/raid1/www/Hosts/bankrupt/TCR_Public/010821.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, August 21, 2001, Vol. 5, No. 163
Headlines
ALAMOSA DELAWARE: S&P Rates Senior Unsecured Notes at CCC
ALBANO CLEANERS: Files Chapter 22 Petition in E.D. Virginia
ALBANO CLEANERS: Case Summary & 20 Largest Unsecured Creditors
AMES DEPARTMENT: Files Chapter 22 Petition in S.D.N.Y.
AMES DEPARTMENT: Case Summary & 20 Largest Unsecured Creditors
AMF BOWLING: Committee Votes to Retain HLZ as Financial Advisor
BE AEROSPACE: S&P Assigns BB+ Rating to $150M Credit Facility
COMDISCO INC.: Secures Okay to Pay Employee & Contractor Claims
CONSUMERS PACKAGING: Owens-Illinois Buys Glass Container Assets
CONSUMERS PACKAGING: Anchor Chairman To Buy Unit Shares
DERBY CYCLE: Case Summary & 20 Largest Unsecured Creditors
DOT HILL SYSTEMS: Receives NYSE Notice Re Listing Requirement
EASYRIDERS INC.: Reports Profits & Positive EBITDA in Q2
ELCOTEL INC.: Books $511K Net Loss in Second Quarter
ENTRADA NETWORKS: Faces Possible Delisting From Nasdaq
FEDERAL-MOGUL: Fitch Downgrades Unsecured Debt Ratings to CCC
FINOVA GROUP: Gets Court Okay To Assume & Assign 6th Ave. Lease
GENESIS HEALTH: Units Seek to Acquire APS Assets from Mariner
GOLDEN BOOKS: Court Approves Sale To Random House/Classic Media
ICG COMMS: U.S. Trustee Balks at Committee Hiring HLHZ
IMPERIAL SUGAR: Agrees To Sell Michigan Sugar Operations
INDUSTRY STANDARD: Suspends Publishing; Plans To File Chapter 11
INFORMATION MANAGEMENT: Agrees To Sell Assets To AIT For $16.5M
INSPIRE INSURANCE: Devises Reverse Stock Split to Shun Delisting
KMC TELECOM: S&P Downgrades Senior Secured Ratings To CCC+
KRYSTAL CO.: S&P Places B+ Ratings on CreditWatch
LAIDLAW INC.: Requests Court To Set Deadline For Filing Claims
LERNOUT & HAUSPIE: Seeks Court OK To Enter License Deal With TLC
LOEWEN GROUP: Closes Deal To Sell Assets To Charter Funerals
LTV CORPORATION: Names Keane As Partner In Support Services
LUCENT TECHNOLOGIES: Fitch Gives Negative Rating Outlook
LUCENT TECHNOLOGIES: S&P Affirms B- Ratings
NEXTWAVE TELECOM: Qualcomm Commits to Invest $300 Million
OWENS CORNING: Creditors' Panel Hires BDO Seidman
PACIFIC GAS: QFs' Reluctance Will Not Compel Decision On PPAs
PILLOWTEX: Court Extends Exclusive Plan Filing Period to Nov. 16
POLAROID CORP.: S&P Lowers $275 Million Senior Note Issue to D
POLESTAR CORP.: S&P Cuts Long-Term Ratings to CCC
PSINET INC.: Continues Deviant Sec. 345 Investment Practices
SAFETY-KLEEN: Maynard Seeks Lifting Of Stay To Proceed With Suit
SAMES CORP.: Files Chapter 7 Voluntary Petition in N.D. Illinois
SLEEPMASTER LLC: S&P Lowers Corporate Credit Rating To CCC-
TEARDROP GOLF: Seeks to Convert Case to Chapter 7 Liquidation
VERADO HOLDINGS: Nasdaq Delisting Notice Served
VITECH AMERICA: Files Chapter 11 Petition in S.D. Florida
VITECH AMERICA: Chapter 11 Case Summary
WHEELING-PITTSBURGH: Gets OK To Reject Pittsburgh Pirates Lease
WINSTAR COMMS: MetaSolv Wants Debtors' Decision on its Contract
ZANY BRAINY: Wells Fargo Facilitates Sale To Right Start
*********
ALAMOSA DELAWARE: S&P Rates Senior Unsecured Notes at CCC
---------------------------------------------------------
Standard & Poor's assigned its triple-'C' rating to Alamosa
Delaware Inc.'s $150 million 13.625 percent senior unsecured
notes due 2011.
At the same time, Standard & Poor's affirmed its single-'B'-
minus rating on Alamosa Holdings LLC's senior secured credit
facility, which is expected to be reduced to $225 million from
$333 million. All other ratings on Alamosa and its subsidiary
were also affirmed (see list below).
Proceeds from the notes will be used to fund a two-year escrow
account, to pay off a portion of the senior secured credit
facility held at subsidiary Alamosa Holdings LLC, and for
general corporate purposes.
Although the amount of secured debt in the company's capital
structure will be materially reduced, the senior unsecured debt
at Alamosa is still rated two notches lower than the company's
corporate credit rating, because total priority obligations as a
percent of asset valuation will still be more than 30 percent.
The ratings on Alamosa reflect the company's limited operating
history, its acquisitive profile, weak financials, and the
fierce competitive environment in the wireless
telecommunications sector.
These factors are somewhat offset by the prefunding of the
company's business plan, specific benefits derived from its
relationship with Sprint PCS, the successful deployment of its
network and services, and its experienced management.
Alamosa is a Sprint PCS affiliate providing personal
communication services (PCS) in an area with 15.6 million
population equivalents (pops).
Alamosa launched operations in the second quarter of 1999, and
by June 30, 2001, had 316,000 subscribers. This accelerated
growth reflects a combination of solid organic growth coupled
with the acquisitions of Roberts Wireless, Washington Oregon
Wireless, and Southwest PCS, all completed in the second quarter
of 2001.
While these acquisitions strengthened Alamosa's position as the
largest Sprint affiliate, it weakened its financial profile in
the short term due to additional debt taken to finance the cash
component of the acquisitions and the buildout of the new
markets.
Alamosa is highly leveraged, with total debt, pro forma for the
new note offering, of about $763 million at June 30, 2001.
On a debt per subscriber basis, the company is leveraged at a
high $2,414. However, this amount is expected to decrease
rapidly, as the company continues to add subscribers at
a fast pace.
In addition, Alamosa is not expected to generate positive cash
flow until 2002. The company also faces challenges from
national, better-capitalized wireless carriers in its markets,
such as Nextel Communications Inc., VoiceStream, AT&T Wireless
Services Inc., Cingular, and Verizon.
Alamosa benefits from its affiliate agreements with Sprint PCS,
which give the company the exclusive right to provide PCS
services under the Sprint PCS brand name in its service area.
In addition, the affiliate agreements give Alamosa the right to
receive roaming revenues from Sprint PCS's contiguous markets,
use Sprint PCS's distribution channels, obtain Sprint PCS
volume-based pricing from vendors, and access Sprint PCS's back-
office operations for a negotiated price.
Since inception, Alamosa has posted strong operating results.
Despite high competitive pressures the company has been adding
subscribers at a fast pace and bringing churn down, as
demonstrated by a reduction in net 30-day deactivation to 2.4
percent in the second quarter of 2001 from 2.6 percent the
previous quarter.
The company's monthly average revenue per subscriber (ARPU) has
been sustainable in the low $60 area, which is above the
industry average.
As penetration increases, basic ARPU is expected to decline
slightly, but should remain at healthy levels. Roaming revenues,
which have been increasing rapidly, should continue to increase
as Sprint PCS's subscriber base expands and Alamosa expands its
coverage.
However, this growth should be at a lower rate, reflecting the
new reciprocal roaming rate agreement that commenced on June 1,
2001, which incrementally reduces roaming rates to 10 cents by
January 2002, from the 20 cents that was in effect until May 31,
2001.
Outlook: Positive
The prefunding of the company's business plan and the buildout
of a significant percentage of the planned covered pops provide
a moderate degree of financial flexibility.
Alamosa's operating performance was sound in its first two years
of operation, with coverage improvement, sustainable subscriber
growth, and healthy ARPU levels. If the company continues to
execute its business plan well, cash flow measures improve, and
potential future acquisitions do not deteriorate its credit
profile, a rating upgrade could occur within the next 18 months.
Rating Assigned
Alamosa Delaware Inc. Rating
$150 million 13.625 percent senior unsecured notes CCC
Ratings Affirmed
Alamosa Delaware Inc. Rating
Corporate credit rating B-
Senior unsecured debt CCC
Alamosa Holdings LLC
Corporate credit rating B-
$333 million senior secured bank loan B-
ALBANO CLEANERS: Files Chapter 22 Petition in E.D. Virginia
-----------------------------------------------------------
Virginia Beach, Virginia-based Albano Cleaners-which has
decreased its number of stores by nearly a third in the past 18
months-filed for chapter 11 bankruptcy protection but will stay
in business as it sorts through its debts, according to The
Virginian-Pilot.
This is the second bankruptcy filing for the dry cleaner in 10
years.
Albano's attorney said the company will continue to operate and
plans to emerge from bankruptcy when its bills are in order. He
said the filing was necessary because the company could not work
out terms for ending leases with some locations' property
owners, creating a cash crunch for Albano.
Albano's largest creditors include dry cleaning suppliers,
accounting and law firms and environmental engineering
consultants. The company listed between 100 and 199 creditors
that are owed between $1 million to $10 million.
Albano's estimated assets are also between $1 million to $10
million. (ABI World, August 17, 2001)
ALBANO CLEANERS: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Albano Cleaners, Incorporated
fdba Pic's Cleaners
fdba Colonial Cleaners
615 North Birdneck Road
Virginia Beach, VA 23451
Chapter 11 Petition Date: August 9, 2001
Court: Eastern District of Virginia (Norfolk)
Bankruptcy Case No.: 01-72591-SCS
Judge: Stephen C. St. John
Debtor's Counsel: Steven L. Brown, Esq.
Tolerton and Brown, P.C.
P.O. Box 3768
Norfolk, VA 23514-3768
Tel: (757) 622-6262
Fax: (757) 622-5138
Email: sl.brown@verizon.net
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
RichClean Open Account $73,703
John Hancock Open Account $26,818
Edmondson, Ledbetter Open Account $23,289
& Ballard
Safety Kleen Open Account $21,683
Crossroads At Chesapeake Open Account $19,551
Sq.
Co Par Realty Open Account $18,000
SCS Engineers Open Account $17,076
Kaufman & Canoles Open Account $16,529
W.P. Ballard & Co., Inc. Open Account $16,236
Cardinal Sign Corp. Open Account $11,527
Thomas L. Woodward, Jr. Open Account $11,503
Pembroke Commercial Realty $11,028
Potter Company Open Account $10,126
Virginia Natural Gas Open Account $9,716
Ziff Properties, Inc. Open Account $9,709
Joseph Krow Fur & Leather Open Account $9,688
Hoffman Industries Open Account $6,922
Great Bridge Retail, LLC Open Account $6,659
MCF Systems Atlanta, Inc. Open Account $6,335
Advantis Open Account $6,180
AMES DEPARTMENT: Files Chapter 22 Petition in S.D.N.Y.
------------------------------------------------------
Ames Department Stores, Inc. (NASDAQ: AMES), announced today
that it has filed for voluntary reorganization under Chapter 11
of the U.S. Bankruptcy Code in the Southern District of New York
in order to focus resources on Ames' solid nucleus of stores and
ensure the company's future success.
Ames' base of more than 400 stores will remain open while the
company operates in reorganization. Through those locations,
Ames will continue to serve its customers, pay its employees,
and reimburse suppliers on normal terms for merchandise
delivered and services provided after the reorganization filing.
Ames will also continue to make the needed investments in its
operations in order to ensure its competitive position moving
forward.
Ames enters reorganization with two completed agreements for DIP
(Debtor in Possession) credit facilities totaling $755 million,
one with GE Capital for $700 million and one with Kimco Funding
LLC for $55 million. These combined facilities, upon court
approval, will provide for the Company's ongoing operations and
for payment of post-petition receipt of merchandise.
"After considering all available options, and in light of
today's difficult economic climate, we have concluded that
reorganization is the best course for Ames," said Ames chairman
and chief executive officer, Joseph R. Ettore. "With the burden
of our debt leverage and certain unprofitable leases removed,
Ames will be better positioned to realize the strong potential
of our solid base of over 400 stores."
"Ames offers unique strengths and an effective strategy for
growth that sets us apart from other discount retailers," Mr.
Ettore continued. "Ames' ongoing stores have attained margins
above last year's even in the recent economic downturn, employ a
marketing strategy that targets a distinct customer base, and
possess a clear business focus that allows us to coexist with
larger retailers, because we offer a different shopping
experience with our smaller, more convenient store size. We
believe that these strengths will enable the company to continue
to operate as the nation's number one regional discounter," he
said.
"We appreciate the support our vendors have shown us in the past
and look to ensure that Ames remains a viable and important
channel for vendors to reach the customer. The dedication and
hard work of our associates is critical to our success, and for
that I thank them. I -- along with my management team -- am
committed to leading the company through this difficult time and
towards a brighter future," Mr. Ettore concluded.
Ames Department Stores, Inc., a FORTUNE 500(R) company, is the
nation's largest regional, full-line discount retailer with
annual sales of approximately $4 billion. With 452 stores in the
Northeast, Mid-Atlantic and Mid-West, Ames offers value-
conscious shoppers quality, name-brand products across a broad
range of merchandise categories. For more information about
Ames, visit WWW.AMESSTORES.COM or WWW.AMESSTORES.COM/ESPANOL.
AMES DEPARTMENT: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Lead Debtor: Ames Department Stores, Inc.
2418 Main Street
Rocky Hill, CT 06067
dba Hills Stores
Debtor affiliates filing separate chapter 11 petitions:
Ames Department Stores, Inc.
Ames Merchandising Corporation
Amesplace.com, Inc.
Ames Realty II, Inc.
Ames Transportation Systems, Inc.
Type of Business: Ames Department Stores, Inc. is a regional
discount retailer that, through its
subsidiaries, currently operates 452 stores in
nineteen states and the District of Columbia.
Chapter 11 Petition Date: August 20, 2001
Court: Southern District of New York (Manhattan)
Bankruptcy Case Nos.: 01-42217-reg through 01-42221
Judge: Robert E. Gerber
Debtors' Counsel: Frank A. Oswald, Esq.
Togut, Segal & Segal LLP
One Penn Plaza
New York, NY 10119
(212) 594-5000
Email: frankoswald@teamtogut.com
and
Martin J. Bienenstock, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Tel: 212-310-8530
Fax: 212-310-8007
Email: martin.bienenstock@weil.com
Total Assets: $ 1,901,573,000
Total Debts: $ 1,558,410,000
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Chase National Corporate Indenture Trustee-- $200,000,000
Services Inc. Ames 10% Senior
Mary Lou Bessie Notes due 2006
Vice President
73 Tremont Street
Boston, MA 02108-3913
(617) 557-6553
State Street Bank & Trust Indenture Trustee - $43,605,000
Company Hills 12.5% Senior
Paul Allen Notes due 2003
Vice President
Corporate Trust Division
4th floor
Two International Place
Boston, MA 02110
(617) 662-1730
Footstar, Inc. License Arrangement $8,900,000
Maureen Richards
VP and General Counsel
933 MacArthur Blvd.
Mahwah, NJ 07430
(201) 934-2344
Wrangler/VF Corp. Trade Debt $8,071,130
Roger Poplin
P.O. Box 21488
Greensboro, NC 27420
(336) 332-4833
IBM Global Services, Inc. Computer Services $5,415,554
Sean Ryan
Vice President
Route 100
Somers, NY 10589
(914) 766-4680
Mattel Toys Inc. Trade Debt $5,350,201
(including Fisher Price)
Kathleen Simpson-Taylor
333 Continental Blvd.
El Segundo, CA 90245
(310) 252-4223
Newell/Rubbermaid Trade Debt $5,205,654
Rob Sandberg
1147 Akron Road
Wooster, OH 44691
(815) 233-8133
Hasbro Trade Debt $5,100,121
Judy Smith
Treasurer
P.O. Box 1241
Providence, RI 02901
(401) 431-8106
Fruit of the Loom Trade Debt $4,467,973
Ed Weldon
Credit Manager
One Fruit of the Loom Dr.
Bowling Green, KY 42102
(270) 781-6400
GMAC Commercial Trade Debt $3,602,254
Credit LLC
Gene Cordiano, EVP
1 Penn Plaza
9th floor
New York, NY 10119
(212) 884-7503
Sara Lee Knits Trade Debt $3,529,227
Grey Loggins
Credit Manager
470 Hanes Mill Road
Winston-Salem, NC 27105
(336) 519-5047
American Greetings Trade Debt $3,504,062
Corporation
Vinnie Henniger
Credit Manager
10500 American Road
Cleveland, OH 44144
(216) 252-6704
The CIT Group/Commercial Trade Debt $3,480,636
David Bram, EVP
1211 Avenue of the
Americas
New York, NY 10036
(212) 382-6939
HSBC Business Credit Trade Debt $3,129,783
USA, Inc.
Greg Gallo
452 5th Avenue
New York, NY 10018
(212) 525-5101
Armstrong/RTA Furniture Trade Debt $3,083,384
(Thomasville)
Paul Dascoli, CFO
401 E. Main Street
P.O. Box 339
Thomasville, NC 27361
(336) 472-4005
Rosenthal and Rosenthal, Trade Debt $3,029,896
Inc.
Allan Spielman, EVP
1370 Broadway
New York, NY 10018
(212) 356-1438
Sunbeam Trade Debt $2,724,185
Jerry Levin, CEO
2381 Executive Center
Drive
Boca Raton, FL 33431
(561) 243-2100
20th Century Fox Home Trade Debt $2,697,290
Entertainment
Charles Austin
2121 Avenue of the Stars
Los Angeles, CA 90067
(866) 306-6160
W E A Distribution Trade Debt $2,668,866
Yvonne Butler
1 Warner Court
Bridgeport, CT 08014
(818) 843-6311
Arlee Home Fashions Trade Debt $2,282,135
Alan Mandell
261 5th Avenue
24th floor
New York, NY 10016
(212) 592-8049
AMF BOWLING: Committee Votes to Retain HLZ as Financial Advisor
---------------------------------------------------------------
Robert Hamwee, Chairman for the Official Committee of Unsecured
Creditors of AMF Bowling Worldwide, Inc., advises the Court that
the Committee voted to retain Houlihan, Lokey, Howard & Zulkin
as its financial advisor and will present the Court with its
application to retain the Firm in short order. (AMF Bankruptcy
News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
BE AEROSPACE: S&P Assigns BB+ Rating to $150M Credit Facility
--------------------------------------------------------
Standard & Poor's assigned its double-'B'-plus rating to BE
Aerospace Inc.'s proposed $150 million senior secured five-year
revolving credit facility and its preliminary single-'B' rating
to the company's $250 million subordinated debt securities filed
under shelf registration.
At the same time, Standard & Poor's affirmed its double-'B'-
minus corporate credit and its single-'B' subordinated debt
ratings on the company.
The outlook is positive.
The credit facility is available for general corporate purposes,
including acquisitions and letters of credit. The firm also has
an option to establish incremental term loan facilities.
A portion of the revolver will be used to fund the recently
announced acquisition of M & M Aerospace Hardware Inc.,
the leading independent aftermarket distributor of aerospace
fasteners.
The revolving credit facility is rated double-'B'-plus, two
notches above the corporate credit rating for BE Aerospace. The
facility is collateralized by the company's accounts receivable,
inventories, and substantially all of its other assets (except
for real estate), and is also secured by first-priority
perfected pledges of 100 percent of the stock of each of the
directly owned domestic subsidiaries and at least 65 percent of
the stock of each of the foreign subsidiaries.
A syndicate of lenders is led by The Chase Manhattan Bank, as
administrative agent, and J.P. Morgan Securities Inc., as lead
arranger and bookrunner.
Pricing is tied to LIBOR or the base rate, and the firm's debt
leverage ratio (debt to EBITDA). Financial covenants include
maximum leverage and minimum interest coverage ratios.
Standard & Poor's believes that the security interest in the
collateral offers good prospects for full recovery of principal,
given the size of the revolver.
Furthermore, there is a significant level of subordinated debt
in the company's capital structure. Considering BE Aerospace's
leading positions in its markets, it is anticipated that the
firm would retain value as a business enterprise in the event of
a bankruptcy. The company's cash flows were significantly
discounted to simulate a default scenario and capitalized at an
EBITDA multiple reflective of the market.
Under this simulated downside case, collateral value is expected
to be sufficient to cover the fully drawn bank facility if a
payment default occurred.
The corporate credit rating on BE Aerospace is supported by its
position as the largest participant in the commercial aircraft
cabin interior products market, a leading share of that business
on business jets, and generally favorable long-term industry
fundamentals.
Those factors are offset by risks associated with competitive
conditions in the airline and general aviation markets, some
cyclicality, relatively high debt levels, and the company's
growth strategy.
BE Aerospace's leading market shares, a higher backlog,
relatively good demand prospects for its products, and an
improving financial profile could warrant an upgrade within the
next two years.
COMDISCO INC.: Secures Okay to Pay Employee & Contractor Claims
---------------------------------------------------------------
Comdisco, Inc. currently employs approximately 2,300 employees.
The Debtors' ability to preserve their businesses and ultimately
to reorganize and/or consummate a sale is dependent upon the
continued service, satisfaction, and loyalty of these employees.
To ensure their employees' continued service, satisfaction and
loyalty, the Debtors sought and obtain a Court order authorizing
them to:
(a) pay the various prepetition claims of the Debtors'
employees and independent contractors, and
(b) continue the Debtors' various Employee benefit plans and
programs.
The Court also authorized the Debtors to pay all federal and
state withholding and payroll-related taxes relating to
prepetition periods, as well as an order:
(i) directing all banks to honor the Debtors' prepetition
checks for payment of the Prepetition Employee
Obligations, and
(ii) prohibiting banks from placing any holds on, or
attempting to reverse, any automatic transfers to
Employees' accounts for Prepetition Employee Obligations.
The Bankruptcy Code requires that certain claims for pre-
petition employee compensation and benefits be accorded priority
in payment in an amount not to exceed $4,650 for each employee.
According to Jack Wm. Butler, Jr., Esq., at Skadden, Arps,
Slate, Meagher & Flom, the Debtors' obligations to majority of
their employees are less than $4,650. Only a limited number of
key sales personnel have claims that exceed the cap, Mr. Butler
notes, and the amount by which these claims exceed $4,650 is de
minimis in relation to the Debtors' gross payroll per two-week
period.
Judge Barliant agrees with the Debtors that it is important to
pay all pre-petition employee obligations to retain the workers
and maintain their morale under difficult working conditions.
The Debtors' prepetition employee obligations fall into seven
categories:
(A) Wages, Salaries, and Commissions -- Certain employees are
paid annual salaries, while others are paid hourly wages,
and certain sales personnel are eligible for various
commissions based upon sales of Comdisco products and
services. The total amount of payroll paid in a given 2-
week period averages approximately $6,553,952. The
Debtors estimate that the total amount of accrued and
unpaid Prepetition Employee Obligations outstanding as of
July 16, 2001 is approximately $650,000. In addition, the
Debtors have approximately 308 employees eligible for
commissions. The Debtors project a third quarter
Commission Payment of approximately $6,000,000.
(B) Other Compensation: Vacation, Overtime, Holiday, Other
Earned Time Off, Business Expenses and Severance -- All
regular, full-time and regular, part-time employees are
eligible to accrue paid vacation time. Certain hourly
employees are entitled to earn overtime pay for hours
worked in excess of their scheduled time. Moreover, many
employees are eligible for additional compensation for
work performed on legal holidays. The Debtors routinely
reimburse employees for certain expenses incurred within
the scope of their employment, including expenses for
travel, lodging, professional seminars and conventions,
ground transportation, meals, supplies, and miscellaneous
business expenses.
(C) Employee Benefit Plans -- The Debtors maintain a number
of policies under the Comdisco Employee Benefit Plan,
including:
(i) Medical, vision care, and prescription drug care
under (a) a general plan with CIGNA, (b) a Blue
Cross-Blue Shield HMO (Illinois) plan for employees
in the Chicago Metropolitan area and (c) a Medica
Choice Select plan for employees in Minnesota.
(ii) Life insurance and accidental death and dismemberment
insurance issued by UnumProvident Insurance Company.
As a general matter, life insurance under the Comdisco
Benefit Plan provides for coverage between one and
four times the total compensation of the Employee,
while accidental death and dismemberment insurance
provides coverage in a basic amount equal to 200% of
the annual earnings of each full-time employee subject
to a maximum of $200,000.
(iii) Business travel and accident insurance pursuant to
policies issues by American International Group, Inc.
(AIG), equivalent to two times and employee's basic
annual earnings up to a maximum of $200,000.
(iv) (a) A dental insurance program pursuant to a policy
issued by Metropolitan Life Insurance Company (Met
Life), (b) flexible spending accounts through CIGNA,
(c) supplemental dependent life insurance as well as
long and short term disability benefits through
UNUMProvident and (d) the opportunity to continue
medical, dental and vision care coverage under the
federal Consolidated Omnibus Budget Reconciliation
Act.
(D) Savings and Retirement Plans -- Under the Comdisco
Retirement Plan, each year, eligible employees may
contribute between 1% and 15% of their pre-tax
compensation for investment in the Retirement Plan.
Comdisco's current practice is to match 50% of each
employee's contribution up to a maximum of $1,000.
(E) Worker's Compensation -- Comdisco provides workers'
compensation benefits to all employees pursuant to the
terms of a workers' compensation insurance policy
Provided by AIG. Comdisco pays a deposit premium of
$200,000 and reimburses AIG for claims on a monthly
basis. The deductible under this policy is $250,000 per
claim. Through May 31, 2001, the Debtors have received 19
workers' compensation claims. The total amount paid by
AIG on these claims was $137,244.
(F) Social Security, Income Taxes, and Other Withholding --
The Debtors routinely withhold from Employee paychecks
amounts that the Debtors are required to transmit to
third parties.
(G) Director & Officer Indemnification -- The Debtors
maintain insurance coverage for directors and officers
with respect to actions related to and within the scope
of their duties with the Debtors (D&O Policy). This
policy expires on September 12, 2001, however, the
Debtors plan to either extend or replace the coverage
provided the D&O Policy. (Comdisco Bankruptcy News, Issue
No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900)
CONSUMERS PACKAGING: Owens-Illinois Buys Glass Container Assets
---------------------------------------------------------------
Owens-Illinois, Inc., (NYSE: OI) entered into an agreement in
principle to acquire substantially all of the Canadian glass
container assets of Consumers Packaging Inc., based in Toronto,
for CDN$235 million (approximately US$153 million).
Representatives of Owens-Illinois and CPI executed a letter of
intent to implement the transaction.
The agreement is part of the CPI restructuring process currently
underway under the jurisdiction of the Ontario Superior Court of
Justice. The transaction is expected to close by the end of the
third quarter of this year. Completion of the acquisition is
subject to court and regulatory approvals and other customary
closing conditions.
Under the agreement, Owens-Illinois will acquire CPI's six glass
container manufacturing plants in Canada. Owens-Illinois plans
to operate the CPI business, which has annual sales of
approximately US$300 million, through a wholly-owned Canadian
subsidiary of O-I.
Owens-Illinois also will assume all liabilities under the
pension and employee benefit plans of the Canadian operations.
O-I expects the acquisition to be accretive to earnings per
share in the first full year after closing.
Owens-Illinois intends to finance the transaction in part by
arranging for assumption of CPI's existing bank credit facility.
O-I plans to finance the remainder through borrowings under its
own bank credit facility.
Owens-Illinois Chairman and Chief Executive Officer Joseph H.
Lemieux said, "We are very pleased with the opportunity to serve
this very important market and outstanding group of customers,
while at the same time advancing our long-term strategy to
create added value for our share owners."
"As the worldwide leader in glass container manufacturing, we
plan to utilize our technology and operating know-how to improve
the CPI operations, as we have done with other glass container
businesses that we have acquired around the world. We believe
that this will best serve the long-term interests of CPI's
customers and employees, while enabling Owens-Illinois to
continue to play a key role in the ongoing consolidation of the
worldwide packaging industry," Mr. Lemieux added.
The transaction also includes all the shares of CPI's Consumers
U.S., Inc. subsidiary, which Owens-Illinois intends to divest.
The transaction does not include the GGC, LLC (formerly Glenshaw
Glass Corporation) glass container plant in Glenshaw, Pa. or
CPI's glass container subsidiaries in Italy and Ukraine.
CONSUMERS PACKAGING: Anchor Chairman To Buy Unit Shares
-------------------------------------------------------
Anchor Glass Container Corporation announced that it has been
informed by its Chairman and Chief Executive Officer, John J.
Ghaznavi, that he has entered into a letter of intent with
Owens-Illinois, Inc. (O-I) to purchase, individually or through
an entity controlled by him, the shares of Consumers U.S., Inc.
Consumers U.S., Inc. holds approximately 58% of the outstanding
equity shares (on a fully diluted basis) of Anchor Glass
Container Corporation.
Owens-Illinois previously announced that it had agreed to
purchase these shares as a part of its acquisition of certain
assets of Consumers Packaging Inc. in conjunction with the
Consumers' restructuring plan. According to Mr. Ghaznavi, the
letter of intent is subject to the execution of a mutually
acceptable agreement.
In connection with the settlement of litigation previously
initiated by Owens-Illinois against Anchor Glass Container
Corporation and its affiliates, including Consumers Packaging
Inc., relating to Anchor's license of Owens-Illinois proprietary
technology, Mr. Ghaznavi has agreed to cause Anchor to exercise
appropriate diligence to protect O-I's licensed technology in
the Anchor facilities in accordance with the terms of the
license.
The disposition by Consumers of these assets in conjunction with
the Consumers' restructuring plan will trigger a requirement for
Anchor to make an offer to repurchase all of its outstanding
bonds at 101 percent of the outstanding principal amount.
Anchor is considering its alternatives in connection with such
occurrence. Consumers and Owens-Illinois have stated that the
sale by Consumers to Owens-Illinois is likely to occur by the
end of the third quarter of 2001.
DERBY CYCLE: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: The Derby Cycle Corporation
22170 72nd Avenue South
P.O. Box 97072
Kent, Washington 98032
Type of
Business: The Derby Cycle Corporation is a leading
designer, manufacturer and marketer of bicycles
and parts and accessories via numerous operating
companies located worldwide.
Chapter 11 Petition Date: August 15, 2001
Court: District of Delaware
Bankruptcy Case No.: 01-10200
Debtor's Counsel: Jeffrey D. Saferstein, Esq.
Andrew N. Rosenberg, Esq.
Heather D. McAm, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
(212) 373-300
Pauline K. Morgan, Esq.
Michael R. Nestor, Esq.
Young, Conoway, Stragatt & Taylor, LLP
1100 North Market Street
Wilmington Trust Center
Eleventh Floor
Wilmington, Delaware 19899-0391
(302) 571-6600
Total Assets: $162,114,000
Total Debts: $207,207,000
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
The Bank of New York Senior Notes $100,000,000
101 Barclay Street, 2W
New York, New York 10286
Contact: Luis Perez
T: 212-815-8387
The Bank of New York Senior Notes DM110,000,000
101 Barclay Street, 2W
New York, New York 10286
Contact: Luis Perez
T: 212-815-8387
GIC Special Investments Subordinated $32, 193,000
Pte Ltd Notes
255 Shoreline Drive, Suite 600
Redwood City, CA 94065
Contact: Deanna Ong
250 North Bridge Road #38-00
Raffles City Tower
Singapore 179101
T: 011 65 330 8869
Topeak, Inc. Trade Debt $229,813
7F-8, No. 20, TA Long Rd
Taichung, Taiwan, ROC
Contact: Linda Chuang
T: 886-42-327-1737
F: 886-42-327-1740
Neil Todrys
T: 800-213-4561 ext. 350
F: 800-341-3013
Kenda Rubber Ind. Trade Debt $218,612
Co.(HK) Ltd.
Kozaki Trading (TT)(Yen) Trade Debt $155,327
AFCO Finance Trade Debt $113,201
Brodeur & Partners Inc. Trade Debt $62,713
Morasi Design & Trade Debt $50,712
Fabrication
Cheng Shin Rubber Ind. Trade Debt $45,995
Co., Ltd.
Rockshox Trade Debt $45,333
Norco Products, Ltd. Trade Debt $44,553
Stearns Technologies Trade Debt $41,667
One, LLC
Maresh One, LLC Trade Debt $41,667
Drive Graphic Design Trade Debt $41,167
Milward Brown, Inc. Trade Debt $32,300
Kampala Industries (Pvt) Trade Debt $28,856
Ltd.
Gateway Olympia, Inc. Trade Debt $28,257
The Austin Group Trade Debt $25,000
Hollywood Engineering, Trade Debt $23,160
Inc.
DOT HILL SYSTEMS: Receives NYSE Notice Re Listing Requirement
-------------------------------------------------------------
Dot Hill Systems Corp. (NYSE: HIL), a leading supplier of
carrier-class data storage and storage area network (SAN)
solutions, has received notification from the New York Stock
Exchange that from mid-June into July of 2001, the company
failed to meet a NYSE continued listing requirement that both
the company's average global market capitalization and total
shareholder equity must not fall below $50 million for more than
30 consecutive trading days.
"Although we are currently in compliance with the NYSE's
continued listing standards and our global market capitalization
is now above $50 million, we are taking steps to comply with all
the NYSE procedural requirements," said Dot Hill Chief Financial
Officer Preston Romm.
"We believe the shortfall in Dot Hill's market cap during the
specified period was primarily due to the national economic
downturn that has effected the share price of many technology
companies during recent quarters. Dot Hill's stockholders equity
dipped below the NYSE threshold of $50 million in part because
of restructuring efforts by the Company, including charges taken
relating to unused and excess facilities and workforce
reductions totaling approximately $4.4 million, as well as the
recording of a $16.0 million charge in connection with a
valuation allowance provided for deferred income tax assets."
Under the rules of the NYSE, Dot Hill must submit a response to
the NYSE's Listings and Compliance Committee describing how it
will remain in compliance with the NYSE continued listing
requirements. If the NYSE does not approve the response, formal
delisting procedures may begin. Should that occur, the company
has the opportunity to appeal the decision to a Committee of the
Board of Directors of the Exchange.
Dot Hill is a leading independent provider of carrier-class data
storage solutions and services. With solutions that include
storage area networks, N EBS-certified systems for Telco and
Internet operations and world-class service capabilities, Dot
Hill believes it is uniquely positioned to address the storage
requirements of mission-critical continuous computing
environments.
Dot Hill's customers include many of the world's leading
Internet service providers, advanced technology and
telecommunications companies, and government agencies. Dot Hill
is an ISO 9002 certified company.
Dot Hill, is a trademark of Dot Hill Systems Corp. All other
trademarks and names are the property of their respective
owners.
EASYRIDERS INC.: Reports Profits & Positive EBITDA in Q2
--------------------------------------------------------
Easyriders Inc. (AMEX:EZR) announced Thursday that for the
three-month period ended June 30, 2001, the company recorded
revenues of $6.9 million, which generated a profit of $0.1
million, or earnings of $0.004 per share, compared with revenues
of $7.3 million and a loss of $5.6 million, or ($0.204) per
share during the same period a year earlier.
Cash flow as measured by EBITDA was $1.2 million, which
represented a $3.9 million improvement from the negative $2.7
million EBITDA reported for the same period in 2000.
For the six-month period ended June 30, 2001, the company
reported revenues of $15.2 million which produced a profit of
$1.0 million, or earnings of $0.036 per share, compared with
revenues of $15.7 million and a loss of $6.9 million, or
($0.268) per share reported during the same period a year
earlier.
Cash flow as measured by EBITDA was $3.5 million, which
represented a $5.5 million improvement from the negative $2.0
million reported for the same period a year earlier.
"We are performing above plan on virtually all of our internal
budget targets for the first six months of fiscal 2001," stated
Easyriders President and Chief Executive Officer Bob Fabregas.
"Notwithstanding the additional professional expenses which are
accruing as a result of our recent Chapter 11 filing, we remain
optimistic regarding our operating performance for the remainder
of this fiscal year.
"It is truly unfortunate that actions taken by our senior lender
forced us to seek protection under Chapter 11 just when the
company had turned the corner, and is now producing sustained,
positive results," Mr. Fabregas continued.
"Every effort is being made by management to continue generating
profits from every facet of the enterprise," Chairman Joe Teresi
said. "We intend to move through the Chapter 11 process, and
hope to emerge with a more rational debt structure which will
benefit all shareholders."
About Easyriders Inc.
Easyriders is a publicly traded, diversified company with
publishing, retail and entertainment interests dedicated to
serving the independent, free-spirited motorcycling and related
lifestyles market.
Easyriders currently publishes more than a dozen popular
motorcycle, special interest and lifestyle magazines, with a
total worldwide readership of more than 6 million. The company
also licenses Easyriders retail stores throughout the United
States and Canada, Easyriders Events and the Bros Club road
service company.
ELCOTEL INC.: Books $511K Net Loss in Second Quarter
----------------------------------------------------
Elcotel, Inc. (OTC Pink Sheets: EWTLQ), a leading provider to
the public communications market, reported a net loss of
$511,000, or $0.04 per diluted share, for the quarter ended June
30, 2001, down from a net loss of $2,134,000, or $.16 per
diluted share, on net sales and revenues of $9.3 million for the
quarter ended June 30, 2000.
The reported net loss was made on net sales and revenues of $6.6
million.
Michael J. Boyle, Elcotel's President and Chief Executive
Officer said, "Our first quarter results reflect the benefits of
the substantial cost and expense reductions that we have made to
facilitate our Chapter 11 reorganization, which far exceeded the
negative impact on gross profit from the continued erosion in
sales and revenues of the Company's payphone business.
"We are continuing our efforts to successfully conclude the
market trial of our Grapevine(TM) terminals and e-Prism(TM)
management services, but do not foresee any significant
contribution from this business in the near future."
He continued, "Although net sales and revenues from the
Company's payphone business improved over the last two quarters
and exceeded our expectations for the quarter, the public
communications industry continues to be plagued by penetration
of wireless services, and the Company remains cautious about the
future sales performance of its payphone business."
"The Company's operating results for the quarter included
$617,000 in estimated Chapter 11 reorganization costs," said
William H. Thompson, Elcotel's Chief Financial Officer.
Mr. Thompson added, "On a pro forma basis excluding Chapter 11
reorganization costs and including interest on bank indebtedness
at the non-default rate, the Company generated positive cash
flow from its operations of approximately $192,000 during the
quarter as compared to a cash flow loss of $675,000 for the same
quarter last year."
The Company also reported that it sold its real estate housing
its corporate headquarters and that the net sales proceeds of
approximately $2.8 million were used to repay a portion of its
bank indebtedness. In addition, the Company entered into a long-
term lease agreement for a portion of the premises required for
its operations.
Elcotel, Inc., based in Sarasota, Florida, is a leader in
providing public access telecommunications networks and
management services for both domestic and international wireline
and wireless communication networks. Visit Elcotel's corporate
website at www.elcotel.com.
ENTRADA NETWORKS: Faces Possible Delisting From Nasdaq
------------------------------------------------------
Entrada Networks, Inc. (Nasdaq NM: ESAN) reported $2.2 million
in net sales from continuing operations of its adapter cards
business during the second quarter, compared with $6.0 million
reported in the same period last year.
Its discontinued operations, the frame relay business, had net
sales of $1.9 million for the second quarter. Total net sales
for continuing and discontinued operations were $4.1 million for
the second quarter.
For the second quarter the Company reported a net loss of $2.8
million, or $0.26 per share, compared to a net loss of $0.7
million, or $0.18 per share, for the same period last year. The
second quarter fiscal 2002 figure includes net income from its
frame relay business of $0.9 million, or $0.08 per share.
For the six months ended July 31, 2001, the Company reported net
sales of $3.5 million from reportable legacy products, compared
with $9.8 million reported in the same period last year. For the
six months ended July 31, 2001 the Company's net loss decreased
to $6.2 million, or $0.57 per share, from a net loss of $7.8
million, or $1.84 per share, for the same period last year.
The net loss figure includes net income from its frame relay
business of $2.2 million, or $0.20 per share, in the first six
months of fiscal 2002.
Entrada Networks distributed a letter to its shareholders to
further explain its situation at the end of the Second Quarter:
Letter To The Shareholders from Dr. Kanwar J.S. Chadha,
"The ongoing downturn in IT spending has negatively
impacted our businesses. Industry demand has slowed in
particular for our adapter cards business. As you know, we
continue to take steps to offset this decline in revenue. To
date, these steps have included layoffs, hiring and salary
freezes and other proactive responses to a recession-like
environment. In addition to these actions we are:
- Also implementing a plan to consolidate the adapter
cards business unit from Maryland to Irvine, California. This
consolidation will contribute to a further 20% reduction in
personnel.
- We are forming three wholly owned operating
subsidiaries: Torrey Pines Networks (our storage area network
transport development efforts), Rixon Networks (our adapter
cards business) and Sync Research (our frame relay products &
service business, currently classified as discontinued
operations). We believe this structure will be the most
effective way for each of these businesses to minimize operating
costs and ultimately maximize shareholder value.
- And finally, we have been informed by The Nasdaq
National Market that we are not in compliance with Marketplace
Rule 4450(a)(5) because our common stock failed to maintain a
minimum bid price of $1.00 over 30 consecutive trading days. We
have been granted until October 22, 2001 to regain compliance
with the Rule. Compliance will be determined by the Nasdaq
Staff, but generally requires that the bid price of our common
stock be at least $1.00 for a minimum of 10 consecutive trading
days. If the Staff determines that we are not in compliance by
October 22, 2001, we have the right to appeal the Staff's
decision to a Nasdaq Listing Qualifications Panel. Failure to
regain compliance would result in the delisting of our
securities from the Nasdaq National Market. Delisting of our
securities could have a material adverse effect on the price of
our common stock and upon the ability of our stockholders to buy
or sell our common stock."
About Entrada Networks
Entrada Networks is pioneering the transport of storage over
Internet Protocol (IP) and light. Entrada's storage area network
(SAN) transport technology will enable original equipment
manufacturers (OEMs) and integrators to inter-network isolated
islands of SANs over wide-area (WAN), and metro-area (MAN)
networks.
The company's Silverline(TM) storage over IP transport switches
will offer the widest available choice of connectivity
and protocol options to optimize data exchange between SANs.
These products help ensure data integrity regardless of distance
and provide continuous access to mission-critical information.
Entrada's expertise in optical networking, Internet, Fibre
Channel and Ethernet technologies enable it to offer unrivaled
SAN transport products.
The company is headquartered in San Diego, CA. To learn more
about Entrada Networks please visit
http://www.entradanetworks.com
FEDERAL-MOGUL: Fitch Downgrades Unsecured Debt Ratings to CCC
-------------------------------------------------------------
Fitch downgrades the ratings on Federal-Mogul's senior unsecured
debt from `B-` to `CCC', secured bank debt from `B+' to `B-`,
while maintaining a Negative Rating Outlook.
Operating under-performance and mounting pressures from the
asbestos-related claims continue to weaken the credit with no
significant sign that either an operating turnaround or legal
remedies to help deal with the asbestos situation are
forthcoming in the near term.
>From an operating standpoint, the outlook for the core market
Federal-Mogul serves, North American automotive OEMs, is weaker
still from the first half of this year and no strengthening is
expected in the aftermarkets. These conditions are expected to
severely test the company's performance going forward.
In addition, with most of the major asbestos-related defendants
in court protection, the pressure on Federal-Mogul continues to
mount to join the others as a legal and financial strategy in
dealing with the situation.
At June 30, 2001, due in part to better working capital
management but due more to asset disposition ($179 million of
business and asset disposition), cash increased to $153 million
from $107 million at Dec. 31, 2000.
Additional liquidity is afforded through roughly $500 million of
drawdown capacity of an expanded secured bank facility.
Continuing divestiture of non-strategic businesses and assets
will also provide some extra measure of liquidity. Ultimately,
however, lacking an operating turnaround and/or other cash
building developments, Fitch expects that liquidity will likely
dry up in the next several quarters.
Federal-Mogul Corp., headquartered in Southfield, Michigan, is a
global producer and distributor of a broad range of components
for automobiles and light trucks, heavy-duty trucks, farm and
construction vehicles and industrial products.
The company's major products and systems focus on engines,
sealing and braking, which it sells to OE producers as well as
to replacement markets.
FINOVA GROUP: Gets Court Okay To Assume & Assign 6th Ave. Lease
---------------------------------------------------------------
At the behest of the FINOVA Group, Inc., Judge Walsh authorized
the Debtors' assumption and assignment of the unexpired
nonresidential real property lease for office space located at
1065 Avenue of the Americas, New York, to Kaye Group, Inc. or
its designees, and the sale to the Kaye Group of related
fixtures and personal property there.
Pursuant to a Purchase and Sale Agreement, the Kaye Group has
agreed to purchase from the Debtors all of their rights, title,
and interest in the Lease and related fixtures and personal
property for the amount of $2,750,000 and assume ongoing
responsibilities and obligations under the Lease.
Although the Debtors have been using the Premises in connection
with operation of their businesses, they have determined that
such use is no longer necessary, and they intended to vacate the
Premises by late July 2001. The Debtors believe the transaction
is in the best of the estates.
The lease was entered by and between FNV Capital (as successor
in interest to another Debtor Ambassador Factors Corporation,
and Trizechahn 1065 Avenue of the Americas LLC (as successor in
interest to Robert H. Arnow, the Landlord) dated April 25, 1004.
The original term of the Lease is 15 years, with an option to
renew for an additional ten-year term. Under the Lease, the
Debtors pay a monthly rent of approximately $112,000.
The Landlord, Trizechahn, had attempted to interpose. It appears
that the Landlord was not happy about the imminent merger that
it learned of, between the Kaye Group, Inc., a publicly traded
domestic corporation and a shell corporation that is a third
tier indirect subsidiary of Hub International Limited, a
Canadian insurance brokerage holding company, and Kaye Group,
Inc. will no longer be a publicly traded corporation.
Trizechahn tells the Court that an unconditional Guaranty of the
obligations of Ambassador Factors under the Lease was provided
by FINOVA Capital Corporation, then known as Greyhound Financial
Corporation, which had acquired Ambassador Factors prior to
execution of the Lease in 1994, and Greyhound was a corporation
with over $700 million in Stockholder's Equity and over $5
billion in assets.
The assumption and assignment of the Lease, Trizechahn
complains, will impose upon Landlord a tenant that is a newly
formed shell corporation which has nothing near the $700 million
in shareholder equity and $5 billion in assets that supported
the Lease when it originally was made.
Trizechahn therefore objects to the Motion on the bases that:
(1) It is not equitable; (2) the motion was not made in good
faith because: (a) the Debtors did not disclose to the Court of
the Merger Agreement between Kaye and Hub, (b) the Debtors had
told the Landlord that the buy-out price to avoid an assignment
of the Lease was $3.5 million but reduced the purchase price to
$2.75 million with no appraisal of value submitted, (c) the
Purchase and Sale Agreement was not executed at the time the
motion was filed, and the $100,000.00 deposit under the
Agreement had not been delivered, (d) the transaction was not
subject to higher and better offers.
Judge Walsh finds that the Debtors' proposed transaction is
appropriate within their business judgment, that assumption and
assignment of the Lease is in the best interest of the Debtors'
estates and creditors, that the Kaye Group is a good faith
purchaser within the meaning of section 363(m) of the Bankruptcy
Code and the transaction contemplated in the motion will be free
and clear of all liens, claims, encumbrances and other interests
and exempt from taxation.
In the order granting the motion, Judge Walsh makes it clear
that, upon assignment of the Lease to the Kaye Group, the
Debtors will have no further obligations to the Landlord. Judge
Walsh directs that the Landlord will be forever barred and
enjoined from asserting against the Debtors any default under
the Lease, and will be forever barred and enjoined from
asserting against the Kaye Group any default under the Lease.
(Finova Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
GENESIS HEALTH: Units Seek to Acquire APS Assets from Mariner
-------------------------------------------------------------
Genesis Health Ventures, Inc. subsidiaries in the pharmacy and
medical supply services business (NeighborCare Pharmacy
Services, Inc.) desire to acquire the pharmacy and related
businesses (the APS Business) owned and operated by Mariner
Post-Acute Network, Inc. (MPAN) and Mariner Health Group, Inc.
(MHG), debtors-in-possession in two other jointly administered
chapter 11 cases pending before the Bankruptcy Court in
Delaware, Case Nos. 00-00113 and 00-00215 respectively.
Genesis, NeighborCare, and the Sellers are in the process of
negotiating an Asset Purchase Agreement which would provide for
the purchase of the APS Assets by Genesis and NeighborCare, for
an aggregate purchase price of approximately $60 million,
subject to certain adjustments.
In order to fulfill their respective obligations under the
Bankruptcy Code, the Sellers intend to solicit higher and better
bids under a court-sanctioned procedure.
The Asset Purchase Agreement would be a "stalking horse"
contract.
If no qualified higher bids are received, the Sellers will be
required to submit the Asset Purchase Agreement to their
Bankruptcy Court for approval. If one or more qualified higher
bids are received, the Sellers will be required to conduct an
auction for the sale of the APS Assets.
The Debtors intend to seek authority to enter into the Asset
Purchase Agreement and bid at such an auction as soon as the
terms of the acquisition of the APS Assets are fully negotiated,
which the Debtors estimate will be completed within the next few
weeks.
The Debtors believe they have sufficient liquidity at the
present time to purchase the APS Assets. At the time of the
commencement of their chapter 11 cases, the Debtors obtained
approval from the Court for debtor in possession financing in
the aggregate amount of $250 million (the DIP Financing).
In addition, they believe that the consummation of the
transaction is unlikely to close prior to the time the Debtors
confirm and consummate their chapter 11 plan of reorganization.
However, the Sellers have made it a pre-condition to any bid
that the Debtors obtain affirmative financial support for the
proposed transaction through an increase in the availability
under the DIP Financing.
Accordingly, the Debtors have negotiated with the lenders under
the DIP Financing for an increase in the current borrowing limit
in the aggregate amount of $40 million to finance the purchase
of the APS Assets as well as provide additional working capital
in certain limited circumstances, as memorialized in the Third
Amendment to Revolving Credit and Guaranty Agreement, dated June
29, 2001. (Such DIP Facility was in the aggregate amount of $250
million at the time the Debtors commenced their chapter 11
cases).
Under certain conditions specified in the Third Amendment, a
portion of the Additional Financing may be used to exercise a
purchase option for certain nursing facilities currently under
lease.
The Third Amendment revises the DIP Financing commitment fees to
include the additional borrowing limits.
The Third Amendment requires the payment of a fee to the
existing lenders under the DIP Financing equal to one quarter of
one percent (0.25%) of the original borrowing limit under the
DIP Financing, or $625,000, plus a fee to the lenders providing
the Additional Financing equal to one percent of the Additional
Financing, or $400,000, for a total amendment fee of $1,025,000.
In addition, the Third Amendment requires a reduction in the
amounts available for borrowing by The Multicare Companies and
their debtor-affiliates under their respective debtor in
possession financing.
The Committee and the Debtors' prepetition senior secured
lenders have advised the Debtors of their support of the
purchase of the APS Assets and the additional borrowing capacity
to effectuate that transition.
The Debtors' Pharmacy Business
Providing pharmacy and medical supply services which include the
provision of prescription and nonprescription pharmaceuticals,
infusion therapy, and medical supplies and equipment,
NeighborCare is responsible for approximately half the Debtors'
revenues and net cash flows.
NeighborCare delivers products to 300,000 patients per day
through 70 institutional pharmacy units. Through their pharmacy
and medical supply service businesses, the Debtors service over
10% of all eldercare beds in the United States. With the size
and scope of NeighborCare's pharmacy operations, the Debtors
distinguish their chapter 11 cases from those of other nursing
home operators.
NeighborCare's customers include nursing care facilities owned
or operated by Genesis, as well as those owned or operated by
other independent nursing care providers. In particular,
NeighborCare provides services to a significant portion of the
nursing care facilities operated by MPAN and MHG.
The Mariner Pharmacy Business
The APS Business, owned by MPAN and MHG, and certain of their
respective subsidiaries, is collectively the fifth largest
institutional pharmacy in the United States.
The APS Business provides pharmaceutical services to
approximately 1,500 customer facilities (serving approximately
60,000 beds) in 34 states across the country. The APS Business
includes 33 institutional pharmacies, three retail pharmacies,
and four respiratory sites.
The Proposed Acquisition
The Debtors have determined that the purchase of certain of the
assets of the APS Business would complement their existing
pharmacy and related businesses.
The proposed acquisition of the APS Assets would also provide
the Debtors with the opportunity to protect their existing base
of business and at the same time obtain synergies and cost
savings by becoming a larger and more efficient operation.
Accordingly, the Debtors seek entry of an order pursuant to
sections 364(c) and 364(d)(l) of the Bankruptcy Code and rule
4001(c) of the Federal Rules of Bankruptcy Procedure approving
an increase in the borrowing limit under the DIP Financing
pursuant to the Third Amendment and the payment of the required
fees thereunder.
The Debtors are not by this Motion seeking authority to use
estate assets to purchase the APS Assets. The Debtors intend to
file a separate motion to seek that relief on completion of the
Asset Purchase Agreement. (Genesis/Multicare Bankruptcy News,
Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900)
GOLDEN BOOKS: Court Approves Sale To Random House/Classic Media
----------------------------------------------------------------
Judge Roderick R. McKelvie of the U.S. Bankruptcy Court in
Wilmington, Delaware, approved the sale Golden Books Family
Entertainment Inc. to Random House Inc. and Classic Media Inc.
in a deal valued at more than $155 million, Dow Jones reported.
Judge McKelvie approved the sale amid several objections,
including ones from HarperCollins Publishers Inc. and DIC
Entertainment Holdings Inc., which requested that the court
reopen a sale auction.
Random House/Classic Media will pay $84.4 million in cash and
assume various liabilities with an estimated worth of $70
million.
The companies also agreed to assume the multimillion-dollar
Golden Books pension plan.
The sale approval comes just in time for Golden Books, which had
said it could not maintain its business operations past
September.
Judge McKelvie said he had to defer to the business judgment of
Golden Books in accepting the Random House/Classic Media bid
over the HarperCollins/DIC Entertainment Holdings bid.
Golden Books said it believed Random House and Classic Media
could close the sale much quicker than HarperCollins and DIC
could. The Random House/Classic Media deal is set to close as
early as August 23.
On Thursday last week, Random House and Classic Media announced
it increased its cash bid by $5.1 million to the final figure of
more than $155 million.
The amended bid also assumed the Golden Books pension plan,
offered the same medical and dental benefits to Golden Books
retirees and disabled workers already received by Random House
employees, and assumed an additional lease. (ABI World, August
16, 2001)
ICG COMMS: U.S. Trustee Balks at Committee Hiring HLHZ
------------------------------------------------------
The United States Trustee presents the Court with a Post-Hearing
Memorandum in support of her continuing objection and opposition
to the employment of Houlihan, Lokey, Howard & Zulkin by the
Official Committee of Unsecured Creditors of ICG Communications,
Inc.
Patricia A. Staiano repeats her argument that nunc pro tunc
retention is not warranted under the standard for professional
retentions.
The U.S. Trustee points out that HLHZ is no stranger to the
bankruptcy court and knew or should have known of the
requirement of approval to be had before commencing work. The
fee agreement was not unusual and was in fact a standard form
for this work.
Although the Court found that the telecommunications industry
was, at the time, in a state of turmoil, the Committee did not
show any persistent exigency requiring work of such magnitude
that it would have precluded these sophisticated professionals
from devoting necessary efforts to putting the retention
agreement together in a more reasonable time than four months.
The testimony at the hearing seems to the U.S. Trustee to
demonstrate "a lack of concern on HLHZ's part for prompt filing
of an application," and "an abdication of counsel for the
Committee" for the same, leaving the Committee and HLHZ to work
things out between themselves.
At the conclusion of the hearing, the Court suggested a
continuation based on its perception that counsel for the
Committee was the person primarily responsible for seeing that
retention applications are filed on a timely basis.
The Court also indicated it needed to know more about the role
that counsel played, and suggested it might be unfair to
penalize HLHZ for the late filing.
In response, the Committee's counsel suggested that if blame was
to be placed at the feet of the Committee's counsel, then the
hardship was out of HLHZ's control, making relief mandated under
applicable case law.
The issue before the Court, as the Trustee sees it, is whether
the delay of HLHZ to make its application for retention was
caused by a failure to come to an agreement on the terms of
compensation with the committee (irrespective of the lack of a
finding or lack of evidence to support a finding of whether the
extended time was justifiable under the circumstances)
constitutes "extraordinary circumstances" permitting
the bankruptcy court to exercise its discretion in granting the
nunc pro tunc application of HLHZ.
The US Trustee argues that negotiation of a retention agreement
between HLHZ and the Committee does not constitute
"extraordinary circumstances", and the fact that counsel for
the Committee was charged with making the application has no
bearing on the same in this instance.
To the argument that since the preparation of the application
was out of the control of HLHZ, nunc pro tunc relief should be
granted, the US Trustee replies that the existence of
responsibility on the part of the Committee does not excuse
HLHZ. Such a "contorted" application of the law would excuse
every late application for professionals other than the attorney
for the debtor or a committee since every other professional's
application would be out of that professionals' hands.
Nothing in the Code relieves HLHZ from the responsibility to
know that approval is necessary and to ensure it is timely
sought. (ICG Communications Bankruptcy News, Issue No. 8;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
IMPERIAL SUGAR: Agrees To Sell Michigan Sugar Operations
--------------------------------------------------------
Imperial Sugar Company (OTC BB:IPRL) is selling its Michigan
Sugar operations to Michigan Sugar Beet Growers, Inc.
Under the terms of a Stock and Asset Sale Agreement, Imperial
will sell to MSBGI all of the wholly-owned capital stock of
Michigan Sugar Company and Great Lakes Sugar Company and license
and sell certain intellectual property related to the Michigan
Sugar operations.
Imperial will continue to market the refined sugar products for
a minimum term of ten years.
Terms of the transaction include:
* an initial cash payment of $55 million,
* the assumption of $18.5 million in industrial development
bonds by MSBGI, and
* a $10 million deferred payment provision.
The net proceeds will be used to reduce debt. Net sales from the
Michigan Sugar operations for the year ended September 30, 2000,
were approximately $181.9 million.
Should the transaction not close by October 1, 2001, MSBGI will
lease the four Michigan Sugar factories from the Company and pay
a combined lease, management and marketing fee. MSBGI has until
March 1, 2002, to close on the Stock and Asset Sale Agreement.
James C. Kempner, President and CEO of Imperial Sugar Company
commented, "This is a win-win transaction for both Imperial and
the sugarbeet growers who supply the Michigan factories. The
purchase of Michigan Sugar gives the sugarbeet grower-owners
complete control over their production from seed to refined
sugar while Imperial is able to utilize the proceeds from the
sale to continue its program of debt reduction."
"Imperial's continuing role as exclusive marketer for refined
sugar processed at the Michigan factories gives it a continuing
stream of income from the Michigan operations while giving the
grower-owners the benefit of Imperial's sales and marketing
expertise and national market presence," Mr. Kempner added.
Imperial Sugar Company filed a petition for relief under chapter
11 of the U.S. Bankruptcy Code in the District of Delaware on
January 16, 2001. The Bankruptcy Court confirmed the Company's
Second Amended and Restated Joint Plan of Reorganization on
August 7, 2001. The Company has received Bankruptcy Court
approval for this transaction.
Imperial Sugar Company is the largest processor and marketer of
refined sugar in the United States and a major distributor to
the foodservice market. The Company markets its products
nationally under the Imperial(TM), Dixie Crystals(TM),
Spreckels(TM), Pioneer(TM), Holly(TM), Diamond Crystal(TM) and
Wholesome Sweeteners(TM) brands.
Additional information about Imperial Sugar may be found on its
web site at http://www.imperialsugar.com
INDUSTRY STANDARD: Suspends Publishing; Plans To File Chapter 11
----------------------------------------------------------------
The weekly Industry Standard magazine suspended its print
edition and plans to file for chapter 11 bankruptcy protection,
the Associated Press reports.
"This is a very sad day for everybody who has helped make the
Industry Standard a great publication," Editor-in-Chief Jonathan
Weber said. "We're very proud of what we have accomplished, and
we're hopeful that the magazine and the web site will find a new
home."
The company's board of directors said the decision to seek
bankruptcy protection was the result of a deep technology
industry slump that has resulted in mass layoffs and drastic
cutbacks. With few buyers in the market, companies reduced their
advertising budgets, which hit the magazine hard.
A magazine spokesperson said the Company likely file for
bankruptcy protection and most of its 180 workers will lose
their jobs. The Industry Standard plans, however, to continue
its web site. (ABI World, August 17, 2001)
INFORMATION MANAGEMENT: Agrees To Sell Assets To AIT For $16.5M
---------------------------------------------------------------
Information Management Associates Inc. announced an agreement to
sell its assets for $16.5 million to AIT (USA) Inc., according
to a regulatory filing with the Securities and Exchange
Commission, Dow Jones reports.
The filing said the purchase price of $16.5 million includes a
$10 million cash component, payable at closing, and $6.5 million
payable through a non-interest bearing promissory note.
The Meriden, Conn.-based Information Management, which provides
customer relationship management software and services, said it
expects to close the transaction next month.
IMA filed for chapter 11 bankruptcy protection on July 24, 2000.
In its June monthly operating report filed with the Bankruptcy
Court, the company listed assets of about $15.9 million and
liabilities of about $7.7 million. (ABI World, August 17, 2001)
INSPIRE INSURANCE: Devises Reverse Stock Split to Shun Delisting
----------------------------------------------------------------
INSpire Insurance Solutions (Nasdaq: NSPR), a leader in property
and casualty outsourcing and software services, today announced
that its Board of Directors will recommend to its shareholders
an amendment to the Company's Articles of Incorporation that
will authorize a reverse stock split of all issued and
outstanding shares of the Company's common stock.
"The purpose of the reverse stock split is to increase the
market price per share of our common stock above the minimum
level required to maintain our listing on the Nasdaq National
Market System, which we believe to be in the best interests of
our shareholders," said INSpire Chairman and Chief Executive
Officer John F. Pergande.
"If the reverse split is not approved by the shareholders, and
if the stock price does not maintain a minimum 10 day bid price
above $1.00 as required by the Nasdaq, the Company could face
delisting action by the Nasdaq."
A special meeting of shareholders to act on the Board's
recommendation is currently scheduled for October 31, 2001 at
the Company's Fort Worth, Texas headquarters.
Stockholders will be asked to authorize a reverse stock split in
a ratio of 1 new share for each 5 shares currently outstanding.
However, the Board will permit a committee of the Company's
Board of Directors, together with the Company's Chief Executive
Officer, to select the final ratio for the reverse stock split
that they believe to be in the best interests of the
shareholders and the Company.
If shareholders approve the reverse split, each five shares of
common stock outstanding prior to the effective date will be
reclassified as one share of common stock.
The reverse stock split will reduce the number of shares
outstanding. Other than the rounding up of fractional shares,
the reverse stock split will not affect a shareholder's
proportionate equity interest or voting rights in the Company.
For example, a shareholder who has a one-percent equity interest
in the Company before the split will have a one percent equity
interest after the split.
The Board of Directors has set a record date of September 10,
2001, subject to modification by the Board, to establish the
shareholders entitled to vote on the matter.
About INSpire Insurance Solutions
INSpire Insurance Solutions, Inc. provides policy and claims
administration solutions for all property and casualty insurance
products. As one of the foremost providers of outsourcing and
integrated systems, INSpire serves clients with needs to enter
new markets quickly, reduce expenses, increase customer
satisfaction and focus on core competencies.
Additional information can be obtained from INSpire's Web site
at http://www.nspr.comor by calling 817-348-3999.
KMC TELECOM: S&P Downgrades Senior Secured Ratings To CCC+
----------------------------------------------------------
Standard & Poor's lowered its corporate credit and senior
secured bank loan ratings on KMC Telecom Holdings Inc. to
triple-'C'-plus from single-'B'-minus and lowered its senior
unsecured debt rating on the company to triple-'C'-minus from
triple-'C'.
The ratings remain on CreditWatch with negative implications,
where they were placed May 2, 2001, due to liquidity concerns.
The downgrade is based on the company's weakened liquidity
position since the first quarter of 2001. As of June 30, 2001,
KMC's unrestricted cash balance was $171 million, down from $277
million at March 31, 2001.
The company only has $45 million available under its $700
million secured credit facility, however, under this amended
credit facility KMC is required to prepay $100 million of the
amount outstanding by May 1, 2002.
The ratings remain on CreditWatch with negative implications
because, based on the cash burn rate through the first half of
2001 and the impact of the slowing economy, Standard & Poor's is
concerned about the company's liquidity position in the late
2001 to early 2002 time frame.
Furthermore, there is near-term potential that the company will
restructure its debt, which was indicated in the second quarter
2001 10-Q.
During the second quarter of 2001, KMC repurchased 39% of its
senior discount notes (with an accreted value of $135 million)
for $19.2 million in the open market.
Although this action reduces the company's overall debt burden,
it required a cash outlay of $19.2 million with no cash savings
until August 15, 2003, when these notes would have begun paying
cash interest.
On June 30, 2001, KMC's balance sheet remained highly leveraged,
with total debt outstanding of about $1.7 billion. Debt to
revenue on an annualized basis was in the 4 times area. Although
EBITDA turned positive, at $3.4 million, in the second quarter
of 2001 from negative $13.5 million in the first quarter of
2001, EBITDA relative to total debt is anticipated to remain
weak near term due to the impact of the slowing economy on Tier
III markets.
Tier III markets, which represent the company's CLEC business,
comprised about 47 percent of consolidated second-quarter 2001
revenue. Improvement in cash flow measures will be dependent on
continued growth in the company's nationwide data platform
business, which experienced a 24 percent revenue growth rate in
the second quarter of 2001 compared with the first quarter of
2001.
KMC is a facilities-based integrated services provider operating
predominately in the Southeast and Midwest. The company provides
telecommunications services in Tier III markets to business,
government, and institutional end users, as well as to Internet
service providers, long-distance carriers, and wireless service
providers.
KMC also provides nationwide data services, such as Internet
access infrastructure and Voice over Internet Protocol service,
under long-term guaranteed revenue contracts.
KRYSTAL CO.: S&P Places B+ Ratings on CreditWatch
-------------------------------------------------
Standard & Poor's placed its single-'B'-plus corporate credit
and senior unsecured debt ratings and its double-'B' senior
secured bank loan rating on The Krystal Co. on CreditWatch with
negative implications.
The CreditWatch placement is based on the company's
deteriorating credit protection measures, which are at the low
end of the range for the rating and continue to decline.
EBITDA coverage of interest was only about 1.5 times (x) in
2000, down from 2.8x in 1999, and did not show any improvement
in the first half of 2001. Operating margins declined to about
10.0 percent in the first half 2001 and all of 2000, from about
12.5 percent in 1999.
This resulted from a 2.0 percent decrease in comparable-store
sales in the first half of 2001 and a 4.4 percent decrease in
all of 2000. Krystal also incurred higher food, paper,
and labor costs.
Moreover, the company faces intense competition from stronger
industry players.
Krystal's debt levels are high, with total debt to EBITDA at
about 6.2x. In addition, the company's financial flexibility is
limited to a $25 million revolving credit facility, of which
only $8.3 million was available as of July 1, 2001.
Standard & Poor's expects to meet with management to discuss the
company's operating and financial strategies.
Based in Chattanooga, Tennessee, the Company develops, operates
and franchises full-size KRYSTAL and smaller "double drive-thru"
KRYSTAL KWIK quick-service restaurants. The Company has been in
the quick service restaurant business since 1932, and believes
it is among the first fast food restaurant chains in the
country. The Company began to franchise KRYSTAL KWIK restaurants
in 1990 and KRYSTAL restaurants in 1991. In 1995, the Company
began to develop and franchise KRYSTAL restaurants located in
non-traditional locations such as convenience stores. At
December 31, 2000, the Company operated 251 units (246 KRYSTAL
restaurants and 5 KRYSTAL KWIK restaurants) in eight states in
the southeastern United States. Franchisees operated 139 units
(68 KRYSTAL restaurants, 27 KRYSTAL KWIK restaurants and 44
KRYSTAL restaurants in non-traditional locations) as of December
31, 2000.
LAIDLAW INC.: Requests Court To Set Deadline For Filing Claims
--------------------------------------------------------------
Laidlaw Inc. asks Judge Kaplan to fix a deadline by which all
creditors must file their proofs of claim in the U.S. Chapter 11
Cases.
The Debtors propose that the Bar Date apply to all creditors of
the Debtors' estate except:
(a) any entity that already has filed a proof of claim
against one or more of the Debtors in accordance with
the procedures outlined in the Bar Date Order;
(b) creditors who agree with the way their claim is
scheduled by the Debtors -- as indicated on a pre-
printed and customized proof of claim form that Logan &
Co. will deliver to each creditor;
(c) any entity whose claim has been paid pursuant to a Court
order;
(d) Intercompany Claims;
(e) claims on account of publicly-held bonds, for which each
Indenture Trustee will file a claim; and
(f) Lenders on account of Bank Debt claims, for which each
Pre-Petition Agent will file a claim.
The Debtors will require separate proofs of claim against each
legal entity against which a claim is asserted.
Proof of claim forms must be returned to:
Logan & Company
Attention: Laidlaw Claims Processing Department
546 Valley Road
Upper Montclair, NJ 07043
The Debtors will publish notice of the Bar Date in the national
edition of The Wall Street Journal, the New York Times, the
National Post and The Globe and Mail. A French version of the
Bar Date Notice will be published in La Presse in the Province
of Quebec. (Laidlaw Bankruptcy News, Issue No. 4; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
LERNOUT & HAUSPIE: Seeks Court OK To Enter License Deal With TLC
----------------------------------------------------------------
L&H Holdings USA, Inc., asks Judge Wizmur to authorize it to
enter into a license agreement among Holdings and one of its
non-debtor affiliates, L&H Applications USA, Inc., on the one
hand, and TLC Productivity Properties LLC, on the other.
Until December 2000, each of the Debtors manufactured, marketed,
distributed and supported its own products for the retail
consumer market in the United States and Canada, including L&H
Holdings' Dragon NaturallySpeaking and L&H Applications' L&H
Voice Xpress products.
Although these consumer retail products produced revenues of
approximately $20 million a year, the products were not suitable
profitable for the Debtors to continue manufacturing, marketing,
distributing and supporting them.
The Debtors' management, therefore, determined to outsource
manufacturing, marketing, sales, distribution and technical
support and began searching for a republisher. In anticipation
of outsourcing its consumer retail products, L&H began to
dismantle the support organization for these consumer retail
products.
The Debtors currently have certain inventory consisting of
Dragon NaturallySpeaking and L&H Voice Xpress consumer retail
products in certain warehouses and with certain distributors.
The inventory in the warehouses is owned by the Debtors, who
distribute it to the distributors or directly to retailers.
It is the Debtors' belief that operators of the warehouses have
and will assert common law or warehouseman liens on the
inventory for amounts allegedly owed by the Debtors.
In the course of its business, the Debtors sell certain
inventory to the distributors. The Debtors are currently owed
money by the distributors for the inventory.
The distributors, however, have a prepetition contractual right
to return all of the unsold inventory to the Debtors for a full
refund or credit against the accounts receivable. Although the
Debtors have successfully convinced the distributors to keep the
inventory to date, the distributors have notified the Debtors of
their intent to return the inventory and thus receive a full
credit against the accounts receivable.
The distributors have informed the Debtors that they will not be
able to sell the inventory because it is no longer supported by
the Debtors.
Over the past several months, the Debtors negotiated with eight
different republishers, including TLC, who would purchase and
distribute the inventory and manufacture, distribute, and
support certain consumer retail products.
During the course of these negotiations, the Debtors ceased
manufacturing new consumer retail products.
The TLC Agreement
The Debtors' management believes that TLC is well situated to
market and support the Debtors' consumer retail products.
TLC is an affiliate of TLC Multimedia, Inc., doing business as
The Learning Company, which is one of the largest consumer
software companies in he world with a number one market share in
the United States in the education and personal productivity
sectors, according to PC Data. The Learning Company was recently
acquired from Mattel, Inc., by Gores Technology Group.
The Debtors believe that TLC has the financing necessary to
consummate the transactions contemplated by the Agreement and
fulfill its obligations under the Agreement. Therefore, the
Debtors' management has determined, in their business judgment,
that the Agreement represents the best business opportunity for
maximizing the value of Holdings' investment in the inventory.
Although Holdings believes that entering into the license
agreement is in the ordinary course of its business, it makes
this Motion out of an abundance of caution.
The terms of the Agreement are:
(a) Term. The initial term is three years, with automatic
renewal for an additional three year period, unless
terminated by either party upon 90 days' written notice
before the expiration of the initial term, or otherwise
terminated earlier as provided in the Agreement. At the
conclusion of the renewal period, the Agreement will
continue on a month-to-month basis and be subject to
termination by either party upon 30 days' written notice.
(b) Termination. The Agreement may be terminated by either
party if the other party materially breaches the
Agreement, and such breach is not cured within a
reasonable period of at least thirty days of receipt of a
written notice specifying such reasonable period.
(c) Grant of Licenses. Holdings and Applications will
respectively grant to TLC a nonexclusive, irrevocable and
sole (for certain retail channels) license within the
United States and Canada to use, reproduce, and
distribute certain Dragon NaturallySpeaking and L&H
Voice Xpress computer software/programs in object codes
form only, and any manuals, handbooks and other written
materials routinely distributed by the Debtors in
connection with the programs provided by the Debtors to
TLC.
(d) Ownership. The Debtors will retain any and all right,
title and interest in and to the programs and
documentation, and any derivative works (including,
without limitation, upgrades created under the Agreement)
of the same, including without limitation all
intellectual property rights in the programs or
documentation.
(e) Escrow. The Debtors agree to list TLC on its standard
escrow agreement as a licensee entitled to receive a copy
of the Dragon NaturallySpeaking or Voice Xpress source
codes if Holdings or Applications, respectively
(including all of the Debtors' successors and any
assignees of the Agreement) (i) cease doing business, or
(ii) fail, in a material respect, to cure a default in
fulfilling the obligations of the Agreement within 90
days.
(f) Distribution. In order to maintain its rights under the
Agreement, TLC will be held to certain minimum sales
units.
(g) Inventory. TLC will purchase, through a bill of sale at
the direct costs of acquisition, manufacture, and
delivery of the programs and documentation, the inventory
in the warehouses and with the distributors by delivering
checks for approximately $200,000 payable to Holdings,
and approximately $350,000 payable to Applications. TLC
will also purchase on consignment Applications'
inventory, with the cost of goods of each unit to be paid
to Applications upon the sale of each unit of the
inventory. Applications estimates that it will receive in
the aggregate $200,000 if all of the inventory on
consignment is sold.
(h) License Fees. TLC will pay license fees to L&H on all
units sold by TLC, whether purchased form L&H or
reproduced by TLC, at competitive rates.
(i) Technical Support. In order to facilitate an appropriate
transition to TLC, the Debtors will continue to provide
support for the programs manufactured and distributed by
the Debtors for 30 days immediately following the
Debtors' delivery to TLC of all materials necessary for
TLC to prepare the product units to direct customer
support to a TLC facility. Thereafter, TLC will provide
Technical support for the programs for a $60,000
recoupment against royalties otherwise due by TLC to the
Debtors under the Agreement
(j) Indemnification. The Debtors will indemnify and hold
harmless TLC with respect to any loss, cost or damage
that TLC incurs as a result of any action, claim,
investigation or proceeding alleging infringement caused
by the use or distribution of the programs or
documentation provided by TLC in accordance with the
Agreement.
(k) Inventory. The inventory will be delivered to TLC free
and clear of all liens, claims and encumbrances. In order
to secure the release of the inventory in the warehouses,
the Debtors may have to pay certain negotiated amounts to
the operators of these warehouses. These payments will be
made in accord with a first-day order authorizing such
payment. The Debtors will also accept the return of the
inventory with distributors and issue credit notes
offsetting the accounts receivable owed by the
distributors. This will allow TL to purchase and
distribute the inventory, which the Debtors believe would
otherwise be returned to the Debtors and remain unsold.
In support of this Motion, the Debtors argue that it is more
profitable to outsource the manufacture, packaging, marketing,
distribution and support of its consumer retail products. The
terms of this agreement are generally consistent with the
license agreements that Holdings enters into in the ordinary
course of its business, and generally comport with industry
standards.
Moreover, the financial terms of the Agreement are generally
competitive with those that TLC and other licensees offer within
the industry for similar licenses. Not only will the Agreement
ensure the continued manufacturing, packaging, marketing,
distribution and technical and other support of its consumer
retail products, but by leveraging TLC's position, it should
increase Holdings' profitability in the consumer software market
while simultaneously maintaining brand awareness.
(L&H/Dictaphone Bankruptcy News, Issue No. 10; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
LOEWEN GROUP: Closes Deal To Sell Assets To Charter Funerals
------------------------------------------------------------
The Loewen Group, Inc. struck a deal to sell to Charter
Funerals, Inc. substantially all of the assets of the Companies
(Hughes Funeral Home, Inc., Dudley M. Hughes Funeral Home North
Chapel, Inc., Hughes Southland Funeral Home, Inc., Ed C. Smith &
Brother Funeral Directors, Inc., Crown Hill Memorial Park, Inc.,
Hughes Funerals, Inc. and Dudley M. Hughes Funeral Home, Inc.)
located in the State of Texas that own and/or operate funeral
homes, cemeteries or similar businesses.
The proposed sale, together with the assumption and assignment
of related executory contracts and unexpired leases, received
the blessing of the Court but the Debtors could not consummate
it because they could not convey to Charter a complete set of
Pre-need Contracts - agreements with customers of the Companies
that contracted and paid in advance for funeral services and
merchandise.
The Debtors believe that the problem and solution lie with the
party that sold the stock of the Companies to LGII in 1996 - the
Hughes Family (Ronald Hughes, Sr., Mary Frances Hughes, Ronald
Hughes, Jr., Dewayne Hughes, Rhonda Hughes and Ronna Hughes
Milo) but the Debtors could not deal with this on their own, so
they seek the Court's help.
Specifically, the Debtors accuse the Hughes Family of not
delivering to LGII after the closing of the Hughes Sale as
required the pre-need agreements entered into prior to the
closing of the Hughes Sale - the Hughes Pre-need Contracts.
The Hughes Family contends that these Hughes Pre-need Contracts
were kept by the Debtors' sales force and provided to the
funeral home manager of the Companies. The Debtors believe this
is just an attempt to avoid the Debtors' request and the Sale
Order requirement.
In addition to the Hughes Pre-need contracts, entered into prior
to the closing of the Hughes sale, the Companies also entered
into other pre-need contracts after the closing of the Hughes
Sale (the Additional Pre-need Contracts). The Debtors have got
information and believe that, one or more of the Hughes Family,
who was employed by the Companies after the closing of the
Hughes Sale, retained some if not all of the Additional Pre-need
Contracts.
The Debtors remind Judge Walsh that the Sale Order requires Mary
Frances Hughes to cooperate in making available all pre-need
funeral contracts relating to the Companies.
Copies of all of the Loewen Pre-need Contracts would enable the
Debtors to verify which Loewen Pre-need Contracts are in fact
missing from the Companies.
The Debtors have reason to believe that such copies are
maintained by Preferred Security Life Insurance Company (PSLIC),
an insurance company owned, operated and controlled by the
Hughes Family.
PSLIC underwrites some of not all of the Loewen Pre-need
Contracts.
Texas law requires an insurance-funded prepaid benefits contract
to be executed with the application for the issuance of the
underlying insurance policy, and counsel to the Hughes Family
admits that PSLIC maintains copies of the Hughes Pre-need
Contracts as a part of its records.
The Debtors believe that PSLIC maintains copies of some if not
all of the Additional Pre-need Contracts for which PSLIC is
providing burial coverage.
Accordingly, the Debtors ask the Court to issue an order,
pursuant to section 542 of the Bankruptcy Code, compelling the
Hughes Family and their respective businesses, companies,
affiliates, agents, representatives, employees, relatives or
attorneys, including without limitation PSLIC to turn over
copies of certain pre-need cemetery and funeral contracts
entered into by one or more of the Debtors. (Loewen Bankruptcy
News, Issue No. 43; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
LTV CORPORATION: Names Keane As Partner In Support Services
-----------------------------------------------------------
Keane, Inc. (Amex: KEA), a leading business and information
technology consulting firm, announced that it has been selected
to partner with LTV Corporation to provide application
maintenance support services for the company's finance, human
resources, and payroll applications.
Under the terms of the agreement, Keane will provide ongoing
maintenance and support services to LTV Corporation providing
process and management disciplines along with resources needed
to support the company's critical IT needs.
The relationship will provide LTV Corporation the flexibility to
accommodate demand fluctuations within their operating
environment while ensuring that their mission critical
information technology requirements are managed effectively.
The LTV Corporation is implementing a significant restructuring
plan to enable the organization to succeed long-term in an
increasingly competitive domestic and global marketplace.
The restructuring efforts include closing inefficient
operations, selling non-core businesses, and achieving
dramatically lower and variable costs in administrative and
information technology functions.
"LTV is attacking all costs while increasing the effectiveness
of critical IT systems," explained William F. Morgan, vice
president - information technology and chief information
officer.
"Keane has demonstrated the willingness to partner with us on
this endeavor and has the ability to provide the highest level
of quality service to our internal technology users in a cost-
effective manner."
"It was important for LTV to find a partner to help them
efficiently manage and maximize the effectiveness of IT assets
during the current challenging economic cycle, and Keane is
pleased to act in that capacity," stated Bob Atwell, senior vice
president of North American branch operations for Keane.
"LTV is an organization with a rich history and a promising
future. We look forward to working with them to establish a
long-term partnership."
LTV: Company Background
The LTV Corporation is a manufacturing company with interests in
steel and metal fabrication. LTV's Integrated Steel segment is a
leading supplier of high-quality, value-added flat rolled steel
to the transportation, appliance, electrical equipment and
service center industries.
LTV's Metal Fabrication segment consists of LTV Copperweld, the
largest producer of tubular and bimetallic products in North
America and VP Buildings, a leading producer of pre-engineered
metal buildings.
Keane: Company Background
Founded in 1965, Keane, Inc. (Amex: KEA) helps Global 2000
companies and government agencies plan, build, and manage
application software to optimize business performance.
The Company's services include Business Innovation Consulting,
Application Development and Integration, and Application
Development and Management (ADM) Outsourcing.
Keane develops long-term relationships and recurring revenues
with its customers based on multi-year outsourcing contracts and
the consistent delivery of high quality, cost-effective, and
responsive services.
Keane does this by adhering to repeatable and proven process and
management disciplines and performance metrics incorporated in
its core IT and business consulting solutions. Keane markets its
services through a network of branch offices in North America
and the United Kingdom, which work in conjunction with Keane
Consulting Group, a centralized Strategic Practices Group, and
two Advanced Development Centers.
Information on Keane is available on the web at www.keane.com.
LUCENT TECHNOLOGIES: Fitch Gives Negative Rating Outlook
--------------------------------------------------------
Fitch has removed Lucent Technologies Inc.'s (Lucent) `BB-`
senior unsecured debt, `BB' senior secured credit facility, and
the company's `B' convertible preferred stock from Rating Watch
Negative.
The Rating Outlook is Negative.
Fitch lowered Lucent's ratings on August 2, 2001 and placed the
company's long-term ratings on Rating Watch Negative due to the
risks associated with obtaining the required credit facilities'
amendment that was necessary in order to implement the planned
new restructuring program in the fiscal fourth quarter ending
2001.
Lucent recently announced the successful negotiation of the
required amendment and consequently has the consent to
implement this second phase restructuring program. The most
significant modifications to the credit facilities include
EBITDA and net worth covenant changes, revised conditions to
spin-off Agere Systems, Inc., and allows Lucent to take a
restructuring charge of up to $9.7 billion.
The negative rating outlook reflects the continued operational
issues and the execution risks surrounding the company's second
phase restructuring strategy which includes additional
significant headcount reductions and major changes to its
organizational structure.
The ratings also incorporate the constrained financial
flexibility given the credit facility requirements, the
extensive cost reduction programs and significant weakness
in the company's end markets, which provides considerable
uncertainty to the timing of the company's return to
profitability.
Lucent is expected to experience operating losses in the near-
term and requires financing for its operating deficit and cash
requirements for the new restructuring program.
Although the recent successful execution of the $1.85 billion
convertible preferred and expected $2.75 billion from the
completion of the Optical Fiber sale clearly increases
liquidity, the company's liquidity requirements will be affected
by the execution risks surrounding the restructuring and
limited visibility due to weak market conditions.
LUCENT TECHNOLOGIES: S&P Affirms B- Ratings
-------------------------------------------
Standard & Poor's affirmed its double-'B'-minus long-term
corporate credit, senior secured bank loan, and senior unsecured
debt ratings, and its single-'B'-minus convertible preferred
stock rating on Lucent Technologies Inc.
These ratings were simultaneously removed from CreditWatch,
where they had been placed July 24, 2001.
At the same time, Standard & Poor's affirmed its single-'C'
short-term corporate credit and commercial paper ratings on the
company. These ratings were not on CreditWatch.
The ratings outlook is stable.
The rating actions reflect Lucent's successful negotiations with
its banks to amend the covenants in the revolving credit
agreement, which will enable the company to take a planned $7
billion to $9 billion restructuring charge in the current
quarter, targeted to reduce operating costs by $2 billion
annually.
The ratings on Murray Hill, N.J.-based Lucent continue to
reflect weak market conditions and aggressive competition in the
communications equipment industry, the substantial execution
risks the company faces as it implements its third major staff-
reduction action in less than a year, and Lucent's transition
toward a largely outsourced manufacturing model.
Still, Standard & Poor's believes the cost reductions are
necessary for the company to achieve sustained operating
profitability during the fiscal year ending September 2002, in
light of lower-than-anticipated revenues.
Lucent will now focus more closely on profitable core products
to serve its leading service provider customer base, while
deemphasizing products whose near-term contribution would be
marginal.
Cash balances, which were $2.3 billion at June 30, 2001, have
been augmented by a recent $1.75 billion preferred stock sale.
In addition, the company anticipates $2.75 billion in proceeds
from the sale of its Optical Fiber Solutions (OFS) unit later
this year, in addition to proceeds from other asset sales.
Although the cash component of the pending restructuring charge
will total $2 billion, liquidity should remain adequate to
support operations over the intermediate term until the cost
reductions expected from the program become effective.
The company had $2.3 billion of its $4.0 billion revolver in use
at June 30, 2001. Proceeds of recent and pending transactions
are expected to reduce outstanding amounts under the company's
revolving credit facility, while the size of the facility
decreases to about $3.25 billion following the OFS sale.
Outlook: Stable
Standard & Poor's expects that the company's anticipated cost
structure will permit it to achieve a sustained level of
operating profitability consistent with the ratings some time in
fiscal 2002, despite expected overall weak market conditions.
In addition, the outlook incorporates Standard & Poor's
expectation that Lucent will retain sufficient financial
flexibility to implement those plans. Still, if after several
quarters the company's performance does not indicate the
potential for meaningful positive EBITDA in fiscal 2002, the
outlook will be revisited.
NEXTWAVE TELECOM: Qualcomm Commits to Invest $300 Million
---------------------------------------------------------
QUALCOMM Incorporated (Nasdaq:QCOM), pioneer and world leader of
Code Division Multiple Access (CDMA) digital wireless
technology, announced its commitment to make a $300 million
strategic investment in NextWave Telecom, which is currently
deploying a CDMA2000 wireless network designed to provide
high-speed wireless Internet access and voice communications
services.
QUALCOMM's investment is in connection with the equity financing
provided for in NextWave's plan of reorganization that was filed
on August 6, 2001, and is subject to NextWave's successful
consummation of its plan of reorganization.
In addition to the investment, QUALCOMM and NextWave have
entered into a Technology Cooperation Agreement under which
QUALCOMM will help facilitate NextWave's deployment of a next-
generation, nationwide CDMA2000 1X/1xEV wireless network in the
United States, and NextWave will commit to utilize CDMA2000
technology to provide next-generation broadband mobile data
services to consumers and businesses.
With data rates of up to 2.4 megabits per second, CDMA2000 will
provide NextWave the ability to offer customers a wide range of
next-generation mobile services, including full web access,
video streaming, high-fidelity audio downloads, multimedia
messaging, email and secure VPN access to corporate
applications.
"QUALCOMM continues to invest in companies that support the
adoption of third-generation CDMA2000 1X/1xEV technologies,"
said Anthony Thornley, chief operating officer and chief
financial officer of QUALCOMM. "This commitment to invest in
NextWave complements our existing investment portfolio of
diverse and innovative wireless companies that are enabling and
fostering CDMA wireless Internet services."
"QUALCOMM's new investment in NextWave exemplifies the
outstanding relationship that has existed between our companies
since NextWave was founded," said Allen Salmasi, CEO and
chairman for NextWave.
"QUALCOMM's third-generation CDMA2000 technology offers the
highest spectral efficiency in the industry and is uniquely
capable of supporting our strategy of extending the desktop
Internet experience to a broad range of wireless devices. With
QUALCOMM's support, we will construct one of the most advanced
IP-based wireless networks in the world and help ensure
America's leadership in broadband wireless technology," Mr.
Salmasi continued.
Under the Technology Cooperation Agreement, QUALCOMM will make
available to NextWave technical assistance in designing and
deploying NextWave's CDMA2000 1X/1xEV network and offer support
for NextWave's innovative "carriers' carrier" distribution
strategy. QUALCOMM also expects to collaborate with NextWave on
the development of new applications and features that will be
supported by CDMA technology.
NextWave Telecom, Inc., headquartered in Hawthorne, N.Y., was
organized in 1995 to provide high-speed wireless Internet access
and voice communications services to consumer and business
markets on a nationwide basis.
NextWave is currently constructing a third-generation CDMA2000
1X network in all of its 95 PCS markets whose geographic scope
covers more than 168 million POPs coast to coast, including all
top 10 U.S. markets, 28 of the top 30 markets, and 40 of the top
50 markets.
NextWave's "carriers' carrier" strategy allows existing carriers
and new service providers to market NextWave's network services
through innovative airtime arrangements. For more information
about NextWave, visit their Web site at
http://www.nextwavetel.com.
QUALCOMM Incorporated -- http://www.qualcomm.com-- is a leader
in developing and delivering innovative digital wireless
communications products and services based on the Company's CDMA
digital technology. The Company's business areas include CDMA
integrated circuits and system software; technology licensing;
the Binary Runtime Environment for Wireless(TM) (BREW(TM))
applications platform; Eudora(R) e-mail software; digital cinema
systems; and satellite-based systems including portions of the
Globalstar(TM) system and wireless fleet management systems,
OmniTRACS(R) and OmniExpress(TM).
QUALCOMM owns patents that are essential to all of the CDMA
wireless telecommunications standards that have been adopted or
proposed for adoption by standards-setting bodies worldwide.
QUALCOMM has licensed its essential CDMA patent portfolio to
more than 100 telecommunications equipment manufacturers
worldwide.
Headquartered in San Diego, Calif., QUALCOMM is included in the
S&P 500 Index and is a 2001 FORTUNE 500(R) company traded on
The Nasdaq Stock Market(R) under the ticker symbol QCOM.
OWENS CORNING: Creditors' Panel Hires BDO Seidman
-------------------------------------------------
The Official Committee of Unsecured Creditors of Owens Corning
files a motion for an order authorizing the employment and
retention of BDO Seidman LLP as special financial advisor for
the Committee.
Joseph J. Bodnar, Esq., at Walsh Monzack & Monaco in Wilmington,
Delaware reveals that the professionals who will be principally
involved in providing services to the committee are William K.
Lenhart and David Berliner of BDO's Financial Recovery Services
Group and Bruce Bingham of BDO's Business Valuation Group.
BDO's Financial Recovery Services Group consists of partners and
senior associates who have broad experience in consulting,
bankruptcy and insolvency areas of accounting and has also real
estate and business valuation experts and tax specialists that
have bankruptcy reorganization expertise.
Mr. Bodnar adds that BDO has participated in many bankruptcy and
insolvency cases throughout the country, including financial
advisors to various creditor committees.
Mr. Bodnar states that the Committee wishes to employ BDO as
special financial advisors for the purpose of representing
interests represented by the trade creditor and bondholder
members of the committee to the extent that such interests
diverge from those of the committee as a whole in connection
with the prosecution of the Chapter 11 cases.
Mr. Bodnar adds that the designated members of the committee has
considerable knowledge in connection with these cases and in the
field of creditor's rights and business reorganizations under
chapter 11 as well as other areas of law including corporate and
banking law matters.
The hourly billing rates of BDO are:
Partners $330 to 550 per hour
Senior Managers $215 to 480 per hour
Managers $195 to 330 per hour
Seniors $140 to 245 per hour
Staff $85 to 185 per hour
William K. Lenhart, a member of the firm BDO Seidman, LLP states
the neither BDO nor any other member of the firm is related to
the Debtors, its officers & attorney or holds any interest
materially adverse to the Debtors' estates upon which BDO is to
be engaged in and is a "disinterested party."
Mr. Lenhart asserts that BDO nor any of its members had any
business with the Debtors or any other party in interest except
for the fact that the Debtors recently purchased Foundry & Steel
Inc. that had previously purchased BDO's JOB OPS manufacturing
software and some additional software consulting services.
Mr. Lenhart states that fees for this engagement represent less
than 1 percent of BDO's annual revenues and relate to matters
totally unrelated to the case which BDO is seeking to be engaged
in.
Mr. Lenhart also asserts that BDO has no business relationships
with parties which is a significant creditor of the Debtors
except for matters unrelated to the case in which BDO is seeking
to be engaged in.
Mr. Lenhart reveals that BDO has performed assurance, tax or
other services for some members of the committee of unsecured
creditors including John Hancock, PPM America, Met Life, JP
Morgan/Chase and Credit Suisse First Boston.
BDO also reveals that it has represented Credit Lyonnais in a
number of matters and also currently representing the bank in
the bankruptcy proceeding of Gencor, Inc., currently pending in
the Middle District of Florida.
In addition, Mr. Lenhart states that BDO has performed and may
be presently performing assurance, tax & other service for some
creditors and parties-in-interest including Bank of America,
Bank of New York, Bank of Tokyo Mitsubishi, Bank One, Barclays
Bank, Canadian Imperial Bank of Commerce, Caplan & Drysdale,
Citibank, First Chicago, Fleet National Bank, Key Bank, Mellon
Bank, Nations Bank, Northern Trust, PNC Bank, Royal Bank of
Canada, Sanwa Bank, Societe Generale, Standard Chartered Bank,
Sumitomo Bank, Suntrust Bank, United Refining Company, Wachovia
Bank, and Wells Fargo Bank.
Mr. Lenhart states that BDO has been retained and will likely
continued to be retained by certain creditors of Owens Corning
but it is BDO's intention to limit engagements to matters
unrelated to the chapter 11 cases. (Owens Corning Bankruptcy
News, Issue No. 15; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
PACIFIC GAS: QFs' Reluctance Will Not Compel Decision On PPAs
-------------------------------------------------------------
There is nothing standing in the way of GWF Power Systems L.P.,
Hanford L.P. and Thermal Energy Development Partnership, L.P.,
making their decision about whether to accept contract
modifications approved by the CPUC in Decision No. 01-06-015,
except the Three QFs' own unwillingness, William J. Lafferty,
Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin, tells
Judge Montali.
That unwillingness doesn't constitute cause for the bankruptcy
court to compel Pacific Gas and Electric Company (PG&E) to make
a quick decision about the burdens or benefits of the Three QFs'
Power Purchase Agreements.
If the Three QFs want to take advantage of the modifications
now, they're free to; issues concerning PG&E's assumption or
rejection of the PPAs can be handled in due course.
Mr. Lafferty stresses that while it is possible to quantify the
remaining monies to be paid under a PPA, there is no competent
evidence concerning the amount of damages which might be due on
rejection of a PPA.
Moreover, regulatory concerns and the timing of cure payments
make the decision about whether to assume or reject a PPA much
more complicated than the typical decision about whether to
assume, assume and assign, or reject a run-of-the-mill executory
contract. (Pacific Gas Bankruptcy News, Issue No. 11; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PILLOWTEX: Court Extends Exclusive Plan Filing Period to Nov. 16
----------------------------------------------------------------
The Official Committee of Unsecured Creditors of Pillowtex
Corporation urges Judge Robinson to grant the Debtors' request
to extend the exclusivity period.
The Debtors are close to completing the strategic planning
process that will provide the framework for their Business Plan,
according to Edmond L. Morton, Esq., at Young Conaway Stargatt &
Taylor. Once completed, Mr. Morton says, the Business Plan will
serve as a basis for the Debtors to negotiate the terms of a
plan of reorganization with the Creditors' Committee and the
Second Lenders.
But first, Mr. Morton says, the Exclusive Periods must be
extended in order for the Debtors to complete the Business Plan.
If the Debtors' motion is not granted, the Committee fears the
Debtors would be pressured to make rash decisions that would
severely prejudice their successful reorganization.
* * *
With no objections filed in response to the Debtors' Motion,
Judge Robinson grants the Debtors' request.
The Debtors' exclusive plan filing period is extended through
and including November 16, 2001 and their exclusive solicitation
period is extended through and including January 15, 2002.
(Pillowtex Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
POLAROID CORP.: S&P Lowers $275 Million Senior Note Issue to D
--------------------------------------------------------------
Standard & Poor's lowered its rating on Polaroid's $275 million
senior unsecured bonds to 'D'. Standard & Poor's senior secured
bank loan rating on the company remains on CreditWatch with
negative implications.
The downgrade follows Polaroid's failure to make a scheduled
interest payment on August 15, 2001.
Polaroid remains in default on two other unsecured bond issues
and Standard & Poor's lowered its ratings on those issues, as
well as the corporate credit rating on the company, to 'D' on
July 17, 2001.
Polaroid continues to operate under a temporary waiver of
covenant violations under its bank facility. On Aug. 10, 2001,
Polaroid announced an agreement to extend its temporary bank
waiver by one month to November 15, 2001, and increase its bank
line by $10 million.
In addition, Polaroid pledged two properties to secure its
senior unsecured notes and as additional collateral for the bank
facility. Certain bondholders now have the right to accelerate
repayment because 30 days have passed since the coupon was
missed.
Polaroid hopes that its pledge of collateral will help it
negotiate a restructuring of its bonds and a longer-term
extension of its bank loans.
Standard & Poor's will continue to monitor Polaroid closely.
Rating Lowered To From
Polaroid Corp.
Senior unsecured debt D C
Rating Remaining On CrediWatch With Negative Implications
Polaroid Corp. Rating
Senior secured bank loan rating CC
POLESTAR CORP.: S&P Cuts Long-Term Ratings to CCC
-------------------------------------------------
After news of possible balance-sheet restructuring actions from
U.K.-based printing group The Polestar Corp. PLC, Standard &
Poor's lowered its long-term corporate credit and senior
unsecured debt ratings on Polestar to triple-'C' and double-'C'
from single-'B'-plus and single-'B'-minus, respectively.
At the same time, the Polestar-guaranteed senior secured bank
loan rating on related entity The Polestar Group Ltd. was
lowered to triple-'C' from single-'B'-plus. In addition, all
ratings were placed on CreditWatch with negative implications.
The downgrade follows the company's announcement that it has
hired a financial advisor to help restructure its balance sheet.
Standard & Poor's is concerned that any restructuring may place
bondholders at a significant disadvantage to other creditors and
have a detrimental effect on their investment.
The rating actions also reflect deepening uncertainty regarding
Polestar's ability to complete the property and business
disposals needed to meet the scheduled debt amortization due in
December 2001.
Polestar operates in the highly competitive and capital-
intensive printing industry, which is characterized by
continuous price deflation and margin erosion. Against this
background, the company's highly leveraged capital
structure severely restricts the management flexibility
necessary to sustain Polestar's position as Europe's largest
independent printer.
Polestar's operating margins continued to decline in the third
quarter of fiscal 2001, the EBITDA margin narrowing to 15% in
the first nine months of fiscal 2001 from 19% over the same
period in 2000.
Given the low levels of pure equity support currently available
to the company, and the difficult market that exists at present
for the disposal of business assets, Standard & Poor's believes
that Polestar is now facing increased uncertainty regarding its
ability to meet the scheduled amortization payments due in
December 2001 and thereafter.
As a result, the ratings will remain under continuous review to
establish Polestar's progress in raising funds for the
forthcoming debt amortization, as well as the terms of its debt
restructuring proposals.
PSINET INC.: Continues Deviant Sec. 345 Investment Practices
------------------------------------------------------------
Pursuant to a Fourth Interim Order, PSINet, Inc.'s motion is
granted for an additional forty-five days through August 27,
2001.
Accordingly, during the interim period, the Debtors are
authorized to invest and deposit their estates' money in the
Accounts and in accordance with the Investment Practices or
commercially comparable practices, notwithstanding that such
practices may not strictly comply with the requirements of
Section 345 of the Bankruptcy Code or the U.S. Trustee's
Guidelines.
The Court also authorizes the Debtors, pursuant to section 363
of the Bankruptcy Code to sell, transfer or otherwise dispose of
the Public Venture investments subject to the additional advance
notice and consent requirements established by the First Day
Order. (PSINet Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
SAFETY-KLEEN: Maynard Seeks Lifting Of Stay To Proceed With Suit
----------------------------------------------------------------
In February 1997 Robert C. Maynard filed suit against Safety-
Kleen Corporation seeking damages of $400,000 he says were
caused when a tanker truck driven by an employee of Safety-Kleen
ruptured, emitting a quantity of hazardous materials to which he
was exposed, suffering severe and permanently disabling
injuries.
Before the Petition Date, Safety-Kleen answered the suit, saying
that the rupture of the tank was unavoidable, brought about or
caused by an intervening and superseding cause not under their
control, but under the control of the other defendant in this
suit, Wolfe Creek Collieries Company.
Safety-Kleen says Wolfe Creek must share all or most of the
liability for putting corrosive materials in the waste water
picked up and hauled by Safety-Kleen as these materials were not
listed on the bill of lading.
Mr. Maynard says, through John C. Collins of the firm of Collins
& Allen of Salyersville, Kentucky, that, in the interests of
economy, this personal injury action should be resolved in a
single forum: the Martin Circuit Court in Inez, Kentucky. He
also tells Judge Walsh that the Bankruptcy Court does not have
jurisdiction to hear and consider that portion of the dispute
between Mr. Maynard and Safety-Kleen.
The plaintiff has demanded a jury trial, which cannot be
afforded him in the Bankruptcy Court He also argues that the
Debtor will not be prejudiced because eventually Safety-Kleen
will have to defend this suit in some forum.
On the other hand, Mr. Maynard says he'll be greatly prejudiced
if stay relief isn't granted. He'll be subject to the risk of
inconsistent judgments, and multiple evidentiary hearings.
Further, prohibiting the Kentucky court from proceeding will
handicap Wolfe Creek's ability to fully develop and prosecute
its defense.
If the Debtor were severed, Mr. Maynard would be handicapped
because the Debtor is intertwined with the factual issues in the
case. For all of these reasons, the stay should be lifted to
permit the Kentucky action to proceed. (Safety-Kleen Bankruptcy
News, Issue No. 19; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
SAMES CORP.: Files Chapter 7 Voluntary Petition in N.D. Illinois
----------------------------------------------------------------
Sames Corporation (Amex: SGT) has filed a voluntary petition
under Chapter 7 of the United States Bankruptcy Code in the
United States Bankruptcy Court for the Northern District of
Illinois, Eastern Division.
The case has been assigned to the Honorable Bruce W. Black, and
has case number 01 B 28983. The interim trustee is Norman
Newman.
On May 21, 2001, Sames, S.A. filed for bankruptcy under French
law. On June 29, 2001, the French bankruptcy court approved the
sale of the Sames, S.A. assets to Exel. Exel will pay 65 million
French francs for the assets, which include all intangible,
moveable and real estate assets of Sames, S.A., as well as its
existing inventory stock, in-process inventory and other
considerations, including any contracts to which Sames, S.A. is
a party other than contracts between Sames, S.A. and the
Company. At March 31, 2001, the assets of Sames, S.A.
represented 62.7% of the total assets of the Company.
On July 16, 2001, Sames Corporation announced that the assets of
Sames, S.A., its French subsidiary, were sold to Exel
Industries, a French industrial company. The Company did not
anticiate that the sale of the French assets would result in any
cash distribution to the Company. The Company's other operating
subsidiaries include Sames Japan and Sames North America. Sames
Japan is currently in the process of restructuring.
Sames was engaged in the manufacture and sale of high-quality
electrostatic spray finishing and coating application equipment.
The Company designed and assembled the majority of its products
at its facility in Meylan, France. In 2000, Sames generated
$80.9 in sales and employed 436 workers.
SLEEPMASTER LLC: S&P Lowers Corporate Credit Rating To CCC-
-----------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on
Sleepmaster LLC to triple-'C'-minus from single-'B'-plus, its
bank loan rating to triple-'C'-minus from double-'B'-minus, and
its subordinated debt rating to double-'C' from single-'B'-
minus.
The ratings were placed on CreditWatch with negative
implications.
As of June 30, 2001, total debt outstanding was $290.1 million.
The rating action follows Sleepmaster's announcement in its
recent 10Q filing that, based on its current projections, the
company may not pay the interest due on its subordinated notes
Nov. 15, 2001.
In 2001, Sleepmaster has been challenged by rising raw material
costs and high competition, resulting in lower selling prices
and volumes. Profitability for the first half 2001 declined with
higher costs from acquired businesses and increased advertising
and professional fees.
EBITDA for the second quarter ended June 30, 2001 was $6.2
million, and includes higher than normal professional fees for
consultants, versus $8.9 million for the same period in 2000.
The latest 12 months EBITDA coverage of interest expense
declined to 1.2 times (x) versus 1.6x for the same period
in 2000. Total debt to EBITDA was 9.2x. The company has violated
covenants, but has obtained a waiver from its banks through
Sept. 30, 2001.
Linden, New Jersey-based Sleepmaster manufactures and markets
mattresses. The company is the largest licensee of the Serta
trademark, whose brands include Serta, Serta Perfect Sleeper,
and Masterpiece.
TEARDROP GOLF: Seeks to Convert Case to Chapter 7 Liquidation
-------------------------------------------------------------
After surviving a creditor's request to dismiss its chapter 11
case earlier in the year, TearDrop Golf Co. announced that it is
seeking bankruptcy court approval to convert the case to a
chapter 7 liquidation, Dow Jones reported.
Company counsel Mary MaloneyHuss of Wolf Block Schorr & Solis-
Cohen LLP, said that the golf-equipment manufacturer requested
the conversion because it won't be able to implement a feasible
reorganization plan. She also said that TearDrop has sold most
of its assets and the company's administrative expenses exceed
whatever cash it has on hand.
A hearing on the matter will be held in the U.S. Bankruptcy
Court in Wilmington, Del., on Sept. 20. MaloneyHuss expects the
court to grant the motion, and said she wasn't aware of any
entity that plans to object to the proposed conversion.
TearDrop Golf filed for bankruptcy on Dec. 4, citing assets of
about $31.4 million and total liabilities about $30.8 million as
of Nov. 1. (ABI World, August 16, 2001)
VERADO HOLDINGS: Nasdaq Delisting Notice Served
-----------------------------------------------
Verado Holdings, Inc. (Nasdaq: VRDO), a provider of outsourced
managed hosting, professional services and data center
solutions, has received a Nasdaq Staff Determination that it has
not maintained compliance with the market value of public float
requirement for continued listing set forth in Marketplace Rule
4450(b)(3) and that its co mmon stock is, therefore, subject to
delisting from the Nasdaq National Market.
As previously announced Verado is scheduled for a hearing on
August 30, 2001 before a Nasdaq Listing Qualifications Panel to
appeal the Staff Determinations. Verado's stock will continue to
trade on Nasdaq until the Panel makes a determination.
About Verado
Verado Holdings, Inc., headquartered in Denver, Colorado, is a
provider of outsourced managed and professional services and
data center solutions for businesses.
Verado's state-of-the-art data centers host, monitor and
maintain mission-critical Web sites, e-commerce platforms and
business applications. Verado currently operates data centers in
Denver, Dallas, Houston, Portland, Santa Clara, Irvine, San
Diego, and Salt Lake City. The data centers comprise
approximately 240,000 square feet of space.
For more information, visit Verado's Web site at www.verado.com.
VITECH AMERICA: Files Chapter 11 Petition in S.D. Florida
---------------------------------------------------------
Vitech America, Inc. (Nasdaq:VTCH), a leading provider of PC-
based Information Technology solutions direct to business and
individual clients, today announced that the Company has filed a
voluntary petition for bankruptcy protection under Chapter 11 of
the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the
Southern District of Florida (Case. No. 0118857).
The Company's Brazilian operating subsidiary, Microtec, was not
part of today's filing and Microtec will continue to provide
high quality products and solutions to its clients.
Vitech expects to continue its ongoing day-to-day operations
while it uses the reorganization process to protect itself from
the judgment given to Gateway in its New York case against
Vitech while allowing Vitech to proceed with its Florida case
against Gateway.
The goal will be for Vitech to have adequate relief from Gateway
and other creditors to regain the financial strength it requires
to continue to compete effectively. The Company will continue to
develop and evaluate strategic alternatives, including the sale
of the Company as a going concern.
The Company is seeking permission from the Courts to continue to
pay employees in the normal course of business and to continue
their medical and other benefits. The Company intends to pay
vendors on a timely basis for goods and services they deliver
after the filing date.
Litigation Against Gateway
On March 9, 2001, Vitech America, Inc. filed a lawsuit against
Gateway in the United States District Court for the Southern
District of Florida for fraud, negligent misrepresentation and
breach of contract.
The Company believes that Gateway fraudulently induced it to
enter into the September 1999 convertible loan agreement.
In particular, the suite alleges that Gateway represented to the
Company that it would make certain investments in Vitech
according to a capital plan presented by Vitech to Gateway,
provide savings in cost of goods sold, and provide Vitech with
use of the Gateway brands and trademarks, among other things.
During the term of the relationship, Vitech believes that
Gateway is and has been in breach of these contractual
obligations causing material damages to Vitech.
Gateway made numerous representations to Vitech that it planned
to convert its debt to equity or extend additional debt
financing at, or prior to maturity of the loan in March 2001,
all in accordance with the Company's capital plan.
During the first quarter of 2001, Gateway allegedly blocked
alternative financing that Vitech had been seeking, and demanded
that it be given voting control over a majority of Vitech's
stock without protecting the Company's shareholders or providing
methods to enhance the shareholder's value.
Vitech believes that all of this was part of Gateway's scheme to
engineer technical defaults by Vitech so that Gateway could take
over the Company's Brazilian computer manufacturing operation.
Gateway responded to the lawsuit in Miami with a separate
lawsuit filed in New York claiming that Vitech is in default on
$41 million of the loans made to the Company and seeking
repayment under the promissory notes issued pursuant to the
loans.
In response, Vitech filed a motion with the New York court to
dismiss, transfer, stay or abate the Gateway suit on the basis
that Vitech had a prior pending action in the Southern District
of Florida court concerning the same agreements and that the New
York court should defer to the action in the Florida court under
the "first-filed" rule.
The New York court responded to Vitech's motion by bifurcating
the Gateway suit and transferring all matters related to the
fraud, negligent misrepresentation and breach of contract under
the loan agreement and the licensing agreement to the Florida
court, but keeping the Gateway suit as it related to payment on
the promissory notes in the New York court.
In July, Gateway filed a motion for summary judgment in the New
York court asking for a judgment to be entered against Vitech on
the $41 million of promissory notes issued by Vitech pursuant to
the Gateway loans plus accrued interest.
Vitech's response asked the New York court not to grant the
motion while the Florida case was still pending on the basis
that the promissory notes are inseparable from the other
agreements between Vitech and Gateway that are part of the suit
filed against Gateway in Florida for fraud, negligent
misrepresentation and breach of contract.
Despite Vitech's defense and no discovery being conducted, on
August 7, 2001, the New York court granted Gateway its motion
for summary judgment against Vitech for the $41 million
promissory notes plus accrued interest.
Vitech is exploring a potential appeal of the decision by the
New York court.
Vitech intends to vigorously pursue its case against Gateway and
intends to seek a stay of any execution by Gateway on the New
York judgment pending the outcome of the Florida case with the
Court.
Corporate Information
Vitech America, Inc., a Miami-based company, is a leading
provider of PC-based Information Technology solutions direct to
business and individual clients, including the manufacture and
marketing of PCs, servers and related products, business systems
integration products and turn-key business solutions in Brazil
under the names: Microtec Digital World and Microtec(TM), with
product lines of Mythus(TM), Quest(TM), Spalla(TM), Vesper(TM)
and Vision(TM).
VITECH AMERICA: Chapter 11 Case Summary
---------------------------------------
Debtor: Vitech America, Inc.
dba Goma Trading
2190 NW 89 Pl
Miami, FL 33172
Chapter 11 Petition Date: August 17, 2001
Court: Southern District of Florida (Dade)
Bankruptcy Case No.: 01-18857
Judge: A. Jay Cristol
Debtor's Counsel: Jeffrey T Kucera, Esq.
201 S Biscayne Blvd 34 Fl
Miami, FL 33131
305-371-8585
WHEELING-PITTSBURGH: Gets OK To Reject Pittsburgh Pirates Lease
---------------------------------------------------------------
Recognizing the nebulous value of the "Private Suite License
Agreement" entered into between Wheeling-Pittsburgh Steel
Corporation (WPSC) and Pittsburgh Associates in July 1999, and
the benefits to be obtained by a prompt rejection, Judge Bodoh
grants the Debtors the Motion to reject Pittsburgh Pirates
Season Suite Lease.
In July 1999 Wheeling-Pittsburgh Steel Corporation entered into
a "Private Suite License Agreement" with Pittsburgh Associates
whereby WPSC obtained the exclusive privilege and right to use
Private Suite No. 3 in the new Pittsburgh Pirates ballpark for a
period of seven seasons, beginning in April 2001 and ending in
March 2008.
The annual license fee provided for in the License Agreement is
$70,000 per year, payable each season in two installments,
subject to a 4 percent escalation each year. This license fee
includes 15 tickets for each home game.
The License Agreement also provided for a $35,000 security
deposits to be held by PA to secure the performance of WPSC's
obligations under the License Agreement. WPSC has paid the
security deposit to PA.
The License Agreement further provides that WPSC cannot assign
the License Agreement without the consent of PA, and that WPSC
cannot transfer the License Agreement for a consideration
greater than WPSC is obligated to pay under the License
Agreement.
PA has contended, and for the purpose of this Motion WPSC does
not dispute, that applicable non-bankruptcy law (Pennsylvania
case law on licenses) provides that the License Agreement is
non-assignable without the consent of the licensor, so that the
Bankruptcy Code prevents WPSC from assigning the License
Agreement without PA's consent.
WPSC has also determined that it is not in the best interest of
the estate to assume the License Agreement and continue to pay
$70,000 per year, plus escalation, in order to be able to attend
Pittsburgh Pirate home baseball games.
Although there is benefit to the ongoing business operations in
having access to a baseball suite, such as customer
entertainment and for employee morale, WPSC has determined that,
in light of its current circumstances, those benefits are not
worth the $70,000 annual payment.
In addition, WPSC has undertaken to determine whether there
could be a market for the License Agreement at a profit to the
estate. Counsel for WPSC contacted a ticket broker but found
that there was no interest.
WPSC placed an advertisement in the Pittsburgh Business Times
for a week which inquired whether there was any interest in
another business acquiring the rights to the License Agreement.
WPSC did receive a number of calls in response to the
advertisement, but in each case the respondents were only
interested in some tickets and some games, or in a sharing
arrangement, and no party was interested in acquiring the entire
suite, let alone acquiring it at a profit to the estate.
Therefore WPSC began negotiations with PA in order to discuss
the effect of a rejection of the License Agreement, particularly
as to the $35,000 security deposit, and any claim that PA would
have in the WPSC case as a result of the rejection of the
License Agreement.
If WPSC were simply not to make the installment payment of
$35,000 on the License Agreement and reject the Agreement
without reaching agreement with PA, PA could apply the security
deposit to unpaid rent and assert a prepetition unsecured claim
in the WPSC estate.
Through these negotiations, WPSC did reach agreement with PA
that, if it would reject the License Agreement and not use the
suite for any games other than those already past, and if the
court approval of the rejection were promptly obtained, PA would
refund the security deposit to WPSC and would not assert any
prepetition claim in the WPSC case due to the rejection of the
License Agreement.
In further considerations of good community relations and this
transaction, PA has also agreed to accommodate WPSC art several
games during this season so that WPSC will still receive some of
the benefits of customer entertainment and corporate morale.
Using its best business judgment, for all the reasons described
in the Motion, WPSC has determined that the License Agreement
does not produce sufficient benefit to the estate of WPSC, is
unlikely to produce sufficient future benefit to its estate, and
the assumption of this executory contract would be burdensome to
WPSC's estate.
Thus, WPSC asks Judge Bodoh to authorize it to reject the
License Agreement promptly, particularly in light of the
agreement with PA as to the return of the security deposit and
the elimination of any possible unsecured claim, which is
advantageous to the estate of WPSC. (Wheeling-Pittsburgh
Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
WINSTAR COMMS: MetaSolv Wants Debtors' Decision on its Contract
---------------------------------------------------------------
Thomas G. Macaulay, Esq., at Zuckerman Spaeder LLP, in
Wilmington, Delaware, asks that the Court enter an Order
directing Winstar Communications, Inc. to assume or reject its
Contract with MetaSolv.
Mr. Macauley claims MetaSolv has been placed in the untenable
position of providing maintenance support postpetition despite
Winstar's complete failure to make postpetition payments for
such service and to provide any assurance that the MetaSolv
contract will be assumed.
MetaSolv is in the business of developing and licensing software
to meet the customer relationship, order management, and service
fulfillment needs of communication providers. The Debtors
entered into a Master Software License and Services Agreement
dated March 1996 with MetaSolv.
Throughout the course of their relationship, MetaSolv and the
Debtors also executed Software Orders, which identify the
specific software licensed by Winstar and its affiliates from
MetaSolv, and establishes software support guidelines (together
with the Agreement, the Contract).
Pursuant to the terms of the Contract, MetaSolv granted to
Winstar a non-exclusive license to use certain software in
exchange for certain licensing fees. In addition, MetaSolv
agreed to provide Winstar with maintenance support for the
software licensed to Winstar in exchange for maintenance support
fees. As set forth in a Letter Agreement dated May 2000, Winstar
agreed to pay MetaSolv annual maintenance support fees in
advance at the beginning of each calendar year.
Mr. Macaulay, Esq. reveals that before the Petition Date,
Winstar failed to make the advance installment payment for
maintenance support for the year 2001. Winstar currently owes
MetaSolv a total of $64,038, of which $46,903 is attributable to
post-petition maintenance services. (Winstar Bankruptcy News,
Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ZANY BRAINY: Wells Fargo Facilitates Sale To Right Start
--------------------------------------------------------
Retail asset-based lender Wells Fargo Retail Finance announced
today that it has arranged and will agent a $115 million line of
credit to The Right Start Inc. (NASDAQ: RTST) to facilitate its
acquisition of Zany Brainy Inc., a specialty retailer of non-
violent, gender-neutral toys, games, books and multi-media
products for kids.
The Right Start is the largest national specialty retailer of
high quality developmental, educational and care products for
infants and children through age three.
"The agreement between Zany Brainy and The Right Start
represents an incredible opportunity to expand our national
presence and benefit from multi-channel opportunities. It also
presents great opportunities for sharing best practices and
enhancing efficiencies while expanding each brand's reach
exponentially," said Tom Vellios, President and CEO of Zany
Brainy.
"Wells Fargo Retail Finance was an extremely valuable partner in
this process, and without them, we could not have achieved such
a fine result."
"We are very excited about the combination of Zany Brainy and
The Right Start," added Jerry R. Welch, Chairman and Chief
Executive Officer of The Right Start. "The companies are a
perfect complement to each other. We have great enthusiasm as
well, for our lending partner, Wells Fargo Retail Finance, as
they have continued to demonstrate responsibility, flexibility,
and above all, an understanding of the process and the desired
result of all involved parties."
Under the terms of the transaction, The Right Start will acquire
substantially all of the assets of Zany Brainy, including
approximately $115 million in cash, inventory and accounts
receivable, in exchange for $11.7 million in cash, approximately
$85 million in the assumption of liabilities, and the issuance
of 1.1 million shares of The Right Start Inc. common stock.
Waterton Management will also invest $20 million in The Right
Start and receive a 48 percent stake in the company.
The Right Start brand originated in 1985 through the creation of
the award-winning Right Start Catalog(TM) and now operates 68
retail stores nationwide. The Right Start has opened 35 new
stores over the past three years and expects to open many more
during fiscal 2001.
In January 2001, Wells Fargo Retail Finance provided The Right
Stuff with a $10 million line of credit. In May 2001, Wells
Fargo Retail Finance also had provided a $115 million debtor-in-
possession line of credit to Zany Brainy.
"Zany Brainy and The Right Start are two complimentary forces in
the specialty toy and kids' hard goods categories," said Andrew
H. Moser, Senior Managing Director and Co-COO of Wells Fargo
Retail Finance. "We're excited that our line of credit will make
it possible to align these two great companies in such a
positive outcome, exceeding the expectations of all involved
parties."
Paul Traub of Traub, Bonacquist & Fox, LLP, as counsel to the
Official Committee of Unsecured Creditors, added, "We are
involved in many bankruptcy cases and are pleased to have been a
facilitator of such a positive outcome for everyone. Not too
often have I seen a lender act as such a strong catalyst in the
outcome of a case. I have great admiration for how Wells Fargo
Retail Finance acted in this case."
Wells Fargo Retail Finance LLC
Based in Boston with additional offices located in Philadelphia
and Los Angeles, Wells Fargo Retail Finance, LLC, brings more
than 25 years of experience in providing working capital to
retailers, and more than 150 years of collective experience as
merchants, retail operators, and financial executives. Today,
the company, a subsidiary of Wells Fargo and Company (NYSE:
WFC), has over $1.9 billion in loan commitments to retailers
throughout North America.
Wells Fargo & Company is a diversified financial services
company with $290 billion in assets, providing banking,
insurance, investments, mortgage and consumer finance from more
than 5,400 stores and the Internet - http://www.wellsfargo.com
-- across North America and elsewhere internationally.
*********
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*********
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Copyright 2001. All rights reserved. ISSN: 1520-9474.
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