/raid1/www/Hosts/bankrupt/TCR_Public/011211.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, December 11, 2001, Vol. 5, No. 241
Headlines
ABC-NACO INC: Selling Operating Assets to TCF Railco for $75MM
AMC ENTERTAINMENT: Inks Pact to Acquire GC Companies Business
ANC RENTAL: U.S. Trustee Appoints Unsecured Creditors' Committee
ADELPHIA BUSINESS: Myron Kaplan Discloses 11.9% Equity Interest
ALGOMA STEEL: Noteholder Group Rebuffs Restructuring Plan
ALGOMA STEEL: Continues Restructuring Talks with Noteholders
AMES DEPT: Analysts Say that Total Sales Plummeted More Than 36%
ARDENTS: Sells DSL Assets to Network Access for $2MM + Debts
ASSISTED LIVING: Delaware Court Confirms Plan of Reorganization
BETHLEHEM STEEL: Panel Brings In McDonald Investments as Bankers
BURLINGTON INDUSTRIES: Taps Sitrick as Corporate PR Consultants
CHARLES SCHWAB: Will Close Brokerage Units in Australia & Japan
CHIQUITA BRANDS: Wants to Continue Financing Insurance Premiums
COLUMBIA LABS: Selling Shares to Acqua Wellington for $1 Million
COMDISCO: Leasing Business Sale Hearing Adjourned to Dec. 20
COOKER RESTAURANT: Red Ink Continues to Flow in Third Quarter
E-SIM LTD: Falls Short of Nasdaq's Equity Listing Requirement
ENRON CORP: Seeks Okay to Pay $48MM of Critical Vendor Claims
EXODUS COMMS: Wants Approval of Amended DIP Financing Facility
FEDERAL-MOGUL: Engages W.Y. Campbell as Divestiture Advisors
GC COMPANIES: Creditors Back Sale of Assets to AMC Entertainment
INNOVATIVE CLINICAL: Will Swap Shares with CNS Under Merger Pact
JORDAN INDUSTRIES: Moody's Junks Ratings on Weakening Financials
KB HOME: Fitch Rates $200 Million Debt Issue Due 2008 at BB-
KEYSTONE CONSOLIDATED: Noteholders Defer Rights Until Dec. 31
LTV CORP: Gets Backing for Asset Protection Plan Implementation
LERNOUT & HAUSPIE: Inks Definite Deal to Sell Assets to Scansoft
MCLEODUSA: Begins Consent Solicitation for Recapitalization Deal
MATSUSHITA ELECTRIC: Closes Fax Machine Units in UK & Singapore
METALS USA: Recommences Trading on OTC Bulletin Board
NATURAL SPRINGS: Defaults on Debts Owed to Reesor Martin
NEON COMMUNICATIONS: Retains Credit Suisse as Financial Advisor
OMNISKY: EarthLink Plans to Acquire Subscriber Base & Key Assets
ORIUS CORP: Fitch Junks Senior Sub Notes On Deteriorating EBITDA
PACIFIC GAS: Commits to Meet Obligations to Government Entities
PACIFIC GAS: Says Exit Plan Requires No Rate Increase or Bailout
PHASE2MEDIA: Has Until February 28 to File Reorganization Plan
POLAROID CORP: Wants Lease Decision Period Extended to March 11
PRIMIX SOLUTIONS: Fails to Meet Nasdaq Equity Requirement
PRINTING ARTS: Wants More Time to File Schedules and Statements
PSINET INC: Sells Japanese Operations to C&W Unit for $10.2MM
RADIO UNICA: Moody's Further Junks Senior Unsecured Debt Rating
SAFETY-KLEEN: Gets Okay to Hire Gary Cary as Title VI Counsel
SIMPLIFIED EMPLOYMENT: Gets Restraining Order vs. 2 Ex-Employees
STEEL HEDDLE: Wants Removal Period Extended Until February 25
SUN HEALTHCARE: Intends to Acquire 2 Atlantic Nursing Facilities
TRANSTECHNOLOGY: Completes Sale of Engineered Components Assets
USG CORP: Seeks Approval to Optimize Belgian Corporate Structure
VANGUARD AIRLINES: Applies for $60MM In Federal Loan Guarantees
*********
ABC-NACO INC: Selling Operating Assets to TCF Railco for $75MM
--------------------------------------------------------------
ABC-NACO Inc., announced that it has agreed to sell all of its
operating assets to TCF Railco Acquisition Corp., for $75
million (subject to certain adjustments and assumption of
certain liabilities.) The assets sold include all of the United
States operating assets of the Company's Rail Products, Track
Products and Rail Services units together with the stock of the
company's subsidiaries in Europe and its joint ventures in
China. The Canadian and Mexican subsidiaries in the Rail
Products Group were not included in this sale.
The Asset Purchase Agreement was executed with TCF in accordance
with the court-authorized sales process and is subject to a
confirmation hearing on Dec. 11, 2001 by the U.S. Bankruptcy
Court for the Northern District of Illinois. In addition, the
sale is subject to review under the Hart-Scott-Rodino Antitrust
Improvements Act. The parties intend to close the sale as soon
as possible after the necessary approvals have been received
Vaughn W. Makary, President and Chief Executive Officer of ABC-
NACO, said, "Upon completion of this sales process, ABC-NACO
concluded that the TCF offer was the highest or otherwise best
submitted during the bidding and sale process. We look forward
to quickly closing the transaction in order to ensure a smooth
transition to the new ownership. We believe TCF will bring
financial stability to the Company allowing it to continue to
provide outstanding products and services to the worldwide rail
industry."
TCF is owned by Three Cities Funds III, L.P. and affiliates. The
Three Cities Funds are primarily engaged in making control
investments in medium-sized companies, where its investment can
lead to a meaningful, positive influence on the future direction
of the enterprise.
Willem de Vogel, a Partner of the Three Cities Funds stated, "We
are very excited about our new partnership with ABC-NACO. It
offers very attractive products and services to the rail
industry. We plan to provide financial and other resources to
implement the company's objectives and meet its long-term
strategic goals."
As previously announced on October 18, 2001, ABC-NACO and its
U.S. subsidiaries voluntarily filed for reorganization under
Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy
Court for the Northern District of Illinois. The cases have been
assigned to the Honorable Judge Eugene R. Wedoff and are being
jointly administered under the Case No. 01 B 36484 for ABC-NACO
Inc.
The Company is one of the world's leading suppliers of
technologically advanced products to the rail industry. The
company holds pre-eminent market positions in the design,
engineering and manufacture of high-performance freight car,
locomotive and passenger suspension and coupling systems, wheels
and mounted wheel sets. The company also supplies railroad and
transit infrastructure products and services and technology-
driven specialty track products.
AMC ENTERTAINMENT: Inks Pact to Acquire GC Companies Business
-------------------------------------------------------------
AMC Entertainment Inc. (AMEX:AEN) announced that it has signed a
letter of intent to acquire GC Companies, Inc., and its
subsidiaries pursuant to a plan of reorganization to be filed
with the Bankruptcy Court in GC Companies' case under Chapter 11
of the U.S. Bankruptcy Code.
Key creditors in the GC Companies' Chapter 11 case have executed
support agreements in which they have agreed to support AMC's
bid and the plan of reorganization.
Under the letter of intent, AMC would pay creditors of GC
Companies and subsidiaries consideration with an estimated value
between $175 million and $195 million consisting of cash, AMC
subordinated notes and AMC common stock. The types and amounts
of consideration paid under the plan of reorganization will
depend upon the Bankruptcy Court's final determination of
allowed claim amounts and upon the elections of certain
creditors between types and amounts of consideration available
to those creditors. As a result of the issuance of AMC's common
stock, this transaction will not materially change AMC's credit
profile. AMC's common stock, notes and cash will not be issued
to creditors until the Bankruptcy Court has confirmed a plan of
reorganization and the effective date of the plan occurs.
AMC's commitment is subject to regulatory approvals, resolution
of claims of lenders of certain subsidiaries, Bankruptcy Court
approval and other conditions. The letter of intent contemplates
that the Bankruptcy Court will confirm the plan of
reorganization by March 20, 2002.
GC Companies currently operates 73 theatres with 677 screens in
the United States and has a 50% interest in a joint venture that
operates 17 theatres with 160 screens in South America. Post
bankruptcy, the United States totals for GC Companies are
expected to be 66 theatres with 621 screens.
"The acquisition of the General Cinema circuit, if approved by
the Bankruptcy Court, would expand AMC's presence in important
major markets, particularly in the Northeast and upper Midwest,"
said AMC Chairman and CEO Peter Brown. "It would also be a great
cultural fit. Like AMC, GC is a company with a rich, 80-year
history of innovation and leadership in theatrical exhibition."
AMC Entertainment Inc. is a leader in the theatrical exhibition
industry. Through its circuit of AMC Theatres, the Company
operates 177 theatres with 2,836 screens in the United States,
Canada, France, Hong Kong, Japan, Portugal, Spain and Sweden.
Its common stock trades on the American Stock Exchange under the
symbol AEN. The Company, headquartered in Kansas City, MO, has a
web site at http://www.amctheatres.com
* * *
As reported in the Troubled Company Reporter (October 9
Edition), Standard & Poor's raised its ratings on AMC
Entertainment Inc. and removed them from CreditWatch where they
were placed with positive implications on June 8, 2001. The
rating actions are based on Standard & Poor's view that AMC's
financial condition and earnings prospects are now on a more
stable footing.
The ratings raised are:
To From
Corporate credit rating B- CCC+
Subordinated debt B- CCC-
According to the report, the ratings reflected AMC's modern
theater circuit and the improved financial flexibility resulting
from the preferred stock issued earlier this year. Ratings also
incorporated the company's still aggressive financial profile
and the weak, but stabilizing, industry operating environment.
ANC RENTAL: U.S. Trustee Appoints Unsecured Creditors' Committee
----------------------------------------------------------------
Pursuant to 11 U.S.C. Sec. 1102, the United States Trustee
appoints these seven creditors to serve on the Official
Committee of Unsecured Creditors of ANC Rental Corporation:
A. Westdeutsche Landesbank Girozentrale New York Branch,
Attn: Thomas D. McCaffery III and Sean Tully
1211 Avenue of the Americas, New York, NY 10036
Phone:(212) 852-6196 Fax: (212) 768-4781
B. Auto Nation, Inc.
Attn: Coleman Edmunds
110 S.E. 6th street. Ft. Lauderdale, FL 333301
Phone:(954) 769-2039 Fax: (954) 769-6527
C. General Motors Corporation
Attn: Robert Weiss
767 Fifth Avenue New York, NY, 10153
Phone: (212) 418-6165 Fax: (212) 418-3523
D. Walt Disney World Co. & American Broadcasting Co.
Attn: Alec M. Lipkind
500 Park Avenue, Suite 500, New York, NY
Phone: (212) 735-5065 Fax: (212) 735-5066
E. Perot Systems Corporation
Attn: David McGanity
P.O. Box 269005, Plano, TX 75026-9005
Phone: (972) 340-5000 Fax: (972) 340-6085
F. Gerrit Dieperink, individually and as Personal
Representative of the Estate of Tosca Dieperink,
c/o Hillencamp & Alverez, P.A.
Attn: Alex Alvarez, Esq.
2937 SW 2th, suite #100-A, Miami, FL 33133
Phone: (305) 444-7675 Fax: (305) 444-0075
G. Sabre Inc.
Attn: Patrick J. Moynihan
4200 Buckingham Boulevard, MD 1434, Fort Worth, TX
76155
Phone:(817)963-9428 Fax: (817) 931-3258
(ANC Rental Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ADELPHIA BUSINESS: Myron Kaplan Discloses 11.9% Equity Interest
---------------------------------------------------------------
Mr. Myron M. Kaplan, a private investor, beneficially owns 11.9%
of the outstanding common stock of Adelphia Business Solutions
Inc. He holds 5,696,100 shares of the Company's common stock
with sole voting and dispositive powers over such stock.
Adelphia Business Solutions (ABIZ) wants to solve
telecommunications problems. The company (formerly Hyperion
Telecommunications) is building a fiber-optic network to provide
integrated communications services to businesses, institutions,
and other telecom service providers. The company offers local
and long-distance phone service, broadband Internet access, and
data networking services. As a result of the economic downturn
that hit the telecom industry, ABIZ has cut back on its plan to
expand nationally. It reduced its workforce by 8% and sold
assets in four states to its parent company, Adelphia
Communications, which has announced plans to spin off the 79%-
owned subsidiary to Adelphia shareholders.
In November, Standard & Poor's lowered its ratings on Adelphia
Business Solutions Inc. (ABIZ), namely:
To From
Corporate credit rating CCC+ BB-
Senior secured debt CCC+ BB-
Senior unsecured debt CCC- B+
Subordinated debt CCC- B
Preferred stock CC B-
ALGOMA STEEL: Noteholder Group Rebuffs Restructuring Plan
---------------------------------------------------------
In a vote announced by the Court-appointed Monitor, the New
York-based Noteholder Group has rejected the restructuring plan
proposed by Algoma Steel Inc., as the basis for the company's
emergence from protection under the Company Creditors
Arrangement Act (CCAA).
Notwithstanding the evident failure of this phase of the CCAA
process, Algoma Steel continues to operate under CCAA
protection. The United Steelworkers is involved in active
discussions with the syndicate of senior lenders, led by Bank of
America, and other stakeholders. The United Steelworkers will
continue to work with the banking syndicate to preserve the
value of the business and its assets.
"The goal is to ensure Algoma Steel continues to play its role
as the economic hub of Sault Ste. Marie, and support 4,000
employees, 12,000 pensioners and survivors, and their families,"
said Steelworkers' Ontario/Atlantic Director Harry Hynd.
* * *
DebtTraders reports that Algoma Steel's 12.375% bond due in 2005
(ALGOMA) trades between 24 and 26. For real-time bond pricing,
see http://www.debttraders.com/price.cfm?dt_sec_ticker=ALGOMA
ALGOMA STEEL: Continues Restructuring Talks with Noteholders
------------------------------------------------------------
Algoma Steel Inc. (TSE:ALG.) announced the results of the votes
of the creditors on its Plan of Arrangement.
The Plan was overwhelmingly approved by four of its five
creditor classes. The two classes of pension creditors, the
unsecured creditors and the City of Sault Ste. Marie all
approved the Plan. The Noteholders voted against the Plan and
then their meeting was adjourned to December 10, 2001 to permit
further discussions.
Hap Stephen, Algoma's Chief Restructuring Officer, said the
Company will continue discussions with the Noteholders and other
key stakeholders over the weekend to resolve the differences so
that the restructuring can proceed. The Company returned to
Court on December 10, 2001 to report on the progress of the
discussions and to seek directions on the ongoing proceedings.
Algoma Steel Inc., based in Sault Ste. Marie, Ontario, is
Canada's third largest integrated steel producer. Revenues are
derived primarily from the manufacture and sale of rolled steel
products, including hot and cold rolled sheet and plate.
AMES DEPT: Analysts Say that Total Sales Plummeted More Than 36%
----------------------------------------------------------------
According to F&D Reports, Ames Department Stores, Rocky Hill, CT
will padlock its distribution center in Columbus, OH while 16 of
the stores (including all 10 in the Chicago, IL area) serviced
by the facility are headed for closure. According to the
Company, the report says, supply of the DC's remaining stores
will be shifted to its facility in Leesport, PA.
In other news, although Ames did not publicly release results
for the month of October, F&D Reports analysts have determined
that total sales fell more than 36% to $211.8 million,
reflecting the closure of 76 stores. Meanwhile, availability
under its $755.0 million DIP facility stood at $141.7 million
on November 20. Based on current sales and inventory
projections, the Company expects that availability will continue
to rise and that it will remain in compliance with all covenant
requirements.
ARDENTS: Sells DSL Assets to Network Access for $2MM + Debts
------------------------------------------------------------
On November 19, 2001, Ardent Communications, Inc. and its wholly
owned subsidiary Ardent, Inc., sold substantially all of the
assets comprising the Company's digital subscriber line business
to Network Access Solutions Corporation. The sale of the DSL
assets was effectuated pursuant to an order of the United States
Bankruptcy Court for the District of Columbia, which currently
has jurisdiction over the voluntary Chapter 11 case commenced by
the Company on October 10, 2001.
The sale of the DSL assets was made in accordance with the Asset
Purchase Agreement between the Company and the Buyer dated
October 25, 2001. Pursuant to the Agreement, upon the closing
of the sale transaction the Buyer paid total cash consideration
to the Company of approximately $2,000,000 and assumed certain
liabilities of the Company in the aggregate amount of
$4,700,000.
ASSISTED LIVING: Delaware Court Confirms Plan of Reorganization
---------------------------------------------------------------
Assisted Living Concepts, Inc. (OTCBB:ALFC), a national provider
of assisted living services, announced the confirmation of its
First Amended Joint Plan of Reorganization by the United States
Bankruptcy Court for the District of Delaware in Wilmington.
On October 1, 2001, Assisted Living Concepts, Inc., and its
wholly-owned subsidiary, Carriage House Assisted Living, Inc.,
filed voluntary petitions under Chapter 11 of the U.S.
Bankruptcy Code in the United States Bankruptcy Court for the
District of Delaware in Wilmington.
On December 5, 2001, the Court held a hearing and confirmed the
Debtors First Amended Joint Plan of Reorganization of the
Company and Carriage House Dated as of October 30, 2001.
Pursuant to the terms of the Plan, on the date the Company
emerges from bankruptcy proceedings (which is expected to be
January 1, 2002, the "Effective Date"):
(1) the Company's two series of convertible subordinated
debentures and certain other unsecured debt of the Company will
be exchanged for (a) $40.25 million aggregate principal amount
of seven-year secured notes, bearing interest at 10% per annum,
payable semi-annually in arrears, (b) $15.25 million aggregate
principal amount of ten-year secured notes, bearing interest
payable in additional New Junior Secured Notes for three years
at 8% per annum and thereafter payable in cash at 12% per annum
payable semi-annually in arrears, and 96% of the new common
stock of the reorganized Company; and
(2) existing holders of the Company's common stock will
exchange their pre-Effective Date common stock for 4% of the new
common stock of the reorganized Company. The date of record for
existing Debenture and common stock holders is December 20,
2001. Notwithstanding the above, there is no guarantee that the
Company will succeed in emerging from bankruptcy on January 1,
2002.
As previously announced, the Company and Carriage House entered
into a debtor-in-possession line of credit facility with Heller
Healthcare Finance, Inc., in the approximate principal amount of
up to $4.4 million to supplement the Company and Carriage
House's cash position in order to ensure that all on-going
working capital needs were met. Concurrent with the closing of
the DIP Facility, certain wholly-owned subsidiaries of the
Company entered into an amendment of the existing Heller
facility which the Company guaranteed, extending the maturity
date of the Existing Facility to be coterminous with the DIP
Facility, among other things. Pursuant to the Plan, the DIP
Facility will be refinanced through an amendment of the Existing
Facility in connection with the exit from bankruptcy. The
principal amount of the Exit Facility will not exceed $44.0
million and will mature 36 months from the date on which the
Company exits from bankruptcy. Principal will be payable monthly
in a monthly amount of $50,000 during the first year, $65,000
during the second year and $80,000 during the last year of the
Exit Facility term. Interest will accrue on a floating basis at
a rate equal to the 90-Day LIBOR rate plus 4.5% adjusted monthly
(with the rate not to be less than 8%), and payable monthly in
arrears. The Company will remain liable for the entire amount of
the Exit Facility as a guarantor.
As previously announced, on October 26, 2001, the Company's
common stock and Debentures were delisted and ceased trading on
the American Stock Exchange. The Company's common stock is
currently listed and traded on the over-the-counter bulletin
board and the Company will seek to have its new common stock
quoted there as well. Historically, the bulletin board has been
a less developed market providing lower trading volume than the
national securities exchanges and NASDAQ. However, there is no
guarantee that the Company will succeed in having its new common
stock quoted on the bulletin board.
BETHLEHEM STEEL: Panel Brings In McDonald Investments as Bankers
----------------------------------------------------------------
The Official Committee of Unsecured Creditors of Bethlehem Steel
Corporation, and its debtor-affiliates, needs an investment
banker and restructuring advisor to perform specified services
in connection with these chapter 11 cases. Catherine Krug of
National City Bank, speaking in behalf of the Committee, tells
the Court that the services of an investment banker and
restructuring advisor are necessary and appropriate to enable it
to evaluate the complex financial and economic issues raised by
the Debtors' reorganization proceedings and to effectively
fulfill its statutory duties.
McDonald Investments, Inc. is the Committee's choice because it
is a nationally recognized investment bank and financial
advisor, and has significant qualifications and experience in
all of the areas in which it will provide services to the
Committee, Ms. Krug explains. In addition, Ms. Krug advises the
Court, McDonald has been involved in many large and complex
restructurings and chapter 11 cases.
The Committee desires to retain McDonald, effective as of
November 1, 2001, to assist, advise and represent the Committee
in connection with these matters:
(a) Familiarizing itself with, to the extent it deems
necessary, and analyzing, to the extent requested by the
Committee, the Debtors' business, operations, financial
condition and prospects;
(b) Advising the Committee on potential values of the
Debtors and/or any of their divisions or subsidiaries on
a going concern and a liquidation basis;
(c) Advising and assisting the Committee in formulating,
evaluating and developing any proposed plans of
reorganization and the financial aspects of any
securities or other consideration or inducements to be
provided under the terms thereof, and assisting the
Committee in negotiating and documenting the financial
aspects of any such plans of reorganization;
(d) Advising and assisting the Committee in evaluating the
various structures and forms of any sale or
restructuring transactions, assisting in or, as
appropriate, undertaking the solicitation and evaluation
of offers and assisting the Committee in negotiating and
documenting the financial aspects of any and all
proposed and potential transactions;
(e) Attending and providing advice at meetings of the
Committee;
(f) If appropriate, participate in hearings before the
bankruptcy court having jurisdiction over the Debtors'
bankruptcy cases with respect to matters as to which
McDonald has provided advice; and
(g) Providing the Committee with other appropriate general
investment banking services with respect to the Debtors.
Ms. Krug informs Judge Lifland that McDonald will coordinate any
services it performs with the services rendered by KPMG -- the
Committee's proposed accountants and financial advisors -- or
any other investment bankers, restructuring or other financial
advisors or counsel, as appropriate, to ensure that such
services are not duplicative.
David M. Powlen, Managing Director and Co-Manager of the
Restructuring Group of McDonald Investments Inc., advises the
Court that McDonald will seek a fee equal to $150,000 per month
in arrears for the term of McDonald's engagement commencing in
the month of November 2001. After the first 6 months of its
engagement, Mr. Powlen relates, McDonald will review with the
Committee the commitment of time and professional resources
involved in the performance of its services to the Committee.
If the amount of the commitment required of McDonald will be
significantly less than was the case in the first 6 months, Mr.
Powlen says, McDonald will negotiate with the Committee in good
faith concerning modification of the fee arrangements specified
herein with respect to future months. Also, Mr. Powlen adds,
McDonald will request monthly reimbursement of all of its
reasonable out-of-pocket expenses.
McDonald may resign at any time and the Committee alone may
terminate McDonald's services at any time, each upon 30 days'
prior written notice to the other. McDonald's indemnification
rights shall survive any such termination and McDonald shall be
entitled to the payment of its reasonable out-of-pocket expenses
earned up to the time of termination.
"To the best of my knowledge, information and belief, McDonald
does not hold or represent an interest that is materially
adverse to the Debtors' estates, or any class of creditors or
equity security holders, in the matters for which McDonald is
proposed to be retained on behalf of the Committee," Mr. Powlen
affirms. Thus, Mr. Powlen assures the Court, McDonald is a
"disinterested person" as defined in Section 101(14) of the
Bankruptcy Code.
Accordingly, the Committee asks Judge Lifland to authorize
(i) the Committee's retention of McDonald as its financial
advisor effective as of November 1, 2001, and (ii) the payment
and reimbursement of McDonald's fees and disbursements, subject
to the jurisdiction and approval of the Court. (Bethlehem
Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
BURLINGTON INDUSTRIES: Taps Sitrick as Corporate PR Consultants
---------------------------------------------------------------
Burlington Industries, Inc., and its debtor-affiliates seek the
Court's authority to retain and employ Sitrick and Company,
Inc., as their corporate communications consultants in these
chapter 11 cases, nunc pro tunc to the Petition Date.
John D. Englar, Burlington's Senior Vice President for Corporate
Development and Law, tells the Court that Sitrick is well suited
to serve as the Debtors' corporate communications consultants
because the firm specializes in addressing sensitive business
situations that require communications strategies targeted to a
variety of constituencies. Mr. Englar also notes that Sitrick
has substantial experience providing corporate communications
services to large corporations in connection with both in and
out-of-court restructurings. Sitrick has served as lead
corporate communications consultant in numerous cases under the
Bankruptcy Code, Mr. Englar continues. To name a few, Mr.
Englar cites, USG Corporation, America West Airlines, Brazos
Sportswear, Inc. Bumble Bee Seafoods, Inc., Eddie Haggar
Limited, Inc., Fine Host Corporation, and many more.
On top of that, Mr. Englar informs Judge Walsh, Sitrick is also
familiar with the Debtors' current corporate communications
needs because Sitrick assisted in the development and
implementation of a comprehensive communications strategy
designed to facilitate the smooth transition of the Debtors'
operations into chapter 11. "Sitrick's professionals have
worked closely with the Debtors' management, internal
communications staff and other professionals -- thus becoming
well acquainted with the Debtors' corporate communications
needs," Mr. Englar adds.
The Debtors will look to Sitrick to render these corporate
communications consulting and related services:
(a) develop and implement communications programs and related
strategies and initiatives for communications with the
Debtors' key constituencies (including customers,
employees, vendors, shareholders, bondholders, and the
media) regarding the Debtors' operations and financial
performance and the Debtor's progress through the chapter
11 process;
(b) develop public relations initiatives for the Debtors to
maintain public confidence and internal morale during
these chapter 11 cases;
(c) prepare press releases and other public statements for the
Debtors, including statements relating to major chapter 11
events;
(d) prepare other forms of communication to the Debtors' key
constituencies and the media, potentially including
materials to be posted on the Debtors' web sites; and
(e) perform such other communications consulting services as
may be requested by the Debtors.
The Debtors and Sitrick have crafted an Engagement Letter,
pursuant to which Sitrick intends to:
(1) charge for its professional services on an hourly basis in
accordance with its ordinary and customary hourly rates in
effect on the date services are rendered; and
(2) seek reimbursement of actual and necessary out-of-pocket
expenses.
As of May 2001, Sitrick and Company's hourly rates are:
Professional Hourly Rate
------------ -----------
Michael Sitrick $575
Ann Julsen 420
Jeff Lloyd 420
Brenda Adrian 285
Anita Marie Hill 265
Peter Demarco 245
Terry Fahn 195
Maya Pagoda 185
Joe Bunning 155
Nancy Peck 150
Romelia Martinez 150
Sheri Sitrick 150
Nanette Cunningham 40
(contract paralegal)
According to Mr. Englar, Sitrick will maintain detailed,
contemporaneous records of time and any actual and necessary
expenses incurred in connection with the rendering of the
corporate communications consulting services and the nature of
the services rendered.
Moreover, Mr. Englar relates, the Engagement Letter provides
that the Debtors will indemnify Sitrick and its shareholders,
officers, directors, employees and agents under certain
circumstances. In particular, Mr. Englar states, the Engagement
Letter provides that the Indemnified Parties are entitled to be
indemnified by the Debtors for any losses, claims, damages,
liabilities, costs and expenses (including reasonable attorneys'
fees) incurred in connection with the services to be rendered by
Sitrick to the Debtors, unless such amounts are judicially
determined to have resulted from Sitrick's or such other
Indemnified Parties' gross negligence or willful misconduct.
At any time on 30 days prior written notice, the Debtors or
Sitrick may terminate the Engagement Letter and the Debtors'
retention of Sitrick.
Mr. Englar makes it clear that all of Sitrick's fees and
expenses in these cases will be subject to approval of the Court
upon proper application by Sitrick in accordance with section
330 and 331 of the Bankruptcy Code, Bankruptcy Rule 2016, the
fee and expense guidelines established by the United States
Trustee and any other applicable requirements.
Prior to the Petition Date, Mr. Englar informs Judge Walsh, the
Debtors paid $90,000 to Sitrick as a retainer for services
rendered or to be rendered by Sitrick. Last November 1, 2001,
the Debtors paid $10,000 to Sitrick as payment for, among other
things, estimated fees, production costs, travel expenses and
shipping charges through the Petition Date. Two weeks later,
Sitrick applied $73,923 of the Retainer and all of the
Additional Payment. At the same time, the Debtors paid $91,475
to Sitrick as an additional Retainer. As of the Petition Date,
Mr. Englar says, all of the Additional Retainer remain
unapplied.
Michael S. Sitrick, Chairman and Chief Executive Officer of
Sitrick and Company, discloses that:
(1) Sitrick is not employed by, and has not been employed by,
any other entity other than the Debtors in matters related
to these chapter 11 cases.
(2) Prior to the Petition Date, Sitrick performed certain
professional services for the Debtors but the Debtors do
not owe Sitrick any amount for services performed prior to
the Petition Date.
(3) From time to time, Sitrick has provided services, and
likely will continue to provide services, to certain
creditors of the Debtors and various other parties adverse
to the Debtors in matters unrelated to these Chapter 11
cases. Sitrick has undertaken a detailed search to
determine, and to disclose, whether it is providing or has
provided services to any significant creditors, equity
security holders, insiders or other parties-in-interest in
such unrelated matters.
(4) Sitrick provides services in connection with numerous
cases, proceedings and transactions unrelated to these
chapter 11 cases. These unrelated matters involve
numerous attorneys, financial advisors and creditors, some
of which may be claimants or parties with actual or
potential interests in these cases or may represent such
parties.
(5) Sitrick personnel may have business associations with
certain creditors of the Debtors unrelated to these
chapter 11 cases. In addition, Sitrick may engage counsel
or other professionals in unrelated matters who now
represent, or who may in the future represent, creditors
or other interested parties in these cases.
(6) Sitrick has approximately 60 employees. It is possible
that certain employees of Sitrick hold securities of the
Debtors or interests in mutual funds or other investment
vehicles that may own the Debtors' securities.
Mr. Sitrick informs Judge Walsh that despite the efforts to
identify and disclose the firm's connections with parties-in-
interest in these cases, Sitrick is unable to state with
certainty that every client relationship has been disclosed
considering that the Debtors are a large enterprise with
thousands of creditors and parties-in-interest. In this regard,
Mr. Sitrick promises to file a supplemental disclosure with the
Court.
"To the best of my knowledge, information and belief, insofar as
I have been able to ascertain after reasonable inquiry, neither
I nor Sitrick, nor any officer or employee, holds or represents
any interest adverse to the Debtors or their respective estates
in the matters for which Sitrick is proposed to be retained,"
Mr. Sitrick assures Judge Walsh. Mr. Sitrick contends that the
firm is a "disinterested person" as defined in section 101(14)
of the Bankruptcy Code and as required by section 327(a) of the
Bankruptcy Code. (Burlington Bankruptcy News, Issue No. 3;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
CHARLES SCHWAB: Will Close Brokerage Units in Australia & Japan
---------------------------------------------------------------
The Charles Schwab Corporation announced it will close its
brokerage operations in Australia and Japan, citing weak market
conditions and slower than expected progress in meeting
financial objectives. Both affiliates, Charles Schwab Australia
and Charles Schwab Tokio Marine Securities Co., Ltd., expect to
discontinue operations by the end of January. The Company
expects to recognize pre-tax charges totaling approximately $35
million in the fourth quarter to reflect its international
restructuring initiatives. These charges are in addition to
those included in the Company's previously announced
restructuring plan.
"It's disappointing to be closing the businesses in Australia
and Japan at such an early stage. Although we succeeded in
establishing our presence in two highly competitive markets in a
short period of time, we have seen a significant downturn in
market activity and a corresponding drop in investor confidence
since launching these businesses," said Bill Atwell, Executive
Vice President, Schwab International.
"We have done everything possible to cope with economic
realities, but it seems that a meaningful turnaround in
international markets will take much longer than previously
thought. In light of these factors, we made the decision to
concentrate our efforts on those markets that we believe are
more promising," Atwell added.
Following the closure of its affiliates in Australia and Japan,
Schwab's international presence includes wholly owned
subsidiaries in Canada, the United Kingdom, Hong Kong, the
Cayman Islands, and a representative office in Brazil. The
company also serves clients in Latin America through its Latin
America Center based in Miami, as well as Asian-American clients
through a combination of dedicated offices and telephonic
services. In each of these countries or regions, demand for U.S.
dollar investments and Schwab-style services continues.
Charles Schwab Australia will continue to offer services and
share trading until January 11 and has reached an agreement to
transfer client accounts to TD Waterhouse Investor Services.
Charles Schwab Tokio Marine Securities Co., Ltd. will offer
services and share trading until mid-January and is recommending
that clients transfer their equity account holdings to DLJdirect
SFG Securities. Clients may also visit the web sites
http://www.schwab.com.auand http://www.schwabtokiomarine.co.jp
for further details.
The Charles Schwab Corporation (NYSE:SCH), through Charles
Schwab & Co., Inc. (member SIPC/NYSE), U.S. Trust Corporation,
CyberTrader, Inc. and its other operating subsidiaries, is one
of the nation's largest financial services firms serving
investors through offices, regional client telephone service
centers and automated telephonic and online channels. The
Charles Schwab, U.S. Trust and CyberTrader Web sites can be
reached at http://www.schwab.com http://www.ustrust.com and
http://www.cybertrader.com respectively.
* * *
In August, Fitch lowered the individual rating of Charles Schwab
to 'B/C' from 'B' reflecting the company's recent financial
performance, which has been challenged by the current downturn
in the capital markets. Schwab's revenues, Fitch said, are
highly dependent upon the volume and level of equity trading and
have compressed significantly, due to declines in customer
flows. Year-to-date, Schwab's asset management revenues,
generated from sizeable money market balances and mutual fund
transaction fees remain stable. Fitch's individual rating is an
indicator of a company's business and financial profile absent
any external support. It includes an assessment of company
profitability, balance sheet integrity, franchise, management,
operating environment, and prospects.
CHIQUITA BRANDS: Wants to Continue Financing Insurance Premiums
---------------------------------------------------------------
Chiquita Brands International, Inc., and its debtor-affiliates
maintains in current effect certain insurance policies providing
coverage for, inter alia, directors and officers liability.
Type of Coverage Insurance Company Premium Term
---------------- ----------------- ------- ----
Directors & Officers Executive Risk $318,750 09/01/99 to
Liability Insurance Indemnity, Inc. 09/01/02
(Chubb Executive
Risk)
Excess Directors & Lloyd's of London $243,950 09/01/99 to
Officers' Liability 09/01/02
Insurance
Directors & Officers CNA Insurance $263,500 09/01/99 to
Excess Insurance 09/01/02
Robert W. Olson, Senior Vice President, General Counsel and
Secretary of Chiquita Brands International, tells the Court that
these Policies are essential to the preservation of the Debtor's
business, property and assets, and in many cases the coverage is
required by various regulations and laws.
Because it is not economically advantageous for the Debtor to
pay the premiums on the Policies on an annualized basis, the
Debtor finances the premiums on the Policies pursuant to a
premium financing agreement with a third-party lender.
According to Mr. Olson, the Existing Premium Financing
Agreements presently requires a total monthly premium and
interest installment of $24,970. Mr. Olson states that the
aggregate annual finance charge of the Existing Premium
Financing Agreements is $72,752 while its interest rate is
approximately 5.89%.
If the Debtor is unable to continue making payments on the
Policies, Mr. Olson explains, the lender under the Existing
Premium Financing Agreements may be permitted to terminate the
Policies to recoup its losses. "The Debtor may then be required
to obtain replacement insurance on an expedited basis, and
likely at tremendous cost to the estate," Mr. Olson anticipates.
If the Debtor is required to obtain replacement insurance and to
pay a lump sum premium for such insurance in advance, and if the
premium for such non-financed replacement insurance is the same
as for the current Policies, Mr. Olson says, this payment would
be the same or greater than what the Debtor currently pays.
"Even if the lenders under the Existing Premium Financing
Agreements were not permitted to terminate the Policies, any
interruption of payments may adversely affect the Debtor's
ability to finance premiums for future policies," Mr. Olson
asserts.
Thus, the Debtor proposes to continue to finance the premiums
for the Policies throughout this Chapter 11 case by continuing
the Existing Premium Financing Agreements in the ordinary course
of business, without the need for further authority or approval
of the Court.
"In view of the importance of maintaining the insurance coverage
with respect to its business, I believe it is in the best
interests of the Debtor's estate to authorize the Debtor to
honor its obligations under the Existing Premium Financing
Agreements," Mr. Olson informs Judge Aug. Any other alternative
would likely require considerable cash expenditures, with no
corresponding value to the Debtor, Mr. Olson anticipates.
Moreover, Anup Sathy, Esq., at Kirkland & Ellis, in Chicago,
Illinois, observes that because the Existing Premium Financing
Agreement does not expire until September 30, 2002, the Debtor
does not anticipate the need to renew or enter into new Existing
Premium Financing Agreements. Accordingly, Mr. Sathy remarks,
the Debtor will only need to continue its current insurance
coverage throughout the duration of this bankruptcy case.
In addition, the Debtor also proposes to pay any pre-petition
obligations related to the Policies or to the Existing Premium
Financing Agreements to the extent that Debtor determines in its
discretion that such payment is necessary to avoid cancellation,
default, alteration, assignment, attachment, lapse, or any form
of impairment to the coverage, benefits or proceeds provided
under the Policies. Mr. Sathy emphasizes that the Debtor seeks
this authority out of an abundance of caution, in recognition of
the critical necessity of keeping its insurance policies in
current effect, and out of concern that if the necessity for
such a payment arises in the future, the passage of time while
the Debtor seeks to obtain the Court's authority for such a
payment may have irreversible adverse consequences for the
Debtor's coverage under the Policies.
Finding the relief requested as appropriate, Judge Aug permits
the Debtor to a) honor the terms of its Existing premium
financing agreements, and (b) make such payments for pre-
petition obligations as are necessary to maintain the Policies
in current effect. (Chiquita Bankruptcy News, Issue No. 2;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
COLUMBIA LABS: Selling Shares to Acqua Wellington for $1 Million
----------------------------------------------------------------
Columbia Laboratories, Inc. is offering 377,358 shares of its
common stock directly to Acqua Wellington North American
Equities Fund, Ltd. at a price of $2.65 per share. Columbia is
selling the shares to Acqua Wellington under a stock purchase
agreement. The Company will receive gross proceeds of $1 million
before deducting expenses of the offering.
Acqua Wellington is an "underwriter" within the meaning of the
Securities Act of 1933, as amended, and any profits on the sale
of the shares of Columbia's common stock by Acqua Wellington and
any discounts, commissions or concessions received by Acqua
Wellington may be deemed to be underwriting discounts and
commissions under the Securities Act. Acqua Wellington has
informed Columbia Laboratories that it intends to use Carlin
Equities Corp. as the broker-dealer for sales of shares of
common stock on the American Stock Exchange. Carlin Equities
Corp. is an "underwriter" within the meaning of the Securities
Act.
Columbia Laboratories, Inc.'s common stock trades on the
American Stock Exchange under the symbol COB. On December 3,
2001, the reported sale price of the common stock on the AMEX
was $2.95 per share.
At the end of June, Columbia Laboratories reported an upside-
down balance sheet, with shareholders' equity deficit of about
$1.6 million.
COMDISCO: Leasing Business Sale Hearing Adjourned to Dec. 20
------------------------------------------------------------
Comdisco, Inc., and its debtor-affiliates sought and obtained
the Court's authority to modify the deadlines so that:
(a) The Sale Hearing in connection with the sale of the
Debtors' Leasing Business is rescheduled to the December
20, 2001 omnibus hearing at 10:30 a.m. (CST);
(b) The Debtors shall file Cure and Assumption Notices with
the Court and serve such Notices on the non-Debtors
parties to the Assigned Contracts no later than 5 days
prior to the Sale Hearing.
(c) The Objection Deadline shall be the earlier of:
(1) 5 days following the date the Debtors filed the
Notices; and
(2) 12 noon (CST) on the day prior to the Sale Hearing;
and
(d) The Sale Objection Deadline shall be 4:00 p.m. (CST) on
December 13, 2001.
According to Felicia Gerber Perlman, Esq., at Skadden, Arps,
Slate, Meagher & Flom, in Chicago, Illinois, the Debtors are
still evaluating the Sale of the Segments of the Leasing
Business. "The Debtors will not make a decision in connection
with the Sale of their Leasing Business until after the
conclusion of the Auction beginning November 29, 2001," Ms.
Gerber explains. Thus, Ms. Gerber notes, the Debtors need
additional time to evaluate the bids and determine whether to
sell any of the segments of the Leasing Business.
Equity Committee Reserves Its Rights
The Official Committee of Equity Security Holders reserves its
rights to object to the sale of the Leasing Business on the
grounds that it did not have enough time and information to
prepare its analysis of the value of the Leasing Business, prior
to its proposed sale.
Among other things, Carmen H. Lonstein, Esq., at Bell, Boyd &
Lloyd LLC, in Chicago, Illinois, relates that the Equity
Committee has a duty to review and assess all proposals for the
sale or other disposition of the Leasing Business. In order to
do so properly, Ms. Lonstein explains, the Equity Committee's
financial advisors must not only compare the value of all bids
received to the intrinsic value of the Leasing Business, but
must also examine the value of alternatives to a sale.
Unfortunately, Ms. Lonstein notes, the Equity Committee's
financial advisors have been severely hampered in preparing the
requisite valuation analysis because they have not received the
Debtors' projections concerning the Leasing Business' potential
future performance. "Nor has the Equity Committee received
information from the Debtors concerning the possible financial
ramifications of retaining and continuing to operate the Leasing
Business," Ms. Lonstein adds. Without these projections and
information, Ms. Lonstein tells the Court, it will be
exceedingly difficult for the Equity Committee to prepare a
meaningful valuation of the Leasing Business within the time
frames proposed in the Debtors' motion.
Ms. Lonstein observes that the Debtors have also refused to
provide any projections of future performance to interested
bidders. "This has reduced the universe of potential bidders to
strategic buyers only, who have their own plans and projections
for the Leasing Business," Ms. Lonstein notes. Also, Ms.
Lonstein says, financial buyers - who rely heavily on
projections of future performance - have been precluded from any
meaningful participation in the auction.
Nevertheless, Ms. Lonstein informs Judge Barliant that the
Equity Committee remains hopeful that it will be able to obtain
projections and other required information from the Debtors in
sufficient time to be fully prepared to respond by the current
proposed deadlines. If that doesn't materialize, Ms. Lonstein
advises the Court that the Equity Committee intends to object to
the sale of the Leasing Business going forward, until the
required information has been provided and until the Equity
Committee's professional advisors have had sufficient time to
assess that information and make relevant recommendations to the
equity security holders. (Comdisco Bankruptcy News, Issue No.
16; Bankruptcy Creditors' Service, Inc., 609/392-0900)
COOKER RESTAURANT: Red Ink Continues to Flow in Third Quarter
-------------------------------------------------------------
Cooker Restaurant Corporation (OTC Bulletin Board: CGRT)
announced results for the third quarter ended September 30,
2001. The Company reported a net loss for the third quarter of
$9,115,000 on sales of $22,989,000, compared with a net loss of
$7,884,000 on sales of $35,845,000 for the same period last
year. For the nine months, the Company reported a net loss of
$22,972,000 on sales of $90,837,000, compared with a net loss of
$8,711,000 on sales of $110,958,000 for the first nine months of
last year. For the quarter, Loss Before Income Taxes narrowed
from $12,129,000 to $9,115,000; however, the Company did not
record a benefit from income taxes in the current quarter. The
current quarter included impairment and reorganization expenses
of $4,880,000, compared with $9,334,000 last year.
The Company continues to operate 43 restaurants as Debtor-in-
Possession in Chapter 11. Sales declined 35.9% for the quarter
primarily due to operating fewer restaurants. Sales for the 43
operating restaurants were down 16.6% for the quarter. The
Company recently completed the move of the remainder of its
corporate functions from West Palm Beach, Florida to Nashville,
Tennessee. Overall reductions in corporate expenses, including
the aforementioned move, are expected to save the Company
$3,500,000 on an annual basis.
The Company is currently going through a Chapter 11
reorganization. The Company operates "Cooker Bar & Grille"
full-service restaurants in Florida, Michigan, Ohio, Tennessee
and Virginia. The restaurants offer a family- friendly, cozy
ambience, with menu selections that include a wide variety of
appetizers, soups, salads, entrees, sandwiches and desserts, as
well as a full beverage menu in most locations; a large
percentage of these items are actually prepared "from scratch"
daily, using original recipes and fresh ingredients. Portion
sizes are generous, service is prompt, friendly and efficient,
and The Cooker backs everything with its famous "100%
Satisfaction Guarantee".
Cooker is traded on the Over the Counter Bulletin Board (OTCBB)
under the symbol CGRT.
E-SIM LTD: Falls Short of Nasdaq's Equity Listing Requirement
-------------------------------------------------------------
e-SIM, Ltd. (NASDAQ: ESIM), a leader in advanced simulation
technology for product design, development and code generation,
announced today that the Company received a Nasdaq Staff
determination on December 3, 2001, indicating that the Company
was not in compliance with the minimum $4,000,000 net tangible
assets or the minimum $10,000,000 stockholders equity
requirements for continued listing on The Nasdaq National Market
set forth in Marketplace Rule 4450(a)(3).
As a result, the Nasdaq Staff indicated that the Company's
ordinary shares are subject to delisting from The Nasdaq
National Market. The Company has requested an oral hearing
before a Nasdaq Listing Qualifications Panel to review the Staff
Determination. There can be no assurance that the Panel will
grant the Company's request for continued listing. Until the
Panel reaches its decision following the oral hearing, e-SIM's
stock will remain listed and will continue to be traded on The
Nasdaq National Market.
Founded in 1990, e-SIM Ltd. (NASDAQ:ESIM) - http://www.e-SIM.com
- is the leading provider of advanced simulation technology for
product development, Web-based customer support and marketing.
E-SIM's simulation technologies build off its RapidPLUS line of
software products that enable product designers and engineers to
expedite the concept-to-market life cycle by easily creating
simulated computer prototypes that are fully functional,
interactive and behaviorally identical to the manufactured
products and systems. E-SIM's proprietary technology enables the
creation and distribution of electronic LiveManuals, "virtual
products" that look and behave like real products, over the
Internet or intranet. E-SIM's customer support Web service,
LiveManuals - http://www.livemanuals.com- features its
proprietary product simulations from multiple manufacturers,
interactive user manuals, personal product folios for easy
reference, comprehensive manufacturer support information and
extended warranties.
ENRON CORP: Seeks Okay to Pay $48MM of Critical Vendor Claims
-------------------------------------------------------------
Enron Corporation, and its debtor-affiliates utilize certain
specialty vendors to supply essential goods, materials, and
services, including:
(a) suppliers of computer hardware and software operations,
maintenance, monitoring, paging, servers and equipment;
(b) internet service providers;
(c) suppliers of services relating to the electronic
exchange of market data and transfers;
(d) providers of storage and hub operations; and
(e) construction contractors.
The Debtors are convinced that their ability to continue their
operations will largely depend upon the continued business of
these critical vendors. Consequently, Brian S. Rosen, Esq., at
Weil, Gotshal & Manges LLP, in New York, relates, the Debtors
have performed an analysis of critical payments that are deemed
necessary to avoid potentially significant disruptions to the
Debtors' business operations.
Mr. Rosen identifies the criteria used to screen which vendor
payments would be deemed critical to avoid business
interruption:
(a) Unique vendors were identified that supply specific
goods or services critical to the Debtors' business
operations.
(b) Other known suppliers were identified that may have
similar goods and services, but are historically more
expensive.
(c) The start-up and delayed delivery time was considered in
order to determine the extent of supply chain and
service interruption that would occur.
(d) There was an additional consideration for vendors that
provide services or supply products that would be
filing, as well as legal entities that would not be
filing. Additional negative repercussions could occur to
those entities that are not filing, if vendors decide to
interrupt businesses at legal entities that are not
planning to file.
(e) Where there was no problem of discontinued service
detected and/or no near term activity with a specific
vendor, these vendors were not considered to be critical
vendors.
The Debtors also identified certain vendors performing critical
construction services in connection with an unencumbered, 40-
story high-rise office building owned by the Debtors in Houston,
Texas, Mr. Rosen continues. The construction contractors
include Clark Construction, the general construction contractor,
and certain subcontractors, Mr. Rosen notes. According to Mr.
Rosen, these payments will become due to the construction
contractors:
Payments For Amount Due On
------------ ------ ------
Pre-petition construction services $ 7,400,000 12/05/2001
Pre-petition construction services 7,400,000 01/05/2002
Pre-petition holdbacks 14,000,000 01/2002
The Debtors are concerned that the construction contractors may
assert statutory mechanic's and materialman's liens, thereby
encumbering an otherwise unencumbered, valuable asset of the
estate. The building may be adversely affected if construction
is not completed and the Debtors default on the construction
contracts, Mr. Rosen adds.
Moreover, the Debtors fear that some critical vendors may:
(i) refuse to deliver goods and services;
(ii) refuse to deliver goods and services on reasonable credit
terms absent payment of pre-petition claims; or
(iii) suffer significant financial hardship if their pre-
petition claims are not paid in whole or in part.
For those reasons, the Debtors ask permission to pay, in the
ordinary course, and in the Debtors' discretion and business
judgment, the pre-petition fixed, liquidated and undisputed
claims of the critical vendors.
Authority to pay the critical vendor claims will not create an
imbalance of the Debtors' cash flows, Mr. Rosen contends,
because the majority of these obligations have customary payment
terms and will not be payable immediately. Mr. Rosen assures
the Court that the cash maintained by the Debtors, together with
the cash generated in the ordinary course of the Debtors'
businesses, can cover payment of the critical vendor claims.
Furthermore, Mr. Rosen advises the Court that the Debtors are
negotiating a debtor in possession credit facility which would
provide for the use of DIP facility to satisfy certain of the
critical vendor claims.
According to Mr. Rosen, payment of the critical vendor claims
would ensure that there is no disruption in the Debtors' ability
to obtain goods and services necessary to the operation of their
businesses and preserve and protect their properties. The
uninterrupted supply of goods and services, on customary trade
terms, and the continuing support of their customers, are
imperative to the Debtors' ongoing operations and viability, Mr.
Rosen stresses. Besides, Mr. Rosen remarks, the Debtors only
seek to pay critical vendor claims where nonpayment of such
claims would lead to the interruption of the delivery of goods
and services or would seriously disrupt the Debtors' operations.
Thus, the Debtors urge the Court to enter an order declaring
that:
(a) The Debtors are authorized, in their discretion and the
exercise of their business judgment, to make payment to
the critical vendors on the conditions that:
(i) such a claim is paid in cash or via wire transfer,
(ii) by accepting payment, the critical vendor agrees
to maintain or reinstate customary trade terms
during the pendency of these cases, and
(iii) the Debtors mail a copy of the order to each
critical vendor to which any payment permitted
hereunder is made.
(b) A critical vendor's acceptance of payment is deemed to
be acceptance of the terms of the Order, and if the
critical vendor thereafter does not provide the Debtors
with customary trade terms during the pendency of these
cases, then any payments of pre-petition claims made
after the Petition Date may be deemed to be unauthorized
post-petition transfers and therefore recoverable by the
Debtors in case.
(c) The Debtors are authorized to obtain written
verification of trade terms to be supplied by the
critical vendors before issuing payment hereunder; and
(d) With respect to the construction contractors who could
otherwise file liens against the Debtors' unencumbered
Houston Office Building, the Debtors are authorized to
pay the December 5th payment in full. (Enron Bankruptcy
News, Issue No. 2; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
EXODUS COMMS: Wants Approval of Amended DIP Financing Facility
--------------------------------------------------------------
Exodus Communications, Inc., and its debtor-affiliates move for
entry of an order authorizing amendment of the Senior Secured,
Superpriority Debtor-in-Possession Credit Agreement with General
Electric Capital Corporation, as Agent and lender, and a
syndicate of lenders.
David R. Hurst, Esq., at Skadden Arps Slate Meagher & Flom LLP
in Wilmington, Delaware, informs the Court that subsequent to
entry of the Final Financing Order, the Debtors and GE Capital
agreed to make certain amendments to the DIP Loan Agreement.
While these amendments may not be material and may not require
Court approval, out of an abundance of caution the Debtors are
now seeking entry of an order approving the amendments.
The amendments to the DIP Financing provide that:
A. As a condition subsequent to the initial closing hereunder,
Borrowers shall on or before 30 days following the closing
date deliver tri-party blocked account and pledged account
agreement, each in a form and substance satisfactory to the
Agent, for the borrower's accounts at Cupertino National
Bank and Silicon Valley Bank unless such accounts have been
closed prior to such date.
B. As a condition subsequent to the initial closing hereunder,
Borrowers shall, on or before the initial funding date,
deliver to the agent control letters together with an
opinion of counsel, in form and substance similar to those
delivered on the closing date.
C. Borrowers shall have obtained the entry of an order by the
Court approving the changes made since the entry of the
Final Order, to the liquidity financial covenant.
D. Integrated Office Solutions London, LLC, a limited liability
company has no assets and has been dissolved. As of closing
date, Exodus Communications B.V. has not issued
certificated securities with respect to any issued and
outstanding stock and has not granted any liens and
security interests with respect to such stock and agrees
that such stock shall remain as uncertified securities. In
the event Exodus B.V. elects to issue certificated
securities with respect to its stock, such certificated
securities, together with other documents reasonably
required to perfect Agent's interest in such stock, in form
and substance reasonably satisfactory to the Agent, shall
be immediately delivered to Agent to secure obligations.
E. To the extent that contracts and agreements with borrowers'
vendors who, on an individual basis, have in excess of
$10,000,000 in annual purchases with borrowers and are to
be assumed by the Borrowers in connection with their
Chapter 11 cases, Disclosure Statement shall be updated to
include such contracts and agreements.
F. On or prior to closing date, each Borrower (other than Arca
Systems) shall have requested in writing and otherwise
taken such reasonable steps to ensure that all Account
Debtors that forwarded payment to a lock box account at
Mellon Bank shall forward all future payments to the Lock
Box Account identified in Disclosure Schedule.
G. Duly executed originals of the Pledge Agreement accompanied
by share certificates representing all of the outstanding
stock being pledged pursuant to such Pledge Agreement and
stock powers for such share certificates executed in blank,
provided, Borrowers shall only be required to deliver the
share certificates representing all of the outstanding
stock of Storage Networks, Inc. and Tanning Technology
Corp. to Skadden Arps Slate Meagher & Flom LLP to be held
in escrow by such counsel until sale of such stock by
Borrowers and provided further that if such stock is not
sold by Borrowers on or before November 30, 2001, the share
certificates of such stock, shall be delivered immediately
to Agent.
Mr. Hurst asserts that the amendments to the DIP Loan Agreement
have been negotiated at arm's length and in good faith by the
Debtors and the DIP Lenders, and are fair and reasonable under
the circumstances. (Exodus Bankruptcy News, Issue No. 10;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
FEDERAL-MOGUL: Engages W.Y. Campbell as Divestiture Advisors
------------------------------------------------------------
As Federal-Mogul Corporation, and its debtor-affiliates began
implementing its investment strategy initiative and focusing on
its core competencies, it has sought opportunities to divest
non-core businesses. In the second quarter of 2001, the Debtors
completed the divestiture of two non-core businesses and in
April 2001, the Debtors completed the divestiture of its torque
converter business and in May 2001, the Debtors completed the
divestiture of its Champion aviation ignition products. Through
July 2001, the Debtors announced it had signed an agreement to
sell its McConnelsville heavy-wall bearings business. The
Debtors have separately applied for authority to retain and
employ Ernst & Young Capital Advisors LLC in connection with the
potential divestiture of their Lighting Group businesses.
The Debtors now seek the advice and assistance of W.Y. Campbell
& Company in connection with the potential divestiture of the
Debtors' Camshaft Group Operations, which may involve the sale
of assets of the Debtors' estates, as well as assets of certain
of the Debtor's non-debtor affiliates. By this motion, the
Debtors request authorization to employ and retain W.Y. Campbell
& Company as investment banker and financial advisor to the
Debtors in connection with the potential divestiture of the
Camshaft Group Operations, nunc pro tunc to October 1, 2001.
Specifically, W.Y. Campbell will provide such services as the
Firm and the Debtors shall deem appropriate and feasible in
order to advise the Debtors in the Transaction, including:
A. advising the Debtors in developing their strategic objectives
with regard to the value and terms of the Transaction;
B. identifying and demonstrating the Camshaft Group Operations'
proprietary attributes;
C. assisting in analyzing the financial effects of the proposed
Transaction;
D. assisting in a valuation analysis of the Camshaft Group
Operations;
E. identifying and soliciting appropriate merger partners or
potential buyers, as approved by the Debtors;
F. assisting in the preparation and distribution of
confidentiality agreements and appropriate descriptive
selling materials regarding the Transaction;
G. advising the Debtors in their preparation for due diligence
and their management of a data room;
H. initiating discussions and negotiations with merger partners
or prospective buyers and advising the Debtors in
negotiations regarding the Transaction;
I. assisting the Debtors in coordinating management
presentations and site visits, as appropriate;
J. structuring any proposed Transaction;
K. providing expert advice and testimony concerning any
financial matters related to the Transaction;
L. providing other services necessary to the completion of a
successful transaction, as mutually agreed upon by W.Y.
Campbell and the Debtors; and
M. providing other financial or ancillary services in connection
with the potential divestiture of the Camshaft Group
Operations in the event that not all of the assets of the
Debtors' estates or Transaction are sold.
James J. Zamoyski, the Debtors' Senior Vice President and
General Counsel, relates that during the period preceding the
Petition Date, W.Y. Campbell has been providing services to the
Debtors in preparation for the potential sale of the Debtors'
Camshaft Group Operations. The Debtors submit that the
familiarity of W.Y. Campbell's professionals with the Camshaft
Group Operations and their knowledge of the progress being made
towards divesting those businesses will increase the Debtors'
chances of successfully completing such a transaction. The
Debtors believe that the experience and expertise of W.Y.
Campbell's professionals in providing merger and acquisition
advisory services in reorganization proceedings will inure to
the benefit of the Debtors in pursuing any transactions. The
Debtors submit that the services of W.Y. Campbell are necessary
to enable the Debtors to faithfully execute their duties as
debtors in possession and will be beneficial to the Debtors'
estates and thus, the Debtors believe W.Y. Campbell is well
qualified to represent the Debtors as their investment bankers
and financial advisors.
Andre A. Augier, Managing Director of W.Y. Campbell & Company
tells the Court that the Firm's professionals have extensive
experience in providing middle-market merger and acquisition
advisory services to a large range of Fortune 1000 clients,
particularly in the automotive sector. W.Y. Campbell also has
broad international experience and the ability to manage
cross-border issues that may arise in connection with any
divestiture of the Camshaft Group Operations. Mr. Augier adds
that W.Y. Campbell wide-ranging experience extends to
transactions involving financially troubled assets, including
several transactions within the confines of chapter 11 and its
Canadian equivalent. W.Y. Campbell's professionals enjoy an
excellent reputation for the services that they have rendered in
large and complex chapter 11 cases throughout the United States.
Mr. Augier confirms that W.Y. Campbell has provided services to
the Debtors in preparation for the Debtors' restructuring
efforts, including preparations for the potential divestiture of
the Camshaft Group Operations, and is therefore familiar with
the Debtors and their Camshaft Group Operations businesses.
Mr. Augier relates that if the sale of Operations is
accomplished by one or a series of transactions, the Firm will
charge a Transaction Fee equal to 1.25% of the aggregate
consideration paid, subject to a minimum or $1,000,000. In the
event the operations are divested in multiple transactions to
unaffiliated buyers, a minimum transaction fee of $200,000 shall
apply to each transaction but in no event shall a transaction
fee exceed 3% of the aggregate consideration paid to any
individual transaction.
Mr. Augier informs the Court that W.Y. Campbell has received
$10,812.81 in payments from the Debtors for expense
reimbursements within the ninety days prior to the Petition
Date. W.Y. Campbell received a retainer in the amount of a
$100,000 Retainer Fee in March of 2001 in connection with its
engagement, and also will receive a retainer in the amount of a
$75,000 Retainer Fee, payable in $25,000 installments due
December 1, 2001; January 1, 2002 and February 1, 2002. Mr.
Augier explains that the $100,000 and the $75,000 Retainer Fees
received by W.Y. Campbell shall be credited against the
Transaction Fee. As of the Petition Date, W.Y. Campbell was owed
a pre-petition amount of approximately $30,000 by the Debtors
but the Firm has agreed to waive any claim or right to payment
for such unpaid pre-petition amounts.
Pursuant to the terms and conditions of the Engagement Letter
and as set forth in more detail therein, Mr. Augier submits that
W.Y. Campbell intends to charge for the professional services
rendered to the Debtors in these chapter 11 cases in the form of
a Transaction Fee. In addition, W.Y. Campbell will seek
reimbursement for reasonable and necessary expenses incurred in
connection with the Debtors' chapter 11 cases, including but not
limited to transportation, lodging, food, telephone, copying,
delivery and messengers.
Mr. Augier informs the Debtors that it does not hold or
represent any interest adverse to the Debtors' estates in
matters upon which the Firm is to be engaged; and is a
"disinterested person" as defined by 101(14) of the Bankruptcy
Code. To the best of Mr. Augier's knowledge and information,
W.Y. Campbell has no connection with any of the Debtors, their
creditors, or any other party in interest, except:
A. former unrelated relationship with Comerica Bank, a known
institutional lender of the Debtors;
B. former unrelated relationship with DaimlerChrysler and Ford
Motor Company, both one of the Debtors' major customers;
C. Former unrelated relationship to the Debtors' officers and
directors, including Richard John Cowie, Charles B. Grant,
and Nancy Shilts;
D. Ernst & Young LLP is currently the auditor of W.Y. Campbell.
Mr. Augier assures the Court that W.Y. Campbell will conduct an
ongoing review of its files to ensure that no conflicts or other
disqualifying circumstances exist or arise and if any new
relevant facts or relationships are discovered, the Firm will
supplement its disclosure to the Court. (Federal-Mogul
Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
GC COMPANIES: Creditors Back Sale of Assets to AMC Entertainment
----------------------------------------------------------------
GC Companies, Inc. (OTC: GCCXQ), parent company of General
Cinema Theatres, Inc., announced that it has signed a letter of
intent with AMC Entertainment Inc. (Amex: AEN) providing for the
acquisition of all of the equity of the reorganized Company
pursuant to a plan of reorganization to be filed with the
Bankruptcy Court under Chapter 11 of the U.S. Bankruptcy Code.
Key creditors of the Company, including the Official Committee
of Unsecured Creditors, have executed support agreements in
which they have agreed to the terms of the letter of intent and
the proposed plan of reorganization.
Under the terms of the letter of intent, subject to Bankruptcy
Court approval, the Company's creditors will receive
consideration consisting of cash, AMC subordinated notes, or AMC
common stock. The types and amounts of consideration paid under
the plan of reorganization will depend upon the Bankruptcy
Court's final determination of allowed claim amounts and upon
the elections of certain creditors between types and amounts of
consideration available to those creditors.
If the plan of reorganization is confirmed by the Bankruptcy
Court and implemented, all existing shares of the Company's
Common Stock will be cancelled and will no longer represent an
equity interest in the Company; however, on terms and conditions
to be set forth in the plan of reorganization, existing holders
of the Company's Common Stock will be provided with the option
to participate in a rights offering relating to the assets of
the Company's investment portfolio.
The transaction is subject to regulatory approvals, resolution
of claims of lenders of certain subsidiaries, and Bankruptcy
Court approval and other conditions. It is anticipated that the
Bankruptcy Court will confirm the plan of reorganization by
March 20, 2002.
GC Companies operates 73 theatres with 677 screens in the United
States and has a 50% interest in a joint venture that operates
17 theatres with 160 screens in South America.
INNOVATIVE CLINICAL: Will Swap Shares with CNS Under Merger Pact
----------------------------------------------------------------
An Information Statement has been mailed to the stockholders of
Innovative Clinical Solutions, Ltd. providing them with
important information regarding a transaction in which ICSL will
exchange all of its stock in its wholly owned subsidiary,
Clinical Studies, Ltd., for shares of common stock of
Comprehensive Neuroscience, Inc. The transaction will be
structured as a merger of a specially created wholly owned
subsidiary of CNS, CNS Acquisition, Inc., with and into CSL. The
Merger will be consummated pursuant to the terms and
conditions set forth in an Agreement and Plan of Merger dated as
of October 31, 2001 among ICSL, CSL, CNS and the acquisition
subsidiary.
November 29, 2001, has been established as the record date for
determining ICSL's stockholders entitled to receive this
Information Statement. As of the close of business on November
29, 2001, ICSL had 11,998,972 shares of common stock outstanding
held by approximately 160 holders of record.
The Merger constitutes the sale of ICSL's core operating
subsidiary. Accordingly, it must be approved by holders of a
majority of ICSL's outstanding common stock as provided by the
Delaware General Corporation Law. The Board of Directors of
ICSL, at a meeting held on October 25, 2001, approved the Merger
Agreement and the transactions contemplated thereby and directed
that the Merger Agreement be submitted to the stockholders of
ICSL for their consideration and approval. Holders of 7,051,164
shares, representing 58.8%, of the outstanding shares of ICSL's
common stock, have agreed in writing to execute a written
consent in favor of approval of the Merger Agreement.
Accordingly, no additional approval of the Merger Agreement by
ICSL's stockholders will be necessary. The Merger Agreement and
the Merger have also been approved and recommended by CSL's
Board of Directors and approved by ICSL as CSL's sole
stockholder.
Innovative Clinical Solutions, Ltd., headquartered in
Providence, Rhode Island, provides services that support the
needs of the pharmaceutical and managed care industries. *
Innovative Clinical Solutions is trying to reposition itself
after filing for Chapter 11 bankruptcy protection and
restructuring. The company has sold its physician practices and
medical service businesses; it also sold its clinical trial
support division, which served pharmaceutical and biotechnology
companies, to IMPATH. The company is now focused on its network
management services, which include managed care contracting and
disease management, although it may sell this division as well.
Investment firm EQSF Advisers owns almost half of the company.
JORDAN INDUSTRIES: Moody's Junks Ratings on Weakening Financials
----------------------------------------------------------------
Moody's Investors Service downgraded the ratings on Jordan
Industries Inc., and its outstanding debt obligations. The
rating outlook is negative while there is approximately $489.0
million of debt securities affected.
The rating agency said that the downgrade reflects a severe
deterioration in Jordan's operating performance, its
substantially constrained financial flexibility, and sharply
weakened credit profile. The negative outlook, on the other hand
reflects Moody's expectation of further weakness in the
company's performance as well as heightened concerns over its
liquidity condition in near to medium term, Moody's said.
Rating Actions: To From
* $275 million of 10.375% senior notes, Caa3 B3
due 2007
* $214 million of 11.75% senior Ca Caa2
subordinated discount debentures,
due 2009
* senior implied rating Caa2 B2
* issuer rating Caa3 B3
Jordan Industries, Inc. operates a diverse group of businesses
in the specialty printing and labeling, specialty plastic,
consumer and industrial products, automotive aftermarket
converters, and motors and gears markets 7the Company
headquarters is in Deerfield, Illinois.
KB HOME: Fitch Rates $200 Million Debt Issue Due 2008 at BB-
------------------------------------------------------------
Fitch has assigned a 'BB-' rating to KB Home's (NYSE: KBH) $200
million, 8-5/8% senior subordinated notes due 2008. The 'BB+'
senior unsecured debt rating is affirmed. Proceeds from the new
debt issue would replace the $175 million principal amount of 9
3/8% senior subordinated notes due 2003 that can now be redeemed
at par and are expected to be redeemed on December 31, 2001. The
new issue has a lower rate and extends the maturity by five
years. For the fiscal year ending November 30, 2001, Fitch
expects leverage (excluding financial services) to remain
comfortably within KB Home's stated debt to capital target of
45-55%.
The long-term ratings for KB Home are based on the company's
geographic diversity, primary focus on the entry- level
homebuyer, solid operating performance and transition to more
conservative building practices. Risk factors include the
inherent cyclical nature of the homebuilding industry.
The company has expanded EBITDA margins over the past several
years on steady price increases, volume improvements and
reductions in SG&A expenses. Also, KB Home has produced record
levels of home closings, orders and backlog as the housing cycle
extended its upward momentum and then plateaued at high levels.
Although KB Home realizes a significant portion of its revenue
from California, a region that has proven volatile in past
cycles, the company has reduced this exposure as it has
implemented its growth strategy and currently sources 23% of its
deliveries from California, compared with 69% in fiscal 1995. KB
Home has now largely transitioned toward a presale strategy,
producing a higher backlog/delivery ratio and reducing the risk
of excess inventory and debt accumulation in the event of a
slowdown in new orders. This strategy has also served to enhance
margins. The company maintains a 3 1/2 year supply of lots, 60%
of which are owned and the balance controlled though options.
Inventory turnover has been consistently above 1.8 times during
the past four years.
Balance sheet liquidity has continued to improve as a result of
efforts to reduce long-dated inventories, quicken inventory
turns and improve returns on capital. Progress in these areas
has allowed the company to accelerate deliveries without
excessively burdening the balance sheet.
KEYSTONE CONSOLIDATED: Noteholders Defer Rights Until Dec. 31
-------------------------------------------------------------
Keystone Consolidated Industries, Inc., (NYSE: KES) announced
that holders representing more than 75% of the principal amount
of its $100 million 9 5/8% Senior Secured Notes have agreed to
extend the deferral of the exercise of such holders' right to
accelerate the payment of the Notes and to defer directing the
Trustee of the Notes to take any action or exercise any remedy
as a result of Keystone's failure to make the interest payment
on the Notes due August 1, 2001. Accordingly, the holders have
agreed not to exercise such rights prior to December 31, 2001.
The Illinois legislature has passed a bill that would authorize
the Department of Commerce and Community Affairs to make loans
from State funds of up to $10 million that could be available to
the Company in connection with its restructuring efforts. The
Company understands the bill either requires the signature of,
or no action by, the Governor of the State of Illinois to become
enacted. Any loan made to the Company would also be subject to
the negotiation and execution of definitive loan documents, with
the appropriate State of Illinois agencies, as well as the
completion of the Company's overall out-of-court restructuring,
which is still being developed.
The Company's pursuit of an out-of-court restructuring involves
continuing discussions with holders of the Senior Secured Notes
concerning the possible exchange of their notes for either a
discounted cash amount or a combination of new debt and equity
securities of the Company, efforts to renew or replace existing
revolving credit facilities, securing new term financing to
provide adequate liquidity for the Company and satisfactory
restructuring of other obligations of the Company. No assurance
can be given that all of these efforts will be successful.
Keystone Consolidated Industries, Inc. is headquartered in
Dallas, Texas. The company is a leading manufacturer and
distributor of fencing and wire products, carbon steel rod,
industrial wire, nails and construction products for the
agricultural, industrial, construction, original equipment
markets and the retail consumer. Keystone is traded on the New
York Stock Exchange under the symbol KES.
LTV CORP: Gets Backing for Asset Protection Plan Implementation
---------------------------------------------------------------
LTV Corporation (OTC Bulletin Board: LTVCQ) announced that the
Company's management, lenders, noteholders, creditors and the
United Steelworkers of America have agreed to support the
Company's motion to implement an Asset Protection Plan. The
Asset Protection Plan (APP) is designed to optimize the value of
the assets for the creditors; permit the shutdown and hot-idling
of LTV's integrated steel facilities; continue normal operations
of LTV Copperweld; facilitate the sale of assets, and protect
public health, safety and the environment.
The support for the Company's Asset Protection Plan followed an
agreement between the parties that provided the following:
1. The Asset Protection Plan goes into effect on December
7, 2001 by order of the Bankruptcy Court. The existing "Stand
Still Agreement" requiring the Company to keep its integrated
steel facilities in "production status," will be vacated by the
Court.
2. Integrated steel plants will be hot idled until February
28, 2002. If a firm buyer (in the lender's reasonable
judgement) exists and if the President requests an extension of
Section 201, the hot idle could be extended through March 15,
2002.
3. Coke plants will remain on extended coking cycles for
three weeks from the date of the Order.
4. Commencement of the 1113 hearing will be adjourned until
December 19, 2001.
5. The Company will pay Supplemental Unemployment Benefits
and insurance benefits through the resolution of the Company's
1113 Motion before the Bankruptcy Court. Employment Security
provisions in the existing labor agreement will not be
applicable through the resolution of 1113.
6. The Voluntary Employee Beneficiary Association Trust
(VEBA) will reimburse the Company for retiree healthcare from
November 20 through December 19, 2001 and the VEBA will receive
an administrative claim for the funds expended.
7. The hourly workforce will perform bargaining unit work
to idle plant equipment under terms and conditions of the
Modified Labor Agreement for two weeks after entry of the
Court's order without prejudice to either parties position
thereafter.
"In spite of the tireless efforts of all concerned, the
realities of the marketplace and the global economic environment
have rendered it impossible for the Company to continue to
operate its integrated steel business. The Asset Protection
Plan will maximize the value of the Company's assets for our
lenders and creditors, which now becomes management's primary
fiduciary responsibility," said John D. Turner, executive vice
president and chief operating officer.
"The last several weeks have been extremely difficult for
everyone who cares about the future of LTV and the thousands of
jobs the Company has provided in its plant communities. While
the decision to shutdown steel operations was painful, the
economic realities facing LTV made that decision unavoidable. I
hope all of the community concern and effort that has been
focused on saving LTV will now be focused on supporting efforts
to bring the Company's facilities back to productive use under
new ownership," Mr. Turner said.
LTV said that it would begin immediately to hot idle all of its
steelmaking and finishing facilities at Cleveland, East Chicago,
Indiana, Hennepin, Illinois, and extend the coking cycles at its
coke plants in Warren, Ohio and Chicago, Illinois.
The LTV Corporation is a manufacturing company with interests in
steel and metal fabrication. LTV's Integrated Steel segment is
a leading producer of high-quality, value-added flat rolled
steel, and a major supplier to the transportation, appliance,
electrical equipment and service center industries. LTV's Metal
Fabrication segment consists of LTV Copperweld, the largest
producer of tubular and bimetallic products in North America.
LERNOUT & HAUSPIE: Inks Definite Deal to Sell Assets to Scansoft
----------------------------------------------------------------
ScanSoft, Inc. (Nasdaq: SSFT) announced that it has signed a
definitive agreement to purchase substantially all of the
operating and technology assets of the Speech and Language
Technologies business of Lernout & Hauspie (L&H). The agreement
was signed among ScanSoft, Lernout & Hauspie Speech Products
N.V., L&H Holdings USA,Inc. and certain L&H subsidiaries.
The agreement signed Friday serves to define the specific terms
of the previously announced acquisition and enable the quick and
seamless transfer of assets and employees upon closing.
Completing the transaction is subject to the approval of the
U.S. Bankruptcy Court for the District of Delaware and
conclusion of parallel bankruptcy proceedings in Belgium. The
U.S. Bankruptcy Court began its hearing on December 4, 2001, and
will continue on December 11, 2001.
"We see this formal agreement as an important next step in
helping to finalize our acquisition of the L&H assets," said
Paul Ricci, ScanSoft's chairman and CEO. "We look forward to
next week's hearing and closing the transaction in a time period
that serves the best interests of both company's employees,
customers and partners."
The Lernout & Hauspie Speech and Language business develops and
markets a variety of technologies, systems and products that
incorporate automatic speech recognition, text-to-speech,
telematic and other capabilities. These solutions enable
telecommunications systems, computing equipment and mobile
communications devices to effectively hear what users say, speak
to users, hold conversations and recognize users by their voice.
Organizations using these technologies comprise some of the
world's leading technology and telecommunications companies
including Alcatel SA, AOL Time Warner, British Telecom, Cisco
Systems, Delphi Automotive, Deutsche Telecom, Fujitsu Ltd.,
Microsoft Corporation and Sony Corp.
Among the technology assets to be acquired by ScanSoft:
-- RealSpeak Text-to-Speech - RealSpeak technology is
widely recognized as the world's leading text-to-speech (TTS)
engine, capable of generating high-quality human sounding speech
that is available in 19 languages including regional variants.
-- Dragon NaturallySpeaking Product Line - This prominent
speech recognition software allows users to harness the power of
speech to easily create, format and edit documents as well as to
control and work with virtually all Windows-based applications.
-- Automatic Speech Recognition Solutions - The L&H
automatic speech recognition engines are capable of multi-
lingual, speaker independent recognition of discrete words or a
continuous string of naturally spoken words, including free-text
dictation. This includes automotive technology that enables
drivers to operate climate control, telematic, audio and other
functions of an automobile using voice commands, as well as
listen to email messages and receive turn-by-turn navigation
routing.
Headquartered in Peabody, Mass., with European headquarters in
The Netherlands, ScanSoft, Inc. (Nasdaq: SSFT) is a global
leader in paper-to-digital solutions for desktop, network,
Internet and mobile environments that enable users to leverage
the power of their scanners, digital cameras and other
electronic devices. ScanSoft's award-winning product line --
OmniPage Pro, TextBridge Pro, PaperPort Deluxe, Pagis Pro,
OmniForm, eOmniForm, and numerous software developer's kits --
enables users to capture, recognize, edit, manage and share
documents and photos electronically by taking advantage of
ScanSoft's cutting-edge technology.
ScanSoft has established numerous strategic partnerships with
the industry's leading scanner and multifunction vendors to
deliver the most comprehensive and cost-effective solutions for
its customers. Vendors who have chosen ScanSoft's cutting-edge
products and technologies include Brother, Canon, Epson,
Fujitsu, Hewlett-Packard, IBM/Lotus, Mustek, Primax, Sharp,
Symantec Corporation, Visioneer, Xerox and others. ScanSoft's
leading technologies have been licensed by Microsoft for use in
Office XP and other future products.
ScanSoft software is sold, marketed and supported worldwide
through retail, dealer and OEM channels and the Internet,
capturing the small to medium size business and corporate
markets. There are more than eight million registered users of
ScanSoft products. ScanSoft can be found on the Web at
www.scansoft.com.
Trademark reference: ScanSoft, OmniPage, OmniPage Pro,
TextBridge, PaperPort, PaperPort Deluxe, Pagis, OmniForm,
eOmniForm, and Developer's Kit 2000 are registered trademarks or
trademarks of ScanSoft, Inc., in the United States and/or other
countries. All other trademarks and trade names are hereby
recognized and may be registered to their respective holders.
* * *
In conjunction with ScanSoft's (Nasdaq: SSFT) previously
announced acquisition of the Lernout & Hauspie speech and
language business, Paul Ricci, ScanSoft's chairman and CEO, last
week visited Belgium to meet with L&H representatives, greet
employees and continue the integration planning. In response to
press requests, and given limited time for personal interviews,
ScanSoft has issued the following statement:
"It is a pleasure to be in Belgium during these exciting
times. As you can imagine, the past several weeks have been
extremely busy, but offer much promise. ScanSoft is very
excited about incorporating the Lernout & Hauspie speech and
language business with our own. The relationship adds superb
technologies and products, brings strength to our distribution
channels, provides access to a prestigious customer base and,
importantly, introduces ScanSoft to a collection of highly
motivated, talented L&H employees that can expand the company's
business worldwide.
"The most important assets for any enterprise are its
people who, through their dedication to the company, deliver the
products and services to customers. The management team at L&H
has operated under extraordinary conditions to maintain employee
morale and commitment, and we applaud them for their work in
preserving the value represented by the dedicated employees of
L&H worldwide.
"Having visited several offices and met employees, we are
enthusiastic about offering employment to a number of L&H
employees in Belgium. It's become clear through our activities
both here and abroad that the L&H family brings a passion and
zeal to its business that fits nicely with ScanSoft's own
motivation to be the global leader in its field.
"While ScanSoft and L&H representatives work with the U.S.
Bankruptcy Court to validate the auction process, we are working
at full speed to complete an integration plan. By showing a
commitment to the people involved, ScanSoft is attempting to
preserve the value represented by the employees, and to maximize
the future value of these assets. Our goal is to be prepared to
close the transaction quickly upon confirmation by the U.S.
Bankruptcy Court. We recognize that this is especially
important to L&H's Belgian employees whose contracts end on
December 14.
"[Fri]day we've reached an important milestone in the
acquisition process by signing a definitive agreement between
ScanSoft and L&H. The agreement serves to define the specific
terms of the acquisition and will enable the quick and seamless
transfer of assets and employees upon closing. Closing the
transaction remains subject to approval by the U.S. Bankruptcy
Court and conclusion of the parallel proceedings here in
Belgium. The U.S. Bankruptcy Court began its hearing on
December 4, 2001, and will continue on December 11, 2001.
"We have much work to do with the L&H management and
employees as we complete the integration of the L&H business
into ours. We welcome the challenges and look forward to the
opportunities that lie before us. We will share more
information as it becomes available. Thank you."
MCLEODUSA: Begins Consent Solicitation for Recapitalization Deal
----------------------------------------------------------------
McLeodUSA Incorporated (Nasdaq:MCLD), one of the nation's
largest independent competitive local exchange carriers,
announced that it has filed a form 8-K attaching its Offering
Memorandum, Solicitation of Consents and Acceptances and
Disclosure Statement that will be distributed to all of its
bondholders for the purposes of its previously announced
recapitalization transaction.
The solicitation document will be publicly available for
information purposes via access to the EDGAR on-line filing
system.
The Company also said that it has been contacted by an Informal
Committee of Bondholders, which has selected Paul Aronzon of
Millbank Tweed Hadley & McCoy as legal counsel and Russ Belinsky
of Chanin & Co. as financial advisor, to assess the proposed
recapitalization transaction. McLeodUSA has initiated discussion
with the Informal Committee and its advisors and, at the
Committee's request, has canceled the bondholder conference call
that was scheduled for today, December 11, 2001.
The Company announced on December 3, 2001 that it had reached
agreements with Forstmann Little & Co. and the McLeodUSA Secured
Lenders on a recapitalization and financial restructuring plan
under which its $2.9 billion in publicly traded bonds will be
tendered in exchange for $560 million in cash, plus
approximately 14 percent of McLeodUSA post-recapitalization
common stock. The cash component of the exchange offer will be
funded through the sale of the Company's telephone directory
publishing business to Forstmann Little for $535 million and a
portion of an additional $100 million equity investment
Forstmann Little will make in the Company. Under the terms of
its agreement with Forstmann Little, the Company is seeking best
offers for the directory publishing business and has engaged
Credit Suisse First Boston, which has begun marketing McLeodUSA
Publishing.
McLeodUSA said it expects to complete the recapitalization
transaction during the first or second quarter of 2002.
McLeodUSA provides integrated communications services, including
local services, in 25 Midwest, Southwest, Northwest and Rocky
Mountain states. The Company is a facilities-based
telecommunications provider with, as of September 30, 2001, 393
ATM switches, 58 voice switches, 437 collocations, 520 DSLAMs,
over 31,000 route miles of fiber optic network and 10,700
employees. In the next 12 months, McLeodUSA plans to distribute
34 million telephone directories in 26 states, serving a
population of 58 million. McLeodUSA is traded on The Nasdaq
Stock Marketr under the symbol MCLD. Visit the Company's web
site at http://www.mcleodusa.com
MATSUSHITA ELECTRIC: Closes Fax Machine Units in UK & Singapore
---------------------------------------------------------------
Matsushita Electric Industrial Co., Ltd. (MEI) (NYSE: MC) and
Matsushita Graphic Communication Systems, Inc. (MGCS, a
subsidiary of MEI), best known for the Panasonic brand name,
announced plans to discontinue production of facsimile machines
at their joint subsidiaries in the UK and Singapore; Matsushita
Graphic Communication Systems (UK) Ltd. (MGUK) and Matsushita
Graphic Communication Systems (S) Pte. Ltd. (MGS) at the end of
February, 2002.
MGUK and MGS will then begin liquidation procedures.
As the main reasons for closing the UK and Singapore
subsidiaries, Matsushita cited declines in demand for single-
function facsimile machines due to changing consumer preferences
toward multi-functional models --- a trend fueled by increasing
use of personal computers and the Internet, brought about by
advancements in information technology. Furthermore, Matsushita
sees an urgent need to restructure its global facsimile
manufacturing locations in the face of intensifying price
competition due to competitors' overseas production shifts. Such
changes in the business environment were also considered in the
decision to close MGUK and MGS. Production of facsimile machines
in the UK and Singapore will be shifted to the Philippines to
enhance cost competitiveness.
MGUK, a manufacturing subsidiary of MGCS and MEI, was
established in Reading, the UK, in 1989. MGUK produced
approximately 100,000 plain paper facsimile machines (mainly for
business use) and related facsimile supplies for the European
market over the past 12 years. MGS, also a manufacturing
subsidiary of MGCS and MEI, was established in Singapore, in
1987. MGS produced approximately 2,700,000 plain paper facsimile
machines and related facsimile supplies for the world-wide
market, including Japan, over the past 15 years.
The closing of MGUK and MGS will have no material effect on
MEI's parent-alone, or consolidated financial position or
performance for the current fiscal year, ending March 31, 2002.
Matsushita Electric Industrial Co., Ltd. is one of the world's
leading producers of electronic and electric products for
consumer, business and industrial use, which it markets around
the world under the "Panasonic," "National," "Technics" and
"Quasar" brand names. Matsushita's shares are listed on the
Tokyo, Osaka, Nagoya, Fukuoka, Sapporo, Amsterdam, Dusseldorf,
Frankfurt, New York, Pacific and Paris stock exchanges. For more
information, visit the Matsushita web site at the following URL:
http://www.panasonic.co.jp/global/
METALS USA: Recommences Trading on OTC Bulletin Board
-----------------------------------------------------
Metals USA, Inc. (OTC Bulletin Board: MUIN), a leader in the
metals processing and distribution industry, announced that its
common stock has commenced trading on the OTC Bulletin Board
effective immediately. The new ticker symbol is "MUIN". Trading
in the Company's common stock, formerly under the symbol "MUI",
has been suspended by the New York Stock Exchange since November
14, 2001. Metals USA plans to appeal this suspension.
"We continue to focus on implementing our recently announced
reorganization to stabilize the Company's finances and provide
the flexibility to execute a strategic plan to ensure the long
term viability of Metals USA," stated J. Michael Kirksey,
Chairman and CEO. "With the price of our common stock below the
$1 NYSE minimum price requirement and the subsequent NYSE
suspension, it has become necessary to provide an alternative
trading exchange for our shareholders. This move to the OTC
Bulletin Board will provide a platform for continued trading in
our common stock while we work to improve results in our core
operations and strengthen our financial position." (Metals USA
Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
NATURAL SPRINGS: Defaults on Debts Owed to Reesor Martin
--------------------------------------------------------
Natural Springs Canada Inc., (Trading Symbol NSG.A) and its
wholly-owned subsidiary, Tri-Pure Water Ltd., are both in
default of payment of outstanding debts owed to Reesor Martin
Barristers & Solicitors. RM advised NSG.A. and TP that RM is
proceeding with the seizure of the assets of NSG.A and TP
pursuant to RM's registered security interests.
Marilyn E. Martin and David B. Reesor both resigned as Senior
Officers and Directors of NSG.A on December 5, 2001.
NEON COMMUNICATIONS: Retains Credit Suisse as Financial Advisor
---------------------------------------------------------------
NEON Communications, Inc. (Nasdaq:NOPT), a leading provider of
advanced optical networking solutions and services in the
northeast and mid-Atlantic markets, announced today that it has
retained the services of Credit Suisse First Boston as its
financial advisor to explore potential financing options and to
evaluate other strategic alternatives, including debt
restructuring, in order to position it for growth in the year
2002 and beyond.
Chairman and CEO, Stephen Courter, said: "NEON selected CSFB
because of its long-standing relationship with NEON as well as
its expertise and knowledge of the telecommunications services
market."
CFO and Treasurer, William Marshall, said: "CSFB is well
positioned to advise NEON on financing alternatives, to provide
banking services, and to assist us in communicating our strategy
to investors."
NEON Communications is a wholesale provider of high bandwidth,
advanced optical networking solutions and services to
communications carriers on intercity, regional, and metro
networks in the twelve-state northeast and mid-Atlantic markets.
NEON is a registered trademark of NEON Communications, Inc.
OMNISKY: EarthLink Plans to Acquire Subscriber Base & Key Assets
----------------------------------------------------------------
EarthLink (Nasdaq:ELNK) announced plans, subject to certain
court approvals, to acquire the installed subscriber base and
key wireless infrastructure components of San Francisco-based
OmniSky Corporation, a developer and provider of wireless data
applications and services on mobile wireless devices.
The acquisition of OmniSky's subscribers, and the underpinnings
of its award-winning wireless data services, will serve to
extend EarthLink's mobile wireless service offerings onto
popular Palm and PocketPC wireless handheld devices. The asset
acquisition also will firmly establish EarthLink as one of the
leading providers of mobile wireless Internet services.
As outlined in a filing for bankruptcy protection that OmniSky
plans to submit to the Bankruptcy Court for the Northern
District of California, the proposed Section 363 asset purchase
would include OmniSky's roughly 32,000 subscribers, as well as
its client software, mobile wireless application platform,
browser proxy, mail proxy, and all other components required to
continue OmniSky's existing service without interruption. The
Bankruptcy Court must first approve the agreement and purchase.
If approved, the transaction would save EarthLink time and
investment in bringing to market a suite of mobile wireless
services comparable to OmniSky's current offerings.
"Our purchase of OmniSky's subscriber base and key network
assets will represent a significant advancement in our company's
mobile wireless strategy -- well beyond our projected first-year
goals for EarthLink Everywhere," said Lance Weatherby, executive
vice president of the ISP's EarthLink Everywhere initiative.
"Simply put, we aim to be the best Internet service provider on
all fronts; and OmniSky's best-of-class wireless product
offerings move us a few steps further in that direction."
"EarthLink is known for providing world-class Internet access to
their subscribers," said Pat McVeigh, OmniSky's chairman and
CEO. "OmniSky is thrilled to be able to transition our customers
over to an industry leader."
The Chapter 11 filing will enable OmniSky to maintain its
operations and continue to provide its subscribers with wireless
service during the sale approval process. EarthLink will work
closely with OmniSky in the months ahead to ensure that existing
OmniSky subscribers continue to receive the high level of
service they have become accustomed to. Current OmniSky
subscribers will continue to receive the same services through
the same network carrier they are currently using through
OmniSky.
"We're very excited about the opportunities this planned
acquisition of assets would bring to EarthLink in terms of the
services we'll be able to offer OmniSky's current subscribers
and future subscribers of our mobile wireless services," said
Weatherby. "As the Internet extends beyond the desktop PC and
onto mobile devices, the utility and communication choices it
provides to us will profoundly influence where, when and how we
access information and interact with one another. EarthLink aims
to maximize that experience by letting people use these devices
as seamless extensions of their home or work PC, and letting
them tailor their EarthLink-powered Internet experience
according to what's relevant to them in their daily lives."
EarthLink formally launched its EarthLink Everywhere wireless
and non-PC access initiative a year ago this week, offering
EarthLink Wireless Email service on the popular Blackberry?
Wireless Handheld from Research In Motion Limited (RIM)
(Nasdaq:RIMM; TSE:RIM). Last April, the company launched
EarthLink Wireless Email service on the trendy Motorola
TalkAboutr two-way T900. In October, EarthLink added mobile
wireless Neomar-powered Internet browser functionality to its
BlackBerry offering. Expanding its capability to deliver
Internet services through home devices other than personal
computers, EarthLink in October also initiated its acquisition
of Cidco Incorporated, a distributor and provider of affordable,
portable, and easy-to-use email appliances and related services.
OmniSky -- http://www.omnisky.com-- is a leading provider of
wireless applications and services and offers its proprietary
wireless applications and services, including Communications,
Content Delivery and Location-Based Services to
telecommunications carriers, online service providers, hardware
manufacturers and other third parties. OmniSky enables these
companies to offer differentiated wireless data solutions on any
mobile device, from WAP-compliant cell phones to PDAs and laptop
computers, and on the most widely available wireless networks,
such as CDPD, CDMA, GSM and GPRS.
OmniSky's award-winning service offers mobile professionals
access to up to six email accounts, including corporate email
via Microsoft Outlook as well as POP3 e-mail, the ability to
search and surf the Internet, a broad range of optimized Web
content, and the ability to securely conduct e-commerce
transactions.
The No. 1 Provider of the Real Internet, EarthLink brings the
magic of the Internet to approximately 4.8 million subscribers
every day. Headquartered in Atlanta, EarthLink provides a full
range of innovative access, hosting and e-commerce solutions to
thousands of communities over a nationwide network of dial-up
points of presence, and broadband and wireless technologies.
EarthLink is committed to doing an exceptional job of pleasing
its subscribers, shareholders and the community by following the
company's Core Values and Beliefs. Information about EarthLink
services is available by calling 800/395-8425 and through
EarthLink's Web site at http://www.earthlink.net
ORIUS CORP: Fitch Junks Senior Sub Notes On Deteriorating EBITDA
----------------------------------------------------------------
Fitch has downgraded the rating of NATG Holdings, LLC's $150
million 12.75% Senior Subordinated Notes from 'CCC+' to 'CC'.
NATG is a wholly owned subsidiary of Orius Corporation (Orius or
the company) and is the issuer of the notes. The rating action
is due to an ongoing deterioration in revenues and EBITDA
generation since the previous rating action was taken on July 2,
2001, poor visibility for new business, and the expectation for
bank facility covenant violations. Absent any unexpected and
material improvement in results, external funding and continued
bank lender forbearance after the current waiver period expires
on January 15, 2002, default seems likely, and therefore the
notes remain on Rating Watch Negative.
Orius' financial results have deteriorated due to weak customer
demand and competitive pressures. Reduced capital spending by
Verizon, which is Orius' largest customer, other local exchange
carriers, and broadband customers have negatively impacted
demand for out-sourced infrastructure services. Revenues for the
nine months ended September 30, 2001 declined 22.8% to $422.5
million compared to the same period of 2000. The nine month 2001
year over year reduction in EBITDA was even more severe, as
EBITDA declined 63% to $34.6 million. The decline was due to the
absorption of fixed costs over a lower revenue base and
competitive pricing pressure. EBITDA for the three-month period
ended September 30, 2001 declined to $8 million compared to $31
million in the same quarter of 2000. Visibility for future
business is poor.
Should EBITDA deteriorate further and based upon existing
liquidity, it appears uncertain whether Orius will be able to
meet next year's fixed charge obligations, including cash
interest charges on the $490 million cash pay debt outstanding,
scheduled amortization and maintenance capital expenditures,
without concessions from the bank group. On August 8, 2001,
Willis Stein, the company's main equity sponsor, infused $10
million of cash equity in exchange for common and preferred
shares, and has agreed to invest another $15 million under
certain circumstances, including failure to maintain minimum
cash balances or payment default.
Orius received a fourth amendment to its credit agreement on
November 20, 2001. Of note, under the terms of this amendment,
Orius must retain a financial advisor to assist in formulating a
financial plan for debt and equity restructuring no later than
December 20, 2001. The amendment also waived financial covenants
through January 15, 2001, at which time the covenants revert to
the levels set forth in the third amendment dated July 26, 2001.
At current EBITDA levels, Orius would not meet these financial
covenants and would be dependent upon further forbearance from
bank lenders.
Orius is a holding company, headquartered in West Palm Beach,
FL, with operating subsidiaries engaged in the provision of
telecommunications and broadband network infrastructure on a
national basis. Services include the design, engineering, and
installation of central office telecom equipment, premise-
wiring, and cable. Willis Stein and Partners, a private equity
investor, is the company's majority equity owner.
PACIFIC GAS: Commits to Meet Obligations to Government Entities
----------------------------------------------------------------
Pacific Gas and Electric Company issued the following statement
after the U.S. Bankruptcy Court denied a motion by the City and
County of San Francisco and six other local governments to form
an Official Committee of Government Creditors.
"As creditors, the City and County of San Francisco and
other local governments have the ability to participate in the
case, and many of them have already chosen to do so. We have
met with and will continue to meet and confer with many of the
cities, counties, and their associations to answer questions
they may have about our plan of reorganization. Those questions
will also be addressed through the normal confirmation process.
"Pacific Gas and Electric Company remains committed to
fulfilling its obligations to local governments. The utility
continues to pay its property taxes, franchise fees, and other
local assessments. We look forward to continuing the historic
partnership between the company and local agencies that has
existed for nearly 100 years."
One of the utility's first actions in Bankruptcy Court was a
request for permission to pay the pre-petition portion of
property taxes owed to local governments. On May 16, 2001, the
Court approved the request and the company promptly paid $41.2
million in taxes to the 49 counties in which it operates.
PACIFIC GAS: Says Exit Plan Requires No Rate Increase or Bailout
----------------------------------------------------------------
Pacific Gas and Electric Company's plan for exiting bankruptcy
is legal, requires no rate increase or state bailout, and
ensures continued regulatory oversight. These were the key
messages of a presentation delivered Friday to the Board of the
California Chamber of Commerce by Robert D. Glynn, Jr.,
Chairman, CEO, and President of PG&E Corporation (NYSE: PCG).
In his remarks Glynn emphasized that Pacific Gas and Electric
Company's Plan of Reorganization has achieved the necessary
balance between ensuring that all valid creditor claims are paid
in full and the company is returned to financial health so that
it can grow the energy infrastructure in California.
"We have a remarkably simple plan," said Glynn. "It
restructures our business so that we can refinance our existing
assets and pay our debts. And, it requires no rate increase or
state bailout."
Glynn noted that a cornerstone of the plan is continued
regulatory oversight of all of Pacific Gas and Electric
Company's current assets. "No where does our plan ask for the
deregulation of any of our assets," said Glynn.
"The distribution of gas and electricity and the setting of
retail rates will continue to be overseen by the Public
Utilities Commission," he added.
Glynn also called the plan a win for employees of Pacific Gas
and Electric Company because power plants and gas and electric
transmission businesses created through the plan will be
California companies employing essentially the same skilled
teams who are currently running them safely and reliably.
The plan also provides for a long-term power supply contract of
up to 12-years to Pacific Gas and Electric Company for its
customers.
"In fact," Glynn told members of the California Chamber of
Commerce Board, "Power under this contract will be the lowest
cost major part of Pacific Gas and Electric Company's power
portfolio."
Glynn closed his remarks by addressing the issue of whether
Pacific Gas and Electric Company's plan for exiting bankruptcy
"breaks the law."
"This statement makes for a good sound bite," said Glynn, "but
it has no substance. Federal law empowers the bankruptcy court
to set aside state law in approving a plan of reorganization.
We are asking the Court to do just that as necessary to approve
our plan."
See http://www.pgecorp.comfor the full text of the speech.
To order a copy of PG&E Corporation's 2000 Environmental Annual
Report, click on the leaf symbol on our website or call 800-743-
6397.
To order a copy of PG&E Corporation's 2000 Financial Annual
Report, click on the club symbol on our website or call 800-654-
2582.
PHASE2MEDIA: Has Until February 28 to File Reorganization Plan
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approved Phase2Media, Inc.'s motion to further extend its
Exclusive Periods. The Court ruled that the Debtor's exclusive
time within which to file a plan of reorganization and obtain
acceptances of the plan is extended through February 28, 2002
and April 30, 2002 respectively.
Phase2Media, Inc., an online advertising, sales and marketing
company, filed for Chapter 11 protection on July 18, 2001 in the
Southern District of New York Bankruptcy Court. Harold D. Jones,
Esq., at Gersten Savage & Kaplowitz, represents the Debtors in
their restructuring effort. When the Company filed for
protection from its creditors, it listed $18,057,000 in assets
and $19,672,000 in debts.
POLAROID CORP: Wants Lease Decision Period Extended to March 11
---------------------------------------------------------------
Polaroid Corporation, and its debtor-affiliates seek a Court
order extending the time within which they must move to assume
or reject their unexpired leases of nonresidential real property
through and including the earlier of (i) March 11, 2002 (ii) and
the date of confirmation of the Debtors' plan of reorganization.
Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom
in Wilmington, Delaware, tells the Court that the Debtors are
lessees under a number of unexpired leases of non-residential
real property. "Majority of the unexpired leases are leases
used by the Debtors to operate corporate offices, sales offices
and warehouse space," Mr. Galardi relates. Because these
unexpired leases are assets of the Debtors' estates, Mr. Galardi
says, the leases are integral to the Debtors' continued
operations as they seek to reorganize.
Until the Debtors have had the opportunity to complete a
thorough review of all of the Unexpired Leases, Mr. Galardi
informs Judge Walsh, they cannot determine exactly which
unexpired leases should be assume, assigned or rejected.
Although the Debtors have made progress in their evaluation of
their unexpired leases, Mr. Galardi observes, the Debtors simply
have not been able to assess the value or marketability of all
the unexpired leases. "It will be impossible for the Debtors to
adequately assess whether to assume or reject the unexpired
leases within the 60-day period specified in the Bankruptcy
Code, considering the importance of the task and the Debtors'
immediate and primary focus on stabilizing their businesses in
the early stages of their chapter 11 cases," Mr. Galardi
explains.
According to Mr. Galardi, the Debtors have remained, and will
continue to remain, current on all their post-petition rent
obligations. Thus, Mr. Galardi assures the Court, the extension
will not prejudice the landlords under the unexpired leases
because the landlords are substantially protected.
On the other hand, if the Debtors are compelled to make rash
decisions on the unexpired leases, Mr. Galardi says, the Debtors
might end up assuming substantial, long-term liabilities or
forfeit benefits associated with some leases. This will be
detriment to the Debtors' ability to operate and preserve the
going-concern value of their business for the benefit of their
creditors and other parties-in-interest, Mr. Galardi asserts.]
(Polaroid Bankruptcy News, Issue No. 6; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
PRIMIX SOLUTIONS: Fails to Meet Nasdaq Equity Requirement
---------------------------------------------------------
Primix Solutions Inc., reported that it received a Nasdaq Staff
Determination on November 30, 2001 indicating that the Company
was no longer in compliance with either the minimum $4,000,000
net tangible assets or the minimum $10,000,000 stockholders'
equity requirement for continued listing on The Nasdaq National
Market under Nasdaq Marketplace Rule 4450(a)(3), and that its
common stock will be delisted from The Nasdaq National Market at
the opening of business on December 10, 2001.
The Company intends to request a hearing before a Nasdaq Listing
Qualifications Panel to appeal the Nasdaq Staff Determination.
The hearing request will stay the delisting of the Company's
common stock pending the decision of a Nasdaq Listing
Qualifications Panel. There can be no assurance that the Listing
Qualifications Panel will grant the Company's request for
continued listing on The Nasdaq National Market.
PRINTING ARTS: Wants More Time to File Schedules and Statements
---------------------------------------------------------------
Printing Arts of America asks the U.S. Bankruptcy Court for the
District of Delaware to extend its time to file its schedule of
assets and liabilities, statement of financial affairs and
schedules of executory contracts and unexpired leases. The
Debtors ask for an extension through Jan. 2 to adequately
prepare the Schedules and Statements for filing.
The Debtors have mobilized their employees and consultants to
work diligently on the preparation of the Schedules and
Statements but do not believe that they will be able to complete
the Schedules and Statements prior to the current deadline. The
Debtors assert that the vast amount of information that must be
compiled, the diffuse location of such information and the
hundreds of hours that must be devoted to the task of completing
the Schedules and Statements constitute good and sufficient
reason that the extension will be granted.
Printing Arts America, Inc. filed for chapter 11 protection on
November 1, 2001 in the U.S. Bankruptcy Court for the District
of Delaware. Teresa K.D. Currier, Esq. and William H. Schorling,
Esq. at Klett Rooney Lieber & Schorling represent the Debtors in
their restructuring efforts. When the Company filed for
protection from its creditors, it listed an estimated assets and
debts of more than $100 million.
PSINET INC: Sells Japanese Operations to C&W Unit for $10.2MM
-------------------------------------------------------------
PSINet Inc., announced that it has entered into a definitive
share purchase agreement for the sale of PSINet Japan Inc. and
certain of its subsidiaries to Cable & Wireless IDC Inc., a
wholly owned subsidiary of Cable and Wireless plc, a company
listed on The London Stock Exchange, for cash in the amount of
US $10.2 million (approximately JPY1.3 billion), subject to
final adjustments. Because the transaction was structured as a
stock purchase, Cable and Wireless also agreed to assume all
liabilities and obligations of PSINet Japan.
The share purchase agreement provides, among other things, that
the proposed transaction will be subject to the approval of the
U.S. Bankruptcy Court. In addition, as is customary in these
situations, the share purchase agreement provides for a court
supervised auction process at which other qualified bidders will
be entitled to bid for PSINet Japan.
Inquiries into the bidding procedure can be directed to John
Sheffield at Dresdner Kleinwort Wasserstein, Inc. at 212-969-
2624. Interested parties who have been financially qualified and
who have executed a confidentiality agreement will have the
opportunity to conduct due diligence with respect to PSINet's
Japanese operations.
PSINet expects that its operations in Japan will continue to
operate in the normal course of business, providing reliable
services to its customers. PSINet's operating subsidiaries in
Japan are not part of the filing by PSINet Inc. and certain of
its U.S. subsidiaries under Chapter 11 of the U.S. Bankruptcy
Code.
Dresdner Kleinwort Wasserstein provided financial advice to
PSINet on the transaction. Legal representation on the
transaction was provided to PSINet by Nixon Peabody LLP and
Wilmer, Cutler & Pickering.
Headquartered in Ashburn, Va., PSINet Inc. is a provider of
Internet and IT solutions offering hosting solutions and a full
suite of Internet services through wholly owned PSINet
subsidiaries.
RADIO UNICA: Moody's Further Junks Senior Unsecured Debt Rating
---------------------------------------------------------------
Moody's Investors Service lowered the ratings of Radio Unica
Corporation. Moody's also withdrew the former B3 rating for the
company's $20 million senior secured revolving credit facility,
which the company is considering extinguishing. The rating
outlook is negative while there is approximately $178 million of
debt securities affected.
Rating Actions: To From
* $158 million (face amount) of Senior Caa3 Caa1
Unsecured Discount Notes due 2006
* Senior Implied Rating Caa3 Caa1
* Senior Unsecured Issuer Rating Ca Caa2
The rating agency stated that the downgrade reflects Unica's
poor operating performance and limited liquidity. Furthermore,
the likelihood that the company will be unable to make its cash
interest payments due in 2003 unless performance in 2002 is
dramatically better than 2001 (from a loss of approximately $11
million over the trailing twelve months to a positive $19
million to cover interest) also pulls the ratings down.
Radio Unica Corporation operates a Spanish-language radio
network and 17 AM radio stations and a leading Hispanic
promotions company. The Company headquarters is in Miami,
Florida.
SAFETY-KLEEN: Gets Okay to Hire Gary Cary as Title VI Counsel
-------------------------------------------------------------
Safety-Kleen Corporation and its related and affiliated Debtors
obtained Judge Peter Walsh's approval and authority to employ
the law firm of Gray Cary Ware & Freidenrich as special
litigation counsel to the Debtors, effective as of June 9, 2000,
the Petition Date, to continue to represent the Debtors under
engagement letters dated January 23, 1995, and November 7, 2000.
Gray Cary have been representing Safety-Kleen Corporation,
Safety-Kleen (Buttonwillow), Inc., and Safety-Kleen
(Westmorland), Inc., and the Debtors wished the firm to continue
to represent those entities in an administrative action filed by
California Rural Legal Assistance on behalf of Padres Hacia una
Vida Mejor of Buttonwillow, El Pueblo para el Aire Limpio of
Kettleman City, and Concerned Citizens of Westmorland,
California under Title VI of the Civil Rights Act of 1964 and
administrative regulations implementing Title VI of the Act,
with the United States Environmental Protection Agency and the
United States Department of Housing and Urban Development, and
in any subsequent lawsuit under Title VI in a United States
District Court or state court before or after exhausting their
administrative remedies with the EPA and HUD, and the Debtors
wish to continue that representation postpetition.
In addition, Gray Cary is authorized to continue to represent
SKC and Buttonwillow in administrative appeals filed with the
State of California by Catherine Congrave Palla and Laidlaw
Environmental Services Local Assessment Committee, along with
Jeff Roberts, Michael Saltz, Eduardo Montoya, and Dennis Palla
under the Tanner Act, and in any subsequent lawsuit under the
Tanner Act in a state court, and the Debtors will continue that
representation postpetition.
The Debtors will continue that same representation of SKC and
Buttonwillow in a state court lawsuit under the California
Environmental Quality Act.
Finally, the Gray Cary will assist the Debtors in permitting of
the Debtors' Lenfest Facility for the transfer of hazardous
waste, which employment was begin in 2000.
Gray Cary was originally retained as an "ordinary course"
professional under Judge Walsh's prior order. Gray Cary was
also engaged in discovery, briefing and preparation for what the
Debtors describe as an "extraordinarily complicated" hearing
before the California Tanner Act Appeal Board in connection with
the Tanner matters. (Safety-Kleen Bankruptcy News, Issue No. 23;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
SIMPLIFIED EMPLOYMENT: Gets Restraining Order vs. 2 Ex-Employees
----------------------------------------------------------------
In the last week of November, two former employees of Simplified
Employment Services (SES), together with their current employer,
appeared in the Federal District Court, where they were cited
for soliciting Simplified Employment's business. The court
issued restraining orders against the two former employees and
their employers and granted motions to allow SES to seek
monetary reparations for all damages.
Chief Executive Officer, Joseph J. Whall, said that he would
continue to aggressively protect the assets of SES from
unethical practices of former employees and competitors. Whall
said that he planned to seek additional motions against other
former employees and competitors in the coming days. Whall added
that SES would seek monetary remuneration from the former
employees and competitors for the damages.
A total of 9 former SES employees, each of the companies they
work for, and the involved clients, will now be subject to
litigation. This could include depositions, interrogatories,
financial audits and possibly trials to determine total damages
sustained by SES. Mr. Whall said that he expects the former
employees to honor their contracts that included a non-compete
agreement.
Simplified Employment announced plans last week to emerge from
Chapter 11 Bankruptcy. The company filed for reorganization on
July 9 and was at that time within hours of shutting down
completely. The plan will create the first professional
employer organization in the nation with partial ownership by
employees.
Mr. Whall said the company today is a solid business, providing
a valuable service, employing people and paying all its taxes.
STEEL HEDDLE: Wants Removal Period Extended Until February 25
-------------------------------------------------------------
Steel Heddle asks the U.S. Bankruptcy Court for the District of
Delaware to extend the deadline within which its may remove pre-
petition civil actions through February 25, 2002.
"The extension will afford the Debtors an additional opportunity
to make fully-informed decisions concerning removal of each Pre-
Petition Actions," the Company tells the Court.
Steel Heddle Group, Inc., a pioneer and innovator in weaving
machine accessories for 103 years, filed for Chapter 11
protection on August 28, 2001 in the Delaware Bankruptcy Court.
Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young &
Jones, represents the Debtors in their restructuring effort. In
its schedules of assets and liabilities filed last September 25,
2001, the company listed $0 in assets and $126,812,645 in debt.
As of July, Steel Heddle Group and its bankrupt affiliates
reported $64,300,000 in assets and $176,000,000 in debt.
SUN HEALTHCARE: Intends to Acquire 2 Atlantic Nursing Facilities
----------------------------------------------------------------
Sun Healthcare Group, Inc., and its debtor-affiliates are
currently the operators of two skilled nursing facilities
located in New Martinsville, West Virginia and West Toledo,
Ohio, according to Mark D. Collins, Esq., at Richards, Layton &
Finger, in Wilmington Delaware. Prior to Petition Date, Mr.
Collins relates, Atlantic Financial acquired fee title to the
Facilities in order to facilitate a separate transaction whereby
the Debtors would operate the Facilities pursuant to a synthetic
lease financing.
Under the Proposed Financing, Mr. Collins explains, the Debtors
would make payments to Atlantic Financial, yet simultaneously
build equity in the Facilities and secure an option to purchase
the Facilities from AFG upon expiration of the loan. During
negotiation of the Proposed Financing, Mr. Collins continues,
Atlantic Financial and the Debtors entered into two interim
lease agreements dated December 7, 1998 and December 28, 1998,
which enabled the Debtors to operate the Facilities until
execution of the Proposed Financing. SunTrust Bank is a named
third party beneficiary of the Interim Leases, Mr. Collins
notes.
But the Proposed Financing was not consummated because of the
intervening commencement of the Debtors' chapter 11 cases.
According to Mr. Collins, the Debtors continue to operate the
Facilities pursuant to the Interim Leases, and have made monthly
rent payments on a timely basis during the post-petition period
to Atlantic Financial. For the month of November 2001, Mr.
Collins informs Judge Walrath that the Debtors paid Atlantic
Financial aggregate rent in the amount of $73,779 for the two
Facilities.
By motion, the Debtors seek the Court's approval to enter
into a financing agreement, whereby the Debtors acquire fee
title to the Facilities from Atlantic Financial subject to a
loan issued by SunTrust. "The Financing Agreement would enable
the Debtors to build equity in the Facilities, and increase
their cash flow through decreased monthly payments," Mr. Collins
explains. In addition, Mr. Collins tells the Court, the Debtors
seek to terminate and reject the Interim Leases, with rejection
damages set at zero by agreement with Atlantic Financial.
Furthermore, Mr. Collins adds, Atlantic Financial has agreed to
withdraw and waive its claim related to the Facilities, which
was filed in the Debtors' chapter 11 bankruptcy cases.
The Financing Agreement provides for two loans on the
Facilities, with a principal amount of $7,400,000 split as:
(a) $1,000,000 on the West Toledo facility
(b) $6,400,000 on the New Martinsville facility
Mr. Collins elaborate that the loans will have a floating
interest rate, at prime +2.5%. "The loans will be secured by
cross-collateralized and cross-defaulted first mortgages on each
Facility, with Sun Healthcare Group, Inc., acting as guarantor
on the two loans," Mr. Collins says. Further, Mr. Collins adds,
a default under the Debtors' post-emergence revolving credit
facility will constitute an event of default under the two
loans. According to Mr. Collins, the term of the Financing
Agreement will commence three years from the earlier of closing
or the consummation of a plan of reorganization in the Debtors'
bankruptcy, but in any event no later than April 1, 2005.
Payments under the Financing Agreement will be made on a monthly
basis, Mr. Collins states, based upon a 15-year amortization
schedule. Payments at the current prevailing interest rate of
5.5% will approximate $70,7018 per month, Mr. Collins observes.
"The Parties have agreed that all professional fees associated
with the Financing Agreement will be borne by the Debtors, up to
$50,000," Mr. Collins tells the Court. In addition, Mr. Collins
continues, Atlantic Financial will withdraw and waive the Claim
it filed in the Debtors' chapter 11 cases. Mr. Collins notes
that the Claim, filed on June 15, 2000 in the amount of
$10,666,821, represents the proposed purchase option price of
the Facilities under the Proposed Financing.
If the Court grants the relief requested, Mr. Collins says, the
Debtors will get to save approximately $36,000 per year under
the Financing Agreement since based upon current interest rates,
payments to SunTrust will be approximately $70,718 per month.
"This is roughly $3,000 less than what the Debtors are currently
paying for the rent of the two Facilities," Mr. Collins
observes. In addition, Mr. Collins reminds Judge Walrath,
payments to SunTrust under the Financing Agreement account for
both interest and principal, and will enable the Debtors to
build equity in the Facilities.
Accordingly, Mr. Collins argues, termination and rejection of
the Interim Leases, with rejection damages agreed by Atlantic
Financial to be set at zero, represents a sound exercise of the
Debtors' business judgment.
Furthermore, Mr. Collins asserts, the Court should approve the
settlement of Atlantic Financial's claim considering that it
will mean the withdrawal and waiver of the $10,666,821 Claim.
(Sun Healthcare Bankruptcy News, Issue No. 27; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
TRANSTECHNOLOGY: Completes Sale of Engineered Components Assets
---------------------------------------------------------------
TransTechnology Corporation (NYSE:TT) announced that it had
completed the previously announced sale of its TransTechnology
Engineered Components business to a company formed by affiliates
of Kohlberg & Company, L.L.C. for $98.5 million, of which $96
million was cash and the balance the assumption of certain
liabilities related to the purchased business. The cash proceeds
of the sale were used to retire debt.
The company also stated that, in conjunction with the sale of
the TTEC business, it had entered into amended forbearance
agreements with both its senior and subordinated lenders. Under
the terms of the revised forbearance agreement with the senior
lenders, which extended the forbearance to March 27, 2002, the
company reduced its senior secured line of credit to $68.3
million and also reduced the interest rate on its senior credit
facility by 50 basis points. The company's subordinated lenders
extended their forbearance through March 28, 2002. Following the
completion of the sale and the retirement of senior debt with
the proceeds, the company had $50 million of senior debt and $78
million of subordinated debt outstanding.
TransTechnology Corporation -- http://www.transtechnology.com--
headquartered in Liberty Corner, New Jersey, designs and
manufactures aerospace products with over 380 people at its
facilities in New Jersey, Connecticut, and California. Total
aerospace products sales were $81 million in the fiscal year
ended March 31, 2001.
USG CORP: Seeks Approval to Optimize Belgian Corporate Structure
----------------------------------------------------------------
Through various non-debtor subsidiaries, John H. Knight, Esq.,
at Richards, Layton & Finger, explains, USG Corporation has
operations throughout the world, including substantial
operations in Europe. USG's European operations primarily
consist of the manufacturing and distribution of ceiling tile
and ceiling grid products. There are ceiling grid manufacturing
facilities in the United Kingdom, France and Germany. Ceiling
tile is manufactured in Belgium.
USG's Belgium operations involve debtor and nondebtor USG
subsidiaries:
-- USG Interiors, Inc.: Interiors, which is a debtor in
these chapter 11 cases, is the USG Company that manufactures
ceiling tile and ceiling grid in the U.S. Interiors is the also
the holding company for USG's European ceiling grid and ceiling
tile operations. Interiors owns 123,724 common shares of Belgium
Holdings.
-- USG Interiors International, Inc.: Interiors
International, which is a debtor in these chapter 11 cases, is a
direct, wholly-owned subsidiary of Interiors and is the holding
company for USG's ceiling operations in Asia, Central America
and South America.
-- USG Foreign Investments, Ltd.: Foreign Investments is a
nondebtor wholly owned subsidiary of USG and a holding company
for most of the USG foreign operations, including ceiling
operations not owned by or through interiors. Foreign
Investments owns one common share each of Belgium Holdings, USG
Europe and the Coordination Centre.
-- USG Belgium Manufacturing S.A.: Belgium Manufacturing
is a nondebtor subsidiary of Interiors and Foreign Investments.
Belgium Manufacturing operates USG's ceiling tile manufacturing
facility in Belgium.
-- USG Belgium Holdings, S.A.: Belgium Holdings is a
nondebtor subsidiary of Interiors and is the holding company for
USG Europe, S.A. and USG Interiors Coordination Centre, S.A.
Belgium Holdings owns 999 common shares of USG Europe and
263,855 common shares of the Coordination Centre.
-- USG Europe, S.A. ; USG Europe is a nondebtor subsidiary
of Belgium Holdings that provides market and management services
to USG's ceiling tile and ceiling grid operations in Europe.
-- USG Interiors Coordination Centre S.A.: The
Coordination Centre is a nondebtor subsidiary of Belgium
Holdings that provides treasury, data processing, accounting and
human resource services to USG's ceiling tile and ceiling grid
operations in Europe. The Coordination Centre also provides
financing to Belgium Manufacturing and other USG subsidiaries
through intercompany loans. Currently, the Coordination Centre
has a debt payable to Interiors International in the approximate
amount of EUR 19 million, and Belgium Manufacturing has a debt
payable to the Coordination Centre in the approximate amount of
EUR 93 million.
USG, Interiors and Interiors International want to streamline
their Belgian corporate structure. A corporate structure
reorganization would improve operations and create a more tax
efficient organization. The plan they wish to implement, Mr.
Knight relates, will save the USG companies more than
$10,000,000 in foreign taxes if the proposed transactions are
carried out before year-end.
Specifically, the Debtors ask the Court to enter an order
authorizing the Affected Debtors, directly or through the listed
nondebtor subsidiaries, to engage in intercompany transactions
with respect to USG's Belgium operations designed to streamline
those operations and make them more tax-efficient. The
transactions contemplate:
(a) The transfer, distribution or contribution of equity
interest in the Affected European Nondebtors and cash by and
between the Affected Debtors, Foreign Investments, and the
Affected European Nondebtors;
(b) The liquidation of Affected European Nondebtors into
other Affected European Nondebtors and;
(c) The payment or offset of intercompany debt existing
between or among the Affected Debtors and the Affected European
Nondebtors.
The Debtors will proceed by:
(1) Interiors will make a capital contribution of the U.S.
dollar equivalent to EUR 19 million to Belgium Holdings, which
in turn will make a capital contribution to the Coordination
Centre. The Coordination Centre will subsequently repay its EUR
19 million obligation to Interiors International.
(2) Foreign Investments will distribute its one common
share in Belgium Holdings to USG, which in turn will transfer
its share to Interiors as a capital contribution. Belgium
Holdings will then be wholly owned by Interiors.
(3) Foreign Investments will distribute its one common
share in the Coordination Centre, repay $500,000 of intercompany
debt to USG (this cash will enable the Coordination to cover
transaction costs related to its pending liquidation), which in
turn will transfer this share and cash to Interiors as a capital
contribution. Interiors likewise will contribute the common
share and cash to its wholly owned subsidiary Belgium Holdings.
Finally Belgium Holdings will contribute the cash to the
Coordination Centre. The Coordination Centre will them be a
wholly owned subsidiary of Belgium Holdings.
(4) Foreign Investments will distribute its one common
share in USG Europe to USG, which will in turn transfer the
share to Interiors as a capital contribution. Interior will then
transfer the one common share to its wholly owned subsidiary,
Belgium Holdings. USG Europe will be wholly owned by Belgium
Holdings as a result.
(5) Foreign Investments will distribute the common shares
that it owns in manufacturing to USG, which in turn will
contribute these shares to interiors to Interiors. As a result,
Belgium Manufacturing will be a wholly owned subsidiary of
Interiors.
(6) Interiors will contribute its entire ownership
interest in Belgium Manufacturing (preferred shared, associated
rights and common shares) to Belgium Holdings. Belgium
Manufacturing will then be a wholly owned subsidiary of Belgium
Holdings. The preferred shares of Belgium Manufacturing will be
converted into common shares.
(7) Belgium Holdings will make a capital contribution to
Belgium Manufacturing, its wholly owned subsidiary, of all the
equity in the Coordination Center.
(8) The Coordination Centre will be liquidated in Belgium
Manufacturing. Once the liquidation occurs, the EUR 93 million
intercompany debt owed by Belgium Manufacturing to the
Coordination Centre, and the corresponding receivable, will
exist in the same company, be offset and canceled.
Mr. Knight continues that since all the Affected European
Nondebtors are wholly owned USG companies, none of the proposed
changes will effect the Debtors adversely. He contends that
since the anticipated reorganization transactions involve (a)
the contribution of EUR 19,000,000 by Interiors to its wholly
owned subsidiary Interiors International and (b) the
contribution of wholly owned nondebtor Belgium Holdings, none of
the transactions should have an adverse impact on the creditors
of any particular debtor. In fact, by saving in excess of
$10,000,000 in foreign taxes, he argues, the requested relief
should materially enhance the value of the Debtors' estates.
The Debtors stress that to gain the most benefit from the
Transactions, the Transactions must be completed by the end of
this year. Also the Debtors ask that the Court waive the 10-day
stay imposed by Rule 6004(g) of the Federal Rules of Bankruptcy
Procedure on transactions pursuant to Section 363. The Debtors
believe, according to Mr. Knight, that these transactions are
sprung from sound business judgment and to benefit and best
interest of their estates and creditors. The fact that the
streamlining plan will save more than $10 million in taxes if
consummated prior to the end of calendar year 2001, makes it
extremely important that the Motion be granted before
December 31, 2001. (USG Bankruptcy News, Issue No. 14;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
VANGUARD AIRLINES: Applies for $60MM In Federal Loan Guarantees
---------------------------------------------------------------
Vanguard Airlines, Inc. (NasdaqSC: VNGD) announced that last
week it filed an application for $60 million in federal loan
guarantee assistance under the Air Transportation System and
Stabilization Act. Vanguard is seeking the federal guarantee as
part of a restructuring program that would provide the Company a
total of $80 million of capital. The restructuring program --
which is being discussed with investors, lessors and creditors -
- includes a federally guaranteed loan, new capital from
investors in exchange for a significant equity stake in the
Company and concessions from aircraft lessors and vendors.
The $60 million loan would be provided, subject to receipt of
the federal guarantee, by Westdeutsche Landesbank Girozentrale
(WestLB), a recognized leader in worldwide aviation.
"We are very pleased to be able to do business with a bank so
well recognized in global airline finance," said Scott Dickson,
Chairman, CEO and President of Vanguard Airlines.
"Vanguard has put together a comprehensive restructuring package
using the timely assistance of the federal loan guarantees,"
continued Dickson. "We have made substantial progress in
completing Vanguard's business turnaround with dramatically
improved reliability and customer service, which has already
resulted in significant year-over-year increases in load factor
despite the economy and the aftermath of September 11. The
Vanguard of today bears little resemblance to the Vanguard of
even nine months ago. Prior to September 11, we were working
with prospective investors to arrange financing to continue our
movement toward profitability. As a direct result of the
horrendous tragedy, that financing is no longer available. Our
employees, stockholders and lessors are all working hard to
implement our restructuring plan, but the federal loan guarantee
is the key component in our ability to continue providing low
fare competition in the airline industry."
"We, too, are proud to work with Vanguard and the US government
in support of rebuilding the US air transportation system
following the tragic events of September 11," said WestLB.
"Encouraging low fare competition has long been a concern of the
United States Department of Transportation," said Dickson.
"Vanguard creates substantial savings for the traveling public
through the stimulation of low fares and increased competition.
Vanguard estimates that we save travelers over $150 million a
year by stimulating competition -- without creating unhealthy
overcapacity in the industry. The DOT has repeatedly recognized
the importance of competition in bringing low airfares to the
American public. We are that competition, and we make a
substantial contribution to the overall efficiency and vitality
of the national airline system.
"The federal guarantees we are seeking are a very small
investment compared to the very large savings Vanguard creates
for the American public through our impact on competition, and a
very small investment compared to the federal grants already
extended to the nation's largest airlines. We believe the
approval of our loan guarantee application is in the best
interest of the traveling public and the American airline
industry.
"The intention of the Act is to ensure a viable and competitive
airline industry for all Americans, by restoring access to the
capital markets to airlines that lost such access as a result of
the horrendous tragedy on September 11 and who promote a
vigorous and viable national airline industry. Considering all
the circumstances, we believe there is no airline who is more
deserving of this assistance than Vanguard."
Vanguard Airlines, Kansas City's Hometown Airline, provides
convenient all-jet service to 15 cities nationwide: Atlanta,
Austin, Buffalo/Niagara Falls, Chicago-Midway, Colorado Springs
(beginning Dec. 20), Dallas/Ft. Worth, Denver, Fort Lauderdale
(beginning Dec. 10), Kansas City, Las Vegas, Los Angeles, New
Orleans, New York-LaGuardia, Pittsburgh and San Francisco. The
airline offers low fares with no advance-purchase requirements,
advanced seat assignment and extra legroom on all flights with a
fleet of eight Boeing 737s and five Boeing MD-80-series
aircraft, which feature SkyBox? Business Class service. For
more information or to make reservations online, visit
Vanguard's Web site at http://www.flyvanguard.com
WHEELING-PITTSBURGH: Urges Pres. Bush to Strengthen ITC Proposal
----------------------------------------------------------------
Wheeling-Pittsburgh Steel Corporation President and CEO James G.
Bradley called for President Bush to strengthen the remedy
proposals presented by the commissioners of the International
Trade Commission. As part of the ITC's Section 201 trade
investigation, the commissioners have recommended varying
degrees of restrictions on imported steel.
"While each of the commissioners' recommendations could help the
steel industry, we urge the President to adopt the strongest
available remedies," Bradley said. "We hope that President Bush
will use the discretion he has under law and implement the
maximum tariffs."
Bradley noted that illegal foreign imports have been damaging
the domestic steel industry for nearly four years and that it
will take an extended period of time for the industry to regain
its economic health.
"The United States steel industry has been under a prolonged
attack from foreign steel producers who have used our country to
dump their excess production. Without stronger remedies than
the commissioners recommended, it is likely that thousands more
steelworkers will lose their jobs and additional steel companies
will file for bankruptcy," Bradley said.
Wheeling-Pittsburgh Steel, the nation's ninth largest integrated
steel manufacturer, filed for Chapter 11 bankruptcy protection
on November 16, 2000. The company is working to complete its
plan of reorganization, which includes the installation of an
electric arc furnace, while considering other alternatives.
Earlier this week, the company confirmed that it was
participating in discussions regarding a consolidation within
the steel industry.
*********
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Copyright 2001. All rights reserved. ISSN: 1520-9474.
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