/raid1/www/Hosts/bankrupt/TCR_Public/020111.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, January 11, 2002, Vol. 6, No. 8
Headlines
ANC RENTAL: United Services Wants to Continue Trademark Suit
AMERICAN BIOGENETICS: Delists from Nasdaq Effective January 8
AMES DEPT: Nassi-Run 54-Store GOB Sales Continuing to March 2
AVADO BRANDS: Makes Interest Payment on 11-3/4% Senior Sub Notes
BETHLEHEM STEEL: Asks Court to Appoint Joint Fee Review Panel
BUILDNET INC: Obtains Court Nod to Extend Exclusive Periods
CAPITOL COMMUNITIES: Set to Sell Residential Parcel for $4 Mill.
CHARTER COMMS: S&P Rates $600 Million Sr. Unsecured Notes at B+
CHIQUITA BRANDS: Court Approves Claims Settlement Procedures
COMDISCO: US Trustee Balks At Indemnification for Lazard Freres
DOW CORNING: Nearly 6 Years in Bankruptcy . . . and Counting
E.SPIRE COMMS: Gets Approval to Sell CyberGate to George Schmitt
EAGLE-PICHER: Completes Sale of Receivables for $43.5 Million
ELGAR HOLDINGS: Decline in Revenues Prompts Moody's Downgrades
ENRON CORP: U.S. Trustee Amends Creditors' Committee Membership
ENRON CORP: Fitch Places NNG's Junk Rating on Watch Positive
EXODUS COMMS: Committee Signs-Up Wachtell Lipton as Lead Counsel
FEDERAL-MOGUL: Moves to Appoint Future Claimants' Representative
FRUIT OF THE LOOM: Disclosure Statement Hearing Set for Feb. 1
GENESIS HEALTH: MultiCare Agrees Huntington Holds $4.5MM Claim
HARVARD INDUSTRIES: Will Delay Filing of Q4 Financial Results
HAYES LEMMERZ: US Trustee Appoints Official Creditors' Committee
HAYES LEMMERZ: Closes Sale of Non-Core Unit to Schedl Automotive
HUNTSMAN CORP: S&P Drops Ratings to D After Missed Payments
INTEGRATED HEALTH: Wants to Assume Amended GECFS Vehicle Lease
KSAT SATELLITE: Projects $9.7 Million Shareholders' Deficiency
LTV CORP: Judge Bodoh Extends Exclusive Period to September 9
LAIDLAW: Resolves Securities Fraud Litigation with Bondholders
LIGHT-SERVICOS: S&P Affirms Low-B's on Local & Foreign Currency
LODGIAN: Will Continue Existing Workers' Compensation Programs
LUMINANT WORLDWIDE: Closes Sale of Key Assets to Lante for $5.2M
MARINER POST-ACUTE: Health Debtors Get 9th Exclusivity Extension
MIDWAY AIRLINES: Wants Plan Filing Period Stretched to March 11
OWENS CORNING: Names John Libonati VP of Gov't & Public Affairs
PMP LTD: S&P Affirms Low-B Long Term Corporate Credit Rating
PARTS.COM: Dismisses Deloitte & Touche as Independent Auditors
PCSUPPORT.COM: Closes New Capital Infusion Via Private Placement
PILLOWTEX: Plan's Classification & Treatment of Creditor Claims
PRIMIX SOLUTIONS: Preparing to Sell N. Amer. Consulting Business
PSINET INC: Intends to Sell Certain Equipment to Japanese Unit
RAZORFISH: Taps Ladenburg Thalmann as Stock Placement Agent
SCAN-OPTICS: Completes Debt Workout Pact with Patriarch Partners
SHOWSCAN ENTERTAINMENT: Court Converts Case to Chapter 7
SUN COUNTRY: Involuntary Chapter 7 Case Summary
SUNBEAM CORP: Court Okays Solicitation Period Extension
TRISM INC: Committee Applies to Retain Spencer Fane as Counsel
USINTERNETWORKING: Chapter 11 Case Summary
VECTOUR: Wants Lease Decision Period Stretched through April 13
VENUS EXPLORATION: Begins Trading on OTCBB Under Symbol VENX
WSI INDUSTRIES: Receives Notice of Default from Bank Lender
WARNACO GROUP: Foreign Vendors Have Until Feb. 28 to File Claims
WASHINGTON GROUP: Anticipates Effective Date by Month-End
XOX CORPORATION: Inks Definite Deal to Merge with Tele Digital
* BOOK REVIEW: The Luckiest Guy in the World
*********
ANC RENTAL: United Services Wants to Continue Trademark Suit
------------------------------------------------------------
The United Services Automobile Association request the court for
an order allowing a relief from the automatic stay so it can
continue litigation against National Car Rental System Inc.,
pending in the United States District Court for the Western
District of Texas, San Antonio Division.
James E. Hugget, Esq., at Klehr, Harrison, Harvey, Branzburg &
Ellers LLP in Wilmington, Delaware, informs the Court that the
Auto Association filed suit on February 1, 2000 and a trial is
scheduled for January 22, 2002. The Auto Association filed the
district court action to seek injunctive relief and recovery of
compensatory and punitive damages for, among others, alleged
infringement of trademark and unfair competition by Debtors. Mr.
Hugget states that ANC Rental Corporation, and its debtor-
affiliates had earlier entered into a Primary Agreement with
Auto Association Alliance Services effective April 1, 1992
relating to the rental of passenger motor vehicles, but was not
renewed upon termination effective March 31, 1993. However,
Debtors allegedly continued representing the agreement to Auto
Association members even after that time.
Mr. Hugget urges the court to grant it relief from the automatic
stay, saying that the parties have completed all discovery and
pretrial motions and thus are ready to proceed trial. The
interests of judicial economy, meanwhile, dictate that the
district court litigation be allowed to proceed so the
bankruptcy court would be relieved of the need to hear and
determine a factually complex case. Mr. Hugget adds that
significant and ongoing hardship will continue to hound the Auto
Association if the district court case is not allowed to
proceed. Since Debtors allegedly still continues to infringe on
Auto Association's trademarks and engage in unfair competition,
the Auto Association will continue to lose revenue based on the
fact that its members may use National's rental car services
rather than that of a car rental agency that Auto Association
has a current agreement.
Mr. Hugget also believes that the Auto Association has a good
chance of winning its case in the district court and there
appears to be no significant prejudice to the Debtor by allowing
the District Court action to proceed.
Larry E. Forkner, Executive Assistant Litigation and Labor
Counsel of the Auto Association, submits that the claim of Auto
Association Alliance Services against Debtors for all pre-
petition and post-petition damages and interest amount to
approximately $17,000,000. The amount of such claim accruing on
a post-petition basis after November 13, 2001 is $16,783,623 and
continues to accrue on a weekly basis in the amount of $25,861.
Mr. Hugget asserts that such considerations coupled with the
mounting damages claim of the Auto Association confirm that any
prejudice caused on the Debtor with the lifting of the automatic
stay is negligible at best. (ANC Rental Bankruptcy News, Issue
No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900)
AMERICAN BIOGENETICS: Delists from Nasdaq Effective January 8
-------------------------------------------------------------
American Biogenetic Sciences, Inc., (Symbol: MABA) has decided
to voluntarily delist the Company's common stock from quotation
on the Nasdaq SmallCap Market. The voluntary delisting of the
stock was effective at the close of business on January 8, 2002.
The trading halt imposed by Nasdaq on the Company's common stock
since November 26, 2001 is no longer applicable.
ABS intends to have an application for quotation of its common
stock filed with the NASD's OTC Bulletin Board (OTCBB) by an
NASD member firm, as soon as possible. There can be no
assurance that a NASD member firm will file such application or
that the Company's common stock will be accepted for quotation
and trading on the OTCBB or the Pink Sheets.
American Biogenetic Sciences, Inc., based in Copiague, NY, is a
development stage company engaged in researching and developing
diagnostic tests for cardiopulmonary conditions and treatments
for neurological disorders, including epilepsy, migraine, mania,
and Alzheimer's disease. As a developer of biogenetic
technologies and compounds, ABS to date has been issued over 75
patents, both US and foreign, and there are over 100 patents
pending.
AMES DEPT: Nassi-Run 54-Store GOB Sales Continuing to March 2
-------------------------------------------------------------
Ames Department Stores, Inc., and its debtor-affiliates sought
and obtained approval of an Agency Agreement with The Nassi
Group, LLC, to conduct simultaneous "going out of business" or
"store closing" sales, in 54 of the Debtors' stores. The GOB
Sales start immediately and run through March 2, 2002.
Martin J. Bienenstock, Esq., at Weil Gotshal & Manges LLP in New
York, New York, says that the GOB sales are necessary since the
said stores are not sufficiently profitable or strategic and
moving the merchandise from these locations to other stores is
too expensive. Delays in their closing, meanwhile, will only
increase administrative rent claims. The Debtors have determined
that through Nassi, the sales proceeds for their inventory will
be maximized for the benefit of their estates and creditors,
while at the same time minimize the distraction from the overall
reorganization effort. The Debtors were also satisfied in the
manner in which Nassi conducted the prior store closing sales.
The salient terms of the Agency Agreement include:
A. Nassi's Responsibilities- Nassi shall plan the advertising,
marketing and sales promotion for the GOB sales, arrange
the stock in the stores for liquidation, determine and
effect price reductions to sell the merchandise in the time
allotted for the GOB sales, arrange for and supervise all
personnel and merchandise preparation, and conduct GOB
sales in a manner reasonable, designed to minimize the
expenses of the GOB sales to the Debtors.
B. Employee involvement and incentive program - Nassi shall use
the Debtors' store personnel, including store management,
to the extent it believes the same to be feasible, and
Nassi shall select and schedule the number and type of
employees required for the GOB sales. Nassi shall also
notify the Debtors as to which of their employees are no
longer required for the GOB sales, at which point the
employees will be provided by the Debtors with alternative
employment or be dismissed in accordance with their
applicable termination procedures. As an incentive to
ensure employee loyalty and hard work, Nassi will utilize a
performance-based bonus plan for the stores' managers,
their assistants and key personnel that will emphasize the
maximization of the liquidation process.
C. GOB sales are to be completed on or before March 2, 2002,
with the stores to be left in broom clean condition on or
before March 5, 2002.
D. Compensation - Nassi will receive a set fee of $1,080,000
($20,000 per store). In addition, if the gross proceeds
from the GOB sales divided by the retail value of the
store's inventory (gross return) exceeds 60%, Nassi shall
be entitled to an incentive fee equal to:
a. 30% of the dollar value of that portion of the gross
return that is greater than 60% but less than or
equal to 61%,
b. 40% of the dollar value of the gross return that is
greater than 61% but less than or equal to 62%,
c. 20% of the value of the gross return that is greater
than 62%.
In no event shall the total fee payable to Nassi exceed
$1,850,000.
E. Expenses - The Debtors shall be responsible for the payment
of payroll and retention bonuses for store employees' payroll
taxes and certain benefits; Nassi's cost for supervisor
fees and reasonable travel costs and agreed bonuses rates;
advertising and promotional costs including signage; risk
management; utilities and occupancy costs including rent
and real estate taxes. Nassi has guaranteed that the
expenses will not exceed $17,508,750 assuming that the
retail value of the merchandise is approximately
$102,650,000.
F. Additional Merchandise - In the event Nassi and the debtors
determined the GOB sale would benefit by additional
merchandise being supplied to the stores, Nassi shall be
entitled to 5% of the gross proceeds realized upon the sale
of such additional merchandise. Nassi shall also be
entitled to the remainder thereof.
G. Leased departments- The lessee of leased shoe departments
within the stores may participate in the GOB sales at the
option of the operator of such departments so long as they
follow the rules, procedures and discounts recommended and
implemented by Nassi. Applicable lease income for the
leased shoe department accrued during the GOB sale shall be
included in gross proceeds. Lease income is defined as the
net proceeds received or retained by the Debtors during the
GOB sale as determined in accordance with the respective
license agreement or other agreement between the Debtors
and their respective lessee.
H. Indemnifiation - Nassi and the Debtors agreed to indemnify,
defend and hold each other free and harmless from and
against any and all demands, claims, actions or causes of
action, assessments, losses, damages, liabilities,
obligations, cost and expenses of any kind whatsoever,
including, attorney's fees and costs, asserted against or
resulting from, a material breach of any term of condition
contained in the Agency Agreement or any willful of
intentional act of the other party.
The Debtors also ask that the Court waive compliance with any
state and local law, statutes, rules and ordinances restricting
store closing or similar sales and to also render unenforceable
any restrictions in the lease agreements governing the stores
premises regarding store closing or similar sales.
The Debtors have determined that conducting the GOB Sales and
ultimately closing the Stores is appropriate and consistent with
the future configuration of the Debtors' retail operations. The
Debtors believe the Agency Agreement provides several benefits
and will maximize the value of the Merchandise located at the
Stores, including:
A. Nassi is a nationally recognized professional liquidator
experienced in conducting sales of this nature. By
retaining Nassi to sell the inventory at the Stores through
the GOB Sales, the Debtors will be able to maximize sale
proceeds for the inventory while minimizing distraction of
the Debtors from their overall reorganization efforts.
B. The Agency Agreement represents a more cost-effective manner
for the Debtors to conduct the GOB Sales because Nassi has
extensive knowledge, expertise, and experience in
conducting store closing sales.
In view of the Debtors' recently completed selection process and
the similarity of the Agency Agreement to the Debtors' prior
agreements with Nassi, the Debtors determined that a third
selection process was neither necessary nor desirable. Moreover,
Mr. Bienenstock points out that as Nassi is in the process of
completing the liquidation of the Merchandise and Fixtures at 16
Stores, the Debtors are confident Nassi can best effectuate the
GOB Sales.
Because of the significant costs of continuing the unprofitable
operation of the Stores, Mr. Bienenstock contends that the GOB
Sales proposed to be conducted by the Debtors and/or Nassi
represent the most efficient and economical manner of disposing
of the Merchandise and Fixtures, while maximizing the value
thereof. The administration of the GOB Sales by Nassi pursuant
to the terms and conditions of the Agency Agreement will result
in the maximum return to creditors. (AMES Bankruptcy News, Issue
No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900)
AVADO BRANDS: Makes Interest Payment on 11-3/4% Senior Sub Notes
----------------------------------------------------------------
Avado Brands, Inc., (OTC Bulletin Board: AVDO) announced that it
has made its $5.9 million semi-annual interest payment to
holders of its 11-3/4% Senior Subordinated Notes. The interest
payment was originally due on December 15, 2001 and the Company
indicated at that time, the payment would be made within the 30
day, no-default period provided for under the terms of the
Indenture.
The Company's semi-annual interest payment to holders of its 9-
3/4% Senior Notes, originally due on December 1, 2001, was paid
on December 24, 2001, also within the 30 day, no-default period
provided for under the terms of that Indenture.
Avado Brands owns and operates three proprietary brands,
comprised of 14 Canyon Cafe restaurants, 131 Don Pablo's Mexican
Kitchens and 74 Hops Restaurant * Bar * Breweries.
* * *
As reported in the Sept. 11, 2001 edition of Troubled Company
Reporter, Standard & Poor's junked its ratings on Avado Brands
Inc. and subsidiary Avado Brands Financing I, maintaining a
negative outlook.
According to the report, the rating action was based on the
company's limited near-term financial flexibility. Also, the
international rating agency cited that although management had
attempted to improve the operating performance at Don Pablo's
and Canyon Caf, S&P saw little assurance that the company could
succeed in reviving its flagging restaurant operations. "The
company's viability is in jeopardy," S&P said, "reflecting
doubts that it will be able to generate sufficient cash flow to
meet its debt obligations over the next 12 months."
BETHLEHEM STEEL: Asks Court to Appoint Joint Fee Review Panel
-------------------------------------------------------------
The Court previously entered an order establishing procedures
for Interim Compensation and reimbursement of Chapter 11
Professionals and Committee Members. In this regard, Bethlehem
Steel Corporation, and its debtor-affiliates request the Court
to appoint a joint fee review committee. The members of the
Joint Fee Review Committee as proposed by the Debtors are:
(a) Tracy H. Davis, Esq., a representative of the Office of
the United States Trustee for this District or her
designee;
(b) Stephen J. Selden, Esq., Deputy General Counsel to the
Debtors or his designee; and
(c) a designated member of the Committee.
George A. Davis, Esq., at Weil, Gotshal & Manges LLP, in New
York, New York, tells the Court that the proposed members of the
Joint Fee Review Committee have experience in respect of
professional compensation and interest in the administration of
the chapter 11 cases.
Mr. Davis explains that the duties of the Joint Fee Review
Committee will be to review all billing statements and
applications filed by Covered Professionals for compliance with
the applicable provisions of the Bankruptcy Code, the Federal
Rules of Bankruptcy Procedure, the Local Rules of the United
States Bankruptcy Court for the Southern District of New York,
the Fee Guidelines promulgated by the Executive Office of the
United States Trustee, and any applicable orders of this Court
and make such reports to the Court as may be appropriate.
"If the Joint Fee Review Committee concludes that any billing
statement submitted or application filed by a Covered
Professional fails to comply with any of the Compensation
Requirements, the Joint Fee Review Committee shall contact such
Covered Professional in an effort to resolve any potential
objection," Mr. Davis says. But the parties are not able to
resolve any potential objection on a consensual basis, Mr. Davis
states that the Joint Fee Review Committee will file an
objection in conformity with the Interim Compensation Order or
other applicable orders of this Court setting forth with
particularity the manner in which it believes the statement or
application filed by the Covered Professional fails to comply
with the Compensation Requirements.
With respect to interim or final fee applications filed by
Covered Professionals, Mr. Davis continues, the Joint Fee Review
Committee may serve and file an appropriate statement with the
Court setting forth the results of its review of such
applications and whether the application filed by each Covered
Professional complies with the Compensation Requirements and any
other relevant comments that it deems necessary for
consideration of the application. (Bethlehem Bankruptcy News,
Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900)
BUILDNET INC: Obtains Court Nod to Extend Exclusive Periods
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of North
Carolina has extended Buildnet Inc.'s Exclusive Periods. The
Company's exclusive right to file a plan of reorganization
continued through January 31, 2002 and its exclusive period
during which to solicit acceptances of that Plan runs through
March 1, 2002.
BuildNet, which is engaged in the business of development and
sale of software primarily for the building industry, filed for
Chapter 11 protection on August 8, 2001 in the Middle District
of North Carolina. John A. Northen, Esq. and Richard M. Hutson,
II, Esq. represent the Debtors in their restructuring effort. As
of August 23, 2001, the company reported $35,998,691 in assets
and $79,614,191 in debt.
CAPITOL COMMUNITIES: Set to Sell Residential Parcel for $4 Mill.
----------------------------------------------------------------
Capitol Communities Corporation (OTC Bulletin Board: CPCY)
announced an Order has been entered by the Circuit Court of Cook
County Illinois approving a Settlement Agreement between
Capitol's wholly owned subsidiary, Capitol Development of
Arkansas, Inc., and Nathaniel S. Shapo, Director of Insurance of
the State of Illinois, as Liquidator of Resure Inc., a failed
syndicate of the Illinois Insurance Exchange. Under the terms
of the Agreement, the Liquidator for Resure agrees to accept
$3,850,000 on or before February 15, 2002 in full satisfaction
of all Resure claims against Capitol Development. The
Settlement Agreement was approved by the U.S. Bankruptcy Court
on December 20, 2001.
Capitol Development operates as a debtor-in-possession pursuant
to a voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code. The petition was filed in the
United States Bankruptcy Court for the Eastern District of
Arkansas, Little Rock Division on July 21, 2000.
To meet the terms of the Settlement Agreement, Capitol
Development has entered into an agreement to sell approximately
450 acres of land it owns in Maumelle, Arkansas to Maumelle
Valley, LLC, a Maumelle-based developer of residential housing,
for a purchase price of $4,000,000. This agreement replaces a
previously announced sale of 88 acres to Maumelle Valley, LLC.,
and is scheduled to close by February 7, 2002. The land is
zoned for single family residential development. $3,850,000,
representing net proceeds from the all cash sale after paying
commissions, legal fees, property taxes and closing costs, will
be paid over to the Liquidator under the Settlement Agreement.
The sale is subject to approval by the U.S. Bankruptcy Court
following notice to creditors and parties in interest of the
terms and provisions of the proposed sale. "Once Capitol
Development satisfies all terms and conditions of the Settlement
Agreement, we will modify our Plan and seek its confirmation at
the earliest possible date, or seek to voluntarily dismiss the
Chapter 11 proceedings entirely," said Michael G. Todd,
President of Capitol Communities Corporation.
Capitol Communities Corporation, through its subsidiary, owns
approximately 1,000 acres of residential property in the master
planned community of Maumelle, Arkansas. Maumelle is a planned
city with about 12,000 residents. It is located directly across
the Arkansas River from Little Rock. Maumelle contains a full
complement of industrial and commercial development, parks,
lakes, green belts, jogging trails, and other lifestyle
amenities.
CHARTER COMMS: S&P Rates $600 Million Sr. Unsecured Notes at B+
---------------------------------------------------------------
Standard & Poor's assigned its single-'B'-plus rating to co-
issuers Charter Communications Holdings LLC's and Charter
Communications Capital Corp.'s $600 million (aggregate proceeds)
senior unsecured notes. The notes, which will include a discount
tranche, will be offered under Rule 144A with registration
rights. Proceeds of the new issue will be used to repay, but
not permanently reduce, bank revolvers.
At the same time, Standard & Poor's affirmed its ratings on
parent cable television operator Charter Communications Inc. and
its subsidiaries. The outlook is stable.
The ratings on Charter reflect the stable cash flow and
relatively protected market position of its cable operations,
the benefits of Charter's large size and system clusters, solid
management record, and expected cash flow improvement from new
service offerings. Somewhat mitigating the company's favorable
business position is the challenge of deploying advanced
services in an industry where basic subscriber growth has
slowed, and concerns that expected improvement in aggressive
debt levels have not yet been realized. Standard & Poor's
imputation of financial flexibility and support from the
company's majority ownership by Microsoft co-founder Paul G.
Allen, who has invested about $6 billion in Charter, remains a
supportive rating factor.
Charter is one of the largest multiple system operators in the
U.S., with a subscriber base that has grown to about seven
million customers, including about 550,000 subscribers purchased
in mid-2001 from AT&T Corp. The company has aggressively rolled
out advanced services, with about 30% of customers taking a
digital tier at year-end 2001 and with video on demand available
to about two million homes. Deployment of high-speed Internet
access via cable modem is available to about 60% of the
subscriber base, and modem penetration of the basic subscriber
base is in the mid-teens percent area. While 2001 third quarter
revenues and cash flow were somewhat below guidance, revenue
growth was good with a solid EBITDA margin of 45%. These figures
reflect a basic subscriber growth rate that, while somewhat
lower than anticipated, was still better than the cable industry
as a whole, and the increasing penetration of new services. Debt
has grown to more than $15 billion as a result of the AT&T Corp.
system purchases, with debt to annualized cash flow quite
aggressive at more than 8 times.
Outlook: Stable
The debt-to-annualized EBITDA ratio for the quarter ended
September 30, 2001, exceeded Standard & Poor's upper guideline
of 7.9x. Accordingly, the company will need to demonstrate
affirmative actions to improve leverage in the near term to
maintain a financial profile consistent with the rating.
Rating Assigned
Charter Communications Holding LLC
Charter Communications Holdings Capital Corp. RATING
$600 million senior unsecured notes (Rule 144A) B+
Ratings Affirmed
Charter Communications Inc. RATING
Corporate credit rating BB
Senior unsecured debt B+
Charter Communications Holdings LLC
Corporate credit rating BB
Senior unsecured debt B+
Charter Communications Holdings Capital Corp.
Senior unsecured issues B+
CC VI Operating Co. LLC
Corporate credit rating BB
Senior secured bank loan BB
CC VIII Operating LLC
Corporate credit rating BB
Senior secured bank loan BB+
Charter Communications Operating LLC
Corporate credit rating BB
Senior secured bank loan BBB-
DebtTraders reports that Charter Comm Holdings LLC's 10.750%
bonds due 2009 (CHTR6) are currently trading slightly above par,
from 104.75 to 105.75. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=CHTR6
CHIQUITA BRANDS: Court Approves Claims Settlement Procedures
------------------------------------------------------------
Chiquita Brands International, Inc., sought and obtained the
Court's authority to settle claims and causes of action filed in
any judicial, administrative, arbitral or other action or
proceeding by:
(1) the Debtor against any Settling Parties or
(2) any of the Settling Parties against the Debtor as well as
any cross-claims and counter-claims asserted against the
Debtor by the Settling Parties (or against the Settling
Parties by the Debtor) in connection with such claims and
causes of action in accordance with the Omnibus Procedure
as:
(a) No settlement will be agreed to unless it is reasonable
in the judgment of the Debtor upon consideration of:
(i) the probability of success if the claim is
litigated or arbitrated,
(ii) the complexity, expense and likely duration of
any litigation or arbitration with respect to
the claim,
(iii) other factors relevant to assessing the wisdom
of the settlement, and
(iv) the fairness of the settlement vis-a-vis the
Debtor's estate, creditors and shareholders;
(b) No settlement will be effective unless it is executed
by the General Counsel of the Debtor, in the case of
litigated matters, or by another authorized
representative of the Debtor, in cases of non-litigated
matters;
(c) Subject to subparagraphs (a) through (b), with
respect to any Settled Amount that does not exceed
$100,000, the Debtor, in its discretion, may agree to
settle such claim or cause of action on any reasonable
terms, and may enter into, execute and consummate a
written agreement of settlement that will be binding on
it and its estate without notice by the Debtor or
further action by this Court;
(d) Subject to subparagraphs (a) through (b), with
respect to any Settled Amount that equals or exceeds
$100,000 but does not exceed $200,000, the Debtor, in
its discretion, may agree to settle such claim or cause
of action only if it provides written notice, via
facsimile transmission, to the Negative Notice Parties
of the terms of the settlement, and such terms are not
objected to in writing by any of the Negative Notice
Parties within 5 days after the date of transmittal of
such written notice; and in the absence of any such
objection, the Debtor may enter into, execute and
consummate a written agreement of settlement that will
be binding on it and its estate;
The Negative Notice Parties are:
United States Trustee
Neal J. Weill
2030 CBLD Center
36 East 7th Street
Cincinnati, Ohio 45202
Counsel to the Ad Hoc Committee of 7% Subordinated
Debenture Holders of Chiquita Brands
International, Inc.
Schulte, Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Attn: Jeffrey S. Sabin and Mark Allen Broude
Counsel to the Ad Hoc Committee of Senior Bondholders
of Chiquita Brands International, Inc.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attn: Alan W. Kornberg and Andrew N. Rosenberg
and
Stephen D. Lerner, Esq.
Squire Sanders & Dempsey
Suite 3500
312 Walnut Street
Cincinnati, Ohio 45202-4036
(e) If any of the Negative Notice Parties object to any
settlement within 5 days after the date of the Debtor's
transmittal of the notice of such proposed settlement,
and the Debtor, in its sole discretion, still desires
to enter into the proposed settlement with the Settling
Party, the execution of the settlement shall not
proceed except upon:
(i) resolution of the objection by the parties in
question or
(ii) further order of the Court after a hearing; and
(f) Any settlement that is not authorized pursuant to the
foregoing procedure, or pursuant to any other Order of
this Court, will be authorized only upon separate order
of this Court upon a motion of the Debtor served upon
the necessary parties-in-interest.
The Court further rules that for each De Minimis Claim, the
Settled Amount shall equal the dollar amount of the allowed
claim to which the Debtor and the applicable Settling Party
ultimately agree in resolving such De Minimis Claim.
Kim Martin Lewis, Esq., at Dinsmore & Shohl, in Cincinnati,
Ohio, informs the Court that the Debtor holds various claims and
causes of action against numerous third parties. Ms. Lewis
explains that if the Debtor is required to obtain prior court
approval to settle each claim, the Debtor will incur significant
costs for each settlement. Accordingly, the Debtor will likely
suffer the delays in obtaining Court approvals while complying
with the required notice periods and available hearing
schedules. "The Debtor will lose negotiating leverage in
resolving such claims as a result," Ms. Lewis states.
The Debtor contends that the Court's approval of the De Minimis
Claims Settlement Procedures will minimize their expenses and
maximize value for the creditors of their estates. (Chiquita
Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
COMDISCO: US Trustee Balks At Indemnification for Lazard Freres
---------------------------------------------------------------
The Official Committee of Unsecured Creditors of Comdisco Inc.,
notes that the United States Trustee does not challenge the
Committee's need for Lazard's services nor Lazard's expertise or
proposed compensation in this matter. The United States Trustee
objects only to the proposed indemnification provision in the
Lazard engagement letter, Ronald W. Hanson Esq., at Latham &
Watkins, in Chicago, Illinois, observes.
Mr. Hanson asserts that the Lazard engagement letter was heavily
negotiated and the indemnification provisions are customary and
usual terms of retention for financial advisors and investment
bankers both in and out of bankruptcy.
According to Mr. Hanson, the Lazard Indemnity itself has been
approved in numerous cases:
* Fruit of the Loom, Inc., order dated March 14, 2000
(Bankr. D. Del.);
* Washington Group International, Inc., order dated June
13, 2001 (Bankr. D. Nev.);
* Rhythms Netconnections, Inc., order dated October 18,
2001 (Bankr. S.D.N.Y.); and
* Heilig-Meyers Company, order dated November 14, 2000
(Bankr. N.D. Va.).
In fact, Mr. Hanson continues, this Court has approved a similar
indemnity in these cases. In August, Mr. Hanson recounts, the
Court approved the retention of Goldman Sachs on terms that
included an indemnity similar to the Lazard Indemnity.
"Clearly, the Lazard Indemnity is consistent with customary
practice of indemnifying financial advisors and investment
bankers," Mr. Hanson insists.
Thus, the Committee contends that their application should be
approved while the United States Trustee's objection should be
overruled.
Mr. Hanson reminds the Court that the United States Trustee
consented to the Goldman Sachs' indemnity earlier in this case.
According to Mr. Hanson, the United States Trustee also asserted
that the "special relationship of trust and reliance existing
between a committee and its legal and financial advisors
mitigates against" the approval of the Lazard Indemnity. "But
the United States Trustee does not explain how the 'special
relationship' between a committee and its professionals differs
from the debtor and its professionals," Mr. Hanson notes.
Furthermore, Mr. Hanson adds, the United States Trustee argues
that the Lazard Indemnity does not require any bankruptcy court
approval before the payment of any such indemnity. In response,
Mr. Hanson says, Lazard will agree to submit any request for
payment of indemnity to the bankruptcy court to ensure that such
indemnity is in fact due under the terms of the Lazard Indemnity
so long as these cases remain open. (Comdisco Bankruptcy News,
Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900)
DOW CORNING: Nearly 6 Years in Bankruptcy . . . and Counting
------------------------------------------------------------
"Recent events have caused [me] to believe that [my]
impartiality in this case might reasonably be questioned from
this point forward," the Honorable Arthur J. Spector says,
without providing any additional detail, in a Notice of Recusal
filed in Dow Corning Corporation's chapter 11 case. Judge
Spector advises that he is recusing himself from all matters
relating to Dow Corning's case filed on May 15, 1995.
Following Judge Spector's departure from the Dow Corning scene,
United States District Judge Denise Page Hood entered an order
withdrawing the reference of the Debtor's case to the bankruptcy
court and taking charge of any further proceedings at the
District Court level.
Rumor has it that the United States Court of Appeals for the
Sixth Circuit may release its decisions this month on the
various appeals that were filed by the Government and various
Claimants following confirmation of Dow Corning's Joint Plan of
Reorganization in November 1999. That Plan was accepted by 90-
some percent of Dow Corning's creditors, proposes to pay
unsecured creditors in full with interest, establishes a $3.2
billion settlement fund for tort claimants, and leaves Dow
Chemical and Corning's equity interests intact. Any decision by
the Sixth Circuit, of course, is subject to further appeal to
the U.S. Supreme Court. The conclusion of all possible appeals
is a condition to the Effective Date of the Plan.
E.SPIRE COMMS: Gets Approval to Sell CyberGate to George Schmitt
----------------------------------------------------------------
e.spire Communications, Inc. (OTC Pinksheets: ESPIQ) announced
that the U.S. Bankruptcy Court for the District of Delaware
approved the sale of its Florida-based Internet subsidiary,
CyberGate, Inc., to George F. Schmitt for approximately $23
million.
As scheduled, opening bids were received yesterday morning at
the New York offices of Credit Suisse First Boston and the
auction was held at the law offices of Saul Ewing LLP in
Wilmington, DE in the afternoon. The Court approved the sale at
a hearing late yesterday afternoon.
According to the terms of the purchase agreement approved by the
Court, the sale will close on or about January 23, 2002, and
Schmitt will take full control of CyberGate at that time.
"e.spire is pleased to realize this sale at a time when we are
considering our exit strategy. We will use the funds both as
working capital and to permanently reduce the total amount of
our debtor-in-possession loan, taking us one step closer to
emerging from Chapter 11," said e.spire Chief Financial Officer
Bradley E. Sparks. "CyberGate has been an important asset for us
over the past few years, and we think this sale is a strategic
move that will benefit both companies."
"We plan to make operational changes at CyberGate, and we intend
to merge the company with similar businesses to build a larger
and stronger enterprise," said Schmitt.
"Tomas Mikaelsson will continue as CyberGate President and CEO,
and we will do everything possible to smooth the transition for
CyberGate employees," added Schmitt.
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'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
EAGLE-PICHER: Completes Sale of Receivables for $43.5 Million
-------------------------------------------------------------
Eagle-Picher Industries, Inc., a wholly-owned subsidiary of
Eagle-Picher Holdings, Inc., announced the completion of the
securitization of substantially all of its domestic accounts
receivable through a sale of the receivables to a GE Capital
sponsored commercial paper conduit. The initial proceeds of the
transaction were $47 million, of which $43.5 million was used to
repay Eagle-Picher's existing receivables-backed revolving loan
facility provided by conduits sponsored by ABN AMRO Bank B.V.
and PNC Bank, National Association. The balance is available
for general corporate purposes. Eagle-Picher expects that its
average liquidity will increase by approximately $10 million to
$15 million under the new facility. Although under U.S.
generally accepted accounting principles, this arrangement will
not appear on the balance sheet of Eagle-Picher, under the terms
of Eagle-Picher's senior secured credit facility it will be
included as debt for purposes of the covenant of total
indebtedness to earnings before interest, taxes, depreciation
and amortization.
Eagle-Picher, founded in 1843, is a diversified manufacturer of
industrial products for the automotive, defense, aerospace,
construction and other industrial markets worldwide. Eagle-
Picher operates more than 40 plants and has 5,300 employees in
the United States, Canada, Mexico, the United Kingdom, Germany
and Japan.
Eagle-Picher emerged from chapter 11 in 1996, escaping from
billions of dollars of asbestos-related liability after five
contentious years before the U.S. Bankruptcy Court for the
Southern District of Ohio. Stephen Karotkin, Esq., and Debra
Dandenau, Esq., at Weil, Gotshal & Manges LLP, represented
the company in that proceeding. Judge Perlman ultimately
convened a protracted estimation hearing to judicially determine
Eagle-Picher's asbestos-related liabilities at a whopping $2.5
billion -- way, way more than a few-hundred-million-dollar
estimate commercial trade creditors and equity advocated and $1
billion less than the $3.5 billion estimate for which the Tort
Claimants' Committee pushed. The Eagle-Picher Debtors plugged
that $2.5 billion number into a plan and prosecuted it to
confirmation in record speed. The Plan created a Sec. 524(g)
Trust for the benefit of the Tort Claimants which owned
virtually all of Reorganized Eagle-Picher's stock. The Trust
then sold its equity to a Dutch company for cash a few years
later.
ELGAR HOLDINGS: Decline in Revenues Prompts Moody's Downgrades
--------------------------------------------------------------
Moody's Investors Service lowered Elgar Holdings, Inc.'s
ratings. The company's ratings outlook remains negative while
there is approximately $104 million of debt securities affected.
Rating Actions From To
* $90 million 9-7/8% guaranteed senior Caa3 B2
notes, due 2008;
* $8.75 million guaranteed senior secured B3 B1
term loan facility, due 2003;
* $5.0 million guaranteed senior secured B3 B1
revolving credit facility, due 2003,
which had been fully drawn as of October;
* Senior implied rating lowered Caa2 B2
* Senior unsecured issuer rating Ca B3
Moddy's stated that "the ratings downgrade recognizes the
heightened risk to full principal recovery in light of the
continued deterioration in Elgar's revenues in FY2001Q3 to about
$12.9 million, or 24% lower than the comparable period one year
ago, and 16% lower than FY2001Q2, reflecting severely weakened
end use demand in its semiconductor test equipment and
telecommunications markets."
Moody's believes, that outstanding borrowings under the bank
credit facility would be fully collateralized based on a
stringent estimate of prospective accounts receivable and
inventory recoveries.
Elgar Holdings, Inc., a leader in the design and manufacture of
programmable power equipment and systems used to test electronic
equipment, is headquartered in San Diego, California.
ENRON CORP: U.S. Trustee Amends Creditors' Committee Membership
---------------------------------------------------------------
Credit Suisse First Boston has resigned from the Official
Committee of Unsecured Creditors in Enron Corporation's chapter
11 cases. Westdeutsche Landesbank Girozentrale (New York Branch)
now sits in its place. The 15 creditors appointed by the United
States Trustee for Region 2 pursuant to 11 U.S.C. Sec. 1102 to
serve as members of the Creditors' Committee are:
1. JP Morgan Chase & Co.
380 Madison Avenue
New York, New York 10017
Attention: Mr. Jeffrey Sell, Senior Credit Executive
(212) 622-4840
Telecopier (212) 622-4827
2. Citigroup/Citibank
250 West Street, 8th Floor
New York, New York 10013
Attention: Mr. Anthony Murphy, Director
(212) 723-3504
Telecopier (212) 723-3964
3. ABN AMRO Bank
10 East 53rd Street, 37th Floor
New York, New York 10022
Attention: Mr. William J. Fitzgerald, Senior VP
(212) 891-0623
Telecopier (212) 891-0650
or
Attention: Mr. Steven C. Wimpenny
(212) 891-0626
Telecopier (212) 891-0651
4. Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
Attention: Mr. Alan Sidrane, Senior Vice President
(212) 261-7000
Telecopier (212) 261-3259
5. Westdeutsche Landesbank Girozentrale (New York Branch)
1211 Avenue of the Americas
New York, New York 10036
Attention: Mr. Michael F. McWalters, Senior Executive
(212) 852-6147
Telecopier (212) 852-6148
6. National City Bank as Indenture Trustee
629 Euclid Avenue, Suite 635
Cleveland, Ohio 44144
Attention: Ms. Elizabeth A. Thuning, Assistant VP
(216) 222-2496
Telecopier (216) 222-9326
7. Silvercreek Management, Inc.
1670 Bay View Avenue, Suite 308
Toronto, Ontario M4G 3C2
Attention: Mr. Robert Kittel, Vice President
(416) 485-7797
Telecopier (416) 485-0640
8. Oaktree Capital Management, LLC
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90017
Attention: Mr. Kenneth Liang, Managing Director
(213) 830-6422
Telecopier (213) 830-8522
9. Wells Fargo Bank Minnesota, N.A., as Indenture Trustee
Sixth Street & Marquette Avenue
Minneapolis, MN 55479
Attention: Ms. Julie J. Becker, Vice President
(612) 316-4772
Telecopier (612) 667-9825
10. The Bank of New York, as Indenture Trustee
5 Penn Plaza, 13th Floor
New York, New York 10001
Attention: Mr. John Stevenson
(212) 896-7255
Telecopier (212) 328-7302
11. St. Paul Fire and Marine Insurance Company
5801 Centennial Way
Baltimore, MD 21209-3653
Attention: Deborah Feurer, Esq.
(410) 205-5978
Telecopier (410) 205-0605
12. National Energy Group, Inc.
4925 Greenville Avenue, Suite 1400
Dallas, Texas 75206
Attention: Mr. Philip D. Devlin, VP and General Counsel
(214) 692-9211
Telecopier (214) 692-5055
13. Duke Energy Trading and Marketing, LLC
5400 Westheimer Court
Houston, Texas 77056
Attention: Mr. George V. Brown, Chief Credit Officer
(704) 373-3512
Telecopier (704) 627-5122
14. Mr. Michael P. Moran, individually & as representative
174 Wedgewood Drive West
Montgomery, Texas 77356
(936) 597-7002
Telecopier (936) 597-7002 (call first)
15. The Williams Companies, Inc.
One Williams Center
Tulsa, OK 74172
Attention: Mr. William G. von Glahn
(918) 573-2480
Telecopier (918) 573-5942
Milbank, Tweed, Hadley & McCloy LLP, serves as counsel to the
Committee. Luc A. Despins, Esq., leads the engagement from
Milbank's New York offices. (Enron Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ENRON CORP: Fitch Places NNG's Junk Rating on Watch Positive
------------------------------------------------------------
The Rating Watch status for Northern Natural Gas Co.'s (NNG)
'CC' rated senior unsecured debt has been changed to Positive
from Negative. NNG has approximately $500 million of senior
unsecured debt outstanding. The change in rating status follows
the recent announcement that Dynegy Inc. (DYN), has settled its
lawsuit with Enron Corp. to exercise its option to acquire NNG.
The parties have agreed to close the transaction by the end of
January 2002. In return, the option Enron has to repurchase the
pipeline for $1.5 billion has been extended from May 9, 2002 to
June 30, 2002.
As part of the now terminated merger agreement between DYN and
Enron, DYN made a $1.5 billion capital contribution to Enron
structured as a preferred stock investment in NNG with the
option to purchase a single purpose entity that owns 100% of
NNG's common stock. Following the termination of its merger
agreement, DYN immediately exercised its option to purchase NNG.
A payment of $23 million by DYN is required at closing to
complete the sale.
NNG's current 'CC' rating reflects its position as a wholly
owned subsidiary of Enron. Enron's ratings were lowered to ``D'
on Dec. 3, 2001, following its filing for Chapter 11 bankruptcy
protection. An additional negative rating consideration is the
structural subordination unsecured lenders have to a fully-drawn
$450 million secured bank facility. In order to provide
additional liquidity for Enron in the weeks prior to its
bankruptcy filing, NNG negotiated a $450 million 364-day credit
facility secured by NNG's capital stock, a subordinated note
from Enron to NNG, and substantially all the other assets of
NNG.
It is expected that NNG will be operated as a subsidiary of
Dynegy Holdings Inc., which is rated ``BBB+', Rating Watch
Negative. Following the purchase by DYN, Fitch anticipates
rating NNG in the high ``BBB' range. NNG's prospective rating
will be affected by whether DYN fully pays off NNG's secured
loan, elevating unsecured debt to its prior senior status.
However, Fitch will likely put NNG on Rating Watch Negative in
consideration of Enron's repurchase option through June 30,
2002.
On a standalone basis NNG historically has demonstrated a strong
financial profile and solid market position. Through mid-2001,
EBITDA-to-interest coverage was nearly 7.0 times and debt-to-
capital at June 30, 2001, was 32%. At that time NNG was rated
'A-'. Including the secured loan, total debt-to-capital remains
slightly below 50%. The pipeline continues to benefit from
strong and consistent cash flow derived from long-term contracts
with creditworthy counterparties and favorable FERC regulation.
DebtTraders reports that Enron Corp's 9.125% bonds due April 1,
2003, (ENRON2) are currently trading in the low 20s. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRON2for
real-time bond pricing.
EXODUS COMMS: Committee Signs-Up Wachtell Lipton as Lead Counsel
----------------------------------------------------------------
The Official Committee of Unsecured Creditors of Exodus
Communications, Inc., and its debtor-affiliates, presents the
Court with its application to employ and retain the law firm of
Wachtell Lipton Rosen & Katz as its counsel.
The members of the Committee based their selection of Wachtell
Lipton as Committee counsel on the firm's extensive experience
and knowledge in the field of bankruptcy and creditors' rights,
and in the other fields of law that are expected to be involved
in these cases as well as on the firm's familiarity with the
case due to its representation, as of September 2001, of an
unofficial committee of holders of the Debtors' senior notes.
The Committee believes that Wachtell Lipton is well qualified to
represent it in connection with these cases. In order to more
efficiently serve the Committee, Wachtell Lipton will represent
the Committee in coordination with the Delaware law firm of
Pachulski Stang Ziehl Young & Jones P.C.
Wachtell partner Richard D. Feintuch, Esq., relates that subject
to Court approval, compensation will be payable to Wachtell,
Lipton on an hourly basis, plus reimbursement of actual,
necessary expenses incurred by the law firm. Prior to the
commencement of these cases and in connection with its
representation of the Unofficial Committee, Wachtell Lipton
received from the Debtors a retainer in the amount of $150,000,
a portion of which was applied to Wachtell Lipton's fees and
expenses incurred in representing the Unofficial Committee. Mr.
Feintuch states that Wachtell Lipton will apply its outstanding
balance for fees and expenses incurred up to the commencement of
these cases to the retainer; the remainder of the retainer, if
any, will be applied to Wachtell Lipton's fees and expenses in
representing the Committee.
At the present time, attorneys and paralegals responsible for
the representation of the Committee and their current hourly
rates are:
Richard D. Feintuch $675 per hour
Seth Gardner $395 per hour
Stacey Comolli (paralegal) $ 90 per hour
In addition, the Firm's other professionals may be engaged in
connection with these cases, whose hourly rates for work of this
nature currently range from:
Paralegals $ 90-$125
Associates $130-$395
Members $400-$875
Included among the professional services which Wachtell Lipton
may be called upon to render to the Committee are:
A. advising the Committee and representing it with respect to
proposals and pleadings submitted by the Debtors or others
to the Court or the Committee;
B. representing the Committee with respect to any plans of
reorganization or disposition of assets proposed in this
case;
C. attending hearings, drafting pleadings and generally
advocating positions which further the interests of the
creditors represented by the Committee;
D. assisting in the examination of the Debtors' affairs and
review of the Debtors' operations;
E. advising the Committee as to the progress of the chapter 11
proceedings; and
F. performing such other professional services as are in the
interests of those represented by the Committee.
To the best of the Committee's knowledge, Wachtell, Lipton has
had no other prior connection with the Debtors, their creditors
or any other party in interest and upon information and belief;
the firm of Wachtell Lipton does not hold or represent any
interest adverse to the Debtors' estates or the Committee or the
creditors the Committee represents in the matters upon which it
has been and is to be engaged.
Immediately upon its retention on October 11, 2001, Mr. Feintuch
informs the Court that Wachtell Lipton commenced work on several
matters requiring immediate attention in connection with the
Debtors' cases, including reviewing the first day orders and
commenting on the Debtors' proposed debtor-in-possession
financing facility and proposed employee retention program.
Accordingly, the Committee requests that this Court authorize
the retention of Wachtell, Lipton as of October 11, 2001.
The Committee believes that it is necessary to employ attorneys
to render the professional services hereinbefore described to
the Committee, and that, without such professional assistance,
neither the Committee's evaluation of the activities of the
Debtors nor its meaningful participation in the negotiation,
promulgation, and evaluation of a plan or plans of
reorganization would be possible. (Exodus Bankruptcy News, Issue
No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900)
FEDERAL-MOGUL: Moves to Appoint Future Claimants' Representative
----------------------------------------------------------------
Federal-Mogul Corporation and its debtor-affiliates, and the
Official Committee of Asbestos Claimants jointly move the Court
to appoint a Legal Representative for Future Asbestos Claimants
in these chapter 11 cases. The Debtors and the Asbestos
Claimants' Committee propose Professor Eric D. Green for
appointment to this position.
James E. O' Neill, Esq., at Pachulski, Stang Ziehl, Young &
Jones LLP in Wilmington, Delaware, tells the court it is
necessary to appoint a Futures Representative to protect the
interests of Future Claimants in these cases. One of the key
elements of any reorganization plan proposed by the Debtors will
be a channeling injunction allowing all asbestos-related claims
to be channeled to a trust for payment and satisfaction. In
order to properly establish such a trust, Mr. O'Neill contends
that the interests of both current and future asbestos Claimants
must be assessed and accommodated. While the interests of
current asbestos-related Claimants are protected in these cases
with the appointment of the Official Committee of Asbestos
Claimants and by each individual claimant's right to file a
proof of claim, the Future Claimants' welfare are not protected
each individual claimant since a Futures Representative has yet
to be appointed.
Mr. O'Neill informs the Court that that both Debtors and the
Asbestos Committee have agreed to recommend Professor Green as
the most qualified candidate for Futures Representative.
Professor Green is a nationally-recognized mediator, arbitrator
and neutral, having co-founded two leading ADR firms, Endispute
and Resolution LLC, and having written about the field of ADR
for over 20 years.
Mr. O'Neill submits that his work in asbestos and other toxic
tort litigation has been extensive, having served as the Special
Master for asbestos litigation in several courts, including
those of Ohio, Connecticut and Massachusetts, where he still
serves. Mr. Green was also the Guardian Ad Litem for future
claimants in major federal class-action asbestos litigation and
is the Legal Representative for the future claimants in the
Fuller Austin bankruptcy and the Babcock & Wilcox bankruptcy. He
has also mediated and arbitrated numerous cases involving
asbestos personal injury claims, asbestos reinsurance, and
asbestos indemnification claims and has resolved numerous other
cases of current and future claims for exposure to PCB's
pharmaceuticals, chemicals, fumes and medical devices.
The appointment of Professor Green as Futures Representative
will hinge on these terms and conditions:
A. Standing - The Futures Representative shall stand to be heard
as a party-in-interest in every matter relevant to the
interests of Future Claimants in the Debtors' Chapter 11
cases, whether in the Bankruptcy Court or the District
Court, including participating in the claims objection,
estimation and plan negotiation processes and applying to
the Court for an order seeking clarification or expansion
of his authority or duties;
B. Engagement of Professionals - Attorneys and other
professionals may be retained by the Futures Representative
with approval from the court consistent with the treatment
afforded to other professionals in these cases;
C. Compensation - Compensation, including professional fees and
reimbursement of expenses, shall be payable to the Futures
Representative and his professionals from the Debtors'
estates, subject to court approval, consistent with the
treatment afforded to other professionals in these cases;
D. Removal - The Futures Representative may be removed or
replaced at any time by a court order, either on its own
motion or on a motion of any party-in-interest;
E. Liability - The Futures Representative shall not be liable
for any damages, or have any obligations other than the
duties prescribed in the order of appointment. He, however,
shall not be spared from liability arising out of his willful
misconduct or gross negligence. Any action or omission
taken in good faith shall not be taken against him.
Professor Green has indicated that he will not accept the
offer as Futures Representative unless the Debtors, at
their own cost, provide him with appropriate and
acceptable liability insurance coverage. The Debtors thus
seek By this motion the Court's authority to obtain
Futures Representative Liability Insurance and pay the
premiums necessary to maintain such.
F. Effective Date of Appointment - Once the Debtors have
obtained the Futures Representative Liability Insurance and
in form and substance and from a carrier satisfactory to
Professor Green, he shall file a certificate of acceptance
before the Court at which time his appointment is deemed to
be effective as of the date of entry of the order approving
this motion.
In addition, Mr. O'Neill states that, since the Futures
Representative would be a fiduciary to a distinct but unknown
constituency, the Debtors are seeking for Professor Green to be
allowed to participate in the formulation of the reorganization
plan, much like the powers and duties delegated to official
committees in these cases. (Federal-Mogul Bankruptcy News, Issue
No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900)
FRUIT OF THE LOOM: Disclosure Statement Hearing Set for Feb. 1
--------------------------------------------------------------
Fruit of the Loom presents the Court with its First Amended Plan
of Reorganization, dated December 28, 2001, together with a
Disclosure Statement in support of that plan. The Plan
implements the sale of Fruit of the Loom's basic apparel
business as a going concern to Berkshire Hathaway under the
terms of the Asset Purchase Agreements.
The Debtors tells Judge Walsh that the chapter 11 Plan and a
parallel Scheme of Arrangement to be presented to the Grand
Court of the Cayman Islands are a result of extensive
negotiations with the Official Committee of Unsecured Creditors
(which represents the holders of in excess of $450 million of
unsecured debt), the steering committee of the informal
committee of senior secured noteholders and the unofficial
prepetition bank steering committee (together representing the
interests of the holders of approximately $1.2 billion of
secured debt), and other constituencies, including the Joint
Provisional Liquidators appointed in the Cayman proceedings.
Moreover, the Plan reflects the results of a series of
interconnected and mutually dependent settlements and
compromises reached among the parties since the Petition Date.
Following the sale of the Apparel Business to Berkshire
Hathaway, the sale proceeds will be distributed to the Debtors'
creditors. Separately, NWI Land Management Corp. and its assets
will be liquidated and the proceeds will be distributed to
creditors. The proceeds from those sales will be less than $1.2
billion and will not make the Secured Noteholders whole.
Settlements embodied in the Plan agree to split the sale
proceeds and recoveries by post-confirmation trusts so that
approximately 92.5% goes to the secured noteholders and
approximately 7.5% goes to Unsecured Creditors in exchange for
their votes to accept the Plan. Shareholders' interests are
cancelled.
Disclosure Statement Hearing
Judge Walsh will convene a hearing on February 1, 2002, at 9:30
a.m., to consider the adequacy of the information contained in
the Disclosure Statement. If Judge Walsh finds that the
Disclosure Statement provides creditors with adequate
information that enables them to make an informed decision about
whether to vote to accept or reject the Plan, then the Debtors
will mail copies of the Disclosure Statement, the First Amended
Plan and various solicitation material to creditors. Creditors
will be asked to cast ballots and vote to accept or reject the
Plan. If the Debtors can secure an affirmative vote from
creditors holding 2/3 of the dollars of claims in each class and
50% of the number of claims in each Class, the road to
confirmation will be swift.
Substantive Consolidation
The Plan calls for an effective substantive consolidation of the
Debtors' Estates (other than NWI) for all purposes related to
the Plan, including voting, confirmation, Distributions, and
Claim determinations. All assets and liabilities will be
treated as though they were assets and Liabilities of the single
Consolidated Estate and no distributions will be made on account
of Intercompany Claims. All guarantees will be deemed to be one
obligation of the Consolidated Estate. Fruit of the Loom
believes that substantive consolidation of the Estates is
appropriate for several reasons:
* Fruit of the Loom conducted its business through a
centralized cash management system;
* Although the members of Fruit of the Loom were
maintained as distinct legal entities, they conducted business,
and the business community treated the group, as one
consolidated business entity;
* The primary liabilities of Fruit of the Loom were shared
among the members of Fruit of the Loom due to the existence of
upstream, downstream, and cross-stream guaranties of many of the
obligations incurred by individual members of Fruit of the Loom,
Fruit of the Loom believes that substantive consolidation is
required for purposes of the Plan and the Distributions to be
made thereunder; and
* No purpose would be served by imposing the substantial
expenses and administrative burdens that would be borne by the
Estates if separate valuations of each Estate's assets and
liabilities were undertaken.
To the extent required, Fruit of the Loom will adduce evidence
in support of, and demonstrate the propriety of, substantive
consolidation at the Confirmation Hearing.
Director & Officer Releases
On the Effective Date, Fruit of the Loom shall be deemed to have
released its present and former directors, officers, and
employees other than Mr. Farley (unless all claims of Fruit of
the Loom or any member thereof against Farley shall have been
satisfied in full) from any and all Class Action Claims that are
property of Fruit of the Loom or any member thereof, the
Consolidated Estate, or the Estate of NWI (including derivative
claims and claims that Fruit of the Loom or any member thereof
otherwise has legal authority to assert, compromise, or settle
in connection with the Reorganization Cases), and any and all
such released Class Action Claims shall be deemed waived and
extinguished as of the Effective Date, except to the extent such
claims (other than Securities Class Action Claims and Class
Action Claims described in Section 1.41(a) of the Plan related
to Equity Interests) are preserved and assigned to the Unsecured
Creditors Trust under the Plan.
All Contracts Not Expressly
Assumed are Rejected
The Plan constitutes a motion by each member of Fruit of the
Loom to reject, as of the Effective Date, all executory
contracts and unexpired leases to which any member of Fruit of
the Loom is a party except for: (a) the executory contracts and
unexpired leases specifically listed on an Assumption and
Assignment Schedule, which shall either be assumed or assumed
and assigned as described therein; and (b) any executory
contracts and unexpired leases dealt with by a Final Order of
the Bankruptcy Court entered on or before the Effective Date.
The Confirmation Order shall constitute an order of the
Bankruptcy Court approving such rejections and assumptions (and,
as applicable, assignments) pursuant to section 365 of the
Bankruptcy Code as of the Effective Date. Each assumed executory
contract and unexpired lease of Fruit of the Loom that relates
to the use or occupancy of real property shall include (i) all
modifications, amendments, supplements, restatements, or other
agreements made directly or indirectly by any agreement,
instrument, or other document that in any manner affects such
executory contract or unexpired lease, and (ii) all executory
contracts or unexpired leases appurtenant to the premises,
including all easements, licenses, permits, rights, privileges,
immunities, options, rights of first refusal, powers, uses,
usufructs, reciprocal easement agreements, vaults, tunnel or
bridge agreements, or franchises, and any other interests in
real estate or rights in rem related to such premises. (Fruit of
the Loom Bankruptcy News, Issue No. 46; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
GENESIS HEALTH: MultiCare Agrees Huntington Holds $4.5MM Claim
--------------------------------------------------------------
Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor,
tells Judge Wizmur that MultiCare Companies, Inc., and
Huntington National Bank agree that Huntington's claim filed on
December 13, 2001 against MultiCare and later amended on July 9,
2001 was timely filed and accurately reflects what Huntington
believes is the correct estimation of the collateral's value.
The parties agree that Huntington holds an allowed $4,499,999
claim, secured by collateral valued at $680,000 based on a
recent appraisal. (Genesis/Multicare Bankruptcy News, Issue No.
18; Bankruptcy Creditors' Service, Inc., 609/392-0900)
HARVARD INDUSTRIES: Will Delay Filing of Q4 Financial Results
-------------------------------------------------------------
Harvard Industries, Inc. has advised the SEC that they will be
late in filing their latest financial information because,
according to the Company: "There have been major upheavals in
the North American car and light truck market, the industry in
which the Company operates, during 2001. Harvard has focused on
reducing all costs and has significantly reduced its salaried
workforce and has directed its attention toward operational
activities. Implementation of these initiatives has placed
increased demands on diminished management resources and
accordingly preparation of the Form 10-K has taken longer than
anticipated."
The Company further states that lower returns are expected since
the North American car and light truck market continued to be
down in Harvard's 4th fiscal quarter.
Harvard Industries, which includes subsidiaries Hayes-Albion and
Pottstown Precision Casting, makes rubber glass-run channels,
rubber door and trunk seals, aluminum castings, and metal
products such as transmission components for North American car
and truck manufacturers. GM, Ford, and DaimlerChrysler account
for more than 80% of sales. The company emerged from Chapter 11
in 1998 and sold a number of underperforming divisions and
subsidiaries, including Kingston-Warren, Harvard Interiors, and
Harman Automotive. Contrarian Capital Advisors owns more than
20% of the company, which will close its Pottstown Precision
plant during 2001. As at June 30, 2001, the company reported
that its liquidity was strained, as total current liabilities
exceeded total current assets by almost $2 million.
HAYES LEMMERZ: US Trustee Appoints Official Creditors' Committee
----------------------------------------------------------------
Pursuant to Section 1102(a)(1) of the Bankruptcy Code, the
United States Trustee appoints these creditors to serve on the
Official Committee of Unsecured Creditors in connection with the
chapter 11 cases of Hayes Lemmerz International, Inc., and its
debtor-affiliates:
A. HSBC Bank USA, as Successor Indenture Trustee
Attn: Robert Conrad
10 East 40th Street, New York, NY 10016-0200
Phone: (212) 525-1314 Fax: (212) 525-1300
B. U.S. Bank Trust National Association, Indenture Trustee
Attn: Patricia Kapsch
180 E. Fifth Street, St. Paul, MN, 55101
Phone: (651) 244-8431 Fax: (651) 244-5847
C. Dreyfus Short Term Income Fund
Attn: Gregory A. Jordon
200 Park Avenue, 55th Floor, New York, NY 10166,
Phone: (212) 922-6101 Fax: (212) 922-4891
D. Triton CBO III Limited
Attn: Daniel Arbess
565 Fifth Avenue, New York, NY 10017
Phone: (212) 792-2170 Fax: (212) 792-2171
E. Alcoa, Inc.
Attn: Leonard L. Rettinger, Jr.
201 Isabella Street, Pittsburgh, PA 15212-5858
Phone: (630) 845-2841 Fax: (630) 845-2817
F. National Steel Corporation
Attn: James Nelson
4100 Edison Lakes Parkway, Mishawaka, IN 46545
Phone: (219) 273-7701 Fax: (219) 273-7493
F. Industrial Systems Associates, Inc.
Attn: Michael F. Bonner
3220 Tillman Drive, Suite 200, Bensalem, PA 19020
Phone: (215) 633-1900 Fax: (215) 633-4423
(Hayes Lemmerz Bankruptcy News, Issue No. 4; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
HAYES LEMMERZ: Closes Sale of Non-Core Unit to Schedl Automotive
----------------------------------------------------------------
Hayes Lemmerz International, Inc. (OTC Bulletin Board: HLMMQ)
announced the sale of its non-core System Service business to
Schedl Automotive System Service Beteiligungsgesellschaft mbH &
Co. Verwaltungs-KG, in Germany. Terms of the transaction were
not disclosed.
Hayes Lemmerz acquired the System Service business in 1997 in
connection with the acquisition of Lemmerz Holding GmbH. The
business has approximately 250 employees and operates five tire
and wheel assembly operations, one of which is a 49% joint
venture. These facilities are located in Belgium, Germany, the
Czech Republic and Portugal.
Hayes Lemmerz International, Inc. is one of the world's leading
global suppliers of automotive and commercial highway wheels,
brakes, powertrain, suspension, structural and other lightweight
components. The Company has 41 plants, 3 joint venture
facilities and 14,000 employees worldwide.
On December 5, 2001, Hayes Lemmerz International, Inc., filed
for reorganization under Chapter 11 of the U.S. Bankruptcy Code,
to reduce their debt and strengthen their competitive position.
This filing includes 22 facilities in the United States and one
plant in Mexico.
More information about Hayes Lemmerz International, Inc., along
with a complete list of current and archived press releases, is
available at http://hayes-lemmerz.com
DebtTraders reports that Hayes Lemmerz's 11.875% bonds due 2006
(HAYES1) are trading between 55 and 57. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=HAYES1for
real-time bond pricing.
HUNTSMAN CORP: S&P Drops Ratings to D After Missed Payments
-----------------------------------------------------------
Standard & Poor's lowered its corporate credit and subordinated
debt ratings on Huntsman Corp. to 'D'. The ratings were removed
from CreditWatch, where they were placed May 22, 2001.
The downgrades reflect Huntsman's decision not to make its
January 2, 2002, interest payments on its senior subordinated
notes. Huntsman will have a 30-day period to cure this situation
before it becomes an event of default under the indenture,
although the company is not expected to make these payments and
has announced plans to pursue a restructuring of its debt with
its bondholders.
Huntsman's financial profile has deteriorated throughout the
past year, under the weight of onerous debt levels and very weak
liquidity, and the continuation of a severe operating trough in
the U.S. petrochemical sector. Earlier in the year, Huntsman
disclosed that it had violated the financial covenants
associated with its bank loans, thereby limiting sources of
liquidity to cash on hand or the proceeds from potential asset
sales. Efforts over the course of the past year to obtain
alternative sources of liquidity were unsuccessful. Recently,
Huntsman announced that it has received a $150 million
commitment to allow the company to continue to operate until it
completes its debt-restructuring plan.
Ratings Lowered and Removed From CreditWatch
To From
Huntsman Corp.
Corporate credit rating D CC
Senior subordinated debt D C
Ratings Remaining on CreditWatch Negative
Huntsman International Holdings LLC
Corporate credit rating B+
Senior unsecured debt B-
Huntsman International LLC
Corporate credit rating B+
Senior secured debt B+
Subordinated debt B-
INTEGRATED HEALTH: Wants to Assume Amended GECFS Vehicle Lease
--------------------------------------------------------------
Gelco Corporation, doing business as GE Capital Fleet Services
(GECFS) leases vehicles to Rotech pursuant to a Master Lease
Agreement dated as of December 6, 1996 as supplemented by a Rate
Schedule and Addendums. These vehicles, primarily trucks and
vans, are used to deliver durable medical equipment, supplies
and medicines to patients throughout the country.
In about December of 1999, GECFS declined to lease additional
vehicles to Rotech. Accordingly, since that time, Rotech has
been required to spend approximately $18,575,502.73 to purchase
904 new vehicles presently owned by Rotech. The current fleet of
Rotech-Owned Vehicles has an estimated fair market value of
approximately $10,922,887. In addition, Rotech's vehicle fleet
includes 1188 vehicles, which remain under lease from GECFS
under the Master Vehicle Lease Agreement.
Pursuant to a series of Fuel and Maintenance Addendums included
in the Master Vehicle Lease Agreement, GECFS provides Rotech
with vehicle maintenance, repair services and fuel for both
GECFS-Leased Vehicles and Rotech-Owned Vehicles.
As of the Filing Date, Rotech was current on its monthly lease
payments for the GECFS-Leased Vehicles under the Master Vehicle
Lease Agreement and owed GECFS $752,239.64 for maintenance,
repair services and fuel under the Fuel and Maintenance
Addendums to the Master Vehicle Lease Agreement.
Insofar as its vehicle fleet is critical to Rotech's business
operations, Rotech wishes to continue leasing the GECFS-Leased
Vehicles and further to resume leasing its entire vehicle fleet
from GECFS.
Accordingly, by this Motion, Rotech seeks to assume the Master
Vehicle Lease Agreement, as amended by a proposed amendment,
dated as of December 18, 2001, pursuant to which Rotech would
sell the Rotech-Owned Vehicles to GECFS for their current air
market value of $10,922,887, subject to adjustment for
depreciation between December 18, 2001 and the date the
transaction closes, and then lease back these vehicles from
GECFS. Rotech further wishes to cure its prepetition default,
agreed to be in the amount of $752,239.64, as required by
Section 365(b) of the Bankruptcy Code and as set forth in the
Amendment.
Rotech believes that assumption of the Master Vehicle Lease
Agreement, as amended, including the contemplated sale and
leaseback, is in the best interests of the Debtors and
constitutes a reasonable exercise of their business judgment.
This will eliminate the capital expenditure that would be
entailed by replacing the GECFS-Leased Vehicles and continuing
to purchase new vehicles. Specifically, this transaction will
generate a cash payment to Rotech in the approximate amount of
$10,922,887, adjusted to reflect depreciation, less Rotech's
cure payment to GECFS in the amount of $752,239.64. Thus, by
assuming the Master Vehicle Lease Agreenient, as amended, Rotech
will ensure the uninterrupted use of its vehicle fleet and
generate a one-time payment from GECFS in the approximate net
amount of $10,170,647.36. Moreover, given the sheer number of
vehicles comprising Rotech's vehicle fleet, and the remote
locations these vehicles service, Rotech has concluded that
continuing the fuel and maintenance program under the Fuel and
Maintenance Addendums is the best means to ensure the
availability of vehicles as and when they are needed.
Based upon the foregoing and pursuant to sections 105(a), 363(b)
and 365(a) and (b) of the Bankruptcy Code and Bankruptcy Rules
6003 and 6006, Rotech seeks an order authorizing the amendment
of the Master Vehicle Lease Agreement which provides for, among
other things, the sale and leaseback of the Rotech-Owned
Vehicles and approving the assumption of the Master Vehicle
Lease Agreement, as amended. (Integrated Health Bankruptcy News,
Issue No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900)
KSAT SATELLITE: Projects $9.7 Million Shareholders' Deficiency
--------------------------------------------------------------
KSAT Satellite Networks Inc., (CDNX- KSA) has determined that it
is expected to have an unaudited shareholders' deficiency of
approximately US$9,700,000 as at December 31, 2001.
The shareholders' deficiency is the result of significant
changes and economic pressures in the Corporation's area of
focus, the telecommunications and satellite industry in China,
and the general slowdown in the economy and the operating
climate in China in fiscal 2001. In particular, the major
state- owned telecommunications companies have undergone a
period of restructuring and consolidation which has had an
impact on capital expenditures for the expansion and upgrading
of existing systems and on the sales the Corporation was able to
close in fiscal 2001. Due to these changes in the economic
conditions and the operating environment, management of the
Corporation has recommended, and the board of directors of the
Corporation has approved, the write down and creation of
provisions against certain assets of the Corporation, namely
inventory, trade receivables, capital assets and pre- operating
expenses, of approximately US$7,600,000 as at December 31, 2001.
In addition, the Corporation has recorded a loss totaling
US$1,740,710 as at December 31, 2001 on the liquidation of its
joint venture with Shehnzen VSAT Satellite Communications Co.
Ltd., Shehnzen Early Bird Engineering Corporation Ltd. (the
"EJV"). The EJV was an operator in VSAT shared-hub services for
one-way data broadcast for paging companies and two-way
interactive data and voice communications network for corporate
organizations. In October 1999, the EJV applied to be
voluntarily liquidated and the Corporation now expects the
process to be finalized in 2002.
During fiscal 2001, the Corporation broadened its operational
base to include service-oriented activities to support the sales
of Gilat Satellite Networks Ltd., a significant shareholder of
the Corporation, in the People's Republic of China. The
Corporation also completed and made operational a customer care
and training center during fiscal 2001.
The Corporation is maintaining its commitment to service their
customers of its One Way Receiver business, which have been
secured over the past two years. In addition, the Corporation
is focusing on improving the performance of its joint venture
with the Ministry of Water Resources and is positioning itself
to be a services oriented business to take advantage of new
business opportunities in the VSAT market in China.
The Corporation expects the continued liberalization of the
telecommunications and satellite industry in China will lead to
the consolidation of businesses. The Corporation also expects
that China's recent membership in the World Trade Organization
may create new business opportunities for the Corporation. The
Corporation expects that both of these factors will lead to
increased demand for VSAT Satellite Communication equipment and
related services in the Chinese market.
LTV CORP: Judge Bodoh Extends Exclusive Period to September 9
-------------------------------------------------------------
The LTV Corporation, and its debtor-affiliates sought and
obtained from Judge Bodoh a third extension of (i) the period
during which the Debtors have the exclusive right to file a plan
or plans of reorganization by approximately nine months through
and including September 9, 2002, and (ii) the period during
which the Debtors have the exclusive right to solicit
acceptances of any plan or plans of reorganization filed during
the exclusive period through and including November 8, 2002, or
approximately 60 days after expiration of the exclusive filing
period.
The Debtors say that they have taken substantial steps to
preserve the value of their estates and maximize the recovery
available to creditors, such as the pursuit of additional
financing, and in particular the $250 million loan from National
City Bank and KeyBank NA which is part of the Federal Emergency
Steel Guaranteed Loan Program. This program is designed to
provide financial assistance to steel companies that have
suffered job, financial or production losses by guaranteeing up
to 85% of loans, up to the $250 million maximum, made to
qualifying steel programs. However, the Debtors admit that none
of the pre-conditions to this loan were satisfied in sufficient
time to forestall an "immediate and precipitous liquidity
crisis" that the Debtors originally forecasted for December.
Accordingly, the Debtors were forced to file the APP. The APP
Period began on December 7, 2001, and is expected to last nine
months.
The Debtors describe steps they have taken to implement the APP,
including their intention to conduct an auction sale of their
Cleveland Works facility, known as "Cleveland East", and their
Indiana Harbor facility, on February 22, 2002. The blast
furnaces at these facilities have been hot-idled, and the
finishing operations will be idled after the remaining inventory
is processed over the next few weeks. The west side of the
Cleveland Works facility has been cold-idled. LTV Steel's two
coke batteries have continued to operate on extended coking
cycles, and they will be cold-idled by January 31, 2002, if no
buyer is identified. LTV Steel's finishing plant in Hennepin,
Illinois, also will be hot-idled in a few weeks after the
processing of existing inventory has been completed. LTV
Steel's tubular operations and the Copperweld Corporation
continue to operate. The Debtors hope to sell these facilities
before the end of the APP period.
To further assist the asset sales that form the core of the APP,
marketing efforts for all of the facilities have been renewed.
Specifically, with respect to the integrated steel facilities
other than the coke batteries, the Debtors, with the assistance
of their professionals, have established a data room; drafted a
form asset purchase agreement and ancillary agreements,
schedules and exhibits; and prepared and sent out to prospective
purchasers summary offering memorandum for Cleveland East,
Indiana Harbor, and Hennepin. With respect to the coke
batteries, the Debtors and their professionals have contacted
approximately 20 potential purchasers, received confidentiality
agreements from 11, and conducted plant tours and provided
financial information and a proposed APA to 5. In this
connection, the Debtors have prepared a data room with
information for each of the 20 plants, organized this
information into logical business units, and drafted a form APA
and ancillary agreements.
Moreover, the Debtors have been negotiating with the USWA in an
attempt to obtain a stand-alone, interim collective bargaining
agreement for the unionized LTV Tubular plants. Presently the
USWA's master CBA regulates these plants. In these discussions,
the Debtors also continue to press for "modifications" to the
CBAs and retiree benefits of the integrated steel business in
connection with the APP. The Debtors remind Judge Bodoh that
they have reached an agreement in principal and are submitted a
proposed order concluding their Motion to reject the CBAs.
In addition to these activities, the Debtors continue the
ongoing administration of these cases, which, considering the
more than 1,200 pleadings filed in these cases, is a substantial
task in itself. In addition, the Debtors have and continue to
take diligent steps to preserve the value of their assets.
The results of the APP will not be known until the conclusion of
the nine-month period. During this Implementation Period, the
Debtors say that any plan that may be proposed by the Debtors or
any other party would be premature. The exclusivity periods
should therefore be extended to provide the Debtors with a
complete opportunity to fully implement the APP before
developing and proposing a plan. (LTV Bankruptcy News, Issue No.
2; Bankruptcy Creditors' Service, Inc., 609/392-00900)
LAIDLAW: Resolves Securities Fraud Litigation with Bondholders
--------------------------------------------------------------
Laidlaw Inc. (TSE: LDM) announced today that all parties have
reached an agreement in principle to settle the securities fraud
class action litigation, In re Laidlaw Bondholders Litigation,
filed by certain of Laidlaw's bondholders who purchased
securities of Laidlaw during the period September 24, 1997
through and including March 13, 2000. The lawsuit alleged that
during that period, Laidlaw and the other defendants
disseminated to the investing public false and misleading
financial statements and press releases concerning the relative
priority of certain of Laidlaw's debentures and the Company's
financial condition. Laidlaw and the other defendants denied all
liability.
The proposed settlement of the class action litigation provides
for a release of all claims that the plaintiffs have and may
have against Laidlaw and the other defendants, including certain
of Laidlaw's former and current officers and directors,
Laidlaw's underwriters in the bond offerings at issue in the
lawsuit and Laidlaw's accountants, and a release of claims by
Laidlaw. Laidlaw and the other defendants continue to deny all
liability. The settlement is subject to the execution of a
definitive settlement agreement and the approval of the United
States District Court for the District of South Carolina, as
well as the approval of the Bankruptcy Court for the Western
District of New York in which the chapter 11 case of Laidlaw is
pending and the court in Canada that is presiding over Laidlaw's
reorganization. In addition, certain aspects of the settlement
are subject to the confirmation of a satisfactory plan of
reorganization for Laidlaw.
Concurrently, an agreement in principle was reached to settle a
class action by Laidlaw bondholders against the indenture
trustee for the Laidlaw bonds, subject to court approval.
Separately, an action by a purchaser of options on Laidlaw bonds
is also being settled.
If the settlement of the bondholder actions receives the
required judicial approvals and is implemented, the plaintiff
bondholder classes would be paid $42.875 million and the
bankruptcy estate of Laidlaw would receive $12.5 million.
Laidlaw Inc. is a holding company for North America's largest
providers of school and intercity bus transportation, municipal
transit, patient transportation and emergency department
management services.
DebtTraders reports that Laidlaw Inc.'s 7.650% bonds due 2006
(LAIDLAW7) are trading in the high 50s. See
http://www.debttraders.com/price.cfm?DT_SEC_TICKER=laidlaw7for
real-time bond pricing.
LIGHT-SERVICOS: S&P Affirms Low-B's on Local & Foreign Currency
---------------------------------------------------------------
Standard & Poor's changed its local currency outlook on LIGHT-
Servicos de Eletricidade S.A.'s to stable from negative. The
local currency rating is affirmed at double-'B'. The foreign
currency rating and outlook are affirmed at double-'B'-
minus/negative.
This action reflects the support of Electricite de France (EdF;
double-'A'-plus/Negative/'A-1'-plus), which is likely to convert
its US$550 million intercompany loan into equity once a pending
share exchange with The AES Corp., (double-'B'/stable) is
consummated. Another positive outcome of the share exchange is
that about US$500 million of debt residing at AES Elpa (formerly
LIGHTGas) will become an obligation of the AES family. As a
result, LIGHT's financial profile is expected to improve
significantly.
LIGHT's ratings reflect the challenges of operating in Brazil
under an evolving regulatory framework and volatile
macroeconomic environment. LIGHT is the electric distribution
company serving the city of Rio de Janeiro. LIGHT is still
struggling to offset the negative effect of the real's
continuing devaluation against the dollar, which began in
January 1999. Despite cost-cutting efforts and improvement on
certain operating parameters, LIGHT's progress on reducing
electricity energy losses has been disappointing. Offsetting
these weaknesses are a stable customer base with a large
residential component, a monopoly franchise to distribute
electricity, and support of EdF, which is expected to increase
its ownership in LIGHT to 88% via a share swap with AES Corp. As
a result of this restructuring, LIGHT will also relinquish its
ownership stake in distributor Eletropaulo Metropolitana
Eletricidade de Sao Paulo S.A. Furthermore, Edf is expected to
take over the ownership position in, and arrange the financing
of, generation projects that LIGHT has initiated. The
expectation is that LIGHT will enter into purchased power
agreements with these plants.
Standard & Poor's considers regulatory risk in Brazil to be
high, despite some positive developments. The government has
negotiated a settlement with distributors, whereby distributors
will recover the bulk of revenues lost due to energy rationing,
imposed in June 2001, due to Brazil's energy crisis; LIGHT's
kilowatt-hour sales declined by 25% in the third quarter of 2001
compared to the same period in 2000. Annual tariff reviews have
been in accordance with concession contract guidelines; LIGHT
received a 20.6% increase in November 2001. However, annual rate
increases have not ensured full recovery of noncontrollable
costs, such as large power purchases from Itaipu, which is
linked to the dollar. A recently created task force has proposed
an indexing mechanism to remedy this problem. And finally,
concerns about the tariff revision in 2003 have been somewhat
eased by the recent tariff revision of Espirto Santo Centrais
Eletricas (Escelsa), which set a positive precedent in the
revaluation of rate base.
Outlook: Stable
LIGHT's financial profile has deteriorated steadily since 1999.
Funds from operations (FFO) interest coverage and cash flow to
debt are expected to only approximate 1.5 times and 5% for 2001,
respectively. The retirement of third-party debt and conversion
of the EdF loan to equity should restore ratios to levels
commensurate with ratings. FFO interest coverage and FFO to debt
should rebound to about 4x and 35%, respectively, during the
next few years.
LODGIAN: Will Continue Existing Workers' Compensation Programs
--------------------------------------------------------------
Lodgian, Inc., and its debtor-affiliates sought and obtained
authorization from the Court to:
A. continue their existing Workers' Compensation Programs;
B. maintain their Insurance Policies on an uninterrupted basis,
consistent with pre-petition practices; and
C. pay, when due, in the ordinary course, all pre-petition
premiums, administrative fees, brokers' commissions,
premium finance payments and other pre-petition obligations
to the issuers of the Insurance Policies to the extent due
and payable post-petition.
Adam C. Rogoff, Esq., at Cadwalader Wickersham & Taft in New
York, New York, relates that under the laws of the various
states in which they operate, the Debtors are required to
maintain workers' compensation policies and programs and to
provide their employees with workers' compensation coverage for
claims arising from or related to their employment with the
Debtors. Additionally, in connection with the operation of their
businesses and management of their properties, the Debtors
maintain numerous insurance policies through several different
insurance carriers.
Mr. Rogoff submits that Debtors maintain a primary workers'
compensation insurance policy with Zurich North America that
covers their statutory obligations in each of the states in
which they operate with the exception of Ohio, West Virginia and
Canada. The Debtors' workers' compensation policy with Zurich
requires the Debtors to pay Zurich a fee for each claim that
Zurich handles. Although the Massachusetts workers' compensation
policy is also with Zurich, Mr. Rogoff explains that due to
state law requirements a separate policy is necessary. With
respect to Ohio, West Virginia and Canada, the Debtors maintain
separate policies that address the particular requirements of
the applicable jurisdiction's workers' compensation laws.
Mr. Rogoff states that the Insurance Policies provide the
Debtors with insurance coverage in respect of property loss or
damage, windstorm and flood loss or damage, automobile
liability, commercial general liability, New York disability,
commercial crime/employee dishonesty, and directors' and
officers' liability. The aggregate annual premiums for all of
the Insurance Policies is approximately $6,700,000. In addition,
Mr. Rogoff tells the Court that the Debtors pay Zurich a fee for
risk engineering services to make periodic visits to selected
hotels to perform various safety inspections. The safety
inspections are required by Zurich, and are in furtherance of
ultimately reducing the Debtors' overall risk exposure and cost.
Mr. Rogoff explains that the Workers' Compensation Programs and
automobile insurance policies provide that the Debtors make
monthly payments, aggregating $2,000,000 for the current policy
year, to an established account held by Zurich. Zurich, in turn,
pays any actual losses that are within the Debtors' $250,000
deductible from the Loss Fund. Last year after adjustments, the
Debtors paid approximately $2,114,667, together with the
$2,000,000 deposited to the Loss Fund, for a total of
$4,114,667. Mr. Rogoff informs the Court that the Debtors have
Insurance Premium Finance Agreements with A.I. Credit Corp. and
Cananwill Inc. to finance premiums for certain of their
Insurance Policies. The Debtors provide down payments to the
Insurance Carriers and make payments on a periodic basis to the
Financiers while the Financiers pay all premiums and other
amounts directly to the Insurance Carriers. Mr. Rogoff adds that
the Debtors have employed the services of McQuery, Henry,
Bowles, Troy, L.L.P, an insurance broker, to obtain certain of
their Insurance Policies and consult on insurance related
issues. The Insurance Broker is paid a commission for its
services and are believed to be owed approximately $18,000 for
pre-petition services.
Mr. Rogoff deems it essential to the continued operation of the
Debtors' business and their efforts to reorganize that the
Workers' Compensation Programs and the Insurance Policies be
maintained on an ongoing and uninterrupted basis. The failure to
pay premiums and/or related fees when due may affect the
Debtors' ability to renew the Insurance Policies. The Debtors
believe that they are current with respect to payments on their
pre-petition premiums, however a premium payment relating to a
period prior to the Commencement Date may be outstanding. If the
Insurance Policies are allowed to lapse, Mr. Rogoff fears that
the Debtors could be exposed to substantial liability for
damages resulting to persons and property of the Debtors and
others. Continued effectiveness of the directors' and officers'
liability policies is necessary to the retention of qualified
and dedicated senior management. Furthermore, pursuant to the
terms of many of their leases, loan agreements, and other
contracts, as well as pursuant to the guidelines established by
the United States Trustee, the Debtors are obligated to remain
current with respect to certain of their primary insurance
policies.
Mr. Rogoff contends that the maintenance of the Workers'
Compensation Programs is indisputably justified, as applicable
state law mandates this coverage. Moreover, the risk that
eligible claimants will not receive timely payments with respect
to employment-related injuries could have a devastating effect
on the financial well-being and morale of their employees, and
their willingness to remain in the Debtors' employ. Mr. Rogoff
argues that departures by employees at this critical time may
result in a severe disruption of the Debtors' businesses to the
detriment of all parties in interest. A significant
deterioration in employee morale undoubtedly will have a
substantial adverse impact on the Debtors, the value of their
assets and businesses, and their ability to reorganize.
If workers' compensation coverage is not maintained as required
by such laws, employees could bring lawsuits against the Debtors
and their officers for potentially unlimited damages, the
Debtors' ongoing business operations in certain states could be
enjoined, and the Debtors' officers could be subject to criminal
prosecution. Mr. Rogoff assures the Court that the amounts that
the Debtors propose to pay in respect of the Workers'
Compensation Programs and Insurance Policies are minimal in
light of the size of the Debtors' estates and the potential
exposure of the Debtors absent insurance coverage.
With respect to the Financiers, Mr. Rogoff maintains that
payment of the premiums and any interest is justified because
the existing arrangement whereby the Financiers extend credit to
the Debtors in the form of premium payments and then only bills
the Debtors periodically provides the Debtors with increased
liquidity and stabilized payment obligations. Payment of pre-
petition Insurance Broker's commission is necessary and
desirable because the continued use of the Insurance Broker's
services will enable the Debtors to realize savings in the
procurement of their future insurance policies. Furthermore, the
use of the Insurance Broker provides an administrative
convenience and cost savings to the Debtors in light of the
large number of policies that the Debtors hold.
The Court further orders that all applicable banks and other
financial institutions are authorized and directed, when
requested by the Debtors in the Debtors' sole discretion, to
receive, process, honor and pay any and all checks drawn on the
Debtors' accounts, and to pay the pre-petition obligations and
post-petition obligations relating to this Motion, whether such
checks are presented prior to or after the Commencement Date,
provided that sufficient funds are available in the applicable
accounts to make the payments. The Debtors represents that each
of these checks can be readily identified as relating directly
to the authorized payment of such pre-petition obligations and
post-petition obligations. Accordingly, the Debtors believe that
checks other than those relating to authorized payments will not
be honored inadvertently. (Lodgian Bankruptcy News, Issue No. 2;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
LUMINANT WORLDWIDE: Closes Sale of Key Assets to Lante for $5.2M
----------------------------------------------------------------
Luminant Worldwide Corporation (Nasdaq: LUMTQ) announced the
completion of the sale of key assets to Lante Corporation
(Nasdaq: LNTE), a Chicago-based provider of information
technology solutions.
Lante paid $5.2 million in cash for Luminant's client contracts
and relationships, intellectual property, software assets and
certain tangible assets. Lante also agreed to purchase select
accounts receivable balances from Luminant for approximately
$3.5 million. A high percentage of these balances are with
continuing clients and represent amounts that are less than 90
days old. The cost of the transaction increased above the
amount initially announced amount due to interest from other
parties during competitive bidding within the bankruptcy
process.
Luminant Worldwide, formerly Clarant Worldwide, develops online
applications and Web sites for its blue chip clients, including
Compaq, Enron, and MasterCard. Luminant also offers consulting
and marketing services, as well as ongoing Web site maintenance
and data analysis. The company was founded in 1998 and quickly
gained size through the acquisition of eight e-services
companies, including Brand Dialogue-New York (which had been
part of advertising firm Young & Rubicam). Luminant has offices
in 10 states and Washington, DC. Young & Rubicam owns about 27%
of the company. Luminant Worldwide filed for reorganization
under Chapter 11 of the U.S. Bankruptcy Code on December 7,
2001, in the bankruptcy Court for the Southern District of Texas
in Houston. Representing the company in its Chapter 11 case are
Henry J Kaim, Esq., Myron M Sheinfeld, Esq., of Akin Gump et al,
711 Louisiana Ste 1900 Houston, TX 77002 713-220-5800.
* * *
Information technology solutions provider Lante Corporation
(Nasdaq: LNTE) announced that it has completed its acquisition
of key assets of Luminant Worldwide Corporation. The
acquisition will enable Lante to build and extend Luminant's
relationships with a number of Global 2000 clients such as
British Petroleum, Dr. Pepper, Lockheed Martin, MasterCard and
Maybelline. The transaction also supports Lante's business
partner integration strategy of helping companies successfully
manage their networks of customers, suppliers and other business
partners.
Lante paid $5.2 million in cash for Luminant's client contracts
and relationships, intellectual property, software assets and
certain tangible assets. Lante also agreed to purchase select
accounts receivable balances from Luminant for approximately
$3.5 million. A high percentage of these balances are with
continuing clients and represent amounts that are less than 90
days old. The cost of the transaction increased above the
amount initially announced due to interest from other parties
during competitive bidding within the bankruptcy process. Lante
did not provide debtor-in-possession financing for Luminant
during the bankruptcy process.
Lante expects that Luminant's client projects and relationships
will generate in the range of $5 million to $7 million in
revenue for the first quarter of 2002. The initial number of
billable consultants who received employment offers was closely
tied to Luminant's sold backlog and projected revenue. Pending
ongoing integration efforts and evolving backlog, Lante will
provide further guidance on revenue and headcount expectations
for the acquisition during our fourth quarter earnings call
scheduled for January 23, 2002.
Rudy Puryear, Lante's president and CEO, said, "This is a
focused acquisition that will give clients access to the
combined skills and solutions of both companies, create new
business development opportunities for Lante and deepen our
capabilities with Luminant's strong skills in areas such as
portals, content management, enterprise application integration
and customer research. We believe this deal represents good
value for Lante's shareholders."
Lante Corporation (Nasdaq: LNTE) is a leading information
technology consulting company focused on helping companies
collaborate electronically to save money, grow revenue and build
stronger, more profitable business relationships. Since its
inception in 1984, Lante has been an innovator in applying
emerging technologies to business. Headquartered in Chicago,
Lante serves clients throughout the United States. Its web site
is http://www.lante.com
MARINER POST-ACUTE: Health Debtors Get 9th Exclusivity Extension
----------------------------------------------------------------
The Mariner Health Group Debtors obtained Court approval for a
further extension of their exclusive periods in which to file a
plan or plans of reorganization to and including January 24,
2002, and if a plan or plans of reorganization are filed on or
before that date, to and including March 29, 2002. (Mariner
Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
MIDWAY AIRLINES: Wants Plan Filing Period Stretched to March 11
---------------------------------------------------------------
Midway Airlines Corporation along with Midway Airlines Parts,
LLC request the U.S. Bankruptcy Court for the Eastern District
of North Carolina to extend the time period within which each of
them has the exclusive right to file a plan and to solicit
acceptances of that plan. The Debtors wish to extend their
exclusive periods through March 11, 2002 and May 10, 2002,
respectively.
The Debtors assert that the cases at hand are not yet ripe for
the formulation of a chapter 11 plan, even if the Debtors had
the time to focus on plan formulation during the initial
exclusivity period. The Debtors pointed out that they were
required to suspend flight operations due to events beyond their
control and were only about to resume these flights. It is
necessary that these operations will first stabilize before the
formulation and negotiation of a plan will be feasible.
Midway Airlines filed for chapter 11 protection on August 13,
2001 in the United States Bankruptcy Code in the Eastern
District of North Carolina. Immediately following the tragic
events on September 11, Midway shut down. Gerald A. Jeutter,
Jr., Esq., at Kilpatrick Stockton LLP, represents the Debtors in
their restructuring efforts.
OWENS CORNING: Names John Libonati VP of Gov't & Public Affairs
---------------------------------------------------------------
Owens Corning (NYSE: OWC) announced that John Libonati has been
named vice-president of government and public affairs for the
company.
"John Libonati represents Owens Corning with class and dignity
and his elevation to officer status is a recognition of his
outstanding performance and impeccable character," said Glen
Hiner, Owens Corning's chairman and chief executive officer.
As vice-president of government and public affairs, Mr. Libonati
will direct all aspects of the company's legislative efforts on
matters critical to both Owens Corning's business and
restructuring efforts.
Mr. Libonati will direct federal, state and local government
lobbying efforts and will develop legislative and public policy
positions that promote Owens Corning products and services. His
office will also be responsible for providing assistance in
dealing with government agencies and industry associations on
day-to-day business needs.
"Federal, state and local legislation, and other public policy
decisions can dramatically impact our company's operations,
products and services and therefore, profoundly impact our
ability to serve our customers," said Mr. Libonati. "As an
industry leader with employees residing in virtually every US
Congressional District, Owens Corning deserves an active voice
in the legislative process. As part of the Owens Corning team,
I am proud to serve our company as an advocate for sound public
policy issues that affect our business and its people."
Mr. Libonati joined Owens Corning in January 1999, after a 22-
year career as a special agent in the United States Secret
Service. He headed the agency's Congressional Affairs Office
following legislative fellowships on the Senate Appropriations
and Senate Judiciary Committees. His diverse career included
assignments with the Presidential Protection Division,
Government Liaison Division and as head of the White House
Access Security Branch.
A strong proponent of voluntarism in fighting child
victimization, Mr. Libonati serves on the Board of Directors for
both the National Center for Missing and Exploited Children and
the National Center for Victims of Crime. Mr. Libonati was
selected as a winner of an Adam Walsh Children's Fund Rainbow
Award, which is bestowed annually to eight individuals who have
demonstrated dedication to protecting the lives of children.
Mr. Libonati holds a BA in Government and Politics from St.
John's University, in New York.
Owens Corning is a world leader in building materials and
composites systems. The company has sales of $5 billion and
employs approximately 20,000 worldwide. For more information,
please visit Owens Corning's Web site at www.owenscorning.com
DebtTraders reports that Owens Corning's 7.700% bonds due 2008
(OWENC4) are trading between 35 and 36.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=OWENC4for
real-time bond pricing.
PMP LTD: S&P Affirms Low-B Long Term Corporate Credit Rating
------------------------------------------------------------
Standard & Poor's affirmed its double-'B'-plus long-term
corporate credit rating on PMP Ltd. At the same time, the rating
was removed from CreditWatch where it was placed on July 2,
2001. The outlook is negative.
This rating action follows completion of a A$20.35 million new
equity injection from Seven Network Ltd. (SNL, not rated) and
the recent sale of PMP's domestic magazine assets into a 50/50
joint venture with SNL. Importantly, this latter transaction
raised an initial A$65 million, which was applied to debt
reduction and also included a A$65 million put option over PMP's
remaining 50% share of the joint venture, which can be put to
SNL in August 2002.
"Although PMP's cash flow protection measures are currently weak
for the rating, the company has a number of opportunities to
reduce its high debt levels in the next 12 months," said Paul
Draffin, associate, Corporate & Infrastructure ratings. "PMP's
primary strategy is to divest its U.K. magazine business, Attic
Futura, which is expected to generate sufficient proceeds to
reduce debt to levels more consistent with the rating."
Importantly, if PMP is unable to complete the sale of the U.K.
assets in a timely manner, the put option over its domestic
magazine joint-venture investment provides a contingent
mechanism to reduce debt. In the near term, however, PMP
continues to be impaired by its limited financial flexibility,
caused by restrictive bank covenants, onerous financing costs,
and a short debt-maturity profile.
Despite cyclical weakness, PMP's core printing operations, which
account for the majority of group earnings, continue to generate
satisfactory cash flows. Furthermore, closure or divestment of a
number of PMP's noncore, start-up, or loss-making media
activities during 2001 should further enhance cash flow
generation. As a consequence, PMP is likely to continue to fund
modest debt reduction from cash flow, and this should improve
significantly if economic conditions improve in the next few
years. In addition, although the Australian magazine market
remains difficult, the new ownership structure is expected to
facilitate a modest improvement in magazine earnings in the near
term through cross media opportunities with SNL.
"The negative outlook reflects the uncertainties surrounding the
timing and proceeds of the U.K. asset sale, PMP's limited near-
term financial flexibility, and continued soft trading
conditions in magazine publishing and commercial printing,"
added Mr. Draffin. "However, a successful sale of the U.K.
assets or exercise of the SNL put option, together with a
successful renegotiation of PMP's medium-term debt facilities,
could see PMP's outlook revised to stable in the next six months
to 12 months."
PARTS.COM: Dismisses Deloitte & Touche as Independent Auditors
--------------------------------------------------------------
On December 21, 2001, the Board of Directors of parts.com, Inc.
approved and notified Deloitte & Touche LLP of their dismissal
as the Company's independent certified public accountants.
Deloitte & Touche's report on the consolidated financial
statements for the year ended December 31, 2000 contained an
explanatory paragraph relating to substantial doubt regarding
the uncertainty of the Company's ability to continue as a going
concern.
Parts.com, based in Sanford, Florida, provides business-to-
business electronic commerce software and parts procurement
platform provider. The Company's e-procurement solutions enable
corporations to use electronic automation to streamline business
transactions and reduce costs. In addition to automating
existing relationships between buyers and seller, Parts.com also
provides a marketplace where buyers and sellers can conduct
transactions electronically.
PCSUPPORT.COM: Closes New Capital Infusion Via Private Placement
----------------------------------------------------------------
PCsupport.com Inc. (OTC BB: PCSP), a leading provider of
outsourced helpdesk solutions, announced the completion of a
private financing from which the company realized gross
proceeds, before offering fees and expenses, of US$907,000 from
current and new shareholders. Under the terms of the financing,
investors purchased a total of 7,566,661 common shares of
PCsupport.com.
The Company also issued as finders' fees common share purchase
warrants to purchase an additional 756,000 shares of common
stock. One half of the share purchase warrants have an exercise
price of $0.20 and a 2 year term, the balance have and exercise
price of $0.40 and a three year term. Cash finders' fees of
$80,000 were paid under terms of the financing agreements and
expenses of approximately $40,000 were incurred, with the
Company realizing net proceeds of approximately US$787,000 to
support operations and for general working capital requirements.
"We are very pleased with the support our shareholders and the
financial community have provided in this financing," said Mike
McLean, President and CEO of PCsupport.com Inc. "Strong growth
is forecast for the technical support industry and we believe
PCsupport.com is well positioned with differentiated products
and high caliber service to gain market share. Our restructuring
in our first quarter has helped us to hold down costs for our
June 30, 2002 fiscal year. We are focused on reaching monthly
profitability and positive cash flow during this fiscal year."
PCsupport.com is a leading provider of outsourced help desk
solutions. The Company partners with corporations to assist them
in reducing the costs of providing technical support services
while improving the overall support experience of computer users
through our MyHelpDesk System. PCsupport.com has received
numerous industry awards and accolades, including the 2001
WebStar Award, the 2001 MVP Award for Best IT Outsource Solution
and the 2000 Harold H. Short Award for Innovations in Service.
As at September 30, 2001, the company's balance sheet showed
that its liquidity is strained, with a working capital deficit
of around $800,000.
PILLOWTEX: Plan's Classification & Treatment of Creditor Claims
---------------------------------------------------------------
Pillowtex Corporation, the top U.S. producer of towels,
blankets, pillows, and down comforters, and makes other bed,
bath, and kitchen textiles and accessories, lays-out how it
proposes to classify and treat creditors' claims under its Plan
of Reorganization filed on December 28, 2002, in the U.S.
Bankruptcy Court for the District of Delaware:
Class/Description Proposed Treatment
----------------- ------------------
1 - Unsecured Priority Unimpaired; on the Effective Date,
Claims each holder of an Allowed Claim in
Class 1 will receive cash equal to the
amount of the Allowed Claim.
Estimated Aggregate Estimated Percentage Recovery: 100%
Claims Amount: $100,000
2 - Convenience Claims: Impaired; on the Effective Date, each
Claims less than holder of an Allowed Claim in Class 2
$2,500 will receive cash equal to 10% of the
amount of the Allowed Claim.
Estimated Aggregate Estimated Percentage Recovery: 10%
Claims Amount: $1,500,000
3 - Industrial Revenue Unimpaired; on the Effective Date,
Bond Claims Allowed Industrial Revenue Bond Claims
will be Reinstated.
Estimated Aggregate Estimated Percentage Recovery: 100%
Claims Amount: $11,959,000
4 - Other Secured Claims Unimpaired; on the Effective Date,
pertaining to each holder of an Allowed Claim in
mechanics' liens Division 4A, 4B, 4C or 4D will
asserted by: receive cash equal to the amount of
the Allowed Claim.
4A - R. Phillips
Construction
4B - Smith Gray
Electric
4C - Southern
Mechanical
Services
4D - Adams Electric
Estimated Aggregate Estimated Percentage Recovery: 100%
Claims Amount: $485,559
4E - Secured Claims Unimpaired; on the Effective Date,
arising under or each holder of an Allowed Claim in
evidenced by Debtor Division 4E will receive, in full
Opelika Industries, satisfaction of the Allowed Claim,
the treatment provided for in the
Inc.'s Promissory
Note dated December Stipulation and Agreed Order Regarding
29, 1995 payable to Secured Claim of General Electric
General Electric Capital Corporation signed by the
Capital Corporation. Bankruptcy Court on November 16, 2001.
Estimated Aggregate Estimated Percentage Recovery: 100%
Claims Amount: $125,000
4F - Secured Claims Impaired; on the Effective Date,
arising under the unless otherwise agreed by a Claim
Master Energy holder and each applicable Debtor,
Services Agreement, each holder of an Allowed Claim
dated as of June 3, in Division 4F will receive, in
1998 between full satisfaction of its Allowed
Pillowtex and Claim, treatment on account of the
DukeSolutions, Inc. Allowed Claim in the manner set forth
in Option A or B, at the election
Estimated Aggregate of the applicable Debtor to be
Claims Amount: $17,190 exercised by written notice to the
applicable creditor not later than 10
days before the deadline to object to
the Confirmation of Plan.
Option A: Each holder of an Allowed
Claim in Division 4F with
respect to which the
applicable Debtor or Debtors
elect Option A will receive
cash equal to the value of
the collateral securing the
Allowed Claim and an
Unsecured Claim (to be
included in Class 6) for the
difference between the value
& the Allowed Claim amount.
Option B: Each holder of an Allowed
Claim in Division 4F with
respect to which the
applicable Debtor or Debtors
elect Option B will receive
new secured debt obligations
in an aggregate principal
amount equal to the value of
the collateral securing the
Allowed Claim and an
Unsecured Claim (to be
included in Class 6) for the
difference between the value
& the Allowed Claim amount.
Estimated Percentage Recovery: 100%
5 - Bank Loan Claims Impaired; on the Effective Date, each
Secured & Unsecured holder of an Allowed Claim in Class 5
Claims arising under will receive, in full satisfaction
the Pre-petition of all of its Bank Loan Claims, a Pro
Credit Facility. Rata share of 9,015,000 shares of New
Common Stock.
Estimated Aggregate Estimated Percentage Recovery: 46.8%
Claims Amount:
$425,948,194
6 - Unsecured Claims Impaired; if Class 6 accepts the Plan,
Overline Facility on the Effective Date, each holder of
Claims, Aircraft an Allowed Claim in Class 6 will
Lease Claims, Old receive, in full satisfaction of its
Senior Subordinated Allowed Claim, subject to any
Notes Claims, Old 6% enforceable subordination rights
Debenture Claims and expressly preserved pursuant to
Old 6% Debenture Section XI.C.3 of the Plan, a Pro Rata
Promissory Note share of:
Claims against any
Debtor and Unsecured (a) 234,500 shares of New Common Stock
Claims against any
Debtor that are not (b) New Warrants to purchase 1,764,706
otherwise classified shares of New Common Stock.
under Article II of
the Plan, including If Class 6 does not accept the Plan,
Trade Claims and no property will be distributed to or
Tort Claims. retained by the holders of Allowed
Claims in Class 6.
Estimated Aggregate Estimated Percentage Recovery: 1.0%
Claims Amount: (excludes the value of New Warrants)
$532,326,907
7 - Intercompany Claims Impaired; no property will be
distributed to or retained by the
Pillowtex Entities on account of
Claims in Class 7, and the Claims will
be discharged as of the Effective
Date. Notwithstanding this treatment
of Class 7 Claims, each of the
Pillowtex Entities holding an
Intercompany Claim in Class 7 will be
deemed to have accepted the Plan.
Estimated Percentage Recovery: 0%
8 - Pillowtex Old Impaired; no property will be
Preferred Stock distributed to or retained by the
Interests holders of Interests in Class 8, and
the Interests will be canceled on the
Effective Date.
Estimated Percentage Recovery: 0%
9 - Pillowtex Old Common Impaired; no property will be
Stock Interests distributed to or retained by the
holders of Interests in Class 9, and
the Interests will be canceled on the
Effective Date.
Estimated Percentage Recovery: 0%
10 - Pillowtex Subsidiary Unimpaired; on the Effective Date,
Debtors Old Common Interests in Class 10 will be
Stock Interests Reinstated.
Estimated Percentage Recovery: 100%
(Pillowtex Bankruptcy News, Issue No. 20; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
PRIMIX SOLUTIONS: Preparing to Sell N. Amer. Consulting Business
----------------------------------------------------------------
A special meeting of Stockholders of Primix Solutions Inc. will
be held on January [ ], 2002, (date yet to be determined), 9:00
a.m. eastern time, at the offices of McDermott, Will & Emery 28
State Street, Boston, MA 02109 for the purpose of considering
and voting upon:
1. Approval of the sale of the company's North American
consulting business to Burntsand (New England) Inc., a Delaware
corporation and indirect wholly-owned subsidiary of Burntsand
Inc., a Canadian corporation, pursuant to an asset purchase
agreement, dated November 14, 2001, between Primix and
Burntsand; and
2. Such other business as may properly come before the
special meeting and adjournments or postponements thereof.
The Board of Directors has fixed the close of business on
January 3, 2002 as the record date for the determination of
stockholders entitled to notice of, and to vote at, the special
meeting and any adjournments or postponements thereof. Only
holders of Primix common stock of record at the close of
business on January 3, 2002 will be entitled to notice of, and
to vote at, the special meeting and any adjournments or
postponements thereof.
In the event there are not sufficient shares to be voted in
favor of any of the foregoing proposals at the time of the
special meeting, the special meeting may be adjourned in order
to permit further solicitation of proxies.
Primix Solutions, formerly a software developer, derives all of
its sales from Internet consulting, systems integration, and Web
development services. Its QuickStart Portal builds an e-business
storefront that links a client's sales, supply chain, and
customer service operations over the Web. Its e-Catalyst
consulting service targets Internet startups, delivering
consulting expertise and operations support (offices and
equipment). Primix is using acquisitions to elbow its way into
the competitive Internet consulting arena. As at September 30,
2001, the company sustained strained liquidity, as total current
liabilities exceeded total current assets by nearly $6 million.
PSINET INC: Intends to Sell Certain Equipment to Japanese Unit
--------------------------------------------------------------
In connection with the sale of their Japanese subsidiary for
$10.2 million, PSINet, Inc., and its debtor-affiliates seek an
order from the Court (i) authorizing the sale of certain
equipment utilized in the business of non-debtor subsidiary
PSINet Japan, Inc., from PSINet to PSINet Japan for nominal
consideration, free and clear of all liens, claims, encumbrances
and interests; and (ii) approving the terms and conditions of
that certain Asset Purchase Agreement by and between PSINet and
PSINet Japan for this transaction.
PSINet Japan currently uses the Equipment in the operation of
its businesses. Transfer of the Equipment to PSINet Japan is
integral to the sale of PSINet Japan's Shares to C&W. Without
such Equipment Sale, the value of the sale of the Shares to the
PSINet estates would be decreased. To complete that transaction,
the Debtors are required to convey the Equipment, now held by
PSINet Inc. (the parent) under disguised financing agreements,
to the subsidiary in Japan. Upon the conveyance of the Equipment
to the subsidiary, the Debtors then seek to sell the Shares of
the subsidiary to a designee of C&W, subject to higher and
better offers.
Third-party appraisers retained by the Debtors have estimated
the value of the Equipment to be approximately $32,000 (without
prejudice to any party asserting a lien on the Equipment to
argue differently). The remaining book value of the payments for
the Equipment is approximately $550,000. In the Debtors' view,
the $10.2 million purchase price provided for in the Share
Purchase Agreement, or any higher and better bid, represents
more value for the Debtors' estates in connection with the
Equipment and the Shares than does a separate stand-alone sale
of the Equipment and the Shares.
Thus, the Debtors seek authority pursuant to Section 363 of the
Bankruptcy Code to sell the Equipment to PSINet Japan for
nominal consideration - apart from the consideration provided by
the Share Purchase Agreement.
To avoid prejudicing the rights of any party holding a lien on
the Equipment, the Debtors propose that any such lien shall
attach to the proceeds of the sale of the Shares of PSINet
Japan, to the extent of the value of the Equipment conveyed,
without prejudice to any party in interest to challenge the
validity or extent of such lien.
Therefore, the Debtors request entry of an order: (i)
authorizing the Sale of the Equipment, free and clear of all
liens, claims, encumbrances and interests; (ii) approving the
terms and conditions of the Asset Purchase Agreement; and (iii)
granting such other and further relief as is just and proper
under the circumstances. (PSINet Bankruptcy News, Issue No. 12;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
RAZORFISH: Taps Ladenburg Thalmann as Stock Placement Agent
-----------------------------------------------------------
Razorfish, Inc is offering 2,941,176 shares of its Class A
common stock at a price of $0.17 per share. The Company has
engaged on a reasonable best efforts basis Ladenburg Thalmann &
Co., Inc., as exclusive placement agent for this offering.
Razorfish's common stock is quoted on the Nasdaq National Market
under the symbol "RAZF". On December 26, 2001, the reported sale
price for the common stock on the Nasdaq National Market was
$0.20 per share.
Founded in 1995, Razorfish is a digital solutions provider that
helps leading companies generate competitive value by leveraging
the power of digital technology. From strategy and design to
system integration, Razorfish provides clients with
opportunities to increase their return on investment, enhance
productivity, and maximize the value of their relationships with
customers, employees, and partners. At September 30, 2001, the
company posted a total stockholders' equity deficit of around $6
million, and working capital deficit of almost $4 million.
SCAN-OPTICS: Completes Debt Workout Pact with Patriarch Partners
----------------------------------------------------------------
Scan-Optics, Inc. (OTC BB: SOCR), a leader in Information
Capture and Customer Service Solutions for Government,
Insurance, Order, Proxy, Test Scoring and other paper-intensive
businesses, announced that the Company has completed a debt
restructuring agreement with Patriarch Partners LLC (Patriarch)
of New York effective December 31, 2001.
The restructuring includes the following terms:
-- The maturity date of the Company's Loan Agreement with
Patriarch will extend through December 31, 2004.
-- Patriarch's commitment under the Company's existing
revolving line of credit was increased from $10 million to
$10.75 million until June 30, 2002, at which point the
commitment amount will return to $10 million. All revolving
loans will continue to accrue interest at a rate of prime plus
2%.
-- The Company's existing term loan was reduced from $8.5
million to $2 million and will continue to accrue interest at a
rate of prime plus 2%. No principal payments will be required on
the $2 million remaining term loan until maturity on December
31, 2004.
-- The Company issued to Patriarch shares of preferred
stock as well as warrants to purchase common stock in exchange
for forgiveness of the remaining $6.5 million balance of the
term loan.
-- The warrants represent the right to purchase up to
4,975,000 shares of common stock of the Company, or
approximately 33% of the currently outstanding shares, including
shares reserved for stock options. The Company may repurchase
the warrants once the term loan and revolving loan are satisfied
and the Company redeems the preferred stock. The repurchase
price of the warrants is $2.7 million plus accrued interest
calculated at prime plus 2%. In addition, if the warrants are
repurchased in 2002, 10% of the Company's common stock will
transfer to Patriarch. This amount increases to 15% in 2003 and
30% in 2004. The warrants are not exercisable until after
December 31, 2004, except upon certain events of default.
-- The preferred stock is subject to mandatory redemption
for $3.8 million plus interest at prime plus 2% on December 31,
2004. The preferred stock is non-voting except upon exercise of
the warrants.
In discussing this agreement, Michael J. Villano, Chief
Financial Officer of Scan-Optics, stated, "We are pleased to
have completed the debt restructuring with Patriarch Partners.
Extending the maturity date to December 31, 2004 provides Scan-
Optics with the capital structure to support the business going
forward."
Scan-Optics, Inc., with headquarters in Manchester, Connecticut,
is recognized internationally as an innovator and solution
provider in the information management and imaging business. It
designs, manufactures and services products and systems for
character recognition, image processing and display, data
capture, and data entry. Scan-Optics systems and software are
marketed worldwide to commercial and government customers
directly and through distributors. Through its Manufacturing
Services Division, Scan-Optics also provides contract
manufacturing services to customers, outsourcing the
manufacturing of complex, electro-mechanical assemblies. The
Company has sales and service offices located throughout the
United States and abroad. As at June 30, 2001, the company is
illiquid with working capital deficit of around $10 million.
Additional information is available at http://www.scanoptics.com
SHOWSCAN ENTERTAINMENT: Court Converts Case to Chapter 7
--------------------------------------------------------
By order of the U.S. Bankruptcy Court for the Central District
of California, the Chapter 11 case of Showscan Entertainment,
Inc. is converted to a Chapter 7 Liquidation. The Court directs
the Debtor to cease all business operations and immediately turn
over all assets to the Chapter 7 trustee.
Showscan Entertainment Inc., an action film producer, filed for
chapter 11 petition on August 11, 2000 in the U.S. Bankruptcy
Court for the Central District of California, Los Angeles
Division. Leslie A. Cohen, Esq. at Liner Yankelvitz Sunshine,
et al., serves as bankruptcy counsel to the Company.
SUN COUNTRY: Involuntary Chapter 7 Case Summary
-----------------------------------------------
Alleged Debtor: Sun Country Airlines, Inc.,
a Delaware Corporation
2520 Pilot Knob Road, Suite 250
Mendota Heights, MN 55120
Involuntary Petition Date: January 9, 2002
Case Number: 02-10060-MFW Chapter: 7
Court: District of Delaware Judge: Mary F. Walrath
Petitioner's Counsel: Ricardo Palacio, Esq.
Ashby & Geddes, P. A.
222 Delaware Avenue
17th Floor
Wilmington, DE 19801
Tel: 302-654-1888
Fax: 302-654-2067
Petitioners Amount of Claim
----------- ---------------
Pegasus Aviation, Inc. $1,143,669
San Francisco, CA 94111
Riverhorse Aviation Group, Inc. $1,091,231
Santa Monica, CA 90405
Pegasus Aviation Asset $870,648
Securitization Trust 1997
c/o Pegasus Aviation, Inc.
SUNBEAM CORP: Court Okays Solicitation Period Extension
-------------------------------------------------------
By order of the U.S. Bankruptcy Court for the Southern District
of New York, Sunbeam's Exclusive Period to Solicit Acceptances
of its plan of reorganization is extended through April 15,
2002.
Sunbeam Corporation, the largest manufacturer and distributor of
small appliances, sells mixers, coffeemakers, grills, smoke
detectors, toasters and outdoor & camping equipment in the
United States, filed for chapter 11 protection on February 6,
2001 in the Southern District of New York. George A. Davis,
Esq., of Weil Gotshal & Manges LLP, represents the Debtors in
their restructuring effort. As of filing date, the company
listed $2,959,863,000 in assets and $3,201,512,000 in debt.
TRISM INC: Committee Applies to Retain Spencer Fane as Counsel
--------------------------------------------------------------
The Official Committee of Unsecured Creditors in Trism Inc.'s
bankruptcy cases asks the Court for permission to retain the law
firm of Spencer Fane Britt & Browne LLP as its counsel in these
cases.
In their selection of SFBB, the Committee points out that the
firm has extensive experience in Chapter 11 proceedings, and in
corporate, litigation, securities, tax, real estate and solvency
matters. SFBB is also familiar with the business and financial
affairs of the complexity of Trism, Inc.'s cases.
SFBB will provide, primarily, professional services and is
expected:
a. To advise the Committee with respect to its rights,
duties and powers as an official unsecured creditors'
committee;
b. To advise the Committee with respect to terms, conditions
and documentation of financing agreements, cash
collateral orders and related transactions;
c. To investigate the nature and validity of liens asserted
against Debtors' property and to advise the Committee
concerning the enforceability of said liens;
d. To investigate and advise the Committee regarding
collection and, in accordance with applicable law,
recover property for the benefit of the estates;
e. To prepare and submit on behalf of the Committee, among
others, all applications, motions, pleadings, orders,
notices, schedules and other legal papers to be prepared
and submitted in these cases, and to review the financial
and other reports;
f. To advise the Committee concerning and to prepare
responses to applications, motions, pleadings, notices
and other documents which may be filed and served;
g. To counsel the Committee in connection with the
formulation, negotiation and promulgation of a plan or
plans of reorganization and related documents;
h. To appear on behalf of the Committee at all hearings
scheduled before the Court;
i. To review pending litigation and evaluating and advising
the Committee concerning appropriate actions to be taken
under the circumstances; and
j. To represent the Committee, and perform all other legal
services for the Committee
SFBB charges the Committee on an hourly basis:
a. Partners $205 - $290
b. Associates $150 - $185
c. Paralegals $90 - $110
In addition to the rates, SFBB will maintain detailed and
itemized records of all professional services rendered and any
actual and necessary expenses incurred on behalf of the
Committee for reimbursement purposes.
Trism, Inc., the nation's largest trucking company that
specializes in the transportation of heavy and over-dimensional
freight and equipment, as well as material such as munitions,
explosives and radioactive and hazardous waste, filed for
chapter 11 protection on December 18, 2001 in Western District
of Missouri. Laurence M. Frazen, Esq. at Bryan Cave LLP
represents the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed $155
million in assets and $149 million in debts.
USINTERNETWORKING: Chapter 11 Case Summary
------------------------------------------
Debtor: USinternetworking, Inc.
dba USinternetworking
dba USi
One USi Plaza
Annapolis, MD 21401
Bankruptcy Case No.: 02-50215
Chapter 11 Petition Date: January 7, 2002
Court: District of Maryland (Baltimore)
Judge: E. Stephen Derby
Debtor's Counsel: Paul M. Nussbaum, Esq.
Whiteford, Taylor & Preston
7 St. Paul St., #1400
Baltimore, MD 21202
Tel: 410-347-8700
VECTOUR: Wants Lease Decision Period Stretched through April 13
---------------------------------------------------------------
VecTour, Inc., asks the U.S. Bankruptcy Court in Delaware to
grant it an extension of time within which to assume, assume and
assign, or reject all unexpired nonresidential real property
leases through April 13, 2002.
The Debtors submit to the Court that they are not in a position
to make a fully-informed determination regarding the disposition
of the Leases at this time. The Debtors said that the Leases at
issue here constitute a potentially valuable asset of their
estates. The Debtors do not own any real property, but rather,
conduct the entirety of their business operations from the
premises governed by the Leases. These Leases are essential to
the Debtors' efforts to continue the operations of their
businesses, and ultimately, the decision to assume (and assign)
or reject the Leases will be central to the Debtors' plan of
reorganization. Without an extension, the Debtors are at risk of
prematurely assuming Leases that may be later are burdensome or
unnecessary to their business plans or prematurely rejecting
Leases that may be critical to their reorganization efforts.
VecTour, Inc. is a leading nationwide provider of ground
transportation for sightseeing, tour, transit, specialized
transportation, entertainers on tour, airport transportation and
charter services. The Company filed for chapter 11 protection on
October 16, 2001. David B. Stratton, Esq. and David M.
Fournier, Esq. at Pepper Hamilton LLP represent the Debtors in
their restructuring effort.
VENUS EXPLORATION: Begins Trading on OTCBB Under Symbol VENX
------------------------------------------------------------
Venus Exploration Inc. (OTCBB:VENX) announced that on Jan. 7,
2002, the Company received notification from The Nasdaq Stock
Market that Nasdaq has determined to delist the Company's common
stock from The Nasdaq SmallCap Market at the opening of business
on Jan. 8, 2002, due to its failure to comply with an exception
to the net tangible assets/shareholders' equity requirements.
Effective Jan. 8, 2002, the Company's common stock began trading
on the OTC Bulletin Board under the symbol "VENX". The OTCBB is
a regulated quotation service that displays real-time quotes,
last sale prices, and volume information in over-the-counter
equity securities.
San Antonio-based Venus Exploration Inc. is engaged in the
generation of development, exploitation and exploration
prospects by applying advanced geoscience technologies for the
purpose of increasing shareholder value through the discovery of
oil and natural gas reservoirs in the United States. Venus is
focused in the Expanded Yegua Trend of the Upper Texas and
Louisiana Gulf Coast and the Cotton Valley Trend of East Texas
and Western Louisiana and its prospect inventory includes 72
prospects and leases with net unrisked reserve exposure of
approximately 1.0 TCFE.
WSI INDUSTRIES: Receives Notice of Default from Bank Lender
-----------------------------------------------------------
WSI Industries, Inc. (Nasdaq:WSCI) reported net sales of
$3,811,000 for the first quarter of fiscal 2002 ended November
25, 2001, down from $6,575,000 in the year-earlier quarter. The
Company posted a net loss of $247,000 compared to earnings of
$67,000 in the first quarter of fiscal 2001.
Michael J. Pudil, president and chief executive officer,
commented: "WSI's lower operating results reflected the
continued impact of the weak national economy on our customer
base. However, it is encouraging to note that first quarter
sales were virtually unchanged from the prior quarter's level,
an indication, we believe, that our manufacturing programs are
stabilizing and that the worst may be behind us. In fact, most
of our customers are signaling their intention to gradually
increase order levels with WSI over the balance of this year. If
these plans fully materialize, the resulting increase in
manufacturing volumes, combined with ongoing cost control and
reduced interest expense, should enable WSI to return to
profitability in fiscal 2002."
The Company's first quarter loss was contained by aggressive
cost reduction measures, which resulted in a 52% decline in
selling and administrative expense in comparison to last year's
first quarter. First quarter results also benefited from a 42%
reduction in interest expense year-over-year, reflecting a
substantial paydown in bank debt with the proceeds from the sale
of the Long Lake, Minnesota, manufacturing facility in the
fourth quarter of fiscal 2001. Total debt declined 27% to
$7,327,000 at November 25, 2001, from $10,019,000 at the end of
last year's first quarter. As a result, the Company's
debt/equity ratio improved to .60 at the end of this year's
first quarter, from .97 at the same time a year ago.
The Company said it is not in compliance with one of the
covenants in connection with its Credit and Security Agreement
and has received a Notice of Default from its bank. However, the
Company has made all required principal and interest payments to
the bank in connection with this agreement. The Company is
currently working with the bank to obtain a waiver of the
violated covenant, which it expects to receive.
WSI Industries, Inc. is a leading contract manufacturer that
specializes in the machining of complex, high-precision parts
for a wide range of industries, including agriculture,
construction, aerospace and avionics, recreational vehicles and
computers.
WARNACO GROUP: Foreign Vendors Have Until Feb. 28 to File Claims
----------------------------------------------------------------
The Warnaco Group, Inc., and its debtor-affiliates employed
Amster, Rothstein & Eberstein to perform legal services in
connection with the Debtors' worldwide intellectual property.
In connection with these services, Amster has advised the
Debtors that hundreds of foreign vendors did render services and
incur fees and expenses related to the worldwide intellectual
property. Amster is asserting substantial claims against the
Debtors for pre-petition legal fees and expenses, which includes
fees and expenses of the Foreign Vendors.
Previously, the Debtors filed a motion with this Court:
(i) requiring Amster to turn over Debtors' files,
(ii) establishing a procedure to determine other documents to
be turned over, and
(iii) establishing a procedure disclaiming the validity,
value, extent and property of Amster's Lien on files, if
any.
This motion is currently calendared for the January 29, 2002
hearing.
The parties inform Judge Bohanon that they have reached an
agreement to settle the disputes related to the Turnover Motion.
One aspect of the settlement will involve providing notice to
Foreign Vendors of the opportunity to file claims. Amster and
the Debtors contemplate that a definitive agreement and motion
to compromise will be filed by January 15, 2002 to be heard
January 29, 2002.
The deadline for filing proofs of claim expired on January 4,
2002.
The Parties note that absent an extension of the bar date, the
Foreign Vendors may not receive a meaningful opportunity to file
a proof of claim. Accordingly, the Parties believe that an
extension of the deadline to file proof of claims is necessary
to preserve the settlement that was previously negotiated.
Thus, the parties stipulate and agree that the deadline for the
Foreign Vendors to file proofs of claim in the Debtors' chapter
11 cases is extended from January 4, 2002 to February 28, 2002,
and ask Judge Bohanon for his approval of this agreement.
(Warnaco Bankruptcy News, Issue No. 17; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
WASHINGTON GROUP: Anticipates Effective Date by Month-End
---------------------------------------------------------
Washington Group International, Inc., announced that it has
secured commitments for a $350 million, 30-month revolving
credit facility that essentially completes the company's
financial restructuring.
The facility, which is subject to Court review and final
documentation, will be used for working capital needs and
general corporate purposes, and provides Washington Group with
the financial strength and ample liquidity to compete for the
largest projects and at all levels in the engineering and
construction industry. The syndication for the facility was led
and arranged by Credit Suisse First Boston.
The company anticipates that its Plan of Reorganization,
confirmed on November 20, 2001, will become effective by the end
of January.
"We are tremendously pleased with the financial community's
response to this offering," said Stephen G. Hanks, Washington
Group President and Chief Executive Officer. "With a strong
financial platform, including restored bonding capacity and a
balance sheet with no term debt and $550 million in equity, we
will be well positioned to compete as a leader in all of our
markets.
"We have completed a major milestone in our accelerated
financial restructuring and this commitment is a clear barometer
of the financial community's confidence in Washington Group's
operational performance."
Washington Group International, Inc. is a leading international
engineering and construction firm. At work in 43 states and more
than 35 countries, the company offers a full life-cycle of
services as a preferred provider of premier science,
engineering, construction, program management, and development
services in 14 major markets. Markets served: Energy,
environmental, government, heavy-civil, industrial, mining,
nuclear-services, operations and maintenance, petroleum and
chemicals, process, pulp and paper, telecommunications,
transportation, and water-resources.
XOX CORPORATION: Inks Definite Deal to Merge with Tele Digital
--------------------------------------------------------------
XOX Corporation (OTC Bulletin Board: XOXC) announced that it has
signed a definitive agreement to merge with Tele Digital
Development, Inc. Upon completion of the merger the current
shareholders of XOX will own approximately 23% of the
outstanding shares of the merged company and current
shareholders of Tele Digital will own approximately 77% of the
merged company.
The merger will be subject to several conditions including,
approval by shareholders of both XOX and Tele Digital and
certain other regulatory and customary conditions.
XOX Chairman, Steve Liefschultz, sees the opportunity to
revitalize shareholder value and, assuming approval by XOX
shareholders, "we are optimistic about the revenue and earnings
growth potential of the combined companies. We have also been
impressed with Tele Digital's vision and board leadership under
Richard W. Perkins, and look forward to he and his executive
team continuing their important contributions to the future of
the merged entity."
XOX exited the geoscience business effective as of December 31,
2000 after management had determined that the geoscience
products and services did not meet the growth thresholds
expected by the shareholders of XOX. Since that time, XOX has
been exploring its strategic options including, but not limited
to, merging with or acquiring another entity or liquidation.
Tele Digital, a privately-held Minnesota corporation, designs,
develops and markets innovative operating software systems for
the wireless communications markets, including proprietary
prepaid mobile phone software. Tele Digital's customers are
original equipment manufacturers (OEMs), cellular carriers,
retailers and distributors to the mobile phone and other mobile
handheld device markets.
* BOOK REVIEW: The Luckiest Guy in the World
--------------------------------------------
Author: Boone Pickens
Publisher: Beard Books
Paperback: US$34.95
Review by Gail Owens Hoelscher
Buy a copy for yourself and one for a colleague on-line at:
http://amazon.com/exec/obidos/ASIN/1893122832/internetbankrupt
"This is the story of a man who turned a $2,500 investment into
America's largest independent oil company in thirty years and
along the way discovered that something is terribly wrong with
corporate America. Mesa Petroleum is the company, and I'm the
man." Thus begins the autobiography of Boone Pickens, who
prefers to be referred to without his first initial, "T."
Mr. Pickens' autobiography was originally published in 1987, at
the end of the rollercoaster years when he was one of the most
famous (or infamous, depending on your point of view) and most-
feared corporate raiders during a decade known for corporate
raiding. For the 2000 Beard Books edition, Pickens wrote an
additional five chapters about the subsequent, equally
tumultuous, 13 years, during which time he suffered corporate
raiders of his own, recapitalized, and retired, only to see his
beloved company merge with Pioneer. One of his few laments is
being remembered mainly for the high-profile years, rather than
for the company he built from virtually nothing.
Of the takeover attempts, he says:
"I saw undervalued assets in the public marketplace. My game
plan with Gul, Phillips, and Unocal wasn't to take on Big Oil.
Hell, that wasn't my role. My role was to make money for the
stockholders of Mesa. I just saw that Big Oil's management had
done a lousy job for their stockholders."
He would prefer to be known as a champion of the shareholder
rights movement, which prompted big corporations to become more
responsive to the needs and demands of their stockholders. He
founded the United Shareholders Association, a group that
successfully lobbied for changes in corporate governance. In a
memorable interview in the May/June 1986 Harvard Business
Review, Pickens said, "Cheif executives, who themselves own few
shares of their companies, have no more feeling for the average
stockholder than they do for baboons in Africa."
Boone Pickens was born in 1928 in Holdenville, Oklahoma. His
grandfather was Methodist missionary to the Indians there; his
father was a lawyer and small player in the oil business.
People in Holdenville worked hard and used such expressions as
"Root hog or die," meaning "Get in and compete or fail."
The family later moved to Amarillo, Texas, where Pickens went to
Texas A&M for one year, but graduated from Oklahoma State
University in 1951 with a degree in geology. He worked at
Phillips Petroleum for three years, and then, despite growing
family obligations, struck out on his own. His wife's uncle
told him, "Boone, you don't have a chance. You don't know
anything."
This book is a wonderful read. Pickens pulls no punches, and is
as hard on himself as anyone else. He talks about proxy fights,
Texas-Oklahoma football games, his three marriages, poker,
takeover strategies, and unfair duck hunting practices, all in
the same easy tone. You feel like he's sitting right there in
the room with you.
Pickens ends the introduction to this story with this:
"How I got from a little town in Eastern Oklahoma to the towers
of Wall Street is an exciting, unlikely, sometimes painful
story. And, if you're young and restless, I'm hoping you'll
make a journey similar to mine."
Root hog or die!
*********
Bond pricing, appearing in each Monday's edition of the TCR, is
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is provided by DebtTraders in New York. DebtTraders is a
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sourcing of attractive high yield debt investments. For more
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Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
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C. de Roda, Ronald P. Villavelez and Peter A. Chapman, Editors.
Copyright 2002. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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*** End of Transmission ***