/raid1/www/Hosts/bankrupt/TCR_Public/030425.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, April 25, 2003, Vol. 7, No. 81
Headlines
ACE LIMITED: Fitch Takes Several Rating Actions; Outlook Stable
ADEPT TECHNOLOGY: March 2003 Balance Sheet Insolvency Tops $5MM
AIR CANADA: Global Payments Wants to Stop Credit Card Processing
AIR CANADA: Establishes Rebooking Policy Brought by SARS Concern
ALADDIN GAMING: Agrees To Sell Las Vegas Strip Properties
ALLOU DISTRIBUTORS: Court Allows Interim Cash Collateral Use
AMERICAN FINANCIAL: Will Release First Quarter Results on May 1
AMERICA WEST: First Quarter 2003 Net Loss Narrows to $62 Million
AMKOR TECHNOLOGY: Secures $200 Million of New Financing
AMR CORPORATION: $1.04 Billion First-Quarter Loss = Insolvency
APPLIED EXTRUSION: Sets Q2 Results Conference Call for Apr. 29
ARCH COAL: S&P Revises Outlook to Negative over Demand Concerns
ATLANTIC COAST: First Quarter Net Income Decreases to $2 Million
BRIO SOFTWARE: March 2003 Working Capital Deficit is at $3.7MM
CABLE SATISFACTION: Banks Further Extend Debt Waivers Till May 7
CARIBBEAN PETROLEUM: Delaware Court Confirms Fourth Amended Plan
CMS ENERGY: S&P Rates $925-Mill. Sr Sec. Credit Facilities at BB
CMS ENERGY: Fitch Affirms Ratings on Positive Liquidity Position
COMPACT DISC: Seeks Authority to Employ Sills Cummis as Counsel
CONSECO FINANCE: Panel Retains Much Shelist as Conflicts Counsel
DIRECTV LATIN: Gets Nod to Continue AP Services' Retention
DYNEGY INC: Completes Sale of Hackberry LNG Project to Sempra
DYNEGY INC: Terminating Power Contracts with Southern Company
ENCOMPASS SERVICES: Employs Innisfree as Noticing Agent
ENRON: Stipulates to Set-Off Compagnie Papiers Claim
FIBERCORE: Nasdaq To Delist Shares Due to Payment, Filing Delays
FLEMING COMPANIES: Summary of $150-Million DIP Facility's Terms
HAYES LEMMERZ: First Amended Reorganization Plan Summary
H&E EQUIPMENT: S&P Ratchets Corp. Credit Rating to B+ from BB-
IMPAC SAC: Fitch Drops 1999-2 Class B1 & B2 Ratings to BB/CCC
IMPERIAL PLASTECH: Quarter Loss Further Strains Liquidity
IRVINE SENSORS: Obtains $6 Million Government R&D Contracts
KCS ENERGY: Appoints CEO James Christmas as New Board Chairman
KMART: Court Disallows Up to $2.7B Duplicate & Amended Claims
LEAP WIRELESS: Honoring Critical Trade Vendor Claims
LODGENET: Stockholders' Equity Deficit Climbs to $108.6 Million
LTV CORP: Noteholders Panel Turns to KPMG for Advice
MAGELLAN HEALTH: Seeks Nod on Amended Aetna Master Service Pact
MATLACK SYSTEMS: Engages Caspert as Real Estates Auctioneer
MCCRORY CORP: Committee Hires KPMG for Financial Advice
MICRON TECH: Don Simplot Retires from Board of Directors
MIIX GROUP: Receives Delisting Notice from NYSE
MITEC TELECOM: Sells Thailand Unit for CDN$1.5 Million
NAT'L CENTURY: NPF XII Subcommittee Wants to Examine HCC & HMA
NATIONSRENT INC: Proposes Increase to Exit Financing Requirement
NEXTEL COMMS: Reports Improved First Quarter 2003 Results
NOMURA CBO: S&P Puts Junk 1997-2 Class A-3 Rating on Watch Neg.
NORFOLK SOUTHERN: Q1 2003 Working Capital Deficit Tops $840 Mil.
NORTHWESTERN: Fitch Further Cuts Low-B Level Senior Note Ratings
NOVA CHEMICALS: Posts Improved Results & Liquidity for Q1 2003
OLYMPIC PIPE LINE: UST Appoints Official Creditors' Committee
OWENS-ILLINOIS: Fitch Assigns BB Rating to Planned Senior Notes
PRIDE INT'L: Report on Offshore Fleet Now Available at S&P Site
PROVIDENT FINANCIAL: Confirms Cash Payment on Income PRIDES(SM)
RITE AID: S&P Ups Corporate Credit & Sr Sec. Note Ratings to B+
ROTECH HEALTHCARE: Reports Declining Revenues for First Quarter
ROWECOM INC: EBSCO Acquires Canadian Subscription Business
SINGER: Makes Final Share Distribution Pursuant to Reorg. Plan
SPIEGEL GROUP: Continues Use of Existing Canadian Bank Accounts
SUN HEALTHCARE: Settles Landlord-Asserted Defaults
TRICO MARINE: Schedules Q1 2003 Conference Call on May 6
TRINITY ENERGY: Targets Filing Reorganization Plan by Month-End
UNISYS: Retirees Picket Plymouth Plant Citing Broken Promises
UNITED DEFENSE: Welcomes C. Thomas Faulders to Board
US DATAWORKS: Independent Auditors Singer Lewak Withdraws Report
US MINERAL: Taggart Taps Benedetto Gartland as Investment Banker
U.S. STEEL: Nixes Discount Under Dividend Reinvestment Plan
VARSITY BRANDS: S&P Places B Long Term Rating on Watch Negative
WCI COMMUNITIES: Annual Shareholders' Meeting Set for Today
WHEELING-PITTSBURGH: Wants to Extend DIP Maturity & Honor Fees
WHITE HALL: Insolvency Prompts S&P's R Financial Strength Rating
WILLIS GROUP: Publishes Improved First Quarter Results
WORLD AIRWAYS: Secures Conditional Nod For $27MM Loan Guarantee
XTO ENERGY: Completes Common Stock and Private Debt Offerings
YUM! BRANDS: Reports Better First-Quarter Financial Results
* BOOK REVIEW: A Legal History of Money in the United States,
1774-1970
*********
ACE LIMITED: Fitch Takes Several Rating Actions; Outlook Stable
---------------------------------------------------------------
Fitch Ratings took several actions affecting the ratings of ACE
Limited (NYSE: ACE) and its subsidiaries.
Fitch downgraded the debt ratings of ACE and its subsidiary ACE
INA Holdings, Inc. by one notch, including the senior debt
ratings to 'A-' from 'A' and commercial paper ratings to 'F2'
from 'F1'. Fitch also downgraded the insurer financial strength
ratings of the insurance subsidiaries of Brandywine Holdings by
four notches to 'B+' from 'BBB-'.
Fitch assigned a 'BBB+' rating to the preferred securities issue
planned under ACE's recent shelf registration, while downgrading
the rating on existing preferred securities to 'BBB+' from 'A-'.
The Rating Outlook on all of the above noted ratings is Stable.
The insurer financial strength ratings of the insurance
subsidiaries of INA Holdings remain on Rating Watch Negative
pending ACE's planned issuance of $500 million of perpetual
preferred securities. If ACE successfully completes the
preferred securities issue or issues in the near term and
contributes approximately $250 million of capital to the
insurance subsidiaries of INA Holdings, Fitch expects to affirm
those ratings at 'A+' with a Stable Rating Outlook. Otherwise,
Fitch expects those ratings will be downgraded to 'A' with a
Stable Rating Outlook.
On July 2, 1999, ACE acquired CIGNA Corporation's domestic
property/casualty insurance operations including its run-off
business and its international property/casualty companies. INA
Holdings and Brandywine Holdings together comprise the domestic
operations of ACE INA and represent the domestic
property/casualty insurance operation that ACE purchased from
CIGNA in 1999. INA Holdings owns the 19 insurance companies
that, along with the 3 companies owned by ACE US Holdings,
represent the active insurance operations of ACE USA.
Brandywine Holdings represents the inactive, run-off operation
that houses the group's asbestos and environmental claims. The
two groups were separated in a 1996 restructuring, effective
December 31, 1995.
Fitch had previously placed the ratings of ACE, ACE INA and INA
Holdings on Rating Watch Negative on January 29, 2003 following
ACE's announcement that it would incur a $2.2 billion gross
charge as the result of its asbestos reserve review, while at
the same time downgrading Brandywine's rating. After
reinsurance, provision for bad debts and taxes, the charge was
$354 million. The gross asbestos charge related entirely to
Brandywine Holdings.
The downgrade of the debt and trust preferred securities ratings
reflects ACE's high exposure to reinsurance recoverables,
moderate financial leverage and the low ratio of tangible equity
to total equity. Fitch believes ACE uses reasonable techniques
to establish its provision for uncollectible reinsurance.
However, Fitch notes that the financial condition of the
worldwide reinsurance industry continues to deteriorate as the
result of losses on investments and adverse development of
reserves, particularly liability reserves, and that dispute risk
is also rising industry-wide. Such trends could lead to the need
to further strengthen reserves for uncollectible reinsurance in
the future.
Positively, Fitch noted ACE's strong underwriting earnings
(excluding the asbestos charge) and adequate overall reserve
level. Fitch believes ACE has benefited from current hard market
conditions and will continue to benefit from those conditions at
least through 2003.
The most significant rating action taken today is the reduction
of the Brandywine insurance subsidiaries from the 'secure'
category to the 'vulnerable' category. This action reflects the
magnitude of the asbestos charge, the exhaustion of the
reinsurance provided by National Indemnity Company, the
exhaustion of the $50 million dividend retention fund provided
by INA Holdings and the partial consumption of the $800 million
stop loss protection provided by INA Holdings' insurance
subsidiaries. Additionally, as part of the 1996 restructuring
agreement, the Brandywine insurance subsidiaries are permitted
to discount loss reserves for the time value of money to an
expected present value. With the recent charge, this discount
grew significantly.
Fitch believes that there is now a high degree of uncertainty
that Brandywine will be able to fulfill all future obligations.
Fitch is also uncertain that any additional funds would be
provided by ACE to support the run-off, above and beyond the
remaining stop loss obligations.
Fitch views the strong results posted by the ongoing insurance
operations of INA Holdings positively. Fitch does not view the
asbestos charge as a negative indication of the active
companies' underwriting strategy or ability. However, Fitch
notes that the penetration of the asbestos charge into the stop
loss agreement resulted in a reduction in surplus at INA
Holdings. Additionally, the active companies are potentially
exposed to further losses at Brandywine up to the remainder of
the stop loss cover and any future replenishment of the dividend
retention fund. Thus, Fitch believes a capital contribution
would be required to affirm the insurance ratings of INA
Holdings at current levels
The individual ratings affected
ACE Limited
--Long-term rating Downgrade 'A-';
--Short-term rating Downgrade 'F2';
--Senior debt Downgrade 'A-';
--Cumulative redeemable preferred shares
Downgrade 'BBB+';
--Commercial paper Downgrade 'F2';
--Preferred stock Assign 'BBB+';
--Rating Watch Removed from Negative;
--Rating Outlook Stable.
ACE INA Holdings, Inc.
--Long-term rating Downgrade 'A-';
--Short-term rating Downgrade 'F2';
--Senior debt Downgrade 'A-';
--Commercial paper Downgrade 'F2';
--Rating Watch Removed from Negative;
--Rating Outlook Stable.
ACE Capital Trust I
--Trust preferred securities Downgrade 'BBB+';
--Rating Watch Removed from Negative.
ACE Capital Trust II
--Capital securities Downgrade 'BBB+';
--Rating Watch Removed from Negative.
ACE American Reinsurance Company Century Indemnity Company
Century Reinsurance Company
--Insurer financial strength Downgrade 'B+';
--Rating Outlook Stable.
The ACE Group of Companies is one of the world's largest
providers of property and casualty insurance and reinsurance.
Headquartered in Bermuda, ACE provides a diversified range of
products and services to clients in nearly 50 countries around
the world.
ADEPT TECHNOLOGY: March 2003 Balance Sheet Insolvency Tops $5MM
---------------------------------------------------------------
Adept Technology, Inc. (OTCBB:ADTK.OB), a leading manufacturer
of flexible automation for the semiconductor, life sciences,
electronics and automotive industries, reported financial
results for its third quarter ended March 29, 2003.
Net revenues for the quarter ended March 29, 2003 were $12.5
million, a decrease of 14.5% from net revenues of $14.6 million
for the quarter ended March 30, 2002. One customer accounted for
18% of net revenues for the third quarter ended March 29, 2003
while no single customer accounted for more than 10% of net
revenues for the quarter ended March 30, 2002. Gross margin for
the quarter was 27.9% versus 32.4% in the same quarter a year
ago. The decrease in gross margin reflects lower volumes and
pricing pressure for Adept's products generally. Operating
expenses for the quarter were $10.2 million, a decrease of 42.4%
compared to $17.7 million in the quarter ended March 30, 2002.
R&D and SG&A expenses for the quarter ended March 29, 2003 were
$7.8 million, a decrease of 36.2% compared to $12.2 million for
the same period a year ago. Adept reported a net loss of $6.8
million, or $0.44 per share, for the quarter ended March 29,
2003, versus a net loss of $9.9 million, or $0.72 per share, for
the quarter ended March 30, 2002. The figures above include
amortization and restructuring charges of $2.4 million for the
quarter ended March 29, 2003 and $5.5 million for the quarter
ended March 30, 2002. Cash and cash equivalents at March 29,
2003 were $1.7 million.
Brian R. Carlisle, Chairman and Chief Executive Officer of Adept
noted, "While third quarter revenues increased 16% from the
prior quarter, the decline in revenues versus the same period in
the prior year reflects continued delays in capital spending by
our customers due to economic and geopolitical uncertainties.
Overall results from operations reflect the significant progress
we have made in reducing our operating expenses to align with
the decline in revenues. Over the last four quarters, we have
reduced our worldwide headcount by 40%, consolidated facilities,
and exited non-strategic product lines as part of a focused
activity to right-size the business for this challenging
business environment. As a result, we have dramatically reduced
our cash burn rate and our goal is to reach cash flow breakeven
this quarter."
For the nine months ended March 29, 2003, Adept reported net
revenues of $33.5 million compared to net revenues of $42.4
million for the nine months ended March 30, 2002, a decrease of
21.0%. Gross margin for the first nine months of fiscal 2003 was
25.3% versus 34.5% for the first nine months of fiscal 2002.
Operating expenses for the nine months ended March 29, 2003 were
$31.2 million compared to $55.7 million in operating expenses
for the same period a year ago, a decrease of 44.0%. For the
first nine months of fiscal 2003, Adept had net losses of $22.6
million, as compared to net losses of $47.9 million for the
first nine months of fiscal 2002. The operating expense figures
above include amortization and restructuring charges of $3.9
million for the nine months ended March 29, 2003 and $18.2
million for the same period one year ago. The net loss figure
for the nine months ended March 30, 2002 also includes the
cumulative effect of change in accounting principle of $10.0
million.
Cash management remains an area of top priority for the company.
Adept's focus continues to be identifying opportunities to
further reduce the company's cost structure and manage cash
without negatively impacting the company's ability to maintain
its top line. In order to address short-term cash needs, the
company has entered into an Accounts Receivable Purchase
Agreement with Silicon Valley Bank for the purchase of eligible
accounts receivable up to $1.75 million. Adept continues to
aggressively pursue additional outside sources of financing to
address future requirements.
As of March 29, 2003, the company records a total stockholders'
equity deficit of $5,236,000
Adept's Outlook
-- The company expects net revenues for the fourth quarter of
fiscal 2003 to be down 8% to 16% from third quarter fiscal 2003
net revenues of $12.5 million.
-- The company has been utilizing less than 50% of its capacity
and expects its gross margin percentage to be approximately 27%
to 30% for the fourth quarter of fiscal 2003.
-- R&D and SG&A expenses in the fourth quarter of fiscal 2003
are expected to be down 6% to 13% compared to third quarter
expenses of $7.8 million.
-- The company is seeking various debt and equity financing
alternatives to improve its cash position. In the event that the
company does not complete a financing in its fourth quarter, the
company expects its cash ending balance to remain relatively
unchanged from the third quarter ending balance of $1.7 million.
This cash forecast is based on certain critical assumptions,
including continued cooperation from certain landlords with whom
we are renegotiating our lease obligations, continued timely
receipt of payment of outstanding receivables and the absence of
any unexpected significant cash outlays during the quarter.
-- The company has significant lease obligations, which it is
currently renegotiating. If the Company is not able to
renegotiate its lease obligations, the company will not have
sufficient cash to satisfy such obligations due in fiscal 2003.
-- The company does not expect to book any tax benefit
associated with current year operations during fiscal 2003.
-- Depreciation and amortization is expected to be approximately
$0.8 million in the fourth quarter of fiscal 2003.
Adept Technology, Inc. designs, manufactures and markets
intelligent production automation solutions to its customers in
many industries including the food, communications, automotive,
appliance, semiconductor, photonics, and life sciences
industries. Adept products are used for small parts assembly,
material handling and ultra precision process applications and
include robot mechanisms, real-time vision and motion controls,
machine vision systems, system design software, process
knowledge software, precision solutions and other flexible
automation equipment. Adept was incorporated in California in
1983. More information is available at www.adept.com.
AIR CANADA: Global Payments Wants to Stop Credit Card Processing
----------------------------------------------------------------
Global Payments Direct Inc. and Global Payments Canada ask Mr.
Justice Farley to declare that they have no obligation to
continue providing credit to Air Canada through the credit card
processing services. Global Payments provided and continues to
provide credit to Air Canada under certain Visa and MasterCard
credit card arrangement.
Michael J. MacNaughton, Esq., at Borden Ladner Gervais LLP,
explains that the written agreement pursuant to which Global's
predecessor provided MasterCard merchant services to Air Canada
expired six years ago. Despite the efforts from both parties,
no new arrangement has been made. Air Canada ticket sales
totaling some C$10 million a day are paid for using Visa and
MasterCard credit cards.
James G. Kelly, Global's Executive VP and CFO, explains that
Global extends credit for up to three days of credit card
charges to Air Canada from the time the cardholder makes the
purchase until the card issuer sends the money to Global. If
Air Canada shuts down, a cardholder will instruct the issuer to
reverse the charge and Global will be out any money its paid to
Air Canada. In the worst-case scenario, Global tabulates its
exposure to Air Canada at C$432 million. (Air Canada Bankruptcy
News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
DebtTraders reports that Air Canada's 10.250% bonds due 2011
(AC11CAR1) are trading at 24 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AC11CAR1for
real-time bond pricing.
AIR CANADA: Establishes Rebooking Policy Brought by SARS Concern
----------------------------------------------------------------
Effective immediately, Air Canada has implemented a policy
providing customers holding discounted tickets to certain
destinations greater flexibility to make changes to future
travel dates. This policy is in response to customer concerns
relating to the World Health Organization's travel advisory
issued today on the outbreak of Severe Acute Respiratory
Syndrome in Toronto and in certain Asian destinations.
Effective immediately, customers holding discounted tickets for
travel to/from Asia and customers holding discounted tickets for
travel from any point worldwide to Toronto purchased on or
before April 24, 2003 for travel on or before May 14, 2003 may
make a change to their travel dates without penalty, with all
travel completed by December 31,2003. Customers who have
commenced travel to Toronto from any point worldwide on
discounted tickets and now wish to return earlier than planned
to their point of origin may also re-book at no penalty. Regular
travel restrictions on discounted tickets continue to apply for
travel to/from all other destinations.
Air Canada continues to monitor developments and will
communicate any further changes to its policies, as necessary.
ALADDIN GAMING: Agrees To Sell Las Vegas Strip Properties
---------------------------------------------------------
Aladdin Gaming, LLC announced that it signed a Purchase and Sale
Agreement to sell the 2,567-room Aladdin Resort & Casino and the
7,000 seat Theatre of Performing Arts located on the Las Vegas
Strip. The Purchase and Sale Agreement is subject to bankruptcy
court approval.
The agreement was reached between Aladdin Gaming, LLC, owner of
the Aladdin Resort & Casino, and a joint venture between Robert
Earl, the CEO and co-founder of Planet Hollywood, Bay Harbour
Management LC and Starwood Hotels and Resorts Worldwide, Inc.
The Joint Venture has appointed Mike Mecca to be its President
and CEO. Prior to his appointment to these positions, Mr. Mecca
served as the General Manager of Green Valley Ranch Casino &
Spa. Pursuant to the agreement, the Joint Venture will retain
existing Aladdin employees.
As part of the transaction, the Joint Venture will assume $510
million of restructured Aladdin Gaming notes and certain other
liabilities, including Aladdin Gaming's ongoing obligations to
Northwind Aladdin, LLC. In addition, the agreement requires the
Joint Venture to invest $90 million of new equity capital for
the primary purpose of enhancing and re-theming the resort as
the new "Planet Hollywood Hotel & Casino," a Sheraton Hotel.
Pursuant to a separate license agreement, Planet Hollywood has
agreed to put on exhibit various displays from its considerable
collection of movie and television memorabilia. Starwood,
through its Sheraton brand, will manage the hotel operations and
will not have responsibility for casino operations. The parties
also contemplate that Starwood, through its Starwood Vacation
Ownership division, will develop a Westin Vacation Resort of up
to 600 units at the property. The purchase will not include the
adjoining Desert Passage Mall, which is owned by Aladdin Bazaar,
LLC.
Aladdin Gaming will seek a bankruptcy court hearing for June, at
which time Judge R. Clive Jones will consider approving the
agreement and/or any other qualified competing proposals. The
sale will be subject to confirmation of Aladdin Gaming's Plan of
Reorganization, which is expected to occur in August. Aladdin
Gaming is currently operating as a debtor-in-possession under
Chapter 11 of the Bankruptcy Code, which proceedings were
instituted on September 28, 2001.
The closing date for the purchase has not been set, as prior to
closing, the purchaser must obtain a gaming license from the
Nevada Gaming Commission. Further information concerning the
transaction may be obtained from Jeff Truitt of KPMG, LLP, 213-
630-2200.
ALLOU DISTRIBUTORS: Court Allows Interim Cash Collateral Use
------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of New York
gave its interim nod to Allou Distributors, Inc., and its
debtor-affiliate' request to continue using their prepetition
lenders' cash collateral to finance their continued business
operations.
As previously reported in the Troubled Company Reporter's
April 10, 2003 issue, three of the Company's Lenders, Congress
Financial Corporation, Citibank, N.A., LaSalle Business Credit,
Inc., filed an involuntary chapter 11 petitions against all of
the Debtors.
The Debtors tell the Court that they do not have sufficient
available sources of working capital and financing to carry on
the operation of their businesses without the use of Cash
Collateral. In addition, the Debtors' critical need for use of
Cash Collateral is immediate. In the absence of the use of Cash
Collateral, serious and irreparable harm to the Debtors and
their estates will occur.
The Debtors' Prepetition Lenders consent to the Debtors' use of
Cash Collateral. Consequently, the Court grants the Debtors'
use of Cash Collateral up to $12,926,000 in an interim basis
through May 16, 2003, pursuant to the Budget:
Week Ending
-----------
April 11 April 18 April 25
-------- -------- --------
Cash Receipts 1,198 3,630 3,300
Cash Disbursements 397 218 2,297
Total Expenses 554 931 2,944
May 2 May 9 May 16
----- ----- ------
Cash Receipts 4,450 2,085 2,240
Cash Disbursements 2,273 2,188 2,189
Total Expenses 3,076 2,759 2,661
The Hearing to consider final approval to use Cash Collateral
will take place on May 14, 2003 at 1:30 p.m.
Allou Distributors, Inc., is in the business of distributing
consumer personal care products and prescription pharmaceuticals
on a national basis. Three of the Debtors' creditors filed an
involuntary chapter 11 petitions against all Debtors on April 9,
2003, which, shortly thereafter, the Debtors consented (Bankr.
E.D.N.Y. Case No. 03-82321). Eric G. Waxman, III, Esq., and
John Joseph Leonard, Esq., at Jenkens & Gilchrist Parker Chapin
LLP represents the Debtors in their restructuring efforts.
AMERICAN FINANCIAL: Will Release First Quarter Results on May 1
---------------------------------------------------------------
American Financial Group, Inc. (NYSE: AFG) expects to release
its 2003 first quarter results on Thursday, May 1, 2003 before
9:30am ET. The earnings release will be available shortly
thereafter on AFG's Web site at http://www.amfnl.com
In conjunction with its earnings release, AFG will hold a
conference call to discuss the first quarter 2003 results at
11:00 am ET that day. There are two alternative communication
modes available to listen to the call.
Over the Telephone
Telephone access will be available by dialing 1-800-810-0924.
Please dial in 5 to 10 minutes prior to the scheduled start
time. A replay of the call will also be available two hours
following the completion of the call, at around 2:00 p.m. and
will run until 8:00 p.m. on May 8, 2003. To listen to the
replay, dial 1-888-203-1112 and provide the confirmation code
292634.
Live on the Internet
The conference call will also be broadcast live over the
Internet. To listen to the call via the Internet, go to AFG's
Web site, http://www.amfnl.com, and follow the instructions at
the Webcast link. The archived webcast will be available
immediately after the call on AFG's Web site until Thursday, May
8, 2003 at 11:59 PM.
As previously reported, Standard & Poor's Ratings Services
affirmed its triple-'B' counterparty credit and senior debt,
triple-'B'-minus subordinated debt, and double-'B'-plus
preferred stock ratings on American Financial Group Inc.
AMERICA WEST: First Quarter 2003 Net Loss Narrows to $62 Million
----------------------------------------------------------------
America West Holdings Corporation (NYSE: AWA), parent company of
low-fare America West Airlines, Inc. and The Leisure Company,
reported a first quarter net loss of $62.0 million and a diluted
loss per share of $1.84. For the same period a year ago, as
restated, America West reported a net loss of $273.5 million, or
$8.10 per share. Excluding the cumulative effect of a change in
accounting principle, first quarter 2002 net loss was $65.2
million, or $1.93 per share.
First quarter 2003 results included a $4.4 million gain related
to the purchase and subsequent exchange of an A320 airframe. The
first quarter 2002 results included $21.0 million of special
charges primarily related to the restructuring completed on
January 18, 2002, and a $35 million tax credit related to the
carryback of losses incurred in 2001 to the tax years 1996
through 2000 due to a change in U.S. income tax law. Excluding
unusual items, America West reported a first quarter 2003 net
loss of $66.5 million or $1.97 per share versus $76.4 million or
$2.27 per share in first quarter 2002.
"While slightly improved on a year-over-year basis and quite
favorable when compared to other airlines, our financial results
continue to reflect the harsh realities facing our industry
today," said W. Douglas Parker, chairman, president and chief
executive officer. "We remain in the midst of the most difficult
period in aviation history, and it is difficult to predict when
conditions will improve. In spite of the obvious challenges, I
am proud to say our employees are pulling together and are doing
what they do best -- taking care of our customers."
Operating revenues for the quarter were $523.2 million, up 13.7
percent from the same period in 2002. Available seat miles
(ASMs) increased 12.8 percent to 6.9 billion. Revenue passenger
miles were 4.9 billion, up 14.3 percent from first quarter 2002,
resulting in a passenger load factor for the quarter of 71.1
percent, up from 70.1 percent in the first quarter of 2002.
Passenger yields increased 0.2 percent to 10.27 cents, and
passenger revenue per available seat mile (RASM) improved 1.7
percent to 7.31 cents, despite a 12.8 percent increase in ASMs
and a 6.9 percent increase in average stage length.
Operating cost per available seat mile (CASM) for the first
quarter of 2003 declined 7.1 percent to 8.19 cents. CASM
excluding unusual items fell 2.5 percent to 8.26 cents, despite
a 60.7 percent, or approximately $35 million, increase in fuel
expenditures. Average fuel price excluding tax was 90.0 cents
per gallon versus 63.2 cents in the first quarter of 2002.
Excluding fuel and unusual items, CASM decreased 8.1 percent to
6.90 cents.
America West is committed to maintaining its position as the
low-cost leader among major hub-and-spoke airlines. In March,
America West announced it would seek to further reduce operating
expenses in an effort to maintain sufficient liquidity and to
protect its financial condition in this uncertain environment.
Included in that goal were reductions in: distribution expenses;
business partner and vendor fees; and management, professional
and administrative payroll costs. Last week, as part of this
plan, the airline eliminated approximately 250 positions,
including five senior officer roles. Executive positions are now
30 percent below early 2001 levels.
America West's cash and short-term investments totaled $356
million on March 31, $310 million of which is unrestricted.
Within the next 30 days, America West expects to receive
approximately $80 million for security fees and cockpit door
reinforcement as part of the aviation reimbursement provisions
of the Emergency Wartime Supplemental Appropriations Act. The
Act also suspends the previously mandated passenger and security
segment fees from June through September 2003.
The airline continued to expand its popular low-fare service
into markets nationwide during the first quarter. On March 1,
America West launched service between its Las Vegas hub and
Eugene, Ore. The company also announced during the quarter that
it would initiate service between Phoenix and Cancun, Mexico, as
well as add new fliand Memphis April 6.
While America West continues to look for strategic opportunities
to expand in markets where customers do not have access to low-
fare service, the company is also taking steps to eliminate
unprofitable flying. In February, America West announced it will
discontinue utilizing Columbus as a hub within the airline's
network to concentrate assets in its stronger hubs of Phoenix
and Las Vegas. During the second quarter, the airline plans to
gradually downsize the hub to field station status.
In the first quarter, America West continued to enhance the
customer experience by becoming the first and only airline to
introduce "Low Fare Finder" online low-fare search
functionality. Low Fare Finder searches for fares on the
customer's preferred travel dates as well as surrounding days to
locate the lowest possible fares.
America West Holdings Corporation is an aviation and travel
services company. Wholly owned subsidiary America West Airlines
is the nation's second largest low-fare carrier, serving 93
destinations in the U.S., Canada and Mexico. The Leisure
Company, also a wholly owned subsidiary, is one of the nation's
largest tour packagers.
AMKOR TECHNOLOGY: Secures $200 Million of New Financing
-------------------------------------------------------
Amkor Technology, Inc. (Nasdaq: AMKR) has entered into a new
$200 million senior secured credit facility consisting of a $170
million term loan maturing January 31, 2006 and a $30 million
revolving line of credit that is available through October 31,
2005.
As previously reported, Standard & Poor's Ratings Services
assigned its 'B+' senior secured bank loan rating to the
proposed $200 million credit facility. S&P also affirmed its
other ratings on the company, including the 'B' corporate credit
rating.
The new credit facility replaces Amkor's existing $197 million
senior secured credit facility, which includes a $97 million
term loan and a $100 million revolving credit facility that were
scheduled to mature September 30, 2005 and March 31, 2005,
respectively. The funds will be used to repay the $97 million
term loan outstanding under the existing credit facility and for
general corporate purposes.
"Completion of this new credit facility further enhances our
liquidity and provides a covenant structure that will enable
Amkor to more effectively manage our balance sheet and
accommodate business growth," said Ken Joyce, Amkor's chief
financial officer.
Amkor Technology, Inc. is the world's largest provider of
contract semiconductor assembly and test services. The company
offers semiconductor companies and electronics OEMs a complete
set of microelectronic design and manufacturing services. More
information on Amkor is available from the company's SEC filings
and on Amkor's Web site http://www.amkor.com
Amkor Technology Inc.'s 10.500% bonds due 2009 (AMKR09USR1) are
presently trading at 96 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AMKR09USR1
for real-time bond pricing.
AMR CORPORATION: $1.04 Billion First-Quarter Loss = Insolvency
--------------------------------------------------------------
Wiping-out $957 million of shareholder equity on the company's
books at December 31, 2002, AMR Corporation (NYSE: AMR), the
parent company of American Airlines, Inc., reported a first
quarter net loss of $1.04 billion. This compares with a net
loss of $1.56 billion, in the first quarter of 2002, which
included a cumulative effect of accounting change of $988
million.
"Our first quarter results were truly dreadful," noted AMR's
Chairman and Chief Executive Officer Don Carty. "The results we
reported today clearly demonstrate the negative effects from
high fuel prices leading up to the Iraq war, and passenger
concern about traveling before and after fighting commenced,"
Carty said.
"The fact remains that we are confronting a brutally difficult
financial and business environment," he said. "We are beset on
all sides by a struggling economy, the continued uncertainties
regarding hostilities in the Middle East, concerns regarding the
SARS outbreak, fuel prices that are significantly higher than
they were a year ago, and fare levels that are at 30-year lows.
All told, it's a perilous climate and our success is far from
assured," Carty said.
In keeping with the provisions of SFAS 109, AMR's first quarter
2003 results do not reflect a benefit for federal and state
income taxes. Conversely, AMR's first quarter 2002 results did
reflect a tax benefit.
Additionally, given the fluidity of AMR's current situation, the
planned conference between AMR's Senior Vice President and Chief
Financial Officer Jeff Campbell and members of the financial
community and the media will not occur as previously scheduled.
APPLIED EXTRUSION: Sets Q2 Results Conference Call for Apr. 29
--------------------------------------------------------------
Applied Extrusion Technologies, Inc. (NASDAQ NMS: AETC) intends
to hold a conference call on Tuesday, April 29, 2003 at 10:00 AM
to discuss its financial results for the second fiscal quarter
ended March 31, 2003. To listen live via the Internet, visit the
Investor Relations section of AET's Web site at
http://www.aetfilms.com. To access the conference call by
phone, dial 1-888-423-3280 and reference access code "AET Call".
A taped replay of the conference call will also be available
from approximately 12:30 PM Eastern Time on April 29, 2003 until
midnight on May 6, 2003. To listen to the replay, dial 1-800-
475-6701 from within the U.S. or 320-365-3844 from outside the
U.S. and enter access code 682545.
Applied Extrusion Technologies, Inc. is a leading North American
developer and manufacturer of specialized oriented polypropylene
films used primarily in consumer products labeling and flexible
packaging applications.
* * *
As previously reported in Troubled Company Reporter, Standard &
Poor's affirmed its single-'B' corporate credit rating on
Applied Extrusion Technologies Inc., and removed the rating from
CreditWatch, where it was placed on July 8, 2002. The outlook is
now negative.
The rating reflects the company's below-average business risk
profile, very aggressive debt leverage, and limited financial
flexibility. The company enjoys a leading share of the OPP
market and benefits from a low-cost position.
ARCH COAL: S&P Revises Outlook to Negative over Demand Concerns
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on coal
producer Arch Coal Inc. to negative from stable. Standard &
Poor's said that at the same time it affirmed its 'BB+'
corporate credit rating on the company. St. Louis, Missouri-
based Arch Coal had $705 million in debt at March 31, 2003.
"The outlook revision reflects Standard & Poor's concern over
the company's rising unit production costs, coal demand, and
upcoming contract negotiations for uncommitted 2004
production.", said Standard & Poor's credit analyst Dominick
D'Ascoli. "If coal prices do not improve and costs remain at
existing levels, operating performance and credit protection
measures will likely be adversely affected, which would result
in a downgrade."
Standard & Poor's said that its ratings on Arch Coal reflect the
company's diversified base of reserves in each of the major coal
producing regions in the U.S., its high percentage of low-sulfur
and compliance coal deposits, and high costs of production in
the eastern U.S. Arch Coal is the second-largest coal producer
in North America, accounting for approximately 10% of U.S.
production.
ATLANTIC COAST: First Quarter Net Income Decreases to $2 Million
----------------------------------------------------------------
Atlantic Coast Airlines Holdings, Inc. (Nasdaq: ACAI)(S&P: B-
/Negative/-), parent of Atlantic Coast Airlines (ACA), which
operates flights as United Express and Delta Connection in the
Eastern and Midwestern United States as well as Canada,
announced that based on accounting principles generally accepted
in the United States (GAAP) first quarter net income was $2.0
million ($0.04 per diluted share), compared to first quarter
2002 net income of $14.3 million ($0.31 per diluted share).
The company's first quarter 2003 results were affected by the
items noted below:
-- The company's total number of revenue departures was
adversely affected by severe weather conditions and by damaged
aircraft. As a result of abnormal winter weather at its
Washington Dulles hub and many of the cities served in the
Northeastern and Midwestern United States, the company cancelled
approximately 3.7% of its scheduled departures in the first
quarter, or approximately 2,900 flights due to weather, compared
to 1,200 flights during the first quarter last year. In
addition, a number of aircraft were damaged, some severely, due
to accidents attributed to other parties' operations and to
storm conditions. The equivalent of three aircraft were out of
service during the first quarter as a result of this damage, two
of which are not anticipated to be returned to scheduled service
until May. The company estimates that its lost revenue and
increased costs relating to unusual weather and aircraft damage
reduced pre-tax income by approximately $7.7 million during the
quarter.
-- The company's earnings for first quarter 2003 were materially
affected by the fact that the fee-per-departure rates paid by
United Airlines have not been set for 2003, with the result that
ACA continues to accrue and receive payment for revenue from
United at 2002 rates. Primarily as a result of decreases in
scheduled aircraft utilization, the existing rates for 2002 do
not adequately compensate the company. Under ACA's agreement
with United, rates are to be reviewed each year and modified to
reflect changes in costs and developments that have a
significant impact. ACA is continuing to pursue discussions with
United regarding rates for 2003. The company estimates that the
income shortfall in the first quarter resulting from using 2002
departure rates relative to the rates increase it has requested
from United was approximately $10 million pre-tax.
-- A charge to other expense of $1 million related to a payment
to Delta Air Lines to remove contractual restrictions on the use
of its ACJet subsidiary and its operating certificate.
-- Continued legal costs and contingency planning expenses of
approximately $0.4 million in the first quarter as a result of
the bankruptcy filings of United Airlines and Fairchild Dornier.
-- The company continues to accrue expenses subject to a rate
dispute with a vendor related to the power-by-the-hour
maintenance contract for certain of the company's regional jet
engines. In the first quarter, the company accrued $0.9 million
for additional maintenance and potential interest costs in
excess of cash payments related to this dispute.
Due to the uncertainties surrounding the situation with United
and the industry in general, the company previously announced
steps to address the current difficulties faced by its partners
and the airline industry:
-- Based on the unavailability of acceptable financing and other
uncertainties facing ACA in the coming months, the company is
continuing its discussions with Bombardier to defer certain CRJ
deliveries scheduled for 2003 and 2004. In connection with
potential changes in its CRJ delivery schedule, the company is
reviewing the retirement plan for its fleet of J-41 turboprops,
a plan that is subject to change depending on the outcome of the
discussions with Bombardier. Changes in the early retirement
plan that would keep the J- 41s in service for an additional
period may result in the company having to reverse amounts
previously recorded as early retirement charges.
-- The company announced that it has commenced an aggressive
cost reduction effort to lower the cost it charges to its major
airline partners and to ensure that its costs remain competitive
in a difficult revenue environment. The cost reduction effort
includes the following:
* Effective April 1, most salaried employees' base salaries were
reduced by 5-10%, and all of the company's bonus plans were
eliminated or reduced.
* These cuts affect the senior management group the most,
resulting in an effective reduction of approximately 20-30% of
potential cash compensation.
* Approximately 330 employees will be subject to a reduction in
force in the coming months, including 197 pilots. The pilot
furloughs are necessary to bring crew numbers to levels
appropriate for current aircraft utilization and changes to the
fleet plan now anticipated by the company.
* Additional cost reduction measures are being implemented
including the renegotiation of vendor agreements and a reduction
in capital expenditures.
During the first quarter 2003, ACA generated approximately 1.1
billion available seat miles (ASMs), an increase of 4.1 percent
over the same period last year. The company carried 1,922,609
passengers, an increase of 32.6 percent over the same period
last year.
Load factor improved 10.9 points to 67.8% for the first quarter
compared to 56.9% in the first quarter 2002.
ACA has a fleet of 142 aircraft -- including 112 regional jets
-- and offers approximately 840 daily departures, serving 84
destinations in the U.S. and Canada. The company employs over
4,900 aviation professionals. The common stock of parent company
Atlantic Coast Airlines Holdings, Inc. is traded on the Nasdaq
National Market under the symbol ACAI. For more information
about ACA, visit http://www.atlanticcoast.com.
BRIO SOFTWARE: March 2003 Working Capital Deficit is at $3.7MM
--------------------------------------------------------------
Brio Software, Inc. (Nasdaq: BRIO), a leading provider of next-
generation business intelligence tools, reported revenues of
$26.7 million for the quarter ended March 31, 2003, compared to
$25.4 million reported for the quarter ended March 31, 2002, and
a sequential increase of 5% from revenues of $25.5 million
reported for the quarter ended December 31, 2002. Revenues for
the fiscal year ended March 31, 2003 were $103.1 million, a
decrease of 7% from revenues of $111.4 million reported for the
fiscal year ended March 31, 2002.
Net loss for the quarter ended March 31, 2003 was $13.4 million
or a loss of $0.36 per share compared to a net loss of $3.8
million or a loss of $0.12 per share for the quarter ended March
31, 2002. Pro forma net income for the quarter ended March 31,
2003 was $101,000 or breakeven per share compared to a pro forma
net loss of $4.0 million or a loss of $0.12 per share for the
quarter ended March 31, 2002.
Net loss for the fiscal year ended March 31, 2003 was $16.6
million or a loss of $0.44 per share compared to a net loss of
$25.7 million or a loss of $0.85 per share for the fiscal year
ended March 31, 2002. Pro forma net loss for the fiscal year
ended March 31, 2003 was $3.3 million or a loss of $0.09 per
share compared to a pro forma net loss of $16.5 million or a
loss of $0.55 per share for the fiscal year ended March 31,
2002.
As of March 31, 2003, cash, cash equivalents and short-term
investments were $28.6 million. This is an increase of $1.3
million from the fiscal year ending March 31, 2002.
The financials used by the Company include various non-GAAP
financial measures, including pro forma net income and net loss
that exclude stock compensation charges (benefit), restructuring
expenses related to severance and related benefits, facility
closure expenses and the loss on abandonment of property and
equipment related to the facility closures. A "non-GAAP
financial measure" is defined as a numerical measure of a
company's performance that excludes or includes amounts so as to
be different than the most directly comparable measure
calculated and presented in accordance with generally accepted
accounting principles ("GAAP"). Management excluded the items
listed above from the pro forma net income and net loss as it
believes these items are not indicative of future operating
results due to their nature, size and infrequency and these
items are impossible to predict. As a result, management
believes a review of financial results excluding the items
listed above provides an important insight into the Company's
operating results and trends. The presentation of this
additional information is not meant to be considered in
isolation or as a substitute for the Company's financial results
prepared in accordance with GAAP.
Craig Brennan, Brio's President and CEO, stated, "For a second
consecutive quarter, we are pleased to have posted sequential
growth in our revenues despite continued conservative IT
spending. Additionally, we generated cash flow from operations
for the quarter and for the fiscal year."
Brennan added, "We made several strategic decisions during the
quarter, including integrating our professional services and
training organizations into North America Sales, restructuring
our Pan-European and Asia Pacific management structures and
continuing to consolidate certain facilities. We believe these
changes will help Brio meet its goal of achieving predictable,
profitable growth."
As of March 31, 2003, the company's liquidity is strained with
total current liabilities of $54,825,000 exceeding total current
assets of $51,053,000.
About Brio Software
Brio Software is a leading provider of next-generation business
intelligence tools and applications that help Global 3000
companies achieve breakthrough business performance. Widely
recognized as one of the easiest-to-use and deploy solutions in
the industry, the Brio Performance Suite(TM) and Brio Metrics
Builder(TM) expand business intelligence beyond advanced query
and analysis technologies to include powerful information
delivery through enterprise-class reporting and personalized
performance dashboards. Used by 75 of the Fortune 100 and more
than 2 million people worldwide, Brio products empower
individuals, workgroups and executives in an organization to
turn enterprise information into actionable insight, so superior
decisions and business performance result. Founded in 1989, and
headquartered in Santa Clara, CA, Brio products and services can
be found around the globe at http://www.brio.com
CABLE SATISFACTION: Banks Further Extend Debt Waivers Till May 7
----------------------------------------------------------------
Cable Satisfaction International Inc. announced that its bankers
have extended the waivers pertaining to the maturity date of the
credit facility of its subsidiary Cabovisao - Televisao por
Cabo, S.A. until May 7, 2003, subject to certain conditions.
The Company is pursuing constructive discussions with secured
lenders, noteholders, suppliers and potential investors to reach
a consensual agreement on a long-term solution to its financial
requirements and those of Cabovisao. There can be no assurance
as to the outcome of these discussions.
Csii builds and operates large bandwidth (750 Mhz) hybrid fibre
coaxial networks and, through its subsidiary Cabovisao -
Televisao por Cabo, S.A. provides cable television services,
high-speed Internet access, telephony and high-speed data
transmission services to homes and businesses in Portugal
through a single network connection.
The subordinate voting shares of Csii are listed on the Toronto
Stock Exchange under the trading symbol "CSQ.A".
DebtTraders reports that Cable Satisfaction International's
12.750% bonds due 2010 (CSQ10CAR1) are trading between 30 and
32. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CSQ10CAR1for
real-time bond pricing.
CARIBBEAN PETROLEUM: Delaware Court Confirms Fourth Amended Plan
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware confirmed
Caribbean Petroleum LP and its debtor-affiliates' Fourth Amended
Joint Plan of Reorganization after finding that the Plan
complies with each of the 13 standards articulated in Section
1129 of the Bankruptcy Code:
(1) the Plan complies with the Bankruptcy Code;
(2) the Debtors have complied with the Bankruptcy Code;
(3) the Plan was proposed in good faith;
(4) all plan-related cost and expense payments are
reasonable;
(5) the Plan identifies the individuals who will serve as
officers and directors post-emergence;
(6) all regulatory approvals that are necessary have been
obtained or are respected;
(7) creditors receive more under the plan than they would
in a chapter 7 liquidation;
(8) all impaired creditors have voted to accept the Plan,
or, if they voted to reject, then the plan complies
with the absolute priority rule;
(9) the Plan provides for full payment of Priority Claims
and the Hacienda Claims;
(10) at least one non-insider impaired class voted to
accept the Plan;
(11) the Plan is feasible and confirmation is unlikely to
be followed by a liquidation or need for further
financial reorganization;
(12) all amounts owed to the Clerk and the U.S. Trustee
will be paid; and
(13) the Plan provides for the continuation of all retiree
benefits in compliance with 11 U.S.C. Sec. 1114.
Eleventh-hour modifications of the Plan, the Court finds, do not
materially and adversely affect or change the treatment of the
holder of any Claim against the Debtors. All holders of the
Claim who voted to accept the Plan are deemed to have accepted
the Plan as amended. Thus, no holder of a Claim who has voted
to accept the Plan will be permitted to change its acceptance to
a rejection as a consequence of such modifications.
The Court further approved the merger of the Debtors. Pursuant
to the Merger Documents:
i) all assets and liabilities of CPLP, Caribbean Oil, LP
and Gulf Petroleum Corporation shall be deemed merged or
treated as thought they were merged into and with the
assets and liabilities of CPC;
ii) no distributions shall be made under the Plan on account
of Inter-Company Claims among such Debtors and all such
claims are eliminated and discharged; and
iii) all guarantees and obligations of each Debtors shall be
deemed to be one obligation of the Reorganized Caribbean
Petroleum Corporation.
CPR shall continue to exist as Reorganized CPR and shall carry
on with its business.
Any executory contracts or unexpired leases, which have not
expired by their own terms shall be deemed rejected by the
Debtors on the Effective Date. All executory contracts and
unexpired leases listed in the Schedule of Assumed and Assumed
and Assigned Executory Contracts and Unexpired Leases, shall be
deemed assumed by the Debtors on the Effective Date.
On the Effective Date all of the property of the Debtors'
Estates is vested in the Reorganized Debtors. The Reorganized
Debtor shall continue to exist after the Effective Date as a
separate corporate entity with all the powers of a corporation
under the state of incorporation.
Caribbean Petroleum LP, distributor petroleum products, filed
for chapter 11 bankruptcy protection on December 17, 2001,
(Bankr. Del. Case No. 01-11657). Michael Lastowski, Esq.,
William Kevin Harrington, Esq., at Duane, Morris & Heckscher LLP
represent the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed over
$100 million in assets and over $50 million in debts.
CMS ENERGY: S&P Rates $925-Mill. Sr Sec. Credit Facilities at BB
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' rating to
CMS Energy Corp.'s $925 million senior secured credit
facilities. The facilities include CMS Enterprises' $516 million
senior secured revolving credit facility due April 30, 2004
(guaranteed by CMS Energy) and a $159 million senior secured
revolving credit facility due April 30, 2004, and a $250 million
senior secured term loan facility due Oct. 30, 2004. The outlook
is negative.
Michigan-based CMS Energy has about $7 billion in debt.
The 'BB' ratings assigned to the facilities, which equates to
CMS Energy's 'BB' corporate credit rating, considers this class
of debt to be at the most senior position in CMS Energy's
capital structure. The uncertain value of the capital stock of
Consumers Energy Co. and CMS Enterprises (which is used as
security for the facilities) in a bankruptcy scenario affect any
potential benefit afforded by the companies' assets that support
the value of their capital stock.
"The potential value of the assets, when considering various
stress scenarios, within Consumers Energy and CMS Enterprises
could ultimately result in a residual value of the companies'
capital stock sufficient enough to collateralize the facilities
by about two times," said Standard & Poor's credit analyst
William Ferara.
CMS Energy's bank credit facilities will be secured by a first-
priority lien on all of the capital stock of Consumers Energy
and CMS Enterprises and its principal subsidiaries. In addition,
a guarantee is provided from all on the company's subsidiaries
other than Consumers Energy and Panhandle Eastern Pipeline Co.
The CMS Enterprises facility contains similar security and is
guaranteed by CMS Energy. Mandatory prepayments to reduce
outstanding borrowings are required from the proceeds of asset
sales and the proceeds of any equity or debt financing with the
exception of a financing at Consumers Energy. Financial
covenants include a leverage ratio (consolidated debt/EBITDA (7
to 1) and a cash dividend coverage test (1.25 to 1). As of Dec.
31, 2002, the company's ratios were 5.6x and 1.57x,
respectively.
CMS Energy's liquidity position and that of its primary
operating subsidiary, Consumers Energy Co., has moderately
improved as they have raised nearly $1.5 billion in various
financings (split $925 million at the parent and $550 million at
the regulated utility), which, along with expected asset sale
proceeds, will address financing requirements through the third
quarter of 2004. Along with the pending sale of its CMS
Panhandle Pipeline unit, the company has effectively improved
its liquidity position and lengthened out its debt maturity
schedule, which affords the company some time to focus on its
longer-term strategic initiatives of deleveraging and
strengthening its core operations.
The negative outlook for CMS Energy and its subsidiaries reflect
challenges, such as executing additional planned asset sales,
maintaining an adequate liquidity position, restoring investor
confidence, and generating cash flow and reducing debt
sufficient enough to produce credit protection measures
commensurate for its current rating.
CMS ENERGY: Fitch Affirms Ratings on Positive Liquidity Position
----------------------------------------------------------------
Fitch Ratings affirmed the existing ratings of CMS Energy Corp.
and its primary subsidiary, Consumers Energy Co., and removed
the ratings from Rating Watch Negative, where they were placed
on July 17, 2002. Approximately $7.5 billion of debt is
affected. The ratings for CMS are as follows: senior unsecured
rating at 'B+', and preferred stock and trust preferred
securities at 'CCC+'. In addition, Fitch has assigned a senior
secured rating of 'BB-' to CMS' $925 million of secured bank
facilities. The Rating Outlook for CMS is Negative. The ratings
affirmed for Consumers are: senior secured debt at 'BB+', senior
unsecured debt at 'BB', and preferred stock and trust preferred
securities at 'B'. The 'B' trust preferred rating of Consumers
Power Financing Trust I has also been affirmed. The Rating
Outlook for Consumers is Stable. A detailed description of the
rating actions is shown below.
The rating affirmations follow recent positive actions taken by
CMS to improve its liquidity and business position. Resolution
of these steps has removed a number of proximate negative
pressures on the parent company's ratings, allowing Fitch to
replace the Rating Watch Negative with a Negative Outlook. These
include a definitive agreement to sell the Panhandle Companies
to Southern Union Co. (rated 'BBB'/Rating Outlook Stable by
Fitch) for $1.828 billion, the successful refinancing of $1.465
billion of bank facilities and the release of audited annual
financial restatements. Importantly, the bank agreements reduce
near-term liquidity pressures on CMS, and should enable the
company to meet all its debt maturities through October 2004.
The Negative Outlook for CMS takes into consideration the
continuing uncertainty surrounding the company's projected
business strategy. CMS is reliant upon the timing and execution
of its remaining asset sale program to pay down debt beyond the
required maturities and improve credit metrics. Although, with
the successful completion of the Panhandle transaction, as well
as those domestic asset sales already announced and in an
advanced stage of realization, CMS will have completed the bulk
of its 2003 plan, the company still faces a difficult economic
and market environment for the sale of its international assets,
primarily in Latin America, the Middle East and Asia, slated for
disposal by late 2004. Additional rating concerns include the
potential financial impact of ongoing regulatory and
governmental investigations related to wash-trades conducted by
CMS' trading business, which is in the process of wind-downing
operations, in 2000-2001.
Stabilization of CMS' Rating Outlook will depend on further
progress towards the execution of the planned asset sales
program, as well as reduction in parent company debt and
resolution of pending regulatory investigations and inquiries.
In the long-term, improvement in the parent company's credit
profile will depend on CMS' ability to generate free operating
cash flow, maintain adequate liquidity, reduce leverage and
demonstrate improved credit protection measures.
On a standalone basis, Consumers' credit profile is solid
relative to the current ratings which reflect constraint due to
ownership linkage to CMS. Despite an increasing investment
burden over the next few years, the regulated utility benefits
from more stable cash flows and electric and gas monopoly
distribution franchises. Current credit concerns at the
regulated utility level primarily relate to Consumers' full
regulatory agenda in 2003, which includes a $1.08 billion
securitization request, a $156 million gas rate case, and
ongoing stranded cost proceedings. While certain items within
the regulatory rate submission, such as securitization of
environmental costs, are less controversial than others, such as
the securitization of pension costs, Fitch notes that the
inability to receive nominal base rate increases may place
pressure on Consumers' financial condition. Following the
completion of the Panhandle transaction, CMS will be almost
entirely dependent on cash distributions from Consumers for debt
service. As a result, Fitch believes that further improvement in
Consumers' ratings will be largely dependent on the
stabilization of CMS' credit quality. The current ratings of
Consumers nonetheless maintain room to permit further modest
rating deterioration at the CMS level without negative rating
action at the regulated subsidiary, and thus a Stable Rating
Outlook has been assigned.
CMS is a utility holding company whose primary subsidiary is
Consumers, a regulated electric and gas utility serving
customers in western Michigan. CMS also has operations in
natural gas pipelines and independent power production.
New Ratings:
CMS Energy Corp.
-- Senior secured debt 'BB-'
Ratings removed from Rating Watch Negative and affirmed:
CMS Energy Corp.
-- Senior unsecured debt 'B+';
-- Preferred stock/trust preferred securities 'CCC+';
-- Rating Outlook Negative.
Consumers Energy Co.
-- Senior secured debt 'BB+';
-- Senior unsecured debt 'BB';
-- Preferred stock/trust preferred securities 'B';
-- Rating Outlook Stable
Consumers Power Financing Trust I
-- Trust preferred securities 'B';
-- Rating Outlook Stable.
COMPACT DISC: Seeks Authority to Employ Sills Cummis as Counsel
---------------------------------------------------------------
Compact Disc World, Inc., asks for approval from the U.S.
Bankruptcy Court for the District of New Jersey to employ Sills
Cummis Radin Tischman Epstein & Gross as its chapter 11
attorneys.
The Debtor believes that Sills Cummis is well qualified to
represent it in this case considering the firm's extensive
experience and knowledge in the field of debtors' and creditors'
rights.
As Debtor's counsel, Sills Cummis will:
a. take all necessary action to protect and preserve the
estate of the Debtor, including the prosecution of
actions on the Debtor's behalf, the defense of certain
actions commenced against the Debtor, negotiations
concerning litigation in which the Debtor is involved,
and analyzing and objecting to, where necessary, claims
filed against the estate;
b. prepare on behalf of the Debtor, as debtor in
possession, all necessary motions, applications,
answers, orders, reports, and papers in connection with
the administration of the estate herein;
c. negotiate and prepare on behalf of the Debtor a plan of
reorganization and all related documents; and
d. perform all other necessary legal services in connection
with this Chapter I 1 case.
The professionals who will be primarily responsible in this
engagement and their current hourly rates are:
Jack M. Zackin $475 per hour
Andrew H. Sherman $425 per hour
Ivan J. Kaplan $275 per hour
Boris I. Mankovetskiy $175 per hour
Compact Disc World, Inc., is a retail music chain. The Company
filed for chapter 11 protection on April 16, 2003 (Bankr. N.J.
Case No. 03-22638). Boris I. Mankovetskiy, Esq., and Jack M.
Zackin, Esq., at Sills Cummis Radin Tischman Epstein & Gross,
P.A., represent the Debtor in their chapter 11 case. When the
Company filed for protection from its creditors, it estimates it
debts and assets of over $10 Million each.
CONSECO FINANCE: Panel Retains Much Shelist as Conflicts Counsel
----------------------------------------------------------------
The Official Committee of Unsecured Creditors of the Conseco
Finance Corp. Debtors seeks the Court's authority to retain
Much, Shelist, Freed, Donenberg, Ament & Rubenstein as Conflicts
Counsel.
The CFC Committee has identified Claims that the CFC Debtors and
their estates may pursue against various Lehman entities
including Lehman Brothers, Inc., Lehman Commercial Paper, Inc.,
and Lehman ALI, Inc.:
a) to avoid and recover any preferential or fraudulent
transfers from Lehman;
b) to challenge the validity, priority, enforceability and
cross-collateralization of all liens granted by Green Tree
Finance Corporation 5 and/or Green Tree Residential
Finance Corp. 1 to Lehman;
c) to consolidate the assets and/or liabilities of either or
both GTFC and/or GTRFC with those of the CFC Debtors or
any other affiliates;
d) to assert that any transfer of assets by the CFC Debtors
to GTFC and/or GTRFC was not a "true sale;" or
e) otherwise to seek to recover transferred assets from GTFC
or GTRFC or to assert that any interest in transferred
asset is property of the CFC Debtors' estates.
On April 2, 2003, the CFC Committee sent a letter to the CFC
Debtors demanding that they bring a complaint against Lehman.
The CFC Debtors have waived their right to pursue the Claims
pursuant to the FPS DIP Order and the SPE DIP Order.
Keith J. Shapiro, Esq., at Greenberg, Traurig, says that his
firm cannot prosecute the Claims because of a conflict of
interest.
Mr. Shapiro tells the Court that Much Shelist has substantial
experience in the field of complex commercial litigation and is
familiar with the Northern District of Illinois. The
professional services that the CFC Committee expects Much
Shelist to render include all actions necessary to investigate,
evaluate and prosecute the Claims.
To the best of the CFC Committee's knowledge, Much Shelist is a
disinterested person as that term is defined in Section 101(14)
of the Bankruptcy Code.
Much Shelist will be compensated on an hourly basis and
reimbursed for actual and necessary expenses.
The hourly rates of the firm's principal attorneys and
paralegals are:
Harvey J. Barnett $450
Anthony Valiulis 450
Christopher Stuart 375
Edward Shapiro 375
Hillard Sterling 325
Lisa Ben-Isvy 320
Michael Moskovitz 300
Rachel Feldstein 290
Carmen Ortiz, Paralegal 150
The CFC Committee requests that Much Shelist be compensated on a
monthly basis of 90% of its fees and 100% of out-of-pocket
costs. The CFC Committee further requests, due to the expedited
nature of the Claims and the risk of payment caused by the
limitation on the Carve-Out contained in the FPS DIP Order, that
Much Shelist be paid 15% of the gross recovery, if any, whether
by settlement, judgment or otherwise, attributable to the
Claims.
Anthony Valiulis, Esq., a principal at Much Shelist, informs
Judge Doyle that the firm was established in 1970 and currently
employs 90 attorneys. Mr. Valiulis asserts that his firm has no
adverse interest against any of the Debtors, their affiliates or
other stakeholders. (Conseco Bankruptcy News, Issue No. 18;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
DIRECTV LATIN: Gets Nod to Continue AP Services' Retention
----------------------------------------------------------
The Official Committee of Unsecured Creditors' objection to
DirecTV Latin America, LLC and its debtor-affiliates' motion to
continue the retention of AP Services, LLC as crisis managers
has been resolved and withdrawn.
Accordingly, pursuant to Section 363 of the Bankruptcy Code, the
Court permits the Debtor to continue to employ APS pursuant to
the Engagement Letter provided that:
(a) The Engagement Letter is revised to provide that APS
employees serving as officers of the Debtor will be
entitled to received only whatever indemnities are made
available, during the term of APS' engagement, to other
non-APS affiliated officers of the Debtor, whether under
the Debtor's by-laws, certificate of incorporation,
applicable corporation laws, or contractual agreements
of general applicability to the Debtor;
(b) APS Temporary Employees will not be entitled to
indemnification the Debtor provided;
(c) APS will not be entitled to receive a Performance Fee to
the extent it is terminated for actions constituting
gross negligence or willful misconduct;
(d) APS will not be entitled to receive a Performance Fee in
the event the Debtor's case is converted from a case
under Chapter 11 to Chapter 7, unless the Chapter 7
trustee appointed after the conversion ratifies or
continues the Engagement Letter; and
(e) the Engagement Letter is revised to provide that the
Debtor will not owe any payment to APS in the event the
Debtor hires an APS employee, provided that the Debtor
will not affirmatively recruit or solicit APS employees.
Moreover, Judge Walsh approves the payments contemplated in the
Engagement Letter. These payments may be made by the Debtor
without any further Court order, provided that APS complies with
any Court order with respect to interim compensation and upon
the occurrence of a Triggering Event, if any, APS must seek
Court approval of the Performance Fee. There is no presumption
that the Performance Fee should be paid upon the occurrence of a
Triggering Event. (DirecTV Latin America Bankruptcy News, Issue
No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900)
DYNEGY INC: Completes Sale of Hackberry LNG Project to Sempra
-------------------------------------------------------------
Dynegy Inc. (NYSE:DYN) finalized the sale of its 100 percent
interest in Hackberry LNG Terminal LLC, the company's proposed
Liquefied Natural Gas (LNG) terminal/gasification project in
Hackberry, Louisiana, to Sempra Energy LNG Corp., a subsidiary
of San Diego-based Sempra Energy (NYSE:SRE). Dynegy had
announced its intentions to sell the facility to Sempra Energy
LNG Corp. on Feb. 18, 2003.
Under the terms of the agreement, Sempra Energy LNG Corp. made
an initial payment of $20 million to Dynegy, with additional
contingent payments based upon project development milestones
and performance.
"This closing represents yet another successful milestone along
our course of non-core asset divestitures and strict capital
management," said Bruce A. Williamson, president and chief
executive officer, Dynegy Inc. "The value gained from selling
the project and preserving the development capital it would have
required will serve our shareholders more effectively as part of
our ongoing debt-reduction program."
Dynegy Inc. owns operating divisions engaged in power
generation, natural gas liquids and regulated energy delivery.
Through these business units, the company serves customers by
delivering value-added solutions to meet their energy needs.
* * *
As previously reported, Standard & Poor's Ratings Services
affirmed its 'B' corporate credit ratings on Dynegy Inc., and
its subsidiaries and removed the ratings from CreditWatch with
negative implications. The outlook is negative.
Standard & Poor's also assigned its 'B+' rating to Dynegy
Holdings Inc.'s (a Dynegy subsidiary) new $1.66 billion senior
secured credit facility.
Dynegy Holdings Inc.'s 8.750% bonds due 2012 (DYN12USR1) are
trading at 82 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=DYN12USR1for
real-time bond pricing.
DYNEGY INC: Terminating Power Contracts with Southern Company
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Southern Company (NYSE: SO) announced it has signed a letter of
intent with Dynegy, Inc., for the early termination of all long-
term wholesale power contracts between the two companies. Under
the letter of intent, Dynegy would pay Southern Company $155
million for the right to exit three wholesale power contracts
totaling 1,100 megawatts of generating capacity. The parties
agreed to use their best efforts to complete and execute
definitive documentation reflecting the terms of the letter
agreement by May 30, 2003.
"By agreeing to a financial settlement for the obligations under
these contracts, we're helping to ensure a more stable outlook
for the long-term planning and operation of our competitive
generation business," said Allen Franklin, Southern Company
president and chief executive officer. "Given the events that
have transpired in the independent power sector over the past 18
months, we believe this agreement is in the best interest of our
customers and our shareholders."
"We are exploring several options to remarket the capacity that
was contracted to Dynegy," added Paul Bowers, President of
Southern Company Generation & Energy Marketing and President and
CEO, Southern Power, a Southern Company subsidiary that builds,
owns and manages the company's competitive generation assets.
He noted that Southern Company has signed several new wholesale
power contracts in the Southeast where additional future
capacity has not been committed.
Under two operating agreements that it signed with Southern
Company, the Houston-based Dynegy, Inc., was receiving 485
megawatts of energy from wholesale agreements that were due to
expire in 2005 and 2011. The third agreement for 615 megawatts
was set to begin in 2005.
Franklin noted that this announcement does not impact the
wholesale generating capacity that the company is scheduled to
complete in 2003. Looking beyond 2003, Franklin noted that " ...
our competitive generation strategy remains on track and we are
committed to meeting the operational and financial goals we have
set."
With 4 million customers and nearly 37,000 megawatts of
generating capacity, Atlanta-based Southern Company (NYSE: SO)
is the premier super- regional energy company in the Southeast
and a leading U.S. producer of electricity. Southern Company
owns electric utilities in four states, a growing competitive
generation company, an energy services business and a
competitive retail natural gas business, as well as fiber optics
and wireless communications. Southern Company brands are known
for excellent customer service, high reliability and retail
electric prices that are 15 percent below the national average.
Southern Company has been named two consecutive years No. 1 on
Fortune magazine's "America's Most Admired Companies" list in
the Electric and Gas Utility industry. Southern Company has
more than 500,000 shareholders, making its common stock one of
the most widely held in the United States. Visit the Southern
Company Web site at http://www.southerncompany.com.
Dynegy, Inc. owns operating divisions engaged in power
generation, natural gas liquids and regulated energy delivery.
Through these business units, the company serves customers by
delivering value-added solutions to meet their energy needs.
Its web site is http://www.dynegy.com
ENCOMPASS SERVICES: Employs Innisfree as Noticing Agent
-------------------------------------------------------
Encompass Services Corporation and its debtor-affiliates sought
and obtained Court authorization to employ Innisfree M&A Inc.,
as noticing, ballot solicitation and tabulation agent in
connection with their Chapter 11 cases.
In addition to the mailing of voting and non-voting documents as
ballot solicitation and tabulation agent, Innisfree will also
provide these services at the Debtors' request:
(i) Advice regarding all respects of the voting and tabulation
process;
(ii) Assist in requesting information from the indenture trustee
and the Depository Trust Company;
(iii) Coordinate with the nominees and responds to inquiries of
noteholders regarding the disclosure statement and the plan
voting procedures;
(iv) Receive and examine all ballots and master ballots cast by
the noteholders and other creditors;
(v) tabulate all ballots and master ballots in accordance
with established procedures; and
(vi) prepare an appropriate ballot certification.
As special noticing agent and consultant, Innisfree will:
(a) assist in sending notices and documents to the holders of
the Debtors' public securities in connection with the
plan and disclosure statement processes in these Chapter
11 cases;
(b) coordinate with other parties in interest to ensure that
the mailings of the notices and related documents are done
properly and in a timely fashion;
(c) prepares affidavits of service for filing with the Court;
and
(d) provide the Debtors with consulting services regarding
the development and review of plan solicitation materials,
including the disclosure statement, ballots, master
ballots, voting instructions and issues arising in
connection with the vote solicitation and tabulation
process.
Accordingly, the Debtors will pay Innisfree for its balloting
and tabulation services:
(1) a $10,000 project fee;
(2) a $2,000 fee for each issue of public securities entitled
to vote on the Plan; and
(3) a $1,500 fee for each issue of public securities not
entitled to vote on the Plan but entitled to receive
notice.
Innisfree will also receive:
(1) a fee for mailings to any registered record holders of
securities or any creditors at $1.75 to $2.25 per package,
depending on the complexity of the mailing;
(2) a minimum charge of $2,000 to respond to up to 250 phone
calls from security holders within a 30-day solicitation
period, with additional calls charged at $8.00 per call;
and
(3) a fee of $100 per hour for tabulating ballots and master
ballots, plus a set up charge of $1,000 for each
tabulation element.
The Debtors will also pay the firm for its consulting services
in accordance with Innisfree's hourly rates:
Staff Rate
----- ----
Co-chairman $375/hr
Managing Director 350/hr
Practice Director 275/hr
Director 250/hr
Account Executive 225/hr
Staff assistant 150/hr
Innisfree will also receive fees for mass mailing services:
-- $3,500 for handling notice mailings to the holders of the
securities; and
-- $0.50 to $0.65, plus postage, for handling notice mailings
to registered record holders and other creditors.
The Debtors will also reimburse Innisfree for its out-of-pocket
expenses, for travel costs, messenger and courier costs and
expenses incurred in obtaining or converting depository
participant, creditor, shareholder and "non-objecting beneficial
owners" lists. (Encompass Bankruptcy News, Issue No. 11;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ENRON: Stipulates to Set-Off Compagnie Papiers Claim
----------------------------------------------------
Enron North America, Enron Industrial Markets LLC and Garden
State Paper Company, LLC, and Compagnie Papiers Stadacona
provided each other with certain corporate, administrative and
human resources services pursuant to a Corporate Services
Agreement dated April 3, 2001 -- the EIM Services Agreement.
Furthermore, ENA supplied fixed quantities of old newspaper to
Compagnie pursuant to an Old Newspaper Purchase and Sales
Agreement dated September 1, 2001 -- the ONP Agreement. On the
other hand, Garden State Paper Company, LLC and Compagnie
provided each other with certain corporate, administrative and
human resources services pursuant to a support service
agreement, dated April 3, 2001 -- the GSP Services Agreement.
The Debtors and Compagnie wish to set off certain mutual,
prepetition obligations the parties owe each other under the EIM
Services Agreement, the ONP Agreement and the GSP Services
Agreement. In a Court-approved Stipulation, the Parties agree
that:
A. As of January 17, 2003, Compagnie will be permitted to
set off the prepetition amounts of $687,369 that it owes
Enron Industrial for technical support provided to Compagnie
by Enron Industrial under the EIM Services Agreement and
$486,329 that it owes Enron Industrial for corporate
services provided to Compagnie by Enron Industrial against:
(1) CDN$1,224,753 that Enron Industrial owes to Compagnie
for sales and technical service administration Compagnie
incurred on Enron Industrial's behalf under the EIM
Services Agreement; and
(2) $42,124 that Enron Industrial owes to Compagnie for
costs associated with old newspaper origination
Compagnie incurred on Enron Industrial's behalf,
leaving a net obligation equal to $345,774 owed by Compagnie
to Enron Industrial;
B. Compagnie will remit payment to Enron Industrial the $345,774
due and owing to Enron Industrial for services provided to
Compagnie under the EIM Services Agreement -- the EIM
Payable. Alternatively, as part of the proposed sale of
Compagnie's business, Compagnie may assign the EIM Payable
to the purchaser of the Compagnie business pursuant to a
purchase and sale agreement, which will require the
Purchaser to remit an allocable portion of the purchase
price equal to the EIM Payable to Enron Industrial in full
satisfaction of Compagnie's obligation to remit payment of
the EIM Payable to Enron Industrial;
C. Compagnie will be permitted to set off $1,534,062 that it
owes ENA under the ONP Agreement in connection with
Compagnie's prepetition purchase of newsprint, leaving
Compagnie with an allowed, unsecured, prepetition claim
against ENA for $8,252,198 -- the ONP Claim;
D. Compagnie will timely file a proof of claim for its ONP
Claim against ENA for $8,252,198, which claim will be
treated in accordance with the plan of reorganization. ENA
acknowledges and agrees with the amount of the ONP Claim;
E. Compagnie will be permitted to set off $67,882 that is owed
to Garden State for its prepetition purchase of old
newspaper under the GSP Services Agreement, against $121,448
the Garden State owes Compagnie for prepetition corporate
services provided thereunder, leaving Compagnie with an
allowed, unsecured, prepetition claim against Garden State
for $56,567 -- the Services Claim;
F. Compagnie will timely file a proof of claim for its Services
Claim against Garden State for $56,567, which claim will be
treated in accordance with the plan of reorganization.
Garden State acknowledges and agrees with the amount of the
Services Claim; and
G. This Stipulation will not affect the substantive rights of
the Parties or any other party-in-interest, except to the
extent expressly set forth. (Enron Bankruptcy News, Issue
No. 62; Bankruptcy Creditors' Service, Inc., 609/392-0900)
FIBERCORE: Nasdaq To Delist Shares Due to Payment, Filing Delays
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FiberCore, Inc. (Nasdaq: FBCE), a leading manufacturer and
global supplier of optical fiber and preform for the
telecommunication and data communications markets, announced
that on April 17, 2003 it had received a notification of
delisting from Nasdaq.
The Company has not yet filed its annual report on Form 10-K
with the SEC due to delays in finalizing the results from its
foreign subsidiaries. The Company had previously filed for an
extension on Form 12b-25, which expired on April 15, 2003. The
Company currently anticipates filing its Form 10-K within the
next 15 days.
As a result of not timely filing its 10-K, the Company received
a Nasdaq staff determination on April 17 indicating that the
Company fails to comply with the filing requirements for
continued listing set forth in Marketplace Rule 4310 (c)(14),
and further that the Company is late in paying fees to Nasdaq
which is a failure to comply with Marketplace Rule 4310 (c)(13),
and that its securities are, therefore, going to be delisted
from the Nasdaq Smallcap Market at the opening of business on
April 28, 2003. Accordingly, the trading symbol for the
Company's securities was changed from FBCE to FBCEE at the
opening of business on April 22, 2003.
Previously, the Company had been notified that it would be
delisted from the Nasdaq Smallcap on May 29, 2003 due to failure
to meet minimum bid requirements. The Company has elected not to
contest this latest determination. The Company will endeavor,
once its annual report on Form 10-K has been filed, to
facilitate the trading of its stock on the OTC Bulletin Board,
but no assurance can be given that such a trading market will be
available. FiberCore previously traded on the OTC Bulletin Board
before moving to the Nasdaq Smallcap Market in November 2000. No
trading on the OTC Bulletin Board can take place until the
Company's annual report on Form 10-K has been filed and a market
maker files a Form 211 with the NASD and such form is "cleared."
Three consecutive trading days after the delisting, an event of
default will exist under the terms of the 5% Convertible
Subordinated Debentures issued in 2002 unless an intervening
waiver is granted by the holders of the Debentures. Currently,
there is $2.5 million outstanding on these Debentures. Once such
a default exists, the Company will also be in default under the
terms of its $8.5 million Credit Facility with Fleet National
Bank. In the event of a default of the Credit Facility, Fleet
could exercise the provisions of a guarantee given by Tyco
International Group S.A. to be paid in full by Tyco and Tyco
would then assume Fleet's position as a creditor of the Company.
In this case, Tyco would also have the right to assume control
of the Company's Board of Directors.
FiberCore, Inc. develops, manufactures, and markets single-mode
and multimode optical fiber preforms and optical fiber for the
telecommunications and data communications markets. In addition
to its standard multimode and single-mode fiber, FiberCore also
offers various grades of fiber for use in laser-based systems up
to 10 gigabits/sec, to help guarantee high bandwidths and to
suit the needs of Feeder Loop (also known as Metropolitan Area
Network), Fiber-to-the Curb, Fiber-to-the Home and Fiber-to-the
Desk applications. Manufacturing facilities are presently
located in Jena, Germany and Campinas, Brazil.
FLEMING COMPANIES: Summary of $150-Million DIP Facility's Terms
---------------------------------------------------------------
Fleming Companies, Inc., and its debtor-affiliates have arranged
to obtain on-going working capital financing under a
$150,000,000 revolving debtor-in-possession credit facility,
with the ability to increase the amount of the revolving credit
facility by up to an additional $100,000,000 without further
court approval.
The major terms contained in the DIP Credit Facility are:
A. Amount and Availability: Revolving loan commitments to be
granted under a revolving credit facility of up to
$150,000,000 with the ability to increase the amount by
up to an additional $100,000,000, less certain amounts
without further court approval, subject to the approval
of the Agents and the Required Lenders, with a sub-limit
for standby and trade letters of credit of $30,000,000 to
be issued for working capital purposes and other general
corporate requirements.
Availability under the DIP Credit Facility will be
subject to a borrowing base based on an amount equal to
the remainder of:
-- the sum of 85% of Eligible Accounts Receivable of the
Borrowers, plus the lesser of 85% of the respective
Net Liquidation Recovery Values on a category basis at
the time and the sum of certain inventory and fixed
asset amounts; less
-- the sum of the aggregate principal amount of loans and
issued and outstanding letters of credit under the
Existing Credit Agreement and the DIP Credit Facility.
In addition, availability under the DIP Credit Facility
will be reduced by the amount of the Carve-Out plus the
amount of allowed but unpaid professional fees that are
in excess of the Carve-Out.
B. Term: The earlier of 18 months from the Petition Date and
the effective date of a Plan of Reorganization, with all
outstanding under the DIP Credit Facility to be repaid in
full on the earlier date. Closing anticipated
concurrently with the interim approval of the DIP Credit
Facility by the Bankruptcy Court.
C. Interest Rate: At the Company's option, the DIP Loans may
be maintained from time to time as:
(i) Alternate Basic Rate Loans which bear interest at
the Applicable Margin in excess of the Alternate
Base Rate; or
(ii) Eurodollar Loans, which bear interest at the
Applicable Margin in excess of the Adjusted
Eurodollar Rate as determined by the Administrative
Agent for the respective interest period.
"Alternate Base Rate" means the higher of:
(i) the rate that the Administrative Agent announces
from time to time as its prime lending rate, as in
effect from time to time; and
(ii) 1/2 of 1% in excess of the overnight federal funds
rate.
"Applicable Margin" means:
(i) in the case of Alternate Base Rate Loans, 2% and
(ii) in the case of Eurodollar Loans, 3%.
Interest periods of two weeks and one month will be
available in the case of Eurodollar Loans. After the
occurrence and during the continuance of an event of
default under the DIP Credit Facility interest on the DIP
Loans will bear interest at a rate equal to 2% plus the
otherwise applicable rate. Interest is due monthly in
arrears commencing with the calendar month end
immediately following the Closing.
D. Fees:
(i) Commitment fee of 0.50% per annum based on the
daily unused balance under the commitments for the
DIP Credit Facility payable monthly in arrears to
each DIP Lender;
(ii) Letter of Credit fee of 3% per annum plus 0.25% per
annum to the issuing Lender, payable monthly; other
standard drawing and processing charges charged to
the Company's account on a per transaction basis;
and
(iii) fees payable to the Agents in amounts separately
agreed.
E. Security: Satisfactory collateral package
granted/confirmed by the Bankruptcy Court, including:
(i) an enforceable first priority priming lien pursuant
to Section 364(d)(1) of the Bankruptcy Code on all
of the existing and after-acquired assets
constituting collateral securing obligations to the
prepetition agents and the Prepetition Lenders
under the Existing Credit Agreement, including
accounts receivable, inventory and stock or other
equity interests, excluding rights with respect to
avoidance actions and subject to the Carve-Out;
(ii) an enforceable first priority lien pursuant to
Section 364(c)(2) of the Bankruptcy Code on all
unencumbered assets of the Borrowers; and
(iii) an enforceable junior lien on all property of the
Borrowers that is subject to valid, unavoidable and
perfected existing liens, other than the
Prepetition Collateral, in each case subject to the
Carve-Out; provided, however, that no proceeds or
any other portion of the Carve-Out will be used,
directly or indirectly, to finance in any way any
Lender Litigation.
The relative security positions will be a first priority
position of the DIP Loans over the Prepetition
Outstandings and a second priority position of the
Prepetition Outstandings over the trade obligations and
all other obligations of the Company and its
subsidiaries.
F. Type and Ranking: Senior secured credit facility; all
obligations under the DIP Credit Facility will be
superpriority administrative expense claims under
Sections 364(c)(1) and 364(c)(2) of the Bankruptcy Code,
subject to a carve-out for:
(i) in the event of the occurrence and during the
continuance of an event of default under the DIP
Credit Facility, the payment of allowed and unpaid
professional fees and disbursements incurred by the
Company and any statutory committee appointed in the
Chapter 11 cases in an aggregate amount not in
excess of $4,000,000; and
(ii) the payment of all unpaid fees payable Section
1930(a)(6) of the Judiciary Procedures Code and all
unpaid fees payable to the Clerk of the Bankruptcy
Court or the United States Trustee, having priority
over all administrative expenses of the kind
specified in Sections 503(b), 507(b) and 726(b) of
the Bankruptcy Code.
So long as an event of default under the DIP Credit
Facility will not have occurred and be continuing, the
Company will be permitted to pay all budgeted
Professional fees and expenses as they come due and
payable and the same will not reduce the Carve-Out.
Laura Davis Jones, at Pachulski Stang Ziehl Young Jones &
Weintraub, P.C., in Wilmington, Delaware, tells the Court that
the Debtors have an urgent and immediate need for cash to
continue to operate their businesses and to seek relief of this
Court through the procurement of debtor-in-possession financing
sufficient to meet the Debtors' operating expenses, and to pay
critical vendors, professional fees and expenses, and other
expenditures. Without the Court's approval and entry of the DIP
Credit Facility Order, the Debtors cannot pay current and
ongoing operating expenses, including, without limitation, wages
and salaries and necessary vendor products and services.
Consequently, the Debtors will suffer irreparable harm, thereby
jeopardizing any prospects for success in these cases.
The entry of the DIP Credit Facility Order will help maintain
employee, vendor and supplier confidence in the Debtors' ability
to pay for goods sold and delivered and services rendered. The
Debtors' use of the funds available under the DIP Credit
Facility are limited to amounts set forth in the budget
contained in the DIP Credit Facility Order, providing additional
safeguards for all creditors of the Debtors' estates.
In satisfying the standards of Section 364 of the Bankruptcy
Code, a debtor need not seek credit from every available source
but should make a reasonable effort to seek other sources of
credit available of the type set forth in Bankruptcy Code
Section 364(a) and (b). See In re Snowshoe Co., 789 F.2d 1085,
1088 (4th Cir. 1986) (trustee had demonstrated by good faith
effort that credit was not available without senior lien by
unsuccessfully contacting other financial institutions in
immediate geographic area; "the statute imposes no duty to seek
credit from every possible lender before concluding that such
credit is unavailable"); Ames, 115 B.R. at 40 (finding that
debtors demonstrated the unavailability of unsecured financing
where debtors approached several lending institutions).
Ms. Jones relates that the Debtors considered new financing to
replace or supplement the financing provided by the Prepetition
Lenders. Prior to the Petition Date, the Debtors considered
other lenders but were not able to secure postpetition financing
on as competitive a basis as provided by the Lenders within the
short time frame and on terms required by the Debtors.
Accordingly, the Debtors believe that the DIP Credit Facility
represents the best source of credit available to it at this
time.
Ms. Jones insists that no party-in-interest can seriously
contend that the Debtors do not need immediate access to a
working capital facility. As with most other large distributors
and retailers, the Debtors have significant cash needs. In the
absence of immediate access to cash and credit, the Debtors'
operations may have to cease, and the Debtors will be unable to
meet current distribution schedules. In turn, many of the
Debtors' otherwise loyal customers will likely look elsewhere to
purchase their goods and services. The cancellation of pending
orders -- already a source of concern prior to the Petition Date
-- will likely grow worse, and the Debtors' ability to secure
new orders will be jeopardized.
Ms. Jones concludes that the success of these cases thus depends
on the confidence of the Debtors' suppliers, retailers and
customers. If that confidence were destroyed, then so too would
be the Debtors' ability to reorganize. In contrast, once the
Court executes the final order authorizing Debtors' use of funds
under the DIP Credit Facility, the Debtors are confident that
the Debtors can stabilize their business, achieve an improved
financial performance and thereby preserve, and indeed maximize,
the value of the Debtors' business. In reaching this
conclusion, the Debtors are mindful of the fact that suppliers
and customers often respond favorably to approval of a
comprehensive debtor in possession financing.
For these reasons, access to credit under the DIP Credit
Facility is critical to promote the continuation of Debtors'
business, thereby generating more cash flow and maximizing the
profitability of their operations. The Debtors cannot wait any
longer for access to finds under the DIP Credit Facility;
indeed, any substantial delay could have the same impact as
denial of the Motion.
Ms. Jones admits that the Debtors are unable to obtain unsecured
credit allowable solely as an administrative expense or credit
secured by junior liens. The proposed DIP Credit Facility
reflects the exercise of sound and prudent business judgment.
The Debtors believe that they are notable to obtain financing on
any other basis. In the Debtors' considered business judgment,
the DIP Credit Facility, as set forth in the DIP Credit Facility
Order, is the best financing option available in the
circumstances in these cases.
The proposed terms of the DIP Credit Facility, Fleming argues,
are fair, reasonable and adequate in that the terms neither tilt
the conduct of these cases and prejudice the powers and rights
that the Bankruptcy Code confers for the benefit of all
creditors nor prevent motions by parties-in-interest form being
decided on their merits. (Fleming Bankruptcy News, Issue No. 3;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
DebtTraders say that Fleming Companies Inc.'s 10.125% bonds due
2008 (FLM08USR1) are trading between 14 and 15. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=FLM08USR1for
real-time bond pricing.
HAYES LEMMERZ: First Amended Reorganization Plan Summary
--------------------------------------------------------
The salient terms of the modified First Amended Reorganization
Plan and Disclosure Statement approved by the Court for Hayes
Lemmerz International, Inc., and its debtor-affiliates on
April 10, 2003 are:
A. Class 2 (Prepetition Credit Facility Secured Claims):
The Modified Plan provides that creditors holding Allowed
Class 2 will receive a greater recovery than that which
would have been provided under the Original Plan.
Specifically, pursuant to the Modified Plan, on the
Effective Date, the Prepetition Credit Facility Secured
Claim will be deemed an Allowed Claim and each holder of
an Allowed Prepetition Credit Facility Secured Claim will
receive its Pro Rata share of:
(i) the Prepetition Lenders' Payment Amount;
(ii) $25,000,000 in New Senior Notes or, in lieu
thereof, at the sole discretion of the Debtors,
either $25,000,000 in cash or a combination of Cash
and Senior Notes equal to $25,000,000 in the
aggregate based on the principal amount of the New
Senior Notes;
(iii) 15,930,000 shares of New Common Stock, which
represents 53.1% of the total amount of New Common
Stock to be issued under the Modified Plan; and
(iv) if the Debtors implement either the Additional
Equity Modification or the Asset Transfer
Modification, 53.1% of the shares of New Preferred
Stock or 53.1% shares of Reorganized HLI Stock.
These distributions will be made directly to the
Prepetition Agent for immediate transmittal to the
Prepetition Lenders without deduction, setoff or
recoupment for anything except for reasonable actual out
of pocket expenses of the Prepetition Agent incurred and
outstanding prior to the Effective Date.
B. Class 5 (Senior Note Claims): The Modified Plan provides
that creditors holding Allowed Class 5 will receive a
lesser recovery than that which would have been provided
under the Plan. Specifically, pursuant to the Modified
Plan, on the Effective Date, a holder of an Allowed
Senior Note Claim will receive a distribution of:
(i) the Claimholder's Pro Rata amount of 13,470,000
shares of New Common Stock, which represents 44.9%
of the total amount of New Common Stock to be
issued under the Modified Plan;
(ii) the Claimholders' Pro Rata share of the Remaining
Senior Note Proceeds; and
(iii) if the Debtors implement either the Additional
Equity Modification or the Asset Transfer
Modification, 44.9% of the shares of New Preferred
Stock or 44.9% of the shares of Reorganized HLI
Stock.
A holder of an Allowed Senior Note Claim also would have
a right to receive distributions from the HLI Creditor
Trust of the Claimholder's Pro Rata share of 1/3 of the
Net Trust Recoveries, subject to certain repayment
obligations set forth in the Modified Plan.
C. Class 3a (BMO Synthetic Lessor Secured Claims): The
treatments contained in the Modified Plan incorporates a
proposed compromise and settlement between the Debtors
and the BMO Synthetic Lessors that is an integral part of
the Plan and avoids potentially lengthy and complex
litigation on various issues in dispute. In addition,
the Modified Plan includes a provision under which the
BMO Synthetic Lessors will assign a portion of their
Allowed General Unsecured Claims to the holders of Class
5 Senior Note Claims in exchange for treatment as holder
of an Allowed Claim in Class 5 in resolution of the
subordination issue in dispute.
Under the Modified Plan, the treatment of the different
types of BMO Synthetic Lease are:
1. BMO-Bowling Green Synthetic Lease: The Modified Plan
provides that, on the Effective Date, the Debtors
would surrender the BMO-Bowling Green Synthetic Lease
Property to permit a sale of the BMO-Bowling Green
Synthetic Lease Property, provided, that the Debtors
could hold over on a month-to-month basis, at a
monthly rate of $26,000, starting on the first
Business Day of the calendar month after the Effective
Date and end at the end of the month in which the
Reorganized Debtors vacate the BMO-Bowling Green
Synthetic Lease Property. The Modified Plan also
provides that the value of the BMO-Bowling Green
Synthetic Lease Property for Plan purposes will be
$6,000,000 as of the Effective Date. The net sales
proceeds realized by the sale of the BMO-Bowling
Green Synthetic Lease Property will be retained by the
BMO Synthetic Lessors, and will be paid in cash to BMO
on behalf of the BMO Synthetic Lessors on or before 30
days following the closing date of any sale of the
BMO-Bowling Green Synthetic Lease Property. The BMO-
Bowling Green Synthetic Lease Property will be sold
for the benefit of the BMO Synthetic Lessors as a
secured lender with the full cooperation and
assistance of the Debtors and the proceeds of the sale
less the sale costs, will be paid to BMO on behalf of
the BMO Synthetic Lessors, which payment will be in
full satisfaction and discharge of the BMO Synthetic
Lease Secured Claim on account of the BMO-Bowling
Green Synthetic Lease Property.
2. BMO-Northville Synthetic Lease: The Modified Plan
provides that all Allowed BMO Synthetic Lease Secured
Claims arising under the BMO-Northville Synthetic
Lease will be satisfied in full, settled, released and
discharged and exchanged for rights and claims against
the Reorganized Debtors under the Amended and Restated
BMO - Northville Synthetic Lease; provided, however,
that:
-- the principal amount of the Amended and Restated
BMO-Northville Synthetic Lease will be $22,600,000;
-- the interest rate of the Amended and Restated BMO-
Northville Synthetic Lease will be the greater of
LIBOR +400 basis points and 5%;
-- the term of the Amended and Restated BMO-Northville
Synthetic Lease will be 5 years with two one-year
renewal options exercisable solely at the option of
the Debtors;
-- the principal will be amortized in an amount equal
to 1% of the principal balance each year during the
term of the Amended and Restated BMO-Northville
Synthetic Lease;
-- a first mortgage security interest in the BMO-
Northville Synthetic Lease Property;
-- no junior liens or security interests in favor of
the BMO Synthetic Lessors will be created under the
Amended and Restated BMO-Northville Synthetic
Lease;
-- subsidiary guarantees will be made available but
only to the extent permitted by the lenders under
the New Credit Facility, which the Debtors have
obtained in Principle; and
-- the Amended and Restated BMO-Northville Synthetic
Lease will provide that the Reorganized Debtors
will have:
a. the right to purchase the BMO-Northville
Synthetic Lease Property by payment of the
remaining principal amount and any accrued and
unpaid interest and certain related expenses,
and
b. the obligation to purchase the BMO-Northville
Synthetic Lease Property after expiration of the
Amended and Restated BMO-Northville Synthetic
Lease by payment of the remaining principal
amount and any accrued but unpaid interest and
certain related expenses.
3. Allowed Unsecured Claim: The Modified Plan provides
that the BMO Synthetic Lessors will be deemed to have
an Allowed General Unsecured Claim totaling
$8,100,000, provided that the BMO Synthetic Lessors
will assign $5,000,000 of this Claim to the holders of
the Class 5 Senior Note Claims in exchange for
treatment as the holder an Allowed Claim amounting to
$5,000,000 in Class 5. The remaining Allowed Claim of
the BMO Synthetic Lessors amounting to $3,100,000 will
be treated as a Class 7 General Unsecured Claim in
accordance with the terms of the Plan.
4. Administrative Claim/Adequate Protection: In
consideration of settlement of the claims and issues
relating to payment for use or adequate protection or
rent due to the BMO Synthetic Lessors, the Debtors
will pay to BMO on behalf of the BMO Synthetic
Lessors, a sum equal to 46.5% of prepetition and
postpetition interest through the Effective Date at
the non-default rate, payable in three equal payments
on:
(i) a date no later than 20 days after the Effective
Date;
(ii) on the first business Day following the 90th day
after the Effective Date; and
(iii) on the first Business Day following the 120th
day after the Effective Date.
In addition, the Reorganized Debtors will reimburse
the BMO Synthetic Lessors up to $400,000 on account of
legal fees incurred by the BMO Synthetic Lessors in
connection with the Chapter 11 Cases, payable no later
than 20 days following the Effective Date. The BMO
Synthetic Lessors will provide actual invoices
detailing these legal fees to the Debtors for their
review and approval. These payments will be deemed
cash payments constituting adequate protection or for
use of property and these payments will be entitled to
Administrative Claim status.
D. Class 3b (CBL Synthetic Lease Secured Claim): Under the
Modified Plan, the treatment of the different types of
BMO Synthetic Lease are:
1. CBL-Air Conditioner Synthetic Lease: The Modified Plan
provides that on the Effective Date, all CBL Synthetic
Lease Secured Claims arising under the CBL-Air
Conditioner Synthetic Lease will be deemed to be
Allowed Claims for $650,000 and CBL will receive in
full satisfaction, settlement, release, and discharge
of and in exchange for the CBL Synthetic Lease Secured
claims with respect to the CBL-Air Conditioner
Synthetic Lease $650,000 in Cash and $1,050,000 in
Allowed Claim in Class 7 (General Unsecured Claims).
2. CBL-Other Equipment Synthetic Lease: The Modified Plan
provides that on the Effective Date, all CBL Synthetic
Lease Secured Claims arising under the CBL-Other
Equipment Synthetic Lease will be deemed to be Allowed
Claims totaling $23,000,000 and CBL will receive in
full satisfaction, settlement, release, and discharge
of and in exchange for the CBL Synthetic Lease Secured
Claims with respect to the CBL Other Equipment
Synthetic Lease:
(i) a secured promissory note amounting to
$23,000,000 issued under the New Credit Facility
to be entered into by the Reorganized Debtors on
the Effective Date of the Plan, which will have
the same terms and be secured by the same
collateral that will secure the Term B Loans
under the New Credit Facility; and
(ii) an Allowed Claim in Class 7 (General Unsecured
Claims) in an amount equal to $2,100,000.
E. Class 3c (Dresdner Synthetic Lease Secured Claims): The
Modified Plan provides that on the Effective Date
Dresdner's Allowed Class 3c will be, in the discretion of
the Reorganized Debtors, subject to the consent of the
Prepetition Agent, the Creditors' Committee and Apollo,
either:
1. satisfied in full, settled, released, and discharged
and exchanged for rights and claims against the
Reorganized Debtors under the Amended and Restated
Dresdner Synthetic Lease; provided, however, that:
(i) the principal amount of the Amended and Restated
Dresdner Synthetic Lease will be $8,350,000,
(ii) the interest rate will be LIBOR +150 basis
points;
(iii) the Amended and Restated Dresdner Synthetic
Lease will have a term of five years from the
Effective Date,
(iv) 50% of the principal amount outstanding under
the Amended and Restated Dresdner Synthetic
Lease will commence amortizing on a straight
line basis on December 1, 2004, and
(v) the Amended and Restated Dresdner Synthetic
Lease will provide that Reorganized HLI will
have:
a. the right to purchase the Dresdner Synthetic
Lease Property at anytime during the term by
payment of the remaining principal amount and
any accrued and unpaid interest, and
b. the obligation to purchase the Dresdner
Synthetic Lease Property after expiration of
the Amended and Restated Dresdner Synthetic
Lease by payment of the remaining principal
amount and any accrued and unpaid interest;
or
2. paid in full in Cash.
Copies of the Debtors' Modified Reorganization Plan and
Disclosure Statement are available for free at:
http://bankrupt.com/misc/2167_ModifiedPlan.pdf
http://bankrupt.com/misc/2166_ModifiedDisclosureStatement.pdf
(Hayes Lemmerz Bankruptcy News, Issue No. 31; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
H&E EQUIPMENT: S&P Ratchets Corp. Credit Rating to B+ from BB-
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on H&E Equipment Services LLC to 'B+' from 'BB-', its
senior secured bank loan rating to 'BB-' from 'BB', and its
senior secured debt rating to 'B-' from 'B'. The ratings were
removed from CreditWatch, where they were placed on
Dec. 13, 2002.
The downgrade reflects the Baton Rouge, La.-based company's
weaker-than-expected performance, stemming from weak operating
conditions in construction and industrial markets in the U.S.
Because of the prolonged slowdown in the construction industry
the company appears unlikely to reduce debt in the near term to
meet Standard & Poor's previous expectations. The outlook is
negative. H & E has about $330 million in debt outstanding.
No significant pickup in industry conditions is expected in
2003. "Given the weak conditions, the company will be challenged
to sustain operating performance over the intermediate term, and
near-term covenant compliance is also of concern," said Standard
& Poor's credit analyst John Sico. "Should operating performance
weaken further or liquidity be reduced, ratings could be
lowered."
H&E Equipment offers primarily four categories of construction
and industrial equipment through a network of 45 locations in
the Intermountain and Gulf Coast regions of the U.S.
Demand for rental equipment slowed considerably beginning in
2001 and continues into 2003 because of declines in construction
spending and excess rental equipment. In a key end-market, non-
residential construction, spending declined 16% in 2002, with a
more modest decline likely in 2003. The equipment-rental
industry will remain challenging through 2003, with near-term
rental revenue expected to remain relatively flat. Longer term,
growth is possible from the continued outsourcing trends and
efforts by customers to reduce fixed-capital investments.
IMPAC SAC: Fitch Drops 1999-2 Class B1 & B2 Ratings to BB/CCC
-------------------------------------------------------------
Fitch Ratings has downgraded one class from Impac SAC mortgage
pass-through certificates, series 1999-2:
Impac SAC, series 1999-2:
-- Class B1, rated 'BB', placed on Rating Watch Negative;
-- Class B2 downgraded to 'CCC' from 'B'.
These actions are taken due to the high delinquencies in
relation to the applicable credit support levels as of the March
25, 2003 distribution.
IMPERIAL PLASTECH: Quarter Loss Further Strains Liquidity
---------------------------------------------------------
Imperial PlasTech Inc. (TSE: Symbol IPQ) announced results for
the three months ended February 28, 2003. Sales in the quarter
were $5.6 million compared to $7.2 million last year. The
decline in sales was due to lower telecommunications conduit
shipments in the US and lower residential piping sales as a
result of the company's decision to exit the PVC pipe market.
Despite the lower sales the Company's pre-tax loss in 2002
remained virtually unchanged from the same period last year
excluding income tax recovery. Profitability in the quarter
improved compared to the fourth quarter of fiscal 2002 as the
restructuring initiatives undertaken over the past year to
reduce costs and breakeven operating levels are proving
effective. Resin prices this year increased due to higher oil
and gas feedstock prices and delays in effecting increases in
product selling prices hurt margins in February and into March
of this year. Selling, general and administrative expenses were
also reduced in dollar terms and as a percentage of sales
compared to the fourth quarter of the prior year due to
continuing cost reduction initiatives.
"Our first quarter results benefited from our ongoing strategy
to diversify our customer and product base and to enter new
markets," commented Victor D'Souza, President and CEO. "While
the significant slowdown in the telecommunications sector
continues to negatively impact our performance, our growth in
other markets has mitigated most of this sales decline."
The Company's working capital deficit widened from the year end
position due to the operating loss in the quarter and costs
involved in relocation of the US production facility. The
Company remains in default of the covenants of its operating
lender and is seeking alternative financing and to sell some of
its surplus assets to address the working capital deficit.
IRVINE SENSORS: Obtains $6 Million Government R&D Contracts
-----------------------------------------------------------
Irvine Sensors Corporation (Nasdaq: IRSN; Boston Exchange: ISC)
announced that it has recently received several government R&D
contract awards, with an aggregate value of approximately $6
million, approximately $5 million of which has been initially
funded. In addition, these contracts include optional tasks
that could increase the aggregate contract value by
approximately $7 million, largely in fiscal 2004, if funded by
government customers.
Robert G. Richards, Irvine Sensors CEO said, "Included in these
awards are the contracts that we suggested were pending in our
first quarter earnings webcast. Because receipt of these
contracts was delayed until just recently, they made little or
no contribution to our second fiscal quarter ended March 30, but
their potential positive effect on revenues in the current and
subsequent periods is welcomed. In addition, they all relate to
our primary technology development thrusts, high-density
electronics and imaging systems, and support our planned
roadmaps to eventual products in those areas."
Costa Mesa, California-based Irvine Sensors Corporation
(http://www.irvine-sensors.com),whose September 29, 2002
balance sheet shows a working capital deficit of about $1.4
million, are primarily engaged in the development and production
of high-density electronics, image processing and sensing
devices, and low power integrated circuits which are intended to
have broad applications in military and commercial systems.
KCS ENERGY: Appoints CEO James Christmas as New Board Chairman
--------------------------------------------------------------
KCS Energy, Inc. (NYSE: KCS) announced that James W. Christmas,
President and Chief Executive Officer of the Company has been
named Chairman of the Board, replacing Stewart B. Kean, who
passed away last year. In addition, the Board established the
role of lead independent director and named Robert Raynolds to
that position. At the same time, William N. Hahne, Executive
Vice President and Chief Operating Officer of KCS, was named
President and Chief Operating Officer and joins the Company's
Board of Directors.
Mr. Christmas joined KCS in 1988 and had served as President,
Chief Executive Officer and a member of the Board since that
time. Mr. Raynolds, an independent geologist for several major
and independent oil and gas companies has served as a director
since 1995 and currently serves on the Board's audit committee.
Mr. Hahne joined KCS in 1998 as Senior Vice President and Chief
Operating Officer and was appointed Executive Vice President in
2002. He is a Registered Petroleum Engineer with over 30 years
of experience with various independent exploration and
production companies.
Commenting on the appointments, James W. Christmas, Chief
Executive Officer of KCS said, "We are pleased to announce that
KCS has joined the ranks of a growing number of companies that
are appointing lead independent directors to their boards. Bob
has been a valuable member of our board for the past eight years
and his expanded role will assist us greatly in enhancing the
communications between our various board committees."
Mr. Christmas continued, "Bill Hahne has been an important
member of our management team since joining the Company. His
energy and leadership has been significant in our reorganization
over the last few years. We welcome him to the Board of
Directors where his operational knowledge and insight will be of
great value as we look to resume our growth."
KCS is an independent energy company engaged in the acquisition,
exploration and production of natural gas and crude oil with
operations in the Mid-Continent and Gulf Coast regions.
KCS Energy's September 30, 2002 balance sheet shows a working
capital deficit of about $75 million, and a total shareholders'
equity deficit of about $44 million.
KMART: Court Disallows Up to $2.7B Duplicate & Amended Claims
-------------------------------------------------------------
Kmart Corporation and its debtor-affiliates withdraw their
Objections with respect to 254 Duplicate Claims totaling:
Claim Type Amount
---------- ------
Secured $2,075,673,838
Administrative 124,717
Priority 5,392,574
Unsecured 108,291,032
---------------
Total $2,189,482,251
Judge Sonderby observes that the Debtors make a case with
respect to majority of the Duplicate Claims and Amended Claims.
Accordingly, Judge Sonderby disallows and expunges 3,299
Duplicate Claims and another 147 Amended Claims in their
entirety.
The disallowed and expunged Claims are of varied types totaling:
Duplicate Claim Type Amount
-------------------- ------
Secured $111,670,290
Administrative 15,491,504
Priority 191,965,429
Unsecured 1,952,197,211
---------------
Total $2,271,324,434
Amended Claim Type Amount
------------------ ------
Secured $148,821,461
Administrative 57,749
Priority 24,283,956
Unsecured 320,017,990
---------------
Total $493,181,155
Judge Sonderby will continue the hearing with respect to 13
unsecured Duplicate Claims, which amount to $119,389,315 and
another eight secured Amended Claims by Liberty Mutual Insurance
Company that total $628,388,705.
-- Duplicate Claims
Claim To Be Remaining
Claimant Disallowed Claim No.
-------- ----------- ---------
Donna Abraham 34465 34466
34467
Dolores Ann Alexander 34773 35140
35129
Tim Birmingham 28573 25719
Estate of Frank Carter 26259 17027
29501
Joyce Dowell 44911 31720
Naomi Gross-Watkins 6641 6325
Jacquelyn Lucero 22625 16414
26021
William C. Perkins 400 364
Carol Rositano 23036 16886
-- Amended Claims
Claim To Be Remaining
Claimant Disallowed Claim No.
-------- ----------- ---------
Liberty Mutual Insurance 32778 42076
Company 38501
39263
40260
41973
Liberty Mutual Insurance 32777 42077
Company 38582
40259
(Kmart Bankruptcy News, Issue No. 52; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
LEAP WIRELESS: Honoring Critical Trade Vendor Claims
----------------------------------------------------
At Leap Wireless International Inc. and its debtor-affiliates'
request, Judge Adler authorizes, but does not direct, the
Debtors to pay the prepetition Trade Claims of certain Critical
Trade Creditors in an aggregate amount not to exceed $15,100,000
for goods and services provided prepetition to Cricket.
Cricket will pay the Trade Claims of Critical Trade Creditors
that agree to continue to supply goods or services to Cricket on
Customary Trade Terms.
If these Critical Trade Creditors later refuse to continue to
supply goods or services to Cricket on Customary Trade Terms
during these cases, then, on motion by Cricket and with the
Court's approval:
(a) any payments on account of Trade Claims made by Cricket
to, or received by, the Critical Trade Creditor after
the Petition Date will be deemed to be postpetition
advances recoverable by Cricket from the Critical Trade
Creditor in cash or in additional goods or services, and
(b) any Trade Claims of the Critical Trade Creditor paid
after the Petition Date will be reinstated as a
prepetition debt.
The determination as to what constitutes "refusal" will be made
by the Court, subject to the provisions of any agreement or
confirming memorandum entered into by the parties. Payments
will be made in the ordinary course of business and not on an
accelerated basis.
Eric D. Brown, Esq., at Latham & Watkins, in Los Angeles,
California, explains that Cricket seeks to avoid disruption of
its relationship with the Critical Trade Creditors. The
Critical Trade Creditors provide goods and services to Cricket
that are essential to the continued operation of the Debtors'
business -- an interruption of which may cause the failure of
their attempt to reorganize. The payment of the Trade Claims
would help ensure that there is no disruption in Cricket's
ability to obtain goods and services necessary to the operation
of its business and to facilitate their successful
reorganization.
Banks on which checks were issued to Critical Trade Creditors
prior to the Petition Date are also authorized and directed to
honor any checks after presentation. Mr. Brown informs the
Court that all payments to Critical Trade Creditors are made
from Cricket's operating accounts maintained at Wells Fargo
Bank. If any Critical Trade Creditor cashes a prepetition check
and later unreasonably refuses to provide Cricket with Customary
Trade Terms, Cricket then will have the right to recover this
payment from the Critical Trade Creditor in cash or in
additional goods and services.
By contrast to Cricket's total indebtedness, which is
$1,800,000,000 as of the Petition Date, Mr. Brown points out
that amounts owed to the Critical Trade Creditors as of the
Petition Date are believed to be no more than $15,100,000.
Thus, Cricket's trade debt to Critical Trade Creditors
represents 1% of its total indebtedness.
The types of goods and services the Critical Trade Creditors
supply include, but are not limited to:
-- the sale of wireless handsets to Cricket subscribers;
-- the collection of payments from Cricket customers;
-- the payment of sales compensation to third party dealers
who sell Cricket phones to retail customers;
-- the repair of wireless handsets; and
-- services related to the distribution of payroll checks to
employees.
As a general rule, Critical Trade Creditors have allowed Cricket
to obtain these goods and services on short-term, unsecured
credit. Cricket submits that, although alternative means may
exist to obtain some of the goods and services, the payment of
Critical Trade Creditors will enable Cricket to maintain its
competitiveness, revenues and service levels. Conversely, the
cessation or reduction by Critical Trade Creditors of credit
terms and deliveries of goods and services would disrupt the
Debtors' operations by forcing Cricket to seek new trade vendors
for the continuation of basic day-to-day operations and
undermine their ability to reorganize successfully in these
Chapter 11 cases. Cricket believes that replacing the Critical
Trade Creditors with alternate suppliers would be time-
consuming, difficult and prohibitively expensive. (Leap Wireless
Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
Leap Wireless International Inc.'s 12.500% bonds due 2010
(LWIN10USR1) are trading between 13.5 and 15.5 . See
http://www.debttraders.com/price.cfm?dt_sec_ticker=LWIN10USR1
for real-time bond pricing.
LODGENET: Stockholders' Equity Deficit Climbs to $108.6 Million
---------------------------------------------------------------
LodgeNet Entertainment Corporation (Nasdaq: LNET) reported its
38th consecutive increase in comparative quarterly revenue and
Operating EBITDA. Revenue in the first quarter of 2003 increased
8.4 percent to $59.6 million in comparison to the first quarter
of 2002, while Operating EBITDA increased to $20.0 million from
$19.8 million a year earlier. Operating income was slightly
positive this year versus $1.4 million a year earlier. Net loss
in the first quarter of 2003 was $8.4 million compared to $6.7
million for the first quarter of 2002.
"Driven by the strong performance of our digital rooms, we
continue to grow revenue and cash flow," said Scott C. Petersen,
President and Chief Executive Officer. "During the quarter, per
room revenue increased over 2 percent despite a 140 basis point
reduction in occupancy levels over the first quarter of 2002.
This increase was led by a strong guest response for the
additional content choices on our digital system. With an 8.4%
increase in total revenue in the quarter, we have once again
proven our ability to perform during a challenging economic
environment."
"With a solid top line performance and a clear focus on reducing
operating expenditures, controlling capital spending and
managing working capital, we were cash flow neutral in the
quarter," said Gary H. Ritondaro, Senior Vice President and
Chief Financial Officer. "Selling, general and administrative
expenses as a percentage of revenue decreased to 9.1 percent
from 10.5 percent in the first quarter of 2002 while guest pay
operating expenses per room increased a modest one percent,
$2.88 per room compared to $2.85 per room in the first quarter
of 2002, on an increase of more than 61,000 rooms served over
the comparable quarter. "
"The foundation of our opportunity continues to be our business
model, based on predictable cash flows from long-term
contracts," continued Petersen. "As we expand our industry-
leading footprint, we are seeing strong demand from guests and
hotels for our digital system, which is now installed in 300,000
rooms or 33.0% of our guest pay room base. With operating costs
in check and the flexibility to moderate growth capital we
remain committed to achieving our financial goal of reaching net
free cash flow after all growth expenditures beginning in the
second half of this year. Once we reach net free cash flow, it
is our intent to continue to grow our company without reliance
on additional debt financing and be in a position to pay down
debt in 2004."
Total revenue for the first quarter of 2003 was $59.6 million,
an increase of $4.6 million, or 8.4%, compared to first quarter
2002. Revenue from Guest Pay interactive services increased $5.2
million, or 9.9%, resulting from a 7.7% increase in average
rooms in operation, with an additional 154,000 digital rooms
deployed compared to first quarter 2002. Revenue per room
increased from $21.45 per month in the first quarter of 2002 to
$21.89 per month in the first quarter of 2003. Per room revenue
from movies increased from $17.04 per month in the first quarter
of 2002 to $17.12 in the current year quarter despite a 140
basis point decrease in occupancy levels. Guest Pay revenue per
room from other sources increased 8.2%, from $4.41 per month in
the first quarter of 2002 to $4.77 in the current year quarter,
due to expanding revenue from TV Internet, TV On-Demand, digital
music, cable television programming services, and other
interactive TV services available with the digital system.
Gross profit increased to $33.1 million in the first quarter of
2003 compared to $32.6 million in the first quarter of 2002. The
overall gross profit margin decreased to 55.4% in the current
quarter compared to 59.2% in the prior year quarter. The
decrease was attributable to increased Internet connectivity
costs, programming costs and hotel commissions.
Guest Pay operations expenses increased 9.0%, or $630,000, in
the first quarter of 2003, compared to the year earlier quarter.
The increase is primarily due to the 7.7% increase in average
rooms in operation. As a percentage of revenue, Guest Pay
operations expenses were 12.8% in the first quarter of 2003
compared to 12.7% in the year earlier period. Per average
installed room, Guest Pay operations expenses were $2.88 per
month in the first quarter of 2003 compared to $2.85 per month
in the prior year quarter.
Selling, general and administrative expenses decreased $345,000,
or 6.0%, in the first quarter of 2003 compared to the prior year
quarter. This decrease was due to reductions in the levels of
bad debt and professional fees incurred in the prior year
quarter related to InnMedia, partially offset by increases in
payroll-related expenses.
Depreciation and amortization expenses increased 8.6% to $20.0
million in the current year quarter versus $18.4 million in the
first quarter of 2002. The increase was driven by the 7.7%
increase in average rooms in operation and the amortization of
the new media business acquired in August 2002. At the end of
first quarter 2003, the interactive digital system had been
installed in more than 297,000 rooms, an increase of 154,000
rooms over the prior year quarter.
As a result of factors previously described, the Company
generated Operating income of $35,000 in the first quarter of
2003 compared to Operating income of $1.4 million in the year
earlier quarter. The Company's net loss increased to $8.4
million from $6.7 million in the year earlier quarter.
Operating EBITDA Reconciliation
Operating EBITDA (defined by the Company as Operating Income
plus Depreciation and Amortization) increased to $20.0 million
in the first quarter of 2003, from $19.8 million in the first
quarter of 2002. As a percentage of total revenue, Operating
EBITDA was 33.6% in the current quarter as compared to 36.0% in
the same quarter of 2002.
Operating EBITDA is not intended to represent an alternative to
Operating income or cash flows from operating, financing or
investing activities (as determined in accordance with generally
accepted accounting principles (GAAP)) as a measure of
performance, and is not representative of funds available for
discretionary use due to the Company's financing obligations.
Operating EBITDA, as defined by the Company, may not be
calculated consistently among other companies applying similar
reporting measures. Operating EBITDA is included herein because
it is a widely accepted financial indicator used by certain
investors and financial analysts to assess and compare companies
on the basis of operating performance and is an integral part of
the Company's debt covenant calculations. In addition to the
GAAP data presented, management believes that Operating EBITDA
provides a stable and consistent comparison of operating
performance exclusive of historical costs of capital such as
depreciation and amortization. Additionally, management also
believes that Operating EBITDA provides an important perspective
on the Company's ability to service its long-term obligations,
the Company's ability to fund continuing growth, and the
Company's ability to continue as a going concern.
As of March 31,2003, LodgeNet Entertainment Corporation records
a total stockholders' equity deficit of about $108,641,000
compared to $101,304,000 in December 31,2002.
2003 Outlook
With regard to financial results for the second quarter of 2003,
LodgeNet expects to report revenue of between $62.0 million and
$65.0 million, resulting in $21.0 to $22.5 million in Operating
EBITDA and $1.1 to $2.6 million in Operating income. This
outlook is based on the assumption of occupancy rates ranging
from a 150 basis point reduction to flat as compared to the
second quarter of 2002. Loss per share estimates are $(0.60) to
$(0.48) for the second quarter of 2003. With respect to the
calendar year 2003, LodgeNet expects to report revenue in a
range from $254.0 million to $260.0 million, $86.0 million to
$89.0 million in Operating EBITDA, and Operating income from
$6.7 million to $9.7 million. Loss per share estimates are
$(2.20) to $(1.96) for the full year 2003. This outlook is based
on the assumption of occupancy rates ranging from plus or minus
100 basis points as compared to the full calendar year of 2002.
About LodgeNet
LodgeNet Entertainment Corporation ( http://www.lodgenet.com)
is the leading provider in the delivery of broadband,
interactive services to the lodging industry, serving more
hotels and guest rooms than any other provider in the world.
These services include on-demand digital movies, digital music
and music videos, Nintendor video games, high-speed Internet
access and other interactive television services designed to
serve the needs of the lodging industry and the traveling
public. As the largest company in the industry, LodgeNet
provides service to 960,000 rooms (including more than 900,000
interactive guest pay rooms) in more than 5,700 hotel properties
worldwide. More than 260 million travelers have access to
LodgeNet systems on an annual basis. LodgeNet is listed on
NASDAQ and trades under the symbol LNET.
LTV CORP: Noteholders Panel Turns to KPMG for Advice
----------------------------------------------------
Edward Adams of Equity Securities Investment, Inc., chairperson
of the Noteholders' Committee in the Chapter 11 cases of The LTV
Corporation and its debtor-affiliates, reminds Judge Bodoh that
the Noteholders' Committee had previously retained CIBC World
Markets Corporation as its financial advisor. While Judge Bodoh
approved that retention, the Court did not rule on the requested
"success fee". CIBC worked for the Committee for a year under
this Order.
With Judge Bodoh's approval of the APP, however, and the sale of
substantially all of the Debtor's businesses, the U.S. Trustee
met with the Noteholders' Committee and the Unsecured Creditors'
Committee to discuss the ongoing costs of the Committees and
whether one or two Committees should exist going forward. The
U.S. Trustee also advised that he opposed the continued
retention of financial advisors on a monthly flat-fee rate, as
opposed to an hourly rate. As a result of these discussions,
the U.S. Trustee consented to the continuation of both
Committees, although the Unsecured Creditors' Committee has now
been disbanded. The U.S. Trustee's consent to the Noteholders'
Committee required that the Noteholders' Committee agree it
would no longer utilize CIBC without first advising the U.S.
Trustee and all existing Committees that all duplication of
efforts must be avoided where appropriate. As a result, the
Noteholders' Committee has not utilized CIBC's services since
mid-January 2002.
However, it became apparent that the Debtors will either sell
the Copperweld Companies or formulate a stand-alone plan for the
Copperweld companies. As a result, the Noteholders' Committee
determined that it would require the assistance of a financial
advisor to evaluate the Copperweld Debtors' business plan,
conduct valuation analysis of the potential reorganized entities
and evaluate any potential sale of the Copperweld assets.
Therefore, the Noteholders' Committee brought an amended
Application to employ CIBC under a modified compensation
package. This was contested by the Debtors, General Electric
Capital as agent for the Copperweld postpetition lenders, and
the U.S. Trustee. After Judge Bodoh's ruling that permitted
CIBC's employment on an hourly basis only, the Noteholders'
Committee withdrew its application to employ CIBC.
The Noteholders' Committee now seeks Judge Bodoh's permission to
retain KPMG LLP, a United States partnership, and KPMG LLP, a
Canadian partnership, as its accountants and financial advisors
in these cases.
KPMG will be:
(1) assisting the Noteholders' Committee in analyzing,
negotiating and effecting a plan of reorganization
for the Copperweld Companies or assisting the
Committee in connection with the sale of all or
substantially all of the Copperweld assets,
including performing valuation analyses on the
Copperweld companies and their assets;
(2) performing analyses of intercompany claims relating
to the Debtors and negotiating the resolution of
such intercompany claims;
(3) participating in depositions, hearings and any other
proceedings before the Court in connection with the
services rendered to the Committee;
(4) providing other tasks as the Committee may deem
appropriate and necessary, and agreed to by KPMG.
KPMG revises its hourly rates annually. At present, the normal
and customary hourly rates for the services to be rendered by
KPMG are:
Partners $540 - 600
Directors/Sr. Managers 450 - 520
Managers 360 - 420
Senior Associates/Specialists 270 - 330
Associates 180 - 240
Paraprofessionals/Technicians 120
Leon Szlezinger, a principal at KPMG, discloses that KPMG LLP-US
has in the past been retained by and presently and likely in the
future will provide services for certain creditors of the
Debtors, other parties-in-interest, and their attorneys and
financial advisors in matters unrelated to those parties' claims
against the Debtors or interests in these Chapter 11 cases.
None of these relationships prevent KPMG from qualifying as a
professional person under the Bankruptcy Code, or from
performing its duties under this application.
* * *
After due deliberation, Judge Bodoh grants the Noteholders
Committee's request. (LTV Bankruptcy News, Issue No. 47;
Bankruptcy Creditors' Service, Inc., 609/392-00900)
MAGELLAN HEALTH: Seeks Nod on Amended Aetna Master Service Pact
---------------------------------------------------------------
Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, in New
York, recounts that on December 4, 1997, Magellan Health
Services, Inc., consummated the purchase of Human Affairs
International, Inc., formerly a unit of Aetna Inc. for
$122,100,000. Human Affairs managed behavioral healthcare
programs primarily through Employee Assistance Programs and
other behavioral managed healthcare plans. At that time, Aetna,
Magellan and Human Affairs also entered into the Master Service
Agreement, dated as of August 5, 1997, which was later amended
by the First Amendment to the Master Service Agreement, dated as
of December 4, 1997.
Pursuant to Section 365(a) of the Bankruptcy Code, the Debtors
seek the Court's approval of the Amended MSA and the Vendor
Contracts related thereto assignment of certain of the Vendor
Contracts to other Debtor and non-Debtor subsidiaries of
Magellan.
According to Mr. Karotkin, the Original MSA required Magellan
and certain of its Debtor and non-Debtor subsidiaries to provide
and manage behavioral healthcare benefits to a significant
number of Aetna's members. In exchange, Aetna paid Magellan
fees based on a set amount for each Aetna Member for each month
for which Magellan provided services. The Capitation Rates
varied by geographic region.
To comply with certain licensing regulations, the Original MSA
provided for Magellan to enter into separate service contracts
with a number of Aetna entities. Each of these Vendor Contracts
sets forth the scope of services that the Company provides to
Aetna Members with respect to a particular geographic market.
The Vendor Contracts consist of 32 HMO Agreements and one Non-
HMO Agreement.
Pursuant to Section 7 of the Original MSA, Mr. Karotkin relates
that Aetna was entitled to receive from Magellan certain
contingent payments each year. These payments were based on the
number of Aetna Members that Aetna submitted to Magellan for
management of behavioral healthcare benefits. Pursuant to
Section 7 of the Original MSA, Magellan owed Aetna $60,000,000
on February 15, 2003 for the preceding year. Magellan did not
make that $60,000,000 payment.
The Original MSA was a significant source of revenue for
Magellan. For the past three years, Aetna paid Magellan
$283,700,000, $315,600,000 and $250,300,000 for the 12-month
periods ending September 30, 2000, September 30, 2001 and
September 30, 2002.
By its terms, Mr. Karotkin informs the Court that the Original
MSA was set to expire on December 31, 2003. Prior to the
Petition Date, the Debtors and Aetna engaged in extensive
negotiations relating to the extension of the Original MSA and
the restructuring of the $60,000,000 payment that was due
February 15, 2003.
On March 11, 2003, immediately prior to the Petition Date, Aetna
and Magellan entered into a Second Amendment to the Master
Service Agreement, dated as of March 11, 2003. At the same
time, Magellan's subsidiaries who are now Debtors and who are
parties to certain of the Vendor Contracts also agreed to be
bound by the Amended MSA. In addition, Magellan's non-Debtor
subsidiaries have entered into amendments of their Vendor
Contracts to reflect the terms of the Amended MSA.
The Amendment provides for:
A. Extension of Term: A two-year extension of the Original
MSA until December 31, 2005, which may be extended by
Aetna in its sole discretion for an additional one year
until December 31, 2006 and will be extended for an
additional one year until December 31, 2006 if Aetna
fails to exercise its Purchase Option prior to
December 31, 2005.
B. New Capitation Rates: Aetna will pay increased rates for
Magellan's services in each geographic region starting
January 1, 2004 as set forth in Schedule 5 of the
Amendment.
C. Migration and Purchase Option: On or prior to
December 31, 2004, the Company will take all actions
required to complete the migration of those functions of
Magellan's business, which operate and manage the
provision of behavioral healthcare services to Aetna
Members pursuant to the Amended MSA into a discrete
business unit. Aetna will have the right to purchase the
Purchased Assets on certain dates set forth in the
Amendment for a purchase price of $30,000,000 plus $500
per outpatient provider, $2,500 per facility that
provides partial hospitalization or intermediate care and
$5,000 per facility providing in-patient care, in each
case, that becomes part of the Aetna provider network.
Aetna may exercise the Purchase Option as of December 31,
2005; provided, however, that Aetna may exercise the
Purchase Option earlier after the occurrence of certain
Events of Default. Thereafter, Aetna may exercise the
Purchase Option at various times through December 31,
2006.
D. Restructuring of the $60,000,000 Payment Due
February 15, 2003: Aetna has agreed to the restructuring
and deferral of its past due $60,000,000 payable from
Magellan on these terms:
1. Magellan will deliver to Aetna on the date that the
Plan becomes effective:
a. $15,000,000 in cash; and
b. a $45,000,000 note.
2. The New Aetna Note will bear interest at a rate equal
to the interest rate on the New Facilities payable
quarterly, and will have a final maturity on
December 31, 2005; provided that:
a. any obligations of Aetna under the Purchase Option
will be credited or offset against any obligations
of Magellan under the New Aetna Note;
b. if, prior to December 31, 2005, the term of the
Amended MSA is extended until December 31, 2006,
then:
i. Magellan will pay to Aetna on December 31, 2005,
50% of the outstanding principal of the New
Aetna Note plus accrued and unpaid interest; and
ii. the final maturity on the remaining principal
will be on December 31, 2006.
3. The obligations of Magellan under the New Aetna Note
and the Purchase Option will be guaranteed by those
subsidiaries of Magellan as are guaranteeing the New
Facilities and will be secured by a second priority
lien on the assets of Magellan and its subsidiaries
which secure the New Facilities.
E. Exclusivity: Magellan will have certain rights of
exclusivity on terms and a timetable as set forth in the
Amendment.
F. Performance Standards: The Company will adhere to
enhanced performance standards as set forth in the
Amendment.
G. Miscellaneous Outstandings: On or prior to the Plan
Effective Date, Aetna will pay Magellan $3,584,903.50,
plus interest from December 20, 2002 through the date of
the payment at a rate of 3.85% per annum. In addition,
Magellan will deliver to Aetna a letter of credit in the
amount of $5,000,000 as credit support for future IBNR
[incurred but not reported] payments.
H. Events of Default: Events of default include:
1. nonperformance or breach of the obligations of any
party;
2. transfer of ownership of Magellan to a direct
competitor of Aetna;
3. Magellan's inability to participate in any Medicare or
Medicaid program;
4. commencing a proceeding under, or having a case
converted to, Chapter 7 of the Bankruptcy Code;
5. Magellan filing, sponsoring, approving, supporting or
failing to object to a plan of reorganization that is
not acceptable to Aetna;
6. Magellan's termination of any line of its behavioral
healthcare business required to service Aetna Members;
7. termination of the Amended MSA, 50% of the HMO
Agreements or a Non-HMO Agreement, for reasons not
permitted by the applicable agreement;
8. Magellan's failure to complete the Migration
activities prior to December 31, 2004;
9. Magellan's failure to comply with any three or more of
the Critical Performance Measures for two consecutive
quarters; or
10. a determination that Magellan's financial condition is
likely to lead to an Event of Default.
I. Remedies:
1. After an Event of Default, the non-defaulting party
has the right to terminate the Amended MSA and pursue
any other legal or equitable remedies; provided that
the Amended MSA will terminate automatically the
occurrence of an Event of Default described in H.4 or
H.5.
2. After an Event of Default by Magellan covered under
H.2, 3, 4, 7, 8 or 9, in addition to Aetna's rights
as, Aetna will be entitled to immediately exercise the
Purchase Option.
3. After Event of Default covered under H.10, Aetna's
obligation not to compete and the exclusivity
obligations set forth in the Amended MSA will
automatically terminate.
J. Indemnification: Each party will, under certain
circumstances, indemnify the other party against all
claims, losses, liabilities, expenses and costs.
K. Expenses: Magellan will reimburse Aetna for all
Reasonable fees and expenses of Aetna's counsel incurred
on and after December 1, 2002 in connection with the
negotiation, administration and implementation of the
Original MSA, the Amendment, the Chapter 11 cases and all
of Aetna's rights. This expense reimbursement will be
subject to a $600,000 cap or, if no Automatic Termination
Event occurs and no party objects to this Motion or to
Aetna's treatment under the Plan, then the expense
reimbursement will be capped at $400,000.
In addition, the Company will reimburse Aetna for all
reasonable fees and expenses of Aetna's attorneys
incurred on and after March 10, 2003 for any claims
commenced against Aetna in connection with any of the
Original MSA, the Amendment, the Chapter 11 cases or
Aetna's rights against Magellan. The reimbursement
obligation is limited to 100% of the first $200,000
incurred and 50% of all fees incurred thereafter.
L. Issuance of Aetna Warrants and Registration Rights: As
part of the consideration for entering into the Amended
MSA, Magellan has agreed to issue to Aetna, on the Plan
Effective Date, new warrants and certain registration
rights to purchase an amount equal to 1% of the new
common stock issued under the Plan. The Warrants will
have an exercise price equal to the per share value of
the new common stock issued under the Plan, which is
estimated to be $21.11, and a term of five years.
M. Consequences of Assumption: Section XVIII of the Amended
MSA contains certain specific limitations on the extent
to which Magellan's assumption of the Amended MSA will
affect the administrative priority of amounts Magellan
owes or will owe Aetna under Section 507 of the
Bankruptcy Code. Among other things, the Amended MSA
provides that the $60,000,000 Magellan owes to Aetna as
of February 15, 2003, will not become an administrative
expense solely by virtue of Magellan's assumption of the
Amended MSA.
N. Automatic Termination Events: The Amended MSA will
terminate automatically if certain bankruptcy milestones
are not met by the dates set forth in Section XX of the
Amended MSA or if orders are entered in the Chapter 11
cases that are inconsistent with the terms of the Amended
MSA. Among other things, Section XX provides that if the
Debtors do not obtain Court approval and authorization of
the assumption of the Amended MSA and related Vendor
Contracts on or before 60 days after the Petition Date or
if the Court has not confirmed the Plan or the Plan is
not consummated on or before 270 days after the Petition
Date, then, in either case, the Amended MSA will
automatically terminate.
Mr. Karotkin argues that the Court should approve assumption of
the Amended MSA and related Vendor Contracts. The Amended MSA,
including the Purchase Option, is unquestionably an executory
contract within the meaning of Section 365(a) of the Bankrupcty
Code because it is a contract "on which performance remains due
to some extent on both sides." The related Vendor Contracts
also qualify as "executory contracts" within the meaning of
Section 365.
Moreover, the Debtors have determined, in their business
judgment, that the Amended MSA and the related Vendor Contracts
are critical to their restructuring efforts. Without the
assumption of the Amended MSA and the related Vendor Contracts,
and the two to three-year extension of the Original MSA, Mr.
Karotkin points out that the Original MSA will expire by its
terms at the end of this year. The Original MSA generated
$250,300,000 in revenues and a significant amount of EBITDA for
Magellan for the past fiscal year. In addition, under the
increased Capitation Rates provided for in the Amended MSA, the
Debtors anticipate that its' revenues from Aetna will be
substantial in the coming two to three years. In fact, the
Debtors are projecting revenues with respect to the Amended MSA
for the 12-month periods ending December 31, 2003, December 31,
2004 and December 31, 2005 of $204,800,000, $225,500,000, and
$245,700,000. The ability of the Debtors to extend their
relationship with Aetna as a customer for the next two or three
years is therefore critical to their operations.
The Debtors also submit that the restructuring of the
$60,000,000 obligation owed by Magellan to Aetna provided for in
the Amendment is in the best interests of the Debtors' estates.
Mr. Karotkin states that the restructuring of this obligation is
a prerequisite to any extension of the Debtors' relationship
with Aetna and was a material part of the negotiations which
culminated in the Amendment. Aetna has agreed to defer payment
of 75% of its money for at least two years, while paying the
Company hundreds of millions of dollars in the interim.
Moreover, after the exercise of the Purchase Option, the
proceeds of the sale of the Purchased Assets, which are
estimated to aggregate $45,000,000, will be applied to offset
the remaining balance of the New Aetna Note. This hard fought
concession is both critical and extremely beneficial to the
Debtors and their estates.
The Debtors also submit that the Purchase Option, which provides
for the sale of the Purchased Assets pursuant to the terms of
the Asset Purchase Agreement, is fair and reasonable. The
Purchased Assets are those assets of the Company constituting
the business that primarily provides services to Aetna Members.
As a condition to entering into the Amendment and extending the
term of the Original MSA, Mr. Karotkin relates that Aetna wants
the option to purchase the Purchased Assets at the end of the
term of the Amended MSA. The Debtors determined that, absent
the Amendment, they would have little or no use for the
Purchased Assets and that the assets would have de minimis value
to anyone other than Aetna. The same circumstances will exist
at the end of the Extension Term. In addition, the Debtors
submit that the purchase price provided for in the Asset
Purchase Agreement is a fair and reasonable price for the
Purchased Assets. (Magellan Bankruptcy News, Issue No. 5:
Bankruptcy Creditors' Service, Inc., 609/392-0900)
MATLACK SYSTEMS: Engages Caspert as Real Estates Auctioneer
-----------------------------------------------------------
Gary F. Seitz, Esq., the Chapter 7 Trustee of the estates of
Matlack Systems, Inc., and its debtor-affiliates, seeks nod from
the U.S. Bankruptcy Court for the District of Delaware to retain
Caspert Management Co., Inc., as Real Estates Auctioneer, nunc
pro tunc to March 24, 2003.
Caspert advises the Trustee that it holds no adverse interest in
the Debtors' assets and thus, is a "disinterested person"
according to the Bankruptcy Code.
The services Caspert may be required to render for the Chapter 7
Trustee include:
-- marketing;
-- advertising; and
-- auctioning all property that the Court authorizes to
sell through one or more public auctions; and
-- promoting the public auctions.
Caspert will be paid in commission from the net proceeds of the
Auction, not to exceed:
-- 10% of the first $50,000;
-- 7% of the next $50,000;
-- 5% of the next $50,000; and
-- 3% of all amounts above $150,000.
Before filing for chapter 11 protection, Matlack Systems, Inc.,
North America's No. 3 tank truck company, provides liquid and
dry bulk transportation, primarily for the chemicals industry.
The Debtors converted their chapter 11 cases to cases under
Chapter 7 Liquidation of the Bankruptcy Court on October 18,
2002 (Bankr. Del. Case No. 01-1114). Richard Scott Cobb, Esq.,
at Klett Rooney Lieber & Schorling represents the Debtors as
they wind up their assets.
MCCRORY CORP: Committee Hires KPMG for Financial Advice
-------------------------------------------------------
The Official Committee of Unsecured Creditors of the chapter 11
case of McCrory Corporation sought and obtained approval from
the U.S. Bankruptcy Court for the District of Delaware to retain
KPMG LLP as Financial Advisors.
The Committee anticipates that KPMG LLP will:
i) assess the Debtors' financial positions, as well as the
Debtors' current and historical operating performance,
financial condition and cash availability, and
compliance with cash collateral usage requirements;
ii) review and assess the Debtors' financial projections to
assist in evaluating the feasibility of achieving
operational and financial projections;
iii) review and assess certain historical transactions to
identify voidable transactions and potential causes for
equitable subordination;
iv) review and analyze the Debtors' monthly operating
reports to assess the Debtors' progress during the
tenure of the case;
v) review and assess purchase offers for certain assets as
necessary and advise the Committee accordingly;
vi) advise the Committee with respect to alternatives for
consideration to enhance the plan of reorganization and
the proposed distributions under the plan;
vii) provide expert testimony as necessary; and
viii) other services as may be required by the Committee or as
directed by the Court that are not listed above.
The Committee seeks to retain KPMG LLP as its financial advisors
because of the Firm's extensive experience and expertise in the
field of insolvency and business reorganization under the
chapter 11 of the Code.
KPMG LLP will bill the Debtor's estates at its customary hourly
rates:
Partner $510 - $570 per hour
Director $420 - $480 per hour
Manager $330 - $390 per hour
Senior Associate $240 - $300 per hour
Associate $150 - $210 per hour
Paraprofessional $120 per hour
McCrory Corporation filed for chapter 11 protection on September
10, 2001. Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl,
Young Jones & Weintraub P.C., represents the Debtors in their
restructuring efforts.
MICRON TECH: Don Simplot Retires from Board of Directors
--------------------------------------------------------
Micron Technology, Inc. (NYSE:MU), announced the retirement of
Don J. Simplot from the company's Board of Directors, effective
immediately. Mr. Simplot has served on the Micron board since
February 1982.
Steve Appleton, President, Chairman and CEO of Micron
Technology, Inc., said, "We appreciate the many contributions
Don has made to Micron in the more than 20 years he has been a
director. His dedication, support and perspective have served
the Company well. We wish Don the very best."
Mr. Simplot commented, "It has been gratifying to be part of the
growth and success Micron has experienced over these past 20
years. I have every confidence in Steve Appleton and his
management team."
Micron Technology, Inc., is one of the world's leading providers
of advanced semiconductor solutions. Through its worldwide
operations, Micron manufactures and markets DRAMs, Flash memory,
CMOS image sensors, other semiconductor components and memory
modules for use in leading-edge computing, consumer, networking,
and mobile products. Micron's common stock is traded on the New
York Stock Exchange (NYSE) under the MU symbol. To learn more
about Micron Technology, Inc., visit its Web site at
www.micron.com.
* * *
As reported in the Jan. 31, 2003, edition of the Troubled
Company Reporter, Standard & Poor's Ratings Services assigned
its B- subordinated debt rating to Micron Technology Inc.'s
planned sale of $500 million convertible subordinated notes due
2010. At the same time, Standard & Poor's affirmed its 'B+'
corporate credit rating on Micron. The ratings outlook is
stable.
MIIX GROUP: Receives Delisting Notice from NYSE
-----------------------------------------------
The MIIX Group, Inc. (NYSE:MHU) a provider of medical
professional liability insurance services, was notified by the
New York Stock Exchange that trading of the Company's common
stock, traded under the symbol MHU, will be suspended at the
opening of business on April 28, 2003.
The Company is not in compliance with the minimum listing
standards for the NYSE. Average global market capitalization
over a consecutive 30 trading-day period is less than
$15,000,000 and the stock has traded for under $1.00 over a
consecutive 30 trading-day period. Additionally, the Company was
recently considered "below criteria" as its total market
capitalization is less than $50 million over a 30-day trading
period and stockholders' equity is less than $50 million.
"While we are disappointed about the NYSE's decision, this will
not affect any aspect of the day-to-day operations of our
Company," stated Chairman and CEO Patricia A. Costante. "The
Company remains focused on servicing our policyholders,
processing claims and managing our investment portfolio. We will
continue to maintain our current third party administration
operations, including service and consulting arrangements with
insurers and other health care providers; and exploring avenues
for expansion of this business. We strongly believe that there
is economic value left in the Company."
The Company expects that the shares will commence trading on the
"Over-the-Counter Bulletin Board," and will provide further
details to investors as they become available.
MIIX Group, Inc.'s financial statements for the year ending
Dec. 31, 2002, show eroding shareholder equity after two years
of losses. The Company's balance sheet at Dec. 31, 2002, shows
that the company is solvent.
MITEC TELECOM: Sells Thailand Unit for CDN$1.5 Million
------------------------------------------------------
As a part of its ongoing plan to concentrate its operations and
focus on its core activities, Mitec Telecom Inc. (TSX: MTM), a
leading designer and provider of wireless network products
for the telecommunications industry, announced that it has
agreed to sell Microwave Technology Company, its subsidiary in
Thailand, to the Thai management team. The purchase price has
been set at CDN$1.5 million, of which CDN$750,000 will be
payable on closing. The closing is expected to take place on May
30, 2003 and is subject to customary closing conditions.
"We are delighted to have implemented this phase of our
strategic reorganization program in a seamless fashion, without
impacting any local employees and without incurring any special
costs," said Rajiv Pancholy, Mitec's President and CEO.
"Additionally, divesting of these non-core operations reduces
our term debt and consolidates our Asian initiatives in Suzhou,
China, which allows us to target our efforts more precisely."
Mitec Telecom is a leading designer and provider of wireless
network products for the telecommunications industry. The
Company sells its products worldwide to network providers for
incorporation into high-performing wireless networks used in
voice and data/Internet communications. Additionally, the
Company provides value-added services from design to final
assembly and maintains test facilities covering a range from DC
to 60 GHz. Headquartered in Montreal, Canada, the Company also
operates facilities in the United States, Sweden, the United
Kingdom, China and Thailand.
Mitec Telecom Inc. is listed on the Toronto Stock Exchange under
the symbol MTM. On-line information about Mitec is available at
http://www.mitectelecom.com.
Mitec Telecom's January 31, 2003 balance sheet shows a working
capital deficit of about C$17 million, while total shareholders'
equity is down to $26 million from about $48 million recorded at
April 30, 2002.
NAT'L CENTURY: NPF XII Subcommittee Wants to Examine HCC & HMA
--------------------------------------------------------------
The Official Subcommittee of NPF XII, Inc. Noteholders of
National Century Financial Enterprises, Inc. seeks the Court's
authority to examine HomeCare Concepts of America, Inc. and Home
Medical of America, Inc.
Kenneth R. Cookson, Esq., at Dinsmore & Shohl, in Columbus,
Ohio, tells the Court that based on a review of NCFE's books and
records, it appears that the two largest sellers of accounts
receivables were HomeCare Concepts and Home Medical America.
HCC and HMA no longer have any operations and are essentially
dormant corporations. When it functioned, HCC owned or invested
in a series of other health care providers. NCFE apparently
purchased over a billion dollars of receivables from HCC and
HMA, with the vast majority of those purchases ultimately funded
by NPF XII.
Unfortunately, because HCC and HMA no longer operate, NCFE faces
the prospect of not being able to collect hundreds of millions
of dollars as a result of its dealings with HCC and HMA.
In addition, HCC and HMA are indirectly owned by NCFE founders:
-- HomeCare Concepts is wholly owned by Kachina, Inc.,
which, in turn, is owned by HealthCare Capital LLC.
HealthCare Capital is owned in equal parts by Lance
Poulsen, Barbara Poulsen, Donald Ayers and Rebecca
Parrett -- the four NCFE founders.
-- Home Medical America is owned by Thor Holdings, Inc.,
which is in turn owned by Thor Capital LLC. Thor Capital
LLC is owned 99% by the four NCFE founders, and 1% by
Craig Porter, the CEO of Home Medical America.
In the case at bar, Mr. Cookson asserts, examinations under Rule
2004 of the Federal Rules of Bankruptcy Procedure are warranted
-- taking into consideration the size of the loss, the fact that
HCC and HMA were NCFE's largest recipients of financing, and the
fact that they are owned by the four NCFE founders.
The Subcommittee seeks to examine HCC and HMA, inter alia:
(1) the circumstances surrounding any financings made by the
Debtors to HCC and HMA,
(2) the extent to which the financings were repaid,
(3) if and how the pattern of funding made to HCC and HMA
gave rise to the conversion of NPF XII assets,
(4) efforts made to service or collect on HCC and HMA
receivables purchased by NPF12, and
(5) more generally, the transactions giving rise thereto and
any other matters appropriate for a Rule 2004
examination.
Mr. Cookson explains that this examination will assist the
Subcommittee in specifically determining amounts NCFE has
collected on account of accounts receivable generated by
companies affiliated with HCC and HMA, and the total amount of
financing received by HCC and HMA from NCFE.
The Subcommittee believes that HCC and HMA have information
regarding:
(i) the acts, conduct, property, liabilities and financial
condition of the Debtors and their estates,
(ii) matters which may affect the administration of the
Debtors' estates,
(iii) the operation of the Debtors' businesses,
(iv) sources of money acquired by the Debtors, and
(v) the formulation and consummation of a plan.
Accordingly, the Subcommittee sought and obtained the Court's
authority to:
(a) conduct the examination and review of documents in
possession of HCC and HMA pursuant to Bankruptcy Rule
2004;
(b) conduct an oral examination of HCC and HMA pursuant to
Bankruptcy Rule 2004; and
(c) in accordance with Bankruptcy Rule 2003, issue subpoenas
to HCC and HMA in accordance with Bankruptcy Rule 9016
encompassing, inter alia, the documents contained in the
motion and requiring their appearance for oral
examination. (National Century Bankruptcy News, Issue
No. 14; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
NATIONSRENT INC: Proposes Increase to Exit Financing Requirement
----------------------------------------------------------------
On February 25, 2003, NationsRent Inc., and its debtor-
affiliates filed a motion to secure a commitment for an Exit
Financing Facility and pay any related fees. The Debtors
indicated that they anticipate obtaining up to $250,000,000 in
exit financing rather than $120,000,000 anticipated at the time
that they filed their Disclosure Statement. The Debtors
contemplated that the additional proposed financing would be
used to consolidate certain other debt that they originally had
projected in the Disclosure Statement. The Debtors explained
that the additional exit financing was not incremental debt to
the total proposed capital structure of the reorganized Debtors.
On March 11, 2002, the Debtors filed an exhibit to the First
Amended Reorganization Plan, which indicated that they had
entered into a non-binding term sheet for an Exit Financing
Facility of up to $250,000,000.
Since filing their Exit Financing Motion, the Debtors have
determined that they require up to $230,000,000 in financing to
effectuate their emergence from Chapter 11. But despite several
attempts, the Debtors were unable to obtain a senior secured
credit facility to meet their exit financing needs. Based on
the response they received from potential lenders in the market,
and their understanding from the principal Majority Bank Debt
Holders regarding the likely final outcome of ongoing
negotiations with respect to the Reorganized Debtors' capital
structure, the Debtors believe that to obtain the necessary exit
financing, they must alter the anticipated capital structure for
the Reorganized Debtors from that previously provided for in the
Plan.
Specifically, the Debtors anticipate that they will obtain up to
$80,000,000 in new capital from the issuance of New Subordinated
Notes, New Common Stock and New Preferred Stock in exchange for
a capital contribution. The New Capital is expected to be
valued at the estimated reorganization value allocated among the
New Subordinated Notes, the New Common Stock and the New
Preferred Stock in the same proportion as the New Securities
being distributed under the Plan. Accordingly, as part of the
Plan Modifications, the amount of New Subordinated Notes, New
Common Stock and New Preferred Stock to be issued pursuant to
the Plan will increase, as necessary, to effectuate the
additional capital infusion of up to $80,000,000.
The balance of the $230,000,000 of required financing will be
obtained from the Exit Financing Facility.
By this motion, the Debtors ask the Court to declare that
increasing the New Securities to be issued pursuant to the Plan
will not adversely impact the treatment afforded to holders of
Allowed Claims against or Interests in the Debtors and that no
further solicitation of such holders is required.
The Debtors explain that the modification does not impact the
holders of Allowed Claims in Classes C-5 and C-6 and Interests
in Classes E-1 and E-2 because the Claim and Interest holders in
those Classes are not entitled to receive any distribution under
the Plan. The Modification also does not impact Allowed Classes
C-2 and C-3 Claim holders because those holders receive either:
(a) payment in cash, in full, on account of the Allowed
Classes C-2 or C-3 Claim; or
(b) a promissory note secured by a first priority security
interest in the collateral securing the Allowed Claim.
The holders of Allowed Claims in Classes C-1 and C-4 also will
not be adversely affected. The Debtors tell the Court that the
Allowed Class C-1 and Class C-4 Claim holders will continue to
receive their pro rata share of the New Securities. The Debtors
further note that the estimated reorganization value of the New
Securities being distributed to the Allowed Claimholders in
these Classes will remain the same. As a result of the
contemplated Plan Modifications, the Debtors also anticipate
that the Allowed Class C-1 and Class C-4 Claim holders will
receive securities in a reorganized company that has more equity
and less leverage than previously forecasted. In addition,
Allowed Class C-4 Claim holders will not receive any
distribution under the Plan if the Class does not vote to accept
the Plan.
But if the Court determines that the Modification adversely
changes the treatment of Allowed Claims in Classes C-1 and C-4,
the Debtors propose to send a notice of the Modification to each
party that timely submitted a vote in Classes C-1 or C-4 to
accept or reject the Plan. The Modification Notice will contain
information regarding the Modification and its effect on the
Allowed Claim holders in the Impacted Classes.
Then any Voting Party that wishes to change its vote to accept
or reject the Plan will have until noon, Eastern Time, on
May 12, 2003 to notify the Debtors, in writing, of its desire to
change its vote. By May 2, 2003, the Debtors will also file
with the Court revised Exhibits to the Plan regarding the terms
of a modified Exit Financing Facility, the terms and conditions
of the New Capital as well as amended copies of any other
Exhibits affected by the Modification. The Debtors will make
these Exhibits available for review on their Web site at
http://www.NationsRent.comAny Voting Party that does not notify
the Debtors of its desire to change its Plan vote by the
Modified Voting Deadline will be deemed to have accepted or
rejected the Plan, as modified Modification, in accordance with
its prior vote. (NationsRent Bankruptcy News, Issue No. 30;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
NEXTEL COMMS: Reports Improved First Quarter 2003 Results
---------------------------------------------------------
Nextel Communications, Inc. (NASDAQ: NXTL), announced record
financial and operating results for the first quarter of 2003.
Income was $208 million, or $0.21 per share, a considerable
improvement over the loss of $654 million, or ($0.82) per share,
for the same period last year. Revenue was $2.4 billion, a 21%
increase over last year's first quarter. Operating income before
depreciation and amortization (EBITDA) was $906 million,
increasing by 64% over the $551 million for the first quarter of
2002. Nextel retired approximately $568 million in debt and
preferred stock during the first quarter, bringing total debt
and preferred stock retirements to $3.8 billion over the last
year. Nextel added approximately 480,000 subscribers during the
first quarter, finishing the quarter with approximately 11.1
million subscribers.
"Strong customer demand for Nextel's differentiated wireless
services coupled with our focused growth strategies led to
improved subscriber quality and our fourth consecutive quarter
of positive earnings," said Tim Donahue, Nextel's president and
CEO. "During the first quarter, Nextel posted 21 cents in
earnings per share and $201 million in free cash flow, putting
Nextel solidly on track to meet or exceed our financial and
operating goals for 2003. We are very excited about the rollout
of Nationwide Direct Connect, which is already underway, and new
handsets with increased battery life, incorporating the new 6-
to-1 voice coder, a software solution that will enable Nextel to
nearly double the cellular calling capacity of our wireless
network."
Nextel's average monthly revenue per subscriber for the first
quarter was $67, significantly higher than other national
wireless carriers and down $1 from the $68 reported in the first
quarter of 2002. Customer churn was approximately 1.9% during
the first quarter, a significant improvement over recent
quarters and the lowest level in the last four years.
"First quarter subscriber growth of 480,000 pushes Nextel to
more than 11 million high-value subscribers and continues
Nextel's momentum in the wireless marketplace," said Tom Kelly,
Nextel's executive vice president and COO. "Nextel once again
expanded market share and improved subscriber quality while
making improvement in our industry leading EBITDA margin, which
grew to 41% in the first quarter, up from last year's first
quarter margin of 30%. Nextel is focused on serving our
traditional business customers and is successfully expanding
into other high-value segments, and that focus is evident in our
results. Consistent with the seasonal trends of our core
customer segments we expect even stronger results in the coming
quarters."
Nextel's consolidated income available to common stockholders
during the first quarter was $208 million, or $0.21 per basic
share. Net cash provided by operating activities was $813
million. Free cash flow generated during the first quarter was
$201 million.
"Nextel delivered on our financial targets during the first
quarter, and we are confident that our strategies will continue
to drive Nextel's earnings higher," said Paul Saleh, Nextel's
executive vice president and CFO. "Nextel has once again set the
bar even higher for subscriber quality, underscored by a
reduction in subscriber churn to the lowest level in the last
four years and an improvement in bad debt expense as a
percentage of operating revenues to the lowest level in the last
three years. The solid first quarter financial performance also
enabled a further retirement of debt and preferred obligations
and Nextel ended the quarter with an excellent liquidity
position of approximately $3.6 billion."
For the quarter ended March 31, 2003, Nextel retired $568
million in principal amount of its outstanding debt and
mandatorily redeemable preferred stock in exchange for
approximately $570 million in cash. Over the last year, Nextel
has retired approximately $3.8 billion in principal amount of
debt and mandatorily redeemable preferred stock, which will
allow Nextel to avoid approximately $6.3 billion in future
principal, interest and dividend payments over the life of these
securities. Nextel may from time to time, as it deems
appropriate, enter into similar transactions that in the
aggregate may be material.
Domestic capital expenditures were $305 million in the first
quarter of 2003. Total domestic system minutes of use on the
Nextel National Network increased 35% during the quarter when
compared with the same period in 2002 to approximately 21.1
billion total system minutes of use.
In addition to the results prepared in accordance with Generally
Accepted Accounting Principles (GAAP) provided throughout this
press release, Nextel has presented non-GAAP financial measures,
such as EBITDA, free cash flow and ARPU. The non-GAAP financial
measures should be considered in addition to, but not as a
substitute for, the information prepared in accordance with
GAAP. Reconciliations from GAAP results to these non-GAAP
financial measures are provided in the notes to the attached
financial tables. To view these and other reconciliations and
information about how to access the conference call discussing
Nextel's first quarter results visit the 'Investor Relations'
link under the 'About Nextel' tab at http://www.nextel.com.
About Nextel
Nextel Communications, a Fortune 300 company based in Reston,
Virginia, is a leading provider of fully-integrated wireless
voice and data communications services including Nextel Direct
Connect(R)--the long-range digital walkie-talkie feature; high
quality digital cellular services; Nextel Onliner wireless data
content and business solutions; and two-way messaging services.
Nextel and Nextel Partners, Inc. have built the largest
guaranteed all-digital wireless network covering 197 of the top
200 U.S. markets. Nextel's wireless voice and packet data
communications services are available today in areas of the U.S.
where approximately 240 million people live or work.
***
As reported in the Troubled Company Reporter's March 12, 2003
edition, Fitch Ratings revised the Rating Outlook on Nextel
Communications Inc. to Positive from Stable. The Positive
Outlook applies to Nextel's senior unsecured note rating of
'B+', the senior secured bank facility of 'BB' and the preferred
stock rating of 'B-'. The Positive Outlook reflects Fitch's view
that favorable financial and operating trends will continue over
the next several quarters based on the positive momentum
produced from the following factors during 2002:
-- The significant improvement in operating performance
through strong cost containment, low churn and solid
ARPUs despite a somewhat unfavorable climate within the
wireless industry and a weak economic environment.
-- The reduction in financial risk due to the repurchase
of $3.2 billion in debt and associated obligations.
-- A strong competitive position relative to other
operators due to the unique push-to-talk application
that allows Nextel to target higher-value and lower
churn business users.
NOMURA CBO: S&P Puts Junk 1997-2 Class A-3 Rating on Watch Neg.
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on the
class A-2 and A-3 notes issued by Nomura CBO 1997-2 Ltd., a
high-yield arbitrage CBO transaction, on CreditWatch with
negative implications. At the same time the 'AAA' rating
on the class A-1 notes is affirmed. The rating on the class A-3
notes was previously lowered on June 28, 2002.
The CreditWatch placements reflect factors that have negatively
affected the credit enhancement available to support the notes
since the ratings were previously lowered. These factors include
continuing par erosion of the collateral pool securing the rated
notes, a negative migration in the credit quality of the
performing assets in the pool and a decline in the weighted
average coupon generated by the performing assets in the pool.
The deal has experienced $95.8 million in defaults since
origination of which $23.8 million was experienced since the
last rating action. As of the most recently available monthly
trustee report (April 2, 2003), the deal holds $57.65 million
worth of securities that are in default. Standard & Poor's noted
that as a result of asset defaults, the overcollateralization
ratios for the transaction have suffered since the June 2002
rating action was undertaken. According to the April 2, 2003
trustee report, the class A overcollateralization was 100.73%,
versus the minimum required ratio of 126%, and compared to a
ratio of 105.29% at the time of the previous rating action. The
class B overcollateralization ratio was 88.68%, versus the
minimum required ratio of 107%, and compared to a ratio of
93.14% at the time of the last rating action.
According to the April 2, 2003 trustee report, the weighted
average coupon was at 10.247%, versus a minimum required ratio
of 10.25%. Standard & Poor's will be reviewing the results of
current cash flow runs generated for Nomura CBO 1997-2 Ltd. to
determine the level of future defaults the rated classes can
withstand under various stressed default timing and interest
rate scenarios, while still paying all of the interest and
principal due on the notes. The results of these cash flow runs
will be compared with the projected default performance of the
performing assets in the collateral pool to determine whether
the ratings currently assigned to the notes remain consistent
with the credit enhancement available.
RATINGS PLACED ON CREDITWATCH NEGATIVE
Nomura CBO 1997-2 Ltd.
Rating Current
Class To From Balance (mil. $)
A-2 AAA/Watch Neg AAA 150.0
A-3 CCC/Watch Neg CCC 105.3
RATING AFFIRMED
Nomura CBO 1997-2 Ltd.
Current
Class Rating Balance (mil. $)
A-1 AAA 21.30
NORFOLK SOUTHERN: Q1 2003 Working Capital Deficit Tops $840 Mil.
----------------------------------------------------------------
Norfolk Southern Corporation (NYSE: NSC) reported first quarter
income from continuing operations, before required accounting
changes, of $85 million, or $0.22 per diluted share, compared to
$86 million, or $0.22 per diluted share, for the same period a
year earlier.
First-quarter net income was $209 million, or $0.54 per diluted
share, and included a $114 million, or $0.29 per diluted share,
gain largely due to a required change in accounting for the cost
of removing railroad crossties, and a $10 million, or $0.03 per
diluted share, gain from discontinued operations resulting from
the 1998 sale of a former motor carrier subsidiary.
"We are pleased to report a solid quarter with the highest
railway operating revenues of any first quarter in Norfolk
Southern's history, which was achieved during a period of
continuing economic slowness," said David R. Goode, chairman,
president and chief executive officer. "We are intensely focused
on diverting freight traffic from the highways to the rails,
reducing debt and costs, and strategically positioning Norfolk
Southern to capture the opportunities for business growth as the
economy rebounds."
Railroad operating revenues during the first-quarter were $1.56
billion, 4 percent higher than first-quarter 2002, while
carloads rose 3 percent, compared to the same period in 2002.
General merchandise revenues of $918 million also set a first-
quarter record, climbing 6 percent compared to the same period a
year earlier. All general merchandise commodity groups exceeded
first quarter 2002 results. Automotive revenues of $242 million
surpassed first quarter 2002 results by 6 percent, while
carloads increased 2 percent over the similar period last year.
Agricultural revenues increased $12 million, or 8 percent, and
were the highest for any quarter.
Intermodal revenues during the first quarter increased 7 percent
to $289 million, compared to the same period of 2002, primarily
as a result of strong international business. Container volume
increased by more than 31,000 units, or 8 percent, while
container revenues climbed 12 percent compared to the same
period a year earlier.
First-quarter coal revenues declined one percent to $354
million, compared to the same period a year earlier, largely as
a result of decreased demand for industrial and metallurgical
coal.
Railway operating expenses were $1.33 billion for the quarter, a
5 percent increase compared to the first quarter of 2002. The
increase was largely due to higher diesel fuel prices and severe
winter weather conditions in Norfolk Southern's operating
territory.
For the quarter, the railway operating ratio, the percentage of
revenues required to operate the railroad, was 85.2 percent
compared to 84.2 percent a year earlier.
Norfolk Southern's March 31, 2003 balance sheet shows that the
company liquidity is strained with total current liabilities of
2,171,000,000 against total current assets of 1,331,000,000.
Norfolk Southern Corporation is one of the nation's premier
transportation companies. Its Norfolk Southern Railway
subsidiary operates 21,500 route miles in 22 states, the
District of Columbia and Ontario, serving every major container
port in the eastern United States and providing superior
connections to western rail carriers. NS operates the East's
most extensive intermodal network and is the nation's largest
rail carrier of automotive parts and finished vehicles.
NORTHWESTERN: Fitch Further Cuts Low-B Level Senior Note Ratings
----------------------------------------------------------------
Northwestern Corp.'s outstanding credit ratings have been
downgraded by Fitch Ratings as follows: senior secured debt to
'BB' from 'BBB-'; senior unsecured notes and pollution control
bonds to 'B+' from 'BB+' and trust preferred securities and
preferred stock to 'B-' from 'BB'. The Rating Outlook remains
Negative. Approximately $2 billion of securities are affected.
The rating action follows Fitch's review of NOR's current and
prospective credit profile including the impact of pre-tax
charges totaling $878.5 million recorded at year-end 2002. The
charges primarily relate to the impairment of goodwill at NOR's
two non-regulated businesses, Expanets and Blue Dot, and the
discontinued operations of Cornerstone Propane Partners, L.P.
Fitch also considered NOR's previously announced plans to
dispose of its investments in Blue Dot and Expanets and focus on
core electric and gas utility operations going forward.
The revised rating levels reflect the continued deterioration in
NOR's credit profile combined with limited opportunities to
reduce debt in the near future. Given the magnitude of the year-
end 2002 asset writedowns and the disclosure of operational
deficiencies at Expanets, Fitch believes that it will be less
likely that NOR will generate material net cash proceeds from
the sale of its non-regulated investments. Although the
performance of NOR's electric and gas utility division should
remain stable, consolidated credit protection measures will
remain extremely weak for the foreseeable future absent
meaningful reduction in NOR's debt load. Fitch expects total
debt to utility based EBITDA (including trust preferred
securities) to remain in excess of 7.5 times (x) over the next
several years. In addition, utility funds from operations should
continue to cover interest and trust preferred dividends albeit
with a limited safety margin. NOR has acknowledged its ability
to defer underlying interest payments on its $370 million
outstanding trust preferred securities which is contractually
permitted for up to 20 consecutive quarters.
The funding of a $390 million secured term loan in February 2003
has stabilized NOR's near-term liquidity position. In addition,
NOR's debt maturity profile is relatively manageable over the
next three years with the only significant maturity consisting
of a $60 million first mortgage bond in 2005. However, the
amount of asset protection available to senior unsecured
bondholders has been meaningfully reduced as a result of the new
secured facility. NOR's utility division fixed assets currently
carry a book value of approximately $1.7 billion. Total first
mortgage bonds currently issued approximate $860 million thus
leaving potential residual utility asset value available for
senior unsecured creditors of about $750 million versus year-end
2002 unsecured debt outstanding of approximately $1 billion.
NOVA CHEMICALS: Posts Improved Results & Liquidity for Q1 2003
--------------------------------------------------------------
All financial information for NOVA Chemicals (NYSE:NCX)(TSX:NCX)
is in U.S. dollars unless otherwise indicated.
NOVA Chemicals Corporation reported net income to common
shareholders of $4 million ($0.05 per share earnings diluted)
for the first quarter of 2003.
This compares to a $48 million loss ($0.56 per share loss
diluted) to common shareholders in the fourth quarter of 2002.
The loss to common shareholders in the first quarter of 2002 was
$66 million ($0.77 per share loss diluted) before unusual items
and $30 million ($0.35 per share loss diluted) after unusual
items (see page 13).
"We exceeded analyst expectations for the first quarter because
we moved rapidly and effectively in a difficult environment.
Olefins/Polyolefins price increases and cost reductions kept
pace with our rapidly rising feedstock costs and Styrenics price
increases and volume growth actually generated margin
expansion," said Jeff Lipton, NOVA Chemicals' President and
Chief Executive Officer.
Lipton continued, "At the beginning of the second quarter we
increased our financial flexibility by successfully
renegotiating our revolving credit facility. We increased the
amount and term of the facility, relaxed some of the covenants
and reduced our borrowing cost. In addition, we have just signed
a commitment letter which will extend the termination date of
our retractable preferred share agreement from Oct. 1, 2003 to
Mar. 15, 2005."
The Olefins/Polyolefins business reported net income of $4
million in the first quarter, equal to fourth quarter levels.
Price increases, combined with continued cost reductions, fully
offset the sharp rise in our feedstock costs. Ethylene and
polyethylene sales volumes declined 5% from strong fourth
quarter volumes.
The Styrenics business reported a first quarter net loss of $17
million compared to a fourth quarter net loss of $33 million.
Product prices stayed ahead of rising feedstock costs and
volumes rose from the fourth quarter.
* * *
As reported in the Dec. 20, 2003, issue of the Troubled Company
Reporter, Standard & Poor's lowered its ratings, including the
long-term corporate credit rating to 'BB+' from 'BBB-', on NOVA
Chemicals Corp., due to industry weakness. The outlook is
stable.
"The ratings actions reflect the potential that improvements in
NOVA's financial performance may be delayed due to current
weakness in the key petrochemical sectors that the company
participates in," said Standard & Poor's credit analyst Kenton
Freitag.
The ratings also reflect NOVA's average business profile, with a
low-cost position in the production of ethylene and
polyethylene. The ratings are offset by the weak performance of
its styrenics business and high, although declining, leverage.
OLYMPIC PIPE LINE: UST Appoints Official Creditors' Committee
-------------------------------------------------------------
Diane E. Tebelius, the United States Trustee for Region 18
appointed 5 creditors to serve to an Official Committee of
Unsecured Creditors in Olympic Pipe Line Company's Chapter 11
case:
1. Puget Sound Energy
Attn: Brian Connolly
P.O. Box 90868 Gen02E
Bellevue, WA 98009-0868
(425) 456-2728
(425) 462-3149 (fax)
brian.connolly@pse.com
2. Tesoro Refining and Marketing Company
Attn: Charles L. Magee
3450 South 344th Way, Suite 100
Auburn, WA 98001
(253) 896-8766
(253) 896-8845 (fax)
cmagee@tesoropetroleum.com
3. Space Age Fuel, Inc.
Attn: Jim Pliska
P.O. Box 607
Gresham, OR 97030
(503) 665-5693
(503) 665-1741 (fax)
jim@spaceagefuel.com
4. Laney Directional Drilling Co.
Attn: Robert D. Hamil
P.O. Box 1449
Humble, TX 77347
(281) 540-6615
(281) 540-6727 (fax)
rhamil@laneydrilling.com
5. Chevron Products Co.
Attn: Jon N. Robbins
P.O. Box 6044
San Ramon, CA 94583-0744
(925) 842-2576
(925) 842-3365
jonr@chevrontexaco.com
Official creditors' committees have the right to employ legal
and accounting professionals and financial advisors, at the
Debtors' expense. They may investigate the Debtors' business and
financial affairs. Importantly, official committees serve as
fiduciaries to the general population of creditors they
represent. Those committees will also attempt to negotiate the
terms of a consensual chapter 11 plan -- almost always subject
to the terms of strict confidentiality agreements with the
Debtors and other core parties-in-interest. If negotiations
break down, the Committee may ask the Bankruptcy Court to
replace management with an independent trustee. If the Committee
concludes reorganization of the Debtors is impossible, the
Committee will urge the Bankruptcy Court to convert the Chapter
11 cases to a liquidation proceeding.
Olympic Pipe Line Company, owns and operates a pipeline system
transporting finished Petroleum products. The Company filed for
chapter 11 protection on March 27, 2003 (Bankr. W.D. Wash. Case
No. 03-14059). Edwin K. Sato, Esq., and Thomas N. Bucknell,
Esq., at Bucknell Stehlik Sato & Stubner, LLP represent the
Debtors in their restructuring efforts. When the Company filed
for protection from its creditors, it listed $105,961,773 in
total assets and $401,856,113 in total debts.
OWENS-ILLINOIS: Fitch Assigns BB Rating to Planned Senior Notes
---------------------------------------------------------------
Fitch Ratings assigned a 'BB' rating to Owens-Illinois' (NYSE:
OI) proposed $450 million senior secured notes and a 'B+' rating
to its proposed $350 million senior notes, which will be offered
in a private placement. The senior secured notes are due 2011
and the senior notes are due 2013. The net proceeds will be used
to reduce a portion of the revolving loan that matures on March
31, 2004 and to repay $300 million of 7.85% senior notes that
matures on May 15, 2004. The Rating Outlook remains Negative.
The rating and Outlook incorporate OI's high leverage position,
refinancing requirements, and asbestos exposure. Total debt
outstanding was $5.3 billion at year-end. OI has retained high
leverage as a result of a number of meaningful acquisitions as
well as high levels of asbestos payments. The backlog of cases
and associated cash outflows continue to trend down (OI spent
$221.1 million in asbestos-related payments in 2002, a 10%
decline from 2001) and management anticipates asbestos payments
will fall moderately over the next couple of years. OI's bank
debt was paid down to $3 billion in January 2002 and was further
reduced with the additional issuance of senior secured notes
offered in November and December 2002. After the proposed
transactions, approximately $1.3 billion of bank debt, $2.1
billion of senior secured notes and $1.4 billion of senior notes
will be outstanding.
OI's relatively stable margins, stemming from its market
position as well as the mature nature of its business, have
allowed the company to maintain positive free cash flow in spite
of the weak economic environment. Free cash flow (EBITDA minus
increase in WC minus cash interest minus cash tax minus capex)
rose to $448 million in 2002 from $235 million in 2001. After
asbestos payments net of insurance proceeds, cash flow was $252
million in 2002, up from $153 million in 2001. OI successfully
improved its pricing during 2002 in the North American glass
containers business, however, higher natural gas costs and lower
North American glass shipments have negatively affected the
company during the first quarter 2003. The company typically
recovers increases in raw material costs for the glass business
through the price adjustment formulas, however such adjustments
are not likely to be seen until 2004. On the plastics side,
price pressure as a result of customer consolidation and cost
inflation negatively affected the operation. Overall EBITDA
interest coverage was 3.1 times at December 31, 2002, slightly
up from 3.0x a year ago, and debt/EBITDA was flat at 4.1x.
Owens-Illinois is a leading manufacturer of glass containers and
plastics packaging products. OI's glass bottle business makes
about one of every two glass containers produced worldwide. The
markets the company serves include soft drink and alcoholic
beverage markets, as well as food and pharmaceutical companies.
PRIDE INT'L: Report on Offshore Fleet Now Available at S&P Site
---------------------------------------------------------------
Contract drillers in the petroleum industry currently are facing
lackluster conditions in a number of key drilling markets,
according to a report published by Standard & Poor's Ratings
Services. The increase in available drilling units and
the resulting pressure on day-rates pose recontracting risk
(i.e., the renewing of contracts on less favorable terms) for
drillers with near-term contract expirations.
High-yield driller Pride International Inc. (BB+/Stable/--)
undoubtedly has exposure to the spot-like nature of the U.S.
Gulf of Mexico (16 commodity-class jack-ups) and the South
American land-drilling market (250 land-drilling and workover
rigs).
"However, the company's recontracting risk is mitigated by its
strong contract position on its high-specification floaters and
other international offshore units," said Standard & Poor's
credit analyst Daniel Volpi. Pride has nine of its 12 floaters
contracted beyond 2003 at favorable day-rates. The company also
has deployed to Mexico nine jack-up rigs on long-term contracts.
The report, titled "Pride International's Offshore Fleet
Mitigates Recontracting Risk," is available on RatingsDirect,
Standard & Poor's Web-based credit research and analysis system.
Members of the media may obtain copies of the full report by
contacting Gregg Stein at (1) 212-438-1730 or by E-mail at
http://www.gregg_stein@standardandpoors.com.
PROVIDENT FINANCIAL: Confirms Cash Payment on Income PRIDES(SM)
----------------------------------------------------------------
Provident Financial Group, Inc. (Nasdaq: PFGI) and PFGI Capital
Corporation announced that the scheduled cash payment on their
Income PRIDES(SM) (NYSE: PCEPRI) security will be paid on May
19, 2003. The distribution, accruing from February 18, 2003
through May 17, 2003, is payable to holders of record on May 1,
2003, at a rate of $0.5625 per each Income PRIDES(SM) held.
PFGI Capital Corporation also announced financial results for
the first quarter ended March 31, 2003. Net income was $4.0
million, interest on loan participations was $4.2 million, and
non-interest expenses, including loan servicing and management
fees, totaled $207,000. At March 31, 2003, there were no non-
performing assets or impaired loans, commercial loan
participations totaled $324.7 million, and the reserve for loan
participation losses was $3.2 million. At March 31, 2003, total
shareholders' equity was $329.4 million and total assets were
$329.4 million.
About Provident Financial Group, Inc.
Provident Financial Group, Inc. is a bank holding company
located in Cincinnati, Ohio. Its main subsidiary, The Provident
Bank, provides a diverse line of banking and financial products,
services and solutions through retail banking offices located in
Southwestern Ohio, Northern Kentucky and the West Coast of
Florida, and through commercial lending offices located
throughout Ohio and surrounding states. At December 31, 2002,
Provident Financial Group had $9.1 billion in loans outstanding,
$9.8 billion in deposits, and assets of $17.5 billion.
About PFGI Capital Corporation
PFGI Capital Corporation is a Maryland corporation formed as a
real estate investment trust for federal income tax purposes.
The principal business objective is to acquire, hold, and manage
commercial mortgage loan assets and other authorized investments
that will generate net income for distribution to PFGI Capital
Corporation shareholders.
As reported in the Troubled Company Reporter's March 7, 2003
edition, Standard & Poor's Ratings Services lowered its ratings
on Cincinnati, Ohio-based Provident Financial Group Inc.,
including the company's counterparty credit ratings, which were
lowered to 'BB+/B' from 'BBB-/A-3'.
Standard & Poor's also lowered its ratings on Provident's units,
Provident Bank, PFGI Capital Corp., Provident Capital Trust I,
Provident Capital Trust II, Provident Capital Trust III, and
Provident Capital Trust IV. The outlook on all Provident
entities remains negative.
The ratings actions reflect a greater degree of uncertainty
regarding Provident's ability to generate earnings of reasonably
consistent quality following the recent announcement that the
company has had to restate its earnings for the past six years.
RITE AID: S&P Ups Corporate Credit & Sr Sec. Note Ratings to B+
---------------------------------------------------------------
Standard & Poor's Ratings Services raised the corporate credit
rating on Rite Aid Corp. and Rite Aid Lease Management Co. to
'B+' from 'B', and the ratings on the senior secured second-lien
notes to 'B+' from 'B-'.
At the same time, Standard & Poor's assigned its 'BB' rating to
Rite Aid's pending $2.0 billion senior secured credit facility,
which matures in 2008. Rite Aid plans to use the net proceeds
from the credit facility and the recently issued $360 million
senior secured notes to refinance amounts outstanding under the
existing $1.9 billion credit facility and the $107 million
synthetic lease. Concurrently, Standard & Poor's affirmed its
'B-' rating on senior unsecured notes and its 'CCC+' rating on
Rite Aid's preferred stock. All ratings were removed from
CreditWatch where they were placed April 14, 2003. The outlook
is stable. The Camp Hill, Pennsylvania-based company has $3.8
billion of funded debt as of March 1, 2003.
"The rating action reflects Rite Aid's improved operating
performance over the past three years and the strengthening of
its balance sheet as a result of the company's $2.0 billion
credit facility and recent $360 million notes offering," said
Standard & Poor's credit analyst Diane Shand. The new capital
structure lengthens significant maturities to 2008 and improves
the company's liquidity.
The ratings on Rite Aid reflect the challenges the company faces
in improving operations at its drug stores amidst intense
competition. The ratings also reflect the company's significant
debt burden and thin cash flow protection.
Rite Aid Corporation's 7.125% bonds due 2007 (RAD07USR1) are
presently trading at 95 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=RAD07USR1for
real-time bond pricing.
ROTECH HEALTHCARE: Reports Declining Revenues for First Quarter
---------------------------------------------------------------
Rotech Healthcare Inc. (Pink Sheets:ROHI) reported that net
revenues for the first quarter ended March 31, 2003 were $152.6
million, a decrease of 1.4% versus net revenues of $154.8
million for the same period last year. Net earnings for the
first quarter were $5.3 million as compared to a net loss of
$133.3 million in the first quarter of 2002. Diluted earnings
per share were $0.21 for the quarter ended March 31, 2003.
Included in the prior year operating results for this time
period were reorganization items of $182.3 million, the majority
of which related to fresh-start reporting adjustments, and an
extraordinary gain on debt discharge of $20.4 million. Our
predecessor, Rotech Medical Corporation, emerged from bankruptcy
on March 26, 2002 and subsequently transferred substantially all
of its assets to Rotech Healthcare Inc., the successor reporting
entity. As a result of adopting fresh-start reporting and
emerging from bankruptcy, historical financial information may
not be comparable with financial information for those periods
after emergence from bankruptcy. Rotech Medical Corporation was
a wholly owned subsidiary of Integrated Health Services, Inc.
for the quarter ended March 31, 2002.
Respiratory therapy equipment and services revenues represented
82.4% of total revenue for the first quarter, versus 77.6% for
the first quarter of last year. The increase in respiratory
revenues reflects the Company's focus on its oxygen concentrator
and nebulizer medication businesses.
Durable medical equipment (DME) revenues represented 15.8% of
total revenue in the first quarter, versus 20.0% for the same
period last year. The decline in DME revenues is the result of a
decreased emphasis on this business in recent quarters; however,
the Company has initiated new efforts to rebuild its DME rental
business.
The Company views earnings from continuing operations before
interest, income taxes, depreciation and amortization (EBITDA)
as a commonly used analytic indicator within the health care
industry, which serves as a measure of leverage capacity and
debt service ability. These performance measures should not be
considered as a measure of financial performance under generally
accepted accounting principles, and the items excluded from this
benchmark are significant components in understanding and
assessing financial performance. EBITDA should not be considered
in isolation or as an alternative to net income, cash flows
generated by operating, investing or financing activities or
other financial statement data presented in the consolidated
financial statements as an indicator of financial performance or
liquidity. Because EBITDA is not a measurement determined in
accordance with generally accepted accounting principles and is
thus susceptible to varying calculations, the benchmarks as
presented may not be comparable to other similarly titled
measures of other companies.
EBITDA was $36.7 million for the quarter ended March 31, 2003,
versus $(118.5) million for the quarter ended March 31, 2002.
Due to unique operating circumstances associated with the
predecessor company's emergence from bankruptcy, the Company
believes certain charges totaling $162.1 million in the prior
year associated with its reorganization, inventory losses
related to resolution of the internal investigation into its
Veterans Administration program, and the extraordinary gain on
debt discharge should be considered when analytically assessing
the Company's operating performance.
Philip L. Carter, President and Chief Executive Officer,
commented that the restructuring process was proceeding well and
prospects of entering 2004 with a more profitable model than at
present were good. He added that the first quarter did contain
additional costs relating to employee severance and location
closures.
About Rotech Healthcare
Rotech Healthcare Inc. is a leading provider of home respiratory
care and durable medical equipment and services to patients with
breathing disorders such as chronic obstructive pulmonary
diseases (COPD). The Company provides its equipment and services
in 48 states through over 500 operating centers, located
principally in non-urban markets. Rotech's local operating
centers ensure that patients receive individualized care, while
its nationwide coverage allows the Company to benefit from
significant operating efficiencies.
ROWECOM INC: EBSCO Acquires Canadian Subscription Business
----------------------------------------------------------
EBSCO Canada, Ltd., a subsidiary of EBSCO Industries, Inc., the
global leader for the delivery of integrated information systems
and services, has completed the acquisition of certain assets of
RoweCom's Canadian subscription operations, Divine Solutions,
ULC, operating under the trade names of RoweCom, Faxon and
Divine, hereinafter referred to as "RoweCom"
Following RoweCom's bankruptcy filing earlier this year, letters
were sent to all of the publishers (approximately 25,000) with
whom RoweCom U.S., RoweCom Australia and RoweCom Canada has a
business relationship to solicit their support (participation)
in a "Pre-paid Order Agreement." When a publisher agrees to
participate in this agreement, they agree to fulfill
subscriptions to their publications for which a RoweCom customer
paid RoweCom, but for which the publisher did not receive
payment. In exchange for agreeing to send issues, publishers are
to receive the equivalent of the RoweCom customer's claim on the
bankrupt estates to the extent of the value of the subscriptions
they have agreed to fulfill. Requests for similar treatment will
be made by/or on behalf of publishers who agree to participate
in servicing RoweCom Canada's customers. To effect this exchange
and to receive the full benefit of said publisher participation,
library creditors of RoweCom Canada should execute the
assignment of their claim to participating publishers. The
mechanics of how this works are more fully described in the next
paragraph and subsequent example.
Letters are being sent to all customers of RoweCom Canada. The
purpose of these letters is to ascertain if a RoweCom Canada
customer who currently has a claim against the bankrupt Divine
Solutions, ULC estate (i.e., had paid RoweCom for journal orders
for which payment was never forwarded to publishers) would agree
to participate by assigning their bankruptcy claims to
publishers agreeing to participate. RoweCom Canada customers
would only be agreeing to exchange their claims to the extent
publishers agree to fulfill issues. See the following example:
Assume a customer ordered and paid for 10 titles each costing
$100.00 for a total payment of $1,000.00 previously made to
RoweCom Canada.
Assume a different publisher publishes each title so there are
10 publishers. Assume RoweCom Canada paid none of the
publishers. Finally, assume seven of the 10 publishers agree to
participate.
The customer initially has a claim on the Divine Solutions, ULC
estate equal to $1,000.00. Should the customer decide to sign
the letter and assign their claim in exchange for issues, they
would receive issues for seven of their 10 journals (the
journals of the seven participating publishers). They would not
receive graced issues for the journals of the three non-
participating publishers but would retain their bankruptcy claim
related to the value of the three journals ($300.00).
It is critical that customers reply promptly in order to ensure
publishers are properly notified which customers are
participating (are to receive graced issues). Customers of
RoweCom Canada are requested to return their letters no later
than May 15, 2003.
The publisher communication process is being managed by Kurtzman
Carson Consultants, LLC. As publishers sign on to participate,
Kurtzman is posting the names of the participating publishers to
its Web site http://www.kccllc.net/rowecom
Once publishers and customers have responded, the responses will
be cross- matched to determine the exact publications publishers
have agreed to deliver to each participating customer. These
details will be supplied to participating customers. Likewise,
publishers will be supplied details of the journal orders they
have agreed to fulfill and the associated customers to receive
these journals. Further information including frequently asked
questions and answers are available on the RoweCom Web site at
www.faxon.com and on the Kurtzman Web site at
http://www.kccllc.net/rowecom
About EBSCO Industries, Inc.
EBSCO Industries, Inc. is a global corporation with sales,
service and manufacturing subsidiaries at work in 19 countries
around the world. EBSCO's business interests include information
management services, online and print journal subscription
services, online research databases, real estate development,
commercial printing and more. EBSCO, an acronym for Elton B.
Stephens Company, is based in Birmingham, Alabama, U.S.A. and
employs 4,000 people around the world. Additional information on
EBSCO Industries is available from http://www.ebscoind.com
SINGER: Makes Final Share Distribution Pursuant to Reorg. Plan
--------------------------------------------------------------
Singer N.V. announced that the final distribution of Common
Shares of the Company to former unsecured creditors of
The Singer Company N.V. is now being made on behalf of the
Singer Creditor Trust by Mellon Investor Services L.L.C., the
Company's share transfer agent.
Included below are the Company's Letter to Shareholders and
Bankruptcy Court Notice regarding this final distribution.
April 15, 2003
Dear Singer N.V. Shareholder:
Singer N.V. is pleased to announce the final distribution
of the remaining shares of the total amount of 8,000,000 Common
Shares of the Company.
The final distribution is being made pursuant to Section
7.14 of the First Amended Joint Plan of The Singer Company N.V.
and Its Affiliated Debtors and Debtors In Possession, which was
confirmed by the United States Bankruptcy Court for the Southern
District of New York on August 24, 2000, and pursuant to the
Amended and Restated Articles of Incorporation of the Company,
as filed with the Ministry of Justice of the Netherlands
Antilles on or about September 10, 2000. Enclosed herewith is a
notice regarding the final distribution that was filed with the
Court on or about March 31, 2003 and which contains information
regarding the final distribution of the New Common Stock and
certain effects of the Plan.
In accordance with the Plan, shares of New Common Stock
have been allocated and distributed by the Singer Creditor Trust
(as defined in the Plan) on a pro-rata basis to former unsecured
creditors of The Singer Company N.V., such as yourself. The
Singer Creditor Trust has distributed the New Common Stock to
such creditors in two stages -- the initial distribution, which
occurred on our about October 31, 2001 (the "Initial
Distribution"), and the current final distribution, which should
be completed by April 25, 2003 (the "Final Distribution"). This
letter discusses primarily the Final Distribution. If you are
entitled to receive New Common Stock, but did not receive a
distribution of New Common Stock during the Initial
Distribution, the entire amount of New Common Stock you are
entitled to receive will be distributed to you during the Final
Distribution. Parties who received a portion of the New Common
Stock that they are entitled receive during the Initial
Distribution will receive only the balance of New Common
Stock owed to them during the Final Distribution. Pursuant to
the Plan, both the Initial and Final distributions of the New
Common Stock by the Singer Creditor Trust are exempt from
registration under applicable securities laws pursuant to
section 1145(a) of the Bankruptcy Code.
As set forth in the Plan, the former unsecured creditors of
Old Singer include the holders of record, as of the close of
business on September 14, 2000, of The Singer Company N.V.
$150,000,000 7% Notes Due 2003, Cusip No. 82930FAA7 (as defined
in the Plan, the "Prepetition Singer Notes"), which were
canceled pursuant to Section 7.18 of the Plan as of the Record
Date. Pursuant to Section 9.7 of the Plan, the transfer ledgers
of the indenture trustee, agents and servicers with respect to
the Prepetition Singer Notes were closed as of the Record Date
and any transfers of the Prepetition Singer Notes occurring
after the Record Date will not be recognized for purposes of the
initial or final distribution of the New Common Stock.
Accordingly, only record holders of the Prepetition Singer Notes
set forth on such transfer ledgers at the close of business on
the Record Date are entitled to receive a distribution of the
New Common Stock from the Singer Creditor Trust. Any issues
relating to transfers of Prepetition Singer Notes occurring
after the Record Date are to be resolved by the record holder of
the Prepetition Singer Notes on the Record Date and any
subsequent transferee of the Prepetition Singer Notes. Pursuant
to the Plan, Singer N.V., the Singer Creditor Trust, the
indenture trustee with respect to the Prepetition Singer Notes
and the Transfer Agent (as defined below) have no obligation to
recognize, and will not recognize, transfers of the Prepetition
Singer Notes occurring after the Record Date.
Depending on the nature of your claim against Old Singer,
you will receive information regarding the number of shares of
New Common Stock issued for your benefit as follows:
* If your claim is not based upon ownership of the
Prepetition Singer Notes, but is based upon a debt owed
to you by Old Singer, then enclosed herewith is a
statement (a "Statement") from Mellon Investor Services,
LLC, the Transfer Agent for the New Common Stock (the
"Transfer Agent"), setting forth the number of shares of
New Common Stock distributed to you in "book entry" form
on the books and records of the Transfer Agent as a
result of the Final Distribution. This amount is in
addition to any shares you may have received during the
Initial Distribution.
* If your claim is based upon ownership of the Prepetition
Singer Notes as of the Record Date, and as of the Record
Date you held such notes in street name through an
intermediary record holder (i.e., in "street name"
through a nominee account), then you should receive
notification from such intermediary record holder
regarding the number of shares of New Common Stock that
you now hold in street name through your nominee account
with such intermediary record holder. If you do not
receive such a notification from your intermediary record
holder, please contact that party directly and request
such information.
* If your claim is based upon ownership of the Prepetition
Singer Notes as of the Record Date, and as of the Record
Date you held such notes in "certificate" form, and you
previously informed the indenture trustee for such notes
of your election to hold your shares of New Common Stock
in "certificate" form, then enclosed herewith is a
physical share certificate (a "Certificate") for the
number of shares of New Common Stock issued to you as a
result of the Final Distribution. This amount is in
addition to the shares you may have received during the
Initial Distribution.
* If your claim is based upon ownership of the Prepetition
Singer Notes as of the Record Date, and as of the Record
Date you held such notes in "certificate" form, and you
did not previously inform the indenture trustee for such
notes of your election to hold your shares of New
Common Stock in "certificate" form, then enclosed
herewith is a Statement from the Transfer Agent setting
forth the number of shares of New Common Stock
distributed to you in "book entry" form on the books
and records of the Transfer Agent as a result of the
Final Distribution. This amount is in addition to any
shares you may have received during the Initial
Distribution.
* If you received shares of New Common Stock during the
Initial Distribution in "book entry" form but
subsequently submitted to the Transfer Agent an election
to receive such shares in "certificate" form, then
enclosed herewith is a Certificate for the number of
shares of New Common Stock issued to you as a result of
the Final Distribution. This amount is in addition to
the shares you may have received during the Initial
Distribution.
If you received a Statement and, thus, hold your shares of
New Common Stock in "book entry" form, you have the option to
receive a Certificate evidencing such shares of New Common
Stock. If you would like to receive such a Certificate, thereby
choosing to hold your shares of New Common Stock in
"certificate" form instead of "book entry" form, please complete
the enclosed Election to Receive Share Certificate for Shares of
New Common Stock (the "Election Form") and return it to the
Transfer Agent at the address set forth on the Election Form.
If you hold your shares of New Common Stock in "book entry" form
and do not want to hold your shares in "certificate" form, you
need not take any further action and should not execute or
return the Election Form.
If you have any questions regarding the Initial or Final
distribution of the New Common Stock, please contact the
Transfer Agent at the following address:
Mellon Investor Services, LLC
44 Wall Street, 6th Floor
New York, New York 10005
Attn.: Frank R. Misciagna
The New Common Stock has not been listed on any U.S. or
overseas securities exchange, the NASDAQ National Market System,
the NASDAQ Small Cap Market, the OTC Bulletin Board or a similar
trading system, and it is not anticipated that the New Common
Stock will be so listed in the near future. Price quotations for
the New Common Stock became available on the "Pink Sheets"
quotation service under the symbol "SNGR" in March 2002. It is
anticipated that brokers should be able to continue to trade the
New Common Stock using the "Pink Sheets" quotation service as
long as the Company is current in submitting to the Securities
and Exchange Commission ("SEC") the materials it makes available
to shareholders or is required to file under its own country
jurisdiction. If the New Common Stock ceases to be traded,
shareholders seeking to sell or buy shares will only be able to
do so with considerable difficulty and at prices that may not
reflect the shares' theoretical inherent value. Even to the
extent that quotations on the "Pink Sheets" service continue,
there is no assurance that there will be adequate liquidity or
that there will not be wide swings in prices and significant
differences between "bid" and "asked" prices, which will make
trading difficult and could cause prices for the New Common
Stock to deviate substantially from their theoretical inherent
value.
The Company has a website -- http://www.singer.com,which
contains financial information, press releases and other
information about the Company which has been published since
September 14, 2000, the Effective Date of the Plan. The
website also provides an e-mail link to the Company's Investor
Relations department. If you have questions or concerns
regarding the Company or you would like to receive a copy of the
Company's Disclosure Statement and Report (including audited
consolidated financial statements), please submit a request
for the same to the Company via the Investor Relations e-mail
link. Alternatively, you may submit questions and concerns, or
request to receive a copy of the Company's Disclosure Statement
(including audited consolidated financial statements) to the
Company in writing at the following address:
Singer N.V.
De Ruyterkade 62
Willemstad, Curacao
Netherlands Antilles
Attn.: Investor Relations
We wish to thank you in advance for your continuing support and
your ongoing cooperation in making Singer N.V. a success in the
future.
Sincerely,
Stephen H. Goodman
Chairman of the Board
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
In re ) Chapter 11
)
THE SINGER COMPANY N.V., et al., ) Case Nos.: 99-10578 (BRL)
) through 99-10607 (BRL), 99-
Debtors. ) 10613 (BRL), 99-10616 (BRL)
) through 99-10629 (BRL) and
) 00-10423 (BRL)
) (Jointly Administered)
NOTICE REGARDING FINAL DISTRIBUTION OF NEW COMMON
STOCK OF REORGANIZED SINGER TO HOLDERS OF ALLOWED
CLAIMS IN CLASS SNV-4 (GENERAL UNSECURED CLAIMS AGAINST
THE SINGER COMPANY N.V.)
PLEASE TAKE NOTICE OF THE FOLLOWING:
1. Confirmation of the Plan. On August 24, 2000, the
United States Bankruptcy Court for the Southern District of New
York (the "Bankruptcy Court") entered an order (the
"Confirmation Order") confirming the First Amended Joint Plan of
Reorganization of The Singer Company N.V. and Its Affiliated
Debtors and Debtors in Possession, dated June 22, 2000 (the
"Plan"), in the chapter 11 cases of The Singer Company N.V.
("Singer") and its affiliated debtors and debtors in possession
(collectively with Singer, the "Debtors"). Unless otherwise
defined in this Notice, capitalized terms and phrases used
herein have the meanings given to them in the Plan and the
Confirmation Order.
2. Treatment of Allowed Claims in Class SNV-4. Pursuant to
Section 5.1(d) of the Plan, each holder of an Allowed Claim in
Class SNV-4 (General Unsecured Claims against Singer), including
the PBGC Distribution Claim, shall receive, in full
satisfaction, settlement, release, and discharge of and in
exchange for such Class SNV-4 Claims, among other things, a Pro
Rata share of one-hundred percent (100%) of the shares of common
stock of Reorganized Singer (the "New Common Stock") authorized
under Section 7.14 of the Plan and under the articles of
incorporation of Reorganized Singer. Pursuant to Section 7.14
of the Plan, the issuance of the New Common Stock and the
distribution thereof to holders of Allowed Claims in Class SNV-4
shall be exempt from registration under applicable securities
laws pursuant to section 1145(a) of the Bankruptcy Code.
3. Effective Date/Record Date. On September 14, 2000, the
Effective Date of the Plan occurred. Pursuant to Section 1.109
of the Plan, the Effective Date is the Record Date for purposes
of making distributions under the Plan on account of Allowed
Claims. Pursuant to Section 9.7 of the Plan, at the close of
business on the Record Date, the transfer ledgers of the
indenture trustees, agents and servicers of the Prepetition
Singer Notes and the Brazil Prepetition Notes were closed, and
there have been no further changes in the record holders of the
Prepetition Singer Notes and the Brazil Prepetition Notes since
the Record Date. Only the record holders of the Prepetition
Singer Notes and Brazil Prepetition Notes stated on the transfer
ledgers as of the close of business on the Record Date will be
recognized for purposes of the Plan and transfers of the
Prepetition Singer Notes or Brazil Prepetition Notes occurring
after the Record Date will not be recognized.
4. Issuance of New Common Stock. On the Effective Date,
the Singer Creditor Trust established by the Plan received on
behalf of each holder of an Allowed Claim in Class SNV-4, in
full satisfaction, settlement, release and discharge of and in
exchange for each and every Class SNV-4 Claim, among other
things, the New Common Stock, to be distributed Pro Rata by the
Singer Creditor Trust in accordance with the terms of the Plan
to holders of Allowed Claims in Class SNV-4.
5. Initial Distribution of the New Common Stock. The
Singer Creditor Trust made an initial distribution of the New
Common Stock to holders of Allowed Claims in Class SNV-4 on or
about October 31, 2001(the "Initial Distribution").
6. Final Distribution of the New Common Stock. The Singer
Creditor Trust has determined to commence the final distribution
of the New Common Stock to holders of Allowed Claims in Class
SNV-4 and, therefore, shall direct Mellon Investor Services,
L.L.C., as stock transfer agent for the New Common Stock (the
"Stock Transfer Agent"), to either (a) establish a "book entry"
record for each holder of an Allowed Claim in Class SNV-4 that
did not receive a distribution of New Common Stock during the
Initial Distribution indicating the amount of each such holder's
Pro Rata share of the New Common Stock, or (b) update the "book
entry" record for holders of Allowed Claims in Class SNV- 4 that
received a distribution of New Common Stock during the Initial
Distribution. With the exception of certain former holders of
Prepetition Singer Notes, physical share certificates for the
New Common Stock will not be distributed automatically to the
holders of such shares. Certain former holders of Prepetition
Singer Notes, who held such notes in "certificate" form
and who previously elected to hold their shares of New Common
Stock in "certificate" form, automatically will receive a
physical share certificate for their additional shares. The
records maintained by the Stock Transfer Agent with respect to
the New Common Stock shall be effective as of April 15,
2003.
7. Delivery/Notification of Distribution. On or before
April 15, 2003, the Stock Transfer Agent, on behalf of the
Singer Creditor Trust, shall mail an information packet to each
holder of an Allowed Claim in Class SNV-4; provided, however,
that information packets with respect to Prepetition Singer
Notes and Brazil Prepetition Notes held through intermediary
record holders shall be mailed to the banks, brokers and
institutions that were the holders of record of such Prepetition
Singer Notes or Brazil Prepetition Notes as of the Record Date
(the "Intermediary Record Holders"), along with instructions
that such Intermediary Record Holders deliver the information
packets to the former beneficial owners of the Prepetition
Singer Notes or Brazil Prepetition Notes. Each information
packet will include: (a) a letter from Reorganized Singer
containing, among other things, sources for financial and other
information for Reorganized Singer; (b) a copy of this notice;
and (c) either (i) a statement from the Stock Transfer Agent
setting forth the total number of shares of New Common Stock
owned by the particular holder in "book entry" form as reflected
in the Stock Transfer Agent's ownership records or (ii) a
physical share certificate indicating the number of additional
shares of New Common Stock held by the particular holder in
"certificate" form; provided, however, that holders of the
Prepetition Singer Notes or Brazil Prepetition Notes who held
such securities in "street name" shall not receive statements or
physical certificates from the Stock Transfer Agent, but instead
should receive information from the Intermediary Record Holders
regarding the number of shares of New Common Stock such holders
now own. The information packets will be delivered to (a) the
addresses set forth on the proofs of claims filed by the holders
of Allowed Claims in Class SNV-4 (or the last known addresses of
such holders if no proof of claim was filed or if the Debtors
were notified of a change of address), (b) the addresses set
forth in any written notices of address changes delivered to the
Singer Creditor Trust after the date of any related proof of
claim, (c) the addresses reflected in the Debtors' Schedules
if no proof of claim has been filed and the Singer Creditor
Trust has not received a written notice of change of address,
(d) the addresses set forth in any written notices of address
change delivered to the Stock Transfer Agent after the Initial
Distribution, or (e) in the case of a Claim holder whose Claim
is governed by an indenture or other agreement and is
administered by an indenture trustee, agent or servicer, at the
addresses contained in the official records of such indenture
trustee, agent or servicer. Pursuant to Section 9.7 of the
Plan, only the record holders of the Prepetition Singer
Notes and Brazil Prepetition Notes stated on the transfer
ledgers as of the close of business on the Record Date will be
recognized for purposes of the Plan and transfers of the
Prepetition Singer Notes or Brazil Prepetition Notes occurring
after the Record Date will not be recognized.
8. Discharge of Claims and Termination of Interests.
a. Pursuant to section 1141(d) of the Bankruptcy Code,
other than with respect to the Foreign Jurisdiction Liquidating
Debtors, Singer Furniture and the No Asset Liquidating Debtors,
and except as otherwise specifically provided in the Plan or in
the Confirmation Order, the distributions and rights that are
provided in the Plan are in complete satisfaction, discharge
and release, effective as of the Confirmation Date, of Claims
and Causes of Action, whether known or unknown, against,
liabilities of, liens on, obligations of and Interests in the
Debtors or the Reorganized Debtors or any of their assets or
properties, regardless of whether any property shall have
been distributed or retained pursuant to the Plan on account of
such Claims, including, but not limited to, demands and
liabilities that arose before the Confirmation Date, any
liability (including withdrawal liability) to the extent such
Claims relate to services performed by employees of the Debtors
prior to the Petition Date and that arise from a termination of
employment or a termination of any employee or retiree benefit
program regardless of whether such termination occurred prior to
or after the Confirmation Date, and all debts of the kind
specified in sections 502(g), 502(h) or 502(i) of the Bankruptcy
Code, whether or not (i) a proof of claim based upon such debt
is filed or deemed filed under section 501 of the Bankruptcy
Code, (ii) a Claim based upon such debt is Allowed under section
502 of the Bankruptcy Code, or (iii) the Claim holder of such a
Claim accepted the Plan. The Confirmation Order is a judicial
determination of the discharge of all liabilities of the
Debtors.
b. Pursuant to section 1141(d)(3) of the Bankruptcy
Code, entry of the Confirmation Order does not discharge Claims
or Causes of Action against Singer Furniture, the Foreign
Jurisdiction Liquidating Debtors or the No Asset
Liquidating Debtors; provided however, that no holder of a Claim
against any Foreign Jurisdiction Liquidating Debtor, Singer
Furniture or No Asset Liquidating Debtor may, on account of such
Claim, seek or receive any payment or other distribution from,
or seek recourse against, any of such Debtors or their
respective property, except as expressly provided in the Plan.
9. Injunctions.
a. Except as provided in the Plan or the Confirmation
Order, and except as may be necessary to enforce or remedy a
breach of the Plan and/or the Trust Agreement, the Debtors, and
all Persons who have held, hold or may hold Claims or Interests
and any successors, assigns or representatives of the foregoing
are precluded and permanently enjoined on and after the
Effective Date from: (a) commencing or continuing in any manner
any Claim, action or other proceeding of any kind with respect
to any Claim, Interest or any other right or Claim against the
Singer Creditor Trust, Reorganized Singer, any other
Reorganized Debtor or any Liquidating Debtor, which they
possessed or may possess prior to the Effective Date, (b) the
enforcement, attachment, collection or recovery by any manner or
means of any judgment, award, decree or order with respect to
any Claim, Interest or any other right or Claim against the
Singer Creditor Trust, Reorganized Singer, any other Reorganized
Debtor or any Liquidating Debtor, which they possessed or may
possess prior to the Effective Date, (c) creating, perfecting or
enforcing any encumbrance of any kind with respect to any Claim,
Interest or any other right or Claim against the Singer Creditor
Trust, Reorganized Singer, any other Reorganized Debtor or any
Liquidating Debtor, which they possessed or may have possessed
prior to the Effective Date, and (d) asserting any Claims that
are released hereby.
b. As of the Effective Date, all entities that held or
may have held any claims, obligations, suits, judgments,
damages, demands, debts, rights, causes of action or liabilities
that are released pursuant to the Plan are permanently enjoined
from taking any of the following actions against any released
entity or its property on account of such released claims,
obligations, suits, judgments, damages, debts, rights, causes of
action or liabilities: (i) commencing or continuing in any
manner any action or other proceeding; (ii) enforcing,
attaching, collecting, or recovering in any manner any judgment,
award, decree or order; (iii) creating, perfecting or enforcing
any lien or encumbrance; (iv) asserting a setoff, right of
subrogation or recoupment of any kind against any debt,
liability or obligation due to any released entity; and (v)
commencing or continuing any action, in any manner,
in any place that does not comply with or is inconsistent with
the provisions of the Plan.
c. By accepting distributions pursuant to the Plan,
each holder of an Allowed Claim receiving distributions pursuant
to the Plan shall be deemed to have specifically consented to
the injunctions set forth above.
10. Termination of Subrogation Rights. All Claims against
the Debtors and all rights and claims between or among Claim
holders relating in any manner whatsoever to Claims against the
Debtors, based upon any claimed subordination rights (if any),
are deemed satisfied by the distributions under the Plan to
Claim holders having such subordination rights, and such
subordination rights are deemed waived, released, discharged and
terminated as of the Effective Date. Distributions to the
various Classes of Claims under the Plan are not subject to
levy, garnishment, attachment or like legal process by any Claim
holder by reason of any claimed subordination rights or
otherwise, so that each Claim holder shall have and receive the
benefit of the distributions in the manner set forth in the
Plan.
Dated: March 31, 2003
OTTERBOURG, STEINDLER, HOUSTON
& ROSEN, P.C.
Counsel for the Singer
Creditor Trust
/s/ Enid N. Stuart
------------------------------
Glenn B. Rice (GR 7605)
Enid N. Stuart (ES 6651)
OTTERBOURG, STEINDLER, HOUSTON
& ROSEN, P.C.
230 Park Avenue
New York, New York 10169
(212) 661-9100
SPIEGEL GROUP: Continues Use of Existing Canadian Bank Accounts
---------------------------------------------------------------
While they are operating as debtors-in-possession, The Spiegel
Group and its debtor-affiliates sought and obtained Court
permission to continue depositing and maintaining cash in their
existing bank accounts in Canada without requiring the Canadian
Banks to post a bond or deposit securities.
The Bank of Montreal, Canadian Imperial Bank of Commerce,
Scotiabank, Royal Bank of Canada, Toronto Dominion, Canada Trust
and The Bank of Nova Scotia house the Debtors' merchant credit
card deposit accounts, debit card proceed accounts, payroll
disbursement accounts, general disbursement accounts and store
depository accounts. The funds in Canadian Accounts are either
negligible or are swept daily. (Spiegel Bankruptcy News, Issue
No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900)
SUN HEALTHCARE: Settles Landlord-Asserted Defaults
--------------------------------------------------
Sun Healthcare Group, Inc. (OTC Bulletin Board: SUHG) announced
that the Company and various of its consolidated subsidiaries
have entered into an agreement with THCI Company LLC, THCI
Mortgage Holding Company LLC, THCI Holding Company LLC and their
affiliated entities (collectively, "Care Realty") settling the
outstanding disputes between the parties. As was reported in the
Company's January 15, 2003 press release, Care Realty had
asserted that Sun had defaulted on certain leasehold obligations
relating to 32 long-term care facilities and on mortgages
encumbering two other facilities. The parties had been in a
long-standing dispute regarding their respective rights and
duties concerning those 34 facilities.
On Friday, April 18, 2003, the parties entered into a
Stipulation to be filed in the Delaware Bankruptcy Court
providing for the orderly transfer of operations of 31 of the 32
leased facilities to Care Realty or to another licensed operator
it designates. The remaining leased facility was previously
subleased to a third party operator. The Sun affiliates managing
or operating the two facilities mortgaged to THCI will also
relinquish their respective interests in those facilities. The
Stipulation provides for the release by both parties of their
claims with respect to the pending disputes, including, among
other things, the release of claims for leasehold damages and
unpaid rent by Care Realty.
Richard K. Matros, Chairman and CEO of Sun stated, "Sun could no
longer continue to operate the Care Realty portfolio at the
rental rates Care Realty demanded. Sun discontinued the above-
market rent payments pending resolution of the outstanding legal
disputes between Sun and Care Realty. The Stipulation now
resolves those disputes in a mutually acceptable manner,
allowing the company to continue to move forward with its
restructuring initiative."
Headquartered in Irvine, California, Sun Healthcare Group, Inc.
owns many of the country's leading healthcare providers. Through
its wholly-owned SunBridge Healthcare Corporation subsidiary and
its affiliated companies, Sun's affiliates together operate more
than 200 long-term and postacute care facilities. In addition,
the Sun Healthcare Group family of companies provides high-
quality therapy, pharmacy, home care and other ancillary
services for the healthcare industry. More information is
available on the Company's Web site at http://www.sunh.com
TRICO MARINE: Schedules Q1 2003 Conference Call on May 6
--------------------------------------------------------
Trico Marine Services, Inc. (Nasdaq: TMAR) has scheduled a press
release and a conference call to discuss its earnings for the
first quarter ended March 31, 2003. The press release will be
issued before the market opens on Tuesday, May 6, 2003, and a
conference call will be held at 2:00 p.m. Eastern time.
Interested parties may listen to the call by dialing 973-935-
8504 and asking for the Trico Marine Conference.
It is recommended that listeners dial in five to ten minutes
before the call begins. A telephonic replay will also be
available shortly after the conclusion of the call and will be
available until 5:00 p.m. Tuesday, May 13, 2003. To access the
replay, dial 973-341-3080 using the pass code 3893694.
Trico Marine provides marine support services to the oil and gas
industry, primarily in the Gulf of Mexico, the North Sea, Latin
America and West Africa. The services provided by the Company's
diversified fleet of vessels include the marine transportation
of drilling materials, supplies and crews and support for the
construction, installation, and maintenance and removal of
offshore facilities.
As reported, Standard & Poor's Ratings Services affirmed its
'B+' corporate credit rating on Trico Marine Services Inc. At
the same time, Standard & Poor's revised the company's outlook
to negative, following a review of 2002 results and expected
2003 earnings. The outlook revision reflects Standard & Poor's
concerns that continued weakness in the company's primary
offshore support markets could lead to additional financial
deterioration.
TRINITY ENERGY: Targets Filing Reorganization Plan by Month-End
---------------------------------------------------------------
Trinity Energy Resources Inc. (OTCBB:TRGC) issued an update on
its efforts to reorganize under Chapter 11 of the U.S.
Bankruptcy Code, for which it filed for protection on Jan. 31,
2003.
On April 15, 2003, the Company filed a motion to obtain post-
petition financing in the amount of $575,000. If approved by the
court, this bridge financing would provide for the
reconditioning of revenue generating assets, support of
administrative costs associated with Chapter 11 processing,
partial payments to secured and unsecured creditors, and exit
financing in support of emerging from Chapter 11.
The Company targets the filing of a Plan of Reorganization on or
before April 30, 2003. Subsequent to the filing of a Plan,
confirmation processing would be subject to various reviews by
the court, and a vote by shareholders. The Company believes it
has moved expeditiously to reorganize, arrange for exit
financing, and advance the interest of shareholders and
creditors.
Assuming the Plan of Reorganization is approved in conjunction
with the proposed bridge financing, the Company would expect to
proceed immediately to pursue other forms of financing,
including equity financing, and other asset based facilities
consistent with the Company's reorganized structure and
capabilities.
Additionally, the Company has filed a motion for the approval of
a partial term assignment with respect to a property development
opportunity in West Texas. As of today, the Company has yet to
receive a decision from the court on this matter, as well as a
range of other matters which have been heard by the court over
the course of the past several weeks.
As the Chapter 11 case has progressed, the Company has dealt
with continuous opposition from two preferred equity holders. It
is anticipated that this opposition will continue, and the
Company stresses that risks associated with this opposition are
material, and may cause substantial delays in implementing its
plan, and could cause the case to be either dismissed or
transferred to the control of a court appointed trustee, a move
the Company has vigorously opposed.
UNISYS: Retirees Picket Plymouth Plant Citing Broken Promises
-------------------------------------------------------------
Some 50 retirees of Unisys Corporation came out of retirement to
picket the company's Plymouth manufacturing plant.
Encouraged by the continuous honking of supportive passing cars
and trucks, the picketers -- some of them in their 70s and 80s
-- were protesting the company's termination of their medical
benefits after they were promised by the company and its
predecessor, Burroughs, "lifetime" medical coverage after 65
paid by the company as part of their retirement benefits.
According to the retirees, the company made these promises to
justify lower pay rates, fight unionization, and induce older
workers to retire.
One of them, Ken Perrin of Highland, who worked for Burroughs,
then Unisys, for 32 years, said: "These are called the Golden
Years, when after a lifetime of working for the company, we are
supposed to be enjoying the fruits of our labor. Surprise!
After repeatedly telling us that our medical benefits were
guaranteed once we retired, the company step by step terminated
them.
"Court after court has agreed that Unisys had systematically
misinformed us about the duration of our benefits and that it
had engaged in a systematic campaign of confusion," Perrin said,
"but they continue to delay and delay coming to a fair solution.
"Some of the 9,000 of us nationwide -- 600 in Southeast Michigan
-- have to pay as much as $9,000 a year for medical coverage.
How do you handle that when you are on Social Security? They
promised me free lifetime medical benefits after 65, but I've
had to pay more than $45,000 in medical premiums since my
retirement in 1988. To me, Unisys's promises are promises
broken.
"Despite previous settlements covering other parts of the
lawsuits filed as far back as 1992, the company continues to
drag out the court case. We dedicated our lives to the company.
Their message to us is 'Drop Dead,' so they won't have to pay
us."
The protest rally, following an earlier one at the company's
Blue Bell, Penn., worldwide headquarters, marked the launch of a
campaign of national protests and informational picketing.
As previously reported, Standard & Poor's Ratings Services
assigned its 'BB+' rating to Unisys Corp.'s $250 million senior
unsecured notes due 2010 and affirmed its 'BB+' corporate credit
and senior unsecured debt ratings on the company. The proceeds
from the notes will be used for general corporate purposes. The
outlook is stable.
UNITED DEFENSE: Welcomes C. Thomas Faulders to Board
----------------------------------------------------
United Defense Industries, Inc. (NYSE:UDI) announced the
nomination of C. Thomas Faulders, III to serve as director and
fill the seat being vacated on May 28 by Robert M. Kimmitt.
Faulders, 53, is Chairman and CEO of LCC International, Inc., a
supplier of infrastructure services to the wireless
telecommunications industry. Faulders is also expected to serve
on UDI's audit committee.
"We are very pleased to welcome Mr. Faulders to the United
Defense Board," said Thomas W. Rabaut, President and CEO of
United Defense Industries. "We look forward to adding his
financial management experience and contributions toward the
growth of the company."
Kimmitt, 55, has been a member of the board since March 1998 and
is stepping down to pursue other interests. "The Board and I
would like to thank Mr. Kimmitt for his tireless work and wise
counsel on the Board, and wish him well in his other endeavors,"
said Rabaut.
United Defense designs, develops and produces combat vehicles,
artillery, naval guns, missile launchers and precision munitions
used by the U.S. Department of Defense and allies worldwide and
is America's largest non-nuclear ship repair, modernization,
overhaul and conversion company. To learn more about United
Defense, visit http://www.uniteddefense.com.
As December 31, 2002, the company reported a total shareholders'
equity deficit of about $30 million.
US DATAWORKS: Independent Auditors Singer Lewak Withdraws Report
----------------------------------------------------------------
US Dataworks, Inc. (Amex: UDW) announced that the Company's
external auditors, Singer Lewak Greenbaum & Goldstein LLP, have
advised the Company that in connection with the Company's recent
announcement that it will restate its financial results, Singer
Lewak's reports on the Company's financial statements for fiscal
years ended 2001 and 2002 can no longer be relied upon.
The Company previously announced its intention to restate its
financial statements for fiscal years 2001 and 2002, as well as
the first three quarters of fiscal year 2003, to change the
method used to record the March 31, 2001 acquisition of US
Dataworks, Inc., a Delaware corporation and subsidiary of the
Company, from a manner similar to a pooling of interests to the
purchase method of accounting.
As previously reported in the Troubled Company Reporter's
December 3, 2002 edition, the Company has received a report from
its independent auditors that includes an explanatory paragraph
describing the uncertainty as to the Company's ability to
continue as a going concern.
US Dataworks has incurred losses for the last two fiscal years
and expects that its net losses and negative cash flow will
continue for the foreseeable future. Its auditors have included
an explanatory paragraph in their Independent Auditor's Report
included in the Company6's audited financial statements for the
years ended March 31, 2002 and 2001, to the effect that US
Dataworks' loss from operations for the year ended March 31,
2002, and the accumulated deficit at March 31, 2002 raise
substantial doubt about its ability to continue as a going
concern. The Company has incurred significant losses in the last
two years. As of September 30, 2002, its accumulated deficit was
$28,797,618. Management believes that Company planned growth and
profitability will depend in large part on the ability to
continue to promote its brand name and gain and expand clients
for whom it would provide licensing agreements and system
integration. Accordingly, US Dataworks intends to invest heavily
in marketing, strategic partnerships, development of its client
base, and development of its marketing technology and operating
infrastructure.
About US Dataworks Inc. (http://www.usdataworks.com)
US Dataworks is a developer of electronic check processing
software, serving several of the top banking institutions,
credit card issues, and the United States Government. The
software developed by US Dataworks is designed to enable
organizations to transition from traditional paper-based payment
and billing processes to electronic solutions. Core products
include MICRworks, Returnworks, Remitworks, and Remoteworks.
US MINERAL: Taggart Taps Benedetto Gartland as Investment Banker
----------------------------------------------------------------
Professor Walter Taggart, the legal representative for future
claimants appointed in United States Mineral Products Company's
chapter 11 case, asks the U.S. Bankruptcy Court for the District
of Delaware for permission to employ Benedetto, Gartland &
Company, Inc., as his Investment Banker to provide financial
analysis and investment banking consulting services.
Professor Taggart submits that the retention of Benedetto
Gartland is crucial to his effective representation of the
Future Claimants in order to evaluate the assets and liabilities
of the Debtor, its value and its ability to pay present claims
and future demands.
In this engagement, Professor Taggart expects Benedetto Gartland
to:
a) review and evaluate the Valuation Report prepared by
Curtis Securities, LLC for the Debtor;
b) review and evaluate material concerning the Debtor's
business that is made available by the financial
advisers retained by the Asbestos Committee or provided
directly by the Debtor;
c) meet with management of the Debtor to review the
Company's historic, current, and prospective operations,
business and financial conditions;
d) advise Professor Taggart concerning the Company's value,
future cash flow and profits, and general outlook for
the future operation;
e) advise Professor Taggart concerning securities that are
proposed to be issued under a plan of reorganization and
assist Professor Taggart in formulating proposals for
securities to be issued under a plan of reorganization
as well as any other issues relevant to maximizing the
amount available to pay asbestos disease claimants;
f) evaluate business plans and financial projections
prepared by the Debtor or its professionals, including
any cash flow projections prepared by the Debtor or its
professionals, including any cash flow projections, long
term or short term business plans; and
g) assist Professor Taggart in negotiating with other
parties concerning any proposed plan of reorganization
or in preparing a plan of reorganization.
Benedetto Gartland agrees to charge:
First Month $35,000
Second Month $35,000
Third Month $20,000
for its services.
United States Mineral Products Company doing business as
Isolatek International, manufactures and sells spray-applied
fire resistive material, insulation and acoustical products to
the commercial and industrial construction industry in North
America, Central America, South America and the Caribbean. The
Company filed for chapter 11 bankruptcy protection on June 23,
2001 (Bankr. Del. Case No. 01-2471). Aaron A. Garber, David M.
Fournier and David B. Stratton at Pepper Hamilton LLP represent
the Debtor in its restructuring efforts.
U.S. STEEL: Nixes Discount Under Dividend Reinvestment Plan
-----------------------------------------------------------
United States Steel Corporation (NYSE: X) announced that it is
discontinuing the discount under its Dividend Reinvestment and
Stock Purchase Plan on initial and optional cash purchases and
on the reinvestment of dividends. Under terms of
the Plan, purchases with reinvested dividends and optional cash
are entitled to a discount of 0 percent to 3 percent, to be
determined in the sole discretion of the Corporation from time
to time. U. S. Steel began offering a 3 percent discount in
February 2002, however, the Corporation has decided to
discontinue the discount effective with Plan purchases beginning
May 15, 2003, and will continue at 0 percent until further
notice.
If a Plan participant has any questions and/or wants to confirm
the most current discount rate, Plan information may be obtained
by calling (412) 433-4707.
Plan participants are advised to read the Plan prospectus
because it contains important information pertaining to the
Plan. A copy of the registration statement and prospectus filed
by United States Steel LLC, now United States Steel Corporation,
with the Securities and Exchange Commission may be obtained at
the Securities and Exchange Commission's web site --
http://www.sec.gov/. Also, a copy of the prospectus contained
in the registration statement may be obtained from United States
Steel Corporation Shareholder Services, 600 Grant Street, Room
611, Pittsburgh, Pennsylvania 15219-2800.
VARSITY BRANDS: S&P Places B Long Term Rating on Watch Negative
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on Varsity
Brands Inc., including its 'B' long-term corporate credit
rating, on CreditWatch with negative implications.
The New York, New York-based provider of goods and services to
the school spirit industry had $71.1 million of debt outstanding
at Dec. 31, 2002.
The CreditWatch listing is based on Varsity's announcement that
it has agreed to be acquired by its senior management and a unit
of an affiliate of Leonard Green & Partners L.P. in a deal
valued at about $130.9 million, including repayment of debt. The
closing of the transaction is subject to certain terms and
conditions, including anti-trust clearance and the successful
completion of a tender offer for Varsity's outstanding 10.5%
senior notes due 2007. The transaction is expected to close in
the 2003 third quarter.
"Resolution of the CreditWatch listing will ultimately be
determined by the capital structure of the surviving company or
new entity, as well as an assessment of management's strategic
focus, financial policies, and near-term operating outlook,"
said Standard & Poor's credit analyst Alyse Michaelson.
Increasing debt levels or a combination with a more heavily
debt-burdened company could pressure the ratings. The senior
debt rating will be withdrawn if a large amount of senior
subordinated notes is tendered.
WCI COMMUNITIES: Annual Shareholders' Meeting Set for Today
-----------------------------------------------------------
WCI Communities, Inc. (NYSE:WCI), a leading builder of highly
amenitized lifestyle communities, announced its annual
shareholders' meeting will be held today, April 25, beginning at
10 A.M. EDT at the Hyatt Regency Coconut Point, 5001 Coconut
Point Road, Bonita Springs, Florida. The company expects to mail
its annual report and proxy statement to shareholders the week
of April 28, 2003. The company's annual report and proxy
statement will be available at http://www.wcicommunities.com on
April 28, 2003. For questions regarding the meeting, please
contact the company at (239) 498-8350.
Based in Bonita Springs, Florida, WCI has been creating amenity-
rich, leisure-oriented master-planned communities for more than
50 years. WCI's award-winning communities offer primary,
retirement, and second home buyers traditional and tower home
choices with prices from $100,000 to more than $10 million and
currently feature more than 600 holes of golf and 1,000 boat
slips as well as country club, tennis and recreational
facilities. The company also derives income from its 28-office
Prudential Florida WCI Realty division, its mortgage and title
businesses, and its amenities division, which operates many of
the clubhouses, golf courses, restaurants, and marinas within
its 30 communities. The company currently owns and controls
developable land of over 14,000 acres.
For more information about WCI and its residential communities
visit http://www.wcicommunities.com
* * *
As reported in Troubled Company Reporter's October 25, 2002
Standard & Poor's affirmed its double-'B'-minus corporate credit
rating on WCI Communities Inc. Concurrently, the Outlook is
revised to Stable from Positive. At the same time, Standard &
Poor's assigns its double-'B'-minus rating to the company's new
$350 million unsecured bank facility.
The ratings acknowledge this Florida-based homebuilder's strong
position in select coastal markets, solid profitability, and
improved financial risk profile. The outlook revision
acknowledges revised third quarter earnings estimates, which
will be negatively impacted by write-offs related to two
projects. Management has also noted some softening of demand
within the company's luxury home product niche, which roughly
comprises one third of WCI's homebuilding business.
WHEELING-PITTSBURGH: Wants to Extend DIP Maturity & Honor Fees
--------------------------------------------------------------
James M. Lawniczak, Esq., and Scott N. Opincar, Esq., at Calfee,
Halter & Griswold LLP, relate that the DIP Credit Facility for
Wheeling-Pittsburgh Steel Corp., and its debtor-affiliates
presently consists of a term loan facility for $35,000,000 and a
revolving credit facility for $160,000,000. The term loan and
revolving loan are secured by first-priority liens on the
Debtors' assets -- subject to valid liens existing on the
Petition Date -- and are entitled to superpriority
administrative status, subject to certain carve-outs for fees
payable to the United States Trustee and professional fees.
Under the terms of the DIP Credit Agreement, the commitments in
respect of both revolving loan and term loan will terminate, and
such loans will be due and payable, on May 17, 2003.
As of March 31, 2003, $35,480,000 was outstanding under the term
loan facility and $147,300,000 in loans and $2,820,000 in
letters of credit were outstanding under the revolving credit
facility.
Since the initiation of these cases, the Debtors have explored
various avenues for the restructuring of their businesses and
their obligations to their creditors. The Debtors believe that
these efforts will reach fruition during the next few months and
have filed a plan of reorganization with this Court. The
financing to be obtained through the Emergency Steel Loan
Guarantee Program is an integral part of that plan of
reorganization. This financing will not be available to the
Debtors before the DIP Facility's Termination Date. In the
interim, the Debtors require uninterrupted access to the DIP
Credit Facility to assure that the Debtors will have sufficient
liquidity to sustain their ongoing operations.
Thus, the Debtors ask Judge Bodoh's permission to execute and
perform under another amendment to the DIP Credit Agreement, and
pay certain fees in that connection.
After extensive negotiations, the Debtors, the DIP Agent and the
DIP Lenders have reached agreement on an extension of the DIP
Credit Facility and other modifications. These are the key
provisions of the Amendment:
(a) Termination Date: The Termination Date will be
extended from May 17, 2003 to August 17, 2003.
(b) Amendment to Article VI: Section 6.22 will be
amended and restated in its entirety:
"6.22 Cooperation with Agent. Upon the occurrence
of any of the following events:
(i) the decision by the Emergency Steel
Loan Guaranty Board to provide
financial assistance to the Borrowers
pursuant to the Emergency Steel Loan
Guarantee Act shall be revoked or
modified so as to require additional
material conditions; or
(ii) the Bankruptcy Court shall have failed
to enter an order confirming the
Borrowers' plan of reorganization
within four Business Days after the
hearing at which such matter is first
presented;
then, the Borrowers agree to cooperate fully with
the Agent and the Lenders to implement a chapter 11
plan acceptable to the Agent and to act as directed
by the Agent with respect to the administration of
the Borrowers' estates, including supporting any
motion or application filed by the Agent in
connection with the foregoing."
(c) Amendment Fee: The Debtors agree to pay to the Agent
for the benefit of each Lender which executes and
delivers this Amendment an amendment fee in the
amount of 0.25% -- based on each such Lender's
Commitments -- payable on the Amendment Effective
Date.
(d) Agent's Fees, Costs and Expenses: The Debtors will
pay all fees, costs and expenses of the Agent in
connection with the preparation, execution, delivery
and administration of this Amendment in accordance
with the terms of Section 10.4 of the DIP Credit
Agreement, including, without limitation, an Agent's
Fee payable pursuant to a fee letter dated as of
April [__], 2003, on the effective date of the
Amendment to the Agent, solely for its own account.
The Debtors will not have continuing access to the DIP Credit
Facility beyond May 17, 2003 except on the terms set forth in
the Amendment. The execution of the Amendment is, therefore, a
critical and positive step towards the Debtors' completion of a
successful reorganization. (Wheeling-Pittsburgh Bankruptcy News,
Issue No. 38; Bankruptcy Creditors' Service, Inc., 609/392-0900)
WHITE HALL: Insolvency Prompts S&P's R Financial Strength Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'R' financial
strength rating to White Hall Mutual Insurance Co. after the
Pennsylvania Insurance Department ordered the company to be
liquidated on the basis of insolvency, effective April 10, 2003.
"In 2002, White Hall's impaired financial position reflected
emerging loss development trends that required the company to
record about $1 million in development on prior-accident-years
losses and loss adjustment expenses," said Standard & Poor's
credit analyst James Sung. "In addition, the company's financial
position was hurt by reinsurance rate increases that affected
profit margins and unrealized capital losses attributable to
the weak equity markets."
White Hall is a 160-year-old property/casualty insurer based in
Doylestown, Pennsylvania. In 2002, the company reported about $8
million in assets, $1 million in surplus, and $970,000 in net
losses.
An insurer rated 'R' is under regulatory supervision owing to
its financial condition. During the pendency of the regulatory
supervision, the regulators may have the power to favor one
class of obligations over others or pay some obligations and not
others. The rating does not apply to insurers subject only to
nonfinancial actions such as market conduct violations.
WILLIS GROUP: Publishes Improved First Quarter Results
------------------------------------------------------
Willis Group Holdings Limited (NYSE: WSH), the global insurance
broker, reports record results for the quarter ended
March 31, 2003. Net income for the quarter ended March 31, 2003
was $117 million, or $0.69 per diluted share compared to $68
million, or $0.43 per diluted share, a year ago. Excluding non-
cash compensation for performance-based stock options, adjusted
net income increased 48% to $123 million for the quarter ended
March 31, 2003 from $83 million in the same period last year,
while adjusted net income per diluted share rose 46% to $0.73
from $0.50 a year ago.
Total revenues for the quarter ended March 31, 2003 increased
23% to $555 million, up from $451 million for the corresponding
quarter last year. Of this increase in revenues of 23%,
approximately 7% represented the effect of foreign currency
exchange rate movements and approximately (2)% was attributable
to the effect of acquisitions and disposals. Adjusting for these
items, total revenues on an underlying (organic) basis were 18%
higher in the first quarter of 2003 compared with 2002.
Joe Plumeri, Chairman and Chief Executive Officer said, "Our
first quarter results reaffirm our business model and
acknowledge our sales culture and discipline. The majority of
our organic revenue growth was attributable to net new business
rather than higher premium rates. This illustrates that our
pipelines are robust, that our sales efforts are succeeding and
that clients endorse our client-advocate model which builds all
efforts around them and their unique business needs."
At March 31, 2003, total long-term debt was $499 million, down
35% from $767 million a year ago. Total stockholders' equity at
quarter end was approximately $970 million. The capitalization
ratio, or the ratio of total long-term debt to total long-term
debt and stockholders' equity, declined to 34% at quarter end
compared to 50% a year ago. There was approximately $93 million
of immediately available cash at March 31, 2003, providing
significant financial flexibility to support the cash needs of
the Company.
"During the first quarter, we made further debt reductions and
improved our capitalization ratio," said Plumeri. "This
progress, as well as our improved financial performance over the
past year, was recognized during the first quarter of 2003 as
one of the major rating agencies upgraded our debt ratings and
reaffirmed a positive outlook on the Company."
Commenting on the current insurance marketplace, Plumeri said,
"Insurance premium rates continue to rise in most lines and
geographies. These increases have moderated in some areas,
principally property related, as new capacity has allowed
placements to be completed at reasonable rates. Our global reach
and expertise means we are well-placed to solve our clients'
problems in this difficult marketplace."
Plumeri concluded, "We are confident in the outlook for future
growth at Willis, and are on course to exceed our goal to grow
adjusted net income per diluted share by 25% or better in 2003.
Our long-term goal is to grow these earnings by 15% or better
each year, in all market environments."
Willis Group Holdings is a leading global insurance broker,
developing and delivering professional insurance, reinsurance,
risk management, financial and human resource consulting and
actuarial services to corporations, public entities and
institutions around the world. With over 300 offices in about 80
countries, its global team of 13,000 associates serves clients
in 180 countries. Willis has particular expertise in serving the
needs of clients in such major industries as construction,
aerospace, marine and energy. Additional information on Willis
may be found on its web site http://www.willis.com
* * *
As previously reported, Standard & Poor's Ratings Services
assigned its preliminary 'BB+' senior unsecured debt rating, its
preliminary 'BB-' senior subordinated debt rating, and its
preliminary 'B+' preferred stock rating to Willis Group Holdings
Ltd.'s $500 million universal shelf offering registration, which
was filed on April 10, 2003, based on Willis's continued
improvement in operating performance in 2002.
"Willis has continued to pay down debt while improving operating
margins, interest coverage, and leverage ratios," noted Standard
& Poor's credit analyst Donovan Fraser. Willis has partially
been able to improve its top line opportunistically because of
higher commission income generated by increased premium rates as
a result of the continuing hard market. The company maintains a
well-established global market presence as the third-largest
insurance broker in the world. Partially offsetting these
strengths is the company's increasing concentration in insurance
brokerage operations, which increases the company's exposure to
the vagaries of the insurance underwriting cycle.
Standard & Poor's considers Willis's business position to be
strong, with more than $1.7 billion of total revenue in 2002.
Willis is the third-largest insurance broker in the world and
has a true global presence, as demonstrated by a team of about
13,000 associates worldwide. As of year-end 2002, its Global,
North American, and International business segments generated
51%, 34%, and 15% of revenue, respectively.
WORLD AIRWAYS: Secures Conditional Nod For $27MM Loan Guarantee
---------------------------------------------------------------
World Airways, Inc. (Nasdaq: WLDAC) announced that the Air
Transportation Stabilization Board (ATSB) has granted the
Company conditional approval for a $27 million federal loan
guarantee. The guaranteed amount represents 90 percent of a new
commercial loan facility. The proceeds from the facility will
be used to strengthen the Company's working capital position and
support its long-term plans.
According to Hollis Harris, World Airways chairman and CEO,
"This is an important milestone, which not only recognizes the
ATSB's endorsement of our business plan, but also the long-term
importance of World to the U.S. aviation system." Harris also
noted, "We applaud the professional and comprehensive approach
employed by the ATSB staff and their business partners as they
processed our application. We remain committed to work with the
ATSB to meet the approval conditions.
"We made strong progress in reducing costs in 2002, enabling our
profitability targets to be reached," added Harris. "Although
we have more work to do, I am now even more optimistic about
achieving our profitability goals for 2003 and beyond."
Utilizing a well-maintained fleet of international range,
widebody aircraft, World Airways has an enviable record of
safety, reliability and customer service spanning more than 55
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. For more information, visit the
Company's web site at http://www.worldair.com.
World Airways' September 30, 2002 balance sheet shows a total
shareholders' equity deficit of about $22 million.
XTO ENERGY: Completes Common Stock and Private Debt Offerings
-------------------------------------------------------------
XTO Energy Inc. (NYSE: XTO), whose corporate credit is rated at
'BB+' by Standard & Poor's, announced that it has completed its
previously announced public common stock offering. The offering
of 13,800,000 shares was priced at $18.75 per share. The
offering included 1.8 million shares priced at $18.75 pursuant
to the exercise of an over-allotment option granted to
underwriters.
As a result of the offering, common shares outstanding increased
to about 183.2 million. Members of the Company's management did
not sell shares in the offering. Lead underwriters for the
common stock offering were Lehman Brothers and Morgan Stanley.
XTO Energy has also completed its previously announced private
placement of $400 million (increased from $300 million) of
senior notes due 2013. The notes were sold at par with a coupon
of 6 1/4% pursuant to a 144A transaction to qualified
institutional buyers. The notes have not and will not be
registered under the Securities Act of 1933 and may not be
offered or sold in the United States absent registration or an
applicable exemption from registration requirements.
Proceeds of the offerings will be used to fund the recently
announced property acquisition from units of Williams (NYSE:
WMB) of Tulsa, Oklahoma, to redeem outstanding 8 3/4% senior
subordinated notes due 2009 and to repay bank debt. The Company
has notified the Trustee that it will redeem all outstanding 8
3/4% senior subordinated notes on May 19, 2003.
XTO Energy Inc. is a premier domestic natural gas producer
engaged in the acquisition, exploitation and development of
quality, long-lived gas and oil properties. The Company, whose
predecessor companies were established in 1986, completed its
initial public offering in May 1993. Its properties are
concentrated in Texas, New Mexico, Arkansas, Oklahoma, Kansas,
Wyoming, Colorado, Alaska and Louisiana.
YUM! BRANDS: Reports Better First-Quarter Financial Results
-----------------------------------------------------------
Yum! Brands, Inc. (NYSE:YUM) reported results for the first
quarter ending March 22, 2003.
Key points are the following:
-- International revenues grew 10%, and international operating
profit increased 15%, both in local currency terms. As
reported in U.S. dollars, international revenues increased
15%, and international operating profit increased 21%.
-- The total number of traditional international restaurants in
operation was 11,658, 8% higher than at the end of the first
quarter 2002. The acquisition of Long John Silver's and A&W
Restaurant brands added 2 percentage points to international
unit growth.
-- Over 2,000 multibrand restaurants are now operated worldwide,
up 30% from one year ago.
-- Franchise fees increased 9%, totaling $205 million in the
first quarter.
The company acquired, for $5 million, the Pasta Bravo brand, a
full line of quality affordable pastas to enable Pizza Hut
multibranding.
David C. Novak, Chairman and CEO, said, "The strength of our
worldwide restaurant brands portfolio, which includes a large
and growing international business, allowed us to achieve our
targeted first-quarter earnings results. We are pleased we were
able to meet our commitment within what is obviously a
challenging operating environment.
"Our international business grew system sales 8% and profits 15%
on a local currency basis. This helped us to offset performance
from our U.S. portfolio, which experienced a 2% decline in
system same-store sales and profits.
"Importantly, we remain focused on executing our three unique
strategies that make us anything but an ordinary restaurant
company.
-- Drive international growth - We and our international
franchise partners opened 211 new traditional international
restaurants in the first quarter. We expect to open more than
1,000 new traditional international restaurants systemwide
again this year.
-- Multibrand great brands - In the first quarter, the U.S.
system added 72 multibrand restaurants, including our first
Taco Bell with A&W, a new multibrand combination. We recently
opened our second Pizza Hut with Pasta Bravo multibrand
restaurant. With our recent acquisition of Pasta Bravo, we
now have opportunities to multibrand all our U.S. brands,
including Pizza Hut.
-- Improve restaurant operations and strengthen our core-brand
portfolio - We continued to make progress on operations with
a key measure, team-member turnover, now at an all-time low
of 100% for the first quarter of 2003."
In the first quarter for Yum! Brands' international business,
continued expansion of our key international brands -- KFC and
Pizza Hut -- was the primary driver of system sales and
operating profit growth. Company restaurant margins also
improved slightly in the first quarter. Lower food and paper
costs related to supply chain initiatives positively impacted
margin. The favorable impact of foreign currency conversion
added $5 million to operating profit for the first quarter.
The acquisition of Long John Silver's and A&W contributed
significantly to growth in U.S. system units and system sales
for the first quarter. The acquisition of these two brands
occurred during the second quarter of 2002. Excluding this
impact, system units were down slightly versus last year, and
system sales declined 2% for the first quarter.
In the first quarter, U.S. systemwide blended same-store sales
decreased approximately 2%. Estimated U.S. blended same-store
sales for franchise restaurants declined approximately 2%,
slightly better than company results, which declined 3%.
In the first quarter, U.S. restaurant margin was negatively
impacted by sales deleverage, unprofitable discounting, wage
inflation and inclusion of the acquisition of Long John Silver's
and A&W. The acquisition of Long John Silver's and A&W
negatively impacted margin by 0.3 percentage points.
Worldwide new-restaurant openings for the first quarter 2003
were driven by growth in new international restaurants from our
global brands: KFC and Pizza Hut. Key growth drivers were the
four high-growth, high-investment international markets --
China, Korea, the U.K., and Mexico with 90 new openings.
Franchise and joint-venture partners opened 62% of systemwide
new international restaurants. Versus the end of the first
quarter 2002, net traditional restaurant count increased 44% in
China, 17% in Korea, 9% in the U.K., and 8% in Mexico.
One point not reflected, which primarily affects U.S. net
restaurant-growth statistics, is the impact of multibranding on
our U.S. restaurant system. Multibrand conversions, while
increasing the sales and points of distribution of the second
brand added to a restaurant, result in no additional unit
counts. Though no additional unit counts are realized, these
conversions, on average, drive significant increases in same-
store sales and result in upgraded, new-image restaurants for
the U.S. business. Similarly, a newly opened multibrand
restaurant, while increasing sales and points of distribution of
two brands, results in just one additional unit count.
This discussion excludes changes in licensed-unit locations,
which are expected to have no material impact on the company's
overall profit performance in 2003. License locations are
typically nontraditional sites, such as airports, that normally
have substantially lower average unit volumes than traditional
restaurant locations.
In the first quarter, 72 gross multibrand restaurants were added
in the U.S., and two internationally. In the U.S., company and
franchise additions were 40 and 32 respectively. For information
purposes, approximately 50% of the U.S. multibrand additions are
expected to be conversions of existing single-brand restaurants,
and 50% are expected to be new-restaurant openings for full year
2003.
For the first quarter, the acquisition of Long John Silver's and
A&W contributed 6 percentage points of franchise restaurant net
growth and 3 percentage points of growth in franchise fees.
Base-business growth in franchise fees was driven by net new-
restaurant development. The favorable impact from foreign
currency conversion added 2 percentage points of franchise-fee
growth in the first quarter.
Total cash generated of $152 million for the first quarter
included $11 million of sales of property, plant and equipment,
$10 million of proceeds from employee stock-option exercises and
$2 million of refranchising proceeds.
SECOND-QUARTER 2003 OUTLOOK
The company is comfortable with the current consensus estimate
of $0.46 in reported EPS. This is an increase of $0.03 compared
to last year's performance, prior to a gain of $0.02 from
special items in 2002.
Projected factors contributing to the company's EPS expectations
are:
-- International system-sales growth of 5% to 6% prior to
foreign currency conversion, or 11% to 12% after conversion
to U.S. dollars. Year-over-year net growth in international
traditional restaurants of +5% to +6% will be the primary
driver.
-- Based on current foreign currency rates, the company expects
a benefit of $4 to $5 million from foreign currency
conversion on operating profit for the second quarter. The
Australian dollar, British pound sterling, Canadian dollar,
Chinese renminbi, Japanese yen, Korean won, and Mexican peso
are important currencies in the company's international
business.
-- U.S. blended same-store sales for company restaurants, up
approximately 2%.
-- Worldwide company restaurant margin is expected to be down
approximately 0.7 percentage points from second quarter last
year, including the impact of the Long John Silver's and A&W
acquisition. Long John Silver's and A&W will negatively
impact margin approximately 0.2 percentage points.
-- General and administrative expenses flat in U.S. dollar terms
versus last year, down 5% versus last year excluding the Long
John Silver's and A&W acquisition.
-- Interest expense up $8 to $9 million versus last year, or
down slightly versus last year, excluding the Long John
Silver's and A&W acquisition impact.
-- A slight loss from refranchising activity versus a slight
gain last year.
-- Assumes no net special items.
-- An operating profit tax rate targeted at 31% to 32%, slightly
better than last year.
ANNUAL OUTLOOK
The company expects earnings per share to grow at least 10% each
year with the continued execution of its three key strategies:
(1) drive international growth; (2) multibrand great brands; and
(3) differentiate our core-brand portfolio. For 2003, Yum!
Brands expects to earn at least $2.00 on a reported EPS basis.
This is at least 10% growth versus last year's $1.82, prior to
special items. Net special items are currently not expected to
be material for the full year 2003.
For 2003, the company expects worldwide revenue growth of 7% to
8% (including 2 percentage points from the favorable impact of
the Long John Silver's and A&W acquisition).
In several markets around the world, including Hong Kong,
Singapore, Taiwan, Thailand and certain sections of China, an
illness, SARS (Severe Acute Respiratory Syndrome), has impacted
overall retail sales trends and the company's sales trends.
Based on information currently available, the company believes
that the likely effect of SARS outbreaks in these markets is
reflected in the company's current annual outlook noted above.
The company currently does not expect that the SARS outbreak
will affect the entire country of China. Hypothetically, if SARS
were to impact the entire country of China for approximately two
to three months with sales declines in the range of 20%, full-
year EPS results for the company would be impacted by
approximately three to four cents. Based on current trends in
the total Yum! portfolio, contingencies currently available
would allow the company to offset this hypothetical shortfall
and maintain the $2.00 per share earnings estimate for 2003. As
always, the company will continue to update shareholders each
four-week period on current sales trends worldwide.
Effective December 29, 2002, the company adopted SFAS 143,
"Accounting for Asset Retirement Obligations" and recorded a
cumulative effect adjustment of $2 million, or $1 million after
tax, in the first quarter. This cumulative effect adjustment did
not materially affect our reported EPS.
PERIOD 4 SALES
Period 4 estimated international system sales increased 5% prior
to foreign currency conversion or 12% after conversion to U.S.
dollars. Estimated U.S. blended same-store sales at company
restaurants increased 1% during the four-week period ended April
19, 2003 (Period 4).
The timing of the Chinese New Year in 2003 negatively impacted
international Period 4 sales results by approximately 1
percentage point versus 2002.
The timing of the Easter holiday in 2003 benefited Taco Bell and
Pizza Hut Period 4 results by approximately 1 percentage point
versus 2002.
Sales results for Period 5 (the four-week period ending May 17,
2003), are scheduled to be released May 22, 2003.
U.S. same-store sales include only company restaurants that have
been open one year or more. U.S. blended same-store sales
include KFC, Pizza Hut, and Taco Bell company-owned restaurants
only. U.S. same-store sales for Long John Silver's and A&W are
not included. U.S. franchise and system same-store sales results
are reported quarterly within the company's earnings release.
International system sales include the total of sales from over
11,000 company, franchise, license, and joint-venture
restaurants in over 100 countries and territories outside the
United States. The international business period close is one
period, or one month, prior to the company's period-end date to
facilitate consolidated reporting.
Yum! Brands, Inc., based in Louisville, Kentucky, is the world's
largest restaurant company in terms of system units with nearly
33,000 restaurants in more than 100 countries and territories.
Four of the company's restaurant brands --KFC, Pizza Hut, Taco
Bell and Long John Silver's-- are the global leaders of the
chicken, pizza, Mexican-style food and quick-service seafood
categories respectively. Since 1919, A&W All-American Food has
been serving a signature frosty mug root beer float and all-
American pure-beef hamburgers and hot dogs, making it the
longest running quick-service franchise chain in America. Yum!
Brands is the worldwide leader in multibranding, which offers
consumers more choice and convenience at one restaurant location
from a combination of KFC, Taco Bell, Pizza Hut, A&W or Long
John Silver's brands. The company and its franchisees today
operate over 2,000 multibrand restaurants, generating nearly $2
billion in annual system sales. Outside the United States in
2002, the Yum! Brands' system opened about three new restaurants
each day of the year, making it one of the fastest growing
retailers in the world. In 2002, the company changed its name to
Yum! Brands, Inc., from Tricon Global Restaurants, Inc., to
reflect its expanding portfolio of brands and its ticker symbol
on the New York Stock Exchange.
* * *
As reported in the April 21, 2003 edition of the Troubled
Company Reporter, Standard & Poor's Ratings Services raised its
corporate credit and senior unsecured debt ratings on quick-
service restaurant operator Yum! Brands Inc. to 'BB+' from 'BB'
because of the significant improvement in the company's
operating performance and debt reduction since its spin-off from
PepsiCo in 1997. The current outlook is positive.
* BOOK REVIEW: A Legal History of Money in the United States,
1774-1970
-------------------------------------------------------------
Author: James Willard Hurst
Publisher: Beard Books
Paperback: US$34.95
Review by Gail Owens Hoelscher
Order your personal copy today and one for a colleague at
http://amazon.com/exec/obidos/ASIN/1587980983/internetbankrupt
This book chronicles the legal elements of the history of the
system of money in the United States from 1774 to 1970. It
originated as a series of lectures given by James Hurst at the
University of Nebraska in 1973. Mr. Hurst is quick to say that
he , as a historian of the law, took care in this book not to
make his own judgments on matters outside the law. Rather, he
conducted an exhaustive literature review of economics, economic
history, and banking to recount the development of law over the
operations of money. He attempted to "borrow the opinions of
qualified specialists outside the law in order to provide a
meaningful context in which to appraise what the law has done or
failed to do."
Mr. Hurst define money, for the purposes of this books, as "a
distinct institutional instrument employed primarily in
allocating scarce economic resources, mainly through government
and market processes," and not shorthand for economic, social,
or political power held through command of economic assets."
From the beginning, public and legal policy in the U.S. centered
on the definition of legitimate uses of both law affecting
money, and allocation of power over money among official
agencies, both federal and state. The foundations of monetary
policy were laid between 1774 and 1788. Initially, individual
state legislatures and the Continental Congress issued paper
currency in the form of bills of credit. The Constitutional
Convention later determined that ultimate control of the money
supply should be at the federal level. Other issues were not
clearly defined and were left to be determined by events.
The author describes how law was used to create and maintain a
system of money capable of servicing the flow of resource
allocations in an economy of broadly dispersed public and
private decision making. Law defined standard money units and
made those units acceptable for use in conducting transactions.
Over time, adjustment of the money supply was recognized as a
legitimate concern of law. Private banks were delegated
expansive monetary action powers throughout the 1900s and
private markets for gold and silver were allowed to affect the
money supply until 1933-34. Although the Federal Reserve Act
was not aimed clearly at managing money for goals of major
economic adjustment, it set precedents by devaluing the dollar
and restricting the use of gold.
Mr. Hurst devotes a large part of his book to key issues of
monetary policy involving the distribution of power over money
between the nation and the states, between legal and market
processes, and among major agencies of the government. Until
about 1860, all major branches of government shared in making
monetary policy, with states playing a large role. Between 1908
and 1970, monetary policy became firmly centralized at the
national level, and separation or powers questions arose between
the Federal Reserve Board, the White House (The Council of
Economic Advisors), and the Treasury.
The book was an enormous undertaking and its research
exhaustive. It includes 18 pages of sources cited and 90 pages
of footnotes. Each era of American legal history is treated
comprehensively. The book makes fascinating reading for those
interested in the cause and effect relationship between legal
processes and economic processes and t hose concerned with
public administration and the separation of powers.
James Willard Hurst (1910-1997) is widely regarded as the
grandfather of American legal history. He graduated from
Harvard Law School in 1935 and taught at the University of
Wisconsin-Madison for 44 years.
*********
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.
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