/raid1/www/Hosts/bankrupt/TCR_Public/030523.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, May 23, 2003, Vol. 7, No. 101
Headlines
ACTERNA: Asks Court to Affirm Priority to Postpetition Suppliers
ACTERNA CORP: Wants Nod to Hire BSI as Noticing and Claims Agent
ALLEGIANCE TELECOM: Nasdaq to Knock-Off Shares on May 27, 2003
ALLMERICA FINANCIAL: Second-Quarter Storm Losses Top $19 Million
ALPHASTAR INSURANCE: Fails to Comply with Nasdaq Guidelines
AMERCO: AM Best Junks Insurance Units' Fin'l Strength Ratings
AMERICAN PLUMBING: S&P Lowers & Places Ratings on Watch Negative
AMERICAN RESTAURANT: Mar. 31 Working Capital Deficit Tops $25MM
ANNUITY & LIFE: S&P Withdraws B+ Counterparty and FS Ratings
APARTMENT INVESTMENT: Completes Amendment to Revolving Facility
AVISTA: Outlines Plan to Meet Electric Customers' Power Needs
BLEECKER: Fitch Downgrades Rating on Class C Notes to B from BBB
BUDGET GROUP: Court Approves AT&T Cure Amount Settlement Pact
CENTERPOINT ENERGY: Prices $400 Million Senior Notes Offering
CHAMPIONLYTE: Receives $1 Million Equity Financing Commitment
CLEAN HARBORS: Weak Earnings Prompt S&P's Negative Outlook
CONOR PACIFIC: Board OKs Debt Settlement Deal with 157692 Canada
CONSECO: Court Reschedules Plan Confirmation Hearing for June 13
CRUM & FORSTER: S&P Assigns BB Rating to $200MM Sr. Unsec. Notes
DANA: Selling Parish Structural Products Operation in Thailand
DAISYTEK: Gets OK to Use Lenders' Cash Collateral Until June 13
DAISYTEK INT'L: ISA International Business Units Purchased
DOW CORNING: Buying Simcala, Inc., for $30,450,000 in Cash
DVI RECEIVABLES: Fitch Rates $11 Million Class E Notes at BB
EMAGIN CORP: March 31 Net Capital Deficit Widens to $15 Million
ENCOMPASS SERVICES: Earns Nod to Sell 13 Non-Core Business Units
ENRON CORP: Judge Gonzalez Extends Exclusive Period to June 30
FEDERAL-MOGUL: Takes Action to Address $158 Bil. in Filed Claims
GENSCI: Full-Year 2002 Operating Results Enter Positive Zone
GLOBAL CROSSING: Court Clears Computer Sciences Settlement Pact
GOLDFARB CORP: Red Ink Continues to Flow in First-Quarter 2003
GOODYEAR TIRE: Releases Monthly Investor Update for April 2003
GROUP MANAGEMENT: Independent Auditor Airs Going Concern Doubt
HOLLINGER INC: S&P Drops Long-Term Corporate Credit Rating to SD
HQ GLOBAL: Exclusive Plan Filing Period Runs through July 13
HYDROMET ENVIRONMENTAL: Misses Financial Reports Filing Deadline
INGRESS I LTD: Fitch Cuts Class C 3rd Priority Term Notes to BB-
INTEGRATED TELECOM: PCTEL Acquires Four U.S. DSL Patents
INTERNET ADVISORY: Cash Insufficient to Meet Operating Needs
ISTAR ASSET: Fitch Rates 6 Series 2003-1 Notes at Low-B Levels
IT GROUP: Court Extends Plan Filing Exclusivity Until July 14
L-3 COMMS: Completes $400MM of 6-1/8 Senior Sub. Notes Offering
L-3 COMMS: Initiates Full Redemption of Outstanding 8-1/2% Notes
LAGNIAPPE HOSP.: Sun Capital Unit Buys J.L. Carraway's Interests
LEAP WIRELESS: Hires Poorman-Douglas as Claims and Notice Agent
MASSEY ENERGY: Offering $100MM Conv. Notes via Private Placement
MED DIVERSIFIED: Completes Sale of Distance Medicine Business
METALS USA: Obtains Court's Approval of IPSCO Stipulation
NETROM INC: Tempest Enters Partnership Pact with Global Trading
NORTEL: TMP Tech. Selects Company's Multimedia Comms. Portfolio
NORTEL NETWORKS: Inks $5-Million Supply Contract with SaskTel
NRG ENERGY: Wants Okay to Continue Existing Insurance Policies
OWENS CORNING: Court Orders Appointment of Fibreboard Examiner
PATTERSON INSURANCE: S&P Assigns R Rating Due to Liquidation
PENNEXX FOODS: Ruling on Smithfield's Action Expected Next Week
PETALS INC: Case Summary & 20 Largest Unsecured Creditors
PETCO ANIMAL: First-Quarter Results Reflect Strong Performance
POLYPHALT INC: Delays Filing of Annual and First Quarter Results
PRINCETON VIDEO: Filing for Chapter 11 Protection Soon
PVC CONTAINER: Taps US Bancorp Piper to Review Strategic Options
REPUBLIC WESTERN: Fitch Drops Financial Strength Rating to DD
SAVVIS COMMS: Fails to Maintain Nasdaq Minimum Listing Criteria
SIERRA HEALTH: AM Best Ratchets FS Ratings Up a Notch to B+
SDL TECHNOLOGIES: Koda Resources Bolts Proposed Merger Agreement
SLATER STEEL: Atlas Unit Workers Ratify 5-Year Collective Pact
SLATER STEEL: OSC Ceases Trading over Statutory Filing Defaults
SLMSOFT INC: Commences Restructuring Under CCAA in Canada
STARWOOD HOTELS: Selling 13 Hotels to Olympus-Led Partnership
SUN HEALTHCARE: Reports Loan Acceleration and Foreclosure Sale
THUNDERBIRD MINING: Voluntary Chapter 11 Case Summary
THYSSENKRUPP BUDD: On-Going Viability Dependent on Finance Unit
UNITED AIRLINES: Selling Aircraft to Dubai Air for $55 Million
VALHI INC: Board Declares Regular Quarterly Dividend
VARICK STRUCTURED: Fitch Hatchets 3 Note Classes to BB/BB/B
WELLS FARGO: Fitch Affirms BB/B Ratings on Classes B-4 & B-5
WHEELING: Has Until July 7, 2003 to Make Lease-Related Decisions
WOMEN FIRST: Inks 3-Year Nationwide Agreement with Premier Inc.
WORLDCOM INC: Files First Amended Plan and Disclosure Statement
ZENITH INDUSTRIAL: Delaware Court Fixes June 27 Claims Bar Date
* Gary L. Blum to Head Becker & Poliakoff's Bankruptcy Practice
* Restructuring Advisory Expert Bennett Gross Joins Huron
* BOOK REVIEW: American Economic History
*********
ACTERNA: Asks Court to Affirm Priority to Postpetition Suppliers
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Numerous vendors and suppliers provide Acterna Corp., and its
debtor-affiliates with millions of dollars of equipment and
materials to be used in their businesses. As of the Petition
Date, the Debtors had $4,500,000 in prepetition purchase orders
outstanding with these Vendors.
As a consequence of their Chapter 11 filing, the Debtors believe
that the Vendors may be concerned that their postpetition
delivery of goods will result in their holding only general
unsecured claims against the Debtors' estates with respect to
the shipments. As a result, the Vendors may refuse to ship or
deliver the goods ordered prepetition unless the Debtors issue
substitute purchase orders or obtain a Court order providing
that all of their undisputed obligations arising from the
postpetition delivery of goods subject to prepetition
outstanding orders are afforded administrative expense priority.
To ensure a continuous supply of goods and materials
indispensable to the Debtors' operations, Judge Lifland confirms
that the Vendors will have administrative expense priority
status pursuant to Section 503(b) of the Bankruptcy Code for the
Debtors' undisputed obligations arising from the postpetition
delivery of goods pursuant to the Outstanding Purchase Orders.
Judge Lifland also permits the Debtors to satisfy the undisputed
Obligations in the ordinary course of business.
Paul M. Basta, Esq., at Weil, Gotshal & Manges LLP, in New York,
emphasizes that the granting of administrative expense priority
status to the postpetition deliveries will not provide the
Vendors with any greater priority than they otherwise would
have. (Acterna Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ACTERNA CORP: Wants Nod to Hire BSI as Noticing and Claims Agent
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Acterna Corporation and its debtor-affiliates ask for authority
from the U.S. Bankruptcy Court for the Southern District of New
York to employ and retain Bankruptcy Services LLC as claims and
noticing agent.
The Debtors report their estimate of more than 3,000 creditors
and parties in interest in these chapter 11 cases, expected to
file proofs of claims. It appears that the noticing and
receiving, docketing and maintaining proofs of claims would be
unduly time consuming and burdensome for the Clerk of the
Bankruptcy Court.
In this connection, the Debtors believe that the retention of
BSI as the Court's outside agent is in the best interests of
their estates and parties in interest.
In this retention, BSI is expected to:
a. notify all potential creditors of the filing of the
bankruptcy petition and of the setting of the first
meeting of creditors pursuant to section 341(a) of the
Bankruptcy Code, under the proper provisions of the
Bankruptcy Code and the Federal Rules of Bankruptcy
Procedure;
b. maintain an official copy of the Debtors' schedules of
assets and liabilities and statement of financial
affairs listing the Debtors' known creditors and the
amounts owed;
c. notify all potential creditors of the existence and
amount of their respective claims as evidenced by the
Debtors' books and records and set forth in the
Schedules;
d. furnish a form for the filing of a proof of claim, after
such notice and form are approved by this Court;
e. file with the Clerk a copy of the notice, a list of
persons to whom it was mailed (in alphabetical order),
and the date the notice was mailed, within 10 days of
service;
f. docket all claims received, maintaining the official
claims registers for each Debtor on behalf of the Clerk,
and providing the Clerk with certified duplicate
unofficial Claims Registers on a monthly basis, unless
otherwise directed;
g. specify in the applicable Claims Register, the following
information for each claim docketed:
(i) the claim number assigned,
(ii) the date received,
(iii) the name and address of the claimant and agent, if
applicable, who filed the claim, and
(iv) the classification of the claim (e.g., secured,
unsecured, priority, etc.);
h. relocate, by messenger, all of the actual proofs of
claim filed to BSI, not less than weekly;
i. record all transfers of claims and provide any notices
of such transfers required by Rule 3001 of the
Bankruptcy Rules;
j. make changes in the Claims Registers pursuant to Court
Order;
k. upon completion of the docketing process for all claims
received to date by the Clerk's office, turning over to
the Clerk copies of the Claims Registers for the Clerk's
review;
l. maintain the official mailing list for each Debtor of
all entities that have filed a proof of claim, which
list shall be available upon request by a party- in-
interest or the Clerk;
m. assist with, among other things, the solicitation and
the calculation of votes and the distribution as
required in furtherance of confirmation of plan(s) of
reorganization; and
n. 30 days prior to the close of these cases, submit an
Order dismissing the Agent and terminating the services
of the Agent upon completion of its duties and
responsibilities and upon the closing of these cases.
BSI will bill the Debtors in its current hourly rates:
Kathy Gerber $210 per hour
Senior Consultants $185 per hour
Programmer $130 to $160 per hour
Associate $135 per hour
Data Entry/Clerical $40 to $60 per hour
Schedules Preparation $225 per hour
Acterna Corporation, the world's largest provider of test and
management solutions for optical transport, access and cable
networks and the second largest communications test company
overall, filed for chapter 11 protection on May 6, 2003 (Bankr.
S.D.N.Y. Case No. 03-12837). Michael F. Walsh, Esq., and Paul
M. Basta, Esq., at Weil, Gotshal & Manges LLP represent the
Debtors in their restructuring efforts. When the Company filed
for protection from its creditors, it listed $497,269,000 in
total assets and $1,269,240,000 in total liabilities.
ALLEGIANCE TELECOM: Nasdaq to Knock-Off Shares on May 27, 2003
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Allegiance Telecom, Inc. (Nasdaq: ALGXQ), a facilities-based
national local exchange carrier, has been notified that its
common stock will be delisted from The Nasdaq Stock Market,
effective with the open of business on May 27, 2003. On May 14,
2003, Allegiance announced that it was pursuing its financial
restructuring plans under Chapter 11 of the U.S. Bankruptcy
Code.
The Nasdaq letter, dated May 15, 2003, states that the Company's
common stock will be delisted from The Nasdaq Stock Market in
accordance with Marketplace Rules 4300 (giving broad authority
to Nasdaq in terminating the listing of an issuer) and 4450(f)
(giving the authority to Nasdaq to suspend or terminate the
securities of an issuer that has filed for bankruptcy).
The Nasdaq letter states that its determination is based on the
following factors: the Company's bankruptcy filing and
associated public interest concerns raised by it; concerns
regarding the residual equity interest of the existing listed
securities holders; and concerns about the Company's ability to
sustain compliance with all requirements for continued listing
on The Nasdaq Stock Market, including the minimum bid price
rules.
The letter also states that the Company is not in compliance
with Marketplace Rule 4310(C)(13) as it has not yet paid its
Listing of Additional Shares fee. The Company understands that
its common stock may be eligible to trade on the NASD-regulated
OTC Bulletin Board.
Allegiance Telecom is a facilities-based national integrated
communications provider headquartered in Dallas, Texas. As the
leader in competitive local service for medium and small
businesses, Allegiance offers "One source for business
telecom(TM)" -- a complete package of telecommunications
services, including local, long distance, international calling,
high-speed data transmission and Internet services and a full
suite of customer premise communications equipment and service
offerings. Allegiance serves major metropolitan areas in the
U.S. with its single source provider approach.
ALLMERICA FINANCIAL: Second-Quarter Storm Losses Top $19 Million
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Allmerica Financial Corporation (NYSE: AFC) has incurred
approximately $19 million in pre-tax catastrophe losses to date
in the second quarter. The losses are primarily the result of
hail, high winds, and tornadoes, principally in the Midwest and
South from April 1 through May 11, 2003. Combined with the $11.2
million in pre-tax catastrophe losses incurred in the first
quarter, the company estimates that year-to-date pre-tax
catastrophe losses for 2003 have been approximately $30.2
million.
Allmerica assumes a certain amount of annual catastrophe losses
when it develops its annual budgets, and for 2003 such losses
were assumed to be approximately three percent of assumed
premium for the year. This level of assumed catastrophe losses
varies by quarter due to seasonal variations in expected loss
patterns. The $19 million of pre-tax catastrophe losses incurred
to date in the second quarter approximates the assumed amount
for the full second quarter, and the year-to-date pre-tax amount
of $30.2 million is below the assumed level for the first and
second quarters of 2003 combined.
Historically, Allmerica has only reported the effect of
catastrophe losses between scheduled earnings announcements when
the company has incurred significant losses from a single event
or a series of related events. However, given the attention the
severe storms have received over the past few weeks, the company
has decided to share this information at this time. In the
future, the company expects to adhere to its historical practice
of disclosure with regard to catastrophe losses between
reporting periods.
Allmerica Financial Corporation expects to announce its second
quarter financial results on Monday, July 28.
Allmerica Financial Corporation is the holding company for a
diversified group of insurance and financial services companies
headquartered in Worcester, Massachusetts.
* * *
As previously reported in Troubled Company Reporter, Fitch
Ratings revised its Rating Watch on the insurer financial
strength ratings of First Allmerica Financial Life Insurance
Co., Allmerica Financial Life Insurance and Annuity Co., and
Allmerica Global Funding LLC's $2 billion global debt program
rating to Positive from Negative.
Fitch has also revised its Rating Watch on Allmerica Financial
Corporation's senior debt rating and Allmerica Financing Trust's
capital securities to Positive from Negative.
Fitch's actions reflect the significant increase in statutory
capitalization for AFC's life operations as a result of the
execution of several fourth quarter transactions, including the
definitive agreement to sell its interest in a $650 million
block of universal life insurance to John Hancock Life Insurance
Company, the retirement of $551 million in funding agreement
liabilities below face value through open market purchase/
tender offer and the implementation of a new guaranteed minimum
death benefit mortality reinsurance program.
Entity/Issue Type/Action/Rating/Rating Watch
First Allmerica Financial Life Insurance Co.
--Insurer financial strength Rating Watch - 'BB-'/Rating
Watch - Positive
Allmerica Financial Life & Annuity Co.
--Insurer financial strength 'BB-'/ Rating Watch Positive.
Allmerica Global Funding LLC $2 billion global note program
--Long-term issuer rating 'BB-'/ Rating Watch Positive.
Allmerica Financial Corp.
--Long-term issuer 'BB'/ Rating Watch Positive;
--Senior debt rating 'BB'/ Rating Watch Positive;
--Commercial paper rating 'B'.
Allmerica Financing Trust
--Capital securities rating 'B+'/ Rating Watch Positive.
ALPHASTAR INSURANCE: Fails to Comply with Nasdaq Guidelines
-----------------------------------------------------------
AlphaStar Insurance Group Limited (Nasdaq: ASIGE) reported that
on May 21, 2003, it received a notification from the Nasdaq
Listing Qualifications Department that the Company has failed to
comply with the filing requirements for continued listing set
forth in NASD Marketplace Rule 4310(C)(14). NASD Marketplace
Rule 4310(C)(14) requires that Nasdaq issuers timely file their
periodic reports in compliance with the reporting obligations
under the federal securities laws. The Company has not timely
filed its Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2003.
The Company previously reported on April 22, 2003 that the
Nasdaq had notified it that its securities were subject to
delisting from The Nasdaq Stock Market, Inc. for failure to file
its Annual Report on Form 10-K for the fiscal year ended
December 31, 2002. At that time, the Company stated its
expectation that it would be able to file the 2002 Form 10-K
within the following 10 days, or by May 2, 2003.
The Company was not able to file the 2002 Form 10-K within the
stated period. The Form 10-K is in the final stages of review by
the Company's auditors. The Company anticipates that its Form
10-Q for the first quarter of 2003 will be filed shortly after
the Form 10-K. The Company continues to believe that neither the
10-K nor the 10-Q will reflect any restatement of prior results
(except to reflect certain discontinued operations).
The Company's late 10-K and 10-Q filings will be considered at
an oral hearing on May 22, 2003 before a panel authorized by the
Nasdaq Stock Market.
AlphaStar Insurance Group Limited is a Bermuda-domiciled holding
company with subsidiaries in the United States and United
Kingdom. Among its subsidiaries are a property-casualty
insurance company, managing general agencies, and reinsurance
intermediaries.
AlphaStar Insurance's September 30, 2002 balance sheet shows
that the company's accumulated deficit has widened to about $38
million, while total shareholders' equity stumbled to about $14
million, from close to $36 million recorded at Dec. 31, 2001.
AMERCO: AM Best Junks Insurance Units' Fin'l Strength Ratings
-------------------------------------------------------------
A.M. Best Co. has downgraded the financial strength ratings to C
(Weak) from B (Fair) of Republic Western Insurance Company
(Arizona) and North American Fire & Casualty Insurance Company
(Louisiana).
Also, the financial strength ratings of the life/health
subsidiaries, Oxford Life Insurance Company (Arizona), Christian
Fidelity Life Insurance Company (Texas) and North American
Insurance Company (Wisconsin) were downgraded to C+ (Marginal)
from B (Fair). The life health ratings will remain under review
and the rating outlook for the group will remain negative.
The companies are all subsidiaries of AMERCO (Reno, NV)
(NASDAQNM: UHAL), which is the parent of U-Haul International,
Inc. (Phoenix, AZ), the largest truck and trailer rental company
in the United States. The companies had a financial strength
rating of B (Fair) and were under review with negative
implications largely based on the financial distress of AMERCO.
The downgrade of Republic Western takes into consideration the
significant accounting adjustments reported in the first quarter
of 2003, their consequential impact on Republic Western's
capitalization and the continued financial challenges
surrounding its parent, AMERCO. These factors stem from Republic
Western's first quarter accounting charges of approximately $96
million, continued adverse loss reserve development and its
adverse impact on policyholders'surplus which Best currently
views as vulnerable. Accounting charges taken in the first
quarter were spread across various assets held by Republic
Western, but were primarily related to the non-admission of
receivable balances due from its parent partially caused by the
parent's non-investment grade status. As a result, Republic
Western's surplus fell 58% from $166 million to roughly $70
million at the end of the first quarter 2003. In the quarter,
Republic Western also reported approximately $8.5 million of
unfavorable loss reserve development.
Over the past several years, Republic Western has become
increasingly dependent on its parent for capital support.
However, given its current status, AMERCO's ability to support
its insurance subsidiaries is practically non-existent.
Furthermore, Republic Western consented to a supervision order
by the Arizona Department of Insurance on May 20, 2003, in light
of the above circumstances. The order is intended to
circumscribe and closely monitor the situation while Republic
Western and its affiliates engage in self-corrective efforts.
The negative outlook arises from concerns over the
aforementioned factors.
The rating action on Oxford Life, Christian Fidelity and North
American Insurance primarily reflects continued stress across
the entire organization, the ongoing uncertainties surrounding
the restructuring of debt at the parent company and the negative
pressures this could cause on the life operations. A.M. Best
believes the life/health subsidiaries are presently in a better
financial position than the property/casualty operations on a
stand alone basis. However, the recent surplus deterioration at
its property/casualty sister company, Republic Western, combined
with AMERCO's recent failure to meet an additional debt payment
and the uncertainty surrounding its parents ability to complete
its debt restructuring, presents A.M. Best with a lack of
confidence in the entire organization.
The financial strength ratings for the following
property/casualty subsidiaries of AMERCO have been downgraded to
C (Weak) from B (Fair):
-- Republic Western Insurance Company
-- North American Fire & Casualty Insurance Company
The financial strength ratings for the following life/health
subsidiaries of AMERCO have been downgraded to C+ (Marginal)
from B (Fair) and are under review with negative implications:
-- Oxford Life Insurance Company
-- Christian Fidelity Life Insurance Company
-- North American Insurance Company
A.M. Best Co., established in 1899, is the world's oldest and
most authoritative insurance rating and information source. For
more information, visit A.M. Best's Web site at
http://www.ambest.com
AMERICAN PLUMBING: S&P Lowers & Places Ratings on Watch Negative
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on American Plumbing & Mechanical Inc., to 'B-' from 'B'.
Standard & Poor's also lowered the senior secured rating to 'B'
from 'B+' and the subordinated rating to 'CCC' from 'CCC+'. All
the ratings were placed on CreditWatch with negative
implications.
At March 31, 2003, AMPAM had approximately $178 million of debt
outstanding.
The rating actions on Round Rock, Texas-based AMPAM reflect
deterioration in the company's liquidity position due to
increasing working capital usage and lack of profitability.
"We will meet with management to discuss its financial
strategies to improve liquidity and reduce debt leverage during
this period of weak market conditions, as well as its operating
strategies to improve margins and cash flow generation, before
taking another ratings action," said Standard & Poor's credit
analyst Joel Levington.
AMPAM is a provider of plumbing and mechanical construction
services to the residential and commercial and industrial
markets.
Although the residential construction market has remained solid
during this period of economic weakness, over the past few
months new permits awarded have declined. The commercial
construction market is expected to decline further in 2003 from
its significantly weakened level over the past year.
AMERICAN RESTAURANT: Mar. 31 Working Capital Deficit Tops $25MM
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Revenues of American Restaurant Group, Inc., for the thirteen
weeks ended March 31, 2003, decreased from $81.8 million in the
first quarter of 2002 to $73.7 million in the first quarter of
2003. Same-store sales decreased by 10.2% in the first quarter
of 2003 compared to 2002. Of the sales decrease, 7.2% resulted
from a planned reduction in spending on TV product promotions
during the first quarter of 2003 vs. the first quarter of 2002.
The sale of promoted items accounted for 21.1% of revenues in
the first quarter of 2003, down from 28.1% in the first quarter
of 2002. The remaining 3.0% of the quarter-over-quarter
decrease stems from sales softness leading up to and during the
Iraqi war. There were 109 Black Angus restaurants operating as
of March 31, 2003 and 108 Black Angus restaurants operating as
of April 1, 2002.
As a percentage of revenues, food and beverage costs improved
1.9% to 31.2% in the first quarter of 2003 from 33.1% in the
first quarter of 2002. The decrease is the result of fewer
sales of promoted products, which have a lower gross profit
margin.
As a percentage of revenues, labor costs improved to 30.0% in
the first quarter of 2003 from 30.1% in the first quarter of
2002.
Direct operating costs consist of occupancy, advertising, and
other expenses incurred by individual restaurants. Direct
operating costs decreased from $20.2 million in the first
quarter of 2002 to $19.0 million in the first quarter of 2003.
The decrease is the result $1.3 million in lower TV advertising
expenses, offset by a small increase in energy and insurance
costs.
Depreciation and amortization consists of depreciation of fixed
assets used by individual restaurants and at the Black Angus and
corporate offices, as well as amortization of intangible assets.
Depreciation and amortization decreased from $1.9 million in the
first quarter of 2002 to $1.8 million in the first quarter
of 2003.
General and administrative expenses increased from $2.3 million
in the first quarter of 2002 to $2.8 million in the first
quarter of 2003. 100% of the increase is the result of higher
fees incurred in connection with the recent audits of the 2002
and 2001 financial statements.
As a result of the above items, operating profit decreased from
$5.7 million in the first quarter of 2002 to $5.0 million in the
first quarter of 2003. As a percentage of revenues, first-
quarter operating profit was 6.9% in the first quarter of 2002
compared to 6.8% in the first quarter of 2003.
Interest expense remained flat at $5.3 million in the first
quarter of 2003.
Liquidity and Capital Resources
The Company's primary sources of liquidity are cash flows from
operations and borrowings under its revolving credit facilities.
The Company requires capital principally for the acquisition and
construction of new restaurants, the remodeling of existing
restaurants, the purchase of new equipment and leasehold
improvements, and working capital. As of March 31, 2003, it had
approximately $5.5 million of cash.
In general, restaurant businesses do not have significant
accounts receivable because sales are made for cash or by
credit-card vouchers, which are ordinarily paid within three to
five days. The restaurants do not maintain substantial inventory
as a result of the relatively brief shelf life and frequent
turnover of food products. Additionally, restaurants generally
are able to obtain trade credit in purchasing food and
restaurant supplies. As a result, restaurants are frequently
able to operate with working-capital deficits, i.e., current
liabilities exceed current assets. At March 31, 2003, American
Restaurant Group's working-capital deficit was $25.5 million.
The Company estimates that capital expenditures of $3.0 million
to $6.0 million are required annually to maintain and refurbish
existing restaurants. Other capital expenditures, which are
generally discretionary, are primarily for the construction of
new restaurants and for expanding, reformatting, and extending
the capabilities of existing restaurants and for general
corporate purposes. Total capital expenditures for continuing
operations were approximately $1.0 million through the first
quarter of 2003 and $0.8 million through the first quarter of
2002. The Company estimates that capital expenditures in 2003
will be approximately $3.5 million. It intends to open new
restaurants with small capital outlays and to finance most of
the expenditures through leases.
As reported in Troubled Company Reporter's November 18, 2002
edition, Standard & Poor's lowered its corporate credit and
senior secured debt ratings on casual dining restaurant operator
American Restaurant Group Inc., to 'B-' from 'B'.
The outlook is negative. Los Altos, California-based American
Restaurant Group had about $160 million of debt outstanding as
of September 30 2002.
ANNUITY & LIFE: S&P Withdraws B+ Counterparty and FS Ratings
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its counterparty
credit and financial strength ratings on Annuity & Life
Reassurance Ltd. and its wholly owned subsidiary, Annuity & Life
Reassurance America Inc., to 'B+' from 'BB-' because of concerns
about the company's ability to meet its collateral requirements
by the end of the second quarter.
Standard & Poor's also said that it subsequently withdrew the
ratings at the company's request.
As of March 31, 2003, the company had $40.6 million of
outstanding unsecured letters of credit issued on its behalf by
Citibank, which expire on Dec. 31, 2003. In 2002, ALRe entered
into an agreement with Citibank to secure or eliminate the
letter of credit by June 30, 2003. As a nonadmitted reinsurer in
the U.S., the company must post collateral in the form of
letters of credit or assets in trust to back the statutory
reserves of its U.S.-based cedents.
"ALRe has made progress toward resolving its commitment with
Citibank through the cessation of new business, the recapture of
several treaties, and by providing assets as collateral" said
Standard & Poor's credit analyst Rodney A. Clark. "However, the
company has experienced significant adverse death claims over
the last two quarters. The company is required to post
additional collateral to support these claim liabilities.
Potential further adverse mortality makes it difficult to
predict the collateral need in advance." As of March 31, 2003,
the company's cedents had asserted collateral requirements of
$172 million in excess of what the company had posted, a
significant portion of which the company is disputing. At least
one cedent has pursued arbitration over the claimed breach.
Standard & Poor's does not have a view on the likely outcome of
the arbitration. However, if ALRe does not prevail in such
arbitration, the impact could lead to a material adverse effect
on the company. If ALRe does not prevail in such arbitration,
the impact could lead to liquidation of the company. Such
arbitration is not likely to be resolved until 2004.
APARTMENT INVESTMENT: Completes Amendment to Revolving Facility
---------------------------------------------------------------
Apartment Investment and Management Company (NYSE: AIV) has
completed modification of Aimco's revolving credit facility and
term loan. The modification includes:
* An increase in the covenant limit on distributions as a
percentage of funds from operations from 80% to 88% for the
quarters ended June 30, 2003 through March 31, 2004, 85% for
the quarters ended June 30, 2004 and September 30, 2004, and
80% thereafter. The quarterly covenant is calculated based on
trailing four quarters consistent with all other covenant
calculations; and
* The right for Aimco to redeem preferred stock with new common
or preferred equity or sales proceeds.
Additionally, in response to investor inquiry, Aimco's coverage
ratios for the first quarter 2003 were 2.00:1.00 for Free Cash
Flow Coverage of Interest Expense and 1.57:1.00 for Free Cash
Flow Coverage of Interest Expense and Preferred Dividends. These
Free Cash Flow coverage ratios represent metrics used internally
by Aimco and use a different basis for calculation than the
coverage ratios as required under Aimco's bank covenants. The
Free Cash Flow coverage ratios as calculated below are based on
the current quarter and use results reported on Aimco's Free
Cash Flow from Business Segments.
Aimco has posted its quarterly NAV calculation to its Web site
at http://www.aimco.com/aimco.pdf
Aimco is a real estate investment trust headquartered in Denver,
Colorado owning and operating a geographically diversified
portfolio of apartment communities through 19 regional operating
centers. Aimco, through its subsidiaries, operates approximately
1,760 properties, including approximately 313,000 apartment
units, and serves approximately one million residents each year.
Aimco's properties are located in 47 states, the District of
Columbia and Puerto Rico. Aimco has been recently included in
the S&P 500.
As reported in Troubled Company Reporter's October 23, 2002
edition, Standard & Poor's Ratings Services affirmed its double-
'B'-plus corporate credit rating and its single-'B'-plus
preferred stock rating on Apartment Investment and Management
Co. The outlook is stable.
The ratings on Denver-based AIMCO, a nationally focused
apartment REIT, reflect the company's seasoned and deep
management team, solid geographic diversification, and
relatively stable operating performance. These strengths are
tempered by the inherent risks associated with the company's
transaction-oriented growth strategy, an aggressive financial
profile, and the uncertain depth and duration of the currently
weak multifamily leasing environment and the impact it might
have on AIMCO's portfolio performance.
AVISTA: Outlines Plan to Meet Electric Customers' Power Needs
-------------------------------------------------------------
Avista Corp. (NYSE: AVA) has submitted its 2003 Integrated
Resource Plan to the public utility commissions in Idaho and
Washington. The IRP describes the mix of generating resources
including an investment in wind power, as well as energy
efficiency programs to meet future electric power needs at least
cost.
"Avista's long-term resource plan demonstrates our commitment to
cost effective renewable energy and energy conservation," said
Ron Peterson, Avista Utilities vice president of energy
resources and optimization. "Avista's preliminary plan includes
the acquisition of 75 megawatts of wind power starting in 2008.
That's enough power to serve 48,000 homes and businesses."
The IRP includes a diverse portfolio of generating resources and
the continuation of the company's commitment to energy
conservation. In the last 10 years, Avista has achieved a total
of 599 million kilowatt-hours in energy savings through its
conservation programs. The company's future energy efficiency
efforts are expected to save 788 million kilowatt-hours over the
20-year period covered by the IRP. The IRP also includes a mix
of thermal generation, peaking resources and long-term
contracts.
The plan was developed over the past 18 months in conjunction
with a technical advisory committee comprised of consumer
groups, conservation advocates, regulators and outside technical
groups.
"We appreciate the considerable time and effort put into our
planning activities by our stakeholders," said Peterson. "The
contributions from the technical advisory committee were very
important to our planning process."
The IRP is created every two years with a 20-year view to the
future. Prior to accepting the plan, the Washington Utilities
and Transportation Commission and the Idaho Public Utilities
Commission will take public comments over the next several
months. The plans are available on the company's Web site at
http://www.avistautilities.com/resources/plans/default.asp
Avista Corp. is an energy company involved in the production,
transmission and distribution of energy as well as other energy-
related businesses. Avista Utilities is a company operating
division that provides electric and natural gas service to
customers in four western states. Avista's non-regulated
subsidiaries include Avista Advantage, Avista Labs and Avista
Energy. Avista Corp.'s stock is traded under the ticker symbol
"AVA" and its Internet address is http://www.avistacorp.com
As reported in Troubled Company Reporter's December 20, 2002
edition, Standard & Poor's Ratings Services revised its outlook
to stable from negative on Avista Corp., based on improvement in
the State of Washington's regulatory environment.
In addition, Standard & Poor's affirmed the company's 'BB+'
corporate credit rating and the 'BBB-' rating on the company's
first mortgage bonds, which reflects overcollateralization of
these bonds by the pledged assets.
The 'BB+' rating on Avista Corp., reflects the company's average
business position, characterized by low-cost, hydroelectric
generation; competitive rates; operating and regulatory
diversity in Washington, Idaho, Montana and Oregon; and a much-
improved regulatory environment, offset by a financial profile
that is weak for the rating.
BLEECKER: Fitch Downgrades Rating on Class C Notes to B from BBB
----------------------------------------------------------------
Fitch Ratings downgrades two classes of notes issued by Bleecker
Structured Asset Fund Ltd.
The following rating actions are effective immediately:
-- Class A-1 floating-rate notes affirmed at 'AAA',
removed from Rating Watch Negative;
-- Class A-2 floating-rate notes affirmed at 'AAA',
removed from Rating Watch Negative;
-- Class B floating-rate notes to 'BBB' from 'AA',
removed from Rating Watch Negative; and
-- Class C fixed-rate notes to 'B' from 'BBB', removed
from Rating Watch Negative.
The transaction, a collateralized bond obligation, is supported
by a diversified portfolio of asset-backed securities,
residential mortgage-backed securities and commercial mortgage-
backed securities. The class A-1, A-2, B and C notes were placed
on Rating Watch Negative on Apr. 24, 2003. Fitch has had
discussions with the Clinton Group, Inc., the asset manager,
regarding the current state of the portfolio and asset
management strategy. Fitch has reviewed the credit quality of
the individual assets comprising the portfolio and has conducted
cash flow modeling of various default timing and interest rate
scenarios. As a result, Fitch has determined that the original
ratings assigned to the class B and C notes of Bleecker no
longer reflected the current risk to noteholders.
The rating actions are based on a number of factors including
substantial downward rating migration in the credit quality of
the portfolio and a reduction in excess spread. According to the
March 2003 trustee report, the transaction was failing the Fitch
weighted average rating factor test. The Fitch WARF was 27 (or
approximately 'BB+') for the period ended March 28, 2003. This
exceeds the max WARF limitation of 17.00 (between 'BBB' and
'BBB-').
The portfolio contains a number of securities whereby default is
a real possibility, although no defaults have occurred to date.
Fitch believes these factors have negatively impacted the
expected performance of the transaction to the point where the
available credit enhancement levels no longer support the
original ratings. Approximately 22% of the collateral pool is
currently rated in the non-investment grade category, including
15% rated 'CCC' or below. Bleecker holds a number of securities
that Fitch has identified as having a potential for adverse
impact on the ability of the CBO to pay ultimate interest and
ultimate principal on the class B and C notes. One area where
the portfolio has experienced significant credit deterioration
is manufactured housing transactions.
BUDGET GROUP: Court Approves AT&T Cure Amount Settlement Pact
-------------------------------------------------------------
Budget Group Inc., and its debtor-affiliates obtained the
Court's approval of its Stipulation resolving Prepetition Cure
Amount and the Gap Cure Amount owed to AT&T Corp.
The Debtors and AT&T Corp have agreed to settle the claims and
disputes between the parties on these terms:
A. The Debtors and AT&T acknowledge and agree that the
Prepetition Cure Amount will be fixed at $2,958,000 and the
Gap Cure Amount will be fixed at $78,791;
B. The Debtors will pay the Prepetition Cure Amount and Gap
Cure Amount to AT&T without further delay;
C. After payment of the Prepetition Cure Amount and Gap Cure
Amount, the Debtors will be deemed to have satisfied any
and all cure obligations owing to AT&T, and no person or
entity will have any further recourse against the Debtors
with respect to the AT&T contracts; and
D. The Stipulation resolves the AT&T Cure Objection and AT&T
agrees to withdraw the AT&T Cure Objection. (Budget Group
Bankruptcy News, Issue No. 20; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
CENTERPOINT ENERGY: Prices $400 Million Senior Notes Offering
-------------------------------------------------------------
CenterPoint Energy, Inc., (NYSE: CNP) has priced $400 million of
senior notes in a placement with institutions under Rule 144A.
Of the total, $200 million, at an interest rate of 5.875
percent, will be due June 1, 2008 and the remaining $200
million, with an interest rate of 6.85 percent, will be due on
June 1, 2015. This transaction is expected to close on May 27,
2003. The net proceeds from this offering will be used to repay
a portion of the outstanding indebtedness under the company's
existing credit facility.
The securities 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
under that Act.
* * *
As reported in Troubled Company Reporter's March 5, 2003
edition, Fitch Ratings affirmed the outstanding credit ratings
of CenterPoint Energy, Inc., and its subsidiaries CenterPoint
Energy Houston Electric LLC and CenterPoint Energy Resources
Corp. The Rating Outlook for all three companies remains
Negative.
The following ratings were affirmed by Fitch:
CenterPoint Energy, Inc.
-- Senior unsecured debt 'BBB-';
-- Unsecured pollution control bonds 'BBB-';
-- Trust originated preferred securities 'BB+';
-- Zero premium exchange notes 'BB+'.
CenterPoint Energy Houston Electric, LLC
-- First mortgage bonds 'BBB+';
-- $1.3 billion secured term loan 'BBB'.
CenterPoint Energy Resources Corp.
-- Senior unsecured notes and debentures 'BBB';
-- Convertible preferred securities 'BBB-'.
CHAMPIONLYTE: Receives $1 Million Equity Financing Commitment
-------------------------------------------------------------
ChampionLyte Holdings, Inc., formerly ChampionLyte Products,
Inc., (OTC Bulletin Board: CPLY) has received a $1 million
equity financing commitment from the Miami- based investment
fund Advantage Fund I LLC.
According to ChampionLyte Holdings President David Goldberg, the
funds will be used to support the relaunch of ChampionLyte(R)'s
product line, the first completely sugar-free entry into the
multi-billion dollar isotonic sports drink market.
"The Advantage Fund has provided the Company with interim
funding in excess of $250,000 to assist with the initial
restructuring of the Company," Goldberg said. "While we
recognize that in order to execute our business plan we will
have ongoing capital needs, this recent infusion has assisted us
with the first phase of that plan. We are encouraged that
Advantage Fund would commit an additional financing line in
excess of that already provided. It shows their commitment to
the Company and its confidence in the new management team and
its advisors.
"We have an obligation to create value for our shareholders and
we are dedicated to utilizing all of our resources in the most
cost efficient manner possible," Goldberg added. "All of the
officers and directors of ChampionLyte Holdings are taking their
compensation strictly in shares of the Company's stock. Our
obligation to effecting transactions that do not create
unnecessary overhang in our shares and that do not create
excessive dilution extends to all of our shareholders including
ourselves. We believe that we have aligned our incentives with
that of our entire shareholder base."
While specific terms of the funding were not disclosed, the
equity structure of the financing will enable the Company to
begin executing its business plan without the need to leverage
the company. As part of the financing, the Company will be
filing an SB-2 Registration Statement to cover the investment on
the part of the fund.
The Company recently announced it has eliminated close to 80
percent of the past due liabilities incurred under the previous
management team.
The Company also announced it has mutually agreed to terminate
its cross marketing agreement with BEVsystems International,
Inc. The Company said that ChampionLyte Beverages, Inc.
President, Donna Bimbo an 11-year veteran of Snapple Beverages,
is developing a comprehensive distribution system specific to
its brands and believes it no longer requires the assistance of
a third party entity.
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.
At September 30, 2002, Championlyte Products' balance sheet
shows a working capital deficit of about $1 million and a total
shareholders' equity deficit of about $9 million.
CLEAN HARBORS: Weak Earnings Prompt S&P's Negative Outlook
----------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Clean
Harbors Inc. to negative from positive, following the company's
announcement of weaker-than-expected first-quarter earnings,
revised earnings guidance, and reduced liquidity position. These
developments highlight, in part, the challenges associated
with the integration of the Chemical Services Division acquired
from Safety-Kleen Corp. in late 2002. At the same time, Standard
& Poor's affirmed its ratings, including the 'BB-' corporate
credit rating on the company. Total debt outstanding is about
$175 million.
"The outlook revision is based on lower-than-expected revenues,
earnings, and cash flow generation for the first quarter ended
March 31, 2003," said Standard & Poor's credit analyst Roman
Szuper. As a result, the company was in violation of financial
covenants for the period under Clean Harbors' loan agreements.
Subsequently, the company has obtained a waiver and amended the
loan agreements to loosen its financial covenants for future
periods, although the company has limited cushion under revised
covenants in the absence of improving operating results.
Braintree, Massachusetts-based Clean Harbors has a below-average
business position in the difficult hazardous waste management
industry.
"If a difficult operating environment, competitive pressures, or
integration issues further dampen operating results, or the
company's ability to maintain acceptable liquidity or covenant
compliance, the ratings could be lowered in the near term," Mr.
Szuper said.
COLUMBIA LABS.: CEO to Present at June 4 UBS Warburg Conference
---------------------------------------------------------------
Columbia Laboratories (AMEX: COB) announced that Fred Wilkinson,
president and chief executive officer, will present at the UBS
Warburg Global Specialty Pharmaceuticals Conference on June 4,
2003 at 4:00 p.m. Eastern Time at the Grand Hyatt New York Hotel
in New York City.
The presentation will be webcast live, then archived and
available 3 hours after the presentation ends for 15 days. The
audio webcast can be accessed at:
http://event.streamx.us/event/Default.asp?Event=UBS20030604
Columbia Laboratories, Inc. is a U.S.-based international
pharmaceutical company dedicated to the development and
commercialization of women's health care and endocrinology
products, including those intended to treat infertility,
dysmenorrhea, endometriosis and hormonal deficiencies. Columbia
is also developing hormonal products for men and a buccal
delivery system for peptides. Columbia's products primarily
utilize the company's patented Bioadhesive Delivery System
technology. For more information, visit
http://www.columbialabs.com
Columbia Laboratories' March 31, 2003 balance sheet shows a
total shareholders' equity deficit of about $13 million.
CONOR PACIFIC: Board OKs Debt Settlement Deal with 157692 Canada
----------------------------------------------------------------
Conor Pacific Group Inc.'s board of directors has approved a
proposed transaction with 157692 Canada Inc., to settle $2.77
million of outstanding indebtedness owed to the Secured
Creditor. Under the proposal, such indebtedness will be settled
by (a) the transfer to the Secured Creditor of certain real
estate assets owned by a subsidiary of the Corporation; and (b)
the issue to the Secured Creditor of 22,125,000 common shares of
the Corporation at a price of $0.08 per share. The transactions
contemplated by the Proposal are related party transactions
within the meaning of Rule 61-501 of the Ontario Securities
Commission and Policy No. Q-27 of the Commission des valeurs
mobilieres du Quebec and are subject to approval by a majority
of the votes cast by minority shareholders at the annual and
special general meeting of shareholders of the Corporation to be
held on June 27, 2003. The transactions are also subject to
receipt of all required regulatory approvals. If approved, the
Proposal will be implemented effective June 30, 2003.
The indebtedness owing to the Secured Creditor consists of the
unpaid principal of, together with accrued interest on, the
outstanding indebtedness of the Corporation acquired by the
Secured Creditor from Royal Bank of Canada and Royal Bank
Ventures Inc. in September 2000 which was not settled in the
restructuring of the Corporation completed under the Companies'
Creditors Arrangement Act in April 2001 and additional advances
made by the Secured Creditor subsequent to such date to fund the
Corporation's real estate activities. The indebtedness, which is
secured by a charge on all of the assets of the Corporation and
its subsidiaries, has been in default since July 1, 2000.
Pursuant to the terms of various forbearance agreements, the
latest of which is effective December 31, 2002, the Secured
Creditor has agreed to forbear from declaring an event of
default under the applicable loan agreements until June 30,
2003.
As previously announced, the continued listing of the
Corporation's common shares is being reviewed by The Toronto
Stock Exchange under its remedial review process as a result of
the Corporation's failure to meet continued listing requirements
including requirements as to minimum public float and
requirements relating to the financial condition and operating
results. Conor Pacific believes that approval and implementation
of the Proposal will assist the Corporation in meeting the
continued listing requirements relating to its financial
condition and operating results.
The Subject Real Estate consists of a 71,772 square foot
commercial building on 8.80 acres of land located at 2240
Speakman Drive within the Sheridan Science and Technology Park
in Mississauga, Ontario and a 40,514 square foot shopping centre
on approximately 4.4 acres of land located at 300 to 310 Fifth
Avenue in Cochrane, Alberta. Valuations obtained by the
Corporation from Altus Group, a division of Toronto Real Estate
Advisory Services Inc., and Merit Valuation Services Inc.
indicate that the Speakman Property and the Cochrane Property
have a market value of $4.85 million and $5.9 million,
respectively, for a total market value of $10.75 million. Under
the Proposal, the Secured Creditor has agreed to pay $11.6
million for the Subject Real Estate to be paid as to $1,000,000
by reducing outstanding indebtedness and as to the balance by
assuming related indebtedness of approximately $10.6 million. If
the Proposal is approved, the only remaining indebtedness owing
to the Secured Creditor will be a second mortgage in the
principal amount of $930,000 on certain undeveloped real estate
in Cochrane, Alberta owned by Cochrane Properties Limited, a
subsidiary of the Corporation. The Cochrane Mortgage is non-
recourse to the Corporation and the Secured Creditor's only
recourse under the Cochrane Mortgage is to Cochrane Properties
Limited or the mortgaged real estate.
The common shares to be issued to the Secured Creditor pursuant
to the Proposal are being issued at a price of $0.08 per share,
being the closing price of the common shares of the Corporation
on the last day the shares traded prior to the approval of the
Proposal by the board of directors of the Corporation. Following
such issuance, there will be a total of approximately 45 million
common shares outstanding of which approximately 49.2% will be
held by the Secured Creditor. The Secured Creditor has indicated
that it intends, subject to receipt of required regulatory
approvals, to distribute these securities to its creditors
and/or shareholders in satisfaction of its outstanding
obligations. No separate valuation has been obtained by the
Corporation in connection with the common shares to be issued to
the Secured Creditor under the Proposal and the Corporation has
relied upon an exemption from such valuation requirements
contained in Rule 61-501 and Policy Q-27.
Two members of the board of directors of the Corporation, Robert
E. Nowack and Jim Bond, are directors and officers of the
Secured Creditor. The shareholders of the Secured Creditor
consist of Conor Pacific Canada Inc. (40%), Greenpoint Trading
Ltd. (25%), Immaculate Confections Ltd. (25%) and Tombstone
Ventures Inc. (10%). Each of these companies are also
shareholders of the Corporation holding, in the aggregate,
approximately 61% of the currently issued and outstanding
shares. Shares held by these companies will not be included in
determining whether requisite majority of minority approval of
the Proposal has been obtained. Robert Nowack, a director and
Chief Executive Officer of Conor Pacific, is a significant
shareholder of Conor Pacific Canada Inc. Tombstone Ventures Inc.
is controlled by Jim Bond, a director of the Corporation. Conor
Pacific Canada Inc., Ventana Construction Inc., a company
controlled by Jim Bond, and Greenpoint Trading Ltd. are also
creditors of the Secured Creditor.
At the Meeting, the shareholders of the Corporation will also be
asked to consider and, if thought fit, approve certain other
matters of special business as follows: (a) to approve a special
resolution to change the name of the Corporation to Precision
Assessment Technology Corporation. The proposed name is similar
to that of the Corporation's principal operating subsidiary,
Precision Sampling, Inc., and the board of directors believes
the proposed name better reflects the future direction and focus
of the Corporation; (b) to approve a special resolution amending
the articles of the Corporation to permit shareholders' meetings
to be held in San Francisco, California and Orlando, Florida
where Precision Sampling, Inc. has its principal operations; c
to approve a special resolution to reduce the stated capital
attached to the outstanding common shares of the Corporation by
$9.2 million, being an amount equal to the estimated accumulated
deficit of the Corporation as at June 30, 2003. The effect of
the resolution, if approved, will be to eliminate the estimated
accumulated deficit of the Corporation as at June 30, 2003.
If the Proposal is approved at the Meeting, the shareholders
will be asked at the Meeting to approve a resolution to increase
the maximum number of common shares issuable under the 1996
Stock Option Plan, as amended, of the Corporation from 3.3
million to 6.5 million common shares, representing approximately
14.5% of the number of common shares which will be outstanding
following the issue of the common shares pursuant to the
Proposal. This increase is being requested to enable the Board
to properly incentivize the officers and employees of the
operating company.
If the Proposal is not approved, the Corporation will not be
able to repay the outstanding indebtedness owed to the Secured
Creditor when due. In accordance with the terms of the
forbearance agreements, the principal amount of the indebtedness
bears interest at a rate of 3.3% per month, compounded monthly,
and is payable at a rate of 12% per annum with the balance of
interest accruing and payable on the repayment of principal.
As the Corporation does not have the liquidity to repay senior
indebtedness, the independent directors unanimously approved the
Proposal as being in the best interests of the shareholders. It
is anticipated that these steps will also move the Corporation
closer to being in compliance with the TSX rules.
CONSECO: Court Reschedules Plan Confirmation Hearing for June 13
----------------------------------------------------------------
Conseco, Inc. (OTCBB:CNCEQ) has received Bankruptcy Court
approval to extend the voting deadline on its Second Amended
Joint Plan of Reorganization from May 21, 2003, to June 6, 2003,
and to reschedule the commencement of its confirmation hearing
from May 28, 2003, to June 13, 2003.
The Company sought the extensions based on its belief that by
consensually resolving a number of non-economic issues with
several objecting parties, it will ultimately reduce the amount
of time necessary for the Court to conduct the confirmation
hearing. The Company has consulted with its principal domestic
insurance regulators concerning these extensions.
Given these extensions, the Company now expects to emerge from
bankruptcy in July. Upon emergence from Chapter 11, Conseco,
Inc. will be engaged exclusively in the insurance business. The
full text of the Second Amended Joint Plan of Reorganization is
available at http://www.bmccorp.net/conseco
DebtTraders reports that Conseco Inc.'s 10.750% bonds due 2008
(CNC08USR1) are trading at about 13 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CNC08USR1for
real-time bond pricing.
CRUM & FORSTER: S&P Assigns BB Rating to $200MM Sr. Unsec. Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' senior
unsecured debt rating to Crum & Forster Funding Corp.'s $200
million 144A notes offering.
Crum & Forster Funding Corp. is a special-purpose entity
administered by Wilmington Trust Corp., which will hold these
funds in escrow until Crum & Forster Holdings Corp., a wholly
owned subsidiary of Fairfax Financial Holdings Ltd. (NYSE:FFH),
is permitted to assume the notes and the related indenture.
Permission to assume the notes is contingent on Fairfax's
ability to renegotiate the terms and conditions of its current
credit facilities. In particular, the current bank agreement
prohibits CFI from borrowing money. If Fairfax is unsuccessful
in amending these terms and conditions within 90 days following
the closing of this offering, then Crum & Forster Funding Corp.,
as prescribed in the indenture, must redeem the notes at a price
equal to 100% of their original issue amount plus accrued and
unpaid interest to the date of redemption. Under those
circumstances, Standard & Poor's believes note holders would be
made whole as stipulated in the indenture.
"If Fairfax is successful in amending the terms and conditions
of its bank facilities so that CFI can assume the notes,
Standard & Poor's will assign a 'BB' counterparty credit rating
to CFI to reflect the view that the financial strength and risk
profile of CFI are integrally tied to its parent, Fairfax
Financial Holdings Ltd," said Standard & Poor's credit analyst
Matthew T. Coyle. As a result, these two entities are expected
to have the same ratings and outlook. Fairfax has 'BB'
counterparty credit and senior unsecured ratings. The outlook on
Fairfax is negative, primarily because of concerns about
liquidity, reserve management, and prospective earnings.
(Fairfax is neither guaranteeing payment nor assuming the
notes.)
As described in the indenture, a portion of the proceeds will be
set-aside in an escrow account to service two years of interest
payments on the notes, with the remainder of the proceeds being
distributed to Fairfax for the primary purpose of reducing its
outstanding debt on pending maturities.
The creation of an interest escrow account is critical for this
transaction to work because CFI's wholly owned insurance
subsidiaries are unable to pay dividends in 2003 and possibly
2004 because of state regulatory restrictions. Therefore, CFI,
in the interim period, is solely reliant on the interest escrow
account and Fairfax to meet debt service requirements, as the
company has no resources of its own.
Post transaction, CFI's pro forma financial leverage (debt as a
percent of capital) would have been 19% as of the end of the
first quarter in 2003.
CFI is a holding company that--through its seven insurance
subsidiaries--offers a broad range of commercial
property/casualty insurance products to insureds. Five of the
seven companies (United States Fire Insurance Co., North River
Insurance Co., Crum & Forster Insurance Co., Crum & Forster
Indemnity Co., and Crum & Forster Underwriters Co. of Ohio) are
also bound by an intercompany pooling arrangement, whereby the
premiums, losses, and other underwriting expenses of each
affiliate are shared through mutual reinsurance based on a fixed
percentage. Each pool member has a 'BBB' financial strength
rating, which reflects Standard & Poor's expectations that
earnings and capital at CFI's insurance operations and, more
broadly, Fairfax's other insurance operations will improve.
Standard & Poor's will continue to provide timely updates on the
progress Fairfax and its subsidiaries are making, particularly
in the areas of underwriting, reserving, and liquidity
management. To the extent management can demonstrate a
sustainable track record of improvement in each of these areas,
Standard & Poor's will maintain its current ratings and possibly
consider revising the negative outlook on the organization.
Conversely, a material deterioration in any of these areas would
likely result in a downgrade.
DANA: Selling Parish Structural Products Operation in Thailand
--------------------------------------------------------------
Dana Corporation (NYSE: DCN) has signed a definitive agreement
to sell its Parish Structural Products (Thailand) Ltd. (PSPT)
operation in Bangpakong, Thailand, to AAPICO Hitech Public Co.,
Ltd., a Thai automotive supplier.
Located just south of Bangkok, PSPT produces frame sets for the
Isuzu D-Max pickup. The operation employs approximately 275
people and related 2002 sales totaled approximately $40 million.
Terms of the transaction were not disclosed.
Dana Automotive Systems Group President Bill Carroll said, "We
have been extremely proud of this structural products operation
and our success in providing unique, world-class frame sets to
Isuzu. Transitioning this business to AAPICO at this juncture
best suits the needs of both Isuzu and Dana. We believe we are
providing the people associated with the PSPT facility with an
excellent opportunity to grow and prosper moving forward, while
at the same time enabling Dana to focus more intently on our
significant axle and driveshaft operations in the area."
Dana's axle, driveshaft, and administrative facilities located
respectively in Rayong, Latkrabang, and Bangkok, Thailand, are
not affected by the proposed sale.
Dana Corporation -- whose new $250 million debt issue is rated
by Standard & Poor's at 'BB' -- is a global leader in the
design, engineering, and manufacture of value-added products and
systems for automotive, commercial, and off-highway vehicle
manufacturers and their related aftermarkets. The company
employs more than 60,000 people worldwide. Founded in 1904 and
based in Toledo, Ohio, Dana operates hundreds of technology,
manufacturing, and customer service facilities in 30 countries.
The company reported 2002 sales of $9.5 billion.
DAISYTEK: Gets OK to Use Lenders' Cash Collateral Until June 13
---------------------------------------------------------------
Daisytek International Corporation (Nasdaq: DZTK) announced that
its U.S. subsidiaries have received consensual approval from the
bankruptcy court and its U.S. lending syndicate to extend use of
a significant percentage of the lenders' cash collateral through
June 13, 2003. Approval to use the cash collateral had been
granted through May 20, 2003.
On May 7, 2003, Daisytek's U.S. subsidiaries filed a voluntary
petition for reorganization under Chapter 11 of the U.S.
Bankruptcy Code. The use of the cash collateral allows the U.S.
subsidiaries of Daisytek to continue to pay salary obligations,
general and administrative operating expenses and such other
essential costs and expenses that may arise, including insurance
and taxes, as approved by the court.
The extension also enables Daisytek to build sufficient
inventory levels at its Arlington Industries, Inc. and The Tape
Company subsidiaries and maintain inventory levels at Digital
Storage, Inc.
Daisytek is a global distributor of computer supplies, office
products and accessories and professional tape media. Daisytek
sells its products and services in North America, South America,
Europe and Australia. Daisytek is a registered trademark of
Daisytek, Incorporated.
DAISYTEK INT'L: ISA International Business Units Purchased
----------------------------------------------------------
Daisytek International Corporation (Nasdaq: DZTK) confirmed that
Voluntary Administrators appointed last week by ISA
International plc's board of directors have sold a significant
amount of Bradford, U.K.-based ISA International plc.
ISA International is a subsidiary of Daisytek ISA Limited.
ISA Internationals' board of directors appointed a Voluntary
Administrator on May 16, 2003 following the significant
tightening of credit terms by vendors and funding sources in the
United Kingdom that occurred after Daisytek's restructuring
announcement in the U.S.
PricewaterhouseCoopers LLP, the Voluntary Administrator
appointed by ISA International's board of directors, have sold
the business and assets of the U.K. and the Republic of Ireland
businesses of Daisytek ISA, together with the equity in the
Swedish and Norwegian companies, for an undisclosed sum to a
newly formed entity called ISA Trading Limited.
As a result of the appointment of the Voluntary Administrator
and the sales described above, as well as anticipated future
sales, it is anticipated that no value in or from ISA will be
retained by Daisytek International Corporation.
Daisytek is a global distributor of computer supplies, office
products and accessories and professional tape media. Daisytek
is a registered trademark of Daisytek, Incorporated. All rights
reserved.
DOW CORNING: Buying Simcala, Inc., for $30,450,000 in Cash
----------------------------------------------------------
Dow Corning Corporation is preparing to acquire all of the
capital stock of Mt. Meigs, Alabama-based Simcala, Inc., one of
its silicon metal suppliers, for $30,450,000 in an all-cash
transaction.
Dow Corning will pay $25,400,000 to acquire all of the equity in
Simcala. In addition, Dow Corning will lend Simcala $6 million.
Simcala, in turn, will use those funds to secure its obligations
under certain industrial revenue bonds issued in 1995 to finance
the costs of acquiring, construcing and equipping the Alabama
facility.
Dow Corning has asked Judge Denise Page Hood in Detroit, in a
motion dated May 16, 2003, to approve its purchase and loan
transaction under Sec. 363 of the Bankruptcy Code. Dow Corning
assures Judge Hood that that this relatively small-dollar
transaction will have no impact on the Company's ability to fund
its obligations under the to-be-declared-effective Amended Plan
of Reorganiation confirmed years ago in the U.S. Bankruptcy
Court for the Eastern District of Michigan.
David Ellerbe, Esq., at Neligan Tarpley Andrews & Foley LLP in
Dallas represents Dow Corning before the Bankruptcy Court.
DVI RECEIVABLES: Fitch Rates $11 Million Class E Notes at BB
------------------------------------------------------------
Fitch rates DVI Receivables XIX L.L.C., series 2003-1
$71,810,000 class A-1 notes 'F1+'. In addition, Fitch rates the
$52,200,000 class A-2 notes and $261,620,000 class A-3 notes
'AAA'; $17,010,000 class B notes 'AA'; $14,740,000 class C notes
'A'; $11,340,000 class D notes 'BBB'; and $11,340,000 class E
notes 'BB'.
The 'AAA' rating on the aggregate $383,510,000 class A notes
reflects the 17.5% credit enhancement provided by the
subordination of the class B notes (3.75%), the class C notes
(3.25%), the class D notes (2.50%), the class E notes (2.50%),
the reserve account (2.50%), and the issuer's retained interest
(3%). The 'AA' rating on the class B notes reflects the 13.75%
credit enhancement provided by the class C notes, the class D
notes, the class E notes, the reserve account, and the issuer's
retained interest. The 'A' rating on the class C notes is based
on the 10.50% credit enhancement provided by the class D notes,
the class E notes, the reserve account, and the issuer's
retained interest. The 'BBB' rating on the class D notes
reflects the 8% credit enhancement provided by the class E
notes, the reserve account, and the issuer's retained interest.
The 'BB' rating on the class E notes reflects 5.50% credit
enhancement provided by the reserve account and the issuers
retained interest. The ratings address the payment of timely
interest and ultimate payment of principal.
Credit enhancement levels were sized to withstand Fitch's
expected loss rate stressed by a multiple appropriate for each
class of notes issued. Fitch's review also took into
consideration stressed recovery rates and recovery lags on
defaulted contracts and incorporated front-end, back-end, and
even loss timing scenarios. In addition, Fitch analyzed expected
top borrower concentrations upon closing as well as over the
life of the transaction at six-month intervals. Moreover, cash
flow break-even scenarios were run under various stress
assumptions and multiple timing scenarios. Fitch's analysis also
took into consideration the following:
-- Underwriting and servicing procedures of DVI Financial
Services, Inc. (DVI FS);
-- Collateral pool diversification;
-- Historical performance of DVI FS's managed portfolio and
previous securitizations; and,
-- Sound legal and payment structure of the transaction.
At closing, the reserve account was funded in an amount equal to
2.50% of the discounted present value of the leases. On an on-
going basis, the required reserve amount will equal the lesser
of: a) 2.50% of the discounted present value of the leases as of
the cut-off date, and, b) the outstanding principal amount of
the class A through E notes.
The reserve account and retained interest piece will be fully
locked out in the DVI Receivables XIX L.L.C., series 2003-1
transaction, identical to the DVI Receivables XVIII L.L.C,
Series 2002-2.
The collateral pool consists of 2,202 lease and loan contracts
secured by small, medium and large ticket medical equipment. The
contracts represent a statistical aggregate discounted contract
balance of $451,190,912 (the present value of the aggregated
contracts computed at a discount rate of 4.70%). The average
contract principal balance is approximately $204,901 and the
underlying obligors primarily include individual doctors,
hospitals, surgery centers and physician's groups.
As servicer, DVI FS has a number of responsibilities including
reviewing the contract files for completeness, as well as
monitoring and tracking to ensure that all necessary insurance
is in place and that all taxes are paid. DVI FS's additional
responsibilities include tracking billing and collections of
payment from obligors, depositing funds into the collection
accounts, providing periodic servicing reports and remarketing
and repossession of the underlying equipment. DVI FS engaged
U.S. Bank, N.A. to act as back-up servicer for the DVI
Receivables XIX L.L.C., series 2003-1 transaction.
Fitch has received true sale and non-consolidation opinions
stating that the transfer of the contracts and the equipment
from the seller to the SPC is a sale, not a pledge of assets. In
the event that DVI FS was to enter into bankruptcy, the transfer
of the assets to the SPC would not be in jeopardy.
DVI Receivables XIX L.L.C., series 2003-1, represents the first
DVI FS equipment lease securitization rated by Fitch in 2003.
Overall, Fitch has rated a total of 24 DVI FS securitizations.
The issuer, DVI Receivables XIX, L.L.C., is wholly owned by DVI
FS. In turn, DVI FS is a wholly owned subsidiary of DVI, Inc.
EMAGIN CORP: March 31 Net Capital Deficit Widens to $15 Million
---------------------------------------------------------------
eMagin Corporation (AMEX:EMA), the leading developer of organic
light emitting diode microdisplay technology, reported revenue
for the fiscal first quarter ended March 31, 2003, of
approximately $0.47 million, compared to $0.16 million in the
first quarter of 2002, an approximate 194% increase. The
increase of $0.3 million in the first quarter of 2003 compared
to the first quarter of 2002 reflects increasing sales in spite
of the lack of working capital and inventory position the
company faced in the first quarter of 2003, when sales were
limited by the low levels of supplies needed to produce
displays. The company reported a net loss of $2.4 million or 8
cents per share for the recent quarter versus a loss of $6.5
million or 24 cents per share for the same period of the prior
year. This represents an improvement of 63%. The changes are
principally the result of significantly reduced expenditures and
increased product sales. Fixed costs dominated the expenses
during this quarter, even though these had been significantly
reduced.
"Product sales in the first quarter of 2003 compared to the
first quarter of 2002 have improved in spite of our financial
difficulties during the first quarter. The financial situation
was greatly improved by our recently announced April 2003
financing and the related debt restructurings," said Gary Jones,
eMagin's president and chief executive officer. "Ordering of
supplies for production and increased staffing to support
increased production and more efficient internal operations has
begun. However, the low working inventory situation is still
expected to take about 3-4 months to correct due to supply line
delays. Our key customers have revised their production
schedules to accommodate the company's delays in completing a
financing and our approximate $27 million backlog of display
orders has remained stable during this period."
Mr. Jones continued, "Our near-eye microdisplay markets for
games, PC, medical, industrial, and commercial applications
continue to develop. eMagin and our customers continue to see
significant upside opportunity for eMagin's products with low
power consumption, temperature range speed, color range and
depth, and cost being the primary benefits. We believe that we
are well positioned for the leadership role in the emerging
market for near eye high resolution displays."
eMagin Corporation's March 31, 2003 balance sheet shows a
working capital deficit of about $15 million, and a total
shareholders' equity deficit of about $15 million.
A leading developer of virtual imaging technology, eMagin
combines integrated circuits, microdisplays, and optics to
create a virtual image similar to the real image of a computer
monitor or large screen TV. These miniature, high-performance,
modules provide access to information-rich text, data, and video
which can facilitate the opening of new mass markets for
wearable personal computers, wireless Internet appliances,
portable DVD-viewers, digital cameras, and other emerging
applications. eMagin's intellectual property portfolio of more
than 100 patents issued or filed is leveraged by key OLED
technology licensed from Eastman Kodak and joint development
programs with IBM and Covion, among others. OLEDs are emissive
devices (i.e., they create light), as opposed to liquid crystal
displays that require a separate light source. OLED devices use
less power and are capable of high brightness and color. Because
the light they emit appears equally bright from all directions,
they are ideal for near to the eye applications since a small
movement in the eye does not change the image. According to
Stanford Resources, a leading market research firm focusing on
the global electronic display industry, the worldwide market for
OLED displays will grow to $1.6 billion in 2007, or 63% a year
over that period. eMagin's corporate headquarters and
microdisplay operations are co-located with IBM on its campus in
East Fishkill, N.Y. Wearable and mobile computer headset/viewer
system design and full-custom microdisplay system facilities are
located at its wholly owned subsidiary, Virtual Vision, Inc., in
Redmond, WA. The company has marketing offices in Santa Clara,
CA. Further information about eMagin and its virtual imaging
solutions can be accessed at http://www.emagin.com
ENCOMPASS SERVICES: Earns Nod to Sell 13 Non-Core Business Units
----------------------------------------------------------------
Alfredo Perez, Esq., at Weil, Gotshal & Manges LLP, in Houston,
Texas, relates that many of Encompass Services Corporation and
its debtor-affiliates' smaller business units are experiencing
significant erosion in value. Since the Petition Date, many key
employees have left the smaller businesses and many customers
have found alternate vendors. Therefore, these businesses had
to be sold in order to stem the loss of "knowledge capital" that
resides with the key employees of the business units and to
allow the purchasers to stabilize their operations going
forward. Mr. Perez notes that the Debtors' reorganization
strategy includes the sale of certain segments of their
businesses as going concerns in order to add funds to the
estates and to streamline their operations.
Accordingly, the Debtors sought and obtained the Court's
authority to sell 13 business operations free and clear of all
liens, claims, encumbrances, and other interests.
The Debtors sold these Business Units:
1. Pacific Rim Mechanical Contractors Inc. doing business as
EMS Southern California, to current president and former
owner, Terry Broyles of Blue Sky Mechanical, Inc., for
$6,000,000 in cash;
2. Wilson Electrical Co. Inc., doing business as EET Northern
Arizona, to Wilson Electric Services Corporation for
$7,000,000;
3. MacDonald-Miller Industries Inc. doing business as EMS
Seattle, MacDonald-Miller Co. Inc, MacDonald-Miller
Service, Inc., MacDonald-Miller of Oregon, Inc. doing
business as EMS Oregon, National Network Services
Northwest LLC, and Phoenix Electric Company doing
business as EET Oregon, to current president and former
Owner, Fred Sigmund of MacDonald-Miller Facility
Solutions, Inc. for $5,000,000 cash and Mr. Sigmund's
assumption of certain percentage of certain accounts
receivables and of a claim held by the assets;
4. Specific assets of Encompass Electrical Technologies-
Florida, LLC related to EET Deerfield Beach formerly
known as Pomeroy Electric, to current president and former
owner Stephen C. Pomeroy of Pomeroy Electric Inc., for
$2,405,000;
5. Sequoyah Corporation doing business as EET Seattle, to
Jamestown Electrical, Inc. for $3,550,000;
6. Sun Plumbing, Inc. to Steven W. Rutherford for $500,000;
7. Air Conditioning Engineers, Inc. to Robert R. Strang for
$350,000;
8. Gamewell Mechanical, Inc. to EMC Company -- or an entity
to be formed by EMC Company -- for $3,358,873 in cash and
notes;
9. Encompass Constructors, Inc. to Harper Acquisition Company
LLC for $6,074,597 in cash and notes;
10. Mechanical Services of Orlando, Inc. to Succession Capital
and Services, LLC -- or an entity to be formed by
Succession Capital -- for $3,175,000 in cash;
11. Columbus, Ohio business, assets and properties of
Garfield-Indecon Electrical Services, Inc. to Gerald C.
Converse -- or an entity he will form -- for $400,000 in
cash;
12. Aircon Energy Incorporated to Vidortx, or an entity to be
formed by Don Rasberry, for $100,000 cash; and
13. Sanders Brothers, Inc. to Acadian Louisiana, Ltd. for
$6,201,000.
The Buyers will also assume the Business Units' current
liabilities at the time of the Closing of the sale, including
certain prepetition liabilities. The Buyers will pay the
outstanding trade payables to maintain satisfactory business
relationships with vendors, which are valuable to the business
operations going forward.
With respect to the sale of Gamewell Mechanical, Inc., Encompass
Constructors, Inc., Mechanical Services of Orlando, Inc.,
Garfield-Indecon Electrical Services, Inc., Aircon Energy
Incorporated, and Sanders Brothers, Inc., Judge Greendyke
authorizes the Debtors to assume and assign to the Buyers the
contracts related to the Business Units' operations. However,
Judge Greendyke notes that Automotive Rentals, Inc.'s agreement
to a partial assignment of obligations under its master lease
with the Debtors will not constitute a waiver of rights under
the master lease. Automotive Rentals leases vehicles for the
Debtors' operations. The Sale Transactions also include the
Buyers' assumption of any personal property tax obligation on
Automotive Rentals' vehicles. (Encompass Bankruptcy News, Issue
No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ENRON CORP: Judge Gonzalez Extends Exclusive Period to June 30
--------------------------------------------------------------
After due consideration, Judge Gonzalez extends Enron
Corporation and its debtor-affiliates' exclusive period to file
a plan to June 30, 2003 and the exclusive period to solicit plan
acceptance to November 29, 2003.
Moreover, subject to the execution and delivery by National City
Bank of an appropriate confidentiality agreement, the Debtors
will meet with NCB on May 23, 2003 to negotiate in good faith
the treatment of the claims of Enron Transportation Services
Company's creditors under any Chapter 11 plan filed in these
cases which relates to ETS. In the event the Debtors file a
joint plan of reorganization by the Plan Exclusivity Deadline
and the Debtors seek additional extension of their solicitation
period, the ENA Examiner, as plan facilitator for ENA, will file
a status report within 10 days prior to the scheduled hearing in
connection with the appropriateness of the Debtors' request.
After the Debtors file their Chapter 11 plan, the ENA Examiner
may file a report concerning, among other things, the fairness
of the proposed plan's treatment of ENA creditors. (Enron
Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
FEDERAL-MOGUL: Takes Action to Address $158 Bil. in Filed Claims
----------------------------------------------------------------
In a regulatory filing with the Securities and Exchange
Commission, Federal-Mogul Corporation reports that 10,400 proofs
of claim, including late-filed claims, totaling
$158,400,000,000, were filed with the Bankruptcy Court in
connection with the March 3, 2003 property and general bar date.
Upon initial review of the filed claims, Federal-Mogul has
identified 1,500 claims, totaling $142,100,000,000, which it
believes should be disallowed by the Bankruptcy Court, primarily
because they appear to be duplicate or unsubstantiated claims.
Of the 10,400 claims filed, Federal-Mogul has also identified
4,025 claims, totaling $8,500,000,000, relating to asbestos-
related contribution, indemnity, reimbursement, or subrogation
claims. Federal-Mogul will address asbestos-related personal
injury and wrongful death claims in the future as part of the
Chapter 11 cases.
Federal-Mogul has not completed its evaluation of the remaining
4,875 claims, totaling $7,800,000,000, alleging rights to
payment for financing, environmental, trade debt and other
matters. While it continues to investigate these unresolved
proofs of claim, Federal-Mogul admits that it is impossible to
reasonably estimate the value of all claims that will ultimately
be allowed by the Bankruptcy Court due to the uncertainties of
their restructuring proceedings and the in-progress state of its
investigation of the submitted claims. The Bankruptcy Court
will ultimately determine liability amounts, if any, that will
be allowed as part of the Chapter 11 Cases, Federal-Mogul says.
Because the Debtors have not completed an evaluation of the
claims received in connection with this process, the ultimate
number and allowed amount of such claims are not presently
known. (Federal-Mogul Bankruptcy News, Issue No. 37; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
GENSCI: Full-Year 2002 Operating Results Enter Positive Zone
------------------------------------------------------------
GenSci Regeneration Sciences Inc. (Toronto: GNS), The
Orthobiologics Technology Company(TM), reported its first full-
year operating profit. Maintenance of our customer base and
cost reduction measures implemented as part of the corporate
reorganization undertaken while operating under the guidelines
of Chapter 11 protection of the U.S. Bankruptcy Court played key
roles in this result.
During 2002, the Company completely upgraded and expanded its
product offering by launching three new product lines that
replaced former products that were the subject of patent
litigation, announced the signing of a two-year agreement with
HealthTrust Purchasing Group, and obtained ISO certification.
One of the new products, Accell(R) DBM100, is the first and
only bone graft putty on the market composed of 100%
demineralized bone matrix (DBM). Accell DBM100 features an
exclusive, patent pending DBM processing technique that does not
require an additive carrier, allowing for a 100% bone product
with the handling characteristics of DBM putty.
As previously reported, GenSci began 2003 by reaching an
agreement in principle to settle all legal disputes subject to
certain significant conditions, which have not yet been
satisfied, and has submitted its Chapter 11 Plan of
Reorganization to the Bankruptcy Court, which is subject to
approval by the Court. Further, GenSci has enhanced its
operations by entering into a supply and distribution agreement
with AlloSource(R), one of the nation's largest non-profit
tissue bank cooperatives.
GenSci's President and CEO Douglass Watson stated: "We are
focused now on guiding GenSci as it works towards emerging from
ongoing legal proceedings and Chapter 11 protection. We
continue to make strides in what remains an exciting and still
rapidly growing field. We are looking forward to the future and
to maximizing our ability to continue to develop technologies
that improve patient care and quality of life. I am very proud
of GenSci's team and grateful for the continued support of our
vendors, sales representatives, long-term customers, and
customers who have adopted our new products as their standard of
care. We are committed to serving the medical community,
building a successful company, and rewarding the patience of our
shareholders."
Results
(all amounts in Canadian dollars)
For the fiscal year ended December 31, 2002, the Company
reported an operating profit of $239,806 compared with an
operating loss of $10,893,808 in 2001. The net loss for the
period, including interest expenses, amortization, discontinued
operations, reorganization costs, and a $1.7 million reserve for
litigation verdict totaled $3,837,840 or a $0.07 per share loss,
compared with a net loss of $36,959,685 or a $0.70 per share
loss in 2001. The Company's year-end cash position improved by
300%, to $3.3 million in 2002 from $1.1 million in 2001.
Revenues
Revenues for the year ended December 31, 2002 of $34,481,612
decreased from $40,444,833 for the year ended December 31, 2001.
The 14.7% decrease in revenue mainly reflects the replacement of
the Company's entire product line late in the third quarter and
the transition phase for launching three new product lines.
During 2002 the Company replaced former products that were the
subject of previously disclosed patent litigation.
Cost of sales
Cost of sales, consisting of the expense of manufacturing the
Company's bioimplant products, decreased to $11,743,981 for the
year ended December 31, 2002 from $15,870,114 for the year ended
December 31, 2001. Cost of sales as a percentage of revenues
was 34% for 2002, compared with 39% in 2001. The 5% decrease in
costs as a percentage of revenues resulted primarily from cost
cutting initiatives during the reorganization of the Company's
operations throughout 2002.
Marketing, general and administrative expenses
Marketing, general and administrative expenses of $19,091,593
for the year ended December 31, 2002 decreased from $31,281,351
in 2001. The decrease mainly reflects the decline in legal
expenses related to the higher level of patent litigation costs
in 2001. For 2002, legal costs related to the Company
operating under Chapter 11 are reported as reorganization costs.
In addition, the Company reduced spending in sales and marketing
as part of the cost cutting initiatives applied to the Company's
operations.
Research and development expenses
Research and development expenses decreased to $3,406,232 for
the year ended December 31, 2002 from $4,187,176 in 2001. The
cost of research and development as a percentage of revenue
remained consistent at 10% in 2002 and 2001. The Company
continued efforts in 2002 to support its near term product
pipeline as part of a planned product development program.
GenSci Regeneration Sciences Inc. has established itself as a
leader in the rapidly growing orthobiologics market, providing
surgeons with biologically based products for bone repair and
regeneration. Its products can either replace or augment
traditional autograft surgical procedures. This permits less
invasive procedures, reduces hospital stays, and improves
patient recovery. Through its subsidiaries, the Company
designs, manufactures, and markets biotechnology-based surgical
products for orthopedics, neurosurgery, and oral maxillofacial
surgery.
GLOBAL CROSSING: Court Clears Computer Sciences Settlement Pact
---------------------------------------------------------------
Global Crossing Ltd., and its debtor-affiliates obtained the
Court's approval of a Settlement Agreement, reached in March
2003, with Computer Sciences Corporation.
Backgrounder
Computer Sciences Corporation is the GX Debtors' single largest
retail customer. The GX Debtors provide CSC with a variety of
telecommunications services, including Global Frame Relay, IP
Transit, Private Line, conferencing and voice services.
Since the Petition Date, the GX Debtors' relationship with CSC
has been strained. In fact, on June 28, 2002, CSC sought to
terminate its contractual relationship with the GX Debtors.
Since that date, the parties have been simultaneously engaged
in:
-- discovery and litigation related to the termination, and
-- settlement negotiations.
The GX Debtors and CSC agreed to the terms of a settlement to
resolve the issues between them, including an amendment to their
existing contract.
Global Crossing Telecommunications, Inc., is the debtor-entity
that provides telecommunications services to CSC pursuant to
that certain Amended Master Services Agreement, dated
November 1, 2001. Prior to the execution of the MSA, the
parties entered into that certain Master Services Agreement,
effective as of December 15, 2000. After 10 months of
deployment and operation under the Original Agreement, CSC
and GX Telecommunications mutually agreed to enter into the MSA
to facilitate the provision of additional services to CSC.
The MSA required CSC to spend all of its "Available Spend" on
certain telecommunications services provided by Global Crossing,
up to a $645,000,000 maximum over 12 years. The MSA also
provided, subject to specific terms and conditions, for the
payment of shortfall charges under certain circumstances if CSC
did not meet certain annual targets. In addition, the MSA
contained a "termination at will" provision which entitled CSC
to terminate the MSA at any time on a no-fault basis after
payment of a $160,000,000 termination charge. The MSA also
facilitated the outsourcing of a portion of CSC's Global Network
to Global Crossing, at CSC's option.
On June 28, 2002, CSC filed a Motion to Modify the Automatic
Stay pursuant to which CSC sought to terminate the MSA. CSC
contended that the Debtors had materially breached the terms of
the MSA by failing to provide:
(i) the requisite amount of Network Availability;
(ii) a network that was "fully redundant"; and
(iii) the amount of network bandwidth required by the MSA.
The Debtors disputed CSC's factual allegations and maintained
that the Debtors had fully performed all of their obligations
under the MSA. Both the Debtors and CSC commenced discovery in
advance of litigation on the CSC Motion. In addition, on
September 30, 2002, CSC filed a proof of claim against GX
Telecommunications' estate for $3,750,000.
Following extensive arm's-length negotiations, the Debtors and
CSC have agreed to the terms of a settlement as well as an
amendment and restatement of the MSA, dated as of March 21,
2003, and to assume the MSA.
Pursuant to the Settlement, the MSA will be amended to:
(i) reduce the initial term;
(ii) revise CSC's minimum purchase commitments;
(iii) acknowledge that CSC does not desire to proceed with
the outsourcing of its Global Network to Global
Crossing by removing the parties' obligations in
relation thereto;
(iv) revise the Termination Provision;
(v) clarify the scope and operation of the provisions in
the MSA regarding service level objectives and
guarantees, making them consistent with industry
standards;
(vi) clarify CSC's rights to terminate the MSA in the event
of a failure to comply with the SLAs; and
(vii) grant mutual releases.
In addition, pursuant to the Settlement, the parties to the MSA
will be able to exercise their rights and remedies under the
MSA, including any contractual termination rights, without
further Court order, provided that all rights and remedies are
taken in accordance with the terms and conditions of the MSA.
The MSA is a complex commercial transaction that involves
various payment and usage requirements on CSC's part. The most
significant terms of which are:
A. "Minimum Required Usage" means the minimum amount of
services that CSC must purchase from the Debtors in each
year of the Initial Term.
B. "Actual Usage " means the amount of services actually
purchased and paid for by CSC.
C. "Minimum Required Cash Payment" means the minimum
payments that the Debtors must receive from CSC each
year. These amounts are higher than the Minimum Required
Usage.
D. "Adjustment Payment" means the amount CSC must pay at the
end of each year to make up any difference between CSC's
Actual Usage and the Minimum Required Cash Payment.
E. "Total Cash Payments" means the total amount of cash that
the Debtors have received from CSC at the expiration of
the Initial Term.
The salient terms of the MSA are:
A. The initial term of the MSA is reduced from 12 years to
seven years.
B. The Debtors will assume the MSA, in accordance with
Section 365 of the Bankruptcy Code. This assumption will
become effective on the first day of the first month
following the Court's entry of a final, non-appealable
order approving the Settlement.
C. CSC's purchase and payment commitments during the Initial
Term are reduced to $151,000,000 which will be payable
based on this schedule:
Minimum
Cash Payment Min. Usage
------------ -----------
Year 1 $15,000,000 $10,000,000
Year 2 19,000,000 12,500,000
Year 3 21,000,000 14,000,000
Year 4 21,000,000 15,000,000
Year 5 21,000,000 16,000,000
Year 6 21,000,000 16,000,000
Year 7 21,000,000 16,000,000
------------ -----------
Totals $139,000,000 $99,500,000
D. Each year, CSC will pay for services as they are
purchased. CSC is required to purchase services in the
amount of the Minimum Required Usage amounts.
E. If the Actual Usage exceeds the Minimum Required Cash
Payment in any given year, then the amount that exceeds
The Minimum Required Cash Payment will reduce the
Following year's Minimum Required Cash Payment.
F. At the end of each year of the Initial Term, CSC will be
required to make an Adjustment Payment to cover any
shortfall between the Actual Usage and the Minimum
Required Cash Payments.
G. The portion of the Adjustment Payment which covers a
shortfall between the Actual Usage and the Minimum
Required Usage will be forfeited by CSC.
H. The portion of the Adjustment Payment which covers a
shortfall between the Minimum Required Usage and the
Minimum Required Cash Payments will be credited towards
services for the following year. CSC will only be able
to utilize the Credit after it has met the Minimum
Required Usage for that year.
I. If the Total Cash Payments are less than $151,000,000,
CSC can elect either to:
1. renew the agreement for an additional four-year term
with a new Extended Term Commitment amounting to
$100,000,000 in services plus the amount of the Total
Shortfall spread equally over the Extended Term; or
2. pay the difference between $151,000,000 and the Total
Cash Payments.
J. The MSA is amended to remove provisions regarding the
proposed outsourcing of CSC's Global Network and to
remove the parties' obligations.
K. The Termination Provision is amended so that CSC may
terminate the MSA:
1. for convenience at any time during the Initial Term
after CSC has paid at least $151,000,000; or
2. for cause pursuant to the terms of the MSA.
L. The SLAs contained in the MSA are amended to be
consistent with industry standards.
M. After Bankruptcy Court approval of the Settlement, CSC
agrees to withdraw:
1. the CSC Motion; and
2. the Proof of Claim.
N. CSC waives its rights relating to the alleged breaches of
the MSA by the Debtors prior to the effective date of the
MSA. The Debtors waive their rights relating to any
claims against CSC, including any failure by CSC to
achieve its minimum purchase obligations prior to the
effective date of the MSA. (Global Crossing Bankruptcy
News, Issue No. 40; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
Global Crossing Ltd.'s 9.125% bonds due 2006 (GBLX06USR1) are
trading at about 5 cents-on-the-dollar, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX06USR1
for real-time bond pricing.
GOLDFARB CORP: Red Ink Continues to Flow in First-Quarter 2003
--------------------------------------------------------------
The Goldfarb Corporation announced its first quarter results.
During 2002, SMK Speedy International Inc., completed the sale
of substantially all of the operating assets of its Car-X
business. Also during 2002, the Corporation and Fleming
Packaging Corporation committed to a formal plan to sell all of
Fleming's operations. Accordingly, these consolidated financial
statements reflect the results of operations and net assets of
the Car-X business and Fleming as discontinued operations.
Continuing operations are comprised of Speedy's operations in
Canada. On February 10, 2003 the Corporation abandoned its
investment in Fleming.
Consolidated revenues from continuing operations for the first
quarter of 2003 were $20.4 million compared to $21.0 million in
2002, a decrease of $0.6 million. The consolidated net income
for the Corporation in the first quarter of 2003 was $20.6
million or $3.49 per share compared to a net loss of $2.7
million or $0.45 per share in 2002. Continuing operations
reflected a net loss of $1.1 million ($0.19 per share) for the
first quarter of 2003 compared to a net loss of $1.0 million
($0.17 per share) in the first quarter of 2002. Discontinued
operations reflected a net income of $21.7 million ($3.68 per
share) in the first quarter of 2003 compared to a net loss of
$1.7 million ($0.28 per share) in the first quarter of 2002. The
Corporation's abandonment of its investment in Fleming has
resulted in an after-tax gain of approximately $21.6 million
recorded in the first quarter of 2003.
Martin Goldfarb, Chairman, said, "As previously announced in
February, 2003, the Corporation has written off its investment
in Fleming Packaging Corporation. It continues to hold its
interest in SMK Speedy International Inc. At Speedy, the
automotive aftermarket remained relatively weak in the first
quarter. The extended severe winter, the war in Iraq and the
SARS situation in the Greater Toronto Area have negatively
impacted consumer activity. Lower revenues in the exhaust and
brake product lines have been partially offset by the continued
growth in non-core product lines and lower costs. Speedy
continues to look for opportunities to increase revenues, reduce
costs and maximize shareholder value."
The Goldfarb Corporation is a management company with one
Canadian business:
- SMK Speedy International Inc., a leading automobile service
specialist with 127 stores in Canada which specialize in no-
appointment, while-you-wait service for brakes, exhaust, oil
change services, maintenance, road handling, steering systems
and tires for all makes of cars and light trucks. Speedy is
listed on the Toronto Stock Exchange as SMK.
* * *
On February 10, 2003, Fleming reached an agreement with its
lenders that addresses Fleming's ongoing default under its loan
agreements. Under the terms of the amendment, the Corporation
has relinquished its control of Fleming but retains its 82.2%
equity position. The lenders have put Fleming up for sale. The
Corporation will receive 3.5% of the net proceeds as defined
under the terms of the amendment, in addition to its right to
participate as shareholder in any surplus funds resulting from
the sale which will be accounted for when received. The
Corporation's abandonment of its investment in Fleming in the
first quarter of 2003 will result in an after-tax gain of
approximately $21.6 million and will be recorded in that period.
The gain is a result of the de-consolidation of Fleming whose
liabilities exceeded assets by a similar amount at December 31,
2002.
GOODYEAR TIRE: Releases Monthly Investor Update for April 2003
--------------------------------------------------------------
Goodyear's Investor Relations department published its monthly
update for individuals interested in tracking Goodyear's
progress on a more frequent basis.
April Operating Highlights
North American Tire
- Industry shipments of consumer replacement tires declined 1
percent from last year's levels.
- Goodyear shipments of consumer replacement tires grew over
last year. In total, Goodyear gained one-half point of market
share compared with April 2002 and outperformed the industry.
Goodyear-brand shipments accounted for most of the growth in
market share.
- Industry shipments of commercial replacement tires in April
were up 7 percent over last year's levels. Strong growth in
Dunlop commercial tire shipments was offset by lower Kelly and
associate brand shipments.
- In April, industry shipments to original equipment
manufacturers declined 13 percent from a year ago for consumer
tires. Goodyear's shipments of OE consumer tires declined more
than the industry.
- Goodyear gained market share in original equipment commercial
tires where industry shipments grew 2 percent in April
compared with April 2002.
- Segment operating income declined due to higher raw material
and conversion costs, and lower OE volume partially offset by
lower transportation costs.
- Goodyear was named one of 15 top suppliers at a major
warehouse club conference. The supplier of the year award
"recognizes excellence in service, business growth and
partnership" with the club, which has more than 10,000
suppliers.
- Dunlop SP 4000 DSST run-flat tires will be provided in a
P225/60R17 size on the 2004 Toyota Sienna all-wheel drive
minivan. The DSST designation stands for Dunlop Self-
Supporting Technology.
- Two new television spots began airing in April with a heavy
schedule of prime time, sports and cable programming set to
showcase the Goodyear brand entering the prime tire selling
season. The two new "On the Wings of Goodyear" spots
demonstrate how outstanding technology can help guide
vehicles through a series of "compromising hazards." The
"Bouncing Balls" spot was selected as one of Adweek magazine's
"Best Spots" for April.
European Union
- In April, industry shipments of replacement tires were flat
for consumer tires and up 1 percent for commercial tires
compared with prior year levels. Goodyear consumer tires
gained market share compared with 2002 due to strong sales in
Germany, France and the United Kingdom. Goodyear commercial
tire shipments declined slightly compared with 2002.
- Industry original equipment consumer tire shipments declined 5
percent from April 2002 levels. Industry OE commercial tire
shipments were 3 percent higher in April 2003 compared with
2002 levels. Goodyear OE consumer tire shipments were below
industry levels due to lower volume at Volkswagen, while OE
commercial tire shipments were higher than industry levels.
- Favorable price/mix, currency translation and lower conversion
costs offset higher raw material costs resulting in higher
segment operating income.
- The Euro, at 1.113 to the U.S. dollar, strengthened 2 percent
in April.
Eastern Europe
- Consumer replacement and original equipment tire unit sales
for Goodyear were up significantly compared with April 2002.
Strong sales in Poland, Russia and the Middle East fueled the
growth.
- Goodyear tire sales in the commercial replacement market also
showed growth over April 2002, while sales in the original
equipment market declined.
- Segment operating income improved over last year due to
favorable price/mix and volume partially offset by increased
advertising and distribution costs.
- Goodyear Turkey recently introduced the GPS Taxi tire, which
was specially designed for the local taxi market. To launch
the product, Turkish associates from all departments talked
with taxi drivers introducing them to the new tire.
Latin America
- Goodyear tire shipments declined significantly in April 2003
compared with 2002 due to market contraction in Brazil and
Mexico.
- Segment operating income was in line with last year's as the
improvement in business mix was offset by lower volumes,
unfavorable translation and raw material costs.
- The Real revalued 13.7 percent in April compared with March.
Asia
- Goodyear original equipment tire shipments for April increased
significantly from 2002 levels due to strong sales in China.
- Replacement tire shipments for Goodyear were flat with 2002.
- Segment operating income improved over April 2002 due to
improved price/mix partially offset by higher raw material
costs.
- Goodyear's tire plant in Dalian, China, has become the
company's first Asian plant and second worldwide Goodyear tire
plant to receive ISO/TS-16949 certification. ISO/TS-16949 is
the International Organization for Standards Technical
specification for Quality Management Systems.
Engineered Products
- Sales declined compared with April 2002 due to continued
softness in the conveyor belt business, partially offset with
strong industrial hose sales and international sales over
2002.
- Operating income improved as a result of the strong industrial
hose business and improved price/mix in Replacement Products
business due to increase sales of the Goodyear brand.
Chemicals
- Chemicals generated higher segment operating income on
significantly higher sales. Increased pricing was partially
offset by higher raw material and energy costs.
Corporate News
- Goodyear's Board of Directors selected Robert J. Keegan to
succeed Samir G. Gibara as chairman of the board. Gibara will
resign as chairman and a board member on June 30, 2003. James
M. Zimmerman, chairman of Federated Department Stores and a
Goodyear director since 2001, will serve as presiding director
on the Board of Directors. Zimmerman will preside over
executive sessions of outside directors.
- Goodyear reduced its holdings in Sumitomo Rubber Industries to
1.5 percent by selling 20.83 million shares for $83.4 million.
Three-fourths of the proceeds were used to reduce debt. "Our
alliances and partnerships with Sumitomo remains strong,"
commented Robert J. Keegan, Goodyear president and chief
executive officer.
- Goodyear remained in the upper echelon of American businesses
in Fortune magazine's 2003 ranking of the largest companies in
the United States. Goodyear is the 139th largest business in
the country, up from 144th place last year.
- As part of the cost reduction focus, Goodyear has delisted
from the Chicago, Pacific and Amsterdam Stock Exchanges.
Goodyear's stock trading volume on these exchanges was not
significant. Goodyear will continue to be traded on the New
York Stock Exchange.
Goodyear (NYSE: GT) is the world's largest tire company.
Headquartered in Akron, Ohio, the company manufactures tires,
engineered rubber products and chemicals in more than 90
facilities in 28 countries. It has marketing operations in
almost every country around the world. Goodyear employs about
95,000 people worldwide.
Goodyear Tire & Rubber's 8.500% bonds due 2007 (GT07USR1) are
trading at about 84 cents-on-the-dollar, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=GT07USR1for
real-time bond pricing.
GROUP MANAGEMENT: Independent Auditor Airs Going Concern Doubt
--------------------------------------------------------------
Group Management Corporation's independent accountant included
an explanatory paragraph in their report, stating that the
audited financial statements of Group Management Corp. for the
year ending December 31, 2002 have been prepared assuming the
company will continue as a going concern. They note that the
Company's continued existence is dependent upon its ability to
generate sufficient cash flows from operations to support its
daily operations as well as provide sufficient resources to
retire existing liabilities and obligations on a timely basis.
The Company has continued losses from operations, negative cash
flow and liquidity problems. These conditions raise
substantial doubt about its ability to continue as a going
concern.
Group Management has been able to continue based upon its
service providers accepting shares of Company common stock as
compensation. However, there can be no assurances its service
providers will continue to accept the common stock as
compensation. If the services providers refuse to accept its
common stock as compensation, this could have a negative affect
on the Company's ability to continue as a going concern.
Management believes that actions presently being taken to revise
operating and financial requirements provide the opportunity for
the Company to continue as a going concern.
Management is presently investigating acquisitions that
management believes can rebuild operations that can be
profitable in the long-term. Although management believes that
these efforts will enable IVG to meet its liquidity needs in the
future, there can be no assurance that these efforts will be
successful.
Management is currently attempting to restructure the operations
of Group Management Corp. However,there can be no assurances
that the restructuring will be successful. Management is of
the opinion and of the business judgment, that a restructuring
will fundamentally assist the operations of Group Management
Corp.
During the quarter management substantially deceased operations
of Group Management Corp. to attempt to restructure the Company.
In the restructuring, management moved the principal place of
business from 12503 Exchange Blvd., Ste. 554, Stafford, Texas
to 101 Marietta St., Ste. 1070, Atlanta, GA. Management in
its business judgment, settled outstanding obligations of the
Company for equipment, office furniture and the leasehold
improvement was terminated in accord with the landlord.
Management currently is of the opinion that its restructuring
activities will have a net positive affect on the Company. The
restructuring activities are currently ongoing during the
period.
Management, in its restructuring and in its business judgment
reduced the deferred revenue of $2,500,000 in a note receivable
from Lumar Worldwide to zero on the balance sheet.
Total revenues for the three months ended March 31, 2003 were
$0.0 as compared to $49,013 for the three months ended March 31,
2001. This decrease was due primarily to the restructuring of
the Company's operations and as a result of management's
decision to restructure Group Management Corp.'s operation and
seek acquisition candidates.
Cost of goods sold was $0.0 for the three months ended March 31,
2003, as compared to $23,412, approximately 91.83% of sales, for
the three months ended March 31, 2002. The decrease in cost of
goods sold reflects lower sales for the period, and is a
direct result of the Company's restructuring of its operations.
General and administrative expenses were $200,000 for the three
months ended March 31, 2003, a decrease of approximately 86%
as compared to $1,344,508 for the period ended March 31, 2002.
This decrease is attributable to a decrease of over $7,310,952
in stock based compensation, and overall decreased sales
activity and the restructuring activities of the Company.
Total costs and expenses were $200,000 for the three months
ended March 31, 2003, as compared to $1,417,480 for the three
months ended March 31, 2002. This decrease of over 86% reflects
a decrease in general and administrative expenses and cost of
goods sold, as discussed above.
The net loss for the three months ended March 31, 2003 was
$200,000 as compared to $1,373,138 for the three months ended
March 31, 2002. The primary cause of this aspproximately 99%
decrease is the decrease in total costs and expenses, discussed
above and the restructuring activities of the Company.
LIQUIDITY AND CAPITAL REQUIREMENTS
Net cash provided in operating activities was a loss of $200,000
for the three months ended March 31, 2003, as compared to net
cash used of $253,608 for the three months ended March 31, 2002,
a decrease of over 5%. The Company had $0.0 in cash at March
31, 2003, a decrease of $0.0 during the quarter.
Net cash used by financing activities was $0.0 for the three
months ended March 31, 2003 as compared to net cash provided of
$263,622 for the period ending March 31, 2002.
At March 31, 2003, the Company's current assets were $0.0, while
its current liabilities were $1,100,000. Total current
liabilities consists of $1,100,000 in notes payable.
If the Company is not able to obtain alternative financing and
the note holders are successful in their action to collect on
the notes, IVG would be unable to make payment in full on the
notes and would consider all strategic alternatives available
to it, possibly including a bankruptcy, insolvency,
reorganization or liquidation proceeding or other proceeding
under bankruptcy law, or laws providing for relief of debtors.
It is also possible that one of these types of proceedings could
be instituted against the Company.
Management has taken steps to revise the Company's operating and
financial requirements to accommodate its available cash flow,
including the temporary suspension of management and certain
employee salaries. As a result of these efforts, management
believes funds on hand, cash flow from operations and additional
issuance of common equity will enable Group Management Corp. to
meet its liquidity needs for at least the short-term foreseeable
future.
The Company needs to raise additional cash, however, in order to
satisfy its proposed restructuring plan, to meet obligations,
and expand its operations. Management is presently
investigating transactions and mergers and acquisitions that
management believes can provide additional cash for operations
and be profitable long-term. In the future management also
intends to attempt to raise funds through private sales of its
common stock. Although management believes that these efforts
will enable Group Management to meet its liquidity needs in the
future, there can be no assurance that these efforts will be
successful.
In the opinion of the Company's management, lawsuits currently
pending, or threatened against the Company, unless dismissed or
settled within a short period of time, will have a material
adverse effect on the financial position and results of
operations of the Company because the Company does not have the
cash flow to continue to fund defense costs. Such strategies
may include acquiring one or more businesses with positive cash
flow, or filing for bankruptcy protection. No decisions have
been made as of this time.
HOLLINGER INC: S&P Drops Long-Term Corporate Credit Rating to SD
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term
corporate credit rating on newspaper publisher Hollinger Inc. to
'SD' (selective default) from 'CCC+', and the global and
Canadian national scale preferred share ratings to 'D' from
'CC'. At the same time, the 'B' senior secured debt rating on
Hollinger Inc. was affirmed.
In addition, Standard & Poor's affirmed its ratings on Toronto,
Ontario-based Hollinger Inc.'s subsidiary (72.6% voting control
and 30.3% equity stake), Hollinger International Inc., and
Hollinger International's wholly owned subsidiary, Hollinger
International Publishing Inc. (HIPI), including the 'BB-' long-
term corporate credit ratings. The outlooks on Hollinger
International and HIPI are negative.
"The ratings actions follow Hollinger Inc.'s recent announcement
that retraction of the 2.8 million series III preference shares
submitted on or after May 1, 2003, are suspended until further
notice, which is considered an event of default from Standard &
Poor's ratings perspective," said Standard & Poor's credit
analyst Barbara Komjathy.
Hollinger Inc. has a total 9.3 million series III preference
shares outstanding with face value of C$10 per share and annual
cumulative dividend of 7%. The series III preferred shares are
retractable at the option of the holder at any time and have a
mandatory redemption date of April 30, 2004. Hollinger Inc.
indicated that it is not able to complete retraction of shares
submitted without unduly impairing its liquidity.
The rating on Hollinger Inc.'s secured debt was affirmed, as
Standard & Poor's continues to base its debt ratings on the
consolidated group of Hollinger companies, including Hollinger
International and HIPI. The consolidated view reflects Standard
& Poor's opinion that economic interests and ownerships are
aligned in a way that ensures Hollinger Inc.'s solvency.
Similarly, the ratings affirmations on Hollinger International
and HIPI reflect Standard & Poor's view that that there is
no material change in Hollinger International's and its
subsidiaries' ability and willingness to meet their debt
obligations.
Under Canadian corporate law, Hollinger Inc. is not required to
redeem the preference shares if its liquidity would be unduly
impaired. Hollinger Inc.'s stand-alone liquidity is limited, as
substantially all of its assets have been pledged as security
for its US$120 million 11.875% senior secured notes due 2011.
Standard & Poor's believes that on a consolidated basis,
including Hollinger International and HIPI, Hollinger has
sufficient resources to meet its financial obligations. Given
its aggressive financial policy and limited legal recourse of
preferred shareholders, however, the company elected not to meet
its retraction obligations as due. Hollinger Inc. has made an
offer to exchange all of its 7% series III preference shares at
par plus any unpaid dividends for newly issued series IV 8%
preference shares with comparable terms and a mandatory
redemption date of April 30, 2008. The exchange offer expires
May 27, 2003.
The ratings on the consolidated group of Hollinger companies
reflect the strong market positions of Hollinger's two key
newspapers, The Daily Telegraph (U.K.) and the Chicago Sun-Times
(U.S.), and the geographic diversity they provide, which helps
to mitigate regional downturns. These factors are offset by the
inherent cyclical nature of the advertising revenues and
newsprint prices, and by Hollinger's aggressive financial
profile and policy.
HQ GLOBAL: Exclusive Plan Filing Period Runs through July 13
------------------------------------------------------------
By order of the U.S. Bankruptcy Court for the District of
Delaware, HQ Global Holdings, Inc., and its debtor-affiliates
obtained an extension of their exclusive periods. The Court
gives the Debtors, until July 13, 2003 the exclusive right to
file their plan of reorganization and until September 13, 2003
to solicit acceptances of that Plan from impaired creditors.
HQ Global Holdings Inc., one of the largest providers of
flexible office solutions in the world, filed for chapter 11
protection on March 13, 2002 (Bankr. Del. Case No. 02-10760).
Daniel J. DeFranceschi, Esq. at Richards, Layton & Finger, P.A.
and Corinne Ball, Esq. at Jones, Day, Rtavis & Pogue represent
the Debtors in their restructuring efforts. When the Company
filed for protection from its creditors, it listed estimated
assets of more than $100 million.
HYDROMET ENVIRONMENTAL: Misses Financial Reports Filing Deadline
----------------------------------------------------------------
Hydromet Environmental Recovery Ltd., (TSX Venture Exchange:
YHM.A) was unable to comply with filing of its Annual Financial
Statement for the year ended December 31, 2002. The 2002
Financial Statements were required to be filed on or prior to
May 20, 2003. Hydromet is issuing this news release under the
requirements of Policy 57-603 of the Ontario Securities
Commission. The Company acknowledges that it is in default of
applicable securities laws and therefore will be placed on the
Default List.
The default in filing is due to a delay in acquiring relevant
financial information of Hydromet de Mexico, the company's
Mexican subsidiary. Hydromet recently agreed to sell 50% of the
shares of Hydromet de Mexico to Abrasivos de Mexico. The Mexican
subsidiary is currently being audited in anticipation of
completion of this joint agreement. The Company is working with
its auditors to complete the Financial Statements as soon as
possible.
The anticipated date of filing is June 20th 2003. As a condition
of this default the Directors, Senior Officers and insiders of
the Company have accepted a restriction on their personal
trading of the shares in the Corporation until the Statements
have been filed.
The Ontario Securities Commission has indicated that, in
accordance with its Policy 57-603, should Hydromet fail to file
the 2002 Financial Statements by July 20, 2003, a cease trade
order may be imposed by the applicable securities commissions
requiring that all trading of securities of Hydromet
Environmental Recovery Ltd. cease for such period specified by
the order. During the period of time that the 2002 Financial
Statements remain unfiled, the directors, senior officers and
insiders of Hydromet will not trade in securities of Hydromet.
* * *
As previously reported in the Oct. 30, 2002 edition of the
Troubled Company Reporter, Hydromet Environmental Recovery Ltd.,
(TSX Venture Exchange: YHM.A) has been in default on $2,244,300
of convertible debentures issued in June 2001 and a further
$1,260,000 of convertible debentures issued in March 2002. The
Company has received a Notice of Foreclosure on the Newman,
Illinois plant from the $2,244,300 debenture holders, and a
demand for repayment in full from the $1,260,000 debenture
holders.
INGRESS I LTD: Fitch Cuts Class C 3rd Priority Term Notes to BB-
----------------------------------------------------------------
Fitch Ratings downgrades two classes of notes issued by Ingress
I, Limited.
The following two classes have been downgraded:
-- $54,000,000 class B second priority floating-rate term notes
due 2040 to 'A+' from 'AA';
-- $21,250,000 class C third priority fixed-rate term notes due
2040 to 'BB-' from 'A-';
The following classes have been affirmed:
-- $90,049,450 class A-1 senior secured floating-rate term notes
due 2040 rated 'AAA';
-- $116,000,000 class A-2 senior secured floating-rate term
notes due 2040 rated 'AAA'.
Ingress is a collateralized bond obligation supported by a
static pool of asset-backed securities, residential mortgage-
backed securities, commercial mortgage-backed securities and
real estate investment trusts. Fitch has reviewed the credit
quality of the individual assets comprising the portfolio,
including discussions with Wachovia Securities (Wachovia), the
asset manager, and has conducted cash flow modeling of various
default timing and interest rate scenarios. As a result, Fitch
has determined that the original ratings assigned to the class B
and class C notes of Ingress no longer reflect the current risk
to noteholders.
The rating actions are based on a number of factors including
substantial downward rating migration in the credit quality of
the portfolio and a reduction in excess spread. As of the March
2003 trustee report, the Fitch weighted average rating factor
was 20 (or approximately 'BBB-') for the period ended March 31,
2003.
The portfolio contains a number of securities whereby default is
a real possibility, although no defaults have occurred to date.
Fitch believes these factors have negatively impacted the
performance of the transaction to the point where the available
credit enhancement levels no longer support the original
ratings. Approximately 25% of the collateral pool is currently
rated in the non-investment grade category, including 6.3% rated
'CCC' or below. Ingress holds a number of securities that Fitch
has identified as having a potential for adverse impact on the
ability of the CBO to pay ultimate interest and ultimate
principal on the class B and C notes. The main area where the
portfolio has experienced significant credit deterioration is in
the manufactured housing sector.
INTEGRATED TELECOM: PCTEL Acquires Four U.S. DSL Patents
--------------------------------------------------------
PCTEL, Inc. (Nasdaq: PCTI), a leading provider of Internet
access technology, 802.11 mobility software, and software-
defined radio products, has acquired four U.S. patents related
to DSL modem technology as part of bankruptcy proceedings
surrounding Integrated Telecom Express, Inc. The purchase
includes all continuations and foreign counterparts. The terms
of the purchase agreement were not disclosed.
The patents cover ADSL (Asymmetrical Digital Subscriber Line)
modem technology. The patents describe techniques for permitting
an operating system to utilize, configure and control an ADSL
software modem. They deal with, among other issues, latency,
flexibility and ADSL links that vary depending on processing
resources.
"We will continue to build our patent portfolio, focusing on
access technology," said Marty Singer, PCTEL Chairman and CEO.
"The company now has critical mass in ADSL patents to offer
meaningful technology licenses to companies shipping ADSL
products. Our goal is to effectively license our technology,
building upon the patent portfolio that we developed and the
substantial portfolio that we acquired from Conexant."
PCTEL recently divested its HSP modem product line. The company
received cash, royalties, and a patent portfolio from Conexant
in a recently completed transaction. PCTEL generated nearly $8
million in licensing and royalty revenues over the past five
quarters and plans to develop this business as it expands its
Wi-Fi and software-defined radio programs.
ITeX was a leading innovator and provider of ADSL chipsets,
network software and development tools. A leader in broadband
technology development, ITeX had more than 50 patents granted or
filed worldwide. ITeX shipped more than one million ADSL
chipsets before the company filed for bankruptcy protection
during the recent economic downturn.
ITeX's Official Committee of Equity Security Holders engaged
CERIAN Technology Ventures, LLC as intellectual property
advisors, to assist the committee in maximizing the value of the
estate's distressed technology assets. CERIAN worked with ITeX
management, the Committee and PCTEL to bring the transaction to
fruition.
The patents covered in this purchase are (US Patent numbers):
-- 6,400,759 -- Device driver for rate adaptable modem with
forward compatible and expandable functionality
-- 6,233,250 -- System and method for reducing latency in
software modem for high-speed synchronous transmission
-- 6,088,385 -- Flexible and scalable rate ADSL transceiver and
system
-- 6,345,072 -- Universal DSL link interface between a DSL
digital controller and a DSL codec
CERIAN Technology Ventures, LLC was founded in 2001 to help
maximize the value of distressed intellectual property assets.
CERIAN works with creditors and investors in technology
companies (or divisions of larger corporations) that are in the
process of being shut down. In many of those cases, the only
significant assets held by those companies are soft assets such
as software, designs, patents and trademarks. CERIAN generates
returns for creditors, investors and employees by preserving and
marketing such distressed technology assets. For more
information, visit http://www.cerian.com
PCTEL, founded in March 1994, is a leading provider of Internet
access technology, 802.11 mobility software and software-defined
radio products. PCTEL's products include WLAN software products
(Segue(TM) Product Line) that simplify installation, roaming,
Internet access and billing. Through its subsidiary, DTI, the
company designs, develops and distributes OEM receivers and
receiver-based products that measure and monitor cellular
networks. The company maintains a portfolio of more than 120
analog and broadband communications and wireless patents, issued
or pending, including key and essential patents for modem
technology. The company's products are sold or licensed to PC
manufacturers, PC card and board manufacturers, wireless
carriers, wireless ISPs, software distributors, wireless test
and measurement companies, and system integrators. PCTEL
headquarters are located at 8725 West Higgins Road, Suite 400,
Chicago, IL 60631. Telephone: 773-243-3000. For more
information, visit its Web site at: http://www.pctel.com
INTERNET ADVISORY: Cash Insufficient to Meet Operating Needs
------------------------------------------------------------
For the three-month periods ended March 31, 2003 and March 31,
2002, The Internet Advisory Corporation, Inc. had revenue of
$517,272 and $50,000 respectively. The increase in revenue was
due to the revenues generated from sales of the Diamond Dollar
rights in the independently owned Scores Showroom pursuant to
the assignment agreement between the two. Cost of goods sold
was $230,895 for the three-month period ended March 31, 2003 and
$0 for the three-month period ended March 31, 2002. The increase
in cost of goods sold was due to the costs associated with the
diamond dollars program. The Company incurred general and
administrative expenses of $582,401 for the three-months ended
March 31, 2003 and $214,612 for the three-months ended March 31,
2002. The increase in general and administrative expenses was
primarily attributable to legal, consulting, rent and salary
expenses. For the three months ended March 31, 2003 interest
expense was $15,615 compared to interest income of $337 for the
three-months ended March 31, 2002. The increase was due to
expenses incurred in financing activities undertaken relating to
the issuance of debentures and notes payable. For the three
months ended March 31, 2003, The Internet Advisory Corporation
had a net loss of $302,639, as compared to a net loss of
$164,275 for the three-months ended March 31, 2002.
The Company recognizes revenues as they are earned, not
necessarily as they are collected. Direct costs such as hosting
expense, design cost, server expense and Diamond Dollar expense
was classified as cost of goods sold. General and
administrative expenses include accounting, advertising,
contract labor, bank charges, depreciation, entertainment,
equipment rental, insurance, legal, supplies, payroll taxes,
postage, professional fees, rent, telephone and travel.
LIQUIDITY AND CAPITAL RESOURCES
The Internet Advisory Group has incurred losses since the
inception of its business. Since inception, it has been
dependent on acquisitions and funding from private lenders and
investors to conduct operations. As of March 31, 2003 it had an
accumulated deficit of $3,492,745. As of March 31, 2003, it had
total current assets of $51,348 and total current liabilities of
$1,482,603, or negative working capital of $1,431,255. At
December 31, 2002, it had total current assets of $44,578 and
total current liabilities of $2,126,582, or negative working
capital of $2,082,004. The Company currently has no material
commitments. The increase in the amount of its negative working
capital is primarily attributable to payables incurred in
connection with payment of the rent on its leased property,
including payables due to related parties.
Management indicates that it will continue to evaluate possible
acquisitions of, or, investments in businesses, products and
technologies that are complimentary to its own. These may
require the use of cash, which would require the Company to seek
financing. It may sell equity or debt securities or seek credit
facilities to fund acquisition-related or other business costs.
Sales of equity or convertible debt securities would result in
additional dilution to its stockholders. The Company may also
need to raise additional funds in order to support more rapid
expansion, develop new or enhanced services or products,
respond to competitive pressures, or take advantage of
unanticipated opportunities. Future liquidity and capital
requirements will depend upon numerous factors, including the
success of its adult entertainment licensing business.
ISTAR ASSET: Fitch Rates 6 Series 2003-1 Notes at Low-B Levels
--------------------------------------------------------------
iStar Asset Receivables Trust, series 2003-1, collateralized
mortgage bonds are rated by Fitch Ratings as follows:
-- $250,000,000 class A1 'AAA';
-- $248,206,000 class A2 'AAA';
-- $18,452,000 class B 'AA+';
-- $20,297,000 class C 'AA';
-- $12,916,000 class D 'AA-';
-- $14,762,000 class E 'A+';
-- $14,762,000 class F 'A';
-- $12,916,000 class G 'A-';
-- $12,917,000 class H 'BBB+';
-- $14,761,000 class J 'BBB';
-- $25,833,000 class K 'BBB-';
-- $18,452,000 class L* 'BB+';
-- $14,762,000 class M* 'BB';
-- $12,916,000 class N* 'BB-';
-- $5,536,000 class O* 'B+';
-- $7,381,000 class P* 'B';
-- $7,381,000 class Q* 'B-';
-- $7,381,000 class S* 'CCC';
-- $18,452,143 class T* 'NR'.
* Not offered hereby.
All classes are privately placed pursuant to rule 144A of the
Securities Act of 1933. Classes O, P, Q, S, & T will be retained
by an affiliate of iStar Financial Inc. The bonds represent
beneficial ownership interest in the trust, primary assets of
which are 14 fixed-rate and 11 floating-rate loans having an
aggregate principal balance of approximately $738,083,143, as of
the cutoff date.
IT GROUP: Court Extends Plan Filing Exclusivity Until July 14
-------------------------------------------------------------
The IT Group, Inc., and debtor-affiliates' obtained the Court's
approval to extend their Exclusive Periods by 90 days. The Court
gave the Debtors the exclusive right to file and propose a Plan
of Reorganization until July 14, 2003, and until August 11,
2003, the exclusive right to solicit acceptances of that Plan
from their creditors.
L-3 COMMS: Completes $400MM of 6-1/8 Senior Sub. Notes Offering
---------------------------------------------------------------
L-3 Communications Holdings, Inc. (NYSE:LLL) announced that L-3
Communications Corporation, its wholly owned subsidiary, has
completed an offering of $400 million principal amount of 6-1/8%
Senior Subordinated Notes due 2013, with interest payable semi-
annually. The notes were offered within the United States only
to qualified institutional investors pursuant to Rule 144A under
the Securities Act of 1933, and, outside the United States, only
to non-U.S. investors.
As previously announced, the proceeds of this offering will be
used to redeem the company's outstanding $180 million aggregate
principal amount of 8-1/2% Senior Subordinated Notes due in 2008
and for general corporate purposes.
The securities have not been registered under the Securities Act
of 1933, as amended, or any state securities laws, and unless so
registered, may not be offered or sold in the United States
except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act
and applicable state securities laws.
Headquartered in New York City, L-3 Communications is a leading
merchant supplier of Intelligence, Surveillance and
Reconnaissance systems and products, secure communications
systems and products, avionics and ocean products, training
devices and services, microwave components and telemetry,
instrumentation, space and navigation products. Its customers
include the Department of Defense, Department of Homeland
Security, selected U.S. Government intelligence agencies,
aerospace prime contractors and commercial telecommunications
and wireless customers.
As reported in Troubled Company Reporter's May 16, 2003 edition,
Standard & Poor's Ratings Services assigned its 'BB-' rating to
L-3 Communication Corp.'s proposed $300 million senior
subordinated notes due 2013. The notes are to be sold under SEC
rule 144A with registration rights. The net proceeds from the
notes will be used to redeem the firm's outstanding $180 million
8.5% senior subordinated notes due 2008 and for general
corporate purposes. At the same time, Standard & Poor's affirmed
its 'BB+' corporate credit rating on L-3. The outlook is stable.
"Ratings on New York, New York-based L-3 reflect a slightly
below average business profile and an active acquisition
program, but credit quality benefits from an increasingly
diverse program base and efficient operations," said Standard &
Poor's credit analyst Christopher DeNicolo. Acquisitions are an
important part of the company's growth strategy, and the balance
sheet has periodically become highly leveraged because of
debt-financed transactions. However, management has a good
record of restoring financial flexibility by issuing equity.
L-3 COMMS: Initiates Full Redemption of Outstanding 8-1/2% Notes
----------------------------------------------------------------
L-3 Communications Holdings, Inc. (NYSE: LLL) announced that L-3
Communications Corporation, its wholly owned subsidiary, has
initiated a full redemption of all of its outstanding $180
million aggregate principal amount of 8-1/2% Senior Subordinated
Notes due 2008.
All Notes will be redeemed on June 20, 2003 at a redemption
price of 104.250% of the principal amount thereof, plus accrued
and unpaid interest to June 20, 2003. On or before June 20,
2003, the Notes should be presented to The Bank of New York, as
paying agent for the redemption, at the address set forth in the
Notice of Redemption, dated May 21, 2003, sent that day to all
registered holders.
Interest on the Notes will cease to accrue on and after June 20,
2003 and the only remaining right of holders of the Notes is to
receive payment of the redemption price upon surrender to the
paying agent, plus accrued and unpaid interest up to, but not
including, June 20, 2003.
In connection with the redemption of the Notes, the company will
record a noncash charge in the second quarter of 2003 of
approximately $7 million after-tax or $0.07 per diluted share,
related to the redemption premium and the write-off of the
unamortized deferred debt issue costs on the Notes.
Headquartered in New York City, L-3 Communications is a leading
merchant supplier of Intelligence, Surveillance and
Reconnaissance (ISR) systems and products, secure communications
systems and products, avionics and ocean products, training
devices and services, microwave components and telemetry,
instrumentation, space and navigation products. Its customers
include the Department of Defense, Department of Homeland
Security, selected U.S. government intelligence agencies,
aerospace prime contractors and commercial telecommunications
and wireless customers.
LAGNIAPPE HOSP.: Sun Capital Unit Buys J.L. Carraway's Interests
----------------------------------------------------------------
An affiliate of Sun Capital HealthCare, Inc., has purchased from
J.L. Carraway notes and mortgages on Lagniappe Hospital (a
Camelot Healthcare facility), the first step in the acquisition
of Shreveport's premier long-term acute care hospital. Sun's
presence will help to provide financial stability to Lagniappe,
and its management team will work closely with Lagniappe's
current administration and staff to continue to provide
excellent patient care.
According to Carraway, there were many potential suitors
interested in purchasing his interest in the hospital, but Sun's
affiliate was the one he felt would bring the hospital the best
future. "I am happy to put good people in place, knowing that my
people will be well taken care of. Now I can comfortably move on
and look after new business and personal interests," Carraway
noted.
Based on Sun's acquisition, Lagniappe Hospital's bankruptcy
counsel, John Hutchison, noted that he anticipates a quick
resolution to the current Chapter 11 bankruptcy proceeding, and
expects an order for substantial consummation, which will
essentially end the proceeding, at proceedings now scheduled for
June 30th.
"This is a great day for Lagniappe Hospital, its staff, its
patients, and the community we serve," added M. Edward
Cunningham, chief executive officer at Laginappe Hospital. "Now,
with Sun's help, we can take great comfort in knowing we can
once again focus with confidence on our most important work,
which is providing our patients with the highest quality of
acute care and rehabilitation services and facilities."
According to Cunningham, Sun, a leading privately-held national
provider of financial services for the health care industry,
began supporting Lagniappe Hospital's cash flow needs with
funding of its accounts receivables early in the hospital's
bankruptcy proceeding. "But as new financial challenges arose,
Sun stepped in with new, viable financial solutions. Acquiring
the first mortgage position has relieved our greatest challenge
to date, one that has regrettably and unnecessarily been
wreaking havoc on community, patient, and staff perception and
confidence."
Sun -- http://www.suncapitalhealth.com-- recently made national
headlines for its innovative and immediate rescue of several
facilities victimized by the collapse of NCFE, which along with
Sun had been one of the largest players in the healthcare
financing industry. Sun's custom-designed funding plan and
requirements was first approved in California and Ohio
bankruptcy courts for Los Angeles-based Lincoln Hospital Medical
Center. Sun's plan specifically pertained to health care
provider bankruptcy filings, and opened the door to alternative
financing options for all health care organizations whose
reimbursements have been locked up pending resolutions of
bankruptcy proceedings. The precedent-setting court decisions
have now become an effective template that Sun draws upon
quickly and efficiently to help fund other former NCFE clients
and others that are in a similar position.
"Since not all financial crisis situations are created equal, we
look at all aspects of a healthcare provider's business -- from
operations, staffing, and purchasing, to patient, physician, and
community needs and concerns -- when stepping in to restore
financial stability," noted Peter Baronoff, Sun's chairman and
CEO.
Howard Koslow, Sun's president and chief operating officer,
added that: "It is far from just a 'numbers' game; people and
exceptional patient care are of paramount importance. Our
seasoned health care team has worked tirelessly to develop
innovative and flexible funding and operational strategies to
resolve the most immediate crises, while continuing a positive
direction and vision for future growth. By making wise business
decisions and positive partnerships -- like the one Lagniappe
made -- we benefit Sun, the hospital, its employees, and the
community."
According to Larry Leder, SCH chief financial officer and 30+
year health care financial consultant, Sun has spent an
"extensive amount of time" with hospital administrators and
staff to develop the most effective and efficient action plan
for "fiscal relief and growth." He notes that, "By working with
Lagniappe, both Sun and the hospital can together drive the next
stages of development."
Lagniappe Hospital -- http://www.lagniappehospital.com-- was
founded and opened on December 28, 1992, and since then has
become a fixture in the Shreveport community. Lagniappe, an
affiliate of Camelot Healthcare LLC, is a 146-bed, 94,680-
square-foot long-term acute care hospital and rehabilitation
facility that served the greater Shreveport community with
37,436 patient days in 2002. The LTAC facility offers inpatient
rehabilitation, general and geriatric psychiatric services,
state-of-the-art wound care, and its own intensive care unit.
Outpatient services include rehabilitation (physical therapy,
occupational therapy, speech therapy), psychiatric services,
wound care, alternative medicine, and diagnostic radiology,
including MRI and CAT Scan services.
Camelot Healthcare, LLC, http://www.camelothealthcare.com,
headquartered in Rayne, LA, is an owner and operator of acute
rehabilitation, long-term acute care facilities, specialty
psychiatric programs and critical access hospitals. The
organization specializes in management outsourcing, facility
acquisitions, joint ventures, and the leasing of under-utilized
patient units to medium-sized hospitals. Camelot currently owns
and manages over 670 beds in 18 locations, and employs more than
900 dedicated professionals providing patient care throughout
the United States, including Shreveport, LA; Cameron, LA;
Lafayette, LA; Ferriday, LA; Port Arthur, TX; Phoenix, AZ; Mesa,
AZ; Greenville, MS; Tampa Bay, FL; and Salt Lake City, UT, and
has four new facilities in the process of completion in Baton
Rouge, LA (two facilities); San Antonio, TX; and Vicksburg, MS.
Lagniappe Hospital is located at 1800 Irving Place, Shreveport,
LA 71101. For more information, please call 318/425-4096.
LEAP WIRELESS: Hires Poorman-Douglas as Claims and Notice Agent
---------------------------------------------------------------
Leap Wireless International Inc., and its debtor-affiliates are
concerned that the thousands of creditors and other parties-in-
interest involved in their Chapter 11 cases may impose heavy
administrative and other burdens on the Court and the Office of
the Clerk of the Court. To relieve the Clerk's Office of these
burdens, the Debtors seek the Court's authority to employ
Poorman-Douglas Corporation as their notice, claims and data
management agent in these Chapter 11 cases.
According to Robert A. Klyman, Esq., at Latham & Watkins, in Los
Angeles, California, Poorman is one of the country's leading
Chapter 11 administrators with experience in noticing, claims
processing, data management, claims reconciliation and
distribution. Poorman has substantial experience in the matters
upon which it is to be engaged. Poorman has acted or is acting
as official notice, claims and data management agent in several
notable cases including: United Airlines, Harnischfeger
Industries, Inc., Marvel Entertainment Group, Allegheny Health,
Education and Research Foundation, Bennett Funding Group,
Xpedior, World Access and Consolidated Freightways.
By appointing Poorman as the notice, claims and data management
agent in these Chapter 11 cases, Mr. Klyman contends that the
Debtors' estates and particularly the creditors will benefit
from the Firm's significant experience in acting as a notice,
claims and data management agent in other cases and the
efficient and cost-effective methods that the Firm has
developed. Poorman is fully equipped to handle the volume
involved in properly sending the required notices to and
processing the claims of creditors and other interested parties
in these cases. Poorman will follow the notice and claim
procedures that conform to the guidelines promulgated by the
Clerk of the Bankruptcy Court and the Judicial Conference.
At the request of the Debtors or the Clerk's Office, Poorman
will:
A. prepare and serve required notices in these Chapter 11
cases, including:
i. Notice of the commencement of these Chapter 11 cases
and the initial meeting of creditors under Section
341(a) of the Bankruptcy Code;
ii. Notice of the claims bar date;
iii. Notice of objections to claims;
iv. Notice of any hearings on a disclosure statement and
confirmation of a plan of reorganization; and
v. Other miscellaneous notices to any entities, as the
Debtors or the Court may deem necessary or
appropriate for an orderly administration of these
Chapter 11 cases;
B. after the mailing of a particular notice, file
electronically with the Clerk's Office a certificate or
declaration of service that includes a copy of the notice
involved, an alphabetical list of persons to whom the
notice was mailed and the date and manner of mailing;
C. maintain copies of all proofs of claim and proofs of
interest filed;
D. maintain official claims registers, including, among
other things, these information for each proof of claim
or proof of interest:
i. the applicable Debtor;
ii. the name and address of the claimant and any agent,
if the proof of claim or proof of interest was filed
by an agent;
iii. the date received;
iv. the claim number assigned; and
v. the asserted amount and classification of the claim;
E. implement necessary security measures to ensure the
completeness and integrity of the claims registers;
F. transmit to the Clerk's Office on a weekly basis a
compact disk containing the updated claims register and
the pdf images for each proof of claim;
G. maintain an up-to-date mailing list for all entities that
have filed a proof of claim or proof of interest, which
list will be available after request of a party-in-
interest or the Clerk's Office;
H. provide access to the public for examination of copies of
the proofs of claim or interest without charge during
regular business hours;
I. record all transfers of claims pursuant to Bankruptcy
Rule 3001(e) and provide notice of such transfers as
required by Bankruptcy Rule 3001(e);
J. comply with applicable federal, state, municipal, and
local statutes, ordinances, rules, regulations, orders
and other requirements;
K. provide temporary employees to process claims, as
necessary;
L. promptly comply with any further conditions and
requirements as the Clerk's Office or the Court may at
any time prescribe;
M. provide any other claims processing, noticing and data
management as may be requested from time to time by the
Debtors; and
N. except for proofs of claim, and the creditor matrix which
will be in text format and filed electronically, all
documents required to be filed by Poorman, will be
prepared in pdf format.
In connection with its appointment as notice agent and claims
agent, Poorman represents that:
A. Poorman will not consider itself employed by the United
States government and will not seek any compensation from
the United States government in its capacity as the
notice, claims and data management agent in these Chapter
11 cases;
B. By accepting employment in these Chapter 11 cases,
Poorman waives any rights to receive compensation from
the United States government;
C. In its capacity as the notice, claims and data management
agent in these Chapter 11 cases, Poorman will not be an
agent of the United States and will not act on the United
States' behalf; and
D. Poorman will not employ any of the Debtors' past or
present employees in connection with its work as the
notice, claims and data management agent in these Chapter
11 cases.
In addition, the Debtors seek to employ Poorman to assist them
with, among other things:
A. the collection and data management of the schedule of
assets and liability information;
B. the reconciliation and resolution of claims, and
C. the preparation, mailing and tabulation of ballots for
the purpose of voting to accept or reject any plans of
reorganization proposed by the Debtors in these cases.
Poorman CEO Jeffrey B. Baker assures the Court that the Firm
does not hold or represent any interest adverse to the Debtors'
estates and the Firm will not represent any other entity in
connection with these Chapter 11 cases. In addition, Poorman is
a "disinterested person" within the meaning of Section 101(14)
of the Bankruptcy Code and holds no interest adverse to the
Debtors and their estates for the matters for which Poorman is
to be employed.
Mr. Baker relates that the compensation arrangement provided for
in the Poorman Agreement is consistent with and typical of
arrangements entered into by Poorman and other such firms with
respect to rendering similar services for clients like the
Debtors. Details of this compensation have yet to be disclosed
to the Court. The Debtors will pay Poorman fees and expenses
upon the submission of monthly invoices by Poorman summarizing,
in reasonable detail, the services for which compensation is
sought. The Debtors submit that the compensation to be paid to
Poorman is reasonable in light of the services to be performed.
(Leap Wireless Bankruptcy News, Issue No. 4; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
MASSEY ENERGY: Offering $100MM Conv. Notes via Private Placement
----------------------------------------------------------------
Massey Energy Company (NYSE: MEE) announced that, as a part of
its current refinancing efforts, it proposes to make a private
offering of $100 million principal amount of convertible senior
notes due 2023 (plus up to an additional $15 million subject to
an over-allotment option). The Company intends to use the
proceeds of the proposed offering to permanently repay
indebtedness under its existing revolving credit facility.
The securities proposed to be offered have not been and will not
be registered under the Securities Act of 1933, as amended, and
may not be offered or sold in the United States absent
registration or an applicable exemption from the registration
requirements of the Securities Act and applicable state
securities laws.
Massey Energy Company, headquartered in Richmond, Virginia, is
the fourth largest coal company in the United States based on
produced coal revenues.
As reported in Troubled Company Reporter's December 4, 2002
edition, Standard & Poor's lowered its long-term corporate
credit rating on coal mining company Massey Energy Co., to non-
investment-grade 'BB' from 'BBB-' based on concerns regarding
the Richmond, Virginia-based company's access to capital
markets. Standard & Poor's said that it has also withdrawn its
'A-3' short-term corporate credit and commercial paper ratings
on the company.
The current outlook is developing. A developing outlook
indicates that the ratings could be raised, lowered, or
affirmed.
Standard & Poor's said that at the same time it assigned its
'BB+' senior secured bank loan rating to Massey's $400 million
of secured revolving credit facilities.
Massey Energy Co.'s 6.950% bonds due 2007 (MEE07USR1) are
trading at about 85 cents-on-the-dollar, DebtTraders says. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=MEE07USR1for
real-time bond pricing.
MED DIVERSIFIED: Completes Sale of Distance Medicine Business
-------------------------------------------------------------
Med Diversified, Inc., (PINK SHEETS: MDDVQ), a leading provider
of home and alternate site health care services, has finalized
the sale of the assets of Trestle Corp., its distance medicine
solutions business, to Trestle Acquisition Corp., a wholly owned
subsidiary of Los Angeles-based Sunland Entertainment Co., Inc.
(OTCBB: SLDE.OB). The assets include all intellectual property
rights, among other items. Proceeds from the sale, in the amount
of $1.25 million, plus the assumption of certain liabilities
totaling approximately $368,000, will remain in escrow pending
completion of the Company's reorganization.
The Honorable Stan Bernstein of the U.S. Bankruptcy Court for
the Eastern District of New York approved the sale on May 12,
2003. As disclosed in the Company's last Form 10-K, Med
Diversified's board of directors and management began at the end
of fiscal year 2002 to investigate business transactions to sell
Trestle or its assets.
Med Diversified operates companies in various segments within
the health care industry, including pharmacy, home infusion,
management, clinical respiratory services, home medical
equipment, home health services and other functions. For more
information, see http://www.meddiversified.com
METALS USA: Obtains Court's Approval of IPSCO Stipulation
---------------------------------------------------------
Metals USA, Inc., and its debtor-affiliates obtained the Court's
approval of a Stipulation resolving claims dispute with IPSCO
Inc.
Backgrounder
On July 2, 2002, IPSCO Inc., on behalf of its affiliates and
subsidiaries, filed a secured claim for $6,330,674.09.
The Debtors objected to the Claim to the extent it claimed
security. The Debtors asserted that IPSCO's claim for the sales
of materials is a general unsecured claim.
IPSCO has agreed that its total prepetition claim is
$5,479,110.05 and the claim will be treated as a Class 4 General
Unsecured Claim.
The Debtors have agreed to allow IPSCO's claim as a Class 4
General Unsecured Claim for $5,479,110.05 in full satisfaction
of all IPSCO's prepetition claims against the Debtors and IPSCO
will receive its distribution of shares in the next scheduled
distribution. (Metals USA Bankruptcy News, Issue No. 31;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
NETROM INC: Tempest Enters Partnership Pact with Global Trading
---------------------------------------------------------------
Netrom, Inc. (OTC: NRRM) announced that its newly acquired
subsidiary, Tempest Asset Management, Inc., has signed a
milestone agreement with its first IRA channel partner, Global
Trading Post, to offer Tempest's Foreign Currency Exchange
trading services to individuals who desire to increase the yield
on their Individual Retirement Accounts. Located in Tustin,
California, Global Trading Post is a provider of a wide range of
Forex based products and services to the billion dollar
investment community in Orange County, California, and will soon
expand their market by opening offices in Los Angeles, San Diego
and Las Vegas, Nevada.
It was announced last week that Tempest had been approved to
market its Forex trading services to the IRA market space. The
IRA market has expanded at a compounded annual growth rate of 13
percent per year to a current size of over $2.5 trillion that
includes over 40 million households.
Tempest can now provide IRA investors with an attractive, much-
needed alternative to the high-risk stock market and low yield
money markets. With this new alternative, investors can now use
their IRAs to defer taxes on the yields that are realized from
Tempest's currency trading services, which in many cases are
superior to other competing forms of investing. Tempest is
giving investors the opportunity to put new life in their
retirement savings programs.
Tempest's Chief Executive Officer, Chris Melendez, said, "Global
Trading Post is the first of many channel partners we intend to
develop in order to bring our FOREX services to the IRA market
space. We expect to announce additional partners in the near
future." He further stated, "We believe that entering the IRA
market is a key move that will help us fulfill our vision of
bringing institutional grade FOREX investing to the individual
investor."
Netrom, Inc. (OTC: NRRM), headquartered in San Diego, was
founded in 1996. Since its inception, Netrom has been involved
in the development of technologies that are related to the
Internet, as well as developing new eBusiness models. In the
first quarter of 2000 Netrom became insolvent and was forced
into a major reorganization. The Company has been in the process
of a turnaround of its business with the primary objective being
to restore trading of its stock to the OTCBB and grow the
Company through strategic acquisitions. In the first quarter of
2003, the Company completed its first step toward this goal with
the acquisition of Tempest Asset Management, Inc.
Tempest Asset Management, Inc. is a development stage California
Corporation headquartered in Irvine, California. The company
provides institutional grade, Forex trading products and
services to individual investors. "Forex" is a term that refers
to the Foreign Currency Exchange Market where a trader
simultaneously buys one currency and sells another for profit,
which is not dependent on the market conditions of stocks, bonds
or commodities. The Company was founded in 2001 by Chris
Melendez, its CEO and internationally renowned Forex trader. He
gained his expertise as a "market maker and proprietary currency
trader" at major financial institutions around the world. For
additional information visit http://www.tempestasset.com
NORTEL: TMP Tech. Selects Company's Multimedia Comms. Portfolio
---------------------------------------------------------------
Nortel Networks (NYSE:NT) (TSX:NT) announced that its Multimedia
Communications Portfolio is being trialed by TMP Technologies, a
subsidiary of Monster Worldwide, Inc. (NASDAQ:MNST). TMP
Technologies provides technology services to all divisions of
Monster Worldwide, including their leading global online careers
property and flagship brand Monster(R). Nortel Networks
Multimedia Communications Portfolio can help companies drive
improved productivity and creativity by redefining the way they
communicate.
"We recognize that the communications landscape is rapidly
changing and that we have to offer the latest technology to our
employees that can dramatically improve the way they interact,"
said Brian Farrey, president of TMP Technologies. "Nortel
Networks Multimedia Exchange provides the most innovative set of
applications to deliver truly consolidated, multimedia
capabilities in a well-designed comprehensive solution."
Nortel Networks Multimedia Communications Portfolio transforms
existing communications networks into a collaborative multimedia
communications system. It can utilize integrated applications
designed to deliver video calling and virtually instantaneous
collaboration services consistently across a workforce that
spans headquarters, regional offices, and employee home offices.
Users of Nortel Networks Multimedia Communications Portfolio can
personalize their communications through Web push, file exchange
and instant messaging applications.
Companies like Monster Worldwide and Monster are seeking to gain
new capabilities like real-time messaging and personalized
services under a single intuitive interface. Nortel Networks
Multimedia Exchange allows the continued use of existing
handsets, retaining previous investment while moving to new
Session Initiated Protocol-enabled applications. SIP is a
service-enabling Web protocol that initiates real-time
multimedia interaction and seamlessly integrates voice, data and
video.
Nortel Networks Multimedia Communications Portfolio includes
Nortel Networks MX and Interactive Multimedia Server, which
deliver advanced multimedia and collaborative applications
through commercially available hardware and the same open-
standards software. This portfolio delivers the scale and
functionality necessary for both enterprises and service
providers to address their respective target market segments.
These Nortel Networks solutions transform the way users
communicate, allowing them to take advantage of next generation
tools that improve productivity and facilitate instantaneous
decision making. Nortel Networks Multimedia Communications
Portfolio delivers services such as multimedia (video calling,
picture caller ID); collaboration (conferencing, white boarding,
file exchange, co-Web browsing); personalization (call
screening, call logs, call management and routing); presence;
and instant messaging.
"Nortel Networks MX is a key element of our 'One network. A
world of choice.' enterprise vision, demonstrating that
customers rely on Nortel Networks to help them gain the most
from their communications networks," said Oscar Rodriguez,
president, Enterprise Solutions, Nortel Networks. "Nortel
Networks Multimedia Communications Portfolio addresses the time-
sensitive requirements that today's business leaders recognize
are necessary to make the right decisions, right now."
'One network. A world of choice.' is about raising the bar with
a new level of customer and employee engagement where and how
the network is accessed while offering enterprises the power of
choice in deployment options through industry-leading solutions
in IP (Internet Protocol) Telephony, applications, data and
optical networking.
Founded in 1967, Monster Worldwide, Inc. (formerly TMP Worldwide
Inc.) is the online recruitment leader and the parent company of
Monster, the leading global careers website. Headquartered in
New York with approximately 4,500 employees in 19 countries,
Monster Worldwide is also the world's largest Recruitment
Advertising agency network, the world's largest Yellow Pages
advertising agency and a provider of direct marketing services.
The Company's clients include more than 90 of the FORTUNE 100
and more than 490 of the FORTUNE 500 companies. Monster
Worldwide (NASDAQ: MNST) is a member of the S&P 500 Index. More
information about Monster Worldwide is available at
http://www.monsterworldwide.com
Nortel Networks is an industry leader and innovator focused on
transforming how the world communicates and exchanges
information. The Company is supplying its service provider and
enterprise customers with communications technology and
infrastructure to enable value-added IP data, voice and
multimedia services spanning Wireless Networks, Wireline
Networks, Enterprise Networks, and Optical Networks. As a global
company, Nortel Networks does business in more than 150
countries. More information about Nortel Networks can be found
on the Web at http://www.nortelnetworks.com
As previously reported, Moody's Investors Service lowered the
senior secured and senior implied ratings on the securities of
Nortel Networks Corp., and its subsidiaries to B3 and Caa3 from
Ba3 and B3 respectively.
Outlook is negative.
The rating action reflects the lack of Nortel's financial
flexibility and the decline of its revenue base. The downgrade
also takes into account the company's planned lapse of its $1.5
billion in credit facilities due on December. However the rating
action is offset by its substantial cash, modest near-term debt
maturities, and the progress the company has made in
streamlining its expenses.
NORTEL NETWORKS: Inks $5-Million Supply Contract with SaskTel
-------------------------------------------------------------
SaskTel, an innovative communications solutions provider in
Canada, has signed an agreement with Nortel Networks
(NYSE:NT)(TSX:NT) -- estimated at approximately US$5 million --
for supply of Nortel Networks Multimedia Communications
Portfolio and Succession voice over Internet Protocol equipment.
SaskTel plans to be the first service provider worldwide to
offer new revenue-generating multimedia and packet voice
services using Nortel Networks equipment.
As part of this agreement, SaskTel is in the process of
deploying products from Nortel Networks Multimedia
Communications Portfolio, which revolutionizes the way people
communicate by unifying communications across multiple media and
devices -- e-mail, cell phones, home and work telephones, PDAs
(personal digital assistant), instant messaging, file sharing
and video conferencing -- to provide a single, simple
communications session.
"We believe that Nortel Networks Multimedia Communications
Portfolio will help provide for the cost-effective delivery of
SaskTel's Hosted Multimedia Services, which include Voice over
IP and integrated multimedia service capabilities," said Kym
Wittal, chief technology officer, SaskTel. "Investing in
technology and providing next generation products and services
to our customers has always been our number one priority."
"Nortel Networks has created a comprehensive program designed
specifically to help service providers drive new revenue
opportunities, and to facilitate mass market deployment of new,
hosted multimedia and packet voice services based on Session
Initiation Protocol (SIP)," said Sue Spradley, president,
Wireline Networks, Nortel Networks. "As an industry innovator,
SaskTel is a lead customer for this initiative. Nortel Networks
Multimedia Communications Portfolio will help revolutionize the
way people communicate, increasing user mobility, collaboration
and productivity."
SIP is an industry standard 'signaling' protocol that is used to
establish multimedia 'sessions' over an IP network. Signaling is
used to set up two-way telephone calls and collaborative
multimedia sessions, and will be as important for next
generation services as it is for today's telephone services.
After completion of an extensive lab trial, SaskTel is now
deploying Nortel Networks Interactive Multimedia Server from
Nortel Networks Multimedia Communications Portfolio to deliver
new SIP-based multimedia capabilities that can be personalized
to meet subscribers' individual communications requirements.
SaskTel plans to use this technology to provide innovative VoIP
and multimedia solutions for both residential and business
customers.
Nortel Networks is also working with SaskTel to help the company
fully leverage its existing investment in Nortel Networks DMS
circuit switches. SaskTel is evolving its circuit switched
network to the Succession Communication Server 2000 platform to
drive operational cost reductions and further service enablement
of packetization. In addition, SaskTel will deploy Nortel
Networks Passport Packet Voice Gateways to expand its network
reach and Nortel Networks Universal Signaling Point to interface
between classic SS7 signaling and next generation IP and ATM
packet networks.
Nortel Networks Multimedia Communications Portfolio includes
Nortel Networks Multimedia Exchange and IMS, which deliver
advanced multimedia and collaborative applications through
commercially available hardware and the same open-standards
software. This portfolio delivers the scale and functionality
necessary for enterprises and service providers to address their
respective target market segments. These solutions transform the
way users communicate, allowing them to take advantage of next
generation tools that improve productivity and facilitate
instantaneous decision-making. Multimedia Communications
Portfolio delivers multimedia (video calling, picture caller
ID); collaboration (conferencing, white boarding, file exchange,
co-Web browsing); personalization (call screening, call logs,
call management and routing); presence, and instant messaging
services.
SaskTel is the leading full service communications company in
Saskatchewan, offering complete wireline, wireless, internet and
e-business solutions over a state-of-the-art, digital network.
SaskTel maintains investments in companies that provide a
variety of products and services. Visit SaskTel at
http://www.sasktel.com
Nortel Networks is an industry leader and innovator focused on
transforming how the world communicates and exchanges
information. The Company is supplying its service provider and
enterprise customers with communications technology and
infrastructure to enable value-added IP data, voice and
multimedia services spanning Wireless Networks, Wireline
Networks, Enterprise Networks, and Optical Networks. As a global
company, Nortel Networks does business in more than 150
countries. More information about Nortel Networks can be found
on the Web at http://www.nortelnetworks.com
Nortel Networks Ltd.'s 6.125% bonds due 2006 (NT06CAN1) are
trading at about 96 cents-on-the-dollar, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NT06CAN1for
real-time bond pricing.
NRG ENERGY: Wants Okay to Continue Existing Insurance Policies
--------------------------------------------------------------
According to Matthew A. Cantor, Esq., at Kirkland & Ellis, in
New York, NRG Energy, Inc., and its debtor-affiliates maintain
numerous insurance policies. In certain instances, the
Insurance Policies are issued in the name of Xcel Energy, Inc. -
- NRG's parent. Xcel maintains several of the Insurance
Policies for the Debtors' benefit and either:
(a) pays all of the premiums and other payment obligations in
advance and then seeks reimbursement from the Debtors on
an annual basis, or
(b) requires the Debtors to make direct payments for their
ratable portion of the insurance coverage.
Prior to the Petition Date, the Debtors entered into an
insurance brokerage agreement with Marsh USA Inc. for the
administration of certain of the Insurance Policies. Under the
Brokerage Agreement, the Debtors pay Marsh a fee or commission
for the administration, as well as certain additional services
performed for the Debtors, including:
-- limited loss control,
-- claims management oversight,
-- assistance with filing certain claims, applications and
other documents with insurance carriers, and
-- access to the insurance marketplace by the Debtors.
With respect to certain of the Insurance Policies, there are
deductible or self-insured retention amounts for each claim.
Under many of the Insurance Policies, claim losses and expenses
are paid directly to claimants by the Insurance Carriers, who
then bill the Debtors monthly for reimbursement of those losses
and expenses that are within the deductible or self-insured
retention amounts. However, because of the infrequent and
unpredictable nature of claims related to other Insurance
Policies, the Debtors do not make regular, periodic payments
under the policies. The Debtors estimate that their deductible
reimbursement payments are approximately $145,000 per month.
The Debtors pay premiums to the Insurance Carriers based on:
(a) a fixed rate established and billed by each Insurance
Carrier; or
(b) a fixed rate established by Xcel for the Debtors'
ratable portion of the Insurance Policy.
The premiums for most of the Insurance Policies are determined
annually and are paid by the Debtors:
(a) directly to the Insurance Carrier at policy inception;
(b) indirectly to Xcel on an annual basis; or
(c) indirectly through insurance brokers.
The Debtors' property insurance is financed through an insurance
premium finance agreement with AFCO Premium Credit LLC and is
paid in installments throughout the policy term. The annual
premiums for the liability and property coverage under the
Insurance Policies are approximately $41,257,733 in the
aggregate.
In addition, after the expiration of the Debtors' global
property insurance program on June 30, 2003, which is currently
maintained by Xcel, the Debtors expect to obtain a new property
insurance program for the policy period from June 30, 2003 to
June 30, 2004. The NRG Global Property Program will be insured
by NRG Energy Insurance, Ltd., a Cayman Islands company, and a
syndicate of other insurance companies. It is expected that NEI
will insure the first $10,000,000 of each and every property
claim up to $29,000,000 in the aggregate, and will collect up to
$27,000,000 in premiums for the layer of risk.
The NRG Global Property Program is anticipated to be instituted
under a special fronting arrangement with other members of the
insuring syndicate so as to meet various credit requirements,
whereby the "front" will be securitized through a secured trust
or letter of credit arrangement.
Similarly, after the expiration of the Debtors' directors' and
officers' liability insurance on August 18, 2003, which
insurance is currently maintained by Xcel, the Debtors expect to
obtain a new policy. The Debtors will seek to obtain the same
coverage in the new D&O Policy as currently exists under the
policy maintained by Xcel with risk coverage up to $150,000,000
and an anticipated annual premium of $10,000,000.
As of the Petition Date, the Debtors believe that they are
current on all prepetition deductible and claim expense
reimbursements due with respect to the Insurance Policies, as
well as all premium and brokers' fee or commission payments due
and payable with respect thereto.
Thus, the Debtors seek the Court's authority to allow them to:
(a) maintain and continue their current Insurance Policies and
obtain new insurance policies as needed in the ordinary
course of business, including the NRG Global Property
Program and the D&O Policy;
(b) pay any outstanding prepetition amounts, including,
without limitation, all premiums and brokers' fees or
commissions under the Insurance Policies;
(c) reimburse Insurance Carriers, third party administrators
and brokers for any payments made or expenses incurred
prior to the Petition Date on behalf of any of the Debtors
that represent amounts owed by the Debtors under the
relevant insurance policy's deductible or self-insured
retention amounts;
(d) reimburse Insurance Carriers, third party administrators
and brokers for any payments made after the Petition Date
on behalf of any of the Debtors relating to prepetition
occurrences if:
(1) the claimant has a direct right of action against
the Insurance Carrier, third patty administrator or
broker and is able to require the Insurance Carrier,
third party administrator or broker to make payment
directly to the claimant as a result of the
prepetition occurrence, and
(2) the payment represents amounts owed by the Debtors
under the relevant insurance policy's deductible or
self-insured retention;
(e) pay or otherwise satisfy retrospective adjustments under
the Insurance Policies relating to prepetition periods,
but in each case only to the extent the Debtors believe it
is necessary for the maintenance or renewal of the
Insurance Policies; and
(f) pay the annual fees and premiums associated with renewal
of the Insurance Letter of Credit, but not to reimburse
the issuers for any draws thereunder.
The Debtors further seek the Court's authority to make all of
these prepetition payments in an aggregate amount not to exceed
$1,000,000 in the ordinary course of business. In addition, the
Debtors propose to continue to make all postpetition payments
with respect to the Insurance Policies.
Mr. Cantor clarifies that the Debtors propose to pay all
obligations arising under or related to these programs and
policies subsequent to the Petition Date in the ordinary course
of business, not on an accelerated basis, and in accordance with
the terms of these programs and policies.
The Debtors must continue, in full force and effect, their
Insurance Policies. If the Insurance Policies were allowed to
lapse, Mr. Cantor explains, the Debtors would be exposed to
substantial liability for any damages resulting to persons and
property of the Debtors and others.
Mr. Cantor reminds the Court that the Debtors may need to renew
or replace certain of their Insurance Policies in the upcoming
months. If they do not honor their obligations under the
Insurance Policies, certain of the Insurance Carriers may be
reluctant to continue doing business with the Debtors.
Moreover, the Debtors represent that they have sufficient cash
reserves and will have sufficient cash from on-going operations
to pay the amounts in the ordinary course of their business.
(NRG Energy Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
OWENS CORNING: Court Orders Appointment of Fibreboard Examiner
--------------------------------------------------------------
Judge Fitzgerald orders the United States Trustee, after
consultation with parties-in-interest, to appoint, subject to
the Court's approval, one disinterested person to serve as
examiner for Fibreboard.
Judge Fitzgerald emphasizes that the examiner is not to perform
any task or take up any duty or in any way perform any work or
incur costs to the estate without further Court order.
As previously reported, Plant Insulation asked the U.S. District
Court to review Judge Fitzgerald's order denying its request for
an appointment of a Fibreboard Examiner in the Chapter 11 cases
involving the Owens Corning. Plant Insulation asserted that
Judge Fitzgerald erred in denying its request.
District Court Judge Wolin remanded the appeal back to the
Bankruptcy Court, specifically noting that the Bankruptcy Court
has not ruled on whether Plant had standing to move for an
examiner, and that a split of authority existed on whether the
appointment of an examiner is mandatory under Section 1104(c)(2)
of the Bankruptcy Code, where the $5,000,000 liquidated debt
level of subsection (c)(2) is met. (Owens Corning Bankruptcy
News, Issue No. 51; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
PATTERSON INSURANCE: S&P Assigns R Rating Due to Liquidation
------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'R' financial
strength rating to Patterson Insurance Co., because of the
company's ongoing liquidation.
Patterson was placed into liquidation on March 17, 2003, by the
19th Judicial District Court, East Baton Rouge Parish, La.
"Insurance regulators initiated these proceedings based on
questions about the value of the company's fixed assets, which
it used to back policies and claims. Patterson's liquidation was
also brought about by claims filed as a result of Hurricane Lili
and Tropical Storm Isidore," explained Standard & Poor's credit
analyst Ovadiah N. Jacob. Prior to the liquidation order, the
company was put under conservation and ordered to cease writing
policies in December 2002.
Patterson was a property/casualty insurer doing business in
Louisiana, Arkansas, Mississippi, and Texas. As of December
2002, the company had 29,000 policyholders.
An insurer rated 'R' is under regulatory supervision owing to
its financial condition. During the pendency of the regulatory
supervision, the regulators may have the power to favor one
class of obligations over others or pay some obligations and not
others. The rating does not apply to insurers subject only to
nonfinancial actions such as market conduct violations.
PENNEXX FOODS: Ruling on Smithfield's Action Expected Next Week
---------------------------------------------------------------
Pennexx Foods, Inc. (OTCBB:PNNX), a leading provider of case-
ready meat to retail supermarkets in the Northeast, announced
that at the hearing held Wednesday on Smithfield's motion the
seize tangible personal property of the Company, the Judge took
the matter under advisement.
The Company expects that a ruling will be handed down next week
or possibly shortly thereafter.
The Company is continuing its discussions with potential
investors who have expressed interest in making an investment in
the Company sufficient to repay the Smithfield loan; however, no
one thus far has committed to do so, and there is no assurance
that the Company will succeed in the effort.
Established in 1999, Pennexx Foods, Inc. is a leading provider
of case-ready meat to retail supermarkets in the northeastern
U.S. The Company currently provides case-ready meat within a
300-mile radius of its plants to customers in the Northeast in
order to assure delivery of product with an extended shelf life.
The Company cuts, packages, processes and delivers case-ready
beef, pork, lamb and veal in compliance with the United States
Department of Agriculture regulations. Pennexx customers include
many significant supermarket retailers.
PETALS INC: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Petals, Inc.
155 White Plains Road
Suite 100
White Plains, New York 10591-5534
Bankruptcy Case No.: 03-13285
Type of Business: Petals, Inc. sells artificial flowers to
customers through mail order, catalogue
sales, retail store outlets and
the Internet.
Chapter 11 Petition Date: May 21, 2003
Court: Southern District of New York (Manhattan)
Judge: Cornelius Blackshear
Debtors' Counsel: Mark Nelson Parry, Esq.
Moses & Singer LLP
1301 Avenue of the Americas
New York, NY 10019
Tel: (212) 554-7800
Fax : (212) 554-7700
Total Assets: $32,000,000
Total Debts: $40,000,000
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Quebecor World Trade Debt $1,983,287
1 Pierce Place
# 800
Itasca, IL 60143
Paul Runko
Tel: 203-532-4304
Genuine Associates Import Trade Debt $1,707,875
and Export Ltd.
GPO Box 3805
Hong Kong
Joseph Chang
Tel: 852-2333-5271
RR Donnelley Logistics Trade Debt $1,210,190
77 West Wacker
15th Floor
Chicago, IL 60601
Ed Rzeppa
Tel: 312-326-7266
United States Treasury Trade Debt $726,597
242 West Nyack Road
West Nyack, NY 10994
Catherine Ficco
Tel: 914-627-1443
UPS Freight Services Trade Debt $355,924
660 Fritz Drive
Copel, TX 75019
Cathy Stitt
972-304-3145
Comax Global Logistics Trade Debt $282,990
167-25 Rockaway Blvd.
2nd Floor
Jamaica, NY 11434
Greg Lui
Tel: 718-656-6760
Crescent Associates Trade Debt $227,595
Caffco International Trade Debt $205,480
Davie Boag Ltd. Trade Debt $193,675
State of New York Trade Debt $167,751
General Post Office
Federal Express Corp. Trade Debt $154,018
TBB Global Logistics Trade Debt $152,033
Victory Packaging Trade Debt $148,007
Commonwealth Storage Trade Debt $134,756
Experian Direct Tech Trade Debt $114,216
UCP/United Chinese Plastics Trade Debt $113,756
AT&T Trade Debt $111,502
KD&E Trade Debt $110,765
Cartel III Trade Debt $97,418
Smurfit Stone Container Trade Debt $96,950
Corp
PETCO ANIMAL: First-Quarter Results Reflect Strong Performance
--------------------------------------------------------------
PETCO Animal Supplies, Inc. (Nasdaq: PETC) reported financial
results for the first quarter ended May 3, 2003. The Company
also provided its guidance for the second quarter and full
fiscal year 2003.
"We are pleased to announce that net earnings per diluted share
increased 27% to $0.19 in the first quarter, compared to pro
forma net earnings of $0.15 per diluted share in the prior-year
first quarter," commented Brian K. Devine, Chairman, President
and Chief Executive Officer. "This strong performance highlights
the consistency and resiliency of our business at a time when
the impact of economic uncertainties, bad weather and the Iraq
war have all contributed to a difficult period for many
retailers. We are also pleased to report the continuation of our
more than decade-long strong positive comparable store net sales
trend, with an increase of 4.6% in the first quarter on top of
the 9.3% comparable store net sales increase we reported in the
prior-year's first quarter."
First Quarter Results
Net sales in the first fiscal quarter of 2003 were $384.7
million with a comparable store net sales increase of 4.6%. The
comparable store net sales increase in the period comes on top
of a 9.3% increase in the prior fiscal year's first quarter.
Overall, net sales increased 10.2% over the first quarter of
fiscal 2002.
Net earnings available to common stockholders for the first
quarter were $11.1 million, or $0.19 per diluted share,
including the $0.01 per share negative impact of an accounting
change as a result of the adoption of Emerging Issues Task Force
Consensus No. 02-16, discussed further below. This compared with
a net loss available to common stockholders of $29.7 million, or
a $0.57 loss per diluted share, in the prior-year first quarter.
The first quarter of fiscal 2002 included the following items:
$12.8 million in management fees and termination costs related
to the termination of a management services agreement that was
entered into in conjunction with our leveraged recapitalization;
$8.4 million in stock-based compensation expense, and other
primarily financing and legal costs of $1.2 million, related to
the Company's initial public offering; debt retirement costs of
$3.3 million related to the early repurchase of senior
subordinated notes with proceeds of the initial public offering;
and, an increase in the carrying amount and premium on
redemption of previously outstanding preferred stock of $20.5
million.
Excluding the previously mentioned items for the prior-year
period and related tax effects, pro forma net earnings available
to common stockholders for the first quarter of fiscal 2002 were
$8.7 million, or $0.15 per diluted share.
Adoption of Emerging Issues Task Force Consensus No. 02-16
Emerging Issues Task Force Consensus No. 02-16 (EITF 02-16)
addresses the accounting for consideration received from
suppliers. Consistent with the transition provisions, which the
EITF finalized in March 2003, the Company is required to adopt
this new guidance prospectively, or on a going-forward basis,
rather than through a retroactive restatement. This new standard
applies to each new or modified agreement entered into with a
supplier. For those suppliers with whom the Company has existing
agreements, adoption of the guidance becomes effective with the
next modification or renewal of those agreements. The Company
follows a practice of continually negotiating new arrangements
with suppliers and does not plan on changing its business
practices as a result of this accounting change.
The adoption of the guidance will have a non-cash impact in each
of the four quarters of fiscal 2003. As a result of adopting
EITF 02-16 through the remainder of fiscal 2003, substantially
all vendor support will now initially be deferred as a reduction
of inventory purchased from each supplier, and the support will
be realized into cost of sales as the related inventory is sold.
This is the way the Company currently accounts for rebates
received from vendors. The accounting change also governs other
forms of cooperative support received from suppliers previously
accounted for as a reduction to the related SG&A expenses. This
support will be deferred as we adopt the new standard, and will
be reflected as a reduction to cost of sales as the related
inventory is sold.
As the Company applies the new accounting guidance throughout
fiscal 2003, both gross margin and SG&A expenses will continue
to increase on a historical basis as vendor consideration is
recorded as a reduction to cost of sales rather than as an
offset to SG&A expenses. This does not affect the cash level of
support from suppliers, it only affects the classification,
timing and recognition of the payments.
Gross Profit Margins and Operating Income
Gross profit margin improved 80 basis points to 30.9% in the
first quarter compared to a pro forma gross profit margin of
30.1% for the first quarter of 2002. The pro forma gross profit
for the first quarter of 2002 has been adjusted to eliminate
stock-based compensation expense of $1.5 million related to the
Company's initial public offering. The impact of the non-cash
stock-based compensation expense was approximately 40 basis
points in the first quarter of 2002. The gross profit
improvement was driven by the continuing change in mix from
lower-margin premium pet food sales to higher margin categories,
such as companion animals, toys, supplies and services. The
improvement also includes a net benefit of 20 basis points for
the adoption of EITF 02-16. As a percentage of net sales, the
net benefit consisted of the initial reclassification of 45
basis points from SG&A, before the deferral of 25 basis points
to inventory, representing the $0.01 per share negative impact
of the accounting change in the first quarter of 2003.
Sales of higher margin pet supplies and services represented
approximately 68% of net sales in the first quarter of 2003, an
improvement of 80 basis points over the prior-year period. For
the first quarter of fiscal 2003, operating income increased to
$24.7 million, or 6.4% of net sales.
Store Expansion Program
PETCO opened 22 new stores during the first quarter and closed
five stores, three of which were relocated to new stores. The
addition of 17 net new stores represented a 10.3% increase in
square footage and brought the store base to 617 locations. Our
plans for 2003 call for the opening of approximately 45-50 net
new stores, which will continue to reinforce PETCO's national
brand presence.
The Company completed eleven remodels of existing stores to its
latest millennium format in the first quarter. As previously
reported, the Company plans to remodel up to 50 existing stores
into the millennium format during fiscal 2003.
Outlook
The Company currently expects a comparable store net sales
increase in the range of 5.0% - 6.0% for the second quarter of
fiscal 2003. This increase in comparable store net sales would
come on top of the 8.5% increase achieved in the second quarter
of fiscal 2002. For the full fiscal year 2003, the Company
continues to expect a comparable store net sales increase of
approximately 6%.
The Company currently expects second quarter earnings per
diluted share in the range of $0.20 - $0.21 and now expects full
fiscal year 2003 earnings per diluted share in the range of
$1.09 - $1.11, in each case, before the non-cash effect of the
adoption of EITF 02-16, which is discussed in detail above. The
adoption of EITF 02-16 will reduce second quarter earnings per
diluted share by approximately $0.02 and full fiscal year 2003
earnings per diluted share by approximately $0.07. Accordingly,
including the effect of the new accounting standard, the Company
now expects earnings per diluted share for the second quarter of
2003 in the range of $0.18 - $0.19 and full fiscal year 2003
earnings per diluted share in the range of $1.02 - $1.04. For
the full fiscal year 2003, the Company currently expects that
approximately 150 basis points of vendor cooperative support
will be reclassified from SG&A expenses to cost of sales, with
approximately 40 basis points, or $0.07 per share, deferred to
inventory. The impact of the accounting change is expected to
significantly impact only the current year. In future years,
amounts deferred will only exceed amounts recognized to the
extent that vendor support is increased, and could represent up
to approximately $0.02 per share.
Subject to specified conditions, the Company can redeem $40.0
million in principal amount of its 10.75% senior subordinated
notes with the proceeds of an offering. In addition, the Company
may also use up to $50 million of existing cash to further de-
lever the balance sheet during fiscal 2003.
PETCO is a leading specialty retailer of premium pet food,
supplies and services. It operates 617 stores in 43 states and
the District of Columbia, as well as a leading destination for
on-line pet food and supplies.
PETCO Animal Supplies' May 3, 2003 balance sheet shows a total
shareholders' equity of about $63,000 up from a deficit of about
$11 million recorded at February 1, 2003.
POLYPHALT INC: Delays Filing of Annual and First Quarter Results
----------------------------------------------------------------
Polyphalt Inc. announced that the filing of its annual financial
statements for the year ended December 31, 2002 and its interim
financial statements for the first quarter ended March 31, 2003
will be briefly delayed past their respective due dates of
May 20, 2003 and May 30, 2003.
The delay arises as a result of continuing discussions between
Polyphalt and its majority shareholder, Grandwin Holdings
Limited. The purpose of these discussions is to determine
whether or not Grandwin considers Polyphalt to be in default
under a loan agreement between Grandwin, as lender, and
Polyphalt, as borrower, and whether or not Grandwin will waive
the default and permit further drawdowns by Polyphalt or instead
call the loan and enforce its rights under the loan agreement.
The resolution of this discussion will have a significant impact
on Polyphalt's ability to continue its business operations.
Depending on how this discussion is resolved, Polyphalt's
auditors may be required to reconsider their report on
Polyphalt's annual and interim financial statements,
particularly as their comments relate to Polyphalt's ability to
continue to operate. At the present time, Polyphalt's auditors
are unable to complete their report.
Polyphalt anticipates that both its annual and interim financial
statements will be filed no later than Monday June 30, 2003.
Until both its annual and interim financial statements are
filed, Polyphalt intends to satisfy the requirements of the
"alternate information guidelines" described in Ontario
Securities Commission Policy 57-603. Pursuant to this Policy, if
Polyphalt's annual and interim financial statements are not
filed by July 20, 2003, one or all of the Ontario Securities
Commission, the British Columbia Securities Commission or the
Alberta Securities Commission may impose an issuer cease trade
order against Polyphalt. Given the delay in filing that is
anticipated by Polyphalt, Polyphalt does not believe that it
will be affected by this aspect of the Policy. However, an
issuer cease trade order may be imposed sooner if Polyphalt
fails to satisfy the requirements of the "alternate information
guidelines". The Ontario Securities Commission has imposed a
management cease trade order on certain insiders of Polyphalt as
of the date of this press release.
Polyphalt is a publicly traded, Canadian based, technology
company that develops and commercializes novel Polymer Modified
Asphalt products and technology to serve North American and
international infrastructure markets. Polyphalt has a broad
portfolio of proprietary technologies, several of which combine
blends of plastics and rubbers, including recycled materials.
These processes help to produce cost-effective and longer-
lasting pavements, roofing materials and other bituminous
building and industrial products. Polyphalt's international
license network comprises thirteen leading Asphalt refiners and
suppliers throughout the United States, Canada, Australia,
Europe and China. In February 2001, Polyphalt acquired GH
International, a leading Canadian producer of roof coatings,
adhesives and pavement maintenance products.
Polyphalt is a member of Cheung Kong Infrastructure group of
companies. CKI is the largest publicly listed infrastructure
company in Hong Kong with investment in power, infrastructure
projects, infrastructure materials and infrastructure-related
businesses. The company has operations in Hong Kong, mainland
China, Australia, Canada and the Philippines.
PRINCETON VIDEO: Filing for Chapter 11 Protection Soon
------------------------------------------------------
Princeton Video Image, Inc. (OTCBB: PVII) expects to file for
Chapter 11 bankruptcy protection in the next several days.
PVI is negotiating with a newly formed entity owned by Presencia
en Medios, SA de CV and Cablevision Systems Corporation to
purchase substantially all of the assets of PVI and to provide
debtor-in-possession financing for approximately 90 days.
Presencia and Cablevision are the only secured creditors of PVI
and currently hold approximately 45% of PVI's common stock. The
asset sale would be subject to bankruptcy court approval and a
competitive bidding procedure in accordance with bankruptcy law.
The filing and the agreement are subject to the successful
negotiation of definitive agreements and the approval of PVI's
board of directors.
PVI expects that if the asset sale is consummated PVI would be
liquidated pursuant to a plan of liquidation which would be
subject to the approval of the bankruptcy court. In the event of
a liquidation, any recovery for shareholders of PVI would be
highly unlikely and would depend on the outcome of the
competitive bidding procedure.
PVI expects the debtor-in-possession financing, if consummated,
to allow the delivery of services to PVI's customers and clients
to continue without interruption during the bankruptcy process.
James Green, President and Chief Operating Officer of PVI, said,
"We believe that this proposed transaction will allow us to
continue to service all of our customers."
Princeton Video Image, Inc., provides real-time virtual
advertising, programming enhancements, virtual product
integration and targeted interactive services for televised
sports and entertainment events. PVI services the advertising
industry with its proprietary, Emmy award-winning technology.
Headquartered in New York City and Lawrenceville, New Jersey,
PVI has offices in Los Angeles, Toronto, Tel Aviv, and Mexico
City.
PVC CONTAINER: Taps US Bancorp Piper to Review Strategic Options
----------------------------------------------------------------
PVC Container Corporation (OTC Bulletin Board: PVCC) has
retained the investment banking firm of U.S. Bancorp Piper
Jaffray to assist management and the Board in the exploration of
strategic alternatives available to the Company, including a
possible sale of the Company.
Phillip L. Friedman, President and Chief Executive Officer,
stated, "We continue to be very focused on our mission to
enhance shareholder value. Our retention of an experienced team
of investment bankers from U.S. Bancorp Piper Jaffray reflects
our belief that the Company's current market capitalization
does not reflect the true value of our strong competitive
position."
Management and the Board intend to work diligently with their
advisors so as not to affect the continuity of the Company's
business. "In exploring strategic options, one of our major
goals is to generate strategy and plans to allow for and enhance
the continued growth of the Company. We are at a very early
stage in the process but we intend to move forward as quickly
and prudently as possible," Friedman said.
PVC Container Corporation, a major producer of plastic
containers, was founded in 1968. The Company's executive offices
are located in Eatontown, New Jersey, with manufacturing
facilities in New Jersey, Pennsylvania, New York, South Carolina
and Illinois. PVC has reported revenues of approximately $83
million for its fiscal year ended June 30, 2002. The Company
operates several wholly owned subsidiaries including Novapak
Corporation, for the manufacture and sale of general line
plastic bottles, the Airopak Corporation and Marpac Industries,
responsible for manufacturing and sales of specialty plastic
containers and Novatec Plastics Corporation, a leading supplier
of PVC compounds and specialty plastic alloys in the United
States. The company's stock is traded under the symbol PVCC.
U.S. Bancorp Piper Jaffray, a subsidiary of Minneapolis-based
U.S. Bancorp, is a focused securities firm comprised of four
divisions: Equity Capital Markets, Fixed Income Capital Markets,
Private Advisory Services and Research. The firm provides a full
range of investment products and services to individuals,
institutions and businesses and has over 124 offices in 25
states across the country. For more information on U.S. Bancorp
Piper Jaffray, visit http://www.piperjaffray.com
REPUBLIC WESTERN: Fitch Drops Financial Strength Rating to DD
-------------------------------------------------------------
Fitch Ratings has lowered the insurer financial strength rating
on Republic Western Insurance Co. to 'DD' from 'B-'. The rating
has been removed from Rating Watch.
This rating action follows the announcement that the Arizona
Department of Insurance has placed Republic Western under
supervision. The ADOI said its action considered the financial
and accounting problems at Republic Western's parent company.
Earlier this month it was disclosed that Republic Western may
incur prior period adjustments to its insurance reserves
following a re-audit by the organization's new accountants.
Republic Western is a wholly owned subsidiary of AMERCO, the
parent company for U-Haul International, Inc. U-Haul has a
leading market position in the consumer truck, trailer and
storage rental industry. Republic Western was initially formed
in 1973 to provide insurance for both U-Haul and its customers.
Fitch currently rates AMERCO's senior unsecured debt 'DD'.
Rating Action
Republic Western Insurance Company
-- Insurer financial strength / Downgrade / 'DD'.
SAVVIS COMMS: Fails to Maintain Nasdaq Minimum Listing Criteria
---------------------------------------------------------------
SAVVIS Communications (NASDAQ:SVVS), a leading global managed IP
and managed hosting services provider, received a Nasdaq Staff
Determination that SAVVIS' common stock failed to meet the $1.00
closing bid price per-share requirement under the Nasdaq's
Marketplace Rule 4310(C)(4), and that the stock is therefore
subject to delisting from the Nasdaq SmallCap Market.
SAVVIS has requested a hearing before the Nasdaq Listing
Qualifications Panel to review the Staff Determination. Under
the Nasdaq's rules, the delisting is deferred until the appeal
is resolved.
Nasdaq recently proposed to extend the period within which
SAVVIS would have to satisfy the SmallCap bid price requirement.
In the event the proposed extension is not approved in time or
SAVVIS is determined not to be eligible for the extension,
SAVVIS may effect a reverse stock to satisfy the $1.00 bid price
per-share requirement and avoid delisting.
SAVVIS stockholders approved a reverse stock split at its 2002
annual meeting, and SAVVIS is seeking their approval of
additional reverse split alternatives at its 2003 annual
meeting, to be held in June.
SAVVIS Communications (NASDAQ:SVVS) is a leading managed
services provider that delivers IP VPNs, private and public,
hosting, and managed hosting services to businesses. SAVVIS
solutions are designed for industries with demanding information
technology requirements including legal, media, retail,
professional services, healthcare, manufacturing, and financial
services.
Known as The Network that Powers Wall Street(SM), SAVVIS was
ranked #3 in IP VPN market share by IDC in its 2003 report,
trailing only AT&T and WorldCom, and its network reliability was
declared "perfect" in Network World magazine's groundbreaking
study of backbone performance.
SAVVIS recently won the first ever American Business Awards
"Stevie"(TM) in the category of "Best Customer Service
Organization." SAVVIS' managed hosting services were awarded the
Service Provider Excellence Award by Boardwatch magazine for its
virtualized approach to managed hosting, and the Market
Engineering Award from Frost & Sullivan for product
differentiation and innovation.
For more information about SAVVIS' Intelligent IP Network(SM)
and managed hosting solutions, visit: http://www.savvis.net
SAVVIS Communications' March 31, 2003 balance sheet shows a
working capital deficit of about $4 million, while the Company's
total shareholders' equity dwindled to about $55 million from
about $77 million recorded three months ago.
SIERRA HEALTH: AM Best Ratchets FS Ratings Up a Notch to B+
-----------------------------------------------------------
A.M. Best Co. has upgraded the financial strength ratings to B+
(Very Good) from B (Fair) of Sierra Health Services, Inc.'s
(NYSE: SIE) core HMO, Health Plan of Nevada, Inc. (both of Las
Vegas), and its health insurance company, Sierra Health and Life
Insurance Company, Inc. (Los Angeles).
A.M. Best has also assigned a "bb-" debt rating to Sierra's
recently issued $115.0 million of 2.25% senior unsecured
convertible debentures due 2023. The rating outlook is stable.
Concurrently, A.M. Best has affirmed the financial strength
rating of B (Fair) of Sierra's discontinued workers'
compensation insurance group, Sierra Insurance Group
(Pleasanton, CA). (See listing of companies below.) The rating
outlook is negative for all regulated workers' compensation
subsidiaries.
Earnings growth at the Nevada companies, primarily Health Plan
of Nevada, continues to be strong. The companies have increased
their leading market share in the Las Vegas area where they
operate a successful integrated delivery network. A.M. Best
expects strong performance to continue over the medium term.
Additionally, Sierra's consolidated cash earnings and debt
service capability have improved substantially, driven by the
essentially complete withdrawal from the Texas market, which had
been a considerable drain and had been supported by funds
borrowed on its revolving credit facility.
The excellent earnings growth has increased Sierra's debt
interest expense coverage from -9.25 times to 7.8 times between
2000 and 2002, and this positive trend has continued into 2003.
Despite this positive earnings trend, Sierra continues to
maintain a marginal amount of cash at the holding company. Also,
the HMO is thinly capitalized for a secure rating. Sierra has
already begun to increase the holding company cash and the
capitalization of the HMO and will continue to do so during
2003.
While many of the past year's critical concerns have been
resolved, some concerns related to issues at entities other than
the health plan remain. A.M. Best is somewhat concerned about
the increase in Sierra's debt-to-capital ratio to approximately
50%, especially after the organization had focused intently on
paying down outstanding debt. This increase was driven by
Sierra's new $115.0 million 2.25% senior convertible debentures
issued in March 2003. These concerns are mitigated by the
conversion features of the debentures as well as Sierra's
decision to redeem all of the workers' compensation subsidiary's
senior debentures and its current intent to pay off the Texas
properties' mortgage note ahead of maturity. As a result, A.M.
Best anticipates Sierra's financial leverage could lower to
approximately 35% by year-end 2003.
Furthermore, two outstanding events pose medium term
uncertainties. The timing of the workers' compensation
disposition and the ultimate value realized could impact
Sierra's consolidated capital structure negatively. Also, the
TRICARE North region bid, if won, could have negative
implications from an execution and liquidity risk standpoint,
owing to the size of the contract in relation to Sierra's
current infrastructure and financial flexibility. A.M. Best will
continue to evaluate these developments and their impact on the
corporation's financial strength.
Sierra Insurance Group's financial strength rating has not been
upgraded at this time due to the group's pending disposition,
continued deterioration in overall capitalization and weak
operating performance in recent years. Since 2000, adverse
development of loss reserves for prior accident years has offset
the improvement in current underwriting profitability driven by
the firming workers' compensation market conditions. Any
additional reserve charges going forward could further weaken
capitalization and dampen operating profitability, which could
put downward pressure on the group's financial strength rating.
Reflecting this potential, the rating outlook is negative.
The following new debt rating has been assigned:
-- Sierra Health Services, Inc.
-- "bb-" on senior convertible debt
The following subsidiaries' financial strength ratings have been
upgraded to B+ (Very Good) from B (Fair) and assigned stable
outlooks:
-- Health Plan of Nevada, Inc.
-- Sierra Health and Life Insurance Company, Inc.
The financial strength rating of B (Fair) has been affirmed for
Sierra Insurance Group and its subsidiaries and assigned a
negative outlook:
-- California Indemnity Insurance Company
-- CII Insurance Company
-- Commercial Casualty Insurance Company
-- Sierra Insurance Company of Texas
SDL TECHNOLOGIES: Koda Resources Bolts Proposed Merger Agreement
----------------------------------------------------------------
Koda Resources Ltd., is not proceeding with the previously
announced proposed business combination with SDL Technologies
Inc. Koda had entered into an agreement on February 16, 2001
with SDL, Dominic Lippa and Sergio Durante providing for the
acquisition of all the issued and outstanding shares of SDL by
Koda. SDL filed an Assignment in Bankruptcy on April 23, 2003.
Koda is seeking other business opportunities to re-activate the
Company and is currently in negotiations with a private Ontario
company, African Gold Group, Inc. African Gold's current focus
is the identification and acquisition of gold exploration and
development projects located in Ghana, West Africa.
Koda also announces that Michael Wallace has been appointed as a
director of Koda to fill the vacancy created by the resignation
of Guy Brooks.
SLATER STEEL: Atlas Unit Workers Ratify 5-Year Collective Pact
--------------------------------------------------------------
Slater Steel Inc., announces that the production and maintenance
workers at its Atlas Stainless Steels facility in Sorel-Tracy,
Quebec have ratified a new five-year collective agreement. The
agreement will expire on November 30, 2007. The workers are
represented by the Syndicat des employes des Aciers Atlas.
Slater Steel Inc. common shares are listed on The Toronto Stock
Exchange and trade under the symbol SSI.
Slater Steel is a mini mill producer of specialty steel
products. The Corporation manufactures and markets bar and flat
rolled stainless steels, carbon and low alloy steel bar
products, vacuum arc and electro slag remelted steels, mold,
tool and die steels and hollow drill and solid mining steels.
The Corporation's mini mills are located in Fort Wayne, Indiana,
Lemont, Illinois, Hamilton and Welland, Ontario and Sorel-Tracy,
Quebec.
* * *
As previously reported, Slater Steel Inc., obtained a waiver of
any default of its financial covenants up to March 31, 2003, and
was required to secure binding commitments by January 31, 2003,
to enable the Company to repay a significant portion of its
credit facilities.
Slater Steel's bankers waived the requirement that the Company
secure binding commitments for new credit facilities by
January 31, 2003 to allow it time to complete negotiations with
lenders. In waiving this condition, the bankers require that
Slater Steel deliver a binding commitment letter providing for a
refinancing of the Company's credit facilities by March 31,
2003.
The Company stated that it continues in advanced negotiations
with lenders regarding the refinancing of its debt and that it
intends to, and believes that it will, satisfy this requirement
by securing new facilities to repay outstanding debt, or by
restructuring its current credit agreement with its existing
bankers.
SLATER STEEL: OSC Ceases Trading over Statutory Filing Defaults
---------------------------------------------------------------
Temporary Cease Trading Order on May 21, 2003 for failure to
make statutory filings, hearing will take place on June 3, 2003.
IN THE MATTER OF THE SECURITIES ACT
R.S.O. 1990, c. S.5, AS AMENDED (the "Act")
- and -
IN THE MATTER OF
ANTHONY GRIFFITHS, DENNIS BELCHER, PIERRE BRUNET, ANTHONY
CRISALLI, ALBERT GNAT, P. THOMAS JENKINS, PATRICK LAVELLE
PIERRE MACDONALD, MICHAEL WILKINSON, PAUL KELLY, DAVID J.
CAMOZZI, PHILIP KELLY, PAUL D. DAVIS, RICK P. ROGERS, DOUG T.
BROWN GARY L. NABER, BRUCE KENNEDY, HOWARD DRABINSKY, MICHEL
TELLIER MICHEL CARDIN, PIERRE MARCOTTE, MIKE SIRBAUGH
TEMPORARY ORDER
(Section 127)
WHEREAS it appears to the Ontario Securities Commission that:
1. Slater Steel Inc. is incorporated under the laws of
Canada and is a reporting issuer in the Province of
Ontario.
2. Each of Anthony Griffiths, Dennis Belcher, Pierre
Brunet, Anthony Crisalli, Albert Gnat, P. Thomas
Jenkins, Patrick Lavelle, Pierre MacDonald, Michael
Wilkinson, Paul Kelly, David J. Camozzi, Philip Kelly,
Paul D. Davis, Rick P. Rogers, Doug T. Brown, Gary L.
Naber, Bruce Kennedy, Howard Drabinsky, Michel Tellier,
Michel Cardin, Pierre Marcotte, Mike Sirbaugh
(individually, a "Respondent" and collectively, the
"Respondents") is, or was, at some time since the
end of the period covered by the last financial
statements filed by Slater in accordance with the Act, a
director, officer or insider of Slater and during that
time had, or may have had, access to material
undisclosed information with respect to Slater.
3. Slater failed to file annual financial statements for
its financial year ended December 31, 2002 on or before
May 20, 2003, contrary to subsection 78(1) of the
Securities Act (Ontario).
4. As of the date of this order, Slater has not filed its
Financial Statements.
5. By virtue of his/her/its relationship, each Respondent
has had, or may have had, access to information
regarding the affairs of Slater that has not been
generally disclosed.
AND WHEREAS the Commission is of the opinion that is in the
public interest to make this order;
AND WHEREAS the Commission is of the opinion that the length of
time required to conclude a hearing could be prejudicial to the
public interest;
IT IS ORDERED pursuant to paragraph 2 of subsection 127(1) and
subsection 127(5) of the Act that:
A. all trading, whether direct or indirect, by the
Respondents in the securities of Slater shall cease
until two full business days following the receipt by
the Commission of all filings Slater is required to make
pursuant to Ontario securities law; and
B. this order shall take effect immediately and shall
expire on the fifteenth day after its making unless
extended by the Commission.
DATED at Toronto, this 21st day of May, 2003.
(signed) "John Hughes"
---------------------------------
Manager, Corporate Finance Branch
SLMSOFT INC: Commences Restructuring Under CCAA in Canada
---------------------------------------------------------
SLMsoft Inc. (TSX: ESP.a, ESP.b), a leading global provider of
e-financial solutions, announced an update on the matters
involving the Insight Venture Associates III, LLC. Insight has
filed a petition for bankruptcy against SLM. SLM is commencing
proceedings to seek a stay of this petition and an order under
the Companies' Creditors Arrangement Act (CCAA) to facilitate
its corporate restructuring.
The Company has been engaged in productive negotiations with a
number of its major creditors, which for the most part, have
been successful. Negotiations with Insight have stalled.
Should SLM receive CCAA protection, SLM will have the
opportunity to regulate its affairs and maintain un-interrupted
service to its customers. The company has received undertakings
of interim financing during the proposed restructuring period.
This matter will be before the Court at the earliest
opportunity, and SLM will at that time advise as of the outcome
and the process that will follow.
Founded in 1986, SLMsoft Inc. is a leading developer of
electronic payment systems and transaction processing solutions,
including e-commerce applications with a focus on the financial
services industry. SLMsoft Inc. provides real-time end-to-end e-
banking solutions that include Internet banking, interactive
voice recognition, debit and credit card issuing, automated
teller machines and point-of-sale network management, retail
branch management, and e-CRM enabling technology. SLMsoft Inc.
also provides investment brokerage client and portfolio
management applications for the brokerage industry; e-health
solutions which enable health insurance claims to be evaluated
at the point of service, processed and settled in real time; and
e-government solutions which enable consumers to pay fees for
government services in person, at kiosks, through IVR systems or
the Internet. For more information, please visit the Company's
Web site at http://www.slmsoft.com
SPECTRASITE INC: Completes Amendment to Senior Credit Facility
--------------------------------------------------------------
SpectraSite, Inc. (Ticker Symbol: SPCS), one of the largest
wireless tower operators in the United States, has completed an
amendment to its senior credit facility.
The senior credit facility amendment reduced the Company's $300
million revolving credit facility to $200 million, loosened the
Company's total leverage covenant in certain periods beginning
January 1, 2004, and provided for certain documentation changes.
The effective date of the amendment was May 14, 2003. After
giving effect to the amendment, the full amount of the $200
million revolving commitment under the $900 million senior
credit facility is available.
SpectraSite, Inc. -- http://www.spectrasite.com-- based in
Cary, North Carolina, is one of the largest wireless tower
operators in the United States. At March 31, 2003, SpectraSite
owned or operated over 18,000 sites, including 7,488 towers
primarily in the top 100 markets in the United States.
SpectraSite's customers are leading wireless communications
providers and broadcasters, including AT&T Wireless, ABC
Television, Cingular, Nextel, Paxson Communications, Sprint PCS,
Verizon Wireless and T-Mobile.
STARWOOD HOTELS: Selling 13 Hotels to Olympus-Led Partnership
-------------------------------------------------------------
A partnership between Olympus Real Estate Partners, Rockwood
Capital Real Estate Partners and HEI Hospitality has entered
into a definitive agreement to acquire 13 upscale hotels
comprising 3,932 rooms from Starwood Hotels & Resorts Worldwide,
Inc. (NYSE: HOT).
In addition, New Jersey-based Prudential Real Estate Investors,
in a joint venture arrangement with HEI, will acquire a 14th
hotel. The total portfolio consists of eight Sheraton hotels,
two Westin hotels, two Hilton hotels, one Marriott-branded hotel
and one independent hotel.
The Partnership plans to sell four of its 13 hotels that it
deems inconsistent with its investment criteria, for an
undisclosed amount. Three of the properties are under binding
agreements to sell. The acquisitions described above are
expected to be consummated by the 2003 third quarter.
Smilezzzz Hospitality, an independent hotel management company
and wholly-owned subsidiary of HEI Hospitality, will manage the
hotels.
"We believe the hotel real estate market is at or near a
cyclical low and that this portfolio is well-positioned to
generate substantial returns for our investors even with only a
modest recovery in the lodging industry," said Clark W.
Hanrattie, partner, Olympus Real Estate Partners. "We expect
these hotels to see near-term benefits from the substantial
renovations completed over the last several years by Starwood,
as well as a return to a more normal corporate travel
environment."
"While these hotels did not fit Starwood's strategic profile,
these high-quality assets meet our criteria of having excellent
upside potential for our investors, especially as the economy
begins to rebound," said Walter P. Schmidt, executive vice
president, Rockwood Capital.
"We have a long history that spans 14 years with HEI and have
the utmost confidence in their ability to add substantial value,
providing the potential for excellent returns," said Roger
Pratt, managing director, PREI.
"About 15 months ago, we formed our company to buy approximately
$500 million in hotels and acquired our first hotel in August
2002," said Gary Mendell, managing partner of HEI Hospitality.
"We believed that the hotel real estate market was entering a
new phase as the economy slowed and viewed this, strategically,
as a window of opportunity to acquire attractive assets. We
believe that there will continue to be excellent opportunities
to acquire hotels for at least the next several years. While we
expect to be an active participant for the remainder of the
year, we plan to focus a substantial portion of our attention on
absorbing these first-class hotels into our portfolio. Starwood
has done a great job in the last several years of building their
brands. We intend to pursue opportunities to build on our
relationship with Starwood, primarily the Westin and Sheraton
brands, and with the other leading hotel brand companies."
"Overall, the hotels are in great physical condition," said
David McCaslin, president of Smilezzzz Hospitality. "Our initial
operations focus will be on installing our management systems
and working together with Starwood and Hilton to further improve
marketing efforts and guest service, which is the key to
building a loyal customer base."
HEI Hospitality, headquartered in Norwalk, Conn. is an
ownership/investment and hotel management group that owns and
manages first-class and full-service hotels throughout the
United States. Smilezzzz is an independent hotel management
company and a wholly owned subsidiary of HEI Hospitality.
Olympus Real Estate Partners is a leading private real estate
investment firm that invests in real property, mortgages and
securities in major markets across the United States. Olympus is
one of the nation's largest domestically focused real estate
firms, having invested more than $5 billion in U.S. real estate
assets, including more than 3.3 million square feet of
commercial space, nearly 52,000 apartment units, 55 resorts and
hotels totaling 9,700 rooms, 40 golf courses and 57 residential
subdivisions. The firm has managed institutional real estate
capital since its inception in 1994, and counts among its
investors some of the largest U.S. public and private pension
funds, as well as a number of endowments, foundations,
corporations, insurance companies and financial institutions.
PREI provides global real estate investment management services
to institutional clients in the United States, Europe, Asia and
Latin America. PREI managed total assets of $21.6 billion on
behalf of 363 institutional clients as of December 31, 2002; net
assets under management (i.e., after deduction of associated
debt and liabilities) were $15.3 billion. For information, visit
http://www.prudential.com/prei
Rockwood Capital is a privately held real estate investment
company that manages a real estate portfolio currently worth
more than $1.5 billion. Since 1980, Rockwood has invested, on
behalf of its investors, more than $1 billion in equity in more
than $3 billion of real estate through four commingled funds and
various special purpose partnerships. Rockwood's investors
include U.S. public and private pension funds, endowments,
institutions and high net-worth individuals.
As reported in Troubled Company Reporter's May 16, 2003 edition,
Fitch Ratings assigned a rating of 'BB+' to the $300 million
in 3.5% convertible senior notes (potentially as much as $360
million including an overallotment option) due 2023 issued by
Starwood Hotels & Resorts Worldwide, Inc.
Proceeds are to be used to repay a portion of outstanding
balances under the revolving credit facility and for general
corporate purposes. The notes will rank pari-passu with all
other senior debt including bank facilities. The notes are not
redeemable prior to May 23, 2006, but may be put to the company
on May 16 of 2006, 2008, 2013 and 2018. The Rating Outlook is
Negative.
The 'BB+' rating reflects the company's standing as one of the
premier global lodging companies, with substantial product and
geographic diversification, strong cash flow generating ability,
and continued access to capital markets. Nonetheless, like its
peers, Starwood has faced persistent industry weakness in
revenue per available room, with little visibility for
improvement in the near term. While debt has been reduced since
year-end 2001, leverage is high for the ratings category, and
continues to climb as EBITDA deterioration has outpaced debt
reduction. However, potential asset sales, forecast by the
company at $1.1 billion in 2003, could accelerate debt reduction
in 2003 and keep credit measures stable.
The Rating Outlook remains Negative due to the weak lodging
fundamentals.
SUN HEALTHCARE: Reports Loan Acceleration and Foreclosure Sale
--------------------------------------------------------------
Sun Healthcare Group, Inc. (OTC BB: SUHG) announced that Dallas
Lease & Finance, L.P., an affiliate of Highland Capital and the
administrative agent under the Term Loan and Note Purchase
Agreement between the Company and certain of its lenders, has
declared the entirety of the Term Loan to be due and payable.
The administrative agent published a notice of a scheduled
foreclosure sale in today's edition of the Wall Street Journal.
In that sale, Highland Capital will seek to sell all of the
stock of certain of the Company's indirect subsidiaries that
provide pharmaceutical services. The Company is currently
negotiating with the term lenders and administrative agent
toward a forbearance agreement.
The Term Loan Agreement is comprised of a three-year $20.0
million term loan and a three-year $23.7 million original issue
discount note of which the Company's borrowing capacity was
limited to $20.0 million. The Term Loan Agreement is secured
primarily by a first security pledge of the stock of
subsidiaries that provide pharmaceutical services and a second
priority security interest in substantially all of the Company's
other assets. The Company received all funds available under the
Term Loan Agreement at the time it emerged from bankruptcy on
February 28, 2002, and no additional funding was or is
anticipated under the Term Loan Agreement. The Company
previously disclosed that the lenders under the Term Loan
Agreement have asserted that the Company is in default of
various covenants thereunder. The Company has also disclosed
ongoing defaults asserted by lenders under its senior revolving
loan agreement.
Richard K. Matros, chairman and chief executive officer of the
Company, stated, "We are in the midst of discussions with our
lenders to address their concerns sufficiently to allow the term
lenders to withdraw the acceleration of the Term Loan and
forbear from exercising their remedies. The Company will
continue to take all actions required to create the greatest
possible value for all of its constituents and stakeholders."
Headquartered in Irvine, California, Sun Healthcare Group, Inc.
owns many of the country's leading healthcare providers. Through
its wholly owned SunBridge Healthcare Corporation subsidiary and
its affiliated companies, Sun's affiliates together operate more
than 200 long-term and postacute care facilities in 25 states.
In addition, the Sun Healthcare Group family of companies
provides high-quality therapy, pharmacy, home care and other
ancillary services for the healthcare industry.
For further information regarding the Company and the matters
reported herein, see the Company's Report on Form 10-K for the
year ended December 31, 2002, a copy of which is available at
the Company's Web site at http://www.sunh.com
THUNDERBIRD MINING: Voluntary Chapter 11 Case Summary
-----------------------------------------------------
Debtor: Thunderbird Mining Co
1200 West Highway 16
Forbes Minnesota 55738
PO Box 180
Eveleth, Minnesota 55734
Bankruptcy Case No.: 03-50641
Type of Business: Supplies work force to parent, Eleveth Mines
LLC
Chapter 11 Petition Date: May 15, 2003
Court: District of Minnesota (Duluth)
Judge: Gregory F. Kishel
Debtors' Counsel: Michael L Meyer, Esq.
Ravich Meyer Kirkman Mcgrath & Nauman
80 S 8th St Ste 4545
Minneapolis, MN 55402
Tel: 612-332-8511
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $10 Million to $50 Million
Debtor's Unsecured Creditors:
Entity
------
The only creditors of this debtor are its employees who are
being paid in the ordinary course of business
THYSSENKRUPP BUDD: On-Going Viability Dependent on Finance Unit
---------------------------------------------------------------
ThyssenKrupp Budd Canada Inc. (BUD:TSX) announced a net loss of
$1.1 million on sales of $156.6 million for the quarter ended
March 31, 2003. This included a $2.6 million non-recurring
recovery of an over accrual of restructuring costs set up at the
2002 fiscal year end. For the same quarter in 2002, a net loss
of $20.5 million on sales of $128.6 million was reported. The
net loss for the first quarter fiscal 2003 ended December 31,
2002 was $3.5 million on sales of $137.7 million.
Higher sales for the second quarter were due to increased
revenues and the additional sales of the extended model of the
GMT360 frames known as the GMT370. Demand for the traditional ST
and Jeep products were steady during the quarter.
Sales for the six month period ended March 31, 2003 were $294.3
million, an increase of $54.7 million over the same period in
2002. The net loss for the six month period ended March 31, 2003
was $4.6 million or $1.22 a share compared to the net loss in
the same period in 2002 of $35.4 million or $9.39 a share.
During the quarter, productivity improvements further reduced
the operating losses. Co-operation from the union and its
membership was a significant factor in these improved results.
Liquidity and Capital Resources
Cash flow generated by operating activities for the six month
period ended March 31, 2003 was $2.3 million. This compared to
cash used in operations of $38.5 million for the same period
last year due mainly to the much lower operating loss in the
first half of 2003. Company debt was paid down by $15.9 million,
while in the same period last year, $23.2 million was borrowed
to cover both operations and investing activities.
The Corporation is current in respect of any financial
obligations. However, its on-going viability is still dependent
on the support of its affiliated company, ThyssenKrupp Finance
Canada, Inc. The Corporation does not have immediate access to
other sources of liquidity.
Outlook
The Corporation believes that the end of the Iraq war and
resulting relief from the potential energy crisis have helped to
maintain and strengthen the North American automotive market in
April. It expects that the traditional "Big 3" automotive
manufacturers will continue new vehicle sales incentives. As a
result, the Corporation's sales should remain steady for the
rest of the fiscal year. Despite operational improvements in the
six months ended March 31, 2003, results for the current fiscal
year remain subject to the continued strong consumer support in
the sport utility market segment. One of our major customer's
assembly plants was shut down due to damage caused by a tornado.
Our shipment schedule to the customer would be adversely
affected in the third quarter resulting in negative impacts to
earnings. In step with the pattern of its major customers, the
Corporation has scheduled a two-week shutdown in July. This
vacation period historically impacts the revenue and profit for
the fourth quarter of the fiscal year.
Corporate Name Change
The Corporation officially changed its name to ThyssenKrupp Budd
Canada Inc. on March 31, 2003 and will be known as such in all
correspondence and official documents. The name change was
approved at the Annual Meeting in February.
ThyssenKrupp Budd Canada Inc. is an automotive manufacturer
specializing in the production of light truck and sport utility
vehicle frames and chassis components.
UNITED AIRLINES: Selling Aircraft to Dubai Air for $55 Million
--------------------------------------------------------------
United Airlines asks Judge Wedoff for authorization to enter
into an Aircraft Purchase and Sale Agreement with Dubai Air
Wing. United proposes to sell one Boeing 747-422 aircraft,
bearing manufacturer's serial number 26906 and U.S. registration
number N109UA, for $55,000,000.
United has been trying to sell the Aircraft utilizing a variety
of marketing techniques including, a listing on its website,
trade show and air show displays, industry publication
advertising and a direct marketing campaign. During this 24-
month effort, United received inquiries from five parties, with
three parties making firm offers for the Aircraft. Dubai
presented the highest and best offer for the Aircraft.
The Aircraft is no longer necessary to the Debtors' operations
or fleet plan. They have been trying to sell the Aircraft for
over two years, and during that time, only three bids were
submitted. Approximately 40% of the sale proceeds -- over
$21,000,000 -- will be applied to the DIP Term Loan while 60% --
over $31,000,000 -- will be applied to the DIP Revolving Loan.
(United Airlines Bankruptcy News, Issue No. 18; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
VALHI INC: Board Declares Regular Quarterly Dividend
----------------------------------------------------
Valhi, Inc. (NYSE: VHI) announced that its board of directors
has declared a regular quarterly dividend of six cents ($0.06)
per share on its common stock, payable on June 30, 2003 to
stockholders of record at the close of business on June 13,
2003.
Valhi also announced that its stockholders elected seven
directors for terms of one year at the annual stockholders
meeting held Wednesday. Valhi's directors are: Thomas E.
Barry, Norman S. Edelcup, W. Hayden McIlroy, Glenn R. Simmons,
Harold C. Simmons, J. Walter Tucker, Jr. and Steven L. Watson.
Valhi, Inc. is engaged in the titanium dioxide pigments,
component products (ergonomic computer support systems,
precision ball bearing slides and security products), titanium
metals products and waste management industries.
As previously reported, Standard & Poor's raised its corporate
credit rating on Valhi Inc., to double-'B' from double-'B'-minus
as a result of improvements to the company's financial profile.
The outlook is stable.
At the same time, Standard & Poor's assigned its double-'B'
corporate credit rating to Kronos International Inc., and
its double-'B'-minus rating to KII's proposed ?270 million
senior secured notes due 2009. The corporate credit and senior
secured ratings on NL Industries Inc. were withdrawn. KII, a
majority-owned indirect subsidiary of Valhi, is a leading
European producer of titanium dioxide (TiO2). A substantial
portion of the proceeds from this financing will be used to
repay NL's senior secured notes due 2003.
VARICK STRUCTURED: Fitch Hatchets 3 Note Classes to BB/BB/B
-----------------------------------------------------------
Fitch Ratings downgrades five classes of notes issued by Varick
Structured Asset Fund, Ltd.
The following classes have been downgraded:
-- Class A-1 floating-rate notes to 'AA+' from 'AAA', removed
from Rating Watch Negative;
-- Class A-2 floating-rate notes to 'AA+' from 'AAA', removed
from Rating Watch Negative;
-- Class B-1 floating-rate notes to 'BB' from 'A-', removed from
Rating Watch Negative;
-- Class B-2 fixed-rate notes to 'BB' from 'A-', removed from
Rating Watch Negative; and
-- Class C floating-rate notes to 'B' from 'BBB', removed from
Rating Watch Negative.
The transaction, a collateralized bond obligation, is supported
by a diversified portfolio of asset-backed securities,
residential mortgage-backed securities and commercial mortgage-
backed securities. The class A-1, A-2, B-1, B-2 and C notes were
placed on Rating Watch Negative on April 24, 2003. Fitch has had
discussions with the Clinton Group, Inc., the asset manager,
regarding the current state of the portfolio and asset
management strategy. Fitch has reviewed the credit quality of
the individual assets comprising the portfolio and has conducted
cash flow modeling of various default timing and interest rate
scenarios. As a result, Fitch has determined that the original
ratings assigned to the class A-1, A-2, B-1, B-2 and C notes of
Varick no longer reflected the current risk to noteholders.
The rating actions are based on a number of factors including
substantial downward rating migration in the credit quality of
the portfolio and a reduction in excess spread. According to the
March 2003 trustee report, the transaction was failing the Fitch
weighted average rating factor test. The Fitch WARF was 20 (or
approximately 'BBB-') for the period ended March 31, 2003. This
exceeds the max WARF limitation of 15 (between 'BBB' and 'BBB-
').
The portfolio contains a number of securities whereby default is
a real possibility, although no defaults have occurred to date.
Fitch believes these factors have negatively impacted the
performance of the transaction to the point where the available
credit enhancement levels no longer support the original
ratings. Approximately 14% of the collateral pool is currently
rated in the non-investment grade category, including 9% rated
'CCC' or below. Varick holds a number of securities that Fitch
has identified as having a potential for adverse impact on the
ability of the CBO to pay ultimate interest and ultimate
principal on the class B and C notes. Two areas where the
portfolio has experienced significant credit deterioration are
aircraft lease and manufactured housing transactions.
WELLS FARGO: Fitch Affirms BB/B Ratings on Classes B-4 & B-5
------------------------------------------------------------
Fitch Ratings has affirmed 3 classes and upgraded 2 classes of
Wells Fargo Asset Securities Corp., Series 2000-3:
Wells Fargo Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 2000-3 --Class B-1 affirmed at 'AAA'; --
Class B-2 upgraded to 'AAA' from 'AA+'; --Class B-3 upgraded to
'AA' from 'A+'; --Class B-4 affirmed at 'BB'; --Class B-5
affirmed at 'B'.
These rating actions are being taken as a result of low
delinquencies and losses, as well as increased credit support.
WHEELING: Has Until July 7, 2003 to Make Lease-Related Decisions
----------------------------------------------------------------
Wheeling-Pittsburgh Steel Corp. and its debtor-affiliates
obtained Judge Bodoh's permission to further extend their
deadline to assume, reject, or assume and assign unexpired
leases of non-residential real property to and including July 7,
2003. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 39;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
WOMEN FIRST: Inks 3-Year Nationwide Agreement with Premier Inc.
---------------------------------------------------------------
Women First HealthCare, Inc. (NASDAQ:WFHC) has signed a
nationwide agreement with the group purchasing arm of Premier
Inc. Under the terms of the agreement, products in the Women
First HealthCare portfolio will be available to nearly 1,500
hospitals and other healthcare sites that use Premier as their
key contracting and purchasing resource.
Under this three-year agreement, Women First HealthCare will be
offering a wide variety of pharmaceutical products including
drugs to address menopausal hot flashes, post-procedural pain
and unwanted facial hair. Women First HealthCare specializes in
products designed for women over 40 nearing or experiencing
menopause. Esclim(TM), the company's transdermal estradiol
system, is included as part of the agreement. Esclim relieves
symptoms attributed to blood vessel dilation, such as hot
flashes and night-sweats, caused by estrogen loss after removal
of the ovaries. Additional products will include pharmaceuticals
for pain and headache management.
Some of the country's best-known not-for-profit hospitals will
have access to Women First HealthCare products. "Women First
HealthCare is pleased to add Premier to its growing list of
pharmaceutical partners. Working through a 1,500-member GPO is a
crucial step toward expanding the presence of our products in
the marketplace," stated Saundra L. Childs, Women First
HealthCare Vice President of the Pharmaceutical Division. "With
an estimated 600,000 hysterectomies performed annually in the
U.S., we are especially pleased that Esclim can now be
prescribed to women immediately post-hysterectomy, and continued
after discharge from the hospital."
Women First HealthCare, Inc. (Nasdaq: WFHC) is a San Diego-based
specialty pharmaceutical company. Founded in 1996, its mission
is to help midlife women make informed choices regarding their
health care and to provide pharmaceutical products -- the
Company's primary emphasis -- and lifestyle products to meet
their needs. Women First HealthCare is specifically targeted to
women age 40+ and their clinicians. Further information about
Women First HealthCare can be found online at
http://www.womenfirst.com
Esclim is indicated for the relief of moderate to severe
vasomotor symptoms associated with menopause.
The most commonly reported side effects of Esclim are those
typical of estrogen therapy: breast tenderness, headache,
nausea, and abdominal pain. Estrogens have been reported to
increase the risk of endometrial carcinoma in postmenopausal
women. Estrogens are contraindicated in patients with known or
suspected pregnancy, undiagnosed abnormal genital bleeding,
known or suspected breast cancer, known or suspected estrogen-
dependent neoplasia, or active thrombophlebitis or
thromboembolic disorders. For more information about this
product and to see the package insert, please visit
http://www.womenfirst.com
As reported in Troubled Company Reporter's May 15, 2003 edition,
Women First HealthCare Inc. received $2.5 million of new capital
through a private placement of its common stock and has
completed agreements to obtain waivers of past defaults and
restructure the terms of both its $28.0 million principal amount
of senior secured notes and convertible redeemable preferred
stock issued to finance the company's acquisition of Vaniqa(R)
Cream.
WORLDCOM INC: Files First Amended Plan and Disclosure Statement
---------------------------------------------------------------
In an attempt to resolve the issues on a consensual basis,
Worldcom Inc., and its debtor-affiliates have drafted and
included in the Disclosure Statement additional information that
is responsive to the objections filed by various creditors.
The material modifications in the Amended Disclosure Statement
dated May 15, 2003 are:
A. Priority Tax Claims: Pursuant to the Plan, except to the
extent that a holder of an Allowed Priority Tax Claim has
been paid by the Debtors prior to the Effective Date or
agrees to a different treatment, each holder of an Allowed
Priority Tax Claim will receive, at the sole option of the
Reorganized Debtors:
(i) cash in an amount equal to the Allowed Priority
Tax Claim on the later of the Effective Date and the
date the Priority Tax Claim becomes an Allowed
Priority Tax Claim, or as soon thereafter as is
Practicable;
(ii) equal annual Cash payments in an aggregate amount
equal to such Allowed Priority Tax Claim, together
with interest at a fixed annual rate equal to 5%,
over a period through the 6th anniversary of the date
of assessment of the Allowed Priority Tax Claim; or
(iii) after the other terms determined by the Bankruptcy
Court to provide the holder of the Allowed Priority
Tax Claim with deferred Cash payments having a value,
as of the Effective Date, equal to the Allowed
Priority Tax Claim.
B. Secured Tax Claims: Pursuant to the Plan, except to the
extent that a holder of an Allowed Secured Tax Claim has
been paid by the Debtors prior to the Effective Date or
agrees to a different treatment, each holder of an Allowed
Secured Tax Claim as of the Record Date will receive, in
full and complete settlement, satisfaction and discharge of
its Allowed Secured Tax Claim, at the sole option of the
Reorganized Debtors:
(i) cash in an amount equal to the Allowed Secured Tax
Claim, including any interest on the Allowed Secured
Tax Claim required to be paid pursuant to Section
506(b) of the Bankruptcy Code, if any, on the later
of the Effective Date and the date the Allowed
Secured Tax Claim becomes an Allowed Secured Tax
Claim; or
(ii) equal annual Cash payments in an aggregate amount
equal to the Allowed Secured Tax Claim, together with
interest at a fixed annual rate equal to 5%, over a
period through the 6th anniversary of the date of
assessment of the Allowed Secured Tax Claim, or after
the other terms determined by the Bankruptcy Court to
provide the holder of the Allowed Secured Tax Claim
deferred Cash payments having a value, as of the
Effective Date, equal to the Allowed Secured Tax
Claim.
Each holder of an Allowed Secured Tax Claim will retain the
Liens securing its Allowed Secured Tax Claim as of the
Effective Date until full and final payment of the Allowed
Secured Tax Claim is made as provided in the Plan, and
after the full and final payment, such Liens will be deemed
null and void and will be unenforceable for all purposes.
C. Convenience Claim: Pursuant to the Plan, each holder of an
Allowed Convenience Claim will receive Cash in an amount
equal to the lesser of 0.40 multiplied by the Allowed
amount of the Convenience Claim or $16,000, in full and
complete satisfaction of the Allowed Claim; provided,
however, that if the holders of Class 4 Convenience Claims
do not accept the Plan by the requisite majorities set
forth in Section 1126(c) of the Bankruptcy Code, then the
holders of Allowed Convenience Claims will be treated as
holders of Allowed WorldCom General Unsecured Claims or
Allowed Intermedia General Unsecured Claims, as
appropriate, and treated in accordance with Section 4.06 or
4.12 of the Plan; provided further, however, that in the
event any election by a holder of an Allowed Convenience
Claim to reduce the amount of its Allowed Claim to $40,000
will be null and void.
D. WorldCom Senior Debt Claims: Pursuant to the Plan, on the
Effective Date, or as soon thereafter as is practicable,
each holder of an Allowed WorldCom Senior Debt Claim may
elect on the Election Form to receive on account of the
Claim:
(i) 14.36 shares of New Common Stock for each $1,000 of
the holder's Allowed WorldCom Senior Debt Claim, or
(ii) New Notes in a principal amount equal to .359
multiplied by the Allowed amount of the WorldCom
Senior Debt Claim, or a combination thereof as set
forth on a properly delivered Election Form or as
modified in the event of an Undersubscription or
Oversubscription, in full and complete satisfaction of
the Allowed Claim.
In the event that Electing Holders have elected to receive
New Notes in an aggregate principal amount greater than
$3,428,000,000, each Electing Holder in Class 5 will
receive:
(i) New Notes in a principal amount equal to the product
of .359 multiplied by the holder's Pro Rated Claim;
and
(ii) 14.36 shares of New Common Stock for each $1,000 of
the holder's Remaining Claim;
provided, however, the Debtors will distribute a
disproportionately greater amount of New Notes to an
Electing Holder or to a Non-Specifying Holder to the extent
necessary, as determined in the reasonable discretion of
the Debtors, to:
(a) avoid any person from becoming a "5% shareholder" or
"5% entity" of Reorganized WorldCom, or
(b) otherwise minimize the amount of New Common Stock that
would be treated as owned for Section 382 purposes by
any "5% shareholder" or "5% entity" of Reorganized
WorldCom or by any person to whom any presumption under
Section 382, which depends on the ownership of less
than 5% of New Common Stock, would not apply.
Holders of WorldCom Senior Debt Claims that are Non-
Specifying Holders will be deemed to have elected to
receive New Common Stock; provided, however, that in the
event of an Undersubscription, the holders will be deemed
to have elected to receive New Notes.
In the event that Electing Holders have elected New Notes
in the aggregate principal amount of less than
$2,428,000,000, New Notes, in an amount equal to the
shortfall, will be distributed first, proportionately to
Non-Specifying Holders and, second, if any shortfall
remains, proportionately to all Electing Holders electing
New Common Stock with a concomitant reduction in the amount
of New Common Stock distributed to the Electing Holders.
E. MCIC Senior Debt Claims: Pursuant to the Plan, on the
Effective Date, or as soon thereafter as is practicable,
each holder of an Allowed MCIC Senior Debt Claim will
receive New WorldCom Notes in a principal amount equal to
.80 multiplied by the principal Allowed amount of the MCIC
Senior Debt Claim, in full and complete satisfaction of the
Allowed Claim. The MCIC Senior Notes Indenture Trustee
will make distribution to or for the benefit of the
beneficial holders of MCIC Senior Debt Claims so that each
holder of an MCIC Senior Debt Claim receives New Notes in
an amount equal to $0.80 on the principal amount of its
MCIC Senior Debt Claim.
F. Intermedia Senior Debt Claim: Pursuant to the Plan, on the
Effective Date, or as soon thereafter as is practicable,
each holder of an Allowed Intermedia Senior Debt Claim may
elect on the Election Form to receive on account of the
Claim:
(i) 37.4 shares of New Common Stock for each $1,000 of
Allowed Intermedia Senior Debt Claim; or
(ii) New Notes in a principal amount equal to .935
multiplied by the Allowed amount of such Intermedia
Senior Debt Claim, or a combination thereof as set
forth on a properly delivered Election Form or as
modified in the event of an Undersubscription or
Oversubscription, in full and complete satisfaction of
the Allowed Claim.
In the event of an Oversubscription, each Electing
Holder in Class 11 will receive:
(i) New Notes in a principal amount equal to the product
of .935 multiplied by the holder's Pro Rated Claim;
and
(ii) 37.4 shares of New Common Stock for each $1,000 of the
holder's Remaining Claim;
provided, however, the Debtors will distribute a
disproportionately greater amount of New Notes to an
Electing Holder or to a Non-Specifying Holder to the extent
necessary, as determined in the reasonable discretion of
the Debtors, to avoid any person from becoming a "5%
shareholder" or "5% entity" of Reorganized WorldCom or
otherwise minimize the amount of New Common Stock that
would be treated as owned for Section 382 purposes by any
"5% shareholder" or "5% entity" of Reorganized WorldCom or
by any person to whom any presumption under Section 382,
which depends upon the ownership of less than 5% of New
Common Stock, would not apply. Holders of Intermedia
Senior Debt Claims that are Non-Specifying Holders will be
deemed to have elected to receive New Common Stock;
provided, however, that in the event of an
undersubscription, the holders will be deemed to have
elected to receive New Notes.
In the event of an Undersubscription, New Notes, in an
amount equal to the shortfall, will be distributed first,
proportionately to holders of WorldCom Senior Debt Claims,
Intermedia Senior Debt Claims, and Intermedia Subordinated
Debt Claims that fail to validly specify an election on
their Election Form and, second, if any shortfall remains,
proportionately to all Electing Holders electing New Common
Stock with a concomitant reduction in the amount of New
Common Stock distributed to the Electing Holders.
G. Intermedia Subordinated Debt Claims: Pursuant to the Plan,
on the Effective Date, or as soon thereafter as is
practicable, each holder of an Allowed Intermedia
Subordinated Debt Claim may elect on the Ballot to receive
on account of the Claim:
(i) 18.56 shares of New Common Stock for each $1,000 of
the holder's Allowed Intermedia Subordinated Debt
Claim; or
(ii) New Notes in a principal amount equal to .464
multiplied by the Allowed amount of such Intermedia
Subordinated Debt Claim, or a combination thereof as
set forth on a properly delivered Election Form or as
modified in the event of an Undersubscription or
Oversubscription, in full and complete satisfaction of
the Allowed Claim.
In the event of an Oversubscription, each Electing Holder
in Class 13 will receive:
(i) New Notes in a principal amount equal to the product
of .464 multiplied by such holder's Pro Rated Claim;
and
(ii) receive 18.56 shares of New Common Stock for each
$1,000 of the holder's Remaining Claim;
provided, however, the Debtors will distribute a
disproportionately greater amount of New Notes to an
Electing Holder or to a Non-Specifying Holder to the extent
necessary, as determined in the reasonable discretion of
the Debtors, to avoid any person from becoming a "5%
shareholder" or "5% entity" of Reorganized WorldCom or
otherwise minimize the amount of New Common Stock that
would be treated as owned for section 382 purposes by any
"5% shareholder" or "5% entity" of Reorganized WorldCom or
by any person to whom any presumption under Section 382,
which depends upon the ownership of less than 5% of New
Common Stock, would not apply. Holders of Intermedia
Subordinated Debt Claims that are Non-Specifying Holders
will be deemed to have elected to receive New Common Stock;
provided, however, that in the event of an
Undersubscription, the holders will be deemed to have
elected to receive New Notes.
In the event of an Undersubscription, New Notes, in an
amount equal to the shortfall, will be distributed first,
proportionately to holders of WorldCom Senior Debt Claims,
Intermedia Senior Debt Claims, and Intermedia Subordinated
Debt Claims that fail to validly specify an election on
their Election Form and, second, if any shortfall remains,
proportionately to all Electing Holders electing New Common
Stock with a concomitant reduction in the amount of New
Common Stock distributed to the Electing Holders.
A free copy of the Debtors' Amended Disclosure Statement is
available at:
http://bankrupt.com/misc/5912_BlacklinedDisclosureStatement.pdf
A free copy of the Debtors' Amended Reorganization Plan is
available at:
http://bankrupt.com/misc/5911_BlacklinedReorgPlan.pdf
(Worldcom Bankruptcy News, Issue No. 28; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ZENITH INDUSTRIAL: Delaware Court Fixes June 27 Claims Bar Date
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware schedules
the final date by which all creditors wishing to assert a claim
against Zenith Industrial Corporation, must file their proofs of
claim or be forever barred from asserting that claim.
The Court rules that all proof of claim must sent so they are
received on or before June 27, 2003, at 4:00 p.m. Exempted from
the Bar Date are:
a) claims not listed in the Schedules as contingent,
unliquidated or disputed;
b) claims already properly filed with the Clerk of the
Court of BSI;
c) Administrative claims of professionals retained by the
Debtor for fees and expenses pursuant to Section 330,
331(a) and 503(b) of the Bankruptcy Code;
d) Claims allowed by order of this Court entered on or
before the Claims Bar Date or claims arising from the
rejection of an executory contract or unexpired lease;
and
e) an person or entity that asserts an administrative
expense claim against the Debtor pursuant to Section
503(b) of the Bankruptcy Code.
Additionally, the Bar Date does not apply to the filing of
proofs of interests in the Debtor. However, any equity security
holder that has a claim arising out of ownership of an equity
security in the Debtor, or arising out of the purchase or sale
of such an interest, must file such claim on or before the
Claims Bar Date.
Proofs of claim sent via first class mail must be addressed to:
Zenith Industrial Corporation
c/o Bankruptcy Services, LLC
PO Box 5112
FDR Station
New York, NY 10150-5112
Proofs of claims sent via FedEx or other similar carrier, must
be delivered to:
Zenith Industrial Corporation
c/o Bankruptcy Services, LLC
70 East 55th Street, Heron Tower, 6th Floor
New York, NY 10022
Zenith Industrial Corporation, a leading worldwide, full-service
Tier 1 supplier of highly engineered metal-formed components,
complex modules and mechanical assemblies for automotive OEMs
filed for chapter 11 protection on March 12, 2002 (Bankr. Del.
Case No. 02-10754). Joseph A. Malfitano, Esq., Edward J.
Kosmowski, Esq., Robert S. Brady, Esq. at Young Conaway Stargatt
& Taylor, LLP and Larry S. Nyhan, Esq., Matthew A. Clemente,
Esq., Paul J. Stanukinas, Esq. at Sidley Austin Brown & Wood
represent the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed
estimated debts and assets of more than $100 million.
* Gary L. Blum to Head Becker & Poliakoff's Bankruptcy Practice
---------------------------------------------------------------
Becker & Poliakoff, P.A., a Florida-based, statewide and
international commercial law firm, appointed Gary L. Blum to
head the firm's growing Bankruptcy & Financial Restructuring
Group. In that capacity, Mr. Blum will work closely with Ivan
Reich and Jason Burnett, who oversee the bankruptcy group's two
main offices in Fort Lauderdale and Jacksonville, respectively.
A former partner in the well-known New York law firm Finley
Kumble, Mr. Blum has concentrated his law practice exclusively
in the area of bankruptcy and insolvency law for over 40 years
and has been lead counsel in numerous high profile bankruptcy
and reorganization cases throughout the country. His work
includes serving as counsel to the Equity Committee in the
Allegheny International Corp. cases, with its complex valuation
and legal issues and extensive corporate governance contests
which produced the first successful public company stockholders'
proxy fight in Chapter 11.
Most recently, along with Mr. Reich, Mr. Blum led Becker &
Poliakoff's representation of the Official Unsecured Creditors'
Committee of Conseco Finance Corp. and Conseco Finance Servicing
Corp., subsidiaries of Conseco, Inc., which filed the third-
largest Chapter 11 bankruptcy in U.S. history on December 17,
2002.
"The firm's Bankruptcy & Financial Restructuring Group has been
one of our top growth areas," said Alan Becker, Esq., a founding
shareholder of Becker & Poliakoff, P.A. "Adding an attorney the
caliber of Gary Blum is going to increase that growth
exponentially. With Gary here to lend his experience, expertise,
and extensive network of contacts, we're very excited about the
opportunities for the group in this expanding area of the law."
Mr. Blum has been actively engaged in more than 600 bankruptcy,
reorganization and restructuring cases during his career. His
advocacy has included representation of secured, unsecured and
partially secured institutional and other creditors; creditors'
committees; equity committees; debtors; trustees; and special
interests. Industries served have included banking and finance,
airlines, electric utilities, oil and gas, manufacturing, real
estate, hotels, and retail chains.
Mr. Blum's experience covers all aspects of bankruptcy
litigation, including avoidance and recovery of preferences,
fraudulent conveyances, corporate governance issues and
invalidating voidable liens and encumbrances.
"Having worked with Gary on a number of cases and experienced
the benefits of his vast knowledge of bankruptcy law, I am truly
excited about working with him on a full-time basis," said Mr.
Reich.
Recent cases for Becker & Poliakoff's Bankruptcy & Financial
Restructuring Group have included the Naranja Lakes Chapter 11
cases, which Mr. Blum and Mr. Reich successfully concluded. The
cases were filed in Miami and involved novel real property,
condominium and bankruptcy issues stemming from the destruction
of improvements to real property caused by Hurricane Andrew. The
firm also recently represented the Official Committee of
Unsecured Creditors and the Liquidating Trustee in the Tutor
Time Learning Centers bankruptcy, and served as counsel to the
Official Committee of Unsecured Creditors in the American
Financial Group of Aventura filing.
Mr. Burnett, the head of the group's Jacksonville office, said,
"While our bankruptcy group has already achieved considerable
success to date, I and all of my colleagues now have a
tremendous opportunity to work with Gary and learn from him to
make this practice even better."
Admitted to the New York Bar in 1959, Mr. Blum is a graduate of
New York University and New York Law School.
Becker & Poliakoff, P.A. is a diversified commercial law firm
based in Fort Lauderdale with more than one hundred attorneys in
fourteen Florida offices and international and affiliated
offices in the Czech Republic, China, Germany, France and
Switzerland. In addition to Bankruptcy, the firm counsels
clients in legal issues relating to Real Estate, Corporate, Tax,
Technology, International Trade, Intellectual Property and many
other areas of law. The firm recently celebrated its 30th
anniversary.
* Restructuring Advisory Expert Bennett Gross Joins Huron
---------------------------------------------------------
Huron Consulting Group announced that Bennett S. Gross has
joined the company as a managing director to help expand the
firm's restructuring practice, with particular focus in the New
York and East Coast markets. Gross will be based in the
company's New York office.
"Bennett brings a diverse business and legal background to
Huron," said Tom Allison, Chief Operating Officer of Huron's
Corporate Advisory Services practice. "His many years of
restructuring experience in a wide variety of industries will be
invaluable to our clients who are faced with financial
distress."
Gross has more than 12 years of restructuring experience and
will provide restructuring consulting services to companies,
creditors and debtors, and parties-in-interest who are
confronted with financial distress by helping them to
restructure their finances and operations, or to enhance value.
He also has significant experience in the retail,
telecommunications and manufacturing industries.
"I am honored to join the many talented professionals at Huron,"
said Gross. "It is exciting to be working to expand a practice
in a company that offers such expertise and experience in a
broad array of disciplines and that is experiencing such
unparalleled growth."
Gross has represented major banking institutions, secured and
unsecured creditors and debtors in complex bankruptcies, DIP
financings, asset dispositions, acquisitions, and out-of-court
restructuring. Prior to joining Huron, Gross practiced in the
restructuring group at Morgan Lewis & Bockius, and led the
bankruptcy of The Caldor Corporation as senior vice president
and general counsel. Gross was also a member of senior
management at R.H. Macy & Co., Inc. and he began his career with
the law firm of Weil Gotshal & Manges.
Gross received his J.D., cum laude, from Georgetown University
and his B.A., summa cum laude, from Penn State University. He
currently resides in Westport, CT with his wife and daughter.
Huron Consulting Group is a 400-person business consulting
organization created on the belief that our people are our
greatest asset and that our clients deserve the very best in
terms of effort, care, and intellectual capacity - delivered
objectively.
Huron Consulting Group provides valuation, corporate finance,
restructuring, and turnaround services to companies and lenders.
It performs financial investigations, litigation analysis,
expert testimony and forensic accounting for attorneys. Huron
provides strategic planning, operational consulting, strategic
sourcing, and organizational and technology assessments in a
variety of industries including manufacturing, healthcare and
pharmaceutical, higher education, law firm and corporate law
departments, transportation, and energy.
Huron Consulting Group operates nationwide with offices in
Boston, Charlotte, Chicago, Houston, Miami, New York, San
Francisco and Washington, D.C.
* BOOK REVIEW: American Economic History
----------------------------------------
Author: Seymour E. Harris, editor
Publisher: Beard Books
Softcover: 560 pages
List Price: $34.95
Review by Gail Owens Hoelscher
Order your personal copy today and one for a colleague at
http://www.amazon.com/exec/obidos/ASIN/158798136X/internetbankrupt/
A classic text on a fascinating topic by a host of notable
authors is again in print. American Economic History is a
collection of 15 studies of the economic development of the
United States from about 1800 to the late 1950s, written by 20
prominent and diverse 20th century thinkers. The authors show
America to be, in the words of contributor Arthur Schlesinger,
Jr., "...a compact example of the growth of an underdeveloped
country into a great and rich industrial state."
The chapters are divided into four topics: major issues, policy
issues, determinants of income, and regional growth. The section
on major issues includes an compelling discussion by Mr.
Schlesinger called "Ideas and the Economic Process." In it, he
claims that the contribution to our unprecedented growth by the
"unfettered individual," the "genius" personage of the American
businessman, has been exaggerated, while the roles of public
policy and the influx of ideas and capital from abroad have been
diminished. Mr. Schlesinger concludes that "(t)he ability to
change one's mind (which is easier in a society in which people
have the freedom to think, inquire and speculate) turns out, in
the last analysis, to be the secret of American economic growth,
without which resources, population, climate and the other
favoring factors would have been of no avail." To complete this
section, Alfred H. Conrad discusses income growth and structural
change over time, and Peter B. Kenan undertook a statistical
survey of growth in population, transportation, output, wealth,
and industry.
The second part deals with policy. J. G. Gurley and E. S. Shaw
discuss the history of U.S. monetary policy, concluding that
"the failure to manufacture enough money may bring on recession
and stultify economic growth, (but) it is also clear . that
merely manufacturing money is not enough." Mr. Harris devotes a
chapter to fiscal policy, defined as an attempt "to adapt tax,
spending, and debt policies to the needs of the economy." He
agrees with Herbert Hoover, in that "when the private economy
was foundering, it was the task of the government to increase
the total amount of purchasing power at the disposal of the
people," and the "medicine for recession was to cut taxes and
increase the total amount of spending." Asher Achinstein
chronicles economic fluctuations in the U.S., and Douglass C.
North the role of the U.S. in the international economy. G. A.
Lincoln, W. Y. Smith, and J. B. Durst recount the effects of war
and defense on the economy.
Part Three deals with determinants of income. In it are thorough
discussions of population and immigration (Elizabeth W. Gilboy
and Edgar M. Hoover); patterns of employment (Stanley
Lebergott); natural resource policies ( Joseph L. Fisher and
Donald J. Patton); transportation (Merton J. Peck); trade
unionism and collective bargaining (Lloyd Ulman); and
agriculture (John D. Black). The writers discuss the historic
linkages between and among population growth, construction, and
transportation growth. Messrs. Fisher and Patton lament the lack
of serious effort to conserve resources until the first quarter
of the 20th century. Professor Ulman concludes that collective
bargaining contributed much to the growth of fringe benefits.
Professor Black charts the decline in relative importance of the
agricultural sector. The book ends with a chapter on regional
income trends, 1840-1950, by Richard A. Easterlin.
Seymour E. Harris (1897-1974), earned undergraduate and doctoral
degrees from Harvard University. He was chairman of the
Department of Economics at Harvard and the University of
California, San Diego. Advisor to numerous government officials,
he was editor of the Review of Economics and Statistics from
1943 to 1964 and associate editor of the Quarterly Journal of
Economics from 1947 to 1974.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices
are obtained by TCR editors from a variety of outside sources
during the prior week we think are reliable. Those sources may
not, however, be complete or accurate. The Monday Bond Pricing
table is compiled on the Friday prior to publication. Prices
reported are not intended to reflect actual trades. Prices for
actual trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies
with insolvent balance sheets whose shares trade higher than $3
per share in public markets. At first glance, this list may
look like the definitive compilation of stocks that are ideal to
sell short. Don't be fooled. Assets, for example, reported at
historical cost net of depreciation may understate the true
value of a firm's assets. A company may establish reserves on
its balance sheet for liabilities that may never materialize.
The prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter
A. Chapman, Editors.
Copyright 2003. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***