/raid1/www/Hosts/bankrupt/TCR_Public/011213.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, December 13, 2001, Vol. 5, No. 243
Headlines
360NETWORKS: Seeks Court Okay of Settlement Pact with Williams
ANC RENTAL: Bringing In Piper Marbury as Special Counsel
ALGOMA STEEL: Commences Contract Talks with Steelworkers
AMTROL INC: S&P Puts Ratings on Watch Negative After Bank Waiver
APPLETON PAPERS: S&P Rates $250M Senior Subordinated Notes at B+
ARCH WIRELESS: S&P Hatchets Debt Ratings Down to D
BETHLEHEM STEEL: Agrees to Provide Afco Credit Security Interest
BURLINGTON: Court Confirms Admin. Priority Status for Suppliers
CHIQUITA BRANDS: Will Accord Priority to Intercompany Claims
CORRECTIONS CORPORATION: Amends Senior Credit Facility Agreement
DELPHI INT'L: Sets Special Shareholders' Meeting for January 8
E.SPIRE COMMS: Court Extends Plan Filing Period Until January 31
ENRON CORP: Intends to Pay $19 Million to Foreign Creditors
EXODUS COMMS: Agrees to Assume Master Pact with Nova & Pay $10MM
FANTOM TECHNOLOGIES: Gintel Asset Discloses 5.48% Equity Holding
FACTORY CARD: Seeks Further Extension on Exclusive Periods
FARINI: Will Loan Proceeds from Equity Issue to Bankrupt Unit
FEDERAL-MOGUL: Wants to Continue Non-Tax Qualified Pension Plan
FLEETWOOD ENTERPRISES: Net Loss Balloons In Q2 On Reduced Sales
GC COMPANIES: Wants Plan Filing Exclusivity Extended to Dec. 26
GIMBEL VISION: Three Directors Step Down from Board
HAYES LEMMERZ: Gets Okay to Continue Intercompany Transactions
HAYES LEMMERZ: S&P Drops Ratings to D After Bankruptcy Filing
HORIZON PCS: S&P Junks $175 Million Senior Unsecured Notes
HUNTSMAN POLYMERS: S&P Cuts Ratings to D After Missed Payment
LDM TECHNOLOGIES: S&P Cuts Ratings on Constrained Financials
LTV CORP: US Trustee Appoints 3rd Amended Noteholders' Committee
LINC.NET INC: S&P Ratchets Low-B Ratings Down Another Notch
LUBY'S INC: Expects to Comply with Revised Covenants for FY 2002
MCWATTERS MINING: Files Plan of Arrangement Under CCAA In Canada
NETWORK COMMERCE: Using Equity Sale Proceed to Augment Capital
OPTICARE HEALTH: Fails to Meet AMEX Continued Listing Guidelines
PACIFIC WEBWORKS: Working Capital Deficit Stands at $1.3 Million
PILLOWTEX: Court Approves Fourth Amended DIP Financing Facility
POLAROID CORP: Committee Signs-Up Young Conaway as Local Counsel
PROTOSOURCE: Falls Short of Nasdaq Continued Listing Standards
PSINET: Asks Court to Fix February 5 Bar Date for Filing Claims
SL INDUSTRIES: Intends to Comply with NYSE Listing Criteria
SABINA BANK: National Bank Acquires All Assets for $12.9MM Cash
TELESYSTEM INT'L: Launches Purchase Offer for its Units
TELESYSTEM: S&P Further Junks Rating After Plan to Recapitalize
UNITED GLOBALCOM: S&P Junks Ratings & Revises Watch to Negative
VLASIC FOODS: Panel Backs Retiree Medical Benefits Termination
WARNACO: Hearing On GJM Sale Bidding Protocol Set for Today
WILLCOX & GIBBS: Court Extends Removal Period Until February 1
ZANY BRAINY: Has Until January 7 to Decide On Unexpired Leases
* DebtTraders Real-Time Bond Pricing:
*********
360NETWORKS: Seeks Court Okay of Settlement Pact with Williams
--------------------------------------------------------------
Prior to Petition Date, 360networks inc., entered into 20
agreements and amendments with Williams Communications LLC,
wherein William are to provide each other with conduits,
unactivated fiber, and collocation space, perform construction
services and provide maintenance services.
Williams asserts that 360networks inc., and its debtor-
affiliates are in default under certain of the Agreements. But
the Debtors dispute certain of these assertions. To resolve
this dispute, the parties negotiated into a settlement
agreement.
According to Shelley C. Chapman, Esq., at Willkie, Farr &
Gallagher, in New York, New York, approval of the Settlement
Agreement would provide a substantial benefit to the Debtors and
their estates:
(1) the Debtors would retain a substantial customer and retain
and obtain indefeasible rights to use vital components of
their network without costly litigation.
(2) the Debtors would enter into certain maintenance
agreements with Williams, which would provide the Debtors
with future revenues.
(3) the Debtors would receive a net benefit of over $1,000,000
in current amounts due upon approval of the Settlement
Agreement.
(4) the Debtors will be able to effectively suspend payments
for certain unused collocation space from Williams while
retaining the right to obtain and use such space when
needed in the future for a significantly smaller
reservation fee.
Ms. Chapman relates that there are 20 Agreements which set forth
the Parties' rights and obligations along multiple
telecommunications system routes in North America. Ms. Chapman
notes that the Agreements can be categorized generally as:
(a) Collocation Agreements
(b) Fiber IRUs
(c) Conduit Sale Agreements
(d) Site Construction Agreements; and
(e) Swap Agreements
Under certain of the Agreements, Ms. Chapman tells the Court,
the Debtors have the continuing obligation to repair and
maintain the fiber, conduit and collocation space being used by
Williams and Williams has the ongoing obligation to reimburse,
compensate or otherwise pay the relevant 360 Parties for such
repair and maintenance.
Under other Agreements, Ms. Chapman says, Williams has
obligations running to one or more of the Debtors and such
Debtors owe Payments to Williams for such services. Thus, Ms.
Chapman says, the Parties owe each other ongoing Payments.
Ms. Chapman informs Judge Gropper that the Agreements provide
for the exchange, sale or IRU of fiber and conduit that has a
contract value in excess of $100,000,000.
Pursuant to the Agreements, Ms. Chapman says, the Debtors are
obligated to pay Williams $6,908,237 as of August 31, 2001 and
additional amounts in regular intervals over the next
approximately 20 years for collocation space and maintenance
provided by Williams. On the other hand, Ms. Chapman notes,
Williams is obligated to pay the Debtors $5,751,789 as of August
31, 2001 and additional amounts in regular intervals over the
next approximately 20 years for the collocation space and
maintenance provided by the Debtors. Moreover, Ms. Chapman
adds, the Parties are obligated to make payments to one another
which are based on external factors such as usage, additional
power requirements, or relocation costs.
The Settlement Agreement, which provides a substantial benefit
to the Debtors, has these salient provisions:
(a) All of the Agreements would be treated as executory
contracts for the purposes of the Settlement Agreement
only, with no admission being made with respect to the
characterization of any other contracts or agreements of
the Debtors;
(b) All of the Agreements would be assumed (as modified);
(c) Upon the Closing, the Parties shall execute two
additional maintenance agreements, for the Portland-
Sacramento route and the Chicago route, and 360 USA
shall renew the Reno-Sacramento License;
(d) All payments due on or before August 31, 2001, with
respect to any Assumed Contract or any New Contract,
including but not limited to all lease payments, O&M
payments, basic collocation charges, splicing and
interconnection charges, cable installation, duct lease
payments, duct purchase payments, IRU payments and any
other periodic payments, shall be netted and mutually
discharged as of the Closing, and any difference shall
be irrevocably discharged by the Parties;
(e) The Parties would remain liable only for ongoing
obligations and payments under the Assumed Contracts
other than the 360 Fixed Payments and Williams Fixed
Payments. The Debtors believe these obligations and
payments to be minimal; and
(f) The collocation space currently provided by Williams and
not in use by 360 USA on the Atlanta-Jacksonville-Miami
route and the Dallas-Houston-Atlanta-D.C. route
(including adjacent spurs) would be terminated and 360
USA would be granted of right of first refusal on such
collocation space for a significantly smaller
reservation fee.
The parties have agreed that the Effective Date of the
Settlement Agreement shall occur upon the later of:
(i) the release of the Liens; or
(ii) this Court's approval of the Settlement Agreement.
(360 Bankruptcy News, Issue No. 15; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ANC RENTAL: Bringing In Piper Marbury as Special Counsel
--------------------------------------------------------
ANC Rental Corporation, and its debtor-affiliates present an
application to employ and retain the firm Piper Marbury Rudnick
& Wolfe LLP as their special intellectual property and franchise
law counsel.
The Debtors seek to retain Piper Marbury because:
A. Piper Marbury has extensive experience and knowledge in the
fields of intellectual property and franchise law;
B. the Debtors believe that Piper Marbury is well qualified to
represent the Debtors with regard to the Debtors'
intellectual property and franchise law issues;
C. Piper Marbury has provided legal advice to the Debtors and
certain non-debtor affiliates with respect to domestic
and international trademark and franchise issues since
December, 2000; and
D. during the course of their representation of the Debtors,
Piper Marbury's intellectual property and franchise
attorneys have developed familiarity with the Debtors'
assets, affairs and businesses.
In addition, by reason of its current relationship and ongoing
representation of the Debtors, Piper Marbury has acquired
invaluable knowledge of the Debtors' affairs, which will be
difficult and expensive for another firm to acquire.
Wayne Moor, the Debtors' Senior Vice President and Chief Finance
Officer, informs the Court that prior to the Filing Date, Piper
Marbury rendered legal advice to the Debtors with respect to
their domestic and international intellectual property and
franchise issues. If retained, Piper Marbury will continue to
represent the Debtors in connection with certain domestic and
international intellectual property and franchise matters and to
provide any additional legal services as may be requested from
time to time by the Debtors.
Ann K. Ford, Esq., a Partner at Piper Marbury Rudnick & Wolfe
LLP, relates that prior to the Filing Date, the Firm retained
local counsel in various locations throughout the world on
behalf of the Debtors to assist in the intellectual property
matters. Retention of Local Counsel is necessary and
appropriate, as Local Counsel have extensive experience and
knowledge in the field of intellectual property in their
respective countries. In addition, Local Counsels are able to
effectively monitor and timely respond to matters that arise in
connection with the Debtors' intellectual property rights.
Ms. Ford explains that Piper Marbury acts as general outside
counsel for the Debtors with respect to international
intellectual property matters. In connection with intellectual
property matters, Piper Marbury has engaged approximately 194
separate law firms in 135 countries as Local Counsel on behalf
of the Debtors. In addition, Piper Marbury has been asked by the
Debtors to retain Local Counsel in connection with certain
international franchise matters. Ms. Ford believes that the fee
arrangements and terms of engagement with Local Counsel are
reasonable, ordinary and customary because Local Counsel send
invoices to Piper Marbury on a periodic basis for services
rendered and expenses incurred. Prior to the Filing Date, Piper
Marbury paid the invoices of Local Counsel and billed the
Debtors for the disbursements to Local Counsel, which were
reflected as disbursements on the invoices that Piper Marbury
sent to the Debtors.
The Debtors seek authorization to establish and maintain a
retainer with Piper Marbury in an amount of $25,000, to be
replenished on an as needed basis, to pay the fees and expenses
of Local Counsel. Ms. Ford assures the Court that Piper Marbury
will forward copies of all invoices from Local Counsel to the
Debtors for review before paying any of the invoices received
from Local Counsel out of the Retainer. The Debtors believe that
the foreign firms acting as Local Counsel are ordinary course
professionals and that the Court does not need to approve the
fees and expenses of Local Counsel.
Ms. Ford tells the Court that Piper Marbury, if retained, will
continue to engage Local Counsel and to pay fees and expenses of
Local Counsel from the Retainer without further order of the
Court, and each foreign firm that act as Local Counsel will file
promptly an affidavit of disinterestedness with the Court. Piper
Marbury, if retained, will be authorized and permitted to pay
the fees and expenses of Local Counsel from the Retainer, after
invoices from Local Counsel have been forwarded to the Debtors
for review. For purposes of accounting to the Debtors and the
Court for disbursements made to Local Counsel, Ms. Ford explains
that Piper Marbury's fee applications shall contain a separate
category of disbursements identifying payments made to Local
Counsel from the Retainer. However, the actual disbursements
made to Local Counsel will not be subject to approval of the
Court.
In addition, Piper Marbury will consult with the Debtors'
management in connection with any potential transaction
involving the Debtors and the operating, financial and other
business matters relating to the ongoing activities of the
Debtors. Ms. Ford states that Piper Marbury will also, to the
extent requested, attend and participate in creditors' committee
meetings, and make appearances before this Court.
Subject to this Court's approval, Ms. Ford informs the Court
that Piper Marbury will charge the Debtors for its legal
services on an hourly basis in accordance with its ordinary and
customary rates, and shall keep detailed time records of time in
increments of tenths of an hour. In addition to the hourly rates
set forth above, Piper Marbury customarily charges its clients
for all disbursements incurred in connection with this
engagement. The current hourly rates that Piper Marbury
presently charges for the legal services of its professionals
are:
Professional/Paraprofessional Rate per Hour
Intellectual Property
Ann K. Ford $325.00
Mark H. Tidman $325.00
Lisa R. Trovato $250.00
Emily C. Sexton $200.00
Thomas E. Zutic $175.00
Eliza P. Nagle $175.00
Jeremy C. Glasser $140.00
Franchising
Ann Hurwitz $300.00
Michael Santa Maria $300.00
Todd Bowers $230.00
Will Woods $180.00
Camille Tabor $110.00
The Debtors believe that the terms and conditions of Piper
Marbury's employment are reasonable because the fees:
A. are based on hourly rates and will correspond to the degree
of effort expended on the Debtors' behalf; and
B. are Piper Marbury's usual and customary rates for services of
this nature.
In connection with Piper Marbury's pre-petition engagement by
the Debtors, from November 1, 2000 to November 1, 2001, and with
respect to professional and ancillary services rendered and to
be rendered, Ms. Ford submits that Piper Marbury received from
the Debtors payments in the aggregate amount of $547,508.17,
including an advance payment of $163,553.60. As of the Filing
Date, a portion of that advance payment may have been exhausted
and the Firm will file a supplemental disclosure stating the
amount of the net advance payment remaining. Ms. Ford assures
the Court that Piper Marbury will credit any excess amount
remaining from the advance payment against the dollar amounts to
be paid to Local Counsel and/or the dollar amounts awarded to
Piper Marbury by this Court with respect to applications for
compensation and reimbursement of expenses submitted by Piper
Marbury to and approved by this Court.
Ms. Ford informs the Court that the Firm, nor any of its
partner, counsel, associate or other professional, holds or
represents any interest adverse to the Debtors or their estates,
except that it may represent entities whose interest may be
adverse to that of the Debtors including:
A. Unrelated representation to major shareholders including ESL
Investments, Michael Egan, Fidelity and Capital Group;
B. Unrelated representation to agents, banks and other lenders
including Bank Austria Creditanstalt, Bank Montreal, Bank
of New York, Bank of Tokyo Mitsubishi, Bank Brussels
Lambert, Chase Manhattan, Credit Industriel et
Commercial, Citibank, Congress Financial, Credit
Agricole, Credit Suisse First Boston, Deutsche Banc,
First Union National Bank, Fleet Bank, General Motors,
Heller Financial, Lehman Brothers, MBIA, Natwest, Nesbitt
Burns Rabobank, Summit, Textron and Union Dominion Trust;
C. Unrelated representation to insurance providers including
Allianz Insurance Aon Risk Services, Associated Aviation
Underwriters, Chubb Atlantic Indemnity Ltd., AIG,
Continental Casualty Co., Executive Risk Indemnity Inc.,
Federal Insurance Co., Hatford Insurance Co., Lexington
Insurance Co., Liberty Mututal, Lloyds of London,
Lumbermans Mutual Casualty, National Union Fire Insurance
Co., New Hampshire Insurance Co., Royal Indemnity
Insurance Co., Starr Excess Liability Insurance, and X.L.
Insurance Co. Ltd.;
D. Unrelated representation to professionals including Arthur
Andersen LLP, Piper Marbury Rudnick & Wolfe LLP, and Paul
Hastings Janofskly & Walker LLP;
E. Unrelated representation to significant unsecured creditors
including A1 Auto & Body Shop, AC Delco, Adecco
Employment Services, Aerotek, Alliance Security, Allied
Automotive Group, American Arbitration Association,
American Express, American Trans Air, Arthur Andersen,
AT&T, ATG Inc., BMC Software Inc., Bridgestone/Firestone
Inc., Chrysler Financial Corp., Cintas Corp., Citgo
Petroleum Corp., Continental Airlines, Corporate Express
Inc., Dupont Flooring Systems, Ecolab Inc., Eller Media
Co., Federal Express, Fenton Press Inc., GMAC, Goodyear
Tire & Rubber, Guardsmark, Hewlett Packard, Internal
Security Mgt., Merill Lynch, Michelin North America Inc.,
Mitsubishi Motor Sales, Northwest Airlines, Oracle Corp.,
Rotary Lift Division, Ryder Transportation Services,
Schuman Carriage, Service Master Mgt. Services,
Storagetek, Temporary Resources Inc., Tesoro Hawaii
Corp., Title America, TRG Inc., Uniglobe Travel
International, United Airlines, Walt Disney Co.,
Wells Fargo Card Services Inc., Yahoo Inc., and Zep
Manufacturing. (ANC Rental Bankruptcy News, Issue No. 4;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ALGOMA STEEL: Commences Contract Talks with Steelworkers
--------------------------------------------------------
Contract talks between the United Steelworkers' Locals 2251 and
2724 and Algoma Steel Inc., were scheduled to begin yesterday,
December 12. Collective agreements will be based on the
framework established by the Plan of Arrangement approved by the
Noteholder Group on Monday, December 10.
The decision to proceed with bargaining was made by the two
local unions' bargaining committees in meetings last night and
Tuesday.
"We have concerns about the viability of the Plan that we intend
to address at the bargaining table," said Steelworkers' Local
2251 President Tom Bonell. "Collective bargaining is the
employees' opportunity to influence how Algoma Steel emerges
from protection under the Company Creditors Arrangement Act
(CCAA). Our goal is to ensure the company's survival."
"Algoma Steel's uncertain future is having an impact on our
members and our community," said Ian Kersley, president of
Steelworkers' Local 2724. "We are committed to focused and
intensive negotiations, aimed at resolving issues that concern
our membership. An agreement that reflects those concerns will
protect both our members' interests and strengthen the company."
"Over the past few weeks, we have identified a number of
problems with the Plan of Arrangement," said Steelworkers' Area
Coordinator Doug Olthuis. "The issue of Algoma Steel's liquidity
coming out of CCAA protection is one that requires urgent
attention. Implementation as well as issues not covered by the
scope of the Plan also need to be resolved before this process
concludes."
Steelworkers' Locals 2251 and 2724 represent 3,200 hourly-rated
employees and approximately 600 non-management salaried
employees respectively at Algoma Steel.
AMTROL INC: S&P Puts Ratings on Watch Negative After Bank Waiver
----------------------------------------------------------------
Standard & Poor's placed its ratings on AMTROL Inc. on
CreditWatch with negative implications following disclosure that
the company had obtained a waiver of the capital contribution
requirement under its credit agreement.
Cypress Merchant Banking Partners L.P., AMTROL's equity sponsor,
was required and agreed to make a common equity contribution of
$12.6 million by November 14, 2001, in order for the company to
remain in compliance with certain financial covenants. This
requirement has been waived until December 27, 2001. AMTROL is
currently in negotiations with two financial institutions to
obtain alternative financing to its bank credit facility, which
expires in May 2002.
Liquidity remains a primary concern. Underpinning the ratings is
the expectation that AMTROL will either close on a new credit
facility or receive a cash equity infusion before the waiver
expiration date. Even without fresh capital, it appears that the
company will have the necessary liquidity during this typically
cash-generative period to meet its immediate operating needs and
a December 31, 2001 bond coupon payment. However, absent
measures to restore liquidity, ratings will be lowered.
The ratings reflect AMTROL's below-average business position as
a leading manufacturer of niche flow control, fluid treatment,
and storage products used primarily in water systems and HVAC
(heating, ventilating, and air-conditioning) applications. The
company has a modest revenue base, an aggressive capital
structure, and a growth-via-acquisition strategy. Operating
performance appears to have stabilized following a year plagued
by high raw material and energy costs, lower demand due to the
weaker North American economy, increased competition, and
pricing pressures.
The ratings will be reviewed again once new financing is in
place.
Ratings Placed on Creditwatch
with Negative Implications
AMTROL Inc. Ratings
Corporate credit rating B
Senior secured bank loan rating B+
Subordinated debt CCC+
APPLETON PAPERS: S&P Rates $250M Senior Subordinated Notes at B+
----------------------------------------------------------------
Standard & Poor's assigned its single-'B'-plus rating to
Appleton Papers Inc.'s $250 million senior subordinated notes
due 2008 to be issued under Rule 144A with registration rights.
At the same time, Standard & Poor's existing ratings on the
company are affirmed (see list below). The outlook is stable.
Proceeds from the debt issue, together with available cash, will
be used to redeem in full a senior subordinated note due 2008
issued to Arjo Wiggins Appleton (AWA) when the company was
recently acquired by its employees. AWA still retains a $140
million payment-in-kind seller note that accretes to $305
million over eight years.
The ratings reflect Appleton's leading positions in niche
specialty paper markets, a fairly stable cost base, limited
product diversity, and an aggressive financial profile.
Appleton is the world's largest manufacturer of carbonless
paper, which is used in multi-part forms such as invoices,
credit card receipts, and packing slips. The industry is
modestly cyclical and very concentrated. Mead Corp., a larger,
diversified forest products company, is the company's primary
competitor. Volumes in the U.S. have been declining about 9% a
year because of the development of substitute technologies, and
these declines are expected to continue. The company expects to
offset them with increased sales in the growing thermal paper
market (point of sales receipts, labels, tickets, etc.), where
it is also the industry leader, and with new product
applications.
Appleton's competitive cost position stems from an on-going
focus on manufacturing efficiencies and process improvements,
limited exposure to raw material price volatility, meaningful
pulp integration, and cost-effective on-machine coating
capabilities. Product pricing is relatively stable, although
there has been some recent pressure in commodity thermal paper
pricing due to capacity additions. Geographic diversity is
limited, with only about 10%-12% of sales outside the U.S.,
however, the company has strong positions in the growing Latin
American carbonless market. Appleton has strong customer
relationships with diverse end users, but is subject to some
customer concentration risk.
Appleton's balance sheet is stretched, with debt to capital of
80% and total debt to EBITDA of 3.6 times. However, the
company's financial profile should strengthen during the next
few years because free cash flow will be primarily applied
toward debt reduction (no dividend payments or acquisitions are
expected). Total debt to EBITDA is expected to average about 3x
with debt to capital declining to between 50% and 60%,
appropriate measures for the ratings. Operating margins (before
depreciation and amortization) should remain in the low-20% area
aided by further shifts to higher margin products, increased
integration, and cost containment measures. Appleton should
generate meaningful levels of free cash flow driven by strong
operating performance, moderate capital expenditures, and
minimal tax payments due to an advantageous corporate structure.
As a result, funds from operations to total debt should range
between 25% and 30%, with cash interest coverage in the 5x-6x
range over the intermediate term. Financial flexibility is
adequate with the company's $75 million revolving credit
facility expected to remain substantially undrawn.
ARCH WIRELESS: S&P Hatchets Debt Ratings Down to D
--------------------------------------------------
Standard & Poor's lowered those ratings on Arch Wireless Inc.,
Arch Wireless Communications Inc., and Arch Wireless Holdings
Inc. which were not already 'D' to 'D'.
The downgrade follows Arch's filing for Chapter 11 bankruptcy
protection on December 6, 2001. The company had about $50
million in cash at the time of filing. At the end of third
quarter 2001, total debt was more than $1.6 billion with an
annualized EBITDA of about $222 million and EBITDA interest
coverage of about 0.84 times. Arch has been defaulting on some
of its debt issues since mid-2001.
Arch was the largest paging/messaging services provider in the
U.S., with more than 13 million subscribers and a 40% market
share, Arch's financial profile began to deteriorate in 2000 due
to a rapid decline in the one-way paging business and the
company's acquisition of Paging Network Inc. (PageNet), a
transaction in which Arch assumed more than $1 billion of
PageNet's liabilities. Although Arch planned to offset the
deteriorating fundamentals of its traditional paging business by
aggressively growing advanced two-way services such as short
messaging and limited Internet access, the growth in these new
services was insufficient due to the slowing economy and
competition from cellular services.
Ratings Lowered
Arch Wireless Inc. TO FROM
Senior unsecured debt rating D C
Arch Wireless Communications Inc.
Senior unsecured debt rating D C
Arch Wireless Holdings Inc.
Senior secured debt rating D CC
Ratings Unaffected
Arch Wireless Inc.
Corporate credit rating D
Arch Wireless Communications Inc.
Corporate credit rating D
Arch Wireless Holdings Inc.
Corporate credit rating D
* * *
DebtTraders reports that Arch Communications Inc.'s 13.750% bond
due 2008 (ARCHC2) (with Arch Wireless as underlying issuer)
trades between 0.25 and 1.0. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=ARCHC2
BETHLEHEM STEEL: Agrees to Provide Afco Credit Security Interest
----------------------------------------------------------------
Afco Credit Corporation is an insurance premium financing
company. Afco entered into two commercial premium finance
agreements with Bethlehem Steel Corporation, and its debtor-
affiliates and agreed to fund the Debtors' insurance premium
payment obligations under certain policies prior to the Petition
Date. Counsel for Afco, Steven G. Legum, Esq., at Carlucci &
Legum, in Mineola, New York, says that pursuant to the Finance
Agreements, Afco loaned the Debtors $5,906,907 for the purposes
of paying the premiums due under the financed insurance
policies.
George A. Davis, Esq., at Weil, Gotshal & Manges LLP, in New
York, attorney for the Debtors, tells Judge Lifland that
pursuant to the Finance Agreements, the Debtors:
(a) granted Afco a security interest in all unearned premiums
and refunds which may become payable in the event of
reduction or cancellation of the financed insurance
policies, and
(b) executed an irrevocable power of attorney appointing Afco
as the Debtors' attorney in fact, with the authority to:
(i) cancel the financed insurance policies if the Debtors
fail to repay the indebtedness, and
(ii) receive and retain all sums due Afco under the
Finance Agreements with respect to the financed
insurance policies, with any excess funds returned to
the Debtors.
As of the Petition Date, Mr. Davis notes, the Debtors owe Afco
$4,842,103.
Mr. Legum explains that the commencement of these chapter 11
cases has prevented Afco from enforcing its rights under the
Finance Agreements. According to Mr. Legum, unless the Afco
security interest receives adequate protection, Afco intends to
move the Court to vacate the automatic stay to allow its
exercise of such rights.
Thus, the Debtors and Afco have agreed to resolve the issues
arising in connection with the Finance Agreements, the financed
insurance policies and the indebtedness. Upon execution of the
Stipulation memorializing such resolution, the Debtors will pay
Afco $601,019, the schedules payment due on November 1, 2001
under the Finance Agreements.
In the Stipulation, the Debtors and Afco acknowledge and agree
that:
(1) Afco has a perfected and secured first lien with respect
to the unearned premiums and refunds under the financed
insurance policies.
(2) During the pendency of these chapter 11 cases, the Afco
security interest in unearned premiums and refunds will
decrease and deteriorate on a daily basis as premiums
are earned by the insurers, and Afco is entitled to
adequate protection of the Afco security interest.
(3) Upon any default in payment of the Indebtedness, Afco's
right to cancel the financed insurance policies, if
exercised, will cause irreparable harm to the Debtors,
their estates and the parties in interest.
(4) On account of the indebtedness, the Debtors will pay
Afco equal monthly installment payments of $601,018.62.
In addition to the November payment that is to be made
upon execution of the Stipulation, the first of such
payments will be made within 5 business days after this
Stipulation is approved by the Court.
(5) In the event of a default in payment, upon 5 business
days' notice to counsel for the Debtors and the Debtors,
Afco shall have the right to file a motion with the
Court seeking relief from the automatic stay to enforce
its rights under the Finance Agreements and applicable
state law. Any such motion may be prosecuted on an
expedited basis.
(6) With respect to the November payment, Afco shall
promptly return such payment to the Debtors in the event
this Stipulation is not approved by the Court.
(7) In the event that any of the financed insurance policies
expire or are cancelled, or if the insurance carriers
shall otherwise require, the Debtor agrees to take all
reasonable steps to cooperate with any audit conducted
by such carrier and will make its books and records
available for such audit.
Mr. Davis announces that he will present the Stipulation to
Judge Lifland for approval tomorrow, December 14, 2001.
(Bethlehem Bankruptcy News, Issue No. 6; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
BURLINGTON: Court Confirms Admin. Priority Status for Suppliers
---------------------------------------------------------------
In the ordinary course of business, numerous suppliers and
service providers supply Burlington Industries, Inc., and its
affiliates and subsidiaries with goods and services that are
integral to the Debtors' ongoing operations. Additionally,
Michelle Morgan Harner, Esq., at Jones, Day, Reavis & Pogue, in
Cleveland, Ohio, tells the Court that the Debtors had
outstanding pre-petition purchase orders with numerous
suppliers, including outstanding orders for a variety of raw
materials, supplies and services that the Debtors require to
produce goods for their customers and maintain current
production schedules.
Ms. Harner voices the Debtors' concern that the suppliers may
perceive a risk that they will be treated as pre-petition
general unsecured creditors and consequently refuse to ship raw
materials and supplies to the Debtors or provide essential
services to the Debtors unless the Debtors issue substitute
post-petition purchase orders or provide other assurances of
payment. Issuing substitute orders would be administratively
burdensome, time-consuming and counterproductive to the Debtors'
reorganization efforts, Ms. Harner explains. According to Ms.
Harner, this could lead to delays in the Debtors' receipt of
essential goods and services, ultimately:
(a) resulting in the disruption of established production
schedules and "just in time" distribution systems, and
(b) hindering the Debtors' ability to fulfill their
obligations to customers.
A loss of access to critical goods and services would
immediately undermine the Debtors' ability to fill their
customer orders on a timely basis, resulting in potentially
irreparable damage to customer confidence in the Debtors during
this critical early stage of the Debtors' reorganization
efforts, Ms. Harner explains further. Many customers may seek
to fill their orders elsewhere, Ms. Harner cautions, thereby
seriously undermining the Debtors' ability to complete a
successful reorganization and maximize values for the benefit of
stakeholders.
Under these circumstances, Ms. Harner relates, the Debtors
believe that relief is needed to provide necessary assurances to
the suppliers and thereby permit the Debtors to obtain timely
delivery of goods and the uninterrupted provision of services
from the suppliers, including goods and services represented by
the outstanding orders.
The Debtors believe that obligations arising out of the post-
petition delivery of goods and provision of services to the
Debtors are expenses incurred for the benefit of the Debtors'
estates and assist in preserving the value of the Debtors'
businesses. Thus, Ms. Harner points out, these costs are
accorded administrative priority status. Ms. Harner tells Judge
Walsh that the Debtors merely want confirmation of the treatment
of such post-petition obligations to provide necessary assurance
of payment to the suppliers and ensure the Debtors' ongoing and
uninterrupted receipt of essential goods and services.
Ms. Harner conveys to the Court the Debtors' belief that they
have sufficient cash reserves, together with anticipated access
to sufficient debtor in possession financing, to pay all
undisputed obligations arising from:
(1) the post-petition delivery of goods by the Suppliers that
are accepted by the Debtors, and
(2) the post-petition provision of services to the Debtors at
the Debtors' request in the ordinary course of business.
Accordingly, the Debtors sought and obtained from Judge Walsh an
order:
(A) granting administrative expense priority status to the
Debtors' undisputed obligations to the suppliers arising
from the post-petition delivery of goods accepted by the
Debtors and the post-petition provision of services to the
Debtors at their request, including any goods and services
provided to the Debtors pursuant to the outstanding
orders, and
(B) authorizing the Debtors to pay their undisputed
obligations to suppliers that are entitled to
administrative expense priority in the ordinary course of
business.
Judge Walsh notes that the Debtors retain their rights to:
(i) cancel a purchase order (including any outstanding order),
(ii) decline the acceptance of goods and services,
(iii) return any defective, nonconforming or unacceptable goods,
or
(iv) contest the amount of any invoice or claim. (Burlington
Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
CHIQUITA BRANDS: Will Accord Priority to Intercompany Claims
------------------------------------------------------------
Under the existing cash management system, Kim Martin Lewis,
Esq., at Dinsmore & Shohl LLP, in Cincinnati, Ohio, notes that
Chiquita Brands International, Inc., in essence is using
Chiquita Brands Inc. as its lender. Given this relationship,
Ms. Lewis says, it is important that the interests of Chiquita
Brands Inc., who will not be a debtor, are adequately protected.
To resolve the concerns related to the accounting of funds moved
between a debtor and its subsidiaries in a Chapter 11 case, Ms.
Lewis observes that courts - including those in the Southern
District of Ohio -- typically grant superpriority status to
inter-company claims.
According to Ms. Lewis, Chiquita Brands Inc. generally pays the
Debtor's obligations and then books an accounting charge to the
Debtor. "Many of the Debtor's obligations may have already been
paid, but due to the ordinary lag time, the inter-company charge
has not been booked," Ms. Lewis relates.
So to ensure that Chiquita Brands Inc. will not, at the expense
of its creditors, fund the operations of another entity, the
Debtor requests that all inter-company claims arising before or
after the Petition Date be accorded superpriority status. Ms.
Lewis emphasizes that all these inter-company claims should have
priority over any and all administrative expenses of the kind
specified in sections 503(b) and 507(b) of the Bankruptcy Code,
subject and subordinate only to the priorities, liens, claims
and security interests that may be granted under section 364 of
the Bankruptcy Code.
The Debtor estimates that the net monthly average for such
claims is $2,700,000, excluding extraordinary or restructuring
charges, Ms. Lewis informs Judge Aug. If inter-company claims
are accorded superpriority status, Ms. Lewis assures the Court
that the Debtor will continue to bear the ultimate repayment
responsibility, thereby maximizing the protection afforded by
the cash management system.
After due deliberation, Judge Aug grants the relief requested.
(Chiquita Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
CORRECTIONS CORPORATION: Amends Senior Credit Facility Agreement
----------------------------------------------------------------
Corrections Corporation of America (NYSE: CXW) announced that it
has completed an amendment and restatement of its existing
senior credit facility. As part of the amendment and
restatement, the existing $269.4 million revolving portion of
the credit facility, maturing on January 1, 2002, was replaced
with a term loan of the same amount maturing on December 31,
2002, to coincide with the maturity of other loans under the
senior credit facility. Lehman Brothers acted as advisor and
lead arranger in connection with the amendment and restatement.
All loans under the amended and restated credit facility bear
interest at a variable rate of 550 basis points over the London
Interbank Offered Rate ("LIBOR"), through June 30, 2002.
Following June 30, 2002, the applicable interest rate for all
loans under the credit facility will increase to 650 basis
points over LIBOR. In the event the company is unable to
refinance the entire facility prior to July 1, 2002, the company
will also be required to pay the lenders under the facility an
additional fee equal to 1.0% of the amounts then outstanding
under the facility.
As a result of the amendment and restatement, certain financial
and non-financial covenants were amended, including the removal
of prior restrictions on the Company's ability to pay cash
dividends on shares of its issued and outstanding series A
preferred stock. Under the terms of the amended and restated
credit facility, the Company is permitted to pay quarterly
dividends on the shares of preferred stock, including all
dividends currently in arrears.
"The extension and modification of our senior credit facility
represents a major step forward in the ultimate restructuring of
the Company's balance sheet," stated Irving E. Lingo, Jr., the
Company's Chief Financial Officer. "Extending the loan maturity
should a provide the Company with the flexibility necessary to
appropriately complete a permanent refinancing of our senior
bank debt. In addition, the modification permitting the payment
of the series A preferred dividend removes a significant
impediment to the Company's ability to obtain an upgrade from
the credit rating agencies, which will also positively affect a
new financing."
The complete text of the amended and restated credit agreement
governing the amended and restated credit facility will be
included as an exhibit to a Form 8-K to be filed by the Company
with the Securities and Exchange Commission via EDGAR. To
obtain a copy of the Form 8-K, please refer to the SEC website,
http://www.sec.gov or the Company's website,
http://www.correctionscorp.com
The Company is the nation's largest provider of outsourced
corrections management services, housing an inmate population
larger than that of all but five public correctional systems in
the United States. The Company specializes in owning, operating
and managing prisons and other correctional facilities and
providing inmate residential and prisoner transportation
services for governmental agencies. In addition to providing
the fundamental residential services relating to inmates, each
of the Company's facilities offers a variety of rehabilitation
and educational programs, including basic education, life skills
and employment training and substance abuse treatment. The
Company also provides health care (including medical, dental and
psychiatric services), institutional food services and work and
recreational programs. The Company owns or manages 70
facilities, including 68 correctional and detention facilities
with a total design capacity of approximately 65,000 beds in 21
states, the District of Columbia and Puerto Rico, of which 68
facilities are operating (two of which are idle) and two are
under construction.
DELPHI INT'L: Sets Special Shareholders' Meeting for January 8
--------------------------------------------------------------
A special general meeting of shareholders of Delphi
International Ltd. will be held on January 8, 2002 at Conyers
Dill & Pearman, Pembroke Room, 2nd Floor, Richmond House, 12
Par-la-Ville Road, Hamilton, HM 08, Bermuda, commencing at 9:30
a.m.
At this meeting shareholders will be asked to consider and vote
upon the following:
1. Ratification of the Commutation, Prepayment and
Redemption Agreement entered into by DI and Oracle
Reinsurance Company Ltd. on September 14, 2001.
2. Resolutions to effect the liquidation of DI.
3. Proposals to be considered by DI, as the holder of all
outstanding voting common shares of Oracle Reinsurance
and O.R. Investments Ltd., to effect the liquidation
of Oracle Reinsurance and O.R. Investments.
The board of directors of DI has fixed the close of business on
December 14, 2001 as the record date for the meeting. Only
shareholders of record on that date are entitled to notice of,
and to vote at, the meeting or any adjournments or postponements
of the meeting.
Delphi International is soaking up the Bermuda insurance
opportunities. Through its wholly owned subsidiary, Oracle
Reinsurance, the island-based company provides excess of loss
and quota share reinsurance. Delphi International primarily
provides reinsurance for group employee benefit insurance
products (including long-term group disability and excess
workers' compensation insurance) offered by Delphi Financial's
Reliance Standard Life Insurance and Safety National Casualty
subsidiaries. Chairman Robert Rosenkranz owns more than 25% of
the company.
The company is in the process of liquidating its assets and
winding-up of its operations to pay off its liabilities.
E.SPIRE COMMS: Court Extends Plan Filing Period Until January 31
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware extends
e.spire Communications, Inc.'s exclusive periods to propose a
plan of reorganization and solicit acceptances of that plan. The
Plan Proposal Period is extended through January 31, 2002 and
the Solicitation Period through April 1, 2002.
Since the Motion was filed prior to the expiration of the
Debtors' Plan Proposal Period, the Plan Proposal Period has been
automatically extended until this order is issued without the
need of a bridge order.
e.spire Communications, Inc. is a facilities-based integrated
communications provider, offering traditional local and long
distance dedicated internet access in 28 markets throughout the
United States. The Company filed for chapter 11 protection on
March 22, 2001 in Delaware Bankruptcy Court. Domenic E. Pacitti,
Esq., Maria Aprile Sawczuk, Esq. and Mark Minuti at Saul Ewing
LLP represents the Debtors in their restructuring effort.
ENRON CORP: Intends to Pay $19 Million to Foreign Creditors
-----------------------------------------------------------
Operating on a global basis, Enron Corporation, and its debtor-
affiliates incur obligations to numerous foreign entities in the
ordinary course of business. Martin A. Sosland, Esq., at Weil,
Gotshal & Manges LLP, in Dallas, Texas, estimates the pre-
petition obligations currently owed to foreign creditors at
$19,000,000. According to Mr. Sosland, these foreign
obligations include obligations owed to:
(i) governmental authorities,
(ii) vendors,
(iii) insurance companies,
(iv) agents,
(v) freight and shipping providers, and
(vi) provides of professional and non-professional services.
Mr. Sosland tells Judge Gonzales that the ability to purchase
goods and materials around the globe is vital to the debtors'
operations, in order to:
(a) preserve the network of foreign suppliers, which currently
provides the Debtors with the goods and materials used by
the Debtors,
(b) maintain the Debtors' overseas office infrastructure, and
(c) maintain and enhance the Debtors' estates.
By motion, therefore, the Debtors ask permission to honor
their obligations to foreign creditors.
If foreign obligations are not paid, Mr. Sosland explains,
foreign creditors may seek to seize or impound assets within
their respective jurisdictions and possibly invoke civil or
criminal penalties against the employees and agents of the
Debtors or their subsidiaries. In addition, Mr. Sosland says,
unpaid foreign vendors may refuse to deliver goods ordered prior
to the Petition Date and to engage in any further business with
the Debtors unless the foreign obligations are satisfied. That
is why the Debtors seek authority to pay up to $19,000,000 in
foreign obligations, Mr. Sosland tells Judge Gonzales. (Enron
Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
EXODUS COMMS: Agrees to Assume Master Pact with Nova & Pay $10MM
----------------------------------------------------------------
Exodus Communications, Inc., and its debtor-affiliates request
approval of a Settlement Agreement, dated October 30, 2001,
between Debtors and NOVA Corp. Under the Settlement Agreement,
the Debtors will assume the Master Agreement, dated August 30,
2000, and pay approximately $10,000,000.
David R. Hurst, Esq., at Skadden Arps Slate Meagher & Flom LLP
in Wilmington, Delaware, relates that NOVA is one of the
Debtors' primary general contractors and has provided goods and
services through it and its subcontractors to construct over 18
IDCs in the United States and abroad that were provided to the
Debtors under the Master Agreement. As of the Petition Date,
NOVA was owed approximately $15,500,000 on account of pre-
petition goods and services that it and its subcontractors
provided.
Mr. Hurst submits that NOVA's continued performance under the
Master Agreement is critical to the Debtors because a number of
sites that the Debtors either intend to operate or sell to third
parties are unfinished. Due to NOVA's and its subcontractors'
familiarity with the projects, NOVA is uniquely suited to
complete the work necessary to operate the sites in a timely and
cost effective manner. If NOVA or its subcontractors are not
paid, Mr. Hurst claims that the Debtors would have to procure
replacement vendors that presumably would charge the Debtors
much more than the amount the Debtors would pay to NOVA under
the Master Agreement. In addition, replacement contractors
likely could not complete the projects in a timely manner
because such contractors would have to familiarize themselves
with the complex layouts of the IDCs and start afresh on plans
to complete the projects. Mr. Hurst adds that a number of
governmental authorities have warned the Debtors that if work is
not timely performed on certain of the Debtors' IDC sites, such
authorities will bring enforcement actions and/or refuse to
issue permits, thereby forcing the shut down and/or preventing
the opening of the Debtors' IDCs. NOVA is uniquely suited to
complete work on the Debtors' IDCs and facilitate the issuance
of necessary permits.
Under the Master Agreement, Mr. Hurst informs the Court that
NOVA and its subcontractors provide guaranties and warranties
with respect to their work at the sites, including operating
IDCs. Thus, if problems develop at one of the IDCs, NOVA
promptly will remedy such problems to prevent interruption of
services that the Debtors provide to customers, without which,
the Debtors' customer service will be severely affected and
customer goodwill eroded. Finally, Mr. Hurst believes that most
of NOVA's pre-petition claims appear to be secured by valid
mechanics' liens and thus, payment of NOVA's claims in
accordance with the Settlement Agreement will affect the timing,
but not the amount, of payment on most of NOVA's claims.
Because NOVA is a critical vendor of the Debtors whose continued
provision of goods and services is essential to the Debtors'
business operations, the Debtors and NOVA negotiated the terms
of the Settlement Agreement pursuant to which the Debtors will
assume the Master Agreement in exchange for a release of all of
NOVA's and its subcontractors' claims and the continued
provision of goods and services by Nova under the Master
Agreement. The pertinent provisions of the Settlement Agreement
are as follows:
A. The Debtors will pay $886,000 for services provided to the
Debtors' non-Debtor affiliates and post-petition work
provided to the Debtors;
B. The Debtors will issue a "critical vendor" payment in the
amount of $1,440,000 on account of work performed at
facilities in New Jersey and Boston;
C. The Debtors will pay $10,020,000 upon closing of the sale of
a New Jersey IDC to a third party. This sum represents
amounts owed on account of that New Jersey site and 75% of
the remaining balance owed under the Master Agreement;
D. NOVA will waive, and take steps to prevent subcontractors
from collecting, $1,275,585.30 for work performed on a London
IDC site owned by one of the Debtors' foreign affiliates;
E. NOVA will, among other things, immediately take steps to
perform under the Master Agreement including, completion of
unfinished IDC sites, performance of compliance work
required by government authorities, and honoring of
guaranties and warranties; and
F. NOVA and its subcontractors will release the Debtors and
their estates, and indemnify and hold them harmless from any
and all claims and will provide satisfactory lien waivers
with respect thereto.
The Debtors believe that approval of the Settlement Agreement,
and assumption of the Master Agreement as amended thereby, is in
the best interests of the Debtors' estates and stakeholders
because:
A. assumption of the Master Agreement will insure that the
Debtors' current construction contracts are completed on a
timely and cost efficient basis, thereby insuring that the
Debtors' operations will be uninterrupted and that the
Debtors will be able to sell certain surplus IDCs for
maximum value;
B. approval of the Settlement Agreement will ensure that NOVA
and its subcontractors will honor guaranties and warranties
that are critical to the Debtors' ability to meet the needs
of their customers on an expedited basis;
C. under the Settlement Agreement, the Debtors will receive an
approximately 40% reduction in the value of NOVA's claim,
which likely is oversecured and would entitle NOVA to
receive post-petition interest on account of such claim,
thus eliminating a secured claim at a significant discount.
(Exodus Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
FANTOM TECHNOLOGIES: Gintel Asset Discloses 5.48% Equity Holding
----------------------------------------------------------------
Gintel Asset Management, Inc. beneficially owns 500,000 shares
of the common stock of Fantom Technologies Inc., with sole
voting and dispositive powers. 500,000 shares represents 5.48%
of the outstanding common stock of the Company. Mr. Robert M.
Gintel, Chief Executive Officer and 100% shareholder of Gintel
Asset Managment, Inc., is also senior member of Gintel & Co. LLC
and, Owner of TransAqua L.L.C., and senior member of Gintel
Equity Managment, L.L.C., which acts as investment advisor to
Gintel Partners Fund.
Fantom Technologies' rivals may wish the maker of vacuum
cleaners would make like a phantom and disappear. Fantom has
helped lead the appliance business into an age of bagless
vacuums with its dual-cyclonic cleaners, which use a removable,
washable, plastic part to collect dirt. In addition to its
FANTOM-brand full-size, upright, and cannister cleaners, the
company is developing a cordless vacuum and a line of countertop
water-purification systems. Assembled at its two plants in
Ontario and South Carolina, Fantom's vacuums are sold mostly
through US and Canadian retailers, but also through catalogs, TV
shopping networks, infomercials, and the Internet.
In October, the company decided to cease its manufacturing and
shipping activities. It also announced that it intended not to
make payment on its loan with Trimin.
FACTORY CARD: Seeks Further Extension on Exclusive Periods
----------------------------------------------------------
Factory Card Outlet Corp. seeks to further extend its Exclusive
Period during which to file a plan of reorganization and solicit
acceptances of that plan through February 19, 2002 and April 19,
2002, respectively.
Factory Card tells the U.S. Bankruptcy Court for the District of
Delaware that its is currently in substantive negotiations with
the Creditors' Committee to arrive at a stand-alone plan of
reorganization. Furthermore, despite the fact that general
unsecured creditors will not receive the full amount of their
claims under the plan, the Debtors seek to formulate a plan that
would provide a recovery, even though limited, for current
Factory Card equity holders. Hence the Debtors assert that the
extension will afford them an opportunity to reach an agreement
upon a plan of reorganization with the Creditors' Committee and,
if possible, the Equity Committee.
Factory Card Outlet Corporation, one of the largest chains of
company-operated superstores in the card, party supply and
special occasion industry in the United States, filed for
chapter 11 protection on March 23, 1999 in the District of
Delaware. Daniel J. DeFrancheschi of Richards Layton & Finger,
P.A., represents the Debtor in their restructuring effort. As of
August 4, 2001, the company listed $ 77,551,000 in assets and
$92,141,000 in debt.
FARINI: Will Loan Proceeds from Equity Issue to Bankrupt Unit
-------------------------------------------------------------
The Farini Companies Inc., announced it has entered into an
agreement with Darryl Harris, a director and principal
shareholder of Farini, pursuant to which Farini has agreed to
issue 10,875,350 common shares to Darryl Harris at a
subscription price of $0.00919 per share for aggregate gross
proceeds of $100,000. The proceeds will be loaned by Farini to
its wholly-owned subsidiary, The Farini Corporation, which has
made a proposal in bankruptcy and the funds will be used by The
Farini Corporation to repay its creditors other than Farini as
contemplated in the bankruptcy proposal.
As a result of the issuance of 10,875,350 common shares to
Darryl Harris, Mr. Harris will increase his share ownership of
Farini from approximately 50% to approximately 90% of the
outstanding shares of Farini.
The transaction with Mr. Harris is expected to close on December
17, 2001. The independent members of the board of directors of
Farini have determined that Farini is in serious financial
difficulty, that the transaction is designed to improve the
financial position of Farini and that the terms of the
transaction are reasonable in the circumstances. They have also
determined that it is reasonable in the circumstances to
complete the transaction without providing 21 days' prior notice
of the proposed issuance of shares because it is important to
satisfy the claims of the creditors of The Farini Corporation
under its bankruptcy proposal as soon as possible which was
filed on May 18, 2001 and accepted by creditors.
FEDERAL-MOGUL: Wants to Continue Non-Tax Qualified Pension Plan
---------------------------------------------------------------
Federal-Mogul Corporation, and its debtor-affiliates seek
authority to continue certain non-tax qualified pension plans,
which provide retirement benefits to approximately 950 current
and former employees of the Debtors. In many cases, the Debtors
have succeeded to the obligations under a given Non-Qualified
Pension Plan through merger with or acquisition of a sponsoring
company.
Laura Davis Jones, Esq., Pachulski Stang Ziehl Young & Jones
P.C., in Wilmington, Delaware, contends that maintenance of the
Non-Qualified Pension Plans is essential to employee retention
and morale, as well as to demonstrating the Debtors'
determination to honor its commitments to its employees. The
Non-Qualified Pension Plans are an integral part of the Debtors'
efforts to provide employee pension benefits competitive with
those offered by other companies in the industry. Absent
continuation of the Non-Qualified Pension Plans, Ms. Jones fears
that certain of the Debtors' employees would find themselves
working for significantly reduced overall compensation, while
former employees of the company might find themselves without
certain necessary benefits, which could lead to the departure of
essential personnel.
The Non-Qualified Pension Plans fall into six general
categories:
A. Defined Benefit Supplemental Employee Retirement
Plans(SERPs)- The Debtors' obligations in this category
relate to three Defined Benefit SERPs maintained for the
benefit of employees of the Debtors, former employees of
Cooper Automotive Company and former employees of Moog
Automotive Company, none of which are funded. Approximately
60 former employees of Federal-Mogul, Cooper and Moog
received payments prior to the Petition Date under these
defined benefit plans, who receive an aggregate monthly
benefit of approximately $53,680 under these plans. Another
16 individuals have deferred benefits from these plans that
would eventually result in the payment of an additional
$2,662 in aggregate monthly payments. In addition, 137
participants in these plans have accrued benefits with a
total value of approximately $3,100,000, of which amount
$2,120,000 was vested as of December 31, 2000, the last
date for which such figures are available.
B. Defined Contribution SERPs - The Debtors also maintains two
non-tax qualified Defined Contribution SERPs for certain of
its active and former employees, one of which covers
certain employees of the Debtors, while the other covers
employees of the Cooper. As with the Defined Benefit
SERPs, neither of the Defined Contribution SERPs is
presently funded. Under these programs, the company had
provided company matching contribution credits on employee
contributions to the qualified 401 (k) plan, to the maximum
amount allowable for such matching funds within the
qualified program's statutory limits. Additionally, the
Defined Contribution SERP that covered former Cooper
employees permitted both employee contributions and the
deferral of employee compensation into the plan. Accounts
became available to the covered employee upon termination
of employment if the employee had five or more years of
service. As of July 31, 2001, the vested value of the
obligations owing under the Defined Contribution SERPs was
approximately $1,280,000. Roughly $600,000 of this amount,
however, represents employee contributions to the program,
with the balance consisting of company matching funds.
C. Medicare Payments - The Debtors also made payments intended
to reimburse Medicare premium obligations to approximately
629 salaried retirees of two companies whose businesses the
Debtors acquired pre-petition, Champion Automotive Company
and Moog. The Medicare Payments were in the amount of $50
per month to each retiree covered by the program, for the
purpose of reimbursing the retiree's payment for Medicare
Part B coverage. Approximately 473 of the retirees
receiving payments under this program are retirees of
Champion, with the remainder comprised of Moog retirees.
The monthly benefit provided by this program prior to the
Petition Date was approximately $31,450 or approximately
$377,400 annually. The payments made by the Debtors
pursuant to this program go directly to the employees, and
are not specifically earmarked for payment to Medicare or
to individual health providers. Rather, this program is
intended to reimburse the covered retirees for those
payments they must make to ensure continued Medicare Part B
coverage.
D. Supplemental Key Executive Pension Plan (SKEPP) Obligations -
The SKEPP is maintained by the Debtors to provide a pension
benefit for a limited number of members of its senior
management team that is competitive with those pension
benefits provided to senior management personnel at peer
companies. The SKEPP is intended to provide a pension
benefit to covered individuals equal to 50% of such
individual's average compensation for the highest
consecutive three-year period of the last five years before
retirement. Benefits under the SKEPP program may not be
paid in a lump sum, but rather may only be paid in the form
of an annuity. In order for an individual to receive any
benefit under the SKEPP, such individual must have worked
for the Debtors for no less than five years. In addition,
for an individual to receive the maximum benefit under the
SKEPP, such individual must have at least 20 years of
service and be no less than 62 years of age at retirement.
At present, only 4 active employees and 1 former employee
covered by the SKEPP. The accrued benefits of the four
active employees above had an approximate value as of
January 1, 2001 of $1,930,000.
E. T&N Obligations - Certain current and former employees of T&N
Industries, a subsidiary encompassing certain businesses
acquired in 1998, participate in one or more non-qualified
retirement plans established by T&N Industries or its
predecessor companies prior to the Petition Date. In all,
35 current and former employees of T&N Industries
participate in these plans. Prior to the Petition Date, 7
of such employees received benefits monthly in a total
amount of $11,824, while 14 additional former employees
received benefits in an aggregate annual amount of $9,602.
The remaining fourteen employees have accrued benefits
valued at approximately $650,000 as of December 31, 2000.
In general, the plans maintained by T&N Industries provide
retirement benefits utilizing the T&N Industries Inc.
Employees' Pension Plan formula, modified to allow for
compensation in excess of the limits placed on qualified
plans. The benefits payable though the T&N Industries'
plans are offset by any benefits earned by the covered
employees through T&N Industries' qualified pension
programs, and may additionally be offset by any other
pensions payable to the employee.
F. Miscellaneous Plans - The Debtors also maintains 2
miscellaneous non-tax qualified plans, each of which was
funded prior to the Petition Date. The first is the Cooper
Deferred Compensation Plan, under which one former Cooper
employee received, prior to the Petition Date, a monthly
payment of $833.33. No assets have been allocated by
the Debtors to fund this obligation. This plan was funded
by covered employees who elected to defer previously earned
compensation into the plan. The second Miscellaneous Plan
relates to a non-qualified pension plan maintained by
Morenci, a corporate entity acquired by Champion. This plan
provides for monthly pension payments to individuals
covered by the plan. As of the Petition Date, there were 4
individuals covered by this plan, of whom 2 were receiving
monthly payments aggregating $312.96 prior to the Petition
Date. The other two individuals are eligible for benefits
in the future under the plan. Prior to acquisition by the
Debtors, Champion funded its obligations to the two plan
participants currently receiving benefits by purchasing
annuity contracts from The Hartford Insurance Company.
Ms. Jones tells the Court that the Non-Qualified Pension
Programs are integral components of the Debtors' overall
compensation package for a large number of its employees, as
well as the means by which many retirees of the Debtors receive
a substantial portion of their retirement income. The Debtors
seek to continue the Non-Qualified Pension Plans in order to:
A. maintain levels and types of compensation that are consistent
with those that are customary in the Debtors' industry,
B. provide additional incentives for those employees covered by
the plans to remain in their employment with the Debtors
and
C. demonstrate clearly to all parties in interest, especially
the Debtors' employees, that the Debtors are continuing
their business operations in chapter 11 as normally as
possible and will continue to honor its promises to
employees and retirees.
Ms. Jones claims that continuation of the Non-Qualified Pension
Programs will also assist the Debtors in maintaining good
relations with their retiree community, by ensuring that the
pension and medical benefits owing to many of the Debtors'
retirees will continue. Also, a substantial portion of the funds
that would be paid out if the Non-Qualified Pension Plans were
continued represent deferred compensation or periodic
contributions of the Debtors' employees.
Absent continuation of the Non-Qualified Pension Plans, Ms.
Jones feels that the Debtors will be at a comparative
disadvantage with other companies in their industry in terms of
the compensation offered to their employees. On information and
belief, most of the Debtors' peer companies offer non-qualified
programs comparable to those described herein. Ms. Jones states
that the Debtors have followed general industry practices in
establishing and fashioning the terms of the Non-Qualified
Pension Plans, and believe that the plans both enable the
Debtors to remain competitive in their industry and constitute a
key component of the Debtors' overall compensation package with
respect to many of their employees. Indeed, the Debtors have
used the Non-Qualified Pension Plans in their efforts to attract
quality employees.
If the plans were not continued, Ms. Jones contends that the
Debtors would be handicapped in their effort to attract and
retain new employees, at a time when many potential candidates
may already be disinclined to accept an offer from one of the
Debtors as a result of the chapter 11 proceedings. In addition,
a failure to continue the Non-Qualified Pension Plans would have
a negative effect upon the morale of current employees, many of
whom would feel that their compensation had effectively been
reduced by such action. Ms. Jones argues that such a belief
could lead to increased turnover at a time when the Debtors are
trying to sustain and develop their businesses notwithstanding
the chapter 11 proceedings and an increasingly competitive
market for the Debtors' products. By fulfilling their
obligations under the Non-Qualified Pension Plans, the Debtors'
concretely demonstrate to their employees and to other parties-
in-interest their intention to continue and expand their
business operations notwithstanding the filing of the chapter 11
petitions.
By continuing the plans, Ms. Jones asserts that the Debtors both
meet their statutory obligations under section 1114(e) of the
Bankruptcy Code to the extent such obligations may exist as well
as demonstrating the security of their businesses by honoring
their commitments to retired employees and accordingly submits
that continuation of the Non-Qualified Pension Plans with
respect to retired employees is warranted. Further, continuation
of the retiree SERF benefits will reinforce the trust of current
employees that the Debtors will honor its commitments to them,
with the effect of increasing morale and reducing employee
turnover.
Ms. Jones tells the Court that a significant portion of the
funds contributed to the Non-Qualified Pension Plans come from
periodic contributions of the Debtors' employees to such plans,
or from compensation that the Debtors' employees have elected to
defer into such plans in an effort to amass savings for
retirement. If the Non-Qualified Pension Plans were not
continued, these employees would not only be deprived of a
significant portion of their retirement savings, but such loss
would come from compensation they had already earned and
entrusted to the Debtors, rather than merely the loss of future
benefits promised by the Debtors, which would be profoundly
damaging to the Debtors' efforts to maintain good employee
relations and retain the personnel necessary for them to
reorganize successfully. (Federal-Mogul Bankruptcy News, Issue
No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900)
FLEETWOOD ENTERPRISES: Net Loss Balloons In Q2 On Reduced Sales
---------------------------------------------------------------
Fleetwood Enterprises, Inc. (NYSE: FLE), the nation's largest
manufacturer of recreational vehicles and a leading producer and
retailer of manufactured housing, announced results for the
second quarter and six months ended October 28, 2001. The
Company reported a second quarter net loss of $12.3 million,
which included an accrual of $8.3 million for the pending
settlements of two class-action lawsuits. The loss also
reflects reduced sales volume in both of the Company's core
businesses. The Company lost $3.4 million in last year's second
quarter.
"Although we had hoped early in the quarter to reach break
even," said Nelson W. Potter, Fleetwood's president and chief
executive officer, "that was changed by the events of September
11th and the opportunity to settle these lawsuits. The drop in
consumer confidence in September particularly affected our RV
sales. In recent weeks, however, orders for our travel trailer
and motor home products have increased compared to the previous
two months. As for the settlements, we believe that the
alternative of additional attorney fees, consumption of
management time and risks of litigation generally -- regardless
of the merit of the cases -- justifies the cost."
For the first six months of fiscal 2001, the Company incurred a
net loss of $23.5 million. This compares with a loss of $34.5
million for the corresponding period in the prior year, which
included a one-time cumulative charge to earnings of $11.2
million after taxes or 34 cents per diluted share related to a
change in accounting for retail housing credit sales.
Consolidated revenues for the second quarter totaled $591
million, down 21 percent from $749 million in last year's second
quarter. Six-month revenues also fell 21 percent to $1.15
billion from $1.47 billion for the first half of last year.
"The manufacturing side of our Housing Group continues to
improve its gross profit margin even under current market
conditions," Potter said. "Manufacturing profits were $16.6
million during the quarter, up 11 percent from the prior year.
The retail division lost $8.9 million, compared with $6.1
million last year, due to a 51 percent drop in sales. The sales
decline is largely due to our actions to rightsize this division
by closing stores, selling them or transferring management
responsibility to a third party. We are now down from a high of
244 stores to approximately 150 stores, which is the number of
stores that we had been targeting for the current industry
environment."
Manufactured housing revenues in the second quarter fell 27
percent to $285.6 million from $391.0 million last year.
Housing revenues included $198.0 million of wholesale factory
sales and $87.6 million of retail sales from Company-owned sales
centers. This compares with $211.4 million and $179.6 million,
respectively, last year. Gross manufacturing revenues declined
to $240.1 million from $284.3 million last year, and included
$42.1 million of intercompany sales to Company-owned stores.
Manufacturing unit volume was off 18 percent to 8,703 homes and
homes sold at Fleetwood retail stores dropped 45 percent to
2,212.
For the first half of the fiscal year, manufactured housing
revenues were down 27 percent to $575.6 million from $785.1
million in the prior year. Revenues included $379.5 million of
wholesale factory sales and $196.1 million of sales to Company-
owned stores, down from $448.0 million and $337.1 million
respectively last year. Gross manufacturing revenues, including
intercompany sales, were $456.3 million this year compared with
$601.8 million last year. Unit shipments from manufacturing
plants declined 27 percent to 16,472, while Fleetwood retail
store sales dropped by 37 percent to 4,858.
"Our RV Group sales also declined, mostly reflecting weakened
sales in our travel trailer division," Potter said. "This
contributed to an RV operating loss of $10.1 million for the
second quarter. We are encouraged, however, by the recent
success of our promotional programs, as well as the high level
of interest in our product line displayed two weeks ago at the
industry's largest show in Louisville, Kentucky. We were
pleased with the enthusiasm of our dealers, the positive
reception of our new motor home and travel trailer products and
the number of orders written at the show."
Quarterly revenues in the RV group were down 15 percent from
$349 million to $297 million. Motor home sales for the quarter
declined to $172 million from $189 million last year. In the
towable category, travel trailer and folding trailer sales
declined to $93 million and $32 million, respectively, compared
to $128 million and $33 million in the prior year.
Six-month RV sales were off 16 percent to $563.2 million
compared to last year's $666.8 million. Motor home revenues
fell to $306 million versus $336 million last year. Travel
trailer sales declined to $200 million from $270 million a year
ago, while folding trailer revenues dropped slightly to $58
million from last year's $62 million.
"Fleetwood is definitely making progress toward profitability,
although we will not reach that point in the seasonally weak
third quarter," Potter said. "Besides the Housing Group's
manufacturing operations, our motor home, folding trailer and
supply operations were also in the black. All of us are very
aware of and are focused on what needs to be done to turn around
travel trailers and continue the improvements in our housing
retail division."
* * *
Last week, Standard & Poor's lowered its corporate credit rating
on Fleetwood Enterprises Inc. to double-'B'-minus. At the same
time the rating on Fleetwood Capital Trust is lowered to 'D'.
Both ratings are removed from CreditWatch, where they were
placed on March 1, 2001. The outlook remains negative.
The lowered corporate credit rating, the rating agency said,
reflected a materially weakened business position, due to the
continued, very competitive industry conditions for both of
Fleetwood's major business segments. In addition, Fleetwood's
financial profile remains constrained, as reflected by the
granting of security to the company's bank lenders and the
recent discontinuation and deferral of the company's common and
preferred dividends, respectively.
GC COMPANIES: Wants Plan Filing Exclusivity Extended to Dec. 26
---------------------------------------------------------------
GC Companies, together with its debtor affiliates and the
Official Committee of Unsecured Creditors, present a joint
motion to extend their plan exclusivity periods to the U.S.
Bankruptcy Court for the District of Delaware.
The Debtors and the Committee request that the Court enter an
order extending their Exclusive Period for filing of a co-
proposed Plan until December 26, 2001, so that they can complete
the process of negotiating with bidders.
The Debtors and the Committee assert that an extension of the
Exclusive Period will afford them an opportunity to negotiate a
consensual Plan with Harcourt, GECC and the other major
creditors and holders of equity. An extension of exclusivity
will reduce the possibility of multiple plans which could lead
to unnecessary and costly adversarial confrontations, an
increase in the professional fees borne by the Debtors' estates
and a concomitant deterioration in the values of the Debtors'
estates.
GC Companies, which operates about 80 movie theaters in 19
states and the District of Columbia, filed for chapter 11
protection on October 11, 2000 in the U.S. Bankruptcy Court for
the District of Delaware. The firm is represented by Aaron A.
Garber, Esq., at Pepper Hamilton LLP. The company's 10Q Report
filed with the SEC lists assets of $232,595,000 and liabilities
of $249,179,000 as of July 31, 2001.
GIMBEL VISION: Three Directors Step Down from Board
---------------------------------------------------
Gimbel Vision International, Inc. (TSE: GBV) announced that Dr.
Howard Gimbel, Judith Gimbel and Glenn Gimbel have resigned as
Directors of GVI.
As reported earlier this year, Dr. Howard Gimbel and Mrs. Judith
Gimbel and their affiliates sold approximately 63% of their
shares in GVI to Aris Vision, Inc. At that time they remained
on the Board to help to ensure an orderly integration of the
companies. Recently, Dr. Gimbel's desire to focus on his
private practice has factored into his decision to maintain
greater independence from GVI. Dr. Gimbel will continue in his
position as Medical Director of GVI and Karen Gimbel, formerly
President and CEO of GVI, will remain on the board of GVI.
On behalf of the GVI board, Clifford James, Chairman of the
Board of Directors, thanked the departing Directors of GVI for
their years of service to GVI.
Gimbel Vision International Inc. is a public Corporation that
owns or is partnered with refractive vision correction centers
in Canada, the United States, Thailand and China. Together,
these facilities make up the GVI network offering clients a
comprehensive range of vision correction services, based on the
well-recognized expertise of GVI's surgeons and the
Corporation's commitment to leading edge technology and patient
care. To date, GVI's surgeons have performed over 80,000
refractive eye surgeries. Gimbel Vision International Inc.
shares are listed on The Toronto Stock Exchange and trade under
the symbol "GBV".
* * *
As reported in the Troubled Company Reporter (Dec. 5 Edition),
Gimbel Vision's Eugene, Oregon, USA laser eye surgery centre
defaulted under its lease agreement with Hillside Financial
International LLC with respect to the lease of a surgical laser.
The default, the report said, resulted from declining financial
results of the centre and, as a consequence of the declining
results, delinquent lease payments. Among other effects of the
default, the lessor has the right to declare the remaining
approximate $445,000 balance of the lease, for which the
Corporation is a guarantor, immediately due and payable. The
Corporation is in discussion with the lessor in an attempt to
remedy this
situation.
As a result of the defaulted lease, the company might be in
cross-default of other agreements with certain other of its
creditors. The future success of the Corporation depends on the
continued support of these and other creditors, the report said.
HAYES LEMMERZ: Gets Okay to Continue Intercompany Transactions
--------------------------------------------------------------
Hayes Lemmerz International, Inc., and its debtor-affiliates
sought and obtained an Order directing that all intercompany
claims against one Debtor by another Debtor arising after the
Petition Date as a result of intercompany transactions and
allocations be accorded superpriority status, with priority over
any and all administrative expenses, subject and subordinate
only to the priorities, liens, claims and security interests
granted under any debtor-in-possession financing facility
approved by this Court or any order granting adequate protection
to the pre-petition secured lenders and other valid liens to
ensure that each individual Debtor will not, at the expenses of
its creditors, fund the operations of another Debtor entity.
Kenneth A. Hiltz, the Debtors' Chief Finance Officer and Chief
Restructuring Officer, tells the Court that if Post-petition
Intercompany Claims are accorded superpriority status, each
individual Debtor on whose behalf another Debtor has utilized
funds or incurred expenses will continue to bear ultimate
repayment responsibility, thereby protecting the interests of
each Debtor's creditors. In addition, in the ordinary course of
business, the Debtors may periodically infuse capital into
certain of their subsidiaries, including non-debtor foreign
affiliates, generally accomplished through the making of
intercompany loans. Mr. Hiltz submits that the Debtors use
repayments of such loans as a tax efficient method of managing
cash throughout their worldwide business enterprise. Because the
nondebtor affiliates are part of the Hayes group of affiliated
entities, the entirety of intercompany transactions among
Debtors and nondebtor affiliates alike remain within the
spectrum of the Debtors' control.
The Debtors anticipate that the funding needs of their non-
debtor foreign affiliates over the course of these cases will
not exceed $20,000,000-$25,000,000. The Debtors believe in the
exercise of their reasonable business judgment that preservation
of the going concern value of the Company as a worldwide
enterprise, including the maintenance of nondebtor foreign
affiliates, is absolutely essential to the success of any
reorganization plan for the Debtors. (Hayes Lemmerz Bankruptcy
News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
HAYES LEMMERZ: S&P Drops Ratings to D After Bankruptcy Filing
-------------------------------------------------------------
Standard & Poor's lowered its ratings on Hayes Lemmerz
International Inc. to 'D'. In addition, all the ratings were
removed from CreditWatch, where they were placed September 5,
2001.
Total debt as of April 30, 2001, was about $1.8 billion.
The rating actions follow Hayes' filing of voluntary petitions
for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
Servicing of debt obligations has been suspended, although the
company has received commitments for $200 million in debtor-in-
possession financing from a group of lenders to fund post-
petition operating expenses and to meet supplier and employee
obligations.
Hayes is a global supplier of automotive and commercial wheels,
brakes, powertrain, and suspension components. The company's
operating results have declined sharply during the past year due
to a number of factors, including lower and erratic production
of light vehicles in North America, the steep decline in heavy-
duty truck production, and operational problems at several of
Hayes' manufacturing plants. These issues led to reduced
earnings and cash flow generation. Liquidity became constrained
due to the company's onerous debt burden, which resulted from
several large debt-financed acquisitions and high capital
investment spending during the past few years.
In addition to these issues, investor confidence in Hayes
declined with the company's announcement on September 5, 2001,
that it would restate its historical financial statements to
correct accounting errors and to write down the value of
impaired assets. The company estimated that it had understated
its net losses by at least $14.7 million and $5.0 million during
fiscal 2000 and the first quarter of fiscal 2001, respectively,
although the investigation into the accounting errors is
continuing and the final adjustments could be considerably
larger than the original estimates. Access to Hayes' bank credit
facility was restricted following the September 5 announcement,
which increased liquidity pressures.
Ratings Lowered, Removed from CreditWatch
Hayes Lemmerz International Inc. To From
Corporate credit rating D B-
Senior secured debt D B-
Senior unsecured debt D CCC
Subordinated debt D CCC
* * *
DebtTraders reports that Hayes Lemmerz's 11.875% bond due 2006
(HAYES1) trades from 45.5 to 47. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=HAYES1
HORIZON PCS: S&P Junks $175 Million Senior Unsecured Notes
----------------------------------------------------------
Standard & Poor's assigned its triple-'C' rating to Horizon PCS
Inc.'s $175 million senior unsecured notes due 2011. At the same
time, Standard & Poor's affirmed its single-'B'-minus corporate
credit, single-'B'-minus senior secured bank loan, and triple-
'C' senior unsecured debt ratings on the company. The outlook is
stable.
Proceeds from the notes will be used to fund a two-year interest
reserve escrow account, to expand the coverage in its service
territory by 1 million population equivalents (pops), and to
open additional 10 stores and to expand its territory and/or its
network.
Horizon is an affiliate of national carrier Sprint PCS. Its
service area covers 10.2 million pops in portions of 12
contiguous states located between Sprint PCS's Chicago, New
York, and Raleigh/Durham markets, and connects or is adjacent to
15 major Sprint PCS markets that have a total population of
more than 59 million. On Sept. 30 2001, the company had 146,641
subscribers.
The ratings on Horizon reflect the company's limited operating
history, its weak financials over the intermediate term, and
fierce competition in the wireless industry. These factors are
somewhat offset by the prefunding of the company's business
plan, the benefits derived from its relationship with Sprint
PCS, and the favorable growth prospects for Sprint PCS
affiliates.
Horizon is highly leveraged, with total pro forma debt of about
$377.7 million and debt per subscriber at a high $2,576 on Sept.
30, 2001. However, this amount is expected to decrease rapidly,
as the subscriber base grows. Horizon is not expected to
generate positive cash flow until 2003 and fully cover total
interest expenses until 2005.
Gross margin has been negatively affected by high variable
network costs, caused by higher-than-expected minutes of use.
High off-network traffic boosted long distance and outbound
roaming costs. In addition, higher-than-expected minutes of use
in 32% of Horizon's services territory, where Horizon uses the
network of NTELOS in exchange for a payment of per-minute use
wholesale charge, boosted the company's network costs. Despite
good results in selling, general, and administrative expenses,
which is driven mostly by a relatively low cost per gross
addition (CPGA), the company's EBITDA losses have been greater
than expected in 2001.
Nonetheless, Standard & Poor's expects that cash flow
performance should improve in 2002 due to the recent
renegotiation of per minute rates under the wholesale agreement;
the decline of the reciprocal roaming rate for Sprint PCS and
its affiliates to 10 cents by January 2002 from 20 cents in July
2001; the expansion of the company's coverage which is expected
to improve the outbound to inbound ratio; and continuing growth
of its subscriber base.
The ratings on Horizon also benefit from its healthy operating
metrics. Despite competitive pressures from larger, better
capitalized wireless carriers, the company has been adding
subscribers at a fast pace while maintaining relatively low
churn rate, which was 2.1% in the last two consecutive quarters.
However, churn exposure is expected to increase as Horizon adds
more volatile ASL subscribers to its base and the vast majority
of its customers (which were acquired in the last three
quarters) reaches its one-year contract anniversary. The
company's monthly average revenue per subscriber (ARPU), in the
mid-$50 area, has been above Standard & Poor's expectations. As
penetration increases, basic ARPU is expected to decline
slightly, but should remain above the industry average.
Horizon also benefits from its affiliate agreements with Sprint
PCS, which give the company the exclusive right to provide PCS
services under the Sprint PCS brand name in its service area. In
addition, the affiliate agreements give Horizon the right to
receive roaming revenues from Sprint PCS's contiguous markets,
use Sprint PCS's distribution channels, obtain Sprint PCS
volume-based pricing from vendors, and access Sprint PCS's
back-office operations for a negotiated price.
Outlook: Stable
While cash flow performance was below Standard & Poor's
expectations, EBITDA loss is expected to significantly decline
in 2002. Financial flexibility derives from a fully funded
business plan.
HUNTSMAN POLYMERS: S&P Cuts Ratings to D After Missed Payment
-------------------------------------------------------------
Standard & Poor's lowered its corporate credit and senior
unsecured debt ratings on Huntsman Polymers Group to 'D'. Both
ratings were removed from CreditWatch with negative
implications, where they were placed May 22, 2001.
The downgrades reflect Huntsman Polymers' decision not to make
its December 3, 2001, interest payment on its $175 million,
11.75% senior unsecured notes due 2004. Huntsman will have a 30-
day period to cure this situation before it becomes an event of
default under the indenture, although Huntsman is not expected
to make these payments and has announced plans to pursue a
restructuring of its debt with its bondholders. Huntsman Corp.,
Huntsman Polymers' parent, is also expected to miss interest
payments on its debt obligations due January 1, 2002.
Accordingly, Standard & Poor's will also lower the ratings of
Huntsman Corp. to 'D' when the company misses these payments.
Huntsman's financial profile has deteriorated throughout the
past year, under the weight of onerous debt levels and very weak
liquidity, and the continuation of a severe operating trough in
the U.S. petrochemical sector. Earlier in the year, Huntsman
disclosed that it had violated the financial covenants
associated with its bank loans, thereby limiting sources of
liquidity to cash on hand or the proceeds from potential asset
sales. Recent efforts to obtain alternative sources of liquidity
were unsuccessful. Huntsman has announced that it has received
a $150 million commitment to allow the company to continue to
operate until it completes its debt-restructuring plan.
Ratings Lowered and Removed from CreditWatch
Ratings
Huntsman Polymers Corp. To From
Corporate credit rating D CC
Senior unsecured debt D C
Ratings Remaining on CreditWatch Negative
Huntsman Corp. Ratings
Corporate credit rating CC
Subordinated debt C
Huntsman International Holdings LLC
Corporate credit rating B+
Senior unsecured debt B-
Huntsman International LLC
Corporate credit rating B+
Senior secured debt B+
Subordinated debt B-
* * *
DebtTraders reports that Huntsman Polymers Corp.'s 10.125% bond
due 2009 (HMAN4) trades between 83.5 and 85. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=HMAN4 for
real-time bond pricing.
LDM TECHNOLOGIES: S&P Cuts Ratings on Constrained Financials
------------------------------------------------------------
Standard & Poor's lowered its corporate credit and senior
secured bank loan rating on LDM Technologies Inc. to single-'B'-
minus from single-'B'. At the same time, the subordinated debt
rating on the company was lowered to triple-'C' from triple-'C'-
plus. The outlook is negative.
The rating actions reflect Standard & Poor's belief that the
company's financial flexibility will become more constrained
over the near term due to intensifying industry pressures, the
scheduled fall-off of some existing business, and the continued
delay of the launch of a significant new platform by a key
customer.
LDM supplies plastic instrument panel and interior components,
exterior trim components, and under-the-hood components to North
American automotive original equipment manufacturers. LDM has
doubled in size since 1995, primarily through a series of
acquisitions. Annual revenues are now about $450 million. While
the acquisitions greatly expanded LDM's product offerings and
customer base, they also left the company highly leveraged.
Debt to EBITDA is currently estimated to be more than 5 times
and is likely to deteriorate further over the near term.
LDM's operating results have come under increased pressure in
recent quarters due to intensifying industry pressures and the
costs associated with a new product launch. LDM has constructed
a new facility and incurred significant expenses related to this
launch, which was originally scheduled for early 2001. The
customer has delayed the launch several times, leaving LDM with
no earnings to offset the costs it has incurred. This platform
is now expected to launch in March 2002.
Until this product launches, LDM is expected to face significant
earnings pressures, which will be exacerbated by the winding
down of some existing business and the continuation of difficult
industry conditions. LDM is doing what it can to conserve cash
in the near term and has initiated cost cutting actions and
capital expenditures reductions.
Earlier this year, LDM amended its bank agreement to improve its
financial flexibility in fiscal year 2001 (fiscal year end is
September 30). Starting in fiscal year 2002, the company will
face covenant requirements again. The ratings are based on
Standard & Poor's expectation that cost-cutting initiatives will
enable LDM to withstand the next few months of earnings
pressure, and that the startup of new business in March 2002
will enable LDM to significantly improve operating results in
the second half of fiscal year 2002. In addition, the ratings
are based on the assumption that LDM will remain in compliance
with covenants and maintain an adequate level of liquidity. At
the end of June 2001, the company had $28.5 million in borrowing
availability under its revolving credit facility. Given the
near-term pressures the company faces, Standard & Poor's
believes that the level of available borrowing capacity will
decline significantly over the near term.
Outlook: Negative
The ratings incorporate Standard & Poor's expectation that cost-
cutting actions and the ramp-up of new business will help LDM
retain adequate liquidity and enable it to meet debt service
requirements and operating needs over the coming year. Should
LDM face greater-than-expected liquidity pressures over the near
term or should financial measures deteriorate beyond expected
levels, the ratings are likely to be lowered.
LTV CORP: US Trustee Appoints 3rd Amended Noteholders' Committee
----------------------------------------------------------------
Following the resignation of Teachers Insurance & Annuity
Association of America from the Committee, Ira Bodenstein,
United States Trustee for Ohio/Michigan Region 9, has revised
the appointments of members to the Official Committee of
Unsecured Noteholders of The LTV Corporation, and its debtor-
affiliates. The members of the current panel are:
HSBC Bank USA
c/o Russ Paladino
140 Broadway
New York, New York 10005-1180
Tel: (212) 658-6041
Fax: (212) 808-7897
U.S. Bank Trust National Association
c/o Scott Strodthoff
180 East Fifth Street
St. Paul, Minnesota 55101
Tel: (651) 244-0707
Fax: (651) 244-5847
PPM-America
c/o Joel Klein
225 West Wacker
Suite 1200
Chicago, Illinois 60606
Tel: (312) 634-2559
Fax: (312) 634-0053
(LTV Bankruptcy News, Issue No. 20; Bankruptcy Creditors'
Service, Inc., 609/392-00900)
LINC.NET INC: S&P Ratchets Low-B Ratings Down Another Notch
-----------------------------------------------------------
Standard & Poor's lowered its ratings on Linc.net Inc. and
placed the ratings on CreditWatch with negative implications.
Total debt outstanding at September 30, 2001 was approximately
$239 million.
The downgrade and CreditWatch placement reflect Linc.net's
limited financial flexibility, weak operating performance, and
expectations that the telecommunications infrastructure service
market will remain depressed for the next several quarters.
Although the firm was able to obtain an additional $10 million
in capital from its equity sponsor during the third quarter as
well as an additional $8.5 million revolving credit facility,
delays in collecting receivables has left the company with about
$8 million in cash and availability under its secured bank
credit facilities. Liquidity will be strained further in the
very near-term as Linc.net will likely break recently amended
bank covenants and because it has $13 million of debt
amortization over the next 12 months. Sales have declined 25%
while EBIT declined 82% over the past three quarters, leading to
pro forma EBITDA to interest coverage of 2.6 times and
total debt to EBITDA of 3.9x. However, credit protection
measures are expected to deteriorate much further given very
weak industry fundamentals.
Linc.net is a leading provider of a variety of network
infrastructure services, including central office installation,
network infrastructure engineering, and last-mile deployment.
Demand for these services has declined dramatically over the
past few quarters as the general economy weakened and because
smaller telecommunications and cable firms have had difficulties
obtaining financing for capital projects.
Standard & Poor's will meet with management to discuss its plans
to improve near-term liquidity, as well as discuss its operating
initiatives to help offset the decline in industry demand,
before taking a further ratings action.
Ratings Lowered and Placed on CreditWatch
with Negative Implications
Ratings
To From
Linc.net Inc.
Corporate credit rating B B+
Senior secured bank loan rating B B+
LUBY'S INC: Expects to Comply with Revised Covenants for FY 2002
----------------------------------------------------------------
During the last several years, Luby's Inc. has funded all
capital expenditures from internally generated funds, cash
equivalents, and credit-facility debt. Capital expenditures for
fiscal 2001 were $17,630,000. This 69% decrease from fiscal
2000 was a result of fewer new restaurant openings and
relocations in comparison with the previous fiscal year. In
fiscal 2001, one restaurant was opened, one was relocated, and
no restaurants were under construction at August 31, 2001. In
comparison, in fiscal year 2000, 11 restaurants were opened,
four were relocated, and two restaurants were under construction
at August 31, 2000. Fiscal 2001 capital expenditures included
approximately $4.1 million related to remodels in 17
restaurants.
Capital expenditures for fiscal 2002 are expected to approximate
$15 million. The Company will focus on improving the
appearance, functionality, and sales at existing restaurants.
These efforts will include changing several locations to other
dining concepts, where feasible. As a start, the Company plans
to remodel two currently closed units. One will reopen as a new
seafood restaurant. The new dining theme for the other
restaurant is still under development.
At August 31, 2001, the Company had a working capital deficit of
$8,975,000, which compares to the prior year's working capital
deficit of $31,420,000. The working capital position improved
during fiscal 2001 due primarily to expense-control initiatives,
price increases in the latter half of the year, and a $10
million loan from the CEO and COO. The Company typically
carries current liabilities in excess of current assets because
cash generated from operating activities is reinvested in
capital expenditures.
In the fourth quarter, the Company entered into an amendment of
its credit-facility agreement with a syndicate of four banks.
Among other things, the amendment provides for a reduction in
commitment with each principal payment, securing the credit-
facility debt with real property, the modification of financial
compliance evaluations from three criteria to one criterion
focused on EBITDA, and a change in the interest rate. The
Company made a $1 million principal payment on July 6, 2001. At
August 31, 2001, the Company had $122,000,000 outstanding under
its credit facility. The maturity date of the amended credit
facility is April 30, 2003, with a provision for extension to
April 30, 2004, given satisfactory conditions.
Subsequent to fiscal year-end 2001, the terrorist attacks of
September 11 and resulting recessionary trends negatively
impacted the Company's ability to meet its first quarterly
EBITDA covenant for fiscal year 2002. Accordingly, the Company
obtained a waiver and amendment to its credit agreement dated
December 5, 2001, which waives its noncompliance with first-
quarter EBITDA levels, resets remaining fiscal 2002 quarterly
EBITDA targets, and limits capital expenditures for the year to
$15 million. The Company expects to be in compliance with its
revised covenants for fiscal year 2002.
The Company believes that funds generated from operations are
adequate for its foreseeable needs. Sales decreased $26,223,000,
or 5.3%, primarily due to 19 store closures as well as market
conditions in the fiscal year. The closing of three restaurants
in fiscal 2000 contributed in part to the decrease in sales.
This decline was partially offset by a price increase on the Lu
Ann platter. Additionally, the heavily discounted Luby's
platter and "Big2Do" bundled offerings that were launched in the
fourth quarter of 2000 were discontinued in the third quarter of
2001.
The Company's net loss for the year ended August 31, 2001 was
$31,881. In the fiscal year 2000 Luby's net income was $9,125,
and in fiscal 1999 the Company experienced net income of
$28,613.
MCWATTERS MINING: Files Plan of Arrangement Under CCAA In Canada
----------------------------------------------------------------
McWatters Mining Inc. (TSE: MCW) reports that it has filed with
the Superior Court of Quebec its formal plan (the Plan) of
compromise and arrangement and reorganization of indebtedness
and liabilities and of share capital pursuant to the Companies'
Creditors Arrangement Act (Canada) and the Companies Act
(Quebec). Implementation of the Plan is subject to, among other
things, obtaining formal approval from its creditors at
creditors' meetings and shareholders at special meetings of the
common and preferred shareholders each of these meetings to be
held on January 23, 2002, the receipt of all necessary
regulatory approvals and to court approval.
McWatters believes that the Plan, which follows months of
extensive review, analysis and negotiations with McWatters'
secured lenders and other creditors, will allow the Company to
return to a financially stable and economically viable going
concern. Furthermore all stakeholders of McWatters (including
creditors, shareholders and employees) will derive greater
benefit from this restructuring plan than they might otherwise
recover from a forced liquidation of its assets, which could
occur if the Plan is not accepted.
In connection with the implementation of the Plan, McWatters has
received various expressions of interest from third parties to
provide the necessary investments and financings to permit
McWatters to satisfy the terms of the Plan and to bring the
Sigma-Lamaque Complex back into production. All such financings
and other commitments necessary to implement the Plan and to
recommence operations at the Sigma-Lamaque Complex are non-
binding and subject to various conditions, including approval of
the Plan by the creditors and shareholders of McWatters.
Reorganization
The following is a summary of some of the key provisions of the
Plan. Full details of the terms of the debt and equity
restructuring are set out in the Plan, a copy of which will be
mailed to each of the known creditors and shareholders of
McWatters on or about December 21, 2001. Under the Plan, it is
proposed that the debt and equity structure of McWatters be
reorganized as follows:
* McWatters' banks shall, in full and final satisfaction of
their claim, be paid an amount equal to $2.4 million, with the
balance owing (approximately $4.4 million) to be paid in
instalments commencing in March 2004 and ending in December
2005.
* The holders of McWatters' secured debentures shall receive
in full and final satisfaction of their claims, a payment of
$1.44 million in cash and $0.96 million in a new series of
debentures (the "Gold-Linked Convertible Debentures") to be
issued by McWatters which will pay interest at a rate based on
the price of gold.
* Certain creditors of McWatters that have registered a
legal hypothec for their claims shall receive, in full and final
satisfaction of their claims, an aggregate cash payment of
$2.775 million.
* McWatters' unsecured creditors and senior unsecured note
holders shall receive, in full and final satisfaction of their
claims, a number of new common shares at a price of $0.10 per
new common shares, up to a maximum of 50% of the value of their
claims. The unsecured creditors and senior unsecured note
holders shall not receive, in the aggregate, more than 148
million new common shares, which shares will be distributed on a
pro rata basis among such creditors.
* McWatters has set aside $200,000 to pay any unsecured
claims equal to or less than $2,000, in cash, and any creditor
holding a claim greater than $2,000 may elect to be part of the
$200,000 pool up to a maximum of $2,000 by renouncing its claim
for the amount that exceeds $2,000.
* Each preferred share outstanding as of the record date
will be exchanged for 1.29388 new common shares.
* Each common share outstanding as of the record date will
be exchanged for 0.28122 of a new common share.
Following the implementation of the Plan, McWatters' existing
common and preferred shareholders will hold approximately 25% of
the Company and McWatters' unsecured creditors will hold
approximately 75% of the Company. To fund the implementation of
the Plan, the Company has received letters of intent from
certain investors (the "Strategic Investors") who have agreed to
purchase $12 million of Gold-Linked Convertible Debentures.
This investment will take place on the implementation of the
Plan and will provide McWatters with the cash necessary to
settle the secured claims and implement the Plan. Furthermore,
the senior officers of the Company have agreed to a salary
reduction over the next two years of between 10% to 20% of their
base salaries.
Gold-Linked Convertible Debentures and Rights Offering
The Gold-Linked Convertible Debentures will be due January 1,
2012, will be unsecured and will rank pari passu among
themselves and with other senior unsecured indebtedness of
McWatters and senior in right and priority to all subordinated
unsecured indebtedness of the Company. The Gold-Linked
Convertible Debentures will be convertible at the holders'
option at any time into new common shares of McWatters at a
price of $0.13 per new common share. The rate of interest
payable on the debentures will be linked to the price of gold.
McWatters will have an annual repurchase obligation under
certain circumstances and the Gold-Linked Convertible Debentures
will be redeemable after January 1, 2005.
On the implementation of the Plan, McWatters will be issuing one
right for every new common share issued under the Plan. Sixteen
Thousand Four Hundred and Sixteen (16,416) rights and $1,000
will entitle the holder thereof to purchase one Gold-Linked
Convertible Debenture. Rights to subscribe for up to $12
million principal amount of Gold-Linked Debentures will be
issued pursuant to the Plan. McWatters will use the proceeds
raised from the exercise of rights to redeem an equal amount of
Gold-Linked Convertible Debentures held by the Strategic
Investors.
The Sigma-Lamaque Complex
The recapitalization of the Sigma-Lamaque Complex forms the
basis of McWatters' business plan. If the Plan is approved and
implemented, McWatters intends to move forward with the
development of the Sigma-Lamaque Complex as an open pit
operation. In accordance with the results of a feasibility study
prepared by a third party for and on behalf of SOQUEM, McWatters
and SOQUEM have concluded that an initial capital investment of
$31 million and a total capital investment of $44 million over
the next 6 years is required to develop the Sigma-Lamaque
Complex.
SOQUEM has made an offer to purchase a 40% interest in the
Sigma-Lamaque Complex from McWatters for $10 million and to
contribute $5.8 million of the initial working capital
requirements of the project. This offer to purchase is
conditional upon, amongst other things, McWatters transferring
the rights to the financing for which it has received a letter
of intent from Investissement Quebec for a $17 million term loan
and Canada Economic Development for a $2.6 million term loan to
the project and McWatters contributing its share of initial and
working capital requirements in an amount of $8.8 million. In
order to effect the transactions contemplated between them and
to develop the Sigma-Lamaque Complex, McWatters and SOQUEM have
agreed to form a limited partnership. McWatters will operate
the mine on behalf of the limited partnership pursuant to the
terms of an operating agreement.
The plan to recapitalize the Sigma-Lamaque Complex and bring it
back into production involves the expansion of the mill to allow
processing of up to 5,000 tonnes of ore per day, significant
pre-stripping and development of multiple working places and the
leasing of mining equipment to move to an owner-operated fleet.
Engineering and mill expansion work will begin in the first
quarter of 2002 while the starting of open pit operations would
take place in the second quarter of 2002. Production is
scheduled to begin in the fourth quarter of 2002 with full
production capacity being reached in the second half of 2003.
The seven year mining plan includes the production of 856,000
ounces of gold at cash operating costs of US$165 per ounce and
at total costs, including capital, of US$212 per ounce. Annual
average gold production is expected to be 150,000 ounces
throughout the plan.
Outlook
"We recognize how difficult creditors will find the prospect of
a compromise of their claims against the Company and how
difficult shareholders will find the significant reduction of
their interest in the Company." stated Mrs Claire Derome,
President and CEO of McWatters. "This restructuring plan
nevertheless presents greater benefit to creditors and
shareholders than the outcome of a forced liquidation of the
Company's assets. The restructuring plan will result in a
significant reduction in McWatters indebtedness from $30.2
million to $4.4 million, and the recapitalization of the Sigma-
Lamaque Complex also gives us every reason to be optimistic
about our future operations. Over the next seven years, at
average gold prices of US$270 per ounce (CDN$410 per ounce),
McWatters forecasts that the Sigma-Lamaque Complex would
generate operating cash flow of $123 million. Of this amount,
McWatters could receive $40 million of net cash flow. As a
result, based on a conservative estimate of the price of gold,
we believe that there is significant up-side potential for a
reorganized and revitalized McWatters," added Mrs. Derome.
"For the Val-d'Or area, this is a tremendous opportunity, both
for our employees and the community as McWatters progressively
regains its status of a strong contributor to the local economy.
Since 1997, McWatters has provided the Val-d'Or region with well
paid jobs. The Company has spent and invested more than $250
million at its Val-d'Or mining sites. Of that amount, 30% or
$75 million represent salary payments while 20% or $50 million
was invested in its mining properties."
"Over the next few years, employment at McWatters will grow from
the current 157 employees to more than 320 employees in 2004
with the construction of the new Sigma mine in 2002 and the
planned construction of the East-Amphi mine in 2004. Gold
production will then reach 200,000 ounces with McWatters' share
representing 150,000 ounces."
"McWatters, if the plan is approved, will be able to carry out
in 2002 an advanced exploration program at Kiena. Success from
this program could add 40,000 to 80,000 ounces of annual
production over time and thereby increase employment
opportunities at McWatters. "
"Also in 2002, McWatters, with its partner SOQUEM will invest
$30 million in the Sigma-Lamaque Complex. The Sigma project
will offer a new opportunity for our employees, shareholders,
suppliers and the Val-d'Or community who will benefit from the
renewed strength of the Company," said Mrs. Derome.
NETWORK COMMERCE: Using Equity Sale Proceed to Augment Capital
--------------------------------------------------------------
On October 5, 2001 Network Commerce Inc. issued a drawdown
notice to Cody Holdings, Inc., in connection with the common
stock Purchase Agreement dated July 10, 2001 evidencing an
equity draw down facility between Cody Holdings and the Company.
This notice offered to sell up to $25,000 of the Company's
common stock to Cody Holdings based on the formula in the
Agreement, during the 22-day period beginning on October 8, 2001
and ending on November 6, 2001, but at not less than $0.10 per
share. During the 22-day period, Cody Holdings purchased a
total of 226,760 shares of the Company's common stock at an
average purchase price of $.10 per share.
These purchases resulted in aggregate proceeds of $20,364 being
paid by Cody Holdings and released from escrow to the Company.
GKN Securities Corp. received $1,364 as a placement fee in
connection with this drawdown. The Company expects to use the
proceeds of this sale of common stock to Cody Holdings for
general corporate purposes, including working capital.
Network Commerce (formerly ShopNow.com) has sold or otherwise
disposed of half a dozen business operations -- including direct
marketing firm The Haggin Group, payment processing software
maker Go Software, online shopping site ShopNow.com, and online
business barter portal Ubarter.com -- in an effort to revive its
fortunes. Network Commerce, which is being sued by shareholders,
has also significantly reduced its staff. The company currently
offers technology services such as domain name registration, Web
site hosting, e-mail marketing, and e-commerce development.
OPTICARE HEALTH: Fails to Meet AMEX Continued Listing Guidelines
----------------------------------------------------------------
OptiCare Health Systems, Inc. (Amex: OPT) reported that on
December 10, 2001 it received a notice from the staff of the
American Stock Exchange (AMEX) that the Company does not meet
the AMEX's continued listing guidelines because of its impaired
financial condition.
The Company has appealed this AMEX staff determination and a
hearing on this matter and a previous listing violation-the
Company's delinquency in filing its Securities and Exchange
Commission (SEC) reports-is set for January 29, 2002. There can
be no assurance that the Company's request for continued listing
will be granted.
Trading in the Company's stock has been halted by AMEX since
April 26, 2001 due to the Company's delinquency in filing with
the SEC its Form 10-K for calendar year 2000 and Forms 10-Q for
the first, second and third quarters of calendar year 2001.
Within the past two weeks, the Company has filed all required
SEC reports.
The Company reported in its filings with the SEC that
preliminary non-binding letters of intent relating to certain
proposed transactions had been signed which, if consummated,
would substantially reduce, restructure and otherwise refinance
all of its senior debt. Those agreements, which involve several
parties including its senior secured bank lender, would, if
consummated, reduce the Company's long-term debt by nearly $10
million, increase equity by $9 million and provide the Company
with what it believes will be sufficient capital to maintain the
Company's business and meet the continued listing requirements
of the AMEX. However, certain major issues remain to be
resolved and, accordingly, no assurance can be given that
definitive agreements with these parties will be reached or that
these transactions will be consummated. If the agreements are
entered into, the Company intends to seek shareholder approval
of several aspects of the proposed restructuring.
The Company disclosed in its SEC filings that the Company is in
default under its senior secured indebtedness. Accordingly, the
Company reported that as of December 31, 2000, as a result of
being in default, $31.9 million of long-term debt has been
classified as a current liability, causing its current
liabilities to exceed its current assets by $34.5 million. Due
to this development, among other considerations, the Company's
auditor, Deloitte & Touche, LLP, in concluding its audit of the
Company's financial statements for 2000, stated in its opinion
that the Company may not be able to continue as a "going
concern."
OptiCare anticipates that trading of its stock on the Exchange
will resume shortly.
OptiCare Health Systems, Inc. is an integrated eye care services
company focused on managed care and professional eye care
services. It also provides systems, including internet-based
software solutions, to eye care professionals.
PACIFIC WEBWORKS: Working Capital Deficit Stands at $1.3 Million
----------------------------------------------------------------
Pacific Webworks and its subsidiaries are engaged in the
development and distribution of web tools software, electronic
business storefront hosting and Internet payment systems for
individuals and small to mid-sized businesses. In April 2001
its management implemented a wholesale distribution strategy in
which it discontinued its internal sales operations and focused
on wholesaling to distributors and retailers.
The Company has a limited operating history and has sustained
losses since inception. However, the Company has taken steps to
reduce its burn rate, including reduction in personnel,
relocation to lower-cost office facilities and other expense
reduction activities. Cash from its current sales channels is
insufficient to support its existing operations; but management
believes that the sales channels it is currently developing will
provide sufficient revenues by the fiscal year end to support
operations. Sales projections are expected to remain down
throughout fiscal year 2001 due to the alteration of its short-
term goals and its overall sales and marketing strategy.
Net revenues decreased $679,759 for the nine month period ended
September 30, 2001, compared to the September 30, 2000 period.
Net revenues decreased $1,211,807 for the third quarter ended
September 30, 2001 compared to the same quarter in 2000. The
decrease for the three and nine month period was primarily the
result of discontinued seminar marketing, which resulted in a
decrease in sales of software, access and license fees. Pacific
Webworks expects its sales for software, access and license fees
to continue to decrease through the fourth quarter of 2001 as a
result of its change in sales plan. The Company anticipates
this decrease of these sales to level off in the first quarter
of 2002. Its sales recorded for hosting and maintenance fees
are expected to increase incrementally in the future as a result
of its new sales and distribution model.
The net loss decreased $563,933 in the 2001 nine month period
compared to the same period in 2000; however, the net loss
increased $319,188 in the 2001 third quarter compared to the
2000 third quarter. The nine month period net loss decrease is
primarily the result of management's steps to shift its business
model away from costly seminar activities to a focus on client
acquisition for monthly hosting and maintenance fee revenues.
However, the impairment losses for the 2001 periods reduced the
overall cost reductions. The increase in net loss for the 2001
third quarter period is due primarily to the large reduction in
sales recognized from software, access and license fees due to
the shift in the sales and distribution model. Pacific Webworks
expects to see similar results through the end of 2001.
Liquidity and Capital Resources
At September 30, 2001, the Company had $255,611 cash on hand
with total current assets of $646,742 compared to $163,801 cash
on hand with total current assets of $698,784 at December 31,
2000. Total current liabilities were $1,993,713 for the 2001
nine month period compared to $3,282,184 at December 31, 2000.
Capital leases in default, past due payables and bank overdraft
accounted for $759,516, or 38.1%, of total current liabilities.
Deferred revenue, which has been deferred in accordance with
SAB101 and recognized on a ratable basis over the period the
service revenues are earned, represented $156,749, or 7.9%, of
total current liabilities as of September 30, 2001, compared to
55.2% as of December 31, 2000. The accumulated deficit totaled
$12,656,621 as of September 30, 2001, and the Company had
negative working capital totaling $1,346,971.
Pacific Webworks continues to fund its operations with loans and
the sale of unregistered stock where cash flows fall short of
requirements. While it has taken steps to reduce its monthly
burn rate and move to become cash flow positive, the Company
believes it will need an additional $1 million to $3 million
into 2002 to further develop products and services and further
business development strategies during the next twelve months.
The company operates in a very competitive industry in which
large amounts of capital are required in order to continually
develop and promote products. Many of its competitors have
significantly greater capital resources than it does. It is
believed the Company will need to continue to raise additional
capital, both internally and externally, in order to
successfully compete. This raises substantial doubt about the
Company's ability to continue as a going concern.
While it may be able to fund a portion of its operations through
its revenues for the short term, it currently anticipates using
private placements of common stock to fund operations over time.
The Company intends to issue such stock pursuant to exemptions
from the registration requirements provided by federal and state
securities laws. The purchasers and manner of issuance will be
determined according to financial needs and the available
exemptions. It is also noted that if it issues more shares of
its common stock its stockholders may experience dilution in the
value per share of their common stock.
Pacific Webworks is currently unable to finance operations
through generated revenues. Its revenues and operating results
have varied significantly from period to period. Although
earnings are becoming more predictable as the market for its
services and products begins to mature, revenues and operating
results can be expected to fluctuate somewhat for a variety of
reasons beyond the Company's control which may result in its
quarterly operating results from time to time being below the
expectations of public market analysts and investors. In that
case, the Company expects that the price of its common stock
would be materially and adversely affected.
PILLOWTEX: Court Approves Fourth Amended DIP Financing Facility
---------------------------------------------------------------
"Entering into the Fourth Amendment and paying the related
amendment fee is a reasonable exercise of Pillowtex
Corporation's business judgment," Judge Robinson finds.
Thus, Judge Robinson authorizes the Debtors to enter into the
Fourth Amendment and pay the related amendment fee to the DIP
Lenders. Judge Robinson further gives the Debtors the Court's
blessing to apply any proceeds from the collection or
liquidation of the Blanket Division accounts receivable or
inventory to the Pre-petition Indebtedness. (Pillowtex
Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
POLAROID CORP: Committee Signs-Up Young Conaway as Local Counsel
----------------------------------------------------------------
The Official Committee of Unsecured Creditors of Polaroid
Corporation, and its debtor-affiliates, asks the Court to
approve its retention and employment of Young Conaway Stargatt &
Taylor, LLP as attorneys to perform services in connection with
the Debtors' chapter 11 cases.
Daniel J. Arbess, of Triton CBO III, Ltd., Co-Chair of the
Committee, explains, "The Committee seeks to retain Young
Conaway as its counsel because of the firm's extensive
experience and knowledge in the field of debtors' and creditors'
rights and business reorganizations under chapter 11 of the
Bankruptcy Code." Mr. Arbess also points to Young Conaway's
expertise, experience and knowledge in practicing before this
Court, its proximity to the Court, and its ability to respond
quickly to emergency hearings and other emergency matters in
this Court as plus factors.
According to Mr. Arbess, the professional services that Young
Conaway will render to the Committee include:
(a) providing legal advice with respect to the Committee's
powers and duties;
(b) assisting the Committee in evaluating the legal basis for,
and effect of, the various pleadings that will be filed by
the Debtors and other parties in interest in these cases;
(c) investigating the acts, conduct, assets, liabilities, and
financial condition of the Debtors;
(d) assisting the Committee in evaluating the Debtors' plan of
reorganization and related disclosure statement;
(e) consulting with the Debtors, the United States Trustee and
the Committee concerning administration of these cases;
(f) commencing and prosecuting any and all necessary and
appropriate actions and/or proceedings on behalf of the
Committee;
(g) appearing in Court to protect the interests of the
unsecured creditors in these cases; and
(h) performing all other legal services for the Committee
which may be necessary and proper in these chapter 11
cases.
Subject to Court approval, compensation will be payable to Young
Conaway on an hourly basis, plus reimbursement of actual,
necessary expenses incurred by the firm. Brendan Linehan
Shannon, a partner in Young Conaway, lists the attorneys and
paralegals presently designated to represent the Committee, as
well as their current standard hourly rates:
Robert S. Brady $390 per hour
Brendan Linehan Shannon $370 per hour
Joseph A. Malfitano $240 per hour
Stephanie Hubloue $ 95 per hour
Mr. Shannon tells the Court that John D. McLaughlin, Jr., Esq.,
recently employed as an attorney advisor with the Department of
Justice in the Office of the United States Trustee for Region 3,
is now employed as an attorney with Young Conaway.
In addition, Mr. Shannon admits, the firm and certain of its
partners, counsel and associates may have in the past
represented, may currently represent and likely in the future
will represent creditors of the Debtors in connection with
matters unrelated to the Committee and these cases. However,
Mr. Shannon assures the Court that Young Conaway is a
"disinterested person" as defined in section 101(14) of the
Bankruptcy Code. (Polaroid Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
PROTOSOURCE: Falls Short of Nasdaq Continued Listing Standards
--------------------------------------------------------------
ProtoSource Corporation (Nasdaq: PSCO; PSCOW; PSCOZ), a
California-based Internet services company, announced that on
December 5, 2001 it received a Nasdaq Staff Determination that
the Company fails to comply with either the net tangible assets
or stockholders' equity requirements for continued listing as
set forth in Marketplace Rule 4310c(2)(b) and that its
securities are, therefore, subject to delisting from the Nasdaq
SmallCap market. The Company has requested an oral hearing
before the Nasdaq Listing Qualifications Panel to review the
Staff Determination. There can be no assurance the Panel will
grant the Company's request for continued listing.
"Although we are disappointed by the determination made by
Nasdaq staff, we are still aggressively pursuing our goal to
enhance shareholder value. To date, we have been unable to
secure financing to proceed with our previously announced
acquisition of Agence 21. Thus, we are exploring all our
options," said Bill Conis, CEO of ProtoSource.
ProtoSource Corporation - http://www.psnw.com-- is committed
to delivering outstanding service and support to its customers,
community, employees and shareholders. ProtoSource Corporation
offers complete Internet services to consumers, public agencies
and businesses. Services include dial-up and high-speed
Internet access, Web hosting, Web site development and
electronic commerce.
PSINET: Asks Court to Fix February 5 Bar Date for Filing Claims
---------------------------------------------------------------
To ascertain the extent and scope of asserted and potential
claims against them in a timely manner, PSINet, Inc., and its
debtor-affiliates ask the Court to issue a Bar Date Order,
pursuant to sections 501, 502 and 1111(a) of the Bankruptcy Code
and Rules 2002(a) and 3003(c)(3) of the Federal Rules of
Bankruptcy Procedure, under which all proofs of claim, with
certain exceptions, must be filed and be actually received on or
before of February 5, 2002 at 4:00 p.m. prevailing Eastern Time
at the following address:
By regular mail:
United States Bankruptcy Court
Southern District of New York
Re: PSINet Inc., et al. Claims Processing
P.O. Box 5045
Bowling Green Station
New York, New York 10274-5045
By hand or overnight mail:
Clerk of the United States Bankruptcy Court
Southern District of New York
Re: PSINet Inc., et al. Claims Processing
One Bowling Green, Room 534
New York, New York 10274-1408
The Debtors seek the Court's approval of the form for filing
proofs of claim. Subject to the Court's approval, a proof of
claim must be filed with original signature in the prescribed
form, or otherwise in compliance with Official Form No. 10 of
the Bankruptcy Rules, and must not be facsimiles, and a separate
proof of claim must be filed against each Debtor against which a
claim is being asserted by any creditor that holds a claim or
potential claim against the Debtors.
The Debtors propose that the Bar Date Order apply to any proof
of claim no matter how remote or contingent, including claims
based upon or arising from any acts or omissions, if any, of the
Debtors that occurred prior to the Petition Date, for example,
claims that arise from indemnity agreements with, guarantees of,
or services provided to or rendered by the Debtors, except
claims by:
(1) creditors who have previously-filed their proofs of claim in
the prescribed form;
(2) creditors who agree with the way the Debtors will schedule
their claims;
(3) administrative claims under sections 503(b) or 507(a) of the
Bankruptcy Code;
(4) claims previously allowed or paid pursuant to a Court order;
(5) intercompany Claims;
(6) claims based solely upon ownership of equity interest;
(7) claims arising from rejection of executory contracts or
unexpired leases must be filed on or before the later of (i)
the Bar Date, or (ii) 30 days after the entry of an order or
expiration of a time period fixed by the Bankruptcy Code or
the Court;
(8) claims arising out of the following: (i) 10% senior notes
due 2005; (ii) 11 1/2% senior notes due 2008; (iii) 11%
senior notes due 2009; and (iv) 10 1/2% senior notes due
2006; provided, however, that proofs of claim relating to
such claims must be filed by the indenture trustee for each
such series of bonds.
Under the proposed Bar Date Order, any person or entity that is
required to file a timely proof of claim in the form and manner
specified by the Bar Date Order but does not: (i) will not, with
respect to such claim, be entitled to vote on a proposed plan of
reorganization or be entitled to receive any payment or
distribution of property from the Debtors, or their successors
and assigns, with respect to such claim; and (ii) will be
forever barred from asserting such claim against the Debtors or
their successors or assigns.
The Debtors propose to mail a copy of the Bar Date Notice within
10 business days after entry of the Bar Date Order to: (i) the
Office of the United States Trustee; (ii) all persons or
entities that have filed a notice of appearance in these cases
under Bankruptcy Rule 2002 and 9010(b); (iii) all persons or
entities listed on the Debtors' Schedules; (iv) all persons or
entities that are known to be parties to executory contracts or
unexpired leases with the Debtors; and (v) all known entities
that might assert claims against the Debtors.
If the Debtors amend their Schedules, the Debtors will provide
prompt notice of such amendment to any creditor whose claim is
affected, and each such creditor will be required to file any
such proof of claim, if necessary, on or before the later of (i)
the Bar Date or (ii) a date that is 30 days after the date of
the notice of such amendment is filed with the Court.
Additionally, the Debtors propose to publish notice of the bar
date in the national Editions of the New York Times, Wall Street
Journal by no later than 10 business days after entry of the
proposed Bar Date Order. (PSINet Bankruptcy News, Issue No. 11;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
SL INDUSTRIES: Intends to Comply with NYSE Listing Criteria
-----------------------------------------------------------
SL Industries, Inc. (NYSE:SL)(PHLX:SL) announced that it has
submitted a plan with the New York Stock Exchange (NYSE) for
complying with the NYSE's continued listing criteria. According
to the criteria, companies are required to have a minimum
stockholders' equity of $50 million and a minimum market
capitalization of $50 million over any consecutive 30-day
trading period. Companies below these levels must submit a
business plan for the NYSE's approval, demonstrating how the
company anticipates meeting the standards within an eighteen-
month period. In October 2001, the NYSE notified the Company
that it had fallen below the NYSE's minimum equity and
capitalization standards, and requested that the Company provide
a business plan demonstrating how it intends to achieve and
sustain compliance. As of September 30, 2001, the Company had
stockholders' equity of $36,568,000. At the close of the market
on December 7, 2001, the Company's total market capitalization
was approximately $40 million.
The Company submitted the required plan to the NYSE setting
forth the action that the Company intends to take to comply with
the eligibility standards. After reviewing the plan, the
Committee will either accept it (following which the Company
will be subject to quarterly monitoring for compliance with the
plan), or not (in which event the Company will be subject to
NYSE trading suspension and delisting). Should the Company's
shares cease being traded on the NYSE, the Company believes that
an adequate alternative trading venue will be available.
SL Industries, Inc. designs, manufactures and markets Power and
Data Quality (PDQ) equipment and systems for industrial,
medical, aerospace and consumer applications. For more
information about SL Industries, Inc. and its products, please
visit the Company's web site at http://www.SLpdq.com
SABINA BANK: National Bank Acquires All Assets for $12.9MM Cash
---------------------------------------------------------------
Premier Financial Bancorp, Inc. (Nasdaq: PFBI) and National Bank
and Trust, Wilmington, Ohio, announce that the two companies
have completed the sale of the business of The Sabina Bank to
National Bank and Trust.
The sale was a Purchase and Assumption transaction whereby
National Bank acquired substantially all of the assets and
assumed all the deposits of The Sabina Bank, including three
banking offices located in Sabina, Ada, and Waynesfield, Ohio.
In exchange The Sabina Bank received $12.9 million in cash. The
Sabina Bank has surrendered its banking charter and is in the
process of winding up its business and liquidating under the
supervision of the Ohio Division of Financial Institutions.
Premier expects to use substantially all of the cash to be
received in the liquidation to pay down existing indebtedness.
TELESYSTEM INT'L: Launches Purchase Offer for its Units
-------------------------------------------------------
Telesystem International Wireless Inc. (TSE: TIW; NASDAQ: TIWI)
announces that it is offering to purchase all of its outstanding
Units, representing a 54.5% equity interest in ClearWave N.V.
(ClearWave), in exchange for 5.46 subordinate voting shares of
TIW for each Unit tendered.
TIW has filed a Purchase Offer (the Offer) circular with the
securities commissions of each of the provinces of Canada and
with the Securities and Exchange Commission in the United
States. The Offer will expire on January 21, 2002 unless
extended or withdrawn. The Offer is part of TIW's recently
announced overall recapitalization plan. The Offer is not
subject to any minimum tender conditions, but is conditional,
among other things, on the successful completion of TIW's
purchase offer and consent request for its 7.00% Equity
Subordinated Debentures announced earlier this month and which
are scheduled to expire on January 9, 2002.
Telesystem Ltd, Caisse de depot et placement du Quebec and all
its subsidiaries, and Rogers Telecommunications (Quebec) Inc.
which together hold approximately 55.1% of the Units outstanding
have agreed to tender their Units in the Offer.
The Independent Committee of the Board of Directors of TIW
retained TD Securities to, among other things, prepare a formal
valuation of the Units. TD Securities' valuation report of the
Units is included in the Purchase Offer circular. Detailed
instructions on how to validly tender are also included in the
circular.
TIW is a global mobile communications operator with 4.9 million
subscribers worldwide. The Company's shares are listed on the
Toronto Stock Exchange (TIW) and NASDAQ (TIWI).
* * *
Earlier this month, Telesystem International Wireless announced
that it reached an agreement with Capital Communications CDPQ
Inc., U.F. Investments (Barbados) Ltd., an affiliate of
Hutchison Whampoa Limited, certain affiliates of J.P. Morgan
Partners, LLC, and Telesystem Ltd which, subject to certain
conditions, will lead to the Company's recapitalization, the
restructuring of its subordinated debentures and the increase of
the Company's economic ownership in ClearWave N.V., from 45.5%
up to a maximum of 100%.
As a result of the successful completion of the restructuring
transactions, TIW's subordinated debt totaling approximately
US$394 million will be retired and, thereafter, the Company's
corporate debt will consist of US$278.8 million in senior
secured debt. Furthermore, TIW's economic ownership in ClearWave
will increase from 45.5% up to a maximum of 100% and there will
be only one class of common shares.
TELESYSTEM: S&P Further Junks Rating After Plan to Recapitalize
---------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on
Telesystem International Wireless Inc. (TIW) to double-'C' from
triple-'C'-plus following an exchange offer launched by the
company on November 29, 2001. In addition, the rating was placed
on CreditWatch with negative implications.
At the same time, the triple-'C'-plus senior secured debt rating
on the company was placed on CreditWatch with developing
implications. This action reflects the possibility that upon the
successful completion of the recapitalization plan, asset
coverage may be sufficient to fully cover the entire loan
facility based on Standard & Poor's simulated default scenario.
This action also reflects the possibility that financial
flexibility at the corporate level will be severely limited
beyond the first quarter of 2002, should the transaction not be
completed successfully and should the company be unable to
obtain additional financing through the disposition of noncore
assets.
The downgrade of the corporate credit rating is based on the
company's announced exchange of C$45 million for its C$150
million 7% equity subordinated debentures (ESDs) as part of a
comprehensive recapitalization resulting in the retirement of
US$394 million of subordinated debt. The rating action is
predicated on the coercive nature of the offer, which
includes incentives to maximize participation in the bond
exchange. The success of this offer will require consents from
bondholders representing 66.7% of the aggregate principal
amount.
Standard & Poor's would consider the completion of the exchange
to be tantamount to a default because bondholders will be
receiving less than par as a result of the offer. This exchange
offer results in bondholders receiving about 30 Canadian cents
on the dollar relative to the par value of the bonds exchanged.
Accordingly, the corporate credit rating will be lowered to 'SD'
on completion of the exchange offer.
The US$394 million recapitalization includes:
* An amendment to the existing ESD indenture, which includes
extending maturity to December 2006 from February 2002,
reducing the principal amount of each ESD to C$250,
delaying the next interest payment date to June 30, 2002,
and adding provisions allowing TIW as well as ESD holders
to convert to subordinate voting shares at maturity;
* The conversion by bondholders of US$300 million 7.75%
convertible debentures (plus accrued and unpaid interest)
for US$94.6 million of common equity;
* A private placement of US$90 million in common equity;
* Warrants issued to certain convertible debenture holders
to buy up to a total of US$15 million subordinate voting
shares;
* The issuance of warrants to holders of subordinate voting
and multiple voting shares;
* An issuer bid to exchange all outstanding TIW units for
TIW common equity in Clearwave N.V.;
* A conversion of all multiple voting shares owned by
Telesystem Ltd. into subordinate voting shares; and
* An amendment of the senior bank credit facility, including
extension of the maturity date to Dec. 15, 2002, from July
14, 2002.
These transactions are conditional upon each other, as well as
on the successful completion of the exchange offer and consent
request. Subsequent to the successful completion of the
recapitalization, Standard & Poor's will reassess the company's
ratings based on a revised business and financial profile that
may include increased ownership of Clearwave, which could
increase up to 100% from 45.5% if the recapitalization is
successful.
Rating Lowered; Placed on CreditWatch Negative
Corporate credit rating To: CC/Watch Neg/--
From: CCC+/Developing/--
Rating Placed on CreditWatch Developing
Senior secured To: CCC+/Watch Dev From: CCC+
UNITED GLOBALCOM: S&P Junks Ratings & Revises Watch to Negative
---------------------------------------------------------------
Standard & Poor's lowered its ratings on United GlobalCom Inc.
(UCOMA), United Pan-Europe Communications N.V. (UPC), UPC Polska
Inc., AUSTAR Entertainment Pty Ltd., and related subsidiaries.
The ratings remain on CreditWatch, but the implications have
been revised to negative from developing.
The downgrade reflects Standard & Poor's view, based on the
progress towards the closing of the second part of the
transaction between UCOMA and Liberty Media Corp., as well as
public comments by Liberty Media, that a restructuring of UPC's
highly leveraged balance sheet may be the most effective
solution to resolving the company's capital structure problem.
UCOMA and UPC face significant funding requirements and will not
be able to grow into their current debt burdens without
additional equity support.
While UPC's assets remain an important part of Liberty Media's
European cable strategy, Liberty Media may seek ways to restore
the financial health of UPC and UCOMA, including a possible
restructuring, before committing additional monies. Standard &
Poor's will continue to monitor the progress of the Liberty
Media and UCOMA negotiations, and evaluate the implications of
any proposed transactions.
Ratings Lowered, CreditWatch Implications Revised
to Negative from Developing
United Globalcom Inc. TO FROM
Corporate credit rating CCC B-
Senior secured debt CC CCC
United Pan-Europe Communications N.V.
Corporate credit rating CCC B-
Senior unsecured debt CC CCC
UPC Distribution Holding B.V.
Corporate credit rating CCC B-
Senior secured bank loan CCC B-
AUSTAR Entertainment Pty Ltd.
Corporate credit rating CCC B-
Senior secured bank loan CCC B-
UPC Polska Inc.
Corporate credit rating CCC B-
Senior unsecured debt CC CCC
Poland Communications Inc.
Corporate credit rating CCC B-
Senior unsecured debt CC CCC
VLASIC FOODS: Panel Backs Retiree Medical Benefits Termination
--------------------------------------------------------------
The Official Committee of Unsecured Creditors of Vlasic Foods
International, Inc., and its debtor-affiliates, urges the Court
to approve the Debtors' motion to terminate the Retiree Medical
Benefit Plans.
Michael R. Lastowski, Esq., at Duane, Morris & Heckscher, LLP,
in Wilmington, Delaware, observes that the Debtors could have
unilaterally terminated the benefit plans at any time but,
presumably, for reasons of compassion chose not to. However,
Mr. Lastowski notes, now that the Debtors has sold substantially
all of its assets to Pinnacle Foods Corporation, there are no
ongoing operations to support the costs of continuing the
Benefit Plans. "While the Committee is sympathetic to the
retirees' position, the retirees should not be permitted to
exploit that sympathy to extract a result that is not consistent
with the Bankruptcy Code and harmful to creditors," Mr.
Lastowski says.
Thus, the Committee asks Judge Walrath to overrule all
objections to the Debtors' motion.
The Court previously adjourned the hearing on the Debtors'
motion as Judge Walrath appointed a Retiree Committee to
consider the proposed termination of the medical benefits.
(Vlasic Foods Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WARNACO: Hearing On GJM Sale Bidding Protocol Set for Today
-----------------------------------------------------------
The Warnaco Group, Inc., and its debtor-affiliates seek the
Court's order approving the proposed bidding procedures for the
proposed sale of substantially all of the assets of the GJM
Business.
According to J. Ronald Trost, Esq., at Sidley Austin Brown &
Wood, in New York, New York, the Bidding Procedures contemplate
that the Debtors be granted the authority to provide a
Termination Fee not to exceed 3% of the cash purchase price for
the GJM Business. "The willingness of a potential buyer to make
a binding 'stalking horse' bid that the Debtors are prepared to
accept provides the assurance that the Sale could proceed at an
acceptable price even if no competing purchasers appear at the
auction, and thus provides substantial benefit to the estate
which support the providing of a Termination Fee," Mr. Trost
asserts. Under the proposed Bidding Procedures, Mr. Trost
relates, the Debtors will be authorized to agree to such a
Termination Fee without further order of the Court only if the
Purchaser executes and delivers an Agreement acceptable to the
Debtors, the Debt Coordinators for the Debtors' pre-petition
banks, the Debtors' post-petition secured lenders, and the
Official Committee of Unsecured Creditors, on or before December
21, 2001.
Furthermore, Mr. Trost says, the Debtors will provide additional
due diligence opportunities to all qualified potential
purchasers which execute a confidentiality agreement, including
access to the data rooms in New York and Hong Kong, management
presentations, factory tours, and the provision of other
information reasonably requested by such prospective purchasers.
Bidding Procedures
In order for a potential buyer to participate in the sales
process as a Qualified Bidder, Mr. Trost explains, the bidder
must be an entity that that the Debtors determine, in their sole
and absolute discretion, is likely (based on availability of
financing, experience and other relevant considerations) to be
able to consummate the Sale if selected to do so. In addition,
Mr. Trost clarifies, the bidder must deliver a letter to the
Debtors, on or before the Bid Deadline, stating that:
(i) the bidder offers to consummate the Sale upon the terms
and conditions set forth in a copy of an asset purchase
agreement attached to such letter, marked to show those
amendments and modifications to the Agreement, including
price and terms, that the Qualified Bidder proposes, and
(ii) the bidder's offer is irrevocable until the later of 48
hours after the closing of the Sale in accordance with
the Sale Order or 30 days after the conclusion of the
Sale Hearing.
According to Mr. Trost, the Bidding Procedures further provide
that each Qualified Bidder (including the maker of a "stalking
horse" bid, if any) must accompany its bid with:
(i) a deposit in a form acceptable to the Debtors in the
amount of 5% of the cash purchase price set forth in such
Qualified Bidder's bid (or such lesser amount as may be
acceptable to the Debtors based on, among other things,
the purchase price offered by such bidder), and
(ii) written evidence, satisfactory to Debtors in their sole
and absolute discretion, of a commitment for financing or
other evidence of ability to consummate the Sale.
In addition, unless otherwise waived by the Debtors in writing,
Mr. Trost says, the Debtors will consider a bid as a qualified
bid only if the bid:
(a) identifies the proponent of the bid and an officer who is
authorized to appear and act on behalf of the bidder;
(b) provides:
(i) in the event that an Agreement has been executed by
the Purchaser, for the payment of cash to the Debtors
in the aggregate amount of:
(A) the cash purchase price set forth in such
Agreement, plus
(B) the Termination Fee
(C) $250,000, or
(ii) in the event that no Agreement has been executed, for
the payment of a cash purchase price to the Debtors;
(c) is on terms that, in the Debtors' reasonable business
judgment and in view of all surrounding circumstances, are
acceptable to the Debtors and in the best interests of the
Debtors' estates and creditors;
(d) is not conditioned on obtaining equity or debt financing,
on the outcome of any unperformed due diligence by the
bidder, or the approval of any Board of Directors,
shareholders or other corporate approval;
(e) is not subject to termination except on substantially the
same terms as set forth in the Agreement;
(f) does not include any other modifications to the Agreement
that the Debtors do not deem acceptable;
(g) does not request or entitle the bidder to any break-up
fee, termination fee, expense reimbursement or similar
type of payment; and
(h) is received by the Bid Deadline.
A Qualified Bidder that desires to make a bid shall deliver a
written copy of its bid to:
(i) The Warnaco Group, Inc.
90 Park Avenue, New York, N.Y. 10016
Attn: Douglas P. Rosefsky,
(ii) Skadden, Arps, Slate, Meagher & Flom,
Four Times Square, New York, N.Y. 10036
Attn: Alan C. Myers; and
(iii) Sidley, Austin, Brown & Wood
875 Third Avenue, New York, N. Y. 10022
Attn: Shalom L. Kohn,
not later than 4:00 p. m. (Eastern Prevailing Time) on the Bid
Deadline. The Debtors have not yet set a date for the Bid
Deadline, Mr. Trost observes.
If Qualified Bids have been received from at least one Qualified
Bidder, Mr. Trost continues, the Debtors may conduct an auction
with respect to the GJM Business. "The Debtors propose that the
Auction take place on the second business day immediately prior
to the Sale Hearing to set by the Court, at the offices of
Skadden, Arps, Slate, Meagher & Flom,, Four Times Square, New
York, N.Y. 10036, or such other time or place as the Debtors
shall notify all Qualified Bidders who have submitted Qualified
Bids and expressed their intent to participate in the Auction,"
Mr. Trost says. Moreover, Mr. Trost makes it clear that only
Qualified Bidders will be eligible to participate at the
Auction. At least two business days prior to the Auction, Mr.
Trost emphasizes that each Qualified Bidder who has submitted a
Qualified Bid must inform the Debtors whether it intends to
participate in the Auction.
Based upon the terms of the Qualified Bids received, and the
number of Qualified Bidders participating in the Auction, Mr.
Trost tells the Court that the Debtors, in their sole
discretion, may conduct the Auction in the manner they determine
will achieve the maximum value for the GJM Business, subject to
the terms of the Bidding Procedures, the Bankruptcy Code, and
any order of this Court.
Upon conclusion of the Auction, Mr. Trost adds, the Debtors
shall:
(i) review each Qualified Bid or Bids on the basis of
financial and contractual terms and the factors relevant
to the sale process, including those factors affecting
the speed and certainty of consummating the Sale, and
(ii) identify the highest and otherwise best offer (or
combination of offers) for the GJM Business.
At the Sale Hearing, the Debtors shall present to the Bankruptcy
Court for approval the Successful Bid. The Debtors request that
the Court set the Sale Hearing at ____ a.m. on ____. The
Debtors further request that the Court set _____ as the
objection deadline with respect to the relief to be sought at
the Sale Hearing.
Notice of Sale Hearing
The Debtors propose that within 5 business days after the entry
of the Procedures Order, the Debtors shall serve the Motion, the
Bidding Procedures and a copy of the Procedures Order by
first-class mail, postage prepaid, upon:
(i) the Office of the United States Trustee for this district,
(ii) counsel to the Debt Coordinators for the pre-petition
banks,
(iii) the Debtors' pre-petition secured lenders,
(iv) counsel to the agent for the Debtors' post-petition
secured lenders,
(v) counsel to the Official Committee of Unsecured Creditors,
(vii) counsel for the Purchaser
(viii) all entities known to have expressed an interest in a
transaction with respect to the GJM Business during the
past six months;
(ix) all entities known to have asserted any claims to or liens
upon the assets comprising the GJM Business;
(x) 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;
(xi) all parties to Assumed Contracts;
(xii) the United States Attorney's office;
(xiii) the Securities and Exchange Commission;
(xiv) the Internal Revenue Service; and
(xv) to each of the entities filing a request for notice in
accordance with Bankruptcy Rule 2002.
The Debtors also propose that publish a notice of the Sale in
Women's Wear Daily on the Mailing Date or as soon as
practicable.
As soon as practicable after December 21, 2001, the Debtors
propose to serve a copy of the Agreement executed by the
Purchaser, together with a summary description of the Proposed
Sale, on each entity which:
(i) had previously submitted a bid for the GJM Business; or
(ii) which has expressed an interest in making such a bid and
which has requested a copy of such Agreement in writing.
The Court will conduct a hearing on the relief request today,
December 13, 2001 at 9:45 a.m. (Warnaco Bankruptcy News, Issue
No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900)
WILLCOX & GIBBS: Court Extends Removal Period Until February 1
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware extends
the time within which Willcox & Gibbs may file notices of
removal on related proceedings.
Under the order signed by Judge Peter J. Walsh, The Debtors may
file their notices of removal through February 1, 2002 or thirty
days after entry of an order terminating the automatic stay with
respect to the particular action sought to be removed, whichever
comes last.
Through the operations of six principal business units, Willcox
& Gibbs, Inc.'s business activities consist of the distribution
of certain replacement parts, supplies and ancillary equipment
to the apparel and other sewn products industry. The Company
filed for chapter 11 protection on August 6, 2001 in the U.S.
Bankruptcy Court for the District of Delaware. Edwin J. Harron,
Esq. and Brendan Linehan Shannon, Esq. at Young, Conaway,
Stargatt & Taylor represent the Debtors in their restructuring
efforts. When the Company filed for protection from its
creditors, it listed $36,393,000 in assets and $29,994,000 in
debts.
ZANY BRAINY: Has Until January 7 to Decide On Unexpired Leases
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware issues an
order extending the period by which Zany Brainy, Inc. may assume
or reject unexpired leases on nonresidential real property.
The Court, having reviewed the Debtors' motion, determined that
there is legal and factual basis establishing just cause to
extend the Debtors' Lease Decision Period through January 7,
2002.
The Court however, delineates a few exceptions with respect to
store numbers 304 and 708, wherein the Debtors have until
December 31, 2001 to reject Unexpired Leases. Also, with respect
to store numbers 326, 518, 409, 209, 525, 307, and 316, the
Debtors shall file a separate motion seeking to assume or reject
the Leases.
Zany Brainy, Inc., retailer of toys, games, books and multimedia
products for kids, filed for chapter 11 protection on May 15,
2001 in the U.S. Bankruptcy Court for the District of Delaware.
Mark D. Collins, Esq. and Daniel J. DeFranceschi, Esq. at
Richards Layton & Finger, P.A. represent the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $200,862,000 in assets and
$131,283,000 in debts.
* DebtTraders Real-Time Bond Pricing:
-------------------------------------
Issuer Coupon Maturity Bid - Ask Weekly change
------ ------ -------- --------- -------------
Crown Cork & Seal 7.125% due 2002 60 - 62 +9
Federal-Mogul 7.5% due 2004 12 - 14 0
Finova Group 7.5% due 2009 36 - 38 +1
Freeport-McMoran 7.5% due 2006 71 - 74 0
Global Crossing Hldgs 9.5% due 2009 9 - 11 -2
Globalstar 11.375% due 2004 7.5 - 9.5 0
Levi Strauss & Co 11.625% due 2008 87 - 89 +4
Lucent Technologies 6.45% due 2029 71 - 73 +2.5
Polaroid Corporation 6.75% due 2002 9 - 11 +1.5
Terra Industries 10.5% due 2005 77 - 80 0
Westpoint Stevens 7.875% due 2005 32 - 35 0
Xerox Corporation 8.0% due 2027 55 - 57 +2
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson
at 1-212-247-5300. To view our research and find out about
private client accounts, contact Peter Fitzpatrick at
1-212-247-3800. Real-time pricing available at
http://www.debttraders.com
*********
Bond pricing, appearing in each Monday's edition of the TCR, is
provided by DLS Capital Partners in Dallas, Texas.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Ronald P. Villavelez and Peter A. Chapman, Editors.
Copyright 2001. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $575 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***