/raid1/www/Hosts/bankrupt/TCR_Public/020322.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, March 22, 2002, Vol. 6, No. 58
Headlines
360NETWORKS: Asks Court to Fix Bar Date for Proofs of Claim
AMC ENTERTAINMENT: Unit Inks Pact to Acquire Gulf State Theatres
ANC RENTAL: Lehman Balks at More Block Airport Consolidations
ACME METALS: Obtains Plan Filing Extension Until May 15, 2002
ADMIRAL INC: Names A. Farber as BIA Proposal Trustee in Canada
ALPHA TECHNOLOGIES: Inks Amended Credit Pact with Bank Group
AMERICA WEST: Expects to Book $15MM Restructuring Charges in Q2
AMERICAN SKIING: Expects to Record $22MM in Operating Loss in Q1
ANCHOR GLASS: S&P Drops Ratings to D After Missed Payment
APPLIED DIGITAL: Enters 3rd Amended Credit Pact with IBM Credit
ASSOCIATED MATERIALS: S&P Maintains Watch on Low-B Debt Ratings
AZUL HOLDINGS: Deloitte & Touche Resigns as Accountants
BABCOCK & WILCOX: Court Dismisses All Claims Re Asset Transfers
BETHLEHEM STEEL: Investment Fund Negotiating to Buy Dev't Works
BUDGET GROUP: Faces Suspension for Failing to Meet NYSE Criteria
BURLINGTON: Wins Nod to Implement Key Employee Retention Plan
CAPITAL ENVIRONMENTAL: Sets Shareholders' Meeting for Wednesday
CARAUSTAR: Moody's Lowers Low-B Ratings Over Weak Financials
CHIQUITA BRANDS: Appoints Craig A. Stephen as President and COO
CHROMATICS COLOR: Richard Eisner Replaces BDO Seidman as Auditor
CLASSIC COMMS: Committee Gets OK to Employ Orrick Herrington
COX TECHNOLOGIES: Working Capital Deficit Tops $400,000 in Q3
EVTC INC: Will Close Innovative Waste Acquisition by Next Week
ENRON CORP: Energy Debtor Propose Contract Notice Procedures
ENRON CORP: S&P Details Debtor's Deception in Senate Testimony
FACTORY CARD: Delaware Court Confirms Plan of Reorganization
FEDERAL-MOGUL: Court Approves Sale of Signal-Stat to Truck Lite
FOAMEX INT'L: Raises Price of Sr. Notes Offering to $300 Million
FOUNTAIN VIEW: Appoints Boyd Hendrickson as Chief Exec. Officer
GALEY & LORD: Secures Final Approval of $100MM DIP Financing
GIMBEL VISION: Craig Lavelle Resigns from Board of Directors
GLOBAL CROSSING: Seeks Open-Ended Lease Decision Time Extension
GLOBAL CROSSING: KAB Group Wants Debtor to Produce Documents
GREATE BAY: Consummates Sale of Primary Asset to Bally Gaming
GREAT LAKES: Checkers to Acquire 7 Rally's Restaurants from RJR
HAYES LEMMERZ: Seeks Court Approval of Various Energy Agreements
HOCKEY CO.: Moody's Assigns Low-B Ratings Over Operational Risks
HOLLYWOOD ENTERTAINMENT: S&P Assigns BB- Rating to $175MM Loan
HUBBARD: Court Extends Time to File Plan Until May 6 in Canada
ICG COMMS: Seeks 4th Extension of Exclusive Solicitation Period
IT GROUP: U.S. Trustee Balks at Skadden Arps' Engagement Fees
INTEGRATED HEALTH: Amends 6 Leases and Disposes of 1 NHP Lease
IRIDIUM OPERATING: Seeks to Stretch Exclusivity through July 31
KAISER ALUMINUM: Taps Logan & Company as Notice & Claims Agent
KEYSOR-CENTURY: Case Summary & 20 Largest Unsecured Creditors
KMART CORPORATION: Committee Looks to KPMG for Financial Advice
LTV CORP: Seeks Okay of Proposed Administrative Claims Protocol
LASON INC: DE Court Sets Plan Confirmation Hearing for April 30
MARINER POST-ACUTE: Has Until May 15 to Decide on 213 Leases
MINK INTERNATIONAL: Fails to Maintain CDNX Listing Requirements
MUTUAL RISK: Pimco Equity Advisers Discloses 8.96% Equity Stake
NTELOS: S&P Affirms B Rating After Bank Loan Covenant Amendments
NATIONAL STEEL: Will Honor Prepetition Customer Obligations
NATIONSRENT INC: Court Okays Zolfo Cooper as Debtor's Consultant
NETIA HOLDINGS: Sets General Shareholders' Meeting for Wednesday
NETWORK PLUS: Court Approves Broadview's Winning Bid for Assets
NORTHWEST AIRLINES: Fitch Rates $300MM Sr. Unsecured Notes at B+
NORTHWESTERN STEEL: Sterling Offers $4.5MM for Melt & Rod Assets
PRESSTEK INC: Receives Waivers from Banks on Adast Bankruptcy
PUBLIC SERVICE: Fitch Revises Outlook to Positive on Merger Plan
PSINET INC: Grants GECC a Provisional Lien for Payment Assurance
RYSTAR COMMS: Fails to Maintain Exchange Listing Requirements
SERVICE MERCHANDISE: Proposes Fixtures Sale Bidding Procedures
STRUCTURED ASSET: Fitch Slashes Class B5 Certs. Ratings to D
SUPREX ENERGY: CDNX Delists Shares Effective March 20, 2002
TELSCAPE INT'L: Bringing-In Peisner Johnson as Tax Consultants
U.S. INDUSTRIES: Selling Domestic Lighting Companies for $250MM
W.R. GRACE: PD Panel Wins Nod to Hire Hilton for Claims Analysis
WARNACO GROUP: Asks Court to Give Indemnities Priority Status
* BOOK REVIEW: Creating Value through Corporate Restructuring:
Case Studies in Bankruptcies, Buyouts, and
Breakups
*********
360NETWORKS: Asks Court to Fix Bar Date for Proofs of Claim
-----------------------------------------------------------
360networks inc., and its debtor-affiliates seek the Court's
authority to fix the time period within which most creditors
must file proofs of claim against 360networks' estates or be
forever barred from asserting that claim. The Debtors propose a
bar date that is approximately 45 days after the entry of an
order approving this motion.
Alan J. Lipkin, Esq., at Willkie Farr & Gallagher, in New York
explains that the circumstances justify the fixing of a Filing
Deadline at this time. The Debtors have filed their schedules
and statements of financial affairs with the Clerk of this Court
and are progressing towards the formulation of a plan of
reorganization. "In order for the Debtors to confirm a plan, it
would be valuable to ascertain the nature, extent and scope of
the claims asserted against them," Mr. Lipkin states.
Furthermore, Mr. Lipkin relates that all creditors of the
Debtors are required to file a proof of claim on account of any
claim against the Debtors. However, proofs of claim are not
required to be filed anymore if they are:
(i) claims listed in the Schedules or any amendments that are
not listed as "contingent", "unliquidated" or "disputed"
and not disputed by the holders as to the correct Debtor,
amount or classification;
(ii) claims on account of which a proof of claim already has
been properly filed with the Court against the correct
Debtor;
(iii) claims previously allowed by order of the Court;
(iv) claims allowable under 11 U.S.C. Secs. 503(b) and
507(a)(1) as expenses of administration;
(v) claims of current officers or directors of a Debtor for
indemnification or contribution arising due to such
officer's or director's service to a Debtor;
(vi) claims of Debtors against other Debtors;
(vii) claims held by any direct or indirect non-debtor
subsidiary of 360networks, Inc. assertable against a
Debtor;
(viii) claims against the Debtors' Canadian affiliates that have
filed concurrent proceedings in the Supreme Court of
British Columbia pursuant to the Companies' Creditors
Arrangement Act;
(ix) claims for principal, interest, fees, attorneys fees,
costs, expenses and other contractual obligations owing to
the Debtors' pre-petition lenders including their agents,
arrangers, managers and representatives under:
(a) the Credit Agreement, dated as of September 29, 2000
to which 360networks, Inc., 360networks Holdings (USA)
Inc., and JPMorgan Chase Bank, as Administrative Agent
and Collateral Agent, are parties;
(b) any Security Document; or
(c) any other agreement or writing executed or delivered
pursuant to or in connection with the Credit Agreement
or any Security Document.
Mr. Lipkin further reports that any holder of a claim respecting
an unexpired lease or executory contract, which has not been
assigned by the respective Debtor prior to the Petition Date,
would be required to file a claim by the later of the date:
(a) the date provided in any order authorizing the Debtor to
reject such Agreement or, if no such date is provided,
then 30 days after the date of any such order, and
(b) the Filing Deadline; provided, however, that if an
Agreement is not rejected prior to the time such Agreement
expires, such claims must be filed by the later of:
(i) the Filing Deadline, and
(ii) 30 days after such date of expiration.
Any other claims respecting a lease or contract must be filed by
the Filing Deadline, Mr. Lipkin emphasizes.
Specifically, the Debtors request a bar date approximately 45
days after the entry of the Court order approving this motion.
"That should allow the Debtors approximately 15 days for
coordination of the service and coordination of the service and
publication of notice of the Filing Deadline and approximately
30 days for creditors to file proofs of claim," Mr. Lipkin says.
The Debtors believe thousands of parties are entitled to receive
notice of the Filing Deadline. "The Clerk's Office is not
equipped to docket and maintain the large number of proofs of
claim that will be filed," Mr. Lipkin notes. Thus, the Debtors
will utilize the services of Bankruptcy Services LLC -- an
independent third party -- to receive, docket, maintain,
photocopy and transmit proofs of claim in these cases as well as
coordinate the processing of proofs of claim with the Clerk's
office. Mr. Lipkin reminds the Court that by order, this Court
previously approved the retention of Bankruptcy Services to
provide such services. (360 Bankruptcy News, Issue No. 20;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
AMC ENTERTAINMENT: Unit Inks Pact to Acquire Gulf State Theatres
----------------------------------------------------------------
As previously reported, on January 28, 2002, AMC Entertainment,
Inc. entered into letters of intent with the owners of Gulf
States Theatres ("GST") and Entertainment Properties Trust
("EPT") respecting a series of transactions in regard to which,
if consummated,
1) AMC would acquire the operations of GST and related
assets (exclusive of GST's real estate assets) from GST for an
aggregate purchase price of approximately $45 million;
2) EPT would acquire GST's real estate assets, consisting
of five theatres with 68 screens located in the New Orleans,
Louisiana area, and lease them to us for a term of 20 years with
an initial annual base rent of $7.2 million and provisions for
rent escalators and percentage rents;
3) AMC would agree to enter into a sale/leaseback
transaction with EPT for certain new megaplex theatres that AMC
develops in the New Orleans, Louisiana area within three years
after the closing date; and
4) AMC would make available for sale/leaseback to EPT two
theatres with 42 screens with an initial lease rate of 11%.
On March 9, 2002, AMC's subsidiary, American Multi-Cinema, Inc.,
entered into a definitive purchase agreement with the owners of
GST and also entered into leases with EPT with respect to the
transactions referred to in the first three numbered points
above. Of the approximate $45 million purchase price,
approximately $5.8 million will be paid to EPT for specified non
real estate assets which EPT is acquiring from GST and reselling
to AMC at cost. AMC also will pay $300,000 annually for five
years in connection with consulting and non-competition
agreements. The sellers will deposit approximately $2 million in
escrow to secure the performance of certain repairs. The closing
under the purchase agreement is subject to customary conditions
and is expected to occur on March 15, 2002. The leases are
conditioned upon the closing under the purchase agreement.
The letter of intent with respect to the transaction referred to
in the fourth numbered item above is non-binding and the
proposed transaction referred to in such item is subject to
negotiation of definitive agreements. The price at which AMC
sells properties to EPT will be determined by AMC's management
and the management of EPT based on historical cost, which AMC
believes is consistent with prevailing market conditions. AMC
also believes its rent terms with EPT are consistent with
prevailing market conditions.
AMC is the largest movie exhibitor in the U.S. based on revenue
and the second-largest based on screen count. It has one of the
industry's most modern theater circuits due to its rapid
expansion and consistent disposition activity since 1995.* A
charitable trust created after the death of former CEO Stanley
Durwood owns 17% of AMC but controls 66% of the voting power.
As reported in the March 20, 2002 edition of Troubled Company
Reporter, On March 18, 2002, Standard & Poor's placed its 'B-'
ratings on AMC Entertainment Inc. on CreditWatch with positive
implications based on evidence of positive developments in the
company's financial policy.
Although AMC is actively looking for acquisitions, it has
reduced the financial risk somewhat by using equity as part of
its funding strategy. AMC's pending sale of $94.5 million in
common stock is part of its effort to maintain a more moderate
capital structure. In addition, the use of equity to partially
finance its purchase of GC Cos., Inc. will help preserve key
credit measures, while the acquisition modestly increases its
geographic reach and diversity.
ANC RENTAL: Lehman Balks at More Block Airport Consolidations
-------------------------------------------------------------
Lehman Brothers Inc. and Lehman Commercial Paper Inc., as Term
Loan Agent, asks the Court to:
A. deny ANC Rental Corporation and its debtor-affiliates' new
set of consolidation motions at the Springfield-Branson
Regional Airport, the Huntsville-Madison County Airport
Authority and the Pittsburgh International Airport;
B. require the Debtors to supply information necessary to
assess the Airport Consolidation Program; and
C. prohibit the Debtors from consolidating the Alamo and
National facilities without providing Lehman adequate
assurance.
William P. Bowden, Esq., at Ashby & Geddes in Wilmington,
Delaware, tells the Court that Lehman previously consented to
the consolidation motions on the understanding that the Debtors'
efforts at the Cincinnati, Detroit, Hartford and Jacksonville
airports represented a pilot project. Lehman also understood
that after the consolidation was implemented at those airports,
the Debtors would pause and meet with their constituencies to
assess collectively the success of their consolidation strategy
prior to implementing such strategy on full-scale.
In January, Mr. Bowden recalls, Lehman requested basic
information to evaluate the pilot project and the consolidation
strategy, including a table, showing, at each, the status of the
consolidation effort and the schedule of implementation with
disclosure of major issues at each airport and an independent
professional marketing study of the customers' reaction to the
airport consolidations. However, the Debtors are now reneging
on their understanding with Lehman to pause and evaluate the
success of the pilot project phase of the consolidation plan
with this new set of airport consolidation motions.
Notwithstanding that, Mr. Bowden submits that Lehman has a lot
of concerns about the Debtors' consolidation efforts. Lehman is
concerned that if the consolidation progresses too far, it will
be prohibitively difficult to sell Alamo and National as
separate companies. He goes on to say it is essential that
these businesses be sold separately to maximize their value.
In the third quarter of 2001, Mr. Bowden recalls that Lehman was
retained by ANC to advise it on strategic alternatives. Lehman
solicited offers to buy or invest in ANC either as a whole or in
its separate lines of businesses. The offers for the separate
lines of businesses- Alamo, National, Alamo Local, Car-Temps and
International - materially exceeded the value offered for the
company as a whole. Such offers, however, never materialized
because of events in September 11, 2001.
Mr. Bowden observes that the consolidation strategy appears to
be a creeping substantive consolidation of the Alamo and
National business without the Debtors making a motion to that
effect nor with any supporting fact-finding or legal conclusion.
Mr. Bowden reminds the Court that the secured creditors have
liens on the separate assets of the Alamo and National
businesses.
According to Mr. Bowden, Lehman is also concerned about the
Debtors' consolidation strategy since its holds a perfected lien
on the Debtors' intellectual property rights such as the Alamo
and National trademarks and trade names. He goes on to say that
Lehman is also concerned that the Airport Consolidation Program
will severely diminish the value of its security interest.
This fear, Mr. Bowden contends, is very real given that the
airport consolidation motions reduces the separate visibility
and presence of Alamo and National and confuses and jumbles them
into one composite mark as Alamo/National. The Courts will
inevitably view the new mark only as a whole when assessing ANC
Rental's rights in a future trademark dispute. Under the anti-
dissection rule, a composite mark is tested for its validity and
distinctiveness by looking at the mark as a whole, rather than
dissecting it into its component parts.
Given their lengthy and prominent use in U.S. Commerce, Mr.
Bowden believes that the marks Alamo and National are now strong
marks that are inherently distinctive and at least one federal
court has specifically noted the dominance of Alamo and National
in the car rental industry. Should ANC Rental cease using Alamo
and National in favor of the new composite mark Alamo National,
ANC Rental will be interpreted to have abandoned these
individual marks. Third parties could therefore begin to use
such marks without liability for infringement and ANC Rental
would have a weaker trademark rights to assert against any
third-party infringement.
The Debtors have yet to provide Lehman with adequate protection
from the diminution of the value of its interest in the
trademarks Alamo and National. Until such time the Debtors could
provide such assurance, Mr. Bowden asks the Court to direct the
Debtors to cease and desist from any effort to combine brands or
operations at any location.
Congress Joins In
Mark Collins, Esq., at Richards Layton & Finger PA in
Wilmington, Delaware, makes it known to the Court that Congress
Financial Corporation is joining in Lehman's omnibus objection
to the Debtors' motion to consolidate operations at the
Pittsburgh, Huntsville and Springfield-Branson Airport. (ANC
Rental Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ACME METALS: Obtains Plan Filing Extension Until May 15, 2002
-------------------------------------------------------------
By order of the U.S Bankruptcy Court for the District of
Delaware, the exclusive periods of Acme Metals Incorporated and
its affiliated debtors are extended. The Debtors obtained an
extension on their exclusive proposal period through May 15,
2002 and their exclusive solicitation period runs through July
15, 2002.
The Debtors say this extension will promote reorganization
through negotiation and to afford them additional time to arrive
at a consensual plan.
Acme Metals filed for chapter 11 bankruptcy protection on
September 28, 1998 in the U.S. Bankruptcy Court for the District
of Delaware. Brendan Linehan Shannon, Esq. and James L. Patton,
Esq. at Young, Conaway, Stargatt & Taylor represent the Debtors
in their restructuring effort. When the company filed for
protection from its creditors, it listed assets of $813 million
and liabilities of $541 million.
ADMIRAL INC: Names A. Farber as BIA Proposal Trustee in Canada
--------------------------------------------------------------
Admiral Inc. (CDNX: ADS) filed a notice of intention to make a
proposal pursuant to the Bankruptcy and Insolvency Act.
The filing of a notice of intention under the BIA stays legal
proceedings against Admiral in respect of its operations until
April 13, 2002. A. Farber & Partners Inc. has been appointed
Proposal Trustee under the BIA.
Admiral has also accepted the resignation of Mr. Gord Cobham as
President and director of Admiral.
Admiral manufactures and distributes over 100 proprietary
environmentally friendly specialty cleaning products, marketed
in Canada and internationally to businesses and institutions
including health care facilities, supermarket chains, food
service operators, food and beverage processing and industrial
companies.
Admiral is a growth-oriented company developing new state-of-art
cleaning products and capitalizing on its leadership position in
sanitation solutions for the environmental, health and safety
conscious marketplace. For more information about Admiral visit
http://www.admiral-inc.com
ALPHA TECHNOLOGIES: Inks Amended Credit Pact with Bank Group
------------------------------------------------------------
Alpha Technologies Group, Inc. (NASDAQ:ATGI) announced that it
had concluded an amendment and restructuring of its loan
agreement with its bank group. Under the amendment, the
financial covenants have been reset to levels that the Company
believes it can meet. In addition, quarterly principal payments
under the Term Loan have been substantially reduced for calendar
2002 and 2003. The Company is also required to make a $5,000,000
principal payment by June 28, 2002. The bank group has agreed to
release its lien on the Company's Pelham, New Hampshire facility
in connection with such principal payment, and the Company
anticipates that it will refinance such property to make the $5
million payment.
The banks also waived the Company's non-compliance of certain
loan covenants for the quarter ended January 27, 2002. The
Company is now in full compliance with the covenants contained
in the loan documents and its debt has been reclassified into
current and long-term portions as of the end of the first fiscal
quarter of 2002. As a result, the Company's working capital as
of the end of the first quarter was $4,952,000.
Lawrence Butler, Chairman and Chief Executive Officer of the
Company, said, "Now that we have successfully restructured our
loan, we can concentrate our efforts on growing our business.
The bank loan restructuring was a time consuming task and we are
glad to have it behind us."
Alpha Technologies Group, Inc. is engaged in the manufacture,
fabrication and sale of thermal management products and aluminum
extrusions. The Company is one of the leading manufacturers of
thermal management products in the United States. Thermal
management products, principally heat sinks, dissipate unwanted
heat generated by electronic components. The Company's thermal
management products serve the automotive, telecommunication,
industrial controls, transportation, power supply, factory
automation, consumer electronics, aerospace, defense,
microprocessor, and computer industries. The Company also sells
aluminum extrusions to various industries including the
construction, sporting goods and other leisure activity markets.
AMERICA WEST: Expects to Book $15MM Restructuring Charges in Q2
---------------------------------------------------------------
America West Holdings Corporation (NYSE: AWA), parent company of
America West Airlines, Inc., released certain data regarding
special charges that it will report with its first quarter 2002
results as well as capacity and expense expectations for the
full year 2002.
The potential for special charges had previously been indicated
in a Form 8-K filed on January 31, 2002. Capacity and expense
expectations for 2002 had previously been disclosed as part of
the 7-Year Plan included in a Form 8-K filed on December 18,
2001.
Adoption of FAS 142 and ERV Impairment
The most significant charge will be a write-down of its Excess
Reorganization Value (ERV) account per FAS 142, a new accounting
standard that addresses goodwill and other intangible assets.
The provisions of FAS 142 require that ERV be tested for
impairment at least annually and written down as necessary.
America West's ERV account was established in 1994 as part of a
company restructuring and carried a balance of $272 million as
of December 31, 2001. In accordance with FAS 142, America West
will no longer record ERV amortization expense of approximately
$20 million per year. America West estimates that an amount
ranging from $100 million to the entire $272 million ERV balance
will be impaired and written off upon adoption of FAS 142 in the
first quarter of 2002. The actual amount of the write-down will
be determined by an independent valuation of the company which
will be completed after March 31, 2002.
Asset Impairment
America West estimates that it will realize additional special
charges of up to $60 million for the impairment of various
assets. These impairment losses have mostly resulted from the
events of September 11 and are predominantly driven by a
reduction in value for owned aircraft.
Restructuring/Other Expenses
America West expects to announce up to $15 million in special
charges primarily related to the restructuring it finalized on
January 18, 2002. These charges include fees, losses on sales of
assets, and employee severance expenses.
Capacity
America West currently expects to increase its capacity by 0-2%
for the full year 2002 versus 2001, less than the 3% estimated
in the Form 8-K filed on December 18, 2001. Its fourth quarter
2002 capacity will approximately equal that for the first
quarter of 2001.
1Q: (16) - (14)%
2Q: (3) - (1)%
3Q: 6 - 8%
4Q: 19 - 21%
Full Year: 0 - 2%
Fuel Price
America West currently forecasts fuel prices, using the 12 month
NYMEX heating oil futures curve, as adjusted for hedge
transactions. Currently forecasted fuel prices, excluding
taxes, are as follows:
1Q: 62-66 cents
2Q: 68-72 cents
3Q: 69-73 cents
4Q: 71-75 cents
Full Year: 68-72 cents
Operating CASM Excluding Fuel and Special Charges
America West expects its unit cost excluding fuel and special
charges to increase by 6-8% in the first quarter of 2002 versus
the first quarter of 2001 due to the large year-over-year
decrease in capacity. For the year, America West forecasts its
unit cost excluding fuel and special charges to decrease by 3-5%
versus 2001. This is less than the 5-6% decrease that was
estimated in the 7-Year Plan due to higher-than-anticipated
insurance, security, and airport costs.
Warrants
As partial compensation to secure a $429 million stabilization
loan in January, America West issued warrants to acquire 22.6
million shares of America West stock at $3 per share. The value
of these warrants will be amortized over the seven year life of
the loan as non-cash interest expense using the effective
interest rate method. America West expects non-cash interest
expense to be $8-10 million in 2002. The warrants are reflected
on America West's balance sheet as equity and thus will not be
marked to market.
America West Holdings Corporation is an aviation and travel
services company. Wholly owned subsidiary America West Airlines
is the nation's eighth largest carrier serving 88 destinations
in the U.S., Canada and Mexico. The Leisure Company, also a
wholly owned subsidiary, is one of the nation's largest tour
packagers. At September 30, 2001, the company's balance sheet
showed a working capital deficiency of $260 million.
AMERICAN SKIING: Expects to Record $22MM in Operating Loss in Q1
----------------------------------------------------------------
American Skiing Company received new information which
necessitates substantial revisions to its current financial
filing with the SEC. The Company expects to file its Form 10-Q
within the extension time period. The Company also expects that
its total revenue from operations for its fiscal quarter ended
January 27, 2002 will be approximately $121.2 million, compared
with $156.3 million for its fiscal quarter ended January 28,
2001. The Company expects that its loss from operations for the
Company's fiscal quarter ended January 27, 2002 will be
approximately $22.0 million, compared with $7.9 million profit
for its fiscal quarter ended January 28, 2001.
American Skiing Company is the largest operator of alpine ski,
snowboard and golf resorts in the United States. At October 30,
2001, the company recorded a working capital deficit of $66
million.
ANCHOR GLASS: S&P Drops Ratings to D After Missed Payment
---------------------------------------------------------
Standard & Poor's lowered its ratings to 'D' on Anchor Glass
Container Corp. on March 19, 2002.
Standard & Poor's expects to resolve the CreditWatch placement
following Anchor Glass' actions with respect to its April 1,
2002, interest payment on its US$150.0 million 11.25% first
mortgage notes.
Anchor Glass has a proposed restructuring plan, which includes a
definitive agreement with Cerberus Capital Management L.P. for
US$100.0 million of new capital, of which US$80.0 million is in
the form of equity. The company plans to file for bankruptcy
within two weeks, and undergo a formal reorganization under U.S.
bankruptcy court.
Under the plan, Anchor Glass' outstanding common stock will be
cancelled, while the company will replace its existing senior
bank facility with a new US$100.0 million credit facility.
Anchor Glass intends to use the proceeds from the Cerberus
investment to retire its unsecured notes at 100.0% of principal,
and pay all accrued interest on the first mortgage notes.
Although the first mortgage notes will remain outstanding, the
reorganization plan will remove debt from the company's balance
sheet and improve its capital structure.
APPLIED DIGITAL: Enters 3rd Amended Credit Pact with IBM Credit
---------------------------------------------------------------
On February 27, 2002, Applied Digital Solutions, Inc., a
Missouri corporation, entered into Amendment No. 5 to the Second
Amended and Restated Term and Revolving Credit Agreement, as
amended, with IBM Credit Corporation extending until April 2,
2002, the payments which were due on March 1, 2002.
Execution of Third Amended
and Restated Term Credit Agreement
On March 1, 2002, ADSX and Digital Angel Share Trust, a newly
created Delaware business trust, entered into a Third Amended
and Restated Term Credit Agreement with IBM Credit, which will
replace the Second Amended and Restated Term and Revolving
Credit Agreement. Upon the completion of the proposed merger
between ADSX's subsidiary, Digital Angel Corporation, and
Medical Advisory Systems, Inc. (AMEX: DOC), a Delaware
corporation, the Credit Agreement will take effect.
Amounts outstanding under the Credit Agreement will bear
interest at an annual rate of 17% and will mature on February
28, 2003. No principal or interest payments are due until the
maturity date. However, the maturity date will automatically be
extended for consecutive one year periods if ADSX repays at
least 40% of the principal amount outstanding plus accrued
interest and expenses prior to February 28, 2003 and an
additional 40% of the principal amount outstanding plus accrued
interest and expenses prior to February 28, 2004. In any event,
all amounts outstanding will be required to be repaid by August
31, 2005. If all amounts outstanding are not repaid by February
28, 2003, the unpaid amount will accrue interest at an annual
rate of 25%. If not repaid by February 28, 2004, the annual
interest rate increases to 35%.
Upon completion of the merger between Digital Angel and MAS, in
satisfaction of a condition to the consent to the merger of IBM
Credit, ADSX will transfer to the Trust all shares of MAS common
stock owned by ADSX and, as a result, the Trust will have legal
title to approximately 82% of the MAS common stock. ADSX will
retain beneficial ownership of the shares. The Trust will be
obligated to liquidate the shares of MAS common stock owned by
it for the benefit of IBM Credit in the event ADSX fails
to make payments, or otherwise defaults, under the Credit
Agreement. Such liquidation of the shares of MAS common stock
will be in accordance with the SEC rules and regulations
governing affiliates.
The Credit Agreement contains certain debt covenants relating to
the Company's financial position and performance. The Credit
Agreement also prohibits ADSX from borrowing funds from other
lenders, and does not provide for any further advances by IBM
Credit. The Credit Agreement limits the amount ADSX may pay its
Chief Executive Officer, Richard Sullivan in cash, and prevents
ADSX from making certain cash incentive and perquisite payments,
including cash payments arising upon a change in control, to
various other executive officers.
Applied Digital Solutions is an advanced digital technology
development company that focuses on a range of early warning
alert, miniaturized power sources and security monitoring
systems combined with the comprehensive data management services
required to support them. Through its Advanced Wireless unit,
the Company specializes in security-related data collection,
value-added data intelligence and complex data delivery systems
for a wide variety of end users including commercial operations,
government agencies and consumers. At September 30, 2001, the
company's total current liabilities exceeded its total current
assets by about $60 million.
ASSOCIATED MATERIALS: S&P Maintains Watch on Low-B Debt Ratings
---------------------------------------------------------------
Standard & Poor's 'BB' ratings on Associated Materials Inc.
remain on CreditWatch with developing implications where they
were placed on December 20, 2001.
The company recently announced that it had entered into an
agreement to sell the company to an affiliate of Harvest
Partners, Inc., a private equity firm, for $50 per share in
cash. The total value of the transaction is about $436 million,
including $75 million of Associated Materials' outstanding 9-
1/4% senior subordinated notes, which will be refinanced. Total
debt outstanding, including capitalized operating leases, was
about $107 million at December 31, 2001.
Developing implications mean that the ratings could be raised,
lowered, or affirmed depending on the nature of the company's
capital structure following completion of the transaction.
Dallas, Texas-based Associated Materials is a medium-size
manufacturer of vinyl siding and windows used primarily in
residential repair and remodeling. Products are distributed
through more than 80 company-owned supply centers across the
U.S. The company also manufactures electrical cable used in
mining, offshore drilling, transportation, and other specialty
industries. The company has performed well over the past few
years, producing credit measures above current rating category
medians. However, the company's below-average business profile
has limited upside rating potential.
Standard & Poor's will monitor developments and make a ratings
decision when details of the recapitalization are known.
AZUL HOLDINGS: Deloitte & Touche Resigns as Accountants
-------------------------------------------------------
On February 6, 2002, Azul Holdings, Inc. received a letter from
Deloitte & Touche LLP in which Deloitte & Touche LLP submitted
its resignation as independent accountants for Azul. On January
10, 2001, Azul had engaged Deloitte & Touche LLP as its new
independent accountants. The Azul Holdings audit committee and
board of directors had approved this new engagement. Deloitte &
Touche LLP had replaced Richard A. Eisner & Company, LLP, who,
as previously reported, was dismissed as independent accountants
for Azul Holdings.
In reaction, the company stated, "We understand that this
decision by Deloitte & Touche LLP was made because Azul has no
material assets, no business operations and no personnel
following a foreclosure sale of its assets resulting from an
uncured default on its secured indebtedness. For that reason
Azul does not anticipate being able to prepare future periodic
filings under the Securities Exchange Act of 1934 nor does it
anticipate engaging replacement independent accountants."
At September 30, 2001, the company recorded a working capital
deficit of about $18 million, and a total shareholders' equity
deficit of about $17 million.
BABCOCK & WILCOX: Court Dismisses All Claims Re Asset Transfers
---------------------------------------------------------------
At a hearing Wednesday in the United States Bankruptcy Court for
the Eastern District of Louisiana, Judge Jerry A. Brown granted
a summary judgment motion filed by the defendants dismissing all
claims asserted in complaints filed by the Asbestos Claimants
Committee and the Future Claims Representative regarding the
1998 transfer of certain assets from Babcock & Wilcox to its
parent, Babcock & Wilcox Investment Company.
This ruling follows the Court's February 8 ruling that Babcock &
Wilcox was solvent at the time of the transfers. These rulings
are subject to appeal.
BETHLEHEM STEEL: Investment Fund Negotiating to Buy Dev't Works
---------------------------------------------------------------
Bethlehem Steel Corporation has signed a letter of exclusive
negotiation with the Delaware Valley Real Estate Investment Fund
(DVREIF) for the possible purchase of the remainder of the
Bethlehem Works development.
"Bethlehem Steel has taken a leadership role in moving the
project to the point of actual construction. Now is an
appropriate time to move the project to a new owner who can
advance the public/private partnership and see that Bethlehem
Works comes to fruition," said Robert S. Miller Jr., Bethlehem's
chairman and chief executive officer.
DVREIF is a limited partnership created for eligible retirement
plans to invest in real estate located within the greater
Delaware Valley. It has successfully invested in a wide variety
of commercial, retail, institutional and hospitality venues,
thereby increasing the value of the projects and its invested
funds. The fund invests for labor unions and uses union labor
for construction projects.
DVREIF is negotiating with Bethlehem Steel to purchase about
120 acres, which accounts for all available land and buildings
in Bethlehem Works on the city's South Side. Land and buildings
that are already sold include the parcels for Tech Center III,
the hockey arena and the preview center for the National Museum
of Industrial History. In addition, land and buildings have
been reserved for the National Museum of Industrial History,
such as the No. 2 machine shop and the blast furnaces.
"The greater Delaware Valley location and the national
prominence of Bethlehem Works make this project a good fit for
the management resources and partnership base of DVREIF," said
John M. Lawlor, managing director of the fund. "We expect to
continue with the development program initiated by Bethlehem
Steel and advanced by Enterprise Real Estate Services."
Enterprise Real Estate Services was retained by Bethlehem
Steel in late 1996 as the master developer of the site, and "our
work to date will allow us to plan for a smooth transition of
ownership," said Robert F. Barron, president and chief executive
officer of Enterprise. "DVREIF possesses strong developer
relationships that have grown from previous financing activities
with other projects. The collective expertise from DVREIF's
partnerships will help Bethlehem Works proceed more quickly."
The due diligence process is expected to be completed in early
summer. (Bethlehem Bankruptcy News, Issue No. 12; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
BUDGET GROUP: Faces Suspension for Failing to Meet NYSE Criteria
----------------------------------------------------------------
Budget Group, Inc., (NYSE: BD) has been informed by the New York
Stock Exchange that the exchange will suspend trading in Budget
Group's common stock before the market opens on Thursday, March
28, 2002. As previously announced, the Company does not
currently meet the continued listing criteria of the exchange
requiring a minimum closing share price of at least $1 per share
over a 30-day period in addition to a total market
capitalization of not less than $50 million and stockholders'
equity of not less than $50 million.
The weak economy and the events of September 11 have adversely
affected the Company's ability to meet the share price and
market capitalization criteria. Budget Group anticipates that
its stock will continue to trade on the over-the-counter
bulletin board (OTCBB) on or before March 28. The Company
expects to receive a new stock "ticker symbol" before trading on
the bulletin board.
The Company said the move to the OTC BB will not affect its
normal business operations.
Budget Group, Inc. owns Budget Rent a Car Corporation and Ryder
TRS, Inc. Budget is the world's third largest car and truck
rental system and Ryder TRS is the nation's second largest
consumer truck rental company. Budget Group continues to remain
a public company and files reports with the Securities and
Exchange Commission. Those reports are available on the SEC's
Web site at http://www.sec.govand the Company's Web site at
http://www.budget.com
BURLINGTON: Wins Nod to Implement Key Employee Retention Plan
-------------------------------------------------------------
Judge Newsome authorizes Burlington Industries, Inc., and its
debtor-affiliates to implement the Key Employee Retention Plan
with respect to participating employees in tiers I-III with
minor modifications. The Court further authorizes the Debtors
to enter into transactions necessary to implement the provisions
of a Retention Incentive Plan and Severance Plan for Mr.
McGregor.
Minor modifications to the original Key Retention Plan regarding
participating employees in tiers I through III are:
(i) the Debtors, the Creditors' Committee and the Secured
Lenders agreed to defer to a later date discussions
regarding an Emergence Performance Bonus Plan; thus, the
Debtors are not seeking approval of the Emergence
Performance Bonus Plan at this time;
(ii) Retention Incentive Payments will be payable as:
(a) two-thirds of each Participating Employee's payment
will be paid in installments on the prescribed dates;
(b) the remaining one-third will be paid in equal
installments upon the achievement of certain
performance targets agreed upon by the Debtors, the
Creditors' Committee and the Secured Lenders. The
parties have agreed to negotiate in good faith to
establish the Performance Targets; and
(c) participating employees under tiers I-III are entitled
to receive the severance benefits.
Furthermore, in lieu of the $1,000,000 retention bonus contained
in the McGregor Agreement, the Debtors, the Creditors' Committee
and the Secured Lenders have agreed to provide Mr. McGregor with
retention incentive and severance payments similar to those
provided to participating employees under the Retention Program.
As a result, the Debtors will not seek to assume the McGregor
Agreement and the retention incentive and severance payments
described will replace and supersede any similar payments or
benefits offered under the McGregor Agreement. Accordingly, the
aggregate value of the retention incentive or severance payments
to be made to Mr. McGregor under the Retention Program is less
than the $1,000,000 retention bonus contemplated by the McGregor
Agreement.
Mr. McGregor will receive a Retention Incentive Payment in the
aggregate amount of $603,750 payable as:
(i) two-thirds of the McGregor Retention Incentive Plan; and
(ii) the remaining one-third will be paid in equal installments
upon the achievement of the Performance Targets.
The Court further rules that if Mr. McGregor's employment is
involuntarily terminated without cause or upon a Change of
Control, or is voluntarily terminated with good reason, Mr.
McGregor will receive:
(i) a lump sum payment of the unpaid McGregor Time-Based
Payment;
(ii) a lump sum payment of any unpaid portion of Mr. McGregor's
award under the Annual Performance Incentive Plan to be
paid at the target amount set forth in such plan if
termination occurs before September 30, 2002 or at the
actual amount earned under such plan if termination occurs
on or after September 30, 2002; and
(iii) the unpaid McGregor Performance-Based Payment, if and when
the applicable Performance Targets are met. Mr. McGregor
will forfeit any unpaid amounts of the McGregor Retention
Incentive Payment or under the Annual Performance
Incentive Plan if his employment is voluntarily terminated
without good reason or involuntarily terminated with
cause.
This Court has already granted the implementation of the Plan
with respects to participating employees in tiers IV-VI in an
earlier order. (Burlington Bankruptcy News, Issue No. 9;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
CAPITAL ENVIRONMENTAL: Sets Shareholders' Meeting for Wednesday
---------------------------------------------------------------
A letter has gone out to shareholders of Capital Environmental
Resource Inc. which reads, in part: "Enclosed is a notice of
special meeting and a management proxy statement regarding a
special meeting of the shareholders of Capital Environmental
Resource Inc. to be held at the Fairmont Royal York Hotel,
Quebec Room, 100 Front Street West, Toronto, Ontario, Canada on
March 27, 2002 at 10:00 a.m. (Toronto Time)."
"The meeting has been called to ask shareholders to consider the
proposed issuance of 11,320,754 of the Company's Common Shares
upon the conversion of the same number of the Company's Series 1
Preferred Shares. The Series 1 Preferred Shares were issued and
sold to a group of investors on February 6, 2002 for an
aggregate purchase price of approximately US $30.0 million.
Approximately US $25.3 million of the proceeds from the
transaction were used by the Company to complete its acquisition
of Waste Services Inc., a Canadian waste services provider, on
February 6, 2002. The remainder of the proceeds will be used for
general corporate purposes, including transaction expenses."
"Pursuant to the rules of the Nasdaq Stock Market, the proposed
issuance of Common Shares must be approved by the Company's
shareholders. Under the subscription agreement with the
purchasers of the Series 1 Preferred Shares, the Company has
agreed to hold this special meeting to have shareholders vote on
the proposed issuance of Common Shares."
"The Board of Directors of the Company believes that the
proposed issuance of Common Shares is in the best interests of
the Company and its shareholders and accordingly has unanimously
approved the transaction and recommends that the shareholders
vote FOR the proposed issuance."
Capital Environmental Resource Inc. is a regional integrated
solid waste services company which provides collection,
transfer, disposal and recycling services in markets in Canada.
CARAUSTAR: Moody's Lowers Low-B Ratings Over Weak Financials
------------------------------------------------------------
Moody's Investors Service has downgraded the senior unsecured
debt and senior subordinated notes ratings of Caraustar
Industries Inc. Outlook for the ratings is stable.
Ratings changed:
* Guaranteed senior unsecured notes: from Baa3 to Ba1
* Guaranteed senior subordinated notes: from Ba1 to Ba2
* Senior unsecured shelf registration: from (P)Baa3 to
(P)Ba1
New ratings assigned:
* Senior Implied: Ba1
* Issuer Rating: Ba1
The rating actions reflect the impact of the current industry-
wide low demand for recycled paperboard (its main product) and
the weak cash generation of the company at present. Although
recovery is anticipated, it is expected to be slower than
originally thought so.
Caraustar is headquartered in Austell, Georgia. It is one of the
largest manufacturers of recycled paperboard in North America,
producing a wide variety of tubes, cores, composite containers,
folding cartons, and industrial and consumer packaging.
CHIQUITA BRANDS: Appoints Craig A. Stephen as President and COO
---------------------------------------------------------------
Chiquita Brands International, Inc., announced that Craig A.
Stephen has been promoted to President and Chief Operating
Officer, Far and Middle East/Australia Region, reporting to
Steven G. Warshaw, President and Chief Executive Officer of
Chiquita. He succeeds Dennis M. Doyle, who has been appointed
Senior Vice President - Regulatory Affairs at Chiquita.
Mr. Stephen will manage all of Chiquita's Fresh operations and
joint venture relationships in the region. In addition, he
continues to serve as a Director of Chiquita Brands South
Pacific, an Australian Stock Exchange company 40% owned by
Chiquita.
"Craig is well-respected for both his work in this region and
his skills in strategy and finance," said Mr. Warshaw. "Craig's
past accomplishments, his relationships with our business
partners, and his financial and operational expertise make him
an excellent choice to lead this growth area for our Company."
Mr. Stephen had been Vice President and Chief Financial Officer
of the Far and Middle East/Australia Region for two years. In
1997, he was named Vice President, Finance & Planning for the
region. He joined Chiquita in 1990 as a Corporate Planner and
was involved in numerous acquisitions and post-merger
integration efforts as well as economic analysis of regulatory
issues. Prior to Chiquita, Mr. Stephen was a Senior Manager at
Ernst & Young in Cincinnati.
He graduated magna cum laude with a B. S. degree in business
administration from the University of Cincinnati. Mr. Stephen
became a certified public accountant in 1985.
Chiquita is a leading international marketer, producer and
distributor of quality fresh fruits and vegetables and processed
foods. (Chiquita Bankruptcy News, Issue No. 9; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
CHROMATICS COLOR: Richard Eisner Replaces BDO Seidman as Auditor
----------------------------------------------------------------
Effective March 8, 2002, the Audit Committee of Chromatics Color
Sciences International, Inc. appointed Richard A. Eisner &
Company, LLP as its independent auditors to replace BDO Seidman,
LLP, as BDO Seidman, LLP declined to be reappointed as the
Company's independent auditors because the Company does not
currently meet its client profile.
BDO Seidman, LLP's reports on the Company's financial statements
for the past two years did not contain an adverse opinion,
disclaimer of opinion, or qualification or modification as to
uncertainty, audit scope, or accounting principles, except the
report contained a going concern explanatory paragraph.
Through its Gordon Laboratories subsidiary, the company is a
contract manufacturer of personal care products such as hair
care concoctions, cosmetics, perfumes, and skin care substances.
CCSI also has a more scientific side; it makes the ColorMate
system, which is used to perform jaundice testing on infants by
measuring changes in their skin color. The system (measuring
devices, filters, and software linked to either a handheld
device or to a computer) can distinguish approximately 200 skin-
tone categories. CCSI has used the same technology to develop
the Light Emitting Diode device, which can be used to match skin
tone with color cosmetics. At September 30, 2001, the company
recorded a total shareholders' equity deficit of $600,000.
CLASSIC COMMS: Committee Gets OK to Employ Orrick Herrington
------------------------------------------------------------
The Official Committee of Unsecured Creditors of Classic
Communications, Inc., sought and obtained permission from the
U.S. Bankruptcy Court for the District of Delaware to retain and
employ Orrick, Herrington & Sutcliffe, LLP, nunc pro tunc to
November 28, 2001, as their lead counsel.
Orrick Herrington will:
a) assist and advise the Committee in its consultations with
debtors regarding the administration of their
reorganization cases;
b) represent the Committee at hearings in these cases and
communicate with the Committee regarding the issues
raised, as well as the decisions of the Court;
c) assist and advise the Committee in its examination and
analysis of the conduct of Debtors' affairs and the
reasons for their Chapter 11 filings;
d) review and analyze all applications, motions, orders,
statements of operations and schedules filed with the
Court by Debtors and other parties-in-interest in this
proceeding, advise the Committee as to their property,
and take appropriate action;
e) assist the Committee in preparing the applications,
motions and orders in support of positions taken by the
Committee, as well as preparing witnesses and reviewing
documents in this regard;
f) apprise the Court of the Committee's analysis of Debtor's
operations;
g) confer with the financial advisors and any other
professionals retained by the Committee, if any are
selected and approved, so as to advise the Committee and
the Court more fully of Debtors' operations;
h) assist the Committee in its negotiations with Debtors and
other parties-in-interest concerning the terms of any
proposed plan of reorganization;
i) assist the Committee in its consideration of any plan of
reorganization proposed by Debtors or other party-in-
interest as to whether it is in the best interest of
creditors and is feasible;
j) assist the Committee with such other services as may
contribute to the confirmation of a plan of
reorganization; and
k) assist the Committee in performing such other services as
may be in the interest of creditors, including the
commencement and participation in appropriate litigation
regarding the estate.
Orrick will work closely with Walsh Monzack & Monaco, PA so that
there is no unnecessary duplication of services performed or
charged to the Debtors' estates.
Orrick Herrington will bill at its customary hourly rates:
Anthony Princi $550 per hour
Thomas L. Kent $395 per hour
Bradford Boyd $200 per hour
Jennifer Livingston $255 per hour
Classic Communications, Inc., a cable operator focused on non-
metropolitan markets in the United States, filed for Chapter 11
petition on November 13, 2001 along with its subsidiaries.
Brendan Linehan Shannon, Esq. at Young, Conaway, Stargatt &
Taylor represents the Debtors in their restructuring efforts.
When the Company filed for protection from its creditors, it
listed $711,346,000 in total assets and $641,869,000 in total
debts.
COX TECHNOLOGIES: Working Capital Deficit Tops $400,000 in Q3
-------------------------------------------------------------
Cox Technologies, Inc. (OTC Bulletin Board: COXT) reported an
improvement in cash flow during the third quarter of fiscal 2002
as compared to the same quarter in fiscal 2001. Cash flow for
the nine months ended January 31, 2002 was $37,000 as compared
to a negative $2,096,000 for the nine months ended January 31,
2001. The net loss of $339,000 for the third quarter of fiscal
2002 showed a $1,381,000 improvement as compared to the net loss
of $1,720,000 for the same period last year. The return to
positive cash flow during the fiscal year reflects the impact of
the strategic restructuring and cost cutting measures undertaken
during the last twelve months.
Dr. James L. Cox, Chairman, President and Chief Executive
Officer stated, "During the first nine months of fiscal 2002, we
have begun to realize some of the expected significant benefits
from our restructuring during the last twelve months.
Financially, our cash flow improved dramatically compared to
last year and we achieved major reductions in our operating
expenses. Operationally, we are producing and selling a small
quantity of the Vitsab(R) products and we expect the sale of
Vitsab(R) products to increase slowly throughout fiscal 2002 and
into fiscal 2003." Dr. Cox further stated, "With the slow
growth in the sale of Vitsab(R) products and price competition
in the Cox 1 graphic recorder line, the marketing focus has been
redirected to pursue sales in our Company's electronic data
logger products such as the DataSource(R) and Tracer(R)."
Jack G. Mason, Chief Financial Officer stated, "I am pleased
with our improvement in cash flow as compared to the prior
fiscal year and the progress we are making in the financial
restructuring of the Company. The Company has implemented
approximately $2,250,000 in annualized cost reductions in just
this fiscal year alone. Achieving these cost reductions will
help move the Company towards its goals of continued positive
cash flow and the return to profitability."
Sales revenues for the quarter ended January 31, 2002 decreased
11% or $256,000, as compared to the prior year period. The cost
of sales for the current quarter increased 4% or $49,000, as
compared to the third quarter of fiscal 2001. The decrease in
revenue and gross profit was driven by a decline in recorder
unit sales and a reduction in the overall average sales price.
However, a portion of this decline was offset by an increase in
unit sales of electronic data logger products. For the
remainder of the fiscal 2002, management believes the Company
will continue to experience a decrease in average sales price
for all products due to competitive price pressure, but expects
unit sales to remain constant or increase as compared to prior
periods.
General and administrative expenses decreased $1,493,000,
selling expenses decreased $150,000, and research and
development expenses decreased $121,000 for the quarter ended
January 31, 2002 as compared to the prior year period. The
decreases in the operating expenses reflect the impact of the
strategic restructuring undertaken during the last twelve months
and the Company finalizing the development of the Vitsab(R)
product. The Company expects the benefits of the restructuring
to continue to be realized throughout the balance of fiscal 2002
and into fiscal 2003.
Cox Technologies is engaged in the business of producing and
distributing transit temperature recording instruments, both
domestically and internationally. These graphic transit
recorders are marketed under the trade name Cox Recorders and
produce a record that is documentary proof of temperature
conditions. The Company has reached the final formative stages
of the development, production and marketing of the "smart
label" (Vitsab(R)) technology. Final development of this
product has required substantial effort and expense to refine
manufacturing processes to achieve a reliable and consistent
product delivery. At January 31, 2001, the company reported that
its total current liabilities exceeded its total current assets
by about $400,000.
EVTC INC: Will Close Innovative Waste Acquisition by Next Week
--------------------------------------------------------------
EVTC, Inc. (OTC Bulletin Board: EVTC) announced that, effective
Wednesday March 20, 2002, EVTC will commence trading on the
national bulletin board. The move from the Nasdaq Small Cap to
the Bulletin Board was due to the cumulative effects of the
change in the Company's business and the change of ownership
necessitated by the pending acquisition by EVTC of Innovative
Waste Technologies, LLC.
As a result of the changes, EVTC expects to conclude early next
week the previously announced acquisition of IWT and the funding
of the $1 million private placement. This earlier than
anticipated closing will enable EVTC to immediately put into
effect the final parts of its recently announced strategic plan
for the Company. Management believes that the acquisition will
enable EVTC to become a profitable leader in the marine and
industrial waste treatment business.
Guy L. Harrell, who will be Chairman and CEO upon the
acquisition of IWT, said, "We are extremely excited about the
prospects as a result of the anticipated early completion of the
acquisition. The implementation of IWT's business plan will
advance at an even faster pace as we can now go forward as one
company. IWT itself expects to be able to announce the
placement of a number of the reclamation units early next week.
On a profitability forecast, our analysis is that each unit that
is placed in service will create $1 million in operating income
on a per unit basis. Our business plan is to have over 40 in
place over the next 24-36 months."
EVTC plans to reapply for listing on a major national exchange
after the acquisition is completed and the financial statements
are available. The Company expects to be able to comply with
all of the listing requirements in a very short time period.
Full Circle, the remaining operational division of EVTC after
the previously announced proposed sales of its Ballast and EMC
divisions, plans to introduce new technologies during the
current quarterly period and, in the coming weeks, to re-staff
its personnel after new management is fully in place.
Innovative Waste Technologies (IWT) holds patents and patent
applications on technologies for wastewater, water treatment and
soil remediation. These technologies provide for treating of
contaminated wastewater through an electrical process and are
believed to be more economical and safe than other methods
presently available in a market having an estimated value of
over 60 billion dollars annually. Industries to be targeted by
EVTC following the acquisition of IWT are expected to include
oil and gas production facilities, oil and gas refineries, major
port facilities, industrial shipping companies, industrial waste
water and environmental remediation projects, as well as other
applicable industries.
* * *
As reported in the March 14, 2002 edition of Troubled Company
Reporter, EVTC, Inc. (Nasdaq: EVTC) is no longer in compliance
with the market capitalization requirements for continued
inclusion of its securities with The Nasdaq Stock Market under
Marketplace Rules 4310(C)(2)(B).
As disclosed in its public filings made with the Securities and
Exchange Commission during February of 2002, the staff granted
the Company's request for an oral hearing before a Nasdaq
Listing Qualifications Panel to hear the Company's opposition to
any delisting of its securities. By its March 4th letter, the
staff advised the Company that the Panel would consider
additional submissions from the Company regarding its
noncompliance with the market capitalization requirements when
rendering a decision following the March 1, 2002 panel hearing
with respect to the previously disclosed deficiencies.
ENRON CORP: Energy Debtor Propose Contract Notice Procedures
------------------------------------------------------------
Enron Energy Services Inc. asks the Court to approve procedures
to notify Customers in Texas, Maine and Massachusetts, of the
proposed Sale of their Retail Contracts, any cure amounts due
and how Customers will receive adequate assurance that any
prepetition defaults under the Retail Contracts will be cured.
Irene M. Goldstein, Esq., at LeBoeuf, Lamb, Greene & MacRae LLP,
in New York, New York, relates that there two types of defaults
under the Retail Contracts:
(1) The first category arises under those Retail Contracts
that have not been switched by Enron Energy to "physical"
service. The damages under such Retail Contracts to be
cured equal the difference, if positive, between the amount
actually paid by a Customer for electric power received from
its electric utility company and the amounts that would have
been paid had that Customer been switched over to physical
service by Enron Energy as set forth in the Retail Contracts
to which such Customer is a party. The amounts owed under a
Rate Default are a function of a number of factors,
including the Customer's actual usage, the actual rate paid,
the Customer's meter read date, and the ultimate switchover
date.
(2) The second category of damages are those arising under
Retail Contracts that contained either financial inducements
prior to beginning physical service or provided discounts
off the tariff pricing structure. Since Enron Energy ceased
providing bill payment services after commencing its chapter
11 case, these Customers did not receive their financial
discounts during one or more months of 2001. Those Customers
with Billing Defaults will receive a separate notice
advising them of the amount of the Billing Default. If Enron
Energy does not believe that there exists a Billing Default
under a Customer's Retail Contract, then such Customer will
not receive a Billing Default Notice. Enron Energy believes
that there are no defaults required to be cured under the
Retail Contracts under which physical delivery has
commenced.
According to Ms. Goldstein, all of the Retail Contracts relating
to Maine Customers have gone physical. Thus, Enron Energy
contends that no amounts are owed to Maine Customers.
In Massachusetts, Ms. Goldstein says, there are a number of
Retail Contracts that have not gone physical. So, Ms. Goldstein
admits, there may be amounts owing to Massachusetts Customers
due to Rate Defaults.
In Texas, Ms. Goldstein continues, none of the Retail Contracts
have gone physical. Accordingly, Ms. Goldstein informs Judge
Gonzalez that all of the Texas Customers may be owed amounts due
to Rate Defaults. In addition, Ms. Goldstein tells the Court,
there are approximately 50 Texas Customers with Billing
Defaults.
As a result of these differences among the Customers, Enron
Energy proposes to send Assumption Notices that tailored to
these differences advising the Customers of Enron Energy's
intention to assume, assign, and sell the Retail Contracts.
Moreover, Ms. Goldstein relates that Enron Energy intends to
escrow funds sufficient to pay the Rate Defaults and the
Billing Defaults from the proceeds of the Sale. However, Ms.
Goldstein explains that Enron Energy cannot yet determine the
exact amounts that will be owed to each Customer because Enron
Energy still needs information not yet available to calculate
the Retail Defaults.
But based on historical consumption, rate assumptions, and
estimates of Customers consenting to contract assignment, Ms.
Goldstein says, the aggregate amounts owed to Customers due to
Rate Defaults under all of the Retail Contracts might reach
$1,000,000 per month, from January 2002 through the date that
the Customers' service is switched over to Constellation or a
purchaser with a higher and better offer. Ms. Goldstein
explains that the Switch Over Date for each Retail Contract will
be on average 20 days following the closing of the Sale of such
Retail Contract. Amounts sufficient to satisfy all Billing
Defaults will also be placed into escrow, Ms. Goldstein adds.
For those Customers who believe that:
(i) defaults exist under their Retail Contracts other than the
Rate Defaults,
(ii) that there has been a Billing Default under their Contract
and have not received a Billing Default Notice,
(iii) they are owed amounts in addition to the Rate Defaults or
the Billing Defaults, or
(iv) the Adequate Assurance Escrow does not provide adequate
assurance of a cure under their Retail Contracts,
-- are required to file with the Court a written objection to
the proposed cure.
Ms. Goldstein assures the Court that Enron Energy will attempt
to reconcile any differences in the Cure Amount believed by the
Customer to exist. But in the event that Enron Energy and the
Customer cannot consensually resolve the Cure Amount Objection,
Ms. Goldstein says, Enron Energy will segregate any disputed
cure amounts, pending the resolution of such disputes by the
Court or mutual agreement of the parties, or if an exact amount
cannot be determined before the closing of the Sale, an
estimated amount based on historic patterns under the relevant
Retail Contract.
Ms. Goldstein informs Judge Gonzalez that amounts owed to
Customers as a result of Billing Defaults will be paid within
30 days of the closing of the Sale while customers who are owed
funds as a result of Rate Defaults will receive payment of the
amount within 60 days of the closing of the Sale.
According to Ms. Goldstein, a Customer who receives payment of a
Rate Default amount will also receive a notice detailing the
calculation used in determining the Rate Default. "Such Customer
will have 20 days from the date of such Payment Notice to file
an objection with the Bankruptcy Court if the Customer disputes
the Rate Default amount," Ms. Goldstein says.
Enron Energy also intends to send Consent Solicitation forms to
Customers who are parties to mid-market contracts at
Constellation's request. Ms. Goldstein explains that receipt of
an executed Consent Solicitation is a condition to
Constellation's obligation to purchase each Mid-Market Contract.
"If less than 50% of the Consent Stipulations for a particular
state are not received, Constellation will not purchase any Mid-
Market Contracts under the Purchase & Sale Agreement," Ms.
Goldstein emphasizes. (Enron Bankruptcy News, Issue No. 16;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ENRON CORP: S&P Details Debtor's Deception in Senate Testimony
--------------------------------------------------------------
"Day by day, it becomes ever clearer that Enron, far from
providing anything like complete, timely and reliable
information to Standard & Poor's, committed multiple acts of
deceit and fraud on Standard & Poor's, just as it did to many
others," said Ronald M. Barone, Standard & Poor's managing
director. Mr. Barone, one of the principal credit rating
analysts covering Enron, made his comments before a Senate
Governmental Affairs Committee hearing in Washington, D.C.
"On a number of occasions Enron made what we later learned were
direct and deliberate misrepresentations to Standard & Poor's,
relating to matters of great substance," Mr. Barone said and
cited several specific examples.
In order to gain a full understanding of Enron's use of off
balance sheet partnerships, Standard & Poor's requested a full
description of Enron's special purpose vehicle activity. On two
occasions (once in 1999 and again in 2000) Enron made
presentations to Standard & Poor's that purported to provide an
analysis, "including the kitchen-sink," of 100% of Enron's off-
balance sheet affiliates. These presentations failed to mention
many partnerships, including Chewco, LJM1 and LJM2. And
Standard & Poor's requests for updates and further clarification
of this information were not met in any meaningful way.
According to news reports, Enron failed to reveal nearly $4
billion in debt, instead calling them hedge instruments. "For a
company that actually showed between $8 billion and $10 billion
in debt, the effect on Enron's book debt-to-total capital ratio
of showing several billion more would have been enormous," said
Mr. Barone. He noted that a press report suggested that one of
the prime motivations for Enron's actions was to hide its true
debt obligations from the rating agencies for the purposes of
inflating its credit rating.
The Powers Report, Mr. Barone noted, similarly determined that
the off-balance sheet partnerships had been created and designed
precisely to conceal from others the true picture of Enron's
financial status.
"This concealment persisted, notwithstanding repeated requests
from Standard & Poor's for any further information to more
clearly depict Enron's true financial situation," he said.
"Had Enron told the truth about its financial condition during
the ratings process, the impact on Enron's rating would have
been significant," Mr. Barone said. "Had they been revealed,
the clandestine dealings and obfuscatory disclosure practices
conducted by Enron's management would have cast long shadows on
the validity of Enron's credibility in general and its financial
reporting in particular."
Mr. Barone explained and strongly defended Standard & Poor's
rating history on Enron. He said that Enron's BBB+ rating "was
by no means the greatest vote of confidence a rating can
bestow." He said it placed Enron at the lowest category of
investment grade ratings and was well below what Enron itself
"repeatedly and unsuccessfully" sought from Standard & Poor's.
He added that the "BBB+ level rating we had assigned was not
only well below how Enron was often treated when it borrowed
money from the market," but it was also "consistently lower than
the ratings of other companies its size."
But even that rating was predicated on deliberate
misrepresentations made by Enron to Standard & Poor's.
"At the heart of the process that leads to a rating ... is an
unambiguous understanding between the company seeking the rating
and Standard & Poor's: The company is obliged to furnish
complete, timely and reliable information to Standard & Poor's
. . . and we, in turn, use that and other information we gather
to assess creditworthiness," said Mr. Barone.
"But Enron did not keep -- it did not begin to keep -- its part
of the well understood bargain."
He noted that studies on Standard & Poor's ratings demonstrate
an excellent track record with a strong correlation between the
ratings initially assigned by Standard & Poor's and eventual
default: the higher the initial rating, the lower the
probability of default and vice versa. Ratings have gained
respect and authority throughout the investment community
because they are widely known to be based on independent,
objective and credible analysis. To ensure this, ratings are
assigned by a committee, not by any individual.
No portion of an analyst's compensation is dependent on or
connected with the performance of the companies they rate or the
amount of fees paid to Standard & Poor's. In addition, the
primary mission of Standard & Poor's analysts is to provide
independent analysis; it is not owned by any investment banking
firm, bank or similar organization.
In his testimony, Mr. Barone also described the important
differences between a debt rating and an equity rating -- a
Standard & Poor's credit rating does not constitute a
recommendation to purchase, sell, or hold a particular security.
Nor does a rating speak to the suitability of an investment for
particular investors. Rather, a rating reflects
Standard & Poor's opinion of a company's ability to meet its
debt obligations on time and in full.
Clearly the collapse of Enron has been a terrible tragedy. "It
is vital, however, that we look to [it] as an opportunity to
consider improvements that can be made to our system," said Mr.
Barone. He noted that Standard & Poor's has long been an
advocate for the highest standards of corporate transparency
around the world. "Because ratings ultimately depend upon
information provided by the issuer, we have been a long-time
champion of complete, timely and reliable disclosure of
financial information and the best means of corporate
governance. We have supported, and will continue to support,
any regulatory efforts aimed at enhancing these goals," Mr.
Barone concluded.
A copy of the full testimony can be found on Standard & Poor's
Web site http://www.standardandpoors.comunder the Enron section
found on the home page.
Standard & Poor's, a division of The McGraw-Hill Companies,
provides widely recognized financial data, analytical research
and investment and credit opinions to the global capital
markets. With more than 5,000 employees located in 18
countries, Standard & Poor's is an integral part of the global
financial infrastructure. Additional information is available
at http://www.standardandpoors.com
Founded in 1888, The McGraw-Hill Companies is a global
information services provider meeting worldwide needs in the
financial services, education and business information markets
through leading brands such as Standard & Poor's, BusinessWeek
and McGraw-Hill Education. The Corporation has more than 350
offices in 33 countries. Sales in 2001 were $4.6 billion.
Additional information is available at http://www.mcgraw-
hill.com
FACTORY CARD: Delaware Court Confirms Plan of Reorganization
------------------------------------------------------------
Factory Card Outlet Corp., announced that the United States
Bankruptcy Court for the District of Delaware had confirmed the
Company's amended plan of reorganization that it filed with the
Court on February 5, 2002. William E. Freeman, the Chairman of
the Board of Directors and Chief Executive Officer, also
announced the promotion of Gary W. Rada to President of the
Company. Mr. Freeman also announced his plans to step down as
Chairman and Chief Executive Officer in order to return to New
York to pursue other turnaround and startup opportunities.
"Gary's strong leadership skills and 26 years of retail
experience made him a natural choice to lead the Company as it
emerges from bankruptcy. His merchandising talent has been a
key contribution to the Company's success during this highly
successful turnaround and we are excited to have an individual
of Gary's caliber to initiate the Company's growth strategy.
Gary will be assuming the leadership role," Freeman said of his
successor.
Mr. Rada, 47, joined Factory Card Outlet in 1998 as Senior Vice
President and General Merchandising Manager. He was promoted to
Executive Vice President in 1999. Prior to joining the Company
he was Vice President and General Merchandising Manager at
Bruno's grocery chain headquartered in Birmingham, Alabama. Mr.
Rada also spent more than 20 years serving in various operating,
merchandising and senior level positions at Jewel/OSCO, a
division of Albertson's. An Illinois native, Mr. Rada and his
family currently reside in Naperville, IL.
William E. Freeman, along with J. Bayard Kelly were the founders
of Factory Card Outlet. Freeman served as Chairman of the
Board, President and Chief Executive Officer of the Company at
various times from 1989 to 1996, after forming and leading a
group of investors in acquiring the original 10 stores from
Viking Enterprises, Inc., who owned Factory Card Outlet from its
original startup in 1985. In 1999 he returned to the Company as
President and CEO.
"Having Bill in a leadership role to guide us through the
successful emergence from bankruptcy was vital. His energy and
confidence in our associates motivated all of us to attain
record operating performance. He made many significant
contributions to Factory Card Outlet and we are grateful to have
had him with us during this period," said Mr. Rada.
The Company also announced that James D. Constantine will be
promoted to Executive Vice President and Chief Financial and
Administrative Officer. Mr. Constantine joined Factory Card
Outlet in 2000 as the Chief Financial Officer. Prior to joining
the Company, he was Senior Assistant Treasurer at Sears, Roebuck
and Co. and held various positions at Deloitte and Touche. He
holds a B.S. degree in Accounting from Northern Illinois
University and an MBA from the University of Chicago. He and
his family reside in Glen Ellyn, Illinois.
"Jim implemented the financial disciplines required for a
successful turnaround and was a guiding force in reorganizing
Factory Card Outlet during our bankruptcy," said Mr. Rada.
Mr. Rada and Mr. Constantine will both serve on the new Board of
Directors when the Company emerges from bankruptcy, which is
expected to take place in early April.
Under the terms of the amended plan, upon its emergence from
Chapter 11, most general unsecured creditors will share receipt
of approximately 90 percent of the common stock of the
Reorganized Company and cash distributions of $1.0 million. In
addition, creditors will receive $2.6 million, three years from
emergence, subject to certain prepayment provisions. Holders of
the Company's outstanding common stock will receive 5 percent of
the common stock of the Reorganized Company and warrants to
purchase an additional 10 percent of the common stock of the
Reorganized Company at various premiums to reorganization equity
value.
Factory Card Outlet operates 172 Company-owned retail stores, in
20 states, offering a vast assortment of party supplies,
greeting cards, gift- wrap and other special occasion
merchandise at everyday value prices.
FEDERAL-MOGUL: Court Approves Sale of Signal-Stat to Truck Lite
---------------------------------------------------------------
City of El Paso, Cameron County and Brownsville ISD object to
Federal-Mogul Corporation and its debtor-affiliates' motion for
order approving the sale of the signal-stat lighting products
business free and clear of liens and authorizing the assumption
and assignment of an executory contract.
Brian A. Sullivan, Esq., at Werb & Sullivan in Wilmington,
Delaware, tells the Court that a lien to secure the payment of
the year 2002 post-petition tax debt was created on January 1,
2002 and the year 2002 tax debt against the property is
estimated to exceed $200,000. Pursuant to the Motion to Sale,
the Tax Authorities' tax liens are to attach to the sale
proceeds. The Tax Authorities assert that a sale free and clear
of the year 2002 post-petition as valorem tax lien is
inappropriate as the purchaser will acquire and possess the
property prior to the close of year 2002. Consequently, Mr.
Sullivan argues that the purchaser should assume at least pro-
rated liability for year 2002 taxes, or even full liability in
the event credit is given at closing. To secure the payment of
the year 2002 tax, the Tax Authorities must retain its year 2002
tax lien against the property; and the purchaser must assume
personal liability of the year 2002 tax so as to provide the Tax
Authorities with the requisite adequate protection. The estate
will incur a significant cost savings in providing this relief.
SAP America Responds
Stephanie Nolan Deviney, Esq., at Brown & Connery in Westmont,
New Jersey, relates that on October 9, 1998, SAP and the Debtors
entered into a License Agreement, under which SAP granted the
Debtors a non-exclusive license, including the right to use the
software. The software licensed to the Debtors is copyrighted
pursuant to the copyright laws of the United States and the
License Agreement is an executory contract. The Debtors does not
own the SAP software, it merely has a license to use the
software.
While the motion does not specifically seek to assume and assign
the agreement to the purchaser, Ms. Deviney states that SAP is
unable to ascertain whether the Debtors intend to include the
license agreement as an asset subject to the sale. SAP does not
consent to including the License Agreement or the SAP software
as an asset of the Debtors subject to the sale and does not
consent to the assumption and assignment of the license
agreement.
* * *
The Sale is approved, Judge Newsome rules. To the extent that
Texas is owed tax money, those claims will attach to the sale
proceeds. If the Purchaser wants to assume the SAP contract,
the Debtors or the Purchaser will need to cure any prepetition
defaults. (Federal-Mogul Bankruptcy News, Issue No. 13;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
FOAMEX INT'L: Raises Price of Sr. Notes Offering to $300 Million
----------------------------------------------------------------
Marshall S. Cogan, Chairman and Founder of Foamex International
Inc. (NASDAQ: FMXI), announced that Foamex's wholly-owned
subsidiaries, Foamex L.P. and Foamex Capital Corporation, priced
a private offering of $300 million aggregate principal amount of
10.75% Senior Secured Notes Due 2009 to be issued pursuant to
Rule 144A. The issue was increased to $300 million from an
originally planned $200 million.
The Notes are non-callable for four years. The offering of the
senior secured notes is expected to close by March 25, 2002.
The securities to be offered will not be registered under the
Securities Act and may not be offered or sold in the United
States absent registration or an applicable exemption from the
registration requirements.
Foamex, headquartered in Linwood, Pennsylvania, is the world's
leading producer of comfort cushioning for bedding, furniture,
carpet cushion and automotive markets. The company also
manufactures high-performance polymers for diverse applications
in the industrial, aerospace, defense, electronics and computer
industries as well as filtration and acoustical applications for
the home. At September 30, 2001, the company had a total
shareholders' equity deficit of $150 million.
FOUNTAIN VIEW: Appoints Boyd Hendrickson as Chief Exec. Officer
---------------------------------------------------------------
Fountain View, Inc., a leading operator of 49 long-term care
facilities with approximately 5,000 patients and 6,000 employees
in California and Texas, announced the appointment of Boyd
Hendrickson as chief executive officer. He fills a position
vacated by the retirement in January of Robert Snukal.
"We look forward to the experience and expertise that Boyd will
bring to Fountain View," said the Company's Chief Restructuring
Officer, Dennis Simon of Crossroads LLC.
Mr. Hendrickson, who takes over as Fountain View's CEO effective
April 1, has 31 years of experience in the healthcare sector,
most recently as chief executive officer of Evergreen Healthcare
of Vancouver, Washington. Evergreen, which provides a broad
range of healthcare services including nursing care and
rehabilitation and respiratory therapy, operates 55 nursing and
assisted-living facilities in Washington, Oregon, California,
Idaho, Montana and Utah.
Previously, he spent 12 years with Beverly Enterprises, the last
five of those as chief operating officer. Arkansas-based
Beverly Enterprises operates 783 skilled nursing facilities,
assisted living centers, home care and hospice agencies, and
outpatient therapy clinics throughout the United States.
Last October, Fountain View filed for Chapter 11 protection
under the U.S. Bankruptcy Code, citing its inability to resolve
a litigation that resulted in a lien being placed on its bank
accounts. The Chapter 11 filing was necessary to ensure
continuation of patient care, the Company said.
Fountain View is a leading operator of long-term care facilities
and a leading provider of a full continuum of post-acute care
services, with a strategic emphasis on sub-acute specialty
medical care. The Company operates a network of facilities in
California and Texas, including 43 skilled nursing and six
assisted living facilities. In addition to long-term care, the
Company provides a variety of high-quality ancillary services
such as physical, occupational and speech therapy and pharmacy
services.
GALEY & LORD: Secures Final Approval of $100MM DIP Financing
------------------------------------------------------------
Galey & Lord, Inc. (OTC Bulletin Board: GYLD) announced that it
has received final court approval of its $100 million debtor-in-
possession (DIP) financing facility, the interim approval of
which was previously announced. In other motions, the Company
received court approval of its request to continue to pay
severance to employees laid off prior to the Company's Chapter
11 filing on February 19, 2002, and to offer similar plans in
the future. The Company also received approval to make any
required contributions to its pension plans.
Arthur Wiener, chairman and chief executive officer of Galey &
Lord, said, "The approval of our DIP financing is a significant
event in our restructuring process. All of our operations have
run normally, and this final approval ensures that our customers
will continue to have the continuity of products and services
that they have enjoyed in the past. It also enables the Company
to pursue its future business strategies in an orderly manner."
Wiener continued, "We are also pleased that we have obtained
approval to meet our pre-petition severance obligations to our
former employees, a number of whom had loyally served the
Company for many years. We continue to be engaged in
constructive discussions with our financial institutions and
creditors regarding the development of our plan of
reorganization."
Galey & Lord is a leading global manufacturer of textiles for
sportswear, including cotton casuals, denim and corduroy, as
well as a major international manufacturer of workwear fabrics.
The Company also sells dyed and printed fabrics for use in home
fashions.
DebtTraders reports that Galey & Lord Inc.'s 9.125% bonds due
2008 (GNL1) are trading between 12 and 17. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=GNL1for
real-time bond pricing.
GIMBEL VISION: Craig Lavelle Resigns from Board of Directors
------------------------------------------------------------
Gimbel Vision International Inc. announced that Mr. Craig K.
Lavelle has resigned from the Board of Directors and that Mr.
Don Baird has resigned as the Executive Vice President and Chief
Operating Officer of the Corporation.
Mr. Lavelle's resignation follows the resignation of Mr. Robert
McInnes on March 13, 2002. Mr. Lavelle offered his resignation
so that the composition of the GVI board of directors would meet
regulatory requirements with regard to the number of resident
Canadians. Mr. Lavelle will continue in his roles as President
and Chief Executive Officer for GVI.
On behalf of the GVI board, Mr. Cliff James, Chairman, offered
Mr. Lavelle his thanks for his service on the board of
directors. "We appreciate the insights that Mr. Lavelle has
offered during his time on the board. In his capacity as
President and CEO he will continue to have a positive impact on
the direction of the company" said Mr. James.
In addition to Mr. Lavelle's resignation, the board of directors
accepted the resignation of Mr. Baird as Executive Vice
President and Chief Operating Officer. Mr. Baird has been with
GVI since 1999, originally as the Chief Financial Officer and in
his current role since August 2001. In May of 2001 Mr. Baird had
agreed to remain with GVI to assist with transitional issues
subsequent to the GVI/Aris Vision Inc. share exchange that took
place on March 31, 2001. Those issues have now been
substantially addressed. Mr. Baird has agreed to maintain a
consulting relationship with GVI as well as attending to his
other business responsibilities.
"We extend our best wishes to Mr. Baird as well as our thanks
for his contributions to GVI especially over the past ten months
during the transition process" said Mr. James. "We are pleased
that we will be able to maintain a business relationship with
him on a go forward basis."
Gimbel Vision International Inc. is a public Corporation that
owns or is partnered with refractive vision correction centres
in Canada, the United States, Thailand and China. To date, GVI's
surgeons have performed over 80,000 refractive eye surgeries.
Gimbel Vision International Inc. shares are listed on the
Canadian Venture Exchange and trade under the symbol "GBV".
* * *
As reported in the Dec. 5, 2001 edition of Troubled Company
Reporter, Gimbel Vision's Eugene, Oregon, USA laser eye surgery
centre defaulted under its lease agreement with Hillside
Financial International LLC with respect to the lease of a
surgical laser. The default resulted from declining financial
results of the centre and, as a consequence of the declining
results, delinquent lease payments. Among other effects of the
default, the lessor has the right to declare the remaining
approximate $445,000 balance of the lease, for which the
Corporation is a guarantor, immediately due and payable. The
Corporation is in discussion with the lessor in an attempt to
remedy this situation.
Under terms of the aforementioned lease, the Corporation could
be in cross-default of other agreements with certain other of
its creditors. The future success of the Corporation depends on
the continued support of these and other creditors.
GLOBAL CROSSING: Seeks Open-Ended Lease Decision Time Extension
---------------------------------------------------------------
Paul M. Basta, Esq., at Weil Gotshal & Manges LLP in New York,
relates that as of the Petition Date, Global Crossing and its
debtor-affiliates were parties to approximately 212 unexpired
nonresidential real property leases for telecommunications
equipment storage spaces, administrative call centers, sales
offices, office spaces and points of presence (POPs).
At this early stage of these complex chapter 11 cases, automatic
rejection of all their leases by operation of 11 U.S.C. Sec.
365(d)(4) would harm the estates by resulting in the loss of one
or more leases of real property that may be essential to the
Debtors' reorganization. Likewise, assumption of all their
leases outside the context of a plan of reorganization would
harm the estates by resulting in the Debtors being required to
cure significant prepetition claims and the elevation of
landlord claims to administrative expense status prior to the
time when an informed decision can be made and a reorganization
assured.
Pursuant to section 365(d)(4) of the Bankruptcy Code, the
Debtors request an extension of the time within which they must
decide whether to assume, assume and assign, or reject their
Unexpired Leases. The Debtors ask that the deadline be extended
through including the date on which a plan of reorganization is
confirmed. Mr. Basta submits that the Extension would give the
Debtors sufficient opportunity to make reasoned and informed
decisions.
Mr. Basta contends that the Unexpired Leases are critical assets
of the estates and the decision as to whether to assume or
reject the Unexpired Leases is central to any plan of
reorganization. The Unexpired Leases cover a wide range of
property interests, including office spaces, telecommunications
storage spaces and administrative call centers. Each of these
interests, although varying in their purpose, is potentially
important to the continuation of the Debtors' operations and to
their ability to maximize their products and services. The
Unexpired Leases related to the telecommunications storage
spaces may be essential to the Debtors' operations, and,
ultimately, their reorganization. However, Mr. Basta claims
that the utility of such storage spaces is dependent upon the
terms of the Debtors' plan of reorganization. If the Debtors'
plan of reorganization alters their global business strategy,
certain storage spaces may no longer be of any utility to the
Debtors' business and would, therefore, become burdensome to a
reorganization. The Debtors need time to determine whether the
Unexpired Leases are essential to their operations, and, in
addition, to evaluate whether such leases have any intrinsic
economic value to the Debtors' estates. The Debtors submit that
because of the potential, but as yet ill-defined, importance of
the Unexpired Leases to their successful reorganization, the
Extension is warranted.
According to Mr. Basta, the sheer magnitude of these chapter 11
cases, which have been widely reported as the fourth largest
chapter 11 cases in history, manifestly satisfy the second of
the Wedtech factors. These cases are also highly complex,
involving 55 Debtors located throughout the world, approximately
35,000 creditors and approximately $15,000,000,000 of invested
capital. The global nature of these business adds an additional
layer of complexity, as does the overlay of coincident
extraterritorial proceedings involving the Bermuda Group and the
appointment of the JPLs. Since the Commencement Date, the
demands on the Debtors and their personnel and professionals
have been great. In addition to the discharge of their ordinary
duties attendant to operating a global telecommunications
company, the Debtors' personnel carry the additional burdens
imposed by the commencement of these chapter 11 cases. Mr. Basta
states that these obligations are further magnified as a result
of the workforce reduction of almost 2,000 personnel since the
Commencement Date. Despite the incredible burdens placed upon
the Debtors' personnel, the Debtors have been working diligently
to further the chapter 11 process and to formulate a business
plan and a plan of reorganization. In the midst of such
challenges, the Debtors have simply not had any opportunity to
complete the intricate and significantly time consuming task of
reviewing and evaluating approximately 212 distinct Unexpired
Leases in the context of developing their plan of
reorganization.
Mr. Basta points out that the Debtors have had insufficient time
to intelligently appraise each lease's value to their plan of
reorganization as the sixty days allotted by section 365(d)(4)
for the evaluation of the leases is inadequate in light of the
complexities and rigors associated with these chapter 11 cases.
The Debtors' chapter 11 cases are on track for an expedited
solution based upon the Debtors' solicitation of investment
proposals. The Committee supports the Debtors' request for an
extension of time to assume or reject the Unexpired Leases until
confirmation and agrees that the Debtors have had insufficient
time, at this stage of their chapter 11 cases, to formulate a
plan of reorganization that will benefit their estates,
creditors and all parties in interest. The Committee further
agrees that, subject to the conditions set forth herein, the
magnitude and complexity of the Debtors' chapter 11 cases
warrants an Extension up to and until confirmation.
Mr. Basta assures the Court that the lessors of the Unexpired
Leases will not be prejudiced by the Extension requested herein.
During the Extension, the Debtors propose that any lessor may
request that the Court fix an earlier date by which the Debtors
must assume or reject its unexpired lease in accordance with
section 365(d)(4) of the Bankruptcy Code. The Debtors submit
that, if a landlord requests such relief from the Court, the
Debtors shall maintain the burden of persuasion. Mr. Basta adds
that the Debtors are committed to remaining current on their
postpetition obligations pursuant to the Unexpired Leases and
intend to cure any instances in which they have failed to meet
such obligations. In light of the fact that the Debtors have
approximately $1,010,000,000 in cash, the Debtors have more than
sufficient liquidity to meet their postpetition obligations
pursuant to the Unexpired Leases.
As an ongoing component of these chapter 11 cases, Mr. Basta
informs the Court that the Debtors will continue to evaluate the
economic value of the Unexpired Leases to their business. As of
the date hereof, the Debtors have filed three separate motions
for the rejection of unexpired leases of nonresidential real
property and the Court has approved the Debtors' rejection of
approximately 55 unexpired leases of real property. The Debtors
had sufficient information to make the determination that the
Rejected Leases were of no utility or value to them because the
utility and value of the Rejected Leases did not depend on the
Debtors' plan of reorganization. Instead, it was the downturn in
the market, particularly in the telecommunications sector, that
eliminated the Debtors' need for the telecommunications storage
spaces, office spaces and corporate apartments associated with
the Rejected Leases.
Mr. Basta tells the Court that the Debtors will continue to
identify and evaluate those Unexpired Leases whose utility to
the Debtors' business is not dependent upon their plan of
reorganization. However, to the extent that the usefulness of
the Unexpired Leases is contingent upon the Debtors' plan of
reorganization, the Debtors submit that an Extension up to and
until the date of confirmation is in the best interests of their
estates.
Judge Gerber will convene a hearing on April 11, 2002, to
consider the Debtors' motion for an open-ended extension and any
objections to that request. The Debtors' lease decision period
is extended through the conclusion of the April 11 hearing.
(Global Crossing Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
GLOBAL CROSSING: KAB Group Wants Debtor to Produce Documents
------------------------------------------------------------
KAB Group, LLC, advisor to The Global Crossing Ltd. shareholders
group that has bid for the company, served demands in the
company's bankruptcy case that Global Crossing provide within 30
days all it knows about any past or present relationships
between company officers and directors and anybody associated
with Hutchinson Whampoa Limited and Singapore Technologies
Telemedia Pte. Ltd., the company's preferred bidders.
Kennon A. Brennen, the managing partner of the KAB Group,
commented: "We believe the shareholders who have built this
company have been excluded from due consideration of their bid
to get the company back on track. And we want to know why.
Shareholders want and need an equal playing field and want the
same opportunities afforded the preferred bidders."
Among the demands made by KAB Group was that Global Crossing
list "all individuals with knowledge of how HWL (Hutchinson
Whampoa) and STT (Singapore Technologies Telemedia) were chosen
to bid for the assets" of Global Crossing and "all documents
relating to" the choice of HWL and STT.
In addition, KAB asked for all documents on any other
negotiations with potential investors.
The shareholders' group has standing to request the documents
and other information because KAB Group is one of only a few
parties in the matter that filed timely objections to the
company's proposed bidding procedures.
In its initial objections, filed February 22, KAB Group asked
Judge Robert E. Gerber to determine it a qualified investor,
allowing it to participate in the court's debtor's auction for
the assets of Global Crossing. The group proposes warrant
offerings totaling as much as $5.5 billion over three years to
recapitalize the company and make creditors whole.
Mr. Brennen noted that more than 20% of Global Crossing's 30,000
shareholders have already visited the Web site containing the
shareholder group's filings and other information --
http://www.kabgroupllc.com-- and that shareholders representing
millions of shares have joined the shareholders' group, with no
financial obligation to themselves and no obligation to
participate in any offering.
DebtTraders reports that Global Crossing Holdings Ltd.'s 9.625%
bonds due 2008 (GBLX3) are quoted at a price of 2.75. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX3for
real-time bond pricing.
GREATE BAY: Consummates Sale of Primary Asset to Bally Gaming
-------------------------------------------------------------
Hollywood Casino(R) Corporation (Amex: HWD) announced today that
the sale of Greate Bay Casino Corporation's primary asset,
Advanced Casino Systems Corporation, to Bally Gaming, Inc., a
wholly owned subsidiary of Alliance Gaming Corporation (Nasdaq:
ALLY) has closed. Pursuant to Greate Bay's plan of
reorganization, Hollywood expects to receive approximately $11
million to $13 million of the proceeds from such sale. It is
Hollywood's current expectation that the plan of reorganization
will be consummated in May of 2002. The sale proceeds will be
received directly by HWCC-Holdings, Inc., a subsidiary of
Hollywood that is not restricted by any of Hollywood's
outstanding debt agreements. As a result, these funds will be
available to Hollywood for any corporate purpose, including
making additional capital contributions to its Hollywood Casino
Shreveport subsidiary.
Hollywood Casino Corporation owns and operates distinctive
Hollywood-themed casino entertainment facilities under the
service mark Hollywood Casino(R) in Aurora, Illinois, Tunica,
Mississippi and Shreveport, Louisiana.
* * *
Greate Bay Casino Corporation (OTC Bulletin Board: GEAA)
announced that it had consummated the sale of its wholly owned
subsidiary, and primary asset, Advanced Casino Systems
Corporation (ACSC) to Bally Gaming, Inc., a wholly owned
subsidiary of Alliance Gaming Corporation (Nasdaq: ALLY) for
$14.6 million.
The sale of ACSC was approved by the U.S. Bankruptcy Court for
the District of Delaware on March 6, 2002. Greate Bay's
bankruptcy plan will be presented to the Court for approval on
May 2, 2002.
GREAT LAKES: Checkers to Acquire 7 Rally's Restaurants from RJR
---------------------------------------------------------------
Checkers Drive-In Restaurants, Inc. (Nasdaq: CHKR) announced
that it will re-acquire 7 Rally's(R) restaurants from RJR,
Receiver, LLC in addition to the 2 locations re-acquired last
year. A local Rally's franchisee has acquired or is anticipated
to shortly acquire an additional 2 units from RJR. It is
further anticipated that RJR will close 14 locations in Detroit
prior to expiration of their licensing agreement scheduled for
later this month. The Company also anticipates re-acquiring an
additional location in Detroit and another in Kansas City on
which restaurants do not presently operate.
RJR was previously appointed receiver for Great Lakes Restaurant
Company, LLC, which filed its bankruptcy petition in January of
2001. RJR had been granted a 1-year agreement to operate 34
stores in Detroit and 5 stores in Kansas City in March of 2001
to operate locations under receivership. The locations not
being acquired will be closed by RJR.
Daniel J. Dorsch, Chief Executive Officer and President
commented, "The situation that developed in Detroit over 15
months ago has finally come to a conclusion within the time
frame we set for resolution. We will now focus on operating a
total of 9 Detroit locations as Company restaurants and feel
that we have upside potential in this market."
As of December 31, 2001, Checkers Drive-In Restaurants, Inc. and
its franchisees own 417 Checkers(R) operating primarily in the
Southeastern United States and 404 Rally's(R) operating
primarily in the Midwestern United States. For more information
about the Company, please visit http://www.checkers.com
HAYES LEMMERZ: Seeks Court Approval of Various Energy Agreements
----------------------------------------------------------------
Hayes Lemmerz International, Inc., and its debtor-affiliates
seek an order under section 363 of the Bankruptcy Code
authorizing the Debtors to execute a consulting and management
agreement, a gas sale and transportation agreement and related
agreements, all which are with various affiliates of Allegheny
Energy, Inc.
According to Grenville R. Day, Esq., at Skadden Arps Slate
Meagher & Flom LLP in Wilmington, Delaware, the Debtors operate
numerous manufacturing facilities across the country that
require large supplies of natural gas and electricity as certain
of their facilities utilize hundreds of thousands of dollars of
natural gas and electricity per month. The Debtors' current
year budget projects expenses of approximately $15,000,000 for
natural gas and $22,000,000 for electricity.
In an effort to manage their energy needs in a centralized and
efficient manner, and stabilize their overall energy costs, the
Debtors are currently negotiating Energy Agreements with
Allegheny that are vital to the Debtors' operations for several
reasons:
A. The Energy Agreements will replace an existing energy
management agreement with Summit Energy Services that is
currently the subject of a motion to reject. The Energy
Agreements provide broader and more focused energy
management services than the Summit Agreement at a cost of
approximately $800 less per month. These management
services will include, for example, energy evaluations and
tariff negotiations.
B. The Energy Agreements will allow the Debtors to utilize the
expertise of Allegheny to manage the Debtors' energy needs
in an efficient and cost effective manner.
C. The Energy Agreements will allow the Debtors to purchase
certain amounts of natural gas at predetermined prices,
allowing them to accurately forecast their future energy
costs and stabilize their cash flow.
D. The Energy Agreements will allow the Debtors to manage their
energy needs on a centralized basis.
The Energy Agreements provide, in relevant part, and in summary,
for:
A. Consulting and Management Agreement
1. Parties: Fellon-McCord & Associates, Inc, a wholly owned
subsidiary of Allegheny Energy, Inc., and Hayes
Lemmerz International, Inc.
2. Management Fees: $15,000 per month plus expenses
3. Term: Three years
4. Services: Consulting and Management Services related to
the procurement and usage of natural gas and
electricity
B. Gas Sale and Transportation Contract
1. Parties: Alliance Energy Services Partnership, a wholly
owned subsidiary of Allegheny Energy, Inc. and Hayes
Lemmerz International, Inc.
2. Price: Price established in each Transaction
Confirmation, subject to adjustment if the Market
Value of natural gas changes. Debtors to prepay
estimate of gas usage, subject to reconciliation
bases upon actual usage.
3. Term: Until terminated upon 30 days' notice by either
party
4. Nature of Contract: Debtors may purchase fixed
quantities of natural gas pursuant to Transaction
Confirmations. Seller to pay for transportation
costs up to Delivery Points, Buyer to pay for such
costs after Delivery Points.
C. Disbursement Agent Agreements
1. Parties: Alliance and Hayes Lemmerz International, Inc.
2. Nature of Contract: Alliance to review and pay electric
and natural gas bills on behalf of the Debtors.
Debtors to prepay Alliance for such bills.
3. Security: Alliance may demand security in the form
of a letter of credit, lien or bond.
D. Natural Gas Agency Agreement
1. Parties: Alliance and Hayes Lemmerz Int'l., Inc.
2. Nature of Agreement: Agreement authorizes Alliance
to act as the Debtors' agent with respect to natural
gas supply and transportation needs.
E. Security and Deposit Agreement
1. Parties: Alliance and Hayes Lemmerz Int'l., Inc.
2. Deposit Amount: $1.5 million cash, subject to
adjustment based upon subsequent transactions.
3. Secured Obligations: All of the Debtors' obligations to
Alliance.
Mr. Day explains that the primary purposes of the Energy
Agreements are to provide centralized energy management services
to the Debtors to replace the Summit Agreement, and to allow the
Debtors to utilize the expertise and market presence of
Allegheny to managing their energy needs. Allegheny currently
supports over 1,100 other facilities on an operational basis,
giving Allegheny a broad background and presence in the energy
industry, which affords them favorable bargaining power.
Allegheny will work directly with the Debtors' facilities to
manage their energy needs, and will provide individual energy
reports for such locations, which will improve the Debtors'
overall energy management system.
Mr. Day relates that the Energy Agreements also allow the
Debtors to purchase certain amounts of natural gas at a fixed
price, which will help the Debtors to stabilize and accurately
predict their cash flow requirements for energy. The Debtors
believe such forward purchases of natural gas will be
advantageous, given current market conditions and that such
forward purchases at fixed prices will help stabilize the
Debtors energy related expenses. The Debtors believe that any
risks associated with such forward purchases are minimal and
acceptable under the circumstances.
Although the Debtors believe that entering into contracts
related to the procurement of natural gas and electricity are
"ordinary course" transactions not requiring Court approval, the
Debtors, out of an abundance of caution, seek such Court
approval.
The Debtors have determined that a sound business justification
exists to enter into the Energy Agreements and undertake the
transactions contemplated thereby. Due to the nature of the
Debtors' businesses, Mr. Day deems it essential that they be
able to continue to procure electricity and natural gas needed
by the Debtors' operating facilities.
Mr. Day notes that the Energy Agreements will allow the Debtors
to replace their existing energy management contract with one
that offers broader services at a lower price. The Energy
Agreements will allow the Debtors to call upon the expertise of
Allegheny to assist with a variety of energy related issues. The
Energy Agreements, by allowing the Debtors to purchase certain
quantities of natural gas at a fixed priced, will also allow the
Debtors to forecast more accurately their energy costs and
stabilize their cash flow. Overall, a legitimate business
purpose exists for authorizing the execution of the Energy
Agreements. (Hayes Lemmerz Bankruptcy News, Issue No. 8;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
HOCKEY CO.: Moody's Assigns Low-B Ratings Over Operational Risks
----------------------------------------------------------------
Moody's Investors Service assigned low-B ratings to The Hockey
Company. Outlook of the ratings is stable.
Rating Actions:
* $125 million senior secured notes due 2009, B2;
* Senior Implied, B2;
* Senior Unsecured Issuer Rating, B3.
The ratings reflect the many risks THC faces in operating in a
competitive and low-growth industry. In order to maintain its
market share, the company must consistently produce new products
and incur large expenditures in the promotion and endorsement of
them. Hockey equipment, which comprises the bulk of their
products, is also a highly seasonal market and concentrated
mostly in the northern regions. Moreover, THC's has acquired the
exclusive right to sell NHL jerseys which is risky since this
would be subject to fashion trends and overall fan interest to
the NHL.
The stable outlook is indicative of Moody's belief that THC will
maintain or slightly improve its operating performance, fuelled
by it's powerful brands and by new product innovations.
The Hockey Company, with its headquarters in Montreal, is a
marketer, designer and manufacturer of hockey equipment and
related apparel.
HOLLYWOOD ENTERTAINMENT: S&P Assigns BB- Rating to $175MM Loan
--------------------------------------------------------------
The credit rating on Hollywood Entertainment Corp. was raised to
'B+' and removed from CreditWatch on March 19, 2002, based on
the company's improved credit profile from the recapitalization,
and the progress it has made in turning around its business
since the third quarter of 2001. A 'BB-' rating was also
assigned to the company's $175 million secured credit facility
at that time.
In March 2002, Hollywood successfully completed a secondary
stock offering, which generated gross proceeds of $121 million,
and secured a new $175 million senior secured credit facility
that matures in 2004. Proceeds from the two transactions were
used to repay all outstanding indebtedness under an existing
credit facility. The company's new capital structure lengthens
debt maturities and provides a better match of debt reduction
requirements with cash flows.
Hollywood Entertainment's $175 million senior secured credit
facility is rated one notch higher than the corporate credit
rating, based on Standard & Poor's belief that the security
interest in the collateral offers reasonable prospects for full
recovery of principal if a payment default were to occur. The
credit facility consists of a $25 million revolving credit
facility and a $150 million term loan, both maturing in 2004.
However, the maturity date will be extended to 2006 on the
satisfaction of specified conditions associated with the
refinancing of the existing senior subordinated notes.
Inventory, accounts receivable, and other tangible and
intangible personal property assets of Hollywood Entertainment
and its subsidiaries secure the facilities.
Standard & Poor's assessment of the value of the company's
discrete assets considered the assets' potential to retain value
over time and an orderly liquidation under a default scenario.
The security interest in the collateral, coupled with fixed-
charge coverage ratio limitations on new store openings under
the revolving credit facility, suggests that prospects for full
recovery of principal are highly likely if a payment default
were to occur. Financial covenants include minimum fixed-charge
coverage, minimum interest coverage, maximum leverage ratios,
and maximum capital expenditures. Pricing will initially be on a
ratings-based grid, and thereafter on a leverage-ratio grid.
The ratings on Hollywood Entertainment reflect the company's
participation in the highly competitive and mature home
entertainment industry, its dependence on its own domestic video
business and on decisions made by movie studios, and the
company's leveraged balance sheet. These risks are partially
mitigated by the company's good position in the video rental
industry and the positive effects of revenue-sharing agreements
with movie studios.
After numerous difficulties since the fourth quarter of 1999,
some of which reflected poor execution of a rapid growth
strategy and the acquisition of Reel.com, management initiated
new strategies in 2001. These were designed to improve
merchandising, customer service, and marketing. As a result,
operating trends began to improve in the third quarter of 2001
and the company generated a 29.9% EBITDA margin for the full
year of 2001, an increase from 29.2% in 2000 but below its
historical 35.0% level. Standard & Poor's expects EBITDA margins
to improve over the next three years through management's
initiatives and the maturation of the store base.
Hollywood Entertainment is highly leveraged, with total debt to
EBITDA of 3.8 times pro forma for the recapitalization. EBITDA
coverage of interest of 2.4x is adequate for the rating
category. Financial flexibility benefits from a $25 million
revolving credit facility. The company has no significant debt
maturities until 2005.
Outlook
The company's well-established position in video retailing
provides support for the ratings. The outlook incorporates
Standard & Poor's belief that Hollywood Entertainment's
operating performance will continue to improve, resulting in
better credit protection measures, and that management is
committed to operating the business under a more conservative
financial policy with a focus on debt reduction. The company's
high leverage and competitive factors in the video retail
industry limit the potential for an upgrade.
HUBBARD: Court Extends Time to File Plan Until May 6 in Canada
--------------------------------------------------------------
Hubbard Holding Inc., a Montreal-based textile manufacturer and
converter of fabrics, announces that pursuant to the provisions
of Section 5.4(9) of the Bankruptcy and Insolvency Act the
Superior Court of Montreal has granted today to its wholly owned
subsidiaries, Hubbard Fabrics Inc. and Hubbard Dyers (1991) Inc.
an extension of time for filing a proposal under the provisions
of Section 50.4(1) of the Act. The period to file a proposal was
extended to May 6, 2002.
The Subsidiaries plan to continue operations during this
additional period, knitting, dying, finishing and shipping goods
to their customers in the normal course.
The common shares of HUBBARD are listed on The Canadian Venture
Exchange and trade under the symbol "HUB".
ICG COMMS: Seeks 4th Extension of Exclusive Solicitation Period
---------------------------------------------------------------
ICG Communications, Inc. and its subsidiaries and affiliates,
Debtors, speaking through Mark L. Desgrosseilliers, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, ask Judge Judith
Wizmur for an order further extending the exclusive period
during which the Debtors may solicit acceptances of a
reorganization plan to and including July 1, 2002, and
prohibiting any party other than the Debtors from filing a plan
during this period.
The Debtors believe that by filing the Plan within the Plan
Proposal Period, the Bankruptcy Code prohibits any party from
filing a competing plan within the Solicitation Period. However,
to the extent necessary and in an abundance of caution, the
Debtors also request that the order extending the Solicitation
Period prohibit any party other than the Debtors from filing a
plan for any Debtor during the Solicitation Period.
The Debtors are seeking a two month extension of the
Solicitation Period to afford the Debtors additional time to
complete the ongoing plan negotiation process and then solicit
acceptances of that plan during the Solicitation Period. A
disclosure statement hearing is currently set for April 3, 2002.
During the Solicitation Period, pursuant to section 1121(d) of
the Bankruptcy Code, no party other than the Debtors would be
permitted to file or solicit acceptances of a reorganization
plan for the Debtors.
Under the Bankruptcy Court, Mr. Desgrosseilliers reminds Judge
Wizmur that she may extend the Exclusive Periods for cause. In
determining whether cause exists to extend the Exclusive
Periods, this Court should examine, among others, the following
factors:
(a) The size and complexity of the Debtors' cases;
(b) The Debtors' progress in resolving issues facing
their estates; and
(c) Whether an extension of time will harm the Debtors'
creditors.
In evaluating these factors, bankruptcy courts are afforded
maximum flexibility to review the particular facts and
circumstances of each case.
The Debtors submit that an additional two month extension of the
Solicitation Period is fully justified in these cases, because,
among other things:
(a) The Debtors' cases are large and complex;
(b) The Debtors have made significant progress in
resolving the many complex issues facing their estates; and
(c) Extension of the Solicitation Period will facilitate
reorganization of the Debtors and not prejudice any party in
interest.
Size and Complexity
The size and complexity of the Debtors' chapter 11 cases alone
constitutes sufficient cause to further extend the Solicitation
Period. The Debtors are one of the largest competitive
telecommunications companies in the United States. One of the
largest cases filed in 2000, the Debtors' petitions for relief
list assets totaling over $2.7 billion and total debts of over
$2.8 billion. As of year-end 1999, the Debtors' extensive
network assets provided nationwide data services to an estimated
700 cities, and had in service over 730,000 customer lines and
data access ports. As of year-end 1999, the Debtors had over
10,000 business customers and approximately 550 Internet service
provider customers.
In light of the sheer size and enormous complexity of these
cases, the Debtors submit that their request for a further two
month extension is modest and consistent with extensions granted
in other large reorganization cases.
Good Faith Progress
The Debtors' reorganization efforts have been proceeding
aggressively toward the plan filing and solicitation process.
The Debtors have filed the Plan and accompanying disclosure
statement. This Court scheduled a hearing with respect to the
adequacy of the Disclosure Statement for April 3, 2002.
No Prejudice
A further extension of the Solicitation Period will facilitate
the Debtors' restructuring efforts by affording the Debtors the
time needed to complete ongoing negotiations with respect to the
Plan, and solicit votes with respect to the Plan, in a matter
that fairly and efficiently treats the claims of the estates'
creditors and provides for the greatest possible distributions
of value on account of such claims. In contrast, termination of
the Exclusive Periods and the uncertainty that would result from
the prospect of competing reorganization plans undoubtedly would
result in lesser values available for distribution to creditors.
Finally, the requested extension of the Solicitation Period will
not prejudice the interests of any creditor; the Debtors have
timely met, and continue to timely meet, their postpetition
obligations in these cases. This fact, alone, strongly militates
in favor of the Court granting the Debtors' requested extension
of the Solicitation Period. (ICG Communications Bankruptcy News,
Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900)
IT GROUP: U.S. Trustee Balks at Skadden Arps' Engagement Fees
-------------------------------------------------------------
Donald F. Walton, the Acting U.S. Trustee, urges the Court to
deny The IT Group, Inc., and its debtor-affiliates' Application
to employ Skadden, Arps, Slate, Meagher & Flom.
Mark S. Kenney, Esq., in Wilmington, Delaware, complains that,
in addition to Skadden's proposed retainer, the firm will also
receive interim compensation and reimbursement of expenses, thus
making the retainer a de facto "evergreen retainer." This
"evergreen retainer" proposal is inappropriate, as it suggests
that there is some basis for treating Skadden differently from
other administrative creditors in these cases. The Debtors
offer no explanation for their proposed deviation from the
established practice of immediate draw-down on pre-petition
retainers in this District. Mr. Kenney submits that there is no
principled basis for such a deviation. (IT Group Bankruptcy
News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
IMMTECH INT'L: Begins Trading on SmallCap Market Effec. March 8
---------------------------------------------------------------
On March 6, 2002, Immtech International, Inc. was notified by
the NASDAQ Listing Qualifications Panel that it has determined
to transfer Immtech's common stock from the NASDAQ National
Market, effective with the open of business on March 8, 2002, to
the NASDAQ SmallCap Market. In its notice, the Panel noted that
Immtech did not present a definitive plan to achieve and sustain
compliance with the minimum net tangible assets/shareholders'
equity requirement for continued listing on the NASDAQ National
Market as required by NASDAQ Marketplace Rule 4450(a)(3).
Immtech's common stock immediately began trading on the NASDAQ
SmallCap Market on March 8, 2002.
Immtech International, Inc. is a biopharmaceutical company
focused on the discovery, development and commercialization of
drugs for the treatment of fungal diseases, tuberculosis,
hepatitis, pneumonia, diarrhea, and cancer. At September 30,
2001, the company's balance sheet showed that its total
liabilities exceeded its total assets by over $400,000.
INTEGRATED HEALTH: Amends 6 Leases and Disposes of 1 NHP Lease
--------------------------------------------------------------
Integrated Health Services, Inc., IHS Acquisition No. 151, Inc.,
Integrated Health Services of Orange Park, Inc. and the other
debtors move the Court pursuant to Secs. 105(a), 363(b) and
365(a) of the Bankruptcy Code and Rule 6006 of the Bankruptcy
Rules, for approval of amendments to six leases between
Nationwide Health Properties (NHP), as landlord, and IHS 151, as
tenant, and for approval of a stipulation regarding the
disposition of a lease between NHP (landlord) and IHS-Orange
(tenant).
Of the six IHS 151 leases, five (four Ohio leases and a Nevada
lease) will be assumed as amended. Among the five IHS 151 leases
to be amended and assumed, the amendments to the four Ohio
leases provide for rental reductions that will turn marginally
profitable or extremely unprofitable leases to a profitable
package. The Nevada lease is already profitable and there will
be no rental reduction, but as with the four Ohio leases,
amendments effectively provide for a capital improvement
contribution by NHP of $1.5 million, which will make the
facilities more attractive and more efficient.
The sixth one, the Horizon Meadows Lease covering premises in
Alliance, Ohio, will be amended and terminate, as will the IHS-
Orange Lease. These provide for termination of the leases and
winding down of the facilities if no transferee is located. The
amendment is the equivalent of a rejection without creating
rejection damages.
Specifically, the leases and the amendments are as follows:
(A) Amendments to five Leases between NHP as landlord and IHS
151 as tenant
These Leases, expiring in 2009, relate to:
* Auburn Manner Nursing Home in Washington Courthouse, Ohio;
* Little Forest Medical Center in Boardman, Ohio;
* Horizon Village in Warren, Ohio;
* Rosewood Manor in Galion, Ohio; and
* Hearthstone of Northern Nevada in Sparks, Nevada.
The proposed amendments to the four Ohio Leases provide for
significant rental obligations while the rental obligation
under the fifth lease (Hearthstone, NV) is unchanged. An
additional article is added to each of the Five Leases,
providing that NHP shall reimburse IHS 151 for the first
$1.5 million in the aggregate of IHS 151's costs for repairs
and improvements to the premises, to be commenced by IHS 151
within three years of January 1, 2002.
The rental reductions for the four Ohio leases are as
follows:
* The Auburn Manor Lease
Before amendment, the Lease defined Minimum Rent as
$365,000 per year, plus Additional Rent, defined as a
percentage of increase in revenues over a base year; and
provided for a Renewal Term Base Rent which would be the
higher of $365,000 or the result of a formula based on
fair market value pursuant to an appraisal process and
certain multipliers as set forth in the lease.
The proposed amendment abolishes Additional Rent and
redefines Minimum Rent commencing January 1, 2002, as
$100,000 for 2002, $200,000 in 2003, and $300,000 per
annum commencing 2004, with an annual CPI-based increase
not to exceed 2% commencing in January 2005. The
amendment also changes the definition of Renewal Term
Minimum Rent to mean the same as Minimum Rent.
* The Little Forest Lease
Before amendment, the Lease provided for Initial Term
Minimum Rent of $918,334.56, plus Initial Term
Additional Rent based on an annual CPI-based multiplier.
Renewal Tent Minimum Rent was to be fair market value,
determined by agreement or by a procedure provided for,
with Renewal Term Additional Rent defined the same as
Initial Term Additional Rent.
The amendment abolishes Additional Rent, and redefines
Initial Term Minimum Rent, and all Renewal Term Minimum
Rents, as $750,000 per annum in 2002 and 2003, $800,000
in 2004, $850,000 in 2005, $900,000 in 2006, and
$950,000 per annum beginning in 2007, with an annual
CPI-based increase beginning in 2008, but no more than
2% per annum.
* The Horizon Village Lease,
Of the same form as the Little Forest Lease, the Lease
before amendment had an Initial Term Minimum Rent of
$922,489.42, or approximately the same as the Little
Forest Lease.
The proposed amendment makes the same rent changes as
the proposed Little Forest amendment.
* The Rosewood Manor Lease
Also of the same form as the Little Forest Lease, before
amendment, the Lease provided for an Initial Term
Minimum Rent of $373,982.40.
The proposed amendment makes the same changes in form,
and makes the following new schedule for Minimum Rent:
In 2002, $100,000, and beginning 2003, $200,000 with a
CPI-based increase, not exceeding 2% per annum,
beginning in 2004.
In the absence of the amendments, Auburn Manor, Little Forest,
Horizon Village and Rosewood Manor respectively show projected
EBITDA of $314,627, $15,671, ($154,560) and ($410,063).
After consideration of CapEx, Little Forest is also
significantly unprofitable and Auburn Manor is only moderately
profitable. Hearthstone, whose rent is unchanged by its
proposed amendment, has a projected EBITDA of $345,144. The
Five Leases combined thus change from an unprofitable picture
to a profitable one.
(B) Amendment for Unwind of Horizon Meadows Lease between NHP
and IHS 151
The proposed amendment provides for
(1) a reduction of the Minimum Rent and Additional Rent to
zero, effective January 1, 2002;
(2) allows IHS 151 to wind down the operations of the
premises after February 1, 2002, including the
termination of all employees and discharge of all
patients; pledges IHS 151 to negotiate in good faith to
any proposed transferee presented by NHP, whether or not
1HS 151 has begun an Unwind; and
(3) provides the lease automatically terminates when IHS 151
vacates the premises after an Unwind or otherwise
transfers the operation of the premises to a proposed
transferee.
(C) The Orange Park Lease
The Orange Park Lease, dated August 17, 1992, between NHP as
landlord and IHS-Orange, as tenant, was for an initial term
ending August 31, 2002.
The proposed Stipulation Regarding Disposition
(1) changes the termination date of the Orange Park Lease to
January 31, 2002;
(2) provides for the payment by IHS-Orange to NHP of
$120,405, which, after application of the security
deposit of $342,550, cures all existing monetary defaults
occurring prior to December 31, 2002;
(3) releases IHS Orange of all liability under the Orange
Park Lease, other than for January 2002 rent (which has
since been paid); including any claim for termination
and/or rejection of the lease;
(4) provides that IHS-Orange has the right to continue to
remain in possession of the facility from and after
February 1, 2002, without any obligation for rent,
occupancy or other charges;
(5) that from February 1, 2002, to May 31, 2002, IHS-Orange
shall manage the facility for NHP, with NHP bearing any
economic risk, and shall pay IHS-Orange $25,000 per month
as insurance cost reimbursements and a management fee
based upon a percentage of net revenue per month, all as
set forth in the amendment;
(6) provides that if NHP locates a reputable licensed
operator on or prior to June 1, 2002.
IHS-Orange will negotiate in good faith for an operations
transfer agreement, and that, if by that date it has not
entered into such an agreement it may commence an Unwind and
vacate the premises.
The Debtors believe that the proposed amendments and stipulation
clearly satisfy the standards for approval as set forth in
Section 365 of the Bankruptcy Code because these relieve the
Debtors of prepetition burden and represent an exercise of sound
business judgment.
Accordingly, the Debtors request entry of an order, authorizing
the Debtors
(a) to enter into the proposed amendments to the Five Leases as
described above, and assuming the Five Leases as so amended;
(b) to enter into the amendment to the Horizon Meadows lease;
(c) to enter into the stipulation regarding the Orange Park
lease;
(d) for such other and further relief as the Court deems proper.
(Integrated Health Bankruptcy News, Issue No. 32; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
IRIDIUM OPERATING: Seeks to Stretch Exclusivity through July 31
---------------------------------------------------------------
To maintain the status quo, Iridium Operating LLC, and its
debtor-affiliates seek a thirteenth extension of their exclusive
periods from the U.S. Bankruptcy Court for the Southern District
of New York. The Debtors want to extend their exclusive periods
in which to file a plan reorganization through July 31, 2002,
and to solicit acceptances of that plan through September 30,
2002.
The Debtors assert that the extensions are warranted to maintain
the status quo, and to allow the Debtors, the Committee, and the
Lenders to implement the Proposed Settlement once the Motorola
appeals are resolved. The Debtors suggest that they should not
be obliged to complete their plan or plans at this time or to
evaluate plans submitted by other parties. The Debtors point-
out that they had previously formulated and circulated a draft
of the plan to the Creditors' Committee, the Lenders, and
Motorola but the discussions were suspended pending the Motorola
appeals.
Iridium LLC and its subsidiaries develop and deploy a global
wireless personal communication system. The Company filed for
chapter 11 protection on August 13, 1999. William J. Perlstein,
Esq. and Eric R. Markus, Esq. at Wilmer, Cutler & Pickering
represent the Debtors in their restructuring efforts.
KAISER ALUMINUM: Taps Logan & Company as Notice & Claims Agent
--------------------------------------------------------------
Because of the large number of creditors and parties-in-
interests involved Kaiser Aluminum Corporation and its debtor-
affiliates' chapter 11 cases, the Debtors sought and obtained an
order from the Court appointing Logan & Company, Inc. to perform
certain claims and noticing functions to relieve the Court and
the Clerk's office from heavy administrative and other burdens.
Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger in
Wilmington, Delaware, tells the Court that Logan is a data
processing firm that specializes in claims processing, noticing
and other administrative tasks ion chapter 11 cases. The Debtors
seek to engage Logan to transmit certain designated notices and
to maintain claims files and claims registers and assist the
Debtors with administrative functions related to any plan of
reorganization.
Mr. DeFranceschi states that under the terms and conditions of
the Logan Agreement, the Debtors anticipate Logan will:
A. prepare and serve required notices in these chapter 11 cases,
such as:
a. notice of the commencement of these chapter 11 cases and
the initial meeting of creditors under section 341(a)
of the Bankruptcy Code;
b. notice of the claims bar date;
c. notice of objection to claims;
d. notice of any hearings on disclosure statement and
confirmation of a plan of reorganization; and,
e. such other miscellaneous notices as the Debtors or the
Court may deem necessary or appropriate for an orderly
administration of these cases;
B. within five days after the mailing of a particular notice,
file with the clerk of court's office a certificate or
affidavit of service that includes a copy of the served
notice, an alphabetical list of persons upon whom the
notice was served and the ate and manner of service;
C. maintain copies of all proofs of claims or proofs of
interests filed in these cases;
D. maintain official claims registers in these cases by
docketing all proofs of claims and interest in a claims
database that includes the following information for each
claim or interest asserted:
a. the name and address of the claimant or interest holder
and any agent thereof, it the proof of claim or
interest was filed by an agent;
b. the date the proof of claim or interest was received by
Logan and, if applicable, the Court;
c. the claim number assigned to the proof of claim or
interest;
d. the asserted amount and classification of the claim;
and,
e. the applicable Debtor against which the claim or
interest is asserted;
E. implement necessary security measures to ensure the
completeness and integrity of the claims registers;
F. transmit to the clerk's office a copy of the claims registers
on a weekly basis, unless requested by the clerk's office
on a more or less frequent basis;
G. maintain an up-to-date mailing, list for all entities that
have filed proofs of claim or interest in these cases and
make the list available upon request to the clerk's office
or at the expense of any party in interest;
H. provide access to the public for examination of copies of the
proofs of claim or interest filed in these cases without
charge during the regular business hours;
I. record all transfers of claims pursuant to Bankruptcy Rule
3001(e) and provide notice of such transfers to the extent
required by the said rule;
J. provide temporary employees to process claims, as necessary;
K. promptly comply with such further conditions and requirements
as the clerk's office or the Court may at any time
prescribe; and,
L. provide such other claims processing, noticing and related
administration services as may be requested from time to
time by the Debtors.
In addition, Mr. DeFranceschi mentions that the Debtors also
expect Logan will assist them with:
A. preparation of the Debtors' assets and liabilities schedule,
statement of financial affairs and master creditor lists
and any amendments thereto;
B. the reconciliation and resolution of claims;
C. the preparation, marking and tabulation of ballots and other
related services for the purpose of voting to accept or
reject a plan or plans of reorganization; and,
D. technical support in connection with the foregoing.
Logan agrees that:
A. it will not consider itself employed by the United States
government and will not seek any compensation from the
government in its capacity as the claims and noticing agent
in these chapter 11 cases;
B. by accepting the employment in these cases, it waives any
right to receive government compensation;
C. in its capacity as the claims and noticing agent in these
cases, it will not be a agent of the government and will
not act on behalf of the government; and,
D. it will not employ past or present employees of the Debtors
in connection with its work as the Claims and noticing
agent in these cases. (Kaiser Bankruptcy News, Issue No. 3;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
KEYSOR-CENTURY: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Keysor-Century Corp
26000 Springbrook Avenue
Saugus, California 91350
Bankruptcy Case No.: 02-12477
Chapter 11 Petition Date: March 19, 2002
Court: Central District of California, San Fernando Valley
Judge: Arthur M. Greenwald
Debtor's Counsel: Brad R. Godshall, Esq.
Pachulski Stang Ziehll & Young
10100 Santa Monica Boulevard Suite 1100
Los Angeles, California 90067
310-277-6910
Estimated Assets: $10 to $50 Million
Estimated Debts: $10 to $50 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Westlake PVC Corporation Trade $656,204
John Sturges
PO Box 100965
Atlanta, Georgia
30384-0965
(713) 585-2902
(817) 465-9546
PPG Industries Inc. Trade $648,719
Bob Herell
PO Box 36017M
Pittsburgh, Pennsylvania
15251-6175
(949) 248-0000
(281) 443-6699
Kaneka Texas Corporation Trade $339,248
Linda Cradic
PO Box 7247-8969
Philadelphia, Pennsylvania
19170-8969
(281) 291-3130
(281) 474-9263
Celanese Trade $317,022
Dennis Pearson
PO Box 910550
Dallas, Texas 75391
(912) 443-4786
(972) 443-3003
Engineering America, Trade $261,933
Inc.
Roland Ho
Engineering America,
Inc.
2875 N.E. 191st Street #704
Adventura, Florida
(972) 529-3834
(305) 937-3728
Rohm and Haas Company Trade $233,073
Crompton Corporation Trade $233,068
Dow Chemical Company Trade $191,064
Pacer Global Logistics Trade $179,425
Colorite Polymers Trade $124,814
Petco/Petroquimica Trade $113,335
Columbiana
Union Pacific Railroad Trade $91,041
Thompson & Knight Trade $68,114
LA County Tax Collector Trade $45,046
Vopak USA, Inc. Trade $44,470
Harwick Standard Dist. Trade $31,500
Corp.
Quantum Staffing Trade $27,427
Akzo Nobel Chemicals, Trade $26,362
Inc.
Concept One Staffing Trade $23,570
Kelron Logistics Trade $19,421
KMART CORPORATION: Committee Looks to KPMG for Financial Advice
---------------------------------------------------------------
The Official Committee of Unsecured Creditors in the chapter 11
cases of Kmart Corporation and its debtor-affiliates seeks to
retain the United States member firm of KPMG LLP International,
as its Accountants and Financial Advisors, effective as of
January 31, 2002.
Specifically, the Creditors' Committee wants KPMG LLP to:
(i) review and analysis of reports or filings that are
prepared pursuant to the Bankruptcy Code, the Bankruptcy
Rules or the Local Bankruptcy Rules, in accordance with
orders of the Bankruptcy Court, or at the request or
direction of the Office of the United States Trustee,
including, but not limited to, schedules of assets and
liabilities, statements of financial affairs, and monthly
operating reports;
(ii) review and analysis of the Debtors' financial
information, including, but not limited to, cash receipts
and disbursements, financial statement items and proposed
or potential transactions for which Bankruptcy Court
approval is or may be sought;
(iii) review and analysis of any debtor-in-possession or other
financing arrangements, including budgets and reports
prepared;
(iv) evaluate employee retention and severance plans, as
well as other compensation and benefit issues;
(v) assist in identifying, analyzing and evaluating
potential cost containment and liquidity enhancement
opportunities;
(vi) assist in identifying, analyzing and evaluating
potential operational improvement and asset redeployment
opportunities;
(vii) analyze assumption and rejection issues regarding
executory contracts and leases;
(viii) review and analyze the Debtors' proposed business
plans and operations and financial condition of the
Debtors generally;
(ix) assist in reviewing, developing and evaluating
reorganization strategies and alternatives available to
the creditors and the Debtors;
(x) review, evaluate and critique the Debtors' financial
projections and assumptions;
(xi) analyze enterprise, liquidation, and reorganization
values;
(xii) assist in formulating, negotiating and documenting a
plan or plans of reorganization, analyze feasibility
and prepare, develop and analyze information
necessary for confirmation;
(xiii) advise and assist the Committee in and, where
appropriate, participate in or attend negotiations and
meetings with the Debtors, lenders and other parties in
interest;
(xiv) analyze and monitor the Debtors' tax positions, including
advice and assistance in evaluating the tax consequences
of proposed plans of reorganization and other
transactions or events;
(xv) assist with analysis of claims, including analyses of
creditors' claims by type and entity;
(xvi) undertake an investigation and forensic analysis of the
Debtors' pre-petition transactions or other transfers of
cash or other assets;
(xvii) provide litigation consulting services and expert witness
testimony regarding confirmation issues, avoidance
actions or other matters; and
(xviii) perform other such functions as requested by the
Committee or its counsel to assist the Committee in these
chapter 11 cases.
Gary Shapiro, co-chair of the Creditors' Committee, explains
that the Committee's Members chose KPMG LLP as its accountants
and financial advisors because of the firm's diverse experience
and extensive knowledge in the fields of accounting, taxation
and bankruptcy.
KPMG will bill for services at its standard hourly rates:
Partners $510 - 570
Directors 420 - 480
Managers 330 - 390
Senior Associates 240 - 300
Associates 150 - 210
Paraprofessionals 120
Melissa Kibler Knoll, a partner of KPMG LLP, assures Judge
Sonderby that KPMG does not hold or represent an interest
adverse to the estates that would impair KPMG's ability to
objectively perform professional services for the Committee.
"KPMG is a 'disinterested person' as that term is defined in
section 101(14) of the Bankruptcy Code," Ms. Knoll asserts.
Ms. Knoll admits that KPMG has, in the past, provided Kmart
certain tax services generally related to state tax and federal
deficiency interest refund opportunities, as well as certain
information systems consulting services. "But not anymore," Ms.
Knoll emphasizes. According to Ms. Knoll, KPMG will not provide
any professional services to Kmart or its subsidiaries during
these chapter 11 cases.
Furthermore, Ms. Knoll relates that KPMG LLP has in the past
been retained by, and presently and likely in the future will
provide services for, certain creditors of the Debtors, other
parties in interest, and their respective attorneys and advisors
in matters unrelated to these chapter 11 cases.
Ms. Knoll promises to file a supplemental affidavit with the
Court in case additional information is discovered that warrants
disclosure. (Kmart Bankruptcy News, Issue No. 7; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
LTV CORP: Seeks Okay of Proposed Administrative Claims Protocol
---------------------------------------------------------------
LTV Steel Company, Inc., and its related and subsidiary Debtors,
ask Judge William T. Bodoh to establish and alter the case
management procedures in effect for these chapter 11 cases. In
late November 2001, the Debtors were in default under their
credit agreement with their postpetition lenders. As a result,
the DIP Lenders' obligation to lend further amounts to the
Debtors under the terms of the DIP Credit Agreement terminated.
This, coupled with a variety of other factors that significantly
impaired the Debtors' liquidity position, caused the Debtors to
obtain the APP Order and commence the asset sale process.
Under the terms of the earlier DIP Order, the DIP Lenders have a
first-priority lien against substantially all of the Debtors'
assets, including, among other things, the Debtors' cash. As a
result of the Debtors' default under the DIP Credit Agreement,
the Debtors lost the right to use the DIP Lenders' cash
collateral without the Lenders' further consent. As part of
their preparations for commencing the APP process, the Debtors
negotiated a consensual budget for the approved use of the DIP
Lenders' collateral, including their cash collateral, to make
necessary disbursements related to the cessation of the
integrated steel business' operations and related asset sales
during the APP Period. This budget was approved by Judge
Bodoh's December 2001 Order.
The APP Budget contemplates payment in the ordinary course
during the APP Period of administrative expenses for goods and
services that are necessary to complete the winddown of the
integrated steel business and otherwise implement the APP. In
short, the DIP Lenders have agreed to permit the Debtors to use
the collateral solely to the extent necessary to fund the asset
sale process contemplated by the APP. Accordingly, consistent
with the APP Budget, the Debtors say they are paying for the
APP Expenses in the ordinary course of business from the
proceeds of the Collateral; the Debtors claim they are not
incurring APP expenses for which they cannot pay. The Debtors
say it "bears mention that the APP expenses include the approved
use of millions of dollars of the Collateral for the current
payment of, among other things, certain reserves for
environmental expenditures and other costs necessary to complete
the safe and orderly wind-down of the Integrated Steel Business.
Such funds would not otherwise be available absent the DIP
Lenders' consent."
Since the filing of the APP Motion, a substantial number of
parties have filed motions, adversary proceedings and other
filings requesting, in whole or part, allowance and immediate
payment of administrative expense claims for obligations
allegedly incurred by the Debtors' non-operating businesses
during the period prior to the entry of the APP Order for (a)
the provision of goods and services to the Debtors, (b)
alleged reclamation claims, and (c) other obligations incurred
by the non-operating businesses in the ordinary course. More
than 40 administrative claims motions have been filed since
entry of the APP, and more are being filed almost daily.
To date, the Debtors have expended substantial time and
resources reviewing, analyzing and responding to the
administrative claim motions. The Debtors have "extremely
limited resources" available to continue reconciling the
administrative claims on an ad hoc basis during the APP Period
and lack sufficient resources to continue reconciling the
administrative claims at the pace that the administrative claim
motions currently are being filed. The Debtors believe that
establishing uniform procedures to address the administrative
claims motions on an efficient and consistent basis will allow
them to focus their attention and resources upon the asset sale
process in order to maximize recoveries for the Debtors'
creditors, thereby creating greater potential recovery for all
administrative expense claimants. Accordingly, the Debtors ask
that Judge Bodoh establish uniform procedures for processing the
pending and any future administrative claims motions.
Specifically, the Debtors propose that the procedure include:
(1) The hearing on any administrative claims motion
currently pending as of the Motion date, or filed in these cases
on or before June 20, 2002, will be adjourned until or scheduled
for hearing at, as applicable, the regularly-scheduled omnibus
hearing on July 23, 2002, at 1:30 p.m. Eastern Time.
(2) The Debtors' response deadline with respect to the
pending motions and any administrative claims motions filed
before the Initial Cut-Off Date and to which the Debtors have
not yet responded will be July 16, 2002, at 4:00 p.m. Eastern
Time.
(3) The Debtors may file a consolidated, omnibus
objection to some or all of the issues presented in the
administrative claim motions filed on or prior to the initial
cut-off date. The Debtors need not, however (i) further respond
to the administrative claims motions with respect to which an
objection previously was filed or (ii) address the issue of
allowance and reconciliation of claims.
(4) Discovery, if any, related to the administrative
claims or the administrative claims motions will be stayed until
after the administrative claims motions hearing.
(5) The administrative claims motions hearing will
address only the issue of the claimants' alleged right to
immediate payment of the administrative claims and other related
issues and will reserve the issue of allowance and
reconciliation of the administrative claims. The Debtors request
this relief because (i) the Debtors have extremely limited
resources to devote to the reconciliation of the multitude of
administrative claims already filed and anticipated to be filed,
and (ii) the use of these limited resources to reconcile the
administrative claims at this time would be wasteful if (as the
Debtors believe) the Debtors lack the ability to use the
collateral to pay these claims outside the APP Budget prior to
the satisfaction of the DIP Lenders' claims.
(6) If, after hearing the arguments of the parties at the
administrative claims motions hearing, Judge Bodoh orders that
immediate payment of any administrative claims be made, then the
Debtors will have a period of 45 days from and after the date of
the entry of such order to reconcile the administrative claims
asserted in the applicable administrative claims motions filed
before the initial cut-off date.
(7) Disputes over the amount of all or a portion of any
administrative claim that is ordered to be paid at the
administrative claims motions hearing and that cannot be
resolved consensually by the parties during the reconciliation
period may be scheduled for further hearing by the party
asserting the administrative claim on not less than 10 business
days' advance written notice by telecopier or overnight delivery
to the parties identified on the general service list
established in these cases, which notice may be served at any
time after the conclusion of the reconciliation period.
(8) The Debtors will not be required to (i) respond to
the request for allowance of administrative claims in any
response filed or before the response deadline, or (ii) address
the allowance or reconciliation of administrative claims at the
administrative claims motions hearing. Such issues and the
Debtors' right to respond to such issues will be fully reserved
until after the administrative claims motions hearing in
accordance with the terms of these administrative claims motions
procedures.
The Debtors reserve all of their rights to seek an extension or
modification of this Motion, including to address administrative
claims motions filed after the initial cut-off date or other
related relief if, in their judgment, the facts and
circumstances warrant. The Debtors further reserve the right to
seek an extension of the reconciliation period if a significant
number of administrative claims are ordered to be immediately
paid at or following the administrative claims motions hearing,
or for other reasons that the Debtors determine in their
judgment make such an extension appropriate or necessary under
the circumstances.
The Debtors will serve a copy of this Motion upon any claimant
that has filed a pending motion or files an administrative
claims motion from and after the date of this Motion. The
Debtors assure Judge Bodoh that by this Motion they do not seek
to establish an administrative claims bar date - merely "uniform
and streamlined procedures for administering the pending motions
and the administrative claims motions yet to be filed in these
cases".
The Debtors argue that this procedure promotes judicial economy
and is consistent with the priorities of payment established by
Congress. It is an extremely inefficient use of the Debtors'
and the Court's time for these administration motion matters to
proceed on an ad hoc basis because the issues raised in each
motion are substantially similar and, in the Debtors' view,
should be resolved on a uniform and consistent basis.
Moreover, adopting a uniform treatment of the administrative
claims motions is consistent with, and supported by, prior
orders of this Court, the priority scheme established by
Congress in the Bankruptcy Code, and applicable case law.
First, the DIP Order grants the DIP Lenders a first-priority
security interest in the collateral and eliminates, absent
written consent of the DIP Lenders, any section 506(c) surcharge
against the collateral; accordingly, satisfaction of the DIP
Lenders' secured claims from the proceeds of the collateral
takes precedence over satisfaction of the administrative claims.
Additionally, the DIP Order granted the DIP Lenders a
superpriority claim. Despite their senior position, the DIP
Lenders have agreed to afford the Debtors limited use of the
collateral to pay the APP expenses, which are necessary to
effectuate the APP's asset sales and related wind-down
activities and, in turn, maximize the value of assets
available for distribution to all creditors, including
administrative creditors.
The Debtors say "it is important to reemphasize that the Debtors
are not accruing administrative expenses that they will not be
able to pay. To the contrary, by virtue of the APP Budget and
the Budget Order, the DIP Lenders have authorized the Debtors to
pay administrative claims accruing during the APP Period as they
arise in the ordinary course of the Debtors' businesses."
Moreover, the Debtors remind Judge Bodoh that his budget order
specifically allows the Debtors to retain "sufficient cash to
pay for the APP Expenses before distributing any funds to the
DIP Lenders." (LTV Bankruptcy News, Issue No. 27; Bankruptcy
Creditors' Service, Inc., 609/392-00900)
LASON INC: DE Court Sets Plan Confirmation Hearing for April 30
---------------------------------------------------------------
Lason, Inc. (OTC Bulletin Board: LSONQ) announced that the U.S.
Bankruptcy Court in the District of Delaware has approved its
Disclosure Statement. The Court also authorized the Company to
transmit its Disclosure Statement and Plan of Reorganization and
solicit votes from its creditors regarding such Plan. Ballots
to vote on the Plan are expected to be mailed out to the
Company's creditors, eligible for voting on its Plan, within the
next week. The deadline for submitting such ballots has been
set for 4:00 p.m. (EST) on April 15, 2002. The Company's Plan
Confirmation Hearing is scheduled for 11:30 a.m. (EST) on April
30, 2002.
"The approval of our Disclosure Statement is a tremendous
achievement," stated Ronald D. Risher, president and chief
executive officer. "We have continued to work through this
process as quickly as possible, and this approval allows us to
continue along our anticipated timeline. We worked very hard in
negotiating our pre-arranged agreement regarding a plan of
reorganization with our senior secured lenders and are proud of
what we have accomplished thus far. We look forward to the Plan
Confirmation Hearing."
Lason, headquartered in Troy, Michigan, is a leading provider of
integrated information management services, transforming data
into effective business communication, through capturing,
transforming and activating critical documents. Lason has
operations in the United States, Canada, Mexico, India and the
Caribbean. The Company currently has over 85 multi- functional
imaging centers and operates over 60 facility management sites
located on customers' premises. More information about Lason is
available on its Web site at http://www.lason.com
MARINER POST-ACUTE: Has Until May 15 to Decide on 213 Leases
------------------------------------------------------------
Mariner Post-Acute Network, Inc., and its debtor-affiliates
obtained Court approval extending their lease decision period.
Accordingly, the period by which the Debtors must assume or
reject their 213 unexpired leases/subleases of nonresidential
real property as identified in Exhibit A of the motion is
extended to and including the earlier of (a) the effective date
of the Plan and (b) May 15, 2002.
For the 3 LTC Leases and subleases, the period is extended
through and including the date that is 30 days after the Nevada
Bankruptcy Court enters a final, non-appealable order
authorizing and directing the assumption or rejection of the LTC
Subleases by Quality Long Term Care Management, Inc. and Quality
Long Term Care, Inc. (Mariner Bankruptcy News, Issue No. 26;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
MINK INTERNATIONAL: Fails to Maintain CDNX Listing Requirements
---------------------------------------------------------------
Effective at the close of business Wednesday, March 20, 2002,
the common shares of Mink International Resources Corp., was
delisted from CDNX for failing to maintain Exchange Listing
Requirements. The securities of the Company have been suspended
in excess of twelve months.
MUTUAL RISK: Pimco Equity Advisers Discloses 8.96% Equity Stake
---------------------------------------------------------------
Pimco Equity Advisers, LLC. beneficially own 3,764,000 shares of
the common stock of Mutual Risk Management, Ltd. representing
8.96% of the outstanding common stock shares of the Company.
Pimco holds sole power to both vote or dispose of the stock
held.
The ownership report was filed with the SEC on behalf of PIMCO
Equity Advisors LLC, a Delaware limited liability company and/or
certain investment advisory clients or discretionary accounts
relating to their collective beneficial ownership of shares of
common stock of Mutual Risk Management. PIMCO Equity Advisors
LLC is a registered investment adviser under Section 203 of the
Investment Advisers Act of 1940. As a result of its role as
investment adviser PIMCO Equity Advisors LLC may be deemed to be
the beneficial owner of the securities of the Company. PIMCO
Equity Advisors LLC has the sole power to dispose of the shares
and to vote the shares under its written guidelines.
Mutual Risk Management offers alternative risk financing for
clients in the US, Canada, and Europe. Its programs, used for
multiple insurance lines, serve as an alternative to traditional
commercial insurance and allow its customers to assume their own
risk. It offers corporate risk management and is a channel
between producers of specialty business and reinsurers wanting
to write that business. Workers' compensation insurance makes up
more than 50% of its business; other segments offer specialty
brokerage (in Bermuda, North America, and Europe); the design,
underwriting, and brokering of risk plans for self-insurers
(including a rent-a-captive program); and mutual fund
administration.
* * *
As reported in the March 11, 2002, edition of the Troubled
Company Reporter, Mutual Risk Management Ltd. (NYSE:MM) has
signed a definitive agreement with The BISYS Group Inc., for the
sale of its fund administration business, Hemisphere Management
Ltd. Pursuant to the agreement the Company expects to receive
cash proceeds from the sale of approximately $110 million and to
report a gain on the sale of approximately $100 million after-
tax. Completion of the transaction is subject to regulatory
approval and other usual terms and conditions. The proceeds of
the sale will be used to repay indebtedness and the Company's
banks and debenture holders have approved the transaction.
In addition, Mutual Risk also announced that it has retained
Greenhill & Co., LLC, an independent global merchant banking
firm, to assist in developing a restructuring of its balance
sheet.
NTELOS: S&P Affirms B Rating After Bank Loan Covenant Amendments
----------------------------------------------------------------
The ratings on integrated telecommunications provider NTELOS
Inc. were affirmed and removed from CreditWatch on March 20,
2002, following the company's announcement that it had obtained
covenant amendments to its $325 million secured bank facilities.
As of year-end 2001, Waynesboro, Virginia-based NTELOS had about
$612 million in total debt outstanding.
Credit Rating: B with Negative Outlook.
The bank loan had included a minimum operating cash flow test
that NTELOS would have been unable to meet in the first quarter
of 2002. This minimum requirement was lowered under the revised
bank agreement for 2002. In addition, the company obtained
revised debt-to-EBITDA requirements for 2003. These amendments
alleviated Standard & Poor's near-term liquidity concerns and
increased the company's financial flexibility.
The negative outlook reflects the fact that the company still
faces the challenge of aggressively growing cash flows from its
wireless business in 2002 to meet the minimum operating cash
flow requirements in the revised bank agreement. Absent
substantial growth in wireless cash flows, the company will be
unable to produce credit metrics supportive of the current
ratings.
Standard & Poor's expects EBITDA interest coverage to be less
than 1 time through 2002 and only about 1x in 2003. The company
experienced operating cash flow losses in its wireless business
through the fourth quarter of 2001, in part due to the
aggressive conversion of its prepaid wireless customers in its
Virginia East market (former PrimeCo property) to postpaid
services, coupled with heightened competition from the larger
national carriers in all of its wireless markets. This has
resulted in high cost per gross customer addition, which was
$344 for 2001. Accompanying operating cash losses for the
wireless business totaled about $21 million for 2001.
NTELOS grew its postpaid wireless subscriber base considerably
in 2001, and in the latter half of the year introduced an
advanced billing product in order to grow the subscriber base
with limited credit risk. The company has also added several
retail stores in its region and plans to open additional stores
in 2002.
The company benefits from a wholesale agreement with Horizon
Wireless PCS, which provides for minimum revenues of $27.4
million in 2002 and $38.6 million in 2003 in exchange for
NTELOS's upgrade to 1XRTT of the portion of its CDMA-based
network serving Horizon. 1XRTT is a 2.5-generation wireless
technology that supports advanced wireless services.
NTELOS derives some limited flexibility from its holdings of
excess personal communications services (PCS) spectrum and other
non-strategic assets. The company sold some PCS licenses in 2001
for $11.6 million. It also has agreements in place for another
$21.6 million in gross proceeds. Standard & Poor's expects the
company will sell additional spectrum and other non-strategic
assets in the 2002 to 2003 time frame to fund potential
operating and capital requirements. NTELOS also derives some
flexibility from its bank facility, under which it had $100
million available as of Dec. 31, 2001.
The company also benefits from the stability of its rural
incumbent local exchange carrier business, which contributed $27
million in operating cash flows in 2001. Largely due to
favorable regulation and extremely limited competition, this
business produces operating cash flows exceeding 60%.
The senior secured bank loan rating is one notch higher than the
corporate credit rating. This reflects the fact that the value
ascribed to the company's incumbent local exchange operations,
which consist of about 52,000 access lines, coupled with the
value ascribed to its PCS licenses in a theoretical distressed
scenario provide adequate coverage of the potential full draw on
the $325 million in secured bank facilities.
Outlook
NTELOS's business plan is predicated on its ability to
substantially improve the operating cash flow performance of the
wireless business in 2002. To accomplish this, it must continue
to significantly grow the customer base and contain overall
operating expense levels. Should the company encounter execution
delays, the ratings could be lowered.
NATIONAL STEEL: Will Honor Prepetition Customer Obligations
-----------------------------------------------------------
National Steel Corporation, and its debtor-affiliates sought and
obtained the Court's authority to continue their Customer
Programs and pay amounts related to the Customer Programs in the
ordinary course of business.
According to National Steel's Vice President and Treasurer
William E. McDonough, the majority of the amounts to be paid
with regard to the Customer Programs will arise post-petition
and therefore, will be entitled to administrative expense.
Mr. McDonough explains that the uninterrupted maintenance of the
Debtors' Customer Programs is essential to attracting new
customers and maintaining existing customer satisfaction. "The
markets for certain of the Debtors' products are highly
competitive, and the Debtors' Customer Programs are integral to
the Debtors' ability to induce customers to purchase certain
products," Mr. McDonough says. Discontinuation of the Customer
Programs would disrupt business operations, generate adverse
publicity and undermine the Debtors' relationship with its
customers, Mr. McDonough warns.
Specifically, Mr. McDonough relates that certain customers hold
contingent pre-petition claims against the Debtors for:
(i) refunds, adjustments, including billing adjustments, and
other credits; and
(ii) obligations arising under warranties given in the
ordinary course of businesses and relating to goods and
services provided to customers prior to the Petition
Date.
Mr. McDonough reports that the aggregate sum of Credits and
Warranty Claims that are accrued but unpaid as of the Petition
Date is impossible to determine. However, the Debtors
anticipate that the total amounts owed on account of such pre-
petition Customer Programs will equal approximately $8,900,000:
$1,800,000 for the Credits and
$7,100,000 for the Warranty Claims.
"The Debtors believe that honoring the existing Customer
Programs is critical to their continued operations," Mr.
McDonough says. In the competitive market, Mr. McDonough
explains, the failure to offer programs that are similar to
their competitors is likely to have a material adverse impact on
the Debtors' ability to maintain existing product placement
arrangements and retain existing customers. Mr. McDonough
insists that failure to continue the Customer Programs during
the pendency of these chapter 11 cases could severely jeopardize
the Debtors' business relationships with their customers.
Furthermore, Mr. McDonough tells the Court that the total amount
the Debtors will pay or credit to customers if the Court grants
the relief requested is de minimis compared with the losses that
the Debtors could suffer if the patronage of their customers
erodes at the outset of these cases. "The maintenance of the
Customer Programs is essential to the continued vitality of the
Debtors' business and to their prospects for a successful
reorganization," Mr. McDonough adds. (National Steel Bankruptcy
News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
NATIONSRENT INC: Court Okays Zolfo Cooper as Debtor's Consultant
----------------------------------------------------------------
NationsRent Inc., and its debtor-affiliates obtained Court's
approval to retain and employ Zolfo Cooper, LLC as bankruptcy
consultants and management advisors in these chapter 11 cases
and approval of Zolfo Cooper's proposed fee structure.
It is presently anticipated that Zolfo will provide these
services:
A. advise and assist management in organizing the Debtors'
resources and activities so as to effectively and
efficiently plan, coordinate and manage the chapter 11
process and communicate with customers, lenders, suppliers,
employees, shareholders and other parties in interest;
B. assist management in designing and implementing programs to
manage or divest assets, improve operations, reduce costs
and restructure as necessary with the objective of
rehabilitating the business;
C. advise the Debtors concerning interfacing with any statutory
committees appointed in these cases, pre-petition secured
lenders and proposed post-petition lenders, other
constituencies and their professionals, including the
preparation of financial and operating information required
by such parties or the Court;
D. advise and assist management in the development of a plan or
plans of reorganization and the underlying business plan,
including the related assumptions and rationale, along with
other information to be included in the disclosure
statement;
E. advise and assist the Debtors in forecasting, planning,
controlling and other aspects of managing cash and, if
necessary, obtaining debtor in possession and exit
financing;
F. advise the Debtors with respect to resolving disputes and
otherwise managing the claims process;
G. advise and assist the Debtors in negotiating a plan or plans
of reorganization with the various creditor and other
constituencies;
H. as requested, render expert testimony concerning the
feasibility of a plan or plans of reorganization and other
matters that may arise in the case; and
I. provide such other services as may be required by the
Debtors.
Meanwhile, as compensation for its services, Zolfo Cooper
charges fees based on actual hours expended to perform its
services at standard hourly rates established for each principal
and employee plus reasonably incurred, out-of-pocket expenses
associated with an assignment. The current hourly billing rates
for professionals who may be assigned to this engagement in
effect as of July 1, 2001, are as follows:
Principals $475 - $625
Professional Staff $150 - $475
Support Personnel $ 75 - $200
In addition, Zolfo Cooper intends to charge a onetime
consummation fee of $2,500,000 if the Debtors succeed in
obtaining:
A. a consensual restructuring, compromise and/or extinguishment
of a substantial amount of its existing indebtedness;
B. a final judicial order approving a plan or plans of
reorganization under chapter 11; or
C. a sale of substantially all of the Debtors assets.
In accordance with the Engagement Letter, the Debtors further
propose that any Consummation Fee will be paid to Zolfo Cooper
at the time of the closing of the applicable transaction,
provided that:
A. the Consummation Fee and the Hourly Fees and Expenses
described herein and in the Engagement Letter in all cases
will be subject to the approval of the Court upon proper
application by Zolfo Cooper;
B. the Hourly Fees and the Expenses that are in addition to any
Consummation Fee will be paid to Zolfo Cooper only upon
Court approval or in accordance with any other procedures
for the compensation of professionals established by the
Court in these cases; and
C. any fees or expenses paid to Zolfo Cooper but not approved by
the Court will be promptly returned by Zolfo Cooper to the
Debtors. (NationsRent Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
NETIA HOLDINGS: Sets General Shareholders' Meeting for Wednesday
----------------------------------------------------------------
Netia Holdings S.A. (Nasdaq: NTIAQ, WSE: NET) announced the
proposed resolutions to be adopted by the Company's
Extraordinary General Meeting of Shareholders on March 27, 2002.
As previously announced by Netia, the proposed resolutions
concern, among other things, a conditional increase of the
Company's share capital by up to PLN 83,222,437 through the
issuance of ordinary bearer series "J" shares, with the aim of
facilitating the issuance of warrants to existing shareholders
(up to 64,848,652), as well as a stock option plan for Netia's
key employees (up to 18,373,785). In accordance with the terms
of the Restructuring Agreement, dated March 5, 2002, the Company
will not allocate more than 5% of its post-restructuring share
capital, before the issuance of warrants, to this stock option
plan.
These proposed resolutions are the result of the terms of the
Restructuring Agreement, as announced previously, and are
subject to the approval of Netia's Supervisory Board. Prior to
the Shareholders' Meeting on March 27, 2002, Netia's Management
Board will present an opinion of the Supervisory Board on these
issues.
DebtTraders reports that Netia Holdings SA's 13.500% bonds due
2009 (NETH09PON2) are currently quoted at a price of 18. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NETH09PON2
for real-time bond pricing.
NETWORK PLUS: Court Approves Broadview's Winning Bid for Assets
---------------------------------------------------------------
Broadview Networks, a network-based electronically integrated
communications provider (e-ICP), announced that the bankruptcy
court in Delaware has issued a sale order that approves its bid
for the assets of Network Plus Corp., the Randolph,
Massachusetts-based communications provider that filed a
voluntary petition with the court in February.
Broadview Networks' winning bid for the assets of Network Plus
was $15.75 million. The assets include 200,000 plus local lines,
thousands of long-distance accounts and about 370 employees.
Broadview Networks will also gain an extensive long-haul fiber
network that runs from New Hampshire to Florida, along with
significant metropolitan fiber networks.
The acquisition also has to be approved by Federal and state
regulators. "We hope the regulators will endorse our bid," says
Vern Kennedy, Broadview Networks president and CEO. "Our aim is
to close the transaction expeditiously, and make it as
uneventful as possible for customers. We are committed to
continue to provide Network Plus customers the quality,
competitive service that they have come to expect."
"Our two companies are a strong fit," says Network Plus
executive vice president and COO, James C. Crowley. "Both
companies are focused on small and medium-sized businesses and
both are committed to support and grow our customer base. The
transaction will benefit customers and the companies."
Broadview Networks -- http://www.broadviewnet.com-- is a
network, electronically-integrated communications provider (e-
ICP) serving small and medium-sized businesses and
communications-intensive residential customers in the
northeastern and mid-Atlantic United States. The New York City-
based company offers integrated communications solutions,
including local, long-distance and international voice services;
data services; and dial-up and high-speed Internet services
using digital subscriber line (DSL) and other advanced
technologies. Customers receive a single, easy-to-understand
bill and have one point of contact for real-time, personal
customer care.
Network Plus -- http://www.networkplus.com-- is a network-based
integrated communications provider headquartered in Randolph,
Massachusetts. Network Plus offers broadband data and
telecommunications services, primarily to small and medium-sized
business customers located in major markets in the Northeastern
and Southeastern regions of the United States. Network Plus's
bundled product offerings include local and long distance
service as well as enhanced, high-speed data and internet
services.
NORTHWEST AIRLINES: Fitch Rates $300MM Sr. Unsecured Notes at B+
----------------------------------------------------------------
Fitch Ratings has assigned a rating of 'B+' to the $300 million
in senior unsecured notes issued by Northwest Airlines Corp. The
privately placed notes carry a coupon rate of 9.875% and mature
in March 2007. The Rating Outlook for Northwest is Negative.
The 'B+' rating reflects the signs of stabilization in
Northwest's cash flow position that have begun to appear over
the last several weeks. Following the unprecedented collapse in
air travel demand that resulted from the events of September 11,
Northwest's revenue per available seat mile (RASM) performance
has improved steadily. RASM showed a year-over-year decline of
16% (in line with industry norms) in the fourth quarter, with
sequential improvements seen in each month since September.
Northwest continues to enjoy a RASM premium over the U.S.
industry average, due in large part to its strong competitive
position at the Minneapolis-St. Paul and Detroit hubs. Moreover,
Northwest's customer appeal should be improved as a result of
the February opening of the new WorldGateway terminal at
Detroit. Although passenger yields remain very weak as a result
of a less favorable business/leisure passenger mix and continued
discounting, booked load factors in the first quarter appear to
be improving. More normal load factors (74.4% system wide in
February) and unit revenue comparisons suggest that the
foundation has been laid for a return to positive operating cash
flow in the second and third quarters, when seasonal demand
patterns are strong. Fitch believes that the risk of a further
weakening in Northwest's operating cash flow position is
unlikely given the more positive demand outlook for the rest of
2002.
In spite of these encouraging developments, Northwest continues
to face a high degree of financial risk as it seeks to recover
from the post-September 11 demand shock. Adjusted leverage,
reflecting both on-balance sheet debt and off-balance sheet
aircraft and facilities lease obligations, remains extremely
high. After drawing down its bank credit facility following
September 11 and completing financing for a large number of new
aircraft deliveries, Northwest's fixed financing charges will
remain high in 2002-2003.
Northwest entered the current crisis with a commitment to
controlling operating expenses, and had successfully lowered its
cost per available seat mile (CASM) beginning in the first
quarter of 2001. With all major labor contract issues settled
and little risk of additional wage shocks, Northwest finds
itself in a reasonably strong position as it fights to keep CASM
increases down in 2002. For the fourth quarter of 2001, CASM
increased by 3.5% over the prior year period. Large declines in
fuel expenses (down 31%) and commissions (down 46%) offset
higher insurance premiums and security expenses. With most of
the quick cost control measures related to the schedule
reduction already completed, Northwest is likely to see higher
CASM levels in 2002. This results from the high level of fixed
costs in the airline's operating budget and the need to spread
those fixed costs over a smaller capacity base.
With respect to capital spending and the fleet plan, Northwest
is embarking upon a major fleet overhaul that involves the
replacement of older, high operating cost aircraft such as
Boeing 727s and DC10s with Airbus A319/320 and Boeing 757-300
narrowbodies, as well as Airbus A330 and Boeing 747-400
widebodies. In 2002, the company is scheduled to take delivery
of 38 mainline jets and 23 Bombardier regional jets to be
operated by Northwest Airlink regional carriers. All new
aircraft deliveries have been financed through completed
enhanced equipment trust certificate (EETC) transactions or
manufacturer financing deals. Total capital spending for
Northwest is projected to reach $2.0 billion in 2002.
Northwest's liquidity position remains quite strong relative to
its competitors, with a year ending 2001 cash balance of $2.6
billion. This figure includes the $461 million (pretax) in
government stabilization grants, as well as deferred federal
excise taxes that were paid on January 15. An additional $51
million in government grants is expected in the first quarter.
The company has amended the terms of its bank facilities to
relax financial covenants. While the company has not ruled out
any future loan guarantee application to the U.S. Government, it
has no immediate plans to make such an application. The
successful completion of the current $300 million unsecured
offering demonstrates that the capital markets are still open to
Northwest, providing the company a traditional alternative
source of financing. With the addition of the new cash,
Northwest has the flexibility in its capital structure to either
maintain a large cash buffer, reduce the level of borrowing
under its bank facility, or purchase new aircraft with cash.
DebtTraders reports that Northwest Airlines Inc.'s 8.875% bonds
due 2006 (NORTHWT1) are trading between 87 and 90. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NORTHWT1for
real-time bond pricing.
NORTHWESTERN STEEL: Sterling Offers $4.5MM for Melt & Rod Assets
----------------------------------------------------------------
Northwestern Steel and Wire Corporation asks the U.S. Bankruptcy
Court for the Northern District of Illinois to approve uniform
Sale Procedures for its assets, approve a break-up fee and set a
hearing to approve a sale transaction to the highest and best
bidder. The Debtors have a bid in hand from Sterling Steel
Company for approximately $4.5 million.
An Auction is scheduled for April 29, 2002 at 10:00 a.m. at
Sidley Austin Brown & Wood, Bank One Plaza, 10 S. Dearborn St.,
Chicago, Illinois, 60603.
The assets to be sold are:
i) the "melt shop" containing the Debtor's primary, 400 ton
electric arc furnace and other electric arc furnaces,
which are used to melt scrap metal into molten steel and
the billet caster which produces 5" square semi-finished
steel or "billets";
ii) the "rod mill" which uses the billets to produce round
rods for a variety of applications, including springs,
fasteners, nails and shopping carts;
iii) the 24" mill and
iv) certain real and tangible and intangible personal
property associated with the assets.
The Debtor relates to the Court that the bidding procedures for
the Assets and auction follow extensive negotiations between the
Debtor, the Official Unsecured Creditors' Committee, and
Sterling Steel, a subsidiary of Leggett and Platt Incorporated.
Throughout this entire period, Leggett and Platt has performed
intensive investigative analysis in site, including
environmental testing of the property, and has advised the
Debtor that it has expended close to $1 million in this effort.
The Debtor and the Committee believe that they landed the best
offer currently available for the Assets.
Pursuant to the Agreement, Sterling Steel will purchase the
Assets for a cash price of $4.5 million. Sterling Steel agrees
to deposit $500,000 of the Purchase Price upon granting the
relief requested in this Motion. To fund the costs of Debtor's
removal from the property of certain designated chemicals and
other materials in an environmentally compliant manner, Sterling
Steel is willing to fund up to $180,000 of "Additional Asset
Protection Expenses" if Debtor will request. The Closing is
expected to occur on or before May 15, 2002.
The Debtor also proposes to subject the Assets to higher and
better bids in accordance with the Sale Procedures. Through AEG
Partners, the Committee's financial advisors, the Debtor wish to
notify and solicit expressions of interest from interested
parties in the Assets, as well as solicit interest in the Non-
APA Assets.
Those who are interested to take part in the bidding must submit
their written expressions of interest and financial capacity to
close on or before 5:00 p.m. Chicago time on April 19, 2002 to:
Lawrence Adelman
AEG Partners
1849 Green Bay Road
Suite 270, Highland Park
Illinois 60035
Tel: 847-579-5007
Fax: 847-681-1819
e-mail: Ladelman@AEGPartners.com
To qualify, bids shall exceed the Purchase Price of $120,000
plus the amount of all Additional Asset Protection Expenses paid
by Sterling Steel through the date of the auction and the amount
of any Environmental Advances. Qualified Bids must be received
by Lawrence Adelman on or before 5:00 p.m. Chicago time on April
26, 2002.
The Debtor's contends that its ability to offer the Sale
Procedures ensures the sale of the Assets to a contractually-
committed bidder at a fair price, at the same time providing a
potential of greater benefit to the estate.
Northwestern Steel and Wire Corporation, a major mini-mill
producer of structural steel components that include wide flange
beams, channels, angles and merchant bars, as well as rod and
selected wire products, filed for chapter 11 protection on
December 19, 2000. Janet E. Henderson, Esq. and Kenneth P.
Kansa, Esq. at Sidley Austin Brown & Wood represent the Debtor
in its restructuring efforts.
PRESSTEK INC: Receives Waivers from Banks on Adast Bankruptcy
-------------------------------------------------------------
Presstek, Inc. (Nasdaq: PRST), a leading provider of direct
digital imaging technology, announced that it has received
waivers from its lenders for the fourth quarter bank covenant
violations caused by the write-off of the $2.1 million of
prepayments made to Adast for raw materials and work-in-
progress. On March 12, 2002 the company announced that its
manufacturing partner Adast had filed for bankruptcy protection.
As previously stated, this bankruptcy is not expected to impact
any other portion of Presstek's business.
Presstek Vice President and Chief Financial Officer Moosa E.
Moosa said, "We are pleased that our banks were very cooperative
under these circumstances. We are now free to put this issue
behind us and return our focus to the opportunities that lie
ahead."
Presstek, Inc. is a leading developer of digital laser imaging
and chemistry-free plate technologies for the printing and
graphic arts industries. Marketed to world-leading press
manufacturers and directly to end users, Presstek's patented
DI(R), CTP and plate products eliminate photographic darkrooms,
film and toxic processing chemicals, reduce the printing
turnaround time and lower the production costs. The company's
Lasertel subsidiary supplies it with the valuable resources
necessary for its next generation laser imaging devices.
PUBLIC SERVICE: Fitch Revises Outlook to Positive on Merger Plan
----------------------------------------------------------------
Fitch Ratings has affirmed the ratings of Public Service Company
of New Mexico (PSNM) as follows: senior unsecured pollution
control notes and senior unsecured notes 'BBB-'; Sale-Leaseback
Obligation Bonds BB+; and, Preferred Stock 'BB-'. The ratings
are removed from Rating Watch Negative, where they were placed
in November 2000 following the announcement of the company's
planned merger with Western Resources. The Rating Outlook is
Positive.
The ratings and positive outlook reflect the relatively
predictable cash flow from PSNM's utility operations, above-
industry-average sales growth, and notable balance sheet
improvement in recent years. Since 1996, PSNM has reduced
outstanding sale-leaseback obligation debt from $395 million to
$166 million, significantly reducing fixed costs. The debt
retirements and growth in retained earnings, lowered PSNM's
debt-to-total capitalization ratio to 53% as of December 31,
2001 compared to 61% and at the end of 1996 and 54% at the
December 31, 2000. Credit quality also benefits from the
extension of cost-of-service regulation under SB 266 through
2006. The extension of cost-of-service regulation under SB 266
from January 1, 2002 to January 1, 2007 is a positive
development that will result in greater cash flow stability vis-
a-vis a competitive environment, while providing additional time
for PSNM to recover its potential stranded costs. There is some
concern that the termination of PSNM's rate agreement at year -
end 2002 will trigger a rate review, later this year, which
could adversely effect credit quality measures. However, even
under a relatively stringent rate-reduction scenario, the
utility's underlying earnings and cash coverage ratios would
remain within the rating category.
Fitch's primary credit concern is PSNM's planned expansion of
its wholesale energy marketing and trading business (EM&T) and
the associated increase in business risk. PSNM management plans
to significantly expand its existing wholesale EM&T operation,
and could add up to 1,800 mWs of merchant generating capacity at
a cost of over $1 billion during 2002-2006. Most of the
financing required for PSNM's EM&T business will be provided by
internal sources of capital. Given the relatively modest
external financing requirements, Fitch expects debt as a
percentage of total capital (including short-term and off
balance sheet obligations) to remain in the mid-50% range for
the next several years. PSNM has two projects under
construction. The 135 mW Afton Generating Station is expected to
begin commercial operation October 2002, and 70 mWs at the
Lordsburg plant will begin operation around mid-2002.
Under SB 266, PSNM will continue to operate as a fully
integrated electric utility until open access begins, but is
permitted to develop wholesale generation outside the purview of
the New Mexico Public Regulation Commission (PRC). New Mexico's
amended restructuring law allows recovery of 50%-100% of PSNM's
stranded costs through a five-year, non-bypassable competition
transition charge to commence with implementation of open
access.
In December 2001, the PRC approved a settlement allowing the
activation of a holding company structure. At the end of 2001,
PSNM capitalized PNM Resources (PNM) with $127 million of
equity. PSNM and its former unregulated business, Avistar, are
now direct subsidiaries of PNM.
PSINET INC: Grants GECC a Provisional Lien for Payment Assurance
----------------------------------------------------------------
As previously reported, General Electric Capital Corporation
filed a Motion for Relief from the Automatic Stay, or in the
alternative, for adequate protection, against PSINet, Inc., and
its debtor-affiliates. GECC filed a secured proof of claim in
the amount of $29,367,251.12. The collateral consists of
equipment located in the United States pursuant to two Master
Lease Agreements and six Lease Schedules.
The parties have resolved that Motion by submitting a
Stipulation and Order providing that:
(a) the Motion will be removed from the Court's calendar, and
can be renewed by GECC at any time on sixty days' notice to
the Debtor and the Committee; and
(b) the Debtors will grant GECC a provisional lien on the
Debtor's cash accounts for the requested amount of its
adequate protection payments (subject to the Debtor's and
the Committee's rights to object at a later date). (PSINet
Bankruptcy News, Issue No. 17; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
RYSTAR COMMS: Fails to Maintain Exchange Listing Requirements
-------------------------------------------------------------
Effective at the close of business March 19, 2002, the common
shares of Rystar Communications Ltd. was delisted from CDNX for
failing to maintain Exchange Listing Requirements.
The securities of the Company have been suspended in excess of
twelve months.
SERVICE MERCHANDISE: Proposes Fixtures Sale Bidding Procedures
--------------------------------------------------------------
To test IAR Group's $3,270,000 bid for substantially all of
Service Merchandise's store fixtures, Beth A. Dunning, Esq., at
Bass, Berry & Sims PLC, in Nashville, Tennessee, explains that
the Debtors want to subject that offer to competitive bidding.
In case a higher bid is received, the Debtors will conduct an
auction prior to the hearing of the sale motion at such date and
time as the Debtors may announce. Ms. Dunning relates that the
auction will be conducted on record and the Debtors will, in
consultation with the post-petition lenders and the Committee,
evaluate the bids to the extent that one is acceptable,
negotiate final terms and announce the successful bidder by
filing of a notice at the Court.
The Debtors ask Judge Paine to approve these uniform Bidding
Procedures:
(1) Bidding Protection:
In consideration of the due diligence and delivery of its bid,
the Debtors agree to provide IAR Group with:
(a) reimbursement of its documented out-of-pocket expenses
and attorneys' fees, and
(b) an initial overbid set at least $250,000 beyond the
bid of IAR Group.
(2) Sales Procedures:
The Purchaser will be permitted to abandon in place the Fixtures
which it elects not to resell. In addition, the Debtors have
other fixtures in their warehouses, distribution centers, and
sales support centers which the Debtors intend to sell or
otherwise dispose of. Since the Debtors already obtained on
January 29, 2001 the Order to "Sell Certain Assets Free and
Clear of Liens, Claims and Encumbrances Without Further Court
Approval", the Debtors anticipate that most of the remaining
Fixtures will fall within those parameters.
If the sale exceeds those parameters, the Debtors will seek
authority to sell the Remaining Fixtures on these terms:
(a) The Debtor will give notice of each such proposed sale to:
-- the US Trustee,
-- counsel to the Committee,
-- counsel for the post-petition lenders,
-- the landlord with respect to any lease, and
-- any known holder of a lien, claim or encumbrance
against the specific property to be sold
(b) The Sale Notice shall be served by facsimile and shall
specify:
-- the Remaining Fixtures to be sold,
-- the identity of the proposed purchaser, and
-- the proposed sale price;
(c) The Notice Parties shall have 5 days to object to, or
request additional time to evaluate, the proposed
transaction. If no objection is received, the Debtors
shall be authorized to consummate the proposed sale
transaction and to take such actions as are necessary
to close the transaction and obtain the sale proceeds;
(d) If a Notice Party timely objects, the Debtors and the
objecting Party shall use good faith efforts to
consensually resolve the objection. If the Debtors and
the objecting Notice party are unable to achieve a
consensual resolution, the Debtors will not take any
further steps to consummate the proposed transaction
without first obtaining Bankruptcy Court approval of the
proposed transaction upon notice and a hearing;
(e) Any valid and enforceable liens shall be attach to the net
proceeds of the sale, subject to any claims and defenses
the Debtors may possess and any amounts in excess of such
liens shall be utilized by the Debtors in accordance with
the terms of the Debtors' post-petition financing
arrangement;
(f) Nothing in the procedure shall prevent the Debtors, in
their sole discretion, from seeking Bankruptcy Court
approval at any time of any proposed transaction upon
notice and a hearing;
(3) Abandonment Procedures:
To the extent that the Successful Bidder abandons any remaining
Fixtures to the Debtors and the Debtors determine that any such
Remaining Fixtures are of inconsequential value, the Debtors
seek the authority to abandon such Fixtures to the landlord to
the extent permitted by the terms of the lease, by applicable
law or by agreement with the landlord. The Debtors further
propose that a landlord be deemed to have consented to the
abandonment of any Remaining Fixtures if a landlord does not
object to such abandonment within 10 days after receipt of a
subsequent notice indicating the Debtors' intent to abandon any
Remaining Fixtures. (Service Merchandise Bankruptcy News, Issue
No. 28; Bankruptcy Creditors' Service, Inc., 609/392-0900)
STRUCTURED ASSET: Fitch Slashes Class B5 Certs. Ratings to D
------------------------------------------------------------
Fitch lowers its ratings of the following Structured Asset
Mortgage Investments Inc. mortgage pass-through certificates:
--SAMI 1999-4, class B5 ($903,695 outstanding) to 'D' from
'CCC'.
The action is the result of a review of the level of losses
incurred to date and the current high delinquencies relative to
the applicable credit support levels. As of the February 25,
2002 distribution:
SAMI 1999-4 remittance information indicates that 8.37% of the
pool is over 90 days delinquent, and cumulative losses are
$1,260,939 or 0.51% of the initial pool. Class B5 currently has
0.00% of credit support remaining.
SUPREX ENERGY: CDNX Delists Shares Effective March 20, 2002
-----------------------------------------------------------
Effective at the close of business Wednesday, March 20, 2002,
the common shares of the Suprex Energy Corporation are delisted
from CDNX for failing to maintain Exchange Listing Requirements.
The securities of the Company have been suspended in excess of
twelve months.
TELSCAPE INT'L: Bringing-In Peisner Johnson as Tax Consultants
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approves
the Motion of David Neier, the trustee of the chapter 11 cases
of Telscape International Inc. and its debtor-affiliates to
retain and employ Peisner Johnson & Company, L.L.P. as special
tax consultants.
The Trustee has selected Peisner Johnson because it is one of
the largest Certified Public Accounting firms in the country
that specializes in excise, income/franchise, state and local
use tax consulting for companies in the telecommunications
industry reorganizing or liquidating in chapter 11.
As Tax Consultants, Peisner Johnson is expected to:
i) review and analyze the Debtors records to determine if
the Debtors estates are entitled to any federal, state,
or local excise or use tax refunds, including:
a) conducting a detailed review and analysis of the
Debtors sales and tax records;
b) reviewing the Debtors invoices and other documents
that may qualify for a tax refund;
c) researching any applicable issues; and
d) scheduling those items qualifying for refunds and
providing the Trustee with a detailed report of all
identified federal, state and local tax relief,
along with the documentation in support thereof;
ii) upon the Trustees approval, prepare and file any tax
returns, refund claims or amending any federal, state or
local tax returns as necessary to secure such tax
refunds;
iii) negotiate any disputes and finalize any compromises
relative to such tax refunds that may result from the
Debtors' seeking such tax refunds;
iv) coordinate as necessary with Greenberg Traurig, LLP with
respect to the tax refunds; and
v) provide such other services relating to Peisner's expert
knowledge in connection with the Services as the Trustee
shall reasonably request from time to time with respect
to these cases.
Peisner Johnson will be compensated as:
a. From tax refunds obtained by Peisner, the Trustee will
pay Peisner a commission of fifty (50%) percent of any
actual cash tax refund identified and obtained by
Peisner on the Debtors' behalf concurrent with the
receipt of the refund (Commission);
b. Peisner will advance all expenses as part of their
commission;
c. If there is no monetary recovery, no compensation for
services (or reimbursement of expenses) shall be due or
paid to Peisner; and
d. Peisner shall file an application with the Bankruptcy
Court for the final award of fees at the conclusion of
its Services.
Telscape International is a leading integrated communication
providers serving the Hispanic markets in the United States,
Mexico and Central America, offering local and long distance
telephone, internet and pre-paid calling card services. The
Company filed for Chapter 11 petition on April 27, 2001 in the
District of Delaware. Brendan Linehan Shannon at Young, Conaway,
Stargatt & Taylor and Victoria Watson Counihan at Greenberg
Traurig, LLP represent the Debtors in their restructuring
efforts.
U.S. INDUSTRIES: Selling Domestic Lighting Companies for $250MM
---------------------------------------------------------------
U.S. Industries, Inc. (NYSE:USI) announced that it has signed an
agreement to sell the stock of its domestic lighting companies,
including LCA Group Inc., to Hubbell Incorporated, of Orange,
Connecticut, for $250 million in cash.
The sale, which is subject to customary closing conditions, is
expected to close during the second calendar quarter. The
proceeds of the sale will be utilized for amortization under the
Company's restructured credit facilities.
LCA Group Inc. and its subsidiaries produce a complete line of
indoor and outdoor lighting for the commercial, institutional
and residential markets. Its major brands include Kim,
Spaulding, Progress, Columbia, Prescolite, Moldcast, Dual-Lite
and Architectural Area Lighting. The sale does not include USI's
European lighting company, SiTeco.
Hubbell Incorporated (NYSE:HUBA, HUBB) is an international
manufacturer of electrical and electronic products for
commercial, industrial, utility, and telecommunications markets,
with approximately $1.3 billion in annual revenues.
David H. Clarke, Chairman and Chief Executive Officer of U.S.
Industries, said, "This sale, which is a significant additional
milestone in the plan to sell our non-core businesses, will
enhance our opportunities for future strategic alternatives. We
are pleased that the buyer is Hubbell and are confident their
expertise in electrical products will benefit LCA's future."
Following the completion of its Disposal Plan, which has been
previously announced, U.S. Industries will own several major
businesses selling branded bath and plumbing products, along
with its consumer vacuum cleaner company. The Company's
principal brands will include Jacuzzi, Zurn, Sundance Spas,
Eljer, and Rainbow vacuum cleaners.
W.R. GRACE: PD Panel Wins Nod to Hire Hilton for Claims Analysis
----------------------------------------------------------------
Judge Fitzgerald grants the PD Committee's Motion and authorizes
the retention of Mr. Hilton as a property damage consultant,
nunc pro tunc to May 2, 2001, in the chapter 11 cases of W. R.
Grace & Co., and its debtor-affiliates. Judge Fitzgerald warns
that she will not approve compensation to two consulting firms
for the same services and requires that the attorneys for the PD
Committee certify as to each monthly application for fees that
the attorneys have personally reviewed the applications and
either (1) identify each entry of duplicative services, or (2)
state there is no duplicative services.
The PD Committee anticipates that Mr. Hilton will render
consulting services for the PD Committee as needed throughout
the course of the Chapter 11 Cases, including:
(a) Reviewing and analyzing the claims facility proposed
by the Debtors in comparison to claims facilities which have
been established in other asbestos bankruptcies;
(b) Analyzing and assessing of the various proof of
claims forms proposed by the Debtors;
(c) Assessing the Debtors' treatment of "threshold
issues";
(d) Analyzing and responding to issues relating to the
establishment of a bar date regarding the filing of property
damage claims;
(e) Assessing proposals made by the Debtors or other
parties, including and without limitation proposals from other
creditors' committees;
(f) Rendering expert testimony as required by the PD
Committee; and
(g) Such other advisory services as may be requested by
the PD Committee from time to time.
Mr. Hilton has agreed to be compensated for its services on an
hourly basis, in accordance with its normal billing practices,
subject to allowance by this Court in accordance with applicable
law. The current hourly rates Mr. Hilton charges is $350 per
hour; provided, however, that depositions, arbitrations,
hearings or trial testimony is billed at time and one-half.
W. D. Hilton, Jr., of Greenville, Texas, says he is the
principal of a consulting firm that provides, among other
services, analytical services focused on the analysis and
resolution of claims and the development of claims facilities
with regard to payments and assets of claims resolution trusts.
(W.R. Grace Bankruptcy News, Issue No. 20; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
WARNACO GROUP: Asks Court to Give Indemnities Priority Status
-------------------------------------------------------------
The Warnaco Group, Inc., and its debtor-affiliates seek the
Court's confirmation of administrative priority of any post-
petition indemnification claims of individuals serving on Board
and other Committees relating to Employee Benefit Plans.
J. Ronald Trost, Esq., at Sidley Austin Brown & Wood, in New
York, relates that the Debtors have a long-established pension
plan -- the Employee Retirement Plan of Warnaco, Inc. -- for its
8,000 active employees and former employees with vested rights.
The Plan is currently paying annual benefits to approximately
2,000 retirees. Also, Mr. Trost informs Judge Bohanon that the
Plan has substantial assets that must be administered and
invested in accordance to the Employee Retirement Income
Security Act of 1974.
Mr. Trost tells the Court that the Warnaco, Inc. is the "named
fiduciary" of the Pension Plan and has the authority and
responsibility to administer the Pension Plan and manage the
investment of its assets. Accordingly, Mr. Trost says, the
Debtors formed committees to address the responsibility prior to
the Petition date:
(a) The Pension Committee assists the full Board of Directors
in discharging its fiduciary responsibilities with
respect to the Pension Plan and any other employee
benefit plans. Other responsibilities include
recommendation of the members to serve on the Retirement
Committee and the Investment Committee;
(b) The Retirement Committee has the authority to construe,
administer and interpret the Pension Plan; and
(c) The Investment Committee has the authority to direct the
management and investment of the assets of the Pension
Plan.
Other administrative committees may be constituted later
pursuant to other employee benefit plans of the Debtors, Mr.
Trost explains.
To reflect changes in personnel and management after the
Petition Date, the Debtors nominate the officers of the Debtors
to compose the Committees:
Pension Committee -- Stuart Buchalter
Harvey Golub
Manuel Pacheco
Retirement Committee -- James Fogarty
Peter Mani
Stanley Silverstein
Investment Committee -- Antonio Alvarez
James Fogarty
Stanley Silverstein
Mr. Trost assures the Court that each Nominee has
indemnification rights against the Debtors for any acts taken
while serving on the Committees, except when the indemnitee is
adjudged liable for negligence or misconduct in the performance
of his duty to the Debtors or otherwise exceeds the limits of
indemnification as provided by state law. Out of abundance of
caution, the Debtors request the Court to confirm the
administrative priority of such indemnification claims.
Mr. Trost contends that, pursuant to section 503(b)(1)(A) of the
Bankruptcy Code, an indemnification claim may qualify as an
administrative expense claim if the claim arise from post-
petition conduct which benefits the estate. "Since the Nominees
will accept the membership role in the post-petition period, the
Nominees and all other future Nominees appointed later, are
clearly acting and rendering services to the Debtors post-
petition," Mr. Trost says. Furthermore, Mr. Trost asserts that
the services to be provided and action to be taken by the
Nominees as Committee members are directly and substantially
beneficial to the estate because:
-- the way the Pension Plan is administered benefits the
Pension Plan and the Debtors;
-- the maintenance and administration of the Pension Plan and
its assets are critical to discharging the Debtors'
responsibilities under Employee Retirement Income Security
Act to its employees; and
-- it is reasonable to expect that prior to the Nominees
accepting a membership role, the Nominees want to be
satisfied that any claims arising from their
indemnification rights will be granted administrative
priority. (Warnaco Bankruptcy News, Issue No. 21;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
* BOOK REVIEW: Creating Value through Corporate Restructuring:
Case Studies in Bankruptcies, Buyouts, and
Breakups
--------------------------------------------------------------
Author: Stuart C. Gilson
Publisher: Wiley
Hardcover: 516 pages
List Price: $79.95
Review by David M. Henderson
Buy a copy for yourself and one for a colleague on-line at:
http://amazon.com/exec/obidos/ASIN/1893122832/internetbankrupt
Most business books fall into two categories. The first is very
important. It is like that stuff you have to drink before you
have a colonoscopy. You keep telling yourself, this is very
good for me, while you would rather be at the beach reading
Liar's Poker or Barbarians at the Gate.
Stuart Gilson, of the Harvard Business School, has managed to
write a book important to everybody in the distressed market
that is also quite enjoyable. His prose is fluid and succinct
and a pleasure to read. But don't take my word for it. The
dust jacket endorsements come from Jay Alix, Martin Fridson,
Harvey Miller, Arthur Newman, and Sanford Sigoloff. At a
collective gazillion dollars a billing hour, that's a lot of
endorsement.
Be advised that this is designed as a text book. The case study
format might be off-putting to some. The effect can be jarring
as you read the narrative history of the case and suddenly
confront the financial statements without any further clue as to
what to do, but this must be what it is like for the turnaround
manager. Even after reading several of the cases, when I got to
the financials I had that sinking feeling of, what do I do now?
If you read carefully, clues to the solutions are in the
introductions.
The book is divided into three "modules", bizspeek for sections:
Restructuring Creditors' Claims,. Restructuring Shareholders'
Claims, and Restructuring Employees' Claims. The text covers 13
corporate restructurings focusing on debt workouts, vulture
investing, equity spinoffs, tracking stock, assete divestitures,
employee layoffs, corporate downsizing, M & A, HLTs, wage give-
backs, employee stock buyouts, and the restructuring of employee
benefit plans. That's a pretty comprehensive survey, wouldn't
you say?
Dr. Gilson's chapter on "Investing in Distressed Situations" is
an excellent summary of the distressed market and a good
touchstone even for seasoned vultures.
Even in the two appendices on technical analysis, this book is
marvelously free of those charts and graphs that purport to show
some general ROI of distressed investing. Those are cute,
aren't they? As Judy Mencher has famously said, "You can buy
the paper at 50 thinking it's going to 70, but it can just as
easily go to 30 if you are not willing to act on it." Therein
lies the rub and the weakness, if inevitable, of this or any
book on corporate restructurings. As Dr. Gilson notes, no two
are alike, and the outcome is highly subjective, in our out of
Court, but especially in Chapter 11. Is the Judge enthralled by
Jack Butler as Debtor's Counsel or intimidated by Harvey Miller
as Debtor's Counsel? Are you holding "secured" paper only to
discover that when it was issued the bond counsel forgot to
notify the Indenture Trustee of the most Senior debt? Is
somebody holding Junior paper that you think is out of the money
only to have Hugh Ray read the fine print and discover that the
"Junior" paper is secured? This is the stuff of corporate
reorganizations that is virtually impossible to codify into a
textbook.
That said, this is an especially valuable text for anybody
working in the distressed market. As a Duke grad, I tend to be
disdainful of all things Harvard, but having read Dr. Gilson's
book, I am enticed to encamp by the dirty waters of the Charles
long enough to take his course, appropriately entitled,
"Creating Value Through Corporate Restructuring."
*********
Bond pricing, appearing in each Monday's edition of the TCR, is
provided by DLS Capital Partners in Dallas, Texas.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, 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
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $625 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***