/raid1/www/Hosts/bankrupt/TCR_Public/021121.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, November 21, 2002, Vol. 6, No. 231
Headlines
ACCEPTANCE INSURANCE: Fitch Further Junks Preferred Rating to C
ACCEPTANCE INSURANCE: Fitch Places B-/CCC+ Ratings on Watch Neg.
ACCEPTANCE INSURANCE: S&P Keeps Watch on Junk and Low-B Ratings
ACCEPTANCE INSURANCE: S&P Further Junks Counterpart Rating to CC
ACCEPTANCE INSURANCE: Considering Selling Crop Insurance Assets
ADVANCED GLASSFIBER: Net Capital Deficit Tops $208MM at Sept. 30
ADVANCED LIGHTING: Defaults on Senior Notes Indenture
ADVANCED LIGHTING: GE to Receive More Rights Under 1999 Pacts
AES CORP: Waives Tender Date for 8.75% Notes & 7.375% Securities
AHEAD COMMS: U.S. Trustee Balks at Zeisler & Zeisler's Fees
ANC RENTAL: Seeks Nod to Hire Lincoln Property as Georgia Broker
ANNUITY & LIFE: Restating 2000 & 2001 Financials
AQUILA INC: Says Liquidity Sufficient to Meet Cash Requirements
ARIES INSURANCE: S&P Assigns 'R' Financial Strength Rating
ARMSTRONG HOLDINGS: Court OKs Tolling Agreements with Defendants
ATCHISON CASTING: Expects Continued Support from US & UK Lenders
BASIS100 INC: Working Capital Deficit Tops $9MM at September 30
BESTNET COMMS: Arbitration Proceedings with Softalk Underway
BUDGET GROUP: Wants to Make $1MM Contribution to French Unit
BURLINGTON: Selling Denton Facility to Magna Fabrics for $1.8MM
CARAVELLE INVESTMENT: Fitch Cuts Sub. Notes' Ratings to BB/CCC
CARBITE INC: Files for Chapter 11 Reorganization in California
CARBITE INC: Case Summary & 20 Largest Unsecured Creditors
CARESIDE INC: Sept. 30 Balance Sheet Upside-Down by $4 Million
CHAPARRAL RESOURCES: Third Quarter 2002 Results Show Improvement
CHILDTIME LEARNING: Special Shareholders Meeting Set for Dec. 17
CINEMA RIDE: Independent Auditors Express Going Concern Doubt
CLAXSON INTERACTIVE: Sept. 30 Net Capital Deficit Tops $14 Mill.
CRESCENT REAL ESTATE: Enters into Exchange Deal with Rainwater
ENRON: Court OKs Proposed Retail Contract Settlement Procedures
EOTT ENERGY: Committee Signs-Up Petrie Parkman for Fin'l Advice
EPICEDGE INC: Sept. 30 Balance Sheet Insolvency Tops $11 Million
EPOCH 2000-1: S&P Cuts Ratings on Classes I & II Notes to BB+/BB
EPOCH 2001-1: S&P Drops Class V Floating-Rate Note Rating to D
EROOMSYSTEM: Will Receive Up to $322K in Interim Debt Financing
EXIDE TECH.: Asks Court to Further Extend Lease Decision Period
EVENFLO COMPANY: Reaches Recapitalization Pact with Noteholders
FLEMING COMPANIES: Completes Exchange Offer for 9-7/8% Sr. Notes
GENTEK: Court Approves Proposed Interim Compensation Procedures
GLOBAL CROSSING: Wants Okay to Assume Kajima Design Agreement
HORIZON NATURAL: Definitive Pact for West Virginia Coal Assets
HORIZON NATURAL: Look for Schedules & Statements on January 11
HUGHES ELECTRONICS: S&P Cuts Low-B Ratings over Liquidity Issues
KAISER ALUMINUM: Enters into Oxnard Workers Shutdown Agreements
KMART: Wants to Sell RK-235 Beechjet to Country Air for $3.4MM
LANDSTAR: Will Delay Filing of Financial Reports on Form 10-QSB
LONDONCONNECT INC: Section 304 Petition Summary
LTV CORP: LTV Steel Wants to Establish Prosecution Thresholds
MILESTONE SCIENTIFIC: Net Capital Deficit Widens to $5 Million
MISSISSIPPI CHEMICAL: Completes Amendment to Secured Revolver
MORGAN GROUP: Asks Court to Okay Use of Lenders' Cash Collateral
MOUNT SINAI MED.: Fitch to Review Financials to Evaluate Ratings
NEBO PRODUCTS: Balance Sheet Insolvency Widens to $2.2 Million
NORTEL: Deploys Optical Ethernet Solutions in Beijing & Qingdao
OWENS CORNING: Court Approves Redevelopment of Florida Plant
PACIFICARE HEALTH: Offering $100M Convertible Subordinated Notes
PACIFICARE HEALTH: Caps 3% Conv. Note Offering at $125 Million
PERKINELMER: Moody's Rating Downgrade Anticipated in Refinancing
PLANETRX.COM INC: Enters Into Merger Pact with Mortgage Express
PRESIDENTIAL LIFE: S&P Slashes Ratings to B+ Following Q3 Losses
PRIMUS TELECOMMS: Canadian Unit Partners with Future Shop
PROVANT INC: Preparing Prospectus for Proposed Share Issuance
RESEARCH INC: Court to Consider Proposed Plan on Wednesday
SIERRA PACIFIC: Says Q3 Results Show Progress in Turnaround Plan
SPORTS ARENAS: Independent Auditors Air Going Concern Doubt
SYNERGY TECH: Hiring Todtman Nachamie as Bankruptcy Attorneys
TECSTAR INC: Plan Filing Exclusivity Extended Until December 4
TENDER LOVING: Taps Klestadt & Winters as Bankruptcy Counsel
TYCO INT'L: Names D. Robinson to Head Plastics & Adhesives Group
TXU EUROPE: Fitch Drops Sr. Unsecured & S-T Debt Ratings to D
UNITEDGLOBALCOM: Inks Pact for European Unit's Recapitalization
VIVENDI UNIVERSAL: SEC Commences Formal Investigation
WACKENHUT CORRECTIONS: S&P Assigns BB- Corporate Credit Rating
WICKES INC: Completes Sale of Bangor, Maine Assets to Hammond
WORLDCOM INC: Philadelphia Stock Exchange Delists Options
XCEL ENERGY: Commences Private Offering of $200MM Conv. Notes
XCEL ENERGY: Fitch Rates $200MM Convertible Securities at BB+
XCEL ENERGY: Prices $200 million Convertible Senior Notes
XEROX: Plans Up to $400MM Q4 Charge for Worldwide Restructuring
XM SATELLITE: Funding Concerns Spur S&P to Keep Ratings Watch
* Investment Funds Form Trade Claim Buyers Association
* DebtTraders' Real-Time Bond Pricing
*********
ACCEPTANCE INSURANCE: Fitch Further Junks Preferred Rating to C
---------------------------------------------------------------
Fitch Ratings has downgraded to 'C' its rating of the $94.875
million trust preferred stock (due 2027) issued by Acceptance
Insurance Companies Inc.'s subsidiary, AICI Capital Trust, from
'CCC+' following the company's announcement that it was
deferring interest payments on the trust preferred stock until
not later than September 30, 2007. At the same time, Fitch
downgraded the long-term issuer rating of Acceptance to 'CC'
from 'B-'. The ratings are removed from Rating Watch Negative.
Following the downgrades, the Rating Outlook for each rating is
now Negative.
The Negative Rating Outlook stems from the company reporting an
estimated after-tax net loss of $131.0 million for the third
quarter of 2002 and that it has signed a nonbinding Letter of
Intent that sets forth preliminary terms for the potential sale
of certain crop insurance assets to Rain and Hail L.L.C., and/or
its affiliates. The degree of success achieved in the proposed
transaction may warrant future rating reviews.
Acceptance Insurance Companies Inc.
-- Long-term issuer rating 'CC'/Negative.
AICI Capital Trust
-- Trust Preferred rating 'C'/Negative.
ACCEPTANCE INSURANCE: Fitch Places B-/CCC+ Ratings on Watch Neg.
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Fitch Ratings has placed its 'B-' long-term issuer rating of
Acceptance Insurance Companies, Inc. and its 'CCC+' rating of
subsidiary AICI Capital Trust's $94.875 million 9.00% trust
preferred securities on Rating Watch Negative.
The rating action follows the company's announcement on Friday
November 15, that it would delay releasing its third quarter 10-
Q until Tuesday, November 19, and that management was in
'discussions with various parties concerning potential strategic
transactions that could affect the company's financial
statements.' The ratings will remain on Rating Watch Negative
pending Fitch's review of the nine month financial results for
Acceptance and a resolution of any transactions that the company
is considering.
The company also announced that it had recorded a loss from crop
insurance underwriting and operations for the third quarter of
2002 of approximately $62 million, due in large part to
'widespread drought and other abnormal growing conditions
throughout the company's area of operations.' Additionally,
Acceptance reported that its property/casualty business, which
is in run-off, posted an estimated loss of $6.1 million for the
quarter.
Acceptance reported total assets of $801 million and
shareholders' equity of $150 million at the end of the second
quarter of 2002. The company also reported a net loss of $9.5
million for the second quarter of 2002, compared to a net loss
of $5.0 million for the same period of the previous year.
Acceptance's primary subsidiary is American Growers Insurance
Company, a Nebraska domiciled insurer with total admitted
assets, on a statutory basis, of $122.1 million and
policyholder's surplus of $71.7 million at June 30, 2002. The
company primarily writes multi-peril crop insurance and other
crop insurance products.
Acceptance Insurance Companies Inc.
-- Long-term issuer rating 'B-'/Negative;
AICI Capital Trust
-- Trust Preferred rating 'CCC+'/Negative.
ACCEPTANCE INSURANCE: S&P Keeps Watch on Junk and Low-B Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its counterparty
credit ratings on Acceptance Insurance Cos. Inc., to 'CCC' from
'B+' and its counterparty credit and financial strength ratings
on AICI's subsidiary, American Growers Insurance Co., to 'BB-'
from 'BBB-' based on the company's November 15 announcement that
it was postponing filing its 10-Q report for the third quarter
of 2002, citing a very significant estimated loss for the
quarter at AGIC.
Standard & Poor's also said it lowered its rating on AICI's
trust-originated preferred securities due 2027 to 'CC' from
'CCC+'.
In addition, these units will be kept on CreditWatch with
negative implications where they were placed on November 15.
The CreditWatch resulted from the company's postponement of its
third-quarter earnings conference call, originally scheduled on
November 15; its concomitant announcement that it intended to
extend the date for filing its 10-Q quarterly report to the
Securities and Exchange Commission; unusual trading activity in
its common stock and a steep decline in the market value of that
stock; and management's noting when it postponed the earnings
call that it was "in active discussions regarding possible
strategic transactions" (a fact known to Standard & Poor's).
AICI is a holding company whose main operation is AGIC, the
largest provider of federal multiperil crop insurance and crop
revenue coverage insurance to farmers in the U.S. In addition,
AGIC writes commercial crop and named peril insurance for
farmers. AICI also owns Acceptance Insurance Co., an
unsuccessful multiline commercial insurer that is in runoff.
On August 29, 2002, Standard & Poor's affirmed its ratings and
established a positive outlook on AICI and AGIC, citing the
latter's strong market position and good long-term operating
results in MPCI and CRC and the former's ability to service its
trust-originated preferred securities, the only external source
of funds on its balance sheet. On that date it lowered its
financial strength and counterparty credit ratings on AIC to
'B+' from 'BB-' and, at management's request, withdrew the
ratings.
Standard & Poor's expects to resolve its CreditWatch after
talking with management about its current state of affairs.
ACCEPTANCE INSURANCE: S&P Further Junks Counterpart Rating to CC
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its counterparty
credit rating on Acceptance Insurance Companies Inc., to 'CC'
from 'CCC' following AICI's announcement late on Nov. 18, 2002,
that it had incurred an estimated after-tax loss of $131 million
for its third quarter ending Sept. 30, 2002. Standard & Poor's
also said that it lowered its counterparty credit and financial
strength ratings on American Growers Insurance Co., to 'CC' from
'BB-'. The ratings on these companies remain on CreditWatch with
negative implications.
In addition, Standard & Poor's lowered its subordinated debt
rating on AICI Capital Trust to 'D' from 'CC'.
AICI's $131 million third-quarter loss included a previously
reported loss of $62.2 million from crop insurance and
underwriting operations. The losses, together with previous,
much smaller losses reported earlier in the year, have
eliminated most of the capital at both AICI and AGIC.
AICI also announced that it was deferring interest payments on
the junior subordinated debentures that constitute the sole
source of dividend payments on the trust-originated preferred
securities, making it virtually certain that the next dividend
installment due on Dec. 31, 2002, will be deferred. Although the
investor agreement governing dividend payments permits such
deferrals for up to five years, it is Standard & Poor's policy
to assign a rating of 'D' to instruments of this type if there
is an arrearage in payment.
AICI is a holding company whose main operation is AGIC, the
largest provider of federal multi-peril crop insurance and crop
revenue coverage insurance to farmers in the U.S. In addition,
AGIC writes commercial crop and named peril insurance for
farmers. AICI also owns Acceptance Insurance Co., an
unsuccessful multi-line commercial insurer that is in runoff.
AICI has signed a non-binding letter of intent with a potential
buyer setting forth the preliminary terms for AICI's potential
sale of certain crop insurance assets. Resolution of the
CreditWatch could depend on the consummation of this proposed
sale.
ACCEPTANCE INSURANCE: Considering Selling Crop Insurance Assets
---------------------------------------------------------------
Acceptance Insurance Companies Inc., (NYSE:AIF) said that under
the preliminary terms of the previously announced nonbinding
Letter of Intent with Rain and Hail L.L.C., and others, the
Company would receive a cash payment at closing, expected to be
in December, of $21.5 million. During 2003 the Company also
would be reimbursed certain expenses of approximately $5.0
million and could receive additional payments of approximately
$2.5 million depending upon the amount of the Company's crop
insurance business transitioned to Rain and Hail. Finally, if
the proposed transaction were completed in a manner generally
consistent with the Letter of Intent, the Company would receive
annual payments of zero to $7.5 million for five years,
depending upon Rain and Hail's achievement of certain financial
results in each of those years.
The proposed sale of certain crop insurance assets to Rain and
Hail and/or its affiliates is contingent upon several
conditions, including the negotiation and execution of a
definitive agreement, approval by the Boards of Directors of
both companies and certain of their affiliates, and receipt of
all required governmental approvals. There can be no assurance
as to the final terms of the proposed transaction, that the
conditions will be satisfied, or that the proposed transaction
will be completed. If the sale is completed as anticipated in
the nonbinding Letter of Intent, Acceptance Insurance Companies
Inc., will discontinue its crop insurance operations. After
payment of obligations to policyholders, employees and others,
the Company expects to retain cash, if any, and future payments,
if any, for its continuing operations.
ADVANCED GLASSFIBER: Net Capital Deficit Tops $208MM at Sept. 30
----------------------------------------------------------------
Advanced Glassfiber Yarns LLC announced that net sales decreased
$8.6 million, or 17.6%, to $40.3 million for the three months
ended September 30, 2002, from $48.9 million for the three
months ended September 30, 2001.
This decrease primarily reflects a sharp reduction in the volume
of products sold to the industrial, construction and specialty
markets. The third quarter 2002 price erosion of 4.6% was offset
by a more favorable change in product mix. Sales to the
industrial market declined by $3.3 million, as production of
commercial aircraft declined and the Company's industrial
customers continued to face increased competition from Asia.
Sales to the construction market declined by $3.6 million due in
part to one of the Company's major customers completing its
transition of sourcing a significant portion of its construction
products to its parent company. The end-use demand in the
electronics market continues to be depressed, pricing remains
under pressure and near term visibility in this market remains
poor.
Gross profit decreased $7.3 million to $5.4 million, or 13.4% of
net sales, for the three months ended September 30, 2002, versus
$12.7 million, or 26.0% of net sales, for the three months ended
September 30, 2001. This decline primarily reflects a sharp
reduction in revenues and lower capacity utilization due to
sales volumes and inventory management. The resulting under-
absorption of fixed costs is offset, in part, by the favorable
impact of continued manufacturing improvements associated with
operating cost reduction programs implemented as a response to
the adverse market conditions during the previous twelve-month
period. Since December 31, 2001, the Company made significant
efforts to deplete its inventory and improve its cash position.
Reduced production schedules and an increase in inventory
reserves resulted in a $3.8 million decrease in inventory at the
end of this quarter as compared to the quarter ended June 30,
2002.
Selling, general and administrative expenses were $5.1 million
for the three months ended September 30, 2002, as compared to
$3.3 million for the three months ended September 30, 2001. If
the Company had not incurred a charge of $2.1 million associated
with its financial restructuring during the most recent three-
month period, selling, general and administrative expenses would
have been $0.3 million lower than last year, reflecting the
reduction in workforce and other cost savings initiatives
implemented since June 30, 2001.
An additional operational restructuring charge of $0.1 million
was incurred for the three months ended September 30, 2002,
associated with the elimination of certain production positions
during the same period.
The Company adopted SFAS No. 142 effective January 1, 2002 and
amortization of goodwill ceased on that date. As a result,
amortization expense decreased $2.2 million to $0.7 million for
the three months ended September 30, 2002, from $2.9 million for
the same period ended September 30, 2001.
Operating income decreased $7.0 million to a loss $0.5 million,
or (0.9)% of net sales, for the three months ended September 30,
2002, from $6.5 million, or 13.3% of net sales, for the three
months ended September 30, 2001. In the third quarter of 2001,
operating income included $2.2 million of goodwill amortization
expense.
Interest expense increased $0.8 million to $9.1 million for the
three months ended September 30, 2002, from $8.3 million for the
three months ended September 30, 2001, despite a decrease in
average loans outstanding during the period. Of the increase,
$0.3 million was a result of a write-off of deferred financing
fees, and $0.5 million was due to an increase in interest rates
on the Company's amended Senior Credit Facility.
As a result of the aforementioned factors, net loss increased
$8.3 million to a loss of $9.8 million for the three months
ended September 30, 2002, from a $1.5 million loss for the three
months ended September 30, 2001.
Adjusted EBITDA for the quarter ended September 30, 2002,
decreased $7.7 million, or 57.0%, to $5.8 million from $13.5
million for the quarter ended September 30, 2001, and for the
nine months ended September 30, 2002, decreased $28.9 million,
or 57.8%, to $21.1 million from $50.0 million for the same
period in 2001.
At September 30, 2002, Advanced Glassfiber's balance sheet shows
a working capital deficit of about $320 million, and a total
shareholders' equity deficit of about $208 million.
Advanced Glassfiber Yarns, headquartered in Aiken, SC, is one of
the largest global suppliers of glass yarns, which are a
critical material used in a variety of electronic, industrial,
construction and specialty applications. Prior to and including
September 30, 1998, the Company was the glass yarns and
specialty materials business of Owens Corning. Since September
30, 1998, Advanced Glassfiber Yarns has been a joint venture
between Porcher Industries, S.A., and Owens Corning.
ADVANCED LIGHTING: Defaults on Senior Notes Indenture
-----------------------------------------------------
Advanced Lighting Technologies, Inc., (Nasdaq:ADLT) announced
sales of $34.3 million for the quarter ended September 30, 2002,
compared with $51.9 million for the comparable year-ago quarter.
The decrease in the first quarter sales was primarily due to the
previously announced sale of the Company's fixture subsidiaries
in fiscal 2002. The net loss for fiscal 2003 first quarter was
$1.5 million compared with a loss of $86.9 million for the same
period last year. The diluted net loss per share, after
preferred share accretion and the impact of the warrant to be
issued to General Electric Company as previously announced, was
$.18 for the fiscal 2003 first quarter as compared to a net loss
per share after preferred share accretion of $3.75 for the same
period last year.
Wayne R. Hellman, Chairman and Chief Executive Officer of
Advanced Lighting Technologies, said, "The benefits of the
transfer of power supply manufacturing to India from the U.K.
and other restructuring measures in fiscal 2002 are beginning to
be realized. Our gross margin has risen to 39% and our income
from operations for this quarter was $1.5 million. In fiscal
2003, the Company expects to achieve its third consecutive year
of positive cash flow from operating activities."
Fiscal 2003 first quarter metal halide sales increased 7 percent
to $26.0 million, compared with $24.2 million for the same
period a year ago, excluding sales made by the fixture
subsidiaries that were sold in fiscal 2002. First quarter sales
of Advanced Lighting's second-generation metal halide lighting
product line, Uni-Form(R) Pulse Start, increased 14 percent to
$8.4 million from $7.4 million in the comparable year-ago
quarter. These increases are mainly due to sales to the former
fixture subsidiaries that are now part of the Company's external
sales and to growth in metal halide material sales. Mr. Hellman
stated, "Although the economy and the lighting industry remain
weak, we continue to be encouraged by increases in sales that
are occurring at our metal halide materials operation and we are
working toward a profitable fiscal 2003."
Special Charges, Asset Impairment
and Accounting Change
The quarter ended September 30, 2001 included special charges
and asset impairments of $14.3 million ($8.9 million of which
were non-cash items) and a gain on a lawsuit settlement of
$554,000. The special charges related principally to the
restructuring of the Company's power supply operations and
reduction of overall staffing levels. Further, the Company
recorded a $4.6 million reserve for the impairment of an officer
loan. Fiscal 2002 results also included a non-cash cumulative
effect of accounting change of $71.2 million resulting from the
adoption of Statement of Financial Accounting Standards No. 142,
Goodwill and Intangible Assets.
Financing of Future Operations
As previously reported, the Company is in default under its
existing bank credit facility and entered into an agreement with
its bank group allowing it access to its revolving credit
facility at least through March 31, 2003. As part of this
agreement, the Company did not make its $4 million interest
payment on its Senior Notes, which was due September 16, 2002.
As a result, the Company is in default under the Senior Notes
Indenture. Unless this Event of Default is waived, the Indenture
trustee may, and at the request of the holders of 25% of the
Senior Notes must, declare the entire principal amount of the
Senior Notes to be immediately due and payable, and may take
certain actions to enforce the terms of the Senior Notes.
Management is in negotiations with its existing banks, Senior
Note holders, investment bankers and other stakeholders on
various alternatives available to the Company. However, the
Company's ability to enter into a new lending arrangement or re-
negotiate the terms of its 8% Senior Notes is uncertain as of
this time.
Conference Call on the Web
The Company will host a conference call with the investment
community today, November 21 at 1:00 p.m. Eastern to discuss the
results of the quarter. Interested parties may access the live
conference call via telephone or the Internet.
Telephone: 877-567-5754 Pass Code: 6739474
Internet: Live webcast at http://www.adlt.com
A replay of the call will begin at 5:00 p.m. Eastern and will
conclude at midnight on November 29, 2002.
Telephone: 800-642-1687 Pass code: 6739474 International: 706-
645-9291 Pass code: 6739474
Please refer to the attached financial statements for additional
information on the first quarter results.
Advanced Lighting Technologies, Inc., is an innovation-driven
designer, manufacturer and marketer of metal halide lighting
products, including materials, system components, systems and
equipment. The Company also develops, manufactures and markets
passive optical telecommunications devices, components and
equipment based on the optical coating technology of its wholly
owned subsidiary, Deposition Sciences, Inc.
The Company currently has an agreement with the banks under the
Company's Bank Credit Facility to continue to provide financing
until March 31, 2003, despite an existing Event of Default under
the facility. The agreement will remain in place so long as
there are no further defaults and the Company's other lenders do
not take certain actions adverse to the Company. The Company is
currently seeking alternative financing sources. The holders of
the Company's 8% Senior Notes have the right to accelerate the
$100 million principal amount of the 8% Senior Notes. If the
Company is unable to negotiate agreements with existing or
replacement lenders and Note holders, which permit it to
continue to execute its operating plans, the Company may be
forced to seek protection under the bankruptcy laws. As
discussed in the Company's SEC filings, covenants in the
Company's bank credit facility, the indenture relating to the
Company's 8% Senior Notes and the Company's agreements with
General Electric Company limit certain corporate actions. As a
result, implementation of certain strategic alternatives may
require consent or require replacement of these ADLT financing
sources. The Company has no assurance that such consents or
replacement financing can be obtained in a manner to permit
timely implementation of these strategic alternatives.
Advanced Lighting's September 30, 2002 balance sheet show that
total current liabilities exceeded total current assets by about
$100 million.
ADVANCED LIGHTING: GE to Receive More Rights Under 1999 Pacts
-------------------------------------------------------------
Advanced Lighting Technologies, Inc., (Nasdaq:ADLT) announced
that General Electric Company would receive additional rights
pursuant to the terms of its 1999 investment agreements. The
rights arise from the failure of the Company to maintain a ratio
of EBITDA to Interest Expense for the six months ended September
30, 2002.
Pursuant to the investment agreements, GE will have the right to
vote the number of shares voted by Wayne R. Hellman,
representing approximately 7.3% of the voting power of the
Company. The combined voting power of GE and Mr. Hellman
approximates 24% of the voting power of the Company.
In addition, the Company is required to issue to GE a warrant to
purchase approximately 6.75 million common shares at a price of
$.63055 per share. Unless GE exercises the warrant and pays the
purchase price for the underlying shares, GE will not have the
right to vote the shares issuable on exercise of the warrant, or
to any other shareholder rights for those shares. GE is under no
obligation to purchase the shares at any time. If GE were to
fully exercise the warrant, its voting power (including the
shares it owns and the shares voted by GE as described above)
would be approximately 39%.
A more complete summary of the rights of GE is included in the
Company's Annual Report on Form 10-K for the year ended June 30,
2002. This summary will be updated in the Company's Form 10-Q
for the period ended September 30, 2002 which the Company
expects to file on or before November 19, 2002.
Advanced Lighting Technologies, Inc., is an innovation-driven
designer, manufacturer and marketer of metal halide lighting
products, including materials, system components, systems and
equipment. The Company also develops, manufactures and markets
passive optical telecommunications devices, components and
equipment based on the optical coating technology of its wholly
owned subsidiary, Deposition Sciences, Inc.
AES CORP: Waives Tender Date for 8.75% Notes & 7.375% Securities
----------------------------------------------------------------
The AES Corporation (NYSE: AES) has waived the deadline by which
holders of its outstanding $300,000,000 8.75% Senior Notes due
2002 and $200,000,000 7.375% Remarketable and Redeemable
Securities due 2013, which are puttable in 2003, must tender in
order to be eligible to receive the early tender bonus payment.
Holders that tender on or prior to 5:00 p.m., New York City
time, on December 3, 2002, the exchange offer expiration date,
and do not withdraw such securities will, if the exchange offer
is consummated, be entitled to such early tender bonus payment
in the amount of $15 for each $1,000 principal amount of 2002
Notes tendered and $5 for each $1,000 principal amount of ROARs
tendered.
Consummation of the exchange offer is subject to a number of
significant conditions, including the condition that 80% in
aggregate principal amount of the ROARSs and 80% in aggregate
principal amount of the 2002 Notes are validly tendered and not
withdrawn. At this time, neither 80% of the ROARs nor 80% of the
2002 Notes have been tendered.
The offering of the new senior secured notes in the exchange
offer is being made only to "qualified institutional buyers" and
"persons other than a U.S. person" located outside the United
States, as such terms are defined in accordance with Rule 144A
and Regulation S of the Securities Act of 1933, as amended.
The new senior secured notes will not be registered under the
Securities Act of 1933, or any state securities laws. Therefore,
the new senior secured notes may not be offered or sold in the
United States absent an exemption from the registration
requirements of the Securities Act of 1933 and any applicable
state securities laws. This announcement is neither an offer to
sell nor a solicitation of an offer to buy the new notes.
* * *
As reported in Troubled Company Reporter's November 13, 2002
edition, Standard & Poor's said it will not change the corporate
credit rating of AES Corp., (B+/Watch Neg/--) following AES'
announcement of the extension until December 3, 2002, of the
tender offer for its December 2002 notes and June 2003 ROARS,
with changes in the terms of the offer. Standard & Poor's
believes that the extension reflects the difficulty in reaching
an agreement given the multitude of parties involved, the
circumstances of the exchange offer, and the time until the Dec.
15 maturity date is reached.
AES Corporation's 9.50% bonds due 2009 (AES09USR1) are trading
at around 46 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AES09USR1for
real-time bond pricing.
AHEAD COMMS: U.S. Trustee Balks at Zeisler & Zeisler's Fees
-----------------------------------------------------------
Carolyn S. Schwartz, the United States Trustee for Region II
tells the U.S. Bankruptcy Court for District of Connecticut that
she objects to Zeisler & Zeisler's application for compensation
as Ahead Communications Systems, Inc.'s bankruptcy counsel. The
UST tells the Court that it has no objection to the firm's
compensation in the amount of $66,800. The UST however, objects
to the reimbursement of out-of-pocket expenses incurred by the
firm in the amount of $7,582 because the Firm has failed to
provide adequate documentation of those expenses.
Ahead Communication Systems, Inc., designs and produce robust
broadband networking systems for private and public networking
environments. The Company filed for chapter 11 bankruptcy
protection on February 07, 2002. Craig Lifland, Esq., at
Zeisler and Zeisler represent the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed $21,071,000 in assets and $23,310,000 in
debts.
ANC RENTAL: Seeks Nod to Hire Lincoln Property as Georgia Broker
----------------------------------------------------------------
ANC Rental Corporation and its debtor-affiliates have identified
another one of its unprofitable property at Bobby Brown Parkway
in East Point, Georgia. The Debtors seek the Court's authority
to employ Lincoln Property Company Commercial Inc. as their real
estate broker to market and sell this property.
The Debtors propose to pay Lincoln a 6% commission based on the
sale price. If there's a cooperating broker, the Lincoln will
have to share the 6% commission on a 50/50 basis.
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)
ANNUITY & LIFE: Restating 2000 & 2001 Financials
------------------------------------------------
Annuity & Life Re (Holdings), Ltd., (NYSE: ANR) announced that,
in connection with its ongoing discussions with the Staff of the
Securities and Exchange Commission regarding the Staff's review
of the Company's prior public filings, the Company will restate
its financial statements for the fiscal years ended December 31,
2000 and 2001. The Company will restate its financial
statements for the fiscal year ended December 31, 2001 to
reflect the bifurcation and separate accounting for embedded
derivatives contained in certain of its annuity reinsurance
contracts in accordance with Statement of Financial Accounting
Standards No. 133 -- Accounting for Derivative Instruments and
Hedging Activities.
In addition, the Company will reclassify the $19,500,000 reserve
component of a $33,000,000 charge taken in the fourth quarter of
2001 in connection with minimum interest guarantees on its
largest annuity reinsurance contract as a reduction of its
carried balance for deferred acquisition costs. Further, based
on information now in the Company's possession, portions of the
$33,000,000 charge will be allocated across certain prior
quarters. The restatement of the Company's financial statements
for the fiscal year ended December 31, 2000 will recognize
approximately $2,800,000 of minimum interest guarantee payments
made during that year that the Company was not made aware of
until 2002. These payments will also impact the amortization of
the Company's deferred acquisition costs. The restatement of our
net income for the fiscal year ended December 31, 2000 is not
expected to reduce our reported net income of $39,000,000 by
more than three percent. The Company also intends to restate
the financial statements included in its Forms 10-Q filed for
the quarters ended March 31 and June 30, 2002. The Company will
release its earnings for the quarter ended September 30, 2002
shortly. The Company has not yet filed a Form 10-Q for the
quarter ended September 30, 2002, but plans to file its Form
10-Q reflecting these restatements as soon as practicable after
the restatements are finalized.
The Company anticipates reporting a net loss of not more than
$20,000,000 for the quarter. Included in the loss are non cash
charges of approximately $7,500,000 for changes in fair value of
embedded derivatives contained in certain of the Company's
annuity reinsurance agreements and a $7,800,000 reserve for
certain guarantees associated with variable annuity
contracts. In addition, the Company recorded a loss of
approximately $6,200,000 related to its Lincoln National
contract, which is principally related to that contract's
recapture. Our expected loss for the quarter also reflects
adverse mortality experience in our life segment, unusual
expenses incurred during the quarter and realized capital gains
of approximately $9,300,000.
The Company has filed a Form 8-K with the Securities and
Exchange Commission, which sets forth information that the
Company believes will assist investors in better understanding
the Company's business and the current challenges the Company is
facing.
Annuity and Life Re (Holdings), Ltd., provides annuity and life
reinsurance to insurers through its wholly owned subsidiaries,
Annuity and Life Reassurance, Ltd., and Annuity and Life Re
America.
As reported in Troubled Company Reporter's August 27, 2002
edition, Fitch Ratings lowered the insurer financial strength
rating of Annuity & Life Reassurance, Ltd., to 'BBB+' from 'A-'.
Fitch has also lowered to 'BB+' from 'BBB-', and withdrawn, its
rating on the senior debt included in Annuity & Life Re
(Holdings), Ltd.'s shelf registration. There is currently no
debt outstanding. The rating remains on Rating Watch Negative,
on which it was placed July 26, 2002.
This rating action reflects Fitch's view that ANR's business
model has become overly dependent on the company's ability to
obtain credit in various forms to allow it to provide collateral
to its U.S.-based ceding companies. Being Bermuda-based, ANR is
an unauthorized reinsurer in the U.S., and like all unauthorized
reinsurers, it must post collateral to the benefit of its U.S.
ceding companies per U.S. regulatory requirements. Such
collateral can be provided in the form of trust deposits and/or
letters of credit. The majority of said collateral is used to
support redundant reserves arising from Triple-X life products.
Management is reducing this dependency going forward.
AQUILA INC: Says Liquidity Sufficient to Meet Cash Requirements
---------------------------------------------------------------
Aquila, Inc., (NYSE:ILA) announced that its liquidity is
sufficient to meet the cash needs resulting from the downgrade
yesterday by Standard & Poor's Corporation without affecting the
company's operations.
S&P lowered the company's credit rating to BB with a negative
outlook. It previously had rated Aquila BBB-, its lowest
investment-grade rating. Aquila said that the downgrade
potentially triggers approximately $238 million in additional
demands for cash.
"We're sorry to lose our investment-grade rating," said Richard
C. Green, Jr., Aquila's chairman, president and chief executive
officer, "but we remain well prepared to meet any additional
cash requirements that may result."
Green said that $84 million in four series of Australian
denominated bonds guaranteed by Aquila have provisions that
could require the company to repurchase the bonds if the
bondholders choose to exercise that option in the next 30 to 60
days. Aquila also has a tolling agreement that could require it
to post $37 million in additional collateral within 70 days to
eight months of Standard & Poor's downgrade. Tolling agreements
allow Aquila to generate power at plants owned by others in
exchange for the natural gas that fuels the plants. Another
approximately $23 million would need to be posted to cover
standard margining agreements remaining from Aquila's
discontinued wholesale energy merchant business. There is also
the potential that Aquila may be required to post additional
collateral of up to $94 million related to certain commodity
contracts.
In an effort to improve its balance sheet and credit ratings, in
this year's second quarter Aquila targeted the sale of
approximately $1 billion in non-strategic assets. To date, the
company has closed asset sale transactions totaling $796.6
million. Another sale for $180 million is pending, and Aquila is
also in the process of taking bids for its 79.9 percent interest
in Midlands Electricity, a utility in the United Kingdom.
Based in Kansas City, Missouri, Aquila operates electricity and
natural gas distribution networks serving customers in seven
states and in Canada, the United Kingdom, and Australia. The
company also owns and operates power generation assets. At
September 30, 2002, Aquila had total assets of $10.7 billion.
More information is available at http://www.aquila.com
ARIES INSURANCE: S&P Assigns 'R' Financial Strength Rating
----------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'R' financial
strength rating to Aries Insurance Co., after the Florida
Treasurer and Insurance Commissioner Tom Gallagher announced
that a judge ordered the company into liquidation.
An arbitration panel ruled last week that Aries owes its
reinsurance company, General Reinsurance Corp., about $3.7
million for overpayments. Originally, Aries claimed that General
Reinsurance Corp., owed it more than $30 million. In May 2002,
Aries was ordered by the court to stop writing policies, and it
subsequently agreed to stop renewal of policies in the summer.
Aries' primary lines of business are personal and commercial
auto and property insurance, but it also writes some workers'
compensation coverage.
The Florida Insurance Guaranty Assn., and the Florida Worker's
Compensation Insurance Guaranty Assn., will be activated to
assist in the payment of outstanding claims. Liquidated assets
of the company will be used to repay the guaranty funds.
Regulators have concluded that Aries' liabilities are more than
$100 million, and its assets and receivables are less that $45
million. This is pending a receivable of $20 million owed by
Onyx Underwriters Inc.; no timetable has been provided for the
repayment.
"An insurer rated 'R' is under regulatory supervision owing to
its financial condition," explained Standard & Poor's credit
analyst Neilay Mehta. "During the pending regulatory
supervision, the regulators may have the power to favor one
class of obligations over others or pay some obligations and not
others. The rating does not apply to insurers subject only to
nonfinancial actions such as market conduct violations."
ARMSTRONG HOLDINGS: Court OKs Tolling Agreements with Defendants
----------------------------------------------------------------
Armstrong Holdings, Inc., and its debtor-affiliates obtained
Judge Newsome's permission to sign tolling agreements with
potential avoidance action defendants. At the same time, the
Court approved the provisions under which notice of these
tolling agreements will be given to key creditor constituencies.
Under the deadline imposed by statute, the Debtors must commence
avoidance actions by December 6, 2002, in order to preserve
their right to assert such actions on behalf of their respective
estates. However, this deadline can be waived or extended by
agreement of the other party.
The Terms of The Tolling Agreements
The principal terms of the Tolling Agreements are:
(1) The Tolling Agreement provides for the suspension
and extension of all periods of limitation applicable
to the suspended claims, including, without limitation,
the two-year period for initiation of avoidance actions
under the Bankruptcy Code, through and including a date
agreed to by the parties that is no later than 30 days
after the effective date of a confirmed plan of
reorganization in the applicable Debtor's Chapter 11 case;
(2) Each of the parties to the Tolling Agreement is free to
terminate the suspension of the period of limitations as to
some or all of the suspended claims at any time and in its
sole discretion, the termination of the applicable
limitations period to take effect on the 90th day after
the date of written notice of termination; and
(3) The Tolling Agreement provides that it insures to the
benefit of the parties and their respective heirs,
executors, administrators, assigns and successors.
(Armstrong Bankruptcy News, Issue No. 31; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
Armstrong Holdings Inc.'s 9.0% bonds due 2004 (ACK04USR1),
DebtTraders says, are trading at about 58 cents-on-the-dollar.
See http://www.debttraders.com/price.cfm?dt_sec_ticker=ACK04USR1
for real-time bond pricing.
ATCHISON CASTING: Expects Continued Support from US & UK Lenders
----------------------------------------------------------------
Atchison Casting Corporation (OTC Bulletin Board: AHNC.OB) said
it anticipates the continued support of its lenders in the US
and the UK in response to questions about Sheffield's expected
noncompliance with certain loan covenants that were announced
last week.
"We have been in default of our loan covenants from time to time
during the current recession. We have kept our lenders
informed, reduced headcount, and taken steps to reduce costs and
manage through the downturn. Our lenders in North America and
in the U.K. have supported the company, and we believe that we
still have their support," said Tom Armstrong, CEO. "Although
there are no guarantees for the future, it is encouraging to
note that new orders for our Sheffield Forgemasters Engineering
unit in Sheffield have increased significantly since July 2002,
and we believe that SFE could soon reach breakeven on an
operating basis following two years of losses," added Armstrong.
ACC produces iron, steel and non-ferrous castings for a wide
variety of equipment, capital goods and consumer markets.
BASIS100 INC: Working Capital Deficit Tops $9MM at September 30
---------------------------------------------------------------
Basis100 Inc. (TSX: BAS), a technology solutions provider for
the financial services industry, announced its operating results
for the third quarter ended September 30, 2002. In addition, the
Company announced that it has completed a private placement of
$7.0 million of 12 percent secured Senior Debt to provide
additional cash resources to the Company as it looks to focus on
building its Core Business Units and executing its 2003 Plan.
Effective the end of the third quarter, the operations of EFA
International Inc. and EFA Software Services Ltd., which formed
part of Basis100's Capital Markets Solutions group, have been
reclassified as Discontinued Operations. The Company's remaining
CMS operations, Lending Solutions and Data Warehousing and
Analytics Solutions Business Units are reported as continuing
operations in the third quarter and year-to-date consolidated
financial statements. The assets, liabilities and operating
results of the EFA Group are disclosed as separate single line
items in the financial statements.
Total revenues from continuing operations in the third quarter
were $10.85 million, an increase of 39 percent over revenues of
$7.8 million in the third quarter of 2001, and an increase of 12
percent from Q2 2002 revenues from continuing operations of
$9.66 million. U.S. sales accounted for 70 percent of total
sales in Q3 2002, compared to 60 percent in Q2 and 55 percent of
sales in Q3 2001. EBITDA for the quarter was $1.0 million prior
to a $.6 million restructuring charge related to the office
facilities lease in Irvine, California, compared to $1.0 million
from continuing operations in Q2 2002 and $.3 million in Q3
2001.
On a Business Unit basis, Lending Solutions Q3 revenues of $3.1
million were in line with recent guidance and slightly lower
than Q2 revenue levels, reflecting the impact of anticipated
seasonality in this line of business. Q3 2002 revenues were
primarily transactional in nature and slightly above revenues
for Q3 2001.
Data Warehousing and Analytics Solutions experienced revenue
growth in Q3 2002, relative to both Q2 2002 and Q3 2001. Q3
revenues of $7.6 million were 31 percent higher than Q2 revenue
of $5.8 million. This increase reflects continuing growth in
customer base and the addition of Mortgage Risk Assessment
Corp., sales in the U.S for the full three months ended
September 2002, as compared to only one month in Q2 2002.
Gross margins from continuing operations in the third quarter
were 95 percent of sales, in line with the 96 percent achieved
in Q2 2002 from continuing operations and slightly above the 92
percent of sales reported in Q3 2001.
Lending Solutions Q3 2002 segment EBITDA of $1.0 million was in
line with recent guidance and was slightly lower than Q2. Prior
to the $.6 million restructuring charge, Data Warehousing and
Analytics Solutions Q3 segment EBITDA of $2.5 million was 70
percent above the Q2 amount. Q3 segment EBITDA was also above
the Q2 level when Mortgage Risk is excluded from both quarters.
Capital Market Solutions continuing operations reported a
negative segment EBITDA of approximately $(.46) million,
reflecting primarily product development work being completed on
the Company's BasisXchange(TM) fixed income trading platform.
Consolidated EBITDA from continuing operations for the quarter
was $1.0 million prior to the $0.6 million restructuring charge,
or $0.03 per share, compared to an EBITDA of $1.0 million in Q2,
2002 and $0.3 million for Q3 2001.
The net loss for the quarter from continuing operations was $3.1
million. Interest, depreciation and amortization costs were $3.5
million. This compares with a net loss of $3.0 million for the
same quarter in fiscal 2001.
At September 30, 2002, current assets totaled $15.8 million,
which included $4.2 million of net current assets from
Discontinued Operations and $3.0 million in cash and short-term
investments. Current liabilities were $24.7 million, including
$15.8 million of net current liabilities related to Discontinued
Operations and $0.7 million of deferred revenue. Long-term debt,
excluding capital lease and other obligations totaling $0.7
million, is comprised of the six percent convertible debenture
with a carrying value of $16.8 million as at September 30, 2002.
The basic number of shares outstanding at September 30th was
37.1 million (29.6 million in 2001); the diluted number of
shares outstanding was 55.0 million (36.0 million in 2001).
Disclosure of operating results by business line is set out in
the Notes to the attached financial statements.
Discontinued Operations
Since the end of the second quarter of 2002, the operating
performance of the EFA Group, which formed part of Basis100's
Capital Markets Solutions group, has been below expectations.
Operating revenues and cash flows generated were less than the
levels necessary for the EFA Group to support its operations. In
an effort to realign and streamline the operations and business
activities of the EFA group, a restructuring effort was affected
at the end of August. The EFA Group did not meet its revised
revenue and performance targets and did not generate sufficient
cash flows to support post-restructuring operating levels. By
September 30, 2002, the EFA Group was in default of its banking
covenants.
On October 30, 2002, the EFA Group registered a notice of intent
to file a formal proposal under the Bankruptcy and Insolvency
Act of Canada. The purpose of the filing is to provide the EFA
Group sufficient time to explore opportunities to sell its
business operations and its assets, to interested parties, which
is expected to be concluded by the end of the first quarter of
2003.
Basis100 Inc., has reclassified the financial results and the
planned disposition of the EFA Group as a discontinued
operation. The Company has reduced the carrying value of the EFA
Group assets to estimated net realizable value and the Company
has recorded potential liabilities for customer letters of
credit related to performance guarantees. The liabilities
associated with the EFA group remain at the amounts originally
recorded as at September 30th, without adjustment, until the
final disposition of the formal proposal is known and the
amounts, if any, of those liabilities can be determined. Any
adjustments to the carrying value of liabilities of the EFA
group would impact on the final amount of the Loss on planned
disposition.
Subsequent Event
$7.0 Million Private Placement Completed: On November 18th, the
Company completed a private placement of $7.0 million of 12
percent secured Senior Debt to provide additional cash resources
to the Company as it looks to focus on building its core
Business Units and executing on its 2003 Plan. The Senior Debt
is repayable in January 2004 and includes the provision for 6.73
million Warrants at a price equal to $.52 per Warrant. 50
percent of the Warrants expire in November 2005 and 50 percent
in November 2006. Each warrant entitles the holder thereof to
purchase one common share at the exercise price.
Changes to Board of Directors
Effective immediately, Kenneth B. Rotman has joined the Basis100
Board of Directors. Ken is Co-Chief Executive Officer and
Managing Director of Clairvest Group Inc (CVG:TSX). Clairvest is
a Canadian-based merchant bank that forms investment
partnerships with entrepreneurial corporations.
David Ewasuik, former shareholder of EFA International Inc., has
tendered his resignation as a director of Basis100 Inc.
effective October 30, 2002.
Basis100 Inc., is a global technology solutions provider for the
financial services industry, which enables businesses to build,
distribute, buy and sell products and services in more efficient
and innovative ways. Basis100's lines of business include:
Lending Solutions for consumer credit, mortgage origination and
processing; Data Warehousing and Analytics Solutions for
automated property valuations, property data-warehousing, data
products and analytics support; and Capital Markets Solutions
for fixed income trading.
More information about Basis100 is at http://www.Basis100.com
BESTNET COMMS: Arbitration Proceedings with Softalk Underway
------------------------------------------------------------
Arbitration proceedings are now underway in Toronto between
Softalk Inc., and BestNet Communications Corp., arising out of
the compulsory arbitration provisions contained in three
agreements between Softalk and BestNet. These are the Product
Customization and Maintenance Agreement, dated June 14, 2000,
the Amended and restated License Agreement dated July 30, 1999
and a Purchase Agreement, dated October 25, 1999. Softalk has
given formal Notice to BestNet of Softalk's intention to
terminate the License Agreement pursuant to a thirty day notice
provision contained in the Licence Agreement. A Notice to
Terminate was delivered to BestNet and its counsel on October
30, 2002. Under the terms of the License Agreement, BestNet has
thirty days to cure the default.
BestNet's defaults relate to various issues as outlined below:
1. Failure to pay taxes
Under Article 15.2 of the Amended and Restated License
Agreement, BestNet is responsible for and shall pay all
sales, value added or similar taxes based upon BestNet's
use, sale or possession of Softalk's products. Softalk has
claimed that BestNet is in contravention of this provision
of the License Agreement, as BestNet is obliged to charge
Ontario Provincial Sales Tax and Canadian Goods and
Services Tax resulting from the operations of its
facilities in Toronto, which reroutes Canadian and
international traffic through a public-switched telephone
network. BestNet has not produced any formal opinion from
its auditors advising that is exempt from the applicability
of PST (8%) plus GST (7%), of its sales and services in
Canada.
In addition, Softalk claims that BestNet is liable to pay
state telecommunication taxes in the United States, and
Federal Excise taxes under U.S. excise tax laws.
2. Failure to comply with foreign laws
Under Article 7.1 of the Amended and Restated License
Agreement, BestNet is obliged to comply with the laws in
the jurisdictions in which it supplies its services,
Softalk claims that BestNet is in contravention of the laws
of Grand Cayman, which, according to BestNet represents
approximately 20% of BestNet's total revenues. BestNet has
no legal authority or license to provide services which
currently contravene Grand Cayman law and, in particular,
contravene the exclusive license granted to Cable &
Wireless (Cayman Islands) LTD. In a decision of the Grand
Court between Net2phone v Cable & Wireless, issued
October 26, 2000, the Court held that Cable & Wireless was
within its rights to block competitive long distance
services and operations.
3. Failure to pay outstanding invoices
Softalk is claiming US$649,000.000 arising out of three
unpaid invoices for work done and services rendered to
BestNet as follows:
Date Invoice No. Amount
---- ----------- ------
July 7, 2001 2001-003 $355,250.00
Nov. 14, 2001 2001-004 118,524.00
Nov. 14, 2001 2001-005 175,322.00
-----------
TOTAL: $649,096.00
BestNet has responded by stating that the amounts claimed
are excessive and subject to BestNet's defense of setoff in
respect of damages which BestNet has claimed from Softalk,
as well as a set-off from a loan obligation owed by Softalk
to BestNet.
BUDGET GROUP: Wants to Make $1MM Contribution to French Unit
------------------------------------------------------------
Budget France is a wholly owned direct subsidiary of Societe
Financiere et de Participation, a dormant holding company and a
wholly owned subsidiary of Budget Rent A Car International.
According to Edmon L. Morton, Esq., at Young Conaway Stargatt &
Taylor, in Wilmington, Delaware, Budget France has been
operating since the late 1980s and, up until late 1998, was
largely a franchise operation with only a few corporate-owned
locations and a small corporate structure to support these
locations. At the end of 1998 and continuing throughout 1999,
Budget France began acquiring franchises on a territorial basis
and converted them to corporate-owned locations. During this
18-month acquisition period, Budget France increased its gross
revenues to $80,000,000.
Mr. Morton relates that the increase is primarily attributable
to the higher profit margins associated with corporate-owned
locations as opposed to the royalty stream associated with
franchised locations. Budget France's rapid growth created
significant integration and corporate support problems. Budget
France implemented a consolidation strategy and incurred
significant expenses in attempting to integrate the acquired
locations. Despite its best efforts, Budget France was unable
to fully integrate the acquired locations in an efficient
manner. As a result, Budget France lost $75,000,000 in 2000.
In 2001, consistent with the strategy Budget was implementing
throughout Europe, Budget France began moving toward a master
franchising model. Given the losses associated with the
integration problems encountered in its acquisition strategy and
the significant amounts that were owed in connection with the
acquisitions, Budget France did not have sufficient capital to
carry out this master franchising strategy.
On July 25, 2002, Budget France was forced into receivership
under French insolvency law, and Maitre Gilles Baronnie was
appointed as its Receiver.
The Debtors and the Creditors' Committee have been working with
the Receiver to find a solution to Budget France's financial
problems. The cash generated by Budget France's operations is
currently insufficient to cover the costs being incurred by the
Receiver and without an immediate cash infusion, Mr. Morton is
concerned that the Receiver may be required to liquidate Budget
France.
Accordingly, Budget Group Inc., and its debtor-affiliates ask
the Court to authorize Budget Rent A Car International to make a
$1,000,000 equity contribution to Budget France. The Committee
supports an immediate contribution of $500,000 by the Debtors to
Budget France. The Debtors have agreed that the Committee's
consent will be a requirement for contributing the additional
$500,000.
Absent Court approval, Mr. Morton fears that the stability of
the Debtors' remaining businesses would be undermined. France
is one of the largest and most populous European countries and
is a significant destination point for travelers throughout the
world.
Because the European travel market is highly integrated, any
disruption or removal of the Budget trademark in France will
have negative effects on the value of both the Budget trademark
throughout Europe and that of the Debtors' businesses. To
maximize the value of the Debtors' business, Budget France and
its significant royalty streams must be preserved. To preserve
those royalty streams, it is important, to the extent possible,
to avoid a liquidation of Budget France.
Without the capital infusion, Mr. Morton says, the Receiver will
likely be required to liquidate Budget France. The Receiver has
already informed the Debtors and the Committee that Budget
France's operations are not generating sufficient cash to meet
its current costs, and that Budget France only has enough cash
to defray those costs incurred through the end of October.
Mr. Morton informs the Court that the equity contribution is
sized and designed to allow the Receiver to fund ongoing cash
requirements through December 31, 2002. Given the restrictions
under French law on the Receiver's ability to incur debt, the
Debtors cannot lend money to Budget France even on an unsecured
basis. Accordingly, the Debtors have decided to make the equity
contribution to:
-- preserve the value of the Budget trademark in France and
throughout Europe; and
-- allow the development and implementation of a strategy
designed to maximize the value of the Retained Business.
Mr. Morton assures the Court that the Committee fully supports
the Debtors' business judgment. (Budget Group Bankruptcy News,
Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900)
BURLINGTON: Selling Denton Facility to Magna Fabrics for $1.8MM
---------------------------------------------------------------
Burlington Industries, Inc., and its debtor-affiliates seek the
Court's authority to sell a vacant textile plant facility in
Denton, North Carolina to Magna Fabrics, Inc., for $1,800,000 --
in accordance with the Order Establishing Real Property Sale
Procedures.
The proposed sale of the Asset includes these provisions:
(a) Magna Fabrics, Inc., a New Jersey corporation not related
to the Debtors, is the Purchaser that submitted the
highest bid on September 25, 2002;
(b) primary economic terms and conditions are set forth in a
Purchase Agreement;
(c) gross consideration for the Asset is $1,800,000 less
broker commission of $36,000 to Hilco Real Estate, LLC
and real property taxes of $158,689 aggregating a net
consideration of $1,605,311;
(d) there are no executory contracts to be assumed or
rejected relating to the Proposed Sale;
(e) JPMorgan Chase Bank holds liens or has other interests in
the Asset as:
-- Administrative Agent to a Credit Agreement dated
September 30, 1988, which was amended and restated on
December 5, 2000; and
-- Administrative Agent, Documentation Agent and
Collateral Agent to a Revolving Credit and Guaranty
Agreement dated November 15, 2001.
JPMorgan has either consented to the Proposed Sale or its
lien:
-- can be extinguished,
-- has been waived, or
-- is capable of monetary satisfaction; and
(f) in the Debtors' view, the conveyance of the Asset does not
require the consent of the Debtors' secured lenders or any
government regulatory agency.
Rebecca L. Booth, Esq., at Richards, Layton & Finger, PA, in
Wilmington, Delaware, asserts that Objections to the Proposed
Sale must:
-- be in writing;
-- state the specific nature of the objection; and
-- be filed with the Court not later than November 27, 2002.
If no objections are filed prior to the deadline, then the
Debtors are authorized without further notice, Court order or
lender's consent to convey the Asset to Magna Fabrics.
Ms. Booth explains that on consummation of the Proposed Sale,
the Asset will be transferred to Magna Fabrics:
-- "as is" and "where is" without any representations or
warranties from the Debtors as to the quality or fitness
of the Asset for any purpose; and
-- free and clear of all liens, claims, encumbrances or
other interests pursuant to Section 363(f) of the
Bankruptcy Code. All liens, claims and encumbrances, if
any, will be attached to the net proceeds of the Proposed
Sale with the same validity, priority, force and effect,
subject to further Court order. (Burlington Bankruptcy
News, Issue No. 21; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
CARAVELLE INVESTMENT: Fitch Cuts Sub. Notes' Ratings to BB/CCC
--------------------------------------------------------------
Fitch Ratings downgrades two classes of notes issued by
Caravelle Investment Fund, LLC, a market value collateralized
debt obligation and takes all the rated classes of notes off of
Rating Watch Negative. All the rated classes of notes were
placed on Rating Watch Negative by Fitch on Oct. 22, 2002. The
following rating actions are effective immediately.
-- $78,000,000 class C subordinated secured notes to 'B'
from 'BB';
-- $52,000,000 class D junior subordinated participating
secured notes to 'CCC' from 'B'.
This rating action results from a significant decline in the
market value of the Fund's assets, which caused Caravelle to
fail its class D overcollateralization test as of the Oct. 10,
2002 valuation date. The Fund failed its overcollateralization
test due to markdowns on publicly traded loans and bonds, as
well as the collateral manager's write down of special situation
portfolio assets. At the Oct. 10, 2002 valuation date the class
D over-collateralization ratio was below the required test level
by a margin of $30.7 million with an overcollateralization ratio
of 94.8%. As such, the Fund had 10 business days to cure the
overcollateralization test failure, which it failed to do. As of
the most recent valuation report available, Oct. 31, 2002, the
Fund failed its class D overcollateralization test by $33.3
million, an overcollateralization ratio of 94.4%. The Fund also
failed its class C overcollateralization test by $156,704, an
overcollateralization ratio of 99.9%.
Given the failure to cure the class D overcollateralization
test, the Fund has formally hit an Event of Default. At this
time, the senior revolving credit facility is capped at $230
million and all cash on hand will be used to pay down the
revolver and senior notes (collectively the senior creditors)
pro-rata. The Event of Default gives the senior creditors the
right to vote the fund into immediate liquidation, which would
cause the collateral manager to rapidly liquidate the portfolio.
Fitch has reviewed in detail the current portfolio holdings of
the Fund. Included in this review, Fitch discussed the current
state of the portfolio with the collateral manager and their
portfolio management strategy going forward. The collateral
manager has represented that approximately 35% of the total
market value of the portfolio assets consist of liquid assets.
Given the current market environment, there is a question as to
the ability to sell less liquid portfolio assets, specifically
in the event of a rapid liquidation. Among the less liquid
assets in the portfolio roughly $125 million, or 20% of the
total market value of the portfolio assets, are collateralized
debt obligations. The Fund's first and third largest issuers are
CDOs representing 10% and 8%, respectively, of the total market
value of the portfolio. Fitch conducted collateral analysis
utilizing various liquidation timings and adjusted
classifications of certain portfolio assets based on current
market conditions. As a result of this analysis Fitch has
determined that the original ratings assigned to the class C and
D notes no longer reflect the current risk to note-holders.
Trimaran Advisors, the collateral manager for this transaction,
is currently reviewing alternatives to avoid a rapid
liquidation. Fitch will continue to monitor and review the
portfolio to ensure the accuracy of the ratings assigned to the
liabilities. Going forward, Fitch is concerned about the value
of the portfolio and the return of principal to the class C and
D note-holders in the event that there is not a controlled and
orderly liquidation of the portfolio. Fitch originally rated the
liabilities of Caravelle Investment Fund, LLC on July 1, 1998.
CARBITE INC: Files for Chapter 11 Reorganization in California
--------------------------------------------------------------
Carbite Golf (OTC: CGTFF; TSX Venture: CGT) announced that its
San Diego based subsidiary, Carbite, Inc., has filed for Chapter
11 bankruptcy protection.
In August, the Company announced it was suspending operations
and laying off the majority of its workforce, following the
actions of a secured creditor, Inabata America Corporation,
which filed suit against the Company in Federal District Court
in New York, and has since attempted to directly collect
Carbite's accounts receivables. In September, in an action
parallel to New York, Inabata sued the Company in San Diego
Superior Court.
On September 25, 2002, the Board of Directors elected William A.
Zebedee President and Chief Executive Officer, replacing Stanley
R. Sopczyk, who resigned earlier in the month. Shortly
thereafter, the company resumed operations on a limited basis.
Since that time, the Company has made several attempts to work
out a settlement with Inabata. When the latest efforts failed
last week, the Company was forced to turn to the courts for
protection.
"The Company and Inabata hold very different views on the value
of Carbite's assets, and our ability to remake the enterprise
into a profitable operation," Mr. Zebedee noted. "We believe
the value of the assets is well in excess of the amount that
Inabata claims is owing to it, and accordingly, our Chapter 11
filing is intended to protect the interests of all creditors,
including Inabata, and ultimately the shareholders as well."
"Carbite has strong brand recognition in our core business of
putters and wedges", Mr. Zebedee continued, "but the Company has
made some unfortunate attempts in the past to leverage its brand
into other sectors of the golf market. We are going to get back
to what we do well, and stay with it."
As part of its restructuring plan, Carbite will liquidate much
of its inventory, listed on its books at a cost of $1.5 million,
with most of the proceeds being applied to repay Inabata. The
Company will also significantly reduce the number of putter
styles it provides, in order to reduce manufacturing costs and
the need to carry large inventories.
Mr. Zebedee noted that, "Suspension of operations was not a
helpful step toward liquidating our inventory, and did not serve
the interests of any of the Company's stakeholders.
"Clearly, we have work ahead to resolve outstanding issues with
our secured creditor, and to restore confidence in the
marketplace. Our plan is to accomplish these goals, and to
ultimately realize Carbite's earning power."
Carbite Golf is a San Diego based company, specializing in
putters and wedges that use its patented powder metal
technology.
CARBITE INC: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Carbite, Inc.
9985 Huennekens Street
San Diego, CA 92121
Tel: (858) 625-0065
Bankruptcy Case No.: 02-11317
Type of Business: An affiliate of Carbite Golf, Inc.
Chapter 11 Petition Date: November 18, 2002
Court: Southern District of California (San Diego)
Judge: Peter W. Bowie
Debtor's Counsel: James P. Hill, Esq.
Sullivan, Hill, Lewin, Rez & Engel, APLC
550 West C Street, Suite 1500
San Diego, CA 92101
Tel: (619) 233-4100
Fax : (619) 231-4372
Estimated Assets: $0 to $50,000
Estimated Debts: $500,000 to $1 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Daiwa Seiko, Inc. $244,345
Wonderland Gestao E Svcs Ltd. $79,177
Golf Digest $50,790
Pilot Air Freight $47,321
Kegler Brown Hill & Ritter $43,462
Woo Sung Company $38,800
PGA International $34,800
Kuehne & Nagel $33,007
Sing Golf MFG $26,179
Werner Publishing Corp. $25,209
IOS Capital $22,314
Printing Place $19,577
Tru Temper $18,051
New Abiding $18,087
John Pierandozzi $16,000
John Shulz $15,144
Femco/Boss International $12,500
Chase America $10,000
Coastal International $11,536
Robert Half $9,000
CARESIDE INC: Sept. 30 Balance Sheet Upside-Down by $4 Million
--------------------------------------------------------------
Careside, Inc. (AMEX:CSA), a provider of point-of-care blood
analysis instrumentation and records management, announced its
results for the third quarter ended September 30, 2002. Revenues
for the third quarter were $78,000, compared to $305,000 in the
prior year period. While revenues decreased, operating expenses
in the third quarter of 2002 declined 45% percent to $1.4
million, from $2.5 million in the third quarter of 2001.
However, for the three months ended September 30, 2002, the
Company incurred a net loss of $2.3 million. This compares with
the net loss for the same period in the prior year of $3.3
million.
In the third quarter, Careside took approximately $644,000 in
additional expenses, of which $491,000 were one-time expense
charges as a result of its October 11, 2002 voluntary petition
under Chapter 11 of the U.S. Bankruptcy Code filed in the United
States Bankruptcy Court for the Central District of California.
On October 24 Careside filed a plan for Debtor-in-Possession
(DIP) financing with the same U.S. Bankruptcy Court in
connection with Palm Finance.
At September 30, 2002, the Company's balance sheet shows a
working capital deficit of about $7.5 million, and a total
shareholders' equity deficit of about $4.4 million.
"Revenues in the third quarter resulted from continuing
cartridge sales to existing customers," said W. Vickery
Stoughton, Careside CEO. "Careside discontinued manufacturing
the Careside Analyzer because of cash problems. Careside has
filed for DIP financing under the U.S. Bankruptcy Code and
subject to court approval of the plan expects to begin
manufacturing Careside Analyzers in the first quarter of next
year."
Careside, Inc., markets a proprietary blood testing system
called the Careside Analyzer. The Careside Analyzer provides a
cost-effective and efficient means of measuring blood chemistry,
electrochemistry, and coagulation function near the patient by
producing accurate test results within 15 minutes. Careside,
Inc., is one of the world's leading developers of advanced
point-of-care blood testing technology.
CHAPARRAL RESOURCES: Third Quarter 2002 Results Show Improvement
----------------------------------------------------------------
Chaparral Resources Inc., (OTCBB:CHAR) announced its financial
results for the third quarter 2002. The Company reported net
income of $2.11 million for the quarter ended Sept. 30, 2002,
compared to a net loss of $5.77 million for the quarter ended
Sept. 30, 2001. The $7.88 million increase in Chaparral's net
income primarily relates to lower costs associated with the
refinancing of its debt obligations and improved operational
results from the Karakuduk Field.
In May 2002, Chaparral increased its ownership in Closed Joint
Stock Company Karakudukmunai from 50% to 60%, obtaining a
controlling interest in KKM. Consequently, Chaparral's financial
statements have been consolidated with KKM on a retroactive
basis to Jan. 1, 2002. Chaparral previously accounted for its
50% investment in KKM using the equity method of accounting,
which is reflected in Chaparral's financial results for periods
prior to 2002.
During the three months ended Sept. 30, 2002, Chaparral sold
approximately 731,000 barrels of crude oil, recognizing $13.45
million, or $18.40 per barrel, in revenue. Transportation costs
were $2.39 million, or $3.27 per barrel, and operating costs
associated with sales were $2.21 million, or $3.03 per barrel.
Comparatively, Chaparral recognized $1.21 million in equity
income from investment for the quarter ended Sept. 30, 2001,
which represents the Company's 50% share of KKM's results during
the period. During the quarter ended Sept. 30, 2001, KKM sold
approximately 385,000 barrels of crude oil, recognizing $6.92
million, or $17.96 per barrel, in revenue. Transportation costs
were $1.23 million, or $3.21 per barrel, and operating costs
associated with sales were $812,000, or $2.11 per barrel.
Chaparral's operations for the nine months ended Sept. 30, 2002
resulted in net income of $4.04 million compared to a net loss
of $11.43 million as of Sept. 30, 2001. The $15.47 million
increase in net income primarily relates to (i) recognition of a
$5.34 million extraordinary gain on the May 2002 restructuring
of our loan with Shell Capital, (ii) lower costs associated with
the refinancing of its debt obligations, improved operational
results from the Karakuduk Field, and (iii) the impact of the
adoption of SFAS 133, Accounting for Derivative Instruments and
Hedging Activities during 2001.
During the nine months ended Sept. 30, 2002, Chaparral sold
approximately 1,881,000 barrels of crude oil, recognizing $32.47
million, or $17.26 per barrel, in revenue. Transportation costs
were $7.03 million, or $3.74 per barrel and operating costs
associated with sales were $5.95 million, or $3.16 per barrel.
Comparatively, Chaparral recognized $4.21 million in equity
income from investment for the nine months ended Sept. 30, 2001.
During the nine months ended Sept. 30, 2001, KKM sold
approximately 1.36 million barrels of crude oil, recognizing
$24.91 million in revenue, or $18.34 per barrel. Associated
operating costs were $3.31 million, or $2.44 per barrel, and
associated transportation costs were $5.02 million, or $3.69 per
barrel
Chaparral's $5.34 million extraordinary gain on the
extinguishment of debt for the nine months ended Sept. 30, 2002,
reflects a $6.56 million gain on the restructuring of the
Company's loan agreement formerly held by Shell Capital with
Central Asian Industrial Holdings, N.V., and a $1.22 million
loss on the accelerated amortization of the discount on
Chaparral's note payable to CAIH due to the early repayment of
$2 million in principal. The discount on the note, a non-cash
item, relates to the fair value of common stock warrants issued
to CAIH along with the note. Chaparral's costs of financing the
development of the Karakuduk Field has significantly improved
from a pre-restructuring annual interest rate of LIBOR plus
19.75% compounded daily to a simple fixed annual interest rate
of 14%, generating savings of approximately $3 million per year.
Chaparral Resources Inc., is an international oil and gas
exploration and production company. The Company's only operating
asset is its participation in the development of the Karakuduk
Field through KKM, of which Chaparral is the operator. The
Company owns directly and indirectly a 60% ownership interest in
KKM with the other 40% ownership interest being held by Joint
Stock Company KazMunayGaz, the government-owned oil company.
Central Asia Industrial Holdings, a private investment holding
company, holds a majority interest in Chaparral and is a
significant investor in the Kazakh oil sector.
Going Concern Uncertainty
In its Form 10-Q filed on November 19, 2002, with the Securities
and Exchange Commission, the Company stated:
"The Company's financial statements have been presented on the
basis that it is a going concern, which contemplates the
realization of assets and satisfaction of liabilities in the
normal course of business. The Company has incurred recurring
operating losses in previous years, which raises substantial
doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments
to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of
liabilities that may result from the outcome of these
uncertainties.
"The Company has taken significant steps to alleviate these
issues through the restructuring of the Company, including the
infusion of a total of $45 million in debt and equity capital
into the Company and the refinancing of the Company's loan
agreement with Shell Capital Inc., in May 2002. As part of the
restructuring, Shell Capital Services Limited, as facility agent
to Shell Capital, discontinued and withdrew all legal
proceedings against Chaparral in the United Kingdom and against
CAP-G in the Isle of Guernsey. Additionally, KKM is currently
producing approximately 6,700 barrels of crude oil per day. The
Company expects the refinancing of the Shell Capital Loan,
along with anticipated future cash flows from operations, to
allow the Company to proceed with the full development of the
Karakuduk Field. No assurances can be provided, however, that
the Company's restructured indebtedness or cash flow from
operations will be sufficient to meet our working capital
requirements in the future, which may require the Company to
seek additional debt or equity financing in order to continue to
develop the Karakuduk Field.
Shell Capital Loan Restructuring
"In May 2002, the Company received a total equity and debt
capital infusion of $45 million, which was partially utilized to
repay a substantial portion of the Shell Capital Loan. The
Company received a total investment of $12 million from Central
Asian Industrial Holdings, N.V., including $8 million in
exchange for 22,925,701 shares, or 60%, of the Company's
outstanding common stock, and $4 million in exchange for a three
year note bearing interest at 12% per annum. Along with the CAIH
Note, CAIH received a warrant to purchase 3,076,923 shares of
the Company's common stock at $1.30 per share. Additionally, JSC
Kazkommertsbank, an affiliate of CAIH, provided KKM with a
credit facility totaling $33 million, consisting of $28 million
that was used to repay a portion of the Shell Capital Loan and
$5 million that was made available for KKM's working capital
requirements. Chaparral paid CAIH $1.79 million as a related
restructuring fee. The terms and conditions of the CAIH Note and
the KKM Credit Facility are more fully described in Note 6,
Loans from Affiliates.
"In conjunction with the closing of the restructuring
transaction, the Shell Capital Loan was transferred from Shell
Capital to CAIH, written down from approximately $11.43 million
(the amount remaining after the $28 million repayment) to $2.45
million and restructured to reflect a fixed, annual interest
rate of 14%. Additionally, the Shell Capital warrant for
1,785,455 shares of the Company's common stock was canceled, and
the Shell Capital 40% net profits interest in CAP-G was
reacquired by CAP-G for a nominal amount. All other agreements
with Shell Capital or its affiliates were terminated, including
KKM's crude oil sales agreement with Shell Trading International
Limited, KKM's technical services agreement with Shell Capital
Services Limited, and Chaparral's transportation risk insurance
policy held directly by Shell Capital. Chaparral also terminated
its political risk insurance coverage with the Overseas Private
Investment Corporation as a condition of the restructuring.
Shell Capital Services Limited, as the facility agent for Shell
Capital, discontinued and withdrew all legal proceedings against
the Company in the United Kingdom and against CAP-G in the
Guernsey Isle and all parties to the original Shell Capital Loan
mutually released each other from future liability. All
outstanding defaults under the Shell Capital Loan were waived by
CAIH upon the completion of the transaction."
CHILDTIME LEARNING: Special Shareholders Meeting Set for Dec. 17
----------------------------------------------------------------
A Special Meeting of Shareholders of Childtime Learning Centers,
Inc. will be held at the offices of Jacobson Partners, 595
Madison Avenue, Suite 3100, New York, New York 10022, on
December 17, 2002, at (time to be announced), Eastern Standard
Time, to consider and act upon the following matters:
(1) The approval of an amendment to the Company's Restated
Articles of Incorporation to increase the number of
authorized shares of common stock from 10,000,000
shares, no par value, to 20,000,000 shares, no par
value.
(2) The re-approval of the grant of options, in favor of JP
Acquisition Fund II, L.P., JP Acquisition Fund III, L.P.
and certain of their designees, to acquire, in the
aggregate, up to 400,000 shares of common stock.
Only shareholders of record at the close of business on November
22, 2002 will be entitled to vote at
the meeting.
Childtime Learning's total working capital deficit as of July
19, 2002 tops $16.5 million.
CINEMA RIDE: Independent Auditors Express Going Concern Doubt
-------------------------------------------------------------
Cinema Ride Inc., develops and operates rides consisting of 3-D
motion simulator attractions and filmed entertainment that
combines projected three-dimensional action films of
approximately four minutes in duration with computer-controlled,
hydraulically-mobilized capsules that are programmed to move in
concert with the on-screen action. The technology employed by
the Company in its ride facilities includes Patent No. 5,857,917
granted to the Company on January 12, 1999 by the United States
Patent and Trademark Office for 3-D video projected motion
simulator rides. The Company's ride facilities are located in
Las Vegas, Nevada; Edmonton, Alberta, Canada; and Atlanta,
Georgia.
During November 2002, the Company opened a new business venture
in Las Vegas, Nevada, which is operated under the name "Coca-
Cola Tickets2Nite". The new business venture sells tickets to
Las Vegas shows at 50% of the face price on the same day of the
performance.
The Company has experienced declining revenues and recurring
operating losses, and had a substantial working capital deficit
at September 30, 2002 and December 31, 2001. The Company's
independent certified public accountants, in their independent
auditors' report on the consolidated financial statements as of
and for the year ended December 31, 2001, have expressed
substantial doubt about the Company's ability to continue as a
going concern.
The Company will require additional capital to fund operating
and debt service requirements. The Company has been exploring
various alternatives to raise this required capital and has
raised a portion of the required capital, but there can be no
assurances that the Company will ultimately be successful in
this regard. During the nine months ended September 30, 2002,
the Company raised $582,500 of new capital through the sale of
its equity securities. The private placement offering consisted
of units sold at $0.25 per unit. Each unit consisted of one
share of common stock and one common stock purchase warrant. The
warrants are exercisable at $0.50 per share for a period of 18
months from the date of issuance.
The Company is continuing its efforts to raise new capital
subsequent to September 30, 2002. The Company is attempting to
raise a total of up to $750,000 of new capital during 2002.
Revenues decreased by $66,996, or 3.6%, to $1,805,582 in 2002,
as compared to $1,872,578 in 2001. Included in revenues for the
nine months ended September 30, 2002 and 2001 were revenues from
the New Jersey ride facility, which was closed in late June
2002, of $156,934 and $262,097, respectively, or 8.7% and 14.0%
of total revenues, respectively. Revenues from the Company's Las
Vegas ride facility increased sufficiently in 2002 to offset
most of the impact from the absence of revenues from the New
Jersey ride facility.
Net loss was $1,066,265 for the nine months ended September 30,
2002, as compared to a net loss of $410,453 for the nine months
ended September 30, 2001. Net loss increased in 2002 as compared
to 2001 primarily as a result of an increase in general and
administrative expenses, start-up costs of the new joint venture
and closure costs of the New Jersey ride facility. Net loss was
$1,066,265 for the nine months ended September 30, 2002, as
compared to a net loss of $410,453 for the nine months ended
September 30, 2001.
To the extent that the Company is unable to secure the capital
necessary to fund its future cash requirements on a timely basis
and/or under acceptable terms and conditions, the Company may
not have sufficient cash resources to maintain operations. In
such event, the Company has indicated that it may be required to
consider a formal or informal restructuring or reorganization.
CLAXSON INTERACTIVE: Sept. 30 Net Capital Deficit Tops $14 Mill.
----------------------------------------------------------------
Claxson Interactive Group Inc., (Nasdaq: XSON) announced
financial results for the three and nine-month periods ended
September 30, 2002.
Financial Results
Operating profit for the three-month period ended September 30,
2002 was $0.6 million, representing a $2.4 million improvement
from operating loss of $1.8 million for the three month period
ended September 30, 2001. Operating loss for the nine-month
period ended September 30, 2002 was $1.9 million compared to an
operating loss of $3.6 million for the same period of 2001.
Total net revenues for the third quarter of 2002 totaled $18.3
million, a 31% decrease from net revenues of $26.5 million for
the third quarter of 2001. Total net revenues for the nine
months ended September 30, 2002 totaled $56.9 million compared
to net revenues of $79.2 million for the nine months ended
September 30, 2001. Claxson's results continued to be negatively
affected by the economic crisis in Argentina and were
particularly impacted by the Argentine devaluation. Net
revenues earned in Argentina for the three months ended
September 30, 2002 were 21% of total net revenues compared to
48% for the same period in 2001. For the nine months ended
September 30, 2002, total net revenues in Argentina were 22% of
total net revenues compared to 47% for the same period in 2001.
During the third quarter of 2002, the average exchange rate
devalued 72% as compared to the same period in 2001. For the
nine-month period ended September 30, 2002, the average
devaluation in Argentina was 66%.
"Having completed our first year of operations, Claxson's
performance continues to improve as a result of an overall
operational and financial restructuring plan which has focused
on aggressively managing operating expenses, and developing new
revenue sources in markets outside of Argentina in an effort to
mitigate the adverse effect of the economic situation in that
market. We believe that this strategy will allow us to maintain
positive operating income in the fourth quarter," said Roberto
Vivo, Chairman and CEO, Claxson. "By having successfully
completed the Imagen Satelital exchange offer in November, we
continue to work towards our long term financial goals of
achieving and sustaining profitability, improving our cash
performance and increasing shareholder value."
Subscriber-based fees for the three-month period ended
September 30, 2002, totaled $7.5 million, representing
approximately 41% of total net revenues and a 50% decrease from
subscriber-based fees of $15.0 million for the third quarter of
2001. The decrease is primarily attributed to the impact of the
devaluation of the Argentine currency of $7.4 million and the
decreased demand for pay-per-view and premium services in the
region. Subscriber-based fees for the nine months ended
September 30, 2002 totaled $25.9 million compared to $46.0
million for the same period of 2001. The decrease attributable
to the devaluation of the Argentine currency represents $20.3
million for the nine-month period.
Advertising revenues for the three-month period ended
September 30, 2002 were $6.9 million, representing approximately
38% of Claxson's total net revenues and a 23% decrease from
advertising revenues of $9.0 million for the third quarter of
2001. This decrease in advertising revenues was due primarily to
a decrease in pay television advertising of $1.8 million as a
result of the economic crisis in Argentina. Advertising revenues
for the nine months ended September 30, 2002 totaled $21.1
million compared to $26.6 million for the same period of 2001.
The decrease in pay television advertising for the nine-month
period represents $4.6 million of the decrease.
Other revenues for the three-month period ended September 30,
2002 were $3.9 million, which represented a 56% increase over
the $2.5 million for the third quarter of 2001. This increase
was primarily due to increased revenues from the operations of
The Kitchen, Inc., Claxson's Miami-based broadcast and dubbing
facility. Other revenues for the nine months ended September 30,
2002 totaled $10.0 million compared to $6.6 million for the same
period of 2001.
Operating expenses for the three months ended September 30, 2002
were $17.7 million, a decrease of 37% from the $28.3 million in
the third quarter of 2001, due primarily to the rationalization
of programming, a reduction in marketing expenditures,
management's continued efforts to rationalize operations, the
effect of the Argentine devaluation on the expenses of our
Argentine-based subsidiaries, and the discontinuance of the
amortization of goodwill and intangible assets in accordance
with the Statement of Financial Accounting Standards No. 142.
Operating expenses for the nine months ended September 30, 2002
totaled $58.8 million compared to $82.8 million for the same
nine months in 2001.
Net loss for the three months ended September 30, 2002 was $5.5
million, which includes $1.4 million in foreign exchange
losses primarily due to certain U.S. dollar denominated debt
held by Claxson's Argentine subsidiary. The net loss
represented an improvement of $4.5 million over the $10.0
million net loss for the same three months of 2001.
For the nine-month period ended September 30, 2002 net loss was
$162.4 million, which includes a $74.8 million non-cash
impairment charge related to the adoption of Statement of
Financial Accounting Standards No. 142, and $68.2 million in
foreign exchange losses. Amortization expense for the three
months, and nine months ended September 30, 2001 was $2.6
million, and $7.5 million, respectively.
As of September 30, 2002, Claxson had a balance of cash and cash
equivalents of $12.8 million and $103.4 million in debt. Its
September 30, 2002 balance sheet shows a working capital
deficiency of about $109 million, and a total shareholders'
equity deficit of close to $14 million.
Update on Debt Renegotiation
On November 8, 2002, Claxson completed the exchange offer and
consent solicitation related to its U.S.$80 million outstanding
principal amount of the 11% Senior Notes due 2005 of its
subsidiary, Imagen Satelital S.A. The Company received valid
tenders from holders representing U.S.$74.5 million of the
principal amount of Old Notes, which represents 93.1% of the
issue. Accordingly, pursuant to the exchange offer, the Company
issued U.S.$41.3 million of new 8-3/4% Senior Notes due 2010.
Giving effect to the completion of the exchange offer, the
Company's total debt as of September 30, 2002 would have been
decreased by $11.5 million, from $103.4 million to $91.9
million, and the stockholders' equity would have been increased
to $1.3 million.
Claxson is currently not in compliance with the coverage ratios
required under its Chilean syndicated credit facility, primarily
as a result of the 17% decrease in the value of the Chilean Peso
against the U.S. Dollar in 2001. Failure to comply with the
financial covenants set forth in the Chilean syndicated credit
facility could result in the acceleration of all amounts due
and payable thereunder. Claxson continues to actively negotiate
with the lenders to amend the credit facility to modify this
financial covenant in order to bring it into compliance. Until
negotiations are final, this debt will be classified as short
term in the balance sheet.
Playboy TV International
PTVI and its affiliates incurred net losses of $1.8 million for
the three-month period ended September 30, 2002. Unless PTVI's
financial obligations an be restructured, PTVI will remain
primarily dependent on capital contributions from Claxson to
fund shortfalls. The report of PTVI's independent auditors with
respect to its financial statements for the years ended December
31, 2001 and 2000 include a "going concern" explanatory
paragraph, indicating that PTVI's reliance on capital
contributions from its partners to meet its obligations as they
become due raises substantial doubt as to its ability to
continue as a going concern.
Since January 2002, Claxson has been negotiating a possible
restructuring of the PTVI joint venture to adjust the fixed cost
structure and obligations to Playboy Entertainment Group, Inc
due to PTVI's lower than anticipated revenues. Negotiations are
in progress, however, no assurances can be made that Claxson
will be successful in restructuring the PTVI joint venture. If
Claxson does not reach a successful agreement with Playboy
Enterprises, Inc., Claxson could be required to fund the
additional $21.4 million of capital contributions required
pursuant to the operating agreement. If Claxson is not able to
fund the additional capital contributions, Playboy Enterprises,
Inc., or PTVI may seek, among other things, the dilution of
Claxson's membership interest.
Nasdaq Listing Update
On October 9, 2002, Claxson was notified by Nasdaq that the
Company was subject to delisting because of its failure to
comply with Marketplace Rule 4320(e)(2)(B), which requires a
minimum of (i) U.S.$2.5 million stockholders' equity or (ii) a
market capitalization of U.S.$35.0 million or (iii) net income
of U.S.$0.5 million. The Company requested an oral hearing
before the Nasdaq Listing Qualifications Panel to review the
determination reached by the Nasdaq Listing Qualifications
Department, which is scheduled for November 21, 2002. There can
be no assurance the Nasdaq Panel will grant the Company's
request for continued listing. If delisted, the Company would
attempt to have its Class A common stock traded in the over-the-
counter market via the Electronic Bulletin Board.
Claxson (Nasdaq-SCM: XSON) is a multimedia company providing
branded entertainment content targeted to Spanish and Portuguese
speakers around the world. Claxson has a portfolio of popular
entertainment brands that are distributed over multiple
platforms through its assets in pay television, broadcast
television, radio and the Internet. Claxson was formed on
September 21, 2001 in a merger transaction, which combined El
Sitio, Inc., and other media assets contributed by funds
affiliated with Hicks, Muse, Tate & Furst Inc., and members of
the Cisneros Group of Companies. Headquartered in Buenos
Aires, Argentina, and Miami Beach, Florida, Claxson has a
presence in all key Ibero-American countries, including without
limitation, Argentina, Mexico, Chile, Brazil, Spain, Portugal
and the United States.
CORRPRO COMPANIES: Names Robert M. Mayer Chief Financial Officer
----------------------------------------------------------------
Corrpro Companies, Inc., (Amex: CO) announced that its Board of
Directors has elected Robert M. Mayer as Senior Vice President,
Chief Financial Officer and Treasurer. Mr. Mayer, a University
of Dayton graduate, has over 17 years of experience in finance
and accounting and has been with Corrpro, most recently as Vice
President and Corporate Controller, since January 1998.
Mr. Mayer, a certified public accountant, served for five years
with a $1.2 billion publicly held manufacturing and distribution
company, where he most recently had been Director of Finance and
prior to that was an audit manager at Ernst & Young. Mr. Mayer
succeeds the Company's prior Chief Financial Officer who, as
previously announced, recently left the Company to pursue other
interests.
"Bob Mayer has been an integral part of our management and
restructuring team and is uniquely qualified for the role of
Chief Financial Officer of Corrpro. He has demonstrated the
leadership and professionalism needed to contribute further as
Chief Financial Officer to the strategic direction of the
Company," said Joseph W. Rog, Chairman, CEO and President.
Corrpro, headquartered in Medina, Ohio, with over 60 offices
worldwide, is the leading provider of corrosion control
engineering services, systems and equipment to the
infrastructure, environmental and energy markets around the
world. Corrpro is the leading provider of cathodic protection
systems and engineering services, as well as the leading
supplier of corrosion protection services relating to coatings,
pipeline integrity and reinforced concrete structures.
Corrpro Companies' June 30, 2002 balance sheet shows that total
current liabilities eclipsed total current assets by about $21
million.
CRESCENT REAL ESTATE: Enters into Exchange Deal with Rainwater
--------------------------------------------------------------
Crescent Real Estate Equities Company (NYSE:CEI) has entered
into an exchange transaction with its largest shareholder and
chairman, Richard E. Rainwater, in which Mr. Rainwater exchanged
700,800 of his Crescent common shares for 350,400 Partnership
Units of the Company's operating partnership, Crescent Real
Estate Equities Limited Partnership. Each Partnership Unit can
be exchanged for two common shares. Mr. Rainwater purchased the
700,800 common shares in the open market from November 7 through
November 11, 2002, at prices ranging from $15.1907 to $15.3960.
The transaction in no way changes Mr. Rainwater's current
beneficial ownership interest in the Company (giving effect to
his ownership of units). Mr. Rainwater's ownership of common
shares remains sufficiently below the 9.5% limit as provided in
the Company's charter.
Crescent Real Estate Equities Company (NYSE:CEI) is one of the
largest publicly held real estate investment trusts in the
nation. Through its subsidiaries and joint ventures, Crescent
owns and manages a portfolio of 73 premier office properties
totaling 28.5 million square feet located primarily in the
Southwestern United States, with major concentrations in Dallas,
Houston, Austin and Denver. In addition, the company has
investments in world-class resorts and spas and upscale
residential developments.
* * *
As reported in the April 3, 2002 edition of Troubled Company
Reporter, Standard & Poor's affirmed its ratings on Crescent
Real Estate Equities Co., and Crescent Real Estate Equities
L.P., and removed them from CreditWatch, where they were placed
on Jan. 23, 2002. The outlook remains negative.
Ratings Affirmed And Removed From CreditWatch
Issue To From
Crescent Real Estate Equities Co.
Corporate credit rating BB BB/Watch Neg
$200 million 6-3/4%
preferred stock B B/Watch Neg
$1.5 billion mixed shelf prelim B/B+ prelim B/B+/Watch Neg
Crescent Real Estate Equities L.P.
Corporate credit rating BB BB/Watch Neg
$150 million 6 5/8% senior
unsecured notes due 2002 B+ B+/Watch Neg
$250 million 7 1/8% senior
unsecured notes due 2007 B+ B+/Watch Neg
ENRON: Court OKs Proposed Retail Contract Settlement Procedures
---------------------------------------------------------------
Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York,
relates that prior to Petition Date, Enron Corporation and its
debtor-affiliates entered into thousands of contracts relating
to the supply of natural gas or electricity to commercial or
industrial end-users. Since then, many of the Retail Customer
Contracts have been terminated, rejected, or assigned under
Section 365 of the Bankruptcy Code. Substantial amounts are
outstanding under many of the terminated, rejected or assigned
Retail Customer Contracts, which amounts include primary
accounts receivable and, in some cases, termination payments due
to the Debtors' estates.
Accordingly, Ms. Gray reports, the Debtors and the Official
Committee of Unsecured Creditors agreed on a Protocol for
Settlement Under Retail Customer Contracts that will allow the
Debtors to obtain expedited Court approval of settlements with
counterparties on amounts due under those Retail Customer
Contracts.
The Protocol provides that:
1. For settlements involving values that exceed a defined
threshold, the Debtors will execute a settlement agreement
with the counterparty only after providing the Committee
with 10 business days' prior written notice. In addition,
the Protocol prescribes certain information concerning the
proposed settlement that must be included in the Debtors'
notice. If the Committee approves the proposed settlement,
the Debtors may file with this Court a motion for approval
of the Settlement. The motion will be noticed for hearing on
the next Hearing Day that is at least 10 days after the
motion is filed and notice thereof is served on the
appropriate parties, with objections to the motion being due
two business days before the hearing;
2. For settlements involving values that fall below the defined
threshold, the Debtors will provide the Committee with
written notice five business days prior to entering into the
settlement, during which time the Committee may approve or
disapprove the settlement or request more detailed
information. If the Committee either approves the proposed
settlement, does not disapprove it, or does not request more
detailed information on it during the five-day period, the
Debtors may file a notice of the settlement with the Court.
The notice will:
(a) identify each Retail Customer Contract subject to the
settlement;
(b) identify the Enron Settling Party and the Settling Party;
(c) summarize the terms of the settlement agreement; and
(d) provide a concise statement by the Debtors of the
rationale for the settlement.
The notice will be filed and served in accordance with the
Case Management Order. Unless an objection is filed and
serviced within five business days after the notice is filed
and served on the appropriate parties, the Debtors will be
authorized to consummate the proposed settlement, and the
parties receiving notice of the proposed settlement will be
deemed to have consented to it. If an objection is timely
filed and served, the matter will be heard on the next
Hearing Day;
3. The threshold, which the Protocol allows the Debtors to
settle a Retail Customer Contract without filing a motion
under the Bankruptcy Rules, is where:
(a) the Accounts Receivable Balance is $500,000 or less; and
(b) the final settlement amount is at least a certain
percentage of the Accounts Receivable Balance as agreed
to by the Committee and is not greater than $2,000,000;
provided, however, that where the Accounts Receivable
Balance is $100,000 or less, the percentage requirement
will not be applicable; and
4. If the Creditors' Committee does not approve a settlement in
either category, the Debtors may nonetheless seek approval
of the proposed settlement upon notice and a hearing in
accordance with Rule 9019 of the Federal Rules of Bankruptcy
Procedure and the Case Management Order.
Ms. Gray contends that the Protocol is warranted because:
(a) Bankruptcy Rule 9019 authorizes the Court to approve
certain classes of settlement to occur without further
Court approval. The procedures will only expedite the
approval process but the settlements will still be filed
with the Court; and
(b) the Court has authority under Section 105 of the
Bankruptcy Code to establish and authorize procedures for
the efficient settlement of amounts due under the Retail
Customer Contracts.
Accordingly, the Debtors sought and obtained the Court's
approval of the Protocol for the efficient processing of
settling and collecting amounts due under the Retail Customer
Contracts. (Enron Bankruptcy News, Issue No. 48; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
Enron Corp.'s 9.875% bonds due 2003 (ENRN03USR3), DebtTraders
reports, are trading at around 14 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR3
for real-time bond pricing.
EOTT ENERGY: Committee Signs-Up Petrie Parkman for Fin'l Advice
---------------------------------------------------------------
Pursuant to Sections 328(a), 504 and 1103 of the Bankruptcy Code
and Rule 2014(a) of the Federal Rules of Bankruptcy Procedure,
the Official Committee of Unsecured Creditors, appointed in the
chapter 11 cases involving EOTT Energy Partners, L.P., and its
debtor-affiliates, seek the Court's authority to retain Petrie
Parkman & Co. as its financial advisor, nunc pro tunc to October
8, 2002.
J. Robert Chambers, Committee Chairman, tells Judge Schmidt that
they chose Petrie Parkman because of the firm's extensive
experience and knowledge in the oil and gas industry. Petrie
Parkman has rendered Chapter 11 services to Panaco Inc., EnRe
Energy LP, Classic Communications, Inc., among others.
Petrie Parkman is expected to:
(a) review, analyze and evaluate the Debtors' business,
with particular emphasis on the Debtors' future prospects;
(b) review, analyze and evaluate the Debtors' assets,
liabilities, financial condition and proposed
expenditures, the operation of the Debtors' businesses,
and the desirability of alternative proposals, if any, to
restructure the operations, and any matters relevant to
these cases in the event and to the extent required by
the Committee;
(c) assist the Committee in the development and formation
of a plan or reorganization and the confirmation of the
plan;
(d) review and analyze any plan of reorganization or
disclosure statement the Debtors prepared or any
party-in-interest; and
(e) perform all other necessary financial services as the
Committee requires in connection with these Chapter 11
cases.
To compensate Petrie Parkman for the services, the Committee
asks the Court to approve these fees:
(a) Petrie Parkman will seek a $100,000 monthly advisory fee,
due on the 22nd of each month throughout the term of its
engagement. Petrie Parkman will credit 50% of any Monthly
Fee earned after the 6th month against the Success Fee;
(b) Upon the closing of a Restructuring, Petrie Parkman will
be paid a success fee equal to 1.25%, in cash, of the
value of the consideration received by interests
represented by the $235,000,000 par value of 11% Senior
Notes due 2009 exceeding $350 per $1,000 Note; and
(c) out-of-pocket expenses related to this assignment,
including fees and expenses of counsel or indemnification
agreement between the Debtors and Petrie Parkman.
Harry A. Perrin, co-head of the Restructuring Group of Petrie
Parkman & Co., Inc., informs the Court that, to the best of his
knowledge, neither Petrie Parkman nor any of its employees has
any connection with the Debtors, their creditors, any other
party-in-interest, their attorneys and accountants, the United
States Trustee, or any other person employed in the U.S.
Trustee's Office, except:
(a) Petrie Parkman was retained as financial advisor to an ad
hoc committee of bondholders prior to the Debtors'
bankruptcy filing. Petrie Parkman may have clients from
the ad hoc committee members that are unrelated to these
cases;
(b) Petrie Parkman previously provided limited advisory
services to Enron North America Corp. in a matter wholly
unrelated to these cases; and
(c) Certain large creditors may have retained the services of
Petrie Parkman that are unrelated to these cases. (EOTT
Energy Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
EPICEDGE INC: Sept. 30 Balance Sheet Insolvency Tops $11 Million
----------------------------------------------------------------
EpicEdge, Inc. (AMEX:EDG), a leading information technology
consulting firm, announced the release of its third quarter
financial results. EpicEdge continued to see increasing demand
for its services, as revenues increased 18.2% from the three
months ended September 30, 2001 to the three months ended
September 30, 2002. The increase in revenues is primarily due to
the addition of projects with new customers. Additionally,
EpicEdge was more efficient operationally as reflected in the
increase in gross margin from 30% to 37% over the same period.
For the three months ended September 30, 2002, compared with the
three months ended September 30, 2001, total revenues increased
$813,000, or 18.2%, to $5,270,000 from $4,457,000. During this
same period, gross profits increased $615,000, or 45.7%, to
$1,962,000 from $1,347,000 and operating expenses decreased
$849,000, or 30.5%, to $1,938,000 from $2,787,000. The increase
in gross profit is the result of increased utilization of
billable staff partially offset by the increase in utilization
of subcontractors.
Net loss per share lessened to $0.02 compared with $0.08 for the
three months ended September 30, 2002 and 2001, respectively.
EpicEdge reported an operating profit of $24,000 for the
quarter.
On November 7, 2002 EpicEdge entered into a loan and security
agreement with Silicon Valley Bank whereby SVB agreed to loan
EpicEdge up to $1.4 million. This facility includes a $1 million
revolving line of credit as well as a $400,000 term note. At the
closing of the loan, EpicEdge used $400,000 from the term note
facility plus cash on hand to extinguish the $856,000 balance of
our secured loan from GE Access.
On November 11, 2002, EpicEdge converted $6,000,000 of
convertible debt and the related accrued and unpaid interest of
$1,272,000 into 9,695,000 shares of Series A Preferred Stock and
$2,150,000 of convertible debt and the related accrued and
unpaid interest of $230,089 into 3,173,000 shares of Series B
Preferred Stock. The balance sheets contain the pro-forma
adjustments as of September 30, 2002.
At September 30, 2002, the Company's balance sheets show a
working capital deficit of about $12 million, and a total
shareholders' equity deficit of about $11 million.
Richard Carter, CEO of EpicEdge, stated, "We are especially
pleased that we have achieved operational profitability. This
was accomplished in part by more effective and efficient project
delivery teams, as demonstrated by our 37% gross profit margin
compared to a 30% gross profit margin for the same period last
year. Our discipline to remain focused on our core values of
customer satisfaction and service delivery excellence has
created a foundation for long-term success."
EpicEdge, Inc., is a leading information technology consulting
firm that helps state and local government agencies, as well as
commercial enterprises, meet their business goals through
implementation and support of client/server and Internet-enabled
PeopleSoft enterprise resource planning software applications,
custom Web application development, and strategic consulting.
The company delivers successful IT project-based services by
combining the elements of market-leading products, highly
skilled technical personnel, and proven project methodologies.
Its business technology solutions help clients maximize ROI and
lower their total cost of ownership.
EPOCH 2000-1: S&P Cuts Ratings on Classes I & II Notes to BB+/BB
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on EPOCH
2000-1 Ltd.'s class I, II, and III tranches of secured floating-
rate notes due 2007, and removed them from CreditWatch, where
they were placed on November 15, 2002.
The rating actions follow final valuations on two declared
credit events and further deterioration of credit quality that
have occurred in the underlying $2.5 billion reference
portfolio.
The ratings reflect the credit quality of the reference credits,
the level of credit enhancement provided by subordination, and
EPOCH 2000-1's ability to meet its payment obligations as issuer
of the secured notes.
RATINGS LOWERED AND REMOVED FROM CREDITWATCH WITH
NEGATIVE IMPLICATIONS
EPOCH 2000-1 Ltd.
Secured floating-rate notes
Class Rating
To From
I BBB AAA/Watch Neg
II BB+ AA/Watch Neg
III BB A/Watch Neg
EPOCH 2001-1: S&P Drops Class V Floating-Rate Note Rating to D
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on EPOCH
2001-1 Ltd.'s class I, II, III, IV, and V tranches of secured
floating-rate notes due August 15, 2006, and removed them from
CreditWatch, where they were placed on November 15, 2002.
The rating actions follow final valuations on two declared
credit events and further deterioration of credit quality that
have occurred in the underlying $1 billion reference portfolio.
The ratings reflect the credit quality of the reference credits,
the level of credit enhancement provided by subordination, and
EPOCH 2001-1's ability to meet its payment obligations as issuer
of the secured notes.
RATINGS LOWERED AND REMOVED FROM CREDITWATCH
WITH NEGATIVE IMPLICATIONS
EPOCH 2001-1 Ltd.
Secured floating-rate notes
Class Rating
To From
I AA AAA/Watch Neg
II BBB AA/Watch Neg
III BB A/Watch Neg
IV CCC BBB-/Watch Neg
V D B-/Watch Neg
EROOMSYSTEM: Will Receive Up to $322K in Interim Debt Financing
---------------------------------------------------------------
eRoomSystem Technologies Inc. (Nasdaq:ERMS), a leading supplier
of in-room technologies for the lodging industry, announced the
signing of a convertible promissory note with Ash Capital LLC,
its largest stockholder. Under the terms of the Convertible
Note, Ash Capital will provide up to $322,500 in financing, and
is obligated to loan the company a minimum of $250,000.
On Nov. 8, 2002, the company also entered into a Stock Purchase
Agreement for the issuance of up to 2,777,778 shares of Series D
Convertible Preferred Stock. Ash Capital's commitment is up to
$1,500,000 (inclusive of the Convertible Note), subject to the
company satisfying each of the conditions in the Stock Purchase
Agreement.
As a condition to closing the Series D Preferred Stock
financing, the company must achieve the following: (a) obtain a
new funding line to finance the placement of its products on a
revenue sharing basis; (b) comply with Nasdaq's minimum bid
requirement of $1 per share for 10 consecutive trading days by
Jan. 15, 2003; (c) obtain consent from Nasdaq, or a majority of
the company's shareholders, to issue the Series D Preferred
Stock on the terms described above; (d) receive written
confirmation from AMRESCO that neither it nor its subsidiaries
is in default under the Master Business Lease Financing
Agreement; (e) the company's manufacturer must commit to supply
product to the company at an amount not to exceed current
pricing; (f) must have executed settlements in place with its
trade creditors who represent not less than 95% of the
outstanding accounts payable as of Nov. 11, 2002; (g) the amount
of proceeds from the Series D Preferred Stock shall not be less
than $2,000,000; (h) there shall not be in effect any order that
would prevent or make unlawful the closing of the Series D
Preferred Stock financing; and (i) there shall not have occurred
(or reasonably be expected to occur) any event, change or
development which has had or could reasonably expected to have a
material adverse effect.
Upon issuance, the Series D Convertible Preferred Stock will be
convertible into common stock on a 1-for-6 basis, or at $0.15
per share. Thus, assuming 2,777,778 shares of Series D Preferred
Stock are purchased in the private placement offering, such
shares would be convertible, with the consent of a majority of
the Series D stockholders, into 16,666,667 shares of common
stock of the company.
The company intends to submit a request to Nasdaq in the next
few days requesting consent to the terms of the Series D
Preferred Stock financing. In the event that Nasdaq declines the
company's request, the company will be required to solicit its
shareholders and obtain majority approval for the Series D
Preferred Stock financing to occur. There can be no assurance
that the company will be successful in obtaining the consent of
Nasdaq or a majority of its shareholders.
eRoomSystem Technologies is a full service in-room provider for
the lodging and travel industries. Its intelligent in-room
computer platform and communications network supports
eRoomSystem's line of fully automated and interactive
refreshment centers (minibars), room safes, ambient trays and
other proposed in-room applications. eRoomSystem's products are
installed in major hotel chains both domestically and
internationally. eRoomSystem is a publicly-traded company listed
on NASDAQ SmallCap Market.
* * *
In its Form 10-Q report filed on November 14, 2002, eRoomSystem
stated:
"Since inception, the Company has suffered recurring losses.
During the year ended December 31, 2001 and the nine months
ended September 30, 2002, the Company had losses of $2,444,411
and $1,942,775, respectively. During the year ended December 31,
2001 and the nine months ended September 30, 2002, the Company's
operations used $1,725,729 and $1,625,275 of cash, respectively.
These matters raise substantial doubt about the Company's
ability to continue as a going concern. Management is attempting
to obtain debt and equity financing for use in its operations.
Management's plans include modifying the costs of the Company's
products by using an outside manufacturer, reducing the sales
price of products to increase sales volume and completing a
private placement offering of up to $2,500,000 from the issuance
of a convertible promissory note and shares of Series D
Preferred Stock. Realization of profitable operations or
proceeds from the financing is not assured. The accompanying
financial statements do not include any adjustments relating to
the recoverability and classification of asset carrying amounts
or the amount and classification of liabilities that might
result should the Company be unable to continue as a going
concern."
EXIDE TECH.: Asks Court to Further Extend Lease Decision Period
---------------------------------------------------------------
James E. O'Neill, Esq., at Pachulski Stang Ziehl Young & Jones
P.C., in Wilmington, Delaware, informs the Court that Exide
Technologies and debtor-affiliates are party to over 100
unexpired leases. The Unexpired Leases include offices space
throughout the country, regional distribution centers, and
strategically located branch facilities. These facilities are
central to the Debtors' ability to function as a going concern,
and will factor heavily into the Debtors' ongoing process of
evaluating and consolidating their business operations.
According to Mr. O'Neill, the Debtors are currently and actively
evaluating the Unexpired Leases with the goal of consolidating
operations where practical, and ceasing operations at
unprofitable locations. This process of consolidating
operations is a primary objective of these Chapter 11 Cases. It
is therefore critical that the Debtors be granted the additional
time they need to make careful, informed decisions with respect
to the Unexpired Leases.
Section 365(d)(4) of the Bankruptcy Code requires a debtor to
assume or reject its leases of non-residential real property
within 60 days of the commencement of the case unless this
period is extended for cause shown. The Section 365(d)(4)
Deadline is set to expire on December 11, 2002.
By this motion, the Debtors ask the Court to extend the Section
365(d)(4) Deadline for an additional period of 180 days, through
and including June 9, 2003.
Mr. O'Neill points out that the Debtors' present situation
readily satisfies the cause requirements for granting an
extension of the Section 365(d)(4) Deadline. The Debtors'
Chapter 11 Cases are large, complex, and involve a variety of
financial, business and legal considerations. The Unexpired
Leases are of great value to the Debtors' estates, and their
treatment will potentially have a significant impact on the
Debtors' reorganization and ultimate business plan as the
Debtors emerge from Chapter 11.
Mr. O'Neill tells the Court that it cannot be disputed that the
Unexpired Leases are critical to the Debtors' business. If the
Debtors' leases were rejected at this time, the Debtors would be
unable to continue operations. If the Debtors were forced to
make hasty, uninformed decisions as to which Unexpired Leases to
assume or reject, their ability to successfully reorganize their
businesses would be seriously impaired.
Mr. O'Neill contends that considerable time has been expended by
the Debtors' personnel and professionals to identify and
evaluate Unexpired Leases. The Debtors have also worked to
compile and centralize the database on Unexpired Leases to be in
a position to evaluate, which Unexpired Leases would be most
valuable to its reorganization effort. Until this analysis is
complete, it is premature to force the Debtors to make global
decisions with respect to the Unexpired Leases.
Mr. O'Neill assures the Court that the Debtors' lessors will not
be prejudiced by the requested extension because they can always
ask the Court to shorten the extension. Moreover, the Debtors
are committed to evaluating their Unexpired Leases with a focus
on identifying and rejecting those leases that are not part of
their ongoing restructuring. While it is not evident how long
it will take to complete this process, the Debtors do not intend
to use the extension to place a moratorium on their efforts.
Rather, the Debtors intend to continue their aggressive review
of the Unexpired Leases, and will seek appropriate resolution as
soon as informed decisions can be made. Mr. O'Neill asserts
that it is in the Debtors' best interest to evaluate their
Unexpired Leases as quickly as possible to limit the accruing
administrative liabilities.
Mr. O'Neill contends that the extension will avert the statutory
forfeiture of essential assets, promote the Debtors' ability to
maximize the value of their Chapter l1 estates and avoid the
incurrence of needless administrative expenses. Moreover, the
Debtors have been, and will continue to evaluate and consolidate
their business operations. Accordingly, the Debtors assert that
the period within which they must assume or reject the Unexpired
Leases should be extended to June 9, 2003. (Exide Bankruptcy
News, Issue No. 14; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
EVENFLO COMPANY: Reaches Recapitalization Pact with Noteholders
---------------------------------------------------------------
Evenflo Company, Inc., has reached agreement with its lenders,
certain noteholders and its controlling shareholder (an
affiliate of the investment firm of Kohlberg Kravis Roberts &
Co., L.P.) for a recapitalization of the Company.
As part of the recapitalization, the Company will offer the
holders of its $110 million 11-3/4% Series B Senior Notes due
2006 the right to exchange their Senior Notes for equity in the
recapitalized Company or $150 cash per $1,000 principal amount
of Senior Notes. An additional approximately $15 million of bank
indebtedness will be extinguished in the recapitalization. The
Company also expects to receive from its controlling shareholder
new cash equity of approximately $18 million, plus the amount
needed to pay noteholders electing to receive cash in connection
with the recapitalization, with this cash being applied to
purchase new common equity in the Company. If successful, the
recapitalization will reduce the Company's leverage from $215
million to $72 million. The recapitalization will have no effect
on trade creditors or customers.
"I am pleased to announce that we have reached agreement on the
form of a recapitalization for the Company. We are eager to
implement the recapitalization as soon as possible. The
additional equity infusion and debt reduction will further
expand our ability to develop new products and build on our
recent progress in our marketplace," said Wayne Robinson, Chief
Executive Officer of Evenflo.
Noteholders holding more than 70% in aggregate principal amount
of the outstanding Senior Notes, Evenflo's controlling
shareholder, the Company's lenders and the Company all have
agreed, subject to certain conditions, to support the
recapitalization. The Company has agreed to commence a tender
and exchange offer reflecting such exchange as soon as
practicable. If all noteholders elect to receive equity in the
exchange offer, noteholders in the aggregate would be entitled
to receive approximately 40% of the Company's common equity
after the recapitalization. The tender and exchange offer will
be conditioned on several items, including 100% participation by
the noteholders.
The Company expects to complete the recapitalization, which is
subject to documentation and other customary conditions, by the
end of the year.
Evenflo Company, Inc., is a worldwide leader in the development
and manufacture of innovative and high quality infant and
juvenile products.
* * *
Liquidity and Capital Resources
In its Form 10-Q filed on November 14, 2002, the Company said
its principal sources of liquidity are from cash balances, cash
flows generated from operations and from borrowings under the
Company's $105,000 revolving credit facility. The Company's
principal uses of liquidity are to provide working capital, meet
debt service requirements and finance the Company's strategic
investments. At September 30, 2001, the Company had $8,063 of
cash. The revolving credit facility subjects the Company to
certain restrictions and covenants related to, among other
things, minimum interest coverage, maximum leverage ratio
restrictions on capital expenditures, and no dividend payments.
At September 30, 2001, the Company had $67,400 in borrowings
outstanding under the revolving credit facility and utilized
$11,415 banker's acceptances and letters of credit. In addition,
the Company had $10,641 in stand-by letters of credit and $263
of letters of credit that have not yet been executed. The
Company had $15,281 in available borrowing capacity under its
revolving credit facility. In addition, the Company has
outstanding $110,000 of 11-3/4% Series B Senior Notes due 2006,
issued on August 20, 1998 and $40,000 liquidation preference of
Cumulative Preferred Stock that bears a variable rate of
interest indexed to the ten-year U.S. Treasury Rate. As of
September 30, 2001 the average dividend rate on the Cumulative
Preferred Stock was approximately 14.11%.
The syndicate of financial institutions under the revolving
credit facility and the Company agreed to amend certain
financial covenants included in the revolving credit facility
for the period commencing with the third fiscal quarter 2000.
This amendment modified financial covenants relating to an
interest coverage ratio and a leverage ratio, increased the
bankers' acceptance limit and increased the additional margin on
the "eurodollar rate" and the "base rate" interest calculation.
The syndicate of financial institutions under the revolving
credit facility and the Company agreed to further amend certain
financial covenants included in the revolving credit facility
for the period commencing with the fourth fiscal quarter of
2000. This amendment (i) modified financial covenants relating
to an interest coverage ratio and a leverage ratio, (ii) imposed
stricter limits on the Company's ability to make capital
expenditures, (iii) required that the Company pledge certain
additional assets, (iv) modified certain other sections of the
revolving credit facility to tighten the covenants on the
Company and (v) further increased the additional margin on the
"eurodollar rate" and the "base rate" interest calculation.
The syndicate of financial institutions under the revolving
credit facility and the Company agreed to amend certain
financial covenants included in the revolving credit facility
effective September 30, 2001. This amendment added a covenant to
limit available borrowings based on a borrowing base formula and
made available to the Company an additional $10,000 in Liquidity
Facility loans. As of the third amendment the Company has a
total of $105,000 in available borrowings. Management does not
believe the borrowing base formula will further limit the
available borrowings.
At September 30. 2001, the Company was not in compliance with
certain financial covenants contained in the credit facility as
amended on March 16, 2001. On October 15, 2001, the lenders
granted a waiver for the debt covenant violations through
January 31, 2002. The principle reasons the Company did not meet
these covenants were a continued slowdown in the general economy
and changes in customer ordering patterns and supply chain
problems that led to order cancellations and reduced net sales.
The Company implemented various steps to improve its
profitability and liquidity, including more effective cost
controls, the closing of a manufacturing facility, other cost
cutting initiatives, and the introduction of new products. In
addition, the Company has taken steps to fix the supply chain
problem by securing additional suppliers of key materials. There
can be no assurance, however, that these initiatives will enable
the Company to meet its financial covenants going forward. As a
result, the Company has classified all debt under its credit
facility as current.
FLEMING COMPANIES: Completes Exchange Offer for 9-7/8% Sr. Notes
----------------------------------------------------------------
Fleming Companies, Inc., (NYSE: FLM) has completed its offer to
exchange any and all of its outstanding 9-7/8% Senior
Subordinated Notes due 2012 for 9-7/8% Senior Subordinated Notes
due 2012 that have been registered under the Securities Act of
1933, as amended. All of the $260 million aggregate principal
amount of the Old Notes were tendered and received or were
covered by guaranteed delivery prior to the expiration of the
Exchange Offer at 5:00 p.m., New York City time, on November 18,
2002.
With its national, multi-tier supply chain network, Fleming is
the #1 supplier of consumer package goods to retailers of all
sizes and formats in the United States. Fleming serves nearly
50,000 retail locations, including supermarkets, convenience
stores, supercenters, discount stores, concessions, limited
assortment, drug, specialty, casinos, gift shops, military
commissaries and exchanges and more. Fleming serves more than
600 North American stores of global supermarketer IGA. To learn
more about Fleming, visit its Web site at http://www.fleming.com
* * *
As reported in Troubled Company Reporter's September 30, 2002
edition, Fleming Companies, Inc.'s senior unsecured debt was
lowered to 'BB-' from 'BB' by Fitch Ratings following the
company's announced plans to divest its retail business. At the
same time, Fleming secured bank facility is downgraded to 'BB'
from 'BB+' and its senior subordinated notes are lowered to 'B'
from 'B+'. About $1.9 billion in debt is affected by the rating
action. The Rating Outlook remains Negative.
The Negative Outlook continues to reflect uncertainty
surrounding Fleming's agreement with Kmart, as its contract with
Kmart has not yet been confirmed in the bankruptcy process,
There is also concern that additional Kmart stores may close,
which will adversely impact the company's wholesale business. In
addition, the inherent integration risks associated with
acquisitions made earlier this year also persist.
GENTEK: Court Approves Proposed Interim Compensation Procedures
---------------------------------------------------------------
GenTek Inc., and its debtor-affiliates obtained permission from
the Court to establish procedures for the interim compensation
and reimbursement of court-approved professionals on a monthly
basis.
Thus, the Court approved these monthly payment guidelines:
A. On or before the 25th day of each month following the month
for which compensation is sought, each Professional will file
a monthly fee application with the Court and will serve a
copy of the Fee Application to:
(a) GenTek Inc.
90 East Halsey Road
Parsippany, New Jersey 07054
Attn: Michael Herman;
(b) counsel for the Debtors:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899
Attn: Mark S. Chehi, Esq.;
(c) David L. Buchbinder, Esq.,
Office of the United States Trustee
Room 2313
844 North King Street
Wilmington, Delaware 19801;
(d) counsel to the Agent for the Lenders:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attn: Kenneth Ziman, Esq.; and
(e) counsel to the Committee;
B. Each Notice Party will have 20 days after service of a
Monthly Fee Application to object to the Application. Upon
the expiration of the Objection Deadline, each Professional
may file a certificate of no objection or a certificate of
partial objection with the Court, whichever is applicable,
after which the Debtors are authorized to pay each
Professional an actual Interim Payment equal to the lesser
of:
-- 80% of the fees and 100% of the expenses requested in the
Monthly Fee Application, which is the Maximum Payment; or
-- 80% of the fees and 100% of the expenses not subject to an
objection;
C. If any Notice Party objects to a Professional's Monthly Fee
Application, it must file a written objection with the Court
and serve it on the Professional and each of the Notice
Parties so that it is received on or before the objection
Deadline. Thereafter, the objecting party and the
Professional may attempt to resolve the Objection on a
consensual basis. If the parties are unable to reach a
resolution of the objection within 20 days after service of
the Objection, the Professional may either:
-- file a response to the objection with the Court, together
with a request for payment of the difference, if any,
between the Maximum Payment and the Actual Interim Payment
made to the affected Professional; or
-- forego payment of the Incremental Amount until the next
interim or final fee application hearing, at which time
the Court will consider and dispose of the Objection, if
requested by the parties;
D. Beginning with the three-month period ending on December 31,
2002, at three-month intervals or at other intervals as are
convenient for the Court, each of the Professionals will file
with the Court and serve on the Notice Parties an interim fee
application for compensation and reimbursement of expenses
sought in the Monthly Fee Applications filed during that
period:
-- The Interim Fee Application must include a summary of the
Monthly Fee Applications that are the subject of the
request, but need not include the narrative discussion
generally included in monthly fee applications;
-- Each Professional will serve notice of its Interim Fee
Application on all parties that have entered their
appearance pursuant to Bankruptcy Rule 2002;
-- Each Professional must file its Interim Fee Application
within 45 days after the end of the Interim Fee Period for
which the request seeks allowance of fees and
reimbursement of expenses. The Professional must file its
first Interim Fee Application on or before February 15,
2003, and the first Interim Fee Application should cover
the Interim Fee Period from the Petition Date through and
including December 31, 2002; and
-- Any Professional that fails to file an Interim Fee
Application when due will be ineligible to receive further
interim payments of fees or expenses with respect to any
subsequent Interim Fee Period until the Interim Fee
Application is filed and served by the Professional;
E. The Debtors will ask the Court to schedule a hearing on
the Interim Fee Applications at least once every six months,
or at other intervals as the Court deems appropriate. The
Court, in its discretion, may approve an uncontested Interim
Fee Application without the need for a hearing, upon the
Professional's filing of a certificate of no objection. Upon
allowance by the Court of a Professional's Interim Fee
Application, the Debtors will be authorized to promptly pay
that Professional all requested fees, including the 20%
holdback, and costs not previously paid;
F. The pendency of an objection to payment of compensation or
reimbursement of expenses will not disqualify a Professional
from the future payment of compensation or reimbursement of
expenses; and
G. Neither the payment of nor the failure to pay, in whole or in
part, monthly interim compensation and reimbursement of
expenses, nor the filing of or failure to file an objection
will bind any party-in-interest or the Court with respect to
the allowance of interim or final applications for
compensation and reimbursement of expenses of Professionals.
All fees and expenses paid to Professionals under these
compensation procedures are subject to disgorgement until
final allowance by the Court;
The Debtors also obtained Court's nod to permit each member of
the Committees in these cases to submit statements of expenses
-- excluding Committee member counsel fees and expenses -- and
supporting vouchers to the Committees' counsel, who will collect
and file the requests for reimbursement in accordance with the
procedure for monthly and interim compensation and reimbursement
of Professionals. (GenTek Bankruptcy News, Issue No. 4;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
GLOBAL CROSSING: Wants Okay to Assume Kajima Design Agreement
-------------------------------------------------------------
Global Crossing Ltd., and its debtor-affiliates seek the Court's
authority to assume the design and construction agreement dated
May 15, 2001, between the Debtors and Kajima Construction
Services, Inc., and settle the liens filed by Kajima and certain
of its subcontractors against the Debtors' leasehold interest in
the Ninth Street Location.
Paul M. Basta, Esq., at Weil Gotshal & Manges LLP, in New York,
explains that pursuant to the Kajima Agreement, Kajima designed
and built certain telecommunications improvements in the
Premises. In connection with the construction, the Debtors are
indebted to Kajima for $1,742,033.60. On March 13, 2002, Kajima
filed a $1,742,033.60 Claim of Lien. Certain of Kajima's
subcontractors also filed $1,672,570 Claims of Lien against the
Debtors' leasehold interest in the Premises.
To effect this discharge, the Debtors will assume the Kajima
Agreement and settle the Liens for $950,000. The salient terms
of the Kajima Amendment are:
-- The Debtors will assume the Kajima Agreement pursuant to
Section 365 of the Bankruptcy Code;
-- The Debtors will satisfy the Liens and all other obligations
of the Debtors under the Kajima Agreement for $950,000; and
-- Kajima will release the Debtors from any and all actions,
causes of action, claims, demands, lawsuits and other
liabilities set forth in the Kajima Amendment. After making
the Lien Payment, the Debtors will have no additional
obligations under the Kajima Agreement.
Mr. Basta assures the Court that the assumption of the Kajima
Agreement is beneficial to the Debtors' estates. Discharging or
bonding the Liens is a condition precedent to the effectiveness
of the Tecota Agreement. The Kajima Agreement provides the
vehicle for the Debtors to satisfy their obligations under the
Tecota Agreement. Pursuant to the Kajima Agreement, the Debtors
will discharge the Liens for a lesser sum than the actual amount
of the Liens.
By assuming the Kajima Agreement, Mr. Basta points out that the
Debtors will maintain the benefit of the warranties contained in
the Kajima Agreement. In addition, the Debtors will benefit
from Kajima's obligation to use its best efforts to cause
certain of their subcontractors to complete the tasks set forth
in the Kajima Amendment. (Global Crossing Bankruptcy News, Issue
No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900)
HORIZON NATURAL: Definitive Pact for West Virginia Coal Assets
--------------------------------------------------------------
The Pittston Company (NYSE: PZB) and Horizon Natural Resources
Company have announced their execution of a definitive agreement
with respect to the previously announced restructured
transaction. As previously disclosed, subsidiaries of Horizon
will acquire certain coal mining assets of subsidiaries of
Pittston in West Virginia (including all active mining
operations in West Virginia) and an option to acquire certain
additional properties (including certain coal reserves in
Kanawha and Fayette Counties, West Virginia). Consummation of
the transaction is subject to the receipt of various consents,
including, without limitation, consent from the Bankruptcy Court
(in connection with Horizon's recent bankruptcy filing) and
Horizon's lenders and other typical closing conditions. Pittston
remains confident of completing the process of exiting the coal
business this year.
The Pittston Company is a diversified company with interests in
security services through Brink's, Incorporated and Brink's Home
Security, Inc., global freight transportation and supply chain
management services through BAX Global, Inc., and mining and
minerals exploration through Pittston Coal Company and Pittston
Mineral Ventures.
HORIZON NATURAL: Look for Schedules & Statements on January 11
--------------------------------------------------------------
Horizon Natural Resources Company and its debtor-affiliates ask
the U.S. Bankruptcy Court for the Eastern District of Kentucky
to extend the deadline for filing lists of equity security
holders, schedules of assets and liabilities, schedules of
current income and expenditures, schedules of executory
contracts and unexpired leases and statements of financial
affairs. The Debtors ask for an extension to January 11, 2003.
The Debtors tell the Court that given the size and complexity of
the their businesses they haven't had the time to compile the
information necessary to comply with the disclosure requirements
imposed under 11 U.S.C. Sec. 521(1) and Rule 1007 of the Federal
Rules of Bankruptcy Procedure.
Horizon Natural Resources (formerly AEI Resources), one of the
US's largest producers of steam (bituminous) coal filed for
chapter 11 protection on November 13, 2002. This the Debtors'
second chapter 11 filing. Ronald E. Gold, Esq., at Frost Brown
Todd LLC represents that Debtors in their restructuring efforts.
When the Company filed for protection from its creditors, it
listed estimated debts and assets of over $100 million.
HUGHES ELECTRONICS: S&P Cuts Low-B Ratings over Liquidity Issues
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
ratings on Hughes Electronics Corp. and its 81%-owned subsidiary
PanAmSat Corp., to 'B+' from 'BB-'. Standard & Poor's also
lowered its senior secured bank loan ratings on the companies to
'BB-' from 'BB'. The downgrade reflects concern about continuing
discretionary cash flow deficits and refinancing risk at Hughes.
The PanAmSat downgrade reflects the company's majority ownership
by Hughes and not PanAmSat's stand-alone operating performance
or financial condition, which have been stable.
All ratings remain on CreditWatch with negative implications
pending the resolution of the merger transaction with EchoStar
Communications Corp. El Segundo, California-based Hughes has
roughly $800 million debt, excluding debt at PanAmSat.
"The FCC decision blocking license transfers needed for the
EchoStar/Hughes merger, and civil lawsuits by the U.S.
Department of Justice and 23 states to permanently enjoin the
proposed deal, make the merger increasingly unlikely. For that
reason, we are recognizing the potential risks of a no-merger
scenario and weighing an analysis of Hughes on a stand-alone
basis," said Standard & Poor's credit analyst Eric Geil.
Standard & Poor's also said that Hughes will consume nearly $1
billion cash in 2002, excluding PanAmSat, which is not a
guarantor of Hughes' credit facility. Cash consumption could
still be meaningful in 2003 given potential needs at DirecTV
Latin America pay TV unit, Hughes Network Systems, and DirecTV
Broadband.
Hughes is reducing the size of its bank facility to $1.8 billion
from $2 billion and is extending the maturity to the earlier of
August 31, 2003 or the completion of an EchoStar merger. Should
a merger not occur, the loan could be repaid from EchoStar's
obligation to purchase PanAmSat for $2.7 billion and the $600
million breakup fee payable by EchoStar. However, Standard &
Poor's is concerned that a delayed payment from EchoStar or any
renegotiation of the termination provisions could squeeze
Hughes' liquidity by the August 2003 bank maturity date.
Standard & Poor's will monitor progress of the EchoStar, Hughes,
and PanAmSat transactions and will likely complete its
reassessment of the ratings upon resolution of the transactions.
KAISER ALUMINUM: Enters into Oxnard Workers Shutdown Agreements
---------------------------------------------------------------
With the impending sale of their aluminum forging facility in
Oxnard, California, Daniel J. DeFranceschi, Esq., at Richards,
Layton & Finger, relates that Kaiser Aluminum Corporation and
debtor-affiliates have negotiated with The International
Brotherhood of Boilermakers, Iron, Shipbuilders, Blacksmiths,
Forgers and Helpers -- AFL-CIO and its Local 343 regarding the
sale's impact on the employees at the facility. On October 24,
2002, the Debtors and the Boilermakers Union inked a Closing
Agreement that sets forth the benefits to be received by the
Oxnard employees on the closing of the Oxnard Facility. The
parties also agreed to the terms of a general release of claims
to be signed by each employee receiving the severance benefits.
The Debtors now ask Judge Fitzgerald to approve both Shutdown
Agreements.
The Debtors explain that the Shutdown Agreements will provide
the employees with an incentive to continue working for them
until the Oxnard Facility closes. According to Mr.
DeFranceschi, this arrangement ensures that the Debtors will be
able to fulfill their obligations to the customers until those
obligations are assigned to, and assumed by, the purchaser of
the Oxnard Facility.
The Oxnard Facility manufactures aluminum parts to be used in
trucks, airplanes, medical equipment and other industrial
products. The Facility employs 44 hourly employees whose
employment is governed by a collective bargaining agreement
between Kaiser and the Boilermakers Union.
The Shutdown Agreements require the Debtors to:
(a) pay all employees actively working as of December 15, 2002
one week of pay -- 40 hours -- for each 3 years of
service. A fraction of a year is considered a full year;
(b) provide medical insurance coverage for four full months
after the closing date to all active employees. However,
the employees will be responsible to make the normal
monthly cash contribution. The four-month coverage will
be included in the calculation of the COBRA coverage;
(c) give five days sick leave pay. The eligibility of an
employee to receive the sick leave pay will be determined
by the terms of that employee's labor agreement with the
Debtors;
(d) pay all accrued and unused vacation pay;
(e) actively cooperate with the Boilermakers' Union to seek
state and federal funding for employee re-training and
plant closure purposes; and
(f) provide exit medical examination as a requirement for the
employees to receive the severance pay. The medical exam
includes Full Blood panel and Asbestos testing. The
testing must be completed during work hours and a copy of
the result must be distributed to the concerned employee.
The Shutdown Agreements also provide that:
-- any employee who desires to resign from Kaiser for other
employment before November 30, 2002 will no longer be
entitled to any severance payment;
-- those employees requesting to leave Kaiser's employment
after November 30, 2002 may also receive the severance
package -- subject to the Debtors' and the Boilermakers
Union's mutual approval. The mutual agreement will not be
withheld without good reason. The Debtors' refusal to
grant an exception will not be subject to the grievance
procedure;
-- the employees must be actively at work to receive any
severance payment. Nevertheless, an employee with personal
injuries may receive his severance benefits upon
certification by a physician;
-- any employees who are out of work due to compensable injury
must be fully released by a physician to return to work
before receiving any severance payments; and
-- each employee must sign a General Release before receiving
any severance payment. The General Release relinquishes
that employee's right to bring any claims, known or
unknown, against the Debtors in relation with his
employment or termination. The claims include:
(i) any claims under federal, state or local laws, or
common law regarding rights or claims relating to
employment;
(ii) any right to statutory attorneys' fees under those
laws; and
(iii) any grievances or claims under the Collective
Bargaining Agreement.
Under the General Release, the employee also waives all
seniority rights and any rights to be recalled to a job at
any of the Debtors' facilities. The General Release does
not apply, however, to an employee's timely claims, if any,
against the Debtors arising under either the workers'
compensation or unemployment insurance laws.
Mr. DeFranceschi relates the severance benefit will be paid in a
separate check with the least allowable taxable rate legally
allowable under state and federal law. The check will be issued
within 48 hours after the last day worked. The Debtors
anticipate that the severance payments will not exceed $370,000.
Moreover, Mr. DeFranceschi adds, the Shutdown Agreements should
substantially reduce or eliminate potential claims from the
employees because they are required to submit to exit medical
examinations, including asbestos exposure testing, and sign the
General Release. (Kaiser Bankruptcy News, Issue No. 18;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
Kaiser Aluminum & Chemicals' 12.75% bonds due 2003 (KLU03USR1)
are trading at 10 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KLU03USR1for
real-time bond pricing.
KMART: Wants to Sell RK-235 Beechjet to Country Air for $3.4MM
--------------------------------------------------------------
Kmart Corporation and its debtor-affiliates own a Model Year
1999 Beechjet 400A, identified by serial number RK-235 and
registration number N695BK. Before the Petition Date, the
aircraft was primarily used by Kmart's divisional presidents to
visit stores in their regions. However, the restructuring of
the Debtors' business and the reduction in the number of stores
has lessened the need to maintain the aircraft. So the Debtors
decided to sell the aircraft.
To assist in the sale and marketing of aircraft, the Debtors
employed Aerodynamics Inc., a broker specializing in aircraft
sale. The Debtors would compensate Aerodynamics 1-1/2% of the
aircraft's purchase price. This is in accordance with the
parties' Exclusive Aircraft Brokerage Agreement approved by the
Court.
The Debtors and Aerodynamics embarked on extensive marketing
efforts for the aircraft in June 2002:
(i) The Beechjet was listed with the two main aircraft listing
services, AMSTAT and JETNET;
(ii) Information regarding the aircraft was provided to the
Internet-based listing service, Aircraft Shopper Online.
Aircraft Shopper Online is a service primarily utilized by
end-users;
(iii) The aircraft was marketed on the Broker's website at
http://www.flyadi.comand
(iv) The Beechjet was advertised through a subscription fax
service that was sent to aircraft dealers, brokers and
other interested parties. This service published pictures
and the specifications of the aircraft. The subscription
fax services is used by the majority of aircraft industry
professionals worldwide.
John Wm. Butler, Esq., at Skadden, Arps, Slate, Meagher & Flom,
reports that Aerodynamics received 18 indications of interest.
Detailed information was provided to these interested parties.
As a result, Aerodynamics received three proposals.
After the Debtors, their legal and financial advisors, evaluated
the terms of each proposal, Big Country Air, LLC was declared as
the highest and best bidder for the property.
The salient terms of the Purchase Agreement between the Debtors
and Big Country Air are:
Purchase Price: $3,400,000
Escrow Deposit: $50,000
Assets Included: All the Debtors' right, title and interest in
the aircraft
Closing: Immediately after the last to occur of:
(1) approval of the Proposed Sale by this Court;
(2) completion of the Pre-Purchase Inspection;
(3) closing of the Escrow Deposit; and
(4) payment of the Purchase Price.
Conditions
to Closing: The Agreement is subject to higher and better
offers as well as Bankruptcy Court approval.
Representations
And Warranties: The Property will be conveyed "as is, where is."
Accordingly, the Debtors seek the Court's authority to
consummate the sale agreement with Big Country Air, subject to
higher and better offers. (Kmart Bankruptcy News, Issue No. 38;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
Kmart Corp.'s 9.0% bonds due 2003 (KM03USR6) are trading at
around 17 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KM03USR6for
real-time bond pricing.
LANDSTAR: Will Delay Filing of Financial Reports on Form 10-QSB
---------------------------------------------------------------
The financial information for Form 10-QSB for LandStar, Inc.,
has been accumulated and has been sent to the Company's external
auditors for their review. The auditors and the Company need
additional time to review the entire package and finalize
disclosure of several transactions that occurred at, or after,
quarter end. For these reasons the Company has advised the
Securities & Exchange Commission that there will be a delay in
the filing of those statements.
LandStar's results of operations for the quarter and nine months
ended September 30, 2002 will differ significantly from those
results of the prior year. In the prior year, the Company's
only source of revenue was the management fees earned from
managing the company they subsequently purchased. On February
28, 2002, the Company purchased a manufacturing plant and
consolidated the results of that operation starting March 1,
2002. The Company will report both sales, which it has
previously never had, as well as management fees. Net loss will
approximate $1.6 million for the three months ended September
30, 2002 compared to $960,000 for the same period of the prior
year and $8.45 million for the nine months ended September 30,
2002 compared to a loss of $2,919,000 for the same period of
2001.
In its June 30, 2002 balance sheets, Landstar Inc., recorded a
working capital deficit of about $16 million, and a total
shareholders' equity deficit of about $6 million.
LONDONCONNECT INC: Section 304 Petition Summary
-----------------------------------------------
Petitioner: LondonConnect, Inc.
20 Bay Street
Toronto, ON M5J2N8
Canada
Bankruptcy Case No.: 02-15837
Type of Business: An Affiliate of GT Group Telecom Inc.
Section 304 Petition Date: November 20, 2002
Court: Southern District of New York (Manhattan)
Petitioner's Counsel: Jeffrey K. Cymbler, Esq.
Angel & Frankel, P.C.
460 Park Avenue
New York, NY 10022
Tel: (212) 752-8000
Fax : (212) 752-8393
Estimated Assets: $1 to $10 Million
Estimated Debts: $1 to $10 Million
LTV CORP: LTV Steel Wants to Establish Prosecution Thresholds
-------------------------------------------------------------
LTV Steel Company, Inc., seeks the Court's authority to
establish certain "thresholds" for the pursuit and prosecution
of certain preference avoidance actions that it may have in
favor of its estate.
The Preference Action Analysis
To recall, LTV Steel engaged AlixPartners LLC to conduct an
analysis of the Preference Actions that might be brought for the
benefit to these estates. Once completed, LTV Steel shared this
analysis in July 2002 with the Committees. In addition, over
the past several months, LTV Steel responded to numerous
inquiries made by the Committees for background information
related to the Preference Actions by providing copies of
documentation and participating in conference calls with counsel
regarding these potential causes of action. The Committees
also asked LTV Steel to have Alix perform a preference analysis
for each of Copperweld and VP Buildings' estates. The
Copperweld analysis is complete, but the VP Buildings is not.
After a review of the Alix analysis, LTV Steel believed, among
other things, that given the APP process and the resulting
hardship upon many of the same creditors that received payments
during the preference period, pursuing the Preference Actions
would not be fair to those creditors. The targets of the
Preference Actions are by and large the same creditors who have
lost money -- perhaps twice -- in these cases. However, this is
not true for the Noteholders Committee's constituents. For this
reason, the interests of the Noteholders Committee in pursuing
the Preference Actions diverge from the interests of the
Unsecured Creditors Committee.
LTV Steel communicated its position to the Committees. Each of
the Committees reviewed the Alix analysis and the background
support. It was the Committees' understanding that LTV Steel
had a fiduciary duty to pursue the Preference Actions in
accordance with reasonable parameters to enhance the recoveries
of administrative claimants in the LTV Steel Chapter 11 case.
After consultation among themselves and their members, and
discussions with LTV Steel, it was determined that the
Preference Actions should be pursued, subject to a reasonable
standard, to which LTV Steel acquiesced.
On October 15, 2002, Alix mailed to the recipients of potential
preferences a letter seeking the return of potentially
preferential payments. Of the 3,705 claims from LTV Steel --
including LTV Tubular, but not including Georgia Tubing -- that
Alix analyzed initially, based upon applicable new value and
ordinary course defenses, Alix mailed Preference Letters to
1,337 creditors, approximately 47 of which were subsequently
withdrawn. The criteria used for sending the Preference
Letters was that the potential preference amount less the new
value defense equaled or exceeded $5,000, which was the
threshold to which the Committees agreed. In sum, the
Preference Letters sought return of payments net of any new
value as calculated by Alix.
As LTV Steel expected, the dissemination of the Preference
Letters created much consternation among its creditors, and
significant adversary publicity and ill will against what
remains of its estate.
The Proposed Parameters
As a result, LTV and the Creditors' Committee -- the official
representative of the recipients of the Preference Letters --
have recently discussed the establishment of certain parameters
for the continued pursuit of the Preference Actions. The
proposed parameters are designed to:
(a) pursue those Preference actions that are likely to
result in a significant recovery to LTV Steel's
estate based on the Alix analysis;
(b) minimize the impact of the Preference Letters on as
many creditors as possible while preserving the
greatest potential recovery to the LTV Steel estate;
(c) conserve the resources to be expended by LTV Steel
in pursuing these actions, and
(d) fulfill LTV Steel management's fiduciary duties.
The parameters agreed to by the Creditors' Committee and LTV
Steel are:
(1) LTV Steel will continue to pursue non-insider
Preference Actions where the expected recovery,
net of new value, is $25,000 or more as reflected
in the Alix analysis;
(2) Settlement of any of LTV's Preference Actions will
be subject to Judge Bodoh's approval; and
(3) For those creditors who received Preference
Letters, but who do not fall within these
parameters, and who have sent or may send checks
to Alix, LTV Steel seeks the Court's authority to
return these checks to the applicable creditors,
as it has not cashed any check it has received in
connection with the Preference Letters. (LTV Bankruptcy
News, Issue No. 40; Bankruptcy Creditors' Service, Inc.,
609/392-00900)
MILESTONE SCIENTIFIC: Net Capital Deficit Widens to $5 Million
--------------------------------------------------------------
Milestone Scientific, Inc., (AMEX: MS) announced its results for
the third quarter and nine months ended September 30, 2002.
During the three months ended September 30, 2002, Milestone
realized a 29.5% increase in sales, while again narrowing its
quarterly net loss. Net sales for the three months ended
September 30, 2002 and September 30, 2001 were $1,034,190 and
$798,776 respectively. The $235,414 or 29.5% increase is
attributable primarily to an 8% or $35,000 increase in domestic
sales of the Wand(R) handpiece, CompuMed(TM) sales of
approximately $23,000 and an $83,000 increase in CompuDent(R)
revenue. The net loss for the three months ended September 30,
2002 was $581,831 as compared to a net loss of $810,317 for the
three months ended September 30, 2001. Net sales for the nine
months ended September 30, 2002 and September 30, 2001 were
$3,215,907 and $2,979,588, respectively. The net loss for the
nine months ended September 30, 2002 was $1,604,252 as compared
to a net loss of $3,254,840 for the nine months ended September
30, 2001. The $1,650,588 or 51% decrease in net loss is
attributable to lower selling and administrative expenses and a
higher gross margin on sales.
At September 30, 2002, the Company's balance sheet shows a
working capital deficit of about $4.5 million, and a total
shareholders' equity deficit of about $5 million.
"Our results from operations continue to reflect the
concentrated effort we have undertaken to drastically reduce
overhead while growing the user base in the dental market as
well as introducing the CompuMed(TM) system in a variety of
medical disciplines, commented Stuart Wildhorn, Milestone's
Senior Vice President. While our handpiece sales continue to
show growth, reflecting broader adoption, the sales of units
continues to be slow primarily due to our constrained marketing
and distribution efforts. We have reduced our average monthly
cash burn rate to less than $50,000 and this year completed a
$4.1 million debt restructuring program, and obtained $585,000
in additional financing. This program included equity
conversions; deferring payment on certain payables until January
2, 2003 and July 2, 2003 and a restructuring of all debt
originally maturing in 2002."
Milestone Scientific is the developer, manufacturer and marketer
of CompuDent(R) and CompuMed(TM) computer controlled local
anesthetic delivery systems. These systems comprise a
microprocessor controlled drive unit as well as The Wand(R)
handpiece, a single patient use product that is held in a pen
like manner for injections. In 2001, Milestone Scientific
received broad United States patent protection on
"CompuFlo(TM)", an enabling technology for computer controlled,
pressure sensitive infusion, perfusion, suffusion and
aspiration, which provides real time displays of pressures,
fluid densities and flow rates, that advances the delivery and
removal of a wide array of fluids. In August 2002, Milestone
Scientific received United States patent protection on a safety
engineered sharps technology, which allows for fully automated
true single-handed activation with needle anti-deflection and
force-reduction capability.
MISSISSIPPI CHEMICAL: Completes Amendment to Secured Revolver
-------------------------------------------------------------
Mississippi Chemical Corporation (NYSE: GRO) reported results
for the quarter ending Sept. 30, 2002. The company incurred an
operating loss of $11.1 million for the quarter, compared to an
operating loss of $12.6 million for the prior-year quarter.
EBITDA (earnings before interest, taxes, depreciation and
amortization) decreased to a negative $438,000 for the quarter
ending Sept. 30, 2002, compared to a positive $1.8 million for
the quarter ending Sept. 30, 2001. Net sales for the first
fiscal quarter were $97.5 million compared to $107.8 million in
the prior-year quarter.
On Nov. 15, 2002 the company completed an amendment and
restatement of its secured revolving credit facility with Harris
Trust and Savings Bank and a syndicate of ten commercial banks.
As part of the amendment and restatement, the company's wholly-
owned foreign subsidiary, Mississippi Chemical Holdings, Inc.,
provided a guarantee of the debt. Mississippi Chemical Holdings,
Inc., a British Virgin Islands corporation, indirectly owns the
company's 50-percent joint venture interest in Farmland MissChem
Limited. As a result of this guarantee, and in accordance with
applicable accounting guidelines, the company recognized a $12.3
million non-cash tax charge, or 47 cents per share, related to
recognition of cumulative foreign earnings from its investment
in Farmland MissChem Limited. The inclusion of this non-cash tax
charge in the quarter contributed to a net loss of $23.5
million, or 90 cents per share, compared to a net loss of $8.1
million, or 31 cents per share, in the prior-year period.
Details of the amendment and restatement of the credit facility
can be found in the company's Form 10-Q filed with the
Securities and Exchange Commission on Nov. 19, 2002.
At September 30, 2002, the Company's balance sheet shows that
total current liabilities exceeded total current assets by about
$33 million.
In announcing the results, Charles O. Dunn, president and chief
executive officer, said, "We are pleased to have reached an
agreement to extend our secured revolving credit facility for an
additional year. These arrangements were put in place during a
period of difficult business conditions and significant
disruption in the financial markets. We believe that the
extension of our existing facility should afford the company the
opportunity to explore an expanded range of long-term
refinancing options in an improving business and financial
market environment.
"While we showed improvement in our consolidated operating
results, we are still working in a challenging environment. Our
nitrogen operations continued to face lower selling prices
compared to the prior-year period. In addition, a scheduled
maintenance turnaround to change out defective equipment at our
Trinidad facility reduced its production for the quarter. In the
prior-year period, we had equity income of approximately $3.5
million from Trinidad compared to approximately breaking even
this quarter. During the quarter, the effect of lower product
prices was partially offset by lower natural gas prices. By the
end of the quarter ammonia prices began to increase in spot
markets as a result of a reduction of supply caused by downtime
at several plants around the world. Unfortunately, natural gas
prices began to rise as well.
"Phosphate prices were higher than in the first quarter of
fiscal 2002, but were retreating by quarter's end. Raw material
costs, excluding ammonia, were at high levels during our first
fiscal quarter and partially offset the benefit of higher
phosphate prices. As we move forward, the combination of higher
raw material costs and lower phosphate prices will negatively
affect the performance of this operation in the coming months.
"Our potash operations experienced improved ore grades, and
increased production despite the reduced production schedule at
our East mine that was initiated in September. Lower fixed costs
per ton, as a result of higher production, together with lower
energy costs, were the primary reasons for the improved
performance in that segment.
"We continue to base operating decisions on the market
conditions we are facing. Beginning in September at our potash
operations, we reduced production schedules at our East mine to
better match our production with industrial demand and lowered
fixed costs at this operation. During October, as part of a cost
reduction effort, we reduced the workforce at our Donaldsonville
nitrogen facility. As a result of the changes at our
Donaldsonville facility, we will accrue a severance charge in
the second quarter of approximately $800,000. We continue to
look internally at our operations for alternatives and
opportunities to further reduce cost and maximize efficiencies
in an effort to improve our overall performance.
"Looking forward, there are improving trends in the agricultural
market that should have a positive effect on spring plantings
and, consequently, on fertilizer consumption. Low grain stocks
and rising commodity prices are expected to increase planted
acres. Corn acres, a major driver of nitrogen demand, are
projected to increase from 78 million acres in 2002 to 82
million acres in 2003, according to Sparks Companies, Inc., an
agribusiness consulting group. While we are optimistic about the
spring season, we continue to face a volatile natural gas market
that will impact the performance of our operations as we go
forward. We will continue to run our facilities based on the
relationship among customer commitments, product prices and
natural gas prices."
Comparing the first quarter ended Sept. 30, 2002, to the prior-
year quarter:
-- The average domestic natural gas price for all
operations, net of futures gains and losses, was $2.97 per
MMBtu, compared to $3.31 per MMBtu in the prior-year period, a
decrease of 10 percent. Company wide, including the Trinidad
operation, natural gas prices averaged $2.55 per MMBtu for the
quarter.
Nitrogen
-- The operating loss for the nitrogen segment in the first
fiscal quarter was essentially unchanged from the operating loss
of $9.1 million in the prior-year quarter.
-- During the quarter, the company's Trinidad operation
experienced a scheduled maintenance turnaround to change out
defective equipment resulting in reduced production from this
operation. This operation came back online Oct. 1, 2002. In the
prior-year period, the Company recognized approximately $3.5
million of equity income compared to essentially breakeven
results during the current quarter. Equity earnings or losses at
Farmland MissChem are reflected as a component of cost of
products sold on the statement of income.
-- Total nitrogen sales volume decreased 4 percent and the
weighted-average selling price decreased 13 percent compared to
the prior-year quarter.
-- Ammonia -- Sales volume decreased 16 percent, and the
average selling price decreased 9 percent. Volumes were lower
due to reduced product available for sale as a result of lower
production levels and reduced demand from industrial customers
compared to the same prior-year period. Lower industrial demand
and new offshore production coming on-stream in Trinidad during
the summer negatively affected prices.
-- Ammonium Nitrate -- For the quarter, sales volume
increased 20 percent, while the average selling price decreased
10 percent compared to the prior-year period. Lower beginning
inventories at the distributor and dealer level compared to the
prior-year period allowed better product movement to distributor
and dealer storage. In addition, increased fall/winter wheat
plantings and good weather conditions for pasture applications
in the southern U.S. had a positive effect on ammonium nitrate
demand. Prices were negatively affected by increased U.S.
production. According to The Fertilizer Institute, an industry
trade group, U.S. ammonium nitrate production increased 13
percent for the July to September time period compared to the
same prior-year period.
-- Urea -- Sales volume decreased 32 percent, and the
average selling price decreased 14 percent compared to the
prior-year period. The decrease in sales volume is primarily
related to decreased industrial sales of urea melt caused by the
closure of Melamine Chemical, Inc.'s facility adjacent to the
company's Donaldsonville, La., complex. In the prior-year
quarter, the company sold approximately 49,000 tons of urea
melt. The loss of the urea melt sales, which were then at higher
net sales prices than other urea products, combined with the
effect of increased global production levels, resulted in a
lower average selling price compared to the prior-year period.
-- Nitrogen Solutions -- Sales volume increased 52 percent
during the quarter, while the average selling price decreased 2
percent compared to the prior-year period. Buyers elected to
purchase product early in response to continued low pricing in
anticipation of higher prices in the 2003 spring planting
season. The company believes the average price decline was less
than other nitrogen products due to reduced imports into the
U.S. as a result of the ongoing trade action against Russia,
Belarus and the Ukraine related to their dumping of nitrogen
solutions.
Phosphates
-- Sales volume decreased 11 percent compared to the prior-
year period primarily as a result of lower production rates.
Mechanical problems, limited availability of raw materials
(sulfuric acid and sulfur) and the impact of tropical storms
during the quarter resulted in a production decrease of
approximately 13,000 tons compared to the prior-year period.
-- Average phosphate sales price increased 24 percent
compared to the prior-year period. International market
conditions improved from the prior-year period due to increased
shipments to China. In addition, stronger domestic markets
during the quarter positively impacted prices. By quarter end,
the spot market for DAP prices had begun to decline due to an
announced resumption of production by a major domestic producer,
higher than anticipated Chinese inventories and lower fall
applications in the U.S. due to wet weather conditions.
-- The operating loss for the phosphate segment was
approximately $501,000 during the quarter compared to an
operating loss of $1.3 million in the prior-year period. Higher
raw material costs for sulfur, sulfuric acid and phosphate rock
were only partially offset by lower ammonia prices compared to
the prior-year period. These lower ammonia prices, combined with
higher product prices, resulted in better performance compared
to the first quarter of fiscal 2002.
-- There will be approximately $800,000 of additional costs
in the second quarter due to higher water treatment costs caused
by the excessive amount of rain during October. These higher
costs and continued high raw material costs will negatively
affect the performance of this operation in the second fiscal
quarter.
Potash
-- Sales volume decreased 14 percent from the prior-year
period, while the average potash sales price was essentially
unchanged compared to the year-ago period. The decrease in tons
sold is primarily the result of fewer tons being moved into the
export market and lower industrial volumes being sold compared
to the prior-year period. Industrial volumes were lower due to
reduced contract tonnage for certain customers and less volume
being sold into the oilfield services industry.
-- The operating loss for the potash segment was $1.1
million compared to an operating loss of $2.3 million a year
ago. Improved results are attributable to increased production
rates because of improved ore grades, which resulted in lower
fixed cost per ton. Lower energy cost compared to the prior-year
period benefited the operation as well.
Consolidated Results
Selling, general and administrative expense was $7.4 million
compared to $7.1 million in the prior-year period. This
increased cost was primarily due to higher cost for insurance
and expenses associated with refinancing. These increased
expenses were partially offset by the absence of goodwill
amortization. The company wrote off all of its goodwill at June
30, 2002.
Other operating expense on a consolidated basis was $5.3 million
compared to $6.6 million in the same prior-year period. This
decrease was the result of reduced idle plant costs at our
nitrogen facilities.
For the quarter, consolidated interest expense was $6.6 million
compared to $7.7 million in the quarter ending Sept. 30, 2001.
The combination of lower average interest rates and lower
average debt balances under the secured revolving credit
facility accounted for the decrease in interest expense.
Mississippi Chemical Corporation, through its wholly owned
subsidiaries, produces and markets all three primary crop
nutrients. Nitrogen-, phosphorus- and potassium-based products
are produced at facilities in Mississippi, Louisiana and New
Mexico, and through a joint venture in The Republic of Trinidad
and Tobago.
MORGAN GROUP: Asks Court to Okay Use of Lenders' Cash Collateral
----------------------------------------------------------------
The Morgan Group, Inc., and its debtor-affiliates ask for
authority from the U.S. Bankruptcy Court for the Northern
District of Indiana, to use their Lender's Cash Collateral to
fund on-going post-petition operating expenses.
The Debtors relate that they entered into a prepetition credit
facility with GMAC Commercial Credit LLC and owe GMAC
$6,350,000. The Debtors contend that as of the Petition Date,
the collateral supporting the GMAC Obligations exceeds what they
owe. The Debtors do not admit that GMAC holds valid, perfected
or enforceable prepetition security interests in and to any of
the collateral.
The Debtors tell the Court that cash generated from collections
of accounts receivable probably won't provide sufficient
liquidity to pay postpetition expenses as they become due. It
may be necessary for GMAC to make additional advances of up to
$200,000.
In order to maintain their business operations and to protect
their ability to function under Chapter 11 of the Bankruptcy
Code, it is imperative that the Debtors obtain authority from
this Court to either use cash collateral or obtain debtor-in-
possession financing.
The Debtors have no present alternative borrowing source from
which to secure additional funding to operate their businesses,
and the Debtors have been unable to obtain postpetition
financing in the form of unsecured credit allowable as an
administrative expense or unsecured credit allowable under the
Bankruptcy Code.
In the event that the Court does not authorize to use cash
collateral or obtain postpetition financing, the Debtors believe
they will not be able to maintain their current business
operations. Moreover, without additional credit, the Debtors
will be seriously and irreparably harmed, resulting in
significant losses to both the Debtors' estates and their
creditors.
The Morgan Group is a holding company; its subsidiaries Morgan
Drive Away and TDI manage the delivery of manufactured homes,
trucks, specialized vehicles, and trailers. The Debtors filed
for chapter 11 protection on October 18, 2002. Andrew T. Kight,
Esq., Michael P. O'Neil, Esq., at Sommer Barnard Ackerson PC
represent the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed
$17,278,000 of total assets and $16,625,000 of total debts.
MOUNT SINAI MED.: Fitch to Review Financials to Evaluate Ratings
----------------------------------------------------------------
Mount Sinai Medical Center, FL, whose outstanding bonds are
rated 'BB' with a Negative Rating Outlook by Fitch Ratings, have
reported financial results for the period ending Sept. 30, 2002
(the third quarter) which are on track to meet management's
fiscal 2002 budget. A list of outstanding issues is provided
below.
MSMC had an operating loss of $36.8 million (negative 11.8%),
and a net loss of $30.8 million (negative 11.4%) through the
third quarter of 2002. MSMC's budgeted to lose $32.5 million in
fiscal 2002 for the entire year before a $30 million transfer
from the Mount Sinai Medical Center Foundation (the Foundation)
which is currently not reflected in MSMC's operating margin.
While MSMC's third quarter results indicated an operating loss
near the projected fiscal year end loss of $32.5 million,
management asserts that certain initiatives will have their
greatest impact in the fourth quarter, allowing MSMC to achieve
their stated goals. If MSMC meets its projected goals for fiscal
2002 it will likely avoid a rate covenant violation. MSMC's
unrestricted cash position has improved slightly, and it has no
plans to issue additional debt over the medium term.
MSMC has exceeded Fitch's expectations for achieving its
initiatives related to managed care negotiations and labor
initiatives and has made progress towards improving supply chain
management and physician contracts. Despite this Fitch will wait
to review both the 2002 audited financials (expected in April
2003) and the fiscal year 2003 budget before it re-evaluates
MSMC's credit rating. Though MSMC has hit budget through nine
months, its losses remain substantial, causing Fitch to maintain
its Negative outlook. Further, MSMC's history of inadequate
disclosure and its inability to meet budgeted goals remains a
clear and recent memory, though MSMC's current disclosure
practices under its new management team have included above
average quarterly and annual financial reporting to both Fitch
and bondholders.
MSMC has also begun consolidation of services at its two
campuses. Most noteworthy is the decision to consolidate heart
services at the Mount Sinai Medical Center campus. Fitch views
management's decision to move forward with consolidation
positively as it should create additional cost savings
opportunities for the system despite anticipated strain on
physician relations that is typical with most consolidations.
MSMC is a two campus health care provider offering a wide range
of tertiary services with 979 licensed beds (780 staffed)
located in Miami Beach, FL. MSMC has total operating revenue of
$436 million in 2001.
Outstanding debt:
--$92,125,000 City of Miami Beach Health Facilities
Authority, hospital revenue bonds, series 2001A (Mount Sinai
Medical Center of Florida Project);
--$30,430,000 City of Miami Beach Health Facilities
Authority, hospital revenue bonds, series 2001B (Mount Sinai
Medical Center of Florida Project);
--$70,640,000 City of Miami Beach Health Facilities
Authority, hospital revenue bonds, series 2001C (Mount Sinai
Medical Center of Florida Project);
--$98,000,000 City of Miami Beach Health Facilities
Authority, hospital revenue bonds, series 1998 (Mount Sinai
Medical Center of Florida Project).
NEBO PRODUCTS: Balance Sheet Insolvency Widens to $2.2 Million
--------------------------------------------------------------
NEBO(R) Products (OTC Bulletin Board: NEBO) reported third
quarter results for 2002.
For the quarter, sales declined 11.6% to $878,161 in the current
year period from $993,070 in the third quarter of 2001. The net
loss for the period widened to $1,079,427 for the third quarter
of 2002 as compared to a loss of $309,545 in the prior year
period.
NEBO Products' September 30, 2002 balance sheet shows a working
capital deficit of about $1.7 million, and a total shareholders'
equity deficit of about $2.2 million.
Commenting on the results, R. Scott Holmes, Chief Executive
Officer, said, "These results reflect the efforts of the company
to restructure the balance sheet. We have properly recognized
non-cash expenses related to investor relations and other
consulting services for which warrants or common stock were used
as compensation.
"Some additional warrant and stock issuances will be required,"
continued Mr. Holmes, "to induce our creditors to complete their
partial conversion of debt to equity. We continue to target a $1
million reduction in debt. While the impact on the income
statement will be negative in the fourth quarter, virtually no
cash will be used for the restructuring. We expect to complete
the restructuring in the fourth quarter and then hope to be able
to begin to report dramatically improved results, approaching
profitability in the first quarter of 2003.
"The improvements will be driven not only by the restructuring
of the balance sheet, but also by reductions in operational
spending. We recently reduced our headcount by approximately
25%, including the departure of our CFO, Mont Warren, by mutual
agreement. Paul Larsen has been promoted to the position of
Controller and will serve as our principal accounting officer,"
Mr. Holmes added.
"With the benefit of a strengthened financial condition and
improved results of operations, we are confident that we can
then reduce our financing costs, potentially allowing us to
begin reporting profits before the end of 2003," Mr. Holmes
concluded.
NEBO(R) Products maintains and distributes innovative hardware
(NEBO(R) Tools) and sporting goods (NEBO(R) Sports). NEBO(R)
Products' lines are unique, aggressively merchandised, and well
priced. NEBO(R) Products, based in Draper, UT, sells to over
5,000 retail customers in the U.S. and Canada.
NORTEL: Deploys Optical Ethernet Solutions in Beijing & Qingdao
---------------------------------------------------------------
Nortel Networks (NYSE:NT)(TSX:NT) has deployed Optical
Ethernet solutions that enable the delivery of high-speed
broadband services to Chinese customers in Beijing, capital of
China, and in Qingdao, a coastal city in East China's Shandong
Province.
Capinfo Company Limited, an Internet application service
provider backed by the Beijing Municipal Government, has
installed Nortel Networks Passport 8600 Routing Switches to
provide e-Government, e-Commerce and other Internet services
over a fiber infrastructure.
Nortel Networks also provided Passport 8600 switches to help
China Netcom Qingdao Branch to expand its Internet Protocol wide
area network for delivery of high-performance Internet access
and virtual private local area networks.
"Nortel Networks continues to harness the power of the high-
performance Internet for customers in China," said Yuan-Hao Lin,
acting president, Nortel Networks China. "With deployment of the
two new broadband metro projects, we are helping to bring the
benefits of the Optical Ethernet directly into China's cities
and metro environments, creating a new market framework that
will allow residential and business users to adopt new high-
speed services and applications."
Nortel Networks Passport 8600 is the industry's first carrier-
grade routing switch for service provider metro applications
requiring high performance routing or metropolitan area network
connectivity. Passport 8600 is designed to provide 99.999
percent uptime to network managers, critical in today's emerging
eBusiness environment, where downtime can result in loss of
competitive advantage, customer loyalty and revenues.
Passport 8600 is a key part of Nortel Networks Optical Ethernet
portfolio, which helps service providers drive profitability by
enabling an array of revenue-generating Ethernet-based services
while controlling on-going operational expense. The portfolio
includes solutions for Ethernet over SONET/SDH, DWDM (dense
wavelength division multiplexing) and dark fiber, enabling
service providers to maximize their existing infrastructure.
Nortel Networks is an industry leader and innovator focused on
transforming how the world communicates and exchanges
information. The Company is supplying its service provider and
enterprise customers with communications technology and
infrastructure to enable value-added IP data, voice and
multimedia services spanning Wireless Networks, Wireline
Networks, Enterprise Networks, and Optical Networks. As a global
company, Nortel Networks does business in more than 150
countries. More information about Nortel Networks can be
found on the Web at http://www.nortelnetworks.com
Nortel Networks Corp.'s 7.40% bonds due 2006 (NT06CAR2),
DebtTraders says, are trading at 53 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NT06CAR2for
real-time bond pricing.
OWENS CORNING: Court Approves Redevelopment of Florida Plant
------------------------------------------------------------
Owens Corning and its debtor-affiliates obtained permission from
the Court to execute a postpetition redevelopment agreement with
Jacksonville City and the Jacksonville Economic Development
Commission.
The agreement provides the Debtors with an economic development
grant to be used for the expansion and the addition of
industrial machinery and equipment of the Debtors' roofing
shingles plant in Jacksonville, Florida.
The grant stipulated in the agreement will be provided on an
annual basis for 10 years and will be equal to a percentage of
the incremental increase in municipal and county ad valorem
taxes paid on the personal property at the plant site, up to
$310,000. The agreement also requires the Debtors to pour a
$10,000,000 private capital investment and to create 25 full-
time equivalent jobs as a result of plant improvements. (Owens
Corning Bankruptcy News, Issue No. 40; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
PACIFICARE HEALTH: Offering $100M Convertible Subordinated Notes
----------------------------------------------------------------
PacifiCare Health Systems, Inc., (Nasdaq:PHSY) intends to offer
approximately $100 million of convertible subordinated
debentures for sale in a private placement. The terms of the
offering are expected to include an option exercisable by the
initial purchasers of the debentures for up to an additional $25
million of debentures.
The offering will be made pursuant to an exemption from
registration under the Securities Act of 1933, as amended.
PacifiCare intends to use a portion of the estimated net
proceeds of this offering to permanently repay indebtedness and
deposit cash against outstanding letters of credit under its
senior credit facility and the remainder for general corporate
purposes. It is expected that the debentures, which will be
convertible into shares of PacifiCare's common stock, will be
due in October 2032.
* * *
As previously reported, Fitch Ratings upgraded PacifiCare
Health System, Inc.'s existing bank and senior secured debt
ratings to 'BB' from 'BB-'. Concurrently, Fitch upgraded
PacifiCare's senior unsecured debt rating to 'BB-' from 'B+'.
The Rating Outlook is Stable. The rating action affects
approximately $860 million of debt outstanding.
The rating action reflects the significant improvement in
PacifiCare's capital structure following the successful sale of
$500 million 10.75% senior notes due June 2009, the reduction in
outstanding bank debt, and the extension in the maturity of the
company's remaining bank debt. The sale of the notes settled on
May 21, 2002 at 99.389 to yield proceeds of $497 million.
PACIFICARE HEALTH: Caps 3% Conv. Note Offering at $125 Million
--------------------------------------------------------------
PacifiCare Health Systems Inc., (Nasdaq:PHSY) announced the
pricing of a private placement of $125 million aggregate
principal amount of 3% convertible subordinated debentures due
2032.
PacifiCare has granted an option exercisable by the initial
purchasers of the debentures to purchase up to an additional $25
million aggregate principal amount of the debentures. PacifiCare
expects the offering to close on Nov. 22, 2002. The debentures,
which will be convertible into shares of PacifiCare's common
stock, will be due October 2032.
PacifiCare intends to use a portion of the estimated net
proceeds of this offering to permanently repay indebtedness
under its senior credit facility and the remainder for general
corporate purposes.
PERKINELMER: Moody's Rating Downgrade Anticipated in Refinancing
----------------------------------------------------------------
PerkinElmer, Inc., (NYSE: PKI) commented that Moody's decision
to reduce its credit rating from Baa3 with negative outlook to
Ba2 with stable outlook was anticipated in the refinancing
program announced October 29, including the commitment of up to
$445 million from Merrill Lynch.
"When we made the decision not to sell our Fluid Sciences
business, we understood the potential effect on our credit
rating," said Gregory L. Summe, chairman and CEO of PerkinElmer,
Inc. "We believe retaining Fluid Sciences until the markets
improve is the best path to improve shareholder value over the
long term. We factored the cost implications of a ratings
downgrade into our financing, and this should not affect our
long-term financial strategy."
On October 29, PerkinElmer reported that it had received a
commitment from Merrill Lynch Capital Corporation to provide a
senior secured credit facility of up to $445 million, including
a revolving credit facility of $100 million. The company intends
to use these facilities to repay existing debt, thereby
extending existing shorter-term debt maturities.
As part of Moody's announcement, the credit outlook for
PerkinElmer was improved to stable from negative.
"Our Q3 earnings were on target, supported by substantial
progress made in cash flow and debt reduction," said Summe. "We
continue to further reduce our cost structure across all of our
businesses, including combining our Life Sciences and Analytical
Instruments businesses into a new Life and Analytical Sciences
business unit. Our business is trending positively, and we are
building momentum."
PerkinElmer, Inc., is a global technology leader focused in the
following businesses - Life Sciences, Optoelectronics,
Analytical Instruments, and Fluid Sciences. Combining
operational excellence and technology expertise with an intimate
understanding of our customers' needs, PerkinElmer creates
innovative solutions - backed by unparalleled service and
support - for customers in health sciences, semiconductor,
aerospace, and other markets whose applications demand absolute
precision and speed. The company markets in more than 125
countries, and is a component of the S&P 500 Index.
PLANETRX.COM INC: Enters Into Merger Pact with Mortgage Express
---------------------------------------------------------------
PlanetRx.com, Inc. (OTC: PLRX), a development stage company
which plans to enter the financial services market through a
series of acquisitions, has entered into binding agreement to
acquire Mortgage Express, Inc. through a merger with its wholly
owned subsidiary, Paragon Homefunding, Inc. The stock for stock
transaction is anticipated to close within a matter of weeks,
and is conditioned upon customary closing conditions including
notifying, or obtaining necessary consents from, certain of the
twenty-five states in which Mortgage Express currently operates.
Mortgage Express employs a staff of over 180 loan originators,
processors and related support personnel, and maintains formal
loan funding relationships with more than 350 independent
mortgage brokers. The merger is expected to provide PlanetRx
with a solid operating platform on which the company can build
through future acquisitions in the financial services sector.
"I'm delighted to announce our first acquisition, especially one
as significant as Mortgage Express," said Steve Burleson, Chief
Executive Officer. "We believe our vision of growth through
acquisitions, as well as the opportunity to consolidate common
business functions in a centralized location and compete more
effectively for improved premiums in the secondary mortgage
market, should have a positive impact on long-term shareholder
value."
"After exploring a range of opportunities to take Mortgage
Express to the next level, I'm extremely happy to be joining a
team that shares our goals and vision," said Philip Lagori,
President of Mortgage Express. "The acquisition strategy is
perfect for our industry, and a public equity deal like this
provides private business owners with great upside potential. It
will also allow them to focus their efforts almost entirely on
loan production, and will make the new combined venture much
more competitive in negotiating spreads when selling
consolidated loans in the secondary market."
Mortgage Express, Inc. -- http://www.webmei.com-- headquartered
in Westmont, Illinois, has been originating residential
mortgages since 1998.
PlanetRx.com, Inc. -- http://www.planetrx.com-- formerly a
leading Internet healthcare destination that recently merged
with Paragon Homefunding, Inc., a development stage company,
plans to enter the financial services market through a series of
acquisitions.
* * *
As previously disclosed, PlanetRx closed its online health care
store in March 2001 and shortly thereafter began preparing a
plan of liquidation and dissolution. In an effort to realize as
much value as possible for its stockholders, PlanetRx has
explored and evaluated various strategic options, including a
possible merger or sale, while taking steps to monetize its
assets and settle its liabilities in a manner that is consistent
with the consummation of either a merger or sale or its
liquidation and dissolution. These steps have included the sale
of assets such as equipment, inventory, facilities, domain names
and other intellectual property; the assignment or negotiated
cancellation of leases, secured obligations and other contracts;
the payment or settlement of other liabilities and obligations;
and the reduction of personnel to only three key managers. This
process is substantially complete.
As of December 31, 2001, PlanetRx's total assets and total
liabilities had been reduced to $477,000 and $224,000,
respectively. Pending the merger with Paragon, PlanetRx intends
to continue to monetize its assets and, to the extent possible,
use the proceeds from such sales and available cash to pay its
remaining liabilities and obligations. The few assets remaining
to be sold consist primarily of internet domain names that are
listed for sale on the http://www.AllNetCommerce.comWeb site.
PRESIDENTIAL LIFE: S&P Slashes Ratings to B+ Following Q3 Losses
----------------------------------------------------------------
Standard & Poor's Ratings Services removed from CreditWatch its
counterparty credit and senior debt ratings on Presidential Life
Corp. and lowered them to 'B+' from 'BBB-' following the sharp
rise in the company's realized losses in the third quarter of
2002.
Standard & Poor's also said that it removed from CreditWatch its
counterparty credit and financial strength ratings on
Presidential Life Insurance Co., and lowered them to 'BB+' from
'A-'.
The outlook on both these companies is negative.
"The rise in realized losses has resulted in a substantive
decline in statutory capital and capitalization at PLICN, a
wholly owned subsidiary that is its dominant source of
earnings," explained Standard & Poor's credit analyst Alan
Koerber. "Mitigating factors include the company's continued
strong operating income before taxes and realized gains and
losses and debt as a percent of capitalization at 27%." Long-
term debt consists entirely of $100 million in senior notes due
2008.
Even though Standard & Poor's believed that unfavorable market
conditions might have resulted in higher levels of both
investment and noninvestment-grade defaults in the PLICN's
fixed-income portfolio, the company's capital adequacy ratio was
expected to remain at more than 125%. The actual decline was
higher than expected, as demonstrated by a Standard & Poor's pro
forma capital adequacy ratio of less than 75% as of September
2002 (down from 164.3% at year-end 2001). Although the capital
adequacy ratio has fallen below levels considered secure,
Standard & Poor's has estimated PLICN's NAIC risk-based capital
ratio was 167% as of September 2002.
The company is expected to seek a means of restoring its eroded
statutory capitalization. Although the magnitude of the write-
downs in its bond portfolio is expected to lessen going forward,
Standard & Poor's believes that sizeable uncertainty remains.
Sales momentum in 2002 is expected to slow from the record
growth rates that have placed PLICN as the 55th largest annuity
writer in the U.S. on an unconsolidated basis.
PRIMUS TELECOMMS: Canadian Unit Partners with Future Shop
---------------------------------------------------------
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 with a net capital deficit of about $183
million (at Sept. 30, 2002), announced a partnership with Future
Shop, Canada's largest, fastest-growing consumer electronics
retailer. Future Shop is now promoting PRIMUS Canada's new high
speed Internet and dial-up Internet access service offerings to
consumers. The high speed Internet service is available
immediately in more than 60 stores in Ontario and Quebec.
"This partnership represents an excellent opportunity to promote
our new Internet service offerings through the many retail
locations Future Shop has across Canada," said Andrew Day,
Senior Vice President, Residential Services, PRIMUS Canada.
"There are a tremendous number of Canadians who go to Future
Shop to purchase Internet services, computers and electronics
products, and we are very excited to have a presence in their
stores."
"At Future Shop, we are committed to ensuring that our customers
get the most out of the technology they buy," said Rick Lotman,
Senior Vice President, Merchandising and Marketing, Future Shop.
"The addition of PRIMUS Canada, one of Canada's leading Internet
service providers, to our roster of products and services is
just one more way that we deliver on that promise."
With more than 100 stores across the country and the nation's
premier web store, at futureshop.ca, Future Shop is Canada's
largest, fastest-growing national retailer and e-tailer of
consumer electronics.
Future Shop and its 8,500 associates are committed to helping
Canadians get MORE out of the technology they buy and offer the
latest digital products along with a wide selection of brand-
named televisions, computers, audio, entertainment software and
hardware and appliances.
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 - news).
PRIMUS Canada news and information are available at the
Company's Web site at http://www.primustel.ca
PROVANT INC: Preparing Prospectus for Proposed Share Issuance
-------------------------------------------------------------
Provant, Inc., has prepared a prospectus relating to 5,750,799
shares of common stock that it intends to issue to the former
stockholders of Strategic Interactive, Inc., under the terms of
the Agreement and Plan of Merger dated October 26, 1998, as
amended, relating to Provant's acquisition of Strategic
Interactive, Inc.
Provant's common stock is traded on the OTC Bulletin Board under
the symbol "POVT.OB". The last trading price for the common
stock on November 13, 2002 was $0.12. Neither the Securities
and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if the
prospectus is truthful or complete.
As a leading provider of performance improvement training
services and products, Provant helps its clients maximize their
effectiveness and profitability by improving the performance of
their people. With over 1,500 corporate and government clients,
the Company offers blended solutions combining web-based and
instructor-led offerings that produce measurable results by
strengthening the performance and productivity of both
individual employees and organizations as a whole.
For more information visit http://www.provant.com
* * *
As reported in Troubled Company Reporter's November 7, 2002
edition, Provant continues to be in default under its credit
facility agreement, and "believe[s] [the Company is] close to
finalizing the terms of an extension to it that would
end the current default."
The terms of this extension will, among other things, extend the
due date of the facility to April 15, 2003, subject to the
Company's continued obligation to take actions that would result
in the early repayment of our indebtedness to the banks. The
Company continues to pursue various strategic alternatives,
which include the sale of Provant or various of its assets.
RESEARCH INC: Court to Consider Proposed Plan on Wednesday
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Minnesota approved
Research Incorporated's Disclosure Statement, finding that the
document contains adequate information to explain the Plan and
allow creditors to make informed decisions about whether to vote
to accept or reject the restructuring proposal.
A hearing to consider confirming the Debtor's Chapter 11 plan is
scheduled on November 27, 2002 at 10:30 a.m., in Courtroom 8
West at U.S. Courthouse, 300 South Fourth Street, Minneapolis,
MN 55415. All written objections to confirmation of the plan
must be filed with the Court by November 22, 2002.
Research Incorporated filed for chapter 11 protection on January
24, 2002. Michael L. Meyer, Esq., at Ravich Meyer Kirkman &
Mcgrath represents the Debtor in its restructuring efforts.
SIERRA PACIFIC: Says Q3 Results Show Progress in Turnaround Plan
----------------------------------------------------------------
Sierra Pacific Resources (NYSE: SRP) reported consolidated third
quarter 2002 net income of $79.4 million compared to net income
of $80.4 million for the same quarter in 2001.
"Our third quarter results indicate we are making progress in
efforts to restore the company's financial health," said Walt
Higgins, chairman, president and chief executive officer of
Sierra Pacific Resources. "Importantly, we have completed
refinancing the credit facilities at both utilities and have
paid continuing power suppliers amounts owed them under
contract."
Quarterly earnings were affected by customer growth and above-
normal temperatures, particularly in July. While retail revenues
rose, total quarterly revenues for the company's utility
subsidiaries, Nevada Power Company and Sierra Pacific Power Co.,
declined due to lower wholesale prices and sales volumes.
For the third quarter, excluding equity in earnings of Sierra
Pacific Resources, Nevada Power recorded earnings of $79.3
million, compared with net income of $78.8 million a year
earlier. Sierra Pacific Power reported quarterly earnings of
$12.6 million for the third quarter, compared to third quarter
2001 earnings of $11.6 million.
For the first nine months of 2002, Sierra Pacific Resources had
a net loss of $268 million, compared with net earnings of $51
million for the comparable period in 2001. The primary cause for
the 2002 loss was the disallowance in March of $434.1 million in
deferred energy costs for Nevada Power Company and the
disallowance in May of $53.1 million of deferred energy costs
for Sierra Pacific Power.
During the third quarter of 2002, retail electric revenues
increased at Nevada Power compared with a year earlier because
of recovery of deferred energy costs in 2002 and an increase in
cooling degree-days resulting in higher sales. Nevada Power
commercial and industrial revenues were higher for both the
three and nine-month periods due to customer growth and recovery
of deferred energy costs.
Retail electric revenues for Sierra Pacific Power were higher
for the third quarter of 2002, compared with the same period a
year earlier due to recovery of deferred energy costs, effective
June 1, 2002, and warmer-than- normal weather in July.
Headquartered in Nevada, Sierra Pacific Resources is a holding
company whose principal subsidiaries are Nevada Power, the
electric utility for most of southern Nevada, and Sierra Pacific
Power, the electric utility for most of northern Nevada and the
Lake Tahoe area of California. Sierra Pacific Power also
distributes natural gas in the Reno-Sparks area of northern
Nevada. A third subsidiary, the Tuscarora Gas Pipeline Company,
owns a 50 percent interest in an interstate natural gas
transmission partnership.
* * *
As reported in Troubled Company Reporter's October 14, 2002
edition, Standard & Poor's Ratings Services reaffirmed its
single-'B'-plus corporate credit ratings on Sierra Pacific
Resources and its utility subsidiaries Nevada Power Co., and
Sierra Pacific Power Co. Standard & Poor's also affirmed the
double-'B' ratings on the senior secured debt at the two
utilities. All ratings remain on CreditWatch with negative
implications.
SPORTS ARENAS: Independent Auditors Air Going Concern Doubt
-----------------------------------------------------------
Sports Arenas Inc., operates principally in four business
segments: bowling centers, commercial real estate rental, real
estate development, and golf club shaft manufacturing. Other
revenues, which are not part of an identified segment, consist
of property management and development fees (earned from both a
property 50 percent owned by the Company and a property in which
the Company has no ownership) and commercial brokerage.
The Company has suffered recurring losses, has a working capital
deficiency, and is forecasting negative cash flows for the next
twelve months. These items raise substantial doubt about the
Company's ability to continue as a going concern. The Company's
ability to continue as a going concern is dependent on either
refinancing or selling certain real estate assets, obtaining
additional investors in its subsidiary, Penley Sports, or
increases in the sales volume of Penley Sports.
The independent auditors' report, dated September 23, 2002,
included in Sports Arenas' June 30, 2002, Annual Report on Form
10-K contained the following explanatory paragraph:
"The accompanying consolidated financial statements have
been prepared assuming that the Company will continue as a
going concern. As discussed in Note 14 to the consolidated
financial statements, the Company has suffered recurring
losses, has a working capital deficiency and shareholders'
deficit, and is forecasting negative cash flows from
operating activities for the next twelve months. These
items raise substantial doubt about the Company's ability
to continue as a going concern."
Management estimates negative cash flow of $500,000 to $700,000
in total for the remaining three quarters of the year ending
June 30, 2003 from operating activities after deducting capital
expenditures and principal payments on notes payable and adding
estimated distributions from UCV, LP.
The short-term oan from the Company's partner in UCV is due on
demand. The Company is exploring selling its partner a portion
of the Company's interest in UCV in satisfaction of the
remaining loan obligations. At this point management is unable
to assess the likelihood a transaction will be consummated.
Vail Ranch Limited Partners is negotiating the sale of its
partnership interest in Temecula Creek Partners to its other
partner in Temecula Creek. The Company estimates that its share
of the proceeds from this sale to be approximately $550,0000 to
$650,000. The Company is obligated to pay approximately one-half
of these proceeds to its minority partner.
Management expects continuing cash flow deficits until Penley
Sports develops sufficient sales volume to become profitable.
Although, there can be no assurances that Penley Sports will
ever achieve profitable operations, management estimates that a
combination of continued increases in the sales of Penley Sports
and reduction of its operating costs will result in Penley
Sports and the Company achieving a breakeven level of operations
at the end of the next two quarters.
Management is currently evaluating other sources of working
capital including the sale of assets or obtaining additional
investors in Penley Sports. Management has not assessed the
likelihood of any other sources of long-term or short-term
liquidity. If the Company is not successful in obtaining other
sources of working capital this could have a material adverse
effect on the Company's ability to continue as a going concern.
However, management believes it will be able to meet its
financial obligations for the next twelve months.
The Company has a working capital deficit of $929,848 at
September 30, 2002, which is a $244,552 increase from the
working capital deficit of $685,296 at June 30, 2002. The
increase in working capital deficit is primarily attributable to
the cash used by operating activities for the three months ended
September 30, 2002.
SYNERGY TECH: Hiring Todtman Nachamie as Bankruptcy Attorneys
-------------------------------------------------------------
Synergy Technologies Corporation and its debtor-affiliate,
Carbon Resources Limited, ask the U.S. Bankruptcy Court for the
Southern District of New York for permission to employ Todtman,
Nachamie, Spizz & Johns, P.C., as their attorneys.
The Debtors tell the Court that Todtman Nachamie will provide
expertise with respect to bankruptcy related issues and will act
as general bankruptcy counsel for the Debtors.
The principal attorneys designated to represent the Debtors and
their current standard hourly rates are:
Barton Nachamie Partner $440 per hour
Arthur Goldstein Partner $390 per hour
Jill L. Makower Associate $285 per hour
Sharon Eisenberg Paralegal $125 per hour
Barbara Gonsalves Paralegal $125 per hour
The Debtors expect Paralegal to:
(a) provide legal advice with respect to the Debtors' powers
and duties as debtors-in-possession in the operation of
their businesses and the management of their properties;
(b) take necessary action to protect and preserve the Debtors'
estates including the prosecution of actions on behalf of
the Debtors and the defense of actions commenced against
the Debtors;
(c) prepare, present and respond to, on behalf of the Debtors,
as Debtors-in-possession, necessary applications, motions,
answers, orders, report and other legal papers in
connection with the administration of their estates in
this case;
(d) negotiate and prepare, on the Debtors' behalf, plan(s) of
reorganization, disclosure statement(s),and related
agreements and/or documents, and take any necessary action
on behalf of the Debtors to obtain confirmation of such
plan;
(e) appear in Court and to protect the interests of the
Debtors before the Court; and
(f) perform all other legal services for the Debtors-in-
Possession which may be necessary and proper in this case.
Synergy Technologies Corporation, a public corporation engaged
in the development and licensing of technologies related to the
oil and gas industry, filed for chapter 11 protection on
November 13, 2002. When the Company filed for protection from
its creditors, it listed $8,735,359 in total assets and
$3,158,794 in total debts.
TECSTAR INC: Plan Filing Exclusivity Extended Until December 4
--------------------------------------------------------------
By order of the U.S. Bankruptcy Court for the District of
Delaware, Tecstar, Inc., and its debtor-affiliates obtained an
extension of their exclusive periods. The Court gives the
Debtors, until December 4, 2002, the exclusive right to file
their plan of reorganization, and until February 3, 2003, to
solicit acceptances of that Plan from creditors.
Tecstar, Inc., n/k/a Don Julian, Inc., manufactures high-
efficiency solar cells that are primarily used in the
construction of spacecraft and satellite. The Company filed for
chapter 11 protection on February 07, 2002. Tobey M. Daluz,
Esq., at Reed Smith LLP and Jeffrey M. Reisner at Irell &
Manella LLP represent the Debtors in their restructuring
efforts. When the company filed for protection from its
creditors, it listed assets of over $10 million and debts of
over $50 million.
TENDER LOVING: Taps Klestadt & Winters as Bankruptcy Counsel
------------------------------------------------------------
Tender Loving Care Health Services seeks permission from the
U.S. Bankruptcy Court for the Eastern District of New York to
employ and retain Klestadt & Winters, LLP as its attorneys, nunc
pro tunc to November 8, 2002
The Debtors anticipate Klestadt & Winters will:
(a) perform all necessary services as the Debtor's counsel,
including, without limitation, providing the Debtor with
advice, representing the Debtor, and preparing all
necessary documents on behalf of the Debtor;
(b) take all necessary actions to protect and preserve the
Debtor's estate during the period of its chapter 11 case,
including the prosecution of actions by the Debtor, the
defense of any actions commenced against the Debtor,
negotiations concerning all litigation in which the Debtor
is involved and objecting to claims filed against the
estate;
(c) prepare on behalf of the Debtor, as debtor in possession,
all necessary motions, applications, answers, orders,
reports and papers in connection with the administration
of this chapter 11 case;
(d) counsel the Debtor with regard to its rights and
obligations as a debtor in possession; and
(e) perform all other necessary legal services.
The Debtor agree to pay the firm's current standard hourly rates
for legal services performed by its attorneys:
Tracy L. Klestadt $395 per hour
Ian R. Winters $300 per hour
Wayne D. Holly $290 per hour
Stacy Bush $275 per hour
John E. Jureller $275 per hour
Sean C. Southard $250 per hour
Patrick Orr $175 per hour
paralegal $125 per hour
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.
TYCO INT'L: Names D. Robinson to Head Plastics & Adhesives Group
----------------------------------------------------------------
Tyco International Ltd., (NYSE: TYC, BSX: TYC, LSE: TYI)
announced that David E. Robinson has been named President of the
Company's Plastics and Adhesives Group. Mr. Robinson, 43, was
most recently President of Motorola Broadband Communications
Sector, where he ran the cable television industry's number one
electronics supplier.
Tyco Plastics and Adhesives is a leading manufacturer and maker
of plastic film, molded products, adhesives and laminates,
serving clients in the retail, industrial, automotive,
agricultural, housing and food packaging markets.
Tyco Chairman and Chief Executive Officer Ed Breen said: "This
appointment signals a renewed focus on the operations of the
Plastics business. I have worked closely with Dave Robinson for
over 15 years, and I know that he is a proven leader with an
outstanding track record. He has a rare combination of
strategic vision and practical day-to-day execution skill that
will enable him to drive operational excellence throughout the
business. Here at Tyco, we're building a world-class team of
new and existing executives and Dave will be a very important
part of that effort."
Mr. Robinson said: "The Plastics Group consists of solid
businesses with great products and impressive market positions.
Looking ahead, we will focus on enhancing our competitive
position, integrating operations, developing new products and
improving earnings and cash flow. These businesses have
significant opportunities for growth and I look forward to
working with the talented people in the Plastics Group to
achieve outstanding results throughout the organization."
Mr. Robinson has over 17 years of experience with Motorola
(formerly General Instrument.) In addition to his position as
Executive Vice President and President of its Broadband
Communications Sector, Mr. Robinson also served as Senior Vice
President and General Manager, Digital Network Systems;
Director, Cableoptics, Wireless and Headend; Product Manager;
and Financial Analyst throughout his career at General
Instrument. Mr. Robinson graduated with a B.A. from Bates
College and received his M.B.A. in general management from Amos
Tuck School, Dartmouth College.
Tyco International Ltd., is a diversified manufacturing and
service company. Tyco is the world's largest manufacturer and
servicer of electrical and electronic components; the world's
largest designer, manufacturer, installer and servicer of
undersea telecommunications systems; the world's largest
manufacturer, installer and provider of fire protection systems
and electronic security services and the world's largest
manufacturer of specialty valves. Tyco also holds strong
leadership positions in medical device products, and plastics
and adhesives. Tyco operates in more than 100 countries and had
fiscal 2002 revenues from continuing operations of approximately
$36 billion.
TXU EUROPE: Fitch Drops Sr. Unsecured & S-T Debt Ratings to D
-------------------------------------------------------------
Fitch Ratings has downgraded the senior unsecured and short-term
debt ratings of TXU Europe Limited to 'D/D' from 'C/C'. The
rating of 'D' reflects the default by subsidiaries of TXU Europe
Ltd., upon interest payment payments and the guarantee of
interest payments. The default relates expiry of a 30-day grace
period on interest payments not met for a $200 million bond
issued by Energy Group Overseas BV and guaranteed by The Energy
Group Ltd.. Both of these entities are owned by TXU Europe Ltd.,
and default under these obligations cross-defaults to the
group's remaining capital markets debt.
The ratings also reflect Tuesday's decision by TXE to place
several of its units into temporary administration. This
decision affects TXU Europe Ltd., The Energy Group Ltd., TXU
Europe Group plc, TXU (UK) Holdings Ltd., TXU Acquisitions Ltd.
and TXU Europe Energy Trading Ltd. Finally, the rating reflects
the low estimated recovery on financial indebtedness - a 'D'
rating indicates that Fitch's expectation for ultimate recovery
for financial creditors of TXU Europe Ltd., lies below 50%. The
'DD' and 'DDD' rating categories would reflect increased
expectations of recovery of '50-90%' and '90%' respectively.
In summary, Fitch believes that:
--financial creditors at the TXU Europe Ltd. level are
likely to achieve a recovery of below 50% in aggregate;
--any financial creditors to TXU Europe Group plc (which
Fitch believes is a much smaller class) may potentially
receive recovery above this level;
--recovery for trade creditors at the TXUEET level will be a
function of the eventual extent of trade liabilities
established, and whether or not individual liabilities
have the benefit of a guarantee from TXU Europe Group plc.
TXUEET trade liabilities with no guarantee will likely achieve a
level of recovery significantly below 50%; those with a
guarantee may potentially achieve a recovery of 50% or above.
The central dilemma in current considerations revolves around
the following interplay:
Fitch believes that TXU Europe Group plc, an intermediate
holding company below TXU Europe Ltd., contains virtually all
residual value within the group, both in terms of the receipts
from a recent asset disposal (GBP1.37 billion in cash), and in
terms of the ownership of remaining valuable assets which may
yet be sold (up to GBP740 million on Fitch's estimates). Fitch
understands that TXU Europe Group plc also acts as guarantor for
some of the trading exposure of TXU Europe Energy Trading. The
remaining trading business is, at the same time, the most
proximate drain on funds and, as a result of the existence of
the guarantees from TXU Europe Group plc, the source of the
greatest subordination of existing financial creditors. The
entity with greatest positive value -- TXU Europe Group plc --
is thus heavily bound to the entity with greatest negative value
-- TXUEET.
UNITEDGLOBALCOM: Inks Pact for European Unit's Recapitalization
---------------------------------------------------------------
UnitedGlobalCom, Inc., (Nasdaq: UCOMA) announced its operating
and financial results for the quarter ended September 30, 2002.
UGC's significant and consolidated operating subsidiaries
include United Pan-Europe Communications N.V., a leading pan-
European broadband communications company; and VTR GlobalCom
S.A., the largest broadband communications provider in Chile.
Results of Austar United Communications, a leading pay-TV
provider in Australia and New Zealand, which is no longer
consolidated, are also presented.
Third Quarter Highlights
-- Consolidated RGUs at September 30, 2002 were 8.7
million, an 11% decrease from September 30, 2001. The decrease
was due to the deconsolidation of Austar and disposal of UPC's
Poland DTH business (Poland DTH) during the fourth quarter of
2001, as well as the deconsolidation of UPC Germany effective
August 1, 2002. Excluding Austar, Poland DTH and UPC Germany
subscribers for the prior period, consolidated RGUs increased
4.7% or 393,000.
-- Consolidated video subscribers at September 30, 2002
were 7.3 million, a 14% decrease from September 30, 2001. The
decrease was due to the deconsolidation of Austar and UPC
Germany, and disposal of Poland DTH. Excluding the results of
Austar, Poland DTH and UPC Germany for the prior period
consolidated video subscribers increased 2.2% or 159,000.
-- Consolidated voice and Internet subscribers at September
30, 2002 were 1.4 million, a 12% increase from September 30,
2001. Adjusting for the deconsolidation of Austar and UPC
Germany for the prior period, voice and data subscribers
increased by 20% or 234,000.
-- Consolidated revenue for the three months ended
September 30, 2002 was $385 million, a 1.8% decrease when
compared to the same period in 2001. The decrease was due
primarily to various disposed, deconsolidated and discontinued
operations at UPC, as well as the deconsolidation of Austar.
Excluding those results in full for the prior period,
consolidated revenue increased 25%.
-- Consolidated triple play revenues(3) for the three
months ended September 30, 2002 were $339 million, a 20%
increase compared to $282 million for the three months ended
September 30, 2001.
-- Consolidated adjusted EBITDA for the three months ended
September 30, 2002 was a record positive $84.8 million, a 303%
or $127 million improvement from negative $41.8 million for the
same period in 2001. Adjusting for the deconsolidation of Austar
and UPC Germany, and disposal of Poland DTH, adjusted EBITDA
from continuing and consolidated operations was $82.7 million, a
325% or $119 million improvement compared to negative $36.7
million for the same period in 2001.
1. In July, UPC cancelled a Euro 359 million obligation due
from UPC Germany to its sole partner of UPC Germany by
transferring 22.3% of UPC Germany to its partner. Since
UPC now owns 28.7% of UPC Germany, UPC Germany was
deconsolidated effective August 1, 2002.
2. Video subscribers consist of analog cable, digital cable
and DTH subscribers.
3. Triple play revenues represent the sum of analog cable,
DTH, digital, voice and Internet revenues.
4. Adjusted EBITDA represents net operating earnings before
depreciation, amortization, cash and non-cash stock-
based compensation charges, including retention bonuses,
and impairment and restructuring charges. Please refer
to the reconciliation of Adjusted EBITDA with Operating
Loss, as well as a more detailed definition of Adjusted
EBITDA, summarized below. Adjusted EBITDA is not a GAAP
measure.
Recent Events
Definitive Agreements Signed for UPC Restructuring. On September
30, 2002, UGC announced that it had entered into definitive
agreements with its subsidiary UPC and an ad hoc committee of
UPC bondholders relating to the recapitalization of EUR 5.2
billion of UPC consolidated debt.
-- Recapitalization will eliminate EUR 5.2 billion (or 65%)
of UPC's outstanding consolidated debt and preference shares.
-- Terms of the Recapitalization imply a EUR 5.2 billion
enterprise value and EUR 1.9 billion equity value for UPC post-
recapitalization.
-- UGC will increase its controlling stake in UPC from 53%
to approximately 66% pro forma for the recapitalization.
-- UGC to underwrite up to EUR 100 million of additional
equity funding to UPC.
-- In addition:
-- Banks agree to amend the terms of UPC's bank debt
facility creating greater operating headroom and
covenant flexibility.
-- Upon completion of the Recapitalization, UPC is expected
to be fully-funded through to positive free cash flow.
-- The parties are working towards completion of the
Recapitalization by March 31, 2003.
Management Comments
Gene Schneider, Chairman and CEO of UGC, said, "I am very
pleased with the results we reported today. Over the last 12
months, we have been focused on two primary things:
recapitalizing our balance sheets and driving profitable
customer growth in our core operations. There is good news on
both fronts today. The transaction among UGC, UPC and a
committee of UPC bondholders to exchange EUR 5.2 billion of debt
into equity is on track and is expected to close in the first
quarter of next year. And all of our key subsidiaries delivered
record revenue and EBITDA in the third quarter. The turn around
in cash flow year-on-year has been substantial and bodes well
for 2003."
Mike Fries, President and COO of UGC, added, "All of our key
measures of operating performance came in strong this past
quarter. Sequential net RGU additions were 62,700 and we have
seen a significant pick-up in customer growth with the arrival
of the fall selling season. Through the first nine months of
2002, we've added over 236,200 subscribers. Meanwhile, revenue
from continued operations was up 25% over last year and
consolidated EBITDA was $85 million, a substantial turn around
from the $42 million loss last year. In fact, this is the eighth
consecutive quarter of strong EBITDA improvement, driven
primarily by UPC and the company's focus on operational
efficiencies in its core triple play business and cost
containment in its media and CLEC divisions. Our outlook for the
remainder of 2002 is generally in-line with recently disclosed
figures in UPC's 8-k filing. Including UGC's other operations,
we're anticipating fiscal year-end 2002 consolidated revenue,
EBITDA and capital expenditures of $1.5 billion, $295 million
and $400 million, respectively. These compare to fiscal year-end
2001 results from continuing and consolidated operations of $1.3
billion, a loss of $168 million and $950 million. This
operational turn-around, together with the anticipated reduction
in our indebtedness, create a stable platform for continued
organic growth in our broadband businesses."
Revenue
UGC's consolidated revenue for the third quarter was $385
million, a decrease of 1.8% from the same period last year. The
decrease was due primarily to various disposed, deconsolidated
and discontinued operations at UPC (detailed below), as well as
the deconsolidation of Austar in the fourth quarter of 2001.
Excluding those results in full for the quarter ended September
30, 2001, revenues increased 25%.
Adjusted EBITDA
UGC's consolidated Adjusted EBITDA for the third quarter was
positive $84.8 million, a 303%, or $127 million, improvement
from the same period last year. UPC and VTR demonstrated a
substantial improvement in adjusted EBITDA on a year-over-year
basis.
United Pan-Europe Communications N.V.
UPC (OTC Bulletin Board: UPCOY) is a leading pan-European
broadband communications company offering cable television,
telephony and high-speed Internet access services in European
countries and serving, on a consolidated basis, approximately
6.8 million video subscribers, 472,400 voice subscribers and
638,700 Internet subscribers.
Third Quarter Highlights
-- Consolidated video subscribers at September 30, 2002
were 6.8 million, a 10% decrease from 7.6 million at September
30, 2001. The decrease was due to the disposal of Poland DTH and
deconsolidation of UPC Germany. Excluding the results of Poland
DTH and UPC Germany in full for the prior periods, video
subscribers increased 2.0%.
-- Consolidated voice subscribers, including UPC's
broadband cable-phone operations and its traditional voice
network in Hungary (excluding Priority Telecom), at September
30, 2002 were 464,500, a 4.3% increase from 445,500 at September
30, 2001.
-- Consolidated chello broadband subscribers plus third-
party ISP subscribers reached 638,700 at September 30, 2002
(including 11,700 third-party ISP subscribers), an increase of
25% from 509,200 at September 30, 2001.
-- Average revenue per RGU per month ("ARPU") increased
6.0% to EUR 13.03 for the quarter ended September 30, 2002
compared to EUR 12.29 for the same period last year.
-- Consolidated revenue decreased 0.5% to EUR 341 million
(US$335million) for the three months ended September 30, 2002
compared to EUR 342 million (US$305 million) for the same period
last year. The decrease was due primarily to certain disposed,
discontinued and deconsolidated businesses as previously
mentioned. Excluding those results, consolidated revenue
increased 15%.
-- Consolidated triple play revenue increased 9.8% to EUR
295 million (US$290 million) for the three months ended
September 30, 2002 compared to EUR 269 million (US$239 million)
for the same period last year.
-- Consolidated Adjusted EBITDA improved 312% to EUR 78.1
million (US$76.8 million) for the three months ended September
30, 2002, compared to negative EUR 36.8 million (US$32.8
million) for the same period last year.
-- Consolidated triple play Adjusted EBITDA increased 86%
to EUR 85.3 million (US$84.7 million) for the three months ended
September 30, 2002 from EUR $45.8 million (US$40.8 million) for
the same period last year.
United Latin America / VTR Globalcom S.A.
United Latin America (ULA), in aggregate, had approximately 2.6
million homes passed, 1.6 million two-way homes passed, 586,100
video subscribers, 217,900 voice subscribers and 65,200 high-
speed Internet subscribers at September 30, 2002. VTR, ULA's
wholly-owned subsidiary in Chile, represents approximately 85%
of the aggregate RGUs in Latin America.
Third Quarter Highlights
-- VTR's video subscribers at September 30, 2002 were
462,800, an increase of 4.0% from 445,100 at September 30, 2001.
VTR's video ARPU for the three months ended September 30, 2002
increased 7.6% to CP 14,157 (US$19.99) from CP 13,158 (US$19.63)
for the same period last year.
-- VTR's voice subscribers at September 30, 2002 were
217,900, a 26% increase from 173,000 at September 30, 2001.
Lines in service at September 30, 2002 were 246,200, a 27%
increase from 193,500 at September 30, 2001. This represents a
26% penetration rate based on two-way homes serviceable compared
to 23% as of September 30, 2001. VTR's voice ARPU for the three
months ended September 30, 2002 decreased 1.7% to CP 16,045
(US$22.67) compared to CP 16,316 (US$24.36) for the same period
last year.
-- VTR's Internet subscribers at September 30, 2002 were
59,100 a 177% increase from 21,300 at September 30, 2001. The
increase was due to continued strong demand for VTR's 300Kbps
Broadband product as well as its new 64Kbps "Broadband Light"
service aimed at converting current dial-up users. VTR's
Internet ARPU for the three months ended September 30, 2002
decreased 25% to CP 14,513 (US$20.50) from CP 19,378 (US$28.91)
for the same period last year. The decrease relates primarily to
higher commercial discounts to maintain VTR's first-mover
advantage in an expanding and competitive market.
-- VTR's consolidated revenue for the quarter ended
September 30, 2002 increased 21% to CP 33,407 million (US$47
million) from CP 27,645 million (US$41.2 million) for the same
period in 2001 on a local currency basis.
-- VTR's Adjusted EBITDA for the quarter ended September
30, 2002 increased 51% to CP 8,034 million (US$11.4 million)
from CP 5,316 million (US$7.9 million) for the same period in
2001 on a local currency basis.
ULA / VTR Recent Events
-- Accelerating Internet subscriber growth: Strong
residential demand for high speed Internet resulted in a 37%
increase in Internet customers on a sequential basis from June
30, 2002 to 59,100 subscribers at September 30, 2002. VTR
remains the market leader with a 56% share in residential
broadband due to its first mover advantage and greater coverage
versus ADSL.
-- Strong growth in telephony: Voice lines in service
increased 5% in the third quarter and 19% year-to-date, totaling
246,200 lines. VTR remains the second largest fixed phone
provider with its market share increasing to 8%.
-- Video customer gains despite economy: Video customers
grew to 462,800, or 3% since December 31, 2001, in spite of a
slow economy and 9.7% unemployment. Bundling, driven mainly by
fast growing Internet and voice services, boosts video growth
and thereby has positioned VTR as the nationwide CATV market
leader with a 65% market share.
-- Bundling rollout: As of September 2002, Triple-Play
subscribers were 45,500, a 168% increase for the first nine
months of 2002. As of September 30, 2002 bundled RGUs
represented 36% of VTR's total RGUs within VTR's Triple-Play
footprint.
Austar United Communications Ltd.
Austar (ASX: AUN) is a leading broadband communications provider
of video, voice and Internet services in Australia and New
Zealand. At September 30, 2002, Austar had, in aggregate, over
2.2 million homes passed, 441,600 video subscribers, 244,200
voice subscribers and 187,600 Internet subscribers.
Third Quarter Highlights
-- Digital DTH subscribers in Australia were 371,000 at
September 30, 2002, a decrease of 7,300, or 1.9% from 378,300 at
September 30, 2001.
-- Revenue for the three months ended September 30, 2002
was A$80.5 million (US$44.0 million), a decrease of 6.9% from
A$86.5 million (US$44.3 million) for the same period last year
on a local currency basis.
-- Adjusted EBITDA was positive A$7.9 million (US$4.3
million), an increase of 139% compared to negative A$20.3
million (US$10.4 million) for the same period last year.
-- XYZ Entertainment, Austar's 50%-owned programming
venture in Australia, reported total subscribers of 7,175,100 at
September 30, 2002, a 1.4% increase compared to the same period
in the prior year. Revenue for the period ended September 30,
2002 was A$18.9 million (US$10.3 million), an increase of 3.9%
from A$18.2 million (US$9.3 million) for the same period last
year.
Austar Recent Events
-- Austar welcomes ACCC decision: Austar United
Communications, the leading regional subscription television
provider, welcomes the ACCC's decision today in relation to the
Foxtel-Optus content sharing arrangement. Key benefits for
AUSTAR include:
-- AUSTAR is guaranteed access to new services that Foxtel
may acquire in the future, including new interactive and
near video on demand services. This new content will
supplement AUSTAR's existing broad channel line up,
which includes all premium subscription television
programming.
-- AUSTAR's joint venture programming business, XYZ
Entertainment, will generate additional revenue by on-
selling programming to Optus and other third parties.
-- AUSTAR will migrate from the B3 satellite to the new C1
satellite to be launched next year, sharing Foxtel's
transponders. This will see AUSTAR's coverage extended
to more than 200,000 new homes, many in the most remote
areas where decent ordinary television reception is
unavailable.
-- A more stable industry should result in a lower cost
structure and more customers so lower prices for
consumers.
UGC is the largest international broadband communications
provider of video, voice, and Internet services with operations
in 21 countries. Based on the Company's consolidated operating
statistics at September 30, 2002, UGC's networks reached
approximately 12.4 million homes and over 8.7 million customers,
including over 7.3 million video subscribers, 690,300 voice
subscribers, 700,000 high speed Internet access subscribers. In
addition, its programming business had approximately 45.8
million aggregate subscribers worldwide.
UGC's major operating subsidiaries include UPC, a leading pan-
European broadband communications company; VTR GlobalCom, the
largest broadband communications provider in Chile, and Austar
United Communications, a leading satellite, cable television and
telecommunications provider in Australia and New Zealand.
Please visit its Web site at http://www.unitedglobal.comfor
further information about the company.
VIVENDI UNIVERSAL: SEC Commences Formal Investigation
-----------------------------------------------------
Vivendi Universal (Paris Bourse: EX FP; NYSE:V) was advised by
the United States Securities and Exchange Commission that its
informal inquiry has now become a formal investigation.
Vivendi Universal intends to cooperate fully with the formal
investigation. The formal investigation will proceed in
conjunction with the ongoing investigation being conducted by
the Office of the United States Attorney for the Southern
District of New York.
WACKENHUT CORRECTIONS: S&P Assigns BB- Corporate Credit Rating
--------------------------------------------------------------
Standard & Poor's assigned its 'BB-' corporate credit rating to
prison and correctional services company Wackenhut Corrections
Corporation. At the same time, Standard & Poor's assigned its
'BB' senior secured debt rating to the company's proposed $175
million senior secured credit facility due 2008.
The outlook on the Palm Beach Gardens, Florida-based Wackenhut
is stable.
The bank loan is rated one notch higher than the corporate
credit rating. The senior secured loan comprises a $125 million
term loan B maturing in six years and a $50 million revolving
credit facility maturing in five years. Amortization of the term
loan is to be made in equal quarterly installments of 0.25% of
the term loan during the first five years and 23.75% of the term
loan in each quarter of the sixth year. The collateral package
includes substantially all of the domestic assets, 100% of the
capital stock of domestic subsidiaries, and 65% of the capital
stock of foreign subsidiaries. Financial covenants include a
maximum total debt to EBITDA, a minimum fixed-charge coverage, a
maximum capital expenditure, and a minimum net worth
requirement.
Based on Standard & Poor's discrete asset value methodology, the
proceeds from the liquidation of the collateral in a distressed
situation would be sufficient to fully cover the bank debt
assuming a fully drawn revolving credit facility.
"The ratings for Wackenhut reflect the company's narrow focus,
limited size, customer concentration, political risk, and
moderate debt leverage," said Standard & Poor's credit analyst
David Kang. "Somewhat mitigating these factors are the company's
favorable market position and demographic trends."
Wackenhut is a provider of a comprehensive range of prison and
corrections services to federal, state, local, and overseas
government agencies. Currently, only about 5% to 6% of the U.S.
prison population is housed in privately managed facilities such
as those provided by Wackenhut. Despite the limited acceptance
of these types of facilities, recent economic and demographic
trends have increased prospects for growth of the domestic
inmate population, and overcrowding in state and federal systems
should provide growth opportunities in the privatized
corrections market.
With about 26,400 beds in the U.S., Wackenhut is the second-
largest player in the niche privatized corrections industry
behind market leader Corrections Corporation of America (CCA,
B+/Stable), which has about 60,000 beds.
WICKES INC: Completes Sale of Bangor, Maine Assets to Hammond
-------------------------------------------------------------
Wickes Inc. (NASDAQ: WIKS), a leading distributor of building
materials and manufacturer of value-added building components,
has completed the sale of its Bangor, Maine center to Hammond
Lumber Company. This facility generated sales of approximately
$8.7 million in fiscal 2001.
J. Steven Wilson, Wickes Inc. Chief Executive Officer stated,
"This sale continues to follow our strategy to focus on our core
markets. The proceeds of the sale will be redirected into our
core markets and used to reduce debt."
Wickes will continue to operate its other Maine center in
Portland. The Portland, ME, center, working in conjunction with
the Hampton, NH, center, will continue to serve one of the
company's strategic northeastern markets.
Wickes Inc., is a leading distributor of building materials and
manufacturer of value-added building components in the United
States, serving primarily building and remodeling professionals.
The company distributes materials nationally and
internationally, operating building centers in the Midwest,
Northeast and South. The company continues to expand its
building component manufacturing facilities, which produce
value-added products such as roof trusses, floor systems, framed
wall panels, pre-hung door units and window assemblies. Wickes
Inc.'s Web site, http://www.wickes.com offers a full range of
valuable services about the building materials and construction
industry. The company is traded on the Nasdaq stock market under
the stock symbol "WIKS".
* * *
As reported in Troubled Company Reporter's November 6, 2002
edition, Standard & Poor's lowered its corporate credit
rating on Wickes Inc., to triple-'C' from triple-'C'-plus. The
downgrade was based on the company's weak liquidity and Standard
& Poor's concern that Wickes will be challenged to improve
operations and liquidity significantly after it completes the
sale of its Wisconsin and Northern Michigan operations.
WORLDCOM INC: 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 the WorldCom
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 WorldCom.
(Worldcom Bankruptcy News, Issue No. 13; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
XCEL ENERGY: Commences Private Offering of $200MM Conv. Notes
-------------------------------------------------------------
Xcel Energy, Inc. (NYSE:XEL), is seeking to raise, subject to
market and other conditions, $200 million through a private
offering of convertible senior notes (such amount does not give
effect to an option to be granted to the initial purchasers to
acquire additional senior notes in the amount of $30 million).
The senior notes are convertible into shares of the Company's
common stock and mature in 2007.
The offering will be made only to qualified institutional buyers
in accordance with Rule 144a under the Securities Act of 1933. A
portion of the net proceeds from the sale of the senior notes
will be used to redeem on January 8, 2003 the $100 million
principal amount of 8% convertible senior notes issued on
November 8, 2002. The remaining net proceeds will be used for
other general corporate purposes, including working capital.
The securities to be offered have not been registered under the
Securities Act of 1933 or any state securities laws, and unless
so registered may not be offered or sold in the United States,
except pursuant to an exemption from, or in a transaction not
subject to the registration requirements of the Securities Act
of 1933 and applicable state securities laws.
XCEL ENERGY: Fitch Rates $200MM Convertible Securities at BB+
-------------------------------------------------------------
Fitch Ratings has assigned a 'BB+' rating to of Xcel Energy
Inc.' s $200 million new issue of convertible senior notes due
2007. The convertible senior notes will rank equally with Xcel's
other senior unsecured and unsubordinated obligations. Proceeds
from the notes will be used to redeem the outstanding $100
million of convertible senior notes recently purchased by a
group of private investors and for working capital needs. The
holders of the convertible notes may convert at any time prior
to the final maturity date any outstanding notes into Xcel
common stock based on a preset conversion ratio. The company
remains on Rating Watch Negative.
The new convertible notes issue is positive for the company's
liquidity position, it is one of the several steps the company
plans to pursue to strengthen its cash position in anticipation
of further liquidity needs in the next few months. For more
details on Xcel's liquidity needs, please refer to Fitch's
November 8 press release on Xcel, available at
http://www.fitchratings.com
Xcel Energy Inc., is the holding company for six electric
utility companies that serve electric and natural gas customers
in 12 states, together with two transmission companies and two
natural gas pipelines. Xcel also owns a number of non-regulated
businesses, the largest of which is NRG Energy, Inc.
XCEL ENERGY: Prices $200 million Convertible Senior Notes
---------------------------------------------------------
Xcel Energy, Inc. (NYSE:XEL), announced today that it agreed to
issue $200 million through a private offering of convertible
senior notes with a coupon of 7.5 percent. The senior notes are
convertible into shares of the Company's common stock at a
conversion price of $12.33 and mature in 2007. The conversion
price represents a 25-percent premium over the $9.86 closing
price of the Company's stock Tuesday. Xcel Energy anticipates
that the transaction will close on Nov. 21, 2002. Xcel Energy
also has granted the initial purchasers a 30-day over-allotment
for up to 15 percent of the amount of this offering.
The offering was made only to qualified institutional buyers in
accordance with Rule 144A under the Securities Act of 1933. A
portion of the net proceeds from the sale of the senior notes
will be used to redeem on January 8, 2003, the $100-million
principal amount of 8 percent convertible senior notes issued on
November 8, 2002. The remaining net proceeds will be used for
other general corporate purposes, including working capital.
The securities to be offered have not been registered under the
Securities Act of 1933 or any state securities laws, and unless
so registered may not be offered or sold in the United States,
except pursuant to an exemption from, or in a transaction not
subject to the registration requirements of the Securities Act
of 1933 and applicable state securities laws.
XEROX: Plans Up to $400MM Q4 Charge for Worldwide Restructuring
---------------------------------------------------------------
Xerox Corporation (NYSE: XRX) said it would take a fourth-
quarter pre-tax charge in the range of $350 million to $400
million related to worldwide restructuring actions that will
further strengthen the company's operations by reducing costs
and improving productivity.
The charge includes severance costs for worldwide workforce
reductions, implemented through a combination of voluntary
programs and layoffs, as well as about $50 million associated
with facility consolidations and closings.
"For Xerox to continue building momentum in this uncertain
economy, we need to accelerate our drive to improve efficiency
while delivering competitive products and services to our
customers," said Anne M. Mulcahy, Xerox chairman and chief
executive officer. "Today's difficult economic challenges
require difficult decisions. To serve Xerox best in the long
term, we are further aligning our cost structure with the
company's leaner, faster and more flexible business model. And,
we're doing so in a manner that preserves the strength of our
direct sales force and the focus of our research and development
investments."
In the past two weeks, the company has communicated voluntary
and involuntary programs in the U.S. and Canada that are
expected to reduce employment by more than 2,400 over the next
three months. Workforce reductions in Europe and developing
markets are dependent on consultations with workers' councils
and other government policies.
Xerox has implemented cost-reduction actions in the past two
years that account for more than $1 billion in annualized
savings resulting in improved margins and lower selling,
administrative and general expenses. The restructuring announced
today will contribute to the company's target of an additional
$1 billion in annualized cost savings.
In the third quarter, Xerox reported net income of $105 million.
Gross margins of 42 percent improved year over year by 4.4
percentage points. SAG expenses in the third quarter decreased
$152 million or 13 percent from third-quarter last year. As of
the end of September, Xerox's worldwide employment was 69,900
including 40,900 employees in the United States. For more
information about Xerox, visit http://www.xerox.com/news
Xerox Corporation's 9.75% bonds due 2009 (XRX09USS1) are trading
at 84 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=XRX09USS1for
real-time bond pricing.
XM SATELLITE: Funding Concerns Spur S&P to Keep Ratings Watch
-------------------------------------------------------------
Standard & Poor's Ratings Services placed its triple-'C'-plus
corporate credit rating on XM Satellite Radio Holdings Inc. and
XM Satellite Radio Inc., (which are analyzed on a consolidated
basis) on CreditWatch with negative implications based on unmet
near-term funding needs.
The Washington, D.C.-based firm had $415 million in debt as of
September 30, 2002.
"XM's cash needs remain significant, and current liquid assets
are only expected to fund XM's operations through the first
quarter of 2003," according to Standard & Poor's credit analyst
Steve Wilkinson. He added, "The company's near-term funding
needs are a growing concern, and failure to obtain a binding
commitment for a significant amount of new capital by mid-
December will result in a downgrade."
Operationally, XM continues to hit its targets, and leads its
primary competitor, Sirius Satellite Radio Inc., in all phases
of execution. The company also appears to have strong support
from General Motors Corp., a shareholder and key business
partner. GM's factory installation program for satellite radio
equipment ramps up considerably in the fourth quarter. GM is
also providing support through a cross-promotional advertising
campaign, dealer training, and promotional programs. Separately,
GM may help XM lower its near-term funding needs by allowing XM
to defer up to $200 million in payments to GM in exchange for
debt or convertible securities, or for stock under certain
circumstances. This potential agreement would require XM to
raise at least $200 million in additional capital and make
certain modifications to its capital structure. XM is in
discussions with various existing and potential investors to
satisfy GM's requirements and expects to reach final agreements
by mid-December. Any material change to the original terms
promised to debt holders would be viewed as tantamount to a
default and result in an immediate downgrade.
Standard & Poor's will monitor XM's success in obtaining new
financing as part of the CreditWatch process. The ratings will
be lowered if it is not successful in reaching a final funding
agreement for a substantial amount of new capital by mid-
December.
* Investment Funds Form Trade Claim Buyers Association
------------------------------------------------------
A number of investment funds active in the market for trade
claims in distressed companies have come together to form the
Trade Claim Buyers Association.
Two long-time players in the private distressed and bankruptcy
areas -- Jon Bauer of Contrarian Capital and Mike Singer of Argo
Partners -- were instrumental in forming the organization.
Founding members of the association include Argo Partners, ASM
Capital, Contrarian Capital Management, Debt Acquisition Company
of America, Madison Capital Management, and Sierra Funds.
With the proliferation of corporate bankruptcies and the
increased number of funds, particularly smaller funds, active in
the trading of vendor claims and similar "private" obligations,
the members felt that a trade association is needed to establish
certain elements for the standardization of the assignment,
transfer and payment for such claims. This would not only
clarify procedures among current competitors in the trade
claims market but, most importantly, would also act to bring
additional confidence to creditors wishing to sell
their claims.
The Association has been formed to promote good standards and
practices within the business of purchasing and transferring
trade claims of companies in general, and specifically companies
in bankruptcy. The Association will promote effective and timely
docketing and paying of transferred claims, and other practices
and standards that are fair and beneficial to the business of
purchasing and selling trade claims. The Association will also
act as an advocate, working with bankruptcy courts, trustees,
bankruptcy attorneys, and claims agents to bring more uniformity
to all aspects of the claims transfer process.
* DebtTraders' Real-Time Bond Pricing
-------------------------------------
Issuer Coupon Maturity Bid - Ask Weekly change
------ ------ -------- --------- -------------
Federal-Mogul 7.5% due 2004 15 - 17 -1
Finova Group 7.5% due 2009 31 - 33 +0.5
Freeport-McMoran 7.5% due 2006 88 - 90 0
Global Crossing Hldgs 9.5% due 2009 1.5 - 2.5 0
Globalstar 11.375% due 2004 6.5 - 7.5 +1.5
Lucent Technologies 6.45% due 2029 42 - 44 +1
Polaroid Corporation 6.75% due 2002 3.5 - 5.5 0
Terra Industries 10.5% due 2005 87 - 89 0
Westpoint Stevens 7.875% due 2005 20 - 22 -1
Xerox Corporation 8.0% due 2027 44 - 46 +1
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices
are obtained by TCR editors from a variety of outside sources
during the prior week we think are reliable. Those sources may
not, however, be complete or accurate. The Monday Bond Pricing
table is compiled on the Friday prior to publication. Prices
reported are not intended to reflect actual trades. Prices for
actual trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
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.
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S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter
A. Chapman, Editors.
Copyright 2002. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $625 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
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