/raid1/www/Hosts/bankrupt/TCR_Public/021119.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, November 19, 2002, Vol. 6, No. 229
Headlines
360NETWORKS: Court Approves New Jersey Turnpike Settlement
ADELPHIA COMMS: Court OKs Greenhill & Co. as Committee's Advisor
ALLCITY INSURANCE: Narrows Third Quarter Net Loss to $2.4 Mill.
ALPINE GROUP: Sept. 30 Balance Sheet Upside-Down by $484 Million
ALTERRA HEALTHCARE: Sept. 30 Net Capital Deficit Reaches $437MM
ANC RENTAL CORP: Signs-Up Lincoln Property as New Jersey Broker
AQUILA INC: Fitch Chops Senior Unsecured Rating to BB from BBB-
ARMSTRONG HOLDINGS: Court Approves Amendment to DIP Credit Pact
ARTIFICIAL LIFE: Net Capital Deficit Tops $2.2MM at September 30
ASIA GLOBAL CROSSING DEVELOPMENT: Voluntary Ch. 11 Case Summary
ASIA GLOBAL CROSSING: Case Summary & 8 Largest Unsec. Creditors
AT&T: Declares 1-For-5 Reverse Split & Broadband's Spin-Off Date
ATLAS AIR: Seeking Waivers of Debt Covenants through Year-End
BAYOU STEEL: Will Defer Interest Payment on 9-1/2% Senior Notes
BEAR ISLAND PAPER: Violates Fin'l Covenants Under Credit Pact
BETHLEHEM STEEL: Court Approves Stipulation with Nation Union
BRAVO FOODS: September 30 Balance Sheet Upside-Down by $840K
BUDGET GROUP: Wins Approval of Purchase Pact with Cendant Unit
DELIA*S CORP: Fails to Meet Nasdaq Continued Listing Standards
DIGITALNET INC: S&P Assigns B+ Ratings over Limited Flexibility
DYNEGY INC: Sells UK Natural Gas Storage Business to Centrica
ENRON CORP: Wants Okay to Implement Overhead Allocation Formula
ENRON EXPAT: Case Summary & 2 Largest Unsecured Creditors
EOTT: Second Amended Plan's Classification & Treatment of Claims
EQUIFIN INC: AMEX Wants Plan to Regain Listing Compliance
FOCAL COMMS: Defaults Prompt Fitch to Further Junk Debt Ratings
GENESEE: Completes Liquidation Phase of Plan Adopted in 2000
GENTEK INC: Noma Wins Approval to use Debtor's Cash Collateral
GLOBAL CROSSING: Asks Court to Approve Settlement Pact with Tyco
HEALTHNOW: S&P Assigns BB Counterparty & Fin'l Strength Ratings
HORIZON NATURAL: Receives Court Approval of First-Day Motions
INVENTRONICS: Successfully Completes Balance Sheet Refinancing
IT GROUP: Wins Nod to Ratify Settlement Agreement with Insurers
KAISER ALUMINUM: Wants Removal Period Extended Until March 12
KASPER A.S.L.: Files Joint Amended Plan & Disclosure Statement
KEY3MEDIA: S&P Further Junks Rating over Restructuring Concerns
LBL SKYSYSTEMS: Wants to Start Restructuring Under BIA in Canada
LEGACY HOTELS: S&P Affirms BB+ Rating & Revises Outlook to Neg.
LERNOUT & HAUSPIE: Assigns Causes of Action to Litigation Trust
MALAN REALTY: Enters UDAG Loan Settlement with City of Chicago
MED DIVERSIFIED: Confirms Filing of Complaint vs JP Morgan et al
MEDPOINTE HEALTHCARE: S&P Keeps Watch on B+ Corp. Credit Rating
NAPSTER INC: Inks Definitive Pact to Sell Assets to Roxio Inc.
NEXELL THERAPEUTICS: Unit to File Cert. Of Dissolution by Friday
NEXTCARD INC: Case Summary & 21 Largest Unsecured Creditors
NEXTEL INT'L: Successfully Emerges from Chapter 11 Proceeding
OAKWOOD HOMES: Files for Chapter 11 Reorganization in Wilmington
OAKWOOD HOMES: Case Summary & 45 Largest Unsecured Creditors
OSE USA: Net Capital Deficiency Balloons to $35 Mil. at Sept. 30
OWENS CORNING: Gets Green Light to Transfer Funds to OC Anshan
PACIFIC GAS: Wants to Assume & Cure $7MM Injury Settlement Pact
PG&E NAT'L ENERGY: S&P Drops Corp. Credit Rating to D from B-
POLYMER GROUP: Files Modified Plan and Disclosure Statement
POSITRON INC: Red Ink Continues to Flow in Third Quarter 2002
PRIMUS TELECOMMS: Enters into Partnership with Best Buy Stores
ROYAL CREST: Ernst & Young Inc. Appointed as Interim Receiver
RURAL/METRO CORP: Reports Improved Results for 1st Quarter 2003
RXBAZAAR INC: Third Quarter 2002 Net Loss Slides-Down to $1 Mil.
SAFETY-KLEEN: Gets Nod to Expand Experio Solutions Engagement
SIRIUS SATELLITE: Reaffirms Recapitalization Plan via Debt Swap
SPORTS CLUB: Comerica Bank Extends Loan Maturity to Nov. 1, 2003
STEAKHOUSE PARTNERS: Plan Filing Exclusivity Extended to Feb. 28
SUPERIOR TELECOM: Balance Sheet Insolvency Reaches $490 Million
TENDER LOVING CARE: Look for Schedules and Statements by Dec. 26
TREND HOLDINGS: Gets Nod to Pay $5MM of Critical Vendor Claims
TRICORD SYSTEMS: Fails to Beat Form 10-Q Filing Deadline
UNION ACCEPTANCE: Has Until December 16, 2002 to File Schedules
US AIRWAYS: Philadelphia Stock Exchange Delists Options
VECTOUR: Taps Continental/Great American Joint Venture as Broker
VISKASE COMPANIES: Wants to Retain Gardner Carton as Co-Counsel
WARNACO GROUP: Judge Bohanon Approves Disclosure Statement
WHEELING-PITTSBURGH: Court Approves Amended RBC Dain Engagement
WORLDCOM: Seeks Court Nod to Assume Blockbuster Marketing Pact
XO COMMUNICATIONS: Delivers Stand-Alone Plan Supplement to Court
* Thacher Proffitt & Wood Moving to 2 World Financial Center
* Large Companies with Insolvent Balance Sheets
*********
360NETWORKS: Court Approves New Jersey Turnpike Settlement
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360networks inc., and its debtor-affiliates obtained Bankruptcy
Court approval of a Settlement Agreement with New Jersey
Turnpike Authority on these terms:
(a) 360 USA will transfer all of its rights and interest in
130 miles of the Duct and Fiber to the Authority. In
consideration of the transfer, the Authority will grant
360 USA an IRU in 12 dark fibers within the 130 miles of
Duct being surrendered to the Authority, free and clear
of all liens, claims and encumbrances. 360 USA will
retain all of its rights in the remaining 100 miles of
Duct and Fiber;
(b) 360 USA will assume the Agreement, as modified by the
Settlement, which govern the Debtor's continued use of
the 360 USA Fibers and Duct;
(c) 360 USA shall be exempt from all user and maintenance
fees associated with the 360 USA Fibers and Duct; and
(d) 360 USA and the Authority will waive and mutually
discharge all claims, if any, they have or may have up
to the date of the execution of the Settlement
Agreement. Among other things, this would result in the
Authority waiving $390,000 of fees.
As previously reported, two years ago, 360networks inc., and New
Jersey Turnpike Authority entered into an Agreement for
Indefeasible Right of Use of Duct and Dark Fiber. Under the
Agreement, the Authority granted to the Debtors the right to
build and maintain a conduit containing 144 fibers along the 230
miles of the Authority's property. In exchange, the Debtors
paid to the Authority a one-time user fee of $12,500,000 and
agreed to pay annual user and maintenance fees of $200,000.
Since the Debtors' business plan no longer requires the use of
all of the Fibers, they negotiated with the Authority for lower
fees. (360 Bankruptcy News, Issue No. 37; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ADELPHIA COMMS: Court OKs Greenhill & Co. as Committee's Advisor
----------------------------------------------------------------
The Official Committee of Unsecured Creditors in the Chapter 11
cases of Adelphia Communications and its debtor-affiliates
obtained permission from the U.S. Bankruptcy Court for the
Southern District of New York to retain the firm of Greenhill &
Co., LLC as its financial advisors during these Chapter 11 cases
effective as of July 16, 2002, the date Greenhill began to work
on behalf of the Committee.
The Committee expects Greenhill to provide financial advisory
and investment banking services including, but not limited to:
A. Reviewing and providing an analysis of the business,
operations, properties, financial condition, business plans
and forecasts and prospects of the Debtors;
B. Monitoring the Debtors' ongoing performance and addressing
issues relating to management including, without limitation,
assessing potential management candidates;
C. Evaluating the Debtors' debt capacity/capital structure in
light of its projected cash flows;
D. Reviewing and providing an analysis of any proposed capital
structure for the Debtors;
E. Reviewing and providing an analysis of any valuations of the
Debtors, as a whole and by system or other business unit, on
a going concern basis and on a liquidation basis;
F. Reviewing and providing an analysis of any proposed public or
private placement of the debt or equity securities of the
Debtors, or any loan or other financing -- including any
proposed debtor-in-possession financing, cash collateral
usage, adequate protection or exit financing;
G. Reviewing and providing an analysis of any of the Debtors'
proposed material expenditures during its Chapter 11 case;
H. Reviewing and providing an analysis of all proposed Chapter
11 plans proposed by any party;
I. In connection therewith, reviewing and providing an analysis
of any new securities, other consideration or other
inducements to be offered and issued under the Plan;
J. Assisting the Committee and participating in negotiations
with the Debtors or any groups affected by the Plan;
K. Assisting the Committee in preparing documentation within its
area of expertise required in connection with supporting or
opposing a Plan;
L. Reviewing and providing an analysis of any proposed
disposition of any material assets of the Debtors or any
offers to purchase some or substantially all of the assets of
the Debtors;
M. When and as requested by the Committee, rendering reports to
the Committee as Greenhill deems appropriate under the
circumstances including providing specific valuation or other
financial analyses as the Committee may require in connection
with the case;
N. Participating in hearings before the Bankruptcy Court with
respect to the matters upon which Greenhill has provided
advice, including, as relevant, coordinating with the
Committee's counsel to provide testimony and reports, as
appropriate, in connection therewith;
O. At the Committee's request, and in conjunction with the
Debtors' advisors, identify and pursue:
-- potential buyers of the Debtors and its systems, and
-- potential new money investors; and
P. Providing any other financial advisory services as the
Financial Advisor, the Committee and Committee's counsel may
from time to time agree in writing.
Pursuant to an Engagement Letter, the Committee outlines the
proposed compensation to Greenhill:
A. A $200,000 initial financial advisory cash fee to be due and
paid upon approval of this Application;
B. A $200,000 monthly cash fee payable on the 16th day of each
month during the term of Greenhill's engagement starting
August 16, 2002;
C. In the event of a Restructuring either during the term of
Greenhill's engagement or within 18 months thereafter, a
$3,500,000 additional fee, which will be payable on the date
of the Restructuring;
D. In the event of a Restructuring either during the term of
Greenhill's engagement or within 18 months thereafter, an
additional fee will be payable either on the date of the
Restructuring in the event that the fee is to be paid solely
in the form of cash or, in any other case, as soon as
practicable thereafter as determined by the Committee and
Greenhill but not later than 25 business days after the
Restructuring is consummated.
In the event that the Supplemental Transaction Fee is
payable, it will be payable to Greenhill in the same
proportion of cash and non-cash consideration as the
distribution the Unsecured Creditors receive on account of
their unsecured claims, as a group, pursuant to the
Restructuring; provided, however, that the Supplemental
Transaction Fee will be payable entirely in cash either:
-- if the Committee so elects, or
-- if Greenhill would be subject to more stringent trading
restrictions with regard to any non-cash instruments
distributed pursuant to the Restructuring than any member
of the Committee.
The Supplemental Transaction Fee will be equal to the greater
of $0 and:
-- 11.25 basis points multiplied by the Unsecured Creditors'
Recovery less,
-- $3,500,000 less,
-- the amount by which the aggregate Monthly Advisory Fees
received by Greenhill exceeds $1,000,000.
Notwithstanding the foregoing, the fair market value of the
Supplemental Transaction Fee should not exceed either:
-- $6,500,000 if a Restructuring is consummated prior to
December 25, 2004 or
-- $8,000,000 if a Restructuring is consummated on or after
December 25, 2004; and
E. In addition to any fees that may be payable to Greenhill and
regardless of whether any transaction occurs the Debtors will
promptly reimburse Greenhill for all:
-- reasonable out-of-pocket expenses including travel and
lodging, data processing and communications charges,
courier services and other appropriate expenditures and
-- other reasonable fees and expenses, including expenses of
counsel, if any. (Adelphia Bankruptcy News, Issue No. 23;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
DebtTraders says, Adelphia Communications' 10.875% bonds due
2010 (ADEL10USR1) are trading at 35 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL10USR1
for real-time bond pricing.
ALLCITY INSURANCE: Narrows Third Quarter Net Loss to $2.4 Mill.
---------------------------------------------------------------
Allcity Insurance Company (ALCI-OTCBB) announced its operating
results for the nine month period ended September 30, 2002 and
reported a net loss of $2,420,000 for the nine months ended
September 30, 2002 compared to a net loss of $18,913,000 for the
comparable 2001 period.
Net earned premium revenues of the Company were $3,727,000 and
$14,949,000 for the nine month periods ended September 30, 2002
and 2001, respectively. The Company's earned premiums declined
in all lines of business during the nine month period ended
September 30, 2002 as a result of actions announced during late
2000 and the first quarter of 2001. As announced in December
2001, the Group (which includes the Company and Empire Insurance
Company, the Company's parent) determined that it was in the
best interest of its shareholders and policyholders to commence
an orderly liquidation of all of its operations. The Group will
only accept business that it is obligated to accept by contract
or New York insurance law; it will not engage in any other
business activities except for its claims runoff operations. The
voluntary liquidation of its operations is expected to be
substantially complete by 2005. Given the Group's and the
Company's current financial condition, the expected costs to be
incurred during the claims runoff period, and the inherent
uncertainty over ultimate claim settlement values, no assurance
can be given that the Company's shareholders will be able to
receive any value at the conclusion of the voluntary liquidation
of its operations.
Included in the Company's pre-tax losses were increases for loss
and loss adjustment expenses for prior accident years of
$1,100,000 and $17,700,000 for the nine month periods ended
September 30, 2002 and 2001, respectively. In addition, during
the nine month period ended September 30, 2001, the Company
wrote-off approximately $2,600,000 of deferred policy
acquisition costs as their recoverability from premiums and
related investment income was no longer anticipated. Results for
2002 also included $1,385,000 of net securities gains compared
to $1,463,000 of net securities gains for the comparable 2001
period.
In the quarter ended September 30, 2002, the Company paid to its
shareholders a $0.335 per share cash dividend aggregating
$2,371,340. The Dividend had the effect of increasing the stand-
alone statutory surplus of Empire by approximately $2,000,000.
At September 30, 2002, Empire's stand-alone statutory surplus
exceeded the minimum statutory surplus requirement of $3,300,000
by approximately $4,500,000. In the event that Empire's stand-
alone statutory surplus declines below the minimum in the
future, no assurance can be given that material adverse
regulatory action will not be taken against Empire (which could
adversely affect the Company's ability to collect its
reinsurance balances receivable from Empire, the outstanding
balance of which was approximately $99,000,000 at September 30,
2002) or the Company.
ALPINE GROUP: Sept. 30 Balance Sheet Upside-Down by $484 Million
----------------------------------------------------------------
The Alpine Group, Inc., (OTC: ALPG.OB) reported results for its
third quarter ended September 30, 2002.
Alpine reported consolidated sales of $368 million for the 2002
third quarter, comprised entirely of the sales of Alpine's
subsidiary, Superior TeleCom Inc. (OTC Bulletin Board: SRTO.OB).
Sales declined 12% (on a copper-adjusted basis) as compared to
sales of $420 million for the third quarter of 2001. The
comparative 2002 sales decline was primarily attributable to
industry-wide conditions impacting demand for Superior's telecom
cable products. Alpine's consolidated loss before impairment
charges related to Superior asset sales for the quarter ended
September 30, 2002 was $18.0 million (including $17.6 million in
consolidated losses of Superior), compared with a net loss for
the quarter ended September 30, 2001 of $2.5 million (including
$2.0 million in consolidated net losses of Superior).
For the nine months ended September 30, 2002, Alpine reported
consolidated sales of $1.137 billion, comprised entirely of the
sales of Superior. Sales declined 16% (on a copper-adjusted
basis) as compared to sales of $1.385 billion for the
comparative 2001 period. Alpine's consolidated loss before
impairment charges related to Superior asset sales,
extraordinary gain and cumulative effect of accounting change
for goodwill impairment for the nine months ended September 30,
2002 was $65.5 million or $4.42 per diluted share (including
$64.0 million in consolidated losses of Superior), compared with
a net loss for the nine months ended September 30, 2001 of $26.4
million or $1.82 per diluted share (including (i) $5.4 million
in consolidated net losses of Superior and (ii) $17.4 million
(after tax) charge for writedown of investment).
The Alpine Group's September 30, 2002 balance sheet shows a
working capital deficit of about $940 million, and a total
shareholders' equity deficit of about $484 million.
Steven S. Elbaum, Chairman and Chief Executive Officer stated
that, "Alpine's consolidated loss for the third quarter of 2002
is solely attributable to losses incurred by Superior, which
reflects the negative impact of weak demand and significantly
lower revenues in Superior's communications and industrial cable
markets, along with impairment charges related to goodwill and
assets to be sold by Superior.
"Superior completed a major bank credit agreement amendment in
September 2002 that relaxes financial covenant requirements for
2002 and 2003 and approved Superior's plans to consummate
certain asset sales to Alpine which will generate debt reduction
for Superior, lower Superior's interest expense and strengthen
its liquidity. On November 6, 2002, Superior also completed the
refinancing of its $160 million accounts receivable
securitization facility, which can provide Superior with
adequate working capital funding into what will hopefully be an
improving demand environment in 2003.
"Superior and Alpine have recently announced a definitive
agreement for the sale by Superior to Alpine of its Electrical
wire assets and business, its DNE Systems, Inc. subsidiary and
its 50% common equity position in Superior Israel, Ltd. for a
purchase price of $85 million in cash and a 19.9% equity warrant
in the company Alpine will establish to operate the electrical
wire business.
"Following completion of the purchase transaction, Alpine plans
to no longer consolidate Superior's income statement or balance
sheet for financial reporting purposes beginning in the fourth
quarter of 2002. Through the September 30, 2002 nine month
period, Alpine has consolidated the financial statements of
Superior and, as a result, Alpine has reported substantial
losses in 2002 (all of which are associated with Superior) and
has included all of Superior's debt in its consolidated balance
sheet. Superior's indebtedness is not an obligation of Alpine
and Alpine is substantially debt free. This change in Alpine's
financial reporting will provide a clear picture of Alpine's
financial position, operating results, including the to be
acquired businesses, and Alpine's earnings, on a prospective
basis."
The Alpine Group, Inc., headquartered in New Jersey, is a
holding company for the operations of Superior TeleCom Inc.
(OTC: SRTO.OB), Alpine's consolidated subsidiary, which is the
largest North American wire and cable manufacturer and among the
largest wire and cable manufacturers in the world. Superior
TeleCom manufactures a broad portfolio of products with primary
applications in the communications, original equipment
manufacturer and electrical wire and cable markets. It is a
leading manufacturer and supplier of communications wire and
cable products to telephone companies, distributors and system
integrators; magnet wire and electrical insulation materials for
motors, transformers and electrical controls; and building and
industrial wire for applications in, construction, appliances,
recreational vehicles and industrial facilities.
ALTERRA HEALTHCARE: Sept. 30 Net Capital Deficit Reaches $437MM
---------------------------------------------------------------
Alterra Healthcare Corporation (AMEX:ALI) announced financial
results for the three-month period ended September 30, 2002, and
provided an update on restructuring activities. At quarter-end,
the Company operated or managed 400 residences with a total
capacity to serve approximately 18,800 residents.
Operating and Financial Results
In the third quarter of 2002, the Company's residence level
operating margins were 32.8%, an increase of 3.0% over residence
level operating margins in the third quarter of 2001. Monthly
rates averaged $2,842 for the quarter ended September 30, 2002,
an increase of 5.6% over the average monthly rate for the
September 2001 quarter. For the three months ended September 30,
2002, the Company reported overall average occupancy of 83.5%.
"While our portfolio occupancy is lower than we would prefer, we
continue to grow our average monthly rates resulting in a net
increase in cash flow and an improvement in operating margins.
We continue to be encouraged by the progress of our field
personnel in upgrading our operations and services. Recently we
have placed increased emphasis on employee training, quality
assurance and risk management, while we continue to advance
company-wide initiatives to strengthen our marketing program and
control costs," said Patrick Kennedy, Alterra's President and
Chief Executive Officer.
At September 30, 2002, the Company's balance sheet shows a
working capital deficit of about $880 million, while total
shareholders' equity deficit tops $437 million, from $about 267
million as recorded at December 31, 2001.
Restructuring Activities and Portfolio Rationalization
In March of 2001 the Company commenced efforts to implement a
restructuring plan, the principal components of which include
the disposition of selected assets and the comprehensive
restructuring of its capital structure. Restructuring
discussions with various senior capital structure constituents
transpired during 2001 and are ongoing through 2002. While
certain binding restructuring arrangements have been executed,
negotiations with respect to all of the Company's secured debt
and lease arrangements have not been concluded. Negotiations
with junior capital structure constituents are dependent upon
the outcome of negotiations with senior capital structure
constituents.
On October 7, 2002, the Company and a bank group entered into a
settlement arrangement related to $42.1 million of debt that had
financed 15 residences with a capacity for 675 residents. This
settlement arrangement includes the eventual release of any
deficiency claims against the Company. Concurrent with the
closing of this settlement arrangement, the Company completed
the refinancing of six residences financed under this credit
facility, together with three other residences, in a sale and
leaseback transaction with one of the Company's existing
lessors.
Since the end of the second quarter, the Company has also
completed restructurings related to two other secured debt
arrangements representing $125.7 million of debt. These two debt
arrangements finance a total of 49 residences with a capacity
for 1,850 residents. In these restructurings, among other
things, the Company and the related lenders agreed to extend the
debt maturities and to certain terms related to the disposition
of some of the financed properties.
The Company's Board of Directors has adopted a plan to dispose
of or terminate leases on 133 residences with an aggregate
capacity of 6,031 residents and 33 parcels of land. As of today,
100 residences representing a resident capacity of 4,421 have
either been sold or transferred to a new lessee. In addition,
the Company has sold 19 land parcels.
Alterra offers supportive and selected healthcare services to
our nation's frail elderly and is the nation's largest operator
of freestanding Alzheimer's/ memory care residences. Alterra
currently operates in 24 states.
The Company's common stock is traded on the American Stock
Exchange under the symbol "ALI."
ANC RENTAL CORP: Signs-Up Lincoln Property as New Jersey Broker
---------------------------------------------------------------
William J. Burnett, Esq., Blank Rome Comisky & McCauley LLP, in
Wilmington, Delaware, tells the Court that ANC Rental
Corporation and its debtor-affiliates intend to dispose of their
property at 822 North Avenue in Elizabeth, New Jersey because it
is unprofitable.
Accordingly, the Debtors seek the Court's authority to employ
Lincoln Property Company Commercial Inc. as their broker to
assist in evaluating the property and supervising and
negotiating the property's marketing and sale. The Debtors also
ask the Court to set Lincoln's retention to May 20, 2002 -- the
date of the Brokerage Agreement between Lincoln and the Debtors
was entered into.
Subject to the Court's approval, Lincoln will receive a
commission based on 5% of the sale price if it is the only
broker. In case of dual brokers, the commission will be
increased to 6%, which Lincoln will split on a 50/50 basis with
the cooperating broker.
Richard L. Flaten Jr., a partner at Lincoln, assures the Court
that Lincoln is a disinterested person in the Debtors' cases.
(ANC Rental Bankruptcy News, Issue No. 22; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
AQUILA INC: Fitch Chops Senior Unsecured Rating to BB from BBB-
---------------------------------------------------------------
Fitch Ratings has downgraded the senior unsecured rating of
Aquila Inc., to 'BB' from 'BBB-' and the short-term rating to
'B' from 'F3'. The obligations of Aquila Asia Pacific and Aquila
Canada Finance have also been downgraded to 'BB' from 'BBB-' by
Fitch. Approximately $3.6 billion of debt is affected. The
ratings of ILA, ILA Asia Pacific and ILA Canada Finance are
placed on Rating Watch Negative, pending a comprehensive review
of the outlook for the remaining core business and the
refinancing of credit facilities now set to come due on April
12, 2003.
All ratings of the UK operations of ILA, comprised of Avon
Energy Partners Holding (AVE, senior unsecured 'BBB-', short-
term 'F3' by Fitch), UK intermediate holding company Midlands
Electricity plc (ME, senior unsecured 'BBB-', short-term F3),
and UK electricity distributor Aquila Power Networks (APN,
senior unsecured 'BBB+', short-term 'F2'), remain on Rating
Watch Evolving, pending the anticipated sale of the UK business.
Discussions continue with bidders, and a determination regarding
acceptance of any offers is anticipated in December 2002. Fitch
notes that ME's currently outstanding Eurobond is guaranteed by
APN and is thus rated 'BBB+', also on Rating Watch Evolving.
Fitch will comment further on the prospects of the AVE group in
due course.
The rating actions on ILA reflect lower than expected operating
cash flows as the company exits the wholesale energy market.
Specifically, ILA's capacity services segment will continue to
be negatively impacted by lower power prices and spark spreads,
and higher capacity payments for tolling arrangements and
synthetic leases. Operating cash flow has also been depressed by
higher-than-anticipated restructuring charges and slow progress
in reducing staff count and operating expenses. While management
predicts a turn-around of cash from continuing operations into
the black early in 2003, the residual debt after applying the
proceeds of asset sales remains very high relative to recurring
operating income from ILA's U.S. and Canadian network utilities
less expected losses of the unregulated power generation
business.
Default of a financial covenant will trigger the need to
refinance, renegotiate or repay ILA's credit facility in April
2003. ILA's reported income for twelve-months ended Sept. 30 is
not in compliance with interest coverage requirements in its
$650 million credit facility, as well as guarantees relating to
three synthetic leases. ILA is not forecasted to be in
compliance with its interest coverage test until Dec. 31, 2003
at the earliest, a factor that eliminates the possibility for
ILA to exercise the one-year term-out option that would have
been available for the $325 million 364-day tranche. In exchange
for waivers obtained from the banks effective until April 12,
2003, ILA has paid down $158.6 million to those lenders and
agreed that 50% of any net cash proceeds under $1 billion, and
100% of net cash proceeds above $1 billion, received prior to
April 12, 2003, from domestic asset sales will be used to pay
off the lenders. As cash proceeds are used to reduce outstanding
loans under these arrangements, the amount of credit available
to ILA will decline permanently by a like amount. ILA has also
agreed to make reasonable efforts to obtain state regulatory
approvals to permit the company to pledge some regulated assets
as security for lenders.
The net book value of ILA's regulated assets in the U.S. is
approximately $2 billion. These assets are directly held by ILA,
not at subsidiaries. ILA also may be able to pledge the equity
of its subsidiaries in Canada and/or Australia if necessary, at
asset value in excess of $900 million. Fitch assumes that ILA's
liquidity will depend on its ability to provide sufficient
collateral to refinance some $300 to 400 million of loans and
letters of credit that will then be outstanding under the bank
facilities plus an amount relating to additional new funding
needed for 2003 capital spending, maturities, and working
capital estimated at or around $350 million. Assuming that ILA
will be successful in implementing a secured financing, the
existing senior notes and other similar unsecured obligations
will then be effectively subordinated relative to any new
secured claims. Resolution of the Rating Watch status is
expected to focus on the terms of any future financing and
developments in ILA's organic cash flow.
Favorable outcomes on several contingencies could benefit ILA's
Outlook, with execution risk regarding these alternatives.
Management has indicated that negotiations are ongoing in an
attempt to lower its contractual capacity payments on tolling
agreements to conserve cash and minimize the ongoing cash drain.
Fitch has assumed that the committed purchase of the Katy gas
storage facility takes place before the maturity of the bank
facilities, but has not assumed any other material asset sale
proceeds. As noted earlier, ILA has solicited bids for the sale
of its interests in Avon Energy Partners Holding. Fitch has not
assumed any residual cash to ILA from AVE's sale, but a more
favorable outcome could result in some modest positive proceeds
in the first half of 2003.
Ratings downgraded, on Rating Watch Negative:
Aquila Inc.
-- Senior unsecured debt to 'BB' from 'BBB-';
-- Short-term debt to 'B' from 'F3'.
Aquila Capital (formerly Utilicorp Capital)
-- PEPS to 'BB-'* from 'BB+'.
* Will be withdrawn upon imminent conversion on Nov. 18.
Aquila Canada Finance Corp.
(formerly Utilicorp Canada Finance)
-- Senior unsecured debt to 'BB' from 'BBB-'.
Aquila Asia Pacific
(formerly Utilicorp Asia Pacific)
-- Senior unsecured debt to 'BB' from 'BBB-'.
ILA, formerly Utilicorp, United Inc., provides network
distribution of electricity and gas in the U.S., Canada,
Australia and UK. It also is in the wholesale power generation
business in North America and is in the process of winding down
its wholesale energy trading activities.
ARMSTRONG HOLDINGS: Court Approves Amendment to DIP Credit Pact
---------------------------------------------------------------
Nitram Liquidators, Inc., Armstrong World Industries, Inc., and
Desseaux Corporation of North America, obtained the Court's
authority to sign another amendment to their DIP Credit
Agreement.
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.
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. (Armstrong Bankruptcy News, Issue No. 31;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
Armstrong Holdings Inc.'s 9.0% bonds due 2004 (ACK04USR1) are
trading at 58 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ACK04USR1for
real-time bond pricing.
ARTIFICIAL LIFE: Net Capital Deficit Tops $2.2MM at September 30
----------------------------------------------------------------
Artificial Life, Inc. (OTC Bulletin Board: ALIF), a provider of
award winning intelligent software robots/intelligent agents and
leading edge life science technology, announced its third
quarter 2002 results.
Revenues for the quarter ended September 30, 2002 were $100,000
as compared to $1,085,500 for the quarter ended September 30,
2001. The net loss for the quarter was $1,398,183 as compared to
a profit of $269,687 for the quarter ended September 30, 2001.
$870,000 or 62% of the net loss for the third quarter of 2002
are due to a bad debt allowance incurred for uncollectible
receivables from two insolvent German clients. The operational
expenses for the quarter ended September 30, 2002, include
expenses of $311,000 for new R&D efforts compared to $3,734 for
the third quarter of 2001.
The net loss per share for the third quarter of 2002 was $0.12
as compared to a net income of $0.03 for the quarter ended
September 30, 2001.
At September 30, 2002, the Company's balance sheet shows a total
shareholders' equity deficit of about $2.2 million, and a
working capital deficit of about $2.5 million.
"In the third quarter we have resumed our R&D efforts and
related spending to develop the next generation of our
technology and to build new mobile computing and Asian language
based products and applications. The potential market
opportunities in these areas especially in Greater China are
tremendous," said Eberhard Schoeneburg, CEO of Artificial Life.
The Company also announced that it has terminated its contract
with its New York based COO Frank Namyslik. Mr. Namyslik also
resigned as a board member.
Founded in 1994, Artificial Life, Inc., (OTC Bulletin Board:
ALIF) develops, markets, and supports intelligent, award winning
software robots and intelligent agents technology and provides
knowledge mining technology for life science applications and
bio-computing solutions. The company offers a variety of unique
products for applications such as self-help, self-service,
consultative selling, e-CRM, e-Finance, Portfolio Management and
Mobile Computing. Major customers of Artificial Life include,
among others, Advance Bank, Credit Suisse First Boston, Eagle
Star, Liechtenstein Global Trust, MobilCom,
PricewaterhouseCoopers, UBS and ZDF. Artificial Life, Inc., is
headquartered in Hong Kong. Detailed information about
Artificial Life, Inc., and its products is available at
http://www.artificial-life.com
ASIA GLOBAL CROSSING DEVELOPMENT: Voluntary Ch. 11 Case Summary
---------------------------------------------------------------
Debtor: Asia Global Crossing Development Co.
11150 Santa Monica Blvd, Suite 400
Los Angeles, California 90025
Bankruptcy Case No.: 02-15750
Type of Business: An affiliate of Asia Global Crossing Ltd.
Chapter 11 Petition Date: November 17, 2002
Court: Southern District of New York (Manhattan)
Debtors' Counsel: David M. Friedman, Esq.
Kasowitz, Benson, Torres & Friedman, LLP
1633 Broadway
New York, NY 10019-6799
Tel: (212) 506-1700
Fax: (212) 506-1800
Estimated Assets: More than $100 Million
Estimated Debts: More than $100 Million
ASIA GLOBAL CROSSING: Case Summary & 8 Largest Unsec. Creditors
---------------------------------------------------------------
Debtor: Asia Global Crossing Ltd.
Mintflower Place
2nd Floor, 8 Par-la-Ville Road
Hamilton HM08
Bermuda
Bankruptcy Case No.: 02-15749
Type of Business: Asia Global Crossing Ltd., through its direct
and indirect subsidiaries, as well as through
a number of in-country joint ventures and
commercial arrangements with Asian partners,
provides the Asia Pacific region with a broad
range of integrated telecommunications and IP
services.
Chapter 11 Petition Date: November 17, 2002
Court: Southern District of New York (Manhattan)
Debtors' Counsel: David M. Friedman, Esq.
Kasowitz, Benson, Torres & Friedman LLP
1633 Broadway
New York, New York 10019
Tel: (212) 506-1700
Total Assets: $2,279,771,000
Total Debts: $2,616,316,000
Debtor's 8 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
The Bank of New York, Senior Notes $432,557,000
as Indenture Trustee for
the 13.375% Senior
Notes due 2010
Richard Haberstroh
101 Barclay Street
21W New York, NY 10286
NEC Corporation Guarantee $242,020,000
(Value of security
unknown)
Hutchison Global Crossing Capacity Commitment $148,671,000
360 Networks Ltd. and Guarantee $100,000,000
360 Pacific (Bermuda) Ltd.
Exodus Communications, Inc. Capacity Commitment $25,000,000
KDDI Submarine Cable Guarantee $23,678,000
Systems Inc. (Value of security
unknown)
Concert Global Network Capacity Commitment $20,000,000
Services, Limited
WorldCom Guarantee Unknown
AT&T: Declares 1-For-5 Reverse Split & Broadband's Spin-Off Date
----------------------------------------------------------------
Achieving another significant milestone in the strategic
restructuring of the company, AT&T (NYSE: T) announced its board
of directors declared a special stock dividend to AT&T
shareowners of record on November 15, 2002.
The special dividend, scheduled for November 18, 2002, is the
distribution of AT&T's stake in AT&T Broadband, which would in
effect become the spin off of AT&T Broadband to AT&T
shareowners. Immediately following the spin off, AT&T Broadband
will combine with Comcast Corporation and the shareholders of
both AT&T Broadband and Comcast will become shareholders of the
new Comcast Corporation.
Separately, AT&T and Comcast said that the company formed by the
merger of AT&T Broadband and Comcast Corporation will be named
Comcast Corporation, not AT&T Comcast, as previously announced.
While AT&T shareowners will still own approximately 56 percent
of the combined company, the name change was made to eliminate
potential customer and market confusion.
Since the merger was announced, AT&T's ability to offer local
service to consumers, using the unbundled network elements
platform has increased. Today, the company offers "all-distance"
service to more than 2 million consumers across eight states and
hopes to continue to bring choice to consumers in more than a
dozen states within the next six to 12 months. Likewise, AT&T
Broadband has more than 1.3 million cable telephony customers,
and Comcast remains committed to that market following the
merger.
In these circumstances, both AT&T and Comcast believe the
advantages of customer and market clarity offset any potential
benefits that could be derived from using the AT&T Comcast name.
The new Comcast shares will be distributed on the basis of
approximately 0.32 of a share of the new Comcast for each AT&T
share outstanding. The final ratio will be determined based on
the actual number of AT&T shares outstanding at the time the
merger is effective.
AT&T shareowners who own four or more shares of AT&T will
receive account statements for full shares of the new Comcast
and cash for partial shares in the new merged company. AT&T
shareowners who own three or fewer AT&T shares will receive cash
payments for fractional shares in lieu of shares of the new
Comcast. Comcast's trading symbol on the NASDAQ will be CMCSA.
As previously announced, AT&T has received a ruling from the
Internal Revenue Service that the spin off qualifies as tax-free
to AT&T shareowners for U.S. federal income tax purposes, except
to the extent that cash is received instead of fractional
shares. The distribution and the merger remain subject to the
conditions set forth in the agreements previously entered into
between AT&T, AT&T Broadband and Comcast. Also, the AT&T board
of directors declared a 1 for 5 reverse stock split for AT&T
common shares outstanding on November 18, 2002, subject to and
immediately after the spin off and merger.
As a result of the stock split, AT&T shareowners who own five or
more shares of AT&T and are in the dividend reinvestment plan
will receive an account statement for full and fractional shares
of the new AT&T. AT&T shareowners who own five or more shares of
AT&T but are not in the AT&T dividend reinvestment plan will
receive account statements for full shares of AT&T, and cash for
fractional shares. Shareowners who own fewer than five AT&T
shares will receive cash payments for fractional shares. AT&T's
trading symbol on the New York Stock Exchange will remain "T;"
however, AT&T's CUSIP number will change as a result of the
transaction.
AT&T, noting that it is premature to declare future quarterly
dividends, said that if it continues paying its regular dividend
at the same rate, AT&T shareowners would expect AT&T's quarterly
dividend to change from 3.75 cents per share to 18.75 cents per
share, as a result of this reverse split.
In addition, and as agreed upon in the AT&T and Comcast merger
agreement, AT&T and Comcast will each contribute five board
members to new Comcast board and will jointly select two
additional members. Today, the AT&T board of directors also
decided which five of the current AT&T directors would move to
the new Comcast board, effective with the merger. The five who
will move are:
* C. Michael Armstrong, retiring chairman and chief
executive officer of AT&T, who will serve as chairman of
the board of Comcast.
* J. Michael Cook, retired chairman and chief executive
officer of Deloitte & Touche LLP.
* George M. C. Fisher, retired chairman and chief executive
officer of Eastman Kodak Company.
* Louis Simpson, president and chief executive officer
capital operations, GEICO Corporation.
* Michael I. Sovern, chairman of Sotheby's Holdings, Inc.,
and President Emeritus and Chancellor Kent Professor of
Law at Columbia University.
The jointly appointed board members are:
* Kenneth J. Bacon, senior vice president of multifamily
lending and investment, Fannie Mae.
* Dr. Judith Rodin, president, The University of
Pennsylvania.
Concurrent with the AT&T Broadband spin off from AT&T,
Armstrong, Cook, Fisher, Simpson and Sovern will leave the AT&T
board and immediately join the new Comcast board.
As it is structured today, AT&T's board has 16 directors. As
previously announced, Sanford I. Weill, chairman and chief
executive officer of Citigroup, Inc., and Charles H. Noski, vice
chairman of AT&T, will retire from the AT&T board effective with
the merger.
"On behalf of all AT&T shareowners I would like to thank these
distinguished members of the board for their vision, support and
hard work," said David W. Dorman, who on completion of the
merger will be AT&T's chairman and chief executive officer. "We
have accomplished much together."
The two retirements and the departure of the five other board
members will reduce the number of AT&T directors to nine.
Following the merger, they will be:
* David W. Dorman, chairman and chief executive officer of
AT&T.
* Kenneth Derr, retired chairman of the board of Chevron
Corporation.
* M. Kathryn Eickhoff, president of Eickhoff Economics,
Inc.
* Amos B. Hostetter, Jr., chairman of Pilot House
Associates.
* Donald F. McHenry, Distinguished Professor in the
practice of Diplomacy, Georgetown University, and
President of IRC Group LLC.
* Frank C. Herringer, chairman of the board and former
chief executive officer of Transamerica Corporation.
* Shirley A. Jackson, Ph.D., President of Rensselaer
Polytechnic Institute.
* Jon C. Madonna, retired chairman and chief executive
officer of KPMG.
* Tony L. White, chairman of the board, president, and
chief executive officer of Applera Corporation.
"This is a world-class lineup," said Dorman. "Every one of these
directors is seasoned and savvy. Each will have an important
contribution to make as we tackle the opportunities and
challenges ahead."
ATLAS AIR: Seeking Waivers of Debt Covenants through Year-End
-------------------------------------------------------------
Atlas Air Worldwide Holdings, Inc., (NYSE: CGO) provided the
following summary of certain of its operating results for the
third quarter ended September 30, 2002.
As previously announced, the company's Form 10-Q quarterly
report to the SEC will be delayed until the ongoing re-audit of
its financial results for fiscal years 2000 and 2001 has been
completed. During this delay, the company will be providing such
summaries of financial and operating data, as well as updates on
the re-audit and related matters.
Financial Results
Revenues for the three months ended September 30, 2002,
increased $140.1 million versus the prior year, to $290.8
million, primarily due to the inclusion of Polar in 2002. At
Atlas Air, revenues were up $20.9 million as strong commercial
and military charter activity offset contract service revenue
declines. Operated block hours increased 53% year over year to
36,939 in the third quarter, with the majority of the increase
being attributable to the addition of Polar.
The company's cash and investment balance stood at $204.1
million on a consolidated basis at the end of the third quarter
and $180.5 million at Atlas Air, Inc. In addition, balance sheet
debt (including current maturities) stood at $958.9 million on a
consolidated basis for the same period, and $933.9 million at
Atlas Air, Inc. The revenue, cash, investment and long-term debt
balances are presented on the basis that the company is not
expecting to have to restate these balances as part of the
ongoing re-audit. However, these numbers should be treated as
estimates until the re-audit is complete.
Operations
Operations at both Atlas Air and Polar Air Cargo remain
unaffected by the accounting re-audit.
Chief Executive Officer Richard Shuyler said, "As the third
quarter came to a close, we began to see the expected seasonal
improvement in air freight demand. This trend became more
pronounced in October as a result of increased charter activity
due primarily to the labor disruption at ports on the West
Coast, as well as strong demand for military charters. This
demand has led to substantial improvement in rates in our
charter business. Our charter capacity is now almost fully
booked through year-end, with additional bookings extending into
January. In response to this unprecedented demand, Atlas Air has
reactivated all but one of the six aircraft that were parked at
the end of the second quarter. We expect to operate in the range
of 45,000 to 47,000 block hours on a consolidated basis in the
fourth quarter and post record quarterly revenues at both Atlas
Air and Polar."
Shuyler continued, "We have also seen some positive news on the
ACMI front. After the close of the third quarter, China Southern
Airlines announced a new service between Shanghai, China and
Liege, Belgium using a wet-leased Atlas 747-400 aircraft. China
Southern is one of the three ACMI customers who had contracts
expiring in 2002, including one that did not renew, and with the
third still under discussion. Additionally, our discussions with
China Southern have resulted in two new wet-lease agreements
that will commence late in the fourth quarter of 2002. We are
very pleased to have extended our relationship with the largest
of China's three main airlines."
Re-Audit Status
As previously reported, Ernst & Young will be re-auditing
financial statements for the 2000 and 2001 fiscal years. The
company anticipates that this re-audit will be completed in
early 2003, along with the completion of audited financial
statements for fiscal 2002.
Debt Covenant Status
Shuyler continued, "Obviously, the status of our debt covenants
has remained a concern for investors, especially in light of our
re-audit. To that end, we are currently seeking a waiver of
certain covenants through year-end which will also allow
sufficient time to assess the impact of the restatement and to
set future covenant levels accordingly. We are hopeful that
creditors will continue to work with the company as they have
done in the past. We believe that the prospects for Atlas
specifically, and for air cargo in general, are improved from
where they stood a year ago. Recent commercial charter and
military demand have also provided an important bridge through
an environment that has been difficult for many in aviation."
Outlook
Shuyler concluded, "While we are not happy to have to restate
our prior financials, it will not distract us from our efforts
to restore the growth of our business, and build upon some of
the positive developments we are seeing this quarter."
Atlas Air Worldwide Holdings, Inc. is the parent company of
Atlas Air, Inc., and of Polar Air Cargo, Inc. Atlas Air offers
its customers a complete line of freighter services,
specializing in ACMI (Aircraft, Crew, Maintenance, and
Insurance) contracts, utilizing its fleet of B747 aircraft.
Polar's fleet of Boeing 747 freighter aircraft specializes in
time-definite, cost-effective, airport-to-airport scheduled
airfreight service. Polar and Atlas Air are operated as separate
subsidiaries of the company. For more information, go to
http://www.atlasair.com
DebtTraders reports, Atlas Air Inc.'s 10.75% bonds due 2005
(CGO05USR1) are trading at 30 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CGO05USR1for
real-time bond pricing.
BAYOU STEEL: Will Defer Interest Payment on 9-1/2% Senior Notes
---------------------------------------------------------------
Bayou Steel Corporation (AMEX:BYX) will take advantage of the
30-day grace period allowed under its 9-1/2% Senior Note
indenture regarding its interest payment due on November 15,
2002. The Company will later consider whether such payment would
be made before the end of the grace period.
"This action is designed to preserve liquidity and to ensure
sufficient trade funding for on-going operations in a period
which is typically the slowest in the year at Bayou Steel's
LaPlace, Louisiana and Harriman, Tennessee mills," said Jerry
Pitts, Bayou's President. The Company takes this action to
preserve adequate availability remaining on its credit line to
meet its ongoing operational plan. Bayou is not in default of
its indenture or line of credit covenants.
The Company is in the process of organizing its bondholders for
the purpose of discussing its financial condition.
Bayou Steel has also been in discussions with its existing
senior credit facility provider and expects the lender to
maintain its supportive relationship.
BEAR ISLAND PAPER: Violates Fin'l Covenants Under Credit Pact
-------------------------------------------------------------
Bear Island Paper Company, LLC, incurred net losses of
$15,019,145 and $5,722,211 for the nine months ended September
30, 2002 and year ended December 31, 2001, respectively, and had
an accumulated deficit of $39,012,963 at September 30, 2002.
Management also anticipates a loss for the year ending December
31, 2002. Because of these recurring losses the Company
continues to not be in compliance with certain financial debt
covenants under its Credit Agreement (which relates to the
Company's $70 million 8-year Senior Secured Term Loan Facility
and the Company's $50 million 6-year Senior Secured Revolving
Credit Facility. Management believes that the Company will be
able to successfully manage through the debt covenant situation,
although the Company's lenders could accelerate the debt at any
time during the period. The acceleration of the Bank Credit
Agreement would permit the holders of the Senior Secured Notes
to declare the Notes immediately due and payable. As a result,
some debts not currently due have been classified as current.
These matters raise substantial doubt about the Company's
ability to continue as a going concern.
The Company is a wholly owned subsidiary of Brant-Allen
Industries, Inc., a Delaware corporation.
The Company manufactures and is dependent on one product,
newsprint, which is used in general printing and the newspaper
publishing industry and for advertising circulars. Accordingly,
demand for newsprint fluctuates with the economy, newspaper
circulation and purchases of advertising lineage which
significantly impacts the Company's selling price of newsprint
and, therefore, its revenues and profitability. In addition,
variation in the balance between supply and demand as a result
of global capacity additions have an increasing impact on both
selling prices and inventory levels in the North American
markets. Capacity is typically added in large blocks because of
the scale of new newsprint machines.
At September 30, 2002, the Company had approximately $142.4
million of indebtedness, consisting of borrowings of $20.0
million under the Revolving Credit Facility, $17.4 million under
the Term Loan Facility, $100 million under the Notes and $5.0
million under a subordinated note from Brant-Allen. At
September 30, 2002, there was no unused borrowing capacity under
the Revolving Credit Facility as a result of the Company's non-
compliance with several financial covenants under the Bank
Credit Agreement for which waivers were obtained through July
30, 2002, however, such waivers have not been extended. The
Company also has a purchase commitment to purchase $4.2 million
of manufacturing equipment from a vendor.
BETHLEHEM STEEL: Court Approves Stipulation with Nation Union
-------------------------------------------------------------
Judge Lifland signs a stipulation between Bethlehem Steel
Corporation, its debtor-affiliates, and National Union Fire
Insurance Company in settlement of the dispute.
Pursuant to the stipulation, the parties agree:
(a) to modify the automatic stay and permit National Union to
pursue its Declaratory Judgment Action in the Illinois
Court, solely with respect to the determination of:
-- the identification of Alternative Distribution Systems
customers, including the Debtors, that are entitled to
recover under the National Union insurance policy; and
-- the allocation of insurance proceeds among these
customers;
(b) that no other issues affecting the Debtors' rights,
interests or obligations in property may be determined in
the Declaratory Judgment Action unless:
-- the Debtors expressly consent to the determination; or
-- a party-in-interest seeking the determination obtains
an order from the Court modifying the stay to permit
the adjudication or determination of the issues by the
Illinois Court or any other court; and
(c) that the Lift Stay Motion is withdrawn.
* * *
As previously reported, a fire occurred at a steel warehouse in
Davenport, Iowa, sometime in February 2001. The steel warehouse
was owned and operated by Alternative Distribution Systems Inc.,
and its wholly owned subsidiary. The warehouse is covered by a
$1,000,000 property insurance policy through The National Union
Fire Insurance Company of Pittsburgh, Pennsylvania.
At the time of the fire, the warehouse stored property belonging
to several major steel companies, including Bethlehem Steel
Corporation.
In order to determine National Union's liability on the policy,
Alternative Distribution Systems and National Union filed
separate declaratory judgment actions before the Chancery
Division of the Circuit Court of Cook County in Illinois. The
Court Actions were later consolidated.
Pursuant to the Consolidated Action, the Illinois Court ruled
that the National Union policy covered the property losses of
Alternative Distribution Systems as well as the property losses
of Bethlehem Steel and other companies. Thus, against this
backdrop, National Union asked the Court to lift the automatic
stay to permit the Consolidated Action to proceed in Illinois
State Court. National Union wants the Illinois Court to
identify the specific customers that are entitled to recover
under the National Union policy, and how the $1,000,000 policy
limit should be divided. (Bethlehem Bankruptcy News, Issue No.
25; Bankruptcy Creditors' Service, Inc., 609/392-0900)
BRAVO FOODS: September 30 Balance Sheet Upside-Down by $840K
------------------------------------------------------------
Bravo Foods International's business model includes obtaining
license rights from Warner Bros. Consumer Products, granting
production and marketing rights to processor dairies to produce
Looney Tunes(TM) flavored milk and generating revenue primarily
through the sale of "kits" to these dairies. The price of the
"kits" consists of an invoiced price for a fixed amount of
flavor ingredients per kit used to produce the flavored milk and
a fee charged to the diaries for the production, promotion and
sales rights for the branded flavored milk.
As of September 30, 2002, the Company had an accumulated deficit
of $24,657,638, cash on hand of $986,615 and reported total
shareholders' deficit of $843,319.
For this same period of time, it had revenue of $1,053,129 and
general and administrative expenses of $3,099,066. General and
administrative expenses consisted of $2,125,426 in operating
expenses, depreciation and amortization expenses of $457,436 and
non-cash one time charges of $391,345 pertaining to the issuance
of compensation options, the extension and re-pricing of
warrants to restructure debt and waive cash penalties, and
finders fees and non-cash consulting expense of $124,859.
After net interest expenses of $20,742, cost of goods sold of
$133,033 and selling expenses of $46,017 incurred primarily in
the operations of its Chinese wholly owned subsidiary, the
Company had a net loss of $2,245,699.
Nine Months Ended September 30, 2002
Compared to the Nine Months Ended September 30, 2001
Bravo had revenues for the nine months ended September 30, 2002
of $1,053,129, with a cost of sales of $133,033, resulting in a
gross profit of $920,126, or 87% of sales. Of the $1,053,129,
$899,618 was from sales in the U.S. operation, $21,436 from
sales in China, $47,150 from sales in Canada and $84,925 from
sales in Mexico. Revenue for the nine months ended September
30, 2002 increased by $465,384, a 79% increase compared to
revenue of $587,745 for the same period in 2001. This increase
is the result of:
* moving from a production-distribution oriented business
model with limited, capabilities, to the
"licensing/branding" business model;
* adding five additional processor dairies in the US
during 2001;
* the opening of the Mexico and Canada markets to Looney
Tunes(TM) flavored milks
* the continued expansion of sales of extended shelf life
product, which provides greater distribution
flexibility; and
* greater market penetration and distribution of Looney
Tunes(TM) flavored milks.
As stated, the Company had a net loss for the nine months ended
September 30, 2002 of $2,245,699 compared with a net loss of
$2,463,894 for the same period in 2001. The net loss consisted
of $103,433 in China and $2,164,691 from our US operation. The
net loss decrease in 2002 amounted to $218,195, or 9%, compared
to the same period in 2001. The decrease in net loss in 2002
resulted from a reduction in general and administrative expenses
in China coupled with a 79% increase in gross revenues in 2002.
BUDGET GROUP: Wins Approval of Purchase Pact with Cendant Unit
--------------------------------------------------------------
Finding that the sale of the assets is in the best interest of
Budget Group Inc., and its debtor-affiliates, their creditors,
and other parties-in-interest, Judge Walrath approves the Asset
and Stock Purchase Agreement between the Debtors and Cherokee
Acquisition Group Corp., a subsidiary of Cendant Corporation.
Judge Walrath also approves the two amendments to the Agreement.
The amendments provide for the increase of the cash component of
Cherokee's bid from $107,500,000 to $110,000,000. Cherokee's
total bid, which is over $3,000,000,000, consists mostly of
assumed debt. The Additional Consideration for the Debtors'
Qualified Fees is also increased to $42,000,000 -- or
$45,000,000 under certain circumstances -- less the aggregate of
the Qualified Fees by the Seller Parties from June 30, 2002
until the Closing Date.
The transaction is set to close on November 22, 2002. (Budget
Group Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
DELIA*S CORP: Fails to Meet Nasdaq Continued Listing Standards
--------------------------------------------------------------
dELiA*s Corp., (Nasdaq:DLIA) a leading multichannel retailer to
teenage girls and young women, announced that on November 12,
2002, dELiA*s received a notice from Nasdaq advising that the
Company's closing bid price has fallen below the $1.00 minimum
closing bid price requirements under Marketplace Rule 4450(a)(5)
and is subject to delisting.
The Company has been provided 90 calendar days, until February
10, 2003, to regain compliance, during which time its common
stock will continue to trade on the Nasdaq National Market.
Stephen Kahn, Chief Executive Officer, stated, "We are taking
appropriate steps in an attempt to rectify the situation and we
remain focused on our commitment to maximize shareholder value."
dELiA*s Corp., is a multichannel retailer that markets apparel,
accessories and home furnishings to teenage girls and young
women. The company reaches its customers through the dELiA*s
catalog, http://www.dELiAs.comand its 54 dELiA*s retail stores.
* * *
In its Form 10-Q filed on September 17, 2002, with the
Securities and Exchange Commission, dELiA*s stated:
"We are subject to certain covenants under the mortgage loan
agreement relating to the 1999 purchase of our distribution
facility in Hanover, Pennsylvania, including a covenant to
maintain a fixed charge coverage ratio. Effective May 1, 2001,
the bank agreed to waive the fixed charge coverage ratio
covenant through August 6, 2003 in exchange for a principal
payment of $2.0 million on May 7, 2001 and our agreement to pay
on August 6, 2003 the outstanding principal balance as of that
date.
"Our credit agreement, as amended, with Wells Fargo Retail
Finance LLC, a subsidiary of Wells Fargo & Company, consists of
a revolving line of credit that permits us to borrow up to $25
million, limited to specified percentages of the value of our
eligible inventory as determined under the credit agreement, and
provides for the issuance of documentary and standby letters of
credit up to $10 million. Under this Wells Fargo facility, as
amended, our obligations are secured by a lien on substantially
all of our assets, except certain real property and other
specified assets. The agreement contains certain covenants and
default provisions customary for credit facilities of this
nature, including limitations on our payment of dividends. The
agreement also contains controls on our cash management and
certain limits on our ability to distribute assets. At our
option, borrowings under this facility bear interest at Wells
Fargo Bank's prime rate plus 50 basis points or at the
Eurodollar Rate plus 275 basis points. A fee of 0.375% per year
is assessed monthly on the unused portion of the line of credit
as defined in the agreement. The facility matures September 30,
2004 and can extend for successive twelve-month periods at our
option under certain terms and conditions. As of August 3, 2002,
we were in full compliance with the covenants under the
facility, the outstanding balance was $13.4 million, outstanding
letters of credit were $3.5 million and unused available credit
was $2.2 million.
"We believe that our cash on hand and cash expected to be
generated by operations, together with the funds available under
our credit agreement, will be sufficient to meet our capital and
operating requirements through at least the next twelve months.
However, we can give no assurances that we will be able to
generate sufficient capital through operations or other means to
comply with the covenants in our credit agreement. Our failure
to raise sufficient capital, to meet our internal earnings
projections or to have continued access to borrowings under our
credit facility would have a material adverse effect on our
business. Additional funds that may be necessary to operate the
business may not be available to us on favorable terms or at
all."
DIGITALNET INC: S&P Assigns B+ Ratings over Limited Flexibility
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to DigitalNet Inc. It also assigned a 'B+' rating
to the Bethesda, Maryland, company's $125 million senior secured
credit facilities. The ratings reflected moderate but
predictable earnings and cash flow.
The outlook is positive. DigitalNet, a leading provider of
networking, seat management, and desktop outsourcing solutions
to the U.S. federal government, has $125 million of debt
outstanding.
"Long-term prospects are good, because of a high recurring
revenue base and increasing levels of government expenditures as
a result of the ongoing upgrading of federal IT systems," said
Standard & Poor's credit analyst Philip Schrank. "Favorable
market conditions and a growing contract backlog should sustain
operating results over the near- to intermediate term."
DigitalNet acquired Getronics Government Solutions LLC (GGS), a
division of Getronics N.V., for $224 million. The transaction
will be financed by a $100 million term loan, coupled with a $34
million bridge loan and equity investments by a sponsor and
DigitalNet management.
More than 20 of the company's top 30 contracts have remaining
contract periods of at least three years. DigitalNet's low
percentage of cost-plus contracts and limited hardware re-
selling has translated into very good EBITDA margins, in the low
teens percentage area. However, DigitalNet's focus is not broad,
and it competes in a consolidating industry with many
participants, some of which are much larger.
Credit quality is constrained by the company's niche focus,
aggressive debt leverage, and limited financial flexibility.
Integration risks associated with acquired operations are
minimal. DigitalNet will migrate its operations to existing
computer platforms, buildings, and other infrastructure, thus
limiting any transition requirements. At expected moderate
growth rates, working capital and fixed-asset expenditures
should be manageable.
DYNEGY INC: Sells UK Natural Gas Storage Business to Centrica
-------------------------------------------------------------
Dynegy Inc., (NYSE:DYN) has sold its remaining Dynegy Storage
assets in the United Kingdom to Centrica plc. Under the terms of
the purchase agreement, which was executed Thursday, a
subsidiary of Centrica paid approximately $500 million for the
subsidiaries that own Rough, an offshore partially depleted
natural gas field in the North Sea, and Easington, a natural gas
processing terminal located on the East Yorkshire coast.
"The storage business sale is yet another significant
accomplishment in our capital plan, which continues to improve
our liquidity and enable us to focus on our core businesses
going forward," said Bruce Williamson, president and chief
executive officer of Dynegy Inc. "When combined with the steps
we are taking to restructure the organization and address the
company's financial obligations, we are continuing to build
momentum for the new Dynegy and drive the company forward."
Following the September 2002 sale of Dynegy Hornsea to SSE
Energy Supply Limited, a unit of Scottish and Southern Energy
plc., for approximately $200 million, the remaining Dynegy
Storage assets included Rough and Easington. Rough is the major
provider of natural gas storage in the UK and is used by
approximately half of the country's natural gas shippers. It has
a deliverability rate of 1.5 billion cubic feet per day and a
total customer storage capacity of 100 billion cubic feet of
natural gas. The Easington terminal processes Rough and third-
party natural gas streams for delivery into the UK natural gas
transportation network. Centrica will employ substantially all
of Dynegy Storage's employees.
The sale is consistent with Dynegy's previously announced plans
to execute a sale or joint venture transaction involving its UK
gas storage assets in connection with its ongoing capital and
liquidity plan. Dynegy Europe Limited now consists of energy
marketing and trading. The company's previously announced
restructuring initiative will involve an exit from this business
in the United States, Europe and Canada over the next three to
six months. Mike Flinn, currently president of Dynegy Europe,
will manage the exit in Europe, which is expected to reduce the
company's collateral requirements and overall corporate
expenses.
ABN AMRO acted as the exclusive financial advisor to Dynegy in
this transaction.
Dynegy Inc., produces and delivers energy, including natural
gas, power, natural gas liquids and coal through its owned and
contractually controlled network of physical assets. The company
serves customers by aggregating production and supply and
delivering value-added solutions to meet their energy needs.
* * *
As previously reported, Dynegy Holdings Inc.'s senior unsecured
debt rating was downgraded to 'BB+' from 'BBB' by Fitch Ratings.
In addition, Fitch downgraded Dynegy Inc.'s indicative senior
unsecured debt to 'BB+' from 'BBB-'. The short-term ratings for
DYNH and DYN' have been lowered to 'B' from 'F3'. The ratings
for DYN and DYNH remain on Rating Watch Negative where they were
originally placed on Nov. 9, 2001. In addition, ratings for
affiliated companies, Illinois Power Co., and Illinova Corp.,
have been lowered and remain on Rating Watch Negative.
Dynegy Holdings Inc.'s 8.75% bonds due 2012 (DYN12USR1) are
trading at about 18 cents-on-the-dollar, DebtTraders says. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=DYN12USR1for
real-time bond pricing.
ENRON CORP: Wants Okay to Implement Overhead Allocation Formula
---------------------------------------------------------------
Enron Corporation and its debtor-affiliates, in compliance with
the Amended Cash Management System Order, seek the Court's
authority to implement the Allocation Formula, for allocation of
shared overhead and other expenses among the Debtors and Non-
Debtors from and after the Petition Date.
Martin J. Bienenstock, Esq., at Weil, Gotshal & Manges LLP, in
New York, points out that in the Amended Cash Management System
Order, the Debtors were directed to develop a formula to
allocate shared overhead expenses. Thus, in consultation with
the Creditors' Committee and the ENA Examiner, the Debtors and
their professionals, developed certain principles to guide their
efforts in formulating the most appropriate method of shared
overhead allocation. These principles include, without
limitation:
-- developing a flexible, simplified and streamlined
allocation process;
-- providing for the allocation of clearly defined expenses
to the respected beneficiary entities;
-- identifying Enron Corp. staff positions 100% dedicated to
the Debtors' Chapter 11 reorganization process;
-- using Cost Accounting Standard 403 of the Federal Cost
Accounting Standards as a guide for allocating shared
overhead expenses; and
-- providing procedures for monitoring and modification of
allocations due to changes in circumstances.
Mr. Bienenstock explains that the Allocation Formula provides
for the allocation of overhead expenses to both the Debtors and
certain material non-debtors. The appropriate allocation
methodology will apply for the entire postpetition period. Mr.
Bienenstock notes that at the start of each fiscal quarter, the
Debtors will reconfigure the allocation of expenses in
recognition of the allocation methodologies. Shared overhead
expenses will be allocated on a monthly basis and will be due
for payment on the 15th of each month for the estimated expenses
of that same month. Allocations will be "trued-up" to actual
expenses once a given month's books are closed.
Under the Allocation Formula, shared overhead expenses include,
but not limited to: salaries and benefits, employee expenses,
outside services, payroll taxes, depreciation and general
business expenses like supplies, rents and computer related
costs. The Allocation Formula also provides for the allocation
of other expenses not directly related to overhead, including
expenses for professional services, employee-related expenses
and expenses related to the dissolution or wind-down of certain
of the Enron Companies.
Mr. Bienenstock continues that the Allocation Formula
categorizes the expenses among the 16 separate departments:
(a) Executive: Incorporates expenses for the senior
management of the Enron Companies, including CEO,
President and CFO;
(b) Legal: Incorporates in-house legal expenses for the
corporate secretary, and the corporate, litigation and
environmental legal teams. Expenses also include
executive board meeting costs and maintaining the legal
library;
(c) Risk Assessment: Incorporates the credit risk and
market risk cost centers and the portfolio and
underwriting groups;
(d) Finance and Treasury: Includes the central treasury
function, asset and hedge management and the global
finance group;
(e) Accounting and Control: Includes expenses for
overseeing accounting and control policies, procedures
and financial reporting for the Enron Companies.
Comprises the corporate accounting group that includes
Administration of the budget and planning process,
reporting, accounting for the corporate cost centers and
compliance;
(f) Tax: Includes expenses for overseeing tax planning and
compliance for the Enron Companies, including expenses
for liaising with federal and state tax authorities,
general tax administration and tax planning;
(g) Corporate Development: Incorporates expenses for
overseeing changes in the Enron Companies structure.
This is being done through liquidations and sales;
(h) Risk Management: Includes the insurance premiums,
political risk insurance costs and insurance
administration and purchasing;
(i) Integrated Solutions Center: This has been outsourced
and manages infrastructure for the accounting systems
used by the Enron Companies on a fee basis. ISC
provides support to users of the Enron Companies'
accounting systems, including report writing, technical
maintenance and system design and building;
(j) Strategic Sourcing: Manages the Enron Companies' vendor
relations ranging from the outside professional to the
material suppliers. Generally, all negotiations at the
inception of the contract and all renegotiations are
handled by the group. Strategic Sourcing also manages a
small procurement group that handles all the high
transaction, low-dollar type transactions like IT
purchasing and office supplies;
(k) Human Resources: Includes the full range of HR services
including, but not limited to, risk management, employee
relocation, work-life programs, and matters related to
compensation;
(l) Public Affairs: Includes expenses relating to the
external and internal media relations group, health and
public safety staff and the environmental regulation
group;
(m) Bankruptcy Coordinator: Includes expenses related to
the management of the bankruptcy process within the
Enron Companies;
(n) Aviation: Expenses associated with maintaining aircraft
like pilot salaries and wages, hangar rental,
maintenance fees and associated rents. This Department
is in the process of being closed;
(o) Enron Properties & Services Corp.: Incorporates
expenses for management of all Houston-based properties.
Also included are expenses relating to external security
contractors and expenses associated with increased
police presence; and
(p) Enron Net Works LLC: Incorporates expenses for
management of the overall IT infrastructure, including
the company-wide computer network, e-mail system,
central data services and project management.
Allocation Methodologies
Each month, the Debtors will calculate an amount for each
Department based on the last known month's actual results and
adjusted for any expected material differences. The methodology
for allocation of Department Overhead Expense varies from one
Department to another, depending on whether the expense may be
categorized as an indirect expense or direct expense.
A. Allocation of indirect overhead expenses
The methodology for allocating the Department Overhead
Expense in this category to a particular entity requires a
determination of that entity's average assets and revenues
and, if the entity is a Debtor, also that entity's average
assets and liabilities.
AAR is determined by calculating the average of:
(a) the percentage of assets held by the particular legal
entity at a given month's end as compared to all legal
entities to receive allocations; and
(b) the percentage of the average absolute value of revenues
generated by a particular legal entity over the trailing
three months from the date the allocation factor is set
as compared to all legal entities to receive allocations
over the same trailing three months.
AAL is determined by calculating the average of:
(a) the percentage of assets held by a particular Debtor at
a given month's end as compared to all Debtors in the
same month; and
(b) the percentage of liabilities owed by a particular
Debtor at a given month's end as compared to all Debtors
in the same month.
For a Department consisting of indirect expenses, the
Department Overhead Expense is made up of:
(a) expenses associated with Enron staff positions
identified as 100% dedicated to the Debtors' Chapter 11
cases -- Dedicated Bankruptcy Expenses; and
(b) all other expenses -- Net Department Expenses.
The allocable amount of the Department Overhead Expense for a
particular legal entity depends on whether it is a Debtor or
Non-Debtor. If a legal entity is a Debtor, the allocable
amount of the Department Overhead Expense is calculated by
adding the product of the Debtors entity's AAL and the
Dedicated Bankruptcy Expense. If the legal entity is a Non-
Debtor, then the allocable amount of the Department Overhead
Expenses is calculated by multiplying the Non-Debtor entity's
AAR times the Net Department Expense.
B. Allocation of direct overhead expenses
Direct expenses are those related to the use or benefit of
some corporate service by a legal entity and are allocated
directly to that legal entity based on use or benefit.
Similarly, Risk Management property insurance premiums will
be directly allocated to the entity holding the property.
C. Allocation of professional services expenses
Professional services expenses relate to costs incurred by
retained legal and other professionals and are allocated by
utilizing AAL. With respect to expenses for professional
services directly attributable to a legal entity whether
Debtor or Non-Debtor, the expense will be allocated directly
to the entity. With respect to expenses for professional
services not directly attributable to one particular entity:
(a) expenses attributable to more than one Debtor will be
allocated based on an average of the percentage of assets
and liabilities of the attributable Debtors;
(b) expenses attributable to more than one Non-Debtor will be
allocated based on an average of the percentage of assets
and liabilities of the attributable Non-Debtors; or
(c) expenses that cannot be split between the Debtors and
Non-Debtors will be allocated to all attributable Debtors
and Non-Debtors based on the overall proportional split
of all other expenses in that period by each entity.
D. Allocation of employee-related expenses
Retention expenses for employees of Enron Corp., ENW and EPSC
will be charged to the department to which the person is
assigned; these expenses will then be allocated based on the
department's proposed allocation process. Retention payments
to all other Enron employees will be charged directly to the
entity that picks up the expenses for that employee.
Similarly, severance expenses relating to employees of Enron
Corp., ENW and EPSC will be allocated to the department
incurring the severance expenses, then allocated based on the
proposed methodology. Certain payroll expenses of ENW are
indirect and will be allocated to the Enron Companies'
wholesale and retail businesses, as they relate solely to
those businesses, based on the AAR/AAL methodology.
E. Allocation of dissolution or wind-down expenses
The Dissolution Expenses for subsidiaries of ENA will be
allocated directly to ENA; and the Dissolution Expenses for
all other subsidiaries will be allocated directly to Enron
Corp. The Debtors estimate that the maximum aggregate amount
of the Dissolution Expenses is $5,500,000 through the end of
2003.
Funding and Monitoring of Allocations
Mr. Bienenstock relates that for the provision of funds for
allocation with respect to monthly cash settlements of allocated
overhead:
(a) escrowed amounts will be available to fund overhead
allocated to the entity holding the escrow account;
(b) as an additional source of cash to fund allocations and
operations of the estate, Enron Corp. will borrow
$250,000,000 from the New Energy Trading Company;
(c) generally, all entities will fund their own allocation
to the extent they are able give these criteria:
-- insolvency and liquidity constraints;
-- regulation and rate base constraints;
-- repatriation restrictions for foreign subsidiaries;
-- absence of contractual right to charge entities not
wholly owned;
(d) ENA will fund in lieu of ENA subsidiaries that are
unable to meet their allocation obligations, and Enron
Corp., will fund in lieu of all other subsidiaries that
are unable to meet their allocation obligations;
(e) ENA-specific provisions:
-- With respect to ENA, its subsidiaries, Enron Power
Marketing Inc. and Enron Natural Gas Marketing Corp,
and ENA subsidiaries unable to fund their own
allocation obligations, for the period between the
Petition Date through July 31, 2002, to the extent
Enron Corp. has incurred direct expenditures and
direct and indirect allocable overhead expenses on
behalf of ENA, EPMI, ENGM or the ENA Non-Funding
Subs, the funding will be re-paid by ENA to Enron
Corp., by reducing the amount of the ENA Loan;
-- With respect to ENA, EPMI, ENGM, and the ENA-Non-
Funding-Subs, for the period following July 31, 2002,
to the extent Enron Corp. has incurred direct
expenditures (only) on behalf of ENA, EPMI, ENGM or
the ENA-Non-Funding-Subs the funding will be re-paid
in cash by ENA, EPMI and/or ENGM to Enron Corp.; and
-- With respect to ENA, EPMI, ENGM, and the ENA-Non-
Funding-Subs, for the period following July 31, 2002,
to the extent Enron Corp. has incurred or will incur
expenditures for directly and indirectly allocable
overhead expenses on behalf of ENA, EPMI, ENGM or the
ENA-Non-Funding-Subs, such funding will be re-paid by
reducing the amount of the ENA Loan, until such Loan
has been paid in full. Thereafter, the amounts will
be paid in cash by ENA.
Furthermore, the Debtors will institute a monitoring process
involving the Creditors' Committee and the ENA Examiner to
ensure that the proposed Allocation Formula protects the rights
and interests of the Debtors, Non-Debtors and their respective
creditors. The Debtors will continue to work with the
Creditors' Committee and the ENA Examiner to oversee and
evaluate the allocation of shared overhead and other expenses,
and verify data accuracy and application of the allocation
methodology. In addition, a quarterly review of the Allocation
Formula and the application thereof will be conducted by the
Debtors, in consultation with the Creditors' Committee and the
ENA Examiner, to assess and determine the need for modification.
Mr. Bienenstock asserts that the Allocation Formula retains the
flexibility to permit the Debtors to exercise their business
judgment for necessary modifications to overhead allocations.
The Debtors, in the exercise of their business judgment, may
enact modifications to the Allocation Formula, without further
Court approval; provided however, that they obtain the agreement
of the Creditors' Committee and the ENA Examiner.
According to Mr. Bienenstock, the Allocation Formula should be
approved because:
(i) it is a requirement of the Amended Cash Management
System Order;
(ii) the Creditors' Committee and the ENA Examiner has been
consulted in developing the Allocation Formula;
(iii) it is conceptually sound and equitably distributes
corporate overhead without incurring excessive
additional expenses in order to perform the allocations;
(iv) it provides a formula for allocation, from and after the
Petition Date, of shared overhead expenses and other
expenses among the Debtors and their material non-debtor
affiliates;
(v) it simplifies and streamlines the Enron Companies'
methods of overhead allocation;
(vi) it fully and fairly allocates expenses to entities based
upon legal structures;
(vii) it provides for the "true-up" of allocations to actual
overhead expenses on a monthly basis; and
(viii) it reduces the instances of duplicative allocation of
overhead expenses. (Enron Bankruptcy News, Issue No. 48;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
Enron Corp.'s 9.125% bonds due 2003 (ENRN03USR1), DebtTraders
reports, are trading at about 12 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR1
for real-time bond pricing.
ENRON EXPAT: Case Summary & 2 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Enron Expat Services Inc.
1400 Smith Street
Houston, Texas 77002
Bankruptcy Case No.: 02-15716
Type of Business: EESI is a payroll management company for all
U.S. citizens working outside of the U.S.
for various Enron entities.
Chapter 11 Petition Date: November 14, 2002
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtors' Counsel: Brian S. Rosen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Tel: 212-310-8602
Fax: 212-310-8007
and
Melanie Gray, Esq.
Weil, Gotshal & Manges LLP
700 Louisiana, Suite 1600
Houston, Texas 77002
Tel: (713) 546-5000
Total Assets: $87,724,623
Total Debts: $86,967,468
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
1994 Expat Deferral Plan Deferred Compensation $5,472,965
1400 Smith Street Plan
Houston, Texas 77002
Pro Business Trade Payable $224
EOTT: Second Amended Plan's Classification & Treatment of Claims
----------------------------------------------------------------
Under EOTT Energy Partners, L.P. and its debtor-affiliates'
Second Amended Plan, the Classes of Claims against and Equity
Interests in the various Debtors are classified as:
A. EOTT LLC, EOTT Energy Operating LP, EOTT Energy Pipeline LP,
EOTT Energy Canada LP, EOTT Energy Finance Corp. and EOTT
Energy Liquids LP:
Class 1 Allowed Priority Unsecured Non-Tax Claims
Class 2 Allowed Secured Tax Claims
Class 3.1 Allowed Enron Secured Claim
Class 3.2 Allowed Trade Partner Secured Claims
Class 3.3 Allowed M&M Lienholder Secured Claims
Class 3.4 Allowed Other Secured Claims
Class 4 Allowed Senior Note Claims
Class 5.1 Allowed Convenience Claims
Class 5.2 Allowed General Unsecured Claims
Class 6 Allowed Equity Interests
The Claims and Equity Interests in EOTT Finance are
designated with a letter "B"; the Claims against and Equity
Interests in EOTT LLC are designated with a letter "C"; the
Claims against and Equity Interests in EOTT OLP are
designated with a letter "D"; the Claims against and Equity
Interests in EOTT Pipeline are designated with a letter "E";
the Claims against and Equity Interests in EOTT Canada are
designated with a letter "F"; and the Claims against and
Equity Interests in EOTT Liquids are designated with a letter
"G".
B. EOTT Energy Partners LP -- "EOTT"
Class 1A Allowed Priority Unsecured Non-Tax Claims
Class 2A Allowed Secured Tax Claims
Class 3.1A Allowed Enron Secured Claim
Class 3.2A Allowed Trade Partner Secured Claims
Class 3.3A Allowed M&M Lienholder Secured Claims
Class 3.4A Allowed Other Secured Claims
Class 4A Allowed Senior Note Claims
Class 5.1A Allowed Convenience Claims
Class 5.2A Allowed General Unsecured Claims
Class 6.1A Allowed Common Units
Class 6.2A Allowed GP Units
Class 6.3A Allowed Subordinated Units
Class 6.4A Allowed Additional Partnership Interests
C. EOTT Energy Corp. (EOTT GP)
Class 1H Allowed Priority Unsecured Non-Tax Claims
Class 2.1H Allowed Indemnifiable Secured Tax Claims
Class 2.2H Allowed Non-Indemnifiable Secured Tax Claims
Class 3.1H Allowed Enron Secured Claim
Class 3.2H Allowed Indemnifiable Other Secured Claims
Class 3.3H Allowed Non-Indemnifiable Other Secured
Claims
Class 4H Allowed Senior Note Claims
Class 5.1H Allowed Convenience Claims
Class 5.2H Allowed Indemnifiable General Unsecured
Claims
Class 5.3H Allowed Non-Indemnifiable General Unsecured
Claims
Class 6H Allowed Equity Interests
Dana R. Gibbs, EOTT President and Chief Executive Officer,
explains that Class 1A-H Claims are not Impaired and are
presumed to have accepted the Plan. Thus, Class 1A-H are not
entitled to vote to accept or reject the Plan.
Treatment of Claims and Equity Interests
The Plan contemplates that the Unclassified Administrative
Claims will be paid in full when due while Classified Claims and
Equity Interests will be treated as:
Class Estimate Claim Treatment
----- -------- ---------------
PRIORITY NON-TAX CLAIMS
1A-H $_______ paid in full from the Priority Claims Reserve
SECURED TAX CLAIMS
2A-G $_______ paid in full at the Debtors' election by:
2.1H
(i) the execution and issuance of a Plan
Note in favor of the Claim holder;
(ii) the conveyance of any Estate Property
constituting the collateral of the
Claim holder to the extent of the
amount of the Allowed Claim; or
(iii) an agreement between the Debtors and
the Claim holder.
Any Estate Property securing Claim under this
Class remaining after full satisfaction of
that Claim will remain Estate Property free
and clear of all Liens. Any Plan Note issued
in satisfaction of an Allowed Claim will
contain these general terms and conditions:
-- Principal: The amount of the Claim;
-- Interest: 6% per annum;
-- Maturity: Six years from the date the
Claim was originally assessed;
-- Payment Terms: Consecutive equal quarterly
installments of principal and interest
over the term of the note.
If the holder of a Class 2A-G Claim or Class
2.1H Claim has a deficiency claim, the Claim
will be treated under the Plan as either:
(i) a Class 5.2 General Unsecured Claim or
Class 5.2H Claim; or
(ii) a Priority Unsecured Tax Claim.
2.2H $_______ paid in full at the EOTT GP's election, which
will be made on or before the Effective Date,
by:
(i) the conveyance of any Estate Property
constituting the collateral of the Claim
holder to the extent of the amount of
the Allowed Claim; or
(ii) an agreement between EOTT GP and the
Claim holder.
If the holder of a Class 2.2H Claim has a
deficiency claim, the Claim will be treated
under the Plan as either:
(i) a Class 5.3 Non-Indemnifiable General
Unsecured Claim; or
(ii) a Priority Unsecured Tax Claim.
SECURED NON-TAX (INCLUDING ENRON'S) CLAIMS
3.1A-H $6,211,673 paid in full pursuant to the Settlement
Agreement
3.2A-G $_______ paid in full
3.3A-G $_______ Debtors will satisfy the Claim by executing
and issuing a Plan Note on the Closing Date
to the Claim holder. The Plan Note will
contain these general terms:
-- Principal: The amount of the Claim;
-- Interest: 6% per annum;
-- Maturity: Six years; and
-- Payment Terms: Consecutive equal quarterly
installments of principal and interest
over the term of the note.
3.4A-G $_______ satisfied in full at the Debtors' election
3.2H by:
(i) issuance of a Plan Note;
(ii) the conveyance of any Estate Property
as the collateral of the Claim holder to
the extent of the Claim amount; or
(iii) an agreement between the Debtors and
the Claim holder.
Any Plan Note issued will contain these
general terms and conditions:
-- Principal: The amount of the Claim;
-- Interest: 6% per annum;
-- Maturity: Six years; and
-- Payment Terms: Consecutive equal quarterly
installments of principal and interest
over the term of the note.
If the holder of a Class 3.4A-G Claim or
Class 3.2H Claim has a deficiency claim, the
Claim will be treated under the Plan as
either as a Class 5.2 General Unsecured Claim
or Class 5.2H Claim.
3.3H $_______ satisfied in full at the election of EOTT GP
on or before the Effective Date, by:
(i) the conveyance of any Estate Property
constituting the collateral of the Claim
holder to the extent of the amount of
the Allowed Claim; or
(ii) an agreement between EOTT GP and the
Claim holder.
If the holder of a Class 3.3H Claim has a
deficiency claim, the Claim will be treated
under the Plan as a Class 5.3 Non-
Indemnifiable General Unsecured Claim.
UNSECURED NOTEHOLDER CLAIMS
4A-H $_______ Each Claim holder will receive:
(i) a Pro Rata Share of the New Notes;
(ii) a Pro Rata Share of the Class 4 LLC
Distribution;
(iii) the Class 6 LLC Distribution; and
(iv) the LLC Warrant Distribution.
CONVENIENCE CLASS CLAIMS
5.1A-H $_______ Paid in cash in an amount equal to the lesser
of:
(i) $10,000; or
(ii) allowed Claim amount.
OTHER GENERAL UNSECURED CLAIMS
5.2A-H $_______ A Pro Rata Share of the Class 5.2
Distribution
5.3H $_______ Pro Rata Share of the EOTT GP Cash
EQUITY INTERESTS
6.1A none Common Units in EOTT will be cancelled and
extinguished on the Effective Date but each
Common Unit holder will receive:
(i) the Class 6 LLC Distribution; and
(ii) the LLC Warrant Distribution.
6.2A none The Equity Interests will be cancelled and
6.3A extinguished on the Effective Date and the
6.4A Equity Interest holders will not receive or
6H retain anything.
6B-G none Equity Interest holders will retain its
Equity Interest under the Plan but will not
be entitled to receive any Distribution
(EOTT Energy Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
EQUIFIN INC: AMEX Wants Plan to Regain Listing Compliance
---------------------------------------------------------
EquiFin, Inc., (AMEX:II AND II,WS) an early stage, commercial
finance company that provides a range of capital solutions to
small and mid-size business enterprises, reported third quarter
and nine-month results for the period ended September 30, 2002.
Revenues for the third quarter of 2002 were $550,000, compared
with $75,000 for the same period in 2001. The Company had a 2002
third quarter loss of $154,000 from continuing operations,
versus a loss of $222,000 for the same quarter ended September
30, 2001.
Revenues for the nine months ended September 30, 2002 were
$1,083,000, compared with $158,000 for the similar period in
2001. The loss from continuing operations for the nine-month
period was $1,046,000, versus a loss from continuing operations
of $622,000 during the same period in 2001.
Commenting on the results, Walter Craig, President and Chief
Executive Officer of EquiFin, stated, "Improved financial
results for the quarter reinforced the viability of our business
model and demonstrated the Company's commitment to providing
credit to small, mid-size business enterprises. Not only did
revenues for the first nine months of 2002 rise significantly to
$1,083,000 from $158,000 for the same period in 2001, but more
specifically, the operations of Equinox Business Credit Corp.,
the Company's 81%-owned operating subsidiary, broke even for the
third quarter."
"While Equinox benefitted from a unique revenue opportunity in
the third quarter of 2002, the Company still does not expect
Equinox to be consistently profitable until early 2003," added
Mr. Craig. "Nevertheless, the third quarter highlighted the
strong returns that are available from providing financing to
small, mid-size business enterprises."
Mr. Craig also reported that the Company has been asked to
advise the American Stock Exchange of its 18-month plan to
reestablish stockholder equity sufficient to keep its common
stock listed for trading on the AMEX.
"The Company is currently formalizing its response to the AMEX,
which we believe will show a viable plan that will bring the
Company into compliance over the next 18 months, and one which
will address specifically the stockholder equity requirement for
continued listing on AMEX," commented Mr. Craig. "Although we
remain optimistic that our 18-month plan to increase stockholder
equity will meet AMEX' approval, there is no assurance that the
AMEX will accept our plan. If the plan is not accepted by the
AMEX, the delisting of our common stock from trading on the AMEX
could result." A definitive response from the AMEX is not
expected until early in 2003.
* * *
In its Form 10-Q report filed with the Securities and Exchange
Commission on November 15, 2002, the Company said:
"In December 2001, Equinox Business Credit Corp., an 81% owned
subsidiary of the Company, entered into a Loan and Security
Agreement with Foothill Capital Corporation, which provides for
the initiation of a $20,000,000 revolving credit facility. The
agreement provides for interest at the prime rate plus 1.25%
(equal to 6% at September 30, 2002). Equinox is permitted to
borrow under the Credit Facility at up to 85% of the borrowing
base, which consists of eligible purchased accounts and eligible
notes receivable, as defined in the Agreement. Under the terms
of the Agreement, Equinox must maintain tangible net worth
(including subordinated debt) of $3,000,000; a leverage ratio,
as defined, of not more than 5 to 1 and, beginning in April
2003, an interest coverage ratio of not less than 1.1 to 1,
increasing to 1.25 to 1 beginning April 2004. All the assets and
the capital stock of Equinox are pledged to secure the Credit
Facility, which is also guaranteed by the Company. The Agreement
matures December 31, 2004. There was $5,720,000 outstanding on
the Credit Facility at September 30, 2002.
"At September 30, 2002, Equinox had a net worth of $2,860,000
compared to the minimum requirement under the Credit Facility of
$3,000,000. The shortfall was subsequently cured by capital
contributions from EquiFin, Inc. The operating results for
Equinox will not be adequate to continue meeting this net worth
requirement during the fourth quarter of 2002 and, accordingly,
further capital contributions by EquiFin to cover such
deficiency will be required. In addition to the agreement to
have a specific net worth which has required capital
contributions from EquiFin, Equinox has, through September 30,
2002, operated as a negative cash flow business. EquiFin has
provided operating cash to Equinox to cover such cash
shortfalls. EquiFin is continuing its private placement of notes
so that it will be in a position to continue to provide Equinox
with capital for its operating needs and net worth coverage.
"If EquiFin is unable to sell notes on a timely basis, or
liquidate any of its other assets on a timely basis to meet
Equinox' net worth and/or cash flow needs, Equinox would be
required to attempt to negotiate a waiver with Foothill on the
net worth requirement of its Credit Facility. There can be no
assurance Foothill would consent to this request. If sufficient
cash is not timely available for Equinox' operating needs, a
reduction in operating expenses would be required to continue
Equinox' operations.
"Advances by the lender under the Credit Facility for loans
initiated by Equinox are equal to 85% of the capital provided to
the borrower, with Equinox providing the additional 15% of
capital. In December 2001, the Company commenced a private
placement of up to $1,500,000 of five-year notes to provide the
Company with additional working capital and capital to invest in
the development of its loan portfolio. Through September 30,
2002, $561,000 of 11% subordinated notes and $470,000 of 13%
secured notes had been sold. The Company is continuing its
placement of notes in view of the requirement that the Company
has 15% invested in each loan that is initiated under the Credit
Facility. The growth of Equinox' loan portfolio during 2003 will
be dependent on the Company's ability to raise additional
capital."
FOCAL COMMS: Defaults Prompt Fitch to Further Junk Debt Ratings
---------------------------------------------------------------
Fitch Ratings has downgraded Focal Communications' senior
unsecured debt rating to 'C' from 'CCC-' and the senior secured
rating to 'C' from 'CCC+'. The Negative Rating Outlook has been
removed and the debt has been placed on Rating Watch Negative.
The rating action is consistent with Focal's disclosure that the
company has defaulted on both its senior secured credit facility
and its senior secured equipment term loan as a result of third
quarter revenue and EBITDA being below its minimum covenant
levels. The company has indicated that it continues to negotiate
with its banks and other senior lenders in an effort to reach a
resolution of the default and amend the covenants, but it is
unclear as to the timing of such a resolution.
At the end of the third quarter of 2002, Focal had approximately
$65 million in cash on its balance sheet. In light of the
default, the company has no other liquidity resources. Given
that $93 million is outstanding on the credit facility, Fitch
believes that the company will not be able to meet its
obligations should the banks and/or other senior lenders require
immediate repayment.
Fitch will continue to monitor the situation, and the Rating
Watch Negative will be resolved pending the company's ongoing
discussions with its bank group and senior lenders.
Focal Communications CP's 12.125% bonds due 2008 (FCOM08USR1)
are trading at a penny on the dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=FCOM08USR1
for real-time bond pricing.
GENESEE: Completes Liquidation Phase of Plan Adopted in 2000
------------------------------------------------------------
Genesee Corporation (Nasdaq: GENBB) announced its progress to
date under the Plan of Liquidation and Dissolution that was
adopted by the Corporation's shareholders in October 2000.
The Corporation has substantially completed the liquidation
phase of the Plan, divesting its brewing, equipment leasing and
foods businesses and its real estate assets in the following
transactions:
Pre-Tax Cash
Asset Divested Date Divested Proceeds To Date
-------------- ------------- ----------------
Brewing Business December 15, 2000 $23.2 million
Equipment Leasing
Business December 28, 2000 $12.8 million
Foods Business October 10, 2001 $22.1 million
Clinton Square Real
Estate July 1, 2002 $2.4 million
Westbrook/Crossroads
Real Estate September 16, 2002 $4.5 million
TOTAL PRE-TAX CASH PROCEEDS: $65.0 million
In connection with the sale of its brewing business, the
Corporation provided $11 million of seller financing to High
Falls Brewing Company and the Corporation was required to
guarantee performance of a major brewing contract and maintain
significant levels of liquid net worth to secure its guaranty.
In April 2002, the Corporation negotiated a release from this
guaranty and the liquid net worth requirement, relieving the
Corporation of a significant contingent liability. In July 2002
the Corporation collected $6 million from High Falls, which,
together with amounts previously paid by High Falls, reduced the
balance remaining on the seller financing of the brewery sale to
$4 million.
The Corporation's unaudited Statement of Net Assets in
Liquidation at October 26, 2002 is set forth below. The amounts
recorded in the Statement of Net Assets in Liquidation are based
on management's current estimates of the net realizable value of
the Corporation's assets and the settlement costs of the
Corporation's liabilities, which are expected to differ from the
amounts shown below and could be greater or lesser than the
amounts shown below.
The major assets reported on the Corporation's Statement of Net
Assets in Liquidation consist of the following:
* $9.3 million in cash and cash equivalents, which
represents the balances maintained in various operating and
money market accounts, and $2.4 million in cash being held in
escrow against potential claims arising from the sale of the
Corporation's foods business. The operating and money market
accounts are valued at their face value at October 26, 2002. Of
this amount, $3.2 million is being held as collateral for a bank
standby letter of credit which provides financial assurance for
the Corporation's self-insured workers compensation liability.
The amount and duration of the financial assurance requirement
is more fully described below. The $2.4 million escrow from the
sale of the Corporation's foods business is being held in a
money market account under an escrow agreement with a nationally
chartered bank. The escrow is scheduled to expire on April 10,
2003. Upon expiration, the principal balance and all accrued
interest in the escrow account is payable to the Corporation
except to the extent that claims for post-closing liabilities
arising from the sale of the foods business exceed $270,000. As
of October 31, 2002, the total amount of all claims chargeable
against the escrow account was less than $10,000.
* $5.4 million in marketable securities available for sale,
which represents a bond portfolio managed by an independent
third party investment advisor. The portfolio consists primarily
of U.S. Treasury and high quality corporate bonds. Average
maturity and yield of the bond portfolio at October 26, 2002 was
1.7 years and 3.0 percent, respectively. Valuation of the bond
portfolio is based upon the closing prices of the bonds in the
portfolio at October 26, 2002.
* $3.7 million in notes receivable, which reflects
management's current estimate of the value of the $4 million
owed by High Falls on the seller financing of the brewery sale.
The $4 million note from High Falls bears interest at the rate
of 12% per annum. Interest is paid quarterly and principal
payments of $1 million and $3 million are due on December 15,
2002 and December 15, 2003, respectively. The December 15, 2003
principal payment can be extended by High Falls to December 15,
2005 if High Falls does not achieve certain contract brewing
volume targets. The $4 million note is subordinate to High
Falls' senior bank debt and mezzanine financing. As of September
30, 2002, the note is subordinate to $11.4 million of senior
debt. Under the terms of the senior debt agreements, in the
event of a default by High Falls, the senior lenders could
declare a standstill, which would prevent the Corporation from
receiving principal and interest payments and enforcing its
rights against collateral pledged by High Falls to secure the $4
million note. If the senior lenders were to declare a
standstill, payments to the Corporation and the Corporation's
rights as a secured creditor could be suspended indefinitely.
The terms of the High Falls seller financing are detailed in
exhibits to the Corporation's report on Form 8-K filed on
January 2, 2001. High Falls is currently in compliance with all
of its obligations under its loan agreements with the
Corporation and the Corporation currently expects to collect the
entire $4 million balance due on the High Falls note. However,
the Corporation has adjusted the value of the High Falls note on
its Statement of Net Assets in Liquidation to $3.7 million to
reflect management's current estimate of the value of the note,
which is based on the fair market value of publicly traded debt
instruments of similar quality.
* $793,000 estimated income tax receivable, which
represents the Corporation's current estimate of the cash flow
impact under an orderly liquidation and dissolution scenario of
estimated taxes on current year and future income after the
utilization of estimated tax credits and carry forwards, all of
which are subject to audit by various federal and state taxing
authorities.
The liabilities reported on the Corporation's Statement of Net
Assets in Liquidation include the following:
* $2.2 million in accrued compensation, expenses and other
liabilities. $1.7 of this amount reflects management's current
estimate of the cost to complete the Corporation's plan of
liquidation and dissolution and operate the Corporation through
its dissolution. This cost estimate, which was increased by
$450,000 in the second fiscal quarter ended October 26, 2002,
includes personnel, facilities, professional fees, and other
related costs, and is based on various assumptions regarding
the number of employees, the use of outside professionals
(including attorneys and accountants) and other costs, and on
management's current estimate that the winding up and
dissolution of the Corporation will be completed by February
2004. Accrued expenses also includes an amount that the
Corporation has estimated as the settlement expense of a state
sales tax audit of the Corporation's former brewing business.
* $1.4 million in accrued self-insured workers compensation
liability, which represents the Corporation's current estimate
of self-insured workers compensation liability that the
Corporation was required to retain following the sale of its
brewing and foods businesses. This estimate is based on an
independent actuarial study of pending and contingent workers
compensation claims. It is expected that the actuarial value of
workers compensation claims will decrease in the future as
amounts are paid to claimants.
* The Corporation is required by the New York Workers
Compensation Board to maintain a $3.2 million standby letter of
credit to provide financial assurance for self-insured workers
compensation liability. Despite the lower $1.4 million actuarial
valuation and the Corporation's expectation that the actuarial
valuation of workers compensation liability will decline over
time as claims are paid, the Board will not review the $3.2
million financial security requirement until at least October
2004 and it is not currently known whether the Board will adjust
the financial security requirement to an amount more consistent
with the actuarial valuation of workers compensation liability.
It is the Corporation's current expectation that the Board will
require the Corporation to maintain some amount of financial
assurance for the actuarially determined duration of the self-
insured workers compensation liability, which is currently
estimated to be twenty to twenty-five years, and any such amount
will not be available for distribution to shareholders until the
Corporation is relieved of its financial assurance obligation.
The Corporation's management is currently reviewing strategies
to reduce operating costs during the wind up and dissolution
phase of the Plan. One initiative being considered is to take
the Corporation private through a reverse stock split that would
reduce the number of shareholders and allow the Corporation to
terminate its registration under the Securities Exchange Act of
1934, thereby relieving the Corporation of the cost of SEC
reporting and other federal securities law compliance costs.
Management is currently evaluating the feasibility, cost, timing
and other considerations associated with a reverse stock split
to take the Corporation private and any such action would
require approval by the Corporation's shareholders.
To date, the Corporation has made five liquidating distributions
to shareholders under the Plan of Liquidation and Dissolution,
totaling $56.1 million, or $33.50 per share. The amount and
timing of future liquidating distributions will depend on the
factors described above and a number of other factors, including
without limitation, the risks and uncertainties identified above
and in the information below.
GENTEK INC: Noma Wins Approval to use Debtor's Cash Collateral
--------------------------------------------------------------
Judge Walrath authorizes Noma Company to use the GenTek
Cash Collateral for its working capital and general corporate
purposes. Noma does not have sufficient available sources of
working capital and financing to carry on the operation of its
business without the use of the GenTek Collateral.
Nevertheless, Noma is prohibited from advancing any of the
GenTek Collateral to any other Debtor in these Chapter 11 cases
or any non-Debtor subsidiary except in ordinary course
intercompany payments among the Debtors and Non-Debtors for the
postpetition provision of goods and services.
Judge Walrath also permits Noma to provide adequate protection
for, and to the extent of, any diminution in value of GenTek's
interest in the Collateral.
Judge Walrath will convene a final hearing on Noma's use of the
GenTek Collateral on December 3, 2002 at 4 p.m. Interested
parties have until November 21, 2002 to file responses and
objections to the use of the GenTek Collateral. (GenTek
Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
GLOBAL CROSSING: Asks Court to Approve Settlement Pact with Tyco
----------------------------------------------------------------
Paul M. Basta, Esq., at Weil Gotshal & Manges LLP, in New York,
recounts that prior to the Petition Date, Global Crossing Ltd.,
and its debtor-affiliates entered into the Agreements with Tyco
Telecommunications (US) Inc., to assist in the construction and
operation of the Debtors' telecommunications network.
Specifically, the Debtors contracted with Tyco to construct
various portions of the Network, including:
-- the installation of portions of the Pan American Crossing
system;
-- the installation of portions of the trans-Atlantic cable
known as Atlantic Crossing I;
-- installation and upgrades of portions of the other trans-
Atlantic cable known as the "Yellow Line" or Atlantic
Crossing II; and
-- construction of two cable stations of the mid-Atlantic cable
known as Mid-Atlantic Crossing.
Under the Tyco Agreements, Tyco agreed to lay cable, install
equipment, operate and construct cable station houses at certain
Network terminals, install equipment and software and warrant
the installed systems. Upon final payment, Tyco agreed to
transfer title to these assets to Global Crossing.
Mr. Basta reports that the entire cost of the Tyco Construction
exceeded $1,100,000,000, which was largely completed prior to
the Petition Date. Tyco asserts $48,800,000 in claims against
the Debtors for non-payment under the Tyco Agreements. Tyco
asserts that payment of $35,600,000 would be required as cure
payment on assumption of the Tyco Agreements pursuant to Section
365 of the Bankruptcy Code. The balance of the Tyco claims are
asserted against non-Debtor Global Crossing affiliates.
Under the Tyco Agreements, the Debtors committed to purchase
additional equipment and services to complete the Tyco
Construction at a cost of $9,032,932. Although the Debtors'
current business plan requires a limited amount of the
Additional Services, the vast majority are not required as the
Debtors have scaled back enormously their capital expenditure
projections and expansion plans. Absent a settlement with Tyco,
Global Crossing would be faced with these prospects, neither of
which is satisfactory:
-- paying the full $9,032,932 for all of the Additional
Services, plus the full cure amounts following assumption of
the Tyco Agreements; or
-- receiving none of the Additional Services from Tyco,
including those services that are essential to the completion
and operational integrity of the Network.
Mr. Basta adds that the Debtors and Tyco also have numerous tax
disputes arising from the Tyco Construction and the Tyco
Agreements. For instance, there are disputes regarding
distribution of reimbursements of VAT paid to the Debtors by
various government entities. Additionally, each of the parties
asserts claims against each other for customs duties for
importing equipment and other material into foreign
jurisdictions.
Assuming the Tyco Agreements, curing prepetition defaults and
paying the full cost of the Additional Services would enable the
Debtors to acquire title to the Segments, attain performance of
the warranties and resolve outstanding tax disputes. However,
in order to achieve a successful restructuring, it is critical
that the Debtors reduce operating and emergence costs. Tyco
asserts that the cost of curing the defaults under those Tyco
Agreements with Global Crossing Debtor-entities is $35,600,000.
The Debtors simply cannot afford to pay these cure amounts. If
the Debtors assumed the Tyco Agreements and paid the alleged
cure amount, the Debtors would severely jeopardize their ability
to satisfy the financial tests contained in the Purchase
Agreement with Hutchison and STT. As a result, given the
associated cure costs and future obligations under the unamended
Tyco Agreements, the wholesale assumption pursuant to Section
365 of the Bankruptcy Code of the Tyco Agreements in their
prepetition form is not a viable option for the Debtors.
Mr. Basta believes that wholesale rejection of the Tyco
Agreements, is also not an attractive option for the Debtors
either, because:
-- rejection would risk severely damaging the value of the
Network, as the Tyco Agreements provide for long-term
warranties for equipment and design life as well as transfer
of title to substantial and critical segments of the Network;
-- the Tyco Agreements contain provisions relating to software
and intellectual property licenses that are necessary to the
operation of the Network. Should the Tyco Agreements be
rejected, issues related to title and intellectual property
rights could result in loss of the Segments, thereby
significantly and negatively impacting the value of the
Network and rendering it useless;
-- $13,200,000 of Tyco's claims under the Tyco Agreements are
asserted against non-debtor affiliates that cannot avail
themselves of the benefits of the automatic stay, Section 365
rejection provisions or any other Chapter 11 protections.
Absent a settlement, the Debtors would be required to pay all
outstanding amounts and for the completion of all Additional
Services under the Tyco Agreements;
-- rejection of the Tyco Agreements would undermine the Debtors
ability to comply with the representations and warranties
contained in the Purchase Agreement. It would also would
jeopardize the operational viability of the Network by
cutting short valuable equipment and design life warranties;
-- rejection of the Tyco Agreements would prevent the Debtors
from acquiring clear title to a substantial portion of the
Network, which is the Debtors' core asset and around which
the Debtors intend to reorganize; and
-- rejection of the Tyco Agreements would negatively impact the
Debtors' relationship with Tyco on a going-forward basis,
which is particularly troublesome because the Debtors, under
the Tyco Agreements, contemplated having Tyco ensure the
operational viability of the Network for years to come.
Thus, the Debtors entered into settlement negotiations with
Tyco. As it was with respect to its other major equipment and
construction vendors, the Debtors' objective was to enter into a
settlement agreement with Tyco that would:
-- be global in scope, settling all disputes and all claims of
Tyco and each Debtor and non-Debtor affiliate in connection
with the applicable Tyco Agreement;
-- eliminate cure costs associated with assuming certain of the
Tyco Agreements;
-- provide for the future completion of work and delivery of
products and services required for the implementation of
the Debtors' current business plan;
-- provide for the transfer of title to the Debtors of the
Segments and related equipment where transfer has not yet
occurred;
-- provide for the performance of warranty obligations by Tyco
where required by the Debtors;
-- provide for the reduction of Additional Services to be
provided by Tyco and corresponding reduction in future
payment obligations of the Debtors where these Additional
Services are not required by the Debtors' current business
plan; and
-- provide for the Debtors' unfettered right to assume and
assign the Tyco Agreements.
Following extensive arms-length negotiations with Tyco, the
Debtors and their applicable non-Debtor affiliates entered into
the Tyco Settlement Agreement. Mr. Basta asserts that the Tyco
Settlement Agreement achieves all or substantially all of the
Debtors' objectives. The Tyco Settlement Agreement is a
critical step toward the successful reorganization of the
Debtors. If approved, the Tyco Settlement Agreement will help
to stabilize the Debtors' businesses, significantly reduce the
costs of emergence and lay the groundwork for a positive future
relationship with one of the Debtors' most important vendors.
The salient terms of the Tyco Settlement Agreement are:
-- Global Crossing Parties: Global Crossing Ltd. and all of its
debtor and non-debtor subsidiaries and affiliates, excluding
Global Crossing Asia Holdings Ltd. and its direct and
indirect subsidiaries;
-- Tyco Entities: Tyco Telecommunications (US) Inc. and its
direct and indirect subsidiaries and affiliates, including
those that execute the Settlement Agreement, and any
successors-in-interest, receivers, liquidators, trustees or
other authorized agents;
-- First Payment by Global Crossing to Tyco: Global Crossing
will pay $2,555,706 to Tyco within three business days of
Court approval of the settlement;
-- Emergence Payment: Global Crossing will pay $2,563,706 to
Tyco on the effective date of the Plan of Reorganization;
-- Work Related Payment: Global Crossing will pay $760,970 to
Tyco on account of future work by Tyco on the Brookhaven and
Hollywood cable stations and for certain PAC-related work, to
be paid by Global Crossing within five business days of its
receipt of invoice, which will be submitted by Tyco to Global
Crossing no sooner than 10 business days prior to work
commencement;
-- Spare Plant Storage Work Related Payment: Global Crossing
will pay $200,000 to Tyco within three business days of the
Effective Date on account of AC-I cable storage;
-- Additional Work Related Payment: Global Crossing will pay
$500,000 to Tyco on account of future PAC-related work by
Tyco, to be paid by Global Crossing within five business days
of its receipt of invoice, which will be submitted by Tyco to
Global Crossing no sooner than 10 business days prior to work
commencement;
-- The Reimbursements: To the extent that Global Crossing
receives, from the applicable tax authority, any VAT
reimbursement in connection with PAC and AC-I, it will be
held in trust for the applicable Tyco entity and will be
promptly paid the reimbursement to the Tyco entity after
Court approval. To date, Global Crossing has received
$8,249,769 of the Reimbursements. Of that sum, $5,687,938 is
currently owed to Tyco by GC Landing, a non-Debtor Global
Crossing entity. The balance of the Reimbursements consists
of:
* $3,700,000 of German VAT that GC Landing cannot recover
without certain documentation from Tyco and that Tyco will
not provide absent approval of the Tyco Settlement
Agreement; and
* $6,100,000 of Mexican, Venezuelan and Panama VAT, the
recovery of which is very uncertain due to the tax regimes
in those countries;
-- Allowed General Unsecured Claim: Tyco will have a $14,000,000
allowed general unsecured claim against Global Crossing, with
$7,000,000 to be paid by GC St. Croix Company Inc.,
$4,900,000 by PAC Landing Corp., and $2,100,000 by GT U.K.
Ltd.;
-- Transfer of Title to the Included Systems: To the extent that
title in the AC-I; AC-I System Upgrades 1, 2 and 3; PAC; PAC
System Upgrade 1; certain MAC related construction; AC-II; AC
II System Upgrades 1 and 2 and, to the extent completed and
in the possession of Global Crossing as of the Effective
Date, AC II System Upgrade 3 has not previously passed in
accordance with the Tyco Agreements, title to the Included
Systems will vest in Global Crossing, free and clear of any
liens or encumbrances by Tyco, upon receipt by Tyco of the
First Payment;
-- Warranties: All warranties under the Tyco Agreements will
remain in full force and effect, except that the warranty
period for each of the Included Systems will commence once
the Court approves the Settlement or and will continue for a
period of two years from the effective date of the
Settlement;
-- Global Crossing Release: Global Crossing releases Tyco from
all claims relating to the Tyco Agreements, other than claims
arising under any warranties contained in these agreements.
This release includes any potential preference actions
asserted by the Debtors against Tyco for payments of
$8,326,222 made by various Debtors to Tyco within 90 days of
the Petition Date;
-- Tyco Release: All Tyco Entities release Global Crossing from
all claims relating to the Tyco Agreements.
-- Assumption of Executory Contracts: The Debtors will assume
these Tyco Agreements, as provided in the Tyco Settlement
Agreement, provided that no payments will be required in
connection with the assumption:
a) Project Development and Construction Contract dated March
18, 1997 between AT&T Submarine Systems, Inc., now known
as Tyco Telecommunications (US) Inc., and Global
Telesystems Ltd., now known as Atlantic Crossing Ltd.;
b) Project Development and Construction Contract between Tyco
and Pan American Crossing Ltd. dated July 21, 1998 amended
and restated April 13, 1999;
c) Construction Contract between Tyco, Mid-Atlantic Crossing
Ltd. and MAC Landing Corp. dated November 30, 1998;
d) Contract Variation No. 2 between Tyco Submarine Systems
Ltd., Level 3 (Bermuda) Ltd., Level 3 International Inc.
and Level 3 Communications Limited and Atlantic
Crossing-II Ltd. dated March 7, 2000;
e) Agreement for the Storage of Spare Plant for Submarine
Cable Systems between Tyco and Atlantic Crossing Ltd.
dated August 30, 2000;
f) Settlement Agreement, dated as of October 4, 2001 between
TyCom (US) Inc. on the one hand, and Global Crossing,
South American Crossing (Subsea) Ltd., Atlantic Crossing
Ltd., GT Landing Corp., GT U.K. Ltd., Global Telesystems
GmbH, GT Netherlands BV and Global Crossing Holdings
USA Inc., on the other hand; and
h) Guaranty of Tyco International Ltd. in favor of Mid-
Atlantic Crossing Ltd. dated November 30, 1998; and
-- Right of Global Crossing to Assume and Assign Tyco
Agreements: Global Crossing will be permitted to assign any
or all of the Tyco Agreements and Tyco waives any right under
Section 365 of the Bankruptcy Code to receive adequate
assurance of future performance by any assignee of any of the
Tyco Agreements or the Tyco Settlement Agreement. If the
assignment occurs prior to the Emergence Date then a certain
portion of the Emergence Payment will be accelerated and will
be paid by the applicable Global Crossing party to the
applicable Tyco party at the time of the assignment.
Mr. Basta asserts that the Tyco Settlement Agreement stabilizes
the business relationship between the Debtors and Tyco. Absent
the Tyco Settlement Agreement, potentially beneficial
transactions between the Debtors and Tyco would be impeded by
unresolved disputes. Resolving the disputes through the Tyco
Settlement Agreement will permit the Debtors and Tyco to
normalize their relationships for the benefit of the Debtors,
their creditors and all other parties-in-interest.
In addition, the Tyco Settlement Agreement aids the Debtors in
satisfying the representations and warranties contained in the
Hutchison/STT Purchase Agreement relating to the functionality
of the Network and the establishment of a good working
relationship with Tyco on a go forward basis. The Tyco
Settlement Agreement also helps the Debtors' satisfy the
financial tests contained in the Purchase Agreement, as the
precise amount of the payments due to Tyco under the Tyco
Settlement Agreement were accounted for when those tests were
developed.
For these reasons, the Debtors ask the Court to approve the Tyco
Settlement Agreement and authorize the assumption of the
applicable executory contracts and leases pursuant to Rule
9019(a) of the Federal Rules of Bankruptcy Procedure. (Global
Crossing Bankruptcy News, Issue No. 26; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
HEALTHNOW: S&P Assigns BB Counterparty & Fin'l Strength Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB'
counterparty credit and financial strength ratings to HealthNow
New York Inc., (d/b/a Blue Cross & Blue Shield of Western New
York) based on the company's low capital level and market
competition, partially offset by its improving operating
performance. It also said the outlook is stable.
"HealthNow's capitalization is still relatively low, but it has
grown steadily in the past five years," observed credit analyst
Tom Taillon. "In addition, the ratings reflect the company's
increasing equity portfolio, slightly offset by the favorable
regulatory environment."
Standard & Poor's expects HealthNow's total enrollment to
increase by the end of 2002 about 5% to 785,000 members.
Although enrollment gains from the managed care segment are
expected to be strong, there is a consistent decline in
enrollment for the company's traditional products, with the
exception of administrative services-only. For 2003, enrollment
growth is expected to finally realize the benefits of the
central New York expansion. Operating performance is expected to
continue its positive trend in the near term. For 2002 and 2003,
Standard & Poor's expects HealthNow's net gain to be in the
$18million-$22 million range. Statutory capital should exceed
$130 million at year-end 2002. At year-end 2002, Standard &
Poor's expects HealthNow's capital adequacy ratio to remain at
about 75%. Capital is expected to exceed $150 million by year-
end 2003.
HORIZON NATURAL: Receives Court Approval of First-Day Motions
-------------------------------------------------------------
Horizon Natural Resources Company (HZON.pk) said that the U.S.
Bankruptcy Court for the Eastern District of Kentucky in
Lexington has granted interim approval of its $350 million post-
petition credit facility with Deutsche Bank Trust Company
Americas.
In addition, the Bankruptcy Court granted various Horizon first-
day motions intended to support Horizon's employees, customers
and vendors while providing other forms of financial stability
while Horizon proceeds with its reorganization.
Horizon's chairman and acting chief executive officer Robert C.
Scharp, said, "We are gratified that the Court agreed with our
needs for prompt continuance of our normal business operations.
Taken together, these approvals allow Horizon to operate without
interruption and meet our normal post-petition obligations. This
is an excellent first step on our road to a successful
reorganization."
Scharp continued, "Our employees, customers and many of our
vendors have called in the last 24 hours to express their
support, and we are sincerely appreciative of their
encouragement. With the Court's first-day rulings, we can now
say that our customers should see no interruption in the supply
of coal, employees will receive compensation as before, and we
should have sufficient liquidity to purchase goods and services
from our suppliers."
On Wednesday, November 13, 2002, Horizon and 76 of its
subsidiaries filed voluntary petitions for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. In its filing documents,
Horizon and its subsidiaries listed total assets of $2.5 billion
at book value and total liabilities of $2.1 billion as of
October 31, 2002.
The case has been assigned to the Honorable William S. Howard.
More information about the filings and rulings in the case is
available via the Internet at http://www.kyeb.uscourts.govin Re
Horizon Natural Resources Company, Inc., Case Number 02-14261
(jointly administered).
For additional information, please see http://www.horizonnr.com
Horizon Natural Resources Company (formerly known as AEI
Resources Holding, Inc.) conducts mining operations in five
states with a total of 42 mines, including 27 surface mines and
15 underground mines:
-- Central Appalachian operations include all of the
company's mining operations in southern West Virginia and
Kentucky, currently totaling 36 surface and underground mines,
which produced approximately 18.1 million tons of coal (64
percent of total production) during the first nine months of
2002.
-- Western operations include mining in Colorado, Illinois
and Indiana, currently totaling six surface and underground
mines, which produced approximately 10.1 million tons (36
percent of total production) during the first nine months of
2002.
INVENTRONICS: Successfully Completes Balance Sheet Refinancing
--------------------------------------------------------------
Inventronics Limited (TSX:IVT), a designer and manufacturer of
custom enclosures for the communications, electronics and other
industries, has entered into agreements, including the
previously announced mezzanine debt financing, to refinance its
balance sheet.
The refinancing is the final step in a comprehensive
restructuring program that Inventronics implemented to return
the 32-year-old company to profitability, and continue its
diversification drive into new markets.
"This refinancing and our other restructuring initiatives have
combined to enable Inventronics to dramatically improve its
working capital position and bring its operating costs in line
with its existing revenues," said Dan Stearne, Inventronics'
President and CEO. "The last few months have been challenging
for IVT, but we now have the pieces in place for a profitable,
growth-oriented future."
Under the terms of the refinancing:
- Completion and funding are scheduled for November 22,
2002;
- Inventronics will receive $3.5 million from investment
funds managed by Mercantile Bancorp Limited for the
issuance of five-year subordinated promissory notes,
subject to finalization of certain closing conditions;
- Inventronics will issue 1,715,000 warrants that are
exercisable over five years, with each warrant entitling
the Mercantile funds to buy one Inventronics common share
for $0.40;
- Inventronics' banker has extended new operating and long-
term debt arrangements which will provide a committed
operating facility of $1,000,000 and a structured long-
term facility with an available limit of $2,500,000;
- Inventronics has scheduled an auction of surplus
equipment for November 26, 2002. Proceeds of more than
$1,000,000 will be added to working capital.
After completion of this refinancing and sale of assets,
Inventronics' balance sheet will reflect approximately $2.5
million of working capital, of which more than $1 million will
be cash. Its debt will consist of the $3.5 million of
subordinated promissory notes and approximately $2.2 million in
capital lease obligations.
This refinancing is one of three concurrent restructuring
initiatives that Inventronics undertook this year. The other two
were the consolidation of North American manufacturing into
IVT's wholly owned plant in Brandon, Manitoba (requiring the
closure of a leased plant in Sherwood Park, Alberta); and the
disposition of IVT's wholly owned UK subsidiary, Eurocraft
Enclosures Limited. The UK disposition was completed in
September and the manufacturing consolidation in October.
Consolidating all of its production into its ISO 9001:2000-
registered facility in Brandon will save Inventronics more than
$2 million in annual operating costs.
Inventronics designs and manufactures custom metal enclosures
and related products for the telecommunications, electronics,
cable television, utilities, industrial OEM, computer server and
energy resources industries. Inventronics' common shares are
listed on the Toronto Stock Exchange under the symbol "IVT."
Visit www.inventronics.com for additional details.
* * *
As reported in Troubled Company Reporter's October 14, 2002
edition, Inventronics Limited reached an agreement with the
Corporation's banker in respect to certain defaults under its
current credit arrangements.
The agreement provides a period of forbearance to allow for the
closing of the previously announced $3.5-million mezzanine debt
arrangement entered into by Inventronics with Mercantile Bancorp
Limited. It also contains a proposal for the Corporation's
banker to provide long-term and operating lending facilities,
which would fulfill one of the major conditions of the mezzanine
debt financing.
IT GROUP: Wins Nod to Ratify Settlement Agreement with Insurers
---------------------------------------------------------------
The IT Group, Inc., and its debtor-affiliates obtained the
Court's approval of their Settlement Agreement and Release with
insurance companies, ACE Property & Casualty Insurance Company
and Central National Insurance Company of Omaha. The Agreement
and Release was entered into in light of the costs, risks and
delays associated with the Insurance Coverage Litigation arising
from IT Corporation's alleged involvement at:
(1) The OII Superfund Site in Los Angeles County, California
and;
(2) The West Contra Costa County Sanitary Landfill Site in
Costa County, California;
The Settlement Agreement, which was filed with the Court under
seal, basically provides that:
(a) 30 days after the Court approves the Settlement Agreement,
the Insurance Companies will pay IT Corporation an agreed
amount that is less than the amount demanded by IT
Corporation in the Insurance Coverage Litigation;
(b) 10 business days after the Settlement Agreement is approved,
IT Corporation will dismiss the Insurance Coverage
Litigation; and
(c) IT Corporation releases and discharges the Insurance
Companies for, among other things, claims which were or
could have been asserted in the Insurance Coverage
Litigation. (IT Group Bankruptcy News, Issue No. 20;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
KAISER ALUMINUM: Wants Removal Period Extended Until March 12
-------------------------------------------------------------
Kaiser Aluminum Corporation and its debtor-affiliates seek a
second extension of their deadline to file notices of removal in
connection with any pending prepetition lawsuits. The Debtors
propose to move the removal deadline to the later of:
-- May 12, 2003; or
-- 30 days after the Court enters an order terminating the
automatic stay with respect to a particular action sought
to be removed.
There is good cause to grant the extension, Patrick M. Leathem,
Esq., at Richards, Layton & Finger, asserts. Mr. Leathem tells
Judge Fitzgerald that Debtor Kaiser Aluminum & Chemical
Corporation remains involved in a significant number of
prepetition asbestos-related proceedings that are pending in
various courts throughout the country. The other Debtors are
also parties to a variety of non-asbestos prepetition
litigation. In consideration of the number of actions involved
and the complex nature of these actions, the Debtors need more
time to determine which, if any, of the actions should be
removed and, if appropriate, transferred to this District.
Mr. Leathem contends that a 180-day extension of the removal
period will protect the Debtors' valuable right to economically
adjudicate the lawsuits if the circumstances warrant removal.
Without the extension, the potential consolidation of the
Debtors' affairs into one court may be frustrated and the
Debtors may be forced to address these claims and proceedings in
a piecemeal fashion to the detriment of their creditors.
Furthermore, extending the removal period will not prejudice the
Debtors' adversaries because these adversaries may not prosecute
the actions absent relief from automatic stay, Mr. Leathem
assures the Court.
Judge Fitzgerald will consider the Debtors' request at a hearing
scheduled on December 19, 2002 at 10:00 a.m. Under Rule 9006-2
of the Local Rules of Bankruptcy Practice and Procedures of the
Delaware Bankruptcy Court, the Debtors' removal deadline is
automatically extended through the conclusion of that hearing.
(Kaiser Bankruptcy News, Issue No. 18; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
KASPER A.S.L.: Files Joint Amended Plan & Disclosure Statement
--------------------------------------------------------------
Kasper A.S.L., Ltd., and certain of its subsidiaries filed a
petition for relief under Chapter 11 of the U.S. Bankruptcy Code
in the U.S. Bankruptcy Court for the Southern District of New
York on February 5, 2002. The Company is unable to timely file
its Quarterly Report on Form 10-Q for the quarter ended
September 28, 2002 because compliance with the periodic
reporting requirements of the Securities Exchange Act of 1934,
as amended, would cause significant hardship and unreasonable
burden in terms of expense and effort on the part of the Company
and its management. Since the filing of the Chapter 11 Petition,
the efforts of Kasper and its management have been occupied with
addressing the day-to-day needs of a Chapter 11 debtor,
including obtaining approval of the Bankruptcy Court for non-
ordinary course activities, negotiating with the Company's
creditor constituencies, on-going efforts to consummate a
reorganization plan and, most recently, the preparation of the
Debtors' First Amended and Restated Joint Plan of Reorganization
and First Amended and Restated Disclosure Statement, which were
filed with the Bankruptcy Court on November 6, 2002.
Kasper anticipates a favorable change in its results of
operations compared to the corresponding prior year period. The
Company cannot reasonably estimate at this time the results of
operations for the current period.
The Debtors are one of the leading women's branded apparel
companies in the United States. They design, market, source,
manufacture and distribute women's career and special-occasion
suits, sportswear and dresses. In addition, they license various
products under many of the Brands including, but not limited to,
women's watches, jewelry, handbags, small leather goods,
footwear, coats, eyewear and swimwear, as well as men's suits
and dress furnishings.
KEY3MEDIA: S&P Further Junks Rating over Restructuring Concerns
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on technology trade show organizer Key3Media Group Inc.,
to triple-'C'-minus from triple-'C'.
At the same time, Standard & Poor's placed the rating on
CreditWatch with negative implications. Los Angeles, California-
based Key3Media had $370 million in total debt on Sept. 30,
2002.
The downgrade and CreditWatch listing follow Key3Media's
announcement that it is exploring various strategic alternatives
to alleviate the burden of its current capital structure,
including a possible debt restructuring or sale of the company.
Key3Media also said that these steps could be accompanied by a
bankruptcy filing under Chapter 11 of the U.S. Bankruptcy Code.
"These developments highlight the severity of the challenges
facing Key3Media due to the considerable problems being
experienced in its technology end markets and the decline in
business travel and trade show participation after the September
11 terrorist attacks," according to Standard & Poor's credit
analyst Steve Wilkinson. He added, "Standard & Poor's is
concerned that these actions may be detrimental to bondholders,
and would consider any debt restructuring or exchange at less
than par value as tantamount to a default. Similarly,
Key3Media's failure to make the Dec. 16, 2002, interest payment
on its 11.25% senior subordinated notes due 2011 as scheduled
would result in lowering of the corporate credit and
subordinated debt ratings to 'D'."
The ratings are expected to remain on CreditWatch pending the
resolution of the company's restructuring efforts.
LBL SKYSYSTEMS: Wants to Start Restructuring Under BIA in Canada
----------------------------------------------------------------
LBL Skysystems Corporation (TSX : LBL) laid-off 67 of its
employees as of November 12, 2002, and filed of a notice of
intention to make a proposal to its creditors under the
Bankruptcy and Insolvency Act. The Company is still hoping to
sell its assets to a new company which would ensure the
continuity of the Company's activities and retain the employment
of its employees.
LBL Skysystems Corporation specializes in the design,
manufacture and installation of engineered curtain walls and
windows for commercial and institutional buildings. The Company
works with owners, property companies, architects and engineers
across North America in the design, manufacture and installation
of its products, which are primarily made up of aluminum and
glass. Visit http://www.lblskysystems.comto know more about the
Company.
LEGACY HOTELS: S&P Affirms BB+ Rating & Revises Outlook to Neg.
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Legacy
Hotels Real Estate Investment Trust to negative from stable. At
the same time, the 'BB+' long-term corporate credit and senior
unsecured debt ratings on the trust were affirmed.
"Standard & Poor's believes that Legacy REIT's financial policy
has become more aggressive, particularly with respect to
acquisitions, during a time when the company should be focusing
on strengthening its credit measures, which are currently weak
for the ratings," said credit analyst Ron Charbon.
Standard & Poor's expects Legacy REIT will continue to acquire
assets in the U.S., and its credit measures likely will remain
weak for the current ratings longer than expected.
Legacy REIT's pending investment in the Monarch Hotel is more
aggressive and riskier than its previous acquisitions for
several reasons. Although the hotel manager, Fairmont Hotels &
Resorts Inc., is experienced in U.S. markets, the Monarch
acquisition is the initial investment for Legacy REIT in the
U.S. Standard & Poor's considers the U.S. market to be more
competitive than the Canadian sector, and it is a market in
which Fairmont Hotels has yet to achieve strong national brand
recognition, particularly in comparison with more established
U.S. lodging brands. In addition, the U.S. lodging sector
continues to be weak. According to Smith Travel Research, U.S.
Revenue Per Available Room declined by 7.1% in 2001, and
Standard & Poor's expects an additional 3% decline in 2002.
Hotels in the upper-upscale price segment have suffered the
greatest effect from the decline in lodging demand compared with
midpriced and economy hotels. The outlook for 2003 is between no
growth and growth in the low single digits. Secondly, the
Monarch hotel was not purchased from Fairmont Hotels and,
therefore, has not been seasoned with Fairmont Hotels management
or with systems in the competitive Washington State market.
Finally, as part of the acquisition, Legacy REIT's major
shareholder and its hotel operator, Fairmont Hotels, will be
providing a capped three-year support payment to Legacy REIT to
supplement the cash contribution of the new acquisition so as
not to imperil the distributions of the trust. The necessity of
Legacy REIT to obtain a three-year support underscores the
riskier nature of the purchase.
The long-term corporate credit rating on Legacy REIT reflects
the trust's strength in business risk, offset by weaker credit
protection financial ratios for its current rating. Legacy
REIT's credit strengths continue to be its portfolio of high-
quality luxury Fairmont hotels in heritage properties across
Canada, a highly regarded and seasoned management team,
the demonstrated resilience of the Canadian hotel industry in
2002, the improved operating results of the Legacy REIT hotel
portfolio, and the established market prominence of the Legacy
portfolio. The credit weaknesses include the acquisitive nature
of the trust, total debt to EBITDA at 5.3 times, an EBITDA
interest coverage ratio at 2.6x, and total debt to book value of
capital at 51.5%.
Standard & Poor's will closely monitor Legacy REIT's operating
performance and acquisition program. Standard & Poor's will look
for Legacy REIT to strengthen its credit measures over time and
for the Monarch acquisition to perform as forecast. The trust
would be more vulnerable to a ratings downgrade if its financial
ratios were negatively affected by future acquisitions.
LERNOUT & HAUSPIE: Assigns Causes of Action to Litigation Trust
---------------------------------------------------------------
Lernout & Hauspie Speech Products N.V., is assigning all of its
causes of action to a litigation trust. As a result of the
accounting irregularities and allegations of fraud relating to
L&H NV's prepetition activities, numerous potential Causes of
Action exist relating to these matters and to L&H NV's
acquisitions of various companies, including, but not limited
to, Dictaphone and L&H Holdings. These potential Causes of
Action include actions against L&H NV's former officers and
directors, prepetition auditors -- possibly including KPMG or
any of its foreign or U.S. affiliates for, inter alia,
accounting fraud, financial advisors and other professionals and
the financial institutions involved in the alleged fraudulent
activities of and involving L&H NV's investments and activities
in Korea.
The Litigation Trust will pursue L&H NV's Assigned Causes of
Action in a manner as to maximize the recoveries to the
respective Classes of creditors and interests receiving
Litigation Trust Membership Interests under the Plan. L&H NV,
however, is not assigning to the Litigation Trust Causes of
Action released in accordance with the Plan or Causes of Action
settled or resolved in the Plan or pursuant to a Final Order
of the Bankruptcy Court. Other excluded Causes of Action
include:
(a) any and all Causes of Action settled or resolved in the Plan
or pursuant to a Final Order of the Bankruptcy Court;
(b) that certain Cause of Action bearing the caption Apple
Computer, Inc. v. Articulate Sys., Inc. And Dragon Sys.,
Inc., (N.D. Cal.);
(c) any and all Causes of Action of L&H NV against former
directors, officers, administrators, or administrators-in-
fact of L&H NV, arising pursuant to Clause 530 of the
"Wetboek van Vennootschappen") (the Belgian Company Code)
dated May 7, 1999;
(d) any and all Causes of Action arising out of or relating to
any criminal proceeding initiated against former directors,
officers, administrators, or administrators-in-fact of L&H
NV, including, but not limited to, Causes of Action for
indemnification;
(e) any and all Causes of Action, the enforcement, prosecution,
litigation, or settlement of which either: (a) must be
initiated, or already has been initiated outside the
jurisdiction of the courts of the United States or (b) would
have an adverse impact on, or would impair the enforcement,
prosecution, litigation, or settlement of the Debtor's
Assigned Causes of Acton by the Litigation Trust, as such
adverse impact or impairment may be determined by the
Curators, with the consent of the Litigation Monitoring
Committee, which consent will not be withheld unreasonably;
and
(f) any Causes of Action asserted against any third party who
has asserted a Claim against L&H NV unless and until:
(a) L&H NV has asserted any and all of L&H NV's
counterclaims against such third party or rights
to set-off or recoupment against the third party,
including L&H NV's rights under Section 502(d) of
the Bankruptcy Code, and (b) such counterclaims,
rights to setoff or recoupment, or rights under
Section 502(d) of the Bankruptcy Code have been
determined by a Final Order or otherwise. L&H NV
will retain defenses, counterclaims, and setoffs
to any causes of action or claims asserted against
it.
The Litigation Trust will be established as of the Effective
Date. The Litigation Trustee will also be appointed on the
Effective Date.
On the Effective Date, the Estate and L&H NV will be deemed to
have, and will have, irrevocably assigned and transferred to the
Litigation Trust all of their rights, title and interest in and
to any and all of the Assigned Causes of Action and any proceeds
thereof received by the Estate. Each of the Debtor's Assigned
Causes of Action, except as otherwise provided in the Plan, will
be free and clear of all Liens, claims, encumbrances and other
interests. Except as otherwise provided in the Plan, L&H NV
will not have any further right, title or interest in any of the
Debtor's Assigned Causes of Action, and neither L&H NV nor Post
Effective Date L&H NV will be entitled to receive any portion of
any amounts recovered on account of any of the Debtor's Assigned
Causes of Action.
Funding The Litigation Trust
On the Effective Date, Post Effective Date L&H NV will pay to
the Litigation Trust $600,000 for the establishment of a reserve
to pay the fees, expenses and costs of the Litigation Trust and
the Litigation Trustee. In addition, Post Effective Date L&H NV
will pay to the Litigation Trust $100,000 for the establishment
of a reserve to pay the fees, expenses and costs of a Litigation
Monitoring Committee. To the extent that the Litigation Trustee
and the Litigation Monitoring Committee reasonably agree that
the amounts of the Litigation Trust Reserve and the Litigation
Monitoring Committee Reserve exceed the amounts reasonably
anticipated to be incurred by the Litigation Trust and the
Litigation Trustee in the pursuit of their duties and
obligations, the excess amounts will be returned to the
successors of the Estate and will be treated as Available Cash
for Distributions to holders of Allowed Claims.
To the extent that the Litigation Trustee reasonably determines
that the amount of the Litigation Trust Reserve is not
sufficient to pursue its duties and obligations, the Litigation
Trustee may request from Post-Effective Date L&H NV and the
Curators additional funding for the Litigation Trust Reserve,
and the consent of Post-Effective Date L&H NV and the Curators
with respect to the request for additional funding for the
Litigation Trust Reserve will not be withheld unreasonably.
Post Effective Date L&H NV will have no obligation to the
Litigation Trust or any holder of an interest therein other than
its obligations to reasonably cooperate as a party to the
Debtor's Assigned Causes of Action assigned to the Litigation
Trust. In addition, the Litigation Trustee may, with the
written consent of the Litigation Monitoring Committee, borrow
funds to finance the operations of the Litigation Trust, which
borrowing(s) may include equity participation features.
Application Of Litigation Trust Proceeds And Expenses
The Curators will be responsible for distributing the Debtor's
Litigation Proceeds to holders of Litigation Trust Beneficial
Interests who received the interests on account of the Allowed
Class 3 Unsecured Claims. The Litigation Trustee will be
responsible for making the distributions to holders of
Litigation Trust Beneficial Interests who received the interests
on account of their Class 4 PIERS/Old Convertible Subordinated
Notes Claims.
Specifically, on receipt of the proceeds of any Debtor's
Assigned Causes of Action assigned to the Litigation Trust, the
Litigation Trustee will:
(a) determine whether to distribute such proceeds to holders of
Litigation Trust Beneficial Interests who received such
interests on account of their Allowed Class 4 PIERS/Old
Convertible Subordinated Notes Claims; and
(b) distribute such proceeds to the Curators for distribution
to the holders of Litigation Trust Beneficial Interests who
received such interests on account of their Allowed Class 3
Unsecured Claims.
In the event that the Litigation Trustee distributes the
proceeds either to:
-- the holders of Litigation Trust Beneficial Interests who
received the interests on account of their Allowed Class 4
PIERS/Old Convertible Subordinated Notes Claims, or
-- the Curators for distribution to holders of Litigation
Trust Beneficial Interests who received the interests on
account of their Allowed Class 3 Unsecured Claims, or
if there are no more proceeds that can be realized by the
Litigation Trust, then the Litigation Trustee will apply the
proceeds, net of amounts paid or deductions made by reason of
set-off to the Litigation Trustee or by reason of reduction in
judgment or reimbursement obligations of the Litigation Trustee:
(a) after utilizing amounts in the Litigation Trust Reserve
and the Litigation Monitoring Committee Reserve, to
the payment of any associated taxes and unpaid
administrative expenses of the Litigation Trust, the
Litigation Trustee and the Litigation Monitoring Committee;
(b) pro rata, to the payment of the reasonable unpaid fees and
expenses incurred in employing professionals for the
Litigation Trustee and the Litigation Monitoring Committee,
and the compensation and expenses of the Litigation Trustee;
(c) to either the Litigation Trust Reserve or the Litigation
Monitoring Committee Reserve for the reasonably anticipated
amount of any future expenses and obligations to the extent
the amounts in the reserves are insufficient; and
(d) the balance to the Curators for distribution to the holders
of Litigation Trust Beneficial Interests who received the
interests on account of their Allowed Class 3 Unsecured
Claims and to holders of Litigation Trust Beneficial
Interests who received the interests on account of their
Allowed Class 4 PIERS/Old Convertible Subordinated
Notes Claims.
Timing Of Litigation Trust Distributions
The Litigation Trustee and the Curators, as the case may be,
will distribute the Debtor's Litigation Proceeds at times as the
Litigation Trustee and the Curators deem appropriate, but only
after paying all outstanding Litigation Administrative Costs and
reserving for any additional reasonable Litigation
Administrative Costs that may be incurred thereafter.
Litigation Trust Reserve
The Litigation Trust will withhold, from the amounts to be
distributed to holders of Litigation Trust Beneficial Interests,
amounts sufficient to be distributed on account of the
Litigation Trust Beneficial Interests that may be granted to
holders of Claims that are Disputed Claims as of the date of
distribution of proceeds, and the Litigation Trust will place
the withheld proceeds in reserve. To the extent the Disputed
Claims ultimately become Allowed Claims, and Litigation Trust
Beneficial Interests are granted to the holders of the Claims,
payments with respect to the interest will be made from the
Litigation Reserve. The Litigation Trustee, in consultation with
Post Effective Date L&H NV, will determine the amount to reserve
in the Litigation Reserve based on the amount of Disputed Claims
determined or estimated for the purposes of the Disputed Claims
Reserve.
Compensation Of Litigation Trustee
The Litigation Trustee will receive compensation for services to
the Litigation Trust as agreed on by the Litigation Trustee, and
both the L&H Creditors' Committee and the Curators, for its
services and will be entitled to reimbursement of reasonable
expenses incurred in performing its duties out of the assets of
the Litigation Trust.
Indemnification and Exculpation
From and after the Effective Date, the Litigation Trustee and
members of the Litigation Monitoring Committee, and their
respective post-Effective Date directors, members, officers,
will be exculpated and indemnified as provided in the Litigation
Trust Agreement.
The Litigation Trustee and the Litigation Monitoring Committee,
from and after the Effective Date, are exculpated by all
Persons, holders of Claims and Equity Interests, Entities, and
parties-in-interest receiving distributions under the Plan, from
any and all claims, Causes of Action, and other assertions of
liability arising out of its discharge of the powers and duties,
except solely for actions or omissions arising out of its gross
negligence, willful misconduct or breach of its fiduciary
duties.
No holder of a Claim or an Equity Interest will have or pursue
any claim or Cause of Action:
(a) against the Litigation Trustee or the Litigation Monitoring
Committee for Distributions made in accordance with the
Plan, or for implementing the provisions of the Plan, or
(b) against any holder of a Claim for receiving or retaining
payments or other Distributions as provided for by the Plan.
The Litigation Trustee and the Litigation Monitoring Committee
will not be liable for any action taken or omitted in good faith
and reasonably believed by it to be authorized within the
discretion or rights or powers conferred on it by the Plan or
the Litigation Trust Agreement.
In performing its duties under the Plan and the Litigation Trust
Agreement, each of the Litigation Trustee and the Litigation
Monitoring Committee will have no liability for any action taken
by the Litigation Trustee and the Litigation Monitoring
Committee in good faith in accordance with the advice of
counsel, accountants, appraisers and other professionals
retained by it, Post Effective Date L&H NV, or the Litigation
Trust.
The Litigation Trustee and the Litigation Monitoring Committee
may rely without independent investigation on copies of orders
of the Bankruptcy Court reasonably believed by it to be genuine,
and will have no liability for actions taken in good faith in
reliance thereon. None of the provisions of the Plan will
require the Litigation Trustee or the Litigation Monitoring
Committee to expend or risk their own funds or otherwise incur
personal financial liability in the performance of any of their
duties or in the exercise of any of its rights and powers. The
Litigation Trustee and the Litigation Monitoring Committee may
rely without inquiry on writings delivered to it, which it
reasonably believes in good faith to be genuine and to have been
given by a proper Person. (L&H/Dictaphone Bankruptcy News, Issue
No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900)
MALAN REALTY: Enters UDAG Loan Settlement with City of Chicago
--------------------------------------------------------------
Malan Realty Investors, Inc. (NYSE: MAL), a self-administered
real estate investment trust, announced operating results for
the third quarter of 2002.
For the quarter ended September 30, 2002, net loss was $1.3
million vs. net income of $2.1 million for the quarter ended
September 30, 2001. Total revenues from continuing operations
(excluding gains on property sales), consisting primarily of
rent and recoveries from tenants, were $8.0 million in the third
quarter of 2002 vs. $8.4 million in the third quarter of 2001.
For the nine months ended September 30, 2002, net loss was $7.2
million vs. net loss of $1.1 million for the nine months ended
September 30, 2001. Total revenues from continuing operations
(excluding gains on property sales) were $25.0 million for the
first three quarters of 2002 compared with $26.3 million in the
first three quarters of 2001.
The results for 2002 include a provision for costs of
investigation and remediation of environmental issues at certain
of the company's properties. Total costs related to these issues
are estimated to be approximately $3.1 million of which $2.6
million was recorded in the third quarter of 2002.
Malan also announced it had reached a settlement with the City
of Chicago on its UDAG Loan, collateralized by Bricktown Square
Shopping Center. Terms of the agreement include a settlement
payment of $1 million in full satisfaction of all principal and
interest outstanding on the loan and an agreement that municipal
transfer taxes would be paid on any subsequent transfer of the
property by the company. Prior to the settlement, the loan had a
principal balance outstanding of approximately $7.8 million, and
the company was in arrears approximately $740,000 in interest
payments.
On August 28, 2002, Malan shareholders approved a plan of
complete liquidation of the company. The plan provides for the
orderly sale of assets for cash or other such form of
consideration as may be conveniently distributed to
shareholders, payment of or establishing reserves for the
payment of liabilities and expenses, distribution of net
proceeds of the liquidation to common shareholders and wind up
of operations and dissolution of the company.
As a result of the adoption of the plan, the company adopted the
liquidation basis of accounting at September 30, 2002.
Accordingly, at that date, assets were adjusted to estimated net
realizable value and liabilities were adjusted to estimated
settlement amounts, including estimated costs associated with
carrying out the liquidation. Net assets in liquidation,
including these costs but excluding any estimated future cash
flows from operations, was $31.7 million as of September 30,
2002. Also as a result of adoption of the plan of liquidation,
the company will no longer report funds from operations or cash
available for distribution, as it no longer believes that these
measures are meaningful to understanding its performance.
Malan said it currently has signed contracts for the sale of
eight properties, including the Orchard-14 Shopping Center in
Farmington Hills, Michigan. The contracts have scheduled closing
dates within the next 90 days, subject to due diligence by the
acquirers. Net proceeds to the company are estimated at
approximately $12.5 million.
The company announced previously it has retained CB Richard
Ellis, the world's largest real estate services company, to sell
its remaining properties. Cohen Financial will continue to
provide services for the financing and refinancing of Malan's
properties.
Malan Realty Investors, Inc., owns and manages properties that
are leased primarily to national and regional retail companies.
The company owns a portfolio of 52 properties located in nine
states that contains an aggregate of approximately 4.6 million
square feet of gross leasable area.
MED DIVERSIFIED: Confirms Filing of Complaint vs JP Morgan et al
----------------------------------------------------------------
Med Diversified, Inc., (PINK SHEETS: MDDV) confirmed it has
filed a complaint in United States District Court in Boston
against the following parties:
-- NPF VI, a special purpose organization of National
Century Financial Enterprises, Med Diversified's primary
lender;
-- NPF XII, a special purpose organization of NCFE;
-- J.P. Morgan Chase & Co., and its representatives as
trustees of NPF VI, as independent directors and audit
committee members of both NPF XII and NPF VI, and as
independent directors and substantial owners of NCFE;
-- Bank One Corporation and its representatives as trustees
of NPF XII;
-- Lance K. Poulsen as chairman of the board, president and
part owner of NCFE and as board member of NPF XII; and
-- Hal Pote as board member of NCFE.
In its complaint, Med Diversified alleges the Parties conspired
to: (i) induce the Company to enter into unconscionable
contractual agreements for the financing of its businesses; (ii)
defraud the Company of millions of dollars; (iii) tortiously
interfere with the Company's contractual relations; and (iv)
ultimately destroy its businesses. The Company believes its
damages are in excess of $1 billion, and it reserves the right
to pursue legal action against other parties who may be
culpable.
The Company alleges the Parties should have known the extent of
financial problems at NCFE that led to NPF VI and NPF XII
failing to deliver scheduled funding payments to the Company's
subsidiaries, including Tender Loving Care Health Care Services,
Inc. These missed payments drove Tender Loving Care into a
state of financial chaos and subsequently caused it to file for
Chapter 11 bankruptcy protection.
In the interests of its patients, creditors, shareholders and
employees, the Company has exerted maximum effort to seek an
amicable resolution with the trustees of NPF VI and NPF XII.
However, the trustees have not participated in any meaningful
discussions. This lack of cooperation, in addition to the missed
payments by NPF VI & NPF XII, has led Med Diversified to
contemplate seeking protection under a Chapter 11 bankruptcy
petition.
"It is incomprehensible that the trustees of NPF VI and NPF XII
are leaving health care providers no alternative other than to
seek bankruptcy protection," said Angeline Cook, director of
investor relations for Med Diversified. "By allowing for an
orderly wind-down of funding and, at the very least, a
subordination on future accounts receivable, the trustees can
give Med Diversified a chance to survive until outside financing
can be secured.
"Unfortunately," Cook continued, "the trustees of NPF VI and NPF
XII have cared only for the interests of themselves and their
bondholders, showing reckless disregard for patients, employees
and shareholders while they hold the Company financially
captive. The bondholders should realize any relief they receive
will be too little, too late, since their bonds were backed by
the very receivables owned by the health care providers being
forced into Chapter 11 protection."
Med Diversified operates companies in various segments within
the health care industry, including pharmacy, home infusion,
multi-media, management, clinical respiratory services, home
medical equipment, home health services and other functions. For
more information, see http://www.meddiversified.com
MEDPOINTE HEALTHCARE: S&P Keeps Watch on B+ Corp. Credit Rating
---------------------------------------------------------------
Standard & Poor's placed its 'B+' corporate credit and senior
secured debt ratings for specialty pharmaceutical company
MedPointe Healthcare Inc., (as well as the corporate credit
rating on parent MedPointe Inc.) on CreditWatch with negative
implications.
"The actions are in response to the continued underperformance
of the company's main product, the nasal antihistamine Astelin,
as well as the lowered sales expectations of the company's
prescription cough and cold franchise for the second half of its
current fiscal year (ending March 31, 2003)," said Standard &
Poor's credit analyst Arthur Wong.
The company had $175 million of outstanding debt as of Sept. 30,
2002.
MedPointe, based in Somerset, N.J., focuses on selling
prescription drugs for the treatment of allergies, cough and
cold, and pain. Combined, Astelin and the prescription
cough/cold franchise account for roughly 65% of total sales.
Astelin's sales growth, however, has been hindered by a
reorganization and expansion of MedPointe's sales force.
Meanwhile, more aggressive than expected generic competition and
the delay of the launch of two new formulations have resulted in
a dramatically lowered sales estimate for the company's
prescription cough and cold products.
MedPointe has completed the reorganization and expansion of its
sales force. Also, a co-promotion agreement entered into with
Sepracor for Astelin may help improve sales. However, the
company faces tightening bank covenants in near-term future
quarters. Before taking rating action, Standard & Poor's will
monitor the success of MedPointe management's efforts to address
its business and financial challenges.
NAPSTER INC: Inks Definitive Pact to Sell Assets to Roxio Inc.
--------------------------------------------------------------
Roxio, Inc. (Nasdaq: ROXI) The Digital Media Company(R),
provider of the best selling digital media software in the
world, has entered into a definitive agreement to acquire
substantially all of the assets of Napster, Inc. As part of the
transaction, Roxio will receive all of Napster's intellectual
property including its technology patent portfolio. Roxio is not
assuming any of Napster's liabilities, including pending
litigation. Roxio's purchase of Napster's assets is subject to
approval of the bankruptcy court.
Roxio's President and CEO Chris Gorog commented, "Roxio's
acquisition of Napster will expand our role in the digital media
landscape and enhance our offerings to consumers. We look
forward to continuing to work with our partners in the
entertainment industry and will be announcing further plans in
the coming months."
Roxio, Inc., provides the best selling digital media software in
the world. Roxio makes award-winning software products for
CD/DVD burning, photo editing and video editing. Roxio's family
of products includes category leading products Easy CD
Creator(R) (Windows) and Toast(R) (Macintosh) for CD/DVD
burning, PhotoSuite(R) for digital photography, and VideoWave(R)
for digital video. Roxio also makes GoBack(R), the #1 selling
system recovery software that enables PC users to instantly
recover from system crashes, virus attacks and data loss.
Roxio's current install base is in excess of 100 million users.
Roxio distributes its products globally through strategic
partnerships with major hardware manufacturers, in stores with
the leading worldwide retailers, through Internet partnerships
and also sells its products direct at http://www.roxio.com
Headquartered in Santa Clara, California, Roxio also maintains
offices in Minnesota, Canada, United Kingdom, Netherlands,
Germany and Japan. The company currently employs more than 400
people worldwide. Roxio is a member of the S&P SmallCap 600 and
the Russell 2000 Index.
Frequently Asked Questions
Roxio to Acquire Assets of Napster Faq
Q: Why is Roxio purchasing Napster's Assets?
A: We feel that Napster has value that is synergistic with
Roxio's current digital media offerings and long-term vision for
the future of digital media and entertainment.
Q: What filings have been submitted toward the proposed
transaction?
A: [Fri]day, November 15, 2002, Napster filed a sale order
motion with the Delaware bankruptcy court to sell Napster's
assets.
Q: When is the deal expected to close?
A: Closure is subject to the approval of the bankruptcy court,
which is expected on November 27, 2002.
Q: What is the proposed purchase price?
A: Pursuant to the legal filings with the Delaware court, we
have offered $5 million in cash and 100,000 warrants to purchase
Roxio common stock.
Q: What are the terms of this deal?
A: Roxio will purchase substantially all of Napster's assets,
including the company's intellectual property (several
technology patents).
Q: Does Roxio inherit Napsters' liabilities in this proposed
transaction?
A: No, Roxio is not subject to any of Napster's liabilities,
including pending litigation.
Q: After the completion of the transaction, what is Roxio's
strategy for Napster?
A: Following the close of the transaction, we will provide
consumers and investors a strategic vision of how Napster will
expand Roxio's role in the digital media landscape and enhance
our offerings to consumers.
NEXELL THERAPEUTICS: Unit to File Cert. Of Dissolution by Friday
----------------------------------------------------------------
Nexell Therapeutics Inc., (OTCBB:NEXL.OB) announced its results
for the third quarter ended September 30, 2002.
Third Quarter 2002 Results
As previously disclosed, on May 15, 2002 the Company's Board of
Directors authorized management to immediately begin an orderly
wind down of operations and on October 17, 2002, the Company
announced that its Board of Directors had adopted a plan to
liquidate and dissolve the Company. All financial results were
impacted significantly by the decision to wind down.
For the quarter ended September 30, 2002, total revenues were
zero compared to $3.3 million in 2001. Gross profit, which was
$0.2 million for the quarter ended September 30, 2001, likewise
declined to zero in the comparable period of the current year.
Operating expenses in the third quarter of 2002 were $0.7
million compared to $9.6 million in 2001, a decrease of $8.9
million. In the prior year there was a $2.6 million asset
impairment charge which did not recur in the comparable period
of the current year. The remaining decreases were the result of
the sale of the Company's Toolbox business in August 2001 and
the subsequent decision to wind down operations.
The Company incurred a net loss of $0.7 million in the third
quarter of 2002 compared to a net loss of $9.5 million in the
comparable period of the prior year. The net loss applicable to
common stock decreased in the three months ended September 30,
2002 to $2.4 million versus $11.2 million in 2001. Weighted
average shares outstanding were 20.9 million for each of the
quarters ended September 30, 2002 and September 30, 2001.
Comparison with Nine Months Ended September 30, 2001
As noted above, the Company is in the process of winding down
its operations and its Board of Directors has approved a plan of
liquidation. Total revenues were $3.0 million for the nine
months ended September 30, 2002, compared to $13.0 million for
the same period in 2001, a decrease of $10.0 million. Current
year revenues were attributable to a one-time sale to Baxter of
inventory that had been fully reserved and the realization of
deferred revenue upon finalization of a transaction with Baxter
in March 2002 related to an agreement assigned to Baxter. Gross
profit was $2.8 million on sales in the first nine months of
2002, a decrease of $1.7 million over the same period in 2001.
The Company is liquidating its operations and will not generate
further revenue or gross profit from operations in future
periods.
Operating expenses of $37.4 million for the first nine months of
2002 were $12.6 million higher than those reported for the same
period in 2001 due to an asset impairment charge of $33.6
million related to the decision to wind down operations. An
impairment charge of $2.6 million was incurred in the prior year
as a result of the August 2001 Toolbox transaction.
The net loss applicable to common stock for the first nine
months of 2002 was $39.6 million versus a net loss applicable to
common stock of $25.3 million in the same period of 2001.
Liquidity
As noted above, the Company is in the process of winding down
its operations and its Board of Directors has approved a plan of
liquidation. Cash and cash equivalents at September 30, 2002,
were $3.0 million versus $5.1 million at December 31, 2001, a
decrease of $2.1 million. The Company's net worth is $1.7
million at September 30, 2002 and the Company believes, based on
current information and estimates, that cash and cash
equivalents combined with any proceeds from the liquidation of
remaining assets, would be sufficient to fund the wind down of
operations, meet creditor obligations and finance the expected
distribution of no more than $0.05 per share to common
shareholders (excluding Baxter) as contemplated by the plan of
liquidation and dissolution.
Other Developments
It is anticipated that the Company's majority-owned subsidiary,
Innovir Laboratories, Inc., will file a certificate of
dissolution with the Delaware Secretary of State on or about
November 22, 2002. As a result of the liquidation preference
held by the Company as sole holder of the Preferred Stock of
Innovir, there will not be any assets available to distribute to
holders of the common stock of Innovir.
Located in Irvine, California, Nexell Therapeutics Inc., is a
biotechnology company that is in the process of winding down all
of its operations pursuant to a Plan of Complete Liquidation and
Dissolution. Nexell was formerly focused on the modification or
enhancement of human immune function and blood cell formation
utilizing adult hematopoietic (blood-forming) stem cells and
other specially prepared cell populations. Nexell was developing
proprietary cell-based therapies that address major unmet
medical needs, including treatments for genetic blood disorders,
autoimmune diseases and cancer.
NEXTCARD INC: Case Summary & 21 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: NextCard, Inc.
595 Market Street
Suite 1800
San Francisco, California 94105
aka Internet Access Financial Corporation
Bankruptcy Case No.: 02-13376
Type of Business: The Company was founded to operate an
internet credit card business. The Debtor's
business was to use the Internet as a
distribution channel for credit card
marketing and to issue credit cards and
extend customer credit through NextBank, a
bank that was a wholly-owned subsidiary.
Chapter 11 Petition Date: November 14, 2002
Court: District of Delaware
Judge: Jerry W. Venters
Debtor's Counsel: Brendan Linehan Shannon, Esq.
Young, Conaway, Stargatt & Taylor
The Brandywine Bldg.
1000 West Street, 17th Floor
PO Box 391
Wilmington, DE 19899-0391
Tel: 302-571-6600
Fax : 302-571-1253
-and-
Kathryn A. Coleman, Esq.
Gibson, Dunn & Cruther LLP
One Montgomery Street
San Francisco, California 94104
Tel: 415-393-8200
Fax: 415-986-5309
Total Assets: $18,000,000
Total Debts: $5,000,000
Debtor's 21 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Federal Deposit Insurance Contract Claim $140,000,000
Corporation, as receiver
For NextBank, NA
Division of Resolution &
Receiverships
Dallas Field Operations Branch
Attn: Frank Campagna
1910 Pacific Avenue,
Suite 1600
Dallas, TX 75201
Tel: 972-761-2250
Amazon.com Claim for Breach of $10,500,000
PO Box 81226 Contract
Attn: Rudy Gadre,
Associate Gen. Counsel
Seattle, WA 98108-1226
Tel: 206-266-6556
First Data Resources Trade Debt $867,010
PO Box 3366
Omaha, NE 68176-0400
Tel: 405-222-7381
AT&T Collocation Facility Contract Termination $750,000
Ann Marie Triolo
795 Folsom St.
San Francisco, CA 94107
Tel: 415-442-2157
Dell Financial Services Equipment Lease $265,024
LLP Termination
3500-A Wadley Place
Austin, TX 78728
Tel: 800-955-3355 x 81481
Molly Streat Lawsuit for Damages $250,000
c/o Leonard A. Bennet and punitive damages
12515 Warwick Boulevard, arising from customer
Suite 201 account services
Newport News, VA 23606
Tel: 757-930-3650
Strat Marketing, Inc. Trade Debt $206,736
IOS Capital, Inc. Trade Debt Under Copier $92,712
Lease
Independence Campus I, LLC Rent Payment for $82,245
November, 2002
Maritz Corporation Damages Provision for $75,000
Contract Termination
Trade Debt $37,537
Sun Microsystems Finance Equipment Lease $41,490
GE Capital Corporation Trade Debt $39,773
Broad Daylight Trade Creditor Lawsuit $36,534
Konica Business Tech Equipment Lease Termination $34,293
AT&T Trade Debt (Phone Services) $34,040
Internet Security Systems Trade Debt $30,672
Alameda County Property Taxes $30,434
Blue Shield of California Trade Debt $29,762
Cyberreps, Inc. Trade Debt $29,738
Thomson Financial Trade Debt $17,052
Whitmont Trade Debt $11,657
$3,642
NEXTEL INT'L: Successfully Emerges from Chapter 11 Proceeding
-------------------------------------------------------------
As previously reported, on May 24, 2002, Nextel International
Inc. filed a voluntary petition for relief under Chapter 11 of
the United States Bankruptcy Code with the United States
Bankruptcy Court for the District of Delaware, in which court it
was assigned case number 02-11505. The original Joint Plan of
Reorganization was filed on June 14, 2002, the First Amended
Plan of Reorganization on June 27, 2002, the Second Amended Plan
of Reorganization on July 9, 2002, the Third Amended Plan of
Reorganization on July 26, 2002, and the Revised Third Amended
Joint Plan of Reorganization on July 31, 2002. On July 31, 2002,
approval was received from the Bankruptcy Court of the Plan and
Second Amended Disclosure Statement.
On October 28, 2002, the Bankruptcy Court entered an order
confirming the Plan. Nextel consummated the Plan and emerged
from Chapter 11 proceedings on November 12, 2002.
* * *
On October 28, 2002, the United States Bankruptcy Court for the
District of Delaware entered an order confirming the Revised
Third Amended Joint Plan of Reorganization of Nextel
International, Inc. As of the Effective Date, November 12,
2002, and the consummation of the transactions contemplated by
the Plan, the Company will be governed by its Restated
Certificate of Incorporation and its Restated Bylaws.
The Amended Certificate establishes that upon the Effective Date
and in accordance with the Plan, the authorized capital stock of
Nextel International consists of 110,000,001 shares, consisting
of 100,000,000 shares of common stock, par value $0.001 per
share, 1 share of preferred stock, par value $1.00 per share,
and 10,000,000 shares of undesignated preferred stock, par value
$0.001 per share. On the Effective Date, the Company expects to
issue up to 20,000,000 shares of New Common Stock, 1 share of
Special Director Preferred Stock and certain other securities
pursuant to the Plan. Additionally on the Effective Date, the
Company expects to issue options covering 2,222,222 shares of
New Common Stock under its 2002 Management Incentive Plan.
OAKWOOD HOMES: Files for Chapter 11 Reorganization in Wilmington
----------------------------------------------------------------
Oakwood Homes Corporation (NYSE: OH), one of the country's
largest producers and retailers of manufactured housing, has
reached an agreement in principle with creditors representing
nearly 40% of the Company's senior unsecured debt and guarantee
obligations to restructure the Company's balance sheet. The
proposed plan calls for the conversion of the Company's $303
million of senior unsecured debt and its guarantees of principal
and interest on $275 million of subordinated REMIC bonds into
100% of the Company's post restructuring common shares. The plan
also provides for the conversion of the Company's current common
shares into out-of-the-money warrants to purchase approximately
10% of the post restructuring common shares.
Myles E. Standish, President and Chief Executive Officer,
stated, "We are very pleased to have the support of our
creditors, who will become our largest shareholders under the
proposed plan, to restructure our balance sheet. The proposed
restructuring would leave Oakwood with virtually no long-term
debt. More importantly, the proposed restructuring would
position Oakwood to capitalize on the eventual recovery of the
manufactured housing industry."
As part of the restructuring, the Company filed a voluntary
petition for relief under Chapter 11 of the United States
Bankruptcy Code with the United States Bankruptcy Court in
Wilmington, Delaware. Mr. Standish stated, "With the support of
our creditors, we expect to emerge from bankruptcy in a matter
of months. I want our employees, vendors, independent retailers
and customers to know that we expect to operate on a "business
as usual" basis. This is a fresh start for a business that has
successfully adjusted and survived for the past 56 years. When
we emerge, Oakwood will be stronger than ever. We are working
with potential credit providers to ensure adequate liquidity
while we are in Chapter 11 and expect to have these facilities
finalized shortly.
"As part of the Company's restructuring, we closed [Thurs]day
five manufacturing plants in several states and our loan
origination operations in Texas. We also intend to close
approximately 75 retail locations. These locations are
principally in the Deep South, Tennessee and Texas markets,
which are highly competitive and have been negatively affected
by the Company's tightening of retail credit standards over the
past 18 months. Exiting these areas should significantly improve
the Company's operating results going forward as well as the
performance of the Company's future loan originations.
"Our filing is largely driven by the continued poor performance
of loans we originated in 2000 and before, as well as the
deteriorating terms in the manufactured housing asset-backed
securitization market into which we sell our loans. Our poor
loan performance, coupled with declining recovery rates in the
wholesale repossession market, have resulted in the Company's
loan servicing income being substantially eliminated. In
addition, these factors have increased the payments we will be
required to make to the holders of the subordinated REMIC bonds
that we have guaranteed.
"Our current business is significantly improving. Loans
underwritten since 2000 are performing substantially better than
those originated in earlier years, and our housing operations
are performing better than they have at any time since 1998,
even in the face of difficult industry conditions. These
improvements, however, have not been sufficient to make up for
the overall poor performance of the loan portfolio and the
deterioration in the asset-backed securitization market.
"Taking this action now allows the Company to reorganize while
it is still relatively strong without taking actions that would
impair our future profitability. A restructuring at this time
should allow us to eliminate our finance company liabilities and
to once again have an opportunity to operate profitably in our
finance business. It will also remove the uncertainties about
our long-term viability, which have hampered our ability to
operate over the past several years."
The manufactured housing industry, which tends to be a cyclical
business, has been in a downturn for a number of years.
Shipments of manufactured housing units have declined industry-
wide from a peak of 372,800 in 1999 to an estimated 160,000 to
170,000 units this year. Because of weak industry underwriting
standards beginning in the mid-1990s, as well as current
economic conditions that are adversely affecting the industry's
customer base, annual repossessions have increased to an
estimated 90,000 units in 2002, more than 50 percent of new home
shipments.
The Company has also been advised by the New York Stock Exchange
(the "NYSE") that the Company has fallen below the NYSE's
continued listing criteria relating to both total market
capitalization and minimum share price. The NYSE requires that
the Company's market capitalization must equal or exceed $15
million and that its stock trade at a minimum share price of $1
over a 30-day trading period. The Company has not complied with
either of these criteria over a 30 consecutive day trading
period.
Oakwood Homes Corporation and its subsidiaries are engaged in
the production, sale, financing and insuring of manufactured
housing throughout the United States. The Company's products are
sold through Company-owned stores and an extensive network of
independent retailers.
OAKWOOD HOMES: Case Summary & 45 Largest Unsecured Creditors
------------------------------------------------------------
Lead Debtor: Oakwood Homes Corporation
7800 McCloud Avenue
Greensboro, North Carolina 27409-9634
Bankruptcy Case No.: 02-13396
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
New Dimension Homes, Inc. 02-13390
Dreamstreet Company, LLC 02-13391
Oakwood Shared Services, LLC 02-13392
HBOS Manufacturing, LP 02-13393
Oakwood MHD4, LLC 02-13394
Oakwood Acceptance Corporation, LLC 02-13395
Oakwood Mobile Homes, Inc. 02-13397
Suburban Homes Sales, Inc. 02-13398
FSI Financial Services, Inc. 02-13399
Home Service Contract, Inc. 02-13400
Tri-State Insurance Agency, Inc. 02-13401
Golden West Leasing, LLC 02-13402
Crest Capital, LLC 02-13403
Preferred Housing Services, LP 02-13404
Type of Business: The debtor and its subsidiaries are engaged
in the production, sale, financing and
insuring of manufactured housing throughout
the U.S. The company's products are sold
through company-owned stores and an extensive
network of independent dealers.
Chapter 11 Petition Date: November 15, 2002
Court: District of Delaware
Debtors' Counsel: Michael G. Busenkell, Esq.
Morris, Nichols, Arsht & Tunnell
1201 N. Market Street
P. O. Box 1347
Wilmington, DE 19899
Tel: 302-658-9200
Fax : 302-658-3989
Total Assets: $842,085,000
Total Debts: $705,441,000
Debtor's 45 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
U.S. Bank Trust NA Senior Notes $174,279,098
Attn: Richard H. Prokosch
180 East Fifth Center
2nd Floor
St. Paul, MN 55101
Tel: 651-244-4299
Fax: 651-244-3100
U.S. Bank Trust NA Senior Notes $124,530,233
Attn: Richard H. Prokosch
180 East Fifth Center
2nd Floor
St. Paul, MN 55101
Tel: 651-244-4299
Fax: 651-244-3100
Deutsche Financial Floorplan Guarantee $43,550,950
PO Box 105080
Atlanta, GA 30348-5080
Chase Manhattan REMIC Guarantee $25,554,561
Attn: Craig Kantor - 1998D
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $24,591,125
Attn: Craig Kantor - 1999A
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $23,815,098
Attn: Craig Kantor - 2001B
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $20,807,916
Attn: Craig Kantor - 1999C
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Bombardier Capital Floorplan Guarantee $19,489,211
261 Mountain View Drive
Colchester, VT 05446
Chase Manhattan REMIC Guarantee $17,894,150
Attn: Craig Kantor - 1998B
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $16,624,000
Attn: Craig Kantor - 1999D
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $14,315,000
Attn: Craig Kantor - 1999D
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $13,135,281
Attn: Craig Kantor - 1998C
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Textron Financial Floorplan Guarantee $12,192,165
4550 North Point Parkway
#400
Alphretta, GA 30022
Chase Manhattan REMIC Guarantee $11,268,000
Attn: Craig Kantor - 2001D
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $10,745,000
Attn: Craig Kantor - 2001C
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $10,096,252
Attn: Craig Kantor - 1997D
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $9,950,000
Attn: Craig Kantor - 1998B
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $9,442,500
Attn: Craig Kantor - 2000A
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $8,993,000
Attn: Craig Kantor - 2002A
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $8,447,500
Attn: Craig Kantor - 1999E
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $8,100,000
Attn: Craig Kantor - 2000B
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $6,731,441
Attn: Craig Kantor - 1997C
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $6,024,000
Attn: Craig Kantor - 2001E
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Vanderbilt Mortgage Floorplan Guarantee $6,000,000
510 Alcoa Trail
Maryville, TN 37804
Chase Manhattan REMIC Guarantee $5,255,770
Attn: Craig Kantor - 1997A
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $5,000,000
Attn: Craig Kantor - 1998B
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $4,923,192
Attn: Craig Kantor - 1997B
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $4,700,000
Attn: Craig Kantor - 1997B
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Conseco Floorplan Guarantee $4,462,345
7711 Bonhomme Avenue
St. Louis, MO 63105
Chase Manhattan REMIC Guarantee $4,000,000
Attn: Craig Kantor - 1997A
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Chase Manhattan REMIC Guarantee $4,000,000
Attn: Craig Kantor - 1997B
450 West 33rd Street
14th Floor
New York, NY 10001
Tel: 212-946-3249
Fax: 212-946-8552
Sterling Savings Floorplan Guarantee $3,000,000
111 N. Wall
Spokane, WA 99201
Tel: 509-624-4114
Fax: 509-838-7872
TransAmerican Commercial Floorplan Guarantee $2,429,152
11121 Carmel Commons Blvd.
Suite 400
Charlotte, NC 28226
U.S. Bank Trust NA Reset debt $1,468,000
Corporate Trust Services
180 East Fifth Center
2nd Floor
St. Paul, MN 55101
Attn: Richard H. Prokosch
Tel: 651-244-4299
Fax: 651-244-3100
U.S. Bank Trust NA Reset debt $1,165,000
Corporate Trust Services
180 East Fifth Center
2nd Floor
St. Paul, MN 55101
Attn: Richard H. Prokosch
Tel: 651-244-4299
Fax: 651-244-3100
Countryside Flooring Floorplan Guarantee $1,000,000
3865 S. Wasatch Blvd.
Suite 300
Salt Lake City, UT 84109
Attn: Douglas J. Cottle
Bank of West Floorplan Guarantee $1,000,000
522 E. Yakima Ave.
Tel: 509-453-1515
Fax: 509-457-3927
Wes Banco Floorplan Guarantee $500,000
301 Adams Street
Fairmon, WV 26554
Tel: 304-368-5150
Fax: 304-368-5174
Village Bank Floorplan Guarantee $500,000
9298 Central Ave. NE
Blaine, MN 55434
Attn: Craig E. Zemke
Tel: 763-780-2100
Fax: 763-780-3500
Tammac Corp. Floorplan Guarantee $500,000
275 Mundy St.
Wilkes-Barre, PA 18702
Attn: Donald J. Brown
Tel: 570-825-9501
Shelby State Bank Floorplan Guarantee $500,000
242 North Michigan Avenue
Shelby, MI 49455
Attn: F.R. Sanford
Tel: 231-894-9041
Fax: 231-861-2468
River Bank Floorplan Guarantee $500,000
4000 Corporate Drive
Holmen, MI 54636
Attn: D. Ronald Justus
Tel: 608-781-9095
Fax: 608-781-7510
Old National Bank Floorplan Guarantee $500,000
420 Main St.
Evansville, IN 47703
Attn: Stephen Hartman
Tel: 812-464-1244
Fax: 812-464-1552
First Shore Federal Floorplan Guarantee $500,000
Savings
PO Box 4248
Salisbury, MD 21803
Attn: John W. Laws
Tel: 410-546-1101
Fax: 410-546-9590
Wells Fargo Floorplan Guarantee $500,000
(formerly First National
Bank)
600 Sheldon Avenue
Houghton, MI 49931
Attn: Paul Kroll
Tel: 906-487-5843
Fax: 906-487-5835
OSE USA: Net Capital Deficiency Balloons to $35 Mil. at Sept. 30
----------------------------------------------------------------
OSE USA, Inc., (OTCBB:OSEE) reported its results for the third
quarter ended Sept. 29, 2002.
Revenues for the three and nine month periods ended Sept. 29,
2002 were $2,791,000 and $7,958,000, respectively, compared with
revenues of $2,670,000 and $9,437,000 for the same periods one
year ago. The Company reported a net loss applicable to common
stockholders of $2,367,000 for the third quarter of 2002,
compared with a net loss applicable to common stockholders of
$2,472,000 for the third quarter of 2001. For the nine months of
2002, the Company reported a net loss applicable to common
stockholders of $8,072,000, compared with a net loss applicable
to common stockholders of $7,084,000 for the nine months of
2001. The operating results for the nine months periods ended
Sept. 29, 2002, included a $1,400,000 cumulative effect of a
change in accounting principle resulting from the goodwill
impairment loss recognized as part of the implementation of SFAS
142. Excluding the effect of the accounting change, net loss
applicable to common stockholders for the nine months period
ended Sept. 29, 2002, was $6,672,000.
Revenues for the three and nine month periods ended Sept. 29,
2002 for the Company's manufacturing segment were $1.6 million
and $4.4 million, respectively, compared with $1.5 million and
$5.9 million for the comparable periods in the prior fiscal
year. Revenues for the three and nine month periods ended Sept.
29, 2002 for the distribution segment were $1.2 million and
$3.6 million, respectively, compared with $1.1 million and
$3.5 million for the comparable periods in the prior fiscal
year.
In its September 29, 2002 balance sheets, the Company recorded a
working capital deficit of about $29 million, and a total
shareholders' equity deficit of about $35 million.
Founded in 1992 and formerly known as Integrated Packaging
Assembly Corp., OSE USA, Inc., is the nation's leading onshore
advanced technology IC packaging foundry. In May 1999 Orient
Semiconductor Electronics Limited, one of Taiwan's top IC
assembly and packaging services companies, acquired controlling
interest in IPAC, boosting its US expansion efforts. The Company
entered the distribution segment of the market in October 1999
with the acquisition of OSE, Inc. In May 2001 IPAC changed its
name to OSE USA, Inc., to reflect the company's strategic
reorganization.
San Jose-based OSE USA delivers competitive cost and quality in
moderate volumes with fast cycle times relative to its offshore
competitors. The company's close proximity to its customers
allows OSE USA to provide dynamic, quick-response, application-
specific packaging solutions to customers worldwide. The
company's latest services include Micro Lead frame, Flip Chip,
and Chip-Scale package assembly and manufacturing.
OSE USA offers these services to support its customers'
engineering, pre-production, low volume production and hot lot
requirements. The company will continue to develop and lead in
the areas of microelectronic packaging technology in the design,
packaging, and electrical testing industry. OSE USA's customers
include IC design houses, OEMs, and manufacturers. For more
information, visit OSE USA's Web site at http://www.ose-usa.com
OWENS CORNING: Gets Green Light to Transfer Funds to OC Anshan
--------------------------------------------------------------
Owens Corning and its debtor-affiliates obtained Court's
authority transfer $4,000,000 funds from OC Investments to OC
Anshan.
Owens Corning has been developing a market in China for its
products since 1995. Owens Corning has determined that the
market for vinyl products in China is growing at a rate that
would permit Owens Corning (Anshan) Fiberglass Co., Ltd., to
profit.
OC Anshan is currently leasing its manufacturing facility from
Bank of China and Anshan Glass Works, an enterprise owned by the
Chinese government, pursuant to a lease set to expire in July
2004. During the term of the lease, OC Anshan has an option to
purchase the facility for $5,400,000. Bank of China has offered
to sell the manufacturing facility to OC Anshan for $3,000,000
if OC Anshan will purchase the facility now instead of at the
end of the term of the lease.
OC Anshan currently has a $3,430,000 accounts payable to OC
Investments, with OC Investments having a corresponding accounts
receivable from OC Anshan. The accounts receivable was
generated this year when the billing structure of the non-debtor
Chinese entities was realigned and centralized in OC
Investments.
OC Anshan is an indirect wholly owned non-debtor subsidiary of
Owens Corning through Owens Corning (China) Investments Company
Ltd., which is an indirect wholly owned non-debtor subsidiary of
Owens Corning through Owens Corning Cayman (China) Holdings, a
direct wholly owned non-debtor subsidiary of OC.
OC Anshan is located in north China, where 50% of the market for
vinyl products in China is located and close to Korea, where
there is also a growing market for vinyl products. OC Anshan
operates its insulation business out of a manufacturing
facility, which can easily accommodate an additional line of
business. OC Anshan has recently entered into an Equipment
Sales Agreement to purchase equipment used to manufacture vinyl
products. (Owens Corning Bankruptcy News, Issue No. 40;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
DebtTraders reports that Owens Corning's 7.70% bonds due 2008
(OWC08USR1) are trading at 30 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=OWC08USR1for
real-time bond pricing.
PACIFIC GAS: Wants to Assume & Cure $7MM Injury Settlement Pact
---------------------------------------------------------------
Pacific Gas and Electric Company seeks Judge Montali's
permission to assume and cure a $7,000,000 prepetition
settlement agreement arising from a personal injury lawsuit
involving severe injuries to a minor.
Janet A. Nexon, Esq., at Howard, Rice, Nemerovski, Canady, Falk
& Rabkin, P.C., explains that the Settlement provides for PG&E
to:
-- make a lump-sum payment of $3,500,000 to the Plaintiff; and
-- fund an annuity at a $3,500,000 cost to the estate in
favor of the Plaintiff to provide for monthly structured
settlement payments.
In exchange, the Plaintiff will completely release PG&E and its
agents and dismiss the personal injury lawsuit with prejudice.
The parties to the settlement Agreement have agreed to keep the
identity of the Plaintiff and certain settlement terms
confidential.
Ms. Nexon relates that the Settlement Agreement was entered on
March 27, 2001. But there remain material unperformed
obligations under the Agreement from both parties:
(a) the Plaintiff has the obligation to execute a release and
file a dismissal of the action and, at the same time,
maintain the confidentiality of the Settlement Agreement;
and
(b) PG&E has the obligation to make the one-time payment and
purchase an annuity.
PG&E wants to satisfy its obligations now since the Settlement
Agreement represents a minimal cost to the estate. PG&E also
has substantial cash reserves and ongoing revenues and is
capable of curing arrearages and completing its future
performances under the Agreement. On the other hand, PG&E's
continued failure to make the payments may impose a serious
hardship on the Plaintiff.
Ms. Nexon represents that, pursuant to the Debtor's Plan and the
alternate plan proposed by the California Public Utilities
Commission, the Plaintiff will be paid in full on the Effective
Date. (Pacific Gas Bankruptcy News, Issue No. 48; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PG&E NAT'L ENERGY: S&P Drops Corp. Credit Rating to D from B-
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on PG&E National Energy Group Inc., to 'D' from 'B-' and
removed the rating from CreditWatch.
At the same time, Standard & Poor's lowered its corporate credit
ratings on two of NEG's subsidiaries, PG&E Energy Trading
Holdings and USGen New England Inc., to 'C' from 'B-'.
Standard & Poor's also lowered its corporate credit rating on a
third subsidiary, PG&E Gas Transmission Northwest, to 'CCC' from
'BB-'. These subsidiaries remain on CreditWatch with negative
implications, given the possibility that NEG may not be
successful in resolving its financial difficulties outside of
bankruptcy.
Standard & Poor's also lowered its senior secured debt rating on
a fourth subsidiary, Attala Generating Co. LLC, to 'C' from
'B-'.
The rating on PG&E Generating Co. LLC, where there is no debt
outstanding, has been withdrawn.
The rating on GTN was lowered to reflect Standard & Poor's
maximum three-notch differential between a rating on a ring-
fenced entity and its ultimate parent, in this case NEG. While
GTN benefits from the legal protection of various structural
enhancements, including an independent director, it guarantees
several obligations of its energy trading affiliate, which may
temper this legal protection should NEG or its creditors
consider a bankruptcy filing. Nevertheless, GTN's stand-alone
credit quality remains considerably stronger than the current
rating would indicate.
The ratings on Indiantown Cogeneration Funding Corp., and
Selkirk Cogen Funding Corp., are not affected by the rating
action on NEG because these project financings are structured as
bankruptcy remote entities and are not 100% owned by NEG.
Therefore, the incentives to consolidate them in a bankruptcy of
NEG is low.
These rating actions follow the announcement by NEG on November
13, 2002, that it would allow defaults to occur on obligations
as they come due over the next several months. Specifically
mentioned was $431 million of principal relating to the
revolving credit facility that is due Nov. 14, 2002, $52
million of interest due on senior notes due Nov. 15, 2002, $25
million under a equipment revolver due in January 2003, and $859
million of equity contributions due at various times in early
2003 relating to GenHoldings, Lake Road, and La Paloma. The
company also specifically stated that it would remain current on
all obligations at GTN. NEG is seeking to effect a global
restructuring of all of its debt and other obligations. NEG
currently suffers from weak cash flow from operations from its
merchant and energy trading operations and has severely
constrained liquidity. Should NEG not be successful in a
consensual resolution of its financial problems, NEG may seek
protection in bankruptcy.
POLYMER GROUP: Files Modified Plan and Disclosure Statement
-----------------------------------------------------------
Polymer Group, Inc., (OTC Bulletin Board: PMGPQ) filed a
Modified Plan of Reorganization and Disclosure Statement with
the United States Bankruptcy Court in Columbia, South Carolina.
The Modified Plan of Reorganization and Disclosure Statement are
available at the Company's Web site at:
http://www.polymergroupinc.com/investors.htm
The Company filed the Modified Plan after reaching agreement on
substantially all of the principal terms of the Modified Plan
with the Official Committee of Unsecured Creditors, the holders
of in excess of 80% in principal amount of the Company's
outstanding Senior Subordinated Notes and the Steering Committee
of Senior Secured Lenders. The Company is seeking to have the
Modified Plan confirmed prior to year end.
Polymer Group, Inc., the world's third largest producer of
nonwovens, is a global, technology-driven developer, producer
and marketer of engineered materials. With the broadest range of
process technologies in the nonwovens industry, PGI is a global
supplier to leading consumer and industrial product
manufacturers. The Company employs approximately 4,000 people
and operates 25 manufacturing facilities throughout the world.
Polymer Group Inc.'s 9.0% bonds due 2007 (PMGP07USR1) are
trading at 19 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=PMGP07USR1
for real-time bond pricing.
POSITRON INC: Red Ink Continues to Flow in Third Quarter 2002
-------------------------------------------------------------
Positron Corporation (OTCBB:POSC.OB) reported third quarter
revenues for the period ended September 30, 2002 of $333,000
compared to revenues of $356,000 for the same period last year.
There were no system sales in the three month period ended
September 30, 2002 and no system sales for the same three month
period one year ago. The Company reported a net loss of $681,000
for the three month period ended September 30, 2002 compared to
a net loss of $567,000 for the same period one year ago.
Revenues for the nine month period ended September 30, 2002 were
$4,313,000 compared to $1,298,000 for the same period a year
ago. There were three system sales in the nine month period
ended September 30, 2002 compared to no system sales for the
same nine month period a year ago. The Company reported a net
loss of $2,051,000 for the nine month period ended September 30,
2002 compared to a net loss of $1,832,000 for the same period
one year ago.
Cash and cash equivalents on September 30, 2002 were $78,000. On
the same date, the Company had accounts payable and accrued
liabilities of $2,486,000 and was in default on a $2,000,000
note payable to a stockholder. The Company currently has orders
in place for two new mPower(TM) systems and one remanufactured
Auricle system that are scheduled for delivery within 120 days.
At September 30, 2002, the Company's balance sheet shows a
working capital deficit of about $1 million, and a total
shareholders' equity deficit of about P585,000.
Gary Brooks, President and CEO of Positron, said, "While the
Company did not ship systems in its third quarter, we are
pleased with progress made during the quarter, which has
resulted in recent additions to our backlog. Given the current
economic climate, we are pleased to have increased our backlog
and will continue to focus on system sales as well as upgrades
to current installations."
Positron Corporation is primarily engaged in designing,
manufacturing, marketing and supporting advanced medical imaging
devices utilizing positron emission tomography (PET) technology
under the trade name POSICAM(TM) systems. POSICAM(TM) systems
incorporate patented and proprietary technology for the
diagnosis and treatment of patients in the areas of oncology,
cardiology and neurology. POSICAM(TM) systems are in use at
leading medical facilities, including the Cleveland Clinic
Foundation, Yale University/Veterans Administration, Hermann
Hospital, McAllen PET Imaging Center, Hadassah Hebrew University
Hospital in Jerusalem, Israel, The Coronary Disease Reversal
Center in Buffalo, New York, Emory Crawford Long Hospital
Carlyle Fraser Heart Center in Atlanta, and Nishidai Clinic
(Diagnostic Imaging Center) in Tokyo.
PRIMUS TELECOMMS: Enters into Partnership with Best Buy Stores
--------------------------------------------------------------
PRIMUS Telecommunications Canada Inc., the wholly-owned
subsidiary of PRIMUS Telecommunications Group, Incorporated
(NASDAQ:PRTL), a facilities-based total service provider
offering an integrated portfolio of voice, data, Internet, and
hosting services, announced a partnership with Best Buy Stores,
Canada's newest electronics retailer. Best Buy will now promote
PRIMUS Canada's new high speed Internet and dial-up Internet
service offerings to consumers. Best Buy opened its first eight
stores in Canada, in the Greater Toronto area, on August 23,
2002.
"This partnership represents an excellent opportunity to promote
our new Internet service offerings," said Andrew Day, Senior
Vice President, Residential Services, PRIMUS Canada. "We know
that Best Buy has aggressive plans to build their brand in
Canada and will generate significant customer traffic into their
'Big Box' retail store locations. With Best Buy offering a wide
variety of electronics products and services, including personal
computers and related Internet services, we see our partnership
as an ideal fit with our efforts to cost-effectively market our
services and build brand awareness."
"As PRIMUS Canada is one of Canada's leading Internet service
providers, we knew it was important to have them included in our
roster of product and service offerings as we opened our first
stores in the Canadian market," said Grant McTaggart, Vice
President, Merchandising, Best Buy Canada. "At Best Buy, our
employees pride themselves on being our customers' smart friend
and offering them complete solutions. PRIMUS Canada brings us
high quality, attractively priced services which will help us
improve the experience of our shoppers."
PRIMUS Telecommunications Canada Inc., is the largest
alternative communications carrier in Canada with approximately
800,000 retail customers. The Company offers facilities-based
voice, data, e-commerce, Web hosting and Internet services. As a
leading Internet Service Provider in Canada, PRIMUS Canada has
approximately 60,000 Internet subscribers served by a national
network of Internet points-of-presence for dedicated and dial-up
access. PRIMUS Canada also offers local services to businesses,
bundling them with its long distance and Internet services. The
Company has a fully redundant and diverse Sonet network across
Canada, extending from Quebec City to Victoria. PRIMUS Canada's
national network consists of Nortel DMS 500 switches with
international connectivity through its parent company's global
network, and ATM and IP nodes at major cities across the
country. These network elements provide an integrated and
converged backbone for all of PRIMUS Canada's voice, data,
Internet and private line services. PRIMUS Canada is a wholly-
owned subsidiary of McLean, Virginia-based PRIMUS
Telecommunications Group, Incorporated (NASDAQ:PRTL). PRIMUS
Canada news and information are available at the Company's Web
site at http://www.primustel.ca
At Sept. 30, 2002, Primus' balance sheet shows a total
shareholders' equity deficit of about $183 million.
Best Buy stores in Canada are a division of Burnaby, B.C.-based
Best Buy Canada Ltd., a wholly owned subsidiary of Best Buy Co.,
Inc. (NYSE:BBY). Best Buy is North America's leading specialty
retailer of consumer electronics, personal computers,
entertainment software and appliances. The first eight Best Buy
stores in Canada are opening now in the Greater Toronto Area.
DebtTraders says, Primus Telecommunications Group's 11.750%
bonds due 2004 (PRTL04USR1) are trading between 62 and 64. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=PRTL04USR1
for real-time bond pricing.
ROYAL CREST: Ernst & Young Inc. Appointed as Interim Receiver
-------------------------------------------------------------
Ernst & Young Inc., was appointed Interim Receiver of The Royal
Crest Lifecare Group Inc., MNC Lifecare Group Inc., 952527
Ontario Inc., Marble Health Care Limited Partnership and Marble
Health Care General Partnership, under an Order granted by the
Ontario Superior Court of Justice on November 14, 2002, and
pending the hearing of an application for an order naming Ernst
& Young Inc., as trustee in bankruptcy of Royal Crest's nursing
and retirement long-term care facilities located in southern
Ontario.
Mr. Kevin Brennan, Senior Vice President of Ernst & Young Inc.,
said, "Every fair and reasonable effort has been made to assist
the Royal Crest management in addressing its financial problems.
But the current operators have lost credibility and no
restructuring plan they might propose would be acceptable to the
majority of creditors. Thus, the company's proceedings under the
Companies' Creditors Arrangement Act had no reasonable chance of
success and were terminated by the Court. As an officer of the
Court our responsibilities include stabilizing the operations by
assuming control of the homes and protecting the interests of
the stakeholders, especially the residents whose health, safety
and well-being is our primary concern."
This action was undertaken with the knowledge of the province's
Ministry of Health and Long-Term Care. The facilities will
continue to operate without interruption while the Interim
Receiver determines the best way in which to ensure the future
of the homes as going concerns. Toward that end, Extendicare
(Canada) Inc., one of the country's leading operators and
managers of long- term care facilities, will assume
responsibility for the day-to-day management of the homes as
agent of the Interim Receiver. Representatives of Ernst & Young
Inc., Extendicare (Canada) Inc., and the Ministry of Health and
Long-Term Care are beginning the process of meeting with
residents and their families to assure them that current
operations will continue without interruption and that any
questions or concerns they may have will be addressed.
Mr. Brennan said, "The continuation of the operations by Royal
Crest without Court intervention would only further threaten the
company's financial position, and thereby its ability to provide
quality resident care. These problems include an inability to
meet loan and other debt obligations estimated at more than
C$160 million; an anticipated further deterioration in the
company's cash flow position in the immediate future;
significant arrears including Canada Customs and Revenue Agency
source deductions, trade creditor accounts payable and employee
pension plan contributions; the absence of reliable and timely
financial reporting information; the proposed revocation of the
license at the Oakville Lifecare Centre and the suspension of
admissions at the Mississauga and Yorkview Lifecare Centres by
the Ministry of Health and Long-Term Care and a lack of progress
in the company's attempts to refinance its obligations, secure
an equity investor or explore the sale of some or all of its
holdings.
"We are taking steps to communicate with residents, their
families and employees as fully as possible to keep them
informed in this matter. We will do our best to address any
questions or concerns they may have about the ongoing
operations. To this end, dedicated hotline numbers have been
posted in all of the homes as well as provided to the residents,
their families and personnel. These hotlines are staffed by the
Interim Receiver and Extendicare, and those who use the hotlines
as a means of expressing concerns or seeking information may do
so on an anonymous basis if they so wish."
RURAL/METRO CORP: Reports Improved Results for 1st Quarter 2003
---------------------------------------------------------------
Rural/Metro Corporation (Nasdaq:RURL), a leading national
provider of medical transportation and fire protection services,
announced the results of its fiscal 2003 first quarter, which
ended September 30, 2002.
The company reported the following first-quarter results from
continuing operations: Net revenue of $125.6 million, compared
to $116.5 million in net revenue for the same period of the
prior year. Net income was $3.8 million, and earnings before
interest, taxes, depreciation and amortization (EBITDA) was
$13.2 million, compared to a net loss of $990,000 and EBITDA of
$9.9 million in the first quarter of fiscal 2002.
The company posted $12.3 million in net income from discontinued
operations in Latin America, which included a $12.5 million gain
from the first-quarter divestiture of those operations. The
transaction was finalized on September 27, 2002 and included the
company's operations in Argentina and Bolivia for consideration
of assumed liabilities. Including the Latin American
transaction, the company's first-quarter net income was $16.1
million, with corresponding EBITDA of $25.6 million.
The company attributed its progress to continuing advancements
in operational and billing efficiencies, as well as revenue
growth in medical transportation and wildland firefighting
services. Same-service-area revenue growth among the company's
medical transportation divisions increased 9 percent over fiscal
2002 levels.
Jack Brucker, President and Chief Executive Officer, said,
"First-quarter results reflect our ongoing efforts to enhance
operational efficiencies and leverage our reputation and
presence in growing regional marketplaces. We are pleased with
the progress and will continue to devote our full attention to
achieving our goals throughout fiscal 2003."
A series of significant contract renewals were awarded during
the quarter, in addition to the start of a new, 911 EMS contract
in Forsyth County, Georgia. Medical transportation contract
renewals included Rochester, New York; and Knox County,
Tennessee. Additionally, the company's National Fire Safety
Division won a new contract to provide aircraft rescue and fire
fighting services to McClellen-Palomar Airport in Carlsbad,
California, and renewed key fire protection contracts with CITGO
Petroleum Corp., Sikorsky Aircraft Corp., and the Port Columbus
(Ohio) International Airport.
Cash collection performance continued to trend positively during
the quarter, with average days' sales outstanding (DSO)
improving to 71 days, compared to an average of 76 days for the
same period a year ago. "We continue to strengthen and enhance
our billing and collections systems, placing particular emphasis
on pre-screening non-emergency requests for medical transports
and redoubling our collections efforts on private-pay accounts,"
Brucker said.
At the close of the first quarter, the company also finalized an
agreement to amend its $152 million credit facility and extend
the maturity date to December 31, 2004. The facility requires no
principal amortization until maturity, is unsecured, and returns
the company to full covenant compliance. Additionally, it
carries an adjustable LIBOR-based interest rate, which was
approximately 8.8 percent at the commencement of the loan. In
conjunction with the agreement, the company's bank group became
10-percent equity holders through a grant of preferred shares
that are automatically convertible, with stockholder approval,
to common shares.
Brucker continued, "This solution is a very important step in
our ongoing plan to maintain financial strength while
positioning the company to capitalize on future growth
opportunities, particularly in the medical transportation
sector."
Stockholder approval to convert lenders' preferred shares to
fully diluted common shares will be sought at the company's next
annual meeting. "Management believes the amended credit facility
is a key link in the company's long-term path to success,"
Brucker explained. "It will enable us to continue to strengthen
the fundamentals of our core business, expand in good-performing
regional service areas, and selectively pursue contract
opportunities in new markets. For these reasons, we believe it
is vital that the Company's stockholders approve the upcoming
proposal."
At September 30, 2002, Rural/Metro's balance sheet shows a total
shareholders' equity deficit of about $159 million, down from a
deficit of about $165 million as recorded at June 30, 2002.
RXBAZAAR INC: Third Quarter 2002 Net Loss Slides-Down to $1 Mil.
----------------------------------------------------------------
RxBazaar, Inc., (OTC Bulletin Board: RXBZ) announced financial
results for the third quarter ended September 30, 2002. The
Company's net sales reached $9.6 million for the quarter, nearly
double the $5.5 million in net sales recorded in the second
quarter of 2002 and continuing the rapid growth from the $3.6
million in net sales recorded in the first quarter of 2002.
RxBazaar also announced that contributions to net sales from the
Company's Internet trading portal have grown to 55.8% of net
sales in the third quarter of 2002, an impressive increase from
the 22.3% and 38.5% contributed in 2002's first and second
quarters, respectively. During the third quarter, the dollar
amount of orders placed through the Internet has grown to $5.4
million, up from $2.1 million in 2002's second quarter. Average
Internet order size reached $1,854 in the third quarter, up from
the second and first quarter's average order size of $1,174 and
$684, respectively.
"We are very pleased with the momentum of our sales growth and
the Internet contribution to those sales," stated C. Robert
Cusick, RxBazaar's Chairman and Chief Executive Officer. "Our
continued growth is proving our business model and the market's
acceptance of our new distribution channel. In addition, we have
a fully-developed infrastructure with a mostly fixed cost
composition, as sales volume increases more drops to the bottom
line allowing us to continue to work toward our goal of
achieving break-even operations."
General and administrative expenses as a percentage of net sales
declined to 13.2% during the quarter compared to 22.5% of net
sales in 2002's second quarter. For the three months ended
September 30, 2002, RxBazaar recorded a net loss of $1,014,303
compared with net losses of $1,379,204 and $1,491,004 recorded
for the second and first quarters of 2002, respectively.
"We are pleased with our continued improvement," continued Mr.
Cusick. "We are moving in a positive direction and many
opportunities are continuing to develop for the Company. We
anticipate continued strong growth."
At September 30, 2002, RxBazaar Inc.'s balance sheet shows a
working capital deficit of about $500,000, and a total
shareholders' equity deficit of about $477,000.
Conference Call Information
RxBazaar, Inc., will conduct an investor conference call to
discuss third quarter results on Thursday, November 21, 2002 at
11:00 AM Eastern Standard Time. To participate in the call,
please telephone 888-287-3903. A replay of the call will be
available for 48 hours following the call by dialing 800-615-
3210 and entering pass code 6315579.
RxBazaar, Inc., is a distributor of brand and generic
pharmaceutical and medical products that are produced by a range
of manufacturers. The Company distributes products through its
traditional call center and through its internally developed
Internet portal that provides a platform for the anonymous
buying and selling of pharmaceutical products. The Company
believes it has developed an innovative approach by making
available to its target market of independent pharmacies
discount purchasing opportunities that were previously
unavailable. More information about the company can be found at
its Web site, http://www.rxbazaar.com
SAFETY-KLEEN: Gets Nod to Expand Experio Solutions Engagement
-------------------------------------------------------------
Safety-Kleen Corp., and its debtor-affiliates obtained
permission from the Court to expand the scope of employment and
retention of Experio Solutions Corporation as consulting
advisors in connection with the Debtors' various process
improvement initiatives, nunc pro tunc to October 1, 2002.
Under the terms of the Initial Retention Order, the Debtors
retained Experio, KPMG and Lucidity to provide:
(i) assistance in designing and administering a program
management office through which the Initial Initiatives
would be managed and administered, and
(ii) experienced resources to perform and administer the
individual Initial Initiatives.
Specifically, Experio and the other consulting firms were
initially engaged to address these finance and support services:
(i) order entry and billing,
(ii) collections and cash accounting,
(iii) accounts receivable accounting,
(iv) procurement-to-payment process,
(v) payroll and benefits accounting,
(vi) intercompany accounting,
(vii) inventory and equipment-at-customers, and
(viii) the account analysis and "close-the-books" processes.
Experio's responsibilities consisted of:
(i) recommending a design, and
(ii) providing appropriate staffing for the PMO for the
Process Improvement Initiatives.
Towards that end, Experio has, through the PMO, tracked the
progress of all process improvement initiatives and worked with
the Debtors' senior management team to:
(i) address the timely resolution of issues and the
resource allocations necessary to meet project
timelines, and
(ii) develop the necessary training and implementation plans
to address material control weaknesses.
Specifically, pursuant to an engagement letter between the
Debtors and Experio, dated October 1, 2002, the scope of
Experio's engagement is being expanded to address these finance
and support initiatives:
(i) cash acceleration,
(ii) "Most Valuable Partner" processing (The Most Valuable
Partner program provides favorable pricing and billing
for customers who consolidate their environmental and
waste management services with Safety-Kleen),
(iii) automated customer action form development,
(iv) billing standardization,
(v) training assessment and coordination,
(vi) inventory processes, and
(vii) close-the-books.
Additionally, Experio will provide PII Services in connection
with any other initiatives identified by the Debtors during the
course of Experio's engagement.
Experio intends to apply to the Court for the allowance of
compensation and reimbursement of expenses in connection with
providing the PII Services with respect to the New Initiatives
consistent with the compensation structure set forth in the
Engagement Letter. With certain exceptions, Experio will be
compensated for its professional services and reimbursed for its
expenses in the same manner disclosed in the Initial Application
and Initial Affidavit. (Safety-Kleen Bankruptcy News, Issue No.
48; Bankruptcy Creditors' Service, Inc., 609/392-0900)
SEVEN SEAS: Fails to Make Interest Payment on 12.5% Senior Notes
----------------------------------------------------------------
Seven Seas Petroleum Inc., (Amex: SEV) did not make a $6,875,000
semiannual interest payment on its 12.5% $110 Million Senior
Subordinated Notes due Friday. The Company has 30 days to make
this payment and avoid being in default under the terms of those
notes. The failure to comply with the terms of the Senior Notes
will also create a default under the terms of the Chesapeake
Note Purchase and Loan Agreement if not cured within 20 days and
all debt will become immediately due. The Company will discuss
with Chesapeake Energy Corporation whether it will extend the
cure period to 30 days, parallel with the cure period provided
by the Senior Notes.
Seven Seas Petroleum Inc., is an independent oil and gas
exploration and production company operating in Colombia, South
America.
The Company was also unable to complete a timely filing of its
third quarter Form 10-Q with the SEC because of pending changes
to its accounting for deferred taxes that affect the second
quarter of 2002. An amended second quarter Form 10-Q/A is being
prepared to reflect changes to the previously reported treatment
of deferred taxes. The Company has filed a Form 12b-25
Notification of Late Filing with the Securities and Exchange
Commission and intends to file the third quarter Form 10-Q no
later than November 19, 2002.
SIRIUS SATELLITE: Reaffirms Recapitalization Plan via Debt Swap
---------------------------------------------------------------
In response to Thursday's misleading Reuters headline that --
once again -- referenced a possible bankruptcy, Sirius Satellite
Radio (Nasdaq: SIRI), the premier satellite radio company,
reaffirms its plans to recapitalize the company through a
voluntary debt for equity exchange and investment of new capital
by existing stakeholders.
Sirius expects to file a registration statement for an exchange
offer with the Securities and Exchange Commission this month. As
a routine part of such a filing, Sirius will include a
pre-packaged bankruptcy as a fall-back position should it fail
to convert the required number of bondholders during the
recapitalization process.
The company discussed this possibility on a conference call with
analysts and investors on October 17, 2002. Language to this
effect appeared in Thursday's filing of the company's 10Q for
the third quarter of 2002, and will appear in other filings
until the recapitalization is consummated, which is expected to
be in early 2003.
Thursday's Reuters article contained no new information on the
recapitalization that had not been previously disclosed.
From its three satellites orbiting directly over the U.S.,
Sirius broadcasts 100 channels of digital quality radio
throughout the continental United States for a monthly
subscription fee of $12.95. Sirius delivers 60 original channels
of completely commercial-free music in virtually every genre,
and 40 world-class sports, news and entertainment channels.
DaimlerChrysler has announced plans to offer Sirius radios in 16
models of Chrysler, Dodge and Jeep(R) vehicles beginning this
fall. Ford is planning to offer Sirius in select vehicle lines
sold in the United States, including Ford, Lincoln, Mercury,
Mazda, Land Rover, Jaguar, Volvo and Aston Martin. BMW has
announced plans to offer Sirius radios as an accessory in its
most popular models through BMW centers across the country,
including select BMW 3 Series, 5 Series, X5 vehicles, and in
MINI vehicles through MINI dealerships. Nissan is currently
offering Sirius radios in the 2003 Nissan Pathfinder SUV and has
announced plans to offer Sirius radios as an option this fall on
numerous Infiniti and Nissan 2003 models. Future Audi and
Volkswagen models will also offer Sirius. Kenwood, Panasonic,
Clarion, Audiovox, and Jensen satellite receivers, including
models that can adapt any car stereo to receive Sirius, are
available at retailers such as Circuit City, Best Buy, Sears,
Good Guys, Tweeter, Ultimate Electronics and Crutchfield.
Click on http://www.sirius.comto listen to Sirius live, or to
find a Sirius retailer in your area.
SPORTS CLUB: Comerica Bank Extends Loan Maturity to Nov. 1, 2003
----------------------------------------------------------------
On November 8, 2002, The Sports Club Company amended its Loan
Agreement with Comerica Bank - California, effective as of
October 31, 2002. The amended agreement extends the maturity
date of the Company's credit facility until November 1, 2003.
Certain financial covenants regarding Effective Tangible Net
Worth, Unsubordinated Liabilities to Effective Tangible Net
Worth and minimum EBITDA levels have also been revised.
The loan agreement amendment added KASCY, L.P., an affiliate of
Kayne Anderson Capital Advisors, L.P., as a leading participant
in the credit facility. Kayne Anderson Capital Advisors, L.P.,
and certain of its affiliates own all of the Company's Series B
Redeemable Preferred Stock. The credit facility increases from
$10.0 million to $15.0 million once KASCY, L.P., satisfies
certain regulatory requirements. This is anticipated to be
accomplished in the next several months.
* * *
As reported in Troubled Company Reporter's Tuesday edition, the
amendment to Loan Agreement with Comerica Bank was made as a
result of the Company's non-compliance with two of the financial
covenants for the June 30, 2002, reporting quarter. The Bank had
previously waived the Company's compliance with such covenants
for that quarter.
The Sports Club Company operates four sports and fitness clubs
(the Clubs) under The Sports Club/LA name in Los Angeles,
Washington D.C. and at Rockefeller Center and the Upper East
Side in New York City. The Company also operates the Sports
Club/Irvine, The Sports Club/Las Vegas and Reebok Sports
Club/NY. SCC's Clubs offer a wide range of fitness and
recreation options and amenities, and are marketed to affluent,
health-conscious individuals who desire a service-oriented club.
The Company's subsidiary, The SportsMed Company, operates
physical therapy facilities in some Clubs.
STEAKHOUSE PARTNERS: Plan Filing Exclusivity Extended to Feb. 28
----------------------------------------------------------------
Steakhouse Partners, Inc., (OTC: SIZLQ) operating as debtor in
possession as of February 15, 2002, announced financial results
for the twelve weeks and thirty-six weeks ended September 3,
2002 in its Quarterly Report on Form 10-Q filed with the
Securities Exchange Commission. The Company reported third
quarter 2002 revenues of $20.5 million versus $23.2 million and
year-to-date revenues of $68.0 million versus $77.4 million for
the corresponding period of fiscal 2001.
The Company reported the principal reasons for this decline in
revenue were the effects of soft economy on the "steakhouse"
segment of the restaurant industry and the closure of ten under-
performing operating units as a part of the reorganization
process the Company is currently engaged in under Chapter 11 of
the United States Bankruptcy Code, further described below and
in the Company's Form 10-Q. Net loss for the twelve weeks ended
September 3, 2002, was $1.4 million versus a net loss of $2.0
million for the corresponding period of fiscal 2001. Net loss
for the twenty-four weeks ended September 3, 2002, was $2.7
million versus a net loss of $3.6 million for the corresponding
period of fiscal 2001. The net losses are principally
attributable to the decline in restaurant revenue, legal costs
directly attributable to the bankruptcy and continued losses of
Pacific Basin Foods, a wholly owned subsidiary of Steakhouse
Partners, partially offset by the sale/disposal of assets.
As previously reported on February 15, 2002 the Company filed a
voluntary petition under Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the
Central District in California ("the Bankruptcy Court"). On
February 19, 2002 Paragon Steakhouse Restaurants, a wholly owned
subsidiary of Steakhouse Partners, and three subsidiaries of
Paragon Steakhouse Restaurants, also filed for relief under
Chapter 11 of the Bankruptcy Code. Also, as previously reported,
on October 11, 2002 Pacific Basin Foods, a wholly owned
subsidiary of Steakhouse Partners, filed a petition under
Chapter 7 of the Bankruptcy Code. Pacific Basin ceased operating
as of its bankruptcy filing.
On October 29, 2002, the Bankruptcy Court extended to February
28, 2003 the time during which Steakhouse Partners and Paragon
have the exclusive right to file a Plan of Reorganization. It
also extended to January 31, 2003 the Company's right to assume
or reject leases. The Company intends to submit a plan of
reorganization to the court by calendar year end.
Steakhouse Partners, Inc., operates 53 full-service steakhouse
restaurants located in ten states. The Company's restaurants
specialize in complete steak and prime rib meals, and offer
fresh fish and other lunch and dinner dishes. The Company
operates principally under the brand names of Hungry Hunter's,
Hunter's Steakhouse, Mountain Jack's, and Carvers.
SUPERIOR TELECOM: Balance Sheet Insolvency Reaches $490 Million
---------------------------------------------------------------
Superior TeleCom Inc., (OTC Bulletin Board: SRTO.OB) reported
results for its third quarter ended September 30, 2002.
Sales for the September 2002 quarter were $368 million, a
decline of 12% (on a copper-adjusted basis) as compared to sales
of $420 million for the September 2001 quarter. For the nine
month period ended September 30, 2002 sales were $1.137 billion
a decline of 16% (on a copper-adjusted basis) as compared to
sales of $1.385 billion for the September 2001 nine month
period. The comparative 2002 sales decline was primarily
attributable to industry-wide conditions impacting demand for
the Company's telecom cable products.
The Company incurred a loss before non-recurring and impairment
charges for assets to be sold of $16.9 million for the September
2002 quarter, as compared to income before goodwill amortization
of $1.3 million for the prior year September 2001 quarter. The
pro forma loss for the September 2002 quarter included
approximately $26 million in non-cash charges for depreciation,
deferred loan cost amortization, interest expense on
subordinated debt and deferred distributions on Trust
Convertible Preferred securities.
For the nine month period ended September 30, 2002, loss before
non-recurring charges, impairment charges for assets to be sold
and cumulative effect of accounting change for goodwill
impairment was $43.2 million, as compared to income before
non-recurring charges and goodwill amortization of $5.8 million
for the nine months ended September 30, 2001. The comparative
decline in earnings for both the three month and nine month
periods of 2002 was due to lower sales, particularly of
Communications cable products, as well as the impact on
operating margins of reduced manufacturing throughput and
unfavorable manufacturing cost absorption.
The 2002 pro forma operating results presented above for the
three and nine month periods ended September 30, 2002 exclude
$1.1 million ($0.7 million on an after tax basis) and $32.8
million ($20.8 million on an after tax basis), respectively, in
non-recurring charges related to closure of Superior's
Elizabethtown, Kentucky and Winnipeg, Manitoba Communications
cable plants, its Rockford, Illinois magnet wire plant and costs
associated with exiting the Canadian building wire market. These
non-recurring charges include non-cash write-offs of property
and equipment of $18.3 million.
The 2002 pro forma operating results also exclude asset
impairment charges for assets to be sold and for goodwill
impairment. The impairment charge for assets to be sold amounted
to $114.5 million ($77.3 million on an after-tax basis) for the
three month period ended September 30, 2002 and related to a
write-down of property, plant and equipment associated
principally with the previously announced sale and divestiture
of Superior's Electrical wire business and assets. This sale is
expected to produce total cash proceeds (including cash tax
benefits) of $110-$120 million which will be used for debt
reduction and liquidity enhancement. During the second quarter
of this year the Company completed an assessment of goodwill
impairment (pursuant to SFAS No. 142), which resulted in a non-
cash write-off of goodwill of $425 million reflected as a
cumulative effect of accounting change and applied retroactively
to January 1, 2002. Including the impact of these asset
impairment charges, the net loss for the three month and nine
month period ended September 30, 2002 was $94.9 million ($4.44
per diluted share) and $565.9 million ($26.62 per diluted
share), respectively. The net loss for the September 2002 nine
month period includes aggregate non-cash charges of $630 million
for goodwill impairment, long lived asset impairment,
depreciation, amortization, restructuring costs and interest
costs.
Superior Telecom's September 30, 2002 balance sheet shows a
working capital deficit of close to $1 billion, and a total
shareholders' equity deficit of about $490 million.
Steven S. Elbaum, Superior's Chairman and Chief Executive
Officer stated that "our sales and operating results continue to
reflect extremely weak demand in the telecom and industrial
markets. Communications cable revenues and operating results for
2002 continue to be negatively impacted by severe reductions in
customer spending on telco local loop investment and in data
network applications. Revenues in our Communications cable
segment declined (on a year-over-year copper-adjusted basis) by
24% in the current quarter and 32% for the first nine months of
2002 compared to prior periods. Competitors and other suppliers
of telecom related products are experiencing even more severe
revenue declines. As a result of aggressive cost reduction
actions, including the shutdown and consolidation this year of
two of our Communications Cable facilities, we were able to
achieve operating margins (in North America) in excess of 7%,
while many of our direct competitors were operating at breakeven
or negative operating margins.
"In our OEM segment, which is principally magnet wire used by
industrial OEMs and motor repair facilities, third quarter
revenues declined 5% on a year-over-year copper-adjusted basis
and by 7% for the nine month period. During 2002 we believe we
have at least maintained market share and continue to be the
largest supplier of magnet wire in the North American market.
Additionally, as a result of a recent plant closure and other
cost reduction actions, we continue to generate solid operating
margins in our OEM segment, although considerably below levels
that have been achieved in more robust economic times.
"Superior has announced a planned sale of its Electrical wire
operations, a transaction that is expected to close in the
fourth quarter of 2002. The Electrical wire operations (which
are included in continuing operations) experienced a copper-
adjusted revenue decline of 4% in the 2002 third quarter and 1%
for the 2002 nine months period. Competitive pricing pressures
continue to be severe in this segment and resulted in an
operating loss in this business segment in the 2002 third
quarter.
"Despite the adverse operating environment, we have achieved
substantial accomplishments in 2002 that are critical from an
operational and strategic perspective. We have completed the
difficult process of closing three major manufacturing
facilities and exiting our Electrical wire Canadian operations.
This leaves Superior with a consolidated manufacturing base,
improved cost structure and more balanced capacity. These plant
consolidations, along with aggressive working capital
management, have allowed us to achieve a $37 million reduction
in inventories in 2002 without compromising customer service
levels. Over the past twelve month period we have reduced
inventories by 17%.
"We also completed a major bank credit agreement amendment in
September 2002 that relaxes financial covenant requirements for
2002 and 2003 and approved the Company's plans to consummate
certain asset sales which will generate debt reduction, lower
interest expense and improved liquidity.
"On November 6, 2002, we also completed the refinancing of our
$160 million accounts receivable securitization facility with GE
Commercial Finance. This facility, which will mature in 2004,
provides critical working capital funding into what will
hopefully be an improving demand environment in 2003.
"Finally, Superior has recently announced a definitive agreement
for strategic asset sales of non-profitable, and/or non-core
businesses, including, as mentioned above, the Electrical wire
assets and business, as well as DNE Systems, Inc. and Superior's
50% common equity position in Superior Israel, Ltd. These asset
sales will generate $110-$120 million in total cash proceeds
(including cash tax benefits) of which approximately $10 million
will be available for additional liquidity purposes. These
divestitures will further reduce future CAPEX and cash interest
requirements and will focus our resources on our core
Communications cable and OEM operations to position these
businesses for a strong profitability rebound when industry
conditions improve.
"As we move into 2003 with the Communications and OEM
businesses, we expect to address our leveraged capital
structure. The recent bank credit agreement amendment, the
refinancing of our receivables securitization arrangement,
liquidity benefits from proposed asset sales, along with
continued careful management of our working capital and
liquidity should provide the appropriate time frame to assess
recapitalization and other deleveraging alternatives. I am
gratified to have been able, along with our Board and management
team, to manage Superior through this period of severe economic
downturn and unprecedented decline and volatility in the telecom
and capital markets. At the same time, we have taken the
necessary steps to optimize financial flexibility, maintain
leading superior market positions and deepen our management
resources. This well positions our businesses for improved
profitability and cash flows when the eventual upturn in demand
occurs."
Superior TeleCom Inc., is the largest North American wire and
cable manufacturer and among the largest wire and cable
manufacturers in the world. Superior manufactures a broad
portfolio with primary applications in the communications,
original equipment manufacturer and electrical wire and cable
markets. The company is a leading manufacturer and supplier of
communications wire and cable products to telephone companies,
distributors and system integrators; magnet wire for motors,
transformers, generators and electrical controls; and building
and industrial wire for applications in construction,
appliances, recreational vehicles and industrial facilities. The
Company's Web site is at http://www.superioressex.com
TENDER LOVING CARE: Look for Schedules and Statements by Dec. 26
----------------------------------------------------------------
Tender Loving Care Health Care Services, Inc., and its debtor-
affiliates sought and obtained more time from the U.S.
Bankruptcy Court for the Eastern District of New York to file
their schedules of assets and liabilities, statements of
financial affairs and schedules of executory contracts and
unexpired leases. The Court gives the Company until
December 26, 2002, to comply with the reporting and disclosure
requirements imposed on all debtors under 11 U.S.C. Sec. 521(1)
and Rule 1007 of the Federal Rules of Bankruptcy Procedure.
Tender Loving Care, through its subsidiaries, affiliates and
franchisees are collectively the second largest provider of
Medicare-reimbursed home health care services in the United
States, filed for chapter 11 protection on November 8, 2002.
Ian R. Winters, Esq., Tracy L. Klestadt, Esq., at Klestadt
Winters LLP represent the Debtors in their restructuring
efforts. When the Company filed for protection from its
creditors, it listed estimated assets of more than $50 million
and estimated debts of more than $100 million.
TREND HOLDINGS: Gets Nod to Pay $5MM of Critical Vendor Claims
--------------------------------------------------------------
Trend Holdings, Inc., and its debtor-affiliates sought and
obtained approval from the U.S. Bankruptcy Court for the
District of Delaware to pay up to $5 million of Prepetition
Claims of Critical Trade Vendors.
The Debtors tell the Court that paying the Critical Vendors is
essential to obtain and facilitate essential postpetition vendor
support on acceptable terms so that the company can continue to
operate its business and maintain uninterrupted supply and
service to its customers. The Debtors' ability to continue
operating and generating revenue, pending the anticipated
approval and consummation of their Chapter 11 Plan, depends upon
the continued support of the Critical Vendors.
Trend Holdings, Inc., and its debtor-affiliates process
plastics, stamp metal and perform electromechanical assembly of
electronic enclosures in facilities around the world. The
Company filed for chapter 11 protection on November 7, 2002.
Laura Davis Jones, Esq., and Christopher James Lhulier, Esq., at
Pachulski Stang Ziehl Young & Jones PC represent the Debtors in
their restructuring efforts. When the Company filed for
protection from its creditors, it listed estimated debts and
assets of more than $100 million.
TRICORD SYSTEMS: Fails to Beat Form 10-Q Filing Deadline
--------------------------------------------------------
Tricord Systems, Inc., (Nasdaq:TRCDQ) did not file its quarterly
report on Form 10-Q, due Thursday last week, with the Securities
and Exchange Commission. The Company said it was unable to file
the report due to its reorganization proceedings under Chapter
11 of the United States Bankruptcy Code, and its inability to
provide the certifications required under Sections 302 and 906
of the Sarbanes-Oxley Act of 2002.
Tricord Systems, Inc., designs, develops and markets clustered
server appliances and software for content-hungry applications.
On August 2, 2002, Tricord Systems, Inc., a Delaware
corporation, filed a voluntary petition for reorganization under
Chapter 11 of the United States Bankruptcy Code with the United
States Bankruptcy Court for the District of Minnesota. On
November 1, 2002, the Company announced the execution of a
definitive Purchase Agreement to sell substantially all of its
assets.
UNION ACCEPTANCE: Has Until December 16, 2002 to File Schedules
---------------------------------------------------------------
By order of the U.S. Bankruptcy Court for the Southern District
of Indiana, Union Acceptance Corp., obtained an extension of the
deadline to comply with the financial disclosure obligations
imposed on all debtors under 11 U.S.C. Sec. 521(1). The Court
gives Union Acceptance until December 16, 2002, to prepare and
file comprehensive schedules of assets and liabilities, and
statements of financial affairs.
Union Acceptance Corporation is a specialized finance company
engaged in acquiring retail installment sales contracts and
installment loan agreements. The Company filed for chapter 11
protection on October 31, 2002. Michael K. McCrory, Esq., at
Barnes & Thornburg represents the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed $243,401,258 in total assets and
$115,394,445 in total debts.
US AIRWAYS: Philadelphia Stock Exchange Delists Options
-------------------------------------------------------
The Philadelphia Stock Exchange sought and obtained permission
from the Securities and Exchange Commission, pursuant to Section
12(d) of the Securities Exchange Act of 1934 and Rule 12d2-2(c),
to strike from listing and registration on the Philadelphia
Stock Exchange the call and put option contracts issued by the
Options Clearing Corporation with respect to US Airways'
securities.
Philadelphia Exchange Rule 1010 provides generally that,
whenever the Exchange determines that an underlying security
previously approved for option transactions on the Exchange
should no longer be approved, whether because it does not meet
the standards for continued approval or for any other reason,
the Exchange will not open any additional options series of that
class for trading, and may take steps thereafter to prohibit
opening purchase transactions in options series of that class
previously opened to the extent it deems these actions
appropriate. When an underlying security becomes no longer
approved for option transactions, the Exchange may apply to
strike the related option contracts from listing and trading
once all option contracts have expired. Under this provision,
the Philadelphia Exchange has determined to strike from listing
and trading the call and put options issued by the Options
Clearing Corp. relating to the common stock of US Airways. (US
Airways Bankruptcy News, Issue No. 14; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
US Airways Inc.'s 10.375% bonds due 2013 (U13USR2), DebtTraders
reports, are trading at 10 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=U13USR2for
real-time bond pricing.
VECTOUR: Taps Continental/Great American Joint Venture as Broker
----------------------------------------------------------------
Vectour Inc., and its debtor-affiliates asks for authority from
the U.S. Bankruptcy Court for the District of Delaware to tap
the services of Continental/Great American Joint Venture as
Asset Liquidator, specifically as vehicle liquidation broker to
market and dispose of any motorcoaches, shuttles, other
vehicles, and other business assets. The Broker is a joint
venture comprised of two partners:
(i) Pride Capital Group, LLC dba Great American Group, and
(ii) Continental Group, LLC.
Among the sales approved by the Court is the Sale of
Substantially All Assets of VecTour of Chicago, Inc., VecTour of
Nevada, Inc., and PROTRAV Services, Inc.-Nevada. In an effort
to salvage whatever value exists in the assets at the Debtors'
Las Vegas and Chicago locations while minimizing the carrying
costs, the Debtors determined that a going-concern sale was not
cost-effective. Instead, the Debtors believe that the best way
to maximize the value of most of their remaining vehicles-which
are believed to be the Debtors' most valuable assets-is to
liquidate them promptly pursuant to arms-length, negotiated
contracts and, failing that, at auction.
The Debtors assert that they require the services of the Broker
for the purpose of assisting them in liquidating Vehicles and
maximizing the value of these remaining Vehicles. The Debtors
seek to retain Broker due to the Broker's partners' experience
in the asset liquidation industry, specializing in the types of
Vehicles owned by the Debtors.
In the course of its employment, Broker will market and arrange
for the sale of Vehicles to various end-buyers on a commission
basis. The initial sale of Vehicles will be conducted by
auction, and any Vehicles not sold at the initial auction may be
sold in a commercially reasonable manner in Broker's discretion.
The Debtors and Broker have agreed that Broker shall receive:
(A) Broker guarantees a net minimum payment of $1,550,000 from
the sales of the assets;
(B) Out of the Gross Sale Proceeds, Broker shall be entitled to
retain up to $150,000 to cover reasonable and actually-
incurred out of pocket expenses;
(C) To the extent that the sales of assets exceeds $1,700,000,
all additional Gross Sale Proceeds after allocation to
Broker of the buyers premium shall be divided into:
(i) Broker receives 30% of the Excess Proceeds and
(ii) the respective Debtor-owners receive 70% of the Excess
Proceeds.
(D) Broker shall have the right to collect from buyers a
premium equal to 10% of the sale price of the assets sold
to such buyer.
VecTour, Inc., is a leading nationwide provider of ground
transportation for sightseeing, tour, transit, specialized
transportation, entertainers on tour, airport transportation and
charter services. The Company filed for chapter 11 protection
on October 16, 2001. David B. Stratton, Esq., and David M.
Fournier, Esq., at Pepper Hamilton LLP represent the Debtors in
their restructuring effort.
VISKASE COMPANIES: Wants to Retain Gardner Carton as Co-Counsel
---------------------------------------------------------------
Viskase Companies, Inc., asks for permission from the U.S.
Bankruptcy Court for the Northern District of Illinois to
bring-in Gardner, Carton & Douglas, as bankruptcy co-counsel.
The Debtor relates it has selected Milbank, Tweed, Hadley &
McCloy LLP as its counsel to represent it in all matters during
the duration of this case. The Debtor has also selected Gardner
Carton to act as its local co-counsel in this case. Gardner
Carton will coordinate with Milbank to avoid duplication of
efforts whenever possible.
As the Debtor's co-counsel, Gardner Carton is expected to:
a) advise the Debtor of its rights, powers, and duties as
debtor and debtor in possession;
b) advise the Debtor concerning actions that it might take
to collect and recover property for the benefit of its
estate;
c) prepare all necessary and appropriate applications,
motions, draft orders, other pleadings, noticed,
schedules, and other documents, and review all financial
and other reports to be filed in the Debtor's case;
d) advise the Debtor concerning and prepare responses to,
applications, motions, other pleadings, noticed and
other papers that may be filed and served in the Debtors
case;
e) review the nature and validity of any liens asserted
against the Debtor's property and advise the Debtor
concerning the enforceability of those liens;
f) advise and assist the Debtor in connection with the
formulation, negotiation, distribution, and confirmation
of a plan of reorganization and related documents;
g) advise and assist the Debtor in connection with any
potential property dispositions;
h) advise the Debtor concerning lease and contract
restructurings and executory contract and unexpired
lease assumptions, assignments, and rejections;
i) assist the Debtor in reviewing, estimating, and
resolving claims asserted against the estate;
j) commence and conduct any and all litigation necessary or
appropriate to assert rights held by the Debtor, protect
assets of its estates, or otherwise further the goal of
completing a successful reorganization; and
k) perform all other necessary legal services in connection
with the Debtor's case.
Gardner Carton will charge the Debtor at its current customary
hourly rates:
Partners and $285 to $575 per hour
Counsel to the Firm
Associates $180 to $375 per hour
Paralegals $140 to $205 per hour
The professionals who will be principally involved in this case
are:
Harold L. Kaplan $575 per hour
Jeffrey M. Schwartz $390 per hour
Monika J. Machen $240 per hour
Mark R. Mackowiak $180 per hour
Viskase Companies, Inc., has its major interests in food
packaging with principal products manufactured are cellulosic
and nylon casings used in the preparation and packaging of
processed meat products, filed for chapter 11 protection on
November 13, 2002. When the Company filed for protection from
its creditors, it listed $219,721,000 in total assets and
$363,185,000 in total debts.
WARNACO GROUP: Judge Bohanon Approves Disclosure Statement
----------------------------------------------------------
After hearing all the arguments presented by the Debtors and
parties-in-interests on November 13, 2002, Judge Bohanon
approves The Warnaco Group, Inc., and its debtor-affiliates'
Disclosure Statement, finding that it contains adequate
information as defined under Section 1125 of the Bankruptcy
Code. Moreover, the Court rules that:
1. All objections to the Disclosure Statement, other than those
withdrawn on the record at the Hearing, those resolved by
making changes to the Disclosure Statement or those otherwise
reserved to the Confirmation Hearing by agreement between the
Debtors and the objecting party, are overruled;
2. The Plan Confirmation Hearing will be held on January 16,
2003 at 9:45 a.m. prevailing Eastern Time;
3. All objections to the confirmation of the Plan must be filed
in writing with the Clerk of the Bankruptcy Court by 4:00
p.m. prevailing Eastern Time on December 27, 2002. Any
objection not filed and served by this time will be deemed
waived and will not be considered by the Bankruptcy Court;
4. The Debtors are authorized and directed, as soon as
practicable, but not later than November 25, 2002, to
transmit by first class mail to all parties-in-interest the
Confirmation Hearing Notice; and
5. The Debtors are authorized and directed to publish a notice
of the approval of the Disclosure Statement, the Confirmation
Hearing and the Objection Deadline in The Wall Street
Journal, the New York Times, Women's Wear Daily and The Globe
and Mail on at least one occasion on or before November 25,
2002. (Warnaco Bankruptcy News, Issue No. 37; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WHEELING-PITTSBURGH: Court Approves Amended RBC Dain Engagement
---------------------------------------------------------------
Wheeling-Pittsburgh Corporation and its affiliated debtors
obtained permission from the Court to execute and perform
under RBC Dain's amended engagement letter dated September 1,
2002, and pay certain fees in that connection.
The Amended Engagement Letter increases the Monthly Fee to be
received by RBC Dain from $50,000 to $200,000 per month,
effective on and from September 1, 2002. The increase in the
fee is required to offset the extraordinary and unexpected
expense incurred by RBC Dain in connection with the Application,
ongoing requests from the ESLGB and the continued assistance
provided to the Debtors in connection with the Financing and
their reorganization efforts. The Amended Engagement Letter
also eliminates the four-month limit on RBC Dain's retention.
Except as otherwise provided in the Engagement Letter Amendment,
the Original Letter and the related indemnification and
contribution agreement will remain in full force and effect.
(Wheeling-Pittsburgh Bankruptcy News, Issue No. 29; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WORLDCOM: Seeks Court Nod to Assume Blockbuster Marketing Pact
--------------------------------------------------------------
Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, in New
York, recounts that on May 30, 1997, MCI Telecommunications
Corporation and Blockbuster Entertainment, Inc., entered into an
agreement establishing an integrated marketing campaign between
the parties.
Ms. Goldstein explains that the Free Flix Agreement is part of
an integrated marketing campaign between the parties, pursuant
to which the Worldcom Inc. Debtors pay Blockbuster for two
different types of obligations -- video rental certificates and
Blockbuster gift cards -- both of which can be redeemed at
Blockbuster stores for video rentals and other goods and
services.
Under the Free Flix program, Blockbuster supplies the Debtors
with Certificates and the Debtors then awards these Certificates
to customers who sign up for and use their services. Customers
earn the Certificates:
-- after enrollment in the program; and
-- through the purchase or use of certain minimum levels of
the Debtors' services.
After redemption of the Certificates, Blockbuster invoices the
Debtors at an agreed price per Certificate.
Ms. Goldstein adds that as part of its marketing efforts, the
Debtors purchase Cards and distributes them to potential
customers. When consumers redeem the Cards, Blockbuster charges
the Debtors for the actual redeemed value of the Cards up to a
limit of 90% of the Card's total redeemable value, provided,
however, that Blockbuster may require that the Debtors pay a
mutually agreed up-front fee for the Cards, which will be
applied toward redemption. Currently, Blockbuster holds a
$2,823,874.98 prepetition deposit from the Debtors, which has
not been verified and remains subject to audit.
As of the Petition Date, the Debtors owed Blockbuster
$3,192,940.28 for prepetition redemptions of Certificates and
Cards.
The Amendment to the Free Flix Agreement
According to Ms. Goldstein, the Free Flix Agreement is currently
scheduled to expire by its own terms on December 31, 2002. If
the Free Flix Agreement expires, the Debtors will lose a
significant source of revenue for 2003 and beyond. The Debtors
project that the Free Flix Agreement will generate $250,000,000
in revenues in 2003 alone and will lead to more than 500,000 new
customers. The Debtors believe that the extension embodied in
the Amendment will be a very valuable asset for their estates.
Therefore, on October 21, 2002, the Debtors and Blockbuster
entered into an amendment to the Agreement. The significant
modifications to the Free Flix Agreement are:
A. Term: The Free Flix Agreement will be extended through
December 31, 2003, provided that approval of assumption of
the Free Flix Agreement and the Amendment is received from
the Court no later than December 2, 2002;
B. Cure: The Debtors will remit to Blockbuster all unpaid
amounts owed to Blockbuster under the Free Flix Agreement
amounting to $3,192,940.28, except to the extent that these
unpaid amounts were set off by the existing Card deposit;
C. Marketing and Promotional Activities: During the term of
the Amendment, and for six months following termination of
the Amendment through no fault of the Debtors, Blockbuster
agrees not to target members of the Free Flix program with
marketing to promote, sell, or advertise any service or
product of any Telecommunications Company and will not
identify to any Telecommunications Company any Blockbuster
customer as being a Free Flix program participant;
D. Exclusivity: During the term of the Amendment, Blockbuster
will not institute or enter into any frequency or loyalty
marketing agreement with any other entity to promote
certain telecommunications services;
E. Termination: Either party may terminate the Amendment after
written notice to the other party if:
1. there is a public announcement or a motion filed to:
-- convert these Chapter 11 cases to cases under Chapter
7 of the Bankruptcy Code, or
-- liquidate or sell off, as part of a reorganization,
all assets of the Debtors or the Debtors' Mass
Markets consumer/small business unit;
2. a Chapter 11 plan of reorganization is filed by any
party other than the Debtors, and the Debtors oppose the
plan, but is confirmed by the Court;
3. there is continuing, material default or event of
material default under any of the Debtors' postpetition
financing agreements that remains uncured after any
applicable cure period has elapsed and could result in:
-- a liquidation or selling off of all of the Debtors'
assets, or
-- a good faith belief by Blockbuster that future
amounts owing to Blockbuster would not be paid; or
4. any representation or warranty made in connection with
the Free Flix Agreement by the Debtors to Blockbuster in
writing and signed by an authorized officer of the
Debtors after the effective date of the Amendment was
untrue or incomplete in any material respect when made,
provided that, if the breach is curable, the Debtors
will be given 30 days to cure the breach from the date
of the written notice from Blockbuster;
F. Revenue Commitment: Beginning on January 1, 2003, the
Debtors agree to certain revenue commitments that will be
tested on a quarterly basis. To the extent that the
Debtors' payments to Blockbuster in any quarter fall short,
the Debtors will make up the shortfall within 30 days
immediately following the quarter in which the shortfall
occurred; provided, however, that shortfall payments in the
first three quarters of 2003 will constitute a credit
against future redemptions of Certificates. If the
Debtors' payments to Blockbuster in any of the first
quarters exceed the revenue commitment level for that
quarter, the overpayment will go toward meeting the revenue
commitment level for the next quarter. The Amendment also
contains certain provisions for dealing with a shortfall of
the Debtors' revenue commitment during the fourth quarter
of 2003; and
G. Release of Claims: The parties agree to release each other
of and from any claims and causes of action of any nature,
whether known or unknown, suspected or unsuspected, now
known or arising in the future that the parties may have
against each other relating to payment or non-payment of
revenue to Blockbuster under the Free Flix Agreement on or
prior to April 1, 2002.
In addition, Ms. Goldstein relates that the amendment provides
for certain rights of the parties after termination of the Free
Flix Agreement. Pursuant to the Amendment, after termination of
the Free Flix Agreement relating to bankruptcy and insolvency
proceedings, the bankrupt party will bear the costs of informing
Free Flix program participants that the program has terminated.
Similarly, the Amendment provides that in the event of
termination, the party for which a receiver was appointed or
which takes advantage of legislation relating to insolvency,
arrangement or relief of debtors will bear the costs of
informing program participants that the program has terminated.
Despite the existence of these provisions, it is the Debtors'
understanding that Blockbuster does not intend to terminate the
agreement by reason of the Debtors' insolvency or bankruptcy.
Thus, the Debtors seek the Court's authority to assume the Free
Flix Agreement, as amended, and to implement the Amendment. The
Debtors also ask Judge Gonzalez to fix their cure obligations.
Ms. Goldstein relates that the Debtors' joint marketing
relationship with Blockbuster has historically been one of the
Debtors' more successful marketing partnerships. Without the
modification and assumption of the Free Flix Agreement, the
Debtors would lose an integral part of their projected business
for 2003 and beyond. The Debtors project that the one-year
extension of the Free Flix Agreement will bring over 500,000 new
customers to the Debtors who are incentivized to purchase
additional products and services to continue earning
Certificates. Accordingly, the Free Flix Agreement is a
critical asset of the estate and is necessary to the generation
of significant revenues. (Worldcom Bankruptcy News, Issue No.
13; Bankruptcy Creditors' Service, Inc., 609/392-0900)
Worldcom Inc.'s 11.25% bonds due 2007 (WCOM07USR4), DebtTraders
reports, are trading at about 23 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOM07USR4
for real-time bond pricing.
XO COMMUNICATIONS: Delivers Stand-Alone Plan Supplement to Court
----------------------------------------------------------------
XO Communications presents to Judge Gonzalez its Supplement to
their 3rd Amended Plan of Reorganization as it relates to the
Stand-Alone Plan -- Plan B.
The Debtor submitted these documents:
A. Amended and Restated Credit and Guaranty Agreement
The $500,000,000 Senior Secured Term Loan is executed between
the Debtor, certain of its Operating Subsidiaries, as
guarantors, various Lenders, and Mizuho Corporate Bank Ltd,
as Administrative Agent.
The Junior Secured Loans will be secured by a second-
priority perfected security interest on the Reorganized
Debtor's and its Operating Subsidiaries' assets;
The Debtor will further secure all its obligations by
granting the Administrative Agent, for the benefit of its
Lenders:
(a) a First Priority Lien on all the Capital Stock owned by
the Company in each of its first tier Domestic
Subsidiaries;
(b) a First Priority Lien on 65% of all the Capital Stock
owned by XO in each of its first tier Foreign
Subsidiaries; and
(c) a First Priority Lien on all of its personal property and
Material Real Estate Assets;
The Term Loans will be repaid in quarterly amounts on
these dates:
Installment Date Installment
---------------- -----------
June 30, 2007 5%
September 30, 2007 5%
December 31, 2007 5%
March 31, 2008 10%
June 30, 2008 10%
September 30, 2008 15%
December 31, 2008 15%
March 31, 2009 35%
The Debtor will issue to the holders of Allowed Senior
Secured Lender Claims, a pro-rata share of:
(a) 90,250,000 shares of the New Reorganized Common Stock
representing 95% of all issued and outstanding shares of
the New Reorganized Common Stock on the Plan's Effective
Date; and
(b) a $500,000,000 junior secured loan pursuant to the
Stand-Alone Term Sheet and the Stand-Alone Plan Term
Loan and Guaranty Agreement.
On the Effective Date, the Debtors will be authorized to
obtain the Exit Facility with a maximum availability of
$200,000,000.
Institutional investors who will provide the Exit Facility
will be granted a first-priority perfected security interest
on all the Reorganized Debtor and its Operating
Subsidiaries' assets.
The Exit Facility may be drawn at any time after the end of
the 4th complete quarter after the Effective Date, provided
that the Debtor and its Operating Subsidiaries are in
compliance with all other covenants under the Junior Secured
Loans.
The Exit Facility may not be drawn on when the Reorganized
Debtor's and its Operating Subsidiaries' cash balance is
over $50,000,000.
The Maximum Exit Facility Available will be reduced by any
cash proceeds to Reorganized Debtor from a Rights Offering
of Reorganized Debtor's common equity;
B. Rights of Certificates
(a) Transferable Rights Certificate
The Certificate would allow a holder to subscribe to the
available Rights Shares of the Debtor's Common Stock it
has previously offered. American Stock Transfer & Trust
Company will be the Rights Agent.
(b) Non-Transferable Rights Certificates
The Certificate will be for the Non-Transferable Rights
of 40,000,000 shares of Common Stock the Debtor is
offering. Each share will have a $5 value for an
aggregate of $200,000,000 through the rights offering;
provided that the Debtor may offer up to an additional
3,333,333 shares in certain events;
C. Warrant Agreement
Each warrant will entitle the holder to purchase from the
Company one fully paid and non-assessable Share. The New
Series A Warrants will be exercisable at $6.25 per share
representing a 25% premium to the Rights Offering Price. The
New Series B Warrants will be exercisable at $7.50 per share,
representing a 50% premium to the Rights Offering Price,
while The New Series C Warrants will be exercisable at $10
per share, representing a 100% premium to the Rights Offering
Price. The Warrant is for a period of seven years. The
Debtor will appoint American Stock Transfer & Trust Company
as Warrant Agent, who will act in connection with the
issuance, registration, exchange and conversion of the
Warrants. In the event that the Right Shares are offered for
sale in the Rights Offering at a price per share less that
$5, then the Exercise Prices will also be reduced;
D. Amended and Restated Bylaws;
E. Amended and Restated Certificate of Incorporation;
F. Retention Bonus Plan
To encourage key employees to continue their employment with
the Debtor during the period of the Debtor's restructuring
and to motivate them to achieve corporate performance goals,
retention bonuses will be paid on completion of a service
requirement and accomplishment of corporate performance
objectives, which includes the Debtor's successful
reorganization;
Retention Bonuses will be earned and paid in three
installments on the accomplishment of the Debtor's successful
emergence from bankruptcy and the achievement of earning
targets after the emergence as:
-- 25% of the participant's Emergence Bonus will be paid
concurrent with the consummation of the Reorganization
Plan and emergence from Chapter 11 proceedings;
-- 37.5% of the Emergence Bonus will be paid after the First
Target Date; and
-- up to an additional of 37.5% of the participant's
Emergence Bonus will be paid after the Second Target Date.
The Retention Bonuses for two employees who began employment
with the Debtor after April 1, 2002 are:
Emergence Maximum Maximum
Employee Bonus First Bonus Second Bonus
-------- --------- ----------- ------------
Mr. Akerson $750,000 $0 $0
Mr. Begeman $250,000 $0 $62,500
Other Participants who started employment after April 1, 2002
will not be eligible for an Emergence Bonus but will be
eligible to earn a First Bonus or Second Bonus on the First
and Second Target Date. The amount of the First and Second
Bonus will be calculated based on the Debtor's EBITDA reported
for the two fiscal quarters immediately preceding the First
and Second Target Date:
-- If the sum of the Debtor's EBITDA is less than 75% of the
Target EBITDA, the amount of the First or Second Bonus will
be zero and no Retention Bonus will be paid on those dates;
-- If the sum of the Debtor's EBITDA is 75% to 100% of the
Target EBITDA, the amount of the First and Second Bonus
will be 75% of the Maximum First Bonus or the Maximum
Second Bonus; and
-- If the sum of the Debtor's EBITDA is greater than 100% of
the EBITDA Target, the First and Second Maximum Bonuses
will be paid respecting the Target Date.
The Participants must be employed by the Debtor on the
Consummation Date, First Target and/or Second Target Date to
receive an Emergence Bonus, First Bonus or Second Bonus. If
the Participant is on an unpaid leave of absence on the date
the Bonuses are scheduled to be paid, the Participant will not
be entitled to receive the bonus until he or she returns to
active employment status. The amount will be prorated for the
number of days that the Participant was actually on active
status from the Effective Date to the Consummation Date, First
or Second Target Dates. Participants who fail to return to
active employment status within 180 days from their leave of
absence will be deemed to have voluntarily terminated their
employment and forfeit Retention Bonus' rights.
The Maximum amounts that may be earned by an individual under
the Plan:
Name and Position Dollar Value
----------------- ------------
Daniel F. Akerson $750,000
Chairman and Chief
Executive Officer
Nathaniel A. Davis 565,500
President and Chief
Operating Officer
R. Gerard Salemme 325,000
Senior Vice President,
Regulatory and Legislative Affairs
Michael S. Ruley 343,750
Executive Vice President,
Market Sales Operations
Nancy Gofus 343,750
Executive Vice President
Marketing and Customer Care
Executive Group 3,966,900
Non-Executive Director Group N/A
Non-Executive Officer 21,007,732
Employee Group
Other than Mr. Akerson, the amounts for other individuals and
the Non-executive Officer Group are estimates made in good
faith because the Plan Administrator has not yet fully
determined their participation levels under the Plan;
G. Management Incentive Program
The purpose of the Plan is to promote the Debtor's success by
providing performance incentive to certain officers,
employees, and individuals so that the individuals will
acquire or increase propriety interest in the successful
emergence from Chapter 11. As incentive, certain officers,
employees and individuals that provide services will be
granted the equity-based compensation awards, including stock
options and restricted stock;
Some provisions of the Incentive Program include:
-- the Plan Administrator has the sole discretion to
determine all terms and conditions of the stock option and
restricted stock awards;
-- separate stock option and restricted stock awards need not
be identical even when made simultaneously;
-- the Plan Administrator may modify or amend outstanding
stock options and restricted stock awarded, however, may
not impair or diminish the rights of any award recipient
or any of the Debtor's obligations without consent of the
award recipient;
-- no outstanding award will be terminated without the award
recipient's consent; and
-- unless terminated earlier, the Plan will terminate 10
years after adoption from the Board and no stock options
or restricted stock may be awarded on or afterwards.
The Board has the right to terminate, modify, or amend the
Plan, but must however, obtain stockholder approval for
amendments that:
(a) increase the number of shares of Class A Common Stock
available under the Plan;
(b) change the determination of who is eligible to receive
the stock option or restricted stock awards; or
(c) require stockholder approval under applicable law.
There are two types of stock options:
(a) incentive stock options -- may be granted only to
employees of the Debtor, including Board members who are
also employees; and
(b) non-qualified stock options -- may be granted to
employees, non-employee consultants, including non-
employee Board members; and
H. Schedule 8.1
The Debtor has elected not to be governed by Section 203 of
the Delaware General Corporate Law. (XO Bankruptcy News,
Issue No. 13; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
* Thacher Proffitt & Wood Moving to 2 World Financial Center
------------------------------------------------------------
Thacher Proffitt & Wood has signed a 15-year lease at 2 World
Financial Center. Thacher Proffitt relocated in September 2001
to midtown after being displaced from its offices in the South
Tower of The World Trade Center and is believed to be the first
company from the World Trade Center to sign a new lease in the
immediate area.
Thacher Proffitt expects to move into 2 World Financial Center
by its goal of August 2003 after the build out of its space is
completed. This move will bring more than 300 employees back
downtown where the Firm began and where many important financial
institutions remain headquartered. Thacher Proffitt will occupy
137,000 square feet on the 26th - 29th floors, approximately the
same footage it occupied at 2 World Trade Center.
Governor George E. Pataki said, "I am extremely pleased that
Thacher, Proffitt & Wood has reaffirmed its commitment to Lower
Manhattan and is moving its offices back downtown. A strong
business community is essential to Lower Manhattan's recovery
and long-term vitality. The return of Thacher is yet another
indication that the revitalization of Lower Manhattan is well
underway."
"Thacher Proffitt is finally going back home," said Jack
Williams, Managing Partner of Thacher Proffitt & Wood. "We are
proud of all that we've accomplished in our quick recovery from
the disaster on September 11th 2001 and we're proud of our
ability to continue to serve and expand our client base since
that date. Our Firm had been based in the downtown area for more
than 150 years and this move brings us back where we started.
Our people have been resilient throughout these last 14 months
and we are looking forward to going back, to being closer to the
roots of our business, and in some small way, giving back to the
community that nurtured us for so long."
John Whitehead, Chairman of the Lower Manhattan Development
Corporation, said, "Thacher Proffitt & Wood's decision to return
to Lower Manhattan demonstrates their confidence in downtown's
comeback. They have a long history in the Lower Manhattan
business community and I commend their decision to help
strengthen the area during this critical time."
"We are excited to have the prestigious firm of Thacher Proffitt
& Wood return to Lower Manhattan," said Carl Weisbrod, president
of the Alliance for Downtown New York. " I am particularly
thrilled to have this first-class law firm move from Midtown to
Downtown. This move once again reaffirms a strong commitment of
businesses to the Downtown area."
Thacher Proffitt thanks Tishman Real Estate Services for their
tireless work as our agent in the relocation process.
A Firm that focuses on the corporate and financial services
industries, Thacher Proffitt & Wood advises domestic and global
clients in a wide range of areas, including corporate and
financial institutions law, structured finance, swaps and
derivatives, cross-border transactions, global finance, real
estate, insurance, admiralty and ship finance, litigation and
dispute resolution, technology and intellectual property,
taxation, trusts and estates, bankruptcy, reorganizations and
restructurings. The Firm has approximately 200 lawyers located
in New York City, Washington, D.C., White Plains, N.Y., Summit,
N.J. and Mexico City, Mexico.
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Advisory Board ABCO (16) 48 (20)
Air Canada AC (938) 8,901 (634)
Alliance Imaging AIQ (79) 658 25
Alaris Medical AMI (47) 573 129
Amylin Pharm Inc. AMLN (3) 63 47
Amazon.com AMZN (1,440) 1,637 286
Anteon Int'l. Corp. ANT (3) 307 27
Arbitron Inc. ARB (169) 127 17
Alliance Resource ARLP (47) 291 (2)
American Standard ASD (90) 4,831 208
Actuant Corp. ATU (140) 343 15
Avon Products AVP (46) 3,193 428
Saul Centers Inc. BFS (24) 346 N.A.
Choice Hotels CHH (64) 321 (28)
Caremark Rx, Inc. CMX (772) 874 (31)
Campbell Soup Co. CPB (114) 5,721 (1,479)
Echostar Comm. DISH (778) 6,520 2,024
Dun & Bradstreet DNB (20) 1,431 (82)
Gamestop Corp. GME (4) 607 31
Hollywood Entertainment HLYW (113) 718 (271)
Hollywood Casino HWD (92) 553 89
Imclone Systems IMCL (5) 474 295
Inveresk Research Group IRGI (7) 302 (115)
Gartner Inc. IT (34) 839 (79)
Journal Register JRC (36) 711 (26)
Kos Pharmaceuticals KOSP (58) 83 27
Ligand Pharm. LGND (58) 117 22
Level 3 Comm Inc. LVLT (65) 9,316 642
Mega Blocks Inc. MB (37) 106 56
Moody's Corp. MCO (304) 505 12
Medical Staffing MRN (33) 162 55
MTC Technologies MTCT 0 26 10
Petco Animal PETC (86) 473 68
Proquest Co. PQE (45) 628 (140)
Playtex Products PYX (44) 1,105 108
RH Donnelley RHD (111) 296 0
Sepracor Inc. SEPR (314) 1,093 727
Solutia Inc. SOI (113) 3,408 (495)
United Defense Ind. UDI (166) 912 (55)
Valassis Comm. VCI (66) 363 10
Ventas Inc. VTR (91) 942 N.A.
Weight Watchers WTW (87) 483 (24)
Western Wireless WWCA (274) 2,370 (105)
Expressjet Holdings XJT (214) 430 52
*********
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.
Each Tuesday edition of the TCR contains a list of companies
with insolvent balance sheets whose shares trade higher than $3
per share in public markets. At first glance, this list may
look like the definitive compilation of stocks that are ideal to
sell short. Don't be fooled. Assets, for example, reported at
historical cost net of depreciation may understate the true
value of a firm's assets. A company may establish reserves on
its balance sheet for liabilities that may never materialize.
The prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.
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 ***