/raid1/www/Hosts/bankrupt/TCR_Public/030121.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, January 21, 2003, Vol. 7, No. 14
Headlines
A NOVO: Securing Nod to Hire Young Conaway as Bankruptcy Counsel
ADELPHIA COMMS: Names William T. Schleye as New Chairman & CEO
AGWAY INC: Donald P. Cardarelli Leaving Company Effective Apr. 1
ALPHA HOSPITALITY: Fails to Satisfy Nasdaq Listing Requirements
AMERICREDIT CORP: Fitch Places BB Debt Rating On Watch Negative
AMES DEPARTMENT: Wins Nod to Implement Lease Rejection Protocol
ARMSTRONG HOLDINGS: Board Considering Proposing Dissolution
ASIA GLOBAL CROSSING: Committee Signs-Up Bingham as Counsel
AT&T CANADA: Stays On-Track to Complete Workout in First Quarter
AUXER: Juan Carlos Hernendez Heads Dominican Republic Operations
BETHLEHEM STEEL: Seeks Amendment to USWA Fee Reimbursement Order
BULL RUN: Annual Shareholders' Meeting Slated for February 13
CARAUSTAR: Amends Credit Facility Avoiding Potential Default
CHARTER COMMS: Restructuring Concern Prompts S&P to Junk Rating
CLARITI TELECOMMS: Converting Three Notes into Restricted Shares
COMM 2000-C1: Fitch Hatchets Ratings to Lower-B and Junk Levels
COMMUNICATION INTELLIGENCE: Violates Additional Nasdaq Guideline
CONSECO INC: Finance Debtors Want to Pay Credit Card Merchants
CORAM HEALTHCARE: Cerberus Says Equity Committee Plan is Flawed
COVANTA ENERGY: Asks Court to Approve Fenelus Settlement Pact
DEVINE ENTERTAINMENT: Postpones Principal Payments on Conv. Debt
DYNEGY INC: Mike Mott Resigns as Company's SVP and Controller
DYNEGY: Agrees to Transition Natural Gas Purchase & Sale Pacts
ENRON CORP: Court Expands Scope of Examiner's Engagement
EPIC RESORTS: Court Approves Settlement of Major Disputed Issues
EQUITEX INC: Regains Compliance With Nasdaq Marketplace Rule
EVENFLO CO.: Closing Wisconsin and Georgia Production Facilities
EXODUS COMMS: Wants Court to Apply Adversary Rules to Infomart
FAO INC: Taps Morgan Joseph for Investment Banking Services
FAO INC: Honoring Up to $3.7 Mill. of Prepetition Vendor Claims
FEDERAL-MOGUL: Equity Committee Proposes Asbestos Procedures
FLEMING COMPANIES: Look for Q4 2002 Results on Thursday
GENTEK INC: Court OKs Deloitte & Touche's Engagement as Auditor
GENUITY INC: Court to Consider Asset Sale to Level 3 Today
GLOBAL CROSSING: Hires Three Firms to Assist in CFIUS Review
GOLF TRUST: Sells Lost Oaks Golf Course to H & M for $2.3 Mill.
GST TELECOMMS: Makes $47MM Distribution to Unsecured Creditors
GUESS? INC: Unit Commences $75MM Secured Note Private Offering
HARBISON-WALKER: Stay Against Halliburton Extended to Feb. 18
HAYES LEMMERZ: Plan Filing Exclusivity Intact through April 15
HOLIDAY RV: Defaults on Additional $5-Million Secured Debt
HOLLYWOOD ENTERTAINMENT: Closes New Sr Secured Credit Facilities
HORIZON NATURAL: Mountaineer Coal Unit to Shut Down Four Mines
IMMTECH INT'L: Enter Joint Venture Pact with Lenton Fibre Optics
INFINITE GROUP: Appealing Nasdaq Staff Delisting Determination
INTEGRATED HEALTH: Asks Court to Further Stretch Exclusivity
INTELLISEC: California Court Confirms Plan of Reorganization
KMART CORP: Promotes President Julian C. Day to CEO Position
KMART CORP: Handleman Expects Minimal Impact from Store Closings
LISANTI FOODS: Court OKs J.H. Cohn as Committee's Fin'l Advisor
LUCENT: Reaches Tentative Pact with Union on 20-Month Contract
MIDLAND STEEL: Honoring Up to $100K of Critical Vendor Claims
NAT'L CENTURY: Silver Moves Wants Cash Collateral Order Enforced
NATIONAL STEEL: Proposes $15 Million Break-Up Fee for U.S. Steel
NATIONSRENT: Wants to Implement Solicitation & Voting Procedures
NETWORK ACCESS: DSL.net Secures $15-Million Revolving Facility
NORTH AMERICAN REFRACTORIES: Honeywell Inks Asbestos Settlement
NRG ENERGY: Involuntary Petition Show-Down Set for Jan. 23
NUTRITIONAL SOURCING: Firms-Up Terms of Financial Restructuring
OWENS CORNING: Will Appoint Stephen Krull as General Counsel
OWENS-ILLINOIS: Declares Dividend on $2.375 Conv. Preferreds
PEGASUS COMMS: Won't Pay Quarterly Dividend on 6.50% Preferreds
PG&E NATIONAL: Lenders Provide Funding for Construction Projects
POLAROID: Primary PDC Files Amended Plan & Disclosure Statement
PROTECTION ONE: Working with Westar to Evaluate Alternatives
RENCO METALS: 11-1/2% Noteholders Want an Independent Trustee
RURAL CELLULAR: Will Pay Quarterly Preferred Share Dividend
SATCON TECHNOLOGY: Silicon Valley Bank Extends Forbearance Pact
SBA COMMS: Reaffirms 4th Quarter Revenue & EBITDA Guidance
SONICBLUE INC: Taps Houlihan Lokey to Aid in Evaluating Options
STARMEDIA NETWORK: Funds Insufficient to Meet All Obligations
TRUMP HOTELS: Issuing Two Mortgage Notes via Private Placement
UNITED AIRLINES: U.S. Trustee Appoints Creditors' Committee
US AIRWAYS: Selling Aircraft & Parts to Alliance Air for $20MM+
VISHAY INTERTECHNOLOGY: S&P Downgrades Ratings to Lower-B Levels
WARNACO GROUP: Arranges New $275-Mill. Revolving Credit Facility
WESTAR ENERGY: Kansas Regulator Clears ONEOK Preferred Issue
WHEELING-PITTSBURGH: Lays-Off about 100 Salaried Employees
WORLDCOM INC: Court Approves Proposed EDS Settlement Agreement
XCEL: Closes Viking Gas Transmission Sale to Northern Border
* Large Companies with Insolvent Balance Sheets
*********
A NOVO: Securing Nod to Hire Young Conaway as Bankruptcy Counsel
----------------------------------------------------------------
A Novo Broadband, Inc., wants to continue Young Conaway Stargatt
& Taylor, LLP's employment as its attorneys in its chapter 11
case.
The principal attorneys and paralegals designated to represent
the Debtor and their current standard hourly rates are:
Brendan Linehan Shannon $380 per hour
M. Blake Cleary $290 per hour
Timothy P. Cairns $180 per hour
Debbie Laskin, paralegal $140 per hour
As Counsel to the Debtor, Young Conaway is expected to:
a) provide legal advice with respect to its powers and
duties as a debtor in possession in the continued
operation of its business and management of its
properties;
b) negotiate, prepare and pursue approval of a disclosure
statement, confirmation of a plan, and all related
reorganization agreements and/or documents;
c) prepare on behalf of the Debtor necessary
applications, motions, answers, orders, reports and
other legal papers;
d) appear in Court and to protect the interests of the
Debtor before the Court; and
e) perform all other legal services for the Debtor which
may be necessary and proper in this proceeding.
A Novo Broadband, Inc., a business engaged primarily in the
repair and servicing of broadband equipment for equipment
manufacturers and operators of cable and other broadband systems
in North America, filed a chapter 11 petition on December 18,
2002, in the U.S. Bankruptcy Court for the District of Delaware.
When the Company filed for protection from its creditors, it
listed $12,356,533 in total assets and $10,577,977 in total
debts.
ADELPHIA COMMS: Names William T. Schleye as New Chairman & CEO
--------------------------------------------------------------
Adelphia Communications Corporation (OTC: ADELQ) entered into an
agreement which names William T. Schleyer, former President and
CEO of AT&T Broadband, as Chairman of the Adelphia Board of
Directors and Chief Executive Officer. The agreement also names
Ron Cooper, AT&T Broadband's former Chief Operating Officer, as
Adelphia's President and COO. The agreement, which is subject to
approval from the Bankruptcy Court for the Southern District of
New York, will be submitted to the Court early this week.
Mr. Schleyer will succeed Chairman and interim Chief Executive
Officer Erland "Erkie" Kailbourne, who has held both positions
since May 2002 following the departure of Adelphia's prior
management. Mr. Kailbourne will continue to serve as a member of
the Board of Directors of Adelphia.
"The Right Team to Lead Adelphia at This Critical Time"
On behalf of the Adelphia Board, Mr. Kailbourne said, "The Board
needed to find and retain proven and qualified leaders who are
capable not only of dealing with the complex challenges we face
today, but of creating and capitalizing on new opportunities to
build an enduring future for the Company. Bill Schleyer and Ron
Cooper fit the bill. They are among the best, most respected
operators in the cable industry. They bring a broad, deep and
successful set of knowledge and experiences as major cable
operators. Bill's vision and ability to shape a strategic plan
that creates value for stakeholders - plus Ron's capacity to
engage and inspire employees - make them uniquely qualified for
their roles. Clearly, this is the right team to lead Adelphia at
this critical time."
"An Extraordinary Opportunity"
Mr. Schleyer stated, "This is an extraordinary opportunity for
Ron and me. While Adelphia represents a set of complex
challenges, we are excited by the chance to rebuild this great
company and bring it out of Chapter 11. To this end, we will
galvanize the employee base and leverage Adelphia's considerable
strengths to enable us to build a terrific customer-focused,
service-oriented company that will also be a great place to
work."
Schleyer noted that Adelphia has an established brand in 3,500
communities, a suite of advanced services, and a strong record
of providing quality service to its more than 5 million
customers. He said, "With $1.5 billion in Debtor-in-Possession
financing, and the extraordinary skill and dedication of its
employees, we have the resources to effectively meet the
challenges that we face."
Ron Cooper said, "We are honored that the Company's Board has
offered us this leadership opportunity to rebuild Adelphia and
restore stakeholder confidence in the Company. Adelphia's
talented and productive workforce has its work cut out for it.
Our highest priorities will be to strengthen Adelphia's fiscal
foundation by working together to broaden the delivery of an
increasingly popular suite of advanced cable and Internet
offerings, while maintaining the Company's hallmark commitment
to high-quality customer service."
David M. Friedman of Kasowitz, Benson, Torres and Friedman,
counsel to the creditors committee, said, "The creditors
committee fully supports and endorses the appointments of Bill
Schleyer and Ron Cooper to lead Adelphia. There is no question
that Bill and Ron have the ideal skills and industry experience
required to rebuild this company for the benefit of all
stakeholders."
Gratitude to Erkie Kailbourne
In assuming the positions of Chairman and CEO, Mr. Schleyer
succeeds Chairman and interim CEO Erkie Kailbourne. Adelphia
director Leslie J. Gelber said of Mr. Kailbourne, "We are all
grateful to Erkie for enthusiastically taking on two strenuous
roles following the removal of Adelphia's prior management. He
was a key factor in stabilizing the Company and encouraging
employees to continue to provide quality service to millions of
customers. The Board and I look forward to working with Bill and
Ron as we continue to revitalize Adelphia."
Mr. Schleyer said that he was encouraged by the steps taken by
Adelphia's current management and the Board of Directors to
recover assets improperly taken from the Company and repair the
other damage inflicted upon Adelphia and its stakeholders. He
added, "The Company will continue to cooperate fully with the
investigations of the Department of Justice and the SEC while
working to complete its internal investigation into the conduct
of the former management.
"Ron and I are excited by the opportunity to work with the Board
and the employees of the Company to put Adelphia's problems
behind us and chart a course that can further restore trust in
Adelphia," Mr. Schleyer concluded.
Background of William T. Schleyer
Bill Schleyer has extensive experience as a senior cable
executive with a proven ability to grow companies and inspire
employees. Most recently, Mr. Schleyer served as President and
Chief Executive Officer of AT&T Broadband, which, prior to its
acquisition by Comcast, provided high-speed Internet access,
digital video service and telephony to more than 13 million
customer in the United States.
Previously, Mr. Schleyer was a Principal in Pilot House
Ventures, a venture capital company. Before that, he served as
President and Chief Operating Officer of MediaOne, the broadband
services arm of U.S. WEST Media Group. He also was President and
Chief Operating Officer of Continental Cablevision, Inc., before
the company's merger with U. S. WEST in 1996. Under Schleyer's
leadership, Continental Cablevision was named "Operator of the
Year" by Cablevision Magazine in 1996.
Mr. Schleyer earned his bachelor's degree in mechanical
engineering from Drexel University and a master's in business
from Harvard Business School.
Background of Ron Cooper
Ron Cooper has extensive operational experience in the cable
television industry with expertise in product management,
technology, customer service, programming, advertising sales,
human resources and marketing. He also has managed the
development, delivery and marketing of advanced Internet
services.
Mr. Cooper most recently served as COO of AT&T Broadband, where
his responsibilities included the day-to-day operational
management of all functional and geographic units, as well as
oversight of the company's video and data businesses.
His cable industry experience also includes service as Executive
Vice President of MediaOne, where he was responsible for all
operations of the broadband services company. A graduate of
Wesleyan University, Mr. Cooper also held a number of senior
executive positions with Continental Cablevision.
Adelphia Communications Corporation is the fifth-largest cable
television company in the country. It serves 3,500 communities
in 32 states and Puerto Rico. It offers analog and digital cable
services, high-speed Internet access (Adelphia Power Link), and
other advanced services.
Adelphia Communications' 10.25% bonds due 2006 (ADEL06USR1) are
trading at about 46 cents-on-the-dollar, DebtTraders says. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL06USR1
for real-time bond pricing.
AGWAY INC: Donald P. Cardarelli Leaving Company Effective Apr. 1
----------------------------------------------------------------
Agway Inc., said that Donald P. Cardarelli will resign as
President, Chief Executive Officer and a Director of Agway Inc.
effective April 1, 2003. The Company also announced that Michael
R. Hopsicker, a 13-year company veteran, has been named Chief
Operating Officer effective immediately and will succeed
Mr. Cardarelli upon his resignation.
"This was a decision that the Board and I reached after
assessing our progress to date and our needs going forward,"
said Mr. Cardarelli, who has been CEO since 1995. "By April we
expect to have completed all of the major restructuring
initiatives we announced early last year, including the very
important step of selling our lease financing business. Agway
will then be a more focused and smaller organization. The next
phase is to develop the plan for the Company's emergence from
Chapter 11. That plan should be developed and carried out under
leadership that is expected to be part of Agway's future."
Agway Board Chairman Gary Van Slyke said that naming Mike
Hopsicker to succeed Cardarelli was a unanimous decision of the
Agway Board. "Mike Hopsicker has exhibited tremendous leadership
capabilities and brings considerable experience as well as a
successful business track record at Agway to this position. We
are confident that Mike is the right person to lead us through
the reorganization process and beyond," said Van Slyke.
Mr. Hopsicker said, "I appreciate the confidence the Agway Board
has placed in me and I welcome this opportunity. Agway's
greatest strength is in its many skilled and dedicated
employees. I strongly believe that our employees have the
ability and determination to take the next steps that will build
value for all of Agway's stakeholders."
Mr. Hopsicker most recently served as Executive Vice President
of Agriculture and Energy and President of Agway Energy
Products. He joined Agway as a financial analyst in 1989. Over
the years, Mr. Hopsicker took on a number of key assignments
that have drawn on his expertise and talents in the areas of
financial management, strategic planning, business restructuring
and business development. Most recently, Mr. Hopsicker led the
successful effort to sell the Company's Agronomy and Seedway
businesses. Since 1996, Mr. Hopsicker has provided overall
leadership to the Agway Energy Products team, which has taken
this business to a level where profits are consistently earned
each year. In addition to his new role, Mr. Hopsicker will
remain President of Agway Energy Products.
"We are grateful to Don Cardarelli for his nearly 19 years of
service to Agway and we are pleased that he has agreed to remain
available to the Board and management team to facilitate the
transition in leadership," said Van Slyke. "Don is a very
capable and respected leader who inherited a difficult financial
situation and led the cooperative during difficult times.
Unfortunately, the convergence of several events last year,
including the unexpected failed sale of one of our businesses,
resulted in Chapter 11 being the only option for Agway's many
stakeholders. Don had the foresight to prepare the Company for
Chapter 11 while continuing to pursue needed restructuring
initiatives. Those initiatives have already generated $100
million in cash, which has allowed the Company to reduce its
current secured lender borrowings to zero and have a cash
surplus available."
Agway Inc., headquartered in DeWitt, NY, is an agricultural
cooperative owned by 69,000 Northeast farmer-members. On
October 1, 2002, Agway Inc. and certain of its subsidiaries
filed voluntary petitions for reorganization under Chapter 11 of
the U.S. Bankruptcy Code. Agway Energy Products LLC, Agway
Energy Services, Inc., Agway Energy Services-PA, Inc., and
Telmark LLC were not included in the Chapter 11 filings. Visit
Agway at http://www.agway.com
ALPHA HOSPITALITY: Fails to Satisfy Nasdaq Listing Requirements
---------------------------------------------------------------
Alpha Hospitality Corporation (Nasdaq and BSE: ALHY) received a
Nasdaq Staff Determination letter dated January 14, 2003,
stating that the Company has failed to comply with the continued
listing requirements of the Nasdaq SmallCap Market.
The notification was made pursuant to Nasdaq Marketplace Rules
4350(e) and 4350(g) for failure by the Company to hold its 2002
annual meeting within the prescribed period of time.
Accordingly, Nasdaq has notified the Company that its securities
are subject to delisting from the Nasdaq SmallCap Market. The
Company intends to request a hearing before the Nasdaq Listing
Qualifications Panel to appeal Nasdaq's determination and the
delisting will be stayed pending the Panel's decision. However,
there can be no assurance that the Company's appeal for
continued listing will succeed.
Alpha Hospitality's September 30, 2002 balance sheet shows that
total current liabilities exceeded total current assets by about
$8 million.
AMERICREDIT CORP: Fitch Places BB Debt Rating On Watch Negative
---------------------------------------------------------------
Fitch Ratings has placed AmeriCredit Corp.'s 'BB' senior
unsecured rating on Rating Watch Negative. Approximately $375
million of senior unsecured debt is affected by this rating
action.
Based on recently updated performance data, AmeriCredit is
experiencing higher than anticipated net chargeoffs due to lower
than expected recovery rates on repossessed vehicles. In
addition, Fitch has observed that AmeriCredit's two most recent
securitizations, 2002-C, and 2002-D, insured by FSA, have
experienced much higher losses relative to previous
securitization pools. This is partially due to the fact that,
unlike most previous AmeriCredit securitization transactions,
these pools were not 'prefunded', and are experiencing losses
earlier on in the life of the trusts. Nonetheless, Fitch is
concerned that if loss trajectories continue, these transactions
may hit their net loss triggers very early in the life of the
pool and trap cash rather than release it back to AmeriCredit.
The cash impact of hitting a trigger is much greater if it is
hit early in the life of the pool rather than later. While Fitch
had anticipated that vintage pools originated in 2000 would hit
their loss triggers, Fitch expected more recent loan
originations to perform noticeably better. Although Fitch
recognizes that the fourth calendar quarter is usually the
weakest period for used car prices, Fitch believes that weakness
in this market will persist over the intermediate term and
continue to pressure the company's net chargeoffs rates.
Fitch had previously affirmed AmeriCredit's ratings following a
successful secondary equity offering in September 2002, which
raised over $500 million of new capital for the company. At that
time, Fitch understood that AmeriCredit would use this cash to
fully fund the required initial cash deposit in the
securitization trust so that it would receive distributions from
the trust sooner than it would otherwise. However, if more
recent transactions hit loss triggers, the spread account
requirement would increase, and excess cash would be trapped in
the trust and not be released back to AmeriCredit. During
AmeriCredit's second fiscal quarter ended Dec. 31, 2002,
AmeriCredit had already used a net $190 million of cash raised
through the equity offering to fund initial cash deposits.
Fitch recognizes that as AmeriCredit has slowed its receivable
growth, the company may look to trim some of its current
warehouse credit facilities. The company has approximately $1
billion out of its $5 billion of warehouse facilities maturing
during the 2003 calendar year. Although AmeriCredit is currently
in compliance with various covenants within its credit
agreements, the cushion, particularly with respect to net
chargeoffs, has diminished.
Fitch's review will focus on AmeriCredit's ability to control
credit quality in an environment where structural changes in the
used car market have negatively impacted the company. As part of
this review, Fitch will consider AmeriCredit's liquidity plans
should additional trusts trap cash. In addition, Fitch will
evaluate AmeriCredit's rationalization of its warehouse lending
facilities and any impact that may have on the company's future
liquidity. Fitch expects to resolve the Rating Watch by early-
February.
AMES DEPARTMENT: Wins Nod to Implement Lease Rejection Protocol
---------------------------------------------------------------
Ames Department Stores, Inc., and its debtor-affiliates
Obtained the go-signal from the U.S. Bankruptcy Court for the
Southern District of New York to implement certain proposed
Rejection Procedures, as part of the efforts to streamline the
process of rejecting their remaining unexpired leases.
The Debtors also obtained the Court's authority to remove any
property from the premises subject to the rejected unexpired
lease that they either own or lease from third parties, or that
is subject to any equipment financing agreements with third
parties. The Debtors intend to abandon any property remaining
in the premises in the event that property has little or no more
value to them.
The Lease Rejection Procedures to be implemented are:
-- Any Unexpired Lease that the Debtors determined to be
unmarketable will be rejected after 10 business days
written notice, via facsimile or overnight mail to:
(1) the non-Debtor party and its counsel, if known, under
the Unexpired Lease;
(2) the statutory creditors' committee's counsel;
(3) Kimco's counsel;
(4) the postpetition lenders' counsel; and
(5) the U.S. Trustee.
-- If an objection to a Rejection Notice is filed by a
Rejection Notice Party, the Debtors may schedule a
hearing to consider the objection.
-- If no objection to a Rejection Notice is timely filed and
received, the applicable Unexpired Lease will be deemed
rejected on the later of:
(a) the date of the Rejection Notice unless otherwise
agreed, in writing, by the Debtors and the
counterparty to the Unexpired Lease;
(b) the date the leased property is surrendered to the
affected lessor; and
(c) the effective date otherwise set forth in the
Rejection Notice.
-- If a timely objection to a Rejection Notice is received,
and the Court ultimately upholds the Debtors'
determination to reject the Unexpired Lease, the
Unexpired Lease will be deemed rejected:
(a) as of the later of:
(i) the date of the Rejection Notice unless
otherwise agreed, in writing, by the Debtors
and the counterparty to the Unexpired Lease;
(ii) the date the leased property is surrendered to
the affected lessor; and
(iii) the effective date otherwise set forth in the
Rejection Notice; or
(b) as otherwise determined by the Court in its order
overruling the objection.
-- Any claims arising out of the rejection of the Unexpired
Leases must be filed with Donlin, Recano & Company, the
Court-approved claims processing agent, on or before 30
days after the effective rejection date. (AMES Bankruptcy
News, Issue No. 31; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
ARMSTRONG HOLDINGS: Board Considering Proposing Dissolution
-----------------------------------------------------------
In connection with the proposed Chapter 11 Plan, the Board of
Directors of Armstrong Holdings, Inc., contemplates proposing
the dissolution and winding-up of AHI. In that regard, AHI's
management advises that the company intends to file relevant
materials with the U.S. Securities and Exchange Commission,
including a proxy or consent solicitation statement with respect
to approval by AHI's shareholders of the dissolution and a plan
of liquidation. Because those documents will contain important
information, AHI stockholders are urged to read them, if and
when they become available. When filed with the SEC, they will
be available for free at the SEC's Web site http://www.sec.gov
AHI stockholders will receive information at an appropriate time
on how to obtain documents related to these matters from AHI.
The documents are not currently available.
AHI directors and executive officers and AHI subsidiaries may be
deemed to be participants in AHI's solicitation of proxies or
consents from its stockholders in connection with this matter:
-- Directors: H. Jesse Arnelle, Van C. Campbell, Judith
R. Haberkorn, John A. Krol, Michael D. Lockhart, James
E. Marley, Ruth M. Owades, M. Edward Sellers, and Jerre
L. Stead; and
-- Officers: Matthew J. Angello, Leonard A. Campanaro,
Chan W. Galbato, Gerard L. Glenn, David E. Gordon,
Michael D. Lockhart, Debra L. Miller, John N. Rigas,
William C. Rodruan, Stephen J. Senkowski, Barry M.
Sullivan, and April L. Thornton.
As of December 31, 2002, none of these participants individually
beneficially owns more than 1% of AHI's common stock. None of
these persons has any interest, direct or indirect, by security
holdings or otherwise, in AHI. (Armstrong Bankruptcy News, Issue
No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900)
Armstrong Holdings Inc.'s 9% bonds due 2004 (ACKH04USR1) are
trading at about 58 cents-on-the-dollar, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ACKH04USR1
for real-time bond pricing.
ASIA GLOBAL CROSSING: Committee Signs-Up Bingham as Counsel
-----------------------------------------------------------
The Official Committee of Unsecured Creditors of the Asia Global
Crossing Debtors sought and obtained the Court's authority to
retain Bingham McCutchen LLP, nunc pro tunc to November 25,
2002, as counsel.
Committee Chairperson Robert D. Petty tells the Court that
Bingham is particularly well suited for the type of
representation required by the Committee. Bingham has more than
800 lawyers in ten offices throughout the United States, London
and Singapore. Bingham has a national and international
practice, and has experience in all aspects of the law that may
arise in these Chapter 11 cases.
Bingham's Financial Restructuring Group is comprised of more
than 100 attorneys practicing nationally and internationally.
Bingham's attorneys have also played significant roles in many
of the largest and most complex cases under the Bankruptcy Code,
including the Chapter 11 cases of NII Holdings (f/k/a Nextel
International, Inc.), Exodus Communications, Comdisco, Owens
Corning, Singer, Loewen International, NextWave, Zenith
Electronics, Boston Chicken, Flooring America, Montgomery Ward,
Hvide Marine, Bradlees, Flagstar (Advantica), Anchor Glass,
Maxwell Communication, Joseph Nakash, Olympia & York, LTV Steel,
Salant, Federated, Rose's Stores, Macy's, Imagyn Medical
Technologies, Allis Chalmers, Pan Am, Western Union, Southeast
Bancorp, Eastern Airlines, United Financial and Texaco, among
many others.
Mr. Petty adds that Bingham's recent Chapter 11 committee
experience includes serving as counsel to the Chapter 11
creditors' committee of Loewen International, counsel to the
Chapter 11 creditors' committee of Boston Chicken, counsel to an
ad hoc noteholders' committee in the Chapter 11 proceedings of
Teleglobe Inc., and counsel to an ad hoc noteholders' committee
in the Chapter 11 proceedings of Global TeleSystems, Inc.
Additionally, Bingham serves as counsel to the ad hoc committee
of noteholders of AT&T Canada in its insolvency proceedings
under the Canadian Companies' Creditors Arrangement Act and its
ancillary case under Section 304 of the Bankruptcy Code in the
U.S.
Furthermore, Bingham has served as international bankruptcy
counsel to:
-- The Singer Company N.V. in the restructuring of its 56
Chapter 11 debtors and its global operations in more than
150 countries;
-- Owens Corning and its global operations;
-- Outboard Marine Corporation and its global operations;
-- Montgomery Ward, LLC and its global operations;
-- Viatel, Inc. in the restructuring of its operations in
Europe and North America;
-- Comdisco, Inc. and its global operations;
-- Goss Holdings, Inc. and its global operations;
-- Polaroid Corporation and its global operations; and
-- Exodus Communications, Inc. and its global operations.
Mr. Petty explains that the AGX Creditors' Committee selected
Bingham as counsel because of the firm's extensive bankruptcy
experience and knowledge, particularly as it relates to
Bingham's substantial experience in foreign and cross-border
insolvency proceedings. For example, Bingham attorneys played
primary roles in the negotiation and Court approval of "cross-
border insolvency protocols" in the Loewen, Nakash and Maxwell
cross-border insolvencies.
Bingham was originally retained to represent an ad hoc committee
of AGX Noteholders holding more than $350,000,000 of AGX's
$408,000,000 13.375% Senior Notes due 2010. In that capacity,
Bingham has developed a significant knowledge base regarding the
AGX Debtors' capital and corporate structures, its commercial
relationships and has reviewed numerous legal issues that will
drive maximization of values to the AGX Debtors' unsecured
creditors.
Bingham will render bankruptcy and restructuring legal services
to the Committee as needed throughout the course of these
Chapter 11 cases. Specifically, Bingham will:
A. provide legal advice with respect to the Committee's
powers and duties in these cases;
B. represent the Committee at hearings held before
this Court and in the Committee's discussions with the
Debtors and other parties-in-interest, as well as
professionals retained by any parties, regarding the
overall administration of these cases;
C. review and analyze pleadings, orders, schedules and
other legal documents; the preparation on behalf of the
Committee of all necessary pleadings, orders, reports and
other legal documents;
D. negotiate and formulate a plan of reorganization;
E. represent the Committee, in coordination with
Bermudan counsel, with respect to all of the matters in
connection with the Bermudan Proceedings; and
F. perform all other legal services for the Committee, which
may be necessary and proper for the Committee to
discharge its duties in these Chapter 11 proceedings.
Bingham will be compensated on an hourly basis according to its
customary hourly rates in effect when the services are rendered.
These rates may change from time to time in accordance with
Bingham's established billing practices and procedures. The
firm's standard hourly rates in calendar year 2002 are:
Members/Partners $450 - 700
Counsel & Associates 175 - 400
Paralegals 115 - 140
As part of Bingham's representation of the Ad Hoc Committee, Mr.
Petty informs the Court that the AGX Debtors paid Bingham a
$150,000 retainer, which was refreshed as needed. On
November 12, 2002, Bingham applied a portion of the Retainer
($111,766.49) as payment for fees and expenses incurred or
expected to be incurred for the period through November 16,
2002. As of the Petition Date, Bingham holds $35,678.05 in trust
for the Debtors.
During the period between January 31, 2002 and the Petition
Date, the AGX Debtors paid Bingham $414,855.66 for fees and
expenses incurred by Bingham as counsel to the Ad Hoc Committee,
and as reimbursement of expenses incurred by Bingham in
connection with these services. These payments were made in the
ordinary course of business. At no time did the amount of
Bingham's outstanding fees and expenses exceed the amount of the
Retainer.
Bingham Partner Evan D. Flaschen, Esq., assures the Court that
the firm has no connection with the Debtors, their creditors,
the U.S. Trustee or any other party-in-interest in these Chapter
11 cases or their attorneys or accountants. In addition,
Bingham is a "disinterested person" as that phrase is defined in
Section 101(14) of the Bankruptcy Code, and does not hold or
represent any interest adverse to the Debtors' estates with
respect to the matters for which Bingham is employed, as
required by Section 328(c) of the Bankruptcy Code.
However, Bingham has represented, and likely will continue to
represent, certain creditors and various other parties adverse
to the Debtors in matters unrelated to these Chapter 11 cases,
including:
A. Creditor: 360 Networks Inc., KDDI America Inc., NEC
Corp., and WorldCom;
B. Underwriter: ABN Amro Inc., Barclays Capital, Chase
Securities Inc., CIBC World Markets, Credit Suisse First
Boston, Deutsche Bank, Goldman Sachs & Co., Lehman Bros.,
Merrill Lynch & Co. Inc., and Salomon Smith Barney;
C. Indenture Trustee: The Bank of New York;
D. Professional: Charles River Associates, Clifford Chance,
Gibson Dunn & Crutcher, Holland & Knight LLP, Gray Cary
Ware & Freidenrich LLP, Jones Day Reavis & Pogue, Kim &
Chang, Latham & Watkins, Lazard Freres & Co. LLC,
McDermott Will & Emery, Millbank Tweed Hadley & McCloy,
Minter Ellison, Monitor Co., Nagashima Ohno, Paul Weiss
Rifkind, Perkisn Cole, Preston Gates Ellis, PwC LLC,
Richards Layton & Finger, Gould & Ratner, Simpson Thacher
& Bartlett, Slaughter & May, and Winston & Strawn;
E. Strategic Partner: Digital United Holdings Ltd., Exodus
Communications Inc., OptiCom CA Ltd., and Softbank Corp.;
and
F. Beneficial Owner: Microsoft Corp., and Softbank Corp.
(Global Crossing Bankruptcy News, Issue No. 32;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
AT&T CANADA: Stays On-Track to Complete Workout in First Quarter
----------------------------------------------------------------
AT&T Canada successfully established new commercial agreements
with AT&T Corp., defining how the companies will serve customers
as AT&T Canada transitions to a fully independent and re-branded
company. These agreements, along with its proposed restructuring
plan, position AT&T Canada to achieve its goal of emerging as a
strong long-term competitor in the Canadian telecom marketplace.
In addition, AT&T Canada reported that the Ontario Superior
Court of Justice has granted an Order for the company to
disseminate the company's capital restructuring plan to its
bondholders and affected creditors, and the company expects to
hold a meeting of these creditors to vote for approval of the
plan on February 20, 2003. As previously announced, the plan
includes the exchange of the company's outstanding public debt
for 100% of the new equity of AT&T Canada and a minimum of $200
million in cash. AT&T Canada remains on track to complete its
capital restructuring at the end of the first quarter 2003.
In today's hearing, the Court also ratified the company's
execution of the new commercial agreements with AT&T Corp. which
will be effective upon similar approval of the U.S. Bankruptcy
Court.
The new commercial agreements, among other things:
- Establish a clear path for AT&T Canada to launch a new
brand name by September 9, 2003 and cease use of the AT&T brand
by no later than December 31, 2003, with the exception of the
use of the AT&T brand for its calling card and Internet
addresses until no later than June 30, 2004;
- Enable AT&T Canada and AT&T Corp., to continue working
together on a non-exclusive basis, and maintain network ties
between the two companies for the benefit of customers;
- Provide continuity for AT&T Canada's global connectivity,
technology platform and product suite, including North American
voice services, end-to-end frame services and bilateral traffic
exchange;
- Provide a framework to deal with ongoing cooperation and
a process to transition network support provided by AT&T Corp.
for the company's toll-free platforms by December 31, 2005 with
details of the transition plan to be completed by no later than
December 31, 2003. The transitional network support arrangements
may be extended by mutual agreement; may be accelerated under
certain conditions to June 30, 2004; or accelerated in the event
of an acquisition of 20% or more of AT&T Canada's equity by a
Strategic Competitor or in other circumstances;
- Recognize AT&T Corp.'s ability to serve Canadian
customers directly, including by competing with AT&T Canada; and
- Provide AT&T Canada the ability to forge additional
supplier relationships that will enhance its connectivity and
product offerings.
These transitional arrangements will enable AT&T Canada to
continue to provide the high level of service that its customers
have come to expect. Details of these arrangements will be
contained in AT&T Canada's Information Circular to be
distributed to its bondholders and other affected creditors on
or about January 22, 2003.
John McLennan, AT&T Canada's Vice Chairman and Chief Executive
Officer stated, "We are very pleased with these transitional
commercial agreements, which will give us the flexibility to
develop additional supplier relationships that will enhance our
connectivity and product offerings. The agreements put in place
provide the foundation we need to effectively transition to our
new brand, which we already are moving aggressively to develop.
From our customers' perspective, it will be business as usual in
terms of the products and services they currently receive from
us."
John A. MacDonald, AT&T Canada's President and Chief Operating
Officer, added, "We are very comfortable with the continuity we
have achieved through these agreements in terms of our
technology platform, global connectivity and network support. We
have put in place the necessary support to enable us to meet the
needs of our customers. In those situations where we find
ourselves competing with AT&T Corp., we will do so fairly,
openly and honestly - and at all times respecting the customers'
wishes on how they want to be served. What we have here is an
excellent platform for future growth and competitiveness."
Mr. McLennan concluded, "We remain on track to emerge from our
capital restructuring at the end of the first quarter with
positive cash flow, a highly motivated work force, and zero
long-term debt. We can compete and win as a fully independent
and re-branded Canadian telecom company. We know the Canadian
market, we understand the needs of Canadian business, and we
have an expert national sales force ready, willing and able to
go to work for our customers across the country. Put it all
together, and we are confident that we will continue to be the
telecom services provider of choice to Canada's leading
businesses."
AT&T Canada is the country's largest national competitive
broadband business services provider and competitive local
exchange carrier, and a leader in Internet and E-Business
Solutions. With over 18,700 route kilometers of local and long
haul broadband fiber optic network, world class data, Internet,
web hosting and e-business enabling capabilities, AT&T Canada
provides a full range of integrated communications products and
services to help Canadian businesses communicate locally,
nationally and globally. Visit AT&T Canada's Web site,
http://www.attcanada.comfor more information about the company.
AT&T Canada Inc.'s 7.65% bonds due 2006 (ATTC06CAR1) are trading
at about 18 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ATTC06CAR1
for real-time bond pricing.
AUXER: Juan Carlos Hernendez Heads Dominican Republic Operations
----------------------------------------------------------------
The Auxer Group, Inc.'s (OTCBB:AXGI) wholly owned subsidiary
Viva Airlines, Inc., appointed Juan Carlos Hernendez as its Vice
President and Chief Operating Officer for Dominican Republic
operations.
Mr. Hernendez will be responsible for government relations,
operations, auditing and ground handling services. Mr. Hernendez
has owned a ground handling business in the Dominican Republic
for many years. Additionally, Mr. Hernendez has significant
experience handling various aviation regulatory matters.
Auxer also announced that it has entered engaged Mojave Jet (a
subsidiary of Cherokee Transportation Group, LLC) as a purchase
agent to seek and procure 2 Boeing 747-200 aircraft to be
purchased and delivered on or about March 15, 2003.
Robert Scott, Auxer's Chairman, stated "We are very fortunate to
have Mr. Hernendez join Viva. Mr. Hernendez is a well respected
businessman in the Dominican Republic. I expect that this
appointment will provide immediate goodwill to Viva. The
engagement of Mojave Jet and subsequent acquisition of jet
aircraft is in response to very strong sales indicators."
The Auxer Group's September 30, 2002 balance sheet shows a
working capital deficit of about $1.5 million, and a total
shareholders' equity deficit of about $2.5 million.
BETHLEHEM STEEL: Seeks Amendment to USWA Fee Reimbursement Order
----------------------------------------------------------------
Bethlehem Steel Corporation and its debtor-affiliates ask the
Court to amend the Reimbursement Order to substitute Potok,
Campbell and Co., LLC for Keilin & Co., LLC as the United Steel
Workers of America's financial advisor. The Debtors also ask
the Court to amend the compensation terms of the USWA's
financial advisor and determine that Keilin is not entitled to
any success fee. The terms and conditions of Potok Campbell's
retention is basically the same as Keilin's except for some
modifications.
George A. Davis, Esq., at Weil, Gotshal & Manges LLP, in New
York, explains that the USWA already terminated Keilin's
retention effective as of November 22, 2002. The USWA replaced
Keilin with Potok Campbell, effective on October 1, 2002. Mr.
Davis relates that the USWA even informed Keilin that it would
not approve the payment of any success fee by the Debtors.
Pursuant to a letter of agreement between the Debtors and the
USWA, the Debtors have agreed to reimburse the USWA's reasonable
professional fees and expenses. At that time, the USWA had
retained Keilin as its financial advisor. In particular, the
Debtors agreed to pay Keilin:
(1) $100,000 as monthly fee, except for the periods October 15
to October 31, 2001 and April 1 to April 15, 2002, in
which case the fee was $50,000; and
(2) $5,000,000 as success fee, less the amount of any monthly
work fees paid to Keilin, subject to the occurrence of the
effective date of either a confirmed reorganization plan
or the sale of all or substantially all of its operating
assets to a third party and the approval of the USWA.
"The understanding also provided that if Keilin's services were
to terminate prior to the effective date of the confirmation
plan or sale of all of Bethlehem's assets, Bethlehem agreed to
pay Keilin the success fee so long as Bethlehem completes a
transaction that implements a restructuring at any time within
18 months following termination," Mr. Davis says.
On January 7, 2002, the Court authorized the Debtors to
reimburse the USWA for its reasonable professional costs and
expenses, including the payment of a success fee to Keilin. The
Court also directed the Debtors to reimburse the USWA, based on
the usual and customary rates charged by its professionals,
subject to an overall limit of $1,400,000, exclusive of any
success fee that might be allowed. The Court also set forth the
method for reimbursement and guidelines for indemnification.
Mr. Davis tells Judge Lifland that the Debtors were informed
that the principals of Potok Campbell were formerly associated
with Keilin. However, these principals have not been associated
with Keilin during the pendency of the matter. "Bethlehem
recognizes the termination of Keilin by the USWA and the need of
the USWA for continuing financial advisory services in
connection with the ongoing negotiations. Therefore, Bethlehem
has agreed to reimburse the USWA for the services of Potok
Campbell in replacement of Keilin," according to Mr. Davis.
Pursuant to a November 22, 2002 letter agreement between the
Debtors and the USWA, the parties agree that same conditions as
applied to Keilin in the performance of its services, including
indemnification, will apply to Potok Campbell except for:
(a) the payment of a $75,000 monthly work fee; and
(b) the reimbursement to Potok Campbell for its reasonable
expenses, subject to the $1,400,000 overall limit.
To date, the Debtors have paid $802,776 as reimbursement
expenses in connection with the USWA -- $602,504 of which has
been paid to Keilin. Mr. Davis notes that there remains a
$597,224 balance payable to the USWA.
Under Potok Campbell's retention, the Debtors are also required
to pay the firm a $2,500,000 success fee, subject to the USWA's
approval. Mr. Davis maintains that this is relatively lower
compared to the Keilin success fee, although the monthly work
fee will not be credited against the Potok Campbell success fee.
The Potok Campbell success fee is also subject to substantially
the same conditions that had applied to the Keilin success fee.
Mr. Davis further asserts that the proposed Potok Campbell
success fee does not add to the potential costs of reimbursement
for financial advisory services to the USWA that were originally
contemplated. The USWA has also advised the Debtors that it
will have no further obligation to Keilin or the USWA as to
Keilin's services and no success fee will be paid to Keilin.
Mr. Davis points out that Potok Campbell's monthly fees are less
than Keilin's, which clearly indicates that the reimbursement
expenses in connection with Potok Campbell's engagement results
in a benefit to the Debtors and their economic stakeholders.
(Bethlehem Bankruptcy News, Issue No. 29; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
BULL RUN: Annual Shareholders' Meeting Slated for February 13
-------------------------------------------------------------
The Annual Meeting of Stockholders of Bull Run Corporation, a
Georgia corporation, will be held at 10:00 a.m., local time, on
February 13, 2003, at the offices of Bull Run, 4370 Peachtree
Road, N.E., Atlanta, Georgia, for the following purposes:
1. To elect directors.
2. To authorize an amendment to Bull Run's Articles of
Incorporation to effect a stock combination (reverse stock
split) pursuant to which every 10 shares of outstanding common
stock would be reclassified into one share of common stock, and
reducing the authorized number of shares of common stock from
100,000,000 to 25,000,000 shares, if such amendment is necessary
to maintain compliance with the continued listing requirements
of The Nasdaq Stock Market.
3. To ratify the selection of PricewaterhouseCoopers
LLP as Bull Run's independent auditors for its fiscal year
ending August 31, 2003.
4. To consider and act upon such other business as may
properly come before the meeting.
The Board of Directors has fixed the close of business on
January 3, 2003 as the record date for determining the holders
of common stock having the right to receive notice of, and to
vote at, the meeting.
Bull Run formerly relied on its Datasouth Computer subsidiary --
which makes heavy-duty dot matrix and thermal printers -- for
nearly all of its sales. Bull Run sold Datasouth in late 2000
and now concentrates on its Host Communications sports and
affinity marketing unit. It provides consulting; event hosting;
member communication and recruitment; publishing; TV, radio, and
Internet program production; and other services to college and
high school sports teams, athletic conferences, and
associations. Clients include the National Collegiate Athletic
Association and the National Federation of State High School
Associations. Chairman Mack Robinson owns 21% of Bull Run. At
August 31, 2002, Bull Run's balance sheet shows a working
capital deficit of about $32 million.
CARAUSTAR: Amends Credit Facility Avoiding Potential Default
------------------------------------------------------------
Caraustar Industries, Inc., (Nasdaq: CSAR) as discussed in its
third quarter 2002 10Q SEC filing, expects to incur an after-tax
charge to equity resulting from the recognition of an additional
minimum liability in its pension plan. The fourth quarter 2002
charge will be approximately $22 million and has no effect on
the company's earnings or its cash position. The underfunded
status is primarily due to the poor performance of the equity
markets. Pension expense for financial reporting purposes is
expected to increase from approximately $4.5 million in 2002 to
$9.9 million in 2003, while cash funding is expected to increase
from approximately $7.1 million in 2002 to $12.1 million in
2003.
The company has also amended its revolving credit facility to
avoid a technical default at December 31, 2002 that would have
resulted from the reduction in shareholders' equity attributable
to the pension charge and expects to be in compliance with its
debt covenants in 2003.
The company also announced that it has completed the purchase of
the remaining equity of Caraustar Northwest, LLC, located in
Tacoma, WA, from its venture partner, Paccess, a Portland,
Oregon based general partnership. The Tacoma facility, which
manufactures tubes, cores, and edge protectors and performs
custom slitting for customers on the West Coast, will become
part of the Caraustar Industrial & Consumer Products Group. This
operation strongly complements the Northwest paper mill that
Caraustar acquired from Smurfit-Stone Container Corporation in
September, 2002.
In other consolidation and restructuring decisions, the company
announced:
-- The Halifax paperboard mill, located in Roanoke Rapids,
NC, has been permanently closed. The mill has been idle since
mid-2001 due to reduced market demand for uncoated recycled
boxboard for the specialty product businesses.
-- Carolina Converting, Inc., in Fayetteville, NC is being
consolidated and relocated in recognition of the trend toward
offshore sourcing of various specialty products, such as board
games and puzzles.
-- The Ashland, OH carton facility is being restructured to
serve a smaller, more focused carton market.
Associated with these actions, the company will take a fourth
quarter after-tax restructuring charge of approximately $7.6
million or $0.27 per share. The restructuring charge is $12.2
million before tax, of which approximately $2.5 million is
expected to be paid in cash.
The company had other nonrecurring charges in the fourth quarter
of approximately $5.3 million after tax or $0.19 per share due
to business interruptions in North Carolina caused by power
outages from the December ice storm, postponed high yield debt
offering costs, noncapitalized costs associated with the
acquisition of the SSCC assets, and one-time employee transition
expenses.
Additionally in the fourth quarter, the company completed a
comprehensive review of the remaining estimated useful lives of
its machinery and equipment. As a result of this review,
Caraustar has revised its estimate of the useful lives for
machinery and equipment from an average of approximately 10
years to an average of approximately 20 years. The company
believes that the change more appropriately reflects the useful
lives of the assets and is consistent with the prevailing
industry practice. Although there is no cash impact, the gain in
net income in the quarter is expected to be approximately $4
million, or $0.14 per share. For 2003, the reduced depreciation
charge is expected to increase net income by approximately $19
million, or $0.67 per share.
The company estimates that it will report a net loss for the
fourth quarter, including all of the above charges, of
approximately $14 million. Excluding the restructuring and non-
recurring charges, but including the impact of the change in
depreciation, the company expects to report a net loss for the
fourth quarter of approximately $1 million.
Commenting on the expected results and announced restructuring
charges for the fourth quarter, Thomas V. Brown, president and
chief executive officer of Caraustar, stated, "Cash generation
continues to be strong even during the current depressed market
conditions. Caraustar completed the $80 million acquisition of
certain Smurfit-Stone assets, made interest payments of $36
million, capital improvements of $22 million and retired $7
million of long-term debt. We ended the year with no borrowings
on our revolver account and $33 million of cash on our balance
sheet.
"The consolidations and restructurings are part of an ongoing
effort to rationalize our capacity to meet the continuing
decline in US industrial demand and the associated drop in
demand for packaging products. On the positive side, despite the
third consecutive year of reduced demand for paperboard
packaging, Caraustar realized a substantial increase in demand
for its mill and converted products. Excluding the new volume
associated with the SSCC business additions, mill volume for the
full year grew 4.5 percent or approximately 40,000 tons overall.
In the fourth quarter, which included the first full quarter of
the SSCC acquisition, mill volume increased approximately 34,000
tons (up 15 percent) over the fourth quarter of last year. The
integration of the SSCC mills and converting operations into
Caraustar is progressing as planned."
The company will report its fourth quarter and full-year 2002
financial results on Tuesday, February 4, 2003, and host a
conference call at 11:00 a.m. (EST) that will be webcast live.
Caraustar, to which Standard & Poor's assigns a BB Corporate
Credit Rating, is one of the largest and most cost-effective
manufacturers and converters of recycled paperboard and recycled
packaging products in the United States. The company has
developed its leadership position in the industry through
diversification and integration from raw materials to finished
products. Caraustar serves the four principal recycled
paperboard product markets: tubes, cores and cans; folding
carton and custom packaging; gypsum wallboard facing paper; and
miscellaneous "other specialty" and converted products.
CHARTER COMMS: Restructuring Concern Prompts S&P to Junk Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
corporate credit rating on cable television operator Charter
Communications Inc., to 'CCC+' from 'B', based on rising concern
about a possible public debt restructuring. All ratings on
related entities were also lowered and are still on CreditWatch
with negative implications.
St. Louis, Mo.-based Charter had about $18.5 billion total debt
outstanding as of Sept. 30, 2002.
"Given depressed debt trading levels and the company's
operational challenges, Charter could be further pressured to
reduce debt through a restructuring. The downgrades are also
based on greater uncertainty regarding management's financial
strategy," said Standard & Poor's credit analyst Eric Geil.
The CreditWatch listing reflects the potential for further
downgrades in the event that Charter announces an exchange offer
to give bondholders consideration significantly less than the
par value of the bonds.
The CreditWatch listing also reflects uncertainty about the
outcome of a federal grand jury investigation into the company's
accounting policies.
Standard & Poor's will monitor Charter's financial and legal
developments and likely resolve the CreditWatch upon receiving
greater clarity about the company's financial plans.
Charter Comms. Holdings' 13.50% bonds due 2011 (CHTR11USR3) are
trading at about 30 cents-on-the-dollar, DebtTraders says. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CHTR11USR3
for real-time bond pricing.
CLARITI TELECOMMS: Converting Three Notes into Restricted Shares
----------------------------------------------------------------
At a meeting of Clariti Telecommunications International, Ltd.'s
Board of Directors on January 14, 2003, the Company voted to
exercise its right to convert three non-interest-bearing notes
in the respective amounts of $857,544, $250,000 and $238,000,
which had been issued to the three secured creditors in
Clariti's Chapter 11 Bankruptcy proceedings as of November 12,
2002, into newly issued restricted shares of common stock of
the Company.
By their terms the notes for $857,554 and $250,000 are each
convertible at a price of $2 per share, while the note for
$238,000 is convertible at a price of $10 per share.
Accordingly, these transactions have resulted in the issuance of
an aggregate additional 577,577 shares of the Company's common
stock. The Company has no present intention to register all or
any of the Note Conversion Shares. Furthermore, the Note
Conversion Shares in addition to the statutory restriction
imposed under Rule 144 of the Securities Act of 1933, are
subject to a contractual restriction or "lock-up" for an
additional period of one year after the expiration of the Rule
144 restriction.
On April 18, 2002, Clariti Telecommunications International,
Ltd., filed a voluntary petition for reorganization under
Chapter 11 of the United States Bankruptcy Code in the United
States Bankruptcy Court for the Eastern District of
Pennsylvania.
COMM 2000-C1: Fitch Hatchets Ratings to Lower-B and Junk Levels
---------------------------------------------------------------
COMM 2000-C1 commercial mortgage pass-through certificates,
series 2000-C1 are downgraded by Fitch Ratings as follows: $26.9
million class G to 'BB' from 'BB+'; $6.7 million class H to BB-
from 'BB'; $6.7 million class J to 'B+' from 'BB-'; $10.1
million class K to 'B' from 'B+'; $7.9 million class L to 'B-'
from 'B'; $6.7 million class M to 'CCC' from 'B-'.
In addition, Fitch affirms the following classes: $128.3 million
class A-1, $542.9 million class A-2, and interest-only class X
at 'AAA'; $38.2 million class B at 'AA'; $39.3 million class C
at 'A'; $13.5 million class D at 'A-'; $25.8 million class E at
'BBB'; $11.2 million class F at 'BBB-'; and $4.5 million class N
at 'CCC'. Fitch does not rate the $9 million class O
certificates.
The downgrades are attributed to additional information received
from the master servicer, Orix Capital Markets. At the time of
Fitch's October review, Orix reported a debt service coverage
ratio on the Crowne Plaza Hotel (10% of the outstanding balance)
for the trailing twelve months as of June 2002 of 1.89 times.
This servicer provided DSCR corresponds to a Fitch stressed DSCR
of 1.49x which resulted in an affirmation of the transaction.
The servicer recently provided revised operating statement
analysis reports for all periods starting September 2001. The
revised TTM DSCR as of September 2002 of 1.02x corresponds to a
Fitch stressed debt service coverage ratio of 0.76x compared to
1.13x at year-end 2001 and 1.73x at issuance. The Fitch DSCR for
the loan is calculated using Fitch adjusted net cash flow and
debt service payments based on the current balance and Fitch
stressed refinance constant. The hotel's revenue per available
room as of September 2002 was $144 compared to $175 at issuance.
Additionally, Fitch remains concerned with the three loans
representing 4.8% of the overall pool balance that are currently
in special servicing. The Radisson Hotel in Miami, FL did not
payoff as expected, but was brought current and the special
servicer, GMAC Commercial Mortgage, expects it to be returned to
the master servicer within six months.
Fitch applied various hypothetical stress scenarios taking into
consideration the Crowne Plaza loan, the specially serviced
loans and the other loans with DSCRs below 1.00x. Based on the
results of these scenarios, downgrades were warranted. Fitch
will continue to monitor this transaction, as surveillance is
ongoing.
COMMUNICATION INTELLIGENCE: Violates Additional Nasdaq Guideline
----------------------------------------------------------------
Communication Intelligence Corporation (Nasdaq: CICI), on
January 10, 2003, received a Nasdaq Staff Notification of
Additional Deficiency indicating that CIC is not in compliance
with the shareholder approval rule set forth in Marketplace Rule
4350(i)(D)(ii), as the Company's equity line of credit could
result in the issuance of shares in excess of 20% of the
Company's currently outstanding shares, and that its securities
are therefore subject to delisting from the Nasdaq SmallCap
Market on this ground, in addition to the per share price non-
compliance previously announced by CIC.
CIC responded to this additional issue at the previously
scheduled hearing before a Nasdaq Listing Qualifications Panel
on January 16, 2003. At that hearing, CIC presented its position
on all issues raised by Nasdaq Staff as to why it believes
continued listing of its shares on Nasdaq SmallCap Market is
warranted. The delisting is stayed pending the outcome of the
hearing, which is expected within the next 30 days. There can be
no assurance that the Panel will grant CIC's request for
continued listing.
Communication Intelligence Corporation is the leading supplier
of electronic signature, biometric security and natural input
solutions focused on emerging, high potential applications
including paperless workflow, smart wireless devices and e-
Commerce enabling the world with "The Power to Sign Online(TM)."
The Company's core software technologies include multilingual
handwriting recognition systems, biometric signature
verification, natural messaging, and operating system extensions
that enable pen input, and were recently licensed by the
operating system subsidiary of Palm, Inc. for use in its popular
operating systems. CIC's products are designed to increase the
ease of use, functionality, and security of wireless electronic
devices and e- business processes. CIC sells direct to OEMs and
Enterprises. Products are also available through major retail
outlets such as CompUSA, Staples, OfficeMax, key integration
partners and direct via http://www.cic.com Industry leaders
such as Ericsson, Fujitsu, Hitachi, Siebel Systems, IBM, Charles
Schwab and Prudential have licensed the company's technology.
CIC is headquartered in Redwood Shores, California and has a
joint venture, CICC, in Nanjing, China. For more information,
please visit the firm's Web site at http://www.cic.com
* * *
Liquidity and Capital Resources
In its SEC Form 10-Q for the quarter ended September 30, 2002,
the Company stated:
"At September 30, 2002, cash and cash equivalents totaled $1,246
compared to cash and cash equivalents of $2,588 at
December 31, 2001. The decrease was due primarily to cash used
in operating activities of $1,569, cash used in investing
activities of $54. Cash provided by financing activities was
$281, net. The $281 provided by financing activities consists
of $426 in proceeds from the exercise of stock options by the
Company's employees and former chairman, the acquisition of
capital equipment under capital lease of $40, reduced by the
repayment of the note by the Joint Venture of $181, and by
payments of capital lease obligations of $4. Total current
assets were $2,372 at September 30, 2002, compared to $3,899 at
December 31, 2001.
"As of September 30, 2002, the Company's principal source of
funds was its cash and cash equivalents aggregating $1,246.
"The Company was incorporated in Delaware in 1986 and the
accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. The Company
has suffered recurring losses from operations that raise a doubt
about its ability to continue as a going concern. The Company
is in the process of filing a registration statement with the
Securities and Exchange Commission in order to obtain funding
from equity financing. However, there can be no assurance that
the Company will have adequate capital resources to fund planned
operations or that any additional funds will be available to the
Company when needed, or if available, will be available on
favorable terms or in amounts required by the Company. If the
Company is unable to obtain adequate capital resources to fund
operations, it may be required to delay, scale back or eliminate
some or all of its operations, which may have a material
adverse effect on the Company's business, results of operations
and ability to operate as a going concern. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
"Current liabilities, which include deferred revenue, were $953
at September 30, 2002. Deferred revenue, totaling $123 at
September 30, 2002, primarily reflects advance payments for
products and maintenance fees from the Company's licensees
which are generally recognized as revenue by the Company when
all obligations are met or over the term of the maintenance
agreement."
CONSECO INC: Finance Debtors Want to Pay Credit Card Merchants
--------------------------------------------------------------
The Conseco Finance Debtors move the Court for an order
authorizing them to pay prepetition claims of critical private
label credit card merchants, authorizing payment of merchant
incentive program obligations, and authorizing the sale of
customer accounts in the ordinary course of business.
Anne Marrs Huber, Esq., at Kirkland & Ellis explains that in a
typical private label credit card transaction, the consumer
finances their purchase at a retail store with a credit card
issued by the CFC Debtors or one of their non-debtor
subsidiaries in the name of the merchant for use in that
particular merchant's stores. Previously, funding obligations
for those credit card accounts were provided by CFC of CFSC in
part. As part of the restructuring measures taken by the CFC
Debtors, the majority of these functions were transferred to the
CFC Debtors' banking subsidiaries, which are not debtors in
these cases. However, because some functions have not been
completely transferred, the CFC Debtors continue to provide
ancillary support to the private label credit card business.
Therefore, they are asking the Court for permission to continue
carrying out these functions.
The CFC Debtors have entered into private label credit card
agreements, or Merchant Contracts, with retailer merchants where
the non-debtor subsidiaries advance payments to the merchant
whose private label card is used in a purchase. The CFC Debtors
continue to provide the following support for these functions:
1) funding credit card balance transfers for customers who
wish to pay off the balance another charge card using a
private label credit card issued by the non-debtor
subsidiaries;
2) providing refunds to customers owed a credit balance
refund because they overpaid their private labe charge
accounts; and
3) funding checks that are written against the private
label cards by customers. These are referred to as Non-
Debtor Private Label Claims.
The CFC Debtors log the Non-Debtor Private Label Claims as an
intercompany charge on a daily basis. On average, the Debtors
process $2,500,000 of charges per month of these claims, which
are recouped on a daily basis.
Ms. Huber explains that merchants favor private label credit
card arrangements because they build brand loyalty and generate
cost reductions for the merchant in the form of lower fees, as
opposed to the fees associated with a general purpose credit
card transaction. As a result, the CFC Debtors and their non-
debtor subsidiaries are able to collect interest and fees from
the consumer related to credit card finance charges. Since this
is a mutually beneficial arrangement, the CFC Debtors seek to
preserve the ability to advance funds on behalf of the Non-
Debtor Private Label Claims on a postpetition basis.
Additionally, Ms. Huber states that the CFC Debtors continue to
handle the payment process for accounts that have not been
transferred to one of CFC's non-debtor banking subsidiaries,
such as making direct payments to merchants on customer private
label credit card accounts or by processing payments made by
customers on behalf of those accounts. The CFC Debtors'
receivables for those accounts that have not yet been
transferred represent lass than 10% of total receivables for
private label credit card accounts.
The CFC Debtors and their non-debtor subsidiaries deal with
numerous private label credit card retailer merchants on a daily
basis. An interruption in the payment flow to these merchants
would be devastating not only to the CFC Debtors, but also their
non-debtor subsidiaries, that do not have the same protections
afforded by the automatic stay. Additionally, if customers of
the private label credit card merchants do not receive basic
services such as refunds on overpayments in a timely manner,
there is substantial likelihood that the CFC Debtors and the
non-debtor subsidiaries will lose long-standing business
relationships with these merchants. All merchant agreements are
structured so that a merchant may terminate its agreement if
funding is not received within a specific time frame.
The Repurchase Provision
Most Merchant Contracts provide the Merchant with the option of
purchasing all outstanding accounts between its customers and
the CFC Debtors upon termination of the agreement, called the
Repurchase Provision.
The CFC Debtors and non-debtor subsidiaries are parties to a
Merchant Contract with Menard Inc., containing a Repurchase
Provision. Menard formally expressed desire to terminate its
Merchant Contract with the CFC Debtors prepetition and to
exercise its Repurchase Provision. The Menard Contract expired
on December 31, 2002. Almost 90% of the outstanding Menard
accounts are held by Mill Creek Bank, Inc. The remaining 10% is
held by CFC. The parties have entered into a letter of intent
with a third party servicer to sell the outstanding Menard
accounts for par value. The third party will pay $520,000,000
for the account held by Mill Creek Bank and $45,000,000 for
those held by CFC. The CFC-owned Menard accounts represent 8.6%
of the total value of accounts scheduled to be sold.
According to Ms. Huber, any sale of accounts pursuant to the
Repurchase Provision is an ordinary course transaction.
Nonetheless, out of an abundance of caution and due to the size
of the transaction, the CFC Debtors seek Court authorization to
execute the sale of the Menard Accounts. The sale will return a
profit and bring additional liquidity into the estate.
Moreover, it is important that the CFC Debtors continue to honor
obligations under the Contracts, even with a Merchant
terminating its Agreement.
Customer Program Obligations
Although the CFC Debtors' non-debtor subsidiaries provide the
primary finding for consumer charges, the CFC Debtors have not
formally assigned the Merchant Contracts to them.
Pursuant to the Merchant Contracts, the CFC Debtors administer
merchant incentive programs designed to provide incentives for
merchants to continue to do business with the CFC Debtors. For
example, the CFC Debtors contribute marketing funds into a joint
marketing account with merchants that is used to market their
private label credit cards. Under other Contracts, the CFC
Debtors are required to administer a volume incentive program
where the CFC Debtors pay merchant or dealer partners a portion
of the finance charges collected from private label credit card
consumers upon reaching a volume threshold. Finally, the CFC
Debtors participate in Rebate Programs where the CFC Debtors
either administers the Program, funds rebates to the merchants
on behalf of consumers when minimum charge amounts are met or
partially funds a direct consumer rebate.
The CFC Debtors have obligations under the Merchant Incentive
Programs of approximately $5,000,000. If the Merchants do not
receive their contributions in a timely fashion, the CFC Debtors
may lose their long-standing business relationships. If the
ultimate consumer does not receive a promised rebate due to
CFC's failure to fund the Program, CFC's reputation may be
irreparably damaged and it could be subject to claims asserted.
The CFC Debtors derive much of their revenue directly or
indirectly from operation of their non-debtor subsidiaries. For
instance, the CFC Debtors' consumer finance division enjoys a
leading position in the private label credit card industry, as
well as in the home improvement and big-ticket recreational
product financing industries. The private label division is
presently the fourth largest third-party private label credit
card provider in the United States. The consumer finance
division generated $36,000,000 in pretax profits on receivable
volume of $3,980,000,000 in 2001 and has estimated pretax profit
of $65,000,000 on receivable volume of $3,790,000,000 in 2002,
due to the ongoing commitment of its key retailer merchants and
dealer partners. Preserving these arrangements will permit the
CFC Debtors to preserve their going concern value to the
greatest extent possible. (Conseco Bankruptcy News, Issue No. 4;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
Conseco Inc.'s 10.50% bonds due 2004 (CNC04USR2), DebtTraders
reports, are trading at about 37 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CNC04USR2for
real-time bond pricing.
CORAM HEALTHCARE: Cerberus Says Equity Committee Plan is Flawed
---------------------------------------------------------------
On December 19, 2002, the Official Committee of Equity Security
Holders of Coram Healthcare Corporation and Coram, Inc., filed a
proposed plan of reorganization for Coram Healthcare Corporation
and Coram, Inc., in the U. S. Bankruptcy Court for the District
of Delaware.
In a nutshell, Rochard Levy, Esq., at Jenner & Block, LLC,
representing the Equity Committee explains, the Equity
Committee's Plan proposes to creditors' claims in full, in cash,
except for the Noteholders and Preferred Stockholders, who will
receive new securities. Equity will remain in place and benefit
from prosecution of RICO claims which the Equity Committee
values at $320 million -- and nearly a billion dollars if
trebled. A complete description of the Proposed Equity
Committee Plan is contained in the Disclosure Statement of the
Official Committee of Equity Security Holders of Coram
Healthcare Corporation and Coram, Inc., filed contemporaneously
with the Proposed Equity Committee Plan in the Bankruptcy Court,
Jointly Administered Case No. 00-3299, which are available at
docket numbers 2019, 2020, 2021 and 2022 in Coram's case.
The Disclosure Statement filed contemporaneously with the
Proposed Equity Committee Plan must be approved by the
Bankruptcy Court as containing adequate information before the
Equity Committee may solicit votes in favor of confirmation of
the Proposed Equity Committee Plan. The Equity Committee wants
Judge Walrath to put her stamp of approval on the Disclosure
Statement at a hearing scheduled for February 5, 2003.
The Equity Committee's Plan, Michael Cook, Esq., at Schulte,
Roth & Zabel says, should never be approved. His client,
Cerberus Partners, L.P., argues that the document:
(a) contains willfully misleading and defamatory
statements about Cerberus and others;
(b) deliberately omits known facts;
(c) intentionally mischaracterizes facts; and
(d) fails to contain "adequate information" and describes
a plan that's patently unconfirmable for five reasons:
(1) the Committee (which was appointed to represent
Coram shareholders) lacks standing to propose a
plan for Coram;
(2) the proposed Plan violates 11 U.S.C. Sec. 1122(a)
by improperly classifying unsecured creditors'
claims;
(3) the proposed Plan violates 11 U.S.C. Sec.
1129(b)(1) by "unfairly discriminating" against
the Noteholders;
(4) the proposed Plan violates 11 U.S.C. Sec.
1129(b)(2)(B)(ii) because the proposed
distribution scheme violates the absolute priority
rule; and "not surprisingly," Mr. Cook adds,
(5) the proposed Plan contains unlawful releases for
the Equity Committee.
Coram Healthcare filed for chapter 11 protection in 2000. Judge
Walrath denied confirmation of the Debtors' initial Plan after
finding a conflict of interest tainted the entire process.
Arlin M. Adams, Esq., serves as the Chapter 11 trustee for the
bankruptcy estates of Coram Healthcare Corporation and Coram,
Inc. On December 2, 2002, the Bankruptcy Court approved Mr.
Adams' retention of SSG Capital Advisors, L.P., and Ewing Monroe
Bemiss & Co., as his advisors.
Daniel D. Crowley -- who's relationship with Cerberus, Judge
Walrath found, tainted the plan process -- continues to be
employed by Coram. The Equity Committee wants Mr. Crowley out,
and has filed a Motion with the Bankruptcy Court to force the
Chapter 11 Trustee to terminate his employment and require Mr.
Crowley to disgorge amounts paid to him from Coram's estates.
That Motion also comes before Judge Walrath for consideration on
February 5.
COVANTA ENERGY: Asks Court to Approve Fenelus Settlement Pact
-------------------------------------------------------------
Pursuant to Sections 105 and 362 of the Bankruptcy Code, Covanta
Energy Corporation and its debtor-affiliates ask the Court for
an order authorizing, but not requiring, Covanta Energy
Services, Inc., and Covanta Lee, Inc. -- the Defendants -- to
enter into:
(i) a settlement agreement by and among the Defendants,
Claudette Fenelus, as Co-Personal Representative of the
Estate of Auguste Masse, deceased, on behalf of and for
the benefit of Louise Dina Masse, and Jose Masse -- the
Movant -- and American International Group, Inc. to
resolve all claims and counterclaims among the Parties
in connection with that certain wrongful death action
titled "Claudette Fenelus and Jenny Masse, as Co-Personal
Representatives of the Estate of Auguste Masse, on behalf
of and for the benefit of Carl Auguste Masse, a Minor;
Cybill Masse, a minor; Jenne Masse; Jose Martin Masse, a
Minor; and Louise Dina Masse, a Minor vs. Covanta Lee,
Inc. and Covanta Energy Services, Inc. asserted against
the Defendants by Movant in Florida state court; and
(ii) a related agreement with AIG.
The Insurance Policy
Prior to the Petition Date, the Debtors maintained and paid for
the Commercial General Liability Insurance Policy of the period
of October 20, 2000 to October 20, 2001. Under the terms of the
Insurance Policy, AIG pays certain attorneys' fees, litigation
costs, losses, arising from certain claims, including the claim
arising from those activities the Movant alleges in the Florida
Action. However, Deborah M. Buell, Esq., at Cleary, Gottlieb,
Steen & Hamilton, in New York, notes, pursuant to Payment
Agreements between AIG and certain of the Debtors and their
affiliates and the Insurance Policy, the Debtors have, among
other obligations, a $250,000 per occurrence retention
obligation to AIG for losses paid pursuant to the Insurance
Policy -- the Retention Obligation. Therefore, any losses paid
by AIG pursuant to the Insurance Policy will subject the Debtors
to a claim by AIG for payment of the Retention obligation.
In addition to the Retention Obligation, the Insurance Program
also imposes, among other obligations, an Allocated Loss
Adjustment Expense on certain of the Debtors. The Payment
Agreements provide that if the losses are within the amount of
the Retention Obligation, certain of the Debtors become liable
of the Loss Adjustment Obligation, which include among other
things, attorneys' fees and defense costs. However, if losses
paid by AIG pursuant to the Insurance Policy exceed the
Retention Obligation, the Loss Adjustment Obligation would be
reduced by multiplying the amount of the allocated Loss
Adjustment Expenses by the fraction with a numerator equal to
$250,000 and denominator equal to the total of the losses for an
occurrence. Accordingly, Ms. Buell concludes, any losses paid by
AIG pursuant to the Insurance Policy could subject certain of
the Debtors to a claim by AIG for payment of the Loss Adjustment
Obligation.
Ms. Buell reports that the Retention and Loss Adjustment
Obligations as well as the Debtors and its affiliates' other
obligations are secured by collateral AIG held. The collateral
includes, but not limited to:
(i) letters of credit amounting to $38,400,000; and
(ii) a surety bond for $19,500,000.
In addition, a Loss Stabilization Fund is held and maintained by
AIG or certain of its affiliates for obligations of certain of
the Debtors or their non-debtor affiliates.
The Settlement
Ms. Buell recalls that on August 21, 2002, the Court modified
the automatic stay to permit the Movant and Co-Plaintiff to
prosecute their claims asserted in the Florida Action as against
the Defendants to final judgment, for the sole purpose of
determining all issues of liability and damages, if any, of the
Defendants.
Consequently, the Parties engaged in extensive discussions to
resolve the Florida Action and all other possible related
disputes between the Parties, including any potential Retention
and Loss Adjustment Obligations that could be owed by the
Debtors to AIG should AIG pay a settlement amount to the Movant
to settle the Florida Action. The discussions resulted in a
Settlement Agreement that would resolve in full all disputes,
claims and counterclaims between the Parties in connection with
the Florida Action.
Salient terms of the Settlement Agreement are:
1. In full satisfaction of all of the Movant's claims in the
Florida Action, including any and all claims against the
Defendants and any of the Debtors, AIG will pay the Movant
$1,200,000;
2. In consideration for the Settlement Payment, the Movant will
release and dismiss with prejudice any and all claims against
the Defendants, any of the Debtors and AIG claimed in,
related to or in connection with the Florida Action,
including, without limitation, any and all rights to continue
to or to assert any unsecured prepetition claim in the
Debtors' bankruptcy proceeding;
3. The Settlement Agreement does not intend to or does not
include payment for or constitute any release of any claims
of the Co-Plaintiff in the Florida Action, and any remaining
claims will survive the Settlement Agreement and proceed as
filed; and
4. The Settlement Agreement will not become effective until it
has been approved by the Court.
As a condition precedent to implementation of the Settlement
Agreement, AIG, the Debtors and their affiliates, agree that:
1. Any claim AIG may have against the Defendants or any Debtors
for any Retention Obligation in connection with the payment
of the Settlement Payment will be resolved in full by
application of the $250,000 Retention Obligation to the Loss
Stabilization Fund, held by and maintained with AIG;
2. Upon the application of the Retention Obligation, there will
be no further requirement of any further Retention
Obligations by the Defendants or nay of the Debtors to AIG in
connection with the Settlement Payment, and AIG will release
any and all rights to continue to or to assert any claim
against the Debtors or their affiliates in connection with
the Settlement Payment or the Florida Action, provided that
both AIG and the Debtors retain all rights and claims with
respect to calculation and payment to the other of any Loss
Adjustment Obligations in connection with the Florida Action;
3. Payment of the Settlement Payment and application of the
Retention Obligation to the Loss Stabilization Fund is
without prejudice to AIG's position with respect to
calculation of the Loss Adjustment Obligation in connection
with the Florida Action, any future claims pursuant to the
Insurance Program or any other insurance policy of the
Debtors, and any premium due under the Insurance Program,
and is without prejudice to the Debtors' position with
respect to the calculation of the Loss Adjustment Obligation
in connection with the Florida, any future claims pursuant
to the Insurance Program or any other insurance policy of the
Debtors;
4. Except as set forth in the AIG Agreement, AIG reserves all
of its rights under the Insurance Program, including, without
limitation, the right to collect all other amounts due or
that may become due under the Insurance Program and the right
to arbitrate any disputes thereunder, and the Debtors and
their affiliates reserve all rights to object; and
5. The AIG Agreement will not become effective until it has
been approved by this Court.
Ms. Buell contends that the settlement of the disputes among the
parties should be approved because:
(a) Litigation of the Florida Action could be prolonged -- a
dispute involving a wrongful death action can be lengthy,
time consuming and expensive. The Florida Action has
already been in litigation for approximately 16 months;
(b) Not only would the litigation of the Florida Action be
lengthy, the resolution of any claims by AIG against the
Defendants and the Debtors regarding potential Retention
and Loss Adjustment Obligations due to AIG in connection
with the Florida Action could also be lengthy and
complicated. The Settlement Agreement will capture and
resolve all potential disputes between the Parties
immediately;
(c) The Debtors will face considerable expense and delay if
forced to litigate these matters or others that arise in
the Florida Action. The outcome of the litigation,
including any judgment amount the Defendants could be
responsible for, is uncertain. The Settlement Agreement
confers a significant benefit on the Debtors' estates, as
it will allow the Debtors to avoid the cost and
uncertainty that would attend protracted legal disputes
between the Parties;
(d) The Settlement Agreement contemplates:
-- AIG paying the Settlement Payment to Movant in
consideration for a full release by Movant of AIG,
Defendants and the Debtors from any and all Movant's
claims related to or in connection with the Florida
Action; and
-- Any related Retention Obligation that could be owed by
Defendants or the Debtors to AIG in connection with
the payment of the Settlement Payment will be fully
resolved with the application of the Retention
Obligation to the Loss Stabilization Fund. The estate
is benefited because the terms of the Settlement
Agreement allow the Debtors to settle the Florida
Action with the Movant, whereas the judgment amount the
Defendants could be responsible of is uncertain. None
of the Debtors' estates are prejudiced by any out-of-
pocket payments by the Debtors. Additionally, the
Debtors' estates are benefited because AIG will
release any and all claims against the Defendants and
the Debtors for any Retention Obligation in connection
with the Settlement Agreement in consideration of
application of the Retention Obligation to the Loss
Stabilization Fund already held by AIG;
(e) The Debtors do not believe that they are in an
underinsured position with respect to this policy year.
Additionally, none of the collateral securing the
Insurance Program is affected by the Settlement Agreement
or any payments made thereunder, and continues to remain
fully in place; and
(f) The Settlement Agreement is the product of vigorous arm's-
length bargaining that took place over a time-span of
several weeks. Each of the Parties was represented by
knowledgeable counsel during the course of the
negotiations. The terms of the Settlement Agreement are
well within the range of reasonableness. (Covanta
Bankruptcy News, Issue No. 21; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
DEVINE ENTERTAINMENT: Postpones Principal Payments on Conv. Debt
----------------------------------------------------------------
Devine Entertainment Corporation (TSX:DVN) reached an agreement
with the majority of its outstanding debenture holders to
postpone certain principal payments.
In aggregate, C$1,385,800 principal amount of the Series 1 and 2
Subordinate Convertible Debentures are currently issued and
outstanding.
As of December 31, 2002 the Company was in default on the Series
2 Debentures. The Company previously reported that because of
conditions in the capital markets that made it difficult for the
Company to raise equity investment, its working capital
continues to be limited. With the support of its debt holders,
the Company had previously postponed certain interest payments.
David Devine, President and CEO stated, "The Company is looking
forward to beginning new film productions in the first quarter
of 2003 and to raising additional working capital shortly
thereafter. Terms for the debenture will be finalized at this
time. Given that a majority of the debenture holders also
participated in the previously disclosed financing to
restructure the Company's Royal Bank debt in 2002, the Company
is pleased with the continued support of the debenture holders."
Five-time Emmy Award-winning Devine Entertainment Corporation is
a developer and producer of high-quality children's and family
films designed for worldwide television and cable markets and
international home video markets. The Company's interactive
history Web site at http://www.devinetime.com was a YAHOO!
Canada "Pick of the Week" and won first prize in the
Entertainment category at the Atlantic Digital Media Festival.
DYNEGY INC: Mike Mott Resigns as Company's SVP and Controller
-------------------------------------------------------------
Dynegy Inc., (NYSE:DYN) announced that Senior Vice President and
Controller Mike Mott has resigned from the company for personal
reasons.
Holli Nichols, vice president and assistant controller, will
assume controller duties on an interim basis. She will be
responsible for the development and application of the company's
accounting policies and procedures, coordination of the
organization's financial and operational accounting functions,
transaction support and internal and external financial
reporting. Nichols will report to Nick Caruso, executive vice
president and chief financial officer.
Dynegy Inc., owns operating divisions engaged in power
generation, natural gas liquids and regulated energy delivery.
Through these business units, the company serves customers by
delivering value-added solutions to meet their energy needs.
* * *
As previously reported, Dynegy Holdings Inc.'s senior unsecured
debt rating was downgraded to 'BB+' from 'BBB' by Fitch Ratings.
In addition, Fitch downgraded Dynegy Inc.'s indicative senior
unsecured debt to 'BB+' from 'BBB-'. The short-term ratings for
DYNH and DYN' have been lowered to 'B' from 'F3'. The ratings
for DYN and DYNH remain on Rating Watch Negative where they were
originally placed on Nov. 9, 2001. In addition, ratings for
affiliated companies, Illinois Power Co., and Illinova Corp.,
have been lowered and remain on Rating Watch Negative.
DYNEGY: Agrees to Transition Natural Gas Purchase & Sale Pacts
--------------------------------------------------------------
Dynegy Inc., (NYSE:DYN) has reached agreement with ChevronTexaco
(NYSE:CVX) to end their existing natural gas purchase and sale
contracts related to ChevronTexaco's North American production
and consumption, effective Feb. 1, 2003.
Dynegy Marketing and Trade had purchased substantially all of
ChevronTexaco's lower-48 U.S. natural gas and supplied the
natural gas requirements of ChevronTexaco's corporate facilities
through agreements that were to run until August 2006. Dynegy
has paid ChevronTexaco approximately $11 million in connection
with ending the contracts and the transfer to ChevronTexaco of
certain third-party contracts. To ensure a seamless transition,
Dynegy will provide ChevronTexaco with services that include
agency arrangements, scheduling, invoicing and accounting,
through March 31, 2003.
"This transition in our business is consistent with Dynegy's
strategy of exiting our third-party marketing and trading
activities and thereby reducing collateral requirements," said
Dynegy President and Chief Executive Officer Bruce Williamson.
"By the time the transition is complete, overall collateral
postings will be lowered by approximately $180 million,
providing yet another significant boost to liquidity as we work
to improve the company's financial position and rebuild Dynegy
around our core power generation, natural gas liquids and
regulated energy delivery assets."
The agreement announced today does not involve the natural gas
processing and liquids agreements between Dynegy Midstream
Services and ChevronTexaco, which will continue in their current
forms. Dynegy Midstream Services is the company's natural gas
liquids business unit involved in gathering, processing,
fractionation, transportation, marketing and feedstock supply.
Dynegy Inc., owns operating divisions engaged in power
generation, natural gas liquids and regulated energy delivery.
Through these business units, the company serves customers by
delivering value-added solutions to meet their energy needs.
Dynegy Holdings Inc.'s 8.75% bonds due 2012 (DYN12USR1) are
trading at about 52 cents-on-the-dollar, DebtTraders says. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=DYN12USR1for
real-time bond pricing.
ENRON CORP: Court Expands Scope of Examiner's Engagement
--------------------------------------------------------
With the Court's consideration of Goldendale's Motion to Appoint
a NEPCO Examiner, Judge Gonzalez approves Enron Corp., Examiner
Neal Batson's recommendation with respect to the scope and time
frame for the examination of the issues raised in the Goldendale
Motion. The Enron Corp. Examiner's expanded scope and time
frame will be:
A. The Examination will be structured in two phases:
(i) An initial phase, which will involve the relationship
between NEPCO and Enron and, in particular, the cash
management system; and
(ii) A second phase, which will address the various project
finance issues raised by BNL to the extent the Court
directs an examination after the filing of an Initial
Interim Report;
B. An Initial Interim Report will be filed with the Court by
April 4, 2003;
C. The Examiner will complete these investigations before the
submission of the Initial Interim Report:
-- the amount and timing of the cash sweeps;
-- the sources of the NEPCO cash that was swept;
-- the disposition of the cash by Enron Corp. including
location of deposits and the details of its use; if any;
-- whether any fraud, dishonesty, incompetence, misconduct,
mismanagement or irregularity by NEPCO or Enron Corp.
occurred in connection with the cash sweeps;
-- whether the swept cash can be traced; and
-- whether the factual and legal predicates for the
imposition of a constructive trust for the $360,000,000
allegedly swept by Enron Corp. may be asserted by NEPCO;
and
D. After the submission of the Initial Interim Report with
respect to phase one of the investigation, and further
direction from the Court, phase two of the examination would
focus on these issues:
-- a project by project analysis to the extent relevant to
the recovery on all creditor claims;
-- a report on any distribution to the NEPCO creditors; and
-- an analysis of the culpability, if any, of any party with
respect to the bankruptcy filing of NEPCO.
Moreover, the Court orders that (i) NEPCO, (ii) Enron Corp.,
(iii) the Official Committee of Unsecured Creditors, (iv) the
U.S. Trustee, (v) the Examiner, (vi) Goldendale Energy, Inc.,
(vii) Banca Nazionale Del Lavoro, S.p.A., and (viii) TECO Power
Services, Inc., its affiliates and its affiliated joint venture
entities, if they choose to be heard, will have 20 days from the
filing of the Initial Interim Report to recommend to the Court
the scope and timing of the second phase of the examination, if
any, with respect to NEPCO. After the submission of the
recommendation, this Court will determine whether a hearing on
the recommendations is necessary prior to ruling on the scope
and time frame of the second phase of the investigation, to the
extent this Court determines that a second phase is necessary.
(Enron Bankruptcy News, Issue No. 53; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
DebtTraders reports that Enron Corp.'s 9.875% bonds due 2003
(ENRN03USR3) are trading at about 14 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR3
for real-time bond pricing.
EPIC RESORTS: Court Approves Settlement of Major Disputed Issues
----------------------------------------------------------------
Anthony H.N. Schnelling, the Chapter 11 Trustee for Epic
Resorts, LLC and its affiliates, announced that on December 12,
2002, the United States Bankruptcy Court for the District of
Delaware approved a settlement resolving the major disputed
issues in the Epic Resorts bankruptcy case.
The participants of the settlement, which include Epic Resorts
and its subsidiaries, Mr. Schnelling, Thomas Flatley, Kenneth
Knight, Scott Egelkamp, Todd Lynch, Lund Stucki, Epic Vacation
Club, various Epic Homeowners' Associations, the Highland Group
of secured creditors and the Official Committee of Unsecured
Creditors, are pleased that the parties were able to reach an
amicable resolution. The settlement closed on January 6, 2003.
In conjunction with the settlement, Epic closed on a $6,000,000
post-petition loan from various funds managed by Highland
Capital Management, which will help to fund necessary operating
costs for Epic, the Vacation Club and the Homeowners
Associations, in order to allow the Trustee to find a buyer for
the Epic Debtors' assets.
All of the participants wish to notify the timeshare community,
the general public and the media that the disputed allegations
made against each other by the parties have been or are being
dismissed. All allegations of any wrongdoing alleged against any
of the parties have been withdrawn.
Although it is impossible for one blanket settlement to resolve
all potential issues, the parties have worked diligently and
with great resolve and have achieved a resolution that is in the
best interests of the parties to the settlement, the creditors
of the Epic Debtors and the homeowners. Consequently, the
Trustee and Mr. Flatley believe that the settlement will result
in improved operations and greater stability for homeowners
utilizing the Epic resort facilities.
EQUITEX INC: Regains Compliance With Nasdaq Marketplace Rule
------------------------------------------------------------
Equitex, Inc., (Nasdaq:EQTX) which reported a working capital
deficit of about $4 million as at September 30, 2002, was
notified by The Nasdaq Stock Market that it has regained
compliance with Marketplace Rule 4350(i)(1)(A) and the matter is
now closed.
As previously reported in the Company's Quarterly Report on Form
10-Q, in November 2002, the Company was notified by The Nasdaq
Stock Market that the issuance in March 2002 of 300,000 warrants
to purchase common stock at $.50 per share to a director of the
Company who is also an officer of a Company subsidiary, required
stockholder approval. The warrants were exercised in March and
April 2002. The Company has rescinded the transaction and
approved the implementation of a new corporate policy for
similar future transactions.
Equitex, Inc., is a holding company operating through its wholly
owned subsidiaries Nova Financial Systems and Key Financial
Systems of Clearwater, Florida, and Chex Services of Minnetonka,
Minnesota, as well as its majority owned subsidiary Denaris
Corporation. Nova and Key service credit card products. Chex
Services provides comprehensive cash access services to casinos
and other gaming facilities. Denaris Corporation was recently
formed to provide stored value card services.
EVENFLO CO.: Closing Wisconsin and Georgia Production Facilities
----------------------------------------------------------------
Evenflo Company, Inc., will close its Suring, Wisconsin and Ball
Ground, Georgia production facilities. The Suring facility
currently employs about 195 associates, and the Ball Ground
facility currently employs about 170 associates. The facilities
are scheduled to close this summer. Production at these two
facilities will be transferred to other Evenflo facilities and
to Evenflo suppliers. This action is necessary for Evenflo to
continue to offer its high quality products at competitive
prices.
Wayne W. Robinson, Evenflo's CEO, commented, "This is a time of
transition for our Suring and Ball Ground associates, and I want
to personally thank them for their dedication. These associates
have helped Evenflo deliver many outstanding products to
families around the world over the years."
Evenflo is one of the world's most recognized innovators and
marketers of infant and juvenile products. Headquartered in
Vandalia, Ohio, its lines include car seats, strollers, baby
bottles, breast feeding accessories, infant carriers, pacifiers,
gates, high chairs, activity centers, swings, and cribs.
* * *
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.
Evenflo Co. Inc.'s 11.75% bonds due 2006 (EVEN06USR1) are
trading at about 9 cents-on-the-dollar, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=EVEN06USR1
for real-time bond pricing.
EXODUS COMMS: Wants Court to Apply Adversary Rules to Infomart
--------------------------------------------------------------
EXDS Inc., and the EXDS Plan Administrator ask the Court to
extend the application of the offer-of-judgment rule applicable
to adversary proceedings -- Rule 7068 of the Federal Rules of
Bankruptcy Procedure -- to govern a contested matter relating to
an administrative expense claim filed by Infomart New York, LLC.
Mark Minuti, Esq., at Saul Ewing, LLP, in Wilmington, Delaware,
reminds the Court that on June 27, 2002, Infomart filed a motion
for allowance and payment of a purported administrative expense
claim totaling $8,829,223.71, claiming that administrative rent
was owed under a lease. Infomart's claim is the second largest
of the 50 administrative claims filed against the estate. Under
Section 8.3(b) of the Confirmed Plan, the Debtors' Plan
Administrator is required to reserve and withhold from
distributing to the Debtors' creditors an amount to pay each
asserted administrative claim in full. As a result of
Infomart's motion, for the past six months, the Debtors' Plan
Administrator has been forced to reserve nearly $9,000,000 in an
account generating less than 2% per annum.
Mr. Minuti asserts that the Debtors owe Infomart only
$331,808.98 in administrative rent. Accordingly, on
December 17, 2002, the Debtors served Infomart with an offer of
judgment amounting to $500,000 to settle this contested matter
without further litigation, and to account for the nuisance
value of Infomart's motion. To resolve this dispute, the Court
must decide the date on which the Debtors rejected the Infomart
lease. The Debtors claims that the lease was rejected on
February 6, 2002 during a hearing before Judge Robinson in which
the parties stipulated in open court that the lease would be
deemed rejected as of that date. On the other hand, Infomart
claims that the lease was not rejected until the Debtors' plan
of reorganization was confirmed on June 5, 2002.
Mr. Minuti insists that Infomart's claim is frivolous because
the parties had already stipulated on February 6, 2002 that the
lease is deemed rejected. There is no good-faith basis on which
Infomart can claim that the lease continued to operate after
this date. It is clear that Infomart is trying to extort a
settlement from the estate by filing a huge claim to tie up
creditors' assets through reserves, and that Infomart is playing
fast and loose with its representations to the Court as part of
its attempt. Infomart is wasting the estate and the Court's
time with this trial. Infomart's conduct should not and cannot
be tolerated.
"Because this is an extraordinary case, extension of the offer-
of-judgment rule to this matter is necessary and appropriate,"
Mr. Minuti argues. "If Infomart insists on ignoring its
representations to the Court and wasting the resources of the
estate, it must bear the consequences, including the attorney
fee shifting provisions of the offer-of-judgment rule."
Under the offer-of-judgment rule, Mr. Minuti explains that if
Infomart rejects the Debtors' offer of judgment and does not
achieve a judgment at trial more favorable that the Debtors
offer, Infomart will be liable to the Debtors for costs incurred
by the Debtors after the date of its offer. Moreover, this
contested matter has all the hallmarks of an adversary
proceeding, to which Bankruptcy Rule 7068 is applicable.
Substantively, the relief sought by Infomart's motion is
indistinguishable from a lawsuit against the Debtors for the
recovery of $9,000,000. Procedurally, this case also looks like
an adversary proceeding -- the parties are engaged in discovery,
have propounded and answered interrogatories and document
requests, have taken many depositions, and are preparing for
trial. Given the similarities between this contested matter and
an adversary proceeding, extending the settlement incentives
contained in Rule 7068 to this contested matter is appropriate
and consistent with the spirit of both the Rule and the
Bankruptcy Code.
Mr. Minuti believes that applying Rule 7068 to this matter is
reasonable because it will force Infomart to consider carefully
a fair and just settlement offer. At present, Infomart has no
motive to settle its administrative claim because it bears very
little risk, except for sanctions that the Court might impose on
Infomart for pursuing a claim without a good faith basis.
Infomart's gamble is, however, highly damaging to the Debtors'
creditors because it has restricted the distribution of nearly
$9,000,000 for months.
Moreover, by pursuing a claim that flies in the face of its
representations to the Court on February 6, 2002, Infomart's
claim also mocks the integrity of the Court. By extending Rule
7068 to this dispute, the Court will shift some of the risk of
Infomart's conduct to where it rightfully belongs -- on Infomart
itself.
Infomart Consents
Margaret Manning, Esq., at Buchanan Ingersoll, in Wilmington,
Delaware, informs the Court that Infomart New York LLC consents
to the Debtors' request. (Exodus Bankruptcy News, Issue No. 29;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
FAO INC: Taps Morgan Joseph for Investment Banking Services
-----------------------------------------------------------
FAO, Inc. (Nasdaq: FAOOQ), a leader in children's specialty
retailing, announced that as part of its restructuring plan it
has retained Morgan Joseph & Co. Inc., as its investment banking
firm to assist it in raising equity capital within its current
public company structure. The retention agreement is subject to
Court approval.
"We look forward to working with the principals at Morgan Joseph
& Co., and taking advantage of their years of experience and
expertise. With their assistance we intend to bring new equity
into FAO, Inc., and complete our restructuring in an expedited
manner. Our goal remains to emerge from Chapter 11 during the
second quarter of this year as a fully integrated organization
with a strong balance sheet and excellent prospects for long-
term success," said Jerry R. Welch, President and Chief
Executive Officer.
On January 13, 2003, FAO Inc., filed voluntary petitions for
reorganization under Chapter 11 of the U.S. Bankruptcy Code in
the U.S. Bankruptcy Court for the District of Delaware. The
Chapter 11 cases are proceeding under lead case number 03-10119
(LK) and have been assigned to the Honorable Judge Lloyd King.
FAO, Inc., (formerly The Right Start, Inc.) owns a family of
high quality, developmental, and educational and care brands for
infants, toddlers and children and is a leader in children's
specialty retailing. FAO, Inc. owns and operates the renowned
children's toy retailer FAO Schwarz; The Right Start, the
leading specialty retailer of developmental, educational and
care products for infants and toddlers; and Zany Brainy, the
leading retailer of development toys and educational products
for kids.
FAO, Inc., assumed its current form in January 2002. The Right
Start brand originated in 1985 through the creation of the Right
Start Catalog. In September 2001, the Company purchased assets
of Zany Brainy, Inc., which began business in 1991. In January
2002 the Company purchased the FAO Schwarz brand, which
originated 141 years ago in 1862. For additional information on
FAO, Inc. or its family of brands, visit the Company on line at
http://www.irconnect.com/faoo/
FAO INC: Honoring Up to $3.7 Mill. of Prepetition Vendor Claims
---------------------------------------------------------------
FAO, Inc., and its debtor-affiliates obtained permission from
the U.S. Bankruptcy Court for the District of Delaware to pay
valid prepetition claims to certain Common Carriers and Critical
Vendors.
The Debtors relate that, in the ordinary course of their
business, they utilize the services of certain third parties to
ship, transport and deliver finished goods used in their
business operations to and from their retail stores. The Common
Carriers either provide carrier services themselves or out-
source such services to other parties. Without the services of
the Common Carriers, the Debtors would face delay or
interruption in the delivery and sale of the Debtors' products,
If the Common Carrier Charges are not paid by the Debtors, the
Debtors believe that goods in the possession of certain of the
Common Carriers on the Petition Date may be subject to
possessory liens under applicable state law. Typically, state
laws grant an entity that furnishes services with respect to
goods, such as a common carrier, a possessory lien on such goods
to secure payment for such services, if such entity retains
possession of the goods at issue.
Additionally, in the ordinary course of their business, the
Debtors utilize certain vendors to supply goods and services
sold and used in the Debtors' business operations. The Debtors
must restock the inventory in their retail stores on a regular
and frequent basis in order, to continue to attract their
customer base and provide the level of product selection that
has served to distinguish the Debtors as a leading retailer.
Furthermore, the Debtors must maintain their relationships with
providers of certain unique services used in the Debtors'
business to avoid significant disruptions to their ongoing
operations.
The Debtors have determined that no more than $3.7 million in
payments to Common Carriers and Critical Vendors may need to be
made in order to avoid potentially significant disruptions in
the Debtors' business.
FAO, Inc., along with its wholly-owned subsidiaries, is a
specialty retailer of high-quality, developmental, educational
and care products for infants and children and high quality
toys, games, books and multimedia products for kids through age
12. The Company filed for Chapter 11 protection on January 13,
2003. Rebecca L. Booth, Esq., Mark D. Collins, Esq., and Daniel
J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A. and
David W. Levene, Esq., and Anne E. Wells, Esq., at Levene,
Neale, Bender, Rankin & Brill, represent the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $257,400,000 in total assets and
$238,374,000 in total debts.
FEDERAL-MOGUL: Equity Committee Proposes Asbestos Procedures
------------------------------------------------------------
At the time Federal-Mogul Corporation and debtor-affiliates
filed for Chapter 11 Petition, the Official Committee of Equity
Securities Holders recounts, the Debtors stated they were
seeking an "efficient, cost effective application of a uniform,
fair system for assessing and compensating asbestos-related
claimants." But since that time, the Debtors have not asked the
Court to implement the "system" that they initially envisioned.
Thus, the Equity Committee urges Judge Newsome to adopt the
asbestos claims estimation protocol first described by the
Debtors. "This protocol will permit a fair and efficient
estimation of the Debtors' asbestos liability," Ian Connor
Bifferato, Esq., at Bifferato, Bifferato & Gentilotti, in
Wilmington, Delaware, explains. Pursuant to the Protocol, the
Equity Committee suggests that the Court fix a final date by
which all asbestos personal injury claims must be filed in order
to receive a distribution under a reorganization plan or to
otherwise vote on a reorganization plan.
The Equity Committee also proposes that the bar date be 120 days
after the Court approves this Motion. Mr. Bifferato notes that
Rule 3003(c)(3) of the Federal Rules of Bankruptcy Procedure
provides that:
[T]he Court shall fix . . . the time within which proofs
of claim or interest may be filed.
Mr. Bifferato relates that the Debtors filed for bankruptcy
because they had been overrun by out-of-control asbestos
litigation. Their expenses for asbestos-related litigation and
liability rose from $89,000,000 in 1998 to $350,000,000 in 2000.
The Debtors predicted that they would have expended a year-end
total of $400,000,000 in asbestos-related litigation and
liability costs had they not filed for relief under Chapter 11.
Notwithstanding the payments made to asbestos claimants before
October 1, 2001, at least 365,000 asbestos personal injury
claims are pending against them.
Additionally, the Equity Committee suggests that all asbestos
personal injury claimants be required to file a specialized
proof of claim, eliciting information that is sufficient to
adjudge the validity of the claim, unless they are listed in the
Debtors' Schedules of Assets and Liabilities in an amount, which
is stated to be "liquidated." Mr. Bifferato maintains that any
asbestos claimants who already have filed proofs of claim should
be required to re-file utilizing the Court-approved specialized
form. The Debtors must also send the specialized proof of claim
form as well as form of notice of the bar date.
The Equity Committee further proposes that a schedule of
proceedings to occur following the filing of proofs of claim
must be set, which will permit a fair and efficient evaluation
of the Debtors' asbestos-related personal injury liability.
According to Mr. Bifferato, the Equity Committee plan to file
omnibus objections and seek for summary judgment on issues where
claimant-specific information can be determined from the face of
the claim form, with the affected claimants to be allowed time
to respond. The Committee also requests that the Court
establish motion deadlines, additional briefing schedules and
discovery and evidentiary hearings as they become necessary.
"It may also be appropriate to conduct trials for common
issues," Mr. Bifferato notes.
Upon resolution of any summary judgment motions and common issue
trials, the Equity Committee also wants an estimation of the
Debtors' asbestos liability. (Federal-Mogul Bankruptcy News,
Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900)
FLEMING COMPANIES: Look for Q4 2002 Results on Thursday
-------------------------------------------------------
Fleming (NYSE: FLM) plans to issue its fourth quarter 2002
results on Thursday, January 23, 2003, before the market opens.
There will be a conference call to discuss these results on
January 23 at 7:30 a.m. Central Standard Time. An audio webcast
of the conference call will be available on the Internet at
http://www.fleming.com The conference call can also be
accessed by phone by calling 913.981.4900. An audio replay of
the conference call will be available by calling 402.280.9273
from 12:30 p.m. Eastern Time on January 23 through midnight
Eastern Time on February 6, 2003. The access code for the live
call and audio replay is 435129. The audio replay of the
conference call will also be archived on the Internet at
http://www.fleming.com
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 the Company's Web site at
http://www.fleming.com
Fleming Companies' 10.625% bonds due 2009 are currently trading
at about 60 cents-on-the-dollar.
GENTEK INC: Court OKs Deloitte & Touche's Engagement as Auditor
---------------------------------------------------------------
GenTek Inc., and its debtor-affiliates obtained permission from
the Court to employ Deloitte & Touche LLP to provide auditing,
accounting, and tax and bankruptcy reorganization services to
the Debtors in these Chapter 11 cases.
Deloitte will render these services:
(1) Auditing and reporting of the Debtors' annual financial
statements for the year ending December 31, 2002;
(2) Advising and assisting on various federal, foreign,
state and local tax matters as requested by the
Debtors;
(3) Providing various reorganization advisory services and
assistance as may be requested by the Debtors;
The Debtors will to compensate Deloitte for its services in
accordance with the firm's regular hourly rates. The Debtors
will also reimburse Deloitte for any reasonable expenses.
Deloitte's range of regular hourly rates by classification are:
Staff Classification Hourly Rate
-------------------- -----------
Partner/ Director $500 - 700
Sr. Manager & Manager 300 - 575
Senior/ Staff 200 - 420
(GenTek Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
GENUITY INC: Court to Consider Asset Sale to Level 3 Today
----------------------------------------------------------
Genuity Inc., announced that, in accordance with the bidding
procedures for the proposed acquisition by Level 3
Communications (Nasdaq:LVLT) and the Chapter 11 process, its
Board of Directors has determined that there are no new bids for
the purchase of Genuity's assets that meet the criteria required
to be considered a qualified offer. As a result, Genuity and
Level 3 will move forward to complete the acquisition process
with a Sale Hearing today, January 21, 2003.
On November 27, 2002, Genuity and Level 3 announced that the two
companies reached a definitive agreement in which Level 3 would
acquire substantially all of Genuity's assets and operations for
$242 million, subject to adjustments, and assume a significant
portion of Genuity's existing long-term operating agreements. To
facilitate the transaction, Genuity and certain of its
subsidiaries filed voluntary petitions for reorganization under
Chapter 11 of the Bankruptcy Code. In conjunction with the
filing, Genuity established bidding procedures and scheduled an
auction to allow other qualified bidders to submit better offers
for its assets.
Genuity is a leading provider of enterprise IP networking
services. The company combines its Tier 1 network with a full
portfolio of managed Internet services, including dedicated and
broadband access, Internet security, Voice over IP (VoIP), and
Web hosting to provide converged voice and data solutions. With
annual revenues of more than $1 billion, Genuity (NASDAQ: GENUQ
and NM: Genuity A-RegS 144) is a global company with offices and
operations throughout the U.S., Europe, Asia and Latin America.
Additional information about Genuity can be found at
http://www.genuity.com
GLOBAL CROSSING: Hires Three Firms to Assist in CFIUS Review
------------------------------------------------------------
Global Crossing Vice President Mitchell C. Sussis informs the
Court that the United States government has traditionally
welcomed foreign direct investment and provided foreign
investors fair, equitable, and non-discriminatory treatment with
a few limited exceptions designed to protect national security.
To protect national security, the federal government regulates
FDI through the "Exon-Florio" provision of the Defense
Protection Act of 1950. The Exon-Florio's intent is not to
discourage FDI generally, but to provide a mechanism to review
and, if the President of the United States finds necessary, to
restrict FDI that threatens the national security.
Mr. Sussis explains that the federal government implements the
Exon-Florio provision through the Committee on Foreign
Investments in the United States, a committee comprised of these
11 entities:
-- the United States Secretary of the Treasury;
-- the United States Secretary of State;
-- the United States Secretary of Defense;
-- the United States Secretary of Commerce;
-- the Director of the Office of Science and Technology
Policy;
-- the Assistant to the President for National Security
Affairs;
-- Assistant to the President for Economic Policy;
-- the United States Attorney General;
-- the Director of the Office of Management and Budget;
-- the U.S. Trade Representative; and
-- the Chairman of the Council of Economic Advisors.
CFIUS seeks to serve the U.S. investment policy interests of
protecting national security while maintaining the credibility
of the open investment policy and preserving the confidence of
foreign investors here and of U.S. investors abroad.
According to Mr. Sussis, CFIUS members are charged with
reviewing the national security implications of particular
transactions from the perspective of their area of competence
within the government. After considering the concerns of each
agency, CFIUS must reach a consensus on whether to recommend
approval of a transaction as originally proposed or, if national
security issues are identified, whether to propose changes to a
transaction.
CFIUS is currently reviewing the Purchase Agreement. To advise
them with respect to CFIUS review, the Debtors want to employ
Covington & Burling, Skadden Arps Slate Meagher & Flom LLP, and
Kissinger McLarty Associates. These firms have:
-- experience in providing strategic advice in connection
with the complex regulatory approval processes, including
the CFIUS review process; and
-- expertise in working with one or more of the relevant
governmental agencies comprising the CFIUS committee.
Accordingly, the GX Debtors seek the Court's authority to
employ:
-- Covington & Burling as special counsel nunc pro tunc to
November 1, 2002;
-- Skadden Arps Slate Meagher & Flom LLP as special counsel
nunc pro tunc to October 22, 2002; and
-- Kissinger McLarty Associates as regulatory advisor nunc
pro tunc to November 1, 2002.
"The services to be performed by the Firms are necessary to
enable the Debtors to execute their duties as debtors and
debtors-in-possession," Mr. Sussis contends. "The Firms have
nationally recognized expertise in dealing with matters
pertaining to the CFIUS approval process."
Mr. Sussis believes that the Firms' employment is particularly
important at this stage of the Debtors' Chapter 11 cases. After
approval of the Debtors' Plan, the effective date of the Plan
will be conditioned on the closing of the Purchase Agreement,
which in turn is conditioned on receiving the requisite
approvals from governmental agencies. Therefore, absent
approval by CFIUS, the transactions contemplated in the Purchase
Agreement may not be consummated, thereby endangering the
Debtors' Plan and prospects of reorganizing.
Mr. Sussis assures the Court that the services to be rendered by
the Firms are not intended to duplicate the services performed
and to be performed by any other professional retained by the
Debtors. Due to the multi-agency nature of the CFIUS review
process, it is critical for the Debtors to retain all three
Firms, who each have separate expertise vis-a-vis the different
members of CFIUS and the CFIUS-review process. The Firms, in
concert with the other professionals retained by the Debtors and
each other, will undertake every reasonable effort to avoid any
duplication of their services.
Covington Application
It is anticipated that Covington will:
-- advise the Debtors with respect to the CFIUS approval
process and provide the necessary background with respect
to the various executive branch agencies that comprise
CFIUS; and
-- assist the Debtors in the drafting of necessary security
agreements and other relevant legal documents involved in
obtaining CFIUS approval.
Covington Partner Stuart E. Eizenstat asserts that the partners,
managers, associates and other employees of the Firms do not
have any connection with the Debtors, their creditors, or any
other party-in-interest, or their attorneys. However, it
appears that Covington currently represents or in the past has
represented these parties in wholly unrelated matters:
A. Professionals: Arthur Andersen & Co., Debevoise &
Plimpton, KPMG Peat Marwick LLP, Shearman & Sterling,
Swidler & Berlin, Freshfields Buckhaus Deringer LLP, and
Nixon Peabody LLP;
B. Litigation Party: Southwestern Bell Telephone Co.,
BellSouth Corp., Level 3 Communications, Network
Associates Inc., and Verizon Communications;
C. Committee Members: The Bank of New York, Deloitte
Consulting, U.S. Trust Corp., and Verizon Communications;
D. Major Stockholder: Microsoft Corp.; and
E. Creditors: ABN Amro Bank NV, Anixter Bros. Inc., Bank
Leumi, Bank of Scotland, Barclays Bank plc, Chase
Manhattan Bank, CIBC World Markets Corp., Citibank N.A.,
Dai-Ichi Kangyo Bank Ltd., Dresdner Kleinwort
Wasserstein, Dreyfus Corp., Equitable Life Assurance
Society, Gensler & Assoc., Goldman Sachs & Co.,
Industrial Bank of Japan, Manufacturers Hanover Trust
Co., Merrill Lynch, Sumitomo Trust & Banking Co.,
Travelers Insurance Co., Tridex Corp., American Express
Co., Bank of America Corp., The Bank of New York, Bank
One Corp., City National Bank, CoBank, Credit Lyonnais,
Deutsche Bank AG, General Electric Capital Corp., HVB
Group, ING Bank N.V., IBM, JP Morgan Chase & Co.,
Trhivent Financial for Lutherans, Morgan Stanley, UBS
Warburg and Wachovia Bank.
The Debtors propose to compensate Covington on an hourly basis
at rates consistent with the rates charged by the firm in
matters of this type. Covington's hourly rates are set at a
level designed to fairly compensate the firm for the work of its
attorneys and legal assistants and to cover fixed and routine
overhead expenses. The hourly rates to be charged by Covington
in connection with this representation are:
Partners $690 - 360
Associates 410 - 170
Paralegals and other personnel 210 - 140
Skadden Application
To aid the GX Debtors in the CFIUS review process, Skadden Arps
Slate Meagher & Flom LLP will act as special regulatory counsel
and:
-- advise the Debtors with respect to telecommunications
policy vis-a-vis the CFIUS review process;
-- advise the Debtors with respect to the impact of
Congressional oversight on the CFIUS review process as it
relates to obtaining the requisite regulatory approvals;
and
-- draft necessary documents with respect to corporate
structures that comply with the demands of the various
CFIUS agencies.
The Debtors also seek to employ Skadden to perform tax services
relating to an audit by the United States Internal Revenue
Service and planning related to other tax matters. The Debtors
employed Skadden as an "ordinary course professional" for tax
purposes. Because the Regulatory Services to be provided, when
coupled with the Tax Services, are likely to put Skadden over
the compensation limit under the OCP Order, the Debtors seek to
include the Tax Services within the scope of Skadden's
employment pursuant to this Application.
Skadden Partner Ivan Schlager, Esq., assures the Court that the
partners, managers, associates and other employees of the Firm
do not have any connection with the Debtors, their creditors, or
any other party-in-interest, or their attorneys. However, it
appears that Covington currently represents or in the past has
represented these parties in wholly unrelated matters:
A. Secured Lenders: ABN Amro Bank NV, Aegon USA Inc., Alliance
Capital, Allstate Insurance Co., American Express, Apollo
Advisors LP, Bain Capital Inc., Bank Leumi, Bank of America
Corp., Bank of China, BHF, Bank of Hawaii, Bank of
Montreal, Bank of New York, Bank of Nova Scotia, Bank of
Tokyo-Mitsubishi, Bank One, N.A., Barclays, Caravelle
Advisors, CIBC Oppenheimer, Citibank, CoBank, Credit
Lyonnais, Credit Suisse, Deutsche Bank, Dai-Ichi Kangyo
Bank, Dresdner Kleinwort Wasserstein, Equitable Life
Assurance, First Union, Fleet BancBoston, Franklin Advisers
Inc., Fuji Bank Ltd., GE Capital Corp., General Reinsurance
Corp., Goldman Sachs & Co., HypoVereinbank AG, Industrial
Bank of Japan, IBM Credit Securities, Indosuez, ING Capital
Advisors, Invesco, JP Morgan Chase, KBC Bank, Key Bank,
Merrill Lynch, Mitsubishi Trust & Banking Corp., Morgan
Stanley Dean Witter, Oppenheimer Funds, Pacific Investment
Management Co., PPM America, Rabobank Nederland, Royal Bank
of Canada, Scotia Capital, Scudder Investments, Sumitomo
Trust & Banking Co., Trust Co. of the West, Textron
Financial Corp., Toronto Dominion, Travelers, UBS Warburg,
Van Kampen and West LB;
B. Indenture Trustees: The Chase Manhattan Bank, The Bank of
New York, and The U.S. Trust Company;
C. Major Stockholders: Eric Hippeau, Microsoft Corp., Softbank
Corp., Lodwrick Cook, Thomas J. Casey, Joseph P. Clayton,
Norman Brownstein, and William Conway Jr.
D. Strategic Partners: Cisco Systems Inc., EMC Corp., Nortel
Networks, Exodus Communications, Hitachi Telecom USA,
Juniper Networks, Lucent Technologies, and Sonus Networks;
E. Professionals: Arthur Andersen LLP, KPMG LLP, The
Blackstone Group LP, and Pacific Capital Group; and
F. Underwriters: Canadian Imperial Bank of Commerce, Chase
Securities, Inc., CIBC Inc., CIBC World Markets Corp.,
Citicorp USA Inc., Deutsche Bank AG, Deutsche Bank
Securities Inc., Goldman, Sachs Credit Partners LP, Merrill
Lynch Capital Corporation, Salomon Smith Barney, Inc. and
Westdeutsche Landesbank.
The Debtors propose to compensate Skadden on an hourly basis at
rates charged by the firm in matters of this type. Skadden's
hourly rates in connection with this representation are:
Partners and "Of Counsel" $725 - 495
Associates and Counsel 485 - 290
Paralegals and other personnel 195 - 80
Kissinger Application
Kissinger is not a law firm, but a partnership that provides
strategic advice to U.S. and multi-national clients in
connection with domestic and international matters including
receiving U.S. and foreign regulatory approval of certain
financial transactions. The individuals at Kissinger who will
be advising the Debtors have significant familiarity with the
federal government and the processes of obtaining approval from
the national security and regulatory agencies that comprise
CFIUS. Specifically, the Debtors seek to employ Kissinger to
provide:
-- consulting services with respect to international
strategic advise, particularly with respect to policy,
communications coordination, and advice; and
-- assistance in connection with the Debtors' interactions
with agencies and representatives of foreign governments
that have an interest in the transaction.
Kissinger Managing Director Nelson W. Cunningham assures the
Court that the partners, managers, associates and other
employees of the Firm do not have any connection with the
Debtors, their creditors, or any other party-in-interest, or
their attorneys.
The Debtors propose to compensate Kissinger on a $30,000 fixed
monthly retainer, plus reimbursement of actual and necessary
expenses incurred. In addition, the Debtors propose that
Kissinger be entitled to a $200,000 success fee, payable after
obtaining regulatory approval through the CFIUS process. This
Success Fee will not be payable in the event that the approval
is not obtained.
Mr. Cunningham contends that the Monthly Fee is Kissinger's
standard fee for work of this nature. The Success Fee is within
the range of fees charged by Kissinger, adjusted by the
complexity of the challenge and the probability of success.
These fees are set at a level designed fairly to compensate
Kissinger for the work of its professional staff and to cover
fixed and routine overhead expenses. (Global Crossing Bankruptcy
News, Issue No. 32; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
GOLF TRUST: Sells Lost Oaks Golf Course to H & M for $2.3 Mill.
---------------------------------------------------------------
Golf Trust of America, Inc. (AMEX:GTA), a real estate investment
trust, on January 13, 2003, closed on the sale of Lost Oaks Golf
Course for total consideration of $2.3 million to H & M
Investments of Clearwater, Inc., a Florida corporation.
Lost Oaks Golf Course is an 18-hole golf course located in Palm
Harbor, Florida.
Golf Trust of America, Inc., is a real estate investment trust
engaged in the liquidation of its interests in golf courses in
the United States pursuant to a plan of liquidation approved by
its stockholders. The Company currently owns an interest in
eight properties (15.0 eighteen-hole equivalent golf courses).
Additional information, including an archive of all corporate
press releases, is available over the Company's Web site at
http://www.golftrust.com
As reported in Troubled Company Reporter's January 6, 2002
edition, Golf Trust of America, Inc., entered into a Second
Amendment to its Second Amended and Restated Credit Agreement
with its senior bank lenders.
The amendment extends the repayment date for all loans
outstanding under the Credit Agreement from December 31, 2002
until June 30, 2003. The current principal balance outstanding
under the Credit Agreement is $69.0 million.
* * *
In its SEC Form 10-Q filed on November 14, 2002, the Company
reported:
"On February 25, 2001 our board of directors adopted, and on
May 22, 2001 our common and preferred stockholders approved, a
plan of liquidation for our Company. The events and
considerations leading our board to adopt the plan of
liquidation are summarized in our Proxy Statement dated April 6,
2001, and in our most recent Annual Report on Form 10-K. The
plan of liquidation contemplates the sale of all of our assets
and the payment of (or provision for) our liabilities and
expenses, and authorizes us to establish a reserve to fund our
contingent liabilities. The plan of liquidation gives our board
of directors the power to sell any and all of our assets without
further approval by our stockholders. However, the plan of
liquidation constrains our ability to enter into sale agreements
that provide for gross proceeds below the low end of the range
of gross proceeds that our management estimated would be
received from the sale of such assets absent a fairness opinion,
an appraisal or other evidence satisfactory to our board of
directors that the proposed sale is in the best interest of our
Company and our stockholders.
"At the time we prepared our Proxy Statement soliciting
stockholder approval for the plan of liquidation, we expected
that our liquidation would be completed within 12 to 24 months
from the date of stockholder approval on May 22, 2001. While we
have made significant progress, our ability to complete the plan
of liquidation within this time-frame and within the range of
liquidating distributions per share set forth in our Proxy
Statement is now far less likely, particularly insofar as the
disposition of our lender's interest in the Innisbrook Resort is
concerned. With respect to our dispositions, as of November 8,
2002, we have sold 25 of our 34 properties (stated in 18-hole
equivalents, 31.0 of our 47.0 golf courses). In the aggregate,
the gross sales proceeds of $229.5 million are within the range
originally contemplated by management for those golf courses
during the preparation of our Proxy Statement dated April 6,
2001, which we refer to as the Original Range; however, two of
our properties (2.5 golf courses) that were sold in 2001 were
sold for a combined 1%, or $193,000, less than the low end of
their combined Original Range. The sales prices of the assets
sold in 2002 have been evaluated against Houlihan Lokey Howard &
Zukin Financial Advisors, Inc., or Houlihan Lokey's March 15,
2002, updated range (discussed in further detail below), which
we refer to as the Updated Range. Of the three properties (5.0
golf courses) sold in 2002, one (1.5 golf courses) was below the
low end of the Updated Range by 4%, or $150,000. Nonetheless,
considering the environment in which we and the nation were
operating in at that time, our board determined that the three
transactions closed at prices below the Original Range
(including the one transaction that closed below the Updated
Range) were fair to, and in the best interest of, our Company
and our stockholders.
"The golf industry continues to face declining performance and
increased competition. Two of the economic sectors most affected
by the recession have been the leisure and travel sectors of the
economy. Golf courses, and particularly destination-resort golf
courses, are at the intersection of these sectors. Accordingly,
we believe our business continues to be significantly impacted
by the economic recession. As reported in our most recently
filed Form 10-K, on February 13, 2002, we retained Houlihan
Lokey to advise us on strategic alternatives available to seek
to enhance stockholder value under our plan of liquidation. In
connection with this engagement Houlihan Lokey, reviewed (i) our
corporate strategy; (ii) various possible strategic alternatives
available to us with a view towards determining the best
approach of maximizing stockholder value in the context of our
existing plan of liquidation, and (iii) other strategic
alternatives independent of the plan of liquidation. Houlihan
Lokey's evaluation of Innisbrook valued this asset under two
different scenarios, both of which assumed that we would obtain
a fee simple interest in the asset as a result of successfully
completing a negotiated settlement or foreclosing on our
mortgage interest. Under the first scenario, Houlihan Lokey
analyzed immediate liquidation of the asset, and under the
second scenario, Houlihan Lokey analyzed holding the asset for a
period of approximately 36-months ending not later than December
31, 2005 to seek to regain the financial performance levels
achieved prior to 2001. In a report dated March 15, 2002,
subject to various assumptions, Houlihan Lokey's analysis
concluded that we may realize between $45 million and $50
million for the Innisbrook asset under the first scenario, and
between $60 million and $70 million under the second scenario.
"Following receipt of Houlihan Lokey's letter on March 15, 2002,
and after consideration of other relevant facts and
circumstances then available to us, our board of directors
unanimously voted to proceed with our plan of liquidation
without modification. We currently expect that liquidating
distributions to our common stockholders will not begin until we
sell our interest in the Innisbrook Resort, which might not
occur until late 2005. All of our other assets were valued and
are recorded on our books at their estimated immediate
liquidation value and are being marketed for immediate sale.
"As of November 8, 2002, we owed approximately $70.7 million
under our credit agreement, which matures on December 31, 2002.
We are currently seeking to obtain our lenders' consent to
further extend the term of our credit agreement before it
matures. If our lenders do not consent to our request for a
further extension and we are not able to secure refinancing
through another source, we might be compelled to sell assets at
further reduced prices in order to repay our debt in a timely
manner. We recently obtained a preliminary indication of the
lenders' willingness to extend the term of our credit facility
until June 30, 2003."
GST TELECOMMS: Makes $47MM Distribution to Unsecured Creditors
--------------------------------------------------------------
On or about January 15, 2003, GST Telecommunications, Inc. will
make its third distribution to unsecured creditors of
approximately $47,200,000.00, pursuant to the Plan of
Liquidation. This distribution is 6.40% of unsecured claims,
making the total distribution to date to unsecured creditors
$303,700,000 or 41.24% of their allowed claims. After this
distribution the Company will have approximately $70,800,000 in
cash, which will be held in various claims reserves and will be
distributed quarterly depending on the resolution of claims
during each quarter.
The primary sources of the upcoming distribution are as follows:
Magnacom Wireless LLC and related parties filed unsecured claims
against the estate for $56,059,180. These claims were settled
for $2,000,000 and paid in January. This settlement released a
net amount of $22,610,000 from the claims reserve for inclusion
in the upcoming distribution.
As part of the 2001 sales agreement whereby certain assets of
the Company were sold to Time Warner Telecom, Inc., certain
revenues related to the completion of construction projects were
placed in escrow, as received, to fund potential cost overruns.
Based on construction costs to date $14,369,906 was released
from escrow and became available for distribution.
On April 18, 2002, the Court entered an order confirming the
Plan. On April 30, 2002, the Plan became effective and the
Company is now in liquidation pursuant to the terms of the Plan.
GUESS? INC: Unit Commences $75MM Secured Note Private Offering
--------------------------------------------------------------
Guess?, Inc., announced that its indirect wholly-owned
subsidiary Guess? Royalty Finance LLC began to privately offer
$75,000,000 of its Secured Notes Due 2011.
These notes will be secured by the assets of the Issuer, which
will include the royalties payable under certain trademark
licenses originally entered into by Guess? and Guess?'s wholly-
owned subsidiary Guess? Licensing, Inc., who will transfer such
licenses and all material trademarks of Guess? (and the related
goodwill) to Guess? IP Holder L.P., a wholly-owned subsidiary of
Guess?, who will transfer the royalties to the Issuer. The notes
will have the benefit of a payment guaranty issued by IP Holder,
which will be secured by a security interest in all of the
trademarks and goodwill transferred to IP Holder and in the
relevant license agreements.
The purpose of the offering is to partially monetize the
expected future royalty payments to be generated by the
licensing business Guess? has established, by transferring
ownership of such assets to IP Holder and Issuer and imposing
certain limitations on Guess? with respect to these assets, and
thereby to generate proceeds that can be used for general
corporate purposes including the repayment of outstanding
indebtedness.
The notes have not been and will not be registered under the
Securities Act of 1933, as amended, and will not be offered or
sold in the United States absent registration or an applicable
exemption from such registration requirements. This press
release does not constitute an offer to sell or a solicitation
of an offer to buy the notes.
Guess?, Inc., (NYSE: GES) designs, markets, distributes and
licenses one of the world's leading lifestyle collections of
contemporary apparel, accessories and related consumer products.
As reported in Troubled Company Reporter's Friday Edition,
Standard & Poor's lowered its corporate credit rating on apparel
manufacturer and retailer Guess? Inc., to 'BB-' from 'BB'.
At the same time, Standard & Poor's lowered its subordinated
debt rating on the company to 'B' from 'B+'. The outlook is
negative. The Los Angeles, California-based company had
approximately $86 million in total debt outstanding as of
September 28, 2002.
"The downgrade reflects the continued erosion of Guess?'s
operating performance and weakened credit protection measures.
The company's performance in recent years has been hurt by the
intensely competitive retail environment, waning consumer
confidence, and consumers' poor response to its product line,"
said Standard & Poor's credit analyst Diane Shand.
Guess? Inc.'s 9.50% bonds due 2003 (GES03USR1), DebtTraders
reports, are trading at about 95 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=GES03USR1for
real-time bond pricing.
HARBISON-WALKER: Stay Against Halliburton Extended to Feb. 18
-------------------------------------------------------------
Halliburton (NYSE: HAL) reached agreement with Harbison-Walker
Refractories Company and the Official Committee of Asbestos
Creditors in the Harbison-Walker bankruptcy to consensually
extend the period of the stay contained in the Bankruptcy
Court's temporary restraining order until February 18, 2003. The
court's temporary restraining order, which was originally
entered on February 14, 2002, stays more than 200,000 pending
asbestos claims against Halliburton's subsidiary DII Industries,
LLC.
As a result of Friday's hearing, Halliburton will file with the
court under seal, by January 31, 2003, a status report and
copies of the settlement agreements reached with the plaintiffs'
attorneys. Additionally, the court required the parties to
provide a progress report at the February 18 hearing.
On December 18, 2002, Halliburton announced that it had reached
an agreement in principle that, when consummated, will result in
a global settlement of all personal injury asbestos and certain
other personal injury claims against the company. The settlement
was reached with attorneys representing substantially more than
the required 75% percent of the known present asbestos claimants
needed to achieve resolution on all of the cases. The agreement
covers all pending and future personal injury asbestos claims
against Halliburton Company and its subsidiaries.
Halliburton, founded in 1919, is one of the world's largest
providers of products and services to the petroleum and energy
industries. The company serves its customers with a broad range
of products and services through its Energy Services Group and
Engineering and Construction Group business segments. The
company's World Wide Web site can be accessed at
http://www.halliburton.com
HAYES LEMMERZ: Plan Filing Exclusivity Intact through April 15
--------------------------------------------------------------
Hayes Lemmerz International, Inc., (OTC Bulletin Board: HLMMQ)
received Court approval to extend the period in which the
Company has the exclusive right to file or advance a Plan of
Reorganization in its Chapter 11 cases. The January 10, 2003
Order preserves the Company's exclusive right to sponsor a Plan
of Reorganization to April 15, 2003, and further preserves the
Company's exclusive right to solicit acceptances of a plan until
June 16, 2003.
The Company obtained the recent court order to maintain control
of its reorganization and prevent the possible distraction that
could arise if another party filed a different Plan of
Reorganization. In its ruling, the Court said the extension is
in "the best interests of the debtors, their estates, their
creditors, and other parties in interest."
On December 16, 2002, the Company filed its Plan of
Reorganization with the U.S. Bankruptcy Court for the District
of Delaware. At the Company's request, the Court scheduled a
hearing for February 6, 2003 to consider approval of the
Company's proposed Disclosure Statement and a hearing on
April 9, 2003 to consider confirmation of the Company's Plan of
Reorganization.
"The Court's extension of the Company's exclusive plan filing
and solicitation periods will ensure that the Company will not
be distracted as it completes its restructuring," said Curt
Clawson, chairman and chief executive officer of Hayes Lemmerz.
"Our progress towards emergence from Chapter 11 is on track,"
Mr. Clawson said. "With the significant changes we are making in
our business to cut costs, improve efficiency, and improve
customer service, we expect that Hayes Lemmerz will emerge from
Chapter 11 during the first half of this year and continue to
compete vigorously as a world-class automotive parts supplier."
Hayes Lemmerz and its subsidiaries in the United States and one
subsidiary in Mexico filed voluntary petitions for
reorganization under Chapter 11 of the bankruptcy code in the
U.S. Bankruptcy Court for the District of Delaware on
December 5, 2001.
Hayes Lemmerz International, Inc., is one of the world's leading
global suppliers of automotive and commercial highway wheels,
brakes, powertrain, suspension, structural and other lightweight
components. The Company has 44 plants, 3 joint venture
facilities and 11,400 employees worldwide.
Hayes Lemmerz's 11.875% bonds due 2006 (HLMM06USS1) are trading
at about 54 cents-on-the-dollar, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=HLMM06USS1
for real-time bond pricing.
HOLIDAY RV: Defaults on Additional $5-Million Secured Debt
----------------------------------------------------------
Holiday RV Superstores, Inc., (Nasdaq: RVEE) said that the
Company's major investor has advanced an additional $1.3 million
to the Company pursuant to an amendment to the Loan Agreement
between the Company and the investor. The Company will use the
$1.3 million advance to pay certain indebtedness of the Company.
The Company is obligated to reduce the principal amount of the
debt owed under the Loan Agreement from the proceeds of sales of
certain inventory and certain other assets owned by the Company.
After the $1.3 million advance, the Company owes the investor
approximately $12.3 million under the Loan Agreement which,
pursuant to the amendment, is payable upon demand and all of
which is senior secured debt. In addition, the Company is in
default on an additional $5.1 million in secured debt owed to
the investor.
As stated above, the Company is currently in default on a $5.1
million loan owed to the investor. Further, the $12.3 million
owed to the investor is due and payable upon demand. There can
be no assurance as to the actions which the investor may take
with regard to the loans. The Company does not have the funds to
repay either of these loans and therefore, if the investor were
to demand the Company to repay either of these loans, such
action would have a material adverse consequence on the Company
and raise substantial doubts as to the Company's ability to
continue as a going concern.
Pursuant to the amendment to the Loan Agreement, the investor
has agreed to convert the shares of Series A and Series AA-2
Preferred Stock, plus accrued dividends, which he owns into an
aggregate of 5,308,940 shares of the Company's common stock.
Additionally, concurrent with the conversion of the major
investor's shares of Preferred Stock, a second holder of shares
of the Company's Series A Preferred Stock will convert his
preferred shares into 806,452 shares of the Company's common
stock.
After these transactions, the investor will hold of record 71.1%
of the outstanding common stock of the Company. As a result,
since the Company's Certificate of Incorporation and By-Laws do
not provide for cumulative voting, the investor will be in a
position to elect the entire Board of Directors of the Company
and thereby control the Company.
The Company also announced that its Board of Directors has
organized a Special Oversight Committee, consisting of the
members of the Company's Audit Committee. The Special Oversight
Committee has been directed to oversee management's activities
in connection with the daily operations of the Company.
As previously announced, the Company has received a staff
determination from The Nasdaq Stock Market that its common stock
is subject to delisting from the Nasdaq SmallCap Market. The
Company has previously requested a hearing before the Nasdaq
Listing Qualifications Panel in an effort to continue its
listing.
As of this date, the Company is evaluating whether it is in the
best interests of the Company to continue to pursue the
Company's previously announced appeal, since it appears
unlikely, based upon the Company's current situation, that the
Company will be able to show current and future compliance with
the Nasdaq Marketplace Rules requiring that the Company maintain
certain minimum stockholders' equity and market value of
publicly held shares. While no decision has yet been made as to
whether to abandon the hearing and accept a delisting of the
Company's common stock from the Nasdaq SmallCap Market, it now
appears probable that the Company's common stock will be
delisted. If the Company's common stock is delisted from the
Nasdaq SmallCap Market, the Company expects that its common
stock would be quoted on the Bulletin Board maintained by the
NASD and on the "pink sheets" published by the National
Quotations Bureau.
Holiday RV operates retail stores in Florida, Kentucky, New
Mexico, South Carolina, and West Virginia. Holiday RV, the
nation's only publicly traded national retailer of recreational
vehicles and boats, sells, services and finances more than 90 RV
brands.
HOLLYWOOD ENTERTAINMENT: Closes New Sr Secured Credit Facilities
----------------------------------------------------------------
Hollywood Entertainment Corporation, (Nasdaq: HLYW) owner of the
Hollywood Video chain of over 1,800 video superstores with a
total shareholders' equity deficit of about $113 million,
successfully completed the closing of its new senior secured
credit facilities from a syndicate of lenders led by UBS Warburg
LLC. The new facilities consist of a $200.0 million term loan
facility and a $50.0 million revolving credit facility, each
maturing in 2008. The Company will use the net proceeds from
the transaction to repay amounts outstanding under the Company's
existing credit facilities which were due in 2004, redeem the
remaining outstanding principal amount of the Company's existing
10.625% senior subordinated notes due 2004 and for general
corporate purposes
Notice of redemption of the remaining principal amount of the
Company's existing 10.625% senior subordinated notes in the
amount of $46.1 million has been delivered to the trustee. The
Company expects to complete the redemption on February 18, 2003.
As previously announced, on December 18, 2002, the Company
completed the sale of $225.0 million of 9.625% senior
subordinated notes due 2011, the proceeds of which were used for
to redeem $203.9 million principal amount of the existing
10.625% notes that were due in 2004. This redemption was
completed Friday.
Commenting on the transaction, Jim Marcum, Executive Vice
President and Chief Financial Officer said, "We are very pleased
with the execution of these transactions regarding the new bank
credit facilities and the sale of the notes. As a result of
these transactions, the Company has significantly lowered the
overall costs of our indebtedness and extended our debt
maturities. The completion of these transactions satisfy the
Company's financing needs for the foreseeable future."
Hollywood Entertainment owns and operates the second largest
video store chain in the United States. Hollywood Entertainment
and Hollywood Video are registered trademarks of Hollywood
Entertainment Corporation.
HORIZON NATURAL: Mountaineer Coal Unit to Shut Down Four Mines
--------------------------------------------------------------
Mountaineer Coal Development Company dba Marrowbone Development
Company, a subsidiary of Horizon Natural Resources Company
(Nasdaq: HZONQ.pk), said that three underground mines and one
surface mine and preparation plant located in Mingo County, West
Virginia, will be placed on permanent idle status.
The company reached this decision because the limited mining
opportunities and profitability of current operations make it
economically unfeasible to continue these operations in today's
market environment.
Approximately 460 employees work at the underground North
Marrowbone Creek mine, Morris Way Lovins mine, East Dingess
Tunnel mine, the surface Triad mine and the Tug Valley
preparation plant operated in conjunction with the Marrowbone
operation. Residual work on equipment removal and reclamation
will continue for some numbers of employees as the Company
reclaims the property. Layoffs will begin March 17, 2003.
Marrowbone today gave notice in accordance with the Worker
Adjustment and Retraining Notification Act of 1988.
"[Fri]day's decision is difficult for the people and the
communities involved," said Horizon's chairman and acting chief
executive officer Robert C. Scharp, "but it is important to
achieve the goals we outlined in November when we announced our
filing for reorganization under Chapter 11 of the U.S.
Bankruptcy Code. This is our first significant step toward
right-sizing our operations to the current opportunities of the
marketplace."
Scharp continued, "In addition, affected employees will receive
benefits as outlined by our contracts, including medical
coverage, educational assistance and re-training for additional
employment. We will be working with the State of West Virginia
regarding outplacement assistance for affected employees."
Marrowbone Development Company's four-mine complex produced 4.66
million tons of coal in 2001 and 3.95 million tons of coal in
2002.
For additional information, please see http://www.horizonnr.com
Horizon Natural Resources Company (formerly known as AEI
Resources Holding, Inc.) conducts mining operations in five
states with a total of 38 mines, including 25 surface mines and
13 underground mines:
-- Central Appalachian operations include all of the
company's mining operations in southern West Virginia and
Kentucky, currently totaling 32 surface and underground mines,
which produced approximately 18.1 million tons of coal (64
percent of total production) during the first nine months of
2002.
-- Western operations include mining in Colorado, Illinois
and Indiana, currently totaling six surface and underground
mines, which produced approximately 10.1 million tons (36
percent of total production) during the first nine months of
2002.
IMMTECH INT'L: Enter Joint Venture Pact with Lenton Fibre Optics
----------------------------------------------------------------
On January 13, 2003, Immtech International, Inc., entered into a
joint venture with an investor who owns 100% of the outstanding
equity of Lenton Fibre Optics Development Limited, a Hong Kong
company. The primary purpose of the joint venture is to
construct and operate a pharmaceutical manufacturing facility
capable of producing commercial quantities of the Company's
pharmaceutical products on land held by Lenton. The land is
located in a "free-trade zone" called the Futian Free Trade
Zone, Shenzhen, in the Peoples Republic of China. The Company
believes the joint venture will benefit by constructing its
manufacturing plant in this tax-free zone because it will be
allowed to import equipment and materials and export products on
a tax-free basis. The Company intends, once the facility is
built and government approvals are obtained, to engage the joint
venture company to manufacture for commercial distribution
Immtech's pharmaceutical products intended for sale in Asia,
Africa and other selected regions. Under the terms of the
agreement, the joint venture will be operated under the name
Immtech Hong Kong Limited.
Under the terms of the Share Purchase Agreement relating to
Shares in Lenton Fibre Optics Development Limited dated
January 13, 2003 by and among the seller, Lenton and the
Company, the Company purchased 80% of Lenton from the seller by
issuing to the seller 1,200,000 unregistered shares of Immtech
common stock, $0.01 par value. The parties have also entered
into a Shareholders' Agreement relating to Lenton Fibre Optics
Development Limited dated January 13, 2003 that sets forth the
parties agreement as to the affairs of the joint venture and the
conduct of its business. The Shareholders' Agreement permits the
Company to "unwind" the joint venture if, among other things,
required government approvals are not obtained or construction
of the facility does not proceed on a timely basis.
* * *
As previously reported, since inception, the Company has
incurred accumulated losses of approximately $41,466,000.
Management expects the Company to continue to incur significant
losses during the next several years as the Company continues
its research and development activities and clinical trial
efforts. There can be no assurance that the Company's continued
research will lead to the development of commercially viable
products. Immtech's operations to date have consumed
substantial amounts of cash. The negative cash flow from
operations is expected to continue in the foreseeable future.
The Company will require substantial funds to conduct research
and development, laboratory and clinical testing and to
manufacture (or have manufactured) and market (or have marketed)
its product candidates.
Immtech's working capital is not sufficient to fund the
Company's operations through the commercialization of one or
more products yielding sufficient revenues to support the
Company's operations; therefore, the Company will need to raise
additional funds. The Company believes its existing unrestricted
cash and cash equivalents and the grants the Company has
received or has been awarded and is awaiting disbursement of,
will be sufficient to meet the Company's planned expenditures
through July 2003, although there can be no assurance the
Company will not require additional funds. These factors, among
others, indicate that the Company may be unable to continue as a
going concern.
The Company's ability to continue as a going concern is
dependent upon its ability to generate sufficient funds to meet
its obligations as they become due and, ultimately, to obtain
profitable operations. Management's plans for the forthcoming
year, in addition to normal operations, include continuing their
efforts to obtain additional equity and/or debt financing,
obtain additional grants and enter into various research,
development and commercialization agreements with other
entities.
INFINITE GROUP: Appealing Nasdaq Staff Delisting Determination
--------------------------------------------------------------
Infinite Group, Inc., (NASDAQ: IMCI) requested a hearing before
a Nasdaq Listing Qualifications Panel to review a Nasdaq Staff
Determination to delist the Company's common stock from the
Nasdaq SmallCap Stock Market effective January 16, 2003 for
failure to comply with Marketplace Rules 4350(e) and 4350(g).
The Company's appeal and hearing request stays the delisting of
the Company's common stock pending the hearing and the Panel's
decision.
The Company also announced that the appeal of the Staff
Determination will address two other issues. On November 4,
2002, the Staff notified the Company that the bid price of its
common stock had closed below $1.00 per share for 30 consecutive
trading days, and accordingly, that it did not comply with
Marketplace Rule 4310(C)(4). The Company was given 180 days, or
until May 5, 2003, to achieve compliance. Also, on November 19,
2002, the Staff notified the Company that its stockholders'
equity did not meet the minimum $2,500,000 criteria or a market
value of listed securities of $35,000,000 or $500,000 of net
income from continuing operations for the most recently
completed fiscal year or two of the three most recently
completed fiscal years, as required by Marketplace Rule
4310(C)(2)(B). The Staff indicated in the letter that it was
reviewing the Company's continuing listing eligibility. The
Company will address both issues at the hearing.
There can be no assurance that the Panel will grant the
Company's request for continued listing.
Infinite Group, Inc., is an industry leader in the areas of
laser material processing, advanced manufacturing methods, and
laser and photonic technology. Infinite Group's September 30,
2002 balance sheet shows that total current liabilities eclipsed
total current assets by about $2 million.
INTEGRATED HEALTH: Asks Court to Further Stretch Exclusivity
------------------------------------------------------------
Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor LLP,
in Wilmington, Delaware, notes that a critical aspect of the
Plan is the sale of Integrated Health Services, Inc., and its
debtor-affiliates' interests. To ensure the feasibility of
the Plan, the Debtors require additional time to conclude the
sale process and obtain Court approval of the Purchase Agreement
or a higher and better offer for the Debtors' interests.
Moreover, the solicitation process for obtaining requisite votes
for the Plan cannot be commenced until the Disclosure Statement
is approved by the Court, the timing of which is intertwined
with the Court's approval of the Purchase Agreement.
Accordingly, by this Motion, the Debtors ask the Court to
further extend their Exclusive Filing Period to and including
April 28, 2003 and their Exclusive Solicitation Period to and
including June 30, 2003. In essence, the Debtors are requesting
a 90-day extension with respect to each of the Exclusive
Periods, without prejudice to their right to seek further
extensions or the right of any party-in-interest to seek to
reduce the Exclusive Periods.
Mr. Brady explains that the Exclusive Periods were intended to
give the Debtors a full and fair opportunity to rehabilitate
their businesses, negotiate and propose one or more
reorganization plans, and solicit acceptances without the
deterioration and disruption of their businesses that might be
caused by the filing of competing plans of reorganization by
non-debtor parties.
Bankruptcy courts have identified these factors as relevant in
determining whether cause exists to extend the Exclusive
Periods:
-- the size and complexity of the case;
-- whether there is good faith progress towards
rehabilitation and development of a consensual plan of
reorganization;
-- whether the debtor is seeking to use its exclusivity to
pressure creditors into accepting a plan they find
unacceptable;
-- whether the debtor is generally making required
postpetition payments as they come due and is effectively
managing its business and preserving the value of its
assets; and
-- whether an unresolved contingency exists.
Mr. Brady contends that application of these factors to the
facts in this case demonstrates that ample cause exists for the
requested further extension of the Debtors' Exclusive Periods.
The Debtors' Chapter 11 "mega-cases" are indisputably of the
size and complexity that Congress and courts have recognized
warrant reasonable extensions of the Exclusive Periods.
Mr. Brady reiterates that the Debtors' cases involve about
20,000 creditors, and their schedules and claims registers
reflect several billion dollars in known and potential
liabilities. Moreover, the highly regulated nature of the
industry in which the Debtors operate and the depressed state of
the long-term care segment of that industry, have continued to
add layers of complexity to these cases. For example, issues
regarding the interplay between bankruptcy law and other federal
laws, including Medicare law, have been a continuing focus of
analysis and discussions throughout these cases, as they have in
the other healthcare bankruptcy cases.
Mr. Brady believes that the Reorganization Plan provides the
framework for a global resolution of these complex issues. The
Purchase Agreement, which is the cornerstone of the Plan, has
been filed with the Court and, subject to the selection of a
higher and better offer in accordance with the Bidding
Procedures, will be presented to the Court for approval on
January 29, 2003. The Plan also provides for treatment of
claims, which has been discussed with the Creditors' Committee
and the Unofficial Senior Lenders' Working Group and will
continue to be discussed and refined prior to the hearing for
approval of the Disclosure Statement on January 29, 2003. In
addition, the Debtors believe that prior to January 29, 2003,
they will have reached a global settlement with the United
States Department of Justice, which will resolve a host of
complex issues and potential claims between the United States
and the Debtors.
Based on the status of the sale process and plan negotiations,
the Debtors anticipate that they should be in a position to
complete the solicitation process for the Plan by April 2002, if
not sooner. The Court previously has been apprised of the
Debtors' progress from the Petition Date through the filing of
the Debtors' eighth motion to extend exclusivity, which efforts
have culminated in the filing of the Plan and Disclosure
Statement. Mr. Brady insists that the requested extension is
reasonable given the Debtors' progress to date and the current
posture of these cases. The Debtors are not seeking this
extension to delay the reorganization for some speculative event
or to pressure creditors to accede to a plan that is
unsatisfactory to them.
Since the confirmation of the Rotech Plan, Mr. Brady relates
that the Debtors have been able to focus themselves and their
major constituents, including the Creditors' Committee, the
Senior Lenders and the United States, on the development of a
mutually acceptable plan or plans of reorganization for the
remaining Debtors. In addition, the Debtors have executed the
Purchase Agreement and are in the process of soliciting final
bids from interested parties. The success of this process is
dependent on the Debtors' ability to conduct a smooth sale
process uninterrupted by a termination of exclusivity and the
resulting potential onslaught of litigation. If this Court were
to deny the Debtors' request for a further extension, any party-
in-interest would be free to propose a plan of reorganization
for each of the Debtors. Termination of the Debtors'
exclusivity would no doubt have a monumental, adverse impact on
the Debtors' business operations and the progress of these cases
and would inevitably foster a chaotic and debilitating
environment with no central focus and explicitly conflicting
interests.
Mr. Brady asserts that these concerns are not abstract or
theoretical -- they are real. The Debtors foresee delay,
increased costs and reduced distributions to creditors if these
Chapter 11 cases are permitted to sink into a morass of
litigation over competing plans championing parochial interests.
Conversely, an extension of exclusivity will enable the Debtors
to harmonize the diverse and competing interests that exist and
seek to resolve any conflict in a reasoned and balanced manner.
This neutral and independent role is precisely what Congress
envisioned for the debtor-in-possession in the Chapter 11
process.
Since the Petition Date, Mr. Brady tells the Court that the
Debtors have taken numerous affirmative steps toward a
successful rehabilitation of their businesses. Through prudent
business decisions and cash management, the Debtors believe they
have more than sufficient resources to meet all required
postpetition payment obligations and have been doing so. As of
December 27, 2002, the Debtors have no outstanding borrowings
under the DIP financing facility other than some modest draws in
connection with letters of credit. In addition, the Debtors are
continuing the process of disposing of non-profitable and non-
core assets. Thus, the Debtors are managing their businesses
effectively and preserving and enhancing the value of their
assets for the benefit of creditors.
Presently, Mr. Brady reports that the Debtors are implementing
the Bidding Procedures, following which they will seek Court
approval of the Purchase Agreement or other highest and best
offer for the Debtors' interests. Any sale will be a critical
factor in the Plan, and the Debtors must have the flexibility
and the time to focus all of their energies on the sale process,
without the interference, which undoubtedly would result if
third parties were entitled to file competing plans of
reorganization for the Debtors. Thus, the Debtors insist that
ample justification exists for the requested extension of the
Exclusive Periods. (Integrated Health Bankruptcy News, Issue No.
49; Bankruptcy Creditors' Service, Inc., 609/392-0900)
INTELLISEC: California Court Confirms Plan of Reorganization
------------------------------------------------------------
Intellisec, a California-based security integration firm, which
installs, services, and provides monitoring of fire, life
safety, and security systems, confirmed its Chapter 11 plan
yesterday in the United States Bankruptcy Court for the Central
District of California before the Honorable John Ryan.
Intellisec sought Chapter 11 protection on April 18, 2002.
Triax Capital Advisors, LLC (successor to Balfour Capital
Advisors, LLC) was engaged by Intellisec as financial advisors
and Chief Restructuring Officer. As part of its engagement,
Triax was responsible for implementing a financial and
operational restructuring of the Company, including
restructuring the Company's balance sheet (converting over $30
million of debt to equity), selling off several divisions of the
Company, and leading the Company through the reorganization
process.
"We are very excited to have been involved in this process from
start to finish and look forward to the Company's future success
in the security marketplace," stated Joseph E. Sarachek, a
principal of Triax Capital Advisors.
Triax Capital Advisors, LLC provides advisory services to
parties involved with highly leveraged companies and special
situations. Triax is able to provide unique capabilities,
including financial and operational restructuring and flexible
compensation structures that focus on success-fee formulas. The
firm has seasoned professionals that specialize in turnaround
and financial advisory services, crisis management, capital
raising and investments, investment banking / M&A advice,
fairness and valuation opinions, accounts receivables
collections, and liquidations. This expertise spans across
various sectors including telecom, media, technology, food
service, aerospace, and general manufacturing.
KMART CORP: Promotes President Julian C. Day to CEO Position
------------------------------------------------------------
Kmart Corporation (Pink Sheets: KMRTQ) named President Julian C.
Day to the additional post of Chief Executive Officer, effective
immediately.
This appointment by Kmart's Board of Directors comes as the
Company begins to implement a reorganized management structure
and an emergence management team in anticipation of Kmart's exit
from Chapter 11 reorganization on or about April 30, 2003. The
Company said that the timing of this planned announcement was
designed to afford Day adequate time to select additional key
executives for Kmart's emergence team including a chief merchant
and general counsel, as well as permanent finance leadership to
succeed the interim services provided by principals of
AlixPartners since March 2002.
As CEO, Day succeeds James B. Adamson, who will continue to
serve as Chairman through the final stages of the Company's
reorganization. Adamson will again serve in the role of non-
executive Chairman, as he did in early 2002. The Board first
appointed him to that position in January 2002 following
disclosure of Kmart's financial difficulties and immediately
preceding the commencement of the Company's Chapter 11
reorganization cases. Adamson was named CEO in March 2002, when
he replaced former CEO Charles C. Conaway and severed the
Company's employment arrangements with the remainder of
Conaway's principal direct reports, recruited Day as President
and COO, and retained principals from AlixPartners as interim
chief financial officer and treasurer.
Kmart's Board of Directors issued the following statement: "We
will be forever grateful for Jim Adamson's unwavering dedication
to Kmart as an institution as well as its employees and other
stakeholders. He answered our call during Kmart's darkest days
and placed Kmart on the road to financial recovery.
Julian Day's zest for tackling the challenging operational
issues that have plagued Kmart for years has resulted in making
this Company stronger, leaner and more efficient as it prepares
to exit Chapter 11 and has garnered support from the Company's
most substantial stakeholders. Julian played an instrumental
role in the development of the five-year business plan approved
by the Board last week for presentation to the Company's
stakeholders during the plan of reorganization process. His
clear commitment, as outlined in that plan, to position Kmart to
compete aggressively in the discount retail sector underscores
our confidence in his ability, desire and passion to decisively
lead this Company going forward."
Chairman James B. Adamson said: "My principal focus when I
accepted the CEO role two months into the Company's Chapter 11
reorganization was to lead Kmart through a fast-track
reorganization in order to position the Company to execute its
longer term business plan outside of Chapter 11 as quickly as
possible. My first two decisions as CEO were to enhance the
credibility of the finance team and to reach out to a qualified
outsider to join Kmart as President and Chief Operating Officer.
As we head down the home stretch of our Chapter 11
reorganization case and prepare to emerge, I have great
confidence in Julian's ability to lead this Company and its
associates to their position as a world-class competitor in the
retail landscape."
Day, 50, joined Kmart as President and Chief Operating Officer
in March 2002. Prior to that, he had joined Sears in March 1999
as Executive Vice President and CFO and was soon promoted to
Chief Operating Officer and a member of the Office of the Chief
Executive. Before joining Sears, Day served as Executive Vice
President and Chief Financial Officer for Safeway, Inc., the
second largest food and drug retailer in North America. During
his five-year tenure at Safeway, the company experienced a
radical transformation of its store operations and achieved a
significant increase in shareholder value. He currently serves
on the Board of Petco Inc.
Day said, "I am honored that the Board has asked me to serve as
Chief Executive as the Company repositions itself for the
future. Having the opportunity to address in the most senior
leadership role the challenges Kmart currently faces is indeed
exciting to me. I feel fortunate to have had the opportunity to
work under Jim Adamson's leadership these past months. He has
been an excellent and challenging mentor for me, spending a
great deal of time making sure I was ready to navigate the
rigorous course that lies ahead."
Day continued: "While the Company struggled to address
significant challenges this past year, Kmart is positioned to
emerge from Chapter 11 in April with a stronger balance sheet
and liquidity position. We have regained the confidence of
lenders, creditors and critical vendors, securing needed
financing during the Chapter 11 reorganization and, most
recently, a new $2 billion exit financing commitment. As we
approach the first anniversary of our Chapter 11 reorganization,
Kmart has achieved a discernible shift in the Company's internal
culture and substantially completed a stewardship review of its
former management team; repositioned itself as a high/low
retailer of exclusive proprietary brands; launched JOE BOXER,
Disney Kids and Martha Stewart Everyday Holiday; secured a new
brand licensing agreement with Thalia; and restructured the
store base and distribution network to protect and strengthen
Kmart's competitive position in key markets."
Kmart's reorganization timetable provides for the initial filing
of a plan of reorganization and related disclosure statement on
or about January 24, 2003, a Bankruptcy Court hearing on
adequacy of the disclosure statement on February 25, 2003,
solicitation of votes on the plan from creditors during March
2003, a Bankruptcy Court hearing on confirmation of the
reorganization plan in mid-April, and emergence from Chapter 11
by April 30, 2003. Commenting on this timetable, Day said: "I
strongly believe Kmart needs to continue to drive its early
emergence timetable. The bankruptcy process is costly in a
variety of ways, including its impact on employee morale, our
reputation with customers, our relationships with key business
partners and other creditors, and our ability to successfully
implement a long-term business plan that maximizes stakeholder
value for all of those parties with a continuing economic
interest in the Company. We are also committed to continue to
work closely throughout this timetable with the statutory
committees appointed in our Chapter 11 case and our major
stakeholders towards a fully consensual reorganization plan."
Kmart Corporation is a mass merchandising company that serves
America through its Kmart and Kmart SuperCenter retail outlets.
The Company's common stock is currently quoted on the Pink
Sheets Electronic Quotation Service -- http://www.pinksheets.com
-- under the symbol KMRTQ.
DebtTraders reports that Kmart Corp.'s 9.00% bonds due 2003
(KM03USR6) are trading at about 13 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KM03USR6for
real-time bond pricing.
KMART CORP: Handleman Expects Minimal Impact from Store Closings
----------------------------------------------------------------
Handleman Company (NYSE: HDL) -- http://www.handleman.com--
expects Kmart's closing of 326 stores will have minimal impact
on its net income. Handleman Company expects to offset the lower
income resulting from these closings with cost reductions and
sales growth.
Stephen Strome, Chairman and Chief Executive Officer said, "As
we do with all our customers, we're working closely with Kmart
to help them accomplish their objectives. We fully support
Kmart's efforts to return to profitability and will make
decisions that reflect our support in addition to securing our
ongoing performance."
Handleman Company had anticipated the store closings and has
already begun the process of adjusting its overhead structure to
a level appropriate to support its ongoing customer base.
Handleman Company expects the sales decrease resulting from the
Kmart closings will be approximately $45 - $50 million annually.
Handleman Company is comprised of two operating divisions:
Handleman Entertainment Resources and North Coast Entertainment.
H.E.R. is a category manager and distributor of prerecorded
music in the United States, United Kingdom, Canada, Mexico,
Brazil and Argentina. As a category manager, H.E.R. manages a
broad assortment of titles required to optimize sales in retail
stores and provides direct-to-store shipments, marketing of the
selections and in-store merchandising.
NCE has two companies in its portfolio. Anchor Bay Entertainment
is a leading North American independent home video label, which
markets a vast collection of popular titles that range from
children's classics to exercise to suspense/horror. Madacy
Entertainment, a major independent record label, markets an
exciting range of music and video products with a catalog
spanning all genres.
LISANTI FOODS: Court OKs J.H. Cohn as Committee's Fin'l Advisor
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey gave
its nod of approval to the Official Committee of Unsecured
Creditors' application to employ J.H. Cohn LLP as Accountants
and Financial Advisors, nunc pro tunc to November 29, 2002, in
the bankruptcy cases involving Lisanti Foods, Inc., and its
debtor-affiliates.
J.H. Cohn will:
a) Review proposed DIP financing commitments;
b) Determine overall viability of the Debtors;
c) Evaluate whether alternative financing arrangements are
feasible for the Debtors;
d) Review any key employee retention plan, if applicable;
e) Gain an understanding of the Debtors' accounting
systems;
f) Review tile Debtors' short-term cash flow projections
for reasonableness;
g) Review the Debtors' expense structure and identify
opportunities for further reductions;
h) Prepare preliminary dividend analysis;
i) Review historical financial statements;
j) Monitor the Debtors' weekly operating results,
availability and borrowing base certificates;
k) Analyze the Debtors' budget m actual results on an
ongoing basis;
l) Perform profitability analysis by product line, business
unit and customer to identify unprofitable activities;
m) Evaluate whether alternative financing arrangements are
feasible for the Debtors;
n) Identify and/or evaluate strategies to maximize value of
estate, including the sale of the business;
o) Monitor the sales process to assure that all potential
buyers are identified and that the necessary financial
information is available to potential buyers;
p) Determine long-term viability of the Debtors and
evaluate their plan of reorganization;
q) Determine management's qualifications to lead the
Debtors;
r) Investigate and analyze potential avoidance action
claims;
s) Investigate transactions between Debtors and non-Debtor
entities;
t) Review the Debtors' claim estimation process for
reasonableness;
u) Communicate findings to tire Committee; and
v) Perform such other services as may be requested by the
Committee and/or counsel.
The current rates of the partner and professionals most likely
to render services in this area are:
Senior Partner $450 per hour
Partner $385 per hour
Director $350 per hour
Senior Manager $300 per hour
Manager $275 per hour
Supervisor $250 per hour
Senior Accountant $160 per hour
Staff Accountant $160 per hour
Paraprofessionals $110 per hour
Lisanti Foods, Inc., leading suppliers of products to
restaurants and pizza parlors, filed a chapter 11 petition on
November 20, 2002 in the U.S. Bankruptcy Court for the District
of New Jersey. Boris I. Mankovetskiy, Esq., Gail B. Cooperman,
Esq., and Jack M. Zackin, Esq., at Sills Cummis Radin Tischman
Epstein & Gross, P.A., represent the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $30 million in assets and $33
million in debts.
LUCENT: Reaches Tentative Pact with Union on 20-Month Contract
--------------------------------------------------------------
Lucent Technologies (NYSE: LU) and the International Brotherhood
of Electrical Workers (IBEW) reached tentative national and
local agreements on a 20-month contract.
The tentative national agreement is essentially the same as the
one the company reached with the Communications Workers of
America early last week. The contract calls for wage increases
as well as some changes in employee and retiree healthcare
benefits. The new contract will become effective March 1, 2003
and expires Oct. 31, 2004.
There will be a general wage increase of 2 percent on June 1 and
an additional increase of 2 percent on May 30, 2004. Changes in
the healthcare benefits include increases in co-payments,
deductibles and out-of-pocket expenses, and modest improvements
in certain dental benefits.
The IBEW, which represents about 300 Lucent employees in the
United States, will begin the ratification process shortly and
anticipates that it will be concluded by Feb. 7.
Lucent Technologies, headquartered in Murray Hill, N.J., USA,
designs and delivers networks for the world's largest
communications service providers. Backed by Bell Labs research
and development, Lucent relies on its strengths in mobility,
optical, data and voice networking technologies as well as
software and services to develop next-generation networks. The
company's systems, services and software are designed to help
customers quickly deploy and better manage their networks and
create new, revenue-generating services that help businesses and
consumers. For more information on Lucent Technologies, visit
its Web site at http://www.lucent.com
Lucent Technologies' 7.70% bonds due 2010 (LU10USR1) are trading
at about 32 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=LU10USR1for
real-time bond pricing.
MIDLAND STEEL: Honoring Up to $100K of Critical Vendor Claims
-------------------------------------------------------------
Midland Steel Products Holding Company and its debtor-affiliates
obtained permission, in their sole discretion, from the U.S.
Bankruptcy Court for the District of Delaware to pay certain
Critical Vendors' prepetition claims.
The Debtors operate a vast distribution network for the shipment
of materials and products to their customers and from suppliers.
Although the Debtors control the majority of their sales and
distribution through company employees and their company-owned
facility, in many instances the shipment and transportation of
products is handled by independent, third-party commercial
common carriers, including, among others, trucking companies and
railroads.
In the normal course of their businesses, the Debtors use the
Shippers to transport and deliver materials and products to and
from customers through an established distribution network. Most
of the Shippers are not under contract with the Debtors or have
contracts that are easily terminable. In many cases, the
Shippers are hired on an as needed basis and are paid an agreed
rate for the services provided. The Shippers generally are not
paid in advance. The Debtors receive notice of all shipping
charges via facsimile subsequent to the service. As of the
Petition Date, the Debtors estimate that the outstanding
Shipping Charges to the Shippers total less than $100,000.
The Court allow the Debtors to pay Shipping Charges to third
parties that the Debtors determine, in the exercise of their
business judgment, and in their sole and absolute discretion,
are necessary and critical to facilitate the delivery,
distribution, and sale of their products to or from their
customers throughout North America.
In return for payment of the Shipping Charges in the ordinary
course of business, the Debtors will require that the Shippers
continue to provide services to the Debtors during the pendency
of the chapter 11 cases on usual and customary trade terms and
conditions provided to the Debtors prepetition.
If a Shipper accepts payment of the Shipping Charges and
subsequently fails or refuses to continue to provides services
to the Debtors on the Customary Terms, the Shipping Charges paid
will be deemed to be a post petition transfer and, accordingly,
recoverable by the Debtors in cash upon written request. Upon
recovery by the Debtors, the Shipper's claim for the Shipping
Charges will be reinstated as if the payment had not been made.
Midland Steel Products Holding Company provides frames for the
medium duty line at General Motors. Laura Davis Jones, Esq.,
Rachel Lowy Werkheiser, Esq., Paula A. Galbraith, Esq., at
Pachulski Stang Ziehl Young & Jones and Shawn M. Riley, Esq.,
Susanne E. Dickerson, Esq., at McDonald, Hopkins, Burke & Haber
Co., LPA ,represent the Debtors in their restructuring efforts.
NAT'L CENTURY: Silver Moves Wants Cash Collateral Order Enforced
----------------------------------------------------------------
Silver Moves, Inc., doing business as Care at Home; NuMed
Rehabilitation, Inc.; and Parke Home Health Care, IN., doing
business as Whole Person Home Health Care of Ohio, are Chapter
11 Debtors at the U.S. Bankruptcy Court for the Middle District
of Florida, Tampa Division since November 8, 2002. The Silver
Moves Debtors are in the business of providing home health care
and related services, temporary staffing of nursing personnel
and contract staffing of physical occupational and speech
therapists to health care facilities in Florida and Ohio.
Chad S. Bowen, Esq., at Jennis & Bowen, in Tampa, Florida,
relates that the Silver Moves Debtors were forced to file their
bankruptcy cases as a direct result of the NCFE Debtors' failure
to provide funding pursuant to a funding arrangement. The
Silver Moves Debtors were in compliance with the financing
arrangement until National Century Financial Enterprises, Inc.'s
breach of the funding arrangement terms in late October 2002.
Mr. Bowen recounts that on September 7, 2002, to solve the
payment delays of receivables and to provide them with
sufficient working capital for their operations, the Silver
Moves Debtors, as sellers, entered into a Sales and Subservicing
Agreement with NPF XII, Inc. as purchaser, and NPFS as servicer.
Under the Sales Agreement, NPF purchased certain of the Silver
Moves Debtors' Health Care Receivable and appointed NPFS to
perform certain servicing, administrative and collection
functions in connection with the Purchased Receivables. NCFE is
the corporate parent of the NPF and NPFS.
Pursuant to the terms of the Sales Agreements, the Silver Moves
Debtors would provide the NCFE Debtors with a report of all
receivables generated by the Silver Moves Debtors in their
operations. NPF would then, at its option, purchase certain
receivables that met its purchase criteria. Generally, the NCFE
Debtors would pay 97% of the face amount of all eligible
receivables as a purchase price. However, to provide sufficient
reserve for the Silver Moves Debtors' repurchase of certain
Purchased Receivables under the terms of the Sales Agreements,
approximately 17% of the purchase price was placed in a reserve
account maintained by a trustee appointed by NPF in connection
with the issuance of promissory notes to fund the purchase of
the Health Care Receivables.
To facilitate collection of all Purchased Receivables by NPFS,
the Silver Moves Debtors and NPFS also established two "Lockbox
Accounts". The first was a "Commercial Lockbox Account" into
which all collection of the Silver Moves Debtors' non-medical
Health Care Receivables and Non-Purchased Receivables were to be
deposited. A separate "Medicare Lockbox Account" was
established for collection of all Medicare, Medicaid and related
Health Care Receivables.
The Lockbox Accounts were maintained at Huntington National Bank
in Columbus, Ohio and Silver Moves notified all the payors of
Health Care Receivables to make payments directly to the Lockbox
Accounts. All collections and amounts in the Medical Lockbox
Accounts were swept daily into "Collection Accounts" maintained
by the Trustee.
On October 18, 2002, the Silver Moves Debtors provided NPF and
NCFE Debtors with a weekly report reflecting all receivables
generated on the period October 7 to 13, 2002. NPF confirmed in
writing that it would pay $138,200 for those receivables on
October 25, 2002. While expecting payment on October 25, 2002,
the Silver Moves Debtors provided the NPF and NCFE Debtors with
an additional report reflecting all receivables generated from
October 14 to 20, 2002.
However, Mr. Bowen notes, in breach of its obligations under the
Sales Agreement, NPF did not pay the Silver Moves Debtors for
the receivables. Instead, NPF and NCFE Debtors have retained
all collections of those receivables. In addition, all
receivables generated by the Silver Moves Debtors after
October 6, 2002 were not Purchased Receivables.
Subsequently, on October 31, 2002, NPF notified each of the
Debtors that NPF has been precluded by its finance source from
releasing funds for the purchase of receivables and was not in a
position to continue purchasing the Eligible Receivables. NPF
has not purchased any receivables nor remitted any funds to
Silver Moves after this date. However, due to the instructions
given to payors of Silver Moves Debtors' Receivables, the
collections of Health Care Receivables, including collection of
Non-Purchased receivables, and receivable generated after the
Silver Moves Debtors' petition date of November 8, 2002 continue
to be deposited into the Lockbox Accounts.
The Silver Moves Debtors believe that $459,667 in Non-Purchased
Receivables have been presumably directed to, and are being held
in, the Lockbox Accounts. Neither Huntington Bank, nor the NCFE
Debtors have released any of those funds to Silver Moves.
Furthermore, since early November, NCFE Debtors have not
provided Silver Moves Debtors with any required reporting
relating to the collection of the Receivables.
After filing their bankruptcy, the Silver Moves Debtors filed a
motion in the Tampa Court seeking recovery and use of certain
accounts receivable, some of which may constitute the Debtors'
cash collateral. At the Cash Collateral Motion hearing, it was
announced to the Tampa Court that the Debtors had just filed for
bankruptcy.
Nevertheless, the Tampa Court granted the Cash Collateral Motion
on December 4, 2002. The Cash Collateral Order characterizes
the Health Care Receivables as:
(a) Purchased Accounts Receivable -- those Healthcare
Receivables generated by the Silver Moves Debtors that
were purchased by the NCFE Debtors;
(b) Non-Purchased, Prepetition Accounts Receivable -- those
Healthcare Receivables generated by the Silver Moves
Debtors prior to their November 8 Petition Date that are
Non Purchased Receivables; and
(c) Postpetition Accounts Receivable -- those Healthcare
Receivables generated by the Silver Moves Debtors after
their November 8 Petition Date.
The Cash Collateral Order makes preliminary findings of fact and
conclusions of law, which includes findings that:
(i) the Postpetition Receivables are property of the estate
of Silver Moves Debtors and that NPFS has no interest in
those funds, and
(ii) the Non-Purchased Receivables are property of Silver
Moves Debtors' estates, but that NPFS may have some
interest in those funds.
However, the Cash Collateral Order mandates that its enforcement
is subject to the Silver Moves Debtors obtaining relief from the
automatic stay in the NCFE Debtors' bankruptcy cases.
In addition, this Court also entered certain Orders, which seem
to enjoin Huntington Bank and other custodians of the Lockbox
Accounts from redirecting Healthcare Receivables to the Silver
Moves Debtors. In general, the Order provides that:
(i) the Silver Moves are stayed, restrained, and enjoined
from maintaining possession, custody or control of any
proceeds of any of the Debtors' Purchased Receivables,
or from asserting any ownership interest in the
Purchased Receivables, and that the proceeds of the
Purchased Receivables be immediately deposited in the
Lockbox Accounts;
(ii) the Silver Moves Debtors and the Lockbox Custodians are
stayed, restrained, and enjoined from diverting the
proceeds of the Purchased Receivables to any entity
other than the Debtors; and
(iii) the Lockbox Custodians are ordered to maintain the
Lockbox Accounts in the manner set forth in the Sales
Agreements.
In the light of all these actions, the Silver Moves Debtors seek
relief from the automatic stay to permit them to enforce the
provisions of the Tampa Court's Cash Collateral Order,
including:
(a) allowing the Silver Moves Debtors to direct payment of
all Non-Purchased Receivables directly to the Silver
Moves Debtors or at their direction; and
(b) allowing the Silver Moves Debtors to seek and obtain the
appropriate orders from the Tampa Court directing the
turnover of all Non-Purchased Receivables and
Postpetition Receivables from the NCFE Debtors,
Huntington and the Trustee.
Mr. Bowen argues that pursuant to Section 362(d)(1), the
automatic stay should be modified or terminated for cause,
including:
(a) the irreparable harm to the Silver Moves Debtors, their
patient, and employees,
(b) the adequate protection afforded to the NCFE Debtors by
the Cash Collateral Order entered by the Tampa Court,
(c) the disputed nature of the NCFE Debtors' interest in the
Non-Purchased Receivables,
(d) the undisputed fact that the NCFE Debtors have no
interest in the Postpetition Receivables, and
(e) the fact that the NCFE Debtors' breach of their
obligations under the Sales Agreement, which began in
October 2002, relieved the Silver Moves Debtors from
their obligations under that Sales Agreement, including
its prospective obligation to forward its Health Care
Receivables to the Lockbox Accounts.
Due to the delays in obtaining the use of the capital that would
have otherwise been available under the Cash Collateral Order,
the Silver Moves Debtors have already been forced to transfer a
great number of patients and employees to alternative health
care facilities to avoid interruption of care for those people.
Moreover, Mr. Bowen adds, the continued constriction of cash
flow caused by the imposition of the automatic stay, especially
in the light of the existing Cash Collateral Order, unfairly
threatens to impair the Silver Moves Debtors' ability to
reorganize. (National Century Bankruptcy News, Issue No. 5;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
NATIONAL STEEL: Proposes $15 Million Break-Up Fee for U.S. Steel
----------------------------------------------------------------
United States Steel Corporation has expended, and likely will
continue to expend, considerable time, money and attention in
the pursuit of the Sale and have engaged in extended arm's-
length, good faith negotiations, Timothy R. Pohl, Esq., at
Skadden, Arps, Slate, Meagher & Flom in Chicago, Illinois, tells
Judge Squires. The Agreement is the culmination of those
negotiations.
In recognition of this expenditure of time, energy and
resources, National Steel Corporation and its debtor-affiliates
have agreed to provide U.S. Steel a $15,000,000 Break-Up Fee.
Accordingly, the Debtors ask the Court to approve the Break-Up
Fee at the Procedures Hearing on January 30, 2003.
The Break-Up Fee is payable by the Debtors to U.S. Steel on the
earlier to occur of:
(a) the approval of a sale or sales of a material portion of
the Acquired Assets to a purchaser other than U.S.
Steel; or
(b) the filing of a plan of reorganization that does not
contemplate the sale of the Acquired Assets to U.S.
Steel.
The Break-Up Fee is to be paid in cash:
(1) in the case of the closing of an Alternative
Transaction, on the date of the closing of the
Alternative Transaction, without the requirement of any
notice or demand from U.S. Steel, directly from, and
will be secured by, the cash component of the
consideration paid in the Alternative Transaction; or
(2) in the case of the filing of a plan of reorganization,
from the assets of the Debtors on the approval of the
plan by the Bankruptcy Court, without the requirement of
any notice or demand from U.S. Steel.
Mr. Pohl further relates that the Debtors' obligation to pay the
Break-Up Fee is:
-- to be entitled to administrative expense claim status
under Sections 503(b)(1)(A) and 507(a)(1) of the
Bankruptcy Code,
-- not to be subordinate to any other administrative expense
claim other than any superpriority claim granted under
the Order approving the Debtors' postpetition financing
or any adequate protection order in existence at the time
the Break-Up Fee is approved, and
-- to survive the termination of the Agreement.
If the closing has not occurred by the earlier of: (a) April 21,
2003, or (b) 10 business days after the entry of the Sale Order
and no Alternative Transaction has occurred, the Debtors are
entitled to terminate the Agreement without penalty or cost.
Thus, if U.S. Steel is unable to satisfy the Labor Condition by
the Break-Up Fee Deadline, the Debtors are free to pursue
alternate transactions without any obligation to pay the Break-
Up Fee.
Mr. Pohl contends that the Break-Up Fee was a material
inducement for, and a condition of, U.S. Steel's entry into the
Agreement. The Debtors believe that the Break-Up Fee is fair and
reasonable in view of:
(a) the intensive analysis, due diligence investigation, and
negotiation undertaken by U.S. Steel in connection with
the Sale, and
(b) the fact that U.S. Steel's efforts have established a
floor with respect to the Assets and increased the
chances that the Debtors will receive the highest and
best offer for the Assets, to the benefit of the
Debtors, their estates, their creditors, and all other
parties-in-interest.
U.S. Steel is unwilling to commit to hold open its offer to
purchase the Acquired Assets under the terms of the Agreement
unless the Break-Up Fee is approved. Thus, absent Court
approval of the Break-Up Fee, the Debtors may lose the
opportunity to obtain what they believe to be the highest and
best offer for the Assets. (National Steel Bankruptcy News,
Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900)
NATIONSRENT: Wants to Implement Solicitation & Voting Procedures
----------------------------------------------------------------
NationsRent Inc., and its debtor-affiliates ask the Court to
establish procedures for the solicitation and tabulation of
votes to accept or reject their First Amended Joint
Reorganization Plan filed on December 23, 2002. The Debtors
also ask the Court to approve:
* ballot forms for submitting Plan votes;
* the deadline for submission of ballots;
* the contents of the proposed solicitation packages to be
distributed to creditors and other parties-in-interest in
connection with the solicitation of votes on the Plan; and
* the proposed record date for Plan voting.
Solicitation Procedures
A. Voting Classes & Ballot Forms
The Debtors intend to distribute to those creditors entitled to
vote on the Plan one or more ballots substantially similar to
the Official Form No. 14, but which have been modified to
address particular terms of the Plan. The Debtors propose that
the appropriate form of Ballot will be distributed to holders of
claims in these classes:
Ballot No. 1 Ballot for Class C-1 Bank Loan Claims
Ballot No. 2 Ballot for Class C-2 Other Secured Claims
Ballot No. 3 Ballot for Class C-4 General Unsecured
Claims
Ballot No. 4A Individual ballot to be returned directly to
Logan & Company, the Debtors' solicitation
and tabulation agent, for Class C-4 claims
on account of Old Senior Subordinated Notes
Ballot No. 4B Individual ballot to be returned to a Master
Ballot Agent for Class C-4 claims on account
of Old Senior Subordinated Notes
Ballot No. 5 Master ballot for Class C-4 claims on
account of Old Senior Subordinated Notes
Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger,
notes that Classes C-3 and E-1 under the Plan are unimpaired
and, therefore, are presumed to accept the Plan. On the other
hand, the holders of claims and interests in Classes C-5, C-6
and E-2 neither retain nor receive any property under the Plan
and are, therefore, deemed to reject the Plan. For these
reasons, the solicitation of Classes C-3, C-5, C-6, E-1 and E-2
is not required and no Ballots have been proposed for creditors
and interest holders in these classes.
Certain beneficial owners hold Old Senior Subordinated Notes
through brokers, banks, dealers or other agents or nominees,
which act as master ballot agents. According to Mr.
DeFranceschi, the Debtors intend to implement special procedures
for the distribution of the solicitation packages and tabulation
of votes with respect to these Beneficial Owners.
B. Voting Deadline
The Debtors anticipate commencing the Plan solicitation period
by mailing Ballots and other approved solicitation materials no
later than seven business days after the Court approves the
Disclosure Statement. Based on this schedule, Mr. DeFranceschi
maintains that all Ballots must be properly executed, completed
and delivered to Logan either:
-- by mail in the return envelope provided with each Ballot;
-- by overnight courier; or
-- by personal delivery.
Ballots must be received by Logan no later than 5:00 p.m.,
Eastern Time, on March 5, 2003 or on other dates the Debtors may
establish that is at least 30 days after the solicitation period
started. To accommodate the additional tabulation activities
that must be performed by Master Ballot Agents, the Debtors also
propose that the Master Ballots, if necessary, may be submitted
by facsimile so as to be received by Logan before the Voting
Deadline. However, the original Master Ballots must be
transmitted to Logan within two business days after the Voting
Deadline.
C. Solicitation Package
The solicitation package will contain:
1. a Confirmation Hearing notice;
2. the Disclosure Statement been filed with the Court; and
3. letters from the Debtors, the Creditors' Committee and
the Majority Bank Debt Holders recommending acceptance of
the Plan.
For the Solicitation Packages sent to holders of claims in
classes entitled to vote, Mr. DeFranceschi says, an appropriate
form of Ballot, a Ballot return envelope as well as other
materials as the Court may direct may be sent to the Master
Ballot Agents to assist in the solicitation of votes of
Beneficial Owners. Consistent with Sections 1126(f) and 1126(g)
of the Bankruptcy Code and Rule 3017(d) of the Federal Rules of
Bankruptcy Procedure, Mr. DeFranceschi relates that the
Solicitation Packages for holders of claims against or interests
in any Debtor in a class under the Plan that is deemed to accept
or reject the Plan under will not include a Ballot.
Tabulation Procedures
A. Tabulation Rules
To establish a fair and equitable voting process, the Debtors
will implement these tabulation rules:
1. Solely for purposes of voting to accept or reject the
Plan, a claim entitled to vote will be deemed
temporarily allowed in an amount equal to the lesser of
the claim:
(i) reported in the Debtors' schedules of assets and
liabilities if the claim is listed in the Schedules;
and
(ii) indicated in a timely filed proof of claim;
2. A claim (i) marked as contingent, unliquidated or disputed
on its face in a timely filed proof of claim or (ii)
listed as contingent, unliquidated or disputed in the
Schedules will be temporarily allowed for $1;
3. A timely filed claim which is marked as a priority claim
but listed in the Schedules as a nonpriority claim or as
priority claim only in part will be temporarily allowed as
a non-priority claim for voting purposes in an amount
equal to the lesser of:
(i) the entire amount of the claim as set in the proof
of claim; or
(ii) the nonpriority claim set forth in the Schedules;
4. A claim that has been estimated or otherwise allowed for
voting purposes pursuant to a Court order will be
temporarily allowed for voting purposes in accordance with
the amount estimated or allowed by the Court;
5. A claim listed in the Schedules as contingent,
unliquidated or disputed and which a proof of claim was
not timely filed will be disallowed for voting purposes;
6. If the Debtors have filed and served an objection to a
claim at least 15 days before the Voting Deadline, that
claim will be temporarily allowed or disallowed for voting
purposes in accordance with the relief sought in the
objection;
7. Claims of individual credit facility creditors will be
counted solely in the amounts identified in a master
bank loan list, unless an applicable Credit Facility
Creditor obtains a Court order allowing its claim in a
different amount for voting purposes;
8. If a claimant identifies a claim amount on its Ballot
that is less than the amount otherwise calculated in
accordance with the Tabulation Rules, the claim will be
temporarily allowed for voting purposes in the lesser
amount identified on that Ballot;
9. The amount of the Old Senior Subordinated Note Claims
asserted by the holders of Old Senior Subordinated Notes
will be allowed for voting purposes at the lesser of:
(i) the amounts reflected in a certain record holder
register or master ballot register, as applicable,
which will be provided to the Debtors by the
Indenture Trustee;
(ii) the amounts identified by an Individual Record
Holder in a Form A Individual Ballot or by a Master
Ballot Agent on a Master Ballot.
The Record Holder Register is a list of the names,
addresses and holdings of the Old Senior Subordinated Note
Claims holders as of January 21, 2003 -- the Record Date.
The Master Ballot Agent Register bears a list of the names
and addresses of the Master Ballot Agents and the
aggregate holdings of the Beneficial Owners a Master
Ballot Agent provides services;
10. Any Ballot that is properly completed, executed and timely
returned to Logan but does not indicate an acceptance or
rejection of the Plan will be deemed a vote to accept the
Plan;
11. If no votes to accept or reject the Plan are received with
respect to a particular class, that class will be deemed
to have voted to accept the Plan;
12. If a creditor casts more than one Ballot voting the same
claim before the Voting Deadline, the last Ballot received
before the Voting Deadline will be deemed to reflect the
voter's intent and thus will supersede any prior Ballots;
and
13. Creditors will be required to vote all of their claims
within a particular class under the Plan either to accept
or reject the Plan and may not split their votes; thus, a
Ballot or a group of Ballots within a Plan class received
from a single creditor that partially rejects and
partially accepts the Plan will not be counted.
B. Tabulation Objections
Mr. DeFranceschi tells the Court that if any claimant seeks to
challenge the allowance of its claim for voting purposes in
accordance with the Tabulation Rules, that the claimant will be
required to file a motion pursuant to Bankruptcy Rule 3018(a)
for an order that temporarily allows its claim in a different
amount or classification for purposes of voting to accept or
reject the Plan. That claimant must serve the Rule 3018 Motion
on the Debtors so that it will be received no later than 10 days
after the later of the service date of:
-- a Confirmation Hearing notice; and
-- a notice of an objection, if any, to the underlying
claim.
The Debtors also want any Ballot submitted by the creditor
filing a Rule 3018 Motion to be counted solely in accordance
with their proposed Tabulation Rules unless and until the
underlying claim is temporarily allowed by the Court for voting
purposes in a different amount, after notice and a hearing.
Confirmation Hearing
A. Confirmation Hearing
In accordance with Bankruptcy Rule 3017(c), the Debtors ask
Judge Walsh to schedule a special hearing date for the
confirmation of their Plan in March 2003. The Confirmation
Hearing, however, may be continued from time to time by the
Court without further notice.
Any objections to the Plan confirmation must:
(a) be in writing;
(b) state the name and address of the objecting party and the
nature of its claim or interest;
(c) state with particularity the basis and nature of its
objection;
(d) be filed with the Court and served on:
* the Clerk of Court;
* the Debtors and their counsel;
* the Creditors' Committee's counsel;
* the counsel to the lenders;
* the counsel to the Majority Bank Debt Holders; and
* the U.S. Trustee;
(e) be received no later than 4:00 p.m., Eastern Time, on
March 5, 2003 or on other date established by the Debtors
that is at least 30 days after the commencement of the
solicitation period.
Pursuant to Bankruptcy Rules 2002 and 3017(d), the Debtors also
intend to serve on all creditors and equity security holders, as
part of the Solicitation Packages and not less than 30 days
before the Confirmation Objection Deadline, a Confirmation
Hearing notice indicating:
1. the Voting Deadline;
2. the deadline for filing Rule 3018 Motions;
3. the Confirmation Objection Deadline; and
4. the time, date and place of the Confirmation Hearing.
The Debtors will also publish a similar notice not less than 25
days before the Confirmation Hearing in The Miami Herald and the
national editions of The Wall Street Journal and The New York
Times.
B. The Record Date
The Debtors also ask the Court to establish January 21, 2003 as
the record date pursuant to Bankruptcy Rule 3017(d) for purposes
of determining which creditors are entitled to receive
Solicitation Packages and, where applicable, vote on the Plan.
With respect to a transferred claim, the Debtors propose that
the transferee will be entitled to receive a Solicitation
Package and cast a Ballot on account of the transferred claim
only if by the Record Date:
-- all actions necessary to effect the transfer of the claim
have been completed; or
-- the transferee files (i) the documentation required by
Bankruptcy Rule 3001(e) to evidence the transfer and (ii)
a sworn statement of the transferor supporting the
validity of the transfer.
Each transferee will be treated as a single creditor for
purposes of the numerosity requirements in Section 112G(c) of
the Bankruptcy Code. (NationsRent Bankruptcy News, Issue No. 25;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
NationsRent's 10.375% bonds due 2008 (NRNT08USR1) are trading at
less than a penny on the dollar, DebtTraders says. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NRNT08USR1
for real-time bond pricing.
NETWORK ACCESS: DSL.net Secures $15-Million Revolving Facility
--------------------------------------------------------------
DSL.net, Inc. (NASDAQ: DSLN), a leading nationwide provider of
broadband communications services to businesses, arranged a $15
million revolving credit facility, under which $6.1 million is
currently available.
The Company also announced that it has taken steps to integrate
network assets, customers and employees it recently acquired
from Network Access Solutions Corporation of Herndon, Va.
The credit facility has a five-year term. During the first two
years, DSL.net will be able to draw funds on a revolving basis
and be required to make interest-only payments. At the end of
this two-year period, any drawn amounts under the facility will
be repaid over a three-year period. Availability under the
facility is based on the amount of guarantees received by the
bank from certain of DSL.net's stockholders.
"The new credit facility will be available for general corporate
purposes," said Robert J. DeSantis, chief financial officer of
DSL.net. "We're pleased to have been able to arrange for this
additional funding to support our continued growth. We believe
that this financing demonstrates our investors' confidence in
our financial prospects."
Commenting on the integration of the acquired NAS network
assets, customers and employees, David F. Struwas, chairman and
chief executive officer of DSL.net, said: "We have already moved
quickly to identify synergies and taken decisive actions to trim
costs and eliminate organizational redundancies."
DSL.net has taken the following steps:
- Contacted subscribers that are serviced by the NAS network
assets acquired by DSL.net to inform them of the ownership
change, minor changes to their invoice and the new mailing
address for payment.
- Established a DSL.net-NAS customer center to provide
additional information and receive feedback regarding any
customer issues -- http://www.dsl.net/nas-support
- Evaluated all positions within the organization and moved
to reduce the combined workforce by about 15 percent to
approximately 225 employees.
- Began to implement a plan to further trim costs -- without
impacting the reliability and quality of services - by
identifying overlaps in the areas of facilities, operational
support and network coverage.
DSL.net will discuss the expected financial and operational
impact of the acquisition of the NAS network assets and related
subscriber lines as part of its fourth quarter and year-end
analysts' conference call, which is currently expected to occur
on or before mid-March 2003.
Based in New Haven, Conn., DSL.net, Inc., combines its own DSL
facilities, nationwide network infrastructure, and Tier I
Internet Service Provider (ISP) capabilities to provide high-
speed Internet access and value-added services directly to
small- and medium-sized businesses throughout the United States.
A certified CLEC in all 50 states, plus Washington, D.C. and
Puerto Rico, DSL.net sells to businesses, primarily through its
own direct sales channel. DSL.net augments its direct sales
strategy through select system integrators, application service
providers and marketing partners. In addition to a number of
high-performance, high-speed Internet connectivity solutions
specifically designed for businesses, DSL.net product offerings
include Web hosting, DNS management, enhanced e-mail, online
data backup and recovery services, firewalls, virtual private
networks and nationwide dial-up services. For more information
on DSL.net, visit http://www.dsl.net
Network Access Solutions provided broadband network solutions
and internet service to business customers. The company provided
their data communications services using a variety of high-speed
access methods and market those services directly through their
own sales force and through wholesale partners. The Company
filed for Chapter 11 reorganization on June 4, 2002, in the U.S.
Bankruptcy Court for the District of Delaware.
NORTH AMERICAN REFRACTORIES: Honeywell Inks Asbestos Settlement
---------------------------------------------------------------
Honeywell (NYSE:HON) confirmed it has signed definitive
agreements or reached agreements in principle with about
236,000, or about 90%, of the North American Refractories
Company-related asbestos claimants regarding settlement of all
existing NARCO-related asbestos claims, whether filed or
unfiled.
NARCO, which filed for reorganization under Chapter 11 of the
U.S. Bankruptcy Code in January 2002, is a company that was sold
by Honeywell in 1986. In addition to the announcement at a U.S.
Bankruptcy Court hearing Friday in Pittsburgh, Judge Judith
Fitzgerald approved an extension of a stay until February 18,
temporarily enjoining any claims against Honeywell and pending
the reorganization of NARCO. The stay reflects the continued
progress of negotiations between Honeywell and the court-
appointed Asbestos Creditors' Committee and between Honeywell
and the law firms representing the vast majority of existing
claimants.
Honeywell and NARCO are seeking to establish a trust under
Section 524 (g) of the U.S. Bankruptcy Code. If approved by the
court, the trust would bar any future NARCO-related asbestos
claims against Honeywell and NARCO in state and federal courts;
instead, all future claims would be directed to the federally
supervised trust. By law, agreement with 75% of current
claimants is required before the bankruptcy court will consider
the trust for approval.
Honeywell also announced that it has reached an agreement with
the negotiating subcommittee of the Asbestos Creditors'
Committee on the trust distribution procedures to govern the
NARCO claims process for both existing and future claims. In
addition, Honeywell reported to the court that it had made
significant progress in its discussions with the futures
representative appointed by the court to represent the interests
of future claimants.
"These are important steps toward resolving a significant
portion of Honeywell's asbestos claims," said Honeywell's
General Counsel Peter Kreindler. "The trust, if agreed to and
approved, would provide claimants with a fair and expeditious
way to receive compensation, and Honeywell would be able to
bring closure to the NARCO litigation."
Last month, Honeywell said that, based on the current state of
its negotiations with plaintiff's counsel representing NARCO
asbestos claimants, it estimated a NARCO bankruptcy trust-
related after-tax charge of approximately $900 million, net of
anticipated insurance recoveries. The asbestos-related reserves
are primarily linked to anticipated company contributions over
time, net of insurance, that are associated with the 524 (g)
trust process to resolve all current and future claims.
Honeywell's estimate of its liabilities has not changed since
that time.
Settlement payments with respect to current claims would be made
over a four-year period. Contributions required to fund future
claims would be capped at an annual level that would not have a
material impact on Honeywell's operating cash flows - assuming
the successful completion of ongoing settlement negotiations.
Honeywell owned NARCO, a manufacturer of high temperature bricks
and cement, from 1979 to 1986. There were approximately 116,000
claims pending prior to NARCO's Chapter 11 filing in January
2002.
Honeywell is a diversified technology and manufacturing leader,
serving customers worldwide with aerospace products and
services; control technologies for buildings, homes and
industry; turbochargers; automotive products; specialty
chemicals; fibers; plastics; and electronic and advanced
materials. Based in Morris Township, N.J., Honeywell is one of
30 stocks that make up the Dow Jones Industrial Average and is a
component of the Standard & Poor's 500 Index. Its shares are
traded on the New York Stock Exchange under the symbol HON, as
well as on the London, Chicago and Pacific Stock Exchanges. For
more information about Honeywell, visit http://www.honeywell.com
NRG ENERGY: Involuntary Petition Show-Down Set for Jan. 23
----------------------------------------------------------
On January 23, 2003, the U.S. Bankruptcy Court for the District
of Minnesota will convene a hearing to consider an involuntary
petition filed against NRG Energy, Inc., by a "rogue group of
disgruntled executives," as NRG's lawyers call them, and the
Company's request that the Bankruptcy Court dismiss the
involuntary petition with prejudice or abstain while NRG's real
creditors continue to negotiate.
William I. Kampf, Esq., and Jamie R. Pierce, Esq., at Kampf &
Associates, P.A., in Minneapolis, tell the Court that NRG's
counterclaims are nonsense. The executives are owed money and
NRG isn't paying what it owes. Nothing supports NRG's argument
that the Court should abstain and the facts don't warrant
dismissing the Involuntary Petition.
Adam P. Merrill, Esq., at Kirkland & Ellis in Chicago, told the
U.S. Bankruptcy Court for the District of Minnesota last month
that the involuntary petition filed againt NRG Energy, Inc.,
smacks of bad faith and should be dismissed. In the
alternative, Mr. Merrill said, the "rogue group of disgruntled
executives" filing the Involuntary Petition should be required
to post a $10 million bond, pursuant to 11 U.S.C. Sec. 303(e),
to "protect NRG and its creditors from the damage that has been
caused and could be caused if these proceedings continue."
Since late last summer, Mr. Merrill relates, NRG has been
developing and negotiating a comprehensive restructuring with
the holders of approximately $7 billion of bank debt and bond
obligations. This effort is particularly complicated and time
consuming because of the complex and capital intensive nature of
NRG's business.
Restructuring negotiations are ongoing among NRG, its parent
company, Xcel Energy Inc., and ad-hoc committees of NRG's
lenders and noteholders, Scott J. Davido, Esq., NRG's Senior
Vice President and General Counsel relates. Specifically, NRG
is holding regular meetings with:
* an ad hoc committee of parent company noteholders
represented by Bingham McCutchen LLP and Houlihan, Lokey,
Howard & Zulkin;
* an ad hoc committee of project level bondholders
represented by Akin Gump Strauss Hauer & Feld LLP and
Ernst & Young Corporate Finance LLC; and
* its bank group represented by Simpson Thatcher & Bartlett
and FTI Consulting/Policano & Manzo.
The negotiations with these holders of approximately $7 billion
of debt, Mr. Merrill continues, have intensified and accelerated
in recent weeks. Recently, NRG and Xcel proposed a
comprehensive restructuring proposal. A counter proposal is
currently under consideration. At present, it is not clear
whether it will be necessary for NRG to commence a chapter 11
case in order to consummate the yet to be agreed upon
restructuring. Nevertheless, NRG does not believe that the
commencement of a reorganization case at this time will enhance
the likelihood of a successful reorganization.
During the summer, NRG determined that it needed to undertake a
financial restructuring and operational reorganization,
Consequently, NRG dismissed a number of the officers that
formulated and implemented the strategy that led to NRG's
current difficulties. On October 3, 2002, six of these former
executives sued NRG for severance and other benefits. NRG
refused to pay the alleged benefits pending a complete
investigation of alleged mismanagement and misconduct by the
former executives. Just seven weeks later, five of these former
executives filed an involuntary chapter 11 petition against NRG.
The petitioners allege just $23.5 million in claims against NRG,
compared with $7 billion in total outstanding debt. No other
creditors have joined the petition, Mr. Merrill notes.
Until NRG and its major creditor constituencies complete their
restructuring discussions and determine a means for
implementation, Mr. Merrill argues, a reorganization case is not
in the best interests of NRG or its creditors. In fact, Mr.
Merrill says, the commencement of a chapter 11 case by or
against NRG without the support of its major creditor
constituencies and access to the additional working capital
required to operate its business as a debtor in possession,
likely would cause substantial harm to NRG's business. Thus, the
present petition should be dismissed pursuant to Bankruptcy Code
Section 305(a)(1).
Mr. Merrill urges the Minnesota court to look at the
petitioners' motives for filing the petition -- which courts
have held are relevant to a 305(a)(1) analysis. Those motives
"do not appear to be pure," Mr. Merrill says. In conversations
with the media, for example, petitioners have asserted that they
filed the petitions out of "frustration," to insert the court
into the out-of-court restructuring process currently underway,
and to wrest the decision of whether and when to commence a
chapter 11 case away from NRG and its other creditors. In view
of these reported comments, petitioners' conduct smacks of bad
faith and abuse of section 303 of the Bankruptcy Code. The
petition should be dismissed so that NRG and its creditors can
fully explore how best to restructure. Then, if a Chapter 11
filing is appropriate, NRG and its creditors as a whole -- not
some rogue group of disgruntled former executives -- can
decide when and where to file it.
NUTRITIONAL SOURCING: Firms-Up Terms of Financial Restructuring
---------------------------------------------------------------
Nutritional Sourcing Corporation reached agreements with the
Official Committee of Unsecured Creditors and its equityholder
on the principal terms of a comprehensive financial
restructuring as part of a Plan of Reorganization. NSC also said
that its operating subsidiaries (Pueblo International, LLC and
Pueblo Entertainment, Inc.) have reached agreement on the
principal terms of a new bank credit facility.
Under the terms of the proposed financial restructuring, the
noteholders would receive:
* $90 million in newly issued 10.125 percent Senior
Subordinated Notes due 2009. The new Senior Subordinated
Notes will be subordinated to the bank debt.
* $51 million in cash consideration, of which $15 million
will be a new contribution from the Company's sole
shareholder.
* $1.5 million every four weeks for a period ending at
NSC's emergence from Chapter 11.
The Company reiterated that Pueblo trade creditors would not be
impaired by the restructuring plan and noted that all trade
claims are at the Pueblo operating subsidiaries and, as such,
are not subject to the bankruptcy proceedings of NSC. Dan
O'Leary, Chief Financial Officer said, "Our vendors continue to
be paid in the ordinary course of business and continue to
support Pueblo."
The new bank credit facility for the operating subsidiaries is
with the Business Credit Division of Westernbank of Puerto Rico
and includes a commitment to provide a $35 million revolving
credit facility and a commitment to provide a $45 million term
loan facility. Closing on the facilities will be in two stages
with the revolving credit facility closing at the beginning of
February 2003 to provide the funds to repay outstanding
indebtedness to existing banks. The second stage would involve
closing on the term loan facility at the time its parent
company, NSC, emerges from Chapter 11.
William T. Keon, III, President and CEO of NSC, said, "The
agreements with our noteholders and equityholder represent a
very important step forward in our efforts to complete a
financial restructuring and represent the solid progress we have
made in the last few months. Taken together with the new $80
million credit facility with Westernbank, all the pieces are now
in place for our emergence from Chapter 11 later this year and
we will be well positioned for long-term growth."
Prior to the Chapter 11 filing, the consolidated indebtedness of
NSC and its operating subsidiaries was $221.7 million. It is
anticipated that total consolidated debt upon NSC's expected
emergence from Chapter 11 in mid-2003 will be approximately
$162.9 million (including the $90 million in new Senior
Subordinated Notes) with a longer-term maturity schedule.
The Company said that it intends to solicit acceptances of the
Plan of Reorganization from its noteholders pending completion
of final documentation and court approval of the Company's Plan
of Reorganization and Disclosure Statement. Additional detail
about the terms of the Company's Plan of Reorganization can be
found on Form 8-K, which will be filed shortly with the U.S.
Securities and Exchange Commission.
Extension of Exclusive Period
NSC has also filed a motion with the U.S. Bankruptcy Court for
the District of Delaware seeking to extend the exclusive period
during which it may file a Plan of Reorganization and solicit
and obtain acceptances to such plan so that such periods will
end on June 30, 2003 and August 30, 2003, respectively.
Currently, those periods are scheduled to terminate on
January 27, 2003 and March 28, 2003, respectively. The Official
Committee of Unsecured Creditors, comprised of holders of the
Company's 9.5% Senior Notes, supports the motion.
Company to Delay 10-K Filing
NSC also said that it does not expect to file timely its 10-K
for the 52 weeks ended November 2, 2002, pending completion of
its financial restructuring.
Nutritional Sourcing Corporation, through its subsidiaries,
operates 48 supermarkets and 42 video rental stores in Puerto
Rico and the U.S. Virgin Islands.
OWENS CORNING: Will Appoint Stephen Krull as General Counsel
------------------------------------------------------------
Owens Corning announced that Stephen Krull will become the
company's senior vice president, general counsel and secretary
following his appointment by the Board of Directors on
February 6, 2003.
Mr. Krull has served as vice president of Corporate
Communications since September 2002. He will continue to oversee
the company's corporate communications operations, as well as
media relations and internal communications.
Prior to accepting the communications position, Mr. Krull was
vice president and general counsel, operations. Prior to joining
Owens Corning, he practiced with the Chicago firm of Sidley and
Austin. He earned a bachelor's degree in business administration
from Eastern Illinois University and a law degree from Chicago-
Kent College of Law.
Mr. Krull replaces Maura Abeln Smith who is leaving the company
at the end of March to become senior vice president and general
counsel for International Paper, the world's largest paper and
forest products company. Ms. Smith has served as Owens
Corning's senior vice president, general counsel and secretary
since February 1998; and, in October 2000, she became Owens
Corning's chief restructuring officer. She was appointed to the
company's Board of Directors in January 2002.
"Maura's five-year career with Owens Corning has been focused,
passionately, on attempting to resolve the company's asbestos
liability, and with the filing of a Joint Plan, it is fair to
say that she has accomplished this goal," said Owens Corning CEO
David T. Brown. "We are grateful for her service and wish her
well in this exciting opportunity."
Ms. Smith will step down as general counsel and secretary,
effective February 6, 2003. However, she will continue to work
with the company's restructuring team through the end of March
2003 to ensure an orderly transition of her duties.
Owens Corning is a world leader in building materials systems
and composite systems. Founded in 1938, the company had sales
of $4.8 billion in 2001 and employs approximately 19,000 people
worldwide. Additional information is available on Owens
Corning's Web site at http://www.owenscorning.com
Owens Corning's 7.70% bonds due 2008 (OWC08USR1), DebtTraders
reports, are trading at about 24 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=OWC08USR1for
real-time bond pricing.
OWENS-ILLINOIS: Declares Dividend on $2.375 Conv. Preferreds
------------------------------------------------------------
Owens-Illinois, Inc.'s (NYSE: OI) board of directors has
declared the quarterly dividend of $0.59375 on each share of the
company's $2.375 Convertible Preferred Stock, payable on
February 15 to holders of record as of February 1.
Owens-Illinois is the largest manufacturer of glass containers
in North America, South America, Australia and New Zealand, and
one of the largest in Europe. O-I also is a worldwide
manufacturer of plastics packaging with operations in North
America, South America, Europe, Australia and New Zealand.
Plastics packaging products manufactured by O-I include consumer
products (blow molded containers, injection molded closures and
dispensing systems) and prescription containers.
As reported in Troubled Company Reporter's December 16, 2002
edition, Fitch Ratings assigned a 'BB' rating to Owens-Illinois'
(NYSE: OI) 8-3/4% $175 million senior secured notes, pursuant to
Rule 144A. The notes are due 2012. Proceeds will be used to
reduce a portion of the bank debt that matures in March 2004.
This offering further reduces commitments for OI's bank debt.
The Rating Outlook remains Negative.
The rating and Outlook reflect OI's asbestos exposure, high
indebtedness and refinancing requirements. Total debt
outstanding was $5.4 billion at September-end and approximately
$1.7 billion in senior unsecured notes borrowed at the parent
level is currently outstanding, $300 million of which will come
due in April 2004. Fitch expects OI to refinance this amount as
Owens-Illinois Group senior secured.
PEGASUS COMMS: Won't Pay Quarterly Dividend on 6.50% Preferreds
---------------------------------------------------------------
Pegasus Communications Corporation (NASDAQ:PGTVD) is not
declaring the quarterly dividend payable January 31, 2003 with
respect to its 6.50% Series C Convertible Preferred Stock.
In accordance with the terms of the Series C Preferred Stock's
Certificate of Designation, the declaration and payment of the
dividend is subject to the discretion of the Company's Board of
Directors. Pursuant to the Certificate of Designation, unpaid
dividends accumulate without interest.
Pegasus Communications Corporation -- http://www.pgtv.com--
provides digital satellite television to rural households
throughout the United States. Pegasus owns and/or operates
television stations affiliated with CBS, FOX, UPN and The WB
networks. Pegasus Communications' September 30, 2002 balance
sheet shows that total current liabilities exceeded total
current assets by about $54 million.
PG&E NATIONAL: Lenders Provide Funding for Construction Projects
----------------------------------------------------------------
PG&E National Energy Group, Inc., announced in a Current Report
on Form 8-K filed with the U.S. Securities and Exchange
Commission on January 16, 2003, that a syndicate of lenders has
agreed to provide funding for the company's subsidiary,
GenHoldings I LLC, to complete construction of the Athens,
Covert and Harquahala power projects. PG&E National Energy Group
is a wholly owned subsidiary of PG&E Corporation (NYSE: PCG).
The funds also will provide working capital facilities allowing
each project, as well as the operational Millennium Power in
Massachusetts, to pay for its fuel and other operating
requirements. This will allow for each project's own collateral
to support natural gas pipeline capacity reservations and
independent transmission system operator requirements. Until
requested otherwise by the lenders, subsidiaries of PG&E
National Energy Group will continue to manage the completion of
construction at the three sites and will provide operating and
energy services management for all GenHoldings' projects.
In connection with the lenders' waiver of various defaults and
additional funding commitments, PG&E National Energy Group has
agreed to work with the lenders regarding disposition of the
equity in or assets of any or all of the company's subsidiaries
holding the Athens, Covert, Harquahala and Millennium projects.
The amended agreement requires that if the four facilities are
not transferred to the lenders or their designees on or before
March 31, 2003, a default would occur. This would trigger lender
remedies, including the right to foreclose on the projects.
PG&E National Energy Group has re-affirmed its guarantee of
GenHoldings' obligation to make equity contributions to these
projects of approximately $355 million. Neither PG&E National
Energy Group nor GenHoldings currently expects to have
sufficient funds to make this payment. The requirement to pay
$355 million will remain an obligation of PG&E National Energy
Group that would survive the transfer of the projects.
The three power plants in construction are all natural gas-
fueled facilities, using state-of-the-art combined-cycle
generating technology. The projects are the following:
Athens Generating, a 1,080-megawatt plant in Athens, NY, is
expected to be ready for commercial operation in late summer
2003. Construction work is approximately 80 percent complete.
Covert Generating, a 1,170-megawatt plant in Covert, MI, is
expected to be ready for commercial operation in fall 2003.
Construction work is approximately 70 percent complete.
Harquahala Generating, a 1,092-megawatt plant in Tonopah, AZ, is
expected to be ready for commercial operation in fall 2003.
Construction work is approximately 77 percent complete.
The 360-megawatt Millennium Power plant owned by the GenHoldings
subsidiary also is a natural gas fueled combined-cycle
generating facility. Located in Charlton, MA, the plant has more
than 20 employees and entered commercial service in spring 2001.
PG&E National Energy Group is currently in negotiations with key
lenders and bondholders regarding a restructuring of the
company's debts. During the last two months, the company has:
-- Entered into an agreement to sell its 66.6 megawatt
Mountain View wind-powered generation facility in the San
Gorgonio Pass, near Palm Springs, Cal. to Centennial Power, Inc.
for $102.5 million. The sale remains subject to receipt of
regulatory approval from the Federal Energy Regulatory
Commission and other conditions contained in the agreement.
-- Reached agreement with its lenders to provide funding
for two of the company's power-plant projects, Lake Road
Generating in Connecticut and La Paloma Generating in
California. The funds are allowing construction to be completed
at the La Paloma plant, provide additional working capital
facilities to enable each project to continue to procure fuel
and other services and support collateral that may be required
by suppliers of natural gas transportation services and others
for the completion and operation of the projects. Subsidiaries
of PG&E National Energy Group will continue to manage the
completion of construction of La Paloma and provide operating
and energy management services to both projects. The agreement
requires that failure to transfer the Lake Road and La Paloma
projects to the respective lenders or their designees by
June 9, 2003 will constitute a default under the agreements.
These projects have been financed entirely with debt. PG&E
National Energy Group does not currently expect to have the
funds needed to fulfill its obligation to guarantee the equity
commitments for these projects in the aggregate amount of $604.5
million.
-- Sold one-half of its 50 percent interest in the
Hermiston Generating plant to Sumitomo Corporation and Sumitomo
Corporation of America for a pre-tax gain of approximately $23
million. The plant, located in Hermiston, Ore., will continue to
be operated and managed by a subsidiary of PG&E National Energy
Group.
PG&E National Energy Group also reported that it will take a
charge in the fourth quarter of 2002 of approximately $248
million for costs related to the termination of certain interest
rate hedge contracts related to the projects and the termination
of certain turbine purchase agreements related to the company's
Mantua Creek project.
PG&E National Energy Group is currently in default under various
debt agreements and guaranteed equity commitments totaling
approximately $2.9 billion. The company continues to negotiate
with its lenders regarding these commitments.
As previously reported, PG&E National Energy Group and its
subsidiaries are continuing efforts to abandon, sell and
transfer additional assets, and reducing energy trading
operations in an ongoing effort to raise cash and reduce debt,
whether through negotiation with lenders or otherwise. Such
asset transfers, sales or abandonments will cause substantial
charges to earnings in 2002 and 2003.
As previously reported, if the lenders exercise their default
remedies or if the financial commitments are not restructured,
PG&E National Energy Group and certain of its subsidiaries may
be compelled to seek protection under or be forced into a
proceeding under Chapter 11 of the U.S. Bankruptcy Code.
For information about other developments please see the Form 8-
K.
Headquartered in Bethesda, Md., PG&E National Energy Group
develops, builds, owns and operates electric generating and
natural gas pipeline facilities and provides energy trading,
marketing and risk-management services.
POLAROID: Primary PDC Files Amended Plan & Disclosure Statement
---------------------------------------------------------------
Kevin R. Pond, President and Secretary of Primary PDC, Inc.,
relates that Polaroid Corporation and its debtor-affiliates'
Plan of Reorganization contemplates and proposes the substantive
consolidation of the Debtors' estates and Chapter 11 cases for
the purposes of all actions associated with confirmation and
consummation of the Plan. On the Confirmation Date, or on
another date as may be set by the Court, but subject to the
Effective Date:
(a) all intercompany claims by, between and among the Debtors
will be eliminated;
(b) all assets and liabilities of the subsidiary debtors will
be merged or treated as if they were merged with the
assets and liabilities of Polaroid;
(c) any obligation of the Debtors and all guarantees of one or
more of the other Debtors will be deemed to be one
obligation of Polaroid;
(d) subsidiary interests will be cancelled; and
(e) each claim filed or to be filed against any Debtor will
be deemed filed only against Polaroid and will be deemed
a single claim against and a simple obligation of
Polaroid.
Moreover, on the Confirmation Date, and in accordance with the
terms of the Plan and the consolidation of the Debtors' assets
and liabilities, all claims based on guarantees of collection,
payment or performance made by the Debtors as to the obligations
of another Debtor will be released and of no further force and
effect.
However, Mr. Pond notes, Polaroid will continue to exist as
Reorganized Polaroid after the Effective Date in accordance with
the laws of the State of Delaware and pursuant to the
certificate of incorporation and by-laws as amended under the
Plan, for the limited purpose of distributing all of the assets
of the Debtors' estates.
A Plan Administrator will be appointed who will exercise all of
the rights, powers and duties necessary to carry out the
obligations under the Plan. As soon as practicable after the
Plan Administrator exhausts the assets of the Debtors' estates
by making the final distribution of cash and stock under the
Plan and the Plan Administration Agreement, the Plan
Administrator will effectuate the dissolution of the Reorganized
Polaroid in accordance with the applicable law and will cause
its Designated Representative to resign as the sole director and
officer of Reorganized Polaroid. All cash for plan distribution
will be obtained from the Debtors' cash balances, the
liquidation of the Debtors' remaining non-cash assets, if any,
and, solely in connection with the Lump Sum Election, the
Funding Source. All stock for distribution will be obtained
from the Debtors' Reserves.
Other salient terms of the Plan are:
-- The Plan's confirmation will settle all Note Avoidance
Actions and disputes between the Holders of General
Unsecured Claims, the Debtors and the Holders of Note
Claims. Note Avoidance Actions are the potential avoidance
actions or other disputes that could have been brought by
the Debtors, any holder of a Note Claim in respect of any
security interest granted to the Holders of the Notes;
-- On the Effective Date or as soon as practicable thereafter,
the members of the board of directors of each of the
Subsidiary Debtors will be deemed to have resigned;
-- On the Effective Date, Reorganized Polaroid will issue
the one share New Common Stock, $0.01 par value per share,
to the Plan Administrator;
-- On the Effective Date, the promissory notes, share
certificates, other instruments evidencing any Claims or
Interests, and all options, warrants, calls, rights, puts,
awards, commitments or nay other agreement of any
character to acquire Interests will be deemed cancelled
and of no further force and effect, without any further
act or action under any applicable agreement, law,
regulation, order or rule, and the obligations of the
Debtors under the notes, share certificates and other
agreements and instruction governing the Claims and
Interests will be discharged;
-- On the Effective Date, the 1997 Indenture will be
cancelled and have no further force and effect, except,
that the cancellation of the 1997 Indenture:
(a) will not impair the rights under the Plan of the
Holders of the Note Claims and the Indenture Trustee
governed by the 1997 Indenture; and
(b) will not impair the rights of the Indenture Trustee
under the 1997 Indenture vis-.-vis Holders of Note
Claims, including any lien and priority rights of the
Indenture Trustee;
-- Except as otherwise provided in the Plan, or in any
contract, instrument, release or other agreement or
document entered into in connection with the Plan, each of
the executory contracts and unexpired leases to which any
Debtor is a party will be rejected by the applicable
Debtors on the Confirmation Date, unless the contract or
lease previously have been assumed or terminated or
rejected;
-- The Asset Purchase Agreement and the Sale Order will be
deemed and treated as executory contracts that are assumed
by the Reorganized Polaroid as of the Effective Date.
-- On the Effective Date, the Creditors' Committee will be
dissolved and its members will be deemed released of all
their duties, responsibilities and obligations in
connection with the Chapter 11 cases, the Plan and its
implementation, and the retention of attorneys, accountants
and other agents will terminate; and
-- On the Effective Date, the Plan Committee will be formed
and constituted. The Plan Committee will consist of at
least two, but no more than three, members who will be
selected by the Creditors' Committee. The Plan Committee
will be responsible for:
(a) instructing and supervising Reorganized Polaroid and
the Plan Administrator;
(b) reviewing the prosecution of adversary and other
proceedings, if any, including proposed settlements;
(c) reviewing the prosecution of adversary and other
proceedings, if any, including proposed settlements
thereof; and
(d) performing other necessary duties to assist the Plan
Administrator. (Polaroid Bankruptcy News, Issue No.
30; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
PROTECTION ONE: Working with Westar to Evaluate Alternatives
------------------------------------------------------------
On December 23, 2002, the Kansas Corporation Commission issued
an order modifying an order issued November 8, 2002, addressing
the financial plan of Westar Energy, Inc., the 88% owner of
Protection One, Inc. After analyzing the Order, the Company
determined that the Order could, if not modified, adversely
affect it. Accordingly, on January 10, 2003, Westar Energy filed
with the KCC a petition for partial stay and reconsideration of
the Order. Also on January 10, 2003, Westar Energy filed a
petition for specific reconsideration of the Order.
On January 9, 2003, Westar Energy advised Protection One that
its Board of Directors has authorized its management to explore
strategic alternatives for divesting its investment in
Protection One with a view to maximizing the value received by
Westar Energy. Protection One indicates that it expects to work
closely with Westar Energy management to identify alternatives
that are in the best interest of all of the shareholders.
As reported in Troubled Company Reporter's Friday Edition,
Standard & Poor's placed its 'B' corporate credit and other
ratings for Protection One Alarm Monitoring Inc., on CreditWatch
with negative implications. The action was taken because of
concerns associated with the intention of 88% owner Westar
Energy Inc., (BB+/Watch Neg/--) to dispose of Protection One and
the potentially negative impact of recent directives by the
Kansas Corporation Commission.
Topeka, Kansas-based Protection One is the second-largest
security alarm monitoring company in the nation. As of September
2002, it had about $575 million of total debt outstanding.
RENCO METALS: 11-1/2% Noteholders Want an Independent Trustee
-------------------------------------------------------------
The holders of more than 60% of the 11-1/2% Senior Noted due
2003 issued by Renco Metals, Inc.:
Face Amount Noteholder
----------- ----------
$24,210,000 AIG Global Investment Corp. (on behalf of
funds it manages or advises)
4,750,000 Carlyle High Yield Partners, L.P.
3,750,000 Carlyle High Yield Partners II, Ltd.
15,361,000 Citadel Credit Trading Ltd.
28,252,000 Citadel Equity Fund Ltd.
21,101,845 RCG Carpathia Master Fund, Ltd.
want Judge Gerber to appoint a chapter 11 trustee or convert the
Debtors' chapter 11 cases to a chapter 7 liquidation proceeding.
Either option's fine, so long as the result is an independent
trustee in charge of the Company's wind-up.
The Noteholders are fed-up with delay and inaction, Gerald K.
Smith, Esq., at Lewis and Roca LLP in Phoenix tells the
Bankruptcy Court. The Debtors filed a plan in February 2002 and
abandoned it when they couldn't get financing. The Company's
assets were auctioned on May 30, 2002, and the sale transaction
closed on June 24, 2002. There are potential fraudulent
conveyance claims to recapture illegal dividends and preferred
stock redemptions that aren't being investigated and pursued.
If they aren't pursued, there will be no meaningful recovery to
unsecured creditors.
The Noteholders indicate that they've already located a capable
lawyer who's willing to pursue the recovery on a contingency fee
basis.
Janice B. Grubin, Esq., at Golenbock, Eisman, Assor, Bell &
Peskoe in New York, serves as local counsel to the Noteholders.
Renco Metals, Inc., and its wholly-owned subsidiary, Magnesium
Corporation of America, filed voluntary chapter 11 petitions on
August 2, 2001, in the U.S. Bankruptcy Court for the Southern
District of New York (Bankr. Case Nos. 01-14311 and 01-14312).
Joseph H. Smolinsky, Esq., at Chadbourne & Parke, LLP,
represents the Debtors.
RURAL CELLULAR: Will Pay Quarterly Preferred Share Dividend
-----------------------------------------------------------
Rural Cellular Corporation (OTCBB:RCCC) announced that the
quarterly dividends on its 11-3/8% Senior Exchangeable Preferred
Stock and 12-1/4% Junior Exchangeable Preferred Stock will be
paid on February 15, 2003, to holders of record on February 1,
2003. The Senior Exchangeable Preferred Stock dividend will be
paid in shares of Senior Exchangeable Preferred Stock at a rate
of 2.84375 shares per 100 shares. The Junior Exchangeable
Preferred Stock dividend will be paid in shares of Junior
Exchangeable Preferred Stock at a rate of 3.0625 shares per 100
shares. Fractional shares for both the Senior and Junior
Exchangeable Preferred Stock will be paid in cash.
Rural Cellular Corporation (OTCBB:RCCC), based in Alexandria,
Minnesota, provides wireless communication services to Midwest,
Northeast, South and Northwest markets located in 14 states. At
September 30, 2002, the Company's balance sheet shows a total
shareholders' equity deficit of about $34 million.
SATCON TECHNOLOGY: Silicon Valley Bank Extends Forbearance Pact
---------------------------------------------------------------
SatCon Technology Corporation(R) (Nasdaq: SATC) reported that
Silicon Valley Bank has granted an extension of its forbearance
agreement until January 25, 2003.
SatCon Technology Corporation manufactures and sells power and
energy management products for digital power markets. SatCon has
three business units: SatCon Power Systems manufactures and
sells power systems for distributed power generation, power
quality and factory automation, including inverter electronics
from 5 kilowatts to 5 megawatts. SatCon Electronics manufactures
and sells power chip components; power switches; RF devices;
amplifiers; telecommunications electronics; and hybrid
microcircuits for industrial, medical, military and aerospace
applications. SatCon Applied Technology develops advanced
technology in digital power electronics, high-efficiency
machines and control systems for a variety of defense
applications with the strategy of transitioning those
technologies into multiyear production programs. For further
information, please visit the SatCon Web site at
http://www.satcon.com
* * *
As reported in Troubled Company Reporter's January 3, 2003
edition, SatCon's independent accountants, Grant Thornton LLP,
issued a going concern qualification in its audit opinion.
"Our auditors, Grant Thornton LLP, have issued an opinion
modified for going concern uncertainties with respect to our
financial statements," said David Eisenhaure, SatCon's President
and Chief Executive Officer. "The opinion expresses 'substantial
doubt about the Company's ability to continue as a going
concern.'" This opinion was based in part upon the Company's
continuing losses and the use of operating cash, the need for
immediate equity as well as the fact that we are operating under
a forbearance agreement with Silicon Valley Bank, which expires
on January 15, 2003 and will require that the line of credit be
renewed."
SBA COMMS: Reaffirms 4th Quarter Revenue & EBITDA Guidance
----------------------------------------------------------
SBA Communications Corporation (Nasdaq: SBAC) is reaffirming
total revenues and EBITDA guidance for the fiscal quarter ended
December 31, 2002 of $63.5 to $70.0 million and $19.0 to $21.5
million, respectively. EBITDA is defined as earnings before
interest, taxes, depreciation, amortization, non-cash charges,
restructuring and other charges, and unusual or non-recurring
expenses. Additionally, the Company reaffirmed its net loss per
share guidance of $.58 - $.68 for the fourth quarter of 2002.
The Company ended the quarter with $62.0 million of cash and
cash equivalents. At December 31, 2002, the amount of funds
borrowed under SBA's senior credit facility was $255.0 million.
Net debt (total debt less cash and cash equivalents) was $957.0
million at December 31, 2002, compared with net debt of $962.1
million at September 30, 2002 and $831.5 million at December 31,
2001. As of December 31, 2002, the Company was in compliance
with all financial condition covenants applicable to any
indebtedness of the Company.
In the fourth quarter, SBA added annualized gross leasing
revenues of approximately $5,350 per tower (.30 on a broadband
equivalent basis). Same tower revenue growth, net of tenant
terminations, for the trailing twelve months on the 3,734 towers
owned as of December 31, 2001 was 16%. Additionally, the Company
built 8 towers, ending the quarter with 3,877 owned tower sites.
At quarter-end, SBA was working on 15 additional new towers, the
majority of which are expected to be completed in the first half
of 2003.
"We are pleased with our fourth quarter results, particularly
with added gross leasing revenues which improved by
approximately 15% from the third quarter," commented Jeffrey A.
Stoops, SBA's President and Chief Executive Officer. "Although
it remains a challenging environment for overall wireless
carrier capital expenditures, we are encouraged by these lease-
up results and view them as evidence that wireless carriers are
continuing to invest in and expand their networks. We look
forward to providing our full fourth quarter and 2002 financial
results and discussing our 2003 prospects and guidance in our
March call."
The Company also announced it will release its 4th quarter
results on Monday, March 24, 2003, after the market close. SBA
will host a conference call on March 25, 2003 at 10:00 A.M. EST
to discuss these results, as well as the Company's financial
guidance for 2003. The call may be accessed as follows:
When: Tuesday, March 25, 2003 at 10:00 A.M.
Dial-in number: 800-851-3058
Conference call name: "SBA 2002 4th Quarter Results"
Replay: March 25, 2003 at 5:00 P.M. to April 8, 2003 at
11:59 P.M.
Number: 800-642-1687
Access code: 7656254
Internet access: http://www.sbasite.com
SBA is a leading independent owner and operator of wireless
communications infrastructure in the United States. SBA
generates revenue from two primary businesses -- site leasing
and site development services. The primary focus of the company
is the leasing of antenna space on its multi-tenant towers to a
variety of wireless service providers under long-term lease
contracts. Since it was founded in 1989, SBA has participated in
the development of over 20,000 antenna sites in the United
States.
* * *
As previously reported, Standard & Poor's lowered its corporate
credit rating on wireless tower provider SBA Communications
Corp., to 'CCC' from 'B'. Standard & Poor's also lowered its
senior secured bank loan rating on the company to 'CCC+' from
'B+' and its senior unsecured debt rating to 'CC' from 'B-'.
The ratings remain on CreditWatch with negative implications,
where they were placed on October 11, 2002 due to concerns over
covenants and liquidity. The Boca Raton, Florida-based company
had total debt of more than $1 billion as of September 30, 2002.
"The downgrade reflects our increased concerns over the
potential for SBA Communications to violate several bank
maintenance covenants within the next seven months. The company
experienced a decline in sequential EBITDA in the third quarter
of 2002 from the prior quarter due to a cutback in new leasing
and network development activities by wireless carriers," said
Standard & Poor's credit analyst Michael Tsao. "With capital
expenditures by carriers likely to remain constrained at least
through 2003 and the company having already taken major cost
reduction measures, SBA Communications may not be able to
materially improve EBITDA on a sustainable basis. This could
lead the company to violate several bank maintenance covenants."
SBA Communications' 10.25% bonds due 2009 are currently trading
at about 61 cents-on-the-dollar.
SONICBLUE INC: Taps Houlihan Lokey to Aid in Evaluating Options
---------------------------------------------------------------
SONICblue(TM) Incorporated (Nasdaq:SBLU), assisted by its
financial advisor, Houlihan Lokey Howard & Zukin, is in the
process of evaluating available strategic options in light of
the amount of debt on the Company's balance sheet. Among the
various options the Board has authorized to be explored is the
identification of new financial or strategic partners who might
invest in, or acquire, the Company, its business units, or
assets.
"SONICblue has improved its operational performance, and its new
product lines are well poised for 2003," said Gregory Ballard,
the Company's CEO. "The goal of this process is to clear the way
for the Company's businesses to continue their strong growth in
the market, unburdened by the amount of debt now carried on the
Company's balance sheet. "
SONICblue is a leader in the converging Internet, digital media,
entertainment and consumer electronics markets. Working with
partners that include some of the biggest brands in consumer
electronics, SONICblue creates and markets products that let
consumers enjoy all the benefits of a digital home and connected
lifestyle. SONICblue holds a focused technology portfolio that
includes Rio(R) digital audio players; ReplayTV(R) personal
television technology and software solutions; and GoVideo(R)
integrated DVD+VCRs, Dual-Deck(TM) VCRs, and digital home
theater systems.
STARMEDIA NETWORK: Funds Insufficient to Meet All Obligations
-------------------------------------------------------------
StarMedia Network Inc., has incurred recurring operating losses
and may have insufficient capital to fund all of its
obligations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. There can be
no assurances that the Company will be able to obtain additional
financing or be able to generate sufficient revenues from the
operation of the mobile solutions business to meet the Company's
obligations. Total comprehensive loss was approximately $8.0
million and $35.5 million for the three and nine month periods
ended September 30, 2002, respectively, and approximately $54.0
million and $145.6 million for the three and nine month periods
ended September 30, 2001, respectively.
The Company is principally engaged in providing integrated
mobile Internet solutions to wireless telephone operators in
Latin America targeting Spanish-and Portuguese-speaking end-
users. In addition, it continues to operate several Spanish- and
Portuguese-language websites and design and operate portals for
third parties. Beginning in July 2002, the vast majority of its
revenues have been generated from its mobile solutions business.
The Company's customers are in Latin America and most of its
revenues come from Venezuela, Brazil, Colombia, Argentina, and
Chile.
StarMedia is considering implementing a reverse stock split and,
as a result, becoming a private company. In late September 2002
the Company filed a preliminary proxy statement pursuant to
Section14(a) of the Securities Exchange Act which, among other
things, describes the reverse stock split that the Board of
Directors and management currently intend to propose for
shareholders' approval at the next meeting of the Company's
shareholders. Following clearance from the Securities and
Exchange Commission, the Company currently intends to distribute
a definitive proxy statement to shareholders formally calling a
meeting of shareholders at which one of the agenda items would
be a vote to approve the reverse stock split and going private
transaction.
While StarMedia has reduced operating expenses significantly,
through a reduction of work force and other operating costs, its
current cash and cash equivalents may not be sufficient to meet
anticipated cash needs for working capital and capital
expenditures for the next 12 months. If working capital is
insufficient to satisfy its liquidity requirements, the Company
indicates that it may seek to sell additional equity or debt
securities or establish an additional credit facility. The sale
of additional equity or convertible debt securities could result
in additional dilution to stockholders. The incurrence of
additional indebtedness would result in increased fixed
obligations and could result in operating covenants that would
restrict Company operations. There is no assurance that
financing will be available in amounts, or on terms, acceptable
to StarMedia, if at all. There can be no assurance that the
Company will obtain such additional capital or that such
additional financing will be sufficient for the Company's
continued existence. Furthermore, there can be no assurances
that the Company will be able to generate sufficient revenues
from the operation of the mobile solutions business to meet the
Company's obligations. These conditions raise substantial doubt
about the Company's ability to continue as a going concern.
TRUMP HOTELS: Issuing Two Mortgage Notes via Private Placement
--------------------------------------------------------------
Trump Casino Holdings, LLC and Trump Casino Funding, Inc.,
recently formed entities that will become subsidiaries of Trump
Hotels & Casino Resorts Holdings, LP, and anticipate offering in
the near future pursuant to one or more private placements to
qualified institutional buyers, two new issues of first and
second mortgage notes aggregating approximately $475 million. It
is anticipated that the first mortgage and second mortgage Notes
will be offered in relative amounts to be determined. The
interest rate on the Notes and other terms thereof are also to
be determined. The Issuers intend to use the net proceeds of the
offering, if consummated, to redeem or repay substantially all
of the outstanding public indebtedness and bank debt of Trump's
Castle Associates d/b/a Trump Marina, the bank debt of Trump
Indiana, Inc., and the bank debt of THCR Management Services,
LLC, which entities will become subsidiaries of the Issuer
holding company and will guarantee the Notes on a secured basis.
The public indebtedness of THCR Holdings, which will not
guarantee the Notes, will also be retired if the offering is
consummated using a portion of the proceeds therefrom. In the
course of offering the Notes to qualified institutional buyers,
Trump Hotels & Casino Resorts, Inc., will furnish the unaudited
operating results of Trump Marina, Trump Indiana, Inc., and THCR
Management Services for the quarter and year ended December 31,
2002, to potential investors. This information follows below.
For the year ended December 31, 2002, Trump Marina reported net
revenues of $270.2 million and EBITDA (representing income from
operations before depreciation, amortization, non-cash
writedowns and charges related to required regulatory costs,
charges pursuant to an executive services agreement and debt
renegotiation costs) of $64.5 million, compared to net revenues
of $252.9 million and EBITDA of $52.1 million for the year ended
December 31, 2001. Trump Marina reported net revenues of $61.7
million and an EBITDA of $12.0 million for the quarter ended
December 31, 2002, compared to net revenues of $62.3 million
and EBITDA of $13.3 million for the quarter ended December 31,
2001. For the year ended December 31, 2002, income from
operations was $34.6 million, compared to $30.6 million for the
year ended December 31, 2001. For the quarter ended December 31,
2002, income from operations was $2.5 million, compared to $7.6
million for the quarter ended December 31, 2001.
For the year ended December 31, 2002, Trump Indiana, Inc.
reported an increase in net revenues to $124.0 million and an
increase in EBITDA to $33.1 million, compared to net revenues of
$120.9 million and EBITDA of $26.2 million for the year ended
December 31, 2001. Trump Indiana reported net revenues of $29.7
million and an increase in EBITDA to $8.7 million for the
quarter ended December 31, 2002, compared to net revenues of
$29.4 million and EBITDA of $6.4 million for the quarter ended
December 31, 2001. For the year ended December 31, 2002, income
from operations was $20.4 million, compared to $14.5 million for
the year ended December 31, 2001. For the quarter ended December
31, 2002, income from operations was $4.3 million, compared to
$3.9 million for the quarter ended December 31, 2001.
During the quarter and the year ended December 31, 2002, THCR
Management Services earned $0.9 million and $2.7 million,
respectively, in management fees and incurred $0.2 million and
$1.1 million, respectively, in general and administrative costs.
For the year ended December 31, 2002, $0.6 million was incurred
by THCR Management Services in pre-opening costs (included in
general and administrative costs). For the year ended December
31, 2002, income from operations of THCR Management Services was
$1.6 million, with no comparable amount in the year ended
December 31, 2001. For the quarter ended December 31, 2002,
income from operations of THCR Management Services was $0.7
million, with no comparable amount in the quarter ended December
31, 2001. THCR Management Services manages the Trump 29 Casino.
THCR Holdings, through its wholly-owned subsidiaries, owns and
operates Trump Plaza Hotel and Casino, Trump Taj Mahal Casino
Resort and Trump Marina Hotel Casino in Atlantic City, New
Jersey, as well as Trump Indiana, a hotel and riverboat casino
at Buffington Harbor, Indiana on Lake Michigan. Also, THCR
Holdings, through a wholly-owned subsidiary, manages the Trump
29 Casino located in the Palm Springs, California area, that is
owned by the Twenty-Nine Palms Band of Luiseno Mission Indians
of California. THCR Holdings (and its subsidiaries) is the
exclusive vehicle through which Donald J. Trump engages in
gaming activities.
THCR Holdings is a subsidiary of Trump Hotels & Casino Resorts,
Inc., a public company which is approximately 46.6% beneficially
owned by Donald J. Trump.
THCR, through its wholly-owned subsidiaries, owns and operates
Trump Plaza Hotel & Casino, Trump Taj Mahal Casino Resort and
Trump Marina Hotel Casino in Atlantic City, New Jersey, as well
as Trump Indiana, a hotel and riverboat casino at Buffington
Harbor, Indiana on Lake Michigan. Also, THCR, through a wholly-
owned subsidiary, manages Trump 29 Casino located in the Palm
Springs, California area. It is the exclusive vehicle through
which Donald J. Trump will engage in new gaming activities in
both emerging and established gaming jurisdictions in both the
United States and abroad.
* * *
As previously reported, Standard & Poor's withdrew its single-
'B'-minus corporate credit rating for Trump Casino Holdings LLC
following management's decision to withdraw its planned private
placement of $470 million in mortgage notes backed by the assets
of Trump Marina Casino Resort in Atlantic City, New Jersey, and
the company's riverboat casino in Gary, Indiana. TCH was to be
formed for the purposes of issuing these notes, and for the time
being, will not be established following the decision to
withdraw the offering.
At the same time, Standard & Poor's raised its corporate credit
rating for Trump Hotels & Casino Resorts Holdings, L.P. (THCR)
to triple-'C' from double-'C' due to the company's continued
payment of interest (as required under its 15.5% senior notes
due 2005) and positive operating momentum at the Indiana
riverboat whose cash flow primarily services this obligation.
The outlook for THCR is developing reflecting the desire to
refinance these notes and other subsidiary debt, and the
uncertain prospects for success.
UNITED AIRLINES: U.S. Trustee Appoints Creditors' Committee
-----------------------------------------------------------
Ira Bodenstein, the United States Trustee, convened an
organizational meeting on December 16, 2002 in Chicago. Mr.
Bodenstein reminded creditors that this is not the first
official meeting of creditors required under 11 U.S.C. Sec.
341(a). That meeting will be scheduled at a later date and all
known creditors will be advised by mail of the time, date and
place for that meeting at which a corporate officer will be
required give testimony under oath about the company's financial
affairs.
Scores of creditors indicated their willingness to serve on one
or more official committees to represent creditors',
shareholders' and other stakeholders' interests.
Based on those creditors' responses to the U.S. Trustee's
questionnaires, Mr. Bodenstein determined that the interests of
the creditors will be adequately represented by one 13-member
Official Committee of Unsecured Creditors in UAL Corp.'s Chapter
11 cases. Those 13 members are:
1. Pension Benefit Guaranty Corp.
1200 K St. NW
Washington, DC 20005
Attn: Craig Yamaoka
2. Association of Flight Attendants
6400 Shafer Ct. Ste. 250
Rosemont, IL 60018
Attn: Gregory E. Davidowitch
3. Air Line Pilots Association, International
6400 Shafer Ct. Ste. 700
Rosemont, IL 60018
Attn: Geoffrey H. Garrett
4. International Association of Machinists
9000 Machinists Place Ste 118B
Upper Marlboro, MD 20772
Attn: Thomas Brichner
5. The Bank of New York
101 Barclay St. Floor 8W
New York, NY 10286
Attn: Gary Bush
6. Airbus North America Holdings
198 Van Buren St. Ste. 300
Herndon, VA 20170
Attn: Renee Martin
7. Pratt & Whitney - A United Tech Division
400 Main St. M/S 133-54
East Hartford, CT 06108
Attn: F. Scott Wilson
8. HSBC Bank USA
425 Fifth Ave.
New York, NY 10018
Attn: Robert A. Conrad
9. US Bank N.A.
180 E. 5th St.
St. Paul, MN 55101
Attn: Timothy J. Sandell
10. R2 Investments LDC
c/o Amalgamated Gadget, LP as Investment Manager
301 Commerce St. Ste. 2975
Fort Worth, TX 76102
Attn: Todd Stein
11. Deutsche Lufthansa AG
1640 Hempstead Turnpike
East Meadow, NY 11554
Attn: Arthur Molins
12. Goodrich Corp.
2730 Tyvola Rd.
Charlotte, NC 28277
Attn: William Walthall
13. Galileo International, Inc.
9700 W. Higgins Rd.
Rosemont, IL 60018
Attn: Thomas DeMay
The Creditors' Committee has authorized the City of Chicago to
participate as an ex officio member. (United Airlines Bankruptcy
News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
United Airlines' 10.67% bonds due 2004 (UAL04USR1), DebtTraders
reports, are trading at about 7 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=UAL04USR1for
real-time bond pricing.
US AIRWAYS: Selling Aircraft & Parts to Alliance Air for $20MM+
---------------------------------------------------------------
Pursuant to Section 363 of the Bankruptcy Code, US Airways Group
Inc., and its debtor-affiliates seek the Court's authority to
sell aircraft and aircraft-related assets to Alliance Airlines
Pty Ltd.
The Debtors inform Judge Mitchell that they have commenced an
exhaustive effort to market and sell the Equipment by contacting
potential buyers throughout the world directly and advertising
in industry publications. However, these efforts garnered
little serious interest.
The Equipment consist of:
-- 2 used Fokker F100 aircraft;
-- 4 installed Rolls Royce Tay 650-15 engines;
-- 7 used Rolls Royce Tay 650-15 engines;
-- miscellaneous Fokker F100 compatible spare parts;
-- additional miscellaneous Fokker F100 spare parts under a
45-day option expiring January 9, 2003; and
-- 1 used CAE, Fokker F100 configured full motion flight
training device.
The purchase price is $20,450,000. A $270,000 initial deposit
is in escrow with a third party.
The Debtors want to take advantage of this valuable opportunity.
Thus, overbid and notice procedures associated with assets sales
under Section 363(b) are inappropriate. The Equipment has been
marketed for over a year and this is the only serious proposal
the Debtors have received. Any delay would risk jeopardizing
the deal as Alliance has put money at risk and outlined plans to
deploy the Equipment. (US Airways Bankruptcy News, Issue No. 21;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
VISHAY INTERTECHNOLOGY: S&P Downgrades Ratings to Lower-B Levels
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and senior unsecured bank loan ratings on electronic components
manufacturer Vishay Intertechnology to 'BB' from 'BB+' and its
subordinated debt rating to 'B+' from 'BB-.' The ratings were
removed from CreditWatch, where they had been placed on Nov. 11,
2002. The outlook is stable.
Malvern, Pa.-based Vishay has strong market positions in a broad
range of components, such as capacitors and resistors
("passives"), as well as diodes and transistors ("actives").
Vishay has about $748 million of debt outstanding.
The actions followed Vishay's acquisition of Netherlands-based
passive-components manufacturer BCcomponents Holdings B.V.,
(unrated) for approximately $350 million of cash, debt, and
warrants. In addition to adding leverage to Vishay's balance
sheet, the BCC acquisition will increase Vishay's exposure to
commodity-like passive components, which have suffered from
significant pricing pressure and margin erosion over the past 18
months, due to deterioration in demand and excess industry
capacity. Prolonged weak operating profitability in passive
components combined with higher debt levels will likely put
pressure on the company's debt protection measures.
"We expect that after the BCC acquisition, Vishay will focus on
cutting costs and maintaining adequate liquidity and will not
undertake other material debt-financed acquisitions until it
restores further balance-sheet strength," said Standard & Poor's
credit analyst Joshua G. Davis.
The BCC acquisition will increase Vishay's exposure to passive
components to a roughly 50/50 passives/actives revenue mix from
40/60. Elimination of duplicated overhead expenses and migration
of manufacturing to low-cost geographies will help to offset
overall weak pricing. However, the prospects for an industry
recovery, particularly in tantalum capacitors and other
commodity-like passive component markets, are uncertain. Vishay
is subject to purchase agreements for tantalum totaling $425
million, originally signed in 2001 and revised in 2002, which
extend to 2006. Vishay may have to follow competitor Kemet
Corp., (unrated) in taking a charge against the value of the
contracts to reflect currently lower market prices for tantalum.
To fund the acquisition of BCC, Vishay increased its funded debt
by approximately $259 million, to $748 million total debt.
WARNACO GROUP: Arranges New $275-Mill. Revolving Credit Facility
----------------------------------------------------------------
Reorganized Warnaco Inc. and Lenders -- Citicorp North America,
Inc., JPMorgan Chase Bank and other financial institutions
acceptable to the Arrangers, Salomon Smith Barney Inc. and J.P.
Morgan Securities Inc., entered into a new $275,000,000 Senior
Secured Revolving Credit Facility to replace the DIP Financing
Facility, provide money to pay certain debts in cash as the
Company exits from chapter 11, and finance Reorganized Warnaco's
on-going working capital needs. The Exit Facility will be used
solely:
(a) to fund transaction costs and expenses,
(b) to provide working capital from time to time for Warnaco
and its subsidiaries, and
(c) for other general and corporate purposes.
The Guarantors of the Loan are The Warnaco Group Inc. and each
existing and subsequently acquired or organized domestic
subsidiary of The Warnaco Group Inc. CNAI acts as the
Administrative and Collateral Agent while JPMorgan Chase Bank is
the Syndication Agent. Salomon Smith Barney and J.P. Morgan
Securities are also Joint Lead Book Managers.
The salient terms of the Exit Revolving Facility are:
1. The Facility
(a) Revolving Loans. A non-amortizing revolving credit
facility made available to Warnaco in a principal
amount of up to $275,000,000 on the Closing Date, and
thereafter, after giving effect to the Facility Increase
of up to $325,000,000, subject to Availability. All
revolving loans outstanding under the Facility will
become due and payable on the Termination Date.
(b) Letters of Credit. Up to $150,000,000 of the Facility
will be available for the issuance of letters of credit
by the Issuers for the account of Warnaco. No letter of
credit will have a termination date after the fifth day
preceding the Termination Date and none will have a term
of more than one year. No more than $35,000,000 of the
facility will be available for the issuance of standby
letters of credit.
(c) Swing Loans. Subject to Availability, any amount up to
the lesser of $200,000,000 and the Administrative Agent's
ratable portion of the aggregate commitments plus
$10,00,000 will be available to Warnaco for discretionary
swing loans from the Administrative Agent.
2. Term
The Exit Facility will be from the Closing Date to the fourth
anniversary of the Closing Date.
3. Closing Date
The date of the initial funding of the Facility, which will
be a date which occurs on or after the effective date of the
Plan of Reorganization and which in any event will occur on
or before February 28, 2003.
4. Borrowing Base
Borrowings are limited at any time to an amount equal to the
sum of:
(a) up to 75% of eligible accounts receivable of the Loan
Parties, and
(b) up to the lesser of:
-- (A) up to 67% of eligible finished inventory of the
Loan Parties,
(B) up to 55% of eligible raw inventory of the Loan
Parties, and
(C) up to 25% of work in process of the Loan Parties;
and
-- up to 85% of the U.S. dollar equivalent of the orderly
liquidation value of the eligible inventory, in each
case less the eligibility reserves and dilution
reserves as the Administrative Agent deems
appropriate.
5. Interest
The Loan will bear interest, at the option of Warnaco, at one
of these rates:
(a) the Applicable Margin plus the Administrative Agent's
fluctuating Alternate Base Rate, payable quarterly in
arrears; or
(b) the Applicable Margin plus the current LIBO rate as
quoted by the Administrative Agent adjusted for reserve
requirements, if any, and subject to customary change of
circumstance provisions, for interest periods of one,
two, three or six months, payable at the end of the
relevant interest period, but in any event at least
quarterly.
Applicable Margin means:
-- for an initial period of one year after the Closing Date,
1.50% per annum, in the case of Base Rate Loans, and 2.50%
per annum, in the case of LIBO Rate Loans; and
-- thereafter, higher or lower rates per annum determined by
reference to a pricing grid to be determined.
Alternate Base Rate means the highest of:
-- Citibank N.A.'s base rate,
-- the three-month certificate of deposit rate plus 1/2 of
1%; and
-- the Federal Funds Effective Rate plus 1/2 of 1%.
Interest will be calculated on the basis of the actual number
of days elapsed in a 360-day year. No more than 10 LIBO Rate
interest periods may be in effect at any one time.
6. Default Interest
During the continuance of an Event of Default, Loans will
bear interest at an additional 2% per annum.
7. Unused Commitment Fee
From and after the Closing Date, a non-refundable unused
commitment fee at the Unused Commitment Fee Rate will accrue
as a percentage of the daily average unused portion of the
Facility, payable quarterly in arrears and on the Terminate
Date.
8. Letter of Credit Fees
A percentage per annum equal to the Applicable Margin for
LIBO Rate Loans less the amount of fees paid to the
applicable Issuer to the Lenders will accrue on the
outstanding undrawn amount of any Letter of Credit, payable
quarterly in arrears and computed on a 360-day basis.
A percentage per annum equal to 0.125% to 0.25% to the
applicable Issuer will accrue on the outstanding undrawn
amount of any Letter of Credit, payable quarterly in arrears
and computed on a 360-day basis. In addition, Warnaco will
pay to the applicable Issuer standard opening, amendment,
presentation, wire and other administration charges
applicable to each Letter of Credit. During the continuance
of an Event of Default, the Letter of Credit Fees will
increase by an additional 2% per annum.
9. Optional Repayment and Commitment Reduction
Warnaco may repay the Loans in whole or in part at any time
without premium or penalty and may reduce the commitments
under the Facility upon at least five business days' notice;
provided that each reduction will be $5,000,000 or multiple
of $1,000,000 in excess thereof and any mandatory prepayment
resulting from the reduction will have been made.
10. Mandatory Repayments
Mandatory repayments of the Loans will be required in the
amount equal to:
(a) 100% of the net cash proceeds received by Warnaco from
any issuance of incurrence of balance sheet debt, subject
to an exception for a refinancing of Second Lien Notes
and other customary exceptions to be agreed upon;
(b) 100% of the net sale proceeds received by Warnaco from
asset sales, subject to limited exceptions and certain
reinvestment rights within 180 days to be agreed upon;
and
(c) 100% of insurance and condemnation proceeds received by
Warnaco or any of its subsidiaries, subject to limited
exceptions and certain reinvestment rights within 180
days to be agreed.
Amounts repaid under the Facility will be applied first to
repay all outstanding Loans and then to cash collateralize
Letters of Credit. Any amount collected in the Concentration
Account will be applied to the repayment of the Loans.
Warnaco will repay the outstanding Loans under the Facility
to the extent that the Loans and Letters of Credit exceed
availability.
11. Security
All amount owing by Warnaco under the Facility and by the
Guarantors in respect thereof will be secured by all of the
assets of each Loan Party, including, but not limited to:
(a) a first priority perfected pledge of all notes owned by
the Loan Parties and all of the capital stock held by any
Loan Party; and
(b) a first priority perfected security interest in all other
assets owned by the Loan Parties, including, without
limitation, accounts, inventory, equipment, investment
property, instruments, chattel paper, material owned real
estate, contracts, patents, copyrights, trademarks and
other intangibles, subject to customary exceptions for
transactions of this type.
12. Events of Default
The loan documentation will contain events of default
customarily found in the Agents' loan agreements for similar
exit financings and other events of default, including,
without limitation:
-- failure to make payments when due,
-- defaults under other indebtedness,
-- non-compliance with covenants,
-- representations and warranties prove to have been
incorrect in any material respect when made or deemed
made,
-- bankruptcy events,
-- failure to satisfy or stay execution of judgments in
excess of specified amounts,
-- the existence of certain materially adverse employee
benefit or environmental liabilities,
-- impairment of loan documentation or security, and
-- change of ownership or control.
13. Indemnification
Each Loan Party will, jointly and severally, indemnify and
hold harmless the Agents, the Arrangers, each Lender and
their affiliates and representatives from and against any and
all claims, damages, losses, liabilities and expenses, except
acts resulting from the Indemnified Party's gross negligence
or willful misconduct.
14. Expenses
Each Loan Party will jointly and severally pay all reasonable
costs and expenses of the Agents, the Arranges and Lenders,
as appropriate.
15. Assignments and Participation
Assignments must be in a minimum amount of $5,000,000. No
participation will include voting rights, other than for
matters requiring consent of 100% of the Lenders.
16. Financial Covenants
To be determined, but in any event, to include a maximum
leverage covenant, a minimum fixed charge coverage covenant
and a limitation on capital expenditures.
17. Financial Reporting Requirements
The Warnaco Group Inc. is required to submit monthly,
quarterly and annual consolidated financial statements, as
well as SEC Form 10-K, 10-Q or 8-K reports and projections
for the balance of the term of the Facility. (Warnaco
Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
WESTAR ENERGY: Kansas Regulator Clears ONEOK Preferred Issue
------------------------------------------------------------
Westar Energy, Inc., (NYSE: WR) announced that the Kansas
Corporation Commission has approved the agreement and related
documents among Westar Energy, Westar Industries, Inc., and
ONEOK, Inc., (NYSE: OKE) for Westar Industries to sell some of
its ONEOK preferred shares to ONEOK.
In its order, the KCC approved the repurchase plan and
transaction agreement, a new shareholder agreement among Westar
Energy, Westar Industries and ONEOK and a new registration
rights agreement that allows the process to proceed. The order
will become final at the close of business Feb. 4, unless
appealed.
Under the KCC-approved agreement, Westar Industries will sell to
ONEOK up to $250 million worth of ONEOK's Series A Convertible
Preferred Stock at the prevailing market price of ONEOK's common
stock, less certain transaction costs, and exchange its
remaining shares of Series A Convertible Preferred Stock for new
shares of ONEOK's Series D Convertible Preferred Stock.
"We appreciate the commission's prompt action to approve this
transaction. This sale is an important step for Westar Energy
toward reducing debt and complying with recent KCC orders,"
James Haines, Westar Energy president and chief executive
officer, said.
Westar Energy, Inc., (NYSE: WR) is a consumer services company
with interests in monitored services and energy. The company has
total assets of approximately $7 billion, including security
company holdings through ownership of Protection One, Inc.
(NYSE: POI) and Protection One Europe, which have approximately
1.2 million security customers. Westar Energy is the largest
electric utility in Kansas providing service to about 647,000
customers in the state. Westar Energy has nearly 6,000 megawatts
of electric generation capacity and operates and coordinates
more than 34,700 miles of electric distribution and transmission
lines. Through its ownership in ONEOK, Inc. (NYSE: OKE), a
Tulsa, Okla.- based natural gas company, Westar Energy has a
44.7 percent interest in one of the largest natural gas
distribution companies in the nation, serving more than 1.4
million customers. Westar Energy's March 31, 2002, balance sheet
shows a working capital deficit topping $1 billion.
For more information about Westar Energy, visit
http://www.wr.com
WHEELING-PITTSBURGH: Lays-Off about 100 Salaried Employees
----------------------------------------------------------
Wheeling-Pittsburgh Steel laid off about 100 salaried employees,
effective immediately.
"In order to retain a competitive edge in the industry,
Wheeling- Pittsburgh Steel must constantly evaluate its position
and quickly adopt necessary changes," said James G. Bradley,
President and Chief Executive of Wheeling-Pittsburgh Steel. "I
believe the actions we have taken [Fri]day, when coupled with
the opportunity presented by the new pattern labor agreement
that is being established in the industry, fundamentally changes
how Wheeling- Pittsburgh Steel manages and operates its
businesses."
Bradley noted that International Steel Group (ISG), which
purchased the assets of LTV, is producing as much steel as LTV
produced from the same facilities -- with substantially fewer
employees. ISG's union-represented employees will vote in the
near future on whether to accept a contract negotiated between
ISG and the United Steelworkers of America. The USWA has said
the contract is expected to become a pattern within the
industry.
"Wheeling-Pittsburgh Steel is taking a difficult but important
step toward changing the way the company operates," Bradley
said. "We will make every effort to be among the leaders as the
steel industry moves to improve its cost structure through a
leaner management organization and more competitive labor costs,
while retaining our customer focus on quality and on-time
delivery. We will work with the USWA as we continue to explore
ways to reinvent how Wheeling-Pittsburgh Steel manages its
businesses and stays competitive in this new environment."
The layoffs of salaried employees affect every major company
facility in the Ohio and Monongahela valleys. Personnel affected
by the layoffs are concentrated among the company's
administrative and support staff. The company will determine
which layoffs will become permanent over the next several
months. In addition to layoffs announced today, Wheeling-
Pittsburgh Steel has reduced its salaried and wage employment
through attrition and terminations by more than 600 since it
filed for Chapter 11 bankruptcy protection in November 2000.
WORLDCOM INC: Court Approves Proposed EDS Settlement Agreement
--------------------------------------------------------------
Worldcom Inc., and its debtor-affiliates obtained the Court's
approval of a settlement agreement with Electronic Data Systems
Corporation and EDS Information Systems, LLC; and modifications
to the GNOA and GITSA.
The principal terms of the Settlement Agreement are:
A. The Settlement Agreement contains these provisions relating
to the Network Payment:
-- within ten days following the Effective Date, EDS will
pay to MCI WorldCom $31,000,000;
-- on or before June 30, 2003, EDS will pay to MCI WorldCom
$31,000,000; and
-- on or before January 5, 2004, EDS will pay to MCI
WorldCom $30,000,000, although EDS will effectively
receive a $15,000,000 credit against the third Payment;
B. MCI WorldCom and EDS agree that the total amount of past
due, unpaid and undisputed postpetition invoices under the
GNOA is $99,630,011.69. EDS has disputed $9,206,625 in
invoices in good faith. EDS agrees in the Settlement
Agreement to pay these Undisputed Amounts:
-- EDS will pay MCI WorldCom $20,000,000 within 10 days
following the date the Letter Agreement is executed by
all Parties;
-- EDS will pay MCI WorldCom $20,000,000 within 30 days
following the Letter Agreement Date;
-- EDS will pay MCI WorldCom $20,000,000 within 60 days
following the Letter Agreement Date;
-- EDS will pay MCI WorldCom $20,000,000 within 90 days
following the Letter Agreement Date;
-- EDS will pay MCI WorldCom the remainder of the
Undisputed Amounts, plus any and all unpaid
accumulated interest, within 120 days following the
Letter Agreement Date; and
-- the Parties will resolve the Disputed Amounts in
accordance with the provisions of the GNOA.
C. With respect to the funds held pursuant to an
Indemnification Escrow Agreement in place related to EDS'
purchase of MCI Systemhouse Corp., EDS and MCI WorldCom
agree to instruct the Escrow Agent to:
-- release to MCI WorldCom $10,000,000 held in
Systemhouse Escrow;
-- Release to EDS 50% of all Distributions held in the
Systemhouse Escrow or about $800,000; and
-- Release to MCI WorldCom 50% of all Distributions held
in the Systemhouse Escrow or about $800,000;
D. MCI WorldCom agrees to pay up to $14,741,415.77 in LEC
invoices submitted by EDS within 30 days following MCI
WorldCom's receipt of a schedule of LEC invoices from EDS;
E. The Settlement Agreement contains these provisions relating
to EDS's Minimums obligation under the GNOA:
-- the Settlement Agreement establishes new Minimums that
are lower than the current Minimums set forth in the
GNOA;
-- "Cumulative Network Minimums" are removed from the
GNOA. "Cumulative Minimums" are also removed from the
GITSA.
-- the Parties agree that there will be no Annual Take-
or-Pay Minimum for Year 3 (2002), and that EDS will
not have any obligation or liability with respect to
any Network Revenue shortfall for Year 3 (2002);
-- at the end of each Year beginning in Year 4 (2003),
EDS will be liable for 100% of the amount by which the
Annual Network Take-or-Pay Minimum in effect for the
year exceeds 100% of the actual Network Revenues paid
during the year; and
-- the parties agree to delete the existing section 6.10
of the GNOA, and replace it with a new section 6.10
that only permits an equitable adjustment to the
Minimums in two scenarios related to the size, scope,
and nature of WorldCom's business;
F. The Settlement Agreement contains these provisions relating
to the rates charged by MCI WorldCom to EDS:
-- MCI WorldCom will have no obligation to reset the EDS
Pricing for Existing Business on the second Network
Reset Date (12/31/02), but EDS Pricing for New Network
Business will continue to be reset on an annual basis;
-- for New Network Business ordered in Year 4 (2003), EDS
will be charged the EDS Pricing set forth in the
Settlement Agreement, which are lower than EDS'
current rates under the GNOA;
-- for New Network Business ordered in Year 6 (2005),
Year 8 (2007) and Year 10 (2009), EDS will be charged
the lower of the then-effective Network CC Rate or the
then-effective Network MFN Rate;
-- for New Network Business ordered in Year 5 (2004),
Year 7 (2006), Year 9 (2008) and Year 11 (2010), EDS
will be charged the lower of the then-effective New
Business CC Rate or the then-effective New Business
MFN Rate; and
-- the Settlement Agreement establishes a new definition
of "New Network Business" that is broader than the
definition of "New Network Business" in the GNOA;
G. The Settlement Agreement contains mutual releases between
MCI WorldCom and EDS for all claims arising under the GNOA,
other than:
-- claims relating to the disputed payments, and
-- claims relating to any potential rejection of the GNOA
by MCI WorldCom;
H. The Settlement Agreement contains mutual releases between
MCI WorldCom and EDS for all claims relating to the Stock
Purchase Agreement dated February 10, 1999 by and among
Electronic Data Systems Corporation, E.D.S. of Canada,
Ltd., MCI WorldCom, Inc., MCI Telecommunications
Corporation; MCI Systemhouse L.L.C., SHL Systemhouse Co.,
and MCI Systemhouse Corp.;
I. EDS and MCI WorldCom agree that certain contractual price
reductions related to personnel changes will be deferred
until certain future events have occurred; and
J. The Settlement Agreement alters the manner in which damages
are calculated if MCI WorldCom terminates the GNOA.
(Worldcom Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
XCEL: Closes Viking Gas Transmission Sale to Northern Border
------------------------------------------------------------
Xcel Energy (NYSE:XEL) on Jan. 17 completed its previously
announced sale of Viking Gas Transmission, including Viking's
one-third interest in Guardian Pipeline, to Northern Border
Partners, L.P.
The sale is consistent with Xcel Energy's focus on its core
electric and gas distribution businesses, according to Dick
Kelly, Xcel Energy's chief financial officer.
Northern Border Partners purchased all of the common stock of
Viking from Xcel Energy for approximately $152 million,
including the assumption of outstanding debt.
The Viking system is a 671-mile interstate natural gas pipeline
extending from the U.S.-Canadian border near Emerson, Manitoba,
to Marshfield, Wis. Viking connects to several major pipeline
systems to serve markets in Minnesota, North Dakota and
Wisconsin. Guardian Pipeline, a 141-mile interstate natural gas
pipeline system from Joliet, Ill., to a point west of Milwaukee,
Wis., began operation in December. Subsidiaries of CMS Energy
and Wisconsin Energy hold the remaining interests in Guardian.
Xcel Energy is a major U.S. electricity and natural gas company
with regulated operations in 12 Western and Midwestern states.
The company provides a comprehensive portfolio of energy-related
products and services to 3.2 million electricity customers and
1.7 million natural gas customers through its regulated
operating companies. In terms of customers, it is the fourth-
largest combination natural gas and electricity company in the
United States. Company headquarters are located in Minneapolis.
Xcel Energy Inc.'s 7.00% bonds due 2010 (XEL10USR1) are trading
at about 76 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=XEL10USR1for
real-time bond pricing.
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Actuant Corp ATU (44) 294 18
Advisory Board ABCO (16) 48 (20)
Air Canada AC (938) 8,901 (634)
Alaris Medical AMI (47) 573 129
Alliance Resource ARLP (47) 291 (2)
Amazon.com AMZN (1,440) 1,637 286
American Standard ASD (90) 4,831 208
Amylin Pharm Inc. AMLN (3) 63 47
Anteon Int'l. Corp. ANT (3) 307 27
Arbitron Inc. ARB (169) 127 17
Avon Products AVP (46) 3,193 428
Campbell Soup Co. CPB (114) 5,721 (1,479)
Caremark Rx, Inc. CMX (772) 874 (31)
Chippac Inc. CHPC (23) 431 (18)
Choice Hotels CHH (64) 321 (28)
Dun & Brad DNB (20) 1,431 (82)
Echostar Comm DISH (778) 6,520 2,024
Expressjet Holdings XJT (214) 430 52
Gamestop Corp. GME (4) 607 31
Gartner Inc IT (5) 824 18
Graftech International GTI (307) 797 112
Hollywood Casino HWD (92) 553 89
Hollywood Entertainment HLYW (113) 718 (271)
Imclone Systems IMCL (5) 474 295
Inveresk Research Group IRGI (7) 302 (115)
Journal Register JRC (36) 711 (26)
Kos Pharmaceuticals KOSP (58) 83 27
Level 3 Comm Inc. LVLT (65) 9,316 642
Ligand Pharm LGND (58) 117 22
Medical Staffing MRN (33) 162 55
Mega Blocks Inc. MB (37) 106 56
Moody's Corp. MCO (304) 505 12
MTC Technologies MTCT 0 26 10
Petco Animal PETC (86) 473 68
Playtex Products PYX (44) 1,105 108
Proquest Co. PQE (45) 628 (140)
RH Donnelley RHD (111) 296 0
Saul Centers Inc. BFS (24) 346 N.A.
Sepracor Inc. SEPR (314) 1,093 727
Solutia Inc. SOI (113) 3,408 (495)
United Defense I UDI (166) 912 (55)
Valassis Comm. VCI (66) 363 10
Ventas Inc. VTR (91) 942 N.A.
Weight Watchers WTW (87) 483 (24)
Western Wireless WWCA (274) 2,370 (105)
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices
are obtained by TCR editors from a variety of outside sources
during the prior week we think are reliable. Those sources may
not, however, be complete or accurate. The Monday Bond Pricing
table is compiled on the Friday prior to publication. Prices
reported are not intended to reflect actual trades. Prices for
actual trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies
with insolvent balance sheets whose shares trade higher than $3
per share in public markets. At first glance, this list may
look like the definitive compilation of stocks that are ideal to
sell short. Don't be fooled. Assets, for example, reported at
historical cost net of depreciation may understate the true
value of a firm's assets. A company may establish reserves on
its balance sheet for liabilities that may never materialize.
The prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter
A. Chapman, Editors.
Copyright 2003. 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 $675 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***