/raid1/www/Hosts/bankrupt/TCR_Public/020610.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, June 10, 2002, Vol. 6, No. 113
Headlines
360NETWORKS: PwC Says July 2 Stay Deadline Likely to be Extended
AES CORP: S&P Ratchets Low-B Credit Ratings Down One Notch
AES CORP: S&P's Downgrade Caused Ripple Effect on Units' Ratings
AES CORP: Expresses Disappointment over S&P's Ratings Downgrades
ATSI COMMS: Re-Negotiates Capital Lease Agreement with IBM
ADELPHIA BUSINESS: Unsecured Panel Taps Kramer Levin as Counsel
ADVANTICA RESTAURANT: Reports Same-Store Sales for May 2002
AIR CANADA: Flies 4.1% More Revenue Passenger Miles in May 2002
AMERICAN ENERGY: Ability to Continue Operations Uncertain
AMES DEPT: Court to Consider Reclamation Claims Report Thursday
AQUIS COMMS: Has $34MM Working Capital Deficit at March 31, 2002
AREMISSOFT: Sets June 28 Hearing to Consider Plan Confirmation
BETHLEHEM STEEL: Fails to Comply with NYSE Listing Standards
CSAM HIGH YIELD: Fitch Cuts Cls. B-1 & B-2 Notes to Junk Level
CALPINE: Baytown Energy Center Enters Combined-Cycle Operations
CELERITY SYSTEMS: Posts March Working Capital Deficit of $1.5MM
CINERGY GLOBAL: Reaches Pact to Sell Spanish Assets to ENERGI E2
CLAXSON INTERACTIVE: Seeking New Financing to Continue Ops.
COMDISCO INC: Signs-Up Innisfree M&A as Noticing & Voting Agent
COVANTA ENERGY: Wins Okay to Hire Ordinary Course Professionals
DAIRY MART: Couche-Tard Makes $80 Million Bid to Acquire Assets
DAIRY MART: Inks Asset Purchase Agreement with Couche-Tard
COLONIAL COMMERCIAL: Violates Nasdaq Listing Requirements
ENRON: Examiner Seeks to Retain Alston & Bird as Legal Counsel
ENRON CORP: Wants Approval of Cap Gemini Outsourcing Agreement
ENRON CORP: Four Long-Standing Directors Resign from Board
EXIDE TECH: Daramic Demands Prompt Decision on Supply Contracts
EXODUS COMMS: Secures Court Approval of Second Amended Plan
FOSTER WHEELER: S&P Maintains Watch on B+ Corp. Credit Rating
FOUNTAIN PHARMACEUTICAL: Woos Potential Buyers for Public Shell
GALEY & LORD: Committee Turns to Peter J. Solomon for Advice
GLOBAL CROSSING: Gets Nod to Enter into AIG Insurance Agreements
HAYES LEMMERZ: Wants Removal Period Deadline Moved to Sept. 3
IEC ELECTRONICS: Slashes 35% of Staff & Restructures NY Facility
INTEGRATED HEALTH: Asks Court to Expunge Tax Claims against Unit
INTERVOICE-BRITE: Pays Down Bank Debt to About $4 Million in Q1
KMART: Middletown Wants to Compel Lease Performance on Property
LTV CORP: Courts Okays 4th Extension to Exclusivity Until Oct. 9
LAIDLAW: Amends Surety Bond Agreement with Federal Insurance
LAS VEGAS SANDS: S&P Assigns B- Rating to $850MM Mortgage Notes
LUMENON INNOVATIVE: Commences Trading on Nasdaq SmallCap Market
MERCANTILE INT'L: Wins Approval to Restructure $40MM Debentures
METALDYNE CORP: S&P Rates $300MM Senior Subordinated Notes at B
NII HOLDINGS: Looks to Houlihan Lokey For Financial Advice
NATIONSRENT INC: Pettys Seek Court Determination on Contracts
PACIFIC GAS: Seeks Court Approval to Incur HR & Payroll Expenses
PATHMARK STORES: S&P Revises BB- Ratings Outlook to Stable
RIVIERA HOLDINGS: S&P Assigns B+ Rating to Proposed $210MM Notes
SAFETY-KLEEN: Clean Harbors Submits "Qualified Bid" for Assets
SAKS INC: Comparable Store Sales Slide-Down 3.3% in May 2002
SEITEL INC: Elects Fred Zeidman as New Board Chairman
SEXTANT ENTERTAINMENT: Files for CCAA Protection to Restructure
SPARTAN STORES: S&P Rates $200MM Senior Subordinated Notes at B
STAMPEDE WORLDWIDE: Ability to Continue Operations Uncertain
TECSTAR INC: Taps Michael Fox to Assist in Asset Disposition
VELOCITA CORP: Files for Chapter 11 Protection in New Jersey
VELOCITA CORP: Case Summary & 30 Largest Unsecured Creditors
VERSATA INC: Reduces Quarterly Cash Burn Rate to $2 Million
WARNACO GROUP: Settles Master Leases Disputes with GE Capital
WESTERN RESOURCES: Completes $1.5 Billion Debt Refinancing
WORKFLOW MANAGEMENT: Reports Improved Fourth Quarter Results
XPEDIOR: Court Sets July 15 Bar Date for Administrative Claims
XVARIANT: Plans Loans & Stock Sales to Raise Fund for Operations
* BOND PRICING: For the week of June 10 - June 14, 2002
*********
360NETWORKS: PwC Says July 2 Stay Deadline Likely to be Extended
----------------------------------------------------------------
In its 11th report to the Canadian Court dated April 30, 2002,
PricewaterhouseCoopers relates that:
-- 360networks inc.'s net cash flow from November 5, 2001 to
April 19, 2002 was an inflow of $36,100,000 compared with
a budget of $13,600,000;
-- Operating inflows was $34,600,000 compared with a budget
of $60,400,000. This negative variance is the result of
dark fiber collections being $28,000,000 below budget,
which is primarily the result of the Qwest, Shaw/Big Pipe
and Bell/Nexxia amounts.
-- Collections from bandwidth sales were $2,400,000 higher
than budget.
-- Non-operating cash inflows were $29,500,000 compared to a
budget of $23,400,000, which is a surplus of $6,100,000.
This is comprised of a surplus collected from the sale of
assets and other items of $6,500,000, including an
unbudgeted Goods and Services tax refund of $3,300,000
plus a surplus of $700,000 of non-operating/one time
inflows and interest/other income, offset by a deficiency
in collections of pre-filing accounts receivable
of $1,100,000. The shortfall in the collection of pre-
petition trade accounts receivable continues to occur due
to the timing of collections.
-- Cash outflows were $27,600,000 compared to a budget of
$70,100,000, resulting in a $42,500,000 positive
variance. This variance includes actual capital
expenditures, for the combined Canadian, US and Atlantic
entities, being $25,900,000 less than budget, O&M items,
excluding O&M salaries, being $5,500,000 less than
budget, SG&A items including O&M and Atlantic
Petitioners' salaries being $7,500,000 less than budget.
"The Canadian Applicants' combined cash position as of April 19,
2002 was $111,200,000 compared with a budget of $87,900,000,"
the Monitor adds.
According to PricewaterhouseCoopers, capital expenditures paid
out for the combined Canadian, USA and Atlantic operations over
the period of the Extension Budget totaled $6,480,000 as of
April 19, 2002. This compares with a budget of $32,400,000 for
the same period.
Over the period covered by the CCAA proceedings to date, the
Canadian Applicants have committed to a total of $56,400,000 of
capital projects across Canada, the USA and the Atlantic, which
is within the $60,000,000 limit as approved by the Senior
Lenders. "They have disbursed $37,200,000 and they have
incurred but not paid a further $1,000,000,"
PricewaterhouseCoopers says.
The Monitor further reports that the Canadian Applicants had
disposed of assets with an aggregate original cost of
$21,100,000 as of April 19, 2002 yielding sale proceeds of
$3,400,000. These funds have been placed into segregated bank
accounts in accordance to a provision in the Confirmation Order.
Restructuring Operations
The Canadian Applicants advise that 6 employees were either
terminated or resigned since the Monitor's last report.
Severance payments amounted to $70,500, which resulted in a
monthly saving of approximately $31,500.
The Canadian Applicants further advise that they have converted
7 staff members in their information technology group from
contract status to employee status. This was done as these
employees will be required on an on-going basis and there is an
average saving of $7,000 per employee per annum associated with
the conversion.
Total headcount for the combined Canadian and Atlantic
Applicants are now 173.
Pre-filing trade creditors for Canadian Petitioners total
$74,400,000 Canadian dollars. Pre-filing creditors for the
Atlantic Petitioners total $55,900,000.
PricewaterhouseCoopers states that in Section II (B) of their
First Report to Court, they reported in error that the
Petitioners had an unsecured 15% senior note liability. This
should have been reported as an unsecured 13% senior note
liability.
Restructuring Efforts
PricewaterhouseCoopers relates that since the last report,
further meetings have taken place with the Senior Lenders and
the US Creditors' Committee with a view to reaching an agreement
in principle on a proposed restructuring plan. An agreement, if
reached, would allow the preparation of a plan to go forward,
after consultation with the Monitor on the appropriate treatment
of Canadian unsecured creditors.
However, the Monitor states that because of scheduling
difficulties, this process has been somewhat delayed from what
was originally hoped for, and the Petitioners are awaiting
confirmation from the US creditors' committee as to a convenient
time for these discussions to continue.
Accordingly, it now seems clear that although progress towards a
restructuring plan is continuing in a positive way, the
likelihood of a plan being available for presentation to
creditors within a time frame that would enable the 360
companies to emerge from insolvency protection prior to the
current stay expiration date of July 2, 2002 is increasingly
unlikely. "It now seems more likely that an extension of that
stay will be required for at least one or two months in order to
allow the process to be completed within the time requirements
dictated, to a large part, by the more complicated US bankruptcy
process, since any Canadian restructuring plan will be
contingent upon approval of a similar plan for the 360 US
Companies," PricewaterhouseCoopers explains. (360 Bankruptcy
News, Issue No. 24; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
AES CORP: S&P Ratchets Low-B Credit Ratings Down One Notch
----------------------------------------------------------
Standard & Poor's lowered its double-'B' corporate credit and
senior unsecured debt ratings on The AES Corp. to double-'B'-
minus, its single-'B'-plus rating on AES' subordinated debt to
single-'B', and its single-'B' rating on the company's trust
preferred securities to single-'B'-minus, and removed all the
ratings from CreditWatch with negative implications. The outlook
is negative.
"The downgrade is due primarily to the increasingly challenging
environment that AES is facing in managing businesses in Latin
America," said credit analyst Scott Taylor. "Specifically,
political instability in Venezuela and Brazil has made
refinancing current obligations more challenging than usual,
which could limit distributions, and a weakening currency in
Venezuela could also weaken dollar-denominated distributions
from that country," Mr. Taylor added.
In addition, Standard & Poor's believes that liquidity
constraints at AES Gener S.A. (triple-'B'-minus/Watch Neg) make
significant distributions from that subsidiary unlikely. While
it is certainly plausible that AES will get cash out of these
businesses and make up some potential shortfalls with upside
from some of the more stable AES businesses providing cash to
the holding company, the increased risk profile in Latin America
given AES' current debt levels results in a profile more in-line
with a double-'B'-minus rating. Standard & Poor's has been
monitoring AES' liquidity, and notes that AES has improved its
liquidity position since the beginning of the year. In addition,
AES is not in the trading business and therefore it has no
trading liabilities and no issues arising from the recent FERC
inquiries. Standard & Poor's does not expect the downgrade to
lead to any serious liquidity problems at AES.
The negative outlook reflects refinancing risk associated with
debt maturities at the parent of $300 million in 2002 and $1.8
billion in 2003, given heightened uncertainty in the bank
markets. AES has put forth a plan whereby it will utilize the
proceeds from asset sales, potential capital market issuances,
and excess operating cash flows to fund the debt maturities and
assist in refinancing the credit facility. The maturities
include an $850 million revolving credit facility, approximately
$775 million of other bank debt, and $500 million in senior
unsecured notes. Once the revolver is renewed, the rating will
likely stabilize. Upon execution of AES' short-term plan, there
is a possibility that the ratings will return to their previous
levels. We understand that AES is currently in discussions with
the banks regarding the refinancing of its revolver. AES has
also publicly stated its intention to pay down additional debt
over the longer term (two to four years) and stabilize its
revenue base, which would further improve credit quality.
DebtTRaders reports that AES Corporation's 9.500% bonds due 2009
(AES09USR1) are quoted between the price 85.75 and 85.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AES09USR1for
real-time bond pricing.
AES CORP: S&P's Downgrade Caused Ripple Effect on Units' Ratings
----------------------------------------------------------------
Standard & Poor's took ratings action on five subsidiaries of
The AES Corp. due to their rating linkage to AES. The ratings
actions are directly attributable to the downgrade of AES'
ratings. There have been no other events that in and of
themselves would have caused a rating action on these
subsidiaries.
Standard & Poor's lowered AES' subsidiary IPALCO Enterprises
Inc.'s corporate credit rating to triple-'B'-minus from triple-
'B', and senior unsecured debt rating to double-'B'-plus from
triple-'B'-minus; IPALCO's subsidiary Indianapolis Power & Light
Co.'s (IPL) corporate credit rating and senior secured debt to
triple-'B'-minus from triple-'B', senior unsecured debt to
double-'B'-plus from triple-'B'-minus, and preferred stock to
double-'B' from double-'B'-plus. All ratings have been removed
from CreditWatch with negative implications. The outlook is
negative. IPALCO's and IPL's 'A-2' commercial paper ratings have
been withdrawn at the issuers' request.
At the same time, Standard & Poor's also changed the outlook for
debt issues at four other AES subsidiaries: AES Eastern Energy
L.P., AES Red Oak LLC, AES Ironwood LLC, and the $120 million
bank loan secured by Compania de Alumbrado Electrico de San
Salvador, S.A. de C.V.; Empresa Electrica de Oriente S.A. de
C.V.; and Distribuidora Electrica de Usulutan S.A. de C.V. from
stable to negative and left their ratings unchanged at triple-
'B'-minus.
The ratings on CILCORP Inc., the direct parent of Central
Illinois Light Co., remain on CreditWatch with positive
implications pending CILCORP's and Central Illinois Light's sale
by AES to Ameren Corp.
In most circumstances Standard & Poor's will not rate the debt
of a wholly owned subsidiary higher than the rating of the
parent. Exceptions can be made, and were in these cases, on the
basis of the cumulative value provided by enhancements such as
structural protections, covenants, a pledge of stock, and an
independent director, assuming the stand-alone credit quality of
the entity supports such elevation. These provisions serve to
make these subsidiaries bankruptcy remote from a sponsor with
weaker credit quality. Standard & Poor's views these provisions
as supportive in that they reduce the risk of a subsidiary being
filed into bankruptcy in the event of a parent bankruptcy, but
does not view them as 100% preventative of such a scenario.
Therefore, Standard & Poor's limits the rating differential
provided by such structural enhancements to three notches. On
that basis, subsidiaries' corporate credit ratings cannot be
higher than triple-'B'-minus, and those that are rated triple-
'B'-minus would have a negative outlook, reflecting the negative
outlook of AES Corp.
AES CORP: Expresses Disappointment over S&P's Ratings Downgrades
----------------------------------------------------------------
The AES Corporation (NYSE:AES) responded to Standard & Poor's
announcement that it has lowered its corporate credit and senior
unsecured debt ratings on AES.
"While we are disappointed with [Thurs]day's action, we are
pleased that S&P has noted the significant improvement in our
liquidity position since the beginning of the year and also
acknowledged the fact that we are not in the trading business
and consequently have no trading liabilities and no issues
arising from the recent FERC inquiries," said Barry Sharp, Chief
Financial Officer.
"Our current parent liquidity is over $450 million, and the cash
and cash equivalents at our subsidiaries is approximately $1.2
billion. As S&P notes AES's liquidity is not seriously affected,
and the associated triggers with this downgrade amount to less
than $60 million of Letters of Credit. These Letters of Credit
are primarily to cover payments for construction projects that
were already included in our forecast. We expect to generate
$1.25 billion of parent operating cash flow in 2002. We have
reduced our discretionary capital expenditures by $500 million,
and have planned reductions in operating costs of $200 million.
In addition, asset sales and financings already announced will
add an additional $800 million. In short, we are continuing to
achieve the commitments that we made to our investors," Mr.
Sharp stated.
AES is a leading global power company comprised of competitive
generation, distribution and retail supply businesses in
Argentina, Australia, Bangladesh, Brazil, Cameroon, Canada,
Chile, China, Colombia, Czech Republic, Dominican Republic, El
Salvador, Georgia, Germany, Hungary, India, Italy, Kazakhstan,
the Netherlands, Nigeria, Mexico, Oman, Pakistan, Panama, Qatar,
South Africa, Sri Lanka, Tanzania, Uganda, Ukraine, the United
Kingdom, the United States and Venezuela.
The company's generating assets include interests in 177
facilities totaling over 59 gigawatts of capacity. AES's
electricity distribution network has over 727,000 km of
conductor and associated rights of way and sells over 108,000
gigawatt hours per year to over 16 million end-use customers.
For more general information visit http://www.aes.com
ATSI COMMS: Re-Negotiates Capital Lease Agreement with IBM
----------------------------------------------------------
ATSI Communications Inc. (AMEX:AI) has renegotiated a capital
lease agreement with IBM.
As of Jan. 31, 2002, ATSI had an obligation of approximately
$4.3 million recorded on its balance sheet, which consisted of a
$3.0 million principal balance and accrued interest of $1.3
million owed to IBM under a capital lease arrangement between
ATSI de Mexico, S.A. de C.V. and IBM's Mexico affiliate. In its
financial statements included in its Form 10Q filing as of Jan.
31, 2002, this entire balance was recorded as a current
liability and represented the largest single obligation of the
Company. In May 2002, the Company and IBM agreed to modify the
lease to an unsecured agreement between ATSI Communications Inc.
and IBM Credit Corporation, to waive the $1.3 million in
interest expense accrued by ATSI, and to amortize the remaining
$3.0 million principal balance interest free over a 42 month
period beginning Aug. 1, 2002.
ATSI's working capital position will improve by approximately
$4.0 million, and the Company expects to record a gain on its
income statement during the fourth quarter of its current fiscal
year as a result of the reduction of the obligation.
H. Douglas Saathoff, ATSI's Chief Financial Officer, stated,
"This completes the first step in a series of planned financial
and strategic initiatives. The new agreement with IBM improves
our financial condition, greatly reduces our monthly cash
outflows for debt service going forward, and reduces the amount
of interest expense to be recognized going forward."
ATSI Communications Inc. is an emerging international carrier
serving the rapidly expanding niche markets in and between Latin
America and the United States, primarily Mexico. The Company's
borderless strategy includes the deployment of a "next
generation" network for more efficient and cost effective
service offerings of domestic and international voice, data and
Internet. ATSI has clear advantages over the competition through
its corporate framework consisting of unique licenses,
interconnection and service agreements, network footprint, and
extensive retail distribution. ATSI's Internet software
subsidiary, GlobalSCAPE Inc. (OTCBB:GSCP) --
http://www.globalscape.com-- is focused on the development,
marketing and support of leading content management
applications.
ADELPHIA BUSINESS: Unsecured Panel Taps Kramer Levin as Counsel
---------------------------------------------------------------
The Official Committee of Unsecured Creditors of Adelphia
Business Solutions, Inc., and its debtor-affiliates, obtained
Court permission to retain Kramer Levin Naftalis & Frankel LLP
as counsel for the Committee in the Chapter 11 cases, effective
as of April 5, 2002.
Kramer Levin is to render any legal services as the Committee
may consider desirable to discharge the Committee's
responsibilities and further the interests of the Committee's
constituents in these cases. In addition to acting as primary
spokesman for the Committee, it is expected that Kramer Levin's
services will include, without limitation, assisting, advising
and representing the Committee with respect to the following
matters:
A. The administration of these cases and the exercise of
oversight with respect to the Debtors' affairs including all
issues arising from the Debtors, the Committee or these
Chapter 11 cases;
B. The preparation on behalf of the Committee of necessary
applications, motions, memoranda, orders, reports and other
legal papers;
C. Appearances in Court and at statutory meetings of creditors
to represent the interest of the Committee;
D. The negotiation, formulation, drafting and confirmation of a
plan or plans of reorganization and matters related thereto;
E. Such investigation, if any, as the Committee may desire
concerning, among other things, the assets, liabilities,
financial condition and operating issues concerning the
Debtors that may be relevant to these chapter 11 cases;
F. Such communication with the Committee's constituents and
others as the Committee may consider desirable in furtherance
of its responsibilities; and
G. The performance of all of the Committee's duties and powers
under the Bankruptcy Code and the Bankruptcy Rules and the
performance of such other services as are in the interests of
those represented by the Committee.
The principal attorneys expected to represent the Committee in
this matter and their current hourly rates are:
Mitchell A. Seider $500 per hour
Robert T. Schmidt $450 per hour
In addition, other attorneys and paraprofessionals may from time
to time provide services to the Committee in connection with
these bankruptcy proceedings. The range of Kramer Levin's hourly
rates for Kramer Levin's attorneys and legal assistants is as
follows:
Partners $440-$625
Counsel $435-$440
Associates $210-$435
Legal Assistants $150-$175
Kramer Levin's hourly billing rates are subject to periodic
adjustments to reflect economic and other conditions. (Adelphia
Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
ADVANTICA RESTAURANT: Reports Same-Store Sales for May 2002
-----------------------------------------------------------
Advantica Restaurant Group, Inc. (OTCBB: DINE) reported same-
store sales for company-owned restaurants during the four-week
and eight-week periods ended May 22, 2002, compared with the
same periods in fiscal year 2001.
Four Weeks Eight Weeks
May 2002 QTD 2002
------------ -------------
Same-Store Sales
Denny's 1.3% 0.4%
Coco's (3.1%) (3.7%)
Carrows 1.4% 0.2%
Guest Check Average
Denny's 2.7% 2.5%
Coco's 3.9% 3.5%
Carrows 2.0% 2.3%
Included below are the Company's restaurant counts at the end of
May, compared with year end 2001.
Restaurant Units 5/22/02 12/26/01
------------ -------------
Denny's
Company-owned 591 621
Franchised 1,118 1,114
Licensed 14 14
------------ -------------
1,723 1,749
Discontinued Operations:
Coco's
Company-owned 135 139
Franchised 39 38
Licensed 295 298
------------ -------------
469 475
Carrows
Company-owned 109 112
Franchised 29 30
------------ -------------
138 142
------------ -------------
2,330 2,366
============ =============
Advantica Restaurant Group, Inc. is one of the largest
restaurant companies in the United States, operating over 2,300
moderately priced restaurants in the mid-scale dining segment.
Advantica owns and operates the Denny's, Coco's and Carrows
restaurant brands. FRD Acquisition Co., the parent company of
Coco's and Carrows and a wholly owned subsidiary of Advantica,
is classified as a discontinued operation for financial
reporting purposes and is currently under the protection of
Chapter 11 of the United States Bankruptcy Code effective as of
February 14, 2001. For further information on the Company,
including news releases, links to SEC filings and other
financial information, please visit Advantica's Web site at
http://www.advantica-dine.com
DebtTRaders reports that Advantica Restaurant Group's 11.250%
bonds due 2008 (DINE08USR1) are traded between 79 and 81. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=DINE08USR1
for some real-time bond pricing.
AIR CANADA: Flies 4.1% More Revenue Passenger Miles in May 2002
---------------------------------------------------------------
Air Canada flew 4.1% more revenue passenger miles (RPMs) in May
2002 than in May 2001, according to preliminary traffic figures.
Capacity decreased by 0.3%, resulting in a load factor of 76.4%,
compared to 73.1% in May 2001; an improvement of 3.3 percentage
points.
"The performance on international routes, apart from the US
transborder, was particularly encouraging," said Rob Peterson,
Executive Vice President and Chief Financial Officer.
"Transatlantic traffic rose 5.6 per cent reflecting strong
demand for the United Kingdom after the foot and mouth concerns
of early 2001, while transpacific growth, up 21.8 per cent,
continued to accelerate due to an increase in Air Canada's
market share in addition to robust demand from Japan, China and
Hong Kong."
AMERICAN ENERGY: Ability to Continue Operations Uncertain
---------------------------------------------------------
The American Energy Group, Ltd. has experienced recurring losses
and negative cash flows from operations, which raise substantial
doubt about the Company's ability to continue as going concerns.
The recovery of assets and continuation of future operations are
dependent upon the Company's ability to obtain additional debt
or equity financing, and their ability to generate revenues
sufficient to continue pursuing their business purpose.
Management is actively pursuing additional equity and debt
financing sources to finance future operations and anticipates a
significant increase in production and revenues from oil and gas
production during the coming year.
During the nine months ended March 31, 2002, the Company
received approximately $1,800,000 from various officers,
directors, and shareholders of the Company. The terms of the
promissory notes are still being negotiated.
The Company issued 2,544,768 shares of outstanding common stock
in lieu of debt totaling $1,094,294 at an average price of $0.43
per share, 6,400,000 shares of outstanding common stock in lieu
of debt totaling $640,000 at an average price of $0.10 per
share, 1,000,000 shares of outstanding common stock as a
consulting fee for renegotiating a loan valued at $100,000 or
$0.10 per share, 1,042,082 shares of outstanding common stock in
lieu of accrued penalty fees totaling $180,000 at an
average price of $0.17 per share, and 1,565,217 shares of
outstanding common stock as additional penalty fees totaling
$270,000 at an average price of $0.17 per share.
In the quarter ended March 31, 2002, the Company incurred a net
operating loss of $208,314, with oil and gas sales of $262,484
as compared to a net operating loss of $5,623,886 on oil and gas
sales of $452,872 in the prior fiscal year's quarter ended March
31, 2001. During the quarter ending March 31, 2002, they sold
13,260 barrels of oil net to a Company interest, compared to
16,577 barrels of oil in March of 2001. Net barrels of sales
generated $262,484 and reflect average daily sales of 147
barrels of oil per day ("BOPD"), net after deducting landowner
royalties.
Comparison To Previous Quarter Ended March 31, 2001
As compared with the quarter ending March 31, 2001 in the
previous fiscal year, the Company realized 42% decrease in
revenues from oil sales on average net oil prices which
decreased by 28%. The decrease was due to the decline in oil
prices ($19.76 March 2002 and $27.32 March 2001) which American
Energy attributes primarily to the events of September 11, 2001.
The decline resulted in a reduction in monthly gross revenues
from production. The resulting decline in overall revenues also
materially impaired company ability to schedule and complete
maintenance, reworking and new drilling operations, causing a
decline in monthly gross production volumes.
Including other income, foreign and domestic administrative
expenses, and interest, American Energy Group reported a net
loss of $359,760 in the quarter ended March 31, 2002, versus a
net loss of $5,623,886 in the prior fiscal year's quarter ended
March 31, 2001, resulting in a reduction in net loss of
$5,264,126 from the prior year's comparative quarter. The
substantially higher loss figure for 2001 was based upon an
increase for that period in the Depreciation and Amortization
Expense resulting from the writing off of dry hole costs in
Pakistan of approximately 5.4 million USD.
Recognizing the critical need for additional working capital for
both short term and long term anticipated expenditures in the
foreseeable future, American Energy entered into a Note and
Stock Purchase Agreement on March 31, 2002, with an Investor in
Hamburg, Germany which provided for a loan to the Company and
the purchase of common and Preferred Stock from the Company
totalling $10,000,000.00. The transaction was made subject to
acceptable due diligence performed by the German Investor and
subject to an increase in theCompany's authorized common stock
from the current 80,000,000 shares to 130,000,000 shares. The
transaction was scheduled to be consummated during the fourth
quarter, if not cancelled by either party, and would have
resulted in sufficient new working capital to meet the Company's
projected short term liquidity requirements and foreseeable
expenditures. The transaction has not closed and has not been
scheduled for a closing. The Company is currently in
negotiations with the German Investor to resolve the conditions
precedent to consummation. If not consummated, management of
American Energy believes that the Company does not have the
necessary liquidity to meet its short term or foreseeable
liquidity requirements. American Energy intends to continue to
explore and pursue all available alternative sources of working
capital through potential loans, sales of securities, joint
venture affiliations, and other transactions in order to meet
anticipated near term needs. There is no assurance that these
efforts will prove successful. If unsuccessful, the Company's
domestic programs will face material delays. Additionally, a
lack of success could result in the Company's inability to
discharge or refinance the matured first lien debt on its Texas
oil and gas leases, which could result in the loss of those
leases and the Company's ability to fund future seismic and
drilling requirements in Pakistan, which deficiencies could
result in a default under the Pakistan license obligations and
potential loss of the license.
The American Energy Group, Ltd. (OTC: AMEL) is an independent
oil and gas exploration, drilling, and production company
currently based in Houston, Texas, engaged in international
exploration projects.
AMES DEPT: Court to Consider Reclamation Claims Report Thursday
---------------------------------------------------------------
Ames Department Stores, Inc and its debtor-affiliates ask the
Court to approve their Reclamation Claims Report as well as a
proposed interim distribution to holders of allowed reclamation
claims. The Debtors have completed their review of all the
Reclamation Claims and the Supporting Documents and have
finished their Report, consistent with the Reclamation Claims
Procedure. The Debtors also seek to establish a deadline and
procedures for the filing and service of objections, if any.
Pursuant to the Reclamation Procedures Order, the Debtors have
reviewed and analyzed all of the asserted Reclamation Claims and
Supporting Documents and have prepared the Report which
reflects:
Total Amount of Reclamation Claims $ 12,938,350
Total of Withdrawn Claims 2,127,037
Amount of Claims Already Paid 2,904,569
Total Invalid Claims 4,361,903
Total of Valid Claims 3,544,840
Neil Berger, Esq., at Togut, Segal & Segal LLP in New York, New
York, says that the Debtors have concluded from their review
that the Valid Reclamation Claims totaling $3,544,840 are
entitled to relief pursuant to Bankruptcy Code Section 546(c).
The Report also provides the basis for the Debtors' objections
to certain Reclamation Claims:
A. The claim does not fall within the reclamation period;
B. The goods are not identifiable or in Debtors' possession;
and,
C. Vendor has been paid for the goods.
Given the significant analysis performed by the Debtors
regarding the Reclamation Claims and the opportunity for all
interested parties to review and object to the Report, the
Debtors will request at the conclusion of the Hearing that the
Report be approved for all purposes including, but not limited
to, claim allowance, distributions and plan voting. Mr. Berger
cites these factors supporting an interim distribution to
holders of valid Reclamation Claims:
A. The Reclamation Procedures Order contemplates distribution to
the holders of allowed Reclamation Claims prior to the
effective date of any plan;
B. The Creditors Committee supports an interim distribution to
the holders of valid Reclamation Claims;
C. The GE Capital Credit Agreement and the Final DIP Order
contemplate and authorize the Debtors to make distributions
pursuant to the Reclamation Procedures of up to the lesser of
$6,000,000 or the aggregate amount of payments permitted to
be made by the Debtors under the Reclamation Procedures; and,
D. It is imperative that the Debtors make an interim
distribution to the holders of allowed reclamation claims to
maintain their goodwill and ongoing relationships with
vendors.
According to Mr. Berger, and pursuant to the Reclamation
Procedures Order, creditors are now time-barred from asserting
new Reclamation Claims or attempting to submit Reclamation
Documents in support of their claims. However, because the GE
Capital Credit Agreement contains a $6,000,000 cap for the
amount of distributions that the Debtors make on account of
Reclamation Claims, the Debtors find it prudent to make an
interim distribution at this time to the holders of valid
Reclamation Claims of up to, but not more than, 75% of the
amounts reflected in the Report for each of the valid
Reclamation Claims. The amount of that interim distribution will
not exceed the cap contained in the GE Capital Credit Agreement.
The Debtors reserve the right to make further, additional
interim distributions to the holders of allowed Reclamation
Claims upon entry of a further Order of the Court.
Mr. Berger tells the Court that the Debtors received 107
reclamation demands from various vendors. The vendors were
seeking the return of approximately $12,900,000 in goods shipped
to the Debtors prior to the Commencement Date, as a result of
the commencement of these Chapter 11 cases. Because of the size
and complexity of the Debtors' businesses generally, and in
particular, the volume of inventory receipts and sales, the
Debtors, with the Committee's consent, proposed to establish an
orderly procedure for the review, analysis and ultimate
treatment of Reclamation Claims.
* * *
Judge Robert Gerber scheduled a Hearing on June 13, 2002 to
consider the Report, the proposed Distribution of valid claims
and objections, if any, before the Court. Objections to the
Application or the Report must be filed electronically with the
Clerk of the Court. They must comply with the Bankruptcy Code;
the Bankruptcy Rules; and the Local Bankruptcy Rules for the
Southern District of New York, including, without limitation,
General Order M-182. These objections must be filed and
received by:
A. The Chambers of the Honorable Robert E. Gerber
United States Bankruptcy Court
for the Southern District of New York,
Room 627, New York, New York 10004-1408;
B. Togut, Segal & Segal LLP
Co-counsel for the Debtors
One Penn Plaza, New York, New York 10119
Attn: Albert Togut, Esq. and,
Neil Berger, Esq.;
C. Weil, Gotshal & Manges
Attorneys for the Debtors
767 Fifth Avenue, New York, New York 10153;
Attn: Martin J. Bienenstock, Esq.
D. Otterbourg Steindler Houston & Rosen, P.C.
Attorneys for the Committee
230 Park Avenue, New York, New York 10169
Attn: Scott L. Hazan, Esq.; and,
E. The United States Trustee
33 Whitehall Street, 21st Floor,
New York, New York 10004
Attn: Mary Tom, Esq.;
not later than June 10, 2002. Objections not timely filed and
served in accordance with the foregoing will be forever barred
and waived. (AMES Bankruptcy News, Issue No. 18; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
DebtTraders reports that Ames Department Stores' 10.000% bonds
due 2006 (AMES06USR1) are traded between the prices 1 and 3. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AMES06USR1
for real-time bond pricing.
AQUIS COMMS: Has $34MM Working Capital Deficit at March 31, 2002
----------------------------------------------------------------
Aquis Communications Group, Inc. is a holding company,
incorporated in the State of Delaware. Through its operating
companies, it operated three regional paging systems providing
one-way wireless alpha and numeric messaging services in
portions of sixteen states principally in the Northeast, the
Midwest and the Mid-Atlantic regions of the United States, as
well as the District of Columbia. The Company ceased operations
in the Midwest region concurrent with the sale of all paging
assets there, which was fully consummated in January 2002 with
the release from escrow of the proceeds due in connection with
the settlement of all remaining contingencies between the
parties. Aquis also resells nationwide and regional services,
offers alpha dispatch, news and other messaging enhancements and
resells cellular and two-way paging services. Its customers
include individuals, businesses, government agencies, hospitals
and resellers.
Aquis incurred losses attributable to common stockholders of
about $1.2 and $2.6 million for the three months ended March 31,
2002 and 2001, respectively, and $12.0 and $23.8 million during
each of the years ended December 31, 2001 and 2000,
respectively. These results have caused it to be in default of
its agreement with its senior lender, and in January 2001 the
Company failed to make a required principal repayment of $514
and similar principal amounts payable in subsequent quarterly
installments were also not paid. Further, Aquis has made none of
the monthly interest payments required for any period subsequent
to December 31, 2000, except for a payment of $156,000 made in
March 2002. Aquis has also not paid a $2,000 convertible
debenture payable to AMRO International that matured in October
2001 and is default of the terms of that agreement. AMRO has not
exercised its right to convert that debt into common stock.
Neither FINOVA nor AMRO has exercised their right to demand
payment of the debts due them as the result of Aquis' defaults.
The Company did not redeem its 7.5% Redeemable Preferred Stock
on January 31, 2002 as required, under which the total
obligation was $1,744,000 at March 31, 2002.
The Company's principal source of liquidity at March 31, 2002
included cash and cash equivalents of about $1,646,000 at which
date its working capital deficit totaled $33,888,000 primarily
the result of the reclassification of its term debt to currently
payable. These factors, along with its history of net losses and
expectation of further losses in future periods raise
substantial doubt about the Company's ability to continue as a
going concern, and the auditors' opinion on Aquis' financial
statements for the years ended December 31, 2001 and 2000 is
qualified as the result of these conditions. The Company's
ability to continue as a going concern is dependent on the
continued forbearance of its lenders from demanding immediate
payment of their outstanding loans, its ability to generate
sufficient cash from operations to meet operating obligations,
aside from those under its debt agreements, in a timely manner,
continuing supplies of goods and services from its key vendors,
and an ongoing ability to limit or reduce operating costs and
capital requirements. Forbearance agreements with Aquis' lenders
expired on April 30, 2002. On May 20, 2002, Aquis' Board of
Directors authorized Management to execute negotiated agreements
with its lenders and preferred shareholders that are expected to
result in the restructuring of its debt and equity. The Company
anticipates that these agreements will be fully executed by all
parties shortly.
The Company incurred losses of about $11,950,000, $23,841,000
and $10,879,000 million during the years ended December 31,
2001, 2000 and 1999 respectively. During the quarter ended March
31, 2002, net loss was $1,128,000.
The company offers local and regional paging and wireless
messaging products and services in the mid-Atlantic and
northeastern US. It operates two wireless messaging networks
with more than 340,000 units in service and offers connections
to nationwide providers. Aquis provides two-way messaging
services with cellular, PCS, and Internet access. The company,
formerly Paging Partners, has grown through acquisitions, such
as the paging business of Bell Atlantic (now Verizon) and
SourceOne Wireless. It has sold its Aquis IP Communications
subsidiary, which offered Internet-related products and
services, and has agreed to sell its midwestern operations.
AREMISSOFT: Sets June 28 Hearing to Consider Plan Confirmation
--------------------------------------------------------------
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW JERSEY
In re: ) Civ. Action No. 02-CV-01336 (JAP)
) Honorable Joel A. Pisano
AREMISSOFT CORPORATION, ) Chapter 11
a Delaware corporation, ) Bankruptcy Case No. 02-32621 (RG)
)
Debtor. )
IMPORTANT NOTICE OF HEARING TO CONSIDER
CONFIRMATION OF PLAN OF REORGANRATION
PLEASE TAKE NOTICE that a hearing to consider confirmation
of the Plan of Reorganization of AremisSoft Corporation Jointly
Proposed by the Debtor and SoftBrands, Inc. has been scheduled
before The Honorable Joel A. Pisano, United States District
Court Judge, on
Date: June 28, 2002
Time: 10:00 a.m. (Eastern Daylight Time)
Location: Courtroom 5076
ML King, Jr. Federal Building & Courthouse
50 Walnut Street, Fifth floor
Newark, New Jersey 07101
The hearing may be adjourned from time to time without
further notice (other than by announcement of the adjourned date
or dates at such hearing).
PLEASE TAKE FURTHER NOTICE that a copy of the solicitation
materials relating to the Plan may be obtained upon written
request to, and accompanied by a check in the amount specified
by The. Garden City Group, Inc. to cover cost of duplication and
handling payable to: The Garden City Group, Inc., PO Box 8861,
Melville, New York 11747-8861, facsimile number (631) 940-6544,
Attn: AremisSoft Corporation.
PLEASE TAKE FURTHER NOTICE that the deadline for
submitting ballots to The Garden City Group accepting or
rejecting the Plan is June 24, 2002.
PLEASE TAKE FURTHER NOTICE that any objection to
confirmation of the Plan must be in writing, state with
particularity the grounds for the objection, identify the
particular article or section of the Plan to which such,
objection pertains, and must be filed with the Court at the
address set forth above, and served in a manner so as to be
received, on or before June 24, 2002, at 5:00 p.m. (New York
City time), by:
Davis Polk & Wardwell United States Trustee for the
450 Lexington Avenue District of New Jersey
New York, New York 10017 One Newark Center, Suite 2100
Attn: Stephen H. Case, Esq. Newark, New Jersey 07102
Co-Counsel for AremisSoft Attn: Margaret Jurow, Esq.
Corporation
Wollmuth Maher & Deutsch LLP Dorsey & Whitney LLP
One Gateway Center 50 South Sixth Street, Suite 1500
Newark, New Jersey 07102 Minneapolis, Minnesota 55402
Attn: Paul R. DeFlippo, Esq. Attn: John C. Thomas, Esq.
Go-Counsel for AremisSoft Chris Lenhart, Esq.
Corporation Counsel for SoftBrands, Inc.
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Attn: Hal M. Hirsch, Esq.
Counsel for Official Equity Committee
Dated: May 17, 2002 BY ORDER OF THE COURT
Newark, New Jersey
DAVIS POLK & WARDWELL
- and -
WOLLMUTH MAHER & DEUTSCH LLP
One Gateway Center
Newark, New Jersey 07102
Attorneys for AremisSoft
Corporation
Debtor and Debtor in
Possession
BETHLEHEM STEEL: Fails to Comply with NYSE Listing Standards
------------------------------------------------------------
Bethlehem Steel Corporation (NYSE:BS) announced that prior to
the market opening on Wednesday, June 12, 2002, the New York
Stock Exchange, Inc. will suspend trading of the Corporation's
common stock, $5.00 cumulative convertible preferred stock,
$2.50 cumulative convertible preferred stock and 8.45%
debentures due March 1, 2005.
The NYSE will thereafter commence proceedings with the
Securities and Exchange Commission to delist the issues. The
NYSE reached its decision because Bethlehem has been unable to
comply with the NYSE's continued listing standard requiring an
average closing share price of not less than $1 per share over a
consecutive 30 trading day period.
Bethlehem expects that its common and preferred stock will be
quoted on the OTC (over-the-counter) Bulletin Board beginning on
June 12, 2002 under new ticker symbols. The OTCBB is a regulated
quotation service that displays real-time quotes, last-sale
prices and volume information in OTC equity securities.
Additional information about the OTCBB may be found at
http://www.otcbb.com.In addition, Bethlehem expects that its
debentures will be quoted on the National Quotation Service's
"Yellow Sheets," a centralized quotation service that collects
and publishes market maker quotes for OTC debt. Additional
information regarding the "Yellow Sheets" may be found at
http://www.pinksheets.com
Bethlehem intends to issue a press release when its new ticker
symbols have been assigned. Investors should be aware that
trading in Bethlehem's equity and debt issues through market
makers and quotation on the OTCBB and the "Yellow Sheets" may
involve risk, such as trades not being executed as quickly as
when the issues were listed on the NYSE.
Robert "Steve" Miller, Jr., Chairman and Chief Executive Officer
of Bethlehem said, "We are working with the NYSE to facilitate a
smooth transition to the OTCBB and the 'Yellow Sheets,' and do
not expect the change in trading venue to affect our current
operations or financial performance. We continue to vigorously
pursue strategic alternatives in developing a chapter 11 plan of
reorganization to assure that our excellent steel facilities
that are capable of producing high-quality, low-cost products
remain a key part of the North American steel industry. In
addition, we expect to maintain adequate liquidity through this
year and into next as our business outlook and the steel market
conditions continue to improve."
Bethlehem Steel Corporation is the second largest integrated
steel producer in the United States. On October 15, 2001,
Bethlehem and certain of its subsidiaries filed voluntary
petitions for chapter 11 bankruptcy protection in the United
States Bankruptcy Court for the Southern District of New York
(Case Nos. 01-15288 (BRL) through 01-15302 (BRL) and 01-15308
(BRL) through 01-15315 (BRL)).
DebtTraders reports that Bethlehem Steel Corporation's 10.375%
bonds due 2003 (BS03USR1) are quoted between 10 and 13.5 . See
http://www.debttraders.com/price.cfm?dt_sec_ticker=BS03USR1for
real-time bond pricing.
CSAM HIGH YIELD: Fitch Cuts Cls. B-1 & B-2 Notes to Junk Level
--------------------------------------------------------------
Fitch Ratings has downgraded the following classes issued by
CSAM High Yield Focus CBO Ltd., a collateralized bond obligation
(CBO) backed predominantly by high-yield bonds:
-- $260,301,035 Class A-1 Notes from 'A' to 'BB+';
-- $9,000,000 Class A-2 Notes from 'A-' to 'BB-';
-- $35,000,000 Class B-1 Notes from 'B' to 'CC';
-- $25,000,000 Class B-2 Notes from 'B' to 'CC'.
All classes have been removed from Rating Watch Negative.
According to its most recent monthly trustee report, CSAM High
Yield Focus CBO Ltd.'s collateral includes over $66 million
(18%) defaulted assets. The deal holds another 24% assets rated
'CCC+' or below. The overcollateralization test is failing at
93.087% with a trigger of 115%.
In reaching its rating actions, Fitch reviewed the results of
its cash flow model runs after running several different stress
scenarios. Also, Fitch has had conversations with the collateral
manager regarding the portfolio.
CALPINE: Baytown Energy Center Enters Combined-Cycle Operations
---------------------------------------------------------------
Calpine Corporation (NYSE: CPN), the San Jose, California-based
independent power producer, announced its 830-megawatt Baytown
Energy Center, built near the Bayer Corporation chemical
facility in Baytown, Texas, has entered combined-cycle
operations. As a cogeneration facility, Baytown is supplying
Bayer's chemical plant with all its electricity and steam needs
per a 20-year contract. Sales to Bayer will generate
approximately 50 percent of the Baytown facility's annual
revenue.
The Baytown facility is generating up to 700 megawatts of
electricity under base load conditions, with the ability to
produce an additional 130 megawatts of "peaking" power during
hot summer months, when the demand for electricity in Texas
reaches record-highs. Calpine is marketing the remaining
electric power into the Texas wholesale market under a variety
of short-, mid- and long-term contracts.
"This is the fifth Calpine project to service the needs of a
large industrial customer in the Texas market," said Calpine
Senior Vice President Diana Knox. "We're providing our
industrial and wholesale power customers with a more energy-
efficient, environmentally sound product. In fact, the Baytown
Energy Center will use up to 40 percent less fuel than the
average older technology plants in Texas, generating the
equivalent amount of electricity."
The Baytown Energy Center uses combined-cycle technology and
advanced emissions controls resulting in 96 percent fewer
nitrogen oxide, 99 percent fewer sulfur dioxide and 50 percent
fewer carbon dioxide emissions than the Texas average for power
plants. The Baytown facility will also contribute to the local
economy, providing more than 25 full-time positions, generating
state and local property tax revenue and supporting local
charitable organizations.
Calpine developed and built the Baytown Power Plant using its
Calpine-Construct approach. This is a unique construction
management program whereby Calpine oversees every phase of a
project's development -- including the design, engineering,
procurement and construction of the plant -- to ensure quality
and cost control, while providing maximum design flexibility.
Siemens Westinghouse Power Corporation of Orlando, Florida
supplied three state-of-the-art 501F combustion turbines.
Toshiba International Corporation supplied the steam turbine.
Based in San Jose, California, Calpine Corporation is an
independent power company that is dedicated to providing
customers with clean, efficient, natural gas-fired and
geothermal power generation. It generates and markets power,
through plants it develops, owns and operates, in 21 states in
the United States, three provinces in Canada and in the United
Kingdom. The company was founded in 1984 and is publicly traded
on the New York Stock Exchange under the symbol CPN. For more
information about Calpine, visit its Web site at
http://www.calpine.com
As reported in the April 03, 2002 edition of Troubled Company
Reporter, Standard & Poor's lowered Calpine Corp.'s Credit
Rating to BB due to plans of securing $2 billion in new
financing.
DebtTraders reports that Calpine Corp.'s 8.500% bonds due 2011
(CPN11USR1) are priced between 79 and 81. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CPN11USR1for
real-time bond pricing.
CELERITY SYSTEMS: Posts March Working Capital Deficit of $1.5MM
---------------------------------------------------------------
Prior to 1998, Celerity Systems, Inc.'s major activity was
selling digital video servers in the interactive video services
market. All sales were in Korea, Israel, Taiwan and China.
However, beginning in 1998, the Company focused sales efforts
in North America, and developed and sold the first production
units of a new digital set top box, the T 6000.
Celerity Systems has continued to focus most of its development
and production efforts since 1999 on the T 6000. In addition, it
is seeking new projects using its digital video servers, which
could be deployed with the T 6000 or other compatible set top
boxes. In December 1999, the Company entered into a
manufacturing agreement with Global PMX Company, Limited, which
terminated by Celerity in November 2000. The Company has since
entered into agreements with Nextek, Inc. in Madison, AL and IES
in Gray, TN under which the T 6000 digital set top boxes will be
manufactured.
Management has also focused on attempting to obtain the
necessary capital to maintain operations. The Company is
continuing to seek financing, including possible strategic
investment opportunities or opportunities to sell some or all of
its assets and business, while continuing to pursue sales
oportunities. Celerity has focused sales efforts to those
which, it is believed, have the best chance of closing in the
near term. The Company continues to encounter a longer and more
complex sales cycle than originally contemplated. The lack of
sales or a significant financial commitment raises substantial
doubt about Celerity Systems' ability to continue as a going
concern.
The Company has had recurring losses and continues to suffer
cash flow and working capital shortages. Since inception in
January, 1993 through March 31, 2002 the losses total
approximately $38,579,000. As of March 31, 2002, the Company
had a negative net working capital of approximately $1,508,000.
These factors taken together with the lack of sales and the
absence of significant financial commitment also raises
substantial doubt about the Company's ability to continue as a
going concern.
In the first three months of 2002, the Company received gross
proceeds from private placements of convertible debt totaling
$400,000 and Series D and E Convertible Preferred Stock totaling
$154,000. These funds enabled the Company to operate for the
last few months, however, additional financing will be
necessary to sustain its operations and achieve its business
plan. The Company has also received orders to provide five of
its DigiKnow Digital Education Systems to schools in the
Midwest. However, there can be no assurance as to the receipt
or timing of revenues from operations including revenues from
these contracts or that management will be able to find a
strategic investor or secure the additional financing necessary
to sustain operations or achieve its business plan.
On April 9, 2002, the Company held its Annual Meeting of
Shareholders. The shareholders approved a one-for-twenty reverse
stock split. In addition, the shareholders approved an increase
in the Company's authorized capital stock to 250,000,000 shares
of common stock after taking into account the one-for-twenty
reverse stock split. This reverse stock split became effective
at the close of business on April 24, 2002.
Also on April 24, 2002, the Company entered into a purchase
order financing arrangement with Kidston Communications. Kidston
Communications is controlled by Ed Kidston, a director and
shareholder of Celerity Systems. Pursuant to this arrangement,
Kidston Communications will purchase products and materials from
the Company in sufficient quantities to fill open purchase
orders received by the Company. Upon such purchase, title to
the products and materials needed to fill the open purchase
orders vests in Kidston Communications and are segregated from
the Company's products and materials. The Company is then
responsible for production of the final products to be shipped
to the customers. The purchase price for these products and
materials is the amount of the open purchase orders, less a 15%
discount. If the order is filled after 10 months, then an
interest charge of 1.5% per month will apply. This discount
will be accounted for as an interest expense on the Company's
financial statements. As of April 30, 2002, Kidston
Communications has financed open purchase orders having a value
of $485,941.
In the second quarter of 2002, the Company issued 370,000 shares
of common stock for conversion of Series B Preferred stock and
386,603 shares of common stock for conversion of convertible
debentures, and issued 92,540 shares of common stock as payment
of certain payroll and accounts payable items. Also, in the
second quarter of 2002, the Company granted employees 302,500
options to purchase shares of common stock as compensation for
services provided.
Celerity Systems, Inc. had a net loss of $1,476,255 for the
quarter ended March 31, 2002, compared to a net loss of $722,865
for the same period in 2001.
CINERGY GLOBAL: Reaches Pact to Sell Spanish Assets to ENERGI E2
----------------------------------------------------------------
Cinergy Global Power, Inc., a subsidiary of Cinergy Corp., has
reached an agreement to sell its Spanish renewable assets to
ENERGI E2 A/S (E2), a major Danish generator of power and heat.
Terms of the transaction were not disclosed.
Cinergy Global Power is selling its subsidiary, Cinergy
Renovables Ibericas, S.L. CRISL is a leading developer, owner
and operator of renewable energy plants in Spain with an
operational portfolio of 203 megawatt gross installed capacity.
Cinergy Global Power has a net equity of 93 megawatts. The
assets include wind energy, with smaller interests in biomass
and mini-hydro power.
Cinergy is selling the assets as part of its focus on paying
down debt and restructuring its balance sheet. The acquisition
of CRISL by ENERGI E2 is a result of E2's European expansion
strategy and allows E2 to leverage its competence within
renewable energy in the Mediterranean region. The transaction is
subject to certain conditions.
Cinergy Corp. has a balanced, integrated portfolio consisting of
two core businesses: regulated operations and energy merchant.
Cinergy owns regulated delivery operations in Ohio, Indiana and
Kentucky that serve 1.5 million electric customers and about
500,000 gas customers. In addition, its Indiana regulated
operations own 6,000 megawatts of generation. Cinergy's energy
merchant business is a Midwest leader in low-cost generation
owning 7,000 megawatts of capacity with a profitable balance of
stable existing customer portfolios, new customer origination,
marketing and trading, and industrial-site cogeneration. The
"into Cinergy" power-trading hub is the most liquid trading hub
in the nation.
Cinergy Corp. is being advised by JPMorgan, and ENERGI E2 is
being advised by Dresdner Kleinwort Wasserstein.
CLAXSON INTERACTIVE: Seeking New Financing to Continue Ops.
-----------------------------------------------------------
Claxson Interactive Group, Inc. (Nasdaq: XSON), a multimedia
provider of branded entertainment content to Spanish and
Portuguese speakers around the world, reported financial results
for the three months ended March 31, 2002.
Net revenues for the three months ended March 31, 2002 totaled
$20.1 million, a 30% decrease from pro forma net revenues of
$28.6 million for the first quarter of 2001, due primarily to
the decrease in dollar terms of Argentinean revenues reflecting
a 52% devaluation of the Argentine currency during the first
quarter of 2002, the downturn of the Argentine advertising
market and the restructuring of the Internet operations.
Claxson has experienced operating losses and negative cash
flows, which have also been negatively affected by the
devaluation and economic situation in Argentina where Claxson
has significant operations. In an effort to improve its
financial position, Claxson is taking certain steps including
the disposition of non-strategic assets and the restructuring of
some of its subsidiaries' debt including renegotiation of
applicable covenants. Claxson believes that if these steps are
not successfully completed in a timely manner, it is likely that
its auditors will express a "going concern" opinion in
connection with Claxson's annual report on Form 20-F to be filed
with the Securities and Exchange Commission in June 2002.
"From an operational standpoint, Claxson has made a significant
improvement by reducing this quarter's operating expenses to
less than half the amount of the prior year period and its
operating loss to one ninth of what it was last year," said
Roberto Vivo, Chairman and CEO. "Our earnings before
depreciation, amortization and merger restructuring expenses
have in one year made a complete turnaround from negative to
positive, primarily due to the downsizing of our Internet and
broadband division and our continued efforts to rationalize our
operations throughout the entire company."
Claxson was formed on September 21, 2001 in a merger transaction
which combined El Sitio, Inc., media assets contributed by
Ibero-American Media Partners II, Ltd., and other media assets
contributed by members of the Cisneros Group of Companies. Pro
forma combined financial results for the three months ended
March 31, 2001 are presented as if the merger transaction had
been effected on January 1, 2001. Consolidated financial results
for the three months ended March 31, 2002 and 2001 are also
provided. Historical information for IAMP, El Sitio and the
other assets comprising Claxson is provided in Claxson's
registration statement on Form F-4 as filed with the U.S.
Securities and Exchange Commission, which became effective on
August 15, 2001.
In June 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 142, Goodwill
and Other Intangible Assets (SFAS 142) which requires an initial
impairment test for goodwill and intangible assets. Claxson is
currently evaluating its goodwill to determine if any impairment
charge will result from the adoption of this statement.
Amortization expense for the three months ended March 31, 2001
was $2.5 million. Accordingly, reported net loss as of March
31, 2001 would have been $3.7 million if SFAS 142 had been
adopted as of January 1, 2001.
Claxson's pro forma combined results reflect the aggregate
performance of its business lines: pay television; broadcast
radio and television; and Internet and broadband. Business line
performance highlights are provided as a supplement to this
press release. Claxson also holds an 80.1% equity interest in
Playboy TV International (PTVI), a joint venture with Playboy
Enterprises, Inc. (NYSE: PLA). Claxson does not control PTVI
and therefore its interest in PTVI is not consolidated for
reporting purposes.
On May 17, 2002, Claxson announced that it had sold its 50%
participation in the animation channel Locomotion, a joint
venture between Claxson and The Hearst Corporation, to Canada-
based Corus Entertainment Inc. (NYSE: CJR). During the second
quarter of 2002, Claxson will record a gain of approximately
$6.5 million arising from this transaction. Claxson will
continue to provide certain key services to the channel
including affiliate sales support in Latin America, program
origination and post-production services, among others.
Subscriber-based fees for the three-month period ended March 31,
2002 totaled $9.7 million, which comprised approximately 48% of
total net revenues and represented a 38% decrease from pro forma
subscriber-based fees of $15.6 million for the first quarter of
2001. The decrease is primarily attributed to the impact of the
devaluation of the Argentine currency of $4.5 million due to the
mandatory conversion of all sales contracts to local currency
dictated by the Argentine government. Claxson's basic package
of owned and represented channels reached a total of
approximately 56 million aggregate subscribers as of March 31,
2002 which represents a 26% increase compared to 44.4 million on
March 31, 2001.
Advertising revenues for the three-month period ended March 31,
2002 were $7.3 million, which comprised approximately 36% of
Claxson's total net revenues and represented a 33% decrease from
pro forma advertising revenues of $10.9 million for the first
quarter of 2001. This decrease in advertising revenues in the
first quarter of 2002 was due primarily to a decrease in
Internet advertising revenues of $1.6 million, and a decrease in
pay television advertising of $1.0 million as a result of the
economic situation in Argentina.
Operating expenses for the three months ended March 31, 2002
were $22.2 million, decreasing 53% from pro forma operating
expenses of $47.3 million for the first quarter of 2001, due
primarily to the downsizing of our Internet and broadband
division of $13.3 million, management's continued efforts to
rationalize the operations and the effect of the Argentine
devaluation on the expenses of our Argentine-based subsidiaries.
In addition, operating expenses for the three months ended March
31, 2002 reflect severance costs of $0.7 million resulting from
other post-merger restructuring and integration initiatives,
down from pro forma merger expenses and severance costs of $2.4
million for the three months ended March 31, 2002. As a result,
in spite of the decrease in net revenues, the operating loss was
reduced to $2.1 million for the three months ended March 31,
2002 compared to a pro forma operating loss of $18.8 million for
the first quarter of 2001. .
Net loss for the three months ended March 31, 2002 was $55.4
million, which includes a charge of $46.8 million due primarily
to a foreign exchange loss on certain U.S. dollar denominated
debt held by Claxson's Argentine subsidiary as a result of the
Argentine currency devaluation. Pro forma net loss for the
three months ended March 31, 2001 was $31.9 million, or $1.72
per common share. Subsequent to March 31, 2002, the Argentine
currency has continued to devalue resulting in further exchange
rate losses.
As of March 31, 2002, Claxson had a balance of cash and cash
equivalents of $11.1 million and $115.5 million in debt.
Claxson's working capital deficit reaches $90 million. On April
30, 2002, Imagen Satelital S.A., an Argentina-based Claxson
subsidiary, announced that it will not make an interest payment
of US $4.4 million on its 11% Senior Notes due 2005. Banc of
America LLC, an investment banking firm, has been engaged to
provide financial advice and to assist the company in evaluating
restructuring alternatives.
Playboy TV International
For the three months ended March 31, 2002, Playboy TV
International (PTVI) and its affiliated companies recorded
combined net revenue of $10.4 million, unchanged from net
revenue of $10.5 million for the first quarter of 2001. PTVI
currently distributes Playboy TV, Spice and/or its other branded
networks in 53 countries and 14 languages worldwide. PTVI has
incurred net losses and working capital deficiencies. Unless
PTVI's financial obligations can be restructured, PTVI will
remain primarily dependent on capital contributions from Claxson
to fund shortfalls. Claxson is in the process of taking certain
steps to restructure its capital structure, however, this steps
were not completed prior to the release of PTVI's annual
financial statements. As a result, PTVI's auditors have
expressed a going concern opinion on PTVI's financial statements
for the year ended December 31, 2001.
Nasdaq Update
On February 14, 2002, Claxson received notification from Nasdaq
that its common shares had failed to maintain a minimum market
value of publicly held shares (MVPHS) of $5.0 million for 30
consecutive trading days as required by Nasdaq rules. As a
result of this, Claxson has filed an application to list its
securities in The Nasdaq SmallCap Market.
Claxson (Nasdaq: XSON) is a multimedia company providing branded
entertainment content targeted to Spanish and Portuguese
speakers around the world. The company has a portfolio of
popular entertainment brands that are distributed over multiple
platforms through Claxson's assets in pay television, broadcast
television, radio and the Internet. Claxson was formed through
the merger of El Sitio and assets contributed by members of the
Cisneros Group of Companies and funds affiliated with Hicks,
Muse, Tate & Furst Inc. Headquartered in Buenos Aires,
Argentina, and Miami Beach, Florida, Claxson has a presence in
all key Ibero-American countries and in the United States.
COMDISCO INC: Signs-Up Innisfree M&A as Noticing & Voting Agent
---------------------------------------------------------------
Comdisco, Inc. and its debtor-affiliates seek the Court's
authority to employ and retain Innisfree M&A Incorporated as
their special noticing and voting agent.
Robert E. T. Lackey, the Executive Vice President, Chief Legal
Officer and Secretary of the Debtors, relates that Innisfree is
a proxy solicitation and investor relations firm that has
significant experience assisting large, publicly-traded
companies, including debtors-in-possession with:
(i) matters relating to communications with, and notices to,
debt and equity security holders;
(ii) plan solicitations; and
(iii) the tabulation of ballots with respect to Chapter 11
plans.
The Debtors wish to engage Innisfree to disseminate certain
notices to holders of the Debtors' Securities, and to provide
assistance to the Debtors in connection with all aspects of plan
voting, including timing issues, distribution of the necessary
documents for the vote, and voting and tabulation procedures in
connection with Securities.
Mr. Lackey explains that the Debtors have previously retained
Logan & Company as claims and noticing agent in their cases.
Logan's responsibilities pertain to general noticing, claims
administration, solicitation, and vote tabulation services with
respect to creditors whose claims come from all matters other
than in connection with holding the Debtors' Securities.
Innisfree's responsibilities pertain to the specific noticing,
solicitation, and vote tabulation services with respect to the
holders of the debtors' Securities. Moreover, Logan and
Innisfree have worked together successfully on a number of
large, complex Chapter 11 cases in the past. In addition, Mr.
Lackey asserts that both firms each have unique areas of
expertise, which are mutually exclusive and will ensure that no
efforts will be duplicated.
The Debtors estimate that the number of beneficial holders of
equity is in excess of 54,000 and the number of beneficial
holders of debt is in excess of 3,000. "The successful
dissemination of notices to the beneficial owners of the
Securities on a timely basis will require coordination with
numerous banks, brokerages, agents, proxies or other nominees to
ensure that these entities properly forward notices and other
materials to their customers," Mr. Lackey says. The Debtors
believe that Innisfree's experience makes them well suited to
assist the Debtors with this task.
Furthermore, Mr. Lackey reports that the solicitation of votes
on the Debtors' reorganization plan will necessitate the
forwarding of a disclosure statement, ballots, and related
solicitation materials to the beneficial owners of the
Securities, as well as the accurate recordation and tabulation
of the numerous ballots that are returned by the entities.
Again, the Debtors believe that they can rely on Innisfree's
expertise and experience in the coordination of this process.
Innisfree is expected to provide these services:
(i) providing assistance and advice to the Debtors regarding
all aspects of the plan vote, including timing issues,
voting and tabulation procedures, and documents needed
for the vote with respect to Securities;
(ii) reviewing the voting portions of the disclosure statement
and ballots, particularly as they may relate to
beneficial owners in "street name";
(iii) working with the Debtors to request appropriate
information from indenture trustees, transfer agents, and
the Depository Trust Company;
(iv) mailing various notices and voting documents to holders
of record of the Securities;
(v) coordinating the distribution of voting documents to
"street name" holders of the Securities by forwarding
voting documents to the Nominee record holders of the
securities, who in turn will forward them to beneficial
owners;
(vi) distributing copies of the master ballots to the
appropriate Nominees so that firms may cast votes on
behalf of beneficial owners of securities;
(vii) handling requests for voting documents from any party who
requests them, including Nominee back-offices,
institutional holders, and any other party who may have
an interest in the transaction;
(viii) responding to telephone inquiries from bondholders,
stockholders, and other parties in interest regarding the
disclosure statement and the voting procedures;
(ix) if requested, making telephone calls to a defined group
of securities holders to confirm that they have received
the solicitation materials and to respond to any
questions about the voting procedures;
(x) assisting with any necessary efforts to identify
beneficial owners of the Securities;
(xi) receiving, date and time stamping, and examining all
ballots and master ballots cast by holders of the
Securities; and
(xii) tabulating all ballots and master ballots received prior
to the voting deadline in accordance with established
procedures, and preparing a vote certification for filing
with the Court.
"The Debtors will pay Innisfree's fees and reasonable out-of-
pocket expenses in the ordinary course of business upon the
presentation of detailed invoices," Mr. Lackey says.
Innisfree's fees and expenses are estimated as:
(i) a project fee of $10,000 plus $2,000 for each issue of
public securities entitled to vote on the plan of
reorganization, and $1,500 for each issue of public
securities not entitled to vote on the plan of
reorganization but entitled to receive notice, which
covers the coordination with all brokerage firms, banks,
institutions and other interested parties including the
distribution of voting materials;
(ii) for the mailing to creditors and record holders of
Securities, labor charges at $1.75-$2.25 per voting
package, or an aggregate amount of approximately $4,000-
$5,000 depending on the complexity of the mailing. To
the extent that mailings of additional notices to
registered record holders of Securities will be required,
assuming that labels or electronic data for these holders
will be provided by the indenture trustee, transfer agent
or party maintaining the records, a charge of $.50-$.65
per holder, plus postage will be incurred. In the event
a notice mailing to the "street name" holders of
Securities is required, up to $7,500 will be charged;
(iii) a minimum charge of $4,000 to take up 500 telephone calls
from creditors and security holders within a 30-day
solicitation period. If more than 500 calls are received
within the period, those additional calls will be charged
at $8 per call. Any calls to creditors or security
holders will be charged at $8 per call;
(iv) a charge of $100 per hour for the tabulation of ballots
and master ballots, plus set up charges of $1,000 for
each tabulation element. Standard hourly rates will
apply for any time spent by senior executives reviewing
and certifying the tabulation and dealing with any
special issues that develop;
(v) standard hourly rates will apply for consulting services,
which would include:
(a) the review and development of solicitation materials,
including the disclosure statement, plan, ballots,
and master ballots;
(b) participation in conference calls, strategy meetings,
or the development of strategy relative to the
project;
(c) efforts related to special balloting procedures,
including issues that may arise during the balloting
or tabulation process;
(d) computer programming or other related project data
processing services;
(e) visits to cities outside of New York for client
meetings or legal or other matters;
(f) efforts related to the preparation of testimony and
attendance at Court hearings; and
(g) efforts related to the preparation of affidavits,
certifications, fee applications, invoices and
reports.
(vi) additional out-of-pocket expenses including printing,
messengers, overnight delivery, telephone, copies, and
postage will be charged separately.
(vii) Hourly rates:
Co-Chairman $375
Managing Director $350
Practice Director $275
Director $250
Account Executive $225
Staff Assistant $150
Mr. Lackey further explains that Jane Sullivan, who will head
the engagement for Innisfree, has provided advice and assistance
in over 45 cases.
Jane Sullivan, a Practice Director of Innisfree M&A
Incorporated, in New York, asserts that Innisfree has not
represented and does not represent any creditor or party in
interest in matters adverse to the Debtors' estates. "It is
possible that the firm may have rendered services to certain
creditors or equity interest holders of the Debtors, however, it
is totally unrelated to the Debtors' Chapter 11 cases," Ms.
Sullivan adds.
Ms. Sullivan believes that Innisfree is a "disinterested person"
as defined by Section 101(14) of the Bankruptcy Code.
* * *
The Court authorizes the Debtors to retain Innisfree M&A
Incorporated as their special noticing and voting agent with
respect to the holders of their debt and equity securities.
(Comdisco Bankruptcy News, Issue No. 29; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
COVANTA ENERGY: Wins Okay to Hire Ordinary Course Professionals
---------------------------------------------------------------
Judge Blackshear allows Covanta Energy Corporation and its
debtor-affiliates to hire ordinary course professionals in its
ordinary course of business. Furthermore, Judge Blackshear
directs the professionals to file with the Court within 60 days:
(a) an affidavit certifying that such professional does not
represent or hold any interest adverse to the Debtors or
their estates with respect to the matter on which the
professional is to be employed; and
(b) a completed retention questionnaire.
The Debtors are also mandated not to pay any fees to the
Ordinary Course Professionals until they have served and filed
the retention affidavit and questionnaire.
Pursuant to the Order, the Debtors provide the Court with the
names of additional ordinary course professionals they will
employ:
Professional Firm Services to be Provided
----------------- -----------------------
Appleby Spurling & Kempe Corporate Counsel
Cumberland House
1 Victoria Street
Hamilton, Bermuda
Baker & McKenzie Corporate Counsel
32 Avenue Kleber
BP 2112
75771 Paris, France
Dispacho Albinana & Sinariz Corporate Counsel
De Lezo SL.
c/o Jose Abascal, 58
28003 Madrid, Spain
Felsberg & Associados Corporate and Litigation
Av. Paulista, 1294-2nd Floor Counsel
CEP 01310-915
Cerqueira Cesar-Sao Paulo, Brazil
Guaia Hussey & Kappagli Litigation Counsel
Corrientes Av., 538, 14th Floor
Buenos Aires, Argentina
Johnson Stokes & Master Corporate Counsel
Floors 16-19, Prince's Building
10 Chater Road
Central Hong Kong, P.R. of China
Kerr, Russell and Weber, PLC Litigation Counsel
Dedtroit Cener, Suite 2500
500 Woodward Avenue
Detroit, MI
Lemle & Kelleher, LLP Litigation Counsel
Pan-American Life Center, 2/F
601 Pydras Street
New Orleans, LA
Machenzie Hughes, LLP Litigation Counsel
101 South Salinas Steet
P.O. Box 4967
Syracuse, New York
Melchor, Albinana & Suarez de Lezo Corporate Counsel
c/o Jose Abascal, 58
28003 Madrid, Spain
Raupach & Wollert-Elmendoriff Corporate Counsel
Berliner Allee 61
40212 Dusseldorf, Germany
TEA Deloitte & Touche Corporate Counsel
Cerrito 420 ISO 7 CP. 11
Montevideo, Uruguay
Watson Wyatt Worldwide Actuarial services
Watson Wyatt & Company
80 Williams Street
Wellesly Hills, MA
Willkie Farr & Gallagher Corporate Counsel
21-23 re de la Ville l'Eveque
75008 Paris, France
Winston & Strawn Corporate Counsel on
200 Park Avenue employee benefit plans
New York, New York 10166
(Covanta Bankruptcy News, Issue No. 6; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
DAIRY MART: Couche-Tard Makes $80 Million Bid to Acquire Assets
---------------------------------------------------------------
Alimentation Couche-Tard Inc. (TSE:ATD.A.) (TSE:ATD.B.) has
filed a bid to acquire the assets of Dairy Mart Convenience
Stores, Inc. (Hudson, Ohio), a leading regional convenience
retailing chain with some 450 stores in five Midwestern and
Southeastern States, including Ohio, Kentucky, Pennsylvania,
Michigan and Indiana. Couche-Tard's bid is for approximately
US$80 million in cash (subject to adjustments) and the
assumption of certain liabilities, mainly lease contracts. The
bid covers a substantial majority of Dairy Mart's stores,
including inventory and is also subject to a one-year management
contract whereby Couche-Tard will manage any stores that it does
not acquire with the intention of eventually selling or closing
those stores on behalf of Dairy Mart. This transaction would be
Couche-Tard's second acquisition of importance in the United
States, where it has been present in the Midwest since June 2001
and operates a network of 238 stores today. The transaction
would add approximately CDN$700 million in annual sales.
The bid is conditional on regulatory and legal approvals as
Dairy Mart Convenience Stores, Inc. filed voluntary petitions
under chapter 11 of the U.S. Bankruptcy Code in the United
States Bankruptcy Court for the Southern District of New York on
September 24, 2001. The execution of the bid commences the
auction process required under Section 363 of the U.S.
Bankruptcy Code, in which other interested parties may submit
bids for Dairy Mart. Bidding procedures and deadlines will be
established by the court. Should Couche-Tard's bid be retained,
it will be subject to various standard procedures for the
required approvals and the closing of the transaction, which
could take place in the summer of 2002.
"This transaction would give us an excellent opportunity to
accelerate our business development with a second large, well-
established network in a market where we already have a solid
presence. After slightly over a year in the United States, that
would bring us closer to our objective of one thousand stores
for our first foothold in the U.S. market," indicated Alain
Bouchard, Chairman of the Board, President and Chief Executive
Officer of Alimentation Couche-Tard.
Alimentation Couche-Tard Inc. is the leader in the Canadian
convenience store industry and the ninth-largest convenience
retailer in North America. The Company operates a network of
1,939 convenience stores in Canada and the Midwestern United
States. Some 750 of these stores include gasoline dispensing.
Currently 13,100 people work at Couche-Tard's head office and
throughout the network.
DAIRY MART: Inks Asset Purchase Agreement with Couche-Tard
----------------------------------------------------------
Dairy Mart Convenience Stores, Inc. has executed an asset
purchase agreement through which, subject to bankruptcy court
approval and potential other bids, Alimentation Couche-Tard Inc.
(Couche-Tard), the ninth largest convenience retailer in North
America, would acquire a substantial majority of Dairy Mart's
stores.
Under the terms of the asset purchase agreement, Couche-Tard
would acquire the majority of Dairy Mart's stores for
approximately $80 million in cash (subject to adjustments) and
the assumption of certain liabilities. Couche-Tard will also
manage any stores that it does not acquire, with the intention
of eventually selling or closing those stores on behalf of Dairy
Mart. Couche-Tard has indicated it intends to hire all of Dairy
Mart's store-level employees and a majority of non-store level
employees.
Gregory G. Landry, president and chief executive officer of
Dairy Mart, said, "Couche-Tard is a strategic, well-capitalized,
growth-oriented operator of convenience stores. Once final, this
agreement can accelerate the progress already made by the
hardworking people of Dairy Mart. This agreement speaks to the
success of our employees' efforts, and to the essential
viability and value of our business and the Dairy Mart brand
name."
The execution of this agreement commences the auction process
required under Section 363 of the U.S. Bankruptcy Code, in which
other interested parties may submit bids for Dairy Mart. Under
the proposed bidding procedures, other interested parties may
submit competing bids through Dairy Mart's investment banker,
Houlihan, Lokey, Howard & Zukin. Although bidding procedures and
deadlines have not yet been established by the court, Dairy Mart
anticipates that an auction will be held for qualified bidders
sometime in late July or early August, with a closing soon
thereafter.
Landry said that the purchase agreement with Couche-Tard has
received the approval of Dairy Mart's Board of Directors and
support from Dairy Mart's Official Committee of Unsecured
Creditors.
Upon closing of the sale, a portion of the proceeds will be used
to retire the company's debtor-in-possession (DIP) loan facility
and the remaining proceeds will be used to fund other creditor
and administrative claims. The company expects that recoveries
associated with this transaction will not result in any
recoveries to shareholders.
As previously announced, Dairy Mart and substantially all of its
subsidiaries filed voluntary petitions for protection under
chapter 11 of the U.S. Bankruptcy Code in the United States
Bankruptcy Court for the Southern District of New York on
September 24, 2001. Since that time, Dairy Mart and its advisors
have continued to pursue strategic alternatives with which to
maximize value in the company. During the chapter 11 process,
Dairy Mart and its stores continue to operate normally.
Alimentation Couche-Tard Inc. is the leader in the Canadian
convenience-store industry and the ninth-largest convenience
retailer in North America. The Montreal-based company operates a
network of 1,955 convenience stores in Canada and the Midwestern
United States. Some 750 of these stores include gasoline
dispensing. Currently 13,100 people work at Couche-Tard's head
office and throughout the store network.
Dairy Mart Convenience Stores, Inc. owns or operates
approximately 450 retail stores in five states located in the
Midwest and Southeast. For more information, visit Dairy Mart's
Web site at http://www.dairymart.com
COLONIAL COMMERCIAL: Violates Nasdaq Listing Requirements
---------------------------------------------------------
Colonial Commercial Corp. (Nasdaq:CCOME) (Nasdaq:CCOPE) has
received a Nasdaq Staff Determination that the Company failed to
timely file its Form 10-Q for the quarter ended March 31, 2002,
as required by Nasdaq Marketplace Rule 4310(C)(14), and that the
Company's securities are therefore subject to delisting from the
Nasdaq SmallCap Market.
At a hearing before a Nasdaq Listing Qualifications Panel on May
16, 2002 the Company asked for a review of prior Nasdaq Staff
Determinations that the Company's securities were subject to
delisting from the Nasdaq SmallCap Market because the Company
had not filed its Form 10-K for 2001, the market value of its
publicly held shares of common stock was less than the required
$1 million, and the closing bid price of its common stock was
less than $1 per share. The Panel may or may not grant the
Company's request for continued listing. In making its
determination the Panel will also consider the Company's failure
to timely file its Form 10-Q for the quarter ended March 31,
2002.
The Company has not filed its Form 10-K and its Form 10-Q
because completion of its audit for 2001 has been delayed by
Chapter 11 reorganization proceedings of its wholly owned
subsidiary, Atlantic Hardware & Supply Corporation. The Company
expects that it should be in a position to file its Form 10-K
and its Form 10-Q shortly once its audit is completed.
ENRON: Examiner Seeks to Retain Alston & Bird as Legal Counsel
--------------------------------------------------------------
Enron Corporation Examiner, Neal Batson, seeks the Court's
authority to retain Alston & Bird LLP as his legal counsel in
these Chapter 11 cases, nunc pro tunc to May 28, 2002.
Mr. Batson expects Alston & Bird to:
(a) take all necessary actions to assist the Examiner in his
examination;
(b) prepare on behalf of the Examiner all reports, pleadings,
applications and other necessary documents in the
discharge of the Examiner's duties;
(c) assist the Examiner in the other tasks that may be
directed to be undertaken by the Court; and
(d) perform all other necessary legal services in connection
with the Case.
In return for its services, Alston & Bird will be compensated
pursuant to its standard hourly rates, which are subject to
periodic adjustments to reflect economic and other conditions:
Partners $330-620
Counsel 275-550
Associates 170-375
Paraprofessionals 105-235
It is the firm's policy to charge its clients in all areas of
practice for all expenses incurred in connection with the
client's cases. The expenses charged to clients include, among
other things, long distance telephone charges, telecopier
charges, mail and express mail charges, special or hand delivery
charges, document processing, photocopying charges, travel
expenses, computerized research, transcription costs, as well as
non-ordinary overhead expenses like secretarial and other
overtime.
Steven M. Collins, Esq., a partner at Alston & Bird LLP, assures
the Court that the firm does not have an interest materially
adverse to the interest of the estates or of any class of
creditors or equity security holders, by reason of any direct or
indirect relationship to, connection with, or interest in, the
Debtors or an investment banker. But Mr. Collins admits that
Alston & Bird may have represented in the past and may currently
represent or in the future represent, creditors of Debtors and
parties in interest in the Case in matters unrelated to the
Case.
Mr. Collins tells the Court that Alston & Bird has agreed that
it will not undertake the representation of Enron and related
entities during this engagement, as well as any party in
connection with the Case. The firm will also withdraw its
current representation of certain members of the Unsecured
Creditors' Committee and other related parties in these Chapter
11 cases. "Alston & Bird will take steps to assure the
protection of confidential information, to permit the Examiner's
work to proceed in an unimpeded fashion, and to comply with
applicable law," Mr. Collins says.
Objections to Mr. Batson's Application, if any, are due June 14,
2002. If no objections are filed, the Application is granted.
Otherwise, Judge Gonzalez will hear those objections on June 20,
2002, at 10:00 a.m. or at another date and time as may be fixed
by the Court. (Enron Bankruptcy News, Issue No. 31; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ENRON CORP: Wants Approval of Cap Gemini Outsourcing Agreement
--------------------------------------------------------------
Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York,
relates that the Enron Companies' Integrated Solutions Center
provides technical and functional support for the SAP system
that supports, with the exception of a few joint ventures, all
debtor and non-debtor Enron entities. Ms. Gray notes that the
SAP system encompasses the software that the Enron Companies use
to run their vital business support functions, like accounting,
purchasing, and payroll. According to Ms. Gray, the ISC
operations provide support to the Enron Companies in critical
areas including, but not limited to:
-- general ledger,
-- accounts payable,
-- financial reporting,
-- purchasing,
-- project management,
-- payroll, and
-- asset management.
In addition, Ms. Gray says, Enron is contractually obligated to
provide SAP system support to two third parties:
(1) UBS Warburg, and
(2) Northern Natural Gas.
Ms. Gray explains that without the critical accounting and
business support functions supported by the SAP system, the
Enron Companies would have:
(1) substantial difficulty in recognizing revenue and
managing cash,
(2) would be practically unable to operate their businesses,
and
(3) would, accordingly, experience a significant loss in
value.
For instance, Ms. Gray illustrates, the Enron Companies would be
unable to pay their employees or vendors and would not be able
to purchase goods to support their business operations. Thus,
Ms. Gray asserts, it is imperative that the ISC continue to
function at a level of service that will enable the Enron
Companies to continue to operate effectively.
But since the Petition Date, a lot of ISC personnel resigned.
What used to be a company with 134-strong workers had only 27
remaining employees as of April 19, 2002. "The ISC continues to
rapidly lose employees who support the Enron Companies'
accounting, payroll, and procurement systems," Ms. Gray tells
the Court. As employees continue to leave, Ms. Gray says, they
are replaced with far more expensive contractors who are
unfamiliar with the Enron Companies' businesses. There are
currently 19 contractors performing Core Services in the ISC.
Ms. Gray points out that the Debtors are still at risk for
further defection of ISC employees. "These skilled employees,
who are uncertain of their job security at Enron, are likely to
seek out employment with other employers that are not currently
in bankruptcy," Ms. Gray explains.
For these reasons, the Debtors seek to enter into an outsourcing
arrangement with Cap Gemini Ernst & Young U.S. LLC for the
operation of the Enron Companies' business support systems in
the ISC. As part of this transaction, Ms. Gray reports that Cap
Gemini will extend offers of employment to Enron's current ISC
employees and replace certain of the contractors currently
providing these accounting support services to the Enron
Companies. "Once the Agreement becomes effective, Cap Gemini
will perform the ISC function for the Enron Companies," Ms. Gray
says.
Under the Agreement, Cap Gemini will, among other things:
(a) Perform Core Services, including systems analysis,
software integration, software maintenance and
enhancement, testing, release management, SAP help desk
and related software support services;
(b) Make Additional Services available, including providing
additional professional staff to respond to Service
Requests, and providing additional software applications
support and minor enhancement Services through Cap Gemini
personnel staffed at its Kansas City Service Center;
(c) Extend offers of employment to substantially all current
Enron eligible employees in the ISC and add 1-3
leadership and support personnel;
(d) Replace at least 1 contractor per month, effectively
capping the Enron's year-one ISC personnel cost at
$10,140,000 (assuming the ISC remains constant or
decreases the cost of contractors not yet replaced); and
(e) Maintain or improve current ISC service levels.
Ms. Gray relates that Cap Gemini is already familiar with the
Enron Companies' ISC as a result of having two contractors
currently providing services to the Enron Companies and having
provided primary assistance in implementing the SAP system.
"Although the Debtors will retain contracts with other existing
contractors until Cap Gemini replaces the contractors, Cap
Gemini incentives under the Agreement are designed to accelerate
replacement of contractors and reduce costs to the Debtors," Ms.
Gray explains.
Under the Agreement, Ms. Gray says, Cap Gemini will provide Core
Services using a baseline staff of 52.7 full time personnel at a
monthly fee ranging from $384,101 to $646,935. The monthly fees
for Services increases as each contractor is replaced with Cap
Gemini personnel, and is subject to other adjustments.
The initial term of the Agreement expires on February 28, 2003,
and will continue in effect for successive one-year terms unless
one party gives written notice of the expiration of the
Agreement at least 30 days prior to the expiration of the then-
current term.
By entering into the Agreement, Ms. Gray estimates that the
Enron Companies will avoid costs of $1,800,000 in the first year
alone. Ms. Gray points out that the departure of one employee
results in a cost savings of approximately $8,231 per month,
while replacing that employee with a contractor leads to an
estimated monthly cost increase of $23,625. The cost
differential for replacing an employee with a contractor is
approximately $15,393 per month. "If one employee resigns each
month for the next 12 months, the ISC's costs will increase
almost $1,800,000 from its current projected personnel cost of
$8,900,000," Ms. Gray speculates. And even if no other Enron
employees resign, Ms. Gray says, next year's cost increase will
be $2,200,000 higher.
"Equally important is that the Enron Companies' key business
support systems are at risk as "knowledge capital" continues to
depart," Ms. Gray adds. Some of the key skills lost as
employees continue to leave include:
(i) functional support for the general ledger and for
financial reporting, and
(ii) knowledge of BASIS and ABAP, which are technical
"languages" used for technical system support, writing
interfaces, reporting functions, and other similar
functions.
By entering into the Agreement, Ms. Gray notes, the Enron
Companies will not lose employees who already possess knowledge
not only of the Enron Companies' SAP systems, but also of the
nature of the Enron Companies' businesses, because Cap Gemini
will make offers of employment to eligible Enron employees in
the ISC.
Thus, the Debtors seek the Court's authority to enter into the
Outsourcing Agreement. (Enron Bankruptcy News, Issue No. 31;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ENRON CORP: Four Long-Standing Directors Resign from Board
----------------------------------------------------------
Enron Corp.'s (ENRNQ) Board of Directors announced key steps in
furthering the planned transition of the membership of the Board
to one composed of new independent directors. At a Board meeting
today, the Board unanimously accepted the resignations,
effective Thursday, june 6, 2002, of the four remaining long-
standing directors, Robert A. Belfer, Norman P. Blake, Dr. Wendy
L. Gramm and Herbert S. Winokur, Jr. The Board also unanimously
adopted resolutions electing Raymond S. Troubh as interim
chairman of the Board and expressing unanimous support for the
election of three candidates as new independent directors,
pending a response on the three candidates from the company's
Creditors' Committee, to whom the names were previously
submitted pursuant to an established protocol.
The Board announced in February 2002 its intent to conduct an
orderly transition to a Board composed of new, independent
directors. Thursday's resignations complete that process.
Two long-standing directors, Messrs. Blake and Winokur, have
indicated their willingness to serve as unpaid advisory
directors to provide continuity of information to the Board in a
brief transition period, if and as requested.
The Board Resolutions implementing these changes read:
Resolutions Unanimously Approved by the
Board of Directors of Enron Corp.
at a Meeting held on June 6, 2002
Resolution
WHEREAS, the Board of Directors of Enron Corp., an Oregon
Corporation, has had an objective to reconstitute the Board in a
prompt and orderly manner to a Board composed, at a minimum, of
a majority of new independent Directors and, preferably,
composed entirely of new independent Directors; and
WHEREAS, in February 2002, the Board established a protocol
with the Creditors' Committee of the Company to provide for the
Creditors' Committee to review, interview and, if it elects,
object to a candidate for Board membership prior to election of
such candidate; and
WHEREAS, the Board and the Restructuring Committee of the
Board have been engaged in an extensive process to identify and
consider highly qualified candidates as prospective members of
the Board representing a range of talents, expertise and
experience to benefit the Company; and
WHEREAS, in partial furtherance of its objective, the Board
has elected three new independent Directors in John A.
Ballantine, Corbin A. McNeill, Jr., and Raymond S. Troubh, and
the three individuals are currently serving as Directors; and
WHEREAS, the Restructuring Committee of the Board has
reviewed with the Board the outstanding credentials and
accomplishments of three additional highly qualified candidates
for new independent members of the Board and has recommended the
three candidates for election as members of the Board; and
WHEREAS, information on the three candidates has been
provided to the members of the Creditors' Committee pursuant to
the previously established protocol and the Creditors' Committee
has not advised the Board that it has concluded its process for
determining that it had no objections to the candidates or of
the outcome of such process, if concluded, and, previously had
indicated that it did not intend to complete such process;
WHEREAS, the four remaining long-serving Directors of the
Company, in light of their concurrence in the objective of
reconstituting the Company's Board and stated belief that the
search process for highly qualified new independent Directors
has been successfully concluded, have submitted their
resignations, effective at the close of business today; and
WHEREAS, two long-standing Directors, Norman P. Blake and
Herbert S. Winokur, Jr., have indicated their willingness to
serve as unpaid Advisory Directors to provide continuity of
information to the Board for a brief transition period, if and
as requested;
NOW, THERFORE, IT IS RESOLVED that, Raymond S. Troubh be
elected interim Chairman of the Board; and
FURTHER, the Board hereby expresses its unanimous support
for the election of three candidates previously identified and
reviewed as new independent Directors;
WHEREAS, the Board also believes that a newly constituted
Board of the Company composed of the three elected new
independent Directors and the three candidates currently
recommended for election would serve the best interests of the
Company and its relevant constituencies, and that electing the
three candidates promptly also would serve such interests;
FURTHER, the Board expresses the unanimous concurrence of
the Directors that the three candidates would have been elected
as Directors to the Company at this meeting had the Creditors'
Committee chosen to complete its process for determining that it
had no objections to the proposed candidates and had, indeed,
had no objections;
FURTHER, it is resolved that the minutes of the June 4,
2002 meeting of the Restructuring Committee and the June 6, 2002
Board Meeting shall be circulated to the resigning members for
their comments, and the text of this resolution (including all
WHEREAS clauses) and any comments of the resigning members and
continuing members of the Board shall be reflected in haec verba
in the minutes of the meetings.
Resolution
WHEREAS, at a meeting held on February 12, 2002, the Board
stated its intent to effect an orderly reconstitution of the
membership of the Board, including a reduction in the number of
Directors to nine members to be effective on March 14, 2002; and
WHEREAS, following the resignations from the Board of one
Director effective February 14, 2002 and of six Directors, as
planned, effective March 14, 2002, and the election of three new
independent Directors and the resignations, as planned, of two
Directors on May 31, 2002, a total of seven Directors currently
serve and two vacancies currently exist; and
WHEREAS, in light of the resignations of four remaining
long-standing Directors to be effective at the end of the
meeting of the Board held on June 6, 2002;
IT IS RESOLVED, that the number of Director seats
comprising the Board is hereby modified to a variable number to
be determined by the maximum number of seats that would allow a
quorum to be filled by the attendance of all elected Directors,
so long as the total number of Director seats is nine or less
total seats.
DebtTraders reports that Enron Corp.'s 9.125% bonds due 2003
(ENRON2) are quoted between the prices 12.5 and 13.5 . See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRON2for
real-time bond pricing.
EXIDE TECH: Daramic Demands Prompt Decision on Supply Contracts
---------------------------------------------------------------
Daramic Inc., moves for an order compelling Exide Technologies
and its debtor-affiliates to immediately assume or reject
various supply Contracts.
According to Francis A. Monaco, Esq., at Walsh Monzack & Monaco
P.A. in Wilmington, Delaware, Daramic and the Debtors entered
into certain supply contracts. These supply contracts -- which
have been delivered to the Court under seal to keep them out of
public view -- consist of:
A. An agreement entered into on December 15, 1999, entitled,
upon amendment in July 2001, the "North American, Australian
and New Zealand Supply Agreement for Automotive Separators".
The Agreement, in general, is a requirements contract in
which the Exide Entities agreed to purchase 100 % of the
separators required to manufacture batteries in the Exide
Entities' facilities in North America, Australia and New
Zealand with that amount having a guaranteed minimum;
B. An agreement entered into in July 2001, entitled the "Golf
Cart Separator Supply Contract". The Agreement, in general,
is a requirements contract in which the Exide Entities agreed
to purchase 100% of the separators required by the Exide
Entities to manufacture golf cart batteries on a worldwide
basis to the extent Daramic produced those separators that
were equal or superior in performance to competing
separators; and
C. An agreement entered into on January 1, 1996, entitled, upon
amendment in July 2001, the "Automotive and Industrial Supply
Agreement". The Agreement, in general, is a requirements
contract in which the Exide Entities agreed to purchase 100%
of the separators required by the Exide Entities on a
worldwide basis:
1. to the extent Daramic produced separators of a
specification required by the Exide Entities and
2. with the exception of separators covered by the GCS
Agreement or the NA Agreement.
Mr. Monaco informs the Court that each of the Supply Contracts
expires on December 31, 2009. Termination of any of the Supply
Contracts requires written consent from both Daramic and Exide
Technologies, or a material, uncured breach by either party.
Almost all of the Exide Separators are produced to
specifications peculiar to the requirements of the Exide
Entities in that, other than the Exide Entities, there is
virtually no market for separators manufactured to the
specifications of the Exide Separators.
Pursuant to and in reliance upon the Supply Contracts, Mr.
Monaco relates that Daramic has spent, and continues to spend,
in excess of $100,000 per month to develop Exide Separators
based on new specifications, develop improved materials and
patterns for use in the Exide Separators, conduct other research
and development for the benefit of the Exide Entities, expand
and maintain production capability to meet the production
requirements of the Exide Entities, and to retool its machinery
to produce a universal separator that will greatly reduce the
Exide Entities' costs of battery production. Daramic continues
to carry significant amounts of Exide specific inventory to meet
Exide's next day requirements.
Mr. Monaco states that the Debtors use a form of (nearly)
Just-In-Time inventory management to reduce their inventory
carrying costs. In order to meet this requirement, and because
Daramic cannot produce Exide Separators on a short notice,
Daramic must maintain large amounts of Exide Separators of all
types in sufficient quantities to meet the varying daily demands
of the Exide Entities. Pursuant to and in reliance upon the
Supply Contracts, Daramic continues to produce and maintain
these high levels of inventory at considerable expense.
Because of the volume commitments contained in the Supply
Contracts and the long-term nature of the Supply Contracts, Mr.
Monaco claims that the Exide Entities are currently enjoying the
benefit of below market pricing specified in the Supply
Contracts. Daramic estimates that the benefit to the Exide
Entities and the detriment to Daramic of this favorable pricing
exceeds $500,000 per month. The Exide Entities are failing to
fulfill minimum purchase provisions of the Supply Contracts. The
Supply Contracts require the Exide Entities to compensate
Daramic for failure to make the minimum required purchase. At
current purchasing levels, Daramic will have accrued an
administrative expense claim of approximately $6,000,000 by the
end of the year.
Mr. Monaco adds that the Supply Contracts also include numerous
other favorable terms benefiting the Exide Entities which are
better than those offered to other customers. For example,
Daramic offers the Exide Entities extended payment terms beyond
that customary in the industry. The favorable pricing and sales
terms extend not only to the Exide Entities' North American
operations, but also to their facilities around the world.
Pursuant to the Supply Contracts, Daramic also granted favorable
pricing and payment terms to the other non-U.S. Exide Entities.
As of the Petition Date, Mr. Monaco submits that the Debtors
owed Daramic approximately $11,200,000 under the Supply
Contracts for which it has not been paid. Approximately
$1,600,000 of this amount consists of "up-charges," from the
2001 contract year. This shortfall resulted in an increase in
the price of separators purchased by the Exide Entities in the
2002 contract year. In addition to the $11,200,000 owed to
Daramic by the Debtors, as of May 13, 2002, Daramic is also owed
approximately $7,500,000 by the non-debtor Exide Entities, of
which approximately $700,000 is past due.
Mr. Monaco notes that Daramic is by far the largest unsecured
trade creditor of the Debtors. The prepetition debt owed to
Daramic is almost three times the amount owed to any other trade
creditor, even though the cost of separator material constitutes
a relatively small part of the Exide Entities' total raw
material costs. The separator cost is typically 3 to 5 % of the
total manufacturing cost of a battery. Other raw materials
constitute a significantly higher proportion of the total
battery cost.
Mr. Monaco explains that the reason for Daramic's extremely high
exposure, despite its relatively small portion of the Exide
Entities' total raw material costs, is that Daramic further
extended its credit terms to the Exide Entities beyond the
already favorable terms prescribed in the Supply Contracts in an
effort to assist the Exide Entities avoid bankruptcy. This
forbearance on the part of Daramic was based in large part on
the verbal assurances from Exide's Acting CFO and Chief
Restructuring Officer, Ms. Lisa Donahue, of Jay Alix &
Associates, that Daramic was indeed Exide's most critical
vendor. Ms. Donahue repeatedly affirmed Exide's intentions to
pay all invoices from Daramic should Exide ultimately file
chapter 11, through a critical vendor set-aside that would be
requested. Daramic has recently learned that the Exide Entities
no longer intend to make payment in full to Daramic from their
critical vendor set-aside as approved by the Court.
Since entering into, and in reliance upon, the Supply Contracts,
Mr. Monaco contends that Daramic has expanded its production
capacity at a cost of over $50,000,000 in order to meet the
minimum volume requirements of the Exide Entities set forth in
the Supply Contracts and particularly the North America
Agreement. Daramic's Corydon, Indiana, facility was purchased in
reliance upon the Supply Contracts, and in excess of 75% of the
facility's production is devoted to the production of Exide
Separators. Daramic continues to fully staff these facilities
and pay the carrying and maintenance costs associated with them.
Mr. Monaco tells the Court that Daramic is currently in the
process of negotiating new contracts with its primary labor
unions at both of its U.S. manufacturing facilities, as well as
its primary European manufacturing facility. These contract
renewals and the terms to which Daramic is willing to agree are
based largely on whether the Exide Entities affirm or reject the
Supply Contracts. Approximately 75% of the volume produced at
one of the two Daramic North American facilities is dedicated to
Exide Entities' North American requirements. The other
facilities produce large volumes of product for Exide as well.
Mr. Monaco maintains that the Supply Contracts are executory
contracts. With respect to the Automotive & Industry Agreement
and the North America Agreement, the Exide Entities have an
ongoing duty to purchase 100% of its worldwide separator
requirements from Daramic to the extent Daramic makes a
separator meeting the Exide Entities' specifications; likewise
and to the extent Daramic makes separators meeting the Exide
Entities' specifications, Daramic has an ongoing duty to sell to
the Exide Entities a sufficient number of separators to meet
100% of their worldwide separator requirements. With respect to
the Golf Cart Agreement, each party has a good faith obligation
to qualify Daramic's existing polymer-based golf cart battery
separators for use by the Exide Entities. Once any of Daramic's
separators are qualified by the Exide Entities, the parties have
the same crossing obligations to purchase and sell as in the
Automotive & Industry Agreement and the North America Agreement.
Failure of either the Exide Entities or Daramic to perform any
of these obligations would constitute a material breach excusing
performance by the other.
Until the status of the Supply Contracts is resolved, Mr. Monaco
avers that Daramic will have to consider whether it will
continue to spend money to expand and improve the Exide
Separator line of products, work with the Exide Entities in
developing, for example, a universal separator that should
reduce the Exide Entities' production costs, or produce and
maintain line item inventory levels necessary to support Exide's
just-in-time inventory requirements. Daramic currently spends in
excess of $100,000 per month in retooling and research and
development related to future production that can only be
recouped if the Supply Contracts are assumed. For example,
Daramic has developed and recently presented to Exide various
research, development, and support projects which, upon
implementation, have the potential to save Exide $4,000,000-
7,000,000 per year. Daramic believes it to be in both parties'
interests to either assume or reject the Supply Contracts as
soon as possible so that Daramic may either continue improving
the Exide Separators or cease committing money to projects
having no future.
Mr. Monaco avers that there are no safeguards to protect any
further investments of this type by Daramic. The Debtors should
be required to assume or reject the Supply Contracts immediately
because Debtors' assumption of the Supply Contracts assures the
Debtors of continued research and development support for their
benefit or, conversely, stops otherwise wasted expenditures by
Daramic. Further commitment of funds to research and development
will harm Daramic if the Supply Contracts are ultimately
rejected, and Daramic will protect its interests accordingly.
Mr. Monaco points out that Daramic is currently in the process
of negotiating new contracts with its primary labor unions at
both of its U.S. manufacturing facilities, as well as its
primary European manufacturing facility. The results of these
negotiations will affect the lives of these workers and the
future operations of Daramic and, potentially, the Exide
Entities for years to come. Until the status of the Supply
Contracts is resolved, Daramic will have insufficient
information with which to make informed decisions as to the
number of workers it will require or the benefits and
compensation to pay them. Daramic believes it is in both
parties' interests to either assume or reject the Supply
Contracts immediately to avoid the potential harms that Daramic
may contract for a workforce that subsequently has no work to
perform or that Daramic lays off a workforce that Daramic and
the Exide Entities require to meet the Exide Entities'
production needs. If the Court does not require the Exide
Entities to assume or reject the Supply Contracts very
soon, Daramic will be forced to negotiate with the unions
without the most critical piece of information it requires, and
there are no safeguards for either Daramic or the Exide Entities
in the event Daramic makes the wrong decision because it lacked
this information.
Because the volume of orders for Exide Separators had decreased
even before the Petition Date, Mr. Monaco claims that Daramic
has considerable excess capacity allocated to the Exide
Entities. Because of its obligation to provide the Exide
Entities with minimum quantities of Exide Separators, Daramic is
holding open excess capacity that could be used to manufacture
separators for other customers. In addition, Daramic cannot
effectively market its separators to other large-volume users
because it cannot be sure whether the excess capacity will be
required upon assumption of the Supply Contracts or not. Daramic
is harmed because of the real costs of maintaining a less than
fully utilized workforce and the opportunity costs of
maintaining excess capacity. In addition, Daramic is harmed
because it is not able to market to other large-volume users on
a long-term contract basis, which these potential customers
would require for supply security. There are no safeguards to
protect Daramic's interests with respect to this issue.
Because of the volume commitments contained in the Supply
Contracts and the long-term nature of the Supply Contracts, Mr.
Monaco asserts that the Exide Entities are currently enjoying
the benefit of below market pricing specified in the Supply
Contracts. The Exide Entities are failing to fulfill minimum
purchase provisions in the Supply Contracts, and Daramic
estimates that the benefit to the Exide Entities and the
detriment to Daramic of this favorable pricing exceeds $500,000
per month based on current purchasing volumes. The Supply
Contracts require the Exide Entities to compensate Daramic for
failing to make the minimum required purchase. Unless, in the
second half of the year, the Exide Entities significantly
increase the actual purchase volume of Exide Separators, the
shortfall will create an unpaid administrative expense claim of
approximately $6 million by the end of the year. Since there is
no assurance this claim will be paid, Daramic is not adequately
protected. It is unfair to allow the Exide Entities to enjoy the
benefits of this below market pricing post-petition, and then to
allow them to reject the Supply Contracts months later.
The Automotive & Industry Agreement and the Golf Cart Agreement
gives the Exide Entities exclusive purchasing rights on any new
separators developed by Daramic. Mr. Monaco relates that the
exclusive purchase period runs for six months from the time the
Exide Entities have conducted a qualification study, which
itself may last well over six months. Thus, the Exide Entities
may, at their option, prevent Daramic from offering new
separator products to third parties for at least one year.
Daramic has developed new products for which the Exide Entities
would have exclusive purchase rights. Daramic will be greatly
harmed if the Exide Entities enforce the exclusive purchasing
arrangement in the near term but ultimately reject the Supply
Contracts because Daramic will be prevented from offering these
products to third parties for at least one year and, as a
result, may lose valuable sales opportunities and potential
market share. There are no safeguards to protect Daramic's
interests with respect to this issue. (Exide Bankruptcy News,
Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900)
EXODUS COMMS: Secures Court Approval of Second Amended Plan
-----------------------------------------------------------
Judge Robinson confirms Exodus Communications, Inc.'s and it
debtor-affiliates' Second Amended Chapter 11 Plan after finding
that the Plan satisfies the provisions of the Bankruptcy Code,
and that Classes 3, 4 and 5 have voted to accept the Plan.
Judge Robinson specifically finds that the Plan satisfies the
applicable provisions of the Bankruptcy Code, including:
A. Sections 1122 and 1123(a)(1) require the classification of
Claims. In addition to administrative claims and priority
tax claims, which need not be designated, the Plan designates
seven classes of claims and interest. Valid business,
factual and legal reasons exist for separately classifying
the various claims and interests created under the Plan and
the classes and the Plan's treatment thereof do not unfairly
discriminate between holders of claims or interests.
B. Section 1123(a)(2) requires the Plan to specify unimpaired
classes. The Plan specifies that Classes 1 and 2 are
unimpaired under the Plan, thereby satisfying the
requirement.
C. Section 1123(a)(2) requires the Plan to specify treatment of
impaired classes. In compliance of this requirement, the
Plan designates Classes 3, 4, 5, 6 and 7 as impaired and
specifies the treatment of the claims and interests in those
classes.
D. Section 1123(a)(4) provides for the fair treatment of claims
and interest. The Plan provides for the same treatment by
the Debtors for each claim or interest in each respective
class.
E. Sections 1123(a)(5) requires a plan to provide for adequate
means for its implementation. The Plan has set forth
provisions for its implementation.
F. Section 1123(a)(6) provides for the inclusion in the
charter of the debtor a provision prohibiting the issuance of
non-voting equity securities. The Plan provides that the
bylaws and certificate of incorporation of the Reorganized
EXDS will be amended as of the Effective Date to provide for
the inclusion of provisions prohibiting the issuance of non-
voting equity securities.
G. Section 1123(a)(7) provides that the Plan should only contain
provisions that are consistent with the interests of creditor
and equity security holders and with public policy with
respect to the manner of selection of any officer, director
or trustee under the Plan. The Debtors properly and
adequately disclosed the identity of the sole officer and
director of the Reorganized EXDS in the Plan Administrator
Agreement and the manner of selection and appointment of the
Plan Administrator.
H. Section 1123(b) sets provisions on treatment of executory
contracts and unexpired leases and classes of claims and
interests. The Plan provides for the Reorganized EXDS'
retention of, and right to enforce, sue on settle or
compromise (or refuse to do any of the foregoing with respect
to) all claims, rights or causes of action, suits and
proceedings, whether in law or in equity, whether known or
unknown, that the Debtors or the estates may hold against any
person or entity. It also provides for releases of and
covenants not to sue various persons, exculpation of various
persons and entities with respect to actions taken in
furtherance of the Chapter 11 cases, and preliminary and
permanent injunctions against certain actions against the
Debtors and their property.
I. Section 1129(a)(2) requires that the proponent of a Plan
comply with the applicable provisions of the Bankruptcy Code,
11 U.S.C. Sec. 1129(a)(2). The legislative history and cases
discussing Section 1129(a)(2) of the Bankruptcy Code indicate
that the purpose of the provision is to ensure that the plan
proponent complies with the disclosure and solicitation
requirements of Sections 1125 and 1126 of the Bankruptcy
Code. The Debtors have complied with the applicable
provisions of the Bankruptcy Code, the Bankruptcy Rules and
the Solicitation Procedures Order in transmitting the
Solicitation Packages and in soliciting and tabulating votes
on the Original Plan.
J. Pursuant to Section 1129(a)(3), the Debtors have proposed the
Plan in good faith and not by any means forbidden by law. In
determining that the Plan has been proposed in good faith,
the Court has examined the totality of the circumstances
surrounding the formulation of the Plan and, in accordance
with Bankruptcy Rule 3020(b)(2), including the absence of
any Objections pursuant to section 1129(a)(3) of the
Bankruptcy Code.
K. Section 1129(a)(4) requires that payments made by the
Debtor on account of services or costs and expenses incurred
in connection with the Plan or the Reorganization Cases
either be approved or be subject to approval by the
bankruptcy court as reasonable. The Plan provides that any
payment made or to be made by the Debtors for services or for
costs and expenses in or in connection with the Chapter 11
Cases, or in connection with the Plan and incident to the
Chapter 11 Cases, has been approved by, or is subject to the
approval of, the Court as reasonable.
L. Section 1129(a)(5) requires that the proponent of a plan
disclose the identity of certain individuals who will hold
positions with the debtor or its successor after confirmation
of the plan. Under the Plan, the identity and affiliations of
the designee of the Plan Administrator who is proposed to
serve as the sole director and officer of Reorganized EXDS
after the Effective Date has been fully disclosed, and the
appointment to the offices of the designee of the Plan
Administrator is consistent with the interests of holders of
Claims against and Interests in the Debtors and with public
policy. The identity of any insider that will be employed or
retained by Reorganized EXDS and the nature of the insiders
compensation also has been fully disclosed.
M. Section 1129(a)(6) permits confirmation only if any
regulatory commission that will have jurisdiction over the
debtor after confirmation has approved any rate change
provided for in the plan. This particular provision is not
applicable in the Debtors' cases.
N. Section 1129(a)(7) sets forth the best interest test of
Creditors. Article VII of the Disclosure Statement and the
other evidence proffered or adduced at the Confirmation
Hearing (i) are persuasive and credible, (ii) have not been
controverted by other evidence or challenged in any of the
Objections, and (iii) establish that each holder of an
impaired Claim or Interest either has accepted the Plan or
will receive or retain under the Plan, on account of the
Claim or Interest, property of a value, as of the Effective
Date, that is not less than the amount that the holder would
receive or retain if the Debtors were liquidated under
Chapter 7 of the Bankruptcy Code on this date.
O. Section 1129(a)(8) requires that each class of claims or
interests must either accept a plan or be unimpaired under a
plan. Classes 1 and 2 are Classes of unimpaired Claims that
are conclusively presumed to have accepted the Plan under
Section 1126 (f) of the Bankruptcy Code. Classes 3, 4 and 5
have voted to accept the Plan in accordance with Sections
1126 (c) and (d) of the Bankruptcy Code. Classes 6 and 7 are
not entitled to receive or retain any property under the Plan
and, therefore, are deemed to have rejected the Plan pursuant
to Section 1126 (g) of the Bankruptcy Code.
P. Section 1129(a)(9) sets forth the treatment of
administrative and tax Claims. The treatment of
Administrative Claims, Priority Tax Claims and Non-Tax
Priority Claims are provided for in the Plan.
Q. Section 1129(a)(10) requires the acceptance by the Impaired
Class of claims of the Plan. Classes 3, 4 and 5 have
voted to accept the Plan.
R. Section 1129(a)(11) requires that the Court find that the
plan is feasible as a condition precedent to confirmation.
The Plan proposed by the Debtors provides for a liquidation
of the Debtors' remaining assets and a distribution of Cash
to creditors in accordance with the priority scheme of the
Bankruptcy Code and the terms of the Plan. The Disclosure
Statement and the evidence proffered or adduced at the
Confirmation Hearing (i) is persuasive and credible, (ii) has
not been controverted by other evidence or challenged in any
of the objections, and (iii) establishes that the Plan is
feasible, thus satisfying the requirements of Section
1129(a)(11) of the Bankruptcy Code.
S. Section 1129(a)(12) requires for all fees due under 28
U.S.C. Sec. 1930 to be paid or will be paid pursuant to the
terms of the Plan. All fees payable under Section 1930 of
title 28, United States Code, as determined by the Court,
have been paid or will be paid on the Effective Date pursuant
to Section 12.4 of the Plan, thus satisfying the requirements
of section 1129(a)(12) of the Bankruptcy Code.
T. Section 1129(a)(13) sets forth certain provisions for
continuation of the payment of health, welfare and retiree
benefits post-confirmation. The Debtors are not obligated,
now or in the future, to pay any retiree benefits that have
not already been paid.
Despite the fact that the Plan does not satisfy the provisions
with respect to the distribution of Classes 6 and 7 of the
Bankruptcy Code, Judge Robinson finds that the Plan is still
confirmable because the Debtors presented evidence at the
Confirmation Hearing that the Plan does not discriminate
unfairly and is fair and equitable with respect to said classes.
All objections to the confirmation of the Plan that have not
been withdrawn, waived or settled and all reservation of rights
pertaining to the confirmation of the Plan are overruled by
Judge Robinson based on their merits. Judge Robinson decrees
that the execution, delivery and performance of the Second
Amended Plan by the Reorganized EXDS is authorized and approved
without the need for further authorization from the Court.
The Plan Administrator Agreement is approved and the Debtors and
Reorganized EXDS are authorized to execute the agreement and to
take any action necessary to implement and effect its
consummation. The Debtors' special advisor to wind-down their
estates, Alvarez and Marsal Inc., is appointed as the Plan
Administrator. In the Second Amended Plan, the Debtors had
disclosed they were in the process of negotiating the form of
the Plan Administrator Agreement with Alvarez and Marsal.
Judge Robinson decrees that the allowed Tax Priority Claims of
the IRS shall be paid in accordance to the provisions of the
Plan and interest shall accrue on allowed Tax Priority Claims of
the IRS at the rate and method set in the United States Code
Sections 6621 and 6622. In addition, the contracts and leases
between any of the Debtors and Citicapital Corporation, EMC and
Fleet Business Credit LLC where the Debtors previously served
notices of rejection will not be rejected and the parties
reserve all rights, objections, defenses and claims with respect
to the effectiveness of such rejection. As to Lakeside's
objection, Judge Robinson decrees that should any inconsistency
arise between the terms of the Plan and the stipulation and
order between the Debtors and Lakeside, the terms of the
stipulation and order shall govern.
Judge Robinson also orders that nothing in the Plan will alter
or impair the rights of Yahoo against the Debtors under the
Agreements or to the moneys segregated or escrowed by the
Debtors pursuant to the agreement. The escrowed amount will be
reserved by the Debtors to satisfy any cure claims Yahoo may
assert in connection with its executory contracts assumed by the
Debtors. The cure claims may be determined by a Court Order or
by written agreement between Yahoo and the Debtors.
As to Portal's objection, Judge Robinson rules that nothing in
the Plan will be deemed to authorize or approve the assumption
or assignment of the Portal Agreement. The Debtors are ordered
to file a motion seeking to assume and assign the Agreement on
or before the Effective Date and June 30, 2002 (the Portal
deadline). However, if a motion to that effect is not filed or
is not approved by the Court, the Portal Agreement will be
considered rejected effective on the date of the Portal deadline
or on the date that the motion is withdrawn or denied. (Exodus
Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
DebtTraders reports that Exodus Communications Inc.'s 11.625%
bonds due 2010 (EXDS3) are quoted between 17.75 and 18.5 . See
http://www.debttraders.com/price.cfm?dt_sec_ticker=EXDS3for
more real-time bond pricing.
FOSTER WHEELER: S&P Maintains Watch on B+ Corp. Credit Rating
-------------------------------------------------------------
Standard & Poor's said that its single-'B'-plus corporate credit
rating on Foster Wheeler Ltd., a leading engineering and
construction firm, remains on CreditWatch with negative
implications following the company's announcement that it has
signed a term sheet with its senior bank lending group for a
$289.9 million bank credit facility. The bank facility will
mature in 2005, and consists of a revolving credit, term loan,
and letter of credit facility.
"The rating will remain on CreditWatch until the bank, lease,
and account receivable facility negotiations are completed, and
the company's financial flexibility assessed," said Standard &
Poor's analyst Joel Levington. Additionally, Standard & Poor's
will review what, if any, erosion has taken place with the
firm's business position during this time of financial stress.
Finally, Standard & Poor's will review the collateral package
granted to the senior bank lenders (a first priority lien on
Foster Wheeler's domestic assets) to determine if the bank
facility and the senior unsecured notes will be notched relative
to the corporate credit rating.
FOUNTAIN PHARMACEUTICAL: Woos Potential Buyers for Public Shell
---------------------------------------------------------------
On December 31, 2001, Park Street Acquisition Corporation
acquired 3,500,000 shares of Fountain Pharmaceutical's Class A
common stock and 100,000 shares of Class B common stock from the
Company for $180,000. The proceeds of this sale were utilized
to pay all of the Company's outstanding liabilities at December
31, 2001. Simultaneously, Park Street acquired 2,000,000 shares
of Class A Preferred Stock from Fountain Holdings, LLC and all
Common Stock Purchase Warrants in the name of Holdings to
purchase shares of the Company's Class A Common Stock. The
aggregate purchase price paid to Holdings was $20,000,
allocated $8,000 towards the purchase of the Preferred Stock and
$12,000 towards the purchase of the warrants. As a result of
these transactions, Park Street became the "control person" of
Fountain Pharmaceuticals, Inc. as that term is defined in the
Securities Act of 1933, as amended. In connection with these
transactions, the Board of Directors of the Company nominated
Brendon K. Rennert on the Board of Directors and all former
officers and directors delivered their letters of resignation to
the Company. Mr. Rennert was named CEO, President and Secretary
of the Company.
Since Fountain Pharmaceuticals no longer has assets except the
Company's public shell, it no longer has the ability to generate
revenue; therefore, the Company is not in the position to
continue as a going concern.
The Company's Board of Directors is currently pursuing
candidates with potential business interest with which to
merge. The Company has reached an agreement to acquire all of
the issued and outstanding shares of SiriCOMM, Inc. As of this
date the Company has 5,980,301 shares of common stock
outstanding, including 104,505 shares of Class B common stock.
In accordance with the terms of the agreement with SiriCOMM,
Inc., the Company is obligated to issue the equivalent of
577,391,565 pre-split shares or 9,623,193 post-split shares to
the SiriCOMM shareholders. In addition, the Company has agreed
to issue the equivalent of 116,228,160 pre-split or 1,937,136
post-split shares to retire $500,000 of convertible debentures
issued by SiriCOMM. Accordingly, after the effective date of the
amendment and the closing with SiriCOMM, the new combined entity
will have approximately 11,660,003 shares of common stock
issued and outstanding. The shareholders and debenture
holders of SiriCOMM will own 99% of the Company upon the
consummation of the transaction. There can be no assurance that
any such transactions will be successfully completed by the
Company.
During the three months ended March 31, 2002, the Company had no
revenues compared to revenues of $190,250 for the three months
ended March 31, 2001. The Company's lack of revenues for the
quarter ended March 31, 2002 was a result of the transfer of the
Company's assets to Mr. Joseph S. Schuchert Jr., (former
Chairman of the Board of Fountain Pharmaceuticals), as of July
6, 2001 and the resultant suspension of the Company's operations
on that date. The Company had a net loss of $38,764 for the
quarter ended March 31, 2002 compared to a net loss of $215,481
for the quarter ended March 31, 2001. This decrease in losses is
directly attributable to the Company's decision to suspend
operations on July 6, 2001.
During the quarter ended March 31, 2002, the Company incurred
operating expenses of $38,764, representing a decrease of
$278,435 or approximately 88% over operating expenses of
$317,199 for the prior quarter ending March 31, 2001. This
decrease in operating expenses was primarily due to reduction in
personnel, legal fees, clinical research studies, and sales and
marketing expenses, coupled with the suspension of operations in
July 2001.
During the quarter ended March 31, 2002, the Company incurred no
interest expense compared to an interest expense of $77,763 for
the prior quarter ending March 31, 2001. This decrease in
interest expense is associated with the forgiveness of the
secured and unsecured lines of credit provided to the Company by
Mr. Schuchert.
Six Months ended March 31, 2002 compared with the Six
Months ended March 31, 2001
During the six months ended March 31, 2002 the Company had no
revenues compared to revenues of $382,261 for the six months
ended March 31, 2001. The Company had a net income of
$1,401,890 for the six months ended March 31, 2002 compared to a
net loss of $469,395 for the six months ended March 31, 2001.
This increase of $1,871,285 is primarily a result of the
forgiveness of debt by a related party ($1,477,401) partially
offset by losses resulting from the Company's decision to
suspend operations as of July 6, 2001.
During the six months ended March 31, 2002 the Company incurred
operating expenses of $52,844, representing a decrease of
$597,209 or 92% over operating expenses of $650,053 for the six
months ending March 31, 2001. As with the quarter shown above,
this six-month decrease operating expenses was primarily due to
reduction in personnel, legal fees, clinical research studies,
and sales and marketing expenses coupled with the suspension of
operations in July 2001.
During the six months ended March 31, 2002, the Company incurred
interest expense of $22,667, an 86% decrease over interest
expense of $160,806 for the prior six months ending March 31,
2001. This decrease in interest expense is associated with the
forgiveness of the secured and unsecured lines of credit
provided to the Company by Mr. Schuchert.
Fountain Pharmaceuticals, which had relied largely on loans from
chairman James Schuchert, Jr., ran out of time and money. Before
suspending operations and transferring its assets instead of
facing foreclosure, it primarily developed "cosmeceuticals"
based on its proprietary drug-delivery technology -- man-made
microscopic spheres carry pharmaceuticals that are released when
applied to the skin. The technology was used in sunscreens,
lotions, and moisturizers under the Celazome and LyphaZone
brands.
GALEY & LORD: Committee Turns to Peter J. Solomon for Advice
------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
chapter 11 cases involving Galey & Lord, Inc., obtained approval
from the U.S. Bankruptcy Court for the Southern District of New
York to retain and employ Peter J. Solomon Company as its
Financial Advisors.
The Committee tells the Court that they selected Peter J.
Solomon because of the Firm's experience in business
reorganizations. Pursuant to the Engagement Letter, Peter J.
Solomon is expected to:
a) assist the Committee in assessing the operating and
financial performance of and strategies for the Debtors;
b) reviewing and analyzing the business plan and financial
projections prepared by the Debtors including testing
and comparing assumptions;
c) advising the Committee in evaluating the valuation of
the Company and its assets, including preparation of
expert testimony related to valuation, if necessary;
d) assisting the Committee in evaluating the Company's
assets and liabilities;
e) advising and assisting the Committee in connection with
the retention of such industry consultants as may be
required and assisting in directing and monitoring the
services provided by such consultants;
f) advising and assisting the Committee with the claims
resolution process and matters relating thereto;
g) advising the Committee in connection with one or more
possible transactions, or a series or combination of
transactions, between the Company and a third party;
h) advising the Committee regarding the restructuring of
the Debtors' existing indebtedness;
i) advising the Committee regarding evaluating DIP
financing, cash collateral and exit financing;
j) assisting the Committee and its counsel in formulating
and negotiating a plan of reorganization, including
preparation of expert testimony relating to financial
matters, if required; and
k) rendering such other accounting and financial advisory
services as may be requested by the Committee and its
counsel.
Peter J. Solomon will receive a $125,000 fixed monthly fee and
won't be required to maintain or provide detailed time records
in connection with any of its fee applications.
G&L, a leading global manufacturer of textiles for sportswear,
including cotton casuals, denim, and corduroy, and is a major
international manufacturer of workwear fabrics, filed for
chapter 11 protection on February 19, 2002 together with its
affiliates. When the Company filed for protection from its
creditors, it listed $694,362,000 in total assets and
$715,093,000 in total debts.
GLOBAL CROSSING: Gets Nod to Enter into AIG Insurance Agreements
----------------------------------------------------------------
Global Crossing Ltd. and its debtor-affiliates sought and
obtained authorization from the Court to enter into workers'
compensation programs, auto insurance policies, a related
Payment Agreement and other related with National Union Fire
Insurance Company of Pittsburgh, Pennsylvania, on behalf of and
certain other entities related to American International Group,
Inc. The Debtors will pay when due in the ordinary course, as
an administrative expense of the Debtors' estates, all
postpetition premiums, administrative fees and other obligations
to AIG with respect to the Insurance Program in accordance with
the Insurance Program.
Harvey R. Miller, Esq., at Weil Gotshal & Manges LLP in New
York, recounts that on the Commencement Date, the Court approved
the continuation of the Debtors' various prepetition workers'
compensation programs and insurance policies in effect as of
that date. Nevertheless, on March 31, 2002, certain of the
Debtors' insurance policies expired by their own terms.
Specifically, the Debtors' workers' compensation policies and
auto insurance policies with ACE USA Insurance Company and its
subsidiaries and affiliates terminated in accordance with the
contracts related to those insurance policies.
Since the Commencement Date, Mr. Miller states that the Debtors
have negotiated with various insurance carriers to replace the
prepetition insurance policies with ACE, which expired on March
31, 2002. Due to the commencement of these cases and other
factors, many insurance companies were unwilling to provide the
Debtors' with policies for the Insurance Program. After
reviewing proposals to the Debtors for the type of insurance
covered by the Insurance Program, the Debtors determined that
AIG provided the best proposal to the Debtors' estates.
According to Mr. Miller, as a result of difficulties attendant
the Debtors' negotiations with other insurance carriers, the
Debtors did not commence their negotiations with AIG with
respect to the Insurance Program until shortly before the
expiration of the prior policies with ACE. The negotiations were
completed on March 30, 2002, one day before the expiration of
the prepetition insurance policies. In order to initiate
coverage under the binder pending court approval of the
Insurance Program, upon expiration of the prepetition insurance
policies with ACE, AIG required that the Debtors pay, in full,
all premiums due under the Insurance Program. Specifically, on
April 1, 2002, the Debtors paid $1,225,730 in premiums for the
Insurance Program for the period March 31, 2002 through March
31, 2003. In addition, on that date, the Debtors provided AIG
with a deposit of $3,000,000 as security for the Debtors'
payment of deductible amounts under the Insurance Program. If
the Court does not approve the Insurance Program, AIG may
terminate the Insurance Program.
The Workers' Compensation Programs
Under the laws of the various states in which the Debtors
operate, Mr. Miller informs the Court that the Debtors are
required to maintain workers' compensation policies and programs
to provide their employees with workers' compensation coverage
for claims arising from or related to their employment with the
Debtors. Under the Insurance Program, AIG has agreed to provide
primary workers' compensation coverage for the Debtors'
employees in each of the states in which the Debtors operate.
The annual premium, including fees and assessments from various
states, for the workers' compensation policies are $956,806
which amount is based on a fixed rate of the Debtors' estimated
annual workers' compensation payroll. In addition to the annual
premium, the Debtors must pay a deductible of $250,000 for each
claim asserted under the workers' compensation policies. The
Debtors' obligation to pay any deductible amounts under the
workers' compensation policies, among other obligations under
the Insurance Program, is secured by the Security Deposit.
The Auto Insurance Policies
Mr. Miller adds that the Debtors also maintain automobile
insurance on vehicles owned or leased by the Debtors on behalf
of certain employees whose responsibilities for the Debtors
require a company vehicle. Under the auto insurance policies,
AIG has agreed to provide primary automobile liability coverage
for approximately 190 automobiles used by the Debtors. The
Debtors are required to pay an annual premium of $268,924 under
the auto insurance policies, which amount is based upon a fixed
rate established and billed by AIG. In addition, pursuant to the
auto insurance policies and the Insurance Program, the Debtors
are required to pay a $250,000 deductible for each claim. The
Debtors obligation to pay any deductible amount under the auto
insurance policies, among other obligations under the Insurance
Program, is secured by the Security Deposit.
AIG also conditioned its provisioning of coverage under the
Insurance Program on the Debtors obtaining entry of an order of
the Court containing the following provisions:
A. The Insurance Program shall be effective as of March 31, 2002
and the Debtors are directed to execute all agreements under
the Insurance Program and any amendments or schedules
thereto.
B. The Debtors are authorized to execute further renewals of the
Insurance Program without further order of the Court.
C. The Debtors are authorized to pay their obligations under the
Insurance Program, including premiums and deductibles, in the
ordinary course of business, without further order of the
Court.
D. All prior payments under the Insurance Program be approved.
E. AIG may adjust, settle and pay insured claims, utilize funds
provided for that purpose, and otherwise carry out the terms
and conditions of the Insurance Program, without further
order of the Court; provided, however, that nonworkers'
compensation claimants shall not be granted relief from the
automatic stay to take any action prohibited by law,
including to pursue their claims.
F. The Insurance Program shall not, without the written consent
of AIG, be altered by any plan of reorganization approved in
these cases and, absent the consent of AIG, shall survive any
plan of reorganization.
G. In the event of a default due to any failure by the Debtors
to make a payment or provide security as required by the
Insurance Program, subject to the notice and cure provisions
in the next sentence and the terms and conditions of the
Insurance Program, AIG may cancel the Insurance Program
without further order of the Court and draw on any letters of
credit, in part or in full. The automatic stay will be
modified for this limited purpose, provided that, AIG will
provide the Debtors with 5 days notice written notice of any
default and an opportunity to cure that default. If Debtors
fail to cure a default within that time, AIG may exercise its
rights to cancel the Program and foreclose on any collateral
without further order of the Court, subject to the Debtors
right to challenge that cancellation or obtain other relief
from the Court.
Mr. Miller contends that the Insurance Program is essential to
the continuation of the Debtors' businesses. Failure to maintain
workers' compensation and automobile insurance would expose the
Debtors to significant liability for damages resulting to
persons and property of the Debtors and others. Moreover, the
maintenance of the workers' compensation policies is mandated by
state laws in the various states in which the Debtors operate.
Criminal and civil penalties may be levied against the Debtors
for noncompliance with statutory workers' compensation laws.
Furthermore, pursuant to the terms of many of the Debtors'
leases, as well as the guidelines established by the United
States Trustee, the Debtors are obligated to maintain these
primary insurance policies. Therefore, in the Debtors' sound
business judgment, absent the Insurance Program, the Debtors
would be unable to continue to operate their businesses in
certain states.
Mr. Miller asserts that the amount the Debtors have agreed to
pay for the Insurance Program is minimal in light of the size of
the Debtors' estates and the potential exposure of the Debtors
without the insurance coverage. (Global Crossing Bankruptcy
News, Issue No. 11; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
DebtTraders that Global Crossing Holdings Ltd.'s 9.500% bonds
due 2009 (GBLX9) are traded between 2.25 and 2.875 . See
http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX9for
real-time bond pricing.
HAYES LEMMERZ: Wants Removal Period Deadline Moved to Sept. 3
-------------------------------------------------------------
Hayes Lemmerz International, Inc. and its debtor-affiliates ask
the Court to further extend their Removal Period -- their time
to remove any prepetition lawsuit pending in a court outside of
the District of Delaware to the Delaware for continued
litigation. The Debtors ask that the Removal Period be extended
to the later of September 3, 2002, or 30 days after entry of an
order terminating the automatic stay regarding any particular
action sought to be removed.
Mark S. Chehi, Esq., at Skadden Arps Slate Meagher & Flom LLP in
Wilmington, Delaware, relates that the Debtors require
additional time to determine which of the state court actions,
if any, they will remove. The Debtors are parties to numerous
judicial and administrative proceedings currently pending in
various courts or administrative agencies throughout the
country. The Actions involve a wide variety of claims, some of
which are extremely complex.
Pursuant to the First Extension Order, the current deadline for
any of the Debtors to remove Actions is June 3, 2002. Because of
the number of Actions involved and the wide variety of claims,
Mr. Chehi submits that the Debtors require additional time to
determine which, if any, of the Actions should be removed and,
if appropriate, transferred to this district.
The Debtors submit that the relief requested is in the best
interests of their estates and creditors. Mr. Chehi notes that
the extension sought will afford the Debtors a sufficient
opportunity to make fully informed decisions concerning the
possible removal of the Actions, protecting the Debtors'
valuable right to economically adjudicate lawsuits pursuant to
28 U.S.C. Section 1452 if the circumstances warrant removal.
Moreover, Mr. Chehi points out that the Debtors' adversaries
will not be prejudiced by an extension because these adversaries
may not prosecute the Actions absent relief from the automatic
stay. Furthermore, nothing will prejudice any adversary whose
proceeding is removed from pursuing a remand pursuant to 11
U.S.C. Section 1452(b). Accordingly, the proposed extension
requested will not prejudice the rights of other parties to any
of the Actions.
A hearing on the Debtors' motion is scheduled on June 11, 2002.
(Hayes Lemmerz Bankruptcy News, Issue No. 12; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
IEC ELECTRONICS: Slashes 35% of Staff & Restructures NY Facility
----------------------------------------------------------------
IEC Electronics Corp. (Nasdaq-SCM: IECE) reduced its Newark, New
York workforce by 35 percent at the end of May.
Chief Executive Officer Thomas W. Lovelock and Chief Financial
Officer Richard L. Weiss have both left IEC, electing not to
continue in management of the downsized company. Mr. Lovelock is
available for consultation with the Company through March 31,
2003.
W. Barry Gilbert, Chairman of the Board has been appointed
acting Chief Executive Officer and Bill R. Anderson, Vice
President and General Manager has been appointed Chief Operating
Officer.
IEC's Chairman Barry Gilbert said, "The restructuring has been
very difficult, in fact gut-wrenching, for those personally
involved. The contract electronics manufacturing industry is
recovering slower than we had anticipated when we reduced
headcount in March, and in response we have had to reduce the
workforce in Newark to make it compatible to the volume of
current business in the facility.
Gilbert continued, "This is a temporary workforce reduction and
our goal is to call back employees as sales increase. We have
seen some improved activity from our industrial/instrumentation
customers, and are encouraged by new opportunities that are
turning up in that sector. IEC greatly appreciates the loyalty
its customers and employees have shown, and we are firmly
determined to take the necessary steps to restore financial
stability and profitability."
Effective June 5, 2002 IEC's shares are being traded on The
Nasdaq SmallCap Market.
IEC is a full service, ISO-9001 and 9002 registered, contract
manufacturer employing state-of-the-art production utilizing
both surface mount and pin-through-hole technology. IEC offers
its customers a wide range of manufacturing and management
services, on either a turnkey or consignment basis, including
design prototyping, material procurement and control, concurrent
engineering services, manufacturing and test engineering
support, statistical quality assurance and complete resource
management. Information regarding IEC can be found on its Web
page located at http://www.iec-electronics.com
INTEGRATED HEALTH: Asks Court to Expunge Tax Claims against Unit
----------------------------------------------------------------
Integrated Health Services, Inc. and its debtor-affiliates
object to Proofs of Claim filed by various taxing authorities
against Rotech and ask the Court to:
a. Disallow and expunge 17 Duplicate/Amended Claims
totaling $3,622,941.51 because the Debtors believe that
the claims have been amended or duplicated by one or
more proofs of claim filed against them;
b. Disallow and expunge 46 No Liability Claims totaling
$669,075.17 because the Debtors believe that their books
and records demonstrate no liability to holders of these
Claims; and
c. Reduce and/or reclassify 21 Reduced and/or Reclassified
Claims from $4,758,799.62 to $2,347,798.19 in the
aggregate. This is because the Debtors believe these
claims have been filed as priority or secured claims
without an appropriate basis and/or have been filed in
amounts that exceed the amounts reflected in the Debtors
books and records or otherwise allowable under
applicable law; and
d. Reducing and/or reclassifying or, in the alternative,
disallowing and expunging, 55 Reconciled Claims from
$450,404.07 ($289,479.58 secured; $156,775.49 priority;
$4,149.00 unsecured) to $184,908.02 ($10,180.22 secured;
$173,110.43 priority; 1,617.37 unsecured) in the
aggregate, based on the consent of the claim-holders,
each of whom executed a reconciliation letter giving
consent. (Integrated Health Bankruptcy News, Issue No. 37;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
INTERVOICE-BRITE: Pays Down Bank Debt to About $4 Million in Q1
---------------------------------------------------------------
InterVoice-Brite (Nasdaq: INTV) announced, after a preliminary
review of its accounting records, that it expects to report
sales of between $37.5 million and $38.5 million for the first
quarter of its fiscal 2003, which ended May 31, 2002. An
estimate for the quarter's operating results is not available as
the Company is in the process of determining the amount of one-
time tax benefit associated with recent tax law changes with
respect to net operating loss carry backs (see the Company's
Form 10-K filed with the Securities and Exchange Commission on
May 30, 2002 for a full discussion) and the final amount of non-
cash charges resulting from goodwill impairment tests mandated
by the Company's required adoption of Statements of Financial
Accounting Standards Nos. 141 and 142 (also see the Company's
Form 10-K for a full discussion). The Company incurred one-time
charges of approximately $3.0 million associated with strategic
actions taken during the quarter.
As previously announced, the Company successfully restructured
its debt during the quarter. As a result, the Company has paid
down its bank debt to approximately $4 million, is no longer in
breach of its credit agreement with its bank lender group and
has access to a $12 million revolving credit facility (against
which $4 million is drawn) to be used for liquidity and working
capital purposes (see the Company's Form 8-K filed with the
Securities and Exchange Commission on May 30, 2002 for a full
discussion of the Company's recent financing transactions).
"We are very happy that we were able to meet our goals of
successfully restructuring our debt, increasing sales quarter
over quarter, building backlog and reducing our operating
expenses during the first quarter," said David Brandenburg, the
Company's Chairman and CEO. "The return on investment generated
by our speech-enabled products is very attractive to our
customers. And the capabilities of our network products to
generate new revenue streams and to reduce costs continue to
attract service providers."
With systems operating in more than 70 countries, InterVoice-
Brite is the technology leader in speech-enabled interactive
information solutions and enhanced services for network service
providers, and is a premier communications and e-commerce ASP.
The Company operates in two global divisions, each focusing on a
separate marketplace. IVB Network Solutions provides value-
added solutions and outsourcing services marketed under the
Omvia(TM) product names for network operators. IVB Enterprise
Solutions provides speech and self-service solutions serving
millions of enterprises' customers and institutions' patrons
worldwide. Both divisions also can provide their products and
services as an Application Service Provider. For more
information, visit http://www.intervoice-brite.com
KMART: Middletown Wants to Compel Lease Performance on Property
----------------------------------------------------------------
Middletown I Resources LP is the Kmart Corporation's and its
debtor-affiliates' landlord to the real property in the Town of
Wallkill, New York. The property is the site of Kmart's Store
No. 7728.
William J. Barrett, Esq., at Barack, Ferrazzano, Kirschbaum,
Perlman & Nagelberg LLC, in Chicago, Illinois, tells the Court
that Kmart is not meeting its obligations under the Lease
because it has allowed certain mechanics' liens to be filed
against the Property and has allowed the mechanics' liens to
remain unsatisfied.
Since the Petition Date, Mr. Barrett relates that mechanics'
liens totaling $2,511,056 have been filed against the Property
as a result of Kmart's failure to pay certain of its contractors
for work performed.
Lienor Amount
------ ------
Greg Construction Company $1,951,038
NEI/Naber Electric Inc. 50,313
La Corte Companies Inc. 6,213
Bush D,cor & Fixture 14,002
Crown Fixture Inc. 29,208
Tomco Mechanical 303,398
Programmed Products Corp. 156,885
Mr. Barrett explains that Kmart contracted for certain building
improvements on the Property, but was unable to pay for it.
Middletown has been writing to Kmart advising that the
Mechanics' Liens be removed. "The Mechanics' Liens threaten
Middletown's ownership of the Property and thus, Kmart's
leasehold interest in the Property," Mr. Barrett notes.
Accordingly, Mr. Barrett asserts that Kmart must immediately pay
or bond the Mechanics' Liens.
In the alternative, Middletown asks the Court to shorten the
time in which Kmart must assume or reject the Lease. "Any delay
in assumption or rejection of the Lease will prejudice
Middletown's ability to defend or resolve the Mechanics' Lien
and thus, preserve its interest in the Property," Mr. Barrett
says. If the Debtors assume the Lease, Mr. Barrett explains,
the Debtors will be required to remove the Mechanics' Liens. On
the other hand, if the Debtors reject the Lease, Mr. Barrett
relates, Middletown can immediately begin to salvage value from
the improvements that resulted in the Mechanics' Liens.
* * *
The Debtors advised the Court and Middletown that these
mechanics' liens have been satisfied as of May 29, 2002,
pursuant to separate agreements with lien claimants:
Lienor Amount
------ ------
Greg Construction Company $1,951,038
NEI/Naber Electric Inc. 50,313
Tomco Mechanical 303,398
La Corte Companies Inc. 6,213
In the meantime, the Debtors relate, efforts are underway to
satisfy or remove these mechanics' liens:
Lienor Amount
------ ------
Bush D,cor & Fixture 14,002
Programmed Products Corp. 156,885
With the parties' consent, the Court orders the Debtors to
promptly conclude the payment of the Liens asserted by Greg
Construction, Naber Electric, Tomco Mechanical and La Corte
Companies. As for the Liens asserted by Bush D,cor and
Programmed Products, the Debtors are directed to:
-- stay the enforcement of,
-- pay, satisfy or bond over, and
-- cause to be released and discharged of record,
these Liens by June 30, 2002.
Upon receipt of payment of the Liens, Judge Sonderby instructs
the Debtors to:
(a) cause the payees to immediately execute and deliver:
1) a satisfaction by which payees:
-- acknowledge full payment for all work, labor and
materials provided to the Property, and
-- release any and all claims payees may now or have,
as to any person or entity, with respect to the
work, labor and materials; and
2) a release and discharge and waiver, in recordable
form, of any and all liens with respect to the work,
labor and materials and the Property, and execute and
file the documents as may be necessary to accomplish
it; and
(b) cause the Liens to be released and discharged of record.
(Kmart Bankruptcy News, Issue No. 23; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
LTV CORP: Courts Okays 4th Extension to Exclusivity Until Oct. 9
----------------------------------------------------------------
For a fourth time, The LTV Corporation and its debtor-affiliates
ask Judge Bodoh to extend the time during which only the Debtors
may file a plan and solicit acceptances of that plan. The
Debtors ask for an extension of their exclusive period to
propose and file a chapter 11 plan to October 9, 2002, and their
exclusive period to solicit acceptances to December 9, 2002.
The Debtors point to their progress in implementing the APP and
the sale of their integrated steel business as evidence of their
diligence in seeking reorganization. The Debtors also cite
their efforts to liquidate their inventory and collect their
accounts receivable, including the suits now pending before
Judge Bodoh. The Debtors say they expect that their remaining
inventory and accounts will be liquidated within the next four
months. As a result of these efforts, the Debtors say they have
repaid $299 million of the post-petition DIP facility, leaving a
balance of approximately $177 million to be paid. These figures
do not reflect monies from the closing of the Copperweld
financing facility or the sale of the integrated steel business.
Accordingly, any plan proposed by another party pending
termination of the APP period would be premature, and the
Debtors seek Judge Bodoh's endorsement of the requested
extensions.
In the absence of objection, Judge Bodoh grants the requested
extensions. (LTV Bankruptcy News, Issue No. 31; Bankruptcy
Creditors' Service, Inc., 609/392-00900)
LAIDLAW: Amends Surety Bond Agreement with Federal Insurance
------------------------------------------------------------
Pursuant to Section 363(b) and 364(b) of the Bankruptcy Code,
Laidlaw Inc. and its debtor-affiliates sought and obtained
Judge Kaplan's authority to enter into a Surety Bond Amendment
and Pledge Agreement with Federal Insurance Company.
Garry M. Graber, Esq., at Hudgson Russ, LLP, in Buffalo, New
York, relates that Federal provides the Laidlaw Companies the
Bonds needed:
(a) to guarantee their performance under certain service
contracts;
(b) to bid on certain contracts; and
(c) for certain other miscellaneous uses.
The Bonds are covered by two Agreements:
(a) an Amended and Restated Underwriting and Continuing
Indemnity Agreement -- Surety Bond Agreement, used for
Bonds needed for the Education Services Division; and
(b) an Amended and Restated Pledge Agreement for the Bonds
needed in the ambulance services businesses.
However, Mr. Graber notes, the Surety Bond Agreement expired on
April 15, 2002.
To date, Mr. Graber reports, the Laidlaw Companies need to
increase and extend the availability of the Bonds under the
Surety Bond Agreement to meet the operational requirements and
no longer need all of the bonding availability under the Pledge
Agreement. Consequently, the Debtors negotiated with Federal
for the accommodation of its needs.
The parties reached an agreement on these terms:
(a) Under the Surety Bond Agreement, Federal will:
-- extend the existing $135,000,000 of Bond availability;
-- extend Bond availability by an additional $5,000,000;
and
-- extend Bond availability by an additional $25,000,000,
provided there is a dollar for dollar decrease in the
Bonds outstanding under the Pledge Agreement.
Accordingly, the cash collateral held under the Pledge
Agreement will be released in $3,000,000 increments,
minus 15%, which will be held as collateral to secure
obligations of the new Bond;
(b) The Surety Bond Amendment and the
Pledge Amendment give the Laidlaw Companies the
flexibility to renew the Bonds outstanding under the
Pledge Agreement, provided that the Bonds are 100% cash
collateralized;
(c) The non-debtor Laidlaw Companies will pay Federal a
$3,000,000 facility fee in consideration for entering
into the Surety Bond Amendment and the Pledge Amendment.
Mr. Graber emphasizes the necessity of the Amendments due to the
vital role the Bonds play in the continued operation of the
Education Services Division. Mr. Graber assures the Court that
the cost of the Amendment will be shouldered by the non-debtor
entities of the Laidlaw Companies. (Laidlaw Bankruptcy News,
Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900)
LAS VEGAS SANDS: S&P Assigns B- Rating to $850MM Mortgage Notes
---------------------------------------------------------------
Standard & Poor's assigned its single-'B'-minus rating to $850
million of 11% mortgage notes due 2010 issued jointly by Las
Vegas, Nevada based Las Vegas Sands Inc., and its subsidiary,
Venetian Casino Resort LLC (jointly, the Venetian).
Standard & Poor's also assigned its single-'B'-plus rating to
the $375 million senior credit facility for which Las Vegas
Sands Inc. and Venetian Casino Resort LLC are co-borrowers.
Also today, the single-'B' corporate credit ratings on Las Vegas
Sands and Venetian Casino Resorts were affirmed and removed from
CreditWatch where they were placed on Sept. 24, 2001.
Concurrently, Standard & Poor's withdrew its ratings on certain
debt that was refinanced as part of this transaction, including
the Venetian's 12.25% mortgage notes due 2004, and 14.25% senior
subordinated notes due 2005.
These rating actions were previewed in a CreditWatch update on
May 8, 2002.
The outlook for both parent and subsidiary is stable.
Approximately $1.26 billion in debt was outstanding pro forma
for the offering, including advance borrowings to fund the Phase
1A expansion project that will be held in restricted cash
accounts until used.
The $850 million note offering, $375 million bank facility, and
$105 million mall loan facility (not rated) refinanced all of
the Venetian's previous indebtedness. The refinancing improves
the company's financial flexibility by extending debt
maturities, reducing near-term principal amortization, and
providing a mechanism to fund the companies' Phase 1A expansion
project and potential venture in Macau subject to certain
limitations.
The bank facility is divided into a $250 million secured term
loan, $50 million senior secured delayed draw facility, and $75
million senior secured revolving facility. All three components
share equally in a first security interest on all assets of the
Venetian and its subsidiaries, with limited exceptions. The bank
facility is rated one notch higher than the corporate credit
rating, given its priority claim on assets and Standard & Poor's
opinion that the lenders have a high probability of full
recovery of principal under a distressed liquidation scenario.
The $850 million notes are secured by a second priority security
interest in the assets of the Venetian and its subsidiaries,
with limited exceptions. Given the second priority interest, the
notes are rated one notch below the corporate credit rating.
"We expect that the Venetian's operating performance will
strengthen during the intermediate term and that credit measures
will improve to levels consistent with the ratings," said
Standard & Poor's credit analyst Craig Parmelee.
Standard & Poor's expects that Las Vegas will continue to
recover from the difficulties of the last months of 2001, which
were driven by a reduction in air travel following the terrorist
attacks of Sept. 11, 2001, and that the Venetian will be a
primary beneficiary. Current room rates and occupancy levels,
and the expectation for an improving economy, support the plan
to add 1,000 new hotel rooms under the Phase 1A expansion
project. Construction is expected to be complete in June 2003,
which will be in advance of any new rooms to be opened by the
Venetian's competitors. Debt leverage is expected to be somewhat
high for the ratings until the company generates additional cash
flow from the new expansion.
LUMENON INNOVATIVE: Commences Trading on Nasdaq SmallCap Market
---------------------------------------------------------------
Lumenon Innovative Lightwave Technology, Inc. (Nasdaq NM: LUMM),
a photonic materials science and process technology company
offering high-quality optical devices for the global
telecommunications, data communications and cable markets, has
received approval from the Nasdaq Stock Market, Inc. to transfer
the listing of the Company's common stock from The Nasdaq
National Market to The Nasdaq SmallCap Market effective at the
opening of business Friday, June 7, 2002. The Company's common
stock will continue to trade under its current symbol "LUMM".
In announcing the approval, Gary Moskovitz, President and Chief
Executive Officer of Lumenon, said, "We are pleased to have
received approval for listing on The Nasdaq SmallCap Market.
This listing allows us to continue trading on an electronic,
well-regulated market and provides us with a grace period until
August 13, 2002, to comply with Nasdaq's $1.00 minimum bid price
requirement. If we do not meet this requirement by August 13,
2002, Nasdaq may grant us an additional 180 day grace period to
regain compliance, until February 10, 2003, as long as we
continue to meet the initial listing requirement for The Nasdaq
SmallCap Market which may be met by a public float of $5 million
in stockholders' equity.
"If, at any time during this period, we achieve the $1.00
minimum bid requirement for 30 consecutive days, provided that
we have maintained compliance with the listing requirements of
The Nasdaq National Market, other than bid price, at all times,
we may be eligible to transfer back to The Nasdaq National
Market."
Lumenon Innovative Lightwave Technology, Inc., a photonic
materials science and process technology company, designs,
develops and builds optical components and integrated optical
devices in the form of packaged compact hybrid glass and polymer
circuits on silicon chips. These photonic devices - based upon
Lumenon's proprietary materials and patented PHASIC(TM) design
process and manufacturing methodology - offer communications
providers the ability to dramatically boost bandwidth for
today's burgeoning telecommunication, data communication and
cable industries.
For more information about Lumenon Innovative Lightwave
Technology, Inc., visit the Company's Web site at
http://www.lumenon.com
MERCANTILE INT'L: Wins Approval to Restructure $40MM Debentures
---------------------------------------------------------------
Mercantile International Petroleum Inc., an oil and gas
exploration and production company, today reported that the
previously announced restructuring of its outstanding U.S.
$40,000,000 11.5% senior unsecured debentures due May 11, 2002
was approved by its shareholders, warrantholders and
debentureholders on June 3, 2002. The restructuring is pursuant
to a Plan of Arrangement under the Companies Law of the Cayman
Islands and the Plan was today sanctioned by an order of the
Grand Court of the Cayman Islands. MIP is now completing the
documentation required to implement the Plan and expects that
process to be completed and the Plan implemented by June 30,
2002.
About MIP - MIP is incorporated in the Cayman Islands and is
involved in oil and gas exploration, development and production.
Through its wholly-owned subsidiaries MIP holds oil and gas
interests in Peru and Colombia. MIP's financial statements are
available on SEDAR.
METALDYNE CORP: S&P Rates $300MM Senior Subordinated Notes at B
---------------------------------------------------------------
Standard & Poor's assigned its single-'B' rating to Plymouth,
Mich.-based Metaldyne Corp.'s proposed $300 million senior
subordinated notes due 2012.
In addition, Standard & Poor's assigned its double-'B'-minus
rating to Metaldyne's new $350 million senior secured term loan
D. At the same time, these ratings were placed on CreditWatch
with positive implications. Proceeds from the debt issues will
be used to refinance existing indebtedness. The double-'B'-minus
corporate credit rating on Metaldyne remains on CreditWatch with
positive implications where it was placed May 16, 2002.
Metaldyne, a manufacturer of automotive components and
industrial products, had total debt of about $1.4 billion as of
March 31, 2002.
The CreditWatch listing reflects Metaldyne's intention to sell a
66% stake in its wholly owned subsidiary, TriMas Corp., for $840
million in cash and debt reductions. Pro forma for the sale and
new debt issues, Metaldyne's debt will total $780 million.
TriMas, a manufacturer of vehicle hitches, packaging systems,
and specialty industrial fasteners, is being sold to Metaldyne's
largest shareholder, Heartland Industrial Partners, L.P.
"Metaldyne intends to use proceeds from the sale to reduce debt,
which will improve the company's currently stretched financial
profile," said Standard & Poor's analyst Martin King.
Pro forma for the transaction, total debt (including operating
leases and sold accounts receivable) to EBITDA will decline to
about 4.4 times (x) from 5.3x. At the same time, the sale would
also somewhat weaken Metaldyne's business profile by reducing
the company's product, customer, and end-market diversity.
NII HOLDINGS: Looks to Houlihan Lokey For Financial Advice
----------------------------------------------------------
NII Holdings, Inc., and its debtor-affiliates have hired
Houlihan Lokey Howard & Zukin Capital as their financial
advisor.
The Debtors recognize the pressing need to retain a financial
advisor to assist them in the critical tasks associated with
analyzing and implementing critical restructuring alternatives,
and to help guide them through their reorganization efforts.
According to their sound business judgement, the Debtors
determined that Houlihan Lokey's broad experience would best
serve their interests and their creditors' in these cases.
As the financial advisor to the Debtors, it is expected that
Houlihan Lokey will:
i) Advise the Company generally of available capital
restructuring and financing alternatives, including
recommendations of specific courses of action and assist
the Company with the design of alternative Transaction
structures and any debt and equity securities to be
issued in connection with a Transaction;
ii) assist the Company in its discussions with lenders,
bondholders and other interested parties regarding the
Company's operations and prospects and any potential
Transaction;
iii) assist the Company with the development, negotiation and
implementation of a Transaction or Transactions,
including participation as a representative of the
Company in negotiations with creditors and other parties
involved in a Transaction;
iv) assist the Company in valuing the Company and/or, as
appropriate, valuing the Company's assets or operations;
provided that any real estate or fixed asset appraisals
needed would be executed by outside appraisers;
v) provide expert advice and testimony relating to
financial matters related to a Transaction or
Transactions, including the feasibility of any
Transaction and, the valuation of any securities issued
in connection with a Transaction;
vi) to the extent requested by the Company, advise the
Company as to potential mergers or acquisitions, and the
sale or other disposition of any of the Company's assets
or businesses;
vii) to the extent requested by the Company, advise the
Company and act as placement agent, as to any potential
financings, either debt or equity;
viii) prepare proposals to creditors, employees, shareholders
and other parties-in-interest in connection with any
Transaction;
ix) assist the Company's management with presentations made
to the Company's Board of Directors regarding potential
Transactions and/or other issues related thereto; and
x) render such other financial advisory and investment
banking services as may be mutually agreed upon by
Houlihan Lokey and the Company.
Pursuant to the Engagement Letter, Houlihan Lokey will
receive:
a. a Monthly Fee of $200,000 for the first six months of
the engagement, and a Monthly Fee of $150,000
thereafter. In addition, after the initial six months of
the engagement, the Monthly Fees shall be fully credited
against any other fees earned by Houlihan Lokey;
b. a Transaction Fee equal to 60 basis points (0.60%) of
the face amount of the Company's debt that is
restructured, modified, amended, foreign or otherwise
compromised. The Transaction Fee shall be reduced by the
full amount of the Monthly Fees paid after the first six
months of the engagement, and shall be subject to a cap
of $13 million; and
c. the reimbursement of all reasonable out-of-pocket
expenses.
The Debtors assure that Court that Houlihan Lokey does not
represent any of the Debtors' creditors or other parties to this
proceeding and is a "disinterested person" as describe in
Bankruptcy Code.
NII Holdings, Inc., along with its wholly-owned non-debtor
subsidiaries, provides wireless communication services targeted
at meeting the needs of business customers in selected
international markets, including, inter alia, Mexico, Brazil,
Argentina and Peru. The Company filed for chapter 11 bankruptcy
protection on May 24, 2002. Daniel J. DeFranceschi, Esq.,
Michael Joseph Merchant, Esq. and Paul Noble Heath, Esq. at
Richards, Layton & Finger represent the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $1,244,420,000 in total assets and
$3,266,570,000 in total debts.
NATIONSRENT INC: Pettys Seek Court Determination on Contracts
-------------------------------------------------------------
Kenneth D. Petty and Ted L. Petty ask the Court to determine
that their Stock Purchase Agreement and their respective
Employment Agreements with NationsRent Inc., and its debtor-
affiliates, are not executory. The Pettys likewise ask the
Court to rule that the Restrictive Covenants under these
agreements terminated prior to the filing of the Debtors'
Chapter 11 cases. In the alternative, the Pettys ask the Court
to shorten the time for the Debtors to assume or reject the
Employment Agreements and the Purchase Agreement within 30 days.
The Pettys entered into a Stock Purchase Agreement with debtor
Tennessee Tool and Supply, Inc., for the sale to Tennessee Tool
of all the Pettys' capital stock in Tennessee Tool. Debtor
Tennessee Tool agreed to make payments to the Pettys in
accordance with a September 25, 1998 Unsecured Convertible
Subordinated Promissory Note worth $3,100,000 made by Tennessee
Tool payable to the Pettys.
Roger G. Jones, Esq., at Boult, Cummings, Conners, & Berry, PLC
in Nashville, Tennessee, reminds the Court that "[An executory
contract is] a contract under which the obligation of both the
bankrupt and the other party to the contract are so far
unperformed that the failure of either to complete performance
would constitute a material breach excusing performance of the
other." Where both parties have material unperformed
obligations, the contract is executory, even if one party's only
remaining obligation involves the payment of money.
Mr. Jones contends that neither the Employment Agreements nor
the Purchase Agreement are executory contracts since the
Restrictive Covenants terminated prior to the filing of this
case. The Pettys only agreed to be bound by the Restrictive
Covenants "so long as an Event of Default had not occurred under
the terms of the Promissory Note." Before petition date, on
November 14, 2001, the Debtors admitted in writing their
inability to pay the debts as they become, an Event of Default
occurred under the Note for which no notice was required and the
Restrictive Covenants terminated. In addition, at no time on or
after November 20, 2001 did the Debtors make payments to the
Pettys in accordance with the terms of the Note.
Assuming arguendo that the Restrictive Covenants were not
terminated prior to the filing of this case, Mr. Jones believes
that the Employment Agreements and the Purchase Agreement are
executory contracts that must be assumed or rejected. If the
Debtors wish to enforce the Restrictive Covenants prior to their
decision to assume or reject the Employment Agreements and the
Purchase Agreement, then they must ask this Court under
Bankruptcy Code Section 105 to permit them to enforce the
Restrictive Covenants pending assumption or rejection and
continue to perform their obligations under those contracts.
However, the Debtors have taken no action under Section 105 to
require performance by the Pettys under the Restrictive
Covenants and have not performed their obligations under any of
the Agreements.
Despite the fact that the Debtors have not assumed the
Employment Agreements or the Purchase Agreements, have not
sought this Court to enforce these contracts pending assumption
or rejection, and have not performed their obligations under the
contracts postpetition, the Debtors insist that the Pettys must
comply with the Restrictive Covenants, when, the Restrictive
Covenants terminated prior to the filing of this case. If the
Court concludes this is not the case, Mr. Jones believes that
the Debtors must be compelled to immediately assume or reject
the Employment Agreements and the Purchase Agreement. They
should not be permitted to demand that the Pettys comply with
the Restrictive Covenants without assuming these contracts.
Mr. Jones claims that the interests of the Pettys in obtaining
an early determination regarding the Employment Agreements and
the Purchase Agreement outweigh any harm to the Debtors. The
Debtors wish to enforce the terms of the Restrictive Covenants
without performing any reciprocal obligation on Debtor's part.
The Pettys agreed to be bound by the Restrictive Covenants so
long as no Events of Default existed under the Note. The Pettys
now cannot afford to be bound by the Restrictive Covenants
because they have not received payments under the Note Or the
Employment Agreements.
According to Mr. Jones, the Purchase Agreement and the
Employment Agreements are likely of little value to the
bankruptcy estate. In order to assume the Purchase Agreement and
the Employment Agreements, the Debtors would have to pay
substantial cure amounts, including all amounts owing under the
Note, the Pettys' bonuses, the Pettys' annual salaries, any and
all other Post-Termination Obligations, and the "Senior
Indebtedness" to which the Note is subordinated. The Debtors
will not suffer harm by virtue of making an earlier
determination to assume or reject.
Debtors Object
Having withdrawn their previous Motion to Compel Rejection of
Executory Contract, Michael J. Merchant, Esq., at Richards,
Layton & Finger P.A. in Wilmington, Delaware, says, the Pettys
now return for a second bite of the apple. The Pettys' present
motion fares no better than their first attempt. The Motion is
premised on the assertion that an Event of Default has occurred
on a Promissory Note the Debtors issued to the Pettys. This
assertion, however, is without support in either fact or law.
Again, the Pettys failed to identify all the agreements between
the Pettys and the Debtors that contain Restrictive Covenants.
At the end of the day, these additional Restrictive Covenants
again render the Pettys' newest Motion moot.
Mr. Merchant states that the Pettys did not seek relief with
respect to their Asset Purchase Agreement, notwithstanding the
fact that these agreements contain Restrictive Covenants nearly
identical to those of the Stock Purchase and Employment
Agreements. The Pettys remain bound by the terms of the
Restrictive Covenants in the Asset Purchase Agreements. Mr.
Merchant adds that there is no merit to the Pettys' claim that
an Event of Default occurred because the Debtors "failed to make
its required payments of accrued interest under the Note to the
Pettys" after Pettys' attorney notified the Debtors of their
delinquency by letter dated November 20, 2001. The Promissory
Note provides that an Event of Default occurs if the "Maker
shall fail to pay when due any payment of principal or interest
on this Note and that failure continues for 90 days after Payee
notifies the Maker in writing."
Mr. Merchant notes that the Pettys agreed to a subordination
provision that provided that the Debtors have no payment
obligations in the event of a "Payment Default" on "Senior
Indebtedness". Specifically, the Note provides that "[i]n the
event of and during the continuation of any default in the
payment of any Senior Indebtedness beyond any applicable grace
period with respect thereto, then no payment shall be made by or
on behalf of Maker of this Note" until the senior Payment
Default is waived, cured, discharged or otherwise ceases to
exist. Thus, there can be no Event of Default while the Debtors
are excused from making payments because of the existence of a
Payment Default on Senior Indebtedness. (NationsRent Bankruptcy
News, Issue No. 12; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
DebtTraders reports that NationsRent Inc.'s 10.375% bonds due
2008 (NATRENT) are quoted between 1 and 2. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NATRENTfor
more real-time bond pricing.
PACIFIC GAS: Seeks Court Approval to Incur HR & Payroll Expenses
----------------------------------------------------------------
Pacific Gas and Electric Company tells the Court that the
average age of its human resources and payroll systems is in
excess of 30 years.
Over the past several years, PG&E has studied the costs of
replacing its aging HR & Payroll System. In lieu of replacement,
PG&E has continued to maintain the applications, replacing those
elements that are most at risk. As a result, the applications
are based on outdated technology and computer code and system,
transaction failures have occurred with increasing frequency,
and there are limited knowledgeable employees and other
potential resources available to maintain the systems.
Since the HR & Payroll System is in need of replacement, it
would be impractical and perhaps impossible to use versions of
the existing system for the New Entities, PG&E tells the Court.
PG&E's HR & Payroll System currently supports 33,000 current and
former employees and accommodates the requirements of four
collective bargaining agreements in place between PG&E and its
three unions. The HR & Payroll System consists of over 50
different information technology systems and applications.
The New Entities will require human resources and payroll
systems to support the payroll and related functions needed for
a company employing thousands of employees with benefits
comparable to PG&E's existing benefits, and the restrictions of
a collective bargaining agreement, among other complexities.
For the New Entities, PG&E has selected an integrated, vendor-
supplied human resources system known as the Human Resources
Management System, developed by PeopleSoft, Inc. The HRMS
offers the functionality and flexibility of modern software and
also avoids PG&E's current problems with system failures and
obsolete program code, PG&E tells the Court.
In order to implement the HRMS for use by the New Entities, PG&E
has selected PeopleSoft to provide technical and functional
assistance because PG&E does not have sufficient internal
resources to implement the HRMS. PG&E contemplates that
PeopleSoft will work under the direction and supervision of
PG&E's project manager for the HRMS implementation. PeopleSoft
will provide project management support, functional leads for
each module, technical resources, a database administrator and a
test team.
PG&E requests approval to incur approximately $2.2 million in
consulting fees to be paid to PeopleSoft for the period
beginning April 2002 and continuing to the Effective Date. PG&E
will pay PeopleSoft on a monthly basis, based on monthly
billings by PeopleSoft.
Specifically, the Services to be provided by PeopleSoft will
include:
(i) implementation of the HRMS through the four modules,
including configuration and set-up of the software, in
addition to system testing and system deployment;
(ii) designing, building and testing of interfaces between
the HRMS and internal (such as accounting) and external
(such as payroll direct deposit) systems;
(iii) programming changes or customizations;
(iv) development of controls, procedures and authorizations
to be configured into the software to control access to
confidential or other private information within the
system;
(v) designing and building the tools needed to extract and
deliver system data to end users; and
(vi) configurations needed to control the flow of
authorizations and signoffs involved in, for example,
hiring a new employee or authorizing a payroll change.
To the extent that subsequent events demonstrate that the HRMS
is unnecessary, PG&E retains the right to terminate PeopleSoft's
contract.
PG&E may require additional resources in connection with the
completion of the HRMS project, such as end-user training and
documentation, and technical and administrative assistance. If
and when PG&E decides that such assistance is required, PG&E
will file a subsequent motion seØking approval for these
additional expenses.
PG&E submits that sound business justifications exist for
approval of the HRMS Expenses because:
(i) its outdated and problematic HR & Payroll System cannot
be utilized for the New Entities;
(ii) the development of the HRMS for the New Entities will be
one of the critical first steps in the Plan
implementation process since it will be integral to the
commencement of business operations;
(iii) the work necessary for the HRMS to reach basic
functionality could take up to 12 months and therefore
cannot be delayed until after Plan confirmation without
jeopardizing PG&E's ability to timely implement the
Plan.
PG&E believes that PeopleSoft is not a "professional person"
under the Bankruptcy Code due both to the nature of the Services
to be provided and PeopleSoft's limited role in connection with
PG&E's reorganization proceeding.
Since the HRMS relates to implementation of the Plan, PG&E
believes that the purpose and scope of the expenditure may be
characterized as outside of the ordinary course of business and
therefore requires Court approval. (Pacific Gas Bankruptcy News,
Issue No. 37; Bankruptcy Creditors' Service, Inc., 609/392-0900)
PATHMARK STORES: S&P Revises BB- Ratings Outlook to Stable
----------------------------------------------------------
Standard & Poor's revised its outlook on regional supermarket
operator Pathmark Stores Inc. to stable from positive based on
lower sales and earnings expectations for the company in 2002
and Standard & Poor's belief that Pathmark may face greater
challenges in significantly improving operating performance over
the next two years.
The double-'B'-minus corporate credit rating on the company was
also affirmed. Carteret, New Jersey-based Pathmark has about
$200 million of rated debt.
"Same-store sales were negative 1.2% in the first quarter of
2002 due to weakened economic conditions and increased
promotional activity in the greater New York metropolitan
market. Same-store sales are also expected to be negative in the
second quarter of 2002 and flat for fiscal 2002," Standard &
Poor's credit analyst Patrick Jeffrey said. "As a result of
these lower-than-expected sales levels, EBITDA coverage of
interest is expected to be about 2.5 times in 2002, similar to
fiscal 2001."
"Pathmark's leading market position and stable operating
performance since 2000 provide support for the ratings," Mr.
Jeffrey added. "However, a highly competitive operating
environment is expected to challenge the company to
significantly improve operations over the next two years."
Standard & Poor's said it believes Pathmark's strategy to drive
customer traffic, increase private-label sales, and implement
other operating initiatives could result in lease-adjusted
operating margin improvements to above 6.0% over the next three
years from about 5.6% in 2001. Free cash flow is expected to be
marginal to negative over the next two years as the company
maintains increased levels of capital expenditures to improve
its store base. Financial flexibility is provided by a $175
million revolving credit facility.
RIVIERA HOLDINGS: S&P Assigns B+ Rating to Proposed $210MM Notes
----------------------------------------------------------------
Standard & Poor's said today that it assigned its single-'B'-
plus rating to the proposed $210 million senior secured notes
due 2010 to be issued by Riviera Holdings Corp. These securities
are expected to be privately placed under Rule 144A.
Proceeds from the notes, along with excess cash balances, will
be used to defease the company's 10% senior secured notes due
2004 and redeem the 13% senior secured notes due 2005
outstanding at the company's subsidiary, Riviera Black Hawk Inc.
(B-/Positive/--). Following the redemption of the Riviera Black
Hawk notes, Standard & Poor's will withdraw its ratings on that
entity.
At the same time, Standard & Poor's affirmed Riviera Holdings
Corp.'s single-'B'-plus corporate credit and senior secured
ratings. The rating on the company's existing senior secured
notes will be withdrawn once the refinancing is complete. The
outlook remains negative.
Riviera Holdings, based in Las Vegas, Nev., owns and operates
the Riviera Hotel and Casino in Las Vegas, and through a
restricted subsidiary, owns a casino in Black Hawk, Colo.
Approximately $220 million in debt (including Black Hawk) was
outstanding at March 31, 2002.
"Ratings could be lowered if the company's overall financial
profile does not strengthen, as expected, from current levels to
provide a cushion to fund possible investment opportunities,"
said Standard & Poor's credit analyst Michael Scerbo.
The company's growth opportunities may include a casino/hotel
development in Jefferson County, Mo., and a racetrack in Hobbs,
N.M. The company has outlined a $150 million project for
Jefferson County that would be funded on a project financing
basis, with an expected equity contribution or other support
from Riviera Holdings. The Hobbs project is expected to be much
smaller in size, scope, and cost. Still, Riviera Holdings would
likely commit some equity, either through an initial
contribution or credit support following the property's opening.
SAFETY-KLEEN: Clean Harbors Submits "Qualified Bid" for Assets
--------------------------------------------------------------
Safety-Kleen Corp. announced that the bidding deadline for the
acquisition of its Chemical Services Division passed last
Thursday with several bids received, but only one that has been
determined to be a "qualified bid" pursuant to the bidding
procedures and requirements approved by the Bankruptcy Court.
The qualified bid was received from Clean Harbors, Inc.,
consistent with a previously announced definitive agreement
reached between Safety-Kleen and Clean Harbors in February 2002.
Other bids were received by the May 30, 2002 deadline, including
one from Onyx North America, but those bids have been determined
not to meet the requirements of a qualified bid.
As a result, Safety-Kleen will not conduct an auction of the CSD
assets, and the Clean Harbors bid will be presented to the
Bankruptcy Court for approval during a scheduled June 13
hearing.
Prior to submitting its bid, Onyx filed a motion with the
Bankruptcy Court, objecting to the proposed sale of the CSD, and
seeking a 60-day delay in the bidding deadline. Safety-Kleen
filed its reply asking the Court to deny the Onyx objection in
its entirety. The Court has scheduled a hearing on the Onyx
request for June 10.
"We are pleased to be moving forward with the sale of the
Chemical Services Division," said Safety-Kleen Chairman,
President and CEO Ronald A. Rittenmeyer. "This is another
important step in our efforts to successfully emerge from
bankruptcy protection."
Based in Columbia, South Carolina, Safety-Kleen Corp. is the
largest industrial and hazardous waste management company in
North America, serving more than 400,000 customers in the United
States, Canada, Mexico and Puerto Rico. Safety-Kleen Corp. is
currently under Chapter 11 bankruptcy protection, which it
entered into voluntarily on June 9, 2000.
SAKS INC: Comparable Store Sales Slide-Down 3.3% in May 2002
------------------------------------------------------------
Retailer Saks Incorporated (NYSE:SKS) announced that comparable
store sales for the four weeks ended June 1, 2002 compared to
the four weeks ended June 2, 2001 decreased 3.3% on a total
company basis. By segment, comparable store sales decreased 1.2%
for SDSG and 6.4% for SFAE for the period. Sales below are in
millions and represent sales from owned departments only.
For the four weeks ended June 1, 2002 compared to the four weeks
ended June 2, 2001, owned sales were:
Total Comparable
This Year Last Year (Decrease) (Decrease)
--------- --------- --------- -----------
SDSG $ 240.0 $ 241.2 (0.5%) (1.2%)
SFAE 155.3 172.0 (9.7%) (6.4%)
---------- --------- ---- ------
Total $ 395.3 $ 413.2 (4.3%) (3.3%)
On a year-to-date basis, for the four months ended June 1, 2002
compared to the four months ended June 2, 2001, owned sales
were:
Comparable
Total Increase
This Year Last Year (Decrease) (Decrease)
--------- --------- --------- ---------
SDSG $1,053.8 $1,061.2 (0.7%) 0.5%
SFAE 757.7 802.6 (5.6%) (1.5%)
---------- ---------- ------ -------
Total $1,811.5 $1,863.8 (2.8%) (0.3%)
Merchandise categories with the best sales performances for SDSG
in May were accessories, women's better and special size
apparel, housewares, furniture, and cosmetics. Categories with
softer sales performances for SDSG in May were men's sportswear,
soft home, intimate apparel, and children's apparel. Categories
with the best sales performances for SFAE in May were jewelry,
women's contemporary sportswear, American designer collections,
women's "gold range" apparel, and fragrances and cosmetics.
Categories with the softest sales performances for SFAE in May
were men's apparel, designer casual women's sportswear, women's
special size apparel, shoes, and intimate apparel.
Saks Incorporated operates Saks Fifth Avenue Enterprises, which
consists of 61 Saks Fifth Avenue stores and 52 Saks Off 5th
stores. The Company also operates its Saks Department Store
Group (SDSG) with 243 department stores under the names of
Parisian, Proffitt's, McRae's, Younkers, Herberger's, Carson
Pirie Scott, Bergner's, and Boston Store.
* * *
As reported in the Feb. 1, 2002, edition of Troubled Company
Reporter, Standard & Poor's assigned its double-'B'-plus rating
to Saks Inc.'s $700 million senior secured bank credit facility
that expires in November 2006.
At the same time, Standard & Poor's affirmed its double-'B'
corporate credit and senior unsecured debt ratings on Saks. The
preliminary double-'B' senior unsecured and preliminary single-
'B'-plus subordinated ratings on the company's shelf
registration were also affirmed. The outlook is negative.
SEITEL INC: Elects Fred Zeidman as New Board Chairman
-----------------------------------------------------
Seitel, Inc. (NYSE: SEI; Toronto: OSL) announced two changes in
its Board of Directors intended to further strengthen its
governance structure. Fred S. Zeidman, a Director of the
Company since 1997, has been elected Chairman of the Board
replacing Paul A. Frame, who voluntarily relinquished the
position and will continue to serve as President and CEO. Mr.
Zeidman is Managing Partner of WoodRock & Company and is a
member of a number of civic and non-profit organizations.
Robert L. Knauss, Chairman and CEO of Baltic International USA,
has been elected to join the Board. Mr. Knauss is the former
Dean of the schools of law at both the University of Houston and
Vanderbilt University and served as a Visiting Professor at the
Amos Tuck School of Business Administration at Dartmouth
College. Mr. Knauss serves as a Director of three other
publicly traded companies.
The Board of Directors has appointed Mr. Knauss as the sole
member of the independent committee to review the allegations
made in the derivative actions filed against certain officers
and directors of the Company. The Board has given Mr. Knauss
full powers to investigate the allegations. Mr. Knauss had
no previous connection to the Company.
In addition to the changes in its membership, the Board
reconfirmed its direction to the Company to promptly take all
appropriate steps to improve the Company's financial position,
including reducing capital expenditures and overhead and
pursuing financing options. The Company is continuing its
discussions with the holders of its Senior Notes regarding its
non-compliance with covenants contained in the Senior Note
Agreements.
The Company also announced that it has initiated legal action in
Federal District Court in Houston, Texas seeking a declaratory
judgment with respect to the employment agreement between the
Company and Herbert M. Pearlman, former chairman of the Board of
the Company. Following his resignation, Mr. Pearlman and the
Company entered into negotiations for a restructuring of his
employment agreement. During the negotiations, a document was
created which Mr. Pearlman now alleges has superseded the
employment agreement. The Company asserts that the document was
not approved by the Board of Directors or the Compensation and
Stock Option Committee. The Company seeks a judgment declaring
the effect of Mr. Pearlman's resignation on the employment
agreement, whether the Company owes any amounts under the
employment agreement as a result of his resignation and, if so,
how much, and a judgment that the subsequent document is not
binding on the Company and is not enforceable by Mr. Pearlman
against the Company.
The Company also stated that a total of ten lawsuits alleging
violations of the securities laws have been filed against the
Company and certain current and former officers and directors of
the Company. The plaintiffs are seeking certification as a
class action. The Company intends to vigorously defend itself
in these cases. In addition, three derivative actions have been
filed, all of which have previously disclosed. Harold G. Basser
v. Paul A. Frame et al. (No. H-02-1874), which was earlier
described as a class action, is in fact a derivative action. As
indicated above, the Board of Directors is undertaking an
independent investigation of the allegations and, upon
completion of the investigation, will take whatever action may
be appropriate.
Seitel markets its proprietary seismic information/technology to
more than 400 petroleum companies, selling data from its library
and creating new seismic surveys under multi-client projects.
It also selectively participates in oil and natural gas
exploration and development programs.
SEXTANT ENTERTAINMENT: Files for CCAA Protection to Restructure
---------------------------------------------------------------
Sextant Entertainment Group Inc. and several of its
subsidiaries, announced that in order to implement a new
strategic plan and restructure its debt load, the Board of
Directors has authorized the application for creditor protection
under the Companies' Creditors Arrangement Act in the Supreme
Court of British Columbia.
The Company believes that it will be able to maintain
production, visual effects and distribution operations in the
short term with its schedule of contracted revenues and tax
rebates and debtor in possession financing ("DIP Financing").
Hearthstone Investments Ltd., Sextant's controlling shareholder,
has provided a $150,000 DIP Financing Facility to finance the
operational requirements of the Company during the restructuring
period, including the payment of professional fees associated
with CCAA application. The ability of the Company to continue
operations in the longer term is subject to securing additional
DIP Financing and the Company's ability to attract strategic
investment.
The strategic plan includes the elimination of all non-essential
overhead and an increase in production and distribution service
volumes. The Company is currently in discussions with strategic
investors concerning a possible investment in the Company but,
at present, there is no assurance that an agreement will be
concluded.
"We have filed the application in order to restructure our
operations and focus on the company's core businesses of quality
television production, visual effect and distribution services"
said Matthew O'Connor, President Corporate & Production. "The
Board and Management believe that taking these steps will
provide the company the tools and the time to implement the
Company's strategic plan".
Sextant Entertainment Group Inc. (TSX: YSX.u) is a fully
integrated network television production, post-production
(visual effects) and distribution services company. Built
through acquisition, the company has an extraordinary history of
producing and distributing award winning premium entertainment.
SPARTAN STORES: S&P Rates $200MM Senior Subordinated Notes at B
---------------------------------------------------------------
Standard & Poor's assigned its single-'B' rating to Spartan
Stores Inc.'s planned $200 million senior subordinated note
offering due in 2012. These notes will be used to refinance a
portion of the company's senior secured debt. The company
operates retail food stores and is a wholesale food distributor.
A double-'B'-minus corporate credit rating was also assigned to
Grand Rapids, Michigan-based Spartan. The outlook is negative.
Pro forma total debt is expected to be about $330 million.
"The ratings are based on Spartan's participation in the highly
competitive food retail and wholesale sectors, and a limited
history operating a significant retail store base," Standard &
Poor's credit analyst Patrick Jeffrey said. "These risks are
mitigated, somewhat, by the company's leading retail market
positions in Toledo, Ohio, and northern and western Michigan."
Standard & Poor's said pro forma lease-adjusted EBITDA coverage
of interest is 2.6 times. Operating margins declined to 3.0% in
fiscal 2002 from 3.5% in 2001 due to competitive difficulties in
the company's retail business. Margins could return to historic
levels over the next three years if the company is successful
with its recent operating initiatives. Pro forma total debt to
EBITDA is 4.0x.
Standard & Poor's said initiatives to reduce inventory and
improve working capital should allow Spartan to generate free
cash flow in the future to help fund store growth and pay down
debt. Financial flexibility is provided by a $100 million
revolving credit facility.
STAMPEDE WORLDWIDE: Ability to Continue Operations Uncertain
------------------------------------------------------------
Stampede Worldwide Inc. has incurred substantial operating
losses since inception. Current liabilities exceed current
assets by $3,150,696 at March 31, 2002. These factors, combined
with the fact that the Company has not generated positive cash
flows from operating activities since inception, raise
substantial doubt about the Company's ability to continue as a
going concern.
During the three and six months periods ended March 31, 2002 and
2001, the Company's activities were conducted primarily in its
subsidiaries. The Company's subsidiaries and their respective
businesses were as follows:
For the three and six months periods ended March 31, 2002:
* Chronicle Commercial Printing, Inc. - commercial web
offset printing, which is continuing
* Stampede Network.com, Inc. - web design and hosting, and
Proprietary database programming, which has been
terminated.
For the three and six months periods ended March 31, 2001:
* Chronicle Commercial Printing, Inc. - commercial web
offset printing
* Stampede Network.com, Inc. - web design and hosting, and
proprietary database programming, and Stampede Quest, a
technology employment placement agency, both of which
have been terminated
* Spiderscape.com, Inc. - Internet and catalog based
computer hardware and software retailing, which has been
terminated
* i-Academy, Inc. - technical computer and software
training facilities, which has merged into and become
Specialized Solutions, Inc.
The Company's financial position, as of March 31, 2002 in
contrast to its financial position at March 31,2001, has
worsened. The Company's current assets for the six months ended
March 31, 2002 decreased by $276,971 and current liabilities
increased by $1,872,001 as compared to the same six-month period
ended March 31, 2001. The cash balance decreased by $2,017.
Accounts receivable net of allowances decreased by $135,500.
This was due primarily to the closure of the technology
subsidiaries as operating units, resulting in lower sales and
receivable amounts. Inventory and other assets deceased by
$139,454. Other assets decreased by a total of $894,207, due
primarily to the write-off of a shareholder receivable of
$635,035 and the transfer of intangible assets in the
Specialized Solutions, Inc. reverse merger transaction.
Accounts payable and accrued liabilities balances increased by
$50,496 as a result of the common stock distribution pursuant to
a court order under bankruptcy. Total accounts payable and
short-term notes paid through issuance of stock totaled
$857,323. Furthermore, bank overdrafts decreased to $3,651.
Long-term debt decreased by $2,287,875, primarily from a
reclassification of the lease on the printing press from capital
to operating and the reclassification of the mortgage note
payable of $2,125,000 from long-term to current due to the
Company's default under the modified agreement approved by the
Bankruptcy Court. Stockholders' equity has decreased by
$1,824,968 from total shareholders' equity of $2,075,484 at
March 31, 2001 to a balance of $250,516 at March 31, 2002.
Overall, the balance sheet has decreased by $2,240,842 from
total assets of $5,943,867 at March 31, 2001 to $3,703,025 at
March 31, 2002.
Liquidity and Capital Resources:
Cash and cash equivalents for the period ended March 31, 2002 is
a deficit balance of $3,133. The decrease of $13,613 since the
fiscal year end was due principally to principal repayments of
debt.
Net cash in operating activities increased by $2,157,863 between
March 31, 2002 and 2001. The increase is attributed to the
closure of all subsidiaries except for the commercial printing
operation, thus eliminating unprofitable and cash-draining
operations. However, Stampede Network.com, Inc. had ongoing
projects after its closure. These projects were concluded in
November 2001 and the Company has no plans to continue
operations in this division. Cash received after closure
totaled $26,288.
Cash increases from operating activities resulted from an
increase in accounts payable and other liabilities of $306,578
and adjustments to reconcile cash provided by operating
activities to net income of a negative $444,371 for gain on
forgiveness of debt, depreciation and loss on investment in
unconsolidated investee.
No cash was used in investing activities for March 31, 2002.
The increase in cash between March 31, 2001 and 2000 is
completely due to no spending on capital items.
Net cash in financing activities decreased by $23,180 for March
31, 2002. The decrease is attributed entirely to principal
repayments of debt.
During the six months ended March 31, 2002, the Company funded
all of its working capital needs through operations. For the
six months ended March 31, 2001, the Company funded most of its
working capital needs through the sale of common stock.
The Company's working capital ratio declined by $2,148,972 as of
March 31, 2002 when compared to March 31, 2001. This decrease
is due primarily to the reclassification of the mortgage note
payable of $2,125,000 from long-term to current due to the
Company's default under the modified agreement
approved by the Bankruptcy Court. The Company's current ratio
at March 31, 2002 is a negative 1.0:11.4 ratio in contrast to
the negative current ratio of 1.0:2.7 at March 31, 2001.
Results of Operations:
For the three months ended March 31, 2002:
The Company showed a decrease in revenues for the three months
ended March 31, 2002 in the amount of $69,953 or a decrease of
14.8% over the same period for 2001. This was due primarily to
the closure of the technology subsidiaries as operating units.
Cost of sales decreased by $111,495 for the three months period
ended March 31, 2002 versus 2001. Management believes the
decreases were the results of less costs of labor in the
printing operation when compared to the technology companies
labor in the prior year. Additionally, the gross profit margin
increased to 21.2% for the three months ended March 31, 2002, in
contrast to a gross margin of 9.3% for the same period in 2001.
For the six months ended March 31, 2002:
The Company showed a decrease in revenues for the six months
ended March 31, 2002 in the amount of $192,582 or a decrease of
18.6% over the same period for 2001. This was due primarily to
the closure of the technology subsidiaries as operating units.
Cost of sales decreased by $368,118 for the six months period
ended March 31, 2002 versus 2001. Management believes that here
too the decreases were the results of less costs of labor in the
printing operation when compared to the technology companies
labor in the prior year. Additionally, the gross profit margin
increased to 31.2% for the six months ended March 31, 2002, in
contrast to a gross margin of 8.5% for the same period in 2001.
TECSTAR INC: Taps Michael Fox to Assist in Asset Disposition
------------------------------------------------------------
Don Julian, Inc., formerly known as Tecstar, Inc. and its
debtor-affiliates moves the U.S. Bankruptcy Court for the
District of Delaware to employ and retain Michael Fox
International, Inc. as their asset disposition agent.
The Court approved the Debtors' entry into an asset sale
agreement under which the Debtors sold the solar cell
manufacturing business to EMCORE Corporation and TPS Acquisition
Commission. The final purchase price of the assets was $20.3
million. The Debtors are currently in the process of liquidating
their remaining assets. The Debtors wish to retain Michael Fox
to hold an auction and for other sales of miscellaneous assets
in these cases.
Prior to retaining Michael Fox, the Debtors interviewed senior
personnel of and considered proposals from other asset
disposition firms. The Debtors concluded that Michael Fox was
best qualified to provide asset disposition services to the
Debtors at a reasonable level of compensation.
Michael Fox will guaranty that the aggregate amount of the gross
proceeds from the auction and any miscellaneous sales will be at
least $450,000. Pursuant to the Agreement, Michael Fox will be
compensated as:
a) after the payment of the Guaranteed Amount, Michael Fox
will be entitled to retain up to $55,000 as a Risk
Premium;
b) after payment of the Guaranteed Amount and the Risk
Premium, the Debtors will receive 85% of the Sale
Proceeds and Michael Fox shall receive the remaining 15%
of the Sale Proceeds;
c) Michael Fox will be entitled to a buyer's premium of
10%.
Tecstar, Inc. manufactures high-efficiency solar cells that are
primarily used in the construction of spacecraft and satellite.
The Company filed for chapter 11 protection on February 07,
2002. Tobey M. Daluz, Esq. at Reed Smith LLP and Jeffrey M.
Reisner at Irell & Manella LLP represent the Debtors in their
restructuring efforts. When the company filed for protection
from its creditors, it listed assets of over $10 million and
debts of over $50 million.
VELOCITA CORP: Files for Chapter 11 Protection in New Jersey
------------------------------------------------------------
The Washington Post reports that Velocita Corp. has filed for
chapter 11 bankruptcy protection and plans to restructure itself
from a telecommunications services company into a construction
company that digs trenches and lays fiber-optic cable. Velocita
listed debts of $827 million and $482.8 million in assets in a
document filed with a New Jersey bankruptcy court on May 30,
2002. According to an industry source close to Velocita's
financial partners, the Falls Church, Virginia-based company
will most likely try to arrange a sale of its business . . . and
is in negotiations for such a sale with a regional Bell company
and a government contractor, reported the Post. (ABI World, June
5, 2002)
VELOCITA CORP: Case Summary & 30 Largest Unsecured Creditors
------------------------------------------------------------
Lead Debtor: Velocita Corp.
2941 Fairview Park Drive
Suite 200
Falls Church, Virginia 22042
fka PacwestFiber.Net LLC
fka PF.Net, LLC
fka PF.Net Holdings, Limited
fka PF.Net Network Services
fka PF.Net Communications, Inc.
Bankruptcy Case No.: 02-35895
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
PF.Net Construction Corp. 02-35896
PF.Net Corp. 02-35897
PF.Net Network Services Corp. 02-35898
PF.Net Supply Corp. 02-35899
PF.Net Virginia Corp. 02-35900
PF.Net Construction, LLC 02-35901
PF.Net Network Services East, LLC 02-35902
PF.Net Network Services West, LLC 02-35903
PF.Net Supply, LLC 02-35904
PF.Net Virginia, LLC 02-35905
Type of Business: The Debtor, together with its direct and
indirect debtor affiliates and subsidiaries
in the above-captioned chapter 11 cases, is
in the business of building a nationwide
broadband fiber-optic network (the "Network")
aimed at serving communications carriers,
internet service providers, data providers,
television and video providers, as well as
corporate and government customers. The
Network, by design, is tailored for those
customers that have unique bandwidth network
requirements.
Chapter 11 Petition Date: May 30, 2002
Court: District of New Jersey (Newark)
Judge: Donald H. Steckroth
Debtors' Counsel: Howard S. Greenberg, Esq.
Morris S. Bauer, Esq.
Ravin Greenberg PC
101 Eisenhower Parkway
Roseland, New Jersey 07068
(973) 226-1500
and
Gary T. Holtzer, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
Total Assets: $482,807,000 (as of March 31, 2002)
Total Debts: $827,000,000 (as of March 31, 2002)
Debtor's 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
United States Trust Indenture Trustee of $225,000,000
Company of New York Bond Debt
Contact: Tim Shea
114 West 47th Street
New York, NY 10036
Phone: (212) 852-1684
Fax: (212) 852-3430
Northern Line Layers Inc. Vendor $5,091,901
Contact: Shawn La Baugh
P.O. Box 80290
Billings, MT 59108-0290
Phone: (800) 735-1370
Fax: (406) 656-5 172
Level 3 Communications, Vendor $4,596,180
Inc.
Contact: John Ryan
1025 El Dorado Boulevard
Broomfield, CO 80021
Phone: (720) 888-1000
Fax: (720) 888-5128
AT&T Corp. Vendor $3,065,542
Contact: Steve Allen
900 Route 202/206
P.O. Box 752
Bedminster, NJ 07921
Phone: (908) 234-8760
Fax: (908) 234-8445
First South Utility Vendor $2,654,303
Construction, Inc.
1892 Trox Street
Greensboro, NC 2741 5
Phone: (336) 273-8175
Contact: Robert Jones
Fax: (336) 274-1469
Global Crossing Vendor $2,617,320
Telecommunications, Inc.
Contact: Gregory Spraetz
VP, Carrier Services
180 South Clinton Avenue
Rochester, NY 14646
Phone: (678) 393-2120
Fax: (678) 393-0941
Broadwing Communications Vendor $2,173,583
Services, Inc.
Contact: Robert F. Black
11101 Metric Boulevard
Suite 821A
Austin, TX 78759
Phone: (512) 742-3700
Fax: (512) 742-1515
WCRM Inc. Vendor $1,093,767
Contact: Thomas Lennon
7765 Durham Circle
Boulder, CO 80301
Phone: (303) 449-1151
Fax: (303) 530-7716
C&B Associates, Ltd. Vendor $907,635
Contact: Debra Clark
P.O. Box 310
Mineral Wells, TX 76068
Phone: (940) 682-42 13
XO Communications Vendor $888,583
Contact: Ernie Ortega
11111 Sunset Hills Road
Reston, VA 20190-5339
Phone: (703) 547-2644
Cleveland Inspection Vendor $811,935
Services, Inc.
Contact: Jerry McDaniel
P.O. Box 100
Cleveland, OK 74020-01 00
Phone: (918) 358-3527
Fax: (918) 358-5444
MCI Worldcom Vendor $781,731
Contact: Attn: Law and
Public Policy
3 Ravine Drive
Atlanta, GA 30356
Phone: (800) 830-6833
Fax: (800) 366-3122
Cisco Systems, Inc. Vendor $740,923
Contact: Vicki Hoyt
13645 Dulles Technology
Drive
Hemdon, VA 20171
Phone: (775) 823-5332
Fax: (703) 484-8693
Construction Management Vendor $543,895
& Inspection, Inc.
Contact: Joyce Dolan
13321 White Bluff Road
Fort Smith, AR 72916
Phone: (479) 646-8590
Fax: (479) 646-0007
0'Connor Teleservices, Vendor $417,184
Inc.
Contact: James T. O'Connor
640 Herman Road, Suite 3
Jackson, NJ 08527
Phone: (732) 833-0600
Fax: (732) 833-1 169
EPIK Communications Vendor $406,000
Incorporated
Contact: Lee Coon
3501 Quadrangle Blvd
Orlando, FL 328 17
Phone: (407) 736-8 101
Fax: (407) 482-8404
Fiber Media LLC Vendor $381,420
Contact: Don Sabin
2401 Hollywood Boulevard
Hollywood, FL 33020
Phone: (954) 342-0304
Fax: (954) 342-5006
GEM Engineering Vendor $340,578
Company, Inc.
Contact: David Mushrush
P.O. Box 846256
Dallas, TX 75284-6256
Phone: (713) 339-1550
Fax: (7 13) 339-9922
Land Services, Inc. Vendor $324,826
Contact: Michael Takac
P.O. Box 813
Monument, CO 80132
Phone: (719) 481-1498
Fax: (719) 488-3004
Time Warner Telecom Vendor $318,562
10475 Park Meadows Drive
Littleton, CO 80124
Phone: (888) 333-0520
Fax: (303) 566-6044
Local Contact: John Gary
1750 Tysons Blvd., Ste 110
McLean, VA 22 102
(703) 287-9603
fax: (703) 827-7451
ADC Software Vendor $283,152
Systems USA, Inc.
Contact: Kevin Freil
One Van De Graaff Drive
Burlington, MA 0 1 803
Phone: (78 1) 270-6500
Fax: (781) 270-6501
Foster Wheeler Vendor $244,065
Environmental Corporation
Fishel Company, Inc. Vendor $195,947
Equinix, Inc. Vendor $184,982
Global Internetworking, Vendor $170,647
Inc.
Diversicom Site Vendor $153,054
Development
International Vendor $140,355
Fibercom, Inc.
General Dynamics Vendor $132,171
Government Systems Corp.
Future Telecom, Inc. Vendor $123,960
Cap Gemini Telecom Vendor $113,809
Media & Networks
VERSATA INC: Reduces Quarterly Cash Burn Rate to $2 Million
-----------------------------------------------------------
Versata, Inc. (Nasdaq: VATA) a provider of software and services
that automate the business logic and processes that power
enterprise applications, announced its results for the second
fiscal quarter ended April 30, 2002.
Total revenues for the second fiscal quarter ended April 30,
2002 were $4.5 million, a decrease of 29.1% from $6.4 million
for the quarter ended January 31, 2002.
The pro forma net loss, which excludes non-cash stock
compensation charges, amortization of intangibles and non-
recurring expenses, was $2.6 million for the quarter ended April
30, 2002, compared to $1.5 million for the quarter ended January
31, 2002. On a GAAP basis, the net loss for the second quarter
2002 was $4.0 million compared to $2.5 million for the quarter
ended January 31, 2002.
The pro forma net loss per share and GAAP net loss per share,
computed prior to Versata's 1-for-6 reverse stock split, was
$0.06 per share and $0.09 per share respectively for the quarter
ended April 30, 2002 and $0.04 per share and $0.06 per share
respectively for the quarter ended January 31, 2002.
Versata ended the second quarter 2002 with $19.1 million in cash
and short-term investments. The reduction in cash and short-term
investments of $2.0 million for the second quarter compares to a
reduction in cash and short-term investments of $3.9 million for
the quarter ended January 31, 2002, an improvement of 48.2%.
Second quarter 2002 software license revenue was $2.2 million, a
decrease of 47.0% from $4.1 million for the quarter ended
January 31, 2002. As a percent of total revenue, software
license revenue was 47.6% for the second quarter 2002 compared
to 63.7% for the quarter ended January 31, 2002.
"We had a challenging quarter with frozen IT spending and few
companies starting substantive J2EE development projects," said
Dr. Eugene Wong, Interim CEO, Versata. "We will continue to work
with our existing customers to ensure their success while
increasing focus on our professional services and our
relationship with IBM. We will also continue managing our costs
and cash burn."
Quarterly Highlights
Customers the second quarter 2002, 14 total customers bought
Versata products. 71% of Versata's software license customers
were repeat customers including Alltel, Fiserv, Interpath and
SCT. New software customers included companies such as a Fortune
500 medical supply company and La Poste from France. 21% of the
deals were delivered via the IBM channel, and 64% of customers
for the quarter purchased Versata products to run on the IBM's
WebSphere application server.
Europe April, Versata appointed Nic Birtles, a seasoned
executive in international sales and operations, to head Versata
European operations. Versata European operations have
traditionally been an important business market for the Company,
and its European customers account for over 25% of the more than
150 successful customer deployments worldwide. Nic's extensive
experience in enterprise software sales and general management,
as well as knowledge of and contact in the European market will
ensure that Versata continues to develop its leadership position
in Europe for business logic creation and management for J2EE
and Web Services.
For IT shops who are struggling to reduce costs and whose
developers are challenged with Java coding demands, Versata
provides an application server extension that uses declarative
business logic as a more productive way to do transaction
processing and business process management. Much like a
relational database manages business data, Versata manages
business logic in the Versata Logic Server - at a higher level
of abstraction, utilizing a server for execution and management.
Unlike traditional hand-coding approaches, Versata enables
developers to maximize their time by allowing them to focus on
rules and processes of an application, rather than clerical
details. Versata's declarative business logic approach enables
IT to create and change applications faster, lower development
and maintenance costs, and reduce application backlogs. Versata-
built applications are constructed from an organization's core
business rules and run in J2EE application servers like IBM
WebSphere and BEA WebLogic.
Versata Global 2000 customers include British
Telecommunications, Federal Home Loan Bank, France Telecom,
Hilton Hotels, ITT Fluid Technologies, J.P. Morgan Chase & Co.,
and Mexicana Airlines. For more information, please visit
http://www.versata.comor call (800) 984-7638.
WARNACO GROUP: Settles Master Leases Disputes with GE Capital
-------------------------------------------------------------
Since the GE Capital Corporation brought its Motion to Compel to
the steps of the Bankruptcy Court, Warnaco Group, Inc., along
with its debtor-affiliates, and GE Capital Corporation have been
in discussions to settle their disputes over the 1994 and 1997
Master Leases Agreements. Kelly A Cornish, Esq., at Sidley
Austin Brown & Wood LLP, in New York, reports that the parties
have agreed on a settlement principally containing these terms:
(a) GE Capital will have an allowed secured claim in the
amount of $15,200,000, known as 1997 Lease Indebtedness,
payable on the terms set forth herein, with respect to
amounts due under the 1997 Master Lease Agreement;
(b) Warnaco will have a credit against the 1997 Lease
Indebtedness equal to the amount of all prior post-
petition rental and other payments in cash or in kind to
GE Capital during the course of the Debtors' Chapter 11
cases;
(c) Warnaco will pay GE Capital $550,000 per month through
confirmation date of the Debtors' plan or plans of
reorganization, and $750,000 thereafter, without
interest, until the 1997 Lease Indebtedness is paid in
full -- the Secured Payments;
(d) The Debtors will have the right to sell any of their
divisions or subsidiaries, free and clear of all liens
and claims of GE Capital. Upon the closing of any sale,
GE Capital will be paid the percentage of the then
outstanding 1997 Lease Indebtedness:
Sale of the first Business: 25% of the remaining
balance of 1997 Lease
Indebtedness
Sale of the second Business: 33 1/3% of the remaining
balance of 1997 Lease
Indebtedness
Sale of the third Business: 50% of the remaining
balance of 1997 Lease
Indebtedness
Sale of fourth Business: 100% of remaining
balance of 1997 Lease
Indebtedness
In addition, subject to payments having been made, the
monthly Secured Payments will also be reduced by the
percentage applicable to the sale of the Business, which
includes Ralph Lauren, Calvin Klein Underwear, Calvin
Klein Jeans, Warner's/Olga and Authentic Fitness
Corporation;
(e) GE Capital will have an allowed general unsecured claim
of $33,557,667 with respect to the 1997 Master Lease
Agreement;
(f) With respect to the 1994 Master Lease Agreement, the
parties have agreed that:
(1) Warnaco will assume the agreement and make a cure
payment of $211,820 plus any amounts due from and
after May 13, 2002;
(2) Warnaco will continue to make the required payments
with respect to certain schedules of the 1994 Master
Lease Agreement; and
(3) Warnaco will have the option, with respect to any
Schedule of the 1994 Master Lease Agreement, to
acquire the equipment in each Schedule at the then-
applicable Stipulated Loss Value specified under the
Schedule;
(g) GE Capital will have a final allowed general unsecured
claim in both Warnaco's and Warnaco Group's Chapter 11
cases in the amount of $3,632,495 with respect to the
Helicopter Lease, minus any net rental payments and any
net sale proceeds received by GE Capital on account of
GE Capital's lease or sale of the Helicopter;
(h) The claims of GE Capital with respect to the Aircraft
Lease, Claims Nos. 1822 and 1823, will be disallowed and
expunged in their entirety; and
(i) Except as set forth in the Settlement Agreement,
including the claims GE Capital will respect to the
Exempted Claims, the Settlement will constitute a mutual
release of all claims between the Debtors and the
Commercial Leasing Division of GE Capital with respect
to any Master Lease Agreement or leasing arrangements
with any of the Debtors.
Accordingly, the Debtors ask the Court's authority for the
Debtors to enter into a Settlement Agreement with GE Capital and
to approve the terms of the Settlement Agreement.
Ms. Cornish contends that pursuant to Federal Rule 9019(a), the
settlement is warranted because:
(a) the ultimate outcome of any litigation related to
characterization of the 1997 Master Lease Agreement is
not certain and will involve complex factual
determination;
(b) if Warnaco is successful in determining the 1997 Master
Lease Agreement to be a financing agreement, an extensive
examination is needed to know the scope of GE Capital's
perfected security interests in the 1997 Equipment -- a
time consuming and costly undertaking;
(c) if the 1997 Master Lease Agreement is considered a
financing agreement, resolving valuation issues of the
1997 Equipment would be a complicated and protracted
process;
(d) if the 1997 Master Lease Agreement will be considered a
true lease, GE Capital will have an administrative claim
of about $48,757,667 -- three times greater than the
agreed Secured Claim of $15,200,000;
(e) the settlement avoids the diversion of the attention of
its key management and legal personnel from the
reorganization efforts at hand;
(f) the settlement provides the Debtors a clear title to the
Equipment; and
(g) the Debtors believe that the administrative expense in
pursuing the dispute to litigation would not be justified
in light of the compromise. (Warnaco Bankruptcy News,
Issue No. 26; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
WESTERN RESOURCES: Completes $1.5 Billion Debt Refinancing
----------------------------------------------------------
Western Resources (NYSE: WR) has obtained a secured $735 million
credit agreement providing for a $585 million term loan and a
$150 million revolving credit facility, each maturing June 6,
2005. The credit agreement was arranged by JPMorgan Securities,
Inc.
The proceeds of the term loan were used to retire an existing
revolving credit facility maturing in March 2003 with an
outstanding principal balance of $380 million, to provide for
the repayment at maturity of $135 million principal amount of
KGE first mortgage bonds due in December 2003 together with
accrued interest, to repurchase approximately $45 million of
Western Resource's outstanding unsecured notes, and to pay
customary fees and expenses of the transactions. There were no
borrowings under the revolving credit facility at closing.
Paul R. Geist, senior vice president and chief financial
officer, said: "With the closing of this bank transaction and
the $765 million bond offering in May, the company has completed
the refinancing of approximately $1.5 billion of its debt. As
with the earlier bond offering, we are extremely pleased with
our continued access to the credit markets and the participation
of many blue chip financial institutions in our refinancings."
Western Resources (NYSE: WR) is a consumer services company with
interests in monitored services and energy. The company has
total assets of approximately $6.6 billion, including security
company holdings through ownership of Protection One (NYSE: POI)
and Protection One Europe, which have more than 1.2 million
security customers. Western Resources provides electric utility
services as Westar Energy to about 640,000 customers in Kansas.
Through its ownership in ONEOK, Inc. (NYSE: OKE), a Tulsa-based
natural gas company, Western Resources has a 44.7 percent
interest in one of the largest natural gas distribution
companies in the nation, serving more than 1.4 million
customers.
For more information about Western Resources and its operating
companies, visit http://www.wr.com
* * *
As reported in the April 30, 2002 edition of Troubled Company
Reporter, Standard & Poor's assigned its 'BB-' rating to Western
Resources Inc.'s Unsecured notes. It also assigned its 'BBB-' to
the company's first mortgage bonds. At the same time, Corporate
Credit Rating was affirmed at 'BB+'. Rating outlook is negative.
The ratings for Western Resources, Inc. and its subsidiary
Kansas Gas & Electric Co. reflect frail financial measurements
relative to the company's average business profile and
uncertainty surrounding the company's restructuring plan.
Western Resources' business position is a function of relatively
low system-wide production costs, solid nuclear performance and
limited environmental exposure. These attributes are partially
offset by an unsupportive regulatory climate, ownership of
riskier unregulated monitored security businesses, high fixed
costs at KG&E, and the inherent challenges of owning and
operating a nuclear unit.
WORKFLOW MANAGEMENT: Reports Improved Fourth Quarter Results
------------------------------------------------------------
Workflow Management, Inc., (NASDAQ: WORK) the nation's leading
outsourcer of print, reported results for the fourth quarter and
fiscal year ended April 30, 2002.
Fourth quarter revenues for the period ended April 30, 2002
increased 4.1% to $163.4 million compared to $157.0 million last
year. Revenues in the Solutions Division increased 3.5% to $80.3
million, while revenues in the Printing Division increased 2.8%
to $86.3 million. Fourth quarter operating income was $8.0
million compared to $7.3 million last year before one-time
charges. Net income was steady at $2.7 million versus net income
of $2.7 million in the prior year fourth quarter before one-time
charges and extraordinary items. Adjusted for the implementation
of FAS 142, which discontinued the amortization of goodwill,
fourth quarter diluted earnings per share would have been $0.24
in the prior year.
Tom D'Agostino, Sr., Chairman and CEO commented, "We are pleased
that our cost cutting measures and strategic initiatives
contributed to the positive results we were able to generate
during this challenging year for Workflow and we are
particularly pleased given the economic uncertainty. In
addition, our financial results benefited from the significant
steps taken over the past year to restructure our business and
streamline operations."
Mr. D'Agostino continued, "Despite the challenges of the past
few quarters, including significant margin pressure in the
Printing Division, our diverse revenue and large customer base
reflects our ability to manage the business more effectively,
thereby producing stable profitability regardless of lower
margin levels. Furthermore, the success in the Solutions
Division, specifically the revenue growth of iGetSmart, has
enabled us to build on our outsourcing leadership position
through advanced technology. The Solutions Division and
iGetSmart addressed the highest priorities of our customers
during the year, enabling them to focus on their core business
and manage their printing related costs."
For the fiscal year ended April 30, 2002, revenues increased
6.1% to $640.1 million versus $603.3 million in fiscal 2001.
Operating income, was $29.1 million versus $29.5 million before
one-time charges. Net income for the year ended April 30, 2002,
was $9.2 million compared to $9.8 million before one-time
charges and extraordinary items. Adjusted for FAS 142, fiscal
2001 diluted earnings per share would have been $0.87.
Mr. D'Agostino remarked, "We are proud that the Company was able
to report record revenues and achieve the revised earnings
guidance of $0.70 per share for fiscal 2002, while overcoming
one the most challenging years in our nation's and the Company's
history."
Commenting on iGetSmart, Mr. D'Agostino continued, "We are
pleased to report that the revenues flowing through the
iGetSmart solution are on the rise, exceeding our internal
expectations. Total revenues managed by the system for fiscal
2002 increased 51.8% to $185.9 million up from $122.5 million in
fiscal 2001. Furthermore, the growth of business flowing over
the iGetSmart system in fiscal 2002 surpassed the 4-year CAGR of
47.8%. This dramatic increase in revenue growth for our
iGetSmart solution of $63.4 million in system managed revenues
is evidence that technology is becoming a powerful tool for
companies looking to outsource the entire print procurement,
distribution and billing process."
Mr. D'Agostino concluded, "We enter fiscal 2003 prepared to
exploit our operating leverage with an ongoing commitment to
solidify our capital structure, increase market share, and
intensify the sales effort of iGetSmart. The outcome should
further strengthen the company and put Workflow in an excellent
position to rebound as the economy improves. We strongly believe
that, at a minimum, Workflow will return to historic levels of
organic growth and profitability."
Workflow Management, Inc. is the leading provider of end-to-end
outsource solutions for print. By providing a variety of print
solutions; including the printing of promotional items with a
company logo to multi-color annual reports, Workflow has built a
reputation of reliability and leadership within the industry.
Workflow's complete cadre of service solutions includes unbiased
outsource and enterprise document strategy consulting, full-
service print manufacturing and outsourcing; warehousing;
fulfillment and Workflow's proprietary iGetSmartTM system; the
industry proven, e-procurement, management and logistics system.
Utilizing a customized combination of these services, the
Company is able to deliver substantial savings to its customers
by targeting and eliminating much of the hidden costs within
the print supply chain. And, by outsourcing these non-core
business processes to Workflow, customers are able to streamline
their operations and focus on their core business objectives.
For more information go to our Web site at
http://www.workflowmangement.com
As previously reported, Workflow Management has obtained a
waiver of its covenant defaults under its credit agreement.
XPEDIOR: Court Sets July 15 Bar Date for Administrative Claims
--------------------------------------------------------------
UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
IN RE: ) Case No. 01 B 14424
XPEDIOR INCORPORATED, et al., ) Chapter 11 Case
) (Jointly Administered)
Debtors. ) Honorable Susan Pierson
) Sonderby
NOTICE OF DEADLINE TO FILE APPLICATIONS FOR
PAYMENT OF ADMINISTRATIVE CLAIMS
PLEASE TAKE NOTICE THAT on May 15, 2002, the Honorable
Susan Pierson Sonderby, Chief Judge of the United States
Bankruptcy Court for the Northern District of Illinois, Eastern
Division entered an Order fixing July 15, 2002 (the
"Administrative Claims Bar Date") as the deadline for any
individual or entity who may have an administrative expense of
the kind specified in Section 503(b) of the Bankruptcy Code and
entitled to priority pursuant to Section 507(a)(1) of the
Bankruptcy Code (but not including professionals retained by
Debtors, the Committee, the Liquidation Trustee or the Special
Litigation Trustee, as those terms are defined in the Plan) from
Debtors, and has asserted or could assert, an administrative
claim against Debtors, which claim arose between April 20, 2001
and March 28, 2002 (the latter being the date of Plan
confirmation), to file an application asserting such
administrative claim, whether such administrative claim is
matured or unmatured, disputed or undisputed, liquidated or
unliquidated, fixed or contingent, legal or equitable. Such
claim must be filed with the Clerk of the United States
Bankruptcy Court for the Northern District of Illinois, Eastern
Division, 219 South Dearborn Street, Room 710, Chicago, Illinois
60604 and must be served, at a minimum, upon the following:
Colleen E. McManus Steven Newman Sandra Reese
PIPER RUDNICK Esanu Katsy Korins ReeseMcMahon, LLC
203 N. LaSalle Street, & Siger, LLP 303 West Erie St.
Suite 1800 605 Third Avenue Suite 410
Chicago, IL 60601-1293 New York, NY 10158 Chicago, IL 60610
Fax: (312) 630-6311 Fax: (212) 953-6899 Fax:(312)397-1050
The Order also provides that any individual or entity that
is required to file an application for an administrative claim
but does not do so before the Administrative Claims Bar Date
shall, with respect to such administrative claim, be forever
barred from: (a) filing a proof of claim or application with
respect to such administrative claim; (b) asserting such
administrative claim against Debtors or their estates or
property; (c) voting any such administrative claim or any plan
or plans filed in this case; and (d) participating in or
receiving any distribution on account of such administrative
claim.
Dated: May 15, 2002
XVARIANT: Plans Loans & Stock Sales to Raise Fund for Operations
---------------------------------------------------------------
Xvariant Inc. is a Nevada corporation organized on October 24,
1996 under the name Almost Country Productions Inc. During the
year ended September 30, 2001, ACPI changed its name to
Xvariant, Inc. On March 15, 2001, the Company acquired Real
Estate Federation, Inc. in a transaction recorded as a
recapitalization of Real Estate Federation with the Company
being the legal survivor and Real Estate Federation being the
accounting survivor and the operating entity. This operating
Company was established to provide a new technology for the real
estate market that enhances the use of the Internet in the home-
buying process. The technology allows potential homebuyers to
search for real estate properties from all participating real
estate brokers' listings. Xvariant, Inc. (a wholly-owned
subsidiary at September 30, 2001 was organized in Utah)
(Xvariant Utah) designs web sites for real estate brokers.
Xvariant Utah was no longer a subsidiary at December 31, 2001
During January 2002, the Company completed the acquisition of
360House.com, Inc., pursuant to a stock exchange agreement. The
Company acquired 360House by issuing 1,000,000 shares of common
stock to the shareholders of 360House in exchange for all of the
outstanding stock of 360House. In addition, the exchange
agreement provides for issuance of additional shares of Company
common stock based on the performance of 360House. The Company
has agreed to issue stock, including the 1,000,000 shares issued
upon execution of the agreement, at a price equal to either 1) a
value equal to six times 360House's earnings before interest,
taxes, depreciation, and amortization in the twelve month period
ending December 31, 2003; or 2) the value defined by a valuation
consultant agreed to by the parties. Either party may demand an
independent valuation.
The Company has incurred losses since its inception and has not
yet been successful in establishing profitable operations. These
factors raise substantial doubt about the ability of the Company
to continue as a going concern. In this regard, management is
proposing to raise necessary additional funds not provided by
its planned operations through loans and/or through additional
sales of its common stock.
Results Of Operations For The Three Months
Ended March 31, 2002
The Company generated $213,062 in revenue during the three
months ended March 31, 2002. During the same three-month period
last year the Company generated $82,742 The increase is due to
the acquisition of 360House and its operations and the Bid Trac
service agreements.
Operating expenses for the three months ended March 31, 2002
were $402,822 compared to $367,927 for the three months ended
March 31, 2001. The increase is due primarily to the increase
in salaries and marketing. Salaries increased approximately
$22,000 over last year due to the increased number of
employees. Marketing includes tradeshows and media advertising
which increased over last year by approximately $20,000.
During the three months ended March 31, 2002, the Company had a
net loss of $191,454 compared to a net loss of $287,558 for the
three months ended March 31, 2001.
Results Of Operations For The Six Months
Ended March 31, 2002
The company generated $286,836 in revenue during the six months
ended March 31, 2002. During the same six month period last
year the Company generated $136,925. Again the increase is due
primarily to operations of 360House and the Bid Trac services
contracts.
Operating expenses for the six months ended March 31, 2002 were
$783,083 compared to $691,584 for the six months ended March 31,
2001. The increase is due primarily to the increase of
approximately $30,000 in technology development and website
design related to the costs of a website development
project and increases in marketing and related travel expenses.
During the six months ended March 31, 2002, the Company had a
net loss of $521,897 compared to a net loss of $558,564 for the
six months ended March 31, 2001. The decrease in net loss is
due primarily to the increased revenues provided by the 360House
acquisition.
Liquidity and Capital Resources
At March 31, 2002 the Company had cash of $66,609, total current
assets of $106,208, total current liabilities of $397,731 and
total stockholder's deficit of $925,347. Cash increased
$50,064, from $16,545 on September 30, 2001, to $66,609 on March
31, 2002. The increase is due to cash generated from the
operations of 360House. Other assets increased from $9,232 on
September 30, 2001, to $79,232 on March 31, 2002. The increase
of $70,000 is the value placed on the service contracts received
in the Bid Trac acquisition. Goodwill at March 31, 2002 is
$1,058,047 and represents the value placed on the 360House
acquisition. There was no goodwill on the books at September
30, 2001.
The Company estimates that its monthly expenses over the next
several months will be between approximately $100,000 and
$120,000 per month. While the Company anticipates that its
negative cash flow may diminish somewhat as, and to the extent,
the Company continues to generate increased cash flow from
operations; the Company will continue to have the need for
infusions of capital over at least the next several months. To
date, the Company has met its working capital needs through
payments received under a subscription agreement and borrowings
from related parties, and anticipates that such payments will
continue over the next several months. The Company expects that
its additional cash needs after revenue, will be between $60,000
and $70,000 per month for the next several months. The
investors under the subscription agreement have the right to
suspend payments at any time due to the Company not meeting its
projections. Therefore, future payments under the
subscription agreements may depend, to some extent, on results
of operations, and there can be no assurance that the Company
will continue to receive payments if the Company does not
demonstrate increased revenues and other favorable operating
results over the next several months. In the event payments
under the subscription agreements were to terminate, for any
reason, the Company would be in immediate need of another source
of capital. There can be no assurance that, in such event, the
Company will be able to locate a source of capital on terms
acceptable to the Company, if at all.
* BOND PRICING: For the week of June 10 - June 14, 2002
-------------------------------------------------------
Issuer Coupon Maturity Price
------ ------ -------- -----
AES Corporation 4.500% 08/15/05 65
AES Corporation 8.500% 11/01/07 70
AES Corporation 8.875% 02/15/11 73
AES Corporation 8.875% 11/01/27 55
Alternative Living Services (Alterra) 5.250% 12/15/02 4
American Tower 9.375% 02/01/09 70
American & Foreign Power 5.000% 03/01/30 60
Armstrong World 9.750% 04/15/08 55
Atlas Air Inc. 9.250% 04/15/08 51
Bethlehem Steel 8.450% 03/01/05 15
Borden Inc. 7.875% 02/15/23 62
Borden Inc. 9.250% 06/15/19 61
Boston Celtics 6.000% 06/30/38 65
Broadwing (Cincinnati Bell Telephone) 6.300% 12/01/28 69
Burlington Northern Santa Fe Corp. 2.625% 01/01/10 73
Burlington Northern Santa Fe Corp. 3.200% 01/01/45 48
Burlington Northern Santa Fe Corp. 3.800% 01/01/20 67
Case Corp. 7.250% 01/15/16 73
Centennial Cellular 10.750% 12/15/08 61
Comforce Operating, Inc. 12.000% 12/01/07 60
Comcast Corp. 2.000% 10/15/29 28
Cox Communications Inc. 0.348% 02/23/21 69
Cox Communications Inc. 0.426% 04/19/20 41
Cox Communications Inc. 3.000% 03/14/30 27
Cox Communications Inc. 7.750% 11/15/29 34
Critical Path 5.750% 04/01/05 63
Crown Cork & Seal 7.375% 12/15/26 65
Cubist Pharmacy 5.500% 11/01/08 60
Dana Corp. 7.000% 03/15/28 73
Dana Corp. 7.000% 03/01/29 73
Equistar Chemicals 7.550% 02/15/26 71
Foster Wheeler 6.750% 11/15/05 50
Gulf Mobile Ohio 5.000% 12/01/56 61
Hasbro Inc. 6.600% 07/15/28 71
Human Genome 3.750% 03/15/07 64
Huntsman Polymer 11.750% 12/01/04 20
Inland Steel Co. 7.900% 01/15/07 50
Level 3 Communications 11.250% 03/15/10 48
Lucent Technologies 5.500% 11/15/08 70
Lucent Technologies 6.450% 03/15/29 64
Lucent Technologies 6.500% 01/15/28 50
Missouri Pacific Railroad 4.750% 01/01/20 60
Missouri Pacific Railroad 4.750% 01/01/30 62
Missouri Pacific Railroad 5.000% 01/01/45 58
MSX International 11.375% 01/15/08 70
Nextel Communications 9.375% 11/15/09 64
Nextel Partners 11.000% 03/15/10 59
Northern Pacific Railway 3.000% 01/01/47 45
Northern Pacific Railway 3.000% 01/01/47 45
Pegasus Satellite 12.375% 08/01/06 49
Public Service Electric & Gas 5.000% 07/01/37 70
Qwest Capital 7.625% 08/03/21 69
Qwest Capital 7.750% 02/15/31 70
Rural Cellular 9.625% 05/15/08 66
Silicon Graphics 5.250% 09/01/04 69
Solutia Inc. 7.375% 10/15/27 70
Tribune Company 2.000% 05/15/29 68
Ugly Duckling 11.000% 04/15/07 56
United Air Lines 9.125% 01/15/12 60
United Air Lines 10.250% 07/15/21 60
Universal Health Services 0.426% 06/23/20 60
US Timberlands 9.625% 11/15/07 67
US West Capital 6.500% 11/15/18 65
US West Capital 7.750% 07/15/28 67
Vesta Insurance Group 8.750% 07/15/25 74
Viropharma Inc. 6.000% 03/01/07 37
Weirton Steel 10.750% 06/01/05 46
Weirton Steel 11.375% 07/01/04 47
Wind River System 3.750% 12/15/06 73
Worldcom Inc. 6.400% 08/15/05 58
XO Communications 5.750% 01/15/09 1
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices
are obtained by TCR editors from a variety of outside sources
during the prior week we think are reliable. Those sources may
not, however, be complete or accurate. The Monday Bond Pricing
table is compiled on the Friday prior to publication. Prices
reported are not intended to reflect actual trades. Prices for
actual trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter
A. Chapman, Editors.
Copyright 2002. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $625 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
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