/raid1/www/Hosts/bankrupt/TCR_Public/011212.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, December 12, 2001, Vol. 5, No. 242
Headlines
360NETWORKS: Taps Cline Williams as Special Litigation Counsel
ANC RENTAL: Signs-Up Blank Rome as Chapter 11 Case Co-Counsel
AELTUS CBO: Fitch Junks $43.6 Million Second Priority Notes
AGERE SYSTEMS: Selling FPGA Business to Lattice Semiconductor
ALGOMA STEEL: CCAA Protection in Canada Extended Until Dec. 19
ALGOMA STEEL: Noteholders Okay Third Amended Plan of Arrangement
ALGOMA STEEL: Steelworkers Warn Long-Term Survival At Stake
AMERICA WEST: Files New Application for Federal Loan Guarantees
ARCH WIRELESS: Wants More Time to File Schedules and Statement
AZUL HOLDINGS: Tudor Trust Will Proceed to Foreclose On Assets
BETHLEHEM STEEL: Committee Signs-Up KPMG LLP as Accountants
BRIDGE INFO: Will Make $5MM Security Deposit with Harris Bank
BRILLIANT DIGITAL: Gets Financial Viability Exception from AMEX
CHIQUITA BRANDS: Gets Okay to Maintain Cash Management System
COLOR SPOT: Will Delay Quarterly Report Due to Refinancing Deals
COMDISCO INC: Court Approves Rothschild as Investment Banker
DAN RIVER INC: Amends Credit Agreement with Senior Lenders
ENRON CORP: Charitable Fund Sues Directors & Arthur Andersen
ENRON CORP.: Counterparty Exposure Estimates Top $9,230,870,000
ENRON CORP: S&P Drops Ratings to D Following Bankruptcy Filing
ENRON ENG'G & CONST: Case Summary & 20 Largest Creditors
ENTRADA NETWORKS: Fails to Meet Nasdaq Listing Requirements
EXODUS: Seeks Court Approval of Proposed Bidding Procedures
FEDERAL-MOGUL: Anticipates Filing Schedules by December 20
FRIEDE GOLDMAN: AmClyde Business Unit Signs $10MM New Contracts
HAYES LEMMERZ: Intends to Continue Use of Cash Management System
HEALTHCENTRAL.COM: NBTY Intends to Acquire Assets for $2.8MM
ICG COMMS: Gets Okay to Pay Due Diligence Fees to Exit Lenders
IT GROUP: S&P Cuts Low-B Ratings on Weaker Financial Performance
IBEAM BROADCASTING: Closes on Sale of Assets to Williams Comms.
LERNOUT & HAUSPIE: ScanSoft Gets Okay of Assets Acquisition Pact
LUMINANT WORLDWIDE: Files for Relief Under Chapter 11 in Houston
LUMINANT WORLDWIDE: Strikes Deal to Sell Key Assets to Lante
LUMINANT: Case Summary & 20 Largest Unsecured Creditors
NUMATICS: Strikes $30MM Credit Agreement with LaSalle Business
PACIFIC GAS: Makes Property Tax Payments Totaling $67 Million
PHARMING GROUP: Reaches Deal with Genzyme to Continue Operations
PLAYDIUM ENTERTAINMENT: Playdium Corporation Acquires All Assets
POLAROID CORP: Creditors' Committee Retains Akin Gump as Counsel
RELIANCE GROUP: Court Okays Zeller's Revised Employment Pact
REVLON CONSUMER: S&P Ratchets Junk Debt Rating Down a Notch
SUN HEALTHCARE: Ernst & Young Amends Proof of Claim to $4MM
THERMADYNE HOLDINGS: Has Until Jan. 18 to File Schedules
THERMOGENESIS: Annual Shareholders' Meeting Set for January 24
TRANSFINANCIAL: Will Hold Shareholders' Meeting on January 22
USG CORP: Wants Court Approval of Risk Management Transactions
U.S. WIRELESS: Court Extends Removal Period Until February 27
VLASIC FOODS: Delaware Court Confirms Joint Reorganization Plan
WHX CORP: Amends Consent Solicitation for 10-1/2% Notes Due 2005
WARNACO GROUP: Hearing Re Sale of GJM Business Set for Today
WINSTAR COMMS: Operations Will Continue for One Week
XO COMMUNICATIONS: S&P Slashes Corporate Credit Rating to D
* Meetings, Conferences and Seminars
*********
360NETWORKS: Taps Cline Williams as Special Litigation Counsel
--------------------------------------------------------------
360networks inc., and its debtor-affiliates seek to employ the
firm of Cline, Williams, Wright, Johnson & Oldfather LLP, as
their special counsel under a general retainer.
According to Shelley C. Chapman, Esq., at Willkie Farr &
Gallagher, in New York, New York, Cline Williams' proposed
retention is for the limited purpose of representing the Debtors
as special counsel, primarily with respect to certain litigation
matters.
Prior to Petition Date, Ms. Chapman relates, Cline Williams
served as outside litigation counsel to the Debtors.
Furthermore, Ms. Chapman adds, Cline Williams has been retained
by the Debtors as ordinary course counsel with respect to the
Debtors' interests in various telecommunications-related
contracts, including claims being pursued on behalf of the
Debtors in the GST Telecom, Inc., Ursus Communications and
Pathnet Telecommunications, Inc., bankruptcy cases.
In its role as special counsel, Ms. Chapman explains, Cline
Williams will continue to provide services to the Debtors in
connection with various lawsuits, such as the CapRock
Telecommunications litigation, and other matters designated by
the Debtors so long as such matters do not constitute matter
central to the Debtors' reorganization. Ms. Chapman assures the
Court that Cline Williams will work closely with the general
bankruptcy counsel so that Cline Williams' experience respecting
the Debtors can be made available to the Debtors' counsel in
these cases.
In return, the Debtors will compensate Cline Williams pursuant
to their hourly rates. Currently, the firm's standard hourly
rates range from $150 to $250 for attorneys and $90 for
paralegals & law clerks. "It is also Cline Williams' policy to
charge its clients in all areas of practice for all other
expenses incurred in connection with the client's case," Ms.
Chapman tells the Court. According to Ms. Chapman, the expenses
charged to clients include, among other things, telephone and
telecopier toll charges, mail and express mail charges, special
or hand delivery charges, document processing, photocopying
charges, travel expenses, expenses for "working meals",
computerized research and transcription costs.
Stephen H. Nelsen, Esq., a member of the firm of Cline,
Williams, Wright, Johnson & Oldfather, LLP, informs Judge
Gropper that the firm, its members and associates have:
(a) appeared in the past and may appear in the future in cases
where one or more of said parties may be involved; and
(b) represented in the past and may represent in the future
one or more of said parties, in matters unrelated to these
Chapter 11 cases and unrelated to the matters for which
Cline Williams is to be retained, except:
(1) Timothy J. Aschoff, associate general counsel for
Debtor, was employed by Cline Williams as an associate
attorney from August 8, 1999 to June 2, 2000.
(2) Sonya Ekart and Jill Jensen of Cline Williams
represent Lincoln Benefit Life, a subsidiary of
Allstate Life Insurance Company, on an ongoing basis.
In the course of that representation, we provide legal
services which are or may also be used by Allstate.
(3) Various attorneys at Cline Williams have periodically
provided legal opinions on loan transactions and
enforced deeds of trust unrelated to the Debtors on
behalf of Chase Manhattan Bank.
(4) 360networks(USA) inc. has agreed to maintain a
retainer of $50,000 with Cline Williams. On June 26,
2001, Cline Williams received a payment of $33,852 in
payment of fees and expenses. The remaining balance
owing of $11,600 was paid by applying retainer funds
to cover the outstanding balance, leaving a retainer
balance of $38,400, which should be restored to a
balance of $50,000.
"Neither I, Cline Williams, nor any member or associate, insofar
as I have been able to ascertain, represents any interest
adverse to the Debtors or their estates in the matters upon
which Cline Williams is to be engaged," Mr. Nelsen asserts. (360
Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
ANC RENTAL: Signs-Up Blank Rome as Chapter 11 Case Co-Counsel
-------------------------------------------------------------
ANC Rental Corporation, and its debtor-affiliates present to the
Court an application to employ Blank Rome Comisky and McCauley
LLP, as their bankruptcy co-counsel in these chapter 11 cases.
The Debtors seek to retain Blank Rome because:
A. Blank Rome has extensive experience and knowledge in the
field of debtors' and creditors' rights and with the
practices and procedures of the Delaware courts;
B. the Debtors believe that Blank Rome is well qualified to
represent them as debtors-in-possession in their Chapter 11
cases; and
C. Blank Rome's bankruptcy and restructuring attorneys have
developed a familiarity with the Debtors' assets, affairs
and businesses.
Lawrence Ramaekers, the Debtors President, states that Blank
Rome will provide its expertise with respect to bankruptcy-
related issues and will act as reorganization and bankruptcy
counsel for the Debtors. The firm will also provide services in
a variety of other areas as to which it has expertise, if
required, in connection with these Chapter 11 cases, including,
tax, corporate, intellectual property, securities, real estate,
employee benefits and labor law.
In connection with the employment application, Blank Rome will
be required to:
A. advise the Debtors with respect to their powers and duties as
debtors and debtors-in-possession in the continued
management and operation of their businesses and
properties;
B. attend meetings and negotiate with representatives of
creditors and other parties in interest and advise and
consult on the conduct of the case, including all of the
legal and administrative requirements of operating in
Chapter 11;
C. take all necessary action to protect and preserve the
Debtors' estates, including the prosecution of actions on
their behalf, the defense of any actions commenced against
those estates, negotiations concerning all litigation in
which the Debtors may be involved and objections to claims
filed against the estates;
D. prepare and prosecute on behalf of the Debtors all motions,
applications, answers, orders, reports and papers necessary
to the administration of the estates;
E. negotiate and prepare on the Debtors' behalf plan(s) of
reorganization, disclosure statement(s) and all related
agreements and/or documents and take any necessary action
on behalf of the Debtors to obtain confirmation of such
plan(s);
F. advise the Debtors in connection with any sale of assets;
G. appear before this Court, any appellate courts, and the U.S.
Supreme Court and protect the interests of the Debtors'
estates before such courts and the U.S. Trustee;
H. perform all other necessary legal services and provide all
other necessary legal advice to the Debtors in connection
with these cases.
Mr. Ramaekers informs the Court that the Blank Rome will charge
the Debtors on an hourly basis in accordance with its ordinary
and customary rates in effect on the date the services are
rendered. In addition, the Debtors will also be charged for
costs of support services that the counsel provides in
connection with court representation. The principal lawyers
assigned to these cases together with their varying hourly rates
are:
Bonnie Glantz Fatell $375.00 per hour
Mark J. Packel $350.00 per hour
William Burnett $215.00 per hour
Lee Harrington $185.00 per hour
Ms. Ramaekers relates that Blank Rome has provided certain legal
services to the Debtors prior the Filing Date in anticipation of
the Debtors filing for relief. In connection with such services,
and in contemplation of other services to be provided the
Debtors by Blank Rome going forward in these Chapter 11 cases,
Blank Rome received a retainer of $165,000. Blank Rome has
applied its retainer to certain amounts due and owing for
services provided pre-petition and as of the Petition Date,
approximately $78,000 remained in the retainer subject to final
reconciliation of fees and costs incurred prior to the Petition
Date.
Bonnie Glantz Fatell, a Partner in the Firm Blank Rome Comisky &
McCauley LLP, tells the Court that the Firm has undertaken an
extensive examination of its database of existing and former
clients to determine whether it has any connections with the
Debtors, its creditors or parties in interest in the Debtors'
Chapter 11 case. Based on the database examination, Ms. Fatell
concludes that in connection with this case, the Firm does not
represent any entity in this case, which has an adverse interest
to the Debtors. However, the database search reveals these
connections:
A. Current unrelated representations to Fidelity, Bank of Nova
Scotia, Citibank, Congress Financial, First Union, Fleet,
General Motors, Heller Financial, Provident, Summit, Chubb
Atlantic Indemnity Ltd., AIG, Royal Indemnity Insurance
Co., Amerada Hess, American Arbitration Association, AT&T,
Hewlett Packard, Lucent Technologies, Merill Lynch,
Northwest Airlines Inc., Prolink, Wells Fargo Card Services
Inc., Central Parking System, City of Philadelphia,
Delaware River & Bay Authority, Equity Capital Holdings
L.P., GE Modular Space, Imperial Parking Ltd., and Walt
Disney World Co.
B. Former unrelated representations to Bank of Montreal, Bank of
New York, Bank of Tokyo Mitsubishi, Capital Bank, Lehman
Brothers, MBIA, Caliber One Indemnity Co., Continental
Insurance Co., National Union Fire Insurance Co. of
Pittsburgh Pennsylvania, American Express, Loews Corp.,
Metropolitan Dade County, U.S. Equities Realty Inc.,
Cadillac Fairview Corp. Ltd., Arthur Anderson LLP, AT&T
Wireless, Chrysler Financial Corp., Federal Express Corp.,
and Goodyear Tire & Rubber.
In the Debtors' view, Blank Rome's bankruptcy and restructuring
attorneys are highly skilled, knowledgeable in the local
practice and procedures for Delaware cases, and after having
provided pre-petition services to the Debtors, have developed a
familiarity with the Debtors' affairs. (ANC Rental Bankruptcy
News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
AELTUS CBO: Fitch Junks $43.6 Million Second Priority Notes
-----------------------------------------------------------
Fitch downgrades the second priority notes of Aeltus CBO II Ltd.
(Aeltus II) and takes them off of Rating Watch Negative.
Approximately 95% of the portfolio is comprised of high yield
bonds, 30% of which are emerging market debt obligations. While
Aeltus Investment Management Inc. currently manages Aeltus II,
there is an amendment with noteholders to replace the current
investment manager with ING Ghent Asset Management LLC.
These rating actions are being taken after reviewing the
performance of the portfolio amidst increased levels of defaults
and deteriorating credit quality of the underlying assets. Given
the current quality of the portfolio, Fitch believes the credit
risk is no longer consistent with the liability ratings.
Aeltus II has been failing its Second Priority over-
collateralization test since January 2001 and its Senior over-
collateralization test since April 2001, the latter of which has
caused the Second Priority Notes to defer interest. In addition,
the weighted average Fitch rating test and ``CCC+ buckets are
well above their trigger levels. Aeltus II currently has a total
of $72,220,000 of defaulted and distressed assets still
outstanding.
As a result of our findings, Fitch downgrades the following
class of notes:
$43,676,220 second priority notes to 'C' from 'BBB-'.
Fitch has performed a review of ING Ghent Asset Management and
is hopeful that they may be able to stabilize the portfolio.
However, the high number of defaults, the low value of unsold
defaults, and the large amount of ``CCC' rated or otherwise
distressed assets may hamper their ability to turn this
portfolio around.
Fitch will continue to monitor this transaction. Deal
information and historical data is available on Fitch's Web site
at http://www.fitchratings.com
AGERE SYSTEMS: Selling FPGA Business to Lattice Semiconductor
-------------------------------------------------------------
Lattice Semiconductor Corporation (Nasdaq: LSCC) and Agere
Systems (NYSE: AGR.A) announced a definitive agreement under
which Lattice Semiconductor will acquire the FPGA business of
Agere Systems for $250 million in cash. The acquisition will be
financed through cash on hand.
Agere and Lattice anticipate closing the transaction in the
first calendar quarter of 2002 subject to regulatory approval
and other customary closing conditions. The transaction is
expected to be accretive to Lattice's calendar year 2002 pro
forma earnings before goodwill.
The transaction includes Agere's general-purpose ORCAr FPGA
product portfolio, its field programmable system chip (FPSC)
product portfolio and all related software design tools. FPSCs
are advanced system-oriented products which combine generic FPGA
logic with embedded cores dedicated to the implementation of
advanced communication protocols and high-speed input/output
(I/O) functions. As part of the transaction, approximately 100
Agere product development, marketing and technical sales
employees will join Lattice.
Lattice will also acquire certain intellectual property cores
and patents that are unique to Agere's FPGA business.
Additionally, the parties will enter into a cross-license
agreement whereby Lattice will receive rights to Agere patents
and certain intellectual property for use in current and future
FPGA and FPSC products and Agere will continue to have access to
the ORCA FPGA technology for incorporation into its "system-on-
a-chip" integrated circuits.
"This acquisition provides Lattice with a unique opportunity to
accelerate our previously announced intention to enter the FPGA
market," stated Steven A. Laub, president of Lattice. "Agere's
products are proven solutions that will complement our internal
FPGA development effort. Agere also offers a deeply experienced
and talented team capable of extending the technology and
building the product portfolio.
"We are particularly attracted to the groundbreaking FPSC
products which have strong design-in activity within key
communication equipment OEM customers. Currently unmatched in
our industry, this FPSC portfolio will immediately provide
Lattice an important means of differentiation in the FPGA
market. We look forward to leveraging our existing sales
channels, global salesforce and broad customer base to
accelerate the adoption of these leadership products," Laub
concluded.
"This sale is one of a series of actions Agere is taking to
better position our business for long-term profitable growth,"
said Sohail Khan, executive vice president of Agere's
Infrastructure Systems Group. "While FPGAs have been a strong
business for us, we are redirecting our resources to areas where
we can focus our skills on system-level integration for advanced
communications applications. The business is a strong strategic
fit with Lattice and we look forward to working with them to
ensure a smooth transition for our customers."
Lattice Semiconductor will host a teleconference today at 5:30
am, Pacific Standard Time, to discuss the details of this
transaction with securities analysts. This teleconference will
be available, live or via replay, to the public on the internet
at http://www.on24.com/clients/default/event.html?eventid=119
or through Lattice's web site at http://www.lscc.com
Goldman, Sachs & Co. served as financial advisor to Lattice in
this transaction.
Agere Systems first introduced the ORCA family of FPGAs in 1994.
Agere's FPGAs are designed for use in communications systems
such as network routers and switches. These integrated circuits
(ICs) give system providers a "clean slate" to create custom
circuitry at their own development and manufacturing sites. In
contrast, circuitry for typical "standard-cell" ICs needs to be
designed before the chips are manufactured in a semiconductor
fabrication facility. FPGAs provide flexibility to meet
evolving industry standards because the circuits can be changed
even after the systems are manufactured and deployed.
In 1998, Agere Systems pioneered a class of FPGAs known as
field-programmable system chips, or FPSCs, which combine the
benefits of both FPGAs and standard-cell IC technology on the
same chip. FPSCs add a block of standard cell logic to an FPGA,
giving system designers higher component density and performance
for those parts of their circuitry that are unlikely to change,
while retaining the advantages of programmability for faster
development and timely delivery of new system features.
Agere Systems is the world's No. 1 provider of components for
communications applications with leadership in optical
components and integrated circuits. This dual capability
uniquely positions Agere to deliver integrated solutions that
form the building blocks for advanced wired, wireless, and
optical communications networks. Agere also designs and
manufactures a wide range of semiconductor solutions for
communications-related devices used by consumers such as
cellular phones, modems, and hard disk drives for personal
computers and workstations. In addition, the company supplies
complete wireless computer networking solutions through the
ORiNOCO product line. More information about Agere Systems is
available from its Web site at http://www.agere.com
The August 31, 2001, edition of the Troubled Company Reporter
related that Standard & Poor's lowered its corporate credit and
senior secured bank loan ratings on Agere Systems Inc. to
double-'B'-minus from triple-'B'-minus, and removed the ratings
from CreditWatch, where they were placed July 24, 2001. The
action reflects, Standard & Poor's said, the agency's belief
that the company's operating profitability will remain
substantially depressed for the near to intermediate period, due
to ongoing weak markets for its communications semiconductors
and optical communications components.
Oregon-based Lattice Semiconductor Corporation designs, develops
and markets the broadest range of high-performance ISP?
programmable logic devices (PLDs) and offers total solutions for
today's advanced logic designs.
Lattice products are sold worldwide through an extensive network
of independent sales representatives and distributors, primarily
to OEM customers in the communication, computing, industrial and
military end markets. Company headquarters are located at 5555
N.E. Moore Court, Hillsboro, Oregon 97124 USA; Telephone (503)
268-8000; FAX (503) 268-8037. For more information access our
web site at: http://www.latticesemi.com
ALGOMA STEEL: CCAA Protection in Canada Extended Until Dec. 19
--------------------------------------------------------------
Algoma Steel Inc. (TSE:ALG.) announced that it has been granted
an extension of its protection under the Companies' Creditors
Arrangement Act and access to its debtor in possession (DIP)
financing to December 19, 2001.
At a meeting Monday, the noteholders approved the third amended
and restated Plan of Arrangement and Reorganization by 80% of
the value of the notes and 80% of the noteholders represented at
the meeting.
Meetings of the two classes of pension benefit creditors and of
the unsecured creditors to vote on the New Plan will be held at
the Ramada Inn in Sault Ste. Marie on Monday, December 17, 2001.
If all of the classes of affected creditors approve the New
Plan, Algoma will return to Court on Wednesday, December 19,
2001 to apply for an order sanctioning the New Plan.
Hap Stephen, the Chief Restructuring Officer of Algoma, said,
"Agreement among the key stakeholders on the New Plan was
reached last night after extensive negotiations. Mr. Justice
Farley played an important role in bringing the stakeholders
together."
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.
ALGOMA STEEL: Noteholders Okay Third Amended Plan of Arrangement
----------------------------------------------------------------
Algoma Steel Inc. (TSE:ALG.) announced that it has filed a third
amended and restated Plan of Arrangement and Reorganization with
the Court under the Companies' Creditors Arrangement Act (CCAA).
The changes set out in the third amended Plan are the result of
lengthy negotiations between representatives of the key
stakeholder groups that took place over the weekend.
Under the third amended Plan, the interest rate on the new
US$125 million notes has been increased from 9.5% to 11%.
The noteholders approved the third amended Plan at an adjourned
meeting Monday. Algoma will call new meetings of the other
classes of creditors to vote on the third amended plan on an
early date.
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.
ALGOMA STEEL: Steelworkers Warn Long-Term Survival At Stake
-----------------------------------------------------------
A revised Plan of Arrangement at Algoma Steel Inc., was approved
Monday afternoon by the Noteholders following last week's
rejection of Algoma's second amended Plan.
"Our members in Sault Ste. Marie and their families have been
going through hell over the past few weeks as the restructuring
process stumbled towards the deadline," said United
Steelworkers' Ontario/Atlantic Director Harry Hynd. "[Mon]day's
decision by the Noteholder Group of a Plan offers hope that the
uncertainty will end. Now we can focus on the real purpose of
the Company Creditors Arrangement Act (CCAA) process - namely,
ensuring the long- term survival of Algoma Steel."
The revisions to the Plan provide for a slight increase in the
rate of interest on a portion of the Noteholders' debt, and
contain restrictions to ensure no interest will be paid to the
Noteholders until the operating line of credit is paid off.
"Although many aspects of the plan are objectionable and there
are many important issues still to be resolved, we at last have
a restructuring framework approved by the Noteholders," said
Hynd. "The Noteholders' acceptance of the banks' restrictions on
interest payments addresses some of the union's medium-term
liquidity concerns, but our concerns about short-term liquidity
remain. Without substantial support from the Federal Government
in the form of a loan guarantee, Algoma will not have sufficient
liquidity coming out of CCAA protection. There is still the risk
that Algoma will fail within weeks.
"The process has been extremely difficult and stressful for
everyone concerned," said Hynd. "On behalf of the United
Steelworkers, I wish to thank the members of the banking
consortium, led by the Bank of America. It is not an
exaggeration that without the banks' support, no framework would
have been possible. My thanks also go to our members and the
community. This is by no means over, and we will need their
continued support and confidence."
Local union leaders will be meeting tonight with staff and
advisors prior to making any decisions about future steps.
AMERICA WEST: Files New Application for Federal Loan Guarantees
---------------------------------------------------------------
America West Airlines (NYSE: AWA) said it submitted to the Air
Transportation Stabilization Board amendments to its application
for $400 million in federal loan guarantees under the Air
Transportation Safety and Stabilization Act, following
discussions with the Stabilization Board. The requested
assistance from the U.S. government would be the catalyst for
more than $1 billion in financial support available to America
West from key constituents and business partners.
"We are confident that America West's application is now in a
form that can and should be approved," said W. Douglas Parker,
chairman, president and chief executive officer. "After a
tremendous amount of work by, and helpful negotiations between,
the board's staff, our lenders and our team, we believe our
submission demonstrates America West's ability to comfortably
repay the loan under very conservative assumptions about
economic and industry recovery, and provides meaningful
compensation for the loan guarantees. We continue to believe
that the approval of America West's application is in the best
interests of airline competition, the traveling public and the
U.S. economy."
On November 13, America West submitted an application to the
Stabilization Board, outlining its success as a post-
deregulation carrier, its solid financial and competitive
position prior to September 11, a sound business plan and nearly
$600 million in concessions and contributions which would result
from the $400 million in loan guarantees.
The amendments to America West's application include the
following significant changes:
* More conservative business model assumptions regarding
the rebound of the U.S. airline industry;
* Total concessions and financial assistance -- increased
by $63 million -- which now exceed $600 million;
* Significantly increased returns to taxpayers through
higher fees and the inclusion of equity;
* An increase in the at-risk portion of the loan from $26
million to $45 million to reduce the government guarantee
portion to less than 90 percent of the $445 million loan.
America West's amended loan application includes a revised
seven-year business model that continues to demonstrate that the
loan can be repaid ratably from 2005 to 2008 while the company
retains comfortable cash balances. Highlights of the model
include:
Conservative industry recovery assumptions: Despite a drop
in airline industry revenue per available seat mile (RASM) of
more than 13 percent from 2000 to 2001, the model assumes that
industry RASM will grow by only 3.9 percent in 2002. This
growth rate is the most conservative projected by a survey of
Wall Street airline analysts, whose 2002 RASM growth estimates
range from 3.9 percent to 18.6 percent and average 9.7 percent.
The America West model assumes that industry RASM rebounds 10.5
percent in 2003 to a level still slightly below the 2000 level.
>From 2004 to 2008, the model assumes industry RASM grows at a
modest 2 percent per year.
Furthermore, despite steady improvement in America West's
RASM versus the industry over the past few years, the model
assumes America West RASM grows at the same gradual rate as the
industry with adjustments only for changes in stage length and
commuter airline feed.
Significant concessions: Concessions negotiated by America
West, conditioned on approval of the loan guarantees, now total
over $600 million and include expense reductions and financings
from aircraft lessors, manufacturers, creditors, vendors and key
state and local governments.
Ability to Repay: Following from the assumptions about
industry conditions over the next two years, the business model
projects continued losses for America West in 2002 and a return
to very modest profitability in 2003. Even under more stable
industry conditions projected for the 2004 to 2008 period,
America West's model projects lower operating margins than those
achieved by the company in the comparable period from 1995 to
1999. Despite this slow and gradual rebound to margins that are
conservative compared to the airline's demonstrated ability to
generate profits, the model projects the loan to be repaid
ratably between 2005 and 2008 with America West retaining cash
balances of more than $400 million.
Additionally, the revised application includes a significantly
increased compensation proposal for the loan guarantees
including higher cash fees and the addition of warrants to
acquire approximately 3.4 million Class B shares of America West
Holdings Corporation. The cash fee structure was designed to
mirror a private commercial loan America West had negotiated
just prior to September 11, and could result in cash payments of
more than $175 million to the U.S. Treasury. The private
transaction did not provide for any concessions from America
West's business partners, nor did it include any compensation in
the form of equity.
"We are very satisfied with our application," said Parker. "The
Stabilization Board has been very diligent in its analysis of
America West's business model and rightfully focused on
negotiating an adequate return for U.S. taxpayers. Considering
our previously demonstrated financial success, our ability to
comfortably repay the loan under very conservative assumptions,
and our willingness to provide market-based compensation for the
requested loan guarantees, we believe our application has set a
high standard for qualification under the letter and spirit of
the Stabilization Act and regulations."
America West Airlines, the nation's eighth-largest carrier,
serves 88 destinations in the U.S., Canada and Mexico. Along
with its codeshare partners, America West serves more than 170
destinations worldwide. America West Airlines is a wholly owned
subsidiary of America West Holdings Corporation, an aviation and
travel services company with 2000 sales of $2.3 billion.
For additional information, visit America West Internet site at
http://www.americawest.com
ARCH WIRELESS: Wants More Time to File Schedules and Statement
--------------------------------------------------------------
Arch Wireless, Inc., and its debtor-subsidiaries, ask the U.S.
Bankruptcy Court for the District of Massachusetts for more time
to file their Schedules and Statement of Affairs. The Bankruptcy
Rules require them to file the Statement and Schedules within
fifteen days after the Petition Date.
The Debtors assert that this case is a large case involving 21
Debtors, thousands of creditors and are extremely complicated.
In order to prepare the Statements and Schedules, the Debtors
must gather information from books, records and documents
relating to thousands of transactions throughout United States,
Canada, Puerto Rico and the U.S. Virgin Islands. Collection of
information necessary to complete the Statements and Schedules
will require substantial time and effort on the part of the
Debtors' employees.
Consequently, it will be unlikely that the Debtors will be able
to complete the Statements and Schedules properly and accurately
within the prescribed time period. The Debtors, therefore, ask
for an additional 45 days or 60 days after the Petition Date.
Arch Wireless, Inc. through its subsidiaries, is a leading
provider of wireless messaging and information services in the
United States. The Company filed for chapter 11 protection on
December 6, 2001 in the U.S. Bankruptcy Court for the District
of Massachusetts. Mark N. Polebaum, Esq. at Hale & Dorr LLP
represents the Debtors in their restructuring effort. When the
company filed for protection from its creditors, it listed
$696,449,000 in assets and $2,163,053,000 in debt.
DebtTraders reports that Arch Communications Inc.'s (Arch
Wireless as the underlying issuer) 13.750% bond due 2008
(ARCHC2) trades between 0.250 and 1.000. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ARCHC2 for
real-time bond pricing.
AZUL HOLDINGS: Tudor Trust Will Proceed to Foreclose On Assets
--------------------------------------------------------------
Azul Holdings Inc., (OTC Bulletin Board: AZUL) announced that it
has been advised by Tudor Trust that it intends to proceed with
its right to foreclose on the assets of Azul as a result of the
uncured default on Azul's greater than $15,000,000 indebtedness
to Tudor Trust. A foreclosure sale has been scheduled for
December 28, 2001. The foreclosure will not affect the
companies whose securities are held by Azul, none of which is
indebted to Tudor Trust. During the interim Azul will continue
its efforts to utilize its assets for the repayment of the
indebtedness to Tudor Trust.
For more information please contact Ed Wittman at (303) 448-9441
or visit Azul on the web at: http://www.azulholdings.com
BETHLEHEM STEEL: Committee Signs-Up KPMG LLP as Accountants
-----------------------------------------------------------
The Official Committee of Unsecured Creditors of Bethlehem Steel
Corporation, and its debtor-affiliates, has chosen KPMG LLP, a
United States Partnership, and KPMG LLP, a Canadian partnership,
as accountants and financial advisors as its accountants and
financial advisors nunc pro tunc to October 27, 2001.
KPMG-US is a firm of independent public accountants, Melissa
Kibler Knoll, a partner in the firm, relates. On the other
hand, Joseph A. Tucker, a partner in KPMG-Canada, says that it
is a professional services firm whose partners are members of
the Canadian Institute of Chartered Accountants. Both are
member firms of KPMG International, a Swiss association.
In behalf of the Committee, Catherine Krug of National City Bank
tells Judge Lifland that the Committee needs assistance in
collecting, analyzing and presenting accounting, financial and
other information in relation to these chapter 11 cases. The
Committee selected KPMG because of the firm's diverse experience
and extensive knowledge in the fields of accounting, taxation
and bankruptcy, Ms. Krug explains.
Ms. Krug lists the services that the Committee expects KPMG to
render:
(i) Review of reports or filings that are prepared pursuant
to the Bankruptcy Code, the Bankruptcy Rules or the
Local Rules, in accordance with orders of the Bankruptcy
Court or at the request or direction of the Office of
the United States Trustee, including, but not limited
to, schedules of assets and liabilities, statements of
financial affairs and monthly operating reports;
(ii) Review and analysis of the Debtors' financial
information, including, but not limited to, cash
receipts and disbursements, financial statement items
and proposed or potential transactions for which
Bankruptcy Court approval is or may be sought;
(iii) Analysis and monitoring of financial results and
operations;
(iv) Review, evaluation and critique of the Debtors'
financial projections and assumptions;
(v) Upon request of the Committee, developing and providing
financial and operational models to the Committee and/or
the Debtors regarding the Debtors' businesses;
(vi) Review and analysis of cash collateral and debtor-in-
possession financing arrangements and budgets, including
reports prepared in connection therewith;
(vii) Evaluation of compensation and benefit issues, including
pension and other post-retirement employee benefit
obligations, labor agreements and potential employee
retention and severance plans;
(viii) Assistance with identifying, evaluating and reviewing
potential cost containment and liquidity enhancement
opportunities;
(ix) Assistance with identifying, evaluating and reviewing
operational improvement and asset redeployment
opportunities;
(x) Analysis of assumption and rejection issues regarding
executory contracts and leases;
(xi) Review and analysis of the Debtors' proposed business
plans and strategy and the business, operations,
financial condition and prospects of the Debtors
generally;
(xii) Analysis of enterprise, liquidation and reorganization
values;
(xiii) Assistance in reviewing, developing and evaluating
reorganization strategies and alternatives available to
the creditors and the Debtors;
(xiv) Assistance in formulating, negotiating and documenting a
plan of reorganization, analyzing feasibility and
preparing, developing and analyzing information
appropriate for confirmation;
(xv) Advice and assistance to the Committee in, and, where
appropriate, participation in or attendance at,
negotiations and meetings with the Debtors, lenders and
other parties in interest;
(xvi) Advice and assistance in evaluating the tax consequences
of proposed plans of reorganization or other
transactions;
(xvii) Assistance with analysis of claims, including analyses
of creditors' claims by type and entity;
(xviii) Administration of the collaborative workspace for the
use of the Committee and the advisors;
(xix) Investigation and forensic analysis of the Debtors' pre-
petition transactions or other transfers of cash or
other assets;
(xx) Litigation consulting services and expert witness
testimony regarding confirmation issues, avoidance
actions or other matters; and
(xxi) Other such functions as requested by the Committee or
its counsel to assist the Committee in these chapter 11
cases.
According to Ms. Krug, KPMG's requested compensation for
professional services will be based upon the hours actually
expended by each assigned staff member at each staff member's
hourly billing rate:
Partners $510 - $570
Director / Sr. Managers $420 - $480
Managers $330 - $390
Senior Associates $240 - $300
Associates $150 - $210
Paraprofessionals $120
KPMG will also seek reimbursement for necessary expenses
incurred, Ms. Krug adds.
"KPMG does not hold or represent an interest adverse to the
estate that would impair KPMG's ability to objectively perform
professional services for the Committee," Ms. Knoll assures
Judge Lifland. Mr. Tucker avows that KPMG is a "disinterest
person" as defined in section 101(14) of the Bankruptcy Code,
given that KPMG:
(a) is not a creditor, an equity security holder, or an
insider of the Debtors;
(b) is not and was not an investment banker for any
outstanding security of the Debtors;
(c) has not been within 3 years before the commencement of
this chapter 11 case, an investment banker for a
security of the Debtors, or an attorney for such
investment banker in connection with the offer, sale or
issuance of a security of the Debtors;
(d) is not and was not, within 2 years before the
commencement of this chapter 11 case, a director,
officer or employee of the Debtors or of an investment
banker of the Debtors; and
(e) does not have an interest materially adverse to the
interest of the estate or of any class of creditors or
equity security holders, by reason of any direct or
indirect relationship to, connection with or interest in
the Debtors or an investment banker of the Debtors or
for any other reason. (Bethlehem Bankruptcy News, Issue
No. 6; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
BRIDGE INFO: Will Make $5MM Security Deposit with Harris Bank
-------------------------------------------------------------
Harris Trust and Savings Bank is concerned that there may not be
enough funds available to cover obligations its incurred in
connection with its provision of cash management services to the
Debtors. Accordingly, Harris Bank requests Bridge Information
Systems, Inc., and its debtor-affiliates, to provide a
$5,000,000 security deposit for any obligations it incurred.
After obtaining the consent of the Pre-petition Lenders,
Lessors, and DIP Lenders, the Debtors and Harris Bank enter into
a stipulation with these provisions:
(1) The Debtors shall deposit $5,000,000 with Harris Bank
solely as additional security for any Obligations incurred
by Harris Bank exclusively in connection with its
provision of the services, which the Debtors will maintain
and will continue to maintain with Harris Bank, and which
will earn a money market rate of return in the Account
that will inure to the benefit of the Debtors. Harris
Bank acknowledges and agrees that the Account shall not be
available as collateral or by way of offset or otherwise
to secure or repay any other indebtedness.
(2) The Debtors acknowledge and agree that Harris Bank has a
first priority perfected lien on and security interest in,
and grant to Harris Bank a first priority perfected lien
on and a security interest in the Account and all funds
now or hereafter on deposit in the Account as collateral
security for the obligations incurred by Harris Bank in
respect of the Services.
(3) The Debtors further agree that upon incurring any
obligation for which funds in the cash management system
accounts held at Harris Bank are inadequate to discharge,
Harris Bank shall have, in addition to such other rights
and remedies under the authorization order and under
applicable law, the right to:
(a) liquidate and sell all such investments,
(b) appropriate such necessary funds and property to
Harris Bank's own exclusive use and benefit to the
extent necessary to discharge such Obligation, and
(c) apply such funds, property and proceeds thereof in
reduction of such Obligations.
(4) This agreement shall terminate as soon as possible, but in
any event, not more than 60 days after the termination of
the Cash Management System. Upon termination, Harris Bank
shall return to the Debtors the balance in the Account
together with all accrued interest, as soon as
practicable, but in no event later than 60 days after
notice of termination of the Cash Management System,
provided that Harris Bank agrees to review from time to
time, using its reasonable business judgment, the
necessity for the Debtors to continue to maintain all of
the funds in the Account and may release a portion of the
Account to the Debtors in its sole discretion.
The Debtors contend that the proposed security deposit will
allow them to continue to realize the benefits of their used of
the Services provided by Harris Bank. If the relief requested
is not granted, Thomas J. Moloney, Esq., at Cleary, Gottlieb,
Steen & Hamilton, in New York, New York, warns that the Debtors'
operations would be hampered if Harris Bank would cease to
provide the Services. Furthermore, Mr. Moloney says, the
Debtors do not believe that they would be able to obtain
replacement cash management services from another bank upon
better terms than those Harris Bank requires.
Thus, the Debtors ask Judge McDonald to approve the Stipulation,
including the authorization of the Debtors' deposit of
additional security. (Bridge Bankruptcy News, Issue No. 22;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
BRILLIANT DIGITAL: Gets Financial Viability Exception from AMEX
---------------------------------------------------------------
Brilliant Digital Entertainment, Inc. (Amex: BDE) reported that
the following letter was mailed to its stockholders:
December 10, 2001
VIA FIRST CLASS MAIL
To the Stockholders of
Brilliant Digital Entertainment, Inc.
Re: Proposed Financing Transaction
Dear Stockholder:
This letter is being sent to notify you of a proposed financing
transaction among Brilliant Digital Entertainment, Inc. (which
we refer to in this letter as "we," "us" or "our") and certain
investors, which we describe in detail below. We refer to the
financing transaction in this letter as the "Transaction."
According to the American Stock Exchange's Listing Standards,
Policies and Requirements (we refer to the American Stock
Exchange in this letter as "AMEX"), conducting the Transaction
would ordinarily require the approval of our stockholders.
Pursuant to Rule 710 of AMEX's Listing Standards, Policies and
Requirements, we have sought and received from the AMEX a
financial viability exception from obtaining stockholder
approval of the Transaction. The Transaction has been
unanimously approved by our Audit Committee as well as by our
Board of Directors, with only our Chairman abstaining because of
his potential financial interests in the Transaction. Our Board
has approved the Transaction and sought the Rule 710 exception
because (i) our cash reserves are nearly exhausted, and (ii) it
believes the delay in securing stockholder approval would
seriously jeopardize our financial viability and therefore our
ability to continue as a going concern. Accordingly, the Board
believes the Transaction is in our best interests and in the
best interests of our stockholders.
As reported in our Quarterly Report on Form 10-QSB filed with
the Securities and Exchange Commission on August 14, 2001, in
May 2001 we sold to Harris Toibb, Europlay 1, LLC (an entity in
which our Chairman has an ownership interest) and Preston Ford,
Inc. secured convertible promissory notes (the "Original Notes")
in the aggregate principal amount of $2,264,150 and three-year
warrants (the "Original Warrants") to purchase up to an
aggregate of 2,850,393 shares of our Common Stock at exercise
prices of $0.793 per share (with respect to 2,792,118 shares)
and $0.858 per share (with respect to 58,275 shares). We sold
these securities for an aggregate purchase price of $2,264,150.
The Original Notes have a term of eighteen months from the date
of issuance and an interest rate of 10% per annum, payable at
maturity. The principal amount of the Original Notes and, at
the option of the holder, all accrued interest, may be converted
by the holder into shares of our Common Stock at a conversion
price of $0.706 per share. The Original Notes are secured by
all of our assets and the assets of our subsidiaries, B3D, Inc.
and Brilliant Studios, Inc., and guaranteed by B3D, Inc. and
Brilliant Studios, Inc. The Original Notes and Original
Warrants are being amended in the Transaction.
The Transaction is structured similar to the financing we
conducted in May 2001 and involves one of the same investors.
In the Transaction, we intend to sell to Harris Toibb and Capel
Capital Ltd. secured convertible promissory notes (the "New
Notes") in the aggregate principal amount of $750,000 (the
"Principal Amount") and warrants (the "New Warrants") to
purchase up to that number of shares of our common stock
obtained by dividing 200% of the Principal Amount by the lesser
of (i) $0.20, or (ii) the volume weighted average price of a
share of our Common Stock on AMEX, or any exchange on which the
Common Stock is then traded, over any five (5) consecutive
trading days commencing on the issuance date of the New Warrants
and terminating at 5:00 p.m. (Pacific Standard Time) on November
10, 2002 (we refer to items (i) and (ii) collectively as the
"Conversion Price"). The New Warrants are exercisable at a
price per share equal to 1.125 times the Conversion Price. The
New Notes mature simultaneous with the Original Notes on
November 10, 2002 and bear interest at the rate of 10% per
annum. The principal amount of the New Notes and, at the option
of the holder, all accrued interest, may be converted by the
holder into shares of our Common Stock at the Conversion Price.
As with the May 2001 financing, the New Notes are secured by all
of our assets and the assets of our two subsidiaries, B3D, Inc.
and Brilliant Studios, Inc., and guaranteed by B3D, Inc. and
Brilliant Studios, Inc.
As a condition to the Transaction, the Original Notes and the
Original Warrants will be amended to correspond to all the terms
of the recent financing transaction. As a consequence, Harris
Toibb, Europlay 1, LLC and Preston Ford, Inc. will be able to
convert the aggregate purchase price of the Original Notes and
all accrued interest into shares of our common stock at the much
lower Conversion Price for the New Notes. In addition, these
original investors will be able to exercise the Original
Warrants at a price per share equal to 1.125 times the much
lower Conversion Price.
The Transaction is scheduled to close on or around Wednesday
December 19, 2001, subject to our satisfaction of certain
closing conditions. In support of the Transaction, we have
sought and received an opinion from a reputable financial firm
that the Transaction is fair to our stockholders from a
financial point of view.
Upon conversion and exercise of his notes and warrants, Harris
Toibb would own approximately 58% of our issued and outstanding
common stock, assuming a Conversion Price of $0.20. However,
Harris Toibb's ability to convert and exercise a substantial
portion of his notes and warrants is subject to our stockholders
approving an amendment to our certificate of incorporation that
would increase the number of shares of common stock we are
authorized to issue. We intend to call a special meeting of our
stockholders and seek stockholder approval of this amendment to
our certificate of incorporation as soon as practicable
following the closing of the Transaction.
Prior to accepting the terms of the Transaction, our Chairman,
Chief Executive Officer and Chief Financial Officer contacted
numerous potential investors in attempts to identify a potential
strategic transaction favorable to our stockholders.
Specifically, we contacted five potential strategic partners.
In our discussions, we introduced and indicated our interest in
a number of strategic scenarios including equity or debt
financing and acquisition or merger structures. Additionally,
we contacted at least ten financial investors and two investment
banks to discuss additional infusions of cash in either debt or
equity transactions. These discussions did not result in any
potential transaction.
Additionally, our Board considered our current and historical
financial condition and results of operations, as well as our
prospects and strategic objectives. In particular, the Board
examined our historical market prices and trading activity,
recent operating losses, declining cash balances, decline in
revenue, negative working capital, and the general economic
downturn. The Board determined that these factors made it
extremely difficult for us to immediately attract other equity
investments, debt financings or strategic partnership
transactions. The Board determined that if our financial
condition continued to worsen and if we were unable to attract
additional alternative equity or debt financing or other
strategic transactions immediately, we would be unable to
continue as a going concern and would be forced to consider
steps that would protect our assets for the benefit of our
creditors.
Given our current lack of financing alternatives and our
immediate need for capital, our Board is not aware of any
material controversy among stockholders regarding the
Transaction and believes the Transaction is necessary to ensure
our continuing viability. Specifically, our Board believes that
stockholders would prefer that we continue our current
operations in order to potentially increase stockholder value,
rather than lose our ability to operate as an ongoing entity.
Accordingly, our Board believes the Transaction is in our best
interests and in the best interests of our stockholders.
Should you have any questions regarding the foregoing, please
feel free to contact Rob Chmiel, our Chief Financial Officer, at
(818) 615-1500.
Sincerely,
Brilliant Digital Entertainment, Inc.
Kevin Bermeister
Chief Executive Officer
* * *
Brilliant Digital Entertainment, Inc. (Amex: BDE) is a leading
developer of real-time 3D technology for rich media content
creation, distribution and ad serving for the Internet. It
sells its b3d Studio content creation and authoring toolset to
enable the creation and delivery of interactive, streaming,
real-time 3D graphics over the Internet, and licenses its ad
serving technology to the content and advertising communities.
The b3d Studio toolset is used by studios, production houses,
web content suppliers and advertising agencies to produce
entertainment, advertising and music content for consumers
distributed over the Internet. Brilliant also licenses its
Brilliant Banner ad serving technology to the web based
advertising industry. Brilliant produces real-time-3D digitally
animated interactive titles featuring popular characters such as
Superman, Xena, KISS and Ace Ventura, and music artists such as
DMX, Ja Rule, Sum 41 and Ludacris. Developed using Brilliant's
proprietary suite of b3d software tools, these full-screen
productions have small files for faster downloads. Content is
distributed broadly via Internet syndication to partners
including Warner Bros. Online, MTV.com, Road Runner and VH1.com.
Find out more at http://www.brilliantdigital.com
CHIQUITA BRANDS: Gets Okay to Maintain Cash Management System
-------------------------------------------------------------
Chiquita Brands Inc., Chiquita Brands International Inc.'s main
direct subsidiary, maintains a centralized cash management
system for many affiliated companies, including the Debtor.
Robert W. Olson, the Debtor's Senior Vice President, General
Counsel and Secretary, tells the Court that all of the cash
needs of the Debtor are processed and paid by Chiquita Brands
Inc., which obtains funds through its credit facility.
Generally, Mr. Olson explains, expenses the Debtor incurs
include: salaries, bonuses, payroll and other taxes, employee
benefits, reimbursements, consulting and professional fees,
retirement benefits, insurance premiums, expenses to support
investor relations, and fees associated with the Debtor's Board
of Directors. "The Debtor does not have a separate account used
to process such obligations," Mr. Olson emphasizes. Rather, Mr.
Olson notes, Chiquita Brands Inc. processes all of the Debtor's
payment obligations in its books and charges the Debtor for the
expenses paid pursuant to an inter-company charge.
To the extent that Chiquita Brands Inc. pays an obligation of
the Debtor that can ultimately be allocated among the Debtor's
subsidiaries, Mr. Olson relates, the Debtor books an inter-
company charge on its books for such allocable amount.
Similarly, to the extent that Chiquita Brands Inc. pays its
obligations and a portion of which can be allocated to the
Debtor, Mr. Olson says, Chiquita Brands Inc. will book an inter-
company charge against the Debtor for such allocable amount.
By motion, the Debtor asks Judge Aug for permission to continue
utilizing its current cash management system, including
authority to make and incur inter-company charges as
appropriate.
Mr. Olson asserts that allowing the Debtor to maintain its
existing cash management system with Chiquita Brands Inc. will
permit the Debtor to meet its obligations on a current and
uninterrupted basis. "This cannot happen if the Debtor is
required to seek alternative sources for funding," Mr. Olson
notes.
According to Mr. Olson, the basic structure of the Debtor's cash
management system has been utilized by the Debtor for
approximately one year and constitutes the Debtor's ordinary,
usual and essential business practice. This system, Mr. Olson
points out, is similar to those commonly employed by corporate
enterprises comparable to the Debtor in size and complexity.
With this system, the Debtor has the ability to:
(a) tightly control corporate funds,
(b) ensure cash availability, and
(c) reduce administrative expenses by facilitating the
movement of funds and the development of timely and
accurate account balance and presentment information.
If the Debtor is forced to establish an entirely new system of
accounts and a new cash management system, Mr. Olson tells the
Court, such task is difficult and unnecessary considering that
the Debtor, as a holding company has no operations. Under the
circumstances, Mr. Olson insists that maintenance of the
Debtor's cash management system is not only essential, but it is
also in the best interests of its estate and creditors. Mr.
Olson assures the Court that the Debtor will continue to
maintain strict records with respect to all transfers of cash,
so that all transactions can be readily ascertained, traced and
recorded properly on applicable inter-company accounts.
Furthermore, Mr. Olson argues, allowing the Debtor to maintain
its existing cash management system would preserve the "business
as usual" atmosphere and avoid the unnecessary distractions that
would inevitably be associated with any substantial disruption
in the Debtor's cash management system.
Hence, the Debtor contends that the Court should authorize the
Debtor's continued use of its existing cash management system.
Persuaded by the Debtor's arguments, Judge Aug authorizes the
Debtor to continue using its existing cash management system.
(Chiquita Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
COLOR SPOT: Will Delay Quarterly Report Due to Refinancing Deals
----------------------------------------------------------------
Filing of Color Spot Nurseries Inc.'s financial statements with
the SEC for the quarter ended June 30, 2001, has been delayed as
a result of various activities related to the Company's
refinancing efforts, including, among other things, a
refinancing of its credit facility with Fleet Capital
Corporation and completion of an exchange offer for its 10 1/2 %
Senior Subordinated Notes.
The Company expects to recognize a loss from operations of $3.6
million for the three months ended September 29, 2001 compared
to a loss from operations of $5.0 million for the three months
ended September 30, 2000. It expects to recognize income from
operations of 11.5 million for the nine months ended September
29, 2001 compared to income from operations of $5.9 million for
the nine months ended September 30, 2000. The Company expects to
recognize net losses of $6.2 million and $1.4 million,
respectively for the three and nine months ending September 29,
2001 compared to net losses of $6.5 million and $6.3 million,
respectively for the three and nine months ending September 30,
2000. These improvements were primarily the result of improved
pricing strategies, reduced excess production, tighter cost
controls and improved distribution efficiencies partially offset
by higher utility rates.
COMDISCO INC: Court Approves Rothschild as Investment Banker
------------------------------------------------------------
In his final order, Judge Barliant authorizes Comdisco, Inc.,
and its debtor-affiliates to employ and retain Rothschild Inc.,
as its investment banker under a general retainer. The Court
rules that the compensation paid to Rothschild shall not be
subject to challenge except under the standard review set forth
in section 328(a) of the Bankruptcy Code, provided, however, the
United States Trustee shall retain its rights to object to
Rothschild's Completion Fee pursuant to the reasonableness
standard provided in section 330 of the Bankruptcy Code.
(Comdisco Bankruptcy News, Issue No. 16; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
DAN RIVER INC: Amends Credit Agreement with Senior Lenders
----------------------------------------------------------
Dan River Inc., (NYSE: DRF) announced that it has amended its
credit agreement with its senior lenders.
The amendment modifies various portions of the credit agreement
and permanently waives financial covenant defaults that were the
subject of an interim waiver dated November 12, 2001. For
specific details, refer to the amendment that has been included
as an exhibit to Dan River's Current Report Form 8-K which will
be filed by the company.
Joseph L. Lanier, Jr., Chairman and Chief Executive Office said,
"We are pleased that we have been able to reach an agreement
with our senior lenders in these difficult times. The amendment
establishes a borrowing base, new covenant levels and interest
rates, and provides the company additional liquidity in 2002 in
order to fund expected working capital needs as the economy
improves."
The company currently has cash on hand and availability under
its revolving credit agreement in excess of $55 million. Mr.
Lanier closed by saying, "Dan River appreciates the cooperation
of our senior lenders in reaching the agreement and the
confidence this expresses in the company."
Dan River is a leading manufacturer and marketer of textile
products for the home fashions and apparel fabric markets.
ENRON CORP: Charitable Fund Sues Directors & Arthur Andersen
------------------------------------------------------------
Scott + Scott, LLC (scottlaw@scott-scott.com), a Connecticut-
based law firm with offices also outside of Philadelphia, filed
an Amended Class Action Complaint on December 6, 2001 for
Violations of the Federal Securities Laws in the United States
District Court for the Southern District of Texas (Civil Action
No, H-01-4071) on behalf of purchasers of publicly traded debt
securities of Enron Corporation (NYSE: ENE) during the period of
October 19, 1998 to November 19, 2001, inclusive.
If you would like more information about this particular
lawsuit, please contact Neil Rothstein, Esq., (nrothstein@scott-
scott.com) or David R. Scott, Esq., (800)404-7770
(drscott@scott-scott.com) (you may also visit its website at
http://www.scott-scott.com). If you wish to serve as lead
plaintiff you must move the Court no later than 60 days from
October 22, 2001. Any purchaser as described herein may move
the Court to serve as lead plaintiff through counsel of their
choice, or may choose to do nothing and remain an absent class
member.
The charitable fund that filed this lawsuit helps to provide
education to children, teach young adults job skills, assist the
mentally impaired/challenged and provides funds for social
services. It generally dedicates its resources to those
charitable organizations that provide pertinent social services.
The complaint charges Arthur Andersen, LLP, Enron's auditor, and
twenty-nine (29) officers and directors of Enron with violations
of Sections 11,12(a)(2) and 15 of the Securities Exchange Act of
1933. Insiders are alleged to have reaped over 1 billion
dollars in inside trading. As readily reported, Enron has
announced that it will restate its earnings for 1997, 1998, 1999
and 2000, and the first two quarters of 2001. Enron is engaged
in the businesses of natural gas, electricity and communications
to wholesale and retail customers. Enron is not named as
defendant in this action, which is filed solely on behalf of
debt holders, as it has filed for protection pursuant to Chapter
11 of the U.S. Bankruptcy Code.
Scott + Scott, LLC is a Connecticut based law firm engaged in
the representation of funds, foundations, endowments,
institutions, pension funds, individuals and other entities
throughout the world in securities, antitrust and other complex
class and non-class action litigation. The firm was founded
upon its ongoing dedication to client satisfaction and
communication. The firm's attorneys litigate in both state and
federal courts throughout the nation.
If you would like to obtain more information about this case and
would like to discuss the matter with an attorney. Please
contact: David R. Scott or Neil Rothstein.
ENRON CORP.: Counterparty Exposure Estimates Top $9,230,870,000
---------------------------------------------------------------
Companies around the globe -- financial institutions,
insurance companies, energy market participants, and a long
list of others -- have started to tabulate their exposure to
the fall-out of Enron Corp.'s record-setting U.S. Bankruptcy
filing. The total, based on corporate disclosures by parties
doing business with Enron (49 different companies as of the
latest), tops $9,230,870,000:
Estimate Counterparty Exposure
-------- ------------ --------
$3,640,000,000 AXA Enron shares
$1,820,000,000 Barclay's Bank's Enron shares of stock
BGI
$715,000,000 Aegon N.V., Chubb Investment portfolio
Corp. and ING group
$420,000,000 UBS Warburg Enron shares
$420,000,000 Merrill Lynch Enron shares
Investment
Management
$320,000,000 John Hancock Investment portfolio
Financial Services
$195,000,000 ING GROEP N.V. unsecured loans and bonds
$182,000,000 Invesco Enron shares
$171,000,000 Principal Financial Investment portfolio
Services Group Inc.
$160,000,000 Abbey National PLC unsecured loans and bonds
$117,000,000 St. Paul Companies Insurance exposure and
value of Enron Corporate
Senior's unsecured debt
$112,000,000 Hartford Financial Maximum exposure on
Services Group, insurance coverage
Inc. and investment portfolios
$103,600,000 HSBC Enron shares
$100,000,000 J.P. Morgan Chase Unsecured loans through
& Co. investment vehicle,
Sequoia
$95,000,000 Abbey National Enron bonds
$89,000,000 Deutsche Bank AG unsecured loans and bonds
$89,000,000 Commerzbank AG unsecured loan bonds
$58,800,000 Friends Ivory Enron shares
& Sime
$50,000,000 CNA Financial Corp. Surety exposures
including
advanced payment
obligation bonds and
reinsurance of surety
obligations
$49,000,000 Legal & General Enron shares
$46,200,000 CGNU Enron shares
$43,000,000 Midland Two long term gas
Congeneration contracts, one to expire
Venture in 2006 and the other to
expire in 2007
$40,000,000 Aquila, Exposure to wholesale of
UtiliCorp United natural gas
subsidiary
$40,000,000 Safeco Surety bond coverage
purchased by Enron and
non-operating losses from
write-downs and sales of
Enron bonds
$31,500,000 UtiliCorp United Unsecured promissory
notes
$25,000,000 Everest Re Group underwriting, credit and
Ltd investment
$15,000,000 Pinnacle West Various transactions with
Capital Corp. Enron related to the
company's energy
generation, selling and
delivery
$15,000,000 AES Corp. Power and gas supply
contracts
$10,000,000 Ameren Corp. Accounts receivable
$9,300,000 FBL Financial Enron bonds
Group Inc.
$8,000,000 CNA Surety Unmet contractual
Corporation obligations which are
supported by the
company's
surety bonds
$7,800,000 West Coast Energy Loan of natural gas
Inc. earlier in the year
$7,320,000 Patina Oil Hedging contracts and gas
and Gas Corp. delivery
$6,000,000 TEPPCO Partners LP The difference between
crude oil sales and
purchases and natural gas
and crude oil
transportation fees
$4,000,000 Clayton William Natural gas swaps and
Energy Inc. crude oil collars (Fixed
price contracts)
$3,500,000 Tenaska Inc. Gas trading contracts
$3,500,000 TECO Energy trade payables and
Inc. and other trading
positions
$2,200,000 Pure Resources Hedge contracts
Inc.
$2,000,000 Berry Petroleum Hedging contracts
Company
$1,700,000 WGL Holdings Inc. Various business
activities with Enron
$1,300,000 Contour Energy Co. Financial natural gas
hedge contracts for
December 2001
$675,000 Berger Iron Works Cost of stainless steel
railings
and other items for
Enron's new 40-storey
office tower
$385,000 Hines Real Estate Construction work on the
Development Firm the Enron Center South
building
$385,000 Vintage Petroleum Credit exposure
Inc.
$222,000 Plains Resource Contracts in the form of
Inc. put and call options
$200,000 Kendall Heaton Fees for architecture
Associates work on Enron's
office tower
$200,000 Prize Energy Corp. Hedging contracts
$75,000 Resource America Contract agreements on
Inc. equipment leasing and
real
estate finance
$8,000 Clark Condon Balance of a $40,000
Associates contract to work on
Enron's office tower
ENRON CORP: S&P Drops Ratings to D Following Bankruptcy Filing
--------------------------------------------------------------
Standard & Poor's lowered its corporate credit and senior
unsecured debt ratings on Enron Corp.'s to 'D' from double-'C'
and the subordinated debt and preferred stock ratings to 'D'
from single-'C' following Enron's December 2, 2001 filing for
Chapter 11 bankruptcy protection. In addition, the guaranteed
preferred stock ratings of four Enron units were lowered to 'D'
from single-'C'. The ratings were removed from CreditWatch with
negative implications.
The ratings at other Enron subsidiaries and related entities are
unchanged because they were not included in Enron's bankruptcy
petition, but each is being reviewed for possible rating action
depending on how Enron's bankruptcy case proceeds.
Ratings Lowered and Removed from CreditWatch
Enron Corp. TO FROM
Corporate credit rating D CC
Senior unsecured debt D CC
Subordinated debt D C
Preferred stock D C
Enron Capital LLC
Preferred stock* D C
*Guaranteed by Enron Corp.
Enron Capital Resources L.P.
Preferred stock* D C
*Guaranteed by Enron Corp.
Enron Capital Trust I
Preferred stock* D C
*Guaranteed by Enron Corp.
Enron Capital Trust II
Preferred stock* D C
*Guaranteed by Enron Corp.
Ratings Remaining on CreditWatch
with Negative Implications
Azurix Corp.
Corporate credit rating CC
Senior unsecured debt CC
Transwestern Pipeline Co.
Corporate credit rating CC
Northern Natural Gas Co.
Corporate credit rating CC
Senior unsecured debt CC
Marlin Water Trust II
Corporate credit rating C
Senior secured debt C
Osprey Inc.
Corporate credit rating C
Senior secured debt C
Osprey Trust
Corporate credit rating C
Senior secured debt C
Enron Funding Corp.
Corporate credit rating CC
ENRON ENG'G & CONST: Case Summary & 20 Largest Creditors
--------------------------------------------------------
Debtor: Enron Engineering & Construction Company
1400 Smith Street
Houston, TX 77002
Bankruptcy Case No.: 01-16110-ajg
Type of Business: Debtor is engaged primarily in the business
of providing engineering and construction
services.
Chapter 11 Petition Date: December 6, 2001
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtor's Counsel: Melanie Gray, Esq.
Weil, Gotshal & Manges LLP
700 Louisiana, Suite 1600
Houston, Texas 77002
Telephone: (713) 546-5000
-and-
Brian S. Rosen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Total Assets: $70,126,078
Total Debts: $52,292,199
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Pro Business Comerica Trade Debt $209,062
Bank - California
Bracewell & Patterson Trade Debt $66,806
LLP
DeWitt Construction Inc. TradeDebt $37,840
Corestaff Services Trade Debt $10,749
The Nicholas Group Trade Debt $6,640
Thermoflow Inc Trade Debt $2,200
Onsite Energy Services Trade Debt $1,834
Afife Khoury Av. Trade Debt $1,375
Americo Vespuccio
Xerox Corporation Trade Debt $1,273
Access Brazil/Abra Ltd Trade Debt $1,100
A. F. (Tony) Trade Debt $1,000
Corporate Express Trade Debt $593
Cingular Wireless Trade Debt $237
Kwik Kopy Trade Debt $580
RLW Analytics Inc Trade Debt $500
Momentum Document Trade Debt $342
Services Inc.
The Wall Street Journal Trade Debt $175
Luther's Bar-B-Q Trade Debt $58
Dynamic Graphics Magazine Trade Debt $43
Mississippi State Trade Debt $25.00
ENTRADA NETWORKS: Fails to Meet Nasdaq Listing Requirements
-----------------------------------------------------------
Entrada Networks, Inc. (Nasdaq: ESAN) received a NASDAQ Staff
Determination on December 4, 2001 indicating that the Company
fails to comply with the net tangible assets and the
stockholders' equity requirements for continued listing set
forth in Marketplace Rule 4200(a)(3), and that its securities
are, therefore, subject to delisting from the Nasdaq National
Market. The Company believes that it meets the requirements for
continued listing on the SmallCap Market and has filed an
application with Nasdaq to transfer the listing of its
securities from the NASDAQ National Market to the SmallCap
Market. This application will stay the delisting order until a
final determination is made.
Entrada Networks has three wholly owned subsidiaries that focus
on developing and marketing products in the storage networking
and network connectivity industries. Rixon Networks manufactures
and sells a line of fast and gigabit Ethernet adapter cards that
are purchased by large networking original equipment
manufacturers as original equipment for servers, and other
computer and telecommunications products. Its focus is on two-
and four-port cards and drivers for highly specialized
applications. Sync Research manufactures and services frame
relay products for some of the major financial institutions in
the U.S. and abroad. The Torrey Pines subsidiary specializes in
the design & development of SAN transport switching products
(which efforts are currently suspended). Entrada Networks is
headquartered in Irvine, California.
EXODUS: Seeks Court Approval of Proposed Bidding Procedures
-----------------------------------------------------------
Consistent with the provisions of the Asset Purchase Agreement
with Digital Island, Inc., Exodus Communications, Inc., and its
debtor-affiliates request that the Court:
A. approve uniform Bidding Procedures,
B. schedule the Sale Hearing to consider approval of the Motion
and Agreement, and
C. approve the form and manner of actual and publication notice
required in connection with the Bidding Procedures and
Auction, the Sale Hearing and Sale, including the
assumption and assignment of the Assigned Contracts.
David R. Hurst, Esq., at Skadden Arps Slate Meagher & Flom LLP
in Wilmington, Delaware, asks the Court to schedule the Sale
Hearing for January 16, 2002, which is the previously scheduled
omnibus hearing date in these chapter 11 cases; set an objection
deadline of January 7, 2002 for filing and service of objections
to approval of the Sale and entry of the Sale Order; and
schedule the Auction for January 11, 2002, given the urgency of
obtaining prompt approval of the Sale and Agreement.
Assuming the Court enters the Procedures Order on or about
December 13, 2001, Mr. Hurst assures the Court that the Debtors
will serve or have served on or before December 20, 2001, each
of the Motion, the Agreement, the proposed Sale Order, a copy of
the Procedures order, and a notice of the proposed Sale and the
Sale Hearing and pertinent objection deadline, by first-class
mail, postage prepaid, upon:
A. all entities known to have expressed an interest in a
transaction with respect to the Purchased Assets during the
past four months;
B. all entities known to have asserted any lien, claim, interest
or encumbrance in or upon the Purchased Assets;
C. all federal, state, and local regulatory or taxing
authorities or recording offices which have a reasonably
known interest in the relief requested by the Motion;
D. all parties to the Assigned Contracts;
E. the united States Attorney's office;
F. the Securities and Exchange Commission;
G. the Internal Revenue Service; and
H. all entities on the 2002 Service List.
The Debtors propose that they will publish a notice of the Sale,
once in the national editions of the Wall Street Journal and The
New York Times on or before December 21, 2001, or as soon as
practicable thereafter; and that such publication notice be
deemed proper and sufficient notice to any interested parties
whose identities are unknown to the Debtors. The Debtors also
propose to assume and assign the Assigned Contracts to Buyer or
other Successful Bidder. With respect to the Assigned Contracts,
Mr. Hurst submits that the Debtors will file with the Court, and
serve on each party to an Assigned Contract, notice of the
Debtors' intention to assume and assign that party's contract.
The Debtors shall mail the Assignment Notice no later than
December 21, 2001 and shall state the cure amounts necessary to
assume the Assigned Contracts.
Mr. Hurst informs the Court that any objection to the assumption
and assignment of a particular Assigned Contract or the Cure
Amount proposed to be paid in connection therewith must be filed
by January 2, 2002. Any objection to the Cure Amount must state
with specificity what cure the party to the Assigned Contract
believes is required, and provide appropriate documentation in
support thereof. If no objection to a particular Cure Amount is
timely received, the Cure Amount set forth in the Assignment
Notice shall be controlling notwithstanding anything to the
contrary in any Assigned Contract or other document, and the
non-debtor party to the Assigned Contract shall be forever
barred from asserting any other claim arising prior to the
assignment against the Debtors or the Buyer as to such Assigned
Contract. The Debtors are requesting that the Court now set a
date falling not less than 45 days following the Sale Hearing
for a supplemental sale hearing, which may be required to the
extent that the Debtors must give to certain parties
supplemental or additional notice of the Sale transactions
contemplated by the Agreement, including the transfer of the
Purchased Assets and the assumption and assignment of all of the
Assigned Contracts.
The Debtors are proposing the Bidding Procedures as procedures
most likely to maximize the realizable value of the Purchased
Assets for the benefit of the Debtors' estates, creditors and
other interested parties, terms of which are:
A. Bid Deadline - All Bids must be submitted to the Debtors c/o
William Austin, Exodus Communications, Inc., with copies
to Skadden, Arps, Slate, Meagher & Flom LLP; Lazard Freres
& Co. LLC, and Wachtell, Lipton, Rosen & Katz, so as to be
received not later than 5 Business Days prior to the date
scheduled by this Court for the Sale Hearing. Counsel for
the Debtors shall immediately distribute, via facsimile
transmission, personal delivery or reliable overnight
courier service, a copy of each Bid to Cable and Wireless
plc, Parent's counsel, Cleary, Gottlieb, Steen & Hamilton,
and counsel to the lead arranger under the Debtors' DIP
Financing, Paul, Hastings, Janofsky & Walker LLP.
B. Bid Requirements - All Bids shall consist of a letter from
one or more Persons who are in the good faith exercise of
its fiduciary duty and after consultation with its
advisers, is financially able to consummate the purchase,
either jointly or separately, of the Purchased Assets,
stating that such Qualified Bidder offers to purchase the
Purchased Assets upon the terms and conditions set forth in
the Agreement. For purposes of determining the existence of
a Bid, a Bid may be in the form of a joint bid from more
than 1 Person.
C. Qualified Bids - Additionally, certain Bids that satisfy the
following additional requirements will qualify for
consideration at the Auction:
a. each Bid must have a cash component of at least an
amount sufficient to satisfy 100% of the Break-Up Fee;
b. with respect to each Bid, the Debtors must determine, in
the good faith opinion of the Board of Directors of
Debtors after consultation with the independent
financial advisors of Debtors and the Committee, that
such Bid has a value taking into account the burdens
and conditions associated with such proposal, greater
than or equal to the sum of:
1. the value, as reasonably determined by the
independent financial advisors of Debtors, of the
Buyer's offer plus
2. the amount of the Break-Up Fee plus
3. in the case of the initial Qualified Bid,
$10,000,000, and in the case of any subsequent
Qualified Bids, $1,000,000 over the preceding
Qualified Bid;
c. each Bid must be accompanied by satisfactory evidence of
committed financing or other ability to perform;
d. each Bid must be accompanied by a deposit equal to or
greater than $1,000,000;
e. each Bid must include a commitment to consummate the
purchase of the Purchased Assets within not more than
15 days after entry of an order by the Bankruptcy
Court approving such purchase, subject to receipt of
any governmental or regulatory approvals which must be
obtained within 60 days after entry of such order; and
f. each Bid must be irrevocable until the closing of the
purchase of the Purchased Assets.
If the Debtors do not receive any Qualified Bids, the
Debtors will report same to this Court and will proceed
with the Proposed Sale pursuant to the terms of the
Agreement. For purposes of the Auction, Parent and the
Buyer shall constitute Qualified Bidders, and the Agreement
shall constitute a Qualified Bid, for all purposes.
D. Auction - If the Debtors receive at least one Qualified Bid,
then the Debtors shall conduct an auction of the Purchased
Assets at the offices of Skadden, Arps, Slate, Meagher &
Flom LLP, Four Times Square, New York, New York 10036, on
the date that is three Business Days prior to the date
scheduled by the Bankruptcy Court for the Sale Hearing,
beginning at 11:00 a.m. (EST), or such later time or other
place as the Debtors shall notify all Qualified Bidders who
have submitted Qualified Bids. Only Debtors, Parent, the
Buyer, any representative of the Committee, any
representative of GE Capital Corporation, as lead arranger
of the debtor-in-possession credit facility, and any
Qualified Bidders who have timely submitted Qualified Bids
shall be entitled to attend the Auction, and only Parent,
the Buyer and Qualified Bidders will be entitled to make
any subsequent Qualified Bids at the Auction. At the
Auction, bidding shall begin initially with the highest or
otherwise best Qualified Bid. Bidding at the Auction shall
be in increments of $1,000,000 and will continue until such
time as the highest or otherwise Qualified Bid is
determined. Immediately upon selection of the highest or
otherwise best Qualified Bid, such Qualified Bidder shall
pay an additional deposit equal to 100% of the Break-Up Fee
minus the amount of such Qualified Bidder's initial
deposit, to be held in escrow by the Escrow Agent until the
earlier of the Closing Date or the termination of the
Qualified Bid. Debtors may announce at the Auction
additional procedural rules that are reasonable under the
circumstances for conducting the Auction so long as such
rules are not inconsistent with the Bidding Procedures
Order. At least one Business Day prior to the Auction, the
Debtors shall give the Buyer, Parent, counsel to the
Committee, counsel to General Electric Capital Corporation,
and all other Qualified Bidders a copy of the highest or
otherwise best Qualified Bid received to date and copies of
all other Qualified Bids. In addition, Debtors shall inform
Parent and each Qualified Bidder who has expressed its
intent to participate in the Auction of the identity of all
Qualified Bidders that may participate in the Auction.
E. Court Approval - Following the Auction, the Debtors shall
seek the approval of the Court of the highest or otherwise
best offer submitted for the Purchased Assets.
Mr. Hurst tells the Court that if Debtors receive at least one
Qualified Bid in addition to the Agreement, the Debtors may:
A. determine, in their business judgment, which Qualified Bid is
the highest or otherwise best offer and
B. reject, at any time before entry of an order of the Court
approving a Qualified Bid, any bid that, in the Debtors'
sole discretion, is:
a. inadequate or insufficient,
b. not in conformity with the requirements of the
Bankruptcy Code or the Bidding Procedures, or
c. contrary to the best interests of the Debtors, their
estates and their creditors.
If the Debtors do not receive any Qualified Bids other than the
Agreement, the Debtors will report same to the Court and proceed
with the Sale pursuant to the terms of the Agreement.
Mr. Hurst contends that the Parent and Buyer and their
professionals have expended, and likely will continue to expend,
considerable time, money and energy pursuing the Sale, and have
engaged in extended lengthy, good faith negotiations. In
recognition of this expenditure of time, energy, and resources,
the Debtors have agreed to provide the Bidding Protections to
Parent and Buyer.
Mr. Hurst submits that a Break-Up Fee in the amount of
$16,800,000 will by payable to Parent to reimburse Parent and
Buyer for their time and expense incurred in connection with the
proposed Sale transaction and for the value added by Parent and
Buyer in establishing a bid standard or minimum for other
bidders, placing the Selling Debtors' estate property in a sales
configuration mode attracting other bidders to the Auction and
for serving as a catalyst for other potential or actual bidders.
The Break-Up Fee will be payable immediately without further
order of the Court in the event that any Selling Debtor accepts
a Bid, other than that of the Buyer, as the highest or otherwise
best offer or sells, transfers, leases or otherwise disposes,
directly or indirectly, including through an asset sale, stock
sale, merger, reorganization or other similar transaction, all
or a substantial portion of the Purchased Assets in a
transaction or series of transactions to a party or parties
other than the Buyer or its Designees within 6 months from the
date of the Agreement.
Mr. Hurst relates that the Agreement provides that the Expense
Reimbursement in an amount equal to the actual out-of-pocket
costs and expenses incurred by Parent and Buyer in connection
with the Agreement and the transactions contemplated thereby,
but not to exceed $5,000,000, will by payable to Parent in the
event that:
A. the Selling Debtors withdraw or determine not to prosecute
this Motion, or
B. a plan of reorganization or liquidation is filed with the
Bankruptcy Court, by the Debtors or the Creditors'
Committee, which, if approved by the Court, would be
inconsistent with the transfer and assignment of the
Purchased Assets to the Buyer or its Designees as
contemplated by the Agreement.
Mr. Hurst states that if payable, the Expense Reimbursement and
the Break-Up Fee will constitute administrative priority claims
against the Selling Debtors' estates.
Mr. Hurst contends that the Bidding Protections were a material
inducement for, and a condition of, the Buyer's entry into the
Agreement. The Debtors believe that the Bidding Protections are
fair and reasonable in view of the intensive analysis, due
diligence investigation, and negotiation undertaken by Parent
and Buyer in connection with the Sale and the fact that Parent
and Buyer's efforts have increased the chances that the Debtors
will receive the highest and best offer for the Purchased
Assets, for the benefit of their estates, creditors, and all
other parties in interest. Mr. Hurst claims that the Buyer is
not willing to remain obligated under the Agreement if the
Procedures order does not authorize and approve the Break-Up Fee
and Expense Reimbursement, without which, the Debtors may lose
what they believe to be the highest and best, and perhaps only,
available offer for the Purchased Assets.
Mr. Hurst points out that the Bidding Protections will
compensate the Buyer for serving as a stalking horse whose bid
will be subject to higher or better offers, in the event Buyer
is not the Successful Bidder. The Debtors believe that the
Bidding Protections are reasonable, given the benefits to the
estates of having the definitive Agreement and the risk to
Parent and Buyer that a third-party offer ultimately may be
accepted. The Debtors submit that the Bidding Protections are
necessary to preserve and enhance the value of the Debtors'
estates, because they have encouraged Parent and Buyer to invest
the requisite time, money, and effort to negotiate the Agreement
and perform the necessary due diligence attendant to the
acquisition of the Debtors' assets in the face of the inherent
risks and uncertainties of the chapter 11 process. (Exodus
Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
FEDERAL-MOGUL: Anticipates Filing Schedules by December 20
----------------------------------------------------------
James O'Neill, Esq., at Pachulski Stang Ziehl Young & Jones
P.C., in Wilmington, Delaware, submits that the voluntary
chapter 11 petitions filed by Federal-Mogul Corporation, and its
debtor-affiliates were accompanied by a consolidated list of
creditors and a consolidated list of the Debtors' 20 largest
unsecured creditors but the schedules of assets and liabilities,
statements of financial affairs, and lists of executory
contracts and unexpired leases were not filed with the Debtors'
chapter 11 petitions.
Mr. O'Neill informs the Court that the 157 Debtors in these
jointly administered cases have over 25,000 commercial creditor
claims, approximately 300,000 asbestos claims, over 3,100
executory contracts, and payments to many of the approximately
74,000 different vendors that supply goods and services to the
Debtors that may have occurred during the 90 days preceding the
Petition Date. The Debtors handle their accounts payable through
60 different sites and systems that are not centralized. Given
the number of creditors, the size and complexity of the Debtors'
businesses, the diversity of their operations and assets, and
the limited staffing available to gather, process and complete
the Schedules and Statements, the Debtors believe, as of the
Petition Date, that the 15-day automatic extension of time to
file the Schedules and Statements and the additional 15-day
extension granted in cases similar to these would not be
sufficient to permit completion of the Schedules and Statements.
By motion, the Debtors move the Court for an order extending the
time to file schedules of assets and liabilities, statement of
financial affairs and list of executory contract and unexpired
leases by an additional 20 days until December 20, 2001.
Mr. O'Neill states that the Debtors, with the assistance of
their professionals, have made considerable progress in
completing the Schedules and Statements in the weeks since the
Petition Date, and are confident that the Schedules and
Statements will be filed shortly. Notwithstanding such progress,
however, as a result of numerous logistical and legal issues
that arose in connection with the preparation of the Schedules
and Statements, as well as the continued receipt of voluminous
new information, the Debtors to now believe that additional time
will be necessary to enable them to properly complete and review
the Schedules and Statements.
Mr. O'Neill asserts that the accuracy of the Schedules and
Statements that will be filed in these cases will be greatly
enhanced if the requested extension is granted. (Federal-Mogul
Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
FRIEDE GOLDMAN: AmClyde Business Unit Signs $10MM New Contracts
---------------------------------------------------------------
FGH Engineered Products Group, the equipment segment of Friede
Goldman Halter, Inc. (OTCBB:FGHLQ), announced that its AmClyde
unit has signed new contracts totaling over $10 million with
several customers in the international offshore oil and gas
sector.
Dick Juelich, AmClyde President, stated: "We are pleased to
receive these contracts for assisting with capacity upgrades and
modifications to existing AmClyde heavy-lift marine cranes, as
well as several other recent contracts." AmClyde will provide
engineering and services to Saipem (ENI Group) of Italy as they
relocate a 2,400-ton AmClyde crane to a new vessel. AmClyde also
has a contract from Horizon Offshore Contractors to upgrade the
lifting capacity on their existing AmClyde Model 52 marine crane
by more than 50 percent. AmClyde is the preeminent
designer/builder of the world's largest marine cranes.
In other developments, AmClyde was awarded a contract from CNOOC
(China National Offshore Oil Corporation) to provide aftermarket
support services for their new 3,800-ton AmClyde marine crane.
The company will seek court approval to perform on the CNOOC
aftermarket services contract. AmClyde-Norson Engineering, the
company's pipelay and cable lay equipment specialist of Glasgow,
Scotland, received a contract from AIOC (Azerbaijan
International Operating Company) to provide a template leveling
system.
Anil Raj, Chief Operating Officer of Friede Goldman Halter,
stated: "As the company undergoes restructuring, these orders
provide a further boost to the backlog of our Engineered
Products Group. The continuing addition of backlog is testimony
to the quality of the products and services of this group, the
confidence of its customers and the dedication and perseverance
of the management and staff of this group."
Friede Goldman Halter designs and manufactures equipment for the
maritime and offshore energy industries. Its operating units are
Friede Goldman Offshore (construction, upgrade and repair of
drilling units, mobile production units and offshore
construction equipment), Halter Marine (construction of ocean-
going vessels for commercial and governmental markets), FGH
Engineered Products Group (design and manufacture of cranes,
winches, mooring systems and marine deck equipment), and Friede
& Goldman Ltd. (naval architecture and marine engineering). For
more information: (228) 897-4867 - http://www.fgh.com
Friede Goldman Halter designs and manufactures equipment for the
maritime and offshore energy industries. Its operating units are
Friede Goldman Offshore (construction, upgrade and repair of
drilling units, mobile production units, and offshore
construction equipment), Halter Marine (construction of ocean-
going vessels for commercial and governmental markets), FGH
Engineered Products Group (design and manufacture of cranes,
winches, mooring systems, and marine deck equipment), and Friede
& Goldman Ltd. (naval architecture and marine engineering). The
company's primary customers are drilling contractors with
operations in eastern Canada, the Gulf of Mexico, South America,
the North Sea, and West Africa. Chairman J. L. Holloway owns
about 20% of FGH. Friede Goldman Halter filed for Chapter 11
Protection in the Southern District of Mississippi on April 19,
2001. Its bankruptcy counsel is John G. Corlew, Esq. of PO Box
650 Jackson, MS 39205, and (601) 948-6470.
HAYES LEMMERZ: Intends to Continue Use of Cash Management System
----------------------------------------------------------------
To ensure an orderly transition into chapter 11, Hayes Lemmerz
International, Inc., and its debtor-affiliates request authority
to continue to use their existing cash management system (as it
may be modified in connection with the contemplated debtor-in-
possession financing).
Grenville Day, Esq., at Skadden Arps Slate Meagher & Flom LLP in
Wilmington, Delaware, tells the Court that the Debtors, in the
ordinary course of business, use a complex, automated and
integrated centralized cash management system to collect,
transfer, and disburse funds generated by their operations and
to accurately record all such transactions as they are made.
Mr. Day explains that cash used to fund the Debtors' operating
expenditures comes, in large part, from the daily collection of
accounts receivable. Receivables from third parties are first
received in lockbox accounts and then swept through zero balance
accounts into a concentration account maintained at Comerica
Bank. Mr. Day states that the funds in the Concentration Account
are used to fund the Debtors' operational needs, including
payroll and other disbursements, through designated zero balance
payroll accounts and other zero balance and controlled
disbursements accounts maintained at one of the banks. Surplus
funds in the Concentration Account are deposited into three
investment vehicles: securities repurchase account, the Scudder
Money Market Institutional Shares Fund, and the Dreyfus
Government Cash Management fund.
Mr. Day contends that the Cash Management System is complex,
automated and computerized, and includes accounting controls
needed to enable the Debtors, as well as creditors and the
Court, if necessary, to trace funds through the system and
ensure that all transactions are adequately documented and
readily ascertainable. The cash management procedures utilized
by the Debtors are ordinary, usual and essential business
practices, and are similar to those used by other major
corporate enterprises. Mr. Day claims that the Cash Management
System provides significant benefits to the Debtors, including
the ability to control corporate funds centrally, segregate cash
flows, invest idle cash, ensure availability of funds when
necessary, and reduce administrative expenses by facilitating
the movement of funds and the development of more timely and
accurate balance and presentment information.
Mr. Day asserts that the operation of the Debtors' business
requires that the Cash Management System continue during the
pendency of these chapter 11 cases. Requiring the Debtors to
adopt new cash management systems at this critical stage of
these cases would be expensive, would create unnecessary
administrative burdens and problems, and would likely disrupt
and adversely impact the Debtors' ability to reorganize
successfully. Mr. Day argues that requiring Cash Management
System changes could irreparably harm the Debtors, their estates
and their creditors by creating cash flow interruptions while
systems were changed. Maintenance of the existing Cash
Management System therefore is in the best interests of all
creditors and other parties-in-interest. (Hayes Lemmerz
Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
HEALTHCENTRAL.COM: NBTY Intends to Acquire Assets for $2.8MM
------------------------------------------------------------
NBTY, Inc. (Nasdaq: NBTY) -- http://www.NBTY.com -- a leading
manufacturer and marketer of nutritional supplements, announced
it was acquiring certain assets of HealthCentral.com and its
affiliates for $2.8 million in cash. The assets are being
purchased pursuant to a bankruptcy auction. The assets include
the customer list of the mail order operation, L&H Vitamins, and
the customer list and URL's of Vitamins.com and WebRx.com. The
acquisition was approved by the bankruptcy court on December 6,
2001 and is expected to close within two weeks.
These operations had sales for the last 12 months of
approximately $15 million and a combined customer list of
approximately 1.8 million names.
NBTY Chairman and Chief Executive Officer Scott Rudolph stated,
"NBTY continues to make strategic acquisitions at advantageous
terms. Our financial strength allows us to acquire companies,
which are unable to sustain operations in this current difficult
environment. We continue to be at the forefront of the
industry's consolidation."
NBTY is a leading vertically integrated U.S. manufacturer and
distributor of a broad line of high-quality, value-priced
nutritional supplements in the United States and throughout the
world. The Company markets more than 1,500 products under
several brands, including Nature's Bounty, Vitamin World,
Puritan's Pride, Holland & Barrett, Nutrition Headquarters,
American Health, Nutrition Warehouse and Dynamic Essentials.
ICG COMMS: Gets Okay to Pay Due Diligence Fees to Exit Lenders
--------------------------------------------------------------
ICG Communications, Inc., and its debtor-subsidiaries and
affiliates, obtained from Judge Peter Walsh an order approving
due diligence reimbursement in connection with obtaining exit
financing.
Since the Petition Date, the Debtors have taken a number of
steps to stabilize their businesses and lay the foundation for a
successful reorganization. The Debtors' management and advisors
have aggressively pursued strategic alternatives that may
benefit the creditors of these entities, and have completed a
long-term business plan upon which a reorganization plan will
ultimately be premised.
As the Debtors proceed toward emergence from bankruptcy, the
Debtors and their advisors have begun negotiating with the
Creditors' Committee with respect to the terms of such
reorganization plan.
As part of the Debtors' efforts to emerge expeditiously from
chapter 11, the Debtors desire to secure exit financing. As the
Debtors assume Judge Walsh is well aware, however, it is
extremely difficult to obtain financing in the highly troubled
telecommunications industry in which the Debtors operate.
Nonetheless, in light of the significant operational turnaround
achieved in these cases, the Debtors believe that viable
opportunities for such financing exist.
Indeed, with the assistance of their advisors, the Debtors have
entered into preliminary discussions with a potential source of
exit financing, that has proposed preliminary terms such that
the Debtors believe that continued negotiated and due diligence
should be pursued.
The Debtors propose to cap the amount they are authorized to
provide such payments at $500,000. (ICG Communications
Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
IT GROUP: S&P Cuts Low-B Ratings on Weaker Financial Performance
----------------------------------------------------------------
Standard & Poor's lowered its ratings on IT Group Inc. The
ratings remain on CreditWatch with negative implications.
The downgrade reflects increased uncertainties regarding the
firm's financial performance following its recent announcement
that the prior guidance for the fourth quarter ending December
31, 2001, is no longer applicable. In the third quarter ended
September 30, 2001, operating results continued to be weak and
IT Group failed to reduce high debt levels, which worsened
already tight liquidity and financial flexibility. Although the
company was in compliance with recently revised bank covenants,
another amendment to the credit facility will likely be needed
in the first quarter of 2002. Ratings will be lowered again
unless the firm's financial profile is strengthened to a level
consistent with current expectations.
IT Group has undertaken actions to reduce costs by $15 to $20
million, to sell certain noncore assets, and to access
additional sources of capital. Those efforts, if successful,
combined with expected cash receipts in the fourth quarter,
could improve currently very limited availability under a
revolving credit facility and provide a cushion against sizable
debt service requirements. Over the longer term, a more
effective project execution and working capital management are
important to deliver better results.
IT Group is a leading provider of environmental consulting,
engineering and construction, remediation, and facilities
management services, with a solid backlog of about $4.8 billion.
The U.S. government accounts for about 55% of revenues (the
Department of Defense is by far the largest customer), with the
balance from commercial, state and local government clients.
Standard & Poor's will monitor ongoing developments to assess
the impact on credit quality.
Ratings Lowered and Remaining on Creditwatch
with Negative Implications
Ratings
IT Group Inc. To From
Corporate credit rating B+ BB-
Senior secured bank loan rating B+ BB-
Subordinated debt B- B
IBEAM BROADCASTING: Closes on Sale of Assets to Williams Comms.
---------------------------------------------------------------
Williams Communications (NYSE: WCG), a leading broadband
provider to bandwidth-centric customers, announced that it has
closed on its agreement to purchase substantially all the assets
of streaming media pioneer iBEAM Broadcasting Corp. Under the
terms of the agreement, Williams Communications has acquired
certain iBEAM assets, including facility and equipment leases
and substantially all customer contracts and intellectual
property for $25 million in cash, and assumed certain
liabilities of iBEAM, relating to the acquired assets. Six
million dollars of the purchase amount was used to repay a loan
extended by Williams Communications to iBEAM on Oct. 11 to
ensure uninterrupted operations during the iBEAM bankruptcy
proceedings.
Williams Communications will integrate iBEAM's streaming and
webcasting business into its broadband media business, which
provides integrated transmission and broadband media services.
Based in Tulsa, Okla., Williams Communications Group, Inc., is a
leading broadband network services provider focused on the needs
of bandwidth-centric customers. Williams Communications
operates the largest, most efficient, next-generation network in
North America. Connecting 125 U.S. cities and reaching five
continents, Williams Communications provides customers with
unparalleled local-to-global connectivity. By leveraging its
infrastructure, best-in-breed technology, connectivity and
network and broadband media expertise, Williams Communications
supports the bandwidth demands of leading communications
companies around the globe. For more information, visit
http://www.williamscommunications.com
iBEAM Broadcasting Corp. (NASDAQ: IBEM), founded in 1998, is a
leading provider of streaming communications solutions. The
iBEAM end-to-end solutions for enterprise and media customers
include interactive webcasting, streaming advertising insertion,
syndication and pay-per-view management, and secure, licensed
download and geographical identification applications. iBEAM
Broadcasting filed its Chapter 11 Petition in Delaware on
October 11, 2001. The company's bankruptcy counsel: David B.
Stratton, Esq. David M. Fournier, Esq. Pepper Hamilton, LLP 1201
Market Street, Suite 1600 Wilmington, Delaware 19801 (302) 777-
6500.
LERNOUT & HAUSPIE: ScanSoft Gets Okay of Assets Acquisition Pact
----------------------------------------------------------------
ScanSoft, Inc. (Nasdaq: SSFT), a leading provider of paper-to-
digital solutions, announced that the U.S. Bankruptcy Court for
the District of Delaware approved ScanSoft's agreement to
acquire substantially all of the operating and technology assets
of the Speech and Language Technologies business of Lernout &
Hauspie (L&H) Speech Products N.V. and L&H Holdings USA, Inc.
The transaction is expected to close before the end of the year.
The acquisition is the result of the November 27, 2001, auction
of the Lernout & Hauspie assets, where ScanSoft emerged as a
winning bidder, subject to Tuesday's hearing. ScanSoft's
consideration for this acquisition will comprise $10 million in
cash, a $3.5 million note and 7.4 million shares of ScanSoft
stock.
"We are pleased that the U.S. Bankruptcy Court has affirmed the
terms of our acquisition," said Paul Ricci, ScanSoft's chairman
and chief executive officer. "A team of individuals from each
organization is diligently working to close the transaction and
begin the transition. ScanSoft looks forward to welcoming the
talented L&H employees to the company and incorporating the
speech and language business with our own."
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
http://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.
LUMINANT WORLDWIDE: Files for Relief Under Chapter 11 in Houston
----------------------------------------------------------------
Luminant Worldwide Corporation (NASDAQ:LUMT), a provider of
technology-enabled business solutions, announced that it has
entered into a definitive agreement to sell core assets to
Chicago-based Lante Corporation. This sale will be completed
pursuant to section 363 of the Bankruptcy Code. Luminant filed
for relief under Chapter 11 of the Bankruptcy Code after the
market closed on Friday, December 7, 2001.
Lante will pay approximately $3 million in cash for client
relationships and contracts, intellectual property, software
assets and certain tangible assets. Lante is committed to
building upon the strong relationships and quality service that
Luminant provides existing and prospective clients. Lante
intends to extend employment offers to Luminant personnel who
are important to serving these clients. The agreement is subject
to court approval and closing is expected to occur in the early
part of the first quarter of 2002.
"The market for professional services has been extremely
difficult this year and the decline in client demand accelerated
after September 11th," said Jim Corey, CEO of Luminant. "This
event, coupled with our thin cash position and heavy debt load
made this asset sale the most prudent step for our creditors,
clients, alliance partners and employees. I am proud of the
people of Luminant and their ability to continue providing
outstanding client service through a difficult economic climate.
Our team is committed to serving our clients and we are excited
about expanding our delivery capability as part of Lante
Corporation."
Rudy Puryear, Lante's president and CEO, said, "This is a
focused acquisition that fits our business partner integration
strategy that will give clients access to the combined skills
and solutions of Lante and Luminant. Lante is excited about the
prospect of highly talented Luminant personnel complementing and
deepening Lante's capabilities."
Concurrent with this announcement, Luminant also reduced the
size of its Board of Directors to three members, including
Donald S. Perkins, Jerry K. Pearlman and James R. Corey.
Luminant Worldwide Corporation is a provider of technology-
enabled business solutions. Our effective, proven business
solutions help some of the world's largest companies fully
capture measurable value from the Internet and other emerging
technologies. We strive to build clients for life by
continuously delivering performance rooted in deep industry
experience, classic strategic management consulting, strong
logistics and marketing strategy analytics, and innovative
creative and information technology skills. Luminant's principal
locations are in Atlanta, Chicago, Dallas, Houston, New York
City and Seattle. For more information, visit
http://www.luminant.com
Lante Corporation (NASDAQ:LNTE) is a leading information
technology consulting company focused on helping companies
collaborate electronically to save money, grow revenue and build
stronger, more profitable business relationships. Since its
inception in 1984, Lante has been an innovator in applying
emerging technologies to business. Headquartered in Chicago,
Lante serves clients throughout the United States. Its web site
is http://www.lante.com
LUMINANT WORLDWIDE: Strikes Deal to Sell Key Assets to Lante
------------------------------------------------------------
Information technology solutions provider Lante Corporation
announced it has agreed to acquire key assets from Luminant
Worldwide Corporation. The assets to be acquired include client
relationships and contracts, intellectual property, software
assets and certain tangible assets. Lante has agreed to pay
approximately $3 million cash with no assumption of debt for
these assets.
Luminant filed for protection under Chapter 11 of the Federal
Bankruptcy Code on Friday, December 7th and will be filing a
motion with the Bankruptcy Court seeking authority to sell the
assets to Lante. This transaction will be completed pursuant to
section 363 of the Bankruptcy Code and is subject to various
conditions including final court approval. The transaction is
expected to close in the early part of the first quarter of
2002. In connection with the transaction, Lante may advance a
portion of the purchase price through debtor-in-possession
financing that will be secured by Luminant's assets.
Rudy Puryear, Lante's president and CEO, said, "This is a
focused acquisition that we believe both fits our business
partner integration strategy and will be accretive in the first
quarter of 2002. Lante intends to leverage its existing
administrative and technical infrastructure to support the
billable personnel hired from Luminant. Lante will determine
the number of Luminant personnel to be hired based on the
strength of Luminant's business prior to consummation of the
acquisition. Lante is committed to building upon the strong
relationships and quality service that Luminant provides its
existing and prospective clients."
Lante Corporation (Nasdaq: LNTE) is a leading information
technology consulting company focused on helping companies
collaborate electronically to save money, grow revenue and build
stronger, more profitable business relationships. Since its
inception in 1984, Lante has been an innovator in applying
emerging technologies to business. Headquartered in Chicago,
Lante serves clients throughout the United States. Its web site
is http://www.lante.com
Luminant Worldwide is lighting the path to cyberspace. Formerly
Clarant Worldwide, the company develops online applications and
Web sites for its blue chip clients, including Compaq, Enron,
and MasterCard. Luminant also offers consulting and marketing
services, as well as ongoing Web site maintenance and data
analysis. The company was founded in 1998 and quickly gained
size through the acquisition of eight e-services companies,
including Brand Dialogue-New York (which had been part of
advertising firm Young & Rubicam). Luminant has offices in 10
states and Washington, DC. Young & Rubicam owns about 27% of the
company.
LUMINANT: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------
Lead Debtor: Luminant Worldwide Corporation
200 West Sam Huoston
Parkway South, Suite 1200
Huoston, Texas 77042
Bankruptcy Case No.: 01-43445
Debtor affiliates filing separate chapter 11 petitions:
Align-Fifth Gear Acqusition Corporation
Align Solutions Corp.
Align-Synapse Acquisition Corporation
BD Acquisition Corp.
InterActive8, Inc.
Free Range Media, Inc.
Integrated Consulting, Inc.
LWC Operating Corp.
LWC Management Corp.
Multimedia I Holdings, Inc.
Potomac I Holdings, Inc.
Potomac Partners Management Consulting, LLC
Resources Solutions International LLC
RSI Group, Inc.
Type of Business: Luminant Worldwide Corporation develops
online applications and Web sites for its
clients. The Debtor also offers consulting
and marketing services, as well as ongoing
Web site maintenance and data analysis.
Chapter 11 Petition Date: December 7, 2001
Court: Southern District of Texas (Houston)
Judge: Letitia Z. Clark
Debtors' Counsel: Henry J Kaim, Esq.
Myron M Sheinfeld, Esq.
Akin Gump et al
711 Louisiana
Ste 1900
Houston, TX 77002
713-220-5800
Total Assets: 29,837,408
Total Debts: 38,960,740
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
HBK Montrose Investments, Note Payable $10,000,000
Ltd.
Jeff Estes
c/o HBK Investments LP
300 Crescent Court
Ste. 700
Dallas, TX 75201
Tel: 214 758 6132
HBK Strong River Note Payable $5,000,000
Investments, Inc
Daniel Golan
660 Madison Avenue
18th Floor
New York, NY 10021
Tel: 212 651 9002
Gil Marmol Severance $685,717
6123 Deloache
Dallas, TX 75225
Tel: 214 394 4549
Joe Autem Severance $649,432
135 Twin Lakes Drive
Lewisville, TX 750577
Tel: 214 850 29995
Evolve Software Trade $542,607
Accounts Receivable
1400 65th Street
Ste. 100
Emeryville, CA 94608
Tel: 510 428 6152
Arthur Andersen LLP Trade $454,390
Darla Lanier
PO Box 730201
Dallas, TX 75373-0202
Tel: 214 741 8300
Documentum Trade $356,352
Accounts receivable
PO Box49184
San Jose, CA 95161-9184
Tel: 925 660 6680
Spencer Stuart Trade $285,577
Jeep Peterson
PO Box 98991
Chicago, IL 60693
Tel: 415 495 4141
Calvin Carter Severance $265,000
2601 Colbe
Dallas, TX 75204
Tel: 214 871 2332
Exodus Communications, Trade $237,234
Inc.
Doug Rice Severance $229,167
Bruce Anderson Severance $208,333
Larry Pierce Severance $208,333
DB Alex Brown LLC Trade $206,752
Bruce Grant Severance $206,250
Canopy International Trade $199,413
Winstar Interactive Media Trade $198,750
Tradex Trade $181,740
Simon Blanks Deferred Compensation $163,049
from Sales Agent
Office Pavillion Trade $141,970
NUMATICS: Strikes $30MM Credit Agreement with LaSalle Business
--------------------------------------------------------------
On November 28, 2001, Numatics, Inc. entered into credit
agreements with LaSalle Business Credit, Inc. and its Canadian
affiliate providing for $30,000,000 of three-year revolving
credit facilities, subject to borrowing base requirements, and
into a note purchase agreement with American Capital Strategies,
Ltd. providing for $31,354,000 of five-year term loans. On
November 29, 2001, the Company used the proceeds of the new term
loans and initial borrowings of $14,604,000 under the new
revolving credit facilities to repay all of the indebtedness
outstanding under the Company's former credit facility with Bank
One, Michigan.
The new credit facilities and loans are secured by liens on
substantially all of the assets of Numatics, Incorporated and
its U.S., Canadian, and German subsidiaries. The new revolving
credit loans bear interest at variable rates based on prime or
LIBOR, at the Company's election. The initial rate is
approximately 5.0% per annum. $14,354,000 of the new term loans
bear interest at the greater of prime plus 6.5% per annum or 12%
per annum. The remaining $17,000,000 of the new term loans bear
interest at 19% per annum, 2% per annum of which may be paid in
kind at the Company's option.
PACIFIC GAS: Makes Property Tax Payments Totaling $67 Million
-------------------------------------------------------------
Pacific Gas and Electric Company made property tax payments
totaling $67.7 million to the 49 counties in which it operates.
This amount represents full and timely payment of property taxes
due for the period from July 1 to December 31, 2001.
"Pacific Gas and Electric Company has enjoyed a historic
partnership with cities and counties for nearly 100 years, and
we look forward to continuing that relationship for another
century to come," said Gordon R. Smith, president and chief
executive officer of Pacific Gas and Electric Company. "We
welcome the opportunity to meet our commitment to support local
governments, whose revenues depend in part on property taxes
paid by the utility. This revenue stream is needed to fund the
many important local services -- police and fire protection,
public health and environmental services, and K-12 public
education - that counties provide local residents."
After filing for Chapter 11 bankruptcy protection on April 6,
one of Pacific Gas and Electric Company's first requests to the
bankruptcy court was to seek permission to make full and
immediate pre-petition property tax payments to counties in
which the company conducts business. On May 16, 2001, the court
granted its permission and the company promptly paid $41.2
million due in pre-petition property taxes to the counties in
which the utility operates.
Propery Tax Payments
Tax Year 2001/2002
COUNTY TOTAL
Alameda County 5,316,277.05
Alpine County 24,744.44
Amador County 480,134.04
Butte County 1,530,105.56
Calaveras County 236,338.61
Colusa County 371,560.39
Contra Costa County 4,474,367.51
El Dorado County 424,933.32
Fresno County 5,218,863.67
Glenn County 283,603.37
Humboldt County 538,902.42
Kern County 1,789,461.12
Kings County 351,703.41
Lake County 229,563.10
Lassen County 34,149.81
Madera County 575,403.37
Marin County 803,143.51
Mariposa County 281,639.58
Mendocino County 390,072.83
Merced County 752,191.30
Modoc County 118,248.30
Monterey County 1,134,486.17
Napa County 429,448.33
Nevada County 582,556.87
Placer County 1,885,918.74
Plumas County 1,354,062.37
San Francisco County 4,301,626.43
Sacramento County 1,153,294.47
San Benito County 255,464.77
San Bernardino County 306,691.57
San Joaquin County 2,648,818.20
San Mateo County 2,543,872.33
Santa Barbara County 300,372.96
Santa Clara County 5,296,676.18
Santa Cruz County 567,302.60
Shasta County 2,233,806.58
Sierra County 41,723.73
Siskiyou County 74,015.71
San Luis Obispo County 11,663,091.65
Solano County 1,490,201.37
Sonoma County 1,740,953.25
Stanislaus County 498,489.28
Sutter County 376,025.74
Tehama County 487,852.74
Trinity County 47,945.86
Tulare County 151,812.07
Tuolumne County 284,468.18
Yolo County 775,304.34
Yuba County 816,015.66
Total 67,667,704.86
PHARMING GROUP: Reaches Deal with Genzyme to Continue Operations
----------------------------------------------------------------
Genzyme Corp. and Pharming Group N.V. (Euronext: PHAR / Nasdaq
Europe: PHAR) announced that they have entered into an agreement
that serves the interests of patients and resolves all issues
remaining between the companies. The agreement enables Pharming
to continue operations, move forward with its clinical
development programs, and implement its plans for the future.
Under the agreement, Genzyme will obtain all of Pharming's
remaining assets related to the diagnosis and treatment of Pompe
disease, including licenses to intellectual property and pre-
clinical and clinical data. The acquisition of these assets
will help Genzyme assure uninterrupted production of transgenic
human alpha-Glucosidase for nine patients with Pompe disease
participating in the extension of a clinical trial previously
conducted through a joint venture with Pharming. It also
improves the company's ability to develop and commercialize a
therapy for Pompe disease, where it has a broad clinical
development program in place.
The agreement also calls for Genzyme to produce clinical
supplies of human C1 Inhibitor for Pharming on a contract basis
until June 2003. Pharming is completing a Phase 1 clinical
trial evaluating the use of human C1 Inhibitor in the treatment
of patients with hereditary angioedema, a serious genetic
disease that may cause life-threatening complications. The
protein is produced at the manufacturing facility in Geel,
Belgium, that was formerly owned by Pharming N.V., the Belgian
subsidiary of the Pharming Group.
Additional terms of the agreement call for Genzyme to purchase
all shares of Pharming N.V.; to release Pharming Group from
claims for capital contributions to joint ventures formed to
develop a treatment for Pompe disease; and to forgive repayment
of the promissory note due from Pharming Group under certain
conditions. Both companies also agreed to terminate all legal
actions between them.
In addition, Genzyme voted in favor of extending the period of
Pharming's receivership. An extension of the receivership until
July 1, 2002, was approved by the majority of Pharming's
creditors and authorized on December 6 by the District Court in
The Hague.
"This agreement allows both companies to move forward, and it
resolves matters in a way that is in the best interests of
patients," said Jan van Heek, executive vice president of
Genzyme Corp. "For Genzyme, the agreement strengthens our
ability to develop and commercialize a therapy for Pompe
disease. We will aggressively move forward with our expansion
plans for the protein manufacturing facility in Geel, Belgium."
>From the perspective of Pharming Group, the agreement
importantly keeps the company's C1 Inhibitor program on schedule
by guaranteeing the supply of recombinant C1 Inhibitor for the
upcoming Phase 2/3 clinical trials in patients suffering from
acute attacks of angioedema. The medical need for this product,
which has been granted Orphan Drug designation in the United
States and Europe, strongly motivates Pharming to develop
recombinant human C1 inhibitor in an expeditious way. In
addition, the agreement is structured such that Pharming is now
in a position to rebuild the company based on its strong
technology platform and its lead products: human C1 Inhibitor,
and human Fibrinogen as a component of tissue sealant
applications.
Genzyme Corp. is a biotechnology company focused on the
development of innovative products and services for unmet
medical needs.
Pharming Group N.V. focuses on the development, production and
commercialization of human therapeutic proteins to be used in
highly innovative therapies. The company's product portfolio is
aimed at treatments for genetic disorders, blood-related
disorders, infectious and inflammatory diseases, tissue and bone
damage, and surgical and traumatic bleeding. Pharming's
proprietary technologies include the production of
biopharmaceuticals in the milk of transgenic animals, as well as
the purification of biopharmaceuticals from milk, formulation
and application of these biopharmaceuticals.
PLAYDIUM ENTERTAINMENT: Playdium Corporation Acquires All Assets
----------------------------------------------------------------
The newly formed Playdium Corporation announced its acquisition
of the assets of the company formerly known as Playdium
Entertainment Corporation.
Covington Fund I Inc. holds 80 percent of the new Corporation
with TD Bank owning the remaining 20 percent. Both companies
were previous Playdium Entertainment stakeholders. CIBC, also a
previous stakeholder, will hold warrants for equity in the new
company. The establishment of the new Corporation is the result
of a successful restructuring of Playdium Entertainment.
"The Playdium business model, without the debt acquired during
the high growth phase, is a strong business with the potential
for exceptional cash flow," said Grant Brown, Managing Partner,
Covington Capital Corporation. "Our Playdium locations offer a
unique entertainment proposition for customers and each
generates positive cash flow. These factors make the
restructured company an attractive business going forward."
The successful restructuring was completed while Playdium
Entertainment was under the protection of the Companies'
Creditors Arrangement Act (CCAA) granted by the Ontario Superior
Court of Justice on February 22, 2001. Under the restructuring
agreement, all assets of Playdium Entertainment have been
transferred to Playdium Corporation including Playdium
Mississauga, Playdium Edmonton and Playdium Burnaby. These sites
will continue to operate normally. Playdium Toronto was closed
earlier this year.
All outstanding Playdium Entertainment playcards and gift
certificates will be honored by Playdium Corporation. Playdium
Toronto playcards and gift certificates can be redeemed at
Playdium Mississauga.
The agreement with Famous Players under which Playdium
establishes and operates interactive entertainment game centres
known as TechTowns in Famous Players theatres across Canada also
was transferred to the new Corporation. Game centre operations
will be a strategic priority for the new Corporation.
The management team put in place to restructure Playdium
Entertainment's operations and debt will continue to run the
operations of the new Playdium Corporation. Cal Haverstock will
serve the corporation as President and CEO. A new Board of
Directors will be named shortly.
"With this long restructuring process behind us, we are excited
about Playdium's future," said Mr. Haverstock. "Playdium is now
in a position to maximize the business potential of each
location by focusing on our product and customers."
Covington Capital Corporation is a leading Ontario-based private
equity firm, managing two Labour Sponsored Investment Funds with
assets of approximately $270 million. Covington is focused on
investing in a diverse group of private companies with strong
management teams and proven products/services essential to their
markets.
Playdium Corporation is the leader in the introduction of
location-based entertainment centers in Canada. Playdium
operates Playdium Mississauga, Playdium Burnaby, and Playdium
Edmonton. In addition, the Corporation has equipped and operates
50 game centers across Canada.
POLAROID CORP: Creditors' Committee Retains Akin Gump as Counsel
----------------------------------------------------------------
Prior to the Petition Date, Polaroid Corporation, and its
debtor-affiliates commenced negotiations with an informal
committee comprised of certain holders of Polaroid's 6.75%
Senior Notes due 2007, 7.25% Senior Notes due 2007 and 11.5%
Senior Notes due 2006 in an effort to reach a consensual
restructuring of the Debtors' debt obligations. Four of the 7
members of the current Official Committee of Unsecured Creditors
were members of the Informal Committee, Daniel J. Arbess, of
Triton CBO III, Ltd., Co-Chair of the Committee, notes.
According to Mr. Arbess, from the Petition Date through the
appointment of the Committee by the U.S. Trustee, Akin, Gump,
Strauss, Hauer & Feld, LLP, rendered professional services on an
expedites basis to the Informal Committee as requested,
necessary, and appropriate in furtherance of the interest of the
members of the Informal Committee and the Debtors' unsecured
creditors generally. In fact, Mr. Arbess advises Judge Walsh,
Akin Gump intends to file an application with the Court seeking
compensation for the services rendered to the Informal Committee
during such period.
In addition to representing the Informal Committee, Akin Gump is
currently representing and has represented creditors' committees
in many significant chapter 11 reorganizations, Mr. Arbess
relates. The Committee believes that Akin Gump possesses
extensive knowledge and expertise in the areas of law relevant
to these cases, Mr. Arbess adds. Convinced that Akin Gump is
well qualified to represent its interests, the Committee
therefore seeks to employ and retain Akin Gump as its co-
counsel.
The Committee will look to Akin Gump to provide these services:
(a) advise the Committee with respect to its rights, duties
and powers in these cases;
(b) assist and advise the Committee in it consultations with
the Debtors relative to the administration of these cases;
(c) assist the Committee in analyzing the claims of the
Debtors' creditors and the Debtors' capital structure and
in negotiating with holders of claims and equity
interests;
(d) assist the Committee's investigation of the acts, conduct,
assets, liabilities and financial condition of the Debtors
and other parties involved with the Debtors, and of the
operations of the Debtors' businesses;
(e) assist the Committee in its analysis of and negotiations
with the Debtors or any third party concerning matters
related to, among other things, the assumption or
rejection of certain leases of non-residential real
property and executory contracts, asset dispositions,
financing of other transactions and the terms of a plan of
reorganization for the Debtors;
(f) assist and advise the Committee as to its communications
to the general creditor body regarding significant matters
in these cases;
(g) represent the Committee at all hearings and other
proceedings;
(h) review and analyze all applications, orders, statements of
operations and schedules filed with the Court and advise
the Committee as to their propriety;
(i) assist the Committee in preparing pleadings and
applications as may be necessary in furtherance of the
Committee's interests and objectives; and
(j) perform such other legal services as may be required and
are deemed to be in the interests of the Committee in
accordance with the Committee's powers and duties as set
forth in the Bankruptcy Code.
The Committee requests that all legal fees and related costs and
expenses incurred by the Committee on account of services
rendered by Akin Gump in these cases be paid as administrative
expenses of the estates. Subject to the Court's approval, Akin
Gump will charge for its legal services on an hourly basis in
accordance with ordinary and customary hourly rates:
Billing Category Range
---------------- -----
Partners $360 - $615
Associates and Counsel $185 - $425
Paraprofessionals $ 60 - $150
Fred S. Hodara, a member of Akin Gump, specifies for the Court
the names, positions and current hourly rates of the Akin Gump
professionals presently expected to have primary responsibility
for providing services to the Committee:
Fred S. Hodara (Partner) $550/hour
David H. Botter (Counsel) $400/hour
Philip Dublin (Associate) $275/hour
Nava Hazan (Associate) $245/hour
"To the best of my knowledge and information, Akin Gump neither
holds nor represents any interest adverse to the Creditors'
Committee, the Debtors, their creditors or other parties in
interest or their respective attorneys in these cases," Mr.
Hodara swears.
Akin Gump may have in the past represented and/or currently
represents and may in the future represent entities who may be
creditors of the Debtors in matters wholly unrelated to their
chapter 11 cases, Mr. Hodara acknowledges. Except for AT&T
Corporation, a major vendor of the Debtors, Akin Gump's services
on behalf of parties in interest constituted less than 1% of the
firm's annual revenues for the 2000 fiscal year, Mr. Hodara
says.
In addition, Mr. Hodara advises Judge Walsh that David H.
Botter, one of the principal Akin Gump attorneys representing
the Committee, has a sibling who works as a management employee
of a corporation that is currently conducting business with the
Debtors. "I do not believe that this in any way represents a
conflict," Mr. Hodara asserts. Nevertheless, Mr. Hodara relates
that he has instructed Mr. Botter to have no communications
whatsoever regarding the facts and circumstances of these cases
with his sibling.
"Based upon information available to me, I believe that Akin
Gump is a disinterested person within the meaning of the
Bankruptcy Code," Mr. Hodara concludes. (Polaroid Bankruptcy
News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
RELIANCE GROUP: Court Okays Zeller's Revised Employment Pact
------------------------------------------------------------
The Pennsylvania Insurance Commissioner, in her capacity at
RIC's Rehabilitator, objects to the Zeller Employment Motion
because $675,000 a year is an excessive salary for a chief
executive of two non-operating companies -- especially when the
services to be performed are unclear. Ann B. Laupheimer, Esq.,
at Blank, Rome, Comisky & McCauley, reminds Judge Gonzalez that
Mr. Zeller served as Vice President and Chief Legal Officer for
Reliance Insurance from March 16, 2001 through July 12, 2001.
This raises the issue of a potential conflict in connection with
his retention. And in all events, the Rehabilitator urges Judge
Gonzales to make it clear that none of Mr. Zeller's salary will
be paid out of funds that are subject to her Constructive Trust
Action.
We are one step ahead of you, says Lorna G. Schofield, Esq., of
Debevoise & Plimpton, counsel for Debtors, Jack Rose, Esq., of
White & Case, counsel for the Official Unsecured Bank Committee,
and Barbara Moses, Esq., of Orrick, Herrington & Sutcliffe,
counsel for the Official Unsecured Creditors Committee of
Reliance Group Holdings, Inc., and its debtor-affiliates. As a
result of negotiations initiated by the Committees, Mr. Zeller
has agreed to accept a lower salary, and the motion has been
modified to reflect that lower figure.
The terms of Mr. Zeller's revised employment agreement are:
Term: Mr. Zeller's employment shall be for the period
commencing on October 1, 2001 and ending on
September 30, 2002;
Salary: Mr. Zeller shall receive a $480,000 annual salary,
payable in accordance with RGH's standard monthly
payroll practices and procedures;
Bonus: Mr. Zeller shall receive a $100,000 retention bonus
payable upon execution of his employment agreement
with RGH; provided, however, that if Mr. Zeller
voluntarily resigns without good reason or is
terminated for cause prior to the end of the 12-month
term, he will return the Retention Bonus;
Benefits: Mr. Zeller will receive:
(1) reimbursement of all reasonable ordinary and
necessary expenses;
(2) participation in any medical, dental, disability,
life insurance, 401(k) or other employee benefit
plan (but in no event severance beyond the
twelve-month term) maintained by RGH for such
executive; and
(3) four weeks' vacation.
* * *
Finding that the revised compensation agreement with Mr. Zeller
reasonable, Judge Gonzalez grants the motion. (Reliance
Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
REVLON CONSUMER: S&P Ratchets Junk Debt Rating Down a Notch
-----------------------------------------------------------
Standard & Poor's lowered its rating on Revlon Consumer Products
Corp.'s senior unsecured debt to triple-'C' from triple-'C'-
plus. At the same time, the single-'B'-minus corporate credit
and senior secured ratings, single-'B' senior secured bank loan
rating, and triple-'C' subordinated debt rating were affirmed.
The outlook is negative while total debt outstanding was about
$1.6 billion at September 30, 2001.
The senior unsecured notes are lowered one notch, reflecting the
firm's increased use of secured debt financing, which
essentially puts the unsecured notes in a more junior position.
On November 6, 2001, the company announced its plans to retire
existing senior secured bank debt with $575 million of senior
secured facilities. At that time, Standard & Poor's rated the
proposed credit facilities and affirmed its triple-'C'-plus
rating on the company's senior unsecured debt. However, on
December 1, 2001, Revlon announced an increase to its senior
secured credit facilities through the completion of a new
financing package totaling $613 million ($363 million senior
secured notes due 2005 and $250 million senior secured bank loan
due 2005).
The ratings reflect Revlon's weak financial profile,
characterized by high debt leverage and a prolonged period of
poor operating results. Despite its strong brand name, Revlon
has been challenged in its efforts to reverse the decline in
revenues and market share due to intense competition in the
mass-market cosmetics industry, divestitures, and the ongoing
reduction of inventory levels by retailers. Specifically,
revenues have declined 40% to $1.35 billion for the trailing 12
months ended September 30, 2001 from $2.25 billion in fiscal
1998.
Revlon's credit protection measures are weak for the rating.
Standard & Poor's expects fiscal 2001 debt to EBITDA to be in
the 8 times area; EBITDA interest coverage will likely be under
1.5x. Standard & Poor's anticipates that credit protection
measures will remain weak over the intermediate term. Revlon's
refinancing of its bank debt will provide additional financial
flexibility through the extension of maturities and improvement
in liquidity.
The $250 million bank facility, which consists of a $132.1
million revolving credit facility and a $117.9 million term loan
due 2005, is rated one notch above the corporate credit rating.
The facility is secured by a first lien on substantially all of
Revlon and its domestic subsidiaries' stock and assets, and two-
thirds of its first-tier foreign subsidiaries' stock. The bank
loan rating anticipates that the borrower would retain
sufficient value as a business enterprise to repay the bank
loans in full in the event of a default.
The $363 million senior secured notes due 2005 are rated the
same as the corporate credit rating. The notes are secured by a
second lien on substantially all of Revlon and its domestic
subsidiaries' stock and assets, and two-thirds of its first-tier
foreign subsidiaries' stock, providing a strong measure of
protection to lenders. However, based on Standard & Poor's
simulated default scenario, which severely stressed the
company's cash flows, it is not clear that the distressed
enterprise value would be sufficient to cover the full amount of
the notes.
Outlook: Negative
Although the refinancing should improve the company's financial
flexibility, the ratings could be lowered if Revlon's operating
performance and credit ratios weaken further.
* * *
DebtTraders reports that Revlon Holdings Inc.'s 12.000% bond due
2004 (REVLON4) trades from 100 to 101. For real-time bond
pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=REVLON4
SUN HEALTHCARE: Ernst & Young Amends Proof of Claim to $4MM
-----------------------------------------------------------
To avoid the time and expense of litigation and to settle all
matters between them, Sun Healthcare Group, Inc., and its
debtor-affiliates, and Ernst & Young stipulate and agree that:
(1) Ernst & Young voluntarily amends its proof of claim to a
general unsecured claim in the amount of $4,000,000
(instead of $4,981,963); and
(2) The Debtors agree that they will not object to the Ernst &
Young Claim and such claim is hereby allowed.
Because no objection was filed, the parties assert, the
stipulation is considered approved. (Sun Healthcare Bankruptcy
News, Issue No. 27; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
THERMADYNE HOLDINGS: Has Until Jan. 18 to File Schedules
--------------------------------------------------------
The United States Bankruptcy Court for the Eastern District of
Missouri approved Thermadyne Holdings Corporation's motion to
extend the time within which the Company must file its schedules
of assets and liabilities, schedules of executory contracts and
unexpired leases, and process checks and statements of financial
affairs through January 18, 2002.
Thermadyne, headquartered in St. Louis, is a multinational
manufacturer of cutting and welding products and accessories.
The Company filed for chapter 11 protection on November 19, 2001
in the U.S. Bankruptcy Court for the Eastern District of
Missouri. Gregory D. Willard, Esq. at Bryan Cave represents the
Debtors in their restructuring efforts. Subject to further
extensions, the Debtors' exclusive period during which to file a
plan expires on March 19, 2002. As of December 31, 2000 the
company reported $317.9 million in assets and $906.5 million
liabilities.
THERMOGENESIS: Annual Shareholders' Meeting Set for January 24
--------------------------------------------------------------
The annual meeting of stockholders of Thermogenesis Corp., a
corporation, will be held at Hilton Garden Inn, located at 221
Iron Point Road, Folsom, California 95630, on Thursday, January
24, 2002, at 9:00 a.m. (PST), for the purpose of considering and
acting on the following:
1. To elect the six nominees named in the proxy statement
as directors to serve for one-year terms or until their
successors have been elected and qualified.
2. Approve the adoption of the 2002 Independent Directors
Equity Incentive Plan.
3. Approve the amendment to the 1998 Equity Incentive Plan
to increase the number of shares available for grant.
4. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Only stockholders of record at the close of business on November
26, 2001, are entitled to receive notice of and to vote at the
meeting.
* * *
THERMOGENESIS makes equipment that harvests, freezes, and thaws
clotting proteins, hormones, enzymes, and other blood
components, as well as stem cells from blood in umbilical cords
and placentas. Its main products are rapid blood-plasma freezers
and thawers it sells to blood banks, blood transfusion centers,
and hospitals in some 30 countries around the world.
THERMOGENESIS' next big thing is its CryoSeal Fibrin Sealant
System, which harvests blood plasma and makes fibrin sealants
used to stop bleeding during surgery; available in Europe and
Canada, the system needs FDA approval in the US. Also in the
works is the CryoSeal APDGF System to treat chronic dermal
wounds.
Thermogenesis has incurred net losses since its inception and
the Company expects losses to continue. Except for net income
of $11,246 for fiscal 1994, the Company has not been profitable
since inception. For the fiscal year ended June 30, 2001, the
Company had a net loss of $6,153,000, and an accumulated deficit
at June 30, 2001, of $44,072,000.
The report of independent auditors on the June 30, 2001,
financial statements includes an explanatory paragraph
indicating there is substantial doubt about Thermogenesis'
ability to continue as a going concern.
Although the Company is executing on its business plan to market
launch new products, continuing losses will impair its ability
to fully meet its objectives for new product sales and will
further impair its ability to meet continuing operating expenses
that may result in staff reductions and curtailment of clinical
trials currently planned.
TRANSFINANCIAL: Will Hold Shareholders' Meeting on January 22
-------------------------------------------------------------
The 2001 Annual Meeting of Stockholders of TransFinancial
Holdings, Inc., a Delaware corporation, will be held at the
offices of Morrison & Hecker, L.L.P, 2600 Grand Avenue, 12th
Floor, Kansas City, Missouri 64108, on Tuesday, January 22,
2002, at 9:00 a.m., Central Time, for the purpose of considering
and acting upon the following proposals:
1. To elect four (4) directors to the Board of Directors
("Proposal 1");
2. To adopt and approve the Plan of Complete Liquidation of
TransFinancial Holdings, Inc, previously approved by the
Company's Board of Directors subject to stockholder
approval ("Proposal 2");
3. To approve the proposed sale of TransFinancial's
Universal Premium Acceptance Corporation and UPAC of
California, Inc. subsidiaries, a separate nonoperating
subsidiary and certain real estate to Commercial
Equity Group, Ltd. ("CEG") ("Proposal 3");
4. To ratify the selection of Weaver & Martin as
independent accountants for the year ended December 31,
2001 ("Proposal 4");
5. To adjourn the Annual Meeting from time to time if
sufficient votes to approve Proposal 2, Proposal 3
and/or Proposal 4 have not been received by the time of
the Annual Meeting or the reconvening of the meeting
following any such adjournment ("Proposal 5");
6. Any other matters that properly come before the meeting
and any adjournment thereof.
The foregoing matters are more fully described in the Company's
Proxy Statement.
Stockholders of record on the Company books at the close of
business on November 29, 2001 will be entitled to receive
notice of and to vote at the meeting.
USG CORP: Wants Court Approval of Risk Management Transactions
--------------------------------------------------------------
John H. Knight, Esq., at Richards, Layton & Finger, asks Judge
Newsome that USG Corporation, and its debtor-affiliates be
allowed to enter into certain risk management transactions. Mr.
Knight explains that, prior to the Petition Date, the Debtors
entered into many risk management transactions in the ordinary
course of their businesses in order to limit price volatility of
the main commodities used in their operations. Typically, the
Debtors entered into various derivative commodity contracts,
such as options, swaps, forward contracts, etc., for commodities
like natural gas, fuel oil, secondary fiber, foreign currency
and interest rates. The Debtors regularly employed standard
master agreements to enter the contracts, primarily the
International Swap Dealers Association Master Agreement.
Since the Petition Date, the Debtors have seen the continuing
need to enter into these Risk Management Transactions. The
Debtors are convinced that they should resume these transactions
in order to limit key commodities' price volatility and allow
them to control costs. Because RMTs fall within the ordinary
course of the Debtors' businesses, the Debtors don't really
believe it is necessary for those transactions to require a
Court order. And, the Debtors advise, they have continued to
effectuate certain RMTs without Court authority since the
Petition Date.
However, Mr. Knight states that parties with whom the Debtors
previously entered transactions, as well as potential parties
have stated they will not do business with the Debtors without
specific Court authorization regarding these transactions. The
Debtors have been unable to convince them that this isn't
necessary. Some potential parties have gone so far as to request
assurance that any derivative contracts entered into with the
Debtors may be liquidated and set off without obtaining relief
from the automatic stay. The Debtors ask for confirmation that
(a) the Debtors have authority to enter into RMTs and (b)
consistent with Sections 362(b)(17), 555 and 556 of the
Bankruptcy Code, RMTs may be liquidated without obtaining relief
from the automatic stay. Mr. Knight goes on to explain the
various types of Risk Management Transactions.
The Debtors' Risk Management Transactions
FX Facilities
The Debtors often enter contracts with foreign vendors and agree
to pay for the goods in the vendors' national currency. The
Debtors assume the risk that the U.S. dollar's value may
decrease reducing its value and effectively raising the costs of
the products the Debtors' must buy. It is necessary for the
Debtors to reduce that risk.
The Debtors enter into FX facilities to reduce their exposure to
fluctuations in the foreign currency exchange rate. The Debtors
can fix the amount of U.S. dollars that they are required to
pay, or be entitled to receive at a specified future date,
according to the value at which the dollar is spotted (for a
specific period of time) at the time the Debtors enter a
contract to buy or sell products internationally. Due to the
protection against foreign currency rate volatility that a FX
facility provides, many companies that conduct business
internationally routinely enter foreign exchange facilities.
The Debtors do not use the FX facilities as a means to invest or
make money, but simply as a means to protect themselves from
market fluctuations. The FX facilities function like insurance
policies that allow the Debtors to compete in the international
marketplace without the risks traditionally associated with
currency fluctuations.
Interest Rate Swap Agreements
In the ordinary course of business prior to the Petition Date,
the Debtors entered into interest rate swap agreements to alter
the interest rate risk profile of the Debtors' outstanding debt,
altering the Debtors' exposure to changes in interest rates.
The Debtors agreed to exchange, at specified intervals, the
difference between fixed and variable interest amounts
calculated by reference to a notional principal amount. Any
differences paid or received on interest rate swap agreements,
when terminated, were recognized as adjustments to interest
expense over the life of the associated debt.
The Debtors have continued this prepetition practice in case
they borrow under their postpetition credit agreement to any
significant extent. As in the past, the Debtors will watch the
capital market developments closely, only entering into currency
and swap transactions with established counterparties with
investment-grade ratings. The Debtors believe they will be able
to control exposure to individual counterparties, and consider
the risk of counterparty default to be little or none.
Raw and Packaging Materials Contracts
The Debtors routinely enter packaging and raw materials purchase
agreements, in the ordinary course of their business. To protect
themselves from market volatility related to these materials,
the Debtors often entered into various derivative third party
contracts, including, but not limited to, forward contracts,
swaps, and option contracts, or a combination thereof. The
standard agreements effectively allowed them to "lock-in" a
specified materials price, adding predictability to their costs.
Mr. Knight contends that the Debtors believe that all RMTs are
ordinary course transactions, as alluded to by Section 363(c)(1)
of the Bankruptcy Code. and therefore can be consummated without
a notice and a hearing. See In re Roth American, 975 F.2d 949,
952 (3rd Cir. 1992)( allows . . . "the flexibility to engage in
ordinary transactions without unnecessary creditor and
bankruptcy court oversight. . . . "). Mr. Knight argues that,
although the term "ordinary course" is not specifically defined,
the usual two-step inquiry may be used to determine whether this
standard has been met:
* The "horizontal dimension test" considers whether the
transaction is the type commonly undertaken by businesses in the
debtors' industry. Roth American at 953 (manufacturing company
satisfied the horizontal dimension test because manufacturing
companies usually extend such agreements to secure union's
continued performance); Dant & Russell, 853 F.2d at 705 (post-
petition leases executed by debtor satisfied horizontal
dimensions test as leases entered were similar to transactions
entered into by other similarly situated businesses).
* The "vertical dimension test" which relates to
creditors' expectations based on the debtor's past business
practices. In this instance, Mr. Knight continues, the Court
considers whether the transaction subjects the hypothetical
creditor to an economic risk that is different from the risk the
creditor accepted when it extended credit. Roth American, 975
F.2d 953 (court determined that debtor did not satisfy vertical
dimensions test because the debtor's extension of a collective
bargaining agreement materially altered the existing agreement
beyond what a hypothetical creditor might expect).
Mr. Knight contends that, based upon the application of both the
horizontal and vertical dimension tests, the Debtors should be
allowed to consummate the RMTs without further order of Court.
Companies in the Debtors' industry routinely enter into such
transactions and accordingly, a hypothetical creditor would not
be exposed to any risk other than what it previously expected
when it provided credit to the Debtors. (USG Bankruptcy News,
Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900)
U.S. WIRELESS: Court Extends Removal Period Until February 27
-------------------------------------------------------------
Judge Robinson of the U.S. Bankruptcy Court for the District of
Delaware issued her order enlarging the time within which U.S.
Wireless Corporation may file notices of removal of related
proceedings through February 27, 2002.
U.S. Wireless Corporation is a research and development of
wireless location technologies, designs and implements wireless
location networks using proprietary "location pattern matching"
technology. The Company filed for chapter 11 protection on
August 29, 2001 in the U.S. Bankruptcy Court for the District of
Delaware. David M. Fournier, Esq. at Pepper Hamilton LLP
represents the Debtor in their restructuring effort. When the
Company filed for protection from its creditors, it listed
$17,688,708 in assets and $22,239,832 in liabilities.
VLASIC FOODS: Delaware Court Confirms Joint Reorganization Plan
---------------------------------------------------------------
Joseph Adler, Vlasic Vice-President and Controller, advises in a
filing with the Securities and Exchange Commission that the plan
of reorganization of Vlasic Foods International, Inc., and its
debtor-affiliates was confirmed by the United States Bankruptcy
Court for the District of Delaware on November 16, 2001 and
became effective on December 5, 2001.
"On such date, and as provided in the plan, all shares of common
stock of the registrant and all 10-1/4% senior subordinated
notes of the registrant were cancelled," Mr. Adler relates. The
holders of common stock of the registrant will receive no
distributions pursuant to the plan of reorganization, Mr. Adler
notes. Furthermore, Mr. Adler says, distributions under the
plan to holders of 10-1/4% senior subordinated notes will be
made on the same basis as distributions to holders of unsecured
claims that are classified in the same class of claims under the
plan. (Vlasic Foods Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WHX CORP: Amends Consent Solicitation for 10-1/2% Notes Due 2005
----------------------------------------------------------------
WHX Corporation (NYSE: WHX) announced that in connection with
its "Modified Dutch Auction" tender offer and solicitation of
consents to certain proposed amendments with respect to its
outstanding 10-1/2% Senior Notes due 2005, which was commenced
on November 19, 2001, it is revising the proposed amendments as
described below, all as more fully provided in Supplement No. 1
to the Offer to Purchase and Consent Solicitation Statement.
The expiration date for the tender offer and consent
solicitation remains 12:00 Midnight, New York City time, on
Monday, December 17, 2001, unless extended.
The proposed amendment to the covenant in the Indenture
governing the Notes concerning Restricted Payments is modified
to reduce the aggregate amount of additional Restricted Payments
following January 1, 2002 that would have been permitted by such
proposed amendment from $40 million to $25 million (which amount
may not be used to pay any dividends on account of WHX's common
stock). The proposed amendment to the covenant in the Indenture
concerning the incurrence of indebtedness and issuance of
preferred stock is withdrawn, so that no change would be made to
that covenant.
The detailed terms and conditions of the tender offer and
consent solicitation are contained in the Offer to Purchase and
Consent Solicitation Statement dated November 19, 2001, as
amended by Supplement No.1 dated December 10, 2001, and the
related Consent and Letter of Transmittal. All previously
tendered Notes and delivered consents are subject to the terms
thereof. This announcement is not an offer to purchase, a
solicitation of an offer to purchase, or a solicitation of an
offer to sell securities, with respect to any Notes. The tender
offer may only be made pursuant to the terms of the Offer to
Purchase and Consent Solicitation Statement dated November 19,
2001, as amended by Supplement No. 1 thereto dated December 10,
2001, and the related Consent and Letter of Transmittal. Credit
Suisse First Boston Corporation is the Dealer Manager and
Solicitation Agent, Innisfree M & A Incorporated is the
Information Agent and Bank One, N.A. is the Depositary. Holders
of Notes can obtain copies of the Offer to Purchase and Consent
Solicitation, Supplement No. 1 thereto, the Consent and Letter
of Transmittal, and the other related documents from the
Information Agent by calling toll-free at (888) 750-5834 (banks
and brokers call collect at (212) 750- 5833). Additional
information concerning the terms of the tender offer and consent
solicitation may be obtained by contacting Credit Suisse First
Boston Corporation at (800) 237-5022, ext. 7675 or at 310-282-
7675 (call collect).
WHX is a holding company that has been structured to invest in
and/or acquire a diverse group of businesses on a decentralized
basis. WHX's primary businesses currently are: Handy & Harman,
a diversified manufacturing company whose strategic business
segments encompass, among others, specialty wire, tubing, and
fasteners, and precious metals plating and fabrication; Unimast
Incorporated, a leading manufacturer of steel framing, vinyl
trim and other products for commercial and residential
construction; and WHX Entertainment Corp., a co-owner of a
racetrack and video lottery facility located in Wheeling, West
Virginia. WHX's other business consists of the WPC Group, a
vertically integrated manufacturer of value-added and flat
rolled steel products, which filed a petition for relief under
Chapter 11 of the Bankruptcy Code on November 16, 2000.
WARNACO GROUP: Hearing Re Sale of GJM Business Set for Today
------------------------------------------------------------
The GJM Business of The Warnaco Group, Inc., is a private label
sleepwear and intimate apparel design, development,
manufacturing and sales operation that was founded in 1985 and
is based in New York City and Hong Kong. The GJM Business
includes sales and design and development teams in the United
States and United Kingdom, finance, administration, shipping and
merchandising teams in Hong Kong and nearby mainland China, and
manufacturing in China, the Philippines and Sri Lanka. The
company has approximately 3,350 employees.
One-third of GJM's production is silk. The rest are principally
polyester and cotton. GJM is a manufacturer of intimate apparel
and sleepwear for Victoria's Secret, Walmart, Kohl's, and a
dozen other customers in the United States and United Kingdom.
GJM is also a contract manufacturer of Speedo and Calvin Klein
underwear garments sold by other Warnaco divisions. In 2000,
GJM achieved $76,000,000 in sales and an EBITDA of $8,900,000.
J. Ronald Trost, Esq., at Sidley Austin Brown & Wood, in New
York, New York, tells the Court that approximately 87% of GJM's
sales were achieved in the United States, and the United Kingdom
accounted for the remainder.
GJM's production is conducted through manufacturing facilities
in each of Guangdong Province, China, Sri Lanka, and the
Philippines, according to Mr. Trost.
As part of its strategic business review, Mr. Trost relates, the
Debtors examined the potential for advantageous disposition of
its various business units. After analyzing the GJM Business,
Mr. Trost says, the Debtors determined that it would be a
suitable candidate for disposition, assuming an acceptable
purchase price was received. So, Mr. Trost continues, the
Debtors began to assemble a confidential descriptive memorandum
relating to the GJM Business for circulation among potential
buyers.
"A substantial part of the rationale for the Debtors' desire to
effect an expeditious sale of the GJM Business is the continuing
deterioration of that business during the course of this case,"
Mr. Trost explains. According to Mr. Trost, GJM is engaged
almost exclusively in the highly competitive private label
manufacturing business, in which product quality and
manufacturing reliability and timeliness are critical. As a
result, Mr. Trost notes, the perceived uncertainties and
financial instability caused by the Debtors' bankruptcies have
placed GJM at a competitive disadvantage, which has adversely
impacted its book of orders, prospects and profitability.
Mr. Trost informs Judge Bohanon that the Debtors contacted 92
entities to solicit their interest in acquiring the GJM
Business. "These 92 potential buyers included entities in the
United States, Europe, the Middle East, and Asia," Mr. Trost
notes. Of these 92 potential buyers, Mr. Trost relates, 12
entered into confidentiality agreements and were:
(i) furnished with a copy of a comprehensive confidential
information memorandum,
(ii) afforded additional limited due diligence, and
(iii) asked to provide preliminary non-binding bids by
November 9, 2001.
A limited number of potential buyers submitted preliminary
non-binding bids, Mr. Trost observes. "These bidders were
afforded and conducted extensive additional due diligence,
including management presentations, interviews with GJM
personnel, factory tours, and inspection of extensive data rooms
established by the Debtors in New York and Hong Kong with
respect to the GJM Business," Mr. Trost tells the Court.
But as of this Motion, Mr. Trost says, none of the negotiations
with prospective buyers has progressed to a point that any
prospective purchaser is prepared to execute a definitive
purchase agreement at a price acceptable to the Debtors.
However, Mr. Trost emphasizes, the Debtors continue to believe
that such a satisfactory definitive agreement could be achieved
through further negotiation or an auction in accordance with the
Bidding Procedures. According to Mr. Trost, the Debtors have
requested the potential buyers with which they are negotiating
to present firm offers on or before December 7, 2001. Mr. Trost
informs Judge Bohanon that the Debtors intend to continue
negotiating with potential purchasers through the date of the
hearing on this Motion and thereafter. Mr. Trost explains that
the Debtors have crafted the Bidding Procedures to facilitate
the process of obtaining an acceptable definitive offer from a
prospective purchaser, subject to higher or better offers and
the approval of this Court.
Thus, the Debtors ask Judge Bohanon's authority to sell their
GJM Business to the highest bidder.
A hearing will be today at 9:45 a.m. to consider the Debtors'
motion. (Warnaco Bankruptcy News, Issue No. 15; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WINSTAR COMMS: Operations Will Continue for One Week
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DebtTraders analysts Daniel Fan and Blythe Berselli report that
Winstar Communications Inc., was ordered to continue operations
for one week by a federal bankruptcy judge Monday afternoon.
Winstar currently does not have sufficient funds to pay employee
and administrative expenses. After a $100 million offer to buy
the Company fell through, Winstar said that it would need to
fire 1,000 workers and begin liquidating its business
immediately. However, at the Government's behest, the judge has
ordered Winstar to continue operations for a week.
According to DebtTraders, Winstar Communications' 12.500% bond
due 2008 (WINSTAR), which is currently an issue in default,
trades between 0.500 and 1.000. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=WINSTAR
XO COMMUNICATIONS: S&P Slashes Corporate Credit Rating to D
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Standard & Poor's lowered its corporate credit rating on XO
Communications Inc. and on the company's 10.75% senior notes due
2009 and 10.50% notes due 2009 to 'D'. These ratings were
simultaneously removed from CreditWatch with negative
implications.
At the same time, the ratings on the company's remaining
unsecured and subordinated debt and preferred stock were
affirmed. These issues remain on CreditWatch with negative
implications because these securities are not currently in
default. In addition, the rating on the company's senior secured
bank loan rating has been withdrawn.
The rating actions are based on the company's failure to pay the
interest due on December 1, 2001, on the two note issues as part
of its balance sheet restructuring plan announced on November
29, 2001. The ratings on the remaining unsecured debt and
preferred stock will also be lowered to 'D' when the interest
and dividend payments are missed on the individual securities.
McLean, Virginia-based XO Communications provides local, long
distance, and data services to small and midsize business
customers and to national enterprise accounts.
On November 29, 2001, the board of directors of XO
Communications approved a preliminary agreement with Forstmann
Little and Telmex in which each investor will contribute $400
million for new equity in the company. Forstmann Little and
Telmex are expected to have a 39% interest each in the company.
The investment is contingent on XO Communications completing a
restructuring of its balance sheet and receipt of regulatory
approvals. The restructuring is expected to require the
completion of transactions with holders of XO Communications
senior notes and lending institutions under its secured credit
facility, resulting in the company's total debt outstanding
of no more than $1 billion of senior secured debt in addition to
its existing capital lease obligations.
As of September 30, 2001, total debt outstanding was about $5.1
billion. Unsecured note holders will primarily receive new
equity in the company and some cash. A definitive agreement with
Forstmann Little and Telmex is expected to be signed on or
before December 14, 2001. Based on Standard & Poor's criteria,
this restructuring of the balance sheet, which involves a debt
for equity swap, is tantamount to a default on the unsecured
debt. Given the current liquidity position of the company, the
noteholders have no alternative.
Ratings Lowered, Removed from Creditwatch Negative
XO Communications Inc. TO FROM
Corporate credit rating D CC
10.75% senior unsecured notes due 2009 D C
10.50% senior unsecured notes due 2009 D C
Rating Withdrawn, Removed From Creditwatch Negative
XO Communications Inc.
Senior secured bank loan rating NR CC
Ratings Affirmed, Remain On Creditwatch Negative
XO Communications Inc.
Senior unsecured debt rating C
Convertible subordinated debt C
Preferred stock C
Concentric Network Corp.
12.75% Senior unsecured notes due 2007 C
13.50% Preferred stock due 2010 C
* Meetings, Conferences and Seminars
------------------------------------
January 31 - February 1, 2002
American Conference Institute
Chapter11 Bankruptcy
The Four Seasons Hotel in Dallas, Texas
Contact: 1-888-224-2480 or
www.americanconference.com/conferences/bankruptcy/
January 31 - February 2, 2002
American Bankruptcy Institute
Rocky Mountain Bankruptcy Conference
Westin Tabor Center, Denver, Colorado
Contact: 1-703-739-0800 or http://www.abiworld.org
January 11-16, 2002
Law Education Institute, Inc
National CLE Conference(R) - Bankruptcy Law
Steamboat Grand Resort, Steamboat Springs, Colorado
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February 25-26, 2002
American Conference Institute
Chapter11 Bankruptcy
Hyatt Regency in Los Angeles, California
Contact: 1-888-224-2480 or
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February 28-March 1, 2002
ALI-ABA
Corporate Mergers and Acquisitions
Renaissance Stanford Court, San Francisco, CA
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
March 3-4, 2002
Association of Insolvency and Restructuring Advisors
Business Valuation Conference (Held in conjunction with
The Norton Bankruptcy Litigation Institute I)
Park City Mariott, Park City, UT
Contact: (541) 858-1665 Fax (541) 858-9187 or
aira@airacira.org
March 3-6, 2002
NORTON INSTITUTES ON BANKRUPTCY LAW
Norton Bankruptcy Litigation Institute I
Park City Marriott Hotel, Park City, Utah
Contact: 770-535-7722 or Nortoninst@aol.com
March 7-8, 2002
RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
Third Annual Conference on Healthcare Transactions
The Millennium Knickerbocker Hotel, Chicago
Contact: 1-800-726-2524 or ram@ballistic.com
March 8, 2002
American Bankruptcy Institute
Bankruptcy Battleground West
Century Plaza Hotel, Los Angeles, California
Contact: 1-703-739-0800 or http://www.abiworld.org
March 14-15, 2002
American Conference Institute
Commercial Loan Workouts
The New York Marriott Marquis in New York City
Contact: 1-888-224-2480 or
www.americanconference.com
March 20-23, 2002
TURNAROUND MANAGEMENT ASSOCIATION
Spring Meeting
Sheraton El Conquistador Resort & Country Club
Tucson, Arizona
Contact: 312-822-9700 or info@turnaround.org
April 11-14, 2002
NORTON INSTITUTES ON BANKRUPTCY LAW
Norton Bankruptcy Litigation Institute II
Flamingo Hilton, Las Vegas, Nevada
Contact: 770-535-7722 or Nortoninst@aol.com
April 18-21, 2002
American Bankruptcy Institute
Annual Spring Meeting
J.W. Marriott, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
April 25-27, 2002
ALI-ABA
Fundamentals of Bankruptcy Law
Rittenhouse Hotel, Philadelphia
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
May 13, 2002 (Tentative)
American Bankruptcy Institute
New York City Bankruptcy Conference
Association of the Bar of the City of New York
New York, New York
Contact: 1-703-739-0800 or http://www.abiworld.org
May 15-18, 2002
Association of Insolvency and Restructuring Advisors
18th Annual Bankruptcy and Restructuring Conference
JW Mariott Hotel Lenox, Atlanta, GA
Contact: (541) 858-1665 Fax (541) 858-9187 or
aira@airacira.org
May 26-28, 2002
International Bar Association
International Insolvency 2002 Conference
Dublin, Ireland
Contact: Tel +44 207 629 1206 or member@int-bar.org
or http://www.ibanet.org
June 6-9, 2002
American Bankruptcy Institute
Central States Bankruptcy Workshop
Grand Traverse Resort, Traverse City, Michigan
Contact: 1-703-739-0800 or http://www.abiworld.org
June 20-21, 2002
RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
Fifth Annual Conference on Corporate Reorganizations
The Millennium Knickerbocker Hotel, Chicago
Contact: 1-800-726-2524 or ram@ballistic.com
June 27-30, 2002
NORTON INSTITUTES ON BANKRUPTCY LAW
Western Mountains, Advanced Bankruptcy Law
Jackson Lake Lodge, Jackson Hole, Wyoming
Contact: 770-535-7722 or Nortoninst@aol.com
July 11-14, 2002
American Bankruptcy Institute
Northeast Bankruptcy Conference
Ocean Edge Resort, Cape Cod, MA
Contact: 1-703-739-0800 or http://www.abiworld.org
July 17-19, 2002
Association of Insolvency and Restructuring Advisors
Bankruptcy Taxation Conference
Snow King Resort, Jackson Hole, WY
Contact: (541) 858-1665 Fax (541) 858-9187 or
aira@airacira.org
August 7-10, 2002
American Bankruptcy Institute
Southeast Bankruptcy Conference
Kiawah Island Resort, Kiawaha Island, SC
Contact: 1-703-739-0800 or http://www.abiworld.org
October 9-11, 2002
INSOL International
Annual Regional Conference
Beijing, China
Contact: tina@insol.ision.co.uk or
http://www.insol.org
October 24-28, 2002
TURNAROUND MANAGEMENT ASSOCIATION
Annual Conference
The Broadmoor, Colorado Springs, Colorado
Contact: 312-822-9700 or info@turnaround.org
December 5-8, 2002
American Bankruptcy Institute
Winter Leadership Conference
The Westin, La Paloma, Tucson, Arizona
Contact: 1-703-739-0800 or http://www.abiworld.org
April 10-13, 2003
American Bankruptcy Institute
Annual Spring Meeting
Grand Hyatt, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
December 3-7, 2003
American Bankruptcy Institute
Winter Leadership Conference
La Quinta, La Quinta, California
Contact: 1-703-739-0800 or http://www.abiworld.org
April 15-18, 2004
American Bankruptcy Institute
Annual Spring Meeting
J.W. Marriott, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
December 2-4, 2004
American Bankruptcy Institute
Winter Leadership Conference
Marriott's Camelback Inn, Scottsdale, AZ
Contact: 1-703-739-0800 or http://www.abiworld.org
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via
e-mail to conferences@bankrupt.com are encouraged.
*********
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S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Ronald P. Villavelez and Peter A. Chapman, Editors.
Copyright 2001. All rights reserved. ISSN: 1520-9474.
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