of the date on which it was first ready to
provide service. PG&E also performs reviews on the fourth
through tenth year anniversaries if requested by the customer.
Actual revenues are calculated using the current Base Revenue
and Cost of Service Factor.
If the non-residential customer's actual revenues exceed the
Base Revenue estimated for the first year (or exceeds the
previous year's actual use in subsequent years), PG&E refunds
the difference to the customer, up to the total refundable
amount. However, if actual revenues are lower than that used as
a credit against the cost of the project, PG&E issues a bill for
the deficiency to the customer. Both residential and non-
residential customers have 10 years to obtain refunds. Refunds
may never exceed the total refundable cost of PG&E's engineering
and construction work.
PG&E currently holds approximately $258,345,002 in outstanding,
refundable MLX deposits in approximately 30,935 MLX accounts
separated by customer, Mr. Butler relates. Approximately
$40,723,148 is held on behalf of 7,599 individual, residential
accounts. Another $146,880,949 is held on behalf of 8,862
residential subdivision accounts. Approximately $70,740,905 is
held on behalf of 14,474 non-residential accounts. In 2000, PG&E
refunded a total of $55,312,301 in MLX deposits: $420,443 to
individual residential customers, $49,755,052 to residential
subdivision customers, and $5,136,805 to non-residential
customers. PG&E estimates that outstanding pre-petition MLX
refund obligations amount to a total of $3,004,297: $889,739 to
individual residential customers, $7,033,831 to residential
subdivisions, and $1,405,563 to non-residential customers. The
average pre-petition amount owed is $8,016 per individual
residential customer, $1,224 per residential subdivision
customer, and $4,717 per non-residential customer.
Honoring customer refunds, Janet Nexon, Esq., from Howard, Rice,
Nemerovski, Canady, Falk & Rabkin, argued, is necessary and
appropriate and permissible given the Court's broad equitable
powers under 11 U.S.C. Sec. 105. PG&E's customers were required
to post these deposits or do without utility service. Moreover,
the cost of customer ill-will that would be caused by telling
MLX customers to file proofs of claim and wait for payment until
confirmation of a plan of reorganization far outweighs returning
$3 million of MLX customers' money. (Pacific Gas Bankruptcy
News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
PHOENIX RESTAURANT: Defaults on Payment Of $22.3 Million Debt
-------------------------------------------------------------
As of December 27, 2000, Phoenix Restaurant Group, Inc., itself
or through certain wholly-owned subsidiaries, operated 188
family-oriented, full-service restaurants in 20 states. The
Company currently has two restaurant concepts serving the full
service restaurant segment. As of December 27, 2000, under the
Black-eyed Pea brand, the Company has 92 casual dining
restaurants which are located primarily in Texas, Arizona, and
Oklahoma. As of December 27, 2000, the Company also operates
under franchise agreements 96 family dining restaurants under
the Denny's brand. The Company's Denny's restaurants are located
primarily in Florida, Texas, Arizona, Colorado and Oklahoma. The
Company's Denny's restaurants represent approximately 5.3% of
the overall Denny's system.
The Company currently operates 91 Black-eyed Pea restaurants in
8 states. Black-eyed Pea restaurants are full-service, casual
dining establishments featuring wholesome home-style meals.
Denny's are family-oriented, full-service restaurants featuring
a wide variety of traditional family fare. The restaurants are
designed to provide a pleasant dining atmosphere with moderately
priced food and quick, efficient service. Denny's restaurants
generally are open 24 hours a day, seven days a week. The
Company currently operates 71 Denny's restaurants in 15 states,
representing approximately 4.0% of the Denny's system.
Restaurant sales decreased 8.6% to $218.1 million in fiscal 2000
as compared with restaurant sales of $238.7 million in fiscal
1999. This decrease was attributable primarily to a decline in
comparable store sales of 9.0% at the Company's Black-eyed Pea
restaurants, offset by a slight increase in comparable store
sales of 0.4% at the Company's Denny's restaurants.
The Company has not been profitable in the last four fiscal
years and its operations are not expected to be profitable in
the near future. The Company cannot provide assurance that it
will be able to sell its remaining Denny's restaurants,
restructure or refinance its debt, and improve the performance
of its Black-eyed Pea restaurants so as to achieve profitability
in the future. In addition, the report by its independent
auditors on its financial statements for the year ended December
27, 2000, states that the uncertainty relating to its ability to
generate sufficient cash flow to meet its obligations on a
timely basis, to comply with the terms and covenants of its
financing agreements, to obtain additional financing or
refinancing as may be required, and ultimately to attain
successful operations raise substantial doubt about its ability
to continue as a going concern. As of the filing date of the
Company's most recent financial statement with the SEC, the
Company is in default on the payment of its $22.3 million
promissory note to its senior lender, CNL APF Partners, LP
(together with its affiliates and related entities), $16.8
million principal amount of subordinated indebtedness, as well
as interest and rent payments to CNL and interest on its
subordinated indebtedness.
PRESIDENT BROADWATER: Files For Chapter 11 in S.D. Mississippi
--------------------------------------------------------------
President Casinos, Inc. (OTC Bulletin Board: PREZ) announced
that its indirectly owned subsidiary, President Broadwater
Hotel, LLC, had filed for reorganization under Chapter 11 of the
U.S. Bankruptcy Code in the United States Bankruptcy Court for
the Southern District of Mississippi. President Broadwater
Hotel, LLC owns the Broadwater Hotel property in Biloxi,
Mississippi, together with an adjoining golf course, on a total
of approximately 260 acres. In addition, President Broadwater
Hotel, LLC is the landlord with respect to the President
Casinos' Mississippi gaming subsidiary, leasing to it the use of
the marina adjoining the Broadwater Hotel.
It is anticipated that this filing will impact the holder of
approximately $37 million of first mortgage indebtedness related
to the Broadwater property due to the Company's inability to
timely repay the principal amount of the loan at maturity. The
bankruptcy is not expected to impact any parties doing business
with the Biloxi casino. It also is not expected to affect the
employment relationships at the Broadwater or amenities provided
to the hotel's guests and customers of the Mississippi gaming
operations. In addition, no impact is anticipated on either the
Missouri gaming company or the parent, President Casinos, Inc.
President Casinos, Inc. previously reached a tentative agreement
with a substantial majority of its bondholders with respect to
debt related to the parent company and is pursuing plans to
repay this debt.
John S. Aylsworth, President and Chief Operating Officer said,
"While we regret having to reorganize the President Broadwater
Hotel subsidiary under a court-overseen process, we have not yet
been able to realize the value inherent in our Biloxi property.
We are continuing to pursue this effort. We remain confident
that the value of the property in Biloxi exceeds any liabilities
that may be associated with it and, given a sufficient period of
time, we believe we will be able to realize fully the value of
the Biloxi property. Meanwhile, operations in St. Louis continue
to improve, with gaming revenues for the first full three months
(January through March) at our new location up 19% over the
prior year, and with March 2001 the highest gaming revenue month
in our history."
President Casinos, Inc. owns and operates dockside gaming
facilities in Biloxi, Mississippi and downtown St. Louis,
Missouri north of the Gateway Arch.
QUEENSWAY FINANCIAL: Selling U.S. Operations To Pay Debts
---------------------------------------------------------
Queensway Financial Holdings Limited disclosed, pursuant to the
binding letter of intent entered into and announced on February
19, 2001, that it has signed a definitive agreement of purchase
and sale with Argonaut Specialty Group, Inc. (a subsidiary of
Argonaut InsuranceCompany), to sell its subsidiaries, North
Pointe Financial Services, Inc., Hermitage Insurance Company,
Consolidated Property& Casualty Insurance Company and Universal
Fire and Casualty Insurance Company. These subsidiaries account
for approximately 83% of Queensway's assets and approximately
91% of Queensway's gross written premiums (in each case,
excluding the Sun States Insurance Group and Paradigm Insurance
Company both of which are in liquidation).
Closing of the transaction is subject to obtaining regulatory
and other approvals and consents, and is expected to occur on or
before June 30, 2001. The purchase price is US$40 million,
subject to certain adjustments. Proceeds received on closing
will be net of holdbacks totaling US$6 million, of which US$2
million will be paid to Queensway upon completion of an audit of
the closing date accounts, subject to operating losses (if any),
reflected in the closing date accounts. The US$4 million
holdback balance will be paid following the second anniversary
of the closing date subject to the adequacy of the insurance
reserves and other provisions in the closing date accounts, and
compliance with the agreement's various representations and
warranties.
As previously announced, these sales together with the proposed
sales of Atlantic Alliance Fidelity & Surety Company, Coachman
Insurance Company and Queensway Investment Counsel Limited
would, when completed, effectively represent the disposition of
all of Queensway's operating companies. The proceeds received on
closing of these sales will be applied to outstanding
indebtedness. Queensway's Board of Directors continue to manage
the sale processand to consider the alternatives which remain
available to the company.
Queensway is a specialty insurance group that provides a range
of individual and commercial insurance coverages.
QUOKKA SPORTS: Filing For Chapter 11 Bankruptcy Protection
---------------------------------------------------------
Quokka Sports laid off about 150 members of its staff, leaving
only a small number to help wind down operations as the company
prepares to file for chapter 11, according to CNET News.com.
Quokka executives had previously announced that they were
considering bankruptcy if a buyer or partner could not be
located. The decision to shut down the company was made on
Monday after it was determined there would be no buyer. The San
Francisco-based sports media company had landed high-profile
partnerships with NBC, the International Olympics Committee, and
Major League Baseball. Quokka had been hustling to find a buyer
before the May 1 deadline that would annul its agreements with
NBC. That deal contained the right to produce Internet coverage
for the 2002 Winter Olympic Games in Salt Lake City. (ABI World,
April 19, 2001)
RESPONSE ONCOLOGY: Reports Fourth Quarter & FY 2000 Results
-----------------------------------------------------------
Response Oncology, Inc., (OTC Bulletin Board: ROIX) reported its
financial results for the fourth quarter and year ended December
31, 2000.
For 2000, net revenues were $130.8 million, 3 percent lower than
the $135.6 million reported in 1999. A 14 percent increase in
physician practice management (PPM) service fees, and a 3
percent rise in pharmaceutical sales to physicians were offset
by a 50 percent decline in IMPACT(R) net patient service revenue
for high dose chemotherapy and a 62 percent decline in clinical
research revenue.
The $14.1 million decrease in IMPACT(R) Center revenue continues
to reflect the pullback in breast cancer admissions, which
resulted from the high dose chemotherapy/breast cancer study
presented at the American Society of Clinical Oncology (ASCO) in
May 1999. Since the release of this data, the high dose
chemotherapy business has slowed significantly, as evidenced by
a 49 percent decrease in high dose procedures at the Company in
2000 as compared to 1999. In addition, the Response Oncology
experienced a decline in insurance approvals on some high dose
referrals. As a result of the decline in volumes, the Company
closed 19 IMPACT(R) Centers in 2000 and will be closing at least
11 more in the second quarter of 2001. PPM service fees rose due
to increases in patient volume for both ancillary and non-
ancillary services and pharmaceutical utilization, and occurred
despite a 7 percent decrease in the number of physicians under
management agreements for the year ended December 31, 2000, as
compared to 1999. Pharmaceutical sales rose as a result of
increased drug utilization by the physicians serviced under
these contracts, but were tempered by the termination of two
pharmaceutical sales agreements effective July 1, 2000.
Operating and general expenses for the year (excluding
pharmaceuticals and supplies) were down 16 percent, or $6.9
million, compared with 1999. This reflected the cost reduction
and containment steps begun in the first quarter of 2000, the
closing 19 IMPACT(R) Centers, lower patient volumes, and the
termination of certain service agreements in the PPM division.
Pharmaceuticals and supplies expense rose 12 percent, or $9.2
million, in 2000. The increase primarily related to greater use
of new chemotherapy agents with higher costs in the PPM
division, and greater volume in pharmaceutical sales to
physicians. The Company recognized an after tax impairment
charge of $9.9 million in the fourth quarter of 2000 related to
the sale of the assets of Oncology Hematology Group of S.
Florida, P.A., and the termination of its management services
agreement with the Company at that time. In addition,
restructuring charges of $.9 million were recorded in the fourth
quarter of 2000 related to the closing of various IMPACT(R)
Centers, severance payments, and professional fees. The
Company's net loss for the year was ($14.4) million, equal to
($1.17) per diluted share, compared with a net loss of ($1.7)
million, equal to ($0.14) per diluted share, for year ended
1999.
For the fourth quarter, net revenues were $30.9 million, down 5
percent from $32.6 million for the 1999 three months. Excluding
pharmaceuticals and supplies, all operating and general expenses
were down 6 percent, or $630,000, due to the cost reduction
programs mentioned earlier. Pharmaceuticals and supplies
expenses rose 3 percent, or $627,000, primarily due to higher
pharmaceutical utilization in the PPM division, and increased
pharmaceutical sales to physicians. The net loss for the three
months was ($13.1) million (after impairment and restructuring
charges), equal to ($1.06) per diluted share, versus a loss of
($3.1) million, equal to ($0.26) per diluted share, for the same
period in 1999.
As previously announced, the Company's common stock was delisted
from the Nasdaq National Market on March 15, 2001, since the
Company could not meet the listing standard that requires a
minimum bid price of $1.00. In addition, on March 29, 2001, the
Company and its wholly owned subsidiaries filed voluntary
petitions for relief under Chapter 11 of the United States
Bankruptcy Code in the United States District Court for the
Western District of Tennessee. Response Oncology currently is
developing a reorganization plan to restructure its obligations
and operations. However, there can be no assurance that this
plan will be successful.
Response Oncology, Inc. is a comprehensive cancer management
company. The Company provides advanced cancer treatment services
through outpatient facilities known as IMPACT(R) Centers under
the direction of practicing oncologists; compounds and dispenses
pharmaceuticals to certain medical oncology practices for a fee;
owns the assets of and manages the nonmedical aspects of
oncology practices; and conducts clinical research on behalf of
pharmaceutical manufacturers. Approximately 300 medical
oncologists are affiliated with the Company through these
programs.
SAISON LIFE: S&P Gives Insurer 'BB+' Financial Strength Rating
--------------------------------------------------------------
Standard & Poor's assigned its double-'B'-plus financial
strength and long-term counterparty credit ratings to Saison
Life Insurance Co. Ltd. The outlook on the long-term rating is
negative.
The financial strength rating on Saison Life reflects the
insurer's very weak operating performance stemming from
relatively high surrenders and poor efficiency, which are
pressuring earnings. These factors are mitigated by the
insurer's low-risk asset profile together with the benefits of
potential access to the clients of its parent, Credit Saison Co.
Ltd., a large and highly profitable credit card company in
Japan. In addition, Saison Life's capitalization is strong,
supported by an increased commitment from the parent, which
recently injected JPY20 billion. Credit Saison is a member of
the Saison group, which encompasses more than 130 companies.
Saison Life is a second-tier life insurer with a 0.2% share of
the market in terms of premium income in fiscal 1999 (ended
March 2000). A key issue in enhancing its market position will
be Saison Life's success in implementing its strategic plan. The
company's management is focusing on increasing sales based on a
consulting approach, as well as leveraging the broad base of
Saison cardholders. The company's business position has remained
weak over the last two years as premium income has declined by
7.6% compared with an average decline of 5.7% in the Japanese
life insurance industry, while surrenders continue to be
relatively high at 11.6% compared with an industry average of
10.5%. Given the increased surrenders at Saison Life after
recent high-profile failures in the industry, the earnings of
Saison Life are likely to remain weak in fiscal 2000. However,
Saison Life, as a subsidiary of Credit Saison, has good access
to the customer base of the Saison group. The insurer is
expected to generate new business among these customers in the
future if the current strategies are successful.
Saison Life's asset mix is relatively diverse. The insurer's
loan portfolio is good with few problem loans. However, the
insurer's investment performance was weak in fiscal 1999, mainly
due to falling equity prices-the insurer has some crossholdings
in Saison group companies-and the volatility of the euro. The
company's exposure to foreign currency risk remains relatively
high.
Saison Life's capital was previously marginal as a result of
declining business and relatively high exposure to foreign
investment markets. However, an injection of JPY20 billion in
perpetual subordinated loans from its parent strengthened Saison
Life's capital significantly. The insurer's financial
flexibility is good, based on its nonmutual status as well as an
increased commitment by Credit Saison to support the company's
financial strength, if required.
Outlook: Negative
The negative outlook reflects the increasing pressure on
earnings in the Japanese life insurance sector as a whole, amid
a challenging operating environment. Despite radical
restructuring in the last three years, Saison Life will not be
insulated from this pressure in the short term. It is likely
that the insurer will form alliances with other companies in the
short-to-mid term, although what effect this will have on Saison
Life's competitive position is not yet clear, Standard & Poor's
said. ---CreditWire
STEEL COMPANY: Shuts Down Due To Lack Of Funds
----------------------------------------------
The Steel Company and its affiliate, Midwest Annealing &
Processing Co., said they would cease operations and assign
their assets to trustee David Abrams for the benefit of
creditors. Both Chicago-based companies, which pickled, cold-
rolled and annealed steel, said they owed about $16 million to
creditors. Although assets were not disclosed, it is assumed
that they are less than the debt. Neither company was able to
receive further credit, making it impossible to sustain
operations. "We felt that more money would be obtained for
creditors by using an out-of-court assignment to a trustee
rather than by filing an expensive bankruptcy case," said
company attorney John Collen. (ABI World, April 19, 2001)
TEMTEX INDUSTRIES: Nasdaq To Delist Common Stock On April 25
------------------------------------------------------------
TEMTEX INDUSTRIES, INC. (Nasdaq: TMTX), which manufactures
woodburning and gas fireplaces and related products, announced
that Nasdaq intends to delist its common stock from The Nasdaq
Stock Market.
The Company stated that it received a Nasdaq staff determination
on April 17, 2001, that its securities are subject to delisting
with the Nasdaq SmallCap Market for failure to comply with the
minimum bid maintenance requirements under Marketplace Rules
4310(c)(8)(B) and 4310(c)(4). The Company was given until April
24, 2001 to request a hearing to appeal the staff determination
and was notified that its securities would be delisted at the
opening of business on April 25, 2001, unless an appeal is
requested. The Company further stated that it will not appeal
the staff determination and, therefore, that its stock will be
delisted from the Nasdaq SmallCap Market on April 25, 2001.
Following the delisting with The Nasdaq SmallCap Market, the
Company intends for its stock to be traded via the OTC Bulletin
Board(R) (OTC BB). The delisting of the Company's stock on the
Nasdaq SmallCap Market will likely adversely affect the ability
or willingness of investors to purchase the Company's stock. In
addition, the market liquidity of the Company's securities is
likely to be adversely affected.
TEXAS EQUIPMENT: Recurring Losses Raise Going Concern Doubts
------------------------------------------------------------
Texas Equipment Corporation currently operates eight retail
stores in two states, specializing in the distribution, sales,
service and rental of agricultural equipment, primarily supplied
by Deere & Company and its subsidiaries. The Company's stores
are located in West Texas and Eastern New Mexico. The Company
acquired four of its agricultural equipment stores in 1997 and
two in 1998. The 1998 acquisitions extended the Company's
equipment retail store network northward in West Texas with its
Amarillo dealership purchase, and westward in Texas with its
acquisition of one store located in Tornillo, Texas, about
thirty miles southeast of El Paso, Texas and three miles from
the border between the US and Mexico.
Deere, a leading manufacturer and supplier of agricultural
equipment in the United States, is the primary supplier of the
equipment and parts sold by the Company. Sales of new Deere
equipment by the Company accounted for approximately 82% of the
Company's new equipment sales in 2000. No other supplier
accounted for more than 2% of the Company's new equipment sales
in 2000. The Company expects that Deere products will continue
to account for the majority of its new agricultural equipment
sales.
The Company's audit report includes an explanatory paragraph in
the auditor's opinion with respect to the Company's consolidated
financial statements at December 31, 2000. The paragraph states
that Texas Equipment's recurring losses from operations and
resulting continued dependence on access to external financing
and the need to restructure its dealership and bank agreements
raise substantial doubts about the Company's ability to continue
as a going concern.
Revenues decreased approximately $5,572,000, or 8.8%, to
$57,648,203 for 2000 from $63,220,272 for 1999. Net loss
increased approximately $1,757,000 to a net loss of ($2,988,024)
in 2000 from a net loss in 1999 of ($1,231,019).
UNITED PAN-EUROPE: Moody's Slashes Senior Debt Rating To Caa1
-------------------------------------------------------------
Moody's Investors Service took the following actions on the debt
ratings of United Pan-Europe Communications (UPC) and its
subsidiaries:
* senior unsecured notes lowered from B2 to Caa1
* guaranteed senior secured bank debt lowered from Ba3 to
B1
* senior implied rating is B2
* The senior unsecured issuer rating for UPC is Caa1.
The outlook for all ratings is negative while approximately
US$8.4 billion (US$ equivalent face amount) of debt securities
are affected.
Accordingly, this concludes the rating agency's review of the
company's debt ratings, which began January 18, 2001.
Moody's relates that the downgrades broadly reflect the
company's very high financial leverage and debt service costs,
which have grown significantly beyond its expectations,
notwithstanding recent and pending equity capital contributions;
heightened concerns about the company's liquidity needs post-
2002, and the likely sources of financing for anticipated
shortfalls; the very large requisite growth in operating
performance that needs to be realized in order to demonstrate
some ability to service the company's debt obligations; and
generally diminished recovery prospects in a downside scenario,
including the prospect of some loss absorption on ultimate
recovery for the company's senior unsecured noteholders in
particular.
The ratings also continue to reflect significant execution risk
and capital expenditure requirements as the company furthers its
network upgrades and introduces new services across a widely
dispersed subscriber base; structural issues with respect to the
company's corporate organization and consolidated
capitalization, with particular reference to the large and
growing layer of still reasonably well-protected bank debt; and
broad-based country risks related to the company's multinational
operations, including potentially adverse currency exchange,
local economic, competitive, political and regulatory
conditions, according to Moody's.
United Pan-Europe Communications is a leading provider of
broadband communication services with approximately 7.1 million
(consolidated) subscribers located in 17 European countries and
Israel. UPC maintains its headquarters in Amsterdam, The
Netherlands.
USA FLORAL: Selling Domestic Operations & Stock of Canadian Unit
----------------------------------------------------------------
U.S.A. Floral Products, Inc. (OTC: ROSI.OB and certain of its
subsidiaries have entered into ten contracts to sell the
Company's remaining U.S. domestic operations and the stock of
its Canadian subsidiary. The proposed sales are subject to
higher and better offers and Bankruptcy Court approval. The
proposed sales do not include the Company's International
Division (Florimex).
As previously announced, on April 2, 2001, the Company and
sixteen of its U.S. subsidiaries voluntarily filed for
protection under Chapter 11 of the United States Bankruptcy Code
in the U.S. Bankruptcy Court for the District of Delaware.
On April 18, 2001, the Bankruptcy Court signed an Order
approving bidding procedures and setting May 3 as the date for a
hearing to consider approval of the proposed sales of the
Domestic Assets. Among other things, the bidding procedures
order entered by the Bankruptcy Court sets forth a procedure for
submitting higher and better offers for the purchase of some or
all of the Company's Domestic Assets and an auction sale for
qualified bidders to be held on May 1, 2001. Thereafter, on May
3, 2001, the Bankruptcy Court will hold a hearing to consider
approval of the proposed sales.
Due diligence with respect to the sale of the Domestic Assets is
being coordinated by PricewaterhouseCoopers. Interested parties
should contact Martin L. Cohen, PricewaterhouseCoopers, 1900 K
Street, NW, Suite 900, Washington, D.C. 20006; phone (202) 822-
4237; facsimile (202) 861-7953; email:
martin.l.cohen@us.pwcglobal.com.
As previously announced, the Company presently anticipates that
all proceeds from the sale of its assets will be distributed to
creditors and that no proceeds will be available for
distribution to its shareholders.
VENCOR INC.: Settles Gene Smith's Claim
---------------------------------------
Gene Smith filed a proof of claim, as amended, in Vencor, Inc.'s
cases alleging indemnification obligations of the Debtors to
him.
As the Debtors do not intend to assume any indemnification
obligations alleged in the Smith Claim, pursuant to Section
12.03 of the Plan, the Debtors sought and obtained the Court's
approval to a Settlement Agreement with Mr. Smith providing, in
relevant part, that the Smith Claim will be deemed allowed and
Smith's rights against the Debtors with respect to
indemnification, contribution, and/or other similar relief would
be preserved subject to the following conditions:
-- Debtors shall use their commercially reasonable efforts
to continue and maintain Smith's present rights to insurance
coverage under any so- called directors' and officers' policy
(D&O Policy), and will afford Smith the same treatment afforded
all ex-officers and directors respecting renewal or acquisition
of insurance coverage; and
-- any and all obligations of the Debtors to provide
indemnification, contribution and/or other similar relief to
Smith, including, without limitation, all obligations in respect
of the Smith claim, will be satisfied only through payments made
or funded under any available present or future D&O Policy.
The Debtors believe, in the exercise of their business judgment,
that the Settlement Agreement represents a fair and reasonable
resolution of the Smith Claim. (Vencor Bankruptcy News, Issue
No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900)
VOICE MOBILITY: Posts $9.7 Million Loss For Year 2000
-----------------------------------------------------
Voice Mobility International is a Nevada corporation,
incorporated on October 2, 1997, as Equity Capital Group, Inc.,
and is the successor to the voice service and related messaging
business founded by Voice Mobility Inc. Currently, the Company
is focused on the commercial introduction and sale of its
Unified Communications software suite that it launched in July
1999. Voice Mobility is engaged in the area of the
telecommunications market known as "unified messaging." It
intends to concentrate the marketing of its Unified
Communications software suite to "Tier II" service providers
who, in the opinion of the Company's management, are the most
aggressive service providers in the marketplace. Tier II service
providers include Wireless Service Providers, Competitive Local
Exchange Providers (CLECs), Internet service providers (ISPs),
cable operators and smaller incumbent local exchange carriers.
In addition to marketing its products to Tier II service
providers, the Company is also in the process of developing its
Unified Communications products for the Tier I telephone
carriers.
Sales for the fiscal year ended December 31, 2000 were $275,190
compared to $55,997 for the fiscal year ended December 31, 1999
representing an increase of 391%. Sales for the fiscal year
ended December 31, 2000 represent the recognition of $93,016 in
deferred revenue from 1999, $98,162 for the sale of third party
computer hardware and software, $21,512 for server installation
and setup charges, and $62,500 of software license revenue based
on the Company's software license agreement with Ikano
Communications Inc. Sales for the fiscal year ended December 31,
1999 were from the sale of a software license and third party
hardware and software.
The Company incurred an operating loss of ($9,748,026) for the
year ended December 31, 2000 [1999 - ($5,988,396); 1998 -
($890,711)] that raises substantial doubt about its ability to
continue as a going concern. Management has been able, thus far,
to finance the operations, as well as the growth of the
business, through a series of equity private placements. The
Company is continuing to seek other sources of financing. On
April 3, 2001 the Company completed an offering of 6,500,000
Special Warrants at a price of Cdn.$2.00 per special warrant for
aggregate proceeds of Cdn.$13,000,000 of which Cdn.$1,010,000
was paid to the placement agents for fees and expenses and
Cdn.$11,305,000 has been escrowed for the purpose of obtaining
approval to list the Company's common shares on The Toronto
Stock Exchange ("TSE"). The special warrants underlying the
escrowed funds are subject to repurchase in the event a TSE
listing does not become effective by October 3, 2001. Management
plans to apply to the TSE in order to have the funds removed
from escrow. Management also expects that increasing revenues
from current operations will result in 2001 from the deployment
of the unified communications software product. There are no
assurances that the Company will be successful in achieving
these goals.
In view of these conditions, the ability of the Company to
continue as a going concern is uncertain and dependent upon
achieving a profitable level of operations and, if necessary, on
the ability of the Company to obtain necessary financing to fund
ongoing operations.
W.R. GRACE: Employs Pachulski Stang as Local Counsel
----------------------------------------------------
Pursuant to 11 U.S.C. Sec. 327(a), W. R. Grace & Co. sought and
obtained permission from Judge Newsome to employ Pachulski,
Stang, Ziehl, Young & Jones P.C., as their local counsel in
these chapter 11 cases. Specifically, David B. Siegel, Grace's
Senior Vice President and General Counsel, told Judge Newsome,
the Company will look to PSZY&J:
(a) to provide legal advice with respect to their powers
and duties as debtors in possession in the operation and
reorganization of their businesses and their properties;
(b) to prepare and pursue confirmation of a reorganization
plan and approval of a disclosure statement;
(c) to prepare on behalf of the Debtors necessary
applications, motions, answers, orders, reports and other legal
papers;
(d) to appear in Court and to protect the interests of the
Debtors before the Court; and
(e) to perform all other legal services for the Debtors
which may be necessary and proper in these proceedings.
Laura Davis Jones, Esq., leads the engagement from her office in
Wilmington, Delaware. The principal attorneys and paralegals
presently designated to represent the Debtors and their current
hourly rates are:
Laura Davis Jones, Esq. $455
Hamid R. Rafatjoo, Esq. $295
David W. Caickhoff, Jr., Esq. $245
Peter J. Duhig, Esq. $195
Kathe Finlyson $120
Pamela A. McGuiork $115
Cheryl Knotts $105
Prior to the Petition Date, Ms. Jones disclosed, PSZY&J received
a $150,000 retainer from W.R. Grace. In addition, the Firm
received $51,460 from the Debtors on account of the filings fees
for their 62 chapter 11 petitions.
Ms. Jones assured the Court that she and her Firm are
disinterested within the meaning of 11 U.S.C. Sec. 101(14). Out
of an abundance of caution, Mr. Jones disclosed that her Firm
represents the National Association of Attorneys General, and
that engagement included the preparation of a report regarding
the ramification of a bankruptcy filing by any of the tobacco
companies. If any conflict should arise -- for example, if W.R.
Grace would need to file a proof of claim in a tobacco
bankruptcy case -- Ms. Jones advised that another law firm will
be retained to represent the Debtors in that discrete matter and
to provide the NAAG with any necessary analysis, advice or
counsel. (W.R. Grace Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
BOND PRICING: For the week of April 23-27, 2001
-----------------------------------------------
Following are indicated prices for selected issues:
Algoma Steel 12 3/4 '05 17 - 20(f)
Amresco 9 7/8 '05 53 - 55
Arch Comm. 12 3/4 '07 31 - 33
Asia Pulp & Paper 11 3/4 '05 12 - 15(f)
Chiquita 9 5/8 '04 57 - 59(f)
Friendly Ice Cream 10 1/2 '07 55 - 58
Globalstar 11 1/4 '04 3 - 4(f)
Level 3 9 1/8 '08 62 - 64
PSI Net 11 '09 5 - 7(f)
Revlon 8 5/8 '08 44 - 46
Trum AC 11 1/4 '06 66 - 67
Weirton Steel 10 3/4 '05 36 - 38
Xerox 5 1/2 '03 73 - 75
*********
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For copies of court documents filed in the District of
Delaware, please contact Vito at Parcels, Inc., at 302-658-
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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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Copyright 2001. All rights reserved. ISSN: 1520-9474.
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