/raid1/www/Hosts/bankrupt/TCR_Public/021031.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, October 31, 2002, Vol. 6, No. 216
Headlines
439288 B.C.: Temporary Order Imposed on 2 Directors in Canada
AES CORP: Brazilian Unit Gets OK to Defer $6MM Interest Payment
ALLMERICA FINANCIAL: John O'Brien Steps Down as President & CEO
AMERICAS POWER: Blackman Kallick Expresses Going Concern Doubt
ANC RENTAL CORP: Consolidating Operations at Portland Airport
ARMSTRONG HOLDINGS: Wants to Amend Pospetition Credit Agreement
ASBESTOS CLAIMS: Committee Signs-Up Caplin & Drysdale as Counsel
AURORA FOODS: Liquidity Concerns Spur S&P to Affirm Rating at B-
BETHLEHEM STEEL: Wins Nod to Assume 2 Intermodal Facility Leases
BUDGET GROUP: Court Extends Lease Decision Period Until Dec. 20
CHARTER COMMS: Moody's Cuts Ratings & More Downgrades Loom
CLECO CORP: Working Capital Deficit Widens to $222MM at Sept. 30
CONTOUR ENERGY: Court Okays Liskow & Lewis as Louisiana Counsel
COVANTA ENERGY: Seeks Okay to Dissolve Two Spanish Subsidiaries
CYMER INC: S&P Assigns B+ Corporate Credit Rating
DANA: Will Close 16 More Facilities Under Restructuring Plan
DENNY'S CORP: Equity Deficit Narrows to $272MM at September 25
DOBSON COMMS: Fails to Maintain Nasdaq Listing Requirements
ENRON CORP: Gets Court's Nod to Hire Batchelder as Fin'l Advisor
EOTT ENERGY: Seeks Nod to Hire Patton Boggs as Special Counsel
ETHYL CORP: Reports Improved Financial Results for Third Quarter
EXIDE TECH.: Introduces Innovative Waterproof Battery Charger
GENERAL BINDING: Red Ink Continues to Flow in Third Quarter 2002
GENTEK INC: Turning to Lazard Freres for Financial Advice
GLOBAL CROSSING: Court to Consider Plan on December 4, 2002
GREENLAND CORP: Implements 50-to-1 Reverse Stock Split
HELLER FIN'L: Fitch Affirms Low-B Ratings on Four Note Classes
HINES HORTICULTURE: Third Quarter Net Loss Narrows to $7MM
HORIZON PCS: S&P Junks Credit Rating Over Liquidity Concerns
HORSEHEAD INDUSTRIES: Signs-Up Kirkpatrick as Special Counsel
IMMTECH INT'L: Annual Shareholders' Meeting Slated for Nov. 15
INTERLIANT INC: Gets Final Nod to Use $5 Million DIP Financing
KAISER ALUMINUM: Court Fixes Jan. 31, 2003 as General Bar Date
KINGSWAY FINANCIAL: Q3 Conference Call Slated for November 7
KMART: Hires Signature Estate as Broker & Disposition Consultant
LECSTAR CORP: June 30 Working Capital Deficit Tops $11.7 Million
LTV CORP: LTV Steel Selling Processing Shares to Mitsui Steel
MANITOWOC COMPANY: Appoints Timothy M. Wood as New SVP and CFO
MARK NUTRITIONALS: US Trustee Appoints Creditors' Committee
MEASUREMENT SPECIALTIES: Firm's Continued Viability is Uncertain
MEDISOLUTION: Signs-Up Paul Roche as New Chief Financial Officer
MERCATOR SOFTWARE: Net Loss Narrows to $8 Million in 3rd Quarter
METROMEDIA INT'L: Makes Interest Payment on 10-1/2% Senior Notes
METROMEDIA INT'L: Alan K. Greene Named New Independent Director
MIDWEST EXPRESS: Names Randall Smith as VP, Sales & Distribution
MONARCH DENTAL: Agrees to Sell Assets to Bright Now! Dental Inc.
MOTOROLA INC: Selling Certain MMS Unit Assets to Telco Inc.
MTS/TOWER RECORDS: Inks New $110 Million Revolver with CIT Group
NAVISTAR INT'L: Board OKs Plan to Refinance Up to $200MM of Debt
NEXTMEDIA OPERATING: Will Publish Q3 2002 Results on Wednesday
NRG ENERGY: Won't Make Interest Payment on 6.50% Senior Notes
O'SULLIVAN INDUSTRIES: Balance Sheet Insolvency Widens to $58MM
OWENS CORNING: Net Loss Tops $2.3 Billion in Third Quarter 2002
PACIFIC GAS: Wants to Defray $1.7MM Additional Misc. Plan Costs
PEMSTAR INC: Second Quarter 2003 Net Loss Balloons to $10 Mill.
PERSONNEL GROUP: Wins Crystal Decisions Training Contract
PETROLEUM GEO: S&P Slashes Credit Rating to B over Market Issues
PRIVATE BUSINESS: Sept. 30 Balance Sheet Upside-Down by $6 Mill.
RELIANCE: Liquidator Posts $11.5M Wherehouse Entertainment Bond
SAFETY-KLEEN: Gets Nod to Settle with Carriers and Create Trust
SEDONA CORP: Fails to Meet Nasdaq Continued Listing Standards
SILVERLINE: Completes Transfer of Fin'l Services to Cognizant
STOCKWALK GROUP: Former MJSK Employees Block Move to Reopen Case
SUPRA TELECOM: BellSouth Asks Court to Dismiss Bankruptcy Case
TITANIUM METALS: S&P Further Junks Preferred Share Rating
TRANSCARE CORPORATION: SDNY Court Fixes November 13 Bar Date
TRENWICK: S&P Keeping BB Counterparty Ratings on Watch Negative
TRENWICK GROUP: Moody's Drops Ratings Due to Weak Fin'l Profile
UNIFORET INC: US Noteholders-Creditors' Meeting Set for Nov. 25
UNIROYAL TECH.: UST Balks at Buccino's Engagement as Advisors
UNITRONIX CORP: Dan Clasby Expresses Going Concern Doubt
US AIRWAYS: Committee Taps Ernst & Young for Financial Advice
U.S. DIAGNOSTIC: Court Okays Sale of Business to Presgar Medical
USDATA CORP: Working Capital Deficit Narrows to $590K at Sept 30
VENTAS INC: Third Quarter 2002 Normalized FFO Slides-Up 32%
WARNACO: Taps Keen Realty to Market 25 Closing CK Jeans Outlets
WORKGROUP TECHNOLOGY: Enters Pact to Sell Assets to SofTech Inc.
WORLDCOM: Court Approves Proposed Dispute Resolution Procedures
* DebtTraders' Real-Time Bond Pricing
*********
439288 B.C.: Temporary Order Imposed on 2 Directors in Canada
-------------------------------------------------------------
British Columbia Securities Commission staff has issued a notice
of hearing and imposed a temporary order against two directors
of a Burns Lake company for making misrepresentations in selling
securities.
The order was issued against Carl Glenn Anderson and Douglas
Victor Montaldi, directors of numbered company 439288 B.C. Ltd.
The order prohibits the pair from participating in the capital
markets.
The numbered company's prime business was to lend money to
borrowers at interest rates between 16- and 18- per cent per
year while it took in money by offering investors higher than
prevailing rates of interest (generally between 10- and 12- per
cent per year) offered by financial institutions. Investors were
issued one-year promissory notes.
Commission staff's main purpose in issuing the order is to
prevent Anderson and Montaldi from operating a similar business
until the pair can face allegations that their conduct of the
business was illegal and abusive to the investors.
In particular, commission staff allege that from Jan. 1, 1996,
the pair did not disclose to investors that they used incoming
investors' funds to pay interest and capital due to existing
investors.
Staff's allegations include breaches of section 57(b) of the
Securities Act when Anderson and Montaldi:
- Concealed from investors the true risk of investing in
the company;
- Gave personal guarantees to investors to encourage them
to invest when the aggregate value of the guarantees
exceeded the pair's combined net worth; and
- Did not disclose to investors that they were using
investors' funds for their own purposes.
(Section 57(b) prohibits transactions relating to trading in
B.C. that perpetrate a fraud on any person in the province.)
The two men also face allegations of unregistered trading in
securities and distributing securities without a prospectus.
Staff allege that the men's conduct was contrary to the public
interest. As part of the temporary order, Anderson and Montaldi
must resign any positions that they hold as directors or
officers of any company. They are also prohibited from becoming
or acting as directors or officers of any company or engaging in
any investor relations activities.
The temporary order is in effect for a maximum of 15 days at
which time commission staff will seek to extend the order until
a commission hearing is held in early 2003 and a decision
rendered.
On April 30, 2002, the Financial Institutions Commission
(FICOM), obtained a financial freeze order and issued a cease-
and-desist order against the numbered company which effectively
banned any further conduct of the company's business.
FICOM subsequently investigated allegations that the company
operated as an unregulated deposit-taking institution and owed
$41-million to creditors. PricewaterhouseCoopers Inc., was
appointed trustee after the company acknowledged on May 9, 2002
that it was insolvent. The trustee's report revealed the company
had about $33-million in assets and about $41-million in
liabilities for a shortfall of $8-million.
The FICOM freeze order was lifted upon the appointment of the
trustee. Since then, creditors have accepted a company proposal
to reorganize its operations into two units including the
numbered company.
The BCSC and FICOM investigations are continuing.
The B.C. Securities Commission is the independent provincial
government agency responsible for regulating trading in
securities and exchange contracts within the province. Copies of
the order and notice of hearing can be viewed in the documents
database of the commission's Web site http://www.bcsc.bc.caor
by contacting Andrew Poon, Media Relations, 604-899-6880.
AES CORP: Brazilian Unit Gets OK to Defer $6MM Interest Payment
---------------------------------------------------------------
On October 23, 2002, the Investment arm of the Brazilian
National Bank for Economic and Social Development (BNDESPAR)
agreed to defer until November 25, 2002 a $6 million interest
payment due by an AES Corporation subsidiary related to the
acquisition of preferred shares of Eletropaulo Metropolitana
Electricidade de Sao Paulo S.A., the electric distribution
company for Sao Paulo, Brazil.
The AES Corporation (NYSE: AES) has reported earnings from
recurring operations of $92 million, or 17 cents per share, for
the third quarter ended September 30, 2002, down 39% from $151
million, or 28 cents per share, in the year earlier quarter.
Earnings from recurring operations for the nine months ended
September 30, 2002, were $410 million, or 76 cents per share,
down 26% from $557 million, or $1.03 per share, for the nine
months ended September 30, 2001. Revenues for the third quarter
were $2.1 billion, up 16% percent from a year earlier.
After adjusting for non-cash charges and discontinued business
operations, AES reported a GAAP loss for the third quarter of
$314 million, or 58 cents per share. For the nine months ended
September 30, 2002, the GAAP loss was $743 million, or $1.38 per
share. The GAAP loss for the third quarter of 2002 includes $215
million, or 40 cents per share, loss from discontinued
operations.
* * *
As reported in Troubled Company Reporter's Monday Edition,
Standard & Poor's lowered its corporate credit rating on AES to
'B+' from 'BB-', reflecting lower-than-expected operating cash
flow and slower-than-expected progress on asset sales, resulting
in AES needing to refinance rather than pay off maturing
obligations. Apparently, banks are uncomfortable with the idea
of some creditors being paid while they wait. The 'B+' rating is
in line with Standard & Poor's expected cash flow compared with
AES' debt burden. AES' corporate credit rating is on CreditWatch
with negative implications because the rating could fall
precipitously if AES were unable to execute this transaction.
Standard & Poor's preliminary 'BB' rating on the bank loan and
exchange notes is two notches above the corporate credit rating.
This reflects Standard & Poor's high degree of confidence that
the collateral package provides enough value for lenders to
realize 100% recovery in a likely default or stress scenario.
This rating assumes that a bankruptcy court would give priority
to the secured creditors in a bankruptcy. The preliminary rating
would become final when the transaction closes and Standard &
Poor's receives final documentation.
AES Corporation's 10.25% bonds due 2006 (AES06USR1) are trading
at 34 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AES06USR1for
real-time bond pricing.
ALLMERICA FINANCIAL: John O'Brien Steps Down as President & CEO
---------------------------------------------------------------
The Board of Directors of Allmerica Financial Corporation (NYSE:
AFC) have accepted the resignation of John F. O'Brien as
President and Chief Executive Officer, effective immediately.
O'Brien will continue as a Director and will be involved in the
transition.
In addition, the Board of Directors elected Michael P. Angelini
as its Chairman and established an Office of the Chairman,
comprised of Angelini, J. Kendall Huber, Senior Vice President
and General Counsel, Edward J. Parry, III, newly appointed
President of Allmerica Asset Accumulation and AFC's Chief
Financial Officer, and Robert P. Restrepo, Jr., President of
Allmerica Property & Casualty Companies. Angelini will continue
as chairman and partner of the Worcester law firm Bowditch &
Dewey, LLP, and has been an Allmerica Director since 1984. The
Board also has established a Search Committee to select a
replacement for O'Brien. Candidates will include current
members of management.
O'Brien joined Allmerica in 1989. During his tenure at
Allmerica, he led the company's successful conversion to a
public company and several years of growth in each of
Allmerica's business segments. "Jack O'Brien has led Allmerica
through important changes over the past 13 years and the Board
and I thank him for his service to the company," Angelini said.
More recently, the extended decline in the equity markets has
impacted Allmerica's asset accumulation business, which has
resulted in the previously announced strategic reorganization of
that business.
Allmerica Financial Corporation is the holding company for a
diversified group of insurance and financial services companies
based in Worcester, Mass. The companies provide property and
casualty insurance, asset management and retirement products and
services to individual and institutional clients throughout the
country.
* * *
As reported in Troubled Company Reporter's October 17, 2002
edition, Fitch Ratings lowered the insurer financial strength
ratings of First Allmerica Financial Life Insurance Co., and
Allmerica Financial Life Insurance and Annuity Co., to 'BB-'
from 'BBB-'. In addition, Fitch has lowered its rating on
Allmerica Global Funding LLC's $2 billion global debt program
rating to 'BB-' from 'BBB-'.
Fitch has also lowered Allmerica Financial Corporation's senior
debt rating to 'BB' from 'BB+', Allmerica Financing Trust's
capital securities to 'B+' from 'BB-'. AFC's commercial paper
program remains at 'B', Rating Watch Negative. FAFLIC's,
AFLIAC's, AGF's, and AFC's ratings remain on Rating Watch
Negative.
Fitch's rating actions reflect FAFLIC and AFLIAC's stand-alone
adjusted risk-based capital ratios that are currently within
Fitch's 'BB' guidelines. Fitch believes that AFC does not plan
to commit additional new capital to its life operations. As a
result, Fitch is viewing FAFLIC and AFLIAC capitalization on a
pure stand-alone basis.
AMERICAS POWER: Blackman Kallick Expresses Going Concern Doubt
--------------------------------------------------------------
Americas Power Partners, Inc., was incorporated in April 1998
with a charter to provide on-site utilities for industrial,
commercial and institutional clients. The Company intends to
become a leading independent power producer engaged in the
business of developing, acquiring, owning and managing the
operation of energy systems, including existing facilities and
cogeneration plants which produce electricity and thermal energy
for sale under long-term contracts. The Company seeks long-term
all-requirements contracts generally in the range of 12 to 25
years for energy and utility services with its clients.
The Company is developing the capacity to serve domestic and
international clients from its headquarters in Hinsdale,
Illinois and regional offices in Renfrew, Pennsylvania, and
Stuart, Florida. In addition, the Company has the ability to
provide services to its customers through four US service
offices and 300 global distributorships of its strategic
partner, Armstrong International, Inc.
During the period from January 27, 1998 (date of inception)
through December 31, 1999, the Company engaged in no significant
operations other than organizational activities, acquisition of
capital and preparation for registration of its securities under
the Securities Exchange Act of 1934, as amended. The Company
recorded no revenues during this period.
During the third quarter of the year ended June 30, 2000, the
Company signed its first two long-term contracts for the
monetization and optimization of steam generation facilities,
and recognized $124,213 of revenue associated with those
contracts. Three additional long-term contracts were signed
during the year ended June 30, 2001. Those two contracts plus
the contracts signed during the year ended June 30, 2000,
resulted in revenues of $5,619,971 for the year ended June 30,
2001. Two more long-term contracts were signed during the year
ended June 30, 2002. Both contracts signed during the year ended
June 30, 2002 and one of the contracts signed during the year
ended June 30, 2001 were signed between Armstrong-Americas I,
LLC, the Company's 50% owned limited liability corporation, and
a major food processing company. This customer is the Company's
largest customer. As a result of this growth, the Company
recorded revenues of $8,180,070 during the year ended June 30,
2002.
During the year ended June 30, 2002, the Company incurred a net
loss of $952,139 compared to a net loss of $3,820,980 during the
year ended June 30, 2001 and a loss of $2,225,971 for the year
ended June 30, 2000.
Since its inception in April 1998, the Company has incurred an
aggregate net loss of $7,562,074 and at June 30, 2002, the
Company has a working capital deficiency of approximately
$3,044,000. However, the Company reduced its net loss over 75%
from $3,820,980 in the year ended June 30, 2001 to $952,139 in
the year ended June 30, 2002.
51% of the Company's current liabilities and approximately
$2,686,000 of its working capital deficiency is attributable and
due to related parties (Armstrong and ASI), one of whom is also
a significant investor in the Company's preferred stock. In
addition, $847,115 of current liabilities is currently in the
form of short-term construction notes issued to a bank. These
notes are likely to convert into long-term obligations upon the
completion of certain construction projects for the Company's
major customer.
Notwithstanding these mitigating factors, the Company,
nevertheless, has been forced during fiscal 2002 and 2001 to
rely in part on advances evidenced in the form of notes payable
to Armstrong to finance its operations and sales development
activities. These notes, in aggregate, amounted to $960,500 plus
accrued interest as of June 30, 2002. Armstrong is not expected
to continue to significantly provide such financings in the
future. The Company has actively been searching for and has
identified certain potential strategic and equity partners. In
addition, the Company has made specific plans and is attempting
to execute a strategy to insure its future viability. The
Company is confident that it will be able to execute its plans
and be able to attract and retain strategic and equity partners.
But, there can be no assurance that it will do so.
Future projects are anticipated to require debt financings as
well. Historically, the Company has not had difficulty finding
debt financing for its projects as the cash flow relative to the
loans have been adequate to induce lenders to finance the
Company's projects.
Nevertheless, the Chicago, Illinois firm of Blackman, Kallick,
Bartelstein, LLP, independent auditors of the Company, have
stated in their Auditors Report dated September 27, 2002: "[T]he
Company has incurred significant losses from operations and has
a deficit that raise substantial doubt about its ability to
continue as a going concern."
ANC RENTAL CORP: Consolidating Operations at Portland Airport
-------------------------------------------------------------
Alamo currently operates an off-airport concession at the
Portland International Airport in Portland, Oregon. Alamo's
operations was made possible because of a permit, pursuant to
Ordinance No. 349 dated July 1, 1991 and another permit pursuant
to Ordinance No. 351, which granted Alamo a non-exclusive
license to use the Commercial Roadway at the Portland Airport
and the Lease of Improved Space.
National also has operations at the Portland Airport.
National's operations was made possible through Port Agreement
No. 98-041, which granted to National a non-exclusive right to
operate a car rental concession, the Underground Storage Tank
Use Agreement, dated March 13, 1998, and the Rental Car Quick
Turn Around Area.
ANC Rental Corporation and its debtor-affiliates would like to
reject all of Alamo's agreements with the airport and assume
National's agreements and assign them to ANC Rental Corp.
Bonnie Glantz Fatell, Esq., at Blank Rome Comisky & McCauley
LLP, in Wilmington, Delaware, tells the Court that ANC has
agreed to deposit with the airport authority a security deposit
equal to 50% of the Minimum Annual Guarantee under the
National's concession agreement. The current Minimum Annual
Guaranty is $1,100,004. Accordingly, a $550,000 security
deposit will be deposited with the airport authority upon Court
approval of this motion.
The consolidation of operations is expected to generate savings
over $1,387,000 per year in fixed facility costs and other
operational cost savings. (ANC Rental Bankruptcy News, Issue No.
21; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ARMSTRONG HOLDINGS: Wants to Amend Pospetition Credit Agreement
---------------------------------------------------------------
Nitram Liquidators, Inc., Armstrong World Industries, Inc., and
Desseaux Corporation of North America, seek the Court's
authority to sign another amendment to their DIP Credit
Agreement.
The Debtors remind Judge Newsome that the first amendment
reduced the amount of the commitment under the DIP Credit
Agreement from $400,000,000 to $300,000,000. The second
amendment in May 2002 further reduced the postpetition
commitment from $300,000,000 to $200,000,000. Under the third
amendment to the DIP Credit Agreement, the parties agreed to
"eliminate certain unnecessary reporting requirements".
Under the terms of the existing DIP Credit Agreement, as amended
to date, the DIP Facility matures on December 5, 2002. The
Debtors, JPMorgan Chase, as agent, and the Lenders are all
currently operating under the terms of this Agreement.
As of June 30, 2002, AWI had cash on hand over $345,000,000. As
a result of AWI's strong cash position, AWI has not drawn on the
postpetition financing. In the ordinary course of its business,
however, AWI has asked the Lenders from time to time to issue
standby and import documentary letters of credit. Currently,
standby Letters of Credit amounting to $24,000,000 have been
issued. Because the Lenders are not required to issue Letters
of Credit that expire after the Maturity Date, however, AWI must
extend the Maturity Date to enable AWI to continue to be able to
post letters of credit in the ordinary course of its business.
The Effective Date of this Amendment is the date on which:
(1) it has been signed by all parties;
(2) Judge Newsome approves the Amendment, including approval of
payment of fees to the Agent, for the benefit of the
Lenders, an arrangement fee equal to 1/10 of 1% of the
Commitment of each Lender as reduced; and
(3) the arrangement fee payment is received by the Agent on
the Lenders' behalf.
The Fourth Amendment
Under the Fourth Amendment, the parties agree to:
-- extend the Maturity Date under the Credit Agreement until
December 8, 2003;
-- reduce the Total Commitment from $200,000,000 to $75,000,000
with the Total Commitment to be allocated among the Banks;
-- terminate all obligations of the Banks to make loans or
advances to the Borrower and limit the Commitments under the
DIP Facility to issuances of Letters of Credit;
-- in the case of AWI and JPMorgan Chase, enter into an
amendment to the Fee Letter; and
-- suspend certain reporting requirements under the Credit
Agreement.
The Fourth Amendment further provides:
(x) for the payment of a $75,000 amendment fee to the Banks;
(y) that the Fourth Amendment will become effective as of the
Effective Date; and
(z) other than these modifications, the terms of the Credit
Agreement remain in effect.
More Fees
Under the Fee Letter Amendment:
-- AWI will pay to JPMorgan Chase a $50,000 arrangement fee once
the Fourth Amendment is effective;
-- JPMorgan Chase will reduce the annual agent administration
fee from $150,000 to $50,000 annually (commencing on the
Effective Date), payable on a quarterly basis in advance; and
-- JPMorgan Chase agrees that collateral monitoring fees payable
to JPMorgan Chase will be reduced from $24,000 to $9,000
annually (commencing on October 7, 2002), payable quarterly
in advance.
The Debtors assert that it is essential to the continued
operation of their business to maintain postpetition financing
to service its customers and continue its ordinary course day-
to-day operations. Although AWI has considerable assets,
immediate access to a postpetition financing facility is
necessary to enable AWI to post letters of credit in the
ordinary course of its business. Without access to letters of
credit, AWI's ability to engage in ordinary business
transactions will be impeded. Even in instances in which AWI
could post cash collateral in lieu of letters of credit, that
would affect AWI's liquidity, require AWI to negotiate
individual cash collateral agreements, and put AWI's cash at
risk in the event of the insolvency of the cash collateral
holder.
Moreover, because AWI has more than sufficient cash to fund its
ongoing operations, AWI has determined that it no longer needs
access to a credit facility except for the purpose of issuing
letters of credit. Accordingly, the Debtors have reduced the
total commitment under the Credit Agreement from $200,000,000 to
$75,000,000, thereby reducing the fees paid by the Debtors for
the postpetition financing. (Armstrong Bankruptcy News, Issue
No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900)
Armstrong Holdings Inc.'s 9.0% bonds due 2004 (ACK04USR1),
DebtTraders says, are trading at 58.5 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ACK04USR1for
real-time bond pricing.
ASBESTOS CLAIMS: Committee Signs-Up Caplin & Drysdale as Counsel
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas
gave its permission to the Official Committee of Unsecured
Creditors of Asbestos Claims Management Corporation, to employ
Caplin & Drysdale, Chartered, as its national Counsel.
Caplin & Drysdale will:
a) assist and advise the Committee in its consultations with
the Debtor relative to the overall administration of the
estate;
b) represent the Committee at hearings to be held before this
Court and communicate with the Committee regarding the
matters heard and issues raised as well as the decisions
and considerations of this Court;
c) assist and advise the Committee in its examination and
analysis of the Debtor's conduct and financial affairs;
d) review and analyze all applications, orders, operating
reports, schedules and statements of affairs filed and to
be filed with this Court by the Debtors or other interested
parties in this case; advise the Committee as to the
necessity and propriety of the foregoing and their impact
upon the rights of asbestos-health related claimants, and
upon the case generally; and, after consultation with and
approval of the Committee or its designee, consent to
appropriate orders on its behalf or otherwise object;
e) assist the Committee in preparing appropriate legal
pleadings and propose orders as may be required in support
of positions taken by the Committee and prepare witnesses
and review relevant documents;
f) coordinate the receipt and dissemination of information
prepared by and received from the Debtor's independent
certified accountants or other retained professionals as
well as information received from independent professionals
engaged by the Committee and other committees;
g) assist the Committee in the solicitation and filing with
the Court of acceptances of rejections of any proposed plan
or plans of reorganization;
h) assist and advise the Committee with regard to
communications to the asbestos-related claimants regarding
the Committee's efforts, progress and recommendation with
respect to matters arising in the case as well as proposed
plan of reorganization; and
i) assist the Committee generally by providing such other
services as may be in the best interest of the creditors
represented by the Committee.
The current hourly rates of professionals expected to represent
the Committee are:
Elihu Inselbuch $670 per hour
Peter Van N. Lockwood $560 per hour
Julie W. Davis $425 per hour
Trevor W. Swett, III $425 per hour
Nathan D. Finch $350 per hour
Rita C. Tobin $300 per hour
Kimberly N. Brown $300 per hour
Beth Heleman $260 per hour
Max Heerman $230 per hour
Brian A. Skretny $215 per hour
John Cunningham $215 per hour
Robert C. Spohn (paralegal) $145 per hour
Elyssa J. Strug (paralegal) $135 per hour
Samira Taylor (paralegal) $125 per hour
Karen Albertelli (paralegal $125 per hour
Asbestos Claims Management Corporation filed for chapter 11
protection on August 19, 2002 at the U.S. Bankruptcy Court for
the Northern District of Texas. Michael A. Rosenthal, Esq., and
Janet M. Weiss, Esq., at Gibson, Dunn & Crutcher represent the
Debtor in its restructuring efforts. When the Company filed for
protection from its creditors it listed debts and assets of over
$100 million.
AURORA FOODS: Liquidity Concerns Spur S&P to Affirm Rating at B-
----------------------------------------------------------------
Standard & Poor's affirmed its single-'B'-minus long-term
corporate credit rating on packaged foods manufacturer Aurora
Foods Inc., and at the same time affirmed Aurora's single-'B'-
minus bank loan rating and triple-'C' subordinated debt rating.
The ratings are removed from CreditWatch where they were placed
on May 16, 2002.
The outlook is negative. Total rated debt was $1.1 billion as of
June 30, 2002.
"The ratings affirmations and removal from CreditWatch are
indicative of Standard & Poor's expectation that Aurora's
liquidity position will remain appropriate for its low
speculative grade rating," said Standard & Poor's credit analyst
Ronald Neysmith.
The ratings reflect St. Louis, Missouri-based Aurora's weak
financial profile, including its high debt levels and limited
financial resources. These factors are partially mitigated by
the company's niche position in the branded packaged food
industry. The company has been undertaking a major restructuring
program and other cost-cutting initiatives during the past
fiscal year to strengthen its operating performance.
Aurora's branded niche includes leading market shares in the
categories of table syrup, baking mixes, frozen seafood, and
frozen bagels with the well-known brands Mrs. Butterworth's, Log
Cabin, Duncan Hines, Van De Kamp's, Mrs. Paul's, and Lender's.
The company also holds positions in the frozen pancake, waffle,
and pizza categories with the Aunt Jemima and Celeste brand
names.
BETHLEHEM STEEL: Wins Nod to Assume 2 Intermodal Facility Leases
----------------------------------------------------------------
In conjunction with the sale of the Bethlehem Commerce Center,
Bethlehem Steel Corporation and its debtor-affiliates obtained
the Court's authority to assume two unexpired nonresidential
real property leases. The Debtors will assign one of the leases
to Majestic.
To recall, the Bethlehem Center and the land adjacent to it are
encumbered by two leases between Bethlehem and BethIntermodal
LLC, a wholly owned subsidiary of Bethlehem:
-- April 1, 1999 Intermodal Lease under which BethIntermodal
operates railroad intermodal facilities on the Bethlehem
Commerce Center; and
-- September 1, 2001 Triple Crown Lease wherein BethIntermodal
operates railroad intermodal facilities on the property
adjacent to the Bethlehem Commerce Center.
Therefore, the assumption of both Leases is necessary to
facilitate the relocation of the intermodal facilities.
Pursuant to the Purchase and Sale Agreement, Majestic has agreed
to give BethIntermodal notice of termination of the Intermodal
Lease. The Leases are terminable on 24 months prior written
notice. Majestic will also place $5,800,000 in escrow. The
escrowed monies are intended to fund the cost of the removal or
relocation of the intermodal facilities from both the Bethlehem
Center and from the adjacent parcel of real property owed by the
Debtors. Any amounts remaining in the escrow account after the
removal or relocation of the intermodal facilities will be paid
to the Debtors.
It is estimated that keeping the intermodal facilities at its
present location will reduce net land sale proceeds to the
Debtors in the East Lehigh area by more than $14,000,000.
(Bethlehem Bankruptcy News, Issue No. 24; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
BUDGET GROUP: Court Extends Lease Decision Period Until Dec. 20
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware extends
Budget Group Inc., and its debtor-affiliates' lease decision
period. Thus, the Debtors have until December 20, 2002, to
decide whether to assume, assume and assign, or reject their
unexpired non-residential real property leases.
DebtTraders says that Budget Group Inc.'s 9.125% bonds due 2006
(BD06USR1) are trading at 19 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=BD06USR1for
real-time bond pricing.
CHARTER COMMS: Moody's Cuts Ratings & More Downgrades Loom
----------------------------------------------------------
The debt ratings of Charter Communications Inc. and its indirect
subsidiary Charter Communications Holdings were downgraded by
Moody's Investors Service. The ratings are still under review
for possible downgrade.
Rating Actions From To
Charter Communications Inc.
* Convertible Senior Debt B3 Caa2
* Shelf Registration (P)B3/ (P)Caa2/
for prospective (P)Caa1/ (P)Caa3/
Senior/Subordinated/Preferred (P)Caa2 (P)Ca
issuances;
* Senior Unsecured Issuer Rating B3 Caa2
* Senior Implied Rating Ba3 B1
* Liquidity Rating - SGL-2 (unchanged);
Charter Communications Holdings, LLC
* Senior Debt B2 B3
Charter Communications Operating, LLC
* Senior Secured Bank Debt Ba3 B1
CC VIII Operating, LLC
* Senior Secured Bank Debt Ba3 B1
Falcon Cable Communications, LLC
* Senior Secured Bank Debt Ba3 B1
CC VI Operating, LLC
* Senior Secured Bank Debt Ba3 B1
CC V Holdings, LLC (formerly Avalon Cable LLC)
* Senior Unsecured Debt B2 (unchanged)
Renaissance Media Group LLC
* Senior Unsecured Debt B2 (unchanged)
The rating action reflects the company's disappointing operating
performance. Moody's also believes that cash flow growth will
fall below expectations with respect to affecting targeted
deleveraging and balance sheet strengthening by 2004. However,
liquidity profile can still be characterized as good as the
company's still expects to be in compliance with covenants.
Charter Communications, based in St. Louis, Missouri, is a
domestic cable operator serving approximately 6.7 million
subscribers.
CLECO CORP: Working Capital Deficit Widens to $222MM at Sept. 30
----------------------------------------------------------------
Third-quarter earnings for Cleco Corp., (NYSE, PCX: CNL) rose 14
percent to $0.74 per share following the start of commercial
operations at two new wholesale generating plants the company
announced today. For the nine months ended September 30,
earnings totaled $1.41 per share, up 24 percent over the same
period in 2001.
At September 30, 2002, Cleco Corp.'s balance sheets show a
working capital deficit of about $222 million.
Cleco Power LLC
Cleco Power posted 2002 third-quarter earnings that were $0.05
per share lower than in 2001. Approximately $0.03 per share in
higher revenues from kilowatt-hour sales were offset by $0.02
per share in lower transmission revenues. Kilowatt-hour sales
were up 7 percent primarily due to added wholesale sales and
slightly warmer-than-average weather for the quarter. Margins
from trading activities were approximately $0.06 per share lower
in third quarter 2002 than in third quarter 2001. Expenses for
the 2002 third quarter were comparable to the same period in
2001.
Cleco Midstream Resources LLC
Earnings recorded by Cleco Midstream during third quarter 2002
were $0.16 per share higher than third quarter 2001 because of
incremental contributions from the Perryville and Acadia power
projects, which began commercial operations during third quarter
2002. The Midstream generating fleet, which consists of the
Perryville, Acadia and Evangeline plants, combined to generate
$0.15 per share more in earnings in third quarter 2002 than in
third quarter 2001, when Evangeline was the sole project in
operation. For the 2002 third quarter, Midstream trading margins
were $0.01 per share higher compared to the same 2001 period.
Midstream asset development and optimization costs were
comparable to the same period last year.
Other
Corporate and other expenses were $0.02 per share higher in
third quarter 2002 than in third quarter 2001 because of higher
administrative and financing costs.
Cleco Power LLC
For the first three quarters of 2002, Cleco Power earned $0.13
more per share compared to the first nine months of 2001.
Approximately $0.10 of that increase was due to higher retail
power sales and $0.06 came from two new wholesale customers,
partially offset by lower transmission, trading and other
revenue of $0.05 per share. Total kilowatt-hour sales were up
about 8 percent for the first nine months of 2002, reflecting
favorable weather and the added wholesale sales. Expenses at
Cleco Power during the first nine months of 2002 were about
$0.02 per share lower than during the same period in 2001.
Cleco Midstream Resources LLC
Cleco Midstream's earnings contribution during the first nine
months of 2002 was $0.10 per share higher than the same period
of 2001 because of incremental contributions from the Perryville
and Acadia plants, which began commercial operations during the
third quarter 2002. The Midstream generating fleet added
incremental earnings of $0.18 per share compared to the first
nine months of 2001, when Evangeline was the only Midstream
generating plant in operation. The contributions from trading
operations were down $0.04 per share from levels recorded during
the first nine months of 2001. Other Midstream costs, including
asset development, asset optimization and financing costs, were
$0.04 per share higher than in the first nine months of 2001.
Other
Corporate and other expenses were $0.01 per share higher in the
first nine months of 2002 than in the same period of 2001
because of higher administrative and financing costs. A loss of
$0.05 per share was recognized from the disposal of UTS, LLC
during the first quarter of 2001. Substantially all of the
assets of UTS, LLC were sold on March 31, 2001, and the
subsidiary has had no impact on 2002 earnings.
Strategic Outlook:
Cleco President and CEO David Eppler said, "We had projected the
Acadia and Perryville plants together would be the catalysts for
our earnings growth in 2002. After successfully bringing these
plants on-line midyear, we are on track with that goal. Income
from these two new projects, combined with the consistent
earnings contribution from our regulated utility operations and
from the Evangeline facility, should enable us to reach our 8 to
10 percent 2002 earnings growth target, even with unplanned
fourth-quarter expenses due to Hurricane Lili. We estimate the
restoration cost of damages caused by the October storm will be
about $25 million. Generally, the majority of the restoration
costs following a major storm are capitalized, but we do expect
some portion to be expensed.
"In reaffirming our 2002 earnings growth target, we are
excluding the effect of an approximate $15 million pretax
restructuring charge we expect to record in the fourth quarter,
once we complete our previously announced organizational
changes.
"Reaching our earnings target this year also presumes the
continued performance under all four tolling agreements at the
unregulated facilities. Should any changes be made to those
agreements, we will adjust our guidance accordingly. There is
certainly credit risk associated with those tolling contracts,
but we own new, state-of-the-art, efficient generating plants,
and power is a commodity that will continue to be in demand,"
Eppler said. "We can't predict how our tolling agreement
counterparties are going to fare. We can only continue keeping a
close watch and taking steps to avoid potential problems. We've
begun discussions with our counterparties as well as with other
parties who have indicated interest in purchasing power or
investing in power assets. Despite the pressures we see in
the market, our objective is to realize the value we have
created in these plants and tolling contracts.
"For the remainder of 2002 and 2003, our goal is to optimize our
current businesses, both our wholesale energy operations and our
regulated utility," said Eppler. "Our organizational changes are
just one aspect of our plans and are intended to reinforce the
financial strength of the company during this down cycle in the
energy market. We estimate restructuring savings will be at
least $10 million per year, some 75 percent of which will be
reflected in lower operating expenses.
"With those cost-saving measures in place beginning in 2003, we
are affirming our 8 to 10 percent 2003 earnings growth guidance,
again assuming continued performance under all current tolling
agreements. We expect the reduced payroll costs to offset lower
growth in utility revenues, assuming normal weather conditions
return, as well as increases in other costs such as taxes and
depreciation. Utility revenue growth during 2002 has been
largely due to favorable weather."
Eppler added, "Now that all Midstream generating facilities are
in operation, we plan to strengthen the balance sheet by
reducing debt as we receive cash flow from these projects."
Cleco Corp., is a regional energy services company headquartered
in Pineville, La. It operates a regulated electric utility
company that serves more than 250,000 customers across
Louisiana. Cleco also operates a nonregulated midstream energy
business that has approximately 2,100 megawatts of generating
capacity. For more information about Cleco, visit
http://www.cleco.com
CONTOUR ENERGY: Court Okays Liskow & Lewis as Louisiana Counsel
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas
gave its stamp of approval to Contour Energy, Co., and its
debtor-affiliates' application to hire Liskow & Lewis, APLC as
special counsel concerning matters of Louisiana law.
Liskow & Lewis has rendered prepetition legal services to
Contour on their loan arrangements, title examinations of
Louisiana mineral interests, and disputes with third parties.
This retention afforded Liskow & Lewis an intimate familiarity
with the Debtors' business affairs and many pertinent legal
issues. Liskow & Lewis's continued retention is in the best
interests of the Debtors, their estates and creditors.
Liskow & Lewis will charge for its legal expertise at its
current hourly rates:
Partners $165 - $300 per hour
Associates/Staff Attorneys $135 - $160 per hour
Legal Assistants/Law Clerks $ 95 - $ 75 per hour
Contour Energy Co., a company engaged in the exploration,
development acquisition and production of oil and natural gas
primarily in south and north Louisiana, the Gulf of Mexico and
South Texas, filed for chapter 11 protection on July 15, 2002.
John F. Higgins, IV, Esq., and Porter & Hedges, LLP represents
the Debtors in their restructuring efforts. When the Company
filed for protection from its creditors, it listed $153,634,032
in assets and $272,097,004 in debts.
COVANTA ENERGY: Seeks Okay to Dissolve Two Spanish Subsidiaries
---------------------------------------------------------------
Ogden International Europe Inc., one of Covanta Energy
Corporation's debtor-affiliates, seeks the Court's authority to
consent to the voluntary filing for bankruptcy of Ogden Spain,
S.A. and liquidation of Ogden Entertainment Services Spain, S.A.
pursuant to Section 363(b)(1) of the Bankruptcy Code and Rules
2002(a), 9006(f), 6004(g) and 7062 of the Federal Rules of
Bankruptcy Procedure.
James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton,
in New York, relates that OGSA and OESS are Spanish companies
with no current business activities, the shares of which are
owned by Ogden International Europe. Accordingly, the Debtors
believe that the voluntary bankruptcy and liquidation are
appropriate.
Contemporaneous with this motion, Mr. Bromley informs Judge
Blackshear that a voluntary proceeding with respect to OGSA will
be filed in Madrid, Spain. The Debtors were advised that the
consent of OIE, as parent, is required as a matter of Spanish
law to proceed with the Spanish voluntary bankruptcy and
liquidation proceedings.
Mr. Bromley reports that the Spanish tax authorities recently
demanded from OGSA payment for Spanish withholding tax amounting
to Euro72,000. OGSA does not have the cash resources to make
this payment. Should OGSA fail to make the payments, OGSA's
administrators could personally be assessed for tax and
liabilities that could reach Euro700,000, among other reasons,
for failure to make a timely application for voluntary
bankruptcy.
In light of the Spanish law condition, OIE wants to give its
consent to the Spanish voluntary bankruptcy filing of OGSA and
the liquidation of OESS.
According to Mr. Bromley, Section 363(b)(1) of the Bankruptcy
Code supports the request because it is a sound exercise of the
Debtors' business judgment since:
(a) the continued functioning of OGSA and OESS provides no
benefit to the Debtors' business operations in the United
States, and, in the case of OGSA, appears set to expose
its administrators to personal liability for non-payment
of that company's debts; and
(b) the dissolution will alleviate potential financial
burdens associated with maintaining the operations of
OGSA and OESS.
Furthermore, due to the urgency of the matter, the Debtors ask
the Court to eliminate the 10-day stay period imposed by
Bankruptcy Rules 6004(g) and 7062. (Covanta Bankruptcy News,
Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900)
CYMER INC: S&P Assigns B+ Corporate Credit Rating
-------------------------------------------------
Standard & Poor's Ratings Services assigned its single-'B'-plus
corporate credit rating to Cymer Inc. At the same time, Standard
& Poor's assigned its single-'B'-minus rating to Cymer's $250
million convertible subordinated notes due 2009. The outlook is
stable.
The ratings reflect Cymer's strong niche market position, its
technology leadership, and good liquidity, offset by frequent
product transitions in its narrow line of business and highly
volatile market conditions.
San Diego, California-based Cymer supplies deep ultraviolet
excimer lasers used in photolithography tools to manufacture
leading edge semiconductors. It had $275 million of debt
outstanding as of September 2002.
Cymer plans to invest $50 million over the next year in a new
facility to add manufacturing capabilities for next-generation
lasers, increasing the level of fixed costs the company must
absorb. Expenditures for the facility will be paid from cash
balances.
"While Cymer's niche position in the highly volatile
semiconductor market limits upside rating potential, cash
balances in excess of debt offer some measure of ratings
protection during the protracted downturn in the semiconductor
industry," said Standard & Poor's credit analyst Emile
Courtney.
Operating margins, which have averaged around 20%, are likely to
be slim over the next few quarters as sales declines are
expected over the near term. The company is likely to experience
negative free cash flow in 2002 for the first time in several
years from lower profitability and increased capital investment.
DANA: Will Close 16 More Facilities Under Restructuring Plan
------------------------------------------------------------
Dana Corporation (NYSE: DCN) announced improved third-quarter
sales and operating earnings strengthened by sustained progress
in its restructuring actions. Sales for the period were $2.6
billion, up 7 percent from 2001.
During the third quarter, Dana recorded after-tax charges of $40
million as part of its $445 million restructuring plan announced
one year ago. This brings total charges recorded to date to
$398 million, or approximately 90 percent of the total program.
Net income, after restructuring charges and other non-recurring
items, totaled $4 million. This compares with net income of $13
million during the same period last year that included goodwill
amortization of $9 million after tax.
Exclusive of non-recurring items, Dana's operating earnings for
the quarter totaled $44 million as compared to the consensus
estimate of 26 cents per share. On the same basis, the company
incurred a net loss of $8 million during the third quarter of
2001.
"The improvement from last year in our operating profit was
clearly driven more by progress with our restructuring plan than
by sales volume," said Dana Chairman and CEO Joe Magliochetti.
"In this respect, our operations have been successful in
managing those items within their control. Third-quarter profit
showed solid improvement across all four of our strategic
business units, compared to the same period last year. We are
also generating strong cash flow and continuing to improve our
balance sheet."
Nine-Month Results Improved
Dana's nine-month consolidated sales were $7.9 billion,
comparable to sales for the same period last year. Excluding
non-recurring items, net income was $139 million, compared with
$19 million in 2001.
The company adopted new accounting standard FAS 142, which
resulted in an after-tax charge of $220 million during the first
quarter of 2002. Dana also recorded $119 million in
restructuring charges during the first nine months of the year
and benefited from a net gain of $27 million on the sale of
several non-core operations. As a result, the reported net loss
for the first nine months of 2002 was $173 million. This
compares to break-even performance for the first nine months of
2001, which included net non-recurring charges of $19 million
and goodwill amortization of $23 million after tax.
Restructuring on Target
Dana has reduced its permanent workforce by approximately 9
percent, closed 18 facilities, and announced plans to close 16
others from the inception of the restructuring plan announced
one year ago through Sept. 30, 2002. The company expects to
complete most of the actions and record all of the charges
related to this restructuring plan by the end of this year.
Divestiture of Non-Core Operations Continues
During the quarter, the Dana Credit Corporation Real Estate
Services Group was sold for approximately $153 million. Also,
Dana entered into a definitive agreement for the sale of its
light-duty cylinder liner business, which had 2001 sales of
approximately $53 million.
Earlier this month, the company announced an agreement to sell
its Boston Weatherhead operations, which had 2001 sales of $207
million. Dana Chief Financial Officer Bob Richter said, "This
and other anticipated transactions, if closed by year end, would
allow us to surpass the $300 million in divestiture-related
proceeds we had projected for this year. This is exclusive of
any transactions related to DCC. We will continue to take the
time necessary to sell the remaining DCC businesses in a way
that will maximize the value received for our shareholders."
Fourth-Quarter Outlook
Mr. Magliochetti said Dana still remains somewhat cautious in
its outlook for its markets during the fourth quarter due
largely to the following considerations:
* A decrease in the build rate of Class 8 trucks following
advanced purchases by many fleets in anticipation of
changes in heavy-duty engine emission requirements;
* Traditionally soft demand for aftermarket products in the
final quarter of the year;
* And the growing uncertainty about the broader global
economic outlook, which some believe could negatively
impact light-vehicle production rates.
"However, despite this uncertain environment, we remain very
confident that we will deliver on our restructuring plans and
achieve the 50 to 55 cents in earnings per share that we had
previously forecasted for the second half of this year," Mr.
Magliochetti said.
Dana Corporation is a global leader in the design, engineering,
and manufacture of value-added products and systems for
automotive, commercial, and off-highway vehicle manufacturers
and their related aftermarkets. The company employs
approximately 70,000 people worldwide. Founded in 1904 and
based in Toledo, Ohio, Dana operates hundreds of technology,
manufacturing, and customer service facilities in 34 countries.
The company reported sales of $10.3 billion in 2001.
As reported in the March 1, 2002 edition of Troubled Company
Reporter, Standard & Poor's assigned a BB rating to Dana's
new $250 million debt issue.
DENNY'S CORP: Equity Deficit Narrows to $272MM at September 25
--------------------------------------------------------------
Denny's Corporation (OTCBB: DNYY), formerly Advantica Restaurant
Group, Inc., reported results for its third quarter ended
September 25, 2002. Highlights for the third quarter included:
-- Same-store sales for the quarter declined by 1.5
percent at company restaurants and declined by 2.4 percent at
franchised restaurants.
-- Revenue at company restaurants decreased $22.4 million
to $223.5 million for the quarter primarily as a result of 61
fewer company restaurants.
-- Despite lower revenue, operating income for the quarter
increased $5.2 million over the same period last year while
EBITDA declined $2.8 million.
-- Denny's reported a loss from continuing operations for
the quarter of $0.4 million compared with last year's loss of
$4.8 million.
-- On July 10, 2002, Denny's completed the divestiture of
its subsidiary, FRD Acquisition Co., and recorded a gain from
disposal of discontinued operations of $56.6 million.
-- The Denny's system closed 11 company and 26 franchised
restaurants during the quarter; total units closed during the
last twelve months were 43 and 91, respectively.
-- Denny's opened 9 franchised restaurants during the
quarter, bringing the total units opened during the last twelve
months to 43.
-- Subsequent to quarter end, Denny's entered into a
commitment letter for a $125 million Senior Secured Credit
Facility to refinance its existing facility which expires in
January 2003.
At September 25, 2002, Denny's Corp.'s balance sheets show a
total shareholders' equity deficit of about $272 million.
Commenting on Denny's results for the third quarter, Nelson J.
Marchioli, president and chief executive officer, said, "Our
same-store sales were soft in the third quarter, reflecting both
the sluggish economy and the fact that our summer Grand Slam
promotion did not drive higher customer counts. We have avoided
taking price increases with our guest check average having
increased only 1.3% year-to-date over last year, because
consumers are especially value conscious during weak economic
conditions. Despite the lower sales, we have maintained strong
operating margins through reduced corporate spending and tighter
cost management in the restaurants.
"In an effort to improve sales and customer traffic for 2003, we
have undertaken several initiatives with regard to our marketing
program. During the quarter, we hired Publicis in Mid America
Dallas as our new general market advertising agency and
cruz/kravetz:IDEAS as our new Hispanic market agency. We will
significantly shift our media strategy toward a heavier focus on
national television advertising and greater reach to the
important Hispanic community in key markets. In addition, our
marketing message will focus more on our new quality food
offerings. For example, on October 21 we rolled out our latest
advertising campaign that promotes two of our newest menu items,
our BBQ Chicken Sandwich and Fabulous French Toast.
"By focusing our marketing message on our exciting new food
offerings and by shifting our media strategy to capitalize on
Denny's national brand status, we can drive guest traffic and
begin to leverage the operational improvements we have worked to
achieve over the last year," Marchioli concluded.
FRD Divestiture
On July 10, 2002, Denny's closed the divestiture of its
subsidiary, FRD Acquisition Co. The divestiture was completed
through FRD's Chapter 11 reorganization proceedings. Pursuant to
the plan of reorganization, FRD's unsecured creditors, who were
generally the holders of FRD's 12-1/2% senior notes, received
100% of the reorganized equity of FRD. As part of the
transaction, Denny's received a payment of $32.5 million in
connection with FRD's senior secured credit facility where
Denny's was lender. This transaction resulted in a gain from
disposal of discontinued operations of $56.6 million in the
third quarter.
Third Quarter Results
Revenue at company-owned restaurants for the third quarter of
2002 decreased to $223.5 million from $245.9 million in the same
period last year. The revenue decline resulted from a reduction
in the number of company restaurants since last year which
included 23 refranchising transactions and the closure of 43
units. Third quarter EBITDA decreased to $40.1 million from
$42.9 million in the prior year primarily as a result of lower
sales. EBITDA this quarter was impacted by higher advertising
expense, as well as higher labor costs due primarily to
increased restaurant staffing and higher wage rates. Partially
offsetting these cost increases were lower food costs, reduced
energy costs and decreased repairs and maintenance spending. In
addition, EBITDA benefited from a $4.5 million decrease in
general and administrative expenses.
Franchise and license revenue declined slightly to $23.4 million
compared with $24.2 million in the prior year quarter due
primarily to a 29-unit net reduction in franchise restaurants.
Franchise operating income was down slightly in this year's
third quarter to $16.0 million from $16.8 million due primarily
to last year's $1.4 million benefit to bad debt expense which
resulted from the collection of past due franchise receivables.
The Company reported a loss from continuing operations for the
third quarter of $0.4 million compared with a loss last year of
$4.8 million. In accordance with SFAS 142, the Company has
combined the excess reorganization value asset with goodwill on
its balance sheet and no longer records amortization of goodwill
and certain other intangible assets. Last year's third quarter
results included $7.8 million of amortization related to these
assets, while this year's quarter had no comparable expense.
The Company reported net income for the third quarter of $56.1
million, compared with a loss in last year's third quarter of
$4.8 million. This year's third quarter included a $56.6 million
gain from the disposal of FRD as outlined above.
EBITDA is defined by the Company as operating income before
depreciation, amortization and charges for restructuring, exit
costs and impairment. The Company's measure of EBITDA as defined
may not be comparable to similarly titled measures reported by
other companies.
Year-to-Date Results
For the three quarters ended September 25, 2002, revenue at
company-owned restaurants decreased to $653.2 million from
$724.8 million in the prior year period. This decline resulted
from a 61-unit net reduction in company restaurants since last
year along with a 0.7 percent decrease in same-store sales.
Franchise and licensing revenue increased slightly to $68.5
million, compared with $68.0 million in the prior year. EBITDA
increased to $113.5 million from $108.1 million in the prior
year. The EBITDA increase resulted primarily from improved
operating margins and lower corporate overhead, partially offset
by reduced gains from refranchising transactions.
During the three quarters ended September 25, the Company
reported income from continuing operations of $11.1 million,
compared with last year's loss of $49.0 million. The year-to-
date results last year included $23.9 million of amortization
related to goodwill and certain other intangible assets, while
this year's period had no comparable expense. In addition, year-
to-date results last year included charges for restructuring,
exit costs and impairment of $16.8 million, while this year's
results contained similar charges of $4.0 million. Also, the
year-to-date period this year included non-operating income of
$19.2 million while the same period last year included
non-operating income of $7.8 million.
The Company reported year-to-date net income of $67.7 million,
compared with last year's loss of $49.0 million. The year-to-
date period this year included a $56.6 million gain from the
disposal of FRD.
Revolving Credit Facility
On September 25, 2002, the Company's credit facility had
outstanding revolver advances of $40.0 million compared with
$62.0 million outstanding on June 26, 2002. The revolver balance
was reduced in July with the $32.5 million payment received by
Denny's in connection with the FRD divestiture, which resulted
in a corresponding reduction in the facility commitment amount
to $155.3 million. The Company's outstanding letters of credit
were $52.1 million at the end of the third quarter, leaving a
net availability of $63.2 million. The credit facility matures
on January 7, 2003.
Subsequent to quarter end, the Company's operating subsidiary,
Denny's, Inc., along with Denny's Realty, Inc., entered into a
commitment letter, pursuant to which they have received
commitments from JPMorgan Chase Bank, Farallon Capital
Management, LLC and Foothill Capital Corporation with respect to
a $125 million, two-year Senior Secured Revolving Credit
Facility, of which up to $60 million will be available for the
issuance of letters of credit. The New Facility will refinance
the existing facility and will be used for working capital,
capital expenditures and other general corporate purposes. The
New Facility will be guaranteed by the Company and its other
subsidiaries and will be generally secured by liens on the same
collateral that secures the existing facility. In addition, the
New Facility will be secured by first-priority mortgages on
approximately 250 owned restaurant properties. The closing of
the New Facility, expected to occur in the fourth quarter of
2002, is subject to, among other conditions, the negotiation of
definitive agreements on mutually acceptable terms, as well as
obtaining commitments for the balance of the New Facility from
additional lenders. J.P. Morgan Securities Inc., will act as
lead arranger for the New Facility.
Private Exchange Offer
On April 15, 2002, the Company closed its registered debt
exchange offer with $88.1 million of the Company's 11-1/4%
Senior Notes Due 2008 exchanged for $70.4 million of 12-3/4%
Senior Notes due 2007 issued jointly by the Company and Denny's
Holdings, Inc. Subsequent to closing this initial transaction,
certain holders of the 11-1/4% Notes expressed interest in
exchanging their notes for new 12-3/4% Notes on a privately
negotiated basis. As a result, during October (subsequent
to quarter end), the Company closed a series of private
transactions for an additional exchange of $15.9 million in
aggregate principal amount of 11-1/4% Notes for $12.7 million in
aggregate principal amount of 12-3/4% Notes. The new 12-3/4%
Notes were issued under a tack-on provision of the indenture
that governs the 12-3/4% Notes, which allows up to $50 million
of additional notes to be issued under the same indenture. The
Company now has $425.6 million aggregate principal amount of
11-1/4% Notes outstanding along with $83.1 million aggregate
principal amount of 12-3/4% Notes.
Denny's is America's largest full-service family restaurant
chain, operating directly and through franchisees almost 1,700
Denny's restaurants in the United States, Canada, Costa Rica,
Guam, Mexico, New Zealand and Puerto Rico.
DOBSON COMMS: Fails to Maintain Nasdaq Listing Requirements
-----------------------------------------------------------
Dobson Communications Corporation (OTCBB:DCEL), with a total
shareholders' equity deficit of about $389 million at June 30,
2002, Monday night received notice from Nasdaq that it planned
to delist the Company's Class A common stock securities from the
Nasdaq National Market System as of October 29, 2002. The letter
from Nasdaq cited Dobson's failure to comply with the $3 minimum
bid price under Maintenance Standard 2.
As of this morning, Dobson securities are trading on the OTC
Bulletin Board, and a current quote can be obtained at the OTC
Bulletin Board's Web site at http://www.otcbb.comunder Dobson's
trading symbol "DCEL."
Dobson also announced its plans to appeal the decision of the
Nasdaq Listing Panel.
Dobson Communications is a leading provider of wireless phone
services to rural markets in the United States. Headquartered in
Oklahoma City, the Company owns or manages wireless operations
in 17 states. For additional information on the Company and its
operations, please visit its Web site at http://www.dobson.net
Dobson Communications CP's 10.875% bonds due 2010 (DCEL10USR1),
DebtTraders says, are trading at 67 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=DCEL10USR1
for real-time bond pricing.
ENRON CORP: Gets Court's Nod to Hire Batchelder as Fin'l Advisor
----------------------------------------------------------------
Enron Corporation and its debtor-affiliates obtained permission
from the U.S. Bankruptcy Court for the Southern District of New
York to employ Batchelder & Partners, Inc., as their financial
advisors in connection with their chapter 11 cases
An engagement letter negotiated by the Debtors provides that
Batchelder will:
(a) Advise the Debtors concerning the preservation and
enhancement of enterprise value;
(b) Advise the Debtors as to effective corporate governance
practices;
(c) Assist the Debtors in identifying opportunities for
equity financing;
(d) Assist the Debtors in internal financial matters to
support recapitalization, restructuring or
reorganization effects;
(e) Assist in the evaluation of the Debtors' businesses and
prospects;
(f) Assist in the development of the Debtors' long-term
business plan;
(g) Assist in the development of financial data and
presentations to the Debtors' Board of Directors,
various creditors, any official committees formed in a
Chapter 11 proceeding, and other third parties;
(h) Provide strategic advice with regard to restructuring
or refinancing the Debtors' obligations;
(i) Evaluate the Debtors' debt capacity and alternative
capital structures;
(j) Assist in the arranging of financings, including
identifying potential sources of capital, assisting in
the due diligence process, and negotiating the terms of
any proposed financing, as requested;
(k) Assist the Debtors in evaluating and executing a
transaction, including identifying potential buyers or
parties in interest, assisting in the due diligence
process, and negotiating the terms of any proposed
transaction, as requested;
(l) Provide testimony in any Chapter 11 case concerning any
of the subjects encompassed by the other financial
advisory services, if appropriate and as required;
(m) Assist and advise the Debtors concerning the terms,
conditions and impact of any proposed transaction; and
(n) Provide such other advisory services as are customarily
provided in connection with the analysis and
negotiation of any of the transactions contemplated in
the agreement, as requested and mutually agreed.
Joel L. Reed, president of Batchelder, tells Judge Gonzalez that
in consideration of the financial advisory services provided by
Batchelder, the Debtors agree to pay:
(a) a retainer fee of $1,250,000 that was paid prior to the
Petition Date, plus a Monthly Advisory Fee in the
amount of $375,000, due and payable on the first
business day following the first day of each month
during our engagement, commencing January 1, 2002.
(b) an Equity Financing fee, equal to 0.5% of the amount of
the equity financing, whether common stock, preferred
stock or any securities convertible into or including
rights to acquire common stock or preferred stock, by
means of capital infusion, conversion or exchange of
existing indebtedness, restructuring, reorganization or
otherwise.
(c) upon the consummation of a transaction, a transaction
fee equal to 0.25% of the incremental transaction
equity value that results if a transaction is
consummated above $9.00 and below $11.40 per Enron
common share, plus 0.50% on such incremental
transaction equity value above $11.40 per Enron common
share.
(d) if the Debtors do not consummate a transaction and
receive a Break Fee, Batchelder shall be due 10% of
such Break Fee.
(e) notwithstanding the foregoing, the aggregate fees
payable by the Debtors to Batchelder shall be limited
to $15,000,000, except that fees paid solely pursuant
to (a) shall not be subject to this limitation.
(f) indemnification pursuant to the Batchelder Agreement
and reimbursement of all reasonable out-of-pocket
expenses incurred during this engagement, including but
not limited to travel and lodging, direct identifiable
data processing and communication charges, courier
services, working meals, reasonable fees and expenses
of Batchelder's counsel and other necessary
expenditures, due upon rendition of invoices setting
forth in reasonable detail the nature and amount of
such expenses. (Enron Bankruptcy News, Issue No. 46;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
Enron Corp.'s 9.125% bonds due 2003 (ENRN03USR1), DebtTraders
reports, are trading at 11.25 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR1
for real-time bond pricing.
EOTT ENERGY: Seeks Nod to Hire Patton Boggs as Special Counsel
--------------------------------------------------------------
Pursuant to Sections 327(e) and 328(a) of the Bankruptcy Code,
EOTT Energy Partners, L.P., and its debtor-affiliates ask the
Court to authorize the Restructuring Committee to employ and
retain Patton Boggs LLP as its special counsel in all matters
necessary to fulfill its fiduciary duties.
Dana R. Gibbs, President and CEO of EOTT Energy Corp., notes
that Patton Boggs has substantial knowledge and expertise in
bankruptcy and corporate law matters. Moreover, Patton Boggs
has the necessary background to deal effectively with all of the
potential legal issues and problems associated with any and all
matters that may arise in the context of the Debtors' Chapter 11
cases. Thus, the Debtors believe that Patton Boggs is both well
qualified and able to represent the Restructuring Committee in a
most efficient and timely manner.
Bruce H. White, Esq., a Partner at Patton Boggs LLP, informs the
Court that at least six Patton Boggs professionals will render
their services to the Restructuring Committee. Accordingly,
Patton Boggs will charge the Debtors these hourly rates:
Clifton R. Jessup, Jr. Partner $450
Bruce H. White Partner 375
William L. Medford Associate 265
Vickie L. Judd Associate 195
Bryan L. Elwood Associate 195
Jeanie George Paraprofessional 90
Moreover, Patton Boggs will seek reimbursement of out-of-pocket
expenses including secretarial overtime, travel, copying,
outgoing facsimiles, document processing, court fees, transcript
fees, long distance telephone calls, postage, messengers,
transportation and other similar expenses.
Mr. White reports that in the year preceding the Petition Date,
Patton Boggs received a $50,000 retainer from the Debtors for
consultation and advice to the Restructuring Committee regarding
various matters, including restructuring, bankruptcy and
corporate issues. This Retainer is presently maintained in
Patton Boggs' trust account. In addition, since January 1,
2002, Patton Boggs has received from the Debtors $260,743 for
professional services performed and for reimbursement of related
expenses.
As assurance that Patton Boggs is a "disinterested person" under
Section 101(14) of the Bankruptcy Code, Mr. White relates that
Patton Boggs has not represented the Debtors, its creditors,
equity security holders, the Restructuring Committee or any
other party-in-interest, or their respective attorneys and
accountants, or the United States Trustee in any matters
relating to the Debtors or their estate. (EOTT Energy Bankruptcy
News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
ETHYL CORP: Reports Improved Financial Results for Third Quarter
----------------------------------------------------------------
Ethyl Corporation (NYSE: EY) President and Chief Executive
Officer, Thomas E. (Teddy) Gottwald released the following
earnings report for the third quarter and nine months 2002 and
an update of the company's operations. All per share information
reflects the impact of the one-for-five reverse stock split.
Thus:
"To Our Shareholders:
"Earnings for the third quarter 2002 improved to $12 million,
while on a comparable basis, results excluding nonrecurring
items for the third quarter of last year were a loss of $2.3
million. For nine months 2002, earnings excluding nonrecurring
items improved to $14.4 million compared to earnings on the same
basis for nine months last year of $6.3 million. This
improvement in 2002 earnings is even more noteworthy considering
it includes the impact of lower pension income which reduced
earnings 34 cents per share for the nine months compared to the
same period last year.
"Net income for this and last year's nine months, as well as
last year's third quarter, include significant nonrecurring
items not included above. These nonrecurring items are included
in the summary of earnings chart at the end of this press
release.
"The continuing improvement in our petroleum additives operating
profit is gratifying. Operating profit for the petroleum
additives segment, excluding nonrecurring items, for the first
nine months this year is nearly double the results for the same
period last year. Earnings for the third quarter are also up
significantly. Petroleum additives profits through nine months
2002 are the best they have been for nine months since 1999.
Profit has improved in all of our major petroleum additive
product lines compared to the same periods last year. The
petroleum additives profit includes the benefits of improved
margin and product mix and some effect of seasonal ordering
trends. We have stabilized our business base in engine oils and
have grown sales about 10% in other petroleum additives, as
compared to nine months last year. Petroleum additives results
also benefited from strong plant production during the third
quarter including some increase in inventory in anticipation of
scheduled plant maintenance in the fourth quarter.
"The higher profit also includes the impact of improved asset
utilization following our restructuring initiatives. While
average raw material costs for nine months this year were
somewhat lower than the same period last year, we are
experiencing increasing cost in this area. In fact, the
September average raw material cost, on a unit basis, is now
somewhat higher than they were in September of last year. In
early October more raw material price increases were announced,
so we expect the average unit cost will continue to pressure our
margins. This increase in raw material cost, planned plant
maintenance and our normal seasonal pattern of lower sales in
the latter part of a year, will result in fourth quarter
petroleum additives profits being considerably lower than third
quarter's strong performance.
"TEL earnings improved in the quarter as compared to the same
quarter last year and the second quarter of this year. For the
nine-month period compared to the same period last year, profits
are lower, as was expected. We have given guidance in the past
that the long-term rate of volume decline for this product would
average 15% per year. As the use of this product continues to be
phased out around the world, the annual rate of decline in usage
will be more difficult to predict. It now appears that the
decline rate could be greater than previously indicated. This
business continues to supply strong cash flow.
"We continue to make good progress on debt reduction. In
addition to improvements in petroleum additives, earnings have
also benefited from lower corporate and interest expense due to
our cost and debt reduction initiatives. During the first nine
months of this year, we have reduced debt $27 million. We have
also made payment of $12.8 million related to the required
funding associated with the amendment of our TEL marketing
agreements. We still expect most of the remaining funding
requirements related to these agreements to be completed in the
fourth quarter of this year and for our debt reduction program
to be on target for the year.
"Significant progress has been made in achieving the conditions
to extend our current debt facility to March 31, 2004. Our year-
to-date performance and projections give us confidence that this
extension will be earned.
"We are very pleased with our progress to improve the
profitability of our petroleum additives business and our
progress in reducing debt. While we expect the fourth quarter to
be lower than our strong third quarter, due to factors noted
above, we expect to end the full year 2002 with significant
improvement over last year."
In its September 30, 2002 balance sheets show that its total
current liabilities exceeded its total current assets by about
$106 million.
EXIDE TECH.: Introduces Innovative Waterproof Battery Charger
-------------------------------------------------------------
Exide Technologies (OTC Bulletin Board: EXDTQ) --
http://www.exide.com-- a global leader in stored electrical
energy solutions, is introducing an innovative waterproof,
intelligent charging system for automotive starting and deep-
cycle lead-acid batteries. The Waterproof Intelligent Charger
is intended for cars, buses and trucks as a supplement to the
vehicles' on-board charging systems. Exide developed the
charging system in partnership with Lyng Elektronikk AS,
located in Vanvikan, Norway. Lyng Elektronikk AS, --
http://www.lyng.com-- is an in-house electronics development
and manufacturing company, supplying a number of worldwide
customers with high-quality electronic solutions.
Today's vehicles are equipped with an increasing number of
power-hungry accessories that place a large drain on a vehicle's
battery. Cars have heated seats, high-tech audio electronics
and adaptive cruise control -- new crash-avoidance systems that
use laser beams or radar to measure the distance from one
vehicle to the car ahead and the relative speed of both
vehicles. Buses are fitted with swipe devices, heating systems
and floor lifts. Trucks deploy global positioning systems,
heavy-duty cooling systems, position lamps and back lifts. When
the battery is drained, it can be recharged easily by the
on-board charging system if the vehicle is driven a sufficient
distance in the course of a day. But if the vehicle doesn't
cover enough ground, the battery will be only partially
recharged, and therefore incapable of fully supporting the
electrical load. The Exide Technologies supplemental on-board
charger provides the extra measure of reliability and safety to
assure a fully charged battery at all times.
The Waterproof Intelligent Charger provides an all-weather,
voltage-controlled maintenance charge of five amperes to prevent
overcharging. It can be used on all lead-acid batteries with
ratings of more than 15amp hours, and its unique back plate
design allows the charger to be safely secured to any part of
the vehicle. In addition, its mains-sensed charging output
provides no opportunity for a drain of battery voltage when the
main electricity supply is interrupted. This is because the
device is fully separated from the battery system.
Exide Technologies developed the Waterproof Intelligent Charger
to be used for a range of vehicles, including
caravans/recreational vehicles, boats, cars, tractors and farm
equipment. It can be used indoors or out, in summer cottages,
boathouses or car showrooms. Its intuitive, yellow-green-red
indicator illustrates whether the system is in the process of
charging, whether the battery is charged, or whether the charger
is connected correctly.
"Exide Technologies offers a range of innovative battery
products and a full spectrum of support products and services to
our customers," said David G. Enstone, president of the Exide
Technologies Global Transportation Business Group. "This
charger is a product of our vision to continually advance the
global development of superior power products."
The compact, lightweight, portable charger weighs 1.8 kg/3.9 lbs
and measures 140mm/5.5 inches by 95 mm/3.7 inches by 135mm/5.3
inches. It comes with a convenient, built-in handle for easy
carrying and cable wind-up. The case is constructed of rugged
polypropylene plastic and is waterproof (Classification IP67),
which means that the charger can be used both indoors and
outdoors without risk for water or dampness damaging the
product. The charger has no fuses, and has built-in protection
against over-voltage, over-temperature and reverse polarity
conditions.
The charger will be available through most wholesalers and
retailers in Europe and the U.S. by November/December 2002.
Exide Technologies, with operations in 89 countries and fiscal
2002 net sales of approximately $2.4 billion, is one of the
world's largest producers and recyclers of lead-acid batteries.
The company's three global business groups -- transportation,
motive power and network power -- provide a comprehensive range
of stored electrical energy products and services for industrial
and transportation applications.
Transportation markets include original-equipment and
aftermarket automotive, heavy-duty truck, agricultural and
marine applications, and new technologies for hybrid vehicles
and 42-volt automotive applications. Industrial markets include
network power applications such as telecommunications systems,
fuel-cell load leveling, electric utilities, railroads,
photovoltaic (solar-power related) and uninterruptible power
supply, and motive-power applications including lift trucks,
mining and other commercial vehicles.
Exide filed for Chapter 11 Reorganization on April 14, 2002, in
the U.S. Bankruptcy Court for the District of Delaware. Further
information about Exide, its financial results and other
information is available at http://www.exide.com
Exide Technologies' 10% bonds due 2005 (EXDT05FRR1), DebtTraders
reports, are trading at 15 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=EXDT05FRR1
for real-time bond pricing.
GENERAL BINDING: Red Ink Continues to Flow in Third Quarter 2002
----------------------------------------------------------------
General Binding Corporation (Nasdaq: GBND) -- whose corporate
credit is currently rated at B+ by Standard & Poor's -- reported
results for the third quarter of 2002 reflecting slightly lower
sales relative to last year's third quarter due to the
continuing weak economy. Despite the challenging sales
environment, GBC reported that sales in its Office Products
Group, its largest business group, continued to improve, with
the Group posting a 2.8% increase in sales over the prior year.
In addition, the Company reported an overall gross profit margin
above last year and continued progress in reducing its net debt.
Quarterly Results
Financial results for the quarter included the following
highlights:
-- Sales in the quarter totaled $176 million, down 1.7%
from the third quarter of 2001, The decline was attributable to
weaker sales of binding and laminating products and commercial
laminating films in the Company's Document Finishing, Films and
Europe Groups, partially offset by a 2.8% increase in sales in
the Office Products Group.
-- The gross profit margin increased over last year by 0.5
points to 39.4%, primarily due to improvement in the Office
Products and Europe Groups, which more than offset a decrease in
the Document Finishing Group's margin. The bulk of the margin
improvement was attributable to continuing progress in certain
pricing and cost reduction initiatives related to the Company's
Operational Excellence Program.
-- Selling, service and administrative expenses totaled
$56.1 million, down slightly from the $57.5 million total for
the third quarter of 2001.
-- Interest expense for the quarter was $10.1 million,
higher than the $8.9 million reported last year due to a higher
interest margin paid in 2002, which was partially offset by a
lower average debt level in 2002.
-- Restructuring and other special charges totaled $1.4
million ($0.06 per share) for the quarter and were primarily
related to severance expenses. The prior year results included
restructuring charges of approximately $1.1 million ($0.06 per
share) related to the shutdown of operations in Poland and
certain workforce reductions.
-- Other income included a non-cash charge of $1.1 million
($0.07 per share) related to the expected disposal of the
Company's interest in an international joint venture.
-- A net loss was reported for the quarter of $(0.03) per
share (basic), compared to a loss of $(0.01) per share last
year. Excluding $0.13 per share of restructuring and other
charges and the loss on the business disposal noted above, net
income for the quarter was $0.10 per share. On a comparable
basis, net income for last year's third quarter was $0.18 per
share, excluding restructuring charges of $0.06 per share and
goodwill amortization of $0.13 per share.
-- Cash flow, as measured by adjusted EBITDA (earnings
before interest, taxes, depreciation, amortization and certain
special items, all as specifically defined in the Company's
primary credit facility), was $19.6 million (11.2% of sales),
compared to adjusted EBITDA of $19.4 million (10.8% of sales)
for the same period last year.
-- Total debt, net of cash and investments, at the end of
the quarter was $334 million, an improvement of $25 million from
the beginning of the year and $7 million from June 30, 2002.
"While the weak economy and the capital spending constraints at
many of our customers continue to adversely affect sales in our
Document Finishing and Films Groups, we are pleased to see
another quarter of improvement in the Office Products Group, the
largest of our business units," said Dennis Martin, Chairman of
the Board, President and CEO. "Their sales were up 2.8% over
last year and 4.5% over this year's second quarter. In addition,
ongoing progress with the pricing initiatives, cost reduction
measures and rationalization efforts of our Operational
Excellence Program allowed us to increase our gross margin and
maintain our operating expense margin, despite the lower sales
level. The Operational Excellence Program, and continued
moderation in our capital expenditures, also helped generate
another successful quarter of free cash flow which was used to
pay our net debt down by $7 million. Thus far this year, our
major focus on generating free cash flow has allowed us to pay
debt down by $25 million."
"During the quarter, we also announced the combination of our
Document Finishing and Office Products businesses into a new
group called the Commercial and Consumer Group," Mr. Martin
continued. "Although there will likely be certain cost savings
associated with this combination, the driving force behind the
move is to pursue growth opportunities through improved
alignment of our sales and marketing activities. We believe that
this growth platform will help us better exploit synergies in
product development, manufacturing, distribution and customer
service, while leveraging our powerful brand names, proven
market strength, leadership in innovation, and our valuable
customer and consumer experience. The creation of this new group
will build on the success of our Operational Excellence Program,
and it continues the transformation of GBC by intensifying our
consumer-focused brand management approach."
Nine-Month Results
For the first nine months of 2002, sales were $523 million,
compared to $551 million for the same period last year. Net
income for the period was $0.20 per share, before special items
and tax adjustments totaling $0.46 per share and the cumulative
effect of the accounting change for SFAS No.142, "Goodwill and
Other Intangible Assets," of $4.98 per share. For the same
period last year, net income, on a comparable basis, was $0.47
per share, excluding special items of $0.43 per share and
goodwill amortization of $0.40 per share.
GBC is the world leader in products that bind, laminate, and
display information so people can accomplish more at work, home,
and at school. GBC's products are marketed in over 115 countries
under the GBC, Quartet, Ibico, and Pro-Tech brands, and they
help people organize and communicate ideas and enhance printed
materials.
GENTEK INC: Turning to Lazard Freres for Financial Advice
---------------------------------------------------------
Before the Petition Date, GenTek Inc., and its debtor-affiliates
sought the services of Lazard Freres & Co., LLC as financial
advisors and investment bankers. Since February 19, 2002,
Lazard has been:
(a) advising and meeting with management, the Board of
Directors and its committees with respect to various
financial matters;
(b) assisting the Debtors and their consultants and counsel in
evaluating their businesses, assets and operations;
(c) assisting in negotiations with the Debtors' senior secured
lenders and acting on the Debtors' behalf in negotiating a
cash collateral stipulation and budget with those lenders;
and
(d) assisting the Debtors in communicating and negotiating
with the Debtors' senior subordinated noteholders with
respect to various matters.
Matthew R. Friel, GenTek Inc., Chief Financial Officer, relates
that, because of its representation of the Debtors, Lazard has
acquired extensive knowledge of the Debtors and their businesses
and is uniquely familiar with the Debtors' financial affairs,
debt structure, operations and related matters.
In addition, Mr. Friel notes that, Lazard and its senior
professionals have extensive experience in the reorganization
and restructuring of troubled companies, both out-of-court and
in Chapter 11 proceedings. Since 1990, these professionals have
been involved in over 200 restructurings. Lazard also has been
employed as financial advisor and investment banker in a number
of troubled company situations, including the Chapter 11 cases
in the District of Delaware: Owens Corning, Fruit of the Loom,
Vlasic Foods International, Armstrong Worldwide Industries,
Stone & Webster, Sun Healthcare Group, Kaiser Aluminum, Hayes
Lemmerz and Safety-Kleen, Inc., among others.
The Debtors believe that continued representation by their
financial advisor and investment banker is critical to their
effort to restructure their business in Chapter 11. Hence, the
Debtors ask Judge Walrath to approve Lazard's employment as
their financial advisors and investment bankers in their Chapter
11 cases.
The Debtors expect Lazard to:
(i) review and analyze their businesses, operations and
financial projections;
(ii) evaluate their potential debt capacity in light of its
projected cash flows;
(iii) assist in the determination of an appropriate capital
structure;
(iv) determine a range of values on a going concern basis;
(v) advise them on tactics and strategies for negotiating
with the stakeholders;
(vi) render financial advice and participate in meetings or
negotiations with the stakeholders and rating agencies
or other appropriate parties in connection with any
restructuring, modification or refinancing of the
Debtors' existing obligations;
(vii) advise them on the timing, nature, and terms of new
securities, other consideration or other inducements to
be offered pursuant to a "Restructuring";
(viii) advise and assist them in evaluating potential capital
markets transactions of public or private debt or equity
offerings, evaluating and contacting potential sources
of capital as they may designate, and assist in
negotiating that transaction;
(ix) assist them in preparing documentation within Lazard's
area of expertise in connection with a Restructuring of
the existing obligations;
(x) assist them in identifying and evaluating candidates for
a potential merger or the sale of all or a portion of
their assets, equity, or other interests, advise them in
connection with negotiations and aid in the consummation
of a Business Combination;
(xi) advise and attend meetings of the Debtors' Board of
Directors; and
(xii) provide them with other general restructuring advice.
As compensation, Lazard will charge the Debtors:
-- A $200,000 monthly fee, payable on the 19th day of the
month and on the same day of each month after that until
the earlier of the consummation of the Restructuring or the
termination of Lazard's engagement. All monthly fees,
except those in respect of the first five months of the
engagement, will be credited against any restructuring or
Business Combination fees;
-- A fee equal to $6,000,000 payable upon the consummation of
a Restructuring;
-- A Business Combination fee:
(a) If, whether in connection with the consummation of a
Restructuring or otherwise, the Debtors consummate a
Business Combination incorporating all or substantially
all of their assets or the majority of the equity
interests of the Debtors, Lazard will be paid a fee
based on the aggregate consideration of the
transaction. The total fee is calculated by
multiplying the Aggregate Consideration by the
applicable fee percentage.
Lazard's Fee Schedule
Aggregate
Consideration
Involved in
Transaction Amount Percent of
(Millions) (Thousands) Transaction
---------- ----------- -----------
$2,000 up $9,000 up 0.450%
1,000 6,000 0.600
900 5,625 0.625
800 5,200 0.650
700 4,900 0.700
600 4,500 0.750
500 4,000 0.800
400 3,600 0.900
300 3,000 1.000
200 2,400 1.200
100 1,500 1.500
50 1,000 2.000
or less or lower
Aggregate Consideration means:
(i) the total amount of cash and the fair market
value on the date of payment of all of the
property paid or payable, including amounts paid
into escrow in connection with the Business
Combination or any related transaction; plus
(ii) the principal amount of all indebtedness far
borrowed money of the Company and any subsidiary
or, in case of the sale of assets, all
indebtedness for borrowed money as set forth in
the most recent consolidated balance sheet
assumed by the third party.
In the event that Lazard is entitled to receive both
the Restructuring Transaction Fee and a Business
Combination Fee, the lower of the two fees will be
fully credited against the higher of the two fees;
(b) In the event that the Debtors consummate any Business
Combination relating to certain of the Debtors'
business lines, divisions or operating groups, the
Debtors will pay Lazard a Business Combination Fee in
cash based on the Aggregate Consideration of the
transaction. The Combination Fee in this case,
however, must not less than $500,000. Any fee payable
will be fully credited against any Restructuring Fees
or Business Combination Fees associated with the sale
of substantially all of the Debtors' assets; and
(c) Any Business Combination Fee payable will be paid upon
closing of the applicable Business Combination. More
than one fee may be payable; and
-- Lazard's total fee, however, will not, in any event be
greater than $7,000,000. In addition to any fees that may
be payable to Lazard and, regardless of whether any
transaction or Restructuring occurs, the Debtors will
promptly reimburse Lazard for all:
(a) reasonable out-of-pocket expenses; and
(b) other reasonable fees and expenses, including expenses
of outside counsel, if any.
The Lazard Restructuring Fee is 0.71% of total funded debt after
five months of non-credited monthly fees.
The Debtors also agree to indemnify Lazard, except to the extent
that any loss, claim, damage, liability or expense is found by a
court of competent jurisdiction in a final judgment to have
resulted primarily from Lazard's gross negligence or bad faith.
Mr. Friel further indicates that either the Debtors or Lazard
may terminate the engagement at any time. If the Debtors
terminate Lazard's engagement, they remain obligated to pay
certain fees and expenses and indemnify Lazard.
Barry W. Ridings, Managing Director at Lazard, discloses that
the Debtors have paid Lazard in full for all prepetition
compensation and expenses. Accordingly, Lazard is not a
creditor of the Debtors. Thus, Mr. Ridings assures the Court
that Lazard does not represent or bear adverse interest to the
Debtors or their estates and stands as a "disinterested person"
within the meaning of 11 U.S.C. Sec. 101(14). Mr. Ridings
reports that:
-- Lazard has not been retained to assist any entity or person
other than the Debtors on matters relating to, or in
connection with, these Chapter 11 cases. Lazard and its
principals and employees have no relationship with the
Debtors;
-- Lazard has not been retained by, nor has any relationship
with, any potential parties-in-Interest. If it did,
Lazard's representation of or relationship with that entity
is only on matters that are unrelated to the Debtors or
these cases;
-- Given the size of the Debtors and their creditors and
investors, Lazard believes it is unlikely that any major
financial advisory and investment banking firm with the
expertise necessary for these cases could be found that
does not have relationships with some of the Debtors'
creditors or stakeholders in unrelated matters;
-- Given the size of Lazard and the breadth of Lazard's client
base, and because the Debtors are part of an international
enterprise with thousands of creditors and other
relationships, it is uncertain that every client
representation or other connection has been disclosed;
-- Lazard's asset management arm, Lazard Asset Management
manages $65,000,000 in assets for institutions and
individuals and advises several mutual fund families. In
the ordinary course of business, Lazard, through LAM, may
act as a broker or investment advisor for or trade
securities for its clients. Some of these LAM accounts and
funds may now or in the future hold debt or equity
securities of the Debtors and stock and bonds in various
public companies who may be creditors in these cases;
-- Lazard has in place compliance procedures to ensure that no
confidential or non-public information concerning the
Debtors has been or will be available to employees of
Lazard with responsibility for trading securities in LAM
accounts and funds. LAM also is operated as a separate and
distinct business unit within Lazard and is separated from
Lazard's other businesses by an ethical wall; and
-- Lazard also operates a Capital Markets business, which is
run as a separate department within Lazard and is ethically
walled off from Lazard's financial advisory and investment
banking groups and their managing directors and employees
advising the Debtors. Capital Markets regularly engages in
trading of debt and equity securities for both clients' and
Lazard's own account. However, as a result of this
engagement, Lazard has placed the Debtors on Lazard's
"Restricted List." Proprietary trading by Lazard and its
managing directors and employees, and publication of
research reports and recommendations or solicitations by
Lazard to buy or sell, are prohibited with respect to
companies placed on the Restricted List, including the
Debtors. The placement of the Restricted List does not,
however, prohibit Lazard from executing unsolicited agency
orders and liquidating trades in a company's securities,
including the Debtors.
If this Court approves the Debtors' proposed employment of
Lazard, Mr. Ridings says, Lazard will not accept any engagement
or perform any service for any entity or person other than the
Debtors in connection with these cases. Lazard will, however,
continue to provide professional services to those entities that
may be creditors of the Debtors, or Potential Parties-in-
Interest, provided, that the services do not relate to these
Chapter 11 cases. (GenTek Bankruptcy News, Issue No. 3;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
GLOBAL CROSSING: Court to Consider Plan on December 4, 2002
-----------------------------------------------------------
A hearing to consider confirmation of Global Crossing Ltd.'s
proposed Plan of Reorganization will be held at 9:45 a.m.,
prevailing Eastern Time, on December 4, 2002; provided, however,
that the Confirmation Hearing may be continued from time to time
by the Court or the Debtors without further notice or through
adjournments announced in open court.
Any objections to confirmation of the Plan or proposed
modifications to the Plan must be filed, together with proof of
service, with the Court and served so that they are actually
received no later than no later than 4:00 p.m., prevailing
Eastern Time, on November 22, 2002. (Global Crossing Bankruptcy
News, Issue No. 25; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
GREENLAND CORP: Implements 50-to-1 Reverse Stock Split
------------------------------------------------------
Greenland Corporation (OTC Bulletin Board: GRLP) has implemented
the 50-to-1 reverse stock split approved at the Special Meeting
of Shareholders held October 15, 2002.
Mr. Thomas J. Beener, CEO of Greenland Corporation stated that
the reverse stock split is effective today and that the
Company's common stock will continue to trade on the OTC: BB
under the symbol "GRLC."
Shareholders of Greenland stock need not return their existing
shares to the transfer agent. The adjustment in the number of
shares will be made at such time as the shares are sold. In
summary for each fifty shares currently owned, said shares will
be adjusted to one share and all fractional interest will be
rounded upward."
Mr. Beener thanked all the shareholders for their support and
cooperation in approving the reverse split and the transaction
with Imaging Technologies Corporation. The Form 10Q-SB for the
quarter ended September 30, 2002 will be filed timely at which
time further information regarding the Company and its PEO
operations will be available.
Greenland Corporation's new address is: 17075 Via Del Campo, San
Diego, California 92127; Telephone (858) 451-6120.
Greenland Corporation is a holding company which operates a
wholly owned subsidiary called Check Central that performs check
cashing transaction processing and is a developer and
manufacturer of the MaxCash(TM) Automated Banking Machine (ABM)
providing self service check cashing. The Company's common
stock trades on the OTC Bulletin Board under the symbol "GRLP."
Visit Greenland Corporation on the Internet at
http://www.greenlandcorp.com
At June 30, 2002, Greenland Corp.'s balance sheets showed a
working capital deficit of about $2.4 million, and a total
shareholders' equity deficit of about $1.2 million.
HELLER FIN'L: Fitch Affirms Low-B Ratings on Four Note Classes
--------------------------------------------------------------
Heller Financial Commercial Mortgage Asset Corp.'s mortgage
pass-through certificates, series 2000 PH-1, $139.9 million
class A-1, $532.3 million class A-2, and interest-only class X
certificates are affirmed at 'AAA' by Fitch. In addition, the
$43.1 million class B certificates are affirmed at 'AA', $47.8
million class C at 'A', $12.0 million class D at 'A-', $35.9
million class E at 'BBB', $14.4 million class F at 'BBB-', $26.3
million class G at 'BB+', $7.2 million class K at 'B+', $9.6
million class L at 'B', and $9.6 million class M at 'B-'. Fitch
does not rate the $19.1 million class H, $9.6 million class J,
and $19.1 million class N certificates. The rating affirmations
follow Fitch's annual review of the transaction, which closed in
February 2000.
The rating affirmations are the result of the improved weighted
average debt service coverage ratio of the mortgage pool and
limited paydown of the certificates. Midland Loan Services, as
master servicer, collected year-end 2001 operating statements
for 93% of the pool by balance. The year-end 2001 weighted
average DSCR for those loans is 1.48 times, an increase from
1.43x at issuance. Fitch's weighted average DSCR is based on
servicer provided net cash flow.
In addition to the improved weighted average DSCR, the
transaction is also diverse by geographic location. Geographic
concentrations include California (16%), Florida (10%), Texas
(9%), Georgia (6%) and New York (6%). Currently the transaction
is collateralized by 233 commercial and multifamily loans with a
total collateral balance of $925.5 million from $956.9 million
at issuance. Significant property type concentrations include
retail (38%), multifamily (24%) and office (19%) property types.
Fitch is concerned with 14 loans (4.62%) which are currently
specially serviced. Of the 14 specially serviced loans, nine
loans are delinquent and Fitch is expecting to losses on five of
these nine loans. The largest loss is expected on a Comfort Inn
located in Phoenix, AZ which is 90 days delinquent. The property
has been hurt by a slowdown in travel in 2002. As of March 2002
occupancy was 34%. The special servicer has initiated
foreclosure on the property. In addition to the hotel, losses
are expected on two real estate owned multifamily properties and
two 90 days delinquent retail properties.
While Fitch does have some concerns with the pool, the current
credit support was adequate to support the rating affirmations.
Fitch will continue to closely monitor the delinquent loans in
this pool to determine if ratings actions are necessary.
HINES HORTICULTURE: Third Quarter Net Loss Narrows to $7MM
----------------------------------------------------------
Hines Horticulture, Inc., (NASDAQ: HORT) reported operating
results for the third quarter and nine month period ended
September 30, 2002.
Third Quarter Results
In a seasonally moderated quarter during the Company's selling
cycle, net sales were up by almost 5% to $45.0 million from
$43.0 million a year ago. The Company achieved these strong
results despite the economic uncertainty that continues to
pervade many regions of the nation. In addition, given Kmart's
uncertain financial situation, Hines reduced its third quarter
sales to the large retailer by more than $3 million from a year
ago.
As was the case earlier in the year, Nursery operations
continued to lead the way as strategic growth initiatives, which
have been implemented in recent years, favorably impacted sales
and operating performance.
The Southwestern region, in particular, had a strong quarter as
the weather continued to improve after a late start to Spring.
This region was one of the first, and has been one of the most
successful, at implementing the Company's in-store service
programs. These programs are enabling Hines to achieve greater
sales per customer by offering a broader selection of green
goods and by streamlining the ordering and in-store
merchandising activities.
During the quarter, the Northeast region also continued to make
significant headway becoming a coordinated, customer-oriented
operation focused on building relationships with key customers
and enhancing profitability. The integration of the Company's
operations in that part of the country coupled with the targeted
introduction of store service programs has produced increasingly
positive results. Management in the Northeast has also re-
allocated its resources to concentrate specifically on customers
with higher potential payback and has selectively eliminated
lower margin programs.
Despite the strong sales performance compared with last year, as
is typically the case, sales volumes in the Company's off-peak
quarters are not sufficient to produce operating gains. For the
2002 third quarter, Hines reported an operating loss of $3.1
million versus $3.6 million last year. Improved leveraging of
general and administrative expenses during the quarter was
offset by a lower gross margin due to in part to increased scrap
rates.
Financing costs for the quarter were down $2.7 million to $8.9
million. As previously announced, Hines completed the sale of
its Sun Gro growing media business during the first quarter of
this year. The Company used net proceeds of $120 million from
the sale to pay down outstanding bank debt, significantly
strengthening Hines' balance sheet and increasing the Company's
financial flexibility.
The net loss from continuing operations for the quarter was $7.1
million, compared with $8.9 million for last year's third
quarter. In addition, for the earlier period, the Company
recognized net income from discontinued operations of $.9
million, net of tax, representing Sun Gro's net income.
Accordingly, the net loss for the third quarter of 2001 was $8.0
million versus $7.1 million for the 2002 period.
Nine Month Results
Net sales for the nine months ended September 30 were up by
almost 4% to $295.9 million despite a nearly 50% reduction in
sales to Kmart, one of the Company's major customers. Operating
income was $48.4 million compared with $48.9 million a year ago.
Financing costs for the period were reduced by $5.8 million to
$25.4 million. This improvement was primarily due to benefits
from the substantial deleveraging that the Company achieved
earlier this year, using proceeds from the sale of Sun Gro to
make a substantial reduction in debt. Net income from continuing
operations for the nine month period increased by almost 30% to
$13.6 million from $10.5 million a year ago.
Hines recorded the earlier sale of Sun Gro and related items on
its financial statements for the nine months ended September 30,
2002 under discontinued operations. The sale of Sun Gro yielded
a gain of $1.3 million, net of tax; however subsequent working
capital adjustments resulted in a net loss from discontinued
operations of $1.7 million. Discontinued operations for the
first nine months of 2001 included Sun Gro's net income of $4.8
million for the period.
Having used proceeds from the Sun Gro transaction to
significantly reduce debt, the Company's financial results for
the first nine months of 2002 also include a $1.0 million after-
tax write-off of unamortized financing costs related to the
early extinguishment of debt. After taking account of
discontinued operations and related charges, the Company's net
income for the first nine months was $10.8 million, compared
with net income of $15.2 million last year.
CEO Highlights
Stephen P. Thigpen, President and Chief Executive Officer,
stated, "I am pleased to report that the momentum we gained
during the second quarter of this year carried over into our
latest reporting period, particularly during July and August.
While some of the success was market driven, a number of the
strategic programs we have implemented in recent years were
major factors. The numbers are particularly impressive in light
of the continued uncertainty in our economic and political
environment.
"In addition to our operating activities during the last half of
the year, some of the most important work being done relates to
planning for the following year's Spring selling season, and
positioning the Company for the longer term. This year, both
sets of activities are being undertaken within the context of
further improving our return on capital, a significant point of
emphasis for us.
"Recognizing that distribution and logistics activities
represent an ever increasing portion of the Company's cost
structure, during the third quarter management focused broadly
on identifying supply chain related efficiencies. With the
process review well under way, we expect to start implementation
of system enhancements in sufficient time to begin realizing
benefits during next year's Spring selling season.
"Also within the supply chain context, we are in the process of
realigning our selling framework much more closely with the
customer in order to enhance overall responsiveness and create
greater efficiencies. This re-alignment is intended not only to
address profitability issues, but growth at the top line as
well. We believe that making Hines easier to do business with
will provide an increased incentive for customers to consolidate
a greater portion of their green goods purchases with us.
"Recognizing the economic uncertainty, which is a current
reality, a high priority in our planning for next year is
maximizing operating flexibility. We are being extremely
diligent in fine tuning customer order volumes by product line
to insure that we are completely sold out. We are re-deploying
portions of our production capacity to broaden an already
extensive product line. By so doing, we improve use of existing
assets, further solidify relationships with important customers,
and increase our overall sales potential in the marketplace.
"Despite long term strategic advances, the current economic
uncertainty makes performance in the short-term difficult to
project. We are hopeful the slowdown we witnessed in September
sales will be reversed and that we will regain some traction in
this quarter. The Southern portions of the country are typically
the strong performers during our final quarter and we expect
that to be the case again this year. However, as we reflect on
our expectations for the year overall in the context of the
current climate of political instability and economic
uncertainty, it's only prudent to take a more cautious stance
and moderate our eps range to $.48 - $.53, from $.53 - $.58. I
hope that we will do better, but the current environment makes
it impossible to predict performance in the short term with a
high degree of confidence. Looking ahead to next year, we are
taking a number of actions within the business and in the
marketplace that we believe should positively impact our 2003
performance."
Hines Horticulture is a leading operator of commercial nurseries
in North America, producing one of the broadest assortments of
container-grown plants in the industry. The Company sells
nursery products primarily to the retail segment, which includes
premium independent garden centers, as well as leading home
centers and mass merchandisers, such as Home Depot, Lowe's and
Wal-Mart.
As reported in Troubled Company Reporter's October 9, 2002
edition, Standard & Poor's affirmed its single-'B'-plus
corporate credit and senior secured ratings as well as its
single-'B'-minus subordinated debt rating on Hines Horticulture
Inc. The ratings have been removed from CreditWatch, where they
were placed on February 2, 2002.
The outlook is positive.
The ratings reflect Hines' leveraged financial profile, a high
level of customer concentration risk, and vulnerability to
unfavorable weather conditions. These factors are mitigated by
Hines' leading market position in the consolidating, but highly
fragmented, color and nursery product lines, some moderation of
Hines financial policies, and an experienced management team.
HORIZON PCS: S&P Junks Credit Rating Over Liquidity Concerns
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Horizon PCS Inc., to triple-'C'-plus from single-'B'-
minus. The downgrade reflects concerns over limited headroom
against execution risks under recently revised bank maintenance
covenants and, separately, weak liquidity.
Standard & Poor's also removed the rating from CreditWatch with
negative implications. The outlook is negative. The rating was
originally placed on CreditWatch on June 26, 2002 due to
concerns over the outcome of the company's negotiation with
banks over covenant amendments. The Chillicothe, Ohio-based
company had total debt of about $502 million at the end of June
2002.
"We believe that Horizon's recently amended maximum EBITDA loss
and minimum revenue covenants under its bank credit facility
provide little margin of safety against execution risks,
especially since these tests become more restrictive on a
successive quarterly basis. Given the weak economy, competition,
and problems with subprime customers under the ClearPay program
that have not yet been fully resolved, the company could find it
challenging to meet these covenants," said Standard & Poor's
credit analyst Michael Tsao.
Standard & Poor's also said that Horizon has weak accessible
liquidity. Standard & Poor's estimates that Horizon had only
about $32 million in accessible liquidity at the end of third
quarter 2002 after excluding $168 million that the company could
not use due to a minimum liquidity covenant newly placed in the
revised bank credit agreement. While this maintenance covenant
does become moderately less restrictive on a quarterly basis
going forward, Standard & Poor's believes this gradual
relaxation is more than offset by the severe constraint it
places on Horizon's liquidity, which the company would need,
given the challenging operating environment and its weak
prospect of generating free cash flow anytime soon.
With weak liquidity, tight bank covenants, and very limited
prospect of generating free cash flow in the near term, Horizon
lacks the financial flexibility to deal with execution risks
stemming from competition and the weak economy. Ratings could be
lowered in the near term due to weak operating performance and
cash flow metrics.
HORSEHEAD INDUSTRIES: Signs-Up Kirkpatrick as Special Counsel
-------------------------------------------------------------
Horsehead Industries, Inc., sought and obtained approval from
the U.S. Bankruptcy Court for the Southern District of New York
to retain Kirkpatrick & Lockhart, LLP, as its special counsel on
matters concerning certain insurance coverage, environmental,
and intellectual property.
The professional services that the Firm has rendered and will
render to the Debtors are:
a) General counseling on certain environmental regulatory
matters including advising regarding compliance issues,
reviewing draft permits, assisting in investigations,
and advising and representing the Debtors with respect
to Comprehensive Environmental Response, Compensation
and Liability Act litigation and related CERCLA issues;
b) Representing the Debtors in the insurance coverage
litigation, seeking coverage from the PMA in the above-
referenced litigation.
c) Maintaining patent and trademark issues; and
d) Providing other related legal advice as needed.
Professionals at the Firm who may provide legal services to the
Debtors are:
Attorneys
---------
Barry M. Hartman, Esq.
David T. Case, Esq.
John P. Krill, Esq.
Christine Ethridge, Esq.
Anthony LaRocca, Esq.
Gregory Wright, Esq.
Thomas Magarello, Esq.
Paralegals
----------
Al Hagovsky
T. Rohrbaugh
Their hourly rates are:
Partners $325 - $425
Associates $160 - $325
Paralegals $ 90 - $150
Horsehead Industries, Inc., d/b/a Zinc Corporation of America,
the largest zinc producer filed for chapter 11 protection on
August 19, 2002. Laurence May, Esq., at Angel & Frankel, PC
represents the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed
$215,579,000 in assets and $231,152,000 in debts.
IMMTECH INT'L: Annual Shareholders' Meeting Slated for Nov. 15
--------------------------------------------------------------
The Annual Meeting of Stockholders of Immtech International,
Inc., will be held on November 15, 2002 at 10:00 A.M., at the
Westin O'Hare, 6100 River Road, Rosemont, Illinois 60018, for
the following purposes:
-- Election of Directors - to elect five directors to serve
until the next annual meeting of the stockholders and until
their successors are elected and qualified or their earlier
resignation, removal, disqualification or death,
-- Proposal No. 1 - to approve an amendment to Immtech's
2000 Stock Incentive Plan to increase the number of shares of
common stock reserved for issuance thereunder from 350,000
shares to 1,100,000 shares,
-- Proposal No. 2 - to approve the issuance of common stock
issuable upon conversion of Series A Convertible Preferred
Stock, $0.01 par value, held by certain officers and directors
of the Company,
-- Proposal No. 3 - to ratify the selection of Deloitte &
Touche LLP as the Company's independent auditors for the fiscal
year ending March 31, 2003, and
-- to transact such other business as may properly come
before the Annual Meeting or any adjournment or postponement
thereof.
Only stockholders of record at the close of business on October
2, 2002 will be entitled to notice of the Annual Meeting and to
vote on any matters which come before the meeting or any
adjournment or postponement thereof.
Immtech International, Inc., is a pharmaceutical company focused
on the development and commercialization of drugs to treat
infectious diseases that include fungal infections, Malaria,
tuberculosis, Hepatitis C, pneumonia, diarrhea and African
sleeping sickness, and cancer. The Company holds worldwide
patents, licenses and rights to license worldwide patents,
patent applications and technologies from third parties that are
integral to the Company's business.
Since its formation in October 1984, the Company has engaged in
research and development programs, expanding its network of
scientists and scientific advisors, negotiating and consummating
technology licensing agreements, and advancing the technology
platform toward commercialization. The Company uses the
expertise and resources of strategic partners and contracted
parties in a number of areas, including: (i) laboratory
research, (ii) pre-clinical and human clinical trials and (iii)
the manufacture of pharmaceutical products. The Company has
licensing and exclusive commercialization rights to a dicationic
anti-infective pharmaceutical platform and is developing drugs
intended for commercial use based on that platform. These
dication pharmaceuticals work by blocking life-sustaining
enzymes from binding to the key sites in the "minor groove" of
an organism's deoxyribonucleic acid, thereby killing the
infectious organisms that cause fungal, parasitic, bacterial and
viral diseases. The minor groove or key site on an organism's
DNA is an area where enzymes interact with the DNA as part of
their normal life cycle. The Company does not have any
commercially available products nor does it expect to have any
commercially available products for sale until after March 31,
2003, if at all.
As reported in Troubled Company Reporter's August 21, 2002
edition, the Company has a shortage of unrestricted working
capital and has had recurring losses from operations and
negative cash flows from operations since inception. These
factors, among others, raise substantial doubt about its ability
to continue as a going concern. The ability to continue to
operate will ultimately depend upon raising additional funds,
attaining profitability and operating at a profit on a
consistent basis, which will not occur for some time or may
never occur.
INTERLIANT INC: Gets Final Nod to Use $5 Million DIP Financing
--------------------------------------------------------------
Interliant, Inc., and its debtor-affiliates obtained approval
from the U.S. Bankruptcy Court for the Southern District of New
York to obtain up to $5,000,000 of postpetition financing from
Access Capital, Inc.
The Debtors' principal prepetition secured creditors are Silicon
Valley Bank, holding a secured claim in the principal amount of
$216,813 as of the petition date, and certain equipment and
insurance financers. The Debtors relate that on September 3,
2002, SVB drew $347,692 as payment in full of all of the
Debtors' obligations under the SVB loans.
The Court determined that the Debtors have an immediate and
critical need to obtain new financing to pay for their payroll,
to defray other direct operating expenses, and to obtain goods
and services needed to carry on business during this sensitive
period in a manner that will avoid irreparable harm to the
Debtors' estates. Furthermore, the Debtors are unable to obtain
credit in the form of unsecured credit or unsecured debt
allowable under the Bankruptcy Code as an administrative
expense.
Amounts borrowed under the DIP Loan Documents will bear interest
at a per annum rate equal to Prime plus 1%.
The DIP Facility will terminate on the earliest of:
i) non-compliance by the Debtors with any of the terms or
provisions of the Court's Order;
ii) any Event of Default;
iii) the use by any Debtor of proceeds of the DIP Loan in a
manner that is not authorized;
iv) the failure of any Debtor to comply with any reporting
requirements set forth in the DIP Loan Documents, which
compliance is not cured during any applicable cure
period;
v) the appointment of a trustee, responsible officer or
examiner in this bankruptcy case;
vi) the dismissal of the bankruptcy case or the conversion
of this case from one under Chapter 11 to one under
Chapter 7 of the Bankruptcy Code;
vii) the commencement of any suit or action against Lender or
any of its representatives that asserts by or on behalf
of any Debtor, its estate, or any committee appointed in
the bankruptcy case, any claim or legal or equitable
remedy or seeks subordination or to invalidate of any
lien existing in favor of Lender;
viii) the filing of a motion in the bankruptcy case without
Lender's prior written consent:
ix) the filing of a plan of reorganization in the
bankruptcy case without Lender's prior written consent
that provides for any treatment of the obligations owing
to Lender other than payment in full in cash on the
effective date of such plan.
x) the breach of a material obligation of any Debtor under
the Court's Order.
Interliant, Inc., a provider of Web site and application
hosting, consulting services, and programming and hardware
design to support the information technologies infrastructure of
its customers, filed for chapter 11 protection on August 5,
2002. Cathy Hershcopf, Esq., James A. Beldner, Esq., at Kronish
Lieb Weiner & Hellman represent the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $69,785,979 in assets and
$151,121,417 in debts.
KAISER ALUMINUM: Court Fixes Jan. 31, 2003 as General Bar Date
--------------------------------------------------------------
Kaiser Aluminum said that the U.S. Bankruptcy Court for the
District of Delaware has approved the company's request to set
Jan. 31, 2003, as the general bar date by which most persons or
entities holding claims against either Kaiser Aluminum or any of
its reorganizing companies must file proofs of claim in the
companies' Chapter 11 cases. The bar date does not apply to
asbestos-related personal injury claims, for which the company
reserves the right to later establish a separate bar date.
Persons or entities required to file a proof of claim that fail
to do so by the general bar date will be barred from asserting a
claim against the companies that is different from that
reflected on the companies' respective schedules of assets and
liabilities on file with the Court. Such persons or entities
will not be permitted to vote on - or receive distribution from
-- any plan or plans of reorganization.
"Setting the general bar date is an important step in the
reorganization process and reflects Kaiser's progress in moving
toward its goal of emerging from Chapter 11 as a strong and
viable enterprise," said Jack A. Hockema, president and chief
executive officer of Kaiser Aluminum.
Kaiser Aluminum has designated as claims agent Logan & Company,
of 546 Valley Road, Upper Montclair, NJ 07043.
The company expects to arrange for the claims agent to send
notice of the bar date on or before Nov. 22, 2002 to all known
persons or entities that may have pre-petition claims, including
current and many former vendors. However, receipt of a claim
notice does not necessarily mean that a claim exists. For
example, the Bankruptcy Code also requires the notice to be sent
to employees, former employees, and retirees - even though such
persons may have no known claims against any of the Kaiser
companies that are in Chapter 11. In particular, Kaiser retirees
who receive such a notice do not need to file a Proof of Claim
merely to continue receiving routine retiree benefits.
The company expects to publish notice of the bar date in
selected national and local newspapers. In addition, the
company's Web site -- http://www.kaiseral.com-- contains
general information about the bar date. A downloadable copy of
the proof-of-claim form will be available on the Kaiser Web site
in late November 2002 for persons or entities that did not
receive such a form from the claims agent. The company has also
established a toll-free telephone number that provides
information about the claims process: 888/829-3340 or 402/220-
0856.
Kaiser Aluminum Corporation (OTCBB: KLUCQ) is a leading producer
of alumina, primary aluminum and fabricated aluminum products.
Kaiser Aluminum & Chemicals' 12.75% bonds due 2003 (KLU03USR1),
DebtTraders reports, are trading at 17 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KLU03USR1for
real-time bond pricing.
KINGSWAY FINANCIAL: Q3 Conference Call Slated for November 7
------------------------------------------------------------
Kingsway Financial Services Inc., (TSX:KFS, NYSE:KFS) will host
a one-hour conference call on Thursday, November 7, 2002,
beginning at 5:00 p.m. eastern time. The Company will discuss
third quarter 2002 results and address questions at that time.
The results will be released at 4:00 p.m. November 7, 2002.
To participate, the conference call number is 1-888-313-1094
There will also be a listen-only webcast of the conference call
at the Company's Web site http://www.kingsway-financial.com A
typed rebroadcast will be available upon completion of the
meeting until November 14, 2002, at midnight. To access the
rebroadcast, please dial 1-800-558-5253. The reservation number
is 20964550. The conference call will be broadcast live and
archived for 60 days at
http://www.newswire.ca/webcast/pages/KingswayFinancial20021107
Kingsway's primary business is the insuring of automobile risks
for drivers who do not meet the criteria for coverage by
standard automobile insurers. The Company currently operates
through nine wholly-owned subsidiaries in Canada and the U.S.
The Company's senior debt is rated 'BBB' (investment grade) by
Standard and Poor's and Dominion Bond Rating Service. The common
shares of Kingsway Financial Services Inc., are listed on the
Toronto Stock Exchange and the New York Stock Exchange, under
the trading symbol "KFS".
As reported in Troubled Company Reporter's September 16, 2002
edition, Standard & Poor's assigned its triple-'B' rating to
Kingsway Financial Services's Canadian senior debt issue of
approximately C$100 million.
Standard & Poor's also assigned its double-'B'-plus preferred
stock rating to Kingsway Financial Capital Trust I's trust
preferred securities of up to US$75 million.
In addition, Standard & Poor's affirmed its triple-'B'
counterparty credit rating on KFS. The outlook is stable.
KMART: Hires Signature Estate as Broker & Disposition Consultant
----------------------------------------------------------------
Kmart Corporation and its 37 debtor-affiliates seek to retain
and employ Signature Associates as broker and disposition
consultant. Signature Associates will market and sell the
leases, fees and other real estate ownership interests of the
Debtors in the Sheffield Office Building located at 3270 West
Big Beaver Road in Troy Michigan.
Signature Associates has the exclusive right to market the
property before September 30, 2002. That right is being
extended on a per month basis until either of the parties
decides to terminate the Retention Agreement.
Currently, the Debtors lease less than half of the floor space
in the Sheffield Office Building to three tenants: Penske,
Sedgwick and Sunguard. The remaining floor space remains
vacant. The Debtors previously utilized the Building as office
space for a portion of their corporate headquarters and as
office space for their major vendors. However, the Debtors no
longer conduct any office or other operations at the Sheffield
Office Building and they have no current plans to do so. Thus,
the Building is no longer necessary to their operations.
John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher &
Flom, relates that Signature Associates has an extensive
experience working with financially troubled companies in
evaluating and advising them regarding their real estate
holdings and, in particular, how best to maximize the value of
those holdings. According to Mr. Butler, "An experienced real
estate broker such as Signature therefore fulfills a critical
service and compliments the services offered by the Debtors'
other restructuring professionals."
Pursuant to their Agreement, the Debtors want Signature
Associates to provide these services:
(a) Evaluate all viable alternatives for the disposition of the
Sheffield Office Building;
(b) Market the Sheffield Office Building in an organized and
efficient manner; and
(c) facilitate the negotiation and execution of a contract for
the disposition of the Sheffield Office Building.
Mr. Butler assures Judge Sonderby that there will be no
duplication of efforts between Signature Associates and Rockwood
Gemini Associates. Mr. Butler explains that Rockwood Gemini and
Signature Associates have been retained to provide two distinct
services. Rockwood Gemini has been retained as a real estate
valuation consultant while Signature Associates will be retained
as the broker and disposition consultant solely with respect to
the Sheffield Office Building.
In consideration for its services, the Debtors and Signature
Associates agree to this compensation scheme:
A. In the event of a lease or subleases:
-- If a tenant or tenants obtained by Signature Associates or
anyone for the Debtors, including the Debtors, leases the
property within 180 days after the expiration of the
Agreement, the Debtors will pay Signature Associates a:
* 5% commission of the first five years of the lease;
and
* 2-1/2% percent thereafter of the aggregate gross
rental.
However, the commission will, in no event, be less than
the first month's rent;
-- In case another broker is involved on behalf of a
buyer/lessee, the aggregate commission will be paid to the
cooperating broker and:
* an additional 2-1/2% of the first five years: and
* 1-1/2% of the total aggregate gross rental thereafter
will be paid to Signature Associates;
-- The commission will be due at the time the lease is
executed and payable -- 1/2 upon lease execution and the
balance upon occupancy of the premises by the tenant. The
brokerage fee, in the aggregate, will in no event be
greater than $10 per square foot of leased space;
-- The Debtors will pay Signature Associates a commission for
any additional rent collected as a result of the tenant's
expansion of its space requirements within the first 24
months of the lease term. That commission will be due at
the time the expansion space is delivered to the tenant;
-- If the tenant exercises an option to extend the lease
term, then the Debtors will pay Signature Associates a
commission at the same rate set forth based upon a term
consisting of the original term plus all additional option
periods, less the commission previously paid by the
Debtors to Signature Associates. The commission will be
due and payable upon the commencement date of each option
period;
-- If the lease contains an option to purchase, the
commission on the sale will be payable to Signature
Associates when the option to purchase is consummated at
the stated price, or other terms agreed upon. The
commission will be at the rate of 4% of the negotiated
sale price, less the unearned commission for the unexpired
portion of the Lease.
B. In the event of a sale transaction:
-- If a purchaser is obtained in accordance with the terms of
the Agreement, the Debtors will pay Signature Associates a
commission of 5% of the sale price in the event a
cooperative broker is involved in the transaction -- with
Signature Associates and the cooperative broker to
mutually agree on their respective shares of the aggregate
commission;
-- In the event Signature Associates is the only broker
involved in the transaction, a commission of 4% of the
sale price will be paid. The commission will be due and
payable at the time of the initial closing of the
transaction; and
-- If a sale is consummated between the Debtors and the
owners of the buildings adjacent to the Sheffield Office
Building, then the fees for that transaction will be 2% of
the sale price. No fee will be due to Signature
Associates if the Debtors enter into new or existing
leases or any lease expansions by existing tenants within
the building, including Penske, Sedgwick, and Sunguard.
John T. Gordy, Senior Vice President Signature Associates,
advises that his firm do not have any connection with the
Debtors, their creditors, or any other interested parties in
manners related to these bankruptcy cases. Mr. Gordy,
nonetheless, reveals that three of the Debtors' major creditors
are clients of Signature Associates in unrelated matters:
1) Merrill Lynch;
2) JPMorgan Chase; and
3) Putnam Funds
Signature Associates also does not hold any adverse interest to
the bankrupt estates. (Kmart Bankruptcy News, Issue No. 36;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
DebtTraders reports that Kmart Corp.'s 9.0% bonds due 2003
(KM03USR6) are trading at 17 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KM03USR6for
real-time bond pricing.
LECSTAR CORP: June 30 Working Capital Deficit Tops $11.7 Million
----------------------------------------------------------------
LecStar Corporation is a Competitive Local Exchange Carrier
which markets on a region-wide basis, a full scope of advanced
telecommunications services that include local access dial tone,
national and international long distance, enhanced subscriber
services, high-speed data and internet services and network
management.
The Company had a working capital deficiency at June 30, 2002 of
approximately $11,737,000, and recorded net losses for the first
six months of 2002 of approximately $5,283,000. This raises
substantial doubt about the Company's ability to continue as a
going concern. The Company's continued existence is dependent on
its ability to obtain additional debt or equity financing and to
generate profits from operations. The Company is continuing to
pursue additional equity and debt financing. There are no
assurances that the Company will receive additional equity and
debt financing.
Total net revenues increased 71% to $3,553,308 for the six
months ended June 30, 2002 from $2,072,162 for the six months
ended June 30, 2001. The increase was driven primarily by
incremental line count growth and market penetration in both
residential and business local and long distance service
segments through additional utility partnerships and the
development of outside sales agent programs. This growth was
furthered through customer migration subsequent to the agreement
the Company entered with Nuvox Communications, Inc. in April
2002. The Company expects continued growth of its revenue base
by capitalizing on its strategic marketing and support channels,
while continuing to expand geographically and to develop its
data, internet, and integrated services presence in the
competitive marketplace.
Net loss for the six months ended June 30, 2002 was $5,282,696
compared to a net loss of $9,860,503 for the six months ended
June 30, 2001.
Lecstar has incurred operating losses since its inception and as
of June 30, 2002, had an accumulated deficit of $53,907,962 and
a working capital deficit of $11,737,199.
Inability to draw funds under either the Company's financing or
credit agreement could result in a material adverse effect on
its business, financial condition, and results of operation.
Furthermore, it may need to raise additional funding through
either debt or equity instruments. If it is not successful in
these efforts, lack of additional funding would result in a
material adverse effect on the Company and its viability as an
ongoing concern.
Its cash and cash equivalents increased $112,726 during the
first two quarters of 2002. The principal sources of funds
consisted of $895,000 in borrowings, and $750,569 received in
proceeds from the sale of 7,000,000 common stock warrants, which
are included in the total calculation of outstanding shares. The
primary use of funds was cash used in operations of $1,478,126.
Lecstar has not paid dividends on the Series A preferred stock
since June 1998 and is currently analyzing alternatives for
addressing these arrearages totaling $2,215,264. At June 30,
2002, the Company was in default on $1,139,489 of lease
obligations. Default under lease obligations could have a
materially adverse impact on its business.
LTV CORP: LTV Steel Selling Processing Shares to Mitsui Steel
-------------------------------------------------------------
LTV Steel intends to sell 1,000 shares of common stock in
Processing Technology, Inc., a Delaware corporation, to Mitsui
Steel Development Co. The proposed sale contemplates that:
(a) The total cash consideration to be paid on the date of the
closing by the Purchaser is $1;
(b) In addition to the cash consideration, the Purchaser agrees
to release and discharge LTV Steel from any claims that the
Purchaser or any of its affiliates has or may have against
LTV Steel or its affiliates resulting from:
-- LTV Steel's rights, duties and obligations as a
PTI shareholder;
-- a Joint Venture Agreement dated as of October 16,
1990, among LTV Steel, the Purchaser, and Steel
Technologies, Inc.; and
-- Steel Coil Tolling and Storage Agreements, each dated
as of October 16, 1990.
However, the Purchaser does not release LTV Steel from any
obligations that LTV Steel may have in respect of a
prepetition, general unsecured claim asserted by PTI against
LTV Steel in respect of the Storage Agreements;
(c) LTV Steel and the Purchaser have business relationships by
virtue of:
-- LTV's ownership of the PTI stock being sold;
-- the Joint Venture Agreement;
-- the Storage Agreements;
-- the PTI unsecured claim; and
-- other past business relationships among the parties;
(d) In LTV Steel's view, the proposed sale does not require the
consent of the postpetition lenders; and
(e) The proposed sale will be free and clear of all liens,
claims, encumbrances or other interests in the property to
be conveyed as part of the proposed sale. The parties
holding liens are The Chase Manhattan Bank and Abbey
National Treasury Services plc. All these liens or
interests can be extinguished, will be waived at the time
of the sale, or are capable of monetary satisfaction. (LTV
Bankruptcy News, Issue No. 38; Bankruptcy Creditors'
Service, Inc., 609/392-00900)
MANITOWOC COMPANY: Appoints Timothy M. Wood as New SVP and CFO
--------------------------------------------------------------
The Manitowoc Company, Inc., (NYSE: MTW) named Timothy M. Wood
as its new senior vice president and chief financial officer. He
assumes the role from Carl J. Laurino, corporate treasurer, who
had been serving on an interim basis since May.
Wood, 54, of Chicago, brings 30 years of financial experience to
the post. He previously held the same title at Redem
Technologies, but spent the bulk of his career - 23 years - with
Borg-Warner Corporation. For six years, he served as vice
president of finance and chief financial officer for the
billion-dollar company.
"We believe Tim's global management skills, familiarity with the
product development process, and broad investor relations
experience will be true strategic assets to The Manitowoc
Company as we pursue our growth plans," said Terry D. Growcock,
Manitowoc's chairman and chief executive officer. "Additionally,
Tim is equally experienced in all operational aspects of
accounting, as well as in the typical duties associated with a
treasurer and chief financial officer."
While at Borg-Warner, Wood helped transform the company from a
capital- intensive, highly leveraged organization to one of the
largest and most profitable providers of physical security
services in the United States. As vice president and corporate
controller, Wood was responsible for all financial and operating
control activity throughout the company in both its automotive
component and security businesses, which included subsidiaries
on five continents.
Wood participated in a $5 billion leveraged buyout and was an
active member of the restructuring team that divested five major
operations and numerous smaller operations - reducing overall
debt by about $4.5 billion. In 1993, after the restructuring,
Wood helped take Borg Warner Security and Borg Warner Automotive
public in two separate transactions. Prior to joining Borg-
Warner, Wood worked with the public accounting firm Peat
Marwick, Mitchell & Co.
"I'm very pleased to join Manitowoc and its family of market-
leading brands," Wood said. "Joining a company that operates in
three diverse industries, with a century of history behind and a
promising future ahead, is a tremendous opportunity."
Wood succeeds Glen Tellock, who was named president and general
manager of Manitowoc's Crane Group earlier this year.
The Manitowoc Company, Inc., is a leading producer of lattice-
boom cranes, tower cranes, mobile hydraulic cranes, boom trucks,
and related products for the global construction industry. It is
also a leading manufacturer of ice-cube machines, ice/beverage
dispensers, and commercial refrigeration equipment for the
foodservice industry. In addition, it is the leading provider of
ship repair, conversion, and new-building services for
government, military, and commercial customers throughout the
maritime industry.
* * *
As reported in Troubled Company Reporter's July 25, 2002
edition, Standard & Poor's assigned its single-'B'-plus rating
to The Manitowoc Company Inc.'s proposed offering of $175
million senior subordinated notes due 2012.
At the same time, the double-'B' corporate credit rating was
affirmed on the Manitowoc, Wisconsin-based company. In addition,
the rating was removed from CreditWatch where it was originally
placed on March 19, 2002, following the company's announcement
of the acquisition of Grove Investors Inc. The outlook is
negative.
MARK NUTRITIONALS: US Trustee Appoints Creditors' Committee
-----------------------------------------------------------
Richard W. Simmons, the United States Trustee for Region 7,
appointed a four-member Official Committee of Unsecured
Creditors in Mark Nutritionals, Inc.'s Chapter 11 case. The
four appointees are:
1. Clear Channel Broadcasting, Inc.
200 E. Basse
San Antonio, TX 78209
(210) 832-3541
(210) 832-3428 Fax
Contact: Christopher M. Cain
E-mail: chriscain@clearchannel.com
2. Infinity Broadcasting Corp.
40 West 57th Street
New York, NY 10019
(212) 314-9221
(212) 314-9244 Fax
Contact: Steve Grosso
E-mail: sgrosso@cbs.com
3. Westwood One Radio Networks, Inc.
8403 Colesville Road
Silver Spring, MD 20910
(301) 628-2437
(301) 628-2440 Fax
Contact: Al Tagliaferro
E-mail: al_tagliaferro@westwoodone.com
4. Kenyon & Kenyon
333 West San Carlos, Suite 600
San Jose, CA 95110
(408) 975-7980
(408) 975-7501 Fax
Contact: Allen J. Baden
E-mail: abaden@kenyon.com
Mark Nutritionals, Inc., filed for chapter 11 protection on
September 17, 2002 in the U.S. Bankruptcy Court for the Western
District of Texas. William H. Oliver, Esq., at Pipkin, Oliver &
Bradley, LLP represents the Debtor in its restructuring efforts.
When the Company filed for protection from its creditors, it
listed over $1 million in assets and over $10 million in
liabilities.
MEASUREMENT SPECIALTIES: Firm's Continued Viability is Uncertain
----------------------------------------------------------------
Measurement Specialties (Amex: MSS) have filed their Annual
Report on Form 10K for the fiscal year ended March 31, 2002, as
well as their Quarterly Report on Form 10Q for the three month
period ended June 30, 2002. The results for the six-month period
ending September 30, 2002 are due by November 14, 2002. The
hearing with the American Stock Exchange to appeal the
determination of the AMEX to delist the Company's common stock
is scheduled for Thursday, October 31, at 4:30pm EST.
Measurement Specialties is a designer and manufacturer of
sensors, and sensor-based consumer products. Measurement
Specialties produces a wide variety of sensors that use advanced
technologies to measure precise ranges of physical
characteristics, including pressure, motion, force,
displacement, angle, flow, and distance. Measurement Specialties
uses multiple advanced technologies, including piezoresistive,
application specific integrated circuits (ASICs), micro-
electromechanical systems, piezopolymers, and strain gages to
allow their sensors to operate precisely and cost effectively.
It Measurement Specialties Form 10-Q filed with the Securities
and Exchange Commission on October 29, 2002, the Company said it
has incurred a net loss of $29,047 for the year ended March
31, 2002, a net loss of $5,703 for the quarter ended June 30,
2002 and anticipates incurring additional losses for the next
several quarters. From September 30, 2001 through March 31,
2002, the Company was in default of certain financial covenants
in its credit agreement and as a result of the restatement of
previously issued financial statements the Company was also in
default of certain financial covenants for earlier periods. The
Company sought, but did not obtain, a waiver of such events of
default from its lenders. The Company and its lenders have
entered into a forbearance agreement which expires November 1,
2002 or earlier. The Company is currently in negotiations with
its lenders to extend the forbearance period and the deadline
for repayment in full of the notes evidencing the term loan and
the revolving credit facility beyond November 1, 2002. No
assurance can be given that the lenders will grant such an
extension on terms reasonable to the Company, or at all.
As a result of the significant losses for the last several
reporting periods and the Company's inability to make the
required payments under the Company's loan agreement, management
and the Board of Directors approved a restructuring program with
the aim of reducing costs, streamlining operations and
generating cash to repay the Company's lenders. As of March 31,
2002, excluding the effects of the Terraillon and Schaevitz UK
dispositions, the Company has reduced its workforce by 138
employees as compared to its workforce as of June 30, 2001.
Additionally, as of September 30, 2002, the Company has reduced
its workforce by an additional 49 employees as compared to its
workforce as of March 31, 2002. The Company expects this
workforce reduction to result in a cost savings of approximately
$5,000 for the fiscal year ending March 31, 2003. The Company is
currently examining the possibility of further workforce
reductions. In addition, the Company (i) discontinued its
operations in the United Kingdom, (ii) sold the assets related
to its silicon wafer fab manufacturing operations in Milpitas,
California, which were part of the Company's IC Sensors division
for approximately $5,250 in July 2002, and (iii) sold all of the
outstanding stock of Terraillon Holdings Limited, the Company's
European subsidiary, for approximately $22,300. Approximately
$2,282 of the Terraillon sales price will be held in escrow
until January 24, 2003 to secure payment of certain purchase
price adjustments, if any.
The Company is currently in the process of responding to the
claims made in the class action lawsuit. The Company intends to
defend the foregoing lawsuit vigorously, but cannot predict the
outcome and is not currently able to evaluate the likelihood of
its success or the range of potential loss, if any. However, if
the Company were to lose this lawsuit, the judgment would likely
have a material adverse effect on its consolidated financial
position, results of operations and cash flows. The Company has
Directors and Officers insurance policies that provide an
aggregate coverage of $10,000, for the period during which the
lawsuit was filed, but cannot evaluate at this time whether such
coverage will be available or adequate to cover losses, if any,
arising out of this lawsuit.
The Company is also the subject of a formal investigation being
conducted by the Division of Enforcement of the United States
Securities and Exchange Commission related to matters reported
in the Company's quarterly report on Form 10-Q for the quarter
ended December 31, 2001. The United States Attorney for the
District of New Jersey is also conducting an inquiry into the
matters being investigated by the SEC. In addition, the trading
of the Company's common stock on the American Stock Exchange has
been suspended and the Company has received a letter from the
AMEX indicating that the Company is no longer in compliance with
AMEX listing requirements. The Company has appealed this
determination.
These factors raise substantial doubt about the Company's
ability to continue as a going concern. The Company has been
pursuing and will continue to pursue, among other initiatives,
i) refinancing our existing bank debt, ii) seeking additional
sales opportunities within its core business, iii) reducing
expenses to a level that would provide the Company with
sufficient cash flow to meet its obligations, iv) additional
equity investments, v) sales of assets and/or vi) a combination
of any of the foregoing. Although there can be no assurances
that the Company will be able to achieve any of the foregoing
initiatives, the financial statements included in this report do
not contain any adjustments that might be necessary if the
Company is unable to continue as a going concern.
MEDISOLUTION: Signs-Up Paul Roche as New Chief Financial Officer
----------------------------------------------------------------
MediSolution Ltd., (TSX:MSH) appoints Mr. Paul Roche as Vice
President and Chief Financial Officer effective immediately.
J. Ken Rutherford, currently Executive Vice President and CFO
will be leaving the Company at the end of November to pursue new
opportunities. Mr. Rutherford joined MediSolution in October
2001 to assist with the financial and operational restructuring
of the business, including the implementation of new financial
planning and reporting processes. With the key elements of the
restructuring now complete, Mr. Roche will focus on
profitability improvement initiatives and on implementing the
systems and procedures necessary to support the company's long-
term growth.
Mr. Roche is a CA and CPA with over 17 years of accounting and
finance experience in both private and public companies. Most
recently, Mr. Roche was the Vice President, Finance and CFO of
the Textile Operations of Consoltex Holdings Inc., a $600
million North American business.
Mr. Allan D. Lin, President and Chief Executive Officer stated
that "we are delighted to have Paul join the management team of
MediSolution". Mr. Lin added that "on behalf of the Board of
Directors of MediSolution I would like to thank Ken for his
significant contribution to the successful restructuring of the
Company and we wish him well in all future endeavors".
MediSolution Ltd., is a leading Canadian healthcare information
technology company with offices in Canada and the United States.
The Company markets a comprehensive suite of information systems
and professional services to the healthcare industry.
As of March 31, 2002, Medisolution reported a total
shareholders' equity deficit of about C$14.5 million while total
working capital deficit tops C$23.4 million.
MERCATOR SOFTWARE: Net Loss Narrows to $8 Million in 3rd Quarter
----------------------------------------------------------------
Mercator Software, Inc. (Nasdaq: MCTR), reported final results
for the third quarter ended September 30, 2002.
The Company stated that total revenues for the period were $25.3
million, compared to $35.6 million in the third quarter a year
ago, including license revenue of $8.3 million, which is down
24% sequentially compared to $10.9 million in the second
quarter.
Third quarter 2002 total pro forma expenses, which represent
total operating expenses and cost of revenues, excluding
amortization of goodwill and intangible assets, and
restructuring charges, were $30.4 million compared to $37.5
million a year ago. Assuming a tax rate of 38%, pro forma net
loss per share was $0.09 per share in the third quarter versus
$0.04 a year ago.
"From a revenue perspective, we had a difficult quarter in a
difficult IT spending environment," said Roy C. King, Mercator
Chairman and CEO. "We reduced our expenses for the seventh
consecutive quarter while delivering new industry integration
solutions to customers and strengthening our strategic
partnerships with key systems integrators and technology
companies."
To align delivery capacity with current customer demand, the
Company announced it is implementing new cost-cutting
initiatives of approximately $15 million aimed at reducing cash
burn.
Assuming a tax rate of 38%, Mercator's pro forma net loss,
excluding amortization of goodwill and intangible assets, and
restructuring charges, was $3.2 million in the third quarter of
2002, compared to a pro forma net loss of $1.2 million a year
ago.
Total cash and cash equivalents declined by $7.2 million in the
third quarter to $20.2 million at September 30, 2002. This
compares to total cash and cash equivalents of $27.3 million at
June 30, 2002, and $7.3 million at September 30, 2001.
At September 30, 2002, the Company's balance sheets shows a
working capital deficit of about $4 million. Its total
shareholders' equity deficit continues to dwindle, narrowing to
$48 million at the end of the third quarter.
"Despite missing our total revenue objectives by six percent, or
$1.6 million," said Kenneth J. Hall, Mercator's Executive Vice
President, Chief Financial Officer and Treasurer, "we reduced
our sequential pro forma net loss by approximately $0.2
million."
The Company said that Days Sales Outstanding improved to 56
days, down by 13 days compared to the second quarter of 2002.
The Company's net loss, calculated in accordance with U.S.
generally accepted accounting principles, which include the
effects of amortization, restructuring charges and actual income
taxes, was $8.2 million for the third quarter of 2002, compared
to a net loss of $11.9 million for the third quarter a year ago.
The reported net loss includes a $1.9 million charge relating to
the previously announced restructuring efforts undertaken by the
Company in the third quarter, including the elimination of 97
positions.
Business Highlights
Notable Mercator customers in the quarter included Blue Cross of
Northeastern Pennsylvania, Deltek, Descartes Systems Group,
Deustche Post, Eli Lilly, Empire BlueCross/BlueShield, Hershey
Foods, Kohler, Lawson Software, Telcordia Technologies, Toyota,
Unisys, Viterra Energy Services and Vytra Health Plans.
Mercator was also selected by one of the world's largest banks
as one of its corporate-wide integration standards.
Additionally, the Company renewed its OEM agreement with Lawson
Software and reported that it concluded two customer
transactions as part of its Global Alliance Program with BEA
Systems, as well as an additional customer implementation with
BearingPoint (previously known as KPMG Consulting).
The Company released several new products during the quarter,
including its Healthcare HUB solution and its GSS for Payments
solution. Mercator(R) Healthcare HUB ties together and processes
all the transaction points throughout a healthcare organization
faster and more efficiently. Mercator(R) GSS for Payments
delivers straight through processing to connect diverse payment
systems throughout a financial services institution.
Mercator also unveiled its new J2EE Connector Architecture
Certification Program, the first of its kind in the industry,
its new JCA Gateway, as well as the latest generation of its
core integration broker technology, Mercator 6.7, featuring
numerous enhancements, for B2B, Web services, Java-based
integration and more.
Mercator provides leading enterprise-wide integration software
solutions to global organizations. Our solutions solve critical
business problems in real time, delivering ROI while leveraging
your current technology investment. The Mercator(R) integration
suite of solutions leverages a robust, open architecture that
easily and seamlessly integrates high-volume, highly complex
transactions faster and with limited customization. Over 1,100
businesses in financial services, healthcare and manufacturing,
retail and distribution use Mercator(R) solutions to enhance
their performance and deliver better business value and real-
time results. For more information about Mercator or to learn
more about our customer-focused software and services solutions,
visit our Web site at http://www.mercator.com
METROMEDIA INT'L: Makes Interest Payment on 10-1/2% Senior Notes
----------------------------------------------------------------
Metromedia International Group, Inc. (AMEX:MMG), the owner of
various interests in communications and media businesses in
Eastern Europe, the Commonwealth of Independent States and other
emerging markets, has remitted $11.2 million to U.S. Bank
Corporate Trust Services, the trustee of its $210.6 million
10-1/2 % Senior Discount Notes due 2007, thereby effecting the
required interest payment within the 30-day grace period
provided under the notes.
This amount reflects the $11.1 million coupon payment that was
due on September 30, 2002, plus interest accrued since that
date.
In making the announcement, Carl Brazell, Chairman, President
and Chief Executive Officer of MMG, commented, "The payment of
the semi-annual interest coupon was a decision that the Company
gave careful consideration. Our objectives in making the
interest payment were centered on adding stability to the
Company's current restructuring process. By avoiding an "event
of default" under the indenture governing these notes, the
Company is better able to pursue its strategy of facilitating,
where and when appropriate, future assets sales at times and
under terms and conditions, including price, most favorable to
the Company."
The Company continues to hold negotiations with representatives
of holders of its Senior Discount Notes in an attempt to reach
an agreement on a restructuring of its indebtedness in
conjunction with proposed asset sales and restructuring
alternatives.
To date, the Company and representatives of note holders have
not reached an agreement on terms of a restructuring. The
Company cannot make any assurance that it will be successful in
raising additional cash through asset sales or through cash
repatriations from its business ventures, nor can it make any
assurance regarding the successful restructuring of its
indebtedness.
Metromedia International Group, Inc., is a global communications
and media company. Through its wholly owned subsidiaries and its
business ventures, the Company owns and operates communications
and media businesses in Eastern Europe, the Commonwealth of
Independent States and other emerging markets. These include a
variety of telephony businesses including cellular operators,
providers of local, long distance and international services
over fiber-optic and satellite-based networks, international
toll calling, fixed wireless local loop, wireless and wired
cable television networks and broadband networks and FM radio
stations.
Visit Metromedia's Web site at http://www.metromedia-group.com
METROMEDIA INT'L: Alan K. Greene Named New Independent Director
---------------------------------------------------------------
Metromedia International Group, Inc., (the Company) (AMEX:MMG)
the owner of various interests in communications and media
businesses in Eastern Europe, the Commonwealth of Independent
States and other emerging markets, and Elliott Associates, L.P.
and Elliott International, L.P., institutional investment firms
under common management, jointly announced the nomination and
appointment of Alan K. Greene as a new independent Director to
MMG's Board of Directors.
Mr. Greene's nomination and appointment as an independent member
of the Board of Directors designated by Elliott follows the
previously announced resignation of Oren G. Shaffer, on
September 30, 2002, whose nomination had earlier this year been
jointly announced by Company management and Elliott and who was
voted into office by the Company's common shareholders in June
2002. As announced earlier this month, Mr. Shaffer indicated
that he had resigned from the Board of Directors because his new
positions as Vice Chairman and Chief Financial Officer of Qwest
Communications require his full-time commitment.
Mr. Greene will serve as a Class I Director for a three-year
term expiring at the annual meeting of stockholders in 2005.
Mr. Greene brings to the Board extensive business, finance and
Board level experience. Mr. Greene served as the Chief
Financial Officer of International Telecommunication Data
Systems, Inc., a leading provider of comprehensive transactional
billing and management information solutions to providers of
wireless, long distance and satellite telecommunications
services. Prior to this position he had over twenty years of
experience as a managing partner at Price Waterhouse. From 1989
to 1991, Mr. Greene held the position of National Director,
Merger and Acquisition - Tax Services at Price Waterhouse.
Previously, Mr. Greene was the Managing Partner of Price
Waterhouse's Stamford Connecticut office. In his tenure at Price
Waterhouse, he consulted with international clients on the tax
and financial implications of cross border financing, and
handled structuring, negotiating, financing and closing over 150
international and domestic transactions ranging from Fortune 100
multinationals to start-up ventures. In addition, he created
financing and investment strategy for new financial products for
the mutual fund industry and foreign banking industries.
"We are very pleased to have Alan Greene as a member of the
Company's Board of Directors," said Carl Brazell, Chairman,
President and Chief Executive Officer of MMG. "He will provide
another independent voice and an additional overall objective
perspective at the Board level. Moreover, we are confident that
Alan's vast business and financial experience will be of great
value in helping us navigate our way through our restructuring."
Metromedia International Group, Inc., is a global communications
and media company. Through its wholly owned subsidiaries and its
business ventures, the Company owns and operates communications
and media businesses in Eastern Europe, the Commonwealth of
Independent States and other emerging markets. These include a
variety of telephony businesses including cellular operators,
providers of local, long distance and international services
over fiber-optic and satellite-based networks, international
toll calling, fixed wireless local loop, wireless and wired
cable television networks and broadband networks and FM radio
stations.
Elliott Associates, L.P., and Elliott International, L.P., are
institutional investors with a collective ownership of
approximately 4% of MMG common stock. Elliott Associates is
based in New York and Elliott International is based in the
Cayman Islands. The investment activities of Elliott Associates
and Elliott International are under common management.
MIDWEST EXPRESS: Names Randall Smith as VP, Sales & Distribution
----------------------------------------------------------------
Midwest Express Holdings, Inc. (NYSE: MEH), which has a working
capital deficit of about $18 million at June 30, 3003, announced
the appointment of Randall K. Smith as vice president of Sales
and Distribution. Smith is responsible for passenger, charter
and cargo sales activities; call center operations; and
electronic distribution systems for Milwaukee-based Midwest
Express Airlines.
Smith joins Midwest Express with 20 years of career experience
in the airline industry. Serving in various senior management
capacities, he has led significant marketing, sales and
advertising efforts at five major airlines. In his most recent
position with TWA, Smith led the airline's worldwide scheduling
operation as vice president of Scheduling. Additionally, he
played a key role in the integration of TWA with American
Airlines.
"Randy's background in both sales and distribution strategies is
a wonderful complement to our staff," said Thomas J. Vick,
senior vice president and chief marketing officer. "As Midwest
Express moves forward with its long-term growth plans, we're
confident Randy's leadership and experience will help us further
improve on the unparalleled travel experience passengers have
come to expect from us."
Smith holds a bachelor's degree in human development and family
studies from Cornell University, Ithaca, N.Y. He started his
career in the academic field before joining an East Coast-based
airline as general manager of Marketing.
Midwest Express Airlines features nonstop jet service to major
destinations throughout the United States. Astral Aviation,
Inc. -- its wholly owned subsidiary -- operates Skyway Airlines,
The Midwest Express Connection, which offers connections to
Midwest Express as well as point-to-point service between select
markets on regional jet and turboprop aircraft. Together, the
airlines fly to 51 cities. More information is available at
http://www.midwestexpress.com
MONARCH DENTAL: Agrees to Sell Assets to Bright Now! Dental Inc.
----------------------------------------------------------------
Monarch Dental Corporation (Nasdaq:MDDS) has reached an
agreement in principle with Bright Now! Dental, Inc., and its
investor group regarding the sale of the Company.
The sale transaction would be structured as a merger of an
affiliate of Bright Now! Dental with the Company. Stockholders
of the Company would receive $5.00 per share in cash upon
completion of the merger. The proposed transaction is subject to
certain conditions, including, without limitation, final
confirmatory due diligence, the approval of the Company's
existing bank group, and the final approval of the Boards of
Directors of the Company and Bright Now! Dental.
In accordance with the terms of the letter of intent previously
executed by the parties, Bright Now! Dental and its investor
group have extended the exclusivity period under the letter of
intent for an additional 15 days through November 12, 2002. The
letter of intent provides that if the Company and Bright Now!
Dental have reached agreement on the terms of the definitive
merger agreement, but the Company and its bank group have not
reached an agreement regarding the proposed transaction, the
granting of forbearance, and certain other matters, Bright Now!
Dental and its investor group can, at their option, extend the
exclusivity period by 15 days. The Company is currently
negotiating with its bank group concerning these matters. Any
agreement with the Company's bank group is subject to the
approval of Bright Now! Dental and its investor group. There can
be no assurance that the Company will be able to negotiate an
agreement with its bank group on favorable terms or at all, or
that Bright Now! Dental and its investor group will approve any
such agreement. The Company does not intend to issue any other
public statements concerning the proposed sale of the Company
until a definitive agreement has been executed or the
exclusivity period has expired.
As previously announced, the Company is in default under its
credit facility and, as a result, the Company's bank group has
exercised its right of set-off and applied approximately $1.18
million from the Company's cash accounts to offset a portion of
the unpaid interest under the credit facility and certain
professional fees. The $1.18 million aggregate amount
represented unpaid interest at the lead lender's prime rate,
plus the then outstanding professional fees of the bank group.
The set-off of this amount by the bank group may have a
significant adverse impact on the liquidity of the Company. In
connection with the Company's negotiations with its bank group,
the Company has requested a forbearance with respect to the
exercise by the bank group of any other remedies under the
credit agreement.
Monarch Dental Corporation (Nasdaq:MDDS) --
http://www.monarchdental.com-- provides business support
services to 152 dental offices serving 17 markets in 13 states.
Monarch Dental offices offer a wide range of general dental
services, including preventive care, restorative services, and
cosmetic services. In addition, many practices offer specialty
services such as orthodontics, periodontics, oral surgery,
endodontics, and pediatric dentistry. Based in Dallas, Monarch
Dental and its affiliated dentists have annual revenues of
approximately $185 million and employ approximately 2,200
people.
MOTOROLA INC: Selling Certain MMS Unit Assets to Telco Inc.
-----------------------------------------------------------
Motorola, Inc., (NYSE: MOT) has entered into an agreement to
sell the equipment repair and manufacturing assets of Phoenix
based Motorola Manufacturing Solutions (MMS) test equipment
business to Telco, Incorporate, a privately held company. Telco
is a leading, Tennessee based, value add manufacturer of
industrial, telecom and consumer products.
Under the agreement, Telco will service, support and manufacture
Motorola's-Mixed Signal Tester, Parametric Functional Tester
Equipment and Dedicated Digital Test Systems.
These products are members of a fully automated electronic test
and measurement systems family that helps electronic
manufacturers automate manufacturing and enhance the quality of
the products they produce. Telco's Phoenix service team will
continue to support the testers, which are sold globally.
"We are delighted that Telco has committed to supporting this
product and customers, and that many of our employees from this
area will now be employed by Telco," said Dennis Roberson,
executive vice president and chief technology officer, Motorola.
Motorola is divesting the service and manufacturing of this
equipment as part of the company's on-going restructuring to
refocus the company on its core strategic communications and
embedded businesses.
Richard Wass, vice president of Telco, Incorporated stated, "The
acquisition of the MMS service group and addition of the MMS
portfolio greatly benefits and expands Telco's ability to help
our customers become leaders in their respective markets by
providing them with a cost-effective affordable service. We are
looking forward to extending this service and portfolio to our
existing customers and our new customers also."
Motorola, Inc., (NYSE: MOT) is a global leader in providing
integrated communications and embedded electronic solutions.
Sales in 2001 were US$30 billion. For more information, visit
http://www.motorola.com
Established in 1984, as a manufacturer of cable assemblies for
leading telecommunications manufacturers, Telco has grown into a
multi-million dollar operation with over 300 employees and a
100,000 square foot facility. Telco's corporate office is
located in Franklin, Tennessee, a suburb of Nashville, with
regional offices located throughout the United States.
Telco is a diverse value add manufacturer specializing in the
manufacture of electrical parts, assemblies, telecommunications
equipment supply, repair and refurbishment. For more
information, visit http://www.telco1.com
Motorola Inc.'s 5.22% bonds due 2021 are trading around 52
cents-on-the-dollar.
MTS/TOWER RECORDS: Inks New $110 Million Revolver with CIT Group
----------------------------------------------------------------
On October 11, 2002, MTS, Incorporated completed the sale of its
Japanese operations to Nikko Principal Investments Japan Ltd.,
and the simultaneous refinancing of the Company's bank credit
facility.
In connection with the refinancing, the Company entered into a
Loan and Security Agreement dated October 9, 2002 by and among
the Company, Three A's Holdings, L.L.C., the lenders party
thereto and The CIT Group/Business Credit, Inc., as
administrative and collateral agent. The CIT Agreement provides
the Company with a revolving line of credit of up to $110
million, which matures on April 1, 2005.
In addition, in connection with the refinancing, the Company
entered into an Amended and Restated Term Loan Agreement dated
October 9, 2002, between the Company, the lenders party thereto
and JPMorgan Chase Bank, as administrative agent and collateral
agent. The JPMorgan Chase Agreement provides the Company with a
$26 million term loan with a maturity date of April 1, 2005.
The Company expects proceeds from both the CIT line of credit
and JPMorgan Chase loan will be used for working capital and
general corporate purposes.
As reported in Troubled Company Reporter's October 22, 2002
edition, Standard & Poor's revised its CreditWatch implications
on its triple-'C' corporate credit rating on MTS Inc., to
positive from developing. The revision is due to the company's
completion of the sale of its Japanese operations and
simultaneous refinancing of its credit facility.
Sacramento, California-based MTS, the primary operating
subsidiary of Tower Records Inc., with 172 stores specializing
in the sale of recorded music and related items, had $299
million of funded debt outstanding as of April 30, 2002, before
the asset sale.
NAVISTAR INT'L: Board OKs Plan to Refinance Up to $200MM of Debt
----------------------------------------------------------------
Navistar International Corporation (NYSE:NAV), the nation's
largest commercial truck, school bus and mid-range diesel engine
producer, will take a fourth quarter restructuring charge as it
completes the transformation to a focused-facility producer that
will improve profit opportunities throughout the business cycle.
John R. Horne, chairman and chief executive officer of Navistar,
said the charge, of up to $456 million after tax, is driven by
changes in the business' long-term cost structure that will
lower the company's breakeven point, reduce fixed and variable
costs and improve profit opportunities at any point in the
business cycle.
Horne said that the company's transformation results from "a
journey we defined in 1996 and began to implement in 1997."
As a result of the transformation, Horne said the company is
well positioned to outperform previous results, with a goal of:
-- 17.5 percent return on equity after tax over the cycle.
-- 15.0 percent return on assets over the cycle.
-- Profits in all businesses over the cycle.
"Since we initiated our five-point truck strategy, we have
transformed the company with industry-leading products, opened
modern new facilities and entered new markets," Horne said. "Our
focused-facility strategy will improve our productivity, focus
our resources and make the company stronger at all points of the
cycle."
Horne also cited the company's new five-year contract with the
United Auto Workers union, which he said "gives us major
improvements in the areas that we needed to change -- a more
variable cost structure with flexible work schedules, lower
fixed manufacturing costs and shared healthcare costs."
According to Horne, the transformation should begin to be
visible in fiscal 2003, with the company returning to modest
profitability at industry retail sales volume for Class 6-8
trucks and school buses at approximately 8,500 units greater
than in 2002. He said that the company's ongoing program of
continuous cost improvements is expected to deliver a $100
million net improvement in earnings before interest and taxes
over 2002. The improvement consists of fixed cost savings,
material costs savings and the incremental impact of the Blue
Diamond joint venture. Forecasted increases in expense for the
pension plans have been factored into this guidance. At the peak
of the next cycle, fixed cost savings, material costs savings
and the incremental impact of the Blue Diamond joint venture are
expected to improve EBIT (vs. 2002) by $400 million.
"The period of extraordinary catch up investment is complete,"
Horne said. "We will continue to invest, but not at the levels
of the past few years."
Elements of the restructuring charges that had been previously
announced relate to severance and benefit costs and other exit
costs associated with the closing of the Chatham, Ont. heavy
truck plant and the ceasing of operations at Springfield, Ohio
body plant and the Line 2 assembly operation. Other charges
include costs associated with a lower manufacturing headcount,
including the curtailment impact on the company's own retirement
plans from the retirement window incentives contained in the new
UAW contract; and asset write-downs relating to the company's V6
diesel engine program with Ford and costs related to exiting the
domestic truck market in Brazil.
In March of 1998, the company was selected by Ford Motor Company
to negotiate an extended agreement to supply V6 diesel engines
for F-150 pick-up trucks, Econoline 150 vans, Ford Expeditions
and Lincoln Navigators. In fiscal 2000, the company and Ford
finalized a contract for the supply of these engines commencing
with model year 2002 and extending through 2012. The contract
provides that the company is Ford's exclusive source, and the
company would sell these engines only to Ford for these
vehicles. To support the program, the company constructed an
engine assembly plant in Huntsville, Ala. and developed a V6
diesel engine. Introduction of these engines was delayed beyond
model year 2002.
Ford has advised the company that their current business case
for these vehicles is not viable. Although Ford is continuing to
study this issue, the timing of the commencement of the program
is no longer reasonably predictable. Accordingly, Navistar is
taking a $190 million to $210 million pre tax charge ($120
million to $130 million after tax) for assets directly related
to this product. In any case, our Huntsville operation will
remain a part of International's diesel engine strategy.
Navistar and Ford intend to work together to reduce the economic
impact of the delay or cancellation.
This action has no effect on the Blue Diamond joint venture
between the company and Ford or the company's contract to supply
V8 diesel engines for Ford through 2012.
The company reentered the Brazilian truck market on a contract
basis in 1998 after a 30-year absence. While a network of 15
dealers was quickly established, a more than 200 percent
devaluation of the Brazilian real since 1998 has made profitable
operations impossible over the near-term. Accordingly, the
company has decided to exit the Brazilian domestic truck market
effective October 31, 2002. The Brazilian truck business exit
will result in a pre tax charge of up to $70 million.
Additional details of the fourth quarter restructuring charge
will be made public with the filing of the company's 10-K for
fiscal 2002 in December.
According to Robert C. Lannert, Navistar vice chairman and chief
financial officer, the cash impact of the restructuring charges
has been included in the company's financing plan through 2005.
The company anticipates that approximately $20 million to $25
million of the cash impact will be incurred in the first half of
2003, and $65 million to $70 million of the charge will be
incurred in the second half of 2003. Approximately $35 million
to $45 million of the charge is expected to be incurred in 2004,
$65 million to $75 million of the charge is expected to be
incurred in 2005, and $210 million to $230 million of the charge
is expected to be incurred in 2006 and beyond.
Lannert said that in the absence of any extraordinary unforeseen
cash demands, the company anticipates completing the financing
plan previously announced and being able to cash flow through
2005 even at company production levels lower than 75,000 units.
The board of directors has approved the sale of up to $175
million of Navistar stock to the company's various benefits
plans. It is anticipated that the sale will be completed during
the first quarter of 2003. The board also authorized a plan to
refinance up to $200 million of debt primarily maturing in 2003.
Lannert also issued an update on the status of the company's
pension plan funding. As a result of the decline in the stock
market coupled with the decline in interest rates, the under-
funded status of the various plans has increased. Based on
September 30, 2002 values, the company forecasts that the
reduction of equity due to additional pension liability could be
in the range of approximately $350 million after tax.
"This charge reflects only a point-in-time view of the funded
status of our pension plans and while the increase is
significant, it is very manageable for Navistar," Lannert said.
"We have absorbed all funding and expense assumptions in our
2003 earnings forecast."
Finally, Horne noted that in order to better align financial
goals with the interests of shareowners, management has
recommended to the board of directors that management's annual
incentive compensation should be based upon the achievement of a
17.5 percent return on equity, after taxes, over the cycle. In
addition, management will receive long-term incentive for 2003
in the form of restricted stock that will be earned on a stock
price performance basis ranging from 50 percent to 150 percent
improvement from the price at the time of the grant at the
December board meeting.
International Truck and Engine is a leading producer of mid-
range diesel engines, medium trucks, heavy trucks, severe
service vehicles, bus chassis and a provider of parts and
service sold under the International(R) brand. The company also
is a private label designer and manufacturer of diesel engines
for the pickup truck, van and SUV markets. Additionally, through
a joint venture with Ford Motor Company, the company will build
medium commercial trucks and currently sells truck and diesel
engine service parts. A subsidiary, IC Corporation, produces
integrated school buses. International Truck and Engine has the
broadest distribution network in the industry. Financing for
customers and dealers is provided through a wholly owned
subsidiary of Navistar. Additional information can be found on
the company's Web site at http://www.internationaldelivers.com
* * *
As reported in Troubled Company Reporter's August 28, 2002
edition, Standard & Poor's lowered its corporate credit rating
on Warrenville, Illinois-based Navistar International Corp., a
leading producer of heavy- and medium-duty trucks in North
America, to double-'B' from double-'B'-plus due to weak
operating results, diminishing financial flexibility, and
Standard & Poor's expectation that persisting weak demand in the
North American truck market will continue for the next several
quarters.
Standard & Poor's said that in addition, the corporate credit
rating on Navistar's subsidiary, Navistar Financial Corp., was
lowered to double-'B'-from double-'B'-plus. The current outlook
is negative.
NEXTMEDIA OPERATING: Will Publish Q3 2002 Results on Wednesday
--------------------------------------------------------------
NextMedia Operating, Inc., will release third quarter 2002
financial results on the morning of Wednesday, November 6, 2002.
The Company will also host a teleconference to discuss its
results on Wednesday, November 6, 2002 at 3:00 p.m. Eastern
Time. To access the teleconference, please dial 973-935-8504
ten minutes prior to the start time. If you cannot listen to the
teleconference at its scheduled time, there will be a replay
available through November 8, 2002 at midnight Eastern Time,
which can be accessed by dialing 877-519-4471 (U.S.), 973-341-
3080 (Int'l), pass code 3568288.
NextMedia Group is a diversified out-of-home media company
headquartered in Denver, Colorado. NextMedia owns and operates
55 stations in 13 markets throughout the United States, and more
than 5,600 bulletin and poster displays. Additionally,
NextMedia owns advertising displays in more than 5,300 retail
locations across the United States. Investors in NextMedia
include Thomas Weisel Capital Partners, Alta Communications,
Weston Presidio Capital and Goldman Sachs Capital Partners as
well as senior management. NextMedia was founded by veteran
media executives Carl E. Hirsch, Executive Chairman and Steven
Dinetz, President and CEO.
* * *
As previously reported, Standard & Poor's revised its outlook on
radio and outdoor advertising company NextMedia Operating Inc.,
to negative from stable based on the company's weakening credit
measures.
Standard & Poor's said that it has affirmed all of its ratings
on NextMedia, including its single-'B'-plus corporate credit
rating. Englewood, Colorado-based NextMedia has $197 million
debt outstanding.
NRG ENERGY: Won't Make Interest Payment on 6.50% Senior Notes
-------------------------------------------------------------
NRG Energy, Inc., a wholly owned subsidiary of Xcel Energy
(NYSE:XEL), announced it will not make the quarterly interest
payment on the NRG 6.50 percent senior debentures due May 16,
2006 which trade with the associated purchase contracts as NRG
corporate units (NYSE:NRZ).
NRG has until December 16, 2002 to make payments to the NRZ
holders to avoid an event of default on these debentures. As
with all NRG debt issues, these are non-recourse to the parent
company, Xcel Energy. NRG plans to address this payment in a
broader restructuring plan and is working with bondholders to
resolve this issue.
NRG Energy, a wholly owned and unregulated subsidiary of Xcel
Energy, develops and operates power generating facilities. NRG's
operations include competitive energy production and
cogeneration facilities, thermal energy production and energy
resource recovery facilities.
Xcel Energy is a major U.S. electricity and natural gas company
with regulated operations in 12 Western and Midwestern states.
The company provides a comprehensive portfolio of energy-related
products and services to 3.2 million electricity customers and
1.7 million natural gas customers through its regulated
operating companies. In terms of customers, it is the fourth-
largest combination natural gas and electricity company in the
U.S. Company headquarters are located in Minneapolis.
NRG Energy Inc.'s 8.70% bonds due 2005 (XEL05USA1), DebtTraders
reports, are trading at 19 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=XEL05USA1for
real-time bond pricing.
O'SULLIVAN INDUSTRIES: Balance Sheet Insolvency Widens to $58MM
---------------------------------------------------------------
O'Sullivan Industries Holdings, Inc. (OTC Bulletin Board:
OSULP), a leading manufacturer of ready-to-assemble furniture,
reported its fiscal 2003 first quarter operating results for the
period ended September 30, 2002.
First Quarter Results
Net sales for the first quarter were $71.6 million, a decrease
of 12.9% from sales of $82.2 million in the comparable period a
year ago. Net sales for the prior year period were adjusted to
reflect the adoption of an accounting pronouncement that
reclassifies certain selling expenses to a reduction of net
sales.
Operating income for the first quarter was $7.9 million, an
increase of 25.7% from operating income of $6.3 million in the
comparable period a year ago.
Net loss for the first quarter was $1.6 million, an increase of
8.5% from a net loss of $1.4 million in the comparable period a
year ago. The current quarter's net loss reflects an increase in
income tax expense related to the arbitration settlement with
our former owner RadioShack. During the fiscal 2002 first
quarter our payments to RadioShack totaled $3.1 million.
Adjusted EBITDA for the first quarter was $11.5 million, or
16.0% of net sales, an increase of 15.0% from $10.0 million, or
12.1% of net sales, for the comparable period a year ago. The
attached table reconciles net loss to adjusted EBITDA.
At September 30, 2002, the Company's balance sheets show a total
shareholders' equity deficit of about $58 million.
"This most recent quarter ended with mixed results for
O'Sullivan Furniture," said Richard Davidson, president and
chief executive officer. "While our top line performance was
disappointing, O'Sullivan Furniture continues to deliver
improved operating and adjusted EBITDA results. In this slow
economy, we continue to operate the company conservatively. We
have adjusted our operating capacity and cost structure to meet
current customer demand levels while keeping the company in a
position to capture market share when furniture demand returns
to more historic levels."
Mr. Davidson continued, "We recently returned from the October
International Home Furnishings Show in High Point, NC. At the
show we introduced 85 new products. Several of these products
were related to initiatives aimed at diversifying our product
offerings and expanding our customer base in an effort to
improve our future top line results. These initiatives include:
-- Commercial Office Furniture and Systems
-- Traditional Furniture
-- Storage Furniture and Systems
-- Globally Sourced Furniture
Our innovative new products related to all of these initiatives
were well received at High Point. We have increased product
placements at the office superstores with new commercial
executive office furniture collections. These placements
represent important progress for our commercial office furniture
initiative. We have also expanded the breadth of our globally
sourced product line and have placed these products with several
customers."
For the quarter, net cash used by operating activities was
$7,000 compared to net cash provided by operating activities of
$16.4 million in the comparable period a year ago. The biggest
increase in cash used by operating activities in the current
quarter was caused by a $4.6 million increase in inventory
levels which increased to $57.0 million from $52.4 million at
year- end. Accounts receivable levels during the current quarter
dropped to $34.0 million from $37.0 million at year-end.
Controlled spending resulted in current first quarter capital
expenditures dropping to $1.6 million from $4.1 million in the
prior year quarter, a decrease of $2.5 million. Cash on hand
levels remained virtually flat at $13.3 million in comparison to
the prior year quarter balance.
The net losses reflect the increased level of debt and related
interest expense associated with O'Sullivan's leveraged
recapitalization in November 1999. However, a sizeable amount of
income-reducing expenses are non-cash charges. These expenses
include non-cash interest as shown on the attached schedule
consisting of:
-- interest on the O'Sullivan Holdings note,
-- the change in market value of the interest rate collar, and
-- the amortization of debt discount and loan fees.
Note: The dividends and accretion on preferred stock are also a
non-cash item.
Mr. Davidson concluded, "Along with the current economic
slowdown, demand for office and residential furniture remains
sluggish in the current economy. We believe that the market will
remain challenging until consumers regain their confidence in
the economy. Accordingly, we continue to be less optimistic
about improving sales levels during the remainder of this fiscal
year. Looking to the second quarter of our fiscal year 2003, we
currently expect sales for the December quarter to be flat to
slightly down from the prior year and EBITDA to be up slightly.
While we are not pleased with our top line, our operations
performance and our diversification efforts demonstrate
O'Sullivan's commitment to continuous improvement as well as our
potential once our sales levels return to more historical
levels."
OWENS CORNING: Net Loss Tops $2.3 Billion in Third Quarter 2002
---------------------------------------------------------------
Owens Corning (NYSE: OWC) reported financial results for the
quarter ended September 30, 2002.
For the third quarter 2002, Owens Corning reported net sales of
$1.306 billion up from $1.291 billion in the same period in
2001. The company's third quarter income from operations was a
loss of $2.342 billion and its net income was a loss of $2.359
billion. Contributing to the loss were charges to income for
asbestos-related liabilities of $1.381 billion for Owens Corning
and $975 million for Fibreboard for a total charge of $2.356
billion. For the third quarter of the prior year, the company
reported income from operations of $63 million and net income of
$27 million.
The company also reported that its income from ongoing
operations for the third quarter was $93 million, which excludes
$35 million of Chapter 11-related charges, $44 million of
restructuring and other charges, and the $2.356 billion charge
for asbestos-related liabilities. Income from ongoing operations
for the third quarter of the prior year was $116 million, which
excluded $23 million of Chapter 11-related charges, $35 million
of restructuring and other charges, and $5 million in income
from asbestos- related insurance recoveries. Income from ongoing
operations is a measurement utilized by management for
evaluating the operating results of the company. It is not a
recognized measurement of results under accounting principles
generally accepted in the United States, and may not be
consistent with similarly titled amounts of other companies.
As a result of the asbestos-related charges described above, the
company's reserves for asbestos-related liabilities are $3.564
billion for Owens Corning and $2.310 billion for Fibreboard. The
company believes that such reserves represent at least a minimum
in a range of possible outcomes as to the amount of Owens
Corning's and Fibreboard's respective liability for asbestos-
related claims as determined in the Chapter 11 process. Given
the nature of the company's Chapter 11 proceedings, however, the
company cautions that the total asbestos-related liabilities
ultimately established in those proceedings may be higher or
lower than the current reserves.
Owens Corning is a world leader in building materials systems
and composites systems. Founded in 1938, the company had sales
of $4.8 billion in 2001 and employs approximately 19,000 people
worldwide. Additional information is available on Owens
Corning's Web site at www.owenscorning.com or by calling the
company's toll-free General Information line: 1-800-GETPINK.
On October 5, 2000, Owens Corning and 17 United States
subsidiaries filed voluntary petitions for relief under Chapter
11 of the U. S. Bankruptcy Code in the U. S. Bankruptcy Court
for the District of Delaware. The Debtors are currently
operating their businesses as debtors-in-possession in
accordance with provisions of the Bankruptcy Code. The Chapter
11 cases of the Debtors are being jointly administered under
Case No. 00-3837 (JKF). The Chapter 11 cases do not include
other U. S. subsidiaries of Owens Corning or any of its foreign
subsidiaries. The Debtors filed for relief under Chapter 11 to
address the growing demands on Owens Corning's cash flow
resulting from its multi-billion dollar asbestos liability.
Owens Corning is unable to predict at this time what the
treatment of creditors and equity holders of the respective
Debtors will ultimately be under any plan or plans of
reorganization finally confirmed. Based on the Debtors' known
assets and known and currently estimated liabilities, it is
likely that pre-petition creditors generally will receive under
a plan or plans less than 100% of the face value of their
claims, and that the interests of Owens Corning's equity
security holders will be substantially diluted or cancelled in
whole or in part. It is not otherwise possible at this time to
predict the outcome of the Chapter 11 cases, the final terms and
provisions of any plan or plans of reorganization, or the
ultimate effect of the Chapter 11 reorganization process on the
claims of the creditors of the Debtors, or the interests of the
Debtors' respective equity security holders.
PACIFIC GAS: Wants to Defray $1.7MM Additional Misc. Plan Costs
---------------------------------------------------------------
Pacific Gas and Electric Company anticipates to incur another
$1,694,400 in miscellaneous expenses in connection with the
implementation of its proposed Reorganization Plan. Hence, PG&E
asks Judge Montali to approve these expenses:
1. Accounts Payable IVR (Cost Estimate -- $58,000)
PG&E uses an Interactive Voice Response system for accounts
payable functions -- the FirstLine Encore IVR system --
provided by EPOS Corporation. This system allows vendors and
employees to access their invoice and payment information
through a series of interactive menus by using their touch-
tone phones.
PG&E believes it is necessary to have the IVR system
available to vendors and employees of the New Entities by the
Effective Date under the Plan to allow for a smooth
transition and to minimize confusion for vendors and
employees who are accustomed to using the IVR system.
EPOS Corporation will provide the necessary hardware,
software, installation and training in connection with the
FirstLine Encore IVR system for the New Entities. This work
will not commence until immediately after Plan confirmation.
PG&E believes it can be completed during the period between
confirmation and the Effective Date under the Plan.
2. Additional Land-Related Expenses (Cost Estimate -- $750,000)
On May 17, 2002, PG&E obtained permission to incur and pay
land-related expenses of up to $5,500,000. Since then, PG&E
has identified additional land-related work that needs to be
completed in advance of the Plan Effective Date.
The additional work to be completed consists of:
(a) Additional Land and Land Rights Analysis and
Reconciliation
This includes title work in connection with the review,
analysis and reconciliation of all Land Rights, including
field verification of information, assignment of the Land
and Land Rights to the New Entities, and analyzing new a
and modified rights to be acquired.
Specifically, the additional work arises out of the
transfer of gas transmission facilities to GTrans, LLC.
In connection with the title review and analysis
associated with these gas transmission rights, it is
necessary to analyze and reconcile data delineated on
12,000 gas system maps. Additional title review and
analysis is also necessary in connection with the
distribution feeder mains -- i.e., local gas
transmission, facilities -- to be transferred to GTrans.
The contractors performing this work are:
* EDB Data Resources;
* Phillip Longo;
* Chas McClue;
* Paragon Partners, Ltd.;
* Kenneth Sorensen; and
* Willbanks Resources Corporation.
(b) Additional Land Surveying
This includes:
-- involves land surveys, preparation of the deeds and
maps related to the possible subdivision, lot line
adjustments, and transfer of fee properties to the New
Entities;
-- the work necessary to ensure compliance with local
rules and regulations; and
-- the preparation of easement reservations and new
easement grants.
Additional survey work arises out of communications and
telecommunications-related transfers that will occur as
part of Plan implementation. PG&E requires the services
of Towill, Inc., as contractor, in preparing exhibit maps
and legal descriptions in connection with two agreements
to be executed in connection with the Plan:
(i) The Master Communications Easement Agreement
This Agreement provides for easements by and between
PG&E and each of the New Entities related to the
ongoing maintenance and operation of communications
facilities. This agreement will allow PG&E and each
of the New Entities to have the mutual benefit of
existing communications facilities that may be
located on the property owned by PG&E, for example,
after the Plan Effective Date; and
(ii) The Telecommunications Services Agreement
ETrans, LLC will provide telecommunications services
to PG&E and the other New Entities. Certain Land
Rights related to telecommunications facilities will
also be transferred to ETrans.
3. Facility Separation Costs (Cost Estimate -- $606,400)
To implement the Plan, PG&E anticipates that seven new
buildings will be leased and prepared for occupancy and 30
existing PG&E-owned buildings must be modified for use by
PG&E and the New Entities. These facilities are needed to
provide separate working areas for field employees of PG&E
and each of the New Entities by the Plan Effective Date. It
is important that there be no confusion about employee
supervision and compliance with legal and business
requirements.
Another reason for the new buildings and existing building
modifications is that the New Entities will individually be
smaller companies, with fewer employees, than present day
PG&E. In order for the New Entities to maintain properly-
supervised work sites, it is necessary to modify existing
work sites or to find new space that will accommodate the
need for consolidated work sites.
(a) Construction Project Managers
PG&E will hire construction project managers to manage the
required construction work. Although PG&E has in-house
expertise in this area, PG&E does not believe it has the
capacity to perform the work in-house due to current
workloads.
PG&E will promptly hire construction managers to perform
preliminary work prior to Plan confirmation. This
preliminary work will include these tasks:
(i) determining the scope of work to be performed on
each building;
(ii) preparing and submitting local building permit and
conditional use permit applications;
(iii) developing detailed, site-specific work schedules;
and
(iv) preparing contract specifications, selecting
qualified contractors, and negotiating contract
terms.
Based from experience with similar projects, PG&E
estimates that seven construction managers will be
required to manage the building projects at a total
estimated cost of $425,000. The construction managers
will be hired on a temporary basis through Source
California Energy Services, Inc. There will be no minimum
amounts due and the services may be terminated at any
time, without penalty.
(b) Permits, Engineering and Other Pre-Construction Costs
Certain pre-construction costs will have to be incurred
beginning in November 2002 for, among others, the
conditional use and construction permits, preliminary
engineering and design work, and environmental
assessments.
Until the construction project managers begin work, PG&E
will not have a precise estimate of the total pre-
construction costs. However, based on PG&E's past
experience in preparing buildings for occupancy and the
estimates that have been developed for a Materials
Distribution Center, PG&E believes that it can begin
certain critical or time-sensitive pre-construction work
with the authority to incur up to $100,000 at this time.
PG&E, therefore, seeks authority to incur a total of
$181,400 in pre-construction costs, including:
(i) $36,400 in connection with the Materials
Distribution Center. PG&E plans to lease a building
to be used as a Materials Distribution Center for
each New Entity This amount is comprised of these
components:
-- $2,000 for a conditional use permit to operate
the site as a utility warehouse and distribution
center;
-- $2,000 for a construction permit related to
necessary facility modifications;
-- $24,900 for design, seismic analysis, fire
protection design and permits related to the
installation of materials racking; and
-- $7,500 for a Phase I Environmental Site
Assessment;
(ii) an additional $45,000 for Phase 1 assessments for
six additional properties to be leased; and
(iii) an additional $100,000 for permit and engineering
costs.
PG&E needs to acquire these expenses prior to Plan
confirmation because;
* the permits can take as long as two months to process;
therefore, as soon as the project managers identify a
need for a permit, an H13 application will be submitted
to the appropriate local government entity;
* the preliminary engineering work must begin prior to
confirmation so that the actual construction work can
begin promptly following confirmation;
* certain preliminary engineering work is required in
connection with the preparation of construction or
conditional use permit applications; and
* an environmental assessment of any property to be leased
must be completed before PG&E enters into the lease, so
that PG&E can:
-- be fully informed about any environmental hazards
associated with the building; and
-- have a baseline assessment of the condition of
the building prior to PG&E's occupancy.
4. ETrans Communications Plan (Cost Estimate -- $280,000)
The separation of PG&E contemplated by the Plan creates
Special communications issues with respect to ETrans, the
entity that will carry on the electric transmission line of
business. Unlike the other lines of business within PG&E
today, the electric transmission line of business is operated
as part of PG&E's integrated transmission and the
distribution business operations without any independent
communications-related materials or resources.
Accordingly, PG&E sees the need to develop a communications
plan to communicate with future ETrans customers and
government and regulatory agencies about ETrans with regards
to, among others, the services it will offer, operational
information and emergency procedures. The communications
plan will help ensure a smooth operating transition in
electric transmission service from PG&E to ETrans.
The ETrans communications plan will include:
* development of materials; and
* meetings with customers and government and regulatory
agencies.
The expenses to be incurred pursuant to the ETrans
Communications plan are:
(a) Communications Consultant
PG&E seeks to hire John Ferrare as a communications
consultant to:
(i) provide design and technical writing services for
all ETrans communications materials;
(ii) develop customer communications strategy; and
(iii) manage the customer meetings that will be required.
PG&E estimates that the total expenses for the
communications consultant will be $130,000. The
communications consultant will commence work in November
2002. He will continue to work through the Plan
Effective Date.
(b) Communications Analysts
PG&E intends to hire two communications analysts through
CoreStaff Services, Inc., a temporary staffing agency, to
Provide:
(i) administrative support for the ETrans communications
plan, including editing and proofreading, material
layout; and
(ii) assistance with customer meetings.
PG&E estimates that the total expenses for the
communications analysts will be $62,000. The analysts
will begin work in December 2002 and continue though the
Plan Effective Date.
(c) Customer Meetings
PG&E anticipates expending $70,000 in customer meetings.
These costs would include:
(i) renting meeting or conference facilities;
(ii) preparing presentations, including audiovisual
costs; and
(iii) other related costs associated with the customer
meetings.
These costs will not be incurred until after Plan
confirmation.
(d) Communications Materials
There will be material and printing costs of $18,000 in
connection with preparing the ETrans communications
materials. These costs will not be incurred until after
Plan confirmation.
Although PG&E anticipates that no more than $50,000 of the
total $280,000 in expenses will be incurred before the
confirmation of the Plan, PG&E wants the project to begin
promptly to allow for sufficient time to implement the ETrans
communications plan in advance of the Plan Effective Date.
Julie B. Landau, Esq., at Howard, Rice, Nemerovski, Canady, Falk
& Rabkin, P.C., contends that the implementation costs are
warranted since PG&E does not have sufficient capacity or skills
in-house to perform and complete the work without the assistance
of the outside consultants. Besides, PG&E is solvent and has
sufficient cash to pay these expenses without causing any
detriment to its creditors.
Ms. Landau points out that, consistent with its previous
implementation expense requests, PG&E continues to enter into
contracts with consulting firms that enables it to terminate
without cause and without any penalty. This is important so
that, in the event that the implementation work is no longer
necessary, PG&E can minimize its costs. Ms. Landau also notes
that only those projects that have been identified as critical
for completion by or in advance of the Plan Effective Date, and
which require long lead time or must be completed before
subsequent related implementation work can be performed are
included. (Pacific Gas Bankruptcy News, Issue No. 47; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PEMSTAR INC: Second Quarter 2003 Net Loss Balloons to $10 Mill.
---------------------------------------------------------------
PEMSTAR Inc. (Nasdaq:PMTR), a leading provider of global
engineering, product design, manufacturing and fulfillment
services to technology, industrial and medical companies,
reported financial results for its fiscal 2003 second quarter.
The company's results, for both revenue and diluted net loss per
share, are consistent with prior guidance.
Financial Results
PEMSTAR reported net sales of $176.4 million for the fiscal 2003
second quarter ended September 30, 2002, compared to $173.4
million in the prior-year period. The company reported a net
loss of $10.0 million, compared to net income of $3.0 million
for last year's fiscal second quarter. The impact of
restructuring charges and reserves, primarily for accounts
receivable and inventories, totaled approximately $3.9 million.
Excluding these items, the loss per share was $.17, which is the
First Call consensus estimate.
The current quarter included sales of $13.7 million of excess
raw material inventories billed to customers in accordance with
contract provisions. The decrease in net sales, after excluding
these billings, was due to volume reductions in the sluggish
communications sector and flat end-market demand. Lower gross
margins stemmed from sales mix changes, additions to reserves
for inventory obsolescence and underutilization of certain new
and existing manufacturing facilities and engineering
infrastructure.
For the first six months of fiscal 2003, net sales were $329.5
million, compared to $340.6 million for the same period last
year. PEMSTAR reported a net loss of $29.8 million versus net
income of $5.5 million for the prior-year six months.
Selling, general and administrative expenses increased $3.4
million from the year-ago period due to specific and general
accounts receivable reserves, infrastructure of acquired and
startup operations, and various corporate costs including
insurance and legal, as well as investments in information
technology.
During the quarter, PEMSTAR successfully reached agreements with
its senior secured lenders to amend its credit facilities for
the duration of its fiscal year ending March 31, 2003, and
extend the agreements to December 31, 2003.
"We are pleased to have worked out agreements with our senior
lenders," said Al Berning, PEMSTAR's chairman, president and
CEO. "Additionally, our restructuring efforts are nearly
complete, and we are beginning to realize cost savings of
approximately $3 to $4 million per quarter."
Cash flow from operations for the fiscal second quarter was
$15.0 million, representing the fifth consecutive quarter in
which PEMSTAR was operating cash flow positive. This cash flow
is a result of significantly increasing working capital
management. As of September 30, 2002, net inventories of $82.6
million were down $12.9 million from June 30, 2002, with a turn
rate of 8.2 times, improved from 6.4 times at June 30, 2002.
Accounts receivable decreased $6.0 million in the quarter, with
days sales outstanding declining from 71 days at June 30, 2002,
to 58 days at September 30, 2002. Bank debt, including
capitalized lease obligations, as of September 30, 2002, was
$83.9 million, compared to $98.5 million at June quarter-end.
Debt to total capital at September 30, 2002, was 33.4 percent,
and net book value was $4.49 per outstanding share.
Business Update
For the fiscal second quarter PEMSTAR's engineering business was
16.4 percent of total revenue, versus 14.1 percent in the year-
ago quarter. The growth is attributable to the acquisition of
Pacific Consultants, partially offset by a decrease in the more
cyclical historic engineering business.
Sales to the communications industry accounted for 38.6 percent
of total sales, down from the year-ago period when
communications industry revenue totaled 51.5 percent. The
remaining 61.4 percent of sales were to the following
industries: computing, 31.3 percent; industrial equipment, 17.1
percent; data storage, 8.3 percent; and medical, 4.7 percent.
From a geographic perspective, 73.6 percent of fiscal second-
quarter revenue was derived from product manufactured in North
and South America, with 17.3 percent generated in Asia, and 9.1
percent in Europe.
During the quarter, Valeo Service, a branch of Valeo, extended
their engineering and manufacturing agreement with PEMSTAR for
the creation of Valeo's new CLIMTEST2 automotive diagnostic
device. Valeo is one of the world's leading automotive suppliers
in both the original equipment and aftermarket segments. PEMSTAR
has been designing and manufacturing diagnostic tools for
automotive air-conditioning systems for Valeo Service since
1999. The CLIMTEST2 is an improved version of the existing
CLIMTEST diagnostic tool for the air-conditioning system in a
vehicle. Under the new agreement, PEMSTAR will enhance and
upgrade the functionality of the device, and will start
producing branded models of the CLIMTEST2 with related
accessories at the PEMSTAR B.V. facility in Almelo, The
Netherlands.
Additionally, PEMSTAR continued advancing its efforts with
Cordis, a division of Johnson and Johnson, Logitech, Land
Warrior, Given Imaging and Motorola. These existing customers
are expected to be part of the growth of PEMSTAR in the future.
"PEMSTAR continues to win new customers and projects in what is
a challenging environment," said Berning. "Our business model of
Concept to Customer--where we take a product from idea to
customer delivery and support--sets us apart from our peers and
our presence in key geographic locations ensures that we are
able to meet customers' needs in virtually any market."
Fiscal 2003 Third-Quarter Outlook
The following statements are based on current expectations, and
today's economic uncertainties make it difficult to project
results going forward. PEMSTAR currently expects net sales in
the fiscal 2003 third quarter ending December 31, 2002, of $165
to $170 million, and breakeven to a net loss of $3.5 million.
This compares with sales of $171.2 million and a net loss of
$12.5 million in the year-earlier December quarter.
PEMSTAR Inc. -- http://www.pemstar.com-- provides a
comprehensive range of engineering, product design,
manufacturing and fulfillment services (Concept to Customer) to
customers on a global basis through facilities strategically
located in the United States, Mexico, Asia, Europe and South
America. The company's service offerings support customers'
needs from product development and design, through manufacturing
to worldwide distribution and aftermarket support. PEMSTAR has
over one million square feet in 17 facilities in 15 locations
worldwide.
As reported in Troubled Company Reporter's October 10, 2002
edition, PEMSTAR Inc., successfully reached agreements with
its senior secured lenders to amend its credit facilities,
effective September 27, 2002.
The amendment provides PEMSTAR with financial covenant relief
for the duration of its fiscal year ending March 31, 2003. The
financial covenants for the amendment were reset to assume
results consistent with PEMSTAR's prior guidance issued on July
24, 2002, for the fiscal second quarter ended September 30,
2002. PEMSTAR currently expects to release results in line with
prior guidance later this month.
PERSONNEL GROUP: Wins Crystal Decisions Training Contract
---------------------------------------------------------
Personnel Group of America, Inc., (NYSE:PGA) announced that its
Venturi Technology Partners unit has been selected by Crystal
Decisions, Inc., of Vancouver, British Columbia, as its
exclusive certified Bay Area training provider. Despite an
industry-wide slowdown in Information Technology consulting,
Venturi has continued to grow market share within its Crystal
Decisions training practice, opening seven new public training
centers over the past 18 months. Training site locations now
include the Bay Area (California), Las Vegas, Seattle, Boise,
Portland, Olympia, Reno, Phoenix, Sacramento, Salt Lake City,
Spokane, San Jose and Honolulu.
Venturi Technology Partners was selected through a competitive
bidding process. Beginning October 1, 2002, Venturi began
offering certified Crystal Decisions training in San Francisco,
San Jose, and Pleasanton, California. "We are thrilled that
Venturi is our Certified Training Partner in the Bay Area," said
Steve Ryujin, Director Worldwide Training. "Not only do they
have several Certified Trainers on staff, they also have a
wealth of instructional and consulting experience."
Venturi Technology Partners has been a public training provider
of certified Crystal Decisions training since 1998. In 2001,
Venturi won the prestigious "Certified Training Partner of the
Year" award from Crystal Decisions for its excellence in
training delivery.
Crystal Decisions, a privately held company, is one of the
world's leading information management software companies with
more than 12 million licenses shipped. Since 1984, Crystal
Decisions has powered winning organizations with one of the
fastest ways for employees, partners and customers to access the
information they need to make the best decisions and,
ultimately, reduce costs and increase productivity. The Crystal
brand is among the most trusted names in enterprise reporting
and more than 300 Independent Software Vendors (ISVs) have
standardized on Crystal Decisions' solutions. Headquartered in
Palo Alto, California, Crystal Decisions has more than 20
offices worldwide and can be found on the Internet at
http://www.crystaldecisions.com
Personnel Group of America, Inc., is a nationwide provider of
information technology consulting and custom software
development services; high-end clerical, accounting and other
specialty professional staffing services; and technology systems
for human capital management. The Company's IT Services
operations operate under the name "Venturi Technology Partners"
and its Commercial Staffing operations operate as "Venturi
Staffing Partners." PGA's Venturi operations may be found on the
world wide web at http://www.venturipartners.com
* * *
In Its Form 10-Q filed with the Securities and Exchange
Commission on August 7, 2002, the Company reported:
Debt Compliance
The Company experienced declines in operating results for the
year ended December 30, 2001 and the first half of 2002 as
compared in each case to prior year due to the weak economic
environment. In response to the deterioration in operating
performance, the Company undertook several initiatives beginning
in 2001, including the following:
-- A number of restructuring actions, including a permanent
workforce reduction of approximately 36% and office space
rationalization efforts. Management expects further headcount
and infrastructure rationalization over the balance of 2002;
-- The divesture of an under-performing business on December
31, 2001;
-- An amendment to its revolving credit facility extending
the facility's maturity to January 2003, with additional
extensions to January 2004 assuming certain conditions are met;
and
-- A concerted effort to reduce accounts receivable, which
resulted in substantial cash flow that was used to reduce debt.
The Company's ability to continue operating is largely dependent
upon its ability to maintain compliance with the financial
covenants in the Company's amended revolving credit facility.
The Company was able to maintain compliance with its Credit
Facility as of December 30, 2001 after obtaining a waiver in
December 2001 of an anticipated default under certain financial
ratios for the fourth quarter of 2001. The Credit Facility was
then amended in February and March 2002, with modification of
the financial covenants to reflect the weak economic environment
beginning with the fourth quarter of 2001 and extending through
the new maturity date of the Credit Facility, January 2003 (with
extensions to January 2004 assuming certain conditions are met).
As a result of these amendments, the Credit Facility, which had
an outstanding balance of $104,700 at June 30, 2002, is
classified as long-term in the consolidated balance sheet.
PETROLEUM GEO: S&P Slashes Credit Rating to B over Market Issues
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Texas-based, oil services company Petroleum Geo-
Services ASA to single-'B' from double-'B'-minus, and its senior
unsecured debt rating to single-'B'-minus from single-'B'-plus.
The ratings on the company's preferred stock have been lowered
to triple-'C' from single-'B'-minus.
The ratings are removed from CreditWatch with developing
implications where they were placed on September 26, 2002.
The outlook is negative.
"The ratings downgrade reflects Standard & Poor's concerns about
the effects of seismic market conditions, the difficulties of
PGO operating as a distressed firm, and the company's need to
repay about $1 billion of maturing debt in 2003 during a period
of potentially weak seismic industry conditions," noted Standard
& Poor's credit analyst Bruce Schwartz.
The negative outlook points to the possibility for further
ratings downgrades as PGO's debt maturities approach. A reversal
of the company's credit ratings downgrades would be conditioned
on PGO successfully executing a plan that positions it to
comfortably meet its 2003 debt maturities and provide it with
sufficient financial resources to cushion it against further
possible deterioration in industry conditions.
PGO competes in two industries: seismic services (70% of
expected 2002 EBITDA) and the operation of floating production,
storage, and offloading vessels (FPSO; 30%). For the past four
years the seismic services industry has been buffeted by extreme
overcapacity, which has greatly reduced industry margins,
increased the industry's capital requirements, and caused a
number of weak participants to become insolvent. Competitors
recently have announced poor results and plan to focus their
operations in PGO's core areas. Although the company's seismic
backlog has remained fairly strong throughout 2002, revenue
visibility in 2003 is less clear.
PGO's FPSO operations should improve its free cash flow
generation in 2003 as capital expenditures are cut to
maintenance levels. While PGO could benefit from a development
well on the Banff oil field and satellite development around its
various FPSOs, the magnitude of cash flow improvement from this
division may be restrained by depletion of the Varg oil field in
2003.
PGO's new management intends to address near-term liquidity
concerns through aggressive cost cutting and more disciplined
capital spending. PGO's management believes that PGO can
generate meaningful free cash flow after capital expenditures
and working capital requirements in 2003, and that supplementary
asset sales and refinancing activity will enable the company to
meet its financial commitments. Nevertheless, Standard & Poor's
believes that successfully executing such a plan could prove
difficult, because of the time constraints presented by maturing
debt.
PRIVATE BUSINESS: Sept. 30 Balance Sheet Upside-Down by $6 Mill.
----------------------------------------------------------------
Private Business, Inc. (Nasdaq:PBIZ), a leading provider of cash
flow and retail inventory management solutions for community
banks and small businesses, announced its operating results for
the third quarter and first nine months of 2002.
Revenues for the quarter ended September 30, 2002, totaled $13.2
million, compared with revenues of $15.2 million in the third
quarter of 2001. Results for the most recent quarter included
$3.2 million in revenue from Towne Services, Inc., which was
acquired in August 2001, compared with a $2.7 million revenue
contribution from Towne in the prior-year quarter. Operating
income increased to $1.5 million in the quarter ended September
30, 2002, versus an operating loss of $1.7 million in the year-
earlier period. Net income available to common shareholders
improved to $662,000, compared with a net loss of $1.6 million
in the third quarter of 2001.
For the nine months ended September 30, 2002, revenues totaled
$42.4 million, compared with revenues of $39.6 million during
the corresponding period of the previous year. Towne revenues
for the nine months ended September 30, 2002, approximated $10.5
million, whereas Towne contributed $2.7 million to Private
Business' revenues in the first nine months of 2001. Operating
income for the first nine months of 2002 increased to $6.4
million, versus $862,000 for the same period in 2001. Net income
available to common shareholders increased to $2.9 million
compared with a net loss of $1.3 million in the first nine
months of the previous year.
All share and per share amounts in this news release have been
adjusted to reflect a one-for-three reverse stock split in
August 2001. Per share amounts for 2002 include 4.6 million
common shares issued in conjunction with the Towne Services
merger.
Results for the third quarter and first nine months of 2001
included (1) an after-tax $2.5 million write down of the
Company's land, building, and furniture to their estimated fair
market value; (2) an after-tax extraordinary charge of $81,000,
resulting from the early extinguishment of debt; and (3) merger-
related expenses of approximately $183,000 net of taxes.
Excluding these items, the Company would have reported pro forma
net income of $1.5 million for the nine months ended September
30, 2001. The Company completed the sale of its land, building
and furniture in March 2002 and consolidated operations into its
Technology and Business Service Center in the first quarter of
2002.
As of September 30, 2002, the Company's balance sheets show a
working capital deficit of about $2.7 million, and a total
shareholders' equity deficit of about $6 million.
"We have been pleased with our profitability measures this
year," stated Tom Black, Chief Executive Officer of Private
Business, Inc. "Earnings per share are up forty-percent over
last year, even when adjusted for last year's one time expenses.
However, revenues have been impacted by the influence of a soft
economy upon many of the small businesses that finance their
receivables through our community bank customers. As we have
discussed in previous quarters, bank and merchant attrition,
along with a tight credit 'culture' in smaller banks, are among
our greatest challenges. Year to date, operating income
continued to increase at a healthy rate twenty-nine percent,
even after adjusting for last year's one-time loss accrual on
the sale of our headquarters building. Continuing reductions in
long-term debt outstanding, along with lower interest rates,
also allowed us to reduce interest expense significantly during
the first nine months of the year.
"We remain excited about the launch and development of our new
product initiatives. Our InsuranceManager(TM) allows us to work
with community banks in the marketing of commercial insurance to
their small business customers. Three banks have already
committed to the program, and we have signed multiple insurance
policies. We expect continued growth from this new product, and
the pipeline of proposed policies submitted to our carriers
continues to expand.
"We have signed three banks for LineManager(TM), our new
automated monitoring service for asset-based lenders," continued
Black. "Development of the product is almost complete. We
anticipate solid results in our 'beta test' phase and growing
revenues from LineManager(TM) in 2003. This is an exciting
product that we believe has the potential to revolutionize
asset-based lending procedures in the community banking
industry.
"We have lowered total outstanding debt from $36.5 million at
December 31, 2001, to $31 million as of September 30, 2002. We
completed the sale of a building that served as RMSA's
headquarters, consistent with management's plan for the
disposition of non-productive assets and the redeployment of
capital into strengthening our balance sheet and expanding our
core businesses. We believe our debt reduction program will
enhance long-term shareholder value and create capital structure
flexibility for growth and acquisition opportunities in the
future.
"Based on the results for the third quarter and first nine
months of 2002, we are revising our guidance for the full year.
We now expect the Company to achieve $13-$14 million in EBITDA,
and $0.25-$0.28 in diluted earnings per share, on revenues of
$54-$56 million, for the year ending December 31, 2002,"
concluded Black.
The Company also noted that at the time of this release it was
in non-monetary default of its minimum EBITDA (earnings before
interest, taxes, depreciation, and amortization) requirement
under the terms of its senior loan agreement. The Company is
discussing this default with its lenders, and management
believes that it will be able to obtain a waiver of such
noncompliance and amendment of the minimum EBITDA requirements
for future reporting periods prior to the filing of its
Quarterly Report on Form 10Q.
Private Business, Inc. is a leading provider of cash flow and
retail inventory management solutions for community banks and
middle-market businesses. The Company is headquartered in
Brentwood, Tennessee, and its common stock trades on The NASDAQ
Stock Market under the symbol "PBIZ".
RELIANCE: Liquidator Posts $11.5M Wherehouse Entertainment Bond
---------------------------------------------------------------
Reliance Insurance Company was involved in a litigation entitled
David L. Peterson, et al. v. Wherehouse Entertainment Inc., et
al., before the Superior Court of California, County of Santa
Clara. This was a claims litigation matter.
Judgment was rendered against RIC's insured in the trial court.
The insurance policy obligates RIC to post an $11,500,000 bond.
In order to be in a position to post the bond, RIC purchased
United States Treasury securities worth $11,500,000 and was
prepared to transfer them to a designated financial institution
to be held in escrow as collateral for the bond.
Accordingly, RIC sought and obtained Commonwealth Court approval
to post securities for the appeal bond. The litigation
continues. (Reliance Bankruptcy News, Issue No. 31; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
SAFETY-KLEEN: Gets Nod to Settle with Carriers and Create Trust
---------------------------------------------------------------
Safety-Kleen Corporation and its debtor-affiliates obtained
Judge Walsh's approval of:
(1) settlement agreements with certain of the Debtors'
general liability carriers,
(ii) the establishment of a qualified settlement trust
to provide funds to pay for, among other things,
costs and legal fees in connection with bodily
injury, personal injury and property damage
claims, and
(iii) the Debtors' contributions of future settlement
amounts into the Qualified Settlement Trust.
The Settlement Agreement
The Debtors assure Judge Walsh that, before signing these
Settlement Agreements, they evaluated:
(1) the relative strength of the parties' legal positions;
(2) the likelihood that the Insurance Policies would be
implicated to cover third-party claims;
(3) the extent that the Insurance Policies covered asserted
and potential claims; and
(4) the costs and risks associated with continued litigation
of the coverage claims.
As a result of negotiations and this evaluation, the Debtors
concluded that a consensual resolution of the coverage claims
was the best option. The aggregate payments under the
Settlement Agreements will be $8,725,000, of which $5,900,000
will be deposited into the Qualified Settlement Trust.
The most significant terms and conditions of these Settlement
Agreements are:
(1) The Hartford Settlement:
(a) Settlement Amount. Hartford will pay Safety-Kleen
$2,000,000 by check or draft made payable to
the Safety-Kleen Settlement Trust;
(b) Effective Date. The date there is a final order
approving the Hartford Settlement;
(c) Dismissal from New Jersey Coverage Action. Within
7 days of receipt of the Settlement Amount, Safety-
Kleen will seek dismissal with prejudice of its
complaint against Hartford in this action;
(d) Dismissal from California Coverage Action. Safety-
Kleen will dismiss without prejudice its complaint
against one of the Hartford companies (First State
Insurance Company) in this action that asserted
claims for coverage for product liability suits under
three excess policies issued by First State;
(e) Mutual Releases. The parties will sign mutual
releases;
(f) No Admission of Liability. Execution and delivery of
the Hartford Settlement is not an admission of any
liability on the part of any party; and
(g) Indemnification. Safety-Kleen will indemnify Hartford
with respect to:
(i) Safety-Kleen's total defense and indemnification
obligations with respect to certain Rollins
policies will be capped at $36o8,199.00;
(ii) Safety-Kleen's total defense and indemnification
obligations with respect to solvent suit
liability will be limited to the pro rata
amount allocated to the Hartford insurance
policies; and
(iii) to the extent non-solvent suits or claims
may arise under Hartford policies, other
than the Rollins Policies, Safety-Kleen
will be obligated to defend and indemnify
Hartford with respect to these claims.
(2) The American Centennial Settlement:
(a) Settlement Amount. American Centennial will pay
Safety-Kleen $75,000 within 30 days after Judge
Walsh's approval of the American Centennial
Agreement and the expiration of the deadline to file
any appeals from that approval;
(b) Dismissal from New Jersey Coverage Action. Within 10
days after payment of the Settlement Amount, Safety-
Kleen will prepare and file the necessary court papers
to dismiss American Centennial from the New Jersey suit
with prejudice;
(c) Mutual Releases. The parties will exchange releases;
and
(d) Indemnification Obligation. Safety-Kleen and its
insured affiliates under the American Centennial
policies will indemnify American Centennial for any
actions against American Centennial under the
insurance policies up to the settlement amount,
plus simple interest accrued at the rate of 5% per
annum from the date of notification of any claim.
(3) The Westport Agreement:
(a) Settlement Amount. Westport will pay to the Qualified
Settlement Trust $100,000 within 30 days of a final
order approving the Westport Agreement;
(b) Dismissal from the New Jersey Coverage Action. Safety-
Kleen will seek dismissal with prejudice of its
complaint against Westport in the New Jersey Coverage
Action;
(c) Mutual Releases. The parties will sign mutual
releases;
(d) No Admission of Liability. Signature and delivery of
the Westport Agreement is not an admission of any
liability by any party; and
(e) Indemnification Obligation. The Qualified Settlement
Trust will indemnify Westport up to the settlement
amount with respect to any claims made against Westport
policy. In the event that the Qualified Settlement
Trust is terminated in accordance with its terms or
fails in its essential purpose, then Safety-Kleen
will assume the obligations of the Qualified Settlement
Trust for indemnification.
(4) The CNA Agreement:
(a) Settlement Amounts. CAN will pay up to the aggregate
amount of $6,550,000 comprised of:
(i) $3,850,000 to the Qualified Settlement Trust, and
(ii) up to $2,700,000 to Safety-Kleen in future
coverage;
(b) Payment Schedule. Within 30 days after issuance of a
final un-appealable order approving the CNA Agreement,
CNA will pay $1,700,000 into the Qualifying Settlement
Trust. Within 120 days of that final order, CNA will
pay an additional $2,150,000 into the Trust. In
addition, CNA will pay 15% of all costs and expenses,
including defense and investigation costs for trial
counsel, national counsel and expert witnesses,
associated with solvent suits, with payments beginning
no earlier than January 1, 2003, extending for 6
consecutive annual periods up through and including
December 31, 2008; provided, however, that CNA's total
obligation for costs will not exceed:
(i) $450,000 in any one annual period; and
(ii) $2,700,000;
(c) Mutual Releases. The parties will exchange releases;
(d) No Admission of Liability. Signature and delivery of
the CNA Agreement is not an admission of any
liability by any party;
(e) Dismissal from California Coverage Action. Safety-
Kleen will dismiss without prejudice its claims
for coverage under certain excess policies issued
by one of the CNA companies for product liability
suits under in this action; and
(f) Indemnification Obligation. The Qualified Settlement
Trust will indemnify and defend CNA under the CNA
policies and will pay on behalf of CNA up to the
settlement amount. In the event that the Qualified
Settlement fails to qualify or fails in its purpose,
then Safety-Kleen will assume the obligations of the
Qualified Settlement Trust for indemnification.
The Qualified Settlement Trust
The salient terms and conditions of the Qualified Settlement
Trust are:
(a) Purpose. The purposes of the Qualified Settlement Trust
are:
(1) The provision of funds which may be used to pay
for costs incurred by the Debtors in connection with
claims, suits and demands alleging personal injury,
bodily injury, and property damage claims;
(2) The provision of funds to be used to pay the legal
fees of the Debtors and costs in conjunction with
litigation and other legal proceedings, including
administrative proceedings, arising from claims;
(3) The provision of advances to pay for legal fees and
settlement cost claims asserted against the Debtors
pending reimbursement or indemnification by other
responsible parties, including insurers of Safety-
Kleen;
(4) The provision of payment for certain contingent
obligations to some of the Settling Insurers under
the Settlement Agreements; and
(5) To do all things necessary or appropriate in these
connections;
(b) Trustee: James K. Lehman;
(c) Duration. The Qualified Settlement Trust will remain in
existence for a period of 20n years from the date of its
creation, or until such other earlier date as the Trust
is exhausted or otherwise terminated;
(d) Payment of Indemnity Obligation. The Trustee is authorized
to distribute all or any portion of the Trust, to the
extent required under the Settlement Agreements, to satisfy
indemnification obligations under the terms of the
Settlement Agreements; and
(e) Indemnification. The Debtors will indemnify and hold
harmless the trustee (and any successor trustee) from and
against any and all losses, liabilities, claims, actions,
damages, and expenses arising out of and in connection with
the Qualified Settlement Trust. (Safety-Kleen Bankruptcy
News, Issue No. 47; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
SEDONA CORP: Fails to Meet Nasdaq Continued Listing Standards
-------------------------------------------------------------
SEDONA(R) Corporation (Nasdaq:SDNA) -- http://www.sedonacorp.com
-- the leading provider of Internet-based Customer Relationship
Management solutions for small and mid-sized financial services
companies, has received a Nasdaq Staff Determination, dated
October 22, 2002, indicating that the Company fails to comply
with the minimum market capitalization listing requirement of
the Nasdaq SmallCap Market set forth in Marketplace Rule 4310,
and that its securities are, therefore, subject to delisting.
The Company has requested a hearing before a Nasdaq Listing
Qualifications Panel to review the Staff Determination. There
can be no assurance, however, that the Panel will grant the
Company's request for continued listing. Should the Company be
unsuccessful in its appeal, its common stock would commence
trading on the NASD Electronic OTC Bulletin Board.
SEDONA(R) Corporation (Nasdaq:SDNA) is the leading provider of
Customer Relationship Management solutions for small and mid-
sized financial services companies. SEDONA's Web-based software,
Intarsia(TM), employs leading-edge CRM technology that enables
financial institutions to create a 360-degree view of customers
and their interactions by consolidating customer information
across departments, product lines, and channels. Organizations
can capitalize on information captured during each customer
interaction to effectively cross-sell and up-sell products and
services, resulting in maximized profitability through increased
customer retention. Through a network of highly respected
channel and technology partners, SEDONA provides the most
comprehensive CRM offering in the financial services market.
SEDONA has been chosen by such market leaders as Fiserv, Inc.,
Open Solutions Inc., Financial Services, Inc., and Sanchez
Computer Associates, Inc., and is an Advanced Level Business
Partner of IBM Corporation. For additional information, visit
the SEDONA Web site at http://www.sedonacorp.comor call 1-800-
815-3307.
At June 30, 2002, SEDONA's balance sheets shows a working
capital deficit of about $1.7 million, and a total shareholders'
equity deficit of about $276,000.
SILVERLINE: Completes Transfer of Fin'l Services to Cognizant
-------------------------------------------------------------
Silverline Technologies Inc., a subsidiary of Silverline
Technologies Limited (NYSE:SLT and BSE:SLVR), has completed the
process of transferring its American Express practice to
Cognizant.
As previously announced, the transaction was part of
Silverline's overall financial restructuring plan.
The terms of the transaction were not announced.
Silverline Technologies Limited (NYSE: SLT and BSE: SLVR) is an
international software development and integration services
firm, with over 1,800 software professionals world-wide.
Silverline provides a comprehensive set of eBusiness consulting
and IT services, including strategic consulting, creative
design, technology integration and implementation, as well as
management and maintenance of Internet and legacy applications.
Silverline focuses primarily on Global 2000 clients in key
industry sectors, such as automotive/discrete manufacturing,
financial services, healthcare/insurance, technology and
telecommunications. The Company also has extensive experience in
technologies such as mobile and wireless applications, ePayments
and enterprise information portals, as well as in business
processes such as customer relationship management, eProcurement
and online marketplaces, channel management and employee
enablement.
Silverline delivers its services through a global network of
software development centers. At the heart of the network are
core offshore centers in Chennai, Hyderabad and Mumbai, in
India, and Cairo, Egypt. These centers support regional
development facilities located close to clients throughout North
America, Europe and Asia Pacific. With SEI CMM Level 4 and ISO
9001 certified processes, Silverline uses this Global Delivery
Model to provide superior service, accelerated delivery and
significant cost savings to clients around the world. Visit
Silverline on the World Wide Web at http://www.silverline.com
As reported in Troubled Company Reporter's September 25, 2002
edition, Silverline Technologies, Inc., a subsidiary of
Silverline Technologies Limited (NYSE: SLT and BSE: SLVR),
received an offer from Cognizant Technology Solutions US
Corporation to acquire certain assets of a business unit of
Silverline Technologies Inc., that provides information
technology services to a fortune 100 financial services company.
This business unit was acquired as part of the acquisition of
SeraNova, Inc., an eBusiness consulting services company that
was acquired by Silverline in March 2001.
The said transaction is part of Silverline's overall financial
restructuring plan.
STOCKWALK GROUP: Former MJSK Employees Block Move to Reopen Case
----------------------------------------------------------------
Several former employees of Miller, Johnson, Steichen, Kinnard,
Inc., filed a motion, in U.S. Bankruptcy Court last Friday,
opposing Stockwalk's Creditors Committee attempts to reopen the
Court's bankruptcy's proceedings of Stockwalk.
The motion was filed by Thomas Bartzen, Steven Mattson, Mark
Beese, Richard Reynolds and Randy Nitzsche. These five
individuals decided on September 12, 2002, several months after
Stockwalk's plan of reorganization was confirmed by the Court,
to engage in a new business, Northland Securities. Northland
Securities is a Minneapolis based, employee owned, full service
investment Broker/Dealer. The firm provides transaction oriented
proprietary fixed income and equity product investment products.
Thomas Bartzen, President of Northland Securities, said the
Creditor's Committee attempts should be denied for several
reasons, including:
1. Stockwalk's Official Committee of Unsecured Creditors
lacks appropriate standing and jurisdiction to bring
these motions to the Courts.
2. The decision to start Northland Securities was made
several months after the bankruptcy plan was approved.
3. No good cause has been shown for extending the deadline
for filing motions.
"We have acted properly in leaving MJSK and in starting
Northland Securities. Northland assisted MJSK in closing several
underwriting deals after our departure. We thought our parting
was amicable. MJSK, through the Creditors Committee, is
attempting to improperly use the bankruptcy court to conduct a
'fishing expedition' into the activities of Northland
Securities," said Bartzen. "This fishing expedition has nothing
to do with the bankruptcy, and is pure harassment of Northland
and its employees.
"We did the right thing professionally and personally," said
Bartzen. "Our careers and reputations were absolutely put in
jeopardy -- through no fault of anyone now at Northland. Over
time, it became clear that we needed to move forward with our
lives and we feel very good about our decision and our future --
for our customers, our co-workers and our families. In less than
30 days, we've successfully raised more than $3.0 million in
capital, over $2.5 million of which from employees. With our
commitment, our capital, and our professionalism, Northland is
poised to become an industry leader in the Upper Midwest."
SUPRA TELECOM: BellSouth Asks Court to Dismiss Bankruptcy Case
--------------------------------------------------------------
Citing recent public statements made by Supra Telecom that it is
financially solvent and able to pay its bills, BellSouth
(NYSE:BLS) filed two motions before the U.S. Bankruptcy Court,
Southern District of Florida. The first motion asks the judge to
dismiss Supra's bankruptcy filing on the basis that it is
another "stop on Supra's litigation train," filed only to
manipulate the legal system and avoid paying BellSouth for
wholesale services.
"Supra's recent statements to its customers that it is able to
pay its bills and is financially solvent contradicts the very
essence of its bankruptcy filing. This type of hypocrisy allows
Supra to continue making a mockery of the judicial due process
system," said BellSouth spokesman Spero Canton. "We don't
believe the bankruptcy court is the correct place to, in Supra's
words, 'stop BellSouth in its tracks.' This is another example
of Supra using a legal maneuver to steer around its contract so
it can continue to receive wholesale telephone service without
paying for it."
The motion also noted that Supra continues to contradict itself
by stating in the top 20 list of its unsecured creditors it
submitted to the bankruptcy court that it owes BellSouth more
than $70 million while making public statements that it doesn't
owe "BellSouth $100 million or even $18 million dollars." It has
even made claims that BellSouth owes money to Supra.
The second motion asks the court to order Supra to pay a $26.2
million deposit to secure payment of services provided during
these proceedings and to accelerate its ruling on this matter.
The motion states that Supra already owes BellSouth more than
$100 million and uses $450,000 worth of BellSouth services on a
daily basis. For each day that Supra withholds the required
deposit, BellSouth is at an additional risk of approximately
$450,000 that the motion states "will likely never be paid by
Supra based upon Supra's prior conduct."
"It is our position that BellSouth should not be forced to
continue to finance Supra Telecom's Florida operations. Despite
all the rhetoric about competition in Supra's ads this is an
issue that involves one thing; Supra's continued failure to pay
money it agreed to pay in its contract. Supra is running ads
attempting to confuse the issue. This is not a competition
issue, it's a non-payment issue," said Canton.
A segment of BellSouth's dismissal motion also posed a question
to the court.
"Even though Supra does not pay BellSouth for services
received..., BellSouth estimates that Supra collects
approximately $13.15 million in monthly revenue from
approximately 320,000 Florida consumers for that service. Supra
disconnects its own customers who refuse to pay Supra on a
timely basis. One can only guess where Supra is funneling the
money it receives from its customers, since it is undisputed
that Supra is not using this money to pay BellSouth."
BellSouth Corporation is a Fortune 100 communications services
company headquartered in Atlanta, Georgia, serving more than 44
million customers in the United States and 14 other countries.
Consistently recognized for customer satisfaction, BellSouth
provides a full array of broadband data solutions to large,
medium and small businesses. In the residential market,
BellSouth offers DSL high-speed Internet access, advanced voice
features and other services. BellSouth offers long distance
service for both business and consumer customers in Alabama,
Georgia, Kentucky, Louisiana, Mississippi, North Carolina and
South Carolina. The company's BellSouth(R) Answers package
combines local and long distance service with an array of
calling features; wireless data, voice and e-mail services; and
high-speed DSL or dial-up Internet service. BellSouth also
provides online and directory advertising services through
BellSouth(R) Real Pages(SM).com and The Real Yellow Pages(R).
BellSouth owns 40 percent of Cingular Wireless, the nation's
second largest wireless company, which provides innovative data
and voice services.
TITANIUM METALS: S&P Further Junks Preferred Share Rating
---------------------------------------------------------
Standard & Poor's Ratings Services lowered its preferred stock
rating on Titanium Metals Corp., to single-'C' from triple-'C'-
minus following the company's announcement that it plans to
defer future dividend payments on its preferred stock.
Standard & Poor's said that it has affirmed its single-'B'-minus
corporate credit rating on the company. The outlook remains
negative.
Titanium Metals has announced that it intends to exercise its
right under the terms of its convertible trust preferred
securities to defer future dividend payments for a period of up
to 20 consecutive quarters. Standard & Poor's credit analyst
Thomas Watters said that the preferred stock rating will be
lowered to 'D' after TIMET defers the dividend payment on
December 31, 2002.
Standard & Poor's said that its ratings reflect Denver,
Colorado-based Titanium Metal's position as an integrated
producer of titanium sponge and mill products, as well as poor
profitability and cash flow, very weak end-market conditions,
and declining liquidity.
TRANSCARE CORPORATION: SDNY Court Fixes November 13 Bar Date
------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
fixes November 13, 2002, as the deadline by which creditors of
Transcare Corporation and its debtor-affiliates must file their
proofs of claim or be forever barred from asserting that claim.
Proofs of claims are not required to be filed on or before the
Bar Date by creditors asserting or holding these 11 types of
claims:
a) Claims properly filed with the Court;
b) Claims not listed on the Schedules, as "disputed,"
"contingent," or "unliquidated;"
c) Claims has been paid or otherwise satisfied by the
Debtors;
d) Claims previously allowed by an order of this Court;
e) Claims of current officers or directors of a Debtor for
indemnification and/or contribution arising due to such
officer's or director's service to a Debtor;
f) Claims held by holders of equity interests in any of the
Debtors including holders of:
(i) any share in a corporation, whether common or
preferred,
(ii) any partnership interest in a partnership, whether
general or limited, and
iii) any membership interest in a limited liability
company, or
(iv) a warrant, option or right to purchase or
subscribe to any such equity interest to the
extent such claim arises solely from their
ownership of such equity interest;
g) Claims governed by Bankruptcy Rule 3002(c)(1);
h) Claims held by any current employee of a Debtor for
unpaid wages, salaries, commissions, severance or
benefits incurred in the ordinary course of business;
i) Claims of the Prepetition Senior Lenders;
j) Claims allowable under the Bankruptcy Code as expenses
of administration; and
k) Claims of Debtors against other Debtors.
Proofs of claim to be deemed timely-filed must be received on or
before 4:30 p.m. on the Bar Date by the Clerk of the Bankruptcy
Court at:
(if mailed) (if sent by overnight courier,
hand delivery, or messenger)
United States Bankruptcy Court United States Bankruptcy Court
TransCare Claims Processing TransCare Claims Processing
P.O. Box 5152 One Bowling Green
Bowling Green Station Room 534
New York, New York 10274-5152 New York, New York 10004-1408
TransCare, a privately held corporation, is one of the largest
privately owned providers of ambulance and ambulette services in
the United States, providing both emergency and non-emergency
services, primarily on a fee-for-service basis. The Company
filed for chapter 11 protection on September 9, 2002. Matthew
Allen Feldman, Esq., at Willkie Farr & Gallagher represents the
Debtors in their restructuring efforts. When the Debtors sought
protection from its creditors, it listed an estimated assets of
$10 million to $50 million and debts of over $100 million.
TRENWICK: S&P Keeping BB Counterparty Ratings on Watch Negative
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its counterparty
credit and financial strength ratings on members of the Trenwick
Group Ltd., by various degrees.
Standard & Poor's also said these companies remain on
CreditWatch with negative implications, where they were placed
on October 21, 2002.
"The lowered ratings are the result of Trenwick America
Reinsurance Co., no longer writing business on its own paper,
the considerable uncertainty about whether its banks will renew
letters of credit that allow continued underwriting at Lloyds,
and by the potential for additional reserve development signaled
by the announcement of a fourth-quarter 2002 reserve study,"
said Standard & Poor's credit analyst Karole Dill Barkley.
Standard & Poor's believes that the operating companies may be
placed into runoff. TARCO no longer writes business on its own
paper but rather has entered into an underwriting arrangement
with Chubb Re to front renewals of TARCO business on its behalf.
This arrangement reflects a significantly reduced business
position prospectively, with long-term implications as yet
uncertain.
The counterparty credit and financial strength ratings on
Insurance Corp., of New York and Dakota Specialty Insurance Co.
were lowered to double-'B' from triple-'B'. The counterparty
credit and financial strength ratings on Trenwick International
Ltd. were lowered to single-'B'-plus from double-'B'-plus and
the counterparty credit and financial strength ratings on
Chartwell Insurance Co. were lowered to single-'B'-plus from
double-'B'. Standard & Poor's believes that certain operating
companies may be placed into runoff.
The creditors under Trenwick's credit agreement will decide
whether to renew and extend their $230 million letters of credit
by November 22, 2002. If the banks elect not to renew the
letters of credit or to demand cash collateral, there is
substantial doubt as to Trenwick's ability to continue
underwriting at Lloyds or continue as an ongoing concern.
Management has disclosed that Trenwick and/or one or more of its
subsidiaries may be forced to seek protection from creditors.
Standard & Poor's will continue to monitor developments at
Trenwick in the next few weeks, and will review these ratings on
the release of third-quarter financial information, following
the bank decision whether to extend its letters of credit at
Lloyds, following the completion and Standard & Poor's review of
a third-party reserve study currently underway for all key
operating platforms, and after any other material developments.
After the review, Standard & Poor's ratings could be affirmed or
lowered.
TRENWICK GROUP: Moody's Drops Ratings Due to Weak Fin'l Profile
---------------------------------------------------------------
Moody's Investors Service lowered the ratings of Trenwick Group
Ltd. and its rated subsidiaries. The rating actions are due to
Moody's concerns over the company's weak liquidity, debt
maturities, and uncertainty of future business prospects.
The lowered ratings are:
Trenwick Group Ltd.
-- prospective preferred stock shelf to (P)Caa2 from (P)B2;
Trenwick America Reinsurance Corporation
-- insurance financial strength to Ba3 from Baa3;
Trenwick America Corporation
-- senior unsecured debt to B3 from Ba3;
-- prospective senior unsecured debt shelf to (P)B3 from (P)Ba3;
-- prospective subordinated debt shelf to (P)Caa1 from (P)B1;
Trenwick Capital Trust I
-- trust preferred stock to Caa1 from B1;
Trenwick America Capital Trust I, II and III
-- prospective trust preferred stock shelf to (P)Caa1 from
(P)B1;
LaSalle Re Holding Limited
-- preferred stock to Caa2 from B2.
Moody's is also concerned of the company's violation of a
revolving credit facility covenant, making the debt due and
demandable. The Investors service believes that Trenwick doesn't
have the cash to meet such obligation as well as repay senior
notes maturing in April 2003.
Trenwick Group Ltd., based in Bermuda, through its operating
subsidiaries, is engaged in providing insurance and reinsurance
for property and casualty risks, both internationally and in the
US, through the broker market.
UNIFORET INC: US Noteholders-Creditors' Meeting Set for Nov. 25
---------------------------------------------------------------
Uniforet Inc., and its subsidiaries, Uniforet Scierie-Pate Inc.,
and Foresterie Port-Cartier Inc., announced that, further to the
judgment rendered by the Quebec Superior Court on October 23,
2002, dismissing the proceedings instituted by a group of US
Noteholders who were contesting the composition of the class of
US Noteholders-creditors, the meeting of that class will be held
on November 25, 2002 at 11:00 a.m., in Montreal, to vote on the
Company's amended plan of arrangement.
The holding of that meeting had been suspended further to the
institution of those proceedings. On the other hand, the
meetings of all the other classes of creditors were held on
August 15, 2001.
In the meantime, the Company continues to benefit from the Court
protection afforded to the Company under the "Companies'
Creditors Arrangement Act" and intends to keep on its current
operations. Suppliers who will provide goods and services
necessary for the operations of the Company will continue to be
paid in the normal course of business.
Uniforet Inc., is an integrated forest products company which
manufactures softwood lumber and bleached chemi-thermomechanical
pulp. It carries on its business through its subsidiaries
located in Port-Cartier (pulp mill and sawmill) and in the
P,ribonka area in Quebec (sawmill). Uniforet Inc.'s securities
are listed on The Toronto Stock Exchange under the trading
symbol UNF.A, for the Class A Subordinate Voting Shares, and
under the trading symbol UNF.DB, for the Convertible Debentures.
UNIROYAL TECH.: UST Balks at Buccino's Engagement as Advisors
-------------------------------------------------------------
As previously reported in the Troubled Company Reporter on
September 10, 2002, Uniroyal Technology Corp., asked the U.S.
Bankruptcy Court for the District of Delaware for permission to
employ Buccino & Associates, Inc., as its restructuring
consultants and financial advisors in connection with the
company's chapter 11 cases.
Donald F. Walton, the Acting United States Trustee for Region 3,
objects to the Debtors' application to employ Buccino &
Associates on two bases:
A) The Engagement Letter provides that Buccino is to bill
Uniroyal weekly and that invoices are to be paid upon
presentation.
As a professional to be employed by this estate, the UST
believes that Buccino must comply with all appropriate
court rules and with the Order Establishing Procedures for
Interim Compensation and Reimbursement of Expenses for
Chapter 11 Professionals and Committee Members in this
case. "Buccino may not attempt to exempt itself from the
provisions of the Bankruptcy Code," the UST adds.
B) Buccino's request for indemnification does not permit the
UST to further review the proposed indemnification
provisions.
Uniroyal Technology Corporation and its subsidiaries are engaged
in the development, manufacture and sale of a broad range of
materials employing compound semiconductor technologies, plastic
vinyl coated fabrics and specialty chemicals used in the
production of consumer, commercial and industrial products. The
Company filed for chapter 11 protection on August 25, 2002 Eric
Michael Sutty, Esq., and Jeffrey M. Schlerf, Esq., at The Bayard
Firm represent the Debtors in their restructuring efforts. When
the Debtors filed for protection from its creditors, it listed
$85,842,000 in assets and $68,676,000 in debts.
UNITRONIX CORP: Dan Clasby Expresses Going Concern Doubt
--------------------------------------------------------
"[T]he Company has suffered recurring losses from operations and
has a net capital deficiency that raise substantial doubt about
its ability to continue as a going concern," Dan Clasby &
Company says in its Auditors Report dated September 26, 2002,
delivered to Unitronix Corp.'s board of directors.
Unitronix Corporation has historically been in the business of
licensing PRAXA software, which operates on VAX and Alpha
Computers manufactured by Compaq Computer Corporation, and
providing software maintenance, training, consulting and custom
programming services in conjunction with the PRAXA software.
Because of the deficiencies of PRAXA and the projected costs of
developing a new product for the highly competitive
manufacturing system marketplace, the Company recently changed
its focus so that it is now concentrating on developing products
and services for use in the mineral exploration, mining and
related industries. This business segment consists of the
business of the Company's former majority owned subsidiary,
Interactive Mining Technologies, LLC. The Company has also
formed two subsidiaries, both of which are wholly owned, to use
the Company's mineral potential analysis tool to identify
properties of merit for eventual joint venture or sale.
IMT had been the majority shareholder of EnerSource Mapping,
Inc., (ESM), a Canadian corporation that was engaged in
producing and marketing tenement maps to the mining, exploration
and investment communities. IMT's shares of ESM were sold to
Goldsat Mining, Inc., a Canadian corporation engaged in mineral
exploration and development in Canada, who was the only other
shareholder in both IMT and ESM.
The Company has continued to incur losses from operations and
has a working capital deficit as of June 30, 2002 of $971,398,
notes payable to its principal shareholder of $612,274 and other
notes payable of $103,500. As a result, management anticipates
that additional financing will be required in the very near
future to sustain the Company's operations and to repay the
notes. Management's plans for continuing their operations and
to repay the notes include developing new products and services
to sell, raising additional funds from new and existing
investors and generating revenues from the sale of existing
products and services. In addition the Company is attempting to
sell the PRAXA software sales and support business. There can
be no assurance that the Company will obtain new products or
services to sell, the financing or the product revenues needed
to continue its operations and to repay the notes.
US AIRWAYS: Committee Taps Ernst & Young for Financial Advice
-------------------------------------------------------------
The Official Committee of Unsecured Creditors, appointed in the
chapter 11 cases involving US Airways Group Inc., and its
debtor-affiliates, seeks the Court's authority to retain Ernst &
Young Corporate Finance as financial advisors, a unit of Ernst &
Young.
Committee Chairman R. Douglas Greco, Senior Director in Sales
Finance for Airbus North America Holdings, relates that E&YCF
has extensive experience in and knowledge of business
reorganizations under Chapter 11 of the Bankruptcy Code.
Mr. Greco assures the Court that E&YCF is a disinterested party.
The firm searched its client database from 1998 and forward to
identify any connection or relationship with:
(a) The Debtors and their affiliates;
(b) The Debtors' officers and directors;
(c) The equity shareholders with more than 20% of common stock;
(d) The Debtors' major secured creditors;
(e) The Debtors' largest unsecured creditors;
(f) The Debtors' counsel and Investment Banker; and
(g) Financial advisors and counsel to other parties-in-interest.
Mr. Greco attests that E&YCF does not hold or represent an
interest adverse to the Committee that would impair its ability
to objectively perform professional services for the Committee,
in accordance with Section 327 of the Bankruptcy Code.
As financial advisor, E&YCF is expected to:
(a) analyze the Debtors' current financial position;
(b) analyze the Debtors' business plans, cash flow
projections, restructuring programs and other reports or
analyses prepared by the Debtors or their professionals in
order to advise the Committee on the viability of the
continuing operations and the reasonableness of
projections and underlying assumptions;
(c) analyze the financial ramifications of proposed
transactions for which the Debtors seek Bankruptcy Court
approval including, DIP Financing, assumption/rejection of
contracts, asset sales, management compensation and/or
retention and severance plans;
(d) analyze the Debtors' internally prepared financial
statements and related documentation to evaluate the
Debtors' performance as compared to its projected results
on an ongoing basis;
(e) attend and advise at Committee meetings, its counsel,
other financial advisors and representatives of the
Debtors;
(g) prepare hypothetical liquidation analyses;
(h) render testimony on the Committee's behalf;
(i) provide other services as requested by the Committee and
agreed to by E&YCF.
E&YCF's current hourly rates for professional services are:
Managing Directors/Principals $575 - 650
Directors 475 - 545
Vice Presidents 375 - 475
Associates 320 - 340
Analysts 275
Client Services Associates 140
Pursuant to a subcontract agreement between E&YCF and E&Y, E&Y
may be requested by E&YCF from time to time to perform certain
professional services on the Committee's behalf. For
administrative ease, E&YCF will be solely responsible for the
collection of E&Y's compensation and expenses for any necessary
services rendered in these cases at its usual hourly rates. The
rates will be clearly articulated in any fee statement or
application, as separate and distinct from services performed by
E&YCF. The funds will be conveyed from E&YCF to E&Y after
collection.
The current hourly rates for E&Y professional services are:
Partners/Principals $600 - 700
Senior Managers 450 - 550
Managers 335 - 475
Seniors 225 - 350
Staff 115 - 235
Mr. Greco assures Judge Mitchell that E&YCF will work with other
professionals to minimize expenses and avoid duplication of
services. (US Airways Bankruptcy News, Issue No. 12; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
U.S. DIAGNOSTIC: Court Okays Sale of Business to Presgar Medical
----------------------------------------------------------------
US Diagnostic Inc., (OTCBB:USDL) announced that on Friday
October 25, 2002, the United States Bankruptcy Court for the
Southern District of Florida, approved its motion for sale of
substantially all of its operating assets, including all 21 of
its diagnostic imaging centers.
On September 12, 2002, USD signed a definitive agreement to sell
its diagnostic imaging business to DVI Financial Services Inc.,
or its designee. DVIFS, together with DVI Business Credit
Corporation, is the Company's primary senior lender. DVIFS has
assigned its purchase rights under the definitive agreement to
an affiliate of PresGar Medical Imaging, Inc., a privately held
company that owns and operates a number of diagnostic imaging
centers in various locations around the country. Pursuant to the
definitive agreement, PresGar will acquire substantially all of
the assets and will assume specified liabilities and contracts
of USD and its subsidiaries which own and operate 21 fixed site
diagnostic imaging facilities. DVI will reserve its rights to
secured claims against certain USD property. On September 13,
2002, USD and certain of its non-operating subsidiaries filed
for a Chapter 11 bankruptcy case under the United States
Bankruptcy Code in United States Bankruptcy Court for the
Southern District of Florida.
USD anticipates that its diagnostic imaging centers will
continue to operate as usual pending completion of the sale. The
closing on the sale is expected to occur in November 2002.
US Diagnostic is an independent provider of radiology services
with locations in nine states and owns and operates 21 fixed
site diagnostic imaging facilities.
USDATA CORP: Working Capital Deficit Narrows to $590K at Sept 30
----------------------------------------------------------------
USDATA Corporation (Nasdaq:USDC), a global provider of
industrial automation software and services, announced operating
results for the third quarter of 2002.
The company reported revenues of $2.0 million for the third
quarter of 2002, a 38% decrease when compared to $3.3 million
for the third quarter of 2001. Revenues of $7.3 million for the
nine months ended 2002 declined 31% when compared to $10.6
million for the same period in 2001.
Loss from operations was $1.0 million for the third quarter of
2002 compared to $1.7 million for the third quarter of 2001.
Included in the 2001 loss from operations was a $1.1 million
restructuring charge related to excess office lease space and a
$391,000 charge for impaired capitalized software development
due to strategy changes of our suppliers. Loss from operations
for the nine months ended 2002 was $2.3 million compared to $2.1
million for the same period in 2001. Included in the loss from
operations for the nine months ended 2002 is a $356,000
restructuring charge related to the company's amendment to its
office lease agreement in the first quarter of 2002. The amended
office lease agreement reduced the company's corporate
headquarters office lease space by approximately 44,400 square
feet and will result in a cash savings of approximately $1.0
million in lease costs during 2002.
Net loss applicable to common stockholders was $3.5 million for
the third quarter of 2002, or a loss of $1.20 per common share,
compared to net loss applicable to common stockholders of $3.0
million in 2001, or a loss of $1.05 per common share. Net loss
applicable to common stockholders for the nine months ended 2002
was $6.2 million, or a loss of $2.17 per common share, compared
to net loss applicable to common stockholders of $12.3 million
in 2001, or a loss of $4.35 per common share.
At September 30, 2002, the Company's working capital deficit
narrows to about $590,000.
Bob Merry, President and Chief Executive Officer of USDATA
commented on today's announcement, "Although we are disappointed
with our third quarter revenue performance, we are pleased with
our continued focus on expense management which resulted in a
38% decline in operating expenses." Mr. Merry continues, "We
believe the combination of expense management and implementation
of a total solutions strategy, initiated with the recent
acquisition of Wizard Information Systems, Ltd., will assist in
a return to profitability."
Now in its 28th year, USDATA Corporation, headquartered in
Richardson, Texas, is a leading global provider of software and
services that give enterprises the knowledge and control needed
to perfect the products they produce and the processes they
manage. Based upon a tradition of flexible service, innovation
and integration, USDATA's software currently operates in more
than 60 countries around the globe, including seventeen of the
top twenty-five manufacturers. USDATA's software heritage has
emerged from manufacturing and process automation solutions and
has grown to encompass vast product knowledge and control
solutions. The company has a global network of distribution and
support partners. For more information, visit USDATA at
http://www.usdata.com
VENTAS INC: Third Quarter 2002 Normalized FFO Slides-Up 32%
-----------------------------------------------------------
Ventas, Inc., (NYSE:VTR) announced that normalized Funds From
Operations for the third quarter of 2002 increased 32 percent
over the comparable 2001 period to $26.3 million or $0.37 per
diluted share. FFO for the comparable period in 2001 totaled
$19.3 million or $0.28 per diluted share. Normalized FFO for the
2002 second quarter was $23.0 million or $0.33 per diluted
share.
Net income for the third quarter ended September 30, 2002, was
$17.1 million or $0.24 per diluted share, compared with $9.2
million or $0.13 per diluted share for the comparable 2001
period. Third quarter 2002 earnings included a $2.2 million tax
benefit as the result of a 2001 recorded federal tax liability
that is no longer due based on a change in estimate.
Normalized FFO for the first nine months of 2002 was $71.3
million or $1.02 per diluted share, a 20 percent increase from
the same period in the prior year of $59.0 million or $0.85 per
diluted share. After income from discontinued operations of
$23.8 million or $0.34 per share and an extraordinary loss of
$6.9 million or $0.10 per share, net income for the nine months
ended September 30, 2002 was $56.3 million or $0.80 per diluted
share compared with $27.8 million or $0.40 per diluted shares in
the first nine months of 2001.
Normalized FFO excludes the gain on the sale of equity in the
Company's primary tenant Kindred Healthcare, Inc. (Nasdaq:KIND)
and a one-time net loss on swap breakage incurred in conjunction
with the Company's refinancing, which was completed in April
2002.
"The third quarter was significant because we began to fully
implement our strategic business plan with our announced
investment in 27 healthcare and senior housing assets in Ohio
and Maryland and the important appointment of Raymond J. Lewis
as our new chief investment officer. We are now looking forward
to more diversification activity," Ventas President and CEO
Debra A. Cafaro said. "At the same time, our financial
performance continues to improve with meaningful balance sheet
strengthening and earnings growth."
Third Quarter Highlights And Other Recent Developments
-- Ventas announced an agreement to invest $120 million
with Trans Healthcare, Inc., a privately owned long-term care
and hospital company, in a transaction that covers 27 properties
in Ohio and Maryland.
-- Ventas appointed Raymond J. Lewis as Senior Vice
President and Chief Investment Officer.
-- The Company reduced its outstanding debt balances to
$786 million at September 30, 2002.
-- From July 1 through September 30, 2002, Ventas sold a
total of 40,000 shares of Kindred common stock at an average
price of $41.20 per share. It currently holds 920,814 shares of
Kindred stock.
-- Kindred announced on October 10, 2002, that it would
have substantial increases in its professional liability
expenses and is considering withdrawal from the Florida skilled
nursing market where it leases 15 facilities from Ventas. Ventas
said rent from the facilities is about 4.5 percent of the total
$187 million in annualized rent it receives from Kindred. Ventas
said it is working with Kindred and potential operators of the
Florida facilities to craft a successful outcome for both Ventas
and Kindred.
-- The 253 skilled nursing facilities and hospitals leased
to Kindred produced EBITDAR to rent coverage of 1.85x for the
trailing twelve month period ended June 30, 2002.
THIRD QUARTER RESULTS
Rental income for the quarter ended September 30, 2002, was
$47.7 million, of which $47.1 million resulted from leases with
Kindred. Expenses for the quarter ended September 30, 2002
totaled $34.2 million and included $10.4 million of depreciation
expenses; $18.8 million of interest expense on debt financing;
and $1.3 million of interest expense on the Company's settlement
with the Department of Justice. Professional fees for the third
quarter totaled $0.9 million.
NINE MONTH RESULTS
Rental income for the nine months ended September 30, 2002 was
$140.9 million, of which $139.3 million resulted from leases
with Kindred. Expenses for the nine months ended September 30,
2002 totaled $109.7 million and included $31.2 million of
depreciation on real estate assets, $57.7 million of interest
expense and $4.2 million of interest on the Department of
Justice settlement. In addition, the Company reported a one-time
$5.4 million net loss on the $350 million swap breakage incurred
in connection with the Company's debt refinancing. Also during
the period, the Company reclassified to discontinued operations
the results of operations specifically related to assets sold or
held for sale on or after January 1, 2002, including the sale of
its hospital in Arlington, Virginia in the 2002 second quarter.
This reclassification, which is required under the newly
effective FAS 144, affects the presentation of results for the
current and prior periods, but does not impact the Company's net
income or
FFO.
FFO GUIDANCE
Ventas said that based on the third quarter results it is
increasing its normalized 2002 FFO guidance to $1.35 to $1.36
per diluted share from previous guidance of $1.28 to $1.30 per
share. The Company also reaffirmed its 2003 normalized FFO
guidance of $1.43 to $1.45 per diluted share. In each case, the
guidance excludes gains and losses, the non-cash effect of swap
ineffectiveness under FAS 133 and the impact of acquisitions,
divestitures and other capital transactions. The Company may
from time to time update its publicly announced FFO guidance,
but it is not obligated to do so.
The Company's FFO guidance is based on a number of assumptions,
which are subject to change and many of which are outside the
control of the Company. If any of these assumptions vary, the
Company's results may change. There can be no assurance that the
Company will achieve these results.
Ventas, Inc., is a healthcare real estate investment trust whose
properties include 43 hospitals, 215 nursing facilities and
eight personal care facilities in 36 states. More information
about Ventas can be found at its website at www.ventasreit.com.
At September 30, 2002, Ventas' total shareholders' equity
deficit widens to about $126 million.
WARNACO: Taps Keen Realty to Market 25 Closing CK Jeans Outlets
---------------------------------------------------------------
Warnaco Inc., the New York based apparel manufacturer/retailer,
has retained Keen Realty, LLC to assist the company in the
disposition of 25 premier locations currently operating as
Calvin Klein Jeans Outlet Stores. Offers are now being accepted
on the available leaseholds and an auction is being considered.
Keen Realty is a real estate firm specializing in restructuring
retail real estate and lease portfolios and selling excess
assets. Warnaco filed for Chapter 11 bankruptcy court protection
on June 11, 2001.
"The available Calvin Klein Jeans Outlet Stores are located in
some of the country's strongest outlet centers - including
Woodbury Commons, Sawgrass Mills, Belz Factory Outlet World in
Las Vegas, and many others. In fact, thirteen of the available
locations were top-ranked in Value Retail News in either or both
of the last two years", said Craig Fox, Keen Realty's Vice
President. "The closing of Warnaco's entire Calvin Klein Jeans
Outlet Store retail division therefore represents an excellent
opportunity for an outlet retailer looking to expand. We are
encouraging prospective purchasers to put in their bids
immediately so that credible offers can be considered."
Available to users are Calvin Klein Jeans Outlet Store
leaseholds located in Alabama, California, Colorado,
Connecticut, Florida, Georgia, Massachusetts, Maine, Nevada, New
York, and Texas. The sites range in size from 3,800 square feet
to 10,800 square feet.
For over 20 years, Keen Consultants, LLC has had extensive
experience solving complex problems and evaluating and selling
real estate, leases and businesses in bankruptcies, workouts and
restructurings. Keen Consultants, a leader in identifying
strategic investors and partners for businesses, has consulted
with over 130 clients nationwide, evaluated and disposed of over
165,000,000 square feet square of properties and repositioned
nearly 9,000 stores across the country.
Companies that the firm has advised include: Northern
Reflections, Edison Bros., Cosmetic Center, Long John Silver,
Caldor, Citibank, N.A. (Ames Dept. Stores), Cumberland Farms,
Fayva Shoe, Herman's Sporting Goods, K-Mart, Merry-Go-Round
Stores, Neiman Marcus, Petrie Retail Inc., and Woodward &
Lothrop. Most recently Keen has sold over $125 million of excess
properties for Family Golf Centers, $80 million of excess
properties for Service Merchandise, raised approximately $5
million for Filene's Basement, $4 million for CODA/Jeans West,
and raised $5.5 million for Learningsmith Inc. In addition to
Warnaco, other current clients include: Cooker Restaurant Corp.,
Matlack Truck Systems, Inc., American Candy, Sweet Factory,
Museum Company, Footstar, and Meadowcraft.
WORKGROUP TECHNOLOGY: Enters Pact to Sell Assets to SofTech Inc.
----------------------------------------------------------------
SofTech, Inc. (OTCBB:SOFT), has entered into an agreement in
principle with Workgroup Technology Corporation (Nasdaq:WKGP) to
acquire WTC for $2.00 per share in cash. Funding to complete the
transaction has been committed to SofTech by its lender. All
other terms of the transaction, including the structure, are to
be set forth in a mutually acceptable definitive agreement.
There can be no assurance that such a transaction will be
concluded.
"Over the last 18 months we have successfully restructured our
business to generate positive cash flow while at the same time
bringing our customer base the enhancements they want on a
timely basis," said Joe Mullaney, President and COO of SofTech.
"WTC's technology is complementary to our product offerings and
we believe this acquisition will benefit the customers,
employees, shareholders and the lender of the combined
business."
* * *
The Company has generated continued losses from operations which
has reduced its cash balances. At September 30, 2002, the
Company had cash and cash equivalent balances totaling
$2,301,000 and working capital of $552,000, each of which
represent significantly lower liquidity than in the prior year.
The Company intends to continue to take appropriate action to
manage its expenses commensurate with the level of sales
expected. Among other things, these actions may include a
restructuring of its operations. Management believes that cash
and cash equivalent balances at September 30, 2002 are
sufficient, combined with management's intent and ability to
reduce expenditures, to meet its operating and capital
expenditure requirements and maintain positive liquidity at
least through March 31, 2003.
At September 30, 2002, Workgroup's balance sheets show that the
Company's total shareholders' equity has dwindled to about
$715,000 from about $1.7 million recorded at March 31, 2002.
WORLDCOM: Court Approves Proposed Dispute Resolution Procedures
---------------------------------------------------------------
Worldcom Inc., and its debtor-affiliates obtained the Court's
approval of its proposed expedited alternative dispute
resolution procedures for postpetition billing disputes with the
Utility Companies.
The terms of the dispute resolution procedures are:
A. A Dispute will exist where the Debtors have, in good faith
and upon written request from a Utility Company, supplied the
Utility Company with:
-- a writing setting forth the reasons for not paying an
invoice, and
-- supporting documentation promptly following the request;
provided, however, that, if the parties' contract, tariff,
or applicable regulation supplies both a format and a time
period for disputing an invoice, that format and time
period will control.
Because these procedures are intended as additional adequate
assurance to the Utility Companies, any Utility Company may
waive the application of these De Minimis Procedures as to a
particular dispute; provided, however, that Utility Companies
may not terminate Utility Service to the Debtors except in
accordance with the 5th ordered paragraph of the Utility
Order. A corporate party need not be represented by an
attorney while participating in these De Minimis Procedures
at any stage prior to a hearing in the Bankruptcy Court;
B. Any Utility Company having a De Minimis Dispute with the
Debtors that elects to invoke these De Minimis Procedures
should send written notice of its desire to initiate
proceedings regarding the Dispute to the Debtors. The
Utility Company should send the De Minimis Dispute Notice
directly to the Debtors to the attention of the person
responsible for the account in question, and to:
Robert W. Rodrigues, Esq.
WorldCom, Inc.
1133 Nineteenth Street, Washington, DC 20036
Phone: (202) 736-6865 Fax: (202) 736-6471
E-mail:robert.w.rodrigues@wcom.com
with a copy to:
Alfredo R. Perez, Esq.
Weil, Gotshal & Manges LLP
700 Louisiana, Suite 1600, Houston, Texas 77002
Phone: (713) 546-5000 Fax: (713) 224-9511
E-mail:alfredo.perez@weil.com
-and-
Christopher Marcus, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue, New York, New York 10153
Phone: (212) 310-8000 Fax: (212) 310-8007
E-mail:christopher.marcus@weil.com
C. The De Minimis Dispute Notice should contain these
information:
-- Identification of the legal entity on each side of the
transaction;
-- Identification of the specific contract or agreement
pursuant to which the alleged amounts are owed, including
any account number or other identifying information for
the account in question;
-- A concise statement of the amount in dispute; and
-- Contact information for a person with settlement authority
to resolve the matter;
D. Promptly after service of the De Minimis Dispute Notice, the
counterparties should make good faith efforts to provide each
other with information as the other may reasonably request
regarding the dispute;
E. Not later than 14 days after service of the De Minimis
Dispute Notice, the counterparties should participate in a
mandatory settlement conference, either in person or by
telephone. The settlement conference will be attended by
representatives of the Utility Company and the Debtors who
have settlement authority to resolve the matter;
F. If a De Minimis Dispute is not resolved at the mandatory
settlement conference, it should be adjudicated, within 45
days from the conclusion of the mandatory settlement
conference, before a special master. The Special Master will
conduct an evidentiary telephonic hearing and will have
authority to make a recommendation to the Court with respect
to a final resolution of the matter. To the extent either
party seeks to introduce testimony at the evidentiary
telephonic hearing, unless agreed to by the other party, all
witnesses must testify in the presence of a notary public.
The Special Master should promptly file a recommendation with
the Court and both the Debtors and the applicable Utility
Company will have 10 days to object. If any party objects to
the recommendation, the Debtors will set the matter for
hearing on a regularly scheduled hearing date and serve
notice of the hearing. Pending the hearing before the
Bankruptcy Court, to the extent the Special Master finds that
the Debtors owe money to the Utility Company, the Debtors
will, within 10 days of the filing of the Special Master's
recommendation, place the amounts in an escrow account; and
G. Within 20 days from the date upon which this Notice is filed,
all parties will have the right to recommend a person to
serve as Special Master. Unless agreed to earlier by the
parties, the Court will appoint a Special Master from among
those recommended at the first regularly scheduled hearing
after 30 days after the filing of this Notice. The Special
Master will have authority, based upon the amount and
complexity of any particular Dispute, to determine whether
and to what extent each party will bear the costs of
resolving a particular Dispute before the Special Master.
(Worldcom Bankruptcy News, Issue No. 11; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
* DebtTraders' Real-Time Bond Pricing
-------------------------------------
Issuer Coupon Maturity Bid - Ask Weekly change
------ ------ -------- --------- -------------
Federal-Mogul 7.5% due 2004 17 - 19 0
Finova Group 7.5% due 2009 28 - 30 -1
Freeport-McMoran 7.5% due 2006 87 - 89 -1
Global Crossing Hldgs 9.5% due 2009 0.5 - 1.5 0
Globalstar 11.375% due 2004 2 - 3 0
Lucent Technologies 6.45% due 2029 34 - 36 +4
Polaroid Corporation 6.75% due 2002 3.5 - 5.5 -0.5
Terra Industries 10.5% due 2005 83 - 85 0
Westpoint Stevens 7.875% due 2005 28 - 30 -2
Xerox Corporation 8.0% due 2027 36 - 38 0
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
*********
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.
*** End of Transmission ***