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/raid1/www/Hosts/bankrupt/TCR_Public/020103.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, January 3, 2002, Vol. 6, No. 2 Headlines AMF BOWLING: Has Until February 28 to Decide on Unexpired Leases BE INCORPORATED: Jean-Louis Gessee Resigns as President and CEO BIRMINGHAM STEEL: Ameristeel Takes-Over Cartersville Facility BRIDGE INFO: Court Approves Settlement Terms with Bridge France BURLINGTON INDUSTRIES: Court Okays Sitrick as PR Consultants BURLINGTON INDUSTRIES: Net Sales Down by 13.4% in FY 2001 CORECOMM LIMITED: Cuts Debts to $183.8MM After Recapitalization CYGNIFI DERIVATIVES: Lease Decision Period Extended to Jan. 31 DEAN HOLDING: S&P Downgrades Ratings Following Merger with Suiza DIGITAL TELEPORT: Commences Reorganization Under Chapter 11 DIGITAL TELEPORT: Chapter 11 Case Summary E.SPIRE COMMS: Gets Okay to Hold CyberGate Auction on Jan. 7 ENRON CORPORATION: Refuses to Make $51 Million 1997 Adjustment FOAMEX: Societe Generale de Belgique Holds 5.9% Equity Interest GLOBIX CORP: Pre-Pack Bankruptcy Talks Prompt S&P Junk Ratings HAYES LEMMERZ: Court Okays $5.2M Payment for Prepetition Taxes HUNTSMAN: Extends 10.125% Sr. Sub. Debt Exchange Offer to Jan. 9 IT GROUP: Heightened Liquidity Concerns Spur S&P to Junk Ratings INTEGRATED HEALTH: Gets Approval of Rotech Disclosure Statement LERNOUT & HAUSPIE: Resolves On-Going Disputes with AllVoice LORAL CYBERSTAR: Subpar Exchange Offer Pushes Ratings to D Level MARINER POST-ACUTE: Treatment of Claims Under First Amended Plan MATLACK SYSTEMS: Board Approves Filing of Plan of Liquidation METALS USA: Court Okays Fulbright to Perform Legal Services METATEC INT'L: Will Undertake Further Restructuring in 2002 MOLL INDUSTRIES: Closes Partial Tender Offer for 10-1/2% Notes NATIONSRENT INC: Will Continue Use of Cash Management System OPTICARE: Seeks Okay of Proposals to Allow Debt Workout Deals PILLOWTEX CORP: Exclusive Period Extended to March 15 PILLOWTEX CORP: Files Reorganization Plan & Disclosure Statement POLYMER GROUP: Sr. Bank Lenders Agree to Forbear Until March 29 PROXITY DIGITAL: Bankruptcy Filing Likely to Sell CSA for $2.5MM PRYOR/ETRAIN: Wants Plan Filing Exclusivity Extended to Jan. 21 QUALITY STORES: Tractor Supply Pitches Best Bid for 25 Stores SOFTWARE LOGISTICS: Inks Pact to Sell All Assets to Zomax Inc. SUN HEALTHCARE: Intends to Reject Tallahasee Office Space Lease TELEPANEL SYSTEMS: Q3 Balance Sheet is Upside-Down by CDN$10MM TOWER AUTOMOTIVE: Restructuring Charges Reach $289 Million in Q4 TRANSIT GROUP: Files for Chapter 11 Reorganization in Florida TRANSIT GROUP: Chapter 11 Case Summary TRICO STEEL: Court Extends Debtors' Exclusive Period to March 22 USG CORP: PI Committee Gets Court's Nod to Hire Professor Warren US INDUSTRIES: Expects to File Form 10-K by January 14, 2002 US MINERAL: Court Extends Plan Filing Exclusivity Until March 19 VENTAS: Wants More Investment from Shareholders & New Investors WINSLOEW FURNITURE: S&P Takes Low-B and Junk Ratings Off Watch * DebtTraders' Real-Time Bond Pricing ********* AMF BOWLING: Has Until February 28 to Decide on Unexpired Leases ---------------------------------------------------------------- AMF Bowling Worldwide, Inc., and its debtor-affiliates sought and obtained entry of an order extending the deadline by which the Debtors must assume or reject their unexpired leases of non- residential real property through and including the effective date of the Plan or February 28, 2002. Dion W. Hayes, Esq., at McGuireWoods LLP in Richmond, Virginia, informs the Court that as of the Petition Date, the Debtors were party to more than 179 Unexpired Leases for locations throughout the United States and abroad. During the post-petition period, the Debtors have assessed and continues to assess the profitability and desirability of the Unexpired Leases. In order to avoid the premature expiration of the Assumption/Rejection Deadline and to facilitate the implementation of Section 8 of the Plan, the Debtors require an extension of the Assumption/Rejection Deadline through the Effective Date or February 28, 2002, whichever is later. Mr. Hayes contends that such an extension is critical to the Debtors' ability to maximize the value of the estates as they seek the confirmation and implementation of the Plan. Mr. Hayes assures the Court that the Debtors have the necessary financial resources and intend to perform timely all of their obligations under the remaining Unexpired Leases as and to the extent required by section 365(d)(3) of the Bankruptcy Code. Further, the mechanism detailed in Section 8 of the Plan addresses the assumption and/or rejection of the Unexpired Leases. Thus, Mr. Hayes asserts that the Assumption/Rejection Deadline should be extended through and including the Effective Date or February 28, 2002 to enable the mechanism in the Plan to operate as intended. Moreover, prior to confirmation of the Plan, individual lessors may ask, for cause shown, that the Court fix an earlier date by which the Debtors must assume or reject a particular Lease. Thus, lessors under the Unexpired Leases will not be prejudiced by the relief sought therein. (AMF Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) BE INCORPORATED: Jean-Louis Gessee Resigns as President and CEO --------------------------------------------------------------- Be Incorporated (Nasdaq:BEOS) announced the resignation of its President and CEO, Jean-Louis Gassee. Following the completion of the sale of Be's intellectual property assets to Palm, Inc., the company has been pursuing activities mainly related to winding down the business and dissolving the company as approved by stockholders at the November 12, 2001 special meeting. The Board of Directors has appointed Dan Johnston, Be's General Counsel, to serve as President during the dissolution process. "This is the normal progression of events in a company that is winding down and dissolving," said Gassee. "Mr. Johnston is best positioned to guide the company through the intricacies of the statutory dissolution process, and to help the Board determine whether an Antitrust suit against Microsoft is both viable and serves to maximize stockholder value." On November 12, 2001, Be held a special stockholders' meeting, whereby Be stockholders approved the sale of substantially all of its intellectual property and other technology assets to a subsidiary of Palm, Inc., and the subsequent dissolution of Be Incorporated pursuant to the terms of the plan of dissolution set forth in the Definitive Proxy Statement filed on October 9, 2001. On November 13, 2001, Be completed the sale of assets to a subsidiary of Palm, Inc. Be's headquarters are in Menlo Park, California. It is publicly traded on the Nasdaq National Market under the symbol BEOS. Be can be found on the Web at http://www.be.com. BIRMINGHAM STEEL: Ameristeel Takes-Over Cartersville Facility ------------------------------------------------------------- Birmingham Steel Corporation announced that its 85%-owned subsidiary, Birmingham Southeast, LLC, has completed the sale of its mini-mill facility in Cartersville, Georgia, to AmeriSteel Corporation, a U.S. subsidiary of Gerdau S.A. (NYSE:GGB) of Rio de Janeiro, Brazil. The Company had previously signed a Definitive Agreement with AmeriSteel on November 14, 2001. As a result of the sale, Birmingham Steel will reduce its debt by approximately $30 million. In addition, the Company will be relieved from off-balance-sheet lease obligations of approximately $70 million. Effective December 29, 2001, Birmingham Steel will have no further involvement in the Cartersville operation. Birmingham Steel operates in the mini-mill segment of the steel industry. Birmingham Steel's stock is traded on the OTC Bulletin Board under the symbol "BIRS." BRIDGE INFO: Court Approves Settlement Terms with Bridge France --------------------------------------------------------------- In 1998, Bridge Information Systems, Inc., and its debtor- affiliates entered into a distribution agreement with Fininfo S.A., under which Fininfo distributed the Debtors' services in France, on the condition that Fininfo pays to the Debtors a portion of its turnover. Subsequently, Sean A. O'Neal, Esq., at Cleary, Gottlieb, Steen & Hamilton, in New York, relates, the Debtors and Bridge Information Systems SARL -- a French subsidiary -- entered into a Master Services Agreement dated January 15, 2001. Under the agreement, Mr. O'Neal explains, Bridge France, in consideration for services it provided, invoiced to the Debtors the operational costs increased by a commercial margin of 5%. Eight months later, Mr. O'Neal tells Judge McDonald, Bridge France obtained an order authorizing the attachment or seizure from Fininfo of certain amounts -- up to a maximum of approximately $933,000 -- for alleged amounts owed by Fininfo to the Debtors in connection with the Distribution Agreement. According to Mr. O'Neal, Bridge France alleged that the Debtors owed such amounts to Bridge France in connection with post- petition services under the Master Services Agreement. And then, on October 11, 2001, Bridge France filed an action in the Commercial Court of Paris, France seeking: (1) validation of the attachment, (2) payment by the Debtors of approximately $933,000 in connection with post-petition obligations allegedly incurred under the Master Services Agreement in the second and third quarters of 2001, and (3) payment by the Debtors to Bridge France of certain legal expenses and other costs incurred in connection with the attachment and action. Now, a settlement agreement between the Debtors and Bridge France provides that: (a) The Debtors shall pay to Bridge France the amount of $100,000; (b) The Debtors shall exercise one of these options in connection with the claim by the Debtors against Fininfo arising from the Distribution Agreement, which claim is currently estimated to be approximately $600,000; (i) The Debtors shall appoint Bridge France as agent to collect their claim against Fininfo, or (ii) The Debtors shall assign to Bridge France their claim against Fininfo; (c) Bridge France shall waive its claim in the amount of $933,000 against the Debtors arising from the Master Services Agreement; (d) Bridge France shall release the attachment; (e) Bridge France shall dismiss the action; and (f) Each party to the settlement agreement shall bear the fees and expenses in connection with the disputes subject to the settlement agreement. The settlement agreement allows the Debtors to avoid the uncertainty, costs and burdens of defending a complex litigation in an inconvenient, foreign jurisdiction, Mr. O'Neal explains. By this motion, therefore, the Debtors seek an order: (i) authorizing the Debtors to enter into the settlement agreement, (ii) approving the terms of the settlement agreement in their entirety, and (iii) authorizing the Debtors to take such actions as may be necessary and appropriate to implement the terms of the settlement agreement. * * * Finding that sufficient cause exists for the Debtors' request, Judge McDonald grants the Debtors' motion. "This Court shall retain jurisdiction over any dispute arising from or in connection with the settlement agreement," Judge McDonald adds. (Bridge Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) BURLINGTON INDUSTRIES: Court Okays Sitrick as PR Consultants ------------------------------------------------------------ The Court authorizes Burlington Industries, Inc., and its debtor-affiliates to retain and employ Sitrick & Company as their corporate communications consultants in these chapter 11 cases, nunc pro tunc as of the Petition Date. "To the extent the Engagement Letter provides that the Debtors will indemnify, hold harmless and defend Sitrick & Company and its shareholders, officers, directors, employees and agents for any losses, claims, damages, liabilities, costs and expenses incurred in connection with the services to be rendered by Sitrick to the Debtors, Sitrick & Company agrees to waive such provisions with respect to pre-petition and post-petition services," Judge Walsh emphasizes. Also, Judge Walsh adds that: "To the extent the Engagement Letter provides that if a dispute arises between the parties - including any dispute with respect to the Engagement Letter - either party may require the matter to be settled by binding arbitration using the rules and procedures of the American Arbitration Association, Sitrick agrees that the arbitration provision in the Engagement Letter shall apply only to the extent that the United States Bankruptcy Court, or the United States District Court if the reference is withdrawn, does not retain jurisdiction over a controversy or claim." (Burlington Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) BURLINGTON INDUSTRIES: Net Sales Down by 13.4% in FY 2001 --------------------------------------------------------- Burlington Industries Inc.'s net sales for the 2001 fiscal year were $1,403.9 million, 13.4% lower than the $1,620.2 million recorded for the 2000 fiscal year. Exports totaled $161 million and $179 million in the 2001 and 2000 fiscal years, respectively. PerformanceWear: Net sales for the PerformanceWear segment for the 2001 fiscal year were $473.4 million, 19.4% lower than the $587.3 million recorded in the 2000 fiscal year. Excluding $67.7 million sales reduction due to closed businesses and planned capacity reductions, net sales of the PerformanceWear markets were 8.9% lower than in the prior year. This decrease was due primarily to 10.3% lower volume partially offset by 1.4% higher selling prices and product mix. Export volume decreased by $13.1 million, in part due to the weak Euro currency. CasualWear: Net sales for the CasualWear segment for the 2001 fiscal year were $257.5 million, 6.2% higher than the $242.5 million recorded in the 2000 fiscal year. This increase was due primarily to 9.6% higher volume offset by 3.4% lower selling prices and product mix. Interior Furnishings: Net sales of products for interior furnishings markets for the 2001 fiscal year were $371.3 million, 25.2% lower than the $496.5 million recorded in the 2000 fiscal year. Excluding $66.2 million sales reduction due to the sales of the tufted area rug and printed mats businesses ($56.1 million in 2001 versus $122.3 million in 2000), net sales of the interior furnishings markets were 15.8% lower than in the prior year. This decrease was primarily due to 17.9% lower volume partially offset by 2.1% higher selling prices and mix. Carpet: Net sales for the Carpet segment for the 2001 fiscal year were $304.1 million, 2.8% higher than the $295.8 million recorded in the 2000 fiscal year. This increase was primarily due to 5.2% higher selling prices and product mix offset by 2.4% lower volume. Segment Income: Total reportable segment income for the 2001 fiscal year was $21.8 million compared to $66.8 million for the 2000 fiscal year. PerformanceWear: Loss of the PerformanceWear segment for the 2001 fiscal year was $2.8 million compared to income of $13.9 million recorded for the 2000 fiscal year. This decrease was due primarily to $20.9 million reduction in margins resulting from lower volume, $24.2 million deterioration in manufacturing performance due to lower volume, restructuring and plant curtailments and $9.9 million lower equity earnings from the Unifi joint venture, partially offset by $6.2 million improvement in margins due to selling price/mix, $15.5 million lower start-up costs in Mexico, $13.0 million of lower selling, general and administrative expenses resulting from restructuring and cost reduction programs, and $3.5 million of lower raw material costs. CasualWear: Losses of the CasualWear segment for the 2001 fiscal year were $12.9 million compared to loss of $8.3 million recorded for the 2000 fiscal year. This increased loss was due primarily to $5.1 million lower margins due to selling prices and mix, higher selling, general and administrative expenses of $1.7 million associated with growing the garment business, and $2.8 million reduction in manufacturing performance after incurring the costs associated with plant curtailments, partially offset by $2.3 million higher margins due to volume and lower raw material costs of $2.8 million. Interior Furnishings: Loss of the interior furnishings products segment for the 2001 fiscal year was $17.1 million compared to income of $12.1 million recorded for the 2000 fiscal year. This decrease was due primarily to $23.2 million lower margins due to volume and price/mix and a $13.1 million negative impact on manufacturing performance due to lower volume, restructuring and plant curtailments, partially offset by $1.2 million lower raw material costs, $4.0 million of lower selling, general and administrative expenses resulting from cost reduction programs and $1.8 million improvement resulting from the sale of the tufted area rug and printed mats businesses. Carpet: Income of the Carpet segment for the 2001 fiscal year was $56.1 million compared to $51.2 million recorded for the 2000 fiscal year. This increase was due primarily to $11.1 million higher margins due to price/mix, offset by $0.9 million reduced margins due to lower volume, $1.6 million higher raw material costs, $0.8 million reduction in margins due to manufacturing inefficiencies caused by production curtailments to reduce inventory levels, and $3.0 million higher selling expenses resulting from expanding the sales force for better geographic and market segment coverage and costs associated with the introduction of new products. Losses of other segments for the 2001 fiscal year were $1.5 million compared to $2.1 million recorded for the 2000 fiscal year. This improvement resulted primarily from gains on asset sales resulting from the downsizing of trucking operations. General corporate expenses not included in segment results were $12.9 million for the 2001 fiscal year compared to $14.2 million in the 2000 fiscal year. This reduction is due primarily to the cost reductions resulting from the 2000 restructuring plan. Before the 2000 goodwill write-off and provisions for restructuring in both periods, operating income before interest and taxes for the 2001 fiscal year would have been $8.2 million compared to $25.6 million for the 2000 fiscal year. Amortization of goodwill was 0.0 million and $16.7 million in the 2001 and 2000 fiscal years, respectively. Net loss for the 2001 fiscal year was $91.1 million in comparison with $527.0 million for the 2000 fiscal year. CORECOMM LIMITED: Cuts Debts to $183.8MM After Recapitalization --------------------------------------------------------------- CoreComm Limited (Nasdaq: COMM), announced that it has closed the recapitalization transactions that it had announced on December 18, 2001. The remaining phase of the recapitalization will be the previously described registered public exchange offer by CoreComm Holdco, Inc., the recapitalized company ("Holdco"), to CoreComm's common stockholders and any remaining holders of CoreComm's 6% Convertible Subordinated Notes. Pro forma for the recapitalization, the only remaining debt obligations of Holdco are its $156.1 million credit facility, $15.8 million in Senior Convertible Notes, and approximately $11.9 million in capital leases. There is no preferred stock outstanding. CYGNIFI DERIVATIVES: Lease Decision Period Extended to Jan. 31 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extends Cygnifi Derivatives Services, LLC's deadline to assume or reject unexpired leases of non-residential real property. The Debtors' Lease Decision Period is extended through January 31, 2002. In its order, the Court also states that the Debtor shall promptly and timely pay to Wasco Funding Corp. all monthly amounts due arising on and after the Petition Date. Cygnifi Derivatives Services, LLC, which provides a wide range of services relative to the management of its clients' derivatives portfolios, filed for Chapter 11 petition on October 3, 2001 in the U.S. Bankruptcy Court for the Southern District of New York. Marc E. Richards, Esq. at Blank Rome Tenzer Greenblatt, LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed total assets of $34,200,000 and $5,100,000 in total debts. DEAN HOLDING: S&P Downgrades Ratings Following Merger with Suiza ---------------------------------------------------------------- Standard & Poor's lowered its corporate credit rating on Dean Holding Co. (successor to Dean Foods Co.) to double-'B'-plus from triple-'B' and lowered the senior unsecured debt rating to double-'B'-minus from triple-'B'. These ratings are removed from CreditWatch, where they were placed on November 22, 2000. At the same time, the 'A-2' short-term corporate credit and commercial paper ratings as well as the preliminary triple- 'B'/triple-'B'-minus rating on Dean Holding Co.'s shelf registration are withdrawn. In addition, the double-'B'-plus corporate credit and senior secured debt ratings on Dean Foods Co. (formerly Suiza Foods Corp.) are affirmed. The single-'B'-plus rating on Dean Capital Trust's (formerly Suiza Capital Trust II) preferred stock (guaranteed by Dean Foods Co.) is also affirmed. Also, the double-'B'-plus senior secured ratings on Dean Foods Co.'s $300 million revolving credit facility due 2004 and on Suiza Fluid Dairy Group L.P.'s $1.6 billion senior secured credit facility due 2004 are withdrawn. The outlook is negative. The senior unsecured debt rating is two notches below the corporate credit and senior secured debt ratings, reflecting the large amount of secured debt represented by the merged entity's new $2.7 million senior secured bank facility. The rating actions are a result of the completion of the merger of Suiza Foods and old Dean Foods Co. to form the largest national dairy company in the U.S., with about a 35% market share and about $10 billion in revenues, on December 21, 2001. The purchase price for this transaction was $49.66 per share, consisting of $21.00 in cash and 0.429 shares of Suiza's common stock for total consideration of $2.7 billion (including the assumption of about $900 million in old Dean Foods' debt). At the same time, Dean Foods repurchased Dairy Farmers of America Inc.'s (BBB+/Stable/A-2) 33.8% interest in Suiza Fluid Dairy Group for about $165 million in cash and 11 dairy plants. The ratings reflect the position of the merged company, with about a 35% share of the U.S. dairy industry, following completion of the combination of Suiza Foods and Dean Foods. This is offset by an aggressive financial profile, a heavy debt amortization schedule, and the firm's acquisitiveness. The ratings also incorporate the operating risk associated with integrating the two firms' operations. The ratings further reflect the newly merged company's strong portfolio of national, regional, and local brands and regional market positions, greater geographic diversity, stable cash flows, moderate capital expenditures, cost-saving opportunities ($60 million in the first year and $120 million within three years of closing), and an experienced management team. The merged Dean Foods will be the leading processor and distributor of branded dairy products under strong regional brands and private labels in the U.S. Further, the firm will have solid positions in pickles, ice cream, and other dairy products. The firm's distribution network will be extensive and cover all channels -- grocery and club retailers, drug and mass merchandisers, convenience stores, and food service. These distribution channels will be served by the merged entity's direct store delivery system (about 6,000 routes) or its national distribution system. The merged entity will have greater economies of scale and opportunities for significant cost savings. Standard & Poor's expects that the merged Dean Foods will not be acquisitive over the near term as it completes the integration of the two firms' operations. However, longer term, Standard & Poor's expects that Dean Foods will be acquisitive and will take advantage of consolidating trends in the dairy and related food industries. The combined company will have the financial flexibility to pursue acquisitions in related industries under its revolving credit facility. Pro forma for this transaction, EBITDA to interest (including preferred stock dividends as interest) is expected to be about 3.0 times. Operating margins (before depreciation and amortization) of about 9% are expected to improve due to greater economies of scale, higher volume, improved efficiencies in both the company's processing and distribution systems, and cost- saving initiatives. The consolidated company's total debt plus preferred stock to EBITDA is about 4.3x. The rated preferred securities have some equity characteristics, somewhat increasing flexibility for the continuation of the merged Dean Foods' acquisition strategy at the current rating level. Standard & Poor's expects that minimal share repurchases are possible at the merged company over the near term. Outlook: Negative The ratings reflect Standard & Poor's expectation that the merged company will maintain its leading position in the dairy industry. However, difficulties integrating Dean Foods' operations with Suiza Foods and/or a decline in credit measures could result in the ratings being lowered. DIGITAL TELEPORT: Commences Reorganization Under Chapter 11 ----------------------------------------------------------- Digital Teleport Inc. and its holding company, DTI Holdings Inc., filed voluntary petitions for Chapter 11 reorganization with the U.S. Bankruptcy Court for the Eastern District of Missouri. The company also announced it has received a commitment for up to $5 million in debtor-in-possession financing to fund continuing operations during its court- supervised restructuring. After reviewing various and previously disclosed strategic alternatives, the regional fiber communications provider for secondary and tertiary markets concluded that Chapter 11 reorganization offers the most attractive opportunity for success. KLT Telecom Inc., a non-regulated subsidiary of Great Plains Energy Inc. (NYSE:GXP), and current majority owner of the company, is providing the DIP financing. Through this restructuring, Digital Teleport expects to eliminate about $300 million in debt and significantly reduce other future commitments. Digital Teleport will use the debtor- in-possession financing plus cash from operations to fund post- filing operating expenses and obligations to suppliers and employees. "During telecom's peak growth years, Digital Teleport pursued an aggressive national expansion at the cost of profitability," said Paul Pierron, president and CEO of Digital Teleport. "We borrowed heavily to acquire fiber network routes that were never put into service. Payments on our bond debt were set to begin in September 2003 and create extraordinary financial pressure." Digital Teleport expects to emerge from reorganization as a stronger, more flexible company with a unique network, a manageable debt load, and a growing base of recurring monthly revenue. Excluding one-time legal and financial expenses associated with its voluntary restructuring, Digital Teleport expects to report positive operating cash flow for January 2002. The company plans to exit the national long-haul business and eliminate non-revenue producing fiber routes. Digital Teleport will focus on operating its traditional core fiber optic network that spans a five-state region in the Midwest. "During the restructuring, the company will continue to be focused on providing the highest quality service to our existing bandwidth customers and fulfilling post-petition obligations to customers, suppliers and employees," Pierron said. "Digital Teleport is not going out of business. We are not liquidating. Reorganization under Chapter 11 enables Digital Teleport to strengthen our balance sheet, eliminating unneeded network facilities, maintaining positive cash flows, ensuring sufficient cash to continue operating and growing the business," Pierron said. Earlier this year, KLT Telecom took a controlling ownership interest in Digital Teleport. At that time, more emphasis was shifted to revenue generation and a new team led by Pierron was brought in. As a result, year-to-date revenues through last Sept. 30, the last reported period, are up 68 percent compared to the same period a year ago, despite the economic and telecom downturn. Digital Teleport provides wholesale fiberoptic transport services in secondary and tertiary markets to national and regional communications carriers. The company also provides Ethernet service to enterprise customers and government agencies in office buildings in areas adjacent to the company's metropolitan network rings. Formed in June 1989, Digital Teleport is 83.4 percent owned by Great Plains Energy Inc. Year- to-date through Sept. 30, 2001 Digital Teleport reported total revenues of $13 million. The company's Web site is http://www.digitalteleport.com DIGITAL TELEPORT: Chapter 11 Case Summary ----------------------------------------- Lead Debtor: Digital Teleport, Inc. 8112 Maryland Ave. 4th Floor Saint Louis, MO 63105 Bankruptcy Case No.: 01-54369 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- DTI Holdings, Inc. 01-54370 Digital Teleport of Virginia, Inc. 01-54371 Chapter 11 Petition Date: December 31, 2001 Court: Eastern District of Missouri (St. Louis) Judge: Barry S. Schermer Debtors' Counsel: Robert E. Richards, Esq. Sonnenschein, Nath & Rosenthal 8000 Sears Tower Chicago, IL 60606 Tel: 312-876-8000 E.SPIRE COMMS: Gets Okay to Hold CyberGate Auction on Jan. 7 ------------------------------------------------------------ e.spire Communications, Inc., (OTC Pinksheets: ESPIQ) announced that the U.S. Bankruptcy Court for the District of Delaware has approved procedures for sale of its Internet subsidiary, CyberGate, Inc. In accordance with the U.S. Bankruptcy Code, a Court-supervised auction for CyberGate will be held at 2:00 PM on January 7, 2002. The Court also approved a lead bid of $21.0 million by a Web hosting provider to acquire certain assets and to assume certain liabilities of the business. Opening competitive bids for the January 7 auction must exceed the lead bid by a minimum of $500,000 and be received in writing prior to 8:00 AM on January 7 by Credit Suisse First Boston Corporation, 11 Madison Avenue, New York, NY 10010, Attn: Gina Orlins, with copies to Saul Ewing LLP, 222 Delaware Avenue, Suite 1200, Wilmington, DE 19801, Attn: Domenic E. Pacitti, Esq. For more information about the sale procedures, please contact Credit Suisse First Boston Corporation by faxing requests at 212-743-2893. e.spire filed a voluntary petition for Chapter 11 protection with the Court on March 22, 2001. e.spire Communications, Inc., an integrated communications provider, offers traditional local and long distance, dedicated Internet access, and advanced data solutions, including ATM and frame relay. e.spire also provides Web hosting, dedicated server, and colocation services through its Internet subsidiary, CyberGate, Inc., and its subsidiary ValueWeb. e.spire's subsidiary, ACSI Network Technologies, Inc., provides third parties, including other communications concerns, municipalities, and corporations, with turnkey fiber-optic design, construction, and project management expertise. More information about e.spire is available at e.spire's Web site, http://www.espire.net ENRON CORPORATION: Refuses to Make $51 Million 1997 Adjustment -------------------------------------------------------------- DebtTraders reports that Enron decided to ignore its auditor's recommendations to cut its income by $51 million to $54 million in 1997, according to the Washington Post newspaper. The Company decided the adjustments were not material. According to DebtTraders analysts Daniel Fan and Blythe Berselli, Enron 6.4% Bonds due 2006 were last quoted at 20. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRON4 for real-time bond pricing. FOAMEX: Societe Generale de Belgique Holds 5.9% Equity Interest --------------------------------------------------------------- Societe Generale de Belgique and Compagnie Europeenne pour le Developpement Electrique et Electronique, a wholly owned subsidiary of Societe Generale de Belgique, beneficially own 5.9% of the outstanding common stock of Foamex International, Inc., (based on a total of 27,158,016 shares of common stock, par value $0.01 per share, outstanding as of the close of business on December 11, 2001, as represented by the transfer agent of Foamex International Inc.) The firms hold sole powers of voting and disposition over the total 1,592,671 shares held. Foamex International is one of North America's largest makers of polyurethane foam for carpets and furniture. Foamex's flexible polyurethane and polymer foams are used in mattresses, couches, car interior trim, carpets, and industrial filters. Its products are sold primarily through outlets in North America, with the US accounting for most of its sales. Automotive supplier Johnson Controls accounts for 12% of sales. Other customers include Sealy, Wal-Mart, Ford, and General Motors. The Bank of Nova Scotia owns 24% of Foamex, which has acquired General Foam Corporation's New Jersey operations. Late last week, the company announced that the Company's bank lenders had agreed to ease year-end 2001 loan covenants to accommodate the fourth quarter charge, enabling Foamex to proceed with Project Transformation. Loan covenants have also been loosened for 2002. In addition, the company is implementing a comprehensive profit enhancement program that will reduce costs, spur revenue growth, and drive increased long-term profitability and shareholder value. GLOBIX CORP: Pre-Pack Bankruptcy Talks Prompt S&P Junk Ratings -------------------------------------------------------------- Standard & Poor's lowered its corporate credit and senior unsecured note ratings on Globix Corp to double-'C' from triple- 'C'. The outlook is negative. The rating action is based on Globix' announcement that it is in discussions with an informal committee of bondholders representing approximately 48% of the company's outstanding $600 million issuance of 12 1/2% senior notes. The discussions concern a financial reorganization of the company through a pre- packaged bankruptcy proceeding that would be aimed at significantly reducing the company's debt burden. Ratings for Globix reflect a rapidly deteriorating credit profile and an unproven business model that has yet to achieve profitability. New York, N.Y.-based Globix provides advanced Internet services and connectivity for businesses in the U.S. and Europe through its fiber-optic network and state-of-the-art Internet data centers in New York; Santa Clara, Calif.; and London, U.K. Globix' weak financial profile, with senior debt of more than $600 million and revenue of $104 million for the fiscal year ended September 2001, is compounded by mounting operating losses. Sales have not meaningfully increased in 2001 and operating losses expanded in its fiscal quarter ended in September. Consequently, likely deterioration in Globix' financial position and uncertainty associated with the company's business model leave the company's credit profile vulnerable, despite a cash balance of nearly $120 million as of September 2001. Outlook: Negative Ratings are likely to be lowered in the near term as management proceeds with a financial restructuring. HAYES LEMMERZ: Court Okays $5.2M Payment for Prepetition Taxes -------------------------------------------------------------- Hayes Lemmerz International, Inc., and its debtor-affiliates sought and obtained an order confirming their authority to pay pre-petition sales, use, and gross receipts taxes and certain other taxes to the respective federal, state and local taxing authorities in the ordinary course of the Debtors' business. The Debtors estimate that the amount of Taxes to be paid is between $4,800,000 to $5,200,000. Mark S. Chehi, Esq., at Skadden Arps Slate Meagher & Flom LLP in Wilmington, Delaware, tells the Court that the Debtors, in the ordinary course of their business, incur various tax liabilities, including, among others, Sales and Use Taxes and employment and withholding Taxes. Prior to the Petition Date, the Debtors generally paid their tax obligations as they became due. Mr. Chehi submits that Sales and Use Taxes accrue daily in the ordinary course of the Debtors' business, and are calculated based upon statutorily mandated percentages and in some cases, are paid in arrears, once collected by the Debtors. Many jurisdictions, however, require the Debtors to remit estimated Sales and Use Taxes on a periodic basis during the month or quarter in which sales are made. The Debtors then generally timely file a Sales and Use Tax return with the relevant taxing authority reporting the actual Sales and Use Tax due, paying any further amounts owed for the month or quarter. The Debtors distribute their finished products to automotive and commercial highway vehicle customers throughout the United States. Mr. Chehi explains that because of the costs that would be involved, and because the Debtors believe there exist multiple legal bases for granting the relief requested, the Debtors have not conducted an exhaustive survey of all the jurisdictions and localities in which the Taxes are due to determine whether such taxes are deemed "trust fund" taxes in each and every such jurisdiction. The Debtors submit that most, if not all, of the Taxes likely constitute so called "trust fund" taxes that are required to be collected from third parties and held in trust for payment to the taxing authorities. To the extent that any Taxes are "trust fund" taxes collected by the Debtors for remittance to Taxing Authorities, Mr. Chehi contends that they are not property of the Debtors' estates and therefore, they arguably have no equitable interest at all in such Taxes and are obligated to remit to the appropriate Taxing Authority all amounts collected from customers or withheld from employees' payroll checks. Mr. Chehi fears that failure to timely pay, or a precautionary withholding by the Debtors of payment of, the Taxes likely would cause Taxing Authorities to take precipitous action, including a flurry of lien filings and a marked increase in audits. Prompt and regular payment of the Taxes would avoid any such unwarranted governmental action. Mr. Chehi also points out that most, if not all, of the Taxes would be entitled to priority status and payment in full under any reorganization plan. The Debtors' payment of the Taxes in the ordinary course of business thus will affect only the timing of the payments although in some cases, prepayment of such Taxes may actually reduce the amounts ultimately paid to the Taxing Authorities. The rights of other unsecured creditors and parties-in-interest consequently would not be prejudiced if the requested relief is granted, and the Court's exercise of its equitable powers under section 105(a) will not be in derogation of any other provision of the Bankruptcy Code. Mr. Chehi informs the Court that the federal government and many states in which the Debtors operate have laws providing that, because the Taxes constitute "trust fund" taxes, the Debtors' officers or directors or other responsible employees could, under certain circumstances, be held personally liable for the payment of such Taxes. To the extent any accrued Taxes of the Debtors were unpaid as of the Petition Date in these jurisdictions, the Debtors' officers and directors could be subject to lawsuits during the pendency of these chapter 11 cases. Mr. Chehi claims that this would be extremely distracting for the Debtors' directors and officers, whose full-time focus must be to devise and implement a successful reorganization strategy for the Debtors. The Debtors thus submit that it is in their best interests and consistent with the reorganization policy of the Bankruptcy Code to eliminate the possibility of such time consuming and potentially damaging distractions. (Hayes Lemmerz Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) HUNTSMAN: Extends 10.125% Sr. Sub. Debt Exchange Offer to Jan. 9 ---------------------------------------------------------------- Huntsman International LLC announced that it has extended its offer to the holders of 250,000,000 euros aggregate principal amount of its 10.125% Senior Subordinated Notes due 2009 to exchange such notes for a like principal amount of notes which have been registered under the Securities Act of 1933, as amended. The exchange offer, scheduled to expire on December 31, 2001, at 5:00 p.m., London time, will now expire at 5:00 p.m., London time, on Wednesday, January 9, 2002, unless further extended by Huntsman International LLC. All other terms, provisions and conditions of the exchange offer will remain in full force and effect. The Bank of New York has been appointed as exchange agent for the 10.125% Notes exchange offer. Requests for assistance or documents should be directed to The Bank of New York at +44 (0) 207 964-6582. Huntsman International LLC said it has been informed by the exchange agent that, as of 5:00 p.m., London time, on December 31, 2001, approximately 249,950,000 euros in aggregate principal amount of its 10.125% Notes had been tendered in the exchange offer. This amount represents approximately 99.98% of the outstanding 10.125% Notes. Huntsman International LLC is a global manufacturer and marketer of specialty and commodity chemicals with annual revenues of $4.5 billion for the year ended December 31, 2000. Information about Huntsman, including corporate background and press releases, is available through its website at http://www.huntsman.com * * * As reported in the Troubled Company Reporter (Nov. 27 2001 Edition), Huntsman International was not in compliance with the leverage covenant contained within its bank facilities. Until successfully amended, this condition would restrict Huntsman International's access to its bank facility, thereby eliminating alternative financial flexibility. It was also reported that the collateral pledged to support Huntsman Corp.'s bank facilities could trigger change of control provisions related to Huntsman International's subordinated debt obligations. IT GROUP: Heightened Liquidity Concerns Spur S&P to Junk Ratings ---------------------------------------------------------------- Standard & Poor's lowered its ratings on IT Group Inc. and maintained them on CreditWatch with negative implications. The downgrade reflects heightened liquidity concerns following the company's announcement that it appears unlikely that satisfactory arrangements can be negotiated with its senior secured lenders for a longer term financial restructuring. IT Group expects not be in compliance with the year-end 2001 financial covenants. The firm is exploring all alternatives available to it, including the sale of assets and seeking protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code. IT Group is a leading provider of environmental consulting, engineering and construction, remediation, and facilities management services. The U.S. government accounts for about 55% of revenues (the Department of Defense is by far the largest customer), with the balance from commercial and state and local government clients. Standard & Poor's will monitor ongoing developments to assess the impact on credit quality. Ratings Lowered; Remain on CreditWatch with Negative Implications IT Group Inc. TO FROM Corporate credit rating CCC- B Senior secured (bank) debt CCC- B Subordinated debt C CCC+ INTEGRATED HEALTH: Gets Approval of Rotech Disclosure Statement --------------------------------------------------------------- Judge Walrath has signed an order approving the Disclosure Statement for the Amended Joint Plan of Reorganization of Rotech and corresponding Solicitation Procedures. Among other things, the Rotech Debtors specify in the Amended Disclosure Statement that they intend to file, prior to the Confirmation Hearing, a motion pursuant to Bankruptcy Rule 9019 for an order approving the IHS-Rotech Settlement Agreement. The Court finds that the Rotech Disclosure Statement, dated November 20, 2001, as amended, contains adequate information within the meaning of section 1125 of the Bankruptcy Code. On February 13, 2002, at 11:00 a.m. Eastern Time, Judge Walrath will convene a Confirmation Hearing on the Rotech Plan. The Confirmation Hearing may be continued without further notice. Any objections to confirmation of the Plan must be filed with the Court and served so that they are actually received no later than 4:00 p.m. Eastern Time, on January 30, 2002. The Debtors, the Senior Lenders and the Creditors' Committee may serve replies to such objections or proposed modifications by no later than February 8, 2002. The Court's order of approval provides for the following, among other things: -- December 20, 2001 is established as the Record Date for purposes of determining which creditors are entitled to vote on the Plan; -- the Rotech Debtors are to mail or cause to be mailed solicitation packages by January 1, 2002; -- the Rotech Debtors are authorized to retain Poorman-Douglas as the voting agent on the proposed terms and conditions; -- all Ballots and Master Ballots must be properly executed, completed, and delivered to Poorman-Douglas so that they are received by Poorman-Douglas no later than 5:00 p.m., Pacific Time, on January 30, 2002 (the Voting Deadline); -- creditors must vote all of their claims within a particular class under the Plan, whether or not such claims arc asserted against the same or multiple Rotech Debtors, either to accept or reject the Plan and may not split their vote(s), and thus a Ballot that partially rejects and partially accepts the Plan will he deemed a vote to accept the Plan; and it is -- solely for purposes of voting to accept or reject the Plan, each claim within, a class of claims entitled to vote to accept or reject the Plan is to be temporarily allowed in an amount equal to the amount of such claim as set forth in a timely filed proof of claim, or, if no proof of claim was filed, the amount of such claim as set forth in the Rotech Debtors' schedules of assets and liabilities filed with the Bankruptcy Court, provided that: a. If a claim is deemed allowed in accordance with the Plan, such claim is allowed for voting purposes in the deemed allowed amount set forth in the Plan; b. contingent, unliquidated, or disputed claims shall be temporarily allowed for voting purposes at $1.00; c. If a claim has been estimated or otherwise allowed for voting purposes by order of the Court, such claim is temporarily allowed in the amount so estimated or allowed by the Court, for voting purposes only, and not for purposes of allowance or distribution; d. If a claim is listed in the Schedules as contingent, unliquidated, or disputed, or scheduled in the amount of zero, and a proof of claim was not timely filed, such claim shall be disallowed for voting purposes and for purposes of allowance and distribution pursuant to Bankruptcy Rule 3003(c), unless the Rotech Debtors have consented in writing; and e. If the Rotech Debtors have served an objection to a claim at least 10 days before the Voting Deadline, such claim shall be temporarily disallowed for voting purposes only and not for purposes of allowance or distribution, except to the extent and in the manner as may be set forth in the objection; and it is further f. If any claimant seeks to challenge the allowance of its claim for voting purposes in accordance with the above procedures, such claimant is directed to serve on the Rotech Debtors and file with the Court on or before the 10 day after the later of (i) service of the Confirmation Hearing Notice and (ii) service of notice of an objection, if any, to such claim, a motion for an order pursuant to Bankruptcy Rule 3018(a) temporarily allowing such claim in a different amount for purposes of voting to accept or reject the Plan; g. If a creditor files a motion pursuant to Bankruptcy Rule 3018(a), such creditor's Ballot shall not he counted unless temporarily allowed by the Court for voting purposes after notice and a hearing. The Rotech Debtors are authorized to make nonsubstantive changes to the Disclosure Statement, the Plan, and related documents without further order of the Court. (Integrated Health Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) LERNOUT & HAUSPIE: Resolves On-Going Disputes with AllVoice ----------------------------------------------------------- Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, asks Judge Wizmur to authorize the Lernout & Hauspie Group to enter into a Settlement and License Agreement with AllVoice Computing plc. AllVoice's Pre-Petition Actions On or about February 12, 1999, AllVoice initiated a lawsuit alleging patent infringement in the Massachusetts District Court against Dragon Systems, Inc. n/k/a L&H Holding. In the Massachusetts Action, AllVoice alleged, among other things, that the L&H Holdings' Dragon Naturally Speaking(R) series of computer software products infringed AllVoice's U.S. Patent No. 5,799,273 ("Automated Proofreading Using Interface Linking Recognized Words To Their Audio Data While Text Is Being Change"). In May 2000, the Massachusetts District Court denied AllVoice's first motion for preliminary injunctive relief -- a ruling that AllVoice appealed to the United States Court of Appeals for the Federal Circuit (the "Federal Circuit"). In September 2000, before the Federal Circuit had ruled on AllVoice's appeal, AllVoice filed a second motion for preliminary injunctive relief in the District of Massachusetts. Shortly thereafter, AllVoice filed a motion to amend the relief sought in its second preliminary injunction motion to include the recall of all units of L&H Holdings' Dragon Naturally Speakingr software that previously had been sold or distributed. The Debtors remind Judge Judith Wizmur that, subsequent to the Petition Date, on or about January 10, 2001, AllVoice filed the Motion For Relief From Automatic Stay Regarding Pending Injunction Motion And Appeal Concerning Debtor's Post-Petition Continuing Patent Infringement. The AllVoice Lift Stay Motion sought relief from the automatic stay to proceed with the Massachusetts Action and the Federal Circuit appeal. Judge Wizmur granted the AllVoice Lift Stay Motion and modified the automatic stay to allow (i) the Massachusetts District Court to rule on AllVoice's motion for preliminary injunction and (ii) the Federal Circuit to issue a ruling on AllVoice's appeal. The Federal Circuit affirmed the Massachusetts District Court's denial of AllVoice's initial motion for preliminary injunctive relief. The Massachusetts District Court denied AllVoice's second motion for preliminary injunctive relief. AllVoice has since asserted new claims alleging infringement in the United Kingdom, specifically with respect to AllVoice's U.K. Patent No. 2303955. Proofs Of Claim Filed By AllVoice. AllVoice filed six proofs of claim in the Chapter 11 cases (i.e., two proofs of claim in each of the members of the L&H Groups' chapter 11 cases). The Proofs of Claims are based upon, among other things, AllVoice's assertion of patent infringement of either the '273 Patent or the '955 Patent. The Proofs of Claim assert that among other things, that L&H Holdings exchanged assets with L&H NV and Dictaphone and jointly marketed products that infringed AllVoice's '955 Patent. Additionally, AllVoice maintains the infringing products include PowerScriber, which is sold through the Dictaphone Healthcare Solutions Group. The Proofs of Claim seek either (a) at least $7,871,050 plus interest, attorneys' fees and such other damages as may be granted in connection with the alleged infringement of the '273 Patent or (b) $46,002,528 plus interest, attorneys' fees and such other damages as may be granted in connection with the alleged infringement of the '955 Patent. In sum, AllVoice filed claims in excess of $55,000,000 against each of the members of the L&H Group. The Proofs Of Claim also specifically reserve AllVoice's right to file requests for allowance and timely payment of administrative claims in these cases insofar as the members of the L&H Group may be found to have continued to infringe the '273 Patent or the '955 Patent after the Petition Date. As Judge Wizmur is aware, AllVoice filed, among other pleadings, a motion to convert the chapter 11 cases of L&H NV and L&H Holdings to cases under chapter 7 of the Bankruptcy Code. On November 20, 2001, Dictaphone filed an Objection to Proofs of Claim Nos. 2578 and 2580 filed by AllVoice Computing PLC as "No Amount Due". The L&H Group and AllVoice commenced discovery (i.e., document production and depositions) in connection with the Objection. AllVoice also recently filed a motion seeking a 2004 examination of L&H NV and L&H Holdings, and served interrogatories on L&H NV and L&H Holdings. Settlement And License Agreement Set forth below are the principal terms of the Settlement and License Agreement: Consideration. The L&H Group shall: (a) pay $450,000 in cash to AllVoice within 5 days of the L&H Group obtaining the Approvals; (b) deliver within 5 days of the L&H Group obtaining the Approvals 25,575 number of shares of Scansoft stock (i.e., the stock received by L&H NV and L&H Holdings in connection with the sale of their Speech and Language Technologies Business) to AllVoice and its counsel; (c) The cash portion of the consideration will be funded by Dictaphone from the escrow established for its benefit in connection with Dictaphone's purchase of the Powerscriber technology from L&H NV and L&H Holdings; (d) The shares of Scansoft stock being delivered to AllVoice as part of the consideration will be contributed by L&H Holdings; and No Admissions. Nothing herein or in the Settlement and License Agreement shall be construed as an admission that any of the L&H Group's products or technology infringe the '273 Patent or the '955 Patent and the L&H Group expressly reserves all of its rights, claims and defenses with respect to the same. Mutual Releases. AllVoice will release any and all claims against any member of the L&H Group, their affiliates, representatives, agents and attorneys. The members of the L&H Group will release AllVoice from any and all claims arising out of the patent infringement claims asserted by AllVoice; Licenses. AllVoice will grant certain fully paid-up royalty free, world-wide licenses in the '273 and '955 Patents to the members of the L&H Group and reorganized Dictaphone upon emergence from chapter 11. Withdrawal Of Claims And Actions. AllVoice will withdraw with prejudice (a) the Proofs of Claim; (b) the Motion to Convert; and (c) the Massachusetts Action. Approvals. The Settlement and License Agreement is subject to approval of this Court and, if necessary, the Belgian bankruptcy authorities. The Settlement and License Agreement will be null and void if the necessary approvals are not obtained on or before December 31, 2001 (which date may be extended by AllVoice). Reservation Of Rights. AllVoice reserves all claims and rights it has or may have against the transferees of the L&H Group's assets (other than Dictaphone and reorganized Dictaphone). Execution Of Settlement And License Agreement Is Permissible As A Reasonable Business Decision The Bankruptcy Code provides that "[t]he trustee, after notice and a hearing, may use, sell or lease, other than in the ordinary course of business, property of the estate." Additionally, the Bankruptcy Code's general equitable authority allows this Court to "issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of [the Bankruptcy Code]." Courts generally approve the use of property outside of the ordinary course of business if the debtor demonstrates a sound business justification for such use of estate property. "The business judgment rule 'is a presumption that in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action was in the best interests of the company.'" The business judgment rule has vitality in chapter 11 cases and presumes that the debtor's management decisions are reasonable. In addition, under the general equity provisions of the Bankruptcy Code, the court has expansive equitable powers to fashion any order or decree that is in the interest of preserving or protecting the value of the debtors' assets. The L&H Group believes that it has a sound business justification for entering into the Settlement and License Agreement. The settlement of AllVoice's claims will bring finality to one of the most difficult issues facing the L&H Group -- the rights, if any, of AllVoice and the resolution of AllVoice's Proofs of Claim. The Settlement and License Agreement also ensures that, following its emergence from chapter 11, reorganized Dictaphone will be able to use its current technology free of potential lawsuits from AllVoice based upon alleged patent infringement. The Third Circuit has stated that the Bankruptcy Court is required to "assess and balance the value of the claim that is being compromised against the value to the estate of the acceptance of the compromise proposal." A court should consider four criteria in striking the balance between the value of the claim and the value of the compromise to the estate: (1) the probability of success in litigation; (2) the likely difficulties in collection; (3) the complexity of the litigation involved, and the expense, inconvenience and delay attending it; and, (4) the paramount interest of the creditors. The proposed settlement between the L&H Group and AllVoice fulfills all of the requirements necessary for court approval and serves the interests of the creditors of the L&H Group in several respects. The proposed settlement brings finality to a highly contentious dispute in these chapter 11 cases that, if litigated, would have cost the estates a significant amount of resources. This is a global resolution of a string of claims filed by and persistent litigation generated by AllVoice. The resolution of the AllVoice claims will bring Dictaphone one step closer to emerging from chapter 11 and will bring L&H NV and L&H Holdings closer to formalizing a strategy to bring finality to their chapter 11 cases. Accordingly, the members of the L&H Group believe that entering into the Settlement and License Agreement is in the best interests of their estate and their creditors. (L&H/Dictaphone Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) LORAL CYBERSTAR: Subpar Exchange Offer Pushes Ratings to D Level ---------------------------------------------------------------- Standard & Poor's lowered its ratings on Loral CyberStar Inc.'s 11.25% and 12.50% senior unsecured notes to 'D' from single-'C', and lowered its corporate credit rating to 'D' from double-'C'. These ratings were simultaneously removed from CreditWatch. The downgrade is based on the completion of a subpar exchange offer for these notes, which Standard & Poor's views as tantamount to default. At the same time, Standard & Poor's affirmed its single-'B' rating on Loral CyberStar's $613 million senior unsecured notes due in 2006. These notes are guaranteed by Loral CyberStar's parent, Loral Space & Communications Ltd. (B/Negative/--). Subsequent to the default, Standard & Poor's assigned its single-'B' rating to the $37 million 11.25% senior unsecured notes and $49 million 12.50% senior unsecured notes that were not tendered as part of the exchange. A new single-'B' corporate credit rating was also assigned to the company. The outlook is negative. The new rating assigned to the 11.25% and 12.50% senior unsecured notes that were not tendered as part of the exchange is the same as the rating on the recently exchanged $613 million senior unsecured notes due in 2006. Although the 11.25% and 12.50% senior unsecured notes do not have any covenant protection, or a guarantee from parent Loral Space & Communications, they currently rank pari passu with Loral CyberStar's $613 million senior unsecured notes and, therefore, have similar default risk. At this juncture, the rating on Loral CyberStar's $613 senior unsecured notes is not a function of the corporate guarantee from Loral Space & Communications. MARINER POST-ACUTE: Treatment of Claims Under First Amended Plan ---------------------------------------------------------------- Most of Mariner Post-Acute Network, Inc.'s creditors will receive distributions of cash, common stock of Reorganized MPAN, warrants to purchase New MPAN Common Stock, or other consideration on or after the Plan's Effective Date. Only creditors that have valid "Allowed Claims" against the Debtors will receive consideration under the Plan. Upon the Plan's Effective Date, all stockholders' Equity Interests in MPAN and options and warrants to acquire old MPAN Common Stock will be cancelled. The new stockholders of Reorganized MPAN after the Effective Date initially will consist of certain of the Debtors' prepetition creditors, specifically the MPAN Senior Credit Facility Claim Holders, the MHG Senior Credit Facility Claim Holders, general unsecured creditors of the MPAN Debtors, and (to the extent such holders do not oppose the Plan and otherwise qualify as Consenting Class UP-2 Holders) holders of MPAN Subordinated Note Claims. Proposed Treatment And Class Descript1on Of Class Right To Vote On The Plan ----- -------------------- ------------------------- SP-1 MPAN Senior Credit MPAN Senior Credit Facility Claim Facility Claims include Holders will receive on the all Claims relating to Effective Date: (a) 79.63% of the to: (i) the MPAN "Available Cash," consisting of Debtors' principal Debtors' Cash on hand as of the secured credit line, Effective Date, plus the net term note, and letter proceeds of any Exit Term Loans of credit obligations (after payment of proceeds ear- evidenced by, among marked for other creditors) or other things, the MPAN Investor Notes, and less $25 Senior Credit Facility million working capital for the Agreement, for which Reorganized Debtors' operations The Chase Manhattan & certain other amounts under Bank serves as agent; the Plan; (b) 79.63% of the (ii) the Synthetic Lender Notes, if any are issued; Lease Transaction (c) 76.44% of the New MPAN Common Documents; and Stock; and (d) a release by the (iii) all notes, Debtors and any entity claiming guarantees, pledges, by or through Debtors. mortgages, and security On or after the Effective Date, agreements relating the MPAN Senior Credit Facility thereto. Claim Holders also will receive: MPAN Senior Credit (y) 79.63% of the APS Sale Facility Claims Proceeds (to the extent not paid are secured by first prior to Effective Date); and priority liens on (z) New MPAN Common Stock and substantially all of New MPAN Warrants that would the MPAN Debtors' otherwise have been distributed assets (except the to holders of Allosved Class UP-2 PHCMI Debtors), Claims that are not Consenting subject only to the Class UP-2 Holders. DIP financing and certain liens. MPAN Class SP-1 is impaired and may Senior Credit Facility vote on the Plan. Claims will be allowed under the Plan in the amount of $985,631,204. SP-2 Claims of Omega To be treated according to the Healthcare Investors, terms of the Omega Settlement Inc. which are secured Agreement, which was approved by the assets of the by the Court on August 22, PHCMI Debtors. Omega 2001. was owed approximately $62.2 million as of Class SP-2 is impaired and the Petition Date. may vote on the Plan. SP-3 Secured Claims of The Allowed LaSalle Secured Claims LaSalle National Bank, will include all unpaid principal as Trustee under the and interest (if allowable under Pooling and Servicing Bankruptcy Code section 506(b)) Agreement relating to the respective nondefault rate Commercial Mortgage through the Effective Date, less Pass-Through any adequate protection payments Certificates Series received by or deposits applied by RMF 1995-1. LaSalle. Notwithstanding the The LaSalle Secured foregoing, in no event shall the Claims are secured Allowed LaSalle Secured Claim by liens upon six of exceed the value, as determined the Debtors' skilled pursuant to Bankruptcy Code nursing facilities section 506(a), of the collateral (SNF): Birchwood securing such Claim, less any Nursing Home, amount of adequate protection Crestview Nursing payments that did not compensate Center, Dixon for diminution in collateral Healthcare Center, value. Flora Care Center, Lafayette Health The Debtors will surrender to Care Center, and LaSalle the Dixon Healthcare Parkway Healthcare Center and the Crestview Nursing Center. The MPAN Center SNFs and all personal Debtors believe they property relating to them upon owed LaSalle approx. which LaSalle holds validly $15.7 million as of perfected, nonavoidable liens, in the Petition Date. partial satisfaction of the Allowed LaSalle Secured Claim. With respect to the balance of the Allowed La Salle Secured Claim, LaSalle will receive (i) a Cash Pay Down in the amount, if any, necessary to provide it with an 80% loan-to-collateral-value ratio, and (ii) a New Project Lender Note, as set forth in the Plan. Class SP-3 is impaired and may vote on the Plan. SP-4, Secured Claims of (i) Each Allowed Secured Claim in SP-5, Fireside Manor, relating these Classes will include all SP-6, to the Greenview Manor unpaid principal and interest at SP-8 SNF (Class SP-4); the respective nondefault rate (ii) Aramark, relating through the Effective Date, less to the Sunset Manor, any adequate protection payments Sierra Vista HealthCare received by or deposits applied by Center, and Alpine the respective creditor. Each such Living Center SNFs Allowed Secured Claim will be paid (Class SP-5); (iii) in full in Cash on or about the Bank Midwest, relating Effective Date. to the Arbor Manor SNF (Class SP-6); and These Classes are impaired and may (iv) Lend Lease, vote on the Plan. relating to the Arbor Manor SNF (Class SP-8). The MPAN Debtors believe they owed approximately $700,000 on account of these Claims as of the Petition Date. SP-7 Bank of New York Claims Class SP-7 is unimpaired and may relating to Summit not vote because it is deemed to Hospital of Louisiana have accepted the Plan. (note: this Class does not include Bank of New York's Claims, if any, relating to the Subordinated Notes). SM-1 MHG Senior Credit MHG Senior Credit Facility Claim Facility Claims include Holders will receive on the all Claims arising Effective Date: (a) 20.37% of the under, evidenced by, Available Cash; (b) 20.37% of the or relating to the Lender Notes, if any are issued; following, pursuant (c) 19.56% of the New MPAN to which PNC Bank, NA. Common Stock; (d) a release by the and First Union Debtors and any entity claiming by National Bank serve or through the Debtors, as set as agents: (i) the forth in the Plan; (e) $625,000 in $210,000,000 Term Cash on account of certain Loan Facility Credit professionals' fees; and (f) the Agreement dated as of surrender, cash collateralization, December 23, 1998; or backing of all undrawn letters (ii) the $250,000,000 of credit issued pursuant to the Revolving Credit MHG Senior Credit Facility Facility Credit Documents. On or after the Agreement dated as of Effective Date, the MHG Senior May 18, 1994; and Credit Facility Claim Holders also (iii) all notes, will receive: (y) 20.37% of the guarantees, security APS Sale Proceeds (to the extent agreements, pledges, not paid prior to the Effective and mortgages relating Date); and (z) Cash that would to the foregoing. otherwise have been distributed to holders of Allowed Class UM-2 MHG Senior Credit Claims that are not Consenting Facility Claims are Class UM-2 Holders. secured by first priority liens on Class SM-l is impaired and substantially all of may vote on the Plan. the MHG Debtors' assets, subject only to the DIP financing and certain Project Lenders' and other permitted liens. MHG Senior Credit Facility Claims will be allowed under the Plan in the amount of $ 426,302,882. SM-2 Secured Claims of (i) Each Allowed Secured Claim in SM-3 Bankers Trust, relating these Classes will include SM-5 to the Palmetto SNF all unpaid principal and interest SM-7 (Class SM-2) and the (if allowable under Bankruptcy SM-1O Westchester SNF Code section 506(b)) at the SM-11 (Class SM-3); respective nondefault rate SM-12 (ii) THCI, relating to through the Effective Date, the Pendleton SNF less any adequate protection (Class SM-5); payments received by or deposits (iii) NHP, relating to applied by the respective the Kensington SNF creditor. Notwithstanding the (Class SM-7); and foregoing, in no event shall an (iv) Monticello, Allowed Secured Claim exceed the relating to the Bonifay value, as determined pursuant SNF (Class SM-10), the to Bankruptcy Code section 506(a), Titusville SNF (Class of the collateral securing such SM-11), and the San Claim, less any amount of Antonio SNF (Class adequate protection payments that SM-12). The MHG did not compensate for diminution Debtors believe they in collateral value. Each creditor owed approximately in these Classes will receive $37.9 million on on account of its respective account of these claims Allowed Secured Claim as of the Petition (i) a Cash Pay Down in the Date. amount, if any, necessary to provide such holder with an 80% loan-to-collateral-value ratio, and (ii) a New Project Lender Note, as set forth in the Plan. These Classes are impaired and may vote on the Plan. SM-4 (i) Secured Claims of Class SM-4 and SM-6 are unimpaired SM-6 Bankers Trust relating and may not vote because they are to the Debtors' deemed to have accepted the Plan. purported guaranty of the St. Augustine SNF landlord's mortgage (SM-4), and (ii) HUD Jacksonville Claims relating to the Jacksonville SNF (Class SM-6). SM-8 Porche Secured Claims The Class SM-8 Claims will be allowed in the amount of zero, because the collateral securing such Claims has no value. Class SM-8 is impaired and may not vote because it will neither receive nor retain any consideration on account of such Claims, and thus is deemed to have rejected the Plan. SM-9 Quaker Deland Claims of The Debtors will surrender to Quaker or HUC relating HUD the Deland SNF and all to the Deland SNF. personal property relating to it upon which HUD holds validly perfected, nonavoidable liens, in full satisfaction of the Allowed Quaker Deland Claims. Class SM-9 is impaired and may vote on the Plan. SJ-1 Secured Tax Claims. Each Allowed Class SJ-1 Claim will Each Allowed Class include unpaid principal and SJ-l Claim will be interest at the applicable deemed to be in a statutory, nondefault rate. separate subclass for Allowed Class SJ-1 Claims will be purposes of voting and paid in full on or about the treatment under the Effective Date. Plan. Each member of Class SJ-1 is impaired, and holders of Allowed Class SJ-1 Claims may vote on the Plan. SJ-2 Other Secured Claims Each Allowed Class SJ-2 Claim will include all Secured include principal and unpaid Claims not otherwise interest at the applicable, classified under the nondefault rate through the Plan, including Claims Effective Date (if allowable under of certain equipment Bankruptcy Code section 506(b)), lessors, purchase money less any adequate protection liens, and similar payments received by or deposits Claims. Each Allowed applied by the creditor. Class SJ-2 Claim will Notwithstanding the foregoing, in be deemed to be in a no event shall an Allowed Class separate subclass for SJ-2 Claim exceed the value, as purposes of voting and determined pursuant to Bankruptcy treatment under the Code section 506(a), of the Plan. collateral securing such Claim. In full satisfaction of each Class SJ-2 Claim and all liens securing it, each Allowed Class SJ-2 will be treated under Option A, Option B, or Option C, at the election of the Debtors or Reorganized Debtors. Option A: The Disbursing Agent will pay the Allowed Class SJ-2 Claim in full, in cash, on or before the later of (i) 60 days after the Effective Date, or (ii) 15 Business Days after the date the Class SJ-2 Claim becomes an Allowed Class SJ-2 Claim. Option B: The Reorganized Debtors will surrender the property securing the Allowed Class SJ-2 Claim to the holder of such claim on or before the later of (i) 60 days after the Effective Date, or (ii) 15 Business Days after the date the Class SJ-2 Claim becomes an Allowed Class SJ-2 Claim; if the Property securing a Class SJ-2 Claim has been lost or destroyed, the Debtors will provide notice of such fact to the holder of the claim, and the delivery of such notice will constitute "surrender" of the property securing the Class SJ-2 Claim for purposes of Option B. Option C: On or before the later of (i) 60 days after the Effective Date, or (ii) 15 Business Days after the date the Class SJ-2 Claim becomes an Allowed Class SJ- 2 Claim, the Reorganized Debtors will comply with the following: (a) any default other than a default of a kind specified in section 265(b)(2) of the Bankruptcy Code will be cured; (b) the maturity of the Claim will be reinstated as the maturity existed before any default; (c) the holder of such Claim shall be compensated for any damages incurred as a result of any reasonable reliance of such holder to the extent provided by Bankruptcy Code section 1124(2); and (d) the other legal, equitable, or contractual rights to which the Claim entitles the holder will not otherwise be altered. The Debtors will be deemed to have elected Option C, except with respect to any Class SJ-2 Claim as to which the Debtors elect Option A or Option B by filing a notice of such election with the Bankruptcy Court and serving such notice on the holder of the respective Class SJ-2 Claim on or before the later of (i) 45 days after the Effective Date, and (ii) 10 Business Days after the Class SJ-2 Claim becomes an Allowed Class SJ-2 Claim. To the extent the Debtors elect Option C, the claim will be unimpaired, and the holder will be deemed to have accepted the Plan. Otherwise, Class SJ-2 is impaired, and the holder may vote on the Plan. Not Priority Tax Claims Allowed Priority Tax Claims will Classi- (Claims entitled to be paid in full, in Cash, on or fied priority under about the Effective Date. Bankruptcy Code Sec. 507(a)(8)). Holders of Priority Tax Claims These Claims are not are not entitled to vote classified in any on the Plan. Class, as provided by Bankruptcy Code Sec. 1123(a)(1). PJ-1 Other Priority Claims Allowed Other Priority Claims will (including employees' be paid in full, in Cash, on or Claims for no more about the Effective Date. than $4,300 in wages incurred within 90 Class PJ1 is unimpaired and may days before the not vote because it is deemed Petition Date, to have accepted the Plan. certain employee benefit Claims, and other unsecured Claims entitled to priority under Bankruptcy Code Sec. 507(a), other than Administrative Expenses and Priority Tax Claims). GP-1 MPAN United States The holders of Class GP-1 Claims Claims. will receive the treatment set forth in the Federal Government Settlement. Class GP-1 is impaired and is consenting to the Plan pursuant to the Federal Government Settlement. GM-1 MHG United States The holders of Class GM-1 Claims Claims. will receive the treatment set forth in the Federal Government Settlement. Class GM-1 is impaired and is consenting to the Plan pursuant to the Federal Government Settlement. UP-1 MPAN General Unsecured Holders of Allowed Class UP-1 Claims (including Claims will receive Pro Rata those of most distributions of (i) 399,078 suppliers of goods and Shares of New MPAN Common services to the MPAN Stock (2.0% of the Primary Debtors, litigation Effective Date Shares); and claimants, parties (ii) New MPAN Warrants, which will to executory contracts enable such holders to purchase and real and personal an additional 376,893 shares of property leases that New MPAN Common Stock (subject to are rejected, and the anti-dilution provisions undersecured creditors' contained in the New Warrant deficiency Claims). Agreement). The Pro Rata distribution to each creditor will depend upon the total amount of Allowed Claims, which will not be known until after the Plan's Effective Date. Accordingly, the timing and amount of distributions to each creditor cannot be determined at this time, but the Debtors anticipate that it will take a significant amount of time to complete all distributions. Class UP-1 is impaired, and holders of Allowed Class UP-1 Claims may vote on the Plan. UP-2 MPAN Subordinated Note Holders of Allowed Class UP-2 Claims Claims will receive Pro Rata distributions of: (i) 399,078 Shares of New MPAN Common (2% of the Primary Effective Date Shares); and (ii) New MPAN Warrants, which will enable such holders to purchase an additional 376,893 shares of New MPAN Common Stock (subject to the anti-dilution provisions contained in the New Warrant Agreement). The Pro Rata distribution to each creditor will depend upon the total amount of Allowed Claims, which will not be known until after the Plan's Effective Date. Accordingly, the timing and amount of distributions to each creditor cannot be determined at this time. Notwithstanding the foregoing, a holder of Class UP-2 Claims will receive no distribution on account of Securities Damages Claims, and further will receive no distribution unless such holder is a "Consenting Class UP-2 Holder", defined as a holder that (i) does not vote against the Plan, (ii) does not object to confirmation of the Plan, and (iii) does not object to, or otherwise challenge, the allowance or treatment of the MPAN Senior Credit Facility Claims under the Plan. With respect to each Consenting Class UP-2 Holder, the MPAN Senior Credit Facility Claim Holders will waive their contractual subordination rights against such holder. Class UP-2 is impaired, and holders of Allowed Class UP-2 Claims may vote on the Plan. UP-3 MPAN Punitive Damage Each holder of a Punitive Damage Claims, including any Claim against any of the MPAN Claim against the MPAN Debtors will receive no Debtors, whether secured distribution under the Plan on or unsecured, for any account of such Claim. fine, penalty, or forfeiture, or for Class UP-3 is impaired and multiple, exemplary, or may not vote on the Plan punitive damages, to as the holders of Class the extent that such UP-3 Claims are deemed to fine, forfeiture, or have rejected the Plan. damages are not compensation for the holder's actual pecuniary loss. UM-1 MHG General Unsecured Holders of Allowed Class UM-l Claims (including those Claims and Allowed Class UM-2 of most suppliers of Claims will receive Pro Rata goods and services to distributions from the "MHG the MHG Debtors, Unsecured Claims Distribution litigation claimants, Fund," consisting of the lesser of parties to executory (a) $7.5 million, or (b) such contracts and real and amount as may be necessary to fund personal property leases a 5% distribution. The Pro Rata that are rejected, and distribution to each creditor will undersecured creditors' depend upon the total amount of deficiency Claims). Allowed Claims, which amount will not be known until after the Plan's Effective Date. Accordingly, the timing and amount of distributions to each creditor cannot be determined at this time, but the Debtors anticipate that it will take a significant amount of time to complete all distributions. Class UM-1 is impaired, and holders of Allowed Class UM-1 Claims may vote on the Plan. UM-2 MHG Third Party Holders of Allowed Class UM-2 Subordinated Note Claims and Allowed Class UM-1 Claims, consisting of Claims will receive Pro Rata MHG Subordinated Note distributions from the MHG Claims that are not Unsecured Claims Distribution held by the MPAN Fund. The Pro Rata distribution Debtors. to each creditor will depend upon the total amount of Allowed Claims, which amount will not be known until after the Plan's Effective Date. Accordingly, the timing and amount of distributions to each creditor cannot be determined at this time, but the Debtors anticipate that it will take a significant amount of time to complete all distributions. Notwithstanding the foregoing, a holder of Class UM-2 Claims will receive no distribution on account of Securities Damages Claims, and further shall receive no distribution unless such holder is a "Consenting Class UM-2 Holder", defined as a holder that (i) does not vote against the Plan, (ii) does not object to confirmation of the Plan, and (iii) does not object to, or otherwise challenge, the allowance or treatment of the MHG Senior Credit Facility Claims under the Plan. With respect to each Consenting Class UM-2 Holder, the MHG Senior Credit Facility Claim Holders will waive their contractual subordination rights against such holder. Class UM-2 is impaired, and holders of Allowed Class UM-2 Claims may vote on the Plan. UM-3 MHG Punitive Damage Each holder of a Punitive Damage Claims, including any Claim against any of the MHG Claim against the MHG Debtors will receive no Debtors, whether secured distribution under the Plan on or unsecured, for any account of such Claim. fine, penalty, or forfeiture, or for Class UM-3 is impaired and multiple, exemplary, may not vote on the Plan or punitive damages, as the holders of Class UM-3 to the extent that such Claims are deemed to have fine, forfeiture, or rejected the Plan. damages are not compensation for the holder's actual pecuniary loss. UJ-1 Debtors Intercompany At the election of the Debtors Claims with respect to each Debtors Intercompany Claim that is reflected on the Debtors' books and records as of the Effective Date, the Debtors will eliminate such Debtors intercompany Claim on the Effective Date either through (i) the declaration of intercompany dividends and/or contributions to capital, or (ii) cancellation of such Debtors intercompany Claim. All other Debtors Intercompany Claims will be deemed to be released as of the Effective Date. Class UJ-1 consists of co-proponents of the Plan and thus consents to the Plan. Equity Interests Proposed Treatment And Class Descript1on Of Class Right To Vote On The Plan ----- -------------------- ------------------------- EP-1 Old MPAN Common Stock, Holders of Old MPAN Common Stock including MPAN's (including related options) and existing stockholders related Securities Damages and holders of options Claims will receive no and warrants to acquire consideration on account of MPAN stock, and all their Equity Interests and any Securities Damages Claims relating thereto. All Claims relating existing shares of Old MPAN thereto. Common Stock and options or warrants to acquire the same will be deemed cancelled as of the Petition Date. Class EP-l is impaired but may not vote because it is deemed to have rejected the Plan. EM-1 Old MHG Common Stock The holders of Class EM-1 Equity Interests will receive no consideration on account of such Equity Interests. Reorganized MPAN will receive the New MHG Common Stock on account of the MHG Senior Credit Facility Claim Holders' subordination of their rights to receive such stock. Class EM-1 consists of co-proponents of the Plan and thus consents to the Plan. EJ-1 Old Affiliates Equity The holders of Class EJ-1 Equity Interests will receive no consideration on account of such Equity Interests. The Reorganized Debtors will receive the New Affiliates Equity on account of the Senior Credit Facility Claim Holders' subordination of their rights to receive such equity. Class EJ-1 consists of co- proponents of the Plan and thus consents to the Plan. (Mariner Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900) MATLACK SYSTEMS: Board Approves Filing of Plan of Liquidation ------------------------------------------------------------- On December 21, 2001, the Board of Directors of Matlack Systems, Inc., a Delaware corporation unanimously approved the filing with the United States Bankruptcy Court for the District of Delaware of a Plan of Liquidation for the Company and all of its direct and indirect wholly owned subsidiaries. The Matlack Entities are the subjects of a voluntary petition seeking protection under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court, which are consolidated for the purpose of joint administration as Case No. 01-1114 (MFW). Execution of the Plan of Liquidation is subject to the approval of the Bankruptcy Court. Among other things, the Plan of Liquidation provides for (a) the classification of claims against the Matlack Entities, (b) the transfer of the assets, titles and rights of the Matlack Entities to a liquidating trust overseen by representatives of the committee of unsecured creditors of the Matlack Entities, (c) the valuation and liquidation of the Remaining Assets transferred to the Trust, (d) the payment of claims against the Matlack Entities in accordance with the classifications set forth in the Plan, to the extent of the Remaining Assets, (e) the substantive consolidation of the Matlack Entities and (f) the retention of jurisdiction by the Bankruptcy Court until the completion of the liquidation and distribution of the Remaining Assets. The Company anticipates that the aggregate value of the Remaining Assets following their liquidation will not be sufficient to permit any distribution to stockholders, and the Plan of Liquidation does not provide for any distribution to the Company's stockholders. Resignations of Directors and Officers On December 14, 2001, Michael B. Kinnard, the Company's President and Chief Executive Officer, and Patrick J. Bagley, its Vice President-Finance and a Director of the Company, resigned, effective as of the close of business on that date, from those positions and from any other positions held as directors or officers of any of the Company's subsidiaries. On December 21, 2001, the Board of Directors of the Company elected Stephen E. Judge, the Company's Vice President- Administration and Controller, as the Company's Chief Reorganization Officer and appointed Mr. Judge to fill the vacancy on the Board of Directors created by Mr. Bagley's resignation. Matlack, North America's No. 3 tank truck company, provides liquid and dry bulk transportation, primarily for the chemicals industry. The company filed for chapter 11 protection last March 29, 2001, in the U.S. Bankruptcy Court for the District of Delaware, and is represented by Richard Scott Cobb, Esq., at Klett Rooney Lieber & Schorling. Matlack's 10Q Report, filed with the Securities and Exchange Commission on March 31, 2001, lists assets of $81,160,000 and liabilities of $89,986,000. METALS USA: Court Okays Fulbright to Perform Legal Services ----------------------------------------------------------- Metals USA, Inc., and its debtor-affiliates obtained Court authority to employ and retain Fulbright & Jaworski LLP to represent them in these cases to perform legal services. Fulbright will render general bankruptcy representation to the Debtors, including: A. advising and consulting the Debtors about their powers and duties as a debtors-in-possession in the continued operation of their businesses and management of their properties; B. representing Debtors in cash collateral and debtor-in- possession financing negotiations and litigation; C. representing the Debtors in asset sales and other liquidity transactions; D. representing the Debtors concerning disposition of their executory contracts; E. assisting the Debtors in the development, negotiation, litigation and confirmation of a chapter 11 plan of reorganization and the preparation of a disclosure statement, concerning treatment of secured and unsecured claims including both trade debt and bond debt; F. preparing for the Debtors' necessary applications, motions, complaints, adversary proceedings, answers, orders, reports and other pleadings and legal documents, in connection with matters affecting the Debtors and their estates; G. taking actions as may be necessary to preserve and protect the Debtors' assets including the prosecution of avoidance actions and adversary proceedings on the Debtors' behalf, defense of actions commenced against the Debtors, negotiations concerning litigation in which the Debtors are involved, objection to claims filed against the Debtors' estate and estimation of claims against the estates; and H. performing other legal services that the Debtors may request in connection with these cases. (Metals USA Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392- 0900) METATEC INT'L: Will Undertake Further Restructuring in 2002 ----------------------------------------------------------- Metatec International, Inc., (Nasdaq:META) announced additional restructuring measures. "Our number one objective is to return Metatec to profitability," said Christopher A. Munro, president and chief executive officer. "Our 2001 strategy has been to refocus the business by transitioning it from primarily an optical disc manufacturer to a supply chain solutions company. The refocusing has helped us examine overall customer profitability and to identify some customers that have become unprofitable for us to serve. This was caused primarily by the prolonged economic downturn in the U.S. and Europe and the commoditization of the CD-ROM business overall. The restructuring measures we are announcing are intended to help increase our focus on selling higher margin supply chain services and further reduce expenses by reducing manufacturing capacity and overhead costs." Munro said that Metatec will reduce capacity at its Dublin CD- ROM manufacturing plant by 25 percent in January as the result of a top-down assessment of customers and their fit with Metatec's solutions-based business model going forward. He said that the capacity reduction will cause a corresponding workforce reduction of 20 percent, or approximately 80 people. He said the workforce reduction will take place during January 2002 and will reduce the company's expenses by more than $3 million annually. "Metatec is on track to becoming a leaner, more profitable company that can leverage its core competency in high quality optical disc services with information intensive supply chain solutions. We believe our company will be well positioned for the eventual economic upturn." Company Continues Turn-Around Plans for 2002 In addition to restructuring measures announced, Munro said Metatec will stay focused in 2002 on the following initiatives: -- Accelerating sales activities targeted at companies needing supply chain services in North America and Western Europe. -- Continuing strict cost management initiatives through a new Continuous Improvement Program. -- Carefully managing the CD-ROM and DVD manufacturing business during the economic slowdown. -- Completing negotiations for the disposal of the company's Silicon Valley plant, closed earlier this year. -- Concluding long-term financing to support the company's business strategy. Metatec International enables companies in the computer hardware, software, telecommunications and media/publishing markets to streamline the process of delivering products and information to market by providing technology driven supply chain solutions that increase efficiencies and reduce costs. Technologies include CD-ROM and DVD manufacturing services, a full range of supply chain management services and secure Internet-based software distribution services. Extensive real- time customer-accessible online reporting and tracking systems support all services. Metatec maintains operations in Ohio and The Netherlands. At September 30, 2001, the company reported that its liquidity is strained, with current liabilities exceeding current assets by about $16 million. More information about Metatec is available by visiting the company's web site at http://www.metatec.com http://www.metatec.nl and http://www.irbyctc.com MOLL INDUSTRIES: Closes Partial Tender Offer for 10-1/2% Notes -------------------------------------------------------------- Moll Industries, Inc., announced that it has closed the cash tender offer and consent solicitation regarding a portion of its outstanding $116.5 million principal amount of 10-1/2% Senior Subordinated Notes due 2008 and regarding certain amendments to the indenture governing the Notes, between the Company and the trustee for the Notes. The Offer and the Solicitation expired at 5:00 p.m., New York City time, on Friday, December 28, 2001. The terms of the Offer and the Solicitation are more fully described in the Offer to Purchase and Consent Solicitation, dated September 19, 2001, as amended. As of the expiration of the Offer and the Solicitation, the Company had received tenders with respect to $28,825,000 aggregate principal amount of Notes and had received consents (without a tender) with respect to $68,890,000 aggregate principal amount of Notes, representing the consents of the holders of at least a majority in aggregate principal amount of the outstanding Notes. The Company and the trustee for the Notes have executed and delivered a First Supplemental Indenture relating to the Indenture and effecting the Proposed Amendments. The Company has completed its debt restructuring which includes an amendment to its existing senior credit facility and a waiver of the default under that facility's fixed charge coverage covenant. The debt restructuring also includes a new mezzanine multi-draw debt term loan facility in the aggregate principal amount of $33,000,000. A portion of the proceeds of the new loan facility is being used to fund the Offer and the Solicitation. Banc of America Securities LLC acted as exclusive dealer manager and solicitation agent for the Offer and the Solicitation. D.F. King & Co., Inc. acted as information agent for the Offer and the Solicitation. State Street Bank and Trust Company acted as the depositary and tabulation agent for the Offer and the Solicitation. Questions concerning the Offer and the Solicitation may be directed to Banc of America Securities LLC, attention of Henk Bouhuys at 704/388-2842 or 888/292-0070. Located in Davie, FL, Moll Industries, Inc. (a Delaware corporation) is a leading full service manufacturer and designer of custom molded and assembled plastic components for a broad variety of customers and end markets throughout North America, Europe and Brazil. NATIONSRENT INC: Will Continue Use of Cash Management System ------------------------------------------------------------ NationsRent Inc., and its debtor-affiliates sought and obtained authority to continue using their Cash Management System, as that system may be modified pursuant to the requirements of the DIP Facility. Joseph I. Izhakoff, the Debtors' Vice-President and General Counsel, relates that prior to the commencement of these cases, in the ordinary course of businesses, the Debtors maintained approximately 66 bank accounts, including deposit accounts, operating accounts, merchant accounts and miscellaneous, special purpose accounts, out of which they managed cash receipts and disbursements. The Debtors believe that all of the Pre-petition Bank Accounts maintained in the United States are with financially stable banking institutions with deposit insurance. Mr. Izhakoff submits that the Debtors' Cash Management System is an integrated system that provides well-established mechanisms for the collection, concentration, management and disbursement of funds used in the Debtors' businesses. The principal components of the Cash Management System and the flow of funds through the Pre-petition Bank Accounts in that system are: A. Cash Collection and Concentration - All of the Debtors' cash receipts ultimately flow into the Concentration Account at Bank of America, and the funds for all disbursements originate from the Concentration Account. The Debtors' procedures for cash collections and concentration are: a. The Debtors maintain six lockbox accounts, five of which are maintained at Bank of America, while the other, a regional account, is maintained at Fifth Third Bank. Debtors also maintain various regional merchant accounts, depository accounts and local accounts. b. Funds collected in the Collection Accounts are deposited into or credited to the Concentration Account and used on a daily basis for disbursements. Any collected funds that remain in the Concentration Account after the funding of disbursements are swept nightly into overnight investments that are consistent with the investment guidelines. B. Disbursements - All of the Debtors' material disbursement accounts are zero balance accounts that are funded from the Concentration Account. The Debtors maintain all but four of the General Disbursement Accounts at Bank of America while the remaining accounts are maintained at Fleet Bank, First MA Bank, Bank One and Bank of Utah. Disbursements from the General Disbursement Accounts primarily include accounts payable, payroll and other operating expenses. Certain of the Debtors' other expenses are funded through certain of the Pre-petition Bank Accounts as follows: a. Purchase Cards Account: The debtors maintain an account at Bank of America used for payment of expenses incurred on purchase cards, which are issued to certain employees and used to charge specified business expenses. b. Health Benefits Imprest Account: The Debtors maintain an account at Citibank, N.A. that is used for payment of expenses incurred under the Debtors' health benefit plans, which are administered by Connecticut General Life Insurance Company, a subsidiary of CIGNA Corporation. c. Health Benefits Imprest Account(California): The Debtors maintain additional account at Citibank for use in connection with the Debtors' welfare benefit program in California, which is administered by CIGNA HealthCare of California and its agent, CGLIC. After each renewal under the Program, imprest balances are recalculated based on claims made during the prior policy year. C. Investments - The Debtors maintain five investment accounts that were used prior to the Petition Date for investments that are consistent with the investment guidelines, including: a. Securities Investment Accounts: The Debtors maintain two active securities investment accounts at Citibank that are managed by The Bear Stearns Companies. One of the accounts is used to hold investments in equity securities of third-party corporations, and the other is used to hold securities of the Debtors that have been repurchased by the Debtors. b. Other Investments Accounts: The Debtors also maintain three separate investment accounts a governmental funds account with Nations Funds at Bank of America; a money market funds account with Provident Institutional Funds at Provident Bank; and a money market funds account with Goldman Sachs Funds and Wachovia Bank, N.A. As an alternative to the overnight investments described above, the Debtors periodically deposited collected funds that remained in the Concentration Account after disbursements into these accounts for investment in certain short-term instruments. These accounts currently are inactive and carry zero balances. Daniel J. DeFranceschi, Esq., at Richards Layton & Finger, P.A. in Wilmington, Delaware, states that the Cash Management System has been utilized by the Debtors for the past three years and constitutes a customary and essential business practice. The widespread use of such a system is attributable to the numerous benefits it provides, including the ability to control and monitor corporate funds, invest idle cash, ensure cash availability and reduce administrative expenses by facilitating the movement of funds and the development of timely and accurate account balance and presentment information. These controls are especially important here, given the significant volume of cash transactions, aggregating approximately $1,250,000,000 managed through the Cash Management System annually. In light of the substantial size and complexity of the Debtors' operations, Mr. De Franceschi believes that a successful reorganization of the Debtors' businesses as well as the preservation and enhancement of the Debtors' values as going concerns, simply cannot be achieved if the Debtors' cash management procedures are substantially disrupted. Therefore, it is essential that the Debtors be permitted to continue to consolidate the management of their cash and transfer monies from entity to entity as needed, in the amounts necessary to continue the operation of their businesses and in accordance with their existing cash management procedures. Given the Debtors' corporate and financial structure and the number of affiliated entities participating in the Cash Management System, Mr. DeFranceschi contends that it would be unduly burdensome for the Debtors to establish an entirely new system of accounts and a new cash management and disbursement system for each separate legal entity. By contrast, the modifications to the Cash Management System that may be required in connection with the DIP Facility will not be difficult to implement and will not disrupt the movement of cash through the system. Under the circumstances, Mr. DeFranceschi asserts that maintenance of the Cash Management System, as modified pursuant to the requirements of the DIP Facility, is not only is essential, but also is in the best interests of the Debtors' respective estates. In addition, preserving a "business as usual" atmosphere and avoiding the unnecessary distractions that inevitably would be associated with any substantial disruption of the Cash Management System will facilitate the Debtors' stabilization of their post-petition businesses and assist the Debtors in their reorganization efforts. To avoid substantial disruption to the normal operation of their businesses and to preserve a "business as usual" atmosphere, the Court also permits the Debtors to continue to use Pre-petition Bank Accounts. Allowing these accounts to be maintained with the same account numbers will assist the Debtors in accomplishing a smooth transition to operations in chapter 11. To protect against the possible inadvertent payment of pre- petition claims, the Court advises all banks with which the Debtors hold Pre-petition Bank Accounts not to honor checks issued prior to the Petition Date, except as otherwise ordered by the Court. Mr. DeFranceschi assures the Court that the Debtors have the capacity to draw the necessary distinctions between pre and Post-petition obligations and payments without closing the Pre-petition Bank Accounts and opening new ones. To avoid disruption of the Cash Management System and unnecessary expense, the Court orders that the Debtors are not be required to include the legend "Debtor in Possession" or a "debtor in possession number" on any checks or other business forms. In the ordinary course of their businesses, the Debtors use a multitude of checks and other business forms. By virtue of the nature and scope of the Debtors' business operations and the large number of suppliers of goods and services with which the Debtors deal on a regular basis, Mr. DeFranceschi deems it important that the Debtors be permitted to continue to use their existing checks and other business forms without alteration or change. The Court also orders that the banks that participate in the Cash Management System be permitted to charge back returned items against amounts from time to time on deposit in the Pre- petition Bank Accounts, regardless of whether such amounts were deposited before or after the Petition Date and regardless of whether the returned items relate to pre- or post-petition items. In this regard, these banks are also be permitted to assess and deduct their normal servicing charges in the ordinary course of business. (NationsRent Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) OPTICARE: Seeks Okay of Proposals to Allow Debt Workout Deals ------------------------------------------------------------- OptiCare Health Systems, Inc. is directing a letter to its stockholders in which stockholders are advised that OptiCare's Board of Directors is soliciting stockholders written consent to the following proposals: 1. Approval of an amendment to OptiCare's certificate of incorporation to increase the number of authorized shares of common stock from 50,000,000 to 75,000,000 shares. 2. Approval of the creation of a new class of convertible preferred stock, to be designated as the Series B 12.5% Voting Cumulative Convertible Participating Preferred Stock, par value $.001 per share, as authorized by OptiCare's board of directors, consisting of up to 3,500,000 shares, each share of Series B Preferred Stock to be convertible into 10 shares of common stock at a price of $0.14 per share of common stock (subject to adjustment as provided in the Series B Preferred Stock), to have voting power corresponding to the shares of common stock into which it is convertible, and to be mandatorily redeemable on December 31, 2008. 3. Approval of the issuance and sale of approximately 2,678,571 shares of the Series B Preferred Stock to Palisade Concentrated Equity Partnership, L.P. for a cash payment of $3,750,000. Palisade is presently the holder of approximately 16% of OptiCare's outstanding common stock and would hold, upon consummation of the proposed issuance of the Series B Preferred Stock, approximately 69% of the outstanding voting stock (i.e., common stock and Series B Preferred Stock) of OptiCare. 4. Approval of an investment in OptiCare by Dean J. Yimoyines, M.D., chariman of the board and chief executive officer of Opticare, and/or members of his family, of $500,000 in cash, in the form of a purchase of 357,143 shares of Series B Preferred Stock, or a subordinated secured note issued by OptiCare due in 10 years, or a combination of Series B Preferred Stock, or a subordinated secured note issued by OptiCare due in 10 years, or a combination of Serires B Preferred Stock and a note. 5. Approval of the issuance to Palisade of approximately 285,714 additional shares of Series B Preferred Stock (plus additional shares of Series B Preferred Stock for accumulated interest) as payment in full of principal and interest owed on Palisade's $400,000 participation in a junior secured bridge loan to OptiCare by Alexander Enterprise Holdings Corp. 6. Approval of the issuance to Dr. Yimoyines of approximately 35,714 additional shares of Series B Preferred Stock (plus additional shares of Series B Preferred Stock for accumulated interest) as payment in full of principal and interest owed on Dr. Yimoyines' $50,000 participation in the Alexander bridge loan. 7. Approval of the issuance to Palisade and Dr. Yimoyines of warrants to purchase an aggregate of up to 17,500,000 shares of common stock, at an exercise price of $0.14 per share (subject to adjustment as provided in the warrant). The warrants shall expire ten years from the date of the issuance and shall be issued to Palisade and Dr. Yimoyines in consideration of Palisade and Dr. Yimoynes making subordinated secured loans to OptiCare of up to $13,900,000 of principal and agreeing to defer a portion of the interest accruing thereon, to the 10-year maturity date of the loans, which loans are to be evidenced by subordinated secured notes issued by OptiCare. The board of directors believes that it is in the best interests of OptiCare's stockholders to adopt all of the proposals to allow for the closing of a series of transactions that will restructure its debt and capital and satisfy its obligations to its senior secured lenders, which are now in default and immediately due and payable. The additional number of authorized shares of common stock and the creation of the Series B Preferred Stock will provide OptiCare with an adequate amount of capital stock to carry out the proposed transactions. In particular, the additional authorized shares are being sought to provide the availability of common stock to be issued upon the conversion of the Series B Preferred Stock and exercise of the Warrant. The closing of the transactions contemplated by the requested consent statement is contingent upon, among other things, the stockholders approval of all of the proposals. Before the proposals can become effective, the holders of a majority of OptiCare's outstanding common stock must give their written consent. PILLOWTEX CORP: Exclusive Period Extended to March 15 ----------------------------------------------------- Having reviewed the motion, Judge Robinson extends Pillowtex Corporation's exclusive period to file a reorganization plan through and including March 15, 2002 while the expiration of their exclusive solicitation period is moved to May 15, 2002. (Pillowtex Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) PILLOWTEX CORP: Files Reorganization Plan & Disclosure Statement ---------------------------------------------------------------- Pillowtex Corporation (OTC Bulletin Board: PTEXQ) and its United States subsidiaries filed their joint Plan of Reorganization and Disclosure Statement with the U.S. Bankruptcy Court in the District of Delaware on December 28, 2001, outlining the Company's plans to emerge from Chapter 11. Pillowtex filed a voluntary petition for reorganization on November 14, 2000. "The filing of our Plan of Reorganization represents a significant step toward successfully reorganizing our Company and is an important milestone in our financial restructuring," said Pillowtex President and Chief Operating Officer Tony Williams. "We are confident that the reorganization structure and program outlined in the Plan lay a strong foundation for our Company's future success." The Plan and Disclosure Statement outline the proposed structure and business operations for the reorganized Company, including reincorporating the parent company, Pillowtex Corporation, as a Delaware corporation. Under the proposed Plan, all shares of Pillowtex's currently issued Common Stock and Preferred Stock will be cancelled with current shareholders receiving no distribution. The Plan provides that the reorganized Company will issue new Common Stock to its secured creditors and a combination of new Common Stock and warrants to its unsecured creditors. In addition, the Plan as filed provides that the Company will emerge with approximately $200 million of debt, significantly less than the more than $1.1 billion of debt the Company had prior to its bankruptcy filing. "Our strategy going forward is to improve our position in the highly competitive industry of home fashions," Williams said. "Our business plan focuses on four broad initiatives -- branding and marketing, capacity rationalization, strategic sourcing and total quality management. Our objective is to be the undisputed leader in customer service." Part of the process Pillowtex undertook during its reorganization was to examine how it operates and to initiate changes designed to improve processes, improve the bottom line and enhance customer service. "Pillowtex employees across the country have performed for months under challenging circumstances," Williams said. "We are very pleased that our employees not only recognize the need for change if we are to achieve long term success, but have embraced the changes we have instituted and will continue to introduce in how we do business." Before the Plan can be presented to certain classes of the Company's creditors for acceptance, the Bankruptcy Court must determine whether the Disclosure Statement contains adequate information, as required by the Bankruptcy Code. "The proposed Plan, if confirmed by the Court, is intended to maximize the value of the Company's assets for the benefit of our creditors and position the new, restructured company to emerge in a stronger financial condition," Williams said. "The filing of the Plan is another step in our reorganization to enhance our ability to meet the needs of our customers and deliver high quality products and services, both now and in the future." The Company also filed a Form 8-K with the U.S. Securities and Exchange Commission on December 28, 2001. Copies of the Plan and the Disclosure Statement are exhibits to the Form 8-K and will be available on the Company's Web site at http://www.pillowtex.com Pillowtex Corporation, with corporate offices in Kannapolis, N.C., is one of America's leading producers of household textiles including towels, sheets, rugs, pillows, mattress pads, feather beds, comforters, and decorative bedroom and bath accessories. The Company's brands include Cannon, Fieldcrest, Royal Velvet, Charisma and private labels. POLYMER GROUP: Sr. Bank Lenders Agree to Forbear Until March 29 --------------------------------------------------------------- Polymer Group, Inc. (NYSE: PGI) announced that the waiver of covenant default under the Company's senior credit facility expired on December 29, 2001, in accordance with its terms. Consequently, the Company is currently in default under its senior credit facility as a result of the Company's noncompliance with formula-based financial covenants and has entered into a forbearance agreement with its senior bank lenders. The Company remains current in its payment obligations under the senior credit facility. The Company also announced that the senior bank lenders have issued a notice to the trustee under the Company's 9% Senior Subordinated Notes due 2007 exercising their right to block the Company's interest payment of $17.8 million scheduled to be made on January 2, 2002. The payment blockage notice is not an acceleration of the maturity of the Company's debt obligations under the senior credit facilities or the 9% Senior Subordinated Notes. A failure by the Company to pay interest on the outstanding Senior Subordinated Notes when due, which continues for 30 days or more (whether or not prohibited by the Company's senior bank lenders), would constitute an event of default under such Senior Subordinated Notes. The Company also announced that PGI's senior bank lenders have agreed to a forbearance period during which they will not exercise certain remedies available to them as a result of the covenant default under the senior credit facility. The forbearance period, which is scheduled to end on March 29, 2002, could end sooner upon the occurrence of certain events, such as the exercise of any remedies by the holders of the Senior Subordinated Notes, or in the event the Company fails to complete certain actions over the course of the next month leading to a financial restructuring. The Company's senior bank lenders have also prevented the Company from making any additional borrowings in excess of the amounts currently outstanding under the revolving credit portion of the senior credit facility. The Company currently has sufficient liquidity to meet its current obligations and holds adequate cash and short-term investments to continue to operate its business in the normal course. The Company anticipates maintaining existing payment terms and remaining current with all of its suppliers and other vendors. As of December 29, 2001, the Company had available cash and short-term investments in excess of $45 million. The Company is also continuing to explore various financial restructuring alternatives with third parties and has retained the investment banking firm of Dresdner Kleinwort Wasserstein to assist in its efforts. Polymer Group, Inc., the world's third largest producer of nonwovens, is a global, technology-driven developer, producer and marketer of engineered materials. With the broadest range of process technologies in the nonwovens industry, PGI is a global supplier to leading consumer and industrial product manufacturers. The Company employs approximately 4,000 people and operates 25 manufacturing facilities throughout the world. Polymer Group, Inc. is the exclusive manufacturer of Miratec fabrics, produced using the Company's proprietary advanced APEX laser and fabric forming technologies. The Company believes that Miratec has the potential to replace traditionally woven and knit textiles in a wide range of applications. APEX and Miratec are registered trademarks of Polymer Group, Inc. PROXITY DIGITAL: Bankruptcy Filing Likely to Sell CSA for $2.5MM ---------------------------------------------------------------- Billy Robinson, Chairman of Proxity Digital Networks, Inc. (OTC Pink Sheets: PDNW), announced that PDNW entered into an agreement to reorganize and sell Computer Support Associates, Inc (CSA) for $2.5 million. Sectec, Inc. security software and VPN Software Company has agreed to purchase CSA under the following terms. CSA must be placed in Chapter 11 and the bankruptcy court must approve a reorganization plan that settles all claims with the creditors and allows Sectec and PDNW to share revenues of a net of $2.5 million to PDNW. Sectec will immediately take control of CSA and provide funding to complete the reorganization business plan. This transaction allows PDNW to shed approximately $1,600,000.00 (one million six hundred thousand dollars) in secured and unsecured debt that was assumed as a result of the transaction, and to free up future funding for new acquisitions and operating capital. In addition to the purchase of CSA, PDNW has decided to invest an addition $750,000 in Setec through a stock exchange between the two companies. "Robert Dunlap, President of Sectec stated the purchase of CSA and the investment by PDNW in the company gives a unique working relationship between the two companies. The earnings potential under the proposed agreement could be very substantial." About the transaction, Robinson commented, "Selling CSA frees us to acquire companies which are more in line with our core business goals. After we had been in CSA as the operator for several months, it became readily apparent that CSA's core business would grow in a different direction and not complement Proxity's current direction..." CSA's newly reappointed President Steve Hamilton commented, "That in light of the separation of the two companies, CSA and PDNW will still market the $380,000,000 (Three Hundred and Eighty Million Dollar), DSL1 government contract that CSA holds and will continue to work together on future projects." Proxity Digital Networks, Inc., (OTC PINKSHEETS: PDNW) is a New Orleans based integrated entertainment and technology company. PDNW's recent acquisitions now include Proxity, Inc., ( http://www.proxity.com/) a leading global provider of end-to- end online solutions for the small-to-midsize e-business market; Proxity is headquartered in Santa Monica, CA. PDNW also has acquired Trivia Group, Inc. owner of http://www.triviaspot.com/ and http://www.funtrivia.com/and Computer Support Associates, Inc. ( http://www.csa-solutions.com/) in New Orleans and dotNow.com, Inc. ( http://www.dotnow.com/) the nations 2nd largest free ISP based in Des Moines, Iowa. dotnow.com, Inc. has recently entered into a letter of intent to merge with Neighborhood Access Corp owner of http://www.goez.net PRYOR/ETRAIN: Wants Plan Filing Exclusivity Extended to Jan. 21 --------------------------------------------------------------- Pryor/eTrain Holdings. L.L.C. asks the U.S. Bankruptcy Court for the District of Delaware to extend its Exclusive Periods during which to file a chapter 11 plan and to solicit acceptances of that plan through January 21, 2002 and March 22, 2002, respectively. The Debtors say that they need more time to complete negotiations with the Committee which "may involve a lawsuit by the present owners against the former owners." Thus, the extension of exclusive periods is requested to allow the Debtors an opportunity to complete negotiations and to keep all options open for the conclusion of this case. Pryor/eTrain Holdings. L.L.C. filed for chapter 11 protection on July 25, 2001 in the U.S. Bankruptcy Court for the District of Delaware. Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl, et al represents the Debtors in their restructuring effort. QUALITY STORES: Tractor Supply Pitches Best Bid for 25 Stores ------------------------------------------------------------- Tractor Supply Company (NASDAQ: TSCO), the nation's largest retail farm and ranch store chain, announced that its recently formed Joint Venture with Great American Group, Gordon Brothers Retail Partners, LLC and DJM Asset Management LLC was the successful bidder at auction for the assets of Quality Stores, Inc., a debtor and debtor in possession under Chapter 11 of the United States Bankruptcy Code. The bid, which has been approved by the United States Bankruptcy Court for the Western District of Michigan, provides for the Joint Venture to act as exclusive agent for the disposition of substantially all of the Quality Stores, Inc. assets located in New York, Pennsylvania, Virginia, Maryland, West Virginia, Delaware, Kentucky, Ohio, Indiana and Michigan. Financial terms of this agreement were not disclosed. Under its agreement with the other Joint Venture partners, Tractor Supply Company has agreed to purchase the real estate assets for approximately 25 stores, to assume the lease rights for approximately 60 additional stores and to purchase the related equipment, furniture and fixtures. After a complete liquidation of the existing inventory by other members of the joint venture, Tractor Supply expects to reopen approximately 85 stores in the Tractor Supply format by the middle of 2002. Joe Scarlett, Tractor Supply Company Chief Executive Officer, commented, "The addition of approximately 85 stores to our 2002 new store plan represents a significant store expansion for Tractor Supply Company. Specifically, we expect to open a total of over 100 stores next year, further building on our proven business strategy. This asset purchase will expand our geographic coverage, increase our market share, leverage our general and administrative expenses and improve overall efficiency while delivering a differentiated merchandise assortment to our new customers." Mr. Scarlett concluded, "We have been impressed with the commitment of Quality's knowledgeable store managers and sales associates and the historically strong support from their customers who embrace the rural lifestyle. We're looking forward to building a strong partnership with a significant number of Quality employees to help us deliver the finest possible shopping experience for our customers." At December 31, 2001, Tractor Supply Company operated 323 stores in 28 states, supplying the daily farm and ranch maintenance needs of its target customers: hobby, part-time and full-time farmers and ranchers, as well as suburban customers, contractors and tradesmen. The Company's stores are located in rural communities and in the outlying areas of large cities where the rural lifestyle is a significant factor in the local economy. The Company offers a comprehensive selection of merchandise including farm maintenance products, animal and pet products, general maintenance products, lawn and garden products, light truck equipment, and work clothing. SOFTWARE LOGISTICS: Inks Pact to Sell All Assets to Zomax Inc. -------------------------------------------------------------- Zomax Incorporated (Nasdaq: ZOMX) announced the signing of a Letter of Intent to purchase substantially all the assets of Software Logistics Corporation, dba iLogistix. iLogistix provides supply chain services to leading technology companies, including procurement, inventory management, assembly, fulfillment, e-commerce, and distribution services. iLogistix has operating facilities in the United States, The Netherlands, Singapore, Taiwan, Mexico, and Brazil. iLogistix is currently operating under the protective provisions of Chapter 11 of the U.S. Bankruptcy Code while it pursues the sale of its business. Under the Letter of Intent with the Trustee of the Bankruptcy Court, Zomax will, subject to approval of the Bankruptcy Court, become the leading bidder and will attempt to agree to a definitive asset purchase agreement with the Trustee by January 11, 2002. The purchase price agreed to be paid by Zomax will be based primarily on iLogistix's working capital assets as of the closing date. If a definitive agreement is signed, an auction process will be instituted by the Trustee in the third week of January, 2002. Under this process, other suitors may submit bids. Zomax may, but is not obligated to, participate in the additional bidding rounds. The Trustee, in consultation with the secured lenders, will determine the winning bidder. There is no guarantee that Zomax will be able to negotiate a definitive agreement for the purchase of the assets of iLogistix or that, if a definitive agreement is signed, Zomax will be the winning bidder. Zomax is a leading international outsource provider of process management services. The Company's fully integrated services include "front-end" E-commerce support, call center and customer support solutions; DVD authoring services; CD and DVD mastering; CD and DVD replication; supply chain and inventory management; graphic design; print management; assembly; packaging; warehousing; distribution and fulfillment; and RMA processing. The Company's Common Stock is traded on the Nasdaq National Market under the symbol "ZOMX." SUN HEALTHCARE: Intends to Reject Tallahasee Office Space Lease --------------------------------------------------------------- Due to the restructuring and consolidation of certain of their operations, Sun Healthcare Group, Inc., and its debtor- affiliates no longer require certain office space located in the Highpoint Center Building, 106 East College Avenue, Suite 700, Tallahassee, Florida that they leased from Tallahassee Highpoint Partners, Ltd. According to Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, the Debtors have reviewed and analyzed the lease to determine its respective economic value and marketability in the perspective of the Debtors' reorganization. But the Debtors are convinced that the lease does not and will not contribute value to the Debtors' estates, Mr. Silberglied relates, and the Debtors have thus determined that rejection of the lease is in the best interest of their estates. As a result of the rejection of the lease, the Debtors' estates will save approximately $1,450,000 in future rent obligations, Mr. Silberglied tells Judge Walrath. Absent mitigation, Mr. Silberglied estimates lease rejection damages at $253,652. The Debtors also request that the rejection of the lease be effective as of December 31, 2001. Mr. Silberglied assures Judge Walrath that the leased premises will be vacated, swept clean, and the keys returned to the lessor by December 31, 2001. Therefore, the Debtors ask the Court to authorize and approve their rejection of the lease. (Sun Healthcare Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) TELEPANEL SYSTEMS: Q3 Balance Sheet is Upside-Down by CDN$10MM -------------------------------------------------------------- Telepanel Systems Inc. (TSE:TLS and OTC:TLSXF), a world leader in electronic shelf label systems for retail stores, announced financial results for the third quarter ended October 31, 2001 (all results are stated in Canadian Dollars). For the nine months ended October 31, 2001, revenue remained fairly consistent at $2,318,759, as compared to $2,376,285 over the same period last year, while the contribution from sales increased to $948,653 from $622,628. For the nine month period ended October 31, 2001, the loss before amortization, interest and under noted items decreased to $1,488,962 from $3,048,950 for the comparative period last year and decreased to $278,105 from $1,134,869 for the three-month period ended October 31, 2001 and 2000. The lower loss and the increased contribution from sales reflects the proactive undertaking to streamline and make the organization more efficient, as well as a focus on higher margin products. The loss for the nine-month period ended October 31, 2001, was $4,356,402 as compared to a loss of $4,616,116 for the corresponding period in 2000. The decrease in operating costs was largely offset by an increase in non-cash amortization and interest costs and the restructuring provision recorded last quarter ended July 31, 2001. "The reduction in our loss before non-cash items for the three- month period has decreased by over $825,000 and while not fully attributable to the action we took to restructure the company, these results demonstrate our focus to bring expenditures in line with our current revenues. Management execution of our plan to increase sales revenues while decreasing operating expenses is key to capitalizing on the emergence of the ESL marketplace," stated Garry Wallace, President and CEO of Telepanel Systems Inc. Mr. Wallace added, "We continue to focus our resources on supporting IBM on closing large-scale rollouts, while continuing to provide support for current customers. The level of interest we are receiving from top-tier retailers is increasing as we add value to the business case of ESLs through demonstrating reduced operating costs, facilitating Revenue Management systems and by illustrating the inherent benefits of the system to promote programs, such as loyalty shopping. Innovative and progressive retailers are beginning to realize the long potential of integrating ESL solutions into their stores." Telepanel is a leader in developing wireless electronic shelf labelling systems for retail stores. Telepanel ESLs are placed on the edge of store shelves to show a product's price and other information. Prices are changed by a radio communications link from the store's product database, to provide rapid, accurate pricing updates. Telepanel's systems are integrated with the leading 2.4 GHz RF LANs which allows retailers to take advantage of their investment in IEEE-standard in-store RF networks and extend their use to electronic shelf labels. Telepanel wireless ESLs are installed throughout the United States, Canada, and Europe, with such premier supermarket chains as Adam's Super Food Stores, A & P, Stop & Shop, Loblaws, Big Y, Reasor's, Doll's, Brown's, Stew Leonard's, Grand Union, Wakefern, Berks, Ellington, Port Richmond, Champion, Leclerc, Intermarche, SPAR, and Super U, and at Universal Studios, Hollywood. At the end of the third quarter, Telepanel Systems balance sheet shows a total stockholders' equity deficit standing at over $10 million. TOWER AUTOMOTIVE: Restructuring Charges Reach $289 Million in Q4 ---------------------------------------------------------------- Tower Automotive, Inc. (NYSE:TWR) announced that it will be taking restructuring and impairment charges totaling $289 million in the fourth quarter ending December 31, 2001. Of this amount, $277 million relates to non-cash charges associated with goodwill and other asset impairments. The company expects that the cash charges recorded will be recovered with operating savings by the end of its 2002 fiscal year. A Form 8-K has been filed Friday last week reflecting this announcement. The charges being announced are in addition to those associated with the closure of the company's Sebewaing facility, which was announced in October 2001. The first portion of the restructuring charge relates to consolidation of technical activities and a reduction of other salaried colleagues pertaining to a reorganization of the company's U.S. and Canada operations. The reduction affects 215 engineering, finance, information technology and human resource colleagues in the company's technical and administrative centers in Novi, Rochester Hills, and Grand Rapids, Mich.; Milwaukee, Wis.; and its U.S. and Canada manufacturing locations. This portion of the restructuring will result in a charge of $17 million, the cash portion of which is $9.8 million. The reduction in the salaried colleague workforce should be completed by third quarter 2002. The second portion of the restructuring charge will be approximately $69 million, of which only $2.4 million is cash, related to the relocation of some component manufacturing from the company's Milwaukee Press Operations to other Tower locations. The company also will record non-cash charges of approximately $203 million related to the impairment of goodwill and underutilized assets at certain business locations, and the carrying value of an under-performing investment. In addition to the reorganization and realignment actions noted above, early in December Tower Automotive informed the unions representing its Milwaukee Press Operations colleagues that the site's management team will recommend the discontinuance of all stamping and ancillary processes currently performed at the facility and the relocation of that work to other Tower Automotive plants or Tier II suppliers. Tower Automotive is in discussions with the leadership of these unions related to this recommendation, and expects a decision early in first quarter 2002. Approximately 40 salaried colleagues and 450 hourly colleagues would be affected by a closure of the Milwaukee Press Operations, with anticipated cash closure costs of $10 million to $20 million and additional impairment charges of $50 million to $60 million. The company intends to continue the assembly of frames for the Dodge Ram and Ford Ranger trucks at its Milwaukee facilities. Tower Automotive, Inc., produces a broad range of assemblies and modules for vehicle structures and suspension systems for the automotive manufacturers, including Ford, DaimlerChrysler, GM, Honda, Toyota, Nissan, Fiat, Kia, Hyundai, BMW and Volkswagen. Products include body structural assemblies such as pillars and package trays, control arms, suspension links, engine cradles and full frame assemblies. The company is based in Grand Rapids, Michigan. At the end of the third quarter, Tower Automotive's working capital deficit stood at around $250 million. TRANSIT GROUP: Files for Chapter 11 Reorganization in Florida ------------------------------------------------------------- Transit Group, Inc., (OTC: TRGP) announced that to support its financial restructuring, the company and certain of its subsidiary companies have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Middle District of Florida. Excluded from the filing is the company's Land Transportation subsidiary, which governs relationships with trucking agents and brokers. "While Transit has sound operating businesses, the company has a capital structure which it cannot sustain," said Philip A. Belyew, President and CEO. "In addition our industry has been significantly impacted by the overall economic decline and escalating insurance premiums. While we have made good progress in reducing our overhead costs over the past year, we have determined the best means to secure a strong future for Transit is through a Chapter 11 financial reorganization." "We have the support of our lenders and their commitment to provide additional financial resources to meet our operating requirements through this process. We are taking steps to ensure that our employees, drivers, owner-operators, agents, customers and ongoing trade suppliers are not affected by our financial reorganization. We will continue to serve our customers as usual, while we complete the necessary changes to establish a sustainable capital structure. This action is a major step towards meeting this objective." The Court has been asked to approve First Day Order requests that authorize Transit to continue to manage its businesses on a normal course basis throughout the restructuring process. This includes authorizing the company to meet its ongoing financial obligations with respect to employee salaries and benefits, as well as payments to owner-operators, agents and third-party carriers, which make up the Transit workforce. Subject to receiving Court approval, Transit expects to enter into a debtor-in-possession (DIP) financing facility with GE Capital Corporation. In addition, the company has ongoing access to an operating line of credit supported by its senior working capital lender. "Through undertaking a financial reorganization and obtaining additional financing, we have strengthened our ability to deliver the high standard of service that Transit is known for. Our commitment is to ensure that our financial reorganization remains a largely invisible process to our customers and our workforce." Transit Group, Inc., headquartered in Atlanta, Georgia, is one of the largest truckload companies in the United States, with operations in 48 states. TRANSIT GROUP: Chapter 11 Case Summary -------------------------------------- Lead Debtor: Transit Group, Inc. 2859 Paces Ferry Road, Suite 1740 Atlanta, GA 30339 Bankruptcy Case No.: 01-12820 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Transit Group of Canada, Inc. 01-12822 Transit Group Transportation LLC 01-12821 Chapter 11 Petition Date: December 28, 2001 Court: Middle District of Florida Judge: Karen S. Jennemann Debtors' Counsel: R. Scott Shuker, Esq. Post Office Box 3353 Orlando, FL 32802 407-481-5808 TRICO STEEL: Court Extends Debtors' Exclusive Period to March 22 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware granted the request of Trico Steel Company, LLC to further extend its exclusive time to file a chapter 11 plan and likewise, to solicit acceptances of that plan. The Court, after finding that there is sufficient cause for the request, extended the Debtors' Exclusive Plan Filing Period through March 22, 2002 and the Exclusive Solicitation Period through May 24, 2002. Trico Steel Company, LLC filed for chapter 11 protection on March 27, 2001 in the U.S. Bankruptcy Court for the District of Delaware. Edward J. Kosmowski, Esq. and Michael R. Nestor, Esq. at Young Conaway Stargatt & Taylor represents the Trico Debtors in their restructuring effort. USG CORP: PI Committee Gets Court's Nod to Hire Professor Warren ---------------------------------------------------------------- Judge Newsome approves Professor Warren's retention by the Official Personal Injury Committee of USG Corporation nunc pro tunc to September 12, 2001, as requested, dismissing objections interposed by the U.S. Trustee. Judge Newsome makes it clear, however, that issues concerning the propriety, nature, and extent of services and any fees paid will be subject to the fee application process and may be revisited if any objection is raised. (USG Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) US INDUSTRIES: Expects to File Form 10-K by January 14, 2002 ------------------------------------------------------------ U.S. Industries, Inc., (NYSE:USI) announced that it has filed with the Securities and Exchange Commission pursuant to Rule 12b-25, extending the filing date of its Annual Report on Form 10-K to Monday, January 14, 2002. The Form 10-K is being delayed to allow the Company to update its financial statements to give effect to a Disposal Plan of five non-core businesses approved by the Company's Board of Directors. Following the completion of its Disposal Plan, U.S. Industries will own several major businesses selling branded bath and plumbing products, along with its consumer vacuum cleaner company. The Company's principal brands will include Jacuzzi, Zurn, Sundance Spas, Eljer, and Rainbow Vacuum Cleaners. In addition, the Company stated in its filing that it expects to report sales from continuing operations of $1.1 billion, compared to $1.7 billion in the prior year, excluding sales of $1.4 billion in both fiscal 2001 and 2000 related to the Non- Core Assets and a loss from continuing operations for fiscal 2001 of $3.1 million (excluding $176.7 million in after-tax non- recurring charges and credits, principally goodwill impairment charges) compared to income of $59.2 million (excluding $20.5 million of after-tax non-recurring charges.) Including non- recurring charges and credits, the loss from continuing operations was $179.8 million in fiscal 2001, compared to income of $38.7 million in fiscal 2000. The net loss, including non-recurring charges and credits, was $524.6 million for fiscal 2001, compared to net income of $35.6 million in fiscal 2000. Results for fiscal 2001 include the estimated net loss on the disposals and in 2001 and 2002 the related operating results of the discontinued operations of the Non-Core Assets included in the Disposal Plan. In connection with the Disposal Plan, the Company will report a non-cash charge of $232.6 million which is equal to the difference between the historical net carrying value and the estimated net realizable value of five of the Company's businesses, Ames True Temper, Selkirk, Lighting Corporation of America, Spear and Jackson PLC, and SiTeco Lighting (collectively the "Non-Core Assets"), and reflect the net assets of the Non-Core Assets as Net Assets Held for Disposition. The results of the Non-Core Assets will not be reflected in continuing operations of the Company. If the Non-Core Assets were included in continuing operations of the Company for the 2001 fiscal year, the Company would have had sales of $2.5 billion and income from continuing operations of $38.5 million excluding net non-recurring charges of $321.6 million, compared to sales of $3.1 billion and income from continuing operations of $114.2 million for fiscal 2000, excluding net non-recurring charges of $78.6 million. The Company also stated that it plans to issue its customary release with its annual earnings on Monday, January 14, 2002. As previously announced, the sale of the Ames True Temper business is expected to yield proceeds of approximately $165 million. The net proceeds from this transaction, which is now anticipated to close in early January, will be used, pursuant to the Waiver and Consent described below, to restore the Unfunded Commitment used to satisfy the remaining December 31, 2001 Credit Facility amortization of approximately $58.0 million. The Company has received a Waiver and Consent from the Lenders under the Credit Facility whereby a payment in the amount of the unpaid amortization will be made by a permanent reduction of the Unfunded Commitments under the Facility. Upon the closing of the Ames True Temper sale, the Company will be allowed to retain proceeds in the identical amount of the unpaid amortization paid for by the permanent reduction. The remaining net proceeds, subject to post-closing adjustments, will be used to permanently reduce outstanding debt under the Credit Facility and approximately $40.0 million will be deposited in a cash collateral account for the benefit of the holders of the Company's Senior Notes due 2003 and 2006. The Company continues to actively pursue its Disposal Plan and also intends to seek a refinancing of its bank debt. However, there can be no assurance when or whether the Company will consummate any of the proposed transactions. If the Company is unable to consummate asset disposals or refinancing in time to meet scheduled amortizations, the Company expects to seek a further restructuring of its credit facilities. While the Company believes it should be possible to implement such a further restructuring, there can be no assurance at this time that it will be able to do so. As a result of such uncertainties, the Company's independent auditor has advised the Company that it may be necessary to include a qualification in its report on the fiscal 2001 financial statements with respect to the ability of the Company to continue as a going concern. US MINERAL: Court Extends Plan Filing Exclusivity Until March 19 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended the Exclusive Periods for United States Mineral Products Company. The Debtor's Exclusive Plan Filing Period is extended through March 19, 2002 and the Exclusive Solicitation Period runs through May 19, 2002. United States Mineral Products Company filed for Chapter 11 Bankruptcy Petition in the U.S. Bankruptcy Court for the District of Delaware on June 23, 2001. Aaron A. Garber, David M. Fournier and David B. Stratton at Pepper Hamilton LLP represent the Debtor in its restructuring efforts. VENTAS: Wants More Investment from Shareholders & New Investors --------------------------------------------------------------- Ventas, Inc., is offering the opportunity to participate in a Distribution Reinvestment and Stock Purchase Plan available for existing stockholders to increase their holdings of Company common stock and for new investors to make an initial investment in the Company's common stock. Existing stockholders may elect to have cash distributions automatically invested in additional shares of common stock. Either an existing stockholder or a new investor may purchase shares of common stock on a monthly basis with optional cash payments at the market price of common stock less a discount ranging between 0% and 5%. All purchases under the Plan are subject to certain dollar limitations. The price of shares purchased with reinvested dividends will be based on whether shares are purchased directly from Ventas or through open market purchases. If shares are purchased directly from the Company, the price will be 100% (subject to change) of the average of the high and low sales prices of the shares of common stock on the New York Stock Exchange on the investment date. If the shares are purchased through open market purchases, the price will be the weighted average of the actual prices paid for all of the shares of common stock purchased with all participants' reinvested distributions for that particular distribution minus brokerage commissions. The offering relates to 25,000,000 shares of common stock, par value $0.25 per share, to be offered for purchase under the Plan. Ventas, Inc.'s common stock is listed on the New York Stock Exchange under the trading symbol "VTR". The closing price of the common stock on December 20, 2001 was $11.85 per share. Brokers and nominees may reinvest distributions and make optional cash payments on behalf of beneficial owners. Enrollment in the Plan is entirely voluntary and investors may terminate participation at any time. Under the Plan, Ventas will receive proceeds from the sale of newly issued common stock but will not receive any proceeds from open market sales. Ventas, Inc. is a real estate investment trust whose properties include 44 hospitals, 216 nursing facilities, and eight personal care facilities in 36 states. The company was formed in 1998 when health care concern Vencor split into an operating company (a new company, which took the Vencor named, now Kindred Healthcare) and a real estate investment trust to own the properties (Ventas, the original Vencor). Ventas owns 44 acute care hospitals, more than 200 skilled nursing facilities, and eight personal care facilities in 36 states. Nearly all of its properties are leased to Kindred, one of the US's largest providers of long-term health care. Kindred emerged from bankruptcy in 2001; Ventas agreed to a reorganization plan making it a 10%-owner of its primary tenant. WINSLOEW FURNITURE: S&P Takes Low-B and Junk Ratings Off Watch -------------------------------------------------------------- Standard & Poor's affirmed its single-'B' corporate credit, single-'B' senior secured, and triple-'C'-plus subordinated debt ratings on WinsLoew Furniture Inc., and removed them from CreditWatch, where they were placed on November 15, 2001. This rating action follows WinsLoew's announcement that its bankers have approved an amendment to its credit agreement relaxing its covenants. The outlook is negative. Total debt was $274.5 million as of September 28, 2001. The ratings reflect Birmingham, Al.-based WinsLoew Furniture Inc.'s highly leveraged capital structure and, as a manufacturer of casual furniture, its vulnerability to economic downturns. Somewhat mitigating these factors is the company's solid share in its key markets. WinsLoew is a designer, manufacturer, and distributor of casual indoor and outdoor furniture, seating products, and ready-to- assemble products for residential and commercial use. Standard & Poor's assigns a higher level of business risk to furniture manufacturers, since this industry is sensitive to economic downturns and real estate development cycles. WinsLoew's ability to provide timely delivery is a key competitive advantage. The company's dedication to customer service and build-to-order processes has enabled WinsLoew to take market share from its competitors over the last few years and to create strong relationships with its distributors and retailers. This is especially important at the higher-end price points where WinsLoew competes, since these products have short selling seasons and retailers want to minimize their inventory. Year-to-date operating results were below Standard & Poor's expectations. Pro forma for recent acquisitions, the firm's sales fell over 9% for the nine months ended September 28, 2001. The trend accelerated in the third quarter as casual furniture and contract and hospitality product line sales, excluding acquisitions, fell 24% and 10%, respectively, compared to the prior year. The firm's weak results stemmed from the economic slowdown, which was exacerbated by poor weather conditions. For the first nine months of fiscal 2001, EBITDA declined 6%, because of lower volumes and higher costs, as the company integrated its newly acquired businesses. For the past 12 months ended Sept. 28, 2001, the EBITDA coverage of interest expense was 1.7 times, down from 2.0x the year before. Total debt to EBITDA was 5.5x. Standard & Poor's expects that EBITDA coverage will be below 2.0x over the near term. Outlook: Negative The outlook reflects Standard & Poor's expectation that WinsLoew will maintain its solid market positions and credit measures appropriate for the rating over time. However, if financial ratios and flexibility further deteriorate, the ratings could be lowered. * DebtTraders' Real-Time Bond Pricing ------------------------------------- Issuer Coupon Maturity Bid - Ask Weekly change ------ ------ -------- --------- ------------- Crown Cork & Seal 7.125% due 2002 67 - 69 +7 Federal-Mogul 7.5% due 2004 12 - 14 0 Finova Group 7.5% due 2009 38 - 39 +2 Freeport-McMoran 7.5% due 2006 71 - 74 0 Global Crossing Hldgs 9.5% due 2009 8 - 10 -1 Globalstar 11.375% due 2004 7 - 9 -0.5 Levi Strauss & Co 11.625% due 2008 88 - 90 +1 Lucent Technologies 6.45% due 2029 66 - 68 -5 Polaroid Corporation 6.75% due 2002 9 - 11 0 Terra Industries 10.5% due 2005 77 - 80 0 Westpoint Stevens 7.875% due 2005 33 - 36 +1 Xerox Corporation 8.0% due 2027 55 - 57 0 Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. 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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. 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