/raid1/www/Hosts/bankrupt/TCR_Public/020517.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, May 17, 2002, Vol. 6, No. 97
Headlines
ADELPHIA COMM.: John J. Rigas Steps Down as Chairman and CEO
ADELPHIA COMM: S&P Sees Likely Covenant Violations
ADVOCAT: Reports $61.5MM Working Capital Deficit at March 31
AGRIFOS FERTILIZER: Forbearance Agreement with Congress Approved
APW LTD.: Files Chapter 11 Petition In S.D. New York
APW LTD: Case Summary & List of 20 Largest Unsecured Creditors
ATLAS AIR WORLDWIDE: S&P Lowers Corporate Credit Rating to B+
BANYAN STRAT: Settles Contract Disputes with Denholtz for $300K
BETHLEHEM STEEL: Entering Into New IT Partnership Pact With EDS
BROADLEAF CAPITAL: Losses Trigger Doubt On Going Concern Ability
BROCKER TECHNOLOGY: Names Suray Sharma As New Interim CFO
BURNHAM PACIFIC: Liquidating Company Releases Q1 2002 Results
CASUAL MALE CORP.: Designs, Inc. Completes $170 Million Purchase
COMPLETEL: Signs Recapitalization Agreement With Bondholders
COVANTA ENERGY: Seeks to Employ Ordinary Course Professionals
COHO ENERGY: First Quarter 2002 Net Loss Amounts To $59.6 Mil
DIETZGEN LLC: Debtor Inks Asset Sale Agreement With Nashua Corp.
ENCOMPASS SERVICES: S&P Places B+ Corp. Rating On Watch Negative
ENRON: Seeks Court Nod To Sell Interests & Note to Tractebel
ENRON CORP: Wants Removal Period Extended through September 3
ETOYS: Asks For Reconsideration of Exclusivity Extension Order
EXCITE@HOME: DoveBid To Conduct Webcast Auction On May 29-30
EXIDE TECHNOLOGIES: Wants to Sign-Up BMC as Claims Agent
GENTEK INC.: Receives Notice of Default From Senior Lenders
GLOBAL CROSSING: Former Employees Press For Benefits Payment
GLOBIX CORPORATION: Releases Fiscal Second Quarter Results
HOLISTICOM.COM: Banned Web Site Operator Settles With Commission
ICG COMMS: Asks for Removal Period to Extend to Effective Date
IT GROUP: Examiner Engages Neilson Elggren as Accountant
INTERDENT INC.: Banks Agree To Waive Covenant Defaults
INT'L BIO: Galaxy Power Demands Payment Of $12.5MM (HK) Loan
KCS ENERGY: Selling Non-core Assets For $26.8MM To Repay Sr Debt
KAISER ALUMINUM: Asbestos Claimants Sign-Up Tersigni as Advisor
KAISER: Found Guilty In Labor Case, May Have To Pay Over $100MM
KEY ENERGY: S&P Puts BB- Rating on Watch Pos. After Merger Deal
KMART CORP: Mellon Bank Asks Court to Lift Stay to Offset Debts
KMART CORP: IBM Pursues Payment of Post-Petition Obligations
LTV CORP: Provides Notice of Allocation of Steel Sale Proceeds
LASER MORTGAGE: Liquidation Prompts NYSE To Delist Shares
MCCOOK METALS: Pechiney Acquires Certain Assets For Around $20MM
MCCRORY: Wins Plan Filing Exclusivity Extension Through June 27
MCLEODUSA INC.: Reports Decreasing Revenues & Losses In Q1 2002
METALS USA: Wants To Hire Ordinary Course Professionals
METROMEDIA INT: May File For Bankruptcy If Unable To Raise Funds
METROMEDIA FIBER: Defers $32MM Interest Payment On Senior Notes
MUSEUM COMPANY: Completes Asset Sale To SFMB/GA LLC
NATIONAL STEEL: Proposes De Minimis Asset Sale Procedures
NEWCOR INC: U.S. Trustee Appoints Unsecured Creditors Committee
NEXELL: Board Endorses Immediate Wind-Down of Operations
NOVO NETWORKS: Publishes Third Quarter Results -- More Losses
PACIFICARE: Moody's Assigns B3 Rating to Proposed $200M Sr Notes
PACIFIC GAS: Issues Statement After Court OKs CPUC's Disclosure
PACIFIC GAS: "Abandon Bankruptcy Plan," Ag Leaders Urge
PEP BOYS-MANNY: S&P Rates $125MM Senior Unsecured Notes at BB-
PIONEER COMPANIES: Posts $8 Mil Net Loss For First Quarter 2002
PRIME RETAIL: Gives Updates On Status of Going Concern Issues
PROVELL: Obtains Extension Until July 25 to File Schedules
PSINET INC: Trustee Gets Court OK to Use Non-Debtor Subs' Assets
RAZORFISH: First Quarter Revenues Decreased by 75% to $10.8 Mil.
RENT-WAY INC: Richard Strong Discloses 5.2% Equity Stake
RITE AID: Reports Increasing Revenues For Fiscal Year 2002
SC INTERNATIONAL: S&P Lowers Corporate Credit Rating To BB
SERVICE SYSTEMS: Auditors Issue Negative Going Concern Opinion
STATER BROS.: S&P Changes B+ Credit Rating Outlook To Positive
SUN COUNTRY: DOT Okays Operating Certificate Transfer
SYBRON DENTAL: S&P Assigns B Rating to Proposed $150 Mill. Notes
TOWER AUTOMOTIVE: S&P Affirms BB Credit Rating After Stock Sale
TRANS WORLD: Seeks to Extend Exclusive Period through August 30
TRICO STEEL: Sells Metals USA Claim to Sierra at 90% Discount
TUTOR TIME LEARNING: Voluntary Chapter 11 Case Summary
URANIUM RESOURCES: Needs To Raise Capital To Fund Operations
UROMED CORPORATION: Files for Chapter 7 Relief in Massachusetts
WARNACO: Court Okays Purchase of ACE Cargo Insurance Policy
WASHINGTON GROUP: Reports Q1 2002 Preliminary Financial Results
WESTERN INTEGRATED: SureWest Explores Possible Acquisition
WESTPOINT STEVENS: Reports Improved Sales Performance In Q1 2002
WILLCOX & GIBBS: UST Convening Creditors' Meeting on May 23
WILLIAMS COMMS: Hires Morris Nichols as Special Board Counsel
WORLDPORT: Reports Q1 Losses & Considers Possible Liquidation
* BOOK REVIEW: Creating Value through Corporate Restructuring:
Case Studies in Bankruptcies, Buyouts, and
Breakups
*********
ADELPHIA COMM.: John J. Rigas Steps Down as Chairman and CEO
------------------------------------------------------------
"After much thought and prayer about what will best serve the
needs of the Company and our stakeholders, including our
shareholders, employees, customers and communities, I have
concluded that Adelphia needs fresh, independent leadership, and
that after half a century at the helm the time is right for me
to step down as Chairman, President and Chief Executive
Officer," Adelphia founder, Chairman, President and CEO John J.
Rigas states. Mr. Rigas has been succeeded as Chairman and as
Interim Chief Executive Officer by Erland E. Kailbourne,
formerly Chairman and CEO (New York Region) of Fleet National
Bank, who has been an independent director of Adelphia
Communications Corporation (Nasdaq: ADLAE) since 1999 and who is
currently Chairman of the Adelphia Board's Audit Committee.
Mr. Rigas, who founded the Company in 1952, has been elected
Chairman Emeritus by the Adelphia Board of Directors, and will
continue to serve on the Company's Board of Directors. As such,
he will continue to share his unique knowledge and perspectives
as appropriate with the Company's Board of Directors and
management team, will be involved in assisting the Company as it
addresses current challenges, and will continue to represent the
Company within the cable television industry and among the
Company's other constituencies.
"I am confident that the changes under way at Adelphia are the
beginning of a process that, under the leadership of Erkie
Kailbourne, will restore the credibility, and rebuild the value,
of this fine company," Mr. Rigas said. "In recent weeks, we have
launched a formal process with our outside financial advisors to
explore possible asset sales, solicit bids for selected cable
assets, reduce debt and build shareholder value."
Mr. Kailbourne said: "I welcome this opportunity to help
Adelphia meet its current challenges and position itself for
long-term success. Adelphia today is a major cable television
company whose outstanding assets include millions of customers
across the country and thousands of skilled and dedicated
employees. I am confident that we have the ability, and the
determination, to take the steps necessary to build Adelphia's
value for all our stakeholders."
Mr. Rigas, 77, has owned and operated cable television systems
since 1952. Among business and community service activities, Mr.
Rigas is Chairman of the Board of Directors of Citizens
Bancorp., Inc., Coudersport, Pennsylvania. He is a director of
the National Cable Television Association and a past President
of the Pennsylvania Cable Television Association. He is also a
member of the Board of Directors of C-SPAN and the Cable
Advertising Bureau, and is a past Trustee of St. Bonaventure
University. He graduated from Rensselaer Polytechnic Institute
with a B.S. in Management Engineering in 1950.
Erland E. Kailbourne, 60, is the retired Chairman and Chief
Executive Officer (New York Region) of Fleet National Bank. He
served with the Fleet organization or its predecessors for 37
years prior to his retirement on December 31, 1998. Mr.
Kailbourne is currently Chairman of the John R. Oishei
Foundation, a director of the New York ISO Board, and a director
of Albany International Corporation, Bush Industries, Inc., and
Rand Capital Corporation. He is also a member of the Advisory
Council of the New York State Office of Science, Technology and
Academic Research and the New York State Banking Board. Mr.
Kailbourne graduated with a degree in business administration
from Alfred State College in 1961.
The Company also announced that it is conducting an
investigation of issues raised in connection with the
preparation of its 10-K statement. The ongoing audit of the
Company by the Company's long-time auditor, Deloitte & Touche,
LLP, will be suspended pending completion of the Company's
investigation. The Company further announced that it has
retained David Boies and the firm of Boies, Schiller & Flexner
to advise it in connection with its investigation and other
matters.
Adelphia Communications Corporation, with headquarters in
Coudersport, Pennsylvania, is the sixth-largest cable television
company in the country.
ADELPHIA COMM: S&P Sees Likely Covenant Violations
--------------------------------------------------
The corporate credit rating on Adelphia Communications Corp. was
lowered on May 15, 2002, to 'CCC-' from 'CCC+'. The CreditWatch
implications were also revised to negative from developing at
that time.
The downgrade was based on developments that significantly
increased the likelihood of covenant violations. On May 15,
Adelphia suspended the ongoing audit of the company by Deloitte
& Touche, pending completion of an investigation into issues
raised in connection with Adelphia's yet-to-be-filed 10K.
Adelphia has hired high-profile attorney David Boise of Boise,
Schiller & Flexner in connection with this investigation.
Because an investigation is likely to take a considerable amount
of time, it is increasingly doubtful that the company can avoid
at least a technical default. Moreover, liquidity may be
jeopardized by these developments. In addition to the suspension
of the audit, Adelphia announced the resignation of John Rigas,
its chairman, president, CEO, and founder.
Standard & Poor's has twice lowered ratings since the company
disclosed co-borrowings by Adelphia subsidiaries and certain
companies affiliated with the Rigas Family. These co-borrowings,
which have not been consolidated on Adelphia's balance sheet,
totaled almost $2.3 billion at Dec. 31, 2001.
Ratings List: To: From:
Adelphia Communications Corp.
* Corporate credit rating CCC- CCC+
* Senior unsecured debt CC CCC
* Subordinated debt C CCC-
* Preferred stock C CC
ADVOCAT: Reports $61.5MM Working Capital Deficit at March 31
------------------------------------------------------------
Advocat Inc.(OTC Bulletin Board: AVCA) announced its results for
the first quarter ended March 31, 2002. The Company reported a
net loss after taxes of $3.1 million, or $0.56 per share, in the
first quarter of 2002 compared with a loss of $1.5 million, or
$0.27 per share, for the same period in 2001. Net revenues for
the first quarter of 2002 increased 3.8% to $51.6 million
compared with $49.7 million in the same period of 2001.
First Quarter Results
Patient revenues increased 6.2% to $40.7 million in the first
quarter of 2002 compared with $38.3 million in 2001. The
increase in patient revenues was due to increased Medicare
utilization, Medicare rate increases at several facilities that
became effective in October 2001, and increased Medicaid rates
in certain states, partially offset by a 0.6% decline in
occupancy in 2002 compared with 2001. In addition, the Company
terminated leases on two nursing homes during the fourth quarter
of 2001. Resident revenues decreased 2.3% to $10.2 million in
2002 compared with $10.4 million in the first quarter of 2001.
The Company experienced increased resident revenue rates, offset
by a 6.5% decline in resident days. Management fees declined to
$679,000 compared with $911,000 in the first quarter of 2001.
Total expenses rose 6.8% to $54.5 million compared with $51.1
million in the first quarter of 2001. Operating expenses
represented 86.0% of patient and resident revenues for the
latest quarter compared with 81.5% of patient and resident
revenues in the first quarter of 2001. The increased costs were
due primarily to increased professional liability costs and
higher salaries and wages. Professional liability costs rose
136.3% to $4.8 million in the first quarter of 2002 compared
with $2.0 million in the same quarter of 2001.
At March 31, 2002, Advocat had negative working capital of $61.5
million primarily due to $55.5 million of debt being classified
as current liabilities resulting from the Company's covenant
non-compliance and other cross-default provisions. Based on
regularly scheduled debt service requirements, the Company has
$33.7 million of debt that must be repaid or refinanced in the
next 12 months.
Effective April 30, 2002, the Company terminated 13 leases with
the former principal owners or affiliates of Pierce Management
Group. As a result, the Company was relieved of its future
obligations with respect to these 13 leases. The Company will
incur a write-down in the second quarter of 2002 of the
remaining net book value of these facilities, estimated to be
approximately $800,000. In addition, the leases on two
additional assisted living facilities with affiliates of Pierce
will be similarly terminated effective June 1, 2002.
Advocat Inc. operates 116 facilities including 54 assisted
living facilities with 5,345 units and 62 skilled nursing
facilities containing 6,992 licensed beds as of March 31, 2002.
The Company operates facilities in 12 states, primarily in the
Southeast, and four provinces in Canada.
For additional information about the Company, visit Advocat's
web site: http://www.irinfo.com/avc
AGRIFOS FERTILIZER: Forbearance Agreement with Congress Approved
----------------------------------------------------------------
Agrifos Fertilizer, LP and its debtor-affiliates secured
approval from the U.S. Bankruptcy Court for the Southern
District of Texas of a Forbearance and Extension Agreement
entered into by Congress Financial Corporation, as Lenders, and
the Debtors, as the Borrowers. By a series of extensions to the
Cash Collateral Order, the Debtors request continued permission
to use Congress' cash collateral through August 5, 2002.
In the Forbearance and Extension Agreement, the Debtors
acknowledge that the Lender does not waive any existing defaults
or any events of default which may exist. The Debtors agree to
pay the Lender a $15,000 forbearance and extension fee.
Pursuant to the Agreement, Availability is reduced by:
a) a $250,000 special reserve; and
b) an additional reserve which Lender agrees shall consist
of the existing reserve of $400,000, plus an additional
amount of $250,000 from and after the date of the
Forbearance Agreement for an aggregate reserve amount of
$650,000, which reserve amount shall be increased to
$900,000 on June 8, 2002.
APW LTD.: Files Chapter 11 Petition In S.D. New York
----------------------------------------------------
APW Ltd. (OTC BB: APWLF), announced that its current lenders
have overwhelmingly, 94% in amount and 90% of the lenders, voted
in favor of a prepackaged plan of reorganization. Pursuant to
the plan, $685 million of debt would be reduced to $100 million
of secured term debt with the balance of $585 million converted
into equity.
In order to effect the plan, APW Ltd. has commenced a voluntary,
prepackaged proceeding under chapter 11 of the Bankruptcy Code
in the United States Bankruptcy Court for the Southern District
of New York. The voluntary proceeding involves only the APW Ltd.
holding company and Vero Electronics, Inc., another non-
operating entity. All other subsidiaries of APW Ltd. are
excluded from the proceeding and continue with normal
operations. This structured process is intended to protect APW
Ltd.'s customers, suppliers and employees from adverse effects
of the recapitalization process.
Concurrent with the filing, a new $110 million Debtor-in-
Possession (DIP) credit facility received interim approval. This
credit facility will provide more than adequate liquidity to
support APW Ltd.'s global operations. The DIP facility will
automatically convert to a revolving credit facility upon the
holding company's emergence from the Chapter 11 proceeding.
Richard Sim, Chairman, President and Chief Executive Officer of
the Company commented, "We are pleased with the recapitalization
agreement and the confidence that our creditors have in the
future of APW Ltd. The chapter 11 filing of the holding company
is the most practical and efficient way to expedite
implementation of the recapitalization."
Sim continued, "In December 2001 we committed to seeking a
solution to our debt leverage in the first half of calendar year
2002. This recapitalization agreement is the best outcome of a
careful and deliberate process. APW's sales have been growing
modestly each month since December 2001. APW Ltd. is now
positioned to build on the wide array of strong customer
relationships that have been fostered over the past few years. I
would like to take this opportunity to thank our employees,
customers and suppliers for their continued support during this
downturn. With this balance sheet fix in place, APW has a bright
future."
Additional communications to shareholders, customers, suppliers
and employees relating to this announcement can be found at
http://www.apw.com
About APW Ltd.
APW Ltd. is a Technically Enabled Manufacturing Services "TEMS"
company that designs and manufactures large, complex
infrastructure products for OEMs in the communications, large
enterprise hardware and Internet markets.
APW Ltd. has particular skills in the areas of designing and
manufacturing enclosures, thermal management, power supplies and
backplanes; as well as core competencies in product and system
design, integration and supply chain management. APW Ltd.
operates in approximately 30 locations throughout North America,
South America, Europe and Asia.
APW LTD: Case Summary & List of 20 Largest Unsecured Creditors
--------------------------------------------------------------
Lead Debtor: APW LTD.
N22 W23685 Ridgeview Parkway West
Waukesha, WI 53188-1013
fka APW
fka Applied Power
fka Applied Power Inc.
fka Wright Line Inc.
Bankruptcy Case No.: 02-12335
Debtor affiliate filing separate chapter 11 petition:
Entity Case No.
------ --------
Vero Electronics, Inc. 02-12334
Type of Business: The Debtor is a holding company whose
subsidiaries provide Technically Enabled
Manufacturing Services, focused on designing
and integrating large electronic products.
Chapter 11 Petition Date: May 16, 2002
Court: Southern District of New York (Manhattan)
Judge: Prudence Carter Beatty
Debtors' Counsel: Richard P. Krasnow, Esq.
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
(212) 310-8493
Fax : (212) 310-8007
Total Assets: $797,104,000
Total Debts: $899,751,000
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Royal Bank of Scotland Bank Loan $97,821,779
plc 5-10 Great Tower Street
London EC3 3HK
Attn: Toni Smith
e-mail: t.smith@rbs.co.uk
44-2076154150
Oaktree Capital Management Bank Loan $57,048,826
(Opportunities Fund III)
333 South Grand Ave., 28th Fl.
Los Angeles, CA 90071
Attn: Chris Brothers
e-mail: cbrothers@oaktreecap.com
213-830-6356
JPMorgan Chase Bank Bank Loan $48,450,558
380 Madison Avenue, 9th Fl.
New York, NY 10017
Attn: Michael Lancia
e-mail: michael.lancia@chase.com
Bank of America, N.A. Bank Loan $38,896,927
555 South Flower St., 11th
Floor
Los Angeles, CA 90071
Attn: Duncan McDuffie
e-mail: malcolm.mcduffie@bankofamerica.com
213-228-2609
Greenwich Street Capital Bank Loan $25,590,084
(Recovery II)
500 Campus Drive, Suite 220
Florham Park, NJ 02932
Attn: Rob De Filippo
e-mail: rdefilippo@gscpartners.com
973-437-1000
Oaktree Capital Management Bank Loan $24,566,480
(Grand Street Holdings 3 LLC)
333 South Grand Avenue, 28th
Floor
Los Angeles, CA 90071
Attn: Chris Brothers
e-mail: cbrothers@oaktreecap.com
213-830-6356
Oaktree Capital Management Bank Loan $20,595,017
(Grand Street Holdings 5 LLC)
333 South Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn: Chris Brothers
e-mail: cbrothers@oaktreecap.com
213-830-6356
Oaktree Capital Management Bank Loan $19,619,064
(Grand Street Holdings 2)
333 South Grand Avenue, 28th
Floor
Los Angeles, CA 90071
Attn: Chris Brothers
e-mail: cbrothers@oaktreecap.com
213-830-6356
Oaktree Capital Management Bank Loan $14,193,966
(Grand Street Holdings 6)
333 South Grand Avenue, 28th
Floor
Los Angeles, CA 90071
Attn: Chris Brothers
e-mail: cbrothers@oaktreecap.com
213-830-6356
BNP Paribas Bank Loan $12,965,642
787 Seventh Avenue
New York, NY 10019
Attn: Christopher Sked
e-mail: christopher.sked@americas.bnp
paribas.com
212-841-3166
Societe Generale Bank Loan $12,965,642
181 West Madison St., Ste. 3400
Chicago, IL 60602
Attn: Eric Siebert
e-mail: eric.siebert@us.socgen.com
Oaktree Capital Bank Loan $11,600,838
Management
(Grand Street 1 LLC)
333 South Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn: Chris Brothers
e-mail: cbrothers@oaktreecap.com
213-830-6356
U.S. Bank National Bank Loan $10,674,921
Association
601 2nd Avenue South
Minneapolis, Minnesota 55402
Attn: Greg Wilson
e-mail: gred.wilson@usbank.com
The Dai-Ichi Kangyo Bank Loan $9,724,232
Bank, Ltd.
1251 Avenue of Americas,
30th Floor
New York, New York 10020
Attn: Matt Murphy
e-mail: mmurphy@gpnus.mizuhocb.com
212-282-4295
Perry Principals, LLC Bank Loan $9,724,232
c/o Roberts Sheridan & Koetel
1177 Avenue of the Americas
New York, NY 10036
e-mail: info@perrycap.com
Oaktree Capital Bank Loan $9,724,232
Management
(Grand Street Holdings 4 LLC)
333 South Grand Avenue, 28th
Floor
Los Angeles, CA 90071
Attn: Chris Brothers
e-mail: cbrothers@oaktreecap.com
213-830-6356
Oaktree Capital Bank Loan $9,246,550
Management
(Grand Street Holdings 8)
333 South Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn: Chris Brothers
e-mail: cbrothers@oaktreecap.com
213-830-6356
Oaktree Capital Bank Loan $6,824,022
Management
(Grand Street Holdings 7 LLC)
333 South Grand Avenue, 28th
Floor
Los Angeles, CA 90071
Attn: Chris Brothers
e-mail: cbrothers@oaktreecap.com
213-830-6356
William E. Simon Bank Loan $5,920,983
& Sons LP
10990 Wilshire Blvd., Suite 500
Los Angeles, CA 90021
Attn: Dale Leshaw
e-mail: dleshaw@wesandsons.com
Oaktree Capital Bank Loan $5,834,539
Management
(Grand Street Holdings 9)
333 South Grand Avenue,
28th Floor
Los Angeles, California 90071
Attn: Chris Brothers
e-mail: cbrothers@oaktreecap.com
213-830-6356
ATLAS AIR WORLDWIDE: S&P Lowers Corporate Credit Rating to B+
-------------------------------------------------------------
On May 15, 2002, Standard & Poor's lowered its corporate credit
rating on Atlas Air Worldwide Holdings Inc. to 'B+' from 'BB-'.
The rating action reflected increased risk in both the company's
financial and business profiles, stemming from current industry
pressures and an increasing focus on new, more risky service
offerings. Purchase, New York-based Atlas provides heavyweight
air cargo services through its Atlas subsidiary and scheduled,
high-frequency airport-to-airport cargo services through its
Polar subsidiary. Outlook is negative.
Because of its high operating leverage, substantial debt burden,
and reduced industry demand over the past year, Atlas has
experienced a deterioration in financial measures, and liquidity
has become constrained. At year-end 2001, lease-adjusted debt to
capital was 84% and EBITDA interest coverage was 1.4 times.
Industry conditions are expected to remain challenging this year
and, as a result, no material improvement in financial
performance is expected over the near term. Over the longer
term, Atlas should benefit from a rebound in air cargo demand.
However, because of its changing business mix, Atlas will likely
experience more volatility in operating results.
Until last year, Atlas' primary business was the provision of
ACMI (aircraft, crew, maintenance, and insurance) services for
airlines, a business in which it is a market leader. In 2001,
Atlas expanded its product line to include fractional ACMI;
partial ACMI; dry leases (aircraft, maintenance, and insurance
but no crew) for aircraft; and charters. Also in late 2001, the
company acquired Polar Air Cargo Inc., a provider of scheduled
airport-to-airport cargo services as well as other nonscheduled
cargo services. Polar's scheduled service is a different type of
business and serves different customers than does Atlas'
existing ACMI freighter services and carries a higher fixed cost
component. The purchase of Polar increased Atlas' fleet of
aircraft and its lease obligations at a time when air freight
market conditions were under significant pressure. Adding to
risks in the near term is Atlas' preexisting commitment to
acquire four new 747 aircraft despite existing overcapacity.
Financial risk is also heightened by substantial debt maturity
requirements over the next few years.
International commercial air freight demand weakened sharply in
2001. No material improvement is expected this year although,
over the longer term, growth prospects are still considered
positive. The cyclical and price-competitive nature of the
industry will remain a challenge for Atlas as will the matching
of additional aircraft with contracts and the renewal and
pricing of expiring contracts.
Outlook
Ratings assume that Atlas will maintain current levels of
liquidity over the near term and generate a gradual improvement
in financial measures as industry fundamentals begin to
strengthen. A protracted downturn in industry demand or
difficulties in executing the new business strategy could lead
to further financial pressures and could result in further
downgrades.
Ratings lowered: To: From:
Atlas Air Worldwide Holdings Inc.
* Corporate credit rating B+ BB-
Atlas Air Inc.
* Senior unsecured rating B- B
* Pass-through certificates Series
1998-1, Class A AA AA-
* Pass-through certificates Series
1998-1, Class B BBB BBB+
* Pass-through certificates Series
1998-1, Class C BB BB+
* Pass-through certificates Series
1999-1, Class A-1 AA AA-
* Pass-through certificates Series
1999-1, Class A-2 AA- AA
* Pass-through certificates Series
1999-1, Class B BBB+ A-
* Pass-through certificates Series
1999-1, Class C BB BB+
* Pass-through certificates Series
2000-1, Class A AA- AA
* Pass-through certificates Series
2000-1, Class B A- A
* Pass-through certificates Series
2000-1, Class C BB+ BBB-
BANYAN STRAT: Settles Contract Disputes with Denholtz for $300K
---------------------------------------------------------------
Banyan Strategic Realty Trust (Nasdaq: BSRTS) announced it has
entered into a series of settlement agreements with Denholtz
Management Corp. and other parties, to resolve all contractual
disputes among the various parties arising from the sale of most
of Banyan's portfolio to Denholtz in May of 2001.
Pursuant to the parties' purchase and sale contract, at the
closing last May, $1.5 million of sales proceeds were placed in
escrow to provide assurance to Denholtz that funds would be
available during Banyan's liquidation process to satisfy post-
closing claims and adjustments. During the course of the year
since the closing, certain disputes have arisen involving
certain closing and post-closing adjustments.
The settlement agreements provide, in part, that Banyan will pay
to, or for the benefit of, Denholtz, $296,147 in full settlement
of all claims of Denholtz. The balance of the escrowed funds
(approximately $1.2 million plus interest) have been released to
Banyan. Banyan and Denholtz have exchanged mutual releases of
any further liability under their purchase and sale contract.
The mutual releases specifically exclude two promissory notes,
each in the original principal amount of $1.5 million, given by
Denholtz to Banyan last May as part of the $185.25 million
purchase price for the portfolio. The notes are due on June 30,
2002.
Banyan noted that prior to this settlement, the principal
balances due on the two notes were $1.5 million and $764,314.18,
respectively, and that all required interest payments to date
have been timely made. Banyan and Denholtz effected the
settlement of their disputes by applying escrowed funds to
reduce the principal balance due on one of the promissory notes
from $764,314.18 to $483,017.18. Banyan also directly paid a
$14,850 claim brought by a third party against Banyan and
Denholtz. The balance of the escrowed funds was then released
to Banyan.
L.G. Schafran, Interim President, Chairman and CEO of Banyan,
commenting upon the settlement agreement, said: "We are very
pleased to reach these agreements with Denholtz, settling our
outstanding contractual disputes and leaving slightly less than
$2 million left to be paid on the notes we accepted at the
closing last May. This settlement allows us to realize a
substantial portion of the previously escrowed funds, and
furthers our Plan of Termination and Liquidation. We will
continue our policy of making liquidating distributions when,
and as often as, conditions warrant."
Banyan Strategic Realty Trust is an equity Real Estate
Investment Trust (REIT) that, on January 5, 2001, adopted a Plan
of Termination and Liquidation. On May 17, 2001, the Trust sold
approximately 85% of its portfolio in a single transaction.
Other properties were sold on April 1, 2002 and May 1, 2002.
Banyan now owns a leasehold interest in one (1) real estate
property located in Atlanta, Georgia, representing approximately
9% of its original portfolio. Since adopting the Plan of
Termination and Liquidation, Banyan has made liquidating
distributions totaling $4.95 per share. On May 1, 2002, Banyan
announced that an additional distribution of $0.30 per share
will be made on May 31, 2002 to shareholders of record as of May
16, 2002, thus increasing the total liquidating distributions to
$5.25 per share. As of this date, the Trust has 15,496,806
shares of beneficial interest outstanding.
BETHLEHEM STEEL: Entering Into New IT Partnership Pact With EDS
---------------------------------------------------------------
Electronic Data Systems Corporation provides Bethlehem Steel
Corporation and its debtor-affiliates information technology
services to ensure the proper and efficient function of the
Debtors' network of data systems through an Information
Technology Partnership Agreement dated December 21, 1992. The
Agreement is due to expire on January 1, 2003.
Electronic Data and EDS Information Services LLC have indicated
their desire to provide the IT Services under new terms
effective January 1, 2003.
Jeffrey L. Tanenbaum, Esq., at Weil, Gotshal & Manges, LLP, in
New York, informs Judge Lifland that under the new terms, EDS
proposes to:
(a) effect overall technology improvements which will
continue to improve the Debtors' operations, work
processes and responsiveness to customers' requirements,
(b) keep the Debtors' information technology costs and other
business management costs low relative to the market and
take advantage of advances in technology, economies of
scale, and efficiencies arising from the use of EDS as a
service provider, and
(c) minimize business risks associated with the operation of
the Debtors' data systems.
The Debtors decided to accept EDS' offer. Therefore, the
Debtors seek the Court's authority to enter into the IT
Partnership Agreement with EDS under these terms:
Term: EDS will provide IT Services to the Debtors
from January 1, 2003 until December 31, 2007
with an option to extend for an additional
three years upon the consent of both parties.
Services: IT Services to be performed by EDS will
include mainframe computer processing, software
application development, PC server
administration, PC computer support, voice and
data communications, process control support,
and information technology equipment
procurement and leasing.
Master Lease
Agreement: As of the Effective Date, the parties agree to
enter into a 2003 Master Lease Agreement which
governs EDS's leasing and procurement of
certain property used by the Debtors in
conjunction with the IT Services. The 2003
Master Lease Agreement will also provide that:
(1) it expires as of the date of the
expiration or termination of the 2003
Agreement,
(2) EDS warrants that it has the right to
lease or sublease applicable assets,
(3) the Debtors will provide EDS with a secure
facility at which to store the leased
assets prior to the applicable installation
date,
(4) the annual financing cap and the fees for
lease administration will be as set forth
in the 2003 Agreement, and
(5) provisions for payment will be as set
forth in the 2003 Agreement, provided that
fees payable under any lease schedule are
be payable in advance.
In the event the parties are unable to finalize
the terms of the 2003 Master Lease Agreement by
the Effective Date, the terms and conditions of
2003 Agreement and annexes will be effective
until such time as the parties do enter the
2003 Master Lease Agreement, provided that the
lease pricing applicable on the Effective Date
is the pricing set in the 2003 Agreement.
Fees: The Debtors will pay base fees to EDS according
to the schedule set forth in the 2003
Agreement. The Debtors will only pay base fees
to the extent they order and receive services.
Additional fees, such as new project fees,
additional services fees and incremental fees,
will be paid to EDS as set forth in the 2003
Agreement. The Debtors are obligated to
negotiate adjustments to the terms of the 2003
Agreement if billing volume falls below a
certain threshold.
Rights of
Setoff: With respect to any amount which the Debtors
and EDS in good faith determine should be
reimbursed to the Debtors, or is otherwise
payable to the Debtors by EDS pursuant to the
2003 Agreement, the Debtors may upon notice to
EDS deduct the entire amount owed against the
charges otherwise payable or expenses owed to
EDS under the 2003 Agreement until the entire
amount owed to the Debtors has been paid. The
Debtors will be relieved of their obligation to
make any payments to EDS until all these
amounts have been credited to the Debtors.
Assignment: EDS will:
(1) not assign the 2003 Agreement or any
amounts payable pursuant thereto without
the written consent of the Debtors, and
(2) only subcontract the provision of any of
the IT Services as permitted by the 2003
Agreement.
The Debtors' consent to any assignment or
subcontracting will not:
(a) with respect to subcontracting, relieve EDS
of its responsibility for the performance
of any of its other obligations under the
2003 Agreement, or
(b) constitute the Debtors' consent to further
assignment or subcontracting.
The Debtors will not assign the 2003 Agreement
without EDS's written consent except the
Debtors may assign any portion of the 2003
Agreement without EDS's consent in respect of
IT Services being provided to a facility or
operation of the Debtors which is sold or
transferred to the entity who acquires such
facility or operation, provided the assignment
does not relieve the Debtors from their other
obligations under the 2003 Agreement.
Termination for
Change in
Control: The Debtors may terminate the 2003 Agreement as
a result of a sale or contribution of all or
substantially all of the Debtors' assets or a
sale of sufficient stock of the Debtors to
effect a change in control upon 180 days
notice. There will be no termination fee
assessed after December 31, 2007. In the event
of a termination for change in control, the
Debtors will pay EDS a $2,000,000 termination
fee within 30 days of the effective date of the
termination.
Termination for
Cause: If either EDS or the Debtors fail to perform
any material obligations under the 2003
Agreement, and the failure is not cured within
30 days after notice is given to the defaulting
party, the non-defaulting party may, upon
further notice to the defaulting party,
terminate the 2003 Agreement. This is provided
that the time to cure a default is extended for
up to 90 days from the date on which a notice
of default is received by the defaulting party,
if the defaulting party has promptly commenced
to cure the default and continues to use its
best efforts to cure such default during the 90
day period.
Termination for
Critical
Production
Outage: If any failure by EDS to provide IT Services
results in a Critical Production Outage, as
the term is defined in the 2003 Agreement, and
EDS does not cure such failure with 48 hours of
its receipt of notice of same, the Debtors may
terminate the 2003 Agreement.
Limitation of
Damages: Following the entry of the final order
approving the 2003 Agreement, in the event that
on or before December 31, 2002:
(a) the Debtors reject the 1992 Agreement
pursuant to section 365 of the Bankruptcy
Code,
(b) the Debtors terminate the 1992 Agreement
pursuant to Section 24 thereof,
(c) EDS will terminate the 1992 Agreement
pursuant to Section 24 thereof, or
(d) the Debtors will reject or terminate the
2003 Agreement for any reason,
the 2003 Agreement will be deemed to be of no
further force or effect and EDS will have an
allowed claim against the Debtors under the
2003 Agreement of $2,000,000. This shall
constitute a fair and reasonable assessment of
liquidated damages thereunder and be treated as
an administrative expense claim pursuant to
Sections 503(b) and 507(a)(1) of the Bankruptcy
Code, payable within 30 calendar days of the
rejection or termination, and EDS will have no
other claim against the Debtors relating to the
2003 Agreement. This is provided, however,
that in the event the Debtors terminate the
1992 Agreement pursuant to Sections 24.03,
24.04, and 24.05 thereof, EDS will not be
entitled to the 2003 Agreement Claim against
the Debtors.
Pre-petition
Claim: EDS is deemed to hold an allowed claim in
the amount of $8,000,000. The claim is in
addition to any other claims EDS may hold, to
the extent any other claims are allowed, and
which the $8,000,000 Claim is deemed a
pre-petition general unsecured claim entitled
to the same treatment as other claims similarly
situated.
Contractual
Fees: The Debtors will pay to EDS the sum of
$2,100,000 as a fee to compensate EDS for its
entry into a long-term arrangement with the
Debtors. The Debtors will pay $800,000 of the
Contractual Fee to EDS within three business
days after the entry of the Order approving the
2003 Agreement, regardless of whether that
order ever becomes a Final Order. The Debtors
will pay EDS the remaining $1,300,000 of
the Contractual Fee within three business days
after the Order approving the 2003 Agreement
becomes a Final Order approving this Agreement.
The Contractual Fee will be retained by EDS
regardless of whether the Effective Date
actually occurs.
Offset: Any payments made by the Debtors to EDS on
account of the 2003 Agreement Claim will
constitute a dollar for dollar offset against
the value of any consideration that EDS may
receive on account of any allowed claim that
EDS may have against the Debtors pursuant to
the terms of the 1992 Agreement.
Bankruptcy Court
Approval: The 2003 Agreement will be of no force or
effect until it has been approved by a Final
Order. In the event the Debtors are unable to
obtain the entry of an Order seeking the relief
requested herein within 120 days of the entry
of such Order on the docket, EDS may terminate
the 2003 Agreement without penalty upon notice
to the Debtors, with the termination to have
no effect on the rights of either party under
the 1992 Agreement. Upon entry of the Final
Order and only with respect to events occurring
on or after the Effective Date:
(a) all amounts owing to EDS pursuant to the
2003 Agreement including, but not limited
to, any damages for breach of contract,
will be treated as administrative expenses
of the Debtors pursuant to sections
503(b)(1) and 507(a)(1) of the Bankruptcy
Code, and
(b) the automatic stay under section 362(a) of
the Bankruptcy Code will not prohibit,
affect, or otherwise interfere in any
fashion with the right of EDS to exercise
its rights under the 2003 Agreement.
Indemnification: The Debtors will indemnify EDS from, and EDS
will indemnify the Debtors from any and all
damages, fines, penalties, deficiencies,
losses, liabilities, and expenses relating to,
among other things, infringement claims by
third parties, act or omissions constituting
harm, personal injuries, property damage, or
fines.
Pursuant to Section 363(b)(1) of the Bankruptcy Code, Mr.
Tanenbaum contends that the Agreement is warranted because:
(a) EDS has an intimate 10 years working knowledge and
understanding of the Debtors, their business operations
and their information technology requirements;
(b) the Debtors would incur a multitude of costs associated
with a transition to a new provider, including
identifying and contracting with a new third party
provider with the requisite skill and resources necessary
to meet the Debtors' complex IT Service requirements,
training of new personnel, transferring mainframe
software systems to a new third party, and paying for
overlapping of services during a transition period;
(c) the pricing schedules proposed by potential third party
providers are substantially similar to the pricing
schedules set forth in the 2003 Agreement, limiting any
potential benefit to be realized by a change in IT
Service providers;
(d) the Debtors' data management systems are a vital and
critical component of their businesses. Any interruption
in IT Services or complications associated with a
transition to a new provider would severely hinder the
Debtors' business operations and undermine their
prospects for a timely and successful reorganization; and
(e) the terms and conditions of the 2003 Agreement were
negotiated in good faith. (Bethlehem Bankruptcy News,
Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900)
BROADLEAF CAPITAL: Losses Trigger Doubt On Going Concern Ability
----------------------------------------------------------------
Broadleaf Capital Partners, Inc. (formerly Peacock Financial
Corporation), a Colorado corporation, incorporated February
1984, is a publicly traded diversified investment holding
company that makes direct investments in and provides management
services to businesses that have an operating history and can
perform to the bottom line. The Company has continued with its
restructuring and plans expansion through the ongoing
development of its available operations and other business
opportunities.
Fiscal year 2001 was the Company's third year in operation as a
Business Development Corporation under the Investment Act of
1940.
Revenues totaled $764,814 for the fiscal year ending December
31, 2000. For the year ending December 31, 2001, revenues were
$15,773. The decrease resulted an adjustment made to reflect the
correction of the Canyon Shadows Partnership. Distributions from
this partnership should have been credited against the
investment rather than a booking to Revenues.
Total operating loss was $8,616,328 for the year ending December
31, 2000 as compared to $3,655,086 for the year ended December
31, 2001. This decrease reflects the write-off of certain of the
Company's investments, particularly the soccer franchises in
2000, and lower level of operations in 2001.
For the twelve months ended December 31, 2001, the Company
funded its operations and capital requirements partially with
its own working capital and partially with proceeds from stock
offerings. The Company currently has no lines of credit
available and is operating in a negative cash flow. Future
operations will depend on attracting additional investments into
the Company, which are essential to the Company's future.
As reported in the consolidated financial statements, the
Company has an accumulated deficit of $15,623,929 and
$11,968,843 as of December 31, 2001 and 2000, respectively. The
Company incurred losses of $3,655,086 and $8,616,328 for the
years ended December 31, 2001 and 2000, respectively. The
Company also has certain debts that are in default at December
31, 2001. The Company's stockholders' deficit at December 31,
2001 and 2000 was $ 3,660,822 and $790,039, respectively, and
its current liabilities exceeded its current assets by
$4,003,229 and $1,683,089, respectively.
These factors create uncertainty about the Company's ability to
continue as a going concern. The ability of the Company to
continue as a going concern is dependent on the Company
obtaining adequate capital to fund operating losses until it
becomes profitable. If the Company is unable to obtain adequate
capital it could be forced to cease operations.
BROCKER TECHNOLOGY: Names Suray Sharma As New Interim CFO
---------------------------------------------------------
Brocker Technology Group Ltd. (TSX: BKI) announced that Suray D.
Sharma has been named interim Chief Financial Officer, of
Brocker Technology Group Ltd. effective immediately. Mr. Sharma
replaces Grant Hope.
Suray D. Sharma, as interim CFO, will oversee Brocker's
financial operations in the Pacific Islands, Australia, New
Zealand and Canada. Mr. Sharma assumes responsibility for all
matters related to financial reporting. Mr. Sharma (36) has a
Bachelors Degree in Accounting and is a Member of the Fiji
Institute of Accountants. He brings to Brocker strong financial
management and administrative operations experience. Previously,
Mr. Sharma has worked with Coopers & Lybrand, Coca Cola Amatil
Fiji Ltd., and was most recently the Group Finance Manager for
Kelton Investments Ltd. and the Datec Group.
"Mr. Sharma has been employed by the Datec Group for over five
years and we are pleased that he has accepted this additional
responsibility. Suray is a hardworking, trusted and trustworthy
colleague and to have him on board at this important time the
company's history adds impetus to our renewed corporate
strategy," explained Michael Ah Koy, Managing Director of
Brocker.
The Company's common shares trade on the Toronto Stock Exchange.
For more information on Brocker Technology Group, visit the
company's Web site at http://www.brockergroup.com
BURNHAM PACIFIC: Liquidating Company Releases Q1 2002 Results
-------------------------------------------------------------
Burnham Pacific Properties, Inc. (NYSE: BPP) announced financial
results for the first quarter ended March 31, 2002. Net income
available to common stockholders for the first quarter of 2002
was $707,000, or $0.02 per share, as compared to net income of
$3,216,000, or $0.10 per share, for the quarter ended March 31,
2001.
Review of Results
For the first quarter ended March 31, 2002, total revenues
decreased $18,250,000 to $7,027,000 from $25,277,000 in the
first quarter of 2001. This decrease was primarily attributable
to asset sales completed in 2001 and the first quarter of 2002
under the Company's Plan of Complete Liquidation and
Dissolution. Total expenses decreased $13,116,000 to $6,303,000
from $19,419,000 in the first quarter of 2001 resulting from the
Company's implementation of the Plan of Liquidation.
Liquidation Basis of Accounting
As a result of the adoption of the Plan of Liquidation and its
approval by the Company's stockholders, the Company adopted the
liquidation basis of accounting for all periods subsequent to
December 15, 2000. Accordingly, on December 16, 2000, in
accordance with the liquidation basis of accounting, assets were
adjusted to estimated net realizable value and liabilities were
adjusted to estimated settlement amounts, including estimated
costs associated with carrying out the liquidation. The
valuation of real estate held for sale as of March 31, 2002 and
December 31, 2001 is based on current contracts, estimates as
determined by independent appraisals and other indications of
sales value, net of (i) estimated selling costs and (ii)
anticipated capital expenditures during the remaining
liquidation period of approximately $731,000 and $6,337,000,
respectively. Actual values realized for assets and settlement
of liabilities may differ materially from the amounts estimated.
Factors that may cause such variations include, among other
factors, the possibility that assets currently under contract
may not be sold on the terms currently provided in those
contracts or at all, and the other risk factors discussed under
Forward-Looking Statements and Certain Risk Factors beginning on
page one of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001 filed with the Securities
and Exchange Commission.
Dispositions and Distributions
Since the adoption of the Plan of Liquidation by the Company's
Board of Directors in August 2000 through May 15, 2002, the
Company has disposed of 54 properties and two parcels of
undeveloped land for aggregate proceeds of approximately
$854,984,000, consisting of approximately $520,125,000 in cash,
2,512,778 shares of common stock of Developers Diversified
Realty Corporation ("DDR") valued at $20.21 per share (the value
of a share of DDR common stock as of the close of business on
the closing date of the sale by the Company of two properties to
DDR), and the assumption of approximately $284,076,000 of
liabilities. The Company applied approximately $126,000,000 of
the cash proceeds to redeem all of the Company's outstanding
preferred equity, approximately $2,578,000 to redeem units of
limited partnership interests in conjunction with the sale of
certain assets, and approximately $243,397,000 to further reduce
the Company's outstanding indebtedness. The Company has also
made liquidating distributions to its common stockholders and
the holders of common units of limited partnership interest in
its subsidiaries of approximately $73,591,000 in cash ($2.20 per
share and common unit) and has distributed all of the shares of
DDR common stock at a ratio of 0.07525 of a share of DDR common
stock for each share of the Company's common stock and each
common unit. The remainder of the net proceeds (excluding
current cash reserves) was used for capital improvements in
development projects, tenant improvements and leasing
commissions, litigation costs, severance and other liquidation
costs, and the repayment of other obligations. The aggregate
amount of liquidating distributions made to date, using the
value of the DDR common stock of $20.21 per share, is $3.72 per
share and common unit.
Based on current facts and circumstances, the Board of Directors
is not yet able to determine whether it will be appropriate to
authorize an additional liquidating distribution prior to June
28, 2002, but it expects to be in a position to determine
whether or not to do so by the middle of June 2002 based upon a
variety of factors. Such factors include, without limitation,
the timing of and the net proceeds realized from the sale of the
Company's properties, the realization and timing of payments to
the Company pursuant to promissory notes received in connection
with such sales, the status of pending and potential litigation,
the collection of delinquent tenant receivables associated with
such sales, and the anticipated amounts of liquidation-related
expenses and other obligations and liabilities that must be
satisfied by the Company and the BPP Liquidating Trust or for
which reserves must be established. There can be no assurance
that any liquidating distribution will be authorized by the
Board of Directors prior to June 28, 2002.
As of May 15, 2002, the Company owned the following five
properties:
Central Shopping Center -- Ventura, CA
Crenshaw Imperial Shopping Center -- Inglewood, CA
Gateway Center -- Marin City, CA
Palms To Pines -- Palm Desert, CA
Simi Valley Plaza -- Simi Valley, CA
Liquidating Trust
On May 10, 2002, the Company announced that it intends to enter
into a liquidating trust agreement on June 28, 2002 for the
purpose of winding up its affairs and liquidating its assets.
The Company currently anticipates that it will transfer its then
remaining assets to (and its then remaining liabilities will be
assumed by) the Trustees of the BPP Liquidating Trust on June
28, 2002, and the Company will be dissolved. It is anticipated
that June 27, 2002 (the "Record Date") will be the last day of
trading of the Company's common stock on the New York Stock
Exchange, and the Company's stock transfer books will be closed
as of the close of business on such date.
Under the terms of the proposed Trust Agreement, on June 28,
2002 each of the Company's stockholders on the Record Date (each
a "beneficiary") automatically will become the holder of one
unit of beneficial interest ("Unit") in the BPP Liquidating
Trust for each share of the Company's common stock then held of
record by such stockholder. On and after June 28, 2002, all
outstanding shares of the Company's common stock automatically
will be deemed cancelled, and the rights of beneficiaries in
their Units will not be represented by any form of certificate
or other instrument. Stockholders on the Record Date will not
be required to take any action to receive their Units. The
Trustees will maintain a record of the name and address of each
beneficiary and such beneficiary's aggregate Units in the BPP
Liquidating Trust. Subject to certain exceptions related to
transfer by will, intestate succession or operation of law, the
Units will not be transferable, nor will a beneficiary have
authority or power to sell or in any other manner dispose of any
Units.
CASUAL MALE CORP.: Designs, Inc. Completes $170 Million Purchase
----------------------------------------------------------------
Designs, Inc. (NASDAQ - DESI), retail brand operator of Levi's
Outlet by Designs, Dockers Outlet by Designs, Candies and Ecko
Unltd. outlet stores, announced the completion of its
acquisition of Casual Male Corp. and certain subsidiaries, a
leading specialty retailer of fashion, casual and dress apparel
for big and tall men.
On May 1, 2002, the Company was selected as the highest and best
bidder at the Bankruptcy Court ordered auction to purchase
substantially all of the assets of Casual Male. The U.S.
Bankruptcy Court for the Southern District of New York
subsequently granted its approval to Designs, Inc. for the $170
million acquisition of Casual Male on May 7, 2002.
Under the terms of the asset purchase agreement, the Company
will acquire substantially all of Casual Male's assets
including, but not limited to, the inventory and fixed assets of
approximately 475 retail store locations and various
intellectual property. In addition, the Company will also assume
certain operating liabilities, including but limited to,
existing retail store lease arrangements and the existing
mortgage for Casual Male's corporate office, which is located in
Canton, Massachusetts.
The Company will fund the $170.0 million acquisition through a
combination of new equity and debt. The Company will issue
approximately $80 million of common and preferred stock
(equivalent to approximately 19 million common shares, assuming
shareholder approval for conversion of preferred stock), and
approximately $36 million in senior subordinated debt (including
warrants for approximately 2.5 million common shares, subject in
part to shareholder approval), and borrow approximately $15
million through a three-year term loan with Back Bay Capital
Funding, LLC, and the assumption of an existing $12.2 million
mortgage note. The remainder of the acquisition will be funded
from the Company's amended senior secured revolving credit
agreement with the Company's bank, Fleet Retail Finance, Inc.
Seymour Holtzman, Chairman of Designs, said, "Although we first
expressed an interest in acquiring Casual Male six months ago,
we were not able to commence our due diligence and fund raising
efforts until March 21, 2002. Since the Bankruptcy Court set a
deadline of April 27, 2002 for submitting a competing offer with
a 10% required deposit, this was an immense task. This was an
extraordinary undertaking and is a great tribute to the senior
management of Designs, Inc."
David Levin, President and Chief Executive Officer of Designs,
stated, "We are very excited about our acquisition of Casual
Male and its contribution to our future growth strategy. Casual
Male is an excellent brand and continues to be the leader in the
specialty retail market of big and tall men apparel. The
similarity of Casual Male's business to ours, that is, retailers
of branded apparel, make this an excellent combination for us.
We believe Casual Male's leading market position, along with
Designs' efficient operating capabilities, will produce a very
profitable combination and that the performance of the combined
company will be beneficial to our shareholders."
Dennis R. Hernreich, Senior Vice President and Chief Financial
Officer of Designs, added, "This acquisition is expected to
increase our total annualized revenue to in excess of $500
million. During the prior two fiscal years, Designs and Casual
Male, between then, reported sales totaling approximately $556.3
million in FY 2001 and $602.5 million in FY 2000 and earnings
before interest, taxes, depreciation and amortization ("EBITDA")
totaling approximately $29.4 million in FY 2001 and $48.4
million in FY 2000. During FY 2001 Casual Male entered
bankruptcy and was operating as debtor-in-possession for most of
the year. Also, because of the synergies between these
businesses, we expect that there will be substantial cost
savings that we will be able to realize. Over the past year,
Casual Male has already taken several significant steps to
improving its operations by closing approximately 130 of its
unprofitable stores, cleaning up its merchandise inventories and
relocating its e-commerce and direct mail operations to its
corporate headquarters in Canton, Massachusetts. During the
balance of this fiscal year we will be in transition of
combining the two operations, planning for significant systems
enhancements at Casual Male and otherwise executing plans to
realize the synergies over the next couple of years."
Designs, Inc. plans to report first quarter results on Thursday,
May 23, 2002. The Company will host a conference call on that
date to be broadcast live via webcast at 10:00 a.m. Eastern
Time. Participants can access the webcast via the Company's
website: www.designsinc.com. An archive of the webcast will be
available one hour after the live call has taken place and
through May 30, 2002.
About Designs, Inc.
Designs, Inc. operates 105 Levi's Outlet by Designs, Dockers
Outlet by Designs and Candie's outlet stores primarily in the
Eastern part of the United States and in Puerto Rico. The
Company is headquartered in Needham, Massachusetts and its
common stock is listed on the Nasdaq National Market under the
symbol "DESI". Investor Relations information is available on
the Company's Web site at http://www.designsinc.com.
About Casual Male
Casual Male is a leading independent specialty retailer of
fashion, casual and dress apparel for big and tall men with
annual sales that exceed $350 million. Casual Male sells its
branded merchandise through various channels of distribution
including full price and outlet retail stores, direct mail and
the internet. Casual Male had been operating under the
protection of the U.S. Bankruptcy Court since May 2001.
COMPLETEL: Signs Recapitalization Agreement With Bondholders
------------------------------------------------------------
Completel has signed an agreement with an ad hoc committee of
holders of Completel Europe NV senior notes in support of a
recapitalization plan for the Company.
The Committee collectively owns over 75 percent of the Company's
combined outstanding Senior Notes and Senior Discount Notes. The
Recapitalization will involve a debt for equity swap in respect
of the Notes and the return to the holders of the Senior Notes
of the escrow funds established at the time of the Senior Notes
issuance. Two of the Company's major shareholders (Meritage
Private Equity Funds and DeGeorge Telecom Holdings) have agreed
to provide euro 30 million in new capital upon the successful
closing of the Recapitalization, and certain of the existing
bondholders on the Committee have agreed to re-invest in the
Company euro 8 million of cash, reflecting a portion of the
escrow funds. Post- Recapitalization, Meritage, DeGeorge and
the bondholders will own 96.6 percent of Completel, with the
existing shareholders being diluted to the remaining 3.4
percent.
The Recapitalization will substantially deleverage the Company's
balance sheet and is expected to fund the Company to cash flow
breakeven. The Committee is unanimously supporting the Company's
proposed recapitalization, which would have the effect of
converting all of the Company's outstanding Notes into equity
securities.
The Recapitalization
The Company intends to effect the Recapitalization by means of a
pre- arranged Netherlands restructuring plan proceedure known as
an Akkoord. To avail itself of this proceeding, in the next two
weeks Completel Europe NV, the group's holding company, would
file for protection from its creditors, which consist almost
entirely of holders of the Notes.
The Recapitalization, which is subject to the support of the
holders of at least 75 percent of the Notes and the sanction of
the Netherlands courts, would be binding on all bondholders,
effectively eliminating the Company's outstanding indebtedness
while permitting the Company's operating subsidiaries to
continue operations without disruption. The Company believes it
has obtained the level of commitments from the holders of its
Notes that would be required by the Netherlands courts to
approve the Recapitalization and retirement of all of its
outstanding Notes. Bondholders wishing to obtain additional
information regarding the terms of the Recapitalization are
recommended to contact bondholders' counsel, James Terry of
Bingham Dana LLP, on +44 (0) 20 7375 9770 as soon as possible.
The aggregate amount of shares to be issued as part of the
Akkoord represents approximately 42.6 percent of the Company's
shares that would be outstanding at the close of the
Recapitalization on an as-converted basis. The new capital of
euro 30 million and the re-invested escrow of euro 8 million
would receive Convertible Preferred A shares and Ordinary shares
representing approximately 42.6 percent and 11.4 percent,
respectively, of the then outstanding shares on an as-converted
basis, with the remaining shares (3.4 percent) being held by
existing shareholders. Post-Recapitalization, the Company's
Supervisory Board would be reconstituted as a six-member board
comprised of two designees of the Convertible Preferred A
shares, two designees of the Convertible Preferred B shares, and
two independent directors mutually acceptable to the investor
group and the bondholder group.
In accordance with their respective terms, in the event of a
liquidation of the Company, the Convertible Preferred A shares
will rank senior to the Convertible Preferred B shares, which
will rank senior to the Company's Ordinary shares. In addition,
upon liquidation, the Convertible Preferred A and B shares will
be entitled to receive, prior to any distribution in respect of
the Ordinary shares, an amount in cash equal to euro 0.03 per
share.
As an alternative to an Akkoord, if the Company concludes that a
significant majority of bondholders support the
Recapitalization, it may pursue an out of court restructuring
effected by means of an unregistered exchange offer on
substantially the same terms as the Akkoord. This offer would
take advantage of the exemption from registration under the
Securities Act provided by Section 3(a)(9) and could achieve a
recapitalization much faster than under an Akkoord. In addition,
the Company may pursue a pre- arranged U.S. Chapter 11 filing to
accomplish the Recapitalization.
Completion of the Recapitalization, which is expected to close
during the third quarter, is subject to approval of a share
capital increase by the Company's existing shareholders, the
closure or sale of the Company's UK operations, and other
customary conditions. The Company believes that it has obtained
the required level of commitments from its existing shareholders
to vote in favor of the capital increase and other required
actions.
After considering a range of options, the Board of Completel
voted unanimously to approve this transaction. The
implementation of the Recapitalization will allow the Company to
focus its management and resources on its French operations.
Upon completion of the transaction and the concurrent closing of
the issuance of new capital, the Company expects that its cash
balances, together with anticipated cash flow from operations,
will provide the Company with sufficient capital to fund its
operations through to cash flow breakeven.
Financial Advisors
In support of the Company's efforts to restructure and
recapitalize, Greenhill & Co., LLC, has acted as principal
financial advisor to the Company since January 2002.
Reverse Share Split
Subject to shareholder and regulatory market authority approval,
Completel is also anticipating a reverse share split in order to
maintain orderly trading, with this reverse split occurring
concurrent with the closing of the Recapitalization.
Q1 2002 Highlights
-- Retail revenue grew by 18% to euro 18.1 million relative to
Q4 2001.
-- The adjusted EBITDA loss for the first quarter narrowed to
euro 9.8 million, a 41% (euro 6.7 million) improvement over Q4
2001, which itself followed a 33% improvement over the previous
quarter.
-- Completel's French cities collectively continue to be
adjusted EBITDA positive in Q1 2002, with Nice the eighth city
to turn positive this quarter.
-- Quarterly cash deployment, was euro 25 million in Q1 2002, a
reduction of 39% relative to the euro 41 million underlying cash
outlay in the prior quarter. Quarter end cash stood at euro
81.2 million, of which euro 56.2 million is unrestricted.
-- Gross margin attained 29.7% for the quarter, versus 16.5% in
the prior quarter.
-- Selling, general and administrative expense was euro 18.4
million, a decrease of 13% as opposed to Q4 2001, and represents
63% of revenue for the quarter.
Tim Samples, CEO, stated, " We have launched a comprehensive
restructuring of our balance sheet that we expect will position
the Company to be fully funded through to free cash flow
positive. The restructuring strategy put forward by Completel
is in the best interest of all stakeholders, generates a minimum
of euro 38 million in new cash resources and virtually
eliminates the Company's debt, positioning Completel to maintain
its leading role in the French CLEC market.
The restructuring now under way is made possible by the support
of a broad majority of bondholders, and by various existing
major shareholders, who see the Completel business plan as
offering attractive prospects post restructuring of the
Company."
Q1 2002 results show 41% decrease in adjusted EBITDA loss
compared to Q4 2001
Completel announced continued growth in the first quarter of
2002, coupled with a decrease of 41% in its adjusted EBITDA loss
for the quarter to euro 9.8 million, and a 39% reduction in its
quarterly cash outlay to euro 25.2 million. Completel also saw
its eighth French city, Nice, turn adjusted EBITDA positive.
The improvement in Completel's adjusted EBITDA margin for Q1
2002 over Q4 2001 resulted from planned reductions in selling,
general and administrative expense, which declined by 13% to
euro 18.4 million. This reduction was coupled with lower
interconnection costs and planned network efficiency gains that
saw gross margin rise to 29.7% from 16.5%. Completel's cash
balance stood at euro 81.2 million at the end of the quarter,
after euro 9 million for capital expenditures primarily related
to the connection of client sites.
Completel made solid operational progress in Q1 2002 in its
retail business, with customer connections of 191 site additions
compared to 130 site additions in the same quarter a year
earlier. Retail customer ARPU for the first quarter was euro
4,400, a 7% increase from euro 4,100 in Q4 2001.
French revenue grew to euro 23.0 million in Q1 2002
The French business, on which Completel will focus going
forward, accounted for 79% of the consolidated revenue for the
first quarter of 2002. Retail revenue in France grew 16%
compared to the fourth quarter of 2001, and now represents 65%
of total French revenue compared to 59% in the prior quarter.
Despite difficult market conditions, French wholesale carrier
services revenue grew 9% compared to Q4 2001, due in part to
continued increases in demand for voice traffic termination
services.
French ISP dial up services declined by 27% relative to Q4 2001.
This business line is gradually becoming less prominent within
the markets served by Completel.
German revenue held at euro 5.3 million in Q1 2002
Overall German revenue did not change significantly from that of
the previous quarter, while the refocusing of operations helped
increase margins. Germany's adjusted EBITDA loss narrowed from
euro 2.5 million in the fourth quarter 2002 to euro 1.0 million
in the first quarter 2002.
Jerome de Vitry, COO, commented, "We now have the necessary
resources with which to move Completel ahead and remain a
leading fibre based business CLEC in France. Activity has been
supported by sound retail growth, with a sustained pace of new
retail sites connections, even under challenging market
conditions. We expect to continue to raise our penetration of
higher value and national retail accounts in France over the
year ahead, while also seeing the margin benefits of penetrating
previous voice services markets, as well as data markets, with
our recently launched LAN to LAN and IP VPN services.
Completel's gross margin improvement, to 29.7% in Q1 2002 from
16.5% in Q4 2001, reflects improved leverage on interconnection
costs as anticipated by management in late 2001. Gross margin
is expected to continue to improve as new customers are added to
the network. Selling, general and administrative expense
dropped to 63% of revenue, from 76% in the prior quarter, as the
result of overall cost reductions that are likely to prove
sustainable thanks to restructuring measures now well under
way."
Lyle Patrick, CFO, added that, "Completel's cash outlays for the
quarter were again significantly reduced - by 39% in terms of
operating cash outlays. Our capital expenditures were reduced by
over 50% compared to the prior quarter. We continue to
capitalize on the advantage of having completed our city builds
faster than planned in 2001. With most of these expenditures
behind us, future asset deployment will be approximately 80%
success based and our cash deployment is being actively managed
to maximize early returns".
During the first quarter 2002, Completel also recognized a non-
cash charge of euro 1.9 million to reflect balance sheet
restructuring costs.
German/UK Operations
On May 10, 2002 the Company sold its German operations
(Completel GmbH) to Arques AG, a German holding company of
equity financing with a business focus on the acquisition and
development of enterprises in redevelopment situations.
Reciprocal commercial agreements for voice and data services
will be created allowing Completel to serve its French customers
that have, or will develop, operations in Germany.
Additionally, the Company has reached an agreement to sell its
UK operation (iPcenta Limited) to a group led by Green Grove
Enterprises Limited. The sale is expected to be completed this
month.
These transactions and the implementation of the ongoing
restructuring will allow the Company to focus its efforts
entirely on its French operations, while significantly reducing
its cash commitments, as is further discussed below. (Note: The
attached condensed financial statements are consolidated as of
March 31, 2002 as both the German and UK entities were operating
at that time).
Funding and Outlook
While the Company previously estimated its funding gap (that is,
the additional financing required to bring it to cash flow
breakeven) to be approximately euro 60 million to euro 90
million, in light of (i) the anticipated elimination of interest
payments (estimated at euro 30 million) upon exchange or
retirement of the Company's Notes pursuant to the
Recapitalization, (ii) the cash savings from the sale of the
German and UK operations (estimated at approximately euro 20
million), (iii) better than previously anticipated adjusted
EBITDA and CAPEX results in the first quarter (estimated at
approximately euro 5 million), and (iv) headquarters cost
reductions (estimated at euro 5 million), the Company currently
estimates its funding gap to be approximately euro 30 million.
The Company expects that the euro 38 million equity infusion to
be effected as part of the proposed Recapitalization will fully
fund its restructured operations to cash flow breakeven.
Completel believes that the trends of strong demand for its
retail services in France will continue in line with its
experience over the past year. This revenue growth, coupled with
increasing margins and cash management of CAPEX and all
expenses, will drive the Company to adjusted EBITDA breakeven in
the first quarter of 2003 and to free cash flow positive in the
first quarter of 2004.
Personnel Changes
Finally, effective May 17, 2002, Tim Samples, Chief Executive
Officer, and Lyle Patrick, Chief Financial Officer, will be
leaving Completel. Jim Dovey, Chairman of the Supervisory Board,
noted that " Tim and Lyle have been critical in transitioning
Completel to this point of a restructured and fully funded
company, and we wish them well as they pursue new opportunities.
We thank them for their successful efforts on behalf of
Completel."
Dovey further noted "that as we focus on the new Completel, the
Board has appointed former Chief Operating Officer Jerome De
Vitry to the position of Chief Executive Officer. Mr. De Vitry
has been a critical part of the management team and has led the
French operation since its inception and we are confident in his
leadership in these challenging times in the telecommunications
business." Mr. Dovey also announced the continuing roles of
Marie-Laure Ducamp Weisberg and Alexandre Westphalen as Senior
Vice President and General Counsel and Vice President of
Finance, respectively.
Completel is a facilities-based provider of fiber optic local
access telecommunications and Internet services to business end-
users, carriers and ISPs with activities predominantly located
in France.
COVANTA ENERGY: Seeks to Employ Ordinary Course Professionals
-------------------------------------------------------------
Deborah M. Buell, Esq. at Cleary, Gottlieb explains that prior
to the commencement of their Chapter 11 cases, Covanta Energy
Corporation and its debtor-affiliates retained the services of
various accountants, independent financial and tax consultants,
legislative lobbyists, attorneys and/or law firms and other
professionals in the ordinary course of their businesses.
In order to continue to manage their businesses effectively, the
Debtors ask Judge Blackshear to grant them authority to continue
the services of these ordinary course professionals, and hire
any additional professionals whose services they require from
time to time during these Chapter 11 cases.
They also ask to employ those additional professionals without
requiring each professional to file separate applications for
employment and compensation. She contends it is in the best
interests of all concerned with the Chapter 11 proceedings to
avoid disruption in professional services, which the Debtors
require on a daily basis.
In the event that payments to any of the Ordinary Course
Professionals exceed the $30,000 monthly cap, then this Ordinary
Course Professional's fees and expenses for that month will be
subject to the notice and application requirements applicable to
professionals specifically retained for these chapter 11
proceedings.
Ms. Buell assures Judge Blackshear that the Debtors do not
request authorization in this Motion to pay claims or balances
owed to the Ordinary Course Professionals for services rendered
prior to the Petition Date, unless an Ordinary Course
Professional has a pre-petition retainer. (Covanta Bankruptcy
News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
COHO ENERGY: First Quarter 2002 Net Loss Amounts To $59.6 Mil
-------------------------------------------------------------
Coho Energy, Inc. (OTCBB:CHOH) announced its financial and
operating results for the quarter ended March 31, 2002.
On February 6, 2002, Coho and its wholly owned subsidiaries,
Coho Resources, Inc. and Coho Oil & Gas, Inc., filed voluntary
petitions for relief under Chapter 11 of the U.S. Bankruptcy
Code in the United States Bankruptcy Court for the Northern
District of Texas. The bankruptcy petitions were filed to
protect Coho while it develops a solution to its liquidity
problems. In November 2001, Coho had received a notice of
borrowing base deficiency from its bank lenders because the
banks reduced Coho's borrowing base by $20 million in their
semi-annual review. Coho was unable to cure the borrowing base
deficiency within the 90-day cure period and received a notice
of default from the lenders on February 1, 2002. Coho is
currently operating as debtor-in-possession under the court's
supervision and pursuant to its orders.
The Company, the bank group and the unsecured creditors
committee, together with CIBC World Markets Corp., as the
financial advisor for all three, have developed a marketing
plan, which is subject to bankruptcy court approval, in the
attempt to achieve maximum value for the Company's assets in
this process. The marketing plan allows the Company to explore
other alternatives available to it, in addition to a sale of its
assets, including a recapitalization of its debt and equity
assuming the Company is able to raise sufficient equity from
existing or new investors to cure the $20 million borrowing base
deficiency and to provide working capital to develop its
properties. A recapitalization may include a partial sale of its
assets. Any sale or recapitalization will be subject to
bankruptcy court approval under a Chapter 11 plan of
reorganization or liquidation or in accordance with Section 363
of the bankruptcy code, which generally provides for a partial
sale of assets prior to confirmation of a plan of reorganization
or liquidation.
Pursuant to the marketing plan, a tentative timetable has been
established to solicit bids for the sale of the Company or its
assets. Critical dates are as follows:
-- May 16, 2002 -- Indication of interest deadline;
-- April 29, 2002 to -- Data room visits;
June 14, 2002
-- June 20, 2002 -- Final offers due;
-- June 27, 2002 -- Court hearing and auction; and
-- August 16, 2002 -- Final closing.
These dates are only estimates and can be amended or terminated.
The bankruptcy court and the unsecured creditors committee have
expressed their willingness to consider alternatives and any and
all bids may be rejected if the Company decides to pursue such
alternative transactions.
All adjustments to the carrying value of the Company's assets or
liabilities related to the bankruptcy filing have not been
reflected in the March 31, 2002 balance sheet. During 2002, the
Company will adjust liabilities subject to compromise to its
estimate of the allowed claims. During the first quarter of
2002, the Company recorded an estimated prepayment penalty, also
referred to as the default penalty, of $29.3 million that was
accelerated on its senior subordinated debt, or standby loan,
due to the bankruptcy filing and adjusted the recorded amount of
the standby loan embedded derivative resulting in a $10.2
million gain. In addition, unamortized debt issuance costs of
$22.6 million and debt discounts of $10.7 million were written
off. The adjustments to the March 31, 2002 carrying values
related to the prepayment penalty, standby loan embedded
derivative, unamortized debt issuance costs and debt discounts
were recorded in earnings as reorganization costs.
At this time, it is not possible to predict the outcome of the
bankruptcy proceedings, in general, or the effect on the
Company's business or on the interests of the creditors or
shareholders. The Company believes, however, that it may not be
possible to satisfy in full all of the claims against it and the
shareholders of our company may not realize any value on their
investment. If all of the Company's oil and gas properties are
sold, the Company will be liquidated. As a result of the
bankruptcy filing, all liabilities incurred prior to February 6,
2002, including secured debt, are subject to compromise. Under
the bankruptcy code, payment of these liabilities may not be
made except pursuant to a plan of reorganization or liquidation
or bankruptcy court approval.
Cash flow provided by operating activities (before working
capital adjustments) was $2.1 million for the current three
month period as compared to cash flow provided by operating
activities of $7.6 million for the same three month period in
2001. Operating revenues net of operating expenses, production
taxes and general and administrative expenses were $6.3 million
for the current three month period compared to $12.0 million for
the same period in 2001.
For the three months ended March 31, 2002, the Company reported
a net loss of $59.6 million, or $3.19 per share, as compared
with net income of $6.3 million, or $0.34 per share, in the same
period in 2001. The loss for the first quarter of 2002 includes
reorganization costs of $53.3 million while the first quarter of
2001 includes a reduction in the previously recognized
reorganization costs of $1.2 million. Reorganization costs
during the first quarter of 2002 include adjustments aggregating
$52.4 million related to the acceleration of the standby loan
default penalty and adjustments to the March 31, 2002 carrying
values related to the standby loan embedded derivative,
unamortized debt issuance costs and debt discounts as discussed
above. The Company recognized a loss of $2.9 million related to
its crude oil hedge arrangements during the first quarter of
2002. A loss of $2.3 million on the standby loan embedded
derivative and a gain of $9.2 million related to the accumulated
effect of the accounting change was recognized by the Company in
the first quarter of 2001.
Coho Energy, Inc. is a Dallas based oil and gas producer
focusing on exploitation of underdeveloped oil properties in
Oklahoma and Mississippi.
For further information contact: Gary Pittman at (972) 774-8300
DIETZGEN LLC: Debtor Inks Asset Sale Agreement With Nashua Corp.
----------------------------------------------------------------
Nashua Corporation (NYSE: NSH), a premier manufacturer and
marketer of labels, thermal specialty papers and imaging
products, has signed an asset purchase agreement with Dietzgen
LLC. Under terms of the agreement, Nashua would acquire
trademarks, trade names, customer lists, and certain equipment
and inventories. The financial terms of the transaction were not
disclosed.
Dietzgen manufactures and distributes specialty papers and
supplies for the architectural, engineering and construction
markets. Dietzgen filed for protection under Chapter 11 of the
U.S. Bankruptcy Code on January 31, 2002, and is seeking
Bankruptcy Court approval of the asset purchase agreement.
Dietzgen's sales for the three months ended March 31, 2002 were
approximately $3.2 million. The consummation of the asset
purchase agreement is subject to the approval of the U.S.
Bankruptcy Court.
"The proposed acquisition of Dietzgen assets will provide Nashua
with access to new customers while extending our specialty paper
product offerings to the rapidly growing architectural,
engineering and construction markets," said Andrew Albert,
Nashua's Chairman, President and CEO. "If approved by the
Bankruptcy Court, the acquisition will advance our plan to make
selected investments in niche markets of strategic importance
where we can gain competitive advantage."
About Nashua
Nashua Corporation manufactures and markets a wide variety of
specialty imaging products and services to industrial and
commercial customers to meet various print application needs.
The Company's products include thermal coated papers, pressure-
sensitive labels, copier papers, bond, point of sale, ATM and
wide format papers, entertainment tickets, as well as toners and
developers and ribbons for use in imaging devices. Additional
information about Nashua Corporation can be found on the World
Wide Web at http://www.nashua.com
ENCOMPASS SERVICES: S&P Places B+ Corp. Rating On Watch Negative
----------------------------------------------------------------
On May 15, 2002, Standard & Poor's placed its 'B+' corporate
credit and other ratings on Encompass Services Corp. on
CreditWatch with negative implications. At March 31, 2002,
Encompass had about $770 million in debt outstanding.
The CreditWatch listing follows the company's announcement of
reduced revenue guidance to $3.5 billion - $3.8 billion (from
$3.6 billion - $3.9 billion), EBITDA guidance to $155 million -
$195 million (from $200 million - $230 million), and earnings
per share guidance to 5 cents - 35 cents (from 45 cents - 70
cents), which was given to the public on Feb. 21, 2002.
Additionally, the company stated that it now expects no
meaningful debt reduction in 2002, compared with previous
expectations of debt reduction in the $25 million - $40 million
range.
Encompass stated that weaker-than-expected demand in the
commercial office, industrial, and hotel markets, combined with
intense pricing pressures in certain end-markets, has led to the
guidance revisions. The quickness of the guidance revision and
the severity of the EBITDA decline, compared with pro forma
EBITDA of $341 million in 2000 and compared with results of
other leading competitors, suggest that internal issues beyond
industry fundamentals may be occurring.
As of March 31, 2002, the company was in compliance with its
bank financial covenants. However, given the firm's new guidance
it is likely that Encompass will break financial covenants for
the June 30, 2002, period. The company has initiated discussions
with its senior lenders and is "confident" that it will be able
to obtain a "satisfactory resolution" to the potential covenant
defaults.
Standard & Poor's will meet with management to discuss its
liquidity position, surety capacity, and operational strategies
before taking a further rating actions. Should bank negotiations
become more challenging than expected, or should it be
determined that it will take an extended period to turn
operational performance around, Standard & Poor's will likely
lower its ratings.
Houston, Texas-based Encompass is one of the largest independent
suppliers of mechanical, electrical, and janitorial services in
North America.
Ratings List
Ratings Placed on CreditWatch Negative
Encompass Services Corp.
* Corporate credit rating B+/Watch Neg/--
* Senior secured debt B+
* Subordinated debt B-
ENRON: Seeks Court Nod To Sell Interests & Note to Tractebel
------------------------------------------------------------
As of May 3, 2002, only 63 of the Enron Companies have filed
Chapter 11 cases. There are approximately 3,500 separate Enron
entities operating worldwide. These non-debtor Enron affiliates
hold significant assets. According to Martin J. Bienenstock,
Esq., at Weil, Gotshal & Manges LLP, in New York, Enron Capital
& Trade Resources Mexico Holdings B.V. is one of them. Enron
Capital is a Netherlands corporation and a direct, wholly owned
subsidiary of Enron North America Corporation.
Mr. Bienenstock lists some of Enron Capital's assets:
(a) 200 Class A ordinary voting shares of Tractebel Energia
de Monterrey Holdings, B.V., a Netherlands private
company, constituting 100% of the issued and outstanding
Class A ordinary voting shares of Tractebel Holdings,
which are 20% of the total issued and outstanding
ordinary voting shares of Tractebel Holdings; and
(b) a note payable to Enron Capital by Tractebel Energia de
Monterrey, B.V., a Netherlands private company formerly
known as Enron Energia Industrial de Mexico, B.V., in the
stated principal amount of up to $13,000,000.
Tractebel S.A. owns 100% of the Class B ordinary voting shares
of Tractebel Holdings, which represents the other remaining 80%
of the total issued and outstanding voting shares of Tractebel
Holdings. Now, Tractebel S.A. wants to buy Enron Capital's 20%
interest so that it would get full control of Tractebel
Holdings. Tractebel S.A. also wants to get its hands on the
$13,000,000 promissory note.
Mr. Bienenstock relates that a Shareholders Agreement was
entered into on October 19, 2001 among these companies:
-- Tractebel S.A.,
-- Enron Capital,
-- Tractebel Holdings,
-- Tractebel Energia de Monterrey B.V.,
-- Tractebel Energia de Monterrey Holdings LLC -- TELLC, and
-- Tractebel Energia de Monterrey, S.de.R.L.de C.V., which is
called the Project Company.
The Shareholders' Agreement governed the affairs of the Project
Company. Mr. Bienenstock explains that the Project Company was
organized to develop and own a 245 MW natural gas-fired
cogeneration facility on a 7.5-hectare site near Monterrey in
Nuevo Leon, Mexico.
Tractebel Energia de Monterrey B.V. owns:
(a) one Series A quota of the Project Company which
represents 99.97% of the capital represented by the
ordinary voting quotas,
(b) one Series N quota of the Project Company, and
(c) 100% of the outstanding voting membership in TELLC.
On the other hand, TELLC owns one Series A quota of the Project
Company, which represents approximately 0.03% of the capital
represented by the ordinary voting quotas of the Project
Company. Mr. Bienenstock relates that various capacity users own
32 Series N non-voting quotas of the Project Company.
Operational Energy Corporation, a debtor in these cases and a
wholly owned subsidiary of Enron North America, and its Mexican
affiliate OEC Mexico, S. de R.L. de C.V., a non-debtor, act as
the current operators of the Project under two 15-year operation
and maintenance agreements with the Project Company. OEC and
the Project Company entered into an Amended and Restated
Technical Assistance Agreement dated November 22, 2000 and
amended on April 6, 2001, and the Operational Energy Corp.
Acknowledgment Letter dated March 15, 2001. OEC Mexico, a 100%
owned subsidiary of Enron Capital, and the Project Company
entered into an Amended and Restated Operation and Maintenance
Agreement dated November 22, 2000 and amended on April 6, 2001,
and the OEC Mexico Acknowledgment Letter dated March 15, 2001.
Mr. Bienenstock reports that the construction of the
cogeneration plant is about 70% complete and commercial
operation is scheduled to begin at the end of October 2002.
"The Project is to provide electricity to three major Mexican
industrials including Vitro, S.A. de C.V., Imsa, S.A. de C.V.
and Apasco Cementos, S.A. de C.V. pursuant to 15-year power
purchase agreements," Mr. Bienenstock says. In addition, the
Project is to provide a Vitro subsidiary (Alcali) under a 15-
year steam purchase agreement.
Total capital cost of the Project is $189,258,057. Mr.
Bienenstock tells the Court that the Inter-American Development
Bank has committed to finance $136,500,000 of the Project Costs
directly to the Project Company and up to $52,758,057 is to come
from sponsor equity contributions -- 80% Tractebel S.A. and 20%
Enron Capital. To date, Mr. Bienenstock notes, Enron Capital
has funded $10,551,612 to the Project Company under the Equity
Guarantee of Enron Corporation and $1,330,000 under the Standby
Equity Guarantee of Enron Corporation.
In October 2001, Mr. Bienenstock recounts that Enron sold 80% of
the Project to Tractebel for an amount that included a premium.
When Enron filed for bankruptcy in December 2001, the Inter-
American Development Bank suspended all future disbursements for
the Project. "The Bank only resumed disbursements under a
temporary waiver after Tractebel entered into an agreement
assuring future performance," Mr. Bienenstock explains. Enron
has tried to market its remaining 20% interest in the project
but nobody seemed attracted to it except for Tractebel.
Mr. Bienenstock informs Judge Gonzalez that Tractebel has
offered a $1,300,000 premium representing a discount from the
Initial Premium previously paid for the controlling position.
The Debtors believe that such a discount is reasonable given:
-- the 20% non-controlling voting interest being sold,
-- the difficult state of the Project as a result of the
Debtors' bankruptcy,
-- the fact that Tractebel is willing to release Enron and
its Affiliates from all responsibilities and liabilities
in connection with the Project and related contracts, and
-- the low probability of obtaining higher offers under the
same terms and conditions.
According to Mr. Bienenstock, the proceeds from the transaction
will be placed into an escrow account pending a determination as
to the allocation of such funds pursuant to an order of the
Court.
The principal terms and conditions of the sale to Tractebel are:
Sale & Purchase: Enron Capital agrees to sell to Tractebel and
Tractebel agrees to purchase the Assets from
Enron Capital.
Assumption: Tractebel (or its affiliates) will assume all
of the contractual rights and obligations of
Enron Capital and its affiliates with respect
to the Project, including the Amended and
Restated Technical Assistance Agreement and
the Amended and Restated Operation and
Maintenance Agreement.
Purchase Price: Total purchase price as of April 26, 2002 is
estimated at $13,495,138 consisting of the
$1,300,000 premium and reimbursement of total
equity contributions and interest on such
contributions of approximately $3,866 and
payment of a loan by Enron Capital, including
accrued interest estimated at $12,191,272. The
final purchase price will be adjusted to
include the accrued interest between April 26,
2002 and the closing date on both the equity
contributions and the loan by Enron Capital.
Terms: Tractebel to pay Enron Capital cash at
closing.
Closing: Closing will take place at the offices of
Baker & McKenzie, located at 1301 McKinney,
Suite 3300, Houston, Texas 77010, on the
second business day following the date on
which each of the conditions set forth in
Sections 5.1 and 5.2 of the Agreement is
satisfied or on another date as agreed to by
Enron Capital and Tractebel.
Conditions
Precedent to
Closing: All consents necessary for the consummation by
the parties of the transaction contemplated by
the Agreement will have been received. Other
than the formal consent required from the
Inter-American Development Bank and Deutsche
Bank Trust Company Americas, the Collateral
Trustee under the Loan Agreement, (which are
expected) and those consents required in
connection with the Chapter 11 cases, all
required third party consents have been
obtained.
The consent of the Bankruptcy Court to the
transactions contemplated by the Agreement
will have been received.
Assignment of the Amended and Restated
Technical Assistance Agreement and the Amended
and Restated Operation and Maintenance
Agreement to Tractebel or its affiliates.
Execution of a guaranty from Enron North
America of Enron Capital's obligations under
the Agreement.
Enron's receipt of binding releases from
Tractebel, its affiliates and the Inter-
American Development Bank.
Tractebel to receive binding releases from
Enron and its affiliates.
Tractebel is to receive an executed notarial
Deed of Transfer from Enron Capital for the
200 Class A shares of Tractebel Holdings and a
new note reflecting its purchase of the
Tractebel Energia de Monterrey B.V. Note.
Survival of
Provisions and
Indemnifications: Unlimited indemnification from Tractebel to
Enron and its affiliates from claims related
to the Project (except one year term
limitation for breaches of the Agreement).
Enron Capital to indemnify Tractebel for up to
one year for breaches of Enron Capital's
obligations and representations under the
Agreement, limited to 50% of the purchase
price.
By this motion, the Debtors seek the Court's approval of:
(a) the sale of the Assets pursuant to the Agreement,
(b) the Debtors' releases as required under the Agreement,
and
(c) the Guaranty to be delivered by Enron North America
pursuant to the Agreement.
In addition, OEC ask the Court's authority to assume and assign
the Amended and Restated Technical Assistance Agreement.
Mr. Bienenstock assures Judge Gonzalez that the terms of the
Agreement were negotiated by Enron Capital and Tractebel at
arm's length and in good faith. (Enron Bankruptcy News, Issue
No. 28; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ENRON CORP: Wants Removal Period Extended through September 3
-------------------------------------------------------------
Enron Corporation and its debtor-affiliates seek to further
extend the removal period to September 3, 2002.
Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York,
relates that the Debtors have not been able to fully evaluate
the merits of removing certain actions and require additional
time to do so. Ms. Gray emphasizes that the Debtors and their
personnel and professionals have been working diligently to
administer their Chapter 11 cases and to address a vast number
of administrative and business issues. At the same time, they
are operating their business to maximize asset values and are
arranging for the sale of certain of the Debtors' assets.
"The right to remove civil actions is a valuable right that the
Debtors do not want to lose inadvertently," Ms. Gray says.
(Enron Bankruptcy News, Issue No. 28; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ETOYS: Asks For Reconsideration of Exclusivity Extension Order
--------------------------------------------------------------
EBC 1, Inc., formerly known as eToys, Inc., and its affiliated
debtors and the Official Committee of Unsecured Creditors filed
an emergency motion for reconsideration with the U.S. Bankruptcy
Court for the District of Delaware of Judge Walrath's
Exclusivity Extension Order.
The Debtors moved to extend their exclusive period to propose a
plan through May 17, 2002 and to solicit acceptances of that
plan through July 15, 2002 and Judge Walrath entered an order
granting the request "with prejudice to the Debtors' rights to
seek further extension" -- without telling anyone.
The Debtors and the Committee relate that had they known the
Court had reservations about granting the Motion, they would
have had "offered evidence in support of the requested
extension." The Debtors and the Committee add that, "had a
hearing on the Extension Motion been convened, the[y] would have
offered more specific and detailed evidence regarding progress
that had been made addressing the difficult and sensitive issues
involved in negotiating and prepar[ing] a plan."
Since the Court entered the Extension Order, the Debtors and the
Committee tell the Court that they have continued working
together to complete the negotiation, formulation and drafting
of a consensual Liquidating Chapter 11 Plan which will be in the
best interests of the Debtors' estates and creditors. Both the
Debtors and the Committee agree that these tasks cannot be
completed in an orderly, efficient and productive way within the
minimal days left in the Current Exclusive Proposal Period.
The Debtors and the Committee ask Judge Walrath to grant them:
a) relief from the Extension Order's "with prejudice"
provision; and
b) a brief extension of the Exclusive Proposal Period
through June 14, 2002 and the Exclusive Solicitation
Period through August 12, 2002.
eToys, Inc., now known as EBC I Inc, operated as a web-based toy
retailer based in Los Angeles, California. The Company filed a
Chapter 11 Petition on March 7, 2001. When the company filed
for protection from its creditors, it listed $416,932,000 in
assets and $285,018,000 in debt. eToys sold its assets and name
to toy retailer KB Toys. The Company's SEC report on February
28, 2002, the Debtors listed $32,091,918 in total assets and
$192,396,702 in total liabilities. Robert J. Dehney, Esq., at
Morris, Nichols, Arsht & Tunnell and Howard Steinberg, Esq., at
Irell & Manella represent the Debtors as they wind-up their
financial affairs.
EXCITE@HOME: DoveBid To Conduct Webcast Auction On May 29-30
------------------------------------------------------------
DoveBid, Inc., a leading provider of fully integrated asset
management services, announces it will conduct a Webcast auction
for Excite@Home, who filed Chapter 11 bankruptcy in September
2001. The auction will be conducted on May 29-30 in Redwood
City, Calif.
Excite@Home has retained DoveBid to auction all of the assets at
its worldwide headquarters in Redwood City, originally valued at
millions of dollars. DoveBid will also conduct a sealed bid sale
for the Excite@Home intellectual property including domain
names, trademarks and patents. DoveBid's Webcast auction will
offer millions of dollars of assets for sale including Sun
Microsystemsr servers, Ciscor networking equipment, EMCr storage
devices, Extreme Networksr equipment, SGIr servers, Herman-
Millerr office furniture, storage devices, PCs, notebooks,
laptops, conferencing equipment, telephone systems, televisions,
video games and the corporate 1995 green BMW 540i.
"DoveBid conducted its first auction for Excite@Home in December
2001, selling over $1.7 million of assets from the closing of
MatchLogic, a division of Excite@Home," said Kirk Dove,
president of Auction Services at DoveBid. "This premier Dot-Com
closure will enable buyers around the globe to access large
amounts of servers, routers, switches, laptops, computers,
monitors, and printers."
The auction will be broadcast live over the Internet at
http://www.dovebid.com as well as at Excite@Home's worldwide
headquarters at 440 Broadway St. beginning at 9:00 a.m. (PT)
Wednesday, May 29, and continuing through Thursday, May 30.
Participants may attend in-person or bid online. Assets may be
previewed on May 28 from 9 a.m. to 4 p.m. PT in San Jose, Calif.
Detailed preview information, asset catalog, and online bidding
instructions available at http://www.dovebid.com
About DoveBid
DoveBid, Inc. is a leader in Webcast industrial auctions Global
4000 businesses. DoveBid has conducted over 5,000 capital asset
auctions and sold over $5 billion of assets. DoveBid's asset
disposition services include live Webcast auctions, featured
online auctions, a corporate marketplace and liquidations.
DoveBid focuses on 20 categories of capital assets and has 26
offices throughout North America, Europe and the Asia-Pacific
region. More information on DoveBid can be found at
http://www.dovebid.com or by contacting company headquarters in
Foster City at 800/665-1042 or 650/571-7400. DoveBid and the
DoveBid logo are registered trademarks of DoveBid, Inc.
EXIDE TECHNOLOGIES: Wants to Sign-Up BMC as Claims Agent
--------------------------------------------------------
Exide Technologies and its debtor-affiliates ask Court authority
to employ and retain Bankruptcy Management Corporation (BMC) as
the Notice, Claims and Balloting Agent pursuant to 28 U.S.C.
Section 156(c).
Craig H. Muhlhauser, the Debtors' President and Chief Executive
Officer, relates that BMC will act as the Notice, Claims and
Balloting Agent in these cases. In this position, BMC will
maintain the list of the Debtors' creditors. BMC will serve the
required notices in the Chapter 11 cases and will prepare the
related certificate or affidavit of service. BMC will also
assist the Debtors in the preparation of the Schedules of Assets
and Liabilities and Statement of Financial Affairs,
reconciliation and resolution of claims, balloting and other
administrative services as may be required by the Court or
Debtors. Additionally, BMC will receive and docket claims
reflecting in sequential order the claims filed in the Chapter
11 Cases, specifying:
A. the claim number;
B. the date such claim was received by BMC or the Clerk's
Office;
C. the name and address of the claimant and the agent, if any,
that filed such a proof of claim;
D. the amount of the claim; and
E. the classification of such claim (e.g., secured, unsecured,
priority, etc.) according to the proof of claim.
Mr. Muhlhauser adds that BMC will also provide the Debtors with
claims management consulting and computer services. The Debtors
also may use BMC to provide the Debtors with training and
consulting support necessary to enable the Debtors to
effectively manage and reconcile claims, and to provide the
requisite notices of the deadlines for filing proofs of claim.
In addition, the Debtors may utilize other services offered by
BMC, such as:
A. providing other notices that will be required as the Chapter
11 cases progress;
B. tabulating acceptances and/or rejections to the Debtors' plan
of reorganization;
C. providing such other administrative services that may be
requested by the Debtors; and
D. to assist in the preparation of the Debtors' schedules and
statements of affairs.
Sean Allen, President of BMC, informs the Court that the Debtors
paid BMC a $10,000.00 retainer, which will be applied to BMC's
final billing to the Debtors. BMC's fee schedule for the
engagement are:
Consulting Services $125-$275/hour
Case Support Services $ 75-$175/hour
Technology Services $ 90-$175/hour
Information Services $ 45-$ 85/hour
Mr. Allen estimates that there are approximately 20,000
creditors, former employees, entities and other parties in
interest who require notice of various matters and, in
particular, the deadline for filing proofs of claim. It would be
highly burdensome for the Office of the Clerk to provide notice
of the bankruptcy filing and other notices to all creditors. It
would also be burdensome to docket and maintain effectively the
large number of proofs of claim that may be filed in the Chapter
11 cases.
Mr. Allen submits that the most effective manner in which to
perform the numerous duties required is for the Debtors to
engage an independent third party to act as the notice, claims
and ballot processing agent for the Court. Pursuant to 28 U.S.C.
Section 156(c), the Court is empowered to utilize outside agents
and facilities for such purposes, provided that the costs of
these facilities and services are paid from the assets of the
Debtors' estates.
Mr. Allen contends that BMC is well qualified for this
engagement. It has performed substantially identical services
for debtors in other large Chapter 11 cases, including most
recently, the cases of In re Synadyne III, Inc., Case No LA
01-28160 (BB) (Bankr. C.D. Cal. June 11, 2001), In re Teligent,
Inc., Case No. 01-12974 (SMB) (Bankr. S.D. N.Y. May 21, 2001),
In re eToys, Inc., Case No. 01-0706 (MFW) (Bankr. D. Del. March
7, 2001), and In re Harnischfeger Industries, Inc., Case No 99-
2171 (PJW) (Banta. D. Del. June 7, 1999). In addition, BMC has
advised the Debtors that it does not hold an interest adverse to
the Debtors or their estates. (Exide Bankruptcy News, Issue No.
4; Bankruptcy Creditors' Service, Inc., 609/392-0900)
DebtTraders reports that Exide Technologies's 10.000% bonds due
2005 (EXIDE2) are trading between 14.5 and 17.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=EXIDE2for
real-time bond picing.
GENTEK INC.: Receives Notice of Default From Senior Lenders
-----------------------------------------------------------
GenTek Inc. (OTC Bulletin Board: GNKI) reported first-quarter
revenues of $276.9 million compared with $340.0 million in the
first quarter of last year. Earnings before interest, taxes,
depreciation and amortization (EBITDA) were $24.2 million
compared with an adjusted figure of $45.7 million in the first
quarter of 2001. The 2001 adjusted EBITDA figure excludes $3.8
million of EBITDA losses related to two, non-core research and
development facilities that were closed during 2001.
The company's first-quarter results were negatively affected by
two principal factors - the continuing downturn in the global
telecommunications industry and one-time costs resulting from a
production outage at one of the company's performance products
manufacturing facilities. This facility was unexpectedly idled
when the second of the facility's two boilers suffered an
unforeseen failure at the same time that the facility's first
boiler was undergoing previously planned, preventative
maintenance. The company estimates that this incident reduced
first-quarter operating income by approximately $3 million due
to costs incurred to expedite repairs of both boilers and loss
of production during the outage. These unusual costs continued
into the second quarter, and the company estimates that the
second-quarter financial impact of this incident will be similar
in magnitude to that incurred in the first quarter. GenTek
expects that the affected facility will operate normally
throughout the third and fourth quarters.
With the exception of this one-time plant outage, GenTek's
performance products segment performed well in the first
quarter, with strength in the water-treatment and personal-care
markets. In addition, operating income from the company's
manufacturing segment showed substantial improvement compared
with the first quarter of last year due principally to improved
production efficiency and realized cost savings from the 2001
restructuring program.
"First-quarter results in our manufacturing and performance
products segments, apart from the isolated plant outage,
generally met expectations," said Paul M. Montrone, GenTek's
chairman. "Last year's restructuring and other cost-saving
measures have improved our bottom-line financial performance in
these businesses. Our communications business continues to
experience lower customer demand in several key markets, which
we will continue to address by reducing cost in these regions to
match demand."
Liquidity and Outlook
As of March 31, 2002, GenTek had total cash balances of $148.8
million. The company believes this level of liquidity will be
sufficient to fund GenTek's operating requirements for the
foreseeable future. GenTek had total debt of $979.8 million at
the end of the first quarter.
On March 31, 2002, the company received a notice of default from
its senior lenders based upon the independent auditors'
explanatory paragraph contained in the company's 2001 year-end
financial statements. In addition, GenTek is not in compliance
with certain financial covenants contained in its senior credit
facility for the quarter ending March 31, 2002.
The existence of these defaults gives GenTek's senior lenders
the right to accelerate the company's senior debt repayment
obligations. If there were an acceleration, the company would
have to seek alternative sources of financing. No assurances can
be given as to the availability of such financing. GenTek is in
discussions with its lenders with respect to amending its senior
credit facility to eliminate these defaults, and the company
anticipates that these discussions will continue through the
second quarter.
As a result of the defaults and pursuant to the terms of the
senior credit facilities, GenTek's outstanding Eurodollar loans
are being converted to prime rate-based loans according to
scheduled interest reset dates. The company estimates that, once
all of the loans have been converted, this conversion will
increase the average effective interest rate on the company's
senior credit facilities by approximately 140 basis points.
Based on scheduled reset dates, all loans should be converted to
prime rate-based loans by October 2002.
"The management team at GenTek continues to aggressively pursue
cost reduction and capital expenditure curtailment initiatives
that are driving improved financial performance in several key
businesses," said Montrone. "We believe that these plans will
result in further improvement in operating performance across
all of our businesses in the coming quarters. GenTek employees
have shown extraordinary dedication and urgency in implementing
these profit improvement plans."
About GenTek Inc.
GenTek Inc. is a technology-driven manufacturer of
communications products, automotive and industrial components,
and performance chemicals. A global leader in a number of
markets, GenTek provides state-of-the-art connectivity solutions
for telecommunications and data networks, precision automotive
valve-train components, and performance chemicals for
environmental, pharmaceutical, technology and chemical-
processing markets. Additional information about the company is
available on GenTek's Web site at http://www.gentek-global.com
GLOBAL CROSSING: Former Employees Press For Benefits Payment
------------------------------------------------------------
According to Michael T. Conway, Esq., at Lazare Potter Giacovas
& Kranjac LLP in New York, New York, although the true number of
former Global Crossing Ltd. employees owed compensation or other
employment-related benefits as of the Petition Date is not yet
known, it is now estimated that approximately 1,200 Former
Employees fall into this category. Many of the Former Employees
lost their jobs either contemporaneously with the Petition Date
or within months thereof. A good majority of the Former
Employees had their last payments from the Debtors, whether for
severance benefits or reimbursement of expenses incurred on
behalf of the Debtors, returned for insufficient funds by their
banks. As these Chapter 11 Cases have progressed, many of the
Former Employees have found it increasingly difficult to pay
what once were considered basic expenses, but now,
unfortunately, are considered "luxury items" including: health
and life insurance, car insurance, utilities and even trash
collection. In addition, those Former Employees with homes are
finding it difficult to pay their mortgages.
Accordingly, and in order to relieve some of the short-term
pressure on the Former Employees, the ad hoc Committee of former
Global Crossing employees seek entry of an Order requiring
payment, on an accelerated basis, of up to $4,650 for each
Former Employee with pre-petition claims that meet the criteria
set forth in 11 U.S.C. Section 507(a).
As a result of the Debtors' Chapter 11 filings, Mr. Conway
relates that the Debtors are prohibited from paying claims that
arose before the Petition Date unless the Debtors receive
specific authorization from the Court. Pursuant to Section
507(a)(3) of the Bankruptcy Code, the Former Employees' claims
for "wages, salaries, or commissions, including vacation,
severance, and sick leave pay" earned within 90 days before the
Petition Date are afforded priority status to the extent of
$4,650 per Former Employee. Similarly, Section 507(a)(4) of the
Bankruptcy Code provides that Former Employees' claims for
contributions to certain employee benefit plans are also
afforded priority status to the extent of $4,650 per Former
Employee covered by such plan, less any amounts paid pursuant to
Section 507(a)(3). Accordingly, because most such priority
claims will be paid in full under a plan of reorganization,
accelerated payment of such claims at this time is appropriate
and this Court is authorized to grant the relief requested.
In determining whether these payments are necessary or
appropriate, Mr. Conway submits that the Court need only look to
the circumstances that have befallen Former Employees. One such
Former Employee resides in Western New York where the telecom
industry is under tremendous stress and is, therefore, simply
not hiring. In order to pay child support for his daughter, this
Former Employee must now choose between staying at home and
receiving unemployment or relocating to another part of the
country, which will effectively result in a loss of custody over
his daughter.
Mr. Conway informs the Court that the last regular paycheck of
another Former Employee was due December 31, 2001. This was the
day he was terminated, but because, he was told, the internal
systems were down, this check was not issued until after the
Petition Date and then it was dishonored by his bank. In the
meantime, this employee has incurred bank charges of over $1,149
due to returned electronic bill payments. This man's family has
been given notice of eviction from their home and his daughter,
who was accepted into the prestigious Summer Intensive Program
at the Kirov Academy of Ballet in Washington, D.C., cannot
attend because the $2,900 tuition is simply not available. Yet
another Former Employee tells of how her retirement account has
all but disappeared from the $180,000 level she had reached
before the Debtors' fall. Now, for the first time in her son's
life, he is without health insurance because the $600 per month
cost of COBRA benefits is simply beyond the limits of their
budget.
These stories go on and on. Mr. Conway points out that the sad
part is, even a small amount will allow the worst of these
problems from becoming insurmountable before new employment can
be located. Unfortunately, despite informal requests that such
small amounts be paid now, before these Former Employees lose
everything, Debtors' counsel has taken no action. They claim
that Debtors' position is based upon feedback from the Official
Unsecured Creditors Committee, which, through counsel, has
indicated that they are adamantly opposed to such payments.
If the Debtors' estimates are correct, Mr. Conway states that a
mere 1,200 Former Employees will be entitled to the requested
accelerated benefits. This means that the Debtors' estates
would be subjected to a maximum accelerated reduction of
$5,580,000 in the event the requested payments are made. This
amount is less than the compensation presently requested for one
individual - John Legere - in the Debtors' pending motion to
approve Mr. Legere's employment agreement. This amount is also a
mere one-third the amount presently requested to fund the
Debtors' Key Employee Retention Program and a small fraction of
the amount paid to employees who recently agreed to voluntarily
leave the Debtors' employ. Each of these other requests were
made by the Debtors and approved by the Official Committee.
This is the same Official Committee which claims to be
representing the interests of the Former Employees, but which
now denies that the above-described hardships rate with the need
for Mr. Legere to earn at least six million dollars this year.
The Ad Hoc Committee ask that this Court step in and grant
relief to the Former Employees which should not only have been
supported by both the Debtors and the Official Committee, but
frankly, should have been requested by the Official Committee
long ago. (Global Crossing Bankruptcy News, Issue No. 9;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
GLOBIX CORPORATION: Releases Fiscal Second Quarter Results
----------------------------------------------------------
Globix Corporation (OTC Bulletin Board: GBIXQ) announced
financial results for its fiscal second quarter 2002, which
ended March 31, 2002.
For the quarter, Globix posted revenue of $21.4 million, a 20%
decrease over revenue of $26.8 million in the second quarter of
fiscal 2001.
Cost of Revenue was $9.7 million, a 7% decline over the same
period last year. Selling, General and Administrative expenses
were $21.4, down from $28.3, a drop of over 24% from second
quarter of fiscal 2001.
EBITDA loss (losses before interest, income taxes, depreciation
and amortization and other non-operating expenses including
restructuring charges and losses on impairment of intangible
assets) was $9.8 million for the quarter, compared to $12.0
million for the same quarter last year. The Company's financial
results were negatively impacted in the quarter by a
restructuring charge of $48.4 million primarily associated with
the reduction of data center square footage under lease at the
Globix House facility in London, related asset impairment as
well as the $3.2 million impairment of certain intangible
assets. For the quarter, net loss attributable to common
stockholders was $87.6 million, or $2.21 per share based on 39.7
million common shares. For the same quarter in the prior fiscal
year, net loss attributable to common stockholders was $33.7
million, or $0.87 per share based upon 38.7 million common
shares.
Globix ended the quarter with $56.5 million in cash.
During the quarter Globix and two wholly owned domestic
subsidiaries filed Chapter 11 petitions under a pre-packaged
plan of reorganization with the support of its bondholders and
preferred shareholders. In April Globix emerged from Chapter
11 bankruptcy protection after the US Bankruptcy Court confirmed
the plan of reorganization and all conditions necessary for the
plan to become effective were satisfied or waived.
Peter Herzig, Vice-Chairman, said, "I am pleased that we have
emerged from the bankruptcy process in such an expedient manner.
The Company looks forward to building its revenue base as it
comes out of the bankruptcy process with a much cleaner balance
sheet and a proven value proposition. We have a strong cash
position and we will continue to closely manage costs as we work
towards our goal of turning the corner to profitability."
About Globix
Globix is a leading provider of advanced Internet hosting,
network and applications solutions for business. Globix delivers
services via its secure state-of-the-art Internet Data Centers,
its high-performance global backbone and content delivery
network, and its world-class technical professionals. Globix
provides businesses with cutting-edge Internet resources and the
ability to deploy, manage and scale mission-critical Internet
operations for optimum performance and cost efficiency.
HOLISTICOM.COM: Banned Web Site Operator Settles With Commission
----------------------------------------------------------------
A B.C. man who ran a holistic medicine Web site has been banned
by the British Columbia Securities Commission for illegally
raising money from investors.
Michael John Dowling ran Holisticom.com Inc., a company that
operated a Web site devoted to holistic medicine. From November
1999 to November 2000, the company distributed more than 1.9-
million common shares to 96 investors - raising over $366,000US
from 93 B.C. residents. The company sold the shares without a
prospectus and without registration, violating the Securities
Act.
Dowling has agreed to not act as a director or officer of any
issuer company for five years and he is prohibited from engaging
in investor relations activities for any company for two years.
Holisticom.com and Dowling are insolvent.
The B.C. Securities Commission is the independent provincial
government agency responsible for regulating trading in
securities and exchange contracts within the province. Copies of
the settlement agreement can be viewed in the documents database
of the commission's Web site http://www.bcsc.bc.caor by
contacting Andrew Poon, Media Relations, 604-899-6880.
ICG COMMS: Asks for Removal Period to Extend to Effective Date
--------------------------------------------------------------
ICG Communications, Inc. and its debtor-affiliates sought and
obtained an order from Judge Walsh further extending the time
within which the Debtors may remove proceedings pending as of
the commencement of these cases. The Debtors remind him that,
as of the Petition Date, the Debtors were parties to hundreds of
civil actions pending in various jurisdictions around the United
States and involving a variety of claims, including claims
sounding in contract and tort, as well as claims arising under
federal, state, and/or local regulatory laws.
Specifically, the Debtors propose that the time by which they
may file notices of removal with respect to any pending Actions
be further extended until the earlier of (a) the effective date
of the Debtors' Second Amended Joint Plan of Reorganization, or
(b) 30 days after entry of an order terminating the automatic
stay with respect to any particular Action sought to be removed.
It is well settled that this Court is authorized to expand the
removal period provided by Bankruptcy Rule 9027 as requested.
Indeed, similar relief previously has been granted, not only in
these cases, but in many other large chapter 11 cases in this
district.
A Further Extension of the Removal Period Is In
the Best Interests of the Debtors' Estates
A further extension of the Removal Period is in the best
interests of the Debtors, their estates, their creditors and
other parties-in-interest. Since the commencement of these
chapter 11 cases, the Debtors' focus has been, first, on
stabilizing their businesses and, second, on formulating a
business plan that ultimately formed the basis of a plan or
plans of reorganization for the Debtors. Indeed, on December 19,
2001, the Debtors filed the Plan and accompanying Disclosure
Statement with this Court. The Disclosure Statement was approved
on April 3, 2002, and a confirmation hearing has been scheduled
for May 20, 2002. The Debtors have not yet been able to conclude
the monumental task of analyzing the merits of removing each of
the hundreds of Actions to which they are a party. The proposed
extension of the Removal Period will afford the Debtors the
chance to make an informed decision with respect to the
benefits, if any, to be derived from removal of some or all of
the Actions.
The Debtors submit that a further extension of the Removal
Period will not prejudice the non-Debtor parties to the Actions.
Each non-Debtor party to an Action that ultimately is removed
will continue to have the right to seek remand under 28 U.S.C.
1452(b). Further, an additional extension of the Removal Period
will not unduly delay the prosecution of the Actions, as most,
if not all, of the Actions remain subject to the automatic stay
of section 362(a) of the Bankruptcy Code. In short, a further
extension of the Removal Period simply will permit maintenance
of the status quo while the Debtors review, analyze, and
consider their options with respect to the Actions. (ICG
Communications Bankruptcy News, Issue No. 23; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
IT GROUP: Examiner Engages Neilson Elggren as Accountant
--------------------------------------------------------
R. Todd Neilson, the Court-appointed Examiner in IT Group Inc.'s
and its debtor-affiliates' Chapter 11 cases, asks the Court for
permission to employ and retain Neilson Elggren LLP, as his
accountants, nunc pro tunc to March 8, 2002, to:
A. Assist and advise in the investigation of the acts,
conduct, assets liabilities and financial condition of the
Debtors businesses and the desirability of the continuance of
such business, and any other matter relevant to the cases or
to the formulation of a plan;
B. Assist to develop one or more detailed plans for the
ongoing operation of the Debtors' business;
C. Assist to develop and make recommendations regarding cost-
cutting and revenue enhancement measures for the Debtors;
D. Assist to explore the prospects for a stand-alone plan of
reorganization for the Debtors in comparison to the
transaction set forth in the Sale Motion;
E. Assist in investigating and fully exploring the potential
lenders, the possible terms of a new DIP facility and
potential exit financing for the Debtors;
F. Assist to investigate and analyze selling any and all of
the Debtors' assets or businesses and, to the extent
necessary to conduct such investigation and analysis, meet
and discuss matters with potential purchasers;
G. Assist in meeting with the Debtors', the Committee and
their respective advisors and attorneys regarding the matters
set forth;
H. Assist the economics of the Debtors' rights and interests
in the Debtors under various agreements that are the subject
of the Motion of Northrop Grunman Technical Services, and
Wackenhut Services, Inc.
I. Assist assessing the potential separate administration or
sale of Landbank Wetlands, LLC and US Wetlands, LLC; and,
J. Assist in the preparation of a report to file in the Court
which will set forth the Examiner's findings as to the
matters mentioned;
David Judd, a Neilson partner, tells the Court that his firm
will bill $85 to $425 an hour for its professional services.
Neilson partner Thomas Jeremiassen, CPA, assures the Court that
Elggren has not otherwise represented the Debtors, their
creditors, equity security holders, or any other party-in-
interest, as their respective accountants, in matters relating
to the Debtors or their estates. (IT Group Bankruptcy News,
Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900)
INTERDENT INC.: Banks Agree To Waive Covenant Defaults
------------------------------------------------------
InterDent, Inc. (Nasdaq/NM: DENT) announced results for the
first quarter ended March 31, 2002.
H. Wayne Posey, InterDent's chairman and chief executive
officer, stated, "I am pleased to report that we are making
progress and executing according to plan. Same-office sales
growth increased by 2.5% in the first quarter over the
comparable period last year. More importantly, practice level
EBITDA (earnings before interest, taxes, depreciation and
amortization) margin improved from 13.7% in the first quarter of
last year to 14.0% in the first quarter of 2002. Our fourth
quarter progress, coupled with the improved performance in the
first quarter, sends a positive signal to all of our
stakeholders confirming that our organizational restructuring
and operational initiatives are beginning to pay off. We expect
to report continued progress in the second quarter and beyond."
Net revenue in the first quarter of 2002 was $63.7 million
compared with $62.9 million in the first quarter of 2001 after
adjusting for dispositions that took place in 2001. Including
dispositions during 2001, net revenue in the first quarter of
2001 was $83.6 million. For the first quarter of 2002, the
Company reported a net loss attributable to common stock of $1.1
million, or $0.28 per diluted share, compared with a net loss in
the first quarter of 2001 of $521,000, or $0.13 per diluted
share. The Company adopted FASB Statement No. 142 effective
January 1, 2002, and, as a result, the Company ceased amortizing
its intangible assets, which were deemed to have an indefinite
life. During the first quarter of 2001, the Company recorded
approximately $1.6 million of amortization expense associated
with its intangible assets.
During the quarters ended March 31, 2002 and 2001, EBITDA was
impacted by executive stock compensation expense, nonrecurring
consulting fees and legal fees related to two significant
lawsuits, all of which are unusual expenses. These unusual
expenses totaled $1.1 million in 2002 and $1.1 million in 2001.
On an adjusted basis and not including the impact of these
unusual items, EBITDA for the first quarter of 2002 was $5.7
million compared with $6.4 million for the first quarter of
2001. Including unusual items, EBITDA for the first quarter of
2002 was $4.6 million compared with $8.2 million for the same
period last year.
Subsequent to the close of the first quarter, the Company signed
an amendment to its Credit Facility. Under the terms of the
amendment, the Company's banks agreed to substantially reduce
the Company's quarterly principal repayment obligations through
March 31, 2003. The Company's previously scheduled quarterly
principal payments due July 1, 2002, October 1, 2002, and
January 1, 2003, have each been reduced from $7.2 million to
$300,000. All previous covenant defaults have been permanently
waived, and the financial covenants have been reset.
Mr. Posey added, "I am also pleased to report that our first
National Conference, attended by over 150 dentists and other
professionals, was an unqualified success. This conference is an
important step as one element of our increased focus on
improving internal communications across the Company. In
addition, such events play a major role in fostering strong
working relationships, enhancing espirit de corps, and providing
opportunities for continuing education. Also, emphasis was given
to our Doctor Career Path and Mentoring Plan, which is being
rolled out in selected markets and receiving an extremely
positive initial reception. The feedback from the conference
that resonated most powerfully was that our business is
fundamentally sound and that our dentists and management team
were re-energized."
About InterDent
InterDent provides dental management services in 141 locations
in California, Oregon, Washington, Nevada, Arizona, Hawaii,
Idaho, Oklahoma and Kansas with total annualized patient
revenues under management of approximately $250 million. The
Company's integrated support environment and proprietary
information technologies enable dental professionals to provide
patients with high quality, comprehensive, convenient and cost-
effective care.
As of March 31, 2002, InterDent's liquidity is strained with
total current liabilities of $46,049,000 exceeding total current
assets of $38,795,000.
INT'L BIO: Galaxy Power Demands Payment Of $12.5MM (HK) Loan
------------------------------------------------------------
The Board of Directors of International Bio Recovery Corporation
("IBR") acknowledge being served a statement of claim by Galaxy
Power Enterprises Limited, whereby Galaxy Power has alleged that
IBR is in default of an April 9, 2001 loan agreement. The suit
claims Galaxy Power granted IBR the 12- month Loan of $12.5
million (Hong Kong), the equivalent of CDN$2.5 million, on April
9, 2001, secured by a promissory note and a general security
agreement and that the Loan is now in default.
While IBR acknowledges Galaxy Power has demanded payment, IBR
has been in discussions with its counsel seeking an expedited
resolution to this matter. Should Galaxy Power reject IBR's
proposal, IBR intends to vigorously defend the May 10, 2002
statement of claim.
International Bio Recovery Corporation is an innovative
environmental biotechnology company setting the global standard
for the management of organic waste and the development of
commercial microbial products to increase crop yields, prevent
plant disease and dramatically reduce the world's agricultural
dependence on chemicals.
IBR is a publicly listed company trading on the Canadian Venture
Exchange under the symbol "IBR".
KCS ENERGY: Selling Non-core Assets For $26.8MM To Repay Sr Debt
----------------------------------------------------------------
KCS Energy, Inc. (NYSE: KCS) announced financial and operating
results for the first quarter ended March 31, 2002.
Commenting on the first quarter's results, KCS President and
Chief Executive Officer James W. Christmas said, "KCS, along
with the entire industry, was negatively impacted by
significantly lower natural gas and oil prices during the first
quarter of 2002, especially when compared to the prices
experienced during the first quarter of last year. While we
cannot control market prices for oil and gas, we did continue to
focus our efforts on things we can control. Cash operating
expenses were down 33%, reflecting our commitment to running an
efficient organization, and interest expense was down 34%
reflecting our commitment to debt reduction. In addition, the
Company has entered into agreements to sell non-core properties
for $26.8 million, the proceeds of which will be used primarily
to repay senior debt. The recent rebound in energy prices,
coupled with our reduced cost levels, will result in higher cash
flow and earnings in the second quarter.
Total revenue was $28.8 million for the three months ended March
31, 2002 compared to $72.7 million for the same period a year
ago. Oil and gas revenue decreased $27.3 million primarily due
to a 42% decline in average realized natural gas prices and a
29% decline in average realized oil and liquids prices. Oil and
gas production declined 1.7 Bcfe to 10.3 Bcfe for the three
months ended March 31, 2002. The decrease in production rates
is largely attributable to the decline from high initial
production rates as a result of the accelerated drilling
programs in the Sonora and West Ada fields which were designed
to capture high first quarter 2001 prices, the sale of certain
oil and gas properties and the scheduled decrease in VPP
deliveries. Other revenue was down $16.6 million, largely due
to non-recurring revenue of $7.7 million related to derivative
instruments and $7.0 million from the sale of emission reduction
credits in the first quarter of 2001. Cash operating expenses
(lease operating, production taxes and general and
administrative expenses) were $10.0 million for the three months
ended March 31, 2002 compared to $15.0 million for the same
period in 2001. Non-cash expenses, primarily depreciation,
depletion and amortization ("DD&A"), increased to $15.2 million
in the 2002 period compared to $13.6 million in 2001 primarily
due to a higher DD&A rate resulting from the dramatic decline in
natural gas prices and a higher depletable base. Interest
expense was $4.8 million in the 2002 period compared to $7.3
million. The 2001 three-month period also included $2.4 million
of reorganization expenses. Net loss was $0.8 million, or $0.03
per share, compared to net income of $41.0 million, or $1.21 per
diluted share last year.
Non-core Property Sales and Operating Highlights
The Company has signed three agreements to sell non-core
properties for $26.8 million. The properties, which include
over 300 wells in five states, had estimated reserves as of the
January 1, 2002 effective date of 20.9 Bcfe and produce
approximately 12 Mmcfepd. Closing is expected within the next
30 days subject to satisfactory completion of the buyer's due
diligence. The Company is continuing to market additional non-
core properties.
KCS drilled 19 wells in the first quarter, of which 14 were
successful. Recent drilling activity includes:
* The Dot Cobb #1 well, Dolan Field, in Live Oak County,
south Texas (KCS WI = 37.5%) is producing at 2,200 Mcfpd. This
is the second well in this field drilled in the last six months.
* The Cinco Ranch #1 in Fort Bend County, south Texas (KCS WI
= 16.2%) is on production at approximately 2,600 Mcfpd and 16
Bopd.
* The Mustang Island 938 #1 (La Playa Prospect) in south
Texas (KCS WI = 20%) is being tested from the lowest of six
potential pay zones at a rate of 1,700 Mcfpd.
* The Butzer #2 (KCS WI = 13%) in Latimer County, Oklahoma is
producing at 2,100 Mcfpd with 5,300 psi flowing pressure.
* The Napper #3 in Lincoln Parish, north Louisiana (KCS WI =
13.5%) is currently flowing to sales at a combined rate of 4,650
Mcfpd and 37 Bopd from two zones. An offset well is planned in
which KCS will have a higher working interest.
The Company's production volumes averaged 115.0 Mmcfepd in the
first quarter, down 4.2 Mmcfepd from the fourth quarter of 2001.
Production volumes were lower because of: 1) property sales
which accounted for approximately 2.0 Mmcfepd (Dragon Tail,
Frost field & Montana/North Dakota sales package); 2) scheduled
VPP delivery reductions of approximately 1.0 Mmcfepd; and
3) production curtailments of approximately 2.6 Mmcfepd. The
Company experienced pipeline curtailments in various offshore
fields, the Catahoula field in south Louisiana and the Provident
City field in south Texas. In the first quarter the Company
also experienced declines in some Mid-Continent non-operated
fields, but these declines were offset by production from new
operated wells.
Outlook for 2002
Based on the recent property divestiture agreements and first
quarter results, the outlook for 2002 is amended as follows
(these projections do not include any additional divestitures):
Previous Forecast Current Forecast
Production (Bcfe)
WI 39-43 36-40
VPP 2-3 2-3
Total 41-46 38-43
Production payment obligation (11.2) (11.2)
LOE ($ millions) 25-29 22-25
G&A ($ millions) 8-9 8-9
Interest Expense ($ millions) 18-20 17-19
Property Sales ($ millions) 25-50 27-50
As of May 14, 2002, the Company had outstanding hedge
instruments fixing 0.9 Bcf of natural gas at a price of $3.05
per Mmbtu for the second quarter of 2002, 0.9 Bcf at $3.70 for
the third quarter and 0.9 Bcf at $3.95 for the fourth quarter of
2002. The Company also hedged 45,500 barrels of crude oil at a
price of $24.50 per barrel for the second quarter of 2002. In
addition, the Company has outstanding conditional hedges and
floor price guarantees with Enron North America Corp. covering
4.28 Bcf of natural gas for the period April to October 2002.
Since Enron is in bankruptcy the Company cannot ascertain
whether these instruments are of any value. All of KCS' hedges
are NYMEX based and not adjusted for geographic location.
KCS is an independent energy company engaged in the acquisition,
exploration, development and production of natural gas and crude
oil with operations in the Mid-Continent and Gulf Coast regions.
For more information on KCS Energy, Inc., please visit the
Company's web site at http://www.kcsenergy.com
As of March 31, 2002, the company records a stockholders' equity
deficit of $38,760,000.
KAISER ALUMINUM: Asbestos Claimants Sign-Up Tersigni as Advisor
---------------------------------------------------------------
The Official Committee of Asbestos Claimants sought and obtained
to employ and retain L. Tersigni Consulting P.C. as its
accountant and financial advisor in the Chapter 11 cases of
Kaiser Aluminum Corporation and its debtor-affiliates.
As previously reported, the services that Tersigni will perform
for the Committee include:
A. Development of oversight methods and procedures so as to
enable the Committee to fulfill its responsibilities to
monitor the Debtors' financial affairs;
B. Interpretation and analysis of financial materials, including
accounting, tax, statistical, financial and economic data,
regarding the Debtors and other relevant parties; and,
C. Analysis and advice regarding additional accounting,
financial, valuation and related issues that may arise in
connection with plan negotiations and otherwise in the
course of these proceedings.
Tersigni is compensated on an hourly basis. Mr. Tersigni's
hourly rate is $425, while the other professionals that Tersigni
will employ, if needed, are compensated on the basis of the
following hourly rate schedule:
Position Rate
-------------------------- ------
Managing Director Level $425
Director Level $320
Senior Manager Level $290
Manager Level $240
Professional Staff Level $160 - $185
Paraprofessional Level $ 80
Loreto Tersigni, Principal of L. Tersigni Consulting P.C.,
indicates that, to the best of his knowledge, they have no
relationship with any entity which would be adverse to the
Committee or the creditors. In addition, Tersigini and its
professionals is not a creditor, former employee, equity
security holder, or an insider of the Debtors. (Kaiser
Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
DebtTraders reports that Kaiser Aluminum & Chemicals's 10.875%
bonds due 2006 (KAISER3) are trading between the prices 78 and
80. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KAISER3for
real-time bond pricing.
KAISER: Found Guilty In Labor Case, May Have To Pay Over $100MM
---------------------------------------------------------------
In a case involving the longest illegal lockout in U.S. labor
history, a federal administrative law judge has ordered the
operating subsidiary of Kaiser Aluminum Corporation
(OTC Bulletin Board: KLUCQ) to "make whole" 3,000 Steelworkers
for any loss of earnings and other benefits during the company's
illegal 20-month lockout in 1999-2000, the United Steelworkers
of America reports.
While the final amount would be reduced by interim earnings
during the period of the lockout, the ruling by National Labor
Relations Board Administrative Law Judge Michael Stevenson would
be the largest backpay award in the history of the NLRB - an
estimated liability that "could likely total over one hundred
million dollars," according to a notice filed by the NLRB in
federal Bankruptcy Court.
"By wielding the hammer of the lockout," Judge Stevenson wrote
in his 65- page decision, Kaiser "unlawfully ``insisted' that
the Union accept a contract," containing an illegal "blank-
check" wage proposal and "malevolent" language which would have
unlawfully changed the scope of the bargaining unit - actions
which "constituted illegal coercion of the Union."
"We're absolutely thrilled to be one step closer to justice in
this struggle, which has gone on far too long and caused
needless misery to thousands of working families," said USWA
President Leo W. Gerard. "But the greatest tragedy is that this
didn't have to happen.
"Kaiser's ``Rambo' bargaining strategy - take no prisoners, obey
no laws - was a mistake from Day 1," Gerard added. "If the
company is really serious about restructuring and returning to
profitability, it's time for management to start obeying the law
and work with us to build a stronger Kaiser Aluminum."
Stevenson's decision follows an exhaustive trial that began
November 13, 2000, and concluded September 14, 2001.
"Throughout this long struggle, Kaiser Steelworkers earned a
place of great distinction in the history of America's labor
movement," added David Foster, Director of USWA District 11 and
chair of the USWA/Kaiser Negotiating Committee. "Their
solidarity and determination overcame largest illegal lockout in
U.S. history, forged landmark alliances with the environmental
movement and spearheaded the labor protests against the WTO in
Seattle."
Kaiser's illegal 20-month lockout, which began January 14, 1999,
is only part of a larger pattern of lawbreaking by the company,
including persistent air quality violations; serious violations
of workplace health and safety standards; and impeding a federal
investigation of the July 1999 explosion which substantially
leveled its Gramercy, La., alumina refinery.
KEY ENERGY: S&P Puts BB- Rating on Watch Pos. After Merger Deal
---------------------------------------------------------------
On May 15, Standard & Poor's placed its 'BB-' corporate credit
rating on Midland, Texas-based Key Energy Services Inc. on
CreditWatch with positive implications following the
announcement that Key has entered into a definitive merger
agreement with Houston, Texas-based Q Services Inc. Key is a
leading onshore services provider to the petroleum industry with
approximately $400 million in debt outstanding. The merger
consideration values Q Services at $265 million including the
assumption of debt. Key plans on issuing approximately $185
million to $190 million of common equity in conjunction with the
merger.
Q Services' strong regional market position will strengthen
Key's ancillary services and broaden the company's current
product offerings. The transaction is also expected to
strengthen Key's financial profile, lowering overall leverage
and improving cash flow measures. Q Services provides fluid
hauling, pressure pumping, and rental tool services in the
Texas, Louisiana, Oklahoma, New Mexico, and the Gulf of Mexico
regions.
Standard & Poor's will resolve its CreditWatch listing upon the
close of the merger. Ratings could be raised or affirmed based
upon Standard & Poor's detailed analysis of the merger.
Ratings List:
Key Energy Services Inc.
* Corporate credit rating BB-
* Senior unsecured rating BB-
* Senior subordinated rating B
KMART CORP: Mellon Bank Asks Court to Lift Stay to Offset Debts
---------------------------------------------------------------
Prior to the Petition Date, Kmart Corporation and certain of its
debtor and non-debtor affiliates obtained approximately
$1,100,000,000 of credit pursuant to the:
(a) Three Year Credit Agreement dated December 6, 1999 among
Kmart, the financial institutions including Mellon Bank
N.A., Bank of America N.A. as "Syndication Agent", The
Chase Manhattan Bank as "Administrative Agent", Chase
Securities Inc. as "Lead Arranger and Book Manager", and
BankBoston N.A. and Bank of New York as "Co-Documentation
Agents"; and
(b) 364-Day Credit Agreement dated as of November 13, 2000
among Kmart, the financial institutions including Mellon
Bank, Credit Suisse First Boston, Fleet National Bank,
and The Bank of New York as "Co-Syndication Agents", The
Chase Manhattan Bank as "Administrative Agent", and
JPMorgan Securities as "Advisor, Arranger, and
Bookrunner".
Richard G. Ziegler, Esq., at Mayer, Brown, Rowe & Maw, Chicago,
Illinois, tells the Court that Kmart owes $37,868,074 to Mellon
Bank under the Agreements as of the Petition Date.
Mr. Ziegler relates that Kmart has two store deposits with
Mellon Bank: Account No. 013-4922 had a pre-petition balance of
$104,984 while Account No. 8-668-113 had a pre-petition balance
of $884,677.
By motion, Mellon Bank asks the Court for relief from the
automatic stay in order to offset the $989,661 it held on
deposit in the Bank Accounts against $37,868,074.
Mr. Ziegler argues that Section 10.8 of the Three Year Credit
Agreement and Section 10.8 of the 364-Day Credit Agreement
granted Mellon Bank a right of setoff for any funds Kmart owes
it against any funds it owes Kmart once an event of default has
occurred (such as Kmart's bankruptcy filing) and the obligations
under the Credit Agreements have accelerated and become
immediately due and payable.
Furthermore, Mr. Ziegler notes, the Debtors have no equity in
the funds held in the Bank Accounts. "Should Mellon Bank turn
over to the Debtors the funds without applying a setoff or
receive adequate protection, it is clear that Mellon Bank's
interest will be compromised," Mr. Ziegler says. Moreover, Mr.
Ziegler points out that the Debtors' ability to reorganize
effectively will not be compromised by a $989,661 setoff
considering it has approximately $2,000,000,000 in cash. (Kmart
Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
KMART CORP: IBM Pursues Payment of Post-Petition Obligations
------------------------------------------------------------
IBM Credit Corporation and Kmart Corporation are parties to a
Term Lease Master Agreement dated December 27, 1984, and various
supplements to the Master Lease. Under the Leases, IBM Credit
agreed to lease to Kmart certain computer and computer-related
equipment, specifically:
1) a 2000 rollout of point of sale equipment -- 2000 POS
Equipment and 2000 POS Lease,
2) a 2001 rollout of point of sale equipment -- 2001 POS
Equipment and 2001 POS Lease,
3) data center equipment -- Data Center Equipment and Data
Center Lease, and
4) various other equipment that came to end of lease and is on
optional extension -- EOL Equipment and EOL Lease.
David A. Newby, Esq., at McCarthy, Duffy, Neidhart & Snakard, in
Chicago, Illinois, reports that IBM has leased over 45,000
pieces of Equipment to Kmart. Since the Petition Date, Mr.
Newby says, Kmart has used the equipment in the operation of its
business.
Under the Master Lease, Kmart is required to pay Rent on the
first day of each month until the expiration of the term of the
Leases. Kmart is also required to pay IBM Credit as additional
rent, all taxes, charges and fees imposed or levied by any
governmental body in connection with the Equipment when billed.
According to Mr. Newby, the costs for use of such Equipment for
the month of May 2002 were billed on April 1, 2002 and were due
on May 1, 2002. Mr. Newby tells the Court that Kmart has been
in default of the rental payments due under the 2000 POS Lease
and the EOL Lease since the Petition Date.
Prior to the Petition Date, Mr. Newby says, Kmart failed to make
payments due and owing under the Leases in the amount of
$3,878,353. Kmart's post-petition debts reach $4,958,234:
2000 POS Lease -- $2,650,614
2001 POS Lease -- $1,689,148
Data Center Lease -- $261,666
EOL Lease -- $356,806
The total amount due and owing through the April 2002 billing
period is $8,836,587.
Upon Kmart's default, Mr. Newby says, IBM Credit has the right
to exercise any of these remedies:
(a) declare the Leases to be in default;
(b) terminate in whole or in part the Leases;
(c) recover from Kmart any and all amounts then due and to
become due;
(d) take possession of any and all items of Equipment,
wherever located, without demand or notice, without any
Court order or other process of law; and
(e) demand that Kart return any or all such items of
Equipment to IBM Credit in accordance with the Master
Lease, and for each day that Kmart shall fail to return
any item of Equipment, IBM Credit may demand an amount
equal to the Rent and Taxes, prorated on the basis of a
30-day month, in effect immediately prior to such
default.
Mr. Newby asserts the Equipment is essential to the operation of
Kmart's business. Mr. Newby also notes that the Master Lease
provides that Kmart shall indemnify IBM Credit against, and hold
IBM Credit harmless from, any and all claims, actions, damages,
obligations, liabilities and liens, and all costs and expenses,
including legal fees, incurred by IBM Credit, arising out of the
Leases. Furthermore, Mr. Newby adds, the Master Lease provides
that Kmart shall pay IBM Credit on demand all costs and
expenses, including legal and collection fees, incurred by IBM
Credit in enforcing the terms, conditions or provisions of the
Leases or in protecting IBM Credit's rights and interests in the
Leases and the Equipment.
Kmart claims it does not have an inventory of the Equipment and
its location. Kmart also told IBM Credit that it wants to re-
deploy the Equipment from closed stores to other stores. Mr.
Newby notes that these store closings will result in movement of
this Equipment -- approximately 5,000 pieces. "Movement of this
Equipment will further increase the likelihood that Equipment
will be lost, damaged, misplaced or stolen," Mr. Newby says.
Moreover, Mr. Newby emphasizes, that Kmart can only relocate the
Equipment from its original location upon consent of IBM Credit.
Mr. Newby makes it clear that relocation shall not relieve Kmart
from its obligations under the Leases.
By motion, IBM Credit asks the Court to:
(i) compel the Debtors to pay immediately any and all of its
post-petition obligations under the Leases, as well as
attorney's fees; and
(ii) compel the Debtors to timely perform its obligations
under the Leases arising after the date of the Court's
Order.
"Otherwise, IBM Credit will suffer significant harm due to the
Debtors' failure to pay its obligations under the Leases," Mr.
Newby contends.
IBM Credit also seeks adequate protection:
(1) with regard to the 2000 POS Leases, if the Court does not
compel the Debtors to pay the past due Rent and to
continue to pay the Rent on an ongoing basis, then IBM
Credit asks that the Court compel the Debtors to make
adequate protection payments for the 2000 POS Equipment;
and
(2) with regard to all the Leases, IBM Credit requests that
the Court compel the Debtors to label all the Equipment
with the label provided by IBM Credit as required
pursuant to the Leases and provide IBM Credit with an
inventory that provides the location of each piece of
Equipment and with updated, to that inventory as
Equipment is moved (upon consent of IBM Credit).
In the alternative, IBM Credit asks Judge Sonderby to terminate
the automatic stay so that it may exercise any and all of its
rights and remedies afforded under the Leases or applicable law.
In addition, IBM Credit requests the Court to compel the
Debtors' decision on the assumption or rejection of the Leases
as soon as possible. (Kmart Bankruptcy News, Issue No. 21;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
LTV CORP: Provides Notice of Allocation of Steel Sale Proceeds
--------------------------------------------------------------
The LTV Corporation and its debtor-affiliates closed the sale of
their Integrated Steel Assets and provided notice that, in
accordance with Lien Treatment Procedures, the Net Proceeds from
the Hard Asset Closing were placed in an escrow account to be
subdivided into separate escrow sub-accounts for each applicable
Acquired Debtor Asset. In accord with Judge Bodoh's Order, all
liens and claims with respect to the Acquired Assets, other than
the Additional Assets, have been extinguished and attach only to
the proceeds in the applicable Escrow Account.
The Debtors, along with The Blackstone Group, provide their
conclusions regarding the fair allocation of net proceeds to the
Acquired Assets. Lienholders with the same priority would be
subject to pari passu treatment. The Debtors provide the
estimated cash value of a particular asset, and an allocation of
the Net Proceeds pro rata based upon an Acquired Asset's
estimated cash value. Assets with negative value were deemed to
be zero for the pro rata allocation of the Net Proceeds.
The Lien Schedule is based, in part, on information provided by
the respective Lienholders, public records, and a review of the
Debtors' records, and does not reflect a comprehensive analysis
of the potential claims and defenses the Debtors may assert in
respect o the relative priority, validity and amount of the
asserted liens. The Debtors reserve the right to modify, amend
or alter the treatment of any lien or claim identified in the
Lien Schedule, including the relative priority, validity and
amount of any lien or claim, and the amount of any anticipated
payment after further review of the applicable liens and claims
asserted against the property, in accord with the applicable
provisions of the Bankruptcy Code or any other applicable law,
or in the event any additional liens or amounts in respect of
known asserted liens are identified.
A hearing on objections, if any, will be held on June 4, 2002,
at 1:30 p.m. Eastern Time, which is the next regularly scheduled
omnibus hearing in these cases.
LTV Steel Corporation
Allocation of Net Proceeds
(Dollars in millions)
Estimated Pro Rata
Acquired Asset Cash Value Allocation
-------------- ---------- ----------
Cleveland Works neg. $ 0.0
Indiana Harbor Works neg. 0.0
Hennepin Works $84.0 34.2
Lorain Pellet Terminal 2.5 1.0
Grand River Lime Plant 0.3 0.1
Short-Line Railroad Equipment 1/ 17.7 17.7
LTV Tech Center 4.9 2.0
Cleveland natural Gas Reserves 2/ 0.6 0.6
L-SE Equity Interest 3/ 19.3 7.9
Warren Coke Facility neg. 0.0
Prepaid Expenses 4/ 1.5 1.5
Total 65.0
Notes:
1. This amount is not allocated pro rata due to a
separate agreement with the Railroad sellers, which
was approved by Judge Bodoh. This amount is the
amount asserted as the value of these assets by the
Railroads; this amount is disputed by the Debtors, who
believe that he actual value is lower. The parties
are attempting to reach agreement on the appropriate
value; absent agreement, the appropriate value will be
determined by Judge Bodoh. Any reduction in this
value after the discrepancy is resolved would result
in a pro rata increase in the allocated Net Proceeds
for the other Acquired Assets.
2. This amount has not been allocated pro rata because it
is a readily marketable commodity with a market price.
3. The sale of this interest has not yet closed, but the
Debtors say they anticipate a closing in the near
future.
4. This amount has not been allocated pro rata because it
is a cash deposit that was not sold at a discount.
All of these properties are subject to multiple liens. The
Debtors provide a summary of these liens by lienholder in what
the Debtors assert is the proper order of priority. These
liens, their holders and the anticipated payment by asset
include:
Cleveland Works
No distribution
Lien
Anticipated
Lienholder Amount Priority Payment
---------- ------ -------- -----------
Cuyahoga County Treasurer $6,305,872.00 1 $ 0.0
Busch International 31,280.00 2 0.0
Precision Environmental Co. 442,854.90 2 0.0
Erie Industrial Maintenance 3,078.75 2 0.0
Harbison-Walker Refractories
Co. 129,620.70 2 0.0
Kelley Steel Erectors Inc. 759,811.84 2 0.0
Lake Erie Electric Inc. 294,107.09 2 0.0
MinTEQ International Inc. 80,635.81 2 0.0
Morgan Engineering Systems,
Inc. 40,448.00 2 0.0
North American Refractories
Co. 1,063,832.74 2 0.0
Osborne Concrete & Stone Co. 138,813.18 2 0.0
Schweizer Dipple, Inc. 422,657.93 2 0.0
Superior Industrial
Insulation 21,485.22 2 0.0
Warren Roofing & Insulation
Co. 120,615.00 2 0.0
United Steelworkers of
America 250,000,000.00 3 0.0
JP Morgan Chase Bank,
as Agent 222,000,000.00 4 0.0
Cuyahoa County Treasurer 7,018,303.72 5 0.0
-------------- ----
485,148,491.93 0.0
Indiana Harbor
No distribution
Lien
Anticipated
Lienholder Amount Priority Payment
---------- ------ -------- -----------
Lake County (Indiana)
Trea. 17,851,248.00 1 0.0
Continental Electric Co. 519,916.58 2 0.0
Shields Electric 136,697.00 2 0.0
Abrex Industries, Inc. 502,106.00 2 0.0
Artisan Corporation 268,678.67 2 0.0
Busch International 71,831.40 2 0.0
Columbia Pipe & Supply Co. 164,398.63 2 0.0
***
JPMorgan Chase, as Agent 222,000,000.00 3 0.0
-------------- ----
233,900,634.88 0.0
Hennepin Illinois
Lien
Anticipated
Lienholder Amount Priority Payment
---------- ------ -------- -----------
Putnam Cty. Tax Collector 741,334.00 1 741,334
Western Sand & Travel Co. 72,488.68 1/ 2 0
Abtrex Industries, Inc. 354,628.00 2/ 2 340,467
Anagnos Door Co., Inc. 6,161.40 2 6,161
Boehm Bros. Inc. 27,440.57 2 27,441
Deichmueller Construction 204,105.70 3/ 2 121,786
Hasse Construction Co. 405,610.19 4/ 2 58,269
JB Contracting Corp. 59,038.20 2 59,038
Star Erectors, inc. 50,594.80 2 50,595
Sterling Fluid Systems 19,000.00 2 19,000
Viatec, Inc. 75,000.00 2 75,000
Western Sand & Gravel 72,488.68 2 72,489
Continental Electric Co. 103,009.87 5/ 2 0
JP Morgan Chase Bank 22,000,000.00 3 32,638,421
-------------- ----------
233,449,566.09 34,200,000
Notes:
1. Lien described by Debtors as "invalid."
2. While lien not described as disputed, Debtors'
"reconciled amount of lien" is $330,467.00.
3. While lien not described as disputed, Debtors'
"reconciled amount of lien" is $121,785.80.
4. While lien not described as disputed, Debtors'
"reconciled amount of lien" is $58,268.92.
5. Invalid - no notice.
Lorain Ohio Pellet Terminal
Lien
Anticipated
Lienholder Amount Priority Payment
---------- ------ -------- -----------
Lorain County Treasurer 1/ $ 882,909.00 1 $82,899.00
Lorain County Treasurer 2/ 985.65 2 0.00
Lorain County Treasurer 2/ 1,999.99 2 0.00
Lorain County Treasurer 2/ 3,894.87 3 0.00
Lorain County Treasurer 2/ 2,829.04 3 0.00
Lorain County Treasurer 2/ 1,313.04 3 0.00
Lorain County Treasurer 2/ 2,009.87 3 0.00
JP Morgan Chase Bank 222,000,000.00 4 917,101.00
-------------- ------------
222,013,033.46 1,000,000.00
Notes:
1. The Debtors' Reconciled Amount of Lien is used as this
is for January 2000, 2001 and 2002, and no proof of
claim has been filed or claim asserted for these
periods by the Treasurer.
2. Invalid, disputed.
Lime Plant-Ohio
No distribution
Lien
Anticipated
Lienholder Amount Priority Payment
---------- ------ -------- -----------
Lake County (Ohio)
Treasurer 1/ $ 65,232.00 1 $65,232.00
Kelley Steel Erectors,
Inc. 87,996.81 2 34,768.00
JP Morgan Chase Bank 222,000,000.00 3 917,101.00
-------------- ------------
222,087,996.81 1,000,000.00
Notes:
1. The Debtors' Reconciled Amount of Lien is used as this
is for January 2000, 2001 and 2002, and no proof of
claim has been filed or claim asserted for these
periods by the Treasurer.
Tech Center - Ohio
Lien
Anticipated
Lienholder Amount Priority Payment
---------- ------ -------- -----------
Cuyahoga Cty Treasurer 1/ $ 882,909.00 1 $ 110,953.00
Schweizer Dipple, Inc. 2/ 3,276.23 2 623.23
Schweizer Dipple, Inc. 2/ 4,819.40 2 4,819.40
JP Morgan Chase Bank 222,000,000.00 3 1,883,595.37
Cuyahoga Cty Treasurer 7,018,303.72 4 0.00
-------------- ------------
229,026,399.35 2,000,000.00
Notes:
1. The Debtors' Reconciled Amount of Lien is used as this
is for January 2000, 2001 and 2002, and no proof of
claim has been filed or claim asserted for these
periods by the Treasurer.
2. The Debtors' Reconciled Amount of Lien is used for
this distribution, rather than the amount of the Proof
of Claim.
Cleveland Ohio Natural Gas Reserves
Lien
Anticipated
Lienholder Amount Priority Payment
---------- ------ -------- -----------
JP Morgan Chase Bank 222,000,000.00 1 600,000.00
-------------- ------------
222,000,000.00 600,000.00
L-S Electro Galvanizing
Lien
Anticipated
Lienholder Amount Priority Payment
---------- ------ -------- -----------
Cuyahoga Cty Treasurer 1/ $ 108,284.00 1 $ 0.00
JP Morgan Chase Bank 222,000,000.00 2 7,900,000.00
-------------- ------------
229,026,399.35 2,000,000.00
Notes:
1. The Debtors' Reconciled Amount of Lien is used as this
is for January 2000, 2001 and 2002, and no proof of
claim has been filed or claim asserted for these
periods by the Treasurer. Under the terms of a Ground
Lease between LTV Electrogalvanizing, Inc., as lessor,
and The Connecticut Bank and Trust Company, NA, as
facility trustee, acting as lessee, dated January 31,
1985, and assigned under an Assignment and Assumption
Agreement by CBT to L-S Electro-Galvanizing Company
dated February 1, 1999, the non-debtor lessee party
has the obligation to pay these tax amounts.
Accordingly, the taxes must be paid by the lessee
rather than the Debtors' estates.
Warren Coke - Ohio
Lien
Anticipated
Lienholder Amount Priority Payment
---------- ------ -------- -----------
Trumbull Cty Treasurer 1/ $ 58,397.00 1 $ 0.00
AcandS, Inc. 2/ 25,129.10 2 0.00
ACME Construction Co. 3/ 81,070.50 2 0.00
ACME Construction Co. 3/ 1,673.06 2 0.00
Kelley Steel Erectors,
Inc. 3/ 88,623.74 2 0.00
United Refractories, Inc. 3/ 104,601.40 2 0.00
United Refractories, Inc. 3/ 84,618.86 2 0.00
Trumbull County Treasurer 3/ 885.96 3 0.00
JP Morgan Chase Bank 3/ 22,000,000.00 4 0.00
Trumbull Cty Treasurer 4/ 112,235.87 5 0.00
-------------- ------------
222,498,838.49 0.00
Notes:
1. The Debtors' Reconciled Amount of Lien is used as this
is for January 2000, 2001 and 2002, and no proof of
claim has been filed or claim asserted for these
periods by the Treasurer.
2. The Lien is described by the Debtors as "invalid"
without explanation.
3. The Lien is described by the Debtors as "valid" and
the Debtors' Reconciled Amount of Lien agrees with the
Lien as filed. No explanation is provided by the
Debtors for this distribution as zero other than the
value allocated to this asset.
4. The assessment is described by the Debtor as "invalid
- wrong Debtor." (LTV Bankruptcy News, Issue No. 30;
Bankruptcy Creditors' Service, Inc., 609/392-00900)
DebtTraders reports that LTV Corporation's 11.750% bonds due
2009 (LTV2) are quoted between 0.5 and 1.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=LTV2for
real-time bond pricing.
LASER MORTGAGE: Liquidation Prompts NYSE To Delist Shares
---------------------------------------------------------
LASER Mortgage Management, Inc. (NYSE: LMM) announced that, as a
consequence of its adopting a plan of liquidation, the NYSE
intends to take action to have LASER's common stock delisted and
will suspend trading of its common stock on May 24, 2002. LASER
will not challenge the NYSE's actions.
MCCOOK METALS: Pechiney Acquires Certain Assets For Around $20MM
----------------------------------------------------------------
Pechiney (PECH.PA)(NYSE:PY) announced that its subsidiary
Pechiney Rolled Products has completed the acquisition of
certain assets from the Chapter 11 Trustee of McCook Metals,
L.L.C. and its subsidiary, McCook Equipment, L.L.C., in McCook,
Illinois. McCook Metals and its subsidiaries are the subject of
a bankruptcy proceeding pending in U.S. Bankruptcy Court in
Chicago.
The sale of the assets to Pechiney Rolled Products was approved
by the U.S. Bankruptcy Court on March 8, 2002. On April 29, the
U.S. Bankruptcy Court approved various other transactions before
the deal was finally completed on May 1, 2002.
Pechiney's net investment cost, amounts to around 20 million US
dollars.
Pechiney is an international group that is listed on the Paris
(PECH.PA) and New York (NYSE: PY) stock exchanges. Its two main
sectors are aluminium and packaging. With a presence in 51
countries, Pechiney achieved sales of EUR 11 billion in 2001,
with 34,500 employees.
MCCRORY: Wins Plan Filing Exclusivity Extension Through June 27
---------------------------------------------------------------
By order of the U.S. Bankruptcy Court for the District of
Delaware, McCrory Corporation and its debtor-affiliates obtained
an extension of their exclusive periods. The Court gives the
Debtors until June 27, 2002 the exclusive right to file their
plan of reorganization and until August 26, 2002 to solicit
acceptances of that Plan.
McCrory Corporation filed for chapter 11 protection on September
10, 2001. Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl,
Young & Jones P.C., represents the Debtors in their
restructuring efforts.
MCLEODUSA INC.: Reports Decreasing Revenues & Losses In Q1 2002
---------------------------------------------------------------
McLeodUSA Incorporated (Nasdaq:MCLDD), one of the nation's
largest independent competitive local exchange carriers,
reported financial and operating results for the quarter ended
March 31, 2002.
Revenues for first quarter 2002 were $388.9 million, down 10%
from the comparable period in 2001, due primarily to the
divestiture of non-core businesses. Reported net loss per share
was $(0.30) compared with $(0.31) per share in the first quarter
of 2001. In the quarter, the Company recorded $57.1 million in
reorganization charges related to its recently completed
recapitalization, including a $53 million non-cash write-down of
previously capitalized bond issuance costs as required under the
accounting literature AICPA SOP 90-7. Excluding these
reorganization charges, EBITDA (earnings before interest, taxes,
depreciation and amortization) for the quarter was $25.1
million, an increase of 12% over the same quarter of 2001.
"Our first quarter results are right in line with our
expectations," stated Chairman and CEO Chris A. Davis.
"Throughout the recapitalization process we concentrated on
executing our plan to refocus the Company on profitable revenue
growth in our 25-state footprint, while improving business
processes and customer service. We are very pleased with the
progress we continue to make in these areas."
Specific accomplishments in the quarter include:
-- Significant strengthening of the management team with the
addition of Ken Burckhardt, Executive Vice President and Chief
Financial Officer, along with four other new Group Vice
Presidents;
-- Completion of the business process team initiatives and
implementation of recommendations to increase efficiencies,
improve customer service and reduce cost;
-- Implementation of new policies to strengthen discipline,
accountability and commitment to excellence;
-- Substantial reduction in business customer installation
and provisioning intervals by an average of 30% for complex
provisioning and 70% for UNE-L;
-- Completion of the central office profitability study which
is resulting in a realignment of the sales force to capitalize
on future opportunities for profitable growth within the 25-
state footprint;
-- Completion of the zero-based capital budgeting process
resulting in a reduced capital plan for 2002 of $300 million;
-- Successful implementation of thirty-four C4 long distance
switches resulting in the integration of three independently
operating regional switching networks (using seven different
platforms) into one dual platform long distance switching
network, which provides least cost routing alternatives,
increased utilization of our network facilities and lower cost;
-- Successful migration of additional customer traffic to the
Company's on-net/on-switch platforms to improve margins,
resulting in a platform mix at the end of the quarter of 23%
resale, 38% UNE-M/P and 39% UNE-L;
-- Completion of the 15% reduction in force that was
announced in Q4 2001 with minimal disruption to business
operations and customer service;
-- Substantial progress toward the June 30th completion date
for the consolidation of customer service and service delivery
facilities from 11 to 3;
-- Substantial progress in completing workforce development
plans for the entire organization, which address required core
competencies and proper pay, performance management and employee
retention programs.
The Company continued its program to divest non-core businesses,
including Splitrock, Integrated Business Systems (IBS) and
CapRock Services, which have generated an additional $79 million
in liquidity since the beginning of the year.
Also, as agreed to in its recapitalization plan, the Company has
initiated the sale of Illinois Consolidated Telephone Company
(ICTC), its Illinois ILEC, which is expected to close by the end
of 2002. The first $225 million of proceeds from this
transaction will be used to pay down the Company's Tranche A and
Tranche B term loans, with the balance of proceeds to remain
with the Company. McLeodUSA ended the first quarter with $114.7
million in cash, excluding $21 million of cash proceeds from the
sale of CapRock Services, which closed on April 8, 2002. The
Company spent $38 million for capital in the current quarter.
In the second quarter, McLeodUSA expects to continue to lay the
groundwork for profitable future growth by completing the
alignment of the sales force and network assets consistent with
the results of its central office profitability study in its 25
states. The Company also plans to continue to focus on cost
reductions and improved margins, as well as develop and
implement the systems enhancements required to support the
improved business processes.
For the year 2002, McLeodUSA expects total revenues of
approximately $1.3 billion and EBITDA, excluding reorganization
charges, of $135 million. These amounts may change based on the
timing of the sales of certain non-core businesses.
Other Recent Company Announcements
Summary of Recapitalization
On April 16, McLeodUSA completed a comprehensive
recapitalization within 75 days through a pre-negotiated Chapter
11 filing. The recapitalization included the elimination of $3
billion of high-yield debt and the sale of McLeodUSA Publishing.
The Company's remaining debt will be approximately $715 million
in bank borrowings after the completion of the sale of Illinois
Consolidated Telephone Company (ICTC), which is currently being
marketed and is expected to close by the end of 2002. As a
result of the recapitalization, the Company eliminated
approximately $315 million of annual interest expense. Once the
ICTC sale closes, the Company will have reduced its annual
interest expense from $365 million to approximately $50 million,
a reduction of 87%. The Company also received a $175 million
equity investment from Forstmann Little as part of the
recapitalization. The Chapter 11 case included only the parent
company, McLeodUSA Incorporated. The operating subsidiaries,
including McLeodUSA Telecommunications, were not part of, nor
affected by the bankruptcy proceeding.
Organizational Changes
On April 17, 2002, McLeodUSA announced that Jeffrey D. Benjamin
has joined the Board of Directors of McLeodUSA as the
representative of the Company's former noteholders.
On April 24, 2002, Forstmann Little and McLeodUSA named a new
senior management team to execute the Company's post-
recapitalization growth strategy. The announcements included:
-- Chris Davis was named Chairman and CEO
-- Steve Gray continues as President
-- Ken Burckhardt joined the Company as Executive Vice
President, Chief Financial Officer and a Director
-- Group Vice Presidents added: Tom Vater as Group Vice
President
-- Finance; Cheri Roach to lead Information Technologies as
the Company's CIO; Greg Crosby to head up Marketing and
Roy McGraw in charge of Materials Management.
-- Clark McLeod, Founder and former Chairman, retired.
Asset Sales
-- On January 24, 2002, McLeodUSA completed two transactions:
the sale of certain Internet/data assets and wholesale dial-up
Internet Service Provider customer base (formerly part of
Splitrock Services) to Level 3 Communications, LLC; and the sale
of its customer-premise equipment business, Integrated Business
Systems, to Inter-Tel Technologies, Inc.
-- On April 8, 2002, McLeodUSA completed the sale of a
subsidiary doing business as CapRock Services Corporation to a
holding company formed by an investor group led by Genesis Park
LP and The Riverside Company. The sale also included two wholly-
owned subsidiaries of CapRock Services: CapRock UK Limited and
Spacelink Systems, Inc.
-- On April 16, 2002, as part of the recapitalization,
McLeodUSA completed the sale of McLeodUSA Publishing Company to
United Kingdom-based Yell Group Limited for $600 million.
About McLeodUSA
McLeodUSA provides integrated communications services, including
local services, in 25 Midwest, Southwest, Northwest and Rocky
Mountain states. The Company is a facilities-based
telecommunications provider with, as of March 31, 2002, 43 ATM
switches, 59 voice switches, 499 collocations, 526 DSLAMs and
7,900 employees. Visit the Company's web site at
www.mcleodusa.com.
METALS USA: Wants To Hire Ordinary Course Professionals
-------------------------------------------------------
Metals USA, Inc. and its debtor-affiliates ask the Court to
authorize the retention of professionals utilized in the
ordinary course of business as of and after the Petition Date.
Zack A. Clement, Esq., Fulbright & Jaworski LLP in Houston,
Texas, submits that while the Debtors only have a limited need
for ordinary course professionals, they recognize the importance
of the services that such professionals render on behalf of the
Debtors' estates. In light of the fact that it would be costly
for the Debtors to prepare individual applications for each
professional, who will receive relatively small fees anyway, the
Debtors ask the Court to dispense with the requirement of
individual employment applications with respect to each
professional.
The Debtors propose that no law firm that is an Ordinary Course
Professional will receive payment for post-petition services
rendered until the professional files an affidavit with the
Court, pursuant to Section 327(e) of the Bankruptcy Code. The
affidavit will set forth any amounts that the Profession is owed
by the Debtors for pre-petition work. It will also indicate
that the Professional does not represent or hold any interest
adverse to the Debtors or their estates with respect to matters
for which the professional seeks retention. In addition, the
Debtors will not make any payments to Ordinary Course
Professionals on account of pre-petition claims. Debtors propose
also that all Retention Affidavits be served, by first-class
mail, on the Office of the United States Trustee for the
Southern District of Texas, counsel for the Bank Group, and
counsel for the Creditors' Committee. The Debtors believe that
the notice provided for herein is fair and adequate and no other
notice is necessary.
It is proposed that the Debtors will be permitted to pay each
Ordinary Course Professional without prior application before
the Court 100% of the fees and disbursements incurred by such
professional. This is provided, however, that any
professional's disbursements do not exceed $10,000 per month.
Payments will be made after the Debtors have approved an
appropriate invoice listing in reasonable detail the nature of
the services rendered and disbursements actually incurred since
November 14, 2001.
Mr. Clement believes that none of the Ordinary Course
Professionals hired by the Debtors have any interest materially
adverse to the Debtors even if some of them may hold unsecured
claims against the Debtors for pre-petition services. The
Debtors make this assertion in view of the limited amount of
work for which the Ordinary Course Professionals will be
engaged. The firms have been performing services for the Debtors
since the Petition Date without compensation. (Metals USA
Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
METROMEDIA INT: May File For Bankruptcy If Unable To Raise Funds
----------------------------------------------------------------
Metromedia International Group, Inc. (AMEX:MMG), the owner of
various interests in communications business ventures in Eastern
Europe, the Commonwealth of Independent States and other
emerging markets, reported operating results for the first
quarter ended March 31, 2002.
For the quarter ended March 31, 2002, the Company reported a net
loss attributable to common stockholders of $20.9 million, or
$0.22 per share, on consolidated revenues of $65.5 million. This
compares to a net loss attributable to common stockholders of
$30.1 million, or $0.32 per share, on consolidated revenues of
$85.1 million for the quarter ended March 31, 2001. The 2001
results included goodwill amortization of $5.7 million, or $0.06
per share, which is excluded in the 2002 financial results due
to the adoption of Statement of Financial Accounting Standards
("SFAS") No. 142. As a result, on a pro forma basis, adjusted to
reflect the adoption of SFAS No. 142 effective January 1, 2001,
net loss attributable to common stockholders would have been
$0.26 for the first quarter of 2001.
Liquidity Issues
The Company had corporate cash of $7.3 million and $6.1 million
as of March 31, 2002 and April 30, 2002, respectively.
Based on the Company's current existing cash balances and
projected internally generated funds, the Company does not
believe that it will be able to fund its operating, investing
and financing cash flows through the remainder of 2002. In
addition, the Company currently projects that its cash flow and
existing capital resources will not be sufficient without
external funding or cash proceeds from asset sales, or a
combination of both, to make the $11.1 million September 30,
2002 interest payment on the Senior Discount Notes. As a result,
there is substantial doubt about the Company's ability to
continue as a going concern.
The Company has been exploring possible asset sales to raise
additional cash and has been attempting to maximize cash
distributions by its business ventures to the Company. The
Company has also held negotiations with representatives of
holders of its Senior Discount Notes regarding possible
restructuring of the obligations under those notes. The Company
cannot make any assurance that it will be successful in raising
additional cash through asset sales or through cash
disbursements from its business ventures, nor can it make any
assurance regarding the successful restructuring of its
indebtedness.
If the Company was not able to resolve its liquidity issues, the
Company would have to resort to certain other measures,
including ultimately seeking bankruptcy protection.
Restructuring Update
The Company continues to engage in periodic discussions with
representatives of holders of its Senior Discount Notes in an
attempt to reach an agreement on a restructuring of its
indebtedness in conjunction with proposed asset sales or spin-
offs and restructuring alternatives. To date, the Company and
representatives of noteholders have not reached an agreement on
terms of a restructuring.
The Company has engaged a financial advisor to manage the sale
of Snapper. The Company has received preliminary interest in the
purchase of Snapper by third parties and initial due diligence
is well under way. The Company anticipates receiving formal
offers within the next thirty days. There can be no assurance
that a transaction will be consummated as a result of these
offers.
The Communications Group
For the three months ended March 31, 2002, the Communications
Group accounted for $34.0 million of the Company's total first
quarter 2002 consolidated revenues compared to $33.2 million for
the same period in 2001.
The Company is no longer providing "Combined Basis" financial
results of its business operations. This change in reporting is
due to recent guidance issued by the Securities and Exchange
Commission regarding the presentation of non-US GAAP based
financial information in press releases. Accordingly, in order
to provide additional insight into the Company's business
operations, the Company is providing the following information
regarding the operating results of the more significant business
ventures in its Communications Group.
PeterStar Business Venture:
PeterStar, in which the Communications Group owns a 71% indirect
interest, operates a fully digital, city-wide fiber optic
telecommunications network in St. Petersburg. PeterStar provides
integrated, high quality, telecommunications services with
modern digital transmission switching and transmission
equipment, including local, national and international long
distance, data and Internet access and value-added services, to
businesses in St. Petersburg.
PeterStar revenues increased in the first quarter of 2002
compared to the first quarter of 2001 due to growth in the
underlying business and residential services. The revenue
increase was partially offset by the expected loss of mobile
traffic revenues to a competitor in late 2000 and early 2001.
First quarter 2001 revenues included approximately $0.4 million
of mobile traffic revenue that was in the process of switching
over to the competitor. PeterStar experienced strong organic
growth of its subscriber base as a result of its aggressive
sales effort and the general improvement of economic conditions
in St Petersburg. In addition, growth in revenues in 2002
resulted from better utilization of spare capacity and higher
transit revenues, which typically bear a lower margin.
Gross margins were negatively impacted by the aforementioned
loss of high margin mobile traffic revenue and a 2002 adjustment
for obsolete inventory that has increased PeterStar's cost of
sales. The decrease in SG&A is principally due to lower
management fees and staff reductions.
Comstar Business Venture:
Comstar, in which the Communications Group owns a 50% interest,
operates a fully digital, fiber optic telecommunications network
in Moscow. Comstar provides integrated, high quality, digital
telecommunications services with modern transmission equipment,
including local, national and international long distance and
value-added services, to businesses in Moscow.
There is a decrease in revenues at Comstar in the first quarter
of 2002 compared to the first quarter of 2001 due to reductions
in long distance tariffs offset by increases in data services
and line rentals. Due to competitive pressure, Comstar continues
to experience reductions in both national and international
tariff rates.
Due to a decrease in revenues, gross margins at Comstar
decreased by 6.5%. Over 50% of Comstar's costs of sales are
fixed costs associated with operating its network. Therefore, it
takes time for Comstar to scale its cost structure in response
to revenue trends. SG&A expenses for the first quarter of 2002
were unchanged compared to the first quarter of 2001.
Magticom Business Venture:
Magticom, in which the Communications Group owns a 34.3%
indirect interest, operates and markets mobile voice
communication services to private and commercial users
nationwide in Georgia. Magticom's network operates and offers
services using GSM standards utilizing both the 900 MHz and 1800
MHz spectrum range.
Revenues at Magticom increased 19.5% in the first quarter of
2002 compared to the first quarter of 2001. The increase in
revenues is attributable the strong growth in subscribers. This
growth was offset somewhat by a decline in roaming revenues,
which was due to competitive pressure on rates. Magticom is
currently the market leader with the highest subscriber count as
well as the largest coverage area in the country estimated at
85% coverage and 75% market share.
Gross margins increased by 21.3% year-over-year due to an
increase in revenues and Magticom's ability to leverage its
fixed costs of operating its GSM network. The components of
Magticom's fixed cost structure include rental and maintenance
of base stations, a portion of the local interconnect and third
party network support.
SG&A decreased by $0.1 million in the first quarter of 2002
compared to the first quarter of 2001. The slight decrease was
the result of a reduction in bad debt expense of $0.4 million
offset by additional costs incurred to grow the business.
Magticom introduced a prepaid calling card system in September
of 2001 that has greatly reduced its bad debt expense. More than
80% of the Magticom's call revenue is now generated on the
prepaid calling platform.
Snapper
Snapper, the Company's manufacturer of lawn and garden
equipment, reported revenues of $31.5 million for the three
months ended March 31, 2002 compared to $51.9 million for the
same period in 2001. The $20.4 million decrease in Snapper
revenues on a year-over-year basis is primarily attributable to
$14.2 million of Wal-Mart related sales in the first quarter of
2001, which represented the products for the roll-out of the
Wal-Mart distribution channel. The remaining decrease in
revenues is attributable to unfavorable weather patterns for
sales of snow blowers and timing of shipments of parts to
Snapper dealers. In 2001, most of the Snapper products were
shipped to Wal-Mart in the first quarter; the Company
anticipates that most of its product shipments to Wal-Mart in
2002 will occur in the months of March, April and May.
Since it is possible that Snapper will not be in compliance with
all its financial covenants during the next four calendar
quarters under its primary credit facility, the Company
continues to classify, as required under generally accepted
accounting principles, all of Snapper's debt to its lenders
under the credit facility in the amount of $53.3 million as a
current liability. Snapper was in compliance with its financial
covenants as of March 31, 2002. The Company may seek amendments
to certain financial covenants of Snapper for future fiscal
periods, and, although it has obtained similar amendments in the
past, the Company cannot be assured that any such amendments
will be obtained.
Conference Call
The Company decided not to have a conference call associated
with the release of its first quarter 2002 financial results.
This decision was made recognizing that the Company held a
conference call associated with the release of its 2001 year end
financial results within the past 30 days and expects to hold
its annual shareholders meeting on June 27, 2002, which will be
simultaneously broadcasted on its Web site.
Metromedia International Group, Inc. is a global communications
and media company. Through its wholly owned subsidiaries and its
business ventures, the Company owns and operates communications
and media businesses in Eastern Europe, the Commonwealth of
Independent States, China and other emerging markets. These
include a variety of telephony businesses including cellular
operators, providers of local, long distance and international
services over fiber-optic and satellite-based networks,
international toll calling, fixed wireless local loop, wireless
and wired cable television networks and broadband networks, FM
radio stations, and e-commerce.
DebtTraders reports that Metromedia Fiber Network's 10.000%
bonds due 2009 (MTFIB1) are trading between 7 and 9. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=MTFIB1for
some real-time bond pricing.
METROMEDIA FIBER: Defers $32MM Interest Payment On Senior Notes
---------------------------------------------------------------
Metromedia Fiber Network, Inc. (MFN) (Nasdaq: MFNXE) did not pay
approximately $32 million of interest due May 15, 2002 on its
$650 million 10% Senior Notes. If MFN does not make the
interest payment on or before the expiration of a 30-day grace
period an "event of default" under the indenture governing these
notes will occur.
The Company also announced that its quarterly report on Form 10-
Q for the quarter ended March 31, 2002 has not been filed and
will be delayed. MFN previously announced that it had delayed
the filing of its Annual Report on Form 10-K for the year ended
December 31, 2001 with the Securities and Exchange Commission.
The Company has not yet filed its Form 10-K.
Metromedia Fiber Network, Inc.
MFN is the leading provider of digital communications
infrastructure solutions. The Company combines the most
extensive metropolitan area fiber network with a global optical
IP network, state-of-the-art data centers, award-winning managed
services and extensive peering relationships to deliver fully
integrated, outsourced communications solutions to Global 2000
companies. The all-fiber infrastructure enables MFN customers
to share vast amounts of information internally and externally
over private networks and a global IP backbone, creating
collaborative businesses that communicate at the speed of light.
Customers can take advantage of MFN's complete, end-to-end
solution or select individual components to complement their
existing infrastructures. By leasing MFN's metropolitan and
regional fiber, customers can create their own, private optical
network with virtually unlimited, un-metered bandwidth at a
fixed fee. For more reliable, secure and high-performance
Internet connectivity, customers can use MFN's private IP
network to communicate globally without ever touching the
public-switched network. Moreover, MFN's comprehensive managed
services enable companies to create a world-class Internet
presence, optimize complex sites and private optical networks,
and transform legacy applications, all with a single point of
contact.
PAIX.net, Inc., a subsidiary of MFN and the original neutral
Internet exchange, offers secure, Class A co-location facilities
where ISPs and other Internet-centric companies can form public
and private peering relationships with each other, and have
access to multiple telecommunications carriers for circuits
within each facility.
For more information on MFN, visit its Web site at
http://www.mfn.com
MUSEUM COMPANY: Completes Asset Sale To SFMB/GA LLC
---------------------------------------------------
Financo Restructuring, the financial advisory division of
Financo, Inc., one of the country's leading independent
investment banking firms, announced the completion of the sale
of the assets of The Museum Company, a national retailer of
museum-related gifts and other items, to SFMB/GA, LLC, a joint
venture of The San Francisco Music Box Company and Great
American LLC. Financo Restructuring acted as the financial
advisors and investment bankers to The Museum Company and
successfully marketed the Company and closed the asset sale
transaction within three months of its Chapter 11 filing.
"I am very pleased that we were able to effectuate a sale of the
Company quickly and efficiently for the benefit of its
creditors," said Robert Miller, President of Financo
Restructuring. "The sale positions The Museum Company for
continued growth and prosperity under the aegis of its new
owners."
The Museum Company filed for Chapter 11 bankruptcy protection on
January 10, 2002. At the time, the Company operated 100 retail
stores and employed 1,500 people.
"Finding a buyer for our Company was vital to maintaining The
Museum Company brand in the marketplace," said Howard Meitiner,
CEO of The Museum Company. "Financo Restructuring did a
marvelous job in readying the Company for sale, identifying
appropriate acquisition candidates, and overseeing the sale
process. We are very pleased with the results, and particularly
the fact that we were able to close the transaction within three
months after our bankruptcy filing."
About Financo Restructuring
Financo Restructuring provides financial advisory and investment
banking services to companies in reorganization and their
creditors. Robert Miller, the President of Financo
Restructuring, is one of the country's leading bankruptcy
experts with over twenty years of experience in major, complex
restructurings including Macy's, Trump Taj Mahal, Days Inn, A.H.
Robins, Continental Airlines, Insilco, Charter Company,
Integrated Resources and Zales.
About Financo
Financo, Inc. is one of the country's leading independent
investment banking firms, with particular experience and
expertise in the retail and merchandising sectors. Founded in
1971 by Gilbert W. Harrison, its Chairman, the firm specializes
in mergers and acquisitions, financial restructuring, principal
transaction sponsorship and consulting. For more information
please visit Financo's website at http://www.financo.com
About The Museum Company
The Museum Company is the leading independent museum related
gift retailer in the USA, with unique collections focused on
education, science, art and culture.
NATIONAL STEEL: Proposes De Minimis Asset Sale Procedures
---------------------------------------------------------
National Steel Corporation and its debtor affiliates ask for the
Court's authority to establish procedures to sell de minimis
assets free and clear of liens, claims and encumbrances without
further Court approval.
The Debtors propose that these procedures be implemented in lieu
of a separate notice and a hearing for the sale of assets if the
sale price for the assets is $3,000,000 or less:
(i) the Debtors will give notice of each proposed sale to:
(a) the U.S. Trustee;
(b) counsel for the Committee;
(c) counsel for the agent under the Debtors' debtor-in-
possession financing facility;
(d) counsel for the agent under the Debtors' pre-petition
secured financing facility; and
(e) the holder of any lien, claim or encumbrance relating
to the property proposed to be sold.
Notices will be served by facsimile, to be received by
5:00 p.m., Central Time, on the date of service. The
Sale Notice shall specify:
(a) the assets to be sold;
(b) the identity of the proposed purchaser; and
(c) the proposed purchase price.
(ii) the Notice Parties will have five business days after the
Sale Notice is sent to object or to request additional
time to evaluate the proposed transaction. If counsel to
the Debtors receives no written objection for additional
time prior to the expiration of the five-day period, the
Debtors are authorized to consummate the proposed sale
transaction and take necessary actions to close the
sale and obtain the proceeds. If a Notice Party provides
a written request for additional time to evaluate the
proposed transaction, only such Notice Party will have an
additional 15 days to object to the proposed transaction.
(iii) if a Notice Party objects to the proposed transaction
within five business days after the Sale Notice is sent,
the Debtors and such objecting Party will use good faith
efforts to consensually resolve the objection. If both
parties are unable to achieve a consensual resolution,
the Debtors will not consummate the sale unless and until
the Debtors seek and obtain Bankruptcy Court approval of
the proposed transaction upon notice and hearing.
Mark A. Berkoff, Esq., at Piper Marbury Rudnick & Wolfe, in
Chicago, Illinois, explains that the proposed procedures will
minimize administrative costs in these cases, speed the
liquidation of miscellaneous non-core assets, and preserve the
rights of interested parties to object. (National Steel
Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
DebtTraders reports that National Steel Corp.'s 9.875% bonds due
2009 (NSUS09USR1) are quoted between the prices 34 and 36. View
http://www.debttraders.com/price.cfm?dt_sec_ticker=NSUS09USR1
for some real-time bond pricing.
NEWCOR INC: U.S. Trustee Appoints Unsecured Creditors Committee
---------------------------------------------------------------
The United States Trustee for Region 3 appoints these creditors
to serve on the Official Committee of Unsecured Creditors in the
chapter 11 cases of Newcor, Inc.:
1. U.S. Bank National Association, as Indenture Trustee
Attn: Lawrence J. Bell
1420 Fifth Ave., 7th Floor
Seattle, WA, 98101
Phone: (206)344-4654, Fax: (206)344-4630;
2. Financial Management Advisors
Attn: Tim A Somers
1900 Avenue of the States, Suite 900
Los Angeles, CA, 90067
Phone: (310)229-2940, Fax: (310)229-2975;
3. Liberty Funds Group/Colonial Advisory Services, Inc.,
Attn: David P. O'Brien
1 Financial Center, Boston, MA, 02118
Phone: (617)772-3916, Fax: (866)283-0330;
4. State Street Bank and Trust, as custodian for General
Motors Employees Global Group Pension Trust, c/o DDJ
Capital Management, LLC, Investment Advisor
Attn: Jackson Craig
141 Linden Street, Suite 4, Wellesley, MA, 02482
Phone: (781)283-8500, Fax:(781)283-8555;
5. Stonehill Capital Management LLC
Attn: Wayne J.O. Teetsel
126 East 56th Street, 9th Floor
New York, NY, 10022
Phone: (212)739-7474, Fax: (212)838-2291;
6. Pro-Mold & Die
Attn: David M. Long
55 Chancellar Drive, Roselle, IL, 60172
Phone: (630)893-3594, Fax: (630)893-4773;
7. Lakeside Plastics, c/o Dempsey, Magnusen, Williamson &
Lampe, LLP
Attn: Charles J. Hertel, Esquire
1 Pearl Avenue, Suite 302
Oshkosh, WI, 54901
Phone: (920)235-7300, Fax: (920)235-2011
Newcor, Inc., along with its subsidiaries, design and
manufacture a variety of products, principally for the
automotive, heavy-duty, capital goods, agricultural and
industrial markets. The Company filed for chapter 11 protection
on February 25, 2002 Laura Davis Jones, Esq. at Pachulski,
Stang, Ziehl Young & Jones P.C. represents the Debtors in their
restructuring efforts. When the Debtors filed for protection
from its creditors, it listed $141,000,000 in total assets and
$181,000,000 in total debts.
NEXELL: Board Endorses Immediate Wind-Down of Operations
--------------------------------------------------------
Nexell Therapeutics Inc. (Nasdaq:NEXL) announced that its Board
of Directors has authorized management to immediately commence
an orderly wind-down of operations. The Company also announced
its results for the first quarter ended March 31, 2002.
Orderly Wind-Down of Operations
The Board of Directors has authorized management immediately to
begin the orderly wind-down of Company operations, including a
headcount reduction from 23 permanent full-time employees to 3
employees.
In reaching its decision that a wind-down would be in the best
interests of the Company, the Board considered a number of
factors, including the Company's financial condition, prevailing
economic and industry conditions, and lengthy and unsuccessful
efforts to raise capital or to effect a business combination
with various other companies.
"After diligently exploring our available alternatives, we
believe that the best option is an orderly wind-down in an
effort to preserve our assets and meet our obligations," said
William A. Albright, Jr., President and CEO.
The Company is considering alternatives available to it in
effecting the wind-down, which may involve liquidation or
reorganization under the federal bankruptcy code, dissolution
under Delaware law or other process or transaction. In any such
procedure or transaction, in light of the liquidation preference
of the Company's outstanding Series A and Series B Preferred
Stock in the aggregate amount of approximately $149 million, it
is very unlikely there will be any remaining value available for
distribution to the holders of Common Stock.
First Quarter 2002 Results
All financial results were impacted significantly by the sale of
the Company's former Toolbox business to Baxter Healthcare Corp.
completed as of August 31, 2001 as substantially all revenue-
producing activities consequently ceased. Results for the first
quarter of 2002 were also significantly impacted by several
transactions that are non-recurring in nature and, accordingly,
these results should not be viewed as indicative of future
financial performance.
For the quarter ended March 31, 2002, total revenues decreased
$1.8 million, or 37 percent, to $3.0 million, compared to $4.8
million in 2001. The Company recognized revenue of $1.5 million
as a result of a one-time sale to Baxter in February 2002 of
inventory that had originally been excluded from the Toolbox
transaction. In addition, as a result of the final settlement of
the transaction in March 2002, the Company realized the
remaining deferred revenue related to an agreement that was
assigned to Baxter as part of the transaction. This non-cash
revenue was also a non-recurring item.
Gross profit on sales in the first quarter of 2002 increased to
$2.8 million from $2.1 million, an increase of $0.7 million or
29 percent. As of December 31, 2001, the Company's remaining
inventory had been written down to an estimated net realizable
value of $0.3 million since the agreement with Baxter precluded
sale of any inventory to any other parties and there had been no
agreement by Baxter at that time to purchase additional
inventory. This resulted in an unusually high margin on the
unanticipated sale of this inventory to Baxter. Further, there
was no cost of sales associated with the deferred revenue
realized in the quarter.
Operating expenses in the first quarter of 2002 were $1.7
million compared to $8.4 million in 2001, a decrease of $6.7
million or 80 percent. This decrease is not expected to be
indicative of future results to the extent that certain credits
to operating expenses totaling $0.5 million were realized in the
first quarter but are not expected to recur in the future.
Non-operating income remained constant at $0.1 million in each
of the quarters ended March 31, 2002 and 2001.
The Company generated net income of $1.2 million in the first
quarter of 2002 compared to a net loss of $6.1 million in the
comparable period of the prior year. The net loss applicable to
common stock declined in the three months ended March 31, 2002
to $0.5 million or $0.03 per share, versus $7.8 million or $0.39
per share, in 2001. Weighted average shares outstanding for the
quarter ended March 31, 2002, were 20.9 million versus 20.0
million for the comparable 2001 period.
Liquidity
Cash and cash equivalents at March 31, 2002, were $6.2 million
versus $5.1 million at December 31, 2001, an increase of $1.1
million.
As previously disclosed, existing cash and cash equivalents
would have been insufficient to fund normal operations beyond
June 2002. Due to the absence of alternatives, the Company has
elected to begin the immediate wind-down of operations to extend
liquidity sufficient to fund this wind-down.
Recent Developments
The Company and Baxter agreed on a final settlement releasing
both parties from any further obligations related to the sale of
the Toolbox business. This resulted in total cash proceeds to
the Company of $3 million in the quarter.
The Company's Common Stock has traded below one dollar since
March 28, 2002. Nasdaq rules create the possibility that the
Company's stock may be delisted in the future if the stock price
does not trade above one dollar for certain time periods.
Moreover, in light of the Company's determination to wind-down
operations, it is likely that Nasdaq will suspend or terminate
trading of the Company's Common Stock and publicly-traded
warrants.
In May 2002, Victor Schmitt resigned as a member of the
Company's Board of Directors.
Nexell Therapeutics Inc.
Located in Irvine, California, Nexell Therapeutics Inc.
(Nasdaq:NEXL) is a biotechnology company that is focused on the
modification or enhancement of human immune function and blood
cell formation utilizing adult hematopoietic (blood-forming)
stem cells and other specially prepared cell populations. Nexell
is developing proprietary cell-based therapies that address
major unmet medical needs, including treatments for genetic
blood disorders, autoimmune diseases, and cancer.
NOVO NETWORKS: Publishes Third Quarter Results -- More Losses
-------------------------------------------------------------
Novo Networks, Inc. (OTC BB:NVNW) announced financial results
for the fiscal 2002 third quarter and nine-month period ended
March 31, 2002.
On March 1, 2002, the Bankruptcy Court for the District of
Delaware approved an amended disclosure statement and
liquidation plan for the assets of the Company's debtor
operating subsidiaries - including Novo Networks Operating
Corp., AxisTel Communications, Inc. and e.Volve Technology
Group, Inc. - which historically provided substantially all of
Novo Networks revenue. Accordingly, the Company did not generate
revenue from operations during the three month period ended
March 31, 2002 due to the termination of debtor subsidiary
operations leading up to the liquidation. The Company reported a
net loss of $4.1 million, or $0.08 per share, in the fiscal 2002
third quarter, compared to a net loss of $127.3 million, or
$2.43 per share, in the third quarter of fiscal 2001. The
weighted average number of shares outstanding (basic and fully
diluted) for the third quarters of fiscal 2002 and 2001 were
52,323,701 and 52,462,631, respectively.
Revenues for the nine-month period ended March 31, 2002 were
$10.5 million, compared to $58.9 million in the year-ago period.
The decline in revenue was due to the circumstances described
above. The Company reported a net loss for the first nine months
of fiscal 2002 of $3.4 million, or $0.06 per share, compared to
a net loss of $165.8 million, or $3.18 per share, in the first
nine months of fiscal 2001. The weighted average number of
shares outstanding (basic and fully diluted) for the nine months
of fiscal 2002 and 2001 were 52,323,701 and 52,189,118,
respectively.
On April 3, 2002 the amended bankruptcy plan became effective
and a liquidating trust was formed and funded by Novo Networks,
to collect, liquidate and distribute the remaining assets of its
debtor subsidiaries and prosecute certain causes of action
against various third parties. No assurance can be given that
such assets of the debtor subsidiaries will be successfully
liquidated and distributed, or that any recoveries will result
from the prosecution of certain causes of action against third
parties.
Novo Networks also announced that Daniel J. Wilson has resigned
from the Company. Mr. Wilson was previously the Executive Vice
President and Chief Financial Officer of Novo Networks.
Additionally, Clark K. Hunt and Olaf Guerrand-Hermes have
resigned from the Board of Directors of the Company.
PACIFICARE: Moody's Assigns B3 Rating to Proposed $200M Sr Notes
----------------------------------------------------------------
Moody's Investors Service took rating actions on several notes
of Pacificare Health Systems and its subsidiary FHP
International. Outlook is stable.
Rating Actions: Rating:
Assigned
PacifiCare Health Systems:
* proposed $200 million senior unsecured B3
notes and issuer rating
Confirmed
PacifiCare Health Systems
* senior implied B2
FHP International
* senior notes B2
Moody's ratings reflect PacifiCare's weak but improved liquidity
and regulated capital cushions, a short track record of
operating improvements and potential dividend increases at the
regulated subsidiaries, and pending litigation with the Texas
Department of Insurance.
The stable outlook mirrors the company's improved chances of a
successful refinancing plan and meeting its expected first
quarter consolidated operating results. If Pacificare continues
to achieve its operating targets and maintains capital cushions,
an upward rating movement can be expected. However, if the
opposite happens or if there will be large penalties with
investigations or litigation, there could be a rating downgrade.
PacifiCare Health Systems, Inc. is a leading managed care
company serving approximately 3.7 million members. It has
healthplans in eight states and Guam, with 60% of its members
residing in California. The company is headquartered in Santa
Ana, California.
PACIFIC GAS: Issues Statement After Court OKs CPUC's Disclosure
---------------------------------------------------------------
Pacific Gas and Electric Company issued the following statement
after the U.S. Bankruptcy Court approved the California Public
Utilities Commission's (CPUC) disclosure statement:
"Pacific Gas and Electric Company is pleased the process is
moving forward and that creditors will now have an opportunity
to contrast our plan and the benefits it delivers with the
flawed alternative proposed by the CPUC.
"PG&E continues to believe its plan of reorganization is the
only practicable solution that allows the utility to emerge from
Chapter 11 as an investment-grade company and gives the State of
California a path to exit the power buying business.
"The CPUC's alternative plan contains fatal flaws, is unlawful
and will ultimately be unconfirmable.
"As it promised, in the interest of moving to a vote by the
creditors and into the confirmation phase of the Chapter 11
process, PG&E did not raise objections that the CPUC's
alternative plan was unconfirmable during this portion of the
case and will raise these objections at the confirmation
hearing."
Earlier this week, the Bankruptcy Court was also informed that
an attempt to reach a mediated settlement between Pacific Gas
and Electric Company and the CPUC has been terminated without a
settlement being accomplished.
PACIFIC GAS: "Abandon Bankruptcy Plan," Ag Leaders Urge
-------------------------------------------------------
In a letter to PG&E Corp. executives Robert Glynn and Gordon
Smith, a coalition of agricultural leaders, under the leadership
of the Agricultural Energy Consumers Association, reiterated
their strong opposition to the company's plan of bankruptcy
reorganization. The large coalition of agricultural
associations, cooperatives as well as individual growers and
processors urged the monopoly utility to work with the
California Public Utilities Commission and consumers to forge a
"less drastic and more workable proposal." The leaders believe
that the alternative bankruptcy reorganization plan recently
proposed by the CPUC provides a more fair and workable
reorganization plan that balances shareholder and consumer
interests.
"It is time for PG&E to put their corporate self-interests aside
and start working with the State and their customers to fashion
a fair and workable bankruptcy plan," said Jim Crettol,
President of the Agricultural Energy Consumers Association. "It
is abundantly clear their drastic reorganization plan goes much
further than necessary and will unnecessarily cost consumers
billions of dollars in increased costs."
PG&E has come under fire in recent months for pursuing an
aggressive and controversial bankruptcy reorganization plan that
increases rates for customers and transfers the company's
valuable hydroelectric, nuclear and transmission assets to an
unregulated affiliate company. The corporation continues to
claim that its poor fiscal health and bankrupt state warrant a
massive restructuring of the company, but evidence demonstrates
that PG&E is in considerably better financial shape than it lets
on.
The letter details evidence suggesting PG&E's fiscal health is
improving: ". . . PG&E has been able to collect revenues that
are far beyond today's low wholesale energy costs and has
accumulated more than $5 billion in available cash. This
'headroom' is a windfall for the utility, but it places an
unfair strain on customers who are stuck paying exceptionally
high retail rates. PG&E shares have notably recovered to more
than $23 per share (75% of their highest value ever recorded)
from a 2001 low of $6.55. The corporation also earned $631
million in the first quarter of 2002, positioning PG&E to beat
its 2001 profit of $1.1 billion for the year. It is also
troubling that the utility recently awarded its top eleven
executives more than $32 million in bonuses of cash and stock."
Equally troubling, the proposed transfer of hydroelectric and
nuclear assets contained in the utility's plan of reorganization
has been shown to contain a significant cost increase of $8.4
billion over the next 12 years, as the cost for the power they
produce will nearly double from 2.8c per kilowatt-hour to more
than 5c under the PG&E plan.
The alternative bankruptcy reorganization proposal crafted by
the CPUC would enable the company to get back into the power
buying business and pay off creditors without raising customer
rates or endangering the state's vast hydroelectric resources.
The letter states that "the plan also is attractive in that it
more evenly distributes the burden of restoring PG&E to
financial health across the spectrum of players -- consumers,
shareholders, and the corporation itself."
Unless settled soon, the bankruptcy effort -- which has already
droned on for 13 -- months-will cost Californians hundreds of
millions of dollars in legal costs alone. The letter states
that, "not only does a reorganization plan of this magnitude
place tremendous strain on the court system; the cost of
maintaining PG&E's army of top-dollar attorneys is being passed
on to customers. According to your own court documents,
expenses for professional fees and other costs are costing
[PG&E] roughly $1 million per week. The documents also divulge
the utility's plan to reimburse PG&E Corp. for as much as $150
million more in legal expenses."
"PG&E's plan of reorganization is completely shareholder-
centered," said Michael Boccadoro, Executive Director of the
Agricultural Energy Consumers Association. "Moving the
company's hydroelectric and nuclear assets out from under the
regulatory control of the CPUC is a multibillion-dollar gift to
PG&E shareholders. It will cost consumers billions of dollars
in higher power costs and higher rates in the long term."
The correspondence from the ag leaders concludes by urging PG&E
to abandon its own plan for reorganization and "begin working
with the CPUC, the State and customer groups, including the
AECA, to address any shortcomings you perceive in this promising
[CPUC] alternative."
Key Signatories of the letter include:
Agricultural Energy Consumers Association (AECA)
Agricultural Council of California
California Poultry Federation
Nisei Farmers League
CALCOT, Ltd.
California Cotton Ginners and Growers Association
Alliance of Western Milk Producers
Dairy Institute of California
California Citrus Mutual
California Cut Flower Commission
California Dairies, Inc.
California State Floral Association
California Tomato Growers Association
Farmers Rice Cooperative
Almond Hullers and Processors Association
California Grain and Feed Association
Western Growers Association
California Warehouse Association
Prune Bargaining Association
California Seed Association
Zacky Farms
Sunworld, Incorporated
Paramount Farming Company
Full text of the letter that was sent to the Governor, State
Legislature and California's congressional delegation today is
posted on AECA's Web page http://www.AECAonline.com
For further information, please contact Michael Boccadoro of
Agricultural Energy Consumers Association, +1-916-447-6206.
PEP BOYS-MANNY: S&P Rates $125MM Senior Unsecured Notes at BB-
--------------------------------------------------------------
A 'BB-' rating was assigned on May 15, 2002, to Pep Boys-Manny,
Moe & Jack's planned $125 million convertible senior unsecured
note issue due in 2007. The 'BB-' corporate credit rating on the
company was also affirmed at that time. The new notes will be
issued under Rule 144A with registration rights and will be used
to repay debt and for general corporate purposes. Outlook is
stable.
The ratings on Pep Boys reflect the risks of operating in the
highly competitive and consolidating auto parts retail segment,
the challenges in converting its operations to the do-it-for-me
and service segments, high leverage, and significant debt
maturities. These risks are mitigated, somewhat, by the
company's leading market position in the industry and improved
operating performance in 2001.
Slower growth trends in recent years have led to consolidation
in the do-it-yourself segment of the market. This, coupled with
aggressive store expansion by Pep Boys in previous years, led to
declining performance from 1997 to 2000. In the latter part of
2000, the company implemented its profit enhancement plan in
which it closed 38 underperforming stores and reduced certain
field, distribution, and store support functions. The company
also substantially reduced growth as it opened only one store in
2001 and plans to open two stores in 2002.
Pep Boys has been shifting its sales mix away from the do-it-
yourself market in favor of the do-it-for-me market. By having
service bays and larger stores than competitors such as AutoZone
Inc., Standard & Poor's believes the company holds a significant
advantage in leveraging its national store base to grow its
service business, which now represents about 56% of sales
(including its tire business). Do-it-yourself now represents
only 44% of total sales. However, Pep Boys continues to face
challenges in managing the labor component of this business and
in promoting its operations in the service sector, compared to
its traditional do-it-yourself services.
Lease-adjusted operating margins improved to 11% in 2001 from
about 9% in 2000 as the company realized benefits from profit
enhancement initiatives implemented the year before. Same-store
sales were positive 1% in the first quarter of 2002 after a
decline of about 6% in 2001. EBITDA coverage of interest
improved to 3.0 times in 2001 from 2.4x in 2000.
The planned $125 million senior convertible note issue is
expected to be used to repay debt maturities in 2002. However,
Pep Boys will continue to face significant debt maturities
beyond 2002, requiring the company to continue to generate
positive free cash flow and maintain sufficient availability
under its bank facilities. The company generated $144 million of
free cash flow in 2001. Standard & Poor's believes Pep Boys will
generate free operating cash flow in the future, as the company
has improved operating efficiencies and is not expected to open
a significant number of new stores. As of May 4, 2002, the
company had about $140 million of availability under its lines
of credit.
Outlook
The company's improved operating performance and slower growth
strategy provide support for the ratings. However, significant
debt maturities beyond 2002 and continued challenges in shifting
the company's strategic focus to service and installation limit
the upside potential for the ratings over the next two years.
Ratings List
Pep Boys-Manny, Moe & Jack
* Corporate credit rating BB-/Stable/--
* Senior unsecured debt BB-
* Senior secured bank loan BB-
PIONEER COMPANIES: Posts $8 Mil Net Loss For First Quarter 2002
---------------------------------------------------------------
Pioneer Companies, Inc. (OTC: PONR) reported that revenues for
the first quarter of 2002 were $71.8 million in comparison with
$101.4 million for the first quarter of 2001. Pioneer had net
income for the first quarter of 2002 of $9.9 million or $0.99
per share, including a gain from the change in fair value of
derivatives of $18.0 million and charges of $3.1 million,
principally for operating restructuring charges that relate to
the idling of its Tacoma chlor-alkali plant. Without the $18
million derivative gain, Pioneer had a net loss of $8.1 million,
or $0.81 per share for the first quarter of 2002. In the first
quarter of 2001, the Company had a net loss of $20.1 million or
$1.74 per share.
Revenues during the first quarter of 2002 were $13.7 million
less than the fourth quarter of 2001, due to lower sales prices
for both chlorine and caustic soda and lower caustic soda
volume. The average ECU price during the quarter was $240, a
decrease of $52 from the previous quarter. Cost of sales
decreased principally due to lower power costs and reduced fixed
costs and, to a lesser extent, lower volume. The Company's
EBITDA (earnings before interest, income taxes, depreciation and
amortization, and excluding asset impairment and other non-
operating charges and the unrealized gain on derivatives) for
the 2002 quarter was $5.2 million, compared to $8.3 million for
the last quarter of 2001. The 2002 EBITDA includes the effect
of a $1.1 million curtailment gain relating to the idling of the
Tacoma chlor- alkali plant and $1.1 million of premium income on
electricity options that expired during the first quarter of
2002.
Revenues during the 2002 first quarter decreased approximately
29% compared to the first quarter of 2001, as somewhat higher
chlorine volumes were offset by lower sales prices and lower
caustic soda sales volumes. The 2002 average ECU price of $240
was $134 less than the ECU price of $374 in the first quarter of
2001. Cost of sales in the 2002 period decreased in comparison
with the first quarter of 2001 principally because of
substantially lower power costs. The Company's EBITDA decreased
to $5.2 million for the 2002 period from $13.5 million for the
2001 first quarter because of lower ECU prices, somewhat offset
by lower power costs and reduced operating costs and selling,
general and administrative expenses.
The $18 million gain from the decrease in Pioneer's net
derivative liability is attributable to increases in forecasted
market power rates. Based on derivative valuations as of March
31, 2002, the aggregate cost to close the derivatives at their
maturities over the next 5 years would be approximately $93
million.
Selling, general and administrative expenses decreased by $5.0
million, or approximately 47%, for the three months ended March
31, 2002 as compared with the corresponding period in the prior
year. The decrease arose primarily from approximately $0.6
million of cost-cutting measures and $3.5 million of decreases
in non-cash items including reduced depreciation and
amortization.
Interest for the 2002 period was substantially less than for the
2001 period because less debt was outstanding as a result of the
implementation of the Company's Plan of Reorganization. First
quarter 2002 results include a tax benefit of $0.7 million
compared to a tax expense in the first quarter of 2001 of $1.5
million. The tax benefit for the 2002 period represents the
foreign tax benefit on the carryforward of the operating loss
from Pioneer's Canadian operations; because of uncertainties
regarding the application of U.S. net operating loss
carryforwards the U.S. tax benefit was offset by a valuation
allowance. At March 31, 2002, the Company had a 100% valuation
allowance for its domestic net operating loss carryforwards.
At March 31, 2002, Pioneer had cash of $6.9 million and a net
borrowing base under its revolving credit facility of
approximately $21.0 million. At that date, borrowings under the
revolver were $5.3 million. Borrowing availability, after
borrowings and letters of credit, was $11.0 million which, when
added to the cash position, resulted in liquidity of $17.9
million. Pioneer is discussing with its lender an amendment of
the Revolver to revise and supplement the financial covenants to
take into account current expectations.
Pioneer, based in Houston, manufactures chlorine, caustic soda,
hydrochloric acid and related products used in a variety of
applications, including water treatment, plastics, pulp and
paper, detergents, agricultural chemicals, pharmaceuticals and
medical disinfectants. The Company owns and operates four
chlor-alkali plants and several downstream manufacturing
facilities in North America. Other information and press
releases of Pioneer Companies, Inc. can be obtained from its
Internet Web site at http://www.piona.com
Pioneer adopted fresh start accounting in connection with its
emergence from bankruptcy on December 31, 2001. Accordingly,
financial statements for periods after emergence are not
comparable in certain respects to those of prior periods. The
Company's financial statements are prepared on a going concern
basis. As noted in Pioneer's Annual Report on Form 10-K for the
year ended December 31, 2001, and its Quarterly Report on Form
10-Q for the quarter ended March 31, 2002, the Company's
emergence from bankruptcy, its financial condition and other
items disclosed in its recent SEC filings raise concern about
the Company's ability to continue as a going concern. The
financial statements included in those filings do not include
any adjustment that may result from the outcome of the
uncertainties.
PRIME RETAIL: Gives Updates On Status of Going Concern Issues
-------------------------------------------------------------
Prime Retail, Inc. (OTC Bulletin Board: PMRE, PMREP, PMREO)
announced its operating results for the first quarter ended
March 31, 2002.
Quarter FFO Results:
Funds from Operations ("FFO") was $7.0 million, or $0.02 per
diluted share after allocations to minority interests and
preferred shareholders, for the quarter ended March 31, 2002
compared to $7.3 million, or $0.03 per diluted share, for the
same period in 2001. FFO for the quarter ended December 31,
2001 was $5.3 million, or $(0.01) per diluted share.
The decrease in FFO and FFO per diluted share for the first
quarter of 2002 compared to the same period in 2001 is primarily
because of a loss in net operating income, partially offset by
interest expense savings, resulting from the sale of (i) a 70%
joint venture interest in Prime Outlets at Hagerstown (the
"Hagerstown Center") on January 11, 2002 and (ii) two properties
during the first quarter of 2001, one of which closed on March
16, 2001.
GAAP Results:
In accordance with accounting principles generally accepted in
the United States ("GAAP"), the GAAP loss before gain on sale of
real estate and minority interests was $5.5 million and $6.4
million for the quarters ended March 31, 2002 and 2001,
respectively.
The GAAP results for the quarter ended March 31, 2002 include a
non- recurring gain on the sale of real estate of $7.2 million,
or $0.16 per share. The gain on the sale of real estate consists
of (i) a gain of $16.8 million on the sale of a 70% joint
venture interest in the Hagerstown Center and (ii) a loss of
$9.6 million related to the write-down of the carrying value of
Prime Outlets at Edinburgh (the "Edinburgh Center") to its net
realizable value based on the terms of a sales agreement.
Effective March 31, 2002, the aggregate carrying value of the
Edinburgh Center of $26.7 million was classified as assets held
for sale in the Consolidated Balance Sheet. The Edinburgh
Center was sold on April 1, 2002.
The GAAP results for the quarter ended March 31, 2001 included a
non- recurring gain on the sale of real estate of $0.7 million,
or $0.02 per share, resulting from the sale of two properties.
Merchant Sales:
Same-store sales in the Company's outlet centers decreased by
1.3% for the first quarter ended March 31, 2002 compared to the
same period in 2001. "Same-store sales" is defined as the
weighted-average sales per square foot reported by merchants for
stores opened and occupied since January 1, 2001. For the fiscal
year ended December 31, 2001, the weighted-average sales per
square foot reported by all merchants was $241.
Going Concern:
As previously announced, under the terms of a modification to
its mezzanine loan completed on January 31, 2002, the Company is
required to make mandatory principal payments with net proceeds
from asset sales, excluding the January 11, 2002 sale of a 70%
interest in the Hagerstown Center, or other capital transactions
of not less than (i) $8.9 million by May 1, 2002, (ii) $24.4
million, inclusive of the $8.9 million, by July 1, 2002 and
(iii) $25.4 million, inclusive of the $24.4 million, by November
1, 2002. The July 1, 2002 deadline may be extended to October
31, 2002 provided certain conditions are met to the lender's
satisfaction.
During April of 2002, the Company sold (i) the Edinburgh Center
and (ii) Phases II and III of the Bellport Outlet Center, in
which it owned a 51% interest, and used the net proceeds to make
mandatory principal payments on the Mezzanine Loan aggregating
$9.7 million. As a result, the Company satisfied the May 1,
2002 mandatory principal payment requirement and is now required
to complete additional asset sales or other capital transactions
generating net proceeds aggregating $14.7 million by July 1,
2002 (subject to extension as indicated above) and $15.7
million, inclusive of the $14.7 million, by November 1, 2002.
The outstanding principal balance of the Mezzanine Loan was
$47.8 million as of March 31, 2002. As a result of the April
2002 mandatory principal payments and other scheduled principal
payments, the outstanding principal balance of the Mezzanine
Loan is currently $36.7 million.
Although the Company is in the process of seeking to generate
additional liquidity through additional asset sales and new
financings, there can be no assurance that it will be able to
complete asset sales or other capital transactions within the
specified periods or that such asset sales or other capital
transactions, if they should occur, will generate sufficient
proceeds to make the mandatory principal payments on the
Mezzanine Loan. Any failure to satisfy these mandatory
principal payments within the specified time periods will
constitute a default under the Mezzanine Loan.
As of March 31, 2002, the Company was in compliance with all
financial debt covenants under its recourse loan agreements.
However, there can be no assurance that it will be in compliance
with its financial debt covenants in future periods since its
future financial performance is subject to various risks and
uncertainties, including, but not limited to, the effects of
increases in market interest rates from current levels, the
risks associated with existing vacancy rates or potential
increases in vacancy rates because of, among other factors,
tenant bankruptcies and store closures, and the resulting impact
on its revenue, and risks associated with refinancing its
current debt obligations or obtaining new financing under terms
less favorable than it has experienced in prior periods.
Based on its current financial projections, the Company believes
it will not be in compliance with respect to debt service
coverage ratios under certain debt facilities as early as the
second quarter of 2002. The debt facilities at issue are fixed
rate tax-exempt revenue bonds (the "Affected Fixed Rate Bonds")
in the amount of $18.4 million and a recourse bridge loan (the
"Bridge Loan") in the amount of $111.2 million. In the event of
non- compliance, the holders of the Affected Fixed Rate Bonds
may elect to put such obligations to the Company at a price
equal to par plus accrued interest, and the Bridge Loan lender
may elect to accelerate the maturity of the Bridge Loan.
Additionally, noncompliance or defaults with respect to debt
service coverage ratios under these debt facilities may trigger
cross-default provisions with respect to other debt facilities,
including the Mezzanine Loan.
The Company is working with the affected lenders to discuss
potential resolutions including waiver or amendment with respect
to the applicable provisions. If the Company is unable to reach
satisfactory resolution with the affected lenders, it will look
to (i) obtain alternative financing from other financial
institutions, (ii) sell the projects subject to the affected
debt or (iii) explore other possible capital transactions to
generate cash to repay the amounts outstanding under such debt.
There can be no assurance that the Company will obtain
satisfactory resolutions with its affected lenders or that it
will be able to complete asset sales or other capital raising
activities sufficient to repay the amount outstanding under the
Affected Fixed Rate Bonds or the Bridge Loan. Should the
Company be unable to secure additional sources of liquidity or
reach satisfactory resolution with its lenders, there would be
substantial doubt about the Company's ability to continue as a
going concern.
Prime Retail is a self-administered, self-managed real estate
investment trust engaged in the ownership, leasing, marketing
and management of outlet centers throughout the United States
and Puerto Rico. Prime Retail currently owns or manages 43
outlet centers totaling approximately 12.2 million square feet
of GLA. As of April 30, 2002, Prime Retail's outlet portfolio
was 87.1% occupied. The Company also owns two community
shopping centers totaling 227,000 square feet of GLA and 154,000
square feet of office space. Prime Retail has been an owner,
operator and a developer of outlet centers since 1988. For
additional information, visit Prime Retail's Web site at
http://www.primeretail.com
PROVELL: Obtains Extension Until July 25 to File Schedules
----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
gives its approval to Provell, Inc. to extend the time period in
which the Debtors may file their schedules of assets and
liabilities, statements of financial affairs and lists of
executory contracts and unexpired leases. The Debtors have until
July 25, 2002 to file their Schedules and Statements.
Provell, Inc. develops, markets and manages an extensive
portfolio of membership and customer relationship management
programs that provide discounts and other benefits to members in
the areas of shopping, travel, hospitality, entertainment,
health/fitness, finance, cooking and home improvement. The
company filed for chapter 11 protection on May 9, 2002. Alan
Barry Hyman, Esq., Jeffrey W. Levitan, Esq., David A. Levin,
Esq. at Proskauer Rose LLP represent the Debtors in their
restructuring efforts. When the Debtors filed for protection
from its creditors, they listed $40,574,000 in total assets and
in $82,964,000 total debts.
PSINET INC: Trustee Gets Court OK to Use Non-Debtor Subs' Assets
----------------------------------------------------------------
As previously reported, prior to the Trustee's appointment,
PSINet, Inc. liquidated substantially all the assets of the non-
debtor subsidiaries of PSINet Consulting Solutions Holdings,
Inc.
As a result, Consulting has approximately $115.1 million in a
trustee account. An additional $6.8 million is held in
concentration accounts at the Subsidiaries (the Subsidiaries'
Accounts). Another $7.9 million is currently held in escrow
accounts resulting from pre-petition asset sales.
While $6.8 million is held in the Subsidiaries' Accounts, the
Trustee has determined that many creditors of the Subsidiaries
have not been paid for several months.
The claims of the creditors of these Subsidiaries (which are
Non-Debtors) have to be identified, resolved or otherwise
provided for before the Trustee is able to make distributions to
creditors of Debtor Consulting under a plan of reorganization.
Therefore, the Trustee sought and obtained the Court's approval
(1) to use the approximately $6.8 million held in the
Subsidiaries' Accounts to pay the Subsidiaries' creditors based
on an allocation of the sale proceeds, and in accordance with
the procedure as described in the motion which provide for the
wind-down/liquidation/abandonment of each Subsidiary, (2) to
vote, if necessary, the shares of the Subsidiaries to effectuate
an orderly liquidation, wind-down or abandonment of the
Subsidiaries.
Shareholder approval is generally not required for the
liquidation, wind-down or abandonment of a Subsidiary organized
under the law of most if not all U.S. jurisdictions. Approval
for the Trustee to vote shares of the Subsidiaries is included
in the motion because it is possible that such Shareholder
approval is required or desirable in the U.S., and foreign-based
Subsidiaries, shareholder approval may be required for the
liquidation, wind-down or abandonment of the Subsidiaries under
foreign jurisdictions. In cases where shareholder approval is
required, the voting by the Trustee of the shares of the
Subsidiaries will constitute use of Debtor Consulting's estate
property outside ordinary course of business under Sec. 363(b)
of the Bankruptcy Code. Therefore, the Trustee sought and
obtained such approval as may be necessary.
The Procedure Approved
(1) The Trustee will use its best efforts to determine the
liabilities of each Subsidiary.
(2) To the extent a Subsidiary appears insolvent, the Trustee
will seek to compromise creditor claims, without filing a
bankruptcy petition. Subject to the Committee's approval,
the Trustee will seek to pay all valid trade claims and
other trade claims as he determines is appropriate in his
business judgment including on a pro rata basis, and
likewise will pay lessor claims and other contractual claims
according to their contractual terms, provided that, the
Trustee will seek to negotiate appropriate caps on the
accelerated balance due the holder of such claims or any
penalty claims asserted by such parties. The Trustee
reserves the right to file a petition under Chapter 11,
Chapter 7, or similar proceedings and arrangements in
foreign jurisdictions.
(3) To the extent a Subsidiary appears solvent, subject to the
approval from the Committee, the Trustee will use the
Subsidiaries' assets and funds to pay the Subsidiaries'
creditors provided that, with respect to lease claims and
other contractual claims, the Trustee will seek to negotiate
appropriate caps on the accelerated balance due the holder
of the claims or any penalty claims asserted by the parties.
The Trustee reserves the right to file a petition under
Chapter 11, Chapter 7, or similar proceedings and
arrangements in foreign jurisdictions.
(4) Subject to Committee approval and the Trustee's business
judgment, the Trustee and/or the Subsidiaries may settle
claims of creditors of the Subsidiaries and exchange
releases or enter into settlement agreements with those
creditors.
(5) Based upon the allocation of sale proceeds, the Trustee may,
subject to Committee approval and the Trustee's business
judgment, use assets of one Subsidiary to pay creditors of
another Subsidiary.
(6) If a Subsidiary is insolvent, or if the winding down of its
operations would realize no tangible benefit to the
Consulting estate, the Trustee reserves the right to abandon
its interest in any such entity.
(7) Once known creditors' claims of a Subsidiary have been
settled or otherwise provided for, the Trustee will seek to
wind-down the operations of each Subsidiary under applicable
law or pursuant to further order of the Bankruptcy Court.
(8) Where Committee approval is required, the Trustee will give
the Committee 5 business days' notice of any proposed action
- if the Committee notices its opposition, no further action
will be taken without Court approval, and if the Committee
poses no opposition, the Trustee may proceed with the
proposed action. (PSINet Bankruptcy News, Issue No. 21;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
DebtTraders reports that PSINET Inc.'s 11.000% bonds due 2009
(PSINET2) are quoted between 10 and 11. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=PSINET2for
some real-time bond pricing.
RAZORFISH: First Quarter Revenues Decreased by 75% to $10.8 Mil.
----------------------------------------------------------------
Razorfish Inc.'s services employ digital technologies to address
a wide range of its clients' needs, from business and brand
strategy to systems integration. From its founding in 1995 to
the present, Razorfish has provided its clients with services
designed to enhance communications and commerce with their
customers, suppliers, employees and other partners through the
use of digital technologies.
Three Months Ended March 31, 2002 Compared to the Three
Months Ended March 31, 2001
The Company's revenues decreased $31.6 million, or 75%, to $10.8
million for the three months ended March 31, 2002 from $42.4
million from the comparable period in 2001. This decrease in
revenue was primarily due to the divestiture of its
international operations ($16.9 million) and a significant
reduction in demand for services experienced by consultants,
which provide similar services to Razorfish. Razorfish expects
the market for its services to remain volatile and can give no
assurance that the decline in revenues will not continue in
future periods.
The Company's project personnel costs decreased $22.7 million,
or 79%, to $5.9 million for the three months ended March 31,
2002 from $28.6 million for the comparable period in 2001. The
decrease is due to a reduction in workforce of approximately
1020 employees to an average billable headcount of 210 from an
average billable headcount of 1230 for the comparable period in
2001. The majority of reductions were part of Razorfish's
restructuring efforts, which were implemented due to reduced
demand for the Company's services.
Reimbursements for direct costs decreased $0.9 million, or 65%,
to $0.5 million for the three months ended March 31, 2002 from
$1.4 million for the comparable period in 2001. The decrease is
due to the number, type, and scope of projects performed by the
company.
Razorfish's sales and marketing costs decreased $4.4 million, or
93%, to $0.3 million for the three months ended March 31, 2002
from $4.7 million for the comparable period in 2001. The
decrease is due to reduced marketing activities at industry
conferences, fewer promotional events, cost reduction efforts
and a workforce reduction.
The Company's general and administrative expenses decreased
$17.2 million, or 84%, to $3.3 million for the three months
ended March 31, 2002 from $20.5 million for the comparable
period in 2001. The decrease in general and administrative
expenses was attributable to multiple factors: Razorfish
significantly reduced its non-billable workforce from
approximately 350 non-billable employees to approximately 60
non-billable employees as of March 31, 2001 and 2002,
respectively, and the divestiture of its European operations.
Additional reductions occurred in the areas of rent and
facilities expenses, equipment rental and depreciation charges.
During the quarter ended March 31, 2002, Razorfish reversed
approximately $1.7 million of the previously expensed
restructuring costs related to facilities, due to settlement of
these obligations for less than previously recorded.
Liquidity and Capital Resources
The Company's net cash used in operating activities was $2.3
million for the three months ended March 31, 2002, and was
principally composed of payments of liabilities related to
restructuring of $3.1 million offset by net income of $2.5
million and other changes in working capital, compared to net
cash used in operating activities of $17.3 million for the three
months ended March 31, 2001.
The Company's net cash used in investing activities was $0.1
million for the three months ended March 31, 2002 compared to
$1.2 million for the three months ended March 31, 2001. Net cash
used in investing activities for the period ended March 31, 2002
was due to capital expenditures of $0.1 million.
The Company's net cash provided by financing activities was $1.5
million for the three months ended March 31, 2002 compared to
$.3 million for the three months ended March 31, 2001. Net cash
provided for the period ended March 31, 2002 was mainly due to
proceeds received from the proceeds of common stock offerings
amounting to $1.5 million.
In April 2002, the Company raised approximately $6.0 million,
before fees and expenses, through the sale of approximately 18.7
million shares of common stock at a price of $0.32 per share. In
addition, the Company issued approximately 2.8 million warrants
to purchase common stock at a price of $0.45 per share. If
exercised, the warrants would generate approximately $1.3
million in additional proceeds to the Company. Management
believes that its current cash position and cash flow generated
from its operations will be sufficient to meet its working
capital needs for the next twelve months.
Founded in 1995, Razorfish is a digital solutions provider
thathelps leading companies generate competitive value by
leveragingthe power of digital technology. From strategy and
design tosystem integration, Razorfish provides clients
withopportunities to increase their return on investment,
enhanceproductivity, and maximize the value of their
relationships withcustomers, employees, and partners.
RENT-WAY INC: Richard Strong Discloses 5.2% Equity Stake
--------------------------------------------------------
Calm Waters Parntership and Richard S. Strong beneficially own
1,336,250 shares of the common stock of Rent-Way Inc.,
representing 5.2% of the outstanding common stock of the
Company. There is shared voting and dispositive powers held by
the owners. Calm Waters Partnership is a private investment
fund owned by Mr. Strong and family members.
The ownership is comprised of 1,241,500 shares of common stock
owned directly by Calm Waters Partnership and indirectly by Mr.
Strong by virtue of the ownership of Calm Waters Partnership by
Mr. Strong and other family members; and 94,750 shares of common
stock issuable upon exercise of a warrant purchased by Calm
Waters Partnership from Rent-Way, Inc. in the transaction
described below.
On April 25, 2002, Calm Waters Partnership purchased 947,500
shares of Rent-Way common stock and a warrant to purchase 94,750
shares of common stock in a private placement from Rent-Way,
Inc. pursuant to a common stock and Warrant Purchase Agreement
dated April 18, 2002. Under the terms of the Purchase
Agreement, Calm Waters has the right to acquire additional
shares and additional warrants in the future, subject to certain
conditions. The beneficial ownership of common stock reported
by the above-named includes 35 shares held by a separate account
over which Strong Capital Management, Inc., a registered
investment adviser and wholly-owned subsidiary of Strong
Financial Corporation, has discretionary authority, and
beneficial ownership of which may be attributed to Mr. Strong by
virtue of his control of Strong Capital Management and Strong
Financial Corporation.
Rent-Way is the second largest operator of rental-purchase
stores in the U.S. Rent-Way rents name brand merchandise such as
home entertainment equipment, computers, furniture, and
appliances from 1,087 stores in 42 states.
RITE AID: Reports Increasing Revenues For Fiscal Year 2002
----------------------------------------------------------
Rite Aid's fiscal 2002 (52 weeks) revenues increased 4.5% over
fiscal 2001 (53 weeks). Excluding the extra week, revenues would
have increased 6.5%, driven by increases of 1.9% in front-end
sales and 9.6% in pharmacy. Same store sales growth for fiscal
2002 was 8.3% (pharmacy of 11.4% and front-end of 3.6%). As
fiscal 2001 was a 53 week year, same store sales are calculated
by comparing the 52 week period ended March 2, 2002 with the 52
week period ended March 3, 2001.
Fiscal 2002 pharmacy sales led sales growth due to an increase
in both prescriptions filled (on a comparable 52 week basis) and
sales price per prescription. Factors contributing to the
pharmacy same store sales increases include inflation, improved
attraction and retention of managed care customers, reduced cash
pricing, increased focus on pharmacy initiatives such as
predictive refill, and favorable industry trends. These trends
include an aging population, the use of pharmaceuticals to treat
a growing number of healthcare problems, and the introduction of
a number of successful new prescription drugs.
Front-end fiscal 2002 sales, which includes all non-prescription
sales, such as seasonal merchandise, convenience items, and food
and other non- prescription sales, also increased. The increase
was primarily a result of increased sales volume due to improved
assortments, lower prices on key items and distributing a
nationwide weekly advertising circular.
Total revenue growth in fiscal 2001 of 8.8% was also fueled by
strong growth in pharmacy sales of 8.7%, an increase in front
end sales of 3.8% and the additional week in fiscal 2001.
Pharmacy sales led revenue growth with same store sales
increases of 10.9% accompanied by very strong front-end same
store sales growth of 6.5%. The pharmacy and front-end increases
were due to the same factors as described above for fiscal 2002.
On revenues of $15,171,146 Rite Aid's net loss for fiscal 2002
was $827,681.
Rite Aid has two primary sources of liquidity: (i) cash provided
by operations and (ii) the revolving credit facility under its
new senior secured credit facility. Principal uses of cash are
to provide working capital for operations, service obligations
to pay interest and principal on debt, and to provide funds for
capital expenditures.
The ability to borrow under the senior secured credit facility
is based on a specified borrowing base consisting of eligible
accounts receivable and inventory. On March 2, 2002, the term
loan was fully drawn except for $21.5 million, which is
available and may be drawn to pay for the remaining outstanding
10.5% senior secured notes when they mature on September 15,
2002. In addition, Rite Aid had $438.7 million in additional
available borrowing capacity under the revolving credit facility
net of outstanding letters of credit of $61.3 million.
The senior secured credit facility, as amended, also allows Rite
Aid, at its option, to issue up to $893.0 million of unsecured
debt that is not guaranteed by any of its subsidiaries, reduced
by the following debt to the extent incurred: (i) $150.0 million
of financing transactions of existing owned real estate; (ii)
$643.0 million of additional debt secured by the facility's
collateral on a second priority basis; and (iii) $100.0 million
of financing transactions for property or assets acquired after
June 27, 2001. The $893.0 million of permitted debt, whether
secured or unsecured, is reduced by the aggregate outstanding,
undefeased balances of the 5.25% convertible subordinated notes,
the 6.0% dealer remarketable securities and the 4.75%
convertible notes and the senior secured notes. As of March 2,
2002, Rite Aid had outstanding principal balances of $150.5
million, $83.6 million, $250.0 million and $149.5 million of the
5.25% convertible subordinated notes, 6.0% dealer remarketable
securities, 4.75% convertible notes and the senior secured
notes, respectively. As of March 2, 2002, its remaining
permitted debt under the senior secured credit facility is
$259.4 million. Its 11.25% senior notes due July 2008 also
permit $150.0 million of real estate financing, $400.0 million
of additional other debt and $600.0 million of additional
permitted debt, which includes allowing it to increase its
senior secured credit facility. As of March 2, 2002 its
remaining permitted debt under the 11.25% senior notes due 2008
is $600.5 million.
The senior secured credit facility, as amended, requires Rite
Aid to meet various financial ratios and limits capital
expenditures. Beginning with the 12 months ended March 2, 2002,
the covenants require the Company to maintain a maximum leverage
ratio of 8.40:1, increasing to 9.50:1 for the twelve months
ending June 1, 2002, and increasing again to 10.00:1 for the
twelve months ending August 31, 2002, before gradually
decreasing to 6.00:1 for the twelve months ending May 31, 2005.
The Company must also maintain a minimum interest coverage ratio
of 1.20:1 for the twelve months ending March 2, 2002, decreasing
to 1.15:1 for the twelve months ending June 1, 2002 and
decreasing again to 1.10:1 for the twelve months ending August
31, 2002 before gradually increasing to 2.00:1 for the twelve
months ending November 30, 2004. In addition, it must maintain a
minimum fixed charge ratio of 0.9:1 for the twelve months ending
March 2, 2002, gradually increasing to 1.10:1 for the twelve
months ending August 31, 2004. Capital expenditures not relating
to the June 27, 2001 refinancing are limited to $150.0 million
annually beginning with the twelve months ending March 2, 2002.
These capital expenditure limits are subject to upward
adjustment based upon availability of excess liquidity as
defined in Rite Aid's senior secured credit facility.
The Company was in compliance with the covenants of the senior
secured credit facility, as amended, and its other credit
facilities and debt instruments as of March 2, 2002. With
continuing improvements in operating performance, the Company
anticipates that it will remain in compliance with its debt
covenants. However, variations in operating performance and
unanticipated developments may adversely affect the ability to
remain in compliance with the applicable debt covenants.
The senior secured credit facility provides for customary events
of default, including nonpayment, misrepresentation, breach of
covenants and bankruptcy. It is also an event of default if any
event occurs that enables, or which with the giving of notice or
the lapse of time would enable, the holder of the Company's debt
to accelerate the maturity of debt having a principal amount of
$25.0 million or more.
Rite Aid is the nation's #3 drugstore chain (behind #1 Walgreen
and #2 CVS). It runs about 3,600 drugstores in 30 states and
Washington, DC. Rite Aid stores fill prescriptions (accounting
for about 60% of sales) and sell health and beauty products,
convenience foods, and other items, including more than 1,500
private-label products. Rite Aid also owns 14% of drugstore.com.
A host of troubles, capped off by the restatement of more than
$1 billion in inflated profits over a two-year period, has led
the company to split with the founding Grass family. It also
curtailed its acquisitive ways and sold its health care
provider, PCS Health Systems, to pare down debt.
SC INTERNATIONAL: S&P Lowers Corporate Credit Rating To BB
----------------------------------------------------------
Standard & Poor's on May 13, 2002, lowered its corporate credit
rating on Arlington, Texas-based SC International Services Inc.
to double-'B' from triple-'B'-minus. At the same time, the
subordinated debt ratings were lowered to single-'B'-plus from
double-'B'-plus. The ratings were removed from CreditWatch,
where they were placed on March 29, 2001. The outlook is
negative. The company's total debt as of December 31, 2001 was
about $1 billion. Outlook is negative.
The rating actions reflect Standard & Poor's uncertainty
regarding the company's parent, Deutsche Lufthansa AG
(BBB+/Stable/A-2), and its longer-term economic incentive to
provide continued support for SC International, a wholly owned
airline catering operation.
Challenging airline industry conditions and the related negative
impact on SC International's recent operating results, as well
as Lufthansa's ultimate intention to monetize its investment in
the noncore subsidiary, remain primary rating concerns. SC
International's recent financial difficulties resulted from the
impact of the Sept. 11 attack, its aftermath on the airline
industry, and the weak economy.
Although the ratings previously incorporated implicit material
support from Lufthansa, and Lufthansa has provided SC
International with financial support to date, it is not certain
what level of support could be expected from Lufthansa in the
future.
The ratings reflect SC International's leveraged financial
profile, customer concentration risk, and limited pricing
flexibility given its customer base's competitive market
conditions. These factors are mitigated by the company's leading
position in the airline catering industry, the long-term nature
of its contracts with the airlines, and the attractive
fundamentals in the home meal replacement (HMR) industry. The
ratings also benefit from implicit, albeit somewhat reduced,
support from Lufthansa.
SC International Services has an approximately 55% domestic
market share and provides catering services in most major
airports. Global market share of about 30% benefits from
Lufthansa's ownership and strong industry position. Long-term
contracts with the company's top 10 customers account for about
60% of airline catering revenues, of which American Airlines
Inc. represents about 20%.
During 2000 and 2001, in order to decrease its dependence on
airline catering revenues, the company completed nine
acquisitions to expand into the HMR industry. Although these
operations provide a platform for expansion, the company faces
some integration and execution issues. Furthermore, Standard &
Poor's does not expect Lufthansa to provide significant capital
investment support in this business.
SC International's overall financial profile remains very weak
and highly leveraged as a result of the weakened airline
industry in 2001 and the company's aggressive acquisition
strategy. While 2001 results were an aberration, Standard &
Poor's does not expect operations to return to pre-Sept. 11
levels in the near term. As a result, Standard & Poor's expects
EBITDA interest coverage of about 2 times and total debt to
EBITDA in the 6x to 7x range. Standard & Poor's does not expect
financial measures to improve significantly in the near term.
Outlook
Following an IPO or spin-off of SC International, the company's
financial profile, without implicit Lufthansa support, may
result in lower ratings.
Ratings List: To: From:
* Corporate Credit Rating BB BBB-
* Subordinated Debt B+ BB+
SERVICE SYSTEMS: Auditors Issue Negative Going Concern Opinion
--------------------------------------------------------------
Vancouver-based Service Systems International, Ltd., through its
wholly owned subsidiary UV Systems Technology, Inc. ("UVS"), is
the manufacturer and marketer of state of the art ultraviolet
disinfection systems for wastewater and potable water. The
Company maintains it is committed to a legacy of a healthy
planet for future generations through the development and
commercialization of superior, cost-effective, environmentally
friendly, ultraviolet-based water treatment systems. Through
UVS, it holds two United States patents and five international
patents on various components of its ultraviolet disinfection
system, including the flow reactor chamber and flow balanced
discharge weir.
The Company was incorporated in the State of Nevada in August
1990, and remained inactive until September 1995. The initiation
of the current business was accompanied by a change of
ownership. Through UVS, Service Systems manufactures and markets
its Ultra Guard ultra violet-based patented water treatment
system. These products are sold primarily for municipal
wastewater disinfection; however, the system can also be adapted
for treatment of process and industrial wastewater, and for
potable water, bottled products and agriculture and aquaculture
water treatment.
For fiscal 2001, the Company reported revenues of $1,408,194, an
increase of $1,344,416, or 2108%, from $63,778 in the comparable
period of 2000. The increase resulted from completed projects
shipped and invoiced and projected percentage completion of
projects in progress in the factory.
For fiscal 2001, the Company reported gross profit of $278,981,
an increase of $273,365, or 4868%, from $5,616 in the comparable
period of 2000. The increase resulted from increased sales
activities.
For fiscal 2001, the Company reported income from licensing of
its technology to a Korean company resulting in a one-time gain
of $242,846, less cost of $66,103, resulting in a net amount of
$176,743, compared to $0 in the comparable period of 2000.
For fiscal 2001, Service Systems reported a net loss of
$1,831,701, a decrease of $696,009, or 28%, compared to
$2,527,710 reported in the comparable period of the prior year.
The decrease in net loss was due primarily to increased revenue
from project sales and income from licensing, decreased
engineering and prototyping expenses, a reduction of
manufacturing costs not applied compared to lack of sales and
increased engineering and prototyping expenses during the
comparable period of the prior year.
During the year ended December 31, 2001 current assets increased
$1,113,952 as compared to the fiscal period ended December 31,
2000. The increase, net of decrease, was due primarily to the
increase in accounts receivable of $990,010, prepaid expenses
and deposits of $208,637, offset by decrease of cash of $25,680,
short-term investments of $15,746 and inventory of $38,730.
Long-term assets decreased, net of increases, during the fiscal
period ended December 31, 2001 by $356,878, as compared to the
fiscal year ended December 31, 2000, due to the amortization of
goodwill of $444,661, depreciation of capital assets of $53,046
and amortization of patents and trademarks of $4,104; offset by
increases due to the acquisition of capital assets of $85,462
and additions to patents and trademarks of $59,471.
Current liabilities increased during the year ended December 31,
2001 by $2,010,961 as compared to the fiscal year ended December
31, 2000. The increase was due to cheques issued in excess of
funds on deposit of $4,539, accounts payable of $951,623,
accrued liabilities of $50,873, wages and vacation payable of
$45,274, loans payable of $508,966 and amounts owing to related
parties of $475,453, offset by a decrease in customer deposits
of $25,767. Long-term debt decreased during the year ended
December 31, 2001 by $342,244 as compared to the year ended
December 31, 2000 due solely to the decrease in the amounts
owing to related parties.
Manning Elliott, Chartered Accountants of Vancouver, British
Columbia advise, in their Auditors Report dated April 29, 2002,
that Service Systems International ".....{the Company} has not
generated profitable operations since inception and has a
working capital deficit of $1,213,985 as at December 31, 2001.
These factors raise substantial doubt about the Company's
ability to continue as a going concern."
STATER BROS.: S&P Changes B+ Credit Rating Outlook To Positive
--------------------------------------------------------------
The outlook on Stater Bros. Holdings Inc. was revised to
positive from stable on May 15, 2002. The 'B+' corporate credit
rating on the company was also affirmed at that time. The
company has about $439 million of rated debt.
The outlook revision was based on Stater Bros.' continued strong
same-store sales and satisfactory liquidity over the past 12
months. Same-store sales grew 6.4% for the first six months of
fiscal 2002 on top of a 4.5% increase for fiscal 2001. The
company maintains sufficient liquidity with a $50 million
revolving credit facility, and cash balances were $75 million as
of March 31, 2002. Standard & Poor's believes Stater Bros.
benefits from a concentrated market position in the Inland
Empire region of southern California and that the ratings could
be raised over the next 18 months if the company can continue to
leverage strong sales trends.
The ratings on Stater Bros. reflect the company's heavy debt
burden and below-average operating margins in an industry with
good business characteristics. These risks are mitigated,
somewhat, by the company's leading position in its primary
markets.
Stater Bros. has the leading market position in the Inland
Empire region of southern California. According to the 2002
Market Scope, the company has a 34% market share in the
Riverside and San Bernadino markets in which it competes with
prominent supermarket chains such as Albertson's Inc., Vons
(Safeway Inc.), and Ralph's Grocery Co. (Kroger Co.). In fiscal
1999, the company significantly increased its store base with
the acquisition of 43 Albertson's and Lucky's stores that were
divested from the Albertson's/American Stores Co. merger.
Despite the weakening U.S. economy, the company's same-store
sales increased 6.4% in the first half of fiscal 2002 and 4.5%
in fiscal 2001. Its lease-adjusted operating margin improved to
4.6% in 2001 from 3.7% in 2000. However, the company's operating
margin is well below the industry average of about 7%, in part
due to its aggressive everyday low price marketing position.
EBITDA coverage of interest is trending at about 2.0 times, an
improvement from 1.2x in 2000. This is the result of successful
marketing programs and increased sales of higher-margin
products. Fiscal 2000 results had also been affected by the
decision to accelerate costs to upgrade many of the 43 stores
acquired from Albertson's. Stater Bros. generated positive free
cash flow of $46 million in 2001. The company had about $75
million in cash balances as of March 31, 2002, which, along with
its $50 million revolving credit facility, provides satisfactory
financial flexibility for the ratings.
Outlook
Standard & Poor's expects that Stater Bros. will be able to
maintain its leadership position in southern California. The
ratings could be raised over the next 18 months if the company
is able to continue to leverage its favorable same-store sales
trends and maintain sufficient liquidity.
Ratings List
Stater Bros. Holdings Inc.
* Corporate credit rating B+/Positive/--
* Senior unsecured debt B-
SUN COUNTRY: DOT Okays Operating Certificate Transfer
-----------------------------------------------------
The U.S. Department of Transportation (DOT) has given final
approval for the transfer of Sun Country Airlines' operating
certificate to the airline's new ownership group, MN Airlines,
LLC.
In the filing, the DOT stated, "the transfer of Sun Country's
certificate authority to MN Airlines, a company that will
continue, and expand on, Sun Country's current operations, can
only have a positive impact on Sun Country's employees and
result in increased competition in the domestic airline
industry."
Some of the assets of Sun Country Airlines, including the name,
were acquired by MN Airlines on April 15th, with approval of the
U.S. Bankruptcy court. At that time, the DOT gave MN Airlines
and Sun Country verbal consent to operate under Sun Country's
existing certificate, pending a more formal review process,
which is complete with the Department's order today.
Sun Country Airlines CEO David Banmiller said, "This is one of
the final phases in our transition from bankruptcy to new
ownership. I applaud the Department of Transportation's
expedited handling of our application. In doing so, the
Department has sent a strong message that protecting competition
and protecting jobs is important to Secretary Mineta and this
Administration. The beneficiaries of the Department's actions
will be the Minneapolis/St. Paul area and travelers and
businesses from throughout the country."
SYBRON DENTAL: S&P Assigns B Rating to Proposed $150 Mill. Notes
----------------------------------------------------------------
On May 14, 2002, Standard & Poor's assigned a single-'B' rating
to Sybron Dental Specialties Inc.'s (SDS) proposed $150 million
10-year senior subordinated notes. Sybron, a leading
manufacturer of professional dental products, plans to use the
proceeds from this offering to repay bank debt and lengthen its
maturity schedule. At the same time, Standard & Poor's assigned
a double-'B'-minus rating to Sybron's $350 million dollar senior
secured credit facility. Total rated debt outstanding for the
company is approximately $360 million.
The speculative-grade ratings on Sybron reflect its position as
a leading manufacturer of professional dental products, offset
by the challenges of effectively operating its expanding
business while shouldering debt associated with its late-2000
spin-off.
Orange, California-based SDS, through operating company Sybron
Dental Management Inc. (SDM), maintains a leading position in
the global dental products market, anchored by consumable
products such as orthodontic appliances, dental composites, and
impression materials, which together account for more than 90%
of revenues. Dentists' repeat use of these products provides a
measure of predictability for the business. Moreover, moderate
pricing flexibility and SDS' manufacturing expertise have
enabled the company to consistently maintain lease-adjusted
operating margins of about 30%.
SDS' R&D effort and niche-filling acquisitions should support
the company's growth. In addition, increased dental spending by
developing countries presents opportunity in the long term.
SDS will remain subject to changes in dental technology and to
global economic conditions. The company is vulnerable to
competition from a much larger industry player and many smaller
niche firms. Because about 40% of SDS' revenues are
international, its profitability is tied to foreign currency
swings. Moreover, the company's limited ability to add to its
debt burden, which was largely incurred in connection with the
company's December 2000 spin-off from Apogent Technologies Inc.,
(formerly known as Sybron International Corp.) constrains the
range of its acquisition opportunities within financial
parameters consistent with the rating.
Outlook: Positive
Standard & Poor's expects that the company will use its free
operating cash flow to reduce its debt. A favorable operating
performance and financial discipline could lead to an upgrade
within the next couple of years.
Details of Credit Facility Security
SDS' proposed senior credit facility is secured by a first-
priority perfected lien on all property and assets of the
company and its subsidiaries as well as a pledge of all of the
capital stock of all direct and indirect (existing and future)
domestic subsidiaries and 65% of the capital stock of the first-
tier non-U.S. subsidiaries of the company. The credit facilities
will also be supported by guarantees provided by all of the
company's direct and indirect domestic subsidiaries.
Standard & Poor's simulated default scenario stressed operating
cash flows and asset values in arriving at the rating. However,
under a severe distress scenario, the performance and asset
values could erode, potentially leading to bank lenders'
ultimate recovery falling short of the total facility amount,
providing only marginal advantage to secured lenders.
Ratings List:
* Corporate Credit Rating BB-
* Senior Secured Debt BB-
* Senior Subordinated Debt B
TOWER AUTOMOTIVE: S&P Affirms BB Credit Rating After Stock Sale
---------------------------------------------------------------
On May 13, 2002, Standard & Poor's affirmed its double-'B'
corporate credit rating on Tower Automotive Inc., a supplier of
automotive structural components and assemblies. The outlook,
however, has been revised to stable from negative.
The rating actions follow Tower's completion of the sale of $222
million of common equity. Proceeds from the sale were used to
reduce borrowings on the company's bank credit facilities. The
equity offering improved Tower's financial flexibility by
increasing borrowing availability under the company's revolving
credit facility and strengthening its credit statistics, which
should permit the company to remain comfortably within its bank
financial covenant requirements.
The ratings on Tower reflect its leading niche position (albeit
in a cyclical and highly competitive industry) offset by an
aggressive financial profile. Tower's slightly below-average
business assessment reflects its leading market position in the
highly fragmented structural components segment of the
automotive market; its good design, engineering and
systems/program management capabilities; and its good track
record for integrating acquisitions and investments, offset by
the risks associated with the capital intensive nature of its
business and its aggressive growth strategy.
Tower experienced significant earnings pressure during 2001 due
to:
- The slowdown in the North American original equipment
automotive market;
- Increased pricing pressures;
- Market share losses by its two largest customers, Ford Motor
Co. and DaimlerChrysler AG; and
- Significant launch costs for new vehicle platforms.
These factors led to a significant deterioration in operating
performance during the year. In 2001, the company reported a net
loss of $267.5 million (including a restructuring and asset
impairment charge of $383.7 million). Benefits from
restructuring actions, reduced launch activity, and stronger
North American production schedules should result in improved
performance during 2002.
Tower's recent equity offering improved the company's credit
statistics, with total debt to EBITDA declining to 3.0 times (x)
from 3.8x. Only modest further improvement is expected in credit
protections measures this year, and that will depend to some
extent on the market acceptance of several key new platforms.
Standard & Poor's expects the company's funds from operations to
debt (treating the trust preferred securities as equity) to
average in the mid-20% area and debt to EBITDA to average about
3.0x over the course of the business cycle, acceptable levels
for the rating. Fair financial flexibility is provided by
adequate access to capital markets and the ability to sell
assets.
Outlook
Tower's leading market positions, good technical capabilities,
disciplined growth strategy, and commitment to a moderately
aggressive capital structure should result in sustained credit
quality.
Ratings List
Tower Automotive Inc.
* Corporate credit rating BB
* Senior unsecured debt rating BB
* Subordinated debt rating B+
R.J. Tower Corp.
* Senior unsecured debt rating BB
(gtd. by Tower Automotive Inc.)
Tower Automotive Capital Trust
* Preferred stock rating B
(gtd. by Tower Automotive Inc.)
TRANS WORLD: Seeks to Extend Exclusive Period through August 30
---------------------------------------------------------------
Trans World Airlines, Inc. and its debtor-affiliates want to
extend their exclusive period within which to file a Chapter 11
plan and preserve the time period during which only the Debtors
have the exclusive right to solicit acceptances of that plan.
The Debtors seek order from the U.S. Bankruptcy Court for the
District of Delaware extending their Exclusive Filing Period
through August 30, 2002 and their Exclusive Solicitation Period
through October 30, 2002.
The Debtors assert that the size and complexity of their cases
justify further extension of the exclusivity periods. The large
size of the debtor and the consequent difficulty in formulating
a plan are important factors which constitute cause for
extending the exclusivity periods, the Debtors explain.
The Debtors further believe that the progress in these cases
warrants an extension of the exclusivity periods. To illustrate
this point, the Debtors relate their progress since the Petition
Date:
-- development and implementation of bidding procedures for
the sale of substantially all of the Debtors assets;
-- implementation of a Key Employee Retention Plan;
-- preparing for and litigating the Debtors' motion to sell
substantially all of the Debtors' assets, the Debtors'
motion to reject the Karabu Ticket Program Agreement,
and the Debtors' motion to establish procedures
regarding the assumption, assignment, or rejection of
their executory contracts;
-- resolving issues and drafting motions and other
documents concerning the Debtors' obligations under 11
U.S.C. Section 1110 with respect to aircraft and
aircraft equipment;
-- preparing for and arguing emergency appeals to the
District Court and the Third Circuit regarding the Bid
Procedures Order, the Sale Order, the DIP Financing
Order, the Key Employee Retention Program Order, and
litigation concerning certain appellants' requests for
stays pending appeals;
-- modification of the Debtors' collective bargaining
agreements affecting approximately 20,000 employees
pursuant to Section 1114 of the Bankruptcy Code;
-- modification of certain retiree benefits;
-- designation of certain executory contracts and unexpired
leases to assume and assign or reject and the
calculation of relative cure amounts;
-- reconciliation and payment of certain executory
contracts that were assumed and assigned to LLC;
-- working with American Airlines, Inc. to resolve post-
closing working capital and other adjustments;
-- analysis of administrative expense, priority, and
secured claims;
-- analysis of reclamation claims;
-- objection to and settlement of certain motions for the
allowance and payment of administrative expenses;
-- liquidation of several aircraft remaining in the estates
after the American sale transaction;
-- filing of the Disclosure Statement and Plan;
-- soliciting votes in favor of the Plan; and
-- negotiating with various parties to resolve objections
to the Plan.
Trans World Airlines filed for chapter 11 protection on January
10, 2001 in Delaware Bankruptcy Court, before AMR bought its
assets and formed TWA Airlines LLC, whose operations are being
combined with those of American. TWA serves more than 160 cities
in North America, the Caribbean, Europe, and the Middle East.
James H.M. Sprayregen, Esq. at Kirkland & Ellis and Laura Davis
Jones, Esq. at Pachulski, Stang, Ziehl, Young & Jones represent
the Debtors in their restructuring effort.
TRICO STEEL: Sells Metals USA Claim to Sierra at 90% Discount
-------------------------------------------------------------
Trico Steel Company, LLC sought and obtained authority from the
U.S. Bankruptcy Court for the District of Delaware to sell its
claim against Metals USA, Inc. to Sierra Asset Management, LLC.
Trico relates that it sold and delivered goods to Metals USA,
Inc., totaling $73,527. On November 14, 2001 Metals USA filed
chapter 11 bankruptcy protection in the U.S. Bankruptcy Court
for the Southern District of Texas.
Trico believes that there is no certainty that it would be able
to recover at all on the Claim. Sierra Asset offered to
purchase the Claim for ten cents on the dollar. Trico has
agreed to sell the Claim to Sierra for $7,352, including any
rights the Debtor may have to interest, penalties and fees.
By selling the Claim to Sierra Asset, the Debtor enjoys an
expedited recovery of a portion of the Claim. The Debtor also
admits that it is less likely to find a more favorable
settlement with Metals USA at a later time.
Trico Steel Company, LLC filed for chapter 11 protection on
March 27, 2001 in the U.S. Bankruptcy Court for the District of
Delaware. Edward J. Kosmowski, Esq. and Michael R. Nestor, Esq.
at Young Conaway Stargatt & Taylor represent the Debtor in its
restructuring effort.
TUTOR TIME LEARNING: Voluntary Chapter 11 Case Summary
------------------------------------------------------
Lead Debtor: Tutor Time Learning Systems, Inc.
POB 847
Deerfield Beach, Florida 33443
Bankruptcy Case No.: 02-23563
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Tutor Time Franchise Learning Centers, Inc. 02-23564
Tutor Time Realty, Inc. 02-23565
Child Site Corp. 02-23566
Tutor Time International, Inc. 02-23567
Child Care Franchise Group, Inc. 02-23568
In-Site Realty Associates, Inc. 02-23569
Lifecare Acquisition Corp. of New York, Inc. 02-23570
Lifecare Acquisitions of Washington, Inc. 02-23571
Lifecare Investments, Inc. 02-23572
T. T. Morgan Hill, Inc. 02-23573
T. T. Holdings, Inc. 02-23574
T. T. GP Holdings, Inc. 02-23575
Tutor Time Child Care Systems, Inc. 02-23576
Chapter 11 Petition Date: May 10, 2002
Court: Southern District of Florida (Broward)
Judge: Paul G. Hyman Jr.
Debtors' Counsel: Brian K. Gart, Esq.
Greenberg Traurig, P.A.
515 East Las Olas Blvd. #1500
Fort Lauderdale, Florida 33301
Phone: 954-765-0500
URANIUM RESOURCES: Needs To Raise Capital To Fund Operations
------------------------------------------------------------
Uranium Resources Inc. ceased production activities in 1999 at
both of its two producing properties because of depressed
uranium prices. In 1999 and the first quarter of 2000 the
Company monetized all of its remaining long-term uranium sales
contracts and sold certain of its property and equipment to
maintain a positive cash position. In August 2000, the Company
raised $750,000 of equity by the issuance of 7.5 million shares
of common stock at $0.10 per share to a group of private
investors. The investors were also issued five-year warrants to
purchase an aggregate of 5,475,000 shares of common stock at an
exercise price of $0.14 per share.
In October 2000, the Company signed an agreement with Texas
regulatory authorities and the Company's bonding company that
provided the Company access to up to $2.2 million of Company
funds pledged to secure the Company's restoration bonds. The
funds are being used by the Company to perform restoration at
the Company's Kingsville Dome and Rosita mine sites in South
Texas.
On January 31, 2001 the Company obtained a $250,000 loan by
issuing demand notes to private investors. The $250,000 in
principal under the demand notes was converted on April 11, 2001
into 3,125,000 shares of common stock of the Company in
connection with an equity transaction.
In April 2001, the Company raised $1,835,000 of equity by the
issuance of 26,062,500 million shares of common stock at $0.08
per share to a group of private investors pursuant to a Common
Stock Purchase Agreement. Included in the issuance was the
conversion of the $250,000 loan entered into on January 30, 2001
with the holders of the demand notes.
Assuming that the Company is able to continue funding its
restoration of the Kingsville Dome and Rosita mine sites through
extensions to the Restoration Agreement, the Company estimates
it will have the funds to remain operating into approximately
mid 2002. Additional funds will be required for the
Company to continue operating after that date. The Company's
current agreement with the Texas regulatory authorities and its
bonding company extends through 2001. The Company cannot
guarantee that it will be able to extend such agreement beyond
2001, or that any extension of the agreement that is negotiated
will contain the same terms and conditions as the current
agreement.
The Company would require additional capital resources to fund
the development of its undeveloped properties. There is no
assurance the Company will be successful in raising such capital
or that uranium prices will recover to levels which would enable
the Company to operate profitably.
For the quarter ended September 30, 2001, the Company's cash and
cash equivalents of $1,280,000 represented a decrease of $71,000
for the quarter. This compares to an increase of $16,000 for the
third quarter of 2000. The Company's cash flow used in
operations was $253,000 for the quarter ended
September 30, 2001 and related primarily to restoration
activities at the Company's South Texas locations. Cash flow
used in operations in the same period in 2000 of $741,000. The
Company's net working capital at September 30, 2001 was
$678,000.
Revenues, earnings from operations and net income for the
Company can fluctuate significantly on a quarter to quarter
basis during the year because of the timing of deliveries
requested by its utility customers. Accordingly, operating
results for any quarter or year-to-date period are not
necessarily comparable and may not be indicative of the results
which may be expected for future quarters or for the entire
year.
Three and Nine months Ended September 30, 2001 and 2000
In the first quarter of 2000 the Company had revenues of
$937,102 resulting from the sale of 13,000 pounds of produced
uranium and 85,000 pounds of uranium purchased at $9.41 per
pound. The Company has neither purchased nor sold any uranium
since then and has no sales scheduled for the remainder of the
year or beyond and also does not have any remaining inventory of
uranium.
The cost of uranium sales in the first nine months of 2001 was
$429,000 compared to $2,130,000 in 2000. The largest single cost
reduction came from the lack of uranium sales in the current
year and the corresponding decrease in the cost of purchased
uranium. Purchased uranium costs in the first quarter of 2000
totaled $799,850 and were zero in the same period of 2001. The
cost of the produced uranium sold in 2000 totaled $112,900 and
was made up of operating expenses of $42,111 depreciation and
depletion cost of $58,782 and restoration charges of $12,007.
The other significant cost reduction in the first nine months of
2001 compared to 2000 was the change in the Company's activities
from a stand-by mode to full scale restoration in the third
quarter of 2000. With the restoration agreement reached covering
the 18 month period beginning July 1, 2000, virtually all
activities occurring after that date in South Texas were
directly related to the restoration process. As a result such
costs incurred after July 1, 2000 were recorded as a reduction
of the Company's restoration liability rather than an ongoing
operations cost. Costs prior to that date were determined to be
holding costs from the uranium facilities being held on stand-
by. Stand-by costs recorded in the first nine months of 2000
totaled $730,000 ($608,00 to operations and $122,000 in
depreciation) compared to $71,000 ($42,000 in operating costs
and $29,000 in depreciation) for the same period in 2001.
The Company incurred $358,000 in writedowns of its uranium
properties in the nine months ended September 30, 2001 compared
to $470,000 in the same period of 2000. The Company capitalizes
expenditures related to non-restoration costs incurred to
maintain and hold its properties and performs realizability
tests each quarter to determine if their recorded values require
adjustment. While uranium prices are below the costs projected
to be needed to produce these properties, the costs capitalized
during the quarter are written down to their net realizable
value.
The provision for restoration and reclamation in the first nine
months ended September 30, 2001 was nil, compared to $12,000 for
the same period in 2000.
General and administrative expenses decreased to $913,000 in the
nine months of 2001 from $1,176,000 in the nine months of 2000
as a result of lower salaries, reduced staff and other cost
reductions.
Net loss for the three months ended September 30, 2001 was
$450,704, while net loss in the same three months of 2000 was
$580,501. Net loss for the six months ended September 30, 2001
was $1,296,322 as compared the the net loss of $2,022,683 for
the same period of 2000.
Production at Uranium Resources' two main properties -- the
Rosita and Kingsville Dome properties in South Texas, which are
capable of producing more than a 1.5 million pounds of uranium a
year -- are on hold until the price of uranium surpasses the
cost of production. Uranium Resources owns additional
exploration and development properties in Texas and New Mexico.
UROMED CORPORATION: Files for Chapter 7 Relief in Massachusetts
---------------------------------------------------------------
UroMed Corporation d/b/a Alliant Medical Technologies
(OTCBB:URMD.OB) filed in the United States Bankruptcy Court for
the District of Massachusetts a voluntary petition seeking
relief under Chapter 7 of Title 11 of the United States Code. It
is anticipated that the Chapter 7 filing, which was approved by
UroMed's board of directors on May 13, 2002, will result in the
complete liquidation of the Company's assets.
WARNACO: Court Okays Purchase of ACE Cargo Insurance Policy
-----------------------------------------------------------
To protect against losses of goods in transit, Warnaco Group,
Inc. and its debtor-affiliates maintain a cargo insurance with
American International Group. Prior to its renewal on May 1,
2002, the Debtors sought further quotes from other insurance
carrier.
Insurance Company of North America, with its affiliate ACE Group
provided a better pricing than American International Group.
Thus, the Debtors choose ACE as the new cargo insurance carrier
for the year commencing May 1, 2002.
The ACE insurance policy has these terms:
(a) $1,285,000 annual premium payable at inception, coverage
including all risks of physical loss or damage including
War and SRCC,1 $5,000,000 limit per conveyance;
(b) $500,000 deductible for carriers not parties to Standards
of Care Agreement and $100,000 deductible for all other
claims except there is no deductible for general average
or salvage claims;
(c) cancellation without further order of the Court upon
60-days notice at any time for any reason to ACE, the
Debtors' insurance broker with respect to the Policy;
(d) cancellation without further order of the Court if the
full annual premium in connection with the Policy is not
received by ACE by the end of the twenty-first day after
the effective date of the Policy, which cancellation
will be effective as of the end of the said 21st
day;
(e) 10% no claims bonus; and
(f) valuation calculated based on cost, insurance and freight
plus 50%.
However, pursuant to the Insurance Premium Order, the Debtors
must provide a 14-day written notice prior to extending,
renewing or entering into a new insurance policy to:
(a) counsel for the Debt Coordinators for the Debtors'
pre-petition secured lenders;
(b) counsel to the Debtors' post-petition secured lenders;
(c) counsel to the Official Committee of the Unsecured
Creditors; and
(d) the United States Trustee.
To be able to bind the ACE Policy prior to the expiration of the
AIG policy, the Debtors must obtain a waiver of the 14-day
notice from the Notice Parties and the approval of the Court by
May 3, 2002.
Accordingly, the Debtors and the Notice Parties stipulate:
(a) The notice requirements set forth in the Insurance
Premium Order are waived in connection with the Debtors'
purchase of the ACE Policy; and
(b) The Debtors are authorized immediately upon entry of the
order approving this Stipulation to purchase the ACE
Policy under the terms and conditions set forth.
Judge Bohanon puts his stamp of approval on this Stipulation on
May 3, 2002. (Warnaco Bankruptcy News, Issue No. 24; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WASHINGTON GROUP: Reports Q1 2002 Preliminary Financial Results
---------------------------------------------------------------
Washington Group International, Inc. (OTC:WGII.PK) released
preliminary results for its first quarter ended March 29, 2002.
The preliminary results indicate performance consistent with the
financial guidance the company provided on February 5, 2002
shortly after it successfully completed its financial
restructuring and emerged as a reorganized and financially
healthy company.
The preliminary first quarter results are to inform Washington
Group customers, partners, and investors of the company's
operating results in anticipation of the filing of its first
quarter report with the Securities and Exchange Commission. That
report - along with audited financial statements for fiscal
years 2000 and 2001 - will be filed with the SEC in the next 30
days. These financial statements have not been completed because
of the complexities involved in accounting for and reporting on
the Raytheon Engineers & Constructors acquisition and Washington
Group's resulting bankruptcy filing.
Washington Group will hold an investor conference call to
discuss its first quarter 2002 results after it files its first
quarter 10-Q with the SEC. The exact time and details of the
call will be announced later.
Washington Group's preliminary first quarter financial results
are pro forma in nature to reflect the results of operations
excluding the following items that will be included in the
eventual SEC 10-Q filing in accordance with generally accepted
accounting principles (GAAP):
-- the significant net gain arising from the discharge of
liabilities in connection with Washington Group's emergence from
bankruptcy; and
-- the effects of "fresh-start" accounting to reflect its
financial position at fair value as a newly reorganized company
on February 1, 2002.
In addition, the pro forma first quarter results also combine
the results of operations of the newly reorganized Washington
Group for the two months ended March 29, 2002, with results for
Washington Group as it existed prior to the reorganization for
the month ended February 1, 2002. Those two periods will be
presented separately to comply with GAAP in the financial
statements to be filed with the SEC.
Because of the company's reorganization, financial comparisons
to the prior year are not meaningful and therefore have been
omitted.
Washington Group will apply for listing on a national stock
exchange as soon as possible after all of its required financial
statements are filed with the SEC and other listing requirements
are met.
First Quarter 2002 Pro Forma Performance
Washington Group expects to report revenues for the quarter
ended March 29, 2002 of about $965 million, gross profit of
between $43 million and $47 million, and EBITDA (earnings before
interest, taxes, depreciation and amortization) of between $30
million and $34 million. Net income is expected to be in the
range of $10 million to $12 million.
The pro forma results for the first quarter include:
-- Revenue of $42 million, EBITDA of $6.0 million and net
income of $2 million ($6.2 million before tax and minority
interest) associated with a business Washington Group had
planned to divest prior to December 31, 2001 and which was not
included in the guidance provided on February 5, 2002. The
company continues to actively pursue the sale of this business.
-- During the quarter, the company recognized a $2.8 million
($1.6 million after tax) gain relating to the demutualization of
an insurance provider.
Washington Group booked about $900 million worth of new work
during the quarter, resulting in backlog at the end of the
quarter of approximately $3.1 billion. Most of the new work
resulted from extensions of existing business relationships or
scope expansions on existing contracts. The company currently is
pursuing major new business opportunities and anticipates
significant new contract awards in each of its primary market
segments in 2002.
"We're pleased with our first quarter results, which serve as an
excellent springboard from which to launch our reorganized
company and win new contracts," said Stephen G. Hanks,
Washington Group president and chief executive officer.
"Throughout our restructuring - and as we emerged - clients
stayed with us and even extended their relationships with us.
This shows the depth of their confidence in our company."
Liquidity and Financial Position
In connection with its emergence from Chapter 11, Washington
Group entered into a $350-million, 30-month credit facility with
a group of lenders. On January 25, 2002, the date the company
emerged from bankruptcy, payments totaling approximately $75
million were made to the company's former secured lenders and to
cover fees on the new credit facility and other costs associated
with the company's plan of reorganization. Washington Group
borrowed $40 million under the new credit facility and used $35
million of available cash to fund these payments. Since
emergence, cash flow has been positive and borrowings under the
credit facility were reduced to $25 million by the end of the
quarter. In addition, the company has approximately $135 million
outstanding under the credit facility for letters of credit
guaranteeing performance on certain contracts.
Washington Group's shareholder equity on March 29, 2002 is
expected to be approximately $560 million. This amount includes:
-- shareholder equity determined by an independent outside
expert during the bankruptcy process and recorded in accordance
with generally accepted accounting principles; and
-- retained earnings for the two months ended March 29, 2002.
Operational Initiatives Lower Costs and Improve Efficiency
During the past 12 months, Washington Group completed several
organizational initiatives to rationalize and streamline its
business. Through those efforts, the company migrated from the
legacy of several companies to a cost-effective integrated
business. Through those changes the company:
-- Reorganized into six market-focused business units: Power,
Industrial/Process, Infrastructure, Mining, Energy & Environment
and Defense;
-- Consolidated the company's service delivery capabilities
into two primary operations centers - a 900-employee center in
Denver, Colorado, and a 1,400-person center in Princeton, New
Jersey - to more efficiently utilize its basic engineering,
construction and administrative resources;
-- Closed or consolidated 25 non-core offices; and
-- Established a company-wide business development and sales
force.
These actions allowed Washington Group to reduce its salaried
workforce by about 1,200 employees and reduce office space by
about one million square feet, which is expected to result in a
$100 million annual reduction in overhead costs.
"Through our restructuring we established our ability to grow in
the future, both financially and organizationally," Hanks said.
"We cut overhead dramatically through elimination of redundant
office locations and functions that were legacies of our earlier
acquisitions."
Washington Group Realigns into Six Market-Focused Business Units
To better utilize its new financial strength, Washington Group
recently split its Government business unit to adjust to new
prospects in the areas of global threat reduction and homeland
security, and moved its mining capabilities into a stand-alone
operating unit. The company's new market-focused business unit
structure consists of:
-- Defense: Following the tragic events of September 11,
2001, Washington Group established the Defense business unit to
pursue opportunities in global threat reduction, military and
U.S. State Department infrastructure reconfiguration, and
homeland security. Washington Group's 70-percent market share in
chemical demilitarization in the U.S. and significant market
position in weapons systems demilitarization in the former
Soviet Union, uniquely position it to take advantage of the
rapidly growing opportunities in this area. The company signed
several important contracts in the first and second quarters
this year. For the first quarter 2002, Defense generated
revenues of about $160 million; booked $165 million in new work;
and ended the quarter with a backlog of $500 million.
-- Energy & Environment: This unit provides engineering,
construction, operations, waste management, and environmental
remediation services primarily to the U.S. Department of Energy.
In a business characterized by long-term contracts, predictable
cash flow, and low capital investment, Washington Group
continues to maintain the strong market position it has held for
50 years with the DOE and its predecessor agencies. Washington
Group's contract to manage the DOE's Savannah River Site in
South Carolina was extended for six years in early 2001. In late
2001, the DOE also announced that it would begin to negotiate an
extension to Washington Group's contract at the West Valley
Demonstration Project in New York where the company has been the
contractor since 1982. For the first quarter 2002, Energy &
Environment generated revenues of about $140 million, including
$42 million from an operation which is currently being held for
sale; booked $100 million in new work; and ended the quarter
with a backlog of $425 million.
-- Mining: This unit provides a full range of mining
services, including resource planning, facilities engineering
and construction, operations, mineral processing and land
reclamation. As one of the few participants in this market able
to offer that broad range of services, Washington Group
established this unit to focus on new opportunities,
particularly internationally where it already has a strong and
profitable presence in Eastern Europe and South America.
Additionally, the company's bankruptcy process opened access to
the precious metals market by eliminating a non-compete
agreement for this unit. For the first quarter 2002, Mining
generated revenues of about $20 million; booked $40 million in
new work; and ended the quarter with a backlog of $280 million.
-- Infrastructure: This unit provides diverse engineering and
construction and construction management services for highways
and bridges, airports and seaports, tunnels and tube tunnels,
railroad and transit lines, water storage and transport
facilities and hydroelectric facilities. The unit will continue
to leverage its position as the nation's third largest heavy
civil contractor to take advantage of the federal government's
$60 to $100 billion stimulus package to upgrade the nation's
rail, highway and airport infrastructure. While demand for
projects such as dams and water storage and transport facilities
in the United States is flat, the company is pursuing a number
of opportunities in the international marketplace. For the first
quarter 2002, Infrastructure generated revenues of about $220
million; booked $230 million in new work; and ended the quarter
with a backlog of $1.07 billion.
-- Power: With a historical legacy of building 217,000
megawatts of electric generating capacity, Washington Group
provides engineering, construction and maintenance services to
both the fossil and nuclear power markets. This unit is well
positioned to take advantage of opportunities in 2002 and 2003
for new coal and gas-fired generating capacity and power plant
upgrades to control emissions. Steam generator replacement for
nuclear plants - where Washington Group holds a 70 percent
market share - and other nuclear services also hold promise for
the company as 80 percent of the nation's nuclear power plants
plan for facility upgrades and re-licensing. For the first
quarter 2002, Power generated revenues of about $250 million;
booked $185 million in new work; and ended the quarter with a
backlog of $360 million.
-- Industrial/Process: This unit provides services primarily
to Fortune 500 companies in each stage of a project's life cycle
- including engineering, design, procurement, construction and
"total facilities management." Its total facilities services
include inventory and supply-chain management, shutdown and
turnaround management and other maintenance, operations and
logistics services. While its growth has been limited during the
recent global recession, Industrial/Process is expected to
improve in the coming months as companies resume delayed capital
improvements and outsourcing plans as the economic rebound takes
hold. Much of that anticipated new market momentum should be led
by industries serving the needs of an aging population,
privatization in emerging economies and the growing natural gas
market. For the first quarter 2002, Industrial/Process generated
revenues of about $175 million; booked $170 million in new work;
and ended the quarter with a backlog of $450 million.
"Washington Group is the most diversified engineering and
construction company in the industry and one of the few players
able to design, build, operate, maintain, and identify financing
for the projects we work on," said Hanks. "At the foundation of
our performance is the dedication of our 38,000 employees. We
have a vibrant and strong company that promotes growth and
development opportunities for our highly skilled people
throughout the world by maintaining all our key relationships
and industry leadership in high growth markets."
Washington Group International, Inc., is a leading international
engineering and construction firm. With 38,000 employees at work
in 43 states and more than 30 countries, the company offers a
full life-cycle of services as a preferred provider of premier
science, engineering, construction, program management, and
development in 14 major markets.
Markets Served
Energy, environmental, government, heavy-civil, industrial,
mining, nuclear-services, operations and maintenance, petroleum
and chemicals, process, pulp and paper, telecommunications,
transportation, and water-resources.
WESTERN INTEGRATED: SureWest Explores Possible Acquisition
----------------------------------------------------------
SureWest Communications (Nasdaq:SURW) announced it is exploring
a possible acquisition of all or a portion of the businesses
operated by Western Integrated Networks, Inc. ("WIN"), which
operates primarily under the "WinFirst" name.
WIN's parent company and certain affiliates filed for Chapter 11
bankruptcy protection in United States Bankruptcy Court in
Denver, Colorado on March 11, 2002. WIN's primary operating
affiliate provides combinations of high-speed voice, data and
video services in portions of the Sacramento, California
metropolitan area.
Brian Strom, President and CEO of SureWest, said "WIN provides
broadband services to customers in and adjacent to our service
area where we already have fiber in proximity to most households
we serve. While our interest is preliminary at this point, our
strategy is to leverage our network architecture to become the
dominant integrated communications provider in the Sacramento
region."
About SureWest Communications
SureWest Communications and its family of companies, including
Roseville Telephone Company, SureWest Wireless, SureWest
Broadband, SureWest Internet, SureWest Directories and SureWest
Long Distance, create value for customers and shareholders
through an integrated network of highly reliable advanced
communications products and services with unsurpassed customer
care. The company's principal operating subsidiary, Roseville
Telephone Company, is California's third largest
telecommunications company, and has provided telecommunications
services for nearly 90 years as the Incumbent Local Exchange
Carrier (ILEC) to the communities of Roseville, Citrus Heights,
Granite Bay, Antelope and parts of Rocklin. The company, through
its Competitive Local Exchange Carrier (CLEC) and subsidiaries,
is licensed to provide fiber optics, 39 GHz wireless, PCS
wireless, DSL, high-speed Internet access and data transport.
For more information, visit the SureWest Web site at
http://www.surewest.com
WESTPOINT STEVENS: Reports Improved Sales Performance In Q1 2002
----------------------------------------------------------------
WestPoint Stevens, Inc.'s net sales for the three months ended
March 31, 2002 increased $16.5 million, or 3.9 %, to $435.1
million compared with net sales of $418.6 million for the three
months ended March 31, 2001. Increases in sales across all
distribution channels, coupled with sales of the expanded Ralph
Lauren Home Collection license and new Disney Home license led
to the improved sales performance.
For the three months ended March 31, 2002, bed products sales
were $266.0 million compared with $233.0 million last year; bath
products sales were $120.9 million compared with $134.5 million
last year; and other sales (consisting primarily of sales from
the Company's mill stores and foreign operations) were $48.2
million compared with $51.1 million last year.
Gross earnings for the three months ended March 31, 2002
increased $14.1 million, or 15.1%, to $107.8 million compared
with $93.7 million for the same period of 2001, excluding
charges associated with the Eight-Point Plan, and reflect gross
margins of 24.8% in 2002 versus 22.4% in 2001. Gross earnings
and margins increased primarily as a result of lower raw
material costs, improved manufacturing efficiencies, a more
profitable mix of revenues and reduced promotional activity.
Included in the cost of goods sold in the first quarter of 2001
are charges associated with the Eight-Point Plan
of $4.0 million, the majority of which reflects costs for
equipment relocation and unabsorbed overhead due to reduced
running schedules. Including the charges, gross earnings for the
three months ended March 31, 2002 increased $18.1 million, or
20.2%, to $107.8 million compared with $89.7 million for the
same period of 2001.
Net income for the first quarter of 2002, before charges
associated with the Eight-Point Plan, increased $7.2 million, to
$2.0 million, or $0.04 per share diluted, from a net loss of
$5.1 million, or a loss of $0.10 per share diluted, in the same
period of last year. After the charges, net income for the first
quarter of 2002 was $2.0 million, or $0.04 per share diluted,
compared with a loss of $10.9 million, or a loss of $0.22 per
share diluted, for the same period of last year.
The Company's principal sources of liquidity are expected to be
cash from its operations and funds available under the Senior
Credit Facility. At May 3, 2002, the maximum commitment under
the Senior Credit Facility was $717.5 million and the Company
had unused borrowing availability under the Senior
Credit Facility totaling $162.0 million. The Senior Credit
Facility contains covenants, which, among other things, limit
indebtedness and require the maintenance of certain financial
ratios, minimum EBITDA and minimum net worth (as defined). The
Senior Credit Facility provides for a $25.0 million
reduction in the revolver commitment on each of the following
dates: November 1, 2002, February 1, 2003, August 1, 2003 and
November 1, 2003 and further provides for a $17.5 million
reduction in the revolver commitment on February 1, 2004 at
which time the revolver commitment will be $600.0 million. The
Senior Credit Facility further provides that any increase in the
Trade Receivables Program above the current $160.0 million
limit, up to a $200.0 million limit, would reduce the revolver
commitment under the Senior Credit Facility by a similar amount.
On January 22, 2002, Kmart Corporation filed a voluntary
petition for reorganization under Chapter 11 of Title 11 of the
United States Code. Kmart Corporation subsequently received
approval of its debtor-in-possession financing and is currently
working towards a restructuring and emergence from
Chapter 11 in 2003. In conjunction with the restructuring, Kmart
Corporation announced the closing of 284 retail store locations.
This represents roughly 13% of its total store base. The Company
has reviewed its sales and profit projections for Kmart
Corporation for 2002 and believes that the recent Chapter 11
filing for bankruptcy protection by Kmart Corporation will not
have a material adverse effect on the Company's future
operations.
At March 31, 2002, the Company was in compliance with all its
covenants under the Senior Credit Facility and Second-Lien
Facility, and based on management's projections of 2002 results
expects to remain in compliance with all the covenants under its
credit agreements.
The Company's principal uses of cash for the next several years
will be operating expenses, capital expenditures and debt
service requirements related primarily to interest payments. The
Company spent approximately $60.5 million in 2001 on capital
expenditures and intends to invest approximately $40.0 to $50.0
million in 2002. The Senior Credit Facility does not permit
future cash dividends.
The Board of Directors has approved the purchase of up to 27
million shares of the Company's common stock, subject to the
Company's debt limitations. At March 31, 2002, approximately 3.6
million shares remained to be purchased under these programs.
The Senior Credit Facility does not permit future stock
repurchases.
Management believes that cash from the Company's operations and
borrowings under its credit agreements will provide the funding
necessary to meet the Company's anticipated requirements for
capital expenditures, operating expenses and to enable it to
meet its anticipated debt service requirements.
Wesrpoint Stevens is the #1 US maker of bed linens and bath
towels and also makes comforters, blankets, pillows, table
covers, and window trimmings. It makes the Martex, Utica,
Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as
well as the Martha Stewart bed and bath lines; other licensed
brands include Ralph Lauren, Disney, and Joe Boxer. Department
stores, mass retailers, and bed and bath stores are its main
customers. (Federated, J.C. Penney, Kmart, Sears, and Target
account for more than half of sales.) It also has nearly 60
outlet stores.
WILLCOX & GIBBS: UST Convening Creditors' Meeting on May 23
-----------------------------------------------------------
The United States Trustee will convene a meeting of Willcox &
Gibbs, Inc. creditors on May 23, 2002 at 3:00 p.m., U.S.
District Court, 844 King St., Room 2112, Wilmington, Delaware.
This is the first meeting of creditors required under 11 U.S.C.
Sec. 341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
WILLIAMS COMMS: Hires Morris Nichols as Special Board Counsel
-------------------------------------------------------------
Williams Communications Group, Inc. and its debtor-affiliates
ask the Court to authorize them to retain and employ,
nunc pro tunc as of April 22, 2002, Morris Nichols Arsht &
Tunnell as special Delaware counsel to the Debtors' board of
directors in the Chapter 11 cases.
According to Corinne Ball, Esq., at Jones Day Reavis & Pogue in
New York, New York, Morris Nichols is particularly well suited
for the type of representation required in the Chapter 11 cases.
Morris Nichols has experience in virtually all aspects of the
law that may arise in connection with the representation of the
Board in the Chapter 11 cases. Morris Nichols also is familiar
with the issues facing the Debtors' Board, having worked closely
with the Board prior to the Petition Date. Accordingly, Morris
Nichols has developed relevant and valuable experience,
expertise and institutional knowledge regarding the Debtors and
the Board that will assist Morris Nichols in providing effective
and efficient services in the Chapter 11 cases.
Subject to further Order of the Court, the Debtors propose that
Morris Nichols be employed to:
A. serve as special Delaware counsel to the Board;
B. advise the Board concerning Delaware law issues that may
arise as a result of the company's current financial
condition;
C. assist the Company in any litigation in the Delaware courts
and elsewhere that might be necessary in connection with, or
might arise out of, any business combination about which the
company may consult it;
D. perform all other necessary or appropriate legal services in
connection with the Chapter 11 cases.
Prior to the Petition Date, Robert J. Dehney, a partner of the
firm of Morris Nichols Arsht & Tunnell, informs the Court that
the Debtors advanced Morris Nichols a total of $197,000 for
services rendered or to be rendered and for reimbursement of
expenses. Morris Nichols applied $102,500 in fees and $9,700 in
expenses against these advances for services rendered prior to
the Petition Date. The source of the advance was the Operating
Company's cash.
The attorneys and paralegals that will be primarily responsible
for this engagement and their corresponding current hourly rates
are:
Robert J. Dehney (Partner) $425 per hour
Eric D. Schwartz (Partner) $340 per hour
Jeffrey R. Wolters (Partner) $340 per hour
Melissa N. Bisaccia (Paralegal) $140 per hour
In addition, other attorneys and paralegals may, from time to
time, assist in connection with these cases. The current hourly
rates of the other attorneys and paralegals range from:
Partners $320-$480
Associates $190-$305
Paralegals $ 80-$160
Mr. Dehney assures the Court that the firm represents no
interest adverse to the Debtors or their respective estates in
the matters for which Morris Nichols will be retained. However,
due to the size and diversity of the firm's practice, it may
have represented or otherwise dealt with certain entities who
may consider themselves creditors, equity holders or parties-in-
interests in these cases. Based on the conflicts search the
firm has conducted, the firm currently represents these parties
in matters unrelated to these cases: Bank of America N.A., Bank
of New York, Cerberus Partners L.P., Citibank N.A., Citicorp USA
Inc., Credit Agricole Indosuez, Credit Lyonnais, Credit Suisse
First Boston, Fidelity Investments, JP Morgan Chase, Merill
Lynch & Co. Inc., Salomon Smith Barney Inc., State Street Bank,
TrizecHahn Corp., and Wilmington Trust Corp. (Williams
Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
WORLDPORT: Reports Q1 Losses & Considers Possible Liquidation
-------------------------------------------------------------
Worldport Communications, Inc. (OTCBB: WRDP) announced its
financial results for the first quarter of 2002.
As previously announced, the Company had ceased all active
business operations and is making no further investment in its
subsidiary operations. The Company also announced that its
subsidiary, Worldport Ireland Limited, had been given notice
that a petition for winding up had been filed. The petition was
heard by the Irish High Court on May 13th and a liquidator was
appointed to act on behalf of the creditors. As a result of this
action, the liquidator has control over this subsidiary's
assets.
As the Company has exited all three of its operating segments as
of March 31, 2002, the results of these operations have been
classified as discontinued under Accounting Principles Board
Opinion No. 30, and prior periods have been restated in order to
conform to the required presentation.
The Company reported net losses for the quarters ended March 31,
2002 and 2001 of $8.1 million and $8.7 million, respectively, or
$0.21 and $0.26 per share, respectively. Net losses from
continuing operations for the first quarter of 2002 and 2001
were $0.8 million and $0.2 million, respectively.
The current quarter loss from discontinued operations was $7.3
million and included a $10 million restructuring charge relating
to the current quarter decision to cease funding to the U.K.
operations. The restructuring charge primarily consisted of
facility exit costs of $8.0 million, bandwidth contract
termination costs of $0.5 million and other related costs of
$1.5 million. Additionally, loss from discontinued operations
for the current quarter included a $5.6 million tax benefit as a
result of a new U.S. federal tax law that was enacted in March
2002, which allowed the Company to carryback a $5.6 million AMT
tax credit from 2001 against taxable income in 2000.
In April 2002, the Company received a $57.6 million income tax
refund which had been reflected as a receivable on the Company's
March 31, 2002 balance sheet. Receipt of this refund does not
indicate that the Internal Revenue Service agrees with the
positions taken by the Company in its tax returns. The refund is
still subject to review by the Internal Revenue Service of the
Company's 2001 tax return. The Internal Revenue Service could
require the Company to return all or a portion of this refund.
After receipt of the tax refund, the Company had approximately
$110.2 million in cash and cash equivalents and $10.9 million in
marketable securities as of May 8, 2002. The cash equivalents
currently consist of highly rated short-term commercial paper,
money market funds and government securities.
Total liabilities at March 31, 2002, were $45.5 million and
included $19.9 million of liabilities for the U.K., German and
Irish subsidiaries which are in Administration, receivership and
liquidation proceedings, respectively, and which the parent
company believes it will not be required to pay. However, there
can be no assurance that creditors of these subsidiaries will
not make claims against the parent company. The remaining $25.6
million of liabilities reflected on the Company's March 31, 2002
balance sheet include $12.4 million of data center lease
obligations. Company management is currently seeking
opportunities for subleasing these facilities and further
reducing its liabilities related to the exited businesses.
However, there can be no assurance that the Company will be
successful in its efforts to mitigate these liabilities or that
additional claims will not be asserted against the parent
company.
After completing the shutdown of our subsidiaries, the Company
expects to continue to have significant cash resources. We
currently anticipate that after we complete the activities
related to exiting these businesses, we will operate with a
minimal headquarters staff while we determine how to use these
cash resources.
The Company intends to consider acquisition opportunities. The
Company also intends to analyze a potential liquidation of the
Company and its effects on the Company's stockholders. Upon any
liquidation, dissolution or winding up of the Company, the
holders of our outstanding preferred stock would be entitled to
receive approximately $68 million prior to any distribution to
the holders of our common stock. Although the Company may
consider acquisition opportunities, it has not identified a
specific industry on which it intends to initially focus and has
no present plans, proposals, arrangements or understandings with
respect to the acquisition of any specific business.
* BOOK REVIEW: Creating Value through Corporate Restructuring:
Case Studies in Bankruptcies, Buyouts, and
Breakups
--------------------------------------------------------------
Author: Stuart C. Gilson
Publisher: Wiley
Hardcover: 516 pages
List Price: $79.95
Review by David M. Henderson
Buy a copy for yourself and one for a colleague on-line at:
http://amazon.com/exec/obidos/ASIN/1893122832/internetbankrupt
Most business books fall into two categories. The first is very
important. It is like that stuff you have to drink before you
have a colonoscopy. You keep telling yourself, this is very
good for me, while you would rather be at the beach reading
Liar's Poker or Barbarians at the Gate.
Stuart Gilson, of the Harvard Business School, has managed to
write a book important to everybody in the distressed market
that is also quite enjoyable. His prose is fluid and succinct
and a pleasure to read. But don't take my word for it. The
dust jacket endorsements come from Jay Alix, Martin Fridson,
Harvey Miller, Arthur Newman, and Sanford Sigoloff. At a
collective gazillion dollars a billing hour, that's a lot of
endorsement.
Be advised that this is designed as a text book. The case study
format might be off-putting to some. The effect can be jarring
as you read the narrative history of the case and suddenly
confront the financial statements without any further clue as to
what to do, but this must be what it is like for the turnaround
manager. Even after reading several of the cases, when I got to
the financials I had that sinking feeling of, what do I do now?
If you read carefully, clues to the solutions are in the
introductions.
The book is divided into three "modules", bizspeek for sections:
Restructuring Creditors' Claims,. Restructuring Shareholders'
Claims, and Restructuring Employees' Claims. The text covers 13
corporate restructurings focusing on debt workouts, vulture
investing, equity spinoffs, tracking stock, assete divestitures,
employee layoffs, corporate downsizing, M & A, HLTs, wage give-
backs, employee stock buyouts, and the restructuring of employee
benefit plans. That's a pretty comprehensive survey, wouldn't
you say?
Dr. Gilson's chapter on "Investing in Distressed Situations" is
an excellent summary of the distressed market and a good
touchstone even for seasoned vultures.
Even in the two appendices on technical analysis, this book is
marvelously free of those charts and graphs that purport to show
some general ROI of distressed investing. Those are cute,
aren't they? As Judy Mencher has famously said, "You can buy
the paper at 50 thinking it's going to 70, but it can just as
easily go to 30 if you are not willing to act on it." Therein
lies the rub and the weakness, if inevitable, of this or any
book on corporate restructurings. As Dr. Gilson notes, no two
are alike, and the outcome is highly subjective, in our out of
Court, but especially in Chapter 11. Is the Judge enthralled by
Jack Butler as Debtor's Counsel or intimidated by Harvey Miller
as Debtor's Counsel? Are you holding "secured" paper only to
discover that when it was issued the bond counsel forgot to
notify the Indenture Trustee of the most Senior debt? Is
somebody holding Junior paper that you think is out of the money
only to have Hugh Ray read the fine print and discover that the
"Junior" paper is secured? This is the stuff of corporate
reorganizations that is virtually impossible to codify into a
textbook.
That said, this is an especially valuable text for anybody
working in the distressed market. As a Duke grad, I tend to be
disdainful of all things Harvard, but having read Dr. Gilson's
book, I am enticed to encamp by the dirty waters of the Charles
long enough to take his course, appropriately entitled,
"Creating Value Through Corporate Restructuring."
*********
Bond pricing, appearing in each Monday's edition of the TCR, is
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Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
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Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, Aileen M. Quijano and Peter A.
Chapman, Editors.
Copyright 2002. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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*** End of Transmission ***