/raid1/www/Hosts/bankrupt/TCR_Public/010515.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, May 15, 2001, Vol. 5, No. 95
Headlines
AAMES FINANCIAL: Losses Trigger Debt Covenant Defaults
ALGOMA STEEL: Seeks More Time To File Plan of Arrangement
ASCENDANT SOLUTIONS: Restructuring to Preserve Assets & Pay Debt
BIONUTRICS INC.: Shares Face Delisting From NASDAQ
BOYSTOYS.COM: Files Chapter 11 Petition in N.D. California
BOYSTOYS.COM: Chapter 11 Case Summary
CAMAYEN CATTLE: Files For Chapter 11 Bankruptcy Protection
CLARIDGE HOTEL: Wins Majority Vote For Fourth Amended Plan
CMI INDUSTRIES: Court Approves Roll-Up DIP Financing with Fleet
COLO.COM: Files Chapter 11 Petition In N.D. California
COLO.COM: Chapter 11 Case Summary
ELECTRONIC BUSINESS: Emerges From Chapter 11 Bankruptcy
eNUCLEUS: Files For Chapter 11 To Complete Debt Restructuring
FINOVA GROUP: Corporate Existence & Governance Under The Plan
FRUIT OF THE LOOM: Closing Plant In Trois-RiviSres, Quebec
GAINSCO, INC.: Loss Widens Amid Restructuring
GC COMPANIES: Seeks to Extend Exclusive Period To August 7
GROVE WORLDWIDE: Moody's Junks Senior Debt Ratings
HARNISCHFEGER: Beloit Claims Team's Retention Program Approved
HIBBING TACONITE: Schedules Five-Week Summer Shutdown
IMPERIAL SUGAR: Obtains Approval For Wasserstein's Employment
INTEGRATED HEALTH: Agrees With DVI, ePlus, Newcourt re MLC Lease
INTEGRATED SECURITY: Stockholders Approve Restructuring Plan
JACOM COMPUTER: Last Date to File Proofs of Claim Is May 25
KAISER GROUP: John V. Koerber Resigns From Board
LOEWEN GROUP: Stockholder George L. Williamson Objects To Plan
LOEWEN GROUP: Reports First Quarter 2001 Operating Results
LTV CORP.: U.S. Trustee Appeals Jay Alix's Retention
MARINER: Cornerstone And Shono Agree To Modify Automatic Stay
METROCALL INC.: Seeks to Renegotiate WebLink Merger Agreement
NATIONAL EQUIPMENT: Moody's Downgrades Senior Credit Ratings
NMT MEDICAL: Annual Stockholders Meeting Set For June 7
OTR EXPRESS: Applies for Delisting From American Stock Exchange
PILLOWTEX: Court Okays KPMG's Employment As Auditors & Advisors
PNV, INC.: America Online Wants its Advertising Money
PSINET INC.: Internet Provider May Have to Pay Ex-CEO Millions
REGAL CINEMAS: On The Verge of Filing For Chapter 11 Bankruptcy
SOUTHERN MINERAL: Releases First Quarter 2001 Results
TELIGENT INC.: Lays Off 900 Workers & May File for Bankruptcy
TELIGENT: Nasdaq Halts Shares Trading & Asks For Information
THERMADYNE: Senior Debt Ratings Fall To Junk Levels
THERMOGENESIS CORPORATION: Atlas II Reports 7.7% Equity Stake
TITANIUM METALS: Intends To Pay Previously Deferred Dividends
TITANIUM METALS: Discloses Selling Price Increases
UNIVERSAL BROADBAND: Deadline For Filing Claims Is June 25
VENTURE CATALYST: Falls Short of Nasdaq's Listing Requirements
VERIDA INTERNET: Board Opts To Cease Operations
W.R. GRACE: Proposes Global Reclamation Procedures
WHX CORP.: S&P Cuts Corporate Rating To B, Senior Notes To CCC+
*********
AAMES FINANCIAL: Losses Trigger Debt Covenant Defaults
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Aames Financial Corporation (NYSE: AAM), a leader in subprime
home equity lending, reported results of operations for the
three and nine months ended March 31, 2001, announcing a net
loss of $33.2 million and $31.5 million, respectively, compared
to a net loss of $61.5 million and $108.4 million, respectively,
during the comparable three and nine month periods in 2000.
Included in the results for the three and nine months ended
March 31, 2001 was a $33.6 million write-down of the Company's
residual assets created in the Company's 1994 to 1999 vintage
securitization trusts compared to write-downs of the Company's
residual interests and mortgage servicing rights of $47.3
million and $82.5 million, respectively, for the three and nine
months ended March 31, 2000.
Excluding the write-downs, the Company posted its third
consecutive quarterly operating profit, earning $0.4 million for
the three months ended March 31, 2001, an increase of $14.6
million over the $14.2 million net operating loss reported
during the same period a year ago. Operating profit during the
nine months ended March 31, 2001 increased $28.0 million to $2.1
million, from a $25.9 million net operating loss during the
comparable nine month period a year ago.
In making the announcement, A. Jay Meyerson, Chief Executive
Officer of Aames, stated, "I continue to be encouraged by the
Company's core operating performance during the quarter. The
Company's positive core operating results during the three and
nine months ended March 31, 2001 reflect credit quality
improvement, balanced loan disposition strategies and reduced
noninterest expense throughout the organization and indicate
management's continued progress on executing the Company's
turnaround plan."
Meyerson continued, "Mortgage loans originated through former
bulk correspondent purchases and lower credit grade broker loan
programs discontinued long ago continue to create credit losses
in our older securitization trusts. The Company continues to
strengthen its loan servicing operations, enhancing its early
intervention and collection efforts, increasing its loss
mitigation, and more aggressively liquidating problem loans to
address these difficult legacy assets. The March 2001 adjustment
reflects management's commitment to address legacy issues
affecting the residual interests and to take appropriate
measures to adjust the Company's balance sheet."
After the required accrual for the dividends relating to
outstanding shares of convertible preferred stock of $3.3
million and $9.7 million, for the three and nine months ended
March 31, 2001, respectively, the net loss to common
stockholders was $36.5 million and $41.2 million, respectively.
In comparison, the net loss to common stockholders was $63.6
million and $114.1 million during the three and nine months
ended March 31, 2000, respectively, after the required accrual
for the convertible preferred stock dividend of $2.2 million and
$5.7 million, respectively. Net loss per common share was $5.88
and $6.64 for the three and nine months ended March 31, 2001,
respectively, compared to a net loss per common share of $10.25
and $18.38 during the comparable three and nine month periods in
2000, respectively.
Discussions with Revolving Warehouse
and Repurchase Facility Lenders
All of the Company's revolving warehouse and repurchase
facilities contain provisions requiring the Company to meet
certain periodic financial covenants, including among other
things, minimum liquidity, stockholders' equity, leverage and
net income levels. Due to the net loss for the March 2001
quarter, the Company failed to meet certain existing financial
covenants under its committed revolving warehouse and repurchase
agreements at March 31, 2001 and April 30, 2001 and does not
expect to meet those covenants at May 31, 2001. The Company is
in discussions with its warehouse lenders to amend the existing
financial covenants contained in the agreements.
Meyerson said, "We believe that the continued positive core
operating results reported over the last three quarters are
indicative of the Company's success in repositioning its
operating platform and origination process for profitability and
growth. While no assurance can be given, we are optimistic that
financial covenant amendments will be obtained which are
mutually satisfactory to the Company and our warehouse lenders."
Summary of Financial Results
Total revenues increased by $20.7 million for the March 2001
quarter compared to the March 2000 quarter.
Total revenues for the three and nine months ended March 31,
2001 were $18.7 million and $135.6 million, respectively,
compared to $(2.0) million and $71.9 million, respectively,
during the comparable periods a year ago. Excluding the $33.6
million and $47.3 million residual interest write-downs during
the three months ended March 31, 2001 and 2000, respectively,
total revenues increased $7.0 million to $52.3 million during
the March 2001 quarter from total revenues of $45.3 million
during the same period a year ago. The $7.0 million increase in
total revenue during the three months ended March 31, 2001 over
the same period a year ago resulted primarily from increases of
$8.4 million and $3.5 million in gain on sale of loans and
origination fees, respectively, partially offset by decreases of
$1.0 million and $4.0 million in loan servicing and interest
income, respectively.
Excluding the $33.6 million write-down and the $82.5 million
write-down during the nine months ended March 31, 2001 and 2000,
respectively, total revenues increased $14.8 to $169.2 million
during the nine months ended March 31, 2001 from $154.4 million
of total revenues during the comparable period in 2000. The
$14.8 million increase in total revenue during the nine months
ended March 31, 2001 over the comparable nine month period in
2000 resulted primarily from increases of $15.7 million and $6.6
million in gain on sale of loans and origination fees, partially
offset by decreases of $0.6 million and $6.7 million in loan
servicing and interest income, respectively.
Total expenses decreased by $7.9 million for the March 2001
quarter compared to the March 2000 quarter.
Total expenses declined $7.9 million and $12.1 million to $51.0
million and $165.7 million during the three and nine months
ended March 31, 2001, respectively, from $58.9 million and
$177.8 million during the three and nine months ended March 31,
2000, respectively. The $7.9 million decline in total expenses
during the three months ended March 31, 2001 from amounts
reported during the comparable three month period a year ago was
attributable to decreases of $2.2 million, $1.2 million, $2.7
million and $1.8 million in compensation, production, general
and administrative and interest expense, respectively. The $12.1
million decline in total expenses during the nine months ended
March 31, 2001 from the comparable nine month period a year ago
is primarily due to decreases of $7.7 million and $7.8 million
in production and general administrative expenses, respectively,
partially offset by increases of $3.1 million and $0.4 million
in compensation and interest expense, respectively.
Meyerson said, "The improvements in our efficiency ratios are
reflective of disciplined expense management in all areas of the
Company and mortgage loan production process improvements. We
expect further expense reductions in occupancy expenses through
the sublease of two executive floors at the Company's Los
Angeles headquarters."
Loan production increased by $108 million for the quarter
compared to the March 2000 quarter.
During the three months ended March 31, 2001 the Company's total
loan production was $554.7 million, an increase of $108.0
million, or 24.2%, from the $446.7 million of total loan
production reported during the comparable three month period a
year ago. During the nine months ended March 31, 2001, the
Company's total loan production increased $122.4 million to
$1.67 billion from $1.55 billion during the comparable nine
month period in 2000.
Included in the Company's core retail and broker production
during the three and nine months ended March 31, 2001 is $23.2
million and $103.6 million, respectively, of loans originated
from the Internet, through affiliations with certain lending
sites and from other telemarketing sources, which compared to
$14.1 million and $20.2 million of such production during the
three and nine months ended March 31, 2000. Meyerson stated, "We
are pleased with the increases in our loan production and
continue to view the Internet as an important vehicle for growth
in future loan production."
Loans securitized and sold.
During the three months ended March 31, 2001, the Company
securitized and sold mortgage loans totaling $512.3 million an
increase of $77.4 million, or 17.8%, over the $434.9 million of
total loan dispositions during the three months ended March 31,
2000. During the three months ended March 31, 2001, the Company
utilized a combination of securitizations and whole loan sales
as its loan disposition strategy, securitizing $150.0 million of
mortgage loans and selling $362.3 million of mortgage loans in
whole loan sales. The Company relied solely on whole loan sales
during the three months ended March 31, 2000.
During the nine months ended March 31, 2001, the Company sold a
total of $1.8 billion of loans, an increase of $84.9 million
over the $1.7 billion in total loan sales during the nine months
ended March 31, 2000. During the nine months ended March 31,
2001, the Company securitized and sold $1.1 billion of mortgage
loans which represented an increase of $277.9 million, or 34.6%,
over the $803.6 million of loans sold through securitizations
during the comparable nine month period a year ago. During the
nine months ended March 31, 2001, the Company was less reliant
on whole loan sales for cash when compared to the mix in loan
dispositions during the same nine month period a year ago.
Accordingly, whole loan sales for cash declined by $193.0
million to $719.1 million during the nine months ended March 31,
2001 from $912.1 million during the nine months ended March 31,
2000.
The residual interests created in the $1.1 billion of
securitizations consummated during the nine months ended March
31, 2001 were sold for cash to an affiliate of the Company's
largest stockholder under its Residual Forward Sale Agreement.
In addition, the Company sold for cash the mortgage servicing
rights and the rights to the prepayment penalties on the
underlying mortgage loans in the securitizations to an
unrelated, third party.
Loan servicing.
At March 31, 2001, December 31, 2000 and June 30, 2000 the
Company's servicing portfolio was $2.8 billion, $3.1 billion and
$3.6 billion, respectively, of which $2.6 billion, $2.9 billion,
and $3.3 billion, respectively, or 92.9%, 93.1% and 92.6%,
respectively, was serviced in-house. The Company's servicing
portfolio at March 31, 2001 includes approximately $304.6
million of loans subserviced for others on an interim basis
pending transfer to purchasers of loans or their designated
servicers. The Company's servicing portfolio was $3.7 billion at
March 31, 2000, of which $3.4 billion, or 91.9 %, was serviced
in-house.
Aames Financial Corporation is a leading home equity lender, and
at March 31, 2001 operated 99 retail Aames Home Loan offices and
5 regional wholesale loan centers nationwide.
ALGOMA STEEL: Seeks More Time To File Plan of Arrangement
---------------------------------------------------------
Algoma Steel Inc.(TSE:ALG.) said it will return to Court on May
22, 2001 to seek an extension of its protection under the
Companies' Creditors Arrangement Act (CCAA) and the time for the
filing of a Plan of Arrangement to September 21, 2001. The
original order obtained by the Company is scheduled to expire on
May 23, 2001.
As disclosed in a note to the March 31, 2001 financial
statements, defaults under the financial covenants occurred and
Algoma Steel applied for protection under CCAA. Certain changes
are required to the financial reporting by Algoma Steel as a
result of these events.
The long-term debt on the balance sheet as at March 31, 2001 has
been reclassified as a current liability. In addition, deferred
foreign exchange losses, deferred debt issue costs and
unamortized debt discounts totalling $89.7 million have been
charged to operations in the first quarter. This increased the
net loss for the period by $89.7 million, decreased total assets
by $60.2 million, increased the current portion of long-term
debt by $550.8 million and decreased shareholders' equity by
$89.7 million.
The 2001 first quarter financial statements will be restated to
reflect these adjustments and will be released in conjunction
with the second quarter financial statements.
Algoma Steel, based in Sault Ste. Marie, Ontario, is Canada's
third largest integrated steel producer. Revenues are derived
primarily from the manufacture and sale of rolled steel
products, including hot and cold rolled sheet and plate.
ASCENDANT SOLUTIONS: Restructuring to Preserve Assets & Pay Debt
----------------------------------------------------------------
Ascendant Solutions, Inc. announced that its Board of Directors
has determined that the capital requirements under its existing
business plan for fiscal year 2001 are greater than currently
available capital resources. This determination was made after a
review of the Company's preliminary operating results for the
first quarter 2001. The Board has therefore taken action to
immediately reduce the size and scope of operations and to
reduce the Company's work force. The Company reports that the
Board took this action to maximize the Company's existing assets
and to minimize current expenditures, pending a determination by
the Board as to the best use of the assets of the Company
remaining after existing liabilities have been paid. In order to
enhance and to maximize shareholder value, the Board is
considering a variety of financial and strategic alternatives,
including a strategic alliance or the possible sale of all or a
portion of the Company. The Board made this decision after
reviewing, among other things, current economic and market
conditions and the slowing of spending for and the
implementation rate of B2B supply chain initiatives.
As previously announced, the Company received a Nasdaq Staff
Determination on March 27, 2001, that the Company failed to
comply with the minimum bid price requirement for continued
listing set forth in Marketplace Rule 4450(a)(b), and that its
securities were, therefore subject to delisting from The Nasdaq
National Market. Further, on March 16, the Company received
notification from Nasdaq that it failed to meet the Market Value
of Public Float requirement for continued listing also set forth
in Marketplace Rule 4450(a)(b) and that the Company has until
June 14, 2001 to comply with this requirement. The Company
requested a hearing before a Nasdaq Listing Qualifications Panel
to review the March 27 Staff Determination, and such hearing was
scheduled for May 11, 2001. The Company's securities continued
to trade on the Nasdaq National Market pending the outcome of
this hearing. In light of this action by the Board of Directors,
the Company is withdrawing its request for a hearing before the
Nasdaq Listing Qualifications Panel. As a result, the Company
has been informed that it is eligible to trade on the electronic
bulletin board, rather than either the Nasdaq National Market or
SmallCap Systems. Even with bulletin board trading, delisting
will adversely affect the ability or willingness of investors to
purchase the common stock, which, in turn, will severely affect
the market liquidity of the Company's securities.
Effective May 10, 2001, Mr. Kevin Yancy resigned as Chairman of
the Board. The Board accepted his resignation, resolved to
reduce the size of the Board from four members to three, and
elevated current board member Mr. Jonathan Bloch to serve as the
new Chairman of the Board and a Class C Board Member. Mr. David
Bowe, the Company's President and CEO, and Mr. Paul Sherer will
continue as the other members of the Board.
As a consequence of the recent actions by the Company's Board of
Directors, the annual stockholders' meeting scheduled for May
31, 2001 has been canceled. The Company also anticipates filing
an extension with the Securities and Exchange Commission for the
filing of its Form 10-Q so that a report can be prepared that
reflects the prospects of the Company's continuing business. The
Company anticipates filing the Form 10-Q no later than May 21,
2001.
BIONUTRICS INC.: Shares Face Delisting From NASDAQ
--------------------------------------------------
Bionutrics, Inc., (NASDAQ: BNRX) received notification on May 8,
2001 of a NASDAQ staff determination that its common stock is
subject to delisting from the NASDAQ SmallCap Market for failure
to comply with Marketplace Rule 4310(c)(4), requiring
maintenance of a minimum bid price of $1 per share.
The Company has requested a hearing before a NASDAQ Listing
Qualifications Panel to appeal the staff determination and,
pending completion of the appeal process, its stock will
continue to be listed on the NASDAQ SmallCap Market. Bionutrics
Board of Directors has approved a one-for-five reverse stock
split in an effort to comply with this listing standard and will
be seeking written consent from its stockholders for the reverse
split. There can be no assurance that Bionutrics will be
successful in its appeal for continued listing or that, if the
reverse stock split is approved by stockholders, the Company
will maintain compliance with the minimum bid price requirement
or other NASDAQ listing standards. Should Bionutrics not prevail
at the hearing or fail to satisfy NASDAQ listing standards, its
securities will be delisted from the NASDAQ SmallCap Market.
Bionutrics is a biopharmaceutical company founded to discover
and develop novel biologically active compounds derived from
natural sources. Natural, biologically active compounds have
potential applications as functional nutrition ingredients as
well as ethical drugs. Bionutrics is presently developing
proprietary functional nutrition ingredients and pharmaceutical
products and intends to market these products through strategic
alliances.
BOYSTOYS.COM: Files Chapter 11 Petition in N.D. California
----------------------------------------------------------
BoysToys.com, Inc. (OTC Bulletin Board: GRLZ) filed a petition
for relief under Chapter 11 of the United States Bankruptcy
Code, in the Federal Bankruptcy Court for the Northern District
of California.
The BoysToys club at 408-412 Broadway in San Francisco remains
open and the Company's intent is that it will stay open. The
Company is current in its monthly rent payments, taxes, payroll
and trade payables, and all of these obligations will continue
to be met. Business at the club continues.
The Company hopes to pay every one of its creditors in full, and
hopes to emerge from this Bankruptcy proceeding with a workable
plan to do just that. As was reported in the Company's SEC
filings, the Company had incurred a substantial amount of short-
term debt in order to complete the renovation and improvements
at the club location. Over the last year, the Company has been
negotiating with its major creditors to restructure this debt.
One of those major creditors is the landlord at the club
location.
Tuesday's filing was in response to, and made necessary by, an
unexpected attempt by the landlord to terminate the Company's
long-term lease at that location. The Company's lease is a
valuable asset that must be protected. The Company has invested
substantial amounts in the tenant improvements, and anticipates
executing extensions under the lease in order to continue
operations there for the next 13 years. While the Company
believes that the Company's filing in bankruptcy court will
assist the Company in obtaining a workable plan, there can be no
assurance that the Company will successfully avoid further
difficulties.
On April 19, 2001, the landlord entered into a written contract
to sell the premises to a competitor of the Company. That
contract, a copy of which has been provided to the Company, is
specifically conditioned on there being no tenant or lease on
the property at the closing. No prior notice of that contract,
or of the landlord's intention to enter into any such contract,
was provided to the Company. The Company contends that the
parties to that contract committed a civil wrong by entering
into it while the Company's long-term lease remains in place,
and by failing to disclose their intent to enter into that
contract. The Company intends to pursue all appropriate legal
remedies to which it may be entitled for damages caused by that
conduct.
Between April 2 and April 19, 2001, the landlord acquired the
rights of a subcontractor who had filed a mechanic's lien
against the property. This lien was the last-remaining of
several lien claims that had been recorded when the
renovation work was done. The Company was prepared and is
prepared to pay off that lien-claim amount over three to four
months. The Company, however, sought the approval of the
landlord to commence paying off the lien claim, because the
Company had agreed to give the highest practical priority
towards paying off certain unsecured notes held by the landlord,
in exchange for the landlord's forbearance from filing suit.
Indeed, the Company has paid over $100,000 to the landlord
pursuant to that agreement (over and above monthly rent
payments), where those note-payment amounts could have been used
by the Company to retire the lien-claim obligation.
Rather than agree to allow the Company to pay the lien claim off
over several months, the landlord continued taking payments on
the notes, pursuant to the agreement described above, and then
elected to pay off the lien-claim amount ($100,000) himself, to
the claimant, in the first instance. The Company anticipated
reaching agreement with the landlord on the repayment of that
amount. The landlord, however, instead entered into the contract
to sell the property free of any lease, and then demanded
immediate repayment of the $100,000 amount from the tenant as an
amount due under the lease and payable within three days. On
Saturday May 5, the landlord attempted service of a 3-day notice
to pay that amount. That 3-day notice is the first step in an
unlawful-detainer procedure to recover possession.
Management first became aware of the attempted service on Monday
May 7. Faced with the inability to pay off the $100,000 lien-
claim immediately, the Company had no choice but to pursue an
immediate Chapter 11 filing. Failure to do so would have left an
unacceptable risk of the landlord's successfully terminating the
tenancy, and terminating the operations of the Company. Given
the very limited time in which to prepare and file the Chapter
11 petition, and given the need to coordinate the contents of
notices being given to different agencies, this notice has had
to follow the actual filing.
Through this bankruptcy filing, management intends to maintain
the Company's long-term lease on the premises and to pay off, in
short order, the $100,000 lien-claim obligation assumed by the
landlord. Management further intends through this filing to
restructure all of the Company's debt, so that the Company can
emerge free from the cloud that its debt structure, to date,
has cast over its future.
BOYSTOYS.COM: Chapter 11 Case Summary
-------------------------------------
Debtor: Boystoys.com, Inc.
412 Broadway
San Francisco, CA 94133
Chapter 11 Petition Date: May 08, 2001
Court: Northern District of California
Bankruptcy Case No.: 01-31267
Judge: Dennis Montali
Debtor's Counsel: Iain A. MacDonald, Esq.
Law Offices of MacDonald and Assoc.
2 Embarcadero Center #1670
San Francisco, CA 94111-3930
415-362-0449
CAMAYEN CATTLE: Files For Chapter 11 Bankruptcy Protection
----------------------------------------------------------
Founded in 1962, Camayen Cattle Co. disclosed it has commenced a
voluntary chapter 11 petition case for the purpose of presenting
and soliciting votes on a chapter 11 plan that Camayen filed
with the petition. Camayen sought chapter 11 relief in order to
preserve and protect its assets and operations while it
restructures its financial affairs.
Losses associated with Hurricane Irene in 1999 and an anomalous
decline in sugar prices relating to last year's crop (the price
has since rebounded to historical levels) materially impacted
Camayen's financial results over the past two years. When
Camayen was unable to reach consensus with its principal lenders
regarding an out-of-court restructuring the decision was made to
utilize chapter 11 in order to maximize value for all of
Camayen's constituencies.
While under chapter 11 protection, Camayen will continue to
operate its business without interruption and meet its
postpetition obligations in the ordinary course. Additionally,
pursuant to its plan, Camayen expects to pay all of its
creditors 100% of what they are owed.
Camayen has been successful in the agriculture business for 40
years, with approximately 6000 acres of real property
strategically placed at the mouth of the St. Lucie River and
Lake Okeechobee. As stated by its Chief Executive Officer,
Alfredo Sanchez, For nearly half a century, Camayen has been a
valuable contributor to the Palm Beach and Martin County
economic communities. Although we have experienced a temporary
setback, we expect to swiftly emerge from chapter 11 and
continue our operations well into the future.
CLARIDGE HOTEL: Wins Majority Vote For Fourth Amended Plan
----------------------------------------------------------
The Claridge Hotel and Casino Corporation, operator of the
Claridge Casino Hotel here, reported the results of the voting
of its creditors regarding its Fourth Amended Joint Plan of
Reorganization.
The holders of the Corporation's $85 million First Mortgage
Notes voted to accept the plan. Approximately, $68 million in
amount and 365 in number voted of which approximately $66
million and 354, respectively, voted to accept the Plan. It is
also believed that the unsecured creditors voted to accept the
Plan.
The Plan provides for the sale of substantially all of the
assets of The Claridge at Park Place, Inc., the Corporation's
wholly owned subsidiary, and the Atlantic City Boardwalk
Associates, L.P., which assets are the Claridge Casino Hotel in
Atlantic City, New Jersey, to Park Place Entertainment
Corporation.
The Corporation intends to move forward to have the Plan
confirmed. The confirmation hearing is scheduled to begin on
May 16, 2001.
On August 16, 1999, the Corporation and The Claridge at Park
Place, Incorporated filed voluntary petitions under Chapter 11
of the U.S. Bankruptcy Code in order to facilitate a financial
structuring. On October 5, 1999, Atlantic City Boardwalk
Associates, L.P. filed a voluntary petition under Chapter 11 of
the U.S. Bankruptcy Code. The Claridge Hotel and Casino
Corporation is a closely-held public corporation and is the
issuer of $85 million of 11 3/4% First Mortgage Notes which are
publicly traded on the New York Stock Exchange under the symbol
CLAR02.
CMI INDUSTRIES: Court Approves Roll-Up DIP Financing with Fleet
---------------------------------------------------------------
CMI Industries, Inc. announced that the Honorable Joseph J.
Faman, Jr. of the U.S. Bankruptcy Court for the District of
Delaware has entered an order which authorizes the Company to
access its secured credit facility in the same manner as it did
prior to the filing of the involuntary petition. The court's
action affirms that the filing of the involuntary petition does
not affect the ability of CMI to incur debt or encumber property
under the existing financial arrangement with its secured
lender, Fleet Capital Corporation.
Said Joseph L. Gorga, President of the Company, "The Company
appreciates the support and confidence that has been provided by
its customers, suppliers, associates and other stakeholders.
The Court's action today enables the Company to continue to
operate in the ordinary course and to work to achieve its
strategic objectives. We look forward to Monday, when we can
again focus our full attention to providing unparalleled
customer service and superior quality fabrics."
In addition, as previously announced, the Company has filed a
motion in the U.S. Bankruptcy Court requesting a dismissal of
the involuntary petition filed against it late last week by
certain holders of the Company's 9 1/2% Senior Subordinated
Notes. According to the motion, on the date of the filing, the
Company was current with its unsecured creditors, owed nothing
on its secured credit facility and had $12,000,000 of borrowing
capacity under that line of credit.
CMI Industries, Inc., and its subsidiaries manufacture textile
products that serve a variety of markets, including the home
furnishings, woven apparel, elasticized knit apparel and
industrial/medical markets. Headquartered in Columbia, South
Carolina, the Company operates manufacturing facilities in
Clarkesville, Georgia; Clinton, South Carolina; Greensboro,
North Carolina; and Stuart, Virginia. The Company had net sales
from continuing operations of $194.7 million in 2000.
COLO.COM: Files Chapter 11 Petition In N.D. California
------------------------------------------------------
Colo.com filed for bankruptcy protection May 8 in a Federal
Bankruptcy District Court of Northern California, a company
spokeswoman has confirmed. The company is seeking debtor and
possession financing, hoping to put payments to creditors on
hold for the time it is in Chapter 11, which would give the
company a chance to raise money, come out of bankruptcy and
re-negotiate terms with vendors. No parties interested in
acquiring the company have come forward yet, the spokeswoman
said.
Colo.com is the first large colocation company to fall victim to
Web hosting market slowdown, with 22 data centers across the
U.S. Colo.com competes with Switch & Data and Equinix.
(Interactive Week INWK, May 11, 2001)
COLO.COM: Chapter 11 Case Summary
---------------------------------
Debtor: Colo.com
dba Colomotion
2000 Sierra Point Pkwy. #601
Brisbane, CA 94005-1819
Chapter 11 Petition Date: May 08, 2001
Court: Northern District of California
Bankruptcy Case No.: 01-31262
Judge: Thomas E. Carlson
Debtor's Counsel: Patrick A. Murphy, Esq.
Murphy, Sheneman, Julian and Rogers
101 California St. 39th Fl.
San Francisco, CA 94111
415-398-4700
ELECTRONIC BUSINESS: Emerges From Chapter 11 Bankruptcy
-------------------------------------------------------
On September 1, 2000, Electronic Business Services, Inc.
(OTCBB:AEBS) filed a voluntary petition under Chapter 11 of the
United States Bankruptcy Code. The management of the Company in
place on the petition date was unable to raise capital and turn
the Company around financially. On November 24, 2000, Vito A.
Bellezza was appointed as the CEO of the Company, and was also
appointed to the Board of Directors of the Company. Following
this appointment, all of the remaining Directors resigned.
Mr. Bellezza, after evaluating the Company and its finances,
hired a new management team and proceeded to raise the necessary
capital, eliminated unnecessary jobs and expenses, adjusted
prices of the Company's goods and services, hired a new sales
force, and rejected burdensome contracts in accordance with
Bankruptcy Code. The new team then proceeded to rebuild its
employment infrastructure and created a new business plan, which
included the Joint Plan of Reorganization, which was submitted
to the United States Bankruptcy Court.
The Plan was approved on May 1, 2001 by the Bankruptcy Court
after all interested parties had an opportunity to address the
Court. The Plan becomes effective on May 14, 2001. Highlights of
the Plan include a dividend payment to unsecured creditors equal
to 5% of their outstanding debt and 2% of the newly issued stock
of the Company. It also included the cancellation of all Capital
Stock, including Common and Preferred Shares and any outstanding
Options and Warrants. New Common Stock of the Company has been
authorized to be issued by the Bankruptcy Court pursuant to 11
U.S.C. ss.1145 commencing on May 14, 2001. The trading symbol
for the newly issued Common Stock of the Company will be
announced next week and the new cusip number will
be "285554 20 0".
The new Officers and Directors of the Company are as follows:
Vito A. Bellezza, CEO and Chairman, Thomas A. Secreto, CIO and
Director and Charles Moche, CFO and Director.
Mr. Bellezza stated after the hearing, "We are absolutely
delighted with the results of the hearing held on May 1, 2001
After five months of hard work in `reincarnating' this Company,
all of the Officers and Directors can now see the future more
clearly. The sound plan we have developed and the sufficient
funding in place to complete our immediate goals, will manifest
themselves within the coming months."
eNUCLEUS: Files For Chapter 11 To Complete Debt Restructuring
-------------------------------------------------------------
eNucleus Inc. has filed for chapter 11 bankruptcy protection in
the U.S. Bankruptcy Court for the Northern District of Illinois
in order to enable it to complete the restructuring of its debt.
eNucleus has been in negotiations with its creditors and has
obtained the agreement of the holders of a majority of its debt
to a restructuring of the company's obligations. The company
believes that it will be able to successfully re-negotiate its
debt with its creditors, note holders and parties-in-interest
and emerge from chapter 11. eNucleus will seek to continue to
operate its business as a debtor-in-possession. (ABI World, May
11, 2001)
FINOVA GROUP: Corporate Existence & Governance Under The Plan
-------------------------------------------------------------
Each of the The FINOVA Group, Inc. Debtors, other than FNV Trust
shall, as a Reorganized Debtor, continue to exist after the
Effective Date as a separate corporate entity, with all of the
powers of such an entity under applicable law and without
prejudice to any right to alter or terminate such existence
(whether by merger or otherwise) under the applicable law of its
jurisdiction of incorporation.
Except as otherwise provided in the Plan, on or alter the
Effective Date, all property of the respective Estates of the
Debtors, and any property acquired by a Debtor or Reorganized
Debtor under any provision of the Plan, shall vest in the
applicable Reorganized Debtor, free and clear of all Claims,
liens, charges, other encumbrances and Interests of any type or
nature (except to the extent that Claims, Liens or Interests are
expressly reinstated or granted by operation of the Plan).
On and after the Effective Date, each Reorganized Debtor may
operate its businesses and may use, acquire and dispose of
property and compromise or settle any Claims or Interests
without supervision or approval by the Bankruptcy Court and free
of any restrictions of the Bankruptcy Code or Bankruptcy Rules,
other than those restrictions expressly imposed by the Plan and
the Confirmation Order.
FNV Trust shall be dissolved, and its assets and liabilities
shall be dealt with as set forth in the Plan, as of the
Effective Date.
Certificates of Incorporation and Bylaws
The bylaws, certificates of incorporation and other organizing
documents of FNV Group and FNV Capital and, to the extent
necessary or appropriate to effectuate the Plan or the
Restructuring Transactions, such organizing documents of the
other Debtors (the New Corporate Documents, as amended) shall be
amended and restated as of the Effective Date to the extent
necessary to, among other things:
(1) authorize the Restructuring Transactions, including but
not limited to, the issuance of the Additional Group Common
Stock, New Group Preferred Stock, Additional Mezzanine Common
Stock and other Restructuring Transaction;
(2) if requested by the Berkadia parties, impose
restrictions on the direct or indirect transferability of the
common stock or other equity of ReorganizedFENV Group such that
(x) no Person (other than the Berkadia Parties) may
acquire or accumulate five percent or more (as
determined under tax law principles governing the
application of section 382 of the Tax Code) of the
common stock or other equity of Reorganized FNV
Group, and
(y) no Person (other than the Berkadia Parties) owning
directly or indirectly (as determined under such
tax law principles) on the Effective Date, after
giving effect to the Plan, or after any subsequent
issuances of Additional Group Common Stock pursuant
to the Plan, five percent or more (as determined
under such tax law principles) of the common stock
or other equity of Reorganized FNY Group, may
acquire additional shares of that common stock or
other equity of Reorganized FNV Group, subject to
certain exceptions;
(3) prohibit the issuance of non-voting equity securities;
(4) with respect to FNV Group, eliminate Article IX of the
Certificate of Incorporation of FNV Group relating to certain
Business Combinations; and
(5) with respect to FNV Group, terminate the Rights Plan
without any payment by FNV Group and without separation of those
Rights from the FNV Group common stock or becoming exercisable.
Copies of the New Corporate Documents will be filed with the
Plan Supplement as Exhibit 63(a).
Directors and Officers of Reorganized FNV Group
Subject to any requirement of Bankruptcy Court approval pursuant
to section 1129(a)(5) of the Bankruptcy Code, the Plan provides
that the majority of the board of directors of Reorganized FNV
Group as of the Effective Date shall be persons designated by
Berkadia.
The members of the Reorganized FNV Group board of directors and
the officers, as of the Effective Date, shall include the
directors who are listed as such on Exhibit 6.3(b), and the
directors and officers of each Reorganized Debtor other than
Reorganized FNV Group shall be as listed on Exhibit 6.3(c), both
exhibits to be provided in the Plan Supplement.
Each such director and officer shall serve from and after the
Effective Date until his or her term of office expires or he or
she resigns or is removed pursuant to the terms of the
applicable certificate of incorporation, the applicable bylaws
or similar corporate governance documents and applicable state
law. No designation in the Exhibit 6.3(b) or Exhibit 6.3(c)
shall create a contract of employment.
Corporate Actions
Actions or matters under the Plan involving the corporation or
trust structure of any Debtor or Reorganized Debtor shall be
deemed to have been authorized and effective upon Confirmation
and the occurrence of the Effective Date, and shall be
authorized and approved in all respects without any requirement
of further action by shareholders, directors or trustees of any
of the Debtors or the Reorganized Debtors, all pursuant to
section 303 of the Delaware General Corporate Law with respect
to those Debtors that are Delaware corporations and to
comparable provisions of applicable law, if any, with respect to
the other Debtors.
Such actions or matters include:
* the borrowing under the Berkadia Loan;
* the adoption of New Corporate Documents;
* the initial selection of directors and officers of the
Reorganized Debtors;
* the distribution of Cash;
* the issuance and distribution of New Senior Notes,
Additional Group Common Stock, New Group Preferred Stock
(if any) and Additional Mezzanine Common Stock (if any);
* the allocation according to the Plan of a portion of the
consideration furnished by Berkadia in connection with
the Restructuring Transactions as consideration for the
issuance of Additional Group Common Stock to the Berkadia
Parties;
* the grant, pledge, assignment or other transfer of
mortgages, deeds of trust, Liens and other security
interests in connection with the Berkadia Loan and the
New Senior Notes Indenture;
* the adoption, execution, delivery, performance and
implementation of all contracts, leases, instruments,
releases, indentures and other agreements related to any
of the foregoing, including the Berkadia Loan Documents
and the New Senior Notes Indenture.
Obtaining Cash and Securities
All Cash necessary for the Disbursing Agent or Agents to make
payments pursuant to the Plan shall be obtained from the
Berkadia Loan, the Debtors' existing cash balances, the
operations of the Debtors or the Reorganized Debtors or post-
confirmation working capital.
Cash and securities payments to be made pursuant to the Plan
shall be made by the Disbursing Agent or Agents from the Estate
of the Debtor that is liable on the underlying Allowed Claim;
provided, however, that the Debtors and the Reorganized Debtors
shall be entitled to transfer funds and securities between and
among themselves as they determine to be necessary or
appropriate to enable each Reorganized Debtor to satisfy its
obligations under the Plan.
Any intercompany balances resulting from such transfers shall be
settled in accordance with the Debtors historical intercompany
account settlement practices.
Preservation of Rights of Action
Except as expressly provided in the Plan, instrument, release,
indenture or other agreement entered into in connection with the
Plan, in accordance with section 1123(b) of the Bankruptcy Code,
the Reorganized Debtors shall retain and may enforce any claims,
rights and causes of action, whether arising before or after the
Petition Date, that any Debtor or Estate may hold against any
entity or person. No creditor or shareholder shall have any
right or power to pursue or commence any litigation, whether
direct or derivative, in regard to such claims, rights and
causes of action. (Finova Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
FRUIT OF THE LOOM: Closing Plant In Trois-RiviSres, Quebec
----------------------------------------------------------
Fruit of the Loom, Ltd. announced the imminent closure of its
Trois-RiviSres plant to the employees unionized with the
Communications, Energy and Paperworkers Union of Canada (CEP).
This closure means that approximately 800 workers will lose
their jobs, of which 650 are members of the CEP.
"We are in shock. There was absolutely nothing that could have
warned us of this announcement. Even if Fruit of the Loom had
placed itself under the Bankruptcy Act last year, the company
had already begun implementing restructuring measures. Last
January, new machines were added to the plant and a production
line was putin place," commented Yves Caza, union representative
of the CEP.
On May 1st, the officers of the company requested a meeting with
the Local executive for the afternoon of May 2nd. Company
representatives then informed the workers of the imminent
closure.
"For the moment, our goal and our efforts will be concentrated
in offering psychological support to our members. In the short
term, it is our intention to call on all representatives at the
various levels of government and all possible intervenors to
help us in this case," declared Yves Caza.
Fruit of the Loom owns plants in various countries in the world
but mainly in Central America. The company blamed the problem in
Trois- RiviSres to over-production and maintains its decision to
close that plant. Meetings with plant management have been
planned for next week. (Fruit of the Loom Bankruptcy News, Issue
No. 28; Bankruptcy Creditors' Service, Inc., 609/392-0900)
GAINSCO, INC.: Loss Widens Amid Restructuring
---------------------------------------------
GAINSCO, Inc. (NYSE: GNA) reported a net loss for the first
quarter 2001 of $1.2 million (loss applicable to common
shareholders of $1.3 million), or $0.06 per common share,
basic and diluted. This compares to a first quarter 2000 net
loss of $0.1 million (loss applicable to common shareholders of
$0.3 million), or $0.02 per common share, basic and diluted. The
effects of common stock equivalents and convertible preferred
stock are antidilutive due to the net losses for the first
quarters of 2001 and 2000. As a result, basic loss per share and
diluted loss per share are reported as the same number.
"It is important to address GAINSCO's first quarter loss in the
context of transitional issues being addressed by our Company in
2001," said Glenn W. Anderson, GAINSCO's president and chief
executive officer. "As a result of the Company's loss for the
year 2000, GAINSCO, as previously announced, implemented a
series of actions to restore our capital adequacy. With our
financial foundation addressed, we became operationally focused
on one overriding goal in 2001: capital preservation. The
strategies in support of this goal are designed to protect
capital and improve capital adequacy by reducing the overall
risk profile and demands against this capital, while we continue
to reposition our business plan to a more successful operating
basis in future periods.
"Central to this strategy is our ongoing process of eliminating
or restructuring business areas which cannot be counted on to
produce underwriting profit on future written business.
Additionally, we are focused on retaining and expanding the
margins on our existing, successful business areas that are
currently producing profit for our Company," said Anderson. The
Company is also in the process of narrowing its business focus
to adjust to the impact of the recently announced reduction in
the Company's rating by A.M. Best.
"These repositioning initiatives are intended to reduce
GAINSCO's insurance business to its profitable components and
distribution sources in 2001. Necessary adjustments in the
Company's expense structure will continue to be made. It is this
smaller base upon which we plan to build in future periods,"
stated Anderson. Given the transitional nature of the year for
GAINSCO, the Company is not giving any guidance as to earnings
expectations for the year.
For the 2001 first quarter, gross premiums written were $38.1
million and net premiums written were $18.8 million. For the
first quarter of 2000, gross premiums written were $43.8 million
and net premiums written were $41.4 million. Net premiums earned
for the first quarter of 2001 were $16.6 million compared to net
premiums earned for the first quarter of 2000 of $36.7 million.
The decreases in first quarter 2001 net premiums written and
earned from the same period in 2000 result largely from the
Company's previously announced exit from the commercial trucking
business, previously communicated reinsurance programs on our
commercial lines business and increased reinsurance levels on
our nonstandard automobile book of business for the year 2001.
The statutory combined ratio for the first quarter of 2001 was
128.6%, and compares to a combined ratio of 103.8% for the 2000
first quarter. The statutory claim ratio for the 2001 first
quarter was 92.4% compared with 74.8% for the first quarter of
2000. The 2001 first quarter expense ratio was 36.2% compared
with 29.0% for the 2000 first quarter. This increase is mainly
attributable to the decrease in premiums written, as discussed
above.
GAINSCO, INC. is a nonstandard property and casualty insurance
holding company. GAINSCO's nonstandard commercial lines products
are distributed primarily through wholesale general agents
throughout the United States. The Company's nonstandard personal
lines products are primarily distributed through retail agents
in the Southeast and upper Midwest.
GC COMPANIES: Seeks to Extend Exclusive Period To August 7
----------------------------------------------------------
GC Companies Inc., et al. seeks an extension of 90 days, to and
including August 7, 2001 of the debtors' exclusive period for
filing a plan of reorganization and an extension of 90 days, to
and including October 7, 2001 of the exclusive period for
soliciting acceptance of a plan filed by August 7, 2001.
The debtors have discussed the terms of a plan of reorganization
with each of its major creditor constituencies. The banks, GECC
and the Creditors' Committee all propose variations to the
debtors' initial proposal that require financial modeling and
evaluation. In addition certain lease issues must be resolved
before a final plan can be proposed and negotiated to
conclusion. The debtors have filed a motion to assume 12 of its
leases and the debtors are seeking to extend their deadline for
assuming or rejecting their 35 remaining leases until August 7,
2001. To date the debtors have rejected 36 leases and assumed 21
leases during the pendency of these cases.
GCX's bankruptcy constituted an event of default on both the
Argentinean and Chilean debt, and both sets of lenders have
indicated a desire to modify or call the loans. GCX has been
negotiating a restructuring of the Argentinean debt and the
Chilean debt with their respective lenders, but has not yet
consummated a deal. Any restructuring will likely require that
GCS fund certain capital requirements in Argentina and repay a
portion of principal in Chile. A failure to successfully
restructure will increase the unsecured claims against GCX by
the amount t of the guaranteed debt and may negatively affect
the value of GCI.
The debtors' plan will be predicated, in part, on the resolution
of the Argentinean and Chilean Debt and will vary depending on
whether the debt is restructured or accelerated.
GROVE WORLDWIDE: Moody's Junks Senior Debt Ratings
--------------------------------------------------
Moody's Investors Service downgraded the ratings of Grove
Worldwide LLC and Grove Capital, Inc following the announcement
regarding the company's chapter 11 bankruptcy filings and
agreement with lenders to restructure its senior secured debt.
The downgrades are as follows:
* $225 million of 9 1/2% senior subordinated notes due 2008
to C from Caa1,
* $303 million of senior secured credit facilities to Caa1
from B1, and
* $50 million of 11 5/8% senior discount debentures, due
2009 to C from Caa2.
* The senior implied rating was lowered to Ca from B2.
* The unsecured Issuer rating is C.
The outlook is negative while approximately $584 million of debt
securities are affected.
Moody's said that Caa1 rating on the senior secured credit
facilities reflects principle impairment. But the rating agency
believes that under Grove's proposed plan of reorganization,
senior secured lenders may ultimately realize full or near full
recovery because of the inclusion of 75% of the common stock in
the restructuring package.
The C rating on the 9 1/4% senior subordinated notes and the C
rating on the junior securities reflects no discernable
recovery, according to Moody's.
Based in Shady Grove, Pennsylvania, Grove Worldwide manufactures
a comprehensive line of mobile hydraulic cranes, aerial work
platforms, and truck-mounted cranes under the "Grove Crane",
"Grove Manlift," and "National Crane" brand names. End-users
include the industrial, commercial operations/maintenance and
construction industries.
HARNISCHFEGER: Beloit Claims Team's Retention Program Approved
--------------------------------------------------------------
As reported, under the Plan, the assets of Beloit Corporation
and its Debtor-subsidiaries (the Liquidating Debtors) will be
placed into a Liquidating Trust. A Plan Administrator will be
appointed under the Plan to administer the Liquidating Trust. In
a motion, Beloit Corporation and Harnischfeger Industries, Inc.
sought and obtained the Court's authority, by entry of the
Claims Team Order:
(a) confirming the key employee retention and severance
programs for the Beloit Claims Team as previously
approved by the Court;
(b) implementing additional related matters;
(c) clarifying that these employee retention and severance
matters will be continued by the Plan Administrator.
The Existing Program for the Claims Team
Because substantially all of Beloit's operating assets have been
sold, Beloit's management decided that the most efficient and
effective way to manage its claims resolution process was to
maintain a limited team of employees dedicated solely to the
project. Under the Claims Team Order, the Bankruptcy Court
authorized Beloit to retain eight individuals to analyze the
multitude of claims filed in these cases. The other remaining
Beloit employees are members of the Projects Group, legal
personnel and other administrative personnel, such as
secretaries and security guards.
The Bankruptcy Court approved a program for the Claims Team with
three main components:
(A) the offer letters which specified salary;
(B) bonus upon completion of the claims resolution process;
(C) a severance package for each member of the Claims Team.
The program was designed to retain the services of the Claims
Team during the liquidation process. As part of the program,
Claims Team members agreed to withdraw any claims against Beloit
or HII based on any understandings or agreements not specified
in the offer letters.
The Debtors told Judge Walsh that the Claims Team has made
significant progress. Specifically, 4,414 claims against Beloit
and its affiliates are "Final Allowed" and 2,172 claims against
Beloit are the subject of a pending objection.
The Debtors represented that the continued employment of the
Claims Team is necessary to address the remaining claims, as
well as to continue to work on preference matters, oversee wind
down of daily operations and continue to address and work on
unresolved claims. The claims resolution process includes
reviewing, verifying, objecting to and contesting the claims
filed against Beloit and its debtor-affiliates, the Debtors
advised.
Beloit will pay the salaries, severance (including statutory
obligations) and health and welfare benefits for the 8 Claims
Team employees. The total amount expected to be paid to the
Claims Team, excluding statutory obligations and health and
welfare benefits, is approximately $777,603.00 in the aggregate.
The estimated cost of the statutory obligations, to be paid by
Beloit, is approximately $93,313.00 (12% of the base salary) in
the aggregate.
Moreover, HII will maintain the health and welfare benefits for
the Claims Team through the completion of all payments under
each employee's respective package. The Beloit estate will not
be charged with these expenses. The health and welfare benefits
provided by HII will be the same as those provided to current
full-time HII employees. The estimated cost of the health and
welfare benefits is approximately $34,215.00 (4.4% of base
salary) in the aggregate. If an employee finds other employment
before the severance period ends, they are no longer entitled to
receive most of these health and welfare benefits.
Pursuant to the Claims Team Order, the Court has authorized that
HII continue to maintain the payroll for the Claims Team to
avoid the expense of establishing a separate payroll after the
Effective Date.
Additional Elements of the Program for the Claims Team
Three additional elements will be provided to the Claims Team:
(1) allowance of administrative claims for the amounts
approved under this Motion;
(2) guarantee of employment through September 30, 2001 and
(3) payment of one-half of the completion bonus on June 30,
2001.
(1) Allowance of Administrative Claims
The eight members of the Claims Team filed administrative
claims which total approximately $800,000 in the aggregate. The
administrative claims will be expunged with respect to the
amounts approved under the Claims Team Order. The administrative
claims include, but are not expressly limited to, amounts
specified in the offer letters. These expenses have been
included in the Beloit Recovery Analysis shared with the Beloit
Committee and the Harnischfeger Creditors Committee.
In addition, the members of the Claims Team will receive
(a) payment in lieu of vacation for unused vacation days and
personal / holiday pay, which totals the amount of $38,100.00
in the aggregate and
(b) outplacement services payment in lieu of outplacement
services in the amounts which total $27,800.00 in the aggregate
(collectively, the Additional Benefits).
The Additional Benefits total $65,900.00 in the aggregate.
(2) Guarantee of employment until September 30, 2001
Beloit is authorized to grant the members of the Claims Team
guaranteed employment until September 30, 2001. The amount that
each member will receive totals $277,464.00 in the aggregate. If
Beloit or the Plan Administrator terminates the employment of
any member of the Claims Team before September 30, 2001, each
member will receive semi-monthly checks for their regular wages
for the period up to September 30, 2001. If the employee
voluntarily quits, then the employee will only receive wages for
the days worked.
After September 30, 2001, whether or not an employee has been
earlier terminated, then beginning with the pay period starting
October 1, 2001, all Claims Team employees' respective
severance/termination pay packages shall become ripe and
payments under such packages shall begin. Payments under these
packages will continue in bimonthly paychecks until the
respective completion of all payments due under each employee's
respective package. The last proposed paycheck for any Claims
Team employee is expected to occur on July 15, 2002. In
addition, the severance package approved in the Claims Team
Order will remain in effect.
The employment of the Claims Team is not expected to extend
beyond September 30, 2001. If the Plan Administrator desires the
services of any Claims Team member after September 30, 2001, the
Plan Administrator will negotiate new contracts with members of
the Claims Team that the Plan Administrator wants to retain. The
members of the Claims Team, however, are not obligated to enter
into such contracts with the Plan Administrator.
(3) Payment of One-Half of Completion Bonus
Each member of the Claims Team will receive one-half of the
completion bonus authorized under the Claims Team Order on June
30, 2001.
The Debtors explained that when the Claims Team Order was
entered, it was anticipated that the claims allowance process
for Beloit would be complete by June 30, 2001 by which time
members of the Claims Team could have the completion bonus, it
is appropriate to pay half that amount at that time.
The remainder of the completion bonus will be paid on September
30, 2001.
Regardless of whether any Claims Team member is terminated
before June 30, 2001, and/or September 30, 2001 (or if such
employee shall voluntarily quit after June 30, 2001), as the
case may be, immediately upon separation from employment, such
Claims Team member would be entitled to receive their full bonus
or, to the extent they have received the June 30 bonus payment,
would be entitled to receive the second half of the bonus which
otherwise would be payable on September 30, 2001.
The Debtors represented that the program accomplishes a sound
business purpose in the process of liquidating Beloit's assets,
in maximizing the value of Beloit's estate and reducing claims
against the HII estate.
The Debtors told Judge Walsh that the Claims Team is composed of
experienced and talented individuals who are intimately familiar
with Beloit's businesses and can easily obtain employment
elsewhere. If any member of the Claims Team is lost, Beloit's
management believes it would be difficult to efficiently
complete the required tasks due to the loss of continuity and
insight. Replacements would not be easily found due to the
complex nature of the issues involved.
The program is designed to provide incentives sufficient to
retain the teams and motivate them to maximize the value of
Beloit' s estate and reduce claims against HII's estate and
carefully structured to avoid unnecessary or excessive
incentives, the Debtors noted. The Debtors believe that the
retention and severance program is reasonable and appropriate
and will enhance the prospect of retaining the remaining Beloit
employees and, ultimately, a successful result in the Beloit
liquidation. (Harnischfeger Bankruptcy News, Issue No. 42;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
HIBBING TACONITE: Schedules Five-Week Summer Shutdown
-----------------------------------------------------
Cleveland-Cliffs Inc (NYSE: CLF) announced that continued
reduced demand for iron ore pellets by North American
steelmakers will necessitate a five-week shutdown this summer of
the Hibbing Taconite Company operations in northern Minnesota.
A subsidiary of Cliffs is manager and a minority owner of
Hibbing Taconite.
John S. Brinzo, Cliffs chairman and chief executive officer,
said, "The shutdown we are announcing today is for Cliffs
account. Because of reduced pellet demand by our customers,
Cliffs overall inventory has risen to about 6 million tons. We
intend to substantially reduce inventory by year end, and,
unfortunately, the only way that can be accomplished is by
curtailing production." Cliffs previously announced that given
its total ownership capacity of 12.8 million tons, and the need
to improve its financial position, the Company expects to
curtail its share of mine production this year by 4 million tons
at Hibbing and most other mining operations where Cliffs has
ownership.
The shutdown, which will begin on July 1, will reduce Hibbing's
production level for the year to approximately 6.5 million tons.
The facility had been scheduled to produce about 7.2 million
tons. Operations are expected to startup on August 5. However,
production plans remain subject to change. Approximately 790
employees will be affected by the shutdown.
This will be the second shutdown for Hibbing this year. The
plant was shuttered for six weeks earlier in the year, which
reduced production by 900,000 tons. A four-week shutdown
originally planned for this summer was cancelled when Bethlehem
Steel Corporation, the mine's majority owner, determined that it
would need additional pellets because of problems in its sinter
plant. Sinter is an alternate form of blast furnace feed.
Brinzo noted that Cliffs has already announced substantial
reductions in production at Northshore Mine in Minnesota and the
Empire and Tilden Mines in Michigan. Northshore has idled a
small furnace, which will reduce production by 700,000 tons, and
both Tilden and Empire are scheduled for six-week shutdowns,
beginning May 13 and June 3, respectively. Possible additional
production curtailments are currently under review.
"With imports of steel, much of it unfairly traded, rising again
in March," Brinzo said, "the only short-term answer to an
improvement in our industry's business conditions is quick and
decisive action by the government. In the long run, our own
internal efforts to reduce costs will be the determining factor
in how well we meet the competition."
Cleveland-Cliffs is the largest supplier of iron ore products to
the North American steel industry and is developing a
significant ferrous metallics business. Subsidiaries of the
Company manage and hold equity interests in five iron ore mines
in Michigan, Minnesota and Eastern Canada. Cliffs has a major
iron ore reserve position in the United States and is a
substantial iron ore merchant.
IMPERIAL SUGAR: Obtains Approval For Wasserstein's Employment
-------------------------------------------------------------
Judge Robinson granted Imperial Sugar Company's Application for
the retention of Wasserstein Perella & Co, LLC, now known as
Desdner Kleinwort Wasserstein, as the Debtors' financial
advisors, effective as of the Petition Date.
However, Judge Robinson modified the provision for Restructuring
Transaction fees and directed that:
(a) If the reorganization plan is confirmed in June 2001,
Wasserstein Perella's aggregate fee, including, without
limitation, monthly advisory fees, sale transaction fees and
financing transaction fees, for the period after the prepetition
commencement of Wasserstein Perella's engagement by the Debtors
shall be $3.8 million;
(b) If the plan is confirmed in July 2001, Wasserstein
Perella's aggregate fees for the period after the prepetition
commencement of its engagement by the Debtors shall be $3.9
million;
(c) Aggregate fees for the period after the prepetition
commencement of engagement by the Debtors shall be $4 million,
if the plan is confirmed in August 2001; and
(d) After August 2001, Wasserstein Perella's restructuring
transaction fee, as provided in the engagement letter, shall be
reduced by $1.182 million.
Wasserstein Perella shall not receive a sale transaction fee or
a financing transaction fee for the DIP Financing,
Securitization facility, the Hormel sale or any sale or
financing transaction with respect to which it does not provide
sale or financing services respectively, as contemplated by the
engagement letter. (Imperial Sugar Bankruptcy News, Issue No. 5;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
INTEGRATED HEALTH: Agrees With DVI, ePlus, Newcourt re MLC Lease
----------------------------------------------------------------
Prior to the Filing Date, Integrated Health Services, Inc.
entered into a certain agreement styled as "Master Lease
Agreement No. MDC 139," dated August 11, 1998 with MLC Group,
Inc. and several subsequent schedules relating to computer
equipment and miscellaneous personal property used at various
nursing home facilities. The original cost of the personal
property covered by the Settlement Agreement was approximately
$10.4 million.
With respect to separate Schedules under the Master Agreement,
three entities - DVI Financial Services, Inc., ePlus Group, Inc.
and Newcourt Financial USA, Inc. - each filed a motion/joinder
after the petition date to compel the Debtors to assume or
reject Unexpired Leases and for allowance and payment of
administrative expenses, in compliance with 11 U.S.C. section
365(d)(10), or, in the alternative, for adequate protection or
relief from the Stay.
General Electric Capital Business Asset Funding Corp. (GEBCAF),
to which three Schedules were assigned, chose not to join in the
Motions. A similar settlement has been reached with GEBCAF and
presented to the Court for approval in a separate motion.
DVI, ePlus and Newcourt contended that the MLC Agreement
constituted one or more true leases, and that the Movants were
entitled to various forms of relief under section 365 of the
Bankruptcy Code.
The Debtors, on the other hand, have contended throughout these
proceedings that the MLC Agreement constitutes a disguised sale
and security agreement under section 8.1-201(37) of the Virginia
Commercial Code, and not a true lease or leases, thus the relief
requested by the Movants pursuant to section 365 of the
Bankruptcy Code is inapplicable.
Since May 16, 2000, when the Debtors and the Movants stipulated
to a discovery and briefing schedule on the lease/security
issue, the parties have exchanged discovery, and the Movants
have filed a memorandum of law, to which the Debtors responded
and the Movants replied. Moreover, the parties engaged in
ongoing discussions which culminated in a Settlement Agreement.
Pursuant to the Settlement Agreement, the Debtors will, in
effect, purchase all of the underlying property in exchange for
the Settlement Payments which aggregate approximately 45.56% of
the original cost of the underlying property. In exchange, the
Movants will release all claims arising under the MLC Agreement,
including administrative claims (other than the $500,000
prepetition general unsecured claim being retained by DVI).
Certain of the Schedules at issue in the ePlus Motion were
subsequently assigned to Pullman and Key, both of which have
joined in the Settlement Agreement with the Debtors.
Excluded from the Settlement Agreement are 3 Schedules assigned
to General Electric Capital Business Asset Funding Corp.
(GEBCAF) which chose not to join in the Motions. A similar
settlement has been reached with GEBCAF and presented to the
Court for approval.
The salient terms of the Settlement Agreement provide that:
(1) The Settlement Agreement is by and among IHS (on behalf
of the Debtors) and (i) Newcourt, (ii) Key, (iii) Pullman, (iv)
DVI, and (v) ePlus.
(2) Settlement Payments in the sum of the sum of
$4,597,000.00 will be mde by the Debtors to Newcourt, Key,
Pullman and DVI, apportioned as follows:
(a) $ 2,604,667.50 to Newcourt;
(b) $ 585,610.00 to Key;
(c) $ 454,917.50 to Pullman; and
(d) $ 951,805.00 to DVI.
In addition, DVI will be entitled to an allowed pre-petition
unsecured claim in the amount of $500,000.
(3) Termination of Schedules and Mutual Releases will be
deemed to occur upon the Debtors' payment of the Settlement
Payments, when the parties to the Settlement Agreement will be
deemed to have exchanged mutual releases.
(4) Transfer of Equipment will be deemed to occur upon the
Debtors' payment of the Settlement Payments, when ePlus,
Newcourt, Key, Pullman and DVI will be deemed to have
transferred to the Debtors all of their rights in and to the
personal property subject to their Schedules, free and clear of
all liens.
(5) Upon payment by the Debtors of the Settlement Payments,
the Motions will be deemed fully settled by the terms of the
Settlement Agreement.
(6) The Effective Date of the Settlement Agreement will be
the first business day after the 11th day following the Approval
Order, unless the Approval Order has been stayed in which case
the Effective Date will be the 3rd business day after the
Approval Order is no longer subject to a stay. If the Effective
Date does not occur by May 21, 2001, any of the parties to the
Settlement Agreement may void the Settlement Agreement and it
will be deemed void.
The Debtors believe that the amount of the Settlement Payments
is reasonable because, among other things, it allows the Debtors
to purchase the underlying property at a price significantly
lower than the aggregate of the early buyout option prices under
the Schedules (approximately $8.4 million).
Moreover, the amount of the Settlement Payments is substantially
less than the Debtors' total outstanding payment obligation
under the Schedules (approximately $9.14 million), which the
Debtors would have to pay over time if the MLC Agreement were
deemed a true lease and the Schedules were assumed, the Debtors
note.
Moreover, the Settlement Agreement will avoid the incurrence of
additional time and expense that would accompany a litigated
resolution of the Motions, the Debtors tell Judge Walrath.
With respect to the threshold Lease/Security Issue, the Debtors
indicate that despite their confidence in making their case that
the MLC Agreement is a disguised secured financing transaction
rather than a true lease or leases, the Movants' colorable
arguments cannot be ignored.
If the Court were to construe the MLC Agreement as one or more
true leases, the administrative burden and expense of disposing
of the Motions would be equally significant. Because the parties
disagree as to whether the Schedules are severable and can be
assumed or rejected individually, additional briefing and
arguments on the issue of severability would be necessary at the
outset. More significantly, depending upon the Court's
determination of the severability issue, the Debtors would need
to make assumption/rejection decisions on thousands of personal
property items on either an "all or nothing" or "Schedule-by-
Schedule" basis. In either scenario, the Debtors anticipate they
would expend considerable time and expense.
Even if the Debtors prevail on the Lease/Security Issue, that
is, if the Court ultimately finds that the MLC Agreement is a
security agreement, the Debtors anticipate that extensive
additional litigation would be required. For example, it would
he necessary for the Court to determine the extent to which the
Movants' security interest is properly perfected under
applicable state law. Litigation of this issue would require the
Debtors, among other things, to determine the whereabouts of
thousands of individual pieces of equipment, many of which may
have been moved, sold, abandoned or otherwise disposed of since
the creation of the Schedules. Further, to the extent that the
Movants could ultimately demonstrate that they have a properly
perfected security interest, they would seek to value their
collateral and demand adequate protection. At present, the
parties disagree as to the value of the collateral and the rate
at which such value has declined since the Filing Date.
Litigation of these issues would require the Debtors, among
other things, to have the collateral appraised, which is a
burdensome task considering the variety, quantity and various
locations of the personal property involved.
Moreover, returning and replacing personal property while
simultaneously operating the facilities would cause interruption
in the debtors' operation.
The Settlement Agreement, on the other hand, allows the Debtors
to avoid all of these litigation and administrative issues, the
Debtors represent.
The Debtors submitted that the Settlement Agreement fully and
finally resolves, on fair and reasonable terms, a number of
disputed legal and factual issues, the litigation of which
undoubtedly would be both costly and time-consuming.
Accordingly, the Debtors believe that entry into the Settlement
Agreement, pursuant to Bankruptcy Rule 9019 is in the best
interest of the Debtors, their estates, their creditors, and all
parties in interest.
Judge Walrath has given her stamp of approval to the Agreement.
(Integrated Health Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
INTEGRATED SECURITY: Stockholders Approve Restructuring Plan
------------------------------------------------------------
Integrated Security Systems, Inc. announced the results of its
annual stockholders meeting which was held on May 10, 2001 at
the Company's executive offices.
The stockholders of the Company elected the following persons to
serve as directors until the Company's next annual meeting or
until their successors are duly elected: C.A. Rundell, Jr. Alan
M. Arsht, William D. Breedlove, Russell Cleveland, Robert M.
Galecke, John P. Jenkins and Frank R. Marlow.
The proposal to approve financial restructuring transactions for
the Company was also approved. This transaction was initially
proposed in November 2000, but required stockholder approval for
consummation. With the approval of this transaction, the Company
will convert all promissory notes and convertible debentures
currently held by Renaissance Capital Growth & Income Fund III,
Inc. Renaissance US Growth & Income Trust PLC, C.A Rundell, Jr.,
The Rundell Foundation HBW Investment Partners II, L.P. and HBW
Capital Fund, L.P. into shares of newly created series of
convertible preferred stock thus significantly lowering the
interest expense and debt service requirements of the Company.
The total amount of promissory notes converted will be $3.3
million, plus accrued interest and the total amount of
convertible debentures converted will be $4.1 million, plus
accrued interest. This transaction will leave the Company's
balance sheet with $1.3 million of short-term and long-term
debt. Although this financial restructuring, assuming conversion
of the preferred stock, decreases the percentage ownership of
the current Common Stock holders from approximately 26.4% to
16.6%, the restructuring significantly strengthens the balance
sheet and the overall cash position of the Company. Since the
Company has been in payment default and covenant default of the
convertible debentures for several months prior to the proposed
restructuring, the board of directors of the Company felt that
this restructuring was in the best interest of the stockholders.
The stockholders also approved three additional proposals at the
meeting; (a) an amendment to the Company's certificate of
incorporation to increase the number of authorized shares of
Common Stock from 35,000,000 to 75,000,000; (b) an amendment to
the Company's certificate of incorporation to reduce the
liquidation preference of the Series D Preferred Stock; and (c)
an amendment to the Company's 1997 Omnibus Long-Term Incentive
Plan to increase the number of shares of Common Stock which may
be issued under the plan from 2,000,000 to 7,500,000.
The Board of Directors of the Company looks forward to the
challenges of focusing on the operations and future growth of
the Company now that the financial restructuring is complete,
commented C.A. Rundell, Jr., the Chairman of the Board. "The
sales potential for the Intelli-Site product has dramatically
increased with the release of the module-based product in early
April 2001. Also, we remain optimistic about the sales potential
for our railroad safety barrier gate. In addition, we are
pleased with the progress that has been made thus far by the
recent changes in our infrastructure both at Intelli-Site and
B&B."
The impact of the said restructuring was to reduce the company's
interest burden and strengthen the balance sheet at a cost of
dilution to the stockholders as described in the proxy statement
previously filed with the Securities and Exchange Commission.
Headquartered in Irving, Texas, IZZI is a high technology
company that designs, develops and markets security software to
the commercial, industrial and governmental marketplaces. IZZI's
Intelli-Site NT provides users with a software solution that
integrates existing subsystems from multiple vendors without
incurring the additional costs associated with upgrades or
replacement. Intelli-Site NT features a user-defined graphics
interface that controls various security devices within one or
multiple facilities. IZZI is also a leading provider of traffic
control and safety systems within the road and bridge and
perimeter security gate industries. In addition, IZZI designs,
manufactures and distributes automatic gates for highway
railroad crossings including FHWA-accepted safety barrier gates
that are designed to prevent vehicular intrusion onto railroad
crossings. IZZI conducts its design, development, manufacturing
and distribution activities through two wholly owned
subsidiaries: Intelli-Site, Inc. and B&B Electromatic, Inc.
JACOM COMPUTER: Last Date to File Proofs of Claim Is May 25
-----------------------------------------------------------
The U.S. Bankruptcy Court, Southern District of New York has
entered an order setting May 25, 2001 at or before 5:00 PM as
the last date for the filing of proofs of claim regarding claims
held or asserted to have arisen before December 11, 2000 against
the debtors.
KAISER GROUP: John V. Koerber Resigns From Board
------------------------------------------------
Kaiser Group Holdings, Inc. (OTC Bulletin Board: KGHI), the
successor issuer to Kaiser Group International, Inc., announced
that John V. Koerber has resigned from the Company's Board of
Directors to focus on other business interests at Bennett
Management, Inc.
Mr. Koerber joined Kaiser's Board of Directors in 2000, after
serving as Chairman of the Creditors' Committee during the
Kaiser Group International bankruptcy proceedings. He served as
a Director and Chairman of the Audit Committee from December
2000 until May 2001, when he stepped down in order to pursue his
new role at Bennett Management, Inc.
"Mr. Koerber has contributed significantly to Kaiser while on
the Creditors' Committee and during his five months on our
Board, and his willingness to serve as a director during this
difficult transition period was extremely important and
continued setting the stage for our restructuring efforts," said
James J. Maiwurm, Chairman of Kaiser. "All of us on the Board
of Directors deeply regret Mr. Koerber's departure, but
understand fully his need to concentrate on other business
interests that demand his attention."
Mr. John T. Grigsby, Jr., Chief Executive Officer and President
of Kaiser, will replace Mr. Koerber as a Director of Kaiser.
Mr. Grigsby became Chief Executive Officer and President of
Kaiser in December 2000.
LOEWEN GROUP: Stockholder George L. Williamson Objects To Plan
--------------------------------------------------------------
George L. Williamson, an owner of common stock of The Loewen
Group, Inc., objected to the Debtor's Joint Plan of
Reorganization on the grounds that he, as a common stock holder,
is treated unfairly under the Plan of Reorganization.
At the time for filing claims, he, as merely a common stock
holder, had no opportunity to file a claim against the Debtor;
under the Plan, the common stock owned by him will become
worthless while certain creditors of Debtor who were able to
timely file claims against the Debtor will receive newly issued
shares of stock under the Plan of Reorganization, to the
detriment of his shares of stock becoming worthless.
Further, he is denied an opportunity to have his claims against
the Debtor adjudicated by the Bankruptcy Court since the time
for filing claims as a creditor has passed.
Mr. Williamson accused that the true motives of the Debtor have
been concealed up to the time of filing the Plan for
Reorganization in that the Debtor has not made it clear that the
currently outstanding common stock would become worthless under
the Plan for Reorganization.
Mr. Williamson told the Court that there are at least about
2,500 common stock holders of millions of shares of common stock
similarly situated as him who may have also been denied a chance
to file claims against the Debtor because of the deceptions the
Debtor has perpetrated on the common stock holders. (Loewen
Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
LOEWEN GROUP: Reports First Quarter 2001 Operating Results
----------------------------------------------------------
The Loewen Group Inc. announced its results for the first
quarter ended March 31, 2001.
Revenue declined to $217.1 million in the first quarter 2001,
from $256.9 million in the first quarter 2000, reflecting
primarily the reduced locations due to the Company's ongoing
disposition program. Earnings from operations were positive at
$8.0 million in 2001, but were down from $47.5 million in 2000.
The net loss for the first quarter 2001, which included an
impairment provision of $17.9 million, was $10.5 million,
compared to net income of $22.8 million in 2000. The Company's
cash position continued to improve, rising from $159.1 million
at December 31, 2000, to $195.7 million at the end of the first
quarter 2001.
Paul A. Houston, President and CEO, commenting on the Company's
operations, stated:
"In assessing the Company's performance it is important to
remember that our disposition program over the past year has
been very successful. It has resulted in the Company having
approximately 250 fewer locations at March 31, 2001, compared to
a year earlier, a 15% decrease.
While on a same store basis the number of funerals was down
3.9% compared to the first quarter of 2000, we do not believe
that we lost market share as our volume declines are a
reflection of a general industry softness which occurred during
the quarter."
Disposition Program
The Company's program to divest non-strategic assets continues
to proceed at a satisfactory pace. During the quarter ended
March 31, 2001, the Company sold 102 properties and received
sales proceeds of approximately $29 million. Since the inception
of the disposition program, transactions involving approximately
300 properties and approximately $114 million in sales proceeds
have been either completed, approved by the Bankruptcy Court or
have been signed and submitted for approval.
Reorganization Progress
The Company has earlier reported on the substantial progress
that it has made toward emerging from Chapter 11 and Canadian
Companies' Creditors Arrangement Act ("CCAA") proceedings. That
progress continues. The Company, at this point, is prevented
from emerging primarily by a single issue -- an inter- creditor
dispute as to whether certain portions of the Company's debt are
secured and entitled to the benefits of the collateral held
under the Company's Collateral Trust Agreement ("CTA"). Pursuant
to orders of the United States Bankruptcy Court, the CTA dispute
has proceeded both through a formal adversary proceeding and
through a mediation process aimed at seeking a consensual
resolution. Discovery in the adversary proceedings has begun.
The mediation has concluded without achieving a settlement of
the CTA issue. The mediator has, however, submitted
recommendations to the Company as to appropriate adjustments to
its earlier-filed Amended Plan of Reorganization.
John S. Lacey, Chairman of the Board, commented:
"Loewen is operationally ready to emerge from the Chapter 11
and CCAA proceedings. Our employees are eager to move the
business forward, free of the distractions and costs resulting
from the restructuring activities. Unfortunately, the CTA
dispute continues to frustrate the timetable for this to occur.
Earlier this week, we announced the intention to file a Second
Amended Plan of Reorganization that will adopt fully the
recommendations of the mediator appointed by the United States
Bankruptcy Court. The mediator, a highly respected authority
on commercial and bankruptcy law, extensively researched,
reviewed and evaluated the arguments presented by the various
creditor groups. His recommendations are founded on an objective
and thorough analysis of the probability of success of each of
the positions advanced by the parties to the CTA dispute. Our
amended Plan, we believe, provides for fair and reasonable
treatment of all creditor groups, taking into account the
mediator's conclusions as to the relative strengths of their
legal positions. We will ask the United States Bankruptcy Court
to submit this Plan to a vote of the creditors so that the
Company may proceed, as quickly as possible, to emerge from
these proceedings. Further delay in this process can serve only
to impede the Company's progress and to jeopardize the interests
of all of the Company's creditors."
Basis of Presentation
The Company's attached interim consolidated statements of
operations and deficit, balance sheets and cash flow statements
have been prepared on a "going concern" basis in accordance with
Canadian generally accepted accounting principles. The going
concern basis of presentation assumes that the Company will
continue in operation for the foreseeable future and will be
able to realize its assets and discharge its liabilities and
commitments in the normal course of business. As a result of the
creditor protection proceedings and circumstances relating to
this event, including the Company's debt structure, recent
losses, cash flow and restrictions thereon, such realization of
assets and discharge of liabilities are subject to significant
uncertainty.
The interim consolidated financial statements do not reflect
adjustments that would be necessary if the going concern basis
was not appropriate. If the going concern basis was not
appropriate for these interim consolidated financial statements,
then significant adjustments would be necessary in the carrying
value of assets and liabilities, the reported revenues and
expenses, and the balance sheet classifications used.
Additionally, the amounts reported could materially change as
part of a plan of reorganization, since the reported amounts in
these interim consolidated financial statements do not give
effect to all adjustments to the carrying value of the
underlying assets or amounts of liabilities that may ultimately
result. The appropriateness of the going concern basis is
dependent upon, among other things, confirmation of a plan of
reorganization, future profitable operations, compliance with
the terms of the DIP financing facility and the ability to
renegotiate such facility, if necessary, and the ability to
generate sufficient cash from operations and other financing
arrangements to meet obligations.
The U.S. Securities and Exchange Commission's Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB 101"), was required to be implemented for U.S. generally
accepted accounting principles in the fourth quarter of 2000,
with effect from January 1, 2000. For U.S. generally accepted
accounting principles, the Company has implemented SAB 101, on a
prospective basis, for pre-need sales contracts consummated on
or after January 1, 2001, but has not yet recognized the
cumulative effect of the adoption of SAB 101 for pre-need sales
contracts consummated prior to January 1, 2001, as a result of
the Company's ongoing reorganization proceedings.
Based in Toronto, The Loewen Group Inc. currently owns or
operates approximately 970 funeral homes and 350 cemeteries
across the United States, Canada, and the United Kingdom. The
Company employs approximately 11,000 people and derives
approximately 90 percent of its revenue from its U.S.
operations.
LTV CORP.: U.S. Trustee Appeals Jay Alix's Retention
----------------------------------------------------
After discovery, Donald M. Robiner, United States Trustee,
appearing through Dean Wyman, Acting Assistant United States
Trustee, and Amy L. Good, objected to The LTV Corporation's
employment of Jay Alix, telling Judge Bodoh that the application
should be denied because Jay Alix is not "disinterested" because
one of its principals, Mr. James A. Bonsall, Jr., is, or will
be, an officer of the Debtors as LTV's Chief Restructuring
Officer and will be assisted by other Jay Alix professionals.
Further, the terms of compensation are excessive and
unreasonable. The request for a non-refundable retainer is on
its face unreasonable, said the Trustee. No showing has been
made that a non- refundable retainer is warranted in these
cases, and is unnecessary and burdensome to the estates. The
Trustee suggested that the Debtors should have to explain why
they have the financial resources to offer Jay Alix a $300,000
retainer that is not refundable.
The Trustee also objected to the success fee, saying it is not
in any way tied to Jay Alix's performance, but is required if
the Debtors confirm a plan of reorganization or enter into a
transaction involving the integrated steel business. The
expertise and abilities of Jay Alix cannot be a basis for this
success fee, as their "handsome hourly rates" already compensate
them for those factors.
The Trustee characterizes the termination fee as a penalty
designed to discourage the Debtors from terminating Jay Alix in
the event that the Debtors are not satisfied with Jay Alix's
performance. Since the Debtors have the authority to retain Jay
Alix, they should have the unfettered right to discharge Jay
Alix. This penalty restricts that right and places an
unwarranted burden on the Debtors, and should not be approved.
The Trustee further objected that the retention agreement
includes an indemnification provision and an arbitration clause.
The indemnification provision places broad and unlimited
obligations upon the Debtors to reimburse Jay Alix for claims
brought against it related to its engagement. This provision
precludes the Debtors from asserting claims against Jay Alix for
any damages caused to the estate, and requires the Debtors to
protect Jay Alix from any claims brought by parties other than
the Debtors. Both aspects are objectionable.
The Trustee said that the arbitration provision should be
limited or denied because it is inconsistent with the General
Order of the District Court referring proceedings and cases to
the Bankruptcy Court. There is no indication that this general
order empowers the Bankruptcy Court to enter orders related to
disputes that are not within the Bankruptcy Court's
jurisdiction, and approval of this provision should be denied.
Chase Manhattan Objects Too
The Chase Manhattan Bank, as Agent for the Inventory
Securitization Facility Lenders, objected to this retention as
well, saying to Judge Bodoh that a principal flaw of the
proposed fee structure is that it seeks to severely restrict the
Court's review of the appropriateness of the fees to be paid to
Jay Alix in light of the actual benefits achieved by its
efforts. Substantial compensation may be paid without meaningful
judicial review, based upon formulas that have little or no
relation to the value of the services actually performed.
Judge Bodoh Rules and Opines
Judge Bodoh granted the Debtors' Application to employ Jay Alix
as crisis managers, business consultants, and restructuring
accountants for these estates, and expressly approved the
proposed fee structure, but issues an opinion explaining his
position on the disinterestedness objection of the Trustee.
Judge Bodoh found that, as part of the Jay Alix engagement, the
firm assigned one of its principals, James Bonsall, Jr., to be
its on-site representative. Because LTV and Jay Alix recognize
that LTV is a highly hierarchal corporate organization, the
parties concluded that Mr. Bonsall's efforts would be assisted
if he carried the designation vice president-restructuring. In
connection with that title, Mr. Bonsall will at no time be on
the LTV payroll or receive any reimbursement of expenses from
LTV. He will receive nothing directly from LTV that would
occasion LTV issuing to him an IRS Form W-2, Form 1099, or other
evidence of taxable transfers from LTV to him. Rather, he will
at all times be paid a salary directly by Jay Alix, and that
entity will reimburse him for any and all expenses in connection
with his services in the engagement. Mr. Bonsall's authority
within the corporate structure will be limited. He will have no
authority to commit LTV to any significant monetary obligation.
He will have no independent authority to hire, fire, or
discipline LTV employees. It appears he will have none of the
emoluments of office traditionally associated with being an
actual corporate officer. Indeed, it appears to Judge Bodoh that
the assignment of this title to him is intended solely to give
Mr. Bonsall the imprimatur of corporate authority as he goes
about the business of advising and assisting LTV in its
restructuring efforts. The United States Trustee's objection is,
to Judge Bodoh, premised on appearance rather than on the
reality of the engagement, and overrules it as to
disinterestedness.
The U.S. Trustee Appeals
The United States Trustee for Region 9, Donald M. Robiner,
represented by Dean P. Wyman and Amy L. Good, appeal to the
United States District Court from the Order Authorizing the
Debtors to retain Jay Alix & Associates as Business Consultants
and Crisis Managers for the Debtors' Integrated Steel Businesses
and restructuring Accountings, and Approving Proposed Fee
Structure. (LTV Bankruptcy News, Issue No. 8; Bankruptcy
Creditors' Service, Inc., 609/392-00900)
MARINER: Cornerstone And Shono Agree To Modify Automatic Stay
-------------------------------------------------------------
One of the Mariner Post-Acute Network, Inc. Debtors, Cornerstone
Health Management Company, instituted a civil action against
SHONO, Inc. on January 16, 2001 in the United States District
Court for the Eastern District of Louisiana, styled Cornerstone
Health Management Company v. SHONO, Inc., Civil Action No. 01-
0141 alleging a breach of contract by SHONO. SHONO wishes to
assert defenses and prosecute counterclaims in the action but
cannot do so without relief from the automatic stay.
The parties agreed and sought and obtained the Court's approval
that, the automatic stay is modified for the limited purpose of
permitting SHONO to assert any defenses and prosecute any
counterclaims in the Louisiana Action, but it will continue to
apply to any of SHONO's efforts to enforce any judgment rendered
against Cornerstone in the Louisiana Action, absent further
order of the Bankruptcy Court.
Cornerstone specified that it does not waive its right to
challenge, defend or otherwise oppose the prosecution of any
counterclaim by SHONO on grounds other than the violation of the
automatic stay. (Mariner Bankruptcy News, Issue No. 14;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
METROCALL INC.: Seeks to Renegotiate WebLink Merger Agreement
-------------------------------------------------------------
Metrocall, Inc. (OTC Bulletin Board:MCLLQ), announced that it
will seek to renegotiate its pending restructuring and merger
agreement with WebLink Wireless, Inc.
"Metrocall continues to believe strongly that a combination of
the businesses of Metrocall and WebLink is the best alternative
for both companies," said William L. Collins, III, Metrocall's
Chairman and CEO. "However, we believe that events since we
signed our agreement on April 1 have changed the economics of
the transaction and we have offered to renegotiate the terms
with WebLink. We stand ready to begin these discussions
immediately and to work toward a new transaction acceptable to
both parties and their respective constituencies."
Metrocall announced that it has exercised its right to terminate
the April 1 restructuring and merger agreement with WebLink,
which otherwise would have required Metrocall to commence a
chapter 11 proceeding on May 15, 2001. Metrocall's action was
based on recent developments affecting WebLink, including its
announcement of personnel reductions and elimination of sales
distribution channels.
Metrocall does not intend to commence proceedings under chapter
11 of the Bankruptcy Code at this time.
NATIONAL EQUIPMENT: Moody's Downgrades Senior Credit Ratings
------------------------------------------------------------
Moody's Investors Service cut the ratings of National Equipment
Services, Inc.'s (NES):
* $275 million of 10% senior subordinated notes, due 2004,
to Caa1 from B3 and
* $650 million senior secured credit facility to B2 from
Ba3
* The senior implied rating was lowered to B2 from B1 and
* unsecured issuer rating to B3 from B2.
Approximately $925.0 million of debt securities are affected.
The outlook is negative.
Moody's said the ratings action is due to continued
deteriorating financial performance during 1Q-00 following a
poor 4Q-00, weakened coverage ratios, and lower financial
flexibility. For 1Q-01 ended March 31, 2001, EBIT reportedly
fell 55% to $7.3 million from $16.3 million in Q1-00, with
operating margins falling to 5.1% from 12.1%. EBITA of $9.5
million was insufficient to cover interest expense of $20.5
million (EBITDA covered interest by 1.9x), Moody's said.
Accordingly, the company has been adversely effected by a
softened economy, a decline in rental rates (particularly in
the Midwest), higher SG&A cost resulting from the acquisition of
higher fixed cost businesses, additional investment in personnel
and systems to support growth, and lower than expected volume in
the traffic safety business. Moody's also noted that the first
quarter is seasonally weak.
The negative outlook reflects Moody's view that in a slowing and
more challenging economy, the equipment rental industry will
rationalize to correct the overexpansion and overfleeting that
occurred over the past three years. Moody's related this process
will likely result in increased price competition and further
margin pressure. Moody's also noted that further deterioration
in EBITDA may result in covenant defaults.
NES is located in Evanston, IL, and is majority owned by Golder,
Thoma, Cressey, Rauner, Inc. and Brown Brothers Harriman & Co.
The company specializes in the rental of specialty and general
heavy equipment to industrial and construction end-users.
NMT MEDICAL: Annual Stockholders Meeting Set For June 7
-------------------------------------------------------
The 2001 Annual Meeting of Stockholders of NMT Medical, Inc.
will be held at the World Trade Center, 164 Northern Avenue,
Boston, Massachusetts 02210, on Thursday, June 7, 2001 at 1:30
p.m., local time, to consider and act upon the following
matters:
(1) To elect seven members of the Board of Directors, each
to serve for a term expiring at the next Annual Meeting of
Stockholders;
(2) To approve an amendment to the 1996 Stock Option Plan
for Non-Employee Directors to (i) increase the number of shares
of the Company's common stock authorized for issuance thereunder
from 150,000 shares to 225,000 shares, (ii) increase the number
of shares underlying each option granted thereunder to newly
elected directors from 10,000 to 15,000 shares and (iii)
increase the number of shares underlying each option granted
thereunder following an annual meeting of stockholders from
2,500 to 5,000 shares;
(3) To approve the Company's 2001 Employee Stock Purchase
Plan;
(4) To approve the Company's 2001 Stock Incentive Plan;
(5) To ratify the appointment of Arthur Andersen LLP as the
Company's independent public accountants for the current year;
and
(6) To transact such other business as may properly come
before the meeting or any adjournment thereof.
Stockholders of record at the close of business on April 23,
2001 are entitled to notice of and to vote at the meeting or any
adjournment thereof.
OTR EXPRESS: Applies for Delisting From American Stock Exchange
---------------------------------------------------------------
OTR Express, Inc. (AMEX:OTR) has applied to the Securities and
Exchange Commission (Commission) to remove its shares of Common
Stock, par value $0.01 per share, from listing on the American
Stock Exchange (AMEX).
William P. Ward, President and CEO of OTR, explained, OTR has
not met AMEX continued listing requirements for some time and is
no longer eligible for continued dealings on AMEX. Mr. Ward
noted that AMEX has consented to OTR's filing with the SEC for
such delisting.
Trading in shares of OTR Common Stock has been halted by AMEX
since OTR announced, on May 9, 2001, that it will cease
operations within 60 days and liquidate and that shareholders
should not expect any distributions in such liquidation. OTR has
been informed by AMEX that it anticipates that trading will
remain halted until the delisting is completed. OTR expects that
the delisting will be granted by the SEC in the next several
weeks, whereupon it is unknown whether and to what extent a
trading market will exist for the Common Stock.
For further information, please contact Steve Ruben, chief
financial officer, OTR Express, at 913/829-1616, extension 3102,
or visit www.otrx.com.
PARACELSUS HEALTHCARE: Taps Merrill, Lynch as Financial Advisors
----------------------------------------------------------------
Paracelsus Healthcare Corporation filed an application for an
order authorizing the employment of Merrill, Lynch, Pierce,
Fenner & Smith as financial advisors and investment bankers.
The firm will provide services with regard to the sale of
certain hospital assets in which the debtor has an interest. The
firm will identify potential purchasers for possible
transactions involving the sale; the firm will analyze,
structure, negotiate and effectuate a proposed sale transaction;
and advise the Board of Directors of the debtor on alternatives
to maximizing shareholder value.
The firm will receive compensation for its services according to
a formula that is tied to certain target prices for the assets.
A hearing on confirmation of the debtor's first amended plan has
been set before this court on May 22, 2001.
PILLOWTEX: Court Okays KPMG's Employment As Auditors & Advisors
---------------------------------------------------------------
Patricia A. Staiano, US Trustee for Region 3, by and through her
counsel, Joseph J. McMahon, Jr., objected to Pillowtex
Corporation's application to employ KPMG as the Debtors'
independent auditor and tax, accounting and compensation
advisor. The US Trustee charged that, based on information
presented in the application, it would appear that KPMG received
payments for antecedent debts from the Debtors during the 90
days prior to bankruptcy filing. Despite requests for
information regarding the alleged payments, the US Trustee has
received insufficient information to make a determination as to
whether such payments are preferential under section 547 of the
Bankruptcy Code.
Stipulation and Agreement
To resolve the matter of the Debtors' application to employ KPMG
and the US Trustee objection to the application, Joseph J.
McMahon, Jr., for the US Trustee's Office, Victoria W. Counihan,
at Greenberg Traurig LLP, in Delaware, counsel for KPMG, and
William H. Sudell, Jr., and Eric D. Schwartz, at Morris,
Nichols, Arsht & Tunnell, in Delaware, informed Judge Robinson
that the parties have stipulated and agreed that:
(a) The U.S. Trustee has withdrawn her objection;
(b) KPMG has waived any right to collect unpaid prepetition
receivables or any other prepetition amounts to the extent they
remain unpaid from the Debtors or the Debtors' estates.
(c) Upon any determination by final order that KPMG
received one or more avoidable preferential transfers, KPMG
shall promptly return the same to the Debtors' estates and waive
any unsecured claim it has by virtue thereof as a condition of
its employment and retention in the Debtors' bankruptcy cases.
Accordingly, Judge Robinson approved the Application in all
respects. (Pillowtex Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PNV, INC.: America Online Wants its Advertising Money
-----------------------------------------------------
Under the terms of a March 2000 Interactive Service Agreement,
Justin W. McCarthy, a Senior Financial Analyst for AOL explains,
America Online, Inc., agreed to provide PNV, Inc., f/k/a Park 'N
View, Inc., with 298,587,571 advertising impressions over the
course of 26 months for a total of $8,000,000. From December 20,
2000, when PNV filed for protection under chapter 11 of the U.S.
Bankruptcy Code in Florida, through March 15, 2001, the date on
which PNV walked away from its advertising contract with America
Online, Inc., AOL asserts that it earned $762,973 under an
Interactive Service Agreement and AOL wants its money.
Accordingly, AOL has filed a motion to compel PNV to pay the
$762,973 administrative claim pursuant to 11 U.S.C. Sec. 503.
Craig Goldblatt, Esq., and Gregory S. Chernack, Esq., at Wilmer,
Cutler & Pickering represent AOL in PNV's chapter 11 cases.
PSINET INC.: Internet Provider May Have to Pay Ex-CEO Millions
--------------------------------------------------------------
PSINet Inc., the Ashburn, Va.-based Internet service provider on
the brink of bankruptcy, may owe at least $3 million in
severance pay to former chief executive William Schrader under
an employment agreement he signed in late 1999, according to The
Washington Post. Schrader was ousted last month when the PSINet
board voted to replace him as chief executive and chairman. It
was not clear whether Schrader has been paid severance or
whether his employment agreement was reworked before his
departure. Under the four-year agreement, which became effective
in October 1999 and was filed with the Securities and Exchange
Commission in November 1999, unless he was dismissed for cause -
such as a felony conviction or willful misconduct - PSINet owes
Schrader all of the salary and bonuses he would have earned
under the terms of the contract, which ran until Sept. 30, 2003.
Schrader's base salary was $750,000, plus an annual bonus of
$450,000.
A multimillion-dollar severance payment to Schrader would be
relatively small compared with the company's other financial
obligations. PSINet is working to restructure $3.6 billion in
debt. The company has warned repeatedly that it could reorganize
under bankruptcy protection. (ABI World, May 11, 2001)
REGAL CINEMAS: On The Verge of Filing For Chapter 11 Bankruptcy
---------------------------------------------------------------
In a move expected to hand control of the nation's largest movie
theater chain to an investment group led by Denver billionaire
and Regal debt holder Philip Anschutz, Regal Cinemas said it is
close to filing for bankruptcy reorganization, according to
Variety. Anschutz, the entertainment entrepreneur who announced
a deal on Wednesday to buy into Edwards Theater Circuit, would
control more than 20 percent of all U.S. screens if the deal
goes through. Regal's chapter 11 filing is expected by the end
of the month. Investment firms Hicks, Muse, Tate & Furst and
Kohlberg Kravis Roberts largely own Regal. Regal's debt exceeds
$1 billion. (ABI World, May 11, 2001)
SOUTHERN MINERAL: Releases First Quarter 2001 Results
-----------------------------------------------------
Southern Mineral Corporation (OTC Bulletin Board: SMOP)
announced financial and operating results for the first quarter
2001. The Company reported net income of $1.8 million, or $0.14
per basic share, on revenues of $8.8 million, compared to a net
income of $1.2 million, or $0.45 per basic share, on revenues of
$7.4 million for the same period in 2000.
Oil and gas revenues for the first quarter of 2001 were $8.8
million, compared to $7.4 million for the same period in 2000.
An increase in average realized natural gas prices more than
offset a decline in production on a quarter to quarter
comparison. Oil and natural gas liquids production decreased
24.4% to 148,037 barrels. There was also a decrease in natural
gas production of 14.7% to 824 million cubic feet) in the first
quarter of 2001, compared to 2000. Canadian production levels
for the first quarter of 2001 are lower than comparable
production levels in 2000 due in part to the sale of certain
properties and other factors including normal production
declines. Domestic production levels are lower due primarily to
normal production declines. Average daily production decreased
20% to 18.8 million cubic feet of gas equivalent from 23.5 Mmcfe
in the first quarter of 2000.
The decreased production was offset by an average realized
natural gas prices increase of 154% to $6.00 per thousand cubic
feet during the first quarter of 2001, compared to $2.36 per Mcf
in same period a year earlier. The average oil and NGL price
decreased 6.4% to $24.09 per barrel in the first quarter of 2001
from $25.72 per barrel in the first quarter of 2000.
Southern Mineral Corporation is an independent oil and gas
company engaged in the acquisition, exploitation, exploration
and operation of oil and gas properties, primarily along the
Gulf Coast of the United States, in Canada and in Ecuador. The
Company's common stock and perpetual warrants are quoted on the
OTC Bulletin Board under the trading symbols "SMOP.OB" and
"SMOPW.OB", respectively.
TELIGENT INC.: Lays Off 900 Workers & May File for Bankruptcy
-------------------------------------------------------------
Virginia-based telecommunications company Teligent Inc. said it
would lay off 900 employees, according to The Washington Post.
Quoting unidentified sources, the Post said the firm might also
file for bankruptcy and planned to shut down a third of its
rooftop wireless network in the months ahead.
The New Jersey-based IDT Corp., which last month acquired a 37
percent stake in the company, planned over the next two to three
months to shut down the network in 11 out of 34 cities Teligent
served, the Post reported, citing sources. The newspaper said
the 900 jobs to be cut represented 38 percent of Teligent's
remaining workforce and would be the company's third round of
job cuts in six months. Teligent had about 2,357 workers at last
count, down from a high of about 3,400 a year ago. Lenders
behind Teligent's $800 million credit facility extended
Teligent's deadline until May 15 to come up with $350 million in
additional financing in order to make interest payments. The
original deadline was Monday. (ABI World, May 11, 2001)
TELIGENT: Nasdaq Halts Shares Trading & Asks For Information
------------------------------------------------------------
The Nasdaq Stock Market(SM) announced that trading was halted in
Teligent, Inc. (Nasdaq: TGNT), Friday, May 11, at 9:03 a.m.,
Eastern Time, for "additional information requested" from the
company at a last price of 0.56. Trading will remain halted
until Teligent, Inc. has fully satisfied Nasdaq's request for
additional information.
THERMADYNE: Senior Debt Ratings Fall To Junk Levels
---------------------------------------------------
Moody's Investors Service took actions on the following ratings:
Thermadyne Mfg. LLC:
* $430 million of senior secured credit facilities to Caa1
from B3,
* $207 million of 9 7/8% senior subordinated notes, due
2008, to Ca from Caa2, and
Thermadyne Holdings Corporation:
* $130 million (accreted value) of 12 1/2% senior discount
debentures, due 2008 to C from Caa3.
* The senior implied rating was lowered to Caa3 from B3.
* The unsecured issuer rating was lowered to Ca from Caa1.
The outlook is negative. Approximately $811.0 million of debt
securities are affected.
According to Moody's, the downgrades reflect a likely
restructuring of the company's debt, following noncompliance
with bank covenants and "going concern" language in its year-end
audit opinion. It is said that bank waivers have been obtained
through May 23, 2001 and management and financial advisors are
currently evaluating Thermadyne's existing capital structure and
considering strategic alternatives to strengthen its balance
sheet.
Thermadyne Mfg. LLC is based in St. Louis, Missouri. It
manufactures a broad range of cutting and welding products and
accessories under the "Victor", "Tweco", "Arcair", "Thermal
Dynamics", and "Cigweld" brand names, among others. End-users
are engaged in the aerospace, automotive, construction, metal
fabrication, mining, mill and foundry, petroleum and
shipbuilding industries.
THERMOGENESIS CORPORATION: Atlas II Reports 7.7% Equity Stake
-------------------------------------------------------------
Atlas II, L.P. of New York, New York, reports holding 2,427,910
shares of the common stock of ThermoGenesis Corporation, with
sole voting and dispositive powers. This represents 7.7 % of the
outstanding common stock of the Company.
TITANIUM METALS: Intends To Pay Previously Deferred Dividends
-------------------------------------------------------------
Titanium Metals Corporation (NYSE: TIE) announced that on June
1, 2001 it plans to pay all previously deferred dividends and
accrued interest on its Convertible Preferred Securities
concurrent with the regularly scheduled dividend payment due on
June 1, 2001, both to holders of record as of May 15, 2001.
TITANIUM METALS: Discloses Selling Price Increases
--------------------------------------------------
Titanium Metals Corporation (NYSE: TIE) announced selling price
increases on new orders for certain grades of commercially pure
titanium and alloy titanium ingot, flatrolled, and forged
products. These price increases will generally range from 3% to
15% on applicable products and reflect continued increases in
certain manufacturing costs, including raw materials and energy,
as well as the need to provide for increased capital
investments. Additionally, Titanium Metals will continue to
reduce or eliminate current pricing discounts on certain
products.
The price increases are effective immediately, but will not
apply to certain industrial products or to orders under
agreements with customers that include specific provisions
governing selling prices. Titanium Metals is currently accepting
orders for delivery through the fourth quarter of this year.
Except for obligations under existing firm agreements, orders
for delivery after the fourth quarter will not be accepted until
later this year.
Titanium Metals Corporation, headquartered in Denver, Colorado,
is a worldwide integrated producer of titanium metal products.
Information on the Company is available on the World Wide Web at
http://www.timet.com
UNIVERSAL BROADBAND: Deadline For Filing Claims Is June 25
----------------------------------------------------------
The U.S. Bankruptcy Court, Central District of California, has
set June 25, 2001 as the last date by which creditors must file
proofs of claim. On April 16, 2001, the Bankruptcy Court entered
an order substantively consolidating Universal Broadband
Networks, Inc. with IJNT, Inc.
VENTURE CATALYST: Falls Short of Nasdaq's Listing Requirements
--------------------------------------------------------------
Venture Catalyst Incorporated (Nasdaq: VCAT) received a letter
from Nasdaq notifying the company that it is currently out of
compliance with the Nasdaq continued listing requirements. The
letter indicated the company's common stock has been trading
below the $1.00 minimum bid requirement for 30 trading days and
does not satisfy the $5 million minimum market value of public
float. The company can demonstrate compliance by maintaining the
minimum bid and market value of public float for at least 10
consecutive trading days before August 6, 2001. If the company
is unable to demonstrate compliance, an appeals process is
available.
"We consider the maintenance of our Nasdaq National Market
listing to be important. We are executing our plan to conserve
capital, reduce operating expenses and exploring additional
means to build value for our shareholders," said Don Speer,
Chairman and Chief Executive Officer of VCAT.
"This has been a trying time and the public markets have shown
significant declines in the prices of numerous companies, as
well as major declines in the Nasdaq Composite, the Dow and
other major indexes. While we are disappointed with this
warning, we cannot control the bid price of our stock,"
continued Mr. Speer. "Nonetheless, we take this seriously and
are evaluating steps regarding this notice and the compliance
issue."
About Venture Catalyst Incorporated
Venture Catalyst Incorporated is a leading service provider of
gaming consulting, infrastructure and technology integration in
the California Native American gaming market.
VERIDA INTERNET: Board Opts To Cease Operations
-----------------------------------------------
The Board of Directors of Verida Internet Corp. (OTC Bulletin
Board: VERYE) has concluded that Verida's financial condition no
longer makes it a viable going concern and has determined to
cease operations. Due to general economic conditions, the
company's wholly owned marketing subsidiary has booked a
significant operating loss in the first quarter. In addition,
the Company has been unable to secure sufficient funding to
complete the 2000 year end audit and the Form 10SB. Accordingly,
the Company will discontinue public disclosures of its financial
and other information, including SEC filings such as Reports on
Forms 10-K, 10-Q and 8-K, and anticipates imminent delisting
from the OTC Bulletin Board. The remaining officers and the
Board of directors of the Company are expected to resign in the
near future.
W.R. GRACE: Proposes Global Reclamation Procedures
--------------------------------------------------
Given the high volume of inventory W. R. Grace & Co. receives
each business day, the Debtors anticipate that many vendors will
assert so-called reclamation claims pursuant to 11 U.S.C. Sec.
546(c)(1) and Sec. 2-702 of the Uniform Commercial Code. That
bankruptcy code provision authorizes vendors who have sold goods
to a debtor in the ordinary course within 10 days prior to a
bankruptcy filing to reclaim those goods if a demand is sent to
the debtor within the 20-day period following the petition date.
If any vendor thinks that the Grace will be returning an
inventory shipment in response to a reclamation demand, James
H.M. Sprayregen, Esq., at Kirkland & Ellis, told Judge Newsome,
the Debtors make their position clear: they won't. All goods
received by Grace are essential to its business operations and,
frankly, returning inventory is not feasible.
By Motion, the Debtors asked the Court to approve an orderly
process to resolve all reclamation claims and protect the rights
of Sellers who were entitled to reclaim their goods.
The Debtors proposed that, within 90 days, they will file one
Omnibus Reclamation Motion listing all reclamation claims which
they think are valid. All parties-in-interest will have the
right and opportunity to object to the inclusion or omission of
any purported reclamation claim from that Omnibus Reclamation
Motion. If the Debtors don't file that Omnibus Reclamation
Motion, Sellers will be free to file their own reclamation
motions and papers. In short, Mr. Sprayregen explained, the
Debtors are asking for a 90-day period to work with Sellers to
sort-out all reclamation before clogging the Court's docket.
Many reclamation claims, Mr. Sprayregen noted, will be mooted
when suppliers receive payments pursuant to the Court's order
approving payment of up to $34 million of prepetition trade
claims.
Another issue arises in connection with this Motion, Mr.
Sprayregen explained to the Court. Sellers are entitled to
reclaim goods pursuant to 11 U.S.C. Sec. 546(c) only if the
debtor is insolvent. The Debtors have no desire to wade into the
conversation at this time about whether the Debtors are solvent
or insolvent. Accordingly, solely for purposes of this Motion
and without making any admission or denial for any other
purpose, the Debtors will waive the solvency defense with
respect to Reclamation Claims. (W.R. Grace Bankruptcy News,
Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900)
WHX CORP.: S&P Cuts Corporate Rating To B, Senior Notes To CCC+
---------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on WHX
Corp. to 'B' from 'B+'. The rating on the company's 10-1/2%
senior unsecured notes due 2005 was downgraded to 'CCC+' from
'B-'. These ratings were removed from CreditWatch, where they
were placed on Sept. 18, 2000. The rating outlook is now
negative. The 'D' rating on the company's preferred stock was
affirmed because dividends continue to be deferred.
The CreditWatch listing was precipitated by concerns about the
ramifications for WHX of the severe problems faced by its
subsidiary, Wheeling-Pittsburgh Corp. (WPC), an integrated steel
producer. Subsequently, on Nov. 16, 2000, WPC filed for Chapter
11 bankruptcy protection.
The downgrades reflect the significant impairment to WHX's asset
base that has resulted from WPC's failure, as well as WHX's
diminished financial flexibility. WPC had accounted for the
majority of WHX's consolidated assets and revenues. The
bankruptcy filing by WPC did not trigger any cross-default
provisions under WHX's borrowing agreements--or those of its
other subsidiaries--and WPC's creditors have apparently not made
any effort to drag WHX into WPC's bankruptcy proceedings. Still,
Standard & Poor's considers it unlikely that WHX will garner any
material recovery on its ownership interest in WPC.
WHX has two other businesses: Handy & Harman, a manufacturer of
specialty wire, tubing, and fasteners, and precious metals
plating and fabricated products; and Unimast Inc., a
manufacturer of steel framing and other products for commercial
and residential construction. These units are well-positioned in
their respective sectors. Financial performance has been broadly
stable in recent years, which is impressive, given the
cyclicality of the end markets served. WHX also has a 50%
interest in a racetrack and video lottery facility in Wheeling,
W.Va., from which it has received significant dividends.
However, the aggregate cash flow from these units provides only
weak coverage of WHX's heavy debt-service requirements.
Although WHX has a substantial cash position ($74 million at
Dec. 31, 2000), its financial flexibility is limited otherwise.
Debt maturing in 2004 and 2005 poses significant refinancing
risk.
Outlook: Negative
Considerable uncertainty exists regarding the outcome of WPC's
Chapter 11 proceedings. Ratings could be lowered if WHX were to
become responsible for funding WPC's material benefits or
environmental liabilities, even though any required payments
would likely be spread out over a number of years, Standard &
Poor's said.
*********
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, Bernadette de Roda, Aileen Quijano and Peter A.
Chapman, Editors.
Copyright 2001. All rights reserved. ISSN: 1520-9474.
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