/raid1/www/Hosts/bankrupt/TCR_Public/020508.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, May 8, 2002, Vol. 6, No. 90
Headlines
800 TRAVEL: Selling Assets to Resort Reservations For $2.4 Mill.
360NETWORKS INC: Defers Issuing 2001 Annual Financial Reports
ANC RENTAL: Court Okays Brown Brothers as Investment Bankers
AIR 2 US: Fitch Hatchets Ratings of Classes C & D to Junk Level
AMERICAN COMM'L: Intends to Issue Up to $120MM of 11.25% Notes
AMERICAN RICE: Brings-In Morgan Lewis to Review Alternatives
ARTHUR ANDERSEN: $217MM Due Baptist Foundation Trust by Oct. 25
AURIGIN SYSTEMS: Information Holdings to Acquire Assets for $12M
BAPTIST FOUNDATION: Andersen Settles Lawsuit for $217 Million
BRIGHTPOINT: S&P Cuts Corp. Credit Rating to B+ Over Q1 Losses
BURLINGTON: Apparel Unit Selling Plant to Lucky Star for $1.6MM
CWMBS INC: S&P Drops Class B-5 P-T Certificates Ratings to D
CHART INDUSTRIES: Completes First Phase of Financial Workout
COLUMBIA LABORATORIES: Selling 337K Shares to Acqua Wellington
COVANTA ENERGY: Court Okays Proposed Reclamation Claim Protocol
DIGITAL TELEPORT: Appoints Andrew Whipple as Chief Fin'l Officer
DOBSON COMMS: Unit Gets FCC Auction No. 35 Refund of $91.2 Mill.
DOMAN INDUSTRIES: March 31 Balance Sheet Upside-Down by $280MM
DYNEX CAPITAL: Recourse Debt Drops to $47MM at March 31, 2002
EBIZ ENTERPRISES: Arizona Court Confirms Chapter 11 Plan
EBIZ ENTERPRISES: Appoints Semple & Cooper as Accountants
ECHO BAY: S&P Affirms B- Credit Rating After Share Exchange
ENRON CORP: Intends to Sell 772 Contracts to Select Energy
ENRON CORP: ENA Seeks Approval of Sale Agreement with El Paso
ENRON CORP: Kinder Morgan Completes $68M Trailblazer Acquisition
EXIDE TECHNOLOGIES: Wants to Continue JA&A Services' Engagement
FEDERAL-MOGUL: Signs-Up Garden City Group as Claims Consultant
FLAG TELECOM: Wins Court Nod to Maintain Cash Management System
FLORSHEIM GROUP: Court to Consider Asset Sale to Weyco on Friday
FLORSHEIM: Unsecured Panel Wants to Convert Case to Chapter 7
FREEPORT-MCMORAN: S&P Ups Credit Rating to B After Reassessment
GIANT INDUSTRIES: S&P Rates Proposed $200MM Sr. Sub. Notes at B
GLOBAL CROSSING: Inks Two-Year $20MM Agreement with Convergia
GO ONLINE NETWORKS: Miller & McCollom Airs Going Concern Doubts
HALE CONSTRUCTION: Changes Name to Hale Building after Workout
HERITAGE PROPERTY: S&P Considering Low-B Ratings for Upgrade
HUBBARD HOLDING: Court Extends CCAA Plan Filing Time To June 17
IGI INC: Sets Special Shareholders' Meeting for May 31, 2002
IT GROUP: Court Okays White & Case as Committee's Lead Counsel
INTEGRATED HEALTH: Wrestles with Litchfield over Lease Contracts
KAISER ALUMINUM: Inks Pact to Sell Coating Line Assets for $15MM
KMART CORP: Court Approves Amended DrKW Employment Agreement
KMART: Has Until March 31, 2003 to Make Lease-Related Decisions
LTV: Hartford to Provide Senior Medical Benefits to Retirees
LTV: Will Assign Columbus Coating Interests to Bethlehem Steel
LODGIAN INC: Committee Signs-Up Evercore for Financial Advice
MILACRON INC: S&P Affirms BB- Rating On Planned Asset Sale
NBO SYSTEMS: Grant Thornton Expresses Going Concern Opinion
NTELOS INC: Working Capital Deficit Tops $23MM at March 31, 2002
NATIONAL STEEL: Minnesota Power Wants $1M Immediate Cash Deposit
NATIONAL STEEL: First Quarter 2002 Net Loss Tops $53 Million
NATIONSRENT INC: Citicapital Seeks Prompt Decision on Leases
NETIA HOLDINGS: Posts Improved Results for First Quarter 2002
OMEGA CABINETS: S&P Withdraws Ratings After Fortune Acquisition
P-COM INC: Board OKs Plan to Extend Convertible Notes' Maturity
PACIFIC GAS: Court Approves Supplemental Pacts with 17 QFs
PENN SPECIALTY: Exclusive Period Stretched to September 6
PHASE2MEDIA: Wins Approval to Stretch Exclusivity through May 31
PILLOWTEX CORP: Court OKs Russell Reynolds as Search Consultant
POLAROID CORP: Lego Seeks Stay Relief to Setoff Obligations
POLAROID CORP: Court Sets Asset Sale Hearing for June 28, 2002
PRANDIUM INC: Wins Favorable Vote on Prepackaged Reorg. Plan
PRECISION SPECIALTY: Committee Wins OK to Employ DKW as Counsel
PRINTING ARTS: Court OKs Held Kranzler Engagement as Accountants
PROVIDIAN FIN'L: Reaches Pacts to Sell $2.6BB Higher Risk Assets
PSINET INC: Cisco Pushing for Lease Payment Adequate Protection
RSL COM: Hearing on Enterprise Business Sale Set for May 23
RAMARRO RESOURCES: Violates TSX Exchange Listing Requirements
RUBBER TECHNOLOGY: Will Lease LA Facility to Recovery Tech.
SEITEL: Sr. Noteholders Agree to Waive Loan Covenant Violations
STANDARD AUTOMOTIVE: Court Okays Post-Petition Financing Pact
SULPHUR CORP: Court Allows New Board to Take Office
SUNBEAM: Debtors' Solicitation Period Extended to August 15
SWAN TRANSPORTATION: Nickens Lawless Handling Insurance Suits
SYNSORB BIOTECH: Reaches Pact to Sell Manufacturing Facility
TRANSFINANCIAL: Seeks Regulatory Nod to Withdraw AMEX Listing
VALEO ELECTRICAL: Union Members Approve Revisions to CBA
VALLEY MEDIA: Court Grants First Requested Exclusivity Extension
VIATEL INC: Court Gives Approval to Stretch Exclusivity Periods
WILD OATS MARKETS: Posts Improved Operating Results for Q1 2002
WILLIAMS COMMS: Look for Schedules & Statements by June 16, 2002
WILLIAMS CONTROLS: Appoints Gary P. Arnold as New Director
* Meetings, Conferences and Seminars
*********
800 TRAVEL: Selling Assets to Resort Reservations For $2.4 Mill.
----------------------------------------------------------------
800 Travel Systems Inc., the distressed discounted travel
services company that filed for chapter 11 bankruptcy protection
in March, agreed to sell its assets for $2.4 million to Resort
Reservations Network Inc., reported Dow Jones. Despite the
agreement, Tampa, Florida-based 800 Travel Systems said it is
seeking court approval to hold an auction for the sale of the
assets. According to the newswire, 800 Travel Systems said it is
looking to maximize the realizable value of its property for the
benefit of creditors and other potential interested parties.
The deal with Resort Reservations is subject to higher
qualifying bids in accordance with proposed bidding procedures
and approval of the bankruptcy court. A hearing for the approval
of the bidding procedures is scheduled for May 13. The hearing
for the approval of the sale is scheduled for May 22.
800 Travel Systems filed for chapter 11 bankruptcy protection on
March 22. (ABI World, May 7, 2002)
360NETWORKS INC: Defers Issuing 2001 Annual Financial Reports
-------------------------------------------------------------
360networks will defer issuing its 2001 annual financial results
and the related management's discussion and analysis.
The company is currently developing a plan of reorganization in
conjunction with its senior bank lenders and unsecured
creditors. Until the structure and terms of a plan are
finalized, 360networks is unable to complete its annual
financial statements and the related management's discussion and
analysis for the year ended December 31, 2001, by the prescribed
due date of May 20, 2002.
360networks intends to comply with the provisions of the
Alternate Information Guidelines contained in the Ontario
Securities Commission Policy 57-603, including issuing a default
status report every two weeks.
Monthly reports filed by the Canadian court-appointed Monitor
about 360networks' operations, finances and restructuring
efforts are available in the Restructuring section of the
company's Web site at http://www.360.net
360networks offers optical network services to
telecommunications and data communications companies in North
America. The company's optical mesh fiber network spans
approximately 40,000 kilometers (25,000 miles) in the United
States and Canada.
On June 28, 2001, the company and several of its operating
subsidiaries voluntarily filed for protection under the
Companies' Creditors Arrangement Act (CCAA) in the Supreme Court
of British Columbia. Concurrently, the company's principal U.S.
subsidiary, 360networks (USA) inc., and 22 of its affiliates
voluntarily filed for protection under Chapter 11 of the U.S.
Bankruptcy Code in the U.S. Bankruptcy Court for the Southern
District of New York. In October 2001, four operating
subsidiaries that are part of the 360atlantic group of companies
also voluntarily filed for protection in Canada. Insolvency
proceedings for several subsidiaries of the company have been
instituted in Europe and Asia. Additional information is
available at http://www.360.net
ANC RENTAL: Court Okays Brown Brothers as Investment Bankers
------------------------------------------------------------
ANC Rental Corporation, and its debtor-affiliates obtained
permission from the Court to employ and retain Brown Brothers
Harriman & Co. as investment bankers, nunc pro tunc to December
27, 2001.
Brown Brothers will:
A. To the extent it deems necessary, appropriate and feasible,
familiarize itself with the business operations,
properties, financial condition and prospects of the
Debtors;
B. Analyze the Debtors' financial liquidity and financing
requirements;
C. Evaluate the Debtors' debt capacity and alternative capital
structures;
D. Advise the Debtors and provide strategic financial analysis
with respect to their alternatives, including the
formulation of and implementation of a restructuring or
sale;
E. Advise and assist the Debtors in developing, identifying and
evaluating any proposed restructuring, financing or sale;
F. Advise and assist the Debtors in obtaining DIP financing and
its attendant amendments and extensions;
G. Assist the Debtors in the preparation of marketing materials
including offering memoranda, management presentations to
assist potential investors or acquirers in a business and
financial evaluation of the Debtors or their assets;
H. Assist the Debtors' management in preparing for and engaging
in direct discussions with potential investors and
acquirers concerning the business and financial
performance and prospects of the Debtors;
I. If the Debtors determine to consider or undertake a
restructuring and financing, advise and assist the
Debtors in structuring and effecting such a transaction
or transactions;
J. Advise with respect to the value and terms of securities
offered by the Debtors in connections with a
restructuring or financing;
K. Assist in the development of a negotiating strategy and if
requested by the Debtors, assist in negotiations with the
Debtors' creditors and other interested parties with
respect to a potential restructuring, financing or sale;
L. Advise and assist in the formulation of an effective strategy
and means for effecting a restructuring plan or financing
on an advantageous basis, including assistance in the
selection of one or more placement agents with respect to
the placement of asset-backed debt financing;
M. If the Debtors determine to consider a sale, provide
financial advise and assistance to the Debtors in
connection with any proposed or potential sale, including
identifying potential acquirers, and at the Debtors'
request, contacting such potential acquirers;
N. Advise as to the probable valuation range obtainable from any
sale under current market conditions;
O. Assist the Debtors in assessing the respective interest of
potential investors or acquirers in consummating a
financing or sale involving the Debtors;
P. Assist the Debtors in preparing various supplementary
material that potential investors or acquirers might
reasonably request in connection with a financing or
sale;
Q. If requested, prepare and deliver to the Debtors customary
fairness opinions in connection with any proposed or
potential sale; and
R. Provide such other advisory services as are customarily
provided in connection with the analysis and negotiation
of a restructuring plan, financing or sale as reasonably
requested by the Debtors.
Brown Brothers will receive a monthly advisory fee of $200,000
per month from December 27, 2001 through April 26, 2002 and
$150,000 per month from April 27, 2002 until the engagement
terminates.
Brown Brothers will also be entitled to a Transaction Fee in the
event of either a sale or restructuring.
In the event of a Sale, Mr. Molner discloses that a Transaction
Fee will be equal to:
2.000% of the first $75,000,000 of aggregate value
(for a maximum of $1,500,000), plus
1.500% of aggregate value between $500,000,000 and
$600,000,000
(for a maximum of $1,500,000), plus
1.125% of aggregate value between $600,000,000 and
$955,000,000
(for a maximum of $4,000,000).
In the event of a Restructuring, the Transaction Fee will be
equal to $1,500,000. (ANC Rental Bankruptcy News, Issue No. 12;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
AIR 2 US: Fitch Hatchets Ratings of Classes C & D to Junk Level
---------------------------------------------------------------
Fitch Ratings downgrades the ratings of Air 2 US enhanced
equipment notes (EENs) as follows: class A to 'A' from 'AA',
class B to 'BBB' from 'A', class C to 'CCC+' from 'BBB' and
class D to 'CCC' from 'BBB-'. The ratings are also removed from
Rating Watch Negative. The original EEN issuance amount was
$1.07 billion compared to about $1 billion currently
outstanding. Due to the payment structure, only the class A EENs
have amortized from the original issuance amount. Air 2 US is a
special purpose Cayman Islands company created to issue the
EENs, hold the proceeds as Permitted Investments, and enter into
a risk transfer agreement with a subsidiary of Airbus S.A.S.
(Airbus).
AIR 2 US has entered into a risk transfer agreement known as the
Payment Recovery Agreement (PRA) with a subsidiary of Airbus.
The primary provision of the PRA states that if American
Airlines, Inc. (American) or United Air Lines, Inc. (United)
fail to pay scheduled rentals under existing subleases of 41
aircraft with subsidiaries of Airbus, AIR 2 US will pay these
rental deficiencies to a subsidiary of Airbus. These deficiency
payments will come from the Permitted Investments.
Fitch's rating analysis involved a composite of portfolio lease
and enhanced equipment trust certificate approaches. The ratings
of the series A, and series B EENs are primarily based on 1)
expected present value of sublease rental payments from American
and United; 2) the Permitted Investment scheduled payments; 3)
the probability that the Permitted Investment payments will be
first directed to pay the scheduled sublease rentals as per the
PRA; 4) liquidity facilities to support EEN interest payments;
5) the ability of Airbus to provide support to the transaction
through the Airbus agreement and related agreements; and, 6) the
integrity of the EEN's legal structure.
The rating of the series C EENs is supported by the factors
mentioned above, but is based primarily on the credit quality of
the two sublessees. The rating of the series D EENs is solely
based on the unsecured credit of the two sublessees.
In November 2001, an event of loss occurred on one of the
aircraft underlying this transaction. The sublessee, American,
could have elected to replace the aircraft under the sublease,
but has opted not to do so. This has prompted a special payment
(amounting to the share allocable to the respective aircraft) on
the EENs, scheduled to be made in October 2002. While Fitch's
ratings incorporate the above events, they were not a factor in
our rating downgrades.
The above rating actions reflect Fitch's concern that the
effects of Sept. 11 and the recession have weakened the credit
quality of the sublessees, made it more difficult to replace a
defaulted sublessee, and lowered the values of the underlying
aircraft which in turn could affect the amount of cash flow that
could be provided by a replacement sublessee. These factors have
increased the likelihood that: 1) scheduled cash flows under the
Permitted Investments will be diverted from the noteholders to
Airbus due to either American or United defaulting under their
existing underlying subleases and, 2) the expected present value
of future projected sublease rental payments will be less than
when the transaction was first rated.
Airbus is one of only two aircraft manufacturers in the market
for large commercial airliners. It designs, builds, sells and
supports commercial aircraft with a capacity of 100 seats or
more. Airbus is owned by two global aerospace and defense
companies, 20% by BAE Systems of the UK and 80% by the European
Defense and Space Company (EADS). EADS is the end result of the
merger of three global aerospace companies: Aerospatiale-Matra
of France, DaimlerChrysler Aerospace of Germany, and CASA of
Spain.
AMERICAN COMM'L: Intends to Issue Up to $120MM of 11.25% Notes
--------------------------------------------------------------
American Commercial Lines LLC have proposed to issue up to
$120,000,000 principal amount of 11-1/4% Senior Notes due
January 1, 2008 under an indenture and up to $116,507,000 of 12%
Pay-In-Kind Senior Subordinated Notes due July 1, 2008 under an
indenture to be qualified in exchange for the entire outstanding
principal amount ($295,000,000) of its 10-1/4% Senior Notes due
June 30, 2008. Subject to the terms and conditions of the
Exchange Offer, the Company will issue $507.385 principal amount
of New Senior Notes and $492.615 principal amount of New Senior
Subordinated Notes for each $1,000 principal amount of Existing
Notes that are properly tendered and not withdrawn pursuant to
the Exchange Offer. In addition each holder of Existing Notes,
other than Danielson Holding Corporation and its subsidiaries,
will also receive New Senior Notes in an aggregate principal
amount calculated based on the aggregate accrued and unpaid
interest owing in respect of their Existing Notes through the
effective date of the Exchange Offer up to $20 million. To the
extent that the aggregate accrued and unpaid interest exceeds
$20 million at the Effective Date, the Company will issue New
Senior Subordinated Notes in a principal amount equal to such
excess.
As the New Notes are proposed to be offered for exchange by the
Company with their existing securityholders exclusively and
solely for outstanding securities of the Company, the
transaction is exempt from registration under the Securities Act
of 1933, as amended, pursuant to the provisions of Section
3(a)(9) thereof. There will not be any sales of the New Notes
made by the Company (other than sales pursuant to the Exchange
Offer) or by or through an underwriter at or about the same time
as the Exchange Offer. No consideration has been, or will be,
given, directly or indirectly, to any broker, dealer, salesman,
or other person for soliciting exchanges of the Existing Notes.
American Commercial Lines LLC has appointed The Bank of New
York as the exchange agent in connection with the Exchange Offer
and Innisfree M&A Incorporated as the information agent in
connection with the Exchange Offer. The Company has agreed to
reimburse the Exchange Agent and the Information Agent for their
reasonable out-of-pocket expenses in connection therewith and to
indemnify the Exchange Agent and the Information Agent against
any losses or claims incurred without negligence or bad faith on
the part of the Exchange Agent or the Information Agent,
respectively, in connection with their respective duties
relating to the Exchange Offer. In addition, the Company will
pay remuneration to their financial, legal, and accounting
advisors for the provision of advisory, legal and accounting
services, respectively. No holder of the outstanding Existing
Notes has made or will be requested to make any cash payment to
the Company in connection with the Exchange Offer.
In the event that the Minimum Tender Condition (as defined in
the Offering Memorandum and Disclosure Statement) is not
satisfied or waived by June 15, 2002, the Company has agreed to
commence voluntary cases under chapter 11 of title 11 of the
United States Code and seek confirmation of a plan of
reorganization as described in the Offering Memorandum and
Disclosure Statement, under which the Company's obligations
under the Existing Notes would be fully satisfied for
substantially the same consideration offered in the Exchange
Offer. In the event the New Notes are exchanged for the Existing
Notes pursuant to the Plan, the issuance of the New Notes would
be exempt from registration under the Securities Act pursuant to
the exemption provided by Section 1145(a)(1) of the Bankruptcy
Code. To the extent that the solicitation of acceptances of the
Plan constitutes an offer of new securities not exempt from
registration under Section 1145 (a)(1), the Company will also
rely on Section 3(a)(9) of the Securities Act and Section 4(2)
of the Securities Act and, to the extent applicable, Regulation
D promulgated thereunder.
American Commercial Lines Holdings LLC, a Delaware limited
liability company, owns 100% of the equity interests of ACL. ACL
owns 100% of Capital, and directly or indirectly owns 100% of
the voting stock of each of the following entities:
NAME OF ENTITY JURISDICTION
-------------- ------------
ACBL do Brasil Holdings, S.A. Uruguay
ACBL Dominicana S.A. Dominican Republic
ACBL Hidrovias, Ltd. Bermuda
ACBL Liquid Sales LLC Delaware
ACBL Riverside Terminals C.A. Venezuela
ACBL de Venezuela, C.A. Venezuela
Amazonas Holdings, S.A. Uruguay
American Commercial Barge Line LLC Delaware
American Commercial Lines
Funding Corporation Delaware
American Commercial Lines
International, L.L.C. Delaware
American Commercial Logistics LLC Delaware
American Commercial Terminals LLC Delaware
American Commercial Terminals
- Memphis LLC Delaware
Houston Fleet LLC Delaware
Jeffboat LLC Delaware
Lemont Harbor & Fleeting
Services LLC Delaware
Louisiana Dock Company LLC Delaware
Orinoco TASA LLC Delaware
Orinoco TASV LLC Delaware
River Terminal Properties, L.P. Tennessee
ACBL Venezuela, Ltd. Venezuela
Rylend, S.A. Uruguay
ACL owns 50% of Vessel Leasing LLC, a Delaware limited liability
company (the remaining 50% is owned by Vectura Group LLC). 399
Venture Partners, Inc., the majority owner of Holdings, also
holds a majority ownership in Vectura Holding Company LLC which
holds a majority ownership interest in Vectura. ACL owns 50% of
UABL Ltd., a Bahamas limited company. The remaining 50% of UABL
is owned by a subsidiary of Ultrapetrol (Bahamas) Limited, an
unaffiliated third party. American Commercial Terminals LLC
("ACT"), a wholly owned subsidiary of ACL, through its wholly
owned subsidiary American Commercial Terminals - Memphis LLC,
owns 50% of Global Materials Services LLC ("GMS"), a joint
venture between ACT and Mid-South Terminal Company, L.P., an
unaffiliated third party.
Following the consummation of the Exchange Offer or
implementation of the Plan, DHC or one or more of its
subsidiaries will own 100% of the equity interests of Holdings.
American Commercial Lines LLC is an integrated marine
transportation and service company operating approximately 5,100
barges and 200 towboats on the inland waterways of North and
South America. ACL transports more than 70 million tons of
freight annually. Additionally, ACL operates marine
construction, repair and service facilities and river terminals.
At December 31, 2001, American Commercial Lines had a total
shareholders' equity deficit of about $143 million.
AMERICAN RICE: Brings-In Morgan Lewis to Review Alternatives
------------------------------------------------------------
American Rice, Inc. (OTC Pink Sheets: ACNR) has retained Morgan
Lewis Githens & Ahn, Inc. as its financial advisor to assist
American Rice in its review of alternatives to maximize
shareholder value.
A third party known to the Company has expressed an interest in
acquiring all of the outstanding shares of the Company at an
estimated price of $12.00 per share. The expression of interest
is preliminary and subject to due diligence. The Company had
also recently received a preliminary expression of interest from
another party. There can be no assurance that either of these
expressions of interest will result in a transaction, or that
the Company will enter into any extraordinary transaction.
Although the board believes these expressions of interest do not
reflect an appropriate value for the Company, they are being
forwarded to the Company's financial advisor.
American Rice, Inc. is one of the largest rice millers and
marketers of branded rice products in the United States and
internationally. The Company sells its products under various
registered trademarks that include (i) Comet(R) and Blue
Ribbon(R) which are sold in the Southeastern United States; (ii)
AA(R) and Green Peacock(R) which are sold in California; (iii)
Adolphus(R) which is sold in Texas; (iv) Cinta Azul(R) which is
sold in Puerto Rico; and (v) Abu Bint(R) which is sold in Saudi
Arabia. ARI competes in most major rice importing regions of the
world. Additional information on the Company can be viewed on
its Web site at http://www.amrice.com
Founded in 1982, Morgan Lewis Githens & Ahn, Inc. is an
investment banking firm working with middle market companies and
financial sponsors. The firm provides financial advisory and
capital raising services including M&A, restructuring advice and
private placements through its principal offices in New York and
Nashville.
ARTHUR ANDERSEN: $217MM Due Baptist Foundation Trust by Oct. 25
---------------------------------------------------------------
Midway through the sixth day of trial in a Phoenix courtroom,
the BFA Liquidation Trust said that Arthur Andersen LLP has
agreed to revive the previously announced $217 million
settlement that had collapsed in March 2002.
The renewed settlement contains several significant additional
terms intended to maximize the prospect that the embattled Big
Five accounting firm will pay the full $217 million settlement
amount. In return for the settlement terms described below, the
Trust has agreed to stop the trial that began last Monday, April
29, 2002.
Pursuant to the settlement agreement finalized this morning,
Andersen will today provide a certified check for $11.32
million, which is non-refundable, and will be deposited into an
account controlled by the Arizona Attorney General's Office,
with whom the Trust and lawyers for the investors have been
working closely throughout this litigation. Andersen has also
agreed that the Trust, the State, and the investor class shall
have the right to enter a stipulated, non-appealable judgment in
the amount of $217 million on June 5, 2002, if Andersen has not
paid the balance of $205.68 million by June 4, 2002.
The parties anticipate that the primary source of funds for the
balance of the settlement amount will be Andersen's Bermuda-
based insurance company, Professional Services Insurance Company
Ltd., if that entity is able to return to solvency over the
coming weeks. At Plaintiffs' insistence and as a prerequisite to
stopping the ongoing Trust trial, the PSICL Board of Directors
voted to approve two separate resolutions at a board meeting in
Hamilton, Bermuda this morning. The first approved payment of
the balance of the settlement amount within five days of PSICL
becoming solvent. The second, effective immediately, approves an
assignment of Andersen's interest in the proceeds of the PSICL
policy that will be used primarily to fund the settlement. While
there cannot be assurance of payment in the event of a PSICL
liquidation, these resolutions provide important safeguards that
will protect the interests of investors in the event of a
liquidation or an Andersen bankruptcy filing.
Should PSICL not be able to pay the settlement by June 4, 2002,
the settlement provides entry of the non-appealable judgment
referred to above, and for a schedule of payments to Plaintiffs
by Andersen itself, pursuant to the payment schedule set forth
below at rates of interest escalating up to ten percent:
June 14, 2002 $10 million
July 15, 2002 $10 million
August 15, 2002 $10 million
September 13, 2002 $10 million
October 15, 2002 $10 million
October 25, 2002 $155.68 million
The settlement amount is the second largest ever agreed to by a
"Big Five" accounting firm to settle litigation not associated
with the savings & loan crisis, and approximately twice the
largest settlement that Andersen had ever paid. It also settles
several other related suits against Andersen that arose out of
the 1999 collapse of the Baptist Foundation of Arizona ("BFA"),
the largest non-profit bankruptcy in American history.
Founded in 1948 to raise money for Southern Baptist causes, BFA
and its subsidiaries and affiliates had marketed securities
throughout the United States as retirement vehicles for
investors, and served as a custodian for tax-deferred Individual
Retirement Accounts ("IRAs"). At the time BFA filed for
bankruptcy in November 1999, it had total liabilities of
approximately $650 million and listed assets of approximately
$290 million. BFA's liabilities included approximately $570
million owed to over 11,000 investors. Pursuant to a
reorganization plan approved by the Bankruptcy Court, the
Liquidation Trust was established to wind up the affairs of BFA
and Clifton Jessup was appointed as the BFA Liquidation Trustee.
The reorganization plan provides that any net recovery from
litigation pursued on behalf of the Trust will flow to the
investors who purchased securities from BFA.
The malpractice case against Andersen, filed in August 2000, is
pending before the Honorable Edward O. Burke of the Superior
Court of Arizona in Maricopa County. The trial, which began last
Monday and was scheduled to last several months, focused on the
Trust's allegations that Andersen had been negligent and
breached its fiduciary duties in failing to disclose serious
financial improprieties by former BFA senior managers, even
after a series of whistleblowers alerted Andersen to the ongoing
fraud. The Trust sought compensatory damages of $155 million for
loss of BFA's assets and significant punitive damages. The
settlement announced today resolves not only the Trust case but
also a putative class action against Andersen by former BFA
investors, a civil action brought by the Arizona Corporation
Commission, and disciplinary proceedings brought against
Andersen and three of its employees by the Arizona Board of
Accountancy.
After attorneys fees, the net recovery to investors from the
Andersen settlement alone - approximately $175 million - will
constitute repayment of over 50% of the net losses suffered by
investors after liquidation of BFA's assets. A prospective
settlement for $21 million that is about to be finalized with
BFA's former outside law firm is expected to result in a
distribution of another $18.3 million to investors. As of
December 31, 2001, the Trust had already distributed $49 million
to investors from sales of real estate and other assets of BFA.
Those sales continue, and are expected to generate additional
distributions over the next three years. The Trust is also
pursuing litigation claims against other parties that may
recover additional money to be distributed to investors.
"We are extremely pleased to achieve this outstanding result for
the investors," said Liquidation Trustee Clifton Jessup. "We
will seek the necessary court approvals expeditiously, so that
we can distribute the proceeds of the Andersen settlement and
the prospective settlement with Jennings Strouss as quickly as
possible," said Mr. Jessup. According to the Trust's lead trial
lawyer, John P. ("Sean") Coffey, a partner of Bernstein Litowitz
Berger & Grossmann LLP and former federal prosecutor, "Getting
the settlement back on track, with significant added protections
for the investors, is a far better result than we could have
achieved at trial. Although we were delighted with how well our
evidence has been going in at trial, the fact is that even in
the 'best case' scenario a judgment would be months away. This
settlement represents as firm and positive an outcome as we
could hope for given Andersen's situation, one that is better
than we could achieve if we were to prevail at trial, and we
have that result now." Mr. Coffey added, "I want to thank my
fellow trial counsel, Rich Himelrick of Tiffany & Bosco and my
partner Bob Gans, for putting together such a strong case at
trial. I also want to thank the Liquidation Trust Board for
their guidance and support, as well as the fine people at the
Arizona Attorney General's Office and our colleagues at Bonnett
Fairborn Friedman & Balint, who, with Rich Himelrick,
represented the investor class, for the outstanding cooperation
as we worked together to achieve our mutually shared goal of
obtaining this result for the investors." Mr. Jessup and Mr.
Coffey each note that litigation against other parties who
played a role in the demise of BFA will continue apace.
Andersen did not admit any wrongdoing in the settlement.
AURIGIN SYSTEMS: Information Holdings to Acquire Assets for $12M
----------------------------------------------------------------
Information Holdings Inc. (NYSE: IHI) has entered into an
agreement to acquire essentially all of the assets of Aurigin
Systems, Inc. for cash consideration of approximately $12.4
million and the assumption of certain liabilities.
The Company expects to complete the transaction within two
weeks.
Aurigin provides intellectual property (IP) management systems,
used primarily by corporations to search, analyze, annotate and
group patent information, as well as proprietary corporate data.
Aurigin will be integrated with the MicroPatent unit of IHI's
Intellectual Property Group. The Company expects that Aurigin,
which has been operating under Chapter 11 bankruptcy protection,
will become profitable following a 3-6 month transition period.
Commenting on the transaction, Mason Slaine, President & CEO
said, "Aurigin represents an important strategic acquisition for
IHI. With previous equity investments approximating $65 million,
Aurigin has been able to develop highly advanced IP analytical
tools. When combined with MicroPatent's comprehensive IP
databases, the patented Aurigin technologies will enable us to
offer unparalleled value-added IP management solutions."
Information Holdings Inc. is a leading provider of information
products and services to scientific, technical, medical,
intellectual property and IT learning markets. Through its
Intellectual Property Group, which includes MicroPatent(R),
Master Data Center(TM), Liquent-IDRAC and LPS Group, IHI
provides a broad array of databases, information products and
complementary services for intellectual property and regulatory
professionals. IHI is recognized as a leading provider of
intellectual property information over the Internet. IHI's CRC
Pressr business publishes professional and academic books,
journals, newsletters and electronic databases covering areas
such as life sciences, environmental sciences, engineering,
mathematics, physical sciences and business. IHI's
Transcender(R) unit is a leading online provider of IT
certification test-preparation products. Its products include
exam simulations for certifications from major hardware and
software providers.
BAPTIST FOUNDATION: Andersen Settles Lawsuit for $217 Million
-------------------------------------------------------------
Arthur Andersen LLP has reached an agreement for a global
settlement of legal matters related to the firm's work for the
Baptist Foundation of Arizona, subject to final court approval.
A prior settlement agreement, negotiated in good faith by Arthur
Andersen LLP, was not approved by the firm's insurance company.
"We made a decision to settle this matter, without admitting or
denying any fault, in a way consistent with our firm's plan to
resolve this matter for the benefit of all parties," the firm
says.
The agreement resolves all litigation brought against Arthur
Andersen LLP by BFA investors, the BFA bankruptcy trustee and
state regulatory bodies.
It is important to underscore that investors were the victims of
a massive fraud perpetrated by Baptist Foundation of Arizona
leadership. In addition to the controller, Donald Deardoff and
two associates of BFA who have already plead guilty to criminal
offenses, five members of BFA's senior management, including
William Crotts, the President and Chief Executive Officer, and
the General Counsel, Thomas Grabinski have been indicted on
multiple counts of criminal fraud. There is clear evidence that
all members of BFA's senior management and majority of the Board
of Director's engaged in a conspiracy of silence to deny
essential information about BFA's financial condition to the
Arthur Andersen auditors.
It is also clear that a number of parties, including multiple
agencies of the State of Arizona, BFA's law firm, and the
executives of the Arizona Southern Baptist Convention, were
warned of possible irregularities at BFA and did not act
adequately, nor did they notify the firm. In addition, it is
clear that Arthur Andersen auditors did warn the BFA board of
problems in the foundation's finances -- warnings that went
unheeded.
"We believe this resolution is fair and reasonable to investors
and to our firm and recognizes the responsibility of a number of
parties in failing to stop this tragedy.
"This settlement will not limit the right of plaintiffs to
pursue claims against other potentially responsible parties. It
is our hope that these parties will now take their own steps to
provide appropriate relief to those affected."
Overview of Agreement
-- The settlement calls for the payment of $217 million.
Andersen is hopeful that this will be accomplished through the
recapitalization of its insurance carrier. After payment of
plaintiffs' attorneys' fees and reimbursement of $640,000 to the
Arizona State Board of Accountancy for the costs of its
investigation, the balance will be used to provide a significant
recovery to investors.
-- Retired Arthur Andersen partner Jay Ozer and principal
Ann McGrath have agreed to relinquish their CPA licenses in the
state of Arizona, without any finding of guilt or misconduct.
BRIGHTPOINT: S&P Cuts Corp. Credit Rating to B+ Over Q1 Losses
--------------------------------------------------------------
On May 6, 2002, Standard & Poor's said it lowered its corporate
credit rating on Brightpoint Inc. to 'B+' from 'BB-'. The
downgrade reflected a net loss from continuing operations for
the quarter ended March 31, 2002. Outlook is negative.
The ratings reflect Indianapolis, Indiana-based Brightpoint's
position as a leading distributor and provider of value-added
logistics services in the fragmented and highly competitive
wireless communications products distribution market. Increased
market saturation for wireless handsets, and global economic
weakness, particularly in the U.S., has resulted in lower
consumer demand and diminished near-term growth prospects for
Brightpoint. The company reported revenues of $339 million in
the first quarter, down 4% from the year-earlier period, and a
net loss from continuing operations of $1.9 million.
While Brightpoint's profitability in 2002 is expected to benefit
from restructuring and cost-reduction actions, near-term
profitability is expected to be weak. The current rating
reflects Standard & Poor's expectation that Brightpoint will
restore positive EBITDA in the second quarter of 2002 and that
profitability will improve sequentially during 2002.
Availability under a $90 million bank facility provides adequate
near term liquidity. The rating also incorporates the
expectation that the company will adequately address potential
near-term maturities.
Outlook
Failure to sequentially improve operating profitability during
2002 could lead to lower ratings.
RATINGS LIST
RATINGS LOWERED TO FROM
Brightpoint Inc.
* Corporate credit rating B+ BB-
* Senior secured debt BB- BB
* Subordinated debt B- B
BURLINGTON: Apparel Unit Selling Plant to Lucky Star for $1.6MM
---------------------------------------------------------------
Burlington Industries, Inc., is selling its Aguascalientes plant
located in Plot No. 2 of Parque Industrial San Francisco de los
Ramos in the Municipio of San Francisco, State of
Aguascalientes, Mexico, and other used textile equipment for
$1,602,000 to Lucky Star Aguascalientes, S.A. de C.V.
Patrick M. Leathem, Esq., at Richards, Layton & Finger, in
Wilmington, Delaware, says the purchaser has no relationship
with Burlington. The purchaser represents that they have a
maquila program which has been duly registered and remains fully
qualified under Mexican laws and regulations and that they will
purchase the assets under such program. The purchasers have
acknowledged that the purchase of the assets will be completed
in reliance upon the continued existence and qualification of
the maquila program.
CWMBS INC: S&P Drops Class B-5 P-T Certificates Ratings to D
------------------------------------------------------------
Standard & Poor's lowered its rating on CWMBS Inc.'s mortgage
pass-through certificates series 1995-M class B-5 to 'D' from
double-'C'. At the same time, ratings are affirmed on the
remaining classes of the series.
The lowered rating on class B-5 reflects the permanent principal
write-down of $79,413 experienced by the class due to the
complete erosion of the certificates' credit support. To date,
cumulative realized losses for series 1995-M total $1,105,818,
or 72 basis points of the original pool balance. The remaining
collateral pool balance is less than 12% of its original size.
The affirmations reflect credit enhancement percentages
sufficient to support the current ratings.
Credit support for this transaction employs a senior subordinate
structure whereby the subordinate classes provide credit support
to the senior certificates.
The underlying collateral backing these certificates are 30-year
fixed-rate first-lien mortgage loans secured by residential
properties.
Rating Lowered
CWMBS Inc.
Mortgage pass-thru certs series 1995-M
Rating
Class To From
B-5 D CC
Ratings Affirmed
CWMBS Inc.
Mortgage pass-thru certs series 1995-M
Class Rating
A-3, A-4, PO, X AAA
B-1 AAA
B-2 AA+
B-3 A+
B-4 BB
CHART INDUSTRIES: Completes First Phase of Financial Workout
------------------------------------------------------------
Chart Industries, Inc. (NYSE:CTI) reported financial results for
its first quarter ended March 31, 2002. Chart reported first-
quarter sales of $67.7 million and a net loss of $3.5 million,
which includes non-recurring charges of $0.12 per diluted share.
Sales for the first quarter of 2002 decreased 24 percent to
$67.7 million from $89.0 million for the corresponding quarter
in 2001. The net loss for the first quarter of 2002 was $3.5
million. Included in the Company's first-quarter 2002 net loss
is $3.5 million ($2.1 million, net of taxes) of professional
fees and financing costs related to obtaining the recent
amendments to the Company's credit facilities, and $1.4 million
($0.8 million, net of taxes) of costs related to the closure of
the Company's Denver-East facility. These charges represent
$0.12 per diluted share of the Company's first-quarter 2002 net
loss of $0.14 per diluted share.
Commenting on Chart's first-quarter results, Arthur S. Holmes,
Chairman and Chief Executive Officer, said, "The first phase of
our financial restructuring was completed in the first quarter
of 2002. With the required bank amendments to our credit
facilities behind us, we are now able to focus on methods of
paying down debt and reducing Chart's leverage, ultimately
leading to improved shareholder value."
Mr. Holmes added, "Performance by business segment was mixed but
generally in line with our forecasts for this soft economic
period. We are very encouraged by the Process Systems and
Equipment segment's second consecutive quarter of strong order
intake and improved gross margin contribution. This segment
continues to actively bid natural gas, ethylene and other large
hydrocarbon projects worldwide. The PS&E segment is building a
strong backlog of work with good gross margin potential, which
should help us improve our bottom line in future quarters."
Mr. Holmes continued, "We experienced continued softness in our
Distribution and Storage segment. The D&S segment was below plan
in orders, sales and gross margin for the first quarter of 2002.
The sales decline in the D&S segment again caused low factory
throughput, resulting in under-absorption of overhead expenses."
"Our largest segment, Applied Technologies, experienced some
softness in demand for products which serve the electronics
industries, but otherwise provided planned orders, sales and
gross margin contributions for the quarter."
Commenting further, Mr. Holmes stated, "During the first quarter
of 2002, we announced our decision to close the Company's
Denver-East plant and consolidate the products manufactured
there into other Chart manufacturing locations. A charge of $1.4
million was taken in the first quarter to cover lease exit
costs, certain inventory items, employee severance and other
costs related to this action.
"In addition, we had $2.5 million of expenses in the quarter for
professional fees incurred in obtaining the latest amendments to
our credit facilities. These fees increased our selling, general
and administrative expenses for the 2002 first quarter above the
levels expected going forward.
"Finally, financing costs of $1.0 million were expensed in the
quarter for obtaining a waiver of certain covenants to March 15,
2002. These costs were in addition to the amortization of
capitalized financing costs, which will be approximately $0.4
million per quarter for the rest of 2002. The non-recurring
charges for amendment-related professional fees and financing
costs and plant closure costs totaled $4.9 million ($2.9
million, net of taxes) and represented $0.12 per share of
Chart's reported net loss of $0.14 per share."
Mr. Holmes continued, "Looking ahead, I expect the second
quarter of 2002 to exhibit stronger sales and gross margin
contribution than the first quarter of 2002. With our major
expenses for bank amendments behind us, Chart should generate
net income for the second quarter of 2002. Furthermore, I
anticipate improvements in sales, gross margin and net income in
each succeeding quarter of 2002. For the full year, we continue
to anticipate sales growth over 2001 of five to ten percent,
average gross profit margin between 26 and 28 percent and
recurring SG&A expenses to be comparable to 2001."
"Going forward, we are finalizing a review of possible
operational restructuring actions which could result in
substantial future improvements in our earnings. When
implemented, these initiatives could result in additional non-
recurring charges to operations in future quarters, but are
planned to result in rapid paybacks. We also continue to focus
on potential sources of additional capital and are currently in
discussions with several investor groups, including one group
that is at an advanced stage of due diligence, regarding a
potential investment in the Company. Finally, we are pursuing
the sale of certain assets that are non-core."
Mr. Holmes concluded, "I am optimistic that most of our products
will experience an increase in demand in the second half of
2002. We are focusing our capital and management resources on
growth markets and products. The belt-tightening and cost
reductions we have completed to date will improve our
performance going forward in 2002 and we expect to launch
further initiatives for improvement from our operational review
efforts. I believe the first quarter of 2002 represented a low
point from which Chart will grow and move to profitability."
Consolidated First-Quarter 2002 Financial Results
Sales for the first quarter of 2002 were $67.7 million versus
$89.0 million for the first quarter of 2001, a decrease of
$21.3 million, or 24.0 percent. This sales decrease occurred in
all three segments. The $21.3 million of PS&E segment sales in
the first quarter of 2001 included heat exchangers and cold
boxes for the Trinidad project and several smaller hydrocarbon
projects, which did not reoccur in the first quarter of 2002.
Sales for the PS&E segment did improve, however, by $1.8 million
over the fourth quarter of 2001. In the D&S segment, sales of
bulk tanks declined $5.3 million and sales of packaged gases
declined $4.7 million compared to the first quarter of 2001 as a
result of continued softness in the U.S. metal fabrication
industry and related businesses. AT sales declined $3.6 million
compared to the first quarter of 2001 primarily due to weak
cryogenic systems sales.
Gross profit for the first quarter of 2002 was $16.8 million
versus $27.1 million for the first quarter of 2001. Gross profit
margin for the first quarter of 2002 was 24.8 percent versus
30.4 percent for the first quarter of 2001. The decreases in
gross profit and gross profit margin occurred in all three
segments. The decline in the AT segment is mainly due to softer
sales to the electronics and aerospace industries. The lower D&S
gross profit and gross profit margin were primarily caused by
low factory throughput, particularly for bulk tank and packaged
gas products, resulting in under-absorption of overhead
expenses. The PS&E segment gross profit and gross profit margin
declines were largely the result of lower volume due to the
completion of the Bechtel jobs for the Trinidad LNG Expansion
project in 2001 and certain non-recurring equipment sales in
2001.
SG&A expense for the first quarter of 2002 was $16.3 million
versus $17.5 million for the first quarter of 2001. Excluding
the $2.5 million of amendment-related professional fees, SG&A
expense of $13.8 million represents a significant improvement
from the first-quarter 2001 quarterly high of $17.5 million, and
reflects the Company's efforts to reduce SG&A in response to
lower sales volume. SG&A expense as a percentage of sales,
excluding the $2.5 million in fees, was 20.4 percent for the
first quarter of 2002 versus 19.6 percent for the first quarter
of 2001.
The Company recorded $1.2 million of goodwill amortization in
the first quarter of 2001. Due to the Company's adoption of
Statement of Financial Accounting Standards ("SFAS") No. 142,
"Goodwill and Other Intangible Assets," in the first quarter of
2002, the Company will no longer record goodwill amortization.
The Company is in the process of completing step one of the
transitional impairment tests of SFAS No. 142 and has not yet
determined the likelihood or amount of any goodwill impairment.
The Company recorded $1.4 million of employee separation and
plant closure costs related to its decision to close the Denver-
East mobile equipment manufacturing facility. These charges
included $0.3 million for inventory impairment included in cost
of sales, and $1.1 million for lease exit costs, severance and
other items.
Net interest expense for the first quarter of 2002 was $4.1
million compared with $6.3 million for the first quarter of
2001, reflecting lower overall interest rates. As of March 31,
2002, the Company had borrowings of $263.0 million on its credit
facilities and was in compliance with all related covenants.
Cash provided by operations in the first quarter of 2002 was
$0.3 million compared with $5.6 million used in operations in
the first quarter of 2001. The Company's 2002 first-quarter
operating cash flow primarily reflects working capital
improvements in accounts receivable and inventory, offset by
necessary payments of accounts payable and other current
liabilities.
Capital expenditures for the first quarter of 2002 were $1.2
million compared with $2.0 million in the first quarter of 2001,
and represented planned maintenance level expenditures.
The Company currently believes that cash forecasted to be
generated by operations and access to capital markets will be
sufficient to satisfy its working capital, capital expenditure
and debt repayment requirements for 2002. The modified financial
covenants under the Company's Credit Facility and the extension
of the Incremental Credit Facility under the March 15, 2002
amendments expire on March 31, 2003. The Company is continuing
to pursue potential sources of additional capital and sales of
certain assets to pay down debt obligations.
Orders And Backlog
Chart's consolidated orders for the first quarter of 2002
totaled $75.5 million, compared with orders of $80.3 million for
the fourth quarter of 2001. Chart's consolidated firm order
backlog at March 31, 2002 was $73.8 million, compared with $64.8
million at December 31, 2001.
AT orders for the first quarter of 2002 totaled $33.3 million,
compared with $38.5 million for the fourth quarter of 2001. The
AT segment experienced a typical first-quarter slowdown in
orders for most of its products against the relative high water
mark of the fourth quarter of 2001. AT backlog for the first
quarter of 2002 of $17.2 million improved compared to $13.8
million for the fourth quarter of 2001.
D&S orders for the first quarter of 2002 totaled $22.5 million,
compared with $22.9 million for the fourth quarter of 2001.
Orders have been at low levels in D&S over the last three
quarters, reflecting worldwide economic softness and tighter
capital budgeting by customers. The Company is anticipating a
second-half recovery in this segment.
PS&E orders for the first quarter of 2002 totaled $19.7 million,
compared with $19.0 million in the fourth quarter of 2001.
Orders in this segment have measurably improved, especially in
the hydrocarbon processing market. PS&E backlog of $31.7 million
significantly improved over the fourth quarter of 2001.
Chart Industries, Inc. manufactures standard and custom-built
industrial process equipment primarily for low-temperature and
cryogenic applications. Headquartered in Cleveland, Ohio, Chart
has domestic operations located in 12 states and international
operations located in Australia, China, the Czech Republic,
Germany and the United Kingdom.
For more information on Chart Industries, Inc. visit the
Company's Web site at http://www.chart-ind.com
COLUMBIA LABORATORIES: Selling 337K Shares to Acqua Wellington
--------------------------------------------------------------
Columbia Laboratories, Inc. is offering 337,079 shares of its
common stock directly to Acqua Wellington North American
Equities Fund, Ltd. at a price of $4.45 per share. The Company
is selling these shares to Acqua Wellington under a stock
purchase agreement. The Company will receive gross
proceeds of $1,500,000 before deducting expenses of the
offering.
Acqua Wellington is an "underwriter" within the meaning of the
Securities Act of 1933, as amended, and any profits on the sale
of the shares of the common stock by Acqua Wellington and any
discounts, commissions or concessions received by Acqua
Wellington may be deemed to be underwriting discounts and
commissions under the Securities Act.
Acqua Wellington has informed Columbia Laboratories that it
intends to use Carlin Equities Corp. as the broker-dealer for
sales of shares of common stock on the American Stock Exchange.
Carlin Equities Corp. is an "underwriter" within the meaning of
the Securities Act.
Columbia Laboratories' common stock trades on the American Stock
Exchange under the symbol COB. On April 23, 2002, the last
reported sale price of the common stock on the AMEX was $4.79
per share.
Columbia Laboratories, Inc. is a U.S.-based international
pharmaceutical company dedicated to research and development of
women's health care and endocrinology products, including those
intended to treat infertility, dysmenorrhea, endometriosis
andhormonal deficiencies. Columbia is also developing hormonal
products for men and a buccal delivery system for peptides.
Columbia's products primarily utilize the company's patented
bioadhesive delivery technology. The company's December 31, 2001
balance sheet shows a total shareholders' equity deficit of
about $3.4 million.
COVANTA ENERGY: Court Okays Proposed Reclamation Claim Protocol
---------------------------------------------------------------
Deborah M. Buell, Esq. at Cleary, Gottlieb, asks the Court to
deny Creditors' reclamation claims and to establish procedures
to allow administrative claims for valid reclamation claims, or
to disallow the same for invalid reclamation claims.
Covanta Energy Corporation and its debtor-affiliates propose
this procedure:
(a) Each Vendor must submit a written request for
reclamation before 10 days after the receipt of
goods by a Debtor (or such period allowed pursuant to 11
U.S.C. Section 546(c)(1)(B)). The request for
reclamation must be accompanied by proof of delivery of
the item to the Debtors, the purchase order number for
the item, a copy of the packing slip with which such
item was delivered and such other reasonable documents
as the Debtors may request with respect to proof of
delivery of such item. These should be sent to Cleary,
Gottlieb, Steen & Hamilton, One Liberty Plaza, New York,
New York 10006, Attn: Deborah M. Buell, Esq. and Manisha
S. Desai.
(b) The Debtors will then endeavor to stipulate with each
Vendor as to the value of the goods that the Debtors
received from the Vendor within 10 days (or such
period allowed pursuant to 11 U.S.C. Section
546(c)(1)(B)) before the Vendor gave written notice of
its demand for reclamation. The Stipulations will
provide that the allowance or disallowance of an
administrative claim based on the stipulated amount
will be subject to all defenses (other than as to the
Debtors of the amount of the Stipulated Amount). The
Stipulations will further provide that if not objected
to by the Debtors or other parties in interest within
20 days of the filing and service of any Stipulation,
the administrative claim, no longer subject to any
defenses, will be allowed in the Stipulated Amount;
(c) The Stipulations will be filed with the Court and served
pursuant to an order of this Court establishing notice
requirements. If no objection to a Stipulation is filed
with the Court within 20 days of service of
such Stipulation, the Vendor's administrative claim
under Section 503(b) of the Bankruptcy Code for the
Stipulated Amount will be allowed without any further
action by the Debtors or further action of the Court. If
an objection is made, then the Court will determine pre-
hearing procedures based upon the requests, if any, of
the relevant Vendor, the Debtors or other objecting
parties and set the matter of allowance or disallowance
of the administrative claim for hearing;
(d) If the Debtors and any Vendor are unable to stipulate to
the value of the goods subject to the Vendor's claim
based on a reclamation demand pursuant to Section 546,
such Vendor may file a motion with the Court, with 20
days notice and opportunity for a hearing, seeking
allowance of an administrative claim at any time prior
to confirmation of a plan or plans of reorganization.
For allowance, such Vendor will be required to prove (1)
timely submission of the Reclamation Demand (2) the
value of goods delivered to the Debtors by the Vendor in
the 10 days (or such period allowed pursuant to 11
U.S.C. Section 546(c)(1)(B)) before such Vendor made its
written demand for reclamation, (3) compliance with any
other applicable state, territorial or common law
reclamation requirements and (4) the priority of its
reclamation rights with respect to liens (if any)
attaching to the goods for which reclamation was
demanded.
Ms. Buell continues that, in their ordinary course of business,
the Debtors receive shipments of inventory and supplies at
various locations throughout the United States on a daily basis.
These inventories and supplies include fuels (such as wood,
diesel, propane, gasoline, and natural gas), chemicals, air
pollution control reagents, spare parts, uniforms and office
products. Furthermore, the Debtors receive shipments of various
equipment essential to the running of their businesses,
including computers and copying machines, motor vehicles,
personal protective equipment, maintenance equipment, facility
equipment, landscaping equipment, cafeteria equipment, and
janitorial equipment and supplies. As such, it is possible that
the vendors of these products may send reclamation demand
notices and file reclamation claims against the Debtors.
The Debtors believe that it is critical to establish a
streamlined process for handling reclamation issues at the
outset of these cases. The Debtors' business operations will be
significantly disrupted if the Vendors are allowed to reclaim
the goods without a uniform procedure that is fair and
applicable to all parties. Moreover, absent the establishment of
an orderly reclamation process, the Debtors' business operations
undoubtedly would suffer as management and employees would have
to divert their attention from important operational issues to
deal with the reclamation claimants, all to the detriment of the
Debtors' estates and their creditors.
The Debtors believe that the procedures for and treatment of
reclamation claims outlined above are authorized by the
Bankruptcy Code, are fair and in the best interests of the
Debtors, their creditors and their estates.
In support of the Debtors' position on this matter, Ms. Buell
states Section 546(c)(1) of the Bankruptcy Code authorizes
vendors who have sold goods to a debtor in the ordinary course
of business to reclaim such goods (subject to certain
limitations) if:
* the debtor was insolvent when the goods were delivered;
* the seller demanded reclamation in writing;
* such demand was made within 10 days after the debtor
received possession of the goods (or within 20 days of
delivery if the 10 day period expires after the petition
date); and (d) the seller is otherwise entitled to
reclamation under applicable state law. See 11 U.S.C.
Section 546(c)(1).
Any vendor asserting a claim for reclamation is required to
demonstrate that it has satisfied all requirements entitling it
to a right of reclamation under applicable state law and section
546(c)(1) of the Bankruptcy Code.
Additionally, in order for a seller to reclaim goods, a debtor
must have had actual possession of the goods at the time the
debtor received the written reclamation demand. Moreover, the
goods must be readily identifiable and cannot have been
processed into other products.
She adds that as an alternative to the physical delivery by the
Debtor of goods that are subject to a reclamation claim, Section
546(c)(2) of the Bankruptcy Code provides that the vendor's
claim may be replaced by an administrative expense claim.
The procedures for the treatment of reclamation claims made
against the Debtors are consistent with Sections 546(c) of the
Bankruptcy Code. They will ensure the continuous supply of
goods that are vital to Debtors' continuous operations and
integral to their successful reorganization.
In light of the foregoing, the Debtors believe that the relief
requested in this Motion is necessary and appropriate, and is in
the best interest of the Debtors, their estates and their
creditors.
She asks Judge Blackshear to grant the Debtors permission to
implement this reclamation process and to grant such other
relief he deems just and proper.
Judge Blackshear later granted this motion. (Covanta Bankruptcy
News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
DIGITAL TELEPORT: Appoints Andrew Whipple as Chief Fin'l Officer
----------------------------------------------------------------
Andrew W. Whipple, 38, has been appointed Chief Financial
Officer of Digital Teleport Inc., a regional fiber
communications provider for secondary and tertiary markets in
the Midwest. Whipple succeeds Gary Douglass who resigned to
pursue other interests.
Whipple, a certified public accountant, was most recently vice
president and controller for Digital Teleport. He joined the
company in September 1998 from Deloitte & Touche LLP, where he
was a senior manager serving the high-tech, service and
manufacturing groups.
"Andy clearly has demonstrated strong financial and strategic
leadership for our company," said Paul Pierron, president and
CEO of Digital Teleport. "Andy's support during our court-
supervised reorganization has kept us on track for successfully
emerging from Chapter 11 before the end of this year. We look
forward to Andy's continued contributions to our company."
Whipple has bachelor's degree in accounting from Virginia Tech
University. He and his wife, Donna, have four children and live
in St. Louis.
Digital Teleport provides wholesale fiberoptic transport
services in secondary and tertiary Midwest markets to national
and regional communications carriers. The company's network
spans 5,700 route miles across Arkansas, Illinois, Iowa, Kansas,
Missouri, Nebraska, Oklahoma and Tennessee. Digital Teleport
also provides Ethernet service to enterprise customers and
government agencies in office buildings in areas adjacent to the
company's metropolitan network rings. The company's Web site is
http://www.digitalteleport.com
Digital Teleport filed for Chapter 11 reorganization on December
31, 2001, in the U.S. Bankruptcy Court for the Eastern District
of Missouri in St. Louis
DOBSON COMMS: Unit Gets FCC Auction No. 35 Refund of $91.2 Mill.
----------------------------------------------------------------
Dobson Communications Corporation (Nasdaq:DCEL) said that the
Federal Communications Commission has refunded to DCC PCS, Inc.,
a Dobson subsidiary, approximately $91.2 million of the
subsidiary's approximately $109 million in payments related to
its participation in FCC Auction No. 35 last year. DCC PCS was
the high bidder on 14 licenses in the auction, but the licenses
have not been awarded.
As a result of the partial refund, Dobson's current availability
of unrestricted cash is now approximately $230 million.
Additional asset and liability balances will be announced when
the Dobson reports its first quarter operating results the
evening of May 8, 2002.
Dobson Communications is a leading provider of cellular phone
services to rural markets in the United States. Headquartered in
Oklahoma City, the Company owns or manages wireless operations
in 17 states. For additional information on the Company and its
operations, visit its Web site at http://www.dobson.net
At June 30, 2001, Dobson Communications reported a total
shareholders' equity deficit of about $37 million.
DOMAN INDUSTRIES: March 31 Balance Sheet Upside-Down by $280MM
--------------------------------------------------------------
Rick Doman, President & CEO of Doman Industries Limited,
announced the Company's first quarter results.
Sales
Sales in the first quarter of 2002 were $131.7 million compared
to $219.9 million in the first quarter of 2001.
Sales in the solid wood segment decreased to $102.6 million in
the current quarter from $125.2 million in the same period of
2001 as a result of lower net sales realizations for lumber and
lower sales volumes and prices for logs.
Pulp sales in the first quarter of 2002 decreased to $29.1
million from $94.7 million in the same period of 2001 as a
result of lower sales volumes of both NBSK and dissolving
sulphite pulp combined with lower prices especially for NBSK and
commodity grade dissolving sulphite pulps.
EBITDA
EBITDA in the first quarter of 2002 was a loss of $3.4 million
compared to a loss of $13.0 million in the immediately preceding
quarter and $13.5 million in the first quarter of 2001. EBITDA
for the solid wood segment in the first quarter of 2002 was $7.2
million compared to a loss of $8.7 million in the fourth quarter
of 2001 and $6.9 million in the first quarter of 2001. As a
result of the softwood lumber trade dispute and to manage
inventory and working capital levels, the Company took extensive
downtime across all of its sawmill and logging operations in the
first quarter of 2002. The average lumber price was $519 per
mfbm in the first quarter of 2002 compared to $510 per mfbm in
the previous quarter and $549 per mfbm in the first quarter of
2001.
EBITDA for the pulp segment in the first quarter of 2002 was a
loss of $8.9 million compared to a loss of $2.4 in the
immediately preceding quarter and $7.7 million in the first
quarter of 2001. Both pulp mills took extensive market related
shutdown in the first quarter as a result of continuing weak
pulp markets. Our Squamish mill produced 28,343 ADMT in the
first quarter of 2002 compared to 48,389 ADMT in the fourth
quarter of 2001, while our Port Alice dissolving sulphite pulp
mill produced 11,418 ADMT in the first quarter of 2002 compared
to 22,097 ADMT in the immediately preceding quarter.
Cash flow from operations in the first quarter of 2002, before
changes in non-cash working capital, was negative $30.5 million
compared to negative $12.1 million in the first quarter of 2001.
A reduction in non-cash working capital generated $50.4 million
in the first quarter of 2002 compared to $37.1 in the first
quarter of 2001. As a result, cash provided by operating
activities in the first quarter of 2002 was $19.9 million
compared to $25.0 million in the first quarter of 2001.
During the quarter, the Company replaced the revolving credit
facility established in 2001 with a new secured revolving
facility of up to $65 million, which has an initial term of
three years and allows for borrowing against a prescribed base
of receivables and inventory.
In April 2002 and within the applicable grace period, the
Company made the semi-annual interest payment on its outstanding
8.75% US$388 million senior unsecured notes initially due on
March 15, 2002.
Earnings
In the first quarter of 2002, the Company reported a net loss of
$39.4 million compared with a net loss of $45.1 million in the
first quarter of the previous year. 2001 amounts for interest
expense have been restated to reflect the adoption of a new
standard for foreign currency translation of long-term debt that
is more fully explained in the accompanying notes to the
financial statements.
Market & Operations Review
Lumber prices in the U.S. as measured by SPF 2x4 lumber,
averaged approximately US $268 per mfbm in the first quarter of
2002 compared to US $194 per mfbm in the same period of 2001 and
US $221 per mfbm in the fourth quarter of 2001. Although prices
have recently come off slightly from the highs reached in the
first quarter, housing starts have remained strong, with March
starts at a seasonally adjusted annual rate of 1,646,000. Lumber
prices in Japan remain weak reflecting the continuing poor
economic conditions and currency weakness.
The on-going softwood lumber dispute has resulted in major
disruptions to the Company's lumber and logging operations.
Talks between the Canadian and U.S. authorities broke down in
late March. On April 25, the U.S. Department of Commerce issued
revised final determinations in the countervailing duty and
anti-dumping cases of 18.8% and 8.4%. On May 2, 2002, the U.S.
International Trade Commission determined that the softwood
lumber industry in the U.S. was threatened with material injury,
as opposed to a determination of actual injury. As a result,
Canadian shippers will be required to make cash payments for
countervailing and anti-dumping duties starting on or about
approximately May 23, 2002. The ITC has not yet confirmed
whether deposits collected on bonds deposited on shipments made
to date will be released. However, based on experiences in the
past, it has been publicly reported that this may occur. If such
a release is confirmed by the ITC, on or around May 16, 2002,
the Company will reverse its accrual to date of $13.7 million in
the second quarter, although the Company can provide no
assurances in this respect.
The Company is unable to predict if and when the softwood trade
issue will be settled or if interim measures will be negotiated
before May 23, 2002. Recognizing that a permanent resolution may
take some time, the Company supports Canadian governmental
discussions to implement an interim border tax to be levied on
Canadian lumber shipped to the U.S. that sells below a threshold
level.
The release by the British Columbia provincial government on May
1, 2002 of a discussion paper on streamlining the Forest
Practices Code as well as other measures being considered by the
provincial government to assist in making the coastal forest
industry more competitive and profitable are encouraging.
However, the nature of such changes and their impact on the
Company cannot be measured or predicted with certainty at this
time.
NBSK pulp markets remained weak during the first quarter with
list prices to Europe falling to US $440 per ADMT in April.
Although Norscan inventory levels fell 118,000 tonnes in March
they still remain high, at 1.7 million tonnes. However prices
appear to have bottomed and price increases have been announced
in May with the NBSK list price to Europe rising by US $30 per
ADMT to US $470 per ADMT. With prices expected to continue
firming, our Squamish pulp mill started up production at the
beginning of May following one and a half months of downtime.
Markets for high purity cellulose grades of dissolving pulp
produced at our Port Alice mill were stable during the first
quarter but prices for lower purity grades continued to
deteriorate. Strengthening kraft markets are expected to have a
positive impact on the dissolving pulp market going forward.
Although our Port Alice pulp mill commenced production in April
following approximately ten weeks of downtime, it will take
further production curtailments as required to control
inventories.
As a result of the negative impacts of the softwood lumber
dispute, weak pulp markets and our high debt levels, the Company
is conducting a strategic review of alternatives including,
among other things, asset divestitures and restructuring of its
indebtedness.
Doman Industries Limited is a British Columbia based coastal
integrated forest products company engaged in timber harvesting,
sawmilling, value-added lumber re-manufacturing and the
production of dissolving sulphite and kraft pulp. The Company
has an annual allowable cut of approximately 4.2 million cubic
metres. The Company's manufacturing plants consist of nine
sawmills with a combined annual capacity of 1.2 billion board
feet, two pulp mills with combined annual production capacity of
265,000 tonnes of NBSK pulp and 160,000 tonnes of dissolving
sulphite pulp, a log merchandising plant, and a value added
lumber re-manufacturing plant with an annual drying and
production capacity of approximately 80 million board feet.
Doman Industries' March 31, 2002 balance sheet shows that the
company has a total shareholders' equity deficit of $280
million, up from a deficit of about $241 million recorded at
December 31, 2001.
DYNEX CAPITAL: Recourse Debt Drops to $47MM at March 31, 2002
-------------------------------------------------------------
Dynex Capital, Inc. (NYSE: DX) reported today net income of $0.5
million for the first quarter 2002, versus net income of $11.6
million for the first quarter 2001.
The Company reported comprehensive income of $8.9 million for
the first quarter 2002, versus comprehensive income of $16.7
million for the first quarter 2001 and $0.8 million for the
fourth quarter 2001. Comprehensive income includes net income
and the change in accumulated other comprehensive loss as
reported in shareholders' equity. Book value per common share,
inclusive of dividends in arrears on preferred stock, increased
to $5.31 at March 31, 2002 from $4.71 at December 31, 2001.
After consideration of preferred stock charges, the Company
reported a net loss to common shareholders of $1.9 million for
the first quarter 2002, versus net income available to common
shareholders of $8.4 million for the first quarter 2001, and a
net loss to common shareholders of $6.7 million for the fourth
quarter of 2001.
First Quarter 2002 Results
The Company reported net interest margin before provision for
losses on its investment portfolio of $9.5 million compared to
$12.8 million for the fourth quarter of 2001. After provision
for losses, net interest margin for the first quarter 2002 was
$1.9 million. The decrease in net interest margin for the first
quarter 2002 was primarily due to (i) an increase in premium
amortization, principally related to higher prepayments on
adjustable-rate mortgage (ARM) loans, (ii) the classification of
the Company's investment in delinquent property tax receivables
as non-accrual (which resulted in a decline in net interest
margin of $1.4 million relative to the fourth quarter of 2001),
and (iii) the decrease resulting from the continued downward
resets on the Company's ARM loans. Overall, the weighted-average
yield on the Company's investment portfolio declined to 6.97% in
the first quarter versus 7.33% in the fourth quarter of 2001.
For the first quarter 2002, comprehensive income was $8.9
million versus $0.8 million for the fourth quarter 2001.
Comprehensive income includes net income, plus the change in the
value of the available-for-sale component of the Company's
investment portfolio, as measured by accumulated other
comprehensive loss in shareholders' equity. The main component
of accumulated other comprehensive loss is the unrealized loss
on investments available-for-sale, which declined to $75.4
million at March 31, 2002, compared to $83.9 million at December
31, 2001. Unrealized losses primarily relate to the mark-to-
market on the Company's securitized commercial loan portfolio
and securitized manufactured housing loan portfolio. During the
first quarter of 2002, the Company realized $8.3 million of such
losses. The Company also reported that general and
administrative expenses for the first quarter declined to $1.9
million versus $3.7 million for the fourth quarter of 2001.
Balance Sheet
Total assets at March 31, 2002 were $2.34 billion, versus $2.50
billion at December 31, 2001. The decline in assets was
primarily the result of prepayments in the Company's investment
portfolio. At March 31, 2002, recourse debt was $47.0 million
versus $58.1 million at December 31, 2001. Recourse debt
consisted principally of $46.8 million of Senior Notes due July
15, 2002. During April, the Company purchased an additional $0.6
million of such Senior Notes. Shareholders' equity was $182.0
million at March 31, 2002 versus $173.1 million at December 31,
2001. Common book value per share, net of liquidation preference
on Series A, Series B, and Series C Preferred Stock, increased
to $5.31 per share from $4.71 per share at December 31, 2001.
On April 25, 2002, the Company completed a securitization where
it issued $605 million of collateralized bonds. These bonds were
collateralized by single-family loans aggregating $602 million,
$447 million of which were loans already owned by the Company
and $155 million of which represented new loans from the
purchase of mortgage backed securities from third parties
pursuant to certain call rights owned by the Company. The
transaction will be accounted for as a financing; thus the loans
and associated bonds will be included in the Company's second
quarter 2002 consolidated balance sheet as assets and
liabilities of the Company.
Discussion
Mr. Thomas H. Potts, President of the Company, stated, "We
continue to make solid progress in improving shareholder value,
as measured by the level of comprehensive income, the increase
in book value per common share, and the results of the April
securitization. We also are on schedule in terms of evaluating
the feasibility of the Company forming or acquiring a depository
institution, and are hopeful that a decision in that regard or
another alternative will be made this quarter."
"Although results as measured by net income were essentially
break even for the quarter, results as measured by comprehensive
income were much stronger. The major difference in net income
and comprehensive income was that $8.3 million of previously
unrealized losses, primarily related to the continued high rate
of losses on the securitized manufactured housing loan
portfolio, were charged to earnings this past quarter. Such
charge to earnings was the major component of the $8.5 million
improvement in the mark-to-market on the investment portfolio.
As a result of the comprehensive income, shareholders' equity
increased to $182.0 million at March 31, 2002, and common book
value per share improved to $5.31 from $4.71 at December 31,
2001."
Mr. Potts continued, "The recent securitization is going to be a
significant benefit for the Company. First, it generated $22
million in cash proceeds, which in conjunction with cash on-hand
and projected cash flow over the next two months, should allow
us to retire the remaining Senior Notes when due on July 15,
2002. Second, the Company's borrowing costs on $447 million of
non-recourse debt will decrease by approximately 36 basis
points. Third, we added $155 million of new interest-earning
assets to the balance sheet, which should mitigate the decline
we would otherwise see in our net interest margin from continued
prepayments on the investment portfolio. And fourth, the
securitization is projected to improve the overall mark-to-
market on the investment portfolio by an estimated $12 million."
Mr. Potts finished by stating, "Assuming the Federal Reserve
leaves short-term interest rates unchanged this quarter, we
would expect comprehensive income for the second quarter to
improve relative to the first quarter as a result of the
securitization and the expected continued improvement of the
mark-to-market of the investment portfolio. This would result in
a further increase in book value per common share, which we feel
is one of the main drivers in improving overall shareholder
value."
Dynex Capital, Inc. is a financial services company that elects
to be treated as a real estate investment trust (REIT) for
federal income tax purposes.
* * *
As previously reported on April 2, 2002 in the Troubled Company
Reporter, Dynex Capital's Board continues to evaluate strategies
to improve shareholder value. Given the improvement in the
market value of the Company's equity securities since January
2001, the Board feels that it is unlikely that any offer will be
made by a third party that would be at a level that would be
approved by both the Board and the requisite percentage of
shareholders. The Board has also reviewed possible liquidation
scenarios, but the illiquid nature of many of the Company's
remaining assets and the lack of buyers for many of such assets
makes such an alternative impractical over any reasonable time
horizon.
As a result, the Board has requested management of the Company
to analyze various business directions for the Company to pursue
on a going forward basis once the remaining Senior Notes are
paid in full, which the Company expects to be completed on or
before July 15, 2002. Based on a review of such alternatives by
the Board in February 2002, the Company has engaged an advisor
to assist it in evaluating the feasibility of the Company
forming or acquiring a depository institution. The Company sees
the benefits of forming or acquiring a depository institution as
follows: (i) as future investments (i.e. loans and/or
securities) would be owned by the depository institution (which
has access to deposits insured by the Federal Deposit Insurance
Corporation and to borrowings from the Federal Home Loan Bank
System), there would be reduced liquidity risk to the Company in
the future, a risk that has historically caused considerable
losses to specialty finance companies including the Company;
(ii) the depository institution is not as dependent on the
public or private markets for funding; (iii) given that the
Company's net operating and capital loss carryforwards exceed
$180 million in the aggregate, the fact that depository
institutions are subject to state and federal income taxes
should not be a detriment to financial results for the
foreseeable future; (iv) while owning and operating a depository
institution would probably require the Company to give up its
REIT status, the Company will not for the foreseeable future
realize any material benefits from maintaining REIT status
(certain of the Company's subsidiaries will maintain REIT status
as required while their respective securitizations are
outstanding); and (v) regulatory guidelines would likely require
an investment strategy that would be of lower risk than the
Company's historic investment strategies.
The Company also sees various drawbacks to forming or acquiring
a depository institution as follows: (i) a depository
institution is highly regulated, and such regulation limits and
restricts the activities and operations of a depository
institution; (ii) the Company would become a bank or thrift
holding company and subject to various restrictions and
regulations; (iii) depository institutions operate in a very
competitive environment; (iv) the Company may not be able to
achieve a return on the equity invested in a depository
institution that enhances shareholder value relative to other
alternatives for the Company; (v) the Company currently has no
experience in managing a depository institution; and (vi) the
annual dividend rate on each of the three series of preferred
stock outstanding would increase by an amount equal to
approximately 0.50%.
EBIZ ENTERPRISES: Arizona Court Confirms Chapter 11 Plan
--------------------------------------------------------
On April 11, 2002 the United States Bankruptcy Court for the
District of Arizona in Phoenix, Arizona executed an order
confirming the Amended Joint Plan of Reorganization of Ebiz
Enterprises, Inc., a Nevada corporation, Case No. B-01-11843-
ECF-CGC, and its wholly-owned subsidiary, Jones Business
Systems, Inc., a Texas corporation, Case No. B-01-11844-ECF-CGC,
that the Company and JBSI filed jointly with the Bankruptcy
Court on January 4, 2002, as amended on January 24, 2002 and as
modified by three immaterial modifications to the Plan at the
April 11, 2002 confirmation hearing.
The principal provisions of the Plan are:
* The effective date of the Plan is thirty (30) days
following the date all orders necessary for confirmation of the
Plan become final orders. The Effective Date is anticipated to
be May 21, 2002 assuming that all orders necessary for
confirmation of the Plan become final orders on April 21, 2002.
On the Effective Date, all of the assets and business operations
of JBSI will be transferred to the Company which shall become
the reorganized, surviving entity and JBSI shall be dissolved
and cease to exist. Thereafter, all purchases, manufacturing,
sales and other business operations will be conducted by New
Company.
* Obligations to secured creditors are to be paid in
full with interest. Long-term periodic payments will be made to
secured creditors until full payment has been made.
* Upon the Effective Date, the general unsecured
creditors will share pro rata in a pool of securities consisting
of (i) 660,000 shares of shares of common stock in New Company,
par value $0.001 and (ii) warrants to purchase 220,000 shares of
new common stock. The terms of the Unsecured Creditors Warrants
will provide for a two-year exercise period from the Effective
Date and an exercise price of $0.65 per share. The total amount
of new common stock issued directly to the general unsecured
creditors and from exercise of the Unsecured Creditors Warrants
(assuming exercise of all Unsecured Creditors Warrants) equals
approximately 9.46% of the new common stock that may be issued
under the Plan. In addition, each general unsecured creditor
will receive equal quarterly payments over a two year period,
beginning on the date that is three months after the Effective
Date, which aggregate 7% of such general unsecured creditor's
allowed claim.
* On the Effective Date, all outstanding shares of
preferred stock and common stock of the Company will be
cancelled. Warrants to purchase shares of new common stock at
$0.65 per share will be issued to the former stockholders (each
a "New Warrant") at the rate of one share of new common stock
for every ten (10) shares of the Company's common stock owned as
of the Effective Date. Terms of the New Warrants will provide
for a sixty-day exercise period from the Effective Date. For
purposes of calculating the exchange for the New Warrants set
forth above, the 7,590 outstanding shares of preferred stock of
the Company have been converted into 3,220,000 shares of common
stock of the Company. The total number of shares of new common
stock for which the New Warrants may be exercised is 3,728,185.
The total amount of new common stock issued to preferred and
common shareholders of the Company from exercise of the New
Warrants (assuming exercise of all New Warrants) equals
approximately 40.09% of the new common stock that may be issued
under the Plan.
* The Canopy Group, Inc. has the right, for the period
that ends thirty days after the Effective Date, to exchange up
to $1,500,000 of its secured debt for shares of new common
stock. The total number of shares of new common stock for which
Canopy may make such exchange is 2,538,462. In addition, Canopy
will receive on the Effective Date warrants to purchase 253,846
shares of new common stock (each a "Canopy/FFEC Warrant"). The
terms of the Canopy/FFEC Warrants will provide for a three-year
exercise period from the Effective Date and an exercise price of
$0.65 per share. The total amount of new common stock issued to
Canopy from the exchange of its secured debt and the exercise of
the Canopy/FFEC Warrants (assuming Canopy exchanges the entire
amount of its secured debt and exercises all of its Canopy/FFEC
Warrants) equals approximately 30.02% of the new common stock
that may be issued under the Plan.
* During the period ending on the date that is thirty
days after the Effective Date, holders of the secured promissory
notes totaling $591,000 (each a "DIP Note"), issued as debtor-
in-possession financing during the Chapter 11 cases, may
exchange all or part of the debt represented by a DIP Note for
(i) shares of new common stock at the price of $0.50 per share
or (ii) a convertible secured promissory note (each a "New
Note") which provides for interest to accrue at various rates
until the maturity date which is seven years after the Effective
Date. At maturity, all principal and accrued interest will be
due. For the period ending on the date that is twenty-four
months after the Effective Date, each holder of a New Note may
convert the amount of such New Note to shares of new common
stock at the conversion price of $0.50 per share. The total
number of shares of new common stock for which the DIP Notes may
be exchanged directly for shares or converted through the New
Notes for shares is 1,182,000 shares which equals approximately
12.71% of the new common stock that may be issued under the
Plan. In addition, the agent for the holders of the DIP Notes,
which also served as the financial advisor to the Company in the
debtor-in-possession financing transaction, will receive 118,200
Canopy/FFEC Warrants which if exercised equals approximately
1.27% of the new common stock that may be issued under the Plan.
* The Transition Management Team will collectively
receive 300,000 shares of new common stock and warrants to
purchase 300,000 shares of new common stock (each a "Transition
Warrant"). The terms of the Transition Warrants will provide for
a one-year exercise period from the Effective Date and an
exercise price of $0.65 per share. Fifty percent of the total
number of shares of new common stock and Transition Warrants
will be distributed to members of the Transition Management Team
on the Effective Date with the balance distributed on the date
that is 90 days after the Effective Date. The total amount of
new common stock issued directly to the Transition Management
Team and from exercise of the New Warrants equals approximately
6.45% of the new common stock that may be issued under the Plan.
* The board of directors of New Company on the Effective
Date will consist of Bruce Parsons, up to three designees of
Canopy (depending upon the amount of its secured debt that is
exchanged for new common stock), and up to one designee of FFEC
(depending upon the amount of the DIP Notes that are exchanged
for new common stock ).
The Plan requires that certain administrative claims be paid on
the Effective Date.
The total outstanding shares of the Company as of the
confirmation date of the Plan was 7,590 preferred shares and
34,061,851 common shares. The number of shares of new common
stock to be issued upon the Effective Date is 810,000, and the
total number of shares of new common stock that may be issued
upon the exercise of all warrants, the conversion of all
convertible debt issued under the Plan, and the issuance to the
Transition Management Team of the balance of its new common
stock is 8,490,693. The combined total number of shares of new
common stock that may be issued under the Plan by all methods is
9,300,693.
As of April 11, 2002, the assets and liabilities of the Company
on a historical cost basis were approximately 4,531,737 and
21,910,899, respectively. On or near the Effective Date, New
Company will adopt provisions of "fresh start accounting," which
requires New Company to restate all assets and liabilities to
their fair values based upon the provisions of the Plan and
certain valuation plans currently underway. No determination of
the impact of fresh start accounting on the historical
consolidated financial statements has been made.
EBIZ ENTERPRISES: Appoints Semple & Cooper as Accountants
---------------------------------------------------------
Semple & Cooper, LLP, Certified Public Accountants and
Consultants, was engaged as EBIZ Enterprises' principal
accountant on February 22, 2001. The decision to engage Semple &
Cooper was approved by the Company's board of directors.
On September 7, 2001 Ebiz Enterprises, Inc., a Nevada
corporation, and its wholly-owned subsidiary, Jones Business
Systems, Inc., a Texas corporation filed separate voluntary
petitions under Chapter 11of the Bankruptcy Code in federal
bankruptcy court in Phoenix, Arizona. The CaseNo. for the
Company is B-01-11843-ECF-CGC, and the Case No. for JBSI isB-01-
11844-ECF-CGC. The bankruptcy court assumed jurisdiction over
the Company and JBSI on September 7, 2001, and the existing
officers and directors have been left in possession of the
respective bankruptcy estates subject to the supervision and
orders of the bankruptcy court.
ECHO BAY: S&P Affirms B- Credit Rating After Share Exchange
-----------------------------------------------------------
On May 6, 2002, Standard & Poor's affirmed its ratings on Echo
Bay Mines Ltd., including the single-'B'-minus long-term
corporate credit rating, following the completion of a share
exchange.
At the same time, the ratings were removed from CreditWatch,
where they were placed May 31, 2001. The outlook is stable.
The ratings on Echo Bay were originally placed on CreditWatch
pending the company's ability to secure a replacement credit
facility when the previous bank facility expired in October
2001. The company obtained a new credit facility for US$17.0
million in revolving credit and US$4.0 million in letters of
credit. The credit facility is guaranteed by an affiliate of
Newmont Mining Corp. of Canada.
The ratings on Echo Bay reflect the company's below-average
business position as a North America-based, midsize gold
producer that has had to contend with the challenges of
operating in the difficult gold pricing environment. In reaction
to the low gold prices, the company has limited its exploration
and development expenditures, which has dampened prospects for
future production and reserve growth.
On April 3, 2002, Echo Bay announced that it had completed an
exchange of its outstanding capital securities and the related
accrued interest obligation for 361.6 million common shares. The
value of principal and accrued interest for the capital
securities totaled US$164.2 million at December 31, 2001. The
securities were issued in 1997 for a principal amount of
US$100.0 million and were set to mature in April 2027.
The terms of the capital securities gave Echo Bay the right to
defer interest payments for a maximum of 10 semiannual periods,
which Echo Bay had exercised. The successful completion of the
transaction eliminates the major concern regarding the company's
ability to pay the accrued interest of about US$80 million,
which would have become due March 31, 2003. As a result of the
exchange, the principal holders of the capital securities,
Newmont Canada (formerly known as Franco-Nevada Mining Corp.
Ltd.) and Kinross Gold Corp., now have ownership interests in
Echo Bay of 48.8% and 11.4%, respectively.
On April 29, 2002, the company announced a public share
offering, with expected proceeds in the range of US$20 million-
US$30 million. Echo Bay intends to use the proceeds to reduce
its outstanding indebtedness under the bank facility and to fund
exploration activities.
Outlook
The completion of the exchange of Echo Bay's capital securities
for common shares has reduced the company's debt leverage and
given it a financially strong parent company. These factors, in
addition to the higher gold prices, have substantially improved
the financial profile of Echo Bay and stabilized the outlook on
the company.
Operating Profile
In 2001, Echo Bay operated four mines, which generated
production of 657,784 ounces of gold and 6.5 million ounces of
silver. Ore reserves as of year-end 2001 stood at 3.8 million
ounces of gold and 1.1 million ounces of silver. The company's
cash operating costs increased to US$223 per ounce in 2001,
representing a substantial increase from the 2000 level of
US$193 per ounce. The increase was caused by lower production
levels at the McCoy/Cove and Kettle River mines. In February
2002, the company entered into an agreement to sell its
McCoy/Cove mine and facilities to Newmont Canada for US$6.0
million plus the assumption of site reclamation obligations. The
finalization of the agreement is subject to the completion of
due diligence, which is to be performed prior to July 31, 2002.
Echo Bay forecasts production of 535,000 ounces of gold and 1.3
million ounces of silver in 2002, with cash operating costs
increasing slightly to US$225 per ounce. The decline in
production stems from the expected disposition of the McCoy/Cove
milling facility.
Although the company reported a net loss for 2001, cash flow
from operations was positive at US$31.6 million, of which US$9.5
million was applied to reduce the company's credit facility. The
reduction in the credit facility, in conjunction with the
exchange of the capital securities to common equity, has
resulted in a significant improvement in Echo Bay's financial
profile. Nevertheless, financial flexibility remains limited. As
of December 31, 2001, the company had US$12.3 million in cash
and cash equivalents on its balance sheet and minimal borrowing
capacity under its bank facility.
Rating List:
* Corporate credit rating B-/Stable/--
ENRON CORP: Intends to Sell 772 Contracts to Select Energy
----------------------------------------------------------
Enron Power Marketing Inc., Enron North America Corporation, and
Enron Energy Services Inc. maintain a portfolio consisting of
772 transmission congestion contracts. Each of the TCCs
represents the right to collect, or the obligation to pay, the
day-ahead "congestion rents" associated with the transmission of
power between a specified "point of injection" and a specified
"point of withdrawal" within the electricity transmission grid
administered by New York Independent System Operator, Inc.
Accordingly, Brian S. Rosen, Esq., at Weil, Gotshal & Manges
LLP, in New York, explains, the TCCs are subject to fluctuation
in value and constitute a hedge against wholesale power
transmission costs between such points of delivery in the
electricity transmission grid.
Mr. Rosen relates that Enron Power purchased the TCCs in NYISO-
administrated auctions and is the holder of record. Enron Power
subsequently assigned:
(a) to ENA a 50% interest in 32 TCCs; and
(b) to Enron Energy a 100% interest in six TCCs.
From time to time during the period between December 1999
through December 2001, Mr. Rosen recounts that the Debtor
Sellers participated in the wholesale energy, ancillary services
and installed capacity markets administered by NYISO. According
to Mr. Rosen, NYISO intermittently reviews the amounts owed to
it by participants in the ICAP Markets, and corrects and adjusts
the billings of such participants. NYISO has the authority to
conduct such True Ups for a period of up to 24 months from the
date of the original invoicing of the participants in the ICAP
Markets, Mr. Rosen explains.
Mr. Rosen tells the Court that Enron is the guarantor of the
Debtor Sellers' obligations pursuant to the TCCs. So when NYISO
determined that Enron's credit ratings were insufficient to
provide an acceptable corporate guaranty of the Debtor Sellers
under the TCCs, it also deemed the Debtor Sellers to be in
default for failure to provide adequate financial assurance.
Consequently, Mr. Rosen relates, NYISO required the Debtor
Sellers to provide additional security in order to continue to
participate in the New York Independent System. So on December
3, 2001, Mr. Rosen says, NYISO retained as collateral security,
all monthly net rents and any other proceeds that would
otherwise have been payable to the Debtor Sellers from NYISO
pursuant to the TCCs.
That same month, Mr. Rosen notes, the Debtor Sellers decided to
exit the ICAP Markets and assume, assign and sell the TCCs in
order to forgo its inherent risks. The Debtor Sellers notified
all of the 150 members of the New York Independent System of
their intention and inquired which members were interested to
join the bidding process for such TCCs. Mr. Rosen reports that
several members submitted bids. Mr. Rosen explains that the
bids were solicited on the basis that the assumption, assignment
and sale of the TCCs would be effective as of February 1, 2002
and would be consummated before April 30, 2002. This date was
later extended to May 31, 2002.
After reviewing all of the submitted bids, Mr. Rosen informs
Judge Gonzalez that the Debtor Sellers proclaimed Select Energy
New York, Inc. as best and highest bidder. Thereafter, the
Debtor Sellers negotiated that Assumption and Assignment
Agreement, as amended, pursuant to which they will assume,
assign and sell their interests in the TCCs to Select, thereby
terminating their participation in the New York Independent
System.
Mr. Rosen relates that the proposed transaction provides
consideration or return of funds to the Debtor Sellers of
approximately $6,100,000 in the aggregate upon consummation of
the transaction, and up to an additional $1,000,000 upon the
release of the Holdback.
The Closing Amount consists of these amounts:
-- approximately $4,800,000, representing the amount that
Select will pay for the TCCs; and
-- approximately $1,300,000, representing the approximately
$2,300,000 in Rents and Proceeds retained by NYISO as
collateral security for the months of October 2001
through January 2002, less the Holdback.
Mr. Rosen emphasizes that the balance of the Holdback remaining
after the True Ups will be distributed by NYISO on or before
December 31, 2003.
"NYISO has advised the Debtor Sellers that, on consummation of
the sale contemplated by this Motion, NYISO will return the
Rents and the Proceeds to the Debtor Sellers. The Proceeds will
be subject to the retention of $1,000,000, for purposes of
conducting True Ups pursuant to the letter agreement between
NYISO and the Debtor Sellers, dated February 27, 2002," Mr.
Rosen tells the Court. The Holdback will be retained from the
Debtor Sellers pro rata in accordance with their percentage
interest in the TCCs, Mr. Rosen adds.
Furthermore, Mr. Rosen continues, the Closing Amount will be
distributed to each of the Debtor Sellers in accordance with
their respective percentage interest in the TCCs. "As and when
NYISO releases portions of the Holdback, such amounts will be
distributed similarly to the Debtor Sellers," Mr. Rosen says.
The Debtor Sellers contend that the terms and conditions of the
proposed assumption, assignment and sale of the TCCs were
negotiated at arms' length and in good faith. "Select does not
hold any material interests in any of the Debtor Sellers, and is
not otherwise affiliated with any of the Debtors or their
officers or directors," Mr. Rosen assures the Court.
Thus, the Debtors ask the Court's approval of the assumption,
assignment and sale of the TCCs to Select. (Enron Bankruptcy
News, Issue No. 24; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
ENRON CORP: ENA Seeks Approval of Sale Agreement with El Paso
-------------------------------------------------------------
Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York,
informs Judge Gonzalez that Enron North America Corporation is
contractually obligated -- through December 2007 -- to deliver
up to 8,500 mmbtu per day to Midland Cogeneration Ventures at
multiple delivery points in the Texas and Louisiana production
area on the Trunkline pipeline. However, since December 2001,
Ms. Gray admits that ENA has failed to perform under the Gas
Contract, prompting Midland to issue a termination letter. In
response, ENA assured Midland it would "cure any defaults under
the Gas Contract and assume and assign the Gas Contract."
Accordingly, ENA marketed the Gas Contract and conducted a
sealed bid auction, via Dealbench -- a secured website. ENA
received four bids. ENA selected the two highest bids and
commenced negotiations with each party over the terms of the Gas
Contract Purchase and Sale Agreement. After extensive
negotiations with both parties, Ms. Gray says, ENA declared El
Paso Merchant Energy LP to be the highest bidder.
Under the terms of the Gas Contract Purchase and Sale Agreement,
Ms. Gray explains that ENA plans to assign, sell, transfer and
set over to El Paso its rights, titles, benefits, privileges and
interests in the Gas Contract arising on and after the Service
Date. Ms. Gray emphasizes that the sale, assignment and
transfer of the Gas Contract is, except for the limited
representations and warranties set forth in Section 2.4 of the
Sale Agreement or otherwise specifically provided therein, "As
is, where is and with all faults."
The Sale Agreement provides:
Purchase Price: $14,000,000, as adjusted
Purchase Price
Adjustments: Value Adjustment -- The Initial Purchase Price
was determined based on the Buyer's valuation of
the Gas Contract as of March 20, 2002 based on
market prices. The Parties agree that the simple
average of the NYMEX contracts from June 2002 to
December 2007 was $3.724/mmbtu as of March 20,
2002, i.e., the quotient of (i) the sum of the
prices per mmbtu for Henry Hub natural gas
contracts for each month from June 2002 to
December 2007 as listed on the NYMEX website as
of March 20, 2002, divided by (ii) 67 (the
number of months from June 2002 to December
2007, inclusive). The Purchase Price will be
adjusted by $13,000 for each $.001/mmbtu
difference between the Initial Average NYMEX
Price and the Final Average NYMEX Price on the
Closing Date.
Closing Date: 10 days after entry of a Sale Order, but no
later than June 25, 2002.
Ms. Gray relates that ENA and El Paso have negotiated and at
Closing will enter into the Assignment and Assumption Agreement
relating to the Gas Contract.
By this motion, ENA asks Judge Gonzalez to approve, subject to
higher and better offers:
(a) the Sale Agreement with El Paso; and
(b) the assumption, assignment and sale of ENA's interests in
the Gas Contract, free and clear of all liens, claims,
encumbrances and interests pursuant to the Assignment and
Assumption Agreement. (Enron Bankruptcy News, Issue No.
24; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ENRON CORP: Kinder Morgan Completes $68M Trailblazer Acquisition
----------------------------------------------------------------
Kinder Morgan Energy Partners, L.P. (NYSE: KMP) announced the
culmination of three events relative to Trailblazer Pipeline
Company that are expected to result in significant growth in
KMP's Natural Gas Pipelines business segment and increased
returns for unitholders.
-- KMP completed its previously announced $68 million
purchase of Enron Trailblazer Pipeline Company's 33.3 percent
stake in the pipeline. The court overseeing Enron's bankruptcy
approved the transaction on May 2, 2002.
-- Effective May 7, 2002, Trailblazer will place into
service its previously announced $59 million expansion project,
which increases transportation capacity on the pipeline by 60
percent to 846,000 dekatherms (Dth) per day and which has
already been fully subscribed by customers.
-- In the first quarter of 2002, KMP paid $12 million to
CIG Trailblazer Company (an affiliate of El Paso Corporation) in
exchange for the stake in Trailblazer Pipeline Company that CIG
would have obtained through participation in the expansion.
KMP now owns 100 percent of Trailblazer Pipeline Company, a 436-
mile interstate natural gas pipeline that runs from Rockport
(Weld County), Colo. to Beatrice (Gage County), Neb.
"We are delighted to have sole ownership of Trailblazer Pipeline
Company, which provides a critical link between the rapidly
growing Rocky Mountain supply basins and eastern markets and has
consistently generated significant cash flow," said Richard D.
Kinder, chairman and CEO of KMP. "The acquisition is expected to
be immediately accretive to cash available for distribution to
unitholders, and completion of the expansion project should
result in significant growth on the pipeline. The additional
324,000 Dth of pipeline capacity has already been fully
subscribed by customers in the form of long- term, firm-
transportation contracts."
The expansion project began in August of 2001, as growth in
Rocky Mountain natural gas supplies created the need for
additional pipeline transportation infrastructure. The expansion
project included installing two new compressor stations and
adding 10,000 additional horsepower at an existing compressor
station.
KMP first acquired an interest in Trailblazer in the fourth
quarter of 1999, when it purchased a 33.3 percent interest from
an affiliate of Columbia Energy, and acquired another 33.3
percent interest from Kinder Morgan, Inc. (NYSE: KMI), the
parent company of its general partner.
Kinder Morgan Energy Partners, L. P. is the nation's largest
pipeline master limited partnership with an enterprise value of
over $9 billion. KMP owns and operates more than 25,000 miles of
pipelines and over 70 terminals. Its pipelines transport more
than two million barrels per day of gasoline and other petroleum
products and up to 7.8 billion cubic feet per day of natural
gas. Its terminals handle over 55 million tons of coal and other
dry-bulk materials annually and have a liquids storage capacity
of approximately 55 million barrels for petroleum products and
chemicals. KMP is also the leading provider in the U.S. of CO2,
which is used in enhanced oil recovery projects.
The general partner of KMP is owned by Kinder Morgan, Inc., one
of the largest midstream energy companies in America. Combined,
the two companies have an enterprise value of approximately $19
billion.
Enron Corp.'s 9.125% bonds due 2003 (ENRON2), DebtTraders
reports, are being quoted at a price of 12.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRON2for
real-time bond pricing.
EXIDE TECHNOLOGIES: Wants to Continue JA&A Services' Engagement
---------------------------------------------------------------
Exide Technologies and its debtor-affiliates ask to continue to
retain JA&A Services LLC as their restructuring consultants
pursuant to Sections 363 and 105 of the Bankruptcy Code and the
Protocol Agreement entered into with the United States Trustee
for the District of Delaware.
According to Craig H. Muhlhauser, the Debtors' President and
Chief Executive Officer, JA&A Services has extensive experience
in providing restructuring consulting services in reorganization
proceedings and has an excellent reputation for the services it
has rendered in Chapter 11 Cases on behalf of debtors and
creditors throughout the United States. The Debtors believe that
JA&A Services is well qualified and able to represent the
Debtors in a cost-effective, efficient, and timely manner.
Mr. Muhlhauser notes that JA&A Services' affiliate, Jay Alix &
Associates has extensive experience in providing restructuring
consultation services to financially troubled organizations. For
more than 20 years, Jay Alix has provided interim management and
advisory services to companies experiencing financial and
operating difficulties. It has recently provided interim
management services in a number of large and mid-size bankruptcy
restructurings, including: In re Harnischfeger Indus., Inc.; In
re APS Holding Corp.; In re Maidenform Worldwide, Inc.; and In
re Sunterra Corp. Although JA&A Services is a new entity, Jay
Alix's experience carries over to JA&A Services because many of
the Jay Alix professionals will be providing services to JA&A
Services.
Mr. Muhlhauser tells the Court that Lisa Donahue, a principal
with Jay Alix, has worked as a turnaround consultant and interim
manager for more than 10 years and has been employed by Jay Alix
since 1998. During her years as a restructuring professional,
Lisa Donahue has worked in many bankruptcy reorganizations,
including In re Regal Cinemas, Inc., and In re Fruit of the
Loom, Inc. Since October 26, 2001, JA&A Services has rendered
restructuring consulting services to the Debtors in connection
with their restructuring efforts. JA&A Services has become
thoroughly familiar with the Debtors' operations and is well
qualified to represent the Debtors as restructuring consultants
in connection with such matters in a cost-effective and
efficient manner.
Lisa Donahue, a principal of JA&A Services, assures the Court
that the firm is a "disinterested person" within the meaning of
section 101(14) of the Bankruptcy Code, and holds no interest
adverse to the Debtors and their estates for the matters for
which JA&A Services is to be employed and has no connection to
the Debtors, their creditors or their related parties. JA&A
Services will conduct an ongoing review of its files to ensure
that no conflicts or other disqualifying circumstances exist or
arise and if any new facts or relationships are discovered, the
firm will supplement its disclosure to the Court.
On October 25, 2001, Ms. Donahue relates that Debtors entered
into the Employment Agreement wherein JA&A Services agreed to
provide certain temporary employees to assist the Debtors in
their restructuring process. Under the Employment Agreement,
JA&A Services' staff assumed certain management positions of the
Debtors' businesses. Lisa Donahue serves as the Chief Financial
Officer and Chief Restructuring Officer of Exide Technologies,
reporting to the Board of Directors and directing the Debtors'
operations and reorganization with an objective of completing a
restructuring of the Debtors. Lisa Donahue is also responsible
for managing the Debtors' daily operations and restructuring
efforts, including negotiating with parties in interest, and
coordinating the "working group" of professionals who are or
will be assisting the Debtors in the restructuring process or
who are working for the Debtors' stakeholders.
Ms. Donahue submits that JA&A Services will also provide nine
full time staff members and certain contract employees from its
affiliate, The System Advisory Group, in connection with the
Employment Agreement. JA&A Services will provide the senior
management services that the firm and the Debtors deem
appropriate and feasible in order to assist the Debtors during
these Chapter 11 Cases. As a member of the Debtors' senior
management, JA&A Services will make decisions crucial to the
Debtors' reorganization efforts. The Debtors believe that these
Senior Management Services will not duplicate the services that
are being provided to the Debtors in these cases by The
Blackstone Group L.P. or any other professional.
The Senior Management Services will include but are not limited
to:
A. Lisa Donahue will serve as the Debtors' Chief Financial
Officer and Chief Restructuring Officer with senior
management status working as a member of the Debtors' senior
management team and reporting to the Debtors' chief executive
officer;
B. ensure suitable productivity of the professionals who are
assisting the Debtors in the reorganization process or who
are working for one or more of the Debtors' stakeholders;
C. provide leadership to the financial function including
assisting the Debtors in strengthening the core competencies
of the Debtors' finance organization;
D. oversee development of an operating business plan to be used
in managing the Debtors for the current year as well as for
future years, which will be used in developing a Plan of
Reorganization;
E. Assist in developing and implementing cash management
strategies, tactics and processes. Work with the Company's
treasury department and other professionals and coordinate
the activities of the representatives of other constituencies
in the cash management process.
F. manage financial performance in conformity with the Debtors'
business plan;
G. prepare the regular reports required by the Court and
information customarily issued by the Debtors' chief
financial officer;
H. analyze and implement financing issues in conjunction with
the Plan of Reorganization or which arise from the Debtors'
financing sources outside the United States;
I. assist in developing the Debtors' Plan of Reorganization;
J. providing expert testimony, as requested; and
K. providing such other restructuring and advisory services as
are customarily provided in connection with the analysis and
negotiation of a Restructuring, as requested and mutually
agreed upon by the Debtors and JA&A Services.
The Debtors have agreed to compensate JA&A Services semi-monthly
for hours charged at the firm's hourly rates. The current hourly
rates for JA&A Services' staff are:
Principals $500-$620
Senior Associates $385-$495
Associates $285-$375
Accountants & Consultants $200-$280
In addition to the above-listed fees and expenses, Debtors also
agreed to pay JAS a success fee of $3,000,000 in the event:
A. the Debtors complete a restructuring through the confirmation
of a Plan of Reorganization other than a liquidation of
substantially all the Debtors' assets; or
B. JA&A Services completes a sale of a majority of the assets of
the Company arranged within a court proceeding.
Ms. Donahue informs the Court that the Debtors paid a retainer
of $300,000 to JA&A Services on October 26, 2001 to secure
performance under the Employment Agreement. This will be
applied against the final fees and expenses specific to the
engagement.
Mr. Muhlhauser submits that Lisa Donahue, as Chief Financial
Officer and Chief Restructuring Officer of the Debtors, will be
entitled to the benefit of the indemnities provided by the
Debtors to their officers and directors, whether under the
Debtors' by-laws, certificates of incorporation, by contract or
otherwise. In the event that other JA&A Services' employees
become officers of the Debtors, such individuals will be
entitled to the same benefit. In addition, the Debtors will use
their best efforts to specifically include and cover under
Debtors' directors' and officers' insurance policy those JA&A
Services' employees serving as officers of the Debtors. (Exide
Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
FEDERAL-MOGUL: Signs-Up Garden City Group as Claims Consultant
--------------------------------------------------------------
Federal-Mogul Corporation and its debtor-affiliates ask the
Court's permission to employ and retain GCG Communications, a
division of The Garden City Group Inc., as their claims notice
consultant in their Chapter 11 cases. The services of GCG are
necessary to potentially design, disseminate and implement
certain Notice Programs, on the terms and conditions provided in
the Advertising and Services Agreement. The large-scale
notification process involved requires the expertise of a notice
consultant like GCG, due to its experience in the negotiation,
design and preparation of notice materials for publication.
David M. Sherbin, Vice President and Deputy General Counsel and
Secretary of the Debtors, explains that they are in the process
of preparing a motion for an order establishing a bar date for
filing proofs of claims for asbestos-related property damages
and approving a form of proof of claim for asbestos-related
damage claims. In the Property Damage Bar Date Motion, the
Debtors will request, inter alia, authority to publish notice of
a property damage bar date in numerous trade, consumer and
business publications and newspapers targeted at entities with
potential asbestos-related property damage claims. The Debtors
also anticipate that, in the future, they may seek authority to
establish a bar date with respect to non-asbestos-related claims
of any kind that arose prior to the petition date and to publish
notice in a limited number of national publications targeted at
entities with potential non-asbestos-related claims. The Debtors
also anticipate to establish a bar date with respect to
asbestos-related personal injury claims and to publish notice of
the bar date, utilizing a number of media sources.
Mr. Sherbin accords that GCG is qualified to serve as the
Debtors' claims notice consultant. For approximately 17 years,
GCG has been engaged in the business of claims processing and
noticing, primarily in large, complex, nationwide class action
settlements. GCG, which began as a business unit of KPMG, has
served or currently serves in numerous bankruptcy cases such as
America West Airlines, HMG Worldwide Manufacturing, The Nations
Flooring, CyberRebate.com, AremisSoft, and HQ Global bankruptcy
cases.
Mr. Sherbin tells the Court that GCG Communications has been
formalized as a distinct services division dedicated to
developing and providing legal notice programs, with Wayne L.
Pines as its Executive Vice President. Mr. Pines has conducted
notification programs in class action and bankruptcy litigation
since 1986. Prior to his employment at GCG Communications, Mr.
Pines served as President of Legal Communications Inc., a
company that provided notification services in class action and
bankruptcy litigation. Mr. Pines also served as executive vice
president of an international communications firm, where he also
conducted class action and bankruptcy litigation notification
programs. Mr. Pines has extensive experience in designing and
implementing legal advertising and notice programs in mass tort,
consumer, environmental, and product liability class action and
bankruptcy cases, and has also served as an expert witness on
notice issues.
The notification services with respect to the Notice Programs
may include, but are not limited to:
A. developing and implementing a comprehensive notification plan
of the Debtors' bar date(s) with recommendations for
materials and media distributions;
B. creating all relevant and necessary media notice materials,
including print and television advertisements, as applicable;
C. implementing media buys and placement;
D. executing an affidavit or other documentation and testimony
as required by the Court and as requested by the Debtors
describing the notification services provided;
E. providing a summary and analysis of the notification
activities and media placements as required by the Debtors;
and,
F. performing all other claimant notification consultant
services that may be necessary or appropriate in connection
with the Notice Programs.
Mr. Sherbin maintains that GCG has agreed to represent the
Debtors if it receives compensation on a commission basis. They
also want reimbursement of actual, necessary expenses and other
charges incurred. GCG will charge the Debtors no more than a
commission of 7.5% on the gross open rate of all media buys as
approved by the Debtors, which is well within industry
standards. Additionally, GCG has also agreed to limit its fees
to the lesser of $300 an hour for actual services rendered by
Mr. Pines and $252 an hour for actual services rendered by Ms.
Fabia D'Arienzo, or $10,000. Mr. Pines and Ms. D'Arienzo are
expected to render services in GCG's behalf.
David A. Isaac, the President of GCG Communications, informs the
Court that GCG has professional relationships with some of the
attorneys employed by the Debtors, including Sidley Austin Brown
& Wood and Gibbons, Del Deo, Dolan, Griffinger & Vecchione.
Additionally, GCG has acted as a claims administrator for Amatex
asbestos trust, and it has had working relationships with Chase,
Citigroup, General Motors, Volvo, AIG and Travelers in various
matters unrelated to these Chapter 11 cases. (Federal-Mogul
Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
FLAG TELECOM: Wins Court Nod to Maintain Cash Management System
---------------------------------------------------------------
Michael E. Foreman, Esq., at Proskauer Rose LLP, says FLAG
Telecom Holdings Limited and its debtor-affiliates' actions
shortly before the Chapter 11 filing show mismanagement and
misuse of their cash management system. The Debtors' cash
management system then must be subjected to strict oversight.
Mr. Foreman notes that the Debtors:
(a) without consideration transferred over $200 million to a
non-debtor affiliate,
(b) paid approximately $4.6 million to their nine senior
officers, and
(c) paid approximately $2.5 million to employees of certain
of their non-debtor affiliates.
Mr. Foreman says the Court should at least require regular
reporting of the uses of cash by the Debtors and their non-
debtor affiliates. For transparency, the Creditors Committee,
the United States Trustee and other parties should have
reasonable access to the books and records of the Debtors and
their non-debtor affiliates.
Order
Judge Gropper grants the Debtors authority to continue to manage
their cash in accordance with their pre-petition cash management
system, finding that it is in the best interests of the Debtors,
their creditors, and all parties in interest. (Flag Telecom
Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
FLORSHEIM GROUP: Court to Consider Asset Sale to Weyco on Friday
----------------------------------------------------------------
Florsheim Group Inc. (OTCBB:FLSCQ.OB) anticipates court approval
of the previously announced Asset Purchase Agreement with Weyco
Group, Inc. (NASDAQ:WEYS) at the sale hearing scheduled for May
10, 2002.
The Company will seek the approval of the Bankruptcy Court for
the sale of Assets to Weyco Group, Inc., pursuant to the terms
of the Asset Purchase Agreement on Friday, May 10, 2002, despite
the attempt by the official committee of unsecured creditors to
convert the case to a Chapter 7 or have it dismissed altogether.
The Company contemplates closing the sale to Weyco of the U.S.
wholesale business and 23 retail stores shortly after the sale
hearing and expects the motion to convert the case will be heard
by the Bankruptcy Court on May 29, 2002. Peter P. Corritori,
Chairman and Chief Executive Officer said, "We do not anticipate
any interruption with our previously announced sale to Weyco.
Our goal is to provide Weyco a smooth transition of the business
and continue to maximize the recovery of the remaining assets
for the estate."
Florsheim Group Inc. designs, markets and sources a diverse and
extensive range of products in the middle to upper price range
of the men's quality footwear market. Florsheim distributes its
products in more than 6,000 department stores and specialty
store locations worldwide, through company-operated specialty
and outlet stores and through licensed stores worldwide.
FLORSHEIM: Unsecured Panel Wants to Convert Case to Chapter 7
-------------------------------------------------------------
The official committee of unsecured creditors in the Florsheim
Group Inc. chapter 11 bankruptcy wants to convert the case to a
chapter 7 or have it dismissed altogether, Dow Jones reported.
Florsheim sought chapter 11 bankruptcy protection with the U.S.
Bankruptcy Court in Chicago on March 4, listing $156.7 million
in assets and $159.6 million in debts. A hearing on the
committee's request was scheduled for May 1, but was continued
to May 10, according to the committee's counsel. According to
the newswire, the committee argues that the chapter 11 filing
was made only to liquidate the company's assets to benefit its
lenders, severely limiting funds that would be available to
cover claims by unsecured creditors. (ABI World, May 6, 2002)
FREEPORT-MCMORAN: S&P Ups Credit Rating to B After Reassessment
---------------------------------------------------------------
On May 2, 2002, Standard & Poor's raised its ratings on
Freeport-McMoran Copper & Gold Inc. The corporate credit rating
on the New Orleans, Louisiana-based company was raised to
single-'B' from triple-'C'-plus. The rating action reflected
Standard & Poor's reassessment of Freeport-McMoRan's exposure to
the ongoing country risks of the Republic of Indonesia.
Although the risks in operating in Indonesia remain
considerable, Standard & Poor's now views the Indonesian
political climate and operating risks for Freeport-McMoRan, as
well as the risk of sovereign intervention with foreign debt
servicing more favorably. Concerns have diminished over possible
reprisals against Freeport-McMoRan for its close dealings with
the former Suharto regime. The central government is continuing
to publicly support both the company and its Contract of Work
with Freeport-McMoRan. The company still faces risks concerning
separatist movement issues in West Papua as well as
uncertainties as to whether the provincial government might seek
an increased stake in the company's primary asset, the Grasberg
copper and gold mine in West Papua. Disputes between the local
government and Freeport-McMoRan are possible because new rules
could contradict existing work contracts governing Grasberg.
Freeport-McMoRan is one of the largest copper and gold producers
in the world, with copper and gold equity production in 2001 of
1.4 billion pounds and 2.6 million ounces, respectively.
Freeport-McMoRan ranks as the world's lowest-cost copper
producer, due to the high gold content in its copper ore, low
labor costs, favorable exchange rates and favorable geological
conditions. Cash costs averaged seven cents per pound during
2001. With copper and gold reserves totaling 52 billion pounds
and 64.5 million ounces, respectively, (PT Freeport's share is
39.4 billion pounds and 50.2 million ounces) the Grasberg mining
district includes the largest copper-and gold-based deposit in
the world; it ensures Freeport-McMoRan will have significant
long-term, low-cost production. The company benefits from a fair
degree of vertical integration due to its ownership in two
smelting and refining facilities: Atlantic Copper S.A., in
Spain; and PT Smelting Co., in Gresik, Indonesia, a joint
venture with Mitsubishi Materials Corp. (75%). The two smelters
process approximately 50% of the mine's output. Freeport-McMoRan
is benefits from having spent more than $1 billion, primarily to
expand its mining and milling operations, which commenced
expanded operations in early 1998. The company has increased
throughput to 243,000 metric tons of ore per day from 125,000
tons. Volatile commodity prices have resulted in unstable
earnings and cash flows.
However, Freeport-McMoRan's management has been comfortable
operating with high debt leverage. As of March 31, 2002, debt
leverage was a very aggressive 96% (including the book value of
$462 million of debt-like preferred stock), due to significant
capital expenditures and share repurchase programs. The company
has not repurchased its stock since early 2001 and is prohibited
under its bank credit facilities from purchasing additional
shares. Freeport-McMoRan was called upon to perform under its
$254 million guarantee of a maturing loan. The loan was to PT
Nusamba Mineral Industri, an Indonesian investor with a 4.7%
indirect stake in PT Freeport. An amendment to the bank credit
facility provided a mechanism to finance payment of the
guarantee. Freeport-McMoRan remains committed to reducing its
burdensome debt levels. Although copper prices currently are
low, Freeport-McMoRan is expected to generate significant free
cash flow, due to its superior cost position and significantly
reduced capital expenditures. Of note, Freeport-McMoRan is
scheduled to pay approximately $233 million (book value;
redemption value would approximate $185 million at current gold
prices) of redeemable Series I gold-denominated preferred stock
in August 2003. However, the company intends to refinance or
restructure the preferred securities. If Freeport does not
extend the maturity of the preferred stock beyond 2005, the
amended bank agreement will prohibit the company from redeeming
or paying dividends on any of that stock. It also faces the
possibility of the lenders of the $250 million 7.2% senior notes
holders exercising their put option in November 2003. However,
liquidity measures are expected to be sufficient to meet the
potential put options.
Outlook
The outlook reflects the expectation that the company will
continue to face a difficult operating environment including
considerable country risk but will meet the liquidity and debt
maturity challenges it faces in the near future.
Ratings List
To From
* Corporate credit rating B/Stable/-- CCC+/Stable/--
* Senior unsecured rating B- CCC
* Preferred stock CCC CC
DebtTraders reports that Freeport McMoran Copper & Gold's 8.25%
convertible bonds due 2006 (FREE4) are traded at about 143. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=FREE4for
real-time bond pricing.
GIANT INDUSTRIES: S&P Rates Proposed $200MM Sr. Sub. Notes at B
---------------------------------------------------------------
On May 6, 2002, Standard & Poor's lowered its corporate credit
rating on independent petroleum refiner/marketer Giant
Industries Inc. to 'BB-' from 'BB' and removed the company's
ratings from CreditWatch, where they were placed on February 15,
2002, after its announcement that it is acquiring BP PLC's
Yorktown, Virginia refinery. At the same time, Standard & Poor's
assigned its 'B' rating to Giant's proposed issuance of $200
million senior subordinated notes due 2012. Outlook is negative.
Scottsdale, Arizona-based Giant has $420 million of debt
outstanding, pro forma for the proposed notes issuance.
Although the Yorktown refinery acquisition improves Giant's
overall business position, the rating actions reflect the
deterioration in Giant's financial profile following the $170
million (including inventory) debt-financed transaction.
Giant's ratings reflect its position as a leveraged independent
oil refiner/marketer operating in a very competitive, highly
cyclical industry that is burdened by high fixed costs. Giant's
business position in enhanced by its dominant position in the
refined product markets of the Four Corners Area, which is
within a 250 miles radius of its two New Mexico refineries
(total capacity 42,600 barrels per day (bpd)). Due to limited
competition caused by geographic isolation, Giant historically
has enjoyed superior refining margins relative to its peers.
However, proposals to increase refined product pipeline capacity
into Giant's area of operation could cause margin compression.
The acquisition of the Yorktown refinery lessens Giant's
dependence on its single, niche market and provides potential
growth opportunities. The Yorktown facility (61,900 bpd
capacity; PADD 1; "11" complexity rating) is a sophisticated
East Coast refinery serving the eastern Virginia, Baltimore, and
other Mid-Atlantic markets. Management has identified a number
of small optimization projects and believes capacity can be
increased at relatively low costs.
When the Yorktown acquisition is complete, Giant's total debt to
total capital will increase to roughly 75% from 65%. Assuming
mid-cycle refining margins, total debt to EBITDA will likely
remain above 3 times and EBITDA coverage of interest and capital
expenditures should be around 2x given the staggered nature of
environmental expenditures, which are scheduled to begin in
2003. Liquidity is adequate as the company's mid-cycle operating
cash flow should be sufficient to fund expected capital
expenditures. In addition, Giant's financial flexibility is
supported by access to a largely undrawn $100 million revolving
credit facility (pro forma for the proposed issuance of
subordinated notes) and light debt maturity schedule.
Outlook
The negative outlook reflects long-term concerns over Giant's
market position in the Four Corners area. The company faces
competitive threats from the potential start-up of various
projects to deliver refined products into the company's
Southwest market. If these projects are constructed before the
company takes steps to improve its competitive position and/or
financial profile, Standard & Poor's could downgrade Giant's
ratings.
Ratings List
Giant Industries Inc.
* Corporate credit rating BB-
* Subordinated debt B
GLOBAL CROSSING: Inks Two-Year $20MM Agreement with Convergia
-------------------------------------------------------------
Global Crossing has signed an agreement to provide Convergia, a
leading reseller of voice and data solutions, with a combination
of data network and voice services across the Americas. The
services include carrier termination, the full array of National
Origination Service (NOS), Pseudo-CIC, private line and co-
location. The two-year contract was signed in March 2002, with
service to begin in May 2002.
"We selected Global Crossing for their comprehensive offering,"
said Cliff Rees, president of Convergia, which is based in
Montreal, Canada. "They provide us with the quality and
reliability we need for our corporate and residential customers.
Global Crossing's network gives us the additional reach we
require to offer services to customers throughout the Americas,
in the U.S., Canada, Mexico, Ecuador, Peru, Chile, Argentina and
Brazil."
Global Crossing's carrier termination provides complete global
termination capabilities for facilities-based carriers.
Termination is available to 197 Local Access and Transport Areas
(LATAs) and over 450 international destinations.
Global Crossing offers both switched and dedicated, inbound and
outbound National Origination Service (NOS), providing customers
with end-to-end call termination and origination, and dedicated
access to the Global Crossing network.
The Pseudo Carrier Identification Code (CIC) service offers
customers flexible transport options and control, such as
deciding to have different call types routed to different
termination destinations.
Global Crossing is also providing Convergia with a private line
data network and co-location facilities. The network will take
advantage of the full spectrum of capacity according to
individual market size.
"Our product line is outstanding," said John Legere, chief
executive officer of Global Crossing, "and we're pleased that
our global, IP-based network will assist Convergia in supporting
their customers across the continent."
Convergia Networks Inc. is a world-class provider of
communication products and broadband solutions, offering
leading-edge, high quality voice, data and value-added services
to small, medium and Fortune 500 businesses worldwide. Our
services are delivered through a state-of-the-art IP/ATM/Frame
backbone that provides companies the full potential of the
broadband revolution. Convergia is committed to delight its
customers by offering a full suite of voice, video and data
services that provides maximum value solutions at very
competitive prices. Our primary objective is offering innovative
and flexible solutions that are tailored to meet our customers'
needs and requirements
Global Crossing provides telecommunications solutions over the
world's first integrated global IP-based network, which reached
27 countries and more than 200 major cities around the globe.
Global Crossing serves many of the world's largest corporations,
providing a full range of managed data and voice products and
services. Global Crossing operates throughout the Americas and
Europe, and provides services in Asia through its subsidiary,
Asia Global Crossing.
On January 28, 2002, certain companies in the Global Crossing
Group (excluding Asia Global Crossing and its subsidiaries)
commenced Chapter 11 cases in the United States Bankruptcy Court
for the Southern District of New York and coordinated
proceedings in the Supreme Court of Bermuda.
Please visit http://www.globalcrossing.comor
http://www.asiaglobalcrossing.comfor more information about
Global Crossing and Asia Global Crossing.
Global Crossing Holdings Ltd.'s 9.625% bonds due 2008 (GBLX3)
are quoted at a price of 2.125, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX3for
real-time bond pricing.
GO ONLINE NETWORKS: Miller & McCollom Airs Going Concern Doubts
---------------------------------------------------------------
Go Online Networks is a technology holding company based in
Southern California. Recently Go Online divested all of its
internet holdings and is focusing its entire corporate resources
on developing its computer services division Digital West
Marketing.
Through its wholly owned subsidiary Digital West Marketing,
Inc., it is a provider of re-engineered and refurbished
computers to the secondary retail marketplace. It acquired
Digital West from its founder and owner in September 2000. At
the time of acquisition, Digital West was a provider of repair
and logistical services to the personal computer hardware
industry. Go Online purchased Digital West with the strategic
plan of converting their existing business to a business that
would refurbish personal computers, laptop computers and
notebooks and sell those products rather than salvaging
computers for parts. Digital West had established vendor
relationships with leading computer companies including Compaq,
Hewlett Packard, Sony, Dell and e-Machines. Building on those
relationships afforded Digital West an easy transition to a
faster growing and potentially more profitable marketing
opportunity. Digital West determined ample supply of computer
products for its refurbishing business could be acquired from
major retail sources desirous of enhancing their asset recovery
needs dealing with customer returns.
Digital West's business has primarily been focused on acquiring,
refurbishing and reselling of these products with approximately
15,000 items being refurbished and $6,128,555 in revenues from
the sale of those products during the fiscal year ended December
31, 2001 and approximately 1,700 items refurbished and $798,596
in revenues for those refurbished products during the fiscal
year ended December 31, 2000.
However, in its Auditors Report dated March 2, 2002, independent
auditors Miller and McCollom of Wheat Ridge, Colorado, state:
". . . the Company has suffered recurring losses from
operations and has a net capital deficiency that raise
substantial doubts about its ability to continue as a going
concern."
Net loss during the fiscal year ended December 31, 2001 was
$3,407,395 compared to net loss of $3,398,080 for 2000, an
increase of $9,318. The 2001 net loss reflects a non-recurring
write-off of goodwill of $749,055, a non-recurring loss from
discontinued operations of $544,939 and a non-recurring loss on
disposal of discontinued operations of $319,520. Consequently,
ongoing operations reflect substantial increased profitability.
There was also an increase in interest expense from $165,122 in
2000 to $323,834 in 2001, primarily due to the Laurus Master
Fund investment and the Series A Convertible Debentures.
For the fiscal year ended December 31, 2001, the Company had
revenue of $6,128,555, almost all of which was generated by
Digital West. This is compared to $798,596 for the fiscal year
ended December 31, 2000. This reflects an increase of
$5,329,959, a 667% increase in revenues. This is entirely
reflected by the increase in operations at Digital West and the
inclusion of substantially
increased business.
Cost of goods sold increased from $653,097 in fiscal 2000 to
$4,890,953 in fiscal 2001. This is reflected in the accounting
structure with the primary refurbishment client which requires
that Go Online reflect as cost of goods sold the original
valuation of the product prior to its resale. The Company
believes that actual cost of goods sold would be substantially
lower based upon its historical sales.
Expenses for the year ended December 31, 2001 was $1,904,282,
compared to $1,559,746 for the fiscal year ended December 31,
2000. Other income and expenses for the year ended December 31,
2001 included the one-time expense for write off of goodwill.
As of December 31, 2001, the Company had assets of $1,698,141,
compared to $1,871,719 as of December 31, 2000. This change was
attributable primarily to changes in inventory and other assets
in the Digital West division.
Current liabilities increased from $3,377,756 at December 31,
2000 to $4,630,998 at December 31, 2001, due primarily to an
increase in expenses and accounts payable. Total liabilities
also increased, from $3,927,756 as of December 31, 2000 to
$6,401,880 as of December 31, 2001, due primarily to the
issuance of new convertible debentures and increases in accounts
payable and accrued expenses. The Company is presently current
on payments of its material accounts payable.
At December 31, 2001, stockholders' deficit was $4,703,739 as
compared to $2,055,839 at December 31, 2000.
HALE CONSTRUCTION: Changes Name to Hale Building after Workout
--------------------------------------------------------------
Hale Construction Co., a commercial construction firm
headquartered in Wilmington, NC, has restructured the firm as
Hale Building Co., LLC, owned in its entirety by L.C. "Bo" Hale,
company founder.
The restructuring was initiated in response to the financial
challenges facing Miller Building Corporation of Wilmington.
Hank Miller, president of Miller Building, had an ownership
interest in Hale Construction since its inception in 1996.
"All of us at Hale Building continue to be very grateful for
Hank Miller's financial support at the onset of our business,"
said Bo Hale. "Over the past month, I have worked closely with
Hank to find a solution to this situation that would protect our
customers, subcontractors and employees and enable us to
continue to provide quality building services to the business
community. We are confident that the new configuration achieves
these goals."
According to Bo Hale, Hale Building Co., LLC has the financial
strength and stability to not only continue to grow, but to also
weather the fluctuations of today's volatile economy. Hale
Building Co., which was incorporated on April 1, is fully bonded
and insured. All existing jobs contracted through Hale
Construction are continuing as regularly scheduled and the day-
to-day operations of Hale Building Co. are continuing in the
same manner as they had been under Hale Construction.
"Our 70 employees will continue in their existing positions, our
management team remains the same, and as owner and president, I
will continue to hold our firm to the same high standards we've
maintained over the past six years," said Hale. "The only thing
that has changed is the ownership and the company name.
Everything else is business as usual."
Since its inception in 1996, Hale Construction has completed
more than $85 million in construction in southeastern North
Carolina and throughout the east coast from Pennsylvania to
South Carolina. "We've built a solid reputation as a commercial
construction company that delivers quality projects on time and
within budget," said Hale. "It's this commitment to quality that
has more than 50% of our clients returning to Hale as repeat
customers."
Hale offers a broad range of commercial and industrial
construction services and construction management, including
office, retail and industrial facilities; design/build services;
pre-engineered systems construction; tenant improvements and
facility renovations. Hale Building Co., LLC is located at 2020
Capital Drive in Wilmington.
HERITAGE PROPERTY: S&P Considering Low-B Ratings for Upgrade
------------------------------------------------------------
Standard & Poor's placed its ratings on Heritage Property
Investment Trust Inc. and Bradley Operating L.P. on CreditWatch
with positive implications. The CreditWatch placement follows
Heritage's successful initial public offering (IPO) and the
resulting improvement in the trust's capital structure.
Boston-based Heritage is one of the nation's largest owners and
operators of neighborhood and community shopping centers with
148 properties in 27 states throughout the Midwest and Eastern
U.S. Heritage achieved this scale, in part, through the
September 2000 leveraged acquisition of Bradley Real Estate Inc.
Today, most of the properties in the combined portfolio are
located in suburban in-fill locations with favorable
demographics. The portfolio is well occupied (93%) and has a
diversified tenant base (TJX Companies, rated single-'A'-minus,
is the largest tenant and contributes 5.6% of base rent). The
lease expiration schedule is manageable with approximately 10%
of base rents expiring in each of the next five years.
At December 31, 2001, Heritage had a total capitalization of
$1.82 billion. Debt comprises 62% of that total and if the $123
million redeemable portion of equity were included as debt,
leverage would have been a very high 69%. Because of the high
level of debt and preferred equity, fixed charge coverage was a
low 1.2 times. However, the company's recent IPO will
significantly improve the capital structure and ultimately
strengthen debt coverage measures. Heritage issued 14 million
common shares at $25 per share. In addition to increasing its
total capitalization, the IPO will enable Heritage to use the
$328 million net proceeds to reduce outstanding debt and improve
leverage to a more appropriate 48% debt-to-book capitalization.
Further, concurrent with the IPO, $458 million in preferred
securities have converted to common and the put option on $123
million in redeemable equity has been eliminated, further
solidifying the capital structure. The lower leverage and the
preferred conversion will also help to strengthen coverage
measures, with debt service and fixed charge coverage expected
to improve to 2.3x and 2.1x, respectively.
Standard & Poor's will meet with management to review the
trust's financial policies and expected growth strategy going
forward, including its use of secured debt since about 42% of
net operating income is derived from encumbered properties.
Should the recent improvement to financial measures prove
sustainable and the level of secured debt within the capital
structure remain balanced (at less than 50% of NOI), a one-notch
upgrade to triple-'B'-minus may be warranted.
Ratings Placed On Creditwatch Positive
To From
Heritage Realty Investment Trust Inc.
Corporate Credit Rating BB+/WatchPos BB+
Bradley Operating L.P.
Corporate Credit Rating BB+/WatchPos BB+
$100 mil. 7.0% sr unsecd nts due 2004 BB+/WatchPos BB+
$100 mil. 7.2% sr unsecd nts due 2008 BB+/WatchPos BB+
HUBBARD HOLDING: Court Extends CCAA Plan Filing Time To June 17
---------------------------------------------------------------
Hubbard Holding Inc., a Montreal-based textile manufacturer and
converter of fabrics, announces that pursuant to the provisions
of Section 5.4(9) of the Bankruptcy and Insolvency Act, the
Superior Court of Montreal has granted to it and to its wholly
owned subsidiaries, Hubbard Fabrics Inc. and Hubbard Dyers
(1991) Inc., an extension of delay for filing a proposal under
the provisions of Section 50.4(1) of the Act. The period to file
a proposal was extended to June 17, 2002.
HUBBARD and its Subsidiaries plan to continue operations during
this additional period, knitting, dying, finishing and shipping
goods to their customers.
The common shares of HUBBARD are listed on TSX Venture Exchange
and trade under the symbol "HUB". The TSX Venture Exchange does
not accept responsibility for the adequacy or accuracy of this
release.
IGI INC: Sets Special Shareholders' Meeting for May 31, 2002
------------------------------------------------------------
A special meeting of the stockholders of IGI, Inc. will be held
on May 31, 2002, at 10:00 a.m., local time, at the offices of
Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109
for the purpose of considering and acting upon the following
matters:
1. to authorize the sale of assets contemplated by the
asset purchase agreement dated February 6, 2002 between
Vetoquinol U.S.A., Inc. and IGI, Inc.,
2. to transact such other business incident to the
conduct of the special meeting as may properly be brought before
the special meeting and any adjournment of the special meeting.
IGI's Board of Directors has fixed the close of business on May
1, 2002 as the record date for determining the stockholders
entitled to notice of and to vote at the special meeting and at
any adjournment of the special meeting.
IGI makes health and beauty products for pets and people. Pet
Products are sold to the veterinarian market under the EVSCO
Pharmaceuticals trade name and to the over-the-counter market
under the Tomlyn and Luv'Em labels. Products include
pharmaceuticals, nutritional supplements, and grooming aids. The
company's consumer products consist of cosmetics and skin care
products; its microencapsulation technology is also used in
several Estee Lauder products, such as Re-Nutriv and Virtual
Skin. IGI sells its products globally, with the US and Canada
accounting for almost 90% of the company's total sales. Stephen
Morris, a hotel, restaurant, and science publishing
entrepreneur, owns almost a quarter of the company. At December
31, 2001, IGI reported a total shareholders' equity deficit of
$4.4 million.
IT GROUP: Court Okays White & Case as Committee's Lead Counsel
--------------------------------------------------------------
The Official Committee of Unsecured Creditors in the chapter 11
cases of The IT Group, Inc., and its debtor-affiliates, obtained
authority from the Court to employ and retain White & Case LLP
as its lead counsel.
Specifically, the Committee expects White & Case to:
A. assist and advise the Committee with respect to bankruptcy
law issues arising in these chapter 11 cases;
B. assist and advise the Committee with respect to the powers
and duties of an official committee pursuant to section
1103 of the Bankruptcy Code in connection with these cases;
C. coordinate with Bayard in the firm's representation of the
Committee in these cases;
D. assist and advise the Committee as to actions necessary to
protect and maximize the estates of the Debtors;
E. communicate with the Committee's members and constituents as
the Committee may consider desirable concerning the conduct
of these cases;
F. perform all other legal services for the Committee which are
or may be appropriate, necessary and proper;
G. represent the Committee in connection with matters and
proceedings that may come before the Court; and
G. represent the Committee in connection with negotiations and
discussions in regard to matters and proceedings in these
chapter 11 cases, including, without limitation, the terms
and provisions of a chapter 11 plan for the Debtors.
White & Case will bill for services at its customary hourly
rates which range from $90 to $630 per hour. (IT Group
Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
INTEGRATED HEALTH: Wrestles with Litchfield over Lease Contracts
----------------------------------------------------------------
Litchfield Investment Company, L.L.C., as Landlord, on the one
hand, and Debtors IHS-Lester, as Tenant, and Integrated Health
Services, Inc., as Guarantor for IHS-Lester, on the other hand,
contest the Debtors' obligations under 43 Leases that have been
rejected by the Debtors. Lester is a 100% owned subsidiary of
IHS.
As previously reported, in 2001, Litchfield filed a motion to
compel the Debtors to assume or reject the Leases on an
accelerated basis. At the hearing on the motion, the Debtors
announced in open court that they were rejecting the Leases and
the Court subsequently entered an order approving rejection of
the leases. The parties have not agreed on an operations
transfer for any of the 43 Facilities.
Litchfield filed proofs of claim against each of Lester and IHS
alleging rejection damages of $27,301,483.56. Litchfield seeks
forfeiture of Lease Deposits totaling millions of dollars. The
Debtors contend that the Lease Deposits are refundable.
According to a Statement of Facts dated April 3, 2002 filed by
the Debtors in Adversary Proceeding 02-1846, the total amount of
Refundable Lease Deposits paid by Debtors to Litchfield total $
$50,807,144 of which $41,766,644 was paid pre-petition. During
the one year period prior to the Filing Date, the total amount
paid to the Defendant by the Plaintiffs as Refundable Lease
Deposits was equal to $4,018,000. Had the Plaintiffs not
rejected the Leases, their purported obligations under the Lease
Deposit provisions of the Leases would have continued to accrue
at a rate of $334,833 per month through September 2004.
Litchfield's Rejection Proofs of Claim purport to calculate the
amount of Litchfield's damages from rejection of the Leases
under the Lease provisions governing calculation of Rent,
subject to the limitations of Section 502(b)(6) of the
Bankruptcy Code. Litchfield's Rejection Proofs of Claim
characterize the Lease Deposit Payments of $4,018,000 per year
under the Leases as "Security Deposits." The other components of
the claim set forth in the Rejection Proofs of Claim are for
purported Basic Rent, Additional Rent, Operating Expenses,
Capital Improvements, and Legal & Professional.
Litchfield also filed a motion "to compel Debtors' specific
performance of certain non-monetary contract obligations or in
the alternative, motion to lift stay to initiate cause of action
against the Debtors."
The Debtors objected to the motion.
The Debtors have also commenced adversary proceeding against
Litchfield seeking, among other things, a turnover of the Lease
Deposits by Litchfield.
Thus, the major issues that have arisen over the rejected Leases
are:
A. Rejection Damage Claims of Litchfield, use and occupancy
obligations of the Debtors;
B. Enforceability or voidability of the Lease Deposit
Provisions after rejection of the Leases and the refund or
forfeiture of the millions of dollars of lease deposits made
by Debtors;
C. Whether Debtors have certain non-monetary contract
obligations under the leases that survive rejection, e.g.,
assignment of the provider agreements.
Litchfield Asserts Non-Monetary Contract Obligations
Litchfield contends that, based upon the Third Circuit's opinion
in Cinicola v. Scharffenberger, 248 F.3d 110 (3d Cir. 2001),
non-monetary obligations intended to govern the parties
following the demise of a contract survive rejection.
Specifically, Litchfield asserts that the subject Leases contain
four separate and distinct covenants that require, among other
things, the assignment of the applicable provider agreements and
other property-level contracts and leases to Litchfield. These
four covenants relate to (i) Cooperation (in orderly transfer),
(ii) Surrender of Possession (of Premises and Leased Equipment,
license to operate the Premises as a health care facility),
(iii) Operations, (iv) Reimbursement Contracts. Litchfield tells
the Court that the purpose of each of these covenants is to
govern the relationship of the parties upon rejection of the
Leases, and the Court should consider this in determining
whether the covenants survive rejection of the Lease.
Litchfield asserts that, as is shown in Cinicola, rejection does
not terminate non-monetary obligations governing the Parties'
relationship upon demise of the Contract. Such obligations are
not excused by Debtors' alleged fiduciary duty, and are not
excused whether Litchfield can operate the Facilities without
the Provider Agreements, or whether Litchfield will remove
patients from the Facilities, or whether the assignment of the
Provider Agreements will be costly to the Debtors due to
underpayments by the Government under the Medicare program,
Litchfield says.
In particular, with respect to the removal of patients,
Litchfield notes that Debtors have consistently acknowledged
that the removal of patients from the Facilities exposes the
Debtors' estate to huge liabilities. For that reason, the
Debtors have refused to transfer operations of facilities to
landlords or other successor operators unless and until Landlord
agrees to the following provision in the Debtors' Lease
Termination and Operation Transfer Agreement: "to indemnify
Transferor and IHS from and against all damages, claims, losses,
costs and expenses . . . incurred by Transferor arising out of
Landlord's failure to accept assignment of the Medicare and/or
Medicaid provider numbers or agreements including, but not
limited to, the discharge from the Facility of any Medicare or
Medicaid beneficiary who was a resident or patient of the
Facility after the Effective Time."
The Debtors' position leads one to question whether the Debtors
(and their counsel) are breaching their fiduciary duties in an
attempt to vindictively cause harm to Litchfield for failing to
restructure the Leases as demanded by the Debtors, Litchfield
alleges.
Based on the argument, Litchfield asks the Court to compel
Debtors to perform certain of their non-monetary obligations
under the contractual agreements with Litchfield, including the
assumption and assignment of provider agreeements and other
licenses, and to lift the automatic stay to allow Litchfield to
pursue its post-petition, post-rejection claims against the
Debtors, including claims relating to the Debtors' failure to
assume and assign their provider agreements to Litchfield.
Debtors' Objection
The Debtors argue that the Rejection Order effected the
rejection in toto of the Rejected Leases, as Courts have held
that an unexpired lease must be assumed or rejected in its
entirety. See in re Sharon Steel Corp. The Debtors remind the
Court that it did not grant Litchfield's May 24th Motion to
compel assumption or rejection of the Leases and, accordingly,
did not direct Debtors to assign their Medicare provider
agreements and related licenses to Litchfield. (Each of the
Facilities participated in the Federal Medicare Program.)
"The Motion to Compel, under the guise of sought-after
'cooperation,' is the transparent effort by Litchfield . . . to
have the Court ordain the transfer . . . of the businesses . . .
of IHS-Lester to Litchfield, for no consideration," the Debtors
tell the Court. The Debtors note that, at the hearing on
Litchfield's motion to compel for assumption/rejection, during
which the Debtors announced in open court the rejection of all
the 43 leases, Litchfield groused about the daunting task ahead
of it. "Now in its Motion to Compel, Litchfield gropes for a
basis to impose upon the Debtors' estates the costs and expenses
associated with reacquiring the Facilities and "starting- up"
its new venture," the Debtors tell the Court.
If Litchfield desires to acquire the Debtors' businesses
situated at the leased premises, then Litchfield must offer and
compensate the IHS chapter 11 estates for the fair value for
those businesses, the Debtors assert.
The Debtors remind the Court they have cooperated with successor
facility managers, in a manner consistent with the interests of
and services being provided to patients and the economic and
proprietary interests of the Debtors. The Debtors indicate that
they will voluntarily assist the new manager or managers, when
designated, in their transition, as has been their protocol if
Litchfield's agenda is to operate the facilities as long-term
healthcare and nursing centers. However, there is no agreement
on transition. The Debtors allege that the compulsion sought by
Litchfield is designed to avoid the consequential costs of
rejection and repossession, and to shift the costs and burdens
for the "start-up" of its new business to the IHS chapter 11
estates. The Debtors assert they are under no obligation to
devote their financial and human resources in establishing a
"start-up" business for the benefit of Litchfield.
There is no basis under applicable bankruptcy law, and none
cited by Litchfield under any applicable state law, to require
the Bankruptcy Court to affirmatively enjoin the Debtors to
perform rejected covenants, the Debtors contend.
In particular, the Debtors point out that the Medicare Provider
Agreements are unexpired executory contracts between the Debtors
and CMS. "Litchfield is not a party to the Medicare Provider
Agreements, and it has absolutely no contractual stake or
interest in them," the Debtors contend, "There is no basis in
law for the Court to edict that the Debtors, at the request of a
party not in privity thereto, assume and assign proprietary and
valuable executory Medicare provider agreements and related
licenses to third-party Litchfield."
The debtors assert that their affirmative obligations ceased
upon the rejection of the leases. In particular, the cooperation
provisions are rejected and unenforceable, the Debtors assert.
"Litchfield has made no showing, nor can it, that the provisions
relied on by it in the rejected executory contracts are
divisible, severable, surviving or enforceable," the Debtors
contend, "Litchfield is not entitled to specific performance."
The rejection of an unexpired lease or executory contract, the
Debtors argue, is equivalent to a pre-petition breach of such
lease or contract. Accordingly, the Debtors contend that
rejection leaves the nonbankrupt with a claim against the estate
just as would a breach in the nonbankruptcy context, and unless
the nonbankrupt's claim is somehow secured, he will be a general
unsecured creditor of the estate.
The Debtors draw Judge Walrath's attention to Section 365:
The trustee shall timely perform all the obligations of the
debtor ... arising from and after the order for relief under
any unexpired lease of nonresidential real property, until
such lease is assumed or rejected. 11 U.S.C. 365(d)(3).
The Debtors further remind the Court that the purpose of both
Sec. 70(b) of the Act and Sec. 365 of the Code is to allow the
rejection of executory contracts which are burdensome to the
estate and the assumption of executory contracts which would
benefit the estate. These sections were intended to solve the
problem of assumption of liabilities, i.e., excusing or
requiring future specific performance by the debtor depending on
assumption or rejection. The effect of rejection is to relieve a
debtor and its estate of the obligation imposed under and
executory contract, the Debtors aver.
Congress intended section 365 of the Bankruptcy Code to be the
vehicle for debtors-in-possession to preserve those contracts
that benefit the estate and reject those that burden the estate
... Clearly. The Bankruptcy Code grants Litchfield no
corresponding right. However, in asking the Court to grant it
dominion over the Medicare Provider Agreements, Litchfield is
essentially seeking to dispose of property of the Debtors'
estates, the Debtors observe.
Moreover, in the instant case, the rent payment amounts
contained in the Rejected Leases were fixed to Litchfield's
mortgage financing, dollar-for-dollar, and not with reference to
any market factor, and the Rejected Leases required the payment
of millions of dollars monthly for continuing rental deposits,
the Debtors tell the Court. Also, the Rejected Leases related to
significantly under-performing facilities, the Debtors add. In
fact, Litchfield, in its May 24th Motion, acknowledges that the
value of the facilities has been steadily declining. The IHS
chapter 11 estates cannot and should not be bound by
artificially formulated rent provisions which are clearly not
marked to the current market, the Debtors tell the Court.
With respect to the rejection-born breach of either kind of
contractual provision, damages remain the appropriate remedy,
the Debtors assert.
Furthermore, "[a]s a general rule, a party is not entitled to
injunctive relief when the injury suffered may be remedied by an
award of damages, [as evidenced in] Silk Plants, at 362," the
Debtors aver. In the instant case Litchfield seeks inverse
equitable relief in the form of specific performance of the
"cooperation" provisions. The principle remains the same --
equitable relief is an inappropriate remedy for breach of
contract where damages are calculable, the Debtors assert. See
Ward, at 711-715.
Thus, in accordance with the law of the Third and other
Circuits, Litchfield may file a general unsecured claim for
breach of the "cooperation" provisions, but should not be
granted equitable relief, the Debtors reiterate. Even if
Litchfield was entitled to equitable relief, which it is not,
this equitable remedy would, pursuant to section 101(5)(B) of
the Bankruptcy Code, be a quantifiable "claim," the Debtors add.
See Ward, at 711-715.
The Debtors submit that subsequent to the rejection of the
Leases, Litchfield may be entitled to administrative rent in an
amount equivalent to only the value of the fair use and
occupancy of the Facilities. Accordingly, the Debtors ask that
the Court deny Litchfield's Motion to Compel.
Adversary Proceeding -- IHS v. Litchfield
In their Complaint against Litchfield, IHS and IHS-Lester seek:
1. a declaration that the "Lease Deposit Provisions" of
prepetition lease agreements entered into between Debtors
and Litchfield requiring forfeiture of certain Refundable
Lease Deposits payable under those agreement are void and
unenforceable penalty clauses under applicable federal and
state law;
2. upon such declaration, the following relief pursuant to,
inter alia, Sections 541, 541, 547, 548, 549 and 550 of the
Bankruptcy Code:
(a) turnover to the Debtors of the amounts paid to Litchfield
pursuant to the Lease Deposit Provisions as property of
the estate;
(b) avoidance and recovery of the full value of certain
prepetition and postpetition transfers to Litchfield,
pursuant to the Lease Deposit Provisions; and/or
(c) an order under Section 105 of the Bankruptcy Code
compelling Litchfield to segregate funds to satisfy any
relief granted and sums awarded to Debtors in this
action.
To the extent the above-mentioned relief is not fully granted,
Debtors seek, in the alternative, a declaration that the funds
they transferred to Litchfield pursuant to the Lease Deposit
Provisions should offset any
(i) existing or future damage claims of Litchfield against the
Debtors on account of the rejection of the Leases, and
(ii) future use and occupancy obligations of the Debtors, if
any, relating to the Facilities and due and owing to
Litchfield during the pendency of the Debtors' bankruptcy
cases.
Article 4.2(b) of the Leases requires forfeiture of 100% of the
Lease Deposit payments in the event of a premature termination
of the Leases prior, by even one day, to the Lease Termination
Date.
The Debtors name four compelling bases to declare Article 4.2(b)
of the Leases a void and unenforceable penalty.
First, Article 4.2(b) results in double recovery because it
allows Defendant, upon default, both to retain the Refundable
Lease Deposits and to sue for full damages under Article 13.2 of
the Leases without any obligation to credit the Refundable Lease
Deposits against such damages.
Second, in conjunction with other Lease provisions, Article
entitles Defendant to a greater recovery upon default than upon
full performance of the Lease. Specifically, in the event of
full performance, Defendant would be obligated to refund 100% of
the Refundable Lease Deposits. However, in the event of a breach
at any point during the Lease term, Defendant was entitled to
sue for damages equal to full performance, plus retain 100% of
the Refundable Lease Deposits.
Third, the size of the forfeiture sanctioned by Article 4.2(b)
bears no relation to actual damages upon breach -- even as the
actual damages to be suffered by Defendant upon breach
diminished as the term of the Leases progressed to maturity, the
magnitude of the forfeiture of the Lease Deposits under Article
4.2(b) continued to grow substantially. As a result, if allowed
to stand, Article 4.2(b) of the Leases -- through its in
terrorem effect -- would effectively compel Plaintiffs, out of
fear of severe economic loss, to continue performance under the
Leases, and guarantee Defendant, in the event of default, a
windfall well above the actual harm sustained.
Fourth, the damages from an actual breach of the Leases was
readily calculated and ascertained based on a straightforward
application of the Lease provisions calculation of Rent and
other charges due and owing under the Leases.
Because Article 4.2(b) is a void and unenforceable penalty
clause -- and hence a nullity -- Defendant is not entitled to
retain the sums paid by the Plaintiffs as Lease Deposits,
Debtors argue. Instead, under Sections 542, 549 and 550 of the
Bankruptcy Code, Plaintiffs assert they are entitled to an order
compelling Defendant to return to Plaintiffs all of the sums
paid under the Lease Deposit Provisions in the Leases. In the
alternative, Plaintiffs assert they are entitled under the
legislative history and applicable case law under Section
502(b)(6) of the Bankruptcy Code to a declaration that the full
amount of the Lease Deposits paid to Defendant may be setoff
against Defendant's lease rejection damage claim. Moreover, to
the extent there is an excess of the Lease Deposits over the
amount of Defendant's lease rejection claim, Plaintiffs assert
such excess should be immediately turned over to the Plaintiffs
(or at least applied against Plaintiffs' ongoing use and
occupancy charges until the excess is exhausted). (Integrated
Health Bankruptcy News, Issue No. 35; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
KAISER ALUMINUM: Inks Pact to Sell Coating Line Assets for $15MM
----------------------------------------------------------------
Kaiser Aluminum Corporation and its debtor-affiliates seek Court
authorization to enter into a sale agreement for its coating
line assets and to determine that the sale transaction may not
be taxed under any law imposing a stamp tax or similar tax,
including any sales, use, excise or other tax.
Patrick M. Leathem, Esq., at Richards, Layton & Finger in
Wilmington, Delaware, relates that the Debtors have agreed to
enter into a $15,500,000 asset sale agreement, dated April 4,
2002. In this agreement, the Debtors would sell their coating
line assets, which include a variety of machinery, equipment and
other assets associated with the Debtors' coating line
operations, free and clear of liens, claims and encumbrances.
The Debtors would also grant the buyers a non-exclusive right
and license to all proprietary information, trade secrets and
know-how used by the Debtors to operate and maintain the coating
line assets. The purchase price is payable in cash at the
closing of the transaction, contemplated to be on June 7, 2002.
According to Mr. Leathem, the coating line assets are used to
coat aluminum lid products manufactured by the Debtors,
primarily from their Trentwood facility in Spokane, Washington.
As part of their reorganization efforts, the Debtors have
determined to discontinue manufacturing this line of products
and, therefore, will have no further use of the coating line
assets. In addition, the consideration to be paid for the
coating line assets is fair and reasonable as the sale was
negotiated at arm's length over a substantial period of time.
Based on the negotiations with the buyer, the Debtors believe
that the sale agreement represent the most favorable terms on
which the coating line assets could be sold.
Mr. Leathem explains that the coating line assets are highly
specialized equipment with no other economically feasible use.
The Debtors believe that there are no other potential buyers
with the financial resources necessary to consummate a purchase
of the assets. Negotiations with the buyer have continued over
the course of a full year and during that time no other party
has expressed an interest in the coating line assets.
The buyer, Mr. Leathem continues, is also required to remove the
coating line assets from the Trentwood facility at the buyer's
sole cost and expense. After removal of the assets, the buyer is
required to perform certain restoration work at the facility.
The Debtors are required to provide the buyer with a reasonable
amount of technical assistance in connection with the removal of
the coating line assets and the restoration of the Trentwood
facility. For 12 months after the closing of the sale, the buyer
is prohibited from soliciting for employment any of the Debtors'
then current production, management and technical service
employees for the coating line.
Mr. Leathem relates that the Debtors are not permitted to
solicit other bids for the coating line assts but in the event
the Court requires the Debtors to seek alternative bids, the
Debtors must give the buyer notice of that ruling and afford the
buyer an opportunity to bid if alternative bids are received.
Each of the Debtors and the buyer is required to indemnify the
other to the extent and as described in the sale agreement. If
the closing of the transaction does not occur by June 30, 2002,
and is not extended by mutual agreement of the parties, either
the Debtors or the buyer may terminate the sale agreement. If
the closing date occurs after June 7, 2002 through no fault of
the buyer, the Debtors must pay to the buyer an extension fee of
$250,000. If the Debtors agree to sell the coating line assets
to any other party before June 30, 200, the Debtors must pay the
buyer a termination fee of $250,000.
Mr. Leathem informs the Court that the Debtors and the buyer
entered into a confidentiality agreement on February 21, 2002,
regarding this transaction. The buyer's identity has nonetheless
been disclosed on a confidential basis to the Creditors'
Committee.
The Debtors believe that any property interests asserted in or
against the coating line assets would be subject to money
satisfaction or would meet one of the other Bankruptcy Code
Section 363(f) requirements. Mr. Leathem assures the Court that,
to the extent any property interests are in fact asserted in or
against the coating line assets, these property interests will
attach to the net proceeds of the proposed sale with the same
validity and priority as they are attached to the coating line
assets.
State of Washington Objects
Zachary Mosner, Assistant Attorney General of Bankruptcy &
Collections Unit of the Department of Revenue, State of
Washington, avers that the Debtors and purchaser are attempting
to fully exempt a $15,500,000 purchase from payment of any sales
or use tax. The Motion makes no reference at all to taxing
agencies having nexus of getting notice and were the State of
Washington not already a creditor for pre-filing taxes, it is
doubtful the State would have been served. The proposed order
confirming the sale of property is not permissible under
Bankruptcy Code Section 1146(c) - specifically, the State of
Washington has the unfettered right to impose sales or use tax
against buyer or seller. An ad hoc process of granting tax
exemptions causes the State substantial loss of critical tax
revenue.
Mr. Mosner argues that there is absolutely no statutory nor case
authority for taking a stamp tax exemption and extending its
scope to sales and use tax, which in the State of Washington
causes a tax of about 8.2% on the $15.5 million sale -- roughly
$1,317,500 in taxes. The pleadings and sales agreement state
that if the effort fails, the buyer remains responsible. The
court should assure that funds are set in reserve by the buyer
as part of its review of the proposed sale. Mr. Mosner adds that
the documents do not make it clear whether any real estate
interest is being transferred. It appears that a manufacturing
line is being disassembled and moved elsewhere with site
remediation or restoration. The State thus only conditionally
objects to the sale of any real estate without the payment of
"stamp tax" as there is no confirmed plan in place at this time.
Mr. Mosner reckons that Bankruptcy Code Section 1146(c) exempts
from taxation a "stamp tax or similar tax." The expansive motion
and proposed order exempting the sale from sales, use, transfer
and other taxes is not supported by the Bankruptcy Code or case
law in any circuit. A sales or use tax, which Washington law
imposes on the sale of personal property, is intended to tax a
sale at approximately 8% and has nothing to do with a recording
or stamp tax. Under applicable state law the sales or use tax
may be collected against either the buyer or seller. If the
Debtors wish to avoid taxation of the sales transaction in this
case, Mr. Mosner states that the Debtors must identify a basis
for the exemption.
Mr. Mosner informs the Court that the State of Washington also
requests telephonic participation in these matters. The State of
Washington like many States faces severe budget cutbacks, with
travel limited to "essential litigation" in the Office of the
Attorney General. Although the issue in the instant case meets
the standard, there are similar disputes pending in Delaware,
New York and Seattle. The use of travel time would effectively
remove two working days from counsel's calendar. No other
attorney in the Office can handle these specialized matters.
* * *
Determining that the Coating Line Assets should be subject to
bidding procedures and auction, the asset sale is subject to
these Bidding Procedures:
A. The Debtors, in consultation with the Creditors' Committee,
shall prepare appropriate solicitation materials that include
financial and operating information relating to the Coating
Line Assets and details of the Bidding Procedures to be
distributed to any potential purchasers;
B. Parties interested in potentially purchasing the Coating Line
Assets should contact:
John Donnan, Esq.,
Deputy General Counsel
Kaiser Aluminum & Chemical Corp.
(713)-267-3671
C. The Debtors must provide potential purchasers who sign an
appropriate confidentiality agreement with access to the
documentation, personnel, and financial date necessary to
evaluate the Coating Line Assets, including on-site due
diligence access to the Coating Line Assets as reasonably
requested by potential purchasers;
D. Any entity that desires to submit a bid for the Coating Line
Assets may do so in writing, provided that such bid:
a. is served upon and actually received on or before May 16,
2002 by:
1. Kaiser Aluminum & Chemical Corporation
5847 San Felipe, Suite 2600, Houston, TX 77057
Attn: John M. Donnan, Esq.
2. Counsel for Debtors
Jones, Day, Reavis & Pogue
2727 North Harwood Street, Dallas, TX 75201-1515
Attn: Gregory M. Gordon, Esq.
3. Counsel for Debtors
Richards, Layton & Finger, P.A.
One Rodney Square, 920 King Street, Wilmington, DE
19801
Attn: Daniel J. DeFranceschi, Esq.
4. Financial Advisor to the Debtors
Lazard Freres & Co., LLC
30 Rockefeller Plaza, 61st Floor, New York, NY 10020
Attn: Blake O'Dowd
5. Counsel for the Creditors' Committee
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue, New York, NY 10022
Attn: Lisa G. Beckerman, Esq.
6. Counsel for the Creditors' Committee
Ashby & Geddes
222 Delaware Avenue, P.O. Box 1150, Wilmington, DE
19899
Attn: William P. Bowden, Esq.
7. Financial Advisor to the Creditors' Committee
Houlihan Lokey Howard & Zukin Capital
1930 Century Park West, Los Angeles, CA 90405
Attn: Amit Patel
8. counsel to all committees
b. exceeds from the purchase price of $15,500,000 contained in
the Asset Sale Agreement by at least $350,000 and is on
substantially similar or more favorable terms and
conditions as set forth in the Asset Sales Agreement;
c. is not contingent upon any due diligence investigation, the
receipt of financing or any board of directors,
shareholders or other corporate or partnership approval;
d. is not contingent upon exemption, under Section 1146(c) of
the Bankruptcy Code or otherwise, from any applicable taxes
payable on account of the transaction;
e. is accompanied by proof, in a form satisfactory to the
Debtors after the consultation with the financial advisors
to the Creditors' Committee, of the entity's financial
ability to consummate its offer to purchase the Coating
Line Assets;
f. contains an Acknowledgement that promptly upon completion
of the Auction the successful bidder will be obligated to
submit a deposit in an amount of 10% of the aggregate
purchase price and execute a purchase similar or more
favorable terms and conditions that the Asset Sales
Agreement; and,
g. contains an acknowledgement that the bid remains open
and irrevocable until the Court approves the sale of the
Coating Line Assets to another entity and the Debtors
closes the sale with, and receives full payment from, such
entity.
D. If one or more Qualified Competing Bids are received, an
auction will be conducted at 2:00 pm ET, on Monday, May 20,
2002 at the offices of:
Richards, Layton & Finger, P.A.
One Rodney Square, 920 King Street,
Wilmington, DE 19801
E. At the auction, competing bidders may submit bids in excess
of the initial bid, plus the initial overbid increment,
provided that such competing bids are in increments of at
least $100,000;
F. At the auction, the Debtors, after the consultation with the
Committees may select the bid that it in its sole business
judgment, determines to be highest and best bid;
G. If no Qualified Bids are received, the Debtors, after
consultation with the Committees, may determine that, in its
sole business judgment, the initial bid is the successful and
seek the Court's approval for the sale of the Coating Line
Assets to the initial bidder;
H. The Debtors are authorized to take any and all actions
necessary to implement the foregoing Bidding Procedures; and,
I. The hearing on the sale of the Coating Line Assets will be
held at 12:00 pm on Tuesday, May 21, 2002. Any objections to
the sale motion must be filed and served before 4:00 pm ET on
May 13, 2002. (Kaiser Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
KMART CORP: Court Approves Amended DrKW Employment Agreement
------------------------------------------------------------
The Court clarifies that the fees to be paid by Kmart
Corporation and its debtor-affiliates to Dresdner Kleinwort
Wasserstein, Inc. pursuant to the terms of the Engagement
Letter, as modified, are approved and subject to the standard
review provided in Section 328 of the Bankruptcy Code.
The Engagement Letter is modified as:
(a) provision for the payment of $112,500 in subparagraph 2(a)
of the Engagement Letter is deleted;
(b) subparagraph 2(c) of the Engagement Letter is deleted in
its entirety and replaced with:
"If at any time any Restructuring is consummated, DrKW
shall be entitled to receive a transaction fee, contingent
upon the consummation of the Restructuring and payable at
the closing, equal to $12,500,000."
(c) Paragraph 2 of the Engagement Letter is amended to include
the text:
"The aggregate amount of the transaction fee provided in
subparagraph 2(c) and the Sale Transaction Fee shall be
reduced by an amount equal to 75% of any fees paid
pursuant to subparagraph 2(b)."
"If the Debtors wish to retain DrKW to perform services in
connection with a Financing that would entitle DrKW to
additional compensation pursuant to Subparagraph 2(e) of the
Engagement Letter, the Debtors will first file an application
seeking the Court's approval of the terms of that retention and
the fees payable in connection with such a Financing," Judge
Sonderby rules.
The Court denies the request to approve the terms of the first
paragraph of the "Indemnification Provisions." Instead, the
Court approves the "Indemnification Provisions" with these
changes:
(1) the first paragraph of the "Indemnification Provisions"
is deleted and replaced by this text:
"In connection with the engagement of Dresdner Kleinwort
Wasserstein Inc. as financial advisor to Kmart
Corporation, the Company hereby agrees to indemnify and
hold harmless DrKW and its affiliates, their respective
directors, officers, employees and controlling persons,
and each of their respective successors and assigns, to
the full extent lawful, from and against all losses,
claims, damages, liabilities and expenses incurred by them
which:
(A) are related to or arise out of:
(i) actions or alleged actions taken or omitted to
be taken by the Company, or
(ii) actions or alleged actions taken or omitted to
be taken by an indemnified person with the
Company's consent or in conformity with the
Company's actions or omissions, or
(B) are otherwise related to or arise out of DrKW's
activities under DrKW's engagement.
The Company will not be responsible, however, for any
losses, claims, damages, liabilities or expenses pursuant
to clause (B) which are finally judicially determined to
have resulted primarily from:
(i) the gross negligence or willful misconduct of the
person seeking indemnification, or
(ii) conduct by the person seeking indemnification that
was not in good faith or that such person did not
reasonably and prudently believe was in the best
interests of the Company;
(2) the Debtors are authorized to indemnify, and will
indemnify, DrKW for any claim arising from or in
connection with DrKW's engagement;
(3) the Debtors have no obligation to indemnify DrKW, or
provide contribution or reimbursement to DrKW, for any
claim or expense that is settled prior to a final judicial
determination of such claim if this Court, after notice
and a hearing, determines that the claim or expense is one
for which DrKW is not entitled to receive indemnity,
contribution or reimbursement under the terms of the
Engagement Letter as modified;
(4) if, before the earlier of:
-- the entry of an order confirming a Chapter 11 plan in
these cases, and
-- the entry of an order closing these Chapter 11 cases,
DrKW believes that it is entitled to the payment of any
amounts by the Debtors on account of the Debtors'
indemnification, contribution and/or reimbursement
obligations under the Engagement Letter, including,
without limitation the advancement of defense costs, DrKW
must file an application in the Court, and the Debtors may
not pay any such amounts to DrKW before the entry of an
order by the Court approving the payment. This
subparagraph is intended only to specify the period of
time under which the Court will have jurisdiction over
any request for fees and expenses by DrKW for
indemnification, contribution or reimbursement and not as
a provision limiting the duration of the Debtors'
obligation to indemnify DrKW;
(5) if DrKW seeks reimbursement for counsel fees, such request
will be supported by time records and expense records
that typically are required to be submitted by counsel
retained as professionals pursuant to Section 327 of the
Bankruptcy Code, and such counsel fees and expenses will
be subject to review for reasonableness, pursuant to the
standards set forth in Section 330 of the Bankruptcy Code;
and
(6) a claim under the Engagement Letter for indemnification,
contribution and reimbursement arising from DrKW's pre-
petition performance of the services described in the
Engagement Letter or otherwise will not be entitled to
administrative expense priority. (Kmart Bankruptcy News,
Issue No. 19; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
KMART: Has Until March 31, 2003 to Make Lease-Related Decisions
---------------------------------------------------------------
In four separate orders, the Court extends the date by which
Kmart Corporation and its debtor-affiliates must assume or
reject these leases through and including March 31, 2003:
Store No. Location Landlord
--------- -------- --------
4192 Southfield, MI Ramco-Gershenson Properties LP
3448 Norwalk, CT Harwill Homes Inc.
7554 Howell, NJ Howell-Friendship Real Estate
4742 Old Bridge, NJ Old Bridge Plaza Associates
3171 Pueblo, CO US Realty 86 Associates
3184 Hutchinson, KS US Realty 86 Associates
4260 San Diego, CA US Realty 86 Associates
4288 Portland, OR US Realty 86 Associates
4404 Eugene, OR US Realty 86 Associates
4406 Milwaukie, OR US Realty 86 Associates
4435 Gresham, OR US Realty 86 Associates
4453 Pueblo, CO US Realty 86 Associates
7024 Scottsbluff, NE US Realty 86 Associates
9744 Azle, TX US Realty 87 Azle Associates
7498 Chesterton, IN US Realty 87 Chesterton
Associates LP
3547 Colorado Springs, CO US Realty 87 Colorado Springs
Briargate Associates
7572 Colorado Springs, CO US Realty 87 Colorado Springs
Palmer Road Associates
7438 Dallas, TX US Realty 87 Dallas Associates
7176 Decatur, GA US Realty 87 Decatur
Associates
7458 Lee's Summit, MO US Realty 87 Lee's Summit
Associates
7447 New Smyrna Beach, FL US Realty 87 New Smyrna Beach
Associates
9573 Rhinelander, WI US Realty 87 Rhinelander
Associates
9704 Rice Lake, WI US Realty 87 Rice Lake
Associates
7474 St. John, IN US Realty 87 St. John
Associates
7526 St. Joseph, MO US Realty 87 St. Joseph
Associates
3543 Tucson, AZ US Realty 87 Tucson-Grove
Associates
3825 Parsippany, NJ Westmount Plaza Associates
3964 Philadelphia, PA Eastwick Joint Venture V
4725 Key West, FL Key Plaza I, Inc.
4277 Stockton, CA Stone Brothers and Associates
7789 Cicero, IL Hawthorne Partners
Judge Sonderby directs the Debtors to pay post-petition real
estate taxes to Eastwick Joint Venture V in the amount of
$132,395.
The Court rules that the effective date of any rejection of an
Unexpired Lease must not occur, nor will a store leased under an
Unexpired Lease become "dark", during the period from October 1,
2002 through January 15, 2003.
In the meantime, another hearing is scheduled for June 26, 2002
at 11:00 a.m. (Central Time) to further consider the extension
of the deadline for the assumption or rejection of these
unexpired leases:
Store No. Location Landlord
--------- -------- --------
7200 Waldorf, MD Combined Properties Inc.
3048 State College, PA F&W Partnership
4822 Schaumburg, IL Allied District Properties, LP
4778 Ponca City, OK Rolf Pillar
9747 Asheboro, NC US Realty 87 Asheboro
Associates
9717 El Dorado, AR US Realty 87 El Dorado
Associates
7389 Indian Harbor US Realty 87 Indian Harbor
Beach, FL Associates LP
7473 Lake Zurich, IL US Realty 87 Lake Zurich
Associates
7511 Austin, TX US Realty 87 South Austin
Associates
7519 Morganville, NJ Union Hill Nine Associates LLC
(Kmart Bankruptcy News, Issue No. 19; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
LTV: Hartford to Provide Senior Medical Benefits to Retirees
------------------------------------------------------------
Americana Financial Services, Inc., the outreach and service
center for The Retired Steelworkers Benefits Plan and Trust,
announced that The Hartford Financial Services Group, Inc.
(NYSE: HIG) (through its subsidiary, Hartford Life Insurance
Company (and/or any other issuers)), through it's subsidiary
Hartford Life and Accident, will provide Senior Medical benefits
to Steelworkers Benefits Plus plan participants age-65 and over.
Steel Worker Benefits Plus is the Voluntary Employee Beneficiary
Association health benefits plan arranged by and for LTV
retirees and former employees with the assistance of Americana
Financial.
For post age-65 Medicare eligible retirees, the plan, which
fills the gaps in Medicare, is as low as $93.00 per month. An
optional Prescription Drug plan provided by (name of
carrier/underwriting company here is also available for $32.50
per month. Members may participate beginning May 1, 2002 and the
open enrollment period for the plan is through June 30, 2002.
The plan is available nationwide with the exception of MN, FL,
WA and VT.
Hartford Life and Accident Insurance Company is an A+ rated
carrier from A.M Best and is one of the nation's leading
providers of Senior Medical plans among other products.
According to Samuel H. Fleet, President and CEO of Americana,
The Hartford offers one of the best and most flexible senior
health plans in the marketplace today. "We are pleased to
administer The Hartford Senior Medical Plan to the steel
workers, and know from experience that participants will be
pleased with the plan benefits and rates. Americana has teamed
with The Hartford extensively on numerous Senior Medical cases,
as well as other programs and member satisfaction levels are
consistently very high," said Fleet. "Our shared clients include
Polaroid Corporation, Acme Steel, Harvard Industries and others.
The Hartford is an (organization that stands by its reputation
for providing quality products, efficient claims turnaround and
excellent customer service," said Fleet.
Steel Worker Benefits Plus Senior Plan Highlights
-- Economical premiums
-- Prescription drug program
-- Nationwide coverage
-- Freedom of provider choice
-- Foreign travel coverage
-- No paperwork or claim forms
-- Dedicated retiree customer care specialists
Plan members can also access their benefits and a health
information resource center online at
http://www.MemberNetUSA.net/steel To service the former
employees of LTV a dedicated, toll free number has been
established at: 800-717-7895.
Due to LTV's recent bankruptcy, the majority of its retirees and
laid off employees have been left with limited health plan
options, therefore, Americana will also administer other health
and life benefits recently terminated by LTV, including Dental,
Life (may not be available in all states) and a Critical Illness
Plan.
DebtTraders reports that LTV Corporation's 11.750% bonds due
2009 (LTV2) are being quoted at a price of 0.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=LTV2for
real-time bond pricing.
LTV: Will Assign Columbus Coating Interests to Bethlehem Steel
--------------------------------------------------------------
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
IN RE : CHAPTER 11
LTV STEEL COMPANY, INC. : JOINTLY ADMINISTERED
A NEW JERSEY CORPORATION, ET AL.: CASE NO 00-43866
:
DEBTORS. : CHIEF JUDGE WILLIAM T. BODOH
NOTICE OF ASSUMPTION AND ASSIGNMENT BY LTV STEEL COMPANY, INC.,
THE LTV CORPORATION, DEARBORN LEASING COMPANY AND LTS-COLUMBUS
PROCESSING, INC. OF THEIR RESPECTIVE INTERESTS IN COLUMBUS
COATINGS COMPANY AND COLUMBUS PROCESSING COMPANY LLC
PLEASE TAKE NOTICE that pursuant to an order 9the
"Stipulated Order") entered on April 24, 2002 by the Honorable
William T. Bodoh, Chief United States Bankruptcy Judge in the
United States Bankruptcy court for the Northern district of Ohio
(the "Court"), located at the United States courthouse and
federal Building, 125 Market Street, Youngtown, Ohio 44501, LTV
Steel Company, Inc., The LTV corporation, Dearborn Leasing
Company and LTV-Columbus Processing, Inc. (collectively, the
"Debtors") as part of a settlement (the "Settlement") with
Bethlehem Steel Corporation, Alliance Coatings Company, LLC and
Ohio Steel Service Company, LLC (collectively "Bethlehem"), are
authorized and directed, upon the satisfaction of the Conditions
to Effectiveness, as defined in the Stipulated Order, to assume
and assign to Bethlehem and/or any wholly-owned subsidiary of
Bethlehem Steel Corporation (the "Transfer") all of the Debtors'
respective interest in Columbus Coatings Company ("CCC") and
Columbus Processing company LLC ("CPC") and any and all rights,
documents, claims or other property related to CCC and CPC
(collectively, the "Transferred Property").
PLEASE TAKE FURTHER NOTICE that the terms of the Stipulated
Order also include, among other things, the following: (1)
Bethlehem shall (i) pay $2,500,000 in cash to the Debtors (the
"Cash Consideration"), (ii) assume all liabilities of the
Debtors in connection with the Modernization Loan, as defined in
the Stipulated Order, and (iii) indemnify the Debtors in
connection with the Modernization Loan; and (2) the Debtors and
Bethlehem release each other from all claims and disputes
related to CCC and CPC. The Conditions to Effectiveness
include, among other things, the following: (1) authorization
by Bethlehem's bankruptcy court of the consummation of the
Settlement; (2) receipt of all necessary governmental and
regulatory approvals; and (3) execution of definitive
documentation.
PLEASE TAKE FURTHER NOTICE that pursuant to the Stipulated
Order, the Transfer shall be deemed to be free and clear of all
claims, liens and encumbrances, with such claims, liens and
encumbrances attaching to the Cash Consideration upon its
receipt by, the Debtors, (i) if no holder of a lien or other
interest in the Transferred Property files a written objection
to the Stipulated Order with the Court by May 10, 2002 at 4:00
p.m. (EDT) (the "Objection Deadline") or (ii) upon further order
of the Court, if a holder of a lien or other interest in the
Transferred Property files a written objection to the Stipulated
Order with the Court by the Objection Deadline (any such
objections will be heard by the Court on May 21, 2002 at 1:30
p.m. (EDT). Any such written objection must be received by the
Court at the above address on or before the Objection Deadline.
You must simultaneously mail copies to: The LTV Corporation,
6801 Brecksville Rd., Independence, OH 44131, Attn: N. David
Bleisch, Esq.; Jones, Day, Reavis & Pogue, North Point, 901
Lakeside Ave., Cleveland, OH 44114, Attn: Heather Lennox, Esq.;
Jones, Day, Reavis & Pogue, 1900 Huntington Center, 41 South
High St., Columbus, OH 43215, Attn: Jeffrey B. Ellman, Esq.;
Bethlehem Steel Corporation, 1170 Eighth Ave., Bethlehem, PA
18016, attn: John F. Lushia, Jr., Esq.; Weil, Gotshal & Manges
LLP, 767 Fifth Ave., New York, NY 10153, Attn: Jeffrey L.
Tanenbaum, Esq. And Robert Lemons, Esq.; and Porter Wright
Morris & Arthur LLP, 925 Euclid Ave., Suite 1700, Cleveland, OH
44115, attn: James W. Ehrman, Esq. As approved by the Court,
the sole basis for any objection to the Stipulated Order shall
be the objection of a holder of a lien or other interest in the
Transferred Property to the Transfer being free an clear of such
party's lien or other interest.
PLEASE TAKE FURTHER NOTICE that to the extent that this
notice conflicts with the Stipulated Order, the terms of the
Stipulated Order shall govern. A copy of the Stipulated Order
may be inspected at the Office of the Clerk of the Court at the
address set forth in the preceding paragraph or may be obtained
by written request made to Debtors' counsel, Jones, Day, Reavis
& Pogue, Attention: Heather Lennox, Esq., North Point, 901
Lakeside Ave., Cleveland, OH 44114, Telephone: (216) 579-0212.
LODGIAN INC: Committee Signs-Up Evercore for Financial Advice
-------------------------------------------------------------
The Official Committee of Unsecured Creditors of Lodgian, Inc.,
and its debtor-affiliates asks the Court to authorize it to
retain Evercore Partners L.P. as financial advisor. Committee
Chairman Sean Armstrong believes that Evercore is well qualified
and able to represent the Committee in a cost-effective,
efficient and timely manner. Evercore and its employees have
participated in various significant reorganizations,
representing creditors' committees in several Chapter 11 cases,
including Motient Corporation, Geneva Steel LLC, Envirodyne,
Inc. and Kendall Corporation. Evercore has also indicated a
willingness to act on behalf of the Committee and to subject
itself to the jurisdiction and supervision of the Court.
The Committee will look to Evercore to:
A. Become familiar with and analyze the business, operations,
properties, financial condition and prospects of the Debtors,
to the extent Evercore deems appropriate;
B. Assist and advise the Committee in developing a general
strategy for accomplishing a Restructuring, as defined in the
Evercore Agreement;
C. Assist and advise the Committee in evaluating and analyzing a
Restructuring Plan, including the value of the securities, if
any, that may be issued under the Restructuring plan;
D. Develop long-term financial projections of Lodgian's business
and analyze the Debtors' long term business plan for the
benefit of the Committee;
E. Subject to the provisions of clause (see P. below), assist in
the development of financial data and presentations to the
Committee;
F. Analyze the Debtors' financial liquidity and evaluate
alternatives to improve such liquidity;
G. Provide strategic advice with regard to restructuring or
refinancing the Debtors' obligations;
H. Evaluate the Debtors' debt capacity and alternative capital
structures;
I. Participate in negotiations among D&P, the Committee, Lodgian
and its counsel, financial advisors, creditors, suppliers,
lessors and other interested parties;
J. Advise the Committee and negotiate with Lodgian and its
lenders with respect to potential waivers or amendments of
various credit facilities;
K. Assist, from a financial point of view, in the analysis of
Inter-company transactions and obligations, if any, between
Lodgian and its various subsidiaries and affiliates; and
L. Determine a range of values for Lodgian, its subsidiaries and
affiliates on a going concern basis and on a liquidation
basis;
M. Assist the Committee in preparing documentation required in
connection with supporting or opposing any proposed
restructuring plan;
N. Advise and assist the Committee in evaluating any potential
financing by the Debtors, evaluation and contacting potential
sources of capital and assisting the Committee in negotiating
such a financing;
O. Assist the Committee in identifying and evaluating candidates
for a potential acquisition, merger, consolidation or other
business combination pursuant to which the business or assets
of the Debtors are combined with a non-affiliated third
party, advising the Committee in connection with and
participating in negotiations, and aiding in the consummation
of a Business Combination;
P. When and as requested by the Committee in writing, render
financial reports to the Committee, as Evercore deems
appropriate under the circumstances, provided that Evercore
obtains the approval of the Committee's counsel prior to
delivering any reports or other information to the Committee;
Q. Participate, to the extent reasonably requested by the
Committee, including, without limitation, as a financial
expert to the Committee, in hearings before a court of
competent jurisdiction in which the Debtors may seek to
implement a Restructuring, with respect to matters upon which
Evercore has provided advice. This would include, as
relevant, coordination with the Committee's counsel with
respect to testimony. However, if services under this
contract entail greater participation than is customary in
the ordinary course of the hearings that are uncontested or
subject to limited contest, then the provision of services
will be the subject of a separate agreement amount the among
the parties and will not be governed by the terms and
conditions of the Evercore Agreement; and
R. Provide other such advisory services as are customarily
provided in connection with the analysis and negotiation of a
Restructuring, as requested and mutually agreed upon by the
Committee and Evercore.
Mr. Armstrong relates that Evercore has agreed to serve as
financial advisor to the Committee pursuant to the terms of the
Evercore Agreement and proposes that the firm be compensated for
the services as described:
A. Evercore will be entitled to a monthly fee of $100,000
per month for the first four months of the Engagement,
starting November 2001, and $75,000 for each month
thereafter. Fees are payable in cash for each month or any
part thereof, with the first Monthly Fee payable upon
execution of the Evercore Agreement by each party. Additional
installments of the Monthly Fee are payable in advance on
each monthly anniversary of the Effective Date, provided,
however, that if the Evercore Agreement is terminated by
Evercore, the Monthly Fee will be pro rated for any month;
B. Evercore will also be entitled to a transaction fee in an
amount equal to $1,000,000, less 50% of the aggregate amount
of monthly fees received by Evercore, but in no event less
than $300,000. Except as otherwise provided in the Evercore
Agreement, the Transaction Fee will be earned upon the
completion of a Restructuring. This is understood to mean
the consummation of a Restructuring of the Debtors'
obligations, effected through the execution, confirmation and
consummation of a plan of reorganization pursuant to an order
of the Bankruptcy Court. The transaction fee will be paid,
in cash, upon the consummation date of any such plan; and
C. Evercore will entitled to reimbursement of all necessary,
reasonable out-of-pocket expenses incurred during this
engagement, including, but not limited to: travel and
lodging, direct identifiable data processing and
communication charges, courier services, working meals,
reasonable fees and expenses of Evercore's counsel in
connection with this engagement and other necessary
expenditures. These are payable upon rendition of invoices
setting forth in reasonable detail the nature and amount of
the expenses, provided, that the reimbursable expenses do
exceed $40,000 in the aggregate without the prior approval of
the Debtors and a majority of the Committee. In connection
therewith, the Debtors pay Evercore on the Effective Date and
maintain thereafter a $20,000 expense advance for which
Evercore will account upon termination of the Evercore
Agreement.
According to John P. Fitzsimons, Managing Director of Evercore
Partners L.P., prior to the Petition Date, Evercore performed
certain professional services for the Committee beginning on
November 13, 2001. It had been in discussions with the Debtors
and their advisors as a result of its pre-petition work on
behalf of the Bondholder Committee on issues related to the
Chapter 11 filing. Evercore invoiced the Debtors for $200,000
for fees through the period ending January 13, 2002, and
$15,364.49 in expenses incurred and processed to date. Prior to
the Petition Date, Evercore has received payments totaling
$200,000 for fees invoiced and a $20,000 expense advance to be
first applied against pre-petition expenses (incurred and
processed and incurred but not yet processed). Evercore will
then credit the unused expense advance against post-petition
expenses incurred thereafter.
Mr. Fitzsimons assures the Court that Evercore does not
represent and does not hold any interest adverse to the Debtors'
estates or their creditors in the matters with the Debtors,
their creditors, equity security holders, or any other parties
in interest or their respective financial advisor and
accountants, the United States Trustee or any person employed in
the office of the United States Trustee, except that:
A. Evercore represents the Committee in these cases and has
represented the Bondholder Committee in the restructuring
efforts which led up to the filing of these Chapter 11 cases,
and
B. Evercore has on occasion provided, and may continue to
provide, services to certain of the Debtors' creditors and
other parties in interest in matters unrelated to these
proceedings.
In addition, Evercore has a national practice and may represent
or may have represented certain of the Debtors' creditors or
equity holders in matters unrelated to these cases.
Mr. Fitzsimons submits that Evercore will conduct an ongoing
review of its files to ensure that no conflicts or other
disqualifying circumstances exist or arise. If any new relevant
facts or relationships are discovered, Evercore will supplement
its disclosure to the Court as required by Bankruptcy Rule 2016.
(Lodgian Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
MILACRON INC: S&P Affirms BB- Rating On Planned Asset Sale
----------------------------------------------------------
On May 6, 2002, Standard & Poor's affirmed its double-'B'-minus
corporate credit rating on Milacron Inc. following the company's
announcement that it is selling the Widia Group, its European
and Indian metalworking tools operation, to Kennametal Inc.
(BBB/Negative/--) for Euro 180 million (about $170 million). Net
cash proceeds to Milacron are expected to be about $140 million
and the company expects to report an after-tax gain on the sale
of $10 million - $12 million.
Most of the sale proceeds will be used to reduce bank debt but
Milacron still needs to demonstrate profitability in its core
plastics machinery business.
The Cincinnati, Ohio-based company with $1.3 billion sales in
2001, participates in the plastics machinery sector (injection
molding, blow molding, extrusion, mold bases), where demand can
swing widely, and in the cyclical industrial products market
(metalcutting tools, metalworking fluids).
The ratings on Milacron reflect an average business risk profile
and an aggressive financial profile. Milacron's current
profitability has declined materially because of the sharp
downturn in North American demand for plastics machinery and
metalworking tools; the timing and extent of market recovery
remains highly uncertain.
Sales were down year-to-year 25% for plastics processing
equipment and 17% for metalworking tools. Management has reduced
staffing and cut back production in certain operations. To
further conserve cash, inventories are being worked down and
capital expenditures reduced. However, debt to total capital and
was somewhat aggressive at 63% at December 31, 2001,
constraining financial flexibility. Lease-adjusted funds from
operations dropped to 4.3% in 2001 from the low-20% area in
recent years due to the challenging economic environment. The
net loss in the first quarter of 2002 was $13.1 ($9.6 million
excluding after-tax restructuring charges) compared with net
income of $5.8 million (adjusting for exclusion of goodwill) in
the same quarter of 2001. Largely due to decreased working
capital, debt was reduced by $12 million in the quarter, and
cash and cash equivalents were $108 million. Milacron has stated
that recently amended bank facility covenants provide adequate
room for an expected slow recovery to profitability by the end
of 2002. For the current rating, funds from operations to total
debt (an important financial protection measure) are expected to
run in the mid-teens percentage area, over the economic cycle.
Outlook: Negative
The ratings are based on the assumption that recovery in demand
will begin in the second half of 2002. Should the current
downturn become more prolonged and severe, however, with further
deterioration in financial flexibility, the ratings could be
lowered.
Ratings List:
Milacron Inc.
* Corporate credit rating BB-/Negative/--
* Senior secured debt BB-
* Senior unsecured debt B
NBO SYSTEMS: Grant Thornton Expresses Going Concern Opinion
-----------------------------------------------------------
"[C]onditions exist which raise substantial doubt about the
Company's ability to continue as a going concern. The Company's
continuation is dependent on its ability to generate sufficient
cash flows to meet its obligations and sustain its operations."
This quotation is taken from Grant Thornton LLP's Auditors
Report dated June 1, 2001, regarding NBO Systems Inc.
NBO's primary business is to provide comprehensive gift
certificate programs to shopping mall managers, non-mall
retailers and consumers. The Company provides shopping mall
managers with a gift certificate product that is accepted and
redeemable at all mall stores and administers the entire
program including accounting, banking, and complying with
escheatment regulations (handling of non-redeemed certificates).
The Company has not generated sufficient revenue to meet the
Company's on-going expenses of operation. These factors raise
doubts about the Company's ability to continue as a going
concern. The report of the Company's independent auditors on the
Company's audited financial statements for the fiscal years
ended March 31, 2001 and 2000, respectively, and the unaudited
financial statements for the fiscal quarters ended December 31,
2001 and 2000 representing the first nine months of fiscal 2002,
respectively, contains information that states that the Company
has incurred consolidated cumulative losses of $23,724,721
since inception of operations, and as of December 31, 2001, the
Company's current liabilities exceeded its current assets by
$4,034,918 and it had a stockholders' deficit of $2,078,840.
These factors also, among others, raise substantial doubt about
the Company's ability to continue as a going concern.
The Company depends on new investments to fund ongoing
operations. If insufficient capital is invested, the results of
the business development could be materially adversely impacted.
The Company's future capital requirements will depend on many
factors, including cash flow from operations, technological and
market developments and the Company's ability to successfully
market the Gift Certificate ("GC") Program and its proposed
services. Unanticipated problems, expenses and delays are
frequently encountered in establishing a new approach to
business in a developing industry, and in developing software
products. These include, but are not limited to, competition,
the need to develop customer support capabilities, market
expertise, setbacks in product development, market acceptance
and sales and marketing activities. The failure of the Company
to meet any of these conditions could have a material adverse
effect on the Company and may force the Company to reduce or
cease its proposed operations.
NBO Systems must raise additional funds through equity or debt
financing. Any equity financing could result in dilution to the
Company's stockholders. Debt financing would result in increased
interest expense. Any financing, if available, may be on terms
unfavorable or unacceptable to the Company. If adequate funds
are not obtained, the Company may be required to reduce or
curtail its proposed operations.
The Company completed two bridge financings in August 1995 to
fund its working capital requirements. The Company raised a
total of $1,650,000 from the two bridge financings from the sale
of a total of 66 Units; each Unit contained a $25,000 promissory
note bearing interest at 10% per annum. The notes were due on
June 30, 1996. Payment was not made on the notes by June 30,
1996 and, as a result, the interest increased to 20% per annum
on the unpaid balance. Since then, over $1,139,200 in principal
has been repaid, however the balance of notes is currently
overdue. As of December 31, 2001, the total amount overdue was
approximately $626,321 consisting of $510,776 in principal and
approximately $115,545 in interest.
Between May 16, 1996 and December 31, 1998, Keith A. Guevara,
Chairman of the Board, President and Chief Executive Officer of
the Company, loaned the Company $402,439 in order for the
Company to meet its payroll and other operating expenses. As of
December 31, 2001, the remaining unpaid balance is $341,749. As
of December 31, 2001, the Company had 46 full-time employees, 4
part-time employees, and 12 temporary employees, and revenue
generated to date is insufficient to meet operational expenses.
Without further loans from Mr. Guevara (of which there is no
assurance such loans will be made in the future) or immediate
funds from investors, it is possible the Company will be unable
to continue its operations.
The Company's success depends, to a significant extent, upon a
number of key employees. The loss of services of one or more of
these employees could have a material adverse effect on the
proposed business and operations of the Company and the GC
Program. The Company is especially dependent on the efforts and
abilities of certain of its senior management, particularly
Keith A. Guevara, the Company's President and Chief Executive
Officer. Mr. Guevara is employed by the Company under a
three year employment agreement expiring in year 2002. The loss
of any of the Company's key executives could have a material
adverse effect on the Company and its operations and prospects,
although the loss of Mr. Guevara would have a more significant
adverse effect on the Company. The Company has $2,000,000 in
key man life insurance on Mr. Guevara. The Company believes that
its future success will also depend, in part, upon its ability
to attract, retain and motivate qualified personnel. There is
and can be no assurance, however, that the Company will be
successful in attracting and retaining such personnel.
NBO Systems has never earned a profit since its inception.
Profits in future years will depend on the success of the
Company in carrying out its business plan. As stated above, as
of December 31, 2001 the Company has incurred consolidated
cumulative losses of $23,724,721 since inception of operations
June 23, 1994. The Company has never paid any cash dividends on
its common stock and does not anticipate paying any cash
dividends in the foreseeable future. The Company currently
intends to retain future earnings, if any, to fund the
development and growth of its proposed business and operations.
NBO's officers and directors beneficially own approximately
29.3% of the outstanding shares of the Company's common stock,
which includes stock options granted under the 1997 Stock Option
Plan. Because cumulative voting rights are not provided for in
the Company's Second Amended and Restated Articles of
Incorporation, these individuals will be in a position to
significantly influence the election of the members of the Board
of Directors and control most corporate actions, including
decisions to dissolve, merge or sell the Company's assets. Prior
to 1998, no member of the Company's management team had had
extensive experience in the gift certificate/gift card industry.
In addition, no member of the Company's management has held
similar positions in SEC reporting companies. Accordingly, this
lack of experience might result in bad business decisions and
bad management practices, and it might discourage subsequent
investors from investing in the Company.
NTELOS INC: Working Capital Deficit Tops $23MM at March 31, 2002
----------------------------------------------------------------
NTELOS (Nasdaq: NTLO) reported first quarter 2002 operating
revenues of $60.0 million and net loss applicable to common
shares of $35.7 million. Operating cash flows (operating income
before depreciation and amortization), or EBITDA, were $9.3
million for the quarter, excluding restructuring charges. The
Company recorded $1.3 million of restructuring charges during
the quarter related to previously announced organizational
initiatives and workforce reductions, resulting in reported
operating cash flows of $8.0 million. Reflecting the merger with
R&B Communications in February 2001 and the concurrent
consolidation of the West Virginia PCS Alliance, pro forma
operating revenues for first quarter 2001 were $52.7 million and
pro forma operating cash flows were $3.8 million.
NTELOS' wireless PCS operations reached the significant
milestone of first-ever positive operating cash flows for the
quarter, ahead of the Company's mid-year guidance. The segment
reported operating cash flows of $0.2 million compared to losses
of $5.7 million and $7.0 million in first and fourth quarters
2001, respectively, and to pro forma losses of $22.0 million for
the year 2001.
At March 31, 2002, NTELOS Inc.'s balance sheet shows that its
total current liabilities exceeded its total current assets by
about $23 million.
"We are most pleased with the financial performance of our
wireless operations this quarter," said James S. Quarforth,
chief executive officer. "Reaching the point of positive
operating cash flows is the most significant achievement to-date
for this segment." Quarforth continued, "With wireless already
positive, we expect consolidated EBITDA to ramp up sequentially
each quarter this year and these first quarter results support
the Company's previously announced EBITDA guidance for 2002."
Highlights of Business Activities
* Completion of Tower Sales: The Company completed the sale
of 70 communications towers in the Virginia East markets to
American Tower Corporation for $23.8 million, with the final 24
towers sold in first quarter 2002 for proceeds of $8.2 million
(46 towers sold in fourth quarter 2001 for proceeds of $15.6
million).
* Sale of Excess PCS Spectrum: The Company completed the
previously announced sales of excess PCS spectrum in the Basic
Trading Areas of Charlottesville and Winchester, Virginia;
Wheeling, West Virginia; and Altoona and Johnstown,
Pennsylvania. Proceeds of $2.5 million (pre-tax gain of $2.0
million) in first quarter 2002 and $12.0 million in second
quarter 2002 were received.
* Sale of Minority Partnership Interest: In April 2002, the
Company sold its 3% minority partnership interest in America's
Fiber Network (AFN) for proceeds of $2.6 million. NTELOS had
become a minority partner when AFN was formed in March 2000
through the contribution of excess fiber capacity.
* Fiber Network Expansion: NTELOS recently announced the
April 2002 purchase of approximately 700 route miles of fiber
for $2.6 million. The fiber is in 12 segments with termination
points in Virginia, West Virginia, Kentucky, North Carolina,
Tennessee and Ohio. Each new segment is contiguous to, or an
extension of, existing NTELOS fiber and totals about 3,900 fiber
miles. With these new routes, the Company will be able to expand
its wholesale offering to existing and new customers and to
eliminate some fiber currently leased from other carriers,
lowering operating expenses.
* New Retail Outlets: Six new retail outlets have been
opened year-to-date -- one in the Virginia East markets, two in
Virginia West and three in West Virginia. This brings the
Company's total retail outlets to 57.
* Wireless Network Upgrade: The Company recently completed
a switch conversion in the Virginia West markets and has
scheduled completion of the previously announced 3G1XRTT upgrade
in the western markets by mid-year. This upgrade supports the
Horizon wholesale network services agreement, which will
generate guaranteed minimum revenues of $27.4 million in 2002
and $38.6 million in 2003.
* Workforce Reductions: In April, the Company announced
that it would reduce its workforce by approximately 15% through
the offering of early retirement incentives, the elimination of
certain vacant and budgeted positions and the elimination of
some jobs. Restructuring charges will be recorded in both the
first and second quarters of 2002. These workforce reductions
will generate net savings and reduce future expenses by
approximately $3.0 million for the year 2002 and $8.5 million
for 2003.
Operating Revenues for the first quarter of 2002 were $60.0
million, compared to $47.6 million for first quarter 2001 and to
pro forma (as previously defined) first quarter 2001 operating
revenues of $52.7 million.
Wireless operating revenues for first quarter 2002 were $35.8
million compared to reported $25.3 million in first quarter 2001
and an increase of 29% over pro forma first quarter 2001
operating revenues of $27.7 million. The sequential quarterly
growth was 15% over fourth quarter 2001 wireless operating
revenues of $31.2 million, reflecting a complete quarter revenue
impact of the strong customer growth achieved in the previous
quarter.
Wireline operating revenues for first quarter 2002 were $22.3
million, compared to $19.9 million and to pro forma $22.4
million for first quarter 2001. Wireline operating revenues were
down slightly from $23.2 million in fourth quarter 2001 due to
favorable reserve adjustments experienced in that previous
quarter.
Operating Cash Flows for the first quarter 2002 were $8.0
million, after $1.3 million of restructuring charges, compared
to $3.9 million for first quarter 2001 and to pro forma first
quarter 2001 operating cash flows of $3.8 million.
Wireless operating cash flows for first quarter 2002 were
positive for the first time ever at $0.2 million compared to a
loss of $5.7 million and to a pro forma loss of $7.0 million for
first quarter 2001. Wireless operating cash flow losses were
$7.0 million in fourth quarter 2001 and $22.0 million for the
year 2001 on a pro forma basis. While wireless revenues grew
sequentially, operating expenses decreased from the previous
quarter to $35.5 million, relatively consistent with pro forma
operating expenses for the first three quarters of last year.
The continuation of this flat trend in wireless operating
expenses has been achieved through a continued focus on cost
control with reductions in incollect roaming expense and costs
of acquisition. Rates per minute for incollect roaming expense
are down 16% year to date and cost per gross addition (CPGA) for
the first quarter 2002 is down 13% from the average CPGA in
2001.
Wireline operating cash flows for first quarter 2002 were $9.2
million, compared to $8.7 million and to pro forma $9.8 million
for first quarter 2001. The CLEC and ISP segments continued the
trends of positive EBITDA, while operating cash flows for the
ILEC were lower, consistent with revenues. ILEC operating cash
flow margin remained strong at 60%.
NTELOS Inc. (Nasdaq: NTLO) is an integrated communications
provider with headquarters in Waynesboro, Virginia. NTELOS
provides products and services to customers in Virginia, West
Virginia, Kentucky, Tennessee and North Carolina, including
wireless digital PCS, dial-up Internet access, high-speed DSL
(high-speed Internet access), and local and long distance
telephone services. Welsh, Carson, Anderson & Stowe, a New York
investment firm with $12 billion in private capital, is a
leading shareholder of NTELOS. Detailed information about NTELOS
is available online at http://www.ntelos.com
NATIONAL STEEL: Minnesota Power Wants $1M Immediate Cash Deposit
----------------------------------------------------------------
According to Richard D. Anderson, Esq., at Briggs and Morgan, in
St. Paul, Minnesota, National Steel Corporation and its debtor-
affiliates have defaulted in the payment of certain utility
charges payable to Minnesota Power.
Minnesota Power informs the Court of their intention to:
(i) demand adequate assurance from the Debtors in the form of
an immediate cash deposit in the amount of $1,100,000.
This amount does not exceed one half of the monthly
utility charge incurred by the Debtors to Minnesota Power
for the month of March 2002;
(ii) retain the deposit demanded pending further order of the
Court or until such time as Minnesota Power may be
required to return the deposit under applicable state law
or regulation;
Mr. Anderson further relates that this demand should not be
construed as a waiver of Minnesota Power's rights and remedies
under any executory contract. They reserve their right to file
an appropriate motion to compel the Debtors to honor the demand.
(National Steel Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
NATIONAL STEEL: First Quarter 2002 Net Loss Tops $53 Million
------------------------------------------------------------
National Steel Corporation (OTC Bulletin Board: NSTLB), which
filed for reorganization under Chapter 11 of the Bankruptcy Code
on March 6, 2002, reported a net loss of $53.2 million for the
first quarter of 2002. This compares to a net loss of $108.7
million for the first quarter of 2001. Net sales for the current
quarter were $604.0 million, an increase of 2% from the first
quarter of 2001, while shipments for the quarter of 1,395,000
tons were essentially equal to the year-ago quarter.
A $53.2 million alternative minimum tax refund as a result of
the Job Creation and Worker Assistance Act of 2002 positively
impacted the current quarter. The first quarter of 2001 was
positively impacted by $17.2 million due to the cumulative
effect of a change in the method of accounting for investment
gains and losses on pension assets in the calculation of
periodic pension cost and by $26.0 million from income generated
by the sale of long- term natural gas contracts, which was
partially offset by the recognition of $25.1 million in non-cash
tax expense in order to reduce the deferred tax asset on the
balance sheet.
First quarter 2002 operating results improved by approximately
$27 million over the same period of 2001 after excluding the $26
million gain mentioned above. This 25% improvement in our
operating results was achieved through lower natural gas and
electricity prices, improved yields and material usage at our
facilities and lower spending on labor, benefits and repair and
maintenance expenses as the Company is beginning to realize the
full benefits of the cost reduction programs put in place during
2001.
During the first quarter of 2002, the Company achieved a $14 per
ton improvement in its average selling prices from the first
quarter of last year. Steadily improving spot market pricing for
its products and an improvement in the value-added product mix
to 58% of total shipments contributed to this improvement.
"I am very pleased by the response of our employees, vendors and
customers and their continued support of our company after the
Chapter 11 filing," said Hisashi Tanaka, chairman and chief
executive officer. "Our vendors are returning us to more normal
payment terms, our customers continue to order our products,
with some increasing their levels of purchases from us, and our
employees have stabilized the business and are focusing on
continuing to reduce costs, increasing our liquidity and
improving customer satisfaction. Our liquidity is strong, which
will provide us with the necessary time to develop our
reorganization plan," he concluded.
Financial Position & Liquidity
Total liquidity from cash and availability under our Debtor In
Possession (DIP) credit facility, after deducting for all
required reserves, amounted to $187 million at March 31, 2002 as
compared to $32 million at December 31, 2001. The significant
improvement in our liquidity position resulted from a number of
factors including the $53 million tax refund previously
mentioned, improved availability under the DIP credit facility,
lower required reserves under the DIP credit facility as
compared to the previous credit facility, cash generated from
the continued reduction in inventory levels and the non- payment
of certain obligations as a result of our bankruptcy filing all
of which was partially offset by higher levels of accounts
receivable.
During the first quarter of 2002, the Company funded $3.8
million in capital expenditures. For the year 2002, the Company
expects to continue to spend at low levels with total spending
expected to be less than $60 million.
Other Matters
Customer satisfaction continues to be one of National Steel's
highest priorities. This was evidenced by the Company's recent
receipt of two distinguished customer awards:
During the first quarter of 2002, National Steel received
Toyota's Certificate of Achievement award, being recognized for
quality performance during the year 2001.
On May 17, 2002, John Deere will present National Steel and
the Granite City Division with its key supplier award for our
performance during 2001.
Outlook
General economic conditions in the markets we serve continue to
slowly improve. The Company is experiencing an increase in
demand for its products and steadily increasing selling prices.
Average selling prices are expected to increase 8% to 10% in the
second quarter 2002 over the levels achieved in the first
quarter of 2002 as a result of the increased demand, positive
impacts from the import tariffs and a continuing improvement in
the product mix of shipments. Forecasted shipments are expected
to decrease by 4% to 7% during the second quarter 2002 from
first quarter 2002 levels due to planned maintenance outages at
our production facilities. The Company continues to focus its
efforts on managing liquidity with the expectation of being cash
neutral during the second quarter of 2002.
Headquartered in Mishawaka, Indiana, National Steel Corporation
is one of the nation's largest producers of carbon flat-rolled
steel products, with annual shipments of approximately six
million tons. National Steel employs approximately 8,300
employees. Please visit the Company's Web site at
http://www.nationalsteel.comfor more information on the Company
and its products and facilities.
National Steel Corp.'s 9.875% bonds ude 2009 (NSUS09USR1),
DebtTraders reports, are quoted at about 34. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NSUS09USR1
for real-time bond pricing.
NATIONSRENT INC: Citicapital Seeks Prompt Decision on Leases
------------------------------------------------------------
CitiCapital Commercial Leasing Corporation and its affiliate,
Citicorp Del-Lease, Inc., ask the Court to compel NationsRent
Inc., and its debtor-affiliates to assume or reject their three
lease agreements and to pay post-petition obligations claims.
Both parties also seek to lift the automatic stay and seek the
allowance and payment of administrative claims. Indiana-based
CitiCapital, formerly known as Associates Leasing, Inc., and
Citicorp, a Delaware corporation, leased equipment to the
Debtors under these respective lease agreements:
Lease Property Terms
------------- -------------- -------------------------
8/25/98 86 pcs. Quarterly lease payment of
CitiCapital of equip. $474,789.
Lease As of petition date,
outstanding balance due under
the lease was $7,139,105.
8/3/99 269 pcs. Quarterly lease payments of
CitiCapital of equip. $389,520.
Lease As of petition date, the
Outstanding balance due under
the lease was $7,799,269.
Citicorp 535 pcs As of petition date, the
Lease of equip. monthly rental for November 26,
2001 of $421,704 was due but
unpaid and the gross
outstanding balance due on the
lease was $17,156,810.
John R. Weaver, Jr., Esq., at Farr, Burke, GambaCorta & Wright
P.C. in Wilmington, Delaware, relates that the terms under each
of the leases provide that, in the event of default, a lessor
may terminate the lease and take possession of the equipment.
All items of equipment under the three leases are mobile, and
can be damaged or subjected to sudden catastrophic loss as well
as depreciation or loss in value through normal use. It must be
regularly maintained in accordance with the manufacturer's
recommendations to avoid excessive wear and tear.
Mr. Weaver reminds the Court that failure to perform obligations
under a lease may be sufficient grounds for compelling
assumption or rejection. Since filing, the Debtors have not paid
rental dues under the lease agreements. Moreover, upon
information and belief, the Debtors have sold certain of the
equipment without consent of CitiCapital and Citicorp and failed
to pay over to them the proceeds or otherwise account for the
sale proceeds.
Mr. Weaver asks the Court that, in the event the Debtors assume
one or more of the leases, the Debtors should be directed to pay
all arrearages within 10 days upon entry of an order approving
such assumption. Otherwise, if the Debtors opt to reject one or
more of the lease agreements, the Debtors should be directed to
return the equipment within 10 days upon entry of Court order
permitting such rejection. In any case, the Debtors must be
directed to pay the rentals and all sums owing until the
equipment is returned.
To the extent that the stay applies, Mr. Weaver argues that
ample cause exists and has been established by CitiCapital and
Citicorp to lift the stay and to allow them recovery of the
equipment and enforce their state law remedies. The Debtors
continue to benefit from the equipment but are refusing to pay
rent or provide adequate protection to CitiCapital's and
Citicorp's interests on the equipment. Moreover, the Debtors
have not compensated CitiCapital and Citicorp for the
depreciating value of the equipment, thereby placing
CitiCapital's and Citicorp's equipment in jeopardy. (NationsRent
Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
NETIA HOLDINGS: Posts Improved Results for First Quarter 2002
-------------------------------------------------------------
Netia Holdings (NASDAQ: NTIAQ; WSE: NET), Poland's largest
alternative provider of fixed-line telecommunications services,
announced unaudited financial results for the first quarter of
2002.
Financial Highlights:
-- Revenues for Q1 2002 amounted to PLN 146.6m (US$35.5m),
a year-on-year increase of 19%.
-- EBITDA for Q1 2002 amounted to PLN 30.1m (US$7.3m), a
year-on-year increase of 99%. EBITDA margin for Q1 2002 reached
20.5%.
-- Cash at March 31, 2002 amounted to PLN 389.2m
(US$94.2m), excluding restricted investments of PLN 49.1m
(US$11.9m).
-- Consolidated shareholders' equity at the end of Q1 2002
was negative PLN 588.7m or US$142.5m.
-- Restructuring Agreement with regard to economic terms
of debt restructuring was reached and signed by Netia, Telia AB,
Warburg Pincus, certain financial creditors and the Ad Hoc
Committee of Noteholders on March 5, 2002. The terms of the
restructuring include the exchange of Netia's existing Notes and
swap claims for new notes with an aggregate principal amount of
EUR 50m and ordinary shares representing 91% of our share
capital immediately post-restructuring. The existing Netia
shareholders would retain 9% ownership and receive warrants to
acquire shares representing 15% of Netia's post-restructuring
share capital (after the provision of shares representing 5% of
our ordinary share capital for a key employee stock option
plan).
- All necessary share and warrant issuances with
regard to Netia's reorganisation have been approved by its
shareholders. On April 5, 2002, Netia filed with the Polish
Securities and Exchange Commission a prospectus relating to the
issuance and registration of shares in relation to the
Restructuring Agreement.
- Consents from Holders of over 90% of the Notes to
the terms of the restructuring were received as of March 31,
2002.
- Arrangement proceeding in Poland was opened with
respect to Netia Telekom S.A., one of Netia's subsidiaries, on
April 22, 2002. Netia is currently awaiting the opening of
proceedings for Netia Holdings S.A. and another of its
subsidiaries, Netia South Sp. z o.o.
Operational Highlights:
-- Netia's nationwide backbone network stretched to 3,300
km as of March 31, 2002.
-- Subscriber lines amounted to 342,288 net of churn and
disconnections, a year-on-year increase of 4%.
-- Business customer lines amounted to 100,563, a year-on-
year increase of 22%. The business segment reached 29.4% of
total subscriber lines while year-to-date revenues from business
customers accounted for 57.1% of telecom revenues as of March
31, 2002.
-- Average revenue per line increased by 8% to PLN 130 in
March 2002, compared to PLN 120 in March 2001.
-- An integrated customer relationship management (CRM)
system "CORE" was launched on April 7, 2002 as the first
integrated CRM solution of any Polish telecom operator.
-- Headcount decreased to 1,362 at March 31, 2002 from
1,536 at December 31, 2001, as a result of management's program
of cost reduction initiated in August 2001.
Other Highlights:
-- Changes within Netia's Supervisory Board. Effective
March 12, 2002 Przemyslaw Jaronski was elected to Netia's
Supervisory Board, in order to represent the Ad Hoc Committee of
Noteholders.
Kjell-Ove Blom, Acting CEO and Chief Operating Officer
commented: "Our cost savings and increased efficiency program is
producing results and has contributed to our EBITDA growth and
margin year-on-year. Netia also continues its track record of
innovation with new product launches such as IN services and
introduction of the first integrated CRM system of any Polish
operator, which will contribute to future operational efficiency
and customer service improvements.
"Our efforts have been focused on Netia's debt restructuring
process, completion of which would position us to continue to
execute our long-term strategy as Poland's largest alternative
telecommunications operator.
"In the quarter Netia experienced a slight overall decline of
0.4% in ringing lines. This is mainly the result of churn by
customers impacted by the deterioration of the Polish economy
and customers moving outside of Netia's coverage as well as low
sales to residential customers. In addition, we refrained from
launching any new sales campaigns during the quarter, given the
uncertainties that prevailed prior to the consensual agreement
with our bondholders on Netia's new capital structure.
Nevertheless, we achieved a net increase in business customers,
which now represent 29.4% of subscriber lines and 57.1% of
telecom revenues, reflecting our intensified focus on corporate
and SME markets."
Avi Hochman, Chief Financial Officer of Netia, added: "Netia has
achieved substantial 99% year-on-year growth in EBITDA and an
EBITDA margin of 20.5% as our cost reduction and increased
efficiency program makes headway. Both revenues and EBITDA saw
modest increases compared to the fourth quarter. Between Q1 2002
and Q4 2001 our cash position decreased by PLN 97.7m due to the
settlement of a swap transaction with JPMorgan Chase Bank, the
purchase of fixed assets and the restructuring costs.
"More importantly, Netia's debt restructuring proposal has now
been accepted by over 90% of the bondholders. We are moving to
implement the swap of [equity for debt]. This will establish a
solid capital structure and foundation to enable Netia's future
healthy development."
OMEGA CABINETS: S&P Withdraws Ratings After Fortune Acquisition
---------------------------------------------------------------
On May 3, 2002, Standard & Poor's raised its subordinated debt
rating for kitchen and bathroom cabinet maker, Omega Cabinets
Ltd., to 'A-' from 'B'. At the same time, Standard & Poor's has
withdrawn its 'BB-' corporate credit and 'BB' bank loan ratings
for Omega. Ratings for Waterloo, Iowa-based Omega were removed
from CreditWatch, where they were placed on April 5, 2002.
The rating actions follow Fortune Brands' recent acquisition of
Omega that was completed on April 12, 2002. Fortune Brands
announced plans to eliminate Omega's outstanding public debt,
and Omega's intention to exercise its option to redeem the
outstanding senior subordinated notes due 2007 totaling $100
million. Standard & Poor's will withdraw the rating on Omega's
notes subsequent to their redemption. Omega's bank debt has been
repaid.
Ratings List To From
Outlook Stable CreditWatch Positive
* Corporate credit No rating BB-
* Senior secured No rating BB
* Subordinated debt A- B
P-COM INC: Board OKs Plan to Extend Convertible Notes' Maturity
---------------------------------------------------------------
P-Com, Inc. (Nasdaq:PCOM), a worldwide provider of wireless
telecom products and services, said that its Board of Directors
has approved a plan to reset the conversion price of its 4-1/4
convertible subordinated notes as part of a previously announced
initiative to extend the maturity of $29.3 million in company
debt.
The approval by P-Com's Board of Directors authorizes note
holders to convert P-Com's 4-1/4 convertible subordinated notes
to common stock at $0.50 cents per share. Previously, the notes
were convertible into P-Com common stock at a conversion price
of $24.73 per share. The reduction is effective May 5, 2002 and
will remain in effect until further action by the Board of
Directors, but at least 20 days.
The amended conversion price coincides with the Company's
efforts to extend the obligations of its outstanding notes by a
minimum of three years and under certain conditions, up to five
years. This is an extension of November 2002 maturity under the
existing note obligations to November 2005 or 2007. In
connection with a restructuring agreement with $21.2 million of
the $29.3 million of notes outstanding, the conversion price
reduction is being implemented. The conversion applies to the
entire $29.3 million in P-Com debt.
"P-Com continues to make progress in renegotiating its debt and
reducing cash outlays as part of its previously announced goal
to return to cash flow positive by the end of 2002," said
Chairman George Roberts.
P-Com, Inc. develops, manufactures, and markets point-to-
multipoint, point-to-point, spread spectrum wireless access
systems to the worldwide telecommunications market, and through
its wholly owned subsidiary, P-Com Network Services, Inc.,
provides related installation support, engineering, program
management and maintenance support services to the
telecommunications industry in the United States. P-Com
broadband wireless access systems are designed to satisfy the
high-speed, integrated network requirements of Internet access
associated with Business to Business and E-Commerce business
processes. Cellular and personal communications service (PCS)
providers utilize P-Com point-to-point systems to provide
backhaul between base stations and mobile switching centers.
Government, utility, and business entities use P-Com systems in
public and private network applications. For more information
visit http://www.p-com.comor call 408/866-3666.
PACIFIC GAS: Court Approves Supplemental Pacts with 17 QFs
----------------------------------------------------------
Pursuant to the order of December 21, 2001 issued by the Court
approving "Supplemental Agreements" between Pacific Gas and
Electric Company and several qualifying facilities, the Debtor
sought and obtained the Court's authority to enter into
Supplemental Agreements with 17 Qualifying Facilities (QFs), by
way of two separate Stipulations and Orders:
QF Name Pre-Petition Amount
------- -------------------
1. Mendota Biomass Power $9,739,501
2. Dynamis Cogen $3,884,475
3. Bio-Energy Partners $1,946,988
4. Diamond Walnut Growers, Inc. $1,351,673
5. Zond Windsystems, Inc. $666,626
6. International Turbine Research $533,143
7. Wineagle Developers $190,751
8. Humboldt Bay MWD $128,934
9. Haypress Hydroelectric, Inc. (LWR) $82,900
10. OWL Companies $67,913
11. Haypress Hydroelectric, Inc. (MDL) $55,985
12. Cedar Falt Hydro. $43,403
--------------
$18,692,292
1. Bailey Creek Hydro $65,714
2. Mid Parker Power Plant $32,139
3. Mid Fairfield Power Plant $0
4. Mid Canal Creek Power Plant $0
5. Solano Co. Government Center $8,662
6. Tom Benninghoven $4,189
7. Occidental Power Company $3,046
--------------
$113,750
The Supplemental Agreements are substantially similar to those
approved in the December 21 Order, except for the following
additional provisions.
-- the QF's waiver of its entitlement for semi-monthly (as
opposed to monthly) payment for deliveries of energy under the
QFs' Power Purchase Agreements (PPAs);
-- the QF's withdrawal, within seven days of a bankruptcy
court order approving the Supplemental Agreements, of any claims
it filed in the bankruptcy case, other than the Section 503
administrative expense claims provided for in the Supplemental
Agreements with respect to PG&E's prepetition defaults (the
Payables) under the PPAs and interest thereon or other claims
specifically reserved in the Supplemental Agreements; and
-- the QF's representation that it is the sole holder of
all right, title and interest to the Payables, and that in the
event it assigns any interest in the Payables to a third-party
(the transferee), it will (i) forward any payments of Payables
to the transferee; and (ii) indemnify PG&E from any claims by
the transferee to collect the Payables from PG&E;
-- the payment of certain QFs' or Assignees' Payables, in
amounts under $100,000 each, in a single payment, as opposed to
twelve equal monthly payments. (Pacific Gas Bankruptcy News,
Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900)
PENN SPECIALTY: Exclusive Period Stretched to September 6
---------------------------------------------------------
By order of the U.S. Bankruptcy Court for the District of
Delaware, Penn Specialty Chemicals, Inc. obtained an extension
of its exclusive periods. The Court gives the Debtor, through
July 8, 2002 the exclusive right to propose and file a plan of
reorganization and until September 6, 2002 to solicit
acceptances of that Plan.
Penn Specialty, one of the world's largest suppliers of
specialty chemicals THF and PTMEG, filed for chapter 11
protection on July 9, 2001, in the U.S. Bankruptcy Court for the
District of Delaware. Deborah E. Spivack, Esq., at Richards,
Layton & Finger, in Wilmington, Delaware, represents the company
in its restructuring effort.
PHASE2MEDIA: Wins Approval to Stretch Exclusivity through May 31
----------------------------------------------------------------
By order of the U.S. Bankruptcy Court for the Southern District
of New York, Phase2Media, Inc. obtained an extension of its
exclusive periods. The Court gives the Debtor, until May 31,
2002 the exclusive right to file their plan of reorganization
and until July 31, 2002 to solicit acceptances of that Plan.
Phase2Media, Inc., an online advertising, sales and marketing
company, filed for Chapter 11 protection on July 18, 2001.
Harold D. Jones, Esq., at Gersten Savage & Kaplowitz, represents
the Debtor in its restructuring effort. When the Company filed
for protection from its creditors, it listed $18,057,000 in
assets and $19,672,000 in debts.
PILLOWTEX CORP: Court OKs Russell Reynolds as Search Consultant
---------------------------------------------------------------
Pillowtex Corporation, and its debtor-affiliates obtained the
Court's authority to retain and employ Russell Reynolds
Associates as their search consultant, nunc pro tunc to January
25, 2002, to assist them in hiring a Chief Executive Officer.
Russell Reynolds will also assist the Debtors in identifying
candidates for director positions on the Board of Directors of
the Reorganized Debtors.
Russell Reynolds will be compensated for their services for:
(i) the Chief Executive Officer search, a fee to be determined
by the Board and the Secured Lenders participating in the
selection process that is no less than $300,000 nor more
than $500,000; and
(ii) the director candidates search, a fee of $75,000 for the
first director candidate recruited and $50,000 for each
subsequent director candidate recruited.
Bobbie Lenga, a partner in Russell Reynolds Associates, reports
that with respect to certain potential director candidates that
the Debtors or certain of the Secured Lenders have already
identified, Russell Reynolds will:
(i) solicit these individuals;
(ii) provide the Debtors and Secured Lenders with a brief of
the credentials and background for each of these potential
candidates; and
(iii) do selected confidential referencing on them where
appropriate for a flat fee of $7,500 each and
reimbursement of expenses.
Moreover, with respect to expenses for the Chief Executive
Officer and director searches, the Debtors will reimburse
Russell Reynolds for normal out-of-pocket recruiting-related
expenses such as travel and meals. The Debtors will pay a fixed
amount for telephone, facsimile, messenger, duplication and
other communications costs of $5,400 for the Chief Executive
Officer search, $5,400 for the first director candidate search
and $2,700 for each additional director search.
In addition, for the Chief Executive Officer search, the Debtors
are to pay Russell Reynolds a $300,000 retainer, all of which
will be invoiced once the Court enters an order authorizing
Russell Reynolds's retention. (Pillowtex Bankruptcy News, Issue
No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900)
POLAROID CORP: Lego Seeks Stay Relief to Setoff Obligations
-----------------------------------------------------------
Lego California, Inc. asks the Court to lift the automatic stay
so that Polaroid Corporation, its debtor-affiliates and Lego can
setoff mutual pre-petition obligations.
Julie A. Manning, Esq., at Shipman & Goodwin, LLP, in Hartford,
Connecticut, tells Judge Walsh that on January 1, 1999, the
Debtors and Lego entered into a Sponsorship Agreement where the
Debtors would have certain exclusive product or service
marketing, advertising and promotional rights for all activities
in and around the Legoland California Park. In exchange, the
Debtors:
(a) pay the $2,000,000 sponsorship fee to Lego, payable in
equal installment of $400,000 annually on or before
January 1 of each year;
(b) conduct two promotions each year with a value of $25,000
per promotion;
(c) give Lego a 20% share of the gross sales revenues for
imaging stations throughout the Park that take photographs
of Park guests while they enjoy certain attractions;
(d) give Lego a revenue share from a kiosk or cart at the
Park that offers mock driver's licenses.
On January 11, 2002, the Court approved the rejection of the
Agreement with the Debtors still owing Lego approximately
$1,350,000, plus the share on the revenue from the imaging
stations and driver's license kiosk.
However, Ms. Manning says that Lego also has a payable to the
Debtors of $107,000 for film and cameras the Debtors delivered
to Lego between April 2001 and August 2001.
Pursuant to Section 362(d)(1) of the Bankruptcy Code, Ms.
Manning contends that automatic stay relief should be granted to
allow the setoff of the Parties' mutual pre-petition
obligations.
Also, Ms. Manning assets that the setoff is warranted under
Section 553 of the Bankruptcy Code because all the obligations
at issue arose prior to the Petition Date and have the requisite
mutuality for the right to setoff.
Without the setoff, Ms. Manning claims, Lego would be
"irreparably and unreasonably harmed" because Lego would have to
pay the Debtors the $107,000 but will not receive payment of
what is due to them in return. (Polaroid Bankruptcy News, Issue
No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900)
POLAROID CORP: Court Sets Asset Sale Hearing for June 28, 2002
--------------------------------------------------------------
Polaroid Corporation said that the U.S. Bankruptcy Court has
approved procedures for the proposed sale of its business to an
investor group led by One Equity Partners -- the private equity
arm of Bank One Corporation (NYSE: ONE) -- or to a bidder with a
higher or better offer. The court has set Friday, June 28, 2002,
for a final hearing on the sale.
Gary T. DiCamillo, Polaroid chairman and chief executive
officer, said, "This is an important milestone in our plan to
emerge from Chapter 11. We remain committed to securing a strong
buyer for the company to maximize value for our creditors and to
create a new beginning for Polaroid as an ongoing business."
Polaroid Corporation is the worldwide leader in instant imaging.
The company supplies instant photographic cameras and films;
digital imaging hardware, software and media; secure
identification systems; and sunglasses to markets worldwide.
Additional information about Polaroid is available on the
company's Web site at http://www.polaroid.com
PRANDIUM INC: Wins Favorable Vote on Prepackaged Reorg. Plan
------------------------------------------------------------
Prandium, Inc. (OTC Bulletin Board: PDIM), said that it and its
wholly-owned subsidiary, FRI-MRD Corporation, received an
overwhelming majority approval from the holders of FRI-MRD's 15%
Senior Discount Notes and 14% Senior Secured Discount Notes and
Prandium's 9-3/4% Senior Notes to proceed with the Company's
prepackaged reorganization plan. Earlier Monday, Prandium and
FRI-MRD filed voluntary petitions for reorganization under
Chapter 11 of the U.S. Bankruptcy Code to gain final approval of
the prepackaged plan. The filing was made in the U.S. Bankruptcy
Court in Santa Ana, California. Because a sufficient number of
its voting noteholders agreed to accept the plan, the Company
expects to emerge from Chapter 11 quickly.
"[Mon]day's legal filing is a significant step for Prandium,"
said Kevin Relyea, Prandium's Chairman and Chief Executive
Officer. "This debt restructuring and exchange is the right step
for Prandium and will create a capital structure that management
believes will allow the Company to focus on its core businesses
and grow."
The Chapter 11 filing includes only Prandium and its wholly
owned subsidiary, FRI-MRD Corporation. Prandium's operating
subsidiaries are not part of, nor impacted by, the filing. The
Company will conduct business as usual with its customers,
employees and suppliers and maintain its existing cash
management systems through its non-debtor subsidiaries. Under
the reorganization plan, the Company's unsecured creditors
(other than noteholders), including its trade creditors, will be
paid in full, in the ordinary course of business.
Monday's action follows the Company's April 8, 2002 announcement
regarding the agreements in principle with respect to supporting
the reorganization plan with an authorized representative of
holders of a majority of FRI-MRD's 15% Senior Discount Notes and
14% Senior Secured Discount Notes and with certain members of an
informal group who hold in excess of 40% of Prandium's 9-3/4%
Senior Notes.
"Prandium has improved its operational performance over the last
year and is now beginning to show stronger EBITDA results,"
Relyea said. "Our team has remained committed throughout the
reorganization process, and I am proud of their ability to
remain focused on our vision. I am also thankful for the support
our vendors have shown us."
Under the plan of reorganization, current equity securities of
Prandium, Inc. and all of Prandium's 10-7/8% Senior Subordinated
Discount Notes will be cancelled for no consideration;
Prandium's 9-3/4% Notes will be cancelled in exchange for new
Prandium equity; the FRI-MRD 14% Notes will be exchanged at a
discount for cash and the FRI-MRD 15% Notes will be exchanged at
a discount for cash and new FRI-MRD 12% Notes which will require
no cash principal and interest payments until January 2005. The
Company's Offering Memorandum and Disclosure Statement, which
was approved by the voting noteholders, was filed with the Court
today with the Chapter 11 petitions and describes the proposed
distributions. Upon confirmation of the plan by the court, a new
capital structure will relieve the Company of significant debt
service requirements, allowing it to focus the Company's
resources on the growth of its businesses.
The Company's ability to complete the restructuring is subject
to the satisfaction of certain conditions, including finalizing
the terms of a $15 million line of credit with its Senior
Lender.
Prandium operates a portfolio of full-service and fast-casual
restaurants including Chi-Chi's, Koo Koo Roo, and Hamburger
Hamlet. Prandium, Inc. is headquartered in Irvine, California.
To contact the company call (949) 863-8500, or link to
http://www.prandium.com
PRECISION SPECIALTY: Committee Wins OK to Employ DKW as Counsel
---------------------------------------------------------------
The Official Committee of Unsecured Creditors of Precision
Specialty Metals, Inc. obtains permission from the U.S.
Bankruptcy Court for the District of Delaware to employ DKW Law
Group PC as its Counsel, effective April 1, 2002.
The Committee initially chose to employ Reed Smith, LLC as its
counsel but the firm withdrew the employment effective March 31,
2002.
The professional services that DKW will render to the Committee
are:
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 will pay DKW its customary hourly rates as:
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 OKs Held Kranzler Engagement as Accountants
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gives its
approval to Printing Arts America, Inc. and its debtor-
affiliates to tap the services of Held, Kranzler, McCosker &
Pulice, LLP as accountants, nunc pro tunc to February 28, 2002,
for certain tax and auditing services.
Held Kranzler will perform a limited scope audit of the Debtors'
statements of net assets available for plan benefits of the
Printing Arts America, Inc. 401(k) Retirement Plan as of
December 31, 2001 and to prepare the Retirement Plan's Form
5500, including required schedules.
Held Kranzler will also prepare the Debtors' December 31, 2001
year-end federal consolidated tax return and state corporate tax
returns.
The Debtors agree to compensate Held Kranzler:
i) For the 401(k) Services, the Debtors will pay Held
Kranzler a $2,500 retainer upon court approval. In
addition, Held Kranzler will charge for its services on
an hourly basis, at an average hourly rate of $150. The
total amount charged shall not exceed $12,500;
ii) For the Tax Return Services, the Debtors will pay Held
Kranzler a $10,000 retainer upon approval of this
Application. In addition, Held Kranzler will charge for
its services on an hourly basis, at an average hourly
rate of $150. The total amount charged shall not exceed
$92,500.
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 listed estimated assets and
debts of more than $100 million.
PROVIDIAN FIN'L: Reaches Pacts to Sell $2.6BB Higher Risk Assets
----------------------------------------------------------------
Providian Financial Corporation (NYSE: PVN) announced net income
for the first quarter of 2002 of $10.0 million. The quarter's
results include an after-tax gain of approximately $242 million
from the sale of the Providian Master Trust, an after-tax loss
of approximately $240 million on the higher-risk portfolio sale
and approximately $17 million in restructuring related charges
taken during the quarter. Details of the asset sales and
associated events are outlined below. Net income from continuing
operations (excluding discontinued international operations) for
the first quarter was $6.8 million. The results for the quarter
compare to reported net income of $230.5 million for the first
quarter of 2001.
"I am pleased with the continued progress we are making to
restructure the Company," said Joseph Saunders, Providian's
president and chief executive officer. "In late October we
outlined our five-point strategic plan and to date we have
accomplished many of the initiatives set forth in the plan. We
certainly have more work to do, but I am confident we are on the
right course. The entire management team is very encouraged by
the Company's accomplishments thus far and the opportunities we
see before us."
During the first quarter, the Company originated approximately
460,000 new customer accounts the majority of which were in the
middle market. Marketing programs initiated during the latter
part of the quarter reflected the Company's transition to a
balanced strategy across the broad middle to prime spectrum.
The Company's first quarter financial results reflect actions
taken by its bank subsidiaries to reduce their credit risk
profile, improve the focus on the middle and prime sectors and
further strengthen the balance sheet. The actions taken during
the quarter include:
-- Completion of the sale of the Providian Master Trust to
a subsidiary of JPMorgan Chase on February 5, 2002. This
transaction resulted in cash proceeds of approximately $2.8
billion and a first quarter after-tax gain of approximately $242
million. During the fourth quarter of 2001, loan loss reserves
related to these assets were reduced by approximately $60
million after-tax as a result of designating these assets as
held for sale.
-- The announcement on April 15, 2002 by the Company that
it had reached agreements with two limited liability companies
formed by affiliates of Goldman, Sachs & Co., Salomon Smith
Barney, CardWorks, Inc. and CompuCredit Corporation to initiate
a structured sale of approximately $2.6 billion in higher risk
assets. Accordingly, at the end of the first quarter 2002, the
Company designated these loans as held for sale or
securitization and reduced their net book value, net of the
associated allowance, to reflect the anticipated sales price.
This resulted in an after-tax loss of approximately $240 million
recognized during the first quarter 2002.
-- Continuation of workforce reduction during the quarter
resulting in the elimination of approximately 800 jobs and an
associated charge in the first quarter of approximately $17
million. Since announcing its five-point strategic plan in
October 2001, the Company has reduced the total workforce by
approximately 24%.
Additional announcements made during the first quarter 2002
include:
-- On February 20, 2002, the Company announced that it had
entered into an agreement to sell its United Kingdom credit card
operations to Barclaycard, a division of Barclays Bank PLC. This
sale was closed on April 18, 2002 and generated additional
liquidity of over $600 million. The after-tax gain of
approximately $60 million from the sale will be reflected in the
Company's second quarter 2002 results.
-- On March 7, 2002, the Company announced an agreement to
sell its Argentine operations to a local investor group in
Argentina. After charges recognized in the fourth quarter of
2001, the Company expects to record a modest gain on the sale.
The sale is contingent upon local regulatory approval and is
expected to close in the second quarter of 2002.
Capital and Liquidity
The Company ended the quarter with total capital of $2.0 billion
and allowances for loan losses of $1.4 billion, which on a
combined basis represent 41% of reported loans and 17% of
managed receivables. Cash and investments totaled over $5.6
billion at the end of the first quarter, representing over 25%
of total managed receivables.
"As a new member of the management team at Providian I am very
encouraged by the financial position of the Company," said
Anthony Vuoto, Providian's vice chairman and chief financial
officer. "The Company is in a very solid position with regard to
its capital, reserves and liquidity. Additionally, our liquidity
will be further bolstered upon the expected completion of the
higher-risk asset sale in the second quarter. I believe that the
Company has established a solid financial foundation upon which
to build the new Providian."
The Company's principal banking subsidiaries remain on track
with the requirements of the Capital Plan. For the first quarter
of 2002, our banking subsidiaries are required to achieve total
risk-based capital ratios at "well capitalized" levels as shown
on their Call Reports, and Providian National Bank is required
to achieve a total risk-based capital ratio of at least 8% after
applying increased risk weightings consistent with the Expanded
Guidance for Subprime Lending Programs ("Subprime Guidance"). As
of March 31, 2002, Providian National Bank and Providian Bank
exceeded the 10% "well capitalized" level with total risk-based
capital ratios of 12.75% and 13.52%, respectively. After
application of the Subprime Guidance risk weightings, Providian
National Bank exceeded the 8% threshold with a total risk-based
capital ratio of 9.46%.
Financial Results
The Company ended the first quarter with $22.1 billion in total
managed credit card loans and 15 million accounts. The sale of
the Providian Master Trust on February 5, 2002 reduced the
Company's managed portfolio by approximately $8 billion of
credit card loans and 3.3 million accounts.
Total managed revenue for the first quarter 2002 was $2.04
billion and included the gain from the sale of the Providian
Master Trust during the quarter. The managed net interest margin
on loans was 14.45% for the first quarter 2002 and benefited
from the sale of the lower margin loans in the Providian Master
Trust.
The managed net credit loss rate and the 30+ day delinquency
rate were consistent with the Company's expectations and ended
the first quarter 2002 at 15.05% and 10.22%, respectively. The
sequential increase in the managed net credit loss rate and the
30+ day delinquency rate were attributable to the continued
seasoning of the loan portfolio and were impacted by the sale of
the lower loss rate receivables in the Providian Master Trust.
The Company's total loan loss reserve ended the quarter at $1.41
billion, representing 17.06% of reported loans.
The Company continued to build its customer franchise by
investing $108.7 million in solicitation and advertising during
the first quarter. This compares to $144.6 million spent on
solicitation and advertising in the comparable period of the
prior year. Other non-interest expense (excluding solicitation
and advertising) was $438.4 million for first quarter 2002 and
included approximately $17 million in restructuring charges.
Additionally, the Company incurred expenses associated with the
interim servicing of the Providian Master Trust receivables that
are subsequently reimbursed by JPMorgan Chase and recognized by
the Company as non-interest income. The quarter's results
compares to non-interest expense (excluding solicitation and
advertising) of $414.9 million in the first quarter of 2001. The
Company expects to realize significant reductions in non-
interest expense upon completion of its interim servicing
obligations for asset sales completed or announced during the
quarter. Additionally, the Company is continuing to identify
various avenues for cost savings and plans to significantly
lower its overall cost structure over the course of 2002.
Strategic Review
Since the Company announced its five-point strategic plan on
October 18, 2001, it has taken the following actions:
-- Hired Joseph Saunders as the Company's President and
Chief Executive Officer
-- Strengthened its executive management team by hiring
Warren Wilcox as Vice Chairman, Planning and Marketing and Susan
Gleason as Vice Chairman, Operations and Systems, Anthony Vuoto
as Vice Chairman, Chief Financial Officer and promoting Jim
Jones to Vice Chairman, Credit and Collections
-- Discontinued all marketing to the standard market
segment, tightened credit line increases across all segments and
selectively re-priced loans that have exhibited increased risk
levels
-- Closed the Henderson, Nevada operations facility,
resulting in annual operating expense savings of approximately
$18 million
-- Completed over $2.8 billion of securitization
transactions
-- Reached an agreement with its regulators for managing
capital and growth
-- Completed the sale of the Providian Master Trust to JP
Morgan Chase
-- Announced the sale of its operations in Argentina (which
has been designated as a discontinued operation)
-- Completed the sale of its credit card operations in the
United Kingdom to Barclaycard, a division of Barclays Bank PLC
-- Announced it has reached agreements to initiate a
structured sale of approximately $2.6 billion of higher-risk
assets
-- Announced total workforce reductions of approximately
24%.
San Francisco-based Providian Financial is a leading provider of
lending and deposit products to customers throughout the United
States. The Company has more than $22 billion in managed
receivables and more than 15 million customers.
PSINET INC: Cisco Pushing for Lease Payment Adequate Protection
---------------------------------------------------------------
As previously reported, Cisco Systems Capital Corporation and
affiliates, asserting entitlement to receive $3,181,407.57 in
rental payments under an equipment lease with PSINet, Inc., and
its debtor-affiliates, filed its Cross-Motion for Adequate
Protection, which was subsequently refiled as a Motion for
Adequate Protection.
In January 11,2002, the Court entered an Order recharacterizing
the Cisco Leases as financing arrangements.
The parties have now agreed to adjourn any proceedings with
respect to the Adequate Protection Motion to determine the
amount and nature of adequate protection payments, if any, that
should be made to Cisco. In the interim, and without prejudice
to either Cisco's assertion that it is entitled to adequate
protection in the form of monthly payments or to the Debtors'
and/or the Committee's right to contest Cisco's assertion, the
parties have agreed to provide Cisco with provisional relief by
way of a Stipulation and Agreement.
The Stipulation, so ordered by the Court, provides for the
following:
1. Cisco's Adequate Protection Motion is adjourned and taken
off the calendar, subject to renewal upon 60 days prior
written notice by Cisco to counsel for the Debtors and
Committee.
2. The Debtors shall grant a provisional lien in favor of Cisco
upon each of the Debtors' following accounts:
(a) the Debtors' main Fleet cash account, no. 008050-8210
(the Concentration Account);
(b) the overnight investment account; and
(c) any account that replaces either the Concentration
Account or the Overnight Account, in the collective
amount of $9,601,959, this amount representing the
adequate protection payment amounts asserted by Cisco
(and disputed by the Debtors and the Committee).
3. On April 1, 2002, and upon the first business day of each
succeeding month during the pendency of this Stipulation,
the Debtors will grant a provisional lien in favor of Cisco
upon such additional monies in Debtors' main cash account as
claimed by Cisco, as adequate protection for the previous
month (the Provisional Periodic Liens). If, however, during
any month the Debtors have returned/abandoned equipment to
Cisco, the dollar amount of adequate protection to be
secured by the next Provisional Periodic Lien -- and of
succeeding Provisional Periodic Liens -- shall be reduced as
set forth in the succeeding paragraph.
4. In determining the amount of the Provisional Periodic Lien
to be granted in favor of Cisco following the Debtors'
return to Cisco or abandonment of some portion of the Cisco
Equipment, the adequate protection amount claimed by Cisco
for the previous month shall be reduced by a fraction, the
numerator of which shall be the purported fair market value
of the returned or abandoned equipment, as claimed by Cisco,
and the denominator of which shall be the purported fair
market value of all of the Cisco Equipment possessed by the
Debtors on the Petition Date.
5. In executing this Stipulation, Cisco, the Debtors and the
Committee reserve all rights, remedies, claims and causes of
action.
6. In the event that the Court later determines, in the context
of the Adequate Protection Motion or otherwise, that Cisco
is not entitled to all or some portion of the adequate
protection claims as to which it has been granted
provisional liens by the terms of this Stipulation, and such
order is not stayed pending appeal, Cisco Stipulates and
agrees that its provisional liens as they relate to such
disallowed amounts, shall be released without further order
of the Court. (PSINet Bankruptcy News, Issue No. 19;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
RSL COM: Hearing on Enterprise Business Sale Set for May 23
-----------------------------------------------------------
UNITED STATES BANKRUPTCY COURT
SOUTHER DISTRICT OF NEW YORK
In re: ) Chapter 11 Cases No.
RSL COM PRIMECALL, INC., and ) 01-11457 and
RSL COM U.S.A., INC., ) 01-11469 (ALG)
DEBTORS. ) (Jointly Administered)
NOTICE OF HEARING FOR APPROVAL
OF SALE OF ENTERPRISE BUSINESS
PLEASE TAKE NOTICE that, pursuant to an order of this Court
dated April 11, 2002, a hearing will be held before the
Honorable Allan L. Gropper, United States Bankruptcy Judge, on
May 23, 2002, at the United States Bankruptcy court, Alexander
Hamilton custom House, One bowling Green, New York 10004, at
10:00 a.m., to consider the motion dated April 11, 2002, of RSL
COM U.S.A., Inc., one of the administratively consolidated
debtors herein, for an order (a) authorizing the sale of the
Debtor's enterprise business, in which the Debtor provides data
and long distance service to its customers, which Enterprise
Business includes certain executory contracts and unexpired
leases, free and clear of liens, claims, interest and
encumbrances (except for the liabilities expressly assumed
pursuant to the Asset Purchase Agreement); (b) approving the
Asset Purchase Agreement, dated as of March 25, 2002 between the
Debtor and Counsel Springwell Communications LLC or its
designee; and (c) granting relating relief, all as more fully
set forth in the Motion.
PLEASE TAKE FURTHER NOTICE, that the Motion provides
principally that, subject to Court approval, the Debtor will
sell the Enterprise Business fee and clear of all liens, claims,
interest and encumbrances, if any, upon the terms and conditions
set forth in the Motion, to the Purchaser or to any other
competing bidder that submits a higher and better bid. A closing
is scheduled to take place as soon as practicable following the
entry of an order authorizing the sale of the Enterprise
Business.
PLEASE TAKE FURTHER NOTICE, that the Sale Hearing may be
adjourned from time to time without further notice to creditors
or other parties in interest other than by an oral announcement
of such adjournment in open court. The Motion, and the related
supporting papers, including the definitive asset purchase
agreement and the Bankruptcy Court's order approving bidding
procedures for the sale of the Enterprise Business, may be
obtained for examination or copying from counsel for the Debtor
as listed below.
PLEASE TAKE FURTHER NOTICE, that objections, if any, to the
relief requested in the proposed Sale Order shall be in writing
(with a courtesy copy to the Court) and served (so as to be
received) no later than 5:00 p.m. on May 14,2 002, upon counsel
to the Debtor, LeBoeuf, Lamb, Greene & MacRae, LLP, 125 West
55th Street, New York, NY 10019, Attn: William S. Schaaf;
counsel for the Official Committee of Unsecured Creditors,
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, NY
10038-4982, Attn: Robin E. Keller, Esq.; the United States
Trustee for the Southern District of New York, 33 Whitehall
Street, 21 st Floor, New York, NY 10004, Attn: Paul Kenan
Schwartzberg, Esq.; and counsel to the Purchaser, Robinson,
Silverman, Pearce, Aronsohn & Berman, LLP, 1290 Avenue of the
Americas, New York, NY 10104, Attn: Mark Lichtenstein, Esq.
PLEASE TAKE FURTHER NOTICE, that the Debtor will consider
competitive bids for the Enterprise Business. Information
concerning the assets to be sold is available, upon execution of
a confidentiality agreement and submission of certain financial
information, for inspection through the financial advisors to
the Debtor, Benedetto, Garland & Company, Inc., 1330 Avenue of
the Americas, New York, New York 10019, Attn: Charles B. Mobus,
(212) 424-9700.
Dated: New York, New York
May 2, 2002
LeBOEUF, LAMB, GREENE & MACRAE, LLP.
COUNSEL TO DEBTORS
125 WEST 55 TH STREET
NEW YORK, NY 10019-5389
(212) 424-8000
RAMARRO RESOURCES: Violates TSX Exchange Listing Requirements
-------------------------------------------------------------
Effective at the close of business May 2, 2002, the common
shares of Ramarro Resources Inc. were delisted from TSX Venture
Exchange as the Company no longer meets the Exchange's Listing
Requirements as a result of all the shares of Ramarro Resources
Ltd. being purchased by EOG Resources Canada Company, a wholly-
owned subsidiary of EOG Resources Canada Inc.
RUBBER TECHNOLOGY: Will Lease LA Facility to Recovery Tech.
-----------------------------------------------------------
Rubber Technology International, Inc. (OTCBB:RTEKE) has reached
an agreement with Recovery Technologies Group, Inc., a Delaware
corporation, for the lease of RTI's Los Angeles facility and the
equipment located in that facility.
The decision to lease the Los Angeles facility came after months
of exploration into alternative restructuring of financing and
exploring possible offers for acquisition of the Company. The
Company's attempt to develop alternative financing options to
cover its cash shortfall, which resulted from last year's order
cancellations and postponements, were not successful.
Trevor Webb, President of RTI stated, "Due to our financial
position, we determined that it would be in the Company's best
interest to seek an arrangement to put a stop to our continual
monthly losses. We explored several offers and believe that our
agreement with RTG will prove to be the most favorable option
for RTI, and we look forward to working with them."
The lease agreement allows RTI to eliminate virtually all of the
Company's overhead and creates a steady stream of income. Under
the terms of the agreement, RTI agreed to lease its Los Angeles
crumb rubber production facility to RTG in exchange for $26,000
per month for five years. After five years, RTG has an option to
extend the lease or purchase the Los Angeles facility. In
addition to leasing its crumb rubber facility, RTI is currently
exploring options for venture arrangements in its sand and
gravel operation in Jean, Nevada.
Recovery Technologies Group, Inc. is based in New Jersey and has
tire collection and processing facilities throughout North
America.
SEITEL: Sr. Noteholders Agree to Waive Loan Covenant Violations
---------------------------------------------------------------
Seitel, Inc. (NYSE: SEI; Toronto: OSL) said that, following a
conference call with its Senior Note Holders Monday morning, the
Senior Note Holders have agreed to immediately waive the non-
compliance with the following covenants under its Senior Note
Agreements: For the 1995, 1999 and 2001 series, the interest
coverage ratio, and for the 1999 series, the maximum restricted
investments and restricted payments thresholds. These are the
only covenants under the Senior Note Agreements with which the
Company currently projects non- compliance. The waiver will
continue through May 24, 2002. During the intervening period,
the Company and the Senior Note Holders intend to negotiate
amendments to the Senior Note Agreements sufficient to ensure
future compliance.
Seitel markets its proprietary seismic information/technology to
more than 400 petroleum companies, selling data from its library
and creating new seismic surveys under multi-client projects. It
also selectively participates in oil and natural gas exploration
and development programs.
STANDARD AUTOMOTIVE: Court Okays Post-Petition Financing Pact
-------------------------------------------------------------
Standard Automotive Corporation (AMEX:AJX) said that the
Bankruptcy Court has entered a final order with respect to the
Company's financing arrangement with its current lenders, which
should provide the Company with sufficient liquidity to fund
operations without interruption during the reorganization
process.
The Company has also retained Legg Mason Wood Walker, Inc., the
Baltimore-based investment banking firm to assist it in
identifying potential buyers for the Company or certain of its
subsidiaries. "We are pleased that we were able to come to
agreement with our banks for further post-petition financing,"
said John E. Elliott, II, chairman and chief restructuring
officer. "This funding will provide our vendors with additional
financial assurances that we will continue to pay them in the
ordinary course for goods and services we purchase from them
going forward.
"With our first day orders approved and our post-petition
financing in place we can continue providing our customers with
the high quality products they have come to expect from us and
in the long-term we can focus on the sale or restructuring of
some or all of our subsidiaries which will create greater access
to the financial resources necessary for our subsidiaries to
prosper and grow," Mr. Elliott said.
In addition to the financing that will be provided as a result
of the arrangement the Court approved on Friday, the operating
subsidiary companies are generating profits and the Company's
cash position has improved by approximately $1.5 million since
March 19, 2002 when Standard Automotive, Ajax Manufacturing
Company and certain of its subsidiary holding companies -- CPS
Enterprises, Inc., Barclay Investments, Inc. and Critical
Components Corporation -- filed voluntary petitions for relief
under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy
Court for the Southern District of New York.
Standard Automotive is a diversified company with production
facilities located throughout the United States, Canada and
Mexico. Standard Automotive manufactures precision products for
aerospace, nuclear, industrial and defense markets, and it
builds a broad line of specialized dump truck bodies, dump
trailers, and related products.
SULPHUR CORP: Court Allows New Board to Take Office
---------------------------------------------------
Further to its news releases of March 13 and April 4, 2002,
Proprietary announces the decision of a Court of Appeal hearing,
initiated by the previous board of directors of Sulphur
Corporation, to prevent the new board from taking office. On
April 26, 2002 a panel of three judges heard the appeal, which
was then dismissed with costs. This decision now permits the new
board to continue in office and to manage the affairs of SCC
free of all previously imposed court restrictions.
SCC is currently under the protection of the Companies'
Creditors Arrangement Act and is planning to file a
restructuring proposal with the courts, subject to receipt and
review of the Monitor's report, by May 17, 2002.
Proprietary's investment in SCC represents approximately 7% of
Proprietary's total assets.
Proprietary is based in Calgary, Alberta and listed on the
Toronto and Swiss Stock Exchanges trading under the symbol PPI.
Proprietary is a merchant bank that owns and manages a portfolio
of financial, natural resource and real estate interests.
Proprietary's management strives to maintain a balance between
generating profits, sustaining growth and realizing capital
appreciation, having targeted 20% as its minimum operating
margin, annual asset and revenue growth rates. Proprietary has
paid dividends for the last two of its nine years of operations.
Proprietary is included in the TSE 300 Composite Index, has been
twice named in the Profit 100 list of Canada's fastest growing
companies, and has had a five-year revenue growth of 6,215%.
SUNBEAM: Debtors' Solicitation Period Extended to August 15
-----------------------------------------------------------
By order of the U.S. Bankruptcy Court for the Southern District
of New York, Sunbeam Americas Holdings, Inc. and its debtor-
affiliates obtained an extension of their exclusive right to
solicit acceptances of their previously filed Plan of
Reorganization. The Debtors exclusive solicitation period now
runs through including August 15, 2002.
Sunbeam Corporation, the largest manufacturer and distributor of
small appliances, sells mixers, coffeemakers, grills, smoke
detectors, toasters and outdoor & camping equipment in the
United States, filed for chapter 11 protection on February 6,
2001 in the Southern District of New York. George A. Davis,
Esq., of Weil Gotshal & Manges LLP, represents the Debtors in
their restructuring effort. As of filing date, the company
listed $2,959,863,000 in assets and $3,201,512,000 in debt.
SWAN TRANSPORTATION: Nickens Lawless Handling Insurance Suits
-------------------------------------------------------------
Swan Transportation Company asks for authority from the U.S
Bankruptcy Court for the District of Delaware to employ Nickens,
Lawless & Flack, LLP as its Special Counsel, nunc pro tunc to
March 13, 2002.
Beginning in 1997, the Debtor became the subject of numerous
claims brought by individuals claiming personal injuries as the
alleged result of exposure to products used at the Foundry,
especially asbestos and silica-related tort claims. The Debtor
notified its insurance carriers regarding the claims, but most
of these carriers refused to provide coverage for the Tort
Claims.
The Debtor reminds the Court that it filed a Prepetition Lawsuit
in Texas state court, seeking declaratory and other relief
regarding the coverage of the Tort Claims under the policies
issued by the insurance carriers.
The Debtor tells the Court that it requires the continuing
assistance of Nickens Lawless as special counsel in this case
with respect to insurance issues. Due to the firm's resulting
experience and knowledge in its prior presentation of the
Debtor, the Debtor believes that employment of Nickens Lawless
in this specific matter is essential and is in the best interest
of the Debtor's estate.
The Debtor will compensate Nickens Lawless on their current
hourly billing rates:
J. Mark Lawless Partner $335 per hour
Dulce M. Stenglein Of Counsel $275 per hour
Lee H. Shidlofsky Associate $210 per hour
Dolores Moncada Legal Assistant $90 per hour
Angie Lopez Legal Assistant $90 per hour
Swan Transportation Company filed for chapter 11 protection on
December 20, 2001. Tobey Marie Daluz, Esq., Kurt F. Gwynne, Esq.
at Reed Smith LLP and Samuel M. Stricklin, Esq. at Neligan,
Tarpley, Stricklin, Andrews & Folley, LLP represent the Debtor
in its restructuring efforts. When the Company filed for
protection from its creditors, it listed assets and debts of
over $100 million.
SYNSORB BIOTECH: Reaches Pact to Sell Manufacturing Facility
------------------------------------------------------------
SYNSORB Biotech Inc. (Nasdaq: SYBB) (TSE: SYB), said that on May
3, 2002, an agreement was signed with a potential purchaser of
the Company's 30,000 square foot pharmaceutical manufacturing
facility. The proposed sale is subject to conditions normal in
commercial real estate transactions. Until conditions are
fulfilled or waived, which must occur no later than May 24,
2002, SYNSORB will continue to aggressively market the property
and entertain other offers.
"The Board's intent to dispose of our manufacturing facility
demonstrates our commitment to executing the restructuring plan
for SYNSORB, and delivering value for our shareholders," said
Bill Hogg, SYNSORB's President & CEO. "Because the sale is
conditional and because we are continuing to market the
property, we cannot disclose the negotiated price at this time.
However we believe it to be attractive given current market
conditions. Upon closing we will be able to communicate the
negotiated price to our shareholders."
SYNSORB expects that the sale of the manufacturing facility will
require approval of shareholders voting at a meeting, which
would be scheduled after all conditions are fulfilled or waived.
SYNSORB Biotech Inc. is a publicly traded company listed on both
the Toronto Stock Exchange (symbol SYB) and on Nasdaq National
Markets (ticker SYBB).
As previously reported, SYNSORBS's December 31, 2001 balance
sheet is upside-down with a total shareholders' equity deficit
of about $73 million.
TRANSFINANCIAL: Seeks Regulatory Nod to Withdraw AMEX Listing
-------------------------------------------------------------
Transfinancial Holdings, Inc., a Delaware corporation, has made
application pursuant to Section 12(d) of the Securities Exchange
Act of 1934 and Rule 12d2-2(d) and (e) promulgated thereunder to
withdraw its common stock, $.01 par value, from listing and
registration on the American Stock Exchange.
The Board of Directors of the Company (unanimously) approved a
resolution on April 9, 2002 to withdraw the Company's common
stock from listing on the American Stock Exchange.
The Company met the requirements of Rule 18 of the American
Stock Exchange by complying with all applicable laws in effect
in the State of Delaware, in which it is incorporated, and by
filing with the Exchange written notice of its intention to
voluntarily withdraw its securities from listing and
registration.
The Company requested the Commission's order granting the
application be effective as soon as possible. (On or after
close of business on April 29th, 2002) The Application relates
solely to the withdrawal from listing of the Company's common
stock from the American Stock Exchange. It is not traded on any
other Exchange.
TransFinancial Holdings shut down its trucking businesses --
Crouse Cartage and Specialized Transport, which had accounted
for 95% of TransFinancial's revenues -- in 2000 to concentrate
on its financial services operations, but the remaining debt
proved too much for the surviving parent to overcome. The
company's Universal Premium Acceptance unit, which financed
premiums for buyers of commercial property and casualty
insurance and thus allowed customers more time to pay for
insurance, was sold to an undisclosed buyer.
VALEO ELECTRICAL: Union Members Approve Revisions to CBA
--------------------------------------------------------
Valeo (Paris: FR; OTC: VLEEY) announced that members of Local
509 IUE-CWA voted to approve revisions to the Union's collective
bargaining agreement with Valeo Electrical Systems, Inc. (VESI)
at the Rochester (New York) facility.
The contract changes include:
- Instituting multiple attrition programs that provide
incentives to cushion employees as they move into retirement or
new jobs and that establish a process for reducing the workforce
to adequate levels
- Converting the health care program to a community-based
model with substantial reductions in premium costs
- Restructuring wage packages to contain costs during the
contract period.
The expected cost of these changes is in line with the level of
provisions in the Group's 2001 consolidated accounts.
VESI, which filed for the protection of Chapter 11 in December
2001 to protect its operations in the face of its difficult
competitive situation, has been implementing plans to return the
Rochester operation to profitability. This new union agreement
gives VESI the framework to address labor costs while continuing
to work on the other elements of the plan: customer terms,
supplier consolidation and operating efficiency.
In the coming weeks VESI management will finalize a
Reorganization Plan that should allow it to emerge from Chapter
11 by 2003.
VESI manufactures automotive wiper and airflow systems, motors
and other components in North America for sale to car and truck
manufacturers, component suppliers and other customers. VESI's
manufacturing operations are primarily located in a facility in
Rochester.
Valeo is an independent industrial Group fully focused on the
design, production and sale of components, integrated systems
and modules for cars and trucks. Valeo ranks among the world's
top automotive suppliers. The Group has 143 plants, 53 R&D
centers, 10 distribution centers and employs nearly 71,500
people in 24 countries worldwide (end March 2002).
For more information on the Group and its businesses, consult
its Web site: http://www.valeo.com
VALLEY MEDIA: Court Grants First Requested Exclusivity Extension
----------------------------------------------------------------
By order of the U.S. Bankruptcy Court for the District of
Delaware, Valley Media, Inc. obtained an extension of its
exclusive periods. Until July 18, 2002, the Court gives the
Debtor the exclusive right to file their plan of reorganization.
The Debtors exclusive period to solicit acceptances of that plan
is extended through September 16, 2002.
Valley Media Inc, a distributor of music and video entertainment
products, filed for chapter 11 protection on November 20, 2002.
Neil B. Glassman, Esq., Steven M. Yoder, Esq., and Christopher
A. Ward, Esq. at The Bayard Firm represent the Debtor in its
restructuring efforts. When the Company filed for protection
from its creditors, it listed $241,547,000 in total assets and
$259,206,000 in total debts.
VIATEL INC: Court Gives Approval to Stretch Exclusivity Periods
---------------------------------------------------------------
By order of the U.S. Bankruptcy Court for the District of
Delaware, Viatel, Inc., and its debtor-affiliates obtained an
extension of their exclusive periods. The Court gives the
Debtors until the earlier of the date on which their plan of
reorganization is confirmed or June 30, 2002 the exclusive right
to file a plan of reorganization and until August 30, 2002 to
solicit acceptances of that Plan.
Viatel, through its domestic and foreign subsidiaries, is the
builder, owner and operator of a state-of-the-art, pan-European,
trans-Atlantic and metropolitan fiber-optic network and a
provider of advanced telecommunications products and services to
corporations, carriers, internet service providers, and
applications service providers in Europe and North America. The
Company filed for chapter 11 protection on May 2, 2001. Gregg M.
Galardi, Esq. and D. J. Baker, Esq. at Skadden, Arps, Slate,
Meagher & Flom LLP represent the Debtors in their restructuring
efforts. When the Company filed for protection from its
creditors, it listed $2,124,000,000 in assets and $2,683,000,000
in debts.
WILD OATS MARKETS: Posts Improved Operating Results for Q1 2002
---------------------------------------------------------------
Wild Oats Markets, Inc. (Nasdaq: OATS), a leading national
natural and organic foods retailer, announced financial results
for the first quarter ended March 30, 2002. The Company
generated net income of $668,000 on first quarter sales of
$233.0 million.
Net sales for the quarter were $233.0 million, up 6.2 percent
compared with $219.5 million in the first quarter of 2001. The
sales gain was driven by 7.3 percent comparable store sales in
the first quarter, continuing the positive momentum established
in 2001 with five successive quarters of same-store sales
growth. Comparable store sales were 1.0 percent in the first
quarter of 2001, 3.9 percent in the second quarter of 2001, 5.5
percent in the third quarter of 2001 and 5.7 percent in the
fourth quarter of 2001.
The continued improvement in same-store sales is primarily due
to positive results from the Company's Fresh Look marketing and
merchandising program, which has helped to increase overall
sales, customer traffic and basket size in the 42 Wild Oats
Natural MarketplaceT stores that have implemented the program.
Additionally, operational improvements in the Company's
remaining Wild Oats natural food supermarket format stores, and
continued strong sales in the Henry's Marketplacer and Sun
HarvestT farmers market stores, contributed to the growth in
comparable store sales in the first quarter of 2002.
Net income in the first quarter of 2002 was $668,000, or $0.03
per diluted share compared with net loss of ($118,000), or
break-even per diluted share in the same period last year.
Driven by overall operational improvements that resulted in
improved store contribution margins and reduced direct store
expenses, Wild Oats was profitable for the first time since the
third quarter of 2000.
"We are pleased with the progress we have made this quarter. We
believe that our strategies to improve sales and strengthen our
operations are working, and have netted positive results earlier
than originally expected," said Perry D. Odak, President and
Chief Executive Officer. "In addition to continued growth in
comparable store sales and a return to profitability in the
quarter, we have significantly reduced our inventories and
improved our cash position. This has allowed us to reduce our
debt in the quarter and, with continued strong balance sheet
management, will help to fund our growth initiatives into the
future."
The Wild Oats stores that participate in the Fresh Look program
generated comparable store sales and customer traffic increases
in the mid-single digits in the first quarter. In addition,
average transaction size in these stores increased in the first
quarter, both sequentially and year-over-year. Average number of
items per transaction continued to increase. The goal of the
Fresh Look program is to drive overall awareness of Wild Oats
among a broader cross section of customers, and to increase
customer traffic in the stores through more frequent and more
comprehensive advertising and pricing promotions. Due to the
positive results of the program, the Company will gradually add
additional Wild Oats stores to the Fresh Look program starting
in the second quarter of 2002.
Wild Oats reported gross profit of $67.6 million in the first
quarter of 2002, a 1.9 percent increase compared with $66.4
million in the same period last year. The gross profit margin
increased to 29.0 percent of sales in the first quarter from
28.0 percent in the previous quarter, but declined compared to
the gross profit margin in the first quarter of 2001, which was
30.3 percent. The year-over-year decline in gross profit margin
was primarily due to reduced retail pricing in stores that
implemented the Fresh Look program and an overall sales mix
shift toward lower-margin perishable products, resulting from an
increased emphasis on produce, meat and seafood products in
advertising and pricing promotions.
A reduction in direct store expenses helped to strengthen the
Company's profitability in the first quarter. Direct store
expenses in the first quarter of 2002 totaled $50.4 million, a
2.3 percent decline compared with $51.6 million in the first
quarter of 2001. Direct store expenses as a percent of sales
were 21.6 percent, compared with 23.5 percent in last year's
first quarter. In sequential quarters, direct store expenses as
a percent of sales declined 2.7 percentage points in the first
quarter from 24.3 percent in the fourth quarter of 2001. The
store contribution margin was 7.4 percent of sales in the first
quarter of 2002, a 60 basis point increase from 6.8 percent in
the same period last year. This increase was primarily due to
improved management of store payroll expenses and occupancy
costs.
Selling, general and administrative (SG&A) expenses, excluding
goodwill amortization, in the first quarter of 2002 increased
37.4 percent to $14.2 million from $10.3 million in the prior
year first quarter. SG&A as a percent of sales was 6.1 percent
in the first quarter of 2002 compared with 4.8 percent in the
first quarter of 2001. The increase in SG&A expenses in the
first quarter was primarily due to on-going investments in
marketing and advertising related to the Fresh Look program to
drive increased awareness and customer traffic. These
investments have begun to translate into improved profitability,
and are expected to drive greater improvements throughout the
remainder of the year.
During the first quarter of 2002, net cash provided by operating
activities was $14.0 million. Capital expenditures were $2.7
million for the first quarter. In the first quarter, Wild Oats
paid down $15.5 million on its credit facility and, as of the
end of the quarter, had approximately $106.8 million outstanding
on its credit facility.
Business Developments
Wild Oats has strengthened its overall store portfolio so that
it has a stronger base from which to grow. In the first quarter,
the Company closed or sold five stores that did not meet the
Company's strategic objectives.
As part of the Company's strategy to strengthen its overall
store portfolio and operating performance, Wild Oats unveiled a
new store prototype on April 17, 2002, with the most successful
grand opening in the history of the Company at its newest store
in Long Beach, California. The Long Beach Wild Oats store is a
26,000 square foot community market that will serve as the
prototype for all future Wild Oats stores. The new prototype
features an expanded produce department; a "store within a
store" Natural Living department that offers an array of
supplements, natural body care products, homeopathic remedies
and information resources; an extensive foodservice area and
bakery; and an updated experiential design and layout that was
based on extensive customer research. The Company plans to open
two additional Wild Oats Natural Marketplaces using the new
prototype, and one Henry's Marketplace by early 2003.
As previously announced, Wild Oats continues to identify
opportunities to raise equity, which will be used to accelerate
growth initiatives. To date, the Company has received several
offers to invest in Wild Oats. These proposals are currently
under review to determine the most favorable funding for both
shareholders and the Company. The proposed equity financing
would primarily be used to fund an aggressive new store
development program. With the additional equity, Wild Oats plans
to open up to 10 additional stores in 2003, 20 in 2004 and 25 in
2005.
"The momentum we established in 2001 has continued into the new
year," said Mr. Odak. "We had a positive quarter in terms of
financial results, operational improvements, the completion of
our new store prototype, and we opened our Long Beach location
in the early part of the second quarter. We expect continued
positive results during the remainder of the year. As we
previously announced, for the full year, we expect to generate
comparable store sales that are slightly above fourth quarter
2001 levels, and continued improvement in our profitability."
Wild Oats Markets, Inc. is a nationwide chain of natural and
organic foods markets in the U.S. and Canada. The Company
currently operates 103 natural food stores in 23 states and
British Columbia, Canada. The Company's markets include: Wild
Oats Natural Marketplace, Henry's Marketplace, Nature's - a Wild
Oats Market, Sun Harvest and Capers Community Markets. For more
information, please visit the Company's Web site at
http://www.wildoats.com
At March 30, 2002, Wild Oats' balance sheet records a working
capital deficit of about $37 million.
WILLIAMS COMMS: Look for Schedules & Statements by June 16, 2002
----------------------------------------------------------------
Williams Communications Group, Inc., and its debtor-affiliates
sought and obtained an extension to June 16, 2002, of the
deadline by which they must file their schedules of assets and
liabilities, schedules of current income and expenditures,
schedules of executory contracts and un-expired leases, and
statements of financial affairs.
Prior to the Petition Date, the Debtors were unable to assemble
all of the information necessary to complete and file their
Schedules and Statements required by Bankruptcy Rule 1007(b)
because of:
A. the substantial size and scope of the Debtors' businesses;
B. the complexity of their financial affairs;
C. the limited staffing available to perform the required
internal review of their accounts and affairs;
D. the necessity for the Company's limited financial,
accounting, and legal staff also to meet numerous, ongoing
reporting obligations, including reporting requirements under
applicable securities laws and regulations; and
E. business exigencies incident to the commencement of the
Chapter 11 cases.
Corrine Ball, Esq., at Jones Day Reavis & Pogue in New York, New
York, informs the Court that completing the Schedules and
Statements for each of the Debtors will require the collection,
review, and assembly of information from multiple locations.
Given the critical and weighty matters that the Company's
limited staff of accounting and legal personnel must address in
the early days of these cases, the Debtors will not be in a
position to complete the Schedules and Statements by the Filing
Deadline. The Debtors submit that the substantial size, scope,
and complexity of the Chapter 11 cases, as well as the volume of
material that must be compiled and reviewed by the Company's
limited staff during the early days of the cases, provide ample
"cause" for justifying, if not compelling, a 30-day extension of
the Filing Deadline.
The Debtors recognize the importance of the Schedules and
Statements in these Chapter 11 cases, and intend to complete and
file those documents as expeditiously as possible. However, if
unforeseen circumstances prevent the Debtors from filing their
Schedules and Statements by the proposed new deadline, the
Debtors request the extension proposed be without prejudice to
the Debtors' right to apply for further extensions for cause
shown. (Williams Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WILLIAMS CONTROLS: Appoints Gary P. Arnold as New Director
----------------------------------------------------------
The Board of Directors of Williams Controls, Inc. (OTC Bulletin
Board: WMCO) has expanded its Board from 5 to 6 members, and has
elected Gary P. Arnold to fill the newly created board seat,
effective April 17, 2002.
Mr. Arnold has had extensive international and domestic
experience in the electronics industry in the areas of finance,
strategic planning and operations, and has been involved in
numerous capital market transactions. He spearheaded the
turnaround at Tektronix Corp. where he was the CFO, and later
became the Chairman and CEO of Analogy, Inc., a provider of
design automation software used in the automotive industry. He
currently serves on the Boards of several companies, including
National Semiconductor Corporation. Mr. Arnold, 60, is a CPA and
holds a BS degree in accounting as well as a JD degree from the
University of Tennessee School of law.
Commenting on Mr. Arnold's appointment, Williams Controls'
President and Chief Executive Officer, Thomas K. Ziegler stated,
"The addition of Gary Arnold as an independent Director should
further strengthen our Board, and provide the Company with a
valuable source of expertise as it continues through its
financial restructuring and moves toward the completion of a
capital transaction. Gary's background is exceptionally well
matched to both the current and future needs of the Company, and
I am confident that his hands-on experience in past turnaround
situations will be of tremendous benefit to the Company."
Williams Controls is a designer, manufacturer and integrator of
sensors and controls for the transportation industry. For more
information, you can find Williams Controls on the Internet at
http://www.wmco.com
At June 30, 2001, Williams Controls had a total shareholders'
equity deficit of about $7.5 million.
* Meetings, Conferences and Seminars
------------------------------------
May 13, 2002 (Tentative)
AMERICAN BANKRUPTCY INSTITUTE
New York City Bankruptcy Conference
Association of the Bar of the City of New York
New York, New York
Contact: 1-703-739-0800 or http://www.abiworld.org
May 15-18, 2002
ASSOCIATION OF INSOLVENCY AND RESTRUCTURING ADVISORS
18th Annual Bankruptcy and Restructuring Conference
JW Mariott Hotel Lenox, Atlanta, GA
Contact: (541) 858-1665 Fax (541) 858-9187 or
aira@airacira.org
May 24-27, 2002
COMMERCIAL LAW LEAGUE OF AMERICA
54th Annual New England Meeting
Cranwell Resort and Gold Club, Lenox, Massachusetts
Contact: 312-781-2000 or clla@clla.org or
http://www.clla.org/
May 26-28, 2002
INTERNATIONAL BAR ASSOCIATION
International Insolvency 2002 Conference
Dublin, Ireland
Contact: Tel +44 207 629 1206 or member@int-bar.org
or http://www.ibanet.org
June 6-9, 2002
AMERICAN BANKRUPTCY INSTITUTE
Central States Bankruptcy Workshop
Grand Traverse Resort, Traverse City, Michigan
Contact: 1-703-739-0800 or http://www.abiworld.org
June 13-15, 2002
ALI-ABA
Partnerships, LLCs, and LLPs: Uniform Acts, Taxation,
Drafting, Securities, and Bankruptcy
Seaport Hotel, Boston
Contact: 1-800-CLE-NEWS or
http://www.ali-aba.org/aliaba/cg097.htm
June 20-21, 2002
RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
Fifth Annual Conference on Corporate Reorganizations
Fairmont Hotel, Chicago
Contact: 1-800-726-2524 or ram@ballistic.com
June 27-29, 2002
ALI-ABA
Chapter 11 Business Reorganizations
Fairmont Copley Plaza, Boston
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
June 27-30, 2002
NORTON INSTITUTES ON BANKRUPTCY LAW
Western Mountains, Advanced Bankruptcy Law
Jackson Lake Lodge, Jackson Hole, Wyoming
Contact: 770-535-7722 or Nortoninst@aol.com
July 11-14, 2002
AMERICAN BANKRUPTCY INSTITUTE
Northeast Bankruptcy Conference
Ocean Edge Resort, Cape Cod, MA
Contact: 1-703-739-0800 or http://www.abiworld.org
July 12-17, 2002
COMMERCIAL LAW LEAGUE OF AMERICA
108th Annual Convention
Grand Summit Hotel, Park City, Utah
Contact: 312-781-2000 or clla@clla.org or
http://www.clla.org/
July 17-19, 2002
ASSOCIATION OF INSOLVENCY AND RESTRUCTURING ADVISORS
Bankruptcy Taxation Conference
Snow King Resort, Jackson Hole, WY
Contact: (541) 858-1665 Fax (541) 858-9187 or
aira@airacira.org
August 7-10, 2002
AMERICAN BANKRUPTCY INSTITUTE
Southeast Bankruptcy Conference
Kiawah Island Resort, Kiawaha Island, SC
Contact: 1-703-739-0800 or http://www.abiworld.org
September 26-27, 2002
ALI-ABA
Corporate Mergers and Acquisitions
Marriott Marquis, New York
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
October 9-11, 2002
INSOL INTERNATIONAL
Annual Regional Conference
Beijing, China
Contact: tina@insol.ision.co.uk or
http://www.insol.org
October 24-28, 2002
TURNAROUND MANAGEMENT ASSOCIATION
Annual Conference
The Broadmoor, Colorado Springs, Colorado
Contact: 312-822-9700 or info@turnaround.org
November 21-24, 2002
COMMERCIAL LAW LEAGUE OF AMERICA
82nd Annual New York Conference
Sheraton Hotel, New York City, New York
Contact: 312-781-2000 or clla@clla.org or
http://www.clla.org/
December 5-8, 2002
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
The Westin, La Paloma, Tucson, Arizona
Contact: 1-703-739-0800 or http://www.abiworld.org
April 10-13, 2003
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
Grand Hyatt, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
May 1-3, 2003 (Tentative)
ALI-ABA
Chapter 11 Business Organizations
New Orleans
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
May 8-10, 2003 (Tentative)
ALI-ABA
Fundamentals of Bankruptcy Law
Seattle
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
July 10-12, 2003
ALI-ABA
Partnerships, LLCs, and LLPs: Uniform Acts, Taxation,
Drafting,
Securities, and Bankruptcy
Eldorado Hotel, Santa Fe, New Mexico
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
December 3-7, 2003
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
La Quinta, La Quinta, California
Contact: 1-703-739-0800 or http://www.abiworld.org
April 15-18, 2004
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
J.W. Marriott, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
December 2-4, 2004
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Marriott's Camelback Inn, Scottsdale, AZ
Contact: 1-703-739-0800 or http://www.abiworld.org
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via
e-mail to conferences@bankrupt.com are encouraged.
*********
Bond pricing, appearing in each Monday's edition of the TCR, is
provided by DLS Capital Partners in Dallas, Texas.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter
A. Chapman, Editors.
Copyright 2002. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $625 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***