/raid1/www/Hosts/bankrupt/TCR_Public/010927.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, September 27, 2001, Vol. 5, No. 189
Headlines
AEROVOX INC: Moves to Fix November 15 Bar Date for Filing Claims
ALARIS MEDICAL: S&P Sees Refinancing as a Favorable Sign
AMF BOWLING: Court Allows Assumption of Playmaster Plant Lease
ARMSTRONG HOLDINGS: PD Panel Taps Klehr Harrison as Lead Counsel
AT HOME: Will Shut-Down MatchLogic & Slash 500 Jobs to Cut Costs
BIO-PLEXUS: Appoints Brian Herrman as Chief Financial Officer
BUILDNET: GDL Management Hired as Debtor's Financial Advisor
BUILDNET INC: HomeSphere Unit Acquires BuildSoft at Auction
CMI INDUSTRIES: Noteholders Agree To Execute Restructuring Plan
CAPRAL ALUMINUM: Weak Results Prompt S&P to Drop Rating to BB-
CENTRAL EUROPEAN: Unit Wins Legal Dispute vs. Czech Republic
COVAD COMMUNICATIONS: Engages Gilardi as Plaintiff Class Locator
DAIRY MART: 20 Largest Unsecured Creditors
DAIRY MART: Gains Court Okay for $10.75MM Interim DIP Financing
EASYLINK SERVICES: Has Agreements to Restructure $63MM of Debt
EQUITABLE LIFE: S&P, Alarmed by Restructuring, Junks Ratings
EXODUS COMMS: Files Chapter 11 Petition in Delaware
EXODUS COMMS: Case Summary & 28 Largest Unsecured Creditors
FINOVA GROUP: Seeks Extension of Removal Period to January 31
FRANK'S NURSERY: Fishman Takes Helm as Chief Executive Officer
GREATE BAY: Begins Soliciting Consents to Amend Indenture Terms
GROVE WORLDWIDE: Consummates Reorganization Plan
HERCULES INC: S&P is Watching BetzDearborn Unit Sale Closely
MARINER POST-ACUTE: Hires E&Y for Preference Analysis Work
MATLACK SYSTEMS: Sells Remaining Tractors & Trailers for $6.3MM
MAXICARE HEALTH: Continues to Wallow in Red Ink in 2nd Quarter
NET SHEPHERD: Complies with CDNX Rules & Trading Resumes
NOVO NETWORKS: Seeks Okay to Cease Prepaid Calling Card Business
ORBITAL IMAGING: Plans to File Chapter 11 with Prearranged Plan
OWENS CORNING: Gets Okay to Assume AspenTech Software License
PNI TECHNOLOGIES: Seeks 4-Month Extension of Exclusive Periods
PHAR-MOR: Case Summary & 20 Largest Unsecured Creditors
PILLOWTEX CORP: Court Approves Settlement with Ralph Lauren
PREMDOR INC: S&P Assigns BB Long-Term Corporate Credit Rating
PSINET: Taps Telephone Management Corp. As Special Consultant
PSINET: Courts Approve Sale of Canadian Assets to TELUS for $77M
RANCH*1: Seeks Extension of Lease Decision Deadline to January 3
REGENT ASSISTED: Fails to Pay September Rents For 5 LTC Leases
SAFETY-KLEEN: Seeks Okay to Hire Gray Cary as Title VI Counsel
TELERGY INC: Banks Extend Additional Financing for Restructuring
TITANIUM METALS: S&P Bullish About Valhi Inc.'s Exchange Offer
USG CORP: Intends to Assume TransCanada Gas Transportation Pact
UGLY DUCKLING: Chairman Withdraws Offer to Buy Outstanding Stock
UNITED METHODIST: Seeks Open-Ended Contract Decision Period
W.R. GRACE: Honeywell Wants Stay Relief to Liquidate Claim
WARNACO GROUP: Court Okays Sharretts as Debtor's Customs Counsel
WINSTAR COMMS: Walks Away from Four High-Capacity Circuit Pacts
WOLF CAMERA: Sells Assets to Rival Ritz Camera for $84.7 Million
* Peterson Consulting Hired to Prep & Pursue WTC-Related Claims
*********
AEROVOX INC: Moves to Fix November 15 Bar Date for Filing Claims
----------------------------------------------------------------
Aerovox, Inc., asks the United States Bankruptcy Court for the
District of Massachusetts to set November 15, 2001 as the
deadline by which creditors must file their proofs of claim.
Harold B. Murphy, Esq., at Hanify & King in Boston,
Massachusetts tells the Court that the Debtors request November
15, 2001 as the bar date in order to enable the Debtor to give
the creditors and interested parties ample notice of the Bar
Date and allow creditors sufficient time to prepare their
paperwork.
Aerovox Inc., a leading manufacturer of electrostatic and
aluminum electrolytic capacitors filed for chapter 11 protection
on June 6, 2001 in Massachusetts. When the company filed for
protection from its creditors, it listed $85,500,000 in assets
and $71,500,000 in debt.
ALARIS MEDICAL: S&P Sees Refinancing as a Favorable Sign
--------------------------------------------------------
Standard & Poor's ratings on ALARIS Medical Inc. and its
operating company, ALARIS Medical Systems Inc. remain on
CreditWatch with positive implications, where they were placed
September 10, 2001.
The CreditWatch listing followed the company's announcement of
its planned refinancing of its operating company's existing bank
facility.
Standard & Poor's expects to raise the corporate credit ratings
for ALARIS and its operating company to single-'B'-plus; the
subordinated debt ratings for ALARIS and ALARIS Medical Systems,
as well as ALARIS' senior unsecured debt rating will be raised
to single-'B'-minus upon the closing of the refinancing
transaction.
Standard & Poor's assigns its single-'B'-plus rating to ALARIS
Medical Systems' proposed $150 million senior secured notes due
2006, offered under Rule 144A with registration rights. The
existing senior secured bank loan rating will be withdrawn when
the debt is repaid.
The ratings reflects several factors:
* The note offering will alleviate onerous bank loan service
requirements and financial covenants during the next few
years. The offering will also permit the company to retire
its convertible subordinated debentures maturing January
2002 and to make distributions from ALARIS Medical Systems
to ALARIS, in order to make cash interest payments on its
senior discount notes beginning in 2004.
* Business prospects associated with operating improvements
and new product launches have improved. In addition, cash
flow has benefited from tighter working capital
management.
* ALARIS will be in a position to expand its business and
maintain credit protection measures consistent with its
rating. Standard & Poor's expects funds from operations to
lease adjusted debt and cash flow coverage of cash
interest to average about 10% and 2 times (x),
respectively.
San Diego, Calif.-based ALARIS manufactures products such as
intravenous pumps to control the flow of solutions, drugs, and
nutritionals into patients' circulatory systems; related
accessories; and patient-monitoring devices.
Ratings Remain on Creditwatch with Positive Implications
ALARIS Medical Systems Inc.
Corporate credit B
Subordinated debt CCC+
Senior secured bank loan B
ALARIS Medical Inc.
Corporate credit B
Senior unsecured debt CCC+
Subordinated debt CCC+
AMF BOWLING: Court Allows Assumption of Playmaster Plant Lease
--------------------------------------------------------------
AMF Bowling Worldwide, Inc., sought and obtained authority from
Judge Adams to assume an unexpired lease of real property
relating to the Playmaster Manufacturing Facility in Bland,
Missouri it leases from Charles & Kathryn Bailey.
Dion W. Hayes, Esq., at Mcguirewoods LLP, in Richmond, Virginia
relates that in connection with the proposed assumption of the
Lease, Worldwide seek approval to cure the Lease's existing
default amounting to $322.58. Worldwide have carefully reviewed
their financial condition and ability to reorganize and have
concluded that it is in the best interests of their estates to
assume the Lease.
Mr. Hayes relates that the assumption of the Leases will provide
a significant benefit to the estates as cash generated from
billiards products manufactured in the Playmaster Plant will
assist Worldwide in their efforts to reorganize and sustain
continued operations. In light of the foregoing, Mr. Hayes
contends that there is a sound business justification supporting
the assumption of the Leases. (AMF Bankruptcy News, Issue No. 8
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ARMSTRONG HOLDINGS: PD Panel Taps Klehr Harrison as Lead Counsel
----------------------------------------------------------------
The Official Committee of Asbestos-Related Property Damage
Claimants of Armstrong Holdings, Inc. asks Judge Farnan to
approve their retention of the law firm of Klehr, Harrison,
Harvey, Branzburg & Ellers LLP as their lead counsel, effective
July 19, 2001, the date the PD Committee was formed.
The mandate of this Committee, as it sees it, is to "represent
the significant interests of property damage claimants" in these
cases. To that end, the Committee wants to retain Klehr and
made that selection at its first meeting.
The services to be performed by Klehr are:
(a) providing the Property Damage Committee with legal
advice with respect to its rights, duties and powers in the
Debtors' cases;
(b) assist the Property Damage Committee in investigating
the acts, conduct, assets, liabilities and financial condition
of the Debtors, the operation of the Debtors' businesses and the
desirability of the continuance of such businesses and other
matters;
(c) preparing pleadings and applications as may be
necessary in furtherance of the Property Damage Committee's
interests and objectives on behalf of its constituency;
(d) reviewing and analyzing all applications, orders,
operating reports, schedules and statements of affairs filed and
to be filed with this Court by the Debtors or other parties in
these cases; advising the Property Damage Committee with respect
to the foregoing matters and their impact upon property damage
claimants; and taking such actions with respect to the foregoing
matters as the Property Damage Committee may determine are
appropriate;
(e) consulting with the Debtors, the other committees,
major creditors and parties in interest, and the United States
Trustee concerning the administration of the Debtors' cases and
their estates;
(f) participating in formulating a chapter 11 plan or
plans of reorganization;
(g) assisting the Property Damage Committee in the
solicitation and filing with the Court of acceptances or
rejections of any proposed plan or plans of reorganization;
(h) advising the Property Damage Committee with respect
to, and implementing as appropriate, communications or related
programs to notify property damage claimants regarding material
developments in the cases, the Property Damage Committee's
position on any proposed plan, the claimants' obligations
relating to any claims deadline(s), and similar matters;
(i) representing the Property Damage Committee in
hearings and other judicial proceedings; and
(j) performing such other legal services as may be
required and as are deemed to be in the best interests of the
Property Damage Committee and the constituency it represents.
Klehr advises it will be billing the Debtors' estates at its
normal and customary rates:
Partners $280-$425 per hour
Associates $180-$280 per hour
Paralegals $120
These hourly rates are subject to periodic increases in the
ordinary course of Klehr's business. The particular attorneys
and paralegals assigned to these cases may vary from time to
time according to the needs of the assignment.
Ms. Joanne B. Wills, a member of Klehr, avers to Judge Farnan
that the firm is "disinterested" and neither holds nor
represents any interests adverse to the PD Committee or these
estates in the matters for which his approval of employment is
sought.
However, in the interests of full disclosure Ms. Wills advises
that Klehr Harrison has represented certain entities, including:
(a) NAO, Inc.; DeSoto, Inc.; Quickway Industrial (and R
Hawthorne, Inc.); Star Engineering, Inc.; and United Capital
Corp., in Superfund litigation relating to the Helen Kramer
Landfill. Among the numerous potentially responsible parties at
this site was AWI. All of the Firm's matters with respect to the
Helen Kramer site are closed. Klehr Harrison has also
represented numerous entities in connection with other Superfund
sites. To the best of my knowledge, the Firm has no open matters
in this connection in which existing clients have interests
potentially or actually adverse to the Debtors.
(b) Klehr Harrison represents or has represented Citibank,
N.A.; First Union National Bank; Fleet Bank; Georgia Pacific;
Marine Midland Bank, N.A.; Mellon Bank, N.A.; PNC Bank, N.A.;
and Wells Fargo Bank Minnesota, all of which are either
unsecured creditors of the Debtors or affiliates of such
unsecured creditors, in matters that are unrelated to the
Debtors' bankruptcy cases.
(c) Klehr Harrison formerly represented T Rowe Price, which
is either a significant stockholder of the Debtors' parent
company, or an affiliate thereof, in a matter unrelated to the
Debtors or their bankruptcy cases.
(d) Klehr Harrison formerly represented Oaktree Capital (a
member of the Commercial Committee or an affiliate thereof) as
co-counsel in a bankruptcy case unrelated to the Debtors' cases.
(e) Klehr Harrison is Delaware bankruptcy counsel to a
class of claimants with asbestos-related personal injury claims
in the Bankruptcy case of In re Owens Corning, Inc., currently
pending in the District of Delaware.
(f) Klehr Harrison represents KPMG Consulting Inc., the
financial advisor to the Debtors or an affiliate thereof, in
matters unrelated to the Debtors or their bankruptcy cases.
(g) Klehr Harrison represents Nissan Motor Acceptance
Corp., an affiliate of Nissan Motor Acceptance Equipment Finance
(a secured creditor of the Debtors), in matters unrelated to the
Debtors or their cases.
In addition to the foregoing, due to the size and diversity of
its practice, Ms. Wills cautions that Klehr Harrison may have
represented or otherwise dealt with, and may now be representing
or otherwise dealing with various persons (and their attorneys
and accountants) who are or may consider themselves creditors,
equity security holders or parties in interest in these cases
but who are not presently identified as creditors or equity
security holders. However, such representations or involvement,
if any, do not relate to the Debtors or their estates.
The Unsecured Creditors'
Committee Raises a Limited Objection
The Official Committee of Unsecured Creditors makes a limited
objection to the employment of Klehr as counsel for the PD
Committee, telling Judge Farnan that that both the Debtors'
Motion to disband the PD Committee and the Committee's joinder
in that Motion assert there is no need or justification for the
existence of a PD Committee, repeating the argument that the
Debtors have not historically had, and currently do not have,
any material liability for asbestos-related property damage
claims.
Second, the interests of the PD claimants are "already
adequately represented" by the Creditors' Committee.
Accordingly the estates should not have to bear the extra
expense of counsel for the PD Committee and the Application
should be denied.
The Debtors Object
The Debtors strenuously object to the employment of Klehr as
counsel for the PD Committee, rehearsing in large part its
previously stated bases for dissolution of the Committee,
including arguments regarding expenses, described in its Motion
to disband the Committee. (Armstrong Bankruptcy News, Issue No.
10; Bankruptcy Creditors' Service, Inc., 609/392-0900)
AT HOME: Will Shut-Down MatchLogic & Slash 500 Jobs to Cut Costs
----------------------------------------------------------------
Excite@Home announced that the company will close its MatchLogic
subsidiary and refine the Excite.com portal services as it
continues to lower operating costs. These decisions are aligned
with previously announced plans to reduce the company's focus on
online media and narrowband businesses.
In conjunction with these steps, the company will downsize its
workforce by approximately 500 employees over the next three
months.
MatchLogic, located in Westminster, Colo., is Excite@Home's
interactive marketing services subsidiary. MatchLogic will begin
transition Tuesday, September 25, 2001 for closure anticipated
to be completed by the end of the year.
Also effective Tuesday, the Excite.com portal will be refining
its operations to offer those Internet services most popular
with users. It is anticipated that Excite.com portal will
continue to provide core applications and content. Support for
the @Home 2000, the personalized broadband content experience
provided to @Home subscribers, will continue.
"Selling and reducing our narrowband media assets that do not
contribute financially or strategically to the broadband access
business is the right direction for our corporate viability,"
said Patti Hart, chairman and chief executive officer,
Excite@Home.
As announced previously, Excite@Home is exploring options with
respect to its liquidity needs and capital structure. The
company anticipates needing additional funding and/or financial
restructuring in order to continue as a going concern. There can
be no assurance that such funding can be attained or that any
restructuring will be successful.
Excite@Home is the world's leading provider of broadband access
services for millions of consumers and businesses. Excite@Home
has interests in one joint venture outside of North America
delivering high-speed Internet services and three joint ventures
outside of North America operating localized versions of the
Excite portal.
BIO-PLEXUS: Appoints Brian Herrman as Chief Financial Officer
-------------------------------------------------------------
Bio-Plexus, Inc. (OTCBB: BPXS), a leader in the design,
manufacture and marketing of safety medical needles, appointed
Brian J. Herrman, CPA, as the Company's Chief Financial Officer.
Mr. Herrman brings nearly 25 years of financial, managerial and
administrative experience to Bio-Plexus.
Prior to joining Bio-Plexus, Mr. Herrman, 46, served as Vice-
President and Chief Financial Officer of Paradigm4, Inc., a 250-
employee wireless data software development and
telecommunications company. He rebuilt the Company's finance, HR
and marketing departments, while developing new plans and
projections for investors. After stabilizing the Company, Mr.
Herrman worked with the CEO to develop a new business plan,
raised $48 million in new capital and eventually increased
revenues from $3 million in 1998 to $15 million in 2000.
>From 1991 to 1998, Mr. Herrman served as Chief Financial
Officer, then Chief Operating Officer, for Silikal Resin
Systems, Inc., a high tech coatings manufacturer. He managed
this company through three distinct phases - turnaround,
financing/growth and eventual sale to a large German
multinational company.
Mr. Herrman began his career at Ernst & Young in 1977,
eventually becoming a Partner in their Entrepreneurial Services
Group, where he specialized in value-added consulting,
accounting, systems and tax services to emerging growth and mid-
size companies in the medical device, high tech, software
development and manufacturing industries. While at Ernst &
Young, he received the US Small Business Administration CPA of
the Year Award in 1987 for "contributions to the strengthening
of small business."
John S. Metz, President and Chief Executive Officer of Bio-
Plexus, commented, "Brian joins Bio-Plexus at an exciting time.
Through nearly a quarter of a century of experience, he has
gained valuable insight into managing growth companies through
different phases of their existence. Brian has been the
architect and implementer of numerous growth, financial and
administrative strategies. His hands-on experience in these
areas will be a tremendous asset to Bio-Plexus and its
shareholders as we expand our industry presence. Our recently
completed refinancing and emergence from bankruptcy signal a new
era in Bio-Plexus' history, and bringing aboard an executive
with Brian's impressive resume is an important step in the
Company's progress."
Mr. Herrman replaces Kimberly Cady as Chief Financial Officer,
who resigned to pursue other interests.
Bio-Plexus, Inc., designs, develops, manufactures and holds U.S.
and international patents on safety medical needles and other
products under the PUNCTUR-GUARD(R), DROP-IT(R), and PUNCTUR-
GUARD REVOLUTION(TM) brand names. For independent evaluations of
the PUNCTUR-GUARD(R) blood collection needle, refer to the
Centers for Disease Control (MMWR, January 1997) and ECRI
(Health Devices, June 1998 and October 1999) studies. Accidental
needlesticks number about one million per year in the United
States and can result in the transmission of deadly diseases
including HIV and Hepatitis B and C.
On April 4, 2001, the Company filed a voluntary petition for
relief under Chapter 11 of the United States Code the with the
United States Bankruptcy Court for the District of Connecticut.
As of the Petition Date, the Company commenced operating its
business and managed its properties as a debtor-in-possession.
Effective July 19, 2001, the Reorganized Company reincorporated
in the State of Delaware as the Delaware Company. The
reincorporation was effected pursuant to a merger agreement
entered into pursuant to the Plan of Reorganization.
BUILDNET: GDL Management Hired as Debtor's Financial Advisor
------------------------------------------------------------
Judge Catharine R. Carruthers grants BuildNet, Inc., authority
to employ GDL Management Services, a division of Mahoney Cohen &
Company, CPA, P.C., as its financial advisors.
GDL Management will provide BuildNet with general financial
advice with respect to the Debtor's business operations,
properties, financial conditions and restructuring prospects,
among others. BuildNet will be paying an estimated total fee of
$30,000 plus expenses to GDL Management.
Judge Carruthers also approves BuildNet's application to employ
John Pait & Associates, Inc., as their appraiser and auctioneer.
BuildNet will look to John Pait firm to establish a fair market
valuation for their furniture, fixtures, and equipment, among
others.
Meanwhile, BuildNet is still waiting for the Court approval of
their applications to employ Hughes Pittman & Gupton, L.L.P., as
their independent auditors and Wyrick Robbins Yates & Ponton,
L.L.P. as their special counsel.
BuildNet, which is engaged in the business of development and
sale of software primarily for the building industry, filed for
Chapter 11 protection on August 8, 2001 in the Middle District
of North Carolina. Subject to further extensions, the Debtors
exclusive period during which to file a plan expires on December
6, 2001, unless the debtor elects to be a small business in
which instance the plan and disclosure statement shall be filed
within 100 days of the Order for Relief.
As of August 23, 2001, the company reported $35,998,691 in
assets and $79,614,191 in debt. Early this year, the company
cut its workforce by about 75%, sold certain assets, and
announced it was being acquired by rival, HomeSphere, after it
failed secure further funding. But the proposed acquisition did
not push through, causing BuildNet to file for bankruptcy.
BUILDNET INC: HomeSphere Unit Acquires BuildSoft at Auction
-----------------------------------------------------------
HomeSphere, a leading provider of e-commerce, collaboration,
bid-management, and buyer incentive programs for the
homebuilding industry, announced it had acted through a wholly
owned subsidiary to acquire the builder back office system
BuildSoft, and a list of related assets, such as patents and
trademarks, at a BuildNet bankruptcy auction.
For the foreseeable future, BuildSoft-related operations will
continue under the current name.
BuildSoft, which was once a cornerstone product of Durham, N.C.-
based BuildNet, has over 3,000 users, of which 2,500 are active
users; over 1,800 users subscribe to BuildSoft's maintenance and
support programs. Maintenance and support for BuildSoft will
continue uninterrupted, as it has since BuildNet first filed
Chapter 11 bankruptcy August 8, 2001.
HomeSphere's acquisition of BuildSoft joins together two
companies whose business plans have long been in alignment.
HomeSphere's software products and service offerings, all solely
focused on the residential construction industry, span from
Internet-based project collaboration and bid management tools to
its unique manufacturer incentive programs. HomeSphere's
services do not disrupt the links in the local supply chain;
indeed, they add strength and substance to them.
BuildSoft, the homebuilding industry's leading procedurally
driven, PC-based, software system and accounting package, which
enjoys over 12% market share among the nation's residential
housing starts, was the core software system around which
BuildNet was first assembled.
After BuildNet collapsed beneath debt it assumed in its
acquisition spree, it filed for bankruptcy and posted certain
assets for sale at an auction administered by a North Carolina
Federal Court. HomeSphere's purchase of BuildSoft includes the
purchase of the BuildSoft software system, several patents and
trademarks related to the BuildSoft business, and the registered
domain name Buildsoft.com.
"We couldn't be happier with our purchase, and in coming version
releases we look forward to bringing improved functionality to
the home building industry's leading software package for small
to medium-sized home builders," said Paul Pittman, HomeSphere's
President. "BuildSoft customers have demonstrated long-term
loyalty to the product, and over time we hope to earn their
equally enduring trust."
HomeSphere Inc., based in Denver, Colo., is a leading provider
of software and services for the homebuilding industry.
Builders, contractors, manufacturers, and dealer/distributors
can use HomeSphere solutions to leverage the Internet to access
user-friendly, online information management, and tools for e-
commerce, collaboration, scheduling, bidding, and communicating.
HomeSphere is led by James H. Waldrop, 54, as Chief Executive
Officer and Paul A. Pittman, 39, as President and Chief
Operating Officer. Jim is a veteran of the residential
construction industry, having served in several senior
management positions, including Executive Vice President, at
Pulte Homes (NYSE: PHM), the largest U.S. homebuilder. Waldrop
has over 15 years of technology management and systems
development experience.
Pittman joined HomeSphere, after serving as CEO of
TheJobsite.com, Inc., which merged with HomeSphere. He has been
involved in the residential construction industry as developer,
builder and lumberyard owner. Pittman was also an investment
banker for 10 years, most recently with Merrill Lynch & Co.
Before purchasing BuildSoft, HomeSphere had over 25 employees,
and already had contractual relationships with builders
responsible for over 15% of yearly U.S. housing starts, as well
as over 60 leading manufacturers of residential construction
products. For more information about HomeSphere, visit
http://www.homesphere.com
CMI INDUSTRIES: Noteholders Agree To Execute Restructuring Plan
---------------------------------------------------------------
CMI Industries, Inc. announced that the Company has reached an
agreement in principle with an informal committee of holders of
the Company's 9 1/2% Senior Subordinated Notes to restructure
all of the Company's debt and equity pursuant to which the
Company's profitable Elastic Fabrics of America LLC subsidiary
will continue as a going concern and the remainder of the
Company's assets will be liquidated in an orderly fashion.
The notes have an outstanding principal balance of $75,325,000
and represent over 85% of the Company's obligations.
Said Joseph L. Gorga, President of the Company, "I am pleased
that we have been able to reach an agreement in principle with
the Company's bondholders to complete a restructuring of CMI's
debt and equity, and at the same time, protect the ongoing
interests of Elastic Fabrics of America LLC. It is regrettable
that circumstances relating to market conditions for greige
fabrics have placed the Company in such difficult circumstances.
I believe this agreement is in the best interest of all the
Company's constituents and will maximize value for the benefit
of all concerned. The Company will now turn its efforts to
implementing the plan on an expeditious basis. I want to again
express my sincere appreciation to our customers, vendors and
associates for their continued support throughout the last few
months. We remain committed to being the premier domestic
supplier of elastic fabrics and are excited about moving forward
with our growth initiatives for this business."
One member of the Noteholder committee expressed satisfaction
concerning this agreement: "this Agreement clears the way for an
orderly reorganization in the best interests of the Noteholders,
other unsecured creditors and all of the Company's
stakeholders."
Under the terms of the restructuring agreement, the Elastics'
operations will continue in the ordinary course without
interruption or interference of any kind, and Elastics'
creditors will be paid in full without impairment by the
reorganization of the parent company. Elastics' prospective
working capital requirements will be satisfied from a new
separate working capital facility.
CMI's restructuring will be implemented pursuant to a voluntary
chapter 11 plan and is subject to definitive documentation and
all approvals required by the chapter 11 process. CMI's
unsecured creditors will receive substantially all of (i) the
proceeds from the liquidation of the Company's non-operating
assets, (ii) new senior notes to be issued by the Company, and
(iii) 100% of the equity in the Company. The parties anticipate
that the restructuring will be completed by early 2002.
Separately, on September 25, 2001, creditors asserting claims
that total less than $80,000 served the Company with a petition
seeking to have it reorganized under Chapter 11 of the
Bankruptcy Code. The Company is reviewing the filing and will
respond appropriately in the near future. The Company and the
Noteholder Committee indicated that the filing was unrelated to,
and would have no effect on, the parties' restructuring
agreement. It is anticipated that these creditors will be
treated in the context of the broader agreement applicable to
unsecured creditors, as negotiated with the Noteholders.
The Company's main operating subsidiary, Elastic Fabrics of
America LLC, manufactures textile products that serve a variety
of markets, including the woven apparel, elasticized knit
apparel and industrial/medical markets. The Company is
headquartered in Columbia, South Carolina.
Elastic Fabrics of America LLC operates manufacturing facilities
in Greensboro, North Carolina and Stuart, Virginia. As
previously announced, the Company is in the process of closing
the last plant involved in its greige woven fabrics operations.
The Company had consolidated net sales from continuing
operations of $85.2 million in 2000.
CAPRAL ALUMINUM: Weak Results Prompt S&P to Drop Rating to BB-
--------------------------------------------------------------
Standard & Poor's lowered its long-term corporate credit rating
on Capral Aluminium Ltd. (Capral) to double-'B'-minus from
double-'B'. At the same time, the rating was removed from
CreditWatch with negative implications where it was placed on
Aug. 27, 2001. The outlook is negative.
The rating action follows the release of Capral's weaker-than-
expected half yearly financial results to June 30, 2001. The
result primarily reflects significant losses from the company's
aluminum remelt facility, cyclically weak demand, higher input
costs from a weaker Australian dollar (A$) and higher aluminum
prices, and costs associated with an internal restructuring
program.
Standard & Poor's also notes that the weaker A$ helped to limit
import competition for its extrusion and distribution businesses
during this six month period. These results were the first since
the divestment of the company's aluminum smelting operations in
October 2000, the proceeds of which were used to complete a
A$304 million buyback of 67% of the company's issued capital.
Although Capral enjoys large market shares in both aluminum
extrusion and distribution in Australia and New Zealand, these
markets are significantly exposed to the building and
construction cycles, exchange rate and metal price movements,
and strong competition from domestic and international
competitors.
Imports, in particular, have enjoyed strong growth in market
share in the past five years, given the relatively high cost
base of the domestic producers, and a reduction in tariff
barriers. Accordingly, domestic extruders are being forced to
significantly reduce their cost structures in order to compete
more effectively with imports. Capral is undertaking a major
cost reduction program designed to provide the company with a
globally competitive cost base, particularly in its extrusion
operations. Although Capral's strategy is considered sound,
Standard & Poor's notes that the expected sales margin
improvements could be undermined by poor implementation of its
cost reduction strategy, or by continued price competition,
driven by weaker-than-expected demand, market oversupply, and a
potential increase in imports.
Despite Capral's weak first half result, underlying cash flows
from continuing operations, excluding the remelt facility, are
considered fair relative to the company's debt obligations, with
debt levels expected to reduce significantly over the second
half from asset sale proceeds and a reduction in working
capital.
Further, the implementation of an appropriate strategy to stem
losses at the remelt facility, and to reduce the cost base of
the extrusion operations, should enable the company to
materially improve its cash flows in the short to medium term.
Although some modest increases in debt in 2002 is expected from
acquisitions and restructure costs, debt levels are expected to
remain below Capral's 35%-40% debt-to-equity target range in the
next few years.
Standard & Poor's expects that Capral will actively manage
increases in debt levels in line with progress in reducing its
cost base.
Outlook: Negative
The outlook reflects the uncertainties surrounding the company's
loss-making remelt operations, and ability to realize expected
cost savings from its restructuring program. The outlook also
incorporates a potential for continued weak economic conditions
and strong price competition in the near term, which could
undermine the extent of any cost savings.
Standard & Poor's expects that if the company is able to
demonstrate solid progress toward its cost savings and earnings
targets, and satisfactorily address the operating losses at its
remelt facility, the outlook could be revised to stable in the
next 12 months-18 months.
CENTRAL EUROPEAN: Unit Wins Legal Dispute vs. Czech Republic
------------------------------------------------------------
Central European Media Enterprises Ltd. (OTCBB:CETVF.OB)
announced that an International Arbitration Tribunal has ruled
in favor of CME's wholly-owned Dutch subsidiary in its
proceedings against the Czech Republic filed under the Bilateral
Investment Treaty between the Netherlands and the Czech Republic
and relating to the Company's investments in the television
service organization CNTS.
Signed in 1991, the BIT seeks to encourage Netherlands
investment in the Czech Republic by providing explicit
protections from actions by the signatory states that are unfair
or discriminatory to foreign investors or that deprive investors
of their investments.
"This ruling caps a long and diligent campaign by CME and its
Chairman Ronald Lauder on behalf of our shareholders," stated
Fred T. Klinkhammer, CME's President and Chief Executive
Officer. "The ruling by an independent international tribunal
clearly establishes that the Czech Republic committed multiple
breaches of the BIT."
"We will now pursue the award to which we have been found
entitled on behalf of our shareholders. CME will prove that
these damages exceed $500 million, plus interest for the more
than two years in which CNTS's operations have been shut down."
On August 5, 1999, all operations of CNTS in the Czech Republic
were halted, when the licenseholder for TV Nova, CET 21, severed
its business relationship with CNTS. On February 22, 2000, CME
instituted arbitration proceedings against the Czech Republic
under the 1991 BIT, claiming that actions by the Czech Republic
had fundamentally undermined and ultimately brought about the
loss of its CNTS investment, and seeking damages for the harm
caused by the Czech Republic's actions.
The arbitration was heard before a three-member tribunal of
German, American and Czech arbitrators, pursuant to the
Arbitration Rules of the United Nations Commission on
International Trade Law, from April 23 to May 2, 2001 in
Stockholm, Sweden, with a final ruling being issued on September
14, 2001. The ruling is final and is not open to appeal.
Under the ruling the Czech Republic was found to have violated
the BIT and here is what the decision actually says and we
quote:
"1. The Respondent has violated the following provisions
of the Treaty:
a. The obligation of fair and equitable treatment
(Article 3 (1));
b. the obligation not to impair investments by
unreasonable or discriminatory measures (Article
3 (1));
c. the obligation of full security and protection
(Article 3 (2));
d. the obligation to treat foreign investments in
conformity with principles of international law
(Article 3 (5) and Article 8 (6), and
e. the obligation not to deprive Claimant of its
investment (Article 5); and
2. The Respondent is obligated to remedy the injury that
Claimant suffered as a result of Respondent's
violations of the Treaty by payment of the fair market
value of Claimant's investment as it was before
consummation of the Respondent's breach of Treaty in
1999 in an amount to be determined at a second phase
of this arbitration;
3. (1) The Respondent shall bear its own legal costs.
(2) The Respondent shall pay to Claimant as refund of
Claimant's legal costs and expenditures US
$750,000.
(3) The Claimant shall bear one third and the
Respondent two thirds of the Arbitral Tribunal's
costs and expenditures. The Respondent,
therefore, shall further pay to the Claimant as
refund of Claimant's payments of the Tribunal's
fees and disbursements US$257,749.81.
4. This Partial Award is final and binding in respect to
the issues decided herein. The legal seat of the
proceedings is Stockholm, Sweden.
The Tribunal will continue the arbitration proceedings
in order to decide on the quantum of the Claimant's
claim upon request of one of the Parties."
"Once a monetary award has been finalized, we expect the Czech
Republic to pay it promptly," Mr. Klinkhammer added. "It is
legally obligated to do so, has signed a treaty promising to do
so, and must do so to have any credibility in the international
marketplace and any standing in the international community.
Under the ruling CME was awarded `costs to date' of
$1,007,749.81, payable immediately by the Czech Republic."
"Despite these courtroom distractions, our management team has
remained focused on strengthening our station group," Mr.
Klinkhammer continued. "In the first six months of 2001, all of
our stations posted positive EBITDA and broadcast cash flow with
combined increases of 91% and 77%, respectively. Under the
guidance of Robert Burke, our recently appointed COO, and the
rest of our management team we will continue to build upon the
success of our market leading stations."
Under UNCITRAL rules, the full text of the award cannot be made
public without the parties' consent. "As CME said before this
award was issued, CME and Ronald Lauder consent to the public
release of the award and the London award in the interest of
transparency," said Mr. Klinkhammer. "We again call upon the
Czech Republic to support transparency by agreeing to the public
release of both awards."
Central European Media Enterprises Ltd. (CME) is a TV
broadcasting company with leading stations located in Romania,
Slovenia, Slovakia and Ukraine. CME is traded on the Over the
Counter Bulletin Board under the ticker symbol "CETVF.OB".
COVAD COMMUNICATIONS: Engages Gilardi as Plaintiff Class Locator
----------------------------------------------------------------
Covad Communications Group, Inc. presents the Court with an
application to employ Gilardi Company, LLC, effective as of
September 19, 2001, to assist the Company in identifying and
compiling a service list of the Class Members of the Securities
Class Actions.
Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young & Jones,
P.C. in Wilmington, Delaware, states that although the Debtor
has reached a settlement of the Securities Class Action, they
realize that due to the procedural and time constraints related
to approval of the settlement, the Representatives will not be
in a position to identify all of the potential Class Members
quickly enough for the Debtor to mail the Class Members the
Notice of Deadline for Creditors to File Proof of Claim
previously approved by this Court and the Disclosure Statement,
the Plan and a ballot.
The Debtor proposes to engage Gilardi to assist it in
identifying and compiling of service list of the Class Members
so that the Debtor can immediately serve the Class Members the
above listed documents. The Debtor believes the nine pro tune
nature of the employment is justified due to the time
constraints faced in this case.
Ms. Jones tells the Court that Gilardi is the world's largest
class action notice and claims administrator, with experience in
notice mailings that have been as high as 8,000,000. Ms. Jones
adds that Gilardi has the in-house staff and capacity to
immediately assist the Debtor with the task of identifying the
Class Members and supplying the Debtor with a mailing matrix of
those Class Members.
By authorizing the Debtor to employ Gilardi to so assist it in
identifying these potential claimants, Ms. Jones states the
Class Members may receive actual notice of the bar date by which
they must file their claims and of their right to vote on the
Plan rather than having to rely on the publication of such
notices.
Ms. Jones informs the Court that Gilardi's compensation for the
services that it will render to the Debtor will be on a fee
service basis with rates of $135 per hour for principals, $95
per hour for managers and $60 per hour for staff with the
blended rate being approximately $65 per hour, plus reasonable
out-of-pocket expenses.
The Debtor respectfully submits that the compensation to be paid
to Gilardi is reasonable in light of the services to be
performed. Gilardi has agreed that the payment of such fees and
expenses will be subject to the approval of the Bankruptcy Court
in accordance with the Bankruptcy Code, the Federal Rules of
Bankruptcy Procedure, the Local Bankruptcy Rules and orders of
this Court.
Dennis A. Gilardi, the principal and founder of Gillardi & Co.,
LLC, states that the firm specializes in supervision of class
notice procedures, including compilation of master mailing lists
of potential class members, address searches for returned and
undelivered mail, supervision of the claims review process,
calculation and the distribution of funds to class members.
Mr. Gilardi says that the compensation arrangement provided for
in the agreement with the Debtor is consistent with and typical
of arrangements entered with other firms, which Gilardi rendered
similar services.
Mr. Gilardi adds that his firm does not hold or represent any
interest adverse to the Debtor's estates and is a disinterested
person in these cases. (Covad Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
DAIRY MART: 20 Largest Unsecured Creditors
------------------------------------------
Entity Nature Of Claim Claim Amount
------ --------------- ------------
US Bank Bond $79,085,958
Timothy Sandell Senior Subordinated
180 East Fifth Street Notes 10.25%-Class A
St. Paul, MN 55101
(651) 244-0713
US Bank Bond $14,235,473
Timothy J. Sandell Senior Subordinated
180 East Fifth Street Notes 10.25% Class B
St. Paul, MN 55101
(651) 244-0713
Travelers Co., Inc. Trade Vendor $8,100,000
Andrew Sherwin
1550 Utica Ave. South
Minnepolis, MN 55416
(952) 591-3362
McLane Co., Inc. Trade Vendor $7,567,828
Terry McElroy
PO Box 987
Nickolasvilla, KY 40340
(254) 771-757
Marathon Oil Trade Vendor $3,700,000
Bill Wilson
539 So. Main St.
Finday, OH 45840
(419) 421-2161
Chevron Products Co. Trade Vendor $3,000,000
Peter Kump
2300 Windy Ridge Pkwy.
Atlanta, GA
(770) 984-3001
Handex, Inc. Environmental $1,557,000
Allen Leung-Wolf Remediation
30914 Suneagle Drive
PO Box 1579
Mount Dora, FL 32757
(513) 942-9343
Cincinnati Insurance Insurance Claims $1,302,836
Company
Marc J. Schambow
6200 S. Gilmore Road
Fairfield, Ohio 45014-5145
(513) 870-2110
Malone Advertising Advertising Agent $1,000,000
Lisa Looman
388 S. Main St., Suite 410
Akron, OH
(330) 376-6148 *3270
PepsiCo Bottling Co. Trade Vendor $818,430
of Akron
Steve Zanin
PO Box 75901
Chicago, IL 60675
(847) 818-6137
PepsiCo Bottling of Lima Trade Vendor $757,303
Denise Hubner
PO Box 75953
Chicago, IL 60675
(800) 926-7242
Novelty, Inc. Trade Vendor $676,030
Becky Hawkins
PO Box 663833
Indianapolis, IN 46266
(800) 344-4354
Coca Cola Bottling Co. Trade Vendor $569,688
of Kentucky
Mark Byrd
PO Box 631277
Cincinnati, OH 45263
(502) 775-4600
Dairymens Trade Vendor $516,289
Martha
(216) 671-2300
PO Box 75123
Cleveland, OH 44101
Proctor and Gamble-Millstone $500,000
Chris Magno
805 Almahurst Lane
Loveland, OH 45104
(513) 774-9296
Baker and Hostetler LLP Legal Advisory $474,000
Albert T. Adams Fees
3200 National City Center
1900 E. 9th Street
Cleveland, OH 44114-3485
(216) 621-0200
Frito-Lay, Inc. Trade Vendor $379,265
Craig Stargatt
PO Box 643104
Pittsburgh, PA 15264
(800) 776-2257
Cardinal Ice Cream Trade Vendor $365,780
Louis Trauth
16 E. 11 Street
PO Box 1770
Newport, KY 41071
(606) 431-7556
Home City Ice Co., Inc. Trade Vendor $330,984
Regina
5709 Harrison Ave.
Cincinnati, OH 45248
(800) 759-4411
Pierre's French Ice Cream Vendor $287,654
Ronnie Levinsohn
6200 Euclid Avenue
Cleveland, OH 44103
(216) 432-1144
DAIRY MART: Gains Court Okay for $10.75MM Interim DIP Financing
---------------------------------------------------------------
Dairy Mart Convenience Stores, Inc. (AMEX:DMC) obtained U.S.
Bankruptcy Court authorization for its requested interim Debtor-
in-Possession (DIP) financing.
In a hearing yesterday, the court reviewed and approved in its
entirety Dairy Mart's motion seeking immediate use of up to
$10.75 million of a new credit facility.
A final court hearing to review and approve the entire facility,
which is for an amount of up to $46 million, is scheduled for
October 11, 2001.
Dairy Mart's DIP financing is provided by a group of lenders led
by Foothill Capital Corporation, a wholly owned subsidiary of
Wells Fargo & Company. The DIP facility will be used for
employee salaries and benefits, ongoing operations and other
working capital needs. A key use of the facility will be
payments to vendors on agreed-to terms for goods and services
rendered after Dairy Mart's bankruptcy petition.
Gregory G. Landry, president and chief executive officer of
Dairy Mart, said that he appreciated the court's prompt
attention: "Uninterrupted support from our suppliers is
especially critical in maintaining retail operations during the
early days of our chapter 11 process. The court's authorization
of our interim DIP facility will go a long way towards assuring
our vendors and employees. I want to thank both employees and
suppliers for the support they've shown."
On September 24, 2001, Dairy Mart and substantially all of its
subsidiaries filed voluntary petitions for protection under
chapter 11 of the U.S. Bankruptcy Code in the United States
Bankruptcy Court for the Southern District of New York. The case
is being heard by Judge Arthur Gonzalez.
During the chapter 11 process, Dairy Mart and its stores will
continue to operate normally.
Dairy Mart Convenience Stores, Inc. owns or operates
approximately 550 retail stores in seven states located in the
Midwest and Southeast. For more information, visit Dairy Mart's
web site at http://www.dairymart.com
EASYLINK SERVICES: Has Agreements to Restructure $63MM of Debt
--------------------------------------------------------------
EasyLink Services Corporation (NASDAQ: EASY), a leading global
provider of outsourced messaging services to enterprises and
service providers, announced it has entered into agreements with
AT&T Corp., George Abi Zeid (the former sole shareholder of
Swift Telecommunications) and equipment lessors to restructure
an aggregate of $63.3 million of debt.
Upon completion of this restructuring, the Company will
eliminate a principal amount of approximately $44.2 million of
debt and decrease its annual cash debt service requirements from
approximately $36.0 million to approximately $5.0 million for
the next two years.
Closing of the debt restructuring is subject to certain
conditions, including completing a $10 million financing. The
Company plans to complete the debt restructuring on or before
October 31, 2001.
Under the terms of the restructuring, the Company will exchange
an aggregate of approximately $63.3 million of debt and
equipment lease obligations for an aggregate of $19.1 million of
restructure notes due in 2006, $4.0 million of other residual
payments due in 2004, 19.4 million shares of Class A Common
Stock and warrants to purchase 18.0 million shares of Class A
Common Stock.
In addition, the Company has agreed to purchase certain leased
equipment having an original equipment cost of $22.5 million for
an aggregate purchase price of approximately $3.9 million. As a
result of the restructuring, the Company will decrease its
average quarterly debt-related cash requirements from an
aggregate of approximately $8.9 million (principal
amortization plus interest) to approximately $1.3 million
(interest only) and increase its stockholders' equity by over
$30 million.
"This announcement is a significant milestone for EasyLink
because it was one of the most challenging financial
restructuring hurdles we needed to overcome to move forward with
our business plan. Moreover, the strategic business
restructuring program we implemented in the fourth quarter of
last year is beginning to show meaningful results so that we now
believe we can support this significantly reduced debt service
out of operating cash flow from our business in the future,"
said Thomas Murawski, Chief Executive Officer of EasyLink.
The restructure notes will bear interest at a rate of 12% per
annum and mature five years from the date of the restructuring.
$6.4 million in principal amount of the restructure notes are
convertible, at the option of the holder, into shares of Class A
Common Stock of the Company at a conversion price of $1.00 per
share.
The Company will not be required to make scheduled principal
payments on any of the notes until two years after the date of
issuance. The warrants allow the holders to purchase shares of
Class A Common Stock of the Company at an exercise price equal
to the average closing prices of EasyLink's Class A Common Stock
over the 30 trading days ending two days before the closing of
the restructuring. The warrants are exercisable for ten years
after the date of the grant.
Pending the completion of this restructuring, creditors have
agreed to defer all payments under the obligations that are the
subject of the restructuring until October 31, 2001 unless
extended. Also pending completion of the restructuring, the
Company has issued approximately $17.1 million of interim
notes in exchange for present and future lease obligations in
the amount of approximately $16.6 million.
The interim notes bear interest at the rate of 12% per annum,
may be declared due and payable by the holder after October 31,
2001 unless extended and will be exchanged upon completion of
the restructuring for a portion of the shares, restructure notes
and warrants to be issued in the restructuring.
The completion of the debt restructuring is subject to certain
conditions, including completing a $10 million financing on or
before October 31, 2001 unless extended, compliance with
applicable NASDAQ stock market rules and entering into
definitive agreements with the creditors holding the obligations
that are subject to this restructuring.
As of Tuesday, the Company has entered into definitive
agreements with creditors representing approximately $50.3
million of the $63.3 million of debt and has entered into
agreements in principle with the balance of the creditors.
EasyLink Services Corporation (NASDAQ: EASY), based in Edison,
NJ, is a leading global provider of outsourced messaging
services to enterprises and service providers. The Company
offers a comprehensive portfolio of messaging services to
provide the essential communications infrastructure companies
need to do business in today's 24x365 environment.
EasyLink's solution set includes e-mail and groupware services;
boundary services that offer virus protection, spam control and
content filtering for business e-mail systems; message delivery
services such as EDI, telex, desktop fax and broadcast and
production messaging services; and professional services
including managed services support, on-site applications
management, help desk and staff augmentation services. For more
information, please visit http://www.easylink.com
EQUITABLE LIFE: S&P, Alarmed by Restructuring, Junks Ratings
------------------------------------------------------------
Standard & Poor's lowered its counterparty credit and insurer
financial strength ratings on U.K.-based insurer The Equitable
Life Assurance Society (Equitable Life) to triple-'C' from
single-'B'.
The rating action follows publication of Equitable Life's
consultation proposal for a restructuring of its liabilities
between guaranteed annuity rate (GAR) and non-GAR policyholders.
The ratings remain on CreditWatch with negative implications.
The above rating actions are in accordance with Standard &
Poor's press release dated Sept. 12, 2001.
At the same time, Standard & Poor's subordinated debt rating on
related entity, Equitable Life Finance PLC (guaranteed by
Equitable Life) remains triple-'C'-minus. This rating remains on
CreditWatch with developing implications, where it was placed on
Feb. 5, 2001.
In a press release on Sept. 12, 2001, Standard & Poor's said
that the counterparty credit and insurer financial strength
ratings would be lowered to triple-'C' or lower when details of
the company's proposed restructuring were announced. Tuesday's
rating action follows publication on Sept. 20, 2001 of Equitable
Life's proposed restructuring. Although this document is for
consultation and does not represent the final proposals,
Standard & Poor's views this document as confirmation of
Equitable Life's plans to restructure its liabilities.
The lowering of the ratings relates specifically to the
potential of the company to selectively default on some of its
contractual obligations to policyholders, notably the GAR
policyholders, if the proposal is implemented following
policyholder approval.
The proposals announced by Equitable Life involve all with-
profits policyholders giving up some of their rights, including
their right to a guarantee, in exchange for an uplift in their
policy values. Specifically, policyholders with contracts
containing GAR options are being asked to forgo their right to a
guarantee (the GAR) in exchange for an uplift in their policy
values averaging 17.5%. The proposal for non-GAR policyholders
is that they relinquish any potential right to take legal action
against the society in exchange for an uplift of about 2.5% in
their policy values.
Standard & Poor's will continue to monitor developments and will
update the CreditWatch placement as further details emerge.
EXODUS COMMS: Files Chapter 11 Petition in Delaware
---------------------------------------------------
Exodus Communications(R), Inc. (Nasdaq: EXDS) filed voluntary
petitions for reorganization under Chapter 11 of the U.S.
Bankruptcy Code.
The filing will enable Exodus(R) to focus on operating its
business and serving its customers while it develops a plan of
reorganization to provide a suitable capital structure for long-
term growth.
The company also announced it has received a commitment for up
to $200 million in debtor-in-possession (DIP) financing from GE
Capital which will be used to fund post-petition operating
expenses and supplier and employee obligations.
The company filed its voluntary petition in the U.S. Bankruptcy
Court for the District of Delaware in Wilmington. The filing
includes the company's domestic operations headquartered in
Santa Clara, Calif.
Exodus Chairman and Chief Executive Officer L. William Krause
said the actions allow the company to continue to provide its
customers with the highest quality service and support and
assure fulfillment of its obligations to them as well as to
Exodus employees.
"Providing high quality products and services to our customers
has been, and continues to be, our number one priority. Our
employees have been, and continue to be, our number one asset,"
Krause said. "We are committed to meeting the needs of both-now
and well into the future. This restructuring action ensures we
have the wherewithal to do that and our daily operations
continue uninterrupted as before. In addition, we will now be
able to devote efforts to solidifying and executing on a go-
forward operating plan that is based on tough-minded fiscal
discipline and focuses on managing Exodus to profitability."
Debtor-in-Possession Financing
To enhance its liquidity, Exodus has obtained a commitment for
up to $200 million in DIP financing from GE Capital. This
financing, as well as cash from operations will be used to fund
post-petition operating expenses and supplier and employee
obligations. Funding of the DIP financing is subject to
condition precedents normal and customary with respect to
facilities of this type, including, but not limited to,
obtaining Bankruptcy Court approval.
"With a commitment for DIP financing in place and the
protections provided under the Bankruptcy Code for post-petition
purchases, we are confident our suppliers will continue to
support us as we complete our restructuring," Krause said.
Focus on Long-Term Profitable Growth
Exodus, as a market leader in complex Web hosting and Internet
operations outsourcing services, enjoyed first-mover status in
its category, building one of the world's largest privately-
managed data networks and locating dozens of state-of-the-art
Internet Data Centers (IDCs) in more high-demand locations than
any other hosting service provider.
The company had 17 consecutive quarters of double-digit
sequential growth and attained market leadership by expanding
rapidly to stay ahead of demand from customers for the highest
quality service and best solutions, according to Krause.
"We sacrificed profitability in exchange for growth and market
share, over-expanding in some areas in advance of demand, not
anticipating the decline as the dot.com bubble burst and the
economy weakened," Krause said. "But the investments made in
IDCs, state-of-the-art operations, customer support, and
enhanced products and service offerings are greatly valued by
our customers. While we address our balance sheet issues, it is
these assets that form the strong base from which we will
restore Exodus to financial stability. Our top priority is to
serve our existing customers, better than ever, so they entrust
us with more of their business. Our goal is to run a profitable
business without sacrificing any of the unique value we bring to
customers and the marketplace."
Krause said the company is in a good position to take advantage
of a market opportunity that continues to grow, albeit at a
slower pace than once predicted. According to the industry
research firm International Data Corporation, which ranks Exodus
as number one in the U.S. web hosting market, the demand for
such services will reach $24.8 billion by 2004, up from $7
billion in 2001.
"Exodus is a viable business in a growing market. We've got
world-class IDC operations and a premier suite of managed
hosting, network management, security, storage and content
delivery services," Krause said. "We intend to emerge from the
restructuring process with a more appropriate capital structure,
sufficient cash to fund on-going operations and the ability to
access additional capital if needed to fund new growth
initiatives. We determined, after careful consideration of our
various options, that reorganization through the Chapter 11
process presents the best mechanism to complete our
restructuring in a timely manner and retain our current
leadership position."
Exodus Communications is the leading provider of managed hosting
services for enterprises with mission-critical Internet
operations. The company offers sophisticated system and network
management solutions along with professional services to provide
optimal performance for customers' Internet infrastructures.
Exodus manages its network infrastructure via a worldwide
network of Internet Data Centers (IDCs) located in North
America, Europe and Asia Pacific. More information about Exodus
can be found at http://www.exodus.net
EXODUS COMMS: Case Summary & 28 Largest Unsecured Creditors
-----------------------------------------------------------
Lead Debtor: Exodus Communications, Inc.
2831 Mission College Boulevard
Santa Clara, CA 95054
Debtor affiliates filing separate chapter 11 petitions:
Area Systems, Inc.
American Information Systems, Inc.
Cohesive Technology Solutions, Inc.
GlobalCenter, Inc.
GlobalCenter Holding, Co.
KeyLabs, Inc.
Planet, Inc.
Service Metrics
Type of Business: Exodus Communications, Inc. and its
subsidiaries (the Company) are the leading
providers of Internet infrastructure
outsourcing services for
enterprises with mission-critical internet
operations. The Company offers a complex web
hosting and managed professional services,
including internet data services, networking,
storage, content distribution and caching,
security, performance measurement, monitoring
and testing, professional consulting, managed
Web hosting and Web application management. As
of June 30, 2001, the Company offered services
through a worldwide network of 44 Internet
Date Centers (IDCs) located in North America,
Europe, Asia and Australia. Through these
IDCs, the Company provided service to the
following major metropolitan areas: Amsterdam,
Atlanta, Austin, Boston, Chicago, Dallas,
Frankfurt, London, Los Angeles.
Chapter 11 Petition Date: September 26, 2001
Court: District of Delaware
Bankruptcy Case Nos.: 01-10539 through 01-10551
Debtors' Counsel: J. Gregory Milmoe, Esq.
D. J. Baker, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
(212) 735-3000
- and -
John K. Lyons, Esq.
Skadden, Arps, Slate, Meagher & Flom
(Illinois)
333 West Wacker Drive
Chicago, Illinois 60606-1285
(312) 407-0700
- and -
Mark S. Chehi, Esq.
David R. Hurst, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899
(302) 651-3000
Total Assets: $5,989,844,000
Total Debts: $4,446,116,000
Debtors' 28 Largest Consolidated Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
HSBC Bank USA Trustee of $1,000,000,000
Todd Niemy 11.625% Senior
140 Broadway Notes due 2010
New York, NY 10005
Tel: (212) 525-1343
Fax: (212) 525-1300
HSBC Bank USA Trustee of $575,000,000
Todd Niemy 3.25% Convertible
140 Broadway Subordinated
New York, NY 10005 Notes due 2008
Tel: (212) 525-1343
Fax: (212) 525-1300
HSBC Bank USA Trustee of $500,000,000
Todd Niemy 4.75% Convertible
140 Broadway Subordinated
New York, NY 10005 Notes due 2008
Tel: (212) 525-1343
Fax: (212) 525-1300
HSBC Bank USA Trustee of $375,000,000
Todd Niemy 10.75% Senior
140 Broadway Notes due 2009
New York, NY 10005
Tel: (212) 525-1343
Fax: (212) 525-1300
HSBC Bank USA Trustee of $275,000,000
Todd Niemy 11.25% Senior
140 Broadway Notes due 2008
New York, NY 10005
Tel: (212) 525-1343
Fax: (212) 525-1300
HSBC Bank USA Trustee of EUR200,000,000
Todd Niemy 11.375% Euro
140 Broadway Denominated
New York, NY 10005 Senior Notes
Tel: (212) 525-1343 due 2008
Fax: (212) 525-1300
Legg Mason Capital Mgmt., public debt $127,250,000
Inc.
Victoria Schwatka
100 Light St., 31st Fl
Baltimore, MD 21202
Tel: (410) 454-5646
Fax: (410) 454-3154
HSBC Bank USA Trustee of EUR125,000,000
Todd Niemy 10.75% Euro
140 Broadway Denominated
New York, NY 10005 Senior Notes
Tel: (212) 525-1343 due 2009
Fax: (212) 525-1300
Fidelity Management & public debt $88,550,000
Research
Robert Pozen
82 Devonshire Street
Boston, MA 02109
Tel: (617) 563-7703
Fax: (617) 476-3931
Janus Capital Corporation public debt $81,635,000
Sandy Rufenacht
100 Fillmore Street,
Suite 400
Denver, CO 80206
Tel: (303) 333-3863
Fax: (617) 482-2450
Loomis, Sayles & Co. LP public debt $80,949,000
Daniel Fuss
1 Financial Center, 34th Fl.
Boston MA 02111
Prudential Global Asset public debt $76,092,000
Management
100 Mulberry Street
2 Gateway Center
Newark, NJ 07102
Tel: (973) 367-1366
Fax: (973) 367-8555
Putnam Investments public debt $74,439,000
Edward D'Alelio
1 Post Office Square
7th Floor
Boston, MA 02109
Wellington Management public debt $72,550,000
Company LLP
75 Stale Street, 19th Fl.
Boston, MA 02109
Tel: (617)951-5038
Brookside Capital Mgmt/ public debt $71,900,000
Boin Capital, Inc.
Neal Reiner
Two Copley Place
Boston, MA 02116
Tel: (617) 516-2000
Fax: (617) 516-2010
T. Rowe Price Associates, public debt $70,100,000
Inc.
William Reynolds
100 East Pratt Street
Baltimore, MD 21202
Tel: (410) 345-5703
Fax: (410) 345-4771
Goldman, Sachs public debt $58,828,500
International
Annika Bjorkhand
Peterborough Court,
133 Fleet Street
Tel: 44-207-774-6376
Fax: 44-207-552-7371
Lehman Brothers public debt $53,671,000
Eric treiling
101 Hudson Street
Jersey City, NJ 07302
Tel: (212) 526-7000
Fax: (212) 526-3738
HSBC Bank USA Trustee of 5% $52,800,000
Todd Niemy Convertible
140 Broadway Subordinated
New York, NY 10005 Notes due 2006
Tel: (212) 525-1343
Fax: (212) 525-1300
Smith Barney Asset public debt $45,390,000
Management
Virgil Cumming
100 1st Stanford Place
Stanford, CT 09602
Capital Research & public debt $42,500,000
Management Company
Abner Goldstein
11100 Santa Monica Boulevard,
15th Floor
Los Angeles, CA
Tel: (310) 996-6118
Fax: (310) 996-6518
Oppenheimer Funds public debt $42,500,000
Jerry Webman
PO Box 5270
Denver, CO 80217-5270
Tel: (201) 728-5600
The TCW Group public debt $42,195,000
856 South Figueroa Street,
18th Floor
Los Angeles, CA 90017
Tel: (213) 244-0065
Fax: (213) 244-0492
Morgan Stanley Dean Witter public debt $37,187,000
Rajesh Gupia
1221 Ave. of America
New York, NY 10020
Tel: (212) 761-4000
Fax: (212) 762-9023
K. Capital Partners public debt $36,000,000
Robert Needham
75 Park Plaza
Boston, MA 02116
Tel: (617) 646-7715
Fax: (617) 646-7777
Enton Vance Management Inc. public debt $35,690,000
Mark Venezia
255 State Street
Boston, MA 02109
Tel: (617) 598-8563
Fax: (617) 482-4572
Northwestern Investment public debt $35,250,000
Management Company
Jefferson DeAngelis
720 Wisconsin Avenue
Milwoukee, WI 53202
Tel: (414) 665-5291
Fax: (414) 665-4414
RBC Dominion Securities public debt $33,010,000
Corp.
Mark Standish
One Liberty Plaza
165 Broadway 4th Floor
New York, NY 10006
Tel: (646) 229-3868
FINOVA GROUP: Seeks Extension of Removal Period to January 31
-------------------------------------------------------------
The FINOVA Group, Inc., asks Judge Walsh for an order further
extending the time period within which the Debtors may file
notice of removal under Bankruptcy Rule 9027(a)(2) to and
including Jan. 31, 2002.
Daniel J. DeFranceschi, Esq., at Richards, Layton & Ginger,
P.A., in Wilmington, Delaware, informs the Court that the
Debtors are parties to over 1,000 civil actions pending in
various courts throughout the United States. Claims asserted in
the civil actions include, among others, lender liability
claims, inter-creditor disputes, breach of contract claims and
securities fraud claims. Many, if not all, of the civil actions
are subject to removal, Mr. DeFranceschi says.
According to Mr. DeFranceschi, the Debtors' decision concerning
whether to seek removal of a particular Civil Action will depend
on a number of factors, including:
(i) the time it would take to complete the proceeding in its
current venue,
(ii) the presence of federal questions in the proceeding that
increase the likelihood that one or more aspects thereof
will be heard by a federal court,
(iii) the relationship between the proceeding and the matters
to be considered in connection with the claims allowance
process, and the assumption or rejection of executory
contracts, and
(iv) the progress made to date in the proceeding.
The general bar date for filing proofs of claim was not until
July 13, 2001, just 1 month prior to confirmation, Mr.
DeFranceschi reminds Judge Walsh. Because of the speed with
which the Plan was confirmed, Mr. DeFranceschi says, the Debtors
have had very little time to process these claims and have not
had a sufficient opportunity to review the civil actions in
order to consider whether removal would be appropriate.
The Debtors believes that the extension sought herein will give
management additional time it needs to make fully informed
decisions concerning the removal of each civil action and will
assure that each estate's valuable rights can be exercised in
the appropriate manner.
Mr. DeFranceschi relates that the Debtors' deadline to file
noticed of removal was originally set to expire on June 5, 2001.
The Court then extended the removal period to and including Oct.
3, 2001, without prejudice to the Debtors moving for further
extensions of time within which they may remove claims or civil
causes of action.
Mr. DeFranceschi assures the Court that the requested extension
of time will not prejudice the Debtors' adversaries because such
adversaries may not prosecute the civil actions absent relief
from the injunction related to the Debtors' discharge.
Moreover, to the extent that such adversaries file timely proofs
of claim, the claims allowance process allows the Debtors the
choice of:
(i) having the claims liquidated in the Bankruptcy Court;
(ii) stipulating with such adversaries to having the claims
liquidated in the state court within which a civil
action may be pending, or
(iii) removing the proceeding to the appropriate district court.
Finally, if the Debtors ultimately seek to remove any action,
Mr. DeFranceschi notes, any party to the litigation can seek to
have such action remanded.
Thus, the Debtors ask Judge Walsh for an order further extending
the removal period for an additional 120 days through and
including Jan. 31, 2002. The Debtors reserve their right to
seek further extensions of the removal period. (Finova
Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
FRANK'S NURSERY: Fishman Takes Helm as Chief Executive Officer
--------------------------------------------------------------
FNC Holdings Inc., parent of Frank's Nursery & Crafts, Inc., the
nation's leading specialty retailer of lawn and garden products,
announced that its Board of Directors has named Steven S.
Fishman Chief Executive Officer and a member of the Board of
Directors, effective September 25, 2001.
Fishman, 50, was previously the President of SSF Resources,
Inc., an investment and consulting firm. Before founding SSF
Resources, Mr. Fishman had served for six years as Chairman and
Chief Executive Officer of Pamida Holdings Corporation, a
general merchandise discount retail chain of 230 stores located
in small towns, which was acquired by Shopko in 1999.
Prior to Pamida, Mr. Fishman held several senior merchandising
positions with a number of major general merchandise retailers
including Caldor (a former division of the May Company) and Gold
Circle Stores (a division of Federated Department Stores).
Earlier in his career he held key merchant positions with
Richman-Gordman Stores, and Joske's of Houston. He graduated
with a B.A. in Business Administration from Columbia College in
Columbia, Missouri in 1974.
"The Board and our Creditors' Committee are excited to have
Steve join Frank's," said David Spalding, a member of the FNC
Holdings Board. "His experience as CEO in a successful
turnaround, combined with his wide ranging expertise in
merchandising, makes him a perfect fit for Frank's."
Fishman has been active in the local community and in the retail
industry. He is currently on the Board of Directors for the
United Way/CHAD, the Greater Omaha Chamber of Commerce and
Rhodes Furniture. He also sits on the Board of Trustees for the
Mid-America Council of the Boy Scouts of America, and was the
Vice Chairman and a member of the Executive Committee of the
Frank's Nursery & Crafts, Inc. is the nation's largest specialty
retail chain of lawn and garden products with 183 stores in 14
states. In addition to lawn and garden, Frank's is a leading
retailer of Christmas Trim-A-Tree merchandise, artificial
flowers, and home and garden decorative items.
In its fiscal year ending January 28, 2001, Frank's had sales of
approximately $437 million and employed approximately 6,000
people. The company voluntarily filed for Chapter 11 protection
on February 19, 2001.
GREATE BAY: Begins Soliciting Consents to Amend Indenture Terms
---------------------------------------------------------------
GB Property Funding Corp., GB Holdings, Inc. and Greate Bay
Hotel and Casino, Inc. are commencing a solicitation of consents
for the purpose of amending the terms of the indenture governing
the Company's 11% First Mortgage Notes due 2005.
The Amendment would, among other things, allow the Company to
borrow additional money and grant liens to secure such
indebtedness and permit the release or subordination of the
existing liens and mortgages that secure the Notes.
This would in turn provide financial flexibility under the
Indenture and facilitate potential improvements and expansion of
the Sands Hotel and Casino and the Company to, among other
things, meet competition.
In order for the Amendment to become effective, consents from
the holders of at least a majority of the aggregate principal
amount of the outstanding Notes must be received and not
revoked. Holders who consent to the Amendment will receive a
payment of $17.50 for each $1,000 principal amount of Notes with
respect to which such consent has been granted, subject to the
terms and conditions set forth in the consent solicitation
statement and related materials distributed to holders of Notes.
Entities controlled by Carl C. Icahn collectively hold in the
aggregate approximately 58% of the Notes outstanding. Mr. Icahn
has indicated that he anticipates that the Icahn Entities will
vote in favor of the Amendment.
GROVE WORLDWIDE: Consummates Reorganization Plan
------------------------------------------------
Grove Worldwide, said that the Company has consummated its Plan
of Reorganization which was approved by the Bankruptcy Court on
September 14, 2001.
Grove has, among other things, commenced payments to its pre-
petition, unsecured creditors. According to the provisions of
the Plan, the Company will pay 100 percent of allowed pre-
petition claims to this class of creditors.
"One of the key components of our Plan of Reorganization was to
make sure that all of our pre-petition vendors and suppliers
were made whole. We have now begun that process and expect to
have it completed over the coming ten day period," stated Jeffry
Bust, Grove Worldwide's chairman and chief executive officer.
"We are delighted to take these final steps in the completion of
our Chapter 11 reorganization process. Grove is now a
financially stronger Company with resources available to better
compete in our worldwide markets which will help us further
strengthen our position as one of the premiere providers of
mobile hydraulic cranes, truck mounted cranes and aerial work
platforms for the global market," Mr. Bust added.
HERCULES INC: S&P is Watching BetzDearborn Unit Sale Closely
------------------------------------------------------------
Standard & Poor's ratings for Hercules Inc. remain on
CreditWatch with developing implications, where they were placed
on Oct. 19, 2000. Developing implications means the ratings may
be raised, lowered, or affirmed.
The CreditWatch listing continues to reflect Hercules' intention
to complete the sale or merger of the entire company, or the
divestiture of selected assets.
The company's new CEO, appointed during May, is expected to
continue the sale process outlined by previous management. If
Hercules were to be acquired by a financially stronger
competitor, or by an entity with complementary businesses,
higher ratings would be possible.
Combination with a firm in a leveraged transaction, or with a
more heavily debt-burdened company, however, could lead to
downgrades. Similarly, other strategic actions resulting in
balance sheet deterioration could lead to downgrades.
The ratings also acknowledge that industry conditions may delay
the completion of a merger or sale of the entire company.
Notwithstanding these factors, significant debt reduction is
anticipated to support the current ratings, which could be
achieved through the announced sale of the BetzDearborn unit.
Standard & Poor's believes that management could complete this
sale during the near term and take steps to ensure adequate
financial flexibility until debt can be reduced. Management is
also implementing a comprehensive cost-reduction plan, which
together with some level of improvement to the U.S. industrial
economy starting 2002, can be expected to lead to a gradual
improvement to key credit statistics.
The CreditWatch placement followed Wilmington, Delaware-based
Hercules' disclosure that its previous chief executive officer
had resigned and that the board of directors would reevaluate
the firm's strategic alternatives for the business, which
implied that the sale of the company would be considered.
Competitive market conditions and a weaker economy will continue
to present near-term challenges to the restoration of Hercules'
operating profit margins.
Standard & Poor's will continue to monitor developments and will
make a ratings decision when details of the potential
transactions are known.
Ratings Remain on CreditWatch with Developing Implications
Hercules Inc.
Corporate credit rating BB
Senior unsecured debt B+
Senior secured debt BB
Preferred stock B
MARINER POST-ACUTE: Hires E&Y for Preference Analysis Work
----------------------------------------------------------
Mariner Post-Acute Network, Inc. and Health Debtors sought and
obtained the Court's authority, pursuant to Bankruptcy Code
section 327(a), to employ E&Y Capital Advisors LLC, which is to
be succeeded by Ernst & Young Corporate Finance LLC as of
September 1, 2001, nunc pro tunc as of August 13, 2001, to
provide preference analysis and consultation services.
The Debtors explain that they seek authorization for the
employment nunc pro tunc so as to avoid any unnecessary delay
in light of the impending statue of limitations for filing
preference actions by January 13, 2002, the size of the cases,
and the large number of payments made by the Debtors in the
90 days prior to the commencement of these cases.
The Debtors have selected the Firm because EYCA is one of the
nation's leading professional firms providing restructuring
(including preference) advisory services as well as expert
testimony in support of these advisory services, with extensive
experience in bankruptcy proceedings under chapter 11 of the
Bankruptcy Code advising debtors, creditors, and other parties-
in-interest.
Effective on September 1, 2001, EYCA intends to transfer all of
its operations and personnel into EYCF and commence operating as
a broker in addition to fulfilling the existing engagements
currently undertaken by EYCA, including the subject engagement.
The Debtors tell Judge Walrath that there will be no substantive
changes to the way in which these engagements are handled by
EYCF.
The Debtors desire to retain the Firm to perform the following
services:
(1) to analyze all transfers made by the Debtors during the
relevant periods prior to the commencement of the Debtors'
chapter 11 cases to determine whether such transfers may be
avoidable as preferential transfers under the Bankruptcy
Code;
(2) to testify, if required, with respect to any matter as to
which the Firm is rendering services to the Debtors; and
(3) to perform other services as may be requested by the
Debtors or its counsel and agreed to by the Firm.
The Debtors assure that the functions to be performed by the
Firm will not in any way duplicate work performed or to be
performed by Conway, Del Genio, Gries & Co., LLC (CDG) or Ernst
& Young LLP, an affiliate of the Firm. Specifically, CDG will
provide advisory services pertaining to the Debtors' day-to-day
operations and restructuring whereas the Firm will only provide
the services identified above. Ernst & Young LLP serves as
auditor and special tax and Medicare advisors.
The Firm will charge for its services on an hourly basis in
accordance with its ordinary and customary hourly rates in
effect on the date the services are being rendered. The hourly
rates of the Firm's professionals vary, based upon, among other
things, each professional's position at the Firm. These hourly
rates are subject to change from time to time in accordance with
the Firm's established billing practices and procedures.
According to Anna Phillips, a managing director in the firm of
E&Y Capital Advisors, LLC, as of July 1, 2001, the Firm's
standard hourly rates for such services were as follows:
Managing Directors and Principals $575-650
Directors $435-520
Vice Presidents $375-440
Associates $320-340
Analysts $275
Client Service Associates $140
The Firm's professionals will maintain detailed records of time
and any actual expenses incurred in connection with rendering
their services. The Firm intends to apply to the Court for
allowance of compensation for professional services rendered and
reimbursement of charges and disbursements incurred in these
chapter 11 cases in accordance with applicable provisions of the
Bankruptcy Code, the Bankruptcy Rules, the Local Rules and any
applicable orders of this Court.
The Debtors submit that, to the best of their knowledge,
information, and belief, other than in connection with the
subject application and as described in the Affidavit by Anna
Phillips of the Firm in Support of Applications, the Firm has no
connection with the Debtors, their estates, their creditors, the
U.S. Trustee or any other person employed in the office of the
U.S. Trustee, or any other party with an actual or potential
interest in the Debtors' chapter 11 cases, or their respective
attorneys and accountants.
Further, the Firm represents no interest adverse to
the Debtors or their respective estates in the matters for which
the Firm is proposed to be retained. The Debtors believe that
the Firm is a "disinterested person" as that term is defined in
section 101(14) of the Bankruptcy Code and as required under
section 327(a) of the Bankruptcy Code. The Debtors have not
previously retained the Firm to perform any work on behalf of
the Debtors.
Ms. Phillips submits to the Court that conflicts check has been
performed in connection with the proposed employment and
attaches to her affidavit a list indicating entities in
connection with the Debtors that have been rendered services
from the Firm in the present or recent past.
Ms. Phillips tells the Court that none of these services have
been in connection with the Debtors or their chapter 11 cases.
The Firm believes that these relationships will not impair the
Firm's ability to objectively perform professional services on
behalf of the Debtors. Ms. Phillips also assure that the Firm
does not represent any interest adverse to the Debtors and will
not represent any entity other than the Debtors in connection
with these chapter 11 cases. Ms. Phillips concludes that the
Firm is a "disinterested person" as defined in section 101(14)
and as required by section 327(a) of the Bankruptcy Code.
Ms. Phillips indicates that because the Firm has a national
financial advisory practice, it is unable to state with
certainty that every client representation or other connection
has been disclosed. If the Firm discovers additional information
that requires disclosure, Ms. Phillips covenants that the Firm
will file a supplemental disclosure with the Court as promptly
as possible. (Mariner Bankruptcy News, Issue No. 18; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
MATLACK SYSTEMS: Sells Remaining Tractors & Trailers for $6.3MM
---------------------------------------------------------------
Matlack Systems, Inc. and its affiliate Debtors want the
blessing of the U.S. Bankruptcy Court for the District of
Delaware to sell substantially all of its remaining tractors and
trailers -- approximately 1,150 of them -- to Southern Tank
Leasing, Inc. for $6,300,000.
Higher and better offers are still welcome. Subject to Court
approval, Matlack will conduct an auction at 10:00 a.m. on
Friday, October 15, 2001, at the offices of the Debtors'
counsel, Klett Rooney Lieber & Schorling, The Brandywine
Building, 1000 West Street, Suite 1410, Wilmington, Delaware.
The minimum initial competing bid must exceed Southern Tank's
offer by at least $315,000, and all subsequent bids must be in
increments of at least $315,000. Each competing bid must be
accompanied by a refundable deposit in an amount equal to 9% of
such competing bid. Each refundable deposit shall be paid by:
(i) certified check payable to Klett Rooney Lieber &
Schorling, or
(ii) wire transfer to the account of Klett Rooney Lieber &
Schorling pursuant to wire transfer instructions
available upon request.
Within 24 hours of the completion of the Auction, the successful
bidder must pay an additional non-refundable deposit equal to
the difference between 9% of the successful bid and the deposit
that accompanied the successful bidder's initial bid. Upon the
closing of the Sale to the successful bidder, the Debtors shall
return the refundable deposits to all other competing bidders.
At or before the auction, each bidder must provide the Debtors
with sufficient written information regarding the bidder to
satisfy the Debtors with respect to the bidder's ability to meet
its obligations at closing. Such information should include a
current financial statement, and a description of the nature and
source of any financing available to the bidder in connection
with its proposed purchase of the tractors and trailers.
Matlack, North America's #3 tank truck company, provides liquid
and dry bulk transportation, primarily for the chemicals
industry. The company filed for chapter 11 protection last
March 29, 2001, in the U.S. Bankruptcy Court for the District of
Delaware, and is represented by Richard Scott Cobb, Esq., at
Klett Rooney Lieber & Schorling. Matlack's 10Q Report, filed
with the Securities and Exchange Commission on March 31, 2001,
lists assets of $81,160,000 and liabilities of $89,986,000.
MAXICARE HEALTH: Continues to Wallow in Red Ink in 2nd Quarter
--------------------------------------------------------------
Maxicare Health Plan Inc. sustained a net loss of $4.9 million
for the three months ended June 30, 2001. For the three months
ended June 30, 2000 the Company had a net loss of $4.7 million.
The Company also sustained a loss of $23.3 million for the six
months ended June 30, 2001. For the six months ended June 30,
2000 the net loss was $4.6 million.
Results of operations for the quarter and six months ended June
30, 2001 include a gain of $9.1 million realized by MHP upon the
IDOI's placement of the Indiana HMO and its wholly-owned
subsidiary, MLH, into rehabilitation. This gain represents the
extent to which consolidated losses of those entities through
May 3, 2001 exceeded MHP's investment in those subsidiaries.
Results of operations for the quarter and six months ended June
30, 2000 included $2.0 million of losses associated with certain
of Maxicare's capitated provider contracts. On May 4, 2001, the
Commissioner of the Indiana Department of Insurance petitioned
the Marion County Circuit Court to place Maxicare's Indiana HMO
into rehabilitation.
The Indiana HMO is the sole owner of Maxicare Life and Health
Insurance Company, the indemnity provider underwriting the
preferred provider organization, point of service and life
insurance products offered by both the Company's Indiana (PPO
only) and California HMOs.
The Indiana HMO is incorporated under the laws of the state of
Indiana and is primarily regulated by the IDOI. MLH is
incorporated under the laws of the state of Missouri and is
primarily regulated by the Missouri Department of Insurance. On
May 24, 2001, the MDOI placed MLH under an Order of
Administrative Supervision.
On July 20, 2001, the California Department of Insurance placed
MLH into conservatorship. MLH has been ordered to cease writing
new business by both the MDOI, the CDOI and the IDOI. The result
of these regulatory actions has been that MHP has effectively
lost control of MLH and the Indiana HMO on May 4, 2001.
Accordingly, results for the June 2001 quarter and June 2001 YTD
include MLH and the Indiana only through May 3, 2001. The
California HMO is primarily regulated by the California
Department of Managed Health Care. On May 25, 2001, the DMHC
issued an order appointing a conservator for the California HMO.
Also on that date the California HMO filed for Chapter 11
bankruptcy protection. Effective June 5 2001, the California HMO
and the DMHC reached an agreement allowing the California HMO's
bankruptcy filing to remain in effect with the recently
appointed conservator relinquishing that position in order to
act as Examiner of the Debtor.
The agreement calls for any disputes between the California HMO
and the Examiner to be resolved in Bankruptcy Court.
NET SHEPHERD: Complies with CDNX Rules & Trading Resumes
--------------------------------------------------------
Net Shepherd Inc., (CDNX - WEB) announced that it is current
with all regulatory filings and has satisfied the reinstatement
requirements of the CDNX through the submission of a Filing
Statement.
Net Shepherd's common shares resumed trading on the CDNX on
Wednesday, September 26, 2001.
The final acceptance by the CDNX of the restructuring agreement
is subject to the completion by Net Shepherd of a $500,000
financing. Once pricing has been negotiated, a further press
release will be issued.
"The year 2001 has been a trying time for Net Shepherd and its
shareholders," said Chairman Pinnell. "Since the Company ceased
trading in April 2001, we have settled all outstanding employee
severance liabilities, reached agreement with most creditors and
reorganized the ownership of the Company."
Pinnell continued, "[With the resumption of our] shares trading,
we intend to arrange additional financing and enter a new
business."
Commenting further on the Company's future business direction,
Pinnell said, "We have a strong desire to enter a self
sustaining business, one where the Company has the opportunity
to grow internally without the constant need for new capital and
the accompanying dilution."
The Company advises that it intends to hold its annual meeting
for the year 2000 prior to year-end, and hopes to be in a
position at that time to outline its plans for the future.
* * *
In June, the Troubled Company Reporter related that Net Shepherd
Inc. (CDNX: WEB) failed to present its annual audited
consolidated financial statements for the year ended December
31, 2000, and asked for an extension to file and mail to
shareholders financial statements for the year ended December
31, 2000 and the three months ended March 31, 2001.
The delay was due to the proposed restructuring of Net Shepherd.
Between April 12, 2001 and May 14, 2001, a restructuring of Net
Shepherd, including settlement of Net Shepherd's debt, was
negotiated between Net Shepherd and Vanenburg and between Net
Shepherd and certain of its creditors.
While the proposed restructuring was being negotiated, all work
on the preparation of the financial statements had to cease.
NOVO NETWORKS: Seeks Okay to Cease Prepaid Calling Card Business
----------------------------------------------------------------
Novo Networks International Services, Inc., seeks authority from
the United States Bankruptcy Court for the District of Delaware
to terminate its prepaid calling card business and reject its
obligations with respect to prepaid calling cards.
Jeffrey M. Schlerf, Esq., at The Bayard Firm, tells the Court
that the Company wishes to terminate its prepaid card business
because of the practice of RSL COM U.S.A., Inc., the
telecommunication service provider of Novo, to intentionally
back up the Company's traffic.
Novo has operated a prepaid calling card business since 1998,
selling prepaid calling cards, which are widely distributed
throughout the United States. Mr. Scherlf estimates that there
are currently 1.7 million active calling cards with average face
value of $10 each.
Mr. Schlerf contends that the Company receives no additional
revenues from the continuation of service but will continue to
incur expenses of approximately $20,000 per day from servicing
the cards. Mr. Schlerf adds that servicing the cards in
circulation until full utilization could take another six
months, thereby causing material losses to the Company until the
bleeding to stop.
Novo Networks International Services, Inc., a developer of
facilities-based broadband network offering voice and data
transport targeted to communications carriers, ISPs, and large
corporate and government clients, filed for chapter 11
protection on July 30, 2001 in the District of Delaware.
Jeffrey M. Schlerf, Esq., at the Bayard Firm represents the
Debtors in their restructuring effort. When the company filed
for protection from its creditors, it listed $60,900,000 in
assets and $23,500,000 in debts.
ORBITAL IMAGING: Plans to File Chapter 11 with Prearranged Plan
---------------------------------------------------------------
Orbital Sciences Corporation (NYSE: ORB) has agreed to support
the financial restructuring of its satellite imaging affiliate,
Orbital Imaging Corporation (ORBIMAGE), with a financing package
that includes both cash and non-cash contributions, the company
said.
Earlier, ORBIMAGE announced that it had reached an agreement
with its major shareholders, including Orbital, and an Informal
Committee representing about half of the holders of its Series A
Senior Notes and Series B Senior Notes, to go forward with a
financial restructuring designed to strengthen its financial
condition.
As is customary in this type of restructuring, ORBIMAGE intends
to file a petition for reorganization under Chapter 11 of the
U.S. Bankruptcy Code with a "prearranged" plan of reorganization
to be agreed to by its security holders. ORBIMAGE will most
likely file the petition in the fourth quarter of 2001. ORBIMAGE
expects to maintain normal business relationships with all of
its customers and suppliers.
Under the terms of the agreement, Orbital would provide ORBIMAGE
with $1.2 million in cash, up to $3.6 million in secured debtor-
in-possession funding and the deferral of $8.6 million provided
under the Orbital/ORBIMAGE procurement agreement, which would be
converted to new secured notes to be issued by ORBIMAGE.
Upon completion of the ORBIMAGE reorganization as set forth
under the agreement, the parties will grant each other mutual
releases of potential claims.
Orbital develops and manufactures affordable space systems,
including satellites, launch vehicles and advanced space
systems. Orbital is also involved with satellite-based networks
that provide wireless data communications and high-resolution
Earth imagery to customers all around the world. More
information about Orbital can be found at http://www.orbital.com
OWENS CORNING: Gets Okay to Assume AspenTech Software License
-------------------------------------------------------------
Owens Corning sought and obtained an order authorizing it to
assume the Software License and Service Agreement and its
Software Development Agreement with Aspen Technology, Inc.
On December 1998, the Debtors executed a License and Service
Agreement with Aspen Technology, Inc., originally as a pilot
program to evaluate the manner in which AspenTech's software
could integrate data from various disparate sources in order to
optimize the production and business execution of certain
manufacturing facilities.
The Debtors have realized significant savings from lower
material usage, increased operational efficiencies, more
efficient use of labor, improved product quality, lower scrap
value and better overall controllability.
Based on these results, the parties amended the agreement in
July 2000 to expand their relationship and provide for usage of
the software at 15 additional sites and also provides for
AspenTech to maintain and support the software. For the 15
sites licensed, the Debtors estimate savings of $4,900,000
annually, contributing $3,160,000 annually in income from
operations.
The Debtors executed a Software Development Agreement on
December 1998 with AspenTech, which covers all software
development work associated with the customization,
configuration and modification of the software licensed to the
Debtors.
Each of the Debtors facilities has unique configuration
requirements, which require modifications to AspenTech's basic
software. Moreover, new modifications and enhancements to the
software require access to the software's source code, which can
only be made by AspenTech.
The Debtors and AspenTech have agreed to the agreements to
provide the Debtors with greater operational flexibility and to
provide certain purchase option discounts. The Debtors estimate
the value of at approximately $300,000 and AspenTech has
committed to provide certain option discounts to the Debtors
with a license structure, which contains no restrictions on
deployment of licensed software except with respect to the
number of sites deployed and number of access points at each
site.
The Debtors and AspenTech have agreed that the requirements for
assumption have been satisfied and have consented to the
Debtors' proposed assumption of agreement, subject to the cure
payment amounting to $1,533,521 of existing defaults of the
Debtors.
Amendments to the Software License and Service Agreement and its
Software Development Agreement are:
(1) Customer agrees that AspenTech has already delivered one
copy of such software product and customer is hereby granted
the right to make multiple copies of each software. No
further delivery by AspenTech is required hereunder.
(2) The license granted hereunder permits the customer to use
the software at specified wholly owned by the Debtors as of
the effective date of the amendment.
(3) Amendment shall be effective upon the occurrence of the
following events on or before June 30, 2001:
a) entry of an order of the Delaware Bankruptcy Court
approving the assumption of agreement; and
b) payment to AspenTech of $1,553,521 as cure payment of
existing defaults. (Owens Corning Bankruptcy News,
Issue No. 16; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
PNI TECHNOLOGIES: Seeks 4-Month Extension of Exclusive Periods
--------------------------------------------------------------
PNI Technologies, Inc. and its affiliate debtors ask Judge Joyce
Bihary to extend their exclusive periods for four months, until
February 8, 2002, to file a plan of reorganization, and until
June 8, 2002, to obtain acceptances of that plan.
The debtors tell Judge Bihary that the size and complexity of
their cases make it difficult to formulate a plan of
reorganization within the original allotted time. PNI also
needs the extension in order to finalize negotiations with major
creditors.
PNI Technologies, formerly Preferred Networks, provides
outsourcing services for wireless providers and owns and
operates one-way paging networks in the US. PNI filed for
chapter 11 protection on June 8, 2001 in the U.S. Bankruptcy
Court for the Northern District of Georgia.
The company, which listed $5,696,386 in assets and $43,282,034
in debt as of June 30, 2001, is represented in its restructuring
efforts by Herbert C. Broadfoot II, Esq., at Herbert C.
Broadfoot II, P.C.
PHAR-MOR: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------
Debtor: Phar-Mor, Inc.
20 Federal Plaza West
Youngstown, OH 44501-0400
Chapter 11 Petition Date: September 24, 2001
Court: Northern District of Ohio, Youngstown Division
Bankruptcy Case No.: 01-44007
Judge: William T. Bodoh
Debtor's Counsel: Michael Gallo, Esq.
Nadler, Nadler and Burdman
20 Federal Plaza, Suite 600,
Youngstown, OH 44503
Tel.: 330-744-0247
Debtor's 20 Largest Consolidated Unsecured Creditors:
Entity Claim Amount
------ ------------
Bank of New York $ 41,312,000
101 Barclay Street
New York, NY 10286
McKesson Drug co. $ 21,727,425
Luckbox McKesson/730477
Suite 600
1801 Royal Lane
Dallas, TX 75229
Proctor and Gamble $ 4,157,696
PO Box 640581
Pittsburgh, PA 15264-0581
Rexall Sundown Inc. $ 3,822,906
PO Box 281339
Atlanta, GA 30384
Gibson Greeting Cares $ 1,968,256
PO Box 641517
Pittsburgh, PA 15264-1517
Pepsi Cola co. $ 1,874,240
PO Box 1107
Buffalo, NY 14240
Tripi Foods $ 1,494,329
PO Box 1107
Buffalo, NY 14240
Whitehall-Robins $ 808,570
PO Box 75296
Charlotte, NC 28275-5296
Pepsi Cola General $ 806,604
Bottlers Inc.
75 Remittance Drive
Suite 1884
Chicago, IL 60675-1884
Slim Fast Foods Company $ 802,081
PO Box 19605
Newark, NJ 07195-0605
NBTY Vitamin Centers $ 722,080
90 Orville Drive
Bohemia, NY 11716
Warner Lambert $ 652,840
PO Box 641053
Pittsburgh, PA 15264-1053
Welch's $ 647,336
PO Box 91464
Chicago, IL 60693
Kimberly Clark Corp. $ 638,602
PO Box 70860
Chicago, IL 60673
Coca Cola Bottling Co. $ 615,005
of OH/KY
Sales Center
PO Box 631277
Cincinnati, OH 45263-1277
Fleming Companies $ 582,382
PO Box 207
Massillon, OH 44648
Gillette Company $ 574,305
PO Box 100800
Atlanta, GA 30384-0800
Kay Gee Produce, Inc. $ 538,990
4900 Crayton Ave.
Cleveland, OH 44104
Hershey Chocolate USA $ 538,728
PO Box 640227
Pittsburgh, PA 15264-0227
Loreal Retail Division $ 495,005
PO Box 96484
Chicago, IL 60693
PILLOWTEX CORP: Court Approves Settlement with Ralph Lauren
-----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware on Monday
approved a settlement of a dispute over a sale and licensing
agreement between Pillowtex Corp. and Ralph Lauren Home
Collection Inc. and Polo Ralph Lauren Corp.
The resolution terminates a sale agreement under which the Ralph
Lauren companies would have purchased $3 million worth of
inventory from Pillowtex, but it does allow Pillowtex to market
that inventory to others, namely WestPoint Stevens Inc., which
has expressed interest in purchasing the inventory. (ABI World,
September 21, 2001)
PREMDOR INC: S&P Assigns BB Long-Term Corporate Credit Rating
-------------------------------------------------------------
Standard & Poor's assigned its double-'B' long-term corporate
credit rating to Premdor Inc. At the same time, Standard &
Poor's assigned its double-'B' rating to the company's proposed
US$685 million senior secured credit facilities. The outlook is
stable.
The ratings on Premdor reflect the company's relatively narrow
product mix in the production of interior and exterior
residential and commercial doors and related components and its
aggressive financial profile resulting from the August 2001
acquisition of Masonite Ltd. from International Paper Co.
These weaknesses are offset somewhat by the company's leading
market position in the North American door market and geographic
diversity stemming from its position in higher growth
international markets. The acquisition of Masonite, a major
supplier to Premdor, improves vertical integration and
offers opportunities for modest cost reduction. The acquisition
also helps improve Premdor's margins, given Masonite's higher
margins.
With a market share of 35%-40%, Premdor is North America's
leading producer of molded doors, which consist of a wood frame
and two molded doorskins made of a composite wood material.
After its acquisition of Masonite, the company will be
vertically integrated in the production of doorskins, the major
component of molded doors, and also will be the world's largest
producer of doorskins.
The company should continue to benefit from molded doors' rising
share of the residential interior door market, particularly in
remodeling applications, and the trend toward larger homes.
Premdor's performance depends very heavily on construction
activity, both in North America and other mature markets. The
company has benefited from the decade-long economic expansion
and attendant increase in new housing starts and repair and
renovation activity, but the prospects for a continuation of
these market conditions are weakening.
The door industry in North America is characterized by a high
degree of concentration, with the two major producers in each
segment accounting for a significant portion of the market. This
has translated to stable, albeit modest, operating margins for
Premdor, although the acquisition of Masonite should improve
margins.
Furthermore, Premdor currently has significant available
capacity, so that the company can continue to grow without
significant capital expenditures, while improving unit costs and
margins.
Pro forma for the Masonite acquisition, Premdor's credit
parameters are weak for the rating, with total debt to
capitalization of 63%. Proceeds from the expected sale of
Masonite's Towanda, Pa., plant as directed by the U.S.
Department of Justice, as well as free cash flow should
contribute to debt reduction in the next 18 months.
This should result in financial ratios that are in line with the
rating, with EBITDA interest coverage averaging about 4.0 times
and funds from operations to total debt of about 20%.
The company benefits from adequate financial flexibility, with
sufficient availability under its revolving credit facility to
cover expected inventory fluctuations. Bank loan covenants
support the rating by restricting capital expenditures and other
uses of cash and by imposing mandatory repayments under various
circumstances.
The bank loan is secured by a first ranking security interest
over substantially all of the assets of Premdor and its
subsidiaries. The ratings on the secured bank loan are the same
as the corporate credit rating, reflecting less than 100%
collateral coverage in a stressed default scenario.
Outlook: Stable
The outlook incorporates the expectation of the timely sale of
the Towanda plant at a price that facilitates meaningful debt
reduction. Premdor's potential for growth and margin improvement
should help it generate credit metrics that are in line with the
rating. In addition, acquisition activity is expected to be
modest until debt levels have been significantly reduced.
PSINET: Taps Telephone Management Corp. As Special Consultant
-------------------------------------------------------------
PSINet Inc. sought and obtained the Court's authorization to
retain Telephone Management Corporation as their special
consultant, pursuant to Section 327(e), for matters involving
the auditing of various telecommunications taxes and the
securing of refunds or credits of taxes or overpayments relative
to services and/or equipment.
None of the Debtors possesses the specialized knowledge or
employs sufficient staff to recapture these tax overpayments.
For this reason, Debtors must employ outside consultants to
conduct such complex audits and secure any refunds, credits or
overpayments.
TMC has twenty-six years experience in matters involving the
auditing of various telecommunications taxes and securing the
return of any taxes and overpayments paid on communications and
other bills and services.
The Debtors have determined that the project is a worthwhile
one, and TMC is prepared to place several professionals on
location. Thomas Morency, the CEO of TMC, declares that TMC (a)
does not have any connection with the Debtors, their creditors
or stockholders, or any party in interest herein, except that
TMC may perform services for certain creditors of the Debtors
outside these Chapter 11 cases but will not represent such
creditors in these Chapter 11 cases and (b) neither holds nor
represents any interest adverse to the Debtors or their
estates in respect of the matters pursuant to the proposed
employment by the Debtors.
The Debtors and Mr. Morency submit that TMC is a "disinterested
person" as defined in Section 101(14) of the Bankruptcy Code.
PSINet authorized TMC to act on behalf of PSINet and its
affiliates before any company or taxing agency in the United
States to attempt to secure the return of any taxes and
overpayments paid on communications and other bills and services
incurred before December 31, 2003.
TMC will be entitled to retain 35% of any refunds or credits
recovered (including interest), payable to PSINet from any
Company or Taxing Agency in the United States and its
territories. The Debtors have been informed that, ordinarily,
TMC retains 50% of all recoveries including interest but has
agreed that for PSINet Debtors it will retain only 35% of all
recoveries including interest. TMC would bear its own out-of-
pocket expenses, as well as compensate any individuals or
entities that work with TMC on behalf of Debtors.
The Debtors note that the contingent fee structure provides them
with the opportunity to increase the resources of the estates
without incurring financial obligations that may diminish the
value of their estates. TMC is paid only if it recovers
overpayments for Debtors.
Moreover, TMC will be paid from funds that otherwise would not
be available to Debtors. To date, Debtors have not compensated
TMC for any services rendered on their behalf, nor have Debtors
incurred any obligation to do so.
Because of this fee structure, TMC is waived from the
requirement to file an application for the allowance of
compensation under the Bankruptcy Code, Bankruptcy Rules and
Local Rules and Orders of this Court.
The Court's order provides that TMC will file on January 1, 2002
and every six months thereafter throughout the pendency of the
PSINet chapter 11 cases, a statement in connection with its
retention setting forth the refunds or credits it has obtained
for the Debtors and the fees it has been paid. Upon completion
of the Debtors' chapter 11 cases, TMC will file a final fee
application setting forth the refunds or credits it has obtained
for the Debtors and the fee it has received or is owed
throughout the pendency of the PSINet cases and the fees paid to
it.
At the request of the Debtors, the Court relieves TMC from the
requirement of maintaining time records in connection with its
engagement.
In connection with the Agreement with TMC, Debtors have
authorized David Isaacson, Esq. to act as their representative
in conjunction with TMC before the appropriate taxing
authorities. TMC will compensate Mr. Isaacson pursuant to
independent arrangements between TMC and Mr. Isaacson. Because
the Debtors do not anticipate paying any fees directly to Mr.
Isaacson, the Debtors believe that Mr. Isaacson's participation
does not require independent approval under Section 327(e) of
the Bankruptcy Code.
Accordingly, the Debtors have filed a supplement with the Court
identifying Mr. Isaacson as an Ordinary Course Professional and
Mr. Isaacson has filed a disinterestedness affidavit. The Court
approves of this practice. (PSINet Bankruptcy News, Issue No. 8;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
PSINET: Courts Approve Sale of Canadian Assets to TELUS for $77M
----------------------------------------------------------------
PSINet Inc. (OTC: PSIX) announced that both the U.S. Bankruptcy
Court and the Ontario Superior Court have approved the proposed
purchase by affiliates of TELUS Corporation of the Company's
Canadian Operations for approximately US$77 million (C$118
million), subject to final adjustments.
TELUS and PSINet announced last June the execution of a
definitive agreement related to the purchase, which, among other
things, was subject to approval by both Courts and to a bidding
process.
The PSINet Canadian operations that are being sold recorded
approximately US$50 million (C$75 million) in revenue for 2000.
PSINet has a state-of-the-art Internet data center in Toronto
and approximately 8,600 corporate accounts across the country.
The majority of PSINet's Canadian revenues are generated in
Ontario.
Dresdner Kleinwort Wasserstein provided financial advice to
PSINet on the transaction, and RBC Dominion Securities provided
financial advice to TELUS. Legal representation on the
transaction was provided to PSINet by Nixon Peabody LLP, Wilmer
Cultler & Pickering and Osler, Hoskin & Harcourt LLP. TELUS
received legal advice on the transaction from Bennett Jones LLP
and Gibson, Dunn & Crutcher.
Headquartered in Ashburn, Va., PSINet Inc. is a provider of
Internet and IT solutions, offering hosting solutions, and a
full suite of retail and whole sale Internet services through
wholly owned PSINet subsidiaries.
RANCH*1: Seeks Extension of Lease Decision Deadline to January 3
----------------------------------------------------------------
Ranch*1, Inc., presents its motion to the United States
Bankruptcy Court for the Southern District of New York asking
for an extension of the time within which its must assume or
reject leases of nonresidential real property to January 3,
2002.
Roman B. Hirniak, Esq., at Buchanan Ingersoll, P.C., tells the
Court that Ranch*1 is currently a party to 15 unexpired leases
throughout the Northeast that they currently or used to operate
retail stores.
Mr. Hirniak says that the Company seeks the extension to afford
sufficient time to evaluate the performance of each remaining
lease location in a prudent manner and make informed decisions
with respect to the remaining leases.
Ranch*1, Inc., a restaurant-chain specializing in grilled
skinless chicken breast sandwiches and healthy side dishes,
filed for chapter 11 protection on July 3, 2001, listing
$10,000,000 in assets and $14,100,000 in debt.
REGENT ASSISTED: Fails to Pay September Rents For 5 LTC Leases
--------------------------------------------------------------
LTC Properties Inc. (NYSE:LTC) announced that Regent Assisted
Living Inc. (OTC:RGNT) has not paid September rents for the five
leases it has with LTC and Regent has advised LTC that Regent
would like to return two of the five properties to LTC.
LTC, Regent and Regent's financial advisors, Cohen & Steers
Capital Advisors LLC, have had several discussions regarding
potential restructurings of Regent. However, these discussions
are preliminary, and LTC stated that it could not, at this time,
predict the outcome of any potential restructuring of Regent.
LTC added that it is exercising all rights and remedies
available under the leases to protect its investment.
LTC stated that these leases represent approximately $35.7
million and $3.4 million, respectively, in original investment
and annual rental income. Based on financial information
provided from Regent as of Aug. 31, 2001, annualized, these five
properties provided cash flow equal to debt service.
LTC is currently pursuing discussions with alternative operators
for these five properties.
Additionally, LTC commented that LTC Healthcare Inc. (OTC:LTHT),
a separate, nonaffiliated company, holds $8.5 million of
Regent's 7.5 percent convertible debentures, which partly
collateralize the line of credit between LTC and LTHT. The
balance owed by LTHT to LTC at June 30, 2001, under this line of
credit was approximately $17.3 million.
Oct. 1, 2001, is the date the next interest payment is due to
LTHT from Regent, and LTC believes it is possible Regent will
default on this interest payment, which could cause a default of
the debentures.
LTC further stated that because of the uncertainties surrounding
Regent, it could not, at this time, estimate what charge, if
any, that it may take in the results of its third quarter ending
Sept. 30, 2001, for the leases and/or the line of credit with
LTHT.
At June 30, 2001, LTC had investments in 248 skilled-nursing
facilities, 94 assisted-living residences and one school in 35
states. The company is a self-administered real estate
investment trust that primarily invests in long-term care and
other health-care-related facilities through mortgage
loans, facility lease transactions and other investments.
Regent Assisted Living develops and operates facilities that
offer housing and support services for senior citizens who are
not fully independent but don't require 24-hour skilled medical
care. The firm provides both housing devoted to assisting
residents at their independence levels (Regent and Regent
House), and housing for special-needs clients such as
Alzheimer's patients (Regent Court). Services include
housekeeping, laundry, medication management, personal care
(bathing, feeding, grooming), and transportation.
Chairman and CEO Walter Bowen owns about two-thirds of the firm,
which has more than 25 facilities in nine states.
* * *
Regent Assisted Living has a substantial working capital deficit
and anticipates that its cash requirements during 2001 will
exceed the cash provided by operations. The Company will require
a significant amount of capital to fund operating losses, debt
and lease obligations and remaining construction costs.
The combination of a difficult financing and operating
environment for the assisted living industry has limited the
potential sources for capital. There can be no assurance that
the Company will be successful in fully implementing the
Restructuring Plan.
Given Regent's current liquidity situation, the Company is
preparing and implementing a Plan which includes the conversion
of certain debts to equity, a bridge loan and a line of credit
provided by the Company's majority shareholder, the planned
disposition of selected assets, and the renegotiation of debt
and lease obligations.
SAFETY-KLEEN: Seeks Okay to Hire Gray Cary as Title VI Counsel
--------------------------------------------------------------
Safety-Kleen Corporation and its related and affiliated Debtors
asks Judge Peter Walsh to approve and authorize their employment
of the law firm of Gray Cary Ware & Freidenrich as special
litigation counsel to the Debtors, effective as of June 9, 2000,
the Petition Date, to continue to represent the Debtors under
engagement letters dated January 23, 1995, and November 7, 2000.
Gray Cary have been representing Safety-Kleen Corporation,
Safety-Kleen (Buttonwillow), Inc., and Safety-Kleen
(Westmorland), Inc., and the Debtors wish the firm to continue
to represent those entities in an administrative action filed by
California Rural Legal Assistance on behalf of Padres Hacia una
Vida Mejor of Buttonwillow, El Pueblo para el Aire Limpio of
Kettleman City, and Concerned Citizens of Westmorland,
California under Title VI of the Civil Rights Act of 1964 and
administrative regulations implementing Title VI of the Act,
with the United States Environmental Protection Agency and the
United States Department of Housing and Urban Development, and
in any subsequent lawsuit under Title VI in a United States
District Court or state court before or after exhausting their
administrative remedies with the EPA and HUD, and the Debtors
wish to continue that representation postpetition.
In addition, the Debtors ask that Gray Cary be authorized to
continue to represent SKC and Buttonwillow in administrative
appeals filed with the State of California by Catherine Congrave
Palla and Laidlaw Environmental Services Local Assessment
Committee, along with Jeff Roberts, Michael Saltz, Eduardo
Montoya, and Dennis Palla under the Tanner Act, and in any
subsequent lawsuit under the Tanner Act in a state court, and
the Debtors wish to continue that representation postpetition.
The Debtors wish to continue that same representation of SKC and
Buttonwillow in a state court lawsuit under the California
Environmental Quality Act.
Finally, the Debtors wish to employ Gray Cary to assist in
permitting of the Debtors' Lenfest Facility for the transfer of
hazardous waste, which employment was begin in 2000.
Gray Cary was originally retained as an "ordinary course"
professional under Judge Walsh's prior order. Currently Gray
Cary is engaged in discovery, briefing and preparation for what
the Debtors describe as an "extraordinarily complicated" hearing
before the California Tanner Act Appeal Board in connection with
the Tanner matters.
The Debtors have been advised that Gray Cary's fees in
connection with its various representations have exceeded the
$250,000 case limit set out in the ordinary course Order. As of
September 12, 2001, Gray Cary's fees and expenses total
approximately $285,763.
Accordingly, the Debtors seek separate authorization for Gray
Cary to continue their representation. Gray Cary's
representation is for discrete matters and is unrelated to the
day-to-day administration of the Debtors' chapter 11 estates.
The firm will not be rendering services typically performed by
general bankruptcy counsel, nor have any responsibility for the
Debtors' general restructuring efforts or other matters
involving the conduct of the chapter 11 cases.
The Debtors argue that Gray Cary's expertise, experience, and
institutional knowledge will save the estates money that would
have to be spent to hire new counsel with no such resources to
handle these matters. For these reasons, this retention is in
the best interests of these estates.
Gray Cary's present standard hourly rates are between $240 and
$600 for partners, $180 to $425 for associates, and $70 to $230
for paralegals. The partners, associates and paralegals
presently expected to render the services described in the
Application, and their present hourly rates, are:
J. Martin Robertson $355
Mary Lehman $300
Aileen Wu $205
Steve Gibson $135
These hourly rates are subject to periodic adjustment to reflect
economic and other conditions. Other attorneys and paralegals
may from time to time provide services to the Debtors in
connection with the firm's engagement.
J. Martin Robertson, a partner in the firm, avers that Gray Cary
is disinterested and neither holds nor represents any interests
adverse to the Debtors or these estates in the matters for which
approval of employment is sought. (Safety-Kleen Bankruptcy News,
Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900)
TELERGY INC: Banks Extend Additional Financing for Restructuring
----------------------------------------------------------------
Telergy, Inc., a broadband telecommunications service provider,
reached an interim agreement with its bank lenders to provide
additional financing as part of an ongoing effort by the company
to restructure its business operations and financial
obligations.
In connection with these efforts, Telergy has retained the
services of Seneca Financial Group, Inc. of Greenwich, CT, a
restructuring advisory firm, to provide interim management
services to the company and to oversee the company's
restructuring efforts.
Previously, the company had retained The Blackstone Group as its
financial advisor and TD Securities as its M&A advisor. Both
firms will continue to provide advisory services to Telergy.
Telergy's senior management team Brian Kelly, Chairman and Chief
Executive Officer, Kevin Kelly, Executive Vice President, and
William Kelly, Executive Vice President, have agreed to resign
from their positions and from their seats on the company's Board
of Directors.
The Kellys, along with J. Patrick Barrett, Telergy's former
president, will continue to consult with new management and
assist in Telergy's efforts to achieve a restructuring through a
strategic transaction.
"The interim financing from Telergy's banks provides the company
with breathing room to accomplish a strategic transaction or
pursue appropriate alternatives given the unfavorable conditions
dominating the telecom sector today. We look forward to working
with the company's management team and advisors to develop
solutions to address these challenges, and at the same time,
continue to provide service and support to our customers," said
James Harris, Founder and President of Seneca.
Telergy also announced the resignation of seven additional board
members: J. Patrick Barrett, Joel-Tomas Citron, Albert J.
Budney, Jr., J. Phillip Frazier, John O'Mara, Lon Frocione and
Terrance McAuliffe.
Telergy is a facilities-based provider of integrated broadband
telecommunications services and high-bandwidth fiber optic
capacity in the northeastern United States. The Telergy network
is designed to be a regional fiber optic intranet combining
direct last-mile connections to our customers, intracity rings
and long-haul capacity. The network is being built over broad
contiguous rights of way in the region, primarily using across
rights granted by utility companies.
Seneca Financial Group, based in Greenwich, Connecticut, is an
investment bank focused on working with companies and creditors
of companies in financial distress. The firm specializes in
small to medium-sized deals, although last year Seneca handled
one of the 25 largest bankruptcies by helping Fort Lauderdale
marine shipper Hvide Marine offload about $700 million of debt
and emerge from Chapter 11 about 100 days after filing for
bankruptcy.
Other recent assignments include Pocket Communications,
Creditrust Corporation, TSR Wireless, Xerox Corporation and
Handy & Harman Refining Group, Inc. More information can be
obtained about Seneca at www.senecafinancial.com.
TITANIUM METALS: S&P Bullish About Valhi Inc.'s Exchange Offer
--------------------------------------------------------------
Standard & Poor's placed its ratings on Titanium Metals Corp.
(TIMET) on CreditWatch with positive implications.
At the same time, Standard & Poor's placed its ratings on NL
Industries Inc. on CreditWatch with negative implications.
Standard & Poor's also placed its corporate credit rating on
Valhi Inc. on Credit Watch with negative implications and
withdrew the ratings on Valhi's outstanding senior secured debt
following the substantial reduction of these obligations.
These actions follow the announcement that Valhi Inc. has made a
proposal to TIMET to exchange its common shares of NL Industries
(held by Valhi and Tremont Corp) for a combination of newly
issued shares of TIMET common stock and TIMET debt securities.
The negative CreditWatch implications on Valhi and NL reflect
recognition that the proposed transaction could result in the
companies' greater reliance on TIMET's more volatile business
and financial profile within the Valhi corporate structure and
that TIMET will maintain majority ownership (approximately 81%)
and management control of NL following the transaction.
Standard & Poor's will be further exploring to what extent
inter-company debt payments, or the proceeds from the sale of
such instruments, would be retained in the business.
The positive CreditWatch listing of TIMET indicates that,
despite the added debt, a successful combination would diversify
TIMET's business profile and provide a more stable and
consistent source of cash flow and profitability.
Pro-forma for the transaction, considering the assumption of
approximately $256 million of debt at NL Industries and $400
million to $480 million of new debt to finance the acquisition,
TIMET's total debt to total capital would increase to the mid-to
high-40% area from the current conservative level of 4%(not
including $200 million of convertible preferred stock as debt).
NL Industries is the world's fourth-largest producer of titanium
dioxide (TIO2) and the second-largest European player. TIO2
pigments are used to add whiteness and opacity to a wide range
of products including paints, paper, plastics, and fibers. The
firm benefits from decent geographic diversity, environmentally
compliant proprietary technology, and competitive cost
positions.
Still, this is primarily a commodity business, and price and
margin fluctuations will occur due to shifts in economic
conditions, the relative balance of supply and demand, and
fluctuations in raw materials costs. Following a period of
consolidation, competition has become increasingly concentrated
among a few large producers, mostly well-established industry
participants.
As a mature industry, demand tends to grow at slow, steady
rates, although some variations will occur due to conditions
within the key markets of coatings, plastics, and paper. Recent
economic uncertainties could result in somewhat lower pricing
over the near term and several producers have announced efforts
to reduce bottlenecking at existing facilities. Over the
intermediate term, however, favorable industry dynamics,
including consistent demand growth and limited large-scale
capacity additions, should support modest improvement.
Denver, Colo.-based TIMET is an integrated producer of titanium
sponge and mill products used primarily for applications in the
highly cyclical and competitive aerospace industry. The titanium
metals industry is extremely competitive worldwide, in part
because excess industry capacity intensifies price competition
during cyclical downturns.
As part of its review, Standard & Poor's will assess the
implications caused by the terrorist attacks in the U.S. on
Sept. 11, 2001, which will more than likely have a negative
impact on the overall economy and lead to dramatic capacity
reductions and possible deferrals of aircraft deliveries and
aircraft order cancellations. The degree and duration of the
adverse conditions in commercial aerospace industry are unclear
at the present time, as is the impact on TIMET's business with
its largest customer, Boeing. However, TIMET does benefit from
its take or pay supply agreement with Boeing.
Standard & Poor's will continue to monitor the situation
closely. The transaction requires approval from TIMET's board of
directors, existing lenders, and majority approval from
shareholders.
Ratings Placed on Creditwatch With Positive Implications
Titanium Metals Corp. Ratings
Corporate credit rating B
Preferred stock rating CCC
Ratings Placed on Ceditwatch With Negative Implications
Valhi Inc. Ratings
Corporate credit rating BB-
NL Industries Inc.
Corporate credit rating BB-
Senior secured debt B+
Rating Withdrawn
Rating
Valhi Inc. To From
Senior secured debt NR B+
USG CORP: Intends to Assume TransCanada Gas Transportation Pact
---------------------------------------------------------------
Paul E. Harner, Esq., at Jones, Day, Reavis & Pogue, asks Judge
Newsome to grant USG Corporation permission to assume certain
natural gas transportation contracts with TransCanada Pipelines,
Ltd. and NOVA Gas Transmission, Ltd.
Mr. Harner explains that all of the Debtors' United States
manufacturing facilities require immense amounts of natural gas
in their daily operations. To illustrate the need, he reveals
that the Debtors' U.S. facilities purchased approximately
$170,000,000 of natural gas in fiscal year 2000.
He elaborates that the Debtors purchase natural gas from the
source and move the natural gas to their manufacturing
facilities in the U.S. by pipeline.
The Debtors, he continues, have maintained a program of buying
large quantities of natural gas in Canada and bringing to the
facilities here in the U.S. on contracted pipeline capacity in
both Canada and the U.S. Mr. Harner states the Debtors believe
this is the most secure and economical supply of natural gas.
The Debtors have firm transportation contracts with pipelines
throughout the U.S. and Canada to meet 100% of their plants'
"baseload" gas requirements. The contracts guarantee the
Debtors' ability to transport a fixed amount of gas on the
pipeline on a daily basis. Without access to the transport
capacity of the Canadian pipelines operated by TransCanada and
NOVA the Debtors would have no way to transport gas from Canada
to pipelines in the U.S. for use in their manufacturing plants.
TransCanada, on behalf of itself and NOVA, contacted the Debtors
by letter in August requesting that the Debtors provide
additional assurance of future performance from the Debtors in
connection with their obligations under the gas transportation
contracts.
TransCanada referred to the Canadian National Energy Board and
the Alberta Energy and Utilities Board requirements that the two
companies act wisely by obtaining financial security from
customers shipping gas along their pipelines. TransCanada and
NOVA, in accordance with their respective Gas Transportation
Tariffs requested that the Debtors acquire irrevocable letters
of credit from a North American Bank or make cash deposits of
C$8,100,000 (US$5,260,000) in respect to TransCanada and
C$185,000 (US$119,000) in respect to NOVA. TransCanada stated
that if the Debtors did not post letters of credit or make the
requested deposits, TransCanada and NOVA would have the
authority to terminate the Gas Transportation Contracts or
suspend services to the Debtors.
Mr. Harner states the Debtors' do not believe that TransCanada
and NOVA have the authority to terminate the Contracts or
suspend service. However, any attempt on the Debtors' part to
obtain a judicial determination on this matter would prove very
costly to the Debtors and involve interpretations of both United
States and Canadian law.
The Debtors believe that since the Gas Transportation Contracts
are vital to the operations of the United States facilities,
assuming the Gas Transportation Contracts would make the most
sense and prove the most cost effective. Thereafter the Debtors
sent a letter to TransCanada and NOVA in which they said they
would seek Bankruptcy Court Approval and asked that TransCanada
and NOVA agree not to terminate the Contracts or seek adequate
assurance from the Debtors until the Bankruptcy Court has had
time to rule on the Debtors' assumption motion.
The letter also outlined that in the event the Bankruptcy Court
enters an order for the Debtors' assumption of the Gas
Transportation Contracts, then TransCanada and NOVA would agree
to forego any right to terminate or request any financial
assurance during the pendancy of these cases. TransCanada and
NOVA signed and returned the Letter Agreement to the Debtors.
The BC Systems Pipelines deliver Canadian gas to the U.S.
pipelines that service the Fremont, Empire, Plaster City, Santa
Fe Springs and Southgate plants. The current transportation
charge is approximately $200,000 per year.
The NOVA Pipeline delivers Canadian gas to other Canadian and
U.S. pipelines that service the Fremont, Plaster City, Santa Fe
Springs, and Southgate plants. The current transportation
charge is approximately $468,000 per year. (USG Bankruptcy News,
Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900)
UGLY DUCKLING: Chairman Withdraws Offer to Buy Outstanding Stock
----------------------------------------------------------------
Ugly Duckling Corporation (Nasdaq NM: UGLY) reported that Mr.
Ernest C. Garcia II, its Chairman and largest shareholder, has
withdrawn his April, 2001 offer to purchase all of the
outstanding shares of the common stock of the Company. Mr.
Garcia's letter of withdrawal indicated that he withdrew
the offer based upon the recent tragic events and the resulting
uncertainty of the economy.
Headquartered in Phoenix, Arizona, Ugly Duckling Corporation is
the largest operator of used car dealerships focused exclusively
on the sub-prime market. The Company underwrites, finances and
services sub-prime contracts generated at its 76 Ugly Duckling
dealerships, located in 11 metropolitan areas in eight states.
References to Ugly Duckling Corporation as the largest chain of
buy-here pay-here used car dealerships in the United States is
management's belief based upon the knowledge of the industry and
not on any current independent third party study.
UNITED METHODIST: Seeks Open-Ended Contract Decision Period
-----------------------------------------------------------
United Methodist Youthville, Inc., files a motion to extend its
time within which to decide whether to assume or reject
executory contracts through the conclusion of any confirmation
hearing of a Plan of Reorganization.
Edward J. Nazar, Esq., at Redmond & Nazar, LLP in Wichita,
Kansas, contends that no harm and prejudice will result in to
the parties for an extension of time to assume or reject the
contracts as the Debtor is current in the payment of post-
petition rent and lease payments.
United Methodist Youthville, Inc., has provided services to
troubled children and their families since 1927, filed for
bankruptcy protection June 22, 2001 in Kansas. Edward J. Nazar,
Esq., at Redmond & Nazar, LLP represents the Debtor in its
restructuring efforts.
W.R. GRACE: Honeywell Wants Stay Relief to Liquidate Claim
----------------------------------------------------------
Honeywell International, Inc., appearing through Kevin J. Mangan
of the Wilmington firm of Walsh Monzack & Monaco, PA, as local
counsel, and Bruce Buechler of the Roseland, New Jersey, firm of
Lowenstein Sandler PC as lead counsel, seeks relief from the
automatic stay of creditor action, retroactive to the Petition
Date, to permit the United States District Court in New Jersey
to adjudicate Honeywell's claims against W. R. Grace & Co. and
ECARG, Ltd., Debtors.
In particular, Honeywell asks Judge Joseph Farnan for stay
relief to continue discovery and allow Honeywell to liquidate
the amount of its claim against the Debtors through these
lawsuits (which Honeywell says the Debtors have continued
to litigate postpetition).
Honeywell explains that it is a co-defendant with, and a cross-
claimant against, the Debtors and a non-debtor entity affiliated
with W. R. Grace named W. R. Grace, Ltd., in 2 related court
proceedings pending in the United States District Court for New
Jersey. These are styled Interfaith Community Org. v. Honeywell
International, Inc. et al, pending before Judge Dennis M.
Cavanaugh, and Hackensack Riverkeeper, Inc. v. Honeywell
International, Inc. et al, pending before Judge Joseph A.
Greenaway. A motion to consolidate these two lawsuits is
pending.
The ICO and Riverkeeper actions both relate to environmental
conditions at real property located west of Route 440 in Jersey
city, New Jersey. Mutual Chemical Company of America operated a
facility adjoining the site prior to 1954 and generated wastes
containing chromium. Prior to 1954, Mutual transported wastes
containing chromium to the site. For liabilities of Mutual
relating to environmental conditions at the site, Honeywell is
the corporate successor to Mutual.
Debtors and Grace-England and their predecessors in interest
have leased, owned and/or operated the site since 1965 and first
became involved in litigation involving environmental
contamination at the site in 1973. The Grace defendants,
through a former affiliate, purchased the site in 1981.
Honeywell is involved in addressing chrome ore processing
residue at the site. On June 17, 1993, Honeywell entered into
an Administrative Consent Order with the New jersey Department
of Environmental Protection obligating it to investigate and
remediate the site, among other properties. Honeywell has
committed $10 million to conduct remedial investigation
feasibility studies for properties addressed in the ACO with the
NJDEP, including the site at issue in the ICO and Riverkeeper
cases. Honeywell announces it has also committed $50 million
(plus any monies remaining from the $10 RI/FS fund) to remediate
the properties addressed in the ACO and ha agreed to implement
the remedies in full, unless Honeywell disagrees with the
appropriateness of the remedies selected, in which event
Honeywell must still fund the remedies to the full amount of the
remediation fund.
On May 10, 1996, Grace filed crossclaims against Honeywell
seeking common-law contribution and indemnification. In January
1997, Grace brought CERLA crossclaims against Honeywell, as well
as various contractual, state and common-law claims. In
November 1999, Grace added claims against Honeywell under Sec.
7002(a)(1)(B) of the Resource Conservation and Recovery Act.
Honeywell thereafter filed its answer and affirmative defenses
to these claims, and asserted various crossclaims against the
Grace defendants seeking declaratory relief and recovery of all
of Honeywell's costs and expenses it has incurred and will incur
as a result of the defendants and their predecessors' handling,
or arranging for the storage, transportation, treatment and/or
disposal of wastes or hazardous substances containing chromium
at or near the site, as well as ownership and/or operation at
the site. Subsequently, Honeywell claimed against the Grace
Defendants under Sec. 7002 of RCRA as well. Grace and ECARG
have requested approval of the retention of environmental
counsel to continue to litigate these matters, and have
themselves asked for relief from the stay to continue their
crossclaims, but only in the ICO matter. Discovery has been
continuing, with some 500,000 documents produced to date by the
various parties. Honeywell has continued to pursue its claims
with assurances from the Debtors that they would agreed to
relief from the stay.
Honeywell agrees not to attempt to enforce any judgment against
the Debtors in these two lawsuits by levying against the
Debtors' assets during the bankruptcy proceeding. Payment of
any judgment would await Judge Farnan's rulings on claims
distributions. (W.R. Grace Bankruptcy News, Issue No. 12;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
WARNACO GROUP: Court Okays Sharretts as Debtor's Customs Counsel
----------------------------------------------------------------
The Warnaco Group, Inc. obtained court approval to hire
Sharretts, Paley, Carter & Blauvelt, P.C., as the Debtors'
customs counsel.
Moreover, the Court ruled that Sharretts, Paley, Carter &
Blauvelt, P.C., will not be required to comply with the monthly
compensation procedures regarding the payment of fees and
expenses for the period of time from the Petition Date through
and including September 30, 2001.
Judge Bohanon directs Sharretts to serve monthly statements for
payment of 80% of fees and 100% of expenses incurred in
connection with the services they rendered to the Debtors for
the period - from Petition Date through and including July 31,
2001, on or before September 20, 2001; and for the period - from
August 1, 2001 through and including September 30, 2001, on or
before October 20, 2001, on the Debtors, their counsel, the U.S.
Trustee, and counsel to the Prepetition Lenders, the Post-
Petition Lenders and the Committee.
Nothing will prejudice the rights of the parties receiving a
statement to object to the fees and expenses sought in a
particular statement.
Judge Bohanon emphasized it is also without prejudice to
Sharretts' rights to seek payment of the remaining 20% of fees.
Starting October 20, 2001, Judge Bohanon ruled that Sharretts
shall be compensated upon appropriate application.
According to Judge Bohanon, this order supercedes the Order
Authorizing Employment and Compensation of Ordinary Course
Professionals. (Warnaco Bankruptcy News, Issue No. 9; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WINSTAR COMMS: Walks Away from Four High-Capacity Circuit Pacts
---------------------------------------------------------------
Prior to the Petition Date, Winstar Communications, Inc., and
its debtor-affiliates had numerous contracts with various
telecommunication utilities, to acquire the right to use "high-
capacity" circuits. As part of their effort to reorganize and
achieve profitability, the Debtors have undertaken a
comprehensive review of their operations to identify appropriate
areas for cost reduction and increased operational efficiency,
and to focus restructuring efforts around their core business of
providing broadband services to businesses in major commercial
centers.
In doing so, the Debtors have concluded that certain of the
Total Circuits do not produce, revenue sufficient to justify
their continuation and are not necessary to the Debtors'
business. Accordingly, the Debtors have determined that it is
in the best interests of their estates, their creditors, and all
parties-in-interest to reject the executory contracts related to
the circuits.
In addition to the excess capacity the Debtors acquired under
the Contracts, the Debtors also have determined that they are
presently paying for additional excess capacity on the Total
Circuits. However, due to the large number of circuits the
Debtors utilize in their network, the Debtors are not at present
able to identify all of the Total Circuits that are no longer
necessary for their present or future business.
Due to the large number of circuits involved, the Debtors have
concluded that special procedures must be established to enable
the Debtors to efficiently reject these contracts and relieve
the Debtors of the burden of paying for the Surplus Circuits.
The Debtors anticipate that through the process they have
implemented to identify surplus circuitry, the Surplus Circuits
will be identified from time to time on an ongoing basis.
By Motion, the Debtors seek entry of an order:
A. approving the rejection of each of the executory contracts
between the telecommunication utilities and the Debtors and
B. establishing procedures in which the Debtors are authorized,
without further order of the Court, to reject additional
executory contracts between the telecommunication utilities
and the Debtors relating to Surplus Circuits if the Debtors
determine that such contracts are no longer necessary for the
Debtors' business.
The executory contracts proposed to be rejected together with
the number of circuits concerned are:
1. SBC Communications - 375 high-capacity circuits
2. Qwest Communications - 250 high-capacity circuits
3. Verizon Communications - 350 high-capacity circuits
4. BellSouth Communications - 100 high-capacity circuits
M. Blake Cleary, Esq., at Young Conaway Stargatt & Taylor, LLP
in Wilmington, Delaware contends that granting the relief
requested in this Motion will permit the Debtors to immediately
reduce costs associated with the Contracts, and will provide the
Debtors with an efficient method for rejecting additional
executory contracts that is fair and reasonable and will not
prejudice the rights of any party. Although the Debtors have
identified some circuits that are not necessary to their present
operations, Mr. Cleary anticipates that the process of
identifying all such circuits will be an ongoing, painstaking
task.
The Debtors believe that the proposed Contract Rejection
Procedures will enable the Debtors to reject executory contracts
for unneeded circuits in a timely and efficient manner and to
the benefit of the Debtors and their estates and without any
prejudice to the telecommunication utilities. Mr. Cleary states
that the Rejection Procedures provide a mechanism whereby the
telecommunication utilities may contest a Rejection Notice if it
believes the rejection has been undertaken in bad faith or is
otherwise improper.
Mr. Cleary adds that these provisions provide assurance that the
rejection of any contract pursuant to the Procedures will be an
exercise of the Debtors' sound business judgment. (Winstar
Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
WOLF CAMERA: Sells Assets to Rival Ritz Camera for $84.7 Million
----------------------------------------------------------------
Judge C. Ray Mullins of the U.S. Bankruptcy Court for the
Northern District of Georgia on Friday approved the sale of Wolf
Camera Inc. to rival Ritz Camera Centers Inc. for $84.7 million
despite the emergence of three last-minute offers that would
have allowed the company to be reorganized instead of
liquidated, TheDeal.com reported.
Cardinal Investment Co., a Dallas-based private equity firm,
offered to pay $53 million in cash and assume some Wolf Camera
liabilities. A second private equity group of Palladin Capital
Group and GB Equity Partners proposed a deal to invest $15
million in Wolf Camera in an effort to keep the chain operating.
Wolf's unsecured creditors committee and its largest creditor,
Eastman Kodak Co., backed an offer by Jessops, the United
Kingdome's leading camera specialty retailing chain. Jessops had
offered a $50 million line of credit to Wolf Camera to pay its
lenders $30 million. Judge Mullins sided with the Ritz proposal
because the three other offers didn't include a plan for Wolf
Camera to deal with dwindling debtor-in-possession (DIP)
financing.
Privately held Wolf Camera, an Alpharetta, Ga.-based photo-
processing chain, filed for chapter 11 bankruptcy protection in
June. Wolf Camera founder Chuck Wolf started his career at
Beltsville, Md.-based Ritz Camera, owned by his cousin, David
Ritz. (ABI World, September 24, 2001)
* Peterson Consulting Hired to Prep & Pursue WTC-Related Claims
---------------------------------------------------------------
Oppenheimer Funds, a substantial leaseholder at the World Trade
Center, has retained Peterson Consulting, a unit of Navigant
Consulting, Inc. (NYSE: NCI), to represent and assist in the
preparation of all property damage and business interruption
claims that resulted from the World Trade Center tragedy.
Peterson Consulting has assisted numerous clients over the last
twenty years in the preparation and validation of claims arising
from some of the nation's previous significant, catastrophic
events, including the 1993 World Trade Center bombing.
Doug Reichert, Executive Managing Director of Peterson, said:
"Our purpose in the engagement is to bring to bear our long term
professional claims experience and expertise to enable the
insurance industry to understand, accept and process our
clients' complex claims in as short a time as possible. A key to
quick recovery for those companies directly impacted is a
professional, informed and well-substantiated claims process.
Peterson has those attributes."
William M. Goodyear, Chairman and Chief Executive Officer of
Navigant Consulting, Inc., said: "In our announcement on
September 20th, we indicated that in the aftermath of the World
Trade Center tragedy, the Company expected several practice
areas to be impacted favorably, including its insurance and
business interruption service lines. The Oppenheimer Funds
engagement confirms that expectation."
Navigant Consulting, Inc. ( HTTP://WWW.NAVIGANTCONSULTING.COM )
is a globally-focused management consulting firm providing
consulting services to Fortune 500 companies, government
agencies, law firms, and regulated and network industries. The
Company is comprised of two business units -- Financial & Claims
and Energy & Water. The Financial & Claims unit, consisting of
Peterson Consulting, The Barrington Consulting Group, PENTA
Advisory Services and Chambers Associates, Inc., provides
consultation to clients facing the challenges of litigation,
bankruptcy, claims, regulation and change in analyzing complex
accounting, finance, economic, engineering, system and
information management and retrieval, outsourcing and technology
issues.
*********
Bond pricing, appearing in each Monday's edition of the TCR, is
provided by DLS Capital Partners in Dallas, Texas.
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Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
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For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
Cataraja de Roda, Ronald Pude Villavelez and Peter A. Chapman,
Editors.
Copyright 2001. All rights reserved. ISSN: 1520-9474.
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