/raid1/www/Hosts/bankrupt/TCR_Public/030521.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, May 21, 2003, Vol. 7, No. 99
Headlines
ACTERNA CORP: Turns to Weil Gotshal for Bankruptcy Advice
ADELPHIA BUS.: Sprint Demands Payment of $5.4-Mil. Admin. Claim
ADELPHIA COMMS: Equity Panel Taps Aarons Co. for Expert Analysis
ALLEGIANCE TELECOM: Has Until July 15 to Complete Schedules
AMERICA WEST: Shareholders Re-Elect Four Directors
ASIA GLOBAL CROSSING: Panel Wants Exclusive Periods Terminated
ASSOCIATED BUSINESS: Assets Being Auctioned Tomorrow in SFO
BETA BRANDS: Names Daniel Colon, Jr., Newest Addition to Board
BUDGET GROUP: Demands Cendant & Cherokee Cough-Up ASPA Payments
CALPINE CORP: Closes $82-Million Contract Monetization with BPA
CASELLA WASTE: Acquires Vermont/New Hampshire Collection Company
CHAMPIONLYTE: New Management Team Cuts Per Share Losses By 400%
CHILDTIME LEARNING: Completes Rights Offering of 100,000 Units
CLAXSON INTERACTIVE: March Working Capital Deficit Reaches $14MM
CMS ENERGY: Will Webcast Shareholders Meeting May 23 at 10:30 AM
COMM 2000-FL3: S&P Cuts Ratings on 3 Note Classes to Low-B Level
COMPX INTERNATIONAL: Suspends Regular Quarterly Dividend Payment
CONSECO INC: Court Moves GE's Estimation Hearing Date to May 23
CONTINENTAL AIRLINES: Forges New Code-Sharing Pact with SkyWest
CROWN CASTLE: Declares Quarterly Preferred Stock Dividend
DAISYTEK INC: Employs Vinson & Elkins as Bankruptcy Attorneys
DEAN FOODS: Will Webcast Annual Meeting Tomorrow at 9:00 a.m.
DELTA AIR: Expands Codeshare Flights With South African Airways
DELTA AIR: Colombia Okays Codeshare Alliance with Alianza Summa
ELEC COMMS: Unable to File FY 2002 Financial Report on Time
ENCOMPASS SERVICES: URS Applies for Temporary Claim Allowance
ENRON CORP: Various Creditors Sell Claims Totaling $48.9 Million
ENRON: Enron Wind Storm's Voluntary Chapter 11 Case Summary
ENRON: ECT Merchant Case Summary & Largest Unsecured Creditor
ENRON: EnronOnline's Case Summary & 20 Largest Unsec. Creditors
ENRON: St. Charles' Case Summary & Largest Unsecured Creditor
ENRON: Calcasieu Development's Case Summary & Largest Creditor
ENRON: Calvert City Power Case Summary & 2 Largest Creditors
ENRON: Enron ACS's Voluntary Chapter 11 Case Summary
ENRON: LOA Inc.'s Voluntary Chapter 11 Case Summary
ENRON: Enron India LLC's Case Summary & 4 Unsecured Creditors
ENRON: Enron Int'l Inc.'s Case Summary & 4 Unsecured Creditors
ENRON: Enron Int'l Holdings' Voluntary Chapter 11 Case Summary
ENRON: Enron Middle East's Case Summary & 6 Unsecured Creditors
ENRON: Enron WarpSpeed's Case Summary & 2 Unsecured Creditors
ENRON: Modulus Technologies' Voluntary Chapter 11 Case Summary
ENRON: Enron Telecomms' Case Summary & 2 Unsecured Creditors
ENRON: DataSystems Group' Voluntary Chapter 11 Case Summary
ESSENTIAL THERAPEUTICS: Files Joint Chapter 11 Plan in Delaware
ESYLVAN: Operating Losses Cast Doubt on Ability to Continue Ops.
EVERGREEN: S&P Ups Junk Credit Rating to B after Refinancing
FEDERAL-MOGUL: Woos Court to Approve Champion Release Agreement
FIBERCORE INC: 2002 Net Working Capital Deficit Widens to $27MM
FLOW INTL: Sells Hydrodynamic Cutting Services Unit to UWG Group
FRONTIER ESCROW: S&P Rates $220-Mil. Senior Unsecured Notes at B
GLOBAL CROSSING: STT/Hutchison Purchase Agreement Amendments
GLOBAL WATER: UST Schedules Section 341(a) Meeting on June 17
GROUP MANAGEMENT: Exits Chapter 11 Reorganization
HIGH SPEED ACCESS: Will Make Cash Distribution on May 30
HUNTSMAN: Planned $250MM Sr. Unsec. Notes Get S&P's B- Rating
IMC GLOBAL: Elects Bernard Michel to Board of Directors
JP MORGAN: Fitch Cuts Series 2001-C1 Class N Notes Rating to CCC
KLEINERT'S: Alvarez & Marsal Engaged to Provide Financial Advice
LASERSIGHT INC.: Needs to Secure Cash Now or File for Bankruptcy
LEAP WIRELESS: Court Sets June 13 General Claims Bar Date
LERNOUT & HAUSPIE: Committee's Supplement to First Amended Plan
LTV CORP: Admin. Creditors' Panel Gets Okay to Hire Reed Smith
METROMEDIA: NY Mercantile Exchange Taps Private Network Service
NORAMPAC INC: S&P Assigns BB+ Rating to $250MM Unsecured Notes
NORTHWEST AIRLINES: Proposes Exchange Offer for Unsecured Notes
NRG ENERGY: Court Allows Continued Use of Cash Management System
NRG ENERGY: GE Serves as Lead Agent for $250MM DIP Financing
OWENS CORNING: Court Extends Solicitation Period Until Nov. 30
PACIFIC GAS: Reorganization Plan Addresses $23B Remaining Claims
PAC-WEST TELECOMM: Appeals Nasdaq Delisting Determination
PIONEER-STANDARD: Finalizes Distribution Agreement with CNT
PLAINS EXPLORATION: S&P Assigns B Rating to $75-Mil Senior Notes
PROVIDIAN FINANCIAL: Offering Up to $150 Mil. Convertible Notes
QUALITY DISTRIBUTION: S&P Gives Stable Outlook to Low-B Ratings
QWEST COMMS: Wins Network Services Contract From Texas State
REGAL CINEMAS: S&P Rates New Series D Term Loan Addition at BB-
RELIANCE: Deloitte & Touche Unable to Complete Audit on Time
REPTRON ELECTRONICS: Selling Distribution Unit to Jaco for $10M+
RUE21 INC: Emerges From Chapter 11 Bankruptcy
SALTON: Appoints S&P Executive Steve Oyer to Board of Directors
SPACEHAB: Says Liquidity Still Enough to Fund Near-Term Ops.
SUPERIOR TELECOM: Obtains Final Nod on $100MM DIP Financing
TEMBEC: Will Temporarily Suspend Ops. at Three Canadian Sawmills
TEXAS IND: Fair Business Position Prompts S&P's Low-B Ratings
TRANSMONTAIGNE INC: S&P Rates Corp. Credit & Sr. Notes at BB/B+
TWINLAB: S&P Further Junks Rating over Expected Covenant Breach
UNITED AIRLINES: Retaining Bain & Co. as Strategic Consultants
UNITED AIR LINES: Special Facility Revenue Bond Rating Cut to D
WEIRTON STEEL: Seeks Access to Lenders' Cash Collateral
WEIRTON STEEL: S&P Hatchets Ratings to D After Chapter 11 Filing
WILLIAMS: Intends Private Placement of $275MM Convertible Debt
WILLIAMS: Takes Actions to Redeem and Repay Buffett Investments
WILSHIRE CREDIT: Fitch Affirms Ratings on Three Note Issues
WORLDCOM/MCI: Settles SEC Fraud Charges for $500 Million
* S.D.N.Y. Soliciting Local Rule Comments Until June 30
* Meetings, Conferences and Seminars
*********
ACTERNA CORP: Turns to Weil Gotshal for Bankruptcy Advice
---------------------------------------------------------
Acterna Corp. and its debtor-affiliates need bankruptcy
attorneys to prosecute their Chapter 11 cases. Accordingly, the
Debtors ask the Court for permission to employ Weil, Gotshal &
Manges LLP as their attorneys to perform the extensive legal
services needed during their Chapter 11 cases.
In particular, the Debtors need Weil Gotshal to:
(a) take all necessary or appropriate actions to protect and
preserve their estates, including the prosecution of
actions on their behalf, the defense of any actions
commenced against them, the negotiation of disputes
involving them and the preparation of objections to
claims filed against their estates;
(b) prepare on their behalf, all necessary or appropriate
motions, applications, answers, orders, reports and
other papers in connection with the administration of
their estates;
(c) take all necessary or appropriate actions in connection
with a reorganization plan and related disclosure
statement and all related documents and further actions
may be required in connection with the administration of
their estates;
(d) render legal advice and services in connection with
general corporate matters; and
(e) perform all other necessary or appropriate legal
services in connection with their Chapter 11 cases.
The Debtors have selected Weil Gotshal because of the firm's
extensive general experience and knowledge, and in particular,
its recognized expertise in the field of debtors' protection,
creditors' rights and business reorganizations under Chapter 11
of the Bankruptcy Code. The firm has been actively involved in
major Chapter 11 cases, including representing the debtors in
WorldCom, Inc., Adelphia Business Solutions, Inc., Global
Crossing Ltd., Enron Corp., Bethlehem Steel Corporation, Rhythms
NetConnections Inc., Armstrong Worldwide Industries, Sunbeam
Corporation, Ames Department Stores, Inc., among others.
Acterna Chief Financial Officer John D. Ratliff tells the Court
that Weil Gotshal members Michael F. Walsh, Esq., and Paul M.
Basta, Esq., and associates Timothy Graulinch and Shlomo
Azarbad, who will be primarily responsible in representing the
Debtors, are members in good standing of, among others, the Bar
of the State of New York and the United States District Court
for the Southern District of New York. Christopher Mallon, Tom
Oliver Schorling and Roland Montford, members of Weil Gotshal
offices in London, United Kingdom, Frankfurt, Germany, and
Paris, France, will provide international expertise with respect
to matters pertaining to the Debtors' operations in foreign
jurisdictions.
Mr. Ratliff relates that the firm has become familiar with the
Debtors' business, affairs, and capital structure. The Debtors
engaged Weil Gotshal in October 2002 to represent and advise
them in connection with a potential restructuring of their
financial obligations. At that time, Weil Gotshal also began
advising the Debtors on various restructuring options, including
commencement of these Chapter 11 cases.
"Weil Gotshal has the necessary background to deal effectively
with many of the potential legal issues and problems that may
arise in the context of the Debtors' Chapter 11 cases," Mr.
Ratliff says.
The Debtors propose to compensate Weil Gotshal for its services
in accordance with the firm's current customary hourly rates:
$425 - 700 members and counsel
250 - 435 associates
125 - 215 paraprofessionals
Concurrent with the prepetition engagement, Mr. Ratliff
discloses that the Debtors have paid Weil Gotshal $1,525,000 for
its services. The Debtors also paid Weil Gotshal $413,000 as a
retainer for the professional services to be performed and
expenses in connection with the prosecution of these Chapter 11
cases.
Weil Gotshal has in the past represented, currently represents
and may in the future represent entities that are claimants or
interest holders of the Debtors in matters unrelated to their
pending Chapter 11 cases. Nevertheless, Paul M. Basta, Esq.,
assures the Court that Weil Gotshal does not hold or represent
an interest adverse to the Debtors' estates. Weil Gotshal is a
"disinterested person" as the term is defined in Section 101(14)
of the Bankruptcy Code. (Acterna Bankruptcy News, Issue No. 2;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ADELPHIA BUS.: Sprint Demands Payment of $5.4-Mil. Admin. Claim
---------------------------------------------------------------
Sprint Communications Company L.P. asks the Court to compel the
Adelphia Business Solutions, Inc., and its debtor-affiliates to
pay its' Administrative Expense Claims, pursuant to Sections
503(a) and (b) of the Bankruptcy Code.
Gary I. Selinger, Esq., at Salomon Green & Ostrow, P.C., in New
York, informs the Court that Sprint entered into prepetition
contracts with ABIZ concerning the delivery of long distance
telecommunications services, purchase of other
telecommunications services, and local telephone exchange
services. Many of these contracts or their related billing
accounts referred to "Adelphia," or used other names that did
not specify a particular legal entity. The contracts do not
permit continuation of the Services if only partial payment is
made.
The Debtors were formerly affiliated with one another, prior to
a spin-off shortly before the ABIZ Petition Date. At least
prior to the fall of 2002, and in any event after the ACOM
Petition Date, ABIZ handled the billing relationships with
Sprint and billed ACOM under a management agreement. The ABIZ
Debtors and ACOM now claim that they entered into one or more
prepetition contracts or separate billing accounts with Sprint
for Services.
Mr. Selinger relates that ABIZ, as debtors-in-possession,
continued to receive and use the Services after the ABIZ
Petition Date. The Debtors now contend that the ABIZ and ACOM
received a portion of the Services delivered to ABIZ's account.
From and after the ABIZ Petition Date, Sprint requested that the
Debtors identify any distinct usage by then non-debtor entities
as users of these accounts or portions of accounts under the
"Adelphia" name. However, the Debtors failed either to
segregate or separately identify this supposed usage by non-
debtor entities before the fall of 2002.
Sprint continued to provide the Services despite existing non-
payment defaults when faced with several factors -- including:
(i) Section 362's automatic stay;
(ii) Section 366's provision for continued utility service,
(iii) this Court's initial orders concerning adequate
assurance to utilities in these cases; and
(iv) the Court's decision of June 25, 2002 in the ABIZ
cases.
These defaults would have otherwise entitled and enabled Sprint
to disconnect the Services and terminate its continued unsecured
credit risk to entities which remained non-debtors after the
ABIZ Petition Date. The Debtors now refuse to pay the charges
incurred between the ABIZ Petition Date and the ACOM Petition
Date.
After resolving most of the setoff claims ABIZ had previously
asserted, and having obtained payment of a substantial portion
of the net amounts owed by ABIZ for service after the ACOM
Petition Date, on January 16, 2003, Sprint gave notice of
postpetition default to the Debtors demanding payment for the
amounts remaining unpaid since the ABIZ Petition Date.
Mr. Selinger states that the Debtors refused to pay the charges
incurred during the Interpetition Period. According to the
Debtors' admissions, these charges total $5,419,496.59.
Notwithstanding their refusal to pay these substantial charges,
the Debtors have continued to receive and use the Services under
these contracts and accounts in furtherance of their respective
reorganization efforts.
Responding to Sprint's demand on Account No. 922117426, the
Debtors asserted that ACOM owed $1,681,753.82 as a direct
contractual obligation to Sprint. The Debtors similarly
responded -- as to Account No. 922836824 -- that $8,146.34
thereof was the sole responsibility of ACOM. Finally, the
Debtors also asserted that Account No. 921845039, and the
$23,373.84 incurred, was a direct obligation only of ACOM.
Since those charges, totaling $1,713,274.00, were incurred
before the ACOM Petition Date, the Debtors assert that they are
not administrative expenses.
Mr. Selinger adds that ABIZ further claimed that the two
remaining accounts at issue, 921317704 and 921690801, were
"intermingled circuits that were for the benefit of the ACOM
Debtors and ABIZ Debtors." ABIZ asserted that ACOM was
obligated to pay most of the sums owed on these "intermingled"
accounts. ACOM disagreed with ABIZ, and asserted that Account
704 was the subject of a direct contract with Sprint.
Similarly, ABIZ claims that they received and used a portion of
the Services under Account 704 prior to June 18, 2002, i.e.,
before their filing date. Specifically, with respect to Account
704, ABIZ asserted that they were obligated for $500,971.61 of
the amount due before June 18, 2002, as a result of ABIZ's
internal allocation of the charges among the ABIZ entities.
ABIZ states that ACOM owed an additional $120,476 for the
Interpetition Period. Conversely, ACOM took the position that
$1,218,951.01 was their obligation in that period. For present
purposes, Sprint submits that the Debtors allege that
$1,218,951.01 constitutes charges under Account 704, and refuse
to pay these charges, contending that they were incurred during
the Interpetition Period.
Mr. Selinger reports that the largest single account remaining
at issue is Account 801. The Debtors assert that $600,920.24 of
the balance was properly allocated to ACOM and, since it
predated the ACOM Petition Date, is "prepetition" and not
presently payable. ABIZ also states that $1,886,351.34 of the
amount due on Account 801 was similarly "prepetition," although
ABIZ itself allocated the usage of these services to the ABIZ
Debtors after the ABIZ Petition Date. The unpaid charges for
Account 801 total $2,487,271.58, according to the Debtors.
ACOM also argues that any liability to Sprint for these charges
must be set off against charges owed by Sprint to ACOM. Exhibit
B of a letter dated March 6, 2003, from ACOM's billing
consultant claims $912,742.02 of charges by ACOM entities to
Sprint entities for the Interpetition Period. However, no more
than $192,611.21 of this sum is properly allocated to services
provided by Sprint; accordingly, ACOM cannot maintain mutuality
of obligation for more than $192,611.21. Moreover, all charges
reflected on the chart suffer from the same erroneous and
inflated calculations which ABIZ originally made, and
subsequently corrected, in resolving its post-ACOM Petition Date
mutual accounts with Sprint.
Mr. Selinger notes that the Debtors continue to refuse to pay
for the Services delivered during this Interpetition Period.
The charges postdate the ABIZ Petition Date and are thus
postpetition as to some of the ABIZ entities. Sprint charged
these accounts to ABIZ, and Sprint is entitled to recover those
postpetition charges. Even if the Court finds that a Service
was properly billable only to an ABIZ Debtor or ACOM, the
charges are still entitled to administrative expense treatment,
as the ABIZ Debtors received "benefit" from the Services.
Mr. Selinger contends that the Debtors failed to clarify and
segregate those Services now asserted to be so severally
chargeable to ABIZ or ACOM when they had the chance to do so,
after the ABIZ Petition Date, and at a time when Sprint had the
power to disconnect Services to these entities as non-debtors.
Given the Debtors' previous failure to segregate the
responsibility for the Services, fundamental fairness requires
that Sprint be paid for the Services.
Moreover, the Services underlying these charges conferred
benefit on all Debtors: they were necessary to preserve
services critical to, and arose from, the continued business and
reorganization of the ABIZ and ACOM entities. Postpetition
continuation of these Services was sufficiently valuable to
these estates to warrant administrative expense status for their
payment.
Mr. Selinger asserts that this Court's equitable power
authorizes payment of these charges, even if they are determined
to be "prepetition." That some of the Services predate the
filing dates for ACOM, or for the ABIZ Debtors, is not by itself
dispositive. ACOM cannot assert setoff to block payment to
Sprint, because the charges by ACOM lack the requisite mutuality
between the billing ACOM entity and the billing Sprint entity
from which ACOM seeks to exercise setoff. (Adelphia Bankruptcy
News, Issue No. 34; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
ADELPHIA COMMS: Equity Panel Taps Aarons Co. for Expert Analysis
----------------------------------------------------------------
Peter D. Morgenstern, Esq., at Bragar Wexler Eagel & Morgenstern
LLP, in New York, reminds the Court that on January 9, 2003, the
Official Committee of Equity Holders filed an adversary
proceeding and motion for an order requiring Adelphia
Communications to hold an annual meeting of its shareholders as
soon as practicable, and to provide notice of this meeting in
accordance with ACOM's bylaws, and enjoining the Rigas
Defendants, as well as their designees, nominees, or insider-
transferees including, without limitation, the Special Committee
of ACOM's board of directors from voting any of the Rigas Shares
pending further order of this Court.
Greenhill Will Testify
that Adelphia is Insolvent
The Debtors and the Creditors' Committee both have indicated
that they intend to oppose the relief sought by the Equity
Committee in the Corporate Governance Motion. In this regard,
on February 24, 2003, Greenhill & Co., LLC, financial advisors
to the Creditors' Committee, produced an expert witness report
with respect to, among other things, the purported valuation of
the Debtors. Apparently the Creditors' Committee intends to
argue that the Debtors are insolvent and that the alleged
insolvency has some bearing on the relief sought by the Equity
Committee in the Corporate Governance Motion.
The Equity Committee Thinks Otherwise
In connection with the challenge by the Creditors' Committee to
the Debtors' solvency, the Equity Committee has sought the
advice, assistance, and expert analysis of:
(a) Mr. Aarons, President of Aarons Co. and a highly
regarded investment banker and consultant with
longstanding experience in the financial and banking
industries; and
(b) Professor Miller, a New York University Law School
professor with extensive knowledge and experience
concerning all aspects of banking and finance law and
regulation.
The Equity Committee desires to retain and employ Aarons Co. and
Prof. Miller, to continue to assist it and its special counsel,
Bragar Wexler, and to provide expert analysis and testimony
concerning the value of the potential causes of action against
the Co-Borrowing Lenders and of the existing suit against its
former accountants, Deloitte & Touche, LLP and how this value
impacts the Debtors' overall solvency.
The Equity Committee Eyes
Deloitte as Recovery Source
By this application, the Equity Committee seeks entry of an
order, pursuant to Sections 328(a), and 1103 of the Bankruptcy
Code, Rule 2014 of the Federal Rules of Bankruptcy Procedure,
Local Bankruptcy Rule 2014-1, and the terms of the respective
engagement letters, authorizing the employment and retention of
Aarons Co. and Prof. Miller to provide expert analysis and
testimony, with respect to the value of Debtors' potential
claims against the Co-Borrowing Lenders and existing suit
against Deloitte.
Mr. Morgenstern tells the Court that the unique task of valuing
the Debtors' claims against the Co-Borrowing Lenders and
Deloitte requires the use of two experts. The relevant facts in
support of these claims are buried in a quagmire of syndicated
loan transactions, the Adelphia Cash Management System, as well
as securities trades between Adelphia and Rigas Entities. The
Equity Committee has required and may again require Aarons Co.'s
specific expertise in syndicated loans, banking and other
financial aspects to decipher these multifaceted transactions.
Once Aarons Co. has provided a breakdown of the complex
background, the Equity Committee then required and may again
require legal expertise to determine what causes of action the
illuminated facts support, and, more importantly, to place a
value on these claims. Professor Miller is uniquely qualified
to perform this valuation.
Moreover, Mr. Morgenstern believes that Aarons Co. and Miller
are necessary additions to the experts already retained by the
Equity Committee. Saybrook Restructuring Advisors, LLC provides
the Equity Committee expertise in valuing Debtors' businesses.
Saybrook has been retained by the Equity Committee to provide it
with general financial advisory services in connection with the
Debtors' bankruptcy. Kagan has specific expertise in the media
and cable industries and has been requested to address valuation
issues and financial analyses specific to those areas.
In contrast, Mr. Morgenstern points out that the retention of
Aarons Co. focuses on financial transactions associated with
syndicated loans. Aarons Co. has in-depth expertise and
understanding regarding the complexities and the norms within
this sector of finance. Moreover, Aarons Co. is expressly going
to limit its analyses the financial facts required to valuate
Debtors' potential claims against the Co-Borrowing Lenders and
current claims against Deloitte; which are not areas which
Saybrook or Kagan have been retained to investigate. Professor
Miller will similarly provide the Committee with expertise
outside of the scope of either the Saybrook or Kagan retentions.
The Committee will utilize Professor Miller's extensive legal
expertise to value the Debtors' potential claims against the Co-
Borrowing Lenders and current claims against Deloitte; an area
beyond the business valuations to be provided by Saybrook and
Kagan.
According to Mr. Morgenstern, Aarons Co. performs advisory,
investment banking, and management services for principal groups
and operating companies. Mr. Orville G. Aarons, President of
Aarons Co., who will be performing these services, has served as
President of Aarons Co. since 1992. He also has extensive
experience in the banking industry including serving as Senior
Vice President, Division Head, Special Loan Division and
Division Head, Corporate Finance Group for the National
Westminster Bank USA, where he, among other things:
-- participated in numerous loan syndications;
-- restructured a portfolio of distressed loans to companies
ranging in size from the lower end of the middle market
to the Fortune 1000; and
-- negotiated and structured merger and acquisition and
leveraged buyout transactions.
Mr. Aarons received his MBA from the University of Chicago.
Additionally, Mr. Aarons has served as Vice President and Chief
Financial Officer, and member of the Board of Directors, of the
Alexander Doll Company, Inc., as well as Vice President of
International Operations/Financial Advisor for Houbigant, Inc.
Among other accomplishments, in his position with Houbigant, he
assisted in negotiations with European and domestic financial
institutions and creditors and assisted in the development of a
plan to generate cash through asset sales.
Mr. Morgestern reports that Professor Miller is the Stuyvesant
P. and William T. III Comfort Professor of Law at New York
University Law School. From 1994 to the present, he also served
as the Director, NYU Law School's Center for the Study of
Central Banks. From 1983-1995, Mr. Miller was a professor at
the University of Chicago Law School, including among other
accomplishments, serving as the Director of the Program in Law
and Economics from 1994-1995. He has also served as an Attorney
Advisor for the Office of Legal Counsel at the United States
Department of Justice and has clerked for Hon. Byron R. White,
United States Supreme Court and Hon. Carl McGowan, U.S. Court of
Appeals, District of Columbia. Mr. Miller is a graduate of
Columbia University Law School where he served as Editor-in-
Chief of the Law Review as well as a magna cum laude graduate of
Princeton University. Additionally, Professor Miller has edited
or written tens of books and hundreds of articles on Mergers and
Acquisitions; Banking Law and Regulation; Legal Ethics/Legal
Profession; Civil Procedure; Corporate and Securities Law;
Constitutional Law; Financial Institutions; Legal History;
Jurisprudence and Ancient Law; and Law and Society.
$340 and $525 Per Hour
Subject to this Court's approval, Aarons Co. will seek
compensation for Mr. Aarons' services at his standard hourly
rate of $340 and Professor Miller will seek compensation for his
services at his standard hourly rate of $525. The rates are
based on Aarons' and Miller's respective skill, knowledge and
level of experience, and are subject to periodic adjustment.
Additionally, Aarons Co. and Miller will seek reimbursement of
out-of pocket expenses incurred in performing services related
their engagement.
To the extent that Aarons Co. and Miller provide services to
Bragar Wexler in connection with litigation matters, Mr.
Morgenstern informs the Court that their work will be performed
at the sole direction of Bragar Wexler and will be solely and
exclusively for the purpose of assisting Bragar Wexler in its
representation of the Equity Committee. As a result, Aarons
Co.'s and Miller's work may be of fundamental importance in the
formation of mental impressions and legal theories by Bragar
Wexler, which may be used in counseling the Equity Committee and
in the representation of the Equity Committee. Accordingly, in
order for Bragar Wexler to carry out its responsibilities, it
may be necessary for Bargar Wexler to disclose its legal
analysis as well as other privileged information and attorney
work product. Thus, it is critical that the Court order that the
status of any writings, analysis, communications, and mental
impressions formed, made, produced, or created by Aarons Co. and
Miller in connection with their assistance to Bragar Wexler in
the litigation be deemed to be protected from discovery, if at
all, to the same extent that the law would provide if Aarons Co.
and Miller had been employed directly by Bragar Wexler. In this
regard, the Equity Committee seeks an order that provides that
the confidential and privileged status of the Aarons and Miller
Litigation Work Product will not be affected by the fact Aarons
Co. and Miller have been retained by the Equity Committee rather
than by Bragar Wexler.
Mr. Morgenstern assures the Court that neither Mr. Aarons,
Aarons Co. nor Professor Miller have represented and nor have
they had a relationship with:
(i) the Debtors;
(ii) their major creditors or equity security holders; or
(iii) any other significant parties-in- interest in these
cases, in any matter relating to these cases.
In addition, neither Mr. Aarons, Aarons Co. nor Professor
Miller:
(a) have any connection with the Debtors, their major
creditors and equity holders, or any party-in-interest,
or their respective attorneys or
(b) hold or represent an interest adverse to the estates.
Moreover, both Mr. Aarons and Professor Miller are
"disinterested persons" within the meaning of Section 101(14) of
the Bankruptcy Code. (Adelphia Bankruptcy News, Issue No. 34;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ALLEGIANCE TELECOM: Has Until July 15 to Complete Schedules
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
gave Allegiance Telecom, Inc., and its debtor-affiliates an
extension to file their schedules of assets and liabilities,
statements of financial affairs and lists of executory contracts
and unexpired leases required under 11 U.S.C. Sec. 521(1). The
Debtors have until July 15, 2003, to file their Schedules of
Assets and Liabilities and Statement of Financial Affairs.
Allegiance Telecom, Inc., is a holding company with subsidiaries
operating in 36 major metropolitan areas in the U.S. who provide
a package of telecommunications services, including local, long
distance, international calling, high-speed data transmission
and Internet services and customer premise communications
equipment sales and maintenance services. The Debtors filed for
chapter 11 protection on May 14, 2003 (Bankr. S.D.N.Y. Case No.
03-13057). Jonathan S. Henes, Esq., and Matthew Allen Cantor,
Esq., at Kirkland & Ellis represents the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $1,441,218,000 in total assets and
$1,397,494,000 in total debts.
AMERICA WEST: Shareholders Re-Elect Four Directors
--------------------------------------------------
Shareholders of America West Holdings Corporation (NYSE: AWA),
parent company of low-fare America West Airlines, Inc., and The
Leisure Company, re-elected four directors at the company's
annual meeting in San Francisco.
Herbert M. Baum, John L. Goolsby, Richard P. Schifter and J.
Steven Whisler were re-elected for a three-year term expiring at
the company's 2006 annual meeting.
Including these individuals, the America West Holdings board of
directors consists of 10 members elected in three classes. The
six directors whose terms continue are Robert J. Miller, W.
Douglas Parker, John F. Tierney, Walter T. Klenz, Richard C.
Kraemer and Denise M. O'Leary.
There were no shareholder proposals presented at the annual
meeting.
America West Holdings Corporation is an aviation and travel
services company. Wholly owned subsidiary America West Airlines
is the nation's eighth largest 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.
DebtTraders reports that America West Airlines, Inc.'s 7.840%
ETCs due 2010 (AWA10USR1) are trading at 45 cents-on-the-dollar.
See http://www.debttraders.com/price.cfm?dt_sec_ticker=AWA10USR1
for real-time bond pricing.
ASIA GLOBAL CROSSING: Panel Wants Exclusive Periods Terminated
--------------------------------------------------------------
Evan D. Flaschen, Esq., at Bingham McCutchen LLP, in Hartford,
Connecticut, points out that Asia Global Crossing Ltd. and its
debtor-affiliates' estates consist of nothing more than a pot of
cash and various claims to that cash. The AGX Debtors, who are
mere corporate shells with no ongoing business operations and
virtually no employees, should therefore not have the exclusive
right to file a plan. In response, the Committee has been
reasonable, perhaps even too reasonable. The Committee has
offered to serve as co-proponents of a liquidating plan with the
AGX Debtors rather than insist that the Committee alone file and
prosecute a plan. The AGX Debtors have refused to agree to
this, instead holding the Committee captive to an agreement on
all terms of a plan before deciding whether to "permit" the
Committee to serve as co-proponents.
Mr. Flaschen tells the Court that the Official Committee of
Unsecured Creditors wants to ensure that the sole stakeholders
in these cases, namely the unsecured creditors, are not held
hostage to the Debtors' parochial views on plan and disclosure
statement content, timing, hearing schedule, and confirmation
schedule. The Debtors' offer to "consider" the Committee's input
is simply insufficient to protect the creditors' interests. For
all intents and purposes, the Debtors should be calling none of
the shots; in sum, there are no "Debtors" left, just a pot of
cash awaiting distribution.
Accordingly, the Committee seeks the immediate termination of
the exclusive periods, pursuant to Section 1121(d) of the
Bankruptcy Code, so that competing plans may be considered.
Alternatively, the Committee requests a modification of
exclusivity to permit the Committee alone to file a plan of
reorganization. Additionally, the Committee requests that, if
the Court orders the termination or modification of the
exclusive filing periods, the Committee's plan be considered on
the same timeframe as the Debtors' plan in terms of a disclosure
statement hearing, plan solicitation, and plan confirmation.
Mr. Flaschen believes that these Chapter 11 Cases can be easily
resolved with a straightforward, liquidating plan. Terminating
the Exclusive Periods will not disrupt any of the Debtors'
businesses because the Debtors are mere shell companies after
the Asia Netcom Transaction. Moreover, the vast majority of the
Debtors' remaining debt resides with a small number of
creditors. Accordingly, these cases are neither large nor
complex, and the Debtors can point to no ongoing business that
could be disrupted by terminating the Exclusive Periods.
Moreover, Mr. Flaschen assures the Court that there would be no
delay as the Committee would be in a position to file a plan of
reorganization within a week of an order terminating the
Exclusive Periods. The Creditors' Plan would provide for the
Debtors' immediate dissolution, as well as a liquidating
trustee's control over the distribution process. As the only
parties-in-interest, the creditors have a greater incentive than
the Debtors to expedite resolution of claims, distribution of
the Cash Assets, and the closing of the Chapter 11 Cases.
Debtors Object
Richard F. Casher, Esq., at Kasowitz Benson Torres & Friedman
LLP, in New York, tells the Court that the Committee's request
is extraordinary and unprecedented. The Committee points to no
reported, apposite decision in which a court has terminated
exclusivity after a debtor has filed, within its exclusive
period and a mere five and a half months after the commencement
of the case, a plan of reorganization that is confirmable as a
matter of law. The motion, filed precipitously and prematurely
before the Debtors even filed the Plan, incorrectly presumes
that the Plan to be filed by the Debtors would be a mere
"placeholder" plan and requests "the immediate termination of
exclusivity . . . so that competing plans may be considered."
Thus, the Committee, presumably the watchdog of the Debtors'
estates and the first line of defense against any waste and
inefficiency that might erode creditors' recoveries, requests
permission to file its own liquidating plan having objectives
and means of implementation that are identical to those of the
Plan, i.e., to distribute the Debtors' assets to creditors in
accordance with the priority scheme established by the
Bankruptcy Code, to provide for the Debtors' immediate
dissolution after the effective date of the Plan and to provide
for the Debtors' assets to be transferred to a liquidating trust
to be administered by a liquidating trustee.
Mr. Casher observes that not only was the Committee's request
premised on a premature and mistaken assumption concerning the
substance of the Plan, the motion attempts to perpetrate the
flagrantly false notion that the Debtors have excluded the
Committee from the plan process and, in some unspecified way,
seek to use exclusivity to coerce creditors. Nothing could be
further from the truth. The Debtors meticulously have been
solicitous of the Committee's views in connection with the Plan,
the Disclosure Statement and the proposed plan solicitation
process, just as the Debtors have been solicitous of the
Committee dating back to the inception of the Debtors'
prepetition restructuring process and continuing throughout
these Chapter 11 cases. Mr. Casher contends that the Debtors
have worked cooperatively with and included the Committee and
the Ad Hoc Committee in every matter of significance affecting
the Debtors during the past year and a half. The Plan filed by
the Debtors incorporates verbatim virtually every word of
detailed, extensive comments made by the Committee to a draft of
the Plan provided to the Committee in early April. In short,
the Plan, in all substantive respects, except for its omission
of the Committee as a co-proponent, reflects the common
authorship of the Committee.
Thus, one is left to wonder why the Committee chose
precipitously to file the motion in the first place, rather than
wait to evaluate the Plan once it was filed. Tellingly missing
from the motion is even a single sentence articulating:
a) how the creditors of the Debtors' estates will be
advantaged in any respect if the motion is granted; and
b) how the creditors will be disadvantaged in any respect if
the Debtors' exclusivity remains intact and the Plan is
confirmed.
If the Committee succeeds in obtaining its request, Mr. Casher
fears that the Debtors' estates will be burdened by the
extravagant inefficiencies and expenses associated with
substantively identical competing plans and disclosure
statements that seek the identical goal through identical means.
In short, the Committee's complaint is not with the substance of
the Plan but, rather, with the fact that it is being proposed by
a liquidating debtor that has no economic stake in its estate.
That complaint, in and of itself, is an insufficient basis, as a
matter of law, on which to premise the termination of
exclusivity. (Global Crossing Bankruptcy News, Issue No. 40;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ASSOCIATED BUSINESS: Assets Being Auctioned Tomorrow in SFO
-----------------------------------------------------------
We are having an auction! Thursday, May 22, we are having an
auction to liquidate the assets of ASSOCIATED BUSINESS SOLUTIONS
in South San Francisco. The auction will be held in their
building at 529 Railroad Avenue.
We will be selling all of the company's remaining stock and
their office equipment. In addition to this, we are including a
variety of other fantastic products from other companies that
are liquidating stock.
There will be over 1,000 items plus 50,000 square feet of
hardwood flooring. Sample items are: 50" Plasma Monitor, 2.66
GHz P4 computers, 15" and 17" Flat Panel Monitors, new Sofa Sets
and tons more.
We are partnering this auction with Able Solutions. More
details can be found on the internet at:
http://www.ableauctions.com
Please call or email if you would like to be sent the auction
flyer.
There will be great deals on flooring at this auction. Call me
if you have any question or need help figuring out how much wood
you need or if you need help understanding how to bid on
flooring at an auction. If you have any friends or family who
are renovating their house, please pass on this notice.
Please feel free to call me if you have any questions at all.
Auction: Associated Business Solutions
Time: Thursday, May 22, 11:00 a.m.
Place: 529 Railway Ave., South San Francisco
Preview: Wednesday, May 21, Noon - 6:00 p.m. or
day of sale starting at 9:00 a.m.
Brett Johnston
Better Source Liquidators LLC
1863 South Norfolk Street
San Mateo, 94403
Office: 650-345-9605
Cellular: 650-430-4700
Store hours: Monday - Friday 10:00 a.m. - 6:00 p.m.
Saturday 11:00 a.m. - 4:00 p.m.
BETA BRANDS: Names Daniel Colon, Jr., Newest Addition to Board
--------------------------------------------------------------
Beta Brands Incorporated (TSX Venture Exchange: BBI) announced
that Daniel Colon, Jr. has been appointed as a director of Beta
Brands Incorporated. The board now consists of Peter M. Schulte,
Ken A. McMillen and Daniel Colon, Jr.
The Company also announced that George E. Harrison has resigned
as Chief Financial Officer and as Secretary of the Beta Brands
Incorporated.
The Company is listed on the TSX Venture Exchange under the
symbol BBI and has approximately 41.3 million common shares
outstanding.
* * *
As reported in the May 15, 2003, edition of the Troubled Company
Reporter, Beta Brands has been notified that the TSX Venture
Exchange has suspended trading in the Company's securities as a
result of a failure to maintain exchange listing requirements.
The failure to maintain exchange listing requirements is the
result of the foreclosure on the assets of the Company, which
was announced on May 2, 2003. Under the terms of the foreclosure
order granted by the Ontario Superior Court of Justice, Beta
Brands Incorporated has been left with no assets and has ceased
to carry on business.
BUDGET GROUP: Demands Cendant & Cherokee Cough-Up ASPA Payments
---------------------------------------------------------------
Budget Group Inc., and its debtor-affiliates initiated a formal
adversary proceeding to compel Defendants Cendant Corporation
and Cherokee Acquisition Corporation to immediately turn over
amounts due under the Asset and Stock Purchase Agreement,
pursuant to Section 542 of the Bankruptcy Code. Budget claims
its owed $2,031,361 plus interest and costs. In addition, the
Debtors want the Court to make it clear that Defendants Cendant
Corporation and Cherokee Acquisition Corporation, and not the
Estates, must pay for defense costs for certain employment-
related actions pending at the time of the ASPA Closing.
Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor LLP,
in Wilmington, Delaware, reminds Judge Walrath that on
August 22, 2002, the Debtors entered into an Asset and Stock
Purchase Agreement, with, inter alia, Cendant and Cherokee
Acquisition Corporation, now known as Budget Rent A Car System,
Inc., pursuant to which Cherokee agreed to purchase
substantially all of the Debtors' assets, excluding the Europe,
the Middle East and Africa businesses, and assume certain of the
Debtors' liabilities.
Under Section 212 of the ASPA, as amended by the November 7,
2002 Third Amendment to the ASPA, Cherokee is required to pay
the Debtors $42,000,000 minus the amount of Qualified Fees paid
by the Debtors from June 30, 2002 until the Closing. In other
words, Cherokee is permitted to reduce the $42,000,000 payable
to the Debtors solely for items that fall within the limited
scope of the "Qualified Fees" definition.
As articulated in the Third Amendment to the ASPA:
"Qualified Fees" means legal, accounting,
investment banking, advisory, brokerage,
administrative, issuance, up-front, placement,
structuring, commitment, underwriting, financing,
"due diligence", rating agencies or similar fees,
commissions, disbursements and expenses, breakage
cost, increased interest rate as a result of an
event of default, amortization event or payment
prior to stated maturity, prepayment penalties
or fees and similar costs incurred or agreed to
be paid or reimbursed by Seller Entities in
connection with the transactions contemplated
by this Agreement, the DIP Asset-Backed Fleet
Financing, the DIP Financing, the DIP L/C
Rollover, the Additional DIP Asset Backed Fleet
Financing, any other post-Petition financing
or extension of credit or the Chapter 11 Cases
or otherwise payable in connection with the
prepayment of any of the Assumed Indebtedness,
the DIP Asset-Backed Fleet Financing or the
Additional DIP Asset-Backed Fleet Financing ... "
Mr. Brady reports that the Debtors paid $22,983,796 in Qualified
Fees prior to the Closing, leaving a total of $19,016,204 owed
by Cherokee under the ASPA. However, Cherokee has repeatedly
refused to pay the amount required by the ASPA. Rather than
fulfilling its clear contractual duties, Cherokee has engaged in
a consistent pattern of raising spurious arguments to avoid
making the required payments. Thus, for instance, as of
December 6, 2002, Cherokee had agreed to pay only $13,433,823,
leaving an unpaid debt of $5,582,381.
On December 16, 2002, after prompting from the Debtors' counsel,
Cherokee abandoned certain of its spurious arguments and
conceded that it owed $3,490,646 of the unpaid $5,582,381.
Cherokee's subsequent payment of that amount left $2,091,735 in
unpaid, matured debt. The Debtors have subsequently
relinquished their claims to $60,374 of the disputed amount.
This leaves a total of $2,031,361 currently in dispute related
to the Qualified Fees.
Mr. Brady relates that despite the repeated efforts to seek a
mutually agreeable and fair resolution, Cherokee's continuing
refusal to meet its contractual obligations has left the Debtors
with no choice but to commence the Complaint. The sum that
Cherokee has failed to pay can be divided into five categories
of expenses, each of which falls outside the definition of
Qualified Fees and should therefore not be deducted from the
amount payable to the Debtors:
A. Eversheds Invoices: Cherokee owes the Debtors $547,844
for fees paid to the Eversheds law firm in July 2002
Eversheds' invoices for July 2002 totaled $642,900, of
which $95,057 properly constituted a Qualified Fee
because it was directly related to the Chapter 11 Cases.
The remaining Eversheds bill covers services that were
provided in support of various initiatives undertaken by
the Debtors and their non-debtor subsidiaries in
connection with their European operations, like the re-
franchising of the German operations and the recovery
proceedings related to a non-debtor French subsidiary.
The Debtors have been pursuing similar initiatives since
at least late 2000. The Debtors' European initiatives
have continued independently of the Chapter 11 process.
Furthermore, the initiatives would have been necessary
regardless of any decision with respect to the Chapter 11
Cases or the asset sale in the United States. These
initiatives were clearly conducted in the ordinary course
of the Debtors' business, unrelated to the Chapter 11
Cases. The Eversheds fees connected with these
initiatives do not constitute Qualified Fees, and they
should be reimbursed by Cherokee.
B. GECC Letter of Credit Fee: Pursuant to the DIP Financing
facility, the Debtors paid GECC regular monthly fees for
each month that a letter of credit obligation remained
outstanding. The Letter of Credit Fees for the period
from June 30, 2002 until the closing of the North
American Sale was $500,172. As is typical in most
standard credit agreements, the Letter of Credit Fees
were ordinary course expenses, similar to an interest
payment on a loan.
Consistent with the classification of other postpetition
financing interest payments, the ASPA treated the Letter
of Credit Fees as "Assumed Liabilities," with the last
monthly payment specifically listed as "Assumed
Indebtedness" to be assumed by Cherokee. Any argument
that the GECC Letter of Credit Fees instead constitute
"issuance" or "commitment" fees that would fall within
the definition of Qualified Fees is further belied by the
fact that the DIP Financing facility did contain issuance
fees and commitment fees that were separate and distinct
from the regular monthly Letter of Credit Fees. Thus,
the Letter of Credit Fees do not fall within the
Qualified Fees definition and should not reduce the
amount payable by Cherokee.
C. CSFB Amendment Fee: The Debtors paid $338,800 to Credit
Suisse First Boston in connection with an amendment of
the Amended and Restated Credit Facility. As defined in
the ASPA, Qualified Fees include certain categories of
fees relating to postpetition financing facilities,
including specific references to the DIP Financing, the
DIP L/C Rollover and the DIP Asset-Backed Fleet
Financing. The Qualified Fees definition in the ASPA
does not mention the Amended and Restated Credit Facility
and does not refer, even generically, to prepetition bank
facilities. These are not Qualified Fees and should not
reduce the amount payable by Cherokee.
D. Various Fees to CSFB Under Amended and Restated Credit
Facility and DIP L/C Rollover: The Debtors also paid
$265,196 in fees to CSFB pursuant to the Amended and
Restated Credit Facility and DIP L/C Rollover. All but
one of these fees arose under the prepetition Amended and
Restated Credit Facility, which, as noted, is not a
facility mentioned in the definition of Qualified Fees.
The remaining fee at issue is the "Letter of Credit Face
Amount Fee" paid under the Section 314 of the DIP L/C
Rollover. That fee is specifically referenced in the
ASPA as "Assumed Indebtedness", in contrast to the
separate commitment and issuance fees found in other
sections of the DIP L/C Rollover that would constitute
Qualified Fees. Assumed Indebtedness is the
responsibility of Cherokee. Consequently, none of the
$265,196 constitutes Qualified Fees and should not be
deducted from the amount payable to the Debtors.
E. McDermott Will & Emery Fees: The Debtors paid $330,600
to McDermott Will & Emery for its work as counsel to Gulf
Insurance in connection with surety bonds and related
agreements. The Debtors were required to pay this amount
to McDermott on behalf of Gulf in order to assign the
Gulf bonds and related agreements to Cherokee. Section
210 of the ASPA defines Cured Costs to include any
payments required to achieve assumption and assignment of
Assumed Contracts, and the Gulf bonds and related
agreements were listed as Assumed Contracts on Schedule
315(m) of the Seller Parties Disclosure Schedule to the
ASPA. These payments therefore constitute a Cure
Cost, not a Qualified Fee.
For a period of at least four months, Cherokee has
retained possession of money belonging to the Debtors.
Cherokee has consistently refused to turn over the money
to the Debtors. This money is property of the Debtors'
estate and is owed to the Debtors pursuant to a matured
debt payable by Cherokee under the ASPA.
Mr. Brady informs the Court that Cherokee has also refused to
fulfill its contractual obligation to assume the liability for
certain employment actions pending against the Debtors. The
ASPA provides for the assumption of many of the Debtors'
liabilities by Cherokee.
Pursuant to Section 3.13(a) of the ASPA, the Debtors submitted
an extensive schedule of employment-related litigation that had
been brought or threatened against the Debtors prior to the
Closing Date. As negotiations proceeded, the Debtors
subsequently submitted, and Cherokee accepted, several updated
lists of litigation brought or threatened against the Debtors up
until the Closing Date.
Mr. Brady notes that the Debtors' 3.13(a) submissions to
Cherokee outlined pending and prospective employment-related
litigation in considerable detail, and included information for
each matter like case names, case numbers, the nature of the
proceedings, the presiding court and location, and the status of
the case. The Debtors' 313(a) submissions thus put Cherokee on
notice of pending and prospective employment-related litigation,
and provided Cherokee with the opportunity to perform due
diligence on the various claims. On information and belief,
Cherokee did in fact perform extensive due diligence on these
claims.
Despite the clear language of the ASPA and the listing of all of
the Employment Actions on Section 3.13(a) of the Seller Parties'
Disclosure Schedule, Cherokee is taking the position that these
claims are "Excluded Liabilities" under the ASPA. However,
Section 2.6 of the ASPA defines "Excluded Liabilities" to be
"Liabilities that are not expressly included in the definition
of Assumed Liabilities, including those set forth in paragraphs
(a) through (p) below ". The Employment Actions were expressly
included in the definition of "Assumed Liabilities" in Section
2.5 of the ASPA and individually listed in the Schedules.
Therefore, Section 2.6(a) through (p) cannot alter the express
assumption of the Employment Actions under Section 25 of the
ASPA, and the Employment Actions cannot constitute "Excluded
Liabilities "
In any event, Mr. Brady asserts that the Employment Actions are
not "Excluded Liabilities." Section 2.6(e) of the ASPA, which
relates to "Excluded Liabilities," refers to "all Liabilities of
[the Debtors] and their Affiliates to current or former
employees, relating to or arising out of any period ending prior
to the Closing arising out of unlawful discrimination, wrongful
termination, violations of Law, breach of the terms of any
Assumed Benefit Plan or failure to pay or discharge such
employees' wages or benefits when due". A liability constitutes
an "Excluded Liability" under Section 2.6(e) only in the event
that the Debtors have been found liable to a current or former
employee for engaging in unlawful discrimination, wrongful
termination, etc. None of the Employment Actions described can
be characterized as falling within Section 2.6(e) because the
Debtors have not been adjudicated liable or agreed to be liable
to an employee in any of the cases in question.
Moreover, legal liability has historically never resulted from
any employment-related lawsuit brought against the Debtors.
Cherokee therefore cannot avoid its contractual obligation to
assume the Employment Actions by pointing to Section 26(e).
Accordingly, the Debtors ask the Court to enter an order:
-- requiring Cherokee to turn over amounts due under the
ASPA totaling $2,031,361, as well as interest and costs;
and
-- assume the defense against certain employment-related
actions pending at the time of the Closing. (Budget Group
Bankruptcy News, Issue No. 20; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
CALPINE CORP: Closes $82-Million Contract Monetization with BPA
---------------------------------------------------------------
Calpine Corporation (NYSE: CPN), a leading North American power
company, announced that it has completed the $82 million
monetization of an existing power sales agreement with the
Bonneville Power Administration (BPA). This transaction
represents another contract monetization completed by the
company as a part of its 2003 liquidity-enhancing program.
Under the existing 100-megawatt fixed-price contract, Calpine
delivers baseload power to BPA through December 31, 2006. As a
part of the monetization transaction, the company entered into a
contract with a third party to purchase power based on spot
prices and a fixed-price swap agreement with an affiliate of
Deutsche Bank to lock in the price of the purchased power. The
term of both agreements is through December 31, 2006.
To complete the monetization, Calpine then entered into an
agreement with an affiliate of Deutsche Bank and borrowed $82
million secured by the spread between the BPA contract and the
fixed power purchases. Proceeds from the borrowing will be used
to pay transaction expenses for plant construction and general
corporate purposes. Calpine will make quarterly principal and
interest payments on the loan that matures on December 31, 2006.
"Calpine benefits from this monetization in a couple of ways: We
raised $82 million with this borrowing, and our open generation
in the attractive western markets has been increased by 100
megawatts for the next several years," stated Calpine's Chief
Financial Officer Bob Kelly. "To date, we have raised
approximately $450 million towards our 2003 liquidity program
goal of approximately $2.3 billion."
"The BPA is an active participant in the evolving electricity
markets in the West. We look forward to a strong relationship
with this valued customer," added Kelly.
Calpine Corporation is a leading North American power company
dedicated to providing wholesale and industrial customers with
clean, efficient, natural gas-fired and geothermal power
generation and a full range of energy products and services.
The company generates power at plants it owns or leases in 22
states in the United States, three provinces in Canada and in
the United Kingdom. Calpine is also the world's largest
producer of renewable geothermal energy, and it owns
approximately one trillion cubic feet equivalent of proved
natural gas reserves in Canada and the United States. The
company was founded in 1984 and is publicly traded on the New
York Stock Exchange under the symbol CPN. For more information
about Calpine, visit http://www.calpine.com.
* * *
As previously reported in Troubled Company Reporter, Calpine
Corp.'s senior unsecured debt rating was downgraded to 'B+' from
'BB' by Fitch Ratings. In addition, CPN's outstanding
convertible trust preferred securities and High TIDES were
lowered to 'B-' from 'B'. The Rating Outlook was Stable.
Approximately $9.3 billion of securities were affected.
Calpine Corporation's 10.500% bonds due 2006 (CPN06USR2) are
presently trading at 82 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CPN06USR2for
real-time bond pricing.
CASELLA WASTE: Acquires Vermont/New Hampshire Collection Company
----------------------------------------------------------------
Casella Waste Systems, Inc. (Nasdaq: CWST), a regional, non-
hazardous solid waste services company, said that it has
completed the "tuck-in" acquisition of a solid waste collection
company in its upper Connecticut River Valley market.
The company said it has purchased the assets of All-Waste
Services, which provides waste and recyclables collection and
hauling services in the Lebanon, New Hampshire; White River
Junction, Vermont; and Bellows Falls, Vermont markets. The
company said the purchase price was approximately $4.3 million.
"This transaction will allow us to improve existing assets and
route structures in a key core market, which is, and will
remain, an important strategic focus as we grow our business,"
John W. Casella, chairman and CEO of Casella Waste Systems,
said. "This acquisition tucks-in nicely with our White River
Junction-based operations."
Casella Waste Systems, headquartered in Rutland, Vermont, is a
regional, integrated, non-hazardous solid waste services company
that provides collection, transfer, disposal and recycling
services primarily in the northeastern United States.
As reported in Troubled Company Reporter's January 17, 2003
edition, Standard & Poor's assigned its 'BB-' rating to solid
waste services company Casella Waste Systems Inc.'s new $325
million senior secured credit facilities and its 'B' rating to
the company's $150 million senior subordinated notes due 2013.
At the same time, Standard & Poor's affirmed its 'BB-' corporate
credit rating on Rutland, Vermont-based Casella. The outlook
remains stable.
CHAMPIONLYTE: New Management Team Cuts Per Share Losses By 400%
---------------------------------------------------------------
ChampionLyte Holdings, Inc., formerly ChampionLyte Products,
Inc. (OTC Bulletin Board: CPLY) reported operating results for
the first quarter ended March 31, 2003. As the result of a
management change and restructure during the quarter, the
Company did not produce any revenues during that period.
However, per share loses were just ($.03) compared to ($.12) per
share in the first quarter last year.
"This Company was virtually in shambles when the new management
took control," said ChampionLyte Holdings, Inc President, David
Goldberg. "The Company was strapped with more than $1 million
in debt, no operating capital, no product and a decimated
distribution system. I'm quite proud of the accomplishments of
the team we have assembled and the dramatic turnaround that's
occurred in just a few months."
Goldberg pointed out Company highlights:
* Through negotiations and conversions of liability to
equity, the Company eliminated close to 80 percent of
the past due liabilities incurred under the previous
management team. That included accounts payable and
other liabilities in excess of $1 million.
* The Company has negotiated settlements with vendors and
creditors that call for payouts in both cash and stock
which the Company does not foresee impairing its stock
price or causing any significant dilution due to the
fact that many of the negotiated settlements resulted
in either the issuance of restricted shares or the
issuance of shares on a monthly basis.
* The Company drastically reduced operating overhead by
more than 60 percent.
* The Company hired an industry veteran, Donna Bimbo, to
head up its newly formed Beverage Division. Ms. Bimbo,
a senior executive with Snapple Beverage group for more
than a decade, has already made sweeping changes in the
division.
* The Company signed a new co-packing agreement and has
begun shipping its initial production run of the newly
reformulated ChampionLyte(R), the first completely
sugar-free entry into the multi-billion dollar isotonic
sports drink market. The vast majority of that initial
run was pre-sold.
* The Company anticipates it will soon announce a
favorable settlement in long-term litigation with Sara
Lee Corp. regarding a trademark infringement issue.
* The Company anticipates it will soon announce it has
secured equity financing to assist with the initial
phases of its restructuring program.
"Perhaps, our greatest accomplishment is that we saved a company
on the brink of extinction and created value for its
shareholders," said Goldberg. "Certainly, we have a great deal
of work ahead of us, but we anticipate that we will gradually
build revenues during the second and third quarters."
About ChampionLyte Holdings, Inc.
ChampionLyte Holdings, Inc. is a fully reporting public company
whose shares are quoted on the OTC Bulletin Board under the
trading symbol CPLY. Its recently formed beverage division,
ChampionLyte Beverages, Inc., a Florida corporation,
manufactures, markets and sells ChampionLyte(R), the first
completely sugar-free entry into the multi-billion dollar
isotonic sports drink market.
CHILDTIME LEARNING: Completes Rights Offering of 100,000 Units
--------------------------------------------------------------
Childtime Learning Centers, Inc. (Nasdaq: CTIM), successfully
completed its rights offering to existing shareholders of
100,000 units, each unit consisting of $35 principal amount of
15% subordinated notes due 2008 and 141 shares of common stock.
As a result of the rights offering and the related purchase of
securities pursuant to a standby commitment from affiliates of
Jacobson Partners, a private equity firm whose managing partner
is the Company's Chairman of the Board, the Company issued 14.1
million shares of common stock and $3.5 million of 15%
subordinated notes due 2008. Substantially all of the proceeds
from the offering will be used to refinance $14.0 million in
principal amount of subordinated debt, plus related accrued
and unpaid interest, that Childtime incurred in July 2002 to
finance its acquisition of substantially all of the assets of
Tutor Time Learning Systems, Inc. and related working capital
needs.
As a result of the rights offering, the Company retired $12.3
million of subordinated notes and related accrued and unpaid
interest (net of $3.5 million issued via the rights offering)
and reduced annual interest expense by more than $1.8 million.
Bill Davis, the Company's President and CEO, stated "We are
pleased with the outcome of the rights offering. The equity
infusion significantly improves our balance sheet and will
enable the Company to make the necessary investments to enhance
our existing portfolio of centers and give us the opportunity to
continue our growth."
Childtime Learning Centers, Inc., of Novi, Michigan, acquired
Tutor Time Learning Systems, Inc. on July 19, 2002 and is now
one of the nation's largest publicly traded child care providers
with operations in 27 states, the District of Columbia and
internationally. Childtime Learning Centers, Inc. has over
7,500 employees and provides education and care for over 50,000
children daily in over 450 corporate and franchise centers
nationwide.
* * *
As previously reported, the Company maintains a $17.5 million
secured revolving line of credit facility entered into on
January 31, 2002, as amended. Outstanding letters of credit
reduced the availability under the line of credit in the amount
of $2.6 million at January 3, 2003 and $1.8 million at
March 29, 2002. Under this agreement, the Company is required to
maintain certain financial ratios and other financial
conditions. In addition, there are restrictions on the
incurrence of additional indebtedness, disposition of assets and
transactions with affiliates. At July 19, 2002 and at October
11, 2002, the Company had not maintained minimum consolidated
EBITDA levels and had not provided timely reporting as required
by the Amended and Restated Credit Agreement. The Company's
lender approved waivers to the Amended and Restated Credit
Agreement for financial results for the quarter ended October
11, 2002. The Company's noncompliance with the required
consolidated EBITDA levels continued as of January 3, 2003. In
February 2003, the Amended and Restated Credit Agreement was
further amended, among other things, to revise the financial
covenants for the quarters ended January 3 and March 28, 2003
and to shorten the maturity of the line of credit to July 31,
2003. The Company is in compliance with the agreement, as
amended.
The Company intends to extend and further amend this agreement
prior to the maturity date, but no assurance can be given that
the Company will be successful in doing so. Should the Company
be unsuccessful in amending this agreement, the Company would be
in default of the agreement, unless alternative financing could
be obtained, and would not have sufficient funds to meet
operating obligations.
CLAXSON INTERACTIVE: March Working Capital Deficit Reaches $14MM
----------------------------------------------------------------
Claxson Interactive Group Inc. (OTC Bulletin Board: XSON.OB)
announced financial results for the three-month period ended
March 31, 2003.
Financial Results
Operating results for the three-month period ended March 31,
2003 represented a loss of $0.2 million, reflecting a $1.6
million improvement from an operating loss of $1.8 million for
the three-month period ended March 31, 2002. The operational
results of the first quarter reflect a near break-even operation
in what is historically the weakest advertising sales quarter of
the year, continuing on a path of operational improvement. As a
result of the new agreement with Playboy Enterprises, Inc.,
Claxson consolidates, as of January 1st, 2003, the operations of
Playboy TV Latin America & Iberia (PTVLA) into the operations of
its Pay TV division for financial reporting purposes.
Net revenues for the first quarter of 2003 were $18.5 million, a
4% decrease from net revenues of $19.2 million for the first
quarter of 2002. Net revenues are affected by a devaluation of
currencies and a decrease in the rates from DIRECTV Latin
America. Net revenues earned in Argentina, where Claxson has
significant operations, were 19% of total net revenues for the
three months ended March 31, 2003 compared to 25% for the same
period in 2002. During the first quarter of 2003, the average
exchange rate of the Argentine peso as compared to the U.S.
dollar decreased 54%, versus the same period in 2002.
"Claxson's first quarter results confirm the positive
operational and financial trend in which we have put the company
due to last year's reengineering," said Roberto Vivo, Chairman
and CEO. "Having overcome last year's challenges, we are
concentrating in efficiently managing the operation and taking
full advantage of the rationalization process undertaken in
2002. Revenues have stabilized and we continue to aggressively
manage cost, hence we expect to continue on this improvement
path."
Subscriber-based fees for the three-month period ended March 31,
2003 totaled $9.8 million, representing approximately 53% of
total net revenues and an 8% increase from subscriber-based fees
of $9.1 million for the first quarter of 2002. The increase is
primarily attributed to the consolidation of PTVLA, partially
offset by devaluation of currencies in the region and the effect
of the renegotiation of our agreement with DIRECTVT Latin
America, which reduced per subscriber rates and translated
prices to local currencies, in exchange for a two year extension
in the contract's maturity.
Advertising revenues for the three-month period ended March 31,
2003 were $7.0 million, representing approximately 38% of
Claxson's total net revenues and a 3% decrease from advertising
revenues of $7.2 million for the first quarter of 2002.
Production services revenues for the three-month period ended
March 31, 2003 were $0.9 million, which represented a 39%
decrease over the $1.5 million for the first quarter of 2002.
This decrease was primarily due to the consolidation of PTVLA,
as services rendered to PTVLA are now eliminated upon
consolidation, and a decrease in volumes handled by The Kitchen,
Inc., Claxson's Miami-based broadcast and dubbing facility, as a
result of the adverse economic situation in Latin America.
Other revenues for the three-month period ended March 31, 2003
were $0.7 million, which represented a 50% decrease from $1.4
million for the first quarter of 2002. This decrease is
explained by the consolidation of PTVLA, as services rendered to
PTVLA are now eliminated upon consolidation, as well as the
discontinuation of services provided to Playboy TV
International.
Operating expenses for the three months ended March 31, 2003
were $18.6 million, a decrease of 11% from the $21.0 million in
the first quarter of 2002, due primarily to the general
restructuring of all operating areas of the company and the
devaluation of the Argentine Peso where the company has
significant operations, partially offset by the consolidation of
PTVLA.
Interest expense for the three-month period ended March 31, 2003
was $0.7 million compared to $3.5 million for the first quarter
of 2002. This decrease is attributable to the Exchange Offer and
consent solicitation as all future interests on the new Claxson
Notes are reflected as part of the balance of the debt. As
interest on these Notes is paid, the debt will be reduced
proportionately.
Net income for the three months ended March 31, 2003 was $5.7
million ($0.31 per common share), including a $7.3 million
foreign exchange gain as a result of the appreciation in value
of the Argentine Peso during 2003. The first quarter net income
represented a turnaround of $141.0 million over the $135.0
million net loss for the same three months of 2002.
Claxson has not yet completed the annual valuation and
assessment of the carrying value of its goodwill in accordance
with the Statement of Financial Accounting Standards No. 142 in
2003.
As of March 31, 2003, Claxson had a balance of cash, cash
equivalents and investments of $8.1 million and $90 million in
debt, which includes $21.0 million in future interest payments
as dictated by accounting principles applicable to Claxson's
debt restructuring.
As of March 31, 2003, the company records a total working
capital deficit of $14,381,000 while total shareholders' equity
decreased to $2,451,000 from $3,195,000 in December 31, 2002.
First Quarter Highlights
During the first quarter of 2003, Claxson's main client, DIRECTV
Latin America, filed for protection under Chapter 11. At filing
date, Claxson's contract with DIRECTV was not rejected and
account receivables added up to approximately $4.2 million.
Claxson's management expects DIRECTV to honor its contract going
forward.
On March 1st Claxson launched a new pan-regional channel called
Retro, featuring the best classic movies and television series.
Leveraging the success achieved in the Southern Cone by its
classic series channel Uniseries, Retro launched throughout
Spanish-speaking Latin America and the Caribbean on DIRECTV
Latin America and on major cable operators in the Southern Cone,
to more than five million Latin American subscribers.
About Claxson
Claxson (XSON.OB) is a multimedia company providing branded
entertainment content targeted to Spanish and Portuguese
speakers around the world. Claxson has a portfolio of popular
entertainment brands that are distributed over multiple
platforms through its assets in pay television, broadcast
television, radio and the Internet. Claxson was formed on
September 21, 2001 in a merger transaction, which combined El
Sitio, Inc. and other media assets contributed by funds
affiliated with Hicks, Muse, Tate & Furst Inc. and members of
the Cisneros Group of Companies. Headquartered in Buenos Aires,
Argentina, and Miami Beach, Florida, Claxson has a presence in
all key Ibero-American countries, including without limitation,
Argentina, Mexico, Chile, Brazil, Spain, Portugal and the United
States.
CMS ENERGY: Will Webcast Shareholders Meeting May 23 at 10:30 AM
----------------------------------------------------------------
CMS Energy (NYSE: CMS) announced that its annual shareholders
meeting will be available via an Internet webcast at 10:30 a.m.
EDT on Friday, May 23, 2003.
Those interested may participate in the webcast by going to the
CMS Energy home page, http://www.cmsenergy.com, and selecting
"Shareholders Meeting Webcast, Friday, May 23/ 10:30 a.m. -
noon."
CMS Energy Corporation is an integrated energy company, which
has as its primary business operations an electric and natural
gas utility, natural gas pipeline systems, and independent power
generation.
More information on CMS Energy at http://www.cmsenergy.com
As reported in Troubled Company Reporter's April 25, 2003
edition, 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.
COMM 2000-FL3: S&P Cuts Ratings on 3 Note Classes to Low-B Level
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its rating on the
class B commercial mortgage pass-through certificates issued by
COMM 2000-FL3. Concurrently, ratings are lowered on classes D,
K-WC, K-HS, and L-HS from the same transaction. At the same
time, ratings are affirmed on six other classes.
The raised rating on class B is due to the increased credit
enhancement realized as a result of the paydown in the mortgage
pool balance. This transaction initially consisted of 10 one-
month LIBOR-based adjustable loans. Four loans, totaling $671
million, have paid off. As a result of these payoffs and some
small amortization of the 10 Hanover Square loan, the in-trust
mortgage pool balance has been reduced by 47%.
The lowered rating on class D reflects the deterioration in
current or expected operating performance for four of the six
loans remaining in the mortgage pool. Aggregate net cash flow
for these six loans has declined by 16% since issuance, and,
when combined with current weak real estate market conditions,
has led to a 20% decline in the overall value of
the collateral pool. The lowered rating on class K-WC is
specifically tied to the deterioration in operating performance
of the Whitehall Conference Center; and the lowered ratings on
classes K-HS and L-HS are tied to the decline in value of the 10
Hanover Square office property.
The four loans whose collateral has experienced a decline in
value since issuance include:
-- 40 Wall Street, which is the second largest loan in the
pool, has a $120.0 million senior interest in a $150
million whole loan secured by a 1.1-million square foot
(sq. ft.) office building in downtown New York. NCF for
this property has declined by 29% for the 12 months
ending Sept. 30, 2002 from its level at issuance in
December 2000. As a result, Standard & Poor's estimates
the value has declined by about the same percentage.
This building has experienced a steady decline in
occupancy. It is currently 80% occupied, down from 96%
at issuance. Standard & Poor's believes the occupancy
for this building has stabilized at this lower
level;
-- 10 Hanover Square, which is the third largest loan in
the pool, has a $92.3 million senior interest in a
$127.3 million whole loan secured by a 522,343-sq. ft.
office building in lower Manhattan. The sole tenant,
Goldman Sachs, has submitted a notice of termination of
its lease. The lease agreement allows Goldman the option
to terminate its lease as of Sept. 30, 2004 by providing
notice at least 12 months prior to the 2004 termination
date. Goldman is required to pay a fixed amount of
$30.9 million plus an amount equal to the basic rent and
tax payments under the lease for the six-month period
following the 2004 termination date. Estimating the
value of the property on a stabilized basis after its
re-leasing, as well as giving benefit to the lease
termination fees, Standard & Poor's believes this
combined value will be 35% less than the underwritten
value of the property at issuance;
-- Queens Atrium, which is the fourth largest loan,
consists of a $63.0 million senior interest in a $95.0
million loan secured by 1.1 million sq. ft. of loft
office buildings in Long Island City, N.Y. While NCF for
the year ended Dec. 31, 2002 indicated a decline of only
5% since issuance, MCI Worldcom Network Services Inc.
has since rejected its lease (representing 28% of
the total space), and vacated the property in early
March 2003. As a result, occupancy has declined to 69%
as of March 31, 2003 from 97% at issuance. Standard &
Poor's recently visited the property and found the
buildings to be in good physical condition with good
access to public transportation. The borrower is
currently negotiating a lease for 110,000 sq. ft. of the
295,000 sq. ft. previously occupied by MCI. The
subject loan matures Aug. 9, 2003, and an extension
through Aug. 9, 2004 is allowed under the loan terms.
However, given the soft office market conditions in New
York City, the remaining vacant space may remain
un-leased for the next 15 months. Assuming an occupancy
rate of 80% for the period through August 2004, Standard
& Poor's estimates that NCF will be $6.2 million, or 34%
less than at issuance. The resultant decline in
value is 35%; and
-- Whitehall Conference Center, which is the fifth largest
loan in the pool, represents a $35.4 million senior
interest in a $50.0 million loan secured by a conference
and training center in Leesburg, Virginia. This property
comprises a 200,000-sq. ft. conference center and
training facility, lodging facilities containing 919
rooms and 199,972 sq. ft. of office space. Occupancy for
the hotel space declined to 34% for the year ended
Dec. 31, 2002, down from 52% at issuance. Based on
results for the year ended Dec. 31, 2002 and adjusting
for the business cycle, Standard & Poor's estimates that
NCF for this property on a stabilized basis is 24% lower
than at issuance. This loan matures on Nov. 9, 2003 with
one 12-month extension available.
Two of the loans in the pool have experienced slightly improved
operating performance since issuance. The largest loan in the
pool, at 35.6% of the mortgage pool balance, is a $185 million
whole loan secured by Water Tower Place, an eight-story building
in Chicago, Ill. containing 724,670 sq. ft. of retail space,
92,872 sq. ft. of office space, and a parking garage (the
hotel and residential condominiums located at this property are
not part of the collateral for this loan). NCF for this property
for the year ended Dec. 31, 2002 was 3% higher than at issuance.
The sixth largest loan is a $24.0 million whole loan secured by
Sunnyvale Research Center, a 215,481 sq. ft. office and research
development property in Sunnyvale, California. While NCF for
this property for the year ended Dec. 31, 2002 increased by
5% since issuance, the lease for the largest tenant representing
84% of the space) in the property expires July 31, 2003.
The current debt service coverage for the six remaining loans is
3.79x, compared to 1.83x at issuance. The improvement in DSCR is
due entirely to the floating-rate nature of these loans and the
prevailing low interest rate environment.
RATING RAISED
COMM 2000-FL3
Commercial mortgage pass-thru certs series COMM 2000-FL3
Rating
Class To From Credit Support (%)
B AAA AA 28.40
RATINGS LOWERED
COMM 2000-FL3
Commercial mortgage pass-thru certs series COMM 2000-FL3
Rating
Class To From Credit Support (%)
D BBB- A- 0.00
K-WC B+ BBB+ N/A
K-HS BB+ BBB+ N/A
L-HS BB- BBB- N/A
RATINGS AFFIRMED
COMM 2000-FL3
Commercial mortgage pass-thru certs series COMM 2000-FL3
Class Rating Credit Support (%)
A AAA 42.3
C A 6.8
K-WT BBB+ N/A
L-WT BBB N/A
M-WT BBB- N/A
X AAA N/A
COMPX INTERNATIONAL: Suspends Regular Quarterly Dividend Payment
----------------------------------------------------------------
CompX International Inc. (NYSE: CIX) announced that its board of
directors suspended CompX's regular quarterly dividend of twelve
and one-half cents ($0.125) per share on its class A and class B
common stock, based on the board's evaluation of CompX's current
results of operations.
"Our board has concluded that suspending the dividend at this
time is financially prudent given the continued challenging
economic conditions and our recent results of operations," said
David A. Bowers, CompX's president and chief executive officer.
"We have focused significant effort on cutting costs and
reducing working capital requirements and we will continue these
initiatives. We believe we are well positioned to take
advantage of opportunities as they arise and that the annual
cash retention of $7.6 million from the suspension of the
dividend will enhance our ability to continue to further
strengthen our balance sheet and consider investments that will
increase long-term stockholder value."
CompX also announced that its stockholders at the annual
stockholders meeting elected seven directors for terms of one
year. CompX's directors are: Paul M. Bass, Jr., David A.
Bowers, Keith R. Coogan, Edward J. Hardin, Ann Manix, Glenn R.
Simmons and Steven L. Watson.
CompX is a leading manufacturer of ergonomic computer support
systems, precision ball bearing slides and security products.
CONSECO INC: Court Moves GE's Estimation Hearing Date to May 23
---------------------------------------------------------------
General Electric Capital Corporation filed an original unsecured
proof of claim for $9,949,582, which has been denominated Claim
No. 49672-007269. On April 2, 2003, Conseco Inc., and its
debtor-affiliates objected to GE Capital's Claim, which
automatically triggered the estimation procedures. Pursuant to
the Court's Order, the estimation hearing must occur between May
7, 2003 and May 21, 2003. Additionally, the parties are required
to make pre-hearing filings.
Alexander Terras, Esq., at Piper Rudnick, tells Judge Doyle that
due to scheduling conflicts, the Court has found it impossible
to set an estimation hearing between these dates. The Court
proposed June 20, 2003. However, this date violates the Order
and is not possible as counsel for GECC will be out of the
country.
As a result, GE Capital asks the Court to reset the estimation
hearing and the deadlines for pre-hearing filings that do not
cause any scheduling conflicts.
* * *
Accordingly, Judge Doyle resets the Estimation Hearing to
May 23, 2003 at 10:00 a.m. (Conseco Bankruptcy News, Issue No.
21; Bankruptcy Creditors' Service, Inc., 609/392-0900)
CONTINENTAL AIRLINES: Forges New Code-Sharing Pact with SkyWest
---------------------------------------------------------------
SkyWest Airlines, a subsidiary of SkyWest, Inc. (Nasdaq: SKYW),
announces that they have signed an agreement with Continental
Airlines to supply the carrier with regional airline feed into
their Houston hub. These communities will be announced by
Continental at a later date.
"Continental is a solid airline that is dedicated to weathering
the challenges facing the aviation industry today," said SkyWest
Executive Vice President and Chief Operating Officer, Ron Reber.
"We have certainly strengthened SkyWest's stability with this
new code-sharing agreement, and we look forward to a long and
productive partnership with Continental."
SkyWest will fly under the Continental Connection banner, and
their service will feature the Brasilia EMB-120 turbo-prop
aircraft. The 30-passenger aircraft features single and paired
seating for passenger comfort. With cruising speeds of more
than 340 MPH, overhead storage compartments, and flight
attendant service, the Brasilia ensures a fast, comfortable
flight for its passengers.
Continental Airlines is the world's seventh-largest airline and
has more than 2,000 daily departures serving 131 domestic and 93
international destinations.
SkyWest Airlines is the nation's largest independently operated
regional carrier and carried 8.23 million passengers last year.
SkyWest was recognized by the Department of Transportation as
the number one on-time domestic airline for the month of
February and March. They currently operate as Delta Connection
and United Express carriers under a marketing agreement with
Delta Air Lines and United Airlines respectively. SkyWest
serves a total of 98 cities in 29 states and two Canadian
provinces and has more than 1,000 daily departures.
Continental Airlines is the world's seventh-largest airline and
has more than 2,000 daily departures. With 131 domestic and 93
international destinations, Continental has the broadest global
route network of any U.S. airline, including extensive service
throughout the Americas, Europe and Asia. Continental has hubs
serving New York, Houston, Cleveland and Guam, and carries
approximately 41 million passengers per year on the newest jet
fleet among major U.S. airlines. With 48,000 employees,
Continental is one of the 100 Best Companies to Work For in
America. In 2003, Fortune ranked Continental highest among
major U.S. carriers in the quality of its service and products,
and No. 2 on its list of Most Admired Global Airlines. For more
company information, visit http://www.continental.com
DebtTraders reports that Continental Airlines' 8.000% bonds due
2005 (CAL05USR1) trade between 81 and 85 cents-on-the-dollar.
See http://www.debttraders.com/price.cfm?dt_sec_ticker=CAL05USR1
for real-time bond pricing.
CROWN CASTLE: Declares Quarterly Preferred Stock Dividend
---------------------------------------------------------
Crown Castle International Corp. (NYSE: CCI) announced that the
quarterly dividend on its 12 3/4% Senior Exchangeable Preferred
Stock will be paid on June 16, 2003 to holders of record on June
1, 2003. The dividend will be paid in shares of the Preferred
Stock at a rate of 31.875 shares per 1,000 shares. Fractional
shares will be paid in Preferred Stock.
Contact Regarding Dividend Payments: Patti Knight, Mellon
Investor Services at 214-922-4420.
Crown Castle International Corp. engineers, deploys, owns and
operates technologically advanced shared wireless
infrastructure, including extensive networks of towers and
rooftops as well as analog and digital audio and television
broadcast transmission systems. Crown Castle offers near-
universal broadcast coverage in the United Kingdom and
significant wireless communications coverage to 68 of the top
100 United States markets, to more than 95 percent of the UK
population and to more than 92 percent of the Australian
population. The Company owns, operates and manages over 15,500
wireless communication sites internationally. For more
information on Crown Castle visit: http://www.crowncastle.com.
As previously reported in Troubled Company Reporter, Standard &
Poor's lowered its corporate credit rating on wireless tower
operator Crown Castle International Corp., to 'B-' from 'B+',
and removed the rating from CreditWatch with negative
implications.
The outlook is negative.
The downgrade was due to concerns that weak tower industry
fundamentals would make it unlikely for Crown Castle to reduce
its heavy debt burden in the foreseeable future and contribute
to increased liquidity risk starting in 2004.
DAISYTEK INC: Employs Vinson & Elkins as Bankruptcy Attorneys
-------------------------------------------------------------
Daisytek, Incorporated and its debtor-affiliates ask for
authority from the U.S. Bankruptcy Court for the Northern
District of Texas to engage Vinson & Elkins LLP as Counsel in
their chapter 11 proceedings.
The lead attorney from Vinson & Elkins who will be attorney of
record is Daniel C. Stewart, Esq. The hourly rates for Vinson &
Elkins' professionals who might render their services to the
Debtors in this engagement are:
partners $375 to $525 per hour
associates $205 to $290 per hour
paraprofessional $150 per hour
The Debtors expect Vinson & Elkins to:
a. serve as attorneys of record for the Debtors in all
aspects of these Cases, to include any adversary
proceedings commenced in connection with the Cases, and
to provide representation and legal advice to the
Debtors throughout the Cases;
b. assist in the formulation and confirmation of a chapter
11 Plan of Reorganization and Disclosure Statement for
the Debtors;
c. consult with the United States Trustee, any statutory
committee and all other creditors and parties-in-
interest concerning the administration of the Cases;
d. take all necessary steps to protect and preserve the
Debtors' estates; and
e. provide all other legal services required by the Debtors
and to assist the Debtors in discharging their duties as
the debtors-in-possession in connection with these
Cases.
Daisytek, Incorporated and its affiliates are leading global
distributors of computer and office supplies and professional
products. The Company filed for chapter 11 protection on May 7,
2003 (Bankr. N.D. Tex. Case No. 03-34762). Daniel C. Stewart,
Esq., Paul E. Heath, Esq., and Richard H. London, Esq., at
Vinson & Elkins LLP represent the Debtors in their restructuring
efforts. When the Company filed for protection from its
creditors, it listed $622,888,416 in total assets and
$450,489,417 in total debts.
DEAN FOODS: Will Webcast Annual Meeting Tomorrow at 9:00 a.m.
-------------------------------------------------------------
On Thursday, May 22, 2003 at 9:00 a.m. central, Dean Foods
Company (NYSE: DF) will host a live audio webcast of its Annual
Meeting of Stockholders at http://www.deanfoods.com.Management
will review the business and discuss the company's outlook for
the coming year.
Windows Media Player software is required to listen to the
webcast. A webcast replay will be available shortly following
the completion of the meeting within the Investor Relations
section of the company Web site under Audio Archives.
Dean Foods Company is one of the nation's leading food and
beverage companies. The company produces a full line of company-
branded and private label dairy and dairy-related products such
as milk and milk-based beverages, ice cream, coffee creamers,
half and half, whipping cream, whipped toppings, sour cream,
cottage cheese, yogurt, dips, dressings and soy milk. The
company is also a leading supplier of pickles and other
specialty food products, juice, juice drinks and water. The
company operates over 120 plants in 36 U.S. states and Spain,
and employs approximately 30,000 people.
* * *
As previously reported, Fitch Ratings initiated coverage of the
New Dean Foods Company assigning a 'BB+' secured credit facility
rating and 'B-' trust convertible preferred securities rating.
Fitch's rating of the senior unsecured notes that were
outstanding prior to Suiza Foods Corporation (Suiza)
acquisition, and on Rating Watch Negative have been downgraded
to 'BB-' from 'BBB+'. Fitch has also withdrawn the Old Dean
Foods commercial paper rating of 'F2', which was also on Rating
Watch Negative.
DELTA AIR: Expands Codeshare Flights With South African Airways
---------------------------------------------------------------
Delta Air Lines (NYSE: DAL) announced plans to start codeshare
service on South African Airways' flights from New York (JFK) to
Dakar, Senegal, effective June 1, 2003.
Currently, South African Airways operates twice a week service
from New York to Johannesburg, South Africa, with a stop in
Dakar. Three days a week the flight operates nonstop from New
York to Johannesburg.
Delta and South African Airways currently provide direct
codeshare service between New York (JFK) and Atlanta to
Johannesburg and Cape Town, South Africa. Delta also codeshares
on South African Airways flights from Johannesburg and Cape Town
to Durban, Port Elizabeth, East London, and George, South
Africa; Nairobi, Kenya; Windhoek, Namibia; Dar es Salaam,
Tanzania; Entebbe, Uganda; and Lusaka, Zambia.
South African Airways codeshares on Delta, Delta Connection and
Song flights from Atlanta and New York (JFK) to Miami, Los
Angeles, San Francisco, Chicago, Boston, Orlando, Ft.
Lauderdale, West Palm Beach, Tampa, Washington D.C., Dallas/Ft.
Worth, Houston, Seattle, Detroit, Denver, Philadelphia, San
Diego, Minneapolis/St. Paul, Baltimore, Phoenix, St. Louis, New
Orleans, Las Vegas, Raleigh/Durham, Cleveland, Cincinnati,
Pittsburgh, Newark, Salt Lake City and Portland, Ore.
South African Airways, founded in 1934, serves 38 cities in 27
countries on six continents and serves over 600 destinations
with codeshare partners. South African Airways provides the only
non-stop flights from the U.S. to South Africa exclusively on
Boeing 747-400s, one of the most modern aircraft in the skies.
The award-winning airline continues to be ranked "Best Business
Class to Africa" by Business Traveler, and "Best Airline to
Africa" by Official Airline Guide, USA Today and the Travel
Weekly Globe Awards (in London). The notable Zagat Survey has
listed South African Airways as one of the "Top 10 International
Airlines." For more information, contact the carrier at 800-
722-9675.
Delta Air Lines, the world's second largest airline in terms of
passengers carried and the leading U.S. carrier across the
Atlantic, offers 5,386 flights each day to 435 destinations in
78 countries on Delta, Song, Delta Express, Delta Shuttle, Delta
Connection and Delta's worldwide partners. Delta is a founding
member of SkyTeam, a global airline alliance that provides
customers with extensive worldwide destinations, flights and
services. For more information, go to http://www.delta.com.
DELTA AIR: Colombia Okays Codeshare Alliance with Alianza Summa
---------------------------------------------------------------
Delta Air Lines (NYSE: DAL) and Alianza Summa announced the
Colombian government's approval of their codeshare alliance.
The Aeronautica Civil's approval of the alliance between Alianza
Summa's Avianca and Aces airlines and Delta marks an important
step to the start of the first phase of the codeshare's
implementation.
The first phase of the alliance, which was announced in November
2002, allows Alianza Summa to sell seats on Delta flights from
Bogota, Colombia, to Atlanta, and beyond Atlanta to Boston,
Chicago, Dallas, Los Angeles and Washington, D.C. Alianza Summa
will begin the sale of the Delta flights on May 22, 2003, and
the codeshare service will begin on June 16, 2003.
The codeshare agreement offers Colombian passengers expanded
services and connections to new destinations in the United
States. Passengers will now be able to enjoy greater travel
options and benefits as they travel between the United States
and Colombia.
The second phase of the alliance, which is pending government
approvals, is expected to begin during the third quarter of
2003. That phase will allow Delta to sell seats on Alianza
Summa flights from Bogota to Bucaramanga, Cali, Cartagena and
Medellin, Colombia.
Delta Air Lines, the world's second largest airline in terms of
passengers carried and the leading U.S. carrier across the
Atlantic, offers 5,386 flights each day to 435 destinations in
78 countries on Delta, Song, Delta Express, Delta Shuttle, Delta
Connection and Delta's worldwide partners. Delta is a founding
member of SkyTeam, a global airline alliance that provides
customers with extensive worldwide destinations, flights and
services. For more information, go to http://www.delta.com.
ELEC COMMS: Unable to File FY 2002 Financial Report on Time
-----------------------------------------------------------
eLEC Communications Corporation's preparation of its Annual
Report for the fiscal year ended November 30, 2002 was delayed
due to Company inability to obtain from third parties certain
information necessary for it to complete its financial
reporting. As a result, the report for the year ended
November 30, 2002 will be somewhat delayed in being filed with
the SEC.
Revenues for fiscal 2002 decreased by approximately $5,451,000,
or approximately 28%, to approximately $14,242,000 as compared
to approximately $19,693,000 reported in fiscal 2001. The
decrease in revenue is directly attributable to the decrease in
the number of customers of Essex Communications, Inc., eLEC's
primary operating subsidiary, including its largest customer,
and the number of access lines it billed each month.
Gross profit in fiscal 2002 decreased by approximately
$1,887,000, or approximately 26%, to approximately $5,266,000
from approximately $7,153,000 reported in fiscal 2001 while the
Company's gross profit percentage remained approximately the
same, 36%. The reduction in gross profit is attributable to the
reduction in eLEC's customer base.
Selling, general and administrative ("SG&A") expenses decreased
by approximately $4,477,000, or approximately 32%, to
approximately $9,486,000 as compared to approximately
$13,963,000 reported in fiscal 2001. The decrease is directly
attributable to various cost cutting measures, which included,
among other things, a reduction in staffing in all areas of
Company operations and reduced spending on marketing efforts.
In fiscal 2001, eLEC recorded a loss on impairment of assets in
the amount of approximately $4,707,000. No loss on impairment of
assets was recorded in fiscal 2002.
Interest expense decreased by approximately $303,000 to
approximately $437,000 from approximately $740,000 reported in
fiscal 2001 primarily due to lower average borrowing caused by
the payback of, and eventual termination of, eLEC's credit
facility in August 2002.
The Company anticipates a loss of approximately $3,319,000, as
compared to a loss in fiscal 2001 of approximately $12,374,000
eLEC Communications Corp., is a competitive local exchange
carrier that is taking advantage of the convergence of the
current and future competitive technological and regulatory
developments in the telecommunications industry. eLEC offers
small businesses and residential customers an integrated set of
telecommunications products and services, including local
exchange, local access, domestic and international long distance
telephone, and a full suite of features, including items such as
three-way calling, call waiting and voice mail.
eLEC Communications' August 31, 2002 balance sheet shows a
working capital deficit of about $10 million, and a total
shareholders' equity deficit of about $9 million.
ENCOMPASS SERVICES: URS Applies for Temporary Claim Allowance
-------------------------------------------------------------
URS Corporation ask the Court to temporarily allow its claim in
the Encompass Debtors' Chapter 11 cases, for voting purposes, in
these amounts:
(a) a secured claim in Class 2 Other Secured Claims for
$2,028,374; and
(b) an unsecured claim in Class 6 General Unsecured Claims
for $1,215,901.
According to Margaret E. Garms, Esq., at Thelen Reid & Priest
LLP, in San Francisco, California, URS electronically filed a
claim in the bankruptcy case of Encompass Mechanical (Utah),
Inc., formerly known as Team Mechanical, Inc. on April 10, 2003.
Hence, the claim was filed before the April 11, 2003 Record
Date. The Claim appears on the Court's Claims Register as claim
no. 4.
An identical claim was also filed with the claims agent,
Bankruptcy Services LLC, on April 14, 2003 and appears on BSI's
consolidated electronic claims register as claim no. 3137.
BSI's electronic claims register, although it provides a link to
the Claim itself, shows the claim amount as zero.
In each case, Ms. Garms relates that the Claim was signed by URS
Vice President Kurt F. Brust. No objection to the Claim has
been filed. Therefore, the Court must accept as true the
statements made by Mr. Brust in the Claim.
The Claim is for breach of an executory contract and for
anticipated damages resulting from that breach.
In the Claim, Mr. Brust states that:
"URS currently estimates that its damages resulting from
Debtors' prepetition breach of the Contract or from the
Debtors' anticipated rejection of the Contract totals
$1,215,901."
Ms. Garms asserts that the $1,215,901 is a deficiency claim
under Section 506(a) of the Bankruptcy Code, and not a secured
claim. URS' secured claim arises solely from set-off or
recoupment and consists of the remaining amount owed by URS to
the Debtors -- $2,028,374.
The claim was prepared with the expectation that the amounts
would be set off or recouped by stipulation or court order and
that only the net amount would be eventually allowed.
Technically, however, Ms. Garms relates that URS' total claim is
$3,244,275, consisting of a $1,215,901 unsecured portion and a
$2,028,374 "secured" portion.
URS' Request For Class 6 Ballot Denied
URS has been denied a ballot for its Claim 6 Claim, despite
repeated requests. Its Class 2 Ballot is erroneously coded to
state the secured claim as zero, despite requests to conform the
register to the claim.
Ms. Garms tells Judge Greendyke that URS received a ballot for
Class 2. However, it did not receive a ballot for Class 6. URS
has attempted to resolve this situation informally. As
instructed in the voting instructions received with the Class 2
Ballot, URS' attorneys contacted Innisfree M&A Inc., the
Solicitation Agent, to request for a Class 6 Ballot.
Innisfree's representatives, however, refused to provide a Class
6 Ballot unless BSI's records were changed to indicate that URS
had a Class 6 Claim.
Ms. Garms learned that under BSI's policy, if any claim
indicates on its face that it is "estimated" in a certain amount
or "at least" a certain amount, then BSI assigns the claim a
"zero" amount for voting purposes. Furthermore, if any claim
indicates that it is secured without giving an exact dollar for
the collateral, then it is registered as a secured claim and not
as a partially secured and partially unsecured claim.
In URS' case, the $1,215,901 was stated to be "estimated", hence
BSI gave it a zero amount. Since the box for "secured claim"
was checked without stating an exact dollars-and-cents value for
the URS' collateral, the claim was put into Class 2 rather than
partly in Class 2 and partly in Class 6.
Ms. Garms argues that URS' claim was stated in an estimated
amount so as to be fully accurate and preserve URS' rights until
the exact amount of the claim could be determined or settled by
agreement between the Debtors and URS. URS should not be
precluded from voting on the Plan just because the precise
amount of some minor elements of its Claim may change as time
passes. To the contrary, Ms. Garms asserts that URS has
carefully calculated the amount of its Claim.
Creditors should not be precluded from voting on the plan due to
myopic "policies" instituted by the Claims Agent, BSI, which are
clearly designed to prevent the voting of as many claims as
possible. (Encompass Bankruptcy News, Issue No. 12; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ENRON CORP: Various Creditors Sell Claims Totaling $48.9 Million
----------------------------------------------------------------
Pursuant to Rule 3001(e) of the Federal Rules of Bankruptcy
Procedure, the Court received notices of claim transfers from
certain creditors of Enron Corporation and its debtor-
affiliates:
CLAIM
TRANSFEREE TRANSFEROR NO. AMOUNT
---------- ---------- ----- ------
Contrarian Funds LLC Encore Acquisition 3808 $7,005,306
Company
Longacre Master Fund Plains Resources 2653 2,263,213
Ltd. Inc. 14710 2,263,213
Lamar Oil & Gas Inc. Burnell James 4518 161,702
Istre, et al.
Credit Renaissance Mieco, Inc. 8537 15,095,504
Partners LLC 8535 2,960,244
8536 15,095,504
8534 2,960,244
Pauahi Mngt. Corp. Kukui, Inc. - 1,095,030
(Enron Bankruptcy News, Issue No. 65; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ENRON: Enron Wind Storm's Voluntary Chapter 11 Case Summary
-----------------------------------------------------------
Debtor: Enron Wind Storm Lake I LLC
1400 Smith Street
Houston, Texas 77002
Bankruptcy Case No.: 03-13151
Chapter 11 Petition Date: May 16, 2003
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtors' Counsel: Brian S. Rosen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Tel: 212-310-8000
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $10 Million to $50 Million
ENRON: ECT Merchant Case Summary & Largest Unsecured Creditor
-------------------------------------------------------------
Debtor: ECT Merchant Investments Corp.
1400 Smith Street
Houston, Texas 77002
Bankruptcy Case No.: 03-13154
Chapter 11 Petition Date: May 16, 2003
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtors' Counsel: Brian S. Rosen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Tel: 212-310-8000
Estimated Assets: More than $100 Million
Estimated Debts: More than $100 Million
Debtor's Largest Unsecured Creditor:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Preston Gulf Coast, LP Delinquent capital $638,916
1717 Woodstead Court, calls
Suite 207
The Woodlands, TX 77380
Ronald Gentzler
Tel: (281) 367-8697
ENRON: EnronOnline's Case Summary & 20 Largest Unsec. Creditors
---------------------------------------------------------------
Debtor: EnronOnline, LLC
1400 Smith Street
Houston, Texas 77002
Bankruptcy Case No.: 03-13155
Chapter 11 Petition Date: May 16, 2003
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtors' Counsel: Brian S. Rosen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Tel: 212-310-8000
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $10 Million to $50 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Texas Comptroller of Tax Payment $109,772
Public Accounts
Petroleum Argus Ltd Trade Debt $43,500
File Open Systems Trade Debt $18,750
Bowne Business Solutions Trade Debt $17,098
2Advanced Studios3 Trade Debt $15,348
ICON Information Trade Debt $13,354
Operating Systems Inc. Trade Debt $10,230
Energy Argus Trade Debt $5,000
Comsys Trade Debt $4,269
N8 Solutions Trade Debt $3,857
Cingular Wireless Trade Debt $2,625
Dakota Framing/Photography Trade Debt $1,651
Tribeca Lofts
FYI - Net, LP Trade Debt $1,098
The Westar Company Trade Debt $986
Exhibit Network Intl Inc. Trade Debt $972
ASAP Software Express Inc. Trade Debt $949
American Express Trade Debt $788
Takeout Taxi of Houston Trade Debt $682
Arch Wireless Trade Debt $513
TJ's Catering & Take Out Trade Debt $376
ENRON: St. Charles' Case Summary & Largest Unsecured Creditor
-------------------------------------------------------------
Debtor: St. Charles Development Company, L.L.C.
1400 Smith Street
Houston, Texas 77002
Bankruptcy Case No.: 03-13156
Chapter 11 Petition Date: May 16, 2003
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtors' Counsel: Brian S. Rosen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Tel: 212-310-8000
Estimated Assets: $0 to $50,000
Estimated Debts: $100,000 to $500,000
Debtor's Largest Unsecured Creditor:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Entergy Services, Inc. Contractual Obligation $132,354
ENRON: Calcasieu Development's Case Summary & Largest Creditor
--------------------------------------------------------------
Debtor: Calcasieu Development Company, L.L.C.
1400 Smith Street
Houston, Texas 77002
Bankruptcy Case No.: 03-13157
Chapter 11 Petition Date: May 16, 2003
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtors' Counsel: Brian S. Rosen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Tel: 212-310-8000
Estimated Assets: $0 to $50,000
Estimated Debts: $100,000 to $500,000
Debtor's Largest Unsecured Creditor:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Entergy Contractual Obligation $141,893
ENRON: Calvert City Power Case Summary & 2 Largest Creditors
------------------------------------------------------------
Debtor: Calvert City Power I, L.L.C.
1400 Smith Street
Houston, Texas 77002
Bankruptcy Case No.: 03-13158
Chapter 11 Petition Date: May 16, 2003
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtors' Counsel: Brian S. Rosen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Tel: 212-310-8000
Estimated Assets: $0 to $50,000
Estimated Debts: $1 Million to $10 Million
Debtor's 2 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Tennesse Valley Authority Contractual Obligation $275,041
(TVA)
400 West Summit Dr WT5-B
Knoxville, TN 37902
Lisa Stinson
Tel: 865-632-2298
Tennesse Valley Authority Contractual Obligation $156,920
(TVA)
ENRON: Enron ACS's Voluntary Chapter 11 Case Summary
----------------------------------------------------
Lead Debtor: Enron ACS, Inc.
1400 Smith Street
Houston, Texas 77002
aka Enron Texoma Gas Company
Bankruptcy Case No.: 03-13159
Chapter 11 Petition Date: May 16, 2003
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtors' Counsel: Brian S. Rosen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Tel: 212-310-8000
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
ENRON: LOA Inc.'s Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: LOA, Inc.
1400 Smith Street
Houston, Texas 77002
aka Houston Pipe Line Marketing Company
Bankruptcy Case No.: 03-13160
Chapter 11 Petition Date: May 16, 2003
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtors' Counsel: Brian S. Rosen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Tel: 212-310-8000
Estimated Assets: $50 Million to $100 Million
Estimated Debts: $50 Million to $100 Million
ENRON: Enron India LLC's Case Summary & 4 Unsecured Creditors
-------------------------------------------------------------
Debtor: Enron India LLC
1400 Smith Street
Houston, Texas 77002
Bankruptcy Case No.: 03-13234
Chapter 11 Petition Date: May 19, 2003
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtors' Counsel: Brian S. Rosen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Tel: 212-310-8000
Estimated Assets: More than $100 Million
Estimated Debts: More than $100 Million
Debtor's 4 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Arthur Andersen & Co Trade Debt $13,036
Vinson & Elkins LLP Legal Fees $356
IMC Worldcell Inc. Trade Debt $123
Excelsior Transportation Trade debt $63
Inc.
ENRON: Enron Int'l Inc.'s Case Summary & 4 Unsecured Creditors
--------------------------------------------------------------
Debtor: Enron International Inc.
1400 Smith Street
Houston, Texas 77002
Bankruptcy Case No.: 03-13235
Chapter 11 Petition Date: May 19, 2003
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtors' Counsel: Brian S. Rosen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Tel: 212-310-8000
Estimated Assets: $500,000 to $1 Million
Estimated Debts: More than $100 Million
Debtor's 4 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Corporate Express Trade debt $103
North Carolina Department Statutory Dues $55
of Revenue
Georgia Income Tax Div. Statutory Dues $10
Kentucky State Treasurer Statutory Dues $30
ENRON: Enron Int'l Holdings' Voluntary Chapter 11 Case Summary
--------------------------------------------------------------
Debtor: Enron International Holdings Corp.
1400 Smith Street
Houston, Texas 77002
aka Enron International Inc.
Bankruptcy Case No.: 03-13236
Chapter 11 Petition Date: May 19, 2003
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtors' Counsel: Brian S. Rosen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Tel: 212-310-8000
Estimated Assets: More than $100 Million
Estimated Debts: $50 Million $100 Million
ENRON: Enron Middle East's Case Summary & 6 Unsecured Creditors
---------------------------------------------------------------
Debtor: Enron Middle East LLC
1400 Smith Street
Houston, Texas 77002
Bankruptcy Case No.: 03-13237
Chapter 11 Petition Date: May 19, 2003
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtors' Counsel: Brian S. Rosen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Tel: 212-310-8000
Estimated Assets: $50 Million $100 Million
Estimated Debts: $50 Million $100 Million
Debtor's 6 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Oilfields Supply Center Trade Debt $153,623
Ltd.
Vinson & Elkins LLP Legal Fees $63,535
Mott MacDonald Trade Debt $21,554
Faisal, Aflah & Shahswar Trade Debt $11,984
Contracting LLC
Electrowatt Consultants Trade Debt $1,064
Intl Courier System Trade Debt $461
ENRON: Enron WarpSpeed's Case Summary & 2 Unsecured Creditors
-------------------------------------------------------------
Debtor: Enron WarpSpeed Services, Inc.
1400 Smith Street
Houston, Texas 77002
aka Warpspeed Communications, Inc.
aka Enron Broadband Acquisition, Inc.
Bankruptcy Case No.: 03-13238
Chapter 11 Petition Date: May 19, 2003
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtors' Counsel: Brian S. Rosen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Tel: 212-310-8000
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $10 Million to $50 Million
Debtor's 2 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Dorado Software, Inc. Software license unknown
agreement
Comdisco Ventures, Inc. Lease Agreement, unknown
Promissory Note and
Loan and Security
Agreement
ENRON: Modulus Technologies' Voluntary Chapter 11 Case Summary
--------------------------------------------------------------
Debtor: Modulus Technologies, Inc.
1400 Smith Street
Houston, Texas 77002
Bankruptcy Case No.: 03-13239
Chapter 11 Petition Date: May 19, 2003
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtors' Counsel: Brian S. Rosen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Tel: 212-310-8000
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $100,000 to $500,000
ENRON: Enron Telecomms' Case Summary & 2 Unsecured Creditors
------------------------------------------------------------
Debtor: Enron Telecommunications, Inc.
1400 Smith Street
Houston, Texas 77002
Bankruptcy Case No.: 03-13240
Chapter 11 Petition Date: May 19, 2003
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtors' Counsel: Brian S. Rosen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Tel: 212-310-8000
Estimated Assets: $0 to $50,000
Estimated Debts: $0 to $50,000
Debtor's 2 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Utah State Tax Commission Trade Debt $20
Florida Dept. of Revenue Trade Debt $5
ENRON: DataSystems Group' Voluntary Chapter 11 Case Summary
-----------------------------------------------------------
Debtor: DataSystems Group, Inc.
1400 Smith Street
Houston, Texas 77002
Bankruptcy Case No.: 03-13241
Chapter 11 Petition Date: May 19, 2003
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtors' Counsel: Brian S. Rosen, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Tel: 212-310-8000
Estimated Assets: $0 to $50,000
Estimated Debts: $1 Million to $10 Million
ESSENTIAL THERAPEUTICS: Files Joint Chapter 11 Plan in Delaware
---------------------------------------------------------------
Essential Therapeutics, Inc., and its debtor-affiliates filed
their Joint Plan of reorganization with the U.S. Bankruptcy
Court for the District of Delaware and intend to file the Plan
Exhibits and Disclosure Statement to the Plan within the next
week. The Debtors' Plan is available for a fee at:
http://www.researcharchives.com/bin/download?id=030512232230
The Plan provides for the substantive consolidation and merger
of the three Debtors, Essential Therapeutics, Inc., The Althexis
Company, Inc., and Maret Corporation. The Plan leaves
unimpaired the claims of the secured and unsecured creditors of
the Debtors, with the exception of the claims held by Preferred
Stockholders who have exercised or will exercise their
Redemption Rights. New preferred stock in the reorganized
debtor will be distributed to Preferred Stockholders. All
common Stock interests will be extinguished.
Essential Therapeutics, Inc., and its debtor-affiliates are
biopharmaceutical companies committed to the discovery,
development and commercialization of critical products for life
threatening diseases. The Company filed for chapter 11
protection on May 1, 2003 (Bankr. Del. Case No. 03-11317).
Christopher S. Sontchi, Esq., at Ashby & Geddes and Guy B. Moss,
Esq., at Bingham McCutchen LLP represent the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $46,317,000 in total assets and
$65,073,000 in total debts.
eSYLVAN: Operating Losses Cast Doubt on Ability to Continue Ops.
----------------------------------------------------------------
eSylvan delivers supplemental education to families and children
through a variety of applications on the Internet. From
October 1, 1999 (date of inception) through December 31, 2001,
the Company was a development stage business. On March 10, 2003,
Sylvan Learning Systems, Inc. announced that it will focus
exclusively on its international and online university business
by selling its K-12 education operating units and disbanding
Sylvan Ventures. Under the pending transaction, substantially
all of the Sylvan Learning Center and Sylvan Education Solutions
divisions of Sylvan, the ownership interest in eSylvan held by
Sylvan Ventures and certain other Sylvan assets will be sold to
Educate, Inc., a newly formed entity associated with Apollo
Management LP. Additionally, Sylvan Ventures will be disbanded.
Sylvan indicates that it cannot predict how this transaction, if
consummated, will impact its business, particularly its access
to Sylvan management, the services provided to the Company by
Sylvan under various management services agreements or its
ability to obtain the working capital and /or equity capital
needed to continue to operate the business.
The Company incurred net losses of $2.7 million and $3.3 million
for the three months ended March 31, 2003 and 2002,
respectively. The net loss for the three months ended March 31,
2003 includes $0.3 million of incurred and accrued severance
costs related to a restructuring plan implemented in February
2003. Under the plan the Company expects to reduce the size of
its annual operating loss and cash flow requirements by
enrolling and servicing fewer students in 2003 than it did in
2002, by enrolling and servicing those students on a more
economical basis and by reducing personnel and other overhead
costs. By reducing enrollments and the number of students
enrolled and served in 2003, the Company believes it can develop
certain software applications and operational processes that
will enable it to operate more efficiently as it increases
enrollments in the future.
Revenues for the three months ended March 31, 2003 declined 6%
to $486,169 from $516,184 for the three months ended March 31,
2002 as a result of lower enrollments in the current period
versus last year. The 56% decline in enrollments and related
assessment and registration revenue was offset by an 11%
increase in tutoring revenue.
During the three months ended March 31, 2003, total operating
costs and other expenses decreased by $0.6 million, or 14%, to
$3.2 million from $3.8 million for the three months ended
March 31, 2002.
Direct costs of services provided for the three months ended
March 31, 2003 decreased 1% to $494,019 from $498,636 for the
three months ended March 31, 2002. In both periods, direct costs
of services provided consisted primarily of labor for
instructional, technical and operations support.
Sales and marketing expenses decreased by $0.3 million, or 32%,
to $0.5 million for the three months ended March 31, 2003, from
$0.8 million for the three months ended March 31, 2002. The
decrease in sales and marketing expenses was due to the
Company's increased focus on utilizing customer acquisition
channels that were more efficient than those utilized in the
prior year. The Company incurs sales and marketing costs for
media and marketing campaigns and for establishing and growing
the "eSylvan" brand.
General and administrative expenses decreased 7%, to $1.5
million for the three months ended March 31, 2003, from $1.6
million for the three months ended March 31, 2002. A decrease in
depreciation and amortization expense of $0.3 million was
partially offset by $0.3 million of severance costs recognized
in the three months ended March 31, 2003 in conjunction with
Company's restructuring plan. The Company terminated 14 of its
full-time personnel, or 33% of total full-time personnel in
February 2003. General and administrative expenses consist of
personnel costs, professional fees, maintenance expenses,
depreciation and other expenses.
Research and development expenses decreased 26%, to $0.3 million
for the three months ended March 31, 2003, from $0.4 million for
the three months ended March 31, 2002. The decrease in research
and development expenses resulted from the need for less
intensive development of on-line tutoring technical
infrastructure in the 2003 period versus the 2002 period.
Management services and facilities usage charges from Sylvan
decreased by $46,000, or 12%, to $0.3 million for the three
months ended March 31, 2003, from $0.4 million for the three
months ended March 31, 2002. Under the Company's services
agreement with Sylvan, Sylvan provides management services,
information systems support services, corporate accounting
services, database management services, human resources and
payroll services, general liability insurance and legal services
to the Company.
The Company incurred no interest expense for the three months
ended March 31, 2003 or for the three months ended March 31,
2002 because Sylvan Ventures did not charge the Company interest
on amounts advanced to the Company by Sylvan Ventures.
Liquidity and Capital Resources
The Company used net cash in its operating activities for the
three months ended March 31, 2003 of $2.1 million, primarily to
fund the $2.5 million loss before depreciation and amortization,
compared to net cash used of $2.5 million in the three months
ended March 31, 2002. There were no capital expenditures for the
three months ended March 31, 2003, compared to capital
expenditures for the three months ended March 31, 2002 of $0.1
million for computer software.
The Company had a revolving credit facility with Sylvan Ventures
that expired on December 31, 2002, under which the Company could
borrow up to $10.0 million. However, in light of Sylvan
Ventures' commitments to purchase addition shares of the
Company's Preferred Stock, Sylvan Ventures has continued to
advance funds to the Company on the same terms as the now
expired line of credit.
In February 2003, the Company issued 3,578,947 shares of the
Preferred Stock to Sylvan Ventures for an aggregate purchase
price of $6.8 million. The Company used $6.6 million of the
proceeds to repay the then outstanding balance under the line of
credit with Sylvan Ventures.
In April 2003, Sylvan Ventures agreed to purchase 1,155,263
additional shares of Preferred Stock for a total purchase price
of $2,195,000. This Preferred Stock will be issued with the same
terms and price as the previously issued Preferred Stock. These
shares are expected to be issued in multiple closings through
May 2003.
The Company expects to incur significant negative cash flow from
operations for the foreseeable future. It believes that the $2.2
million committed by Sylvan Ventures will satisfy its cash
requirements through May 2003. The Company does not expect that
its current resources will be sufficient to support its growth
and operations until it becomes profitable. Since its founding,
the Company has relied upon Sylvan and Sylvan Ventures for the
capital necessary to operate the Company's business. The Company
cannot predict whether Educate, Inc. will continue to provide
the necessary capital to the Company following Educate, Inc.'s
purchase of Sylvan's K-12 education operating units. Therefore,
the Company cannot be certain that it will be able to raise
additional funds as needed, or, if it can, that it will be able
to do so on terms that it deems acceptable. In particular,
potential third party investors may be unwilling to invest in
the Company due to Sylvan Venture's, or its successor company's,
voting control. The Company is unable to predict the amount of
additional financing it will need because the amount is
substantially dependent upon its success in implementing its
business plan, including its marketing and advertising efforts
and a variety of factors outside its control, such as unexpected
technical difficulties with the on-line tutoring infrastructure
and other factors. The failure to obtain the funds necessary to
establish and grow its business will have a material adverse
effect on the business and the Company's ability to generate and
grow revenues. If the Company raises funds through the issuance
of equity or equity-related securities, these securities will
likely have rights, preferences or privileges senior to those of
the rights of the Company's common stock, and current holders of
the common stock will experience dilution, which may be
substantial.
The Company's current and projected operating losses and limited
committed funding raise substantial doubt about its ability to
continue as a going concern.
EVERGREEN: S&P Ups Junk Credit Rating to B after Refinancing
------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Evergreen International Aviation Inc. to 'B' from
'CCC' and removed the rating from CreditWatch, where it was
placed June 21, 2002.
At the same time, Standard & Poor's assigned its 'B+' rating to
the company's new $100 million bank credit facility due 2006 and
'B-' rating to its new $215 million senior secured notes due
2010. The outlook is negative. The notes and credit facility are
fully and unconditionally guaranteed on a senior basis by
Evergreen Holdings Inc. (the parent company) and by most
subsidiaries, which represented 98.9% of operating revenues, 99%
of net income, and 94.6% of assets in fiscal 2003 (fiscal year
ended Feb. 28, 2003.)
The rating actions follow Evergreen's successful refinancing of
existing debt. The McMinnville, Oregon-based airfreight
transportation company has about $365 million of lease-adjusted
debt outstanding.
"Ratings reflect the cyclical and competitive nature of
Evergreen's airfreight transportation business and its
significant, albeit declining, debt burden and constrained
liquidity," said Standard & Poor's credit
analyst Lisa Jenkins. Evergreen derives the majority of its
revenues and operating profits from Evergreen International
Airlines, its airfreight transportation subsidiary, which
operates a fleet of older B-747-100 and -200 widebody freighters
and smaller DC-9 freighter aircraft. The company also provides
ground logistics services; aircraft maintenance and repair
services; helicopter and small aircraft services; and aviation
sales and leasing. Evergreen serves both military and commercial
customers.
Evergreen faces significant business risk in its largest
business segment due to the cyclical and competitive nature of
the industry and the challenges of managing the timing and
pricing of expiring contracts. These factors have led to fairly
volatile swings in earnings in the past. The company's other
businesses, while aviation related, are less volatile and
less capital intensive and have a somewhat more variable cost
structure. As these businesses grow and become a greater
contributor to revenues and earnings, operating performance
should stabilize somewhat.
Despite the significant weakening in commercial air cargo demand
over the past two years, Evergreen has remained profitable,
reflecting the benefits of increased military flying. This is
expected to remain an important underpinning of financial
performance over the near to intermediate term. Evergreen has
also benefited from a favorable cost position due to its
nonunion workforce and standardized fleet (which reduces
training and maintenance costs) and from growth in backhaul
opportunities in the air cargo business and increased demand in
ground logistics services. Over time, military flying is likely
to decline from currently elevated levels. However, this is
likely to be offset by a rebound in commercial markets as
the global economy recovers.
The company's constrained liquidity position makes it very
vulnerable to a downturn in end-market demand. Should market
conditions deteriorate and put pressure on earnings and cash
flow, ratings are likely to be lowered.
FEDERAL-MOGUL: Woos Court to Approve Champion Release Agreement
---------------------------------------------------------------
Pursuant to an asset purchase agreement dated April 29, 2001,
debtor Federal-Mogul Ignition Company sold its aviation business
to Champion Aerospace Inc., formerly known as Aviation
Acquisition Corporation, for a $170,000,000 total purchase
price, subject to adjustment based on the actual value of
certain assets sold. F-M Ignition and Champion also agreed to
indemnify each other and certain related parties with respect to
certain events.
As security for the possibility that, after adjusting the
purchase price, the amount that Champion paid for the Aviation
Business was above the adjusted purchase price, and as security
for F-M Ignition's indemnity obligations, the parties and First
Union National Bank established an escrow for $5,000,000
pursuant to an escrow agreement on May 31, 2001. The Escrowed
Amount secured the parties' indemnification obligations and
$1,000,000 of the Escrow also secured any adjustment to the
purchase price.
Assuming that no purchase price adjustment was necessary and
that Champion had not raised any claims for which F-M Ignition
was obligated to indemnify Champion, the Escrow Agreement
provided for the release of $2,500,000 to F-M Ignition one year
after the sale closes and the remaining $2,500,000 plus interest
one year thereafter. In the event that F-M Ignition and
Champion could not agree on the appropriate adjustment to the
purchase price, the Purchase Agreement provides for binding
arbitration by PricewaterhouseCoopers to resolve any dispute.
Aside from the Purchase Agreement, F-M Ignition and Champion
also executed numerous related agreements. As security for
certain obligations under the Purchase Agreement, Champion,
TransDigm, Inc., and Federal-Mogul Corporation entered into a
Guarantee and Support Agreement on April 29, 2001. In
connection with the transaction contemplated under the Asset
Purchase Agreement, Champion and TransDigm executed a Letter
Agreement dated May 31, 2001 with F-M Ignition and Federal-Mogul
Corporation concerning accounts receivable, lien releases,
certain computer equipment, and e-mail. Champion and TransDigm
also executed a Transition Health Care Services Agreement on
May 31, 2001.
Because the Aviation Business required the use of certain
intellectual property retained by F-M Ignition, F-M Ignition
granted Champion an exclusive license of the intellectual
property pursuant to a Patent and Technology License and
Trademark License Agreement both on May 31, 2001.
However, after the sale was consummated, F-M Ignition and
Champion raised various claims against the other. Champion
raised accounting claims that, if upheld, will require F-M
Ignition to pay Champion $7,600,000. Similarly, F-M Ignition
raised accounting claims that, if upheld, will obligate Champion
to pay F-M Ignition $3,200,000 in addition to the $5,000,000
held in Escrow to secure F-M Ignition's indemnification
obligations.
As result of the controversy, the Escrow released only
$1,500,000 of the $2,500,000 F-M Ignition believed that it was
entitled on the one-year anniversary of the Closing.
The Debtors believe that the resolution of claims between F-M
Ignition and Champion is important. Arbitrating any adjustments
necessary to the purchase price for the Aviation Business
requires significant time, effort and resources. Therefore, the
Debtors would incur substantial accountants' fees, attorneys'
fees and expenses to arbitrate adjustments to the purchase
price. Given the complexity of the accounting issues raised, the
probability of success were F-M Ignition and Champion to proceed
to arbitration and thereafter judgment is, at best, uncertain.
After good faith, arm's-length negotiations, F-M Ignition and
Champion agreed to resolve and release all outstanding issues,
terminate their obligations to the other under the Purchase
Agreement and the related Agreements.
Pursuant to a Release and Termination Agreement approved by the
Court, the parties stipulate and agree:
(a) to take all steps necessary to terminate the Escrow and
effect the immediate distribution of the $3,500,000
funds remaining in the Escrow to F-M Ignition;
(b) to terminate the Letter Agreement and the Transition
Health Care Services Agreement;
(c) that, except with respect to asbestos-related claims,
certain provisions under the Guarantee will be
terminated and, without admitting any liability under
the Guarantee, its remaining provisions will remain in
effect;
(d) that F-M Ignition, for itself and its affiliates, will
grant to Champion and its affiliates a release, from any
and all causes of action, claims or demands arising from
the Sale, the Purchase Agreement and all related
Agreements;
(e) that, except with respect to Asbestos Claims, Champion,
for itself and its affiliates, will grant to F-M
Ignition and its affiliates a release from any and all
causes of action, claims or demands arising from the
Sale, the Purchase Agreement and the related Agreements;
and
(f) that the Patent and Technology License and the Trademark
License Agreement are not "executory contracts" for
purposes of Section 365 of the United States Bankruptcy
Code.
Accordingly, the Debtors ask the Court to approve their Release
Agreement with Champion. (Federal-Mogul Bankruptcy News, Issue
No. 37; Bankruptcy Creditors' Service, Inc., 609/392-0900)
FIBERCORE INC: 2002 Net Working Capital Deficit Widens to $27MM
---------------------------------------------------------------
FiberCore, Inc. (Nasdaq: FBCEE), a leading manufacturer and
global supplier of optical fiber and preform for the
telecommunication and data communications markets, announced
results for the fourth quarter and year ended December 31, 2002
The Company filed its annual report on Form 10-K with the SEC
late due to delays in finalizing the results from its foreign
subsidiaries. This resulted in the Company being notified on
April 17 that it would be delisted from the Nasdaq Smallcap
Market effective April 28, 2003. The delisting action has been
deferred pending a hearing that the Company requested which will
be held on May 22, 2003. The Company received an opinion from
its auditors, Deloitte & Touche LLP, that questioned the
Company's ability to continue as a going concern and the Company
is actively pursuing additional financing, debt restructuring
and further cost reductions to improve its liquidity situation.
As of December 31, 2002, FiberCore, Inc.'s working capital
deficiency increased to $27,352,000 compared to $1,319,000 the
previous year.
The Company must raise approximately $5 million in additional
financing soon and/or restructure some of its obligations to
address its liquidity crisis. The Company is also attempting to
renegotiate the terms on approximately $18 million in short-term
debts and notes payable.
For 2002, sales decreased by 51% to $25.5 million from $52.4
million in 2001. This was attributable to the dramatic downturn
in the telecommunications industry that began in 2001 and
continued throughout 2002. Based on industry sources, fiber
optic cable market volumes dropped in 2002 from 2001 levels by
approximately 65% in the US and 70% in Western Europe, where
most of the Company's customers are located. During this period
worldwide shipments dropped by 50%, and the value of the market
dropped even further when price reductions are considered. The
Company incurred a net loss for 2002 of $31.1 million, or $0.48
per share, compared to net income of $0.5 million, or $0.01 per
share in 2001. The 2002 results contain a number of charges for
restructuring and the write-off of certain assets on its balance
sheet. These charges total $14 million including the write-off
of goodwill, patents, inventory write-downs, restructuring
charges, and an additional $1.7 million for non-cash interest
expense.
The gross profit for the year was a negative $0.2 million, or 1%
of sales, in 2002 as compared to a gross profit of $16.3
million, or 31% of sales, in 2001. The lower margin was
primarily due to the substantially lower level of sales combined
with significantly lower selling prices. The gross margin was
6% during the first nine months of 2002 but was further
negatively impacted in the fourth quarter as the Company wrote
down $1.9 million in inventory and sold some of its lower grade
inventory below production costs.
The Company incurred an operating loss of $22.6 million in 2002
as compared to an operating profit of $5.4 million in 2001.
This loss includes $14 million in write-downs of assets and
restructuring charges described above. Net income was further
negatively impacted by higher interest expenses associated with
the Company's recent expansion activities, non-cash interest
expense of $1.7 million associated with the convertible
debentures the Company issued during the first half of 2002 and
by foreign exchange losses of $4.3 million incurred primarily
during the second and third quarters by the Company's Brazilian
subsidiary.
Sales in the fourth quarter of 2002 decreased by 44% to $5.2
million from $9.2 million in the year ago period, and were down
15% from the third quarter of 2002. Sales continued to be
negatively impacted by reduced demand in the single-mode fiber
market and by reduced pricing in all markets.
The Company reported a net loss of $16.7 million, or $0.24 per
share, in the fourth quarter of 2002. The fourth quarter
included $12.7 million in charges described above. This
compares to a net loss of approximately $3.3 million, or $0.05
per share, in the year ago quarter.
Gross profit in the quarter was a negative $1.4 million,
compared to a negative gross profit of $0.6 million in the year
ago period. FiberCore's gross margin was severely impacted by
$1.9 million of inventory write-downs during the quarter.
Dr. Aslami, President and CEO commented, "2002 was a difficult
year for FiberCore, as it was for most companies in our
industry. After making significant investments in acquisitions
and capacity expansion during 2000 and 2001, we were faced with
an unprecedented collapse in demand for single-mode fiber and
the ensuing price declines not only for single mode fiber, but
for multimode fiber as well. With the sudden reduction in
capital expenditures by the telecom carriers that began in 2001
and the related high levels of inventory being maintained by the
major fiber and cable manufacturers at that time, we experienced
declines in both demand and pricing for our single-mode fiber.
Offsetting some of the decline in the single-mode business, we
were able to grow our multimode fiber business with a volume
increase of 45% and a revenue increase of 32%. As a result of
these trends, multimode sales contributed approximately two-
thirds of 2002 revenues as compared to one-quarter of revenues
in 2001."
"If we can resolve our liquidity issues, we believe we are well
positioned for the industry's recovery when it does occur, as
our focus is primarily on feeder loop, premise, and the 'last
mile' applications, which are expected to lead the recovery in
the optical fiber markets. The long-haul market recovery is
expected to be much slower, but FiberCore is not a major player
in this field, especially in the US and Europe" added Dr.
Aslami.
"During 2002 and early in 2003, we have worked diligently to
reduce our cost structure significantly and have made major
steps in technology improvements, including implementing our
plasma technology to reduce our production costs and improve our
product capabilities. The Company continues to work through a
period of tight liquidity resources and has not yet concluded
any of the financing alternatives we discussed in our last
update on April 3. While sales have picked up during the past
six weeks, the Company is still in need of completing a
financing package quickly to meet its obligations. While I
cannot make any assurances, we are in ongoing discussions with
several groups to provide funding to the Company in the near-
term, including negotiating the terms of the investments,"
concluded Dr. Aslami. "Assuming we successfully resolve our
liquidity issues, we expect significant operating and cash flow
improvement in our operation, and a return to profitability in
2004."
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.
FLOW INTL: Sells Hydrodynamic Cutting Services Unit to UWG Group
----------------------------------------------------------------
Flow International Corporation (Nasdaq: FLOW), the world's
leading developer and manufacturer of ultrahigh-pressure
waterjet technology equipment used for cutting, cleaning
(surface preparation) and food safety applications, announced
that it has completed the sale of the assets of its Hydrodynamic
Cutting Services (HCS) business to UWG Group. HCS uses
ultrahigh-pressure abrasive jet technology to provide cutting
services on oil wells and offshore structures.
"In February we announced a two-year restructuring plan to
return the Company to profitability and reduce debt, by closing,
consolidating or divesting non -- core businesses," stated
Stephen R. Light, Flow's President and Chief Executive Officer.
"Consistent with this plan we have completed the sale of this
small non-core division. We are pleased with our on schedule
progress on the other aspects of the restructuring plan as we
continue to reduce headcount, working capital and occupied
square footage."
UWG, based in the United Kingdom, is a leading supplier of
abandonment services for wells and offshore structures. It has
offices in Norwich and Aberdeen in the United Kingdom, Rio de
Janeiro, Brazil, and Dubai, United Arab Emirates. UWG will
operate the business under the name WellCut(TM) Inc.
About Flow International
Flow International Corporation is the world's leading developer
and manufacturer of ultrahigh-pressure (UHP) waterjet technology
for cutting, cleaning, and food-safety applications, as well as
isostatic and flexform presses. FLOW provides total system
solutions for various industries, including automotive,
aerospace, paper, job shop, surface preparation, and food
production. For more information, visit http://www.flowcorp.com
* * *
As of January 31, 2003, Flow International was in default of its
financial loan covenants contained in its senior bank loan
agreement. The loan agreement -- data obtained from
http://www.LoanDataSource.comshows -- provides Flow
International with access to up to $73,000,000 of credit on a
revolving basis from:
Lender Commitment
------ ----------
Bank of America, N.A. $32,490,000
U.S. Bank National Association $21,840,000
KeyBank National Association $18,670,000
-----------
Total Revolving Commitment $73,000,000
BofA serves as the Agent for the lending syndicate. Avure
Technologies, Inc., Hydrodynamic Cutting Services, CIS
Acquisition Corporation, and Flow Waterjet Florida Corporation
guarantee Flow International's obligations to the Lenders.
Financial Covenants
In July 2002, the Company agreed to comply with four key
financial tests at January 31, 2003:
(1) maintain a Fixed Charge Coverage Ratio (Cash Flow
divided by Fixed Charges) of at least .80 to 1;
(2) maintain a Funded Debt Ratio of not more than
24.50 to 1;
(3) maintain a ratio of Debt to Tangible Net Worth of
not more than 2.75 to 1.
(4) maintain Senior Funded Debt Ratio (Senior Debt
divided by EBITDA) of not more than 16.50 to 1
Increased Security
The loan agreement, dated December 29, 2000, has been amended
eight (maybe more) times to date. An Eighth Amendment, dated
October 11, 2002, required the Company to provide the Lenders
with additional security, including bank control agreements,
subsidiary stock pledges and landlord consents.
Continued Availability
All debt outstanding to the Lenders has been classified as
current. To date, the Lenders have not exercised any of their
default rights. The company had $9.8 million of its $113 million
total credit facility available as of January 31, 2003.
Accelerated collections have increased this availability to
$17.3 million as of March 17, 2003.
FRONTIER ESCROW: S&P Rates $220-Mil. Senior Unsecured Notes at B
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' senior
unsecured rating to Frontier Escrow Corp.'s $220 million 8%
senior notes due 2013, guaranteed by Frontier Oil Corp. At the
same time, Standard & Poor's affirmed all ratings on Frontier
Oil, which remain on CreditWatch with positive implications. In
addition, the new issue was also placed on CreditWatch with
positive implications.
Texas-based guarantor Frontier Oil is estimated to have about
$460 million worth of debt pro forma for this transaction.
"Frontier Escrow will be the obligor of the notes and will
retain all proceeds until immediately before Frontier Oil's
merger with Holly Corp.," noted Standard & Poor's credit analyst
Paul B. Harvey. "At that point, Frontier Escrow will merge with
Frontier Oil and Frontier Oil will become obligor of the notes,
which will rank equally with the existing senior unsecured
indebtedness of Frontier Oil," he continued. Proceeds from the
notes will be used to fund Frontier Oil's merger with Holly.
Frontier Oil's merger with Holly improves Frontier Oil's credit
quality by broadening its refining business and strengthening
its balance sheet, assuming that the combined company is able to
receive a "small refinery" exemption from Tier II gasoline and
ultra low-sulfur regulations. Through the transaction, Frontier
Oil will increase its refining capacity by about 92,000 barrels
per day (bpd) to about 260,000 bpd total post-merger across
various markets in the Rocky Mountains and the Four Corners
region, including the pending acquisition of the Woods Cross
refinery in Utah (25,000 bpd) from ConocoPhillips Co. In
addition to broadening Frontier Oil's markets, the transaction
will also result in an improvement to cash flow measures.
However, before any potential upgrade of Frontier Oil, Standard
& Poor's must have a statement from regulators confirming
Frontier Oil's continued status as a "small refiner", which
enables it to defer material expenditures required to meet Tier
II gasoline and diesel specifications. If Frontier Oil were to
lose its "small refinery" exemption due to the transaction,
Frontier Oil's capital structure and liquidity would likely
deteriorate. As such, Standard & Poor's would be unlikely to
upgrade its ratings on Frontier Oil. Standard & Poor's intends
to meet with management and further review the potential success
of the transaction and articulate its opinion around the
expected close of the transaction in July 2003.
GLOBAL CROSSING: STT/Hutchison Purchase Agreement Amendments
------------------------------------------------------------
Michael F. Walsh, Esq., at Weil Gotshal & Manges LLP, in New
York, reports that despite working closely with the relevant
authorities in the United States to address regulatory concerns,
it has not been possible for Hutchison Telecommunications Ltd.
and the federal government to reach an agreement on an
appropriate structure that is fully satisfactory to all parties
concerned within a reasonable investment time frame. As a
result, pursuant to a letter dated April 30, 2003 and in
accordance with section 7.1(b) of the Purchase Agreement,
Hutchison terminated its rights and obligations under the
Purchase Agreement. The Hutchison Letter did not terminate the
Purchase Agreement; rather, it terminated only its own rights
and obligations. In a separate letter dated April 30, 2003 and
pursuant to section 8.3(b) of the Purchase Agreement, Singapore
Technologies Telemedia Pte Ltd. assumed Hutchison's rights and
ongoing obligations under the Purchase Agreement.
In connection with Hutchison's termination of the Purchase
Agreement, Mr. Walsh relates that Global Crossing Ltd., along
with its debtor-affiliates, and Hutchison agreed to provide each
other with mutual releases. In a letter, dated April 30, 2002,
the GX Debtors acknowledged Hutchison's termination. Moreover,
the GX Debtors and Hutchison mutually, irrevocably, and
unconditionally agreed to release and discharge each other and
their officers, directors, shareholders, employees, advisors,
attorneys, financial advisors and other professional advisors,
agents and representatives from any and all liabilities,
obligations and claims of any nature whatsoever arising under or
relating to the Purchase Agreement.
The GX Debtors further agreed that any plan proposed under
Chapter 11 of the Bankruptcy Code and any schemes of arrangement
under the laws of Bermuda will preserve and contain release,
injunction, and exculpation protection in Hutchison's favor and,
except as expressly provided in the Plan and the Schemes of
Arrangement, all of Hutchison's officers, directors,
shareholders, employees, advisors, attorneys, financial
advisors, accountants, other professional advisors, agents and
representatives and other protected persons or entities
identical in form, scope, and substance to those presently
existing under the Plan, the Confirmation Order, the Schemes of
Arrangement, and any order of the Supreme Court of Bermuda
sanctioning the Schemes of Arrangement pursuant to the Companies
Act 1981 of Bermuda.
At this point in these cases, the Debtors have three
alternatives available to them:
A. to amend the Purchase Agreement to extend the Voluntary
Termination Date to a date after the expected revised
regulatory process;
B. to continue to seek regulatory approvals without making
any changes to the Purchase Agreement; or
C. to terminate the Purchase Agreement.
The Debtors have determined that the first alternative --
amending the Purchase Agreement -- is by far the best for their
estates and creditors. Mr. Walsh points out that the advantage
of extending the Voluntary Termination Date is to obtain ST
Telemedia's commitment to make its $250,000,000 investment
through the balance of the expected regulatory process. The
only risk is that regulatory approval for completing the
Transaction with ST Telemedia will be further delayed or denied.
Mr. Walsh believes that neither of the other available
alternatives are attractive. The second alternative --
maintaining the status quo -- is not really an option because
the Debtors believe that ST Telemedia would terminate the
Purchase Agreement without a commitment by the Debtors to be
bound through the balance of the regulatory process. Even if ST
Telemedia were willing to continue seeking regulatory approval
without such a commitment, the Debtors would be risking a later
termination by ST Telemedia.
Mr. Walsh insists that terminating the Purchase Agreement now is
not an attractive alternative because it is likely to delay
significantly the Debtors' emergence from Chapter 11. While the
Debtors have made remarkable strides in maintaining their
customer base and operations through this regulatory process, it
is clear that they will not thrive until they emerge from
bankruptcy. Additional delay and expense is inherent in any
termination scenario because:
A. There is no guaranty that an acceptable purchaser or
transaction will be available. The Debtors have already
engaged in a multi-month auction process. The
culmination of that process was the execution of the
Purchase Agreement because Hutchison and ST Telemedia
made the best proposal to the Debtors. Nothing has
changed at the Debtors or in the industry since the
execution of the Purchase Agreement to lead the Debtors
to believe that a significantly better transaction is
available.
B. Even if an alternative transaction were available,
pursuing that possibility would significantly delay the
case. The process would require the Debtors to re-
auction the company, renegotiate a new purchase
agreement, draft a new disclosure statement and plan of
reorganization, solicit acceptances for the new plan, and
confirm the new plan. The time, expense, and risk
attendant to this alternative outweigh its possible
benefits, and there are no assurances that if the Debtors
terminated their relationship with ST Telemedia, they
would be able to complete a deal with new investors.
C. Termination of the Purchase Agreement will not obviate
the need for or speed up the regulatory process. In
general, the transfer of a controlling interest in the
Debtors' licenses to any third party must be approved by
the FCC. The typical timeline for FCC approval is about
six months or more. Unlike the alternative of amending
the Purchase Agreement and continuing with ST Telemedia,
which the Debtors have submitted in an amendment to their
existing FCC application, a new investor will have to
start the regulatory process from scratch.
Mr. Walsh explains that the principal purpose of Amendment No. 2
to the Purchase Agreement is to extend the Voluntary Termination
Date in section 7.1(b) from April 30, 2003 until October 14,
2003. The amendment also makes a number of conforming and
mechanical changes to the Purchase Agreement to reflect the fact
that there is only one remaining Investor, including:
-- clarification that the term "the Investors" or similar
terms that reflect the existence of more than one
Investor refer solely to ST Telemedia;
-- confirmation that Hutchison's right and obligation to
subscribe to shares in New GX have been assigned to and
assumed by ST Telemedia and that ST Telemedia has agreed
to pay the entire purchase price of $250,000,000;
-- modification to section 4.4 of the Purchase Agreement to
make it clear that ST Telemedia may appoint eight of the
ten directors on New GX's board of directors;
-- deletion of sections 6.2(b), 6.2(i), and 7.1(g) of the
Purchase Agreement since they are no longer applicable;
and
-- deletion of the reference to the "other" Investor in
sections 6.2(c) and 7.1(c) of the Purchase Agreement.
In addition to the reimbursement rights provided to ST Telemedia
in the Purchase Agreement, Mr. Walsh informs the Court that
Amendment No. 2 obligates the Debtors to reimburse ST Telemedia
for additional reasonable, actual, documented, out-of-pocket
costs and expenses incurred by ST Telemedia in connection with
these Chapter 11 cases for the period commencing on May 25,
2003, until the Transaction closes or the Purchase Agreement is
terminated. Up to an additional $2,250,000 will be paid in the
ordinary course. Thereafter, an additional $2,250,000 will be
paid, but only after the earlier to occur of the closing of the
Transaction or termination of the Purchase Agreement. In the
event additional payment is due after any termination which
results in the payment of liquidated damages under section 7.3
of the Purchase Agreement, the additional $2,250,000 will be
credited against those liquidated damages.
Mr. Walsh adds that Amendment No. 2 contemplates the delivery of
a "confirmation letter" to reduce the risk that either party
will be able to assert a default under the Purchase Agreement
prior to the closing of the transactions contemplated. If this
letter is delivered, it will contain acknowledgements regarding
any breaches under the Purchase Agreement or the existence of
any "Material Adverse Affect". In this letter, the Debtors will
acknowledge that it is not aware of any breach of the Purchase
Agreement by ST Telemedia. The proposed confirmation letter
would also contain ST Telemedia's agreement to:
-- remove the Debtors' obligation to use commercially
reasonable efforts to maintain its ownership interest in
Asia Global Crossing;
-- waive compliance with the financial tests in section
6.2(d) of the Purchase Agreement;
-- waive compliance with respect to section 4.10 of the
Purchase Agreement with respect to certain of the
contracts listed in that section; and
-- waive compliance with the financial tests in section
6.2(e) of the Purchase Agreement as long as exit costs
that arise between the date of the confirmation letter
and the closing of the Transaction, together with those
costs that have been reported to ST Telemedia, do not
exceed the amounts specified in that section.
These acknowledgements and waivers are advantageous to the
Debtors because they remove significant conditionality from the
closing of the Transaction.
Mr. Walsh contends that the only alternative that makes sense is
to amend the Purchase Agreement to extend the Voluntary
Termination Date by five months and seek regulatory approval for
a Transaction based on an increased investment by ST Telemedia.
The Debtors already have a confirmed Plan that is contingent
only on the approval of the Transaction by the regulatory
authorities. Much of the work required for regulatory approval
is complete and only in certain instances will the Debtors be
required to submit amended or new applications for regulatory
approval. Although continuing the regulatory approval process
will require an investment of the Debtors' time and money, this
cost pales in comparison to the cost and risk associated with
re-auctioning the company and confirming a new plan of
reorganization.
Mr. Walsh asserts that the Mutual Releases are in the Debtors'
best business judgment. Hutchison and the Debtors are amicably
terminating their relationship without the prospect of bringing
claims and causes of action against each other in the future.
The Debtors do not believe that Hutchison has breached the
Purchase Agreement; therefore, by granting their release, the
Debtors do not believe they are releasing any claims of value.
In addition, without Hutchison's withdrawal, regulatory approval
of the Purchase Agreement would be further delayed. Hutchison's
termination and ST Telemedia's assumption of all of Hutchison's
rights and ongoing obligations provide the Debtors with the
quickest and least expensive route to regulatory approval.
Moreover, Hutchison is releasing the Debtors from any liability
under the Purchase Agreement. (Global Crossing Bankruptcy News,
Issue No. 40; Bankruptcy Creditors' Service, Inc., 609/392-0900)
GLOBAL WATER: UST Schedules Section 341(a) Meeting on June 17
-------------------------------------------------------------
The United States Trustee will convene a meeting of Global Water
Technologies, Inc.'s creditors on June 17, 2003, 10:00 a.m., at
U.S. Custom House, 721 19th St., Room 104, Denver, Colorado
80202. This is the first meeting of creditors required under 11
U.S.C. Sec. 341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Using environmentally sound technologies, Global Water
Technologies, Inc., significantly enhances operating
efficiencies by reducing water use, operating cost, chemical use
and discharge to the environment. The Company filed for chapter
11 protection on May 14, 2003 (Bankr. Colo. Case No. 03-19278).
Robert Padjen, Esq., at Rubner Padjen and Laufer LLC represents
the Debtor in its restructuring efforts. When the Company filed
for protection from its creditors, it listed $60,023,000 in
total assets and $55,544,553 in total debts.
GROUP MANAGEMENT: Exits Chapter 11 Reorganization
-------------------------------------------------
Group Management Corp., (OTC BB: GPMT) announced they have
resumed trading under the symbol "GPMT."
"We have completed the filing of the financial statements, and
have exited the Chapter 11 reorganization.
Business Plan Development
Currently we are evaluating our business plan for the remainder
of the fiscal year. After exiting the Chapter 11 reorganization
we now have the flexibility to enter into profitable mergers and
acquisitions and joint ventures, without court approval.
- First on the agenda for the company is to evaluate whether
to remain as a business development company now that we have
exited Chapter 11. A decision will be rendered shortly on
this matter.
- Second will be to obtain the funding required to implement
our business plan objectives and obtain a steady cash flow
from the operations of the business.
We are very excited now that the legal and financial statement
hurdles have been completed. Our current organization and legal
team are actively seeking out profitable ventures in the
entertainment and publishing industries that the company can
enter and obtain viability.
We expect to announce several joint ventures within the coming
weeks now that the restructuring is nearing completion."
HIGH SPEED ACCESS: Will Make Cash Distribution on May 30
--------------------------------------------------------
High Speed Access Corp. "HSA" (OTC Bulletin Board: HSAC)
announces that its Board of Directors has authorized a cash
distribution of $1.40 per share on May 30, 2003, payable to
shareholders of record as of May 23, 2003. The $1.40 per share
distribution is the initial cash distribution pursuant to the
Plan of Liquidation and Dissolution approved by the Company's
shareholders on November 27, 2002.
The Company expects to make subsequent cash distributions
totaling $.13 per share prior to November 27, 2003. The amount
of these intended subsequent distributions may be higher or
lower due to various uncertainties, including but not limited
to:
* the amount, if any, of the remaining $1 million balance
of the Charter indemnity holdback that HSA ultimately
collects in connection with Charter's assertion of a
potential claim for indemnity in respect of Charter in
the IPO Litigation;
* the Company's ability to dispose of or settle any other
claims Charter may assert in connection with the sale of
substantially all of HSA's assets to Charter;
* the amount of the general contingency reserve (initially
established at $2,000,000 or approximately $.05 per
share) that HSA ultimately determines is appropriate to
assure the settlement of its liabilities during the
dissolution process, and the amount of such reserve
actually used to pay liabilities;
* the amount of time and money required to assess and
resolve outstanding and potential litigation against HSA;
* the amount, if any, HSA receives upon liquidation of its
remaining tangible assets net of any claims or
liabilities;
* the total amount of HSA's liquidation transaction and
administration costs; and
* any claims or potential claims that may arise before HSA
is finally liquidated and dissolved or that management
believes are likely to arise within 10 years of HSA's
dissolution.
HSA will announce the record date for the determination of
stockholders entitled to subsequent liquidating distributions at
a later date. After completing such subsequent liquidating
distributions, HSA also expects to close its stock transfer
books, cease the filing of periodic reports with the SEC, and
transfer its general contingency reserve and any remaining
assets and liabilities into a liquidating trust.
HUNTSMAN: Planned $250MM Sr. Unsec. Notes Get S&P's B- Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' rating to
petrochemical producer Huntsman LLC's proposed $250 million
senior unsecured notes due 2010.
Standard & Poor's said that at the same time, it has affirmed
its 'B+' corporate credit rating on the company. The outlook
remains stable.
Huntsman LLC, based in Salt Lake City, Utah, has approximately
$1.9 billion of debt outstanding.
"The rating on the proposed notes is two notches below the
corporate credit rating and the firm's existing secured bank
facility rating to reflect the new notes' subordinated position
versus the firm's secured creditors and limited prospects for
recovery in the event of a default," said Standard & Poor's
credit analyst Kyle Loughlin.
Standard & Poor's said that its ratings reflect Huntsman LLC's
good business risk profile, the credit position of its parent,
HMP Equity Holdings Corp, and a highly aggressive financial
profile. With approximately $2.9 billion in annual revenues,
Huntsman LLC is among the largest privately held chemical
companies in North America.
IMC GLOBAL: Elects Bernard Michel to Board of Directors
-------------------------------------------------------
Bernard M. Michel, retired Chairman and Chief Executive Officer
of Cameco Corporation, was elected to the Board of Directors of
IMC Global Inc. (NYSE: IGL) at the Company's 2003 Annual Meeting
of Stockholders. The election of Mr. Michel, 65, who will serve
a two-year term expiring in 2005, increases the size of IMC
Global's Board to nine.
Mr. Michel served as Chairman and CEO of Cameco from April 1993
through December 2002, when he retired as CEO. He retired as
Chairman and as a Director of Cameco on March 31, 2003. Based
in Saskatoon, Saskatchewan, Cameco Corporation (TSE: CCO, NYSE:
CCJ) is an international mining company which is the world's
leading supplier, refiner and converter of uranium, a partner in
the generation of nuclear electricity, and a gold producer.
Mr. Michel joined Cameco in 1988 as Senior Vice President of
Operations and was promoted to Chief Operating Officer in
January 1990. He was named President and elected a Director in
October 1990, and appointed Chief Executive Officer in October
1991. He became Chairman in April 1993.
Mr. Michel's engineering and management career spans more than
35 years in the mining and nuclear industries in Europe and
North America. Prior to Cameco, Mr. Michel was President of
Amok Ltd., a Canadian subsidiary of Cogema, a French nuclear
company he joined after working in various positions for
Entreprise Miniere et Chimique, a leading French fertilizer
producer and distributor. During his tenure with Entreprise
Miniere et Chimique, he managed the operations of a Canadian
potash mine.
Mr. Michel is Chairman of the Board of Bruce Power Inc., an
electric utility company operating six nuclear reactors in
Ontario, and a Director of IPSCO Inc. and Canadian Light Source
Inc.
Mr. Michel earned an engineering degree from the Ecole
Polytechnique in Paris, France in 1960. He was awarded the
French Order of the Legion d'Honneur, in the rank of Chevalier,
in July 1998.
With 2002 revenues of $2.1 billion, IMC Global is the world's
largest producer and marketer of concentrated phosphates and
potash crop nutrients for the agricultural industry and a
leading global provider of feed ingredients for the animal
nutrition industry. For more information, visit IMC Global's
Web site at http://imcglobal.com.
* * *
As previously reported, Fitch Ratings assigned a 'BB' rating to
IMC Global Inc.'s new 11.25% senior unsecured notes due June 1,
2011. Fitch has affirmed the 'BB+' rating on the senior secured
credit facility, the 'BB' rating on the existing senior
unsecured notes with subsidiary guarantees and the 'B+' rating
on the senior unsecured notes with no subsidiary guarantees. The
Rating Outlook has been changed to Negative from Stable.
JP MORGAN: Fitch Cuts Series 2001-C1 Class N Notes Rating to CCC
----------------------------------------------------------------
Fitch Ratings downgrades J.P. Morgan Chase (JPMC) Commercial
Mortgage Securities Corp.'s mortgage pass-through certificates,
series 2001-C1, $5.2 million class N to 'CCC' from 'B-'. The
$37.9 million class A-1, $156.2 million class A-2, $603.7
million class A-3, and interest only classes X-1 and X-2 are
affirmed at 'AAA' by Fitch. Fitch also affirms the $47.7 million
class B certificates at 'AA', $21.9 million class C at 'AA-',
$21.9 million class D at 'A', $12.9 million class E at 'A-',
$25.8 million class F at 'BBB', $12.9 million class G at 'BBB-',
$21.9 million class H at 'BB+', $9 million class J at 'BB', $6.4
million class K at 'BB-', $10.3 million class L at 'B+', $5.2
million class M at 'B', $32.7 million class NC-1 at 'A' and $6.7
million class NC-2 at 'A-'. Fitch does not rate the $19.3
million class NR certificates. The rating downgrade and
affirmations follow Fitch's annual review of the transaction,
which closed in November 2001.
The downgrade is primarily due to Fitch's evaluation of the
specially serviced loans that are expected to result in losses.
The expected losses total approximately $9 million, which would
deteriorate the credit enhancement of class N.
Currently, three loans (2%) are in special servicing two of
which are expected to result in losses. The largest loan is
secured by a multifamily property in Colorado Springs, Colorado,
is 30 days delinquent, and comprises 1% of the pool. The decline
in performance is due to a soft market. Fitch expects this loan
to result in a loss. The second largest specially serviced loan
is over 90 days delinquent and also expected to result in a
loss. The multifamily property is located in a new development
near a research facility that was recently closed.
Midland Loan Services L.P., the master servicer, collected year-
end 2002 operating statements for 79.6% of the pool. The YE 2002
weighted average debt service coverage ratio (DSCR) for these
loans declined to 1.54 times, compared to 1.72x at issuance.
Four loans (3.2%) had a YE 2002 DSCR below 1.0x. Fitch considers
six loans (3%) on Midland's watchlist a concern.
Fitch reviewed the performance of the Newport Centre loan
(15.1%). The loan is secured by a 920,000 square foot (sf)
regional mall, of which 386,587 sf is in-line space and the
actual collateral of the loan, located in Jersey City, New
Jersey. Fitch's stressed DSCR was calculated by using servicer
reported net operating income (NOI) and a Fitch stressed
constant of 9%. The YE 2002 DSCR was 1.49x, compared to 1.51x at
issuance. Occupancy has remained consistent at 98%. Given the
stable performance of this loan it maintains an investment-grade
credit assessment and classes NC-1 and NC-2 were affirmed.
As of the May 2003 distribution date, the pool's aggregate
principal balance has decreased by 1.2% to $1.06 billion from
$1.07 billion at issuance. The certificates are currently
collateralized by 169 loans, consisting primarily of retail
(41.7%), multifamily (30.8%), office (10.1%), and industrial
(9.4%). The properties are located in 34 different states, with
concentrations in New Jersey (22%), California (12.9%), and
Texas (9.4%).
Fitch will continue to monitor the performance of the pool,
including expected loses and loans of concern.
KLEINERT'S: Alvarez & Marsal Engaged to Provide Financial Advice
----------------------------------------------------------------
Kleinert's, Inc., and its debtor-affiliates sought and obtained
approval from the U.S. Bankruptcy Court for the Southern
District of New York to retain and employ Alvarez & Marsal,
Inc., as financial advisor to facilitate the successful
completion of the company's chapter 11 cases.
Alvarez & Marsal has been advising and providing interim
management services to Debtors prepetition. This afforded
Alvarez & Marsal an intimate familiarity with the Debtors'
business and operations.
In its capacity as the Debtors' financial advisor, Alvarez &
Marsal has agreed to perform:
(a) assistance in evaluation of the Debtors' current
business plan and in preparation of revised operating
plans and cash flow forecasts and presentation of such
plans and forecasts to the Debtors' Board of Directors
and other parties in interest as directed by the
Debtors;
(b) assistance in identification and implementation of cost
reduction and operations improvement opportunities;
(c) assistance in finance, treasury and chapter 11 case
management issues, including assistance in preparation
of reports and liaison with creditors and other parties
in interest as directed by the Debtors
(d) assistance in the sale of divisions and other assets
and with the negotiation of any related transition
service agreements;
(e) assistance in developing a plan of reorganization and
working with management in negotiating with creditors
and other parties in interest; and
(f) such other activities as are approved by the Board of
Directors of the Debtors and agreed to by A&M.
For its professional services, Alvarez & Marsal will receive a
$150,000 monthly fee. Additionally, Alvarez & Marsal will be
entitled to incentive compensation in the amount of $300,000,
payable upon the earlier of:
i) the sale, transfer or other disposition of substantially
all of the assets of the Buster Brown division of the
Debtors, and
ii) the consummation of a plan of reorganization for the
Debtors.
Kleinert's Inc., filed for chapter 11 protection on May 7, 2003
(Bank. S.D. N.Y. Case No. 03-41140). Wendy S. Walker, Esq., at
Morgan, Lewis & Bockius, LLP represents the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed its estimated debts and assets of
over $50 million each.
LASERSIGHT INC.: Needs to Secure Cash Now or File for Bankruptcy
----------------------------------------------------------------
LaserSight Incorporated (OTC Bulletin Board: LASE) announced
financial results for the quarter ended March 31, 2003. Revenues
for the first quarter of 2003 were $2.3 million compared to $2.0
million in the first quarter of 2002. The Company reported a
loss attributable to common shareholders of $2.9 million, or
$0.10 per share for the first quarter of 2003, compared to a
loss of $5.1 million, or $0.19 per share in the comparable
period of 2002. The average common shares outstanding were
27,842,000 during the first quarter of 2003 compared to
26,488,000 during the comparable period of 2002.
LaserSight's 10-Q Quarterly Report discusses the Company's
present financial conditions and its severe liquidity
difficulties, including its need for an immediate cash infusion
without which it will be forced to file for bankruptcy
protection.
To meet this problem, LaserSight has been in continuous
negotiations with the holder of its Series H Convertible
Preferred Stock, regarding the possibility of securing immediate
cash payments for purchase of Company products, further
definition of the terms of a long-term strategy for the Company
in China, and a timetable for additional product purchases. The
Company expects, but cannot assure, that those negotiations will
produce an agreement that will be closed in the very near
future.
As previously announced, on April 29, 2002 LaserSight's Common
Stock was transferred to The OTC Bulletin Board Market where it
is currently traded.
LaserSight is a leading supplier of quality technology solutions
for laser vision correction and has pioneered its patented
precision microspot scanning technology since it was introduced
in 1992. Its products include the LaserScan LSX precision
microspot scanning system, its international research and
development activities related to the Astra family of products
used to perform custom ablation procedures known as CustomEyes
and its MicroShape family of keratome products. The Astra family
of products includes the AstraMax diagnostic workstation
designed to provide precise diagnostic measurements of the eye
and CustomEyes AstraPro software, surgical planning tools that
utilize advanced levels of diagnostic measurements for the
planning of custom ablation treatments. In the United States,
the Company's LaserScan LSX excimer laser system operating at
300 Hz is approved for the LASIK treatment of myopia and myopic
astigmatism. The MicroShape family of keratome products includes
the UltraShaper durable keratome and UltraEdge keratome blades.
LEAP WIRELESS: Court Sets June 13 General Claims Bar Date
---------------------------------------------------------
Leap Wireless International Inc., and its debtor-affiliates ask
the Court to fix 4:00 p.m. Pacific Standard Time on
June 13, 2003 as the final date and time for proofs of claim to
be filed against them. Governmental units may have until 4:00
p.m. Pacific Standard Time on July 13, 2003 to file proofs of
claim against the Debtors.
The Debtors propose to give notice of the Bar Date to all
creditors and governmental units by:
(a) mail no later than May 16, 2003, including a form of
proof of claim substantially in the form of Official
Bankruptcy Form 10; and
(b) publication by no later than May 16, 2003 once in each
of these newspapers -- The Wall Street Journal (national
edition) and San Diego Union Tribune.
In addition, the Debtors will give notice of the Bar Date to the
California Secretary of State, Securities and Exchange
Commission, the District Director of the Internal Revenue
Service for the Southern District of California and the United
States Attorney's Office for the Southern District of
California. The Debtors contend that these notice procedures
will constitute good and sufficient notice of the Bar Date to
all known and unknown creditors.
Rule 3003(c)(3) of the Federal Rules of Bankruptcy Procedure
provides that the "Court shall fix and for cause shown may
extend the time within which proofs of claim or interest may be
filed." Furthermore, this Court's local rules provide that
creditors receive 28 days notice of the Bar Date.
Robert A. Klyman, Esq., at Latham & Watkins, in Los Angeles,
California, tells the Court that the circumstances of the
Debtors' cases justify setting the Bar Date for the dates
proposed. The Debtors intend to confirm a plan of
reorganization expeditiously, resulting in swift and focused
Chapter 11 cases. To this end, the Debtors heavily negotiated
the terms of the restructure prior to the Petition Date with the
Informal Vendor Debt Committee and the Informal Noteholder
Committee and have filed a number of motions for "first day"
relief, including this request. Accordingly, setting the Bar
Date now, and for the dates proposed, will allow the Debtors to
quickly turn to the final stages of the cases, namely, claims
resolution.
The Debtors request that all their creditors and governmental
units be required to file a proof of claim on account of any
claim against the Debtors; provided however that, at this time,
proofs of claim would not be required to be filed by creditors
holding or wishing to assert claims against the Debtors of these
types:
A. claims on account of which a proof of claim has already
been properly filed with the Court against the Debtors;
B. claims allowable under Sections 503(b) and 507(a)(1) of
the Bankruptcy Code as expenses of administration;
C. claims of the Debtors' current officers or directors for
indemnification and contribution arising as a result of
these officers' or directors' postpetition services to
the Debtors;
D. claims held by equity interest holders, provided,
however, that if an equity interest holder asserts any
rights as a creditor of the Debtors, a Proof of Claim is
required; and
E. claims of beneficial and record holders of senior notes
due in 2010 and the senior discount notes due in 2010
issued under a certain Indenture, dated February 23,
2000, by and among Leap, Cricket Communications Holdings,
Inc., and U.S. Bank National Association.
Mr. Klyman states that if the trustee under the Indenture
disagrees with the claim scheduled by the Debtors with respect
to the Senior Notes and Senior Discount Notes, the Indenture
Trustee may file a proof of claim on or before the Bar Date, as
authorized by Bankruptcy Rules 3003(1) and 3003(5). The proof
of claim filed by the Indenture Trustee will supersede any proof
of claim filed by any beneficial owner of the Notes. In the
absence of a proof of claim filed by the Indenture Trustee, the
scheduled Senior Note and Senior Discount Note claims will
supersede any proof of claim filed by any beneficial owner of a
Senior Note or Senior Discount Note. Beneficial and record
holders of the Notes will not be required to file proofs of
claim in order to receive any distribution on account of these
notes that is approved in these cases.
Also, any person or entity that holds a claim that arises from
the rejection of an executory contract or unexpired lease would
be required to file a proof of claim based on the rejection by
the later of:
(a) 30 days after the date of any order authorizing the
Debtors to reject the agreement; and
(b) the Bar Date.
Mr. Klyman relates that the Debtors do not intend for the Claims
Bar Date to apply to the filing of proofs of interests in the
Debtors. However, any equity security holder that has a claim
arising out of ownership of an equity interest in the Debtors,
or arising out of the purchase or sale of such an interest, must
file this claim on or before the Claims Bar Date.
* * *
Judge Adler orders that all persons and entities wishing to
assert a claim against the Debtors are required to file, on or
before 4:00 p.m. Pacific Time on the date that is 30 days after
the date the Debtors file their Schedules and Statement of
Financial Affairs, a completed and executed proof of claim form
on account of any claim the creditor wishes to assert against
any of the Debtors.
In addition, all governmental units wishing to assert a claim
against the Debtors are required to file, on or before 4:00 p.m.
Pacific Time on the date that is 30 days after the Claims Bar
Date, a completed and executed proof of claim form on account of
any claim the governmental unit wishes to assert against any of
the Debtors. (Leap Wireless Bankruptcy News, Issue No. 4;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
LERNOUT & HAUSPIE: Committee's Supplement to First Amended Plan
---------------------------------------------------------------
The Official Committee of Unsecured Creditors in the Chapter 11
cases of Lernout & Hauspie Speech Products N.V. and Dictaphone
Corp., and its debtor-affiliates, represented by Joseph J.
Bodnar, Esq., at Monzack & Monaco PA, provides a supplement to
their First Amended Plan to incorporate:
(1) the Assumption and Assignment Schedule;
(2) the Plan Administration Agreement;
(3) the Litigation Trust Agreement;
(4) the Mutual Release Agreement among L&H NV and
L&H Holdings dated June 26, 2002; and
(5) the Litigation Monitoring Committee Members.
The Committee reserves the right to modify or amend the Plan
Supplement in any manner.
Assumption and Assignment Schedule
The Committee states that the Amended Plan provides that all
executory contracts and unexpired leases not specifically listed
on their Schedule are to be deemed automatically rejected as of
the Confirmation Date.
At present, the Committee believes that L&H NV does not intend
to assume any executory contract or unexpired lease in
accordance with the Plan and, therefore, includes no listing for
this Schedule. However, the Committee expressly reserves the
right at any time on or before the Confirmation Date to amend
their Schedule to delete or add any executory contract or
unexpired lease."
This may well mean that the non-debtor party to any lease or
contract not already assumed or rejected must wait until the
Confirmation Date to determine the legal status of their
contract or lease.
Plan Administration Agreement
L&H NV and Scott L. Baena, Esq., will enter into the Plan
Administrator Agreement. Since this is a liquidating Plan, Mr.
Baena will be the sole officer and director of Post-Effective
Date L&H. His duty will be to administer the Plan according to
its terms and the Administration Agreement. The Plan
Administrator may also serve concurrently as the Litigation
Trustee.
Title to the Chapter 11 Assets are vested in Post-Effective Date
L&H as of the Effective Date of the Plan. After that date,
Post-Effective Date L&H may use, acquire and dispose of property
free of any restrictions imposed under the Bankruptcy Code or
Rules, and the Bankruptcy Court. As of the Effective Date, all
of the Chapter 11 Assets are to be owned free and clear of all
liens, claims or encumbrances or interests, except as
specifically provided in the Plan, by Post-Effective Date L&H.
The liabilities and obligations to make the Distributions
required by the Plan are to be assumed by Post-Effective Date
L&H. Otherwise, the Post-Effective Date L&H exists only to
liquidate the L&H NV estate's remaining assets, obtain insurance
and prepare and file all tax returns, prosecute all causes of
action pending or to be filed in the future, reconcile claims,
pay administration expenses, and carry out the provisions of the
Plan as confirmed.
The Plan Administrator is to prepare, as soon as reasonably
practicable, a register of the holders of Litigation Trust
Beneficial Interests and deliver that to himself as Litigation
Trustee. Thereafter, the Plan Administrator is to promptly
notify himself of any disputed claims that become allowed,
specifying the extent to which the holder of the claim is
eligible to receive Litigation Trust Beneficial Interests.
Litigation Trust Agreement
The Litigation Trust Agreement creates a liquidating trust for
federal income tax purposes, and is between L&H NV and Mr. Baena
in his alternate position as Litigation Trustee. The Plan
provides for the establishment of a Litigation Trust to initiate
and prosecute all pending and future causes of action on behalf
of the creditors of the L&H NV estate holding Claims in Classes
3 and 4. The proceeds of that litigation form a large part of
the distribution, after payment of the costs of litigation and
administration of the Trust.
As of the Effective Date, the Lernout & Hauspie Speech Products
N.V. Litigation Trust will receive the transfer and assignment
of all of the estate's right, title and interest in all assigned
causes of action and any proceeds received by the Debtor or
Post-Effective Date L&H, together with all documents connected
with those actions, free and clear of all liens, claims or other
interests in the trust assets, except as provided in the Plan.
Mr. Baena will be assisted and advised in the Trust's operations
and functions by the Litigation Monitoring Committee.
Mutual Release Agreement among L&H NV and
L&H Holdings dated June 26, 2002
The Mutual Release Agreement between Holdings and L&H NV was
included in the First Amended Plan of Liquidation by L&H
Holdings (USA), Inc., and is part of that confirmation process.
Further, the release was included in a separate motion filed
jointly by these Debtors and previously approved by the Court.
Litigation Monitoring Committee Members
The members of the Litigation Monitoring Committee are:
(1) Michael Curran of KBC Bank;
(2) A. Edwin Matthews of Fortis Financial Services; and
(3) Albert V. DeLeon of Dexia. (L&H/Dictaphone
Bankruptcy News, Issue No. 42; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
LTV CORP: Admin. Creditors' Panel Gets Okay to Hire Reed Smith
--------------------------------------------------------------
The Committee of Administrative Creditors of LTV Steel Company,
Inc., sought and obtained the Court's authority to retain Reed
Smith LLP as its local counsel.
Reed Smith had previously been retained as counsel for the
Official Committee of Unsecured Creditors in the LTV Steel case.
Now, as local counsel, Reed Smith will be:
(1) advising the Committee and its other professionals
with respect to the historical facts in these
cases and consulting with the Debtors and other
committees concerning the administration of these
cases;
(2) assisting and advising the Committee in its
evaluation of intercompany claims;
(3) assisting and advising the Committee in its
investigation and evaluation of the acts, conduct,
assets, liabilities, and financial condition of the
Debtors, their affiliates, and their present and
former officers and directors, which might give rise
to claims or causes of action and, as appropriate,
prosecuting any such claims or actions;
(4) assisting and advising the Committee in its
evaluation and investigation of environmental issues
involving or impacting the LTV Steel estate;
(5) consulting with the Committee's professionals in its
evaluation and review of the operation of the
Debtor's remaining businesses, and the desirability
of the continuation of those businesses, and any
other matters relevant to the case or to the
formulation of a Plan for any of the Debtors and
the impact on the LTV Steel estate;
(6) providing services to the Committee or assistance to
the Committee's other professionals on matters as
may be requested by the Committee to the extent that
a conflict does not exist; and
(7) preparing all necessary motions, applications,
answers, orders, reports or other papers in
connection with these matters.
Reed Smith will charge its standard hourly rates, which range
from $185 to $670 for lawyers and from $40 to $255 for
paraprofessionals. The principal lawyers expected to work on
this matter and their hourly rates for 2003 range from $300 to
$500 for partners and $210 to $300 for associates. (LTV
Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service,
Inc., 609/392-00900)
METROMEDIA: NY Mercantile Exchange Taps Private Network Service
---------------------------------------------------------------
Metromedia Fiber Network, Inc. (MFN), the leading provider of
optical communications infrastructure solutions, will provide a
private, unshared fiber optic network to the New York Mercantile
Exchange, the largest physical commodities exchange in the
world. MFN will connect the Exchange's trading floor with its
back-up facility to allow for real-time mirroring of data.
MFN's WaveChannel service combines dark fiber and DWDM equipment
to create a turnkey, fully-managed, one hundred percent private
and unshared wavelength- based optical network capable of
supporting the organization's mission- critical applications.
The Exchange will be able to quickly and efficiently provision
additional bandwidth as needed simply by lighting another
wavelength on the installed fiber. ADVA Optical Networking (FSE:
ADV), a leading global provider of metro optical networking
solutions, will partner with MFN to provide the equipment for
this DWDM-based solution.
"Our business moves quickly transmitting volumes of information
representing billions of dollars each day," said J. Robert
Collins, Jr., president of the Exchange. "Real-time secure back
up is essential to the way we do business and we rely on fiber
optics to facilitate this production recovery environment."
"For financial institutions like the New York Mercantile
Exchange, security is a paramount concern and a few minutes of
data can represent hundreds of millions of dollars, which is why
our unshared network service is the solution of choice," said
John Gerdelman, president and chief executive office. "MFN's
Wavechannel service will provide the Exchange with the security,
unlimited scalability and a high-speed connection it needs now
and as it grows. This connection will allow the Exchange to
share information in real-time between secure locations and over
a secure connection, adding a layer of redundancy and
reliability to its operations."
About Metromedia Fiber Network, Inc.
Metromedia Fiber Network is the leading provider of optical
communications infrastructure solutions. The Company combines
the most extensive metropolitan area fiber network with a global
optical IP network, state-of-the-art data centers and award
winning managed services to deliver fully integrated, outsourced
communications solutions for high-end enterprise companies. The
all-fiber infrastructure enables MFN customers to share vast
amounts of information internally and externally over private
networks and a global IP backbone, creating collaborative
businesses that communicate at the speed of light.
On May 20, 2002, Metromedia Fiber Network, Inc. and most of its
domestic subsidiaries including PAIX.net, Inc. commenced
voluntary Chapter 11 cases in the United States Bankruptcy Court
for the Southern District of New York.
Metromedia Fiber Network's 10.000% bonds due 2009 (MFNX09USR1)
are trading between 3.75 and 4.25. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=MFNX09USR1
for real-time bond pricing.
NORAMPAC INC: S&P Assigns BB+ Rating to $250MM Unsecured Notes
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB+' rating to
Norampac Inc.'s proposed senior unsecured US$250 million note
issue, and its 'BBB-' rating to the company's C$350 million
proposed senior secured credit facility. At the same time, the
ratings outstanding on containerboard and corrugated box
producer were affirmed, including the 'BB+' long-term corporate
credit rating. The outlook is stable.
The ratings on Montreal, Quebec-based Norampac Inc., the largest
containerboard producer in Canada, reflect the company's
competitive cost position in containerboard production, leading
market position across Canada, improving integration in box
conversion, and sound financial profile characterized by
moderate debt levels and healthy credit measures.
Norampac, a joint venture created in January 1998 from the
amalgamation of the containerboard operations of Domtar Inc. and
Cascades Inc., is Canada's largest box producer. The company has
strong customer coverage across the country and, as a result,
has leading market shares in the main regions. Furthermore, the
integration of both firms' respective operations resulted in
significant profitability improvements that have exceeded
expectations.
"Demand for containerboard and corrugated boxes remains weak due
to continued uncertainty in the U.S. economy. In the past
quarter, Norampac realized lower selling prices for both
segments, coupled with higher fiber costs and peak energy
pricing, which served to significantly compress operating
margins," said Standard & Poor's credit analyst, Clement Ma.
Nevertheless, despite near-term price uncertainty, and the
impact of a weaker U.S. dollar on Canadian dollar costs,
Norampac should continue to generate healthy profitability and
cash flow with its cost efficient facilities and leading
competitive position across Canada, as well as its growing
presence in the U.S.
Norampac currently has four facilities in the northeastern U.S.-
-having recently acquired a converting facility in Schenectady,
New York--that supports the company's strategy to expand U.S.
coverage. To build on this strategy and achieve a targeted
forward integration of more than 70%, the company is expected to
continue with acquisitions of individual converting facilities
or a larger network of box plants in the near term.
Acquisitions are expected to be financed in a disciplined
manner, and likely will result in a moderate increase in total
debt. In addition, the company is expected to continue with
dividend payments to its parents of 20% of excess available cash
flow, which was about C$28 million in 2002.
Norampac's bank loan and credit facility are rated one notch
higher than the long-term corporate credit rating because of the
reasonable prospect for recovery in the event of default.
Standard & Poor's does not impute any direct credit support to
Norampac from its ownership by Domtar and Cascades.
Weaker market conditions will continue to hamper Norampac's
operating profitability, but management's commitment to a
moderate capital structure should result in coverage ratios that
are at least commensurate with the ratings category, and enable
the company to pursue a disciplined acquisition strategy.
NORTHWEST AIRLINES: Proposes Exchange Offer for Unsecured Notes
---------------------------------------------------------------
Northwest Airlines Corporation (Nasdaq: NWAC) and Northwest
Airlines, Inc. announced that they had filed a registration
statement with the U.S. Securities and Exchange Commission (SEC)
relating to a potential offer to exchange newly created pass
through certificates representing interests in equipment notes
secured by a number of the company's aircraft for an aggregate
of $550 million of outstanding senior unsecured debt securities
of Northwest Airlines, Inc.
The decision to proceed with the exchange offer will depend on
market and business conditions over the next several weeks,
finalization of the exchange offer terms that are acceptable to
the company, as well as other factors. Certain terms of the
exchange offer have not yet been determined and will be
announced upon the launch of the offer. The company will not
receive any cash proceeds from the issuance of the new
securities in the exchange offer, which will be subject to
various conditions as described in the registration statement.
Under the terms of the proposed offer, Northwest Airlines, Inc.
intends to issue $576 million of Class D Certificates,
representing interests in the assets of the 2003-1 Pass Through
Trust, which will acquire a direct or indirect interest in notes
secured directly or indirectly by 69 aircraft owned by Northwest
Airlines, Inc. The registration statement states that $540
million of the underlying notes will be entitled to the benefits
of Section 1110 of the federal bankruptcy code. The unsecured
securities that Northwest Airlines, Inc. is targeting in
connection with the offer are the:
-- 8.375% Notes due 2004;
-- 8.52% Notes due 2004; and
-- 7-5/8% Notes due 2005.
The dealer manager for the exchange offer is Morgan Stanley. A
prospectus relating to the exchange offer, when available, may
be obtained from the New York office of the dealer manager. The
registration statement relating to these securities filed with
the Securities and Exchange Commission has not yet become
effective. These securities may not be sold nor may offers to
buy be accepted prior to the time that the registration
statement becomes effective.
This announcement is neither an offer to sell nor a solicitation
to buy any of these securities and shall not constitute an
offer, solicitation or sale in any jurisdiction in which such
offer, solicitation or sale is unlawful.
Interested parties may read a copy of Northwest Airlines'
registration statement and any other document the airline files
at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549.
Interested parties may call the SEC at 1-800-SEC-0330 for
further information on its public reference rooms.
Northwest Airlines, Inc. is the world's fourth largest airline
with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and
Amsterdam, and approximately 1,500 daily departures. With its
travel partners, Northwest serves nearly 750 cities in almost
120 countries on six continents.
DebtTraders reports that Northwest Airlines Inc.'s 10.150% ETCs
due 2005 (NWAC05USR2) are trading at 85 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NWAC05USR2
for real-time bond pricing.
NRG ENERGY: Court Allows Continued Use of Cash Management System
----------------------------------------------------------------
Matthew A. Cantor, Esq., at Kirkland & Ellis, in New York, tells
the Court that NRG Energy, Inc., and its debtor-affiliates
maintain an integrated cash management system that provides
well-established mechanisms for the collection, management and
disbursement of funds in their domestic operations. The Cash
Management System is essential to enable the Debtors to
centrally control and monitor corporate funds, invest idle cash,
ensure cash availability and liquidity, and reduce
administrative expenses by facilitating the movement of funds
and the development of timely and accurate account balance and
presentment information.
In addition, through the Cash Management System, NRG is able to
separate accounts by Project to better track and trace the
movement of funds, which ultimately assists in the accounting
and auditing of the Debtors' books and records.
According to Mr. Cantor, the Cash Management System is comprised
of several accounts maintained at the corporate level solely by
the parent entity, NRG, as well as numerous accounts maintained
at the Project level. The cash management arrangements of the
Projects can be categorized into one of the these three types of
"subsystems":
(1) a restricted cash management subsystem where the
underlying Project uses intercompany power marketing
services -- the Power Marketing Subsystem;
(2) a restricted cash management subsystem where the
underlying Project does not utilize intercompany power
marketing services -- the Restricted Subsystem; and
(3) an unrestricted cash management subsystem where the
underlying Project does not utilize intercompany power
marketing services -- the Unrestricted Subsystem.
Mr. Cantor informs Judge Beatty that the principal components of
the Cash Management System, including the various Project
subsystems are:
I. The Corporate Accounts
(A) The Corporate Concentration Accounts are maintained at
Wells Fargo Bank, and LaSalle National Bank;
(B) Transfers from the WF Concentration Account are made
into:
(1) The Payroll Account,
(2) The WF Overnight Investment Account where available
funds exceeding $10,000 in the WF Concentration
Account and an account maintained by one of the
Unrestricted Generating Companies are automatically
swept at the end of each day temporarily, and
(3) The WF Investment Accounts where NRG invests excess
cash receipts from both the Concentration Accounts
in short-term investments;
(C) Transfers from the LaSalle Concentration Account funds:
(1) the working capital requirements of certain of the
Projects on an as needed basis,
(2) special wire transfers to pay NRG's operating costs
to third parties and the operating costs of two of
the NRG domestic entities, and
(3) the LaSalle CD Account, which in turn processes
check payments to third party vendors; and
(D) The LaSalle Overnight Investment Account -- where
available funds in the LaSalle Concentration Account and
other accounts are automatically swept into at the end
of each day. These funds are automatically swept back
into their account on a daily basis.
II. The Project Level Cash Management Subsystems
(A) The Power Marketing Subsystem
(1) Transfers to the Power Marketing Account and the
Trust Accounts;
(2) Transfers from the Trust Accounts and Project
Operating Accounts on an as needed basis, including:
-- interest and principal payments under the
Restricted Generating Companies' debt financing
agreements;
-- substantially all of the Restricted Generating
Companies' third party construction and operating
costs, which are transferred from the Trust
Accounts directly to third parties; and
-- certain limited operating costs of the Restricted
Generating Companies, which amounts are paid
directly into the Project Operating Account, and
then disbursed from the Project Operating
Accounts to third party vendors either directly
via wire transfer or via check through a zero-
balance controlled disbursement account.
The Project Operating Accounts also manually remit
funds on a periodic basis either directly to the
Concentration Accounts or to the Operating Service
Account for reimbursement to NRG of operating and
management expenses incurred at the Project level
and paid at the parent level on the Project's
behalf; and
(3) The Short Term Investment Accounts maintained at
LaSalle;
(B) The Restricted Subsystems have these principal
components:
(1) Cash Collection and the Trust Accounts where all
revenues of the Restricted Generating Companies are
directly deposited; and
(2) Transfers from the Trust Accounts and Project
Operating Accounts on an as needed basis, including:
-- interest and principal payments under the
Restricted Generating Companies' debt financing
agreements;
-- substantially all of the Restricted Generating
Companies' third party construction and operating
costs, which are transferred from the Trust
Accounts directly to third parties; and
-- certain limited operating costs of the Restricted
Generating Companies, which amounts are paid
directly into the respective Project Operating
Account and then disbursed from the Project
Operating Accounts to third party vendors either
directly via wire transfer or via check through a
zero-balance, controlled disbursement account;
and
(C) The Unrestricted Subsystem has these principal
components:
(1) Project Operating Accounts and Lockbox Accounts
Proceeds from purchases by customers of the
Unrestricted Generating Companies are deposited,
depending on the particular Project and the number
of customers, into either:
-- lockbox accounts maintained at Wells Fargo; or
-- one or more operating accounts maintained by the
Project; and
(2) Transfers from the Project Operating Accounts
All operating costs and debt service obligations of
a particular Project are paid to third parties by
wire transfer from funds deposited in the Project
Operating Account; provided, however, that certain
of the operating costs are paid by checks, which are
processed through zero balance, controlled
disbursement accounts.
Accordingly, pursuant to Sections 105(a), 363, 364, 503, 1107
and 1108 of the Bankruptcy Code, the Debtors sought and obtained
the Court's authority to continue to use their integrated Cash
Management System. (NRG Energy Bankruptcy News, Issue No. 2;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
DebtTraders says that NRG Energy Inc.'s 8.700% bonds due 2005
(XEL05USA1) are trading between 44 and 46 cents-on-th-dollar.
See http://www.debttraders.com/price.cfm?dt_sec_ticker=XEL05USA1
for real-time bond pricing.
NRG ENERGY: GE Serves as Lead Agent for $250MM DIP Financing
------------------------------------------------------------
GE Corporate Lending is serving as the lead agent for the $250
million debtor-in-possession financing facility secured by NRG
Energy, Inc. in connection with NRG's voluntary filing on May 15
for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
Based in Minneapolis, NRG Energy owns and operates power
generating facilities, with operations including competitive
energy production and cogeneration facilities, thermal energy
production, and energy resource recovery facilities. The company
is an indirect subsidiary of Xcel Energy, Inc. (NYSE: XEL).
GE Corporate Lending provides restructuring products and
services delivered by a dedicated Retail and Restructuring
Group, a unit within GE Corporate Lending serving companies
across all industry segments. The GE Retail and Restructuring
Group is a consistent leader in DIP financings.
"Our restructuring services on behalf of energy companies like
NRG are supported by our deep business and operational knowledge
of this industry segment," said Colleen Palmer, senior vice
president of the GE Retail and Restructuring Group, for the
Central Region. "We serve as a committed, reliable source of
capital, with a comprehensive range of financing products and
services that help our clients address critical transitional and
essential business needs."
About GE Corporate Lending Group
GE Corporate Lending is a part of GE Corporate Financial
Services, a leading global provider of financing solutions for
investment and non-investment grade companies - committed to
supporting clients at all stages of the business cycle. For more
information on the businesses and products of GE Corporate
Financial Services, visit http://www.gelending.com.
OWENS CORNING: Court Extends Solicitation Period Until Nov. 30
--------------------------------------------------------------
Judge Fitzgerald extends the Solicitation Period for Owens
Corning and its debtor-affiliates to solicit acceptances of
their reorganization plan through and including
November 30, 2003 without prejudice to the Debtors' right to
seek further extensions. (Owens Corning Bankruptcy News, Issue
No. 51; Bankruptcy Creditors' Service, Inc., 609/392-0900)
PACIFIC GAS: Reorganization Plan Addresses $23B Remaining Claims
----------------------------------------------------------------
In connection with Pacific Gas and Electric Company's Chapter 11
filing, various parties filed claims with the Bankruptcy Court
totaling $50,100,000,000 through March 31, 2003. Of these
claims, $26,500,000,000 have been disallowed or withdrawn.
Of the remaining $23,600,000,000 of filed claims, pursuant to
PG&E's Reorganization Plan and alternative plan jointly proposed
by the California Public Utilities Commission and the Official
Committee of Unsecured Creditors, Christopher P. Johns, PG&E
Corporation Senior Vice President and Controller, reports that
an aggregate $5,500,000,000 in claims are expected to pass
through the bankruptcy proceeding and be determined in the
appropriate court or other tribunal during the bankruptcy
proceeding or after it concludes.
PG&E has objected to $1,000,000,000 of the remaining
$23,600,000,000 of filed claims. These objections are pending
in the Bankruptcy Court. Mr. Johns relates that PG&E intends to
object to $4,400,000,000 of the remaining $23,600,000,000 of
filed claims. These objections relate primarily to generator
claims.
According to Mr. Johns, the generator claims could be reduced
significantly based on the March 26, 2003 decision of the
Federal Energy Regulatory Commission finding that electricity
suppliers significantly overcharged California buyers, including
IOUs, from October 2, 2000, to June 20, 2001. PG&E has recorded
its estimate of all valid claims at March 31, 2003, as
$9,400,000,000 of liabilities subject to compromise and
$3,000,000,000 of long-term debt. PG&E has paid certain claims
authorized by the Bankruptcy Court and reduced the amount of
outstanding claims accordingly. In addition, since its Chapter
11 filing, PG&E has accrued interest on all claims it considers
valid. This additional interest accrual is not included in the
original $50,100,000,000 of claims filed. (Pacific Gas
Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
PAC-WEST TELECOMM: Appeals Nasdaq Delisting Determination
---------------------------------------------------------
Pac-West Telecomm, Inc. (Nasdaq: PACW), a provider of integrated
communications services to service providers and business
customers in the western U.S., announced that it has received a
Nasdaq Staff Determination indicating the company has failed to
comply with the minimum bid price requirement of $1.00 a share
as set forth in Marketplace Rule 4310(c)(4) for continued
listing on the Nasdaq SmallCap Market, and is therefore subject
to delisting.
The company has appealed this determination, and has requested a
hearing before a Nasdaq Listing Qualifications Panel. Pac-West's
common stock will remain listed on the Nasdaq SmallCap Market
pending a decision from the Nasdaq Listing Qualifications Panel.
At the hearing, the company intends to present its plan to
regain compliance with the minimum bid price requirement, which
could include, among other things, a reverse share split to be
submitted to a vote of its shareholders. As set forth in Pac-
West's 2003 annual proxy statement, which was mailed to
shareholders of record on or about April 27, 2003, the company
will be submitting to a vote of its shareholders at its annual
meeting to be held on June 9, 2003 a proposition to amend its
articles of incorporation to give effect to a reverse share
split. If approved by the company's board of directors and
shareholders and subsequently implemented, the reverse share
split is intended to cause the market price of its shares to be
equal or above $2.00 per share, which is above the minimum bid
price requirement of $1.00 per share. However, even if a reverse
share split were approved and implemented by the company's board
of directors and shareholders, there can be no assurances that
the stock price will remain above the minimum bid requirement of
$1.00 or that the Listing Panel will grant the company's request
for continued listing.
About Pac-West Telecomm, Inc.
Founded in 1980, Pac-West Telecomm, Inc. is one of the largest
competitive local exchange carriers headquartered in California.
Pac-West's network carries over 100 million minutes of voice and
data traffic per day, and an estimated 20% of the dial-up
Internet traffic in California. In addition to California, Pac-
West has operations in Nevada, Washington, Arizona, and Oregon.
For more information, please visit Pac-West's Web site at
http://www.pacwest.com
As reported in Troubled Company Reporter's May 1, 2003 edition,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Stockton, Calif.-based competitive local exchange
carrier Pac-West Telecomm Inc. to 'D' from 'CC'. The rating on
the 13.5% senior notes due 2009 has been lowered to 'D' from
'C'. The downgrade is due to the company's completion of a cash
tender offer to exchange its 13.5% senior notes at a significant
discount to par value. Standard & Poor's views such an exchange
as coercive and tantamount to a default on the original terms of
the notes.
Given the company's significant dependence on reciprocal
compensation (the rates of which the company expects to further
decline in 2003) and its limited liquidity, Pac-West will likely
find the implementation of its business plan continue to be
challenging.
PIONEER-STANDARD: Finalizes Distribution Agreement with CNT
-----------------------------------------------------------
Pioneer-Standard Electronics, Inc. (Nasdaq: PIOS), a distributor
of enterprise computing solutions and CNT (Nasdaq: CMNT), a
global expert in storage networking and a leader in remote IP
storage solutions, finalized an agreement for Pioneer-Standard
KeyLink Systems(R) to distribute CNT's UltraNet Edge Storage
Router. KeyLink Systems is currently the only authorized
distribution partner in North America for this product. This
agreement represents the ongoing commitment of KeyLink Systems
in delivering best-in-class storage solutions to value-added
resellers throughout North America.
Under the terms of the agreement, KeyLink Systems will
distribute CNT's UltraNet Edge Storage Router, a compact,
intelligent, storage networking platform which supports remote
disk mirroring and tape vaulting for business continuity. The
product interconnects Fibre Channel SAN islands over an IP or
ATM infrastructure to streamline storage applications and drive
cost efficiencies.
Recently, CNT announced the completion of its acquisition of
INRANGE Technologies Corporation. CNT is now one of world's
largest providers of complete storage networking products,
solutions and services. In 2002, KeyLink Systems signed a
distribution agreement to sell INRANGE's comprehensive family of
storage networking solutions.
"Companies demand scalable, secure storage solutions that can be
easily integrated into existing infrastructures. Pioneer-
Standard KeyLink Systems has a highly focused Storage Solutions
Business Unit dedicated to providing comprehensive solutions,"
said John McArthur, group vice president, Worldwide Storage
Research, IDC. "This agreement is another example of the KeyLink
Systems commitment to enhancing their extensive portfolio of
storage solutions. Their relationship with CNT elevates their
already strong leadership position."
CNT's UltraNet Edge Storage Router is certified for all major
Fibre Channel disk mirroring and tape backup solutions including
IBM FAStT Mirroring and 3590/LTO remote tape backup with IBM
Tivoli Storage Manager or VERITAS NetBackup, Hitachi TrueCopy
9500/9900, HP Continuous Access XP and Data Replication Manager
(DRM).
"CNT has an excellent reputation within the storage networking
industry," said Bob Bailey, executive vice president, Pioneer-
Standard Electronics. "The addition of the UltraNet Edge Storage
Router gives us a cost-effective solution for maximized
performance and scalability and provides our resellers with a
decided advantage in this highly competitive marketplace."
"KeyLink Systems has a large channel of experienced storage
resellers who can help CNT reach new markets and expand our
customer base," said Ed Walsh, vice president of business
development, marketing, and sales operations at CNT. "KeyLink
Systems' presence in the midrange markets is a perfect match for
CNT's product, the UltraNet Edge Storage Router, which offers
these customers a cost-effective business continuity solution.
As the need to protect critical data expands beyond the data
center into smaller organizations and departments, the UltraNet
Edge Storage Router's scaleable platform can meet those
additional requirements."
About KeyLink Systems(R)
KeyLink Systems is the distribution channel of Pioneer-Standard
Electronics, Inc. that markets and sells innovative enterprise-
level computer products, services and solutions to its network
of resellers located throughout the U.S. and Canada.
About CNT
CNT is one of the world's largest providers of comprehensive
storage networking solutions, products, and services. For 20
years, businesses around the world have depended on us to
deliver business continuity solutions that drive business
efficiencies, lowering costs and reducing IT risks across the
enterprise. CNT applies its expertise in storage architecture to
help companies build end-to-end solutions that include analysis,
planning and design, multi-vendor integration, connectivity,
implementation and ongoing remote management of the SAN or
storage infrastructure. For more information, visit CNT's web
site at http://www.cnt.comor call 763-268-6000.
About Pioneer-Standard Electronics, Inc.
Pioneer-Standard Electronics, Inc. is one of the foremost
distributors and premier resellers of enterprise computer
technology solutions from HP and IBM as well as other leading
manufacturers. The Company has a proven track record of
delivering complex servers, software, storage and services to
resellers and corporate customers across a diverse set of
industries. Headquartered in Cleveland, OH, Pioneer-Standard has
sales offices throughout the U.S. and Canada. For more
information, visit http://www.pioneerstandard.com
* * *
As reported in the Troubled Company Reporter's January 17, 2003
edition, Standard & Poor's Ratings Services placed its 'BB-'
corporate credit and its other ratings for Pioneer-Standard
Electronics Inc. on CreditWatch with a negative implication.
PLAINS EXPLORATION: S&P Assigns B Rating to $75-Mil Senior Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB-' corporate
credit rating on Plains Exploration & Production Co.
At the same time, Standard & Poor's assigned its 'B' rating to
the company's $75 million senior subordinated notes due 2012.
The outlook is stable.
The notes will be issued as an add-on in the same series as the
senior subordinated notes due 2012, previously issued in an
aggregate principal amount of $200 million on July 3, 2002.
Proceeds from the issuance will be used to term out drawings
under the company's revolving credit facility and partially fund
its announced acquisition of 3TEC Energy Corp., expected to
close in early June 2003.
Plains, based in Houston, Texas, is a medium-sized oil and gas
exploration and production company and has about $270 million of
debt outstanding.
"Our stable outlook for the company reflects the significant
cash flow protection Plains enjoys through its attractively
priced commodity hedges. Upward ratings and outlook revisions
will likely depend on successful integration of 3TEC assets and
demonstrated, cost-competitive exploration success with these
properties," said Standard & Poor's credit analyst John
Thieroff.
3TEC's reserve base provides an attractive contrast to Plains's
existing properties. Plains has historically pursued
acquisitions of underdeveloped crude oil properties, which it
exploited using secondary recovery techniques.
Although this strategy has provided only moderate growth
opportunities through internal means, it does provide
predictability regarding future production volumes. Plains's
considerable hedging activities further augment this policy and
help to limit cash flow volatility.
Plains's reserves (302 million boe; 81% oil; 58% proved
developed pro forma the 3TEC acquisition) are located onshore
and offshore California, the Gulf Coast, and East Texas.
PROVIDIAN FINANCIAL: Offering Up to $150 Mil. Convertible Notes
---------------------------------------------------------------
Providian Financial Corporation (NYSE: PVN) announced that it
intends to offer $150,000,000 of Convertible Notes due 2008.
JPMorgan and Morgan Stanley will serve as joint book-running
managers and Deutsche Bank Securities and Goldman Sachs & Co.
will serve as co-managers. The underwriters will have a 13-day
option to purchase up to $22,500,000 additional notes from the
company to cover over-allotments, if any. The notes will be
convertible into shares of Providian Financial's common stock
upon the achievement of a predetermined stock price or the
satisfaction of other conditions.
The offering of the notes may be made only by means of a
prospectus, a copy of which can be obtained from J.P. Morgan
Securities Inc. at One Chase Manhattan Plaza, Room 5B, New York,
NY 10081, or from Morgan Stanley & Co. Incorporated, 1585
Broadway, New York, NY 10016.
San Francisco-based Providian Financial is a leading provider of
credit cards and deposit products to customers throughout the
U.S.
As previously reported, Moody's Investors Service confirmed the
ratings of Providian Financial Corporation and its unit
Providian National Bank. Outlook is stable.
Ratings Confirmed:
* Providian Financial Corporation
- senior unsecured debt rating of B2.
* Providian Capital I
- the preferred stock rating of Caa1.
* Providian National Bank
- bank rating for long-term deposits of Ba2
- ratings on senior bank notes and other senior long-term
obligations of Ba3;
- issuer rating of Ba3;
- subordinated bank notes rating of B1, and
- bank financial strength rating of D.
The ratings confirmation reflects the numerous measures the
company has taken just to strengthen its financial position,
including portfolio sales, facility closings, and the
implementation of conservative underwriting and marketing plans.
QUALITY DISTRIBUTION: S&P Gives Stable Outlook to Low-B Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' corporate
credit rating to tank truck carrier Quality Distribution Inc. At
the same time, Standard & Poor's assigned its 'B-' bank loan
rating to the company's proposed $65 million bank revolver and
$94.6 million term loan and 'B-' senior secured rating to its
$175 million proposed note offering. The rating outlook is
stable. Proceeds will be used to refinance existing bank debt
and extend the maturity of the debt structure.
"Ratings on Tampa, Florida-based Quality Distribution reflect
its participation in a low-margin, fragmented industry, combined
with a weak financial profile," said Standard & Poor's credit
analyst Kenneth Farer. Quality Distribution is the largest bulk
tank truck carrier in North America. Through a network of 110
terminals, Quality Distribution LLC, a wholly owned subsidiary
of Quality Distribution Inc., transports a broad range of
chemical products (Quality Carriers Inc.; 83% of 2002 revenues),
plastics (TransPlastics; 7%), and flat glass (Levy Transport;
2%), in addition to providing customers and affiliates with
supplemental services such as tank wash (Quala Systems; 6%) and
insurance (Power Purchasing Inc; 2%). Although the company
benefits from a strong market share in an industry with high
barriers to entry, its customers have some transportation
alternatives (rail, barge) depending on the nature of the
shipment.
The company was formed in 1998 by the merger of MTL Inc. and
Chemical Leaman Corp., the largest and fourth-largest companies
in the industry. The merger expanded the company's geographic
coverage and terminal network, while adding other profitable
businesses, including specialized dry-bulk handling, tank
cleaning, rail transloading, and freight brokerage. However, the
acquisition also added a significant debt and interest burden.
Initial operational challenges from the merger have been
resolved and the integration has resulted in the realization of
some cost savings.
The company complements its own fleet operations through the use
of affiliates, independent companies contracted by Quality
Distribution to operate their terminals exclusively for Quality
Distribution, and owner operators, independent contractors who
supply one or more drivers, tractors, and trailers for Quality
Distribution and affiliate use. This business model shifts fixed
costs to variable costs for Quality Distribution, versus a
network that is wholly owned and uses company drivers. This
network also allows the company to continue to expand with
little fixed-asset capital investment.
In the late 1990s through 2002, the weakening of the economy
reduced demand for chemicals and, hence, revenues for Quality
Distribution. During this time, some customers shifted from
truck transportation to rail (which is less expensive for longer
hauls), and insurance premiums rose by more than 100%. However,
the company's operating margins after depreciation have remained
in the 5.0% to 5.5% range, despite reduced revenues, as a
result of management's efforts to reduce operating costs.
Standard & Poor's believes that the foundation for a gradual
intermediate-term recovery remains in place for the chemical
industry for 2003. Positive industry considerations include
improving economic forecasts, evidence of lower inventories, and
the slowing pace of capacity additions in many commodity
chemical areas.
QWEST COMMS: Wins Network Services Contract From Texas State
------------------------------------------------------------
Qwest Communications International Inc. (NYSE: Q) announced that
it has been awarded a multi-year, multimillion-dollar contract
to provide dedicated Internet access (DIA) to the University of
Texas System Office of Telecommunication Services (OTS). The
University of Texas system is the nation's second-largest state
university system, totaling nearly 170,000 students.
"Qwest is helping us provide a variety of communications
services to Texans across the spectrum of public organizations -
- from colleges and universities to K-12 schools to state
government entities to leading research organizations," said
Wayne Wedemeyer of the OTS. "From distance learning to
collaborative research to simple Internet exploration, Qwest is
helping the University of Texas System and THEnet assist Texas
with today's sophisticated technology."
The OTS operates the following two networks, both of which will
be connected to the Qwest backbone:
* The University of Texas System Network, which provides
voice, video and data communications among the various
University of Texas campuses -- including the University
of Texas at Austin, the nation's largest university with
more than 50,000 students -- and supports classroom
education, distance learning, training, research, public
service and administrative functions.
* The Texas Higher Education Network (THEnet), which
offers Internet connectivity to public and private K-12
schools, community college districts, colleges and
universities, libraries, hospitals, government agencies,
and not-for-profit health and education organizations.
THEnet connects more than 200 public entities in all
parts of the state.
"These networks are designed to help provide all Texans with the
same educational tools, whether the student lives in downtown
Dallas or a rural town on the panhandle," said Cliff Holtz,
executive vice president for Qwest's business markets group.
"We are pleased to help enable THEnet to achieve its goal of
expanding educational and research opportunities for all
Texans."
Qwest Communications International Inc. (NYSE: Q), whose
December 31, 2002 balance sheet shows a total shareholders'
equity deficit of about $1 billion, is a leading provider of
voice, video and data services to more than 25 million
customers. The company's 50,000-plus employees are committed to
the "Spirit of Service" and providing world-class services that
exceed customers' expectations for quality, value and
reliability. For more information, please visit the Qwest Web
site at http://www.qwest.com
Qwest Communications Int'l's 7.250% bonds due 2008 (Q08USR2) are
presently trading at 91 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=Q08USR2for
real-time bond pricing.
REGAL CINEMAS: S&P Rates New Series D Term Loan Addition at BB-
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' rating to
Regal Cinemas Inc.'s proposed $315 million series D term loan
addition to its existing senior secured bank facility.
At the same time, Standard & Poor's affirmed its 'BB-' corporate
credit rating on Regal Cinemas and its parent company, Regal
Entertainment Group, which are analyzed on a consolidated basis.
In addition, Standard & Poor's assigned its 'B' rating to Regal
Entertainment's proposed Rule 144A $125 million convertible
senior notes due 2008. The outlook remains stable.
Regal is the largest motion picture exhibitor in the U.S. On a
pro forma basis, Knoxville, Tennessee-based Regal will have
approximately $1.15 billion in debt outstanding.
Proceeds, along with about $190 million in cash and a small
revolving credit drawdown, will be used to fund a $600 million -
$625 million special dividend to the Regal Entertainment
shareholders. Subsequently, Regal Entertainment will reduce its
quarterly dividend by about 20%.
"The special dividend represents a substantial diminution of the
liquidity previously provided by the company's surplus cash
balances," according to Standard & Poor's credit analyst Steve
Wilkinson. He added, "It is also a major departure from the more
moderate financial policies followed by the company in its
limited operating history, and illustrates the significant
equity-return orientation of its majority shareholder, the
Denver, Colorado-based Anschutz Company. Even so, the roughly
17% increase in debt on a lease-adjusted basis will not
materially alter the company's key credit ratios, which will
remain in line with expectations for the rating. In addition,
discretionary cash flow should remain meaningful, and the
company will maintain significant borrowing capacity under its
$145 million revolving credit facility. Nonetheless, the
transaction reduces the company's debt capacity and flexibility
to make sizable acquisitions that do not include a substantial
equity component."
Standard & Poor's expects that Regal's moderate pace of
expansion will enable it to continue to generate substantial
discretionary cash flow, gradually delever, and improve key
credit statistics. Ratings stability could be undermined if
Regal pursues additional, aggressive financial policies that add
to leverage or reduce its discretionary cash flow.
RELIANCE: Deloitte & Touche Unable to Complete Audit on Time
------------------------------------------------------------
Due to significant changes in Reliance Group Holdings Inc.'s
operational (underwriting, claims), corporate (systems,
actuarial, financial) and organizational structure and staffing,
which occurred within the last half of 2000 and early 2001 as a
result of its decision to discontinue its ongoing insurance
business and commence run-off operations, its accountants,
Deloitte & Touche LLP is unable to complete the work necessary
to complete their audit for fiscal year 2000. The Company has
advised the SEC that until such audit is completed, it will not
be possible to prepare Company financial statements for the
quarter ended March 31, 2003.
Reliance Group Holdings filed for Chapter 11 relief on
June 12, 2001, (Bankr. S.D.N.Y. Case No. 01-13404). Steven R.
Gross, Esq., and Lorna G. Schofield, Esq., at Debevoise &
Plimpton represent the Debtors in their restructuring efforts.
REPTRON ELECTRONICS: Selling Distribution Unit to Jaco for $10M+
----------------------------------------------------------------
Reptron Electronics, Inc. (Nasdaq: REPT), an electronic
manufacturing supply chain services company, reported that it
has signed a definitive agreement to sell the assets (other than
accounts receivable) and business of its electronic components
distribution division to Jaco Electronics, Inc. (Nasdaq: JACO).
The purchase price is approximately $10,400,000 and will be paid
by way of assumption of identified liabilities and payment of
cash at closing. It is anticipated that the cash portion will
approximate $5,600,000.
The cash proceeds realized will be used to reduce Reptron's
secured indebtedness owed to Congress Financial Corporation
(Florida). There remain a number of conditions precedent to
closing that must be either satisfied or waived by Reptron and
Jaco prior to the closing, and there further remain a number of
third party consents to the transaction, which if not obtained
may prevent the closing from occurring. Provided all of the
conditions are either waived or satisfied, and the required
consents obtained, Reptron expects the transaction to close
before the end of May 2003.
Reptron's distribution division recorded net sales of $109
million in 2002, or about 34% of Reptron's total net sales. The
division recorded an operating loss of $17.3 million in 2002,
approximately 95% of the Reptron's total operating loss. Reptron
Electronics, Inc. will continue to operate its Reptron
Manufacturing Services, Reptron Memory Module and Reptron
Display & Systems Integration divisions. These business units
collectively recorded 2002 net sales of $211 million and
incurred a 2002 operating loss of $932,000.
"The sale of our electronic component distribution business is
an important part of our strategy to restore profitable
operating results for Reptron Electronics, Inc. We look forward
to focusing our efforts in the electronic manufacturing services
business going forward," stated Paul Plante, Reptron's President
and Chief Operating Officer.
Plante continued, "We believe our distribution customers and
suppliers will be well served by Jaco Electronics, Inc. We are
grateful for the effort and hard work extended by the current
and past employees of our distribution business. We offer
sincere thanks to these partners for their support and hope they
experience great success in the future."
About Reptron
Reptron Electronics, Inc. is a leading electronics manufacturing
supply chain services company providing distribution of
electronic components, custom logistics and supply chain
management services, engineering services, electronics
manufacturing services and display integration services. Reptron
Distribution is authorized to sell over 30 vendor lines of
semiconductors, passive products and electromechanical
components and offers a variety of custom logistics and supply
chain management services. Reptron Manufacturing Services offers
full electronics manufacturing services including complex
circuit board assembly, complete supply chain services and
manufacturing engineering services to OEMs in a wide variety of
industries. Reptron Display and System Integration provides
value-added display design engineering and system integration
services to OEMs. For more information, go to
http://www.reptron.com
***
As reported in the February 5, 2003 edition of the Troubled
Company Reporter, Standard & Poor's Ratings Services lowered its
corporate credit rating on Reptron Electronics Inc. to 'D' from
'B-' and its subordinated note rating to 'D' from 'CCC'. The
company did not make the semiannual interest payment due on Feb.
1, 2003, on its 6 3/4% convertible bonds. Reptron is in default
of its loan and security agreement with secured lenders, as
operating results did not meet certain financial covenants for
2002.
Tampa, Florida-based Reptron has total debt of about $120
million.
Sales and profitability were severely depressed in 2002 due to
challenging business conditions in both of Reptron's major
business lines, electronics components distribution, and
electronics manufacturing services.
RUE21 INC: Emerges From Chapter 11 Bankruptcy
---------------------------------------------
rue21, inc. f/k/a Pennsylvania Fashions, Inc., a leading
specialty retailer announced its emergence from a voluntary
reorganization under Chapter 11 on May 15, 2003.
rue21, headquartered in Warrendale, PA, operates 170 stores in
38 states in regional malls, outlets and strip centers. rue21
will continue to be one of the dominant value specialty
retailers for junior and young men's apparel in the outlet
sector and regional malls. The Company will focus and build on
the rue21 brand with an emphasis on fashion, value, quality,
customer loyalty and service.
A new experienced management team headed by President and CEO
Robert Fisch was responsible for the turnaround. Under Mr.
Fisch's leadership the management team will continue to develop
the rue21 brand, improve store operations, monitor and achieve
financial goals and implement the marketing plans. rue21 plans
to open 10 new stores this year and has an aggressive new store
expansion plan for the next five years. The Company has reopened
35 newly remodeled stores during the past 12 months and plans to
remodel and reopen a similar number of stores each year.
The Company selected LaSalle Retail Finance as the lead
financial institution for its banking relationship, which will
provide the Company the working capital for its growth plans.
LaSalle is a leading bank in the financing of retail companies.
rue21's majority shareholder is Saunders Karp & Megrue which is
one of the leading private equity investment firms and currently
manages over $1.7 billion in private equity funds. SKM aligns
itself with superior management teams with investments that
include Charlotte Russe, The Children's Place and Targus Group
International.
The company name "rue21" is derived from the French word for
street, "rue" while "21" represents the age that many people
want to be. The management and employees reflect a "whatever it
takes" attitude and has the slogan "do you rue? ... I do." The
turnaround at the Company was achieved in a 15-month period and
is a testament to the hard work and perseverance of the
employees.
SALTON: Appoints S&P Executive Steve Oyer to Board of Directors
---------------------------------------------------------------
Salton, Inc. (NYSE: SFP) announced that it has named Steve Oyer
to its Board of Directors. The appointment was effective
immediately. Mr. Oyer is currently Vice President of Global
Business Development for Standard & Poor's Portfolio Services.
Mr. Oyer's appointment will increase the size of the company's
Board of Directors to nine.
Mr. Oyer has over 25 years of business and investment
experience. Prior to joining Standard & Poor's, he served as the
Chief Financial Officer of Saflink Corporation, where he
continues to serve on the company's Board of Directors. From
1995 until the company was sold in 2000, he worked for Murray
Johnstone International Ltd., where he was responsible for the
sales and marketing of international investment management
services and private equity sales.
"I am pleased to join Salton's Board of Directors," said Mr.
Oyer. "As a leader in small appliances, I believe that the
company has strong growth prospects in both domestic and
international markets. The company has an excellent reputation
for innovation, and I am confident that it will continue to
develop new products to maintain its industry-leading position."
He has also held positions at Nicholas-Applegate, Harris Bank
and Bank of Montreal Trust Co. Ltd.
About Salton, Inc.
Salton, Inc. is a leading domestic designer, marketer and
distributor of a broad range of branded, high quality small
appliances under well-recognized brand names such as Salton(R),
George Foreman(TM), Toastmaster(R), Breadman(R), Juiceman(R),
Juicelady(R), Farberware(R), Melitta(R), Russell Hobbs(R),
Tower(R), Haden(R) and Westinghouse(R). Salton also designs and
markets tabletop products, time products, lighting products and
personal care and wellness products under brand names such as
Block China(R), Atlantis(R) Crystal, Sasaki(R), Calvin Klein(R),
Ingraham(R), Westclox(R), Big Ben(R), Spartus(R), Timex(R)
Timers, Stiffel(R), Ultrasonex(TM), Relaxor(R), Carmen(R), Hi-
Tech(R), Mountain Breeze(R), Salton(R), Pifco(R) and Starck(R).
As reported in the Troubled Company Reporter's May 16, 2003
edition, Standard & Poor's Ratings Services placed its ratings
on Salton Inc., including the company's 'BB-' corporate credit
rating, on CreditWatch with negative implications.
"The CreditWatch placement reflects weaker than expected profits
for the 12 months ended March 31, 2003, as a result of price
erosion and unit declines across many of the company's brands,"
said Standard & Poor's credit analyst Martin Kounitz. "This
erosion has mitigated the strength of the company's geographic
diversification in North America and Europe."
SPACEHAB: Says Liquidity Still Enough to Fund Near-Term Ops.
------------------------------------------------------------
For the nine months ended March 31, 2003, as compared to the
nine months ended March 31, 2002, SPACEHAB Inc.'s revenue
increased 9% to approximately $81.3 million as compared to $74.7
million. For the nine months ended March 31, 2003, revenue of
$39.5 million was recognized from Space Flight Services
primarily under the REALMS Contract with NASA and commercial
customers, $31.2 million for JE primarily under the FCSD
Contract, $9.3 million from Astrotech, $0.9 million from SMI and
$0.4 million of other service revenue. In comparison, for the
nine months ended March 31, 2002, revenue of $37.2 million was
recognized from Space Flight Services primarily under the REALMS
Contract with NASA and commercial customers, $29.9 million from
JE under the FCSD Contract, $6.8 million from Astrotech, $0.5
million for SMI and $0.3 million of other service revenue. The
increase in revenue under the REALMS Contract with NASA and
commercial customers is attributable to increased revenue on
STS-114, STS-116 & STS-118 based on cost incurred. The increase
in revenue at Astrotech is due primarily to an increase in the
number of missions completed and processed in the nine months
ended March 31, 2003 as compared to the same period last year
and additional payments under its long term contracts. Revenue
at JE increased due to increased project work on both the FCSD
and CM contracts and reimbursement of excess facilities costs.
Costs of revenue for the nine months ended March 31, 2003
increased by 14% to approximately $66.5 million, as compared to
$58.6 million for the comparable period last year. For the nine
months ended March 31, 2003, integration and operations costs of
Space Flight Services for the REALMS Contract with NASA and
commercial customers were $28.4 million, $27.4 million for JE,
$4.1 million for Astrotech payload processing, $0.4 million for
SMI, and $0.5 million related to other service revenue, $5.7
million of depreciation expense is also included in cost of
revenue. For the nine months ended March 31, 2002, integration
and operations costs of Space Flight Services for the REALMS
Contract with NASA and commercial customers were $20.6 million,
$26.1 million for JE, $3.1 million for Astrotech payload
processing, $0.4 million for SMI, and $0.8 million related to
other service revenue. $7.6 million of depreciation expense is
also included in the cost of revenue. Costs of revenue under the
REALMS Contract with NASA and commercial customers increased
primarily due to increased costs of leased flight assets and
increased integrations and operations work for STS-114.
Astrotech's costs increased due to the increased costs of the
missions added over the guaranteed contract missions and the
costs of the EELV facility. JE's costs increased due to closeout
of the FCSD contract. The decrease in depreciation expense is
related to the extension in the useful life of the Company's
flight assets from 2012 to 2016 and the loss of the RDM in the
third quarter of fiscal year 2003.
Operating expenses increased to approximately $71.5 million for
the nine months ended March 31, 2003 as compared to
approximately $15.1 million for the nine months ended March 31,
2002. Operating expenses include $11.9 million non-cash
nonrecurring charge for impairment of goodwill at JE and $50.3
million non-cash nonrecurring charge for the RDM loss. Normal
operating expenses decreased by $5.6 million. The decrease in
operating expenses is primarily the result of the completion of
bid and proposal efforts for the microgravity contract of $2.0
million, refocusing of SMI efforts of $1.4 million, and the
elimination of $0.8 million of goodwill amortization expense as
a result of new accounting standards. The Company's ongoing cost
reductions initiated during the fiscal year ended June 30, 2002
have resulted in savings of approximately $1.6 million. Legal
and insurance costs decreased $0.3 million, facilities related
costs decreased $0.4 million, depreciation expense decreased
$0.5 million and compensation and benefits decreased $0.4
million.
Research and development expenses decreased by $0.2 million to
$0.1 million for the nine months ended March 31, 2003 as
compared to $0.3 million for the comparable period last year as
the Company continued to emphasize its core operations and
limited new investments in research and development.
Interest expense was approximately $5.5 million for the nine
months ended March 31, 2003 and approximately $4.2 million for
the nine months ending March 31, 2002. The increase was due
primarily to interest on the mortgage loan payable on the
Astrotech facility. There was no interest capitalized for the
nine months ended March 31, 2003 and $1.4 million of interest
was capitalized for the nine months ended March 31, 2002.
Interest was capitalized in conjunction with the construction of
the new facility constructed by Astrotech.
Interest and other income/expense was $0.1 million (expense) for
the nine months ended March 31, 2003 and was approximately $1.1
million for the nine months ended March 31, 2002. The Company
recorded a gain of approximately $1.1 million on the sale of the
Oriole Sounding Rocket assets during the nine months ended
March 31, 2002. Interest income is earned on the Company's
investments.
The Company recorded a tax refund of $0.7 million in the nine
months ended March 31, 2001. Based on the Company's projected
taxable status for fiscal year 2003, the Company recorded no tax
expense for the nine months ended March 31, 2003, as compared to
$0.1 million tax expense recorded for the nine months ended
March 31, 2002.
The net loss for the nine months ended March 31, 2003 was
approximately $61.6 million as compared to the net loss of $2.1
million for the nine months ended March 31, 2002.
Liquidity and Capital Resources
Historically SPACEHAB obtained operating and capital investment
funds from the proceeds of its initial public offering of common
stock and an offering of Series B Senior Convertible Preferred
Stock. The Company also completed a private placement offering
of convertible subordinated notes to support capital investments
required for development and construction of space flight
assets.
The Company's primary source of liquidity is cash flow from
operations. The principal uses of cash flow that affect the
Company's liquidity position include both operational
expenditures and debt service payments. Management is focused on
increasing the Company's cash flow and on managing cash
effectively through limiting cash investments in long-term
assets.
SPACEHAB currently maintains a working capital line of credit
facility totaling $5.0 million in order to ensure appropriate
levels of liquidity. As of March 31, 2003, amounts unused and
available under this credit facility were $5.0 million.
Cash provided by operations for the nine months ended March 31,
2003 and 2002 was $23.3 million and $4.5 million, respectively.
For the nine months ended March 31, 2003, the Company recorded a
$50.3 million nonrecurring charge, net of accumulated
depreciation and commercial insurance proceeds, related to its
loss of the RDM as the result of the Space Shuttle Columbia
accident. The Company also recorded a non-cash charge for
impairment of goodwill of $11.9 million at JE due to the current
decline in JE's revenue base which the Company expects to recoup
with new contracts. The Company received $17.7 million from its
commercial insurance carriers for the loss of the RDM. Deferred
flight revenue decreased by $8.4 million due to the completion
of the STS-107 mission and the completion of most tasks related
to the STS-114 mission.
Depreciation and amortization decreased as compared to the prior
year primarily as the result of the loss of the RDM module and
the elimination of the amortization of goodwill as per the
requirements of Statement of Financial Accounting Standards No.
142. Accrued subcontracting services increased $3.5 million as
the result of the increase in accrued cost for the STS-114
mission and lease cost for the VCC. Cash flows provided by
operating activities for the nine months ended March 31, 2002
were $4.5 million. The significant change during the nine months
ended March 31, 2002 was the decrease in deferred flight revenue
due primarily to completion of various tasks required under the
REALMS and related commercial contracts. Accounts payable and
accrued expenses decreased due to payments made to various
vendors. Accounts receivable decreased due to collections from
various customers primarily under the REALMS and FCSD contracts.
The increase in depreciation and amortization is primarily the
result of the completion of the Research Double Module which was
completed in December 2000.
For the nine months ended March 31, 2003 and 2002, cash flows
used for investing activities were $15.7 million and $13.3
million, respectively. For the nine months ended March 31, 2003,
SPACEHAB received $0.8 million of funds from state governmental
agencies relative to the construction of its satellite
processing facility. The Company received $17.7 million from its
commercial insurance carriers for the loss of the RDM of which
$16.5 million has been invested in U.S. Treasuries, Federal
sponsored agencies and repurchase agreements collateralized by
U.S. Treasury obligations. Excess machinery and equipment was
sold for $0.1 million which was offset by minor capital
expenditures. In addition, cash that was restricted at June 30,
2003 has been released for its intended purpose. For the nine
months ended March 31, 2002, $11.7 million was spent on the
completion of the payload processing facilities at Astrotech
primarily to support the contract extensions with Boeing and
Lockheed Martin. In addition, $2.3 million was spent on various
flight assets primarily the VCC. The Company received $0.8
million in cash proceeds from the sale of the Oriole sounding
rocket assets and the sale of equipment to Clear Lake
Industries.
For the nine months ended March 31, 2003 and 2002, cash flows
used for/provided by financing activities were $6.0 million used
for, and $9.9 million, respectively. For the nine months ended
March 31, 2003, the Company repaid $5.8 million of obligations
under various credit agreements and $0.3 million for a
litigation settlement. The Company repaid $11.5 million of debt
during the nine months ended March 31, 2002 and $3.1 million of
the loan payments was in connection with the Astrotech
financing. The Company received $20.0 million of proceeds from
its Astrotech financing. The Company received $750,000 in the
form of external equity investment in SMI.
SPACEHAB's liquidity has been constrained over the previous two
fiscal years. A significant portion of this constraint arose
from funding of new operations and assets to support future
Company growth, funding a portion of the construction cost of
the Astrotech Florida facility and funding of required debt
repayments. In addition, the Company was committed to capital
investments to complete certain flight assets.
Beginning in the third quarter of the fiscal year 2001,
management began an aggressive multi-faceted plan to improve the
Company's financial position and liquidity. This plan included
restructuring and repayment of certain debt obligations. Under
this plan, the Company undertook extensive efforts to reduce
cash required for both operations and capital investments.
Additionally, the Company completed planned divesting of non-
core assets. Development and construction of new assets is
currently limited to those assets required to fulfill existing
commitments under contracts. The Company has no further on-going
commitments to fund development or construction of any asset.
The Company completed the planned restructuring of certain debt
obligations and continues to focus on reducing its outstanding
debt. Management completed the implementation of the plan in the
fourth quarter of fiscal year 2002.
On March 25, 2003 the Board of Directors authorized the Company
to repurchase up to $1.0 million of the Company's outstanding
common stock at market prices. Any purchases under the Company's
stock repurchase program may be made from time-to-time, in the
open market, through block trades or otherwise in accordance
with applicable regulations of the Securities and Exchange
Commission. As of March 31, 2003, the Company had repurchased
36,100 shares at a cost of $36,885. The Company will continue to
evaluate the stock repurchase program and the funds authorized
for the program.
SPACEHAB was under contract with NASA to support the STS-107
mission on its Columbia orbiter. The mission utilized the
Company's RDM flight asset. On February 1, 2003 the RDM was lost
in the tragic STS-107 accident. The RDM was partially covered by
commercial insurance. During the three months ended March 31,
2003, the Company received $17.7 million from commercial
insurers. The Company does not plan on replacing the RDM. The
Company has two additional modules available to support its
current NASA contracts. Spacehab has invested the majority of
the commercial insurance proceeds in U.S. Treasuries, Federal
sponsored agencies and repurchase agreements collateralized by
U.S. Treasuries in order to safeguard capital and provide ready
liquidity. The Company filed a claim with NASA for
indemnification of its loss of the RDM. The claim was filed for
$50.3 million, an amount representing the net book value of the
module net of commercial insurance proceeds of $17.7 million.
The Company is currently in discussions with NASA regarding
resolution of the pending claim for the loss of the RDM.
Management continues to focus its efforts on improving the
overall liquidity of the Company through reducing operating
expenses and limiting cash commitments for future capital
investments and new asset development. The Company indicates
that it has sufficient liquidity to meet its short term needs.
Spacehab's working capital deficit at March 31, 2003, tops
$636,000.
SUPERIOR TELECOM: Obtains Final Nod on $100MM DIP Financing
-----------------------------------------------------------
Superior TeleCom Inc. (OTC Bulletin Board: SRTOQ.OB) announced
that, following a hearing on May 15, 2003 in the US Bankruptcy
Court for the district of Delaware, Honorable Judge Jerry W.
Venters granted final approval on the Company's "Debtor in
Possession" (DIP) financing facility. As a result of the ruling,
Superior's total DIP financing facility was increased from $95
million to $100 million.
David S. Aldridge, Chief Financial and Restructuring Officer of
Superior TeleCom stated, "The approval of our final DIP facility
is another important step in our restructuring process. Since
filing for Chapter 11, our operations have generated positive
cash flow and we have successfully reduced total borrowings
under the DIP credit facility. Based on current debt levels and
the additional availability resulting from the final DIP
financing order, the Company currently has approximately $40
million in total available liquidity -- exceeding our original
projections.
"Additionally, our businesses are performing well as we continue
to meet or exceed all of our customer expectations and maintain
our industry leadership in quality and customer service. Our
industry leadership was underscored by the recent receipt of the
2002 Best Customer Service award from one of our major
customers.
"Overall, we are very pleased with our progress and our
restructuring activities are proceeding on schedule with the
support of our customers, vendors, employees and our secured
lenders."
As announced on March 3, 2003, Superior TeleCom Inc.'s U.S.
operations filed petitions for reorganization under Chapter 11
of the United States Bankruptcy Code. The Company is working in
consultation with its lenders towards a debt restructuring.
Superior TeleCom's United Kingdom and Mexican operations were
not included in the filing.
About Superior TeleCom
Superior TeleCom Inc. is one of the largest North American wire
and cable manufacturers and among the largest wire and cable
manufacturers in the world. Superior manufactures a broad
portfolio of wire and cable products with primary applications
in the communications and original equipment manufacturer (OEM)
markets. The Company is a leading manufacturer and supplier of
communications wire and cable products to telephone companies,
distributors and system integrators and magnet wire for motors,
transformers, generators and electrical controls. Additional
information can be found at http://www.superioressex.com.
TEMBEC: Will Temporarily Suspend Ops. at Three Canadian Sawmills
----------------------------------------------------------------
Tembec announced that on June 1 it plans to shut down three of
its sawmills for five weeks. The B,arn, Cochrane and Canal Flats
mills - located in Quebec, Ontario and British Columbia,
respectively - have been hard hit by the unwarranted and illegal
countervailing duties and anti-dumping penalty imposed on
softwood lumber by the US. The recent strength of the Canadian
dollar has aggravated the situation. Activities have also been
suspended at the Kirkland Lake, Ontario, sawmill since November
2002 for the same reasons.
During meetings held at each of the three mills, employees and
union representatives were informed of the Company's decision
and discussed the situation with management.
The Bearn, Cochrane and Canal Flats mills combined produce some
30% of Tembec's total SPF lumber output, and their temporary
shutdown will affect over 490 direct jobs. Management believes
that this curtailment will not negatively affect the Company's
financial performance.
Tembec's Forest Products Group, which has sales in the order of
$1.2 billion, is a leading supplier in three major sectors:
softwood lumber and OSB panels, specialty wood products and
engineered wood products.
Tembec is an integrated Canadian forest products company
principally involved in the production of wood products, market
pulp and papers. The Company has sales of approximately $4
billion with over 55 manufacturing sites in the Canadian
provinces of New Brunswick, Quebec, Ontario, Manitoba, Alberta
and British Columbia, as well as in France, the United States
and Chile. Tembec's Common Shares are listed on the Toronto
Stock Exchange under the symbol TBC. Additional information on
Tembec is available on its web site, at http://www.tembec.com
* * *
As previously reported, Standard & Poor's Ratings Services
revised its outlook on diversified paper and forest products
producer Tembec Inc., to negative from stable. At the same time,
the ratings outstanding on the Temsicaming, Quebec-based
company, including the double-'B'-plus long-term corporate
credit rating, were affirmed.
The outlook revision stemmed from protracted weakness in
Tembec's credit measures that is unlikely to subside in the near
term due to weakened market conditions across all paper and
forest products grades.
TEXAS IND: Fair Business Position Prompts S&P's Low-B Ratings
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' rating to
Texas Industries Inc.'s proposed $200 million senior secured
revolving bank credit facility due 2007. Standard & Poor's also
assigned its 'BB-' rating to the company's proposed $600 million
senior notes due 2011.
Standard & Poor's said that it also has affirmed its 'BB-'
corporate credit rating on the company. The outlook remains
negative. The Dallas, Texas-based company has $600 million in
total debt.
"The rating on the bank loan reflects the strong prospects for
full recovery in a default or bankruptcy scenario," said
Standard & Poor's credit analyst Paul Vastola. "A stressed
scenario would likely stem from intensified competition in the
already pressured structural steel segment and increased
leverage. Utilizing a discrete asset analysis to determine
recovery prospects, a meaningful reduction in the value of
current assets was assumed in order to incorporate the stresses
in this insolvency scenario." The rating on the bank loan is
based on preliminary terms and conditions and is subject to
review once full documentation is received.
Standard & Poor's said that its ratings on Texas Industries
reflect its fair business position in the steel and CAC
industries, which are highly cyclical and intensely competitive.
The ratings also reflect the company's weakened credit measures.
TRANSMONTAIGNE INC: S&P Rates Corp. Credit & Sr. Notes at BB/B+
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' corporate
credit rating to terminaling company TransMontaigne Inc. and its
'B+' rating to the company's proposed $200 million senior
subordinated note issuance. The outlook is stable.
Denver, Colorado-based TransMontaigne has about $265 million in
debt.
"The ratings on TransMontaigne reflect the company's solid
business profile and stable cash flow garnered from its terminal
and pipeline business," noted Standard & Poor's credit analyst
William Ferara. "These strengths are offset by the company's
continued focus on higher-risk product supply and marketing
activities," he continued.
The rating is supported by an increasingly diversified portfolio
of assets (primarily terminals) operating from the Gulf Coast to
the Northeast and fairly inelastic demand for the liquid
petroleum products transported by pipeline or stored in
terminals. However, these strengths are tempered by the uneven,
but improving, performance from TransMontaigne's product supply
and marketing activities. This business unit has started to
represent a greater percentage of the company's cash flow mix
versus historical levels, which has increased consolidated
business risk. The company's debt leverage is also elevated due
to recent acquisitions, but is expected to decrease more in line
with rating expectations.
TransMontaigne is one of the largest terminaling companies in
the U.S., with the terminaling unit accounting for slightly over
half of the company's operating margins. The location, size, and
scale of the company's terminals provide TransMontaigne with
various competitive advantages. The bulk of the company's 55
terminals with 22 million barrels (mmbbls) of storage capacity
are associated with the Colonial and Plantation pipelines (31
terminals; 10.4 mmbbls), the Mississippi and Ohio Rivers (15
terminals; 3.4 mmbbls), and Florida (8 terminals; 6 mmbbls) and
one terminal in Brownsville, Texas, with a capacity of 2.2
mmbbls. The company's pipeline operations are small and not
expected to become a significant part of the company's business
mix.
TransMontaigne's product supply and marketing business unit
attempts to benefit from changes in basis-spread differentials
at various locations throughout its network. TransMontaigne
takes physical delivery of refined products, simultaneously
hedges the commodity price risk, and then redistributes those
refined products where they can best maximize value. While basis
spreads in the refined products market have historically been
positive, they still remain volatile and may adversely affect
the company's position. TransMontaigne's large scale allows the
company to acquire and redistribute refined products to various
destinations throughout its network with multilocation
relationships with major customers providing additional
operational flexibility.
TransMontaigne's financial business profile is adequate compared
with other terminaling and liquids pipeline companies. Over the
intermediate term, EBITDA interest coverage is expected to
approximate 3.5x while expected debt to EBITDA ratios should
approach 2.5x, with these measures expected to improve slightly
from these levels. Debt leverage of about 45% in 2003, is
expected to trend down below 40%, which would be more in line
with rating expectations.
The stable outlook reflects the expectation of continued
stability in TransMontaigne's terminaling and pipeline areas and
that future acquisitions will be funded in a manner commensurate
with the ratings.
TWINLAB: S&P Further Junks Rating over Expected Covenant Breach
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on vitamin manufacturer Twinlab Corp. to 'CCC-' from
'CCC+', because of the company's anticipated breach of covenants
related to its mortgage debt, the refinancing risk of its
current senior debt, its poor profitability, and litigation
matters.
The outlook is negative.
The company reported $70.6 million in total debt as of
March 31, 2003.
"Twinlab is challenged by a combination of factors, including
declining profitability, the expected breach of covenants on
mortgage debt related to its Utah plant, and the 2004 maturity
on its senior debt," said credit analyst Martin S. Kounitz. "As
a result, Twinlab's auditors have issued a qualified opinion
indicating that the company may be unable to continue as a going
concern."
Sales for the first quarter ended March 31, 2003 fell 17% from
the previous year, and operating income was negative $3.3
million. Twinlab has discontinued sales of diet products
containing ephedra, a compound that has been at the center of
wrongful death lawsuits and is under review by the U.S. Food and
Drug Administration. Past sales of ephedra-containing products
caused the company's insurance costs to rise significantly.
Hauppauge, New York-based Twinlab, a vitamin and supplement
manufacturer, continues to restructure operations by realigning
its sales force and divesting noncore operations.
The outlook is negative. If credit protection measures and
financial flexibility continue to deteriorate, ratings could be
lowered.
Ratings Lowered: To From
Corporate credit rating CCC- CCC+
Subordinated debt rating CC CCC-
UNITED AIRLINES: Retaining Bain & Co. as Strategic Consultants
--------------------------------------------------------------
United Airlines Inc. and its debtor-affiliates ask Judge Wedoff
for permission to employ Bain & Company as their strategic
consultants. The Debtors need Bain's services in connection
with the future strategy and operations of their Express Carrier
unit and as negotiating agent for the Express Carrier
Agreements.
James H.M. Sprayregen, Esq., at Kirkland & Ellis, tells Judge
Wedoff that Bain has extensive experience in the airline
industry and has worked on most of the major strategic and
operational issues faced by major airlines.
United Express is operated by several regional airlines
including Atlantic Coast Airlines, SkyWest Airlines and Air
Wisconsin Airlines. Under the Express Contracts, prices are
calculated on a fee-per-departure basis. The Debtors have
determined that the prices currently being paid are higher than
existing market rates. Therefore, United will seek to reduce
costs through renegotiation or rejection of the agreements.
The renegotiation is expected to be a complex undertaking
requiring proper deliberation. Changes in the Express
operations must be carefully managed to minimize the operating
and financial risk. Since Bain has experience in this field,
the Debtors plan to employ its consultants as negotiating
agents.
In return for its services, Bain will be paid flat monthly fees:
February 2003 $525,000
March 2003 525,000
April 2003 446,000
After April 2003 267,000
United has agreed to provide Bain with a $500,000 retainer. In
addition, Bain will be entitled to reimbursement of reasonable
fees and expenses connected with services rendered to the
Debtors, subject to a $200,000 cap.
Specifically, Bain will provide:
1) Consulting Services -- determining the optimal mix of
mainline and express flying in United's post Chapter 11
structure, including the use of regional jets, designing a
new express schedule, and developing a full set of
potential negotiating tactics; and
2) Negotiating Services -- leading the negotiation team,
engaging regional carriers in negotiating new contracts,
managing negotiation logistics, and driving completion of
the contract negotiation process to realize optimal
savings.
It is important for Bain to help with the negotiations due to
the enormous time commitment that would be required if the
Debtors' current staff got involved. These negotiations affect
the structure, revenue-generating capacity and profitability of
an entire United business unit. This endeavor could not be
accomplished by United's current staff without taking away its
focus on daily operations of the Express unit. Without help,
either the business would suffer or the negotiations would
suffer.
Allistair Corbett, Director and Vice President at Bain,
discloses that Bain has represented the Debtors since
February 1, 2003, which has allowed them to become familiar with
the businesses. Bain has concluded a computerized search of
potential significant parties in United's Chapter 11 cases.
This search revealed a number of Bain representations. While
Bain has these relationships, the work conducted does not
involve matters upon which Bain is to be engaged and would not
disqualify its representation of the Debtors. (United Airlines
Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
DebtTraders says that United Airlines' 10.670% bonds due 2004
(UAL04USR1) are trading at 8 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=UAL04USR1for
real-time bond pricing.
UNITED AIR LINES: Special Facility Revenue Bond Rating Cut to D
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on United
Air Lines Inc.'s (rated 'D') Series 1992 (Regional Airports
Improvement Corp.) and Series 1995A (Indianapolis Airport
Authority) special facility revenue bonds to 'D' from 'CC'.
Ratings were also removed from CreditWatch, where they were
placed on Nov. 29, 2002. The downgrades reflect May 15, 2003,
payment defaults by the airline on these issues. United is the
major operating subsidiary of UAL Corp. (also rated 'D'). In
UAL's 2002 10-K report, the company stated that future payments
for special facility revenue bonds will not be made.
WEIRTON STEEL: Seeks Access to Lenders' Cash Collateral
-------------------------------------------------------
"Most important to Weirton's successful rehabilitation and
reorganization . . . is the Company's access to cash liquidity,"
James T. Gibbons, Senior Director -- Corporate Development and
Strategy for Weirton Steel Corporation, tells Judge Friend.
Weirton has significant cash requirements, Mr. Gibbons explains,
to purchase materials, make payroll and honor other obligations.
"A lack of access to working capital," Mr. Gibbons says, "would
immediately and irreparably harm Weirton, its bankruptcy estate
and creditors."
Weirton is the borrower under a Loan and Security Agreement
dated October 26, 2001, as amended and restated as of
May 3, 2002, and again on June 18, 2002, and subsequently
amended from time-to-time. That facility -- according to data
obtained from http://www.LoanDataSource.com-- provided Weirton
with up to $180 million (after accounting for a $20 million
required reserve) of working capital financing from:
Commitment Lender
---------- ------
$50,000,000 Fleet Capital Corporation
$50,000,000 Foothill Capital Corporation
$50,000,000 The CIT Group/Business Credit, Inc.,
$35,000,000 GMAC Business Credit, LLC, and
$15,000,000 Transamerica Business Capital Corporation.
The chapter 11 filing, of course, throws that facility into
default. The Debtor admits its owes the Prepetition Lenders
$160,551,115.93 as of the Petition Date. Weirton's obligations
to repay amounts borrowed from these lenders are secured by a
first-priority mortgage, lien and security interest in the
majority of the Company's assets, including all accounts
receivable, inventory, products and proceeds thereof, and
Wierton's Tin Assets.
The Debtor needs continued access to cash coming in the door, by
this emergency motion, sought and obtained Judge Friend's
approval of a consensual cash collateral arrangement that will
allow Weirton to access those funds.
The Debtor has immediate authority to use up to $10 million of
the Lenders' Cash Collateral pending approval of a debtor-in-
possession financing facility. This should be a one-day loan to
bridge the Debtor's needs for cash from the time of the
bankruptcy filing Monday morning through a 3:00 p.m. Interim DIP
Financing Hearing today. The DIP Facility contemplates a
complete roll-up of the Prepetition Financing Facility,
transforming those prepetition loans into superpriority senior
secured postpetition borrowings. (Weirton Bankruptcy News, Issue
No. 1; Bankruptcy Creditors' Service, Inc., 609/392-0900)
DebtTraders says that Weirton Steel Corporation's 11.375% bonds
due 2004 (WRTL04USR1) trade at 34.5 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WRTL04USR1
for real-time bond pricing.
WEIRTON STEEL: S&P Hatchets Ratings to D After Chapter 11 Filing
----------------------------------------------------------------
Standard & Poor's Rating Services has lowered its corporate
credit rating on Weirton Steel to 'D' from 'CCC' following the
company's voluntary filing for reorganization under Chapter 11
of the U.S. bankruptcy code.
"Despite cost-cutting efforts that included securing wage and
benefit concessions from its unions, the company's financial
performance has been adversely affected by weak demand, low
selling prices, high energy and raw material costs," said
Standard & Poor's credit analyst Dominick D'Ascoli. "Weirton
also has heavy legacy liabilities, that it could seek relief
from during the bankruptcy process in order to further improve
its cost position."
West Virginia-based Weirton Steel is the nation's sixth-largest
integrated steel producer. The company produces flat-rolled
steel and tin mill products.
WILLIAMS: Intends Private Placement of $275MM Convertible Debt
--------------------------------------------------------------
Williams (NYSE: WMB) announced it is planning a private
placement of $275 million aggregate principal amount of junior
subordinated convertible debentures due 2030 to certain
qualified institutional buyers under the Securities Act of 1933.
Williams will also grant the initial purchaser of the debentures
an option to purchase up to an additional $25 million aggregate
principal amount of the debentures.
Williams intends to use the net proceeds from the offering to
fund the repurchase of the convertible preferred stock currently
held by a subsidiary of MidAmerican Energy Holdings Company.
The securities to be offered have not been 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. This press release shall not
constitute an offer to sell or solicitation of an offer to buy
such notes and is issued pursuant to Rule 135c under the
Securities Act of 1933.
About Williams
Williams, through its subsidiaries, primarily finds, produces,
gathers, processes and transports natural gas. Williams' gas
wells, pipelines and midstream facilities are concentrated in
the Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard.
More information is available at http://www.williams.com.
As reported in the Troubled Company Reporter's May 6, 2003
edition, The Williams Companies, Inc.'s senior unsecured debt
rating has been upgraded to 'B+' from 'B-' by Fitch Ratings. In
addition, Fitch has assigned a 'BB' rating to WMB's outstanding
senior secured debt obligations. The senior unsecured debt
ratings of WMB's three pipeline issuing subsidiaries,
Transcontinental Gas Pipe Line Corp., Northwest Pipeline Corp.,
and Texas Gas Transmission Corp. have been upgraded to 'BB' from
'BB-'. The ratings for WMB, TGPL, and NWP are removed from
Rating Watch Evolving. The Rating Outlook is Stable. TGT's
rating remains on Rating Watch Positive pending completion of
the sale of TGT to Loews Corp. (senior unsecured rated 'A' by
Fitch, Rating Outlook Negative).
WILLIAMS: Takes Actions to Redeem and Repay Buffett Investments
---------------------------------------------------------------
Williams (NYSE: WMB) announced actions that will result in the
retirement of the investments in Williams by a subsidiary of
MidAmerican Energy Holdings Company, a member of the Berkshire
Hathaway Inc. (NYSE: BRK) family of companies.
Williams and MidAmerican have reached an agreement under which
Williams will repurchase for approximately $289 million all of
the outstanding 9-7/8 percent cumulative-convertible preferred
shares held by a wholly owned subsidiary of MidAmerican. In
March 2002, Williams sold the 1,466,667 preferred shares to
MidAmerican in a $275 million transaction. The repurchase is
subject to typical closing conditions, including obtaining the
necessary approvals from Williams' banks. The company expects
to close the transaction in June.
Williams also announced that it intends to make a $1.17 billion
payment that will retire a loan with a group of investors led by
Berkshire Hathaway. The 364-day loan, which matures in July, is
secured by substantially all of Williams' exploration-and-
production interests in the U.S. Rocky Mountains. Williams plans
to repay this loan prior to maturity.
Williams intends to refinance a portion of the exploration-and-
production loan with new, subsidiary-level borrowing at market
rates. The company is seeking $400 million to $500 million in
financing through a four-year, fully funded and prepayable term
loan. Williams intends to use the same exploration and
production interests to secure the new financing. The remaining
amounts due will be repaid from available cash at Williams,
principally generated from recently closed asset sales.
Williams is scheduled to close the new exploration-and-
production loan on or around May 30.
"Warren Buffett's Berkshire Hathaway companies served as
important strategic partners for Williams in 2002 -- with both a
preferred-equity investment and the exploration-and-production
loan," said Steve Malcolm, chairman, president and chief
executive officer. "This group's demonstrated faith in
Williams' fundamental strengths and, importantly, our future
helped us weather a severe financial crisis.
"We are seizing opportunities that allow Williams to benefit
from targeted financings in a manner that is consistent with our
overarching goals of strengthening liquidity and reducing debt,"
he said.
"The fact that, short of a year after the exploration-and-
production loan, Williams is in a position to redeem and repay
these investments on attractive terms is evidence, in and of
itself, of the significant progress we're making toward
strengthening our company and narrowing our focus," Malcolm
said.
"We are pleased to have played a role helping Williams secure a
stronger financial future," said David Sokol, chairman and chief
executive officer of MidAmerican Energy Holdings Company.
About Williams
Williams, through its subsidiaries, primarily finds, produces,
gathers, processes and transports natural gas. Williams' gas
wells, pipelines and midstream facilities are concentrated in
the Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard.
More information is available at http://www.williams.com
WILSHIRE CREDIT: Fitch Affirms Ratings on Three Note Issues
-----------------------------------------------------------
Fitch Ratings has taken rating actions on three Wilshire Credit
Corporation issues:
Series 1996-3
-- Class A-2-A, A-2-B, A-2-C, A-IO & PO affirmed at 'AAA';
-- Class M-1 & M-2 affirmed at 'AAA';
-- Class M-3 affirmed at 'AA-';
-- Class B-1 affirmed at 'BBB';
-- Class B-2 affirmed at 'BB+'.
Series 1997-WFC1
-- Class M-1 & M-2 affirmed at 'AAA';
-- Class M-3 affirmed at 'AA';
-- Class B-1 affirmed at 'BB+';
-- Class B-2 affirmed at 'B+'.
Series 1997-2
-- Class A-5, A-6 & A-7 affirmed at 'AAA';
-- Class M-1 affirmed at 'AA+';
-- Class M-2 affirmed at 'A+';
-- Class M-3 affirmed at 'BBB+';
-- Class B affirmed at 'BB'.
The affirmations on the above classes reflect credit enhancement
consistent with future loss expectations.
WORLDCOM/MCI: Settles SEC Fraud Charges for $500 Million
--------------------------------------------------------
MCI announced a settlement with the Securities and Exchange
Commission (SEC) on a civil penalty to be imposed for the
company's past accounting practices. The settlement finds the
company liable for a civil penalty of $1.510 billion, to be
satisfied by payment of $500 million upon the effective date of
the Company's emergence from Chapter 11 protection, expected
this fall.
The settlement must be approved by the U.S. District Court that
is overseeing the SEC's lawsuit against the Company as well as
by the U.S. Bankruptcy Court that is overseeing the Company's
Chapter 11 proceedings. The District court has entered an order
establishing a procedure for consideration of the proposed
settlement. The court invited interested parties to submit
comments on the proposed settlement on or before June 6, 2003.
If the settlement is approved by the courts it will resolve all
claims by the SEC against the Company for its past accounting
practices.
The funds will be distributed pursuant to the Fair Fund
provisions of the Sarbanes-Oxley Act of 2002. The U.S. District
Court will approve the plan for distribution of the funds.
"This settlement recognizes our cooperation with the SEC's
investigation, the Company's acceptance of responsibility for
its past accounting practices, and the significant strides we
have made in rebuilding MCI as a model of good corporate
governance," said MCI's executive vice president and general
counsel Michael Salsbury. "This is an important milestone in our
progress to emerge from Chapter 11 on schedule this fall."
MCI has already implemented a significant number of management,
policy and structural changes beyond the provisions of the
settlement, such as:
* Appointment of a new Board of Directors, CEO, and CFO;
* Active ethics program and continuing education procedures;
* Engagement of KPMG as its new auditor; and
* Commitment to transparency and candor in all company
affairs.
About WorldCom, Inc.
WorldCom, Inc. (WCOEQ, MCWEQ), which currently conducts business
under the MCI brand name, is a leading global communications
provider, delivering innovative, cost-effective, advanced
communications connectivity to businesses, governments and
consumers. With the industry's most expansive global IP backbone
and wholly-owned data networks, WorldCom develops the converged
communications products and services that are the foundation for
commerce and communications in today's market. For more
information, go to http://www.mci.com.
Worldcom Inc.'s 7.875% bonds due 2003 (WCOE03USR1) are presently
trading between 28.125 and 28.625 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOE03USR1
for real-time bond pricing.
* S.D.N.Y. Soliciting Local Rule Comments Until June 30
-------------------------------------------------------
The United States Bankruptcy Court for the Southern District of
New York has formed a committee to review its Local Bankruptcy
Rules. The Committee is soliciting comments from attorneys for
suggested changes or additions to the existing Local Bankruptcy
Rules. Please submit your comments or suggestions
electronically to LRBPcomments@FFHSJ.com or by mail to: Prof.
Alan N. Resnick, Chair, Committee on Local Bankruptcy Rules, c/o
Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza,
New York, NY 10004-1980, before June 30, 2003.
Kathleen Farrell-Willoughby
Clerk of Court
* Meetings, Conferences and Seminars
------------------------------------
June 4, 2003
NEW YORK INSTITUTE OF CREDIT
24th Credit Smorgasbord
Contact: 212-629-8686; fax 212-629-7788;
info@nyic.org
June 19-20, 2003
RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
Corporate Reorganizations: Successful Strategies for
Restructuring Troubled Companies
The Fairmont Hotel Chicago
Contact: 1-800-726-2524 or fax 903-592-5168 or
ram@ballistic.com
June 26-29, 2003
NORTON INSTITUTES ON BANKRUPTCY LAW
Western Mountains, Advanced Bankruptcy Law
Jackson Lake Lodge, Jackson Hole, Wyoming
Contact: 1-770-535-7722
or http://www.nortoninstitutes.org
July 10-12, 2003
ALI-ABA
Partnerships, LLCs, and LLPs: Uniform Acts, Taxation,
Drafting, Securities, and Bankruptcy
Eldorado Hotel, Santa Fe, New Mexico
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
December 3-7, 2003
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
La Quinta, La Quinta, California
Contact: 1-703-739-0800 or http://www.abiworld.org
April 15-18, 2004
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
J.W. Marriott, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
December 2-4, 2004
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Marriott's Camelback Inn, Scottsdale, AZ
Contact: 1-703-739-0800 or http://www.abiworld.org
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via
e-mail to conferences@bankrupt.com are encouraged.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices
are obtained by TCR editors from a variety of outside sources
during the prior week we think are reliable. Those sources may
not, however, be complete or accurate. The Monday Bond Pricing
table is compiled on the Friday prior to publication. Prices
reported are not intended to reflect actual trades. Prices for
actual trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies
with insolvent balance sheets whose shares trade higher than $3
per share in public markets. At first glance, this list may
look like the definitive compilation of stocks that are ideal to
sell short. Don't be fooled. Assets, for example, reported at
historical cost net of depreciation may understate the true
value of a firm's assets. A company may establish reserves on
its balance sheet for liabilities that may never materialize.
The prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
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S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter
A. Chapman, Editors.
Copyright 2003. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
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