/raid1/www/Hosts/bankrupt/TCR_Public/011106.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, November 6, 2001, Vol. 5, No. 217
Headlines
360NETWORKS: Wants Plan Filing Period Extended Until February 25
AMF BOWLING: Court Extends Plan Filing Period to February 27
ADESTA COMMS: Files for Chapter 11 Reorganization in Omaha
ADESTA COMMUNICATIONS: Chapter 11 Case Summary
ALARIS MEDICAL: Third Quarter Results Higher Than Expectations
ALGOMA STEEL: Net Loss Swells in Q3 Due to Forex Loss on Notes
ALTERRA HEALTHCARE: Patrick Kennedy Takes Helm in Restructuring
AMES DEPARTMENT: Utilities Seek Advance Payment Arrangement
AQUASEARCH: Says Involuntary Bankruptcy Petition Has No Merit
BAKERY RESOURCES: New Buyer Sought for Ms. Desserts
BALANCED CARE: Q1 Net Loss Drop Due to Lower Operating Expenses
BETHLEHEM STEEL: Schedules Filing Deadline Extended to Dec. 13
BRIDGE INFO: Court Okays Stibbe As Debtor's Special Counsel
CARBIDE/GRAPHITE: Nasdaq Delists Common Stock Effective Nov. 2
COMDIAL: Speeds-Up Restructuring to Offset Effects of Slowdown
COMDISCO INC: Gets Approval to Pursue Intercompany Transactions
COMDISCO INC: Postpones Year-End Earnings Release to December 13
CONSOLIDATED CONTAINER: Financial Covenants Violation Likely
DYLEX LTD: Richter Sells Fairweather Division to A Canadian Firm
ECHOSTAR COMMUNICATIONS: S&P Keeps Watch on Low-B Ratings
EXCELSIOR INCOME: Shareholders Reject Proposed Liquidation Plan
EXODUS COMMUNICATIONS: Signs-Up Brobeck Phleger As Labor Counsel
FEDERAL-MOGUL: U.S. Trustee Appoints Unsecured Creditors' Panel
FLEXINTERNATIONAL: Swings Into Net Loss of $1.7MM in 3rd Quarter
GENESIS HEALTH: Gets 60-Day Extension of ADR Deadlines
GLOBALNET: Nasdaq Delists Shares From the SmallCap Market
HENLEY HEALTHCARE: Voluntary Chapter 7 Case Summary
INTEGRATED HEALTH: Court Okays Transfer of 3 Alabama Facilities
KENTUCKY ELECTRIC: Misses Principal Payment on 7.6% Senior Notes
LAND O'LAKES: S&P Rates Planned $300 Million Senior Notes at BB
LEINER HEALTH: Gets Creditors' Nod for Financial Restructuring
MARINER POST-ACUTE: Court Okays Bidding Protocol for APS Sale
METRICOM INC: Aerie Buys Ricochet Wireless Assets for $8.25MM
NCS HEALTHCARE: Q1 Revenues Drop Due to Closure of Non-Core Ops.
OPEN PLAN: Wachovia Bank Agrees to Forbear Until January 31
PENTACON: S&P Raises Ratings After Making Interest Payment
PHILIPS INT'L: Completes Sale of Port Angeles Assets for $4.5MM
PHOTOCHANNEL: Chapter 7 Case Summary
POLAROID CORP: Intends to Assume & Assign 398 Contracts to PIDS
QUALITY STORES: Chapter 11 Case Summary
RAMPART SECURITIES: IDA Continues Membership Suspension
RELIANCE: Court Okays Hiring of Ordinary Course Professionals
SUN HEALTHCARE: Seeks Okay to Reject 4 Leases & 1 Sublease
THERMOVIEW: Cost-Cutting Efforts Yield Positive Results in Q3
TRUMP HOTELS: S&P Junks & Places Ratings on CreditWatch Negative
VIDEO NETWORK: Now Trading Off Nasdaq SmallCap Market
VLASIC FOODS: Seeks Extension of Plan Filing Period to Dec. 28
WARNACO GROUP: Asks Court to Fix January 4 Claims Bar Date
WHEELING-PITTSBURGH: Gets $400K Grant For Paint Line Plant in WV
YORK POWER: S&P Drops $150M Bonds to D After Missed Payment
*********
360NETWORKS: Wants Plan Filing Period Extended Until February 25
----------------------------------------------------------------
Judge Gropper extends 360networks inc.'s deadline to file a plan
of reorganization through November 8, 2001, on which date the
Court will convene a hearing on the Debtors' request.
The Debtors want 120 more days to file a plan(s) of
reorganization and to solicit/obtain acceptances to such plans.
The Debtors propose February 25, 2002 as the deadline to file
their plan of reorganization and April 26, 2002 as the
expiration of their exclusive solicitation period.
Shelley C. Chapman, Esq., at Willkie, Farr & Gallagher, in New
York, New York, tells the Court the Debtors have been busy
working for their eventual emergence from chapter 11.
Specifically, Ms. Chapman notes that the Debtors have:
(a) Stabilized their downsized operations and formulated a
revised business plan.
(b) obtained continued access to cash collateral with the
consent of their pre-petition lenders and the Committee.
(c) Worked on their Schedules and Statements of Affairs.
(d) Made substantial progress in disposal of non-core assets
and renegotiation of a variety of contractual
relationships.
(e) Formulated and obtained approval in part of an employee
incentive and retention program.
(f) Worked closely with their financial advisors to develop
an Offering Memorandum which invites interested parties
to make offers to acquire, or make an investment in, the
Debtors' business.
Obviously, Ms. Chapman notes, the Debtors need more time to
develop and negotiate a reorganization, which they intend to do
so expeditiously.
The Debtors also explain that they had to defer preparation of a
plan of reorganization because asset value preservation and
enhancement was their primary consideration at the outset of
these chapter 11 cases.
At the same time, Ms. Chapman makes it clear that the Debtors
have made substantial progress in laying the foundation for
proposing a reorganization plan. Those efforts include:
(1) The Debtors retained legal professionals and claims
agents to assist in navigating the chapter 11 process.
(2) The Debtors obtained valuable extensions of time to
assume or reject their unexpired leases and executory
contracts as well as to remove pending litigation to
this Court.
(3) The Debtors have made substantial progress in preparing
their Schedules and Statements of Affairs.
(4) The Debtors have substantially revised their business
plan, which continues to be reviewed and revised to
reflect management's judgment as to the best course for
the Debtors' and their estates.
(5) The Debtors have continued their cost-cutting efforts
whenever appropriate by rejecting costly leases and
downsizing their workforce. The Debtors have also made
substantial progress in the disposal of non-core assets
and renegotiation of a variety of contractual
relationships.
(6) The Debtors have finalized an Offering Memorandum and
circulated it to prospective parties interested in
acquiring or investing in the Debtors' businesses. The
Offering Memorandum seeks binding commitments over the
next few months.
Still, Ms. Chapman notes, much remains to be done, including
evaluation of all claims to be filed in these cases. Thus, Ms.
Chapman asserts, the Court should grant the relief requested.
(360 Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
AMF BOWLING: Court Extends Plan Filing Period to February 27
------------------------------------------------------------
AMF Bowling Worldwide, Inc., sought and obtained an order
extending its exclusive plan filing period and the exclusive
plan solicitation period 120 days through and including February
27, 2002 and April 30, 2002, respectively.
Dion W. Hayes, Esq., at McGuire Woods LLP, in Richmond,
Virginia, reminds the Court that a Disclosure Statement hearing
is set on November 8, 2001, and the Debtors anticipate
confirmation of the Plan in January, 2002. Mr. Hayes states
that in an abundance of caution and in an effort to retain
exclusivity for a sufficient period, the Debtors seek a
reasonable extension of their exclusive periods within which to
propose a plan and to solicit votes on a plan.
Mr. Hayes contends that the relief requested is warranted
because the Debtors' chapter 11 cases are large and complex
cases, plus the magnitude of these cases has required the
Debtors to dedicate a significant amount of time to resolving
complex issues including the negotiation of a plan of
reorganization and the reconciliation of thousands of creditor
claims. Further, the Debtors have been paying their post-
petition bills as they have come due.
Mr. Hayes tells the Court that the Debtors have made substantial
strides toward the confirmation of the Plan and the conclusion
of the administration of this case. The Debtors request this
extension in good faith and are not seeking this extension to
delay their reorganization or to pressure creditors to agree to
a plan unsatisfactory to them and in fact, the Debtors have made
every feasible effort to emerge expeditiously from these
proceedings. (AMF Bankruptcy News, Issue No. 10; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ADESTA COMMS: Files for Chapter 11 Reorganization in Omaha
----------------------------------------------------------
Adesta Communications Inc., a nationwide developer of fiber
optic-based communication networks and a wholly-owned subsidiary
of Bracknell Corporation (NASDAQ: BRKC; TSE: BRK) announced that
it has filed voluntary petitions for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. The filings, made in
U.S. Bankruptcy Court in Omaha, Nebraska, will enable Adesta
Communications to continue to conduct its business operations
and control its assets while restructuring financial obligations
and implementing a reorganization plan.
On September 20, Bracknell announced that as a condition of
amending its bank credit facilities, its Adesta Communications
subsidiary was required to be self-funding and it was essential
that strategic alternatives be immediately pursued for Adesta.
These actions were required because of softness in the telecom
sector. The Company's announcement is a result of a review of
strategic alternatives for Adesta.
"During the past 18 months, the telecommunications sector has
faced difficult financial times and we have been affected by a
large amount of outstanding receivables and a decreased demand
for our services," said Bob Sommerfeld, President of Adesta
Communications. "We are taking this action because we believe it
will best protect the Company's assets for the benefit of our
creditors, customers, employees and other stakeholders while we
continue to evaluate our strategic alternatives. Although we
have already taken dramatic steps to counter the severe downturn
in the market for our services, we now find it necessary to seek
the assistance of the court in order to reorganize our balance
sheet."
Adesta Communications has retained McGrath, North, Mullin &
Kratz, P.C. to provide legal representation for the proceedings,
and KPMG, Inc. as financial advisors for the restructuring.
Adesta Communications is a leader in the development, design and
integration of intelligent infrastructure solutions for advanced
communications applications. The Company provides systems
integration and innovative development for facilities-based
communications projects. Adesta Communications' clients include
federal, state and local government agencies, telecommunications
service providers, regional and state transportation and transit
agencies, utilities and private industry in the United States
and abroad. The company has deployed over 2 million fiber miles
in more than 70 metropolitan areas. Information about Adesta
Communications can be found at
http://www.adestacommunications.com
ADESTA COMMUNICATIONS: Chapter 11 Case Summary
----------------------------------------------
Debtor: Adesta Communications, Inc.
1200 Landmark Center, Suite 1300
Omaha, NE 68102-1892
Chapter 11 Petition Date: November 2, 2001
Court: District of Nebraska (Omaha)
Bankruptcy Case No.: 01-83236
Judge: Timothy J. Mahoney
Debtor's Counsel: Robert Bothe, Esq.
Suite 1400 One Central Prk Plz
222 South Fifteenth Street
Omaha, NE 68102
(402) 341
ALARIS MEDICAL: Third Quarter Results Higher Than Expectations
--------------------------------------------------------------
ALARIS Medical Inc. (AMEX:AMI) reported sales of $103.6 million
for the third quarter of 2001, an increase of 13% in constant
currency (11% as reported) compared with the same period in
2000. Adjusted EBITDA increased $1.0 million, or 5%, to $21.3
million for the quarter ended September 30, 2001 versus $20.3
million for the same quarter in the prior year.
Income from operations was $13.4 million for the third quarter
of 2001 compared with $5.9 million for the same quarter in the
prior year. The Company reported a net loss of $1.2 million,
compared with a net loss of $6.2 million.
Sales were higher than previously expected for the quarter which
was forecasted in the Company's second quarter earnings release
of August 2, 2001 to be at or slightly above second quarter
sales of $98.5 million. Adjusted EBITDA was also higher than the
previously expected $18-20 million range.
David L. Schlotterbeck, president and chief executive officer
said, "We are very pleased to report significant growth in our
business and results that exceed expectations. This is
especially satisfying during this time when many companies are
experiencing a general slow down and contraction of their
businesses. This improved operating performance is a result of
our continued focus on developing high impact, high quality
products that meet our customers' needs while also improving our
manufacturing effectiveness and efficiency."
Sales
Sales increased $10.4 million, or 13% on a constant currency
basis (11% as reported) for the quarter ended September 30, 2001
compared with the same quarter last year. North America sales
were $74.5 million, an increase of $9.8 million, or 15%,
compared with the third quarter of 2000. The increase was
primarily due to the first sales of the Company's MEDLEY Patient
Care System which totaled $5.5 million for the quarter as well
as increased volume of drug infusion disposable administration
sets. The MEDLEY System is the first product to include the
Company's proprietary Guardrails Advisory System medication
error alert software.
International sales were $29.1 million, an increase of 8% in
constant currency and 2% as reported. The increase was primarily
due to increased volume of drug infusion disposable
administration sets and patient monitoring instruments.
For the nine months ended September 30, 2001, sales were $301.0
million, an increase of $24.2 million or 11% in constant
currency (9% as reported) compared with $276.8 million reported
for the same period in the prior year. The increase in sales is
primarily due to increased volumes of both drug infusion
instruments and disposable administration sets. Instrument and
disposable revenues in patient monitoring also increased over
the prior year comparative period.
Gross Margin
Gross profit increased $7.7 million, or 18%, during the quarter
ended September 30, 2001 compared with the same quarter last
year. This increase was due to the increase in sales and an
increase in the gross margin percentage. The gross margin
percentage increased to 48.1% in the third quarter of 2001, from
45.2% in the third quarter of 2000. The improved margin
percentage was due to continuing manufacturing efficiencies and
improvements and included the benefits of higher production
volumes and lower product warranty and repair costs.
Selling and Marketing Expenses
Selling and marketing expense increased $2.0 million, or 12%,
during the quarter ended September 30, 2001 compared with the
same period in 2000 due to higher sales volume resulting in
increases in sales compensation and distribution costs. Also
contributing to this increase was higher marketing expenses
related to new product launch strategies. As a percentage of
sales, selling and marketing expenses increased to 18.6% for the
third quarter of 2001 from 18.5% in the third quarter of 2000.
General and Administrative Expenses
General and administrative expenses increased $2.6 million, or
28%, during the three months ended September 30, 2001 compared
with the three months ended September 30, 2000. As a percentage
of sales, general and administrative expenses increased to 11.5%
in the third quarter of 2001 from 10.0% in the third quarter of
2000. The increase is due to higher costs for employee benefits
and consulting expenses. The higher benefits costs include
significantly higher bonus accruals based on the Company's
turnaround. A large portion of these bonuses is not anticipated
to be repeated in 2002.
Research and Development Expenses
Research and development expenses increased approximately $1.6
million, or 32%, during the three months ended September 30,
2001 compared with the three months ended September 30, 2000.
The increase is due to spending associated with new product
development, including salaries, benefits and consulting costs,
and is consistent with the Company's strategic plans to increase
the level of investment in its new product pipeline. As a
percentage of sales, spending on research and development
increased to 6.3% for the third quarter of 2001, compared with
5.3% for the third quarter of 2000.
Restructuring and Non-Recurring Charges
There were no restructuring or non-recurring charges in the
third quarter of 2001. During the third quarter of 2000, the
Company incurred $6.1 million in restructuring and non-recurring
charges representing activities that involved the Company's
manufacturing facilities in Creedmoor, N.C., Basingstoke,
England and San Diego.
Income from Operations
Income from operations increased $7.5 million during the three
months ended September 30, 2001 compared with the three months
ended September 30, 2000 due primarily to higher sales and
increase in gross profit.
Interest Expense
Interest expense increased $0.6 million, or 4%, during the three
months ended September 30, 2001 compared with the three months
ended September 30, 2000 due to increased interest accretion on
the Company's 11-1/8% senior discount notes as well as higher
interest rates in 2001 on the Company's other outstanding debt.
Other expense improved $1.6 million from expense of $1.5 million
for the third quarter of 2000 to income of $0.1 million for the
third quarter of 2001. This is primarily due to lower foreign
currency transaction losses resulting from changes in foreign
currency rates during the quarter as well as the implementation
in 2001 of additional foreign currency hedging programs designed
to reduce exposure to changes in currency rates.
Financial Position
ALARIS Medical reported long-term debt (including current
portion) of $522.7 million at September 30, 2001 compared with
$523.8 million at December 31, 2000. Cash provided by operations
was approximately $40.5 million for first nine months of 2001
compared with $25.7 million for the first nine months of 2000.
The Company had $52.8 million in cash at the end of September
2001 compared with $30.6 million at year-end 2000.
Recent Key Developments
-- ALARIS Medical Systems, Inc. completed a previously
announced private offering of $170 million of senior secured
notes due in 2006. The joint managers of the offering were UBS
Warburg and Bear, Stearns & Co. Inc. The net proceeds of the
offering, along with existing cash, were used primarily to
eliminate the Company's bank debt. Based on strong demand, the
offering was increased from its originally anticipated size of
$150 million to $170 million at an interest rate of 11-5/8%. The
additional funds were used primarily to repurchase $20 million
aggregate principal amount of the Company's 9-3/4% subordinated
notes due 2006 at a discount to par.
-- On September 7, the Company announced a plan to meet in
total its obligations with regard to the January 15, 2002
maturity of its $16.2 million 7-1/4% convertible debentures.
With the completion of the $170 million senior secured notes
financing, this plan is being implemented.
-- On October 3, the Company announced a long-term agreement
with McKesson Corporation to develop and co-market innovative
new products designed to reduce intravenous medication errors, a
significant cause of patient harm and a major factor in the
rising cost of healthcare in the United States and throughout
the world.
-- The Company has begun the first commercial shipments of its
MEDLEY Patient Care System, which include its Guardrails
Advisory System software to prevent bedside medication errors
involving intravenous medications.
-- During the quarter, the Company released the ASENA GW
large volume pump for the international market. The ASENA
GW is a small, lightweight, highly-featured device for
delivery of nutritional products and hydration therapy.
-- The ALARIS AEP monitor was introduced to North American
customers in October at the Annual Meeting of the American
Society of Anesthesiologists in New Orleans. This non-invasive
device is used for real-time monitoring of the level of
consciousness of sedated patients. This device has FDA 510(k)
clearance and will be available for sale in North America in
the first quarter of 2002.
Outlook
As stated in the Company's press release of October 9, 2001,
fourth quarter sales are forecasted to be 8% to 10% higher than
fourth quarter sales for 2000. This would result in full year
2001 sales of approximately $411 million to $413 million, an
increase of approximately 9% over 2000. Adjusted EBITDA is
forecasted to be $23 million to $25 million for the fourth
quarter and $82 million to $84 million for the full year.
The Company has not completed all of its business planning for
2002 but currently anticipates sales growth for 2002 should
again be approximately 9% with Adjusted EBITDA growing slightly
faster than the rate of sales growth. This planned performance
would result in positive earnings per share for the full year
2002.
ALARIS Medical Inc., through its wholly-owned operating company,
ALARIS Medical Systems Inc., is a leading developer,
manufacturer and provider of integrated intravenous infusion
therapy and patient monitoring instruments and related
disposables, accessories and services. ALARIS Medical's primary
brands, ALARISr, IMEDr and IVACr, are recognized throughout the
world. ALARIS Medical's products are distributed to more than
120 countries worldwide. In addition to its San Diego world
headquarters and manufacturing facility, ALARIS Medical also
operates manufacturing facilities in Creedmoor, N.C.;
Basingstoke, U.K.; and Tijuana, Mexico. Additional information
on ALARIS Medical can be found at http://www.alarismed.com
ALGOMA STEEL: Net Loss Swells in Q3 Due to Forex Loss on Notes
--------------------------------------------------------------
Algoma Steel (TSE:ALG.) reports its third quarter financial
results.
The operating loss in the third quarter declined to $16.0
million from $42.9 million in the second quarter. The
improvement was due mainly to lower operating costs and a
writedown of a trade receivable in the second quarter. The net
loss increased to $61.9 million from a $47.8 million loss in the
second quarter reflecting a foreign exchange loss on the First
Mortgage Notes of $22.5 million in the quarter as compared to a
foreign exchange gain on the First Mortgage Notes in the second
quarter of $21.8 million.
Cash conservation efforts have been very successful to date,
contributing to a reduction in bank indebtedness of $7.5 million
in the quarter and no draw at September 30 on the Debtor-In-
Possession (DIP) facility provided by the banking syndicate.
Restructuring Status
Algoma filed a Plan of Arrangement with the Court on October 24,
2001. This is the beginning of a formal process which is
expected to result in votes by creditors and implementation of
the Plan in early January, 2002. The Company has received an
extension of protection under the Companies' Creditors
Arrangement Act until December 10, 2001.
Algoma's wholly-owned subsidiary, Cannelton Iron Ore Company
(CIOC), has reached agreement in principle with Cleveland Cliffs
(Cliffs) respecting a transfer to Cliffs of CIOC's 45% interest
in the Tilden Mine for the assumption by Cliffs of CIOC's share
of Tilden Mine liabilities. Under this arrangement, Algoma would
enter into an exclusive 15-year iron ore supply agreement with
Cliffs. This transaction will result in reduced annual operating
costs for Algoma. It is conditional on finalization of
definitive agreements and Algoma's successful restructuring.
Management's Discussion & Analysis
The following discussion and analysis should be read in
conjunction with the Management Discussion and Analysis and the
annual audited consolidated financial statements and notes
contained in the Corporation's 2000 Annual Report and with the
interim financial statements and notes contained in this report.
Financial and Operating Results
The operating loss in the third quarter declined to $16.0
million from $42.9 million in the second quarter. A substantial
reduction in operating costs and a $16.8 million writedown of a
trade receivable in the second quarter were the major reasons
for the improvement. Selling prices increased slightly but were
a minor factor in the improvement, with average revenue per ton
up $1 from the second quarter to $478 per ton. Steel markets
were stronger through part of the third quarter but weakened
substantially by the end of the quarter as a result of the
events of September 11, 2001.
The decline in operating costs relates primarily to cost
reduction initiatives and spending restraints. Other factors
include lower natural gas costs and unit cost reductions
originating from higher production levels. A temporary
improvement in market conditions contributed to an increase in
raw steel production and shipments in the quarter. Raw steel
production increased by 26,000 tons from the second quarter to
585,000 tons, while shipments were higher by 22,000 tons at
506,000 tons.
The operating loss for nine months reached $111.8 million which
compares to operating income of $40.3 million for the same
period in 2000. The deterioration was caused mainly by a
continuation of lower selling prices initially caused by a surge
of imported steel in the second half of 2000 and weakness in
some sectors of the economy in 2001. These factors also caused a
decline in shipments and resulted in higher unit costs due to
lower production volumes.
Sales in the first nine months totaled $700.2 million which is
substantially lower than the $878.1 million for the first nine
months of 2000. The decline was due mainly to the high level of
imports and the economic downturn. Average revenue per ton
declined to $473 from $556 in the first nine months of 2000,
while shipments dropped by 99,000 tons to 1,480,000 tons.
The CCAA filing and defaults on certain financial covenants at
the end of the first quarter resulted in a reclassification of
the First Mortgage Notes liability of $550.8 million as a
current liability and a related non-recurring charge to earnings
of $89.7 million. This charge was composed of deferred foreign
exchange losses, deferred debt issue costs and unamortized debt
discounts related to the First Mortgage Notes and is classified
as reorganization expenses along with various fees totaling $8.8
million related to the restructuring process.
The net loss for the third quarter includes a foreign exchange
loss of $22.5 million on the First Mortgage Notes, while the
second quarter results included a $21.8 million foreign exchange
gain. This relates to the reclassification of the debt as
current and the need to immediately record foreign exchange
gains or losses rather than amortize gains or losses over the
remaining term of the debt. This reclassification also results
in the interest on the Notes being reported as other interest
rather than interest on long-term debt. The third quarter net
loss also includes reorganization expenses of $3.0 million.
The net loss for the nine months of 2001 of $276.2 million
compares to a net loss of $27.2 million in the same period for
2000. The deterioration was due mainly to the weaker steel
markets and reorganization expenses of $98.5 million.
Liquidity
A cash drain from operations of $25.9 million was more than
offset by a reduction in working capital of $36.7 million.
Positive cash flow from operations and continuing cuts to the
capital expenditure program, with only $3.9 million expended in
the quarter, resulted in a reduction in bank indebtedness of
$7.5 million. Bank indebtedness decreased to $142.5 million at
September 30, 2001 from $150.0 million at June 30, 2001.
The Company funds its short-term lending needs through two loan
agreements with a banking syndicate. A Senior Loan facility
provides access to a maximum of $180 million to December 31,
2001 subject to various covenants and other conditions. This
facility is secured by a first charge on substantially all of
the Company's inventory and receivables. The Company defaulted
on certain covenants in the first quarter and remains in breach
of these covenants, but the banking syndicate has agreed to
forbear from acting on their rights and remedies subject to
certain conditions through an "Amendment and Accommodation
Agreement". The Company was also provided with a Debtor-In-
Possession (DIP) facility which provides financing to December
31, 2001 to a maximum of $50 million and is subject to various
covenants and conditions. The Company was in compliance with
these covenants at September 30, 2001. A CCAA Court order
currently limits the use of the DIP facility to a maximum of $35
million. The DIP facility is secured by a first charge on fixed
assets and a second charge on inventory and receivables.
The DIP facility can only be used when the full availability of
the Senior facility is exhausted. At September 30, 2001, the
borrowings of $142.5 million were entirely from the Senior
facility with no borrowings under the DIP facility.
Trade
In August, 2001, the Canadian International Trade Tribunal
(CITT) determined that certain hot rolled carbon and alloy steel
sheet products originating in or exported from Brazil, Bulgaria,
China, Chinese Taipei, India, Macedonia, South Africa, Ukraine
and Yugoslavia and the subsidizing of the goods originating in
or exported from India have caused material injury to the
domestic industry. As a result of the injury finding, dumping
and countervailing duty (India only) will be applied to imports
from those countries. The CITT also determined that imports from
Korea, New Zealand and Saudi Arabia have not caused and were not
threatening to cause injury to the domestic industry.
The finding is being challenged at the Federal Court by one of
the Chinese exporters.
In October, the United States International Trade Commission
ruled, in their global safeguard investigation under Section 201
of the Trade Act of 1974, that global imports of many steel
products were injuring the domestic steel industry. The ruling
found that flat rolled steel products imported from Canada were
not injuring the U.S. industry with the result that it
recommended that Canada be excluded on those products from any
remedies that will be applied to other countries. The matter is
now referred to the President's office for his determination of
an appropriate remedy. The U.S. finding of injury against
offshore imports is in stark contrast to the CITT decisions in
the Canadian cases.
In a ruling in early October, the CITT determined that certain
cold rolled steel sheet products originating in or exported from
Brazil, China, Chinese Taipei, Korea and South Africa have not
caused injury or retardation and are not threatening to cause
injury to the domestic industry. The Company is astonished by
the CITT's determination in the cold rolled case and in the hot
rolled determination relating to Korea. The CITT's failure to
find injury in circumstances where the Canadian steel industry
has so manifestly suffered grievous harm at the hand of unfairly
traded imports is very difficult to understand. The Company
continues to work with the Government of Canada in the ongoing
effort to provide appropriate measures to safeguard the Canadian
steel industry from unfairly traded steel.
Algoma is carefully monitoring the imports of steel entering the
Canadian market from offshore producers and is very concerned
that imports destined to the U.S. may now be diverted to the
Canadian market which has been left extremely vulnerable due to
the CITT decisions.
Outlook
The deterioration in economic conditions following the events of
September 11, 2001 has contributed to weaker demand for steel.
This, combined with seasonal low shipments in December, will
result in reduced shipments in the quarter. An improvement in
market conditions is expected at some point in 2002.
1. Financial restructuring and basis of presentation
On April 23, 2001, the Company obtained protection under the
Companies' Creditors Arrangement Act (CCAA) in the Ontario
Superior Court of Justice. The Company has received several
extensions and has recently been granted an extension of its
CCAA protection until December 10, 2001. This allows the Company
to continue operating as it negotiates a restructuring plan with
its stakeholders by preventing legal action being brought
against the Company and by staying substantially all unsecured
and undersecured claims as of the Filing Date. Additional
financing has been obtained providing for continuing operations
through the anticipated restructuring period.
On October 24, 2001, the Company filed a Plan of Arrangement and
Reorganization with the Court which provides for contributions
from all stakeholders that will significantly reduce costs and
improve cash flow in future years. The Plan provides for, among
other things:
-- the cancellation of currently outstanding common shares and
the issuance of new common shares;
-- the cancellation of the First Mortgage Notes and related
interest obligation in exchange for $150 million of new debt
and 75% of the new common shares;
-- a payment of $2 million in cash and 5% of the new common
shares in satisfaction of the claims of the unsecured creditors;
-- the issuance of 20% of the new common shares to employees
and new collective bargaining agreements which will include wage
and benefit reductions, pension benefit changes and manning
reductions; and
-- a new board of directors.
The Plan must be approved by the employees and by each class of
creditor of the Company. It may be amended prior to the votes.
If no Plan can be confirmed among all stakeholders, the Company
may face liquidation of its assets under the Bankruptcy and
Insolvency Act.
The unaudited interim consolidated financial statements have
been prepared on a "going concern" basis in accordance with
Canadian generally accepted accounting principles. This assumes
that the Company will continue in operation for the foreseeable
future and will be able to realize its assets and discharge its
liabilities in the normal course of business. These assumptions
are subject to significant uncertainty due to the CCAA
reorganization proceedings, the Company's current debt structure
and recent operating losses and cash flow problems.
These consolidated financial statements do not reflect any
adjustments that would be necessary if the "going concern"
principle was not appropriate. If the "going concern" principle
was not appropriate, significant adjustments would be required
in the carrying values of assets and liabilities, reported
revenues and expenses, and the consolidated balance sheet
classifications used.
2. Accounting Policies
The unaudited interim consolidated financial statements have
been prepared in accordance with Canadian GAAP on a basis
consistent with those described in the fiscal 2000 Annual
Report. This requires management to make estimates and
assumptions that affect the amounts reported in the consolidated
financial statements. Management believes that the estimates are
reasonable, however, actual results could differ from these
estimates. The interim consolidated financial statements do not
conform in all respects to the requirements of Canadian GAAP for
annual financial statements. Accordingly, these interim
consolidated financial statements should be read in conjunction
with the financial statements and notes included in the fiscal
2000 Annual Report.
3. Liabilities subject to compromise
The principal categories of obligations stayed under the CCAA
and classified as liabilities subject to compromise are
identified below. The Company believes that provisions have been
made in the consolidated financial statements for all potential
claims that could reasonably be estimated at September 30, 2001.
The amounts of the claims to be filed by creditors could be
significantly different than the amount of the liabilities
recorded by the Company.
4. Accounts receivable
On May 16, 2001, one of the Company's customers filed for and
received CCAA protection from its creditors. At September 30,
2001, a bad debt allowance of $16.8 million has been recorded
against the entire account receivable stayed under the CCAA.
5. Banking facilities
The Company's Revolving Credit Facility which expires on
December 31, 2001 was amended effective April 23, 2001. The
Amendment and Accommodation Agreement addressed several covenant
defaults which occurred at the end of the first quarter and
reduced the availability under this facility to the lesser of
$180 million and a borrowing base determined by the levels of
the Company's accounts receivable and inventories less certain
reserves. The facility is secured by a first charge on the
Company's accounts receivable and inventories.
Under the Senior Loan Facility, the Company may borrow in either
Canadian or United States (U.S.) funds at 4.5% over either the
Canadian or U.S. prime bank rate or, at the Company's option, at
5.5% over the bankers' acceptance rate or London interbank
offering rate (LIBOR) for $U.S. loans.
In addition to the Senior Loan Facility, effective April 23,
2001, in conjunction with filing for protection under the CCAA,
the Company was provided with a Debtor-in-Possession ("DIP")
Facility by the existing banking syndicate. The DIP Facility
provides financing to a maximum of $50 million to December 31,
2001 and is secured by a first charge on fixed assets and a
second charge on inventories and receivables. The Company is
required to meet certain covenants relating to capital
expenditures, liquidity and EBITDA (earnings before interest,
taxes, depreciation and amortization, foreign exchange on First
Mortgage Notes and reorganization expenses). The CCAA Court
order currently limits the use of the DIP Facility to a maximum
of $35 million. Under the DIP Facility, the Company may borrow
in either Canadian or United States (U.S.) funds at 2.5% over
either the Canadian or U.S. prime bank rate or, at the Company's
option, at 3.5% over the bankers' acceptance rate or London
interbank offering rate (LIBOR) for $U.S. loans.
6. Long-term debt
At the end of each fiscal quarter in 2001, the Company was in
violation of financial covenants with respect to its First
Mortgage Notes, resulting in the Notes being reclassified as a
current liability subject to compromise under the CCAA (note 3).
Accordingly, gains and losses resulting from the translation of
the $U.S. denominated Notes are now recorded in the consolidated
statement of loss as incurred. For the three and nine-month
periods ended September 30, 2001, accrued interest on the Notes
in the amounts of $16.7 million and $33.4 million, respectively,
has been classified with other interest in the consolidated
statement of loss. The consolidated financial statements for the
interim period ended March 31, 2001 have been restated to
reflect a charge of $89.7 million comprised of deferred foreign
exchange losses, deferred debt issue costs and unamortized debt
discount.
ALTERRA HEALTHCARE: Patrick Kennedy Takes Helm in Restructuring
---------------------------------------------------------------
Alterra Healthcare Corporation Names Patrick Kennedy as Interim
Chief Executive Officer; Announces Consulting Agreement With
Affiliate of Holiday Retirement Corp.
Alterra Healthcare Corporation (AMEX: ALI) announced the
election of Patrick F. Kennedy as Chief Executive Officer,
effective immediately. Mr. Kennedy, a senior executive and
director of Holiday Retirement Corp., is expected to serve as
Alterra's Chief Executive Officer through the completion of
Alterra's restructuring.
Alterra also announced that it has entered into a consulting
agreement with Holiday Retirement Consulting Services LLC, an
affiliate of Holiday Retirement Corp., pursuant to which the
services of Mr. Kennedy as well as other members of Holiday's
senior management team will be made available to Alterra.
Mr. Kennedy, a business lawyer by training, practiced
transactional law for 15 years with large New York and Seattle
based law firms prior to joining Holiday Retirement Corp., a
major operator of independent living retirement facilities, in
1995. At Holiday he has held a variety of positions, most
recently serving as Senior Vice President and a member of the
Board of Directors with responsibility for Holiday's
international operations.
"We believe Pat Kennedy is a great addition to our talented and
dedicated management team as we seek to achieve positive cash
flow from operations and complete our restructuring. As a senior
executive with Holiday and as a business lawyer, Pat has a skill
set that is well suited to managing our efforts to accomplish
these tasks," said Jerry L. Tubergen, Chairman of the Board. "We
will continue our search for a permanent CEO for Alterra, but do
not expect to conclude our search until our restructuring is
substantially completed," noted Tubergen.
Pursuant to its consulting agreement with Holiday, Alterra also
expects to benefit from the advice and assistance provided by
Holiday's senior management as Alterra seeks to continue to
deliver quality service, optimize rates and control costs, all
of which are directed at continuing to grow the Company's cash
flow. According to Alterra's President, Steven Vick, "Having
access to Holiday's experienced management team will be a great
resource for our management team as we pursue operating
improvements while seeking to complete our restructuring."
Alterra offers supportive and selected healthcare services to
our nation's frail elderly and is the nation's largest operator
of freestanding Alzheimer's/memory care residences. Alterra
currently operates in 26 states. Holiday Retirement is the
largest operator of independent living retirement facilities in
North America, currently managing over 70,000 units in the
United States, Canada and Europe.
Alterra's common stock is traded on the American Stock Exchange
under the symbol "ALI."
* * *
At June 30, 2001, the Company had $21.8 million in unrestricted
cash and cash equivalents and a $1.1 billion working capital
deficit compared to unrestricted cash and cash equivalents of
$23.4 million and a working capital deficit of $129.2 million at
December 30, 2000.
For the six months ended June 30, 2001 the cash flow from
operations was a deficit of $54.3 million before the $166.6
million loss on disposal of assets and the reserve for lease
terminations of $12.6 million compared to cash flow from
operations of $2.0 million for the six months ended June 30,
2000.
To address its long-term liquidity and capital needs, including
the Company's upcoming debt maturities, Alterra Healthcare
intend to (i) effect a Restructuring Plan with our lenders,
lessors, convertible debenture holders and joint venture
partners, (ii) continue to implement operating initiatives
focused on overall rate and occupancy improvement and overhead
reductions, (iii) dispose of under-performing and non-strategic
residences in order to reduce associated financing costs,
operating expenses and to generate cash, and (iv) seek to
identify additional equity or equity-linked capital.
AMES DEPARTMENT: Utilities Seek Advance Payment Arrangement
-----------------------------------------------------------
Niagara Mohawk Power Corporation, Dominion Virginia Power,
Dominion East Ohio Gas, Dominion Peoples Natural Gas, Dominion
Hope Gas, Baltimore Gas and Electric Company, American Electric
Power, Public Service Electric and Gas Company, Yankee Gas
Services Company, GPU Energy, Central Hudson Gas & Electric
Corporation, New York State Electric and Gas Corporation,
National Fuel Gas Distribution Corporation, and PECO Energy
Company, submit their Response To The Motion Of Ames Department
Stores, Inc For Determination Deeming Utilities Adequately
Assured Of Future Performance.
Eileen P. McCarthy, Esq., at Gould & Wilkie LLP in New York, New
York, tells the Court that the Utilities provided the Debtors
with pre-petition utility service and continue to provide the
Debtors with post-petition utility service. The Utilities
estimated pre-petition claims against the Debtors are:
A. Dominion Virginia Power $ 76,457.56
B. Dominion East Ohio Gas 5,862.70
C. Dominion Peoples Natural Gas (17.61)
D. Dominion Hope Gas 78.79
E. Baltimore Gas and Electric Company 64,749.18
F. American Electric Power 360,538.71
G. Public Service Electric and Gas Company 50,216.00
H. Yankee Gas Services Company 5,173.13
I. GPU Energy 425,110.34
J. Central Hudson Gas & Electric Corporation 47,473.08
K. New York State Electric and Gas Corporation 112,370.00
L. National Fuel Gas Distribution Corporation 98,280.00
M. Niagara Mohawk Power Corporation 462,528.52
N. PECO Energy Company 44,600.00
Based on the exposure presented by their state mandated billing
cycles, the Debtors' continued losses and the uncertainty
regarding the Debtors' future operations, Ms. McCarthy relates
that the post-petition security that the Utilities have
requested from the Debtors are:
A. Dominion Virginia Power $137,450 (2 month deposit)
B. Dominion East Ohio Gas $6,353 (1.3 month deposit)
C. Dominion Peoples Natural Gas $10,296 (2 month deposit)
D. Dominion Hope Gas $1,764 (2 month deposit)
E. Baltimore Gas and Electric Company $217,949 (2-mth. deposit)
F. American Electric Power $434,445 (2 month deposit)
G. Public Service Electric and Gas Company $76,080 (2-mth.
deposit)
H. Yankee Gas Services Company $43,585 (3 month deposit)
I. GPU Energy $508,847 (2 month deposit)
J. Central Hudson Gas & Electric Corporation $136,300 (2 month
deposit)
K. New York State Electric and Gas Corporation $626,314 (2 month
deposit)
L. National Fuel Gas Distribution Corporation $122,235 (2 month
deposit)
M. Niagara Mohawk Power Corporation $952,590 (2 month deposit)
N. PECO Energy Company $211,750 (2 month deposit)
In the alternative and in lieu of deposits, Ms. McCarthy states
that the Utilities would also be willing to accept an advance
payment arrangement under which the Debtors would tender weekly
payments to the Utilities in an amount equal to 1/8 of the
Utilities' two month deposit requests. The Utilities would
reconcile the foregoing weekly payments against the Debtors'
actual usage and either bill the Debtors for any amount used
that exceed the weekly payments or apply the applicable credit
to the next month's bill.
Ms. McCarthy contends that the weekly payment proposal not only
reduces the significant exposure the Utilities face from their
state mandated billing cycles but does not require the Debtors
to borrow to post the deposits they are reluctant to provide
even though they claim to purportedly have access to funding.
Regarding the Debtors' claim that their ability to pay for
future utility services and the grant of an administrative
expense priority for unpaid post-petition bills should
constitute adequate assurance of payment in this case, the
Utilities presents these objection:
A. The foregoing "protections" are inter-related because if the
Debtors lose their ability to pay for future utility
services the administrative expense priority will be
worthless, particularly because the Debtors have provided
their professionals with a $5,000,000 carve out to secure
the payment of their fees.
C. The Debtors has not set forth any facts to demonstrate why
this case is such an exceptional case that the Court should
ignore the deposit or other security requirements of
Section 366 of the Bankruptcy Code. Specifically, based on
the $473,000,000 that the Debtors owed to their pre-
petition lenders and the numerous other secured claims
against the Debtors' estates, it is unlikely that the
Debtors have complete access to the $755,000,000 facilities
that they obtained. Moreover, since the Debtors' most
important quarter is the fourth quarter, it is very likely
that the Debtors have already made substantial post-
petition borrowings under their DIP Facilities, one of
which was to have been fully funded upon execution.
C. Based on the Debtors' history of continued losses, the
Debtors' financial situation is not very promising. The
Debtors' claim that the competitive retail environment and
current economic conditions caused them to incur the losses
that resulted in their bankruptcy filing. As there is no
indication that the current economic situation is
improving, the Utilities are concerned that the Debtors
will continue to incur losses and possibly close and
liquidate their stores as so many other retailers have
done.
Therefore, Ms. McCarthy concludes that the Utilities should not
be required to be subject to these risks when the Court can
reduce these risks by requiring the Debtors to tender weekly
payments to the Utilities or require the Debtors to tender post-
petition deposits that the Debtors claim to have the finances to
pay. (AMES Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
AQUASEARCH: Says Involuntary Bankruptcy Petition Has No Merit
-------------------------------------------------------------
Aquasearch, Inc. (OTCBB:AQSE), a global leader in
photobioreactor technology, announced that it has embarked on a
major cost reduction campaign in an effort to achieve
profitability. The Company has furloughed most of its production
staff while retaining key marketing, technical and support
personnel. Personnel were decreased by 45%, which brought the
organization to a total of 16 full time employees.
Expenses have been reduced from approximately $4.8 million for
fiscal year 2001 to an estimated $2.4 million for fiscal 2002.
For fiscal year 2001, the Company estimates it will achieve
roughly $1 million in revenues. This compares to $200,000 for
the fiscal year 2000, or a potential increase of 500%. The
Company believes that it will be able to maintain this growth
rate throughout fiscal year 2002. The cost reductions have
reduced expenses by approximately 50% and the Company feels that
if sales growth continues along this same line, that
profitability can be reached more quickly during the next fiscal
year.
"We intend to focus the Company's efforts and resources on the
continued marketing of The AstaFactor in Hawaii and on the
previously announced mainland rollout," said Mark Huntley,
Ph.D., Chief Executive Officer of Aquasearch.
Due to improved processes, the Company stated that it has
sufficient inventory on hand to sustain expected order flow for
The AstaFactor for some time. The improved production and
extraction techniques can be credited to the efforts of Dr.
Michael Cushman who joined the company a little over a year ago.
"Dr. Cushman's efficiencies have increased the Company's ability
to produce astaxanthin by five fold. This has helped Aquasearch
maintain its position as one of the worlds top producers of high
quality product," stated Huntley.
The Company will focus almost all its resources on ramping up
sales of The AstaFactor, but it will also continue its work with
the US Department of Energy on the greenhouse mitigation
project, and on efforts to secure new drug development deals.
In addition, Aquasearch has also recently entered into
negotiations with several different entities regarding potential
strategic joint ventures, which could increase sales and
distribution of both astaxanthin and The AstaFactor. These
potential strategic joint ventures may also involve capital
infusion for the Company.
Aquasearch was also recently made aware of an involuntary
bankruptcy petition that has been filed against it in Federal
bankruptcy court. The petitioners include a recently terminated
employee and four other individuals. The claims of these
individuals are disputed. Aquasearch management questions the
good faith of the creditors and the legitimacy of the petition.
Mark Huntley, Aquasearch Chairman & CEO said, "Aquasearch is not
in bankruptcy. These debt claims are in dispute and I feel these
petitioners have no valid claims. There appears to be some
hidden agenda on the part of these people, as they have made no
formal communication with us in the past six weeks. We intend to
vigorously oppose the petition and take further action,
including seeking sanctions from the Court in what appears to be
a bad faith filing by these individuals."
Dr. Huntley concluded by stating, "In October, Aquasearch had
record sales which represented our best month ever. We initiated
the California roll-out yesterday with our first sale of The
AstaFactor to our mainland distributor and we fully anticipate
that November and beyond should be equally impressive."
Aquasearch is a biopharmaceutical company dedicated to the
discovery, development, and commercialization of prescription
drugs and over-the-counter nutraceuticals from microalgae.
Aquasearch is a world leader in commercial photobioreactor
technology, which enables large-scale cGMP production of single
cell plants. Although plants have proven to be the most
successful source of new drugs, more than 30,000 species of
single cell plants remain unexploited in health and medicine.
Aquasearch's first nutraceutical, The AstaFactor, is a natural
dietary supplement rich in astaxanthin, a potent antioxidant
with anti-inflammatory properties. The AstaFactor, is expected
to be available at many more retail outlets on the U.S. mainland
later this year.
BAKERY RESOURCES: New Buyer Sought for Ms. Desserts
---------------------------------------------------
Ms. Desserts -- a company whose baked goods tantalize tastebuds
from Singapore to New York -- is up for sale with a sealed-bid
deadline of November 27. Bakery Resources Group, LLC (BRG),
which trades under the name of Ms. Desserts, suffered as a
result of the AmeriServe bankruptcy earlier this year.
While the high-end baked goods boutique retains a client list
generating $10 million in sales, it also offers a buyer
something priceless: the unwavering loyalty of its 80
employees.
Ms. Desserts was purchased in 1997 from Stroehmann's Bakeries, a
subsidiary of George Weston Ltd., of Toronto, which sold it
because corporate direction changed. It took the new owners
less than a year to pay back the purchase price, aided by savvy
business moves, a base of dedicated employees and products that
continue to win major awards.
Last May 21, Baltimore-based BRG -- which also operates Take the
Cake and Arctic Dough -- filed for Chapter 11.
Yet customers remain committed and "Not one employee has left as
a result of this news," says BRG's CEO Robert J. Barry, Jr.
Ms. Desserts' Research & Development Director Shelley Treadway
continues to speak confidently about the new products she
expects to launch and improvements to the progressive Culinary
Center, established last year as a think tank where noted client
chefs come to brainstorm. She joined the company in 1980,
working for the original founder who formed Ms. Desserts about
20 years ago.
According to Kevin Williams, finishing line cake foreman,
company innovation is a plus but it's also the corporate culture
than wins kudos. Hired in 1989, Williams says that he's "loyal,
and I do things because they will benefit the company."
That credo is echoed by others, including Chris Fittro, who
works at Ms. Desserts' on-site factory store, part of the
56,000-square-foot plant that provides desserts to the food
service and retail markets.
Employees like Fittro seek a new buyer ready to invest in a
developed business with a loyal workforce and product millions
crave.
BALANCED CARE: Q1 Net Loss Drop Due to Lower Operating Expenses
---------------------------------------------------------------
Balanced Care Corporation (Amex: BAL), an integrated operator of
assisted living communities and related services, reported
operating results for the first fiscal quarter ended September
30, 2001.
First Quarter Financial Results
First quarter revenues totaled $13.8 million compared to
revenues of $14.0 million for the comparable quarter in the
prior year. The loss improved from $7.2 million in the quarter
ended September 30, 2000 to $5.9 million in the First quarter.
The improvement in the net loss is attributable to lower
operating expenses, substantially reduced provision for losses
under shortfall funding agreements and lower lease expense,
partially offset by higher interest expense. Approximately $5.1
million of expenses in the quarter are non-cash charges,
bringing the cash loss for the quarter to $800,000.
Operating Results (Currently Owned and Managed Operations)
Income from operations (EBITDAR) improved from $4.6 million in
the quarter ended September 30, 2000 to $5.7 million in the
First Quarter, a 22 % gain. The gain was attributable, in part,
to a quarterly census gain of 9% and a 5.3% increase in revenue
per resident day. Additionally, First Quarter EBITDAR improved
14.4% from the fourth fiscal quarter ended June 30, 2001
primarily as a result of continued pricing improvement and
intense cost control.
Brad Hollinger, Chairman and CEO, stated: "We continue to make
incremental improvement in performance. During the past 12
months, management has implemented portfolio changes and cost
structure reductions that are reflected positively in the First
Quarter's operating results. We expect to strengthen our
performance with additional operating changes currently
underway. Results of changes already made include:
-- Reduction in G&A expense of $550,000 in the First Quarter
compared to the corresponding prior year quarter, attributable
to a 40% reduction in corporate staff and cost savings realized
through reengineering business practices. Annualized, G & A
savings exceed $6 million, a 50% reduction over historical G&A
expense levels.
-- Increases in revenue and expense control in managed
properties resulted in a 60% reduction in shortfall funding
requirements in the First Quarter compared to the prior year.
-- Increase of 5.3% in system-wide rate per resident day over
the past 12 months, with an increase in operating costs per
resident day of 2.9%."
Balanced Care operates 58 facilities with system-wide capacity
of 4,063 residents. The Company utilizes assisted living
facilities as the primary service platform to provide an array
of health care and hospitality services, including preventive
care and wellness, Alzheimer's/dementia care and, in certain
markets, extended care services.
As at Sept. 30, the Company's total current assets exceeded its
total current assets by close to $100 million, 95% of which is
composed of the current portion of the Company's long-term
debts.
BETHLEHEM STEEL: Schedules Filing Deadline Extended to Dec. 13
--------------------------------------------------------------
Bethlehem Steel Corporation needs more time to file their
schedules of assets and liabilities, schedules of executory
contracts and unexpired leases, and statements of financial
affairs.
George A. Davis, Esq., at Weil, Gotshal & Manges LLP, in New
York, explains that the Debtors will be unable to complete their
Schedules and Statements within the required 15 days, in view
of:
(a) the size of the Debtors' cases,
(b) the complexity of their business operations and financial
affairs, and
(c) the amount of information that must be assembled and
compiled.
The Debtors have mobilized their employees to work diligently on
the assembly of the necessary information, Mr. Davis assures the
Court. Nonetheless, Mr. Davis estimates that the Debtors will
be able to file their Schedules and Statements only after 90
days.
Thus, the Debtors requested an extension of time to file their
Schedules and Statements through and including January 13, 2002.
* * *
Noting the complexity and diversity of the Debtors' operations,
Judge Lifland finds cause to extend the deadline for the Debtors
to file their Schedules and Statements. However, the extension
granted is only until December 13, 2001, without prejudice to
request an additional extension if necessary. (Bethlehem
Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
BRIDGE INFO: Court Okays Stibbe As Debtor's Special Counsel
-----------------------------------------------------------
Judge McDonald sanctioned Bridge Information Systems, Inc.'s
employment and retention of the Dutch firm of Stibbe as special
counsel, to act as legal advisers to the Debtors in connection
with the Bank Mendes Gans N.V. cash pooling services.
David M. Unseth, Esq., at Bryan Cave LLP, in St. Louis,
Missouri, told the Court that Stibbe will advise the Debtors
solely with respect to matters of Dutch law on any and all legal
matters that arise in connection with the cash pool, including:
(a) the legal implications to the Debtors of the Unites States
bankruptcy proceedings and the cash pool;
(b) the obligations of the Debtors with respect to Dutch
bankruptcy law and the liabilities of officers and
directors of the Debtors;
(c) the cash pool and any transfers of liabilities and/or
employees of the Debtors to a prospective offeror,
pursuant to Standing Order #5 of this Court, if any; and
(d) any other legal advice needed with respect to matters
relating to the above.
Mr. Unseth reports that Stibbe has indicated a willingness to
act on behalf of the Debtors and to subject itself to the
jurisdiction and supervision of this Court with respect to any
matters relating to the firm's fees and expenses only. The
Debtors are convinced that Stibbe is well qualified to serve as
special counsel based upon its exercise in the matters upon
which it is to be retained and its knowledge of the
subsidiaries.
Jaap Willeumier, a partner in the law firm of Stibbe, outlines
for the Court the names, positions and current hourly rates of
the firm's professionals who will have (or have had) primary
responsibility for providing services to the Debtors:
Hourly Rate Hourly Rate
(through (as of
Name Position 9/30/01) 10/1/01)
---- -------- ----------- -----------
Jaap Willeumier Partner EUR 385 EUR 410
Maurits van den Wall Bake Partner EUR 385 EUR 410
Toni van Hees Partner EUR 400 EUR 430
Karen Harmsen Associate EUR 325 EUR 350
Rogier Raas Associate EUR 190 EUR 210
James Mulholland Associate
(no longer with the Firm)
Mr. Willeumier advises the Court that Stibbe calculates fees on
the basis of these hourly rates. The firm will also seek
reimbursement for all reasonable out-of-pocket expenses incurred
in connection with this representation, Mr. Willeumier adds.
Presently, Mr. Willeumier says, the firm has incurred fees of
EUR 35,640 (US$33,000).
Mr. Willeumier assures the Court that neither he nor any partner
or associate in the firm holds or represents any interest
adverse to that of the estates or the Debtors in the matters
upon which the firm is to be engaged. The firm's other
representations do not conflict with the interests of the
Debtors or their estates, Mr. Willeumier adds.
Convinced that the retention of Stibbe is in the Debtors' best
interests, Judge McDonald allowed the Debtors to employ and
retain the firm of Stibbe as special counsel, nunc pro tunc to
May 1, 2001. (Bridge Bankruptcy News, Issue No. 19; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
CARBIDE/GRAPHITE: Nasdaq Delists Common Stock Effective Nov. 2
--------------------------------------------------------------
The Carbide/Graphite Group, Inc. (Nasdaq: CGGIQ) announced that
it has received a Nasdaq Staff determination indicating that the
Company had failed to comply with the requirements for continued
listing on The Nasdaq Stock Market and that its common stock is,
therefore, delisted from The Nasdaq National Market as of the
opening of business Friday, November 2, 2001.
According to the staff determination, the decision to delist was
based on the following factors: (i) the Company's September 21,
2001 filing under Chapter 11 of the U.S. Bankruptcy Code and
associated public interest concerns as set forth under Nasdaq
Marketplace Rules 4450(f) and 4330(a)(3), (ii) concerns
regarding the residual equity interest of the existing listed
common stockholders and (iii) the Company's inability to
demonstrate its ability to sustain compliance with all
requirements for continued listing on The Nasdaq Stock Market.
The Company has decided not to appeal this determination based
on the costs and expenses associated with such an appeal, the
management attention that would be involved and the low
probability of success of an appeal. The Company's common stock
may be eligible for quotation on the NASD "over the counter"
bulletin board or in the "pink sheets", but there can be no
assurance that such common stock will in fact be quoted therein.
The Company also announced that it had submitted a "no-action
letter" to the Securities and Exchange Commission requesting
relief from the periodic reporting obligations under the
Securities Exchange Act of 1934. The Company is awaiting a reply
to the no-action letter. In the meantime, in accordance with
the modified reporting requested in the no- action letter, the
Company intends to file, under cover of Form 8-K and in lieu of
its Exchange Act reports, the monthly operating reports that it
files with the U.S. Trustee and the Bankruptcy Court.
The Carbide/Graphite Group, Inc. is a leading manufacturer of
industrial graphite and calcium carbide products with
manufacturing facilities in St. Marys, Pennsylvania; Niagara
Falls, New York; Louisville and Calvert City, Kentucky; and
Seadrift, Texas.
COMDIAL: Speeds-Up Restructuring to Offset Effects of Slowdown
--------------------------------------------------------------
Comdial Corporation (Nasdaq:CMDL) announced that it is
accelerating its restructuring program. The company is
concentrating its R&D efforts in Internet protocol (IP)
telephony and shifting the company's structure to support its
streamlined product portfolio. Additionally, Comdial continues
implementing its cost cutting program to adapt to the industry-
wide economic slowdown
Comdial's core business strategy is to provide small and mid-
market businesses with advanced communications solutions to
bridge today's communications with tomorrow's IP telephony.
Comdial continues to deliver products for its large installed
base, to migrate its existing customers to IP telephony, and to
deploy new customers with complete IP telephony systems. The
company will keep its R&D resources focused on engineering new
products that capitalize upon the high growth IP telephony
sector.
Comdial has made significant progress with its outsourcing
capabilities and is now benefiting from savings in direct and
indirect production costs. Steve Swartz, Comdial's Vice
President of product marketing, said, "Outsourcing and product
line consolidation are key strategies in transforming the
company. For example, we recently released two very robust and
versatile systems. Because we designed with scalability in mind,
we can meet a broader range of customer needs with these two
systems, and do so more efficiently, than in the past when we
had five platforms. These systems are produced by contract
manufacturers, so Comdial has accelerated the outsourcing of its
remaining product still manufactured in our Charlottesville,
Virginia office."
Due to both Comdial's successful outsourcing and the current
economic downturn, Comdial announced a workforce reduction of
approximately 200 positions. About 100 employees are affected
immediately and 100 cuts will phase in during the fourth quarter
and first quarter next year. Most of the cuts are in
manufacturing and engineering. The company began its
restructuring plan late last year, that called for the
consolidation of product lines and the introduction of new, more
efficient products. The success of those product introductions
and manufacturing outsourcing has resulted in the company
realizing additional cost reductions.
The company expects to see improvements to SG&A expenses as well
as a reduction in overhead as a result of the restructuring.
Preliminary estimates on the long-term savings the company
expects to realize as a result of the restructuring are
approximately $5 million annually. When combined with previous
reductions, the company estimates it will save approximately $15
million annually.
Comdial Corporation, headquartered in Sarasota, Florida,
develops and markets sophisticated communications solutions for
small to mid-sized businesses, government, and other
organizations. Comdial offers a broad range of solutions to
enhance the productivity of businesses, including voice
switching systems, voice over IP (VoIP), voice processing and
computer telephony integration solutions. For more information
about Comdial and its communications solutions, please visit our
web site at http://www.comdial.com
COMDISCO INC: Gets Approval to Pursue Intercompany Transactions
---------------------------------------------------------------
In the ordinary course of business, Comdisco, Inc. engage in
inter-company transactions including inter-company loans. In
addition, the Debtors modify these transactions by forgiving,
deferring, or subordinating these inter-company loans or
converting inter-company debt to equity, which the Debtors
determine in their business judgment to be appropriate. These
include transactions to enhance the tax efficiency of Comdisco
and its affiliates to ensure that Comdisco's non-debtor foreign
subsidiaries can comply with all foreign statutory requirements
and will not be rendered insolvent.
George N. Panagakis, Esq., at Skadden, Arps, Slate, Meagher &
Flom, in Chicago, cites as an example the proposed forgiveness
of all or a portion of the debt owed by Prism Communication
Services, Inc., a wholly-owned subsidiary of Comdisco and one of
the affiliate Debtors in these cases, to Comdisco. According to
Mr. Panagakis, forgiving at least a portion of the inter-company
loan from Comdisco to Prism will reduce the taxable income of
Comdisco and the affiliated Debtors. It will also increase the
value of the Debtors' estates by preserving valuable net
operating losses for future use, Mr. Panagakis adds.
Mr. Panagakis also discusses the circumstances of Comdisco
Australia PTY Ltd., a non-debtor subsidiary that could be denied
interest expense deductions for Australian tax purposes with
respect to its 2001 fiscal year if it failed to maintain a
certain debt-to-equity ratio. Mr. Panagakis tells Judge
Barliant that Comdisco Australia's debt-to-equity ratio could be
maintained if Comdisco converted debt owed by Comdisco Australia
to Comdisco into equity. According to Mr. Panagakis, preserving
the interest expense deductions for Comdisco Australia will
eventually inure to the benefit of Comdisco, which is the 100%
owner of Comdisco Australia.
Certain of the Debtors' foreign subsidiaries are required to
meet certain solvency tests under applicable foreign law, Mr.
Panagakis relates further. To satisfy these requirements, Mr.
Panagakis reports, the foreign subsidiaries generate cash from
their operations, raise cash from third parties or receive
support in the form of cash or through an inter-company
transfer.
Mr. Panagakis informs the Court that the Debtors often determine
to support the foreign subsidiaries through the appropriate
inter-company transactions. In addition, Mr. Panagakis says, if
the inter-company debt of a foreign subsidiary creates an
obstacle to obtaining additional external financing to support
growth, Comdisco might agree to forgive, defer or subordinate
some or all of the inter-company debt owed by that subsidiary.
The Debtors engage in these transactions in the ordinary course
of their business in order to maximize the value of the Debtors
and the non-debtor foreign subsidiaries, Mr. Panagakis explains.
If the Debtors cannot continue to engage in these transactions,
Mr. Panagakis claims, the Debtors will likely incur losses that
could have been avoided and potentially miss opportunity for
significant economic advantages. Mr. Panagakis assures Judge
Barliant that the Debtors will consult with the Creditors'
Committee before engaging in any inter-company transaction in
excess of $5,000,000.
Thus, the Debtors ask the Court for authority to engage in
inter-company transactions, including the forgiveness, deferral
or subordination of inter-company debt or the conversion of debt
to equity, where such transactions are designed to enhance the
overall value of the Debtors' estates.
Former Employees Object
(1) Manuel Henriquez and Glen Howard
Manuel Henriquez and Glen Howard, former executive employees of
the Comdisco Ventures Division of Comdisco, Inc., are
participants in the Incentive Compensation Plan dated October
1996 and the Incentive Plan Termination Agreement dated December
1999.
According to Douglas J. Lipke, Esq., at Vedder, Price, Kaufman &
Kammholz, in Chicago, the Debtors have not made tens of millions
of dollars in payments under these agreements. This non-payment
prompted Henriquez and Howard to file separate breach of
contract actions against the Debtors prior to the Petition Date,
Mr. Lipke relates.
Moreover, Mr. Lipke adds, Henriquez entered into a March 2000
Separation Agreement, General release and Covenant not to Sue,
whereby Henriquez:
(a) retained certain rights in an Incentive Compensation Plan
dated January 2000;
(b) obtained certain rights in a proposed Public Offering of
Comdisco Ventures;
(c) retained certain rights and interests in Rosemont Venture
Management I LLC; and
(d) retained certain rights and interests in Hybrid Venture
Partners, L.P.
Now, Mr. Lipke says, the Debtors request carte blanche authority
to engage in unidentified inter-company transactions, without
any further notice to creditors or the Court. However, Mr.
Lipke criticizes the motion's failure to advise the Court what
effects such transactions will have to the creditors of one of
the Debtors, over the other Debtors involved in such
transactions. According to Mr. Lipke, the Debtors' motion
requests authority for inter-company transactions, which may
very well affect the claims and interests of Henriquez and
Howard, without providing Henriquez and Howard an opportunity
for notice and a hearing.
Thus, Manuel Henriquez and Glen Howard ask Judge Barliant to:
(A) deny the Debtors' motion, or in the alternative,
(B) provide that Debtors may not engage in any inter-company
transactions until they provide creditors and parties in
interest with adequate prior notice, and an opportunity to
be heard by the Court.
(2) James Labe
James Labe founded the Comdisco Ventures division and was its
president and CEO from January 1987 to April 2001.
James L. Komie, Esq., at Schuyler, Roche & Zwirner, P.C., in
Chicago, informs the Court that Mr. Labe has a variety of
interests in Comdisco Ventures, Rosemont and Hybrid, including
his:
(i) right to payments under his employment agreement and the
1996 Incentive Compensation Plan,
(ii) carried interest in Rosemont, and
(iii) corresponding interest in Hybrid.
Thus, as a creditor and an interested party, James Labe objects
to the Debtors' motion for authority to engage in inter-company
transactions.
According to Mr. Komie, the core problem with the motion is its
hypothetical nature. The Debtors do not specify the
transactions for which approval is sought, Mr. Komie complains.
Nor do the Debtors address the potential impact of debt
cancellations upon the creditors of the potentially affected
affiliates, Mr. Komie adds. Thus, Mr. Komie notes, it is
impossible for creditors to determine how their claims may be
affected by the debt transactions. Mr. Komie contends,
therefore, that the motion does not provide effective notice of
the proposed actions, nor sufficient justification for the
relief sought.
Furthermore, Mr. Komie observes that the proposed procedures
constitute a sub rosa substantive consolidation that may
severely prejudice the rights of creditors. The power to
disregard inter-company debt is one of the principal hallmarks
of the equitable remedy of substantive consolidation, Mr. Komie
explains. Yet the Debtors casually ignore the prerequisites for
substantive consolidation, Mr. Komie notes. According to Mr.
Komie, the Debtors' motion only looks at one side of the
equation -- the possible benefit of tax-efficiency. But it has
wholly failed to address the possibility of prejudice to one or
more groups of creditors, Mr. Komie adds.
In summary, Mr. Komie applauds the Debtors' articulated goal of
enhancing the overall value of the Debtors' estates. But, Mr.
Komie emphasizes, this should not be at the hidden costs of
prejudicing the rights of groups of creditors without the
opportunity for notice and hearing.
Therefore, James Labe requests that either:
(a) The Court deny the motion as presented, and require that
Debtors seek court approval of specific transactions based
upon proof of their beneficial nature and lack of
prejudice as to all creditors, however situated; or,
alternatively,
(b) The Court require that at least 14 days notice be given to
Labe, as well as the Committee, of the specifics of any
proposed action regarding inter-company debt. If Labe
objects to the proposed transaction, then Debtors should
be required to obtain Court approval based upon a fully
noticed motion before entering into the transaction as to
which the objection was made.
Debtors Respond
George N. Panagakis, Esq., at Skadden, Arps, Slate, Meagher &
Flom, in Chicago, explains that although the motion is broadly
drafted, Comdisco, Inc. is the only Debtor that intends to
forgive, defer, and/or subordinate debt owed from its
subsidiaries and affiliates, or to exchange such debt for equity
in the relevant subsidiary or affiliate.
The Debtors, therefore, are not seeking authority for any
affiliate Debtor to forgive, defer or subordinate inter-company
debt owed to such affiliate Debtor, Mr. Panagakis clarifies.
The Debtors have revised the order accordingly, Mr. Panagakis
advises the Court. Thus, Mr. Panagakis assures the concerned
parties, the inter-company transactions for which the Debtors
seek authority will not harm the value of any affiliate Debtor.
* * *
After due deliberation, Judge Barliant granted the Debtors'
motion, stressing that the Debtors shall consult with the
Creditors' Committee and the Equity Committee before engaging in
inter-company transactions which involve debt of a face value in
excess of $5,000,000. In the event there is a dispute with
either Committee, Judge Barliant rules, the Court retains
jurisdiction to resolve such dispute.
"Nothing in this order shall have the effect of or be construed
as a revocation, alteration, or waiver of any provision of the
Secured Super-Priority Debtor in Possession Revolving Credit
Agreement dated as of July 16, 2001," Judge Barliant declares.
Judge Barliant further emphasized that Comdisco, Inc.'s
subsidiary and affiliate Debtors are not authorized to forgive,
defer, and/or subordinate debts owed to them by Comdisco, Inc.,
or to exchange such debt for equity, without further order of
the Court. (Comdisco Bankruptcy News, Issue No. 13; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
COMDISCO INC: Postpones Year-End Earnings Release to December 13
----------------------------------------------------------------
Comdisco, Inc., (NYSE:CDO) announced that its fourth quarter and
year-end financial results will be released on Thursday,
December 13, 2001. Comdisco said that its earnings release is
being rescheduled from an earlier November, 2001, date because
of activities in its Chapter 11 reorganization cases, including
the sale of its Availability Solutions (Technology Services)
business and the ongoing sale evaluation process for segments of
its Leasing businesses.
Comdisco also announced that it has been notified by the New
York Stock Exchange (NYSE) that it has not met the requirements
for listing on the Exchange because its stock has traded below
$1.00 for thirty consecutive trading days.
The Company has acknowledged receipt of the notice from the
Exchange and notified it that the Company will complete
development of its reorganization plan following the completion
of asset sales pending in the Bankruptcy Court.
Comdisco and 50 domestic U.S. subsidiaries filed voluntary
petitions for relief under Chapter 11 of the U.S. Bankruptcy
Code in the U.S. Bankruptcy Court of the Northern District of
Illinois on July 16, 2001. As previously announced, Comdisco has
the exclusive right to develop and file a plan of reorganization
through January 15, 2002, and to solicit acceptances from its
stakeholders regarding such a plan through March 15, 2002. The
Company has reserved its rights to seek further extensions of
those dates for cause shown.
Comdisco -- http://www.comdisco.com -- provides technology
services worldwide to help its customers maximize technology
functionality, predictability and availability, while freeing
them from the complexity of managing their technology. The
Rosemont, (IL) company offers a complete suite of information
technology services including business continuity, managed web
hosting, storage and IT Control and Predictability
Solutions(SM). Comdisco offers leasing to key vertical
industries, including semiconductor manufacturing and electronic
assembly, healthcare, telecommunications, pharmaceutical,
biotechnology and manufacturing. Through its Ventures division,
Comdisco provides equipment leasing and other financing and
services to venture capital-backed companies.
CONSOLIDATED CONTAINER: Financial Covenants Violation Likely
------------------------------------------------------------
Consolidated Container Company announced that it expects to
report weaker than expected results for the third quarter and
will be in violation of the financial covenants of its senior
credit agreement.
The company will be seeking a waiver from its banks and expects
to receive the waiver prior to reporting third quarter results
on November 14, 2001.
Bryan Carey, Chief Financial Officer of Consolidated Container
Company, commented, "On a preliminary basis, we expect to report
revenues of $203 million and EBITDA before non-recurring costs
of $20 million for the quarter ended September 30, 2001. In
addition, on a preliminary basis, we expect to have
approximately $12 million in one-time costs comprised of
approximately $4 million of restructuring costs related to
organizational and management changes during the third quarter
and costs to relocate the company's headquarters to Atlanta, GA;
$5 million of other non-recurring costs including the costs for
settling contractual claims by certain customers as a result of
our delay in reaching contracted volumes of production at
certain plants; and about $3 million of other non-recurring
expenses relating to customer claims and start-up costs.
Including the restructuring and other non-recurring costs the
company expects to report a loss for the third quarter of
approximately $16 million.
"We have continued to experience a higher level of operating
costs as a result of plant consolidations and the operating
costs for facilities which are and will be handling new
business. In addition, in the third quarter we experienced
higher material and labor costs as we began production on
several new business projects. While these costs have led to
disappointing financial performance many of the costs are
related to growth initiatives. Given the non-recurring costs as
well as the start up costs and disruption from the new business
we will be seeking a waiver from our bank group. In addition, we
will be working with the bank group to amend the financial
covenants to reflect the current level of profitability."
Steve Macadam, President and Chief Executive Officer, stated,
"In the last 18 months previous management initiated 9 capital
projects with major customers totaling nearly $70 million of
investment capital. While these projects are attractive and will
enhance long-term value, the company has not had the operating
capability and resources to bring on these complex and demanding
projects. As a result of the start-up disruptions, in many cases
we are disappointing customers and are working to rectify this
situation immediately."
Macadam continued, "Fortunately, we are experiencing healthy
volumes in our core business and actually volume across the
company has increased by more than 5% in the quarter. We are
devoting resources to absorb the impact of the new business and
are working toward building an organization which is capable of
driving manufacturing excellence and improved customer service.
We expect to see a return to normalized levels of profitability.
Given the complexity of these projects, as well as the need to
bolster resources, it will be several quarters before we see
meaningful improvement in operating profits."
The company will provide an update on the status of its bank
agreement when it reports results on November 14.
Consolidated Container Company is a leading U.S. developer,
manufacturer and marketer of blow-molded rigid plastic
containers for the beverage, consumer and industrial markets.
The company was created in 1999 through the merger of Reid
Plastics Holdings with the domestic plastic packaging operations
of Suiza Foods Corporation.
DYLEX LTD: Richter Sells Fairweather Division to A Canadian Firm
----------------------------------------------------------------
Richter & Partners Inc., in its capacity as Trustee in
Bankruptcy of Dylex Limited, announces that the Fairweather
Division has been sold as a going concern to a Canadian-
controlled corporation.
"We are delighted that we were able to complete a transaction
that is in the best interests of the Dylex creditors, while
preserving the vast majority of jobs at Fairweather," says
Robert Harlang, Senior Vice President, Richter & Partners Inc.
"Selling the Fairweather Division as a going concern allows
their operations to continue as usual, as they head into the
busy holiday retail season."
Richter & Partners Inc. is a leader in the field of financial
reorganization and insolvency, with offices in Toronto, Montreal
and Calgary. It is part of Richter, Usher & Vineberg, one of
Canada's largest independent accounting, business advisory and
consulting firms.
ECHOSTAR COMMUNICATIONS: S&P Keeps Watch on Low-B Ratings
---------------------------------------------------------
Standard & Poor's ratings on EchoStar Communications Corp. and
related entities remain on CreditWatch with developing
implications.
The ratings of Hughes Electronics Corp. and its 81%-owned
subsidiary PanAmSat Corp. remain on CreditWatch with negative
implications.
The CreditWatch update follows the announcement that EchoStar
and Hughes intend to merge in a stock and cash transaction
valued at about $25 billion. The transaction is subject to
approval by regulators and a majority of each class of GM
shareholders. If the transaction is completed as proposed, GM
and Hughes shareholders would own the majority of the fully
diluted equity in the combined company.
The developing CreditWatch listing of EchoStar reflects the
possibility that the company's ratings could be raised or
lowered. The upside potential for the ratings reflects the
significant cost and revenues synergies that could be achieved
if DirecTV operations are combined with those of EchoStar, as
well as the overall improved competitive position of the
combined company. Cost synergies include reduced programming,
general, and administrative expenses, and lower subscriber
acquisition costs. Opportunities for increased revenue would
come from the significant addition of markets with access to
local programming, and from advertising revenues, a result of a
larger subscriber base and broader reach.
While Standard & Poor's believes there is a smaller probability
of a downgrade, downside risk exists. EchoStar will face
significant integration and regulatory risks, which may delay
the achievement of synergies. In addition, the $5.5 billion cash
component will add significant leverage to EchoStar's already
leveraged balance sheet. If the merger is approved, the
surviving entity's total debt is expected to exceed $11 billion.
If the transaction does not get the necessary approvals,
EchoStar will incur a $600 million break-up fee and will be
obligated to purchase Hughes' 81% stake in PanAmSat for $2.7
billion in cash and assumed debt of about $2.5 billion.
If the transaction is closed as contemplated, Standard & Poor's
will likely evaluate EchoStar and PanAmSat on a consolidated
basis, similar to the way Standard & Poor's currently views the
Hughes and PanAmSat credits. This is due to the control the new
EchoStar/Hughes entity will exercise over PanAmSat through its
81% ownership stake. PanAmSat is proceeding with its own
financing path independent of this transaction, attempting to
refinance a $1.725 billion intercompany note with Hughes. On a
pro forma basis, PanAmSat will be a stronger credit than the
newly merged EchoStar/Hughes; however, Standard & Poor's expects
that the rating on PanAmSat will be constrained by its parent.
It is estimated that regulatory scrutiny could take up to one
year. During that period Standard & Poor's will monitor the
developments related to the proposed offer.
Ratings Remaining On Creditwatch Developing
EchoStar Communications Corp. RATING
Corporate credit rating B+
Subordinated debt B-
EchoStar Broadband Corp.
Corporate credit rating B+
Senior unsecured debt B
Echostar DBS Corp.
Corporate credit rating B+
Senior unsecured debt B+
Ratings Remaining On Creditwatch Negative
Hughes Electronics Corp.
Corporate Credit rating BBB-/A-3
Commercial paper A-3
PanAmSat Corp.
Corporate Credit Rating BBB-/A-3
Senior unsecured debt BBB-
Commercial paper A-3
EXCELSIOR INCOME: Shareholders Reject Proposed Liquidation Plan
---------------------------------------------------------------
The Board of Directors of Excelsior Income Shares, Inc., d/b/a
EIS Fund (NYSE: EIS), announced that the report certified by the
independent inspector has confirmed the preliminary results
announced earlier.
Shareholders signaled a desire for change by voting to replace
the entire Board. The proposed Plan for Liquidation, which
received support from only 46.1% of the shares, was rejected. In
addition, the proposals to replace the investment advisor and
amend the Fund's Certificate of Incorporation to change the
Fund's name to "EIS Fund, Ltd." were both defeated. However,
shareholders did approve the appointment of
PricewaterhouseCoopers, LLP, as the Fund's independent
accounting firm for the current year.
The Board elected Ralph W. Bradshaw as Chairman and President of
the Fund and met with representatives of U.S. Trust to effect a
smooth transition. U.S. Trust, which serves as the Fund's
investment advisor and provides additional administrative
services, had informed the previous Board of its desire to
surrender its duties with the Fund. Since the proposals for a
new investment advisor and a name change were defeated, the
Board plans to present alternative proposals to shareholders for
approval in a special meeting that will be held in the near
future.
EIS Fund is the name under which Excelsior Income Shares, Inc.,
a closed-end bond fund organized under the laws of New York,
does business.
EXODUS COMMUNICATIONS: Signs-Up Brobeck Phleger As Labor Counsel
----------------------------------------------------------------
Exodus Communications, Inc. asks the Court for permission to
employ and retain Brobeck Phleger and Harrison LLP as their
special labor and employment, real estate and securities
counsel, nunc pro tunc to the Petition Date.
Adam W. Wegner, the Debtors' Adviser for Corporate and Legal
Affairs, states that continued representation of the Debtors by
Brobeck as special labor and employment, real estate and
securities counsel is critical to the success of the Debtors'
reorganization as the Firm is uniquely familiar with Debtors'
business operations and procedures and legal affairs. Mr. Wegner
believes that Brobeck's long association with the Debtors and
its representation of the Debtors in labor and employment and
real estate matters leaves it well-positioned to serve the legal
needs of the Debtors during the chapter 11 cases. Further, Mr.
Wegner claims that Brobeck's familiarity with the Debtors'
business and its prior representation of the Debtors in extant
shareholder securities lawsuits filed against the Debtors
earlier this year underscores the importance of Brobeck's
continuing representation of the Debtors as special securities
counsel.
The Debtors selected BPH as their special labor and employment,
real estate and securities counsel because of the firm's
extensive experience with and knowledge of the Debtors' legal
affairs. The Debtors desire to employ the firm of BPH under a
general retainer because of the extensive legal services that
will be required from it in connection with these cases.
Brobeck will assist as special labor and employment counsel by:
A. Counseling regarding labor and employment policies and
procedures;
B. Counseling in labor and employment matters, including issues
and disputes with current and former employees;
C. Performing all phases of labor and employment litigation
including, but not limited to: factual investigation;
preparation of pre-trial pleadings, briefs, discovery
requests and responses, and motions; negotiation of
settlement of claims; and trial.
As special real estate counsel, Brobeck will take charge of:
A. Negotiation and preparation of purchase and sale agreements
for properties that the Debtors desire to sell to third
parties;
B. Negotiation and preparation of contracts for termination,
assignment and assumption of leasehold interests;
C. Examination of title work and related due diligence
preparation and obtaining of all necessary and appropriate
releases and terminations of security instruments
including, without limitation, UCC financing statements,
collateral assignments, deeds of trust and mortgages;
D. Preparation of all required closing documents including,
without limitation, assignments, waivers, reliance letters,
deeds, affidavits, notices, bills of sale and estoppels;
E. Review and modification, as necessary, of closing documents
prepared by other parties to sale and lease transactions;
F. Review of general real estate documents, document control and
organization;
G. Preparation for, travel to and attendance at status and
organizational conferences with the Debtors, their real
estate brokers and advisors, and/or their financial
consultants; and
H. Advice to the Debtors, as requested, on all aspects of the
disposition of owned and leased real estate interests.
Brobeck's securities-related work will include:
A. Representing the Debtors in all types of securities
litigation including shareholder litigation arising under the
federal securities laws, litigation involving mergers and
acquisitions, litigation involving derivative suits and
breaches of fiduciary duty, and litigation involving states
securities law and common law claims concerning the
purchase and sale of securities;
B. Performing all phases of the securities litigation process
including: factual investigation; pre-trial negotiation,
pleading and discovery; settlement negotiations, if
appropriate; and trial;
C. Responding to inquiries and investigations, if any, by
regulatory agencies and self-regulatory agencies such as
the U.S. Securities and Exchange Commission, and the
National Association of Securities Dealers;
D. Advising and counseling the Debtors regarding compliance with
federal and state securities laws;
E. Representing and advising the Debtors in all matters within
the scope of a September 6, 2001 Engagement Letter.
Mr. Wegner tells the Court that it is necessary and essential
that the Debtors, to employ special labor and employment, real
estate and securities counsel under a general retainer to render
the foregoing professional services.
The Debtors have agreed to compensate Brobeck for all services
rendered pursuant to the Firm's normal hourly rates and
reimburse it for all expenses incurred during the course of the
chapter 11 cases. The current hourly rates of the Firm are:
Partners & Special Counsel $385 to $745
Associates $220 to $415
Paralegals and Case Assistants $115 to $280
David M. Furbush, a partner to the firm Brobeck Phleger and
Harrison LLP, submits that the partners, counsel and associates
of the Firm do not have any connection with or hold any interest
adverse to the Debtors, their affiliates, creditors or any other
parties in interest, or their respective attorneys and
accountants, the United States Trustee or any person employed in
the Office of the United States Trustee, except for:
A. Unrelated representation to major bondholders including Aegon
USA Investment Management, Inc., Brookside Capital
Management/Bain Capital, Inc., Goldman Sachs & Co., Legg
Mason Capital Management, Inc., Smith Barney Asset
Mangement, Lehman Brothers, Morgan Stanley Dean Witter,
Oppenheimer Funds, RBC Dominion Securities Corp., T Rowe
Price Associates, Inc., Zurich Scudder Kemper Investments.
B. Unrelated representation to bond trustees including Chase
Manhattan Bank & Trust Co., and HSBC Bank USA.
C. Unrelated representation to secured lenders including
Transamerica Lending & Leasing, Inc., Barclays Bank PLC,
Bank of Tokyo-Mitsubishi, Ltd., Lehman Brothers Bank FSB,
and Wells Fargo Bank NA.
D. Unrelated representation to Deloitte & Touche, an ordinary
course professional in these cases.
E. Unrelated representation to major trade creditors including
AT&T Corp., Devcon Construction Inc., EOP Wyman Street LP,
Global Crossing Ltd., Oracle Corp., Storage Networks, Inc.,
TMG Sta. Clara Associates LP, GE Access.
F. Unrelated representation to directors and officers including
James A. Stoddart, Mark Dubovoy, Michael Perry, and Bob
Sanford.
G. Unrelated representation to major lessors including Amdahl
Corp., Cabot Industrial Properties, Cisco Systems, Main
Street, LLC, Sun Microsystems, Inc., and Lightspeed At
Beacon Tradeport.
H. Unrelated representation to retained professionals including
Lazard Freres & Co., LLC, Gray Cary Ware & Freidenrich, and
Bingham Dana LLP. (Exodus Bankruptcy News, Issue No. 4;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
FEDERAL-MOGUL: U.S. Trustee Appoints Unsecured Creditors' Panel
---------------------------------------------------------------
Pursuant to section 1102(a)(1) of the Bankruptcy Code, the
United States Trustee appoints these entities to the Official
Committee of Unsecured Creditors in Federal-Mogul Corporation's
chapter 11 cases:
A. R2 Investments, LDC, c/o Amalgamated Gadget, L.P.
Attn: Rebecca Pacholder
301 Commerce St., Suite 2975, Fort Woth, Texas 76102
Phone: (817) 332-9500 Fax: (817) 332-9606
B. Aspen Advisors LLC
Attn: Neil Subin
152 West 57th St., New York, New York 10019
Phone: (561) 223-0089 Fax: (954) 697-4687
C. Teachers Insurance and Annuity Association of America
Attn: Roi G. Chandy
730 Third Avenue, New York, New York 10017
Phone: (212) 916-6139 Fax: (212) 916-6140
D. U.S. Bank Trust National Association,
as Indenture Trustee
Attn: Lawrence Bell
1420 Fifth Avenue, 7th Floor, Seattle, Washington 98101
Phone: (206) 344-4654 Fax: (206) 344-4630
E. NTN Bearing Corporation of America
Attn: Craig K. Dunn
1600 E. Bishop Court, Mt. Prospect, Illinois 60056
Phone: (847) 298-7500 Fax: (847) 294-1209
F. Cummins, Inc.
Attn: Paul W. Malone II
500 Jackson St., M/C 60701, Columbus, Indiana 47201
Phone: (812) 377-9632 Fax: (812) 377-3272
G. Leggett & Platt Aluminum Group
Steffan B. Sarkin
75 N. East Ave., Suite 401, Fayetteville, Arkansas
72701
Phone: (501) 443-1455 Fax: (501) 443-7058
(Federal-Mogul Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
FLEXINTERNATIONAL: Swings Into Net Loss of $1.7MM in 3rd Quarter
----------------------------------------------------------------
FlexiInternational Software, Inc. (OTCBB:FLXI), a leading
designer, developer and marketer of Internet based financial and
accounting software and services, announced its results for the
third quarter ended September 30, 2001.
Financial Results
For the third quarter of 2001, revenues were $1.9 million
compared to revenues of $2.8 million for the comparable quarter
last year. The net loss for the third quarter of 2001 was $1.7
million, as compared to net income of $51,000 for the
corresponding period of 2000. The third quarter of 2001 included
a one-time charge of $862,000 relating to the impairment of
goodwill.
Third quarter license fee revenue decreased 52% from the
comparable period last year and was 19% below last year
comparable nine-month period. In the third quarter of 2000, one
customer accounted for $503,000 or 65% of the license revenue
reported for the quarter. Of that, $400,000 of revenue was
attributable to a one time special licensing of our source code.
For the nine-months ended September 30, 2001, we reported
revenues of $7.3 million compared with revenues of $9.3 million
for the same period in 2000. The net loss for the nine-month
period was $1.6 million, compared to a net income of $86,000 for
the corresponding period of 2000.
"While we are disappointed to report a loss after six
consecutive profitable quarters, we are pleased that our direct
sales were in line with forecast and that we could announce our
first BPO client. Direct new license revenue in the US was 64%
ahead of Q3 2000. At the same time our partner results were
substantially below last year. Our healthcare partner,
McKesson/HBOC, reported sales 75% below last year and a major
multi-million dollar deal with our insurance partner, The
Freedom Group, was put on hold due to the 9/11 impact on the
insurance industry," said Stefan R. Bothe, Chairman and Chief
Executive Officer of FlexiInternational Software, Inc.
"We believe that the current business climate will continue to
impact IT spending in most industries. However, this could bode
well for accounting outsourcing as a cost effective alternative
to in-house processing allowing companies to focus their
resources on the core business functions which can increase
shareholder value. We think Flexi is well positioned to take
advantage of this emerging BPO market."
FlexiInternational Software, Inc., headquartered in Shelton, CT,
with operations in the US and UK, is a leading provider of
Internet enabled financial and accounting software and services.
The Flexi Financial Enterprise Suite consists of
FlexiFinancials, a full range of accounting solutions, and
financial management and data warehouse applications that offer
efficient processing and analysis of enterprise financial data
for mid-size and high growth companies. Flexi markets its
software for direct installations at its target companies as
well as a business process outsourcing (BPO) service to those
companies that want to outsource their back office accounting
operations.
Flexi supports a variety of databases and hardware platforms. In
1998 and 1999, Flexi was recognized as one of the top 10 fastest
growing technology companies in Connecticut and as one of the
top 100 nationwide for both 1992 to 1997 and 1993 to 1998 as
part of the Technology Fast 500 program sponsored by Deloitte &
Touche.
FlexiAssets, FlexiFinancials, FlexiFinancial Datawarehouse,
FlexiInventory, FlexiLedger, FlexiOrders, FlexiPayables,
FlexiProjects, FlexiPurchasing, FlexiReceivables, FlexiWorkflow,
FlexiWriter, FlexiAnalysis, FlexiInfoCenter, FlexiDeveloper,
FlexiDesigner, justaboutbiz, FlexiFMS and FlexiDB are either
registered trademarks or trademarks of FlexiInternational
Software, Inc. All other company names and products are
trademarks or registered trademarks of their respective
companies.
As at Sept. 30, the Company had total current assets of $3.9
million, including cash and cash equivalents totaling $314,000,
while its total current liabilities stood at $7.3 million,
including accounts payable and accrued expenses of $1.5 million
and short-term portion of long-term debt amounting to $701,000.
Total liabilities reached $7.6 million, as opposed to total
assets of around $4.6 million. Stockholders' equity deficit
amounted to $3 million.
GENESIS HEALTH: Gets 60-Day Extension of ADR Deadlines
------------------------------------------------------
Pursuant to the ADR and the ADR Term Sheet, Genesis Health
Ventures, Inc. & The Multicare Companies, Inc. mailed ADR
Notices to the Preliminary Claims List in or about July, 2001.
The ADR Term Sheet provided that the Claimants would have 45
days to respond to the ADR Notice by either sending an offer or
opting out of the ADR Procedures. Once this offer, if any, is
received by the Debtors, the ADR Term Sheet provides that the
Debtors have 45 days to respond to the offer by making a
counter-offer, or taking such other actions as provided in the
ADR Term Sheet. As a result, the Debtors counter-offers and/or
other actions will be coming due en masse according to of this
time table.
Under the relevant contracts of insurance, the Debtors require
AIG's and Zurich's consent to settle cases. Moreover, the
Debtors experience has been that AIG and Zurich wish to be
actively involved in the ADR Procedures, including the amount of
the counter-offer.
Unfortunately, Zurich's headquarters for personal injury claims
handling is located at One Liberty Plaza, one of the buildings
severally impacted by the World Trade Center collapse, and AIG's
office was located a mere two blocks away. Both buildings are
inaccessible for the foreseeable future. Obviously, the
inability to access its office has had a substantial impact on
Zurich's ability to respond promptly to the deadlines imposed by
the ADR Order. Likewise, without access to the headquarters at
which certain records are kept, AIG will have a difficult time
responding to the deadlines imposed by the ADR Order.
Although the Debtors' aim is to resolve the Claims as
expeditiously as possible, as a result of these tragic
circumstances, the Debtors, who lack authority to settle cases
without AIG's and Zurich's consent on their respective cases,
will miss deadlines imposed by the ADR Order absent the relief
requested.
With regret, the Debtors seek a minimal breathing space while
Zurich and AIG attempt to recuperate from the terrorist attacks.
Thus, the Debtors sought and obtained an additional 60 days to
respond to ADR offers, without prejudice to the Debtors right to
seek and additional extension, and that such other and further
relief be granted as is necessary and appropriate.
(Genesis/Multicare Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
GLOBALNET: Nasdaq Delists Shares From the SmallCap Market
---------------------------------------------------------
GlobalNet, Inc. (Nasdaq: GBNE) announced that it has received
notice from a Nasdaq Listing Qualifications Panel that the Panel
has determined to delist GlobalNet's common stock from The
Nasdaq SmallCap Market effective with the close of business on
November 1, 2001.
In its notice to GlobalNet, which GlobalNet received after the
close of business on November 1, 2001, the Panel noted that
GlobalNet had failed to comply with the minimum $35 million
market capitalization requirement for continued listing set
forth in Marketplace Rule 4310(c)(2)(B)(ii).
GlobalNet is taking all necessary and appropriate steps to
qualify its common stock for quotation on the OTC Bulletin
Board.
GlobalNet, Inc. provides international voice, data and Internet
services over a private IP network to international carriers and
other communication service providers in the United States and
Latin America. GlobalNet's state-of-the-art IP network,
utilizing the convergence of voice and data networking, offers
customers economical pricing, global reach and an intelligent
platform that guarantees fast delivery of value-added services
and applications. The company, through its facilities in the
U.S. and Latin America and arrangements with affiliates
worldwide, can carry traffic to more than 240 countries.
HENLEY HEALTHCARE: Voluntary Chapter 7 Case Summary
---------------------------------------------------
Debtor: Henley Healthcare Inc.
dba Lasermedics Inc.
PO Box 810
8600 AV Delft
The Netherlands
Chapter 7 Petition Date: October 19, 2001
Court: Southern District of Texas (Houston)
Bankruptcy Case No.: 01-41429
Judge: Letitia Z. Clark
Debtor's Counsel: John F. Higgins, IV, Esq.
Porter & Hedges
700 Louisiana
Suite 3500
Houston, TX 77002
713-226-0687
INTEGRATED HEALTH: Court Okays Transfer of 3 Alabama Facilities
---------------------------------------------------------------
In a previous motion, Integrated Health Services, Inc. sought to
reject three nonresidential real property leases relating to the
following three skilled care nursing facilities in Alabama:
(1) the Greensboro Healthcare Center which is located at 616
Armory Road, Greensboro, Alabama;
(2) South Gate Village facility which is located at 235 Selma
Road, Bessemer, Alabama; and
(3) the Livingston Healthcare Center which is located at 4201
Bessemer Highway, Bessemer, Alabama.
The corporate parent of each of the Landlords and the New
Operator served its Limited Objection to the Rejection Motion on
the grounds, among others, that it was inappropriate for the
Debtors to reject the Leases and turn the Facilities over to the
Landlord before the Landlord and/or its designee are in a
position to step in as an operator of the Facilities.
Thereafter, the Debtors and American successfully concluded the
negotiation of the terms of the Transfer Agreement, pursuant to
which the New Operator will take over the operation of the
Facilities and the Leases will be terminated. The Debtors have
agreed to withdraw their Rejection Motion as of the date that
the parties to the Transfer Agreement conclude a closing of the
transfer of the Facilities.
Accordingly, the Debtors sought and obtained an order from the
Court, pursuant to sections 105(a), 363(b), and 365(a), (b) and
(f) of the Bankruptcy Code, and Rules 6004 and 6006 of the
Bankruptcy Rules,
(1) approving and authorizing a Lease Termination and Operations
Transfer Agreement, dated as of September 21, 2001 (the
Transfer Agreement), by and between
(a) Debtor Community Care of America of Alabama, Inc. as
Transferor,
(b) American Health Corp. as transferee (the New Operator),
(c) landlords, Greensboro Health Care, Inc., Midwest Health
Enterprises of Bessemer, Inc., and South Gate Village,
Inc.
(2) approving and authorizing the Debtors' assumption and
assignment of the Transferor's Medicare and Medicaid
provider numbers and provider reimbursement agreements.
The Debtors believe that entering into the Transfer Agreement
represents an exercise of sound business judgment as manifest in
the result which the Debtors' estates will realize: the
divestiture of unprofitable facilities that the Debtors have
been unable to turn around, and the elimination of significant
ongoing administrative liabilities. As previously, the Debtors'
management evaluated the economic performance of each of the
Facilities and concluded that, the Greensboro and Livingston
Facilities are unprofitable, and the South Gate Facility while
marginally profitable, requires capital expenditures to improve
the physical plant which will render the Facility unprofitable.
Specifically, the Greensboro and Livingston Facilities' fourth
quarter year 2000 annualized pro-forma cash flow were negative
$31,435.00, and negative $29,961.00, respectively. The South
Gate Facility generated a modest positive cash flow for the year
2000 - $40,262.00 fourth quarter annualized pro-forma cash flow
- but the Debtors believe that the costs associated with capital
improvements which are required at the Greensboro and South Gate
Facilities will cause further declines even the South Gate
Facility will generate a negative cash flow.
The Transfer Agreement
The Transfer Agreement provides for the termination of the
Leases and governs the transition of the Facilities to the New
Operator in accordance with applicable state and federal law. In
this regard, the Transfer Agreement provides that the Leases
will terminate as of the Effective Time. Accordingly, if the
Closing of the Transfer Agreement occurs as contemplated under
the Transfer Agreement, the Debtors will withdraw the Rejection
Motion.
The Transfer Agreement further acknowledges that all rent which
was due and payable by the Transferor from the Petition Date
through September 30, 2001, has been paid, and the Transferor
and Landlord have agreed that the rent for the period from
October 1, 2001, through the Effective Time will accrue at the
rate of $1,810.59 per day and will be paid in full by the
Transferor at the Closing.
If the Effective Time does not occur by 11:59 p.m. CST on
October 31, 2001, the Transferor is entitled to remain in
possession and operate the Facilities without any obligation for
the payment of rent until the Effective Time has occurred, or
until possession and operation of the Facilities have been
transferred to New Operator or another qualified operator
acceptable to Transferor.
The Transfer Agreement provides that the New Operator will
assume the Transferor's Medicare provider number and provider
reimbursement agreement (the Medicare Provider Agreement), and
the Transferor's Medicaid provider number and provider
reimbursement agreement (Medicaid Provider Agreement). The New
Operator must also assume and satisfy all obligations and
liabilities under the Medicare and Medicaid Provider Agreements
regardless of whether they arose before or after the Effective
Time. If any payments are required in order to cure any defaults
as a condition to the New Operator's assumption of the Medicare
and Medicaid Provider Agreements, then the New Operator is
required to pay those sums at or before the Closing.
In addition, the New Operator is required to enter into an
agreement with the United States Department of Health and Human
Services and the Transferor, regarding the assignment and
assumption of the Medicare Provider Agreement, which agreement
will include a release of the Transferor from all liabilities
under the Medicare Provider Agreement that arose before or after
the Effective Time. New Operator is also required to enter into
an agreement with the applicable state Medicaid agency and the
Transferor regarding the assignment and assumption of the
Medicaid Provider Agreement, which agreement will include a
release of Transferor from all liabilities under the Medicaid
Provider Agreement which arose before or after the Effective
Time.
Finally, the Transfer Agreement governs: (1) the transfer of
Transferor's property located at the Facilities to the New
Operator, including, but not limited to inventory, furniture and
equipment; (2) the transfer of Resident Trust Funds; (3) the
employment of Transferor's employees; (4) the disposition of
unpaid accounts receivable; (5) access to records; (6) and the
transfer of vendor, service and other agreements to the New
Operator. (Integrated Health Bankruptcy News, Issue No. 21;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
KENTUCKY ELECTRIC: Misses Principal Payment on 7.6% Senior Notes
----------------------------------------------------------------
Kentucky Electric Steel (Nasdaq:KESI) announced that it has not
made a principal payment in the amount of $3.3 million under its
7.66% Senior Notes due November 1, 2005 as required. The Company
did pay all interest due of $638,000.
As of November 1, 2001, the Company has $16.7 million principal
amount of Notes outstanding. This action was taken to allow the
Company to conserve cash for continuing operations. The Company
has an unrestricted cash balance of approximately $6.5 million.
In addition to the Notes, the Company has an aggregate of $12.1
million currently outstanding under its unsecured revolving
credit facility and lease obligations totaling $7.2 million with
various financial institutions. The Notes and each of these
other financing arrangements contains a covenant requiring the
Company to maintain a fixed charge coverage ratio of 2:1 for
each rolling four quarter period. Since March 31, 2001, the
Company has been in default of this covenant.
The Company has been and is continuing negotiations with its
current lenders and other financial institutions regarding its
financing requirements. There can be no assurance, however, that
the Company will be successful in obtaining acceptable
replacement financing, or in negotiating terms which will enable
it to extend or continue its relationship with its current
financial institutions.
The current Note holders and financial institutions have the
right to declare a default and exercise their rights and
remedies under the Notes, including increasing the interest rate
to the default rate and accelerating the Company's obligation to
pay the entire amount outstanding. Accordingly, the Notes and
the borrowings under the unsecured revolving credit facility
have been classified as current liabilities.
Kentucky Electric Steel, Inc. is a publicly held company which
operates a specialty steel mini-mill, manufacturing special
quality steel bar flats for the leaf-spring suspension, cold
drawn bar conversion, truck trailer support beam, and steel
service center markets. Kentucky Electric Steel, Inc.'s common
stock (Nasdaq:KESI) is traded on the NASDAQ SmallCap Market.
LAND O'LAKES: S&P Rates Planned $300 Million Senior Notes at BB
---------------------------------------------------------------
Standard & Poor's assigned its double-'B' rating to Land O'Lakes
Inc.'s planned offering of $300 million of senior notes due
2011. The notes are to be issued under Rule 144A to private
investors with registration rights.
At the same time, Standard & Poor's affirmed its double-'B'-plus
corporate credit rating and its triple-'B'-minus senior secured
debt rating on Land O'Lakes as well as its single-'B'-plus
preferred stock rating on Land O'Lakes Capital Trust I
(guaranteed by Land O'Lakes Inc.).
The outlook is stable.
The senior unsecured notes are rated one notch below the
corporate credit rating reflecting the substantial amount of
senior secured debt outstanding. Upon the closing of the $300
million senior unsecured notes transaction, Standard & Poor's
will affirm and remove the senior secured debt rating from
CreditWatch where it was placed on Oct. 3, 2001. If this
transaction is not completed or the proceeds are less than $300
million, Standard & Poor's will lower the senior secured debt
rating to double-'B'-plus and reevaluate the outlook.
The ratings on Land O'Lakes reflect the firm's diverse product
line, geographic coverage and strong consumer brand franchise.
These factors are offset by an aggressive financial profile,
modest discretionary cash flow, and a sizable debt amortization
schedule.
Land O'Lakes is a national, farmer-owned dairy and agricultural
marketing and supply cooperative. The dairy segment produces and
markets products under the strong Land O'Lakes and Alpine Lace
brands as well as under regional brands. Agricultural products
consist of seed, animal feed, and an extensive line of
agricultural supplies and services to farmers and local
cooperatives.
The ratings further reflect Land O'Lakes' recent acquisition of
Purina Mills Inc. for $23 per share (a total purchase price of
about $380 million including assumed debt). Purina Mills has
become part of Land O'Lakes Farmland Feed LLC, a feed joint
venture with Farmland Industries Inc. (a minority holder). The
firm has the number one market position in the fragmented, but
consolidating, U.S. animal feed industry as well as a strong
portfolio of national, regional, and local brands; greater
geographic diversity; and cost savings opportunities.
The rating also incorporates the operating risk associated with
integrating the two firms' operations. In addition, Land
O'Lakes' recent operating performance has been impacted by the
cyclical downturn in many areas of the cooperative's
agricultural-based businesses as well as by a series of
acquisitions. This has resulted in credit measures, before the
Purina Mills acquisition, that were below Standard & Poor's
expectations.
Pro forma for the transaction (treating the preferred stock as
debt and capitalizing operating leases), EBITDA to interest is
3.2 times, EBITDA margin is 4.0%, and total debt to EBITDA is
about 5.0x. In fiscal 2002, financial measures are expected to
substantially improve with EBITDA to interest in the 3.5x area,
EBITDA margin of about 5.0%, and total debt to EBITDA of about
3.5x. Key to the rating will be Land O'Lakes' ability to achieve
cost savings of about $64 million over the first three years
following the merger, the divestiture of swine assets and other
noncore assets, and moderate capital spending. Although Standard
& Poor's treats the preferred stock as debt and the dividends as
interest in calculating credit measures, the preferred stock's
equity characteristics provide Land O'Lakes with some additional
financial flexibility.
There is some refinancing risk since the unrated $75 million Co-
Bank ACB credit facility matures six months after the closing of
the Purina Mills acquisition and the $250 million tranche C term
loan matures in April 2003. Standard & Poor's expects that the
tranche C term loan and a portion of the borrowing under the
revolving credit facility will be repaid with the proceeds of
the proposed $300 million unsecured debt financing. If the
transaction is not completed by Dec. 31, 2001 or the amount of
the unsecured financing is less than $300 million, Standard &
Poor's will lower the senior secured debt rating to double-`B'-
plus and reevaluate the outlook. The Co-Bank ACB credit facility
will be repaid with the proceeds of the anticipated accounts
receivable securitization program.
Outlook: Stable
Standard & Poor's expects Land O'Lakes to maintain its leading
market positions and to moderately improve its financial profile
over the intermediate term.
LEINER HEALTH: Gets Creditors' Nod for Financial Restructuring
--------------------------------------------------------------
Leiner Health Products announced that it has reached agreements
in principle with its primary investors on the terms of a new
equity investment, and with its bank lenders and principal
subordinated debtholders on the terms of a comprehensive
financial restructuring.
When implemented, the new investment and restructuring will
significantly reduce Leiner's financial indebtedness and provide
for a new revolving credit facility.
Under the terms of the agreement in principle, a group of
Leiner's existing equity investors, led by North Castle
Partners, will invest $20 million in the Company.
Under the terms of the agreement in principle with bondholders
representing approximately 80 percent of the face value of
Leiner's 9.625 percent Senior Subordinated Notes due June 30,
2007, bondholders will receive a combination of cash and newly
created preferred stock in exchange for the current Notes, an
exchange that will reduce Leiner's indebtedness by $85 million.
Under the agreement in principle with its bank lenders, Leiner's
existing senior indebtedness will be restructured and remain
outstanding. In addition, Leiner's bank lenders will extend the
Company a new revolving credit facility of up to $20 million.
The principal terms of these transactions are described below.
Leiner said that under the agreements in principle, suppliers
will be unimpaired by the restructuring and that normal business
operations will continue. Additionally, employee salaries, wages
and benefits will continue without interruption.
"These agreements in principle are extremely important steps
forward for Leiner, and are the result of more than a year of
hard work by many dedicated people," said Robert Kaminski, chief
executive officer of Leiner. "As our recent results indicate,
our operational reengineering has yielded strong improvement.
Now, the agreements we have reached with our bank lenders,
bondholders and investors will, when fully documented and
implemented, provide Leiner with a significantly reduced debt
burden and access to new working capital."
"The intent of the agreements in principle is to restructure
Leiner's balance sheet and to provide us with the resources
necessary to continue our progress. We are particularly pleased
that we have the support of our bank lenders, investors and
principal bondholders in taking steps to ensure that the
restructuring has no impact on our relationships with our
vendors, customers and employees, whose ongoing support has been
key to the success of our turnaround thus far," continued
Kaminski.
The parties intend to implement the financial restructuring
through a prepackaged plan of reorganization under Chapter 11 of
the US Bankruptcy Code early in 2002. Leiner intends to begin
the process of soliciting the formal acceptance of its plan of
reorganization in mid December, before filing the restructuring
plan as a prepackaged plan of reorganization in early 2002.
First Half Performance Expected to Show Continuing Improvement
Leiner said that its reengineering initiative, which began in
January 2000, has continued to produce positive results. It
expects that its first half US 2002 results will demonstrate
continued favorability over the prior year half-year results in
a number of areas including gross sales, operating expense
reduction and operating income. Further, the Company's
reengineering has yielded significant customer service and
working capital improvements.
Leiner expects to report detailed financial and operating
results for its second quarter 2002 on or about November 14,
2001.
Forbearance Agreement Extended
In conjunction with the agreements in principle, the Company
also announced today that it has reached an agreement in
principle with its senior lenders to extend its previously
announced forbearance agreement through December 14, 2001. The
previous forbearance agreement expired on November 2, 2001. As
previously announced, under the forbearance agreement, Leiner's
lenders will continue not to exercise remedies available to them
during the forbearance period. The extension will terminate if
the Company fails to make any payments as required thereunder,
or fails to remedy any other default within two business days of
notice of such default or fails to execute forbearance and
lockup agreements with its principal bondholders by November 20
or a commitment letter or stock purchase agreement with its new
equity investors by December 10. Under the extension, all
relevant terms of the previous forbearance agreement remain in
effect.
Terms of Agreements in Principle
The key terms of Leiner's agreement in principle regarding a new
equity investment are as follows:
The new investors will invest $20 million in exchange for shares
of Series A Preferred Stock of Leiner's parent, Leiner Health
Products Group. The Series A Preferred Stock will have a
liquidation preference equal to a minimum of three times and a
maximum of six times invested capital, depending on the date on
which the liquidation preference payment event occurs. The terms
of the investment also provide the new investors with certain
control rights over extraordinary actions by the Leiner Group
should an event of default occur under Leiner's new credit
agreement, as well as control over borrowings under Leiner's new
revolving credit facility in excess of $10 million.
The key terms of the agreement in principle regarding the
restructuring of Leiner's existing bank debt are as follows:
The outstanding bank debt will be restructured into two term
loans, a $200 million Term A loan and a $79 million Term B loan
(to be allocated pro rata between the US and Canadian
facilities). The Term A Loan will mature on March 31, 2004 and
is extendable for two one-year periods upon payment of extension
fees equal to 1.25% of the outstanding principal amount for the
first one-year extension and 2.0% of the outstanding principal
amount for the second one-year extension. The interest rate will
be the alternate base rate plus 2.25% per annum, payable monthly
in arrears, subject to a 1% per annum increase on April 1, 2004
and an increase of an additional 0.50% per annum if the Company
fails to meet certain leverage tests at the end of its 2003 and
2004 fiscal years. The Company will also be required to make
prepayments equal to 50% of its annual excess cash flow and 50%
of cash generated by permanent reductions in working capital.
The Term B Loan will mature on September 30, 2003 and will bear
interest at LIBOR plus 0.50% per annum in cash, payable monthly
in arrears, and at 10% per annum payable in kind, quarterly in
arrears. The bank lenders will also be issued Series B Junior
Convertible Preferred Stock of Leiner Health Products Group,
which shall be convertible into an aggregate of 3% of the fully
diluted equity of Leiner Group, or pay a fixed liquidation
preference of $7.5 million.
In addition, the Company will be required to make mandatory
prepayments equal to the net proceeds received from any
antitrust litigation. It will also pay its bank lenders a
restructuring fee equal to 1% of the outstanding principal
amount on the closing of the restructuring and, continuation
fees equal to 1% of the total outstanding principal senior debt
payable on the first anniversary of the restructuring and 0.75%
of the total outstanding principal payable annually commencing
on the second anniversary of the restructuring.
The new revolving credit facility will be a borrowing-base
facility that will bear interest at LIBOR plus 3% per annum. The
facility will mature on the same date as the Term A Loan. The
lenders will receive an up front fee equal to 2% of their $20
million commitment and an unused commitment fee of 0.5%. The
Company's lenders have also agreed to permit the existing $11.9
million of Letters of Credit to remain outstanding.
The key terms of the agreement in principle regarding the
bondholder restructuring are as follows:
The bondholders will exchange their subordinated notes for their
pro rata share of $15 million in cash and shares of Series C
Preferred Stock of Leiner Group. The Series C Preferred Stock
will have a $7 million fixed liquidation preference that is
junior to the Series A Preferred Stock and is pari pasu with the
liquidation preference of the Series B Junior Convertible
Preferred Stock.
Leiner Health Products Inc., headquartered in Carson,
California, is one of America's leading vitamin, mineral,
nutritional supplement and OTC pharmaceutical manufacturers. The
company markets products under several brand names, including
Natures Origin, YourLife and Pharmacist Formula. For more
information about Leiner Health Products, visit
http://www.leiner.com
MARINER POST-ACUTE: Court Okays Bidding Protocol for APS Sale
-------------------------------------------------------------
Chase Manhattan Bank, administrative agent of the MPAN Senior
Lenders, filed a Limited Objection to the motion of Mariner
Post-Acute Network, Inc., seeking the sale of its APS unit for
$60 million or more.
Chase makes it clear that the MPAN Senior Lenders support the
sale of the Pharmaceutical Business to the proponent of the
highest and best offers. In addition, the MPAN Senior Lenders
have no objection to the terms set forth in the Asset Purchase
Agreement. Chase tells Judge Walrath that the MPAN Senior
Lenders have had the opportunity to review in detail the terms
of the Genesis APA and have had direct negotiations with Genesis
on certain points, the resolution of which improved the overall
terms of the Genesis APA. In addition, the MPAN Lenders, as the
future equity owners of Reorganized MPAN, have had the
opportunity to evaluate and become comfortable with Genesis's
ability to provide high quality pharmaceutical services to the
MPAN Debtors and the skilled nursing facilities under their
management.
What Chase objects to, on behalf of the MPAN Senior Lenders, are
the terms of the proposed order approving the Sale Procedures
Motion in the following limited ways:
(i) the proposed Sale Procedures Order does not provide the
MPAN Senior Lenders a role in the evaluation of what
alternative bid (or bid at an auction) is the "highest and
best" and
(ii) that order provides for the release of the MPAN Senior
Lenders' liens in connection with a sale to a currently
unknown alternative bidder.
Given the pecuniary interest of the MPAN Senior Lenders, Chase
believes it essential that it and the other MPAN Senior Lenders
and their advisors have a meaningful voice in the evaluation of
alternative bids and to work with the MPAN Debtors' Management
in that evaluation process. These assessments need to be done
both on terms of price and quality, as the ability of a buyer to
provide high quality reliable service is critical to the
successful operation of the MPAN Debtors' nursing homes and,
consequently, the long term value of MPAN.
On a related point, Chase believes it is premature for the MPAN
Senior Lenders to agree to release their liens with respect to
any alternative bids or be deemed to have pre-consented to any
alternative bid.
"The MPAN Senior Lenders have every incentive to see the
Debtors' Pharmaceutical Business sold to the offeror of the
highest and best bid," Chase says, "That being said, the MPAN
Senior Lenders should not be required to release their liens on
the Pharmaceutical Business in a vacuum. Moreover, absent
consent, Section 363(f) of the Bankruptcy Code does not
authorize the release of the MPAN Senior Lenders' liens in these
circumstances."
For these reasons, Chase request that the Sale Procedures Motion
be (a) denied insofar as it is inconsistent with the foregoing
and (b) otherwise granted, and that the Court grant such other
relief that is just and proper.
The Court's Ruling
Upon a hearing conducted on October 15, 2001, and review of the
pleadings and other documents filed in connection with the
Motion to (1) establish Bidding Procedures for Sale of Debtors'
Pharmaceutical Business and (2) approve Break-up Fees, Judge
Walrath issued an order granting the motion, with provisions
resolving any objections to the motion.
Specifically, the Court is satisfied that, requiring that all
initial overbids be made at least fourteen days prior to the
Sale Hearing provides the Debtors, the MPAN Bank Group, the MHG
Bank Group, the MPAN Committee, and the MHG Committee with an
opportunity to review and clarify such bids,
The Court's order provides, among other things, that:
-- Bidding will commence at the amount of the highest and
best bid submitted by a Qualified Overbidder, as determined by
the Debtors in the exercise of their fiduciary duties to their
respective estates after consultation with designated
representatives of the MHG and MPAN Bank Groups, and after
consideration of the nature and identity of the bidder, the
amounts bid, the ability of the bidder to consummate the
proposed transaction, the timing of the payments, and such other
factors as may be relevant to the determination (hereinafter,
including the duty to consult with the designated
representatives of the MUG and MPAN Bank Groups, the "Bid Review
Standards");
-- Following the conclusion of the Auction and at the time
of the Sale Hearing, the Debtors shall recommend that the Court
authorize and approve a sale of the Debtors' Pharmaceutical
Business (including an assumption and assignment of the Assigned
Agreements) to the entity that they determine to have submitted
the superior offer for the assets based upon the results of the
bidding following application of the Bid Review Standards, and
shall submit to the Court for approval if the Purchasers are the
highest bidder, the Asset Purchase Agreement, as modified and
initialed by Purchasers, or, if a Qualified Overbidder is the
highest bidder, the Generic Asset Purchase Agreement, as
modified and initialed by the Qualified Overbidder and signed by
the Debtors;
-- If the Purchasers are, based upon an overbid, selected
by the Debtors as the winning bidders at the Auction, then prior
to the conclusion of the Sale Hearing, the Purchasers shall
submit to the Court for in camera review an entered order of the
Genesis Bankruptcy Court establishing that the winning bid was
within the parameters of the Purchaser's authority under the
Purchasers' Approval Order, or provide alternative evidence
sufficient to establish that such an approval order from the
Genesis Bankruptcy Court was not required at the time the
overbid was made.
-- The Debtors reserve all rights to exercise their
business judgment, following application of the Bid Review
Standards, to recommend a sale of the Debtors' Pharmaceutical
Business (including an assumption and assignment of the Assigned
Agreements) to any bidder whose bid the Debtors determine to be
in the best interests of the estates. The Debtors further
reserve all rights to request, after consultation with the MHG
and MPAN Bank Groups, one or more continuances or recesses, for
a combined period not to exceed thirty days, of the Auction or
the Sale Hearing for any reason, including the need for
additional time to ascertain the financial or other capabilities
of potential Qualified Overbidders or to resolve and/or respond
to objections regarding the assumption arid assignment of the
Assigned Agreements. Each Qualified Overbidder, however, should
be prepared to make its best and final offer at the Auction and
to appear, as required, at the Sale Hearing. The Debtors shall
reserve all rights to object to and oppose any request by any
bidder or party in interest for a continuance or recess of the
Sale Hearing. (Mariner Bankruptcy News, Issue No. 20; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
METRICOM INC: Aerie Buys Ricochet Wireless Assets for $8.25MM
-------------------------------------------------------------
Aerie Networks, Inc. announced the acquisition of the Ricochet
wireless broadband network assets and intellectual property in
an $8.25 MM cash deal from bankrupt Metricom, Inc. The deal was
awarded to Ricochet Networks, Aerie Networks' newly formed
subsidiary company, during bankruptcy court proceedings on
November 2, 2001.
The sale should be finalized this week.
Aerie Networks plans to work in partnership with communities and
local service providers to reactivate the 17 metropolitan
markets initially deployed by Metricom and to deliver high-speed
connectivity to underserved markets. Ricochet's patented
technology delivers wireless broadband access that is simple,
fast and affordable.
"Ricochet has had an incredibly loyal customer base that has
made it clear that they want their Ricochet back. As a former
customer, I too am passionate about restarting the Ricochet
service," said Mort Aaronson, President and Chief Executive
Officer of Aerie Networks. "In order to bring it back, we will
create partnerships to provide the service at a new lower price
point than previously offered and make it available to millions
of users where they buy other related products and services."
Aerie Networks will devote its resources to making Ricochet a
leader in providing affordable, wireless broadband access.
"Ricochet has a unique and proven market position that the
talented management team at Aerie Networks will build upon,"
commented Alan Salzman, Chairman of the Board, Aerie Networks
and Managing Partner, VantagePoint Venture Partners. He added,
"VantagePoint Venture Partners has been behind Aerie Networks
since the beginning. This solid acquisition strengthens Aerie's
competitive position and we are excited about its future
prospects." The Company has a knowledgeable management team
with experience and expertise in every aspect of designing,
building, operating, financing and marketing broadband networks
and is backed by industry-leading capital partners.
In addition to affordable, wireless access for businesses and
consumers, Ricochet provides communities with secure, broadband
connectivity to support public safety and emergency workers with
speed and mobility. For local service providers, Ricochet
offers an opportunity to provide their existing customer base a
product that is very much in demand. The Company will work with
partners to design, build and operate the Ricochet network and
will provide tools needed to help market the Ricochet service.
Before it was shutdown, the Ricochet network had been built in
17 cities, operated in 14 of those cities and had over 51,000
subscribers, all at an estimated cost of $1 billion to develop.
The Company is actively seeking new partners to help turn the
service back on where it once existed and to expand and to
install new networks in areas where affordable, broadband access
is currently unavailable.
"I am very pleased to make this announcement [Mon]day," noted
Aaronson. "It's good news for Aerie Networks and its
stakeholders, it's good news for those that have not been able
to get high speed access, it's good news for Ricochet users with
the promise of restarting the service, and it's good news for
the telecommunications industry with positive news of rebuilding
value."
Aerie Networks is a privately-held broadband services company
based in Denver, Colorado. Aerie designs, builds and operates
broadband networks and provides tools to market broadband
services from a platform of managed network services called
Network Host. The Company owns and will soon reactivate the
Ricochet network, a unique patented wireless broadband
technology that delivers high-speed connectivity that is
affordable, easy to access and use. For more information about
Aerie Networks and Ricochet, please visit the website at
http://www.aerienetworks.com
NCS HEALTHCARE: Q1 Revenues Drop Due to Closure of Non-Core Ops.
----------------------------------------------------------------
NCS HealthCare, Inc. (NCSS.OB) announced financial results for
its fiscal first quarter ended September 30, 2001.
For the three months ended September 30, 2001, revenues
decreased 0.7% to $157,836,000 from $159,022,000 recorded in the
first quarter of the previous fiscal year. During the last
several quarters, NCS has continued to execute its strategic
restructuring plan, which has included the shutdown,
restructuring or sale of certain non-core ancillary lines of
business. The fiscal first quarter decrease in revenues was
largely attributable to the sale or shutdown of these
businesses.
Net loss for the quarter was $5,179,000 as compared to net loss
of $7,113,000 for the fiscal first quarter of the previous year.
The results for the quarter reflect the adoption of Statements
of Financial Accounting Standards (SFAS) No. 141, "Business
Combinations" and No. 142, "Goodwill and Other Intangible
Assets," which resulted in discontinuing the amortization of
goodwill.
As a result of the early adoption of SFAS No. 142, net loss was
reduced by $2.6 million and net loss per diluted share was
reduced by $0.11 for the quarter ended September 30, 2001. As
required by SFAS No. 142, the results for the quarter ended
September 30, 2000 have not been restated.
Kevin B. Shaw, President and Chief Executive Officer of NCS
commented, "We have continued to provide our nursing home
customers with high quality service while reducing our own
operating costs. eASTRAL, NCS' suite of Internet applications
designed to deliver pharmacy cost savings, has been well
received. We will continue to focus on our customers by
providing real-time information and overall expense management."
Mr. Shaw added, "While high customer service levels remain our
highest priority, we are also encouraged that cash collected as
a percentage of revenues has strengthened."
Gross margin for the three months ended September 30, 2001 was
17.2% as compared to 17.7% for the previous quarter. The
decline in gross margin was due primarily to a change in service
mix, the continued shift toward lower margin payer sources such
as Medicaid and third party insurance, and lower Medicaid and
insurance reimbursement levels. Medicaid and insurance revenues
accounted for 59.4% of revenues in the fiscal 2002 first quarter
versus 59.0% in the previous quarter and 55.0% in the first
quarter of fiscal 2001.
Excluding the effect of the adoption of SFAS 142, selling,
general and administrative expenses as a percent of revenues
improved to 17.7% for the fiscal 2002 first quarter as compared
to 18.3% of revenues during the previous quarter. The
improvement was due primarily to reductions in employee-related
costs as well as efficiencies achieved in pharmacy operating
costs.
Depreciation and amortization expense for the three months ended
September 30, 2001 was $3.3 million as compared to $6.4 million
during the previous quarter. The Company has elected early
adoption of SFAS No. 142 effective July 1, 2001. Under SFAS No.
142, goodwill and indefinite lived intangible assets will no
longer be amortized. Under this non-amortization approach,
goodwill and indefinite lived intangible assets will be reviewed
for impairment using a fair value based approach as of the
beginning of the year in which SFAS No. 142 is adopted.
The Company is required to complete the initial step of the
transitional impairment test within six months of adopting SFAS
No. 142 and is required to complete the final step of the
transitional impairment test by the end of the current fiscal
year. Going forward, these assets will be tested for impairment
on an annual basis or upon the occurrence of certain triggering
events as defined by SFAS No. 142. Any impairment loss resulting
from the transitional impairment test will be recorded as a
cumulative effect of a change in accounting principle for the
quarter ended September 30, 2001. While the Company is still in
the process of completing the initial step of the transitional
impairment test, the Company does expect that it will be
required to recognize an impairment loss as a result of the
adoption of SFAS No. 142.
Net interest expense was $7.0 million for the most recent
quarter as compared to $7.4 million for the quarter ended June
30, 2001 due primarily to lower interest rates.
As previously reported, net losses incurred during fiscal 2000
resulted in certain technical covenant defaults under the
Company's senior credit facility. The Company continues to make
all interest payments to its senior lenders in accordance with
the credit facility. The Company has elected to not make the
$2,875,000 interest payments due February 15, 2001 and August
15, 2001 on its 5 3/4% Convertible Subordinated Debentures due
2004. As a result of these non-payments, the Company has
received a formal Notice of Default and Acceleration and Demand
for Payment from the indenture trustee.
Brown, Gibbons, Lang & Company L.P. (BGL&Co.) continues to act
as the Company's financial advisor in its continuing discussions
with the Company's senior lenders and with an ad hoc committee
of holders of the 5 3/4% Convertible Subordinated Debentures due
2004, with respect to the defaults and to restructuring options.
BGL&Co. is also discussing various strategic alternatives with
third parties. No decision has been made to enter into any
transaction or as to what form any transaction might take. NCS
can give no assurance with respect to the outcome of these
discussions or negotiations.
NCS HealthCare, Inc. is a leading provider of pharmaceutical and
related services to long-term care facilities, including skilled
nursing centers, assisted living facilities and hospitals. NCS
serves approximately 206,000 residents of long-term care
facilities in 33 states and manages hospital pharmacies in 14
states.
OPEN PLAN: Wachovia Bank Agrees to Forbear Until January 31
-----------------------------------------------------------
Open Plan Systems, Inc., (OTCBB: PLAN) an independent
remanufacturer of work stations, announced that it has entered
into an agreement to extend the existing Forbearance Agreement
with its primary lender, Wachovia Bank, N.A.
Under the terms of the agreement, the Bank has agreed to refrain
from exercising any rights or remedies with respect to existing
defaults under the Company's loan documents until after January
31, 2002. The Company maintains a revolving line of credit with
the Bank.
The extension of the Forbearance Agreement does not materially
change the terms of the Forbearance Agreement executed on August
10, 2001.
Thomas M. Mishoe, Jr., President and CEO, stated, "We're pleased
to have secured the Bank's agreement to continue to forbear into
next year. We believe the continued support of the Bank
indicates continuing progress of the Company in fully
implementing the previously announced restructuring plan and
progress towards returning the Company to future profitability."
Open Plan Systems, Inc. remanufactures and markets modular
office workstations through a network of Company-owned sales
offices and selected dealers. Workstations consist of movable
panels, work surfaces, storage units, lighting and electrical
distribution combined into a single integrated unit. The Company
has recycled over fifty million pounds of workstations. Under
its "As Is" program, the Company also purchases and resells used
workstations. Additionally, the Company markets a wide variety
of other office-related products including chairs, desks and
other office furniture.
PENTACON: S&P Raises Ratings After Making Interest Payment
----------------------------------------------------------
Standard & Poor's raised its corporate credit rating on Pentacon
Inc. to triple-'C'-minus from 'SD', its subordinated debt rating
to single-'C' from 'D', its senior secured (bank loan) rating to
triple-'C' from double-'C', and its subordinated debt rating to
single-'C' from 'D'.
All ratings are placed on CreditWatch with negative
implications. The upgrades follow the firm's announcement that
on Oct. 30, 2001, the last day of the 30-day grace period, it
made the $6.1 million interest payment due October 1, 2001, on
its $100 million 12.25% senior subordinated notes due April 1,
2009. The CreditWatch listing reflects continuing uncertainty
regarding the company's ability to meet its future debt service
obligations.
Pentacon also announced that it has reached agreement with its
senior lenders under its bank credit facility to amend certain
provisions under that facility giving the firm additional
borrowing availability of $3.5 million (after making the
interest payment). The company continues discussions with the
holders of subordinated notes, is evaluating replacement senior
debt financing (the existing senior facility terminates March
31, 2002, under the new amendment), and is exploring additional
transactions to strengthen liquidity.
Pentacon is a leading distributor of a broad range of fasteners
and other small parts and provider of related inventory
management services from its nationwide distribution network.
The company serves the aerospace and industrial markets, each
representing about 50% of sales. The former business has been
significantly impacted by the consequences of the September 11
terrorist attacks.
Standard & Poor's will monitor developments to determine the
impact on credit quality.
PHILIPS INT'L: Completes Sale of Port Angeles Assets for $4.5MM
---------------------------------------------------------------
Philips International Realty Corp. (NYSE-PHR), a real estate
investment trust, announced that the Company has completed the
sale of its Highway 101 Shopping Center in Port Angeles,
Washington for approximately $4.5 million in cash.
Pursuant to the Company's plan of liquidation, its Board of
Directors declared the fourth liquidating distribution of $.50
per share which will be payable on November 19, 2001. The record
date is November 12, 2001. However, shareholders must continue
to own their shares up to and including November 19, 2001 in
order to be entitled to the liquidating distribution of $.50 per
share.
Effective November 8, 2001, the Company's shares will be traded
on the New York Stock Exchange with due bills which will entitle
the owner of the stock to receipt of the distribution. The
Company's stock will be traded ex-dividend after the payment
date of November 19, 2001. The Company has approximately 7.4
million shares of common stock and common stock equivalents
which will participate in this distribution.
On October 10, 2000, the stockholders approved the plan of
liquidation, which is estimated to generate approximately $18.25
in the aggregate in cash for each share of common stock in two
or more liquidating distributions. The prior distributions of
$13.00, $1.00 and $.75 per share were paid on December 22, 2000,
July 9, 2001 and September 24, 2001, respectively. The Company's
five remaining assets are currently being offered for sale.
PHOTOCHANNEL: Chapter 7 Case Summary
------------------------------------
Debtor: Photochannel, Inc.
Two Omega Drive
Stamford, CT 06907
Chapter 7 Petition Date: November 1, 2001
Court: District of Connecticut (Bridgeport)
Bankruptcy Case No.: 01-51316
Judge: Alan H. W. Shiff
Debtor's Counsel: Ellery E. Plotkin, Esq.
Plotkin & LiVolsi, LLP
1035 Washington Boulevard
Stamford, CT 06901
203-325-2279
POLAROID CORP: Intends to Assume & Assign 398 Contracts to PIDS
---------------------------------------------------------------
Polaroid Corporation seeks the Court's authority to assume and
assign some 398 Designated Contracts to PIDS Holdings or the
Successful Bidder, in relation to the sale of their I.D.
Business. Most of the contracts and leases have zero cure
amounts while some carry substantial cure amounts:
Counterparty Cure Amount
------------ -----------
Computer Deductions Inc. $576,000
Flash Logistics 113,133
Genicom Corporation 252,061
Lockheed Martin Intergrate 271,666
NCR 921,872
Ray Morgan Company, Inc. 168,674
Transilwrap Company, Inc. 133,652
Atlantek Inc. 198,510
To the extent any defaults exist under any executory contract or
unexpired lease that is assumed and assigned, Gregg M. Galardi,
Esq., at Skadden, Arps, Slate, Meagher & Flom, in Wilmington,
Delaware, explains that PIDS Holdings or Successful Bidder will
cure any such default prior to the assumption and assignment.
Moreover, Mr. Galardi says, the Debtors will later show the
financial credibility of either PIDS Holdings or the Successful
Bidder, experience in the industry, and willingness and ability
to perform under the contracts to be assumed and assigned to it.
If there are any complaints to the Debtors' proposed cure
amounts, these objections must be filed on or before 4:00 p.m.
of November 9, 2001 with the Court.
The Debtors plan to conduct an auction starting at 9:00 a.m. on
November 20, 2001. After the conclusion of the Auction, Mr.
Galardi informs the Court, the Debtors will send a notice to
each non-Debtor person party to an executory contract or
unexpired lease that the Debtors propose to assume and assign to
the successful purchaser(s) identified at the Auction.
According to Mr. Galardi, the assumption notice will identify
the successful purchaser(s) who wish to assume the contracts and
leases. The notice will also explain why the Debtors believe
that there is adequate assurance that such successful
purchaser(s) will continue to perform under the contracts and
leases.
A hearing to approve the proposed assumption and assignment of
identified contracts and leases will start on November 26, 2001
at 4:00 p.m. at the Delaware Bankruptcy Court. (Polaroid
Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
QUALITY STORES: Chapter 11 Case Summary
---------------------------------------
Debtor: Quality Stores Services, Inc.
455 East Ellis Rd
Muskegon, MI 49443
Chapter 11 Petition Date: November 1, 2001
Court: Western District of Michigan (W. Michigan)
Bankruptcy Case No.: 01-11068
Judge: James D. Gregg
Debtor's Counsel: Timothy J. Curtin, Esq.
Varnum Riddering Schmidt &
Howlett
333 Bridge Street NW
PO Box 352
Grand Rapids, MI 49501-0352
616-336-6000
RAMPART SECURITIES: IDA Continues Membership Suspension
-------------------------------------------------------
The Investment Dealers Association of Canada announced that the
membership rights and privileges of Rampart Securities Inc.
continue to be suspended. This follows an Order in the Superior
Court of Justice on October 24, 2001, adjudging Rampart bankrupt
and the making of a receiving order against Rampart, wherein
Ernst & Young was appointed Trustee of the estate of Rampart.
Rampart's membership rights and privileges were originally
suspended on August 14, 2001, for a capital deficiency.
The Investment Dealers Association of Canada is the national
self-regulatory organization and representative of the
securities industry. The Association's role is to foster fair,
efficient and competitive capital markets by encouraging
participation in the savings and investment process and by
ensuring the integrity of the marketplace.
The IDA enforces rules and regulations regarding the sales,
business and financial practices of its Member firms. The
Enforcement Branch investigates complaints, conducts
investigations and disciplines Members and their employees as
part of the IDA's regulatory role.
RELIANCE: Court Okays Hiring of Ordinary Course Professionals
-------------------------------------------------------------
Ann B. Laupheimer, Esq., of Blank, Rome, Comisky & McCauley,
counsel for the Pennsylvania Insurance Commissioner, tells Judge
Gonzalez that her side may have jumped the gun in its objection
to Reliance Group Holdings, Inc.'s motion to employ ordinary
course professionals. While not withdrawing the objection
outright, the Insurance Commissioner says the objection may be
premature and she will wait until the proceedings develop
further before deciding on how zealously to pursue it.
Not so fast, retorts Lorna G. Schofield, Esq., of Debevoise &
Plimpton, counsel for Debtors, Jack Rose, Esq., of White & Case,
counsel for the Official Unsecured Bank Committee, and Barbara
Moses, Esq., of Orrick, Herrington & Sutcliffe, counsel for the
Official Unsecured Creditors Committee.
The Rehabilitator now concedes that her Ordinary Course
Professionals Motion is "premature," yet she refuses to withdraw
it (to which the Debtors and Committees have filed opposition).
Consequently, the Debtors and Committees are entitled to an
order denying the Ordinary Course Professionals Motion and
overruling the Objections.
The notion of an open-ended "deferral," such as the
Rehabilitator seeks, runs counter to the common-sense notions of
fairness and due process underlying the motion practice rules in
this and other courts. If an opposing party could, by means of
filing an objection and then "deferring" it, prevent the court
from entering the necessary orders, such a party could, in
effect, defeat the application without ever having to establish
the merits of its objection. That is precisely what the
Rehabilitator seeks to do in this instance.
Nor does it help the Rehabilitator to characterize her motion
and objections as "premature" rather than (as is in fact the
case) meritless regardless of timing. Motions and objections
found to be premature are routinely denied or overruled on that
very basis.
Should a time come when the Rehabilitator believes-and is
prepared to prove-that she has a "mature" motion or objection to
make, it is her responsibility to file the appropriate pleading
and discharge her burden of proof and persuasion at that point.
In the meantime, she cannot hold these chapter 11 proceedings in
limbo with a "deferred" motion or objections.
Judge Gonzalez finds that the Rehabilitator is on shaky legal
ground, overrules the Commissioner's Objection, and grants the
Debtors' and Committee's motion to employ ordinary course
professionals. (Reliance Bankruptcy News, Issue No. 14;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
SUN HEALTHCARE: Seeks Okay to Reject 4 Leases & 1 Sublease
----------------------------------------------------------
Sun Healthcare Group, Inc. seeks authorization, pursuant to
section 365(a) of the Bankruptcy Code and Bankruptcy Rule 6006,
to reject four nonresidential real property leases (2 for
properties in California, 1 in Florida, 1 in Missouri) and one
nonresidential real property sublease in Kansas. The properties
subject to the Leases and Sublease consist of four offices and
one office/distribution center.
Subsequent to entering into the Leases and Sublease, the Debtors
encountered significant liquidity problems, which eventually led
to the commencement of their bankruptcy cases. Due to the
restructuring and consolidation of certain of their operations,
the Debtors no longer require such leased space. Based on the
results of the Debtors' review and analysis, the Debtors
determined that the Leases and Subleases do not and will not
contribute value to their estates. As the leases were entered
into at a time when the real estate market was substantially
stronger, the properties are subject to leases at or above the
current market rate. After contacting local real estate brokers
and/or analyzing the lease terms of comparable properties within
the same geographic vicinity, the Debtors believe that the costs
associated with marketing the Leases and Sublease, in addition
to any cure amounts that would be required to be paid pursuant
to section 365(d)(3) of the Bankruptcy Code, would be
significantly greater than any potential value that might be
realized by any future sale or sublease.
The Debtors represent that as a result of the rejection of the
Leases and Sublease, their estates will be benefited by
immediately eliminating any unnecessary rent accruals and other
obligations associated with the Leases and Sublease, and will
save approximately $91,908 in future rent obligations. Absent
mitigation, the Debtors estimate that lease rejection damages
will amount to approximately $85,748.
Accordingly, the Debtors have determined in the exercise of
their business judgment that such Leases and Sublease should be
rejected.
One of the four properties subject to the Leases is vacant. The
premises have been swept clean and the keys have been
surrendered to the lessor. The Debtors anticipated the remaining
three properties subject to be vacated, swept clean, and the
keys to be returned to the respective lessors by October 31,
2001.
The Debtors request that the rejection of the Leases be
effective as of October 31, 2001. Retroactive application of the
Court's approval order is a proper exercise of the Court's
equitable jurisdiction, the Debtors represent.
The Debtors anticipate that the Subleased Property will be
vacated, swept clean and surrendered by November 30, 2001.
Although the Sublease expired by its own terms on July 31, 2001,
the Debtors have remained in possession on a month-to-month
basis. Through inclusion in the Motion, and in an abundance of
caution, the Debtors seek to reject any obligations that may
survive the expiration of the Sublease.
The Debtors request that the rejection of the Subleased Property
be effective November 30, 2001, at which time the property will
be vacated, swept clean, and the keys will be surrendered to the
sublessor.
The Rejection Leases/Subleases are as follows:
Property Address Lessor Lessee
---------------- ------ ------
4725 Lakeland Joe P. Ruthven SunScript Pharmacy
Commerce Parkway Investments Corp. #6162
#6-9
Lakeland, FL
43770 15th Street Henry C. Booker SunPlus Home Care
West, Suite 160 #6421
Lancaster, CA 93534
Corporate Centre American National SunDance Rehabilitation
1949 East Sunshine Insurance Company Corp.
Building 2
Springfield,
MO 65804
Building 140 Forbes Realty Accelerated Care Plus,
LLC
Topeka Air Corporation
Industrial Park (Sublessor)
Topeka, KS
23575 Cabot Blvd. Allstate Life First Class Pharmacy,
Inc.
Building B Insurance Co.
Suites 201/202
Hayward, CA 94545
(Sun Healthcare Bankruptcy News, Issue No. 25; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
THERMOVIEW: Cost-Cutting Efforts Yield Positive Results in Q3
-------------------------------------------------------------
ThermoView Industries, Inc. (Amex: THV), one of the largest
publicly traded companies dedicated exclusively to the home
improvement and renovation industry, reported financial results
for the three and nine months ending September 30, 2001.
For the 2001 third quarter, the diversified home improvement and
remodeling company reported a net loss attributable to common
stockholders of $358,620. For the comparable 2000 quarter, the
loss attributable to common stockholders was $1,031,003. Third
quarter 2001 revenues were $22.6 million, compared with $26.4
million in the year-earlier quarter.
"Cost-cutting and streamlining efforts have had a positive
impact on our results," said Charles L. Smith, ThermoView
president and CEO. "We will continue our intense focus on
boosting corporate-wide efficiencies and implementing top-line
sales initiatives. I'm confident our efforts will position us
to achieve our financial and operational goals."
Cash flow (as measured by earnings before interest, taxes,
depreciation and amortization, or EBITDA), was $1.3 million
during the third quarter. That figure compares with year-ago
third quarter EBITDA of $1.7 million.
Despite the unfavorable impacts of a sluggish economy and the
terrorist attacks on America, ThermoView's retail and
manufacturing subsidiaries in North Dakota and its retail
subsidiary in Kansas City reported revenue growth in the third
quarter of 2001, compared with the same period in 2000. These
revenue gains were offset by declines in our Chicago retail
subsidiary related to its continuing shift in lead generation
strategy, a subsidiary management reorganization, and the
closing of an unprofitable branch operation. Our St. Louis
retail subsidiary experienced a weather-related revenue decline
in the 2001 third quarter.
For the nine months ending September 30, sales were $68.2
million versus $75.1 million during the year-earlier period.
Nine-month net income attributable to common stockholders was
$5.2 million, which included an $0.86 per share extraordinary
gain from debt restructuring. Comparative figures for 2000
reflected a net loss attributable to common stockholders of
$21.6 million, after unusual charges of $10.7 million.
EBITDA during the first nine months of 2001 was $3.1 million.
For the year-ago nine-month period, EBITDA was a negative $11.4
million, which reflected a one-time charge of $10.7 million to
write off goodwill from closed operations. Smith said the
company expects to meet internal EBITDA targets for 2001.
Smith said the company's mission is to expand its position as
one of the top home improvement companies in the U.S. Among the
efforts underway are continuing to identify and implement
operational and marketing efficiencies throughout the
organization, expanding relevant home improvement products and
services in all of ThermoView's markets, and opening sales
offices where it makes strategic and operational sense. He said
the company is examining other avenues to boost income, such as
national warehousing opportunities to streamline purchases,
selling branded products outside of ThermoView's existing market
area, and expanding finance alternatives for its customers.
Headquartered in Louisville, ThermoView Industries, Inc. reaches
consumers in 16 states, from California to Ohio and North Dakota
to Missouri, and in major metropolitan areas including Los
Angeles, Chicago and St. Louis. The company designs,
manufactures, markets, and installs home improvements in the
$200 billion home improvement/renovation industry, and is the
fifth-largest remodeler in the country, according to the
September 2001 issue of Qualified Remodeler Magazine.
ThermoView Industries' common stock is listed on the American
Stock Exchange under the ticker symbol "THV." Additional
information on ThermoView Industries is available at
http://www.thermoviewinc.com
* * *
As of June 30, 2001, the Company had cash and equivalents of
$1.7 million, a working capital deficit of $453,000, $16.6
million of long-term debt, net of current maturities, and $6.7
million of mandatorily redeemable preferred stock.
TRUMP HOTELS: S&P Junks & Places Ratings on CreditWatch Negative
----------------------------------------------------------------
Standard & Poor's lowered its ratings for Trump Hotels & Casino
Resorts Holdings L.P. and subsidiaries. In addition, the ratings
are placed on CreditWatch with negative implications.
The downgrade and CreditWatch placement follow the announcement
by Trump that, because it expects that future gaming in New York
will severely affect operating performance in Atlantic City, it
is seeking to negotiate the terms of its public debt to better
reflect this environment. The company also announced that until
discussions with bondholders are final, future scheduled
interest payments would be withheld, including the payment due
Thursday. If the payments are withheld, the ratings will be
revised to 'D' following each interest payment date.
Ratings Lowered, Placed On Creditwatch
With Negative Implications
TO FROM
Trump Hotels & Casino Resorts Holdings L.P.
Corporate credit rating CC CCC+
Senior secured debt CC CCC+
Trump Hotels & Casino Resorts Funding Inc.
Corporate credit rating CC CCC+
Senior secured debt CC CCC+
Trump Atlantic City Associates
Corporate credit rating CC B-
Senior secured debt CC B-
Trump Atlantic City Funding Inc.
Corporate credit rating CC B-
Trump Atlantic City Funding II Inc.
Senior secured debt CC B-
Trump Atlantic City Funding III Inc.
Senior secured debt CC B-
VIDEO NETWORK: Now Trading Off Nasdaq SmallCap Market
-----------------------------------------------------
Video Network Communications, Inc., a provider of real-time
video network communications solutions, was notified Wednesday,
October 31, 2001 by a Nasdaq Listing Qualifications Panel that,
effective with the open of business on November 1, 2001, the
Company's common stock and publicly traded warrants will be
delisted from trading on The Nasdaq SmallCap Market.
The Nasdaq Listing Qualifications Panel informed the Company
that these securities were delisted for the Company's failure
for an extended period of time to evidence compliance with the
net tangible asset and stockholders' equity requirement under
Marketplace Rule 4310(c)(2)(B). The Company's securities are
immediately eligible for trading on the OTC Bulletin Board.
Video Network Communications designs, develops, and markets
video distribution systems that provide full-motion, high-
resolution video networking, enabling video broadcast
distribution, retrieval of stored video-on-demand and
interpersonal video communications. VNCI's patented technology
allows the VNCI Video System to use the active telephone wiring
to bring TV-quality video anywhere there is a phone jack. The
Company's ISDN/IP and Universal (ATM) Gateway solutions extend
the system's reach from enterprise desktops out to the wide-
area-networks (WANs). VNCI can be found at http://www.vnci.net
VLASIC FOODS: Seeks Extension of Plan Filing Period to Dec. 28
--------------------------------------------------------------
Vlasic Foods International, Inc. and its debtor-affiliates ask
Judge Walrath for an order extending by an additional 60 days
the exclusive periods during which the Debtors may file and
solicit acceptances of a plan of reorganization.
Should the Court grant the relief requested, the expiration of
the Debtors exclusive period to propose a plan would be on
December 28, 2001 while the deadline of their exclusive
solicitation period would be on February 26, 2002.
According to Anthony W. Clark, Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, in Wilmington, Delaware, the Debtors have
made extraordinary progress in these cases in the 9 months since
the Petition Date. During this short window of time, Mr. Clark
reminds the Court that the Debtors have marketed and sold as a
going concern their pickles, sauce and frozen foods businesses.
In addition, Mr. Clark continues, the Debtors' non-debtor
European subsidiaries have completed sales of substantially all
of their assets. Mr. Clark notes that the sales of these
businesses and assets constitute the basis for the plan filed by
the Debtors on June 12, 2001 and amended on September 24, 2001,
which the Debtors believe provides a sizable distribution to
unsecured creditors.
Furthermore, Mr. Clark relates, the Debtors have also
aggressively prosecuted their chapter 11 cases. The Debtors are
also presently engaged in conducting an orderly wind-down of the
Debtors' business operations, including employee benefit plans,
Mr. Clark adds. Moreover, Mr. Clark recounts, the Debtors have
also successfully negotiated the resolution of a critical motion
to estimate the asserted secured claims of their senior bank
lenders. As a result of such resolution, Mr. Clark tells Judge
Walrath, the Debtors' senior bank lenders have agreed to support
confirmation of the plan.
The Debtors are seeking the approval of this motion out of an
abundance of caution because they want to be prepared to amend
the Plan as necessary for confirmation, Mr. Clark explains. A
60-day extension of the Exclusive Periods should be enough to
make any necessary edits to the Plan and to solicit any
additional required acceptances, Mr. Clark contends.
The Debtors assert that a 60-day extension of each of the
exclusive periods is warranted because, among other things:
(a) the Debtors cases are large and complex;
(b) the Debtors have made significant progress in resolving
issues facing their estates; and
(c) an extension of the exclusive periods will facilitate
negotiations among the various constituencies without
prejudicing any party-in-interest. (Vlasic Foods
Bankruptcy News, Issue No. 14; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
WARNACO GROUP: Asks Court to Fix January 4 Claims Bar Date
----------------------------------------------------------
The Warnaco Group and its debtor-affiliates seek the Court's
authority to establish January 4, 2002 at 4:00 p.m. (New York
time) as the last date and time by which certain creditors must
file claims against any of the Debtors.
Kelley A. Cornish, Esq., at Sidley, Austin, Brown & Wood, in New
York, New York, relates that the Debtors are currently taking
steps toward formulating a consensual plan or plans of
reorganization. To enable the Debtors to formulate a plan and
commence negotiations with their constituencies, Ms. Cornish
says, the Debtors must ascertain, among other things, the
number, amount, nature and character of all claims against any
of the Debtors to the extent reasonably practicable. In this
regard, Ms. Cornish asserts, it is imperative that the Debtors
undertake and complete an analysis to determine which, if any,
asserted claims are in addition to, or at variance with, those
set forth in the Schedules.
The Debtors propose that bar date apply to all creditors of
their estates:
(a) whose claims do not appear on the Schedules, or
(b) whose claims are listed in the Schedules as disputed,
contingent and/or unliquidated.
According to Ms. Cornish, each person or entity that asserts a
claim against any of the Debtors that arose prior to the
Petition Date must file proof of any such claim on or before the
Bar Date. With respect to claims relating to executory contracts
or unexpired leases that have been rejected by the Debtors, Ms.
Cornish says, the proposed Bar Date Order provides that all such
claims, whether arising prior to or after the Petition Date,
must be filed on or before the later of:
(i) 30 days after the effective date of rejection of such
executory contract or unexpired lease as set forth in the
order approving such rejection,
(ii) 30 days after the date of the entry of an order by the
Bankruptcy Court approving the rejection of such executory
contract or unexpired lease, or
(iii) the Bar Date.
But, Ms. Cornish emphasizes that the bar date shall not apply to
these categories of claims or interests:
(a) Administrative Claims
(b) Properly Scheduled Claims
(c) Previously Filed Claims
(d) Equity Interests
The Debtors propose to provide written notice of the Bar Date by
mailing, on or before November 26, 2001, a notice of the Bar
Date, a proof of claim form, and an instruction sheet for
preparing and filing the Proof of Claim Form. According to Ms.
Cornish, the Bar Date Package will be sent by first class mail,
postage prepaid, to:
(a) the United States Trustee - Southern District of New York,
(b) the District Director of Internal Revenue for the Southern
District of New York,
(c) counsel for the Committee,
(d) counsel for the Debt Coordinators for the Pre-Petition
Lenders,
(e) the Debtors' post-petition lenders,
(f) all known holders of claims, including those listed on the
Schedules at the addresses stated therein,
(g) all record holders of Warnaco stock as of the Petition
Date, and
(h) all persons or entities requesting notice pursuant to
Bankruptcy Rule 2002.
Ms. Cornish points out that the proposed notice period provides
more than the 20-day notice requirement of Bankruptcy Rule
2002(a)(7).
For the benefit of those entities, who assert claims that are
not listed on the Schedules but are not otherwise known to the
Debtors, the Debtors intend to publish a notice of the Bar Date
in The Wall Street Journal (National Edition), The New York
Times (National Edition) and USA Today (National Edition). Ms.
Cornish informs the Court that the Debtors propose to publish
the notice on at least 1 occasion in each such publication at
least 20 days prior to the Bar Date, in order to satisfy the
requirements of Bankruptcy Rule 2002(a)(7).
Creditors who fail to file their proofs of claim on the bar date
will be forever barred from asserting such claim against the
Debtors and their estates or from voting on, or receiving a
distribution under, the Plan. (Warnaco Bankruptcy News, Issue
No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900)
WHEELING-PITTSBURGH: Gets $400K Grant For Paint Line Plant in WV
----------------------------------------------------------------
Wheeling-Pittsburgh Steel Corporation received a $400,000 grant
from West Virginia Governor Bob Wise, which will allow the
company to complete construction of a paint line at its Beech
Bottom, WV, plant.
"Gov. Wise has shown tremendous leadership during the steel
industry's fight against illegal foreign steel," said James G.
Bradley, President and CEO of Wheeling-Pittsburgh Steel.
"Today, Gov. Wise is once again taking action that will
measurably help Wheeling-Pittsburgh Steel complete its
reorganization. Without Gov. Wise's leadership and the state of
West Virginia's participation, Wheeling-Pittsburgh Steel would
not be able to complete this very important project. Our
employees and the citizens of the Northern Panhandle are
extremely grateful to Gov. Wise."
In presenting company officials with a ceremonial oversized
check, Gov. Wise said, "I am going to continue to fight and do
everything I can to help Wheeling-Pittsburgh Steel remain in
operation and continue to produce American-made steel."
Construction on the $14.6 million paint line was halted after
the company filed for Chapter 11 Bankruptcy Protection on Nov.
16, 2000. Construction is expected to resume next week and be
completed about March 1, 2002. Once it is operational, the line
will allow the company to reduce costs by more than $6 million
per year. In addition, as many as 15 employees will be added,
bringing the total at the Beech Bottom plant to more than 105.
"The second paint line will allow Wheeling Corrugating to paint
all its steel inhouse and provide the company with painting
capacity for future expansion," said James E. Muldoon, President
of Wheeling Corrugating Company. "This added paint line improves
our competitiveness today and is an important element of our
strategic plan for growth."
The $400,000 grant from the state of West Virginia is being held
in an escrow account as security for the non-guaranteed portion
of a $2 million loan for the completion of the paint line. A $7
million financing package needed to complete the paint line was
approved by the bankruptcy court in October.
JD&E, the prime contractor for the project when it was halted,
will continue as the prime contractor. In addition, ERB
Electric and H E Neumann will return to the project to complete
the electrical and mechanical portions of the project. In
addition, ironworkers from Wheeling-Pittsburgh Steel's
Steubenville Complex will take part in finishing the project.
The company currently operates one paint line at its Beech
Bottom facility. Once the second paint line is operational, the
plant will be able to produce painted steel coils for all
Wheeling-Pittsburgh Steel's Wheeling Corrugating Company
Division facilities throughout the United States. In addition
to the paint lines, Beech Bottom fabricates steel decking used
in the construction industry.
Wheeling Corrugating is a leading manufacturer of steel roofing
and siding for residential, light commercial and agricultural
markets. In addition, it is a major producer of steel decking
for the construction, highway and bridge building markets and is
a key supplier of steel sheet and slit coil products to the
culvert and HVAC markets.
YORK POWER: S&P Drops $150M Bonds to D After Missed Payment
-----------------------------------------------------------
Standard & Poor's lowered its rating on York Power Funding
(Cayman) Ltd.'s $150 million senior secured bonds due 2007 to
'D'.
The action follows Tuesday's failure by the project to make a
$10.3 million payment due October 30, 2001, citing a lack of
funds. The project has until November 9 to make the payment to
avoid an event of default under the bond indenture, which will
give bondholders the right to accelerate the bonds.
Standard & Poor's, however, has no information about whether
this payment will be forthcoming. Also supporting the action is
yesterday's disclosure by the project sponsor, York Research
Corp., that it took $17.5 million in cash flow from the largest
project over the past 18 months for its corporate purposes, a
material violation of the project bond indenture.
York Power Funding--a funding vehicle for York Research--issued
bonds to fund construction of two now-completed projects in
Trinidad & Tobago (foreign currency rating triple-'B'-
minus/Stable/'A-3') and in Texas, and to refinance two operating
projects in New York City, as well as for undefined corporate-
level project development activity for York Research. Bond debt
service was being paid with cash flows from the InnCOGEN project
in Trinidad & Tobago, the Big Spring wind project in Texas, and
the Warbasse plant in Brooklyn, N.Y., and with distributions
from Brooklyn Navy Yard Cogeneration Partners, L.P. (triple-'B'-
minus/Stable/--).
The collateral package available to lenders includes all of the
plants, but creditors could be challenged to realize all of the
security interest in the main asset, InnCOGEN, given the complex
offshore ownership structure.
The default further increases the risk of a York Research
bankruptcy event, which could have additional adverse effects on
the project bonds, given that Standard & Poor's has always held
that the project was not fully bankruptcy remote from York
Research. Last year, Standard & Poor's placed the credit rating
of York Power Funding (Cayman) on CreditWatch Negative,
following the possibility of a York Research bankruptcy event
following the February 2000 bankruptcy filing of York Research's
wholly owned natural gas marketing subsidiary, North American
Energy Conservation (NAEC) Inc.
Standard & Poor's has linked the rating on the bonds to York
Research's overall creditworthiness because York Power Funding
and its four projects are not fully structurally separate from
York Research, and because York Research owns 100% of the
entities' flowing equity from the four projects, and is
operating and maintaining two of the projects. York Research's
increased financial risk exposure stems from the guarantee
obligations that it has extended to NAEC.
In January 2001, York Research reached a settlement with NAEC
creditors that required York Research to establish a trust fund
by May 1, 2001, which was to include at least $13 million in
cash, plus common stock, warrants and other items. York Research
was and remains unable to meet this obligation. York Research
has been in various discussions to sell some of its assets to
meet its obligations, and most recently entered into an
agreement with a subsidiary of NRG to sell its interests in the
InnCOGEN plant in Trinidad & Tobago for $140 million.
*********
Bond pricing, appearing in each Monday's edition of the TCR, is
provided by DLS Capital Partners in Dallas, Texas.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Ronald P. Villavelez and Peter A. Chapman, Editors.
Copyright 2001. All rights reserved. ISSN: 1520-9474.
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