/raid1/www/Hosts/bankrupt/TCR_Public/020415.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, April 15, 2002, Vol. 6, No. 73
Headlines
360NETWORKS: Court Okays Settlement Agreement with Time Warner
ADELPHIA BUSINESS: Look for Schedules & Statements in Mid-June
ADELPHIA COMMUNICATIONS: Will Pay Quarterly Dividend On May 1
ALARIS MEDICAL: Expects $21 Million EBITDA For 1st Quarter 2002
APPLIED DIGITAL: Reports Positive Results for First Quarter 2002
AVERY COMMS: December 2001 Balance Sheet Upside-Down By $3.5MM
BUILDING MATERIALS: S&P Cuts Senior Secured Note Rating To B
BURLINGTON: Selling Residential Upholstery Business to Richloom
CABLE DESIGN: Deloitte Replaces Arthur Andersen as Auditors
COVANTA ENERGY: Retains Hogan & Hartson as Special Counsel
COVANTA: Fitch Continues Ratings Review in Light of Bankruptcy
CYBEREDGE ENTERPRISES: Terminates Proposed Acquisition of Cobex
DIGITAL CREATIVE: Bruce Galloway Discloses 20.1% Equity Stake
DOLLAR GENERAL: S&P Lowers Rating To BB+ & Says Outlook Negative
DOMAN INDUSTRIES: Pays Semi-Annual Interest on $388M Sr. Notes
DOMAN: S&P Ups Credit Rating to CC After C$26MM Interest Payment
ELIZABETH ARDEN: S&P Lowers Senior Unsecured Rating to CCC+
ENRON: Energy Units Enter Into Settlement Pact With SoCal Edison
FEDERAL-MOGUL: Asbestos Claimants Tap Lovells As Int'l Counsel
FEDERAL-MOGUL: Extends CEO & COO Transition Period
FLAG TELECOM: Files for Voluntary Chapter 11 Protection in NY
FLAG TELECOM: Case Summary & Largest Unsecured Creditors
GAP INC: Reports Decreasing Sales For March Over Weak Market
GLOBAL CROSSING: Level 3 Seeks Stay Relief to Initiate Eviction
ICG COMMS: Court Extends Solicitation Period Through July 1
INTELLICORP INC: Shares Knocked Off Nasdaq Market
INTERNET ADVISORY: Inks Pact to Acquire Go West Entertainment
KAISER: Asbestos Claimants Hiring Tersigni as Financial Advisor
KINDRED HEALTHCARE: Tinkers with Revolver & Senior Secured Notes
KINETEK INDUSTRIES: S&P Assigns B+ Rating to Sr. Secured Notes
KMART: Seeks Court Nod to Extend Exclusive Periods Thru June 30
LTV CORP: LTV Sales Finance Co. Files Chapter 11 Petition
LODGIAN: Asks Court to Stretch Plan Filing Deadline To Oct. 21
MAIL-WELL: Signs-Up Gordon Griffiths as Print Group Pres. & CEO
MADISON RIVER: S&P Affirms B Ratings Following Put Option Deal
MCLEODUSA: Creditors' Committee Employs Milbank Tweed As Counsel
METROCALL: Prepares for Chapter 11 Filing on or about April 30
MPOWER: Seeks Nod to Pay Critical Vendors' Prepetition Claims
NATIONAL STEEL: Retaining Babst, Calland as Special Counsel
ON SEMICONDUCTOR: Stockholders to Convene in Tempe, AZ on May 23
ORIUS CORP: NATG Talking with Lenders to Amend Debt Covenants
PACIFIC GAS: Court Tentatively Approves Disclosure Statement
P-COM INC: Engages Ellen Hancock as Special Advisor
PETROLEUM HELICOPTERS: S&P Rates Proposed $170MM Sr Notes At BB-
PINNACLE ENT.: Names Daniel Lee as New CEO & Board Chairman
PRECISION SPECIALTY: Committee Taps DKW to Replace Reed Smith
PRINTING ARTS: Court Authorizes Committee to Retain Saul Ewing
REMINGTON PRODUCTS: S&P Affirms B- Rating; Outlook is Negative
STARWOOD HOTELS: Selling $1.5 Billion Senior Notes to Pay Debts
SAFETY-KLEEN CORP: Amends Acquisition Pact With Clean Harbors
SAKS INC: Reports Improved Store Sales for 5 Weeks Ended April 7
SUNBEAM: $200 Million DIP Financing Pact Extended into 2003
U.S. PLASTIC: Senior Lenders Agree to Forbear through May 21
TELEGLOBE: S&P Downgrades Ratings To B-, Still on Watch Negative
TELERGY INC: Dominion Telecom Acquires Assets For $7.4 Million
WCI COMMUNITIES: S&P Affirms Low-B Ratings
WEBB INTERACTIVE: Jona, Inc., Could Own 17,500,000 Shares
WILLIAMS: Completes $1B Pipeline Sale to Energy Partners
XEROX CORP: Settles Issues With Securities & Exchange Commission
* BOND PRICING: For the week of April 15 - 19, 2002
*********
360NETWORKS: Court Okays Settlement Agreement with Time Warner
--------------------------------------------------------------
The Bankruptcy Court of the Southern District of New York
approved 360networks Inc., and it debtor-affiliates' proposed
Settlement Agreement with Time Warner Telecom Holdings.
As previously reported, the Debtors and Time Warner Holdings
Inc. are parties to an Agreement for the purchase of certain
conduit and un-activated fiber and a Joint Marketing Agreement
-- JMA -- relating to the marketing of such conduit and fiber.
The Debtors and Time Warner entered into three modification
agreements, which amended certain terms of the Agreement.
The Portland-Sacramento Agreement obligates the Debtors to
perform three basic tasks:
(i) to design, construct, install and maintain a long-haul
telecommunications system between Portland, Oregon and
Sacramento, California, otherwise known as the Project;
and
(ii) the greater of 72 fibers or 50% of the total number of
fibers contained in the cable installed in the Primary
Conduit to Time Warner in exchange for:
(a) 50% of the Debtors costs to design, construct,
install and maintain the Project;
(b) a management fee of 10% of the Project costs;
(c) 100% of the cost of any additional work required by
Time Warner in connection with the Project that is
outside the scope of the Por-Sac Agreement.
(iii) the parties will enter into the JMA.
The proposed Settlement Agreement would also:
(i) assume the Por-Sac Agreement as amended by the
modifications;
(ii) reject the JMA; and
(iii) agree to bring further motions to assume agreements for
Underlying Rights necessary to operate the Project.
The Settlement Agreement:
(i) is worth $9,350,000 to the Debtors, with the Debtors
receiving $5,000,000 in cash and $4,350,000 to fully
offset intended future purchases of conduit, fiber and
collocation space from Time Warner; and
(ii) the Debtors would avoid costly litigation over amounts
owed to the JMA and the Por-Sac Agreement and would also
avoid expending time and other valuable resources
responding to Time Warner's continuing audit.
(360 Bankruptcy News, Issue No. 21; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ADELPHIA BUSINESS: Look for Schedules & Statements in Mid-June
--------------------------------------------------------------
The Adelphia Business Solutions, Inc., and its debtor-affiliates
obtained an order from the Court extending the 15 day
period to file their respective schedules of assets and
liabilities, schedules of current income and expenditures,
schedules of executory contracts and unexpired leases, and
statements of financial affairs. They have received an
additional 60 days, to June 10, 2002, without prejudice to the
Debtors' right to request additional time should it become
necessary.
Judy G.Z. Liu, Esq., at Weil Gotshal & Manges LLP in New York,
relates that the Debtors provide telecommunications services to
thousands of direct customers and also provide services to other
companies who in-turn provide the Debtors' services to their
direct customers. In order to prepare the Schedules, the Debtors
must gather extensive information on all such services and
clients throughout the country. Such a task requires an enormous
expenditure of time and effort on the part of the Debtors and
their employees.
Ms. Liu assures the Court that the Debtors are mobilizing their
employees to work diligently and expeditiously on the
preparation of the Schedules. Nonetheless, due to the additional
demands placed on the Debtors' employees as a result of the
Chapter 11 process, personnel resources are strained. The
Debtors likely will not be able to properly and accurately
complete the Schedules within the 15-day time period imposed
under the Bankruptcy Rules. This becomes obvious when
considering the large amount of work entailed in completing the
Schedules and in dealing with the competing demands upon the
Debtors' employees to assist in efforts to stabilize business
operations during the initial post-petition period.
Accordingly, in view of the size of the Debtors' cases, the
amount of information that must be assembled and compiled, the
location of such information, and the significant amount of
employee time that must be devoted to the task of completing the
Schedules, the Debtors submit that ample cause exists for the
extension. (Adelphia Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ADELPHIA COMMUNICATIONS: Will Pay Quarterly Dividend On May 1
-------------------------------------------------------------
Adelphia Communications Corporation (Nasdaq: ADLAC) announced
that it has declared a quarterly dividend on its 7-1/2% Series F
Mandatory Convertible Preferred Stock (liquidation preference
$25.00 per share). The dividend will be payable in cash on May
1, 2002 to holders of record on April 15, 2002. The initial
dividend will be $.51042 per share. Each subsequent dividend
will be at a quarterly rate of $.46875 for each share of
outstanding Mandatory Convertible Preferred Stock.
Dividends on the Mandatory Convertible Preferred Stock are
payable quarterly on each February 1, May 1, August 1 and
November 1 (or the preceding business day if the 1st is not a
business day) to holders of record on the preceding January 15,
April 15, July 15 and October 15 (or the preceding business day
if the 15th is not a business day), respectively. Adelphia is
the sixth largest cable television operator in the United
States.
ALARIS MEDICAL: Expects $21 Million EBITDA For 1st Quarter 2002
---------------------------------------------------------------
ALARIS Medical Inc. (AMEX:AMI) anticipates that it will report a
slight positive earnings per share for the first quarter of 2002
compared with the loss of $.04 per share that it reported for
the first quarter of 2001. The company previously said that it
anticipated "a small net loss for the quarter."
Adjusted EBITDA is anticipated to be slightly in excess of $21
million, compared with $19.5 million a year ago. The company
previously indicated Adjusted EBITDA would be "at or slightly
below the same quarter in 2001."
The anticipated first quarter profit is due to several factors.
The most important is that sales growth is higher than expected.
ALARIS expects to report first quarter 2002 sales of
approximately $104 million, a 5 to 6 percent increase (7 to 8
percent in constant currency) compared with the prior year's
strong first quarter. A substantial portion of this increase is
from the company's core products. Management previously
indicated it believed sales growth this quarter would be about 4
percent.
Two other items will favorably affect net income while having no
effect on Adjusted EBITDA. The first is a benefit from the
mandated accounting change for amortizing goodwill and other
intangibles previously discussed by the company. First quarter
2002 earnings (as well as subsequent quarters) are expected to
be $0.03 per share higher than they would have been if the
change were not required. The second is a one-time insurance
settlement which will add about $0.01 to earnings per share this
quarter.
Commenting on the preliminary results, David Schlotterbeck,
president and CEO, remarked, "Having made it clear that we are
in a turnaround situation, I think there is no better measure of
a successful turnaround than to begin reporting quarterly net
income. We are very gratified by the pending results. That they
have come sooner than we expected reflects our customers'
recognition of our steadily improving product offerings and our
continuously brightening financial prospects."
ALARIS Medical plans to report its first quarter 2002 results on
May 1, 2002. A conference call with portfolio managers and
analysts will be available online at http://www.alarismed.com.
The live Webcast will begin at 8:00 a.m. Pacific Daylight Time
on Wednesday, May 1, 2002, with the replay beginning shortly
after the completion of the live call. The replay of the
conference call will also be accessible by telephone at 800/925-
4265 (for domestic callers) and 402/220-4172 (for international
callers), beginning shortly after the completion of the live
call. Both the online and telephone replay will be available
through May 15th.
ALARIS Medical Inc., through its wholly owned operating company,
ALARIS Medical Systems Inc., is a leading developer,
manufacturer and provider of integrated intravenous infusion
therapy and patient monitoring instruments and related
disposables, accessories and services. ALARIS Medical's primary
brands, ALARIS(R), IMED(R) and IVAC(R), are recognized
throughout the world. ALARIS Medical's products are distributed
in more than 120 countries worldwide. In addition to its San
Diego world headquarters and manufacturing facility, ALARIS
Medical also operates manufacturing facilities in Creedmoor,
N.C.; Basingstoke, U.K.; and Tijuana, Mexico. Additional
information on ALARIS Medical can be found at
http://www.alarismed.com
At December 31, 2001, Alaris Medical had a total shareholders'
equity deficit of about $47 million.
APPLIED DIGITAL: Reports Positive Results for First Quarter 2002
----------------------------------------------------------------
Applied Digital Solutions, Inc. (Nasdaq: ADSX), an advanced
technology development company, provided preliminary guidance on
the company's results for the first quarter of 2002, which ended
March 31.
Applied Digital expects to report that it was EBITDA positive
for the first quarter and delivered a contribution to earnings
per share.
Commenting on the guidance, Scott R. Silverman, President of
Applied Digital Solutions stated: "The results of our corporate
restructuring and cost cutting initiatives are taking hold.
Applied Digital is now EBITDA positive and our new strategic
direction as an advanced technology development company is
showing positive results in its first quarter of operations.
Importantly, the Digital Angel merger has yielded a gain on
Applied Digital's original investment in that company. The
bottom line result is this: positive earnings for the first time
in more than two years."
Also commenting on the preliminary guidance, Richard J.
Sullivan, Chairman, Founder and CEO of Applied Digital said:
"The preliminary results of the first quarter are a credit to
our new management team and all Applied Digital employees. With
the corporate restructuring complete, the company is EBITDA
positive and our initial investment in life-enhancing, advanced
technologies are already yielding a positive return. This is a
major milestone in the evolution of Applied Digital. We fully
expect to continue this positive trend throughout 2002 and
beyond."
Applied Digital Solutions (Nasdaq: ADSX) is an advanced
technology development company that focuses on a range of life-
enhancing, personal safeguard technologies, early warning alert
systems, miniaturized power sources and security monitoring
systems combined with the comprehensive data management services
required to support them. Through its Advanced Technology Group,
the company specializes in security-related data collection,
value-added data intelligence and complex data delivery systems
for a wide variety of end users including commercial operations,
government agencies and consumers. For more information, visit
the company's Web site at http://www.adsx.com
At December 31, 2001, Applied Digital's total current
liabilities eclipsed its total current assets by about $86
million.
AVERY COMMS: December 2001 Balance Sheet Upside-Down By $3.5MM
--------------------------------------------------------------
Avery Communications, Inc. (OTC Bulletin Board: AVYC), a
provider of outsourced billing and customer care solutions,
released financial results for the year ended December 31, 2001.
The results reflect the acquisition of substantially all of the
assets of OAN Services, Inc. on August 3, 2001.
During 2001, revenue was $41.9 million, compared to $36.5
million in 2000. The Company earned $1.9 million in operating
income in 2001, excluding a $0.4 million non-recurring charge
related to a write-off of a non-recourse note receivable,
compared to $3.3 million in 2000. As the result of $3.3 million
of non-recurring and non-operating charges in 2001, related to
write-offs of a $2.4 million investment in an affiliate and $0.9
million in non-recourse notes receivable from related parties,
Avery incurred a $1.8 million net loss from continuing
operations compared with net income of $2.3 million from
continuing operations ($1.76 per share, basic) during 2000.
"There is considerable turmoil in the telecommunications
industry, and we are seeking to reduce costs and maximize
efficiency through consolidation of our operations," stated
Patrick J. Haynes, III, Chairman and Chief Executive Officer.
"Integrating our two system-driven operations is well underway,
and the savings will be significant when we are finished later
this year."
According to Haynes, "Expense reduction is our principal
priority. We are pursing other billing service sectors,
particularly the utility area, to provide additional sources of
fee income. Similarly, our Aelix business is offering a variety
of innovative communications services to government agencies.
We believe the combination of a lower cost structure and new
product offerings will set a strong foundation for earnings
improvement."
Avery is a technology based service company engaged in
outsourced customer care and billing services for the
telecommunications industry. Through its wholly owned
subsidiaries, HBS Billing Services Company, based in San
Antonio, Texas, and ACI Billing Services, Inc., based in
Northridge, California, Avery provides telecommunication billing
and collection clearinghouse services for inter-exchange
carriers and long-distance resellers. The clearinghouse
operations maintain billing arrangements with approximately
1,300 telephone companies that provide access lines to, and
collect for services from, end-users of telecommunication
services. Through its Aelix, Inc. subsidiary, also based in
Northridge, California, Avery offers message communication
services and applications designed to lower costs while
improving customer service.
At December 31, 2001, Avery Communications reported an upside-
down balance sheet, showing a total shareholders' equity deficit
of about $3.5 million.
BUILDING MATERIALS: S&P Cuts Senior Secured Note Rating To B
------------------------------------------------------------
Standard & Poor's affirmed its 'B+' corporate credit rating on
Building Materials Corp. of America (BMCA) and removed it from
CreditWatch, where it had been placed on November 6, 2000. The
rating on the senior secured notes was lowered to one notch
below the corporate credit rating at 'B' due to the meaningful
amount of priority debt relative to total assets.
The rating affirmation reflected Standard & Poor's expectation
that BMCA's credit quality will not be impaired by the Chapter
11 bankruptcy proceedings of the company's parent, G-1 Holdings
Corp., nor by the asbestos litigation pending against BMCA.
Ratings incorporate the company's position as a leading U.S.
producer of residential asphalt roofing materials, offset by the
narrow focus of its product line, vulnerability to petroleum-
based raw material costs, a competitive industry, and weak cash
flow protection measures. The competitive position of Wayne, New
Jersey-based BMCA, the only operating company of G-1 Holdings,
should be sustained by strong brand names, a focus on product
mix improvement (it is a leading producer of premier laminated
shingles), and effective national distribution capability. A
high level of aftermarket sales (about 80% of revenues are
derived from reroofing activity) provides a meaningful degree of
stability to earnings.
Operating income (excluding nonrecurring charges) rebounded
significantly in 2001 from depressed levels, aided by a
favorable roofing market and lower asphalt costs. Based on the
strength of current demand, further improvement in profitability
is expected for 2002. With capital expenditures likely to remain
at lower levels the next few years, BMCA appears to be in a
reasonable position to generate meaningful discretionary cash to
reduce its heavy debt load and thus temper refinancing risks.
Lower debt should lead to some improvement of the total debt to
EBITDA ratio in the 5.0 times area for 2001, and EBITDA interest
coverage presently about 2.2x. BMCA's cash flows are not
expected to be called upon in any meaningful amounts to meet any
obligations of the parent.
Liquidity is satisfactory, as evidenced by the absence of
borrowings under the company's bank facilities totaling $210
million (although letters of credit amounted to $42 million),
and a cash position of $46 million at December 31, 2001. The
credit agreements, which mature in 2003, are secured by a first-
priority lien on substantially all of the assets, while the
outstanding senior notes have a second priority lien on that
collateral. The next large debt maturity is not until 2005, when
$150 million of notes come due.
Standard & Poor's ratings anticipate that the company's
financial flexibility, including its ability to access capital
markets, will not be constrained by the parent's bankruptcy
proceedings nor by pending asbestos-related claims against BMCA.
G-1 Holdings' voluntary petition for reorganization will likely
take several years to resolve, during which time the Bankruptcy
Court will also decide whether BMCA has meritorious defenses to
any asbestos-related claims. The Bankruptcy Court has issued a
preliminary injunction enjoining any existing or future
claimants from bringing asbestos claims against BMCA. This
injunction is expected to remain in effect pending confirmation
of a Chapter 11 plan of reorganization for G-1 Holdings, and it
enhances prospects that BMCA will not file for Chapter 11.
However, some or all of the parent's ownership interest in BMCA
is expected to be used to settle asbestos claims against the
parent when it emerges from bankruptcy.
Outlook
Business and market fundamentals are favorable, and expected
debt reduction should benefit weak financial ratios.
Consequently, any changes in credit quality over the next
several years is likely to be influenced by the company's legal
proceedings, rather than by its roofing products operations. The
eventual outcomes of the legal matters of BMCA and its parent
are uncertain. Any negative legal developments could lead to a
downgrade.
BURLINGTON: Selling Residential Upholstery Business to Richloom
---------------------------------------------------------------
As part of its actions to restructure its Burlington House
division, Burlington Industries, Inc. (OTC Bulletin Board: BRLG)
signed a definitive agreement with Richloom Fabrics Group, Inc.
for the sale of Burlington's residential upholstery business.
The company also announced it will sell to Bacova Guild, Ltd.
its bath consumer products assets. Both sales would include
certain inventories and intellectual properties. Additional
details of the transactions, including the effect to operations
is still to be determined.
These sales are in line with the division's strategy to focus on
growing its fabric business with products that have good market
share and acceptable profit potential. Going forward, the
division will supply fabrics for mattress coverings, bedding and
window products and commercial fabrics for hospitality and
corporate customers.
Commenting on the restructuring, George W. Henderson, III,
Chairman and Chief Executive Officer, said, "These actions
support our strategy and provide our Burlington House division a
more effective and sustainable manufacturing base. These
changes will allow us to focus our strong jacquard and
decorative weaving capabilities on innovative products where we
have a leadership position and bring distinction and value to
the market."
The completion of these transactions will be subject to approval
under procedures established by the US Bankruptcy Court, which
has jurisdiction over Burlington's Chapter 11 reorganization.
Final approval of the sale to Richloom is expected in May.
Final approval of the sale to Bacova is expected on April 11.
In addition, the company expects to receive final approval of
the previously announced sale of the bedding and window consumer
product businesses to Springs Industries in early May.
Burlington Industries, Inc. is one of the world's largest and
most diversified manufacturer and marketer of softgoods for
apparel and interior furnishings. Burlington Industries filed
voluntary petitions for Chapter 11 under the U.S. Bankruptcy
Code on November 15, 2001.
CABLE DESIGN: Deloitte Replaces Arthur Andersen as Auditors
-----------------------------------------------------------
Cable Design Technologies Corporation (NYSE: CDT) says its Board
of Directors appointed the accounting firm of Deloitte & Touche
LLP as the company's independent auditors, replacing Arthur
Andersen LLP.
CDT said that during Arthur Andersen's tenure as the Company's
auditor, the firm consistently provided a high quality of
auditing services, and exhibited the highest levels of
professionalism. CDT added that the Company and Deloitte &
Touche have a plan for an orderly transition that will be
completed in time for Deloitte & Touche to review the Company's
fiscal third quarter earnings report and to start and complete
the audit for the Company's fiscal year ending July 31, 2002.
Cable Design Technologies (http://www.cdtc.com)is a leading
designer and manufacturer of high bandwidth network connectivity
products, fiber optic cable and connectors, assemblies,
components, computer interconnect cables for communication
switching applications, and communication cable products used in
wireless, central office and local loop applications. CDT also
manufactures electronic data and signal transmission products
that are used in automation and process control and specialty
applications.
As reported in the March 20 issue of the Troubled Company
Reporter, Standard & Poor's lowered the corporate credit rating
on Cable Design Technologies Corp. to 'BB' from 'BB+'. At the
same time, Standard & Poor's assigned a 'BB' rating to CDT's
$200 million unsecured credit facility, which expires in January
2005. Also, Standard & Poor's removed its outstanding ratings on
CDT from Credit Watch where they were placed on February 1,
2002. Rating outlook was stable.
COVANTA ENERGY: Retains Hogan & Hartson as Special Counsel
----------------------------------------------------------
Covanta Energy Corporation, and its debtor-affiliates sought and
obtained the Court's authorization to retain Hogan & Hartson as
special counsel, pursuant to Section 327(e) of the Bankruptcy
Code.
Covanta's Jeffrey R. Horowitz, Senior Vice President-Legal
Affairs, explains that the Debtors want Hogan to provide
representation and advice relating to the Debtors' businesses
including, without limitation:
* project and finance related matters such as taxable and
tax-exempt finance matters;
* project and asset acquisitions and dispositions;
* negotiations with project participants and lenders;
* environmental issues;
* tax issues;
* leasing issues;
* labor issues:
* regulatory issues, including without limitation, energy
regulatory issues;
* disclosure issues;
* real estate issues;
* transaction structure and strategic issues; and
* other general business and transactional matters.
Hogan plans to charge its hourly rates for these services:
Partners $350-$650
Counsel $300-$450
Associates $160-$350
Law Clerks/Summer Assoc. $180
Paralegals $100-$160
Hogan will charge for reimbursement of actual, necessary
expenses it incurs, as well as other expenses. Other expenses
include related costs, such as telephone, copier, mail and
express mail charges, special or hand delivery charges, travel
and meal expenses, research and transcription costs and the
like.
For the 12-month period ending February 28, 2002, Hogan has
received about $175,000 for pre-petition services. Hogan also
holds $130,000 in pre-petition claims against the Debtors'
estate for legal services rendered prior to the Petition Date.
Mr. Horowitz assures Judge Blackshear that the Debtors are not
requesting permission to pay these pre-petition claims. These
claims do not disqualify Hogan from representing the Debtors on
a post-petition basis given that Hogan holds no interest adverse
to either the Debtors or their estates with respect to the
matters on which Hogan is to be employed.
Mr. Horowitz relates that Hogan is a law firm that employs more
than 800 attorneys. It maintains law offices in Washington,
D.C., Baltimore, Maryland, McLean, Virginia, New York, New York,
Denver, Colorado Springs and Boulder, Colorado, Miami, Florida,
Irvine and Los Angeles, California, as well as nine offices
abroad. More than 40 percent of Hogan's lawyers handle
corporate, securities, financial, intellectual property, tax and
other transactions throughout the world. Approximately a quarter
of attorneys litigate commercial and other disputes before
state, federal, and international tribunals, and engage in
domestic and international arbitration. About 30 percent of
Hogan's attorneys practice in areas of government regulation and
policy. This combined experience, states Mr. Horowitz, permits
Hogan to serve its clients in virtually all areas of law. Over
40 core attorneys specialize in the project finance practice
area, many of whom have extensive experience in project
restructuring and distressed projects, and approximately 20
attorneys who are experts in tax-exempt finance.
Over the past seven years, continues Mr. Horowitz, Hogan has
advised the Debtors in connection with a wide variety of
transactions and legal issues relating to project restructuring
and project financing (both taxable and tax-exempt). Hogan has
also provided the Debtors legal services related to new project
development for water/wastewater projects, project-related asset
acquisitions and expansions, acquisition of landfill rights,
contractual matters, energy-related matters, power generation
and waste disposal, and waste water projects, real estate leases
relating to Covanta facilities, joint ventures, acquisitions and
dispositions, partnership matters, international transactions
and matters related to other aspects of the Debtors' businesses.
"Given the complexity of these issues and Hogan & Hartson's
expertise," offers Mr. Horowitz, "the Debtors believe that Hogan
& Hartson is uniquely qualified to assist them with continuing
the legal advice on these issues during the pendency of these
proceedings."
The Debtors believe that if they are not allowed to retain Hogan
as their special counsel, their estates and all parties in
interest would be unduly prejudiced. It would be prejudiced by
the time and expense necessarily required by Debtors' Section
327(a) bankruptcy and time for another counsel to familiarize
themselves with the intricacies of these complicated projects.
Hogan has indicated a willingness to act on the Debtors' behalf
to render the foregoing services.
Hogan has in the past represented, currently represents and may
in the future represent entities that are creditors and parties
in interest. None of these entities have been represented in
connection with the Debtors.(Covanta Bankruptcy News, Issue No.
3; Bankruptcy Creditors' Service, Inc., 609/392-0900)
COVANTA: Fitch Continues Ratings Review in Light of Bankruptcy
--------------------------------------------------------------
Fitch Ratings continues its monitoring and review of the
documents associated with the April 1, 2002 bankruptcy filing of
Covanta Energy Corp. and various of its wholly owned
subsidiaries. The bankruptcy court issued an interim order that
allows Covanta and certain of its debtor subsidiaries included
in the Chapter 11 filing, to continue to pay debt service, as
well as maintain normal operations, pay critical vendors, and
receive operating fees. Fitch remains concerned that the
creditor's committee may request changes to the debtor-in-
possession (DIP) financing that could be detrimental to
bondholders of Fitch rated waste-to-energy projects. A final
hearing on the DIP order is scheduled for May 7, 2002. The
ultimate outcome and effect of the bankruptcy on the timely
repayment of the bonds has yet to be determined.
The terms of the DIP financing provide for 20 non-debtor
subsidiaries of Covanta to act as guarantors for the DIP
financing. While the Haverhill project has not been included in
the Chapter 11 filing, it has been named as a non-debtor
subsidiary guarantor. Cash generated from the Haverhill project
remains included in the consolidated cash management system and
together with other unencumbered assets are to be included in
revenues available to discharge the debt of the parent, Covanta.
Fitch Ratings is evaluating any special risks that this may pose
to the Haverhill project's bondholders.
Fitch Ratings will continue to examine court filings and other
information and will adjust ratings as warranted by such
evaluations.
Fitch's ratings of municipal bonds backed by waste-to-energy
projects owned or leased by subsidiaries of Covanta are:
-- Bristol Resource Recovery Facility Operating Committee, CT
solid waste revenue bonds (Ogden Martin Systems of Bristol,
Inc. Project), 1995 series, unenhanced rating of 'CC' -
Rating Watch Evolving;
-- Massachusetts Industrial Finance Agency and Massachusetts
Development Finance Agency resource recovery revenue bonds
(Ogden Haverhill Project), unenhanced rating of 'CC' -
Rating Watch Evolving;
-- Onondaga County Resource Recovery Agency, NY project
revenue bonds, series 1992, unenhanced rating of 'CC' -
Rating Watch Evolving;
-- Suffolk County Industrial Development Agency, NY solid
waste disposal facility revenue bonds (Ogden Martin Systems
of Huntington Limited Partnership Recovery Facility),
series 1999 (insured: Ambac), unenhanced rating of 'CC' -
Rating Watch Evolving;
-- Union County Utilities Authority, NJ solid waste landfill
taxable revenue bonds, series 1998 (insured: Ambac),
unenhanced rating of 'CC' - Rating Watch Evolving;
-- Union County Utilities Authority, NJ solid waste facility
senior lease revenue bonds, series 1998 A & B (Ogden Martin
Systems of Union, Inc. Lessee), unenhanced rating of 'CC' -
Rating Watch Evolving;
-- Union County Utilities Authority, NJ solid waste facility
senior lease revenue bonds (Ogden Martin Systems of Union,
Inc. Lessee) series 1998A (insured: Ambac), unenhanced
rating of 'CC' - Rating Watch Evolving; and
-- Union County Utilities Authority, NJ solid waste facilities
subordinate lease revenue bonds, series 1998A (Ogden Martin
Systems of Union, Inc. Lessee) (insured: Ambac), unenhanced
rating of 'CC' - Rating Watch Evolving
Additionally, approximately $520 million of outstanding
municipal bonds for projects serviced by Covanta and secured by
payment obligations of certain public entities, remain on Rating
Watch Negative or Evolving, as listed below, in recognition of
possible operating and other risks that could result from
Covanta's bankruptcy filing:
-- Lee County, FL solid waste system refunding revenue bonds,
series 2001 (insured: MBIA), unenhanced rating of 'A-' -
Rating Watch Negative;
-- Lee County, FL solid waste system revenue bonds, series
1995 (insured: MBIA), unenhanced rating of 'A-' - Rating
Watch Negative;
-- Northeast Maryland Waste Disposal Authority, MD solid waste
revenue bonds (Montgomery County Resource Recovery
Project), series 1993 A and B, unenhanced rating of 'AA-' -
Rating Watch Negative.
CYBEREDGE ENTERPRISES: Terminates Proposed Acquisition of Cobex
---------------------------------------------------------------
Cyberedge Enterprises, Inc (OTC: CYBT) mutually agreed to
terminate its proposed acquisition of Cobex Technologies, Inc.
As reported in the January 2, 2001 issue of the Troubled Company
Reporter, Cyberedge withdrew its filing with the U.S. Bankruptcy
Court in the wake of the Cobex merger deal.
Cyberedge says it will "continue to pursue its goal to identify
suitable acquisition or merger candidates."
DIGITAL CREATIVE: Bruce Galloway Discloses 20.1% Equity Stake
-------------------------------------------------------------
Bruce Galloway, whose principal office is in New York City,
beneficially owns 7,489,677 shares (representing 20.1% of the
37,330,245 shares of common stock of Digital Creative
Development Corporation outstanding) with sole power to vote and
sole power to dispose of 7,483,677 shares. For the remaining
6,000 shares, there is shared power to vote and shared power to
dispose of the shares held by Mr. Galloway's wife.
On February 28, 2002, 3,330,000 shares of common stock were
purchased at $0.04 per share by Bruce Galloway; Jacombs Trading*
(which is controlled by Bruce Galloway) purchased 514,300 shares
of common stock at $0.04 per share; and 500,000 shares of common
stock at $0.04 per share, were purchased by two of Mr.
Galloway's children.
Jacombs Trading is a company that is controlled by Bruce
Galloway. Bruce Galloway controls 7,489,677 shares of the
Digital Creative Development Corporation common stock
representing 20.1% of the total issued and outstanding shares.
Of those shares, Bruce Galloway's control includes 1,040,404
shares, owned by Jacombs Trading representing 2.8% of the total
issued and outstanding Shares.
Personal funds were used by Mr. Galloway as an individual, and
working capital of Jacombs Trading was used to acquire the
shares.
Mr. Galloway has the following options and warrants with Digital
Creative Development:
(i) warrants to purchase 20,000 shares of common stock which
are exercisable at an exercise price of $1.00 per share through
March 27, 2002;
(ii) warrants to purchase 10,000 shares of common stock which
are exercisable at an exercise price of $1.00 per share through
November 24, 2003;
(iii) warrants to purchase 20,000 shares of common stock which
are exercisable at an exercise price of $.68 per share through
March 15, 2004;
(iv) warrants to purchase 72,000 shares of common stock which
are exercisable at an exercise price of $.44 per share through
May 10, 2004; ]
(v) warrants to purchase 175,000 shares of common stock which
are exercisable at an exercise price of $.30 per share through
September 30, 2004;
(vi) warrants to purchase 3,333 shares of common stock which
are exercisable at an exercise price of $.30 per share through
October 21, 2004;
(vii) warrants to purchase 65,789 shares of common stock which
are exercisable at an exercise price of $.38 per share through
December 1, 2004;
(viii) warrants to purchase 3,333 shares of common stock which
are exercisable at an exercise price of $.30 per share through
February 5, 2005;
(ix) warrants to purchase 10,000 shares of common stock which
are exercisable at an exercise price of $.39 per share through
March 16, 2005;
(x) warrants to purchase 22,166 shares of common stock which
are exercisable at an exercise price of $.68 per share through
April 10, 2004;
(xi) warrants to purchase 30,769 shares of common stock which
are exercisable at an exercise price of $.49 per share through
May 10, 2004;
(xii) warrants to purchase 39,630 shares of common stock which
are exercisable at an exercise price of $.38 per share through
June 10, 2004.
(xiii) warrants to purchase 36,928 shares of common stock which
are exercisable at an exercise price of $.41 per share through
July 10, 2004;
(xiv) warrants to purchase 39,862 shares of common stock which
are exercisable at an exercise price of $.38 per share through
August 10, 2004;
(xv) warrants to purchase 44,040 shares of common stock
which are exercisable at an exercise price of $.34 per share
through September 10, 2004;
(xvi) warrants to purchase 47,604 shares of common stock which
are exercisable at an exercise price of $.32 per share through
October 10, 2004;
(xvii) warrants to purchase 37,212 shares of common stock which
are exercisable at an exercise price of $.40 per share through
November 10, 2004;
(xviii) warrants to purchase 40,850 shares of common stock which
are exercisable at an exercise price of $.37 per share through
December 10, 2004;
(xix) warrants to purchase 42,265 shares of common stock which
are exercisable at an exercise price of $.35 per share through
January 10, 2005;
(xx) warrants to purchase 8,621 shares of common stock which
are exercisable at an exercise price of $1.74 per share through
February 10, 2005;
(xxi) warrants to purchase 3,947 shares of common stock which
are exercisable at an exercise price of $3.80 per share through
March 10, 2005; and
(xxii) options to purchase 10,000 shares of common stock, which
are exercisable at an exercise price of $.31 per share through
December 31, 2005.
At March 31, 2001, Digital Creative's balance sheet shows a $1.7
million working capital deficit.
DOLLAR GENERAL: S&P Lowers Rating To BB+ & Says Outlook Negative
----------------------------------------------------------------
Standard & Poor's lowered the credit rating on Dollar General
Corp. to 'BB+' and removed the retailer from CreditWatch on
April 12, 2002. S&P's rating outlook is negative.
The downgrade was based on the restatement of financial results,
reduced financial flexibility, and the challenges management
faces in improving its financial and operating controls while
expanding rapidly within a highly competitive industry. Dollar
General restated financials for fiscal years 1999, 1998, and
2000, in its Form 10-K for the fiscal year ended Febraury 2,
2001, filed on January 14, 2002. Several categories of expenses
were involved in the restatement, the largest of which were the
reclassification of operating leases to capital leases and
several components of SG&A. Although the restatement did not
materially impact cash flow for the restated years, it still
points to inadequate financial controls. These issues are being
addressed by the new financial management team.
Store-level execution has been inconsistent, despite good
historical same-store sales, in large part due to the demands of
rapid store expansion. To help improve execution, management is
moderating the pace of growth somewhat and implementing numerous
operational changes. The company will open about 600 stores in
2002, which is still aggressive but below 2000's record 750-plus
store opening program. New initiatives include better
technology, including a perpetual inventory system, shrink
reduction, standardized store processes, and enhanced supply
chain management through new merchandising and planning
programs. However, Standard & Poor's believes it may be some
time before these new initiatives take hold and produce more
consistency in operational control.
Although cash flow coverage for the restated years and for
fiscal 2001 was adequate, near-term financial flexibility is
somewhat constrained due to significant refinancing needs in
2002. These include the maturities of $383 million in synthetic
leases and a $175 million revolving credit facility in September
2002, as well as an anticipated shareholder litigation
settlement. The company has reserved $162 million for this
settlement, to be mitigated by expected inflows of $29 million
($5 million from insurers and $24 million from the company's
director and officer liability insurance policies). The
settlement is subject to final approval of the company's board
of directors and court approval. Efforts are underway to prefund
these needs, and the rating incorporates Standard & Poor's
assumption that the refinancing will be completed in a timely
manner.
The ratings are supported by Goodlettsville, Tennessee-based
Dollar General's good business position. Dollar General has a
track record of high single-digit same-store sales and a niche
position in small town markets serving the "extreme value"
segment of the discount industry. Its base of more than 5,500
small-format stores provides inexpensive consumable basics to
low- and fixed-income families. However, the stores are
increasingly facing competition from large-format discounters
and other "dollar" retailers. This pressure increases the
importance for Dollar General to successfully improve its in-
store performance.
Outlook
Ratings could be under further pressure if the intended
refinancing is not completed in a timely manner. Moreover, the
company is undergoing an SEC investigation into its accounting
practices. Although the scope and timing of this investigation
are not defined, management has indicated that there are no
additional areas of concern that are being reviewed. Still, an
unfavorable result from the investigation could adversely affect
credit quality.
DOMAN INDUSTRIES: Pays Semi-Annual Interest on $388M Sr. Notes
--------------------------------------------------------------
The Board of Directors of Doman Industries Limited announces
that the Company has made its semi-annual interest payment on
its outstanding US$388 million 8.75% senior unsecured notes
maturing 2004 initially scheduled for March 15, 2002.
The Company will continue its ongoing operations and the Board
will continue to review and consider strategic and restructuring
alternatives.
* * *
As previously reported in the March 18, 2002 of the TCR, S&P
lowered the ratings of Doman Industries to 'CCC'.
The 8-3/4% Notes, DebtTraders reports, are trading around 20.
See http://www.debttraders.com/price.cfm?dt_sec_ticker=DOM04CAR1
for real-time bond pricing.
DOMAN: S&P Ups Credit Rating to CC After C$26MM Interest Payment
----------------------------------------------------------------
Standard & Poor's raised its ratings on Doman Industries Ltd. to
'CC' and placed them on CreditWatch with negative implications
on April 12, 2002.
The rating action follows the company's payment of its C$26.0
million interest obligation on the 8.75% senior unsecured notes
outstanding, originally due March 15, 2002.
Despite making the payment, the company's liquidity remains
unclear, as weak demand for pulp, compounded by duties imposed
pursuant to the Canada-U.S. softwood lumber dispute, continues
to negatively affect earnings and cash generation. Standard &
Poor's expects to resolve the CreditWatch placement following an
assessment of Doman's liquidity position.
ELIZABETH ARDEN: S&P Lowers Senior Unsecured Rating to CCC+
-----------------------------------------------------------
On April 11, 2002, Standard & Poor's lowered its rating on
Elizabeth Arden Inc.'s senior unsecured notes to 'CCC+' and
affirmed its 'B' corporate credit rating on the company. At the
same time, all ratings were removed from CreditWatch where they
were placed January 31, 2002 due to weaker-than-expected
operating performance. Credit rating outlook is negative.
The senior unsecured notes were lowered one notch reflecting a
reassessment of Standard & Poor's criteria for notching of
unsecured debt issues where there is a material disadvantage due
to the amount of secured debt expected to be outstanding during
the peak seasonal periods. Elizabeth Arden's weak performance in
2001 led to financial covenant defaults under its credit
agreement for the fourth quarter of fiscal 2002 (ended January
31). An amendment to the credit agreement has since been
completed, including waiving all necessary financial covenants
for this period, adding new covenants, and amending existing
covenants. Standard & Poor's believes that Elizabeth Arden will
continue to be challenged over the intermediate term by the
highly competitive environment in which it operates, given the
maturity of the U.S. cosmetics industry.
The ratings for Elizabeth Arden reflect the company's below-
average business and financial profiles, integration risk
resulting from the the company's acquisition of Unilever's
Elizabeth Arden business, highly seasonal sales, and industry
concerns about the very competitive cosmetics business. These
factors are partially offset by Elizabeth Arden's niche position
in the distribution of prestige fragrances through the mass-
merchandising trade channel.
The challenging conditions in the retail cosmetics industry,
which were made worse following the September 2001 terrorist
attacks, affected the company's performance over the past year.
Revenues and operating profits were affected by the soft 2001
holiday-selling season, intense competition, destocking by
retailers, and reduced store traffic, especially at department
stores and travel outlets. Furthermore, the January 2001
acquisition of Unilever's Elizabeth Arden business significantly
increased leverage, and added integration risk.
Credit protection measures (adjusted for operating leases and
unusual items) weakened considerably in fiscal 2002, with debt
to EBITDA of about 5 times, up from 3x in fiscal 2001 pro forma
for the acquisition. In addition, EBITDA interest coverage
dropped to 1.5x in fiscal 2002 from 2.8x the previous year.
Standard & Poor's expects Elizabeth Arden's credit ratios will
remain weak for the rating over the near term because sales and
operating earnings will be pressured given intense competition
within the cosmetics industry.
Outlook
The ratings could be lowered if Elizabeth Arden's operating
performance and credit ratios weaken further.
ENRON: Energy Units Enter Into Settlement Pact With SoCal Edison
----------------------------------------------------------------
Enron Energy Services Inc. and Enron Energy Marketing
Corporation sought and obtained the Court's approval to enter
into a settlement agreement with Southern California Edison
resolving outstanding credit balances on direct access customer
accounts.
Enron Energy Services and Enron Energy Marketing are part of
Enron Retail Services, selling electric power and natural gas to
end use customers. Southern California Edison is a public
utility and an electric distribution company also providing
services to retail end use customers in the state of California.
Carl A. Eklund, Esq., at LeBoeuf, Lamb, Greene & MacRae LLP, in
New York, relates Enron Energy sold electric power to retail
end-use customers in SoCal Edison's service area pursuant to the
restructuring of California's retail electric market initiated
in 1996 by the passage of Assembly Bill 1890 and as implemented
by the California Public Utility Commission.
That electric restructuring, Mr. Eklund explains, provides that
if a competitive energy service provider, such as Enron Energy,
contracts with an end-use customer to supply its energy, the
local utility, such as Southern California Edison, will no
longer supply that component but will continue to deliver that
energy to the customer over its transmission and distribution
system after receipt from the Energy Service Provider. "In this
situation, the amount the utility would otherwise have charged
for the generation component is deducted from the utility's
applicable service rate to the customer so that the customer
does not pay twice for the generation component," Mr. Eklund
tells the Court.
According to Mr. Eklund, AB 1890 provided for, among other
things, a "frozen bundled rate" that utilities charged customers
who did not choose to contract with an Energy Service Provider
but elected to continue to receive "bundled" service -- the
generation component and the T&D component -- from the utility.
Mr. Eklund notes that the frozen bundled rate also served as the
otherwise applicable tariff rate for calculating charges and
credits for customers taking service from Energy Service
Providers.
"The generation component of this rate was calculated based on
the average market clearing prices posted at the California
Power Exchange resulting in a mechanism that credited or debited
direct access customers based upon the relationship of these
Power Exchange prices to the frozen bundled rate as a device to
manage the recovery of the utilities' "stranded costs" incurred
as a result of electric restructuring," Mr. Eklund explains.
Reduced to its essential economics, Mr. Eklund says, the Power
Exchange credit mechanism operated such that when the Power
Exchange clearing price was below the frozen bundled rate, the
Energy Service Provider would owe the difference to the utility
and when the Power Exchange clearing price was above the frozen
bundled rate the utility would owe the difference to the Energy
Service provider. The resulting amounts are often referred to
as "PX credits."
As a result of PX clearing prices in California that were above
the entire amount of the frozen bundled rate (and not just the
generation component), Mr. Eklund informs Judge Gonzalez that
Enron Energy claimed $109,800,000 from Southern California
Edison under the PX credit mechanism between May of 2000 and
January of 2001. But Southern California Edison refused to pay
these amounts to Enron Energy. This prompted Enron Energy to
file a complaint on January 22, 2001 with the California Public
Utility Commission claiming that Southern California Edison
violated:
(i) the terms and conditions of its Energy Service Provider
Agreements, and
(ii) the terms and conditions of its CPUC-approved tariff and
claiming that Southern California Edison owed Enron
Energy outstanding debts for PX credit balances on direct
Access customer accounts.
In its response, Mr. Eklund notes that Southern California
Edison asserted numerous defenses, including that due to the
occurrence of certain events direct access customers were no
longer entitled to PX credits. Mr. Eklund adds that Southern
California Edison also alleged that affiliates of Enron Energy
possessed market power that contributed to the high PX clearing
prices that gave rise to the PX credits claimed by Enron Energy.
On August 30, 2001, Mr. Eklund relates that Enron Energy filed a
second complaint. Enron Energy alleged that Southern California
Edison had unilaterally removed the cumulative unpaid PX credit
balances from its direct access customer accounts, in order to
prevent Enron Energy from setting off these balances against
amounts owed to Southern California Edison on account of the T&D
component on behalf of Enron Energy's direct access customers.
According to Mr. Eklund, Enron Energy has made payments on
account of the T&D component as deposits with the California
Public Utility Commission, which deposits total approximately
$9,700,000.
To resolve the dispute, the parties entered into the Settlement
Agreement, the salient terms of which are:
A. Southern California Edison agrees to pay Enron Energy
Services and Enron Energy Marketing $97,259,703, in the
aggregate, in full satisfaction of any and all claims by
Enron Energy Services and Enron Energy Marketing against
Southern California Edison comprising or related in any
way to outstanding claims for credit balances on direct
access customer accounts accrued through the date of the
execution of the Settlement Agreement and allegedly due
and owing by Southern California Edison to Enron Energy
Services and Enron Energy Marketing, net of amounts owed
by Enron Energy Services and Enron Energy Marketing to
Southern California Edison for T&D services as of the
execution date;
B. Upon receipt of the Settlement Amount, Enron Energy
Services and Enron Energy Marketing, on behalf of
themselves and their agents, including their directors,
officers, employees, legal representatives, creditors,
trustees in bankruptcy, successors, and assigns,
absolutely and unconditionally release and acquit and
forever discharge Southern California Edison and its
present or former parents subsidiaries, affiliates,
directors, officers, agents, insurers, legal
representatives, successors and assigns from any and all
claims relating to the Credit Balances;
C. Upon payment of the Settlement Amount, Southern California
Edison, on behalf of itself and its agents, including its
directors, officers, employees, legal representatives,
successors and assigns, absolutely and unconditionally
releases and acquits and forever discharges Enron Energy
Services and Enron Energy Marketing and their present or
former parents, subsidiaries, affiliates, directors,
officers, agents, insurers, legal representatives,
creditors, trustees in bankruptcy, successors and assigns
from any and all claims relating to the Credit Balances;
D. Enron Energy Services and Enron Energy Marketing and
Southern California Edison agree to execute Notices of
Dismissal for Case No. 01-01-029 and Case No. 01-08-041
pending before the California Public Utility Commission,
which Notices of Dismissal shall effectuate dismissal of
Enron Energy Services' and Enron Energy Marketing's claims
against Southern California Edison with prejudice and
which Notices of Dismissal shall effectuate dismissal of
Southern California Edison's counter-complaints without
prejudice to the subsequent assertion by Southern
California Edison (and challenge by Enron Energy Services
and Enron Energy Marketing) of claims:
(i) based in whole or in part on allegations involving
the exercise of market power in other proceedings
before the California Public Utility Commission,
the Federal Energy Regulatory Commission, state or
federal court or any other court or agency, and
(ii) based on under-scheduling and underreporting of
power by Enron Energy Services and Enron Energy
Marketing. After execution of the Notices of
Dismissal and payment by Southern California Edison
of the Settlement Amount, Enron Energy Services and
Enron Energy Marketing will be entitled to return
of the $9,700,000 in deposits in connection with
Complaint II and Southern California Edison will
have no claim on such funds; (Enron Bankruptcy
News, Issue No. 19; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
FEDERAL-MOGUL: Asbestos Claimants Tap Lovells As Int'l Counsel
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved
the Official Committee of Asbestos Claimants' application to
retain Lovells, a law firm headquartered in London, England, as
international counsel, nunc pro tunc to January 23, 2002, to
perform services in connection with Federal-Mogul Corporation's
Chapter 11 cases, the English Debtors' administration
proceedings, the Cross-Border Insolvency Protocol approved by
the Court in this case, and relevant issues that may arise with
respect to non-debtor European affiliates of the Debtors.
Lovells is an international firm with offices in 26 locales,
including England, Europe, Asia, and the United States.
The activities and the services of the Committee's international
counsel for the foreseeable future are expected to include:
A. assisting and advising the Committee regarding legal issues
that arise concerning the English Debtors and the Debtors'
other European affiliates;
B. representing the Committee at hearings to be held in the
U.K. and communicating with the Committee regarding
the matters heard and issues raised as well as the
decisions and considerations of the U.K. Courts;
C. reviewing and analyzing applications, orders, operating
reports, schedules and statements of affairs filed
and to be filed with this Court or the U.K. courts by
the English Debtors or other interested European or
international parties;
D. advising the Committee as to the necessity and propriety
of the foregoing and their impact upon the rights of
asbestos-health related claimants, and upon the case
generally;
E. and, after consultation with and approval of the
Committee, consenting to appropriate orders on its
behalf or otherwise objecting thereto;
F. assisting the Committee in preparing appropriate legal
pleadings and proposed orders relating to the English
Debtors or the Debtors' other European affiliates, as
may be required in support of positions taken by the
Committee and preparing witnesses and reviewing
documents relevant thereto;
G. assisting the Committee and its U.S. Counsel in the
solicitation and filing with the Court of acceptances
or rejections of any proposed plan or plans of
reorganization;
H. assisting and advising the Committee with regard to
communications to British and other European
asbestos-related claimants regarding the Committee's
efforts, progress and recommendation with respect to
matters arising in the case as well as any proposed
plan of reorganization; and
I. assisting the Committee and its U.S. Counsel generally
by providing such other services as may be in the
best interest of the creditors represented by the
Committee, including issues that may arise from time
to time in this Court.
Lovells' hourly rates are:
England United States
------- -------------
Partners 450 $345 - 625
Senior Associates 330 - 350 265 - 400
Junior Assistants 220 - 275 195 - 255
(Federal-Mogul Bankruptcy News, Issue No. 14; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
FEDERAL-MOGUL: Extends CEO & COO Transition Period
--------------------------------------------------
To ensure continuity of leadership during the company's current
restructuring, Federal-Mogul Corporation (NYSE: FMO) announced
that Chairman and Chief Executive Officer Frank Macher and
President and Chief Operating Officer Chip McClure will remain
in their current roles for the foreseeable future -- extending
the transition period before McClure succeeds Macher as CEO and
president.
"Chip McClure and I have agreed to maintain our current roles as
we work with the various bankruptcy committee members to develop
our Plan of Reorganization. Continuity is critical as we move
forward in our ongoing negotiations," Macher said.
"Our first priority is to emerge from Chapter 11 in a timely and
orderly fashion," said McClure. "It is in the best interest of
all our stakeholders that we remain in our positions for a
longer period of time to allow our progress to continue."
Macher and McClure joined Federal-Mogul on January 11, 2001 --
Macher as chief executive officer and McClure as president and
chief operating officer. Macher was appointed to the additional
position of chairman of the board of directors on October 1,
2001, the same day the company voluntarily filed for financial
restructuring under Chapter 11 of the U.S. Bankruptcy Code. At
the time Macher and McClure joined Federal-Mogul, the company
announced a leadership succession plan where McClure would
succeed Macher as chief executive officer and president in July
2002.
Federal-Mogul is a global supplier of automotive components and
sub-systems serving the world's original equipment manufacturers
and the aftermarket. The company utilizes its engineering and
materials expertise, proprietary technology, manufacturing
skill, distribution flexibility and marketing power to deliver
products, brands and services of value to its customers.
Federal-Mogul is focused on the globalization of its teams,
products and processes to bring greater opportunities for its
customers and employees, and value to its constituents.
Headquartered in Southfield, Michigan, Federal-Mogul was founded
in Detroit in 1899 and today employs 49,000 people in 24
countries. For more information on Federal-Mogul, visit the
company's Web site at http://www.federal-mogul.com.
FLAG TELECOM: Files for Voluntary Chapter 11 Protection in NY
-------------------------------------------------------------
FLAG Telecom (Nasdaq: FTHL; LSE: FTL) announced that it has
filed a voluntary petition under Chapter 11 of the United States
Bankruptcy Code with the United States Bankruptcy Court for the
Southern District of New York. Certain subsidiaries of the
company have also filed voluntary petitions under Chapter 11.
This action was taken after the Board of Directors authorized
the filing of the Petition by unanimous vote. The Board's action
was taken following the acceleration of the bank debt of FLAG
Atlantic Ltd by the syndicate of banks which are its lenders,
which constituted a cross-default under the company's indenture
for its outstanding senior notes.
As announced on April 11, the Board of Directors has authorized
FLAG Telecom's management and advisors to negotiate with certain
creditors, including representatives of the FLAG Telecom
Atlantic Bank Group, holders of its various Senior Notes, and
significant trade creditors, regarding a comprehensive financial
restructuring. FLAG Telecom will attempt to reach agreement with
these representatives regarding the material terms of a
financial restructuring in the coming weeks. If and when such an
agreement is reached, a plan of reorganization will be filed
with the court, and, when approved, will allow the company to
emerge from Chapter 11 with a deleveraged balance sheet and a
strong operational base.
FLAG intends to manage its business in a focused manner,
conserving capital and reducing costs where appropriate. It will
continue to provide core backbone capacity to traditional
carriers, Internet Service Providers and other content
providers.
FLAG Telecom is a leading global network services provider and
independent carriers' carrier providing an innovative range of
products and services to the international carrier community,
ASPs and ISPs across an international network platform designed
to support the next generation of IP over optical data networks.
FLAG Telecom has the following cable systems in operation or
under development: FLAG Europe-Asia, FLAG Atlantic-1 and FLAG
North Asian Loop. Recent news releases and information are on
FLAG Telecom's Web site at http://www.flagtelecom.com
FLAG TELECOM: Case Summary & Largest Unsecured Creditors
--------------------------------------------------------
Lead Debtor: FLAG Telecom Holdings Limited
41 Cedar Avenue
Hamilton HM 12, Bermuda
Bankruptcy Case No.: 02-11732
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
FLAG Telecom Holdings Limited 02-11732
FLAG Atlantic Limited 02-11733
FLAG Atlantic Holdings Limited 02-11734
FLAG Limited 02-11735
FLAG Pacific USA Limited 02-11736
Type of Business: FLAG Telecom is a leading global network
services provider and independent carriers'
carrier providing an innovative range of
products and services to the international
carrier community, ASPs and ISPs across an
international network platform designed
to support the next generation of IP over
optical data networks. FLAG Telecom has the
following cable systems in operation or
under development: FLAG Europe-Asia, FLAG
Atlantic-1 and FLAG North Asian Loop.
Leveraging this unique network, FLAG
Telecom's Network Services business markets a
range of managed bandwidth and value added
services targeted at carriers, ISPs, and ASPs
worldwide. Principal shareholders are:
Verizon Communications Inc., Dallah Albaraka
Group (Saudi Arabia) and Tyco International
Ltd.
Chapter 11 Petition Date: April 12, 2002
Court: Southern District of New York
Judge: Allan L. Gropper
Debtors' Counsel: Conor D. Reilly, Esq.
Janet M. Weiss, Esq.
M. Natasha Labovitz, Esq.
Craig A. Bruens, Esq.
Paul H. Guillotte, Esq.
Sarah K. Larcombe, Esq.
Joseph Furst, Esq.
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
Telephone (212) 351-4000
Fax (212) 351-4035
Total Assets: $3,476,666,000 (as per Dec. 31, 2001 Consolidated
Balance Sheet)
Total Debts: $3,046,746,000 (as per Dec. 31, 2001 Consolidated
Balance Sheet)
Debtor's Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
The Bank of New York Indenture Trustee $564,000,000
101 Barclay Street for 11.625%
Floor 21 West Senior Dollar and
New York, NY 10286 Senior Euro Notes
Attn: Corporate Trust due 2010
Administration -
Global Finance Unit
York Capital Management 11-5/8% Senior $48,132,000
350 Park Avenue, 4th Floor Notes due
New York, NY 10022 March 2010
Cybill Yee
Tel: 212-651-0500
Fax: 212-651-0501
Colonial Management 11-5/8% Senior $40,000,000
Associates, Inc. Notes due
Equity Department March 2010
1 Financial Center, 13th Floor
Boston, MA
Carl Ericson
Tel: 617-426-3750
Fax: 617-772-3995
Varde Investment Partners LP 11-5/8% Senior $18,600,000
3600 West 80th Street, Suite 425 Notes due
Minneapolis, MN 55419 March 2010
Tel: 952-893-1554
Fax: 952-893-9613
Smith Barney 11-5/8% Senior $7,540,000
Smith Barney Mutual Funds Notes due
333 West 34th Street, 3rd Floor March 2010
John Bianchi
Tel: 800-451-2010
Brinson Advisors, Inc. 11-5/8% Senior $5,500,000
Mitchell Hutchins Funds Notes due
1285 Avenue of the Americas March 2010
New York, NY 10019
Marianne Rossi
Tel: 212-713-2000
Aragon Investments, Ltd 11-5/8% Senior $4,005,000
Chicago, IL 60606-3405
Sutter Real Estate 11-5/8% Senior $4,000,000
San Francisco, CA 94111 Notes due
March 2010
Bank of Montreal 11-5/8% Senior $3,250,000
100 Kings Street West, 3rd Floor Notes due
First Canadian Place March 2010
Toronto Ontario M5X 1H3
Lemuel Seabrook
Redwood Capital Mgmt 11-5/8% Senior $3,000,000
Englewood Cliffs, NJ 07632 Notes due
March 2010
Wells Fargo Capital Markets 11-5/8% Senior $3,000,000
550 California St, FL 14 Notes due
San Francisco, CA 94104 March 2010
Louise Chen
Atlantic Asset Management 11-5/8% Senior $2,500,000
New York, NY 10006 Notes due
1111-5/8% Senior March 2010
HSBC Bank Plc Global 11-5/8% Senior $2,250,000
Investment Services Notes due
England March 2010
Satellite Credit 11-5/8% Senior $2,000,000
Opportunities Fund, Ltd Notes due
Boston, MA 02110-1727 March 2010
Trust Company of the West (TCW) 11-5/8% Senior $2,000,000
865 S Figueroa Notes due
Los Angeles, CA 90071 March 2010
Enterprise Capital Management 11-5/8% Senior $1,450,000
Atlanta, GA 30326 Notes due
March 2010
First Allmerica Financial 11-5/8% Senior $1,250,000
Life Insurance Notes due
New York, NY 10066 March 2010
American Express Financial Corp. 11-5/8% Senior $1,000,000
55440-0534 Notes due
March 2010
Deutsche Banc Securities 11-5/8% Senior $745,000
Notes due
March 2010
USB Warburg LLC 11-5/8% Senior $300,000
677 Washington Blvd 9N Notes due
Stanford, CT 06901 March 2010
Carlos Lede
Tel: 203-719-7644
Fax: 203-719-0795
Afliac Market Value Fund 11-5/8% Senior $250,000
New York, NY 10006 Notes due
1111-5/8% Senior March 2010
Latham & Watkins Professional $48,642
Services
Arthur Andersen-UK Trade Debt $22,171
American Stock Transfer Trade Debt $4,000
& Trust
Appleby, Spurling & Kempe Professional $3,001
Services
Financial Times Trade Debt $2,774
B. FLAG Atlantic Limited's Largest Unsecured Creditors
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Tycom Trade Debt $1,737,288
Building A
60 Columbia Turnpike
Morristown, New Jersey 07960
Dresdner Bank Bank Debt $247,402
Skadden, Arps, Slate, Professional $6,473
Meagher & Flom Services
Hobbs Group L.L.C. Trade Debt $6,000
Appleby, Spurling & Kempe Professional $5,710
Services
Simmons & Simmons Professional $283
Services
Barclays Bank plc Bank Debt Unliquidated
C. FLAG Atlantic Holding Limited's Largest Unsecured Creditor
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Slaughter & May Professional $789
D. FLAG Limited's Largest Unsecured Creditors
Entity Nature Of Claim Claim Amount
------ --------------- ------------
IBJ Schroder Bank & Indenture Trustee $430,000,000
Trust Company for 8-1/4%
One State Street Senior Notes
New York, NY 10004 due 2008
Attn: Corporate Trust
Administration
Vanguard Group 8-1/4% Senior $56,630,000
Fixed Income Notes due
100 Vanguard Blvd January 2008
Karen Hogan
Tel: 610-669-1000
Fax: 610-407-2807
Jackson National Life 8-1/4% Senior $41,200,000
Jackson Natl Life Ins Co of NY Notes due
1 Corporate Way January 2008
Robert Fritts
Tel: 517-381-5500
PPM America, Inc. 8-1/4% Senior $32,800,000
Equity Investments Notes due
225 West Wacker Drive-1200 January 2008
Marvin Lutz
Tel: 312-634-2553
Fax: 312-634-0055
JoAnne Bianco
Tel: 312-634-2500
Fax:312-634-0906
Pimco Advisors 8-1/4% Senior $17,991,000
PIMCO Funds Notes due
P.O. Box 6430 January 2008
840 Newport Center Drive
Benjamin Trotsly
Tel: 800-426-0107
New York Life Insurance Equity 8-1/4% Senior $16,400,000
51 Madison Avenue-203 Notes due
Karen Beyer January 2008
Tel: 212-576-6194
Fax: 212-448-1711
Putnam Advisory Global 8-1/4% Senior $15,695,000
Fundamental Research Notes due
1 Post Office Square January 2008
John Boselli
Tel: 617-760-8461
Fax: 617-760-1375
UBS Warburg LLC 8-1/4% Senior $15,000,000
100 Liverpool Street Notes due
John Campbell January 2008
Tel: 0207 567 2939
Fax: 0207 567 2064
Appaloosa Investment L.P. 8-1/4% Senior $12,405,000
Notes due
January 2008
Lincoln National Life 8-1/4% Senior $12,000,000
915 South Clinton Street Notes due
Mail Stop 8A-02 January 2008
Jon Boscia
Tel: 219-455-2000
Fax: 219-455-1729
Palomino Fund Ltd 8-1/4% Senior $10,870,000
Notes due
January 2008
Eaton Vance Management Inc 8-1/4% Senior $10,650,000
Equity Research &
Investments
255 State Street
Michael Weilheimer
Tel: 617-482-8260
Fax: 617-542-7410
American Home Assurance 8-1/4% Senior $10,000,000
AIG Tower 1-2-4 Notes due
Kinshi-Cho January 2008
Yasuo Goto
Tel: 3-5619-3084
Fax: 3-5619-3153
Unumprovident Corporation 8-1/4% Senior $10,000,000
Notes due
January 2008
Perry Capital 8-1/4% Senior $9,949,000
599 Lexington Avenue, 36th Floor Notes due
New York, NY January 2008
Nat Klipper
Tel: 212-583-4000
Fax: 212-583-4099
Trust Company of the West (TCW) 8-1/4% Senior $9,000,000
400 South Hope Street, 3rd Floor Notes due
Richard Pool January 2008
Tel: 212-553-9865
Fax: 212-553-9880
Offit 8-1/4% Senior $8,000,000
520 Madison Avenue, 27th Floor Notes due
New York, NY January 2008
William Charlton
Tel: 212-350-3776
Fax: 212-371-7687
Provident Life 8-1/4% Senior $8,000,000
1 Fountain Square Notes due
Vicki Corbett January 2008
Tel: 423-755-1373
Deutsche Banc Securities 8-1/4% Senior $6,705,000
Notes due
January 2008
Marathon Asset Management LLC 8-1/4% Senior $6,200,000
230 Park Avenue, 7th Floor Notes due
Andrew Rabinowitz January 2008
Tel: 212-499-1350
Fax: 212-499-1385
AIG Life 8-1/4% Senior $6,000,000
AIG Life Insurance Co. Notes due
Post Office Box 667 January 2008
John Oehmke
Tel: 302-594-2000
Freshfields Bruckhaus Deringer Professional $82,070
Services
Arthur Andersen & Co. (Bda) Professional $61,130
Services
Arthur Andersen (Malaysia) Professional $57,996
Services
Agilent Technologies UK Ltd Trade Debt $43,547
Hobbs Group Trade Debt $12,587
GAP INC: Reports Decreasing Sales For March Over Weak Market
------------------------------------------------------------
Gap Inc. (NYSE:GPS) reported sales of $1.21 billion for the
five-week period ended April 6, 2002, compared with sales of
$1.24 billion for the same period ended April 7, 2001, which
represents a 2 percent decrease. The company's comparable store
sales for March 2002 were down 12 percent, compared to an 8
percent decrease in March 2001.
Comparable sales by division for March 2002 were as follows:
-- Gap Domestic: negative 12% versus negative 6% last year
-- Gap International: negative 16% versus negative 2% last year
-- Banana Republic: negative 4% versus negative 9% last year
-- Old Navy: negative 12% versus negative 13% last year
"Gap and Old Navy experienced weaker than expected pre-Easter
sales, which affected our performance in March," said CFO Heidi
Kunz. "Looking at the remainder of the first quarter, we expect
the Easter shift from April to March to negatively impact April
sales. Although difficult to predict, we continue to assume
April sales will be about 42% of the total sales for March and
April."
Gap Inc. will announce April sales on May 9 and is scheduled to
report its first quarter earnings results on May 16, following
the market close.
Year-to-date sales of $1.9 billion for the 9 weeks ended April
6, 2002 decreased 5 percent compared with sales of $2.0 billion
for the same period ended April 7, 2001. The company's year-to-
date comparable store sales decreased 14 percent compared to a
decrease of 9 percent in the prior year.
As of April 6, 2002, Gap Inc. operated 4,199 store concepts
compared to 3,799 store concepts last year, which represents an
increase of 11 percent. The number of stores by location totaled
3,112 compared to 2,939 stores by location last year, which
represents an increase of 6 percent.
* * *
As previously reported, Fitch Ratings has lowered its rating of
Gap, Inc.'s $2 billion of senior unsecured notes to 'BB-' from
'BB' and assigned a 'BB-' rating to the company's expected $1
billion convertible note to be issued under Rule 144A.
The downgrade reflects the significant addition to the company's
debt burden, which further weakens its credit profile as well as
somewhat weaker than anticipated year-end results. The Rating
Outlook remains Negative. This rating was initiated by Fitch as
a service to users of its ratings. The rating is based on public
information.
GLOBAL CROSSING: Level 3 Seeks Stay Relief to Initiate Eviction
---------------------------------------------------------------
Level 3 Communications Limited, and Level 3 Landing Station,
Inc. move the Court for an order granting relief from the
automatic stay to permit Level 3 to commence an eviction action
in state court in Suffolk County, New York against GT Landing II
Corp. from certain space owned by Level 3 and currently occupied
by GT Landing II.
Harvey R. Miller, Esq., at Weil Gotshal & Manges LLP in New
York, New York, tells the Court that the Motion should be denied
as there is no cause to lift the automatic stay. He indicates
that despite the assertions of Level 3, Global Crossing Ltd.,
and its debtor-affiliates have a legal right to occupy the New
York Cable Landing Station. This legal right derives from three
sources: an executed lease agreement that specifically provides
for the Debtors' possession of the premises, a construction
agreement which provides for the Debtors' possession of the
premises, and the conduct of the parties. Indeed, the Debtors
have been in continuous occupation of the space since
approximately November 2000 and have made substantial
improvements to the premises costing over $20 million. The
Debtors have also invested over $180 million in transatlantic
routes that would be lost without the New York Cable Landing
Station.
Mr. Miller points out that Level 3's Motion seeks to recreate
history in an attempt to gain leverage in a broad and
complicated dispute between Level 3 and the Debtors with respect
to a wide array of issues. Among other things, Level 3 owes the
Debtors approximately $10 million with respect to transatlantic
capacity they have purchased from Global Crossing. Level 3 seeks
to target a significant asset of the Debtors - a gateway to the
European network - in an effort to avoid a comprehensive
resolution of the outstanding issues between the parties.
Mr. Miller submits that Level 3's Motion fails as to substance,
because the Debtors have a valid right to possess the premises,
and also fails as to process. Federal Rule of Bankruptcy
Procedure 7001 provides that the appropriate manner to determine
the validity of an interest in property is through an adversary
proceeding. In the Second Circuit, the controlling law is Orion
Pictures Corp. v. Showtime Networks, Inc. (In re Orion Pictures
Corp.), 4 F.3d 1095, 1098 (2d Cir. 1993), which holds that the
validity of an underlying agreement must be determined with the
protections contained in an adversary proceeding; not in a
summary proceeding.
Mr. Miller states that under Orion, if Level 3 wants to now
argue, after Global Crossing has been in possession of the New
York Cable Landing Station for approximately 17 months, that
Global Crossing has no legal right of possession, it needs to
commence an adversary proceeding to do so. This is especially
appropriate because of the complicated relationship between the
parties, the numerous factual issues required to be developed
through discovery, and the detrimental impact to the Debtors'
estates that would arise from a cessation of access to a
significant portion of the Debtors' trans-Atlantic network.
Mr. Miller contends that Level 3 has failed to demonstrate the
requisite cause to be granted relief from the automatic stay to
commence an eviction action. Contrary to Level 3's assertions,
the Debtors occupy the New York Cable Landing Station pursuant
to a valid New York Lease and even if the New York Lease were
not valid, the Debtors would still have a legal right to
possession under the Co-Build Agreement. Staying Level 3's
eviction action against GT Landing II is critical to the
Debtors' reorganization. If the Debtors and their equipment were
evicted from the New York Cable Landing Station, a crucial
segment of the Debtors' network would be imperiled, placing the
entire global network at risk.
Moreover, Mr. Miller believes that under Bankruptcy Rule 7001(2)
and the Second Circuit's decision in Orion, a proceeding to
determine the validity of a lease must be brought as an
adversary proceeding to provide the parties with adequate time
and notice to commence the necessary discovery. Level 3 should
not be permitted to raise complex issues of fact and law during
a motion for relief from the stay, which is limited in scope.
Finally, Level 3 comes to the Court with unclean hands. To the
extent that there may be a flaw in the New York Lease, the flaw
is due to Level 3's breach of the Co-Build Agreement. Level 3
should not be provided with the opportunity to bring an eviction
action against the Debtors, because of circumstances created by
Level 3. (Global Crossing Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ICG COMMS: Court Extends Solicitation Period Through July 1
-----------------------------------------------------------
ICG Communications, Inc. and its subsidiaries and affiliates 4th
motion for an order further extending the exclusive period
during which the Debtors may solicit acceptances of a
reorganization plan to and including July 1, 2002, and
prohibiting any party other than the Debtors from filing a plan
during this period was granted.
The Debtors are gained a two month extension of the Solicitation
Period to afford the Debtors additional time to complete the
ongoing plan negotiation process and then solicit acceptances of
that plan during the Solicitation Period. During the
Solicitation Period, pursuant to section 1121(d) of the
Bankruptcy Code, no party other than the Debtors would be
permitted to file or solicit acceptances of a reorganization
plan for the Debtors. (ICG Communications Bankruptcy News, Issue
No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900)
INTELLICORP INC: Shares Knocked Off Nasdaq Market
-------------------------------------------------
IntelliCorp, Inc., a leading provider of business process
optimization solutions, announced that it has been notified by
the Nasdaq Stock Market, Inc. that its common stock will be
delisted from the Nasdaq SmallCap Market, effective with the
open of business on April 12, 2002, as a result of IntelliCorp's
failure to meet Nasdaq's continued listing requirements.
IntelliCorp's common stock will be eligible for trading on the
Over-the-Counter Bulletin Board (OTCBB).
As previously announced, the Company plans to hold a Special
Meeting of Shareholders on April 30, 2002, and anticipates the
release of its third quarter earnings in early May.
IntelliCorp is a leading solutions and services firm focused on
the optimization of key business processes across the entire
enterprise requiring extensive technical integration and
business process expertise. Today's challenging business climate
requires the tight integration of front-office processes with
back-office systems to reduce cost and improve operational
efficiencies, while increasing customer satisfaction and
retention. IntelliCorp has deep capability and experience with
SAP R3, MySAP.com, Siebel eBusiness Applications, and a number
of other dominant software suites and components. In addition,
IntelliCorp offers a suite of software solutions, tools, and
applications for business process management and support of the
integration and management of SAP's back office systems.
Headquartered in Mountain View, the company has offices across
the United States and throughout Europe. IntelliCorp's Web site
is http://www.intellicorp.com
INTERNET ADVISORY: Inks Pact to Acquire Go West Entertainment
-------------------------------------------------------------
On March 11, 2002 the Internet Advisory Corporation entered into
an Acquisition Agreement with Go West Entertainment Inc., a New
York corporation and the shareholders of Go West. The Go West
shareholders are Richard Goldring, Elliot Osher and William
Osher. Pursuant to the Acquisition Agreement, The Internet
Advisory Corporation acquired all of the issued and outstanding
capital stock of Go West from the Go West shareholders, making
Go West a wholly owned subsidiary of The Internet Advisory
Corporation in exchange for 10,000,000 shares of the Internet
Advisory Corporation's restricted common stock.
Go West was formed on May 11, 2001 to establish, own and operate
upscale adult entertainment nightclubs. The principal assets of
Go West are a twenty year lease on a building at 533-535 West
27th Street, New York, New York at which Go West intends to open
an adult entertainment nightclub during the fourth
quarter of 2002 under the name "Scores West" and a license
agreement with Heir Holding Co., Inc., a Delaware corporation
granting Go West the right to use the "Scores" name in New York
City for up to three adult entertainment nightclubs. The
determination of the amount of consideration to pay for the
purchase of the Go West shares was based on projected income
from the ownership of three clubs. Heir is the owner of the
intellectual property rights respecting the name "Scores" which
is a recognized name in the adult entertainment industry owing
to the success of "Scores Showroom" a successful and well known
adult entertainment nightclub operating at East 60th Street in
New York, NY since 1991. Scores Showroom is owned by Scores
Entertainment, Inc., a New York corporation. Go West intends to
model "Scores West" and all other "Scores" clubs it may operate
in the future after Scores Showroom by providing its customers
with a discreet, first class entertainment experience. Scores
West will offer topless dancing, a gourmet quality restaurant
and bar operations.
The License Agreement between Heir and Go West dated August 15,
2001, as amended on March 3, 2002, grants Go West the right and
license to use certain Scores trademarks in New York City in
connection with the operation of up to three adult entertainment
topless dance clubs and the retail sale of commercial
merchandise, including tee-shirts, sweatshirts, sweat pants,
jackets, baseball hats, key rings and other similar merchandise,
from each club location. All merchandise sold pursuant to the
License Agreement must be purchased from Heir at Heir's then
current wholesale prices. The License Agreement also provides
for an annual royalty payment of $520,000 to be paid by Go West
to Heir. The term of the License Agreement continues until Go
West ceases or discontinues the operation of Scores West.
The Lease, which is dated October 3, 2001, commences May 1, 2002
or June 1, 2002 as determined by Go West and provides for a 20
year lease term. The Lease provides for a $1,000,000 security
deposit, $750,000 of which had been paid to date, and an
escalating annual base rental during the term of the Lease
starting with an annual base rental of $700,000 during year one
(1) and ending with an annual base rental of $1,754,784 during
year twenty (20). The Lease contains an option to buy the
premises at any time through and including December 31, 2003 at
a price of $10,000,000. Go West intends to renovate the
structure at its own expense for purposes of operating the
premises as "Scores West." 10,000 square feet of the premises,
the maximum permitted by New York City law will be utilized by
"Scores West." The west side Manhattan location from which
"Scores West" will operate was carefully chosen by Go West in
recognition of New York City's increasingly restrictive zoning
regulations and policies respecting the operation of
establishments that provide adult entertainment. Unlike other
parts of Manhattan that prohibit adult entertainment businesses
from operating altogether or restrict the amount of customer
accessible space an establishment can devote to adult uses, the
"Scores West" location contains no such zoning restrictions.
The Internet Advisory Corporation, Go West, Heir and Scores
Entertainment, Inc. are affiliated entities. The Internet
Advisory Corporation's president, chief operating officer,
director and principal shareholder, Richard Goldring is an
officer and director of Go West, an officer, director and
shareholder of Heir and the operations manager for Scores
Showroom. John Neilson, The Internet Advisory Corporation's
secretary and director is a management consultant for both Go
West and Scores Entertainment, Inc. The Internet Advisory
Corporation's treasurer and director, Joseph Erickson is
the controller for Scores Entertainment, Inc. Elliot Osher is an
officer and director of Go West, an officer, director and
shareholder of Heir and the director of club operations for
Scores Showroom. William Osher is an officer and director of Go
West, an officer and director and shareholder of Heir, and the
day manager for Scores Showroom. The Internet Advisory
Corporation plans to leverage the adult entertainment nightclub
experience of its management in an owner/ operator business
model in which it intends to both own and manage clubs. Pursuant
thereto, The Internet Advisory Corporation is engaged in
negotiations to manage Scores Showroom. As The Internet Advisory
Corporation shifts the focus of its business to its intended
adult entertainment nightclub operations, it continues to review
the ongoing viability of its existing ISP business.
The Internet Advisory Corporation is a publicly traded company
in the United States and Europe. In the United States it trades
on the OTC BB Symbol: PUNK and in Europe on the Frankfurt Stock
Exchange Symbol: IAS. The Company offers an expanding package of
enhanced Internet tools, including website hosting and
electronic commerce solutions, (E-Commerce), enabling its
customers to conduct transactions with their customers and
vendors over the Internet with secure Internet communication
links permitting customers to engage in private and secure
Internet communication with their employees, vendors, customers
and suppliers. Internet Advisory filed for Chapter 11
Reorganization on May 25, 2001, in the U.S. Bankruptcy Court for
the Southern District of Florida in Broward.
KAISER: Asbestos Claimants Hiring Tersigni as Financial Advisor
---------------------------------------------------------------
The Official Committee of Asbestos Claimants appointed in Kaiser
Aluminum Corporation's chapter 11 cases, asks the U.S.
Bankruptcy Court for the District of Delaware for permission to
employ and retain L. Tersigni Consulting P.C. as its accountant
and financial advisor.
Thomas Craig, a member of the Asbestos Claimants' Committee,
says that Tersigni provides expert services regarding
accounting, financial and valuation matters in bankruptcy and
litigation related matters. The services that Tersigni will
perform for the Committee include:
A. Development of oversight methods and procedures so as to
enable the Committee to fulfill its responsibilities to
monitor the Debtors' financial affairs;
B. Interpretation and analysis of financial materials, including
accounting, tax, statistical, financial and economic data,
regarding the Debtors and other relevant parties; and,
C. Analysis and advice regarding additional accounting,
financial, valuation and related issues that may arise in
connection with plan negotiations and otherwise in the
course of these proceedings.
According to Mr. Craig, the Committee's selection of Tersigni is
based upon its extensive experience and knowledge in providing
expert consultation and advice regarding complex financial
matters. Tersigni also is experienced in rendering such
services as the analysis and interpretation of accounting, tax,
statistical financial, economic and valuation data.
Tersigni has extensive experience in providing accounting,
financial advisory and valuation services in bankruptcy and
litigation consulting matters. Tersigni has provided similar
consulting and expert testimony services for such firms as: The
Babcock and Wilcox Company, Pittsburgh Coming Corporation, Owens
Coming Corporation, Armstrong World Industries, Inc., G-1
Holdings, Inc., W.R. Grace & Company, United States Gypsum
Corporation, Federal Mogul Global, Inc. North American
Refractories Company, H.K. Porter Company, Inc., Keene
Corporation, and Hillsborough Holdings Company.
Mr. Craig believes that Tersigni's services are both necessary
and appropriate and will assist the Committee in the
negotiation, formulation, development, and implementation of the
plan of reorganization.
Mr. Craig relates that Tersigni is compensated on an hourly
basis. Mr. Tersigni's hourly rate is $425, while the other
professionals that Tersigni will employ, if needed, are
compensated on the basis of the following hourly rate schedule:
Position Rate
-------------------------- ------
Managing Director Level $425
Director Level $320
Senior Manager Level $290
Manager Level $240
Professional Staff Level $160 - $185
Paraprofessional Level $ 80
Loreto Tersigni, Principal of L. Tersigni Consulting P.C.,
indicates that, to the best of his knowledge, they have no
relationship with any entity which would be adverse to the
Committee or the creditors. In addition, Tersigini and its
professionals is not a creditor, former employee, equity
security holder, or an insider of the Debtors.(Kaiser Bankruptcy
News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
KINDRED HEALTHCARE: Tinkers with Revolver & Senior Secured Notes
----------------------------------------------------------------
Kindred Healthcare, Inc. (NASDAQ:KIND) announced that it has
amended certain terms of both its revolving credit facility and
senior secured notes.
The more significant changes to these agreements allow the
Company to make acquisitions and investments in healthcare
facilities up to an aggregate amount of $130 million compared to
$30 million before the amendments. In addition, the amendments
allow the Company to borrow up to $45 million under the
revolving credit facility to finance future acquisitions and
investments in healthcare facilities. The amount of credit under
the revolving credit facility, which was reduced to $75 million
in connection with the Company's equity offering in the fourth
quarter of 2001, has been restored to the $120 million level
that was in effect prior to the offering. The amendments also
allow the Company to pay cash dividends or repurchase its common
stock in limited amounts based upon certain annual liquidity
calculations. Finally, the Company agreed to certain revised
financial covenants, none of which are expected to materially
affect its financial flexibility. Other material terms of the
credit agreements, including maturities, repayment terms and
rates of interest, were unchanged.
The recently completed cash acquisition of Specialty Healthcare
Services, Inc. for $45 million was consummated within the
financial covenants of the Company's credit agreements prior to
the amendments and did not utilize any of the additional
financial resources associated with the amendments discussed
above.
At December 31, 2001, cash and cash equivalents totaled $190.8
million and the outstanding balance of the senior secured notes
aggregated $210.5 million. There were no outstanding borrowings
under the revolving credit facility at December 31, 2001.
Kindred Healthcare, Inc. is a national provider of long-term
healthcare services primarily operating nursing centers and
hospitals.
KINETEK INDUSTRIES: S&P Assigns B+ Rating to Sr. Secured Notes
--------------------------------------------------------------
Standard & Poor's assigned its 'B+' rating to Kinetek Industries
Inc.'s (a wholly-owned subsidiary of Kinetek Inc.) privately
placed $15 million senior secured notes due 2007, and to the
company's privately placed $11 million senior secured notes due
2007. At the same time, Standard & Poor's affirmed its long-term
corporate credit rating on Kinetek. Proceeds from the secured
notes are expected to be used pay to down outstanding bank
credit facility. Rating outlook is negative.
The 'B+' corporate credit rating on Kinetek, a wholly owned non-
restricted subsidiary of closely held Jordan Industries Inc.,
reflects its solid positions in small niche markets and its very
aggressive financial profile.
Kinetek is a leading manufacturer of specialty purpose electric
motors for the consumer, commercial, and industrial markets.
Although end-markets are cyclical, sufficient product line and
customer diversity, along with a competitive cost structure and
modest capital intensity, enable the firm to enjoy consistently
good operating margins. However, as the company integrates
acquisitions, operating margins can temporarily fluctuate. Many
of Kinetek's key end-markets, including the subfractional
refrigeration and appliance motor market and the drink vending
machine motor market, have declined significantly during the
past few quarters. As a result, sales declined 9% in 2001.
Industry fundamentals are not expected to improve in the next
couple of quarters.
Financial risk is expected to remain high for an extended
period, reflecting the firm's heavy debt burden and thin cash
flow protection. As a result of end-market weakness, EBITDA to
interest declined to 1.7 times, while total debt to EBITDA rose
to about 5.6x, at December 31, 2001. Although total debt to
EBITDA may rise towards the 6x area in the next couple of
quarters, leverage is expected to average in the 4x-5x range
over the business cycle. In the future, debt usage likely will
remain high because Kinetek likely will use modest free cash
flow generation for "bolt-on" acquisitions that extend product
offerings and geographic diversity. Therefore, EBITDA to
interest coverage is expected to average in the modest 2.0x-2.5x
range. Financial flexibility, while limited, benefits from
ownership in a number of discrete business units (which could be
sold, if necessary), limited debt amortization, and about $36
million in cash and capacity under the firm's bank credit
facility.
Outlook
A number of operational and working capital initiatives should
partially offset declining profitability and generate a modest
amount of free cash flow. Failure to stabilize financial
flexibility could lead to a downgrade in the near term.
KMART: Seeks Court Nod to Extend Exclusive Periods Thru June 30
---------------------------------------------------------------
Kmart Corporation and its 37 debtor-affiliates ask the Court to
extend their exclusive periods to file and solicit acceptances
of plan through the critical fourth quarter holiday sale season.
The Debtors ask the Court to extend its exclusive period in
which to file a plan of reorganization until March 31, 2003 and
asks that the deadline for soliciting creditors' acceptances of
that plan run through June 30, 2003.
According to John Wm. Butler, Jr., Esq., at Skadden, Arps,
Slate, Meagher & Flom, in Chicago, Illinois, these extensions
will allow the Debtors to focus substantially all of their
energy on operating their business, including stocking and
selling merchandise and creating a stable environment that will
maximize opportunity for vendors to ship desirable inventory on
appropriate terms.
Mr. Butler relates that other courts have previously granted
similar holiday exclusivity extensions in other large and
complex retail cases like Service Merchandise Company,
Montgomery Ward Holding Corporation, Bradlees Stores Inc.,
Elder-Beerman Stores Corporation, Caldor Corporation, among
others.
Importance of a Strong Holiday Sales
Mr. Butler explains that the Debtors depend heavily on the
fourth quarter holiday sales, which comprise almost 30% of their
total annual revenues. According to Mr. Butler, the prospect
that a competing plan of reorganization or liquidation might be
filed during the late summer or early fall months, just prior to
the upcoming holiday shopping season, would distract the
Debtors' drive to sell goods.
In order to achieve the strong fourth quarter results, Mr.
Butler relates that the Debtors must begin their annual holiday
inventory "build" in September of each year. "This holiday
inventory build peaks in late-Fall and involves the selection,
purchase, distribution and sale of hundreds of millions of
dollars of merchandise in a relatively short time frame," Mr.
Butler informs Judge Sonderby. This massive undertaking
requires:
-- precise coordination with the Debtors' vendors and
distributors;
-- dedication and effort of thousands of the Debtors'
employees and;
-- the bulk of the time of the Debtors' senior management.
"Furthermore, absent an extension of plan exclusivity through
the fourth quarter, already wary vendors will be unlikely to
establish trade terms or otherwise accommodate the Debtors'
needs during this all-important period," Mr. Butler adds.
Without such trade credit and other accommodations, Mr. Butler
warns that the Debtors will be forced to:
(a) place smaller and more frequent orders and pay invoices
on an accelerated basis; and
(b) borrow more under their post-petition credit facility
resulting in higher interest costs.
Moreover, Mr. Butler notes that if the Court does not extend
exclusivity at this moment in time or if plan exclusivity
terminates during the holiday inventory build, it will send the
very public message that the Debtors' reorganization efforts are
stagnating. In turn, Mr. Butler anticipates that this will
cause a crisis of confidence among the Debtors' key
constituencies including vendors, customers and employees. For
instance:
-- employees may again fear for the security of their jobs,
becoming less productive and causing unnecessary and harmful
attrition; and
-- vendors may tighten credit terms or refuse to ship altogether
and disheartened customers may patronize other retailers.
Thus, Mr. Butler maintains that the extension of the Exclusive
Periods is essential to permit the Debtors to establish
stability until they have conducted the holiday inventory build
and subsequent sales season. "Until this has happened, no one
can begin to formulate, much less file, a consensual, or even a
meaningful, plan of reorganization," Mr. Butler tells the Court.
The Debtors have repeatedly announced that they intend to file a
plan of reorganization in the Spring of 2003 and exit from
Chapter 11 protection in the Summer of 2003.
Formulation of a Business Plan
Accordingly, Mr. Butler relates that a credible long-term
business plan is essential to:
(1) the assessment of a reasonable range of values for the
Debtors' reorganized businesses, and
(2) the determination of how much debt and equity those
businesses will be able to support.
"Both of these assessments are prerequisites to the filing of a
plan of reorganization," Mr. Butler notes. However, Mr. Butler
emphasizes the Debtors' current focus must be on stabilizing
their business and preparing for the holiday shopping season.
"Only then can the Debtors focus the efforts on the formulation
of along-term business plan," Mr. Butler says.
"That's why the Debtors, in consultation with their financial
advisors, are now in the process of developing their strategic
operating plan," Mr. Butler explains. Once the holidays have
passed, Mr. Butler tells the Court that additional time will be
required to finalize development of the Debtors' long-term
business plan in light of actual operating results throughout
the critical 2002 holiday shopping season. Because a validated
business plan is the foundation for a plan of reorganization,
Mr. Butler argues it would be imprudent for the Debtors or any
other party in interest to file a plan of reorganization until
the Debtors:
-- complete the 2002 holiday shopping season and stabilize their
business,
-- tally and evaluate the holiday operating results,
-- complete the development of their long-term business plan
and,
-- as necessary, adjust the plan in light of the holiday
results'.
For these reasons, the Debtors contend that the Court should
extend their Exclusive Periods. The Debtors assure Judge
Sonderby that "cause" exists to grant the relief requested
because:
(a) these cases are undoubtedly large and complex;
(b) the Debtors have made progress towards reorganization;
(c) the Debtors are not using exclusivity to pressure
creditors;
(d) the Debtors must assess their holiday results before
formulating a long-term business plan; and
(e) the Debtors are paying their bills when they come due.
(Kmart Bankruptcy News, Issue No. 13; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
LTV CORP: LTV Sales Finance Co. Files Chapter 11 Petition
---------------------------------------------------------
The LTV Corporation's subsidiary, LTV Sales Finance Company has
brought a separate proceeding under Chapter 11, joining the
other LTV Debtors. S. Todd Brown, Esq., at Jones Day Reavis &
Pogue is counsel for this Debtor. The Petition and related
information is averred to by Sheri H. Edison, Assistant
Secretary for the Debtor.
LTV Sales Finance's Schedules reflect no interests in real
property, but the Debtor's interests in personal property are
valued at $24,526,648. LTV Sales Finance lists no liabilities
at all.
This Debtor shows no cash on hand or on deposit, identifying
$24,526,648 in intercompany receivables consisting of $3,190,931
owed by The LTV Corporation on invoices, and $21,335,717 owed by
The LTV Corporation as a note.
In its list of creditors, the Debtor includes the Bank Group as
secured creditors holding contingent, unliquidated, disputed
claims in an unknown amount. These creditors are:
* Abbey National Treasury Services PLC,
* The Chase Manhattan Bank NA,
* Credit Agricole Indosuez, and
* Standard & Poor's Corporation of New York.
The Debtor lists the Delaware Secretary of State, the Ohio
Department of Taxation Income/Corporate Franchise Tax Audit
Division, and the Texas Comptroller of Public Accounts as the
holders of contingent and unliquidated unsecured claims entitled
to priority of payment. In its Schedules, the Debtor lists
multiple state and federal taxing agencies, regulatory agencies,
and environmental agencies as holding contingent claims valued
at $0.
This Debtor is not a party to any executory contracts or leases.
The Debtor identifies no income for the calendar year of 2001, a
negative income of $9,521,000 for the calendar year of 2000, and
a positive income of $3,649,000 for the calendar year of 1999.
No payments to any creditor are shown to have been made in the
12 months preceding the Petition Date.
John Delmore of Independence, Ohio, is listed as the person who
kept or supervised the keeping of this Debtors' books and
records.
The case number for this proceeding is 02-40980. (LTV Bankruptcy
News, Issue No. 28; Bankruptcy Creditors' Service, Inc.,
609/392-00900)
LODGIAN: Asks Court to Stretch Plan Filing Deadline To Oct. 21
--------------------------------------------------------------
Lodgian, Inc. and its debtor-affiliates request an extension of
their exclusive periods, under Sections 1121(b) and (c) of the
Bankruptcy Code, to file a Chapter 11 Plan of Reorganization and
solicit creditors' acceptances of that Plan. Lodgian asks for 6
more months' time:
-- to and including October 21, 2002 to have the
exclusive right to propose and file a plan; and
-- to and including December 18, 2002 to solicit
acceptances.
The Debtors make it clear that this request is without prejudice
to their rights to seek additional and further extensions of
these periods as may be appropriate under circumstances then
prevailing. The requested extensions are realistic and
necessary given the multiple tasks to be completed and issues to
be resolved before a confirmable Plan can be proposed and
negotiated.
Adam C. Rogoff, Esq., at Cadwalader Wickersham & Taft in New
York, New York, submits that the Debtors are one of the largest
owners and operators of hotels located throughout the United
States (and one hotel in Canada). To date, the Debtors have
identified in excess of 26,000 creditors. The size and
complexity of the Debtors' businesses, together with the
Debtors' corporate structure and diverse financing arrangements,
place heavy demands on the Debtors' management and personnel
even in the best of times. However, the poor economic
environment affecting the hospitality industry generally,
combined with the daily demands of operating in Chapter 11, have
exacerbated the demands upon management.
By any reasonable measure, Mr. Rogoff claims that the Debtors'
Chapter 11 cases are sufficiently large and complex to warrant
an extension of the Filing and Solicitation Periods. These
cases, which involve 82 interrelated legal entities, thousands
of creditors, and a close to $1 billion dollars in liabilities,
is among the larger and more complex Chapter 11 cases -
certainly by Nationwide standards. Considering the sizes of the
estates involved and diversity of issues that must be resolved,
neither the Debtors nor any other party in interest could
realistically formulate, promulgate and build consensus for a
plan before April 19, 2002.
According to Mr. Rogoff, the Debtors are continuing to address
the multitude of tasks necessary to the daily administration of
these Chapter 11 cases. The Debtors have only very recently
filed their Schedules and Statements, selected their claims
agent, and moved to fix a bar date in these cases. These
represent essential steps in assessing the universe of claims
subject to restructuring. Accordingly, neither the Debtors nor
other parties in interest have had sufficient time to evaluate
the potential claims that could be asserted against the Debtors.
Mr. Rogoff contends that the Debtors need sufficient time to
analyze these claims - let alone prepare a meaningful disclosure
statement containing adequate information. The Debtors'
restructuring plans, discussions with various secured and
unsecured creditor constituencies regarding the reorganization
process, and daily operations as Chapter 11 Debtors In
Possession will consume the majority of the Debtors' time and
efforts in the upcoming months. Accordingly, an extension of the
Filing and Solicitation Periods is necessary to allow the
Debtors sufficient time to negotiate a plan and prepare a
disclosure statement containing adequate information.
Mr. Rogoff submits that extension of a debtor's exclusive period
to file a plan and the period to solicit acceptances for such a
plan are justified by progress in the resolution of issues
facing the debtor's estate. During the first three months of
these Chapter 11 cases, the Debtors have made substantial
progress in addressing certain of the major issues facing their
estates as of the Commencement Date. This includes the need for
the use of cash collateral and additional liquidity, and
preserving vital relationships with franchisors, vendors and
utility service providers. Given their importance, the Debtors
have devoted substantial time and effort to addressing these
fundamental threshold issues affecting their daily business
operations.
Since the Commencement Date, Mr. Rogoff points out that the
Debtors' senior management has expended enormous effort
responding to the many exigencies and other matters incidental
to the commencement of any Chapter 11 case. Efforts are
compounded given the size and complexity of the cases. For
example, the Debtors have been consumed with the task of
responding to a multitude of inquiries and informational
requests made by the Committee, the post-petition lenders,
franchisers, bondholders, vendors, hotel guests, utility
providers and other parties in interest.
Mr. Rogoff tells the Court that the initial stages of these
cases were consumed by the Debtors' extensive negotiations with
several independent lenders, each with their own agendas and
concerns as relates to their collateral. The complexity of the
negotiations is increased by the interests of the Debtors'
various franchisers, who expressed concerns over the sufficiency
of the Debtors' cash to meet on-going operational expenses. Only
after several weeks of intense negotiations were the Debtors
able to foster agreements, which resulted in individualized
consensual arrangements with their various secured lenders.
These represent vital efforts to preserving and maintaining the
going concern value of the Debtors.
Since the Commencement Date, Mr. Rogoff explains that the
Debtors have also been faced with a barrage of threats by
utilities seeking to alter or discontinue the Debtors' utility
services, notwithstanding the Court's Order entered on December
21, 2001, specifically prohibiting such activity. In addition,
certain utility providers filed motions seeking to reconsider or
vacate the Utility Order. These actions required the Debtors to
devote attention to negotiating and obtaining Court approval of
numerous additional protections for certain utility companies,
including:
A. establishment of a $1 million dollar reserve fund for the pro
rata benefit of certain of the utilities for the provision of
post-petition services,
B. the creation of expedited remedy procedures before this
Court, and
C. the implementation of centralized invoicing for post-petition
utility services.
Since the Commencement Date, in an effort to maintain positive
business relationships with their franchisers, and to continue
to operate under certain valuable flags, Mr. Rogoff informs the
Court that members of Lodgian's senior management, including the
President and CEO, have visited virtually all of Lodgian's
hotels to review quality and guest satisfaction issues. This
necessary "hands on" inspection of the Debtors' properties
required that senior management devote weeks to traveling
throughout the Country. Additionally, Lodgian recently formed a
Capital Expenditure Committee to address necessary capital
expenditures and renovations to certain hotel properties - all
towards the end of improving their business operations.
Lodgian's focus on enhancing the quality of their hotel
properties is essential to the Debtors' continued viability and
business values, which requires a nearly daily commitment of
certain of the Debtors' key employees and professionals.
Mr. Rogoff contends that the Debtors' reorganization is
proceeding at an appropriate pace. The Debtors' request for an
extension of the Filing and Solicitation Periods is not a
negotiation tactic, but instead, merely a reflection of the fact
that these cases are not yet ripe for the formulation and
confirmation of a viable plan of reorganization. Moreover, the
Debtors have kept sight of the need to deal with all of their
disparate parties in interest in these cases, including
approximately 16 groups of secured lenders, bondholders, trade
vendors, CREST holders, and franchisers. The Debtors and their
professionals have consistently conferred with these
constituencies on all major substantive and administrative
matters. Often, they have altered their positions in deference
to the views of the Committee, the U.S. Trustee, the post-
petition lenders under the DIP Facility, or other parties in
interest. The Debtors have no intention of discontinuing this
dialog if this motion is granted.
Mr. Rogoff assures the Court that the Debtors have sufficient
liquidity and are paying their bills as they come due. This is
unlikely to change given this Court's approval of the Debtors'
use of cash collateral and their $25 million DIP Facility. In
short, it is of paramount importance that a strong signal be
sent now that the Debtors' reorganization is, and remains, on
track.
Accordingly, Mr. Rogoff believes that the Filing and
Solicitation Periods should be extended to afford the Debtors a
full and fair opportunity to negotiate, propose and seek
acceptance of a Chapter 11 plan. The requested extension of the
Filing and Solicitation Periods is warranted and appropriate
under the circumstances. The requested extension is realistic
and necessary, does not prejudice the legitimate interest of the
Debtors' creditors, and affords the Debtors a meaningful
opportunity to pursue a feasible and consensual plan. Under
these circumstances, an extension of the Filing and Solicitation
Periods comports with Chapter 11 of the Bankruptcy Code.(Lodgian
Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
MAIL-WELL: Signs-Up Gordon Griffiths as Print Group Pres. & CEO
---------------------------------------------------------------
Mail-Well, Inc. (NYSE: MWL) names Gordon Griffiths as President
and CEO of Mail-Well Print Group, effective April 8, 2002.
Mr. Griffiths most recently served as the chairman, CEO and co-
founder of Caxton Group, a marketing services organization.
Prior to founding Caxton Group, Mr. Griffiths served Canada's
largest privately owned printer, St. Joseph Corporation, as
president and chief operating officer. St. Joseph is Canada's
third largest printing and communications organization. For
18 years, Mr. Griffiths was associated with Quebecor Printing,
Inc., serving in various positions including president of
Quebecor Printing Canada. Under his leadership the division
experienced a robust growth period, which resulted in dramatic
increases in both revenue and profit and an expansion of
operations into the U.S., India and Mexico. His experience in
the printing industry dates back to 1964.
"Gordon has a wealth of knowledge, expertise, and leadership to
bring to Mail-Well," said Paul Reilly, Mail-Well's chairman,
president and CEO. "He is a great believer in providing
industry-leading customer service and generating superior
quality for every customer. Gordon has a history of growing his
organizations by meeting customers' needs."
Mr. Griffiths takes over for David Blue, who recently left the
company to pursue other interests.
Mail-Well (NYSE: MWL), until 2001, had specialized in four
growing multibillion-dollar market segments in the highly
fragmented printing industry: commercial printing, envelopes,
labels and printed office products. Mail-Well currently has
approximately 13,000 employees and more than 140 printing
facilities and numerous sales offices throughout North America
and the United Kingdom. The previously announced strategic plan
will result in the company concentrating on its Envelope and
Commercial Printing segments, where it already holds leading
positions. These segments achieved sales of $1.6 billion in
2001. The other segments will be exited. The company is
headquartered in Englewood, Colorado.
MADISON RIVER: S&P Affirms B Ratings Following Put Option Deal
--------------------------------------------------------------
The ratings on Madison River Telephone Company LLC (MRTC) and
its subsidiaries were affirmed and removed from Standard &
Poor's CreditWatch on April 11, 2002, following the company's
announcement that it had completed an agreement with the former
shareholders of Coastal Utilities Inc., a rural exchange
telephone company, which sold certain properties to MRTC in
March 2000.
S&P affirms Madison's single-B credit rating and says that the
outlook is stable.
The transaction was a positive credit event because it
eliminated a potential $35 million April 2002 put option held by
the shareholders. The revised terms call for the shareholders to
receive stock in MRTC and $20 million of term debt payable over
eight years.
Outlook
MRTC's credit should improve in 2002 due to significantly
reduced losses at its competitive local exchange carrier
operations. The company's core rural local exchange carrier
assets remain stable, and management has done a good job
integrating acquisitions and improving EBITDA margins to more
than 50%. Near-term liquidity appears adequate with the
resolution of the Coastal Utilities put option.
MCLEODUSA: Creditors' Committee Employs Milbank Tweed As Counsel
----------------------------------------------------------------
The Official Committee of Unsecured Creditors' application to
the Court to employ Milbank, Tweed, Hadley & McCloy LLP as
Counsel, retroactive to February 13, 2002 in McLeodUSA Inc.'s
chapter 11 case was approved.
Services
The Committee will expect Milbank Tweed to:
(a) advise with respect to the Committee's rights, powers
and duties in the Debtor's case;
(b) advise and assistance in the Committee's consultation
with the Debtor relative to the administration of the
Chapter 11 case;
(c) provide assistance in analyzing the claims of the
Debtor's creditors and in negotiating with such
creditors;
(d) provide assistance in the Committee's analysis of, and
negotiations with, the Debtor or any third party
concerning matters related to, among other things, the
terms and implementation of the Plan;
(e) provide assistance and advise with respect to the
Committee's communications with the general creditor
body regarding significant matters in the Chapter 11
case;
(f) review and analyze all applications, orders,
statements of operations and schedules filed with the
Court and advise as to their propriety;
(g) provide assistance in preparing the Committee's
pleadings and applications as may be necessary in
furtherance of the Committee's interests and
objectives;
(h) represent the Committee in all hearings and other
proceedings; and
(i) perform all other legal services as may be required and
are deemed to be in the interests of the Committee in
accordance with the Committee's powers and duties.
Compensation
Thomas Kreller, Esq., at Milbank, Tweed, Hadley & McCloy LLP,
says the Firm has received a $150,000 pre-petition retainer from
the Debtor, of which approximately $81,000 was drawn. Overall,
Milbank Tweed was paid $376,000 for services rendered before the
Chapter 11 case commenced.
Milbank Tweed will bill for services at its customary hourly
rates:
Professional Compensation
------------ -------------
Thomas R. Kreller $500
David B. Zolkin $465
Brett Goldblatt $425
Nancy Toross $375
Beth A. Passage $110
(McLeodUSA Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
METROCALL: Prepares for Chapter 11 Filing on or about April 30
--------------------------------------------------------------
Metrocall, Inc. contemplates that on or about April 30, 2002, it
will file for protection under Chapter 11 of the United States
Bankruptcy Code and seek expeditiously to obtain approval of a
pre-negotiated reorganization plan. The Company says in its
annual report filed with the Securities and Exchange Commission
that it is likely that the plan will provide for reduced levels
of bank debt, substantial common equity to the holders of
existing bank debt, common equity to general unsecured creditors
and no recovery to holders of existing preferred or common
stock.
In April 2001, Metrocall, Inc.'s bank lenders delivered a notice
of default under the bank credit facility because the Company
failed to make its subordinated debt interest payments. At that
time, the bank lenders reduced their commitment from $200.0
million to $133.0 million (presently outstanding under the
credit facility) and have reserved their rights with respect to
this default, which absent a waiver or other agreement by the
banks, could accelerate Metrocall's debt. If the lenders
accelerate the debt, Metrocall would likely file for protection
under Chapter 11 of the Bankruptcy Code immediately.
Metrocall is a leading provider of local, regional and national
one-way or "traditional" paging and two-way or "advanced
wireless data and messaging" services. Through its one-way
nationwide wireless network, Metrocall provides messaging
services to over 1,000 U.S. cities, including the top 100
Standard Metropolitan Statistical Areas (SMSAs). Since 1993,
Metrocall's subscriber base has increased from less than 250,000
to a high of 6.3 million as of June 30, 2001 and is presently
5.4 million, including approximately 231,400 subscribers
receiving advanced data and messaging services. This growth was
achieved through a combination of internal growth and a program
of mergers and acquisitions. As of December 31, 2001, Metrocall
was the second largest messaging company in the United States
based on the number of subscribers.
MPOWER: Seeks Nod to Pay Critical Vendors' Prepetition Claims
-------------------------------------------------------------
Mpower Holding Corporation and its debtor-affiliates seek
authority from the U.S. Bankruptcy Court for the District of
Delaware to pay prepetition claims held by critical vendors.
Critical vendors includes independent telecom brokers, system
integrators, network and cabling companies, interconnects, long
distance brokers, cellular and wireless brokers and utility
consultants.
The Debtors contract with outside agents to perform sales
functions critical to generating revenue. These Agent Vendor
Representatives are independent contractors who market the
Debtors' products and services directly to their existing
customers. Agent Vendor Representatives earn commission from
the Debtors, which are paid upon the installation of each new
voice, or data line sold in the form of percentage revenue
payment. The Percentage Revenue Payment continues for as long
as the line is active and the Agent Vendor Representative is in
good standing.
The Debtors estimate that the Agent Vendor Representatives
collectively hold approximately $340,000 in claims based on
unpaid sales commission during April 2002. In addition, certain
additional amounts will become due and payable after April 2002
on account of lines installed before the Petition Date. Due to
the contingent nature of such amounts, the Debtors are not able
to estimate the Residual Commissions at this time.
The Debtors strongly believe that continuation of favorable
business relations with these Critical Vendors is imperative to
their reorganization and that the payment of the Current Claims
and Residual Commissions is essential to assure good relations.
The Debtors assert that payment of the Critical Vendors' Claims
is a decisive factor toward achieving a successful
reorganization. Agent Vendor Representatives bring in business
that represents a large percentage of the Debtors' new business
in every market, the Debtors explain. Not only would the Debtors
loose the Agent Vendor Representative's future business, it
would potentially lose the millions of dollars associated with
the existing customer base received from the Agent Vendor
Representatives.
Mpower Holding Corporation and its affiliates are a facilities-
based communications company offering local dial tone, long
distance, Internet access via dial-up or dedicated Symmetrical
Digital Subscriber Line technology, voice over SDSL, Trunk
Level 1. Mpower filed its pre-negotiated chapter 11 plan of
reorganization and disclosure statement simultaneously with
their chapter 11 bankruptcy protection on April 8, 2002.
Pauline K. Morgan, Esq., M. Blake Cleary, Esq., and Timothy E.
Lengkeek, Esq., at Young, Conaway, Stargatt & Taylor and Douglas
P. Bartner, Esq., Jonathan F. Linker, Esq., at Shearman &
Sterling represent the Debtors in their restructuring efforts.
When Mpower Holding filed for protection from its creditors, it
listed $490,000,000 in total assets and $627,000,000 in total
debts. Its debtor-affiliate Mpower Communications listed
$831,000,000 in assets and $369,000,000 in debts; Mpower Lease
listed $242,000,000 in assets and $248,000,000 in debts.
NATIONAL STEEL: Retaining Babst, Calland as Special Counsel
-----------------------------------------------------------
National Steel Corporation and its debtor-affiliates want to
retain Chester R. Babst, III and Babst, Calland, Clements &
Zomnir as special counsel with respect to corporate or
commercial contract matters, pension and labor matters,
environmental, health, safety, and regulatory matters nunc pro
tunc to the Petition Date.
David N. Missner, Esq., at Piper Marbury Rudnick & Wolfe, in
Chicago, Illinois, relates that Babst represented the Debtors
related to the matters prior to their filing of these cases.
"Babst has considerable experience in handling these matters and
is very familiar with the Debtors' business operations," Mr.
Missner adds. The Debtors believe that the employment of Babst
is necessary for efficient handling in these matters and will
eliminate the expense of hiring new counsel who will be
unfamiliar with the Debtors, their business operations and the
matters involved.
Mr. Missner tells the Court that Babst is expected to assist the
Debtors in:
(a) Corporate and Commercial Contract Matters
Babst provides counsel to the Debtors with respect to
certain corporate and commercial matters, including the
negotiation and drafting of contracts, joint venture
agreements, and related documents.
(b) Labor Matters
Babst provides counsel in various labor relations matters
for the Debtors pertaining to negotiations with the
United Steel Workers of America, and legal advise related
to interpretation and application of the collective
bargaining agreements between the Debtors and the United
Steel Workers. In the past, Babst has also provided
legal advise with respect to personnel matters involving
non-represented employees of the Debtors regarding their
retirement program. Babst has also prosecuted and
defended litigation arising out of labor contract issues
and employment/personnel matters.
(c) Pension Matters
Babst assists the Debtors with claims relating to the
UMWA 1974 and 1950 Pension Plans, the UMWA Combined
Benefit Fund, the Coal Industry Retiree Health Benefit
Act of 1992 and the UMWA 1992 Benefit Plan.
(d) Environmental, Health, Safety and Regulatory Matters
Babst provides general and specific legal advice and
counsel to the Debtors with respect to environmental,
health, safety, regulatory and compliance matters. This
representation includes representing the Debtors in
litigation relating to environmental matters.
Chester R. Babst, III, a principal and a shareholder of the law
firm Babst, Calland, Clements & Zomnir, in Pittsburgh,
Pennsylvania, provides that the Debtors will compensate the firm
with a 22.8% discount from the standard hourly rate for their
professionals:
Babst $250
Calland $250
Gutman $225
Clements $250
Donofrio $200
Garber $175
Relnhart $210
Howard $210
Bluedorn $210
Glarla $180
Escovitz $200
Wesolowski $210
Grimes $180
Cribbs $165
Kilbert $210
Shepard $210
Douglass $180
Baicker-McKee $190
Corbelli $175
Hellerstedt $220
Laurent $200
McCreary $180
Cimini $180
Kelly $175
O'Connell $175
Rangos $145
Winek $170
Farmakis $160
Koscinski $160
Albert $125
McClintock $125
Wolfson $125
Jameson $160
Silverman $125
Christman $125
M. Shannon $120
According to Mr. Babst, a conflict analysis was performed and it
was determined that the firm neither holds nor represents an
interest adverse to the Debtors or their estates.
"The law firm is not a pre-petition creditor and has no
connections with the Debtors, their creditors or any parties in
interest," Mr. Babst asserts. Thus, Babst, Calland, Clements &
Zomnir is a "disinterested person" as defined by Section 101(14)
of the Bankruptcy Code.
* * *
Judge Squires grants the Debtors' application and authorizes
them to retain Chester R. Babst, III, Esq., and Babst, Calland,
Clements & Zomnir as special counsel. (National Steel Bankruptcy
News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
ON SEMICONDUCTOR: Stockholders to Convene in Tempe, AZ on May 23
----------------------------------------------------------------
The Annual Meeting of Stockholders of ON Semiconductor
Corporation will be held at the Wyndham Buttes Resort, 2000
Westcourt Way, Tempe, AZ 85282 on Thursday, May 23, 2002 at 9:30
A.M., local time, for the following purposes:
1. To elect four Class III Directors each for a
three-year term expiring at the Annual Meeting of
Stockholders to be held in 2005 or until his successor
has been duly elected and qualified, or until the
earlier of his resignation, removal or disqualification;
2. To consider approval of the ON Semiconductor 2002
Executive Incentive Plan;
3. To consider approval of an amendment to the
Restated Certificate of Incorporation to increase the
authorized number of shares of common stock from
300,000,000 to 500,000,000;
4. To consider approval of a proposal to ratify the
action of the Board of Directors in selecting
PricewaterhouseCoopers LLP as independent accountants to
audit our consolidated financial statements for the
current year; and
5. To transact such other business as may properly
come before the meeting and any adjournment or
postponement of the meeting.
The Board of Directors has fixed the close of business on March
25, 2002, as the record date for determination of stockholders
entitled to notice of and to vote at the Annual Meeting or any
adjournment or postponement thereof.
ON Semiconductor manufactures low-cost, high-volume analog,
logic, and discrete semiconductors. These components perform
vital power control and interface functions in nearly every sort
of electronic gear, from networking routers and cellular phones
to household appliances and automotive braking systems. Top
customers for ON Semiconductor's chips include Agilent, Alcatel,
Nokia, Sony, and Sun Microsystems. The company also furnishes
foundry (contract manufacturing) services to former parent
Motorola. Investment gadabout Texas Pacific Group owns 73% of ON
Semiconductor; Motorola also retains a small stake.
* * *
As reported in the July 30, 2001 edition of Troubled Company
Reporter, Standard & Poor's lowered its corporate credit rating
on ON Semiconductor Corp., to single-'B'-plus from double-'B'-
minus. At the same time, the report said, Standard & Poor's
lowered the senior secured debt to single-'B+' from double-'B'-
minus and lowered the subordinated debt to single-'B'-minus from
single-'B'. The ratings outlook remains negative, S&P said.
According to S&P, the company's operating profitability has been
pressured by substantial revenue declines, causing the company
to be in noncompliance with covenants for its $150 million
revolving credit agreement in last year's June quarter. Ratings
was also made in anticipation that the company's banks will
waive the covenant violations and permit the company to proceed
with its restructuring plan.
ORIUS CORP: NATG Talking with Lenders to Amend Debt Covenants
-------------------------------------------------------------
NATG Holdings, LLC, a wholly owned subsidiary of Orius Corp., is
in the process of negotiating the terms of an amendment and
waiver to its senior credit facility regarding compliance to
certain financial covenants. Orius believes that it will reach
an agreement with its senior lenders in the near future and
requires additional time to finalize the proposed amendment and
to incorporate the terms of the amendment into the Company's
Annual Report on Form 10-K for the year ended December 31, 2001.
The efforts of Orius to obtain this amendment have required
considerable time and attention, and the delay in filing the
Company's Form 10-K could not be eliminated. Orius Corporation
will file its Form 10-K as soon as practically possible.
Due to the downturn in the telecommunications industry the
Company's annual results of operations are expected to be
substantially lower over the same period last year. The downturn
has caused a significant increase in accounts receivable and
inventory reserves, as well as, restructure charges associated
with the consolidation of certain operations. These amounts will
materially impact its annual results compared to the
corresponding period last year.
PACIFIC GAS: Court Tentatively Approves Disclosure Statement
------------------------------------------------------------
Pacific Gas and Electric Company issued the following statement
after the U.S. Bankruptcy Court tentatively approved its
disclosure statement:
"Pacific Gas and Electric Company is pleased that the Bankruptcy
Court has tentatively approved its disclosure statement. PG&E
was able to address all the objections that were raised.
Approval of the disclosure statement is a significant milestone
in the utility's continued progress through the bankruptcy
process."
Following are some key upcoming dates:
April 15 Deadline for CPUC to file its alternative plan of
reorganization and disclosure statement.
April 19 PG&E to file plan of reorganization and
disclosure statement incorporating language to
resolve objections.
April 24 PG&E to submit order for approval of its
disclosure statement. Status conference on CPUC's
plan and disclosure statement.
May 3 Deadline for objections to CPUC's plan and
disclosure statement.
May 9 Hearing on objections to CPUC's plan and
disclosure statement.
June 17 Target date for the beginning of the solicitation
period.
P-COM INC: Engages Ellen Hancock as Special Advisor
---------------------------------------------------
P-Com, Inc. (Nasdaq:PCOM), a leading provider of wireless
telecom products and services, announced that long-time
technology executive Ellen M. Hancock will serve as a special
advisor to P-Com CEO George Roberts and as a member of the
company's board of advisors.
Hancock recently served as chairman of Exodus Communications,
acquired by Cable & Wireless in February, and led the company
for three years through a key phase of its growth. Hancock has
also worked for IBM, Apple Computer and National Semiconductor
during her 35-year career in the technology business.
"Ellen Hancock is a world-class executive whose extensive
industry knowledge and leadership experience can assist P-Com in
rolling out its family of next-generation products," said P-Com
Chairman George Roberts. "Serving as a special advisor to the
company, Ellen will play a key part in P-Com's recently
announced restructuring plan and help us reach our goal of
returning to cash-flow positive by the fourth quarter of 2002."
"P-Com continues to be one of the industry's most innovative
providers of wireless telecom products and services, with a
well-focused strategy and the ability to serve customers around
the world," Hancock said. "I'm delighted to be working with
George Roberts and the rest of the P-Com executive team
as the company expands its geographic reach and suite of
products."
Prior to joining Exodus, Hancock worked for Apple Computer as
executive vice president of Research & Development and chief
technology officer. Before Apple, Hancock worked at National
Semiconductor as executive vice president and chief operating
officer, and was a member of the office of the president.
Hancock also worked with IBM for 29 years in a variety of staff
and executive positions and was a member of the IBM Corporate
Executive Committee and IBM Worldwide Management Council. Her
last position with IBM was as senior vice president and group
executive for the company's networking hardware, networking
software and software solutions divisions.
Currently, Hancock serves on the boards of directors of Colgate
Palmolive and Aetna, and is on the boards of trustees of Marist
College and Santa Clara University. She is a member of the
Council on Foreign Relations and the Committee of 200 (Women
Executives). Hancock holds a Bachelor of Arts degree in
mathematics from the College of New Rochelle and a Master of
Arts in mathematics from Fordham University.
P-Com, Inc. (Nasdaq:PCOM) develops, manufactures, and markets
complete lines of Point-to-Multipoint, Point-to-Point and Spread
Spectrum wireless access systems. Through its wholly owned
subsidiary, P-Com Network Services, the company provides related
installation, engineering and system maintenance services for
the worldwide telecommunications market. P-Com's broadband
wireless access systems are designed for Internet service
providers, competitive local exchange carriers (CLECs), cellular
and personal communications service (PCS) providers and for
governments around the world. P-Com is headquartered in
Campbell, California. For more information, visit
http://www.p-com.com or 408/866-3666.
At December 31, 2001, P-Com reported a working capital deficit
of about $10.2 million.
PETROLEUM HELICOPTERS: S&P Rates Proposed $170MM Sr Notes At BB-
----------------------------------------------------------------
Standard & Poor's assigns a BB- rating to Petroleum Helicopters
Inc.'s proposed offering of $170 million senior notes and says
that the outlook is stable.
The ratings on Petroleum Helicopters Inc. (PHI) reflect the
company's leading position as a provider of helicopter
transportation services in the Gulf of Mexico dedicated to
servicing the cyclical and volatile offshore oil and gas
exploration and production industry. Furthermore, the rating
reflects PHI's highly-leveraged financial profile, although
gradual improvement in cash flow protection measures and debt
leverage is expected largely through efficiency gains and
earnings retention.
Although the helicopter industry (like other oilfield services
providers) is affected by the offshore rig count, which in turn
is highly influenced by oil and natural gas prices and their
attendant effect on the capital spending patterns of upstream
operators, an oligopolistic industry structure and demand
generated throughout the exploration/ construction/ production
cycle dampens volatility relative to other segments of the
oilfield services industry.
PHI is one of the largest operators in the helicopter services
industry, with a total fleet of about 217 (166 in the Gulf of
Mexico) helicopters and fixed-wing aircraft. Operations are
leveraged to the Gulf of Mexico, where the company generated 70%
of its revenue and about 85% of EBIT in 2001. In the Gulf of
Mexico, PHI primarily competes with Offshore Logistics
(BB/Stable/--) and Era Aviation, with domestic fleets of 191 and
49 aircraft, respectively. Together, PHI and its next two
largest competitors control about 85% of total helicopter
capacity, which provides for pricing stability although flight
hours still are highly correlated with changes in the Gulf of
Mexico rig count. Although contracts in the Gulf of Mexico tend
to be up to one year (customers have the option to cancel on 30
days notice), flight hours and rates can be immediately affected
by market conditions. Customer contracts provide for a fixed
monthly fee for dedicating specific aircraft to customers and a
variable fee based on flight hours. For 2001, PHI estimates that
revenues from these contracts were approximately 48% from the
fixed-fee component, which provides some revenue stability.
Following a disappointing financial performance during the
cyclical downturn of 1999-2000 and a change in controlling share
ownership in 2001, PHI has installed a new management team that
has implemented many actions to restore profitability that
include a willingness to relinquish market share in pursuit of
improved unit revenues, margins, and return on capital.
Financial improvement was demonstrated in 2001 primarily as a
result of two service rate increases of 10% and 30%,
respectively, implemented in the Gulf of Mexico during the first
half, and, to a lesser extent, cost-cutting initiatives. This
improvement in profitability is illustrated by the increase in
the company's lease-adjusted operating margin to 19% in 2001
(despite a falling rig count), when compared with a cyclical low
of 8.4% in 2000.
PHI's financial profile is highly leveraged, although liquidity
appears adequate to ride out a multiyear downturn. Pro forma for
the $170 million senior notes and treating about $27 million of
operating leases as debt, total debt as a percentage of total
capital as of Dec. 31, 2001 is about 68%. Absent acquisitions,
debt leverage could be reduced to about 65% over the next year
through increased retained earnings. In 2002, total lease
adjusted debt to EBITDA plus rent (EBITDAR) could fall to about
3.2 times (x), from about 3.5x (pro forma 2001), as PHI realizes
a full year benefit of the rate increases implemented in 2001
and utilization modestly improves. Over the medium term, EBITDAR
interest coverage is expected to remain above 2.9x, while funds
from operations to total debt should exceed 18%. Capital
spending requirements for 2002 are expected to be funded
internally. Financial flexibility is supported by $5 million in
cash balances, a lack of near-term debt maturities, low
maintenance capital spending costs ($15 million), and (pro forma
for the notes offering) approximately $50 million available on a
senior secured borrowing base revolving credit facility.
Outlook
The stable outlook reflects Standard & Poor's expectations that
PHI's debt leverage has reached the upper end of its targeted
range. Therefore, it is expected that any major new build
programs or acquisition will be financed conservatively.
PINNACLE ENT.: Names Daniel Lee as New CEO & Board Chairman
-----------------------------------------------------------
Pinnacle Entertainment, Inc. (NYSE: PNK) announced that the
Company has hired Daniel R. Lee, formerly the Chief Financial
Officer and Senior VP-Development of Mirage Resorts, to become
the Company's Chief Executive Officer and Chairman of the Board,
subject to regulatory approvals. He is replacing Paul Alanis as
CEO, who resigned. The Board commented, "Paul did a good job
for us and we wish him the best. We are delighted that Dan is
joining Pinnacle Entertainment as its CEO. He is a strong and
experienced gaming executive and we are confident that he will
be a great leader of the Company going forward. He will work
closely in this role with Wade Hundley, the Company's Chief
Operating Officer. Since Mr. Hubbard intended to retire from
the board at the forthcoming annual meeting, we felt it was
appropriate for Dan to also become Chairman at this time."
First Quarter Outlook
The Company also announced that it anticipates reporting first
quarter 2002 earnings before interest, taxes, depreciation,
amortization and non-recurring items ("EBITDA") to be in the
range of $18.5 million to $20.0 million for the first quarter of
fiscal year 2002, significantly ahead of most analysts'
estimates. In addition, the Company announced it expects to
report a quarterly net loss in the range of $2.5 million to $3.7
million (before any goodwill impairment charges discussed
below).
"These stronger than anticipated operating results are
reflective of the positive steps taken in late 2001 and during
the first quarter of this year at our properties. We anticipate
continuing this positive trend in future quarters as we continue
to enhance our operations," stated Wade Hundley, Chief Operating
Officer.
Results for the first quarter of fiscal year 2001 were EBITDA of
$19.4 million and a net loss of $2.1 million. Such first quarter
2001 results included approximately $0.7 million of EBITDA from
a profit sharing arrangement with a Native American gaming
facility in Washington State. The Company sold that operation
in June 2001.
The Company is continuing to evaluate the effects of the
implementation of Statement of Financial Accounting Standards
No. 142 ("SFAS No. 142"), regarding the accounting for goodwill
and non-amortizing intangible assets. The Company anticipates
there will be a charge recorded in the first quarter of 2002 of
approximately $54 million to $59 million. Such impairment
charge will be recognized as the cumulative effect of a change
in accounting principle in the first quarter, and therefore the
above first quarter outlook is before any such charge.
Belterra Casino Resort
The Company noted that the Indiana Gaming Commission is
conducting an investigation of the Company's regulatory
compliance at its Belterra Casino Resort. The investigation was
initiated as a result of allegations of harassment in a lawsuit
filed by two former employees of Belterra.
Revised Fiscal-Year 2002 Guidance
Based upon better than expected results anticipated for the
first quarter of 2002 and current market and economic
conditions, Pinnacle Entertainment now anticipates EBITDA for
2002 of $74 million to $79 million, and a net loss of $12
million to $15 million. These estimates are before any loss
attributed to goodwill and intangible asset impairment write-
downs noted above. Excluding the Washington State operations
sold in mid-year, EBITDA during 2001 was $64.5 million.
The Company may provide further financial guidance in future
press releases, and reserves the right to adjust its guidance at
any time, but does not undertake any obligation to update or
revise any guidance or other forward-looking statements, whether
as a result of new developments or otherwise.
First Quarter Results and Conference Call
Pinnacle Entertainment expects to issue first quarter financial
results and conduct a conference call in late April or early May
2002 and will announce such date shortly.
Pinnacle Entertainment owns and operates seven casinos (four
with hotels) in Nevada, Mississippi, Louisiana, Indiana and
Argentina, and receives lease income from two card club casinos,
both in the Los Angeles metropolitan area. The Company has also
been selected to receive the 15th and final riverboat gaming
license for a project in Lake Charles, Louisiana.
* * *
As previously reported in the Troubled Company Reporter,
Standard & Poor's said it lowered its corporate credit and
senior secured bank loan ratings on Pinnacle Entertainment Inc.
to single-'B' from single-'B'-plus. Standard & Poor's also
lowered its subordinated debt rating on the company to
triple-'C'-plus from single-'B'-minus.
The actions followed Glendale, California-based Pinnacle's
lower-than-expected 2001 operating results, further
deterioration of credit measures, and Standard & Poor's
expectation that near-term debt leverage would remain high on
continued competitive pressures for the owner and operator of
casino facilities.
PRECISION SPECIALTY: Committee Taps DKW to Replace Reed Smith
-------------------------------------------------------------
The Official Committee of Unsecured Creditors of Precision
Specialty Metals, Inc. asks for permission from the U.S.
Bankruptcy Court for the District of Delaware to employ DKW Law
Group PC as its Counsel.
The Committee initially chose to employ Reed Smith, LLC as its
counsel but the firm withdrew as the employment effective March
31, 2002. The Committee is convinced that DKW's engagement is
necessary and beneficial to the general class of unsecured
creditors.
Specifically, DWK will assist the Committee by:
a. consulting with the debtor in possession concerning the
administration of the case;
b. consulting with the Debtor as to the pending sale of all
or substantially all of its assets and evaluating other
potential bids for the Debtor's assets;
c. investigating the acts, conduct, assets, liabilities,
and financial condition of the Debtor, the operation of
the Debtor's businesses and the desirability or the
continuance of such businesses, and any other matter
relevant to the case or to the formulation of one or
more Plans;
d. participating in the formulation of one or more Plans,
advising those represented by such Committee of such
Committee's determinations as to any Plan formulated,
and collecting and filing with the Court acceptances or
rejections of any such Plan;
e. if appropriate, requesting the appointment of one or
more trustees or examiners under Section 1104 of the
Bankruptcy Code; and
f. performing such other services as are in the interests
of the Debtor's unsecured creditors.
The Committee proposes to pay DKW its customary hourly rates:
Partners:
Gordon W. Schmidt $325 per hour
Samuel R. Grego $300 per hour
James W. Kraus $240 per hour
Associates:
Michael J. Bodner $175 per hour
John R. Gotaskie, Jr. $175 per hour
Vince H. Suneja $130 per hour
Paralegal:
David J. Horn $125 per hour
Michelle I. Cooney $110 per hour
Precision Specialty Metals is a specialty steel conversion mill
engaged in re-rolling, slitting, cutting and polishing stainless
steel and high- performance alloy hot band into standard or
customized finished thin-gauge strip and sheet product. The
Company filed for Chapter 11 petition on June 16, 2001 in the
U.S. Bankruptcy Court for the District of Delaware. Laura Davis
Jones, Esq., at Pachulski, Stang, Ziebl, Young & Jones P.C.
represents the Debtor on its restructuring efforts.
PRINTING ARTS: Court Authorizes Committee to Retain Saul Ewing
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gives its
approval to the Official Committee of Unsecured Creditors
appointed in the chapter 11 cases involving Printing Arts
America, Inc., to retain Saul Ewing LLP as its co-counsel, nunc
pro tunc to December 3, 2001.
Lowenstein Sandler PC serves as lead counsel to the Committee
and Saul Ewing will serve as local counsel. Lowenstein and Saul
Ewing will make every effort to prevent any needless duplication
of effort by the two law firms. The Committee points out that
because Lowenstein's members, counsel, and associates are not
Delaware lawyers, the Committee is required to hire local
Delaware counsel in accordance with the Local Bankruptcy Rules.
Saul Ewing will be paid from the Debtors' estate for its
professionals' services at the Firm's customary hourly rates:
Norman L. Pernick (partner) $425 per hour
Mark Minuti (partner) $345 per hour
Domenic E. Pacitti (partner) $345 per hour
Donald J. Detweiler (special counsel) $260 per hour
Tara L. Lattomus (associate) $245 per hour
Jeremy W. Ryan (associate) $235 per hour
Annmarie Stergakos (law clerk) $125 per hour
Pauline Z. Ratkowiak (paralegal) $125 per hour
Veronica Parker (case management clerk) $50 per hour
The Committee will look to Saul Ewing to:
a) provide legal advice with respect to the Committee's
rights, powers and duties in these cases;
b) prepare on behalf of the Committee all necessary
applications, answers, responses, objections, forms of
orders, reports and other legal papers;
c) represent the Committee in any and all matters involving
contests with the Debtors, alleged secured creditors,
and other third parties;
d) assist the Committee in its investigation and analysis
of the Debtors and the operations of the Debtors'
businesses; and
e) perform all other legal services for the Committee which
may be necessary and proper in these proceedings.
Printing Arts America, Inc., filed for chapter 11 protection on
November 1, 2001 in the U.S. Bankruptcy Court for the District
of Delaware. Teresa K.D. Currier, Esq., and William H.
Schorling, Esq., at Klett Rooney Lieber & Schorling represent
the Debtors in their restructuring efforts. When the Company
filed for protection from its creditors, it estimated assets and
debts exceeding $100 million.
REMINGTON PRODUCTS: S&P Affirms B- Rating; Outlook is Negative
--------------------------------------------------------------
On April 12, 2002, Standard & Poor's affirmed its 'B-' rating on
Remington Products Co. LLC and Remington Capital Corp. At the
same time, S&P removed the rating from CreditWatch where it was
placed Dec. 12, 2001, due to weaker-than-expected operating
performance. S&P says the outlook is negative.
Remington's weak 2001 performance led to financial covenant
defaults under its credit agreement for the fourth quarter of
2001. An amendment to the credit agreement has since been
completed, including waiving all necessary financial covenants
for this period, adding new covenants, and loosening existing
covenants.
Ratings are based on Remington's high debt leverage and seasonal
nature of its sales, partially offset by the company's strong
niche position in the U.S. men's shaver market, with the number-
two electric razor. The personal-care appliance segment is very
competitive and relatively mature, with slow volume growth and
limited pricing flexibility. Product innovation and marketing
are key factors in generating consumer demand. Remington has
experienced success with new product introductions, with over
half of its sales coming from products introduced within the
past three years. Nevertheless, the company will be challenged
to continue developing innovative products and to stay ahead of
larger competitors, namely Norelco (subsidiary of Philips
Electronics N.V.) and Braun (subsidiary of Gillette Co.). Also,
the seasonal nature of this business results in a substantial
portion of sales and earnings falling in the fourth quarter of
the calendar year.
After several years of improvement, Remington's financial
performance weakened in 2001 as a result of challenges with the
company's U.K. business, higher customer returns and
distribution costs, charges related to customer credit problems,
and the write-down of obsolete inventory. Credit measures
(adjusted for unusual items) weakened considerably in 2001, with
debt to EBITDA of 6.6 times (x), up from 4.6x in 2000. In
addition, EBITDA interest coverage dropped to 1.2x in 2001 from
1.8x the previous year. Standard & Poor's expects Remington's
credit ratios to remain weak over the near term because sales
and operating earnings will be pressured given intense
competition within the personal-care appliance segment.
Outlook
The ratings could be lowered if Remington's operating
performance and credit ratios weaken further.
STARWOOD HOTELS: Selling $1.5 Billion Senior Notes to Pay Debts
---------------------------------------------------------------
Starwood Hotels and Resorts Worldwide, Inc. announced that it
agreed to sell $1.5 billion of senior notes in two tranches:
* $700 million principal amount of 7-3/8% senior notes due
2007 with a yield to maturity of 7.45% and
* $800 million principal amount of 7-7/8% senior notes due
2012 with a yield to maturity of 7.95%.
Starwood expects to use the proceeds to repay all of its senior
secured notes facility and a portion of its senior credit
facility.
This notice does not constitute an offer to sell or the
solicitation of an offer to buy the notes or any other
securities. The notes are only offered, with registration
rights, in the United States to qualified institutional
buyers pursuant to Rule 144A under the Securities Act of 1933,
as amended, and outside the United States pursuant to Regulation
S under the Securities Act. The notes will not be initially
registered under the Securities Act and therefore may not be
offered or sold in the United States without registration or an
applicable exemption from the registration requirements of the
Securities Act. It is anticipated that a registration statement
will be filed under the Securities Act to permit exchange of the
notes for registered notes or resale of the notes.
Starwood Hotels & Resorts Worldwide, Inc. (NYSE:HOT) is one of
the leading hotel and leisure companies in the world with more
than 740 properties in more than 80 countries and 110,000
employees at its owned and managed properties. With
internationally renowned brands, Starwood is a fully integrated
owner, operator and franchiser of hotels and resorts including:
St. Regis, The Luxury Collection, Sheraton, Westin, Four Points
by Sheraton, W brands, as well as Starwood Vacation Ownership,
Inc., one of the premier developers and operators of high
quality vacation interval ownership resorts. For more
information, please visit http://www.starwood.com
SAFETY-KLEEN CORP: Amends Acquisition Pact With Clean Harbors
-------------------------------------------------------------
Safety-Kleen Services, Inc., and Clean Harbors, Inc., entered
into a FIRST AMENDMENT to the Acquisition Agreement dated as of
February 22, 2002, under which Clean Harbor offers to buy
Safety-Kleen's Chemical Services Division.
Clean Harbor is now required to deliver a $3,000,000 deposit on
May 30, 2002 to Lazard Freres & Co. LLC.
Absent material breaches of the Acquisition Agreement, the
outside date for S-K and Clean Harbors to complete the Chemical
Services Division Sale is October 15, 2002.
Clean Harbor now has the right -- but only until April 30, 2002
-- to walk away from the Transaction in the event that Clean
Harbor finds (i) S-K is in material breach of any
representation, warranty, covenant or other agreement contained
in the Agreement, (ii) the Confidential Information Memorandum
dated September 2001 which was delivered to the Purchaser
contains either a material misrepresentation or omission with
respect to the Business, or (iii) a Material Adverse Effect has
occurred since the date of the Confidential Information
Memorandum.
* * * *
As previously reported, Clean Harbors, Inc., after completing
substantial due diligence, presented the Debtors with an offer
to acquire the Chemical Services Division for $311,270,000
($46,270,000 in cash plus $265,000,000 of [to be identified]
assumed liabilities). (Safety-Kleen Bankruptcy News, Issue No.
31; Bankruptcy Creditors' Service, Inc., 609/392-0900)
SAKS INC: Reports Improved Store Sales for 5 Weeks Ended April 7
----------------------------------------------------------------
Retailer Saks Incorporated (NYSE:SKS) announced that comparable
store sales for the five weeks ended April 6, 2002 compared to
the five weeks ended April 7, 2001 increased 2.4% on a total
company basis. By segment, comparable store sales increased 3.2%
for SDSG and 1.4% for SFAE for the period. Sales below are in
millions and represent sales from owned departments only.
For the five weeks ended April 6, 2002 compared to the five
weeks ended April 7, 2001, owned sales were:
Total Comparable
Increase Increase
This Year Last Year (Decrease) (Decrease)
--------- --------- --------- ---------
SDSG $ 311.1 $ 306.2 1.6% 3.2%
SFAE 231.3 238.6 (3.1%) 1.4%
--------- ---------- ------ ------
Total $ 542.4 $ 544.8 (0.4%) 2.4%
For the two months ended April 6, 2002 compared to the two
months ended April 7, 2001, owned sales were:
Total Comparable
Increase Increase
This Year Last Year (Decrease) (Decrease)
--------- --------- --------- ---------
SDSG $ 533.9 $ 545.1 (2.0%) 1.0%
SFAE 391.3 413.8 (5.4%) (0.6%)
--------- ---------- ------ -------
Total $ 925.2 $ 958.9 (3.5%) 0.3%
Merchandise categories with the best sales performances for SDSG
in March were women's better and moderate apparel, accessories,
housewares, and furniture. Categories with softer sales
performances for SDSG in March were dresses, outerwear, and
special size women's apparel. Categories with the best sales
performances for SFAE in March were women's contemporary and
bridge sportswear, American and European designer collections,
women's "gold range" apparel, and fragrances and cosmetics. Off
5th also performed well during March. Categories with the
softest sales performances for SFAE in March were outerwear,
designer casual women's sportswear, and Salon Z (large size)
women's apparel.
March 2002 sales were favorably affected by the earlier Easter
in 2002 (Easter fell in April during 2001 and in March during
2002). Management expects April 2002 comparable store sales to
decline in the mid-single digit range based on the Easter shift.
Saks Incorporated operates Saks Fifth Avenue Enterprises (SFAE),
which consists of 61 Saks Fifth Avenue stores and 52 Saks Off
5th stores. The Company also operates its Saks Department Store
Group (SDSG) with 243 department stores under the names of
Parisian, Proffitt's, McRae's, Younkers, Herberger's, Carson
Pirie Scott, Bergner's, and Boston Store.
* * *
As reported in the Feb. 1, 2002, edition of Troubled Company
Reporter, Standard & Poor's assigned its double-'B'-plus rating
to Saks Inc.'s $700 million senior secured bank credit facility
that expires in November 2006.
At the same time, Standard & Poor's affirmed its double-'B'
corporate credit and senior unsecured debt ratings on Saks. The
preliminary double-'B' senior unsecured and preliminary single-
'B'-plus subordinated ratings on the company's shelf
registration were also affirmed. The outlook is negative.
SUNBEAM: $200 Million DIP Financing Pact Extended into 2003
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
put its stamp of approval on an amendment to the Debtor-in-
Possession Financing Facility used to fund Sunbeam Americas
Holdings, Ltd. and its affiliated debtors' post-petition working
capital needs. First Union National Bank, as administrative
agent for a consortium of Lenders, agrees to increase the amount
of available credit and extend the facility's maturity date.
The Amendment provides that the Maturity Date is extended to
February 5, 2003 and the Total Commitments are increased to
$200,000,000. The Court clarifies that the Credit Agreement and
the other Loan Documents shall continue to be in full force and
effect.
Sunbeam Corporation, the largest manufacturer and distributor of
small appliances, sells mixers, coffeemakers, grills, smoke
detectors, toasters and outdoor & camping equipment in the
United States, filed for chapter 11 protection on February 6,
2001 in the Southern District of New York. George A. Davis,
Esq., at Weil Gotshal & Manges LLP, represents the Debtors in
their restructuring effort. When Sunbeam filed for chapter 11
protection, the company listed $2,959,863,000 in assets and
$3,201,512,000 in debt.
U.S. PLASTIC: Senior Lenders Agree to Forbear through May 21
------------------------------------------------------------
U.S. Plastic Lumber Corp. (Nasdaq:USPL) expects to report
positive operating income in both divisions for the first time
in 18 months and has entered into a forbearance extension with
its Senior Lenders.
Mark Alsentzer said, "USPL has worked diligently over the last
year to restructure its plastic lumber division and turnaround
those operations. It is very apparent that our restructuring
efforts have been successful. This is the first time in 18
months that we will be reporting a positive operating income for
the plastic lumber division, and it is occurring in a seasonally
weaker quarter. We will be reporting positive operating income
for each of January, February and March 2002 for both the
plastic lumber and environmental division, and estimate that
earnings before interest, taxes, depreciation and amortization
for the first quarter of 2002 will exceed $2.5 million,
exclusive of corporate overhead." Alsentzer added, "This is very
exciting for us and verifies the hard work and tough decisions
over the past year are proving to be successful. Provided that
we are able to resolve our liquidity issues, USPL is back on
track toward a profitable future. Additionally, we believe, that
if we are able to resolve our liquidity issues, our profit
margins will increase further due to the benefits of our
successful restructuring plan."
USPL has also agreed to a new Forbearance Agreement with its
Senior Lenders in connection with USPL's Senior Credit Facility.
The Forbearance Agreement extends the forbearance period through
May 31, 2002. Under the terms of the Forbearance Agreement, the
Senior Lenders agreed to accept interest only payments through
March 31, 2002, which are to be paid over the next 60 days, and
allowed us to defer the April 1, 2002 principal payment until
the earlier of May 31, 2002 or the sale of certain of our
assets. Pursuant to the terms of the Forbearance Agreement, the
Senior Lenders also agreed not to take any action against us
with respect to any covenant violations as of March 31, 2002.
The Company believes that its improved operating results along
with its continued efforts to refinance its balance sheet will
resolve its liquidity crisis and avoid a bankruptcy filing by
the Company. Alsentzer added, "The Company has no intention of
filing for bankruptcy so long as its senior lenders and other
creditors continue to work with the Company. We believe our
turnaround in financial performance will continue, again subject
to our senior lenders and creditors continuing to cooperate with
us."
The Company's plan to sell its environmental division have been
delayed because New CEI, Inc., the purchaser, is having
difficulty in raising all the necessary financing to close the
transaction. Presently, New CEI, Inc. expects to be able to
complete its financing requirements and be in a position to
close the sale transaction in the second quarter.
TELEGLOBE: S&P Downgrades Ratings To B-, Still on Watch Negative
----------------------------------------------------------------
Standard & Poor's lowered its ratings on Teleglobe Inc. to B- on
April 12, 2002. The ratings actions are due to heightened
concerns regarding the company's ability to obtain additional
sources of funding given a reevaluation by BCE Inc. of
Teleglobe's longer term strategic importance to BCE. The
ratings remain on watch negative.
The downgrade also reflects heightened uncertainty regarding
Teleglobe's ability to amend the terms under the fully drawn
US$1.25 billion facility, which becomes due July 22, 2002.
The ratings now reflect the stand-alone ratings on Teleglobe.
The company's credit profile has weakened considerably due to
significantly lower revenue and EBITDA in 2001 due to a sharp
decline in wholesale revenues from carrier customers. The
ratings also take into account limited rating support due to the
BCE relationship. Continued weakness in the sector places
increasing uncertainty regarding the growth potential of
Teleglobe's high-margin global enterprise business, which was
expected to offset declines in the carrier segment.
Despite recent cost containment measures and lower capital
expenditures at Teleglobe, Standard & Poor's believes that
absent other financing alternatives, the company is dependent on
BCE's financial support.
Although Teleglobe's stand-alone performance has deteriorated
significantly during the last two years, the company had
benefited from a significant degree of support from BCE in the
form of equity commitments, which facilitated Teleglobe's
renewal of the bank facility in 2001 and completion of the
buildout of Globesystem.
BCE has announced that it is considering strategic alternatives
for Teleglobe, which include potential business combinations,
debt restructurings, and alternative sources of funding.
Previously, BCE had positioned the company as its global
connectivity operating business. BCE had also indicated on Dec.
12, 2001, its intention to contribute an additional C$1.0
billion to support Teleglobe's working capital and debt service
requirements over the next 12 months on the basis that with such
support, Teleglobe would be able to meet its current business
plan.
Teleglobe is a facilities-based provider of international
telecommunications services with customers in the large carrier
and Internet content provider segments. Key to the company's
success was its transition away from traditional voice traffic
to data- and Internet-related applications through Globesystem,
which it has not been able to achieve. With the nearing of
completion of a globally integrated Internet, data, voice, and
video network expected in mid-2002, Teleglobe was expected to
benefit from a recovery in data and Internet traffic. The
company's current overexposure to the declining international
voice telephony segment and competition from companies with
access to greater financial resources remain concerns.
TELERGY INC: Dominion Telecom Acquires Assets For $7.4 Million
--------------------------------------------------------------
Dominion Telecom Inc., an affiliate of Dominion (NYSE: D) that
provides facilities-based broadband services, announced that on
April 10 it closed on the purchase of the upstate New York long-
haul and metro-fiber network facilities of Telergy Inc., a
Syracuse, N.Y., telecommunications provider in liquidation.
Dominion Telecom's $7.4 million bid was accepted by the U.S.
Bankruptcy Court for the Northern District of New York at Utica
on March 25.
Dominion Telecom previously had purchased facilities from
Telergy. Over the past two years, it had purchased long-haul
fiber between Buffalo, Syracuse, Albany and New York City as
well as metro-ring facilities in upstate New York.
"Dominion Telecom has acquired a strong set of metro and long-
haul assets, which has deepened our network in areas where we
already have customers," said Gregg Kamper, senior vice
president and general manager. "This acquisition positions us
well for a potential opportunity to gain entr,e into Canada with
long-haul conduit and fiber facilities that link Albany with
Montreal and to gain new private-line customers previously
served by Telergy."
Dominion Telecom is a facilities-based, inter-exchange and
emerging local carrier that provides broadband solutions
(private line, wavelengths, dark fiber, Internet and
collocation) to wholesale customers throughout the eastern
United States. The company is expanding its fiber-optic network
from its current 346,000 fiber miles (6,500 route miles) to more
than 400,000 fiber miles (16,000 route miles) by the end of
2003. For more information, visit Dominion Telecom's Web site
at http://www.dominiontel.com
Dominion, headquartered in Richmond, Va., is one of the nation's
largest producers of energy, with a production capability of
more than 3 trillion British thermal unit of energy per day.
Its 22,000-megawatt generation portfolio is expected to grow to
more than 26,000 megawatts by 2005. For more information about
Dominion, go to http://www.dom.com
WCI COMMUNITIES: S&P Affirms Low-B Ratings
------------------------------------------
Standard & Poor's affirmed its double-'B'-minus corporate credit
rating on WCI Communities Inc. (WCI). At the same time, the
double-'B'-minus rating on the company's $450 million secured
credit facility due 2004 and the single-'B' rating on the $350
million 10.625% senior subordinate notes due 2011 are also
affirmed. The ratings outlook is revised to positive from
stable.
The ratings and outlook acknowledge this Florida-based
homebuilder's strong position in select coastal markets, solid
profitability, and recent successful initial public offering
(IPO). These strengths are somewhat tempered by its luxury
buyer focus, geographic concentration, and the secured nature of
its bank credit facility.
Bonita Springs, Florida-based WCI is a fully integrated
homebuilding company with more than 50 years experience in the
development and operation of leisure-oriented master-planned
communities. WCI remains a dominant player in select submarkets
on the west coast of Florida. Further, the company's position
on the east coast of Florida should continue to strengthen as it
continues to develop the significant landholdings it purchased
from the MacArthur Foundation in 1999.
While geographically concentrated in Florida, WCI's development
activities are spread among multiple product lines (ranging from
single-family to luxury towers) and various price points (sales
prices ranging from $100,000 to $10 million per unit for an
average of $528,000 per unit). In addition, the company's
ancillary businesses, amenities, and real estate services do
provide some diversity to earnings. Revenues, which totaled $1.1
billion in fiscal year 2001, were dominated by single-family and
multifamily homebuilding (44% of total revenues) and mid- and
high-rise homebuilding (37%) that produced a solid combined 31%
gross profit margin, up from an already strong 28% in 2000.
Overall, corporate gross and operating margins of around 31% and
20%, respectively, compare very favorably with peers and should
provide WCI with substantial pricing flexibility to spur sales
should conditions in its markets show signs of softness.
The company's financial profile, while historically aggressive,
has become more moderate. WCI successfully completed its IPO on
March 12th through the issuance of 7,935,000 shares
(approximately $139 million) and used the proceeds to repay
debt. As a result, debt leverage has improved from a high
62% debt-to-book capitalization to a more moderate 54%.
Further, the issuance of $350 million of 10-year senior
subordinated notes in 2001 did serve to reduce variable-rate
debt exposure and lengthen debt tenor to a solid seven years.
Coverage measures have also continued to show improvement,
reaching approximately 3.7 times EBITDA interest coverage and
about 2.9x debt to EBITDA for year ended December 31, 2001 (up
from a weaker roughly 3.0x and 3.0x, respectively one year ago).
Financial flexibility has been enhanced by the successful IPO,
which expanded WCI's investor base, provided additional internal
liquidity (approximately $50 million cash-on-hand), and created
full availability under its $200 million secured bank revolver.
Management has indicated a desire to explore expansion into
other markets where high-rise luxury housing and highly
amenitized community developments have also been successful.
However, Standard and Poor's anticipates that any geographic
expansion outside the state of Florida would be pursued in a
prudent manner.
Outlook: Positive
WCI's attractive land position in several important coastal
areas of south Florida likely creates some meaningful barriers
to entry and enhances the company's competitive position. The
company has also transitioned its capital structure to a lower
risk profile, with less overall leverage, improved credit
statistics and less reliance on short-term bank financing.
Future ratings improvement will depend upon WCI's ability to
sustain its strong profitability and recently improved debt
protection measures, while adhering to sound inventory
management and management's stated capitalization plan.
WEBB INTERACTIVE: Jona, Inc., Could Own 17,500,000 Shares
---------------------------------------------------------
Webb Interactive Services, Inc. (OTC Bulletin Board: WEBB)
announced that its largest investor, Jona, Inc., has exercised
its option to purchase 2,500,000 units of the Company's
securities at $1.00 per unit. Each unit consists of one share
of Webb common stock and a five-year warrant representing the
right to purchase an additional share of common stock at $1.00.
On March 11, 2002, the Company announced that Jona completed the
purchase of a total of 5,000,000 units of Webb's securities on
the same terms.
In consideration for Jona, Inc. exercising its option
approximately five months before its expiration, the Company
issued Jona a five-year warrant representing the right to
purchase an additional 2,500,000 shares of common stock at
$1.00.
In another recent development, Webb announced that it has
reached agreement with France Telecom Technology Investissements
(FTTI), Webb's investment partner in Jabber, Inc., to simplify
the capital structure of Jabber, Inc. This restructuring will
increase Webb's stockholders' equity by more than $5,000,000.
Bill Cullen, Webb CEO, stated, "We are very appreciative of the
confidence both Jona and FTTI have demonstrated in our business
prospects. While efforts are continuing to expand the existing
strategic investment base of Jabber, we have sufficient cash on
hand to fund the operating requirements of both Webb and Jabber
into 2003 when cash flow breakeven is projected to occur. The
net of the estimated results of operations for the first quarter
of 2002 and transactions completed since the first of this year
has been to improve our stockholders' equity by more than
$12,000,000, to approximately $7,000,000 at March 31, 2002, as
adjusted to reflect the Jabber restructuring which will be
completed this month."
"Our first quarter results will be released in early May,"
Cullen commented further, "but, suffice it to say, we are very
pleased with Jabber's progress in building a significant base of
blue chip customers. Going forward, Webb and Jabber are aligned
with the priorities that provide for our near-term liquidity,
long-term stability and execution against an aggressive business
plan. I am pleased to report progress on all three fronts and
look forward to continuing to do so throughout the year."
Webb Interactive Services (OTC Bulletin Board: WEBB) located in
Denver, Colorado is the parent company of Jabber, Inc. an
independently operated developer of the world's most widely used
open platform for extensible Instant Messaging and presence
management applications. Founded by and initially financed by
Webb, Jabber's investors also include France Telecom Technology
Investissements, which owns 21% of Jabber. Please see
http://www.webb.net
Jabber, Inc. -- http://www.jabber.com-- an independently
operated subsidiary of Webb Interactive Services, Inc. (OTC
Bulletin Board: WEBB) is the provider of the world's most widely
used open source platform for developing real-time
communications, Instant Messaging and presence applications.
Based upon XML, Jabber has its roots in the Jabber open source
project located at http://www.jabber.org With over 60,000
servers deployed, Jabber has been adopted in the
telecommunications, enterprise and software development markets.
Jabber, Inc.'s customers include Walt Disney Internet Group,
France Telecom, Bell South and AT&T.
At September 30, 2001, Webb Interactive Services had a total
shareholders' equity deficit of about $2.8 million.
WILLIAMS: Completes $1B Pipeline Sale to Energy Partners
--------------------------------------------------------
Williams (NYSE: WMB) closed the sale of Williams Pipe Line to
Williams Energy Partners L.P. (NYSE: WEG) for $1 billion.
Williams received cash proceeds in the amount of $674 million
and the balance of the purchase price in Class B units of
limited partnership interests in Williams Energy Partners.
The transaction was approved by Williams' board of directors,
along with the board of directors and the conflicts committee,
which is comprised of independent directors, for the general
partner of Williams Energy Partners.
Williams Pipe Line delivers refined petroleum products to the
Midwest through 6,700 miles of pipeline and 39 storage and
distribution terminals.
"We believe this is an attractive transaction for Williams
shareholders. The proceeds we're receiving reflect the high
quality and strong value of the asset," said Steve Malcolm,
Williams president and CEO. "When you couple this transaction
with previous actions taken this year, we have already over-
achieved in our plan to strengthen Williams' balance sheet."
Phil Wright, president of the general partner of Williams Energy
Partners, said, "The acquisition of Williams Pipe Line is an
excellent strategic and financial fit for Williams Energy
Partners. This is the fifth and most significant acquisition
we've made to increase distributable cash flow per unit since
our inception in February 2001.
"From an asset perspective, the pipeline becomes a fixture in
our virtual supply network to help our customers move their
petroleum products to key markets throughout the nation. From a
financial perspective, the pipeline generates stable cash flows
based on FERC-regulated tariffs with modest capital expenditure
requirements," Wright added.
Williams Energy Partners plans to finance the purchase initially
with equity issued to Williams and short-term debt. Williams
Energy Partners expects to replace this interim financing in the
future with permanent financing in the form of equity and long-
term debt.
Williams Pipe Line is expected to be more than 50 cents
accretive to cash flow per unit on an annualized basis to the
partnership's unitholders. In addition, the partnership expects
first full-year earnings before interest, taxes, depreciation
and amortization to be approximately $122 million.
Williams Energy Partners will discuss the acquisition at an
investor conference call at 9 a.m. Eastern on Friday, April 12.
To participate in the conference call, dial (800) 289-0496 and
provide code 610178. International callers should dial (913)
981-5519 and provide the same code. A webcast will also be
available at http://www.williams.com/weg/weg_news.html.
Williams, through its subsidiaries, connects businesses to
energy, delivering innovative, reliable products and services.
Williams information is available at http://www.williams.com.
Williams Energy Partners L.P. was formed to own, operate and
acquire a diversified portfolio of energy assets. The
partnership is engaged principally in the transportation,
storage and distribution of refined petroleum products and
ammonia. The general partner of Williams Energy Partners is a
unit of Williams, which specializes in a broad array of energy-
related services, including energy marketing and trading and
natural gas pipeline transportation.
XEROX CORP: Settles Issues With Securities & Exchange Commission
----------------------------------------------------------------
Xerox Corporation (NYSE:XRX) concluded its settlement with the
Securities and Exchange Commission on the previously disclosed
proposed allegations related to matters that have been under
investigation since June 2000.
As a result, the Commission filed Thursday a complaint and a
consent order in federal district court for injunctive relief
and a civil penalty of $10 million. Xerox neither admits nor
denies the allegations of the complaint.
"The settlement with the Commission effectively resolves Xerox's
outstanding issues with the SEC," said Anne M. Mulcahy, Xerox
chairman and chief executive officer. "Xerox today is a stronger
company with a new management team that has taken all the right
steps to turn our business around. With the SEC matters now
behind us, we are better positioned to continue fortifying our
business through operational improvements and future growth
opportunities -- creating enhanced value for our customers and
shareholders."
Under the terms of the settlement, the company announced last
week that it will restate its financials for the years 1997
through 2000 as well as adjust previously announced 2001
results. The restatement will primarily reflect adjustments in
the timing and allocation of lease revenue recognition, which
will be reallocated among equipment, service and finance revenue
streams as appropriate by applying a methodology different than
the one the company had used during those years. The resulting
timing and allocation adjustments cannot be estimated until the
restatement process has been completed. In any event, there will
be no impact on the cash that has been received or is
contractually due to be received from these leases. Furthermore,
the monetary value of the leases does not change. The
restatement will also include adjustments due to the
establishment and release of certain reserves prior to 2001 and
other miscellaneous items.
To allow for the additional time required to prepare the
restatement and to make these adjustments, the Commission has
granted to Xerox as part of the settlement an extension of 75
days beyond the 15-day extension received last week for the
filing of its 2001 10-K and first-quarter 2002 10-Q.
Xerox has also agreed that a special committee of its Board of
Directors will retain an independent consultant to review its
material accounting controls and policies. The Board will share
the outcome of this review with the SEC.
BOND PRICING: For the week of April 15 - 19, 2002
-------------------------------------------------
Following are indicated prices for selected issues:
Amresco 9 7/8 '05 24 - 25(f)
AES 9 1/2 '09 77 - 79
AMR 9 '12 96 - 97
Asia Pulp & Paper 11 3/4 '05 25 - 27(f)
Bethlehem Steel 10 3/8 '03 11 - 13(f)
Enron 9 5/8 '03 11 - 12(f)
Global Crossing 9 1/8 '04 2 - 3(f)
Level III 9 1/8 '04 44 - 46
Kmart 9 3/8 '06 50 - 52(f)
McLeod 11 3/8 '09 24 - 26(f)
NWA 8.70 '07 90 - 92
Owens Corning 7 1/2 '05 38 - 39(f)
Revlon 8 5/8 '08 44 - 46
Trump AC 11 1/4 '07 74 - 76
USG 9 1/4 '01 80 - 82(f)
Westpoint Stevens 7 3/4 '05 49 - 51
Xerox 7.15 '04 94 - 95
*********
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is provided by DebtTraders in New York. DebtTraders is a
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of interest to troubled company professionals. All titles are
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For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
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of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
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Copyright 2002. All rights reserved. ISSN: 1520-9474.
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