/raid1/www/Hosts/bankrupt/TCR_Public/010702.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, July 2, 2001, Vol. 5, No. 128
Headlines
360NETWORKS: Files for Reorganization in Canada and the U.S.
ADVOCAT INC: Jury Issues $78.425 Million Verdict Against Company
ASTRIS ENERGI: Losses Likely to Continue Through FY2002
BALDWIN PIANO: Secures Warranty Surety Bond through ACSTAR
CALICO COMMERCE: Appeals Nasdaq Staff Delisting Notice
COEUR D'ALENE: Files Registration Statement for New Senior Notes
COEUR D'ALENE: S&P Cuts Ratings to 'CC'; Implications Negative
COMDISCO INC: S&P Cuts Ratings to Junk Levels
CONSUMERS PACKAGING: Records $32.9 Million Net Loss
DANKA BUSINESS: KPMG Expresses Going Concern Doubts
DANKA BUSINESS: Reports $220.6 Million Net Loss in FY2001
DANKA BUSINESS: Shareholders Approve Management Division Sale
EAST COAST: Delinquent Filing Basis for Delisting From OTC
EDISON INTERNATIONAL: Agrees To Sell Edison Select To ADT
ERGOBILT INC: Richard Troutman Gains Shares in Loan Foreclosure
FIRST WAVE: Creditors Committee Supports Plan of Reorganization
GENTIA SOFTWARE: NASDAQ Delists Shares
GS TELECOM LTD: Auditors Doubt Going Concern Ability
ICG COMMUNICATIONS: Rejects 3 Telecom Site Leases
JLM INDUSTRIES: Congress Extends New $20 Million Revolver
LAIDLAW INC.: Files Chapter 11 in U.S. and CCAA in Canada
OWENS CORNING: Reaches "Stand Still" Agreement With CSFB
PACIFIC AEROSPACE: Nasdaq Delists Shares
PACIFIC AEROSPACE: Sells U.S. Casting Unit to Advanced Metals
PARACELSUS HEALTHCARE: Ailing Company's Losses Continue
PILLOWTEX: Wants to Sell Beacon Assets to Core Point
PINNACLE ENTERTAINMENT: S&P Lowers Ratings with Negative Outlook
PLAYDIUM ENTERTAINMENT: Appoints Haverstock As President & CEO
PRIME RETAIL: Sets Annual Stockholder Meeting for August 14
PSINET INC: Taps Nixon Peabody as Special Counsel
UNITED SHIPPING: Shares Face Potential Delisting
ULTRADATA SYSTEM: Plans to Appeal Nasdaq Delisting
VENCOR INC: Deregisters Shares Under Vencor Plan
WARNACO GROUP: Court Gives Nod to Payment of Pre-petition Taxes
WASHINGTON GROUP: Gets 3-Yr Extension for $200 Million Contract
WILLCOX & GIBBS: Achieves Near-Break-Even Quarterly Results
WINSTAR COMMUNICATIONS: Affiliated Computer Moves for Set-Off
ZYMETX: Nixes Reverse Stock Split After Nasdaq Delisting
BOND PRICING: For the week of July 2 - 6, 2001
*********
360NETWORKS: Files for Reorganization in Canada and the U.S.
------------------------------------------------------------
360networks announced that the company and several of its
operating subsidiaries have filed for protection under the
Companies' Creditors Arrangement Act (CCAA) in the Supreme Court
of British Columbia. The company's principal U.S. subsidiary,
360networks (USA) inc. and 22 of its affiliates concurrently
filed for protection under Chapter 11 of the U.S. Bankruptcy
Code in the U.S. Bankruptcy Court for the Southern District of
New York. Where necessary, appropriate action is being taken in
other jurisdictions to protect the company's assets.
The company and the subsidiaries covered by the filings
currently have approximately US$155 million of unrestricted
cash, cash equivalents, short-term investments and marketable
securities on hand. 360networks expects to use these funds to
maintain service to existing customers in Canada and the United
States, and to complete key segments of its North American
network.
360networks believes it will be able to complete its North
American network using its cash and current backlog of
contracted revenues. Further growth will depend on its ability
to attract additional financing or strategic investment into the
reorganized company. Subject to certain conditions, the
company's senior secured lenders have agreed to subordinate
their liens to up to US$100 million of debtor-in-possessions
(DIP) financing, and the company has received a firm proposal
for such financing. 360networks also intends to consider
additional proposals to enable it to obtain the best available
terms and is examining other strategic alternatives, including
asset sales.
"We are taking these steps to restructure our business and
financial position in a difficult telecommunications
environment," said Greg Maffei, president and chief executive
officer of 360networks. "While very disappointing, we believe
today's filings provide us the best opportunity to reorganize
and operate our core business."
Lazard Freres is assisting 360networks to develop and evaluate
options, including restructuring its debt obligations.
PricewaterhouseCoopers Inc. has been appointed by the court in
Canada as Monitor of the Canadian proceeding.
The filings do not include the company's 360americas
subsidiaries, which were acquired in connection with the
purchase of GlobeNet Communications Group Limited.
In addition, 360networks intends to initiate insolvency
proceedings for certain of its European subsidiaries.
The company also announced the resignation of seven board
members: Kevin Compton, Glenn Creamer, John Malone, Claude
Mongeau, Christian Reinaudo, John Stanton and Jim Voelker. These
resignations took place prior to today's filings.
About 360networks
360networks (NASDAQ: TSIX and TSE: TSX) offers optical network
services to telecommunications and data-centric organizations.
The company's fiber optic network connects more than 50 major
cities in North America, Europe and South America with
terrestrial segments and undersea cables. As of March 31,
2001, 360networks had total assets of US$6.3 billion and total
liabilities of US$3.6 billion. Currently, the company has US$1.2
billion of senior secured bank debt and US$1.45 billion,
represented by unsecured Senior Notes. The company's cash
revenue was US$644 million in 2000 and US$274 million in the
first quarter of 2001.
ADVOCAT INC: Jury Issues $78.425 Million Verdict Against Company
----------------------------------------------------------------
Advocat Inc. (Nasdaq OTC:AVCA - news) announced June 25, 2001
that a jury in Mena, Arkansas, has issued a verdict in a
professional liability lawsuit against the Company and certain
of its subsidiaries totaling $78.425 million.
This judgment must be certified by the trial judge within thirty
days. If the judgment is certified by the trial judge, the
Company will ask the trial judge to overturn or reduce the
verdict, and if denied, will vigorously appeal this decision.
The Company believes that it will ultimately be successful in
resolving this matter within the insurance limits that were in
effect at the time matter arose.
In the event that the Company is not successful in its request
to the trial judge to overturn the verdict prior to appeal, in
order to stay execution of the judgment pending appeal, a bond
in the amount of the verdict will be required.
In the event the Company's insurance carriers do not post the
full amount of the bond, the Company does not have the financial
resources to cause the issuance of a bond in the amount in
excess of the Company's insurance limits. In that case, the
Company would have to consider other alternatives, including
seeking bankruptcy court protection, in order to stay execution
of the judgment.
Advocat Inc. operated 120 facilities including 56 assisted
living facilities with 5,245 units and 64 skilled nursing
facilities containing 7,230 licensed beds as of March 31, 2001.
The Company operates facilities in 12 states, primarily in the
Southeast, and four provinces in Canada. For additional
information about the Company, visit Advocat's web site:
http://www.irinfo.com/avc
ASTRIS ENERGI: Losses Likely to Continue Through FY2002
-------------------------------------------------------
Astris Energi Inc. has incurred net losses each year since
inception. The accumulated deficit of the Company was CDN
$1,988,453 as of December 31, 2000. It expects to continue to
incur net losses at least through fiscal year 2002, and these
losses may be substantial.
To implement the current business strategy, the Company will
have to incur a high level of fixed operating expenses and will
continue to incur considerable research and development expenses
and capital expenditures. Accordingly, if additional capital,
revenues and positive cash flows cannot be generated, to which
no assurance can be given, the Company will not achieve
profitability. Even if profitability is achieved, it may not be
sustained or increased on a quarterly or annual basis.
The Company's auditors have issued a "going concern" statement
about Astris Energi. Whether the Company continues as a going
concern is dependent upon the Company's ability to raise
additional capital, the successful commercialization of one or
more of the Company's research projects and the attainment of
profitable operations.
The ability to generate future revenues will depend on a number
of factors, many of which are beyond control of the Company.
These factors include the rate of market acceptance of its fuel
cell products, competitive activities, regulatory developments
and general economic trends.
At December 31, 2000, the Company had a negative working capital
of CDN$141,172. The ability of the Company to realize its
objectives depends in large part upon obtaining additional
capital. The Company has a present need for capital in
connection with its fuel cell development activities and
transition to commercial operations.
The Company believes that it will require up to CDN$10 million
over the next three to five years to establish a pilot program
facility for the manufacture of an aggregate of 2,000 kilowatts
per year of alkaline fuel cells in various sizes. There is no
assurance that any additional financing will be available on
commercially attractive terms, in a timely fashion, in
sufficient amounts, not substantially dilutive to shareholders,
or at all. If adequate funds are not available, the Company
would have to scale back its operations, including its product
development, manufacturing and marketing activities, all of
which could lead ultimately to cessation of operations.
To date, the Company has derived revenues principally from sales
of prototypes or small ancillary products, contract research and
government grants. Sales have been limited to demonstration and
prototype models.
The Company's prototypes are pre-commercial production products
assembled on a one-off basis, by hand. The Company is not yet
adequately financed to produce commercial products. The Company
has not produced any prototypes on an automated basis and has
not designed an automated assembly facility. In addition, the
Company still has not been able to determine whether or not its
prototypes can be assembled through automation or whether there
is a sufficient level of acceptance of its products for the
Company to sell fuel cells in sufficient volume to become
profitable. The Company does not have the manufacturing
experience to handle large commercial requirements. It would
have to rely on third-party manufacturers until it can develop
its own capacity.
The Company may not be able to produce or
commercialize any of its products in a cost-effective manner,
and, if produced, it may not be able to successfully market
these products. Production costs of the initial commercial units
may be higher than their sales price and there can be no
assurance that higher production levels will occur or that sales
prices will ever exceed production costs.
BALDWIN PIANO: Secures Warranty Surety Bond through ACSTAR
----------------------------------------------------------
Baldwin Piano & Organ Company it has purchased a warranty surety
bond through ACSTAR Insurance Company of New Britain,
Connecticut. ACSTAR's financial rating by A.M. Best is a strong
("A-"). Baldwin's warranty assurance plan backed by the surety
bond will apply to Company's products purchased on or after June
1, 2001.
Baldwin purchased the surety bond as a means to reassure its
dealers and customers of its future and its ability to comply
with its warranty obligations during the Company's
reorganization. The Company filed reorganization under Chapter
11 of the United States Bankruptcy Code on May 30, 2001.
"The security of a surety bond demonstrates to our dealers and
customers our commitment to provide the best manufactured pianos
in the world along with all the assurances associated with our
products," said Robert Jones, chief executive officer and
president. "Baldwin Piano & Organ is known for its quality
products. We want to make sure we are able to stand behind our
products as we go through the restructuring, retaining the
confidence of all our constituents."
A Warranty Assurance Certificate is to be delivered by the
dealer to each Baldwin buyer, at the time of purchase, of a
Baldwin, Chickering or Wurlitzer piano on or after June 1, 2001.
The warranty assurance program will be prominently displayed on
dealer's floor advertisements, special tags being attached to
each piano and certificates placed on the top of each
instrument.
Baldwin Piano & Organ Company, the maker of America's best
selling pianos, has marketed keyboard musical products for over
140 years.
CALICO COMMERCE: Appeals Nasdaq Staff Delisting Notice
------------------------------------------------------
Calico Commerce, Inc. (Nasdaq:CLIC), a developer of interactive
selling solutions, said that on June 28, 2001 it received a
Nasdaq Staff Determination indicating that the Company has
failed to comply with the minimum bid price requirement for
continued listing (Nasdaq Marketplace Rule: 4450(a)(5)) and that
its securities are, therefore, subject to delisting from the
Nasdaq National Market. Calico has requested an oral hearing
before the Nasdaq Listing Qualifications Panel to appeal the
Staff Determination.
Calico stock will continue to be traded on the Nasdaq National
Market pending the final decision by the Qualifications Panel.
There can be no assurance that the Panel will grant the
Company's request for continued listing. The hearing date will
be determined by Nasdaq. If Calico is unsuccessful in its
appeal, Calico may not qualify for the Nasdaq SmallCap Market,
and would thereafter cease to trade on Nasdaq but would seek
alternatives such as the NASD OTC Bulletin Board.
About Calico Commerce, Inc.
Calico Commerce, Inc. (Nasdaq:CLIC) develops and delivers
interactive selling solutions for Global 2000 companies to sell
more effectively through every channel. Calico's solutions drive
significant bottom-line benefits to customers and build
competitive advantage by improving sales productivity and
eliminating the costs of inaccurate orders. Calico's solutions
enable customers to streamline the sale of complex products,
execute real-time pricing, and manage quote and order processes
via the Web, thus delivering a unique experience to users
through multiple channels. Calico's customers include global
leaders in high technology and industrial manufacturing,
telecommunications services, financial services, and retail.
Calico Commerce, Inc., headquartered in San Jose, can be found
on the World Wide Web at http://www.calico.com
COEUR D'ALENE: Files Registration Statement for New Senior Notes
----------------------------------------------------------------
Coeur d'Alene Mines Corporation (NYSE: CDE) on June 20, 2001
said that it filed a registration statement with the Securities
and Exchange Commission for a proposed exchange offer of its 13
3/8% Convertible Senior Subordinated Notes due December 31, 2003
to be extended to holders of its 6 3/8% Convertible Subordinated
Debentures due January 31, 2004, 7 1/4 % Convertible
Subordinated Debentures due October 31, 2005 and 6% Convertible
Subordinated Debentures due June 10, 2002. The Company also
plans to offer to Debenture holders who participate in the
exchange offer up to $25 million of additional Notes for cash. A
prospectus will be sent by the Company to the debenture holders
when it commences the exchange offer.
The exchange offer will allow the Company to substantially
reduce its debt, increase shareholders' equity due to an
extraordinary gain that would be recognized by the retirement of
indebtedness, improve its cash flow, and improve its overall
capital structure.
Coeur d'Alene Mines Corporation is the United States' leading
low-cost primary silver producer. The Company has mining
interests in Nevada, Idaho, Alaska, Chile and Bolivia.
COEUR D'ALENE: S&P Cuts Ratings to 'CC'; Implications Negative
--------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating for Coeur
D'Alene Mines Corp. to double-'C' from single-'B'-minus and
lowered its ratings on the firm's 6.375% convertible
subordinated notes due 2004 and 7.25% convertible subordinated
notes due 2005 to single-'C' from triple-'C'. In addition,
Standard & Poor's affirmed its triple-'C' rating on Coeur
D'Alene's 6% convertible subordinated notes due 2002. At the
same time, Standard & Poor's placed all of its ratings on the
company on CreditWatch with negative implications.
These actions follow the company's recent filing of a proposal
to exchange its 6.375% and 7.25% convertible subordinated notes
for new convertible subordinated notes that have a par value
significantly less than that of the existing subordinated notes.
The company is attempting to restructure and reduce its debt
levels, as it may not be able to meet its current debt service
requirements in the future. Standard & Poor's would consider the
completion of the exchange to be tantamount to a default, since
the total value of the proposed notes from the exchange offer
will be significantly less than the par value of the convertible
subordinated notes. The exchange offer remains subject to
several conditions; however, should it be completed as planned,
ratings on the corporate credit will be lowered to 'SD', and the
6.375% and 7.25% subordinated notes will be lowered to 'D'. The
rating on the 6% notes is affirmed, as this issue is not subject
to a lower value offer. Subsequent to the successful completion
of the exchange offer, the corporate credit rating could be
revised from `SD' to as high as single-'B'-minus, reflecting the
company's reduced leverage as a result of the proposed deal.
Due to continued low gold and silver prices, Coeur D'Alene has
experienced weak operating results and deteriorating liquidity.
Although there is considerable uncertainty about the direction
of gold and silver prices, Standard & Poor's expects both to
remain weak in the intermediate term and, thus, continue to
negatively impact Coeur D'Alene's credit quality. The company is
a relatively small precious metals producer, with mines in North
America, Chile, and, to a lesser extent, Bolivia, Standard &
Poor's said.
RATINGS LOWERED AND PLACED ON CREDITWATCH
WITH NEGATIVE IMPLICATIONS
TO FROM
Coeur D'Alene Mines Corp.
Corporate credit rating CC B-
6.375% convertible due 2004 C CCC
7.25% convertible due 2005 C CCC
RATINGS AFFIRMED AND ON CREDITWATCH
WITH NEGATIVE IMPLICATIONS
Coeur D'Alene Mines Corp.
6% convertible sub. debentures due 2002 CCC
COMDISCO INC: S&P Cuts Ratings to Junk Levels
---------------------------------------------
Standard & Poor's lowered its counterparty credit, senior
unsecured, and CP ratings on Comdisco, Inc. The ratings remain
on CreditWatch with developing implications, where they were
placed on April 3, 2001, following the company's announcement
that it had hired Goldman, Sachs and Co. and McKinsey and Co. as
advisors to explore strategic alternatives. CreditWatch with
developing implications indicates that the ratings could be
raised, lowered, or affirmed, depending ultimately on the
company's chosen strategic alternative.
The rating actions reflect Standard & Poor's ongoing concern
over the company's diminished franchise and earnings prospects
in its core leasing and continuity services businesses. The
ratings also factor in the company's reduced financial
flexibility to meet its financial obligations. Comdisco
continues to meet its short- and long-term debt obligations with
cash flow from operations, and it has not been in violation of
its bank covenants to date, the most onerous being its leverage
test not to exceed a 7-to-1 total debt-to-equity ratio. However,
the company has publicly stated that it will not be able to meet
its funding requirements through fiscal 2001, which ends Sept.
30, 2001. The company has approximately $400 million in cash on
hand to meet more than $500 million in debt maturities through
Aug. 31, 2001. Additionally, approximately $1.8 billion of debt
is expected to mature in fiscal 2002, $978 million in fiscal
2003, $60 million in fiscal 2004, and $269 million in fiscal
2005 and beyond. On May 2, 2001, the company suspended its
dividend on common stock.
Comdisco continues to explore new sources of liquidity through
possible asset sales, securitization, the sale of certain
businesses, or an outright sale of the entire company. Any
developments related to the possible sale or restructuring of
Comdisco will be monitored, Standard & Poor's said.
RATINGS LOWERED AND REMAINING ON CREDITWATCH
WITH DEVELOPING IMPLICATIONS
TO FROM
Comdisco Inc.
Counterparty credit ratings CCC+/C B/B
Senior unsecured CCC+ B
CP C B
Comdisco Finance (Netherland) B.V.
CP C* B
*Guaranteed by Comdisco Inc.
CONSUMERS PACKAGING: Records $32.9 Million Net Loss
---------------------------------------------------
Consumers Packaging Inc. (TSE: CGC) released its interim
consolidated financial results for the three-month period ended
March 31, 2001 and filed such results with the Ontario
Securities Commission and other Canadian regulatory agencies.
Net sales for the period increased 13.1% to $408.6 million from
$361.3 million in the same period last year. The Company had an
operating loss of $2.3 million in the latest period, compared
with an operating income of $15.6 million in the earlier period.
After interest and financing charges and a write off of
goodwill, Consumers Packaging had a net loss of $32.9 million or
82 cents a share for the 2001 first quarter, compared with a
loss of $3.1 million or 8 cents a share for the 2000 period.
A summary of the interim consolidated first quarter results
follows:
Consumers Packaging Inc.
For three months ended March 31
In thousands of dollars, except per-share data.
---------------------------------------------
Year 2001 2000
---------------------------------------------
Net Sales 408,049 361,320
---------------------------------------------
Operating Income (Loss) (2,292) 15,580
---------------------------------------------
Net Loss (32,937) (3,055)
---------------------------------------------
Net Loss per share,
basic and fully diluted (0.82) (0.08)
---------------------------------------------
Consumers Packaging is operating under an order of the Ontario
Superior Court of Justice made under the Companies' Creditors
Arrangement Act (CCAA). The Order stays legal proceedings
against the Company until August 15, 2001, and allows it to
continue work to develop a restructuring plan. The Toronto
office of KPMG Inc. has been appointed Monitor under the CCAA
and is assisting the Company in formulating a restructuring
plan.
During the first quarter, Consumers Packaging suspended interest
payments on its two series of bonds with a face value of U.S.
$245 million. As a result, several cross-default provisions were
breached, resulting in approximately $438.5 million of long-term
debt being classified to current on the Company's balance sheet.
"Consumers Packaging continues to operate on a 'business as
usual' basis during this restructuring period," said Brent
Ballantyne, Chief Restructuring Officer and Chief Executive
Officer. "Our plants are meeting all of our customer
requirements."
Mr. Ballantyne said good progress is being made on developing a
restructuring plan. The deadline for the submission of
restructuring proposals by third parties has been extended to
July 5 from June 29. "Our key stakeholders, including our bank
lenders who have provided interim financing, are fully co-
operating as we work with a number of third parties to develop a
plan that will address the Company's current financial needs."
The Company is no longer in default of the financial statement
filing requirements imposed by securities regulators. The
interim financial statements for the quarter ended March 31,
2001 were due to be filed with regulatory authorities by May 30,
but were delayed by the restructuring.
Consumers Packaging employs approximately 2,400 people in
Canada. It manufactures and sells glass containers for the food
and beverage industry. It commenced operations in 1917 and
supplies approximately 85% of the glass containers used by the
Canadian juice, food, beer, wines and liquor industries. In
Canada, the company operates six facilities, three in
Ontario (Toronto, Brampton and Milton), and one each in Quebec
(Montreal), New Brunswick (Scoudouc) and British Columbia
(Lavington). In the United States, it operates a plant in
Glenshaw, Pennsylvania through its wholly owned subsidiary, GGC
LLC (Glenshaw Glass).
Consumers Packaging is the largest shareholder (with 58% of the
outstanding common equity on a fully diluted basis) of Anchor
Glass Container Corporation, which is the third largest
manufacturer of glass containers in the United States. It
employs approximately 4,000 persons and operates nine glass
manufacturing plants in the United States.
DANKA BUSINESS: KPMG Expresses Going Concern Doubts
---------------------------------------------------
KPMG Audit Plc, independent accountants for Danka Business
Systems PLC, in a disclosure dated June 27, 2001, consented to
incorporation by reference in the registration statements (Nos.
33-75468, 33-75474 and 33-18615) on form S-8, and (Nos. 33-
95898, 33- 94596 and 333-8455) on Form S-3 of Danka Business
Systems PLC of KPMG's report dated June 7, 2001, relating to the
consolidated balance sheets of Danka Business Systems PLC and
subsidiaries as of March 31, 2001 and 2000, and the related
consolidated statements of operations, shareholders' equity
(deficit), and cash flows for each of the years in the three-
year period ended March 31, 2001, and related schedule, which
report appears in the March 31, 2001 annual report on Form 10-
K/A of Danka Business Systems PLC.
KPMG's report dated June 7, 2001 contains an explanatory
paragraph that states that the Company has a substantial amount
of indebtedness maturing on March 31, 2002 and April 1, 2002.
"The Company's need to restructure its indebtedness in order to
meet its obligations and repay such indebtedness when it matures
raises substantial doubt about the Company's ability to continue
as a going concern," KPMG said. "The consolidated financial
statements and financial statement schedule do not include any
adjustments that might result from the outcome of that
uncertainty."
DANKA BUSINESS: Reports $220.6 Million Net Loss in FY2001
---------------------------------------------------------
Danka Business Systems PLC reported an operating loss of $169.2
million in fiscal year 2001 compared to earnings from operations
of $117.1 million in fiscal year 2000. The loss is primarily due
to the decline in revenue, lower gross profit, write-offs of
excess, obsolete and non-recoverable inventories, and the write-
offs of goodwill and restructuring charge recorded in fiscal
year 2001.
The company recorded a net loss of $220.6 million in fiscal year
2001 compared to net earnings of $10.3 million in fiscal year
2000. The loss is primarily due to the decline in revenue, lower
gross profit, and the write-offs of goodwill and restructuring
charge recorded in fiscal year 2001.
The company has a credit agreement with a consortium of
international bank lenders through March 31, 2002. The credit
agreement requires that Danka maintain minimum levels of
adjusted consolidated net worth and cumulative consolidated
EBITDA, a ratio of consolidated EBITDA to interest expense, a
consolidated fixed charge coverage ratio and a consolidated
total leverage ratio.
As of March 31, 2001, the company owed approximately $515.0
million under the credit agreement. The available unused
commitments as of March 31, 2001 were $17.3 million. However,
new borrowings are limited to amounts necessary for ordinary
operational needs. The credit agreement prohibits the company
from incurring other significant indebtedness. Danka was
incurring interest on indebtedness under the credit agreement
during fiscal year 2001 at a weighted average rate of 7.64% per
annum. Effective interest rates under the credit agreement are
IBOR, or comparable interbank rates for non-United States
dollars, plus 2.75%.
Danka's indebtedness under the credit agreement is secured by
substantially all of their assets in the United States. The
credit agreement contains negative and affirmative covenants
which place restrictions on dispositions of assets, capital
expenditures, incurring additional indebtedness and creating
liens, prohibit the payment of dividends, other than payment-in-
kind dividends on participating shares, and require the company
to maintain certain financial ratios as described above.
Danka is not permitted to make any acquisitions of businesses,
except with the approval of our bank lenders. The company
cannot dispose of any assets outside the ordinary course of
business without the approval of bank lenders. While the company
is generally prohibited from incurring new indebtedness other
than under the credit agreement, it is permitted to borrow up to
$40.0 million at any one time outside of the credit agreement to
finance the purchase of high-volume digital copiers and to
secure those loans with liens upon the financed equipment.
Effective March 28, 2001, Danka obtained an amendment to the
credit agreement which modifies the financial covenants for the
period March 28, 2001 through July 16, 2001. During the waiver
period ending July 16, 2001, the company may receive advances
under the credit agreement only for ordinary operational needs.
The company said it will pay fees to bank lenders for the March
2001 amendment of approximately $1.5 million. These fees will be
expensed over the period ending July 16, 2001. Without this
amendment the company would have been in violation of the
financial covenants.
The company said that as a result of the magnitude of the write-
offs and charges taken in the fourth quarter of our 2001 fiscal
year and the explanatory paragraph contained in the company's
independent auditors' report on the 2001 fiscal year financial
statements stating that there is substantial doubt about our
ability to continue as a going concern, the company was in non-
compliance with the financial covenants and a covenant that
independent auditors' report must not contain such an
explanatory paragraph.
On June 7, 2001, Danka obtained an additional amendment to the
credit agreement excluding certain of the fourth quarter write-
offs and charges from the calculation of the financial covenants
effective through July 16, 2001 and waiving permanently the
requirement that the independent auditors' report on our March
31, 2001 financial statements must not contain such an
explanatory paragraph. After giving effect to this additional
amendment, the company concludes that it is in compliance with
the financial covenants that apply under the credit agreement
for the period through July 16, 2001.
Danka was not required to pay a fee in consideration of the June
7, 2001 amendment. However, the company anticipates that it
would be required to pay lenders a fee in respect of any further
amendment or waiver that the company obtains of the financial
covenants.
Danka said it intends to refinance indebtedness under the credit
agreement before July 17, 2001. If this is not possible, the
company expects that it will require an additional amendment to,
or a further waiver of, the financial covenants that will be in
effect under the credit agreement from that date, but could not
assure that lenders would agree to a further amendment or
waiver.
In the absence of a further amendment or waiver to the credit
agreement, after July 16, 2001, the company's lenders would be
entitled to exercise all of their rights under the credit
agreement. These rights include the right of lenders owning a
majority of outstanding indebtedness under the credit agreement
to decide to declare all amounts outstanding under the credit
agreement immediately due.
In March 1995, Danka issued $200.0 million in principal amount
of 6.75% convertible subordinated notes at par in a private
placement. The notes are due for repayment in full on April 1,
2002. The company says it does not currently have, or expect to
have, sufficient liquidity to repay in full both the
indebtedness under the senior credit agreement when it is due
for payment on March 31, 2002 and the convertible 10
subordinated notes when they are due for payment on April 1,
2002.
Danka is currently implementing a plan intended to reduce and
refinance indebtedness and permit it to maintain liquidity on a
long-term basis. The plan has three parts:
* the sale of DSI;
* the refinancing of $200 million of 6.75% convertible
subordinated notes due 2002 through an exchange offer;
and
* the refinancing of indebtedness under the credit
agreement.
On April 9, 2001 Danka entered into an agreement to sell DSI to
Pitney Bowes Inc. for $290.0 million in cash, subject to
adjustment depending on the value of DSI's net assets on
closing. The company anticipates that it will use the majority
of the net proceeds of DSI to repay part of its indebtedness
under the credit agreement. The company anticipates part of the
net proceeds of DSI will be used to finance the cash payable
under the exchange offer for the convertible subordinated notes,
to finance the costs of, and taxes associated with, the exchange
offer and costs associated with the refinancing of our senior
bank debt.
Danka said it is highly unlikely that the company will be able
to refinance its indebtedness under the credit agreement while
any substantial portion of the old notes are outstanding, and is
therefore making an exchange offer for its convertible
subordinated notes under which noteholders can exchange each
$1,000 in principal amount of notes for either:
* $400 in cash;
* $800 in principal amount of new zero coupon senior
subordinated notes due 2004;
* $1,000 in principal amount of new 10% subordinated notes
due 2008.
Payments under the cash option will be limited to a maximum
amount of $24 million, or $60 million in principal amount of
notes tendered. If more than $60 million in principal amount of
notes are tendered for the cash option, the company said it will
exchange $800 in principal amount of new zero coupon senior
subordinated notes for every additional $1,000 in principal
amount of old notes tendered.
Danka will distribute the $24 million in cash so that everyone
who tenders notes for the cash option will receive cash and new
senior subordinated notes in the same proportion as everyone
else who tenders notes under that option. If the company fails
to repay the new senior subordinated notes at maturity, holders
of the new senior subordinated notes will be entitled, at their
option, to convert all or part of their notes into Danka's
American depositary shares or ordinary shares.
The conversion price will be calculated by reference to the
closing market price of the company's American depositary shares
for the twenty trading day period ending on the maturity date.
This conversion right is subject to the prior approval of our
shareholders. The conversion right is also subject to compliance
with applicable laws and the obtaining of applicable regulatory
approval. The exchange offer commenced on February 20, 2001 and
is conditioned upon:
a) the company receiving valid tenders of at least 92% of
the outstanding amount of the 6.75% convertible
subordinated notes;
b) the refinancing of our senior bank debt;
c) consent to the exchange offer from parties to our tax
retention operating leases;
d) the closing of the sale of DSI; and
e) other customary conditions.
The expiration date for the exchange offer was 8:00 a.m., New
York City time, on June 29, 2001, subject to satisfaction or
waiver of conditions, and unless extended. The principal effect
of the exchange offer, if successful, would be to extend the
maturity of Danka's subordinated debt from 2002 to 2004 at the
earliest, which should assist the company to refinance its
indebtedness under the credit agreement. The principal amount of
the new subordinated notes outstanding following the exchange
offer will depend upon which options noteholders select in the
exchange offer.
Danka said the company anticipates it will refinance the
remaining balance of its indebtedness under the credit agreement
by drawing down a new credit facility, which may be provided by
some or all of its lenders under its existing credit agreement.
The company said it has reached an agreement with the steering
committee of its existing lenders on the principal terms of the
new credit facility, which will consist of revolver, term loan
and letter of credit commitments. The new credit facility is
subject to approval by 100% of the company's lenders,
finalization of definitive documentation, completion of the sale
of DSI and closing of the exchange offer. The new credit
facility will mature on the earlier of the third anniversary of
its closing or the date which is one day in advance of the
maturity of the senior subordinated notes being offered pursuant
to the exchange offer, which is expected to be March 31, 2004.
Danka anticipates closing the exchange offer, the refinancing of
its senior bank debt and the sale of DSI on or about June 29,
2001. Danka said if its plans are not successful, the company
may have to consider other alternatives to refinance its
indebtedness. These other alternatives may include the disposal
of some or all of its businesses and assets in addition to DSI.
The Internal Revenue Service has completed an examination of
Danka's federal income tax returns for the fiscal years ended
March 31, 1996 and 1995. Danka received a notice of proposed
deficiency in November 1999. The principal adjustments relate to
the timing of certain deductions associated with leased
equipment financing. The company has filed a protest and are
meeting with the Appellate Division of the Internal Revenue
Service to resolve this issue. If the Internal Revenue Service
were to prevail, net operating losses available for carry back
to these years would increase by corresponding amounts.
Discussions are ongoing and Danka expects that the issue will be
resolved favorably for the company and its resolution will not
have a material impact on the company's financial position,
results of operations or liquidity.
The Internal Revenue Service is in the process of completing an
audit of the company's federal income tax returns for the fiscal
years 1998 and 1997. The proposed adjustments relate to the
timing of certain deductions associated with Danka's acquisition
of Kodak's office imaging division, research and development
costs and deductions associated with leased equipment financing.
It is not anticipated that the resolution of this audit will
have a material impact on the company's financial position,
results of operations or liquidity.
Fiscal authorities in the Netherlands are engaged in an audit of
Danka's Dutch operations. The company does not believe that this
audit, or any result thereof, will have a material impact on its
financial position, results of operations or liquidity.
Danka is one of the world's largest independent suppliers, by
revenue, of photocopiers and office imaging equipment. The
company primarily markets these products, and photocopier
services, parts and supplies direct to customers in
approximately 30 countries. Most of the are manufactured by
Canon, Heidelberg, NexPress, Ricoh and Toshiba. Throughout
Europe, the company also markets private label photocopiers,
facsimile machines and related supplies directly to customers
under the Infotec trademark. In addition, the company markets
photocopiers, parts and supplies on a wholesale basis to
independent dealers through international operations.
Danka also provides worldwide document management services
through its outsourcing business, Danka Services International
(DSI). Services provided by DSI range from on- and off-site
document management services, including the management of
central reprographics departments, the placement and maintenance
of convenience copiers, print-on-demand operations and document
archiving and retrieval services.
DANKA BUSINESS: Shareholders Approve Management Division Sale
-------------------------------------------------------------
Danka Business Systems PLC (Nasdaq:DANKY) said that it has
adjourned the Extraordinary General Meeting to approve the sale
of its facilities management division, Danka Services
International (DSI). The meeting has been reconvened for 10:00
a.m., London time, Friday, June 29, 2001 at the offices of
Square Mile 6 Middle Street, London EC1A 7PH. The Company has
received proxies to vote on the resolution to approve the sale
of DSI from shareholders holding approximately 31% of the shares
entitled to vote on the resolution. Of these proxies,
approximately 99.9% are in favor of the resolution and less than
0.1% are against the resolution. The quorum for the
Extraordinary General Meeting is three shareholders present in
person or by proxy and a majority of the shareholders who vote
on the resolution is required to pass the resolution.
In addition, it was announced that the UK Secretary of State for
Trade and Industry will not refer the acquisition of DSI by
Pitney Bowes Inc. to the UK Competition Commission. This
completes the review of the acquisition of DSI by the UK
competition authorities.
On April 9, 2001, Danka Business Systems PLC entered into an
agreement to sell DSI to Pitney Bowes Inc., a global provider of
integrated mail and document management solutions, for $290.0
million in cash, subject to adjustment depending on the value of
DSI's net assets at closing of the sale. Closing of the sale
was conditioned upon the approval of shareholders, consent of
senior bank lenders, clearance of the sale, or expiry of the
applicable waiting period, under United Kingdom competition
legislation, and other customary conditions.
The sale of DSI has been cleared by U.S. and German competition
authorities. The sale of DSI will generate funds to repay part
of the company's senior bank debt, which Danka says should
assist in refinancing that indebtedness. The company also
anticipate the use of net proceeds of the sale of DSI to finance
the cash portion of the exchange offer for convertible
subordinated notes and to finance the costs of the exchange
offer.
EAST COAST: Delinquent Filing Basis for Delisting From OTC
----------------------------------------------------------
East Coast Beverage Corp. (OTCBB:ECBVE) had not filed the
appropriate Form 10-k and l0-Q within the prescribed due date
and subsequently has received a Staff Determination Notice from
NASDAQ notifying the Company that it has failed to comply with
the requirements set forth by SEC rules and that its securities
have been delisted from the OTC Bulletin Board.
"We are optimistic that our delinquent forms 10KSB and 10QSB
will be filed shortly and that we will be able to apply for
relisting on the OTCBB. Our distribution network continues to
grow and the Company continues to aggressively market and
distribute Coffee House USA(TM) all natural, Ready-To-Drink
bottled coffee drinks, HYPE(TM) Energy Drink and REAL POWER(TM)
sports beverage to more than 50,000 retail outlets across the
country," said Alex Garabedian, President and CEO of East Coast
Beverage, Corp.
About East Coast Beverages:
Based in Coral Springs, Florida, East Coast Beverage Corp.
(OTCBB:ECBVE), develops, produces and distributes Coffee House
USA(TM), a proprietary line of all natural, Ready-To-Drink
bottled coffee drinks, as well as distributes HYPE(TM) Energy
Drink and REAL POWER(TM), a sports beverage, in various flavors.
East Coast Beverage Corp. is currently expanding to become a
full beverage company offering a variety of products. For more
information, visit http://www.coffeehouseusa.com
EDISON INTERNATIONAL: Agrees To Sell Edison Select To ADT
---------------------------------------------------------
Edison International (NYSE: EIX) has entered into an
agreement to sell Edison Select, a wholly owned subsidiary of
Edison Enterprises and Edison International, to ADT Security
Services, Inc., a unit of Tyco International Ltd. (NYSE: TYC).
Terms of the agreement were not disclosed. Proceeds from the
sale will be used to pay down debt maturing this year at Edison
International as part of a recently announced refinancing plan.
Edison Select, formed in 1996, provides unregulated services to
predominantly residential customers through its two major
business lines, Edison Security and Edison OnCall. Edison
Security, formed in 1997, has quickly become one of the largest
providers of residential security services in Southern
California, and is currently the sixth largest residential alarm
monitoring company in the U.S. Edison OnCall provides
residential electrical warranty repair services. Edison Select
generated annual revenues of approximately $154 million at year-
end 2000.
Significant operational improvements at Edison Select in recent
years have positioned the Company to be an attractive addition
to ADT's well-established customer base. The sale of Edison
Select also complements Edison International's long-term
strategy of focusing on energy related markets.
ADT Security Services, Inc. a unit of Tyco Fire and Security
Services, is the largest single provider of electronic security
services to nearly 3 million commercial, federal and residential
customers throughout North America and Europe. ADT's total
security solutions include intrusion, fire protection, closed
circuit television, access control, critical condition
monitoring and integrated systems.
Edison International was advised by Lehman Brothers, Inc. The
transaction is targeted for completion by mid-August.
Based in Rosemead, Calif., Edison International is the parent
company of Southern California Edison, Edison Mission Energy,
Edison Capital, Edison O&M Services, and Edison Enterprises.
ERGOBILT INC: Richard Troutman Gains Shares in Loan Foreclosure
---------------------------------------------------------------
Richard C. Troutman, a retired ophthalmologic surgeon,
beneficially owns 12.9% of the outstanding common stock of
Ergobilt, Inc. represented in the 792,736 shares he holds. Dr.
Troutman has sole voting and dispositive powers over the stock.
In recent years Dr. Troutman has been involved in management of
his private investments.
Dr. Troutman acquired 292,736 shares of the Company's common
stock as a result of a merger between Ergobilt and BodyBilt
Seating, Inc. effected during February 1997. Dr. Troutman was
one of three shareholders in BodyBilt, Inc., which merged into
ErgoBilt. As consideration, he and the other two BodyBilt
shareholders received a combination of cash and stock in
ErgoBilt.
He acquired the remaining 500,000 shares as the result of the
entry of a final judgment of foreclosure on the shares. In
February 1998, Dr. Troutman loaned $1,600,000 to Gerald
McMillan, President of Ergobilt. Mr. McMillan executed and
delivered to Dr. Troutman a promissory note for that amount
together with a Pledge Agreement pursuant to which McMillan
pledged 500,000 shares of Ergobilt's common stock as security
for payment of the note. The note was due and payable on May 21,
1998.
McMillan defaulted in the payment of the note and on June 17,
1998, Dr. Troutman instituted a lawsuit against McMillan to
collect on the note and to foreclose on the pledged shares. On
or about December 7, 2000, pursuant to a settlement, approved by
the court, a final judgment of foreclosure was entered in favor
of Dr. Troutman. Under the final judgment, the shares were
directed to be transferred, unrestricted and free of legends,
from McMillan to the doctor. The shares were finally transferred
to him on June 1, 2001.
FIRST WAVE: Creditors Committee Supports Plan of Reorganization
---------------------------------------------------------------
First Wave Marine, Inc. has filed a Plan of Reorganization in
the Company's Chapter 11 proceeding with the U.S. Bankruptcy
Court for the Southern District of Texas. The filing of the Plan
should pave the way for the Company's emergence from bankruptcy
in early fall after requisite Bankruptcy Court approvals can be
obtained. The Plan calls for an exchange of all of First Wave's
11% Senior Notes for 96.7% of the common stock of the Company
which will significantly improve the balance sheet and financial
strength of the Company. The Committee of Unsecured Creditors
has stated that it will support the Plan.
On February 5, First Wave filed for relief under Chapter 11 of
Title 11 of the United States Code in the Southern District of
Texas. The Company will operate as a debtor-in-possession, which
will enable the Company to continue operations during the
reorganization proceeding.
Immediately after filing, the Company secured $20 million in
post petition financing to provide working capital during its
restructuring. At the same time, First Wave obtained Bankruptcy
Court authority to pay employees and certain qualifying critical
vendor and subcontractor pre-petition payables on an
uninterrupted basis. Since its Chapter 11 filing, First Wave has
successfully maintained normal operations.
First Wave President Grady Walker said, "Filing this Plan
represents the achievement of a major milestone in our efforts
to restructure the Company and paves the way for a speedy
emergence from bankruptcy. Additionally, the Plan dramatically
reduces the long term indebtedness of the Company, thus
improving its financial and competitive strength. Thanks to the
hard work of our employees and the loyalty and support of our
customers, vendors and lenders, First Wave's operations have
performed well throughout this Chapter 11. Now as we move
towards the conclusion of this restructuring, First Wave will
redouble its focus on core businesses and prepare to exploit its
new financial strength in order to better serve the evolving
needs of its customers."
The original majority shareholders, Messrs. Sam Eakin, Frank
Eakin and David Ammons, have elected to resign their positions
as officers and directors upon Bankruptcy Court approval to
pursue their interests in other companies. Upon approval, H.
Grady Walker III, Frank R. Pierce and Suzanne B. Kean will
be appointed as directors of the Company. Messrs. Walker and
Pierce and Ms. Kean will also continue in their current
respective management positions.
First Wave is a leading provider of shipyard and related
services, with five shipyards in the Houston-Galveston area. The
Company provides repair, conversion, new construction, and
related services for barges, boats, ships, offshore rigs, and
other vessels in the offshore and inland marine industries.
GENTIA SOFTWARE: NASDAQ Delists Shares
--------------------------------------
The American Depository Receipts representing Gentia Software
(Nasdaq: GNTI)'s ordinary shares will no longer be listed on the
Nasdaq National Market effective June 29, 2001. Gentia expects
that its securities will be eligible for listing on the OTC
Bulletin Board.
"While we no longer meet the one dollar minimum listing
requirement for the main board on Nasdaq, we believe our efforts
at restructuring the organization have been fruitful and we will
continue to focus our efforts on maintaining and growing Gentia
as a profitable business," said Steve Fluin, Chief Executive
Officer, Gentia Software. "Despite the general stress in the
technology marketplace, our strategy and performance management
suite of applications are still well received, and we will
continue to develop and sell best-of-breed applications for the
enterprise market."
About Gentia Software
Gentia Software (Nasdaq: GNTI) is a leading supplier of
intelligent analytical applications for enterprise performance
management and customer relationship management. Its product
suites sustain and improve business performance by improving the
quality of customer interactions and driving strategy and
performance management. Gentia incorporates unique technology
and the world-class consulting expertise of partners including
IBM, NCR, PWC and KPMG. Gentia offers best-in-class solutions
for Fortune 1,000 companies including Volvo, Bell Atlantic,
Credit Suisse First Boston and Motorola. For more information,
visit www.gentia.com
During April 2001, Gentia Software PLC and Gentia Software (UK)
Limited entered into a Company Voluntary Arrangement (CVA) under
the Insolvency Act 1986. This arrangement was approved by the
requisite majority of the Companies' members and creditors and
provides for monthly contributions by the Company sufficient to
pay preferential creditors in full and unsecured creditors
approximately 63.5% and 53.0%, respectively, of their claims
over a 54 month period.
GS TELECOM LTD: Auditors Doubt Going Concern Ability
----------------------------------------------------
The report of GS Telecom Ltd.'s independent accountants, BDO
Stoy Hayward, on the Company's financial statements for the
fiscal year ended June 30, 2000, includes a statement that the
Company has incurred significant recurring losses and has a
substantial accumulated deficit as of the end of its fiscal
year. The auditors have stated that there is a substantial doubt
about the ability of the Company to continue as a going concern.
There can be no assurances that the Company will be able to
generate any revenues or will be able to continue as a
going concern.
The company's quarterly report ending September 2000 stated, "If
the Company is unable to access the capital markets or obtain
acceptable financing, its results of operations and financial
conditions could be materially and adversely affected. The
Company may be required to raise substantial additional funds
through other means. If adequate funds are not available to the
Company, it may be required to curtail operations significantly
or to obtain funds through entering into arrangements with
collaborative partners or others that may require us to
relinquish rights to certain of our technologies or product
candidates that the Company would not otherwise relinquish.
While the Company has subsequently begun to receive commercial
revenues, there can be no assurances that its existing
commercial agreements will provide adequate cash to sustain its
operations. If the Company decides to expand its business
faster, or to geographic areas outside of Europe during the next
twelve months, it may need to raise further capital."
GS Telecom Limited was incorporated in Colorado on December 19,
1983 as Teleconferencing Systems International, Inc. Activities
of the Company from June 30, 1995 until November 15, 1997 were
primarily liquidation of operating assets and settlement of
obligations owed creditors and employees. Between 1998 and 1999,
the Company engaged in a series of transactions to acquire
certain intellectual property rights and E-commerce businesses.
These strategic relationships and acquisitions have provided the
Company with a technology in secure Internet payment systems.
While the Company will seek to acquire additional businesses in
E-commerce, there can be no assurance that the Company will be
successful in locating such opportunities, or having sufficient
financing to complete such acquisitions, and even if the Company
completes any such acquisition of an additional E-commerce
business, there can be no assurance that such business will be
profitable.
Since February 1999, the operations of the Company have been
focused on acquiring and developing businesses and technologies
in E-commerce. These businesses and technologies are inherently
risky, and there can be no assurance that any of these
businesses will be commercialized successfully, or if so
commercialized, will be profitable.
In the fiscal quarter ended September 30, 2000, (the current
quarter), the Company had no revenues from operations.
For the current quarter, the Company incurred an aggregate of
$1,292,243 in selling, general and administrative expenses,
versus $641,290 for the fiscal quarter ended September 30, 1999.
The primary reason for the income was professional expenses in
seeking acquisitions in the E-commerce field.
Net loss was ($1,642,384) for the current quarter, versus
($615,069) for the fiscal quarter ended June 30, 2000.
At September 30, 2000, the Company had $2,172,435 in current
assets versus $3,023,856 in current assets at September 30,
1999. At June 30, 2000, cash and cash equivalents amounted to
$52,401, with $400,000 held in escrow; at June 30, 2000, the
Company had cash and cash equivalents of $44,700, with $400,000
held in escrow. The balance of current assets primarily
consists of prepaid expenses in both periods.
The Company will require additional working capital during its
fiscal year ending June 30, 2001 and thereafter to implement its
business strategies, including cash for
(i) payment of increased operating expenses such as
salaries for additional employees; and
(ii) further implementation of those business strategies.
Such additional capital may be raised through additional public
or private financing, as well as borrowings and other resources.
To the extent that additional capital is raised through the sale
of equity or equity-related securities, the issuance of such
securities could result in dilution to the Company's
stockholders.
No assurance can be given, however, that the Company will have
access to the capital markets in the future, or that financing
will be available on acceptable terms to satisfy the Company's
cash requirements to implement its business strategies. If the
Company is unable to access the capital markets or obtain
acceptable financing, its results of operations and financial
conditions could be materially and adversely affected. The
Company may be required to raise substantial additional funds
through other means.
If adequate funds are not available to the Company, it may be
required to curtail operations significantly or to obtain funds
through entering into arrangements with collaborative partners
or others that may require it to relinquish rights to certain of
its technologies or product candidates that the Company would
not otherwise relinquish. While the Company has subsequently
begun to receive commercial revenues, there can be no assurances
that its existing commercial agreements will provide adequate
cash to sustain its operations. If the Company decides to expand
its business faster, or to geographic areas outside of Europe
during the next twelve months, it may need to raise further
capital.
ICG COMMUNICATIONS: Rejects 3 Telecom Site Leases
-------------------------------------------------
ICG Communications, Inc. asked Judge Walsh to approve their
decision to reject 3 commercial property leases used as
telecommunications sites. Gregg Galardi, Esq., at Skadden, Arps,
Slate, Meagher & Flom, advised Judge Walsh that the Creditors'
Committee has reviewed this Motion prior to its filing and
supports granting the relief requested. The Debtors use these
telecommunications sites and facilities. The Debtors have
determined that these sites are not necessary to the Debtors'
ongoing operations, but remain obligated under the leases and
contracts.
In the business judgment of the Debtors, it is no longer in the
best interests of these estates to maintain the leases. The rent
and other expenses due under the leases constitute an
unnecessary drain on the Debtors' cash flow. The rent and
expenses for the leases is approximately $2,970 per month. By
rejecting these leases, the Debtors can minimize unnecessary
administrative expenses. Moreover, the Debtors do not believe
that they could obtain any value for the leases by assignment to
third parties. Accordingly, the Debtors urge that rejection of
these leases is in the best interest of these estates and
their creditors.
The three leases are:
Site Landlord Lessee Debtor
---- -------- -------------
3240 Triangle Dr. SE Dan Allen ICG NetAhead, Inc.
Suite 225
3535 Del Web Ave. N.E.2d
Salem, OR Salem, OR
208 Hospital Dr. Dr. Gage Boyd ICG NetAhead, Inc.
Suite C 208 Hospital Dr.
Ft. Walton Beach, FL
2155 N. Park Lane Stanley Claypool
2d Floor 2155 N. Park Lane
North Charleston, SC
Agreeing with the Debtors' business argument, Judge Walsh
granted the requested authority to reject these three leases.
(ICG Communications Bankruptcy News, Issue No. 7; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
JLM INDUSTRIES: Congress Extends New $20 Million Revolver
---------------------------------------------------------
JLM Industries, Inc. (Nasdaq:JLMI), a leading global marketer,
distributor and manufacturer of commodity and specialty
chemicals, completed its previously announced financial
restructuring. The Company has completed financings totaling
$31.5 million, the proceeds of which were used to refinance the
Company's previous credit facilities and reduce outstanding
indebtedness.
The financings consisted of a $20.0 million revolving credit
line provided by Congress Financial Corporation, a $7.1 million
term debt facility provided by GATX Capital Corporation, a $1.9
million mortgage loan provided by SouthTrust Bank and a $2.5
million private placement of common stock led by Phoenix
Enterprises LLC.
John L. Macdonald, President and Chief Executive Officer of JLM
said, "The completion of our financial restructuring is a major
milestone for JLM. In addition to providing the Company with
additional liquidity and capital to continue growing our
business, the more favorable terms of the new credit facility
will contribute over $2 million in additional cash flow to our
operations annually."
Mr. Macdonald concluded, "We are excited to be involved with
lenders who understand our business and were also encouraged
that our private equity placement was oversubscribed. We were
very pleased with the enthusiastic reception the refinancing
received and appreciate the efforts of all parties to the
transaction. The success of this financing demonstrates the
financial community's confidence in our Company and supports
JLM's position as an industry leader."
JLM Industries, Inc. is a leading international marketer and
distributor of performance chemicals, olefins, petrochemicals,
engineered resins and plastics. The Company is listed as the
sixth largest chemical distributor in North America, and is a
manufacturer and merchant marketer of phenol and acetone. JLM
affiliates are conveniently located in over eighteen countries
around the world to serve its customers on a regional and global
basis. Visit the company web site at www.jlmi.com to learn
more.
LAIDLAW INC.: Files Chapter 11 in U.S. and CCAA in Canada
---------------------------------------------------------
As part of its financial restructuring, Laidlaw Inc. (TSE:LDM;
OTC:LDWIF) and five of its subsidiary holding companies have
filed voluntary petitions for reorganization under chapter 11 of
the U.S. Bankruptcy Code in the United States Bankruptcy Court
for the Western District of New York. The subsidiaries are
Laidlaw Investments Ltd., Laidlaw International Finance
Corporation, Laidlaw One, Inc., Laidlaw Transportation, Inc. and
Laidlaw USA, Inc.
As part of the U.S. filings, the company filed its Plan of
Reorganization, Disclosure Statement and ancillary exhibits. The
company and Laidlaw Investments Ltd. will be filing cases under
the Canada Companies' Creditors Arrangement Act (CCAA) in the
Ontario Superior Court of Justice in Toronto, Ontario later
today.
None of the company's operating units is included in the
filings; they are not affected by today's actions and will
continue to carry on their businesses as usual.
Stephen Cooper, managing partner of Zolfo Cooper LLC, a New
York-based consulting firm specializing in restructurings and
reorganizations and Laidlaw's vice chairman and chief
restructuring officer, said, "In light of Laidlaw Inc.'s
excessive leverage and the deterioration in value of certain
of its assets, our primary objective has been to minimize the
impact of the restructuring process on our operating companies -
their employees, customers and vendors. We believe achieving
this objective will maximize the value of the company for its
creditors and other parties in interest. Today's filings
represent a significant step in achieving this objective as
the restructuring process will be contained at the holding
companies level.
"Significant progress in our restructuring efforts, which is
reflected in the Plan and Disclosure Statement, has been made in
resolving issues between our bank lenders and bondholders. We
will now concentrate our efforts to resolve other litigation and
alleged claims involving the filed companies through additional
processes available to us under chapter 11 and the CCAA.
"The restructuring plan as filed, among other matters, sets
forth our views on the reorganized company's capital structure,
which anticipates that all of the equity in the reorganized
company will be distributed to the company's creditors.
Unfortunately, as we have previously discussed and is often the
case with reorganizations, the value of the company's assets
proved to be insufficient to support a recovery for the
company's current shareholders," Mr. Cooper continued.
Subject to receiving court approval and completing final
documentation, Laidlaw expects to enter into a $200 million
debtor-in-possession (DIP) financing facility with GE Capital.
The DIP financing would provide total borrowing availability of
$200 million, including a $100 million letter of credit sub-
facility. The company is today seeking, and expects to obtain,
interim authority to borrow up to $50 million under the
facility, subject to completion of definitive documentation.
Further, Greyhound Lines, Inc. and its direct subsidiaries,
which are not subject to the chapter 11 or CCAA filings, are
parties to a separate revolving credit facility which provides
total borrowing availability of up to $125 million. Current
availability under this facility is approximately $58 million.
It is anticipated that cash-on-hand of approximately $200
million and these financing sources - the DIP and the Greyhound
facility -- will provide the operating companies with sufficient
capital to maintain their business-as-usual climate during their
parent company's reorganization.
"We believe that our operating companies are generating more
than adequate cash flows to meet their working capital
requirements for the foreseeable future. They have been more
effectively managing cash and have continued to meet all their
obligations to their suppliers," said John R. Grainger, Laidlaw
Inc.'s president and chief executive officer.
"By filing chapter 11 and CCAA cases and obtaining the
additional financing provided by the $200 million DIP facility,
we will ensure that all our operating companies will be able to
maintain the normal high levels of service and safely deliver
service to their customers. As our operating companies are not
parties to these filings, our daily operations will continue as
usual while we complete a holding company-level restructuring
with our creditors. As reflected in our reorganization plan, we
intend to emerge from this process with a capital structure
appropriate for our long-term business plan," Mr. Grainger
continued.
Mr. Grainger emphasized that during the restructuring period and
beyond, employees will continue to be paid their wages and
health and welfare benefits without interruption and that no
layoffs are planned. The company's businesses will continue
operations as usual and vendors will continue to be paid in the
normal course of business.
Each of Laidlaw Inc.'s operating units is the largest in its
sector:
* Laidlaw Education Services provides school bus services
in the U.S. and Canada;
* Greyhound Lines, Inc. provides intercity bus
transportation in Canada, the U.S. and Mexico;
* Laidlaw Transit Services operates bus systems for public
transit authorities in the U.S. and Canada;
* American Medical Response, Inc. (AMR) is the largest
provider of ambulance services in the United States; and
* EmCare Holdings, Inc. and its operating units comprise
the leading U.S. emergency department management business.
OWENS CORNING: Reaches "Stand Still" Agreement With CSFB
--------------------------------------------------------
Norman L. Pernick, along with J. Kate Stickles of the Wilmington
firm of Saul Ewing LLP, joined by Charles O. Monk, II, Stephen
M. Goldberg, and Edith K. Altice of Baltimore, tell Judge
Fitzgerald that Owens Corning has reached a "stand still"
agreement in its disputes with Credit Suisse First Boston.
Under this agreement, Owens Corning wants to:
a) implement a Standstill and Waiver Agreement with certain
opponents, and to compromise and settle certain related
matters;
b) terminate all injunctive relief previously obtained;
c) with respect to certain opponents, dismiss all pending
litigation as to those opponents;
d) compromise and settle setoff rights asserted by Credit
Suisse and terminate the stay to that end, and
e) release, discharge and waive certain claims of the
opponents.
Under a 1997 Credit Agreement, Credit Suisse as agent for a
group of lenders made credit facilities of up to $1,800,000,000
available to Owens Corning and certain of its subsidiaries. This
agreement matures by its own terms on June 26, 2002. 47 banks
and other parties participate as lenders in this Credit
Agreement, with Credit Suisse serving as their collective agent.
On the Petition Date the Debtors began a proceeding attempting
to enjoin the bank group from exercising their purported rights
under the Credit Agreement against any Debtors or non-debtor
subsidiaries, declaring any non-debtor subsidiaries of the
Debtors in default under any separate banking agreements as a
result of the Debtors' filing these Chapter 11 proceedings,
accelerating the payments under any separate banking agreements
as a result of the Debtors' filing these cases, freezing,
impairing or otherwise moving against the funds of a nondebtor
subsidiary of the Debtors that are held by the bank group as
a result of the Debtors' filing these cases, and declaring the
rights and obligations of the parties under the setoff provision
of the Credit Agreement.
In the course of these proceedings, the Debtors and Credit
Suisse have agreed to periodic continuations of a restraining
order preserving the status quo for the benefit of these estates
and their creditors. This agreed injunction enjoined the bank
group and each of their respective branches, affiliates,
offices, agents and employees from exercising against designated
non-debtor entities any enforcement rights or remedies,
including setoff rights, without further Order of the Court.
However, the bank group were permitted to impose an
administrative freeze on any funds in accounts of the designated
non-debtors as of the Petition Date, and to terminate any
commitment of the bank group to make additional loans or
advances. Certain members of the bank group imposed an
administrative freeze on funds of certain Debtors and non-
debtors in the approximate amount of $46,000,000.
By this Motion, the Debtors request entry of an order
(i) approving a standstill agreement and authorizing the
Debtors to execute all documents and take all other
actions that may be reasonably necessary or appropriate
to effectuate the terms of the standstill agreement;
(ii) terminating the agreed injunction with respect to the
lenders participating in the standstill agreement;
(iii) dismissing the litigation against those lenders;
(iv) authorizing the Debtors to compromise and settle setoff
rights asserted by those lenders and terminating the
stay of the Bankruptcy Code with respect to those
setoff rights; and
(v) releasing, discharging and waiving N.V. Owens Corning
S.A., Owens Corning Composites S.P.R.L., and the
Alcopor related entities, consisting of Alcopor Owens
Corning Holding AG, Owens Corning Alcopor Belgium S.A.,
Owens Corning (UK) Holdings Limited, Owens-Corning
Fiberglas (U.K.) Limited; Owens Coring Alcopor UK Ltd.,
Owens Corning Polyfoam UK Ltd., and Owens Corning
Alcopor France S.A.S., and each of their respective
subsidiaries, affiliates, predecessors, successors and
assigns, from all actions, causes of action, claims,
damages, rights and remedies now existing or hereafter
arising, of the participating lenders relating to the
Credit Agreement; provided, however, to the extent that
any of the lenders have asserted a right to setoff or
recoup funds in accounts of OCSA, SPRL and the Alcopor
related entities which are currently subject to an
administrative freeze, such rights are preserved until
resolved under the terms of the Standstill Agreement.
The Standstill Agreement
Parties:
* The Debtors;
* non-debtor borrowers;
* non-debtor guarantors;
* consenting subsidiaries;
* non-debtor affiliates of Owens Corning;
* other non-debtor affiliates of Owens Corning that are
parties to bilateral credit facilities;
* non-debtor affiliates of Owens Corning that have funds
currently subject to an administrative freeze; and
* the participating lenders.
Standstill: During the standstill period, except for valid
setoff rights existing as of the Petition Date, the
participating lenders will be prohibited from exercising any
right or remedy for the enforcement, collection, or recovery of
any of the guaranteed obligations from any of the non-debtor
borrowers, the non-debtor guarantors, the consenting
subsidiaries, and the consolidated IPM affiliates (each a
covered non-debtor); and the participating lenders party to
certain scheduled bilateral credit facilities will not be
permitted, as a result of any default under those facilities
arising solely from the commencement of these Chapter 11 cases,
to exercise any enforcement right or remedy against any of the
covered non-debtors, bilateral affiliates, or setoff affiliates,
each non-debtors, that are parties to the agreement.
Standstill Period: The standstill period begins when the
conditions precedent to the effectiveness of the standstill
agreement have been satisfied, and ends on the earliest to occur
of
(i) the date of the filing of a plan or plans of
reorganization in these cases;
(ii) a termination due to an event of default; or
(iii) the date which is no earlier than October 31, 2002,
and which is 45 days after written notice has been
given to Owens Corning that the participating lenders
have elected to terminate the standstill period.
Setoff Rights: With respect to funds currently subject to an
administrative freeze by the participating lenders:
(i) to the extent the parties agree that any asserted
setoff right is valid, the frozen funds may be setoff;
(ii) to the extent the parties agree that any asserted
setoff right is not valid, the participating lenders
must release the frozen funds; or
(iii) to the extent the parties are unable to agree as to the
validity of any asserted setoff right, the
administrative freeze remains in full force and effect,
and the rights of all parties are preserved until
resolved by the parties or this Court.
Conditions Precedent: The Standstill Agreement becomes effective
only when on or prior to June 30, 2001, unless extended by the
parties,
(i) Credit Suisse notifies Owens Corning that it has given
due notice of the Standstill Agreement to the
participating lenders as provided in the Credit
Agreement;
(ii) the Standstill Agreement has been duly executed;
(iii) an order acceptable to Credit Suisse is entered
(x) terminating the injunction and dismissing the
litigation without prejudice with respect to the
participating lenders,
(y) approving the Standstill Agreement, and
(z) lifting the automatic stay to permit the exercise
of certain setoff rights;
(iv) an order acceptable to Credit Suisse is entered
authorizing the use of certain existing bank accounts,
the use of a modified cash management system, and
certain transfers between the Debtors and non-debtors;
and
(v) the fees and expenses due under the Standstill
Agreement have been paid.
Fees: Owens Corning agrees to pay
(i) a standstill fee of $3,000,000 to Credit Suisse for the
benefit of the participating lenders, and
(ii) a fee of $200,000 to each of Credit Suisse and Chase
Manhattan Bank, as co-chairs of the opponents' steering
committee. The standstill fee will be shared by the
participating lenders pro rata based on each
participating lender's outstanding commitment under the
Credit Agreement.
Costs and Expenses: Certain costs and expenses must be paid by
Owens Corning. These include
(i) reasonable fees and expenses incurred by Credit Suisse
as Agent incurred in connection with its participation
in the Chapter 11 cases or the enforcement of any
rights under the Credit Agreement, including payment
for the Agent's counsel and financial advisor, subject
(with respect to a financial advisor) to certain
monetary limits;
(ii) reasonable fees and expenses of participating lenders
incurred in connection with their participation on the
opponents' steering committee, subject to certain
monetary limits;
(iii) reasonable travel and related out-of-pocket expenses of
the participating lenders incurred in connection with
meetings of the opponents and related matters under the
Credit Agreement; and
(iv) reasonable fees and expenses of any participating
lender that is a party to a bilateral facility to the
extent so provided in such bilateral facility and
connected with the injunction and the enforcement of
rights under such bilateral facility.
Rights Preserved: Except to the extent expressly modified by the
Standstill Agreement, the rights of all parties to the Credit
Agreement or any bilateral facility are preserved. Any credit
facility between any of the opponents, and any non-debtor, that
is not specifically listed as subject to the Standstill
Agreement is excluded from its scope.
Covenants: The Standstill Agreement incorporates the covenants
from the DIP Loan Agreement and contains certain additional
covenants, both negative and affirmative. These include:
(i) a requirement that Owens Corning and each covered non-
debtor furnish certain pleadings and other court
documents to the Agent;
(ii) a requirement that the Debtor will not amend that
portion of the previously entered cash management order
governing the transfers of funds among IMP and its non-
debtor subsidiaries, affiliates and joint ventures,
without prior approval of the Agent;
(iii) a requirement that Owens Corning notify the Agent of
any failure by any covered non-debtor to make any
payment, or otherwise timely perform, under any
bilateral facility;
(iv) a requirement that Owens Corning provide the Agent
with certain notices and information (including
financial information);
(v) a prohibition on liens on assets of covered non-
debtors, subject to some limited exceptions for
ordinary-course transactions;
(vi) a prohibition on distributions, except for
distributions to other covered non-debtors and the
acquisition of stock in a covered non-debtor under a
compensation or benefit plan;
(vii) assurances that senior management of the covered non-
debtors and their professionals will confer with the
Agent and the opponents' steering committee;
(viii) restrictions on the prepayment of debt by covered
non-debtors subject to ordinary-course exceptions;
(ix) a prohibition on capital expenditures by covered non-
debtors, subject to the exceptions specified in the
cash management order; and
(x) a prohibition on mergers, sales and other corporate
action taken by the covered non-debtors, subject to
certain limited ordinary-course exceptions.
Alcopor Release: The Standstill Agreement includes a full and
unconditional release and waiver of all existing or future
actions, claims, rights and remedies relating to the Credit
Agreement which the opponents may have against OCSA, SPRL, and
the Alcopor related entities, except that any setoff rights
asserted by the opponents in accounts of OCSA, SPRL and the
Alcopor related entities current subject to an administrative
freeze are preserved. (Owens Corning Bankruptcy News, Issue No.
12; Bankruptcy Creditors' Service, Inc., 609/392-0900)
PACIFIC AEROSPACE: Nasdaq Delists Shares
----------------------------------------
The Nasdaq National Market delisted the securities of Pacific
Aerospace & Electronics, Inc. (Nasdaq: PCTH), a diversified
manufacturing company specializing in metal and ceramic
components and assemblies.
The Company was notified of the delisting late on June 27, 2001.
The reason for the delisting was the Company's failure to meet
the minimum bid price and net tangible assets requirements of
the Nasdaq Marketplace Rules. The Company expects that its stock
will be quoted on the OTC Bulletin Board.
"We continue to implement our plan to restructure our business
by divesting non-core and unprofitable operations," said Don
Wright, President and CEO of Pacific Aerospace & Electronics,
Inc. "We have made progress in implementing our plan, as
indicated by the recent sale of our U.S. Casting Division and
the downsizing of our Engineering & Fabrication Division. We
intend to continue making progress, while strengthening and
supporting our core electronics, engineering, and aerospace
machining operations. However, our plan is still in process, and
we are looking forward to seeing our accomplishments reflected
in the price of our stock and on our balance sheet. We hope that
this delisting will be a minor bump in the road, and we plan to
work diligently to requalify for listing on Nasdaq or another
exchange."
Pacific Aerospace & Electronics, Inc. is an international
engineering and manufacturing company specializing in
technically demanding component designs and assemblies for
global leaders in the aerospace, defense, electronics, medical,
telecommunications, energy and transportation industries. The
Company utilizes specialized manufacturing techniques,
advanced materials science, process engineering and proprietary
technologies and processes to its competitive advantage. Pacific
Aerospace & Electronics has approximately 800 employees
worldwide and is organized into three operational groups -- U.S.
Aerospace, U.S. Electronics and European Aerospace. More
information may be obtained by contacting the Company directly
or by visiting its Web site at www.pcth.com
PACIFIC AEROSPACE: Sells U.S. Casting Unit to Advanced Metals
-------------------------------------------------------------
Pacific Aerospace & Electronics, Inc. (Nasdaq: PCTH), a
diversified manufacturing company specializing in metal and
ceramic components and assemblies, announced on June 18, 2001
the recent sale of assets of the Company's U.S. Casting Division
located in Entiat, WA to a subsidiary of Advanced Aluminum LLC,
of Malvern, PA. The transaction included the sale of
substantially all of the assets of PA&E's casting division,
including working capital, land, buildings and equipment. The
buyer hired substantially all of the existing 90-plus employee
workforce at the Entiat manufacturing location. The transaction
closed on June 14, 2001. The terms were not disclosed.
The decision to sell the U.S. Casting Division is an integral
part of the Company's plans to divest businesses that no longer
fit its long-term business strategy. Going forward, the Company
intends to focus on its core technologies. The Company utilizes
patented advanced materials science in ceramics and metals to
manufacture components primarily for the aerospace, defense,
telecommunications and medical industries.
The divestiture will result in an approximate 10% reduction in
total company headcount and is expected to have a positive
financial impact on the Company's remaining business. The two
companies intend to maintain an active supplier-vendor
relationship to satisfy the combined needs of their customer
base.
"This is a major step towards completing our strategy to divest
non-core or non- performing assets and represents further
progress in our commitment to reshape PA&E by concentrating on
value-added products and proprietary technologies," said PA&E
President and CEO Don Wright.
"As a result of this strategy, we expect to have a company with
a significantly streamlined operational structure and a much
clearer business focus. While we do regret that the U.S. Casting
Division no longer fits into our long-term strategy, I am
confident that it will fit well with Advanced Metals and its
philosophy for providing its operating companies the focus to
grow and serve their customers better."
Pacific Aerospace & Electronics, Inc. is an international
engineering and manufacturing company specializing in
technically demanding component designs and assemblies for
global leaders in the aerospace, defense, electronics, medical,
telecommunications, energy and transportation industries. The
Company utilizes specialized manufacturing techniques, advanced
materials science, process engineering and proprietary
technologies and processes to its competitive advantage. Pacific
Aerospace & Electronics, Inc. has approximately 800 employees
worldwide and is organized into three operational groups -- U.S.
Aerospace, U.S. Electronics and European Aerospace. More
information may be obtained by contacting the company directly
or by visiting its Web site at www.pcth.com.
PARACELSUS HEALTHCARE: Ailing Company's Losses Continue
-------------------------------------------------------
Paracelsus Healthcare Corporation (PHC) was incorporated in
November 1980 for the principal purpose of owning and operating
acute care and related healthcare businesses in selected
markets. PHC and its subsidiaries presently operate 10 acute
care hospitals with 1,287 licensed beds in seven states, of
which eight are owned and two are leased.
On September 15, 2000, PHC filed a voluntary petition for
protection under Chapter 11 of Title 11 of the United States
Code with the United States Bankruptcy Court for the Southern
District of Texas. The bankruptcy filing is limited to PHC, the
parent company, and does not include any of PHC's hospital
subsidiaries. During the Chapter 11 proceeding, PHC is operating
as a debtor-in-possession under the authority of the Bankruptcy
Code.
The Company's continuing operating losses and liquidity issues
and PHC's Chapter 11 proceeding raise substantial doubt about
the Company's ability to continue as a going concern. The
ability of the Company to continue as a going concern is
dependent upon, among other things,
(i) the Company's ability to comply with the terms of the
subsidiary level credit facility,
(ii) timely effectiveness of the Amended Plan,
(iii) the Company's ability to achieve profitable operations
after the Effective Date, and (iv) the Company's
ability to generate sufficient cash from operations to
meet its obligations.
Net revenue for the three months ended March 31, 2001, was $90.3
million, a decrease of $4.8 million, or 5.0%, from $95.1 million
for the same period in 2000. The decline occurred primarily at
the Company's Fargo, North Dakota facility due to the opening of
a competing hospital in November 2000. Excluding the North
Dakota facility, the net revenue for 2001 increased by 9.6%, or
$6.6 million, compared to 2000, due primarily to a combination
of increased patient volumes in certain markets and improved
pricing for certain hospital services.
Loss before income taxes was $4.8 million for the three months
ended March 31, 2001, and included
(i) reorganization costs of approximately $2.5 million for
professional fees and incremental insurance costs
incurred in connection with the Company's
reorganization efforts and
(ii) an unusual charge of $1.1 million comprised of a
$772,000 charge for employee termination costs incurred
as part of the Company's efforts to reduce corporate
overhead and a $347,000 charge for potential settlement
costs associated with the Fentress investigation.
Loss before income taxes was $8.5 million for the three months
ended March 31, 2000 and included reorganization costs of
approximately $2.5 million for professional fees.
PILLOWTEX: Wants to Sell Beacon Assets to Core Point
----------------------------------------------------
Judge Robinson grants Pillowtex Corporation's motion to enter
into an Expense Reimbursement Agreement with Core Point Capital,
L.P., for the sale of Debtor Beacon Manufacturing Company's
assets.
The assets involved were used in the business of designing
manufacturing and selling blankets. Core Point is the only
seriously interested buyer of these assets.
However, Core Point earlier refused to proceed with the
negotiations without reimbursement of certain expenses if:
(a) Prior to April 13, 2001, the Debtors enter into a
binding agreement to sell the blanket division assets to another
party or
(b) Core Point discovers a material misstatement of fact in
written materials provided to Core Point prior to execution of a
proposed Expense Reimbursement Agreement.
The material provisions of the Expense Reimbursement Agreement
are as follows:
(a) The total amount payable by Beacon under the Expense
Reimbursement Agreement shall not exceed $100,000;
(b) Beacon shall have no obligation to make any payment
under the Expense Reimbursement Agreement unless:
(i) Beacon enters into a binding, definitive agreement
to sell the Blanket Division Assets to a party
other than Core Point or,
(ii) Written materials containing an affirmative untrue
statement of a material fact regarding the Blanket
Division Assets (except for certain information
provided by members of Beacon management
participating with Core Point in the proposed
acquisition) were provided to Core Point prior to
the date of the Expense Reimbursement Agreement and
were used by Core Point in its evaluation. Core
Point must provide Beacon with written notice that
specifies the untrue statement that Core Point is
discontinuing the evaluation.
(c) The Expense Reimbursement Agreement will terminate
automatically on the earlier of:
(i) the date on which a definitive purchase agreement
for the Blanket Division Assets is executed and
delivered by Beacon and Core Point, or
(ii) April 13, 2001 (or a later date that the Debtors
and Core Point agree to in writing).
(d) Debtor Pillowtex Corporation will guarantee Beacon's
performance of its obligations under the Expense Reimbursement
Agreement.
William H. Sudell, Esq., at Morris, Nichols, Arsht & Tunnell, in
Wilmington, Delaware, notes that the agreement is reasonable and
well within the range of due diligence expense provisions
typically as part of the proposed sale.
In addition, Mr. Sudell relates, the Debtors have already
discussed the agreement with the counsel for the Secured Lenders
and the counsel for the Creditors' Committee. Neither of them
opposed the relief requested. (Pillowtex Bankruptcy News, Issue
No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900)
PINNACLE ENTERTAINMENT: S&P Lowers Ratings with Negative Outlook
----------------------------------------------------------------
Standard & Poor's lowered its ratings for Pinnacle Entertainment
Inc. The outlook remains negative.
The downgrade follows the company's announcement that operating
results for the second quarter ending June 30, 2001, and full-
year 2001 would be well below previous estimates, due to
weakness at several of the company's properties. In addition,
the lower ratings reflect Standard & Poor's expectation that the
company's overall financial profile is not likely to improve
materially, due to competitive pressures and an increase in
capital spending over the intermediate term.
Ratings reflect the company's continued lower-than-expected
results from its property in southern Indiana, competitive
pressures in many markets served, high debt balances, and
increased capital spending levels, offset by adequate financial
flexibility with significant cash balances and availability
under the company's revolving credit facility.
PLAYDIUM ENTERTAINMENT: Appoints Haverstock As President & CEO
--------------------------------------------------------------
The Board of Directors of Playdium Entertainment Corporation
(PEC) announced Cal Haverstock will assume the role of President
and Chief Executive Officer.
Mr. Haverstock joined the Playdium Board of Directors on June
28, 2000 bringing extensive experience in general and operations
management, strategic planning and financial management. He
replaces Jon Hussman who has left the company to pursue new
opportunities in the entertainment and internet gaming sector.
Mr. Hussman will continue to act as a consultant to the new CEO
and the board of directors.
Mr. Haverstock will lead planning and operations for Playdium as
the company works to restructure its debt obligations under the
protection of the Companies' Creditors Arrangement Act (CCAA).
PEC continues to operate normally at its four major locations in
Toronto, Mississauga, Edmonton and Burnaby, and at its 50 game
centres across Canada.
Playdium Entertainment Corporation is the leader in the
introduction of location-based entertainment centres in Canada
and is dedicated to developing and operating entertainment
centres worldwide. Playdium operates Playdium Mississauga,
Playdium Burnaby, Playdium Toronto and Playdium Edmonton. In
addition, PEC has equipped and operates 50 game centres across
Canada.
PRIME RETAIL: Sets Annual Stockholder Meeting for August 14
-----------------------------------------------------------
The Annual Meeting of Stockholders of Prime Retail, Inc., a
Maryland corporation, will be held at the Baltimore World Trade
Center, Maryland Room, 21st Floor, 401 East Pratt Street,
Baltimore, Maryland, on August 14, 2001 at 11:00 a.m., local
time, to consider and vote on the following matters (while no
exact figures and record date have yet been disclosed by the
Company):
(i) To consider and approve an amendment to the Company's
Charter to:
(a) effect a reverse stock split whereby each ___
outstanding shares of common stock, par value $0.01
per share, would be automatically converted into
one share of outstanding Common Stock, and
(b) reduce in the same proportion as the outstanding
shares are reduced by the reverse stock split, the
number of authorized shares of Common Stock from
150,000,000 to __________;
(ii) To elect three Directors;
(iii) To ratify the appointment of Ernst & Young LLP as
independent auditors of the Company for the fiscal year ending
December 31, 2001; and
(iv) To transact such other business as may properly come
before the Meeting or any adjournment(s) or postponement(s)
thereof.
Holders of record of the Company's Common Stock, $0.01 par value
per share, at the close of business on ______________, 2001
shall be entitled to notice of, and to vote with respect to all
matters to be acted upon at the Meeting.
PSINET INC: Taps Nixon Peabody as Special Counsel
-------------------------------------------------
Judge Gerber signed an interim order authorizing PSINet, Inc. to
employ and retain Nixon Peabody as their special counsel,
effective as of the commencement of the PSINet cases, subject to
final hearing before the Court on July 2, 2001 at 2:00 p.m.
(PSINet Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
UNITED SHIPPING: Shares Face Potential Delisting
------------------------------------------------
United Shipping & Technology Inc. (Nasdaq:USHP has received a
letter from Nasdaq to the effect that the Company is not in
compliance with the requirements for continued listing on the
Nasdaq SmallCap Market because its market capitalization has
fallen below the amount required for continued listing. The
Company has been given 30 days to regain compliance or it may be
delisted. In such event, the Company would utilize its right to
appeal the determination.
ULTRADATA SYSTEM: Plans to Appeal Nasdaq Delisting
--------------------------------------------------
Ultradata Systems, Inc. (Nasdaq:ULTRE) said that it has been
notified that the Nasdaq Listings Qualifications Panel has
determined to delist Ultradata Systems from the Nasdaq Small Cap
Market as of June 28, 2001.
According to Nasdaq, the Company has been in violation of the
Marketplace rules since it failed to file the required audited
10-KSB by March 31, 2001, following the withdrawal of its
auditors BDO Seidman in April. The company filed a Form 8-K with
regard to that action on April 13, 2001. The Company has engaged
Weinberg & Co., C.P.A., to complete the filing of the 10-KSB for
2000 and the 10-QSB for the first quarter as soon as possible.
Unaudited results have been disclosed in earlier press releases
for both the year 2000 and the first quarter 2001.
Monte Ross, CEO of Ultradata, said, "We were disappointed by the
ruling of the Qualifications Panel and we are planning an appeal
in accordance with the procedures prescribed by Nasdaq. As soon
as our filings are complete, we will file for listing on the
Bulletin Board, pending the outcome of the appeal."
Ultradata Systems, Inc. is a leader in the field of hand-held
electronic information systems. Based in St. Louis, MO,
Ultradata Systems develops, manufactures and markets hand-held
travel information computers, global positioning system (GPS)
products, and information systems used for locating destinations
and trip planning. The company's lead product, the hand-held
electronic travel information guide, has sold more than three
million units and is marketed through chain drug, mass and
consumer electronic retail chains, home centers, the automotive
aftermarket, cable TV direct marketers, premium incentive
catalogs and other channels. These computers use Ultradata's
patented data compression technology and proprietary database to
provide directions to thousands of destinations and services
along highways and in major metropolitan areas. Ultradata
Systems owns approximately one fourth of Talon Technology
Limited, a New Zealand-based company that makes and markets GPS
and marine navigation systems.
VENCOR INC: Deregisters Shares Under Vencor Plan
------------------------------------------------
Kindred Healthcare, Inc. (formerly Vencor, Inc.), a Delaware
corporation, had previously filed a Registration Statement with
the Securities and Exchange Commission on August 13, 1998, to
register 400,000 shares of the Company's former common stock,
par value $0.25 per share, for issuance in accordance with the
THC Retirement Savings Plan. The THC Plan was merged into the
Vencor Retirement Savings Plan on December 31, 1999. No shares
have been issued under the THC Plan.
On September 13, 1999, the Company and substantially all of its
subsidiaries filed voluntary petitions for protection under
Chapter 11 of Title 11 of the United States Code in the United
States Bankruptcy Court for the District of Delaware.
On March 1, 2001, the Bankruptcy Court approved the Company's
fourth amended plan of reorganization filed with the Bankruptcy
Court on December 14, 2000, as modified at the confirmation
hearing. The order confirming the Amended Plan was signed on
March 16, 2001 and entered on the docket of the Bankruptcy Court
on March 19, 2001. The Amended Plan became effective on April
20, 2001.
In connection with its emergence, the Company also changed its
name to Kindred Healthcare, Inc. In connection with the
bankruptcy, all shares were cancelled under the terms of the
Amended Plan. In addition, the Company ceased offering the
shares as an investment alternative under the THC Plan during
1999.
Pursuant to the Company's undertaking in the Registration
Statement, a Post-Effective Amendment was filed by the Company
to deregister 400,000 shares, which constitute all of the
securities registered pursuant to the Registration Statement but
remaining unissued under the THC Plan. All remaining unissued
shares under the Vencor Plan are being deregistered separately
on a post-effective amendment.
WARNACO GROUP: Court Gives Nod to Payment of Pre-petition Taxes
---------------------------------------------------------------
The Warnaco Group, Inc. sought and obtained an order authorizing
them to pay pre-petition sales, use and other "trust fund" taxes
to the respective taxing authorities, without prejudice to their
right to contest the amount of any taxes.
In their ordinary course of business, the Debtors incur various
taxes such as state and local taxes, use tax liabilities from
their customers, and other taxes in foreign countries.
Kelley A. Cornish, Esq., at Sidley Austin Brown & Wood, in New
York, convinced the Court that the Debtors have no equitable
interest in the taxes and are obligated to make payments. Non-
payment or delay in the payment of these taxes would only result
administrative difficulties and potential lawsuits that would
hamper the Debtors' reorganization efforts, Ms. Cornish
explains. (Warnaco Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WASHINGTON GROUP: Gets 3-Yr Extension for $200 Million Contract
---------------------------------------------------------------
Washington Group International, Inc. received a three-year
extension to continue hazardous waste, environmental and
remediation services for the U.S. Army Corps of Engineers' Tulsa
District under its Total Environmental Restoration Contract
(TERC).
The contract has $200 million in capacity remaining.
"The extension of this contract validates Washington Group's
past successes with the Corps of Engineers, and shows confidence
in our abilities to continue to support the Corps," said Stephen
G. Hanks, President and Chief Executive Officer for Washington
Group. "We look forward to continuing this
productive relationship."
"The TERC contract, along with several other contracts recently
awarded to Washington Group, further underscores our commitment
to operational excellence and adds to our momentum in the
marketplace," Hanks added.
Under terms of the contract, Washington Group will continue to
perform services for the Corps of Engineers Tulsa District,
which administers this Southwest Division Regional contract.
Washington Group will provide engineering and construction
services for the Little Rock Air Force Base in Little Rock,
Ark., the Popile Superfund Site in El Dorado, Ark., the Pine
Bluff Arsenal, Pine Bluff, Ark., the Inner Harbor Navigation
Canal in New Orleans, La., and the Clinton-Sherman Industrial
Airpark in Burns Flat, Okla.
Washington Group's remediation services for Tulsa TERC have
included site investigations and sample analysis for soil and
groundwater contamination, feasibility studies to evaluate
remedial alternatives, removal of lead-contaminated soil from
residential properties, underground storage tank removal,
asbestos removal and building demolition, stabilization of
lead-contaminated soil, hazardous waste remediation, as well as
management and related construction support activities.
The Tulsa TERC is a 10-year turn-key environmental and hazardous
waste services contract originally awarded to Washington Group
in August 1994. The contract's purpose is to provide hazardous
waste and environmental remediation services to the Corps of
Engineers and other federal and state agencies within the states
of Oklahoma, Arkansas, Louisiana, Texas, and New Mexico.
Washington Group International, Inc. is a leading international
engineering and construction firm with more than 35,000
employees at work in 43 states and more than 35 countries. The
company offers a full life-cycle of services as a preferred
provider of premier science, engineering, construction, program
management, and development in 14 major markets.
Markets Served
Energy, environmental, government, heavy-civil, infrastructure
and mining, nuclear-services, operations and maintenance,
petroleum and chemicals, industrial process, pulp and paper,
telecommunications, transportation, and water-resources.
WILLCOX & GIBBS: Achieves Near-Break-Even Quarterly Results
-----------------------------------------------------------
Willcox & Gibbs, Inc. is a holding company engaged through its
subsidiaries in the distribution of replacement parts, supplies
and ancillary equipment to apparel manufacturers, decorated
products manufacturers and other sewn products industries.
The Company currently operates through several principal
business units:
a) its Sunbrand division, which is a distributor of
replacement parts, supplies and ancillary equipment to
manufacturers of apparel and other sewn products;
b) its Macpherson Meistergram Inc. subsidiary, which is a
distributor of replacement parts, supplies and ancillary
equipment to manufacturers of decorated products, and
c) its Leadtec Systems, Inc. subsidiary, which develops and
supplies computer-based production planning and control
systems for the apparel industry.
In addition, the Company's Emtex Leasing Corporation subsidiary
provides lease financing for equipment and software sold by the
Company's businesses and embroidery equipment formerly sold by
Macpherson. Sunbrand, the Company's largest business unit,
provides distribution, administrative services, accounting and
collection functions for Macpherson.
Net sales were $19.0 million in the first three months of 2001,
a decrease of $3.0 million, or 13.5%, as compared to the first
three months of 2000. The decline was the result of a continuing
decline in the U.S. of apparel manufacturing and markets for
decorated products, including screen printing and embroidery
products. The decline was also the result of the sale of the
embroidery machine business in January 2000 and the sale of the
Company's Unity division in May 2000.
Net income in the first three months of 2001 was $7,000,
compared to a net loss of $5.0 million in the first three months
of 2000. The Company has funded its working capital
requirements, capital expenditures and acquisitions from cash
provided by operations, borrowings under its credit facilities
and proceeds from the issuance of debt and equity securities.
Management believes that cash flows from operations, sales of
assets and its existing credit facility will provide sufficient
liquidity for at least the next 12 months.
At March 31, 2001, the Company had outstanding indebtedness of
$19.7 million and cash of $0.4 million. In addition,
approximately $0.7 million was available for borrowings under
the Company's Credit Agreement. The Company's capital
expenditures during the first three months of 2001 aggregated
approximately $0.1 million. Such expenditures were primarily for
computer, office and warehouse equipment and improvements.
Net cash used in the Company operating activities was $0.7
million during the first three months of 2001 principally due to
working capital changes. Net cash provided by financing
activities during the first three months of 2001 aggregated $1.0
million.
WINSTAR COMMUNICATIONS: Affiliated Computer Moves for Set-Off
-------------------------------------------------------------
Affiliated Computer Services (ACS) is an information technology
outsourcing company that provides infrastructure technology,
outsourcing business services and other professional services to
its clients. ACS and Winstar Communications, Inc. are parties to
an Agreement for Technology Services (ATS), a Telecom Agreement,
and an IRU Agreement.
Under the recently amended ATS Agreement, the Debtors committed
to purchase $16,825,000 worth of ACS technology services over a
3-year period starting 2001. ACS provides Winstar's staffing for
billing on long distance customer calls, local customer calls,
and call collection and mediation at Winstar's Rockville,
Maryland and Herndon, Virginia facilities.
At the Debtors' request, ACS also agreed to purchase some
reciprocal services from Winstar under a Telecom Agreement
wherein Winstar provides professional services and
telecommunication services to ACS.
The Debtors further requested ACS to purchase an interest in an
OC3 cable line and underlying fiber between three city pairs.
ACS agreed to acquire the OC3 Cable Line from Winstar at a cost
of approximately $4,500,000 pursuant to the IRU Agreement.
Tara L. Lattomus, Esq., at Saul Ewing LLP, in Wilmington,
Delaware, contends that the 3 ACS Agreements are actually an
integrated business transaction between the Debtors and ACS. The
ATS and Telecom agreements, for example, contain certain setoff
provisions permitting the setoff of amounts owing against
certain accounts receivable.
But Winstar's dramatic downsizing, financial difficulties, and
cloudy future have alarmed ACS. If the Debtors can't meet their
obligations under the ACS Agreements, Ms. Lattomus notes, the
backlash could cause significant operational problems for ACS.
Ms. Lattomus tells Judge Farnan that the Debtors are already
showing signs that it could no longer fulfill its obligations
under the ACS Agreements. Under the ATS Agreement, Winstar
failed to remit payment for 6 months. As of Petition Date,
Winstar owes ACS $2,457,403.20. ACS is convinced that the
Debtors will not be able to pay its obligations for the year
2001, which is equivalent to $6,967,000. ACS also doubts if the
Debtors can deliver the services it promised under
the Telecom and IRU Agreements.
By this motion, ACS asks Judge Farnan to grant them relief from
the automatic stay so that ACS will be permitted to setoff its
pre-petition debts to Winstar with the amounts owed by Winstar
to ACS. Ms. Lattomus discloses that ACS holds a pre-petition
claim against Winstar for $2,457,403.20 while ACS owes Winstar
$498,731.19 on pre-petition invoices pursuant to the Telecom
Agreement and IRU Agreement.
But even after the setoff, Winstar still owes ACS an excess of
$1,958,672.10. So ACS also seeks the Court's authority to recoup
all amounts due under the IRU Agreement for the balance of 2001
and thereafter, including quarterly payments of $282,731 as well
as any additional maintenance, connection and other charges. The
same goes for the Telecom Agreement where ACS seeks to recoup
any amounts it may owe to Winstar in 2001 and thereafter, which
is estimated to be approximately $27,000 per month.
* * *
Simultaneously, ACS filed a separate motion seeking an order:
(a) Compelling the Debtor to immediately assume or reject
the ATS Agreement;
(b) Allowing ACS an administrative claim for all amounts
due by Winstar to ACS as of the entry of the order on account of
post-petition services provided by ACS to the Debtor;
(c) Compelling the Debtor to immediately pay such
administrative claim.
According to Ms. Lattomus, the decision to assume or reject the
ATS Agreement will not be difficult for the Debtors. ACS is
positive that the Debtors will eventually reject the ATS
Agreement since there is no way that the Debtors can comply with
its contractual obligations at a current usage of approximately
$130,000 per month. In fact, the Debtors have filed a motion to
reject the ATS Agreement.
Ms. Lattomus also tells Judge Farnan it is unfair that ACS is
required to continue to make payments to the Debtors under the
IRU and Telecom Agreements when the Debtors can't do the same
under the ATS Agreement. As of Petition Date, ACS has been
providing services to Winstar under the ATS Agreement on a
credit basis. ACS hasn't seen a dime from the Debtors since
then. This prompts ACS to request for immediate allowance of an
administrative claim for all services they provided to the
Debtors since the Petition Date. As of this motion, Winstar owes
$187,132 to ACS for post-petition services. Additional amounts
will likely be owed by the date of hearing on this motion.
Ms. Lattomus explains that ACS first tried to air their
concerns, out of court, to the Debtors. But, despite their
efforts to talk about these issues, the Debtors responded in
silence. (Winstar Bankruptcy News, Issue No. 7; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ZYMETX: Nixes Reverse Stock Split After Nasdaq Delisting
--------------------------------------------------------
ZymeTx officials said they will not challenge the recent
decision by a Nasdaq review panel to delist the biotech and
disease management company's stock and will not, therefore,
pursue a reverse stock split as previously announced.
ZymeTx, Inc. (OTCBB:ZMTX) is a biotech company engaged in viral
disease detection.
"We are focused on several opportunities to secure additional
financing and capital for the Company at this time," commented
Norman Proulx, President and Chief Executive Officer at ZymeTx.
"In that regard, we are hopeful on several fronts and intend to
aggressively pursue research advancements and to broaden the
Company's distribution channels, so we will not pursue a
reverse stock split."
The Company reported yesterday the signing of a significant,
definitive agreement with Polaroid Corporation (NYSE:PRD)
pertaining to a new viral disease detection technology with
numerous applications.
"Our energies are devoted to the encouraging advancements we are
making with the next-generation viral disease detection and
diagnostic platform coming forth from the scientific work with
Polaroid," Proulx said. "We also continue to cultivate the
market in Japan, where our rapid point-of-care flu diagnostic
test, ZstatFlu(R), is making inroads. Challenging the Nasdaq's
decision at this time would distract us from the favorable
progress we are making in our research and marketing," Proulx
concluded.
About ZymeTx, Inc.
ZymeTx, Inc., headquartered in Oklahoma City, is a biotechnology
company engaged in the development of technology to produce
products for the diagnosis and treatment of viral disease, viral
management and disease surveillance. The Company developed
ZstatFlu(R), the world's first rapid point-of-care test capable
of detecting both Influenza A and B, and the National Flu
Surveillance Network(TM) (NFSN), a network of physician sites
across the country that use ZstatFlu to track influenza in their
communities and practices. Additional information on ZymeTx and
NFSN can be obtained by accessing the web sites at
www.zymetx.com and www.fluwatch.com
BOND PRICING: For the week of July 2 - 6, 2001
----------------------------------------------
Following are indicated prices for selected issues:
Algoma Steel 12 3/4 '05 18 - 20 (f)
Amresco 9 7/8 '05 57 - 59
Arch Communications 12 3/4 '05 8 - 11 (f)
Asia Pulp & Paper 11 3/4 '05 25 - 27 (f)
Chiquita 9 5/8 '04 66 - 68 (f)
Friendly Ice Cream 10 1/2 '07 55 - 58
Globalstar 11 3/8 '04 6 - 7 (f)
Level III 9 1/8 '04 52 - 54
PSINet 11 '09 7 - 9 (f)
Revlon 8 5/8 '08 47 - 50
Trump AC 11 1/4 '06 66 - 68
Weirton Steel 10 3/4 '05 38 - 40
Westpoint Stevens 7 3/4 '05 40 - 42
Xerox 5 1/4 '03 81 - 83
*********
Bond pricing, appearing in each Monday's edition of the TCR, is
provided by DLS Capital Partners in Dallas, Texas.
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Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
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of interest to troubled company professionals. All titles are
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For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
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Copyright 2001. All rights reserved. ISSN: 1520-9474.
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