/raid1/www/Hosts/bankrupt/TCR_Public/020404.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, April 4, 2002, Vol. 6, No. 66
Headlines
ACT MANUFACTURING: Continuing Process to Sell All Assets
ADELPHIA BUSINESS: Chapter 11 Cases Reassigned to Judge Gerber
ADELPHIA COMMS: Confirms SEC Inquiry into Co-Borrowing Pacts
ADVANCED SYSTEMS: Extends $1.2M Debentures Maturity to Mar. 2003
AFFINITY TECH: Tenders Surety Mortgage Equity Stake to HomeGold
AFFINITY TECH: Taps Scott McElveen to Replace Ernst & Young
AMERICREDIT: Fitch Cuts Rating Down to BB Over Growth Concerns
ARMSTRONG: PD Panel Wants AWI to Produce Flooring Product Docs
BE INCORPORATED: Will Not File Form 10-K with SEC on Time
BUDGET GROUP: Taps Lazard Freres for Recapitalization Advice
CELERIS CORP: Selling Clinical Monitoring Assets to STATPROBE
COMDISCO: Hearing on Exclusive Period Extension Set for April 18
COVANTA ENERGY: Wants to Use Secured Lenders' Cash Collateral
COVANTA: Moody's Further Junks Ratings After Chapter 11 Filing
CYPRESS BIOSCIENCE: Ernst & Young Withdraws 'Going Concern Note'
DELCO REMY: S&P Concerned About Material Shortfall in Op. Income
ENRON: Energy Services Wants to Sell Gas Contracts to Occidental
EVERCOM INC: Senior Lenders Agree to Forbear Until June 7, 2002
FLAG TELECOM: S&P Drops Ratings to D After Missed Payments
FLEMING COMPANIES: Will Offer $260MM Notes in Private Placement
FLEMING COMPANIES: Fitch Assigns B+ Rating to New $260MM Notes
GENCORP: Fitch Rates New Subordinated Convertible Notes at B+
GRAND EAGLE: Sells Transformer & Motors Assets for $15 Million
HQ GLOBAL HOLDINGS: Taps Houlihan Lokey for Financial Guidance
HIGH VOLTAGE: S&P Junks Rating on Limited Financial Flexibility
ICG COMMS: 11th Hour Plan & Disclosure Statement Changes
INDOSUEZ CAPITAL: Fitch Affirms B- Rating on $104M Class C Notes
INT'L TOTAL: Closes Sale of Non-Preboard Assets to SMS for $1.5M
INTRAWARE INC: Has Working Capital Deficit of $9.3MM at Feb. 28
JPM COMPANY: Still Accepting Bids for Assets Until Tomorrow
KAISER ALUMINUM: Committee Members Seek Okay to Trade Securities
KMART CORP: Sedgwick Claims Wants Prompt Decision on Contract
LODGIAN INC: Wins Nod to Hire Cadwalader Wickersham as Counsel
MARINER POST-ACUTE: Court OKs 8th Amended DIP Credit Agreement
MILLER INDUSTRIES: Seeking L-T Credit Agreement to Cure Defaults
MOHEGAN TRIBAL: Gets Lenders' Consent to Amend Credit Facility
MOSSIMO INC: Enters into Multi-Year Licensing Pact with Target
MULTI-LINK TELECOMMS: Westburg Loan Now Matures on July 31, 2002
NATIONAL STEEL: Gets Okay to Hire Ordinary Course Professionals
NATIONAL STEEL: Gets Final Court Approval of DIP Financing Pact
NEWPOWER: Begins Trading on Pink Sheets Under New NWPW Symbol
ORBITAL SCIENCES: Sets Shareholders' Meeting for April 25, 2002
OWENS CORNING: Hiring PwC to Replace Arthur Andersen
PENTACON: Eyes Prepackaged Chapter 11 to Restructure Debt
PHARMCHEM INC: Closes Sale of UK-Based Unit for $9.9 Million
PHOTOWORKS INC: Ziegler Capital Discloses 16.7% Equity Stake
PIERRE FOODS: Begins Trading on OTC Bulletin Board Today
POLAROID CORP: Court Fixes May 31, 2002 as Claims Bar Date
PRIME RETAIL: Sells Edinburgh Outlets to Pay Down Mezzanine Loan
RUSSELL: S&P Assigns Low-B $375M Facility & $200M Notes Ratings
SL INDUSTRIES: Seeks Cure & Waiver of Defaults Under Credit Pact
SMART CHOICE: James Edward Ernst Discloses 79.8% Equity Stake
SOLID RESOURCES: Files for CCAA Protection in Canada
STATIONS HOLDING: Inks Pact to Sell Assets to Gray for $500MM
STATIONS HOLDING: Seeks OK to Tap Pachulski Stang as Co-Counsel
SUNRISE TECHNOLOGIES: Inks Silicon Valley Extension to Year-End
TANDYCRAFTS: Wants Lease Decision Deadline Moved though June 14
TOKHEIM: Lender Group Agrees to Modify Certain Loan Covenants
U.S. WIRELESS: Asks Court to Stretch Exclusive Period to May 28
VENTAS INC: Offering $400MM of New Senior Notes to Pay Down Debt
VIASYSTEMS GROUP: S&P Junks Rating Due to Liquidity Constraints
WKI HOLDING: Likely Chap. 11 Filing Prompts S&P to Junk Ratings
W.R. GRACE: Court Okays Kinsella as Debtors' Noticing Expert
WEBLINK WIRELESS: Look for Form 10-K by April 15, 2002
WESTERN INTEGRATED: Court Nixes Dow Lohnes' Engagement
WILLIAMS COMMS: S&P Slashes Rating to D After Deferred Payments
WILLIAMS COMMUNICATIONS: Fitch Drops Ratings to Default Level
ZAP GROUP: Fails to Meet Nasdaq Continued Listing Requirements
ZAP: Signs Agreements to Merge with RAP Group & Voltage Vehicles
ZENITH INDUSTRIAL: Court Okays BSI's Engagement as Claims Agent
* DebtTraders' Real-Time Bond Pricing
*********
ACT MANUFACTURING: Continuing Process to Sell All Assets
--------------------------------------------------------
ACT Manufacturing, Inc., which currently is a debtor in a
Chapter 11 bankruptcy proceeding, announced that it is
continuing a process to sell all or substantially all of the
Company's assets as it operates under reorganization
proceedings. As previously announced, the Company filed a
petition for reorganization under Chapter 11 of the Bankruptcy
Code on December 21, 2001, and obtained a $20 million debtor-in-
possession financing facility in January 2002 pursuant to a
Revolving Credit and Guaranty Agreement dated January 25, 2002
among the Company and its DIP lenders. The DIP Credit Agreement
provides for the DIP lenders' total commitment to be reduced
over a period of time, and for the Company to operate under an
agreed-upon budget and in compliance with various operating
covenants.
Since the third quarter of 2001, the Company has continued to
reduce the scale of its operations. Due to the Company's
limited liquidity, the Company has not engaged an independent
accounting firm to prepare an audit for the year ended December
31, 2001 or for any subsequent period, and presently has no
plans to do so. The Company did not file its annual report on
Form 10-K for the year ended December 31, 2001, and presently
does not expect to make such filing.
As part of the DIP Credit Agreement, the Company agreed to
diligently and in good faith engage in a process reasonably
designed to promptly conclude a sale of all or substantially all
of the Company's assets by way of a Bankruptcy Court auction or
auctions occurring on or before June 30, 2002. Although the
Company is pursuing the sale and auction process contemplated in
the DIP Credit Agreement, the Company can provide no assurances
as to the value or recovery resulting from this process, if
completed, to be realized by the holders of the Company's debt
or equity securities. Given the level of pre-petition creditor
claims, however, the Company currently believes that it is
unlikely that a sale of all or substantially all of the
Company's business and assets will satisfy all outstanding
creditor claims that arose prior to the bankruptcy or provide
any return to equity holders. The Company currently believes
that the holders of its common stock likely will retain or
recover no equity or other value as a result or upon the
conclusion of the bankruptcy proceeding with respect to the
Company's common stock. The Company cannot predict, however,
the outcome of any sales process.
The Company, headquartered in Hudson, Massachusetts, provides
value-added electronics manufacturing services to original
equipment manufacturers in the networking and
telecommunications, computer and industrial and medical
equipment markets. The Company provides OEMs with complex
printed circuit board assembly primarily utilizing advanced
surface mount technology, electro-mechanical subassembly, total
system assembly and integration, mechanical and molded cable and
harness assembly and other value-added services.
ADELPHIA BUSINESS: Chapter 11 Cases Reassigned to Judge Gerber
--------------------------------------------------------------
Vito Genna, Chief Deputy Clerk of the Bankruptcy Court for the
Southern District of New York, indicates the reassignment of the
chapter 11 cases of Adelphia Business Solutions, Inc., and its
debtor-affiliates from Judge Bernstein to Judge Gerber due to a
conflict of interest in Judge Bernstein's initial assignment.
(Adelphia Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ADELPHIA COMMS: Confirms SEC Inquiry into Co-Borrowing Pacts
------------------------------------------------------------
Adelphia Communications Corporation (Nasdaq: ADLAC) confirmed
that the Securities and Exchange Commission is conducting an
informal inquiry into its previously disclosed co-borrowing
agreements and has asked the Company to provide clarification
and related documentation.
The Company is cooperating fully with this inquiry and is
providing the requested information as expeditiously as
possible.
Adelphia Communications Corporation, with headquarters in
Coudersport, Pennsylvania, is the sixth-largest cable television
company in the country.
ADVANCED SYSTEMS: Extends $1.2M Debentures Maturity to Mar. 2003
----------------------------------------------------------------
Advanced Systems International, Inc. (OTC: BB ADSN), today
announced that the Company has successfully negotiated the
extension of the maturity of their $1.2 million debentures to
March 2003, thereby correcting the $560,000 debenture default
announced on January 11, 2002.
The debentures continue to accrue interest at 12% per annum and
the extension also included the issuance of shares of common
stock to the debenture holders and others. This negotiation of
prior indebtedness is part of a larger funding project, which
includes the sale of senior debentures.
Advanced Systems International is a supplier of application
software for the e-business information market. The Southfield,
Mich.-based company offers a broad range of high-end workforce
management systems and application software for the transparent
collection and distribution of business data across the
enterprise. Managers are provided the capability to track
critical material, production process, inventory and labor data,
in real-time, to support their e-business initiatives that are
focused on cost reduction and operational efficiencies. For more
information on ADSN, visit our Web site at
http://www.advsysintl.com
The Company's customers include market leaders such as:
DaimlerChrysler (NYSE:DCX), Continental Airlines (NYSE:CAL),
Johnson Controls (NYSE:JCI), HJ Heinz (NYSE:HNZ), Dana
Corporation (NYSE:DCN), Sara Lee (NYSE:SLE), Lear Corporation
(NYSE:LEA), Rolls-Royce (LSE:RR), Volvo (NASD:VOLVY) and
Imperial Tobacco.
AFFINITY TECH: Tenders Surety Mortgage Equity Stake to HomeGold
---------------------------------------------------------------
On July 26, 2001, Affinity Technology Group, Inc. pledged its
stock in Surety Mortgage, Inc. to HomeGold, Inc. to secure a $1
million loan from HomeGold to the Company. Pursuant to the terms
of the loan, on December 31, 2001, the Company tendered its
stock in Surety to HomeGold in complete satisfaction of all
amounts outstanding under the loan. Surety conducted the
Company's mortgage loan processing operations.
Affinity Technology Group may have to start collecting alms if
it doesn't find success with its Automated Loan Machine (ALM),
an ATM-like terminal that can approve personal, mortgage, and
auto loans in minutes. Affinity's DeciSys/RT software system can
approve, decline, or refer to loan officers credit applications
from customers using the phone, the Internet, or an ALM
terminal. The company also offers mortgage brokering services.
After finding little success offering its software under the
application service provider model, the company reduced its
workforce by one-third, and focused its efforts on its mortgage
processing business. At September 30, 2001, the company's total
current liabilities exceeded its total current assets by about
$200,000.
AFFINITY TECH: Taps Scott McElveen to Replace Ernst & Young
-----------------------------------------------------------
On March 20, 2002, Affinity Technology Group, Inc. dismissed its
prior independent accountants, Ernst & Young LLP, and retained
as its new independent accountants, Scott McElveen LLP. Ernst &
Young LLP's reports on the Company's financial statements for
December 31, 2000 contained an explanatory paragraph regarding
the uncertainty as to the Company's ability to continue as a
going concern.
The decision to change the Company's accountants was recommended
by the Audit Committee of the Company's Board of Directors and
approved by the Company's Board of Directors.
AMERICREDIT: Fitch Cuts Rating Down to BB Over Growth Concerns
--------------------------------------------------------------
Fitch Ratings lowers the senior unsecured rating of AmeriCredit
to 'BB' from 'BB+ '. The Rating Outlook has been revised to
Stable from Negative. The rating action centers on concern
regarding excessive growth well above internal capital
formation, dependance on the secured markets for long-term
financing, and volatility inherent in the company's short-term
warehouse facilities due to the presence of rating triggers. The
rating continues to reflect ACF's good performance to date,
sophisticated risk management capabilities and a leading market
position in subprime automobile finance.
ACF's capitalization profile has continually declined following
the company's secondary stock offering in August 1999. As of
December 31, 2001, equity to managed assets has dropped to 8.99%
from 10.50% at September 30, 1999. The primary driver behind the
decline in capital ratios has been the company's robust
receivable growth. ACF's managed auto receivables totaled $12.4
billion at December 31, 2001, an increase of 51% since December
31, 2000. The composition of ACF's capital structure remains
weak. Securitization-based residual assets totaled $1.5 billion
or 120% of total equity (equity does not include a deferred tax
liability of approximately $140 million) at December 31, 2001.
The value of these securitization-based residual assets is based
on assumptions related to asset quality and prepayment speeds.
Fitch assesses a significant risk-weight to these assets in its
capitalization assessment. ACF has not supplemented its
portfolio growth with additional common equity, further eroding
its capital structure.
The company remains heavily reliant on secured financing and
securitization for funding growth over the intermediate term.
Continued access to the securitization market remains vital to
pay down warehouse lines. Fitch is concerned about the ultimate
availability of warehouse funding that can occur in the event of
a three-notch rating downgrade.
ACF's cash flow from previously executed securitizations
provides liquidity to fund its day-to-day operations. Cash
distributions from the securitization trust's for the six months
ended December 31, 2001, were $128 million. A concern however,
is that there is clearly some volatility around actual cash flow
from the trusts. This could occur if there was a shortfall in
asset quality in one or more of the specific trusts. The
securitization trusts are all cross collateralized, such that if
a specific trust experiences extremely high credit losses, and
negative cash flow, then the cash is captured from the balance
of the trusts until that is effectively cured. ACF could limit
volatility of cashflow distributions by instituting a higher
percentage of uninsured and non-cross collateralized structures
into its securitization mix.
As a subprime automobile lender, ACF maintains a high-risk loan
portfolio. To date, asset quality has performed within initial
expectations, but Fitch expects losses to accelerate in a
weakening economic environment. The company continues to monitor
credit score hurdles and performance. The company raised minimum
acceptable credit scores across the branch network in 1999, and
raised selected market scores in 2000 and 2001. In addition, ACF
uses deferments to manage a subprime consumer through a troubled
environment for the consumer. This practice has helped reduce
loss and delinquency ratios.
ACF's earnings quality is less predictable than many consumer
finance companies as revenue is derived principally from
securitization gains and servicing income. Non-cash gain on
sale, as required by SFAS NO. 140, as a percentage of total
revenue continues to be a major contributor of total revenue.
Reduced execution in the securitization markets would directly
impact reported revenue and income. Gain on sale as a percentage
of revenue has hovered around 38% for the past three years.
Based in Fort Worth, Texas, ACF has become the largest
independent subprime automobile finance company in North
America. As of December 31, 2001, ACF maintained $12.4 billion
in managed automobile finance receivables.
ARMSTRONG: PD Panel Wants AWI to Produce Flooring Product Docs
--------------------------------------------------------------
The Official Committee of Asbestos-Related Property Damage
Claimants, represented in the chapter 11 cases of Armstrong
Holdings, Inc., and its affiliated debtors, by Joanne B. Wills,
Esq., at Klehr Harrison Harvey Branzberg & Ellers LLP, asks
Judge Newsome to force Armstrong Worldwide, Inc. to produce
"documents relative to the substantive liability and defense
issues" presented in these chapter 11 cases. Although the major
issue that is being litigated in this case is whether there is
such a thing as asbestos property damage arising from the
flooring products containing asbestos which the Debtors
manufactured and placed in the marketplace, the Debtors
steadfastly refuse to provide the PD Committee with relevant
discovery concerning the "science" of their asbestos flooring
products. The Debtors refuse to provide, inter alia,
information about the composition of their asbestos flooring
products and studies concerning the health risks posed by these
products during the installation process, when in place, and
upon removal. Likewise, the Debtors refuse to produce documents
relating to their statute of limitations and product
identification defenses.
The Debtors concede the existence of personal injury asbestos
claims and are working cooperatively with the Official Committee
of Asbestos-Related Personal Injury Claimants. The Debtors,
however, challenge the existence of asbestos-related property
damage claims, primarily based on the "simplistic" argument that
asbestos flooring products are safe because they can be
categorized as non-friable.
As the PD Committee says the Debtors are well aware, non-friable
asbestos-containing material can become friable if damaged,
degraded, or if mechanical forces are applied to it, such as
mechanical forces used in installation, renovation or removal of
flooring. Indeed, the Debtors' asbestos flooring products are
now 20, 30, and 40 years old and many of them are degraded and
damaged.
The only way the PD Committee believes Judge Newsome can
determine whether the Debtors' "non-friability" defense is
legitimate is for him to conduct a hearing to evaluate
scientific evidence concerning the release of toxic asbestos
fibers from the Debtors' asbestos flooring products, the
resultant contamination, and the harm to health and welfare
caused by the release and contamination.
The Discovery Requests
In September 2001 the PD Committee served the Debtors with a
notice of deposition and request for production of documents.
On October 26, 2001, the Debtors served their responses and
objections to the First Requests, objecting to most of the
requests and agreeing only to produce a limited amount of
documents.
On November 26, 2001, the PD Committee served the Debtors with a
second request for production of documents. On December 21,
2001, the Debtors served their responses and objections to the
Second Requests, refusing to produce any documents in response
to this request.
A. Knowledge of Whether and When
Notwithstanding the scientific issues presented by this case,
the Debtors have refused to produce any documents that relate to
these issues. AWI justifies this "by putting the rabbit in the
hat." AWI argues that since its products pose no health risk it
need not provide discovery. Notably, the Debtors do not contend
that the documents don't exist -- they just don't want to
produce them.
Describing the contents of its two document requests, the PD
Committee argues that all of its requests are relevant to the
issues of the safety of the products at issue, what AWI was
aware of and when, and whether the Debtors have concealed
dangers posed by their asbestos-containing products. Therefore,
the PD Committee concludes, AWI should be compelled to produce
documents related to its knowledge of the dangers of asbestos.
B. Knowledge of Identity of PD Claimants
The Debtors have refused to produce documents related to the
identity of potential known property damage claimants, although
it is well settled that in bankruptcy cases, known creditors
must be provided with actual written notice of a debtor's
bankruptcy filing and claims bar date. For Judge Newsome to
decide if all known property damage claimants received proper
notice of the Debtors' bar date, the parties must be able to
examine the Debtors' books and records concerning the identity
of reasonably ascertainable claimants. Judge Newsome cannot,
in the PD Committee's opinion, determine whether a party has
received sufficient notice without proof of a diligent search of
the debtors' books and records.
In response to the PD Committee's request that the Debtors
produce documents related to the identities of all known
asbestos-related property damage claimants and consumers of
AWI's asbestos-containing products, the Debtors produced reacted
correspondence sent to consumers who wrote in with questions or
complaints related to their asbestos flooring products.
Specifically, the Debtors reacted the names and address of the
consumers. Moreover, the Debtors refused to produce any
documents in response to the PD Committee's request for
documents related to analyses done by the Debtors regarding the
potential scope of asbestos-related property damage claims; the
identity of buildings containing their asbestos flooring
products; distributors of their asbestos flooring products; and
persons who purchased these products directly from the Debtors.
C. Knowledge of Product Identification and Estimation Issues
Despite the fact that AWI is seeking to disallow PD claims based
on their contention that PD claimants cannot positively identify
AWI products, AWI has refused to produce documents related to
pattern books. Similarly, the Debtors have refused to produce
documents relating to the total square footage covering by AWI's
flooring products, AWI's share of the flooring market, the
amount of product manufactured and sold, and the percentage of
AWI's flooring products that were installed residential as
opposed to commercial properties.
D. Document Destruction/Retention Policy
AWI has refused to produce any documents relating to its
document retention/destruction policy. In response to the PD
Committee's request for documents related to insurance coverage,
the Debtors produced a jumbled box load of policies, some of
which were illegible, and some of which were covered with
handwritten notes, indicating that the policies may have been
amended or superseded. In short, AWI has not produced any
insurance analysis or any document which allows the PD Committee
to determine which carrier insured AWI for property damage
claims for which years, or how much of the insurance coverage
has been exhausted. In that regard, and despite their
"historical" arguments, AWI, allegedly for confidentiality
reasons, has not produced documents which relate to any
settlement payments made to property damage claimants.
The Depositions
Without production of the relevant documents and given the
Debtors' unwillingness to permit their representatives to
testify as to the subject matter areas set out in the PD
Committee's Notice of Deposition, the PD Committee has been
unable to take the meaningful depositions to which it is
entitled.
For these reasons, the PD Committee asks Judge Newsome to grant
this Motion. (Armstrong Bankruptcy News, Issue No. 19;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
BE INCORPORATED: Will Not File Form 10-K with SEC on Time
---------------------------------------------------------
Be Incorporated (OTCBB:BEOSZ) announced that it filed a Form
12b-25 with the Securities and Exchange Commission notifying the
SEC that it will delay its filing of Company financial
statements for the year ended December 31, 2001 and certain
related information with its Annual Report on Form 10-K, which
was filed today with the SEC.
In order to curtail expenses in connection with its wind-up and
dissolution, the Company has sought relief from the SEC, via a
no-action letter request, seeking permission to file unaudited
financial statements with its Annual Report on Form 10-K for the
fiscal year ended December 31, 2001. Because the Company is
awaiting the SEC's decision, the Company's independent auditors
have not completed an audit of Be's financial statements, nor
has the Company incurred the expenses associated with such an
audit. As a result, the Company's Annual Report on Form 10-K
filed today does not contain information related to Items 6, 7,
8 and 14 of Form 10-K (Selected Financial Data; Management's
Discussion and Analysis of Financial Condition and Results of
Operations; Consolidated Financial Statements and Supplementary
Data; and Financial Statement Schedule).
If the Commission denies the Company no-action relief from
filing audited financial statements, the Company intends to file
audited financial statements along with the information required
by Items 6, 7, 8 and 14 of Form 10-K by filing an Amended Annual
Report on Form 10-K/A as soon as practical in accordance with
SEC regulations and guidelines and pursuant to any instruction
from the Commission in its response to the Company's no action
request. If the Commission grants such relief, the Company
intends to file unaudited financial statements along with the
information required by Items 6, 7, 8 and 14 of Form 10-K no
later than April 16, 2002 by filing an Amended Annual Report on
Form 10-K/A.
On November 12, 2001, Be stockholders approved the sale of
substantially all of Be's intellectual property and other
technology assets to a subsidiary of Palm, Inc., and the
subsequent dissolution of the company in accordance with the
plan of dissolution. Pursuant to the terms of the asset purchase
agreement with Palm, Be retained certain rights, assets and
liabilities in connection with the transaction, including its
cash and cash equivalents, receivables, certain contractual
liabilities under in-licensing agreements, and rights to assert
and bring certain claims and causes of action, including under
the antitrust laws. On November 13, 2001, Be completed the sale
of its assets to the Palm subsidiary. On March 15, 2002, Be
filed a Certificate of Dissolution with the Secretary of State
of Delaware pursuant to Section 275 of the Delaware General
Corporation Law, closed its transfer books and voluntarily
delisted its common stock from the Nasdaq National Market
System. Be's headquarters have moved to Mountain View,
California and it can be reached at P.O. Box 391420, Mountain
View, CA 94041. Be can be found on the Web at
http://www.beincorporated.com
BUDGET GROUP: Taps Lazard Freres for Recapitalization Advice
------------------------------------------------------------
Budget Group, Inc. (OTC Bulletin Board: BDGPA) announced that it
has launched a recapitalization initiative to restore its
financial health. The Company is currently in discussions with
certain interested investors regarding an infusion of new
capital through a private equity investment.
The Company has retained Lazard Freres & Co. LLC as its
financial advisor regarding recapitalization alternatives and
has also begun discussions with holders of the Company's senior
notes concerning a balance sheet restructuring. As part of this
initiative, the Company did not make the $18.5 million senior
notes interest payment due on April 1, 2002. The Company has
made all principal and interest payments relating to its vehicle
fleet financing.
In addition, Budget announced that it has filed an extension
request with the SEC relating to its annual report on Form 10-K
for the year ended December 31, 2001. Budget expects to file
the annual report on or about April 15, 2002.
The Company emphasized that the recapitalization will not affect
Budget's ability to service its car and truck rental customers.
Budget said it would continue to operate on a business as usual
basis with regard to its employees, customers and vendors.
Sandy Miller, Chairman and Chief Executive Officer of Budget
Group, Inc., commented, "Despite a challenging economy, we are
seeing signs of improvement as evidenced by a rise in car rental
industry pricing and increases in the Company's vehicle
utilization and revenue per vehicle. Recapitalization of the
balance sheet, combined with our continuing cost cutting and
asset control efforts, will put Budget on track for future
financial success."
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. For more information, visit the
Company's Web site at http://www.budget.com
DebtTraders reports that Budget Group Inc.'s 9.125% bonds due
2006 (BD06USR1) are quoted at a price of 15. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=BD06USR1for
real-time bond pricing.
CELERIS CORP: Selling Clinical Monitoring Assets to STATPROBE
-------------------------------------------------------------
Celeris Corporation (OTCBB:CRSC), a provider of specialty
clinical research services to pharmaceutical, medical device and
biotechnology companies, announced that it has entered into a
non-binding letter of intent to sell substantially all the
assets of its clinical monitoring and data management operations
to STATPROBE Inc., a provider of clinical trial services based
in Ann Arbor, Michigan. STATPROBE intends to assume all of
Celeris' client contracts for clinical monitoring and data
management services.
The negotiation of a definitive agreement will commence
immediately. Prior to the signing of the purchase agreement,
4STATPROBE must satisfactorily complete its review of Celeris'
operations. The two parties intend to sign a definitive
agreement by the end of April, at which time additional
information concerning the transaction would be made available.
Celeris anticipates that the sale would be voted on by Celeris
shareholders at the Company's annual meeting, which is currently
scheduled for May 29, 2002, with a transaction to close shortly
thereafter. Upon completion of a sale transaction, Celeris plans
to begin an orderly liquidation of its remaining assets and
liabilities, with the net proceeds to be distributed to its
shareholders during the third quarter of 2002. The amount of
expected proceeds will be disclosed to shareholders once a
binding agreement is reached. Celeris intends to proceed with
the proposed sale as planned; however, if the closing of the
transaction is delayed or is not completed, the Company may have
potential operating difficulties.
Barbara Cannon, president and chief executive officer of
Celeris, said "The planned combination of Celeris' clinical
monitoring and data management operations with STATPROBE
represents an excellent opportunity for Celeris' clients and
employees, as well as an opportunity for Celeris shareholders to
achieve liquidity for their investment. STATPROBE has earned a
respected name in the research services outsourcing industry,
and its company culture, long-term client relationships, and
retention of valued R&D staff are compatible with Celeris'
philosophy."
STATPROBE Inc. is a privately held, full-service contract
research organization (CRO) serving pharmaceutical,
biotechnology and medical device clients. The company was
founded in 1988 and currently employs over 300 in Columbus, OH;
Lexington, KY; San Diego, CA and Cary, NC.
Celeris also reported its results of operations for the fourth
quarter and year ended December 31, 2001. Clinical research
services revenues for the fourth quarter ended December 31,
2001, were $2.08 million compared with revenues of $2.24 million
for the fourth quarter of 2000. Loss from continuing operations
for the fourth quarter was $700,000 compared with a loss from
continuing operations of $831,000 in the prior-year quarter.
For the year ended December 31, 2001, clinical research services
revenues were $8.96 million compared with revenues of $10.27
million in the year ended December 31, 2000. Loss from
continuing operations for the year-to-date period amounted to
$2.74 million compared with a loss from continuing operations of
$3.63 million a year ago. Celeris expects to continue to incur
operating losses in 2002. If the closing of the aforementioned
transaction is delayed or is not completed for any reason, the
Company cannot determine how its operations or financial
position may be affected. As a result, Celeris cannot guarantee
that its available capital resources will be sufficient to fund
its operations through the end of 2002.
Celeris Corporation is a provider of specialty clinical research
services and information technology services that expedite and
streamline the clinical trial and regulatory submission process
for pharmaceutical, medical device and biotechnology
manufacturers.
COMDISCO: Hearing on Exclusive Period Extension Set for April 18
----------------------------------------------------------------
Judge Barliant will convene a hearing to consider Comdisco
Inc.'s third Motion for an extension of its Exclusive Periods on
April 18, 2002 -- three days after the current expiration of the
Debtors' Exclusive Period.
Accordingly, Judge Barliant rules that it is appropriate to
enter an order extending the Debtors' Exclusive Period until the
April 18, 2002 hearing.
"This will give the Debtors an opportunity to continue
negotiating with the Official Committee of Unsecured Creditors
and the Official Committee of Equity Holders for a consensual
plan of reorganization," Judge Barliant states. This will also
prevent the Court from conducting an additional hearing in April
with regard to exclusivity. (Comdisco Bankruptcy News, Issue No.
23; Bankruptcy Creditors' Service, Inc., 609/392-0900)
COVANTA ENERGY: Wants to Use Secured Lenders' Cash Collateral
-------------------------------------------------------------
Four groups of Secured Lenders purport to hold prepetition
claims secured by assets or revenues of one or more of Covanta
Energy Corporation and its affiliates debtor entities:
(A) The WTE Trustees
The Company and certain Subsidiaries operate, and in
some cases own, energy-generating projects fueled by municipal
solid waste, and providing long-term services from these WTE
Projects to the communities in which they are located. In
connection with these WTE Projects, the Company, the applicable
Subsidiaries and certain third parties have entered into
agreements concerning the design, construction, operation,
maintenance and financing of the WTE Projects, which
collectively form the contractual base on which each of the WTE
Projects was financed, and upon which the project-related cash
flows are handled. There are 24 WTE Projects among the Debtor
entities, all of which were financed by bond issuances by non-
Debtor entities unaffiliated with the Debtors. Under the
relevant WTE Agreements, some or all of the WTE Project assets
or revenues are pledged as security to the WTE Trustees.
Accordingly, the WTE Trustees generally have a security interest
in the project cash, including any Operating Fees, pass-through
costs, share of energy revenues, surplus funds and other amounts
payable to the Debtors. The Operating Fee is disbursed,
typically on a monthly basis, and by the WTE Trustee, to the
Company and its Operating Subsidiaries.
In 16 of the 24 WTE Projects, the Company and one or
more Subsidiaries own or lease the facility and have pledged
assets and revenues of the WTE Projects to the WTE Trustee to
secure another party's repayment of the bonds:
WTE Project Debtor Subsidiary WTE Trustee
----------- ----------------- -----------
Alexandria/ Covanta SunTrust Bank, Inc.
Arlington, VA Alexandria/Arlington, Mail Code: HDQ 5310
Inc. 919 East Main Street
Richmond, VA 23219
Fax: 804-782-7855
Amount Owed: $44,350,000 (Series A)
Amount Owed: $42,755,000 (Series B)
Babylon, NY Covanta Babylon, Inc. JPMorgan Chase
Institutional Trust
Services
450 West 33rd Street,
15th Floor
New York, NY 10001
Fax: 212-946-8160
Amount Owed: $91,532,070
Bristol, CT Covanta Bristol, Inc. State Street Bank and
Trust Company
Corporate Trust
Goodwin Square
225 Asylum Street,
23rd Floor
Hartford, CT 06103
Attn: Mark Forgetta
Ph: 860-244-1837
Fax: 860-244-1884
Amount Owed: $55,865,000
Fairfax, VA Covanta Fairfax, Inc. First Union National
Bank
Corporate Trust Dept.
800 E. Main Street,
Lower Mezzanine
Richmond, VA 23219
Attn: Sarah McMahon
Ph: 804-343-6057
Fax: 804-343-6699
Amount Owed: $174,720,000
Hennepin, WI Covanta Hennepin M&I National Trust
Energy Resource Co., Company
LP 321 N. Main Street
P.O. Box 1980
West Bend, WI 53095-
7980
Attn: Karen Zimmel
Ph: 262-335-3084
Fax: 262-335-3037
Amount Owed: $ 74,895,000
Honolulu, HI Covanta Honolulu City and County of
Resource Recovery Honolulu
Venture Department of
Environmental
Services
Attn: Timothy E.
Steinberger
Acting Director
650 S. King Street
Honolulu, HI 96813
Attn: Timothy E.
Steinberger
Ph: 808-527-6663
Fax: 808-527-6675
Amount Owed: Unavailable
Huntington, NY Covanta Huntington, LP U.S. Trust Company of
New York
Corporate Trust
Division
114 West 47th Street,
25th Floor
New York, NY 10036-
1510
Attn: Matthew Lombardi
Ph: 212-852-1652
Fax: 212-852-1625
Amount Owed: $128,615,000
Indianapolis, IN Covanta Indianapolis, Bank One Trust Company,
Inc. N.A.
Corporate Trust
Services
111 Monument Circle,
Suite IN1-0152
Indianapolis, IN 46277
Attn: Sharon P. Karst
Ph: 317-756-1316
Fax: 317-592-5060
Amount Owed: $ 62,930,000
Lake County, FL Covanta Lake, Inc. First Union National
Bank
Corporate Trust Dept.
225 Water Street
Jacksonville, FL 32231
Attn: John Speichert
Ph: 904-489-3174
Fax: 904-489-5410
Amount Owed: $69,615,000
Marion, OR Covanta Marion, Inc. BNY Western Trust
Company
601 Union Street
Suite 1720
Seattle, WA 98101-2321
Attn: Perry Tobe
Ph: 206-667-8904
Fax: 206-667-8905
Amount Owed: $26,270,000
Onondaga, NY Covanta Onondaga, LP Bankers Trust Company
Corporate Trust and
Agency Group
100 Plaza One
Jersey City, NJ 07310
Attn: Scott Thiel
Ph: 201-593-6849
Fax: 201-593-6450
Amount Owed: $147,300,000
Stanislaus, CA Covanta Stanislaus, The Bank of New York
Inc. Corporate Trust Dept.
385 Rifle Camp Road
West Paterson, NJ
07424
Attn: Sharon Jaffe-
Goser
Ph: 973-357-7833
Fax: 973-357-7840
Amount Owed: $56,255,000
Tulsa, OK Covanta Tulsa, Inc. Bank One Trust Co.,
N.A.
15 E. Fifth Street,
7th Floor
Tulsa, OK 74103
Fax: 918-586-5351
Amount Owed: $49,355,000
Union, NJ Covanta Union, Inc. Bank of New York
Corporate Trust Dept.
385 Rifle Camp Road,
3rd Floor
West Patterson, NJ
07424
Fax: (973) 357-7840
- and -
The Trust Company of
New Jersey
35 Journal Square
Jersey City, NJ 07306
Attn: Brad Von Arx Jr.
Ph: 201-420-2659
Fax: (201) 420-2928
Amount Owed: $ 190,950,000
Wallingford, CT Covanta Projects of State Street Bank and
Wallingford, LP Trust Company
Corporate Trust
Goodwin Square
225 Asylum Street,
23rd Floor
Hartford, CT 06103
Attn: Mark Forgetta
Ph: 860-244-1837
Fax: 860-244-1884
Amount Owed: $32,690,000
Warren, NJ Covanta Warren Energy First Union National
Resources Co., LP Bank
Corporate Trust Bond
Administration
21 South Street,
3rd Floor
Morristown, NJ 07960
Attn: Chris Golabek
Ph: 973-898-7169
Fax: 973-682-4531
Amount Owed: $38,285,000
In five of the 24 WTE Projects, the Subsidiary or
Subsidiaries operate, but have no ownership interest in, the
facility, and the WTE Trustees' security interest is founded on
pledges to them of all the assets and revenues of the WTE
Project (including the Operating Fee) by the WTE Projects' non-
Debtor owners:
WTE Project Debtor Subsidiary WTE Trustee
----------- ----------------- -----------
Hartford, CT Covanta Mid-Conn, Inc. State Street Bank and
Trust Co.
Corporate Trust
Attn: Mark Forgetta
Goodwin Square
225 Asylum Street,
23rd Floor
Hartford, CT 06103
Attn: Mark Forgetta
Ph: 860-244-1837
Fax: 860-244-1884
Amount Owed: Unavailable
Hillsborough, FL Covanta Hillsborough, Hillsborough County
Inc. Circuit Court Clerk
PO Box 1110
Tampa, FL 33601
Ph: 813-272-6576
Fax: 813-272-5044
Amount Owed: Unavailable
Huntsville, AL Covanta Huntsville, SouthTrust Bank
Inc. Corporate Trust Dept.
Attn: Woody Alston
110 Office Park Drive,
2nd Floor
Birmingham, AL 35223
Attn: Woody Alston
Ph: 205-254-4131
Fax: 205-254-4180
Amount Owed: Unavailable
Lancaster Covanta Lancaster, Fulton Financial
County, PA Inc. Advisors
Corporate Trust Dept.
One Penn Square
PO Box 4887
Lancaster, PA 17604-
4887
Ph: 717-291-2562
Fax: 717-295-2534
Amount Owed: Unavailable
Montgomery Covanta Montgomery, US Trust Company of
County, MD Inc. New York
Corporate Trust
114 West 47th Street,
15th Floor
New York, NY 10036-
1532
Ph: 212-852-1000
Fax: 212-852-3433
Amount Owed: Unavailable
The portion of the Cash Collateral of the WTE Trustees
that the Company and its Subsidiaries seek to use is, in each
case, only the Operating Fee and other payments due to the
Company or its Subsidiaries under the non-default provisions of
the WTE Agreements.
In three of the 24 WTE Projects, no collateral issues
arise, as the WTE Trustees have no security interest in the
Operating Fee:
WTE Project Debtor Subsidiary WTE Trustee
----------- ----------------- -----------
Kent County, MI Covanta Kent, Inc. U.S. Bank Trust
Corporate Trust
Services
101 N. Washington
Square
Lansing, MI 48993
Attn: Lorraine Grill
Ph: 517-371-8055
Fax: 517-372-0175
Amount Owed: Unavailable
Lee County, FL Covanta Lee, Inc. Bank of New York
Corporate Trust Dept.
Bondholder Relations
10161 Centurion
Parkway
Jacksonville, FL 32256
Attn: Lee Boenische
Ph: 904-645-1914
Fax: 904-645-1998
Amount Owed: Unavailable
Pasco County, FL Covanta Pasco, Inc. First Union National
Bank
Corporate Trust Dept.
225 Water Street
Jacksonville, FL 32202
Attn: John Speichert
Ph: 904-489-3174
Fax: 904-489-5410
Amount Owed: Unavailable
(B) The Water Parties -- Covanta Bessemer, Inc., entered
into agreements with:
The Governmental Utility Services Corp.
PO Box 670
Bessemer, AL 35021-0670
Fax: (205) 481-9859
- and -
Southtrust Bank
Corp. Trust Department
P.O. Box 2554
Birmingham, AL 35290
Fax: (205) 254-4275
granting a security interest in the operating fee of the
Bessemer, Alabama Water Project to secure repayment of an
[unavailable] amount.
(C) The IPP Parties -- The Company and certain of the
Subsidiaries have entered into agreements with one or more
Independent Power Production Parties, pledging assets or
interests in other Subsidiaries to the IPP Parties to secure the
repayment of indebtedness, including deferred purchase price
obligations and obligations under certain leasing arrangements,
to the IPP Parties:
IPP Project Debtor Subsidiary IPP Party
----------- ----------------- ---------
HFC Heber Field Company GE Capital Services
Structured Finance
Group, Inc.
120 Long Ridge Road
Stamford, CT 06927
Attn: Warren
MacGillivray
Ph: (203) 961-5452
Fax: (203) 357-4890
Amount Owed: $7,135,000
HGC Heber Geothermal GE Capital Services
Company Structured Finance
Group, Inc.
120 Long Ridge Road
Stamford, CT 06927
Attn: Warren
MacGillivray
Ph: (203) 961-5452
Fax: (203) 357-4890
Amount Owed: $14,525,200
Unidentified Covanta Power HypoVereinsbank
Pacific, Inc. 30th floor
150 East 42nd Street
New York, NY 10017-
4679
Attn: Mr. Paul
Colatrella
Ph: 212-672-5776
Fax: 212-672-5516
Amount Owed: $19,406,826 (this may not be secured)
SIGC Second Imperial GE Capital Services
Geothermal Company Structured Finance
Group, Inc.
Attn: Warren
MacGillivray
120 Long Ridge Road,
Third Floor
Stamford, CT 06927
Ph: 203-961-5452
Fax: 203-357-4890
Amount Owed: $47,466,205
(D) The Anaheim Parties -- Ogden Facility Management
Corporation of Anaheim pledged the management fee of the Anaheim
Project to secure an [unavailable] amount owed to:
CSFB
11 Madison Avenue
New York, NY 10010
Fax: (212) 325-0304
- and -
State Street Bank and Trust
Company of California, N.A.
633 West 5th Street, 12th Floor
Los Angeles, CA 90071
Fax: (213) 362-7537
- and -
AIG Financial Products Corp.
100 Nyala Farm
Westport, CT 06880
Fax: (203) 222-4780
During the next 30-day period, Jeffrey R. Horowitz, Covanta's
Senior Vice President for Legal Affairs relates, the Debtors
project that cash disbursements will exceed cash receipts by
some $47 million:
Covanta Energy Corporation
Estimated Cash Disbursements And Receipts
For The 30-Day Period Following The Petition Date
Estimated Cash Receipts
From Energy Operations $30,571,000
From Non-Energy Operations 13,828,000
From Asset Sales ---
-----------
Total Receipts $44,398,000
Estimated Cash Disbursements
Energy Operating Disbursements $53,624,000
Energy Overhead 5,238,000
Energy Insurance 1,452,000
Critical Vendors 2,800,000
Capital Expenditures 3,300,000
Debt Service 3,678,000
Professional Fees 3,994,000
Non-Energy Operating Disbursements 15,226,000
Non-Energy Overhead 1,946,000
Taxes 275,000
-----------
Total Disbursements $91,533,000
-----------
Estimated Net Cash Uses $47,134,000
===========
Absent Bankruptcy Court authority to use the Secured Parties'
Cash Collateral pursuant to section 363 of the Bankruptcy Code,
Richard T. Franch, Esq., at Jenner & Block, tells Judge
Blackshear, the Debtors will have insufficient cash funds
available to conduct ordinary business operations and to
maintain and preserve the property and assets of their estates.
Without the ability to use the Secured Parties' Cash Collateral,
the Debtors will not be able to continue business operations
during the pendency of these chapter 11 cases. Cessation of the
Debtors' business would cause immediate and irreparable harm to
the Debtors' estates, Mr. Franch continues.
The Debtors want to use the Secured Lenders' Cash Collateral and
understand that they must provide those lenders with adequate
protection of their security interests. Covanta proposes:
(a) The Debtors will continue to perform all of their
duties as operators and managers of the WTE Projects so that WTE
Project cash flows will continue to be generated in the ordinary
course, in exchange for which the WTE Trustees shall continue to
make or permit to be made all payments and transfers required to
be made to the Debtors under the non-default provisions of the
relevant WTE Agreements;
(b) The Debtors will, in the case of the Alexandria and
Fairfax WTE Projects, continue to make all payments and
transfers required to be made to the WTE Trustees under the non-
default provisions of the relevant WTE Agreements;
(c) The Debtors will consent to the continued payment and
transfer by the WTE Trustees of amounts due to non-Debtors in
accordance with the non-default provisions of the WTE
Agreements;
(d) Although continuation of the WTE Operating
Obligations, WTE Debt Service Payments and Third Party Payments
provides adequate protection to the WTE Trustees, out of an
abundance of caution the WTE Trustees will be granted (effective
upon the date of the Interim Order and without the necessity of
the execution by the Debtors of mortgages, security agreements,
pledge agreements, financing statements or otherwise) valid and
perfected replacement security interests in, and liens on, all
of the Debtors' right, title and interest in, to and under the
WTE Trustee Collateral relating to each of their respective WTE
Projects, subject only to (x) the Carve-Out under the DIP
Financing Facility and (y) any validly perfected liens which
remain senior to the liens granted to them;
(e) The Debtors will continue to perform all of their
duties as operators of the Water Project so that Water Project
cash flows shall continue to be generated in the ordinary
course, in exchange for which the Water Parties shall continue
to make or permit to be made all payments and transfers required
to be made to the Debtors under the nondefault provisions of the
relevant Water Agreements;
(f) Although continuation of the Water Operating
Obligations provides adequate protection to the Water Parties,
out of an abundance of caution the Water Parties will be granted
valid and perfected replacement security interests in, and liens
on, all of the Debtors' right, title and interest in, to and
under the Water Collateral relating to each of their respective
interests in the Water Project, subject only to (x) the Carve-
Out under the DIP Financing Facility and (y) any validly
perfected liens which remain senior to the liens granted to
them;
(g) Except as otherwise requested herein, the Debtors
will, where applicable, continue to perform all of their duties
as operators and managers of the IPP Projects so that IPP
Project cash flows will be generated in the ordinary course, in
exchange for which the IPP Parties will, where applicable,
continue to make or permit to be made all payments and transfers
required to be made to the Debtors under the non-default
provisions of the relevant IPP Agreements;
(h) The Debtors will make monthly payments of the interest
component of amounts due to GE Capital at the non-default rates
under the Heber IPP Agreements;
(i) The Debtors will make quarterly payments of the
interest component of amounts due to GE Capital at the non-
default rates under the SIGC IPP Agreement.
(j) GE Capital will be granted valid and perfected,
replacement security interests in, and liens on, all of the
Debtors' right, title and interest in, to and under the IPP
Collateral relating to each of the IPP Projects, subject only to
(x) the Carve-Out under the DIP Financing Facility and (y) any
validly perfected liens which remain senior;
(k) The Debtors will continue to perform all of their
duties as managers of the Anaheim Project so that Anaheim
Project cash flows will continue to be generated in the ordinary
course, in exchange for which the Anaheim Parties will continue
to make or permit to be made all payments and transfers required
to be made to the Debtors under the non-default provisions of
the relevant Anaheim Agreements; and
(l) Although continuation of the Anaheim Managing
Obligations provides adequate protection to the Anaheim Parties,
out of an abundance of caution the Anaheim Parties will be
granted valid and perfected replacement security interests in,
and liens upon, all of the Debtors' right, title and interest
in, to and under the Anaheim Collateral relating to each of
their respective interests in the Anaheim Project, subject only
to (x) the Carve-Out under the DIP Financing Facility and (y)
any validly perfected liens which remain senior to the liens
granted to them.
The Debtors ask Judge Blackshear for permission to use these
Secured Lenders' cash collateral, continue honoring their
Project Obligations, and grant the Secured Parties replacement
liens. The Debtors advise Judge Blackshear that this request is
an integral part of the $463 million debtor-in-possession
financing package arranged by the bank group. (Covanta
Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
COVANTA: Moody's Further Junks Ratings After Chapter 11 Filing
--------------------------------------------------------------
Moody's Investors Service further lowered the senior secured
rating of Covanta Energy Corporation to Caa3 from Caa2. Moody's
also affirmed the company's subordinated debt rating at Ca.
The ratings downgrade is due to Covanta's filing for Chapter 11
reorganization on April 1, 2002 with the U.S. Bankruptcy Court
in the Southern District of New York. The filing was instituted
when the company failed to complete a satisfactory restructuring
and acquire outside capital since December of last year. The
company believes that a chapter 11 reorganization will
accomplish the company's goal of disposing non-core businesses
and concentrate on its waste-to-energy, independent power and
water businesses.
Moody's also further junks the senior secured rating on the
company's announcement of obtaining a $463 million debtor-in-
possession financing from its existing bank group. The DIP
Financing in effect puts the bank group in a more senior
position than the debenture holders and could negatively affect
Covanta's recovery levels on its senior debt.
Covanta Energy is based in Fairfield, New Jersey. It is
primarily an energy company focusing on waste-to-energy,
independent power, and water and wastewater businesses.
CYPRESS BIOSCIENCE: Ernst & Young Withdraws 'Going Concern Note'
----------------------------------------------------------------
Cypress Bioscience, Inc. (NASDAQ:CYPB) (NASDAQ:CYPBC) announced
that their auditors, Ernst & Young, have withdrawn the "going
concern opinion."
Since the company's auditors completed their audit of the
consolidated financial statements and issued their report dated
Feb. 21, 2002, which contained an explanatory paragraph
regarding the company's ability to continue as a going concern,
the company, as announced Monday, has completed an issuance of
its common stock and warrants to purchase common stock resulting
in net proceeds of approximately $15.5 million. Therefore, the
conditions that raised substantial doubt about whether the
company will continue as a going concern no longer exist and the
auditors revised their opinion accordingly in their report
included in the company's annual report filed on Form 10-K.
Cypress is committed to be the innovator and commercial leader
in providing products that improve the diagnosis and treatment
of patients with fibromyalgia syndrome, or FMS, and related pain
and central nervous system disorders. In January 2001, the
company began a strategic initiative focusing on FMS. In August
2001, Cypress licensed its first product for clinical
development, milnacipran, to treat the widespread pain
associated with FMS. For more information about Cypress, visit
the company's Web site at www.cypressbio.com. For more
information about FMS, visit http://www.FMSresource.com
DELCO REMY: S&P Concerned About Material Shortfall in Op. Income
----------------------------------------------------------------
On March 29, 2002, Standard & Poor's placed its long-term
corporate credit rating on Delco Remy International Inc., a
leading manufacturer and remanufacturer of automotive
components, on CreditWatch with negative implications. The
CreditWatch placement reflects the company's material shortfall
in operating income, deteriorating credit protection measures,
and increasing liquidity pressures.
Anderson, Indiana-based Delco Remy continues to be negatively
affected by lower volumes at its original equipment customers
and the softening in the heavy-duty truck aftermarket.
Additionally, Delco Remy was adversely affected by significant
losses at the company's North American gas engine unit. For the
year ended December 31, 2001, Delco Remy had EBITDA (excluding
special restructuring charges) of about $100 million, compared
with $146 million in 2000, a 31% decline. As a result, credit
protection measures have deteriorated with total debt to EBITDA
around 6 times and interest coverage of about 1.6x for the full
year 2001. In addition, Delco Remy's financial flexibility is
limited with only about $22 million in bank credit facility
availability.
The company's management continues to focus on improving
profitability by reducing headcount, closing facilities, and
realigning its manufacturing operations. However, management's
initiatives so far have been unable to offset challenging
business conditions.
Standard & Poor's will meet with the company's management to
assess the company's near-term prospects and liquidity position
and the likely time frame for achieving operating improvements.
If it appears that operating performance and credit protection
measures will remain below expected levels for an extended
period, the ratings could be lowered.
ENRON: Energy Services Wants to Sell Gas Contracts to Occidental
----------------------------------------------------------------
Enron Energy Services Inc. and Enron Energy Marketing
Corporation seek a Court order approving:
(i) a Purchase and Sale Agreement with Occidental Energy
Marketing Inc.; and
(ii) the assumption, assignment and sale of their interests in
certain retail gas supply contracts, certain service
contracts with Southern California Gas Company, and any
Marketer Rights to Occidental -- subject to higher or
better offers -- free and clear of all liens, claims and
encumbrances, with all such Interests and Claims to attach
to the net sale proceeds.
According to Irena M. Goldstein, Esq., at LeBoeuf, Lamb, Greene
& MacRae LLP, in New York, Enron Energy supplies natural gas on
a long-terms basis under various Retail Contracts to Customers
in California. Ms. Goldstein explains that the gas is
transported to the Customers by Southern California Gas Company
and Pacific Gas and Electric Company under certain Marketer
Programs. "Occidental wants to step into Enron Energy's shoes as
the Gas Supplier under the Retail Contracts and as holder of the
Marketer Rights under the Marketer Programs," Ms. Goldstein
says.
The principal terms of the Purchase and Sale Agreement are:
Purchase Price: $29,000,000, as adjusted
80% of the Purchase Price will be payable at the
Closing Date. In addition, in the event the
Closing occurs on or before April 16, 2002, the
amount paid to Sellers at Closing shall be
increased by $3,000,000, which shall not be
subject to the Holdback Amount, and the Closing
Date shall be deemed effective as of April 1,
2002 for all purposes under the Purchase and
Sale Agreement.
The remaining 20% of the Purchase Price, less:
(a) the sum of all indemnity amounts admittedly
owed by Enron Energy to Occidental's
indemnified parties, plus
(b) the amount of disputed obligations, will be
paid to Enron Energy on the 120th day after
the Closing Date. The Remaining Holdback
Amount will be held by an escrow agent
pending disbursement for disputed
obligations under the Purchase and Sale
Agreement.
Purchase Price
Adjustments: (a) Value Diminution Adjustment:
The Initial Purchase Price was determined
based on Purchaser's valuation of the Retail
Contracts as of March 1, 2002. If the
Closing occurs after March 1, 2002 but on or
before May 31, 2002, the Initial Purchase
Price will be reduced for the Retail
Contracts' diminution in value for each day
from and after March 1, 2002, to and
including the Closing Date, by the sum of
$59,000 per day for each day in March,
$53,000 per day for each day in April and
$49,000 per day for each day in May.
(b) Modified and Excluded Contracts Adjustments:
The Initial Purchase Price will be further
adjusted in accordance with the Purchase and
Sale Agreement by the Sales Value of:
(1) each Retail Contract that is validly
terminated on or before the Closing Date
or is not approved by the Court for
assignment to the Purchaser, and
(2) each Retail Contract for which
Purchaser is reasonably insecure of
Customer's payment history under such
Retail Contract, whether identified
before or after the Closing, or to the
extent that the actual Sales Value of a
Retail Contract is determined to be
greater or less than the Sales Value
attributed for such contract in the
Purchase and Sale Agreement.
The Initial Purchase Price will be reduced
only to the extent that the aggregate sum of
all the adjustments or Modified Contracts
and Excluded Contracts exceeds $500,000;
provided, however, that the Initial Purchase
Price shall never be adjusted to exceed
$29,000,000.
Closing Date: The closing will take place on the later of:
(1) the second business day following the entry
by the Court of the Sale Order,
(2) if applicable, the date of termination or
expiration of all waiting periods under the
Hart-Scott-Rodino Act, and
(3) the satisfaction or waiver of all Closing
Conditions.
Post-Closing
Indemnity: Pursuant to the Purchase and Sale Agreement,
Occidental and Enron Energy agree to indemnify
each other for certain claims arising out of
certain liabilities and other matters. In no
event shall Enron Energy's aggregate indemnity
liability exceed:
(a) prior to the 120th day after the closing
of the transaction if such day is a business
day and if not, then on the next following
business day, the Holdback Amount, or
(b) after the Holdback Payment Date, the
undisbursed amount from time to time of the
Remaining Holdback Amount; provided that in
no event shall Occidental have any right to
recover, or claim against, any amount
previously distributed to Enron Energy from
the Holdback Amount.
In no event, shall Occidental's aggregate
indemnity liability exceed an amount equal to
the Holdback Amount. Each Claim asserted by a
party must be bona fide and asserted in good
faith.
Closing
Conditions: (1) the representations and warranties of the
other parties are true and correct as of the
Closing Date,
(2) each party has performed and complied with
in all material respects all covenants and
agreements required to be performed or
complied with by it on or prior to the
Closing Date,
(3) to the extent applicable, all waiting
periods under the Hart-Scott-Rodino Act with
respect to the Purchase and Sale Agreement
shall have expired or been terminated,
(4) no preliminary or permanent injunction or
other order shall be in effect which
restrains, prohibits or otherwise makes
illegal the consummation of the transactions
contemplated under the Purchase and Sale
Agreement, and
(5) the entry by the Bankruptcy Court of the
Sale Order, which order shall not have been
stayed.
Termination
Events: The Purchase and Sale Agreement provides for
termination of the Agreement under certain
circumstances, including without limitation:
(a) if the motion for the Sale Order has been
denied by an order of the Bankruptcy Court,
(b) if the Sale Order has not been entered by
Bankruptcy Court on or before May 1, 2002,
(c) by mutual written consent of both parties,
(d) if a material breach or default shall be
made by a party in the observance or in the
due and timely performance of any of the
covenants or agreements contained in the
Purchase and Sale Agreement and such
default has not been cured within 10 days
of written notice,
(e) if a governmental entity has issued a
non-appealable order or taken any other
action which permanently restrains or
otherwise prohibits the transactions
contemplated by the Purchase and Sale
Agreement,
(f) if Sellers or either of them enter into an
Alternative Transaction,
(g) if adjustments to the Initial Purchase
Price exceed 50% of the Initial Purchase
Price, except as otherwise provided in the
Purchase and Sale Agreement, and
(h) if the Closing has not occurred on or
before May 31, 2002.
In addition, Enron Energy and Occidental will also execute an
Assignment and Assumption Agreement.
Ms. Goldstein explains that in order to preserve the value of
the Retail Contracts, Enron Energy must either enter into a
long-term agreement to purchase the gas to be supplied under the
Retail Contracts or sell the Retail Contracts. Enron Energy
chose the latter.
Enron Energy contacted at least 21 companies before finally
deciding to enter into a purchase and sale agreement with
Occidental. (Enron Bankruptcy News, Issue No. 18; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
EVERCOM INC: Senior Lenders Agree to Forbear Until June 7, 2002
---------------------------------------------------------------
Evercom, Inc., a provider of inmate telecommunications systems
formerly known as Talton Holdings, Inc., today announced that it
has entered into a Second Amendment to its Loan and Security
Agreement and a Forbearance Agreement with respect to its senior
credit facility with its senior lenders. The forbearance period
will be in effect until June 7, 2002.
Evercom was in default of certain covenants under its Senior
Credit Facility as of March 31, 2002. Under the terms of the
forbearance agreement, the Company's senior lenders will not
exercise remedies available to them during the forbearance
period. The Company is currently in discussions with its senior
lenders in an effort to finalize a further amendment to the
Senior Credit Facility prior to the expiration of the
forbearance period.
Evercom is a provider of inmate telecommunications systems,
serving approximately 2,000 correctional facilities throughout
the United States. The Company has become a recognized leader
in providing comprehensive, innovative technical solutions and
responsive value-added service to the corrections industry.
FLAG TELECOM: S&P Drops Ratings to D After Missed Payments
----------------------------------------------------------
The ratings on FLAG Telecom Holdings Ltd. were lowered to 'D'
and removed from CreditWatch on April 2, 2002, because the
company did not make the March 30, 2002, interest payments on
its senior unsecured notes.
Standard & Poor's also lowered its ratings on FLAG subsidiary
FLAG Ltd. at that time. These ratings remained on CreditWatch
negative. The ratings on FLAG Ltd. will be lowered to 'D' when
the coupon payment on the company's notes is missed, or if a
restructuring or bankruptcy filing occurs.
FLEMING COMPANIES: Will Offer $260MM Notes in Private Placement
---------------------------------------------------------------
Fleming Companies, Inc. (NYSE: FLM) announced that it intends to
offer for sale $260 million of senior subordinated notes due
2012 in a private placement. The net proceeds of the offering
will be used to redeem Fleming's currently outstanding $250
million 10.5% senior subordinated notes due 2004. The new 10-
year notes, which will be guaranteed by Fleming's current and
future wholly-owned subsidiaries, could be priced for sale as
soon as tomorrow, April 2nd, 2002. Fleming will issue a formal
Notice of Redemption for the 2004 notes shortly.
"The combined benefits of low interest rates and strength in the
capital markets provide Fleming an opportunity to, essentially,
extend the maturity on this debt," said Neal J. Rider, Fleming's
Executive Vice President and Chief Financial Officer.
The new 10-year notes will be offered to qualified institutional
buyers under Rule 144A and to persons outside the United States
under Regulation S. The notes will not be registered under the
Securities Act of 1933, as amended, and unless so registered,
may not be offered or sold in the United States except pursuant
to an exemption from the registration requirements of the
Securities Act and applicable state securities laws. This press
release shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of
the notes in any state in which such offer, solicitation, or
sale would be unlawful prior to registration or qualification
under the securities laws of any such state.
FLEMING COMPANIES: Fitch Assigns B+ Rating to New $260MM Notes
--------------------------------------------------------------
Fitch Ratings affirms Fleming Companies, Inc.'s 'BB+' rated
secured bank credit facilities, 'BB' rated senior unsecured
notes and 'B+' rated senior subordinated notes, removing them
from Rating Watch Negative where they were placed on January 22,
2002 following a Chapter 11 bankruptcy filing by Kmart Corp.,
its largest customer. Fitch Ratings also assign a 'B+' rating to
Fleming Co.'s pending $260 million senior subordinated notes due
2012. Proceeds from the issuance will be used to redeem the
company's $250 million 10.5% senior subordinated notes due 2004
when callable in June. The Rating Outlook is Negative.
The ratings reflect Fleming's position as the largest food
wholesaler in the U.S., its improving financial profile and its
repositioned retail strategy. The ratings also consider the
company's relationship with Kmart as well as its appetite for
acquisitions and heavy debt burden.
Fleming, with about $15.6 billion in 2001 revenues, is the
largest food wholesaler in the U.S and also has a retail segment
which accounted for about 15% of 2001 revenues. While the
bankruptcy filing of Kmart, which represented nearly 20% of 2001
revenues, has negatively impacted Fleming's anticipated revenue
growth, its revenues from Kmart are expected to increase in 2002
to about $3.6 billion from $3.1 billion in 2001. This revenue
growth is expected as 2002 will be the first full year working
with Kmart, but also factors in lost sales from the 284 Kmart
stores to be closed as well as more conservatively plans sales
to the remaining Kmart stores. The company's wholesale
distribution business continues to serves nearly 12,000
supermarkets, supercenters, discount and convenience stores
throughout all 50 states from its network of 35 distribution
centers. In addition, due to the low-margin nature of the Kmart
relationship, the impact on Fleming's profitability from the
Kmart bankruptcy is modest.
As part of its 1998 restructuring initiatives, Fleming closed or
consolidated 12 distribution centers and refocused its retail
efforts around the price-impact supermarket format, closing 200
conventional supermarkets. As a result, Fleming's financial
profile has improved with leverage (measured by total debt plus
eight times rents to EBITDAR) improving to 4.7x in 2001 from a
peak of 5.3x at year-end 1999 and EBITDAR coverage of interest
and rents improving to 2.1x from 1.8x over the same period.
Of ongoing concern is the company's acquisition activity, which
has resulted in incremental borrowings. While each of the
acquisitions is individually small in size and has expanded
operations, the level of activity is somewhat aggressive,
spending $121 million on acquisitions in 2001. While Fitch
Ratings expects Fleming continue to pursue opportunistic
acquisitions, we expect that they will be financed in a way that
would not compromise the company's ability to meet its financial
targets, which are commensurate with the assigned ratings.
The Negative Rating Outlook reflects the uncertainty as to the
achievement of Kmart sales levels and the ultimate nature of
Fleming's agreement with Kmart, as Fleming's contract with Kmart
has not yet been confirmed in the bankruptcy process. Also of
concern is the possibility for additional Kmart store closures,
beyond those already announced.
GENCORP: Fitch Rates New Subordinated Convertible Notes at B+
-------------------------------------------------------------
Fitch Ratings has assigned a 'B+' rating to GenCorp's new
subordinated convertible notes, which the company intends to
issue under Rule 144A, and has affirmed its 'BB' rating on
GenCorp Inc.'s (GY) senior debt. The Rating Outlook is changed
to Positive from Stable. The ratings and outlook reflect
GenCorp's position in the favorable defense market, particularly
in missile defense; the decrease in debt levels since the
Draftex acquisition; progress in monetizing substantial real
estate holdings; and indications of successful restructurings at
GDX and AFC. Concerns center on the ongoing integration of the
Draftex acquisition; a competitive automotive market;
environmental liabilities; and potential acquisitions.
As of February 28, 2002, GenCorp's financial flexibility
included cash of $54 million and availability of $22 million
under its credit facility, offset by $26 million in current
maturities and short-term debt. Total debt reached high levels
earlier in fiscal year 2001 ($481 million at 8/31/01 after the
Draftex acquisition), but since then GenCorp has reduced debt
nearly by half with proceeds from the sale of its EIS division
for $315 million. Debt at 2/28/02 was $246 million and total
debt to capital was 44%. For fiscal year 2001 leverage, as
defined by Debt-to-EBITDA, was 2.1x, and interest coverage was
3.1x. Paying down the debt in late 2001 will lead to materially
lower interest expense in 2002, as well as a marked improvement
in credit statistics even if operations remain stable. The
company recently announced its intention to issue $100 million
of convertible subordinated notes due in 2007. This offering
should lower GY's interest payments as well as supporting
potential acquisition activity. The company will use the
proceeds to pay down the balance of Term Loan C and to reduce
the amount outstanding under the revolver. Total maturities are
$17 million in FY2002 and $22 million in FY2003, assuming Term
Loan C is paid down with the proceeds from the subordinated
convertible offering.
In October 2001, GenCorp closed the sale of its Aerojet
Electronic & Information Systems (EIS) business to Northrop
Grumman for $315 million, generating a pretax gain of $206
million. The transaction significantly improved GenCorp's
capital structure as the gain increased equity and cash proceeds
reduced debt. Fitch considers the transaction a prudent
strategic move since it allows Aerojet to focus on its
propulsion business, which has a better competitive position
than the EIS business, and to focus its operation geographically
in the Sacramento area. However, the transaction materially
lowered GenCorp's footprint in the aerospace & defense industry
since EIS accounted for the bulk of GenCorp's A&D revenues.
Excluding the $398 million in revenues EIS contributed in 2001,
GenCorp's A&D sales were only $207 million, excluding real
estate sales. Fitch expects GenCorp to explore acquisition
opportunities to increase its size in the A&D industry.
Excluding the effects of the EIS transaction, Fitch believes
sales will increase approximately 30% in 2002 on the back of
strong contract wins in 2001. Fitch expects margins on a
reported basis to decline due to lower pension income, but
excluding this non-cash item, margins should be steady. The
company should do well in the favorable defense spending
environment, particularly as a result of its involvement in
missile defense. Two contingencies remain with GenCorp following
the EIS sale: environmental liabilities related to the EIS
facilities and a purchase price dispute with Northrop. Northrop
has proposed a purchase price reduction of $42 million, which
GenCorp disputes. An arbitrator will most likely decide the
issue.
The GDX Automotive segment faced a challenging year in 2001 due
to competitive auto market conditions and integration efforts
related to the acquisition on Draftex, which GenCorp purchased
in December 2000 for $205 million. The acquisition gave GDX a
broader customer and geographic base. In 2001 GenCorp initiated
restructuring programs at both GDX and Draftex. The
restructuring has included closing three manufacturing
facilities; consolidating some facilities; and reducing
headcount by 1500. The aggressive restructuring lowered the
segment's cost structure by approximately $60 million, which
Fitch expects should allow GDX to achieve 5% margin levels for
2002, with the improvement weighted toward the second half.
However, 2002 operating margins will remain lower than the
segment's potential. First quarter results illustrated the
initial benefits of the restructuring. Operating income improved
$13 million versus 1Q01, generating a 3.2% operating margin.
GDX's first quarter performance was encouraging and it is a key
consideration in changing the Rating Outlook to Positive.
AFC has a much-improved outlook for 2002. In December AFC became
a wholly owned subsidiary of GenCorp when the parent repurchased
NextPharma's 40% stake in AFC. As a result of the repurchase,
AFC is now a separate reporting segment of GenCorp. AFC also
embarked on a restructuring program in 2001, reducing headcount
by more than 40%. With these cost reductions and several new
products in the market, AFC appears to be on sounder footing in
2002. Fitch expects AFC's sales to increase to the $45-$50
million range in 2001. Fitch believes AFC should achieve
positive operating income in 2002 because of the cost savings
from the workforce reductions, marketing cost savings from the
termination of the NextPharma relationship, lower start-up
costs, and higher volumes. Sales and operating income will be
weighted toward the second half.
GenCorp has extensive real estate holdings, although
environmental obligations slow the realization of the value
associated with these holdings. During 2001 GenCorp took several
steps toward monetizing some of its real estate assets. First,
in September it reached an agreement with the EPA to remove 2600
acres in Sacramento from Superfund site designation. The EPA
subsequently filed the agreement in court, and final approval is
expected in April. Second, GenCorp sold 1100 acres in November
for $28 million generating a pre-tax gain of $23 million. This
acreage is outside the Superfund site, and is unrelated to the
2600 acres under the EPA agreement. Real estate sales during
2001 totaled $36 million and pre-tax profits were $26 million,
significant increases from the $6 million in sales and $3
million in profit in 2000. The company announced that it has
hired an executive to head its real estate operations.
On January 22, GenCorp announced it would investigate the
accounting practices at two GDX plants, and the company delayed
the release of earnings and the 10-K by several weeks. The
results of the investigation indicated that accounting errors
occurred primarily at one plant and consisted of erroneous
accounting for customer-owned tooling, inventory, and liability
recognition. As a result of the investigation, GenCorp restated
financial results for 1999, 2000, and the first nine months of
2001. Fitch believes the accounting review was comprehensive and
the results have not materially affected the company's credit
quality.
Headquartered in Sacramento, GenCorp is a technology-based
manufacturing company that operates in three business segments:
GDX Automotive (54% of 2001 sales), Aerospace and Defense (43%)
and Fine Chemicals (3%). Aerospace & Defense contract and funded
backlogs at year-end were approximately $603 million and $366
million, respectively.
GRAND EAGLE: Sells Transformer & Motors Assets for $15 Million
--------------------------------------------------------------
On February 25, 2002, Glenn C. Pollack, Chapter 11 Trustee for
Grand Eagle, Inc. and its five debtor subsidiaries conducted a
live auction sale with respect to the operating assets of Grand
Eagle's Transformer, Breaker and Motor business divisions. The
Auction Sale resulted in the sale of Grand Eagle's Transformer
and Breaker business divisions in whole and the sale of
significant Motors business division assets. The Auction Sale
generated cash proceeds of approximately $15 million.
Subsequent to the Auction Sale, Glenn C. Pollack and his
financial advisors, Candlewood Partners, LLC, have continued
efforts to sell the Motor business division facilities that were
not sold at the Auction Sale. To date, these efforts have
resulted in the sale of an additional six facilities. These
sales have generated approximately $3.5 million in additional
cash proceeds.
The Auction Sale, combined with the subsequent sale of Unsold
Motor Facilities, has resulted in 21 separate asset sale
transactions. In connection with these transactions, Grand Eagle
retained assets worth approximately $3 million, primarily
receivables that the Trustee expects to collect in an orderly,
expedited fashion. After completion of the sales of Unsold Motor
Facilities described above, four closed facilities will remain.
The Trustee expects to dispose of these facilities, along with
all other remaining assets of Grand Eagle, in the near future.
On February 27, 2002, the United States Bankruptcy Court for the
Northern District of Ohio, Eastern Division, Akron, Ohio
approved the Auction Sales. In addition, the Trustee has a
motion pending regarding approval of the sales of the Unsold
Motor Facilities. Benesch, Friedlander, Coplan & Aronoff LLP
represented the Trustee in connection with the Grand Eagle
transactions.
"I'm pleased with the number of facilities sold as going
concerns, including many to Grand Eagle employee groups. These
sales obviously created the most opportunities for Grand Eagle
employees," said Glenn C. Pollack, Trustee for Grand Eagle. "As
evidenced by the proceeds from these sales, along with the
expected value of the retained assets, the Chapter 11 process
allowed for the opportunity to maximize the value of Grand
Eagle's assets."
Grand Eagle, Inc. (a privately held company) was North America's
largest independent motor, switchgear, and transformer services
provider. Based in Richfield, Ohio, the company provides
engineered upgrades, repair, remanufacturing and maintenance
services for industrial, utility and commercial markets.
HQ GLOBAL HOLDINGS: Taps Houlihan Lokey for Financial Guidance
--------------------------------------------------------------
HQ Global Holdings, Inc. and its affiliated debtors ask the U.S.
Bankruptcy Court for the District of Delaware for permission to
retain and employ Houlihan Lokey Howard & Zukin Capital as their
financial advisors and investment bankers.
The Debtors relate to the Court that they have a pressing need
to retain financial advisors and investment bankers to assist
them in the critical tasks associated with analyzing and
implementing critical restructuring alternatives and to help
them guide through their reorganization efforts. The Debtors
believe that Houlihan Lokey is well qualified because of the
Firm's broad experience in these matters.
Houlihan Lokey is expected to:
a) advise the Debtors generally of available capital
restructuring and financing alternatives, including
recommendations of specific courses of action, and
assisting the Debtors with the design of alternative
Transaction structures and any debt and equity
securities to be issues in connection with a Transaction
as defined in the Engagement Letter;
b) assisting the Debtors in their discussions with lenders,
bondholders, preferred shareholders and other interested
parties regarding the Debtors' operations and prospects
and any potential Transaction;
c) assisting the Debtors with the development, negotiation
and implementation of a Transaction or Transactions,
including participation as a representative of the
Debtors in negotiations with creditors and other parties
involved in a Transaction;
d) assisting the Debtors in valuing the Debtors, as
appropriate, valuing the Debtors' assets or operations;
provided that any real estate or fixed asset appraisal
needed would be conducted by outside appraisers selected
and paid for by the Debtors;
e) at any time prior to consummation of a Transaction,
providing experts advice and testimony relating to
financial matters related to a Transaction, including
the feasibility of any Transaction and the valuation of
the Debtors or any debt equity securities issued in
connection with a Transaction;
f) to the extent requested by the Debtors, advising the
Debtors as to potential mergers or acquisitions, and the
sale or other disposition of any of the Debtors' assets
or businesses;
g) to the extent requested by the Debtors, advising the
Debtors and acting as placement agent, as to any
potential financings, either debt or equity, including
debtor-in-possession financing;
h) assist the Debtors in preparing proposals to creditors,
employees, shareholders and other parties-in-interest in
connection with any Transaction;
i) assist the Debtors' management with presentations made
to the Debtors' Board of Directors, creditors and
stockholders regarding potential Transactions/other
issues related thereto and attending such presentations
and meeting;
j) advise the Debtors' Board of Directors and its
committees with respect to potential Transactions or
valuations, including the delivery of written opinions;
and
k) render such other financial advisory and investment
banking services as may be mutually agreed upon by
Houlihan Lokey and the Debtors; provided that
notwithstanding anything to the contrary contained
herein, if the Debtors request such services regarding
the sale of the Debtors or obtaining financing for the
Debtors then such services shall be performed pursuant
to the terms and conditions of a separate agreement for
a fee that is in excess to the amounts paid under the
Engagement Letter.
Pursuant to the terms and conditions of an engagement letter and
subject to the Court's approval, Houlihan Lokey is entitled to
be paid a $150,000 monthly fee for its professional services
rendered to the Debtors in these chapter 11 cases and a
$1,225,000 transaction fee.
HQ Global Holdings Inc., one of the largest providers of
flexible office solutions in the world, filed for chapter 11
protection on March 13, 2002 in the U.S. Bankruptcy Court for
the District of Delaware. Daniel J. DeFranceschi, Esq. at
Richards, Layton & Finger, P.A. and Corinne Ball, Esq. at Jones,
Day, Reavis & Pogue represent the Debtors in their restructuring
efforts. When the Company filed for protection from its
creditors, it listed estimated assets of more than $100 million.
HIGH VOLTAGE: S&P Junks Rating on Limited Financial Flexibility
---------------------------------------------------------------
On April 2, 2002, Standard & Poor's lowered, to 'CCC', its long-
term corporate credit rating on Wakefield, Massachusetts-based
High Voltage Engineering Corp., a manufacturer of diversified
industrial and technology products, due to a significant erosion
in the financial profile and limited near-term financial
flexibility, including high refinancing risk. The rating outlook
is negative.
The ratings on High Voltage reflect the potential for senior
credit agreement covenant violations, and its niche business
positions in certain weak industrial markets (including
semiconductor and off-highway vehicles), more than offsetting
improvements in energy and utility markets, which utilize the
company's medium voltage variable frequency drives.
Financial flexibility is severely constrained with only $3.5
million available under the firm's $25 million credit facility,
and cash of $15.2 million as of January 26, 2002. Cash balances
have declined from the beginning of its fiscal 2002, primarily
due to the company's poor operating performance, modest capital
expenditures, and significant research and development costs.
Liquidity will remain constrained due to the company's semi-
annual $8.3 million interest payment on its 10.5% senior
unsecured notes, annual debt maturities of about $2.0 million,
and restrictive financial covenants. In addition, the near-term
expiration of the company's senior credit facility in October
2003 and its unsecured notes maturing in August 2004 heighten
the financial risk.
High Voltage (excluding an unrestricted subsidiary) reported a
net loss of about $24.6 million for the first nine months ended
January 26, 2002, due to the continued weakness in several key
industrial end markets. As a result of the poor operating
performance and its heavy debt burden, credit measures have
weakened, with total debt to EBITDA at about 11.5 times and
EBITDA interest coverage of about 0.8x as of January 26, 2002,
on a trailing 12-month basis. Credit measures are expected to
remain distressed for the next several quarters.
High Voltage serves a variety of industrial markets through
three operating units, whose products include variable-speed
drives and power-control systems, instruments and services for
advanced surface analysis, and monitoring instrumentation for
heavy-duty trucks and off-highway vehicles.
Outlook
Failure to improve cash flow generation in the near term could
further constrain liquidity and lead to potential financial
covenant violations, possibly resulting in a senior lender
agreement default within the next 12 months.
ICG COMMS: 11th Hour Plan & Disclosure Statement Changes
--------------------------------------------------------
ICG Communications, Inc., and its related and subsidiary Debtors
presented the U.S. Bankruptcy Court for the District of Delaware
with further amendments to their Plan and Disclosure Statement
at yesterday's Disclosure Statement Hearing before Judge Walsh.
Like its predecessors, the Second Amended Plan works like two
plans in one:
* one plan to restructure the Holdings Debtors -- ICG
Communications, Inc., ICG Holdings, Inc., and ICG
Telecom Group, Inc., and
* one plan to restructure the Services Debtors -- ICG
Equipment, Inc., ICG Mountain View, Inc., ICG NetAhead,
Inc., and ICG Services, Inc.
Ownership of the Reorganized Company will shift to prepetition
unsecured creditors holders of unsecured debentures, and ICG
will emerge from bankruptcy as an on-going Internet access
provider.
Assuming that holders of claims in Classes H-4 and S-4 vote to
accept the Plan, the Debtors project that:
* Holding's Unsecured Creditors will recover 7.39% on
account of their $1.4 billion of claims; and
* Services' Unsecured Creditors will recover 5.96% on
account of their $1.1 billion of claims.
The Amended Plan In General
Under the Plan as amended, the Debtors anticipate a
restructuring of the Debtors' balance sheets by (i) paying in
cash $25 million of the obligations outstanding to the holders
of the Secured Lenders Claims against the Services Debtors from
the proceeds of the New Senior Subordinated Term Loan, and
converting the balance of these obligations, estimated at $59.6
million, to new secured debt of Reorganized ICG, and (ii)
converting general, unsecured claims, which include claims of
holders of the publicly held unsecured debentures issued by the
various Debtors, into 100% of the newly issued common stock of
Reorganized ICG (8 million shares), subject to dilution from
conversion of the New Convertible Notes into New Common Shares,
the New Holdings Warrants, and Management Options. There will
be no recovery for holders of existing preferred or common
equity securities of the Debtors, whose interests will be
cancelled if the Plan as amended is confirmed.
Reorganized ICG will borrow the $25,000,000 being paid to the
Secured Lenders under a New Senior Subordinated Term Loan
facility arranged by Cerberus Capital Management, L.P., maturing
four years after the Effective Date. That Subordinated Loan
will carry a 14% interest rate, is subordinated to the New
Secured Notes and secured by a junior lien on all unencumbered
property. The New Senior Subordinated Term Loan facility
requires that confirmation occur by May 30, 2002.
As in the prior Plan, Reorganized ICG will also issue New
Convertible Notes to:
Cerberus Capital Management, L.P. $20,000,000
W.R. Huff Asset Management L.P. 5,000,000
Stonehill Capital Management LLC 5,000,000
CSFB Global Opportunities Adviser LLC 5,000,000
Morgan Stanley & Co., Inc. 5,000,000
raising $40,000,000 to fund future working capital needs.
Unsecured Stock Pools
Under the Plan as now amended, holders of Allowed General
Unsecured Claims against the Holdings Debtors, which are
classified in Class H-4, will receive a pro rata share of the
Class H-4 Stock Pool, and holders of Allowed General Unsecured
Claims against the Services Debtors, which are classified in
Class S-4, will receive a pro rata share of the Class S-4 stock
pool. The New Common Shares to be issued to the holders of
Allowed General Unsecured Claims will be allocated to the Class
H-4 and Class S-4 Stock Pools based on the aggregate amount of
Allowed General Unsecured Claims in these two classes. Based on
the Debtors' estimate of the amount of General Unsecured Claims
that will ultimately become Allowed, the Debtors estimate that
approximately 56% of Allowed General Unsecured Claims are
against the Holdings Debtors, and approximately 44% of the
Allowed General Unsecured Claims are against the Services
Debtors. In addition, in consideration of certain intercompany
claim issues, an additional 3% of the New Common Shares will be
allocated to the Class H-4 Stock Pool. As a result, the Debtors
estimate that a total of approximately 59% of the New Common
Shares will be placed in the Class H-4 Stock Pool and a total of
approximately 41% of the New Common Shares will be placed in the
Class S-4 Stock Pool.
In addition, if Class H-4 accepts the Plan, holders of Allowed
Claims in Class H-4 will also receive their Pro Rata share of
the New Holdings Creditor Warrants, which are 5-year warrants to
purchase 800,000 additional New Common Shares (approximately 10%
of the aggregate amount of New Common Shares to be issued and
outstanding on the Effective Date), at a strike price of $20.00
per share, based on the implied value of total equity.
New Common Shares Registration
The Debtors promise to use their best efforts to list the New
Common Shares on the New York Stock Exchange, the American Stock
Exchange, or the NASDAQ National Market. If this event occurs,
the New Common Shares will be generally freely tradable under
state securities laws. If the New Common Shares are not listed
on any of these exchanges, the New Common Shares will not be
freely tradable under state securities laws unless there is an
exemption from registration for secondary market transactions
under the so-called "manual exemption" if financial and other
information about an issuer is published in certain manuals
published by Moody's Investor Service, Inc., or Standard &
Poor's. If the New Common Stock are not listed on one of the
above exchanges, the Reorganized Debtors intend to provide the
necessary information in order to be able to take advantage of
manual exemptions.
New Common Shares Warrants Tax
The Debtors do not indicate their intention regarding listing of
the warrants. However, the Debtors do warn that the New
Holdings Creditor Warrants should be treated as either (i)
additional consideration received on exchange of such holder's
Claim for New Common Shares and New Holdings Creditor Warrants,
or (ii) a separate payment in the nature of a fee for acceptance
of the Plan. If the New Common Shares are treated as additional
consideration received on the exchange, the fair market value of
the New Holdings Creditor Warrants on the Effective Date will be
added to the amount realized in computing gain or loss. If the
New Holdings Creditor Warrants are treated as a separate fee, a
holder of an Allowed Class H-4 Claim would likely recognize
ordinary income in an amount equal to the fair market value on
the Effective Date of the New Holdings Creditor Warrants
received. Such ordinary income would be recognized regardless of
the gain or loss recognized by the holder on the exchange of its
Allowed Class H-4 Claim for New Common Shares. The law is
uncertain as to the characterization of such payments, but the
Debtors believe and plan to take the position that the New
Holdings Creditor Warrants are part of the amount realized by a
holder on the exchange of its Allowed Class H-4 Claim for New
Common Shares.
The market discount provisions of the Internal Revenue Code may
apply to holders of certain Claims. In general, a debt
obligation other than a debt obligation with a fixed maturity of
one year or less that is acquired by the holder in the secondary
market (or, in certain circumstances, on original issuance) is a
"market discount bond" as to that holder if its stated
redemption price at maturity (or, in the case of a debt
obligation having original issue discount, its revised issue
price) exceeds the tax basis of the debt obligation in the
holder's hands immediate after its acquisition. However, a debt
obligation will not be a "market discount bond" if such excess
is less than the statutory de minimus amount. Gain recognized
by a Claim holder with respect to a "market discount bond" will
generally be treated as ordinary interest income to the extent
of the market discount accrued on such bond during the
Claimholder's period of ownership, unless the claim holder
elected to include accrued market discount in taxable income
currently. A holder of a market discount bond that is required
under the market discount rules of the IRC to defer deduction of
all or a portion of the interest in indebtedness incurred or
maintained to acquire or carry the bond may be allowed to deduct
such interest, in whole or part, on disposition of such bond.
Projections
The Second Amended Plan proposes to wipe nearly $2.5 billion of
debt from the Company's balance sheet. Assuming an April 30,
2002, Effective Date, Reorganized ICG's balance sheet will
reflect approximately $541 million in assets, $377 million in
total liabilities and $164 million in positive shareholder
equity.
Tinkering with their Strategic Business Plan -- primarily by
deferring depreciation expenses -- the Debtors now project:
ICG Communications, Inc.
Projected Statement of Operations
2002 2003 2004 2005
---- ---- ---- ----
Revenue $502,747,000 $622,805,000 $739,618,000 $890,063,000
Operating
Costs 298,813,000 384,882,000 455,741,000 524,567,000
------------ ------------ ------------ ------------
Gross Profit 203,934,000 237,923,000 283,877,000 365,496,000
SG&A 108,855,000 130,188,000 152,206,000 175,413,000
------------ ------------ ------------ ------------
EBITDA 95,079,000 107,735,000 131,671,000 190,083,000
Depreciation 65,070,000 83,677,000 104,216,000 127,541,000
Interest 23,873,000 26,551,000 31,280,000 32,988,000
Other Income 17,723,000
------------ ------------ ------------ ------------
Net Income ($11,587,000) ($2,493,000) ($3,825,000) $29,554,000
============ ============ ============ ============
Projected Revenues
The Debtors generate revenues from primarily three product
lines: corporate services, dial-up, and point-to-point
broadband. The Debtors also earn Reciprocal Compensation
revenue based on dial-up services provided.
A. Corporate services: Net revenues (comprised of voice,
DAI services and NikeNet) are projected at: $88.5MM, $135.7MM,
$236.9MM, and $465.8MM for 2002 through 2005, respectively.
Projected revenue increases result primarily from increased
sales of DIA services to corporate customers and the addition of
value-added services to the DIA service offering which are
projected to become available during 2002 and 2003. DIA
services leverage the Company's existing nationwide data
infrastructure.
DAI gross new T1 unit sales are projected to grow from
745 in 2002 to 3,542 in 2005, with T3 sales projected to grow
from 75 in 2002 to 1,363 in 2005. The projections assume an
average realized price decrease of between 5% and 10% annually
for 2003 through 2005 for each product (excluding value-added
revenues and local loop charges). Gross margins for these
services improve over the plan period primarily as a result of
economies of scale and increased sales of value-added services.
Voice revenues are projected at: $70.6MM, $70.4MM,
70.5MM and 72.5MM during the four years beginning January 1,
2002, respectively. Voice revenues are virtually flat during the
projection period, which reflects a shift in focus in new sales
from voice services to DIA.
B. Dial-Up. New revenues are projected at $214.3MM,
$280.8MM, $301.1MM and $296.3MM from 2002 through 2005,
respectively. The projections reflect growth in dial-up
revenues primarily as a result of increased user time online and
industry consolidation. Increased time online per user requires
ISPs to purchase more capacity from dial-up providers such as
the Debtor.
During the projection period, the Company anticipates
an increase in cumulative net dial-up ports from approximately
610,000 on January 1, 2002, to approximately 1,420,000 on
December 31, 2005. Pricing decreases and a shift over time from
higher margin services to lower margin services are principally
offset by assumed line cost decreases.
C. Point-to-Point Broadband. Net revenues are projected
at $132.9MM, $162.2MM, $189.5MM and $228.0MM from 2002 through
2005, respectively. Revenues primarily consist of Special
Access services, but also include SS7 and Switched Access
services. The projections assume that growth in data
communications will drive growth in bandwidth demand within the
local marketplace where the Company provides such services.
The projections include Special Access capital
investments of $24MM, $55MM, $40MM, and $50MM in years 2002
through 21005, respectively, all with an assumed 24-month
payback on investment.
SS7 revenues and Switched Access revenues are projected to be
$16.3MM in 2002 and $16.7MM in 2003 through 2005.
D. Reciprocal Compensation. The revenue stream from
reciprocal compensation is projected to be phased out during
2003 and 2004, in accordance with current FCC rulings and
existing agreements. Net reciprocal compensation is projected
at $67.0MM, $44.1MM and $12.0MM from 2002 through 2004,
respectively. Projections are based on anticipated minutes of
use and applicable contracted or FCC rates.
E. Operating Costs. Operating costs consist of line
costs for leased facilities and other operating costs, including
operating facilities rent, systems maintenance and related
personnel costs.
Line costs are projected to be $167.3MM, $233.3MM,
$290.1MM and $350.0MM in years 2002 through 2005, respectively,
or 33%,37%, 39% and 39% of revenue, respectively. Line costs
expressed as a percent of revenue are projected to increase form
2002 to 2005 primarily due to the phase-out and eventual
elimination of reciprocal compensation.
Other operating costs are projected to be $131.5MM,
$151.6MM, $165.6MM and $174.6MM in years 2002 through 2005,
respectively, or 26%, 24%, 22% and 20% of revenue, respectively.
Other operating costs as a percentage of revenue decline as the
Debtor leverages its existing operating facilities and
personnel.
Overall gross margins resulting from the operating
costs assumptions are 41%, 38%, 38% and 41% in years 2002
through 2005, respectively. Gross margins are projected to
initially decline as reciprocal compensation is phased out, and
are projected to subsequently increase as efficiencies in the
Company's cost structure are realized. (ICG Communications
Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
INDOSUEZ CAPITAL: Fitch Affirms B- Rating on $104M Class C Notes
----------------------------------------------------------------
Fitch Ratings has affirmed its rating on one tranche of the
liabilities issued by Indosuez Capital Funding, IV L.P. and
removes it from Rating Watch Negative. The following rating
action is effective immediately:
* $104,000,000 class C notes affirmed at 'B-'
Indosuez is a collateralized loan obligation, which is backed
predominantly by senior secured loans. Indosuez is currently
managed by RBC Leveraged Capital (Royal Bank of Canada). The
liabilities were placed on Rating Watch Negative in October 2001
due to a breach of the key man clause. Management of the
portfolio was subsequently transferred from Indosuez Capital to
Royal Bank of Canada. While Fitch is comfortable with the new
management team, the class C notes remained on Rating Watch
Negative due to deterioration in the credit quality of the asset
portfolio.
Fitch's rating on the class C notes addresses the return of
principal only. After modeling the current asset portfolio
including the required cumulative default rate for a 'B-'
rating, as well as aggregate distributions made to date, the
class C notes make sufficient total distributions to return the
original principal amount to noteholders by the legal final
maturity date.
INT'L TOTAL: Closes Sale of Non-Preboard Assets to SMS for $1.5M
----------------------------------------------------------------
International Total Services, Inc. (OTC:ITSW) announced the
closing of the sale of its aviation non-preboard business to SMS
Holdings Corp. of Nashville, TN for $1.5 million cash pursuant
to order of the U.S. Bankruptcy Court of Eastern District of New
York.
ITS and its domestic subsidiaries filed voluntary petitions for
protection under Chapter 11 of the U.S. Bankruptcy Code in the
United States Bankruptcy Court for the Eastern District of New
York on September 13, 2001. The company continues business
operations without interruption under court protection.
International Total Services Inc., is a leading provider of
airport services personnel and staffing and training services
and commercial security services for a wide variety of
industries. ITS services include, among other things, airport
passenger checkpoint screening pursuant to contract with the
Federal Aviation Administration. The company has more than 8,000
employees at operation throughout the United States, and in the
United Kingdom.
INTRAWARE INC: Has Working Capital Deficit of $9.3MM at Feb. 28
---------------------------------------------------------------
Intraware, Inc. (Nasdaq:ITRA), a leading provider of electronic
software delivery and management and information technology
management solutions, announced financial results for the fourth
quarter and twelve months ended February 28, 2002.
Total revenues for the fourth quarter of fiscal year 2002 were
$14.0 million. This result reflects a one-time recognition of
approximately $6.7 million in deferred license revenue and
related gross profit of approximately $133,000 from a third-
party software sale. The company reported revenues of $9.4
million in the immediately preceding quarter of FY 2002 and
$21.6 million in the fourth quarter of FY 2001. Total revenues
for FY 2002 were $52.3 million, compared to $121.8 million in FY
2001. The declines in total revenues are primarily the result of
the company's decision to focus on proprietary technologies and
to transition out of the third party software resale business
beginning in July of 2001. Online services and technology
revenues grew to $3.7 million in the fourth quarter of FY 2002
from $3.4 million in the third quarter of FY 2002. These results
compare to online services and technologies revenues of $4.8
million in the fourth quarter of FY2001, when the company was
still recognizing revenue from products that have since been
discontinued. For FY 2002, online services and technology
revenues were $15.5 million.
Gross profit for the fourth quarter of FY 2002 was $4.1 million,
compared to $4.4 million in the previous quarter ended November
30, 2001 and $6.4 million in the fourth quarter of FY 2001. For
FY 2002, gross profit was $19.2 million, compared to $36.6
million in FY 2001. Gross profit from online services and
technology increased from $2.4 million in the third quarter of
FY 2002 to $2.9 million in the fourth quarter. The increase in
online services and technology gross profit was offset by the
reduced gross profit contribution recognized from third party
software sales.
Gross profit margins totaled 29% in the fourth quarter FY 2002,
compared to 47% in the previous quarter ended November 30, 2001,
and 29% in the fourth quarter of FY2001. The reduction in gross
profit margins in the fourth quarter of FY2002 was caused by the
one-time recognition of $6.7 million of low-margin deferred
license revenue mentioned above. Excluding this one time item,
the company's gross profit margins in the fourth quarter
exceeded the third quarter's 47% gross profit margins.
"We are pleased with our fourth quarter results and especially
the growth that we experienced in our core asset management and
electronic software delivery and management businesses," stated
Frost Prioleau, President of Intraware. "This growth was
primarily the result of the increased effectiveness of our sales
channels and an improving economic environment for products such
as ours that provide rapid return on investment."
Excluding unusual and certain non-cash charges to earnings, pro
forma net income (which the company has defined as EBITDA) was
$783,000 in the fourth quarter of FY2002 compared to a pro forma
net loss of $8.7 million in the corresponding quarter a year
ago. Pro forma net income for the immediately preceding quarter
ended November 30, 2001, excluding unusual and certain non-cash
charges, was $368,000. The excluded non-cash charges were items
such as the stock based compensation charge, amortization
related to acquisitions, and depreciation as well as unusual
charges associated with the issuance and redemption of preferred
stock, beneficial conversion features, accrued dividends,
accretion, interest expense and income, and the charges relating
to the restructurings implemented in August 2001 and December
2000. For FY 2002, the pro forma net loss excluding the charges
detailed above was $1.8 million compared to a pro forma net loss
of $32.7 million in FY 2001.
Including all charges to earnings, the net loss attributable to
common stockholders was $4.5 million for the quarter ended
February 28, 2002, compared to a net loss attributable to common
stockholders of $27.7 million for the same quarter a year
earlier and a net loss attributable to common stockholders of
$5.0 million for the immediately preceding quarter ended
November 30, 2001. For FY 2002, the net loss attributable to
common stockholders, including the charges detailed above was
$37.4 million compared to a net loss attributable to common
stockholders of $68.4 million in FY 2001. Deferred revenues and
the gross profit associated with deferred revenues at the end of
FY 2002 were $6.5 million and $4.2 million, respectively.
Fourth Quarter Highlights
-- The company signed contracts with five new SubscribeNet
service customers and entered into pilot agreements with two
additional companies, bringing the total number of software
vendors using this service to 27. New SubscribeNet service
customers include F5 Networks, Inc., Verity, Inc., and Portal
Software, Inc.
-- The company signed subscription renewals with six
existing SubscribeNet service customers, or 86% of those that
came up for renewal. Several of these renewals significantly
increased the scope of the expiring contracts. Customers that
renewed included Documentum, Inc., Interwoven, Inc., E.piphany,
Inc. and PeopleSoft, Inc.
-- The company entered into a strategic alliance with
GLOBEtrotter Software, Inc., a subsidiary of Macrovision
Corporation, allowing both parties to reach customers with
complementary product needs and expand their respective product
offerings. This alliance enables software vendors using the
SubscribeNet service to provide their customers the ability to
both download the vendors' GLOBEtrotter FLEXlm(R)-enabled
software products, and generate and download licenses for those
products, from a single Web site.
-- Argis(R) and ContractDirector(TM) software license
revenues increased 34% over license revenues in the directly
preceding third quarter. New customers included major
institutions in the banking, retail, distribution, and
educational verticals.
-- Intraware's Argis channel alliance program continued to
gather momentum. In the fourth quarter, 28% of Argis and
ContractDirector software license revenue came through the
company's channel program.
The company, at February 28, 2002, recorded a working capital
deficit of about $9.3 million.
"The momentum that we built in the fourth quarter is a good
indication that the company is on the right track," remarked Mr.
Prioleau. "The strength of our products combined with the
increased sales reach that we are achieving through our channels
put Intraware in an excellent position to achieve significant
growth in our core businesses in FY03."
"We are encouraged by our accomplishments in FY02," said Wendy
Nieto, Vice President of Finance. "We have concluded a
successful year of restructuring the company and we are now
poised for profitability in FY03."
Business Outlook: First Quarter and FY 2003
The following statements are forward looking and based on
current expectations, which are subject to adjustment in the
future. Actual results may differ materially and are subject to
risks and uncertainties.
-- Total revenues for the first quarter of FY 2003 are
expected to be in the range of $5.0 to $5.7 million. Total
revenues for FY 2003 are expected to be between $24 and $26
million. Residual revenues from Intraware's discontinued third
party software resale business are expected to be 29% of the
first quarter of FY 2003 revenues and 9% of total FY 2003
revenues.
-- Gross profit for the first quarter of FY 2003 is
expected to be in the range of $2.8 to $3.3 million. The gross
profit margin in the first quarter ending May 31, 2002 is
expected to be approximately 57%. Gross Profit for FY 2003 is
expected to be between $16 and $18 million. For FY 2003, the
company expects the gross profit margin to increase to
approximately 80% by the fourth quarter.
-- Net loss from operations is expected to range between
$4.0 and $4.4 million for the first quarter of FY 2003 and
between $7.0 and $9.0 million for FY 2003.
Intraware, Inc. (Nasdaq:ITRA) is a leading provider of
electronic software delivery and management (ESDM) and
information technology management solutions that enable
corporations to optimize their IT investments. Intraware's
unique spectrum of innovative IT management solutions has
attracted strategic relationships with industry-leading vendors
such as Computer Associates International, Inc., Corporate
Software, iPlanet E-Commerce Solutions, PeopleSoft, Inc., and
Lockheed Martin. Intraware is headquartered in Orinda,
California, and can be reached by phone at 888/446-8729,
925/253-4500 or http://www.intraware.com
JPM COMPANY: Still Accepting Bids for Assets Until Tomorrow
-----------------------------------------------------------
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: : Chapter 11
THE JPM COMPANY OF : Case No. 02-10642 (MFW)
DELAWARE, INC., et al : (Jointly Administered)
Debtors. :
NOTICE OF CHAPTER 11 ASSET SALE
-------------------------------
PLEASE TAKE NOTICE THAT ON MARCH 15, 2002 BIDDING PROCEDURES FOR
THE FOLLOWING ASSETS (THE "ASSETS") WERE APPROVED.
A. 97,000 square foot facility (including a Class 100 fiber
optics operation) located in Lewisburg, PA 250 employees
assembling $15 million in cable harnesses used predominantly in
OEM/CM computer/business automation components industry;
B. 70,000 square foot facility (including Class 10000 fiber
optics clean room) located in Beaver Springs, PA. 200 employees
assembling #10 million in cable harnesses used predominantly in
the OEM/CM telecommunications industry;
C. 100% common stock of a $1 million (revenue) Singapore
distribution center; and
D. Majority interest in common stock of a $2.5 million
(revenue) Brazilian assembler of cable harnesses used
predominantly in the OEM telecommunications industry.
FOR INFORMATION REGARDING THE ASSETS, PLEASE CONTACT:
David Weinberg or Marc Friedant
Penn Hudson Financial Group, Inc.
215-568-4556 FAX 215-568-4844
ALL BIDS ARE DUE, IN WRITING,
NO LATER THAN 4:00 P.M. APRIL 8, 2002
John T. Carroll, Esquire
COZEN O'CONNOR
Chase Manhattan Centre
1201 North Market Street, Suite 1400
Wilmington, Delaware 19801
Neal D. Colton, Esquire
COZEN O'CONNOR
1900 Market Street
Philadelphia, Pennsylvania 19103
Counsel for Debtors
KAISER ALUMINUM: Committee Members Seek Okay to Trade Securities
----------------------------------------------------------------
The Official Committee of Unsecured Creditors, in the chapter 11
cases of Kaiser Aluminum Corporation, and its debtor-affiliates,
asks the Court to allow any Committee member acting in any
capacity to engage in securities trading as regular part of its
business without violating its duties as a Committee member and
without subjecting its claims to possible disallowance,
subordination, or other adverse treatment, by trading in
securities during the pendency of the Debtors' chapter 11 cases,
provided that the Committee member implements and follows
adequate information blocking procedures to separate its trading
activities from its committee related activities. The Committee
also seeks approval of proposed information blocking procedures.
William P. Bowden, Esq., at Ashby & Geddes, in Wilmington,
Delaware, explains that Securities Firms providing investment
advisory services to institutional, mutual fund, and high net-
worth clients have a fiduciary duty to maximize returns for its
clients through the buying and selling of securities. When
Securities Firms serve as members of a Creditors' Committee, the
firm and its affiliates also owe a fiduciary duty to other
creditors not to divulge any confidential any confidential or
inside information regarding the Debtors. Thus, Mr. Bowden
says, if the Securities firm is barred from trading securities
during the pendency of these cases because of their duties to
other creditors, then the securities firm risks the loss of a
beneficial investment opportunity for its clients.
Alternatively, if any securities firm resigns from the
Committee, the interest of its shareholders may be compromised
by virtue of such firm taking less active role in the
reorganization process.
As a solution to this dilemma, Mr. Bowden proposes that the
Committee members adopt information blocking procedures to
isolate their trading activities from their activities as
members of the official committee of unsecured creditors in
these chapter 11 cases. The polices and procedures that the
Securities Firm will use to establish its Screening Wall in
these cases are:
A. The legal department of the Securities Firm will prepare and
the Securities Firm Committee personnel shall execute a
memorandum acknowledging that they may receive non-public
information regarding the Debtors and that they are aware
of he information blocking procedures which are in effect
with respect to the non-public information and the
securities;
B. The Memorandum shall state that the Securities Firm is in
compliance with the provisions of Committee's Motion and
Order and a copy of each Memorandum shall be forwarded to
the Debtors' counsel;
C. Securities Firm Committee personnel responsible for
performing Committee functions shall be different front the
personnel responsible for performing trading functions and
shall use physically separate office space, file space,
hone lines and facsimile lines for the performance of their
respective responsibilities;
D. Securities Firm Committee personnel will not directly or
indirectly share any no-public Committee information or
non-public information concerning these cases with such
Securities Firm's other personnel except regulators,
auditors and designated legal personnel for the purpose of
rendering advice to such firm's Committee personnel who
shall not share such non-public information;
E. Securities Firm Committee personnel will establish procedures
which provide for the maintaining of all files containing
non-public information received in connection with or
generated from Committee activities in secured files which
are physically separated from, and inaccessible to other
employees of such Securities Firm; and,
F. Securities Firm will place the securities on the firm's
"fully restricted list" for the purpose of testing the
Screening Procedures and confirming full compliance with
the Screening Procedures. Each time that a purchase or sale
of the securities is proposed to be made by a member of the
firm, trading personnel will contact the Securities Firm
Legal Department personnel who will make a determination as
to whether there was compliance with the Screening
Procedures and, if so, will approve the proposed trade.
Mr. Bowden says that the proposed procedures are meant to
exemplify common steps taken to establish a Screening Wall.
They are not meant to be exclusive of other measures and do not
necessarily represent the precise procedures that a particular
Securities Firm will institute. (Kaiser Bankruptcy News, Issue
No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900)
KMART CORP: Sedgwick Claims Wants Prompt Decision on Contract
-------------------------------------------------------------
Sedgwick Claims Management Services Inc. acts as a third-party
administrator for certain types of liability claims for which
Kmart Corporation is self-insured, pursuant to an Outsourcing
Agreement dated May 27, 1999.
According to Forest B. Lammiman, Esq., at Lord, Bissell & Brook,
in Chicago, Illinois, the types of claims that Sedgwick is
responsible for administering include customer and other non-
employee personal injuries, property damage, and other economic
loss claims for which the claimant believes Kmart is liable.
Mr. Lammiman relates that these claims arise out of such events
as accidents on store premises, defective products, shoplifting
arrests, assaults on store premises, incidents involving
shopping carts, pharmacy operations, food service operations,
and intentional misconduct by employees. Sedgwick is also
responsible for administering Kmart's product liability,
automobile liability, and property and cargo loss claims, Mr.
Lammiman adds.
Moreover, Mr. Lammiman continues, Sedgwick is required under the
Contract to retain, supervise, assist, and pay legal counsel to
defend Kmart against lawsuits arising from the claims and to
pursue claims in cases where Kmart is entitled to be
indemnified. Sedgwick is also required under the Contract to
perform various other claims management, accounting, and filing
duties and to operate a claims office in Troy, Michigan.
Mr. Lammiman tells the Court that Sedgwick pays the claimant to
settle the claim if, in its opinion, it would be prudent for
Kmart to do so and the amount of the payment does not exceed
certain limits in the Contract. In other cases, Mr. Lammiman
says, Kmart may direct Sedgwick to settle claims for amounts in
excess of such limits.
Sedgwick pays claims from funds maintained in an account at
First Union National Bank, according to Mr. Lammiman. Kmart is
required to fund the Bank account on a presentment basis using
an automated clearing house debit to the Kmart Comerica Bank
account in Detroit, Mr. Lammiman explains. Sedgwick has Kmart's
written authority to initiate an automated clearing house debit
transaction to the Bank account. Sedgwick notifies Kmart daily
of the amount needed to fund the Bank account for the next day.
In addition, Mr. Lammiman says, Kmart is required to pay
Sedgwick various service fees and to reimburse Sedgwick for any
state sales tax applicable to the services Sedgwick provides.
To fulfill its obligation to operate a claims office in Troy,
Michigan, Mr. Lammiman informs Judge Sonderby that Sedgwick and
Kmart entered into an Office Lease for the period from September
1, 2001 through August 31, 2006.
Now, Sedgwick complains that:
-- Kmart has not paid their services fees for March 2002;
-- Kmart has failed to reimburse Sedgwick in the amount of
$1,189,739 for claims paid on Kmart's behalf:
$644,837 01/06/02 - 01/18/02
$544,902 01/22/02 - 01/24/02
-- it was forced to stop payment on $2,778,215 in additional
checks issued to claimants on behalf of Kmart when it became
clear that Kmart had failed to honor its reimbursement
obligations under the Contract.
By this motion, Sedgwick asks the Court to compel Kmart to
assume the Contract and the Lease now. "Allowing Kmart to delay
indefinitely in deciding whether to assume or reject the
Contract and the Lease will impose an unfair burden on
Sedgwick," Mr. Lammiman argues.
Besides, Mr. Lammiman notes, assuming the Contract and the Lease
will benefit Kmart's estate because:
(a) the perception of Kmart in the marketplace can only be
enhanced if Kmart honor legitimate claims made by its
customers, including those accidentally injured by
visiting a retail site;
Specifically as to the $2,800,000 in dishonored checks,
Mr. Lammiman, Kmart will quell any misperception that it
cannot assure its customers that it will honor its
obligations to them.
(b) Kmart will assure itself of the continued benefit of third
party administration of its claims -- considering that
Sedgwick will be willing to suspend its "at will" 90-day
termination rights under the Contract until the
confirmation of a plan of reorganization;
(c) to the extent that post-petition claims already are not
being proceed and paid, any delay in assuming the Contract
can only hinder Kmart's reorganization efforts;
(d) in order to perform the services that the Debtors need,
Sedgwick must be assured that the Contract will be honored
going forward;
According to Mr. Lammiman, assumption of the Contract will
require the cure of all defaults, including:
(i) reimbursing Sedgwick for the $1,200,000 in claims
that Sedgwick has paid on Kmart's behalf, and
(ii) indemnifying Sedgwick for other claims and expenses,
including claims arising out of $2,800,000 in
dishonored checks.
(e) the Debtors will also benefit if the Lease is assumed
because the rent will be paid by Sedgwick, its on-site
offices at Kmart's headquarters will be used for their
intended purpose: efficient administering and payment of
claims against the company.
In the alternative, Sedgwick asks the Court to lift the
automatic stay so that it will be the one to terminate the
Contract and Lease upon 90 days' notice.
The Debtors Object
"Sedgwick's motion is nothing but a thinly-veiled attempt to
force the Debtors and these estates to pay Sedgwick its pre-
petition claim in full ahead of the claims of other unsecured
creditors without justification of any kind," Mark A. McDermott,
Esq., at Skadden, Arps, Slate, Meagher & Flom, in Chicago,
Illinois, tells the Court.
The Debtors assert that they are current on their post-petition
obligations to Sedgwick. Mr. McDermott argues that the
assumption of the Sedgwick Agreements now will only foist an
unnecessary financial burden on the estates. Besides, Mr.
McDermott insists that Sedgwick will not be harmed by
continuation of the status quo, especially given the Debtors'
significant financial and operating resources. Mr. McDermott
maintains that Sedgwick has no right to insist on the unfettered
right to terminate the Agreements without notice to any party in
interest.
Clearly, the Debtors contend that Sedgwick's motion is meritless
and thus, should be denied. (Kmart Bankruptcy News, Issue No.
10; Bankruptcy Creditors' Service, Inc., 609/392-0900)
LODGIAN INC: Wins Nod to Hire Cadwalader Wickersham as Counsel
--------------------------------------------------------------
Lodgian, Inc., and its debtor-affiliates obtained approval from
the Court to employ Cadwalader Wickersham & Taft under a general
retainer, to perform the extensive legal services that will be
necessary during their chapter 11 cases in accordance with
Cadwalader's normal hourly rate and disbursement policies.
Specifically, Cadwalader will:
A. take all necessary action to protect and preserve the estates
of the Debtors, including the prosecution of actions on the
Debtors' behalf, the defense of any actions commenced
against the Debtors, the negotiation of disputes in which
the Debtors are involved, and the preparation of objections
to claims filed against the Debtors' estates;
B. prepare on behalf of the Debtors, as debtors in possession,
all necessary motions, applications, answers, orders,
reports, and other papers in connection with the
administration of the Debtors' estates;
C. negotiate and prepare on behalf of the Debtors a plan of
reorganization and all related documents; and
D. perform all other necessary legal services in connection with
the prosecution of these chapter 11 cases.
Adam C. Rogoff, Esq., a member of Cadwalader Wickersham & Taft,
informs the Court that the Firm will charge the Debtors in
accordance with its customary hourly rates:
Members and Counsel $435-$650
Associates $195-$400
Paraprofessionals $120-$180
On December 19, 2001, Mr. Rogoff informs the Court that
Cadwalader received $700,000 from the Debtors as a retainer for
professional services rendered and to be rendered, and as an
advance against expenses incurred and to be incurred, in
connection with these chapter 11 cases. (Lodgian Bankruptcy
News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
MARINER POST-ACUTE: Court OKs 8th Amended DIP Credit Agreement
--------------------------------------------------------------
The Court approves the Eighth Amendment to the Mariner Post-
Acute Network, Inc. Debtors' Revolving Credit and Guaranty
Agreement (the DIP Credit Agreement) with Foothill Capital
Corporation, successor to The Chase Manhattan Bank (n/k/a
JPMorgan Chase Bank) as agent and lender, and with various other
lenders.
The MPAN DIP Credit Agreement matures on June 3, 2002.
* * *
As previously reported, Mariner Post-Acute Network, Inc.
Debtors' DIP Agreement with Foothill Capital Corporation,
successor to The Chase Manhattan Bank (n/k/a JPMorgan Chase
Bank) as agent and lender, and with various other lenders, was
scheduled to mature on April 1, 2002. The Debtors' authority to
use their prepetition senior secured lenders' cash collateral
(for which Chase still serves as agent) also expired on April 1,
2002 prior to the approved amended credit agreement.
With the Court order, the "Eighth Amendment to Revolving Credit
and Guaranty Agreement":
(1) extends the maturity of the DIP Agreement to June 3, 2002,
and
(2) extends the consensual use of the cash collateral of the
Prepetition Senior Secured Lenders, also through June 3,
2002. (Mariner Bankruptcy News, Issue No. 28; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
MILLER INDUSTRIES: Seeking L-T Credit Agreement to Cure Defaults
----------------------------------------------------------------
Miller Industries, Inc. (NYSE: MLR) announced financial results
for its calendar 2001 fourth quarter and year ended December 31,
2001. As previously announced, the Company changed its reporting
period from a fiscal year ended April 30th to a calendar year
ended December 31st.
For the fourth quarter of calendar 2001, net sales were $113.5
million compared with $119.7 million in the calendar 2000 fourth
quarter. Operating income for the quarter before special
charges and other net operating expenses increased to $2.5
million from $0.6 million in the same period last year. The
Company reported net income before special charges for the
current period of $0.4 million compared with a loss in the
calendar 2000 fourth quarter of $3.3 million. Including the
special charges as described below totaling $16.5 million,
Miller Industries reported a net loss of $10.6 million.
The Company periodically reviews the carrying amount of the
long-lived assets and goodwill in both its towing services and
towing and recovery equipment businesses to determine if those
assets may be recoverable based upon the future operating cash
flows expected to be generated by those assets. As a result of
such review during the fourth quarter of calendar 2001, the
Company concluded that the carrying value of such assets in
certain towing services markets and certain assets within the
Company's towing and recovery equipment segment were not fully
recoverable. Accordingly, the Company recorded non-cash
impairment charges of $13.2 million and $3.3 million in its
towing services and towing and recovery equipment segments,
respectively.
For the full calendar year ended December 31, 2001, net sales
were $468.9 million versus $534.8 million during the prior full
calendar year. Operating income before special charges in
calendar 2001 was $9.7 million, compared to a loss before
charges of $0.4 million in calendar 2000. Excluding the special
charges, Miller Industries reported a net loss for calendar 2001
of $2.0 million compared to a net loss before special charges of
$14.7 million in 2000. Including the charges, the Company
reported a loss for 2001 of $13.3 million. As a result of a
similar review during the fourth quarter of its April 30, 2000
fiscal year, the Company at that time recorded non-cash
impairment charges of $69.1 million and $7.7 million in its
towing services and towing and recovery equipment segments,
respectively. Including these charges, the Company reported a
net loss for calendar 2000 of $78.7 million.
Revenue in Miller Industries' towing and recovery equipment
segment was $78.0 million for the calendar 2001 fourth quarter,
a 4.1% increase from $75.0 million a year ago. The Company has
experienced generally stable order rates in the face of
continued challenging business conditions. Operating income for
the towing and recovery equipment segment in the calendar 2001
fourth quarter before charges was $4.0 million, a 107%
improvement from $1.9 million in the year-ago period. The higher
sales, combined with manufacturing efficiencies and continued
expense controls, helped the Company to realize positive
operating leverage and generate the substantially higher
profits.
Within the Company's RoadOne towing services segment, revenue
for the calendar 2001 fourth quarter was $35.4 million versus
$44.7 million in the year-ago period. The revenue decrease in
the recent quarter reflects slower towing volumes due to
unseasonably mild temperatures, the impact on the overall
transportation industry following the events of September 11th,
and the sale of several RoadOne markets as part of the Company's
continued efforts to eliminate underperforming businesses. The
operating loss for the calendar 2001 fourth quarter before
charges was $1.5 million, compared to a loss of $1.3 million in
the prior year period. The disposal of underperforming markets
and continued success in reducing overhead costs served to
substantially offset the impact of the lower revenue at RoadOne.
Selling, general and administrative expenses for the calendar
2001 fourth quarter declined 14% to $14.3 million from $16.6
million a year ago as the Company maintained an aggressive
posture towards expense control. Interest expense in the fourth
quarter of calendar 2001 declined approximately 60% to $1.8
million from $4.5 million in the same period last year as a
function of the substantially lower financing costs associated
with Miller Industries' new financing agreement that was
concluded in July 2001, as well as the effect of lower
prevailing interest rates.
During the first quarter of 2002, the lenders under the
Company's senior credit facility determined that revised asset
appraisal amounts indicated that the Company was over-advanced
on its line of credit, which led to a default under the
Company's subordinated credit facility. The Company has been
operating under short-term forbearance agreements with its
lenders. The Company is currently in discussions with its
lenders regarding a long-term agreement to waive the over-
advance and cure all resulting defaults.
Jeffrey I. Badgley, President and CEO of Miller Industries,
said, "We were pleased with the Company's overall performance in
the fourth quarter and its profitable results before special
charges. During an extremely difficult economic climate
performance of our towing and recovery equipment segment saw
some stabilization in its order rates for equipment, which drove
a resumptioore group of performing markets have rebounded
somewhat from the depressed levels of November and December.
Nevertheless, we will continue to monitor our cost structure to
ensure that we retain the high profitability of the incremental
revenue. In addition, we will continue our efforts to reduce our
debt levels through internally generated funds and the disposal
of underperforming RoadOne operations."
Miller Industries is the world's leading integrated provider of
vehicle towing and recovery equipment and services. The Company
markets its towing services under the national brand name
RoadOne(R) and its towing equipment under a number of well-
recognized brands.
MOHEGAN TRIBAL: Gets Lenders' Consent to Amend Credit Facility
--------------------------------------------------------------
On March 26, 2002, the Mohegan Tribal Gaming Authority received
the requisite consent of its lenders to Amendment No. 3 to its
senior secured credit facility. The amendment reduced the
lenders' commitment from $500.0 million to $400.0 million
effective March 26, 2002, and changed the first scheduled
commitment reduction date to September 30, 2002 from March 31,
2002.
Mohegan Sun Casino, a complex run by the Mohegan Tribal Gaming
Authority for the Mohegan Tribe of Indians of Connecticut. The
Native American-themed facility's 315,000 sq. ft. of gaming
space in the Casino of the Earth (opened in 1996) and Casino of
the Sky (2001) includes more than 6,100 slot machines, 240
gaming and 42 poker tables, and simulcast horse race wagering. A
$1 billion expansion has added a 10,000-seat arena, 300-seat
cabaret, and dozens of stores and restaurants. Gambling revenues
go to after-school and cultural programs for the tribe,
financial assistance to other tribes, and to pay for college
education for tribal members; 25% of the slots revenue goes to
the state. At September 30, 2001, had a working capital deficit
of about $117 million and a total shareholders' equity deficit
of approximately $200 million.
MOSSIMO INC: Enters into Multi-Year Licensing Pact with Target
--------------------------------------------------------------
On March 28, 2000, Mossimo, Inc. entered into a multi-year
licensing agreement with Target Corporation. Under terms of the
Target Agreement, Target has the exclusive United States license
for production and distribution through Target stores of
substantially all Mossimo products sold in the United States,
other than those covered under previously existing Mossimo
licensing arrangements. The Target licensed product line
includes men's, women's, boy's and girl's apparel and footwear,
cosmetics and other fashion accessories such as jewelry,
watches, handbags, belts, neckwear and gloves.
Under the Target Agreement, the Company and Mossimo Giannulli,
its Chief Executive Officer and principal designer, contribute
design services and the Company has approval rights for product
design and marketing and advertising materials. Target
collaborates on design and is responsible for product
development, sourcing, quality control and inventory management
with respect to the Target licensed product line. Target is
obligated to pay the Company a royalty based upon a percentage
of its net sales of Mossimo brand products, with minimum
guaranteed royalties of approximately $8.5 million, $9.6 million
and $9.6 million in the contract years ended January 31, 2002,
2003 and 2004, respectively. Target pays royalties due on net
sales achieved based on percentages defined in the Target
Agreement. The Company is obligated to pay 15% of all royalties
received from Target to a third party who assisted the Company
in connection with entering into the Target Agreement. The
Target Agreement is subject to early termination under certain
circumstances. If Target is current in its payments of its
obligations under the Target Agreement, Target has the right to
renew the Target Agreement, on the same terms and conditions,
for additional terms of two years each.
As a result of entering into the Target Agreement, substantially
all of the Company's revenues are now derived from royalties due
from Target. Royalties due from Target represented approximately
92% and 24% of royalty revenues during the years ended December
31, 2001 and 2000, respectively.
In addition to the Target Agreement, the Company also licenses
its trademarks to third party licensees for use in collections
of eyewear and women's swimwear and bodywear sold in Target
stores in the United States. Currently, Mossimo has four
additional license agreements pursuant to which third party
licensees have the exclusive right to manufacture and distribute
certain products bearing the Company's trademarks according to
designs furnished or approved by the Company in specified
territories outside of the United States. Mossimo products are
characterized by quality workmanship and are targeted towards
the fashion conscious consumer generally age 30 or under.
Total revenues in the year ended December 31, 2001 were $16.7
million compared to $27.6 million in the year ended December 31,
2000.
As a result of entering into the Target Agreement, the Company
made no sales of apparel and related products in 2001. Net sales
of apparel and related products in 2000 were $24.1 million.
Royalty revenues due under the Target Agreement are recognized
as Target achieves sales of the Company's products. Royalty
payments are due on a quarterly basis and range from 1% to 4% of
net sales. The Target Agreement is structured to provide royalty
rate reductions for Target after it achieves certain levels of
retail sales of Mossimo branded products during each contract
year (i.e. each twelve month period beginning February 1). As a
result, the Company's royalty revenues from Target as a
percentage of Target's retail sales of Mossimo branded products
will be highest at the beginning of each contract year and
decrease throughout each contract year as Target reaches certain
retail sales thresholds contained in the Target Agreement.
Therefore, the amount of royalty revenue received by the Company
in any quarter from Target is dependent not only on retail sales
of branded products in such quarter, but also on the cumulative
level of retail sales for the contract year, and the resulting
attainment of royalty rate reductions in any preceding quarters
in the same contract year.
Royalty revenues from the Company's other licensees are
recognized as those licensees achieve sales of the Company's
products. Royalty payments are due on a quarterly basis and
range from 2% to 7% of net sales.
Royalty revenues increased to $16.7 million in 2001 from $3.5
million in 2000. Royalty revenues due under the Target Agreement
amounted to $15.3 million in 2001 compared to $835,000 in 2000
following the initial launch of the Target licensed product line
in the Fall of 2000. Royalty revenues from licensees other than
Target decreased to $1.4 million in 2001 from $2.7 million in
2000. The decrease was primarily due to decreased royalty income
from a licensee who manufactures and distributes the Mossimo
line of women's swimwear and bodywear. As a result of entering
into the Target Agreement, the license agreement in respect of
the Mossimo line of women's swimwear and bodywear was amended
and royalty payments decreased from 6% to 2% of net sales of
women's swimwear and bodywear. The Company received $536,000
from this licensee in 2001 compared to $1.3 million in 2000.
Additionally, the Company received $150,000 and $213,000 in 2000
from two licensees whose license agreements were terminated in
2000.
Total operating expenses decreased to $10.5 million in 2001 from
$19.0 million in 2000.
The Company's net income for the year ended December 31, 2001
was $9.0 million compared to a net loss of $12.3 million for the
year ended December 31, 2000.
Mossimo, Inc. expects that its principal source of liquidity
during the remaining term of the Target Agreement will be its
net operating cash flows. Although no assurances can be given,
the Company anticipates that, in conjunction with its available
cash balances at December 31, 2001, its net operating cash flows
during the remaining term of the Target Agreement, which
primarily will be derived from revenues due under the Target
Agreement, assuming only the minimum guaranteed royalties due
under the Target Agreement, will be adequate to meet the
Company's currently anticipated liquidity needs through the
remaining term of the Target Agreement, in particular its
obligations due under its line of credit agreement, its
obligations to unsecured vendor creditors and its obligations
due under the terminated endorsement agreement with a PGA
professional.
From time to time, Mossimo also considers a number of different
financing alternatives, including the issuance of equity
securities, debt securities and equity-linked securities, as
sources of liquidity.
Founded in 1987, Mossimo, Inc. is a designer of men's, women's,
boy's and girl's apparel and footwear, home textiles, cosmetics,
eyewear and other fashion accessories such as jewelry, watches,
handbags, belts and hair care products. At December 31, 2001,
the company had a total shareholders' equity deficit of about
$700,000.
MULTI-LINK TELECOMMS: Westburg Loan Now Matures on July 31, 2002
----------------------------------------------------------------
On March 19, 2002, Multi-Link Telecommunications, Inc. completed
an agreement with Westburg Media Capital, L.P., its primary
lender as follows:
1. The maturity of Multi-Link's loan with Westburg was
changed from October 31, 2003 to July 31, 2002.
2. Westburg agreed to waive certain defaults by Multi-Link
under the credit facility through July 31, 2002, and to forbear
from exercising any remedies under the credit facility in
connection with such defaults through July 31, 2002.
3. Multi-Link granted Westburg additional security for the
credit facility. Multi-Link pledged to Westburg and granted
Westburg a security interest in all outstanding shares of
capital stock of VoiceLink, Inc. and of One Touch
Communications, Inc. and all of the assets of each of such
subsidiaries.
The foregoing summary is qualified in its entirety by the more
detailed terms and conditions set forth in the Modification and
Forbearance Agreement, Pledge Agreement and Replacement Security
Agreement filed with the Securities & Exchange Commission.
Multi-Link also signed an Agreement for Purchase with Signius
Corporation under which Signius has agreed to acquire all of the
assets of Multi-Link's Telephone Answering Service business in
Indianapolis, IN for $475,000. The parties expect this
transaction to close on or about March 29, 2002.
Multi-Link Telecommunications' messaging systems link office,
home, and mobile phones and include access to basic voice mail,
call routing, integrated voice and fax messaging, and live
answering services. It plans to introduce Unified messaging
services. Multi-Link also offers voice mail and paging services
to consumers. The company has more than 100,000 small to
midsized business and residential customers. The company has
been expanding through acquisitions and has operations in eight
US cities. Glenayre Technologies owns 6.5% of the company.
NTL INC: Completes Sale of Australian Assets for US$448 Million
---------------------------------------------------------------
NTL Incorporated (OTC BB: NTLD; NASDAQ Europe: NTLI), announced
that it has completed the previously announced sale of its
Australian broadcast business to Macquarie Bank for A$850
million (US$ 448 million) in an all cash transaction. The net
proceeds from the sale are approximately A$574 million (US$ 303
million).
As announced on January 31, NTL has appointed Credit Suisse
First Boston, JPMorgan and Morgan Stanley to advise on strategic
and recapitalization alternatives to strengthen the company's
balance sheet and reduce debt.
As previously announced, following the New York Stock Exchange's
announcement on March 28, 2002 that it had withheld trading of
shares of NTL's common stock pending delisting, the Company
expects that the shares will commence trading on the Over the
Counter Bulletin Board ("OTC BB") in the United States as early
as Monday April 1, 2002 and will trade at such time under the
new symbol "NTLD". The Company will provide additional
information to investors if and when available.
NTL offers a wide range of communications services to homes and
business customers throughout the UK, Ireland, Switzerland,
France, Germany and Sweden. Over 20 million homes are located
within the NTL's group franchise areas, covering major European
cities including London, Paris, Frankfurt, Zurich, Stockholm,
Geneva, Dublin, Manchester and Glasgow. NTL and its affiliates
collectively serve over 8.5 million residential cable telephony
and Internet customers.
In the UK, over 11 million homes are located within NTL's fibre-
optic broadband network, which covers nearly 50% of the UK
including, London, Manchester, Nottingham, Oxford, Cambridge,
Cardiff, Glasgow and Belfast. NTL Home now serves around 3
million residential customers.
NTL Business has more than (pound)500 million in annual revenues
and customers include Royal Bank of Scotland, Tesco, Comet, AT&T
and Orange. NTL offers a broad range of technologies and
resources to provide complete multi-service solutions for
businesses from large corporations to local companies.
NTL Broadcast has a 47-year history in broadcast TV and radio
transmission and helped pioneer the technologies of the digital
age. 22 million homes watch ITV, C4 and C5 thanks to NTL's
broadcast transmitters. With over 2300 towers and other radio
sites across the UK, NTL also provides a full range of wireless
solutions for the mobile communications industry.
DebtTraders reports that NTL Incorporated Inc.'s 11.875% bonds
due 2010 (NLI4) are trading between 36.5 and 38.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NLI4for
real-time bond pricing.
NATIONAL STEEL: Gets Okay to Hire Ordinary Course Professionals
---------------------------------------------------------------
National Steel Corporation, and its debtor-affiliates
customarily retain the services of various attorneys,
accountants, tax professionals and other professionals to
represent them in matters arising in the ordinary course of
their business. By this motion, the Debtors seek the Court's
authority to:
(i) retain the ordinary course professionals without the
necessity of a separate, formal retention application
approved by this Court; and
(ii) compensate the Ordinary Course Professionals for post-
petition services rendered.
David N. Missner, Esq., at Piper Marbury Rudnick & Wolfe, in
Chicago, Illinois, relates that the Debtors desire to continue
to employ and retain 60 Ordinary Course Professionals to render
services to their estates similar to those rendered before the
Petition Date. Accordingly, the Debtors request that they be
permitted to employ the Ordinary Course Professionals on terms
substantially similar to those in effect prior to the Petition
Date.
The Debtors propose that they be permitted to pay, without
formal application to the Court by any of the Ordinary Course
Professional, 100% of the interim fees and disbursements upon
the submission of an appropriate invoice. "The invoice should
have in reasonable detail the nature of the services rendered
after the Petition Date so long as such interim fees and
disbursements do not exceed a total of $30,000 per month per
Ordinary Course Professional and no more than $300,000 per
Professional for the duration of these chapter 11 cases," Mr.
Missner says. With respect to Morgan, Lewis & Bockius, Mr.
Missner states that such interim fees and disbursements may up
to be a total of $40,000 per month. Mr. Missner relates that
Morgan Lewis advises the Debtors with respect to employee
benefits and compliance issues. Accordingly, payments to a
particular Ordinary Course Professional would become subject to
Court approval if such payments exceed $30,000 per month or
$300,000 for the entire chapter 11 cases.
In addition, the Debtors request that all Ordinary Course
Professionals be excused from submitting separate applications
for proposed retention. The Debtors however, are providing the
parties in interest with copies of a list of attorneys proposed
to be retained as Ordinary Course Professionals. Mr. Missner
relates that parties in interest are given 20 days from the date
of service of a professional's affidavit to object to the
retention of such professional.
Moreover, the Debtors request that they be authorized to employ
and retain additional Ordinary Course Professionals as
necessary, in the ordinary course of their business without the
need to file individual retention applications and absent a
hearing.
"If the Debtors lose the expertise, experience and institutional
knowledge of these Ordinary Course Professionals, the estates
will incur significant and unnecessary expenses, as the Debtors
will be forced to retain other professionals without similar
background and expertise," Mr. Missner asserts.
* * *
The Court grants the relief requested and rules that:
-- approximately every 120 days, the Debtors shall file a
statement with the Court and serve such statement upon the
U.S. Trustee, counsel to any official committees appointed in
these cases and the counsel to the Debtors' pre-petition and
post-petition lenders; and
-- the statement shall include:
(a) the name of the Ordinary Course Professional;
(b) the aggregate amounts paid as compensation for services
rendered and reimbursement of expenses incurred by the
Ordinary Course Professional during the 120 days; and
(c) a general description of the services rendered by the
Ordinary Course Professional. (National Steel Bankruptcy
News, Issue No. 3; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
NATIONAL STEEL: Gets Final Court Approval of DIP Financing Pact
---------------------------------------------------------------
National Steel said that it has received final Court approval of
the Company's $450 million debtor-in-possession financing
agreement.
The DIP agreement calls for the Company's existing senior
secured bank group, to provide $450 million in post-petition
financing to National Steel to purchase goods and services and
fund the Company's ongoing operating needs during its
restructuring process. The Company filed its voluntary Chapter
11 petition in the U.S. Bankruptcy Court for the Northern
District of Illinois on March 6, 2002.
"The DIP financing agreement will provide more than adequate
financial resources to fund our post-petition vendor and
employee obligations and other operating requirements as
National moves forward in its restructuring," said Hisashi
Tanaka, chairman and chief executive officer. "We are greatly
encouraged by the support of our supplier community and
appreciate the many suppliers who are continuing to ship to us
on normal terms. Their cooperation and support have already
contributed to improvements in our business in the short weeks
since the filing."
Headquartered in Mishawaka, Indiana, National Steel Corporation
is one of the nation's largest producers of carbon flat-rolled
steel products, with annual shipments of approximately six
million tons. National Steel employs approximately 8,400
employees. For more information about the company, its products
and its facilities, please visit the National Steel's Web site
at http://www.nationalsteel.com
NEWPOWER: Begins Trading on Pink Sheets Under New NWPW Symbol
-------------------------------------------------------------
NewPower Holdings, Inc. announced that its securities are now
trading on the over-the-counter Electronic Quotation Service
"Pink Sheets" under the trading symbol "NWPW".
The quote and trading activity can be found by accessing
http://www.pinksheets.comby using the symbol NWPW. Investors
should contact their broker to trade securities on the Pink
Sheets.
The company's announcement follows press releases issued
yesterday whereby the New York Stock Exchange and the company
announced that the Exchange would suspend trading of the
company's securities on the basis that they had been trading
below the minimum level of $1 per share.
NewPower Holdings, Inc. through The New Power Company, is the
first national provider of electricity and natural gas to
residential and small commercial customers in the United States.
The Company offers consumers in restructured retail energy
markets competitive energy prices, pricing choices, improved
customer service and other innovative products, services and
incentives.
ORBITAL SCIENCES: Sets Shareholders' Meeting for April 25, 2002
---------------------------------------------------------------
The Annual Meeting of Stockholders of Orbital Sciences
Corporation, a Delaware corporation, will be held at the
Company's headquarters located at 21839 Atlantic Boulevard,
Dulles, Virginia 20166, on Thursday, April 25, 2002 at 9:00 a.m.
for the following purposes:
1. To elect four directors for three-year terms ending
in 2005.
2. To approve an increase in the number of shares
authorized to be issued under the Orbital
Sciences Corporation 1999 Employee Stock
Purchase Plan from 1,000,000 shares to 3,000,000
shares.
3. To transact such other business as may properly come
before the meeting or any adjournments thereof.
The Board of Directors has set March 15, 2002 as the record date
for the meeting. This means that owners of the Company's common
stock at the close of business on that date are entitled to
receive notice and to vote at the meeting and any adjournments
or postponements thereof.
Orbital develops and manufactures affordable space systems,
including satellites, launch vehicles and advanced space
systems. Orbital is also involved with satellite-based networks
that provide wireless data communications and high-resolution
Earth imagery to customers all around the world. More
information about Orbital can be found at http://www.orbital.com
At December 31, 2001, Orbital Sciences had a working capital
deficit of about $64 million.
OWENS CORNING: Hiring PwC to Replace Arthur Andersen
-----------------------------------------------------
On March 22, 2002, Owens Corning determined to engage
PricewaterhouseCoopers LLP as the Company's independent public
accountants for the 2002 fiscal year, replacing Arthur Andersen
LLP, which served as the Company's independent public
accountants for the 2001 fiscal year. The determination was made
following an extensive evaluation process that considered
proposals from the foregoing firms plus other major audit firms.
The change in independent public accountants was approved by the
Executive Committee of the Company's Board of Directors
(pursuant to delegation of authority from the Board of
Directors), upon the recommendation of the Audit Committee of
the Board of Directors. It is expected that the Board of
Directors will ratify the determination at its next meeting. In
making its determination, the Executive Committee commended
Andersen for its many years of service to the Company and noted
its high regard for the professionalism of the Andersen
personnel that had worked with the Company.
PENTACON: Eyes Prepackaged Chapter 11 to Restructure Debt
---------------------------------------------------------
Pentacon, Inc. (OTC Bulletin Board: PTAC), a leading distributor
of fasteners and other small parts and provider of related
inventory management services, announced that it has reached an
agreement in principle with certain key holders of Pentacon
subordinated debt to significantly de-leverage the Company. The
agreement in principle, if consummated, will significantly
improve Pentacon's capital structure.
Specifically, the Company announced today that it has approved
preliminarily a proposal by an informal negotiating committee
composed of holders of a majority of its $100 million of 12-1/4
percent Senior Subordinated Notes due April 1, 2009 to effect a
recapitalization of Pentacon. The transaction, once completed,
would significantly de-leverage Pentacon's balance sheet and
result in pro forma long-term debt of approximately $95 million,
compared to approximately $160 million Monday. The contemplated
transaction would result in holders of the Notes receiving, in
exchange for all of the $100 million of Notes, approximately 90%
of the common stock of Pentacon and $35 million principal amount
of newly-issued senior notes due 2007. Existing Pentacon
shareholders would receive 10% of the restructured common stock
of Pentacon. Upon consummation of the transaction up to 12.5%
of the common stock of Pentacon would be reserved for issuance
to management. It is anticipated that up to 7.5% will be
granted upon consummation.
In addition, the Company has been involved in extensive
negotiations with the lenders under its senior revolving bank
credit facility and expects to receive a written proposal from
the lenders to extend the maturity of the facility for one year.
The Company anticipates that the new credit facility will
provide it with additional borrowing capacity and liquidity.
The proposal is not a commitment by the lenders, and no
assurances can be made regarding the Company's ability to enter
into a new credit facility with the existing lenders. The
Company also has obtained a commitment from a different senior
lender to provide a new $60 million senior credit facility which
will be available to the Company in the event it does not
proceed with the proposed restructuring of its existing
facility.
Rob Ruck, Chief Executive Officer, said: "The proposed
financial restructuring announced today, once completed, will
provide us with the financial flexibility we need to grow our
business. Pentacon's management team, our senior lenders and
Noteholders are committed to rapidly completing the
restructuring so that the Company can get on with the business
of providing our customers with an ever-increasing array of
inventory management solutions. We greatly appreciate the
confidence that the committee of our Noteholders and our senior
lenders have shown in Pentacon's prospects. We also appreciate
very much the continued support of our vendors, customers and
employees."
The restructuring is conditioned upon a number of factors,
including execution of definitive documentation, completion of
due diligence, final approval of Pentacon's board of directors,
including receipt of a fairness opinion, consent of holders of
95% of the outstanding principal amount of Notes participate in
the exchange offer and other conditions for transactions of this
type. The restructuring is expected to be completed in late May
2002. The parties have agreed to attempt to complete the
transaction without a Chapter 11 filing. If the requisite
Noteholder consents or other conditions are not obtained, the
proposal contemplates consummation of the transaction through a
pre-negotiated Chapter 11 filing. Under either restructuring
scenario, all trade obligations will be assumed and paid in
full. There can be no assurance that the contemplated
recapitalization will be successful or completed.
While the Company has reached the understandings described
above, the following points should be noted: The Company's
lenders under its Senior Credit Facility have notified the
Company that it is not in compliance with several covenants
under the Bank Credit Facility that, if acted upon by the
lenders, would give the lenders the right to accelerate the
indebtedness under the Bank Credit Facility and declare it
immediately due and payable. The Company and the senior lenders
have entered into a forbearance agreement in which the lenders
have agreed not to exercise their remedies under the Bank Credit
Facility until April 29, 2002. Based upon the agreement in
principle with its Noteholders, the Company intends to seek an
additional extension of the forbearance to coincide with the
expected closing of the Note restructuring transaction. In
addition, the scheduled interest payment date for the Company's
Notes was April 1, 2002. The Company did not make the interest
payment. The indenture for the Notes provides a 30-day grace
period. If the failure to pay interest continues for 30 days,
the Notes will be in default, and the holders of the Notes may,
subject to the terms of the indenture, declare all interest and
principal immediately due and payable. A default under the
Notes will also be a default under the Company's Bank Credit
Facility.
Given the inherent uncertainty regarding completion of the
foregoing transactions, the Company's independent auditor, Ernst
& Young, has issued a going concern qualification to its opinion
on the Company's financial statements as of December 31, 2001.
Restructuring and Other Charges
In the fourth quarter of 2001, the Company initiated a
previously announced plan to restructure its business
operations. In addition, the Company conducted an assessment of
its business in the aerospace and telecommunications industries
in view of the impact of recent events, most notably the events
of September 11 and the financial difficulties in the
telecommunication industry. The Company expects decreases in
revenue in the aerospace industry and continued softness in the
telecommunication sector. As a result of our previously
announced business restructuring and these industry specific
conditions, the Company recorded restructuring and other charges
of $47.7 million in the fourth quarter of 2001.
Below is an analysis and discussion of the restructuring and
other charges recognized during the fourth quarter and year-
ended December 31, 2001:
Quarter Ended Year Ended
Description of Charges December 31, 2001 December 31, 2001
(in thousands)
Write-off of excess inventory $33,430 $39,053
Restructuring charges $2,620 $3,932
Professional fees related
to restructuring $966 $966
Write-off of debt issuance costs $633 $633
Valuation allowance
on deferred tax assets $10,001 $10,001
In light of rapidly changing industry conditions following the
events of September 11, the Company performed a comprehensive
review of its inventory during the fourth quarter of 2001 and
has taken a noncash charge of $33.4 million for potentially
excess aerospace ($31.8 million) and telecommunications ($1.6
million) inventory. This charge is based upon a review of the
decreased usage levels being experienced and expected in the
future combined with changes in the mix of the Company's
business. A $5.6 million noncash charge was recognized in the
second quarter of 2001 as a result of offering to sell $9.8
million of slower moving aerospace inventory at substantially
reduced prices in order to take advantage of the cash flows and
tax benefits.
As announced in November 2001, the Company implemented a
restructuring plan to reduce operating expenses. The Company is
closing five distribution facilities and has reduced its
workforce by approximately 14 percent. The Company recognized a
$2.6 million charge in the fourth quarter relating to
implementation of the plan. In the second quarter of 2001, the
Company recorded a $1.0 million charge for the relocation of its
corporate office from Houston, Texas to Chatsworth, California
and a $0.3 million charge for cost reduction initiatives in the
Industrial Group.
As a result of the charges recorded in the fourth quarter, the
Company's ability to realize the benefit of recorded deferred
tax assets is not assured. Accordingly, the Company also
recorded a $10.0 million charge to reduce the carrying value of
deferred tax assets.
In June 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 142,
"Goodwill and Other Intangible Assets". SFAS No. 142, which
must be applied to fiscal years beginning after December 15,
2001, modifies the accounting and reporting of goodwill and
intangible assets. The pronouncement requires entities to
discontinue the amortization of goodwill, reallocate all
existing goodwill among its reporting segments based on criteria
set by SFAS No. 142 and perform initial impairment tests by
applying fair-value-based analysis on the goodwill in each
reporting segment.
At December 31, 2001, the Company's net goodwill was
approximately $125.9 million, and annual amortization of such
goodwill was approximately $3.5 million. The Company expects to
adopt SFAS No. 142 during the first quarter of 2002. The
Company believes the impairment charge upon adoption will be
material, and, based on current market capitalization, could
equate to a substantial amount of its recorded goodwill. The
adoption will not impact the Company's free cash flows or its
EBITDA.
Results of Operations
For the quarter ended December 31, 2001, Pentacon reported
revenues of $53.3 million compared to $67.6 million in the prior
year period. Excluding the previously described restructuring
and other charges, EBITDA (earnings before interest, income
taxes, depreciation, amortization and write-off of debt issuance
costs) was $3.6 million in the quarter, in line with previously
announced expectations, compared to $6.7 million in the
comparable 2000 quarter. After-tax charges of $32.2 million or
$1.90 per share were recorded during the fourth quarter of 2001
for the restructuring and other charges. After-tax charges of
$1.2 million or $0.07 per share were recorded during the prior
year quarter to reflect actions taken in the Company's Aerospace
Group to exit certain non-core and underperforming operations.
After the above charges, Pentacon reported a net loss of $48.4
million for the fourth quarter of 2001. This compares with a
net loss in the prior year's fourth quarter of $1.2 million.
Revenues for the year ended December 31, 2001 were $259.4
million compared to revenues of $283.7 million in the prior
year. Excluding restructuring and other charges, EBITDA was
$23.7 million in 2001 compared to $28.1 million in 2000. For
the year ended December 31, 2001, Pentacon reported a net loss
of $1.7 million excluding restructuring and other charges.
Including after-tax charges of $1.2 million, Pentacon reported a
net loss in 2000 of $0.9 million.
Aerospace Group
Pentacon Aerospace Group's fourth quarter revenues decreased 17
percent to $25.0 million and operating income before charges
declined 20 percent to $2.1 million compared to the prior year
period. The reduction resulted from the overall reduction in
aerospace activity levels resulting primarily from the events of
September 11 and the related cancellation or delay of $5.4
million of orders during the fourth quarter. Compared to the
September 30, 2001 quarter, revenues declined 25 percent and
operating income declined 52 percent.
Full year revenues in the Aerospace Group were $129.6 million, a
5 percent increase from 2000. The Aerospace Group's 2001
operating income before charges increased $2.0 million or 17
percent compared to the prior year period. The revenue
increases in the first nine months resulted primarily from the
implementation of new contracts.
Industrial Group
Pentacon Industrial Group's revenues decreased $9.1 million or
24 percent from the prior year quarter. The group experienced
decreased demand from its communications, power generation,
heavy-duty truck and certain transportation customers. Fourth
quarter operating income before charges decreased $2.5 million
or 61 percent primarily as a result of the sales decline and the
inability to reduce costs as quickly as revenues declined.
Pentacon Industrial Group's revenue for the year ended December
31, 2001 decreased 19 percent to $129.7 million and operating
income before charges decreased 39 percent to $10.2 million.
The revenue and operating income decreases primarily relate to
decreased revenues from telecommunications and certain
transportation markets.
Operational Comments
Rob Ruck, Chief Executive Officer, commented, "The year 2001 was
a turbulent one for the country as well as for our Company.
Given the consequences of the events of September 11 on our
fourth quarter, I am very proud of our organization's ability to
react quickly to changing events. Specifically, we moved
promptly to reduce operating expenses, modify our inventory
buying methodologies, preserve our customer relationships, work
with our vendors to reschedule hardware shipments, reduce our
senior credit facility debt balance and add several new
contracts to our business portfolio. All things considered, the
Company and its employees turned in a stellar effort given the
business environment with which we were confronted. The
implementation of these and other restructuring steps has
brought our cost structure in line with current business
operations. Subject to completion of the financial
restructuring, Pentacon continues to see 2002 EBITDA (excluding
the expenses related to financial restructuring) consistent with
2001 EBITDA (excluding restructuring and other charges)."
Headquartered in Chatsworth, California, Pentacon is a leading
distributor of fasteners and other small parts and provider of
related inventory management services. Pentacon presently has
30 distribution and sales facilities in the U.S., along with
sales offices in Europe, Canada, Mexico and Australia. For more
information, visit the Company's Web site at
http://www.pentacon.com
PHARMCHEM INC: Closes Sale of UK-Based Unit for $9.9 Million
------------------------------------------------------------
PharmChem Inc. (Nasdaq:PCHM) completed the sale of Medscreen,
Ltd., its London-based wholly owned subsidiary for approximately
$9.9 million. The proceeds will be used to pay down debt and for
general corporate purposes. The transaction will be recorded in
the first quarter of 2002.
Because of the management time required to negotiate and close
the aforementioned sale, the Company has filed an automatic 15-
day extension with the Securities and Exchange Commission to
submit its Annual Report on Form 10-K. The Company expects to
announce its fiscal year 2001 results on or about April 12,
2002.
PharmChem is a leader in the field of providing services to
clients seeking to detect and deter the use of illegal drugs.
PharmChem operates a forensic drug-testing laboratory in Haltom
City, Texas.
* * *
As reported in the March 7, 2002 edition of Troubled Company
Reporter, PharmChem Inc. (Nasdaq:PCHM) received a letter from
The Nasdaq Stock Market, Inc. indicating that the Company was
out of compliance with the $5 million minimum market value
requirement for its publicly held shares, as stated in
Marketplace Rule 4450(a)(2). Publicly held shares exclude shares
held directly or indirectly by any officer or director of the
Company and by any person who is the beneficial owner of more
than 10% of the total shares outstanding.
The letter provided PharmChem with 90 calendar days, or until
May 15, 2002, to come into compliance with this rule, which
would require the company's publicly held shares to maintain a
minimum market value of $5 million for a minimum of 10
consecutive trading days during that period. If PharmChem fails
to meet this requirement, it will become subject to delisting
from The Nasdaq National Market, at which the time the company
can appeal the delisting to the Nasdaq Listing Qualifications
Panel. In addition, the company also has the option of applying
to transfer its securities to The Nasdaq SmallCap Market, where
it also would have to satisfy continued inclusion requirements
for that market. Market value of publicly held shares on The
Nasdaq SmallCap Market must be $1 million or more.
PHOTOWORKS INC: Ziegler Capital Discloses 16.7% Equity Stake
------------------------------------------------------------
Ziegler Capital Group LLC beneficially owns 3,333,000 shares of
the common stock of PhotoWorks, Inc. representing 16.7% of the
outstanding common stock of the Company. Ziegler Capital has
the sole power to vote or to direct the vote of 1,725,000 such
shares and the sole power to dispose or to direct the
disposition of the 3,333,000 shares.
Since the securities noted above are held in discretionary
accounts with Ziegler Capital Group manages for the benefit of
its clients Ziegler disclaims beneficial ownership of all the
above securities. Clients for whom Ziegler Capital Group acts
as investment adviser may withdraw dividends or the proceeds of
sales from the accounts managed by Ziegler. No single client
account owns more than 5% of the class of securities.
Formerly Seattle FilmWorks, the company offers -- primarily
through regular and electronic mail -- 35mm film, photo
processing, and services that allow users to store images on
disks, CDs, and online. It also provides software and services
that enable users to turn photos into digital albums, screen
savers, and cards. In addition to selling via mail-order,
PhotoWorks operates through some 35 retail stores in Washington
and Oregon. Started in 1976, PhotoWorks is transforming itself
into an online photo catalog and provider of imaging services in
light of slumping sales and the growing popularity of digital
cameras. CEO Gary Christophersen owns about 5% of the company.
At June 30, 2001, the company had a working capital deficit of
about $5.5 million.
PIERRE FOODS: Begins Trading on OTC Bulletin Board Today
--------------------------------------------------------
Pierre Foods, Inc. (Nasdaq: FOOD) announced that its common
stock will be delisted from the Nasdaq Small Cap Market at the
opening of business on April 4, 2002, but is anticipated to be
eligible to trade on the Over-the-Counter Bulletin Board (OTCBB)
at that time. Prices for OTCBB stocks are accessible at
http://www.otcbb.com Pierre Foods will continue to comply with
the periodic reporting requirements of the Securities Exchange
Act of 1934.
Nasdaq advised Pierre Foods that the decision to delist Pierre
Foods' common stock was based on the company's failure to hold
an annual meeting of shareholders for the fiscal year ended
March 3, 2001, as required by Nasdaq Marketplace Rules. Pierre
Foods postponed this meeting in anticipation of a special
meeting of shareholders to consider the proposed management
buyout announced in March 2001. Pierre Foods will not appeal
Nasdaq's decision. Pierre Foods owns and operates food
processing facilities in Cincinnati, Ohio and Claremont, North
Carolina. The company is a leading manufacturer of fully cooked
branded and private-label protein and bakery products and is
believed to be the largest integrated producer of microwaveable
sandwiches. The company provides specialty beef, poultry and
pork products formed and portioned to meet specific customer
requirements. It sells primarily to the foodservice market and
serves leading national restaurant chains, a majority of primary
and secondary schools, vending, convenience stores and other
niche markets.
POLAROID CORP: Court Fixes May 31, 2002 as Claims Bar Date
----------------------------------------------------------
The Official Committee of Retirees complains that Polaroid
Corporation, and its debtor-affiliates do not consider the
Retirees as creditors in these cases. Scott Salerni, Esq., at
Greenberg Traurig, LLP, in Wilmington, Delaware, contends that
since the Court has not yet determined whether the Debtors'
attempt to terminate various retiree benefits on the eve of
bankruptcy were effective or ineffective, notice of the Bar Date
should be provided directly to all Retirees as well.
Mr. Salerni proposes that, if it is determined by the Court that
the Retirees do not have any pre-petition claims for retiree
benefits, the Debtors can simply object to, and seek to expunge,
any Retiree claims that have been filed. On the other hand, Mr.
Salerni adds, if the Retirees have valid pre-petition claims,
due process requires actual, written notice of the Bar Date to
all Retirees, given that the Debtors know all the Retirees.
Accordingly, Mr. Salerni argues that the Retirees should be
provided with the notice on the Bar Date.
* * *
Judge Walsh sets the General Bar Date on May 31, 2002. (Polaroid
Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
PRIME RETAIL: Sells Edinburgh Outlets to Pay Down Mezzanine Loan
----------------------------------------------------------------
Prime Retail, Inc. (OTC Bulletin Board: PMRE, PMREP, PMREO)
announced the completion on April 1, 2002 of the sale of Prime
Outlets at Edinburgh, an outlet center located in Edinburgh,
Indiana consisting of 305,000 square feet of gross leasable
area. The Edinburgh Center was sold to Chelsea Property Group,
Inc. for cash consideration of $27.0 million.
The net cash proceeds from the sale were $9.6 million, after
repayment in full of $16.3 million of existing first mortgage
indebtedness on the Edinburgh Center and closing costs and fees.
The Company used these net proceeds to make a mandatory
principal pay down of $9.2 million on a mezzanine loan obtained
in December 2000 from Fortress Investment Fund LLC and Greenwich
Capital Financial Products, Inc. in the original amount of $90.0
million. As a result of this and other pay downs, the remaining
outstanding principal balance of the Mezzanine Loan is currently
$37.9 million.
As previously announced, under the terms of a modification to
the Mezzanine Loan completed on January 31, 2002, the Company is
required to make mandatory principal prepayments with net
proceeds from asset sales or other capital transactions of not
less than (i) $8.9 million by May 1, 2002, (ii) $24.4 million,
inclusive of the $8.9 million, by July 1, 2002 and (iii) $25.4
million, inclusive of the $24.4 million, by November 1, 2002.
The July 1, 2002 deadline may be extended to October 31, 2002
provided certain conditions are met to the Lender's
satisfaction.
As a result of the $9.2 million pay down of the Mezzanine Loan
with net proceeds from the sale of the Edinburgh Center, the
Company has satisfied the May 1, 2002 mandatory principal
repayment requirement. The Company is now required to complete
additional asset sales or other capital transactions generating
net proceeds aggregating $15.2 million by July 1, 2002 (subject
to extension as indicated above) and $16.2 million (inclusive of
the $15.2 million) by November 1, 2002. Any failure to satisfy
these future mandatory principal prepayment requirements or
other payments within the specified time periods would
constitute a default under the Mezzanine Loan.
Prime Retail is a self-administered, self-managed real estate
investment trust engaged in the ownership, leasing, marketing
and management of outlet centers throughout the United States
and Puerto Rico. Prime Retail's outlet center portfolio
currently consists of 43 outlet centers in 25 states and Puerto
Rico totaling approximately 12.1 million square feet of GLA.
The Company also owns two community shopping centers totaling
227,000 square feet of GLA and 154,000 square feet of office
space. Prime Retail has been an owner, operator and a developer
of outlet centers since 1988. For additional information, visit
Prime Retail's Web site at http://primeretail.com
RUSSELL: S&P Assigns Low-B $375M Facility & $200M Notes Ratings
---------------------------------------------------------------
On April 2, 2002, Standard & Poor's assigned a corporate credit
rating of 'BB+' to apparel manufacturer Russell Corp. It also
assigned ratings to the company's proposed $375 million senior
secured credit facility and proposed $200 million senior
unsecured note issue at 'BB+' and 'BB' respectively.
The ratings reflect Atlanta, Georgia-based Russell's
participation in the highly competitive and volatile apparel
industry, which is subject to changing consumer preferences and
a consolidating retailer base. Somewhat mitigating these factors
are the company's well known brand name, its strong market
position, and its moderate financial profile.
Russell is a manufacturer and marketer of primarily men's and
boy's active wear, including sweatshirts, sweatpants, sports
uniforms, and basic "blank" items for imprinting. In its core
segments, the company competes with larger and financially
stronger players such as Nike and Sara Lee's apparel division.
Suppliers in the apparel industry are facing increased pricing
pressure as retailers, like Wal-Mart, have grown in size and
have significant leverage when dealing with its vendors.
Additionally, more companies are shifting production to low-cost
areas such as the Far East and Latin America, but these savings
eventually get passed on to the retailer and the consumer.
Because of the basic nature of its products, Russell is more
challenged with having to stand out amongst its competitors than
those companies with signature product. Russell must continually
distinguish itself through superior service and competitive
pricing, as well as brand appeal in order to maintain its
relevance with retailers and consumers alike. However, Standard
& Poor's believes there is little fashion risk associated with
Russell's overall product portfolio.
The company is completing its multiyear restructuring, which
began in 1998, aimed at transforming it into a more marketing-
based organization from a manufacturing-based one. Russell has
been in operation since 1902 and, despite its historical
manufacturing focus, its brand name is one of the most
recognized in sports-related apparel and active wear; the
company holds generally No.1 or No.2 positions in its
categories. Standard & Poor's believes that Russell's brands are
a competitive advantage and expects the company to employ more
"pull" marketing strategies to draw in more consumers. As the
company realizes savings from lowering its manufacturing costs,
this frees up resources for brand support.
Russell possesses the size and scale necessary to service the
large, national retail accounts. These customers have been
favoring the bigger suppliers in the industry, and Russell is
well positioned to maintain and grow its business, while smaller
companies are at a disadvantage.
Credit measures are appropriate for the rating. Standard &
Poor's estimates total debt to EBITDA and EBITDA coverage of
interest expense were about 2.6 times and 4.2x, respectively,
for 2001. The company generates solid free cash flow that is
expected to cover manageable debt maturities over the next
several years. Adequate financial flexibility for seasonal
working capital needs is provided by a new $325 million
revolving credit facility.
The new bank facility, which consists of a $325 million 5-year
revolving credit facility and a $50-million term loan due in
2007, is rated the same as the corporate credit rating. The
facility is secured by substantially all of the company's
domestic assets, which provides a strong measure of protection
to lenders. However, based on Standard & Poor's simulated
financial distress scenario, which severely discounted the
company's cash flows, it is not clear that the distressed
enterprise value would be sufficient to cover the total credit
facility.
The senior unsecured notes are rated one notch below the
corporate credit rating, due to the material amount of secured
debt in the capital structure, which ranks senior to the notes.
Outlook
The stable outlook anticipates that Russell will continue to
maintain its strong market positions. Standard & Poor's expects
financial performance to remain commensurate with the current
rating.
SL INDUSTRIES: Seeks Cure & Waiver of Defaults Under Credit Pact
----------------------------------------------------------------
Sl Industries, Inc. (NYSE & PHLX:SL) announced that its net loss
for the year ended December 31, 2001 was $10,650,000, or $1.87
per diluted share. Net losses for the year included a loss,
after tax, of $3,947,000, from discontinued operations and pre-
tax nonrecurring charges aggregating $11,078,000, consisting of
restructuring charges of $3,868,000 related to closing down two
facilities and laying off 810 employees, inventory write-offs of
$2,940,000, and asset impairment write-offs of $4,270,000.
Discontinued operations included a realized loss of $2,745,000,
pre-tax, upon the sale of the assets of SL Waber.
For the year ended December 31, 2000, net income was $1,700,000,
which included a gain of $875,000, from the settlement of a
class action suit with one of the Company's life insurance
carriers.
Net sales for 2001 were $138.5 million, compared with net sales
of $148.4 million for the prior year (excluding sales at SL
Waber, a discontinued operation).
For the three months ended December 31, 2001, the net loss was
$3,107,000. This included pre-tax charges at Condor D.C. Power
Supplies in connection with the costs of closing down the
manufacturing facility in Reynosa, Mexico ($1,102,000) and
impairment charges relating to the Todd Products acquisition
($4,145,000). For the fourth quarter of 2000, the net loss was
$373,000, which included a loss of $1,601,000, after tax, for
discontinued operations.
For the 2001 fourth quarter, net sales were $34,438,000,
compared with net sales of $35,638,000 for the same period in
the prior year (excluding sales at SL Waber, a discontinued
operation).
As previously announced, at the Annual Shareholder Meeting held
on January 22, 2002, in a contested election, shareholders
elected five new directors and re-elected three incumbent
directors to the Company's Board. Shortly after the annual
meeting, Warren Lichtenstein was elected Chairman of the Board
and Chief Executive Officer, and Glen Kassan was elected
President of the Company. The former Chairman of the Board and
Chief Executive Officer, Owen Farren, was not elected to the
Board and has subsequently been terminated as an officer and
employee of the Company. All of the senior divisional and most
of the corporate management teams are continuing in their
respective positions.
Shortly after the annual meeting, two of the incumbent
directors, Charles T. Hopkins and J. Edward Odegaard, resigned
as directors, creating two vacancies on the Board of Directors.
On March 8, 2002, Richard A. Smith was appointed to the
Company's Board of Directors. Smith is a private investor based
in New York. Previously, he served in various management
positions with Morgan Stanley Inc., most recently as co-head of
the Worldwide Institutional Equity Division. During his 16-year
career with Morgan Stanley, Mr. Smith was a Managing Director,
served as a member of the Management Committee and as worldwide
head of the International Equity, Convertible Bond and
Derivative Products Department. Smith received a B.A. from Yale
University in 1961, and is a member of the Board of Directors of
CMT Technologies.
Warren Lichtenstein, Chief Executive Officer, commented, "The
2001 financial results reflect the challenges faced by the
Company in the semiconductor and telecommunications markets last
year. In particular, the acquisition of Todd Products Corp. and
the performance of SL Waber, Inc. contributed to substantially
all of the Company's losses over the past two years. With
respect to the Todd Products division, the Company's Condor D.C.
Power Supplies subsidiary instituted layoffs, closed two
facilities, consolidated manufacturing operations and wrote-off
intangible assets and component and finished goods inventory.
The Company's SL Waber subsidiary was sold last year at a loss.
Substantially all of the costs related to these restructuring
initiatives were charged or paid in 2001 and should not have a
significant affect on the results of operations this year."
Lichtenstein continued, "Since assuming control of the Board of
Directors and the management of SL Industries, the new directors
have been working with employees and executives throughout the
Company to review ongoing operations and to establish new
budgets and projections for 2002, which includes the anticipated
receipt of tax refunds totaling approximately $5,500,000 during
2002. We continue to work with Credit Suisse First Boston to
explore a sale strategy to maximize shareholder value. We expect
to develop and begin implementing our new corporate strategy by
the end of April and plan on sharing that strategy with our
shareholders.
"As previously announced, the Company has received a notice from
its lenders stating that SL has defaulted under its revolving
credit facility due to its failure to meet the scheduled debt
reduction to $25.5 million due March 1, 2002. Currently, the
Company has approximately $26.2 million outstanding under its
line of credit. Additionally, the Company expects that it will
not be able to meet earnings covenants under the bank loan due
to (a) the write-off of certain intangibles at its Condor
subsidiary during the fourth quarter of 2001 and (b) the
operating charges incurred in connection with the charge of
change-in-control payments and proxy cost expenses incurred in
the first quarter of 2002. The opinion of Arthur Andersen LLP
regarding the Company's 2001 financial statements contains a
qualification with respect to the Company's ability to continue
as a going concern, which qualification, if not acceptable to
the Company's lenders, would be a violation of a financial
reporting covenant.
"We are in discussions to cure the default and to obtain a
waiver of the subject covenants. As we are now in the midst of
discussions, there can be no assurance that we will be able to
obtain waivers of the default."
SL Industries, Inc. designs, manufactures and markets Power and
Data Quality (PDQ) equipment and systems for industrial,
medical, aerospace, telecommunications and consumer
applications. For more information about SL Industries, Inc. and
its products, please visit the Company's Web site at
http://www.slpdq.com
SMART CHOICE: James Edward Ernst Discloses 79.8% Equity Stake
-------------------------------------------------------------
James Edward Ernst beneficially owns, in the aggregate,
6,857,907 shares of Smart Choice Automotive Group, Inc.'s common
stock, thus owning 79.8% of the issued and outstanding common
stock of the Company. Mr. Ernst possesses sole voting and
dispositive powers with respect to all of the securities of the
Company beneficially owned by him.
Effective March 11, 2002, Mr. Ernst purchased from Crown, in a
privately negotiated transaction, all of the 6,857,907 shares of
common stock of Smart Choice Automotive Group, Inc. held by
Crown for an aggregate purchase price of $100.00. Mr. Ernst
purchased with personal funds from Crown Group, Inc., in a
privately negotiated transaction. Prior to this transaction,
Mr. Ernst did not own any securities of the Issuer.
The acquisition effected by Mr. Ernst, the Chief Executive
Officer of Smart Choice Automotive Group, Inc. was for the
purposes of investment and to exercise influence and control
over the management of the Company. The Company presently has no
ongoing operations, and Mr. Ernst is overseeing the winding up
of the business of the Smart Choice. Mr. Ernst expects that all
members of the Board of Directors of the Company, other than
himself, will resign in the near future, and that he will cause
Larry Kiem, the Chief Financial Officer of the Company, to be
elected to the Board of Directors of Smart Choice Automotive
Group, Inc.
Smart Choice Automotive Group is the brains behind PAACO and
First Choice used car dealerships. The beleaguered firm sold off
nearly a dozen dealerships and its Corvette parts business
before 1999, when Crown Group -- owner of the PAACO group of
Texas dealerships -- acquired control of Smart Choice and its
remaining used-car dealerships. The company operates 10 used-car
dealerships under the First Choice name in Florida as well as
the 12 PAACO locations in Texas. It buys cars at auto auctions
and inspects and repairs them before placing them on its lots.
The company generally targets subprime customers with limited or
troubled credit histories. Crown Group owns about 70% of the
company.
As reported in the December 28, 2001 edition of Troubled Company
Reporter, that Smart Choice Automotive Group, Inc.'s lender
foreclosed upon certain collateral of the Company's Florida
based subsidiaries, and the company granted its lender an option
to purchase its PAACO Subsidiary.
Smart Choice incurred a net loss of $33.1 million for the three
month period ended October 31, 2001 as compared to net income of
$0.8 million for the same period in the prior fiscal year. The
decrease is principally the result of a $30 million write down
of certain assets that were deemed impaired in connection with
the foreclosure by Smart Choice's lender of certain Florida
based assets and a decision to wind-down Smart Choice's Florida
based operations.
SOLID RESOURCES: Files for CCAA Protection in Canada
----------------------------------------------------
Solid Resources Ltd (CDNX: SRW) has announced that on March 28,
2002 it successfully applied for and received an order from the
Court of Queens Bench of Alberta for protection under the
Companies' Creditors Arrangement Act (C.C.A.A.).
Solid was forced to seek protection after three secured note
holders demanded repayment. As a result of these demands the
National Bank demanded repayment of its loans.
The C.C.A.A. protection order applies to Solid and its operating
subsidiary, Solid Production Services Ltd. The order will
allow Solid and Production time to structure a plan that will
enable the two entities to meet the demands of their creditors
through refinancing with new lending, equity financing or the
sale of various business units either as a going concern or
liquidation basis.
The C.C.A.A. protection order will also allow Solid and
Production, with the support of the National Bank, to continue
as a viable operation and allow for the reorganization of
affairs to the benefit of not only Solid but also the creditors.
The order will also protect the jobs of Solid's employees.
Solid and Production entered into a C.C.A.A. agreement with its
banker, part of which involved the execution of a Consent
Receivership Order to be held and utilized by the bank within
the terms of the agreement.
The Court of Queens Bench of Alberta has appointed KPMG as
monitor.
STATIONS HOLDING: Inks Pact to Sell Assets to Gray for $500MM
-------------------------------------------------------------
Gray Communications Systems, Inc. (NYSE: GCS GCS.B) of Atlanta,
Georgia and Stations Holding Company, Inc., the parent company
of Benedek Broadcasting Corporation, jointly announced they have
executed a Letter of Intent calling for Gray to acquire all of
the capital stock of Stations Holding Company for $500 million
in cash plus proceeds from selected pending station
divestitures.
"We at Gray are delighted to add Benedek's television stations
and senior management to our company," commented Robert Prather,
Executive Vice President - Acquisitions, of Gray. "Anyone
familiar with affiliated television station groups targeting
mid-sized markets sees that Gray and Benedek have a great deal
in common -- this is about as perfect a 'fit' as one can come up
with in the station business."
Benedek was founded and built by its Chairman and Chief
Executive Officer, A. Richard Benedek and its President, K.
James Yager. The company currently operates 22 television
stations, which produced in 2001 net revenue of approximately
$138.1 million and broadcasting cash flow of approximately $47.5
million (excluding Wheeling, West Virginia). Benedek's station
group of affiliated stations -- 10 CBS, 7 ABC, 4 NBC and 1 FOX -
- are located in 21 markets. Benedek has previously announced
that its Wheeling, West Virginia station will be sold in a
separate pending transaction.
"We have a superb management team and a strong group of stations
with high margins," commented Richard Benedek. "The sale to
Gray is an excellent outcome. The two groups have always been a
natural fit."
"We have always focused on mid-sized markets where we can
develop stable cash flows and service our viewers and
advertisers with highly rated local news, community-oriented and
network programming," said Jim Yager, Benedek's President, who
will join the combined Gray/Benedek broadcasting group. "Gray
has similar operating characteristics. Furthermore, the
geographic proximity of our two station groups offers compelling
regional operating opportunities."
Gray owns 13 stations serving 11 markets, of which 10 are
affiliated with CBS and 3 with NBC. Gray is publicly traded on
the New York Stock Exchange and reported total net revenue of
$156.3 million in 2001 and media cash flow of approximately
$53.1 million, including $40.8 million from the television
station division. In addition to its television station
division, Gray operates four local daily newspapers located in
Georgia and Indiana.
The combined station groups will comprise a total of 35 stations
with 20 CBS affiliates, 7 NBC affiliates, 7 ABC affiliates and 1
FOX affiliate. The combined station group will have 24 stations
ranked #1 in viewing audience within their respective markets.
The Company will reach in excess of 6% of total U.S. TV
households. In addition, with 20 CBS affiliated stations, it
will be the largest non-Network owner of CBS affiliates in the
country. Based on results for the year ended December 31, 2001,
the combined Gray and Benedek television stations produced
approximately $244.5 million of revenue and $88.3 million of
broadcast cash flow. Including Gray's publishing and other
operations, the combined Gray and Benedek operations for 2001
produced approximately $294.4 million of revenue and $100.6
million of media cash flow.
The combined station group will have a strong presence in the
Southeast, Midwest, Great Lakes and Texas areas of the United
States. The station locations, some of which are in adjacent
markets, form natural geographic clusters.
Gray intends to finance the acquisition by issuing a combination
of debt and equity securities. Gray is considering raising the
equity financing through a secondary public offering of the
company's common stock.
The acquisition is subject to execution of a definitive
agreement, which the companies expect to execute soon, as well
as approval by the Federal Communications Commission of the
transfer of control of Benedek's television licenses. The
transaction is also subject to approval of the Delaware
bankruptcy court with jurisdiction over the reorganization of
Stations Holding Company, Inc. The transaction is expected to
close by the fourth quarter of 2002.
STATIONS HOLDING: Seeks OK to Tap Pachulski Stang as Co-Counsel
---------------------------------------------------------------
Stations Holding Company, Inc. asks the U.S. Bankruptcy Court
for the District of Delaware for authority to retain and employ
Pachulski Stang Ziehl Young & Jones PC as Co-Counsel in its
chapter 11 case, nunc pro tunc to March 22, 2002.
The Debtor agrees to pay Pachulski Stang at the Firm's customary
hourly rates:
a) Laura Davis Jones $550 per hour
b) Michael Seidl $305 per hour
c) Curtis Hehn $280 per hour
d) Christopher Lhuilier $260 per hour
e) Camille Ennis $110 per hour
Pachulski Stang is expected:
a) to provide legal advice with respect to its powers and
duties as debtor-in-possession in the operation and
reorganization of its business and its properties;
b) to prepare and pursue confirmation of a reorganization
plan and approval of a disclosure statement;
c) to prepare on behalf of the Debtors necessary
applications, motions, answers, orders, reports and
other legal papers;
d) to appear in Court and to protect the interests of the
Debtor before the Court; and
e) to perform all other legal services for the Debtor which
may be necessary and proper in these proceedings.
Stations Holding Company, Inc. is a holding company with minimal
operations other that from its non-debtor, wholly-owned
subsidiary, Benedek Broadcasting Corporation. Benedek
Broadcasting owns and operates 23 television stations located
throughout the United States. The Company filed for chapter 11
protection on March 22, 2002. Laura Davis Jones, Esq. at
Pachulski, Stang, Ziehl Young & Jones and James H.M. Sprayregen,
Esq. at Kirkland & Ellis represent the Debtor in its
restructuring efforts. When the Company filed for protection
from its creditors, it listed estimated debts and assets of more
than $100 million.
SUNRISE TECHNOLOGIES: Inks Silicon Valley Extension to Year-End
---------------------------------------------------------------
Sunrise Technologies International, Inc. (OTC Bulletin Board:
SNRS) announced that it has signed an extension with Silicon
Valley Bank until December 31, 2002. The extension of the
repayment due date is subject to several conditions, including
(i) the agreement of Sunrise's unsecured creditors to the
restructuring proposal described in the Form 8-K filed with the
Securities and Exchange Commission on March 18, 2002; (ii) the
completion of the merger with SBH Holdings LLC described in that
Form 8-K; and (iii) the company obtaining a commitment for new
equity financing of at least $5 million by September 30, 2002;
in addition to other conditions. Silicon Valley Bank is owed
approximately $3.5 million and has a first lien on all tangible
assets of the company and a co-equal first lien of up to $1.5
million on Sunrise's intellectual property.
David Brewer, Manager of Sunrise, said: "I am very pleased that
our largest secured creditor has finalized its agreement to go
along with our restructuring plan. Our discussions with the
other secured creditors are almost complete. I am hopeful that
the company's unsecured creditors will also get behind the
restructuring plan, as it is their best hope for a recovery of
their claims, in my opinion. With the cooperation of all the
creditors, we will work to build Sunrise into a financially
successful company. I am very committed to this process and
encourage all creditors to respond to the restructuring proposal
as quickly as possible."
Sunrise's proposed restructuring, if accepted by the creditors,
would convert 97% or more of the company's unsecured debts into
junior preferred stock. Any creditors with questions should
contact Anesti Management at 650-688-5858. (fax no 650-566-
1251).
Sunrise Technologies International, Inc. is a refractive surgery
company based in Fremont, California, that has developed holmium
YAG laser-based systems that utilize a patented process for
shrinking collagen developed by Dr. Bruce Sand (the "Sand
Process") in correcting ophthalmic refractive conditions.
TANDYCRAFTS: Wants Lease Decision Deadline Moved though June 14
---------------------------------------------------------------
Tandycrafts, Inc. and its affiliated debtors seek an order from
the U.S. Bankruptcy Court for the District of Delaware giving
them more time to decide which unexpired nonresidential real
property leases to assume, assume and assign, or reject. The
Debtors ask the Court to extend their decision period to
June 14, 2002.
The Debtors relate that their management and their retained
professionals have been consumed with addressing pressing
administrative and operational matters which eats up significant
expenses on the Debtors' estates. As a result, the Debtors have
been unable to complete a comprehensive review and analysis of
the leases.
Currently, the Debtors are in discussions regarding the terms of
a plan of reorganization and alternative transactions, and have
not yet been able to assess fully the importance of each Lease
to their reorganization efforts. The Debtors require additional
time to properly determine which Leases will prove valuable or
burdensome.
Tandycrafts, a leading manufacturer and marketer of picture
frames, mirrors and other wall decor products, filed for chapter
11 protection on May 15, 2001. Mark E. Felger, Esq., at Cozen
and O'Connor, represents the company in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed assets of $64,559,000 and debts of
$56,370,000.
TOKHEIM: Lender Group Agrees to Modify Certain Loan Covenants
-------------------------------------------------------------
Tokheim Corporation (OTCBB:THMC) has reached an agreement with
its lenders to modify certain loan covenants so that previously
existing events of default no longer exist. This agreement with
its lenders, together with the resolution of certain other
issues, will enable the Company to proceed with the filing of
the Annual Report on Form 10-K.
"The successful conclusion of these discussions with our lending
group attests to the positive working relationship that exists
between our Company and our lenders," said John S. Hamilton, the
Company's President and CEO. "Issues will come up from time to
time, and we will work closely with our lenders to ensure these
issues have no effect on our ability to improve our business and
serve our customers." In addition to the referenced agreement
reached with its lenders, the Company continues to negotiate
with its lenders to revise its debt and equity structure. The
Company believes the outcome of these negotiations, if
successful, will result in an improvement of its financial
strength.
During fiscal 2000, the Company operated under the protection of
a Bankruptcy Court for only fifty-four (54) days, emerging from
this supervision on October 20, 2000. Since that date, the
stakeholders of Tokheim, including employees, lenders, customers
and vendors, have worked cooperatively and diligently to meet
the challenges facing the Company. This cooperative spirit will
be an essential component for the Company's success in 2002 and
beyond.
Tokheim Corporation, based in Fort Wayne, Indiana, is the
world's largest producer of petroleum dispensing devices.
Tokheim Corporation manufactures and services electronic and
mechanical petroleum dispensing systems. These systems include
petroleum dispensers and pumps, retail automation systems (such
as point-of-sale systems), dispenser payment or "pay-at-the-
pump" terminals, replacement parts, and upgrade kits.
U.S. WIRELESS: Asks Court to Stretch Exclusive Period to May 28
---------------------------------------------------------------
U.S. Wireless Corporation and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to further extend
their exclusive periods to file a plan of liquidation and
solicit acceptances of that plan. The Debtors want their
exclusive filing period to run through May 28, 2002 and their
exclusive solicitation period extended through July 29, 2002.
The Debtors relate to the Court that since the Petition Date,
they have been actively involved in the sale of their businesses
and assets. The Court approved a sale of substantially all of
the Debtors' assets to an unrelated third party and the Debtors
retained an auctioneer to dispose the remaining furniture,
vehicles and equipment.
The Debtors point out that since December 2001, they've
drastically reduced their workforce to two employees. This
workforce reduction has resulted in an unavoidable postponement
in the Debtors' ability to focus on the formulation of a Chapter
11 plan of liquidation.
U.S. Wireless Corporation is a research and development of
wireless location technologies, designs and implements wireless
location networks using proprietary "location pattern matching"
technology. The Company filed for chapter 11 protection on
August 29, 2001 in the U.S. Bankruptcy Court for the District of
Delaware. David M. Fournier, Esq. at Pepper Hamilton LLP
represents the Debtor in their restructuring effort. When the
Company filed for protection from its creditors, it listed
$17,688,708 in assets and $22,239,832 in liabilities.
VENTAS INC: Offering $400MM of New Senior Notes to Pay Down Debt
----------------------------------------------------------------
Ventas, Inc. (NYSE:VTR) said that it plans to raise
approximately $400 million in a proposed private offering of
senior notes due 2009 and senior notes due 2012 to be issued by
its operating partnership and a wholly-owned subsidiary formed
in connection with the offering.
The Company said it currently intends to use the net proceeds of
the offering and borrowings under a proposed credit facility
that is expected to close concurrently with the consummation of
the offering to repay all outstanding indebtedness under the
Company's existing Credit Agreement and to pay breakage costs
for the partial termination of the associated interest rate swap
agreement.
Interest rates, redemption terms, and additional terms of the
notes will be determined at the time of the pricing of the
offering. The notes will be senior, unsecured obligations,
ranking pari passu with all existing and future senior unsecured
indebtedness of the issuers. The Company will unconditionally
guarantee the notes.
The notes to be offered will not be registered under the
Securities Act of 1933, as amended (the "Securities Act"), and
may not be offered or sold in the United States absent
registration or an applicable exemption from the Securities
Act's registration requirements.
There can be no assurance that the proposed offering of the
notes will be consummated or, if consummated, the terms upon
which the notes will be offered.
Ventas, Inc. is a healthcare real estate investment trust whose
properties include 44 hospitals, 215 nursing facilities and
eight personal care facilities in 36 states.
VIASYSTEMS GROUP: S&P Junks Rating Due to Liquidity Constraints
---------------------------------------------------------------
On April 2, 2002, Standard & Poor's lowered its corporate
credit, senior secured bank loan, and subordinated debt ratings
on Viasystems Group Inc., based on severe liquidity constraints
arising from the company's failure to satisfy certain financial
maintenance covenants contained in its senior secured credit
facility. The company's corporate credit is rated at 'CC'.
Outlook is negative.
Ratings on Viasystems reflect the significant deterioration in
operating performance over the past year as a result of the
downturn in the telecommunications and networking end markets.
Sales declined 25% in 2001, to $1.2 billion, from 2000 levels,
and profitability fell nearly 80% in the fourth quarter of 2001
from the comparable period in 2000. Operating margins, which
were in the 16%-18% range in 2000, are likely to be in the 4%-6%
range in the near term, due to low capacity utilization and weak
end-market demand. Viasystems has nearly $1.1 billion in debt.
Credit measures are very weak; debt to EBITDA was more than 9
times for 2001, and EBITDA coverage fell below 1x for the fourth
quarter of 2001. Liquidity was limited to $34 million of cash as
of December 31, 2001.
Although an amendment to the credit agreement provides that
credit facility lenders will refrain from exercising any rights
or remedies in respect of the company's failure to comply prior
to May 29, 2002, up to $1 billion of indebtedness could become
due and payable shortly thereafter if the company is unable to
extend forebearance with its lenders. The company has retained a
financial adviser to assist in evaluating several
recapitalization alternatives in an effort to reduce debt.
St. Louis, Missouri-based Viasystems, which was formed in 1996,
grew through a series of acquisitions to become a major provider
of printed circuit boards, backpanels, and electronic
manufacturing services for original equipment manufacturers.
Outlook
The ratings are likely to be lowered unless management enhances
liquidity in the near term.
WKI HOLDING: Likely Chap. 11 Filing Prompts S&P to Junk Ratings
---------------------------------------------------------------
On April 2, 2002, Standard & Poor's lowered its corporate
credit, senior secured bank loan, and subordinated debt ratings
on WKI Holding Company Inc to 'CCC'. The outlook is negative.
The downgrade reflects WKI Holding's public statement that it is
working with financial advisors to explore strategic
alternatives, including the possible need for a court-supervised
proceeding to facilitate the financial restructuring of the
company.
The company is not expected to make the next interest payment on
its subordinated notes, which is due May 1, 2002, because it
would cause the waiver of the bank covenant defaults to expire.
WKI Holding has stated there is substantial doubt about its
ability to continue as a going concern.
Outlook
The ratings will be lowered to 'D' if the company fails to make
its scheduled interest payment or files for bankruptcy
protection.
W.R. GRACE: Court Okays Kinsella as Debtors' Noticing Expert
------------------------------------------------------------
Judge Fitzgerald grants W. R. Grace & Co., and its debtor-
affiliates' request to employ Kinsella Communications as their
notice consultant. However, she limits the amount that may be
paid to Kinsella to no more than $398,000 as interim
compensation.
Specifically, Kinsella performs and has performed work on the
initial bar date notice plan by:
(a) extensively researching the Debtors' asbestos-related
businesses and products as background for developing a bar date
notice plan;
(b) gathering and analyzing product information relating
to the Debtors' asbestos-related products, including (i)
information on Grace's vermiculite and asbestos-containing
products; (ii) distribution and sales information by state for
MK-3 from sales records; and (iii) information regarding
Zonolite Attic Insulation;
(c) analyzing claims-related information, including: (i)
statistics regarding age of personal injury claimants, ,and (ii)
claims filings by jurisdiction for Grace;
(d) developing demographic profiles of personal injury
claimants, settled claimants, property claimants, and Zonolite
Attic Insulation claimants, using factors such as age, gender,
occupation and the like;
(e) researching and identifying the media vehicles
through which different classes of potential claimants in the
United States and Canada normally receive information;
(f) developing a media program, including general
consumer magazines, newspapers, television and public relations,
through an extensive analysis of the most effective media
vehicles to be used in combination to the reached claimants;
(g) calculating the estimated reach and frequency of the
notice program;
(h) identifying potential geographic concentrations of
personal injury claimants based on identifiable areas where the
Debtors may have mined, manufactured or distributed vermiculite
and asbestos-containing products and operated expanding plants;
(i) identifying (i) third-party organizations that may
have contact with personal injury claimants, including
occupationally-related trade or professional associations and
organizations whose membership may include individuals with
asbestos-related personal injury, (ii) trade publications that
serve industries in which occupational asbestos exposure was
likely; (iii) consumer publications targeted to "do-it-yourself"
homeowners; and (iv) trade publications likely to be read by
owners, administrators and managers of commercial, residential
or public buildings; and
(j) creating the required notice materials with multiple
drafts and layouts, including the bar date notices for use in
trade and general publications, a script for a 30-second
television spot and materials to be sent to trade unions and
other third parties.
For the second notice plan, Kinsella performs and has performed:
(a) developing a new notice program to address concerns
of the PD Committee, including revisions to the planned consumer
magazine, television and Canadian media buys;
(b) reconsidering all plan elements in light of the PD
Committee's concerns;
(c) developing several alternative plans using various
combinations of television dayparts and print media vehicles;
(d) comparing the alternative media plans for their
relative efficacies in achieving adequate reach among the
intended notice parties; and
(e) rewriting and redesigning all notice materials, with
multiple drafts and layouts, to address various constituent
concerns.
In addition, between September and November Ms. Kinsella and
Kinsella's staff spent considerable time addressing the concerns
raised by the PD Committee to the initial bar date notice plan.
Kinsella also provided the PD Committee with all requested
information prior to a deposition of Ms. Kinsella. Ms. Kinsella
also spent substantial time preparing for the deposition, as
well as preparing for testimony to be provided at a November
hearing on the bar date motion which was cancelled on the day of
the hearing because of other case developments. (W.R. Grace
Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
WEBLINK WIRELESS: Look for Form 10-K by April 15, 2002
------------------------------------------------------
WebLink Wireless, Inc. will be filing a late Form 10-K with the
SEC for the period ended December 31, 2001. The annual
financial report will be filed on or before the fifteenth
calendar day following the prescribed due date of March 31,
2002.
The Company's Form 10-K could not be filed within the prescribed
period as a result of a certain activities in process that, upon
completion, or, if not completed, will impact the disclosures in
the Form 10-K for the period ended December 31, 2001. Due to the
significance of these activities, the Company believes it should
delay its filing to ensure full and complete disclosures in the
annual Form 10-K.
WebLink Wireless, Inc. is a leader in the wireless data
industry, providing wireless email, wireless instant messaging,
information on demand and traditional paging services throughout
the United States. WebLink Wireless filed for chapter 11 under
the U.S. Bankruptcy Court on May 23, 2001, in the U.S.
Bankruptcy Court for the Northern District of Texas.
WESTERN INTEGRATED: Court Nixes Dow Lohnes' Engagement
------------------------------------------------------
The U.S. Bankruptcy Court for the District of Colorado denied
Western Integrated Networks, LLC and its affiliated debtors'
application to retain and employ the firm of Dow Lohnes &
Albertson PLLC as their Special Corporate and Regulatory Counsel
in the companies' chapter 11 cases.
Why? The Court states that the Debtors failed to comply the
requirement of Rule 202 to serve a Notice together with the
Motion under the Bankruptcy Code. The Court stipulates that if
the Debtors will seek to reconsider the Motion, they must file a
separate new motion, Rule 202 Notice and pay any required fees
again.
Western Integrated Networks, LLC is a single source facilities
based provider of broadband services to residential and small
business customers in certain targeted markets. The Company
filed for chapter 11 protection on March 11, 2002. Douglas W.
Jessop, Esq. at Jessop & Company, P.C. assists the Debtors in
their restructuring efforts.
WILLIAMS COMMS: S&P Slashes Rating to D After Deferred Payments
---------------------------------------------------------------
The corporate credit rating on long-haul data service provider
Williams Communications Group Inc. was lowered to 'D' and
removed from CreditWatch on April 2, 2002. The ratings on the
company's 10.875% senior redeemable notes due 2009 and
redeemable cumulative convertible preferred stock were also
lowered to 'D' and removed from CreditWatch at that time. All
other ratings remained on CreditWatch with negative
implications.
The downgrades followed the company's decision to defer payment
of about $91 million in interest due on April 1, 2002, on about
$1.7 billion of debt and suspend quarterly dividend payment on
its preferred stock. The company indicated that it may seek
Chapter 11 bankruptcy protection if it is unable to restructure
its debt. Tulsa, Oklahoma-based Williams Communications had
total debt outstanding of about $5.9 billion at the end of 2001.
The ratings of Williams Communication's bank loan and other debt
issues will be lowered to 'D' on the default of interest
payments, a bankruptcy filing, or a restructuring, the last of
which would be considered tantamount to default by Standard &
Poor's.
WILLIAMS COMMUNICATIONS: Fitch Drops Ratings to Default Level
-------------------------------------------------------------
Fitch Ratings has downgraded Williams Communication Group,
Inc.'s senior unsecured rating to 'D' from 'CC' and the
convertible preferred stock to 'D' from 'C'. The rating of
Williams Communications, Inc.'s senior secured credit facility
has also been downgraded to 'C' from 'CCC-'. The senior secured
credit facility remains on Rating Watch Negative.
The rating action is consistent with WCG's announcement to take
advantage of a 30 day grace period on the interest payment due
April 1, 2002 related to its senior redeemable notes, and to
suspend the quarterly dividend payment on its preferred stock,
which in Fitch's view puts the notes in technical default.
The rating downgrade of Williams Communications, Inc.'s senior
secured credit facility reflects Fitch's concern that the
facility will be in default, absent a waiver of cross default
provisions contained in the terms of the credit facility within
the next 30 days.
WCG has announced that it continues to negotiate with its bank
group and other stakeholders to restructure its balance sheet.
To that end, the negotiating window has been extended to April
26, 2002. The Rating Watch Negative is likely to be resolved
pending the outcome of WCG's ongoing discussions with its bank
group.
ZAP GROUP: Fails to Meet Nasdaq Continued Listing Requirements
--------------------------------------------------------------
ZAP (Nasdaq:ZAPPQ) announced that on March 21, 2002, the listing
qualifications section of Nasdaq notified ZAP that Nasdaq
intends to delist ZAP from The Nasdaq Stock Market for failure
to comply with Marketplace Rules 4330(a)(1), 4330(a)(3),
4310(c)(2)(B and 4310(c)(13).
The Nasdaq delisting notice stated their determination was based
on concerns raised by ZAP's recent filing for reorganization
under Chapter 11 of the U.S. Bankruptcy Code, concerns regarding
the residual equity interest of the existing listed security
holders, and ZAP's failure to meet quantitative requirements for
continued Nasdaq listing. The Nasdaq staff noted that ZAP does
not meet the minimum net tangible assets and stock holder's
equity requirements. In addition, ZAP has failed to pay $23,335
in listing fees due to Nasdaq dating from the third quarter of
2001. Finally, the Nasdaq staff noted that the company's bid
price of its common stock had closed below the $1 per share
minimum requirements, required by Marketplace Rule 4310(c)(4),
for more than thirty days.
ZAP had notified the Nasdaq staff that the company is currently
exploring various strategic alternatives for the company,
including, among other things, merging with private automotive
and distribution companies, as part of their plan of
reorganization, in order to increase the company's equity and
assets.
The Nasdaq staff has determined to delist the company's
securities from The Nasdaq Stock Market on the opening of
business of April 1, 2002, subject to the company's right to
appeal the delisting of its securities from Nasdaq and a
hearing. ZAP has requested a hearing before a Nasdaq Listing
Qualifications Panel to review the staff determination. ZAP
expects that its request for a hearing will stay the delisting
process pending the Panel's decision. ZAP cannot be sure that
the Panel will grant the company's request for continued
listing.
ZAP: Signs Agreements to Merge with RAP Group & Voltage Vehicles
----------------------------------------------------------------
ZAP (Nasdaq:ZAPPQ) signed Agreements to merge with two privately
owned companies involved in alternative fuel vehicles,
automotive sales and distribution.
RAP Group, Inc. (RAP) and Voltage Vehicles are two Sonoma
County, California-based companies with strategic relationships
in automotive services looking to accelerate their growth in the
alternative transportation market. Both of the mergers with ZAP
will be an integral part of, and contingent on, ZAP's Plan of
Reorganization being approved by its creditors and shareholders
and confirmed by the U.S. Bankruptcy Court.
According to ZAP officials, the mergers are expected to enhance
ZAP's financial base and provide access to the two companies'
services and relationships. The move is expected to advance
ZAP's goal of becoming a leading full-service brand in the
electric and alternative fuel transportation industry. Upon
completion of the mergers, ZAP plans to step up its role in
building a national distribution network to support the
manufacturing for its growing line of products.
Voltage Vehicles is a Sonoma County-based Nevada Corporation
that has exclusive distribution contracts with electric vehicle
manufacturers in the independent auto dealer network, including
one of the only full-performance electric cars certified under
Federal Motor Vehicle Safety Standards. In May 2001, ZAP formed
a joint venture with Voltage Vehicles to develop, design,
manufacture and distribute electric vehicles including ZAP's
current line of electric vehicles.
RAP is a California Corporation with an auto dealership focused
on the independent vehicle market and advanced technology
vehicles. A Voltage Vehicle authorized dealer, RAP currently
markets electric scooters, bikes and other electric vehicles
from its location on River Road in Fulton, California.
ZAP had earlier in the month signed a MOU with Daybreak
Automotive Recovery, Inc., but the parties have mutually agreed
not to complete the merger.
"We believe that ZAP will rapidly emerge from their
reorganization and we want to be part of that," said Steve
Schneider, President of Voltage Vehicles. "ZAP has one of the
strongest brand names in the electric vehicle industry, and for
our target market, branding is an important marketing tool."
Founded in 1994, ZAP manufactures and distributes electric
bicycles, scooters, motorbikes and other alternative
transportation and recreational products. For further
information, call 707-824-4150 or visit the company's Web site
at http://www.zapworld.com.
ZENITH INDUSTRIAL: Court Okays BSI's Engagement as Claims Agent
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approves
the application of Zenith Industrial Corporation to employ
Bankruptcy Services LLC as Agent of the Bankruptcy Court.
Although the Debtor has not yet filed its schedule of assets and
liabilities, it anticipated that there will be in excess of 500
entities to be served with the various notices, pleading and
other documents filed in this case. The Debtors believe that the
most effective and efficient manner to accomplish the process of
noticing these creditors, and to transmit, receive, docket,
maintain, photocopy and microfilm claims, is for the Debtor to
engage an independent third party to act as an agent of the
Court.
As Claims Agent, BSI is expected to:
a) relieve the Clerk's Office of all noticing under any
applicable rule of bankruptcy procedure;
b) file with the Clerk's Office a certificate of service,
within 5 days after each service, which includes a copy
of the notice, a list of persons to whom it wad mailed
and the date mailed;
c) maintain an up-to-date mailing list for all entities
that have requested service of pleadings in this case,
which list shall be available upon request of the
Clerk's Office;
d) comply with applicable state, municipal and local laws
and rules, orders, regulations and requirements of
Federal Government Departments and Bureaus;
e) relieve the Clerk's Office of all noticing under any
applicable rule of bankruptcy procedure relating to the
institution of a claims bar date and processing of
claims;
f) at any time, upon request, satisfying the Court that the
Claims Agent has the capability to efficiently and
effectively notice, docket and maintain proofs of claim;
g) furnish a notice of bar date approved by the Court for
the filing of a proof and a form for filing a proof of
claim to each creditor notified of the filing;
h) maintain all proofs of claim filed;
i) maintain an official claims register by docketing all
proofs of claim on a register containing relevant
information;
j) maintain the original proofs claim in correct claim
number order, in an environmentally secure area, and
protecting the integrity from these original documents
from theft/alteration;
k) transmit to the Clerk's Office an official copy of the
claims register on a monthly basis, unless requested in
writing by the Clerk's office on a more or less frequent
basis;
l) maintain an up-to-date mailing list for all entities
that have filed a proof of claim, which list shall be
available upon request of a party in interest or the
Clerk's Office;
m) being open to the public for examination of the original
proofs of claim without charge during regular business
hours;
n) recording all transfers of claims and provide notice of
the transfer as required by the Bankruptcy Rule;
o) record court orders concerning claims resolution;
p) make all original documents available to the Clerk's
Office on an expedited, immediate basis; and
q) promptly comply with such further conditions and
requirements as the Clerk's Office may prescribe.
The professional fees that BSI shall charge the Debtor are:
Kathy Gerber $195 per hour
Senior Consultants $175 per hour
Programmer $125 to $150 per hour
Associate $125 per hour
Data Entry/Clerical $40 to $60 per hour
Upon Court's approval, the Debtor shall pay BSI a retainer in
the amount of $25,000.
Zenith Industrial Corporation, a leading worldwide, full-service
Tier 1 supplier of highly engineered metal-formed components,
complex modules and mechanical assemblies for automotive OEMs
filed for chapter 11 protection on March 12, 2002. Joseph A.
Malfitano, Esq., Edward J. Kosmowski, Esq., Robert S. Brady,
Esq. at Young Conaway Stargatt & Taylor, LLP and Larry S. Nyhan,
Esq., Matthew A. Clemente, Esq., Paul J. Stanukinas, Esq. at
Sidley Austin Brown & Wood represent the Debtor in its
restructuring efforts. When the Company filed for protection
from its creditors, it listed estimated debts and assets of more
than $100 million.
* DebtTraders' Real-Time Bond Pricing
-------------------------------------
Issuer Coupon Maturity Bid - Ask Weekly change
------ ------ -------- --------- -------------
Crown Cork & Seal 7.125% due 2002 92.5 - 94.5 +1.5
Federal-Mogul 7.5% due 2004 17 - 19 -0.5
Finova Group 7.5% due 2009 35.5 - 36.5 0
Freeport-McMoran 7.5% due 2006 83.5 - 86.5 +0.5
Global Crossing Hldgs 9.5% due 2009 1.75 - 2.75 -0.75
Globalstar 11.375% due 2004 9 - 11 +1
Lucent Technologies 6.45% due 2029 63 - 65 0
Polaroid Corporation 6.75% due 2002 5.5 - 7.5 +0.5
Terra Industries 10.5% due 2005 84 - 87 0
Westpoint Stevens 7.875% due 2005 52 - 54 +3
Xerox Corporation 8.0% due 2027 58 - 60 +1
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 its research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com
*********
Bond pricing, appearing in each Monday's edition of the TCR, is
provided by DLS Capital Partners in Dallas, Texas.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, 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 ***