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/raid1/www/Hosts/bankrupt/TCR_Public/010426.MBX T R O U B L E D C O M P A N Y R E P O R T E R Thursday, April 26, 2001, Vol. 5, No. 82 Headlines ADVANCED RADIO: Files Chapter 11 Petition in Wilmington ADVANCED RADIO: Case Summary & 20 Largest Unsecured Creditors ALGOMA STEEL: Secures CCAA Order for Debt Restructuring ALGOMA STEEL: Steelworkers Pledge Support In Restructuring ALGOMA STEEL: Moody's Slashes First Mortgage Notes To Caa2 ARMSTRONG: Asks To Extend Rule 9027 Removal Period To October 2 AVIATION SALES: Senior Debt Ratings Dive To Junk Levels BETHLEHEM STEEL: Posts $118 Million Net Loss For Q1 2001 BRIDGE INFORMATION: Banks Plan to Block Reuters Bid For Assets CHIQUITA BRANDS: Releases First Quarter Financial Results CHIYODA LIFE: S&P Withdraws Ratings After Reorganization CLARK MATERIAL: Taps Glass & Associates As Management Consultant CONVERSE INC.: Reports Financial Results For Fiscal Year 2000 DXP ENTERPRISES: Shares Subject To Delisting From Nasdaq FINOVA GROUP: GE Aircraft Seeks Relief From Automatic Stay FREEREALTIME.COM: Files Chapter 11 Petition in C.D. California FULL HOUSE: Receives Nasdaq's Delisting Notice ICG COMM: Trustee Balks At Move To Pre-Approve Bidder Incentives IMPERIAL CREDIT: Falls Short Of Nasdaq's Listing Requirement KCS ENERGY: Annual Stockholders Meeting Is On May 24 In Houston KYOEI LIFE: S&P Withdraws Ratings After Reorganization LILLY'S JEWELERS: Files for Chapter 11 Bankruptcy Protection LTV CORPORATION: Appoints Carl B. Frankel to Board of Directors MARINER: Health Seeks Further Extension To Decide On Leases NORTHWESTERN STEEL: Asks Court To Establish June 18 Bar Date OWENS CORNING: Agrees To Provide Utilities Payment Assurance PACIFIC GAS: Seeks Permission to Fund Energy Efficiency Programs PROTECTION ONE: Fitch Cuts Senior Notes To B, Sub Debt To CCC+ SIMITAR ENTERTAINMENT: Plan Confirmation Hearing Set For May 17 SKINNER ENGINE: Files for Chapter 11 Protection STROUDS INC: Bankruptcy Court Gives Go Ahead For Asset Sales SYBASE INC.: Stockholders To Convene in California On May 24 SYMONS INTERNATIONAL: Posts $71.4 Million Loss For Year 2000 TENNECO AUTOMOTIVE: Discloses 2001 First Quarter Results VENCOR INC.: Medstar Moves To File Late Proof Of Claim VISTA EYECARE: Atlanta Court Gives Nod On Disclosure Statement W.R. GRACE: Paying Prepetition Sales And Use Taxes WINSTAR COMMUNICATONS: Honoring Prepetition Customer Obligations WORLD ACCESS: Files Chapter 11 Petition in N.D. Illinois WSR CORPORATION: Seeks to Extend Exclusive Periods ********* ADVANCED RADIO: Files Chapter 11 Petition in Wilmington ------------------------------------------------------- Advanced Radio Telecom Corp. and four affiliates-ART Licensing Inc., ART Leasing Inc., Big Creek Systems LLC and DCT Communications-filed for chapter 11 bankruptcy protection on Friday in the U.S. Bankruptcy Court in Wilmington, Del., according to The Wall Street Journal. The company listed assets of $535.2 million and debts of $247.7 million as of Sept. 30, 2000. The Bellevue, Wash.-based Advanced Radio also listed more than 1,000 creditors and said that funds will be available for unsecured creditors. Triton Network Systems Inc., which holds a $3 million claim for inventory, is the company's largest creditor. The broadband fixed wireless Internet services provider first announced its intention to file for bankruptcy on March 30. At the time, Advanced Radio said that continuing distressed capital markets prevented it from completing any of the financing alternatives it had been pursuing. (ABI World, April 24, 2001) ADVANCED RADIO: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: Advanced Radio Telecom Corp. 500-108th Avenue NE Bellevue, WA 98004 Debtor affiliates filing separate chapter 11 petitions: Art Licensing Corp. Art Leasing, Inc. Big Creek Systems, LLC DCT Communications, Inc. Type of Business: Broadband fixed wireless internet services provider Chapter 11 Petition Date: April 20, 2001 Court: District of Delaware Bankruptcy Case Nos.: 01-01511 through 01-01515 Debtors' Counsel: Bruce Grohsgal, Esq. Wolf, Block, Schorr & Solis-Cohen LLP 920 King Street, Suite 300 Wilmington, DE 19801-3319 (302) 777-5860 and Laura Davis Jones, Esq. Pachulski, Stang, Ziehl, Young & Jones, P.C. 919 North Market Street 16th Floor, P.O. Box 8705 Wilmington, DE 19866-8705 Tel: (302) 652-4100 Fax: (302)652-4400 Total Assets: $535,186,155 Total Debts: $247,694,034 Consolidated List of Debtors' 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Triton Network Systems, Inc. Inventory $3,000,000 Attn: Ken Vines 8529 South Park Circle Suite 400 Orlando, FL 32819 P: 407-903-0900 F: 407-903-0999 WFI Trade $1,337,635 Attn: Accounts Payable 4810 Eastgate Mall San Diego, CA 92121 P: 858-824-2929 F: 858-824-2928 Ropes & Gray Legal $780,000 Attn: Mary E. Weber, Esq. One International Place Boston, MA 02110-2624 P: 617-951-7000 F: 617-951-7050 General Dynamics 640232 Trade $701,253 c/o PNC Bank NA Attn: Tom DiMatteo P.O. Box 640232 Pittsburgh, PA 15264-0232 P: 781-455-2914 F: 781-455-2865 Tower Resource Management Trade $297,000 Dept. 296 Attn: Bill Crowley 979 South High St. Columbus, OH 43265-0296 P: 301-652-0405 F: 301-652-8039 PricewaterhouseCoopers Trade $240,000 American Express Trade $174,046 DDB Worldwide Comm Group Inc Trade $139,028 Ceragon Networks Inventory $127,775 Melvin Mark Construction Trade $109,351 Pacific Northwest Networks Trade $80,000 Inc. Wiley, Rein & Fielding Legal $65,000 Great Lakes Wire and Cable Inventory $63,000 Infranext (a Tynan Co.) Trade $60,978 Hall Kinion & Associates Trade $60,000 Arcom Inventory $58,428 Netigy Corp. Trade $50,000 Verio-650091 Network $43,350 Fiber Systems International Inventory $42,273 MFS Telecom, Inc. Trade $38,667 ALGOMA STEEL: Secures CCAA Order for Debt Restructuring ------------------------------------------------------- Algoma Steel, Inc. obtained an order under the Companies' Creditors Arrangement Act that will allow it to restructure its debt without filing for bankruptcy. The Company also stated that it has secured additional financing that will allow it to continue supplying its customers. "This is the responsible course of action to take in our circumstances. The order will enable our ongoing business to continue while we negotiate a restructuring plan with our stakeholders," commented Alexander Adam, president and chief executive officer. "The major challenge that we face is on our balance sheet and the weakness in short-term steel markets." (New Generation Research, April 24, 2001) ALGOMA STEEL: Steelworkers Pledge Support In Restructuring ----------------------------------------------------------- The United Steelworkers, representing 4,100 hourly, clerical, and salaried employees at Algoma Steel Inc., pledged all their effort and resources to work with management and other stakeholders in restructuring the company's finances in order to ensure it emerges from protection under the Companies' Creditors Arrangement Act (CCAA) a stronger company, with an improved balance sheet, and fully-equipped to meet the challenges of the steel market in the coming decades. Algoma Steel remains open and in business, operating under CCAA court protection. The company has arranged additional financing for its immediate cash needs, said Steelworkers' Area Coordinator Doug Olthuis. The union does not anticipate any interruption in the pay or benefits of employees or retirees. Subject to the CCAA Court Order, the current collective agreements will remain in place and continue to be honoured, while a restructuring plan is developed. Current market conditions, following a flood of unfairly traded steel imports into Canada, have made it impossible for Algoma Steel to meet its financial obligations and pushed the company into a CCAA restructuring process. The CCAA process provides Algoma Steel with the opportunity to develop a plan to reorganize the company's finances. Discussions among the stakeholders about the nature of that plan have not yet begun, and even though both management and the Steelworkers are committed to completing them as soon as possible, the process will likely take many months. The union fully intends to play a major role in the restructuring process, said Steelworkers' Ontario/Atlantic District Director Harry Hynd. "The Steelworkers represents 98 per cent of Algoma's employees, and the Employee Trusts, which hold roughly 24 per cent of outstanding shares, continue to be the company's largest single shareholder. The union's objectives at Algoma Steel have not changed, said Hynd. The union will continue to dedicate all of its resources to maintaining the living standards of our members, their families, as well as those of retirees. The union is absolutely committed to protecting the retirement benefits of our members who have dedicated years of their lives to the steel plant, said Olthuis. The final outcome of the CCAA process and the discussions leading to a restructured company are impossible to predict at this time, and it is not helpful to speculate on what the implications might be for the Steelworkers, its members, and the community, said Olthuis. As we learned in 1991-92, the restructuring process can be long and difficult, said Steelworkers' Local 2251 President Tom Bonell. The Local is committed to making communication with the membership and the sharing of information its first priority throughout the process. The steel plant is the economic base of our region, and we know that our members and the community will be living in a state of heightened concern about their futures. A timely flow of information, within the limits imposed by the process, may help reduce that anxiety. Steelworkers' Local 2724 (salaried employees) President Ian Kersley said: The CCAA process may be a difficult process, but our members in both locals can be assured the union will work together as a team with our advisors, to ensure that we fully understand the situation of the company, what the alternatives are, and what the implications of those alternatives are for our members and the community. The Steelworkers Union is assembling a team of legal and financial advisors to assist throughout the restructuring process. As well, local Steelworkers will have the support of the union's district, national, and international leadership. The union is fully aware of the critical importance of Algoma Steel to Sault Ste. Marie, said Bonell. Not only does Algoma Steel inject over $250- million to the regional economy each year in annual wages and salaries, $80- million in pension benefits are paid out to Algoma's 7,000 retirees. The union is optimistic about the process, said Kersley. We have the support of our members, and as demonstrated in the past, we have the support of the community. We have a good set of steel assets, and a committed and highly skilled workforce. There is every reason to believe that the steel markets will rebound from their currently depressed levels, and that, provided our members remain focused on producing quality steel in a safe manner, we can retain our customer base and emerge from CCAA stronger than ever. ALGOMA STEEL: Moody's Slashes First Mortgage Notes To Caa2 ---------------------------------------------------------- Moody's Investors Service downgraded Algoma Steel Inc.'s ratings after the the company announced it obtained an order under the Companies' Creditors Arrangement Act allowing it to restructure its debt, without filing for bankruptcy. The rating actions are as follows: * Algoma's US$350 million of 12.375% first mortgage notes due 2005 downgraded to Caa2 from Caa1 * senior implied rating was lowered to Caa2, from Caa1, and * senior unsecured issuer rating was lowered to Caa3 from Caa2. Moody's withdrew its B3 rating for Algoma's C$200 million secured revolving credit facility. The rating outlook remains negative while approximately $350 million of debt securities are affected. Accordingly, Algoma has been severely impacted by oversupply, depressed prices and increased imports, which resulted to a deterioration of the company's liquidity. As of March 31, 2001, operating income was negative C$52.9 million compared with negative C$10.7 million at the end of the previous quarter. Moody's has noted that due to cash outflows from operations and interest payments on its first mortgage notes, the company had no availability under its credit facility at the time of the filing. Debt has also been mounting, as evidenced by the company's total debt to capitalization, which was 80.8% at March 31, 2001 compared to 72% at the end of the prior quarter, the rating agency said. Algoma Steel Inc., based in Sault Ste. Marie, Ontario, produces 2 million tons per year of sheet and plate products and had sales of C$1.1 billion in 2000. ARMSTRONG: Asks To Extend Rule 9027 Removal Period To October 2 --------------------------------------------------------------- Rebecca L. Booth, at Richards, Layton & Finger, P.A., in Delaware acknowledges that the Armstrong Holdings, Inc. Debtors are parties to numerous judicial and administrative proceedings currently pending in various courts or administrative agencies throughout the country, and involving a variety of claims. Pursuant to the Federal Rules of Bankruptcy Procedure, the Debtors must file notices of removal by June 4, 2001. She explained that, due to the number of actions involved, and the wide variety of claims the actions present, the Debtors require additional time to determine which, if any, of the proceedings should be removed and, if appropriate, transferred to the District of Delaware. By motion, the Debtors requested Judge Farnan for an extension of the Removal Period by an additional 120 days. Specifically, the Debtors proposed that the time by which they may file removal notices, with respect to any action pending on the Petition Date, be extended through and including the later of (a) October 2, 2001, or (b) 30 days after the entry of an order terminating the automatic stay with respect to any particular action sought to be removed. Ms. Booth asserted that by Rule the Debtors may seek to remove prepetition claims or causes of action affected by the automatic stay, within the longest of 90 days after the Petition Date and 30 days after the entry of an order terminating the stay. The Debtors are convinced that all claims or causes of action against them pending as of the Petition Date are subject to the automatic stay and, therefore, the time to remove such actions would expire 30 days after the stay is lifted or terminated with respect to a particular claim or cause of action. Ms. Booth insisted that, to protect the Debtors' valuable right to economically adjudicate suits, the relief should be granted, as an extension of time will afford the Debtors additional time to assess whether the actions can, and should be, removed. In addition, the requested extension of time will not prejudice the Debtors' adversaries because such adversaries may not prosecute the claims or causes of actions absent relief from the automatic stay, and nothing in the Debtors' request precludes any adverse party to an action removed from pursuing a remand. Ms. Booth cautioned the Court that, unless an extension is granted, the consolidation of the Debtors' affairs into one court may be frustrated, and the Debtors may be forced to address claims and actions against it, in piecemeal fashion, to their creditors' detriment. (Armstrong Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) AVIATION SALES: Senior Debt Ratings Dive To Junk Levels ------------------------------------------------------- Moody's Investors Service took the following actions on Aviation Sales Company's ratings: * the company's $75 million senior secured credit facility lowered to Caa1 from B1, * the long term issuer rating lowered to Caa3 from B3, * the $165 million 8.125% senior subordinated notes due 2008 lowered to Ca from Caa1, and * the senior implied rating lowered to Caa2 from B2 The outlook remains negative as approximately $240 million of debt securities are affected. Moody's related that the downgrades were due to the company's large losses in 2000, expected continued losses in the near term due to weak industry fundamentals, weak cash flow, and "going concern qualification" expressed by its independent auditor Arthur Andersen in the Company's 10-K for the year ended December 31, 2000 due to reported losses in 1999 and 2000 as well as cash required to fund its operating activities for each of the past three years. The Company had to borrow $10 million from a financial institution in February 2001 to pay for working capital needs and the $6.7 million semi-annual interest payment on the $165 million senior subordinated notes due on February 15, 2001, disclosed Moody's. Also, the rating agency stated that the negative outlook reflects concern about the Company's near-term performance in light of weak industry conditions. Florida-based Aviation Sales Company is a leading independent provider of fully integrated aviation maintenance and repair facilities. BETHLEHEM STEEL: Posts $118 Million Net Loss For Q1 2001 -------------------------------------------------------- Bethlehem Steel Corporation reported a net loss of $118 million for the first quarter of 2001 compared with net income of $3 million for the first quarter of 2000. After preferred dividend requirements, this is a loss of $.99 per diluted share for the first quarter of 2001, compared with a loss of $.05 per diluted share for the first quarter of 2000. Sales for the first quarter of 2001 were about $900 million compared with $1.2 billion for the first quarter of 2000. Shipments for the first quarter of 2001 were 2.0 million tons compared with 2.4 million tons for the first quarter of 2000. Duane R. Dunham, Bethlehem's Chairman, President and Chief Executive Officer, said, "Steel market conditions continue to be extremely competitive and our financial performance for the first quarter of this year reflects depressed pricing and continued weak demand. We are beginning to see some modest improvement in certain of our markets, and we believe that steel market conditions in general will improve more meaningfully during the second half of this year. We are continuing to aggressively reduce costs and implement other actions to improve our cash flow. Additionally, we are in discussions with our lending group to obtain a new and larger secured credit agreement that will increase our overall financial flexibility. Looking ahead, we continue to believe that bold and urgent actions need to be taken by Bethlehem and other steel companies, the steelworkers union, and the government to improve the competitiveness and financial performance of domestic steel companies. These actions include consolidation of steel industry assets, the rationalization of non-competitive facilities, full and effective enforcement of existing trade laws, and finding workable solutions to healthcare and related legacy costs. Operating Results Our loss from operations was $120 million for the first quarter of 2001 compared with $19 million of income from operations for the first quarter of 2000. Our first quarter operating results decreased from a year ago mainly as a result of significantly lower prices and shipments resulting from the impact of unfairly traded steel imports and a sluggish economy. Costs were higher principally from lower operating rates in both our steel making and finishing facilities, higher natural gas prices, and higher pension expense. Our product mix was less favorable, as shipments of hot-rolled products have remained about the same while cold-rolled and coated product shipments have declined. Our loss from operations was $116 million for the fourth quarter of 2000, excluding a $6 million charge for the closing of the slab mill at our Burns Harbor Division. The slightly larger loss for the first quarter of 2001 compared with the fourth quarter was primarily due to significantly lower prices, which were nearly offset by reduced costs and slightly higher shipments. Average realized prices, on a constant mix basis, decreased about 5% from the fourth quarter of 2000. Liquidity and Cash Flow At March 31, 2001, our liquidity, comprising cash, cash equivalents, and funds available under our bank credit arrangements, totaled about $135 million compared with $315 million at December 31, 2000. For the first quarter of 2001, $80 million of cash was used for operating activities, primarily the result of operating losses and higher working capital. Other major uses of cash in the first quarter included debt repayments of about $45 million, capital expenditures of about $14 million, and preferred dividend payments of about $10 million. Major uses of cash for the year 2001 are expected to include capital expenditures of about $125 million, debt repayments of about $55 million, and preferred dividend payments. Major sources of cash during the first quarter of 2001 included borrowings of $120 million under our inventory credit agreement and the use of $28 million that was available in our social insurance trust fund to pay for retiree healthcare. Major sources of cash for the year 2001 are expected to be from operating activities, including inventory reductions, and pension and retiree healthcare expenses that will continue to be in excess of required company pension funding and healthcare payments. We also anticipate having significant proceeds from asset sales. Our inventory credit agreement and three other secured financing arrangements contain covenants that require us to maintain a minimum adjusted consolidated tangible net worth at the end of each calendar quarter. The three other arrangements are a $50 million loan secured by certain assets at the new cold mill at Sparrows Point and lease obligations totaling $42 million for two 1,000-foot-long, self-unloading lake vessels used to transport iron ore to our Burns Harbor Division. At March 31, 2001, our adjusted consolidated tangible net worth exceeded this minimum requirement by about $13 million. Under the current difficult industry economic conditions, we do not expect to remain in compliance with this covenant. However, we are in discussions with our lending group to modify this covenant and increase availability under our secured credit facilities. We expect these discussions to be completed within the next month. With a new agreement, we believe that we will also be able to arrive at satisfactory agreements with the financing parties under the other above-mentioned arrangements. During December 2000, The LTV Corporation filed for Chapter 11 bankruptcy protection. LTV is our partner in Columbus Coatings Company (CCC). CCC's construction costs for a hot-dipped coating line were financed in part with a construction loan under a 1999 agreement that contains provisions for conversion to a long-term sale and leaseback during 2001. Bethlehem and LTV both guaranteed the full amount of the construction loan. Due to LTV's bankruptcy, the lenders are not obligated to make any further construction loan advances, and they have the right to seek payment of the entire construction loan, currently totaling about $120 million. In January, Bethlehem filed a motion with the LTV bankruptcy court asking it to permit Bethlehem to exercise certain buyout rights contained in the CCC joint venture agreement or require LTV to assume in its Chapter 11 proceedings all its obligations under the joint venture and financing arrangements. LTV and its creditor's committee opposed the motion, and the parties agreed to defer this litigation pending further discussions with each other and the CCC lenders. On March 21, the CCC lenders agreed to forbear exercise of their rights against Bethlehem as they relate to the LTV bankruptcy through June 30, 2001. This forbearance agreement required Bethlehem to provide additional collateral. We are continuing to work with LTV and the CCC lenders to achieve a satisfactory resolution to this issue. The parent of our partner in our Chicago Cold Rolling joint venture is in Chapter 11 proceedings. As a consequence, under our arrangements with the lenders to this venture, we can be required to repay approximately half the outstanding loans to the venture. Outlook The U.S. economy has slowed considerably during the past two quarters, but we believe that the economy and steel consumption will strengthen during the second half of the year. We believe that the recent interest rate cut by the Federal Reserve will help to strengthen several of our key markets. We continue to be concerned about the relatively high levels of unfairly traded steel imports. However, we welcome the preliminary determinations recently announced by the U.S. Department of Commerce covering hot-rolled carbon steel products, and we will continue to investigate and prepare additional trade cases for filing as appropriate. Currently, steel market conditions remain depressed reflecting slow economic growth, continuing reductions in customer inventory levels, and continued relatively high levels of flat- rolled steel imports, especially cold-rolled sheet products. As a result, our order entry continues to be relatively weak and steel prices remain under pressure. However, we have seen some improvement in certain products, especially plates and to a lesser extent hot-rolled sheets. Additionally, car and light truck inventories have been reduced to more normal levels. Service center inventories, on a daily shipping rate basis, have dropped significantly from their recent high in December 2000, and further reductions to achieve more normal levels are expected to occur during the second quarter. Currently, we expect to report a loss for the second quarter of 2001 that is lower than for the first quarter of 2001." BRIDGE INFORMATION: Banks Plan to Block Reuters Bid For Assets -------------------------------------------------------------- Five banks including Citigroup, Credit Suisse First Boston, Deutsche Bank AG, HSBC Holdings PLC and UBS Warburg have joined forces to try to stop the Reuters Group PLC from acquiring some assets of rival Bridge Information Systems, according to Reuters. The banks were preparing to make a bid if Reuters, a global news and information provider, became the favored bidder in a hearing scheduled for May 3. Earlier this month, Reuters announced that it had bid for Bridge Information Systems in North America, the EJV bond data and analytics business, the Bridge Trading Company brokerage business, the Bridge Trading Technologies and Transaction Services businesses, the eBridge Internet business and an option on Bridge's interest in Savvis Communications Corp. The offered price was not made public. Reuters faces a proposal from SunGard Data Systems Inc. for the Bridge assets. SunGard has offered to pay $165 million. (ABI World, April 24, 2001) CHIQUITA BRANDS: Releases First Quarter Financial Results --------------------------------------------------------- Chiquita Brands International, Inc. (NYSE: CQB) reported first quarter net income of $4 million ($.01 per share), compared to earnings of $35 million ($.43 per share) in the first quarter of 2000. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of 2001 was $61 million compared to $92 million in the first quarter of 2000. The Company's results declined primarily as a result of a stronger dollar in relation to major European currencies. The effect of lower banana pricing in North America and Japan was partially offset by improved pricing in Europe on a local currency basis. Operating results for the Processed Foods business declined from the prior year primarily as a result of lower pricing for canned vegetables. Net sales for the first quarter of 2001, excluding the effects of prior year divestitures, decreased approximately 4% from the 2000 first quarter primarily as a result of the stronger dollar. On April 11, 2001, the United States and European Commission announced an agreement regarding the long-standing dispute over the European Union (EU) banana import regime. The agreement is expected to result in partial recovery in future periods of the EU market opportunities previously available to Chiquita and Latin American producing nations. Subject to establishment of definitive regulations for this new regime, the agreement is a positive development for Chiquita and Latin American banana interests. However, the Company still intends to proceed with the previously announced parent company debt restructuring. This restructuring initiative is necessitated by the cumulative effect on Chiquita of the EU's discriminatory banana import regimes over the past eight years, as well as the accelerated weakening of European currencies in recent years. Chiquita is a leading international marketer, producer and distributor of quality fresh fruits and vegetables and processed foods. CHIYODA LIFE: S&P Withdraws Ratings After Reorganization -------------------------------------------------------- Standard & Poor's withdrew its 'R' counterparty credit and insurer financial strength ratings on Chiyoda Mutual Life Insurance Co. after confirming that the company's restructured liabilities and related assets are now managed by AIG Star Life Insurance Co. Chiyoda Life filed for court protection on Oct. 10, 2000, and was reorganized with sponsorship from AIG under a rehabilitation plan recently approved by the court and regulator, Standard & Poor's said. -- CreditWire CLARK MATERIAL: Taps Glass & Associates As Management Consultant ---------------------------------------------------------------- By order entered on April 11, 2001 by the US Bankruptcy Court, District of Delaware, the debtor, Clark Material Handling Company, et al., was authorized to employ Glass & Associates, Inc. as management consultant based upon the affidavit of Shaun K. Donnellan, a principal of Glass. CONVERSE INC.: Reports Financial Results For Fiscal Year 2000 ------------------------------------------------------------- Net revenue for Converse, Inc. for Fiscal 2000 decreased to $209.1 million from $235.2 million in Fiscal 1999, an 11.1% reduction. The Company said the $26.1 million reduction in net revenue in Fiscal 2000 was attributable to decreases of 34.4%, 17.1%, 43.2% and 12.3% in the performance, athletic originals, children's and action sports categories, respectively, compared to Fiscal 1999. These decreases were partially offset by a $32.0 million increase in the Company's lifestyle category, which was introduced during Fiscal 1999. the Company recorded a net loss of $27.4 million in Fiscal 2000 compared to a net loss of $43.6 million in Fiscal 1999. The Company's working capital position, net of cash, was a deficit of $136.0 million on December 30, 2000 versus a deficit of $44.7 million on January 1, 2000. Total current assets, net of cash, were $77.3 million at December 30, 2000, down $42.5 from $119.8 million at January 1, 2000. The decrease in current assets is predominantly decreases of $6.4 million and $36.3 million in accounts receivable and inventories, respectively. The decreases in receivables and inventories are due principally to a decrease in sales in 2000 and the continued conversion of operating subsidiaries in Europe to third-party licensing arrangements. Total current liabilities increased $48.8 million, from $164.5 million at January 1, 2000 to $213.3 million at December 30, 2000. The current portion of long-term debt increased $74.7 million due to the reclassification of convertible subordinated notes from long- term debt in the third quarter of Fiscal 2000. This was partially offset by a decrease of $23.7 million and $1.5 million in the credit facility and short-term debt respectively. Accounts payable, accrued expenses and income taxes payable decreased $0.6 million, in aggregate, from prior year. DXP ENTERPRISES: Shares Subject To Delisting From Nasdaq -------------------------------------------------------- DXP Enterprises, Inc. (Nasdaq: DXPE) has been notified by Nasdaq Staff, in a letter dated April 17, 2001, that the Company has failed to comply with the minimum bid price and market value of public float requirements for continued listing as set forth in Marketplace Rule 4310, and that its common stock, therefore, is subject to delisting from the Nasdaq SmallCap Market. The Company has requested a hearing before a Nasdaq Listing Qualifications Panel to review Nasdaq Staff's determination. DXP's common stock will continue to be listed on the Nasdaq SmallCap Market pending the results of the hearing. There can be no assurance that the Nasdaq Panel will grant the Company's request for continued listing. If DXP's common stock is delisted from the Nasdaq SmallCap Market, the Company expects its common stock will be available for quotation on the OTC Bulletin Board electronic quotation system, and shareholders will be able to access current trading information, including the last trade, bid and ask quotations, and share volume. DXP Enterprises, Inc. is a provider of maintenance, repair and operating products, equipment and integrated services including engineering expertise and logistics capabilities to industrial customers. DXP provides customers, primarily in the general manufacturing, oil and gas, petrochemical, service and repair and wood products industries, with fluid handling equipment, bearings, power transmission equipment, general mill supplies, safety supplies and electrical products. FINOVA GROUP: GE Aircraft Seeks Relief From Automatic Stay ---------------------------------------------------------- GE Aircraft Engine Services, Ltd. told the Court that pursuant to service and upgrade work on six aircraft engines, it is owed $13,750,000 by Tower Air, Inc., which is in the course of chapter 7 proceedings. GEAE claims it has a security interest in the Engines pursuant to The FINOVA Group, Inc.'s subordination of interest by way of an intercreditor agreement. GEAE believes it is undersecured. However, three of the Engines are in FINOVA's possession, one is in CAL's possession and one is held by Tower Air. GEAE did not say whether the remaining Engine is in its own possession but it said that one of the engines is not an issue. Prior to FINOVA's filing for chapter 11 relief, GEAE was in the course of some dispute with FINOVA in the Tower Air case in connection with FINOVA's attempt to rescind the intercreditor agreement, and GEAE's Injunction Motion seeking authority to take possession of the Engines. Such actions in the Tower Case were stayed upon the commencement of the FINOVA cases. By motion, GEAE requested an order of the Court pursuant to section 362(d) of the Bankruptcy Code modifying the automatic stay to permit GEAE to (i) take possession of the Engines free and clear of FINOVA's claims because GEAE's interest in the Engines is not being protected against diminution in value, and (ii) proceed with its counterclaim in the Adversary Proceeding filed by FINOVA in the Tower Air chapter 11 case. Specifically, GEAE alleged, (A) The Services Agreement and Intercreditor Agreement On or about October 7, 1996, Tower Air, Inc. and GEAE entered into a services agreement pursuant to which GEAE agreed to perform service and upgrade work on six Pratt & Whitney, Model JT9D, aircraft engines bearing serial numbers * 685945 - not an issue * 662787, 662923, 662890 - held by FINOVA in the Arizona Desert * 662417 - in Taipei in the possession of CAL * 662962 - held by Tower Air in a hangar in JFK Airport, New York. On or about November 26, 1996, Tower, FINOVA and GEAE entered into the Intercreditor Agreement, which was subsequently amended on or about November 17, 1997 pursuant to which FINOVA agreed to subordinate its interest in the Engines to GEAE's security interest in the Engines for the purpose of securing Tower's obligation to pay GEAE for work performed on the Engines under the Services Agreement. On or about October 31, 1997, in connection with the Intercreditor Agreement, Tower and GEAE entered into a Security Agreement on Finova Units pursuant to which Tower granted GEAE a security interest in the Engines to secure the payment to GEAE of amounts due under the Services Agreement. The Engine bearing serial number 685945 is not at issue here. The aggregate charges for the work performed by GEAE on the Engines were $19,744,310. GEAE has received an aggregate of $3,101,993 from Tower. According to GEAE's normal business practices, $18,486,316 (inclusive of interest accrued through August 1999) remains unpaid. Of that amount, approximately $13,750,000 is allocable to the Upgrade Work, which alone exceeds the Engines value. (B) FINOVA's Action to Rescind the Intercreditor Agreement On or about August 9, 2000, FINOVA commenced an adversary proceeding in Tower's chapter 11 case (Case No. 00-128) against GEAE to rescind the Intercreditor Agreement. On or about October 16, 2000, GEAE filed its answer and counterclaim in the FINOVA Action. The dispute in the FINOVA Action centers on FINOVA's allegations (i) that GEAE waived Tower's obligation to comply with the terms of a payment schedule with respect to GEAE's work in converting the Engines from 7A to 7J status (the Upgrade Work), without FINOVA's consent, (iii) that FINOVA subordinated is interest in the Engines only to GEAE's charges for the Upgrade Work. The parties have already commenced discovery in the F1NOVA Action. (C) FINOVA's Wrongful Possession of the Engines Prior to and after commencement of the F1NOVA Action, FINOVA, through self-help and without authorization of the Tower chapter 11 court, gained possession and retained without the consent of GEAE of the 662787 Engine, the 662923 Engine, and the 662890 Engine. Upon information and belief, each of the three Engines is being retained by F1NOVA in a storage facility located in the Arizona desert. Even if, as FINOVA argued, the trustee appointed in Tower's chapter 11 case consented to FINOVA's taking of the three Engines, that would not have authorized FINOVA to exercise control over the Engines to the exclusion of GEAE and other creditors without first obtaining a court order. (D) GEAE's Injunction Motion On or about February 5, 2001, GEAE filed a motion for a preliminary injunction seeking, inter alia, an order directing FINOVA to surrender to GEAE possession of the three Engines and the respective records in their possession free and clear of FINOVA's claims, and enjoining FINOVA from interfering with GEAE's taking possession of the Engine held by CAL and that held by Tower Air, free and clear of FINOVA's claims. In connection the action, GEAE offered to post a bond to cover any damages FINOVA may suffer if FINOVA ultimately prevails on the merits in the F1NOVA Action. In support of its Injunction Motion, GEAE argued, inter alia, that it faced irreparable harm based on the deteriorating market for the Engines, and FINOVA's escalating financial difficulties and imminent prospects of a bankruptcy filing. On or about February 26, 2001, FINOVA filed its verified objection to GEAE's Injunction Motion arguing, inter alia, that FINOVA's escalating financial difficulties and imminent prospects of a bankruptcy filing were "nothing more than conjecture." On February 28, 2001, a hearing was held on GEAE's Injunction Motion. The Court continued the hearing to March 15, 2001 at 5:00p.m. on the basis of FINOVA's contentions, inter alia, that its alleged financial difficulties posed no emergency and that F1NOVA had additional evidence from an unnamed witness on the "west coast" whose testimony F1NOVA wanted to put on the record. On March 1, 2001, one day after FINOVA's counsel denied in open court GEAE's allegations of F1NOVA's financial distress and imminent bankruptcy filing, GEAE learned that on February 28, 2001, the same date of the hearing on GEAE's Injunction Motion, FINOVA filed with the United States Securities and Exchange Commission a Form 8-K in which FINOVA indicated it had reached a restructuring agreement with Leucadia National Corporation and Berkshire Hathaway. Inc., which required FINOVA to file a chapter 11 no later than March 8, 2001. In light of the information contained in F1NOVA's Form 8-K, on March 1, 2001, GEAE filed its Emergency Motion for hearing on its Injunction Motion. On March 2, 2001 FINOVA filed an objection to GEAE's Emergency Motion. In their Emergency Objection, FINOVA again dismissed the newspaper articles presented by GEAE reporting FINOVA's imminent bankruptcy filing as "conjecture." Furthermore, in its Emergency Objection, FINOVA argued disingenuously that the news of F1NOVA's imminent bankruptcy filing, as reported in FINOVA's 8-K and the press releases, was, in effect, no surprise or cause for emergency because GEAE had already informed the court of the newspaper articles during the hearing on its Injunction Motion. On the eve of its imminent chapter 11 filing, FINOVA's counsel made the following argument in response to GEAE's assertion that F1NOVA's imminent bankruptcy created an emergency: "There will be no action taken which would, in any way adversely affect the value of the Engines or [GEAE's] alleged claims that cannot wait until the adjourned hearing on the GEAE Injunctioni Motion." At the time that FINOVA's Emergency Objection was filed, FINOVA, through counsel, knew or should have known that the automatic stay would preclude GEAE from proceeding with the adjourned hearing on its Injunction Motion, scheduled for March 15, 2001, immediately upon F1NOVA's filing chapter 11 on or before March 8, 2001. On March 7, 2001, F1NOVA commenced its chapter 11 case. On March 12, 2001, GEAE filed a Notice in Tower's bankruptcy case informing the court of FINOVA's chapter 11 filing and acknowledged that the automatic stay in FINOVA's chapter 11 case precluded GEAE from continuing to prosecute its counterclaim and its Injunction Motion in the FINOVA Action or continuing with the related discovery until such time as relief from the stay is granted. On March 14, 2001, the Tower chapter 11 court adjourned, without date, the March 15, 2001 hearing. As a result, GEAE now to reapply to the Court in the FINOVA chapter 11 cases for the turnover of the Engines it had previously sought from the Tower chapter 11 court. (E) The Engines Continue to Deteriorate in Value The airline industry is currently experiencing a downturn in general and in particular with respect of the model of aircraft engine that is in dispute. Moreover, there is no reasonable prospect that the market for the Engines will improve in the near future because the host aircraft for such engines, the 747 series 100 and 200 aircraft, have been out of production since the 1980s and a growing number of these aircraft are being grounded and used for scrap. In fact, it is possible that in time, the Engines could end up being virtually worthless to GEAE as security for its outstanding indebtedness. The value of the Engines would be maximized if GEAE puts the Engines into service or dismantles them and sells their parts before the market deteriorates further. * * * GEAE asserted that Section 362(d)(1) of the Bankruptcy Code authorizes bankruptcy courts to grant any party in interest relief from the automatic stay for "cause, including lack of adequate protection of an interest in property" and the requirement of adequate protection is mandatory under 11 U.S.C. secton 363(e). Thus, when a secured party's interest in a depreciating piece of equipment is not being adequately protected, the debtor must provide protection for such party's interest upon request, GEAE argued. In this case, the movant goes on, GEAE has a first priority, perfected security interest in the Engines that is entitled to protection, GEAE performed all obligatory service, including the Upgrade Work, on the Engines in accordance with the Services Agreement and GEAE's charges for that work, even if limited to the Upgrade Work, exceed the Engines' value. GEAE contended that the existence of issues regarding scheduling and reporting of Tower's payment obligations and the scope of FINOVA's subordination do not entitle FINOVA to remain in possession of the Engines without providing GEAE with adequate protection, and should not prevent GEAE from taking title to the Engines free and clear of FINOVA's claims, especially since FINOVA initially came into possession of the Engines wrongfully. China Airlines Ltd.'s Response CAL does not object to the motion which if granted will enable CAL to attempt to enter into an agreement with GE with regard to Engine 662417. CAL asserted that since that Engine is in CAL's possession in Taiwan and is subject to CAL's psssessory liens, GE is not entitled to possession of the Engine unless and until CAL's possessory liens are satisfied. CAL files the response to preserve its rights, claims and liens with regard to the 662417 Engine or its rights to maintain possession of the Engine unless and until its liens are satisfied. Objection by FINOVA The Debtors pointed out that the issue is one of lien priority. FINOVA obtained a first priority security interest in the engines and other collateral in connection with various loans and security agreements with Tower. The Debtors acknowledge that FINOVA subsequently agreed to subordinate its first priority lien to that of GEAE. However, the agreement to subordinate was made pursuant to certain conditions as set forth in the intercreditor agreement between FINOVA, GEAE, and Tower, the Debtors told the Court. GEAE has breached that agreement, FINOVA alleges, and therefore, FINOVA asserted that its lien is prior in right to that of GEAE. FINOVA noted that under the Intercreditor Agreement and absent an Event of Default under the Services Agreement, GEAE's security interest in each of the Engines would be extinguished within twenty-four months after the Despatch Date of that Engine, and the last of the despatch dates for the five Engines in question is January 7, 1998. This suggests that absent a default, all payments with respect to the Upgrade Work should have been made and GEAE's security interest in the Engines should have been all released. FINOVA believes that GEAE has increased the amounts due from Tower to include amounts for additional work not contemplated under the Intercreditor Agreement. FINOVA believes that GEAE has misapplied payments made by Tower for the Upgrade Work to satisfy other, unsecured obligations but F1NOVA did not consent to subordinate its security interest in the Engines for the purposes of any additional services beyond the Upgrade Work. In this connection, FINOVA alleged that GEAE has waived Tower's obligations under the Services Agreement and has agreed to restructure Tower's payment obligations and to extend its time for payment, all without obtaining FINOVA's written consent and in direct violation of the Intercreditor Agreement. As a result, to date, GEAE has only released its security interest on one of the six Engines, FINOVA charged. FINOVA said that it has been unable to verify the amounts still owed by Tower because, despite numerous requests, GEAE has failed to provide to FINOVA an accounting of Tower's outstanding debt to GEAE under the Services Agreement. FINOVA indicated that it is prepared to offer the testimony of Ms. Marilyn Petrina, FINOVA's portfolio manager responsible for the Tower account at a deposition or before the Court because Ms. Petrina was unable to appear at the Preliminary Hearing due to family circumstances. FINOVA is also prepared to present the testimony of Mr. Morten Beyer, Chairman and CEO of Morten Beyer & Agnew. Mr. Beyer is a Certified Senior Aircraft Appraiser by ISTAT (the professional society of aircraft evaluators) and will opine on the fair market value of the Engines at issue. Mr. Beyer will testify that a member of his staff has inspected the three Engines in F1NOVA's possession and has reviewed the records for those Engines. He will testify that the Engines and their records are in good condition and are being well maintained. Breach of the Intercreditor Agreement Specifically, FINOVA told the Court that the Intercreditor Agreement provides that the Engines will be inducted into GEAE's service program for performance of the Upgrade Work on a staggered basis over the period September 30, 1996 through September 30, 1997. Payment for the Upgrade Work on each Engine was to be made in twenty-four equal monthly installments, commencing on the date GEAE completes the Upgrade Work on each Engine and returns the Engine to Tower (the Despatch Date). GEAE contractually agreed to release its security interest in each Engine once Tower completed its payment for the Upgrade Work on that Engine. FINOVA draws the court's attention to Section 3(b) of the Intercreditor Agreement: - "[U]pon the payment by Tower to GE of the amounts due with respect to the services performed on any Engine (after such payment, such Engine being referred to as a "Paid Engine"), GE shall, at the request of Tower or F1NOVA, promptly release its security interest in such Paid Engine regardless of whether any other amounts are outstanding with respect to any of the other Engines that constitute a portion of the Collateral." The Despatch Dates for each of the Engines upon FINOVA's information and belief were: Engine Serial Number Despatch Date -------------------- ------------- 685945 September 17, 1997 662417 October 30, 1997 662923 November 28, 1997 662962 December 31, 1997 662787 January 7, 1998 To enable F1NOVA to monitor the subordination of its security interest, pursuant to the Intercreditor Agreement, GEAE is obligated to provide written notice to FINOVA of the completion of the Upgrade Work and GEAE is obligated to deliver a statement setting forth the payment amounts within seven days of FINOVA's request, the Debtors told the Court. FINOVA also told the Court that, in order to insure that Tower's debt to GEAE was discharged promptly, under the Intercreditor Agreement, GEAE cannot amend or waive compliance with any provisions of the Services Agreement that would result in an extension of Tower's time to make payments or increase the amounts owed by Tower without prior written consent of FINOVA: "GE may not amend or waive compliance with any provisions of the Services Agreement in any manner which would increase the amount or extend the time of payment of the principal and interest or any other amounts secured thereby without the prior written consent of F1NOVA." Ms. Petrina will testify that, despite repeated requests, GEAE failed to provide FINOVA with the information it was obligated to provide under the Intercreditor Agreement, and that, when GEAR did provide some information, it could not be reconciled with the information provided to F1NOVA by Tower. Further, it was unclear from that information how GEAR had applied Tower's payments in satisfaction of the liens, whether those payments had been applied to overhauls, as opposed to upgrades, of the Engines or additional work for which FINOVA's security interest was not subordinate, and the total amount of work performed on any particular Engine and when it had been despatched. As a result, F1NOVA was unable to monitor the release of GEAR's liens in the Engines, and believes that the liens on the Engines may have been satisfied. Ms. Petrina also will testify regarding representations made by Tower that GEAR's liens had been satisfied and that F1NOVA is entitled to a first priority interest in the Engines. Ms. Petrina will also testify that, on or about September 28, 1999, GEAR agreed to begin releasing its liens on the Engines, one per month, beginning that month. Ultimately, however, GEAR released only one Engine, and Ms. Petrina is prepared to testify that GEAR began to retreat from its commitment -- and ultimately reneged altogether -- shortly thereafter. Storage and Maintenance of Aircraft Engines Regarding its keeping three of the Engines in the Arizona Desert, FINOVA explained that it is doing this in order to protect and preserve. FINOVA points out that no transfer of title has been made in this connection. FINOVA told the Court that, pursuant to an agreement with the Chapter 7 Trustee in the Tower bankruptcy proceeding, it transported two aircraft, which contained the Engines bearing serial numbers 662787, 662923, and 662980 to Evergreen Air Center in Pinal Park, Marana, Arizona and is insuring these Engines at its own cost and expense. Evergreen, FINOVA noted, is a well-known facility for the maintenance and storage of aircraft and aircraft Engines. FINOVA believes that Engine 662962 is currently uninsured and is located in a hangar at JFK Airport in New York, and Engine 662417 is being held by China Airlines Ltd. in a repair facility in China. FINOVA contests GEAE's repeated complaints that FINOVA engaged in "self help" when it obtained possession of these three Engines. FINOVA cited what the Trustee's representative said during a hearing in the Tower proceedings, "the Trustee was aware and agreed for F1NOVA to take possession. Because the Trustee and the bankruptcy estate were under great pressure to vacate the hangars in the area of JFK." Moreover, whether the transfer of the Engines violated the automatic stay in the Tower bankruptcy proceedings is irrelevant to the subject motion in FINOVA's proceedings. The Debtors reminded the Court that, whether it is FINOVA or GEAE that maintains the storage of the engines, there must be a determination of the value of the engines, of the respective claims by F1NOVA and GEAE with respect to the priority of their respective security interests in those engines, and of the question whether the value of the engines is diminishing. Only then, the Debtors argued, can a determination be made as to whether GEAE must be adequately protected if FINOVA continues to possess the engines, and as long as Tower has title to the engines, neither party may sell or use the engines without relief of the Bankruptcy Court in the Tower bankruptcy case. Therefore, FINOVA requested that the Court partially lift the stay to allow these issues to be determined in the Tower bankruptcy case on a modified schedule that would allow all interested parties in the FINOVA proceedings to fully participate. In the alternative, if the Court wishes to determine these issues in connection with the FINOVA proceedings, FINOVA requests that the Court set a schedule to allow for discovery to address the issues of valuation of the engines, of whether that value has diminished, and of the relative priorities of the liens. F1NOVA believes that discovery will show that GEAR has in fact been paid for most, if not all of the Upgrade Work it has performed on the Engines. In that event, GEAE's security interest in the Engines should be immediately released. Relief from the Automatic Stay FINOVA argued that GEAE has not shown that it is entitled to relief from the automatic stay. Due to the importance of the automatic stay, a party seeking to lift the stay under Section 362 bears the burden of making an initial showing that cause exists to grant that relief. While GEAE argued that it is entitled to relief from the stay because its interests in the Engines are not being adequately protected, GEAE has not alleged that adequate protection measured by the amount by which the value is diminishing in value is unavailable, nor has GEAE made the required showing that it is entitled to adequate protection at all, FINOVA contends. FINOVA observes that because the Engines still remain the property of the Tower estate and any lack of adequate protection of GEAE's interest in the Engines is caused by the Tower stay and not the actions of FINOVA. FINOVA also asserted that: (1) The evidence will not establish that GEAR's security interest in the Engines is superior to that held by FINOVA because Ms. Petrina's testimony will show that even if GEAE once held a security interest in the Engines that was senior to FINOVA's, due to GEAR's breaches of the Intercreditor Agreement, GEAR's security interest should be subordinated to that of Finova. (2) The evidence will not establish that GEAR is still owed payments in connection with its Services Agreement with Tower. (3) The evidence will not establish that, in the event that GEAR is still owed payments in connection with the Upgrade Work it performed on the Engines, GEAR is owed amounts in excess of the fair market value of the Engines. FINOVA points out that GEAE has not presented any evidence concerning the approximate fair market value of the Engines, and the Court cannot determine whether GEAR is entitled to adequate protection of its interests in the Engines, without determining the value of the collateral. In contrast, FINOVA is prepared to present the testimony of Mr. Morten Beyer, Chairman and CEO of Morten Beyer & Agnew, at the Preliminary Hearing concerning, among other things, the Engines fair market value. (4) The evidence will not establish that the value of the Engines is diminishing and can be expected to diminish throughout the duration of the bankruptcy proceedings. FINOVA reminds the Court that GEAR must show that the Engines are diminishing in value in order to obtain the relief it seeks. It has not done so, and will not be able to do so, FINOVA asserted. In support of its position, GEAR offered a two page affidavit from Mr. Richard Britton, which states that the "value of the JT9D Engines as a whole is decreasing. . . in the marketplace" and that the "market for JT9D engines is worse than it was two years ago." FINOVA observed that Mr. Britton, however, does not place a current value on the Engines at issue, or give any estimate of the amount of the expected decline in the value of those Engines in the marketplace but F1NOVA is prepared to offer the testimony of Mr. Beyer on this issue. In addition, the evidence will establish that wholly apart from the question of value of the Engines as operating Engines, the Engines have a substantial residual value if sold only for parts. (5) The evidence will not establish that, in the event the Court finds that there is a lack of adequate protection, F1NOVA cannot provide that protection in some manner. Therefore, FINOVA should be entitled to keep possession of the Engines and the stay should remain in place. Modification of the Stay for the Purposes of Proceeding With the Adversary Proceeding FINOVA agreed that the dispute concerning who properly holds the first priority security interest in the Engines needs to be resolved as soon as possible. Therefore, FINOVA is prepared to consent to a partial lifting of the automatic stay for the limited purpose of allowing the Adversary Proceeding to continue on a modified schedule, allowing sufficient time for discovery. Although the Adversary Proceeding would continue within the Tower bankruptcy proceedings, F1NOVA submitted that all parties in interest in the FINOVA bankruptcy proceedings must be allowed the opportunity to participate. (Finova Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) FREEREALTIME.COM: Files Chapter 11 Petition in C.D. California -------------------------------------------------------------- FreeRealTime.com, Inc. (OTC Bulletin Board: FRTI) filed a voluntary petition for relief, for itself, and its wholly-owned subsidiary Freerealtime.com-Canada, under Chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the Central District of California. The Company's other subsidiaries, RedChip.com, Inc. and its subsidiaries, and Digital Offering, Inc. are not included in the petition. While under the protection of the bankruptcy court, the Company intends to continue to operate its web site, Freerealtime.com, as it pursues strategic alternatives for its business and properties, including the sale of all or substantially all of its assets. FULL HOUSE: Receives Nasdaq's Delisting Notice ---------------------------------------------- Full House Resorts, Inc. (Nasdaq: FHRI) said it received a Nasdaq Staff Determination on April 19, 2001 indicating that the Company has failed to comply with the minimum bid price requirement for continued listing set forth in Marketplace Rule 4310(c)(4), and that its securities are, therefore, subject to delisting from The Nasdaq SmallCap Market. Accordingly, the Company's securities will be delisted from the Nasdaq SmallCap Market at the opening of business on April 27, 2001. The Company's securities are eligible for listing on the OTC Bulletin Board. Full House Resorts, Inc. is a manager and developer of gaming entertainment enterprises. We are currently involved with operating casino projects in North Bend, Oregon and Harrington, Delaware, as well as development projects in Battle Creek, Michigan and Southern California. ICG COMM: Trustee Balks At Move To Pre-Approve Bidder Incentives ---------------------------------------------------------------- Patricia A. Staiano, United States Trustee for Region 3, through Frank J. Perch, Assistant United States Trustee, objected to the ICG Communications, Inc.'s Motion. The Debtors sought pre- approval of a breakup fee of up to three percent of the aggregate purchase price to be offered to prospective stalking horse bidders, without reference to the terms of a specific transaction; i.e., without knowledge of what assets are to be sold, what terms are proposed, or who the proposed buyer is. The Trustee submitted to Judge Walsh that approval of a breakup fee in a vacuum, without the context of a specific transaction or specific bid against which to evaluate the proposed fee or range of fees, cannot possibly meet the standard set by the Court of Appeals for the Third Circuit in decisions such as In re O'Brien Environmental. The Trustee further objected to the blanket approval of breakup fees in a vacuum on the grand that no stalking horse bidder should be entitled to a breakup fee unless and until the Court can make a determination that the stalking horse bid would, if accepted, constitution a transaction that would meet the standard for approval of asset sales. The application seeks pre- approval of a breakup fee and expense reimbursement even in circumstances where such relief would be inappropriate or at least subject to higher scrutiny, such as where the proposed purchaser is an insider or affiliate, or a credit bid of a secured creditor or a landlord bidding on its own lease. The application also seeks pre-approval of a "limited no-shop provision" that would bar the Debtors from seeking competitive bids upon accepting a stalking horse bid. It is similarly inappropriate for Debtors to request blanket pre-approval of such a provision the appropriateness of which is dependent on the findings that the Court cannot now make, such as that the Debtor has adequately marketed the assets in question and adequately solicited potential bidders prior to accepting the bid to be protected, and that the bidder being protected is not an insider or affiliate, or a secured creditor credit-bidding on its own collateral, or a landlord bidding on its own lease. Further, the approval of a no-shop provision binding on the Committee appears to the Trustee inconsistent with the Committee's fiduciary duties. (ICG Communications Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392- 0900) IMPERIAL CREDIT: Falls Short Of Nasdaq's Listing Requirement ------------------------------------------------------------ On April 20, 2001, Imperial Credit Industries received a Nasdaq Staff Determination that the Company fails to comply with the minimum bid price requirement for continued listing set forth in the Nasdaq Marketplace rules, and that its securities are, therefore, subject to delisting from the Nasdaq National Market. The Company has filed its request for a hearing before the Nasdaq Listing Qualifications Panel to review the Staff Determination, and will present the Panel with the Company's recapitalization plan. There can be no assurance that Qualifications Panel will grant the Company's request for continued listing. Pending the final decision of the Qualifications Panel, the Company's securities will continue to trade on the Nasdaq National Market. Imperial Credit Industries, Inc., a diversified financial services holding company, was formed in 1991 and is headquartered in Torrance, California. The Company's major business activities are primarily conducted through Southern Pacific Bank, a wholly owned subsidiary. The Company also owns an equity interest in Imperial Capital Group, LLC (approximately 38% ownership). KCS ENERGY: Annual Stockholders Meeting Is On May 24 In Houston --------------------------------------------------------------- The Annual Meeting of Stockholders of KCS Energy, Inc. will be held on May 24, 2001, at the Marathon Oil Tower, 5555 San Felipe Road, Houston, Texas, at 9:00 a.m. local time for the following purposes: (1) To elect two directors to serve until the Annual Meeting of Stockholders in 2004; (2) To take action upon any other business as may properly come before the Meeting, or any adjournment thereof. The Board of Directors has fixed the close of business on March 30, 2001, as the record date for the determination of the stockholders entitled to notice of and to vote at the Meeting or any adjournment thereof. KYOEI LIFE: S&P Withdraws Ratings After Reorganization ------------------------------------------------------ Standard & Poor's withdrew its 'R' long-term counterparty credit and insurer financial strength ratings on Kyoei Life Insurance Co. Ltd. after confirming that the company's restructured liabilities and related assets are now managed by Gibraltar Life Insurance Co. Kyoei Life filed for court protection on Oct. 20, 2000, and was reorganized with sponsorship from Prudential Insurance Co. of America under a rehabilitation plan recently approved by the court and regulator, Standard & Poor's said. LILLY'S JEWELERS: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------------------ Lillys' Jewelers filed for chapter 11 protection last week and plans to liquidate its assets, according to The Charleston Gazette. Store owners hired a national jewelry liquidator to sell the inventory that is valued at about $2 million. The company's nine West Virginia stores could be sold to other jewelers, said company attorney Steven Thomas. According to the store's bankruptcy filings, if Lillys' had not filed for bankruptcy, it could have lost more than $460,000 in the next fiscal year. Lillys' has more than 200 creditors. The jeweler's largest creditor, City National Bank, is owed more than $1.3 million. Lillys' owes other unsecured creditors between $1.4 million and $1.8 million. (ABI World, April 23, 2001) LTV CORPORATION: Appoints Carl B. Frankel to Board of Directors --------------------------------------------------------------- The LTV Corporation (OTC Bulletin Board: LTVCQ) announced that Carl B. Frankel, retired general counsel of the United Steelworkers of America union, has been appointed a director of the Corporation. Under the terms of the labor agreement between LTV Steel and the United Steelworkers of America (USWA), the union may nominate one director. The last director nominated by the USWA was Edgar Ball who retired in 1999. We are very pleased to welcome Carl Frankel to the LTV Board. He brings with him a reputation of extraordinary intelligence and integrity and his participation in our efforts to secure a hopeful future for LTV is most welcome, said William H. Bricker, LTV's chairman and chief executive officer. LTV and all of its constituents face very severe consequences unless we successfully restructure LTV's integrated steel unit into a viable business that is fully competitive in the domestic and international marketplace. Mr. Frankel's 30 years of experience, and his knowledge of the complex problems facing steel will be invaluable to our efforts on behalf of LTV's shareholders, employees and communities, Mr. Bricker said. Mr. Frankel, a graduate of the University of Chicago College and Law School, joined the USWA in 1968 as associate general counsel. He served at the staff level of the Collective Bargaining Forum, a government/union/ management committee designed to improve labor relations in the United States. He also played a prominent role in presenting the union's position on matters related to foreign trade to various government bodies. Mr. Frankel also served the union as one of its leading negotiators in the basic steel industry. He was one of the architects and negotiators of the USWA's New Directions bargaining program which included partnership, employment security, neutrality, board representation, and partially funded retiree health benefits. The LTV Corporation is a manufacturing company with interests in steel and metal fabrication. LTV's Integrated Steel segment is a leading producer of high-quality, value-added flat rolled steel, and a major supplier to the transportation, appliance, electrical equipment and service center industries. LTV's Metal Fabrication segment consists of LTV Copperweld, the largest producer of tubular and bimetallic products in North America and VP Buildings, a leading producer of pre-engineered metal buildings for low-rise commercial applications. MARINER: Health Seeks Further Extension To Decide On Leases ----------------------------------------------------------- To avoid premature assumption of large, long-term liabilities, which will give rise to needless administrative priority claims, or premature rejection of potentially valuable interests, the Health Debtors sought a further extension of the period within which they must assume or reject all of the 64 non-residential real property leases unexpired as at petition to the earlier of (a) September 17, 2001, and (b) the effective date of a plan of reorganization, without prejudice to their right to seek a further extension and the right of any lessor to request that the extension be shortened as to a particular lease. The Debtors covenant that they will be current on their postpetition obligations under the unexpired leases and intend to continue to pay postpetition rent and tax obligations under these leases as they become due, except to the extent that any unexpired lease is subsequently rejected. (Mariner Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) NORTHWESTERN STEEL: Asks Court To Establish June 18 Bar Date ------------------------------------------------------------ Northwestern Steel and Wire Company seeks to establish June 18, 2001 at 4:00 PM as the last date and time by which all creditors of the debtor and its estate, including governmental entities, must file proofs of claim in this case with respect to claims arising prior to December 19, 2000. OWENS CORNING: Agrees To Provide Utilities Payment Assurance ------------------------------------------------------------ Through Mark S. Chehi and David R. Hurst of the Wilmington branch of Skadden, Arps, Slate, Meagher & Flom LLP, together with Norman L. Pernick and J. Kate Stickles of the Wilmington firm of Saul Ewing LLP, Owens Corning have reached a series of agreements with various utility companies regarding "adequate assurance" to those utilities of the various Debtors' payment of postpetition utility charges. In October the Debtors filed a motion for interim and final orders prohibiting utilities from altering, refusing or discontinuing services on account of prepetition invoices, and establishing procedures for determining requests for additional adequate assurances of payment other than and in addition to the Debtors' prepetition payment record. This motion was granted, and the Debtors have reached agreements with various utilities to provide additional adequate assurance under the procedures described in the Motion, and ordered by the Court. In each instance these additional agreements require that the Debtors post a cash security deposit with the utility, which will bear interest as provided for under the utility's regulations, and which will be returned to the Debtors, less any amounts due for unpaid utility invoices for postpetition services, as provided by the regulations. If there is a default by the Debtors with respect to (i) payment of the security deposit, or (ii) payment of charges for postpetition utility services, as to which there is not a good faith dispute, and which is not cured within the greater of ten days or the period provided for in the regulations after written notice from the utility to the Debtors, then the utility may terminate postpetition utility services to the Debtors in accordance with the regulations and without further order of the Court. Any undisputed charge for postpetition utility services provided by the utility to the Debtors will constitute an administrative expense entitled to such priority of payment as is provided by the Bankruptcy Code. Utility Additional assurance ------- -------------------- Allegheny Power $ 1,850 Fairmont, West Virginia AmerenUE $ 212 St. Louis, Missouri American Electric Power $ 533,295 Roanake, Virginia Arkansas Western Gas Company $ 125 Fayetteville, Arkansas Baltimore Gas & Electric $ 42,000 plus terms* Baltimore, Maryland Cincinnati Gas & Electric Co. and $100,000 L/Credit Affiliates, including The Union Light, Heat & Power Co. and Lawrenceburg Gas Cincinnati, Ohio Columbia Gas of Ohio $ 35,396 plus terms* Columbus, Ohio Consumers Energy $ 29,473 Jackson, Mississippi Crossroads Distribution Center LLC $ 10,000 plus terms* Oklahoma City, Oklahoma Dominion East Ohio Gas $ 2,306 Richmond, Virginia Dominion Virginia Power $ 131,375 Richmond, Virginia Entergy Arkansas, Inc. $ 630 Entergy Gulf States, Inc. $ 1,085 Entergy Louisiana, Inc. $ 1,230 Entergy Mississippi, Inc. $ 425 (prepetition) New Orleans, Louisiana Florida Gas Transmission Co. $ 15,000 Houston, Texas Florida Power Corporation $ 500 Clearwater, Florida Florida Power & Light Company $ 15,000 Washington, DC Georgia Power Company and $ 500,000 Savannah Electric Company Atlanta, Georgia Greenville Utilities Commission $ 300 Greenville, North Carolina Industrial Gas Supply $ 39,322 Houston, Texas Ionex Telecommunications, Inc. $ 600 Wichita, Kansas Jackson Utility Division $ 500,000 Nashville, Tennessee Johnson City Power Board $ 3,000 Johnson City, Tennessee Lakeland Electric & Water $ 2,000 Lakeland, Florida Memphis Light, Gas & Water $ 56,231 Memphis, Tennessee Metropolitan Water Reclamation $ 350 Chicago, Illinois Morehead City Water Department $ 400 Morehead City, North Carolina Niagara Mohawk Power Corp. $ 350,000 Buffalo, New York Northern Indiana Public Service Co. $ 36,320 Merrillville, Indiana Pacific Gas & Electric Company $ 117,000 Stockton, California PacifiCorp (Utah Light & Power and $ 35,000 Pacific Power & Light) Portland, Oregon Piedmont Natural Gas Company, Inc. $ 75,000 Charlotte, North Carolina Public Service Electric & Gas Co. $ 69,760 Kearney, New Jersey Reliant Energy Entex $ 36,506 Houston, Texas Scana Corporation (South Carolina Electric And Gas, Scana Energy and PSNC Energy) $ 27,622 Columbia, South Carolina Shelby Energy Cooperative, Inc. $ 2,000 Shelbyville, Kentucky Slemco $ 320 Lafayette, Louisiana Southern California Edison $ 60,000 Rosemead, California Southwest Gas Corp. $ 25,000 Las Vegas, Nevada TXU Electric & Gas $ 500,000 Dallas, Texas Verizon Communications, Inc. $ 40,000 Atlanta, Georgia Xcel Energy $ 4,000 Eau Claire, Wisconsin The Debtors' stipulation with each of Crossroads Distribution Center, Baltimore Gas & Electric, and Columbia Gas of Ohio calls for a deposit, and also provides that the terms of postpetition services from the utility to the Debtors will be governed by the applicable rules, regulations, tariffs, statutes, laws, ordinances and customary billing procedures governing utilities in the State in which the account by which the utility services the Debtors is located. The utility will continue to provide utility services to the Debtors and will continue to invoice the Debtors for such services in the same manner as was customary prior to the Petition Date, and the Debtors agree to pay the full, undisputed amounts of the utility's postpetition invoices on or before the due dates set out in the invoices, and if the Debtors fail to do so, then the utility may avail itself of its remedies as provided under the regulations. The Debtors are to promptly notify the utility of any refusal or failure of delivery by any entity that is supplying natural gas to the Debtors. Upon presentation with this series of stipulations, Judge Fitzgerald signed and approved each of them. (Owens Corning Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) PACIFIC GAS: Seeks Permission to Fund Energy Efficiency Programs ---------------------------------------------------------------- Pacific Gas and Electric Company filed a motion with the U.S. Bankruptcy Court asking the court to confirm that the funds collected by the utility for Public Purpose Programs -- including energy efficiency, low income, research and development and renewable generation programs -- are not part of the bankruptcy estate and can be used to honor pre-petition obligations incurred in connection with the Public Purpose Programs. If its motion is approved by the court, Pacific Gas and Electric Company will be able to immediately pay for costs incurred in connection with the Public Purpose Programs prior to April 6, the day it filed for protection under Chapter 11 of the U.S. Bankruptcy Code. The utility owes approximately $37 million to consumers who have requested rebates and to contractors who have performed work in customers' homes and businesses to make them more energy efficient. A favorable ruling will also ensure that the $260 million now in the energy efficiency accounts will be fully available for payments for these programs. Pacific Gas and Electric Company operates the most extensive energy efficiency programs in the nation, and the continued vitality of these programs will be a critically important part of California's efforts to reduce the severity of rolling blackouts this summer. The utility collects more than $200 million each year from ratepayers, and administers energy efficiency programs under the auspices of the California Public Utilities Commission. The funds are used to provide customers with rebates for energy efficient appliances, lighting and equipment; weatherization services for low-income customers; and consulting services for residential and business customers. Pacific Gas and Electric Company's ratepayers also fund research and development and renewable generation programs through the California Energy Commission. PROTECTION ONE: Fitch Cuts Senior Notes To B, Sub Debt To CCC+ -------------------------------------------------------------- Fitch has downgraded Protection One, Inc.'s (POI) senior unsecured notes to 'B' from 'B+' and the company's senior subordinated notes to 'CCC+' from 'B-'. These notes were issued by Protection One Alarm Monitoring, Inc., the company's wholly owned subsidiary. The company's ratings are removed from Rating Watch Negative. The Rating Outlook is Negative. The rating actions reflect the company's declining financial performance, limited financial flexibility, and execution risk surrounding the company's operating strategy. The company is removed from Rating Watch Negative as POI has stated that the SEC questions regarding the company's accounting treatment of amortization for new customers appear to have been resolved. The outlook reflects the company's anticipated weaker financial and operational performance, challenges in reversing attrition trends, and continued limited financial flexibility. POI's year-end operating results include higher operating costs and above industry-average customer attrition levels. This resulted in EBITDA margins declining to 33.6% from 34.3% in 1999 as operating expenses increased due to additional staff to improve customer service intended to offset higher attrition rates. The company has stated that it is taking specific steps to improve these attrition rates to normal industry levels. However, Fitch believes EBITDA margins and overall credit protections measures will continue to be challenged as efforts continue by management to improve the company's operational performance. Credit statistics show the interest coverage ratio, measured by EBITDA to interest incurred, remaining the same at 2.4 times (x) at Dec. 31, 2000, when compared to the same period in 1999. POI's leverage, measured by total debt to EBITDA, decreased to 4.4x, compared to 5.4x at the end of 1999. This is mainly attributable to the company's disposition of its European operations to Westar Industries, Inc. (Westar) for approximately $244 million, consisting of $183 million in cash and $61 million of POI debt securities. The company utilized the cash proceeds as well as internal cash flow to repurchase its own debt at a discount. However, Fitch anticipates that leverage will increase, interest coverage could deteriorate further, and cash flow after capital expenditures will be challenged. POI could face liquidity constraints and may have difficulty accessing the capital markets in the near term, as issues relating to its weak operating and financial performance remain unclear. Although the company negotiated with banks to provide independent financing via a long-term credit facility the company elected to extend its credit facility with Westar, which is also an approximate 85% equity owner of POI. The current $115 million facility expires on Jan. 2, 2002, and can be increased by up to an additional $40 million for acquisitions and other discretionary spending. As of March 30, 2001, the company had $135 million outstanding from this facility. POI continues to be in discussion with banks for long term financing in addition to considering asset dispositions to improve its liquidity. POI is a leading provider of property monitoring services, providing electronic monitoring and maintenance of alarm systems to over 1.4 million customers in North America as of Dec. 31, 2000. Revenues are generated primarily from recurring monthly revenues for monitoring and maintaining the alarm systems that are installed in customers' homes and businesses. SIMITAR ENTERTAINMENT: Plan Confirmation Hearing Set For May 17 --------------------------------------------------------------- The disclosure statement filed by Simitar Entertainment, Inc. was approved by order entered on March 27, 2001 by the Honorable Dennis D. O'Brien, US Bankruptcy Court, District of Minnesota. A hearing to consider confirmation of the plan will be held on May 17, 2001 at 9:30 AM. The value of the debtor's assets are likely not sufficient to pay in full the secured claim of Congress Financial Corporation, debtor's lender. As of March 2, 2001, the Congress secured claim totaled $4.9 million. SKINNER ENGINE: Files for Chapter 11 Protection ------------------------------------------------ Skinner Engine Co., one of Erie, Pa.'s oldest industrial companies, filed for chapter 11 protection, according to the Erie Times-News. A list of the company's creditors has not yet been filed. Mike McInchak, president of United Auto Workers Local 1697, said the company was forced to seek protection because it is facing slow orders and a number of customers who haven't paid their bills. "The gist of it is we have some money problems and our corporate headquarters put us into chapter 11," he said. The company dates back to 1868 where it began its business building steam engines. Since that time it has built gas engines and eventually began building turbines for power generation and mixers. (ABI World, April 24, 2001) STROUDS INC: Bankruptcy Court Gives Go Ahead For Asset Sales ------------------------------------------------------------ By order entered on April 12, 2001, Strouds, Inc. was granted authority to enter into a certain asset purchase agreement authorizing the sale of substantially all of the debtor's assets to Strouds Acquisition Corporation. On the Closing Date and as set forth in the agreement the Buyer shall pay the following purchase price for the assets: * Cash in the amount equal to the sum of 37% of the retail value of the Inventory based upon the sum set forth in the Seller's Inventory stock ledger, subject to adjustment, if any in the price to be paid for Inventory that the Seller has purchased more than 12 months prior to the Closing Date that is in excess of $6 million, for which the purchaser shall pay 27% of the retail value of such Inventory; assumption by the debtor of the accounts payable to trade vendors or other post--petition obligations, in an amount of $3 million and all accrued vacation and applicable payroll taxes payable for employees to be retained following the Closing Date in an amount not to exceed $1.1 million; assumption by Buyer of all liabilities for gift certificates and merchandise credits not to exceed $1.4 million; * reimbursement in cash for the actual amounts of certain advertising expenses, not to exceed $500,000; the sum of $2 million in cash; * reimbursement of the debtor's closing month rent following the closing date; * $2 million to be paid tot he debtor in the form of a non- interest bearing note, to be paid in four equal installments of $500,l000; and $106,275 in cash as reimbursement for the deposits. SYBASE INC.: Stockholders To Convene in California On May 24 ------------------------------------------------------------ The 2001 Annual Meeting of Stockholders of Sybase, Inc., will be held at 10:00 a.m., Thursday, May 24, 2001, at Sybase, Inc. Eniac Conference Room 1650 - 65th Street, Emeryville, California 94608, to act upon the following: - Election of three Class III directors - Amendment of the 1996 Stock Plan to increase the share reserve by 4,000,000 - Adoption of the 2001 Director Option Plan - Ratification of Ernst & Young LLP as independent auditors for 2001 - Transaction of other business properly brought before the meeting Stockholders are entitled to vote on these matters if they were a stockholder of record at the close of business Monday, April 2, 2001. SYMONS INTERNATIONAL: Posts $71.4 Million Loss For Year 2000 ------------------------------------------------------------ Symons International Group, Inc. owns insurance companies which underwrite and market nonstandard private passenger automobile insurance. The Company's principal insurance company subsidiaries are Pafco General Insurance Company, Superior Insurance Company and IGF Insurance Company. The Company is a 73% owned subsidiary of Goran Capital Inc. The Company is currently pursuing the sale of its crop insurance operations. Management expects to complete the sale during the second quarter of 2001. The Company reported losses from continuing operations of $(71,384,000) for the year 2000 compared to losses from continuing operations of $(65,443,000) for 1999. Results from continuing operations before the effects of income taxes, minority interest and amortization expense were losses of $(24,969,000) and $(48,698,000) for 2000 and 1999 respectively. Losses from continuing operations had decreased from 1999 largely due to favorable developments in loss ratios and actions taken to reduce operating expenses. The Company is continuing to seek and implement rate increases and other underwriting actions to further improve profitability. A number of systems have been automated and the Company says service problems have been eliminated or significantly reduced. Although the Company has taken a number of actions to address factors contributing to these past losses, there can be no assurance that operating losses will not continue. TENNECO AUTOMOTIVE: Discloses 2001 First Quarter Results -------------------------------------------------------- Tenneco Automotive (NYSE: TEN) reported a net loss of $31 million, or 84 cents per diluted share, for the first quarter of 2001. These results include pre-tax restructuring charges of $12 million (23 cents per share), pre-tax environmental charges of $6 million (12 cents per share), and pre-tax charges associated with the company's re-negotiation of its senior debt agreements of $2 million (5 cents per share). The company reported a net loss of $16 million, or 44 cents per diluted share, for the first quarter of 2001, before restructuring charges and other unusual charges, compared to net income of $1 million, or 3 cents per diluted share, for the first quarter of 2000. The company's revenue and profitability continue to be impacted by downturns in North American light vehicle and heavy-duty truck production as well as the depressed global aftermarket, despite strong performances during the quarter by its European original equipment and rest of world operations. Revenue for the quarter was $864 million versus $878 million in the first quarter of 2000. EBITDA for the quarter, excluding restructuring and other unusual charges, was $63 million compared with $86 million the previous year, a 27 percent decline. The company reported that cash flow from operations during the quarter, while negative, did not decline as much as the decline in EBITDA. At quarter end, working capital, before factored receivables, improved by $100 million compared to the first quarter 2000, as the company enhanced its receivables performance by three days and shrunk inventory levels by six days. A $9 million decrease in capital spending and lower taxes also contributed to this cash flow improvement. Additionally, the company reduced its SGA&E expense by $18 million year-over- year, as a result of previously announced restructuring initiatives. We continue to focus on the key areas that we can control -- manufacturing costs, SGA&E, discretionary spending, and working capital -- in order to meet the immediate challenges caused by the difficult industry conditions, said Mark P. Frissora, chairman and CEO, Tenneco Automotive. The company reported the following geographical results before restructuring and other unusual charges: North America North American original equipment revenue declined 15 percent during the quarter to $324 million versus $382 million in the first quarter of 2000. North American aftermarket revenue decreased 13 percent to $111 million from $128 million in the previous year. North American EBIT declined to $6 million versus $34 million in the first quarter of 2000. EBIT was primarily impacted by lower revenues, including a significant downturn in the high margin heavy-duty elastomer business. Operating inefficiencies and aftermarket bad debt expense also contributed to the decline. Europe Driven by increased original equipment exhaust volumes, European original equipment revenue increased 36 percent to $275 million compared to $202 million in the previous year. European aftermarket revenue declined 20 percent to $74 million versus $92 million in first quarter of 2000. European EBIT increased 33 percent to $16 million for the quarter. This increase was driven primarily by operational improvements in the European original equipment exhaust business. Rest of the World The company's Australian operations reported a 10 percent revenue decline from $29 million to $26 million; however, revenue would have increased 5 percent if currency exchange rates had been the same in the first quarter of 2000 as in the first quarter of 2001. The launch of new original equipment programs in South America fueled a 9 percent increase in revenue to $36 million, from $33 million in 2000. Revenue from Asian operations grew 64 percent to $18 million from $11 million in the first quarter of 2000, driven by production from the company's new facility in Shanghai and aftermarket volumes. Combined EBIT for South America, Australia, and Asia was $4 million compared to $2 million in the previous year, primarily the result of volume increases. We are by no means satisfied with our results, Frissora said. However, we are encouraged by progress we've made in reducing our overhead costs and spending, and our entire organization is determined to make additional improvement in these areas in the second quarter and throughout 2001. Tenneco Automotive is a $3.5 billion manufacturing company headquartered in Lake Forest, Ill., with 23,000 employees worldwide. Tenneco Automotive is one of the world's largest producers and marketers of ride control and exhaust systems and products, which are sold under the Monroer and Walker r global brand names. VENCOR INC.: Medstar Moves To File Late Proof Of Claim ------------------------------------------------------ Area Metropolitan Ambulance Authority d/b/a MedStar filed a motion for leave to file proof of claim in the amount of $64,877.25 arising from mobile intensive care unit ambulance services provided for the purpose of transporting nursing home and home patients of Vencor Hospital. MedStar told the Court that it did not receive any notice of the commencement of the Vencor bankruptcy case or the deadline for filing a proof of claim. The list of creditors filed by the Debtor does include MedStar and/or Metropolitan Ambulance Authority. However, such notice was sent to MedStar's payment processing center, Bank One, which is not authorized to receive legal notice on behalf of MedStar. The movant said it first learned of these proceedings when it received the Disclosure Statement and ballot which indicates that MedStar is a convenience class creditor having a claim in the amount less than $3,000. Therefore, MedStar seeks leave to file the proof of claim in the amount of $64,877.25 so that this will be deemed timely filed. MedStar asserted that the request should be granted because -- The movant was entitled to receive actual notice of the bar date but did not receive it; -- There is no harm to the Debtors in allowing the filing of the claim as the estate has not been liquidated and no distribution had been made before the effective date of the Plan; -- MedStar acted with diligence and good faith to seek leave to file its proof of claim as it notified its counsel, Matthew Goetz, Esq of Murphy Mahon Keffler & Farrier of its predicament shorty after receiving the Debtors' Disclosure Statement. Mr. Goetz then engaged bankruptcy counsel, Randall Johnson, Esq. Of Harris, Finley & Bogle, Forth Worth, Texas. Mr. Johnson subsequently endeavored to find representation for his client in the State of Delaware by Bifferato, Bifferato & Gentilotti. As at April 12, 2001, the parties were negotiating the terms for a consensual resolution of the matter. (Vencor Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) VISTA EYECARE: Atlanta Court Gives Nod On Disclosure Statement -------------------------------------------------------------- Vista Eyecare Inc. won court approval of the disclosure statement related to its chapter 11 reorganization plan after it amended the document in response to Wal-Mart Stores Inc.'s objection. Judge James E. Massey of the U.S. Bankruptcy Court in Atlanta approved the adequacy of information in the plan disclosure statement after a hearing April 12. The plan confirmation hearing is set for May 17, with objections due May 14. The Lawrenceville, Ga.-based eye care retailer also won court approval to sell most of its remaining vision center operations in free-standing locations - malls and strip centers - and its Fullerton, Calif., optical laboratory and related distribution center to Vista Acquisition LLC for $7.5 million. (ABI World, April 24, 2001) W.R. GRACE: Paying Prepetition Sales And Use Taxes -------------------------------------------------- W. R. Grace & Co. sought and obtained Judge Newsome's authority to pay prepetition claims approximating $1,700,000 for sales, use and other taxes collected on account of prepetition sales but not paid to the applicable taxing authority and other unpaid fees, licenses and other similar charges and assessments, including hazardous waste and environmental permits and costs. Judge Newsome expressly held that nothing in his Order should be construed as limiting, abridging, or otherwise affecting the Debtors' right to contest on any grounds the validity or amount of any taxes due or paid under the Order. (W.R. Grace Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392- 0900) WINSTAR COMMUNICATONS: Honoring Prepetition Customer Obligations ---------------------------------------------------------------- To sign-up new customers as rapidly as possible, Winstar Communications, Inc. offered their customers many incentives, including discounts, credits, and other promotions. Most of these programs, the Debtors told the Court, have ended or are in run-off mode. The "Business Essentials" package is now the normal way Winstar's products and services are bundled and sold. Uninterrupted maintenance of all existing Customer Practices is essential to attracting new customers and maintaining existing customer satisfaction, the Debtors tell Judge Farnan. Discontinuation of existing Customer Practices would, the Debtors are convinced, result in a loss of current customers, impair Winstar's ability to attract new customers and Winstar would see a significant drop in customer-generated revenue. The Debtors estimate that their prepetition customer-related obligations approximate $2,500,000 and that $250,000 is owed to vendors for customer referral fees. The Debtors ask the Court for permission to honor these prepetition obligations. Judge Farnan agreed with the Debtors' assessment that the amount of money involved is de minimis compared with the losses that the Debtors could suffer if the patronage of Winstar customers erodes at the outset of these cases. By Motion, the Debtors sought and obtained an order authorizing, but not directing, Winstar to continue their prepetition Customer Practices and granting the Debtors authority to honor prepetition credits against future transactions. Nothing in his order, nor the Debtors' decision to honor any Customer Practice, Judge Farnan cautioned, shall constitute an admission by the Debtors as to the validity of the underlying obligation or a waiver of any rights the Debtors may have to subsequently dispute such obligation. (Winstar Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) WORLD ACCESS: Files Chapter 11 Petition in N.D. Illinois -------------------------------------------------------- World Access, Inc. (Nasdaq: WAXS) disclosed that its Board of Directors approved the filing of voluntary petitions for Chapter 11 relief in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division, on behalf of World Access and certain of its U.S. subsidiaries. As previously announced, on April 4, 2001, three holders of World Access' 13.25% Senior Notes due 2008 commenced an involuntary bankruptcy case against the Company, and the Company has been in discussions with the noteholders regarding a possible restructuring of the Company's obligations since before that filing. In addition, on April 5, 2001, Deutsche Telekom disconnected circuits used by TelDaFax AG, which is 33% owned by World Access, effectively cutting off service to most of TelDaFax's German customers. Although service was subsequently restored, World Access' management concluded that great harm had been caused to the commercial prospects of TelDaFax. In light of the loss of TelDaFax's commercial prospects and the inability to reach a resolution with the noteholders that does not involve remaining in bankruptcy, the Chapter 11 filing is being made in cooperation with the noteholders and effectively converts the involuntary case into a structure in which the Company's management will work with the noteholders to finalize a plan for the sale of the Company's operations. World Access has engaged UBS Warburg to assist it in evaluating potential acquirers of the Company's various business units. WSR CORPORATION: Seeks to Extend Exclusive Periods -------------------------------------------------- WSR Corporation, and its debtor affiliates seek to extend by 90 days the debtors' exclusive periods within which to file a chapter 11 plan and solicit acceptances. Pursuant to Section 1121(d) of the Bankruptcy Code, the debtors requested entry of an order extending their plan exclusivity period and solicitation exclusivity period for approximately ninety days, to and including July 9, 2001 and September 6, 2001, respectively. The debtors claim that the extensions are necessary to participate in the presently scheduled mediation with R&S Parts and Service LLC of substantially all of the debtor's operating assets and the creditors' committee with respect to Parts & Service's alleged right to set off certain amounts due and owing for those Assets under the promissory note executed in connection with the sale of the assets and Parts & Service's right to retain approximately $1.8 million in cash remaining in certain accounts at the time of closing on the sale of assets. And if the parties are unable to resolve the disputes through mediation, to seek adjudication of the disputes; and to file, solicit votes with respect to and confirm he debtors' plan. The debtor stated that the size of the cases and the complexity of the issues facing the debtors and the present disputes weigh in favor of granting the debtors' request for an extension of exclusivity. In addition to its size, complex structure, diverse creditor constituencies and recently completed Asset Sale, the debtors now are faced with unexpected emergencies -- the Setoff Dispute an d the $1.8 million Dispute. The debtors asserted that the advantage of a negotiated resolution of the disputes over litigation justifies granting the debtors the requested extension of their exclusive periods. ********* Bond pricing, appearing in each Monday's edition of the TCR, is provided by DLS Capital Partners in Dallas, Texas. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658- 9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Debra Brennan, Yvonne L. Metzler, Aileen Quijano and Peter A. Chapman, Editors. Copyright 2001. All rights reserved. ISSN: 1520-9474. 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