/raid1/www/Hosts/bankrupt/TCR_Public/030319.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, March 19, 2003, Vol. 7, No. 55
Headlines
ADVANCED LIGHTING: S&P Withdraws D Rating after Bankruptcy
AFTON FOOD: Pursuing Balance Sheet Restructuring Negotiations
AMCAST INDUSTRIAL: Sells Speedline Subsidiary to European Firm
AMES DEPARTMENT: Court Clears GE Capital Settlement Agreement
ANNUITY & LIFE RE: Names John F. Burke as Chief Exec. Officer
ANTHONY CRANE RENTAL: S&P Further Junks Sr. Notes & Debentures
ASIA GLOBAL: Wants Plan Filing Exclusivity Extended to May 1
BARRINGTON FOODS: Taps BBX Equity to Explore Financing Options
BETHLEHEM STEEL: Dimensional Fund Discloses 3.01% Equity Stake
BIOTRANSPLANT INC: Will Hosting Conference Call on April 2, 2003
BIOTRANSPLANT: UST Schedules Section 341(a) Meeting for April 4
BOUNDLESS CORPORATION: Creditors' Meeting Scheduled for April 25
BURLINGTON IND.: Court Okays Sheffield as Committee's Advisor
CCC GLOBALCOM: Clifford J. Bottoms Resigns as CFO and Director
CONCURRENT COMPUTER: Pursuing Funding & Strategic Alternatives
CONGOLEUM CORP: Seeks Bondholders' Consent to Amend Indenture
CONSECO FINANCE: S&P Drops Ratings on 4 Related Deals to D
CONSECO INC: Judge Doyle Approves Disclosure Statement
CONSECO INC: Asks Court to Extend Removal Period to September 11
DEAN FOODS: Makes $100MM Partial Redemption of 5-1/2% Preferreds
DEVON MOBILE: Seeking Buyers for Wireless Assets in Three States
DIRECTV LATIN AMERICA: Files Chapter 11 Petition in Wilmington
DIRECTV LATIN AMERICA: Case Summary & 20 Largest Creditors
EL PASO CORP: Closes $138-Million San Juan Basin Rosa Asset Sale
ENRON CORP: Mr. Russo Earns Nod to Hire Gardere Wynne as Counsel
EXIDE TECHNOLOGIES: Judge Carey Fixes April 23 General Bar Date
EXIDE TECHNOLOGIES: Signs New Supply Agreement With Volvo Trucks
FAIRPOINT COMMS: S&P Rates $219 Mill. Secured Bank Loan at BB-
FLOW INTERNATIONAL: Defaults on Financial Loan Covenants
FREESTAR TECH.: Liquidity Concerns Raise Going Concern Doubt
GENUITY INC: Obtains First Open-Ended Removal Period Extension
GILAT: Completes Restructuring Deals Cutting Debt by US$300 Mil.
GLOBAL CROSSING: Special Panel Files Olofson Allegations Report
GROUP MANAGEMENT: Enters Phase II of Restructuring Proceeding
HARTMARX CORP: Reports Profitable Fourth Quarter and FY 2002
HYPERTENSION DIAGNOSTICS: Wants to Transfer Listing to OTCBB
IFX CORPORATION: Board Approves Reverse Stock Split Plan
INTERPUBLIC: Meets Tender Offer Conditions for Notes due 2023
IRVINE SENSORS: Distributing Prospectus re Share Public Offering
KAISER ALUMINUM: Summit Comm'l Acquires Kaiser Center in Oakland
KENNY INDUSTRIAL: Case Summary & 31 Largest Unsecured Creditors
LA QUINTA: Selling $325-Million Sr. Notes in Private Placement
MAGELLAN HEALTH: Earns Approval to Honor Employee Obligations
METATEC INT'L: Sets Annual Shareholders' Meeting for May 15
MICROCELL: Creditors Accept Proposed Reorganization Plan
NEW WORLD RESTAURANT: Refinancing Risk Prompts S&P's CCC- Rating
NOVADEL: Cash Inadequate to Continue Operations Beyond 3 Months
NTELOS: Taps Administar Services as Claims and Noticing Agent
ON SEMICONDUCTOR: Board Elects Donald Colvin as SVP and CFO
PEABODY ENERGY: Names Charles Ebetino to Lead Market Dev't Team
PERSONNEL GROUP: Inks Definitive Debt Restructuring Agreements
PRIMUS TELECOMMS: Raises $13 Million in New Debt Financing
QWEST: Providing Advanced Data Comms. To Recreational Equipment
RAMPART: Ontario Regulator Withdraws Enforcement Proceeding
SAFETY-KLEEN: Wins OK to Preserve Avoidance Actions for 75 Days
SERVICE MERCHANDISE: Claim Classification & Treatment Under Plan
SHAW GROUP: Pulls Plug on Covert and Harquahala Contracts
SPARTAN: Changes Organizational Structure to Facilitate Growth
SOTHEBY'S HOLDINGS: Red Ink Continued to Flow in Full-Year 2002
SUPERIOR TELECOM: Ordinary Course Professional Employment Okayed
TENNECO: Brings-In Ulrich Mehlmann to Head European Business
TODAY'S MAN: Wants Nod for Astor Weiss' Engagement as Counsel
TYCO INTERNATIONAL: Board Declares Regular Quarterly Dividend
UNITED AIRLINES: Wants to Reject Collective Bargaining Pacts
UNITED AIRLINES: Flight Attendants Disappointed with 1113 Motion
UNITED AIRLINES: Wants Filing Exclusivity Stretched to October 6
UNIVERSAL BUSINESS: Case Summary & Largest Unsecured Creditors
UNIVERSAL CITY: S&P Assigns B- Rating to $500M Sr. Unsec. Debt
US AIRWAYS: Judge Mitchell Confirms Reorganization Plan
US AIRWAYS: Names New Directors for Reorganized Company
VITALLABS: Clancy and Co. Expresses Going Concern Doubt
WHEELING-PITTSBURGH: Forest Investment Dumps WHX Equity Stake
WILLIAMS: Records Adjustments for FERC Item & Investment Charge
WINDSOR WOODMONT: Gets Court OK to Hire Rubner Padjen as Counsel
WORLD AIRWAYS: Nasdaq Panel Approves Continued SmallCap Listing
WORLDCOM INC: Southern Telecom Seeks Stay Relief to Use Remedies
W.R. GRACE & CO: Peninsula Entities Disclose 5.02% Equity Stake
* Meetings, Conferences and Seminars
*********
ADVANCED LIGHTING: S&P Withdraws D Rating after Bankruptcy
----------------------------------------------------------
Standard & Poor's Ratings Services withdrew its 'D' corporate
credit rating on Solon, Ohio-based Advanced Lighting
Technologies Inc. At the same time, Standard & Poor's withdrew
its 'D' rating on Advanced Lighting's $50 million senior secured
credit facility and its $100 million of senior unsecured notes.
The corporate credit rating was lowered to 'D' on Feb. 28, 2003,
following the company's voluntary filing for protection under
Chapter 11 of the U.S. bankruptcy code. The company plans to
operate its business while it seeks to restructure its debt with
senior lenders and unsecured bondholders as well as the
preferred stock held by General Electric Co. Advanced Lighting
is operating with funds generated from operations and a debtor-
in-possession loan.
"The company's current financial difficulties resulted from its
weak operating performance during 2001 and 2002 combined with a
heavy debt burden," said Standard & Poor's credit analyst Nancy
C. Messer. The company's subpar operating performance is
primarily attributable to the overall weak U.S. economy, which
has reduced demand for Advanced Lighting's metal halide
products; higher operating costs as a percentage of sales; and
competitive pricing.
AFTON FOOD: Pursuing Balance Sheet Restructuring Negotiations
-------------------------------------------------------------
In mid 2002, Afton Food Group Ltd., (TSX- AFF) set three main
tasks; restructure operations, restructure the balance sheet and
initiate programs for top line growth, which together are
expected to restore earnings. The following is an update on
these corporate initiatives.
The Company's wholly owned subsidiary, Joint Technologies Inc.,
closed its call center facility in North Bay on March 10, 2003,
resulting in approximately $1.4 in annualized savings. The
Company also intends to sell the facility, thereby eliminating
certain facility and operating lease obligations and the Company
is in discussions with potential purchasers at this time. With
the closure of the call center, the Company has completed the
majority of its operational restructuring.
The TSX recently placed the Company under a remedial review
process under which the Company has 120 days to comply.
Specifically, the Company has been advised that it does not meet
working capital requirements, which must be corrected and as
well, the aggregate market capitalization of the Company's
shares must be greater than minimums set down for TSX companies.
The working capital deficiency arose primarily as a result of
substantial losses in the call center and restructuring
provisions taken in the previous quarters of 2002.
The Company has been working diligently on the restructuring of
its Balance Sheet, with a goal of reducing or eliminating its
debt, eliminating its working capital deficiency, and as part of
this effort, reorganize the Company into an Income Trust.
Negotiations and discussions in this area are ongoing. The
Company has retained Burgeonvest Securities Limited to assist in
accomplishing these goals.
The Company has also enacted a 20 point business development
plan that is specifically focused on new revenue initiatives.
These initiatives are for the most part, cost neutral and
expected to have a positive impact on revenues and earnings over
a twenty-four month period.
AMCAST INDUSTRIAL: Sells Speedline Subsidiary to European Firm
--------------------------------------------------------------
Amcast Industrial Corporation, (NYSE:AIZ) has sold Speedline,
its Italian wheel subsidiary, to a European-based company. The
net proceeds from the sale will be negligible.
Byron O. Pond, Chairman of the Board and Chief Executive
Officer, said, "Speedline's recent operating performance has had
a significant, detrimental impact on Amcast's profitability. The
transaction should return the remaining Amcast businesses to
positive net earnings in its third fiscal quarter. However, the
impact of the disposal of Speedline, which will be reflected in
Amcast's second quarter results, is anticipated to result in a
pretax book loss of approximately $56 million. Amcast's second
quarter earnings announcement is expected to be released on
March 26 and will provide additional information concerning this
transaction and its financial impact on the company."
Mr. Pond continued, "Amcast acquired Speedline in 1997 with the
intent of increasing the geographic scope of the Company's wheel
business. The Speedline acquisition allowed Amcast to enter the
European market with a well-recognized name and a meaningful
market position. Despite our additional investments in
Speedline, its unfavorable cost structure did not allow us to
maintain market position and generate adequate returns in the
face of changing market conditions and increased competition.
The sale allows us to exit this business and focus our efforts
and resources on our domestic businesses where we see more
opportunity."
Amcast also announced that the New York Stock Exchange, Inc.,
issued a letter indicating that the Company is below criteria
for the NYSE's continued listing standards. The Company no
longer meets the equity standard, which requires a listed
company to have an average market capitalization of not less
than $50 million over a 30 trading-day period and stockholders'
equity of not less than $50 million. The Company has expected
this action and is reviewing its available alternatives to
assure a continuous public trading market for its common shares.
* * *
As previously reported in Troubled Company Reporter, edition,
Amcast Industrial Corporation (NYSE:AIZ) successfully negotiated
a restructuring of its credit facilities with its bank-lending
group and senior note holders. As restructured, the bank credit
facilities have been continued through September 14, 2003, and a
required $12.5 million prepayment under the senior notes has
been deferred until maturity in November 2003.
After restructuring, long-term debt at the end of the fiscal
third quarter was $160.4 million. This reduced short-term debt
to $25.4 million, or 13.7% of total obligations.
AMES DEPARTMENT: Court Clears GE Capital Settlement Agreement
-------------------------------------------------------------
Ames Department Stores, Inc., and its debtor-affiliates obtained
Court approval of their settlement agreement with the Official
Committee of Unsecured Creditors, General Electric Capital
Corporation, as a lender and as agent under the GECC DIP
Agreement dated August 20, 2001, and a Prepetition Credit
Agreement dated March 2, 2001, and certain lenders.
The Settlement Agreement resolves a dispute in connection with:
-- the DIP Lenders' demand for payment of a $14,000,000
prepayment fee in connection with the Debtors' payment of
all principal and interest under the GE Capital DIP
Agreement; and
-- the DIP Lenders' request for indemnification for the
potential exposure in connection with the action initiated
by LFD Operating Inc. against them. The DIP Lenders have
estimated that the LFD Action could give rise to
$11,500,000 in potential liability, plus fees and costs
incurred in connection with defending the Action.
The Settlement Agreement is in furtherance of a Stipulation
among the parties, pursuant to which the Debtors agreed to
escrow $25,500,000 until the parties reached a consensual
resolution of the dispute or the Court made a determination as
to whether the Debtors were obligated to pay the Prepayment Fee
or indemnify the DIP Lenders for the LFD Exposure.
On September 6, 2001, LFD commenced an adversary proceeding
against the Debtors before the Bankruptcy Court seeking
declaratory and other relief based on their failure to pay
$8,900,000 allegedly due LFD that were instead paid over to the
Prepetition Lenders. LFD operated footwear departments in the
Debtors' retail stores. On the same day, LFD also filed an
identical complaint against GECC in the New York Supreme Court
alleging that the Debtors improperly placed the funds that were
allegedly property of LFD into a lockbox that was swept daily
pursuant to the Prepetition Credit Agreement. The GECC
complaint was later moved to the Bankruptcy Court before Judge
Gonzalez.
On March 8, 2002, and after a trial on the merits, Judge
Gonzalez issued a Memorandum Decision dismissing all of LFD's
claims against the Debtors in the Adversary Proceeding. LFD
appealed the Order and the Appeal is currently pending in the
U.S. District Court for the Southern District of New York.
GE Capital filed a motion for summary judgment in its own
Adversary Proceeding, seeking dismissal of the causes of action
asserted by LFD. GE Capital based the Motion on the collateral
estoppel effect of the Court's ruling in the Ames/LFD Adversary
Proceeding. The Summary Judgment Motion was stayed by Court
Order dated July 1, 2002, pending the outcome of the Appeal.
Pursuant to the Settlement Agreement, the DIP Lenders have
agreed to reduce their claims to the Prepayment Fee from
$14,000,000 to $7,000,000 in full and complete satisfaction of
their claims to the Prepayment Fee. The Debtors will receive
the remaining $7,000,000, plus interest earned on the
$14,000,000 escrowed in connection with the Prepayment Fee. The
Settlement Agreement also resolves the parties' disputes,
without further litigation, regarding the Debtors' obligations
to indemnify the DIP Lenders for the LFD Exposure.
The parties further release and discharge each other from any
and all causes of action, obligations and demands in connection
with the GE Capital DIP Agreement, the Prepetition Credit
Agreement or the Debtors' Chapter 11 cases, except with respect
to any remaining escrowed property, the other obligations
expressly set forth in the Settlement Agreement, the remaining
letter of credit obligations and the cash collateral which is
being held by GE Capital, on behalf of itself and DIP Lenders,
in accordance with the terms of the DIP Agreement. (AMES
Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
ANNUITY & LIFE RE: Names John F. Burke as Chief Exec. Officer
-------------------------------------------------------------
Annuity and Life Re (Holdings), Ltd., (NYSE: ANR) announced that
John F. Burke has been appointed Chief Executive Officer of the
Company, effective as of February 28, 2003. Mr. Burke has
served as the Company's Chief Financial Officer since September
2001 and will continue in that role in addition to assuming the
responsibilities of Chief Executive Officer of the Company.
Mr. Burke will also be joining the Company's Board of Directors.
Frederick S. Hammer, the non-executive Chairman of the Company's
Board of Directors, said, "Jay has been an invaluable member of
our management team since joining the Company. We are pleased
to announce that he has agreed to serve as CEO and expect that
his leadership will help the Company face the challenges ahead."
The Company also announced that Brian M. O'Hara, who had been
serving on the Company's Board of Directors as a designee of XL
Capital Ltd, had resigned from the Board and would be replaced
by Henry C.V. Keeling at the request of XL. Mr. Keeling
currently serves as the Chief Executive of XL's global
Reinsurance Operations, "XL Re." The Company also announced
that Walter A. Scott had retired from the Company's Board of
Directors in December 2002.
Annuity and Life Re (Holdings), Ltd., provides annuity and life
reinsurance to insurers through its wholly owned subsidiaries,
Annuity and Life Reassurance, Ltd., and Annuity and Life
Reassurance America, Inc.
As reported in Troubled Company Reporter's February 28, 2003
edition, Fitch Ratings lowered the insurer financial strength
rating of Annuity & Life Reassurance, Ltd., to 'CC' from 'CCC'.
The Rating Watch has been changed to Negative from Evolving.
This rating action follows the company's public disclosure on
February 24th of a number of adverse developments related to its
operating performance and financial position. Of particular
concern to Fitch are the company's announcements that it has
ceased writing new business and has notified its existing
reinsurance clients that it cannot accept additional cessions
under previously established treaties, as well as disclosure of
continued adverse mortality and a large number of open claim
submissions. These disclosures, combined with other negative
developments, has led the company to announce that a significant
loss will be reported in the fourth quarter of 2002, and for the
year.
ANTHONY CRANE RENTAL: S&P Further Junks Sr. Notes & Debentures
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on
Anthony Crane Rental L.P.'s $155 million 10.375% senior notes
and parent Anthony Crane Rental Holdings L.P.'s $48 million
13.375% senior discount debentures to 'C' from 'CCC-' following
the company's filing of an exchange offer for these issues on
March 14, 2003. In addition, Standard & Poor's lowered its
corporate credit and senior unsecured bank loan rating
on Pittsburgh, Pennsylvania-based Anthony Crane to 'CC' from
'CCC+'. Standard & Poor's views this exchange as coercive since
the interest due on these notes will not be paid in cash but
will accrete as additional principal for one year and thereafter
the interest rate will be lowered below the original coupon
rate. All issues remain on Credit Watch with negative
implications where they were originally placed on Dec. 14, 2001,
due to financial weakness.
"Anthony Crane Rental L.P. (doing business as Maxim Crane Works)
has been experiencing financial difficulties due to the weakness
in the industrial and nonresidential construction markets while
struggling with a significant debt burden," said Standard &
Poor's credit analyst John R. Sico. The ratings on the issues
being exchanged will be lowered to 'D' following the completion
of the exchange offer, which is anticipated to be on or about
April 11, 2003.
ASIA GLOBAL: Wants Plan Filing Exclusivity Extended to May 1
------------------------------------------------------------
The initial Exclusive Filing Period and Solicitation Period of
the Asia Global Crossing Debtors currently are set to expire on
March 17, 2003 and May 16, 2003. By this motion, the AGX
Debtors seek a 45-day extension of the Exclusive Periods through
and including May 1, 2003 and June 30, 2003, without prejudice
to their rights to seek additional extensions. The extension is
essential in the context of the AGX Debtors' large and complex
Chapter 11 cases.
Richard F. Casher, Esq., at Kasowitz Benson Torres & Friedman
LLP, in New York, tells the Court that the Exclusive Periods
afford a debtor a full and fair opportunity to propose a
consensual plan and solicit acceptance of this plan without the
deterioration and disruption of its operations that might be
caused by the filing of competing plans by non-debtor parties.
The primary objective of a Chapter 11 case is the formulation,
confirmation, and consummation of a consensual Chapter 11 plan.
It is the AGX Debtors' intention to achieve this objective
without undue delay.
By any reasonable measure, Mr. Casher argues that the Debtors'
Chapter 11 cases are sufficiently sizeable and complex to
warrant the requested extension of the Exclusive Periods. AGX
is the holding company for a substantial and wide-ranging
business with extensive holdings. As of January 21, 2003, AGX's
consolidated financial group of subsidiaries listed
$2,413,326,000 in "book" assets and $1,895,468,000 in "book"
liabilities. As of March 10, claims over $1,000,000,000 have
been filed in the Debtors' cases. The Debtors have not had
adequate time to analyze the validity of these claims.
Although these cases involve only two Debtors, Mr. Casher
insists that these cases nevertheless are quite complex. The
underpinnings of the Debtors' liquidating plan of reorganization
and the distributions to its creditors is the sale of
substantially all of its assets to Asia Netcom, a Bermuda-based
investment vehicle of China Netcom Corporation (Hong Kong)
Limited. CNC is a member of the China Netcom Group, one of two
incumbent wireline operators in the People's Republic of China.
The Debtors' assets sold to Asia Netcom include equity interests
in numerous foreign subsidiaries in a multitude of
jurisdictions. The Asia Netcom Transaction was complicated if
for no other reason than the complex dynamics of negotiating and
closing a transaction involving a People's Republic of China-
based buyer and the regulatory regimes of foreign jurisdictions
affecting the sale and purchase by a People's Republic of China-
based buyer of the Debtors' foreign subsidiaries.
Mr. Casher points out that the global nature of the Debtors'
businesses adds an additional layer of complexity, as does the
overlay of parallel extraterritorial "winding up" proceedings
involving the Debtors in Bermuda and the appointment of the
JPLs. In addition, the initial months of the Debtors' Chapter 11
cases have been devoted to difficult and protracted negotiations
with Global Crossing that culminated in the Settlement. The
Settlement resolved substantial intercompany claims between AGX
and certain of its subsidiaries, on the one hand, and Global
Crossing and certain of its subsidiaries, on the other hand, and
also established a framework for a commercial relationship
between AGX and Global Crossing, in each case, as required by
the terms of the Sale Agreement.
The Debtors have taken significant strides to establish a
framework to effectuate the Debtors' liquidation and the
development of a liquidating plan to implement this liquidation.
Mr. Casher points out that the essential predicate for the
Debtors' liquidating plan was the consummation of the Asia
Netcom Transaction. The Asia Netcom Transaction represented the
culmination of more than six months of negotiation between AGX
and Asia Netcom that was preceded by an exhaustive worldwide
marketing of AGX and its assets to ensure that AGX received the
highest and best offer for its assets. In that regard, the Asia
Netcom Transaction provides AGX's creditors with the highest and
best possible return. However, the Asia Netcom Transaction did
not close until March 10, 2003, only one week prior to the
expiration of the Exclusive Filing Period. Moreover, the
Settlement with Global Crossing was not formalized and executed
until March 5, 2003. With those exceedingly time-intensive
matters having been concluded only a few days before the
expiration of the initial Exclusive Filing Period, the Debtors
have not had sufficient time to negotiate with the Committee to
formulate a consensual liquidating plan of reorganization.
However, in addition to consummating the Asia Netcom
Transaction, the Debtors have made significant progress
throughout the course of their Chapter 11 cases in laying the
foundation for a consensual liquidating plan of reorganization.
These include:
A. Negotiating With Creditors: On November 25, 2002, the U. S.
Trustee appointed the Committee. Even prior to the
formation of the Committee, although AGX was not in
default of any material obligation or covenant of the
indenture governing AGX's 13.375% Senior Notes due 2010,
AGX negotiated with an ad hoc committee of holders of the
Senior Notes in connection with its restructuring. The Ad
Hoc Committee had significant input in AGX's prepetition
restructuring activities, including significant contact
with AGX professionals and input in the restructuring
efforts undertaken by AGX and its financial advisors,
Lazard Freres & Co. LLC and other professionals. Since the
formation of the Committee, the Debtors and their
professionals have engaged directly with the Committee and
its advisors on a regular basis with respect to the Sale
Agreement, the establishment of procedures for the
solicitation of investment proposals for the sale of AGX's
assets, the distribution of funds to AGX's estate for the
benefit of its creditors in connection with the Sale, and
other matters relating to the administration of these
Chapter 11 cases.
B. Establishing Auction Procedures and Confirming the Sale: On
December 10, 2002, this Court approved an order
establishing procedures for an auction of the Acquired
Assets. That order was submitted to the Court after the
Committee was given an opportunity to comment on the form
of the order. In the absence of competing bids for the
Acquired Assets, an auction was not held and the Asia
Netcom Transaction was approved following the Sale Hearing
and pursuant to a Court order entered on January 29, 2003.
Again, the Sale Order was submitted to the Court after the
Committee had the opportunity to comment on the form of the
Sale Order; indeed, the Committee had significant input on
amendments to the Sale Agreement that were executed
following the entry of the Sale Order.
C. Key Vendor Negotiations: The proper and effective operation
of the AGX's telecommunications network requires the
cooperation and assistance of the Debtors' key vendors. To
ensure this service and maximize the integrity of the
telecommunications network for the benefit of all parties-
in-interest, and to satisfy a requirement under the Sale
Agreement, AGX successfully negotiated with KDDI Submarine
Cable Systems Inc. and NEC Corporation, its key vendors,
the extinguishment of the vendors' substantial potential
claims against AGX and the basis for an ongoing commercial
relationship.
Each of KDDI and NEC held a substantial claim against East
Asia Crossing Ltd., one of AGX's non-debtor subsidiaries,
and AGX arising in connection with the construction of the
East Asia Crossing undersea telecommunications cable. In
conjunction with the Asia Netcom Transaction, those claims,
which totaled $280,000,000, have been reduced, restructured
and assumed by Asia Netcom and, as to AGX, released.
D. Settlement with Global Crossing: Global Crossing is the
majority shareholder of AGX and is its single most
important commercial relationship. Global Crossing's
network provides the necessary and uninterrupted worldwide
services for AGX's customers. After a number of months of
intensive negotiations that commenced prior to the Petition
Date, AGX and Global Crossing have reached a universal
settlement. The Settlement Agreement:
-- resolves all claims of AGX and its subsidiaries and
affiliates under its control against Global Crossing and
its subsidiaries and affiliates, which claims aggregate
$1,000,000,000;
-- resolves all claims of the Global Crossing Entities
against AGX and its subsidiaries and affiliates, which
claims aggregate $330,000,000;
-- provides a transition plan and transition services for
AGX's businesses to facilitate the sale of assets to
Asia Netcom;
-- implements a certain undersea cable maintenance
agreement between the parties; and
-- establishes the terms for a continuing
telecommunications business relationship.
The Settlement was a significant predicate to the Asia
Netcom Transaction and will spare AGX's estate the dilution
that otherwise would be caused by the allowance of the
Global Crossing Entities' claims.
Since the Petition Date, Mr. Casher contends that the Debtors
have behaved in a manner consistent with their fiduciary duties
to their creditor constituencies, evidencing proper motive in
seeking, with the Committee's consent, a short extension of the
Exclusive Periods. The Debtors have demonstrated good faith in
their efforts to negotiate with all relevant parties at this
critical stage of their Chapter 11 cases. The Debtors have
recognized the need to deal with those parties and consistently
have conferred with them on major substantive and administrative
matters, often reaching an agreement or a compromise.
Mr. Casher assures the Court that granting a short extension of
the Exclusive Periods in this instance would not give the
Debtors an unfair bargaining leverage over creditor
constituencies. Instead of prejudicing any party-in-interest,
the extension will afford the Debtors an opportunity to
negotiate a consensual, workable liquidating plan with the
Committee and expeditiously seek confirmation of this plan.
Thus, failure to extend the Exclusive Periods as requested would
defeat the very purpose of Section 1121 of the Bankruptcy Code
-- to provide the debtor with a reasonable opportunity to
negotiate with creditors and other parties-in-interest and
propose a confirmable Chapter 11 plan.
Although the contingency of closing the Asia Netcom Transaction
now has occurred within the Exclusive Filing Period, Mr. Casher
tells the Court that the transaction was not consummated until
one week prior to the end of the Exclusive Filing Period. With
the closing having taken place, the Debtors now, free from the
substantial time demands of the Asia Netcom Transaction, can
focus its time and energy on:
-- the liquidating plan of reorganization and negotiating the
final form of the plan with the Committee; and
-- a disclosure statement in respect of the liquidating plan.
The timetable for closing the Asia Netcom Transaction
necessitates that the Exclusive Periods be extended briefly in
order that the Debtors may have a realistic opportunity to
formulate and negotiate a consensual, confirmable plan.
Mr. Casher asserts that the Debtors have sufficient liquidity to
pay, and, indeed, are paying, their postpetition bills as they
come due. The Debtors have sufficient resources to meet all
projected postpetition payment obligations. As a result of the
consummation of the Asia Netcom Transaction, AGX has $93,100,000
of cash on hand while AGX Development Co. has $1,160,000 of cash
on hand. Both Debtors easily have sufficient cash to fund their
Chapter 11 cases.
* * *
The Court will convene a hearing on April 3, 2003 to consider
the AGX Debtors' request. Accordingly, Judge Bernstein extends
the Debtors' exclusive periods until the conclusion of that
hearing. (Global Crossing Bankruptcy News, Issue No. 36;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
BARRINGTON FOODS: Taps BBX Equity to Explore Financing Options
--------------------------------------------------------------
Barrington Foods International Inc. (OTC BB: BFII), have entered
into a formal consulting agreement with BBX Equity Group, LLC of
Las Vegas to immediately explore various funding options for
working capital, and to assist with a corporate restructuring
plan.
Placement documents are in process of being drafted, and the
company expects initial funding via such placement may begin
shortly. Further details will be announced when warranted.
Barrington Foods' principal activities are focused in the
wholesaling of select food products and proprietary formula
development. The company's core product line is soy- and dairy-
based powdered milk products, including their foremost product,
Pride & Joy(R), an infant formula. The company will be
introducing other complementary products, such as dried fruit
snacks, powdered juice crystals, flavor formulas and high
protein drinks, in the coming months. Barrington Foods has
exclusive distribution agreements for products imported into the
United States, such as gourmet coffees from Vietnam and
Guatemala, and are vertically integrated through the manufacture
and wholesale distribution of proprietary products.
BETHLEHEM STEEL: Dimensional Fund Discloses 3.01% Equity Stake
--------------------------------------------------------------
In a February 3, 2003 regulatory filing with the Securities and
Exchange Commission, Dimensional Fund Advisors Inc., discloses
that it beneficially owns 3,936,292 shares of Bethlehem Steel
Corporation, in its role as investment advisor or manager. This
represents 3.01% of all shares Bethlehem issued.
Dimensional Fund's Vice President and Secretary, Catherine L.
Newell, however, emphasizes that the Bethlehem common stocks are
owned by certain investment companies, trusts and accounts.
Dimensional furnishes investment advice to four investment
companies registered under the Investment Company Act of 1940,
and serves as investment manager to certain other commingled
group trusts and separate accounts. Dimensional is a Delaware
corporation and an investment advisor as defined in Section
240.13d-1(b)(1)(ii)(E) of the Securities and Exchange Act and
registered under Section 203 of the Investment Advisors Act of
1940.
According to Ms. Newell, "all securities reported are owned by
advisory clients of Dimensional Fund Advisors, no one of which,
to the knowledge of Dimensional, owns more than 5% of the class.
Dimensional disclaims beneficial ownership of all such
securities." (Bethlehem Bankruptcy News, Issue No. 33;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
BIOTRANSPLANT INC: Will Hosting Conference Call on April 2, 2003
----------------------------------------------------------------
BioTransplant Incorporated (OTC Bulletin Board: BTRNQ.OB) will
host a conference call at 8:30 AM Eastern Time on Wednesday,
April 2, 2003 to provide a company update.
During the call, the Company will provide an update on its
previously filed voluntary petition for reorganization under
Chapter 11 of the Bankruptcy Code. The Company will also provide
an update on corporate developments, including the status of its
contract dispute with the Catholic University of Louvain (UCL).
The Company previously announced that it had received a
purported notice of termination of its sponsored research
agreement from UCL. UCL has alleged that the Company failed to
make sponsored research and royalty payments under the agreement
or devote the appropriate level of effort to develop and
commercialize the licensed technology.
The conference call may be accessed by dialing 800-915-4836 for
domestic callers, and 973-317-5319 for international callers.
A replay of the conference call will be available from 10:30 AM
Eastern Time on April 2, 2003 through 11:59 PM Eastern Time,
April 9, 2003, and may be accessed by dialing 800-428-6051 for
domestic callers and 973-709-2089 for international callers. The
passcode is 287896.
BioTransplant Incorporated, a Delaware corporation located in
Medford, Massachusetts, is a life science company whose primary
assets are intellectual property rights that it has exclusively
licensed to third parties. The Company's strategy is to maximize
the potential future value of these licensed intellectual
property rights. The Company has exclusively licensed Siplizumab
(MEDI-507), a monoclonal antibody product, to MedImmune, Inc.
Siplizumab is in Phase II clinical trials for the treatment of
psoriasis. The Company's assets also include the AlloMune System
technologies, which are intended to treat a variety of
hematologic malignancies and improve outcomes for solid organ
transplants, and the Eligix HDM Cell Separation Systems, which
use monoclonal antibodies to remove unwanted cells from bone
marrow, peripheral blood stem cell and donor leukocyte grafts
used in transplant procedures. BioTransplant also has an
interest in Immerge BioTherapeutics, Inc., a joint venture with
Novartis, to further develop both companies' individual
technology bases in xenotransplantation.
BIOTRANSPLANT: UST Schedules Section 341(a) Meeting for April 4
---------------------------------------------------------------
The United States Trustee for Region 1 will convene a meeting of
BioTransplant Incorporated's creditors at 1:45 p.m. on April 4,
2003, in Room 1190 of 10 Causeway Street in Boston,
Massachusetts. This is the first meeting of creditors required
under 11 U.S.C. Sec. 341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Biotransplant Incorporated discovers, develops and
commercializes therapeutics, therapeutic devices and therapeutic
regimens designed to suppress undesired immune responses and
enhance the body's ability to accept donor cells, tissues and
organs. The Company filed for chapter 11 protection on February
27, 2003 (Bankr. Mass. Case No. 03-11585). Daniel C. Cohn,
Esq., at Cohn Khoury Madoff & Whitesell LLP represents the
Debtor in its restructuring efforts. When the Company filed for
protection from its creditors, it listed $16,338,300 in total
assets and $6,960,338 in total debts.
BOUNDLESS CORPORATION: Creditors' Meeting Scheduled for April 25
----------------------------------------------------------------
The United States Trustee for Region 2 will convene a meeting of
Boundless Corporation and its debtor-affiliates' creditors on
April 25, 2003, 10:00 a.m., at 560 Federal Plaza, Room 561,
Central Islip, New York. This is the first meeting of creditors
required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Boundless Corporation is a global technology company and is
composed of two subsidiaries: Boundless Technologies, Inc., a
desktop display products company, and Boundless Manufacturing
Services, Inc., an emerging EMS company providing build-to-order
(BTO) systems manufacturing, printed circuit board assembly, as
well as complete end-to-end solutions from design through
product end-of-life to its customers. The Company filed for
chapter 11 protection on March 12, 2003 (Bankr. E.D.N.Y. Case
No. 03-81558). Jeffrey A Wurst, Esq., at Ruskin Moscou
Faltischek PC represents the Debtors in their restructuring
efforts. When the Company filed for chapter 11 protection from
its creditors, it listed $19,442,850 in total assets and
$19,417,517 in total debts.
BURLINGTON IND.: Court Okays Sheffield as Committee's Advisor
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approves
the Burlington Industries, Inc.'s Official Unsecured Creditor
Committee's application to retain Sheffield Merchant Banking
Group as financial advisors, nunc pro tunc to February 6, 2003.
Furthermore, the indemnification provisions of the Retention
Letter attached to the Application, are approved, subject to
these provisions:
(a) The Debtors are authorized to indemnify, and will
indemnify, Sheffield, in accordance with the Retention
Letter and for any claim arising from, related to, or in
connection with the services to be rendered as described
in the Retention Letter, but not for any claim arising
from, related to, or in connection with Sheffield's
postpetition performance of any services other than the
services described in the Retention Letter unless the
other postpetition services and indemnification therefore
are approved by the Court;
(b) Notwithstanding any provision of the Retention Letter to
the contrary, the Debtors have no obligation to indemnify
Sheffield, or provide contribution or reimbursement to
Sheffield, for any claim or expense that is either:
-- judicially determined to have arisen from Sheffield's
gross negligence or willful misconduct, or
-- settled prior to a judicial determination as to
Sheffield's gross negligence or willful misconduct, but
determined by this Court, after notice and a hearing,
to be a claim or expense for which Sheffield should not
receive indemnity, contribution or reimbursement under
the terms of the Retention Letter as modified by this
Order; and
(c) If, before the earlier of (i) the entry of an order
confirming a Chapter 11 plan in these cases, and (ii) the
entry of an order closing these Chapter 11 cases,
Sheffield believes that it is entitled to the payment of
any amounts by the Debtors on account of the Debtors'
indemnification, contribution or reimbursement obligations
under the Retention Letter, including without limitation
the advancement of defense costs, Sheffield must file an
application in this Court, and the Debtors may not pay any
amounts to Sheffield before the entry of a Court order
approving the payment.
The Retention Letter will be modified so that any success fee to
be paid to Sheffield for a sale or transaction consummated after
the termination of Sheffield's employment on the Committee's
behalf will only be paid if the sale or transaction is
consummated as a result of the services performed by Sheffield.
* * *
The terms of the Retention Agreement dated as of February 6,
2003 are:
A. Scope of Services
The professional services to be rendered by Sheffield include
acting as financial advisor to the Committee and will also:
(a) review and provide an analysis of the business,
operations, properties, financial condition, business
plans and forecasts and prospects of the Company;
(b) monitor the Company's ongoing performance and address
issues relating to management, including without
limitation assessing potential management candidates;
(c) evaluate the Company's debt capacity and capital
structure in light of its projected cash flows;
(d) review and provide an analysis of any proposed capital
structure for the Company;
(e) review and provide an analysis of any valuations of the
Company, as a whole and by business unit, on a going
concern basis and on a liquidation basis;
(f) review and provide analysis of any proposed public or
private placement of the debt or equity securities of the
Company or any loan or other financing - including
without limitation any proposed debtor-in-possession
financing, cash collateral usage, adequate protection or
exit financing;
(g) review and provide an analysis of any of the Company's
proposed material expenditures during its Chapter 11
case;
(h) review and provide an analysis of all proposed Chapter 11
plan of reorganization proposed by any party;
(i) review and provide an analysis of any new securities,
other consideration or other inducements to be offered
and/or issued under a Plan;
(j) assist the Committee and/or participate in negotiations
with the Company or any groups affected by a Plan;
(k) assist the Committee in preparing documentation within
our area of expertise required in connection with
supporting or opposing a Plan;
(l) review and provide an analysis of any proposed
disposition of any material assets of the Company or any
offers to purchase some or substantially all of the
assets of the Company;
(m) when and as requested by the Committee, render reports to
the Committee as the Financial Advisor deems appropriate
under the circumstances including without limitation
providing specific valuation or other financial analyses
the Committee may require in connection with the Chapter
11 case;
(n) participate in hearings before the Bankruptcy Court with
respect to the matters upon which the Financial Advisor
has provided advice, including without limitation
coordinating with the Committee's counsel to provide
testimony and/or reports, as appropriate, in connection
therewith;
(o) at the Committee's request, and in conjunction with the
Company's advisors, identify and pursue (i) potential
buyers for the Company and/or some or substantially all
of its assets, and (ii) potential new money investors;
and
(p) provide other financial advisory services as the
Financial Advisor and the Committee and/or the
Committee's counsel may from time to time agree in
writing.
B. Compensation
(a) Monthly Advisory Fee
A cash fee $75,000 will be due and paid by the Estate
upon Bankruptcy Court approval of this Agreement and
thereafter on each monthly anniversary during the term of
this Agreement.
(b) Transaction Fee
The Transaction Fee will be equal to 2.5% of the amount
by which the Unsecured Creditors' Recovery exceeds
$140,000,000.
C. Out-of-Pocket Expenses
The Estate will, whether or not any Plan is confirmed,
reimburse the Financial Advisor on a monthly basis for its
travel and other reasonable out-of-pocket expenses incurred
in connection with the Financial Advisor's activities under
or contemplated by this engagement. The Estate will also
reimburse the Financial Advisor for any sales, use or similar
taxes arising in connection with any matter referred to or
contemplated by this engagement.
D. Recognition of Fee Structure
The Financial Advisor, the Company and the Committee
acknowledge and agree that the hours worked, the results
achieved and the ultimate benefit to the parties represented
by the Committee of the work performed, in each case, in
connection with this engagement, may be variable, and that
the Committee and the Financial Advisor have taken this into
account in setting the fees hereunder.
E. Information
The Company will make available to the Financial Advisor all
information concerning the business, assets, operations,
financial condition and prospects of the Company that the
Financial Advisor reasonably deems necessary in connection
with the services to be performed for the Committee.
F. Indemnification
The Company and its Estate shall indemnify the Financial
Advisor and certain related persons in accordance with the
indemnification provisions
G. Limitation of Liability
Each of the Committee and the Company agrees that none of the
Financial Advisor, its affiliates or their respective
directors, officers, agents, employees and controlling
persons, or any of their respective successors or assigns -
Covered Persons - will have any liability to the Committee,
the Company or the Estate for or in connection with this
engagement or any transactions or conduct, except for losses,
claims, damages, liabilities or expenses incurred by the
Committee, the Company or the Estate, which are finally
judicially determined to have resulted primarily from the bad
faith, gross negligence or willful misconduct of the Covered
Person.
H. Termination
This Agreement and the Financial Advisor's engagement may be
terminated by either the Committee or the Financial Advisor
at any time, upon 30 days' prior written notice to the other
party.
I. Confidentiality
The Financial Advisor will keep confidential and use solely
in its capacity as financial advisor to the Committee all
information provided to it by the Company and the Committee
and each of their agents.
J. Credit
The Financial Advisor will have the right to place
advertisements in financial and other newspapers and journals
at its own expense describing its services to the
Committee.
K. Choice of Law: Jurisdiction
This Agreement and all controversies arising from
or relating to performance of this Agreement will be governed
by, and construed and enforced in accordance with, the laws
of the State of New York.
L. Successors and Assigns
This Agreement will be binding upon the Financial Advisor,
the Committee, the Company and the Estate and their
respective successors and assigns. (Burlington Bankruptcy
News, Issue No. 29; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
Burlington Industries' 7.250% bonds due 2005 (BRLG05USR1) are
trading at about 38 cents-on-the-dollar, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=BRLG05USR1
for real-time bond pricing.
CCC GLOBALCOM: Clifford J. Bottoms Resigns as CFO and Director
--------------------------------------------------------------
Clifford J. Bottoms has resigned as the chief financial officer
and as a director of the Company effective March 14, 2003.
Mr. Bottoms has left the Company to pursue other interests.
Mario Hernandez, controller, will be the principal financial
officer of the Company and head of the finance department.
Mr. Gary Owens and Mr. Michael Walsh have also resigned from the
Company's board of directors due to time limitations.
CCC GlobalCom Corporation is an Integrated Communications
Provider headquartered in Houston. The Company offers a full
range of communications services to commercial and residential
customers while providing a single point of contact through
bundled billing services. CCC GlobalCom Corporation provides
local, long distance, high-speed data, Internet, paging and
other enhanced communications services in the United States. In
addition, CCC GlobalCom Corporation has franchise operations in
Colombia - South America. CCC GlobalCom Corporation actively
seeks opportunities to acquire existing telecommunication
service providers, customer bases and major telecommunication
switching equipment to be deployed in its target markets.
CCC GlobalCom Corporation -- whose Sept. 30, 2002 balance sheet
shows a working capital deficit of about $31 million, and a
total shareholders' equity deficit of about $27 million -- is
actively seeking opportunities to acquire existing
telecommunication service providers, customer bases and major
telecommunication switching equipment to be deployed in its
target markets.
CONCURRENT COMPUTER: Pursuing Funding & Strategic Alternatives
--------------------------------------------------------------
Concurrent Computer Corporation (NASDAQ: CCUR), a pioneer and
market leader in commercial Video-On-Demand (VOD) deployments
and premier provider of high-performance, real-time computer
solutions for commercial and government markets, will host a
conference call at 11 a.m. EST to provide updated details about
the status of its business and its current expectations for the
fiscal third quarter ending March 31, 2003.
For the Company's fiscal third-quarter ending March 31, 2003 the
company expects total revenues to be between $16.5 and $18.5
million. VOD revenue is expected to be between $7.5 and $9.5
million and Real-Time revenue is expected to be approximately
$9.0 million.
The primary reasons surrounding the lower VOD revenue
expectations relate to order timing issues among a relatively
small cable customer base, continued concern by select customers
regarding capital spending, ongoing integration and
implementation issues which have temporarily slowed the pace of
certain rollouts, further delays in international opportunities,
and new competitive pricing pressures in the market.
Concurrent's competitive position remains strong, as indicated
by the fact that no VOD market deployment that Concurrent had
expected to win has been lost to a competitor during the
quarter. Due to competitive pricing pressures and the service
costs being spread over a smaller product revenue base, the VOD
gross margin percentage is expected to be in the low 40's in the
third quarter.
For the Company's fiscal third-quarter ending March 31, 2003,
the company expects its loss per share to be between 5 and 6
cents, excluding any possible impact of a further write-down of
the Company's investment in Thirdspace. Concurrent is actively
involved with Thirdspace as they continue to pursue additional
funding and strategic alternatives. The Company's initial equity
investment of $7.3 million was written down to $4.4 million in
the second quarter ended December 31, 2002. Although
Concurrent's $6 million loan to Thirdspace is secured by all of
the assets of Thirdspace, there can be no assurance that these
assets will be sufficient to repay the debt owed to Concurrent
in the event of possible insolvency. The ultimate future of
Thirdspace is unclear at this time and it is likely that
Concurrent will be required to write-down most, if not all, of
its equity investment in the third quarter. Concurrent also may
be required to write-down the notes receivable from Thirdspace
in the quarter. A further write-down of the equity investment in
Thirdspace to zero would add 7 cents to the net loss per share
and a complete write-down of the note receivable from Thirdspace
would add another 10 cents to the net loss per share, if
required, or an aggregate of an additional 17 cents per share.
Concurrent Computer Corporation -- http://www.ccur.com-- is a
worldwide leader in high-performance computer systems, software
and servers. Concurrent's XSTREME Division is a worldwide market
leader in providing digital VOD systems to the broadband
industry. This market includes broadband VOD and rich streaming
media applications such as corporate training, education,
hospitality and digital video-to-the-home. Concurrent is also a
leading provider of high-performance, real-time computer
systems, solutions, and software that focus on hardware-in-the-
loop and man-in-the-loop simulation, data acquisition, and
industrial control systems for commercial and government
markets. Concurrent has 35 years of experience and is providing
these best of breed solutions through its offices in North
America, Europe, Asia, and Australia.
Concurrent is a leader in the VOD market, serving eight major
cable operators in 52 markets with over 3.5 million digital
subscribers. Concurrent's proven technology provides one of the
most flexible, comprehensive solutions for HFC, DSL, and IP-
based networks. The Company's powerful and scalable VOD systems
are based on open standards and are integrated with the leading
broadband technologies.
CONGOLEUM CORP: Seeks Bondholders' Consent to Amend Indenture
-------------------------------------------------------------
Congoleum Corporation (AMEX:CGM) announced that as part of its
strategy to resolve its asbestos liabilities, it is seeking
bondholders' approval of certain amendments to the indenture
governing its 8-5/8% Senior Notes due 2008. These amendments are
intended to expressly give Congoleum greater flexibility to
proceed with certain steps and transactions in connection with
its asbestos settlement negotiations. Upon successful completion
of these negotiations, Congoleum intends to file a prepackaged
plan of reorganization under Chapter 11 of the Bankruptcy Code
which would incorporate the asbestos settlement and leave its
bondholders, trade creditors, and other non-asbestos related
claim creditors unimpaired.
Adoption of the proposed amendments to the indenture requires
the consent of holders representing a majority of the aggregate
principal amount of the outstanding notes as of the record date.
Holders of such a majority have already provided Congoleum with
written confirmation that they intend to consent to the proposed
amendments.
Roger S. Marcus, Chairman of the Board, commented, "Our
negotiations with claimants' counsel have progressed to the
point where we believe we should be able to reach agreement. We
have reviewed our goals and strategy with our largest
bondholders under confidentiality agreements and they have given
us their support and encouragement. This solicitation provides
for the formalization of that support and positions us to
finalize a settlement agreement with the claimants' counsel once
the remaining economic and other aspects of our negotiations are
concluded, which I am optimistic could occur shortly."
The solicitation is being made upon the terms and is subject to
the conditions set forth in the Consent Solicitation Statement
dated March 17, 2003, and related documents. Copies of those
documents can be obtained by contacting The Altman Group, Inc.,
the consent agent for the consent solicitation, at
(212) 681-9600. The expiration date for the consent solicitation
is 3:00 p.m., New York City time, on Thursday, March 27, 2003,
unless extended by Congoleum.
Congoleum Corporation is a leading manufacturer of resilient
flooring, serving both residential and commercial markets. Its
sheet, tile and plank products are available in a wide variety
of designs and colors, and are used in remodeling, manufactured
housing, new construction and commercial applications. The
Congoleum brand name is recognized and trusted by consumers as
representing a company that has been supplying attractive and
durable flooring products for over a century.
CONSECO FINANCE: S&P Drops Ratings on 4 Related Deals to D
----------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings to 'D' on
four classes from various Conseco Finance Corp-related series
issued by Home Improvement & Home Equity Loan Trust, Home
Improvement Loan Trust 1996-E, and Home Equity Loan Trust
1997-B.
Conseco Finance Corp., did not make any payments under the
limited guarantee on the March 17, 2003 distribution date,
resulting in a principal distribution shortfall on series 1996-
E, and interest shortfalls on the remaining three classes in the
list below.
The ratings on the certificates were lowered to 'CCC-' from
'CCC+' on Sept. 12, 2002, as a result of an analysis that
determined that the monthly excess spread alone might not be
sufficient to offset the weakening credit quality of the
guarantor, Conseco Finance Corp. Each of the four certificates
has credit support from a limited guarantee provided by Conseco
Finance Corp. and from monthly excess spread.
RATINGS LOWERED
Home Improvement & Home Equity Loan Trust
Rating
Series Class To From
1996-D HE:B-2 D CCC-
1997-A HE:B-2 D CCC-
Home Improvement Loan Trust
Rating
Series Class To From
1996-E (single class) D CCC-
Home Equity Loan Trust
Rating
Series Class To From
1997-B B-2 D CCC-
CONSECO INC: Judge Doyle Approves Disclosure Statement
------------------------------------------------------
Conseco, Inc., (OTCBB:CNCEQ) received Bankruptcy Court approval
of its Disclosure Statement for its Plan of Reorganization.
The approval of the Disclosure Statement allows Conseco to
commence soliciting votes for confirmation of its Plan of
Reorganization. The Disclosure Statement and ballots to vote on
the plan are expected to be mailed shortly. The voting record
date is March 19, 2003 and the deadline for returning the
completed ballots is May 14, 2003. The hearing to consider
confirmation of the Plan is scheduled to begin on May 28, 2003.
"We are very pleased that the Court has approved the adequacy of
our Disclosure Statement," said William J. Shea, president and
chief executive officer. "With the continued support of our
banks and bondholders and the Official Committee of Unsecured
Creditors, we continue to make considerable progress in our
efforts to reorganize our capital structure and our businesses."
Upon emergence from Chapter 11, Conseco, Inc., will be engaged
exclusively in the insurance business.
The full texts of the Second Amended Joint Plan of
Reorganization and Second Amended Disclosure Statement are
available at http://www.bmccorp.net/consecoand will soon be
available at the SEC's Web site at http://www.sec.gov The
Disclosure Statement and Plan do not govern the Chapter 11
petitions filed by Conseco Finance Corp., or its subsidiaries.
CONSECO INC: Asks Court to Extend Removal Period to September 11
----------------------------------------------------------------
James H.M. Sprayregen, Esq., at Kirkland & Ellis, relates that
Conseco Inc., and its debtor-affiliates are defendants in
numerous lawsuits in various state and federal courts for a
large number of different claims. Many actions were filed prior
to the Petition Date. Since then, a number of additional
actions have been filed and are continuing to be filed. The
Debtors have not had a full opportunity to investigate their
involvement in the Actions.
The Debtors assert that it is both prudent and necessary to seek
an extension of time to protect their right to remove Actions
that are discovered through the Debtors' investigation and the
claims review process.
Rule 9006(b) of the Federal Rules of Bankruptcy Procedure allows
the Court to further enlarge the unexpired time periods:
"When an act is required or allowed to be done at or
within a specified period by these rules or by a notice
given thereunder or by order of court, the court for
cause shown may at any time in its discretion . . . with
or without motion or notice order the period enlarged if
the request therefore is made before the expiration of
the period originally prescribed or as extended by a
previous order."
Accordingly, the Debtors ask the Court to extend the deadline to
remove actions until September 11, 2003.
Judge Doyle enters a bridge order extending the removal period
to March 31, 2003. (Conseco Bankruptcy News, Issue No. 12;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
DebtTraders reports that Conseco Inc.'s 10.750% bonds due 2008
(CNC08USR1) are trading at about 13 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CNC08USR1for
real-time bond pricing.
DEAN FOODS: Makes $100MM Partial Redemption of 5-1/2% Preferreds
----------------------------------------------------------------
Dean Foods Company (NYSE: DF) announced that its wholly-owned
subsidiary, Dean Capital Trust, will partially redeem its 5-1/2%
Trust Issued Preferred Equity Securities. TIPES with an
aggregate liquidation amount of $100 million will be redeemed on
April 17, 2003 at a redemption price of $51.0315 per security.
The TIPES to be redeemed will be selected by lot pursuant to the
terms of the related indenture.
Holders of TIPES that are selected for redemption will have
until 4:00 P.M. EST on April 16, 2003 to convert their preferred
securities into shares of Dean Foods common stock instead of
receiving the $51.0315 redemption price. TIPES submitted for
conversion will be exchanged for 1.278 shares of Dean Foods
common stock for each TIPES security. Fractional shares will be
paid in cash.
The company will fund cash redemptions using cash flow from
operations and borrowings under the company's senior credit
facility. Any shares of common stock that Dean Foods Company may
issue as a result of conversions of TIPES are already reflected
in the company's reported diluted share calculation for purposes
of determining diluted earnings per share, as required by
generally accepted accounting principles.
Approximately $500 million of TIPES will remain outstanding
following the completion of this partial redemption.
Dean Foods Company is one of the nation's leading food and
beverage companies. The company produces a full line of company-
branded and private label dairy and dairy-related products such
as milk and milk-based beverages, ice cream, coffee creamers,
half and half, whipping cream, whipped toppings, sour cream,
cottage cheese, yogurt, dips, dressings and soy milk. The
company is also a leading supplier of pickles and other
specialty food products, juice, juice drinks and water. The
company operates over 120 plants in 38 U.S. states and Spain,
and employs approximately 28,000 people.
* * *
As previously reported, Fitch Ratings initiated coverage of the
New Dean Foods Company assigning a 'BB+' secured credit facility
rating and 'B-' trust convertible preferred securities rating.
Fitch's rating of the senior unsecured notes that were
outstanding prior to Suiza Foods Corporation (Suiza)
acquisition, and on Rating Watch Negative have been downgraded
to 'BB-' from 'BBB+'. Fitch has also withdrawn the Old Dean
Foods commercial paper rating of 'F2', which was also on Rating
Watch Negative.
DEVON MOBILE: Seeking Buyers for Wireless Assets in Three States
----------------------------------------------------------------
Devon Mobile Communications, L.P., operating as debtor-in-
possession under chapter 11 of the U.S. Bankruptcy Code, is
seeking buyers for its remaining 22 wireless markets in
Pennsylvania, New York and New England. These markets cover
territories that comprise a total population of approximately
7.1 million. Devon Mobile has invested over $115 million in
property, plant and equipment to build out its wireless networks
in these markets.
Pennsylvania Markets
Devon Mobile has elected to immediately initiate a private sale
process for its nine contiguous Pennsylvania wireless markets.
Devon Mobile had originally planned to auction these markets,
including 10 MHz in Pittsburgh, on March 12, 2003. Although
multiple bids were received, none conformed to the requirements
in the bid procedures approved by the Bankruptcy Court on
February 21, 2003.
The markets cover territories that comprise a total population
of approximately 3.5 million and are as follows:
BTA Market MHz
350 Pittsburgh, PA 10
131 Erie, PA 10
429 State College, PA 10
117 Du Bois-Clearfield, PA 15
416 Sharon, PA 15
328 Oil City-Franklin, PA 15
317 New Castle, PA 15
287 Meadville, PA 15
203 Indiana, PA 15
Interested parties should contact Jeffrey R. Manning of Devon
Mobile's financial advisor Legg Mason Wood Walker, Incorporated
at (410) 454-5395.
New York and New England Markets
Devon Mobile also filed a procedures motion with the Bankruptcy
Court on March 7, 2003 for an order authorizing it to conduct an
auction for its five contiguous wireless markets in New York and
eight contiguous wireless markets in New England on April 10,
2003. These markets cover territories that comprise a total
population of approximately 3.6 million and are as follows: BTA
Market MHz, 60 Buffalo-Niagara Falls, NY 10 127 Elmira-Corning-
Hornell, NY 10 330 Olean, NY-Bradford, PA 10 215 Jamestown, NY-
Warren, PA 10 208 Ithaca, NY 10, 63 Burlington, VT 10
30 Bangor, ME 10 251 Lewiston-Auburn, ME 10 249 Lebanon-
Claremont, NH 10 465 Waterville-Augusta, ME 15 227 Keene, NH-
Brattleboro, VT 10 388 Rutland-Bennington, VT 10 363 Presque
Isle, ME 20
A hearing with respect to the procedures motion is scheduled to
occur on March 20, 2003. If approved, the auction of the New
York and New England markets will take place at 10:00 a.m. in
the offices of Devon Mobile's bankruptcy counsel, Brown Raysman
Millstein Felder & Steiner in New York City. Bid procedures may
be obtained from Brown Raysman - Attention: Gerard S.
Catalanello, (212) 895-2635 or Legg Mason - Attention: Steven R.
Soraparu, (410) 454-5104. Qualifying bids are due by 5:00 p.m.
April 4, 2003.
"We have set the stage for interested parties to acquire
attractive licenses and network assets in the Northeastern
U.S.", said Lisa-Gaye Shearing Mead, president of Devon G.P.,
Inc.
Devon Mobile was established in 1995. Devon GP owns 50.1% of the
partnership interests and Adelphia Communications Corporation
owns 49.9%. Together with its direct debtor and non-debtor
subsidiaries, Devon Mobile is a personal communications service
company with PCS networks and/or licenses in six states: Maine,
New Hampshire, western New York, western Pennsylvania, Vermont
and western Virginia. Devon Mobile and its subsidiaries hold 31
Federal Communications Commission licenses that permit them to
build, operate and maintain PCS networks in certain areas of
those states. The license areas comprise a total population of
approximately 8.8 million.
Legg Mason Wood Walker, Incorporated is a wholly-owned
subsidiary of Legg Mason, Inc. (NYSE: LM), a Baltimore, MD-based
holding company that provides asset management, securities
brokerage, investment banking, and related financial services
through its subsidiaries.
DIRECTV LATIN AMERICA: Files Chapter 11 Petition in Wilmington
--------------------------------------------------------------
DIRECTV Latin America, LLC, in order to aggressively address the
Company's financial and operational challenges, filed a
voluntary petition for reorganization under Chapter 11 of the
U.S. Bankruptcy Code yesterday morning in Wilmington. The
filing applies only to DIRECTV Latin America, LLC, a U.S.
company, and does not include any of its operating companies in
Latin America and the Caribbean, which will continue regular
operations.
DIRECTV(TM) is the leading pay television service in Latin
America and the Caribbean with approximately 1.6 million
subscribers in 28 countries. DIRECTV Latin America, LLC intends
to continue providing its DIRECTV service as normal without
interruption across Latin America and the Caribbean.
"The commitment by DIRECTV Latin America, LLC to provide its
customers with the best service and widest array of
entertainment options has not changed," said Michael A. Feder,
chief restructuring officer, DIRECTV Latin America, LLC. "The
action we have taken today in the U.S. is intended to strengthen
DIRECTV Latin America and allow us to continue to selectively
add new subscribers on a profitable basis and further enhance
our product offerings for the benefit of our customers."
DIRECTV Latin America, LLC is a Delaware limited liability
company owned by DIRECTV Latin America Holdings, a subsidiary of
Hughes Electronics Corporation (HUGHES); Darlene Investments
LLC, an affiliate of the Cisneros Group of Companies; and Grupo
Clarin. Today's filing was made in the U.S. Bankruptcy Court in
Wilmington, Delaware.
HUGHES has agreed to provide DIRECTV Latin America with a $300
million senior secured debtor-in-possession financing facility
(subject to Bankruptcy Court approval) to supplement its
existing cash flow and help ensure that vendors, programmers and
other business associates receive payment for services incurred
after the bankruptcy filing was made.
In early January 2003, DIRECTV Latin America, LLC announced it
had initiated negotiations with certain programmers, suppliers
and business associates in an effort to resolve issues that have
affected the financial performance of the Company in recent
years, including excessive fixed costs and a substantial debt
burden during a time of economic deterioration throughout Latin
America. The Company's decision to voluntarily file for Chapter
11 followed its determination that these negotiations would not
achieve a satisfactory long-term outcome for DIRECTV Latin
America, LLC.
Feder said, "We appreciate the efforts by all involved in the
discussions regarding a potential out-of-court restructuring.
However, we have concluded that a Chapter 11 filing is a
necessary and appropriate means of addressing the Company's
current financial and operating challenges. We expect this
process will enable us to significantly reduce our fixed costs
by restructuring or rejecting contracts that are not in line
with the current economic realities of the marketplace or that
do not provide for programmers and suppliers to appropriately
share the risks of exchange rate fluctuation and currency
devaluation. The process should also allow us to simplify
certain contractual issues and significantly reduce our long-
term debt."
Feder continued, "Because we have already identified the issues
that need to be addressed, we are prepared to move forward
quickly and complete the restructuring process as soon as we are
able."
Concurrent with today's announcement, it was announced that
Kevin N. McGrath has retired as chairman of DIRECTV Latin
America, LLC, and Larry N. Chapman has been named president and
chief operating officer of the Company, effective immediately.
DIRECTV Latin America, LLC previously retained AP Services, LLC,
an affiliate of AlixPartners, LLC as restructuring advisors and
appointed Feder, a principal of the firm, as chief restructuring
officer. Feder will continue to oversee the restructuring
efforts during the bankruptcy process, reporting to Chapman.
In conjunction with the Chapter 11 filing, DIRECTV Latin
America, LLC filed "First Day Motions" to support its employees
and vendors. These filings include requests to continue employee
payroll and benefits as usual; to obtain interim approval of the
DIP financing from HUGHES and maintain existing cash management
programs; and to retain legal and financial professionals to
assist with the Company's restructuring. In addition, the
Company intends to file motions today seeking to reject certain
executory agreements that it has determined to be uneconomic and
not in its best long-term interest. These include contracts
pertaining to Disney Channel Latin America, MUSIC CHOICE and
certain exclusive rights to broadcast the 2006 FIFA World
Cup(TM) soccer tournament.
DIRECTV Latin America, LLC will continue normal business
operations in its markets across Latin America and the
Caribbean.
"We will continue to pursue opportunities to add new programming
and services that further enhance the DIRECTV experience for our
customers," Feder said.
About DIRECTV Latin America
DIRECTV is the leading direct-to-home satellite television
service in Latin America and the Caribbean. Currently, the
service reaches approximately 1.6 million customers in the
region, in a total of 28 markets. DIRECTV is currently available
in: Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, El
Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Puerto
Rico, Trinidad & Tobago, Uruguay, Venezuela and several
Caribbean island nations.
DIRECTV Latin America, LLC is a multinational company owned by
DIRECTV Latin America Holdings, a subsidiary of Hughes
Electronics Corporation; Darlene Investments, LLC, an affiliate
of the Cisneros Group of Companies; and Grupo Clarin. DIRECTV
Latin America has offices in Buenos Aires, Argentina; Sao Paulo,
Brazil; Cali, Colombia; Mexico City, Mexico; Carolina, Puerto
Rico; Fort Lauderdale, USA; and Caracas, Venezuela. For more
information on DIRECTV Latin America please visit
http://www.directvla.com
Hughes Electronics Corporation, a unit of General Motors
Corporation, is a world-leading provider of digital television
entertainment, broadband satellite networks and services, and
global video and data broadcasting. The earnings of HUGHES are
used to calculate the earnings attributable to the General
Motors Class H common stock (NYSE: GMH).
DIRECTV LATIN AMERICA: Case Summary & 20 Largest Creditors
----------------------------------------------------------
Debtor: DirecTV Latin America, LLC
2400 E. Commercial Blvd.
Fort Lauderdale, Florida 33308
Telephone (954) 958-3200
http://www.directvla.com
Bankruptcy
Case Number: 03-10805 (PJW)
Chapter 11
Petition Date: March 18, 2003
Bankruptcy Court:
United States Bankruptcy Court
District of Delaware
824 Market Street, 5th Floor
Wilmington, DE 19801
(302) 252-2900
Bankruptcy Judge: The Honorable Peter J. Walsh
Debtors'
Lead
Bankruptcy
Counsel: Lawrence K. Snider, Esq.
Stuart M. Rozen, Esq.
Alex P. Montz, Esq.
Sean T. Scott, Esq.
Mayer, Brown, Rowe & Maw
190 N. LaSalle Street
Chicago, Illinois 60603
Telephone (312) 782-0600
Fax (312) 701-7711
Debtors'
Local
Bankruptcy
Counsel: Joel A. Waite, Esq.
M. Blake Cleary, Esq.
Young, Conaway, Stargatt & Taylor, LLP
The Brandywine Building
1000 West Street
P.O. Box 391
Wilmington, Delaware 19899-0391
Telephone (302) 571-6600
Fax (302) 571-1253
Debtors'
Restructuring
Advisor: AP Services, LLC
(an AlixPartners affiliate)
Claims Agent: Ron Jacobs
Bankruptcy Services LLC
Heron Tower
70 East 55th Street, 6th Floor
New York, New York 10022
Telephone (212) 376-8902
U.S. Trustee: Frank J. Perch, III, Esq.
Office of the U.S. Trustee
844 King Street, Suite 2313
Lockbox 35
Wilmington, DE 19801
Telephone (302) 573-6491
Fax (302) 573-6497
Estimated Total Assets (as of Dec. 31, 2002): $600,000,000
Estimated Total Debts (as of Dec. 31, 2002): $1,600,000,000
DIRECTV Latin America's 20-Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Hughes Loan and $1,367,433,742
Attn: Dave Baker Miscellaneous
200 N. Sepulveda Blvd. Debt
El Segundo, CA 90245
California Broadcast Center Trade Debt $32,127,494
Attn: Sandra Terry
Building A03 - M/S 3000
3800 Via Oro Avenue
Long Beach, CA 90810
Buena Vista (Disney) Trade Debt $25,082,664
Walt Disney Television
(Latin America)
Attn: Luis Perez
Two Alhambra Tower, 9th Flr.
Coral Gables, FL 33134
HBO Trade Debt $12,632,846
HBO Latin America Media
Services, Inc.
One Alhambra Plaza, Penthouse
Coral Gables, FL 33134
LAPTV Atlanta Partners Trade Debt $5,651,289
Attn: Genaro Rionda
3845 Pleasantdale Road
Atlanta, GA 30340
Kirschsports Trade Debt $4,932,000
Grafenauweg 2
P.O. Box 4442
6304 Zug SWITZERLAND
Music Choice Trade Debt $3,642,709
Attn: Bob Ellis
300 Welsh Road, Building 1
Horsham, PA 19044
AOL Trade Debt $3,132,825
Attn: Juan Carlos Urdaneta
101 Amrietta Street
Atlanta, GA 30303
Viacom -- MTV Trade Debt $2,556,208
Attn: Antionette Zel
1111 Lincoln Road, 6th Floor
Miami Beach, FL 33139
Vivendi -- USA Trade Debt $2,301,809
Attn: Eric Denis
804 Douglas Road, Suite 700
Coral Gables, FL 33134
MGM Trade Debt $2,263,301
Attn: Mel Vin Perz
Suite 1320
2800 Ponce de Leon Blvd.
Coral Gables, FL 33134
Discovery Trade Debt $1,751,625
Attn: Enrique Martinez
Suite 190
6505 Blue Lagoon Drive
Miami, FL 33126
SONY Trade Debt $1,648,615
Attn: Michael Grindon
10202 West Washington Blvd.
Culver City, CA 09232
ESPN (Disney) Trade Debt $1,515,314
Attn: Russell Wolff
605 Third Avenue
New York, NY 10158
Troy Limited (Claxson) Trade Debt $1,451,637
Attn: Ralph Haiek
404 Washington Ave., 8th Flr.
Miami Beach, FL 33139
Corporacion Venezolana Trade Debt $1,368,504
de Television (Claxson)
550 Biltmore Way, Suite 1180
Coral Gables, FL 33134
Hallmark Trade Debt $966,412
Attn: Eduardo Vera
95 Merrick Way, Suite 460
Coral Gables, FL 33194
Weather Channel Trade Debt $856,994
Attn: Eddie Ruiz
Suite 101
8200 N.W. 52nd Terrace
Miami, FL 33166
Open TV, Inc. Trade Debt $703,250
Attn: Accounts Receivable
401 East Middlefield Road
Mountain View, CA 94043
BBC Worldwide Trade Debt $616,715
Attn: Simon Cottle
Room C306 BBC Woodlands
80 Woodlne
London W12 OTT UNITED KINGDOM
EL PASO CORP: Closes $138-Million San Juan Basin Rosa Asset Sale
----------------------------------------------------------------
El Paso Corporation (NYSE: EP) has closed the sale of its
interest in the San Juan Basin Rosa production properties to the
Sacramento Municipal Utility District for $138 million.
El Paso also announced the retirement of $1 billion of notes
associated with the Limestone Electron Trust financings. The
notes were retired on schedule using cash on hand. El Paso has
recently generated significant cash from asset sales and from
its recently closed $1.2 billion secured loan financing. A
portion of the secured loan proceeds were used to repay the $825
million Trinity River financing on March 13, 2003.
These successful transactions further demonstrate the
significant progress that El Paso has made in executing its
five-point business plan, which includes exiting non-core
businesses quickly but prudently as well as strengthening and
simplifying the balance sheet while maximizing liquidity.
El Paso Corporation is the leading provider of natural gas
services and the largest pipeline company in North America. The
company has core businesses in production, pipelines, midstream
services, and power. El Paso Corporation, rich in assets and
fully integrated across the natural gas value chain, is
committed to developing new supplies and technologies to deliver
energy. For more information, visit http://www.elpaso.com
* * *
As reported in Troubled Company Reporter's February 11, 2003
edition, Standard & Poor's lowered its long-term corporate
credit rating on energy company El Paso Corp., and its
subsidiaries to 'B+' from 'BB'.
Standard & Poor's also lowered its senior unsecured debt rating
at the pipeline operating companies to 'B+' from 'BB' and the
senior unsecured rating on El Paso to 'B' from 'BB-', reflecting
structural subordination relative to the operating companies.
All ratings on El Paso and its subsidiaries were removed from
CreditWatch, where they were placed Sept. 23, 2002. The outlook
is negative.
El Paso Corporation's 7.000% bonds due 2011 are currently
trading at about 72 cents-on-the-dollar.
ENRON CORP: Mr. Russo Earns Nod to Hire Gardere Wynne as Counsel
----------------------------------------------------------------
Pursuant to Sections 105(a), 327(e) and 363(b)(1) of the
Bankruptcy Code and the March 29 Order, Judge Gonzalez
authorizes Enron Corporation and its debtor-affiliates to retain
and compensate Gardere Wynne Sewell LLP as Gavin J. Russo's
counsel, nunc pro tunc to July 1, 2002, as long as Mr. Russo is
only a witness in connection with the Investigation. (Enron
Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
DebtTraders reports that Enron Corp.'s 9.875% bonds due 2003
(ENRN03USR3) are trading at about 15 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR3
for real-time bond pricing.
EXIDE TECHNOLOGIES: Judge Carey Fixes April 23 General Bar Date
---------------------------------------------------------------
Judge Carey sets April 23, 2003 at 4:00 p.m. Eastern Time as the
last day to file proofs of claim against Exide Technologies
Debtors' estates.
The Debtors will serve, on all known entities holding potential
general claims, notice of the General Bar Date and a proof of
claim form, substantially in the form of Official Form No. 10.
Entities that should file claims on or before the General Bar
Date are:
A. any entity whose prepetition General Claim against a Debtor
is not listed in the applicable Debtor's Schedules, Amended
Schedules or is listed as contingent, disputed or
unliquidated and that the entity wants to participate in
the Debtors' Chapter 11 case or share in any distribution
in these cases;
B. any entity that believes its prepetition General Claim
against a Debtor is improperly classified in the Debtors'
Schedules, Amended Schedules or is listed in an incorrect
amount and wants to have its General Claim allowed in a
classification or amount that is different than that shown
in the Debtors' Schedules or Amended Schedules; and
C. any entity claiming damages as a result of contract
rejection.
These entities need not file proofs of claim by the General Bar
Date:
A. any entity that has already properly filed a proof of claim
against one or more of the Debtors;
B. any entity whose claim against a Debtor is not listed as
contingent, unliquidated or disputed in the Debtors'
schedules, and that agrees with the nature, classification
and amount of its claim as identified in the schedules;
C. any entity whose claim against a Debtor has previously been
allowed by, or paid pursuant to an order of the Court;
D. any of the Debtors, including any of the Debtors that hold
claims against one or more of the Debtors;
E. any entity whose claim is limited exclusively to a claim
for repayment by the applicable Debtor of principal,
interest or any claim based on an equity interest;
F. any entity whose claim against any of the Debtors is
limited to an administrative expense of these Chapter 11
cases under Section 503(b) of the Bankruptcy Code;
G. any person or entity, other than an indenture trustee,
seeking to assert a claim for principal and interest due on
a bond issued by the Debtors; provided, however, that any
bondholder holding any other type of claim, or alleging
damages or asserting causes of action based on or arising
from a bond, must file a proof of claim by the General Bar
Date; and
H. any person or entity seeking to assert a claim arising out
of the Amended and Restated Credit and Guarantee Agreement
dated September 29, 2000, among the Debtors, the
Prepetition Agent, the Lenders, and others.
Pursuant to Rule 3003(c)(2) of the Federal Rules of Bankruptcy
Procedures, any entity that fails to file a proof of claim by
the General Bar Date on account of a General Claim will be
forever barred, estopped and enjoined from:
A. asserting any General Claim against any of the Debtors:
-- that exceeds the amount that is identified in the
Schedules or Amended Schedules on behalf of the entity
as undisputed, non-contingent and unliquidated; or
-- that is of a different nature or a different
classification than any General Claim identified in the
Schedules or Amended Schedules on behalf of this entity;
or
B. voting on, or receiving distributions under, any plan or
plans of reorganization in these Chapter 11 cases in
respect of an Unscheduled Claim, notwithstanding that this
entity may later discover facts in addition to, or
different from, those which that entity knows or believes
to be true as of the General Bar Date, and without regard
to the subsequent discovery or existence of these different
or additional facts.
The primary component of the proposed notice program is direct
mailed notice. The Debtors, through their noticing agent,
will serve on all entities known to hold prepetition General
Claims:
-- a notice of the General Bar Date; and
-- a proof of claim. (Exide Bankruptcy News, Issue No. 19;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
Exide Technologies' 10.000% bonds due 2005 (EXDT05FRR1) are
trading at about 15 cents-on-the-dollar, DebtTraders says. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=EXDT05FRR1
for real-time bond pricing.
EXIDE TECHNOLOGIES: Signs New Supply Agreement With Volvo Trucks
----------------------------------------------------------------
Exide Technologies (OTC Bulletin Board: EXDTQ) --
http://www.exide.com-- a global leader in stored electrical-
energy solutions, has signed a new three-year exclusive supply
agreement with Volvo Trucks North America.
VTNA is a division of Volvo Truck Corporation, one of the
leading heavy truck and engine manufacturers in the world.
Volvo Trucks manufactures a broad line of Class 8 and specialty
trucks and tractors -- both on highway and vocational -- under
the Volvo and Mack brands. VTNA has a strong dealer network as
well as industry-leading parts and service programs that support
owners of its new or used vehicles.
The new agreement expands the existing Exide Technologies
aftermarket product offerings from the Mack Truck dealer network
to include new Volvo branded batteries for Volvo Truck dealers.
Exide, now the exclusive supplier of the Mack Bulldog and Volvo
branded batteries, also will supply its proprietary brands to
the extensive VTNA network of Mack and Volvo dealers located
throughout North America.
"I was extremely pleased with willingness of Exide to work with
us and be creative in their ideas," said Jay Fuggiti, Vice
President of Purchasing for Volvo Parts North America. "The
professionalism of the parties involved was admirable and has
resulted in an agreement which will prove beneficial to both
of our organizations."
Through Mack Trucks, which was acquired by Volvo in December
2000, Volvo and Exide Technologies have had a relationship since
the 1970s.
"By combining innovative programming with maintaining the
highest levels of quality and service, we will help VTNA achieve
significant growth with its customers," said Craig H.
Muhlhauser, Chairman and CEO of Exide Technologies. "We
sincerely appreciate the continued support of Volvo Trucks North
America."
Exide Technologies, with operations in 89 countries and fiscal
2002 net sales of approximately $2.4 billion, is one of the
world's largest producers and recyclers of lead-acid batteries.
The company's three global business groups - transportation,
motive power and network power -- provide a comprehensive range
of stored electrical energy products and services for industrial
and transportation applications.
Transportation markets include original-equipment and
aftermarket automotive, heavy-duty truck, agricultural and
marine applications, and new technologies for hybrid vehicles
and 42-volt automotive applications.
Industrial markets include network power applications such as
telecommunications systems, fuel-cell load leveling, electric
utilities, railroads, photovoltaic (solar-power related) and
uninterruptible power supply, and motive-power applications
including lift trucks, mining and other commercial vehicles.
Further information about Exide, its financial results and other
information is available at http://www.exide.com
FAIRPOINT COMMS: S&P Rates $219 Mill. Secured Bank Loan at BB-
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' rating to
incumbent rural local exchange carrier FairPoint Communications
Inc.'s $219 million secured bank credit facility that matures in
2007.
Standard & Poor's also affirmed its 'B+' corporate credit rating
on the company and revised the outlook to stable from negative.
Charlotte, North Carolina-based FairPoint had total RLEC debt of
about $790 million at the end of 2002.
"The outlook revision is based on improvement in FairPoint's
liquidity resulting from less restrictive covenants under its
new bank agreement and refinancing of maturing bank debt with
proceeds from the recent issuance of $225 million in senior
notes due in 2010," Standard & Poor's credit analyst Michael
Tsao said.
"The previous bank loan was rated at the same level as the
corporate credit rating due to its substantially larger size.
The much smaller current bank facility is rated one notch above
the corporate credit rating because, based on a conservative
discounted cash flow analysis, Standard & Poor's estimates that
the value of the company's approximately 243,000 access lines
would provide for strong likelihood of full recovery of
principal in the event of default or bankruptcy on a fully drawn
basis," Mr. Tsao added.
The $219 million facility, which is comprised of a $30 million
Term Loan A, a revolving credit facility of $60 million, and
about $129 million outstanding under an existing Term Loan C,
supersedes a prior bank loan commitment of about $440 million.
The new facility is guaranteed by intermediate subsidiaries that
are above various RLEC operating companies and is collateralized
by the capital stocks of these same subsidiaries. The
intermediate subsidiaries and operating companies are generally
not permitted to directly incur debt and liens. In addition,
there are no restrictions against the upstreaming of cash from
the operating companies to service debt at the parent level.
FLOW INTERNATIONAL: Defaults on Financial Loan Covenants
--------------------------------------------------------
Flow International Corporation (Nasdaq: FLOW), the world's
leading developer and manufacturer of ultrahigh-pressure
waterjet technology equipment used for cutting, cleaning
(surface preparation) and food safety applications, reported
preliminary results for its third fiscal quarter ended
January 31, 2003. On a consolidated basis, FLOW reported fiscal
third quarter preliminary revenues of $28.9 million and a
preliminary net loss of $42.3 million, which includes $32.8
million in charges related to accounts receivable and inventory
reserves, goodwill impairment, allowances for deferred tax
assets and other adjustments. These adjustments were highly
influenced by the economic environment the company and its
customers face, and are further described in detail in the
"Comprehensive Financial Review" section below. This compares to
$41.5 million in revenue and a net loss of $505,000 in the
fiscal third quarter of 2002. Year to date, the company recorded
preliminary revenues of $113.6 million and a preliminary net
loss of $54.2 million, compared to $132.3 million in revenues
and net income of $291,000 for the same period of fiscal 2002.
The company is continuing to work with its independent
accountants to finalize these preliminary amounts. The company
intends to file a Form 12b-25 tomorrow, which extends the filing
date for the company's Form 10-Q until March 24, 2003.
The Flow Waterjet Systems segment reported preliminary third
quarter revenues of $30.5 million and a preliminary net loss of
$26.5 million or $1.64 per diluted share. The Avure Technologies
segment recorded preliminary negative revenues as a result of
the reversal of percentage of completion revenue previously
recognized on four food systems (for two customers) based on the
customers' failure to fulfill their purchase contract
obligations. Total revenue reversed in the quarter was $5.9
million and, as a result, Avure reported preliminary third
quarter revenues of negative $1.7 million and a preliminary net
loss of $15.8 million. Avure booked $3 million in new food
orders during the quarter, however revenue from these orders
will be recognized upon customer acceptance.
"Shortly after I became President and CEO in January, we began
an immediate and comprehensive review of our financial condition
and operations capabilities," commented Stephen R. Light, FLOW's
new President and CEO. "The focus of this analysis was to
identify and implement actions to reduce debt and return the
company to profitability. The recently announced two-year
restructuring program that will bring extensive operational
improvements to the company is an initial result of this effort.
This review continues. However, as a consequence of our third
quarter results, we are in default of all financial loan
covenants. As the company's current senior credit facility
expires September 2003, we are working closely with our Senior
Lenders to restore FLOW to a solid financial footing. I am
pleased to report that we have already begun jointly working on
a new long-term credit facility which is expected to be in place
effective April 30, 2003. The company also expects to work with
its Subordinated Lender to modify terms and covenants of the
existing agreement to be in compliance effective April 30, 2003.
"On the Avure side of FLOW," Light continued, "our General Press
business has been impacted by a worldwide slowdown in aerospace
and automotive demand, and we have experienced more than a 50%
decline in new orders and revenues. However, our food equipment
product line continues to make progress, with more than 62
ultrahigh-pressure food processing systems now in use around the
world, demonstrating the commercial viability of those products
in what is still an early stage emerging market. To realize the
value of our investment in food processing technology in the
near-term, we recently announced we have retained The Food
Partners, LLC, a well respected banking firm that specializes in
the food industry. TFP is preparing a detailed review of Avure
to help us develop and implement value maximizing strategic
alternatives."
Banking Update
As of January 31, 2003, the company was in default of its
financial loan covenants contained in its senior bank loan
agreement. The loan agreement -- data obtained from
http://www.LoanDataSource.comshows -- provides Flow
International with access to up to $73,000,000 of credit on a
revolving basis from:
Lender Commitment
------ ----------
Bank of America, N.A. $32,490,000
U.S. Bank National Association $21,840,000
KeyBank National Association $18,670,000
-----------
Total Revolving Commitment $73,000,000
BofA serves as the Agent for the lending syndicate. Avure
Technologies, Inc., Hydrodynamic Cutting Services, CIS
Acquisition Corporation, and Flow Waterjet Florida Corporation
guarantee Flow International's obligations to the Lenders.
Financial Covenants
In July 2002, the Company agreed to comply with four key
financial tests at January 31, 2003:
(1) maintain a Fixed Charge Coverage Ratio (Cash Flow
divided by Fixed Charges) of at least .80 to 1;
(2) maintain a Funded Debt Ratio of not more than
24.50 to 1;
(3) maintain a ratio of Debt to Tangible Net Worth of
not more than 2.75 to 1.
(4) maintain Senior Funded Debt Ratio (Senior Debt
divided by EBITDA) of not more than 16.50 to 1
Increased Security
The loan agreement, dated December 29, 2000, has been amended
eight (maybe more) times to date. An Eighth Amendment, dated
October 11, 2002, required the Company to provide the Lenders
with additional security, including bank control agreements,
subsidiary stock pledges and landlord consents.
Continued Availability
All debt outstanding to the Lenders has been classified as
current. To date, the Lenders have not exercised any of their
default rights. The company had $9.8 million of its $113 million
total credit facility available as of January 31, 2003.
Accelerated collections have increased this availability to
$17.3 million as of March 17, 2003.
The Company anticipates the Banks will continue to forebear
through April 30, 2003.
Restructuring and Operations
On February 19, 2003, the company announced a comprehensive two-
year restructuring plan designed to return the company to
profitability through consolidation of facilities and
operations, reductions in headcount, and closure or divestiture
of selected company business units. Approval and communication
of this plan occurred in February 2003. The restructuring
program will affect approximately half of the company's
locations, reducing total square footage occupied by nearly
fifty percent and headcount by more than one quarter.
Significant cost savings are also expected to be achieved by
standardizing designs and rationalizing production of shape
cutting machines across European, North American and Asian
markets. Annualized full year savings of approximately $20
million will improve cash flow to pay down debt as well as
restore profitability. The cash outlays related to the
restructuring program are expected to be incurred over an 18
month period and are estimated to be between $11 million and $13
million. Such amounts will be expensed by the company as
incurred. The company anticipates being able to fund
restructuring cash costs within its current credit facility,
provided the Senior Lenders do not restrict access to these
funds, as a result of the loan default.
Additional non-restructuring operational improvements are being
implemented across the company, including:
-- Extending the application of its successful process
improvement initiative, "FASTT," to all remaining
operating locations to reduce expenses.
-- Initiating an aggressive overdue accounts collection
effort.
-- Reducing the workforce at its Swedish manufacturing
location by 25 people.
-- Launching a company-wide inventory reduction program
aimed at increasing turnover by more than 50% within one
year.
In addition, the company entered into a 10-year lease with its
landlord on its existing Kent, Washington headquarters and
manufacturing facility which provides a monthly cost reduction
of approximately $30,000 with an option to vacate the building
at the end of five years.
Comprehensive Financial Review
During the quarter, the company recorded $32.8 million in write-
downs, impairments and other adjustments as outlined below:
-- The company reviewed the carrying values of assets that
are expected to be converted to cash in the short-term and has
adjusted the estimated recoverability of such assets, resulting
in a write-down of $7.8 million of accounts receivable,
inventories and customer demonstration machines. These charges
are primarily a result of the economic weakness of the markets
the company serves and the need to convert assets into cash as
quickly as possible.
-- Statement of Financial Accounting Standard No. 142,
"Goodwill and Other Intangible Assets," requires companies to
reassess the value of existing intangibles, such as goodwill, to
ensure their value has not been impaired. The company's review
resulted in impairment charges of $7.1 million driven by
continued weakness in the automotive industry as well as
weakness in the company's European operations.
-- The company has determined that no further services will
be required of its former CEO over the remaining term of his
contract and has accrued all remaining contractual fees and
related benefits totaling approximately $1.1 million.
-- In an effort to accelerate cash collection, the company
intends to sell some of its long-term notes receivable with a
face value of $10.3 million. Subsequent to quarter end, the
company sold $8.9 million of these notes at a 12% discount,
collecting $7.8 million in cash. The company has recorded a
discount of $1.2 million, or 12% of the face value of these
$10.3 million in notes.
-- The company has from time to time entered into recourse
obligations with third party leasing companies and has increased
its reserve $1.8 million for potential losses related to several
European recourse obligations. This increase was necessary as a
result of a customer bankruptcy in February 2003, as well as
increasing concerns related to the financial health of several
others.
-- The company had previously incurred $1 million in
professional fees associated with a planned secondary stock
offering and spin-off of the Avure business. In connection with
its discussions with TFP, the company has abandoned these equity
plans and accordingly expensed all of these fees in the third
quarter.
-- During the quarter the company reversed the percentage
of completion revenue previously recognized on four food systems
(two customers) based on the customers' failure to fulfill their
obligations under the contract terms. The associated gross
margin reduction was $2.9 million.
-- During the quarter ended January 31, 2003, the company
reassessed its ability to realize its net deferred tax assets.
Given the size of the losses generated during the quarter and on
a year-to-date basis, the company has determined it is
appropriate to establish a valuation allowance covering its net
deferred tax assets amounting to $5.3 million.
-- Based on management's new direction and strategy to
downsize and streamline its operations, the company adjusted
various other asset values and reserves to more appropriately
reflect their realizable value to the company on a prospective
basis. These adjustments totaled $4.6 million.
Flow International Corporation is the world's leading developer
and manufacturer of ultrahigh-pressure waterjet technology for
cutting, cleaning, and food-safety applications, as well as
isostatic and flexform presses. FLOW provides total system
solutions for various industries, including automotive,
aerospace, paper, job shop, surface preparation, and food
production. For more information, visit http://www.flowcorp.com
Avure Technologies is a wholly owned subsidiary of Flow
International Corporation. Avure's Fresher Under Pressure HPP
technology destroys food-borne pathogens, including Salmonella,
E. coli and Listeria. HPP also destroys other organisms that can
cause health hazards and spoilage in fresh foods, without
compromising taste, color, texture, or nutritional value. For
more information, visit http://www.avure.com
FREESTAR TECH.: Liquidity Concerns Raise Going Concern Doubt
------------------------------------------------------------
FreeStar Technology Corporation, formerly known as Freestar
Technologies and Freedom Surf, Inc., was formed on November 17,
1999 as a Nevada corporation, with its principal offices in
Santo Domingo, Dominican Republic. The Company has developed
software-enabling e-commerce transactions over the Internet,
using credit, debit, ATM (with PIN), or smart cards.
The Company plans to have two main revenue sources, including 1)
sales of its PaySafe devices "ePayPad" and 2) processing fees
related to the transactions through the use of ePayPad. The
Company would charge a fee for these transactions ranging from
0.3% to 1.3%.
ePayPad is one of several card swipe devices that the Company
intends to utilize to deliver its pay safe now solution. The
ePayPad is a small desktop hardware device resembling a credit
card reader found at your local supermarket or bank. This
unobtrusive box is equipped with a credit card reader and a ten
key numeric keypad. The ePayPad allows the consumers to
securely shop and pay bills on-line.
Through December 31, 2002, the Company has not been able to
generate significant revenues from its operations to cover its
costs and operating expenses. Although the Company has been
able to issue its common stock or other financing for a
significant portion of its expenses, it is not known whether the
Company will be able to continue this practice, or if its
revenue will increase significantly to be able to meet its cash
operating expenses.
This, in turn, raises substantial doubt about the Company's
ability to continue as a going concern. Management believes that
the Company will be able to raise additional funds through an
offering of its common stock or alternative sources of
financing. However, no assurances can be given as to the
success of these plans.
The Company incurred a net loss of $4,233,822 for the period
from inception (May 25, 2001) to June 30, 2002, and a net loss
of $5,665,579 for the six months ended December 31, 2002. At
December 31, 2002, it had an accumulated deficit of $9,899,401.
This, again, raises substantial doubt about the Company's
ability to continue as a going concern.
Current funds available to FreeStar Technology will not be
adequate for it to be competitive in the areas in which it
intends to operate. The Company's continued operations, as well
as the implementation of its business plan, therefore will
depend upon its ability to raise additional funds through bank
borrowings, equity or debt financing. FreeStar has previously
negotiated a financing package with Papell Holdings, Ltd., a
Turks & Caicos Islands company, and Boat Basin Investors LLC, a
Nevis limited liability company, that is a total of: (a)
$270,000 convertible debenture; (b) a total of $400,000 in
convertible promissory notes from those companies and three
individuals, plus vFinance, Inc. (a total of $210,000 which has
been received - the remainder of the $400,000 was paid by the
Company for certain fees; and (c) $237,000 borrowed from these
individuals and companies on December 23, 2002, for which the
Company does not have any documentation $200,000 net of fees and
expenses). In addition, FreeStar recently signed an equity line
of credit agreement with Cornell Capital Partners, LP to provide
up to $7,500,000 in financing for FreeStar over a maximum period
of 24 months. Under the terms of the agreement, the Company has
the right but not the obligation to draw under the commitment
only upon the effectiveness of a Form SB-2 registration
statement.
The Company defaulted regarding the registration deadline in
connection with the $270,000 convertible debenture.
Consequently, in June 2002, the lenders then exercised their
rights with respect to all of the 4,000,000 shares of restricted
common stock that Paul Egan pledged as collateral for this loan.
The Company is contesting the date and effect of such exercise.
The lenders have claimed in connection with financing set forth
in (a) above, that the Company was required to pay the investors
a 9% penalty on the amount borrowed as the registration
statement was not filed within 60 days of registration
requirement date. As of September 30, 2002, the Company
recorded $24,300 related to this penalty.
FreeStar also defaulted in connection with the registration
deadlines required of the $400,000 convertible promissory notes.
Consequently, in December 2002 the lender group exercised their
rights with respect to all of the 14,400,000 shares of
restricted common stock that Paul Egan pledged as collateral for
these loans. The Company is contesting the date and effect of
such exercise.
There is no guarantee that these funding sources, or any others,
will be available in the future, or that they will be available
on favorable terms. In addition, this funding amount may not be
adequate for the Company to fully implement its business plan.
Thus, the ability of FreeStar Technology Corporation to continue
as a going concern is dependent on additional sources of capital
and the success of FreeStar's business plan. Regardless of
whether its cash assets prove to be inadequate to meet
FreeStar's operational needs, the Company might seek to
compensate providers of services by issuance of stock in lieu of
cash.
If funding is insufficient at any time in the future, FreeStar
may not be able to take advantage of business opportunities or
respond to competitive pressures, any of which could have a
negative impact on the business, operating results and financial
condition. In addition, if additional shares were issued to
obtain financing, current shareholders may suffer a dilutive
effect on their percentage of stock ownership in the Company.
GENUITY INC: Obtains First Open-Ended Removal Period Extension
--------------------------------------------------------------
Genuity Inc., and its debtor-affiliates obtained the Court's
approval to extend the period within which they must move
prepetition civil actions and proceedings from the state and
federal courts, until 30 days after the effective date of a
Chapter 11 plan in these cases. (Genuity Bankruptcy News, Issue
No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900)
GILAT: Completes Restructuring Deals Cutting Debt by US$300 Mil.
----------------------------------------------------------------
Gilat Satellite Networks Ltd., (Nasdaq: GILTF) announced the
closing of its plan of arrangement with its bank lenders,
holders of its 4.25% Convertible Subordinated Notes due 2005,
and certain other creditors. At the closing, Gilat's Old Notes
were cancelled and the holders of the Old Notes were issued a
combination of 4.00% Convertible Notes due 2012 and ordinary
shares of the Company. Additional New Notes and ordinary shares
were also issued in exchange for a portion of the Company's bank
debt and debt to another financing creditor. The ordinary shares
issued at the closing were available for trading as of Monday,
March 17, 2003.
"Our debt restructuring plan has reached a successful conclusion
and the process is now behind us," said Yoel Gat, Gilat's
Chairman and CEO. "With a much improved balance sheet and cost
structure, Gilat can now move forward and execute its plan for
future growth," he added.
As of March 17, 2003, a total of 259,757,196 ordinary shares of
the Company are outstanding. The completed transaction reduces
the Company's principal debt by approximately US$300 million,
secures new agreements with its banking creditors, and
significantly reduces overall financing costs. The Company
intends to distribute shortly a proxy statement relating to a
shareholders meeting that it expects to hold in April of this
year, to approve, among other things (i) the implementation of a
1-for-20 reverse stock split, (ii) an increase of the Company's
share capital, and (iii) the election of a slate of directors.
The expected reverse stock split will reduce the number of
outstanding shares of the Company to approximately 12,987,860
shares, based on the amount of outstanding shares as of
March 17, 2003.
Gilat Satellite Networks Ltd., with its global subsidiaries
Spacenet Inc., Gilat Latin America, Inc. and rStar Corporation,
is a leading provider of telecommunications solutions based on
Very Small Aperture Terminal satellite network technology - with
nearly 400,000 VSATs shipped worldwide. Gilat markets the
Skystar Advantage, DialAw@y IP, FaraWay, Skystar 360E and
SkyBlaster* 360 VSAT products in more than 70 countries around
the world. The Company provides satellite-based, end-to-end
enterprise networking and rural telephony solutions to customers
across six continents, and markets interactive broadband data
services. The Company is a joint venture partner in SATLYNX, a
provider of two-way satellite broadband services in Europe with
SES GLOBAL. Skystar Advantage(R), DialAw@y IP(TM) and
FaraWay(TM) are trademarks or registered trademarks of Gilat
Satellite Networks Ltd., or its subsidiaries. Visit Gilat at
http://www.gilat.com (*SkyBlaster is marketed in the United
States by StarBand Communications Inc. under its own brand
name.)
GLOBAL CROSSING: Special Panel Files Olofson Allegations Report
---------------------------------------------------------------
The Special Committee on Accounting Matters of the Board of
Directors of Global Crossing Ltd. delivered a report to the
Board regarding the allegations of Roy Olofson.
The Special Committee consists of three independent Directors of
the Company, Jeremiah D. Lambert (Chairman), Alice T. Kane, and
Myron E. Ullman, III, none of whom was involved in the matters
under investigation or has any prior affiliation with, or
interests in, Global Crossing. The Board established the
Special Committee on February 11, 2002, and directed it to
conduct an investigation into the timeliness and efficacy of the
Company's response to allegations made by Roy Olofson, a former
employee, with respect to accounting improprieties and
misleading financial disclosures for which he believes the
Company and its management to be responsible.
The Special Committee conducted the Investigation through
counsel. To fulfill its mandate, the Special Committee
instructed counsel to:
-- determine the facts and circumstances relevant to the
Company's response to Olofson's Allegations;
-- determine whether the Company or its outside law firm,
Simpson Thacher & Bartlett, intentionally suppressed or
concealed Olofson's Allegations or any matters
implicated;
-- determine the adequacy of the Company's response to
Olofson's Allegations;
-- determine whether Company management and Simpson Thacher
fulfilled their fiduciary duties to the Company, its
shareholders, and its creditors in responding to
Olofson's Allegations; and
-- determine whether and to what extent the Company suffered
damages as a result of Simpson Thacher's representation.
Because the Special Committee did not have authority to compel
the production of documents, the information it reviewed was
generally limited to that made available by the Company or
otherwise voluntarily provided. The Special Committee had only
limited access to records and personnel of Simpson Thacher and
Arthur Andersen LLP, the Company's auditor. Nonetheless, the
Investigation accomplished its purpose and was disinterested and
thorough.
The summary of the Special Committee's findings are:
A. Relevant Facts and Circumstances: The Company first
learned of Olofson's Allegations as set forth in his
letter delivered to the Company on August 6, 2001. To
address the allegations it contained, the Company commenced
an investigation, conducted by Simpson Thacher but
supervised by the Company's Acting General Counsel, Rhett
Brandon, who remained a partner in Simpson Thacher while
serving in that capacity. Olofson's Allegations eventually
became a matter of public record as the subject of an
article in the Los Angeles Times on January 30, 2002. The
Company then issued public statements confirming that it
had conducted an investigation and that Olofson's
Allegations were without merit. Notwithstanding those
statements, during the nearly six-month period between the
Company's receipt of the Olofson Letter and its bankruptcy
filing on January 28, 2002, neither the Company nor Simpson
Thacher had in fact completed a substantive investigation
of Olofson's Allegations, made timely disclosure of the
results of that investigation to Arthur Andersen, or taken
other appropriate remedial action.
B. Absence of any Intentional Effort to Conceal or Suppress
the Allegations: The Special Committee's Investigation has
not yielded information suggesting intentional concealment
or suppression of Olofson's Allegations. Through its
Office of the General Counsel, the Company initially
responded to Olofson's Allegations by:
-- immediately informing senior management;
-- briefing the Chairman of the Company's Audit Committee;
-- consulting with Simpson Thacher; and
-- engaging Simpson Thacher to conduct an investigation.
Simpson Thacher's investigation nonetheless proved to be
flawed and incomplete, as were its advice and assistance to
its client.
C. The Company's Response to Olofson's Allegations Was
Inadequate: Olofson's Allegations implicated potentially
serious issues of liability. The Company should have
investigated whether Olofson's Allegations were material
and relevant and, if so, taken timely remedial action.
Simpson Thacher's investigation, directed by its partner
Brandon as the Company's Acting General Counsel, did not
meet that standard. Simpson Thacher failed to pursue the
investigation it had undertaken diligently and to
conclusion. Simpson Thacher completed one interview, that
of Joseph Perrone, Sr., the Company's Chief Accounting
Officer and Olofson's supervisor, to whom the Olofson
Letter attributed principal responsibility for the
Company's accounting and financial reporting. Thereafter,
however, Simpson Thacher:
-- failed to obtain critical supporting documents
identified by Perrone;
-- did not interview other Company officers;
-- did not consult with or disclose the Olofson Letter to
Arthur Andersen; and
-- sought to minimize its responsibility by denying that it
had been engaged to conduct an investigation.
D. Simpson Thacher and the Acting General Counsel Violated
Their Duties to the Company in Responding to Olofson's
Allegations: Primary responsibility for mounting the
Company's response to Olofson's Allegations rested with its
Office of the General Counsel. Commencing on September 1,
2001, Brandon headed that office as Acting General Counsel.
On September 20, 2001, Brandon hired Simpson Thacher to
conduct an investigation on Olofson's Allegations under his
direction and supervision. As this report concludes,
neither Brandon nor Simpson Thacher fulfilled their
fiduciary obligations to the Company, which suffered
significant damages as a result.
-- As the Company's principal legal officer, Brandon was
obligated by his duties of care and loyalty to ensure
that Olofson's Allegations were properly addressed.
Similarly, as the Company's outside counsel, Simpson
Thacher was required to exercise competence and due
diligence in discharging its professional obligations.
Although Brandon retained oversight and control over the
investigation entrusted to Simpson Thacher, Brandon
failed to supervise Simpson Thacher's work and even
impeded it through neglect because:
* he offered Simpson Thacher no assistance in obtaining
necessary Company documents;
* did not respond to Simpson Thacher's requests for
instructions and guidance; and
* failed to take appropriate remedial action when it
became clear that Simpson Thacher's investigation had
not gone forward.
Simpson Thacher, for its part, treated its engagement as
a "direct report" to Brandon and took no further action
when the requested instructions were not forthcoming.
By failing to treat its responsibilities proactively,
Simpson Thacher allowed the investigation of a
critically important matter to languish.
-- Brandon's concurrent roles, as Simpson Thacher partner
and the Company's Acting General Counsel:
* compromised the Company's relationship with Simpson
Thacher;
* led to misunderstandings; and
* ultimately gave rise to a conflict of interest on the
failure of Simpson Thacher to adequately investigate
Olofson's Allegations.
When the conflict became apparent, Simpson Thacher
should have recused itself from further representation
of the Company on the Olofson matter or obtained the
Company's knowing consent to its continuation as
counsel. Simpson Thacher did neither.
-- Neither Brandon nor Simpson Thacher took the immediately
obvious and indispensable step of disclosing the Olofson
Letter to Arthur Andersen, which received a copy only
the day after the Company's bankruptcy filing. Once
informed of the Olofson Letter, Arthur Andersen believed
it had no choice but to meet its obligations under
federal securities law by demanding that the Company
disclose the results of its internal investigations of
the Olofson matter, if any. Brandon rejected Arthur
Andersen's request citing attorney-client privilege. In
response, Arthur Andersen suspended its audit of the
Company's 2001 financial statements, an audit that has
not been completed to the present day. According to
information provided to the Special Committee by the
Arthur Andersen engagement partner responsible for the
Company's account, if either Brandon or Simpson Thacher
had completed the investigation and disclosed the
results to Arthur Andersen, it could promptly have
addressed outstanding issues and completed its audit on
schedule.
E. Damages: The Company's inability to obtain audited 2001
financial statements has subjected it to otherwise
avoidable costs, losses, regulatory burdens, and
reputational damage. The Special Committee concludes that,
but for Simpson Thacher's and Brandon's failure to manage
the Company's response to Olofson's Allegations in a
timely, transparent, and appropriate manner, the Company
could have obtained audited 2001 financial statements;
addressed Olofson's Allegations with the support of its
outside auditor; and as a result minimized or avoided the
related adverse consequences it thereafter encountered.
For these reasons, the Special Committee submits these
recommendations to the Board of Directors for its review and
consideration:
-- Seek Appropriate Redress From Simpson Thacher: The Special
Committee concludes that Simpson Thacher failed to satisfy
its professional responsibilities to Global Crossing, which
suffered significant injuries as a result. The Special
Committee believes that causes of action may be asserted
against Simpson Thacher for malpractice and breach of
fiduciary duty. The Special Committee therefore recommends
that the Company seek appropriate redress from Simpson
Thacher.
-- Compliance with the Sarbanes-Oxley Act of 2002: The
Sarbanes-Oxley Act of 2002, which became law on July 30,
2002, changes the way public corporations are governed and
their relationships with outside auditors. Its provisions
require, inter alia,
(i) enhanced corporate disclosures;
(ii) increased officer and director accountability;
(iii) strengthened corporate governance; and
(iv) increased auditor independence and professional
oversight.
If the Company had been subject to and observed Sarbanes-
Oxley's requirements in August 2001, it would have treated
Olofson's Allegations differently.
The Special Committee takes special note of these
prescriptions contained in Sarbanes-Oxley:
(i) Adopt and Maintain Audit Committee Compliance
Procedures, Including Procedures for Receiving and
Responding to Allegations Relating to Accounting,
Internal Control, and Auditing Matters: Sarbanes-
Oxley requires audit committees of public companies
to establish procedures for receiving and responding
to allegations relating to accounting, internal
control, and auditing matters.
The Audit Committee is preparing draft procedures
for these matters but also recommends adoption of a
broader program to address allegations of
impropriety or illegal conduct.
(ii) Maintain Effective Written Internal Financial
Controls: Effective written internal financial
controls are essential to effective corporate
governance and compliance with applicable law.
(iii) A Direct and Unwavering Reporting Relationship with
the Company's Outside Auditor: Subject to the
oversight and directions of the United States
Trustee, the Audit Committee expects to appoint a
successor auditor, with which the Audit Committee
will maintain a direct reporting relationship.
-- Adopt Proper Policies and Procedures for Addressing
Concerns and Allegations of Impropriety or Illegal Conduct:
The Global Crossing Ethics Policy prescribes general
principles and provides a clear statement of the conduct
the Company expects from its officers, directors and
employees. Although otherwise appropriate, the Policy does
not contain formal guidance for responding to allegations
of impropriety or illegality.
The Special Committee recommends that the Policy be
supplemented with guidelines for addressing any future
allegations of impropriety or illegal conduct. At a
minimum, that policy should encompass:
(i) respect for the confidentiality of those raising
concerns;
(ii) an opportunity to raise concerns outside the line
management structure and even directly to outside
counsel;
(iii) meaningful sanctions, up to and including
termination of employment, for preventing employees
from raising legitimate concerns or retaliating once
such concerns have been raised;
(iv) meaningful sanctions, up to and including
termination of employment, for making false or
malicious allegations; and
(v) a requirement that management act promptly and
transparently when allegations of impropriety are
made. (Global Crossing Bankruptcy News, Issue No.
36; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
GROUP MANAGEMENT: Enters Phase II of Restructuring Proceeding
-------------------------------------------------------------
Group Management Corp., (OTC BB: GPMT) the emerging growth
company announced, Part II of the restructuring process.
Phase I Restructuring
We have completed Part I of our restructuring beginning in
January 2003. We have to date: (1) placed a management team in
place; (2) brought current all regulatory filings; (3) engaged
an investor relations counsel; (4) identified the business
segments we intend to pursue; and (5) identified several
acquisition candidates.
Phase II Restructuring
Acquisition Candidates
To date we have identified several acquisition candidates. We
have signed a letter of intent to acquire Kadalak Entertainment
Group, Inc.; (2) we have identified a source with several shell
corporations with free trading shares that are available for
acquisition. We intend to enter into an agreement with this
source to supply GPMT with free trading shares in no less than
three companies.
Reverse Merger
The shell corporation we have identified currently has free
trading shares available and is currently updating its financial
statements. We intend to enter into a letter of intent to
acquire the shell and merge a business segment into the shell
and have the shares trade on the OTC Bulletin Board, and the
Frankfurt Exchange to attract European investors.
Spin-Off of Shares of Shell Corporation
Once the shell corporation is acquired, and the reverse merger
completed, we intend to spin-off a portion of the shares to the
shareholders of GPMT. Unlike GPMT this company will not have any
convertible debt or equity on its balance sheet and therefore
will not be subject to naked short sellers, and should trade at
its true inherent value.
More details of the Phase II restructuring will be forthcoming
as they develop. Management as stated in earlier press releases
is committed to developing GPMT into an emerging high growth
company.
An investment in GPMT will reward the patient investor.
* * *
As previously reported, Group Management Corp (OTCBB:GPMT)
disclosed that holders of a $1.1 million convertible note filed
a complaint in United States District Court for the Southern
District of New York against, the Company and Elorian Landers,
the Company's Chief Executive Officer.
In their complaint, the note holders allege, among other things,
fraud in connection with the sale of the notes and breach of
contract on the notes. The note holders are seeking monetary
damages in excess of $1.1 million and certain injunctive relief
in connection with the registration of the common stock
underlying the notes, conversion of the notes into Company
common stock and transfer of Company common stock pledged as
collateral in connection with a related financing transaction
surrounding the notes. The note holders had previously declared
the Company in default on the notes and demanded payment
thereon.
HARTMARX CORP: Reports Profitable Fourth Quarter and FY 2002
------------------------------------------------------------
Hartmarx Corporation (NYSE: HMX) reported operating results for
its fourth quarter and full year ended November 30, 2002. Full
year sales were $570.3 million in 2002, compared to $600.2
million in 2001. Earnings before interest and taxes improved to
$21.1 million compared to a loss of $15.1 million in 2001. After
consideration of interest expense and income taxes, earnings
before extraordinary items were $3.4 million compared to a loss
of $17.8 million in 2001. After extraordinary charges in 2002 of
$4.2 million pre-tax or $2.5 million net of tax benefit
associated with elimination of high-cost debt, the Company
reported net earnings of $.02 per share. Financial information
presented in this release reflects the restatements resulting
from the previously announced review of the accounting records
at the Company's International Women's Apparel operating unit
and the retroactive restatement of retained earnings relating to
the reversal of reserves and valuation allowances established
prior to 1999.
Homi B. Patel, president and chief executive officer of Hartmarx
Corporation, commented, "We are pleased that we have achieved
all three financial objectives announced at last April's
Shareholders Meeting. Despite the difficult conditions at retail
throughout the year, we reported second half and full year
profitability even after accounting for extraordinary items. We
reduced inventory levels by $35.2 million or 23.4%, the major
factor which contributed to exceeding our 15% working capital
reduction goal. Finally, year end debt declined by $48.2 million
or 28.1%, again well beyond our stated objective of a $25
million reduction."
"The result of all the restructuring actions taken to improve
our margins and lower our cost structure should enable the
Company to achieve a significant increase in earnings per share
next year without relying on any substantial improvement in the
economy or retail business," Mr. Patel stated.
Fourth quarter sales were $151.1 million in 2002 compared to
$155.3 million in the fourth quarter of 2001. EBIT improved to
$9.4 million compared to a loss of $1.7 million in 2001 which
included $3.1 million of restructuring charges. Fourth quarter
results for 2002 reflected a favorable restructuring adjustment
of $.5 million as well as favorable effects from the liquidation
of inventory quantities valued under the LIFO inventory method
carried at lower costs prevailing in prior years. After
consideration of interest expense and income taxes, fourth
quarter earnings before extraordinary item were $3.8 million in
2002 compared to a loss of $3.6 million in 2001. The fourth
quarter extraordinary item in 2002 of $.8 million reflected the
non-cash write-off of unamortized debt discount and fees related
to the retirement of $15 million face value of 12.5% Senior
Unsecured Notes in November, 2002.
The higher gross margin rate for the year of 28.8% in 2002
compared to 25.2% in 2001 reflected production efficiencies from
improved manufacturing utilization and more efficient off-shore
sourcing. Lower inventory quantities valued under the LIFO
method also favorably impacted margins for the fourth quarter
and full year. Prior year gross margins were adversely impacted
from the wind-down of certain production facilities associated
with 2001 restructuring actions. Selling, general and
administrative expenses of $150.2 million declined $7.8 million,
representing 26.3% of sales in each year, reflecting the
realization of restructuring actions taken in 2001 and the
salary reductions for higher paid employees in effect during
2002, partially offset by a full year of expenses related to the
Consolidated Apparel Group acquisition consummated during 2001
and the Hickey-Freeman retail store which opened in October,
2001. Restructuring charges included in EBIT for 2002 were $.4
million compared to $11.6 million in 2001 which included $3.1
million in 2001's fourth quarter. As previously reported,
results for 2002 also included $4.5 million of litigation
settlement proceeds recorded in the second quarter.
Although reported interest expense of $15.5 million for the full
year increased by $1.1 million, fourth quarter expense declined
by $1.2 million, reflecting savings resulting from the
August 30, 2002 refinancing. Based on the current interest rate
environment and capital structure, fiscal 2003 interest expense
is expected to be at least $4 million lower, assuming no
acquisitions. The full year of 2002 reflected extraordinary
items, net of income tax benefit, of $2.5 million or $.08 per
share, representing non-cash write-offs of unamortized fees,
expenses and debt discount related to refinancing actions
completed during the year. The nominal extraordinary item in
fiscal 2001 related to repurchases of the Company's then
outstanding senior subordinated notes.
At November 30, 2002, total inventories of $115.2 million
declined $35.2 million or 23.4%, which was the most significant
contributor to the total debt reduction of $48.2 million or
28.1% for the year. With the completion on January 21, 2003 of
the previously announced early retirement of the remaining $10.3
million face value of 12.5% senior unsecured notes, the Company
will have only small annual debt repayment requirements through
2006. Shareholders' equity at November 30, 2002 reflected a non-
cash reduction of $14.0 million relating to the Company's
defined benefit plan, representing the charge to equity
resulting from the additional minimum pension liability
associated with the Company sponsored plan.
Company Restates Past Results
and Names New CEO and CFO at IWA
As previously reported, in the course of its fiscal 2002 year-
end review, the Company's Internal Audit Department discovered
that certain accounting transactions at its International
Women's Apparel subsidiary were not properly recorded. IWA
represents 4% of the Company's sales and 50% of the women's
segment. The Company promptly notified both its Audit and
Finance Committee of the Board of Directors and independent
accountants of their findings. Under the direction and oversight
of the Audit Committee, and with the assistance of outside legal
advisors and the Company's independent accountants, the Company
conducted a thorough investigation into these accounting
irregularities and performed a more complete evaluation of
accounting practices at this location. The investigation at IWA
has resulted in the restatement of the Company's financial
statements for 2000 and 2001 and for the first three quarters of
2002.
The effect of the restatement for the year ended November 30,
2000 was to decrease the Company's previously reported
consolidated earnings before extraordinary item from $8.6
million to $6.7 million; for the year ended November 30, 2001,
the previously reported consolidated loss before extraordinary
item of $13.9 million was increased to $17.8 million as a result
of the restatement. In addition, consolidated retained earnings
as of December 1, 1999 have been retroactively restated to
reflect an increase of $4.8 million resulting from the reversal
of certain balance sheet accruals and valuation allowances
established in prior years for which specific needs were not
required as of November 30, 1999.
Mr. Patel stated, "The overall impact of the restatements was
that at November 30, 2001, total assets as previously reported
were reduced by $2.4 million, total liabilities were decreased
by $1.3 million and total shareholders' equity and equity per
share were reduced by $1.1 million or $.03 per share. The
independent investigation found no evidence indicating that any
employee of IWA or the Company diverted any funds or assets for
personal gain. This is an isolated event, limited to one
operating location. Even though the improper recording of
accounts was discovered by our Internal Audit Staff and
appropriately reported, this was a significant setback at IWA,
and we have taken action to ensure that such a situation is not
repeated. Steve Weiner, group president, has been named the new
chief executive officer at IWA. Brian Evers, formerly the CFO of
our Intercontinental Branded Apparel subsidiary, has been named
the new chief financial officer at IWA. Evers will now report to
the Hartmarx chief financial officer."
"Other enhancements and changes effective immediately, include,
among other things, realignment of reporting responsibilities of
finance and accounting executives at IWA, including direct
oversight by the Company's chief financial officer and chief
accounting officer, more frequent periodic on-site review of the
books and records of IWA and the Company's other subsidiaries by
internal and outside auditors, and more disciplined adherence to
the Company's internal certification requirements for senior
executives of its subsidiaries with respect to periodic reports,
financial statements and other disclosures."
"We take this matter very seriously and with these actions, the
Company has put into place further safeguards and procedures to
protect the integrity of its financial reporting and disclosure
obligations to shareholders," Mr. Patel concluded.
Hartmarx produces and markets business, casual and golf apparel
under its own brands including Hart Schaffner & Marx, Hickey-
Freeman, Palm Beach, Coppley, Cambridge, Keithmoor, Racquet
Club, Naturalife, Pusser's of the West Indies, Royal, Brannoch,
Riserva, Sansabelt, Barrie Pace and Hawksley & Wight. In
addition, the Company has certain exclusive rights under
licensing agreements to market selected products under a number
of premier brands such as Austin Reed, Tommy Hilfiger, Kenneth
Cole, Burberrys men's tailored clothing, Ted Baker, Bobby Jones,
Jack Nicklaus, Claiborne, Evan-Picone, Pierre Cardin, Perry
Ellis, KM by Krizia, and Daniel Hechter. The Company's broad
range of distribution channels includes fine specialty and
leading department stores, value-oriented retailers and direct
mail catalogs.
* * *
As previously reported by the Troubled Company Reporter,
Standard & Poor's lowered its corporate credit rating
on Hartmarx Corp., to 'SD' (selective default) from double-'C'
and the senior subordinated debt rating to single-'D' from
single-'C'. The ratings were removed from CreditWatch, where
they were placed on October 4, 2001.
Subsequently, the single-'D' rating on Hartmarx' senior
subordinated 10.875% notes due January 15, 2002 was withdrawn.
The downgrade reflects the completion of an exchange offer on
the 10.875% notes due January 15, 2002 with bonds maturing in
2003 plus an amount of cash and common stock. In December 2001,
Hartmarx claimed in an 8-K filing that, if the company is
unsuccessful in completing the exchange or obtaining additional
financing, it would need to restructure its debt. Standard &
Poor's considers the completion of the exchange to be tantamount
to a default, given the coercive nature of the offer.
HYPERTENSION DIAGNOSTICS: Wants to Transfer Listing to OTCBB
------------------------------------------------------------
Hypertension Diagnostics, Inc. (Nasdaq: HDII), has requested a
withdrawal from The Nasdaq SmallCap Market effective as of the
open of the markets on March 21, 2003 so that its securities may
be listed on the OTC Bulletin Board. The Company's common stock
and Redeemable Class B Warrant will be eligible for immediate
quotation on the OTC Bulletin Board after withdrawal from The
Nasdaq SmallCap Market. The symbol for the Company's common
stock is expected to remain "HDII" and the Company's Redeemable
Class B Warrant is expected to remain "HDIIZ." The Company's
request for withdrawal from The Nasdaq SmallCap Market was made
concurrently with the Company's notification to the Nasdaq
Listing Qualifications Hearings Department that the Company
would not continue its appeal of the Nasdaq Staff Determination
that the Company's securities be delisted from The Nasdaq
SmallCap Market.
* * *
As of December 31, 2002, the Company had cash and cash
equivalents of $605,946. Management anticipates that these
funds, in conjunction with revenue anticipated to be earned from
placements of the CVProfilor DO-2020 Systems, anticipated sales
of the CR-2000 Research Systems, as well as anticipated
operating cost reductions, are estimated to allow the Company to
pursue its business development strategy for approximately the
three months following December 31, 2002. At February 1, 2003,
it had cash and cash equivalents of approximately $480,000.
Revenues from placements of the CVProfilor DO-2020 Systems and
sales of the CR-2000 Research Systems are not expected to be
sufficient, either alone or together, to provide the Company
with sufficient working capital to support operations during the
twelve month period following December 31, 2002. These matters
raise substantial doubt about Hypertension Diagnostics' ability
to continue as a going concern. If it does not receive
substantial additional capital in the three months following
December 31, 2002, it will be forced to cease operations. If it
is forced to cease operations, it will seek to eliminate all
operating expenses while it reassesses its strategic options.
IFX CORPORATION: Board Approves Reverse Stock Split Plan
--------------------------------------------------------
IFX Corporation (OTC Bulletin Board: FUTR) --
http://www.ifxcorp.com-- reported that its Board of Directors
has approved a reverse stock split that would have the effect of
terminating the Company's obligations to file annual and
periodic reports and make other filings with the Securities and
Exchange Commission. In connection with the reverse stock split,
stockholders of record holding less than one share after the
reverse split would receive a cash payment equal to $0.12 for
each share of common stock they currently hold. The Company's
Board of Directors has proposed a reverse stock split at a ratio
ranging from 100 to 1 to 300 to 1. The completion of the
transaction is subject to stockholder approval. Assuming
approval by a majority of the Company's stockholders, the Board
will determine the final reverse stock split ratio, and the
company's stock will begin trading on a post-split basis. The
Company incurs substantial costs associated with being a public
company, such as accounting and legal fees, which would decrease
significantly after the Company deregisters its common shares.
It is anticipated that as a result of the reverse stock split,
the Company will have fewer than 300 holders of record of the
Company's common stock, allowing the Company to deregister its
common shares with the SEC. Stockholders owning one or more
shares of the Company's common stock following the reverse stock
split would not receive any cash payment and would remain
stockholders of the Company. Upon termination of the
registration of the Company's common stock with the SEC, the
Company does not expect its common stock to be quoted on the OTC
Bulletin Board.
The Company also announced that on March 6, 2003, it issued
$500,000 of Convertible Promissory Notes to UBS Capital
Americas, its controlling stockholder. The Notes mature on
March 1, 2008 and carry an interest rate of ten percent per
annum. At any time UBS Capital Americas can convert the Notes
into shares of the Company's Series D Convertible Preferred
Stock or, if necessary under Delaware law, a new class of
preferred stock at a conversion price equal to $1.20 per share.
Alternatively, UBS Capital Americas can convert the Notes into a
convertible debt or equity security the Company may issue in the
future.
Finally, the Company also reported that the put option
previously provided to UBS Capital Americas and set to expire on
February 19, 2003 was extended to August 19, 2003. The put
option provides the right to UBS and the other Tutopia.com,
Inc., preferred and common shareholders to exchange their equity
investment in Tutopia for shares of IFX's preferred at an
exchange ratio of approximately 0.70 shares of IFX for each
share of Tutopia.
As previously reported, the independent auditors' report with
respect to IFX's audited consolidated financial statements for
the fiscal year ended June 30, 2002 contained an explanatory
paragraph relating to IFX's ability to continue as a going
concern. Although IFX raised $4.0 million in September and
October 2002 and $500,000 in March 2003 through the issuance of
convertible promissory notes, the Company can provide no
assurances that it will be able to continue raising funds on
acceptable terms, or at all, and the Company's inability to
raise sufficient funds in the future would affect its ability to
meet its working capital needs, satisfy capital and operating
lease obligations and would cause the Company to eliminate
capital expenditures.
IFX Corporation (OTC Bulletin Board: FUTR.OB) --
http://www.ifxcorp.com-- is a Latin American Network Service
Provider. The Company's operations are headquartered in Miami
Lakes, Florida. IFX operates a pan-regional Internet Protocol
network that is marketed under the IFX Networks brand name,
provides Internet network connectivity and offers a broad range
of value-added services to multinationals, Internet Service
Providers, telecommunications carriers and small to medium-sized
businesses in Latin America. Although the Company's primary
focus is to pursue multinational businesses, carriers and small
to medium-sized businesses in Latin America, the Company
continues to provide consumer Internet products and services.
IFX offers network solutions that include region-wide wholesale
and private label Internet access, dedicated fixed wireline and
wireless Internet access, unlimited dial-up roaming access to
IFX Network's POPs throughout the Latin American region, web
design, web-hosting and co-location, dial-up local area network,
or LAN services, and virtual private network, or VPN services,
and full technical support.
At December 31, 2002, IFX's balance sheet shows a total
shareholders' equity deficit of about $5 million.
INTERPUBLIC: Meets Tender Offer Conditions for Notes due 2023
-------------------------------------------------------------
The Interpublic Group of Companies, Inc. (NYSE: IPG) announced
that, following the completion of its private placement offering
of 4.5% convertible senior notes due 2023, it has satisfied or
waived all conditions to its offer to purchase its zero-coupon
convertible senior notes due 2021 except for those relating to
legality of the offer, as described in its Schedule TO filed
with the Securities and Exchange Commission on March 10, 2003.
Interpublic completed the private placement offering and issued
$800 million aggregate principal amount of notes, including $100
million resulting from the initial purchaser's exercise in full
of their over-allotment option, on March 13, 2003. In connection
with the private placement, Interpublic entered into a
Registration Rights Agreement and a Supplemental Indenture with
respect to the 4.5% convertible senior notes and intends to
amend its Schedule TO to include these agreements as exhibits.
In addition, the commitment from UBS AG to provide Interpublic
with an interim credit facility terminated upon the completion
of the private placement in accordance with its terms.
The notes issued in the private placement and the underlying
common shares have not been registered under the Securities Act
of 1933, or any state securities laws, and may not be offered or
sold in the United States absent registration under, or an
applicable exemption from, the registration requirements of the
Securities Act of 1933 and applicable state securities laws.
The Interpublic Group of Companies is among the world's largest
advertising and marketing organizations. Its global operating
groups are McCann-Erickson WorldGroup, The Partnership, FCB
Group and Interpublic Sports and Entertainment Group. Major
global brands include Draft Worldwide, Foote, Cone & Belding
Worldwide, Golin/Harris, NFO WorldGroup, Initiative Media, Lowe
Worldwide, McCann-Erickson, Octagon, Universal McCann and Weber
Shandwick.
As reported in Troubled Company Reporter's Monday Edition,
Standard & Poor's Ratings Services assigned its 'BB+' rating to
The Interpublic Group of Cos. Inc.'s $700 million 4.5%
convertible senior note issue due 2023. Proceeds are expected to
be used to fund the company's concurrent offer to purchase its
outstanding zero-coupon convertible senior notes due 2021.
At the same time, Standard & Poor's affirmed its 'BB+' long-term
corporate credit rating, and withdrew its 'B' short-term
corporate credit rating. All ratings were removed from
CreditWatch where they were placed on Aug. 6, 2002. The outlook
is negative. New York, New York-based advertising agency holding
company Interpublic had total debt outstanding of approximately
$2.6 billion at Dec. 31, 2002.
"The refinancing mitigates the risk related to the potential
Dec. 14, 2003, put, for cash, of the company's zero coupon
convertible note issue due 2021," said Standard & Poor's credit
analyst Alyse Michaelson.
IRVINE SENSORS: Distributing Prospectus re Share Public Offering
----------------------------------------------------------------
Under date of March 13, 2003, Irvine Sensors Corporation has
prepared, and is distributing, a prospectus dealing with the
public offering, which is not being underwritten, of a total of
3,306,143 shares of the common stock of the Company by selling
stockholders. The price at which the selling stockholders may
sell the shares will be determined by the prevailing market
price for the shares or in negotiated transactions. Irvine
Sensors will not receive any of the proceeds from the sale of
these shares. The Company's common stock is quoted on the
Nasdaq SmallCap Market under the symbol "IRSN" and is traded on
the Boston Stock Exchange under the symbol "ISC". On March 6,
2003, the last reported sale price for the common stock on the
Nasdaq SmallCap Market was $1.33 per share.
Irvine Sensors, whose September 29, 2002 balance sheet shows a
working capital deficit of about $1.4 million, makes minute
solid-state microcircuitry that is assembled in 3-D stacks
instead of flat layouts, creating lower weights and volumes and
boosting speeds. Its Novalog subsidiary (59% of sales) uses this
technology to make integrated circuits for wireless infrared
communications applications. Subsidiary MicroSensors makes
micromachined sensors and related electronics. Silicon Film
Technologies makes digital imaging equipment. Irvine Sensors
targets its small, lightweight components to applications in the
space and aircraft industries. The US government -- mainly the
US Army -- and its contractors account for 20% of sales.
KAISER ALUMINUM: Summit Comm'l Acquires Kaiser Center in Oakland
----------------------------------------------------------------
Concluding a year-long, complex process, Summit Commercial
Properties has acquired the one million-square-foot Kaiser
Center in Oakland for approximately $100 million. Opened in
1960, it was the centerpiece of Henry J. Kaiser's original
master plan for six million square feet of mixed-use development
at this Lake Merritt location. Summit acquired the Kaiser Center
and the remaining 1.5 million square feet of the original
entitlements from Kaiser Aluminum through the federal bankruptcy
court.
"Kaiser Center presented a rare opportunity to acquire a
landmark property at a good price that has considerable upside
potential," said Jack Mahoney, president, Summit Commercial
Properties. "To secure this property we committed the time and
resources to sort out the multiple ownership structures and
issues associated with working through the bankruptcy court."
Kaiser Center consists of the primary 28-story office tower, a
1,500 space multilevel garage with rooftop garden and 130,000
square feet of retail. Built by Henry J. Kaiser, the office
tower was a model of innovation in architecture, engineering and
materials. His vision began with the most stunning location on
Lake Merritt and remains the premier property in this district.
Today it is further enhanced as the hub of the BART network
offering unparalleled access to any point in the San Francisco
Bay area.
"Henry J. Kaiser conceived of this development as a showcase for
his engineering and design skills where he introduced new
technologies and ideas, some akin to green building principles,"
noted Mahoney. "For instance, instead of using asbestos he
directed that crushed oyster shells be mixed with the concrete
to create an insulation."
Henry J. Kaiser tapped Welton Becket, the leading architect of
the era, to create his vision. At the time, Becket's firm was
one of the largest in the world with more than 400 employees,
and was known for his cutting edge construction, engineering and
design techniques that are still viable today. For example, he
introduced a new concrete formula that made it possible to build
lighter and therefore higher skyscrapers. From the cylindrical
Capitol Records building in Hollywood, McKesson Plaza in San
Francisco and the FCB Building in Chicago, to the Cairo Nile
Hilton and the Moscow World Trade Center, Becket's work spans
continents and generations.
"Kaiser Center was a masterpiece for its time and it remains a
timeless classic," observed Mahoney. "We will restore the
complex to regain its prominence among the premier buildings in
the Bay Area. Particular attention will be paid to the ground
floor, infusing it with natural light and restoring the open and
airy space. Further, we will be developing a long-term plan that
will include some reconfiguration of the retail component and
analysis of the possibilities for new development."
Kaiser Center, located at 300 Lakeside Drive, occupies an
enviable location in the Lake Merritt area of Oakland, Calif.,
an attractive and established business center. Kaiser Center is
immediately adjacent to the lake and steps from a BART station.
It is currently 85 percent leased to corporate and government
tenants such as the University of California Regents, California
Bank & Trust, IBM and Bank of America.
Henry J. Kaiser selected a sleek, curved design for the tower
inspired by a hotel that he had visited and admired. With floor
to ceiling windows throughout, the design captures the panoramic
views starting at the ground floor and creates efficient floor
plates, even by today's standards. The top floor served as Henry
J. Kaiser's private residence for many years and offers
spectacular views of Lake Merritt, the San Francisco Bay and
Golden Gate Bridge, nine surrounding counties and the renowned
three-acre rooftop garden designed in the shape of Lake Merritt.
Highlights of the Kaiser Center include:
-- Engineered to standards that even today are impressive and
beyond current earthquake codes
-- Fitted with 19 elevators to serve 28 floors
-- A 300 seat auditorium with full stage for tenant and
community uses
-- 100 percent continuous fresh air
-- Burgess Manning cooling and heating system -- utilizing
aluminum ceiling squares and copper piping
"The chief tenant complaint in any office building is difficulty
regulating the temperature yet when we interviewed tenants at
the Kaiser Center they were pleased with the system," Mahoney
added.
The rooftop garden, designed by landscape architect Osmundson
and Staley along with David Arbegast, was the largest continuous
roof garden in the world when it opened in 1960 and has become
the subject of study by landscape architecture students
worldwide. Drainage and weight presented the greatest challenges
to rooftop plantings. At the Kaiser Center an elaborate
irrigation and drainage system was devised that includes a layer
of shale to drain water from the soil as polypropylene filter
fabric was not available in 1960. To combat weight concerns, a
lightweight soil mix was developed and is still used today;
rocks and boulders were of pumice stone; and the 42 trees, which
originally weighed three tons, were placed over building
columns. A focal point of the garden is a large pond with small
fountains that enhances the serenity of the space. With abundant
shade and seating the area is a popular lunchtime destination
and gathering place.
"Summit Commercial has strategically targeted the acquisition of
office properties in strong urban markets like Lake Merritt that
are attractive to major corporate tenants. Kaiser Center is an
exceptional project that complements and enhances our real
estate portfolio," Mahoney added.
In Northern California Kaiser Center joins Summit's existing
portfolio of prominent tier one assets: Dublin Corporate Center
in the East Bay, Pacific Plaza on the San Francisco peninsula,
Solano Business Park in the Napa/Solano market, and Southport
Business Park in Sacramento. Summit recently acquired the
Commerce Office Park near downtown Los Angeles and three major
properties in the Phoenix area.
Summit Commercial Properties has engaged Cushman & Wakefield to
handle all property management and Cushman & Wakefield brokers
Samuel Swan, Charles Allen and Ryan Hattersley to manage the
leasing program for Kaiser Center. Warren Collins of MCC Realty
represented Kaiser Aluminum in the transaction.
Summit Commercial Properties -- http://www.summitprop.net-- is
an affiliate of Highridge Partners, one of the nation's most
successful and respected real estate companies. Headquartered in
Los Angeles with Northern California offices in Sacramento, the
company has acquired, developed and managed a real estate
portfolio valued at more than $3 billion in the past decade.
KENNY INDUSTRIAL: Case Summary & 31 Largest Unsecured Creditors
---------------------------------------------------------------
Lead Debtor: Kenny Industrial Services, LLC
414 N. Orleans, Suite 202
Chicago, Illinois 60610
Bankruptcy Case No.: 03-04959
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Golf Construction 03-04960
Kenny Industrial Solutions, LLC 03-04961
Genesee Coatings LLC 03-04962
Kenny Industrial Resources, LLC 03-04963
Cannon Sline LLC 03-04964
Kenny Manta Industrial Services, LLC 03-04965
Kenny Industrial Resources, Inc. 03-04966
Canisco Services, LLC 03-04967
Kenny Industrial Solutions, Inc. 03-04968
Kenny Industrial Service, LLC 03-04969
Type of Business: Kenny Industrial Services is a provider of
comprehensive industrial preservation and
maintenance services, including chemical
cleaning, waste separation and minimization,
fireproofing, insulation, identification and
tagging, and concrete restoration.
Chapter 11 Petition Date: February 3, 2003
Court: Northern District of Illinois
Judge: Carol A. Doyle
Debtors' Counsel: James A. Stempel, Esq.
Ryan Blaine Bennett, Esq.
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601-6636
Tel: 312-861-2000
Total Assets: $70,189,327
Total Debts: $102,883,389
Debtor's 31 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
CRP Investment Partners IV, $3,400,000
LLC & LP
Attn: Robert Ammerman
85 Merrimac Ammeran
Suite 200
Boston, MA 02114
Niles Brothers, Inc. $1,500,000
Attn: Dan Niles
9690 Burning Tree Drive
Grand Blanc, MI 48439
ICI Dulux Paint Centers Trade Debt $802,446
General Counsel
925 Euclid Avenue
Cleveland, OH 44115-1487
Tel: 216-344-8000
ACM Elevator Company Trade Debt $671,212
2293 S. Mt Prospect Road
Des Plaines, IL 60018
Hertz Equipment Rental Trade Debt $642,201
Attn: Kelley
PO Box 26390
3817 Northwest
Oklahoma City, OK 73112
Tel: 405-280-4732
Ernst & Young LLP Trade debt $553,945
233 S. Wacker
Chicago, IL 60606
Stan Chem Trade Debt $535,745
Attn: Mike/Todd
401 Berlin Street
East Berlin, CT 06023
Tel: 860-828-0571
Zurich Trade Debt $474,457
1400 American Lane
Schumburg, IL 60193
Carboline Company Trade Debt $473,721
Attn: Scott Selbach
350 Hanley Industrial Court
St. Louis, MO 63144-1599
Sherwin Williams Company Trade Debt $361,721
Attn: Greg Young
101 Prospect Avenue NW
Cleveland, OH 44115
Brandon Industries Trade Debt $327,217
Div., SIG Southwest, Inc.
12360 Leisure Road
Baton Rouge, LA 70807
Tel: 504-775-1950
United Rentals, Inc. Trade Debt $293,580
Attn: Jack Hallsworth
One Harfield Executive Park
Suite 305
East Winsor, CT 06088
Tel: 856-933-4733
NLB Corporation Trade Debt $250,298
Attn: July
29830 Beck Road
Wixom, MI 48393
Tel: 800-227-7652
W.R. Grace & Co. Trade Debt $234,437
Rental service Corp. Trade Debt $226,015
American express Co. Trade Debt $215,959
Sunbelt Rentals, Inc. Trade Debt $212,658
First USA Financial Service Trade Debt $200,052
Theresa Soto Trade Debt $200,000
CUES Trade Debt $162,476
ASGL Acotec, Inc. Trade Debt $135,744
Plasite Corporation Trade Debt $134,784
Five Star Safety Equipment Trade Debt $134,439
Brunt Bros. Transfer, Inc. Trade Debt $134,132
Distribution International Trade Debt $129,745
Laner, Muchin, Dombrow Trade Debt $115,519
Fleetman DBA Trade Debt $115,054
Unicoat Technology, Inc. Trade Debt $112,263
Safway Steel Products Inc. Trade Debt $111,163
Nextel Communications Trade Debt $110,515
Robinette Demolition Trade Debt $104,099
LA QUINTA: Selling $325-Million Sr. Notes in Private Placement
--------------------------------------------------------------
La Quinta Properties, Inc. and La Quinta Corporation (NYSE: LQI)
announced that La Quinta Properties, Inc., has entered into an
agreement to sell in a private placement $325 million in senior
notes due 2011 at 8-7/8%. The closing of the sale of the senior
notes is expected to occur this week, subject to customary
closing conditions. The senior notes will rank pari-parsu with
the Company's existing senior notes and will be guaranteed by La
Quinta Corporation.
La Quinta expects to use the net proceeds to fund tender offers
for any or all of the tendered portion of the Company's 7.82%
notes (puttable in 2003) due 2026, 7.51% medium term notes due
2003 and 7.25% senior notes due 2004, as well as the 7.114%
Exercisable Put Option Securities due 2004 as announced by the
Company on March 5, 2003. La Quinta also expects to use the net
proceeds to fund senior notes maturing or puttable in 2003 and
2004 that were not tendered, repay borrowings under the
Company's revolving credit facility and for general corporate
purposes.
As reported in Troubled Company Reporter's March 13, 2003
edition, Fitch Ratings assigned a rating of 'BB-' to the
prospective $250 million senior unsecured notes due 2011 being
issued by La Quinta. Proceeds will be used to tender for the
outstanding $90.4 million 7.82% notes due 2026 (puttable in
2003), $16.1 million 7.51% medium term notes due 2003 and $63.9
million 7.25% senior notes due 2004. In addition, the company
has tendered for the $93.6 million outstanding 7.114%
Exercisable Put Option Securities due 2004. The new notes will
be issued by La Quinta Properties, Inc., and guaranteed by La
Quinta Corporation. The Rating Outlook is Negative.
The ratings reflect La Quinta's sizable and geographically
diverse asset base of owned hotel properties, healthy liquidity,
improved balance sheet, experienced management team, and track
record in a challenging environment. Risks include the very weak
lodging environment, the resulting pressures on credit
statistics and marginal free cash generation, required access to
external capital over the intermediate term and significant
competition in its sector that includes companies with far
greater resources.
The Negative Rating Outlook reflects the weak lodging
fundamentals that have disproportionately affected LQI's results
due to (i) LQI's significant exposure to underperforming markets
and (ii) downward pricing pressure and lower occupancy at
limited service hotels as full service hotels scale back
pricing.
MAGELLAN HEALTH: Earns Approval to Honor Employee Obligations
-------------------------------------------------------------
Magellan Health Services, Inc., and its debtor-affiliates sought
and obtained an order from the Court to authorize, but not
require, them to pay, in their sole discretion, all obligations
with respect to:
* Employees wages, salaries and compensation,
* Payroll Tax Obligations,
* Independent Contractor Obligations,
* 401(k) Obligations,
* Welfare Plan Obligations,
* Deferred Compensation Obligations,
* PTO Obligations,
* Severance Obligations,
* Tuition Obligations,
* Reimbursement Obligations,
* Administration Obligations and
* Temporary Agency Obligations,
and all costs incident, and to continue to honor their
practices, programs, and policies with respect to their
Employees as these practices, programs and policies were in
effect as of the Petition Date.
Stephen Karotkin, Esq., at Weil Gotshal & Manges LLP, in New
York, relates that in the ordinary course of their businesses,
the Debtors incur payroll and various other obligations to their
employees throughout the country for the performance of
services. The Debtors currently employ 5,480 employees, of which
5,160 are full-time salaried employees, 160 are occasional
employees and 180 are part-time employees. The Debtors have
incurred costs and obligations in respect of the Employees that
remain unpaid as of the Petition Date because they accrued,
either in whole or in part, prior to the Petition Date. Even
though they arose prior to the Petition Date, these obligations
will only become due and payable in the ordinary course of the
Debtors' businesses on and after the Petition Date.
These obligations include:
A. Wages, Salaries and Compensation Expenses: Prior to the
Petition Date, the Debtors paid Employees on either an
hourly wage or salaried basis. The Debtors' average
monthly gross payrolls for all of their hourly employees is
$270,000. The Debtors estimate that their Hourly Employee
Obligations for the pay period prior to the Petition Date
aggregate $90,000. The Debtors' average monthly gross
payrolls for all of their salaried employees is
$17,500,000. The Debtors estimate that prepetition
Compensation Obligations for the pay period prior to the
Petition Date aggregate $5,900,000.
The Debtors estimate that, as of the Petition Date, the
amount of the Debtors' accrued and unpaid Payroll Tax
Obligations aggregate $4,000,000. Included in this total
are amounts in respect of state unemployment taxes and
contributions, which the Debtors are required to pay
directly on a quarterly basis. The Debtors estimate these
amounts to be $229,000 per 15-day pay period.
B. Independent Contractors: The Debtors utilize the services
of 150 independent contractors throughout the United States
who assist in procuring customers to enter into Employee
Assistance Program contracts with the Debtors. In
addition, the Independent Contractors provide account
management services to the customers that they procure and
facilitate debt collection on behalf of the Debtors.
Collectively, the Independent Contractors are responsible
for the acquisition of $12,600,000 worth of the Debtors'
business. The Debtors estimate that their total accrued
and unpaid prepetition obligations to the Independent
Contractors does not exceed $940,000.
C. 401(k) Retirement Savings Plan: The Debtors maintain one
retirement savings plan for the benefit of their Employees.
The 401(k) Retirement Savings Plan is funded by employee
voluntary wage deferral elections as well as the Debtors'
matching obligations. The Debtors estimate that, as of the
Petition Date, their obligations for the immediately
preceding payroll periods in respect of accrued and
unremitted 401(k) Contributions is $450,000.
The Debtors make matching contributions in respect of the
401(k) Retirement Savings Plan. The Debtors match their
non-union Employees 401(k) contributions at the rate of 50%
of each Employee's 401(k) contributions. Union employees
receive a match at the rate of 100% of each Employee's
contribution not exceeding 3%. The Debtors estimate that,
as of the Petition Date, the Matching Obligations aggregate
$150,000.
D. The Welfare Plans: The Debtors sponsor numerous health and
welfare benefit plans to provide benefits to the Employees,
including flexible spending programs for medical and
dependent care, medical, dental and other health plans,
life and travel accident insurance, disability benefits and
employee assistance benefit plans. The Debtors estimate
that their aggregate annual expenditures under the Welfare
Plans is $34,000,000. The Debtors estimate, that, as of
the Petition Date, the obligations that have accrued but
have not been paid to or on behalf of Employees under the
Welfare Plans aggregate $4,000,000.
E. Deferred Compensation Plan: The Debtors maintain a
Supplemental Accumulation Plan, which is an elective
benefit program for certain management Employees selected
by Magellan's Board of Directors or Magellan's Chief
Executive Officer. Management Employees eligible to
participate in the SAP may defer up to 50% of their base
salary and up to 100% of sales commissions, bonuses and
incentive compensation. Participants in the SAP receive
distributions in a lump sum on a payment date selected by
the Employee, with the payment date being no sooner than
two years after the last compensation deferral was made
under the SAP. Currently, there is $1,600,000 in the SAP
and there are 57 participants entitled to receive payments.
F. Paid Time Off: Under the Debtors' paid time-off policy,
eligible Employees accrue paid time off, including
vacation, paid holidays and personal or sick time, based on
the length of service at the Debtors. Prior to the
Petition Date, the Debtors paid $2,200,000 per month on
average in respect of PTO Time and have $56,000 of PTO Time
carryover obligations in respect of earned but unused PTO
Time for terminated employees.
G. Severance Programs: Prior to the Petition Date and in the
ordinary course of business, the Debtors maintained a
severance policy for their salaried and part-time
Employees. The severance policy generally provides salaried
and part-time Employees with four weeks of severance pay
after involuntary termination of employment. As of the
Petition Date, the amount of outstanding payments owed in
respect of the Debtors' severance policy was $1,800,000.
H. Tuition Reimbursement: The Debtors maintain a discretionary
tuition reimbursement plan designed to encourage certain
Employees to continue their formal education. Pursuant to
the Educational Assistance Program, and at the sole
discretion of the Debtors, eligible Employees are
reimbursed up to $2,500 per benefit year to be used towards
college tuition and fees and up to $800 per benefit year
for continuing education for license renewal. Prior to the
Petition Date, the Debtors paid $40,000 per month in
respect of Tuition Expenses.
I. Reimbursement Obligations: The Debtors customarily
reimburse their Employees for a variety of business
expenses incurred in the ordinary course of employment.
These reimbursable business expenses include those expenses
incurred in connection with travel, relocation, long-
distance and cellular phone charges. The Debtors estimate
that, as of the Petition Date, their obligations in respect
of eligible expense reimbursements to Employees aggregate
$375,000.
J. Administration of Employee Benefits: As is customary in
the case of most large companies, in the ordinary course of
their businesses, the Debtors utilize the services of Group
Benefit Services in order to facilitate the administration
and maintenance of their books and records in respect of
the 401(k) Retirement Savings Plan and the Welfare Plans.
The Debtors estimate that $550,000 was accrued and unpaid
as of the Petition Date with respect to services rendered
by Group Benefit Services with respect to these employee
matters.
K. Obligations in Respect of Temporary Employees: The Debtors
utilize temporary employees, provided through temporary
agencies, at their facilities. The Debtors believe that it
is necessary to pay all obligations to the temporary agency
so that these agencies will continue to provide adequate
staffing for the Debtors. The Debtors estimate that their
total accrued and unpaid obligations to the temporary
agencies aggregate $150,000.
Mr. Karotkin contends that the Debtors' Employees are essential
to the continued operation of their businesses and the Debtors'
successful reorganization, and the Employees' morale directly
affects their effectiveness and productivity. Consequently, it
is critical that the Debtors continue, in the ordinary course,
those personnel policies, programs and procedures that were in
effect prior to the Petition Date. If the checks issued and
electronic fund transfers requested in payment of any Employee
Obligations have been or are dishonored, or if these obligations
are not timely paid postpetition, the Debtors' Employees will
suffer extreme personal hardship and may be unable to pay their
daily living expenses. These circumstances undoubtedly will
adversely affect their performance and similarly adversely
impact the Debtors' reorganization effort to the detriment of
all parties-in-interest.
Moreover, Mr. Karotkin believes that the treatment of former
employees impacts current employees because current employees
naturally will harbor concerns about their treatment in the
event they are terminated, particularly in light of work force
reductions recently undertaken by the Debtors. In addition, it
would be inequitable to require the Debtors' Employees to bear
personally the cost of any business expenses they incurred
prepetition, for the benefit of the Debtors, with the
understanding that they would be reimbursed.
Because the temporary employees are not employees of the
Debtors, Mr. Karotkin insists that the claims of temporary
employees likely are not priority claims within the meaning of
Section 507(a)(3) of the Bankruptcy Code. However, the
continued utilization of temporary employees is necessary for
the continued efficient operation of the Debtors. Any
disruption in the services rendered by the Debtors' temporary
employees would be severely disruptive to their business
operations. If the Debtors do not honor their prepetition
obligations to the temporary agencies, those agencies may cease
doing business with the Debtors, thereby causing a significant
disruption in the Debtors' operations. Accordingly, the Debtors
believe that the payment of the Temporary Agency Obligations is
warranted, particularly in view of the relatively modest amount
outstanding relating to the prepetition period.
Mr. Karotkin asserts that the payment of all Employee
Obligations in accordance with the Debtors' prepetition business
practices is in the best interests of the Debtors' estates,
their creditors and all parties-in-interest and will enable the
Debtors to continue to operate their businesses in an economic
and efficient manner without disruption. The Debtors' employees
are central to their operations and are vital to this
reorganization. A significant deterioration in employee morale
at this critical time undoubtedly would have a devastating
impact on the Debtors, their customers and vendors, the value of
the Debtors' assets and businesses and the Debtors' ability to
continue operations. The total amount to be paid is relatively
modest compared with the size of the Debtors' overall businesses
and the importance of the Employees to the Debtors'
reorganization efforts.
The Court also authorizes and directs the Disbursement Banks to
honor and pay all prepetition and postpetition checks issued or
to be issued, and fund transfers requested or to be requested,
by the Debtors in respect of the Employment Obligations. The
Debtors are also authorized to issue new postpetition checks, or
effect new fund transfers, on account of the Employee
Obligations to replace any prepetition checks or fund transfer
requests that may be dishonored or rejected.
As a result of the commencement of the Debtors' Chapter 11
cases, and in the absence of an order of the Court providing
otherwise, Mr. Karotkin is concerned that the Debtors' checks,
wire transfers and direct deposit transfers in respect of the
Employee Obligations may be dishonored or rejected by the
Disbursement Banks. The Debtors represent that each of these
checks or transfers is or will be drawn on the Debtors' payroll
and general disbursement accounts and can be readily identified
as relating directly to payment of the Employee Obligations.
Accordingly, the Debtors believe that prepetition checks and
transfers, other than those for Employee Obligations, will not
be honored inadvertently. (Magellan Bankruptcy News, Issue No.
2: Bankruptcy Creditors' Service, Inc., 609/392-0900)
Magellan Health Services' 9.375% bonds due 2007 (MGL07USA1) are
trading at about 83 cents-on-the-dollar, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=MGL07USA1for
real-time bond pricing.
METATEC INT'L: Sets Annual Shareholders' Meeting for May 15
-----------------------------------------------------------
The Annual Meeting of Shareholders of Metatec International,
Inc., an Ohio corporation, will be held at the Company's
principal executive offices located at 7001 Metatec Boulevard,
Dublin, Ohio 43017, on Thursday, May 15, 2003, at 1:00 p.m.,
local time, for the following purposes:
1. To elect two Class I directors;
2. To consider and vote upon a proposal to amend the
Company's Articles of Incorporation to change the
Company's name to Metatec, Inc.; and
3. To transact such other business as may properly come
before the meeting or any adjournment thereof.
The close of business on March 24, 2003, has been fixed as the
record date for the determination of shareholders entitled to
notice of, and to vote, at the meeting, and any adjournment
thereof.
Metatec enables companies to streamline the process of
delivering products and information to market by providing
technology driven supply chain solutions that increase
efficiencies and reduce costs. Technologies include a full range
of supply chain solutions and CD-ROM and DVD manufacturing
services. Extensive real-time customer-accessible online
reporting and tracking systems support all services. Metatec
operations are based in Dublin, Ohio.
More information about Metatec is available by visiting the
company's Web site at http://www.metatec.com
At September 30, 2002, the Company's balance sheets show a total
shareholders' equity deficit of approximately $11 million.
MICROCELL: Creditors Accept Proposed Reorganization Plan
--------------------------------------------------------
Microcell Telecommunications Inc., (TSX:MTI.B) announced that,
at meetings held this morning, its secured and affected
unsecured creditors overwhelmingly approved the proposed Plan of
Reorganization and of Compromise and Arrangement described in
the Company's Information Circular and Proxy Statement dated
February 17, 2003. The Plan provides for a comprehensive
recapitalization of Microcell that significantly reduces the
Company's debt obligations by approximately C$1.7 billion and
its annual interest obligations by a range of approximately
C$160 million to C$200 million.
"We are pleased that the Plan received such a strong endorsement
from our creditors," said Andre Tremblay, President and Chief
Executive Officer of Microcell Telecommunications Inc. "The Plan
is in the best interests of all stakeholders, both in the short
and long term, not only because the Plan provides the best
available recovery for them, but also because it establishes a
new capital structure that strengthens the financial position of
Microcell. I want to especially acknowledge our employees for
their hard work, and our customers and suppliers for their
support throughout this process."
At the secured creditors' meeting, 98% of the secured creditors
who voted approved the Plan, representing 93% of the total value
of the secured claims that were voted either in person or by
proxy. Similarly, the Plan was also approved by 100% of the
affected unsecured creditors who voted at their respective
meeting, representing 100% of the total value of the affected
unsecured claims that were voted either in person or by proxy.
Jacques Leduc, Chief Financial Officer and Treasurer of
Microcell stated, "We believe the Plan leaves us well positioned
financially with positive and growing operating cash flow, the
lowest debt level of any of the Canadian wireless operators,
some of the best credit ratios in the industry, a lean cost
structure, and sufficient liquidity to deliver on our current
business plan.
"In fact, we have more liquidity today than when we first began
the restructuring process last August, which is a tribute to the
soundness of our business operations."
On March 18, 2003, the Company will ask the Court to sanction
the Plan. The hearing will be held in Montreal at the Palais de
Justice, located at 1 Notre-Dame Street East, starting at 9:15
a.m. (ET). Subject to Court approval, the Company expects that
the effective date for implementation of the Plan will occur by
the end of April 2003.
Microcell Telecommunications Inc., is a provider of
telecommunications services in Canada dedicated solely to
wireless. The Company offers a wide range of voice and high-
speed data communications products and services to approximately
1.2 million customers. Microcell operates a GSM network across
Canada and markets Personal Communications Services and General
Packet Radio Service under the Fido(R) brand name. Microcell
Telecommunications has been a public company since October 15,
1997, and is listed on the Toronto Stock Exchange under the
stock symbol MTI.B.
NEW WORLD RESTAURANT: Refinancing Risk Prompts S&P's CCC- Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on quick-casual restaurant operator New World Restaurant
Group Inc., to 'CCC-' from 'CCC+' based on increased refinancing
risk facing the company, as its $140 million senior secured
notes mature on June 15, 2003. The rating remains on
CreditWatch with negative implications.
"New World has not filed financial statements since the first
quarter of 2002 and has yet to complete the reaudit of its
financial statements for the fiscal years ended Dec. 31, 2000,
and Jan. 1, 2002," Standard & Poor's credit analyst Robert
Lichtenstein said. "Moreover, the company is challenged to
refinance amid an informal investigation by the SEC, and a
Department of Justice inquiry pertaining to the previous
management."
NOVADEL: Cash Inadequate to Continue Operations Beyond 3 Months
---------------------------------------------------------------
Novadel Pharma Inc., a Delaware corporation, is engaged in
development of novel application drug delivery systems for
presently marketed prescription and over-the-counter drugs and
has been a consultant to the pharmaceutical industry. Since
1992, the Company has used its consulting revenues to fund its
own product development activities.
Since its inception, substantially all of the Company's revenues
have been derived from its consulting activities. The Company
has had a history of recurring losses from operation, giving
rise to an accumulated deficit at January 31, 2003 of
approximately $13,296,000. For the 6 months ending January 31,
2003, the Company has had no revenue from consulting as the
Company has shifted its emphasis away from product development
consulting for its clients and to development of its own
products.
For the reasons stated above, the Company anticipates that it
will incur substantial operating expenses in connection with the
testing and approval of its proposed delivery systems, and
expects these expenses will result in continuing and significant
operating losses until such time, if ever, that the Company is
able to achieve adequate sales levels.
In view of the Company's very limited resource, its anticipated
expenses and the competitive environment in which the Company
operates, there can be no assurance that its operations will be
sustained for the duration of the current fiscal year.
The Company believes that it currently has sufficient cash to
satisfy its cash requirements for at least the next three (3)
months. However, beyond this point there is substantial doubt
about the Company's ability to continue operations without
obtaining additional financing and/or consummating a strategic
alliance with a well-funded business partner. There are a
number of risks and uncertainties related to the Company's
attempt to complete a financing or strategic partnering
arrangement that are outside the control of the Company. It
indicates that it may not be able to successfully obtain
additional financing on terms acceptable to the Company, or at
all. These uncertainties raise substantial doubt as to the
Company's ability to continue as a going concern. The
Company's auditors have qualified their audit opinion with
regard to the Company's ability to continue as a going concern.
NTELOS: Taps Administar Services as Claims and Noticing Agent
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Virginia
gave its nod of approval to NTELOS Inc., and its debtor-
affiliates' application to employ Administar Services Group,
Inc., as official claims and noticing agent of Clerk.
The Debtors have numerous creditors, potential creditors and
parties in interest to which certain notices must be sent. The
Clerk of the Bankruptcy Court is not adequately equipped or
staffed to docket and otherwise manage the large number of
proofs of claim that are expected to be filed by the Debtors'
creditors or to provide notices to such creditors and other
parties in interest
Consequently, to relieve the Clerk's Office of such burden,
Administar will:
a) prepare and serve certain required notices in the Chapter
11 proceeding, including: notice of commencement of the
case, notice of claims bar date, notice of objections to
claims, notice of any hearings on disclosure statement and
confirmation of a plan of reorganization, as well as other
miscellaneous notices to any entities, as the Debtors or
the Court may deem necessary or appropriate;
b) place any notice advertisements in publications or
alternate media sources as may be prescribed by the Debtors
or the Court;
c) file certificates of service with the Clerk's Office
including a copy of the notice and corresponding service
list;
d) maintain copies of all proofs of claim and proofs of
interest filed;
e) maintain the official claims registry by docketing all
proofs of claim and proofs of interest on claims registers
including name and address, date received, claim number
assigned, asserted amount and classification of claim;
f) ensure security and completeness of the claims registry;
g) transmit the claims registry to the Clerk's Office on a
specified basis;
h) maintain an up-to-date mailing list of all entities that
have filed a proof of claim or proof of interest and make
such list available upon request;
i) provide to the public for examination copies of proofs of
claim or proofs of interest during regular business hours;
j) record all transfers of claims and provide notice of such
transfers as required;
k) provide remote, web-based access to the Claims Agent's
database for the Debtors' personnel and professionals;
l) provide creditor communications services as may be
requested by the Debtors, including but not limited to,
development of a case information website and management of
a creditor information call center;
m) provide balloting and disbursement services as may be
requested by the Debtors;
n) provide consulting services to assist in various projects
as requested by the Debtors or their professionals.
Administar Services' hourly rates are:
Vice President/Principal $175 per hour
Senior Consultants/Senior Programmers $125 per hour
Consultants/Programmers $95 per hour
Call Center/Management $65 per hour
Administrative/Clerical $40 per hour
Call Center Attendants $32 per hour
NTELOS Inc., a regional integrated communications provider
offering a broad range of wireless and wireline products and
services, filed for chapter 11 protection on March 4, 2003
(Bankr. E.D. Va. Case No. 03-32094). Linda Lemmon Najjoum,
Esq., at Hunton & Williams represents the Debtors in their
restructuring efforts. When the Company filed for protection
from their creditors, it listed $800,252,000 in total assets and
$784,976,000 in total debts.
ON SEMICONDUCTOR: Board Elects Donald Colvin as SVP and CFO
-----------------------------------------------------------
ON Semiconductor (Nasdaq: ONNN) announced that its board of
directors has elected Donald Colvin as senior vice president and
chief financial officer effective April 2, 2003.
Colvin will replace John T. Kurtzweil, ON Semiconductor's
current CFO, upon Kurtzweil's resignation from the company
following completion of the year-end financial reporting
process.
Colvin has more than 26 years of experience in managing
international finances in the semiconductor industry. He comes
to ON Semiconductor from Atmel Corporation, a manufacturer of
advanced semiconductors, where he most recently served as vice
president of finance and CFO. Prior to his experience at Atmel,
he held various senior financial positions, including CFO with
European Silicon Structures. Colvin also held various financial
positions with Motorola Semiconductors Europe earlier in his
career. He earned his bachelor's in economics, with honors, and
an MBA from the University of Strathclyde, Scotland.
"As we evolve our strategy from an internal focus to one that
emphasizes global market share gain and revenue growth, Donald's
extensive experience with international semiconductor finances
will provide us with a definitive advantage," said Keith
Jackson, ON Semiconductor president and CEO. "The geographic
realities of today's global semiconductor market require an in-
depth understanding of international business and finance.
Donald clearly has this experience and we're excited to welcome
him aboard as we continue to make this company's potential a
reality."
In the interim, Kurtzweil will continue to serve the company to
aid in the transition process. Over the past year, Kurtzweil
served as ON Semiconductor's senior vice president and CFO.
Prior to ON Semiconductor, he was senior vice president of
finance and CFO at Read-Rite Corp., a hard disk drive
manufacturer, and held several senior finance positions with
other high-tech companies.
"We are extremely grateful for John's contributions to this
company as we navigated the continued challenge of the
marketplace conditions," Jackson said. "We wish him the best in
his future endeavors."
ON Semiconductor offers an extensive portfolio of power- and
data-management semiconductors and standard semiconductor
components that address the design needs of today's
sophisticated electronic products, appliances and automobiles.
For more information visit ON Semiconductor's Web site at
http://www.onsemi.com
As reported in Troubled Company Reporter's February 19, 2003
edition, Standard & Poor's assigned its 'B' rating to the
planned sale by ON Semiconductor Corp., (B/Negative/--) of
$200 million of Rule 144a senior secured notes due 2010.
Proceeds of the note issue will be used to prepay bank debt.
Other ratings were affirmed.
The Phoenix, Arizona-based maker of commodity semiconductors had
debt of $1.6 billion, including capitalized operating leases, at
December 31, 2002.
"ON's financial profile, although improving, remains marginal
for the rating level," said Standard & Poor's credit analyst
Bruce Hyman. "If debt-protection measures do not continue to
improve in coming quarters, the ratings could be lowered."
PEABODY ENERGY: Names Charles Ebetino to Lead Market Dev't Team
---------------------------------------------------------------
Peabody Energy has named Charles A. Ebetino Jr. senior vice
president of market development for its sales and marketing
subsidiary, Peabody COALSALES Company. Ebetino will be
responsible for completion of contract and asset restructuring
transactions, development of value-added products and services
for Peabody customers and establishment of new third-party coal
supply and arrangements. He will report to Executive Vice
President of Sales, Marketing and Trading Richard M. Whiting.
With expertise in engineering, operations, marketing and
management, Ebetino joins Peabody after more than two decades
with American Electric Power. He served in a number of
management roles in the fuel procurement and supply group,
including senior vice president of fuel supply and president and
chief operating officer of AEP's 11 coal mining and coal-related
subsidiaries from 1993 until 2002. In 2002, he formed Arlington
Consulting Group, Ltd., an energy industry consulting firm.
He was elected to the National Mining Association board of
directors in 1994 and chaired the NMA Environmental Committee
from 1996 through 2001. He also was appointed to the Edison
Electric Institute's Power Generation Subject Area Committee in
1996, serving as vice chairman from 1998 to 2000 and chairman
from 2000 to 2002. Ebetino was appointed to the Inland Waterway
Users Board in 1997 and served as vice chairman in 2000. He was
also elected to the Western Coal Transportation Association
board of directors for nine years and served as president from
1998 to 2000.
Ebetino has a bachelor of science degree in civil engineering
with a minor in economics from Rensselaer Polytechnic Institute
in Troy, N.Y. He attended the New York University School of
Business for graduate study in finance.
Peabody Energy (NYSE: BTU) is the world's largest private-sector
coal company, with 2002 sales of 198 million tons of coal and
$2.7 billion in revenues. Its coal products fuel more than 9
percent of all U.S. electricity generation and more than 2
percent of worldwide electricity generation.
* * *
As previously reported in Troubled Company Reporter, Fitch
Ratings assigned a 'BB+' to Peabody Energy's proposed $600
million revolving credit facility and a new $600 million bank
term loan and a 'BB' to its proposed issuance of $500 million of
senior unsecured notes due 2013. The Rating Outlook remains
Positive. A portion of the proceeds from the new credit facility
and senior unsecured note offering will be used to fund the
repurchase of the company's existing 8-7/8% senior notes and
9-5/8% senior subordinated notes, which the company is seeking
to acquire through a tender offer commenced on Feb. 27, 2003. At
the completion of Peabody's refinancing the rating on its senior
subordinated notes, currently rated 'B+', will be withdrawn.
Since March 31, 1999, Peabody has reduced its total debt by over
$1.5 billion. At the end of FY2002 Peabody has a Debt/EBITDA of
approximately 2.5 times and an EBITDA/Interest of 4.0x.
Internally generated funds will be used for further debt
reduction. The ratings also incorporate the likelihood of tuck-
in acquisitions as the industry continues to consolidate.
However, any large acquisition that would substantially increase
leverage could affect the company's financial flexibility and
negatively impact Peabody's credit quality. Peabody's legacy
postretirement health care and pension liabilities are
significant but Fitch feels that these are manageable.
PERSONNEL GROUP: Inks Definitive Debt Restructuring Agreements
--------------------------------------------------------------
Personnel Group of America, Inc. (OTCBB:PRGA), announced the
execution of definitive agreements with certain of its
creditors, including the holders of approximately $110.0 million
(or 96%) of its outstanding 5.75% Convertible Subordinated Notes
due 2004 and approximately $43.8 million (or 42%) of its senior
revolving credit debt, to effect the financial restructuring of
PGA's balance sheet. Pursuant to the definitive agreements, the
participating 5.75% noteholders will exchange their 5.75% Notes
with the Company and receive the following for each $1,000 in
principal amount of notes exchanged:
-- $28.75 in cash;
-- 190.9560 shares of newly issued shares of PGA common stock;
and
-- 9.5242 shares of Series B preferred stock of PGA, each share
of which will be convertible into 100 shares of common stock
of PGA and will automatically convert into shares of common
stock upon any amendment to PGA's charter increasing the
authorized number of shares of common stock. The Series B
preferred stock will vote on all matters with the common
stock as if converted, will have a liquidation preference of
$.01 per share, and otherwise will have no greater rights or
privileges than the common stock.
Following completion of the notes exchange contemplated in the
definitive restructuring agreements, the participating
noteholders will own approximately 82% of PGA's then outstanding
common stock (assuming for this purpose that all shares of
Series B preferred stock have been converted) and the existing
shareholders (who will retain their PGA shares) approximately
18%.
Also, as announced previously, PGA and its senior revolving
credit lenders who are parties to the definitive agreements have
secured options from the non-participating senior lenders to
acquire the non-participating senior lenders' interests in the
revolving credit facility.
The Company plans to file with the Securities and Exchange
Commission copies of the definitive restructuring agreements as
exhibits to a Current Report on Form 8-K.
Pursuant to the definitive restructuring agreements, PGA has
amended its shareholder rights plan to exempt the execution of
the definitive agreements, and the transactions contemplated
therein, from triggering rights under that plan.
PGA expects to close the financial restructuring in the first
half of 2003. Completion is subject to a number of conditions,
however, and there can be no assurance that the Company will be
able to complete the proposed restructuring as planned or at
all.
Personnel Group of America, Inc., whose December 29, 2002
balance sheet shows a total shareholders' equity of about $52
million, is a nationwide provider of information technology
consulting and custom software development services; high-end
clerical, accounting and other specialty professional staffing
services; and technology systems for human capital management.
The Company's IT Services operations now operate under the name
"Venturi Technology Partners" and its Commercial Staffing
operations operate as "Venturi Staffing Partners" and "Venturi
Career Partners."
PRIMUS TELECOMMS: Raises $13 Million in New Debt Financing
----------------------------------------------------------
PRIMUS Telecommunications Group, Incorporated (Nasdaq: PRTL), a
global facilities-based telecommunications services provider
offering an integrated portfolio of voice, data, Internet, and
Web hosting services, has obtained $13 million in new debt
financing and completed the restructuring of an existing major
vendor facility.
PRIMUS's wholly-owned subsidiary, PRIMUS Telecommunications
Canada Inc., entered into a C$20 million (US$13 million) secured
credit facility with a major Canadian financial institution. The
proceeds from the two-year, non-amortizing facility are
earmarked for acquisitions.
PRIMUS also announced that it had consummated a transaction to
restructure $58 million of secured loan facilities that had
funded the purchase of telecommunications equipment.
Essentially, the transaction consolidates three former secured
loans into a single secured facility with a maturity date of
December 1, 2006. As a result of the transaction, PRIMUS is able
to defer principal payments that were otherwise due beginning in
the first quarter in 2002 for eighteen months; principal
payments will now commence in July 2003 at a reduced level for
six months, and level amortization payments will thereafter
commence in January 2004. In addition, the interest rate on the
restructured facility has been reduced from a blended fixed rate
of approximately 10.6 percent from the three former facilities
to a fixed rate 8 percent facility. The new consolidated
facility is secured by the equipment (primarily switches)
purchased with the proceeds of the original loans, as well as
additional network equipment located in the United States. The
restructured facility also contains covenants and financial
ratios that are customary in such transactions.
In commenting on the transactions, K. Paul Singh, Chairman and
Chief Executive Officer of PRIMUS, stated: "We are pleased to
report these developments which reflect the substantial
improvement in PRIMUS's financial condition. The restructuring
of the $58 million of secured equipment facilities, which
represents almost half of our remaining vendor debt, provides
PRIMUS with substantial cash flow benefits and evidences the
lender's confidence in PRIMUS's future prospects. The facility
secured by our Canadian subsidiary demonstrates the ability of
our major operating units to attract capital in their own right.
These developments announced [Mon]day, together with our
anticipated receipt later this month, assuming requisite
shareholder approval, of the $9 million in remaining proceeds
from our Series C Convertible Preferred Stock issuance in a
transaction led by funds affiliated with the American
International Group (AIG), bolster our near-term liquidity
position. As a result, we do not have any immediate plans to
pursue the issuance of additional Convertible Preferred Stock
that may be issued without the consent of the holders of Series
C Convertible Preferred Stock in accordance with the terms of
the Series C Convertible Preferred Stock as previously disclosed
by the Company."
PRIMUS Telecommunications Group, Incorporated (NASDAQ: PRTL) is
a global facilities-based telecommunications services provider
offering bundled voice, data, Internet, digital subscriber line,
Web hosting, enhanced application, virtual private network, and
other value-added services. PRIMUS owns and operates an
extensive global backbone network of owned and leased
transmission facilities, including over 300 IP points-of-
presence throughout the world, ownership interests in over 23
undersea fiber optic cable systems, 19 international gateway and
domestic switches, a satellite earth station and a variety of
operating relationships that allow it to deliver traffic
worldwide. PRIMUS also has deployed a global state-of-the-art
broadband fiber optic ATM+IP network and data centers to offer
customer Internet, data, hosting and e-commerce services.
Founded in 1994 and based in McLean, VA, PRIMUS serves
corporate, small- and medium-sized businesses, residential and
data, ISP and telecommunication carrier customers primarily
located in the North America, Europe and Asia Pacific regions of
the world. News and information are available at PRIMUS's Web
site at http://www.primustel.com
At December 31, 2002, Primus Telecommunications' balance sheet
shows a working capital deficit of about $73 million, and a
total shareholders' equity deficit of about $200 million.
Primus Telecomms.' 12.75% bonds due 2009 (PRTL09USR2) are
trading at about 77 cents-on-the-dollar, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=PRTL09USR2
for real-time bond pricing.
QWEST: Providing Advanced Data Comms. To Recreational Equipment
---------------------------------------------------------------
Recreational Equipment, Inc., the nation's leading retailer of
quality outdoor gear and clothing, has chosen Qwest
Communications International Inc., (NYSE: Q) to provide advanced
data communications. Qwest will help REI ensure its data is
secure and reliable, helping REI keep employees, co-operative
members and customers connected to each other.
Specifically, Qwest is helping REI diversify its data transport
services. With dedicated Internet access services and network
equipment, Qwest will help REI create secondary pathways for its
data to travel in the event of an outage or problem at the
primary pathway. REI will also have the benefit of Qwest's
expert technical support, which can trouble-shoot and
proactively prevent network issues.
"Qwest's account team took the time to listen to our needs and
develop a solution that actually made sense for us, instead of
jamming technology down our throats," said Ernie Hughes,
director of information technology, REI. "We've had an excellent
experience with Qwest and hope to continue our relationship."
REI was founded in 1938 as a consumer cooperative by a group of
Pacific Northwest mountaineers seeking quality climbing
equipment. While anyone may shop at REI, members pay a one-time
$15 fee and receive a share in the company's profits through an
annual patronage refund based on their purchases. A portion of
REI's profit is set aside each year for support of conservation
and recreation causes. REI has given more than $9 million since
1976 to such efforts around the nation. In 2002, REI awarded
more than $1 million for conservation, outdoor recreation and
environmental stewardship projects. REI operates 63 retail
stores in 24 states; two online stores, REI.com and REI-
OUTLET.com; and an adventure travel company, REI Adventures.
"We're pleased to have forged this new relationship with REI
because it's right in our backyard," said Cliff Holtz, executive
vice president, Qwest Business Markets Group. "REI has an
excellent reputation for customer service and innovation in
outdoor gear, which fits well with Qwest's ongoing service
commitments. "We're excited about the future and the opportunity
to help REI deliver high-quality service to its customers."
Qwest Communications International Inc., (NYSE: Q) is a leading
provider of voice, video and data services to more than 25
million customers. The company's 50,000-plus employees are
committed to the "Spirit of Service" and providing world-class
services that exceed customers' expectations for quality, value
and reliability. For more information, please visit the Qwest
Web site at http://www.qwest.com
Qwest Communications' December 31, 2002 balance sheet shows a
working capital deficit of about $1.2 billion, and a total
shareholders' equity deficit of about $1 billion.
Qwest Communications' 7.500% bonds due 2008 (Q08USR3) are
trading at about 85 cents-on-the-dollar, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=Q08USR3for
real-time bond pricing.
RAMPART: Ontario Regulator Withdraws Enforcement Proceeding
-----------------------------------------------------------
Staff of the Ontario Securities Commission has withdrawn an
enforcement proceeding in respect of Rampart Securities Inc.
The Commission issued a Notice of Hearing on August 14, 2001. A
Temporary Order suspending Rampart's registration and ordering
that Rampart cease trading was issued the same day. It alleged
that Rampart had a capital deficiency contrary to section 107 of
Ontario Regulation 1015 that required Rampart to maintain
adequate capital at all times.
On October 24, 2001, Rampart was petitioned into bankruptcy and
Ernst & Young were appointed Trustee.
Since the issuance of the OSC Notice of Hearing, the Investment
Dealers Association disciplined Rampart for violations in the
sales compliance, financial compliance and regulatory capital
areas. The IDA terminated Rampart's rights, privileges and
membership in the IDA, imposed a fine of $3 million and ordered
Rampart to pay costs of $270,000. Settlements were reached with
the principals of Rampart.
As a result of the sanctions imposed by the IDA, Staff of the
Enforcement Branch is withdrawing the Notice of Hearing.
SAFETY-KLEEN: Wins OK to Preserve Avoidance Actions for 75 Days
---------------------------------------------------------------
Safety-Kleen Corp., and its debtor-affiliates obtained Judge
Walsh's approval granting a further extension of time, for an
additional 75 days, to effect service of original process for
the Avoidance Actions.
As a result of the two year statute of limitations to commence
certain causes of action, the Debtors were required to commence
avoidance actions by June 9, 2002 or potentially forfeit such
causes of action. However, serving the Complaints at this stage
of these bankruptcy proceedings against a potentially
significant percentage of the Debtors' current vendors could
result in substantial harm to the estates and the Debtors'
ability to complete the reorganization.
On January 23, 2003, the Debtors filed their (i) Disclosure
Statement with Respect to the First Amended Joint Plan of
Reorganization of Safety-Kleen Corp., and Certain of Its Direct
and Indirect Subsidiaries and (ii) the First Amended Plan of
Reorganization of Safety-Kleen Corp. and Certain of Its Direct
and Indirect Subsidiaries. The Disclosure Statement hearing is
scheduled for February 21, 2003, and the confirmation hearing is
scheduled for March 31, 2003. The Debtors expect to go forward
on these dates and, assuming the Amended Plan is confirmed,
emerge from Chapter 11 in mid to late April, 2003. (Safety-Kleen
Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
SERVICE MERCHANDISE: Claim Classification & Treatment Under Plan
----------------------------------------------------------------
In accordance with Section 1122 of the Bankruptcy Code, Service
Merchandise Company, Inc., and its debtor-affiliates' Joint Plan
provides for the classification of Classes of claims and equity
interests. Section 1122(a) permits a plan to place a claim or
an interest in a particular class only if the claim or interest
is substantially similar to the other claims or interests in
that class. Pursuant to Bankruptcy Code Section 1123(a)(1),
Administrative Expense Claims and Priority Tax Claims have not
been classified and the holders of these Claims are not entitled
to vote to accept or reject the Plan. The Debtors believe that
the classification of Claims and Equity Interests under the Plan
is appropriate and consistent with applicable law.
Class Treatment
----- ---------
N/A Administrative Claims
Each holder of an Allowed Administrative Claim will
receive, in full satisfaction, settlement, release and
discharge of, and in exchange for, the Claim:
-- Cash equal to the unpaid portions of the Allowed
Administrative Claim; or
-- other less favorable treatment which the Debtors or
Reorganized Service Merchandise and the Allowed
Claim Holder will have agreed in writing.
However, the Allowed Administrative Claim against a
Debtor with respect to the liabilities incurred in the
ordinary course of business during the Chapter 11 Cases
may be paid in the ordinary course of business in
accordance with the terms and conditions of any related
agreements in the Debtors', Reorganized Service
Merchandise's or the Plan Administrator's discretion,
after consulting the Creditors' Committee or the Plan
Committee.
N/A Priority Tax Claims
On, or as soon as reasonably practicable after the later
of (a) the Effective Date, or (b) the date on which a
Priority Tax Claim becomes an Allowed Priority Tax
Claim, the Allowed Claim Holder will receive in full
satisfaction, settlement, release and discharge of, and
in exchange for the claim:
-- Cash equal to the Allowed Priority Tax Claim; or
-- other less favorable treatment, which the Debtors or
Reorganized Service Merchandise and the Holder will
have agreed in writing.
Any Priority Tax Claim that is not allowed, including
any Allowed Priority Tax Claim not due and owing on the
Plan Effective Date, will be paid in accordance with
this provision when the Claim becomes Allowed and due
and owing. However, any Claim or demand for payment of
a penalty will be disallowed pursuant to the Plan, and
the Claimholder will not assess or attempt to collect
the penalty from the Debtors or their Estates,
Reorganized Service Merchandise, the Plan Administrator
or their property.
1 Secured Claims (Unimpaired)
Each holder of an Allowed Claim will receive either Cash
equal to the Claim or other treatment that will leave
the Claim as Unimpaired. The Holder also gets
distributions under the Plan on the later of the
Effective Date, or the date on which the Secured Claim
becomes allowed.
Estimated amount of Allowed Claims: $9.3 - $9.5 million
Estimated recovery: 100%
2 Non-Tax Priority Claims (Unimpaired)
Each claimholder will receive either Cash equal to the
amount of the Allowed Non-Tax Priority Claim or other
treatment that will leave the Claim as unimpaired.
Claimholders will also receive distributions under the
Plan on the later of the Effective Date or the date on
which its Non-Tax Priority Claim becomes allowed.
Estimated amount of Allowed Claims: $0
Estimated recovery: 100%
3 Prepetition Senior Secured Note Deficiency Claims &
Prepetition Senior Notes Claims (Impaired)
On the initial Distribution Date, or as soon as is
reasonably practicable, and on each Subsequent
Distribution Date until the Allowed Class 3 Claims and
Subordination Rights are satisfied fully, the holders of
Allowed Class 3 Claims will be entitled to receive:
-- their Pro Rata share of the Net Available Cash,
and Cash held in the Supplemental Distribution
Account as to Subsequent Distributions; plus
-- the amount otherwise distributable to or for the
benefit of Holders of Allowed Class 5 Claims.
After the Claims and Subordination Rights are satisfied
in full, but subject to the terms and conditions of the
Noteholder Preference Action Settlement, the
Claimholders will be entitled to receive amounts which
would otherwise have been distributable to Allowed Class
3 Claimholders.
Estimated Amount of Allowed Claims: $23,000,000
Estimated Subordination Redistribution Amount: $24.0 -
$25.8 million
-- This is comprised of $18,000,000 to $19,800,000 of
Allowed Class 3 Claims which were not satisfied
through distributions under the Plan and $6,000,000
of postpetition interest and charges incurred under
the applicable inter-creditor agreements.
Estimated % Recovery w/o Subordination Redistribution
Amount: 13.8% to 22.9%
Estimated % Recovery w/ Subordination Redistribution
Amount: 100%
4 General Unsecured Claims (Impaired)
On the Initial Distribution Date, or as soon as is
reasonably practicable, and on each Subsequent
Distribution date, the holders of allowed Class 4 claims
will be entitled to receive:
-- their Pro Rata share of the Net Available Cash, and
Cash held in the Supplemental Distribution Account
as to Subsequent Distributions; plus
-- if the Court authorizes and approves the Noteholder
Preference Action Settlement and the Allowed Class 3
Claims and Subordination Rights are satisfied in
full, the amounts otherwise distributed to or for
the benefit of the Allowed Class 5 Claim Holders
until the Noteholder Preference Claim Redistribution
Amount has been satisfied in full accordance with
the terms and conditions in the Plan.
The Allowed Class 4 Claim Holders may make an
irrevocable written election to opt-into the
classification of Claim 6 on a validly executed and
timely delivered ballot. This election will reduce the
Claim to $5,000 and cause the claimholder to instead be
deemed a holder of a Class 6 General Unsecured
Convenience Claim for all purposes.
Estimated Amount of Allowed Claims: $245 - $300 million
Estimated % Recovery w/ Noteholder Preference Action
Settlement: 13.8% to 22.9%
Estimated % Recovery w/o Noteholder Preference Action
Settlement: 13.5% to 23.9%
5 Prepetition Subordinated Notes Claims (Impaired)
If the Court authorizes and approves the Noteholder
Preferences Action Settlement, then on the Initial
Distribution Date, or as soon as is reasonably
practicable, and on each Subsequent Distribution Date,
the Allowed Claimholders will be entitled to receive
their Pro Rata share of the Net Available Cash, and Cash
held in the Supplemental Distribution Account as to
Subsequent Distributions, provided that the amounts
otherwise distributable to or for the benefit of Allowed
Class 5 Claimholders will be redistributed:
-- first, to Allowed Class 3 Claimholders until the
Allowed Class 3 Claims and Subordination Rights have
been satisfied in full, after which time, the excess
amounts will be redistributed to the Allowed Class 5
Claimholders; and
-- then, to Holders of Allowed Class 4 claims in
accordance with the terms and conditions of the
Noteholder Preference Action Settlement.
If the Court does not authorize and approve the
Noteholder Preference Action Settlement for any reason,
then 100% of the face amount of the Class 5 Claims will
be treated as Disputed Class 5 Claims pursuant to the
Plan and the Holders will not be entitled to any
distributions under the Plan until a Final Order is
entered by the Bankruptcy Court resolving the Noteholder
Preference Action.
Estimated Amount of Allowed Claims: $306,700,000
Estimated % Recovery w/ Noteholder Preference Action
Settlement: 5.1% to 13.4%
Estimated % Recovery w/o Noteholder Preference Action
Settlement: 3.0% to 14.1%
6 General Unsecured Convenience Claims (Impaired) --
$5,000 or less
The holders of Allowed Class 6 Claims will receive, at
the election of the Debtors or Reorganized Service
Merchandise, after consulting the Creditors' Committee
or the Plan Committee, Cash equivalent to 18.3% of the
Allowed General unsecured Convenience Claims on the
Initial Distribution, or the same treatment provided for
Allowed Class 4 Claims.
The Claimholders may elect to be treated in the same
manner and fashion as Class 4 Holders. Likewise, a
Class 4 Claimholders may elect to reduce their Allowed
Claim to $5,000 and be treated in the same manner and
fashion as Allowed Class 6 Claimholders.
By remaining, or voting to be treated as a General
Unsecured Convenience Claim, the Class 6 Holder forever
waives and releases any rights to a Subsequent
Distribution under the Plan.
Estimated Amount of Allowed Claims: $660,000 - $700,000
Estimated % Recovery Under Cash Option: 18.3%
Estimated % Recovery Under Class 4 Option: 13.8% to
22.9%
7 Old Equity Interests and Subordinated Claims
(Unimpaired)
On the Effective Date, the Old Equity will be cancelled
and neither the holders of the Old Equity nor of
Subordinated Claims will receive or retain any
distribution on account of their Claims. Thus, they are
deemed to reject the Plan.
Estimated Amount of Allowed Claims: $0
(Service Merchandise Bankruptcy News, Issue No. 46; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
SHAW GROUP: Pulls Plug on Covert and Harquahala Contracts
---------------------------------------------------------
The Shaw Group Inc., (NYSE: SGR) has notified PG&E National
Energy Group, Inc., and its lenders that Shaw has terminated two
engineering, procurement and construction contracts with NEG's
subsidiaries Covert Generating LLC and Harquahala Generating
LLC.
Shaw is continuing discussions with NEG and its lenders towards
a mutually agreeable resolution of contract issues surrounding
the Projects. At this time, Shaw plans to continue to work on
the Projects while in discussions. Shaw has elected to terminate
the Contracts in order to preserve, and better enable Shaw to
assert, certain legal rights under the Contracts.
Shaw placed Covert and Harquahala in default under the Contracts
on October 16, 2002. Since that time, the Company has continued
to work on the Contracts while seeking assurances of payment
from NEG. To that end, the Company filed suit on December 13,
2002 in U.S. District Court in Delaware. The Company has
dismissed the lawsuit, and NEG has returned to Shaw
approximately $50 million of letters of credit.
The Shaw Group Inc., offers a broad range of services to clients
in the environmental and infrastructure, power and process
industries worldwide. The Company is a leading provider of
consulting, engineering, construction, remediation and
facilities management services to the environmental,
infrastructure and homeland security markets. The Company is
also a vertically-integrated provider of comprehensive
engineering, consulting, procurement, pipe fabrication,
construction and maintenance services to the power and process
industries. The Company is headquartered in Baton Rouge,
Louisiana with offices and operations in North America, South
America, Europe, the Middle East and the Asia-Pacific region and
employs approximately 17,000 people. For more information please
visit the Company's Web site at http://www.shawgrp.com
* * *
As reported in Troubled Company Reporter's March 5, 2003
edition, Standard & Poor's Ratings Services lowered its
corporate credit rating on Shaw Group Inc. to 'BB+' from 'BBB-'.
At the same time, Standard & Poor's assigned its 'BB' senior
unsecured rating to the engineering and construction firm's
proposed $250 million note offering due 2010. The notes are
expected to be filed under SEC Rule 144A with registration
rights. The ratings assume the timely syndication and completion
of the financing activities. Proceeds from the note offering are
expected to be used to purchase up to $384.6 million of the
firm's LYONs securities in a "Modified Dutch Auction," which
will run through March 26, 2003.
At November 30, 2002, Baton Rouge, Louisiana-based Shaw Group
had $531 million in debt outstanding on its balance sheet. The
outlook is now stable.
"The rating action reflects Standard & Poor's heightened
concerns that Shaw's liquidity will decline over the next
several quarters, mainly due to working capital usage as the
firm works off its power EPC backlog," said Standard & Poor's
credit analyst Joel Levington. "It also reflects weaker-than-
expected profitability on certain projects, which has led the
company to reduce its earnings guidance to $1.32 per share-$1.37
per share in 2003, versus prior expectations of $1.92-$2.08,"
the analyst continued.
SPARTAN: Changes Organizational Structure to Facilitate Growth
--------------------------------------------------------------
Spartan Stores, Inc., (Nasdaq:SPTN) announced organizational
changes under the direction of President and Chief Executive
Officer Craig C. Sturken. The changes are intended to provide an
organizational structure that better supports the Company's
system-wide efforts to improve sales growth and profitability.
They are also expected to improve the effectiveness of the
retail and wholesale marketing and merchandising functions, and
to advance the organization's customer orientation.
Mr. Dennis Eidson, former Divisional President and Chief
Executive Officer of the Great Atlantic and Pacific Tea
Company's Midwest region, and Assistant General Manager for Nash
Finch, Inc.'s Michigan operations, has been named to the newly
created position of Executive Vice President of Marketing and
Merchandising. The position will report directly to Mr. Sturken
and is expected to raise the sales growth performance of both
the retail and distribution business segments. The change is
expected to improve the Company's category management function
by better coordinating the retail and distribution marketing and
merchandising efforts. The retail and distribution marketing and
merchandising operations will continue to function
independently, but will now report to a single executive officer
responsible exclusively for those business disciplines.
The V.P. of marketing and V.P. of retail merchandising positions
that previously reported directly to the President and CEO will
now report to Mr. Eidson. The V.P. of wholesale merchandising
position that previously reported to the E.V.P., of supply chain
and convenience store distribution will also report to
Mr. Eidson.
The divisional V.P. of Pharm operations and the Director of
Corporate Communications will now report directly to Mr.
Sturken. Under the present organizational structure, retail
operations will also report directly to Mr. Sturken.
"The merchandising function is a crucial element necessary to
help improve the operational and financial performance of our
retail stores," stated President and Chief Executive Officer,
Craig C. Sturken. "Recognizing that marketing, merchandising and
category management execution is essential for success in both
our retail and distribution operations, we are making the
organizational changes that will help raise the performance of
these disciplines to higher levels. The new organizational
structure will create stronger managerial ownership and results
accountability. Moreover, the new structure will provide better
operation and communication channels to our customers and
associates. It will further sharpen our focus by bringing us
even closer to these important groups, allowing us to improve
our product and service offerings and customer satisfaction
levels.
"We are very pleased to welcome Dennis Eidson to our executive
management team. Dennis brings a wealth of merchandising
knowledge, insight and experience in both retail and
distribution operations," said Mr. Sturken. "He is a graduate of
Michigan State University's Food Management program and has
spent his entire career working in the Michigan and Ohio
region's grocery industry, giving him a profound knowledge of
our primary markets. He was also instrumental in implementing
successful and disciplined category management programs for
A&P's Farmer Jack retail grocery operations. This new position
will have accountability for improving sales growth and gross
profit margins in both retail and distribution segments. We
firmly believe that Dennis will bring a more structured approach
to the category management function and help to improve our
execution of a key fundamental merchandising principle.
"We believe that these organizational changes are fundamental to
success in restoring retail operations to profitability,
improving our competitive market position, driving better
incremental sales growth, and capturing more of the natural
synergies that exist between our retail stores, customer stores
and distribution operations."
Spartan Stores, Inc., (Nasdaq:SPTN) Grand Rapids, Michigan, owns
and operates 94 supermarkets and 21 deep-discount drug stores in
Michigan and Ohio, including Ashcraft's Markets, Family Fare
Supermarkets, Food Town, Glen's Markets, Great Day Food Centers,
Madison Family Market, Prevo's Family Markets and The Pharm. The
Company also distributes more than 40,000 private-label and
national brand products to more than 330 independent grocery
stores and serves as a wholesale distributor to 6,600
convenience stores.
* * *
As previously reported, Standard & Poor's assigned its single-
'B' rating to Spartan Stores Inc.'s planned $200 million senior
subordinated note offering due in 2012. These notes will be used
to refinance a portion of the company's senior secured debt. The
company operates retail food stores and is a wholesale food
distributor. A double-'B'-minus corporate credit rating was also
assigned to Grand Rapids, Michigan-based Spartan. The outlook is
negative. Pro forma total debt is expected to be about $330
million.
SOTHEBY'S HOLDINGS: Red Ink Continued to Flow in Full-Year 2002
---------------------------------------------------------------
Sotheby's Holdings, Inc. (NYSE: BID; LSE), the parent company of
Sotheby's worldwide auction business, art-related financial
services and real estate brokerage activities, announced results
for the full year and fourth quarter ended December 31, 2002.
For the year ended December 31, 2002 the Company reported total
revenues of $345.1 million, compared to $336.2 million for the
previous year. Net loss for the full year 2002 was $54.7
million, compared to a net loss of $41.7 million for 2001. This
includes pre-tax charges in 2002 of $65.6 million, which are
related to antitrust-related matters $41.0 million, employee
retention costs $22.6 million and the Company's restructuring
plans of $2.0 million.
The antitrust-related charges principally consist of the $20.1
million European Commission fine, which was determined by the
European Commission in October, and the $20 million settlement
related to the International Antitrust Litigation, which was
agreed to, subject to court approval, on March 10, 2003.
Excluding all of the pre-tax items discussed above, the Company
would have recorded a net loss of $3.8 million in 2002. During
full year 2001, the Company recorded pre-tax charges of $38.8
million related to employee retention costs $19.8 million, the
Company's restructuring plans $16.5 million and antitrust
related matters $2.5 million. Excluding these items, the Company
would have recorded a net loss of $16.9 million.
For the quarter ended December 31, 2002, the Company reported
total revenues of $124.3 million, compared to $110.9 million in
the corresponding period in 2001 for an increase of 12%. The
Company's net loss for the fourth quarter of 2002 was $6.5
million compared to a net loss for the fourth quarter of 2001 of
$0.4 million. During the fourth quarter of 2002, the Company
recorded pre-tax charges of $29.6 million related to antitrust-
related matters $21.9 million, employee retention costs $4.3
million and the Company's restructuring plans $3.5 million. The
antitrust-related charges principally consist of the $20 million
settlement of the International Antitrust Litigation, which is
subject to court approval. During the fourth quarter of 2001,
the Company recorded pre-tax net restructuring charges of $8.8
million and pre-tax employee retention costs of $6.1 million.
Excluding these items, the Company would have recorded adjusted
net income of $14.2 million in the fourth quarter of 2002, as
compared to adjusted net income of $9.1 million in the same
period in 2001. Adjusted operating income, excluding the above
items, also rose in the fourth quarter of 2002, increasing 80%
to $26.9 million, as compared to $15.0 million in 2001.
"We are very pleased with our fourth quarter results, which
showed revenues up 12%, representing a significant improvement
over the prior year," said William F. Ruprecht, President and
Chief Executive Officer of Sotheby's Holdings, Inc. "Our
financial position is stronger today than at any time over the
past three years," Mr. Ruprecht continued. "We exceeded our goal
of $60 million in annual savings versus our 2000 cost base
(excluding charges related to antitrust-related matters, the
Company's restructuring plans and employee retention costs). In
fact we achieved over $70 million in annual cost savings and we
expect to achieve further savings in 2003 as management
continues its focus on reducing the Company's cost structure. In
2002 we made considerable progress towards a return to
profitability as evidenced by our fourth quarter results."
Mr. Ruprecht added, "As a result of the sale-leaseback
transaction involving our York Avenue headquarters, completed on
February 7, 2003, Sotheby's long-term financial situation has
greatly strengthened. The $167 million in net cash proceeds
allow us to refinance $100 million in borrowings under our
credit facility, fund the $20.1 million European Union antitrust
fine and will also provide funding for the $20.0 million
settlement of the International Antitrust Litigation."
Total Auction Sales (hammer price plus buyer's premium)
increased 10% to $1.8 billion for the year ended December 31,
2002. Auction Sales in North America increased 7% to $866.1
million. In Europe, Auction Sales increased 13% to $814.2
million, principally due to the July sale of Sir Peter Paul
Rubens' Massacre of the Innocents for $76.7 million, as well as
the favorable impact of foreign currency translations.
"Despite an unstable economy and considerable worldwide
uncertainty, buyers continue to demonstrate a strong demand for
works of art of superb quality and rare provenance," commented
Mr. Ruprecht. "Auction Sales increased 10% over 2001, and we
achieved some record individual results, including Sir Peter
Paul Rubens' masterpiece Massacre of the Innocents, which at
$76.7 million (49.5 million Pounds Sterling) was a sterling
world record price for any work at auction. We continue to see
growth in the Contemporary art market. Our November Contemporary
sales in New York brought $94.4 million - the highest total in
over 10 years, and our strong Contemporary sales in London this
February continued this trend. Also adding to our improved
results was our luxury real estate brokerage business, which
benefited from a strong real estate market and saw sales volume
increase by 13% over 2001. "
Internet
In February, Sotheby's and eBay announced that separate online
auctions on Sothebys.com will be discontinued in early May. The
sothebys.com website will continue, but will focus on promoting
Sotheby's live auctions through eBay's Live AuctionsT technology
and on supporting Sotheby's live auction business.
"Due to the lack of profitability, Sotheby's and eBay are
discontinuing separate online auctions," said Bill Ruprecht.
"This action is regrettably resulting in redundancies, as well
as a one-time restructuring charge in the range of $2.0 million,
which will be recorded in the first quarter of 2003. However, we
do anticipate that this restructuring of the Company's Internet
activities will result in an estimated net annual cost savings
of approximately $8 million."
Real Estate
For the year ended December 31, 2002 real estate revenues were
$36.4 million, an increase of $3.5 million, or 10%, as compared
to 2001. Operating income for the real estate business for 2002
was $6.3 million, an increase of $2.6 million, or 72%, as
compared to 2001. This increase is attributable to a recovery in
the real estate market in 2002 after a decrease in sales in
2001.
Winter 2003 Sales Summary
"We are pleased with our results for this year so far," said Mr.
Ruprecht. "Sotheby's led the Americana Week sales in New York
with a total of $15.9 million. The Appell Family Collection,
which brought $3.7 million doubled its high estimate and
Property from a Private Collection brought $4.2 million, just
below its pre-sale high estimate. Our Old Master Paintings sale
in New York featured one of the greatest paintings remaining in
private hands, Andrea Mantegna's Descent into Limbo, which sold
for $28.6 million, a record for the artist at auction. In total,
the sale brought $47.9 million, far exceeding the competition.
"Our February London sales also contained positive news. We were
particularly pleased with the results of our Contemporary
Evening Sale, which brought approximately $18.0 million and was
88% sold. The Impressionist, Modern and Surrealist Art sale in
London achieved approximately $27.0 million and was highlighted
by the sale of Pierre Bonnard's La Porte fenetre for $7.0
million, a world auction record for the artist in pounds."
2003 Sales
"Though it is still early, several excellent collections and
individual works of art have already been consigned to Sotheby's
for our spring auction season," said Mr. Ruprecht. "Our May
sales in New York will feature the Collection of Meyer and
Vivian Potamkin - one the finest collections of American Art in
private hands. The collection represents a broad range of the
Potamkins' taste from furniture and decorative arts to prints
and American paintings and is estimated to sell in excess of $10
million.
On May 15th Sotheby's Paris will offer Karl Lagerfeld's
collection of Modernist 1920's and 30's furniture, ceramics and
metalwork from his apartment in Monaco and house in Biarritz,
estimated to sell for $3 million. The Lagerfeld collection was
assembled according to the highest standards of both quality and
provenance and comprises works by the key artists of the
Modernist movement, including Jean-Michel Frank, Pierre Legrain,
Marcel Coard and Alberto Giacometti.
A newly discovered Rembrandt self-portrait is to be offered in
our sale of Old Master Paintings on July 10, 2003. The self-
portrait had been concealed for over 300 years beneath layers of
over-paint, and only after cleaning was it revealed to be a
Rembrandt. It is one of only three Rembrandt self-portraits left
in private hands and the first to be offered at auction in the
last 30 years. The painting is expected to sell for in excess of
$8.0 million.
Termination of Sale Process
On February 21, 2003, Sotheby's announced that the Company and
the Taubman family, agreed to terminate the formal process
commenced on June 3, 2002, regarding a possible sale or merger
of the Company or sale of the Taubman stake in the Company.
International Antitrust Litigation
On March 11th, Sotheby's announced that, together with
Christie's, it had entered into an agreement, subject to court
approval, to settle the Kruman case, an antitrust class action
which sought damages through the United States Courts for
auctions that took place between 1993 and 2000 outside the
United States. Under the terms of the agreement, Sotheby's and
Christie's will each pay $20 million to the class of plaintiffs.
As a result, the Company recorded this amount in special charges
during the fourth quarter of 2002. The settlement also provides
that a threatened claim in the United Kingdom will not be
pursued and that a purported class action commenced in Canada
will be dismissed. Moreover, buyers and sellers who participate
in the International Antitrust Settlement must agree not to
pursue similar claims against Sotheby's and Christie's in
jurisdictions outside the United States.
The EU antitrust investigation was also completed in October
2002, resulting in a fine of $20.1 million.
2003 Outlook
"While we are very pleased with our fourth quarter performance,
as well as our cost cutting efforts and the major progress we
have made on resolving antitrust litigation, we remain guarded
about second quarter sales due to global economic uncertainties
and the potential conflict with Iraq," said Mr. Ruprecht. "As we
have stated before, high end works of art have sold extremely
well over the last few years. Nevertheless, this worldwide
situation may impact auction consignments and transactions in an
already softening real estate market, and therefore may impact
second quarter results."
Sotheby's Holdings, Inc., is the parent company of Sotheby's
worldwide auction business, art-related financing and real
estate brokerage activities. The Company operates in 34
countries, with principal salesrooms located in New York and
London. The Company also regularly conducts auctions in 13 other
salesrooms around the world, including Australia, Hong Kong,
France, Italy, the Netherlands, Switzerland and Singapore.
Sotheby's Holdings, Inc., is listed on the New York Stock
Exchange and the London Stock Exchange.
Sotheby Holdings' 6.875% bonds due 2009 are currently trading at
about 74 cents-on-the-dollar.
SUPERIOR TELECOM: Ordinary Course Professional Employment Okayed
----------------------------------------------------------------
Superior TeleCom Inc., and its debtor-affiliates sought and
obtained permission from the U.S. Bankruptcy Court for the
District of Delaware to continue the employment of professionals
they turn to in the ordinary course of their businesses.
The Debtors relate that in the ordinary course of operating
their businesses, they retain and employ different professional
firms throughout the United States and worldwide that provide,
among other things, various ongoing legal, actuarial and
employee benefit consulting services. To minimize any disruption
to their operations, the Debtors want to continue such
employment to render discrete services to the Debtors in a
variety of matters affecting their day-to-day business
operations. The Debtors note that the services of the Ordinary
Course Professionals will not include the administration of the
Debtors' Chapter 11 cases and matters that will be handled by
the professionals being retained by the Debtors through separate
motion to the Court.
In this connection, the Debtors ask the Court to give them
authority to pay, without formal application to the Court, 100%
of the fees and disbursements to each of the Ordinary Course
Professionals upon the submission to the Debtors of reasonably
detailed invoices setting forth the nature of the services
rendered and calculated in accordance with the standard billing
practices of each professionals. The Debtors assure the Court
that the fees and disbursements do not exceed a total of $45,000
per month per Ordinary Course Professional and do not exceed a
total of $170,000 per month for all Ordinary Course
Professionals.
Superior TeleCom Inc., a leading manufacturer and supplier of
communications wire and cable products to telephone companies,
distributors and system integrators and magnet wire for motors,
transformers, generators and electrical controls, filed for
chapter 11 protection on March 3, 2003 (Bankr. Del. Case No. 03-
10607). Laura Davis Jones, Esq., and Michael Seidl, Esq., at
Pachulski, Stang, Ziehl Young Jones & Weintraub represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from its creditors, it listed $861,716,000 in
total assets and $1,415,745,000 in total debts.
TENNECO: Brings-In Ulrich Mehlmann to Head European Business
------------------------------------------------------------
Tenneco Automotive (NYSE: TEN) announced the appointment of
Ulrich Mehlmann as Vice President and General Manager, Original
Equipment Emission Control, Europe. He joins Tenneco Automotive
from TRW, Koblenz, where he was Vice President, European Chassis
Operations.
Mehlmann, 44, will be based at Tenneco Automotive's global
emission control R&D headquarters in Edenkoben, Germany, and
will report to Hari Nair, Executive Vice President and Managing
Director, Tenneco Automotive Europe.
Commenting on the appointment, Nair said: "This is a key
leadership position that requires the ability to manage diverse
operations, lead organisational change and bring profitable
growth. I am confident that Ulrich's proven experience in all
these areas will benefit both the Emission Control business and
complement Tenneco Automotive's European Leadership Team."
Mehlmann replaces Tim Jackson, Senior Vice President of Global
Technology, who managed the business in an interim role since
April 2002. Jackson was today named to the new position of
Senior Vice President, Global Manufacturing and Engineering.
Prior to joining TRW in 2000, Mehlmann was Director, Operations
and Worldwide Quality for Delphi Diesel Systems, based in Paris.
Mehlmann began his automotive career with Lucas Automotive,
Koblenz, in 1985, serving in various European and international
quality management positions before being appointed Quality
Director in 1996.
Mehlmann holds a degree in technology and materials from the
University of Dortmund in Germany and completed post-graduate
management studies in Switzerland and the UK.
Tenneco Automotive is a $3.5 billion manufacturing company with
headquarters in Lake Forest, Illinois. The company employs
approximately 19,600 employees worldwide. Tenneco Automotive is
one of the world's leading manufacturers and marketers of
Automotive ride and emission control products and systems.
Tenneco Automotive's brands include Monroe(R), Walker(R),
Gillet(TM) and Fonos(R), trademarks of Tenneco Automotive.
The company's European Original Equipment Emission Control
business has 11 manufacturing plants in Europe and South Africa
and eight Inline Sequencing (ILS) and Just in Time (JIT)
facilities on or near customer sites. The business manufactures
complete exhaust systems under the Gillet(TM) brand name for the
world's leading OEMs, and has special capabilities in
converters, manifolds and advanced acoustics. Key technologies
in serial production include diesel particulate filters, semi-
active mufflers, close coupled converters and DeNox systems for
the heavy duty market. The business employs approximately 3,000
people in the region.
Tenneco Automotive, whose December 31, 2002 balance sheet shows
a total shareholders' equity deficit of about $94 million, is a
$3.5 billion manufacturing company headquartered in Lake Forest,
Ill., with 19,600 employees worldwide. Tenneco Automotive is
one of the world's largest producers and marketers of ride
control and exhaust systems and products, which are sold under
the Monroe(R) and Walker(R) global brand names. Among its
products are Sensa-Trac(R) and Monroe(R) Reflex(TM) shocks and
struts, Rancho(R) shock absorbers, Walker(R) Quiet-Flow(TM)
mufflers and Dynomax(TM) performance exhaust products, and
Monroe(R) Clevite(TM) vibration control components.
TODAY'S MAN: Wants Nod for Astor Weiss' Engagement as Counsel
-------------------------------------------------------------
Today's Man, Inc., and its debtor-affiliates ask for permission
from the U.S. Bankruptcy Court for the District of New Jersey to
retain and employ Astor, Weiss, Kaplan & Mandell, LLP as their
Special Real Estate and Leasing Counsel.
The Debtors tell the Court that they need Astor Weiss' expertise
with respect to real estate and leasing and will act as special
bankruptcy counsel for the best interest of the Debtors and
their creditors.
Consequently, Astor Weiss is expected to:
a) give legal advice to Debtors in connection with leasing
and other real estate matters; and
b) assist with preparation on behalf of Debtors necessary
applications, motions, answers, orders, reports and
other legal papers in connection with the administration
of its leases and other real estate matters.
The attorneys presently designated to represent Debtors and
their current standard hourly rates are:
David S. Mandel $290 per hour
Michael D. Renner $260 per hour
William J. Weiss $245 per hour
Alan A. Reuter $200 per hour
Today's Man, Inc., an operator of men's wear retail stores
specializing in tailored clothing, furnishings, sports wear and
shoes, filed for chapter 11 protection on March 4, 2003 (Bankr.
N.J. Case No. 03-16677). Michael J. Shavel, Esq., at Blank,
Rome, Comisky & McCauley represents the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $37,800,000 in total assets and
$36,500,000 in total debts.
TYCO INTERNATIONAL: Board Declares Regular Quarterly Dividend
-------------------------------------------------------------
The Board of Directors of Tyco International Ltd. (NYSE: TYC,
LSE: TYI, BSX: TYC) has declared a regular quarterly cash
dividend of one and one quarter cents per common share. The
dividend is payable on May 1, 2003 to shareholders of record on
April 1, 2003.
Tyco International Ltd., is a diversified manufacturing and
service company. Tyco is the world's largest manufacturer and
servicer of electrical and electronic components; the world's
largest designer, manufacturer, installer and servicer of
undersea telecommunications systems; the world's largest
manufacturer, installer and provider of fire protection systems
and electronic security services and the world's largest
manufacturer of specialty valves. Tyco also holds strong
leadership positions in medical device products, and plastics
and adhesives. Tyco operates in more than 100 countries and had
fiscal 2002 revenues from continuing operations of approximately
$36 billion.
Tyco International Ltd.'s December 31, 2002 balance sheet shows
a working capital deficit of about $3 billion.
UNITED AIRLINES: Wants to Reject Collective Bargaining Pacts
------------------------------------------------------------
UAL Corp. (NYSE: UAL), the parent company of United Airlines,
filed a motion under Section 1113(C) Chapter 11 of the U.S.
Bankruptcy Code to reject the company's collective bargaining
agreements. The company emphasized that its priority would be to
continue negotiating with its unions, but that it had to file
the motion Monday to ensure that the necessary cost savings are
in place by early May. The cost savings are critical to United's
ability to meet the requirements of its debtor-in-possession
(DIP) financing. The company said that meeting those
requirements necessitates permanent wage concessions as well as
addressing issues such as benefits, work rules, and "scope
clauses" that presently restrict the company's ability to
compete and pursue strategic initiatives.
Glenn F. Tilton, chairman, president and CEO of United, said,
"We have a plan to fundamentally transform United's business in
a way that is durable and sustainable, and we have made solid
progress in reducing costs. It strikes a balance in achieving
our near-term goal of successfully emerging from bankruptcy with
our longer-term commitment to create a resilient, profitable
enterprise that can be the industry leader once again. Between
now and May 1st, we will continue to negotiate around the clock
in the belief that we can reach consensual agreements with all
of our union groups and render a ruling from the court
unnecessary. However, all of us will have to accept changes that
are broad and deep, and those changes require that we take an
entirely new approach to competing and succeeding in this
changed industry."
Under the 1113(C) motion filed Monday with the U.S. Bankruptcy
Court for the Northern District of Illinois, United has
requested court approval to reject the company's collective
bargaining agreements and make permanent the interim wage relief
it received from its unionized employees in early January. The
company is also seeking to implement modifications to benefits
packages, work rules, scope of work and job security provisions
that will maximize the company's strategic flexibility and
facilitate transformation to a competitive and efficient
airline.
The company's proposed collective bargaining modifications have
a targeted savings of $2.56 billion annually on a cash basis
compared to the current contractual path. Examples of the types
of non-compensation issues that the company needs to address
include the establishment of common benefit and pension plans,
changes to scheduling rules for flight crews, and modifications
to scope-of-work rules to permit, among other things, the
outsourcing of certain functions, expanded use of regional jets,
the establishment of a low-cost carrier and the ability to
expand code-share agreements.
United also said that it has reached a tentative agreement with
its unionized meteorologists represented by the Transport
Workers Union (TWU) on contract modifications that would
generate the level of cost savings sought by the company. As a
result, the Company will withdraw its 1113 c motion for the TWU,
subject to ratification of the tentative agreement by the TWU
membership. The TWU is expected to vote on this agreement by
March 21, 2003.
Additionally, the company said it has experienced a recent
significant drop-off in revenue as bookings have declined in
advance of a potential war with Iraq and that the company must
take immediate steps to offset the negative financial effects.
United is actively engaged in an industry effort led by the Air
Transport Association seeking war-time relief and financial
assistance from the US government to mitigate the
disproportionate impact of any war on the airline industry and
United. United also intends to approach its lenders.
In the event United is unable to gain sufficient relief within
the next 30 days, the company said that it may need to seek
additional temporary pay reductions of at least nine percent
across-the-board for all employee groups. If war occurs, United
is prepared to reduce capacity as may prove necessary under the
circumstances as they unfold.
Tilton continued: "While our revenue picture stabilized in the
initial three months after our Chapter 11 filing, we have
recently seen a significant slowdown in travel and bookings in
advance of a possible war with Iraq. We will do everything
possible to avoid a temporary reduction in wages."
News releases and other information about United Airlines can be
found at the company's Web site at http://www.united.com
UNITED AIRLINES: Flight Attendants Disappointed with 1113 Motion
----------------------------------------------------------------
United Airlines flight attendant Master Executive Council
President Greg Davidowitch, of the Association of Flight
Attendants, AFL-CIO, issued the following statement:
"AFA is extremely disappointed that United Airlines has filed an
1113c motion to abrogate the flight attendant collective
bargaining agreement that seeks cuts far beyond what is
necessary to turn United into a successfully reorganized
carrier.
"Flight attendants understand that for this reorganization to be
successful, United must emerge from bankruptcy able to compete.
AFA's proposal of over $1 billion in labor savings over the next
six years puts United's flight attendant costs at a level
competitive with Southwest Airlines current flight attendant
costs. In fact, AFA's proposal is the equivalent of our entire
work group working for free one year of the six. The proposal
provides these substantial cost savings as well as greater
scheduling flexibility and relief in other areas of the contract
targeted by management.
"Flight attendants are among the lowest paid workers at the
airline, yet we have repeatedly shown our commitment to United's
successful restructuring by setting industry records for service
and by agreeing to immediate sacrifices that allowed United to
meet initial DIP covenants. To put management's 1113c motion
into perspective, the cuts United is proposing would put
thousands of flight attendants at an income level qualifying
them for welfare and other government aid programs. There is no
fat, the muscle is carved, and United's filing is cutting
straight to the bone.
"AFA's goal is to reach a consensual agreement with current
United management, and negotiations aimed at reaching an
acceptable agreement continue. But United is abusing the 1113
process. 1113 was established to protect labor contracts from
being unnecessarily modified and to ensure that the sacrifices
made by all parties are fair and equitable. United's 1113 motion
goes far beyond what's needed to successfully restructure in an
attempt to gut our contract, and places an inordinate burden on
the flight attendants.
"As we have said before, history shows that discord between
labor and management in the bankruptcy process does not promote
success. And AFA's number one goal is success for our company
and security for our members."
More than 50,000 flight attendants, including the 24,000 flight
attendants at United, join together to form AFA, the world's
largest flight attendant union. Visit us at
http://www.unitedafa.org
UNITED AIRLINES: Wants Filing Exclusivity Stretched to October 6
----------------------------------------------------------------
UAL Corporation and its debtor-affiliates ask Judge Wedoff for
an Order extending the exclusive period to file a Chapter 11
Plan an additional 180 days, through October 6, 2003. Also, the
Debtors ask for an extension of the company's exclusive period
to solicit acceptances of the Plan through December 5, 2003.
James H.M. Sprayregen, Esq., at Kirkland & Ellis, reminds Judge
Wedoff that the Debtors comprise a large, multifaceted national
and international company with numerous businesses, operations
and financial interests throughout the world. United is the
world's second largest airline and has been in operation for 76
years. During 2001, UAL carried approximately 75,000,000
passengers in a fleet of 537 jet aircraft.
The extensions will afford the Debtors an opportunity to
undertake an extensive review and analysis of their businesses
and properties, so that they may develop a business plan and
Plan of Reorganization that satisfies the requirements of
Chapter 11 and not harm creditors. Given the modest amount of
time requested, in relation to cases of similar size, creditors
are not prejudiced under the terms of Section 1121.
The Company argues that these requests are routine in large-
scale Chapter 11 cases.
United tells Judge Wedoff that it continues to evaluate
strategic alternatives and work with creditor groups and other
stakeholders on formulating a plan of reorganization.
Since filing for Chapter 11 protection on December 9, 2002,
United says that it's made solid progress in restructuring its
business, achieving four significant milestones to date:
-- Arranging for debtor-in-possession financing of up to $1.5
billion from a group led by Bank One, J.P. Morgan Chase,
Citibank and CIT Group.
-- Restructuring its operations, including reducing 2003
capacity by six percent as compared to 2002; reorganizing
the company's executive team; realigning divisions; and
completing plans to close certain reservation call
centers, all US city ticket offices and stations in Latin
America, New Zealand and Europe. Overall, the company has
already identified approximately $1.4 billion in annual
non-labor cost savings and profit improvements.
-- Substantially reducing labor costs by implementing wage
reductions for United's salaried and management employees
and successfully negotiating interim wage concessions with
four of its six labor unions. Additionally, the company
filed a motion under section 1113(e) of the Bankruptcy
Code in order to achieve interim wage concessions with the
remaining two unions.
-- Posting record flight completion and on-time performance
rates and continuing to provide customers with superior
service.
Judge Wedoff will convene a hearing at 9:30 a.m. on March 21 in
Chicago to consider the Debtors' request. (United Airlines
Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
UNIVERSAL BUSINESS: Case Summary & Largest Unsecured Creditors
--------------------------------------------------------------
Lead Debtor: Universal Business Strategies, Inc.
2406 S. 24th St., #E250
Phoenix, Arizona 85034
Bankruptcy Case No.: 03-03788
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Liberty Group International, Ltd. 03-03790
Chapter 11 Petition Date: March 10, 2003
Court: District of Arizona (Phoenix)
Judge: Charles G. Case II
Debtors' Counsel: Victoria M. Stevens, Esq.
Shughart Thomson & Kilroy, P.C
3636 N. Central Avenue
Suite 1200
Phoenix, AZ 85012
Tel: 602-650-2008
Fax : 602-264-7033
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
A. Universal Business' 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Charles L. Riley, Jr., Asset Purchase $2,000,000
Chapter 7 Trustee Agreement
Estate of Don's Making
Money, LLP
Chandler, AZ 85248-5540
24th Street Press Trade Debt $111,097
Multimedia Graphics, Inc. Trade Debt $90,550
West Telemarketing Trade Debt $84,532
ATT Utilities $56,377
4 Bucks Media Trade Debt $29,154
ATT Trade Debt $16,121
Freedom Media Trade Debt $13,200
Great Scott Productions Trade Debt $16,843
Key Media Trade Debt $13,250
Newton Media Trade Debt $57,797
Northeast Nevada Telco Trade Debt $23,379
Quarles & Brady Streich Legal Services $10,868
Lang
Qwest Utilities $11,001
Results Media Group Trade Debt $14,900
Ryan Properties, Inc. Lease $54,446
Tristar Printing & Visual Trade Debt $19,570
United States Postal $5,000
Service
Tony West Trade Debt $5,000
Victory Packaging Trade Debt $5,412
B. Liberty Group's 4 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Joe & Sari Deihi $50,000
Creative Personnel Resources Unknown
Universal Business Strategies, Inc. Unknown
Windy City Properties Unknown
UNIVERSAL CITY: S&P Assigns B- Rating to $500M Sr. Unsec. Debt
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' rating to
Universal City Development Partners Ltd.'s and co-issuer
Universal City Development Partners Finance Inc.'s privately
placed $500 million senior unsecured notes due in 2010.
At the same time, Standard & Poor's assigned its 'B+' corporate
credit rating to Universal City Development Partners Ltd. The
outlook is stable. Orlando, Florida-based Universal City had pro
forma total debt of $1.287 billion as of Dec. 28, 2002.
Universal City is a joint venture of the Blackstone Group and
Vivendi Universal Entertainment. The company is analyzed on a
stand-alone basis because Standard & Poor's does not expect
material credit support from Vivendi Universal.
"The ratings reflect the company's geographic concentration of
earnings, cyclical operating performance, and high financial
risk," said Standard & Poor's credit analyst Hal Diamond.
"Nearly all of company's profits are derived from two theme
parks, Universal Studios Florida and Islands of Adventure.
Tempering this is the competitive position Universal Studios
has developed in Orlando against incumbent Walt Disney World."
Universal Studios is attempting to transform itself into a
multi-day destination resort, with its CityWalk shopping, dining
and entertainment complex, as well as three adjacent themed
hotels, which are not company-owned. However, attractions are
generally not extensive enough to support longer than two-day
passes. Revenue from sales of one-day and two-day passes
accounted for 55% and 30%, respectively, of total pass sales.
Universal Studios competes with five major theme parks in the
Orlando area within a 10-mile radius. The company's target
market is families with older children. Its share of Orlando
theme park attendance modestly rose from 17% in 1997 to 23% in
2002. Each of Disney's four theme parks has greater attendance
than either Universal Studios or Islands of Adventure. Disney's
success in selling four- and five-day passes may restrict
Universal Studios' ability to gain significant market share.
The credit measures are expected to remain relatively stable in
the near term. Upgrade potential is somewhat limited by the
company's narrow operating diversity.
US AIRWAYS: Judge Mitchell Confirms Reorganization Plan
-------------------------------------------------------
Following a strong vote of approval by the company's creditors,
the U.S. Bankruptcy Court confirmed US Airways' plan of
reorganization, allowing the company to continue on its path to
a March 31, 2003, emergence from Chapter 11.
Judge Stephen S. Mitchell of the U.S. Bankruptcy Court of the
Eastern District of Virginia for Alexandria ruled that all
necessary requirements have been met to implement its
reorganization. Monday, the company reported that all necessary
creditor classes of all eight debtors in the Chapter 11 cases
had voted to accept the reorganization plan. The acceptance rate
by claim holders voting was 80.77 percent and by claim amount
voting was 81.18 percent, well above the required vote needed
for approval.
"With the nation on the verge of war and the economy impacted by
geopolitical uncertainties, the court's approval today is
absolutely critical to our efforts to complete our restructuring
by March 31," said US Airways President and Chief Executive
Officer David N. Siegel. "Only upon emergence from Chapter 11
protection can we access the $1 billion loan from the Air
Transportation Stabilization Board (ATSB) and the new equity
investment of $240 million from the Retirement Systems of
Alabama. This new injection of capital is essential so that we
can ride out the impact of war and economic turbulence, and
implement our new business plan."
Siegel said that the company's full attention will focus on
completing the remaining tasks of its restructuring prior to
emerging from Chapter 11, including:
* Resolve all remaining issues with the Air Line Pilots
Association on the pilot pension plan and secure approval
from the Pension Benefit Guaranty Corporation and the
bankruptcy court;
* Finalize a new agreement with one of the banks that has
expressed interest in processing the company's credit
card transactions;
* Close on the ATSB loan and the new equity investment from
RSA.
Siegel expressed his ongoing appreciation to the airline's
employees, customers and business partners for supporting the
company's restructuring, allowing it to complete its Chapter 11
reorganization in less than seven months.
US Airways is the nation's seventh largest airline and serves
nearly 200 destinations in the U.S., Canada, Mexico, Europe and
the Caribbean. US Airways filed for Chapter 11 protection on
Aug. 11, 2002, to complete its financial restructuring and has
kept to a fast-track timetable to emerge from bankruptcy on
March 31, 2003.
US AIRWAYS: Names New Directors for Reorganized Company
-------------------------------------------------------
In accordance with Section 7.2(b) of the First Amended Joint
Plan of Reorganization of US Airways Group, the individuals who
will serve on the initial Board of Directors of Reorganized US
Airways Group, Inc. and Reorganized US Airways, Inc., are:
Morton Bahr
Dr. David G. Bronner
Rono Joy Dutta
Cheryl Gruetzmacher Gordon
Perry Hayes
Robert L. Johnson
Bruce R. Lakefield
Joseph J. Mantineo
John Andrew McKenna
Hans Mirka
William D. Pollock
David N. Siegel
Honorable James M. Simon
Raymond W. Smith
William Stephens
(US Airways Bankruptcy News, Issue No. 28; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
VITALLABS: Clancy and Co. Expresses Going Concern Doubt
-------------------------------------------------------
Vitallabs is a holding company which conducts its business
through two wholly owned subsidiaries. These subsidiaries are
Med Tech Labs, Inc., doing business as Med Services of America,
and Medical Discounts Limited, Inc. Both Subsidiaries are
located in Clearwater, Florida. Med Tech Labs, Inc. operates
one of the largest independent laboratory testing facilities and
clinical laboratories on the west coast of Florida with 21
collection locations. MDL remarkets a prescription benefits card
and markets a medical service discount card. MDL is shown as a
discontinued operation in the Company's current financial
statements because it will be spun off pursuant to the agreement
with ASK.
Vitallabs did not generate any revenue for the years ended
December 31, 2000 and 2001. The Company's two subsidiaries,
General Personnel Management, Inc. (GPM) and MDL have been
reported in its financial statements as discontinued segments.
On October 1, 2001, the Company sold all of the outstanding
shares of common stock of GPM it owned for $25,000. Net sales
of GPM for the period ended January 1, 2001 to September 30,
2001 (date of disposition) and the period June 1, 2000 (date of
acquisition) to December 31, 2000 were $1,476,223 and
$1,088,036, respectively. These amounts are included in the
loss of $48,112 and $34,787 for the years 2000 and 2001
respectively for operations of discontinued segments. As a
result of this transaction, goodwill previously recorded was
written off. The loss on disposal was $104,100.
Vitallabs is contractually obligated to distribute 95% of the
common stock of MDL to its stockholder. Therefore, Vitallabs
has shown MDL's operations as a discontinued segment. Net sales
of MDL for the period June 22, 2001 to December 31, 2001 was
$17,316, which was the measurement date established by the Board
of Directors. These amounts are also included in loss on
operations of discontinued segments. As a result of this
contractual obligation goodwill previously recorded was written
off. The loss for the period was $187,769.
In January of 2001, Med Tech Labs, Inc. created a division to
provide service to the Nursing Home Industry. Med Tech Labs,
Inc. experienced several problems with this division primarily
with payment both from Medicare and from the individual homes.
Med Tech Labs, Inc. closed this division July 13, 2001 and
terminated its relationship with these homes. The results of
operation were severely impacted by these events. Revenues for
the year ended December 31, 2001 were $11,245,885. The net loss
for the period was $2,089,832 due to a write off of accounts
receivable and other charge offs of $1,946,241. The accounts
receivable write off primarily consisted of accounts written off
due to lack of authorization from a major insurance provider and
the termination of business with the nursing homes. Total
assets were $3,361,604, liabilities were $5,711,927 and total
stockholders equity a deficit of $2,350,323. Management has
estimated that it needs approximately $3,000,000 in debt/equity
financial to complete its short-term business plan, which
includes the acquisition of other existing labs. There can be
no assurance that if additional funds are required they will be
available, or, if available, that they can be obtained on terms
satisfactory to Management. There can be no guarantee that
Vitallabs will be able to obtain additional financing, or if
successful, that it will be able to do so on terms that are
reasonable in light of current market conditions.
On March 1st 2002, Clancy and Co., resigned as the Company's
certified public accountants. That firm's report on Vitallabs'
financial statements for 1999 and 2000 contained a "going
concern" qualification. The "going concern" qualification was
expressed in the audit report as NOTE 1" and reads as follows:
"Monogram continues to actively seek merger targets. There is,
of course, no assurance that Monogram will be successful in its
endeavors. The financial statements have been prepared on the
basis of generally accepted accounting principles applicable to
a going concern, which contemplates the realization of assets
and liquidation of liabilities in the normal course of business.
Accordingly, they do not purport to give effect to adjustments,
if any, that may be necessary should Monogram be unable to
continue as a going concern. The Company has incurred
substantial net losses in recent years and used substantial
amounts of working capital in its operations. These factors
raise substantial doubt about its ability to continue as a going
concern. The continuation of Monogram as a going concern is
dependent upon Monogram's ability to establish itself as a
profitable business. Management's plans to seek additional
capital include equity financing's and/or a merger with an
existing operating company (s). It is Monogram's belief that it
will continue to incur losses for the next 12 months, and as a
result, will require additional funds. There are no guarantees
Monogram will be successful in obtaining these funds. Monogram's
ability to achieve these objectives cannot be determined at this
time. The financial statements do not include any adjustments
that might result from the outcome of these uncertainties."
The decision to resign by Clancy and Co., P.L.L.C. was accepted
by the Board of Directors on March 7th, 2002. Vitallabs' new
management wished to retain Pender Newkirk and Co. CPA's as its
auditors both for geographic reasons and Pender's recent
accounting experience with Vitallabs' pending acquisition of
Med-Tech Laboratories, Inc. d/b/a/ Med Services of America.
During the past two fiscal years and the interim period since
the end of the most recent fiscal year, to the knowledge of
current management, Clancy and Co., P.L.L.C. did not advise
Vitallabs that the internal controls necessary for Vitallabs to
develop reliable financial statements do not exist, that Clancy
and Co., P.L.L.C. would no longer be able to rely on
management's representations, that it was unwilling to be
associated with the financial statements prepared by management
that it needed to expand significantly the scope of its audit,
that information had come to its attention that if further
investigated may (i) materially impact the fairness or
reliability of either: a previously issued audit report or the
underlying financial statements; or the financial statements
issued or to be issued, that information had come to its
attention that it has concluded materially impacts the fairness
or reliability of either (i) a previously issued audit report or
the underlying financial statements, or (ii) the financial
statements issued or to be issued covering the fiscal period(s)
subsequent to the date of the most recent financial statements
covered by an audit report (including information that, unless
resolved to the accountant's satisfaction, would prevent it from
rendering an unqualified audit report on those financial
statements).
On March 7th, 2002, Vitallabs engaged Pender Newkirk and Company
of Tampa, Florida as its independent public accountant to audit
its financial statements for the fiscal year ended 2001 and to
re-audit the fiscal year ended 2000. Pender had been engaged as
the independent public auditor of Med-Tech Laboratories, Inc., a
company which was acquired by Vitallabs April 5th, 2002. In its
subsequent Auditors Report the newly hired firm of Pender
Newkirk and Company rendered the following paragraph, under date
of April 19, 2002, except for Note 9, as to which the date is
February 5, 2003:
"The accompanying consolidated financial statements have been
prepared assuming the Company will continue as a going concern.
The Company has incurred substantial net losses for the periods
indicated, has negative working capital of approximately
$232,000 at December 31, 2001, and its liabilities exceed its
assets by approximately $288,000 at December 31, 2001. In
addition, as more fully described in Note 9, the Company
subsequent to year end has acquired another company which is
experiencing financial difficulties. These factors and others
raise substantial doubt about the Company's ability to continue
as a going concern. Management's plans in regards to these
matters are discussed in Note 2. The consolidated financial
statements do not include any adjustments that might result from
the outcome of these uncertainties."
WHEELING-PITTSBURGH: Forest Investment Dumps WHX Equity Stake
-------------------------------------------------------------
In a regulatory filing dated February 12, 2003, Forest
Investment Management, LLC, a Delaware limited liability company
and registered investment adviser; Forest Partners II, L.P., a
Delaware limited partnership; Michael A. Boyd, Inc., a Delaware
corporation; and Mr. Michael A. Boyd disclose to the Securities
and Exchange Commission that they no longer own any shares of
WHX Corporation. (Wheeling-Pittsburgh Bankruptcy News, Issue No.
36; Bankruptcy Creditors' Service, Inc., 609/392-0900)
WILLIAMS: Records Adjustments for FERC Item & Investment Charge
---------------------------------------------------------------
Williams (NYSE: WMB) has recorded two additional after-tax
charges totaling $18 million in the company's 2002 financial
results.
Subsequent to the company's year-end earnings report last month,
Williams has negotiated a settlement with the Federal Energy
Regulatory Commission pertaining to its Transco pipeline and
recorded an adjustment related to a petroleum pipeline
investment.
On Feb. 20, the company announced an unaudited net loss of
$736.5 million, or $1.60 per share. In a form 10-K filing
planned this week, Williams will file audited results that show
a net loss of $754.7 million, or $1.63 per share.
"Wrapping up these issues continues to help us move beyond 2002,
which was one of the toughest years in Williams' long history,"
said Steve Malcolm, chairman, president and CEO. "We're fully
focused on the days ahead as we build a stronger, more focused
Williams. We have been making notable progress on our liquidity
and integrated natural gas business strategy."
Williams and the FERC agreed late last week to settle issues
raised during an investigation of Transco's compliance with
regulations governing the relationship between interstate gas
pipelines and marketing affiliates.
The company already has instituted a number of process changes
to address the FERC's concerns and, as part of the settlement,
has agreed to a plan to ensure future compliance. Williams has
previously worked to honor the spirit of the FERC's market
affiliate rules and believes that none of the issues identified
by the FERC harmed any party or provided any competitive
advantage to Williams.
"Our clear and continuing objective is to conduct our business
in a manner that is consistent with the FERC's regulations,"
Malcolm wrote in a letter to Williams employees. "We must
ensure that all of our business activities always meet our own
high standards of conduct and fully comply with all rules and
regulations."
As a result of the agreement, Williams will pay a civil penalty
of $20 million to FERC over the next four years, beginning with
a $4 million payment as early as mid-May. The impact on
Williams' financial results is an additional $8 million charge
to fourth-quarter 2002 segment profit for its gas pipeline
business. This charge, combined with previously recorded
amounts, adequately reflects the total financial impact of the
settlement.
The settlement also calls for the company's Transco pipeline to
discontinue firm sales services by April 1, 2005, and places
additional restrictions on Williams' energy marketing and
trading unit's ability to transport gas on affiliated pipelines.
Williams said it will continue to have the capability to
transport gas through its affiliated pipelines to meet the needs
of its exploration and production, midstream and power
businesses.
Since the company is continuing to pursue a strategy to
substantially exit the energy marketing and trading business
through sales or joint venture, Williams does not expect these
new requirements from the FERC to have a significant impact on
the company's future business.
Unrelated to Monday's agreement with the FERC, Williams will
record a $10 million charge to its 2002 financial results to
reflect adjustments recorded by a petroleum liquids pipeline
project in which the company owns a 32.1 percent interest. The
adjustment is to expense certain amounts previously capitalized
as property costs.
Additional information regarding these announcements will be
available in the company's Form 10-K.
Williams, through its subsidiaries, primarily finds, produces,
gathers, processes and transports natural gas. Williams' gas
wells, pipelines and midstream facilities are concentrated in
the Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard.
More information is available at http://www.williams.com
WINDSOR WOODMONT: Gets Court OK to Hire Rubner Padjen as Counsel
----------------------------------------------------------------
Windsor Woodmont Black Hawk Resort Corporation sought and
obtained approval from the U.S. Bankruptcy Court for the
District of Colorado to employ Rubner Padjen and Laufer LLC, as
its local bankruptcy counsel.
The Debtor expects Rubner Padjen to:
a) prepare all schedules, reports, plans, disclosure
statements, pleadings, motions and other documents as
may be required in this Chapter 11 case;
b) assist the Debtor in negotiating and obtaining
confirmation of a Plan of Reorganization; and
c) perform all other bankruptcy law related services for
Debtor which may be necessary.
To the best of the Debtor's knowledge, the Firm has no material
connection with the Debtor or its accountants, creditors, or any
other party-in-interest.
The Debtor will compensate Rubner Padjen in its customary hourly
rates which are:
Paul Rubner $330 per hour
Joel Laufer $300 per hour
Robert Padjen $240 per hour
Windsor Woodmont Black Hawk Resort Corporation, owner and
developer of Black Hawk Casino by Hyatt Casino in Black Hawk,
Colorado, filed for chapter 11 protection on November 7, 2002
(Bankr. Colo. Case No. 02-28089). Jeffrey M. Reisner, Esq., at
Irell & Manella LLP, represents the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed $139,414,132 in total assets and
$152,546,656 in total debts.
WORLD AIRWAYS: Nasdaq Panel Approves Continued SmallCap Listing
---------------------------------------------------------------
World Airways, Inc., (Nasdaq: WLDAC) announced that the NASDAQ
Listing Qualifications Panel has approved the continued listing
of its stock on the SmallCap Market, provided the Company has
audited net income for 2002 exceeding $750,000 and a minimum bid
price on its securities of $1.00 per share by May 19, 2003.
The Company reiterated it will exceed the net income
requirement, and it plans to file its Form 10K Report with the
Securities and Exchange Commission by March 31, 2003. In a news
release dated February 13, 2003, when the Company announced
unaudited results for the fourth quarter and 2002, it reported
net income of $2 million.
Hollis Harris, chairman and CEO of World Airways, noted, "When
we file our Form 10-K, it will show that we exceed NASDAQ's net
income requirement for 2002. We remain optimistic about
achieving our goals for 2003."
World must achieve a closing bid price of at least $1.00 per
share on or before May 19, 2003, and immediately thereafter a
closing bid share price of at least $1.00 for a minimum of 10
consecutive trading days.
At this time, the Securities and Exchange Commission is
considering further revisions to the bid price rules, and the
Company may qualify for an additional extension if these changes
are approved.
According to NASDAQ, the Company must continue to comply with
all requirements for continued listing on the SmallCap Market.
If the Company is unable to demonstrate compliance with all
requirements for continued listing on the NASDAQ SmallCap
Market, its securities will be delisted and available as an
over-the-counter bulletin board stock. The Company reported that
with the exception of the minimum bid requirement, it remains in
compliance with all NASDAQ SmallCap Market listing requirements.
Utilizing a well-maintained fleet of 16 international range,
wide-body aircraft, World Airways has an enviable record of
safety, reliability and customer service spanning 54 years. The
Company is a U.S. certificated air carrier providing customized
transportation services for major international passenger and
cargo carriers, the United States military and international
leisure tour operators. Recognized for its modern aircraft,
flexibility and ability to provide superior service, World
Airways meets the needs of businesses and governments around the
globe.
World Airways' September 30, 2002 balance sheet shows a total
shareholders' equity deficit of about $22 million.
WORLDCOM INC: Southern Telecom Seeks Stay Relief to Use Remedies
----------------------------------------------------------------
Southern Telecom, Inc., asks the U.S. Bankruptcy Court for the
Southern District of New York to modify the automatic stay to
permit Southern Telecom to exercise its rights and remedies
under a Second Amendment to and Restatement of the Fiber Optic
Facilities and Services Agreement and compelling Worldcom Inc.,
and its debtor-affiliates to assume or reject the Restatement.
James M. Nolan, Esq., at Troutman Sanders LLP, in Atlanta,
Georgia, recounts that in 1990, Southern Telecom and Metrex
Corporation and MFSA Holding, Inc. -- both wholly owned
subsidiaries of MCI WorldCom, Inc. -- agreed that Southern
Telecom would replace the ground wire on certain Georgia Power
transmission lines in and around Atlanta, Georgia with a special
ground wire containing optical fibers. Under the Agreement,
Metrex paid for the new cable and for Southern Telecom's cost of
installing the cable. Metrex received an exclusive right to use
the majority of the fibers in the cable, and Southern Electric
reserved the right to use a number of the fibers to meet its
internal communication requirements. Southern Telecom also
obtained the right to a share of Metrex's revenues.
On August 12, 1999, Mr. Nolan relates that Southern Telecom and
Metrex and MFSA executed the Restatement, which superceded the
Agreement. Under the Restatement, Southern Telecom agreed to
forego its share of Metrex's revenues in return for Metrex
paying a $22,928,162 one-time payment after the execution of the
Restatement and making 12 annual payments of $1,970,900 due on
January 2 of each year through 2011. Under the Restatement, the
parties also agreed to update the fiber optic network by
replacing the existing fiber optic cables with new cable.
Metrex was responsible for purchasing and delivering the
Consolidation Cable to Southern Telecom, and Southern Telecom
was responsible for installing the Consolidation Cable.
Moreover, pursuant to the Restatement, Mr. Nolan informs the
Court that Metrex was responsible for reimbursing all the
expenses Southern Telecom incurred in connection with replacing
the cable, unless Metrex completed the transfer of all traffic
to the Consolidation Cable within 365 days after the
installation of the Consolidation Cable, in which case Southern
Telecom was to reimburse Metrex for up to $1,000,000 of the
costs Metrex had previously paid to Southern Telecom. Southern
Telecom also was responsible for removing the old cables.
Southern Telecom could not remove those cables until Metrex
completed the transfer of all of its traffic to the
Consolidation Cable. Thus, Southern Telecom agreed to a
potential refund of up to $1,000,000 to encourage Metrex to
finish its work at Southern Telecom's facilities as quickly as
possible.
On September 24, 2002, Mr. Nolan states that Metrex sent a
letter to Southern Telecom, whereby Metrex represented that
Southern Telecom had finished the installation of the
Consolidation Cable in December 2000, and that Metrex had
completed implementation of the Consolidation Plan in October
2001. Thus, Metrex demanded that Southern Telecom reimburse
Metrex $1,000,000. Despite Metrex's representation that it
completed the Consolidation Plan in October 2001, Metrex made
the annual payment amounting to $1,970,900 by January 2, 2002.
On October 3, 2002, Southern Telecom sent a letter responding to
Metrex's September 24th letter, whereby Southern Telecom
notified Metrex that Metrex was not entitled to the $1,000,000
reimbursement because Southern Telecom completed installation of
the Consolidation Cable on August 17, 2000. Thus, Metrex did
not complete the Consolidation Plan within the one-year time
limit.
According to Mr. Nolan, on October 24, 2002, Metrex sent a
letter to Southern Telecom, whereby Metrex alleged that its
September 24th letter was incorrect. In this letter, Metrex
acknowledged that Southern Telecom had completed installation of
the Consolidation Cable on August 17, 2000, but Metrex then
contended that it completed the Consolidation Plan on July 2,
2001, not October 2001 as it had earlier alleged. Metrex
informed Southern Telecom that it intended to offset $1,000,000
against the $1,970,900 annual payment, which was due to Southern
Telecom on January 2, 2003.
In response to Metrex's letter, on November 26, 2002, Southern
Telecom requested that Metrex provide Southern Telecom with
documents that supported Metrex's alleged completion dates.
Instead of providing Southern Telecom any documents that
supported its alleged completion dates, Metrex sent a letter to
Southern Telecom, whereby Metrex simply reasserted its
contention that it was entitled to the $1,000,000 reimbursement.
On December 24, 2002, despite Metrex's failure to document when
it fully implemented the Consolidation Plan, Mr. Nolan alleges
that Metrex improperly offset $1,000,000 against the $1,970,900
annual payment under the Restatement. Metrex provided no
documentation to support its claims, and Section 6.1(b) of the
Restatement provides that the annual payment is due without
right of setoff. In addition to its improper setoff, Metrex has
failed to pay Southern Telecom for postpetition services under
the Restatement amounting to $53,651.60, which consists of five
unpaid invoices. Despite Metrex's failure to pay the amounts
owed under the Restatement and improperly offsetting $1,000,000,
Metrex continues to accept all of the benefits of the
Restatement, including the use of Southern Telecom's network to
route its customer traffic.
Because Metrex and MFSA are in default under the Restatement and
they continue to receive the benefits of the Restatement
postpetition, Mr. Nolan insists that Southern Telecom is
entitled to relief from the automatic stay in order to exercise
all of its rights and remedies under the Restatement. The
equitable considerations weigh heavily in favor of Southern
Telecom as the Debtors have failed to pay Southern Telecom for
the amounts owed under the Restatement that arose after the
Petition Date. Moreover, the Debtors, without any documentation
and contrary to their earlier representations, improperly offset
$1,000,000 against the annual payment owed to Southern Telecom
postpetition. Despite the Debtors' breaches under the
Restatement, the Debtors continue to receive all of the benefits
under the Restatement, including routing their customer traffic
over Southern Telecom's network.
Mr. Nolan asserts that the Debtors should not be permitted to
use the automatic stay as a sword by accepting the benefits
under the Restatement postpetition without fully performing
their obligations postpetition. See In re Jas Enterprises,
Inc., 180 B.R. 210, 215 (Bankr. D. Neb. 1995) (noting that in a
non-residential lease context relief from the automatic stay was
appropriate when the lessee failed to pay rent postpetition).
Under these circumstances, the Court should modify the automatic
stay to enable Southern Telecom to exercise all of its rights
and remedies. If the automatic stay is lifted, Southern
Telecom, to the extent necessary, would consent to litigating
this matter in this Court. See Schneiderman v. Bogdanovich (In
re Bogdanovich), 292 F.3d 104, 110 (2d Cir. 2002). (Worldcom
Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
W.R. GRACE & CO: Peninsula Entities Disclose 5.02% Equity Stake
---------------------------------------------------------------
Peninsula Investment Partners, L.P. and Peninsula Capital
Advisors, LLC beneficially own 5.02% of the outstanding common
stock of W.R. Grace & Company, represented in the holding of
4,100,000 of Grace's common stock. The Peninsula Partners and
Advisors shares voting and dispositive powers over the stock.
W.R. Grace is a leading global supplier of catalysts and silica
products, especially construction chemicals and building
materials, and container products. The Company filed for Chapter
11 protection on April 2, 2001 (Bankr. Del. Case No. 01-01139).
* Meetings, Conferences and Seminars
------------------------------------
March 20-21, 2003
AMERICAN CONFERENCE INSTITUTE
Outsourcing In Financial Services
Marriott East Side, New York
Contact: 1-888-224-2480 or 1-877-927-1563
http://www.americanconference.com
March 26, 2003
NEW YORK INSTITUTE OF CREDIT
Asset-Based Lending Luncheon
Contact: 212-629-8686; fax 212-629-7788;
info@nyic.org
March 27-28, 2003
FINANCIAL RESEARCH ASSOCIATES
Commercial Loan Workout Techniques
New York Helmsley Hotel, New York City, NY
Contact: 1-800-280-8440 or http://www.frallc.com
March 27-30, 2003
NORTON INSTITUTES ON BANKRUPTCY LAW
Litigation Institute II
Flamingo Hilton, Las Vegas, Nevada
Contact: 1-770-535-7722
or http://www.nortoninstitutes.org
March 31 - April 01, 2003
RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
Healthcare Transactions: Successful Strategies for
Mergers, Acquisitions, Divestitures and Restructurings
The Fairmont Hotel Chicago
Contact: 1-800-726-2524 or fax 903-592-5168 or
ram@ballistic.com
April 10-11, 2003
AMERICAN CONFERENCE INSTITUTE
Predaotry Lending
The Westin Grand Bohemian, Florida
Contact: 1-888-224-2480 or 1-877-927-1563
http://www.americanconference.com
April 10-13, 2003
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
Grand Hyatt, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
April 28-29, 2003
AMERICAN CONFERENCE INSTITUTE
Credit Derivatives
Waldorf Astoria, New York
Contact: 1-888-224-2480 or 1-877-927-1563
http://www.americanconference.com
April 29, 2003
NEW YORK INSTITUTE OF CREDIT
Corporate Governance Luncheon
Contact: 212-629-8686; fax 212-629-7788;
info@nyic.org
May 1-3, 2003
ALI-ABA
Chapter 11 Business Organizations
New Orleans
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
May 8-10, 2003
ALI-ABA
Fundamentals of Bankruptcy Law
Seattle
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
May 14, 2003
NEW YORK INSTITUTE OF CREDIT
Factoring Panel Luncheon
Contact: 212-629-8686; fax 212-629-7788;
info@nyic.org
June 4, 2003
NEW YORK INSTITUTE OF CREDIT
24th Credit Smorgasbord
Contact: 212-629-8686; fax 212-629-7788;
info@nyic.org
June 19-20, 2003
RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
Corporate Reorganizations: Successful Strategies for
Restructuring Troubled Companies
The Fairmont Hotel Chicago
Contact: 1-800-726-2524 or fax 903-592-5168 or
ram@ballistic.com
June 26-29, 2003
NORTON INSTITUTES ON BANKRUPTCY LAW
Western Mountains, Advanced Bankruptcy Law
Jackson Lake Lodge, Jackson Hole, Wyoming
Contact: 1-770-535-7722
or http://www.nortoninstitutes.org
July 10-12, 2003
ALI-ABA
Partnerships, LLCs, and LLPs: Uniform Acts, Taxation,
Drafting, Securities, and Bankruptcy
Eldorado Hotel, Santa Fe, New Mexico
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
December 3-7, 2003
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
La Quinta, La Quinta, California
Contact: 1-703-739-0800 or http://www.abiworld.org
April 15-18, 2004
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
J.W. Marriott, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
December 2-4, 2004
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Marriott's Camelback Inn, Scottsdale, AZ
Contact: 1-703-739-0800 or http://www.abiworld.org
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via
e-mail to conferences@bankrupt.com are encouraged.
*********
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
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re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
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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.
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