/raid1/www/Hosts/bankrupt/TCR_Public/030806.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, August 6, 2003, Vol. 7, No. 154
Headlines
A NOVO: Has Until August 18 to Make Lease-Related Decisions
ABACUS COMMS: U.S. Trustee to Meet with Creditors on August 28
ACTERNA CORP: Court Okays Thelen Reid's Engagement as Counsel
ALLIANCE GAMING: Reports Improved Performance in June Quarter
ALPHASTAR INSURANCE: Nasdaq Knocks-Off Shares Effective Aug. 5
ALPINE GROUP: Completes Exchange Offer for 6% Junior Sub. Notes
AMR CORPORATION: Withdraws Convertible Debt Offering
ANC RENTAL: Court Extends Lease Decision Period Until October 6
ASTROCOM CORP: Will File Chapter 11 Petition Within the Week
AT PLASTICS: Shareholders Approve Proposed Acetex Amalgamation
BEAR STEARNS: Fitch Assigns Ratings to Series 1997-6 Notes
BETHLEHEM STEEL: Joint Plan's Claim Classification and Treatment
BONUS STORES: Bringing-In ADA as Asset Disposition Advisors
BREEZY POINT LLC: Case Summary & 13 Largest Unsecured Creditors
CABLEVISION SYSTEMS: Names Jonathan Schwartz as EVP/Gen. Counsel
CALPINE: Selling Interest in 240-MW Gordonsville Power Plant
CAPITOL COMMUNITIES: Completes Asset Sales Totaling $2.7 Million
CDO CERTIFICATES: S&P Assigns BB/B Ratings to Class J & K Notes
CMS ENERGY: Will Webcast Second Quarter Results on August 12
COGENTRIX ENERGY: Lenders Agree to Forbear Until August 31, 2003
COMDISCO INC: Settles Final Purchase Prices for Asset Sale to GE
COOK ASSOCIATES: Case Summary & 5 Largest Unsecured Creditors
CWMBS (INDYMAC): Fitch Takes Rating Actions on 17 Securitizations
DVI HEALTHCARE: Fitch Further Junks 1998-1 Class C Rating to C
DVI INC: Exploring Options, Including Chapter 11 Filing
EAGLE-PICHER: Extends Tender Offer for 9-3/8% Notes Until Today
EMERALD CASINO: Park Place Delivers Bid to Build Caesars Casino
EMERALD CASINO: Accepting Binding Proposals for Sale of Assets
ENGAGE INC: Sells All Remaining Assets to JDA Software for $3MM
ENRON CORP: Protane Unit Selling Procaribe Assets for $5 Million
FANSTEEL: Inks Definitive Pact to Sell Assets to Investor Group
FIRST INT'L BANK: Fitch Takes Actions on Six Securitizations
FLEMING COMPANIES: Plan Filing Exclusivity Extended to Nov. 27
GALEY & LORD: Obtains Conditional Exclusivity Period Extension
GALEY & LORD: Reduces Total Commitment Under DIP Agreement
GENESIS HEALTH: Continued Improvement in Labor Cost Containment
GLOBAL CROSSING: Consolidated Net Loss for June Tops $99 Million
HORIZON PCS: Streamlines Operations and Terminates 300 Employees
JLG INDUSTRIES: Completes Acquisition of Textron's OmniQuip Unit
JP MORGAN: Fitch Affirms Low-B Ratings on Six Note Classes
KISTLER AEROSPACE: Signs-Up Davis Wright as Bankruptcy Attorneys
LAND O'LAKES: Enters Marketing Agreement with Dairy Marketing
LEAP WIRELESS: Court Approves Fifth Amended Disclosure Statement
LEGACY HOTELS: Successfully Closes Olympic Hotel Acquisition
LUCILLE FARMS: Files March 31, 2003 Annual Report on Form 10-K
MAGELLAN HEALTH: Outlines Distribution of Share After Emergence
MAIL-WELL: 2nd Quarter Results Show Year-Over-Year Improvements
MELLON RESIDENTIAL: Fitch Takes Actions on Various Note Classes
NATIONAL STEEL: Seeks 4th Extension of Solicitation Exclusivity
NATIONSRENT INC: Wants Nod for Guaranty Capital Financing Pact
NEENAH FOUNDRY: Files Prepackaged Chapter 11 Petition in Del.
NEENAH FOUNDRY: Case Summary & 30 Largest Unsecured Creditors
NISTAR: Fitch Ups & Affirms RMBS Ratings from 2 Securitizations
NORTHWESTERN CORP: Fitch Cuts & Places Ratings on Watch Negative
NRG ENERGY: Court Nixes Move to Terminate SC Exclusivity
ODETICS INC: Consummates Lease Obligations Restructuring
ORGANOGENESIS INC: Plan Confirmation Hearing Set for Aug. 12
O'SULLIVAN INDUSTRIES: March 31 Net Capital Deficit Tops $133MM
P-COM INC: Receives $2.8-Million Order from Telcel Radiomovil
PENNSYLVANIA DENTAL: S&P Affirms BB Financial Strength Rating
PETROLEUM GEO: Disclosure Statement Hearing Set for Sept. 10
PG&E NATIONAL: USGen Proposes Interim Compensation Procedures
PHLO CORP: Signs-Up Reznick Fedder as New Independent Auditors
PHLO CORP: Intends to Spin-Off Certain Portions of Business
PILLOWTEX CORP: Taps Debevoise & Plimption as Chapter 11 Counsel
POLAROID: Committee Wants Certain Employee Claims Disallowed
PRIME HOSPITALITY: Promotes Richard T. Szymanski to SVP and CFO
RELIANT RESOURCES: Company's Vice Chairman Stephen Naeve Retires
RENCO METALS: Trustee Sues Brokers, Auditors, Lawyers & Others
RENCO STEEL: Fails to Make Interest Payment on 10-7/8% Sr. Notes
RURAL CELLULAR: June 30 Net Capital Deficit Stands at $487 Mill.
RURAL/METRO CORP: Brings-In Michael S. Zarriello as SVP and CFO
SAFETY-KLEEN CORP: James K. Lehman Appointed as Plan Trustee
SAGENT: Sets New Special Shareholders' Meeting for September 30
SALEM COMMS: Second Quarter Results Enter Positive Territory
SEITEL: Patton Boggs Serves as Seitel Board's Special Counsel
SIEBEL SYSTEMS: Appoints C. Scott Hartz to Board of Directors
SK GLOBAL: UST Convenes Organization Meeting to Form Committees
SOLUTIA INC: Federal Judge Clemon Approves Consent Decree
SPECIAL METALS: Court Conditionally Okays Disclosure Statement
STORAGENETWORKS: To Liquidate Following Low Buy-Out Offers
STRUCTURED ASSET: Fitch Affirms Low-B Ratings on 3 Note Classes
TENET HEALTHCARE: Will Publish Second Quarter Results Tomorrow
U.S. STEEL: Red Ink Continued to Flow in 2003 Second Quarter
VIALINK CO.: Receives $550,000 in Loan Proceeds from Shareholders
WESTAR ENERGY: Will Sell Portion of ONEOK Inc. Share Holdings
WESTERN WIRELESS: Reports Improved Second Quarter Fin'l Results
WHEELING-PITTSBURGH: WHX Q2 Results Swing-Down to $4MM Net Loss
WHITE MOUNTAIN MINING: J. Phillips Wins Watershed Court Decision
WORLDCOM INC: MCI Names Anastasia Kelly as EVP & General Counsel
WORLDCOM INC: MCI Counters AT&T Objection to Chapter 11 Plan
WORLDCOM INC: Wants Clearance for Metromedia Asset Exchange Deal
* Meetings, Conferences and Seminars
*********
A NOVO: Has Until August 18 to Make Lease-Related Decisions
-----------------------------------------------------------
By order of the U.S. Bankruptcy Court for the District of
Delaware, A Novo Broadband obtained an extension of its lease
decision period. The Court gives the Debtors until August 18,
2003, to decide whether to assume, assume and assign, or reject
its unexpired nonresidential real property leases.
A Novo Broadband, Inc., a business engaged primarily in the repair
and servicing of broadband equipment for equipment manufacturers
and operators of cable and other broadband systems in North
America, filed for chapter 11 petition on December 18, 2002
(Bankr. Del. Case No. 02-13708). Brendan Linehan Shannon, Esq.,
M. Blake Cleary, Esq., at Young, Conaway, Stargatt & Taylor
represent the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed
$12,356,533 in total assets and $10,577,977 in total debts.
ABACUS COMMS: U.S. Trustee to Meet with Creditors on August 28
--------------------------------------------------------------
The United States Trustee will convene a meeting of Abacus
Communications LC's creditors at 2:00 p.m. on August 28, 2003,
at the Office of the U.S. Trustee, 200 Granby Street, Federal
Building, Room 631, Norfolk, Virginia. This is the first meeting
of creditors required under 11 U.S.C. Sec. 341(a) in all
bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
All creditors wishing to assert a claim against the Debtor's
estates must file their proofs of claim form on or before
November 26, 2003, or be forever barred from asserting that claim.
January 28, 2004 is the Governmental Claims Bar Date.
Abacus Communications LC, headquartered in Virginia Beach,
Virginia is an outsourcing service bureau. The Company filed for
chapter 11 protection on August 1, 2003 (Bankr. E.D. Va. Case No.
03-75562). Frank J. Santoro, Esq., and Karen M. Crowley, Esq., at
Marcus, Santoro & Kozak, P.C., represent the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed $12,750,352 in total assets and
$13,049,014 in total debts.
ACTERNA CORP: Court Okays Thelen Reid's Engagement as Counsel
-------------------------------------------------------------
Acterna Corp., and its debtor-affiliates sought and obtained the
Court's authority to employ Thelen Reid & Priest LLP as:
* special corporate counsel, and
* conflicts counsel to the extent the Debtors' general
bankruptcy counsel cannot represent them in bankruptcy
matters due to a conflict of interest.
The Debtors explain that their decision to employ Thelen Reid as
special corporate counsel and conflicts counsel is due to the
fact that Eric W. Cowan, Esq., has advised and assisted them in
certain ongoing corporate transactions. Prior to the Petition
Date, Mr. Cowan worked as a partner at the law firm of Akin Gump
Strauss Hauer & Feld LLP. While working at Akin Gump, Mr. Cowan
was corporate counsel to the Debtors. In May 2003, Mr. Cowan
left Akin Gump and joined Thelen Reid as a partner in its Business
& Finance Practice Group. Mr. Cowan represented the Debtors in
connection with negotiations of outsourcing their manufacturing
operations and related activities to a third party as well as with
the sale of substantially all the assets of one of the Debtors'
non-core businesses. As a result of these representations, the
Debtors believe that Mr. Cowan has acquired a familiarity with
their operations and personnel.
The Debtors consider Thelen Reid as both well qualified and
uniquely able to represent them as special counsel in the most
efficient and timely manner. Thelen Reid is a national law firm
with more than 400 lawyers in six offices located in the United
States.
Thelen Reid will provide various legal services to the Debtors in
its role as special corporate counsel, including:
(a) consulting with and advising the Debtors concerning
transactional matters;
(b) negotiating, preparing and revising documentation that
reflects proposed sale transactions; and
(c) representing the Debtors in contracts and transactions.
Thelen Reid will be compensated according to its customary hourly
rates, subject to periodic adjustments:
Partners, Senior Counsels, $210 - 625
Counsel and Associates
Paralegals 140 - 190
The Debtors will also reimburse Thelen Reid for its actual,
necessary expenses.
Mr. Cowan assures the Court that the members, counsel and
associates of Thelen Reid have not represented and do not have
any connection with the Debtors, their creditors, or any other
parties-in-interest to the case. Mr. Cowan attests that Thelen
Reid is "disinterested" within the meaning of Section 101(14) of
the Bankruptcy Code and does not hold or represent any interest
adverse to the Debtors or their estates. (Acterna Bankruptcy News,
Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ALLIANCE GAMING: Reports Improved Performance in June Quarter
-------------------------------------------------------------
Alliance Gaming Corporation (NYSE: AGI) announced earnings for its
fourth fiscal quarter ending June 30, 2003. Income from continuing
operations for the fourth quarter totaled $15.0 million on
revenues from continuing operations of $121.1 million.
For the comparable quarter ended June 30, 2002, the Company
reported income from continuing operations (before one-time tax
benefit of $37 million) of $10.8 million on revenues of $86.5
million. For the fiscal year ended June 30, 2003, income from
continuing operations totaled $40.4 million, compared to $30.0
million for the prior year (before the one-time tax benefit). The
fiscal 2002 results included no Federal income tax expense due to
the utilization of net operating loss carry forwards and other tax
credits. Assuming Federal income taxes had been recognized in
fiscal 2002, EPS from continuing operations would have been $0.09
and $0.34 for the quarter and fiscal year ended June 30, 2002,
respectively.
Discontinued Operations
As previously announced, the Company has entered into definitive
agreements to divest certain non-core assets including its route
operations (United Coin Machine Co. and Video Services, Inc.) and
its German wall machine and amusement games business unit (Bally
Wulff). In July 2003 the Company completed the sale of Bally
Wulff and received $16.5 million in cash, and recorded a charge in
the June 2003 quarter of $25.4 million for the final write down of
the Bally Wulff assets to the sale price, which included a $12.0
million non-cash charge for the recognition of the cumulative
translation losses. The sale of the route operations is expected
to be completed in calendar 2004.
For purposes of financial reporting, each of these three
businesses are now treated as discontinued operations, and their
results are presented net of applicable income taxes below Income
From Continuing Operations in the accompanying unaudited
statements of operations. The net assets of these businesses are
now classified as Assets Held For Sale in the accompanying
unaudited balance sheets.
Consolidated results for the June 2003 quarter include:
* Revenues from continuing operations of $121.1 million, an
increase of 40% from the $86.5 million in the prior year
quarter, led by a 49% increase in revenues at the Bally
Gaming and Systems business unit.
* Operating income from continuing operations of $28.4
million, an increase of 86% from the $15.3 million in the
prior year quarter.
* Income from continuing operations of $0.30 per diluted
share, an increase of 38% compared to the prior year
quarter of $0.22 per diluted share (or a 232% increase if
compared to the pro forma after-tax income of $0.09 per
diluted share).
* Total net income (loss), including discontinued operations
and the loss on the sale of Bally Wulff, totaled $(0.23)
per diluted share, compared to $0.56 per diluted share in
the prior year quarter.
* EBITDA of $34.5 million, an increase of 76% from the $19.6
million in the prior year quarter, led by a 89% increase at
Bally Gaming and Systems.
Consolidated results for the June 2003 fiscal year include:
* Revenues from continuing operations of $407.6 million, an
increase of 38% from the $296.1 million in the prior year.
* Operating income from continuing operations of $89.9
million, an increase of 57% from the $57.1 million in the
prior year.
* Income from continuing operations of $0.81 per diluted
share, an increase of 28% compared to the prior year of
$0.63 per diluted share (or a 138% increase if compared to
the pro forma after-tax income of $0.34 per diluted share).
* Total net income, including discontinued operations,
totaled $0.39, compared to $1.34 in the prior year.
* EBITDA of $111.5 million, an increase of 56% from the $71.7
million in the prior year.
Cash and Capital Expenditures
* As of June 30, 2003, cash and cash equivalents for the
Company's continuing operations totaled $40.2 million,
which included approximately $3.8 million held for
operational purposes in vaults, cages and change banks and
$14.5 million held in jackpot reserve accounts. These
amounts exclude cash and cash equivalents of the
discontinued operations which are now included in Assets
Held For Sale.
* For the quarter ended June 30, 2003, consolidated capital
expenditures, including costs to produce proprietary games,
totaled $9.3 million compared to $5.2 million for the prior
year quarter. The current period capital expenditures were
driven by the continued deployment of wide-area progressive
and daily-fee games. A total of $1.6 million was incurred
for capital expenditures for our discontinued operations.
Other financial highlights:
* Consolidated net interest expense for the current quarter
totaled $6.1 million compared to $6.7 million in the prior
year period, resulting from lower interest rates on the
Company's term loan facility.
* Since July 1, 2002, the Company has been recognizing
Federal income tax expense based on 35% of pre-tax domestic
income and State income taxes at a rate of approximately 2%
of domestic income. The fiscal 2002 actual results include
no Federal income tax expense as all domestic earnings were
offset against net operating loss carry forwards, but does
include a one-time tax benefit of $37.0 million for the
reduction of previously recorded deferred tax valuation
reserves. For fiscal 2003, the discontinued operations are
presented net of applicable Federal and State income taxes
and the Bally Wulff results are presented net of a tax
benefit of $16.8 million from the capital loss resulting
from the sale of the business.
Fiscal Year 2004 Guidance
* For fiscal 2004, the Company expects earnings from
continuing operations of at least $1.10 per diluted share
on revenues of approximately $460 million and EBITDA of
approximately $130 million. This fiscal year 2004 earnings
guidance reflects a 36% increase in earnings per share as
compared to $0.81 of earnings from continuing operations
for fiscal 2003. This guidance reflects the lower interest
expense associated with the anticipated refinancing
transaction, but is a non-GAAP financial measure as it
excludes the effects of two previously reported items which
are anticipated to occur in fiscal 2004, including: 1) the
net gain from the sale of the Route Operations of at least
$0.60 per share, and 2) an after tax charge of
approximately $0.16 per share related to the refinancing
transaction including $5 million for the early
extinguishment of the 10% Subordinated Notes and $7 million
for the non-cash write-off of unamortized debt issue costs.
Alliance Gaming Corporation is a diversified gaming company
headquartered in Las Vegas, Nevada. The Company is engaged in the
design, manufacture, operation and distribution of advanced gaming
devices and systems worldwide and is currently the nation's
largest gaming machine route operator and operates two casinos.
Additional information about the Company can be found on the
Alliance Gaming web site at: http://www.alliancegaming.com
As reported in Troubled Company Reporter's July 7, 2003 edition,
Standard & Poor's Ratings Services affirmed Alliance Gaming Corp's
'BB-' corporate credit rating following Alliance's announcement
that it signed a definitive agreement to sell both its slot route
operations (United Coin Machine Co. and Video Services, Inc.) and
its German wall machine manufacturing (Bally Wulff) segments.
The 'BB-' bank loan and 'B' subordinated debt ratings also were
affirmed. The outlook is stable.
ALPHASTAR INSURANCE: Nasdaq Knocks-Off Shares Effective Aug. 5
--------------------------------------------------------------
Nasdaq Listing Qualifications Department delisted AlphaStar
Insurance Group Limited's (Nasdaq: ASIGE) securities effective the
opening of business on Tuesday, August 5, 2003. The reason for
the delisting is the Company's inability to demonstrate full
compliance with the requirements for continued listing on The
Nasdaq Small Cap Market. In particular, the Company has failed to
timely file its Annual Report on Form 10-K for the fiscal year
ended December 31, 2002 and its Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 2003. The Company therefore
was not in compliance with the filing requirements for continued
listing set forth in NASD Marketplace Rule 4310 (c)(14), which
requires that Nasdaq issuers timely file their periodic reports in
compliance with the reporting obligations under the federal
securities laws.
The Company's were not immediately eligible for trading on the OTC
Bulletin Board due to these same filing deficiencies.
Stephen A. Crane, the Company's Chairman, President and Chief
Executive Officer, commented that: "We believe that the current
regulatory environment, together with the Company's publicly
announced plans to divest itself of a major subsidiary and its
deteriorating overall results, have delayed completion of our
periodic reports. We will continue to work with the auditors to
try to bring this gridlock to an end."
As of the opening of business on April 22, 2002, the Company's
trading symbol, "ASIG", was amended to include the fifth character
"E" to denote the Company's filing delinquency.
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.
ALPINE GROUP: Completes Exchange Offer for 6% Junior Sub. Notes
---------------------------------------------------------------
The Alpine Group, Inc. (OTC Bulletin Board: ALPG.OB) announced the
results of its offer to exchange up to $10 million principal
amount of its 6% Junior Subordinated Notes for shares of its
common stock. The exchange offer expired in accordance with its
terms Monday at 5:00 P.M., New York City time.
As of the expiration of the exchange offer, Alpine has accepted
all of the shares of its common stock that were validly tendered
and not properly withdrawn in accordance with the terms of the
offer. The exchange agent for the offer has advised Alpine that,
as of the expiration of the offer, an aggregate of 15,535,754
shares of Alpine common stock were tendered pursuant to the offer,
representing approximately 22.4% of the Alpine shares outstanding.
As previously announced, Alpine intends to offer holders of its
common stock the right to subscribe for shares of Series A
Convertible Preferred Stock in proportion to their common stock
ownership. The full terms of this rights offering will be
contained in a registration statement which Alpine intends to file
as promptly as practicable with the United States Securities and
Exchange Commission. This rights offering will be made only
pursuant to an effective registration statement filed with the
SEC.
The Alpine Group, Inc., headquartered in New Jersey and whose
March 31, 2003 balance sheet shows a total shareholders' equity
deficit of about $831 million, is a holding company which owns
100% of Essex Electric Inc. and DNE Systems, Inc. Essex Electric
Inc. is a leading manufacturer of a broad range of copper
electrical wire for residential, commercial and industrial
buildings for sale to electrical distributors and retailers. DNE
Systems Inc. is a designer and manufacturer of communications
equipment, integrated access devices and other electronic
equipment for defense, government and commercial applications.
AMR CORPORATION: Withdraws Convertible Debt Offering
----------------------------------------------------
AMR Corp. (NYSE: AMR) announced that due to the state of current
market conditions, it has decided not to sell a convertible debt
offering launched Monday.
"With the significant improvement we have seen in AMR's operating
results beginning in May, and with our strong cash balance of more
than $2.7 billion, we felt it made no sense to proceed with this
transaction in market conditions as they evolved [Mon]day, and
which are at odds with the growing improvement of our company,"
said AMR's Senior Vice President and Chief Financial Officer
Jeffrey Campbell.
AMR last Friday (Aug. 1) reported a record high July load factor
of 81 percent resulting from strong gains in both domestic and
international markets. Additionally, the company estimated that
unit revenues improved an estimated nine to 11 percent from their
levels of the same period a year ago.
More information on AMR Corp. can be obtained at its Web site at
http://www.amrcorp.com
As reported in Troubled Company Reporter's June 24, 2003 edition,
Standard & Poor's Ratings Services raised its ratings of AMR Corp.
(B-/Negative/--) and subsidiary American Airlines Inc.,
(B-/Negative/--), including raising the corporate credit ratings
of each to 'B-' from 'CCC'. The ratings were removed from
CreditWatch, where they were placed with developing implications
on March 28, 2003. S&P says the outlook is negative. AMR's
balance sheet shows that the carrier is insolvent with liabilities
exceeding assets by more than $100 million.
ANC RENTAL: Court Extends Lease Decision Period Until October 6
---------------------------------------------------------------
U.S. Bankruptcy Court Judge Walrath granted ANC Rental Corporation
and its debtor-affiliates the extension of their deadline by which
they must determine whether to assume, assume and assign, or
reject their remaining unexpired leases. Their lease decision
deadline is extended until October 6, 2003. (ANC Rental Bankruptcy
News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
ASTROCOM CORP: Will File Chapter 11 Petition Within the Week
------------------------------------------------------------
Astrocom Corporation (OTCBB:ATCC) announced that due to continuing
financial difficulties it has become reasonably likely that a
Chapter 11 bankruptcy filing will be made by the Company later
this week.
AT PLASTICS: Shareholders Approve Proposed Acetex Amalgamation
--------------------------------------------------------------
AT Plastics Inc. (TSX: ATP) announces that at a special meeting
held on Aug. 1, shareholders of AT Plastics voted 95.5% in favor
of the proposed merger with Acetex Corporation (TSX: ATX)
previously announced on June 20, 2003.
The merger will create an integrated chemical company focusing on
specialty plastics and intermediate chemicals serving customers
around the world. Under the merger agreement, AT Plastics will
become a wholly-owned subsidiary of Acetex. Shareholders of AT
Plastics will receive one common share of Acetex in exchange for
every six common shares of AT Plastics held.
AT Plastics develops and manufactures specialty polymers and films
products. Specialty polymers are used in the manufacture of a
variety of plastics products, including packaging and laminating
products, auto parts, adhesives and medical products. The films
business focuses on products for the agricultural, horticultural
and constructions industries. The company operates in niche
markets where its product development and process engineering have
allowed it to develop proprietary and patented technologies to
meet evolving customer requirements. Products are sold in the
United States, Canada and throughout the world. AT Plastics
manufacturing operations are located in Edmonton, Alberta.
AT Plastics Inc.'s June 30, 2003 balance sheet shows that its
total current liabilities outweighed its total current assets by
about $94 million, while its total accumulated deficit of about
$60 million.
BEAR STEARNS: Fitch Assigns Ratings to Series 1997-6 Notes
----------------------------------------------------------
Fitch Ratings has taken rating actions on the following Bear
Stearns Mortgage Securities Inc., mortgage pass-through
certificates, series 1997-6:
Bear Stearns Mortgage Securities Inc., mortgage pass-through
certificates, series 1997-6 ARM
-- Class 3A affirmed at 'AAA'.
Bear Stearns Mortgage Securities Inc., mortgage pass-through
certificates, series 1997-6 FRM
-- Class 1A -2A affirmed at 'AAA';
-- Class B-1 affirmed at 'AA';
-- Class B-2 affirmed at 'A';
-- Class B-3 affirmed at 'BBB';
-- Class B-4 downgraded to 'CCC' from 'BB' and removed
from Rating Watch Negative.
These rating actions are being taken as a result of low
delinquencies and losses, as well as increased credit support.
BETHLEHEM STEEL: Joint Plan's Claim Classification and Treatment
----------------------------------------------------------------
In accordance with Section 1122 of the Bankruptcy Code, Bethlehem
Steel Corporation's Joint Plan provides for the classification of
Classes of claims and equity interests. Pursuant to Section
1123(a)(1), Administrative Expense Claims and Priority Tax Claims
are not classified and the holders of these Claims are deemed to
vote in favor of the Plan because their claims will be paid in
full.
Classes 1, 2, and 3 are impaired under the Plan, and holders of
Claims in these Classes are entitled to vote to accept or reject
the Plan. Holders of Equity Interests in Class 4, on the other
hand, will not receive any recovery, and are, therefore, deemed
to reject the Plan.
The Debtors believe that this classification of Claims and Equity
Interests is appropriate and consistent with applicable law:
Class Description Treatment
----- ------------ ---------
N/A Administrative Expense 100% recovery
Claims
N/A Priority Tax Claims 100% recovery
1 Other Secured Claims At the Debtors' option,
claimants may receive:
-- Cash equal to 100% of the
unpaid amount of the
Allowed Other Secured
Claim;
-- The proceeds of the sale
or disposition of the
Collateral securing the
Allowed Other Secured
Claim to the extent of
the value of the holder's
secured interest in the
Allowed Other Secured
Claim, net of the
costs of disposition of
the Collateral;
-- The Collateral securing
the Allowed Other Secured
Claim;
-- Treatment that leaves
unaltered the legal,
equitable, and
contractual rights to
which the holder of the
Allowed Other Secured
Claim is entitled; or
-- Other distribution as
necessary to satisfy the
requirements of the
Bankruptcy Code.
2 Priority Non-Tax 100% recovery
Claims
3 General Unsecured 0.3% recovery
Claims
Claimholders will get Pro
Rata Share of the beneficial
interests in the Liquidating
Trust.
Distributions to holders of
Allowed General Unsecured
Claims will be made by the
Trustee upon liquidation of
the Liquidating Trust
Assets.
4 Equity Interests 0% Recovery
All Equity Interests:
-- issued by the Debtors
will be cancelled and one
new share of the Debtors'
common stock will be
issued to a custodian to
be designated by
Bethlehem, who will hold
the share for the benefit
of the holders of the
former Equity Interests
consistent with their
former economic
entitlements.
-- of the other Debtors
will be cancelled when
the Debtors are dissolved
or merged out of
existence in accordance
with the Plan provisions.
Each Equity Interest holder
will neither receive nor
retain any property or
interest in property on
account of the Equity
Interest.
Each holder of an Equity
Interest will not receive
any recovery.
All of Bethlehem's common
stock of will be cancelled
on the date Bethlehem is
dissolved.
The Debtors estimate the amount of Allowed Administrative Expense
Claims as of the Effective Date to be $25,800,000, and
$2,600,000, for Allowed Priority Tax Claims. Allowed Class 1
Claims are estimated at $2,000,000 and Allowed Class 3 Claims at
$5,000,000,000.
According to Lonnie A. Arnett, Bethlehem Vice-President,
Controller, and Chief Accounting Officer, the distribution under
the Plan of the beneficial interests in the Liquidating Trust and
the Consideration Shares to holders of Allowed General Unsecured
Claims satisfies the requirements of Section 1145(a)(1) of the
Bankruptcy Code and are, therefore, exempt from the registration
requirements of the Securities Act. The beneficial interests in
the Liquidating Trust will be non-certificated and non-
transferable.
Mr. Arnett explains that Section 1145 of the Bankruptcy Code
provides that the securities registration requirements of federal
and state securities laws do not apply to the offer or sale of
stock, warrants, or other securities by a debtor or a successor
to the debtor if:
(i) the offer or sale occurs under a Chapter 11 plan;
(ii) the recipients of securities hold a claim against, an
interest in, or a claim for administrative expense
against the debtor; and
(iii) the securities are issued in exchange for a claim against
or interest in a debtor or are issued principally in the
exchange and partly for cash and property.
The plan classifies the Allowed Claims in Class 1 as a single
class. However, this class is actually a group of subclasses,
depending on the underlying property securing the Allowed claims,
and each subclass is treated as a distinct Class for voting and
distribution purposes, Mr. Arnett says.
Distributions to any holder of an Allowed Claim will be allocated
first to the principal portion of the Allowed Claim. Only after
this portion is fully satisfied in full will the portion
comprising allowable interest be satisfied.
Minimum Distributions and Fractional Shares
No payment of cash less than $10 will be made by the Trustee to
any holder of a General Unsecured Claim. This amount reflects
the point in which the Debtors believe the expected cost of
distribution will equal or exceed the amount distributable. No
fractional shares of Consideration Shares will be distributed.
For purposes of distribution, fractional shares of Consideration
Shares will be rounded down to the next whole number or zero, as
applicable. Any Liquidating Trust Assets, which are
undistributable in accordance with the Plan, will be distributed
to a charitable organization exempt from federal income tax under
Section 501(c)(3) of the Tax Code to be selected by, and
unrelated to, the Trustee. (Bethlehem Bankruptcy News, Issue No.
40; Bankruptcy Creditors' Service, Inc., 609/392-0900)
BONUS STORES: Bringing-In ADA as Asset Disposition Advisors
-----------------------------------------------------------
Bonus Stores, Inc., is seeking permission from the U.S. Bankruptcy
Court for the District of Delaware to retain Asset Disposition
Advisors, LLC as asset disposition advisors and consultants.
The Debtor employs ADA in connection with the commencement and
prosecution of this chapter 11 case, and more specifically, the
implementation of the Debtor's ongoing store closing program.
The Debtor has selected ADA because the Debtor believes that ADA
has developed an expertise that will be helpful in assisting the
Debtor in its effort at achieving maximum realizable value for the
Debtor's inventory and trade fixture assets in its 238 closing
stores, and generally in implementing the ongoing store closing
program. ADA's efforts will be focused on assisting and guiding
the Debtor in the process of conducting physical inventory counts,
and reconciling it with the Debtor's liquidating agents.
ADA is intimately familiar with retail businesses generally, and
the Debtor's business operations and is well regarded and a leader
in the distressed asset liquidation/disposition field.
Barry Gold, a principal of ADA, will be responsible for performing
work in this chapter 11 case. Mr. Gold discloses that his current
hourly rate is $500 per hour. Hourly rates of professionals that
may apply in this retention are:
Senior Consultants $450 to $495 per hour
Junior Consultants $365 to $225 per hour
Support Staff $ 75 to $150 per hour
Bonus Stores, Inc., headquartered in Columbia, Mississippi, is a
chain of over 360 stores in 13 Southeastern states that offers
everyday deep discount prices on basic everyday items. The
Company filed for Chapter 11 protection on July 25, 2003 (Bankr.
Del. Case No. 03-12284). Joel A. Waite, Esq., at Young Conaway
Stargatt & Taylor, represents the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed an estimates debts and assets of over $50
million each.
BREEZY POINT LLC: Case Summary & 13 Largest Unsecured Creditors
---------------------------------------------------------------
Lead Debtor: Breezy Point, LLC
1866 Beam Avenue
Maplewood, Minnesota 55109
Bankruptcy Case No.: 03-45440
Type of Business: Hotel
Chapter 11 Petition Date: August 1, 2003
Court: District of Minnesota (Minneapolis)
Judge: Nancy C. Dreher
Debtor's Counsel: Steven Nosek, Esq.
701 Fourth Avenue
South Suite 300
Minneapolis, MN 55415
Total Assets: $7,959,076
Total Debts: $8,012,690
Debtor's 13 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Breezy Point Development $283,895
1866 Beam Avenue
Maplewood, MN 55109
Robert Cline $266,699
68 Courtside Circle
San Antonio, TX 78216
David Weber $233,266
Steve Anderson $132,000
Whitebirch, Inc. $90,923
Cartier Agency $38,000
River Valley Development Corp. $19,920
Ralph Tully $9,014
City of Breezy Point $4,020
Siteworks Unlimited $1,315
Charter Comm $1,166
First Colony Life Insurance $1,001
First Colony Life Insurance $546
CABLEVISION SYSTEMS: Names Jonathan Schwartz as EVP/Gen. Counsel
----------------------------------------------------------------
Cablevision Systems Corporation (NYSE: CVC) has appointed Jonathan
D. Schwartz as the company's executive vice president and general
counsel. In this role, Mr. Schwartz will oversee and direct all of
Cablevision's legal affairs. He will report to Cablevision
President and CEO James L. Dolan.
Mr. Schwartz, 41, has a wide range of private and public sector
experience. Most recently, he served as senior vice president and
deputy general counsel for AOL Time Warner Inc. Prior to that, Mr.
Schwartz was general counsel for Napster, Inc.
Starting in 1995, Mr. Schwartz held a series of high-level
positions in government, culminating with his role as Principal
Associate Deputy Attorney General for the United States Department
of Justice in Washington. He advised the Attorney General on a
range of legal issues of nationwide importance and served as the
senior day-to-day manager of the department. Prior to his role in
Washington, he also served as a federal prosecutor in Manhattan.
Mr. Schwartz succeeds Robert Lemle, who headed Cablevision's legal
department for more than 20 years. Mr. Lemle left the position of
general counsel at the end of 2002 and continues to serve as a
consultant at Cablevision.
Mr. Dolan said: "Jonathan Schwartz comes to Cablevision with a
distinguished background and broad experience that includes senior
roles at both AOL Time Warner and Napster and leadership positions
with the federal government. He has already achieved a great deal
in his professional life, we believe he will be an excellent
addition to Cablevision's senior management team and we look
forward to a long association with him."
Mr. Schwartz said: "Cablevision is a first-rate, diversified media
and entertainment company with terrific assets and enormous
opportunities. I look forward to working with the company's
management team to pursue the many prospects that lie ahead for
Cablevision."
Mr. Schwartz served as a law clerk for both Judge Harry T. Edwards
of the U.S. Court of Appeals for the District of Columbia Circuit,
and for Justice Thurgood Marshall of the U.S. Supreme Court. He
also served in the litigation department of the New York office of
Jones, Day, Reavis & Pogue.
A Long Island native, Mr. Schwartz graduated summa cum laude from
the Wharton School of the University of Pennsylvania and finished
first in his class at Stanford Law School. He was awarded a
Fulbright Scholarship to attend Cambridge University, where he
earned a master's degree with distinction in international
relations.
Mr. Schwartz is a member of the New York and District of Columbia
bars. In 1998, he was named one of the top 40 lawyers under the
age of 40 by Washingtonian magazine. In 1999, Mr. Schwartz was
selected as a Fellow at Harvard University's Institute of
Politics. The Department of Justice honored him in 2001 with the
prestigious Edmund J. Randolph Award, given by the Attorney
General for outstanding service to the Department of Justice.
Cablevision Systems Corporation is one of the nation's leading
entertainment, media and telecommunications companies. In addition
to its broadband, cable, Internet and telephone offerings, the
company owns and operates Rainbow Media Holdings, Inc. and its
networks; Madison Square Garden and its teams; and Clearview
Cinemas. In addition, Cablevision operates New York's famed Radio
City Music Hall. Additional information about Cablevision Systems
Corporation is available on the Web at http://www.cablevision.com
As reported in Troubled Company Reporter's July 11, 2003 edition,
Standard & Poor's Ratings Services placed the ratings on
Cablevision Systems Corp. and related entities on CreditWatch with
negative implications, including the 'BB' corporate credit rating
on the company.
At March 31, 2003, Cablevision's total debt outstanding was $6.4
billion, excluding collateralized indebtedness of $1.6 billion.
The company's preferred stock totaled another $1.6 billion.
CALPINE: Selling Interest in 240-MW Gordonsville Power Plant
------------------------------------------------------------
Calpine Corporation (NYSE: CPN) plans to sell its unconsolidated,
50-percent interest in the 240-megawatt Gordonsville Power Plant
to Dominion Virginia Power, an affiliate of Dominion. Under the
terms of the transaction, Calpine will receive a $31.5 million
cash payment, which includes a $26 million payment from Dominion
and a separate $5.5 million payment from the project for return of
a debt service reserve. Calpine's 50-percent share of the
project's non-recourse debt at closing was approximately $44
million. The company expects to complete the transaction in the
fourth quarter of 2003, pending regulatory and other third-party
approvals.
Calpine acquired its interest in the natural gas-fired facility in
1997. Located in Gordonsville, Virginia, the facility was
commissioned in 1993 and provides electricity to Dominion under
power sales agreements ending in 2024. As a cogenerator, the
Gordonsville facility also supplies steam to Rapidan Services, the
local water authority, under a long-term steam sales agreement.
The Gordonsville sale represents another capital-raising event
involving Calpine's Qualifying Facilities. Calpine Senior Vice
President Carolyn Marsh stated, "Enhancing liquidity while
sustaining long-term value continues to be one of Calpine's
highest priorities. In addition to the Gordonsville transaction,
we've sold the De Pere Energy Center, completed the Newark and
Parlin financing, and sold an equity interest in the King City
Power Plant. Calpine continues to enhance liquidity through its QF
program and is currently evaluating additional opportunities."
As a cogenerator, the Gordonsville Power Plant is considered a QF
under the Public Utility Regulatory Policies Act of 1978. QFs were
established to foster development of new fuel-efficient and
renewable energy resources, including cogeneration, geothermal,
solar and wind. Cogeneration facilities like Gordonsville produce
electricity and then recycle the waste heat to create steam for
industrial processing.
Calpine Corporation is a leading North American power company
dedicated to providing electric power to wholesale and industrial
customers from clean, efficient, natural gas-fired and geothermal
power facilities. The company generates power at plants it owns or
leases in 22 states in the United States, three provinces in
Canada and in the United Kingdom. Calpine is also the world's
largest producer of renewable geothermal energy, and it owns
approximately one trillion cubic feet equivalent of proved natural
gas reserves in Canada and the United States. The company was
founded in 1984 and is publicly traded on the New York Stock
Exchange under the symbol CPN. For more information about Calpine,
visit http://www.calpine.com
* * *
As previously reported, Standard & Poor's Ratings Services
assigned its 'B' rating to Calpine Corp.'s $3.3 billion second-
priority senior debt. The $3.3 billion includes: a $750 million
term loan due 2007, $500 million floating rates notes due 2007,
$1.15 billion 8.5% secured notes due 2010, and $900 million
secured notes due 2013.
The notes carry the same rating as other Calpine senior secured
debt and are rated two notches higher than the 'CCC+' rated senior
unsecured debt.
At the same time, Standard & Poor's affirmed its 'B' corporate
credit rating on Calpine, its 'B' rating on Calpine's secured
debt, its 'CCC+' rating on Calpine's senior unsecured bonds, and
its 'CCC' rating on Calpine's preferred stock. The 'BB-' rating on
the existing $950 million secured term loan and the $950 million
secured revolver are withdrawn, as this debt was refinanced with
the proceeds of the recent $3.8 billion financing.
CAPITOL COMMUNITIES: Completes Asset Sales Totaling $2.7 Million
----------------------------------------------------------------
Capitol Communities Corporation (OTC Bulletin Board: CPCY)
announced Capitol's wholly owned subsidiary, Capitol Development
of Arkansas, Inc., has recently completed two land sales. On May
28, 2003, the Company completed the sale of approximately 19 acres
of land in Maumelle, Arkansas to Odom Boulevard, LLC. The
multi-family tract was sold for $700,882. After paying closing
costs, Capitol reduced its mortgage debt by $606,674 and received
net proceeds of $38,673. On July 1, 2003, Capitol completed the
sale of approximately 192 acres of single-family property in
Maumelle known as the Pine Ridge Tract. Pine Ridge, comprised of
four subdivisions platted into 482 homesites, was sold to ERC
Land Development Group, LLC of Fort Smith, Arkansas for
$2,016,000. Capitol received net proceeds of $491,782 after
closing costs and debt reduction in the amount of $1,384,493 to
New Era.
"The cash proceeds of these sales have been used to reduce
mortgage debt which Capitol had assumed when it earlier regained
ownership of these properties and 38.5 acres of commercial land in
Maumelle Town Center," said Michael G. Todd, President of Capitol
Communities. "With the sales and debt reduction, Capitol can now
design a master plan for the Maumelle Town Center property in an
effort to maximize its value," he added.
Capitol Communities Corporation, through its subsidiary, currently
owns approximately 288 acres of residential and commercial land in
the master planned community of Maumelle, Arkansas. Maumelle is a
planned city with about 13,000 residents. It is located directly
across the Arkansas River from Little Rock. Maumelle contains a
full complement of industrial and commercial development, parks,
lakes, green belts, and jogging trails.
* * *
Financial Condition
In its most recent Form 10-QSB filing, Capitol Communities
reported:
"The Company needs to cure its current illiquidity in order to
diversify its portfolio, acquire new business opportunities and
generate revenues. Accordingly, the Company is in the process
of liquidating all or portions of the Maumelle Property and raise
sufficient capital to commence meaningful operations. There can
be no assurance, however, that the Company will be able to sell
portions and/or all of the Maumelle Property for a fair market
value or at all, or raise sufficient capital in order to
implement its growth strategy.
"At March 31, 2003, the Company had total assets of $10,250,603 an
increase of $3,278,242 or 47% as compared to total assets of
$6,972,179, as of the Company's fiscal year ended September 30,
2002. The Company had cash of $497,492 as of March 31, 2003
compared to $16,981 at September 30, 2002. The increase of assets
was primarily due to the purchase of the Company's membership
interest in TradeArk Properties, LLC.
"The current portion of notes receivable increased to $1,000,000
on March 31, 2003 from $500,000 on September 30, 2002. The
increase was primarily a result of a $1,000,000 note becoming
current, and a $500,000 note paid by West Maumelle, L.P.
"Total liabilities of the Company at March 31, 2003 were
$7,757,591, an increase of $3,466,584 from the September 30, 2002
total of $4,291,007. The current liability for notes payable
increased by $3,466,584 during the six months, from $2,029,168 to
$3,470,158.
"Long term debt increased to $1,601,074, as of March 31, 2003 from
$1,216,000, as of September 30, 2002, an increase of $385,074.40.
"Shareholders' Equity decreased by $188,160 to $2,493,012 from
$2,681,172 for the period ended September 30, 2002. The
decreased was primarily the result of a reclassification of the
notes receivables by an officer and controlling shareholder of the
Company, for an offset of accrued expenses, the settlement of
certain notes for equity, the year to date loss and a
reclassification of $261,000 offsetting debt for Preferred Stock,
Series A."
CDO CERTIFICATES: S&P Assigns BB/B Ratings to Class J & K Notes
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
ratings to Collateralized Debt Obligation Certificates Series
2003-1's $290.5 million fixed-rate notes.
This presale report is based on information as of Aug. 1, 2003.
Subsequent information may result in the assignment of final
ratings that differ from the preliminary ratings.
The preliminary ratings reflect:
-- The expected commensurate level of credit support in the
form of subordination to be provided by the notes junior
to the respective classes;
-- Excess spread and overcollateralization provided by the
assets;
-- The cash flow structure, which is subject to various
stresses requested by Standard & Poor's;
-- The experience of the collateral administrator; and
-- The legal structure of the transaction, which includes the
bankruptcy remoteness of the issuer.
PRELIMINARY RATINGS ASSIGNED
Collateralized Debt Obligation Certificates Series 2003-1
Class Rating Amount (mil. $)
A AAA 58,000,000
B AA 37,100,000
C A 24,700,000
D A- 16,500,000
E BBB+ 37,200,000
F BBB 13,000,000
G BBB 45,000,000
H BBB- 7,000,000
J BB 28,000,000
K B 24,000,000
L N.R. 123,882,944
X (sub. IO class) N.R. 414,382,944
IO-Interest only. N.R.-Not rated.
CMS ENERGY: Will Webcast Second Quarter Results on August 12
------------------------------------------------------------
CMS Energy (NYSE: CMS) will discuss its second quarter earnings
results and update its business and financial outlook with
investors, analysts and others at 9 a.m. EDT on Tuesday, Aug. 12,
2003.
Those interested may participate in an Internet webcast on the
second quarter results and outlook by going to CMS Energy's home
page -- http://www.cmsenergy.com-- and selecting "CMS Energy
Second Quarter 2003 Results and Outlook." An audio replay of the
presentation will be available approximately two hours after the
webcast, and will be archived for 30 days on CMS Energy's Web site
in the "Invest in CMS" section.
CMS Energy (S&P, senior secured rated 'BB-', Rating Outlook
Negative) is an integrated energy company, which has as its
primary business operations an electric and natural gas utility,
natural gas pipeline systems, and independent power generation.
For more information on CMS Energy, visit http://www.cmsenergy.com
COGENTRIX ENERGY: Lenders Agree to Forbear Until August 31, 2003
----------------------------------------------------------------
As a result of the maturity of the outstanding obligations
(currently $154.1 million) under the Cogentrix Energy, Inc.,
corporate credit facility in October 2003, CEI's independent
auditors expressed a going concern uncertainty in their report on
CEI's consolidated financial statements for the year ended
December 31, 2002, which triggered an event of default under the
corporate credit facility.
On May 29, 2003, CEI executed a forbearance agreement with the
lenders to the corporate credit facility pursuant to which the
lenders agreed to forbear through July 31, 2003 from terminating
their commitments or accelerating the outstanding obligations and
demanding payment. Additionally, the lenders agreed to allow CEI
to continue to convert to borrowings, drawings under outstanding
letters of credit issued under the corporate credit facility
during this forbearance period.
On July 22, 2003, the lenders granted CEI's request to extend this
forbearance period through August 31, 2003.
Cogentrix Energy develops, owns, and operates independent power
plants, located primarily in the US. The firm has an operational
generating capacity of 4,900 MW from its stakes in 27 primarily
coal- and gas-fired facilities. Cogentrix Energy sells electricity
wholesale to utilities and power marketers, primarily through
long-term purchase or conversion contracts. The company also
produces and sells steam to industrial customers. The company is
owned by Chairman Emeritus George Lewis, Jr., who founded the
company in 1983, and his family. Utility holding company Aquila
agreed to acquire Cogentrix Energy in 2002, but the agreement was
later canceled due to poor conditions in the wholesale power
market.
COMDISCO INC: Settles Final Purchase Prices for Asset Sale to GE
----------------------------------------------------------------
Comdisco Holding Company, Inc. (OTC:CDCO) has agreed to
adjustments on the final purchase price for the sale of its
Electronics, Laboratory & Scientific, and Healthcare leasing
portfolios to GE Commercial Equipment Financing. Comdisco received
approximately $25 million for the settlement of the purchase price
holdbacks relating to the sales, which closed in 2002. GE CEF also
agreed to accelerate its contingent payment obligations based on
various Electronics portfolio performance criteria by making a
single $40 million cash payment and providing other consideration
valued by Comdisco at approximately $29 million. The other
consideration primarily consists of a participation in certain
lease rental payments previously purchased by GE CEF. Comdisco
expects to record a gain in excess of $30 million in its fourth
fiscal quarter ended September 30, 2003 as a result of these
arrangements.
On January 14, 2002, Comdisco announced the sale of its
Electronics and Laboratory & Scientific leasing units to GE CEF
and, on April 4, 2002, announced the sale of certain of its
Healthcare leasing assets to GE CEF. The Electronics assets were
integrated into GE Global Electronics Solutions. The Laboratory &
Scientific assets were integrated into GE Life Science and
Technology Finance. These transactions closed during April, May
and June 2002. Each of the announced purchase prices were subject
to post-closing adjustments through a holdback of ten percent of
the estimated purchase price. In addition, the Electronics sale
included contingent payment provisions based on various portfolio
performance criteria.
GE Global Electronics Solutions offers Equipment Lifecycle
Management services for users of semiconductor manufacturing,
automated test and printed circuit board assembly (PCA)
equipment). GES' services allow customers to execute equipment
management programs that provide strategic flexibility, increase
profits and reduce technology cost and risk. GE Life Science and
Technology Finance provides financial solutions to life science
companies throughout the USA and Canada with a portfolio exceeding
$400 million in served assets, representing over 275 customers.
Both businesses are part of GE Commercial Equipment Financing, a
unit of GE Commercial Finance. GE is a diversified services,
technology and manufacturing company with operations worldwide.
The purpose of reorganized Comdisco is to sell, collect or
otherwise reduce to money the remaining assets of the corporation
in an orderly manner. Rosemont, IL-based Comdisco --
http://www.comdisco.com-- provided equipment leasing and
technology services to help its customers maximize technology
functionality and predictability, while freeing them from the
complexity of managing their technology. Through its former
Ventures division, Comdisco provided equipment leasing and other
financing and services to venture capital backed companies.
COOK ASSOCIATES: Case Summary & 5 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Cook Associates Inc
631 16th Avenue
Salt Lake City, Utah 84103
fka Cook Slurry Company
Bankruptcy Case No.: 03-51015
Type of Business: Manufacture of slurry and emulsion blasting
agents
Chapter 11 Petition Date: August 1, 2003
Court: District of Minnesota (Duluth)
Judge: Gregory F. Kishel
Debtors' Counsel: Joseph V Ferguson, III
Clure Eaton Law Firm
222 W Superior St Ste 200
Duluth, MN 55802
Tel: 218-722-0528
Total Assets: $1,019,725
Total Debts: $475,120
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Blake Atkin $1,774,500
136 South Main Street Secured Value:
Sixth Floor $29,500
Salt Lake City UT 84101
PCS Sales $340,000
1101 Skokie Boulevard
Suite 400
Northbrook IL 60062
Merrill Cook $41,762
Dr. Terry Ring $7,440
R. Douglas Later $3,918
CWMBS (INDYMAC): Fitch Takes Rating Actions on 17 Securitizations
-----------------------------------------------------------------
Fitch Ratings has upgraded 21 classes, downgraded 7 classes and
affirmed 57 classes for the following CWMBS (IndyMac), Inc.
residential mortgage-backed certificates:
CWMBS (IndyMac) Mortgage Pass-Through Certificates, Series 1994-A:
-- Class A affirmed at 'AAA';
-- Class B1 affirmed at 'AAA';
-- Class B2 affirmed at 'AA+';
-- Class B3 affirmed at 'A';
-- Class B4 affirmed at 'BBB';
-- Class B5 affirmed at 'BB+'.
CWMBS (IndyMac) Mortgage Pass-Through Certificates, Series 1994-C:
-- Class A affirmed at 'AAA';
-- Class B1 affirmed at 'AAA';
-- Class B2 affirmed at 'AA';
-- Class B3 affirmed at 'BBB';
-- Class B4 affirmed at 'BB';
-- Class B5 affirmed at 'B+'.
CWMBS (IndyMac) Mortgage Pass-Through Certificates, Series 1994-D:
-- Class A affirmed at 'AAA';
-- Class B1 upgraded to 'AAA' from 'AA';
-- Class B2 upgraded to 'AA' from 'A';
-- Class B3 upgraded to 'BBB+' from 'BBB';
-- Class B4 affirmed at 'BB'.
CWMBS (IndyMac) Mortgage Pass-Through Certificates, Series 1994-R:
-- Class A affirmed at 'AAA';
-- Class M1 affirmed at 'AAA';
-- Class M2 affirmed at 'AAA';
-- Class B1 upgraded to 'AAA' from 'AA';
-- Class B2 affirmed at 'BBB+';
-- Class B3 affirmed at 'C'.
CWMBS (IndyMac) Mortgage Pass-Through Certificates, Series 1995-C:
-- Class A affirmed at 'AAA';
-- Class B1 affirmed at 'AAA';
-- Class B2 upgraded to 'AAA' from 'AA';
-- Class B3 affirmed at 'A';
-- Class B4 rated 'BB' placed on Rating Watch Negative;
-- Class B5 downgraded to 'CCC' from 'B' and removed from
Rating Watch Negative.
CWMBS (IndyMac) Mortgage Pass-Through Certificates, Series 1995-I:
-- Class B1 affirmed at 'AAA';
-- Class B2 affirmed at 'AAA';
-- Class B3 upgraded to 'A' from 'BBB';
-- Class B4 affirmed at 'C'.
CWMBS (IndyMac) Mortgage Pass-Through Certificates, Series 1996-F:
-- Class A affirmed at 'AAA';
-- Class B1 upgraded to 'AAA' from 'AA';
-- Class B2 upgraded to 'AAA' from 'A';
-- Class B3 upgraded to 'A+' from 'BBB';
-- Class B4 affirmed at 'BB';
-- Class B5 affirmed at 'B'.
CWMBS (IndyMac) Mortgage Pass-Through Certificates, Series 1998-A:
-- Class A affirmed at 'AAA';
-- Class B1 affirmed at 'AAA';
-- Class B2 upgraded to 'AAA' from 'AA';
-- Class B3 upgraded to 'AA' from 'A';
-- Class B4 affirmed at 'BB';
-- Class B5 affirmed at 'B'.
CWMBS (IndyMac) 1999-A (RAST 1999-A1) Mortgage Pass-Through
Certificates, Series 1999-A:
-- Class A affirmed at 'AAA';
-- Class B1 upgraded to 'AAA' from 'AA';
-- Class B2 upgraded to 'AA' from 'A';
-- Class B3 affirmed at 'BBB';
-- Class B4 affirmed at 'CCC';
-- Class B5 affirmed at 'C'.
CWMBS (IndyMac) 1999-B (RAST 1999-A2) Mortgage Pass-Through
Certificates, Series 1999-B:
-- Class A affirmed at 'AAA';
-- Class B1 affirmed at 'AAA';
-- Class B2 upgraded to 'AAA' from 'AA';
-- Class B3 upgraded to 'AA-' from 'A';
-- Class B4 upgraded to 'BB+' from 'BB';
-- Class B5 affirmed at 'B'.
CWMBS (IndyMac) 1999-C (RAST 1999-A3) Mortgage Pass-Through
Certificates, Series 1999-C:
-- Class A affirmed at 'AAA'.
CWMBS (IndyMac) 1999-D (RAST 1999-A4) Mortgage Pass-Through
Certificates, Series 1999-D:
-- Class A affirmed at 'AAA'.
CWMBS (IndyMac) 1999-E (RAST 1999-A5) Mortgage Pass-Through
Certificates, Series 1999-E:
-- Class A affirmed at 'AAA';
-- Class B1 upgraded to 'AAA' from 'AA';
-- Class B2 upgraded to 'AA' from 'A';
-- Class B3 affirmed at 'BBB';
-- Class B4 affirmed at 'BB';
-- Class B5 downgraded to 'CCC' from 'B' and removed from
Rating Watch Negative.
CWMBS (IndyMac) 1999-F (RAST 1999-A6) Mortgage Pass-Through
Certificates, Series 1999-F:
-- Class CB, NB affirmed at 'AAA';
-- Class B1 upgraded to 'AAA' from 'AA';
-- Class B2 affirmed at 'A';
-- Class B3 affirmed at 'BBB';
-- Class B4 affirmed at 'BB' and removed from Rating Watch
Negative;
-- Class B5 affirmed at 'C'.
CWMBS (IndyMac) 1999-G (RAST 1999-A7) Mortgage Pass-Through
Certificates, Series 1999-G:
-- Class CB, NB affirmed at 'AAA';
-- Class B1 upgraded to 'AAA' from 'AA';
-- Class B2 upgraded to 'AA' from 'A';
-- Class B3 affirmed at 'BBB';
-- Class B4 downgraded to 'CCC' from 'BB' and removed from
Rating Watch Negative;
-- Class B5 downgraded to 'C' from 'CC'.
CWMBS (IndyMac) 1999-H (RAST 1999-A8) Mortgage Pass-Through
Certificates, Series 1999-H:
-- Class CB, NB affirmed at 'AAA';
-- Class B1 affirmed at 'AA';
-- Class B2 rated 'A' placed on Rating Watch Negative;
-- Class B3 downgraded to 'CCC' from 'BB' and removed from
Rating Watch Negative.
CWMBS (IndyMac) 1999-I (RAST 1999-A9) Mortgage Pass-Through
Certificates, Series 1999-I:
-- Class CB, NB affirmed at 'AAA';
-- Class B1 affirmed at 'AA';
-- Class B2 affirmed at 'A';
-- Class B3 affirmed at 'BBB';
-- Class B4 downgraded to 'CCC' from 'BB-';
-- Class B5 downgraded to 'C' from 'CCC'.
These actions are taken due to the level of losses incurred and
the delinquencies in relation to the applicable credit support
levels as of the July 25, 2003 distribution. For specific
delinquency and loss information, visit Fitch's Web site at
http://www.fitchratings.com
DVI HEALTHCARE: Fitch Further Junks 1998-1 Class C Rating to C
--------------------------------------------------------------
Fitch Ratings downgrades the class C note of the DVI Business
Credit Receivables Corp. III, Series 1998-1 to 'C' from 'CCC.' The
class C note remains on Rating Watch Negative.
The downgrade reflects Fitch's downgrade of DVI, Inc., which
guarantees the class C notes of the DVI Business Credit Series
1998-1 healthcare receivable securitization.
DVI INC: Exploring Options, Including Chapter 11 Filing
-------------------------------------------------------
DVI, Inc. (NYSE:DVI) announced that neither it nor any of its
wholly-owned subsidiaries has any remaining availability under its
or their various credit facilities. Defaults exist under a number
of these facilities, some of which entitle the applicable
debtholders to accelerate the respective indebtedness owed under
some of the facilities.
DVI is discussing waivers or grants of forbearance with these
lenders, while at the same time seeking to address its near-term
liquidity requirements through new short-term borrowings or asset
sales.
DVI is actively pursuing various alternatives in order to address
its situation. These alternatives include recapitalization, sale
of its entire business or some or all of its assets, and a Chapter
11 bankruptcy filing.
The failure of DVI to obtain additional funding or resolve any
existing or future defaults with respect to its bank lending
facilities and other debt or the commencement of bankruptcy
proceedings could have a serious adverse effect on DVI's business
and on the value of DVI's debt and equity securities.
DVI is an independent specialty finance company for healthcare
providers worldwide with $2.8 billion of managed assets. DVI
extends loans and leases to finance the purchase of diagnostic
imaging and other therapeutic medical equipment directly and
through vendor programs throughout the world. DVI also offers
lines of credit for working capital backed by healthcare
receivables in the United States. Additional information is
available at http://www.dvi-inc.com
EAGLE-PICHER: Extends Tender Offer for 9-3/8% Notes Until Today
---------------------------------------------------------------
Eagle-Picher Incorporated, a wholly-owned subsidiary of Eagle-
Picher Holdings, Inc., announced today that it has extended the
expiration date of its cash tender offer for its 9-3/8% Senior
Subordinated Notes Due 2008 to 11:59 p.m., today. The tender
offer was originally scheduled to expire at 11:59 p.m. on
August 5, 2003.
EPI is seeking to acquire any and all of its outstanding $220
million of Notes pursuant to the terms and conditions set forth in
its Offer to Purchase and Consent Solicitation Statement dated
July 9, 2003. On July 23, 2003, EPI announced that it had
received 95% of the $220 million of outstanding Notes and had
executed a supplemental indenture amending its indenture among
EPI, certain guarantors named therein, and The Bank of New York,
as trustee. The supplemental indenture will not become operative
until the Notes are accepted for purchase in accordance with the
terms of the Statement. The tender offer will expire at 11:59
p.m., New York City time, on August 6, 2003, unless extended by
EPI.
EPI intends to finance the tender offer and consent solicitation
with the proceeds of an offering of approximately $250 million
aggregate principal amount of senior unsecured notes pursuant to
Rule 144A and Regulation S under the Securities Act of 1933, as
amended, together with other available funds. The securities to
be offered have not been registered under the Securities Act and
may not be offered or sold in the United States, absent
registration or an applicable exemption from such registration
requirements. Additionally, EPI is currently negotiating a new
senior secured credit facility in the approximate amount of $275
million to replace its current credit facility. The new credit
facility is anticipated to provide for a term loan of $150 million
and a revolving facility of $125 million.
All of the Company's operations are conducted through EPI and its
subsidiaries. EPI, founded in 1843, is a diversified manufacturer
of industrial products for the automotive, defense, aerospace and
other industrial markets worldwide.
As reported in Troubled Company Reporter's July 24, 2003 edition,
Standard & Poor's Ratings Services assigned its 'B+' senior
secured bank loan rating to the $275 million senior secured credit
facilities of Eagle-Picher Inc., formerly Eagle-Picher Industries
Inc.
Standard & Poor's also assigned its 'B-' senior unsecured debt
ratings to the company's $220 million senior unsecured notes due
2013. Proceeds will be used to repay existing debt, refinance the
company's existing $220 million subordinated notes due 2008, and
for working capital and general corporate purposes.
At the same time, Standard & Poor's affirmed its 'B+' corporate
credit rating on the company and its 'CCC+' preferred stock
ratings on Eagle-Picher Holdings Inc. The outlook remains stable.
EMERALD CASINO: Park Place Delivers Bid to Build Caesars Casino
---------------------------------------------------------------
Park Place Entertainment Corporation (NYSE: PPE) has submitted a
bid to build and operate a Caesars brand casino to serve the
greater Chicago market.
Planned for a site in Rosemont, Illinois, the proposed new casino
is designed to stimulate tourism and economic development
throughout the Chicagoland region by attracting new domestic and
international visitors, as well as local residents.
The Rosemont site is close to O'Hare International Airport,
accessible from major freeways and located near the state's
second-largest convention facility, the 840,000-square-foot
Rosemont Convention Center. Immediately adjacent to the site are
6,000 hotel rooms and a well developed entertainment district that
includes the 18,000-seat Allstate Arena and the 4,300-seat
Rosemont Theatre.
The current design calls for a Caesars branded casino resort
comprising 40,000 square feet of gaming space, more than 1,100
slot machines and 34 table games, four restaurants, and four bars
or beverage lounges. The project also would include a covered
parking facility with more than 5,000 spaces, which is partially
completed. Financial terms were not disclosed.
"Developing the Rosemont site represents the best opportunity for
the state of Illinois to quickly realize significant economic
benefits from a new casino," said Park Place President and Chief
Executive Officer Wallace R. Barr. "The Rosemont location is
easily accessible to more potential customers than any other in
the state, and a significant amount of work already has gone into
site preparation. That means that a new casino at Rosemont can
begin delivering revenue to the state sooner than a new casino in
any other location," Barr added
"Caesars is the best-known casino brand in the world. It will be a
valuable asset in attracting new visitors to the Chicagoland
market. Because of our diverse worldwide operations, extensive
development expertise and longtime reputation for honesty and
integrity, Park Place is in a unique position to deliver to the
state of Illinois the kind of top-quality, intelligently operated
and profitable casino that it is seeking," Barr said.
The bid to build the Caesars brand casino in Rosemont was
submitted to Emerald Casino, Inc. through its agent, Rothschild,
Inc. of New York, as part of the bid procedure established by the
U.S. Bankruptcy Court overseeing the Emerald bankruptcy. Under the
procedure established by the court, the winning bidder would merge
with Emerald and take control of its assets, which include an
Illinois gaming license and the Rosemont site. Any merger will
require the approval of the Illinois Gaming Board.
Park Place Entertainment Corporation is one of the world's leading
gaming companies, licensed in 11 different jurisdictions around
the world. With $4.7 billion in annual net revenue, 29 properties
in five countries on four continents, 29,000 hotel rooms, two
million square feet of casino space and 54,000 employees, the Park
Place portfolio is unequaled in the casino resort industry. The
company has its corporate headquarters in Las Vegas, Nevada.
Park Place brands are among the most respected and best recognized
in the world: Caesars, Paris, Bally's, Flamingo, Hilton and Grand
Casinos. The company commands a leading share in the major gaming
markets in the United States - Las Vegas (#2 market share);
Atlantic City (#1 share); Tunica, Mississippi (#1 share);
Mississippi Gulf Coast (#1 share).
In addition to world-class casinos, Park Place resorts feature
more than 170 distinctive restaurants and cafes; 71 exciting
theaters, showrooms and amphitheaters; 19 luxurious spas; five
championship golf courses, a best-in-class sports shooting range,
easy access to skiing, boating, deep sea fishing and other outdoor
adventures - and the most alluring shopping destinations in the
world.
The company has announced plans to change its name to Caesars
Entertainment, Inc., effective in January 2004, pending
shareholder approval.
Additional information on Park Place Entertainment can be accessed
through the company's Web site at http://www.parkplace.com
EMERALD CASINO: Accepting Binding Proposals for Sale of Assets
--------------------------------------------------------------
Emerald Casino, Inc., has decided to sell its business through a
Chapter 11 Plan and the Sale Process developed by Emerald had been
approved by the U.S. Bankruptcy Court for the Northern District of
Illinois, Eastern Division.
The sale process developed by Emerald includes, but is not limited
to, the following procedures:
* Submission of confidential binding proposals containing
the terms required by Emerald;
* Public opening of Binding Proposals, disclosing
prospective purchasers' names, venture partner(s) if
any, and locations of proposed development sites
* Evaluation of Binding Proposals by Emerald whereby
certain bidders will be selected from among those who
submit proposals to participate
The process is open to all potential bidders and any interested
municipality in Illinois. There is no limitation on development
site.
For further information regarding Emerald's sale process and terms
for binding proposals, visit
http://www.datasite.merrilldirect.com/EmeraldCasino/
Interested parties should contact:
Todd Snyder, Managing Director, or
Ira Wolfson, Vice President
Rothschild Inc.
1251 Avenue of the Americas
New York, NY 10020
Tel: 212-403-3500
The city of Rosemont, Illinois, filed an involuntary Chapter 7
petition to force Emerald Casino into bankruptcy on June 13, 2002.
The case was later converted into a voluntary Chapter 11 case on
Sept. 10, 2002, (Bankr. N.D. Ill. Case No. 02-22977). James
Sprayregen, Esq., and Sven T. Nylen, Esq., at Kirkland & Ellis
represent the Debtor in its liquidating efforts.
ENGAGE INC: Sells All Remaining Assets to JDA Software for $3MM
---------------------------------------------------------------
JDA(R) Software Group Inc. (Nasdaq:JDAS) has acquired
substantially all of the remaining assets of Engage Inc., an
innovative provider of enterprise advertising, marketing and
promotion software solutions, for $3.0 million in cash.
Representing its eighth acquisition in five years, the purchase
enables JDA to expand JDA Portfolio(R) with software products that
help retailers to significantly improve and accelerate their
promotion planning and production process. Using Engage's advanced
digital asset management and ad layout capabilities, JDA clients
will be able to produce localized customer communications in less
time and at reduced costs than relying on today's tedious, manual
practices.
"By expanding our Portfolio Revenue Management(TM) suite with the
Engage products, we will improve our position in the AMP market,"
commented Peter Charness, JDA's chief product officer and senior
vice president, global marketing. "Thanks to an earlier
partnership with Engage, we have already interfaced their flagship
solution with our Marketing Expense Management(TM) application,
which will enable us to leapfrog the competition with a
comprehensive Revenue Management suite proven to boost both
bottom- and top-line results."
Continued Charness, "We also see the Engage applications adding
value to other Portfolio products, including our Space Management
by Intactix(TM) software. There is tremendous demand in the supply
chain to increase planogram compliance. Our Intactix clients will
be able to leverage Engage's content management and workflow
automation software to support enhanced content for planograms so
they can implement new planograms faster and more accurately than
ever before."
Additional Details of JDA's Acquisition
As the successful bidder in a Chapter 11 auction, JDA gained all
intellectual property for Engage's four current product lines that
target retailers, agencies, newspapers and corporations as well as
all equipment. JDA expects to spend up to an additional $800,000
for assumed liabilities, which will bring the total cost of the
Engage acquisition to approximately $3.8 million.
JDA has extended employment offers to approximately 30 former
Engage sales, development, services and support associates. JDA
will close Engage's headquarters in Andover, Mass., and establish
a more appropriately configured office in the nearby area. For the
nine months ended April 30, 2003, Engage's total unaudited
revenues were $8.2 million, which included $2.3 million in
software licenses, $3.1 million in maintenance revenue and $2.8
million in services revenue.
Engage Client List Includes Leading Names in Retail
With the acquisition final, JDA adds several high-profile
customers to its list including existing JDA clients Albertsons
Inc., H-E-B, Kohl's Department Stores, L.L. Bean, Meijer, Reno-
Depot Inc. and The Home Depot, plus several new retail clients
including Circuit City, Sears Canada Inc. and the Sharper Image.
JDA also welcomes clients from new verticals including in the
newspaper and promotions industries: Associated Newspapers, The
Boston Globe, The Richmond Times-Dispatch, The New York Times
Co.'s Worcester Telegram & Gazette, Valpak Direct Marketing
Systems Inc. and McKinney & Silver.
JDA plans to offer these clients ongoing support of the Engage
applications and will explore collaborative capabilities between
the retail and publishing markets to help both parties cut time
and cost out of the very complex process of producing advertising
and promotional campaigns.
Engage Applications Support Digital Asset Management
and Workflow Automation
This acquisition enables JDA to provide clients with a defined set
of AMP processes that streamline communication and collaboration.
Engage's powerful ContentServer digital asset management and
workflow automation software enables the creation, approval,
production and delivery of marketing and advertising content more
quickly and efficiently. As a result, users reduce advertising
lead-times, ensure the timely, consistent distribution of
advertising circulars and promotional materials, and ultimately
achieve higher ROI from their marketing programs. Other benefits
that Engage's software delivers include:
-- Creates competitive advantage by accelerating time to market of
complex versioned ads that target unique customer segments with
market-specific product swaps or personalized messaging without
time or accuracy penalties.
-- Eliminates production headaches with advanced capabilities that
respond to last-minute changes and competitive information.
-- Facilitates increased communication and interaction among a
retailer's internal departments as well as between publishers
and their ad clients with unique workflow automation and
collaboration tools that support shared views of product
information and messaging, key during the approval process.
With more than 4,800 retail, manufacturing and wholesale clients
in 60 countries, JDA Software Group Inc. is a global leader in
delivering integrated software and professional services for the
retail demand chain. By capitalizing on its market position and
financial strength, JDA commits significant resources to advancing
JDA Portfolio, its suite of merchandising, POS, analytic and
collaborative solutions that improve revenues, efficiency and
customer focus. Founded in 1985, JDA is headquartered in
Scottsdale, Ariz., and employs more than 1,200 associates
operating from 32 offices in major cities throughout North
America, South America, Europe, Asia and Australia. For more
details, visit http://www.jda.com
Engage, Inc., headquartered at Andover, Massachusetts, sells
software that enables publishers, advertisers and merchants to
streamline the creation, approval, production and re-purposing of
advertising and other marketing material. The Company filed for
chapter 11 protection on June 19, 2003 (Bankr. Mass. Case No. 03-
43655). Kevin J. Walsh, Esq., at Mintz Kevin Cohn Ferris Glovsky
& Popeo, PC, represents the Debtors in their restructuring
efforts. When the Company filed for protection from its
creditors, it listed $52,113,000 in total assets and $16,593,000
in total debts.
ENRON CORP: Protane Unit Selling Procaribe Assets for $5 Million
----------------------------------------------------------------
Pursuant to Sections 105, 363 and 365 of the Bankruptcy Code and
Rules 2002, 6004 and 6006 of the Federal Rules of Bankruptcy
Procedure, Debtor Protane Corporation asks the Court to:
(a) authorize it to sell substantially all of the assets of
its ProCaribe division to Terminal Acquisition Company,
Inc. free and clear of all liens, claims, interests,
encumbrances, rights of set-off, recoupment, netting and
deduction for $5,090,000; and
(b) approve the assumption and assignment of these unexpired
leases and executory contracts:
-- an LPG Services Agreement,
-- a Terminal Lease,
-- a Tallaboa Pier Agreement,
-- an Omnibus Consent and Agreement of EcoElectrica and
The Chase Manhattan Bank dated as of October 31, 1997
and the Omnibus Consent Accession Agreement among
ProCaribe and the Chase Manhattan Bank dated
December 15, 1997,
-- a License Agreement dated January 23, 1985 between
Commonwealth Oil Refining Company, Inc. and Progasco,
Inc., as predecessor to Protane, as confirmed by
Letter signed by CORCO and Protane dated December 12,
1997,
-- an Empire Throughput Agreement, to the extent renewed,
-- a Tropigas Throughput Agreement, to the extent renewed,
-- an Automobile Lease Agreement dated January 28, 2000,
-- a Nitrogen Agreement dated January 1, 1987 between
ProCaribe and Air Products and Chemicals, Inc.,
-- certain easements, and
-- certain permits.
The ProCaribe Business
Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York,
relates that Protane, through its ProCaribe division, owns and
operates a Liquified Petroleum Gas supply, storage and forwarding
business in Penuelas, Puerto Rico. ProCaribe was established in
1986 and operates the largest refrigerated LPG storage terminal
in the Caribbean basin with ability to receive large fully
refrigerated tankers. ProCaribe represents 85% of the terminal
and storage capacity in Puerto Rico.
ProCaribe's facilities consist of three fully refrigerated tanks
on its site with an aggregate storage capacity of approximately
23,000 metric tons. One of the three tanks is a new 11,200-
metric ton tank designed for and capable of providing primary
fuel supply and back-up fuel supply to EcoElectrica L.P., a
partnership formed for the development, construction, operation
and ownership of an electricity generating facility at Penuelas,
Puerto Rico -- the EcoElectrica Project. Ms. Gray informs Judge
Gonzalez that EcoElectrica is an affiliate of Enron and Edison
Mission Energy and owns this tank.
ProCaribe operates and maintains the tank and provides back-up
fuel services for EcoElectrica pursuant to the LPG Service
Agreement. Protane leases the other two tanks and certain
ancillary equipment, including the land where they are located,
from Caribe Olefine, L.L.P., S.P. pursuant to a Restatement of
Lease Agreement with Option to Purchase between Caribe and
Protane, dated December 12, 1997 -- the Terminal Lease. The
Terminal Lease expires on December 31, 2020.
Significant Contracts
In addition to the Terminal Lease, Ms. Gray reports that
ProCaribe is a party to a number of contracts essential to the
continued operation of its business. Pursuant to an LPG Storage
and Services Agreement, between EcoElectrica and ProCaribe, a
division of Protane, dated as of October 31, 1997, ProCaribe, as
terminal operator, provides back-up fuel supply services,
consisting of LPG unloading, storage and redelivery services to
EcoElectrica for the EcoElectrica Project. In connection
therewith, ProCaribe is also responsible for all day-to-day
operation, terminalling, monitoring, maintenance, repair and
overhaul services required for the operation and maintenance of
ProCaribe's LPG facility -- the ProCaribe Terminal. Under the
terms of the LPG Services Agreement, EcoElectrica and ProCaribe
jointly utilize the storage capacity and may borrow and loan to
each other LPG that has been delivered to the ProCaribe Terminal.
ProCaribe is also paid a base annual fee of $75,000 and is
reimbursed for all Reimbursable Incremental Costs incurred by it
in performing services under the LPG Service Agreement. The LPG
Services Agreement expires on December 31, 2020.
Pursuant to a Tallaboa Pier Use and Maintenance Agreement
between the Puerto Rico Port Authority and Protane, dated as of
December 5, 1997, as amended, ProCaribe is entitled to
"preferential use" of the Tallaboa Pier with respect to vessels
docked at the pier for ProCaribe's or EcoElectrica's use. In
connection therewith, ProCaribe pays the Port Authority an annual
fee of $100,000 and is responsible for operating and maintaining
the Tallaboa Pier. The Tallaboa Pier Agreement expires on
December 31, 2004.
Pursuant to The ProCaribe Throughput Agreement between Empire Gas
Company, Inc. and ProCaribe, as amended by Amendment #1 thereto,
dated March 13, 2003 and The ProCaribe Throughput Agreement
between Tropigas de Puerto Rico, Inc. and ProCaribe, as amended
by Amendment #1 thereto, dated March 14, 2003, ProCaribe provides
LPG throughput services to Empire and Tropigas. Under these
agreements, ProCaribe stores LPG for Empire and Tropigas pending
distribution to end users in return for which ProCaribe receives
a fee. These agreements expired on July 31, 2003.
In addition, ProCaribe has also been issued various licenses and
permits to conduct its business, and has been granted the
easements. ProCaribe is also the exclusive LPG supplier to San
Juan Gas pursuant to a renewable annual agreement.
The Marketing Process
Ms. Gray tells the Court that beginning in May 2002, Protane
began exploring a possible sale of the ProCaribe business. This
initial sales process was suspended shortly thereafter due to
internal reorganization efforts. The sale process was
reinitiated in November 2002. Current Protane management
prepared information memorandums, set up a data room and formally
commenced the sales process by sending a solicitation letter on
January 17, 2003 to 16 local and foreign companies.
This solicitation letter outlined the procedure and timetable for
the sales process, including due diligence, site visits and
management meetings. The companies receiving the solicitation
letter were selected based on a combination of direct expressions
of interest and Protane's understanding of the LPG market. The
companies included numerous multinational and local companies,
including EcoElectrica. Although there was interest from
companies outside of Puerto Rico, the majority of the interest
came from local companies. Of these prospective purchasers, four
submitted indicative offers. After reviewing the bids and
consulting with its advisors, Protane determined that Empire was
the leading candidate and moved forward with the negotiation of a
definitive agreement. Empire's offer was the best offer in terms
of price, terms and conditions, and closing risk.
The Purchase and Sale Agreement
On May 7, 2003, Protane, Terminal Acquisition Company, Inc. -- an
entity organized by Empire for the purpose of consummating the
sale transaction -- and Empire executed a Purchase Agreement,
which provides these terms:
A. Purchase Price
The purchase price for the Assets to Terminal Acquisition
will be $5,090,000, subject to a Working Capital Adjustment
and an upward dollar for dollar adjustment in the amount of
any Contingent Known Liabilities paid by Protane on and
after the Contract Date. Terminal Acquisition placed in
escrow an Earnest Money Deposit equal to $509,000 and will pay
the remainder of the Purchase Price at Closing.
B. Assets
The Assets include, among others,
(i) accounts receivable related to throughputs and sales of
LPG by Protane for the Business,
(ii) LPG inventory used in the Business,
(iii) certain prepaid expenses related to the Business,
(iv) the Contracts,
(v) the Permits, and
(vi) all computer software and technical computer manuals
used by the Protane in the conduct of the Business.
C. Assumed Liabilities
Terminal Acquisition will assume the liabilities set forth
in the Purchase Agreement, including, without limitation,
(i) all liabilities, costs and expenses related to or in
respect of the Assets and the Business incurred or
accrued on and after the Closing Date,
(ii) all liabilities, costs and expenses related to any item
or account set forth in the Balance Sheet,
(iii) all liabilities, costs and expenses incurred in the
Ordinary Course of Business and unpaid since
December 31, 2002,
(iv) all liabilities, costs and expenses and performance
obligations in respect of the Contracts and Permits on
and after the Closing Date, and
(v) certain Contingent Known Liabilities.
D. Transfer Taxes
Terminal Acquisition will pay any Transfer Taxes resulting
from the transactions contemplated by the Purchase Agreement.
E. Termination of Agreement
The Purchase Agreement and the transactions contemplated
therein may be terminated prior to the Closing by, inter
alia:
(i) the mutual written agreement of Protane and Terminal
Acquisition;
(ii) Protane at any time after the 45th day after the
Contract Date if:
(a) the Closing has not occurred by the close of
business on the 45th day after the Closing Date, and
(b) Protane is not in default of its obligations under
the Purchase Agreement in any material respect; and
(iii) Terminal Acquisition or Empire at any time after the
Expiration Date.
F. Joint and Several Liability
Empire agreed to be jointly and severally liable for all of
Terminal Acquisition's obligations under the Purchase
Agreement.
Ms. Gray contends that the contemplated transaction should be
authorized because:
(a) except for the Assumed Liabilities, Protane is not aware
of any liens, claims, encumbrances, interests, or rights
of set-off relating to the Assets;
(b) to the extent an interest exists, Protane intends to
provide in the Sale Order that the interest will attach
to the sale proceeds;
(c) the terms of the Agreement have been negotiated at
arm's length and in good faith between Protane, Terminal
Acquisition and Empire;
(d) the assignment of the Contracts to Terminal Acquisition,
together with Empire's agreement to be jointly and
severally liable for Terminal Acquisition's obligations
under the Purchase Agreement, will provide the non-debtor
parties to the Contracts will adequate assurance of
future performance;
(e) the Assets have been extensively marketed prepetition; and
(f) Protane believes that it is not in monetary defaults
under any of the Contracts and thus, is not required to
cure any defaults.
According to Ms. Gray, there are three non-monetary claims
against the Contracts:
(i) Caribe's claim of Protane's alleged improper use of a
roadway easement;
(ii) Caribe's claim of Protane's alleged failure to comply
with certain insurance requirements in connection with
the Terminal Lease; and
(iii) the Puerto Rico Public Service Commission's claim for
royalties due in connection with Franchise FG #1498, one
of the Permits to be assigned to Terminal Acquisition.
Protane disputes the claims.
In the event that a party files an objection to the assumption
and assignment of their Contract to Terminal Acquisition, and
Protane is unable to resolve the objection prior to the Sale
Hearing, Protane intends to ask the Court to either:
(a) overrule the objection on the merits, or
(b) authorize the assumption and assignment of the Contract
subject to Protane escrowing the disputed portion of the
Cure Amount pending a determination by the Court of the
amount upon notice of a future hearing.
Accordingly, Protane requests that upon assumption and assignment
of the Contracts to Terminal Acquisition, all non-debtor
parties thereto be forever barred from asserting a Cure Claim
against Protane or Terminal Acquisition. Protane further asks
the Court to relieve it from any liability for any breach of the
Contracts occurring after the assignment to Terminal Acquisition
pursuant to Section 365(k) of the Bankruptcy Code.
Ms. Gray asserts that the proposed procedures provide a fair and
reasonable means of ensuring that non-debtor parties to the
Contracts receive notice of the assumption and assignment of
their Contracts without paying a cure amount.
Ms. Gray informs Judge Gonzalez that Protane intends to use up to
$800,000 of the sale proceeds to pay certain costs in connection
with, or liabilities retained under, the Purchase Agreement,
including:
(i) severance and retention payments to employees,
(ii) prepetition transactional fees and expenses incurred to
non-debtor Enron affiliates and outside professionals
in connection with the Purchase Agreement, and
(iii) costs incurred and payments to third parties in
connection with satisfying closing conditions under the
Purchase Agreement.
Protane has provided the Creditors' Committee with a budget for
these expenses and has provided for the payment of these items.
(Enron Bankruptcy News, Issue No. 76; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
FANSTEEL: Inks Definitive Pact to Sell Assets to Investor Group
---------------------------------------------------------------
Fansteel Inc., (Pink Sheets: FNSTQ) and its subsidiary Phoenix
Aerospace Corporation executed a definitive agreement for the sale
to an investment group of the Company's California Drop Forge and
Hydro Carbide divisions, as well as certain other assets located
in the Company's Lexington, Kentucky and Plantsville, Connecticut
facilities and substantially all of the assets of Phoenix
Aerospace.
The contemplated sale is subject to a number of conditions,
including the buyer's satisfactory conclusion of its due diligence
and the approval of the United States District Court for the
District of Delaware, the court responsible for overseeing the
Company's Chapter 11 case, of bidding procedures for an auction
process, the designation of the buyer as the stalking horse (with
customary break-up fee protections), and the ultimate sale.
Pursuant to the reorganization plan and related disclosure
statement filed with the Bankruptcy Court on July 24, 2003, which
are also subject to Bankruptcy Court approval, a portion of the
cash proceeds from the sale will be placed in escrow to fund the
cash portion of distributions to general unsecured creditors under
the Plan.
As previously reported, on January 15, 2002, Fansteel Inc., and
its U.S. subsidiaries filed voluntary petitions for reorganization
relief under Chapter 11 of the United States Bankruptcy Code in
the United States Bankruptcy Court in Wilmington, Delaware. The
cases have been assigned to the Honorable Judge Joseph J. Farnan,
Jr., and are being jointly administered under Case Number
02-10109. On July 24, 2003, the Company and its U.S. subsidiaries
filed a joint plan of reorganization and related disclosure
statement, which have yet to be considered for approval by the
Bankruptcy Court.
FIRST INT'L BANK: Fitch Takes Actions on Six Securitizations
------------------------------------------------------------
Fitch Ratings takes the following rating actions on the following
classes of securities.
FNBNE Business Loan Notes, Series 1998-A
-- Class A notes affirmed at 'AA';
-- Class M-1 affirmed at 'BBB';
-- Class M-2 notes affirmed at 'BB'.
FIB Business Loan Notes, Series 1999-A
-- Class A notes affirmed at 'AA';
-- Class M-1 notes affirmed at 'BBB';
-- Class M-2 notes affirmed at 'BB'.
FIB Business Loan Notes, Series 2000-A
-- Class A notes downgraded to 'BBB-' from 'BBB';
-- Class M-1 notes affirmed at 'B';
-- Class M-2 notes affirmed at 'CCC';
-- Class B notes affirmed at 'CC'.
FIB SBA Loan-Backed Adjustable Rate Certificates,
Series 1999-1
-- Class A notes downgraded to 'BBB' from 'A';
-- Class M notes downgraded to 'B-' from 'BB'.
-- Class B notes downgraded to 'CCC' from 'B'.
FIB SBA Loan-Backed Adjustable Rate Certificates,
Series 2000-1
-- Class A notes downgraded to 'BBB-' from 'A';
-- Class M notes downgraded to 'CCC' from 'BB'.
FIB SBA Loan-Backed Adjustable Rate Certificates,
Series 2000-2
-- Class A notes downgraded to 'BBB' from 'A;
-- Class M notes downgraded to 'B' from 'BB'.
All of the aforementioned First International Bank transactions
are also removed from Rating Watch Negative. The transactions were
originally placed on Rating Watch Negative on November 5, 2002.
For the affirmed classes, the transactions are performing within
Fitch's expectations. The downgraded classes are experiencing
deterioration in credit quality and adverse collateral performance
within the securitizations, and the resulting decline in credit
enhancement available in each transaction.
Since Fitch's last rating action on February 7, 2003,
delinquencies within the FIB securitizations have remained at
historically high levels. Specifically, loans to borrowers in the
manufacturing, metals/steel mill, and millwork/textile industries
have contributed to the transactions' high delinquency and loss
levels, which have exceeded Fitch's initial base case assumptions.
Credit Enhancement and Excess Spread:
Structurally, the FIB securitizations contain a mechanism that
traps additional excess spread equal to the full amount of all
delinquent loans 180-720 days past due. Therefore, high
delinquencies have forced the transactions to reserve large
amounts of cash for delinquent loans over 180 days past due.
Consequently, high delinquencies have caused a significant
reduction in available excess spread, which has in turn,
negatively impacted credit enhancement. As a result, FIB's high
delinquencies and low excess spread levels have hindered the
transactions' abilities to absorb losses and build the reserve
accounts to required amounts.
Methodology Employed:
In its analysis, Fitch reviewed each securitization at the
individual loan level. For all loans greater than 90 days past
due, Fitch modeled expected losses and recoveries for each loan
based on the collateral supporting that loan. During its
collateral review, Fitch assessed expected recoveries on each
piece of collateral. Essential to Fitch's analysis was the
specific collateral type supporting the loans (i.e. machinery and
equipment, real estate and/or accounts receivable), appraised
values, FIB's lien position; historical recovery rates and FIB's
own expected recovery rates. After estimating future recoveries
and subsequent losses on each loan, Fitch defaulted all loans over
90 days past due in each transaction in order to estimate future
enhancement levels. This practice enabled Fitch to estimate the
amount of future enhancement that would be able to cover losses
for each class of notes.
Fitch's review also took into consideration certain top borrower
concentrations within the securitizations relative to current and
expected credit enhancement levels.
Fitch performed the same methodologies for its previous rating
actions on the FIB securitizations. Since its last review, Fitch
has observed that many of the delinquent loans greater than 90
days past due as of December 2002, remain delinquent as of May
2003 and have not yet been charged off. Between December 2002 and
May 2003, FIB has made downward revisions on its recovery
expectations for the majority of loans that remain 90+ days
delinquent. FIB's actual recovery rate per securitization ranges
between 13% and 31%. Fitch believes FIB's low recovery rates, slow
recovery timing and high losses are a direct reflection of the
poor collateral supporting the securitizations in addition to
FIB's subordinate lien positions in many cases.
Securitization-specific performance statistics as of June 30, 2003
are as follows:
FNBNE Business Loan Notes, Series 1998-A
-- pool factor of 26% and cumulative net losses of 5.77%;
-- the 90-720 day delinquency rate is 17.65% and the 180-720 day
delinquency rate is 11.76%.
FIB Business Loan Notes, Series 1999-A
-- pool factor of 45% and cumulative net losses of 11.78%;
-- the 90-720 day delinquency rate is 8.22% and the 180-720 day
delinquency rate is 8.22%.
FIB Business Loan Notes, Series 2000-A
-- pool factor of 48% and cumulative net losses of 15.77%;
-- the 90-720 day delinquency rate is 18.97% and the 180-720 day
delinquency rate is 13.86%.
FIB SBA Loan-Backed Adjustable Rate Certificates, Series 1999-1
-- pool factor of 46% and cumulative net losses of 7.57%;
-- the 90-720 day delinquency rate is 18.07% and the 180-720 day
delinquency rate is 13.28%.
FIB SBA Loan-Backed Adjustable Rate Certificates, Series 2000-1
-- pool factor of 60% and cumulative net losses of 15.37%;
-- the 90-720 day delinquency rate is 17.49% and the 180-720 day
delinquency rate is 14.94%.
FIB SBA Loan-Backed Adjustable Rate Certificates, Series 2000-2
-- pool factor of 68%; cumulative net losses of 5.90%;
-- the 90-720 day delinquency rate is 18.15% and the 180-720 day
delinquency rate is 11.83%.
Fitch continues to receive detailed securitization information
from UPS Capital on a monthly basis. Fitch will continue to
closely monitor these transactions and may take additional rating
action in the event of further deterioration.
FIB, formerly First National Bank of New England, is a Connecticut
Bank and Trust Company organized in 1955 and headquartered in
Hartford, Connecticut. Prior to August 2001, FIB was a wholly
owned subsidiary of First International Bancorp, Inc., a Delaware
Corporation. United Parcel Service, headquartered in Atlanta,
Georgia, purchased FIB in August 2001.
FLEMING COMPANIES: Plan Filing Exclusivity Extended to Nov. 27
--------------------------------------------------------------
Fleming Companies, Inc., and its debtor-affiliates obtained the
Court's approval extending their Exclusive Periods. The Court gave
the Debtors the exclusive right to file and propose a plan until
November 27, 2003, and the exclusive right to solicit acceptances
of that plan until January 26, 2004. (Fleming Bankruptcy News,
Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900)
GALEY & LORD: Obtains Conditional Exclusivity Period Extension
--------------------------------------------------------------
By order of the U.S. Bankruptcy Court for the Southern District of
New York, Galey & Lord, Inc., and its debtor-affiliates obtained
an extension of their exclusive periods. The Court gives the
Debtors, until September 9, 2003, the exclusive right to file
their plan of reorganization and until November 3, 2003, to
solicit acceptances of that Plan. However, if 100% of the
Postpetition Lenders do not commit to a DIP Facility Extension on
or before August 12, 2003, the Debtors' Exclusive Plan Filing
Period will expire on August 19, 2003, and its Solicitation Period
will expire on October 24, 2003.
Galey & Lord, a leading global manufacturer of textiles for
sportswear, including cotton casuals, denim, and corduroy, and is
a major international manufacturer of workwear fabrics, filed for
chapter 11 protection on February 19, 2002 together with its
affiliates (Bankr. S.D.N.Y. Case No. 02-40445). When the Company
filed for protection from its creditors, it listed $694,362,000 in
total assets and $715,093,000 in total debts. Joel H. Levitin,
Esq., Esq., at Dechert represents the Debtors and Michael J. Sage,
Esq., at Stroock & Stroock & Lavan LLP, represents the Official
Committee of Unsecured Creditors.
GALEY & LORD: Reduces Total Commitment Under DIP Agreement
----------------------------------------------------------
On February 19, 2002, Galey & Lord, Inc. and each of its domestic
subsidiaries filed voluntary petitions under Chapter 11 of Title
11, United States Code in the United States Bankruptcy Court for
the Southern District of New York (Case Nos. 02-40445 through 02-
40456 (ALG)).
The Company and such subsidiaries remain in possession of their
assets and properties and continue to operate their businesses and
manage their properties as debtors-in-possession pursuant to
Sections 1107(a) and 1108 of the Bankruptcy Code. On February 19,
2002, the Company and such subsidiaries filed a motion seeking to
enter into a credit facility of up to $100 million in debtor-in-
possession financing with First Union National Bank and Wachovia
Securities, Inc. On February 21, 2002, the Bankruptcy Court
entered an interim order approving the facility and authorizing
immediate access to $30 million. On March 19, 2002, the Bankruptcy
Court entered a final order approving the entire $100 million DIP
financing.
As permitted under the terms of the final DIP financing agreement,
the Company previously exercised its right to permanently reduce
the Total Commitment (as defined in the DIP Agreement) under the
DIP Agreement from $100 million to $75 million, effective
September 24, 2002.
As permitted under the terms of the DIP Agreement, the Company has
further exercised its right to permanently reduce the Total
Commitment under the DIP Agreement from $75 million to $50
million, effective as of July 25, 2003. At July 25, 2003, the
Company had no outstanding borrowings under the DIP Agreement
(except for outstanding standby letters of credit of approximately
$7.5 million) and the Company had domestic cash on hand of
approximately $7.3 million.
GENESIS HEALTH: Continued Improvement in Labor Cost Containment
---------------------------------------------------------------
Genesis Health Ventures, Inc. (Nasdaq: GHVI) announced income from
continuing operations and net income of $12.4 million and $6.5
million, respectively for the quarter ended June 30, 2003. These
results include the effect of certain strategic planning,
severance and other related costs, as well as tax gains which are
described below. Excluding the effect of these costs and gains,
income from continuing operations and net income on an as adjusted
basis were $15.3 million and $9.4 million, respectively for the
quarter ended June 30, 2003.
For the nine months ended June 30, 2003, income from continuing
operations and net income were $38.6 million and $23.1 million,
respectively. These results also include the effect of certain
strategic planning, severance and other related costs and the
impact of certain tax and transactional gains which are described
below. Excluding the effect of these costs and gains, income from
continuing operations and net income on an as adjusted basis were
$41.0 million and $25.5 million, respectively.
In addition to the Company's strategic related costs and gains
described below, the overall decline in earnings is due to the
impact of the "Medicare Cliff", which had the effect of reducing
income from continuing operations by $3.7 million for the third
quarter of 2003 and $11.0 million for the year-to-date period in
2003.
"Growth this quarter was driven by NeighborCare's increasing
operational strength with double-digit revenue growth and
expanding margins," said Robert H. Fish, Chairman and Chief
Executive Officer. "ElderCare's performance was strengthened this
quarter by a continued reduction in our use of nursing agency
labor."
During the current and prior year periods, Genesis recognized
costs associated with the spin-off of its eldercare operations and
the transformation of Genesis to a pharmacy-based business.
During the quarter and nine months ended June 30, 2003, such costs
before income taxes were $11.5 million and $21.3 million,
respectively, compared to $12.6 million in the comparable periods
of the prior year. The significant level of strategic costs in
the current year quarter of $11.5 million is principally due to
$7.2 million of costs to tender employee stock options and
restricted stock grants prior to the spin-off and the remaining
$4.3 million includes severance costs for a reduction in force and
spin-off related legal, accounting and other professional fees.
In the prior year quarter and nine months ended June 30, 2002,
Genesis recognized $2.6 million and $4.3 million, respectively of
debt restructuring and reorganization costs. Also during these
periods, Genesis recognized several significant one-time gains.
During the nine months ended June 30, 2003, Genesis realized $11.3
million of gains, principally from a break-up fee associated with
an attempted pharmacy acquisition. During the three and nine
months ended June 30, 2002, Genesis realized gains of $0.2 million
and $21.9 million, respectively, associated with an arbitration
award. During the three and nine months ended June 30, 2003 and
2002, Genesis realized reductions of income tax expense of $4.4
million and $10.3 million, respectively due to changes in the tax
law.
Consolidated Financial Summary
Consolidated revenues for the third quarter ended June 30, 2003
grew 6.5% to $668.7 million versus $628.1 million in the
comparable period in the prior year. For the nine months ended
June 30, 2003, revenues grew 5.3% to $1,957.2 million versus
$1,857.9 million in the comparable period in the prior year.
Increased revenues were primarily driven by growth in
NeighborCare.
Consolidated EBITDA, as adjusted for the costs and gains described
above, for the third quarter ended June 30, 2003, was $53.9
million compared to $54.2 million for the same period in the prior
year. The decline in EBITDA as adjusted was caused by the impact
of the Medicare Cliff, as described above, but was offset by the
growth in EBITDA of the pharmacy business.
NeighborCare
NeighborCare's revenues for the third quarter ended June 30, 2003
grew 11.7% to $317.0 million versus $283.6 million in the
comparable period in the prior year. For the nine months ended
June 30, 2003, revenues grew 9.5% to $914.9 million versus $835.4
million in the comparable period in the prior year.
NeighborCare's revenue growth was driven not only by an increase
in the number of beds served this quarter versus the same period
in the prior year, but also by an increase in the revenue per bed.
Growth in number of beds served is a result of a reconfigured
sales force, improved client retention and the addition of two new
pharmacy sites during the quarter. NeighborCare's increase in
revenue per bed was a result of further improvement in its quality
mix, serving more skilled nursing beds and fewer assisted living
beds.
NeighborCare's EBITDA for the third quarter ended June 30, 2003
increased 22.3% to $33.4 million compared to $27.3 million in the
same period in the prior year. For the nine months ended June 30,
2003, NeighborCare's EBITDA increased 15.2% to $92.6 million
compared to $80.4 million in the same period in the prior year.
Pharmacy EBITDA margins increased to 10.0% this quarter versus
8.8% in the comparable quarter in the prior year and 9.6% last
quarter. Margin increases in the quarter are attributed to a
previously announced margin expansion initiative. This program is
now operational in all seven pharmacy regions. John J. Arlotta,
Vice Chairman said, "We are very pleased with the progress we have
made thus far with our margin improvement program and feel we are
well positioned to continue to drive down our costs while
maintaining our high quality of service."
ElderCare
Inpatient revenues for the third quarter ended June 30, 2003 were
consistent at $303.6 million versus $302.7 million in the
comparable period in the prior year. For the nine months ended
June 30, 2003, inpatient revenues were $905.2 million compared to
$899.3 million in the same period in the prior year. Despite the
Medicare Cliff, inpatient revenues increased as a result of
improved rates from private pay and Medicaid sources.
Inpatient EBITDA for the third quarter ended June 30, 2003 was
$28.9 million compared to $34.7 million in the same period in the
prior year. For the nine months ended June 30, 2003, inpatient
EBITDA was $85.4 million compared to $106.9 million in the same
period in the prior year. The decline in EBITDA was primarily
driven by the impact of the Medicare Cliff, as previously
discussed, but was offset by moderating nursing labor costs, which
grew 3.7% on a per patient day basis in the current year quarter
compared to the same period in the prior year, and 5.6% in the
current year-to-date period compared to the same period last year.
Agency labor costs also declined this quarter almost 40% over the
same period in the prior year. Overall nursing costs and the
agency component of those costs improved as a result of the
Company's continued efforts to efficiently manage overtime
utilization and to reduce reliance on agency staffing.
Quarter over quarter, overall nursing labor costs declined nearly
1% to $77.98 per patient day and agency labor costs declined 5.2%
while maintaining the level of nursing hours per patient day.
"The operating performance of the business that will form Genesis
HealthCare Corporation continues to meet our expectations," stated
George V. Hager Jr., the appointed Chief Executive Officer of GHC.
"Our occupancy levels continue to exceed industry-averages, we
have seen demonstrated success in our labor staffing and
scheduling cost-reduction initiatives, our rehabilitation business
continues to add new contracts and maintain productivity levels,
and overhead costs, both direct and indirect, have been consistent
all year."
Reimbursement Update
On August 4, 2003, the Centers for Medicare & Medicaid Services
published in the Federal Register the final fiscal year 2004
skilled nursing facility prospective payment system rules
effective October 1, 2003. The final rules make two significant
enhancements to the market basket adjusting the fiscal year 2004
base rates by 6.26% (3% increase in the annual update factor and a
3.26% upward adjustment correcting for previous forecast errors).
These two changes are estimated to increase Medicare payment rates
per patient day by $19. The final rules also provide for the
continuation through fiscal year 2004 of certain payment add-ons
which were authorized in the Balanced Budget Refinement Act of
1999 to compensate for non-therapy ancillaries.
The recent economic downturn has had a negative affect on most
state revenues and has put pressure on state budgets. Given that
Medicaid outlays are a significant component of state budgets, the
Company expects continuing cost containment pressures on Medicaid
outlays in the states in which it operates. State specific
details are just emerging as state legislatures begin the task of
approving budgets. However, initial indication points to
inflationary type increases of 3 - 4% in most states as was
previously anticipated.
Liability Insurance Update
During the quarter ended June 30, 2004, Genesis successfully
renewed its professional liability insurance coverage through
May 31, 2004. Consistent with the Company's previous program
structure, Genesis retains self-insurance limits of approximately
$14.0 million with coverage in excess of the self-insured limit of
approximately $100.0 million through third-party carriers on
both an occurrence and aggregate basis. On a continuing
operations basis, overall pre-tax liability insurance expense
increased approximately $3.0 million on an annual basis in
connection with the renewal.
Spin-Off Update
Genesis' spin-off of its ElderCare businesses is on track for
October 2003.
Share Repurchase Program Update
On March 20, 2003, Genesis announced that its Board of Directors
had authorized the Company to repurchase up to $50.0 million of
the Company's common stock. As of June 30, 2003, Genesis had
repurchased approximately $36.2 million of the Company's common
stock or 2.3 million shares of common stock, through privately
negotiated transactions and in the open market, representing 5.5%
of the common stock outstanding.
Discontinued Operations
On October 1, 2001, the Company adopted the provisions of
Statement of Financial Accounting Standards, No. 144 "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of". Under SFAS 144, discontinued businesses
including assets held for sale are removed from the results of
continuing operations and presented as a separate line on the
statement of operations.
Outlook
The Company is reaffirming its guidance for fiscal year 2003.
Genesis Health Ventures (Nasdaq: GHVI) provides healthcare
services to America's elders through a network of NeighborCare
pharmacies and Genesis ElderCare skilled nursing and assisted
living facilities. Other Genesis healthcare services include
rehabilitation and respiratory therapy, group purchasing, and
diagnostics. Visit http://www.ghv.comto learn more about the
Company.
As previously reported, Standard & Poor's Ratings Services
affirmed the ratings on Genesis Health Ventures Inc. -- at BB+.
At the same time, the ratings have been removed from CreditWatch,
where they were placed Oct. 3, 2002. The removal from CreditWatch
reflects the company's announcement that its board has approved a
plan that splits Genesis into two public companies.
GLOBAL CROSSING: Consolidated Net Loss for June Tops $99 Million
----------------------------------------------------------------
Global Crossing filed a Monthly Operating Report with the U.S.
Bankruptcy Court for the Southern District of New York, as
required by its Chapter 11 reorganization process. Results
reported in the June 2003 MOR are unaudited.
In June 2003, Global Crossing reported consolidated revenue of
approximately $252 million. Consolidated access and maintenance
costs were reported as $168 million, while other operating
expenses were $81 million.
"Our business showed steady growth in several areas during June,
including gains in revenue and EBITDA. Additionally, June was a
strong month for cash performance, with healthy cash collections.
We ended June with $559 million in consolidated cash, a $22
million increase from the previous month," noted John Legere,
Global Crossing's CEO. "Our company remains strong, our customers
and employees have stayed loyal, and we continue to look
positively toward our emergence from Chapter 11 as a bright new
beginning for Global Crossing."
Global Crossing's consolidated cash balance of approximately $559
million as of June 30, 2003 was comprised of approximately $222
million in unrestricted cash (including $67 million of cash held
by Global Marine) and $337 million in restricted cash.
Consolidated EBITDA was reported at $3 million. The consolidated
net loss for June 2003 was $99 million. The net loss increase from
May is in part due to higher professional fees and one-time
restructuring costs. As discussed below, the reported June 2003
depreciation and amortization of $95 million, and therefore the
June operating loss and net loss, would have been reduced
substantially if the financial statements in the June MOR had
reflected the tangible asset impairment anticipated by Global
Crossing.
As previously reported, in connection with the independent audits
being conducted for 2001 and 2002, Global Crossing concluded that
its Global Marine subsidiary should no longer be classified as a
discontinued operation since the newly emerged Global Crossing
expects to retain this business. As a result, Global Marine was
reclassified into Global Crossing's continuing operations
beginning with the May MOR. When historical financial statements
are filed for 2001 and 2002 Global Marine will be presented as
continuing operations for all periods presented. The April
financial information in the tables below have been amended from
previous press releases to include Global Marine as part of
continuing operations to enhance comparability with June financial
results.
Global Crossing provides telecommunications solutions over the
world's first integrated global IP-based network, which reaches 27
countries and more than 200 major cities around the globe. Global
Crossing serves many of the world's largest corporations,
providing a full range of managed data and voice products and
services.
On January 28, 2002, Global Crossing Ltd. and certain of its
subsidiaries (excluding Asia Global Crossing and its subsidiaries)
commenced Chapter 11 cases in the United States Bankruptcy Court
for the Southern District of New York (Bankruptcy Court) and
coordinated proceedings in the Supreme Court of Bermuda (Bermuda
Court). On the same date, the Bermuda Court granted an order
appointing joint provisional liquidators with the power to oversee
the continuation and reorganization of the Bermuda-incorporated
companies' businesses under the control of their boards of
directors and under the supervision of the Bankruptcy Court and
the Bermuda Court. Additional Global Crossing subsidiaries
commenced Chapter 11 cases on April 23, August 4 and August 30,
2002, with the Bermuda incorporated subsidiaries filing
coordinated insolvency proceedings in the Bermuda Court. The
administration of all the cases filed subsequent to Global
Crossing's initial filing on January 28, 2002 has been
consolidated with that of the cases commenced on January 28, 2002.
Global Crossing's Plan of Reorganization, which was confirmed by
the Bankruptcy Court on December 26, 2002, does not include a
capital structure in which existing common or preferred equity
will retain any value.
On November 18, 2002, Asia Global Crossing Ltd., a majority-owned
subsidiary of Global Crossing, and its subsidiary, Asia Global
Crossing Development Co., commenced Chapter 11 cases in the United
States Bankruptcy Court for the Southern District of New York and
coordinated proceedings in the Supreme Court of Bermuda, both of
which are separate from the cases of Global Crossing. Asia Global
Crossing has announced that no recovery is expected for Asia
Global Crossing's shareholders. Asia Netcom, a company organized
by China Netcom Corporation (Hong Kong) on behalf of a consortium
of investors, has acquired substantially all of Asia Global
Crossing's operating subsidiaries except Pacific Crossing Ltd., a
majority-owned subsidiary of Asia Global Crossing that filed
separate bankruptcy proceedings on July 19, 2002. Global Crossing
no longer has control of or effective ownership in any of the
assets formerly operated by Asia Global Crossing.
Please visit http://www.globalcrossing.comfor more information
about Global Crossing.
HORIZON PCS: Streamlines Operations and Terminates 300 Employees
----------------------------------------------------------------
As previously reported, Horizon PCS, Inc., has been attempting to
negotiate a modification of the terms of its management agreements
with Sprint PCS. Horizon PCS has been unsuccessful to date in
these negotiations. The Company's proposal to Sprint PCS
contemplated concessions from the Company's creditors and equity
holders and that Sprint and the Company would enter into an arms-
length modification of their agreements to provide fee relief and
predictability to the Company.
Based primarily upon the failure of the Sprint negotiations,
Horizon PCS is implementing a company-wide work force reduction to
further reduce costs that are within the Company's control. The
employment of approximately 300 employees will be terminated, and
the Company is closing approximately 19 of its 42 company-owned
sales and service centers to reduce costs in areas where revenues
are not currently meeting criteria for return on investment.
Horizon is also converting approximately 13 of its other company-
owned sales and service centers to customer service centers.
In connection with its cost reduction efforts, Horizon PCS has
significantly reduced work on the expansion of its network and the
enhancement of its network capacity.
Horizon PCS currently has over 300,000 subscribers. As a result of
the cost reduction efforts, management anticipates that the
Company's new subscriber additions will decline significantly.
Horizon PCS Inc.'s March 31, 2003 balance sheet shows a total
shareholders' equity deficit of about $341 million.
Horizon PCS is one of the largest PCS affiliates of Sprint,
based on its exclusive right to market Sprint wireless mobility
communications network products and services to a total
population of over 10.2 million in portions of 12 contiguous
states. Its markets are located between Sprint's Chicago, New
York and Raleigh/Durham markets and connect or are adjacent to
15 major Sprint markets that have a total population of over 59
million. As a PCS affiliate of Sprint, Horizon markets wireless
mobile communications network products and services under the
Sprint and Sprint PCS brand names. For more information, visit
http://www.horizonpcs.com/
Sprint operates the largest, 100-percent digital, nationwide PCS
wireless network in the United States, already serving more than
4,000 cities and communities across the country. Sprint has
licensed PCS coverage of more than 280 million people in all 50
states, Puerto Rico and the U.S. Virgin Islands. In August 2002,
Sprint became the first wireless carrier in the country to
launch next generation services nationwide delivering faster
speeds and advanced applications on Vision-enabled Phones and
devices. For more information on products and services, visit
http://www.sprint.com/mr PCS is a wholly-owned tracking stock
of Sprint Corporation trading on the NYSE under the symbol
"PCS." Sprint is a global communications company with
approximately 72,000 employees worldwide and nearly $27 billion
in annual revenues and is widely recognized for developing,
engineering and deploying state-of-the art network technologies.
JLG INDUSTRIES: Completes Acquisition of Textron's OmniQuip Unit
----------------------------------------------------------------
JLG Industries, Inc., (NYSE: JLG) has completed the purchase of
the OmniQuip business unit of Textron. JLG purchased the assets of
Trak International, Inc., which include all operations relating to
the Sky Trak(R) and Lull(R) brand telehandler products, for a
purchase price of $100 million. Sales for the purchased operations
in calendar year 2002 totaled approximately $217 million.
"We are pleased that this transaction has been completed in such a
short time period," commented Bill Lasky, Chairman of the Board,
President and Chief Executive Officer. "We have formed a dedicated
integration team which has developed a comprehensive plan designed
to fully integrate the OmniQuip operations into JLG. To this end,
today, we have communicated our vision for the integration with
the OmniQuip people and have announced our intended closing of the
Port Washington, WI facility with the process to begin in October
and to be completed over the following 12 months. The Mendota
Heights, MN facility closure is expected to be completed
concurrently over a nine-month period. However, we expect to
retain the best people, particularly within the engineering and
military contract staff, as well as continue the operations at the
Oakes, ND facility. With our successful transfer of our own
telehandler production from our Orrville, OH facility into our
McConnellsburg operations last year, we have an experienced team
to implement our integration plan for the Sky Trak and Lull brand
machines.
"These identified 'hard' synergies represent ongoing cost savings
of approximately $27 million annually. Furthermore, expected
'soft' synergies from common components, product designs and
distribution channels will result in additional savings going
forward. When combined with JLG's industry-leading after-sales and
support services, these synergies will offer our customers
significantly increased value."
Commenting on the overall financial impact, Jim Woodward,
Executive Vice President and Chief Financial Officer stated, "The
integration plan involves moving the telehandler production to our
Pennsylvania facilities and, as a result, we will incur estimated
expenditures totaling approximately $45 million over a four-year
period. In addition to the $100 million purchase price, we will
capitalize approximately $24 million associated with personnel
reductions, facility closings and other restructuring costs, while
approximately $21 million in increased pre-tax costs is associated
with integration expenses such as plant start up costs and
facility operating expenses that will impact the income statement.
However, ongoing savings from hard synergies after the absorption
of integration costs will result in approximately $27 million
annually.
"The fiscal 2004 impact will be approximately $28 million of which
$18 million is associated with personnel reductions, facility
closings and other restructuring costs capitalized as part of the
purchase, with approximately $10 million in pre-tax costs to
impact the income statement. Also, of the $28 million amount, $24
million will be cash and $4 million will be non-cash charges.
Approximately $19 million of synergies are expected to be realized
this year.
"From a revenue mix standpoint, the impact on JLG is significant -
reducing the dependency on aerial work platforms with a better
balance between aerials and telehandlers. This acquisition further
enhances JLG's position as an industry leader and provides our
customers with a broader choice of products and services."
The Port Washington, WI, Mendota Heights, MN, and Oakes, ND
facilities represent approximately 500,000, 40,000 and 78,000
square feet of space, respectively and employ a total of
approximately 530 people.
JLG Industries, Inc., is the world's leading producer of mobile
aerial work platforms and a leading producer of telehandlers and
telescopic hydraulic excavators marketed under the JLG(R),
Gradall(R), Lull(R) and Sky Trak(R) trademarks. Sales are made
principally to rental companies and distributors that rent and
sell the Company's products to a diverse customer base, which
includes users in the industrial, commercial, institutional and
construction markets. JLG's manufacturing facilities are located
in the United States and Belgium, with sales and service locations
on six continents.
As reported in Troubled Company Reporter's July 15, 2003 edition,
Standard & Poor's Ratings Services places its BB corporate credit
and senior unsecured debt ratings on JLG Industries Inc. on
CreditWatch with negative implications. Hagerstown, Maryland
based JLG is a construction equipment manufacturer.
JP MORGAN: Fitch Affirms Low-B Ratings on Six Note Classes
----------------------------------------------------------
J.P. Morgan Chase Commercial Mortgage Securities Corp.'s
commercial mortgage pass-through certificates, series 2001-CIBC1,
are affirmed by Fitch Ratings as follows: $28.9 million class A1,
$132.0 million class A2, $607.0 million class A3 and interest-only
classes X1 and X2 at 'AAA', $43.1 million class B at 'AA', $40.6
million class C at 'A', $12.7 million class D at 'A-', $25.4
million class E at 'BBB', $14.0 million class F at 'BBB-', $29.2
million class G at 'BB+', $10.1 million class H at 'BB', $7.6
million class J at 'BB-', $12.7 million class K at 'B+', $5.1
million class L at 'B', and the $5.1 million class M at 'B-'. The
$20.3 million class NR certificates are not rated by Fitch. The
affirmations follow Fitch's annual review of the transaction,
which closed in March 2001.
The rating affirmations reflect the consistent loan performance
and minimal reduction of the pool collateral balance since
closing.
GMAC Commercial Mortgage Corp., the master servicer, collected
year-end 2002 financials for 73% of the pool balance. Based on the
information provided, the resulting YE 2002 weighted average debt
service coverage ratio is 1.49 times compared to 1.46x at issuance
for the same loans.
Currently, three loans (1.2%) are in special servicing. The
largest loan (0.51%) is secured by an industrial property in
Atlanta, Georgia and is currently 90 days delinquent. The property
has been 52% occupied since December 2002. The foreclosure sale
scheduled for July 2003 was postponed due to the borrower filing
for bankruptcy in June 2003. The next largest specially serviced
loan (0.43%) is secured by a multifamily property in Dallas, TX
and is currently 30 days delinquent. The property has suffered
from the occupancy decline caused by the soft market and from
increased expenses.
Fitch is also concerned that the largest loan in the deal, 65
Broadway (4.9%), has outstanding servicer advances.
Fitch will continue to monitor this transaction, as surveillance
is ongoing.
KISTLER AEROSPACE: Signs-Up Davis Wright as Bankruptcy Attorneys
----------------------------------------------------------------
Kistler Aerospace Corporation asks for permission from the U.S.
Bankruptcy Court for the Western District of Washington to employ
Davis Wright Tremaine LLP as Counsel in this bankruptcy
proceeding.
The Debtor reports that it selected Davis Wright because of its
expertise in the fields of debtors' and creditors' rights and
business reorganizations and in all other aspects of the law
related to a Chapter 11 case.
Before the Petition Date, the Debtor's Board of Directors approved
by unanimous consent the retention of Davis Wright as the Debtor's
bankruptcy counsel to:
a. advise tire Debtor of its rights, powers and duties as
debtor and debtor-in-possession continuing to operate
and manage its business and property under Chapter 1 I
of tire Bankruptcy Code;
b. take all actions necessary to protect and preserve the
Debtor's bankruptcy estate, including the prosecution of
actions on the Debtor's behalf, the defense of any
action commenced against the Debtor, negotiations
concerning all litigation in which the Debtor is
involved, evaluating and (where appropriate) filing
objections to claims filed against the Debtor in this
bankruptcy case, and the compromise or settlement of
claims;
c. advise the Debtor concerning, and prepare on behalf of
the Debtor, all necessary applications, motions,
memoranda, responses, complaints, answers, orders,
notices, reports, and other papers and review all
financial and other reports required from the Debtor as
debtor in possession in connection with administration
of these Chapter I1 case;
d. advise the Debtor with respect to, and assist in the
negotiation and documentation of, financing agreements,
debt and DIP financing orders and related transactions;
e. review the nature and validity of any liens asserted
against the Debtor's property and advise the Debtor
concerning the enforceability of such liens and advise
the Debtor regarding:
(i) its ability to initiate actions to collect and
recover property for the benefit of its estate;
(ii) any potential property dispositions; and
(iii) executory contract and unexpired lease
assumptions, assignments, and rejections and lease
restructuring and recharacterizations;
f. negotiate with creditors concerning a plan of
reorganization, prepare the plan of reorganization,
disclosure statement and related documents, take the
steps necessary to confirm and implement the plan of
reorganization, including, if needed, negotiations for
financing the plan;
g. advise Debtor on its debt restructuring and render
general legal services to the Debtor as needed
throughout the course of this Chapter 11 case, including
bankruptcy and restructuring, corporate, environmental,
finance, litigation, real estate, regulatory,
securities, labor and tax assistance and advice;
h. assist in negotiations with potential buyers of Debtor's
assets and prepare the necessary documentation for airy
court approved sale transactions; and
i. provide such other legal advice or services as may be
required in connection with this Chapter 11 case or the
general operation and management of the Debtor's
business.
The Debtor will pay Davis Wright's professionals their standard
hourly rates of:
C. Keith Allred $365 per hour
Ragan L. Powers $340 per hour
Joseph D. Weinstein $375 per hour
Youssef Saeifer $260 per hour
Mark Bailey $235 per hour
Jennifer L. Dumas $225 per hour
Lucy Endel Bassli $210 per hour
Kistler Aerospace Corporation, headquartered in Kirkland,
Washington is developing a fleet of fully reusable launch vehicles
to provide lower cost access to space for Earth orbiting
satellites. The Company filed for chapter 11 protection on July
15, 2003 (Bankr. W.D. Wash. Case No. 03-19155). Youssef Sneifer,
Esq., at Davis Wright Tremaine LLP, represents the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed $6,256,344 in total assets and
$587,929,132 in total debts.
LAND O'LAKES: Enters Marketing Agreement with Dairy Marketing
-------------------------------------------------------------
Dairy Marketing Services and Land O'Lakes, Inc., announced an
agreement to jointly market milk from both organizations in the
Northeastern United States. This agreement will involve
approximately 16 billion pounds of milk produced annually by dairy
producers represented by the two organizations in that region.
Officials of DMS and Land O'Lakes said the focus of the agreement
is to provide greater efficiencies and increased savings in the
areas of milk marketing, assembly and transportation. The
ultimate goal of this agreement is to enhance returns to all
members.
"This agreement is based on our common dedication to operational
efficiency and a shared commitment to benefit the dairy producers
we represent," said Land O'Lakes President and Chief Executive
Officer Jack Gherty. "It will enable us to leverage the combined
resources and expertise of our two organizations to reduce costs,
while enhancing service to our customers."
"By jointly marketing milk supplies and redirecting milk to the
closest destination, we will generate savings for both
organizations," said DMS Chief Executive Officer Rick Smith.
"These administrative and operational savings will enable the two
organizations to better serve dairy farmers and customers alike."
Gherty and Smith added that the marketing alliance recognizes the
intensely competitive and rapidly consolidating dairy marketplace,
Land O'Lakes and DMS' commitment to customers and the two
companies' overlapping geography. The agreement applies only to
the marketing of commodity milk. Both organizations will retain
separate operations for membership, member services and programs,
producer payroll and cooperative governance.
Dairy Marketing Services, LLC is a milk-marketing organization
that serves dairy producers and the industry by combining the milk
supplies of independent and cooperative farms for the purposes of
creating efficiency and reduction of cost on milk assembly, field
services and transportation. DMS was created as a result of a
joint partnership between Dairylea Cooperative and Dairy Farmers
of America's Northeast Council.
Land O'Lakes -- http://www.landolakesinc.com-- is a national,
farmer-owned food and agricultural cooperative, with sales
approaching $6 billion. Land O'Lakes does business in all fifty
states and more than fifty countries. It is a leading marketer of
a full line of dairy-based consumer, foodservice and food
ingredient products across the U.S.; services its international
customers with a variety of food and animal feed ingredients; and
provides farmers and local cooperatives with an extensive line of
agricultural supplies (feed, seed, crop nutrients and crop
protection products) and services.
As previously reported in Troubled Company Reporter, Moody's
Investors Service downgraded the ratings on Land O'Lakes, Inc.
Outlook is stable.
Rating Action To From
Land O'Lakes, Inc.
* Senior implied rating B1 Ba2
* Senior secured rating B1 Ba2
* Senior unsecured issuer rating B2 Ba3
* $250 million Senior secured bank
facility, due 2004 B1 Ba2
* $291 million Senior secured term
loan A, due 2006 B1 Ba2
* $234 million Senior secured term
loan B, due 2008 B1 Ba2
* $350 million 8.75% Senior unsecured
guaranteed Notes, due 2011 B2 Ba3
Land O'Lakes Capital Trust I
* $191 million 7.45% Trust preferred
securities B3 Ba3
The lowered ratings reflect the company's weaker-than-expected
operating performance, giving rise to a constrained financial
flexibility and the deterioration of credit protection measures.
LEAP WIRELESS: Court Approves Fifth Amended Disclosure Statement
----------------------------------------------------------------
U.S. Bankruptcy Court Judge Adler approves Leap Wireless
International Inc.'s Disclosure Statement accompanying the Fifth
Amended Joint Plan of Reorganization dated as of July 30, 2003.
The document contains the right amount of the right kind of
information creditors need to make informed decisions about
whether to vote to accept or reject the Plan. The Court further
orders that:
(1) All objections to the Disclosure Statement not withdrawn
are overruled;
(2) The forms of the Ballots and Master Ballots are approved;
(3) The Debtors are authorized and directed, as soon as
practicable, but no later than August 7, 2003, to transmit
by first-class United States mail to all known Holders of
Claims and Interests the Solicitation Package. In
addition, Holders of Claims in Classes that are entitled
to vote to accept or reject the Plan will also receive a
Ballot and a Ballot return envelope as part of the
Solicitation Package;
(4) With respect to the distribution of Master Ballots, the
Debtors are authorized to send Master Ballots to record
holders of the Old Vendor Debt Claims and the Senior Note
Claims, including, without limitation, brokers, banks,
dealers, or other agents or nominees, and each Master
Ballot Agent will be entitled to receive reasonably
sufficient copies of Ballots to distribute to the
applicable beneficial owners of Claims;
(5) Ballots accepting or rejecting the Plan must be received
by 4:00 p.m. Pacific Standard Time on September 8, 2003 to
Poorman-Douglas Corporation. Ballots received after the
Voting Deadline will not be counted;
(6) If a creditors casts more than one Ballot voting the same
Claim before the Voting Deadline, the last Ballot received
is deemed to supersede all prior Ballots;
(7) The Confirmation Hearing and the hearing on the valuation
of the Debtors will take place on September 29, 2003
through October 3, 2003 and October 7, 2003 through
October 8,2003 at 10:00 a.m. Pacific Standard Time each
day before Honorable Louise DeCarl Adler; provided,
however, that the Confirmation Hearing may be continued
from time to time by the Court or the Debtors without
further notice;
(8) All objections to Confirmation of the Plan must be in
writing, filed with the Clerk of the Bankruptcy Court and
served upon, so as to be received on or before September
8, 2003, at 4:00 p.m. Pacific Standard Time;
(9) The Debtors will file their brief in support of the
confirmation of the Plan on or before 12:00 p.m. Pacific
Standard Time on September 26, 2003;
(10) The Debtors will file a declaration regarding voting
results on or before September 22, 2003;
(11) The Record Date for purposes of determining which
creditors are entitled to vote on the Plan will be July
25, 2003;
(12) The Debtors, the Informal Vendor Debt Committee, the
Official Unsecured Creditors' Committee and MCG PCS, Inc.
will designate their experts regarding valuation on or
before August 5, 2003. Expert witness reports must be
filed with the Court and served on or before September 8,
2003. Supplemental expert reports and expert declaration
will be filed and served on or before September 22, 2003;
and
(13) The Debtors are authorized to take or refrain from taking
any action necessary or appropriate to implement the terms
of and the relief granted in this Order without seeking
further order of the Court. (Leap Wireless Bankruptcy
News, Issue No. 8; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
LEGACY HOTELS: Successfully Closes Olympic Hotel Acquisition
------------------------------------------------------------
Legacy Hotels Real Estate Investment Trust (TSX: LGY.UN) completed
the acquisition of the Olympic Hotel, located in Seattle. Fairmont
Hotels & Resorts will manage the property, which is officially
flagged "The Fairmont Olympic Hotel, Seattle".
Commenting on the transaction, Neil J. Labatte, President and
Chief Executive Officer of Legacy, said, "We are pleased to be
adding such a high-quality heritage asset to our portfolio. This
Seattle hotel is an exceptional property in an important market
and represents the qualities we seek for our portfolio of luxury
hotels." Added Mr. Labatte, "This irreplaceable property is a
natural complement to Legacy's strong Fairmont presence in both
Vancouver and Victoria, British Columbia."
The purchase price for the property, including closing costs, was
approximately US$105 million, or Cdn$145 million, and was financed
through the assumption of an existing first mortgage of
approximately US$44 million, or Cdn$61 million, and available
credit facilities.
Fairmont has agreed to make a payment to Legacy to acquire the
long-term management contract. The terms of the agreement have
been approved by Legacy's Independent Trustees.
Legacy expects that this acquisition will enhance the portfolio's
current performance and create long-term value for unitholders.
Built in 1924 and located in the heart of Seattle's fashionable
Rainier Square neighborhood, this 450-room property, including 209
suites, blends classic ambience with state-of-the-art amenities.
Minutes away from the city's arts & entertainment districts, the
AAA Five Diamond hotel features two restaurants and two lounges, a
fully equipped fitness center with indoor pool, high-speed
Internet access in all guestrooms and 20,000 square feet of
versatile meeting and function space.
Legacy is Canada's premier hotel real estate investment trust with
22 luxury and first-class hotels in Canada and two in the United
States, consisting of over 10,500 guestrooms. The portfolio
includes landmark properties such as Fairmont Le Chateau
Frontenac, The Fairmont Royal York, The Fairmont Empress and The
Fairmont Washington, D.C.
* * *
As previously reported, Standard & Poor's Ratings Services
downgraded its ratings on Legacy Hotels Real Estate Investment
Trust (Legacy REIT or the trust) to 'BB-'. At the same time, the
senior unsecured debt rating was lowered to 'B+' from 'BB+'. The
outlook is negative.
The 'BB-' long-term corporate credit rating on Legacy REIT
reflects the deterioration of its business risk profile and
financial risk profile. Legacy REIT's credit strengths include a
portfolio of good quality real estate assets and its prominent
market position. Legacy REIT's credit weaknesses include the
aggressive business and financial policies of management, weak and
deteriorating credit measures, liquidity concerns, and uncertainty
in the lodging sector in general. Standard & Poor's is concerned
with Legacy REIT's business and financial strategies given a
challenging lodging environment when it is experiencing weakening
credit measures.
LUCILLE FARMS: Files March 31, 2003 Annual Report on Form 10-K
--------------------------------------------------------------
Lucille Farms, Inc., (NASDAQ: LUCYE) reported that the Company
filed its annual report on Form 10-K for its year ended March 31,
2003. In a press release issued on July 16, 2003, the Company
reported that it had delayed the filing of its annual report on
Form 10-K due to the failure to obtain on a timely basis a waiver
of a default in the debt service ratio covenant contained in its
USDA guaranteed 20-year term loan with First International Bank
(UPS Capital Business Credit). Said waiver has now been obtained
from the Bank.
Lucille Farms, Inc. is engaged in the manufacture, processing,
shredding and marketing of low moisture mozzarella cheese and the
shredding of other cheese and cheese blends. Also, utilizing
proprietary formulas and processes, the Company has developed a
line of mozzarella type cheese products, which include reduced
fat, non-fat and low moisture products. The company also sells
whey, which is a by-product of its cheese making operation. The
Company's low moisture mozzarella and mozzarella type cheese
products are manufactured in the Company's USDA approved
production facility in Swanton, Vermont and are made of natural
ingredients.
MAGELLAN HEALTH: Outlines Distribution of Share After Emergence
---------------------------------------------------------------
This table illustrates the distribution of Magellan Health shares
post-Effective Date and after conversion of MVS Securities to New
Common Stock.
No. of Shares No. of Shares
of New Common of New Common
Holder Stock* % Stock** %
------ ------------- ------ ------------- ------
PRIMARY SHARE OWNERSHIP
-----------------------
Senior Subordinated 8,997,664 59.0% 6,931,918 45.4%
Note Claim
Other General 681,557 4.5% 525,080 3.4%
Unsecured Claims
Magellan Preferred 198,548 1.3% 198,548 1.3%
Magellan Common 49,637 0.3% 49,637 0.3%
Stock Interests
Equity Offering/ 2,631,579 17.2% 2,631,579 17.2%
Equity Investor
(backstop of the
Equity Offering)
Equity Investor 2,631,579 17.2% 4,853,801 17.2%
(but not for
backstop of the
Equity Offering)
Houlihan Lokey 72,594 0.5% 72,594 0.5%
------------- ------ ------------- ------
Total 15,263,158 100.0% 15,263,158 100.0%
(Magellan Bankruptcy News, Issue No. 11: Bankruptcy Creditors'
Service, Inc., 609/392-0900)
MAIL-WELL: 2nd Quarter Results Show Year-Over-Year Improvements
---------------------------------------------------------------
Mail-Well, Inc., (NYSE: MWL) announced its results for the second
quarter and six-month period ended June 30, 2003. The net loss
for the quarter was $2.3 million, or $0.05 per share, and the net
income was $0.4 million for the six months of 2003 on sales of
$408 million and $835 million respectively, compared to a net loss
of $38.2 million or $0.80 per share and $171.6 million or $3.60
per share, on sales of $421 million and $864 million during the
same periods of 2002. These results reflect an after tax loss on
the disposition of discontinued operations of $0.6 million in the
second quarter of 2003. In the three months ended June 30, 2002,
Mail-Well's net loss also included a charge for restructuring of
$9.3 million, a loss of $8.7 million on debt refinancing, together
with impairment losses related to discontinued operations and
assets held for sale of $19.3 million, none of which recurred in
2003.
EBITDA for the quarter and the first six months of 2003 was $27.3
million and $58.6 million, respectively, representing improvements
of 39% and 20% over the $19.6 million and $48.7 million achieved
by ongoing operations in the same periods in 2002.
Net cash provided by operating activities in the quarter ended
June 30, 2003 was $33.6 million, reversing the use of cash seen in
the first quarter of this year, as expected.
Paul Reilly, Chairman, President and CEO, stated, "The second
quarter, which has always been seasonally weaker, produced results
in line with our expectations. This was achieved on two percent
overall higher sales when excluding the $21 million of sales from
the operations that we have divested since last year. The year
over year increase in sales and profitability in the Print Segment
has continued as expected and has more than offset the drop in
volumes and prices experienced in both the Envelope and Printed
Office Products segments both of which continue to return EBITDA
margins in the double digit range. We continue to expect that the
full year 2003 will show EBITDA in a range of $130 to $140
million."
Reilly also stated, "Our focus on Total Customer Solutions and our
mobilization effort within all of our units are developing as
significant drivers of growth. Additionally, the federal 'Do Not
Call' program may result in a reallocation of budgets from
telemarketing to direct mail to reach prospects and customers.
This, together with normal seasonality and our ability to mitigate
pricing pressures by reducing costs as a result of previous
initiatives, should provide for sequential increase in
profitability in the third quarter."
Mail-Well (NYSE: MWL) specializes in three growing multibillion-
dollar market segments in the highly fragmented printing industry:
commercial printing, envelopes and printed office products. It
holds leading positions in each. Mail-Well currently has
approximately 10,000 employees and more than 85 printing
facilities and numerous sales offices throughout North America.
The company is headquartered in Englewood, Colorado.
* * *
As previously reported, Standard & Poor's lowered its corporate
credit rating on Mail-Well Inc., to double-'B'-minus from
double-'B', its subordinated debt rating to single-'B' from
single-'B'-plus, and its senior secured and senior unsecured
debt ratings to double-'B'-minus from double-'B'.
Standard & Poor's has also assigned its double-'B'- minus rating
to Mail-Well I Corp.'s $300 million senior secured revolving
bank facility due 2005, which is guaranteed by its holding
company parent, Mail-Well Inc., and all non-borrower
subsidiaries.
The outlook, S&P says, is negative.
MELLON RESIDENTIAL: Fitch Takes Actions on Various Note Classes
---------------------------------------------------------------
Fitch Ratings has upgraded 6 classes, affirmed 8 classes and
downgraded 1 class of Mellon Residential Funding Corporation,
mortgage pass-through certificates as follows:
Mellon CRA Mortgage Loan Trust 1998-A
-- Class B-1 upgraded to 'AA+' from 'AA';
-- Class B-2 upgraded to 'A+' from 'A';
-- Class B-3 affirmed at 'BBB';
-- Class B-4 affirmed at 'BB';
-- Class B-5 downgraded to 'CCC' from 'B'.
Mellon Residential Funding Corporation, Mortgage Pass-Through
Certificates, Series 1998-2 Pools 1 & 2
-- Class A affirmed at 'AAA';
-- Class B-1 affirmed at 'AAA';
-- Class B-2 affirmed at 'AAA';
-- Class B-3 upgraded to 'AAA' from 'AA';
-- Class B-4 upgraded to 'AAA' from 'A+';
-- Class B-5 upgraded to 'AA' from 'BBB+'.
Mellon Residential Funding Corporation, Mortgage Pass-Through
Certificates, Series 1998-TBC1
-- Class A affirmed at 'AAA';
-- Class B-1 affirmed at 'AAA';
-- Class B-2 affirmed at 'AAA';
-- Class B-3 upgraded to 'AAA' from 'AA+'.
These rating actions are being taken as a result of low
delinquencies and losses, as well as increased credit support.
Further information regarding current delinquency, loss and credit
enhancement statistics is available on the Fitch Ratings web site
at http://www.fitchratings.com
NATIONAL STEEL: Seeks 4th Extension of Solicitation Exclusivity
---------------------------------------------------------------
The U.S. Bankruptcy Court has set August 19, 2003 as the hearing
date to determine the adequacy of National Steel Corporation's
Disclosure Statement in connection with their Plan. The Debtors'
Exclusive Solicitation Period expires on August 20, 2003.
According to Colleen McManus, Esq., at Piper Rudnick, in Chicago,
Illinois, since the hearing on the Disclosure Statement will be
on August 19, the Debtors will not be able to initiate the
solicitation process by the current solicitation deadline.
Ms. McManus explains that even if the Court approves the
Disclosure Statement, the Debtors have to perform all these tasks
in order to solicit Plan acceptances:
(a) locate all parties entitled to vote on the Plan;
(b) produce Ballots for all parties entitled to vote;
(c) provide the Ballots to concerned parties;
(d) provide notice to the parties detailing the deadline to
file Ballots; and
(e) provide notice to all appropriate parties detailing the
deadline to file objections to the confirmation plan.
Therefore, the Debtors ask Judge Squires to extend their
Solicitation Period until October 20, 2003.
Ms. McManus tells the Court that the Debtors have shown
substantial progress by filing the Plan. The Debtors and their
major creditor constituencies entered into an Intercreditor
Settlement Term Sheet, which the Court approved in connection
with the U.S. Steel Sale Hearing on April 21, 2003. Accordingly,
all material economic terms of the Plan have been agreed to
between the Debtors and the major creditors. Thus, Ms. McManus
points out, the Debtors' requested extension is not being sought
to pressure creditors in any way or to give the Debtors an
enormous advantage over their creditors. Rather, the extension
is really nothing more than a scheduling issue. The Debtors
assure the Court that the extension does not prejudice any of
their creditors because they are no longer sustaining any
operating loss. (National Steel Bankruptcy News, Issue No. 33;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
NATIONSRENT INC: Wants Nod for Guaranty Capital Financing Pact
--------------------------------------------------------------
NationsRent Inc., and its debtor-affiliates sought and obtained
the Court's permission to enter into a Master Inventory Financing,
Security and Settlement Agreement with American Finance Group
Inc., doing business as Guaranty Capital Corporation. In
connection with their equipment lease review program, the Debtors
have actively been involved in arm's-length discussions with
Guaranty Capital regarding their obligations under various
prepetition equipment leases and financing arrangements. The
Debtors obtain from Guaranty Capital equipment for their rental
fleet.
Under the Financing Agreement, Guaranty Capital will sell to the
Debtors the leased equipment. The Debtors will finance the
purchase of the Inventory by borrowing $3,900,000 from Guaranty
Capital. The Debtors will issue to Guaranty Capital a promissory
note identifying the Inventory subject to the Loan. Guaranty
Capital will make a Loan to the Debtors at 7% interest rate per
annum. However, in an event of default, Guaranty Capital will
add a 2% premium per annum to the interest rates. The Debtors
will pay the interest quarterly in arrears beginning on July 1,
2003. To secure the Debtors' outstanding obligations under the
Financing Agreement and with respect to the Loan, Guaranty
Capital will have a purchase money security interest in the
Inventory, including certain proceeds.
The Financing Agreement also contemplates the modification of the
automatic stay to permit Guaranty Capital to:
-- file necessary documents to perfect its interests and
liens granted with respect to the Financing Agreement; and
-- on the occurrence of an event of default:
(a) terminate the Financing Agreement, the promissory
note and any other documents and agreements in
connection with the Loans;
(b) declare the Debtors' outstanding obligations under the
Financing Agreement and the Note immediately due and
payable;
(c) exercise the rights of a secured party under the
Uniform Commercial Code to take possession and dispose
of the collateral under the Financing Agreement and the
Loan; and
(d) exercise any other rights and remedies under applicable
law.
The Financing Agreement also contemplates the termination of the
Debtors' Prepetition Agreements with Guaranty Capital on the
effective date of the sale. As a consequence, Guaranty Capital
will have a $426,719 allowed unsecured non-priority claim on
account of the deficiency claims and other general unsecured
claims against the Debtors pursuant to the Prepetition Agreements.
Guaranty Capital will have no further claims. On the Effective
Date, each party will fully release the other from any and all
causes of action, liabilities and obligations under the
Prepetition Agreements.
Michael J. Merchant, Esq., at Richards, Layton & Finger, P.A.,
notes that the cost to the Debtors in complying with the
Agreement's terms is reasonable. The monthly payments due to
Guaranty Capital under the Financing Agreement will be
significantly less than what the Debtors are currently paying
Guaranty Capital under the Prepetition Agreements. Of equal
importance, the Debtors will also be able to continue to own and
utilize the purchased Inventory at the end of the Agreement's
term. Mr. Merchant further states that the secured financing
terms are necessary. Guaranty Capital is unwilling to provide
financing on unsecured, administrative expense basis. The
granting of the security interest is essential in obtaining the
favorable terms for the purchase of the Inventory. (NationsRent
Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
NEENAH FOUNDRY: Files Prepackaged Chapter 11 Petition in Del.
-------------------------------------------------------------
Neenah Foundry Company has filed a prepackaged plan of
reorganization under Chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court for the District of Delaware.
The Company has received the requisite votes to approve the Plan
from its existing senior bank lenders and holders of the Company's
outstanding 11-1/8 % series A, B, D, and F senior subordinated
notes due 2007. As previously announced, Neenah has received
financing commitments to fund the cash distributions under the
Plan and will seek court approval to implement the financial
restructuring by September 30, 2003. In addition to the Plan, the
Company and its affiliates filed bankruptcy petitions this morning
with the federal bankruptcy court in Wilmington, Delaware.
"We are pleased that our banks and bondholders have overwhelmingly
voted in support of our Plan," said William Barrett, Chief
Executive Officer of Neenah. Barrett added, "We are looking
forward to completing this financial restructuring, as it will
significantly reduce our debt and required cash interest expense
payments, thereby improving the Company's operating flexibility."
In addition to restructuring its long-term debt pursuant to the
Plan, the Company is seeking court approval to continue to operate
consistent with past practice and to pay trade claims of the
Company's suppliers in the ordinary course.
Prior to the implementation of the Plan, the Company will offer
the holders of its existing 11-1/8 % Notes the right to purchase
their pro rata share of units comprised of (x) new 11% senior
second secured notes of the Company, and (y) warrants to purchase
approximately 45% of the common stock of the Company's parent, ACP
Holdings. To the extent that any holders of the Company's existing
11-1/8% Notes elect not to purchase their pro rata share of such
units Neenah has arranged for other parties, including certain
current holders of the 11-1/8% Notes, to purchase them.
The plan of reorganization will be subject to normal conditions
including funding of the exit financing facilities, which include
the sale of the senior second secured notes, and final court
approval of the terms of the Plan. The complete terms of the
restructuring are contained in the Company's Disclosure Statement
and Plan of Reorganization, which have been filed with the
bankruptcy court in Wilmington, Delaware. The Disclosure Statement
and Plan of Reorganization contain important information about the
Company, the restructuring, the new financing commitments, and
related matters.
Neenah Foundry Company manufactures and markets a wide range of
iron castings and steel forgings for the heavy municipal market
and selected segments of the industrial markets. Neenah is one of
the larger independent foundry companies in the country, with
leading market share of the municipal and industrial markets for
gray and ductile iron castings and forged steel products.
Additional information about Neenah is available on the Company's
Web site at http://www.nfco.com
NEENAH FOUNDRY: Case Summary & 30 Largest Unsecured Creditors
-------------------------------------------------------------
Lead Debtor: Neenah Foundry Company
2121 Brooks Avenue
Neenah, Wisconsin 54956
aka Neenah Corporation
Bankruptcy Case No.: 03-12416
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
ACP Holding Company 03-12414
NFC Castings, Inc. 03-12415
Cast Alloys, Inc. 03-12417
Neenah Transport, Inc. 03-12418
Gregg Industries, Inc. 03-12420
Advanced Cast Products, Inc. 03-12421
Mercer Forge Corporation 03-12422
Deeter Foundry, Inc. 03-12423
Dalton Corporation 03-12425
Belcher Corporation 03-12428
Peerless Corporation 03-12429
A&M Specialties, Inc. 03-12433
Dalton Corporation, Warsaw Manufacturing Facility 03-12435
Dalton Corporation, Ashland Manufacturing Facility 03-12436
Dalton Corporation, Stryker Machining Facility 03-12437
Dalton Corporation, Kendallville Manufacturing Fac 03-12438
Type of Business: Gray & ductile iron foundries, metal machining
to specifications and steel forging
Chapter 11 Petition Date: August 5, 2003
Court: District of Delaware
Judge: Peter J. Walsh
Debtors' Counsel: Laura Davis Jones, Esq.
Pachulski, Stang, Ziehl Young Jones & Weintraub
P.C.
919 N. Market Street
16th Floor
Wilmington, DE 19899
Tel: 302-652-4100
Fax: 302-652-4400
-and-
James H.M. Sprayregen, P.C., Esq.
James W. Kapp III, Esq.
Kirkland & Ellis LLP
200 East Randolph Drive
Chicago, IL 60601
Total Assets: $494,046,000
Total Debts: $580,280,000
Debtor's 30 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
The Bank of New York, Bond Debt $282,000,000
Trustee
Corp. Trust Division
101 Barclay Street
8th Floor West
New York, NY 10286
Tel: 212-815-5445
Fax: 212-815-3272
Sadoff Iron & Metal Trade Debt $1,095,794
PO Box 1138
Fond du Lac, WI 54935-1138
Contact: Shel Lasky
Tel: 920-921-2070
Fax: 920-921-1283
Sturgis Iron & Metal Trade Debt $642,494
70675 Centerville Road,
PO Box 579
Sturgis, MI 49091
Attn: Jean Lee
Tel: 616-651-7851
Fax: 616-651-4189
The Timken Company Trade Debt $421,673
PO Box 751580
Charlotte, NC 28275
Attn: Matt
Tel: 800-236-0354
Fax: 440-715-3938
Citizens Gas Trade Debt $360,327
PO Box 66643
Indianapolis, IN 46266
Attn: Carol Johnson
Tel: 317-264-8807
Fax: 317-264-8805
Dauber Company Trade Debt $273,208
577 North 18th Road
Tonica, IL 61370
Attn: Eric Dauber
Tel: 800-682-8478
Fax: 815-442-3669
Hickman Williams & Co. Trade Debt $251,689
Location 00286
Cincinnati, OH 45264
Attn: Bill Snyder
Tel: 909-822-5591
Fax: 909-822-7595
Chaparral Steel Company Trade Debt $207,182
American Colloid Company Trade Debt $204,953
Continental Forge Company Trade Debt $193,280
Dana Corporation Trade Debt $175,404
Caterpiller, Inc. Trade Debt $174,981
R I Lampus Company Trade Debt $167,403
HA International LLC Trade Debt $153,012
Foseco Trade Debt $145,117
Scott Sales Company Trade Debt $139,648
Pacific Coast Recycling, LLC Trade Debt $131,943
B&H Pattern Trade Debt $124,340
H.P. Core Company, Inc. Trade Debt $120,242
OmniSource Corp. Trade Debt $106,455
Wefab Trade Debt $105,992
Elkem Metals Trade Debt $105,657
Lewis Salvage Trade Debt $104,314
Selee Corp Trade Debt $98,563
Baseline Tool Trade Debt $94,668
MP Steel Trade Debt $88,416
Fox Valley Wood Trade Debt $85,727
S.L. Fusco Trade Debt $85,052
Air Products Trade Debt $81,913
Miller & Company Trade Debt $79,714
NISTAR: Fitch Ups & Affirms RMBS Ratings from 2 Securitizations
---------------------------------------------------------------
Fitch Ratings has taken rating action on the following NISTAR
mortgage pass-through certificates:
NISTAR, mortgage pass-through certificates, series 1999-1
-- Class A affirmed at 'AAA';
-- 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 'BBB-';
-- Class B-5 affirmed at 'B'.
NISTAR, mortgage pass-through certificates, series 1999-2
-- Class A affirmed at 'AAA';
-- 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 delinquencies
and losses, as well as credit support levels.
NORTHWESTERN CORP: Fitch Cuts & Places Ratings on Watch Negative
----------------------------------------------------------------
Fitch Ratings lowers NorthWestern Corp.'s outstanding senior
unsecured debt obligations to 'CCC' from 'B-' and its senior
secured debt to 'B-' from 'BB-'. NOR's outstanding trust preferred
securities are affirmed at 'C'. All ratings have been placed on
Rating Watch Negative.
The downgrades reflect continued erosion in NOR's cash and
liquidity position and the growing pressure to complete planned
asset sales in the near term, including enforcement of an existing
contract to sell certain electric transmission assets. The revised
rating levels also incorporate the growing potential that NOR will
pursue a debt restructuring, the terms of which are not available.
In a prelude to a potential debt for equity exchange offer, NOR is
seeking shareholder approval at its August 26, 2003 annual meeting
to increase the authorized number of common shares from 50 million
to 250 million. If considered coercive, an exchange will be
treated as a distressed debt exchange, and affected debt issues
will be considered to have defaulted. Of particular concern is the
impact of NOR's weakened liquidity position on the operations of
core electric and gas utility operations, which had been expected
to be a stabilizing factor in NOR's overall credit profile. In
particular, Fitch believes that NOR's tight liquidity situation
coupled with abnormally high natural gas prices during the summer
inventory build period has made it increasingly difficult for the
company to post LCs and/or cash collateral to execute its
commodity purchases. Moreover, a recent decision by the Montana
Public Service Commission to disallow the pass through certain gas
costs could create further financial stress for NOR's utility
division. Fitch notes that NOR management is working to arrange
several liquidity enhancing transactions which would stabilize the
company's working capital situation if ultimately consummated.
Within the speculative grade rating category, Fitch's ratings
incorporate expected levels of recovery for the various creditor
classes. Accordingly, the two notch separation between NOR's
secured and unsecured ratings reflects the enhanced asset
protection available to senior secured bondholders. As of March
31, 2003, NOR's total utility division assets carried a book value
of approximately $1.85 billion versus total outstanding secured
debt of $865 million, total senior unsecured debt of a further
$865 million, and other unsecured financial obligations, which
Fitch estimates at about $100 million. In addition, NOR's capital
structure includes $370 million of trust preferred securities,
under which NOR previously elected to defer underlying interest
payments. Fitch's recovery analysis for utilities primarily
incorporates a view on the value of a corporation on a
restructured rather than liquidated basis, though the difference
between a liquidated recovery based on the book value of assets
and cash flow multiple approach do not currently yield materially
different outcomes in notching terms.
NorthWestern Corp.
-- $865 million outstanding first mortgage bonds, secured
pollution control obligations, and secured medium term notes
lowered to 'B-' from 'BB-';
-- $865 million outstanding senior unsecured notes and medium term
notes lowered to 'CCC' from 'B-'.
NWPS Capital Financing I, NorthWestern Capital Financing I,
NorthWestern Capital Financing II; and NorthWestern Capital
Financing III:
-- $305 million outstanding trust originated preferred securities
affirmed at 'C'.
Montana Power Capital I:
-- $65 million outstanding cumulative quarterly income preferred
securities (QUIPS) affirmed at 'C'.
NRG ENERGY: Court Nixes Move to Terminate SC Exclusivity
--------------------------------------------------------
The Informal Committee of Secured Bondholders of NRG South
Central Generating LLC and NRG Northeast Generating LLC asks the
Court to:
-- terminate the exclusive periods to file and solicit
acceptances of a plan of reorganization of NRG South
Central Generating LLC, Louisiana Generating LLC and NRG
New Roads Holdings LLC; or
-- alternatively, appoint a Chapter 11 trustee in the South
Central Debtors' cases.
South Central is a Delaware limited liability company. LaGen is
a wholly owned subsidiary of South Central that owns electrical
generation assets known as Big Cajun I and Big Cajun II. New
Roads is a wholly owned subsidiary of South Central; its
principal assets are real estate interests.
The equity interests of South Central are owned in equal amounts
by NRG Central US LLC and South Central Generation Holding LLC.
These two holding companies are wholly owned subsidiaries of the
debtor NRG Energy, Inc.
South Central is not an operating company. Its officers are
employees of NRG Energy, Inc. South Central has no employees.
LaGen, however, is a true operating company and employs its own
management.
South Central currently owes approximately $750,750,000 to
noteholders under two series of Senior Secured Bonds, the 8.962%
Senior Secured Series A Bonds Due 2016 and the 9.479% Senior
Secured Series B Bonds Due 2024. The SC Bonds were issued
pursuant to a Trust Indenture, dated March 30, 2000, between
South Central, LaGen, and HSBC Bank USA -- the Indenture Trustee,
as successor to JPMorgan Chase Bank, and JPMorgan Chase Bank as
Depositary Bank and Collateral Agent. LaGen guaranteed the SC
Bonds obligations. Included as collateral for the SC Bonds are
the LaGen membership interests that South Central owns, and all
assets owned by LaGen.
On November 18, 2002, the Informal Committee directed the
Indenture Trustee to accelerate the full amount of principal,
interest, premium, if any, and other amounts payable under the SC
Bonds pursuant to the terms of the Indenture. On November 20,
2002, the Indenture Trustee issued a notice of acceleration of
the SC Bonds. On November 20, 2002, the Collateral Agent also
issued a declaration of a trigger event under the Indenture. On
December 4, 2002, South Central, LaGen, the Indenture Trustee,
and JPMorgan Chase Bank entered into an Instruction and Indemnity
Agreement with holders of in excess of 1/3 of the SC Bonds to
allow the Informal Committee's oversight and control of its cash
collateral. Prior to the Petition Date, South Central missed two
principal payments under the Indenture. On the Petition Date,
approximately $80,000,000 in cash also constituting collateral
for the SC Bonds had been segregated and was in the accounts
maintained by the Collateral Agent.
Fred S. Hodara, Esq., at Akin, Gump, Strauss, Hauer & Feld LLP,
in New York, tells Judge Beatty that the circumstances of the
South Central Debtors' Chapter 11 cases are uncommon and atypical
when compared to the cases of NRG Energy, Inc. and certain of its
affiliated debtors. Each of the South Central Debtors was
organized as what is commonly referred to as a Special Purpose
Vehicle. These legal entities were formed to acquire certain
assets from Cajun Electric Cooperative and related companies, all
former Chapter 11 debtors in the Middle District of Louisiana.
The principal debt obligations owed by the South Central Debtors
were incurred to finance the acquisitions from Cajun.
According to Mr. Hodara, the reorganization of the South Central
Debtors should be considered as separate and distinct from the
reorganization of the other NRG companies now before the Court.
To recall, on their Petition Dates, Debtors NRG Energy, Inc., NRG
Power Marketing, Inc., NRG Finance Company I LLC, NRGenerating
Holdings B.V., and NRG Capital LLC -- the NRG Parent -- filed a
joint plan of reorganization. In the Parent Plan, there is no
proposal for the reorganization of the South Central Debtors nor
is there any provision for the payment of the debts owed by the
South Central Debtors. To date, the interests of the creditors
of the South Central Debtors have been completely ignored in
favor of the interests of the NRG Parent's creditors.
At least eight months prior to the filing of the South Central
Debtors' cases, purchase offers for the South Central Debtors or
their assets were solicited. In line with this, NRG Energy, Inc.
conducted half-hearted negotiations with DTE Energy Resources,
Inc. No purchase agreement was concluded due in large part to
the adverse influence and pressures being asserted by NRG Parent
creditor groups.
In stark contrast, the wishes of the true creditors of the South
Central Debtors have been completely ignored. Mr. Hodara relates
that the true parties-in-interest want to see a sale to DTE
pursuant to a reorganization plan for the South Central Debtors.
DTE is still interested in completing a transaction.
Thus, the Informal Committee wants the immediate termination of
the South Central Debtors' Exclusive Periods for them to move
forward with a reorganization plan that contemplates a sale to
DTE. The Informal Committee believes that these cases can and
should be quickly moved to the plan confirmation stage by
finalizing and submitting a joint plan of reorganization,
providing for the sale of at least the membership interests owned
by South Central in LaGen and New Roads to DTE. Moreover, the
Informal Committee's Plan will satisfy all of the allowed claims
of all of the creditors of the South Central Debtors. It is
contemplated that the acquisition entity DTE designated will
assume the South Central Indenture subject to certain
modifications.
Mr. Hodara notes that the on-going failure of the NRG Parent to
pursue the contemplated disposition of the South Central Debtors
results in the loss of the best opportunity for the South Central
noteholders and all other South Central Debtors' creditors to
maximize their recoveries. The NRG Parent should not be allowed
to exercise control of the South Central Debtors and use
exclusivity to jeopardize the interests of creditors, Mr. Hodara
maintains.
In fact, Mr. Hodara says, there was no valid business reason to
file Chapter 11 for South Central, LaGen and New Roads at this
time. The entities have a positive cash flow sufficient to meet
their operating obligations and are projected to have positive
cash flows sufficient to meet their operating obligations in the
future as none of the South Central Debtors required any DIP
financing. Thus, the filing of the South Central Debtors was
aimed at thwarting the exercise of the rights of the holders of
South Central Bonds under the Indenture.
Thus, Mr. Hodara asserts, termination of exclusivity is necessary
and appropriate because South Central will be unable to confirm a
plan of reorganization without the consent of the holders of the
South Central Bonds, unless the plan would not impair this sole
class of non-contingent creditors. Accordingly, the Informal
Committee will control the plan confirmation in any event and
should be permitted to file its own plan at this time to enable
the parties with the greatest economic stake in the reorganization
of the South Central Debtors to control the process and ensure the
maximization of recovery to the creditors of the South Central
Debtors.
According to Mr. Hodara, DTE is a qualified buyer ready, willing
and able to purchase the membership interests in LaGen and New
Roads. Based on initial negotiations, the purchase consideration
will most probably include an amount in cash, a significant
portion of which should be used to pay a portion of the principal
due on the South Central Bonds, assumption of the remaining
amount of the South Central Bonds with minor, consensual covenant
modification, and issuance of a subordinated note equal in amount
to the cash payment on the South Central Bonds, which will be
delivered to the appropriate holders of equity interests in South
Central in satisfaction of the interests.
Time sensitivities in this case also dictate an early termination
of exclusivity. Mr. Hodara informs the Court that LaGen is a
party to four long-term power supply contracts -- Form C contracts
with four electric cooperatives in the State of Louisiana. The
current Form C contracts will expire on March 31, 2004. In June
2002, the Cooperatives and LaGen signed extensions of the current
Form C contracts, which will commence on April 1, 2004 and expire
on March 31, 2009. The Extended Form C contracts have to be
approved by the Louisiana Public Service Commission. However, in
January 2003, the LPSC staff recommended to the LPSC Commissioners
that the Extended Form C contracts not be approved due to LaGen's
financial instability.
Because the contracts are good economic contracts for the
Cooperatives, the LPSC at its April 2003 open session meeting
approved a six-month extension of the current Form C contracts to
give LaGen sufficient time to complete a sale of its assets or a
Chapter 11 reorganization. The current Form C contracts will now
expire on September 30, 2004. Without the six-month extension,
the Cooperatives would have been forced to start their
solicitation process all over because it takes at least a year to
complete the solicitation and negotiation of Form C contracts.
If a sale of South Central's assets is not completed by
September 30, 2003, the renewal of the Form C contracts will be
in jeopardy. The LPSC is not going to approve the Form C
contracts without sufficient assurance of LaGen's and South
Central's financial stability or transfer of LaGen's assets to a
financially viable third-party.
Mr. Hodara reminds the Court that the Form C Contracts entail a
significant source of LaGen's revenue. The Form C Contracts
provide the South Central Debtors with stable cash flow streams
and profit margins. Loss of the Form C Contracts will reduce the
enterprise value of the South Central Debtors and reduce the
credit rating and value of the SC Bonds.
In the alternative, Mr. Hodara asserts, the Court should appoint
a Chapter 11 trustee for the South Central Debtors pursuant to
Section 1104(a) of the Bankruptcy Code. It is crystal clear to
the members of the Informal Committee that both those who are
managing the affairs of the South Central Debtors obligated on
the SC Bonds and certain NRG Parent creditors are not acting in a
fair and unbiased manner. The NRG Parent management is obviously
bending to the will of the NRG Parent creditors.
Since the value of the South Central equity, as tested by an
eight-month sale process and the South Central Debtors' own
valuation, is de minimis relative to the value of the over-all
enterprise, it appears that NRG Parent creditors would prefer to
keep ownership and control of the South Central Debtors on the
wish and a prayer that the enterprise value will significantly
appreciate over time. However, that free option is with enormous
risk to the only real stakeholders of the South Central Debtors.
Mr. Hodara points out that it is a well-recognized and accepted
proposition that cause to appoint a trustee exists under Section
1104(a)(1) simply where there are conflicts between the current
management and the estate's creditors or when creditors have
"completely lost confidence in the management of the business."
South Central Debtors' management is grossly mismanaging the
affairs of the South Central Debtors in direct contravention of
their fiduciary duty to the creditors of these estates. For
eight months, South Central Debtors' management has been
negotiating a sale of South Central Debtors' assets. By stalling
negotiations with the interested purchaser, management has
breached its fiduciary duties to the creditors of the South
Central Debtors.
Instead of acting in the best interests of the estates,
negotiations with the purchaser have focused on recoveries for
parent creditors that have no interest in the South Central
Debtors' assets. Management of the South Central Debtors has
ignored the requests of the only significant creditor group of
the South Central Debtors to finalize the terms of the sale in
flagrant disregard of the financial ramifications to the SC Bond
Collateral and the claims of unsecured creditors. The holders of
the SC Bonds are the only significant creditors of South Central,
with debt totaling $750,750,000.
Responses
1. The Official Committee of Unsecured Creditors
Evan D. Flaschen, Esq., at Bingham McCutchen, LLP, in Hartford,
Connecticut, argues that the Informal Committee and its
constituency are not the only true parties-in-interest. The
Official Committee members and its constituents have a
substantial economic stake in the South Central Debtors as well.
The Official Committee objects to the Informal Committee's
request precisely because it believes that the DTE proposal does
not reflect the true value of the South Central Debtors.
In addition, the Informal Committee does not cite any evidence to
support its contention that the NRG Parent is abdicating its
interest in, and withdrawing its attention from, the other
Debtors simply because it filed the Parent Plan on the Petition
Date. The Debtors led off with the Parent Plan both because of
the availability of financing conditioned on confirmation of the
plan and because it was not practicable to file plans with
respect to all of the Debtors on the Petition Date.
The Informal Committee's request sketches the terms of its plan
in vague terms and does not venture to predict when their plan,
and its accompanying disclosure statement, would be filed. A
party's mere statement of its intention to file a plan does not
constitute cause for termination of exclusivity.
Similarly, the Informal Committee's "firmly held view . . . that
these cases can and should be quickly moved to the plan
confirmation stage" and complaints that the NRG Parent has failed
to reveal the proposed treatment of the Secured Bondholders are
insufficient cause for termination. Mr. Flaschen contends that
it is in fact the Informal Committee, which seeks to exclude the
Debtors and the Official Committee from negotiations. If given
an opportunity to file a plan at this stage in these cases, the
Informal Committee will have no incentive to negotiate with the
Debtors or to consider the interests of the Official Committee's
broad constituency.
Moreover, the Informal Committee does not assert compelling
grounds for the conduct of what would amount to a fire sale at
this stage of these cases. Perhaps the Debtors will determine
that the sale of the South Central Debtors will yield the highest
return for all of the parties with economic interests. Perhaps
the Official Committee will seek to file a competing plan of its
own if the Debtors do not make satisfactory progress toward a
sale or reorganization. However, the Informal Committee would
have to demonstrate extraordinarily compelling reasons for the
Debtors and the Committee to hand over the keys.
Mr. Flaschen relates that the only purported cause for termination
of exclusivity that is extraneous to the Informal Committee's
overriding desire for the Secured Bondholders to be paid in full
is the possibility that a local regulatory authority will refuse
to extend certain supply contracts which expire on September 30,
2004 because the South Central Debtors are in Chapter 11
proceedings.
Furthermore, the Committee is hesitant to lend credence to the
Informal Committee's call for appointment of a Chapter 11 trustee
by lengthy argument. Mr. Flaschen refers to Section 1104 of the
Bankruptcy Code, which reflects a strong presumption that a
Chapter 11 debtor remain in possession of its assets and operate
its business in the ordinary course, and that courts should not
lightly exercise the power to appoint a trustee.
The Informal Committee asserts that appointment of a trustee is
warranted "when creditors have completely lost confidence in the
management of the business." Hence, the Informal Committee:
(i) claims that it has no faith in management because
management dares to consider the interests of the
creditors and equity holders of the NRG Parent, and
(ii) charges that "management is grossly mismanaging the
affairs of the South Central Debtors in direct
contravention of their fiduciary duty to creditors of
these estates."
At the same time, the Informal Committee cites the South Central
Debtors' positive cash flow, prepetition "mechanisms [that] had
been put in place to protect [their Collateral] and insure
operational stability," and "accumulated cash collateral of
approximately $8,000,000 on the Petition Date." However, the
Informal Committee has taken no discovery and produced no
"smoking gun" suggesting that current management has broken faith
with that responsibility. To the contrary, Mr. Flaschen says,
the very possibility that the value of the membership interests
in LaGen and New Roads may yield a significant return to the
South Central equity holders, to whom management clearly has a
fiduciary responsibility, and in turn, to other Debtors in the
ownership chain, suggests to the Committee that management is
fulfilling its fiduciary duties by resisting the Motion and
weighing alternatives available to the South Central Debtors.
Ultimately, the arguments for appointment of a trustee prove too
much, Mr. Flaschen says. In each instance, the Informal
Committee goes overboard in urging the Court to consider the
Secured Bondholders' interests to the exclusion of the Debtors
and other parties-in-interest. Accordingly, the Committee asks
the Court to deny the Informal Committee's request in its
entirety.
2. The South Central Debtors
The South Central Debtors do not support the Informal Committee's
request to terminate their Exclusive Periods on the bases that:
(a) the Bondholders have failed to satisfy the high burden
imposed on parties seeking to terminate the Exclusivity
Periods, or in the alternative, seeking to appoint a
Chapter 11 Trustee, and
(b) they have yet to determine whether a sale of the South
Central Assets on the terms currently proposed by DTE is
in the best interests of the South Central Debtors'
bankruptcy estates or interest holders.
Matthew A. Cantor, Esq., at Kirkland & Ellis, in New York, asserts
that the Informal Committee's request should be denied because:
(a) The South Central Debtors' Chapter 11 cases are large and
complex;
(b) The South Central Debtors require sufficient time to
prepare a Plan;
(c) The South Central Debtors have made good faith progress
towards reorganization.
(d) The South Central Debtors are financially sound, paying
their debts as they come due and are capable of preparing
a viable Plan. However, if the South Central Debtors did
not have the benefit of the automatic stay and were
required to pay the full $750,750,000 due under the
Prepetition Debt Facility, they would have no alternative
but to liquidate;
(e) The Chapter 11 Cases are at a very early state; and
(f) The initial Exclusivity Period has not yet elapsed.
On the other hand, consistent with its fiduciary duties, the
South Central Debtors continue to negotiate the terms of a
possible sale of the South Central Assets to DTE. The South
Central Debtors have yet to determine if a sale of the South
Central Assets to DTE is in the best interests of their bankruptcy
estates or interest holders. Mr. Cantor informs Judge Beatty
that:
(a) In light of the fact that prices for energy assets are
currently at or near their historic lows, a sale of the
South Central Assets needs to be carefully considered in
conjunction with other restructuring alternatives;
(b) The South Central Debtors are not convinced that DTE's
current offer provides sufficient consideration. South
Central's Assets is estimated at $887,154,000, excluding
cash, coal inventory and working capital;
(c) DTE's current offer does not account for substantial
improvements in the South Central Debtors' operations,
which have become very competitive;
(d) The non-price terms of DTE's current offer are
unacceptable to the South Central Group. Both parties
continue to disagree on NRG's representations and
warranties, NRG's potential post-closing liabilities,
NRG's closing covenants, the proposed break-up fees and
certain bankruptcy related provisions addressing the
Section 363 auction process, among others;
(e) Due to their large equity cushion, the Bondholders'
security interests are not at risk while the South Central
Debtors continue to negotiate with DTE. According to the
Kroll Valuation, the value of the South Central Assets
exceeds the Secured Debt by at least $136,404,000. In
contrast, a sale of the South Central Assets on the terms
DTE proposed will foreclose the equity holders from
realizing the full value of their interests in the South
Central Debtors;
(f) LaGen is unlikely to lose the Form C Contracts if a sale
of the South Central Assets is not consummated; and
(g) The South Central Debtors are not beholden to the NRG
creditors.
Mr. Cantor refutes the Bondholders' allegation that the South
Central Debtors has delayed in selling the South Central Assets
to DTE because they favor NRG's creditors over the Bondholders:
A. It was the Bondholders who forced the South Central Debtors
to file for bankruptcy protection under Chapter 11.
The Bondholders accelerated the entire outstanding principal
balance of approximately $750,750,000, which balance became
immediately due and payable, under a Prepetition Debt
Facility. Faced the constant threat that the Bondholders
would destroy the South Central Debtors' ability to survive as
viable businesses without external financing, the South
Central Debtors had no choice but to file for Chapter 11
protection.
B. NRG could not include the South Central Debtors in its Plan.
Pursuant to a certain agreement, Xcel agreed to pay
$752,000,000 to NRG if NRG emerges from bankruptcy by
December 15, 2003. Thus, rather than risk missing the
Effective Date and jeopardize the Xcel settlement, NRG
decided to omit the South Central Debtors from the Plan.
D. The Bondholders are not the only significant creditors of the
South Central Debtors. In fact, LaGen owes approximately
$22,000,000 to well over 400 third-party creditors.
In the alternative, the Bondholders failed to show that cause
exists to appoint a Chapter 11 Trustee. Mr. Cantor emphasizes
that the South Central Debtors have not engaged in any of the
conduct identified in Section 1104(a) of the Bankruptcy Code or
the applicable case law to constitute cause for appointment of a
trustee. By contrast, Mr. Cantor affirms that:
(1) The South Central Debtors have not acted fraudulently or
dishonestly.
The South Central Debtors have always acted honestly and
disclosed their affairs completely, accurately and in good
faith. Since the acceleration of the Prepetition Debt
Facility, the South Central Debtors have provided the
Bondholders with cash reimbursement budgets, detailed
documentation for each weekly reimbursement request
including invoices, related accounting entries, wiring
instructions, confirmations and detailed payroll records.
(2) The South Central Debtors have managed their businesses
competently.
The South Central Debtors are currently managed by a team
of executives and professionals who possess considerable
knowledge and expertise in energy and finance matters.
Owing to the management's restructuring efforts, the South
Central Debtors currently are financially sound and are
successfully operating their businesses in a difficult
industry environment.
(3) There is no deep-seated animosity and hostility between
the South Central Debtors and their creditors.
Despite their disagreements in this Chapter 11 case, the
Bondholders and the South Central Debtors have and will
continue to effectively collaborate, on a daily basis, on
a large number of issues and have already successfully
reached an interim agreement regarding the use of Cash
Collateral.
Section 1104(a)(2) of the Bankruptcy Code permits any party-in-
interest to move for appointment of a trustee if the appointment
would be "in the best interests of the creditors, any equity
security holders, and other interests of the estate." Thus, Mr.
Cantor asserts, it can never be sufficient if appointment is only
in the interests of creditors, much less the interests of a sub-
class of creditors like the Bondholders.
On the contrary, the South Central Debtors seek to accommodate
the interests of all estate constituents and maximize estate
value. In negotiating with DTE to sell the South Central Assets
for a fair price, the South Central Debtors are attempting,
consistent with their fiduciary duty, to maximize estate value
for the Bondholders, the non-Bondholder creditors, the equity
holders and other interest holders.
Accordingly, the South Central Debtors ask the Court to deny the
Informal Committee's request to terminate the exclusive periods.
* * *
Judge Beatty denies the Informal Committee's request without
prejudice. (NRG Energy Bankruptcy News, Issue No. 7; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ODETICS INC: Consummates Lease Obligations Restructuring
--------------------------------------------------------
Odetics Inc., (OTCBB:ODETA) has concluded a restructuring of its
lease obligations for its principal operating facilities located
in Anaheim. Under the revised terms, Odetics and its Iteris
subsidiary entered into two separate leases for space totaling
80,000 square feet located at their current Anaheim based
location.
Odetics has been relieved of a continuing lease obligation on
approximately 257,000 square feet. In exchange for the
restructured agreement, Odetics paid approximately $2.5 million in
cash that had been previously pledged as collateral on the lease,
in addition to giving the lessor 425,000 shares of Odetics Class A
Common Stock and a note payable for $814,000. The restructured
agreement is expected to save the company approximately $2.4
million per year in cash flow.
Commenting on the agreement, Greg Miner, Chief Executive Officer
stated, "Reaching agreement on the facilities lease is key to our
business going forward. The new agreements allow us to operate our
business without interruption to structure our business model in
the most optimal manner to enhance our future success."
Odetics products address the management needs of the
transportation and security industries. Odetics -- whose March 31,
2003 balance sheet shows a total shareholders' equity deficit of
about $4 million -- is a market leader for video-based sensors
used for surface transportation and is a developer of integrated
systems for facility security and trace detection of dangerous
chemicals and explosives. Odetics has headquarters in Anaheim. For
more information on the Company, visit http://www.odetics.com
ORGANOGENESIS INC: Plan Confirmation Hearing Set for Aug. 12
------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Massachusetts ruled
on the adequacy of the Disclosure Statement prepared by
Organogenesis, Inc. Pursuant to Section 1125 of the Bankruptcy
Code, the Court found that the Disclosure Statement contains the
right kind and amount of information for creditors to make
informed decisions about whether to vote to accept or reject the
Plan.
A hearing to consider confirmation of the Debtor's Plan is set for
August 12, 2003, at 1:30 p.m., before the Honorable William C.
Hillman.
All Non-Debtor parties with objections to the treatment proposed
by Organogenesis must file their objection with the Bankruptcy
Court before 4:30 p.m. tomorrow. Copies must also be served on:
1. Counsel to the Debtors
Foley Hoag LLP
155 Seaport Boulevard
Boston, MA 02210
Attn: Andrew Z. Schwartz, Esq.
Fax: 617-832-7000
2. Office of the US Trustee
1184 Thomas P. O'Neill, Jr. Federal Bldg.
10 Causeway Street
Boston, MA 0222-0143
Attn: Gary L. Donahue, Esq.
Fax: 617-565-6368
3. Counsel to the Post-Petition Investors
Duane Morris LLP
470 Atlantic Avenue
Suite 500
Boston, MA 02210
Attn: Paul D. Moore, Esq.
Tel: 617-289-9201
4. Counsel to the Committee
Goulston & Storrs PC
400 Atlantic Avenue
Boston, MA 02110
Attn: James F. Wallack, Esq.
Fax: 617-574-7674
5. Counsel to the Post-Petition Lenders
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, NY 10019
Attn: Dianne F. Coffino, Esq.
6. The Chapter 11 Examiner
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, MA 02109
Attn: Charles L. Glerum, Esq.
Fax: 617-248-4000
Organogenesis Inc., developer and manufacturer of skin
substitutes and related items, filed for chapter 11 protection
on September 25, 2002, (Bankr. Mass. Case No. 02-16944). Andrew Z.
Schwartz, Esq., at Foley Hoag LLP represents the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed $24,536,000 in total assets and
$32,346,000 in total debts.
O'SULLIVAN INDUSTRIES: March 31 Net Capital Deficit Tops $133MM
---------------------------------------------------------------
O'Sullivan Industries Holdings, Inc. (OTC Bulletin Board: OSULP),
a leading manufacturer of ready- to-assemble furniture, announced
its fiscal 2003 third quarter operating results which include
revised accounting for the company's tax sharing agreement with
RadioShack. O'Sullivan also announced that it has amended its
senior credit facility and sold its Utah manufacturing facility.
Revised Accounting for RadioShack Tax Sharing Agreement
The company's consolidated balance sheets will be restated as of
February 1994 to record the deferred tax asset created by the
increased tax basis in our assets as a result of elections under
Section 338(g) and 338(h)(10) of the Internal Revenue Code by
RadioShack and O'Sullivan. Simultaneously, we also recorded our
total obligation to RadioShack under the tax sharing agreement.
Each of these amounts was approximately $147.9 million as of
February 1994. These amounts were reduced as we realized benefits
from the increased deductions from our increased basis and made
payments to RadioShack. We have restated the March 2002 quarter to
reflect an additional valuation allowance of $84.5 million against
our net deferred tax assets, increasing tax expense for the amount
of the valuation allowance. The increased tax expense does not
affect O'Sullivan's cash flow or Earnings before Interest, Taxes,
Depreciation and Amortization.
"This restatement reflects a change in the timing of when certain
tax expenses are recognized for accounting purposes and has no
effect on the timing of our cash flow now, or in the future,"
commented Phillip Pacey, O'Sullivan senior vice president and CFO.
"We understand that any restatement of our financial results may
cause concern on the part of our investors. However, I believe
that the information contained in this announcement will help
assure the company's stakeholders that our financial stability and
capital resources are unaffected by this change."
Historical Accounting
In 1994, RadioShack, then Tandy Corporation, completed an initial
public offering of O'Sullivan. In connection with the offering, we
entered into a tax sharing and tax benefit reimbursement agreement
with RadioShack. RadioShack and O'Sullivan made elections under
the Internal Revenue Code with the effect that the tax basis of
our assets was increased to the deemed purchase price of the
assets, and an equal amount of such increase was included as
taxable income in the consolidated federal tax return of
RadioShack. The result was that the tax basis of our assets
exceeded the historical book basis we used for financial reporting
purposes.
The increased tax basis of our assets results in increased tax
deductions and reduced federal and state income taxes payable by
us. Under the tax sharing agreement, we are contractually
obligated to pay RadioShack nearly all of the federal tax benefit
expected to be realized with respect to such additional basis. The
payments under the agreement represent additional consideration
for the stock of O'Sullivan Industries, Inc. and further increase
the tax basis of our assets from the 1994 initial public offering
when payments are made to RadioShack.
To the extent the benefit of these basis step-up deductions caused
us to have a federal taxable loss, we were only obligated to pay
RadioShack to the extent that the benefits were used to reduce
taxable income to zero. Any additional tax deductions resulting
from the step-up create a net operating loss (NOL) carryforward on
our federal income tax return. Under the terms of the tax sharing
agreement, if we utilized this NOL carryforward to generate future
tax savings, we were also obligated to remit that benefit received
to RadioShack.
Since 1994, O'Sullivan has treated the amount due to RadioShack as
income tax expense when such amounts become payable and to the
extent that O'Sullivan Industries had sufficient taxable income.
Thus, our tax expense approximated what it would have been in the
absence of the Section 338(h)(10) step-up in basis and the tax
sharing agreement.
Under this accounting method, the deferred tax asset from both the
step-up in basis and the obligation to RadioShack was not recorded
on our consolidated balance sheets because we deemed the benefits
to be an asset of RadioShack. When the tax benefits were received
and paid to RadioShack, we recorded the payment as tax expense
since this amount would have been paid as federal income taxes in
the absence of the step-up in basis and the tax sharing agreement.
In November 1999, we completed a leveraged recapitalization
transaction that significantly increased our debt. As a result of
the higher debt levels from the recapitalization, we are incurring
increased interest expense, which RadioShack claimed should not
affect the tax benefits due them under the tax agreement. As
previously disclosed in our public filings, RadioShack pursued
this matter and prevailed in an arbitration ruling in March 2002.
We entered into a settlement agreement with RadioShack in May
2002. We now calculate payments to RadioShack based on pro forma
tax computations excluding the additional interest expense from
the recapitalization. If on a pro forma basis, we could have used
the deductions from the step-up in basis, we are required to make
a payment to RadioShack even though we may not be receiving any
current tax benefit from these deductions on our federal income
tax return.
Following the decision in the arbitration and the settlement
agreement with RadioShack, we recorded the $24.6 million payment
to RadioShack as a deferred tax asset at March 31, 2002. We
believed that this was appropriate as the payment represented the
tax benefit we could realize from future use of net operating
losses on our federal income tax returns if we had sufficient
taxable income in the future. After offsetting our deferred tax
liabilities of $8.0 million, we had a net deferred tax asset of
$13.4 million at March 31, 2002.
Under generally accepted accounting principles, we must determine
if it is more likely than not that we will realize the net
deferred tax asset as a reduction in our tax liabilities in the
future. GAAP requires objective evidence to support the more
likely than not conclusion. The arbitration decision dramatically
affected our liquidity, which reduced the amounts we could invest
in sales efforts or cost improvements, as most free cash flow
would now be used to pay RadioShack or repay our indebtedness. In
addition, it became evident to us by March 2002 that the prolonged
economic slowdown that started prior to September 11, 2001 was
continuing. This, coupled with the adverse effect on our liquidity
of the settlement, caused us to lower our projections of future
taxable income. Accordingly, we projected our expected future
taxable income utilizing operating performance we achieved in
fiscal 2002 assuming our performance would be no better or worse
over an extended period of time. Such projections indicate that we
would not have taxable income until 2009 when substantially all
the tax benefit deductions had been taken. At that point, the
projections indicated that our net operating losses existing at
that time would be utilized before they expire. However, we
currently have and expect to have taxable losses for a number of
years in the future. Projections over a long time are inherently
uncertain, and we cannot provide objective evidence that our
operations in 2009 and beyond will produce sufficient taxable
income. As a result, we provided a valuation allowance in our
March 2002 quarter of $13.4 million against all of our net
deferred tax assets with a corresponding charge to income tax
expense. Consistent with our prior accounting, both before and
after the recapitalization and merger, we did not record any
deferred tax assets related to future deductions from the step-up
in basis or any future obligations to RadioShack as they were
still contingent upon our taxable income in the future.
Similarly, in our June, September and December 2002 financial
statements, we accounted for each payment to RadioShack in the
same manner as the initial $24.6 million payment under the
settlement agreement by recording a deferred tax asset to the
extent that we could not benefit currently from the increased
deductions. We then provided a valuation allowance against the
additional deferred tax asset with a corresponding charge to
income tax expense on a quarter by quarter basis. We believed this
method was in conformity with accounting principles generally
accepted in the United States and consistent with our accounting
for the tax sharing agreement since 1994. O'Sullivan's independent
accountants were aware of the facts surrounding, and our
accounting for, the tax sharing agreement.
Revised Accounting
In connection with a review of our 2002 Annual Report on Form 10-K
by the staff of the SEC, O'Sullivan received a comment letter on
the accounting for the tax sharing agreement with RadioShack.
After reviewing our accounting again with our independent
accountants, we concluded that we should revise our method of
accounting for the tax sharing agreement and restate our financial
statements for all affected periods. The company and our
independent accountants then addressed the issue with the audit
committee of our Board of Directors. We have concluded discussions
with the staff of the SEC.
O'Sullivan determined that the deferred tax asset created by the
step-up in basis and the additional basis from the probable future
payments to RadioShack should be recorded as of February 1994. At
the same time, we recorded our obligation to RadioShack. The
amounts of the deferred tax asset and obligation to RadioShack
were each $147.9 million at February 1994. From 1994 through 2001,
we reduced the amount of the deferred tax asset and the obligation
to RadioShack as we realized the benefits of the deferred tax
asset and paid RadioShack amounts due under the tax sharing
agreement.
At March 31, 2002, a full valuation allowance was provided against
the $97.9 million net deferred tax asset, which consists of the
$13.4 million valuation allowance originally recorded in the March
2002 quarter plus an additional $84.5 million representing the
balance of the deferred tax asset at that time. The valuation
allowance of $97.9 million together with the $3.2 million tax
provision for the quarter represent the $101.1 million recorded as
tax expense in the March 2002 quarter. We recorded the valuation
allowance because we were unable to determine, based on objective
evidence, that is was more likely than not we would be able to
utilize our net operating losses prior to their expiration. If at
a future date we determine that some or all of the deferred tax
asset will more likely than not be realized, we will reverse the
appropriate portion of the valuation allowance and credit income
tax expense. The remaining maximum obligation to RadioShack was
$109.1 million at March 31, 2002. The obligation to RadioShack was
reduced by subsequent payments and was $75.2 million and $81.4
million at March 31, 2003 and June 30, 2002, respectively. We
currently believe that it is probable that the future payments to
RadioShack will be made.
In summary, instead of accounting for our deferred tax assets
resulting from the step-up in basis as tax expense through a
valuation allowance on a quarter by quarter basis as we make
payments to RadioShack under the tax sharing agreement, we revised
our accounting to record the aggregate deferred tax asset and the
obligation to RadioShack in February 1994. Our deferred tax asset
has been reduced as we have realized the benefits from 1994 to
2002 and was fully offset by the March 2002 valuation allowance.
Therefore, this revised method of accounting will increase our net
income (or reduce our net loss) and increase our net income
attributable to common stockholders (or reduce the loss) for each
quarterly period after March 31, 2002 through the quarter ending
March 31, 2009 or until we can determine, based on objective
evidence, that it is more likely than not that we will be able to
utilize our net operating losses prior to their expiration and
reverse all or a portion of the valuation allowance on our
deferred tax assets.
The timing or amounts of our payments to RadioShack as previously
disclosed in our public filings will not be affected by the
revised method of accounting. As we pay RadioShack, we will reduce
the obligation to RadioShack on our books.
O'Sullivan expects to file restated financial statements for the
affected periods with the Securities and Exchange Commission as
soon as possible. The effects of the restatement described in this
release and the attached tables are estimates and unaudited. Until
O'Sullivan issues its restated financial statements, investors
should not rely on the financial information contained in
O'Sullivan's previously filed annual report on Form 10-K and
auditor's report thereon for the fiscal year ended June 30, 2002
or on O'Sullivan's quarterly reports on Form 10-Q for the quarters
ended September 30, 2002 and December 31, 2002.
Fiscal Year 2003 Third Quarter Results
Net Sales
Net sales for the third quarter were $86.9 million, a decrease of
17.6% from sales of $105.5 million in the comparable period a year
ago. Year to date net sales were $237.5 million, a decrease of
12.7% from net sales of $272.0 million in the comparable period a
year ago.
Operations
Operating income for the third quarter was $8.7 million, or 10.0%
of net sales, a decrease of 43.6% from operating income of $15.3
million, or 14.5% of net sales, in the comparable period a year
ago. Year to date operating income was $24.7 million, or 10.4% of
net sales, a decrease of 18.0% from operating income of $30.1
million, or 11.1% of net sales, in the comparable period a year
ago. Included in operating income for the third quarter and nine
months ending March 31, 2003 is a $540,000 restructuring charge
related to the impairment of long-lived assets for our Utah
facility.
Income and EBITDA
Net income for the third quarter was $2.7 million compared to a
net loss of $91.8 million in the comparable quarter a year ago.
Year to date net income was $6.2 million compared to net loss of
$92.1 million in the comparable period a year ago. The net loss in
the prior year periods reflects increased income tax expense from
the revised accounting for the tax sharing agreement with
RadioShack. For comparison, our pre-tax income for the quarter and
nine months ended March 31, 2002 was $9.3 million and $8.9
million, respectively.
EBITDA for the third quarter was $12.4 million, or 14.2% of net
sales, a decrease of 35.3% from EBITDA of $19.1 million, or 18.1%
of net sales in the comparable period a year ago. Year to date
EBITDA was $35.0 million, or 14.7% of net sales, a decrease of
14.5% from EBITDA of $40.9 million, or 15.0% of net sales in the
comparable period a year ago. The attached table reconciles net
income to EBITDA.
EBITDA should be considered in addition to, but not as a
substitute for or superior to, operating income, net income,
operating cash flow and other measures of financial performance
prepared in accordance with generally accepted accounting
principles. EBITDA may differ in the method of calculation from
similarly titled measures used by other companies. EBITDA provides
another measure of the operations of our business and liquidity
prior to the impact of interest, taxes and depreciation. Further,
EBITDA is a common method of valuing highly leveraged companies
such as O'Sullivan, and EBITDA, with adjustments, is a component
of each of the financial covenants in our senior credit facility.
Working Capital
For the nine months ending March 31, 2003, net cash provided by
operating activities was $23.4 million, compared to net cash
provided by operating activities of $46.1 million in the
comparable period a year ago.
Inventory levels at the end of the current quarter were $42.0
million compared to the $39.7 million balance at March 31, 2002,
an increase of $2.3 million, or 5.8%. However, inventory levels
have decreased $10.4 million, or 19.8%, from the beginning of the
fiscal year balance of $52.4 million.
Accounts receivable levels during the current quarter dropped to
$36.3 million from $56.3 million in the prior year quarter, a
decrease of $20.0 million, or 35.5%. The lower receivable balance
is primarily attributable to the lower sales levels; however, we
have also decreased our day's sales outstanding compared to the
prior year.
Capital expenditure spending for the nine month period ended March
31, 2003 was $4.8 million, a decrease of $2.2 million, from the
$7.0 million spent in the comparable period a year ago. Cash on
hand levels remained strong at $17.6 million compared to $38.5
million in the prior year.
Total long-term debt at the end of the current quarter was $215.2
million compared to the $230.3 million balance at March 31, 2002,
a decrease of $15.1 million, or 6.6%. We made an additional $10.0
million optional prepayment on our senior credit facility in the
March 2003 quarter.
At March 31, 2003, the Company's balance sheet shows a total
shareholders' equity deficit of about $133 million.
Management Comments
Richard Davidson, president and chief executive officer stated,
"During the third quarter of fiscal year 2002 O'Sullivan Furniture
reported very high sales and EBITDA levels. This was generally
because many of our retail partners drew their Christmas 2001
inventory levels down further than forecasted which resulted in
large replenishment orders during the third quarter of fiscal year
2002. Further, during the third quarter of fiscal 2002 we rolled
out many new products to several mass merchants. These same events
did not occur at the same high levels during the third quarter of
fiscal year 2003 when our sales better reflected the realities of
the current economy.
"Business conditions continue to be challenging for O'Sullivan
Furniture," continued Mr. Davidson. "We continue to be
disappointed with our top line results and are taking actions to
diversify our product offerings and customer base in an effort to
increase our sales in the future. Two of these product initiatives
are:
-- Our recently announced licensing agreement with Coleman for
innovative storage products. These and other storage products
have been shown or will soon be shown to many current and new
retail customers. We have secured placement at some retailers
and others are reviewing or testing Coleman(R) storage products
before they commit to chain-wide rollouts.
-- We continue to aggressively pursue the commercial office
furniture and systems furniture segment and have recently
placed groups in two major office superstores. The next major
phase of our commercial office furniture and systems initiative
has been introduced and enthusiastically received by several of
our major customers."
New Bank Covenant Amendment
As of June 30, 2003, O'Sullivan executed a fourth amendment to its
senior credit facility. The facility amends certain financial
covenants for quarters ending June 30, 2003 through June 30, 2004.
The amendment made several other changes to the senior credit
agreement, including reducing the revolving credit commitment from
$40 million to $30 million and increasing the excess cash flow
payment percentage from 75% to 100%. The interest rate on loans
under the senior credit facility was increased to LIBOR plus 4.75%
or prime plus 3.75% for revolving credit and tranche A loans and
LIBOR plus 5.25% or prime plus 4.25% for tranche B loans. In
addition, O'Sullivan will pay additional interest of 2.0% on the
outstanding balance of tranche B loans by July 2, 2004.
With the execution of the fourth amendment, O'Sullivan expects
that it will be in compliance with its covenants under the senior
credit facility at June 30, 2003.
Sale of Utah Facility
In June 2003, O'Sullivan sold the land and building it owned in
Cedar City, Utah. The net proceeds from the sale were used to
reduce indebtedness under the senior credit facility.
Outlook
Mr. Davidson concluded, "Due to the lingering uncertainty of the
U.S. and worldwide economy along with the RTA furniture market, we
will continue to manage our cost structure to leverage our
position as a low-cost producer. Some of the steps we have taken
are continued realignment of our manufacturing capacity with
expected sales levels and a reduction of approximately 50 people
in our corporate staff in June. In the June quarter, we saw no
improvement in our near-term business environment. Sales in the
fourth quarter of fiscal 2003 were down about one-third from the
prior year fourth quarter. Our fiscal 2003 fourth quarter
operating income declined approximately 55% to 60% from the fourth
quarter a year ago. Looking to the September quarter, we still are
seeing weakness in the RTA furniture market and currently expect
our sales to continue to decline by approximately 10% from the
September 2002 quarter."
P-COM INC: Receives $2.8-Million Order from Telcel Radiomovil
-------------------------------------------------------------
P-Com, Inc. (OTC Bulletin Board: PCOM), a worldwide provider of
wireless telecom products and services, has received a $2.8
million order for its advanced, point-to-point radios from Mexican
cellular operator Telcel Radiomovil DIPSA, S.A. de C.V.
P-Com said it expects to receive additional orders for deployment
in the Telcel network during 2003.
"This order for our Encore Plus radios confirms the strength of
our products by one of the world's most respected and fastest-
growing telecommunications companies," said P-Com Chairman George
Roberts. "This is a significant order for P-Com, and we look
forward to additional orders as our partnership with Telcel
expands."
Telcel is a subsidiary of America Movil, a leading provider of
wireless communications services in Mexico and operating under the
trademark "Telcel." Telcel operates cellular telecommunications
service within the country's nine regions and provides coverage to
more than 85 percent of Mexico's population.
Encore Plus is a variable bandwidth, digital microwave radio that
facilitates high-speed voice, data and video transmissions across
a network. Encore Plus is also being tested by several other large
telecommunications operators in Mexico.
Earlier this year, P-Com received approval for Encore Plus from
Mexico's Comision Federal de Telecomunicaciones, the equivalent of
the Federal Communications Commission in the U.S.
P-Com, Inc., develops, manufactures, and markets point-to-point,
spread spectrum and point-to-multipoint, wireless access systems
to the worldwide telecommunications market. P-Com broadband
wireless access systems are designed to satisfy the high-speed,
integrated network requirements of Internet access associated with
Business to Business and E-Commerce business processes. Cellular
and personal communications service providers utilize P-Com point-
to-point systems to provide backhaul between base stations and
mobile switching centers. Government, utility, and business
entities use P-Com systems in public and private network
applications. For more information visit http://www.p-com.com
P-Com, Inc.'s June 30, 2003 balance sheet show a working capital
deficit of about $34 million, and a total shareholders' equity
deficit of about $30 million.
PENNSYLVANIA DENTAL: S&P Affirms BB Financial Strength Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
Pennsylvania Dental Service Corp., to stable from negative because
although earnings and capitalization are marginal, they improved
in 2002.
Standard & Poor's also said that it affirmed its 'BB' counterparty
credit and financial strength ratings on DDP and its 'BB'
financial strength ratings on DDP's affiliates -- Delta Dental of
New York Inc., Delta Dental of Delaware Inc., Delta Dental of West
Virginia, and Delta Dental of District of Columbia -- because of
DDP's good business profile, marginal liquidity, and aggressive
investment portfolio given the plan's capitalization. "The ratings
on DDP's affiliates are based on a guarantee by DDP," noted
Standard & Poor's credit analyst Steven Ader.
DDP, a dental benefits company based in Mechanicsburg, Pa., is a
member of the Delta Dental Plans Assoc. The company has an
estimated 9% share of the dental insurance market in Pennsylvania,
which is considered good. With its affiliates in New York,
Delaware, West Virginia, and the District of Columbia, the DDP
group of companies is diversified geographically, covering 2.8
million members (a market share of 1%-6%) as of Dec. 31, 2002.
PETROLEUM GEO: Disclosure Statement Hearing Set for Sept. 10
------------------------------------------------------------
As previously reported in the Troubled Company Reporter's
August 5, 2003 issue, Petroleum Geo-Services ASA filed its Chapter
11 Plan Of Reorganization and Disclosure Statement with the U.S.
Bankruptcy Court for the Southern District of New York.
The Honorable Judge Burton R. Lifland will convene a hearing on
September 10, 2003 at 10:00 a.m., at the United States Bankruptcy
Court, Southern District of New York, One Bowling Green, New York,
New York 10004 in Room 623, to review the Debtor's Disclosure
Statement.
At that hearing, the Court will consider if the Debtor's
Disclosure Statement contains "adequate information" as that
phrase is defined in Section 1125 of the Bankruptcy Code. If the
document contains the right amount of the right kind of
information necessary for all creditors to arrive at a reasoned
decision whether to accept or reject the Plan, it will be
approved. The Court will also schedule the Plan confirmation
hearing and other relevant deadlines and procedures as may be
appropriate or contemplated by the Plan.
Written objections to the Debtor's request for Disclosure
Statement approval must be filed with the Court and served on:
(i) counsel to the Debtor,
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attn: Matthew A. Feldman, Esq., and
Paul V. Shalhoub, Esq.;
(ii) Petroleum Geo-Services ASA
PGS House, Strandveien 4
1366 Lysaker, Norway
Attn: Stale Gjengset;
(iii) counsel to the ad hoc Committee
Bingham McCutchen LLP
One State Street, Hartford
Connecticut 06103
Attn: Anthony J. Smits;
(iv) the Office of the United States Trustee
33 Whitehall Street, 21st Floor
New York, New York 10004
Attn: Brian Masumoto, Esq.; and
(v) counsel to the Creditors' Committee, if any.
at or before 12:00 noon (prevailing New York time) on September 3,
2003.
Petroleum Geo-Services ASA, headquartered in Lysaker, Norway is a
technology-based service provider that assists oil and gas
companies throughout the world. The Company filed for chapter 11
protection on July 29, 2003 (Bankr. S.D.N.Y. Case No. 03-14786).
Matthew Allen Feldman, Esq., at Willkie Farr & Gallagher
represents the Debtor in its restructuring efforts. As of May 31,
2003, the Debtor listed total assets of $3,686,621,000 and total
debts of $2,444,341,000.
PG&E NATIONAL: USGen Proposes Interim Compensation Procedures
-------------------------------------------------------------
Section 330 of the Bankruptcy Code authorizes payment to a
debtor's professionals of "reasonable compensation for actual,
necessary services rendered" and "reimbursement for actual,
necessary expenses." Section 331 expressly allows courts to
authorize, prior to final allowance of compensation or expense
reimbursements, interim payments to professionals every 120 days,
or more often, including a monthly basis when warranted.
In consultation with the Office of the United States Trustee,
USGen has developed uniform interim compensation procedures for
its professionals on a monthly basis. USGen proposes that all
professionals employed under its Chapter 11 cases may seek
interim compensation in accordance with these monthly procedures:
(a) No earlier than the 15th day and no later than the
last day of each month following the month for which
compensation is sought, each Professional will submit
through facsimile, overnight mail, or courier, a monthly
statement, including the daily time entries and summaries
of time normally submitted with an interim fee
application, as well as a detailed summary of all
disbursements and expenses for which the Professional is
seeking reimbursement to:
* USGen's counsel
Blank Rome LLP
405 Lexington Avenue, New York, NY 10174
Attention: Marc E. Richards, Esq.
and Edward J. LoBello, Esq.;
* The Office of the United States Trustee
6305 Ivy Lane, Suite 600
Greenbelt, Maryland 20770
Attention: John L. Daugherty, Esq.; and
* The Counsel for any Committee appointed pursuant to
Section 1102 of the Bankruptcy Code
(b) No earlier than the 15th day and no later than the last
day of each month following the month for which
compensation is sought, each Professional will file
the Monthly Statement with the Court,
(c) In the event USGen, the Committees, or the U.S. Trustee
have an objection to any portion of the Fees or Expenses
sought in a particular Monthly Statement, on or before the
20th calendar day after the filing date of that Monthly
Statement, the objecting party must serve on the concerned
Professional and the other Reviewing Parties, a written
Notice of Objection to the Fee Statement indicating the
amount of Fees and Expenses to which the reviewer objects
and the basis for the objection. Thereafter, the
Professional can seek payment of objected Fees and
Expenses under Section 331 through the Professional's next
interim fee application;
(d) If no objection to any Professional's Monthly Statement is
timely served, USGen will pay the full amount of the Fees
and Expenses, less 20% holdback, by the end of the month
in which any objections to the Monthly Statement were to
be served and filed;
(e) If an objection is served by the deadline, USGen will pay
the amount of the Fees and Expenses requested in the
Monthly Statement less any amount objected to and less
a 20% Holdback of the Fees by the end of the month in
which any objections to the Monthly Statement were to be
served and filed;
(f) The first Monthly Statement submitted by each of the
Professionals pursuant to an order will cover all periods
from the Petition Date through August 31, 2003 and will be
filed no earlier than September 15, 2003 and no later than
September 30, 2003. Thereafter, each Monthly Statement
will cover a single calendar month;
(g) The monthly Fees and Expenses paid pursuant to Monthly
Statements will not be deemed allowed or disallowed for
purposes of Sections 330 or 331 of the Bankruptcy Code.
Rather, for each Fee Period, each Professional will file
with the Court and serve on the Reviewing Parties an
application for interim approval and allowance of the Fees
and Expenses requested and serve notice of the filing of
that Interim Fee Application on the notice parties as well
as on parties who have requested notice pursuant to
Rule 2002 of the Federal Rules of Bankruptcy Procedure;
(h) Each Professional will file its first Interim Fee
Application covering the period from the Petition Date
through and including December 31, 2003 on or before
January 31, 2004. Thereafter, each Interim Fee
Application will cover one of three Fee Periods in each
calendar year. Any Objection to an Interim Fee
Application will be filed on or before the last day of
the month following the filing and serving of the Interim
Fee Application;
(i) If a Professional fails to timely serve a Monthly
Statement, that Professional may not incorporate it into
the next Monthly Statement but may seek fees in the
next Interim Fee Application;
(j) If a Professional fails to timely file and serve an
Interim Fee Application, then that Professional may
incorporate the fees into the next Interim Fee Application
but may not receive payment on any intervening Monthly
Statements until the next Interim Fee Application is
filed;
(k) Each Professional's Monthly Statement and Interim Fee
Application will be divided into discrete service
categories as agreed upon by the U.S. Trustee and the
Professional;
(l) Each Professional will maintain accurate detailed time
records in both electronic and hard-copy form and, upon
request, will provide either or both to the U.S. Trustee;
(m) Any Fees allowed pursuant to a Court Order granting an
Interim Fee Application will be reduced by a Holdback in
an amount to be agreed upon by the Professional and the
U.S. Trustee or as determined by the Court;
(n) Each Monthly Statement and Interim Fee Application will
be accompanied with a summary sheet and a cover page;
(o) To the extent that any deadline falls on a Saturday,
Sunday or legal holiday, as that term is defined by
Federal Bankruptcy Rule 9006, that deadline is extended to
the next day that is not a Saturday, Sunday or legal
holiday;
(p) If a Professional's application to be employed is pending
but has not yet been granted by the Court, that
Professional will nonetheless timely submit all Monthly
Statements and Interim Fee Applications during the
pendency, however, all payments under the Monthly
Statements and Interim Fee Applications will be held back
by the Debtor pending approval of the employment of the
Professional;
(q) Upon the collective written agreement of USGen, the
Committees and the U.S. Trustee, a deadline with respect
to submitting a Monthly Statement or an Interim Fee
Application may be extended with respect to one or more
Professionals without further Court order. The deadline
for objecting to a Monthly Statement or an Interim Fee
Application of a particular Professional may be extended
on the written consent of that Professional without
further Court order. However, any amendments to the
general procedures require further Court order;
(r) Where USGen's Professionals utilize the services of a
third party copy service to reproduce and serve pleadings
or other papers in this case, USGen may directly pay the
third parties for their services, including any associated
postage, overnight delivery or other charges. USGen will
report the expense on its monthly reports. Alternatively,
the third-party copy service charges may be paid by
USGen's Professionals and included for reimbursement in
its next Monthly Statement or Interim Fee Application; and
(s) Pursuant to Section 503(b)(3)(F) of the Bankruptcy Code,
official members of any Committee may receive 100%
reimbursement of all reasonable expenses associated with
their work on Committee matters, and may seek
reimbursement through their counsel via the counsel's
Monthly Statements or Interim Fee Applications.
USGen believes that, in a case of this magnitude, it is both
necessary and appropriate to establish a uniform monthly
compensation procedure for its Professionals and the Committee
Professionals. Accordingly, USGen asks the Court to approve the
interim compensation procedures. (PG&E National Bankruptcy News,
Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900)
PHLO CORP: Signs-Up Reznick Fedder as New Independent Auditors
--------------------------------------------------------------
On July 2, 2003, Phlo Corporation dismissed Marcum & Kliegman, LLP
as its independent auditor "for cause". The Company's decision was
approved by the Company's Board of Directors. According to public
records, the Company was the third public company to terminate the
services of M&K during a period of one week, and, subsequently in
July, a fourth public company which had only retained M&K on
April 4, 2003, also terminated M&K as its independent auditor.
The Company has retained Reznick Fedder & Silverman as its new
independent auditors. The fees estimated by various auditing firms
which were competing for the Company's business confirmed the
Company's belief that M&K's fees were egregious for the services
M&K was providing. Additionally, the Company believes that the
retention of Reznick will result in substantial cost savings to
the Company related to the audit of its financial statements for
the fiscal year ended March 31, 2003, even taking into account all
additional audit work required in the event of a lack of
cooperation by M&K.
The Company states it has repeatedly resisted a continuing
coercive course of conduct by M&K and its Audit Partner, David C.
Bukzin, and Managing Partner, Jeffrey M. Weiner, to force the
Company to pay disputed and excessive fees related to the M&K
audit relationship and to force the Company to make false
statements related to M&K's liability to the Company. The Company
believes that David Bukzin and Jeffrey Weiner acted intentionally
and maliciously to damage the Company. For example and according
to the Company, David Bukzin and Jeffrey Weiner contacted the
Company after the 2003 Audit had begun and immediately prior to
the initial filing deadline for the Company's Form 10-KSB and
began a process of making demands for the payment of disputed
fees, negotiating fee agreements with the Company, unilaterally
violating such agreements, and then further increasing their
payment demands. When the Company objected to this coercive course
of conduct, M&K (through Messrs. Weiner and Bukzin) attempted to
force these payments and the making of the above-referenced
statements by threatening to prevent the Company from complying
with its SEC reporting requirements by the inappropriate use of
inapplicable provisions of the Sarbanes-Oxley Act of 2002.
Again according to the Company, M&K deliberately mischaracterized
the Company's objections to M&K's coercive conduct as threats of
litigation which impaired M&K's independence. M&K used its claim
of impaired independence to improperly invoke the Sarbanes-Oxley
Act and as justification to increase its monetary demands and to
demand that the management of the Company make false statements
for the purpose of releasing M&K from liability to the Company
arising from M&K's actions. M&K raised the issue of impaired
independence and the Sarbanes-Oxley Act requirements solely for
the purpose of extracting disputed fees, false statements and a
release of M&K's liability from the Company under the threat of
preventing the Company from complying with its reporting
requirements. As a result of these actions by M&K, the Company was
forced to terminate M&K "for cause".
The Company states that its position with respect to this matter
is corroborated by documentary evidence and testimony, including
evidence of M&K's conduct related to other situations involving
other clients of M&K.
Phlo Corporation has reported to the SEC that M&K began a process
of coercing the Company to pay increasing amounts of disputed fees
as a condition to the issuance of its audit opinion just days
before the deadline for filing the Company's annual report on Form
10-KSB. In order to obtain larger payments, M&K refused to
complete the audit of the Company's financial statements that M&K
had begun, and it did so at a time when there was no possibility
that another auditor could be substituted in time to meet the SEC
reporting requirements. The Company disputed the amount which M&K
claimed was outstanding because of the egregious nature of the
billings and in part because M&K invoiced the Company for entire
audits and reviews without including any supporting detail and
ignored the Company's repeated requests for documentation of the
work for which the Company was being billed. When the Company
objected to the actionable practices of M&K (including the
extraction of disputed fees under threat of failure to complete
the audit by the required deadline), M&K and it's attorneys
deliberately mischaracterized that objection as a threat of
litigation which impaired M&K's independence and used that claim
to increase its monetary demands, to demand a release from the
Company of M&K's liability, and to demand that the Company make
false statements. For example, M&K agreed with the Company on a
fee arrangement providing for a substantial amount of fees to be
held "in dispute," and the agreement was set forth in writing by
M&K's legal counsel. A day later, M&K refused to honor that
agreement and demanded, as a condition to issuing the audit
opinion, the payment of the agreed amount, the "in dispute"
amount, and an additional amount of approximately $50,000.
According to Company statements M&K's coercive course of conduct
continued even after the termination of M&K as the Company's
auditor. M&K transmitted to the Company a letter from M&K dated
July 14, 2003, addressed to the SEC, which the Company maintains,
contains gross misrepresentations and misstatements of fact. The
Company believes that M&K attempted to use the M&K Letter to exert
control over the Company's contacting the SEC with a response to
the M&K Letter. In fact, M&K's outside counsel represented to the
Company's outside legal counsel that M&K would reissue the M&K
Letter at a later date and might revise the M&K Letter depending
on M&K's review of the Company's response thereto prior to the
Company's filing of such response with the SEC. The Company
resisted M&K's attempts to improperly influence the Company's
filing, and, as a result, M&K claimed that the M&K Letter dated
July 14, 2003 was the final version of its letter addressed to the
SEC.
With respect to the M&K Letter, the allegations contained therein
that "[o]n June 26, 2003," the Company "attempted to improperly
influence and/or coerce this firm in regard to our audit..." are
blatantly false states Phlo. The Company believes that such false
allegations were made by M&K to support its inappropriate use of
the Sarbanes-Oxley Act in an effort to justify the actionable
conduct of M&K, David Bukzin and Jeffrey Weiner and for the
purpose of extracting disputed fees, false statements and a
release of liability from the Company. The Company denies that it
took any actions at any time that impaired M&K's independence,
including any action that could conceivably have been viewed to
constitute a threat or attempt to influence or coerce M&K in
regard to an audit of the Company's financial statements. .
The allegation in the M&K Letter that the Company rejected M&K's
proposals to resolve the dispute is materially misleading states
Phlo, as it was M&K that repeatedly, unilaterally violated fee
agreements to which the parties had agreed. The Company and M&K
agreed to fee arrangements, which M&K violated soon thereafter.
The proposals made by M&K to which the Company did not agree
entailed the making of false statements by the Company and the
payment of egregious amounts of fees including those that M&K had
previously acknowledged were disputed.
Moreover, the Company also expressly denies M&K's allegation in
the SEC Letter that the Company omitted from its Form 8-K material
information required to be provided under SEC rules. The Company
reiterates its position that during the Company's two most recent
fiscal years and through the date of the Form 8-K, there were no
disagreements with M&K on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or
procedure, which disagreement, if not resolved to the satisfaction
of M&K would have caused M&K to make reference to the subject
matter of the disagreement in connection with its reports. To the
extent M&K suggests that the Company should have included
information relating to the fee dispute between the Company and
M&K in its filing, M&K's claims are factually inaccurate and
meritless, and a fee dispute would not have given rise to a
reportable disagreement. The dispute relates to approximately
$60,000 in fees that M&K claims are outstanding, which the Company
disputes.
M&K's reports on the Company's financial statements for fiscal
years 2002 and 2001 included a going-concern opinion, in which M&K
reported that the Company's financial statements had been prepared
assuming that the Company will continue as a going concern and
that the Company's financial condition raised substantial doubt at
the time each report was issued about the Company's ability to
continue as a going concern. M&K has not issued an audit report on
any of the Company's financial statements since the Company filed
its annual report on Form 10-KSB on July 15, 2002, for the
Company's fiscal year ended March 31, 2002.
Phlo Corporation is a maker of vitamin-infused fruit drinks,
lemonades, black and green teas, and other nutraceutical products.
PHLO CORP: Intends to Spin-Off Certain Portions of Business
-----------------------------------------------------------
Phlo Corporation intends to spin-off the portion of its business
that involves the development and commercialization of
biotechnologies capable of being incorporated into primarily
liquid products (for oral consumption) and goods, the
manufacturing and marketing of products resulting therefrom, and
the licensing or sublicensing of other biotechnologies. The
Company anticipates that the spin-off will be accomplished by the
distribution to Company shareholders of capital stock of an
affiliated company. The assets of the affiliated company that the
Company intends to spin-off shall include, but may not be limited
to, all rights pursuant to an exclusive license for all uses
(including nutraceutical, biotechnological and pharmaceutical),
worldwide, of an invention, and all enhancements thereto, related
to VEP/PPC (Vitamin E phosphate/polyenylphosphatidylcholine) in a
micro-particle delivery system; all intellectual property related
to the Aquis Oral Rehydration Solution; biotechnology related to
modified pectin liposomal products and its possible use
as a cancer treatment; and biotechnology related to insulin
liposomal products and its possible use as a treatment for
diabetes. The Company plans to complete the spin-off as
expeditiously as possible.
The Company believes that the proposed spin-off will provide
greater value to shareholders by creating two public corporate
entities that focus on separate scientific platforms and
businesses. In addition, the spin-off will allow the management of
each company to better focus on the individual businesses of the
respective companies and facilitate the establishment of executive
compensation that is more closely tied to the performance of each
individual company's results. Finally, the Company believes that
the proposed spin-off will enhance each company's access to
financing.
Phlo Corporation is a maker of vitamin-infused fruit drinks,
lemonades, black and green teas, and other nutraceutical products.
Marcum & Kliegman, LLP, the Company's former independent auditor,
reported that the Company's financial statements had been prepared
assuming that the Company will continue as a going concern and
that the Company's financial condition raised substantial doubt at
the time each report was issued about the Company's ability to
continue as a going concern. M&K has not issued an audit report on
any of the Company's financial statements since the Company filed
its annual report on Form 10-KSB on July 15, 2002, for the
Company's fiscal year ended March 31, 2002.
PILLOWTEX CORP: Taps Debevoise & Plimption as Chapter 11 Counsel
----------------------------------------------------------------
Pursuant to Section 327(a) of the Bankruptcy Code, and Rule
2014(a) of the Federal Rules of Bankruptcy Procedure, Pillowtex
Corporation and its debtor-affiliates ask the Court to authorize
the employment and retention of the law firm of Debevoise &
Plimpton of New York, as their counsel with regard to the filing
and prosecution of the Chapter 11 cases and all related matters.
The Debtors have selected Debevoise & Plimpton on the basis of
the Firm's considerable experience in the fields of bankruptcy,
corporate reorganization and debt restructuring. The Debtors
believe that Debevoise & Plimpton is well qualified to represent
them as debtors-in-possession in the Chapter 11 cases.
The professional services that Debevoise & Plimpton will render
to the Debtors may include, but will not be limited to:
(a) advising the debtors with respect to their powers and
duties as debtors-in-possession in the continued
management and operation of their businesses and
properties throughout the liquidation process, including
the rights and remedies of the Debtors with respect to
their assets and with respect to the claims of the
creditors;
(b) taking the necessary legal steps relating to negotiation,
confirmation and implementation of a plan or plans for
liquidation;
(c) preparing on behalf of the Debtors, as debtors-in-
possession, necessary applications, motions, complaints,
answers, orders, reports and other pleadings and
documents; and
(d) appearing before the Court and other official and
tribunals and protecting the interests of the Debtors in
other jurisdictions and other proceedings.
Debevoise & Plimpton will work with the Debtors' local counsel,
Morris, Nichols, Arsht & Tunnel to ensure that there is no
duplication of services between the two firms.
Debevoise & Plimpton has no connection with the Debtors, their
creditors, any other parties-in-interest, or their respective
attorneys and accountants, or with the United States Trustee or
any person employed in the office of the U.S. Trustee, except
that Debevoise & Plimpton:
(i) represents the Debtors in the present cases and has
represented the Debtors in their restructuring and
liquidating efforts in preparation for the institution of
the Chapter 11 cases; and
(ii) represents some of the Debtors' creditors and other
parties-in-interest in maters unrelated to the present
proceedings.
Moreover, In the a declaration, Richard E. Hahn states that
Debevoise & Plimpton does not hold or represent any interest
adverse to the Debtors and that Debevoise & Plimpton is a
disinterested person as defined in Sections 101(14) and 1107(b)
of the Bankruptcy Code. Thus, Debevoise & Plimpton is qualified
to serve as counsel for the Debtors pursuant to Section 327 of
the Bankruptcy Code and Rules 2014 and 5002 of the Federal Rules
of Bankruptcy Procedure.
Debevoise & Plimpton's hourly rates are set at a level designed
to fairly compensate overhead expenses. Hourly rates vary with
the experience and seniority of the individuals assigned. The
hourly rates charged by Debevoise & Plimpton are consistent with
the rates charged in non-bankruptcy matters and are subject to
periodic adjustment to reflect economic and other conditions.
The current hourly rates of the partners, associates and legal
assistants of Debevoise & Plimpton who are expected to render
services to the Debtors in connection with the present Chapter 11
cases are:
Professional Hourly Rate
------------ -----------
Richard F. Hahn $700
Michael Wiles 700
My Chi To 450
Sean Mack 425
James B. Roberts 425
Jae Sun Chung 350
Melanie Velez 350
James Irving 310
Alexia Richmond 175
Debevoise & Plimpton received a $250,000 cash retainer from the
Debtors and has been paid for all accrued time and expenses
through the Petition Date. (Pillowtex Bankruptcy News, Issue No.
47; Bankruptcy Creditors' Service, Inc., 609/392-0900)
POLAROID: Committee Wants Certain Employee Claims Disallowed
------------------------------------------------------------
Pursuant to Section 502(b) of the Bankruptcy Code, Rules 3003 and
3007 of the Federal Rules of Bankruptcy Procedure, and Rule 3007-
1 of the Local Rules of the U.S. Bankruptcy Court for the
District of Delaware, the Official Committee of Unsecured
Creditors of the Polaroid Debtors objects to the allowance of
certain employee claims.
Employee Claims Based On The Retention Program
The Committee asks the Court to disallow these eight Employee
Claims in accordance with the general release of claims signed by
some employees in connection with the Debtors' key employee
retention program:
Claimant Claim No. Claim Amount
-------- --------- ------------
Batten, Christian F. 5410 $449,584
Byrd, III Benjamin C. 6585 500,000
Carlson, Terry 5543 245,000
Flaherty, William L. 4369 2,139,625
Halsted, III Donald M. 7038 0
Hoskins, Todd 5749 76,000
Roslansky, Louise L. 4348 284,000
Stewart, Inez 6680 35,565
On April 5, 2002, the Court authorized the implementation of the
postpetition key employee retention program wherein the Debtors'
Employees -- Participants -- were eligible to receive:
(a) retention payment; and
(b) severance payment.
Pursuant to the Retention Program, Joseph A. Malfitano, Esq., at
Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware,
relates that the Participants were not eligible for any payments
under any other severance program, retention program or other
incentive compensation program offered by the Debtors. The
Participants were, however, entitled to:
-- payment of accrued, unpaid vacation pay on the
their separation date; and
-- continuing medical coverage at employee rates for
one month following their separation date.
Furthermore, the receipt of any payment under the Retention
Program was conditioned on the Participant's execution of a
standard release and waiver of claims, including claims under any
other benefit, retention or severance program previously offered
by the Debtors -- Retention Program Release.
According to the Retention Program Release, each Participant
agreed to "unconditionally and irrevocably remise, release and
forever discharge Primary PDC, Inc. of and from any and all
suits, claims, demands. arising out or in connection with
[her/his] employment by Primary PDC, Inc."
Employee Claims Based On The Non-qualified Pension Plans
The Committee further asks the Court to disallow these six
Employee Claims in accordance with the release of claims signed
by some employees in connection with the Debtors' Non-Qualified
Pension Plans:
Claimant Claim No. Claim Amount
-------- --------- ------------
Booth, Macallister 6654 $1,164,000
Buckier, Sheldon 5510 656,999
Dietz, Milton S. 5319 75,348
Henry, Bruce 6137 623,686
Mackenzie, Hugh R. 6590 354,296
Oldfield, Joseph 5047 865,907
Prior to the Petition Date, Mr. Malfitano recalls that the
Debtors established the Non-Qualified Pension Plans for the
benefit of their retired Employees -- Beneficiaries. The Non-
Qualified Pension Plans are:
(a) the Polaroid Retirement Parity Plan;
(b) the Polaroid Equalization Retirement Plan; and
(c) the Polaroid Supplemental Benefit Plan.
On September 2001, the Beneficiaries were given the option either
to:
(i) elect to receive a lump sum payment from the Debtors
reflecting a portion of the present value of their future
benefits under the Non-Qualified Pension Plans in lieu of
all future monthly benefit payments under the Non-
Qualified Pension Plans; or
(ii) elect to continue to receive the monthly benefit payments
from the Debtors under the Non-Qualified Pension Plans.
According to the Payment Election Form, once the lump sum payment
option was selected by a Beneficiary, no further payments were
payable to the Beneficiary under the Non-Qualified Pension Plans.
Additionally, the Beneficiary's receipt of the lump sum payment
was conditioned on the Beneficiary's execution of a standard
release and waiver of any causes of action, rights or claims the
Beneficiary may have against the Debtors in connection with the
Non-Qualified Pension Plans -- Plans Release.
Given all these facts, Mr. Malfitano asserts that the Employee
Claims are objectionable because they are asserted by:
(a) Participants who:
-- have signed the Retention Program Release; and
-- have waived any and all claims they may have against
the Debtors arising out of their employment with the
Debtors; and
(b) Beneficiaries who:
-- have signed the Plans Release; and
-- have waived any and all claims they may have against
the Debtors in connection with the Non-Qualified
Pension Plans.
Mr. Malfitano points out that failure to expunge the claims will
result in the relevant creditors receiving an unwarranted
recovery against the Estates, to the detriment of other similarly
situated creditors. (Polaroid Bankruptcy News, Issue No. 41;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
PRIME HOSPITALITY: Promotes Richard T. Szymanski to SVP and CFO
---------------------------------------------------------------
Prime Hospitality Corp. (NYSE: PDQ), announced the promotion of
Rich Szymanski to Senior Vice President and Chief Financial
Officer.
As Senior Vice President and CFO, Mr. Szymanski will be
responsible for all financial operations, including treasury
services, taxation, risk management, accounting, MIS, internal
auditing and budget and analysis.
Mr. Szymanski first joined Prime seventeen years ago. Before
being named CFO, he served Vice President of Finance, overseeing
corporate accounting, SEC reporting, payroll, budgeting and
planning, and asset divestitures.
"I am very pleased to announce Rich's promotion to Senior Vice
President and CFO. Over the years, Rich has demonstrated a deep
understanding of the industry and clear strategic vision," said
A.F. Petrocelli, Prime's Chairman and Chief Executive Officer. "I
am confident that Rich will be a driving force in the continuing
evolution and success of Prime."
"Having been a part of Prime for seventeen years, I am very proud
of the Company's achievements and leadership position in the
lodging industry," commented Mr. Szymanski. "I look forward to
building on my experience here and making new contributions
through my role as Senior Vice President and CFO."
Mr. Szymanski holds a B.S. in Accounting from Rutgers University
in Newark, NJ and has been a Certified Public Accountant since
1981.
Prime Hospitality Corp., one of the nation's premiere lodging
companies, owns, manages, develops and franchises more than 240
hotels throughout North America. The Company owns and operates
three proprietary brands, Prime Hotels & Resorts(SM) (full-
service), AmeriSuites(R) (all-suites), and Wellesley Inns &
Suites(R) (limited service). Also within Prime's portfolio are
owned and/or managed hotels operated under franchise agreements
with national hotel chains including Hilton, Radisson, Sheraton
and Holiday Inn. Prime can be accessed over the Internet at
http://www.primehospitality.com
As reported in Troubled Company Reporter's July 30, 2003 edition,
Standard & Poor's Ratings Services affirmed its 'BB-' corporate
credit and 'B' subordinated debt ratings for Prime Hospitality
Corp.
At the same time, the ratings were removed from CreditWatch where
they were placed on July 2, 2003. The outlook remains negative,
reflecting the continued soft lodging environment.
RELIANT RESOURCES: Company's Vice Chairman Stephen Naeve Retires
----------------------------------------------------------------
Reliant Resources, Inc., (NYSE: RRI) announced that Stephen W.
Naeve, vice chairman, is retiring on September 16, 2003.
"Steve Naeve's service to Reliant Resources and its former parent
and affiliate companies has spanned more than three decades.
Since joining the company in 1972, he has played a critical role
in many aspects of the company's operations. His contributions
are appreciated and will be missed," said Joel V. Staff, chairman
of the board and chief executive officer.
Since the formation of Reliant Resources in 2000, Naeve has served
in a number of key executive management positions, most recently
as vice chairman. From May 2002 until May 2003, he was president
and chief operating officer after having served as the company's
executive vice president and chief financial officer.
Prior to the September 2002 spin-off of Reliant Resources, Naeve
had served in various executive positions with the parent
corporation, then known as Reliant Energy, Incorporated. From
June 1999 until September 2002, he was vice chairman and chief
financial officer, and from 1997 to 1999, he was executive vice
president and chief financial officer. Between 1988 and 1997,
he held various senior management positions with Reliant Energy,
Incorporated.
Reliant Resources, Inc., based in Houston, Texas, provides
electricity and energy services to retail and wholesale customers
in the U.S. and Europe, marketing those services under the Reliant
Energy brand name. The company provides a complete suite of
energy products and services to approximately 1.7 million
electricity customers in Texas ranging from residences and small
businesses to large commercial, industrial and institutional
customers. Its wholesale business includes approximately 22,000
megawatts of power generation capacity in operation, under
construction or under contract in the U.S. The company also has
nearly 3,500 megawatts of power generation in operation in
Western Europe. For more information, visit
http://www.reliantresources.com
As reported in Troubled Company Reporter's July 1, 2003 edition,
Reliant Resources, Inc.'s $550 million 9.25% senior secured notes
due 2010 and $550 million 9.50% senior secured notes due 2013 were
rated 'B+' by Fitch Ratings.
RENCO METALS: Trustee Sues Brokers, Auditors, Lawyers & Others
--------------------------------------------------------------
Lee E. Buchwald, of Buchwald Capital Advisors LLC, serving as the
Trustee for Renco Metals, Inc. and its wholly owned subsidiary,
Magnesium Corporation of America, filed a 42-count, 160-page
lawsuit in Federal Court last week against:
* The Renco Group, Inc., which owns 100% of the outstanding
stock of Metals;
* Sabel Industries, Inc., an indirect wholly owned subsidiary
of Renco Group;
* K. Sabel Holdings, Inc., which acquired all of the stock of
Sabel Industries from Renco Metals.
* KPMG Peat Marwick, LLP, Renco Metal's auditors from 1993 to
1999;
* Donaldson, Lufkin & Jenrette Securities Corporation (now a
subsidiary of Credit Suisse Group) which underwrote Renco
Metals' 1996 $150 million High Yield Bond Offering;
* Houlihan Lokey Howard & Zukin, which served as financial
advisor to Renco Metals at various times and provided a
solvency opinion;
* Cadwalader, Wickersham & Taft, L.L.P., which represented
Renco Metals, Renco Group and Mr. Rennert, Renco Group's
Shareholder;
* Ira Leon Rennert, who controls the Rennert Trusts which own
Renco Group and who has been Chairman of the Board, Chief
Executive Officer and a Director of Group since 1975; the
Sole Director of Metals since its inception in 1993; and the
Sole Director of MagCorp since 1989.
* Roger L. Fay, a Renco Group Director, Vice President of
Renco Group since 1983, Vice President of Finance for Renco
Metals since its inception; and Vice President of MagCorp
since 1989.
* Justin W. D'Atri, Esq., who serves or served as a Director
and the Secretary of Renco Group since its inception,
Secretary of Renco Metals since its inception; Secretary of
Magnesium Corporation of America since its inception; a
Director and Secretary of Sabel Industries; and has ties to
the Rennert Trusts;
* Michael C. Ryan, Esq., a Calwalader member who served as an
Assistant Secretary of Renco Group, Assistant Secretary of
Metals; Assistant Secretary of MagCorp; and Assistant
Secretary of Sabel Industries;
* Dennis A. Sadlowski, Esq. who serves or served as the Vice
President of Legal Affairs for Renco Group; Assistant
Secretary of Renco Metals; Assistant Secretary of MagCorp;
and Assistant Secretary of Sabel Industries;
* Michael H. Legge, who served as the President and Chief
Executive Officer of MagCorp beginning January 1, 1993;
* Ron L. Thayer, who served as Vice President of Operations of
MagCorp between 1993 and 2001, and serves or served as the
Chief Operating Officer beginning in 2001;
* Todd R. Ogaard, who served as Vice President of Finance of
MagCorp from 1995 until his departure in 2003;
* Lee R. Brown, who has served as Vice President of Human
Resources of MagCorp from 1989 until 1999, and served as
Vice President of Public and Governmental Affairs beginning
in 1999.
* Howard I. Kaplan, who served as Vice President of Sales and
Marketing for MagCorp from 1993 until 1998;
* Keith Sabel, a Director of Sabel Industries and who has
served as its President and Chief Executive Officer since
1990 and who is a Director and Chief Executive Officer of
Sabel Holdings, which acquired all of the stock of Sabel
Industries from Renco Metals in December 2000; and
* Unidentified Trustees of Rennert Trusts.
The lawsuit alleges that in 1996 Renco Metals and MagCorp engaged
in a series of transactions through which Rennert, Metals and
other Defendants caused Metals to incur $150 million in debt
offered to the public, and simultaneously caused Metals to pay
approximately $90,000,000 to Group in the form of dividends and
stock redemptions. Additionally, Group obligated MagCorp to make
nearly $5.3 million in bonus compensation payments to the MagCorp
Officer Defendants. These transfers rendered Metals and MagCorp
insolvent, yet Group and its shareholders, Rennert and the Rennert
Trusts, benefited enormously, as did the MagCorp Officer
Defendants who received the bonuses: Defendants Legge, Thayer,
Ogaard, Brown and Kaplan. Millions more leaked out from the
estates, the lawsuit explains.
A full-text copy of the 160-page complaint in available at no
charge at:
http://bankrupt.com/misc/RencoComplaint.pdf
Mr. Buchwald complains that the financial statements and SEC
filings KPMG prepared were grossly misleading and fraudulent with
regard to the true extent of MagCorp's environmental liabilities
and KPMG breached its engagement letter by failing to make
specific inquiries of management about the representations
embodied in the financial statements and the effectiveness of the
internal control structure.
Houlihan, Mr. Buchwald complains, rendered a flawed Solvency
Opinion because it failed address the obvious fact that the
proposed transactions actually contemplated that Renco Metals
would be left with negative equity, a fact that even the June 28,
1996 Prospectus disclosed.
DLJ, Mr. Buchwald says, failed to perform the type of due
diligence and financial analysis necessary to understand and
appreciate Renco's environmental liabilities and should have known
the public offering would cause the company's financial condition
to crumble. "DLJ's silence and complicity allowed Group, Rennert
and the Director and Officer Defendants to cause Metals to take on
an additional $75 million in indebtedness while simultaneously
transferring in excess of $88.8 million to Group and the MagCorp
Officer Defendants," the lawsuit says.
Cadwalader, the lawsuit continues, breached its "fiduciary and
professional duties to Metals to act in Metals' best interest and
to advise Metals in a competent professional manner as to the
risks and consequences of these transactions." In providing advice
and counsel, Cadwalader knew or should have known at the time:
(1) that Cadwalader had actual non-waivable conflicts of
interest in connection with the 1996 Offering and related
dividend and stock redemption transfers;
(2) that the $75.7M Dividend and the redemption of the
preferred stock were not in the best interest of Metals
and would harm Metals financially;
(3) that MagCorp's environmental liabilities were understated
on the consolidated financial statement of Metals and its
subsidiaries;
(4) that the disclosures in the Prospectus relating to the
environmental liabilities were inadequate and misleading
so as to mislead prospective investors in the New Notes;
and
(5) that Group had intentionally timed the 1996 Offering
and remitted transfers so as to coincide with the
temporary upswing in Magnesium prices to give the false
prospect of MagCorp's future success.
The $75.7 million Dividend, the Stock Redemption Transaction and
$5.3 million of NWAA payments to the MagCorp Officer Defendants in
1996 are all fraudulent conveyances and should be repaid to the
Debtors' Estates, Leo R. Beus, Esq., Timothy J. Paris, Esq., and
Mitzi L. Torri, Esq., at BEUS GILBERT PLLC, tell the Court. Beus
Gilbert serves as Proposed Litigation Counsel to Mr. Buchwald.
The other defendants' misdeeds resulted in damages that a jury
will be asked to quantify. The Complaint asks for treble damages
as allowed pursuant to statutory and common law, all costs and
accrued interest.
RENCO STEEL: Fails to Make Interest Payment on 10-7/8% Sr. Notes
----------------------------------------------------------------
Renco Steel Holdings, Inc., did not make the required payment of
interest, due on August 1, 2003, on its 10-7/8% Senior Secured
Notes due 2005. As of the date hereof, no decision has been made
as to whether or not the aforementioned interest shall be paid
prior to the expiration of the 30-day grace period provided for in
the indenture governing the Renco Steel Notes. Approximately $16
million aggregate principal amount of Renco Steel Notes are held
by persons or entities not affiliated with The Renco Group, Inc.,
Renco Steel's parent.
Renco Steel is a holding company whose only material assets
consist of the common stock of WCI Steel, Inc. WCI's prior
failure to pay the interest, due on June 1, 2003, on its 10%
Senior Secured Notes due 2004 prior to the expiration of the 30-
day grace period provided for in the indenture governing the WCI
Notes, constituted an event of default under the indenture
governing the Renco Steel Notes. This event of default continues
as of the date hereof.
RURAL CELLULAR: June 30 Net Capital Deficit Stands at $487 Mill.
----------------------------------------------------------------
Rural Cellular Corporation (OTCBB:RCCC) announces financial,
customer results for the second quarter of 2003.
Second Quarter 2003 Highlights:
-- Net income of $382,000 as compared to a net loss of $3.6
million in the second quarter of 2002.
-- Operating income increased 8% to $41.2 million as compared to
the second quarter of 2002.
-- EBITDA increased to $60.9 million (see reconciliation of non-
GAAP financial measures to comparable GAAP financial measures)
-- Service revenue grew 13% to $90.9 million compared to the
second quarter of 2002.
-- Roaming revenue remained strong at $31.8 million as compared to
the second quarter of 2002.
-- LSR increased to $44 as compared to $41 in the second quarter
of 2002.
-- Total customer net growth was 10,309, including wholesale.
At June 30, 2003, the Company's balance sheet shows a total
shareholders' equity deficit of about $487 million.
Richard P. Ekstrand, President and Chief Executive Officer,
commented: "This quarter's strong service revenue together with
our solid operating performance resulted in another overall good
quarter and positive net income."
EBITDA
During the second quarter of 2003, EBITDA increased to $60.9
million as compared to $58.7 million during the second quarter of
2002. Affecting year-over-year EBITDA comparability was RCC's
emphasis in 2002 on a phone rental program under which it
capitalized $6.4 million in fixed assets. In 2003, RCC did not use
this marketing approach.
Eligible Telecommunications Carrier Status
Under current federal regulations, with Eligible
Telecommunications Carrier, or "ETC," certification, the Company
is eligible for federal Universal Service Fund, or "USF," support
for serving low-income customers and customers in geographic areas
in which telephone services would otherwise be too costly to
provide. RCC recognized $2.5 million in ETC support payments from
the states of Alabama, Mississippi, and Washington during the
second quarter of 2003. The Company has recently received ETC
certification in Vermont and Maine and is anticipating
certification in Minnesota. RCC has filed applications for ETC
designation in Kansas, New Hampshire, and Oregon.
Customer Growth
During the second quarter of 2003, total customers, including
wholesale, increased by 10,309 and totaled 739,015 at the end of
the quarter. During the second quarter of 2003, postpaid retention
was 98.4%, reflecting postpaid net customer additions of 7,970. In
addition, wholesale customers increased by 3,301 and prepaid
customers decreased by 962. Wireless Alliance accounted for 16,842
customers.
Future Capital Expenditures and Network Construction
Including the cost of the Company's planned technology overlays,
total capital expenditures for 2003 through 2005 are expected to
range from $190 to $230 million. RCC anticipates funding these
capital expenditures by using its existing cash on hand, potential
borrowing under its credit facility, and internally generated cash
flows.
Rural Cellular Corporation, based in Alexandria, Minnesota,
provides wireless communication services to Midwest, Northeast,
South and Northwest markets located in 14 states.
RURAL/METRO CORP: Brings-In Michael S. Zarriello as SVP and CFO
---------------------------------------------------------------
Rural/Metro Corporation (Nasdaq:RUREC) announced that Michael S.
Zarriello has joined the company as Senior Vice President and
Chief Financial Officer.
Zarriello, 53, brings more than 30 years of experience in all
phases of operational and financial management, most recently as
President of Jesup & Lamont Merchant Partners LLC, a New York-
based investment-banking firm.
Jack Brucker, President and Chief Executive Officer, said,
"Michael brings considerable financial strength and a proven track
record of performance in a variety of consumer service industries.
He also brings a strong background in accounting, financial
controls, SEC reporting, strategic planning and financial analysis
that we believe will benefit our stakeholders. We are very pleased
to welcome him to the company and look forward to the
contributions he will make toward achieving our long-term
objectives."
Prior to his position at Jesup & Lamont, Zarriello was a Managing
Director and Principal of Bear-Stearns and Co., Inc., and Chief
Financial Officer for the firm's Merchant Banking Group.
Earlier in his career, Zarriello was President and Chief Executive
Officer of Retirement Inns of America, a division of Avon
Products, Inc.; and Vice President and Chief Financial Officer of
Avon Products Health Care Division.
Zarriello received his Advanced Professional Certificate in
finance and security analysis from the New York University
Graduate School of Business; his Master's of Business
Administration in finance and accounting from Fairleigh Dickinson
University; and his undergraduate degree in finance and accounting
from State University of New York at Albany. Zarriello serves as
an independent director on the Boards of Applied Digital
Solutions, an advanced technology development company, and Good
Samaritan Hospital in Suffern, N.Y. He also serves on the Board of
Directors and Audit Committee for Bon Secoures Charity Health
System in New York.
Rural/Metro Corporation, whose December 31, 2002 balance sheet
shows a total shareholders' equity deficit of about $160 million,
provides emergency and non-emergency medical transportation, fire
protection, and other safety services in approximately 400
communities throughout the United States. For more information,
visit the Rural/Metro Web site at http://www.ruralmetro.com
SAFETY-KLEEN CORP: James K. Lehman Appointed as Plan Trustee
------------------------------------------------------------
The Safety-Kleen Debtors notify all parties that the Official
Committee of Unsecured Creditors of Safety-Kleen Corp. has
selected James K. Lehman, Esq., to serve as Trustee. Mr. Lehman
currently serves as a Senior Vice President and General Counsel of
Safety-Kleen Corp., Corporate Secretary of Safety-Kleen Corp., and
Ethics and Compliance Officer of Safety-Kleen Corp. (Safety-Kleen
Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
SAGENT: Sets New Special Shareholders' Meeting for September 30
---------------------------------------------------------------
Sagent (Nasdaq:SGNT), a leading provider of enterprise business
intelligence solutions, has set September 30, 2003 as the new date
for the special stockholders meeting to consider approval of the
sale of substantially all of Sagent's assets to Group 1 Software
Inc. and Sagent's subsequent dissolution. The special stockholders
meeting will be held at 10:00 a.m. PST, at the offices of Wilson
Sonsini Goodrich & Rosati, Professional Corporation, at 650 Page
Mill Road, Palo Alto, California.
Commenting on the events that necessitated the scheduling of a new
stockholders meeting date, following the failure to obtain a
quorum at the previous stockholders meeting, last adjourned on
July 28, 2003, Sagent's Chairman and CEO, Andre M. Boisvert,
stated, "It was certainly made clear to us by a 36:1 voting ratio,
of those that chose to exercise their right to vote, that there is
outstanding support by our stockholders to adopt the proposed sale
of our operating assets to Group 1 Software Inc. and to
subsequently dissolve the company, but the challenge of getting a
quorum stemmed from the fact that the stockholders of the original
date of record did not necessarily hold the stock at the time of
the vote and therefore were not motivated to participate."
Boisvert added, "There was simply no real alignment between the
individuals that had the right to vote and those who actually
owned the shares at the time of the special stockholders meeting.
My board colleagues and I sincerely believe that it is in the best
interest of the actual stockholders to have adjourned the meeting
and to call for a new special stockholders meeting at which point,
we believe that there will be greater alignment between stock
ownership and the right to vote."
Sagent has fixed the close of business of August 6, 2003 as the
new record date for determining stockholders entitled to notice
of, and vote at, the Special Meeting of September 30, 2003. The
stockholders will be able to vote by either returning their proxy
card in the postage-prepaid envelope provided to them by our
mailing agent or vote electronically as per the instructions
contained in the proxy statements or simply vote telephonically by
calling the toll free number of 1-888-897-6096.
At the meeting, the stockholders will be asked to vote on the
following proposals:
1. To approve the proposed sale of substantially all of Sagent's
assets to Group 1 Software, Inc., described in more detail in
the proxy statement.
2. To approve the Plan of Complete Liquidation and Dissolution of
Sagent Technology, Inc.
3. Following consummation of the asset sale in Proposal 1, to
amend Sagent's Amended and Restated Certificate of
Incorporation to remove the name "Sagent."
4. To transact such other business as may properly come before the
Special Meeting and any adjournments thereof.
If the sale of the assets and dissolution is approved at the
special stockholders meeting, the closing of the sale will be held
promptly following the stockholders meeting, and the dissolution
is expected to be completed by early 2004, at which point
distribution would be paid out to the shareholders as described in
the proxy statement. If the sale of assets and dissolution is not
approved at the special stockholders meeting, the $9 million loan
from Group 1 will be due on September 30, 2003, and Sagent will
not be in a position to make the payment. At that point, Group 1
would be in a position to declare an event of default, exercise
its remedies as a secured creditor and commence a foreclosure
sale. If this were to happen, it is uncertain what amount, if any,
would be received upon the sale of our assets and if there would
be any funds available to distribute to stockholders.
Additional Information
Sagent will file a proxy statement and other relevant documents
concerning the transaction with the Securities and Exchange
Commission. Stockholders of Sagent are urged to read the proxy
statement and any other relevant documents when they become
available because they contain important information. Investors
and security holders can obtain free copies of the proxy statement
and other relevant documents by contacting Sagent Technology,
Inc., 800 West El Camino Real Suite 300, Mountain View, CA 94040
or at Sagent's web site at www.sagent.com. In addition, documents
filed with the SEC by Sagent are available free of charge at the
SEC's Web site at http://www.sec.gov
Sagent has fixed the close of business on August 6, 2003 as the
record date for determining stockholders entitled to notice of,
and vote at, the Special Meeting. Information regarding the
identity of the persons who may, under SEC rules, be deemed to be
participants in the solicitation of stockholders of Sagent in
connection with the transaction, and their direct and indirect
interests, by security holding or otherwise, in the solicitation
will be set forth in the proxy statement to be filed by Sagent
with the SEC.
Sagent's patented technology fundamentally changes the way that
data warehouses are built and accessed. Sagent's unique data flow
server enables business users to easily extend the structure of a
data warehouse with new analytics that support immediate business
needs. This technology is at the core of Sagent's ETL, EII and
business intelligence solutions, as well as multiple partner
solutions that address the needs of specific vertical and
functional application areas. Sagent has more than 1,500 customers
worldwide, including: AT&T, Boeing Employees Credit Union, BP
Amoco, Carrefour, Citibank, Diageo, Heineken, Kawasaki, Kemper
National Insurance, La Poste, NTT-DoCoMo, Siemens, and Singapore
Telecom. Key partners include Advent Software, Cap Gemini Ernst &
Young, HAHT Commerce, Hyperion, Microsoft, Satyam, Sun
Microsystems, and Unisys. Sagent is headquartered in Mountain
View, California. For more information about Sagent, visit
http://www.sagent.com
SALEM COMMS: Second Quarter Results Enter Positive Territory
------------------------------------------------------------
Salem Communications Corporation (Nasdaq:SALM), the leading radio
broadcaster focused on religious and family themes programming,
announced strong results for the quarter ended June 30, 2003.
Commenting on these results, Edward G. Atsinger III, President and
CEO, said, "Salem's results demonstrate a strong and successful
performance for the first half of 2003, despite an uncertain
economic environment. Our same station revenue growth rates have,
once again, led the industry as a result of the continued growth
of our music stations, complemented by the consistent and reliable
nature of our block programming business. This revenue growth,
combined with careful cost management, has resulted in a very
noteworthy 21% growth in station operating income."
Second Quarter 2003 Results
For the quarter ended June 30, 2003, net broadcasting revenue
increased 8.4% to $43.4 million from $40.1 million in the same
quarter a year ago. The company reported operating income of $8.9
million for the quarter, compared with operating income of $4.4
million for the same quarter last year. The company reported net
income of $1.8 million for the quarter, compared with a net loss
of $1.6 million for the same quarter last year.
Station operating income increased 20.8% to $15.9 million from
$13.2 million in the corresponding 2002 quarter. Station operating
income margin increased to 36.7% in the second quarter of 2003
from 32.9% in the second quarter of 2002.
EBITDA increased 70.4% to $11.9 million in the second quarter of
2003 compared to $7.0 million in the same quarter last year.
EBITDA for second quarter 2002 includes a one-time $2.3 million
legal settlement cost write-off. Excluding the impact of this
write-off, Adjusted EBITDA increased 28.3% to $11.9 million from
$9.3 million.
On a same station basis, net broadcasting revenue and station
operating income increased 7.8% to $43.2 million and 20.2% to
$15.8 million, respectively, for the second quarter of 2003 as
compared to the second quarter of 2002.
Per share numbers were calculated based on 23,573,321 weighted
average diluted shares for the quarter ended June 30, 2003, and
23,469,604 weighted average diluted shares for the comparable 2002
period.
Year to Date 2003 Results
For the six months ended June 30, 2003, net broadcasting revenue
increased 8.4% to $82.1 million from $75.8 million for the same
period last year. The company reported operating income of $12.1
million for the first six months of 2003, compared with operating
income of $8.6 million for the same period last year. The company
reported a net loss of $4.2 million, compared with a net loss of
$3.4 million for the same period last year. The net loss for the
first six months of 2003 included a one-time loss (net of an
income tax benefit) of $4.0 million as a result of the early
retirement of $100 million of the company's 9.5% senior
subordinated notes.
Station operating income increased 16.8% to $28.3 million from
$24.2 million in the corresponding 2002 period. Station operating
margin increased to 34.4% for the first six months of 2003, from
31.9% in the same period of 2002.
EBITDA decreased 14.7% to $11.6 million in the first half of 2003
compared to $13.6 million in the same period last year. EBITDA
includes one-time costs of $6.4 million for a bond redemption, a
$2.2 million cost due to a denied tower site and license upgrade
in 2003, and a $2.3 million legal settlement cost in 2002.
Excluding the impact of these items, Adjusted EBITDA increased
27.3% to $20.2 million from $15.9 million.
For the six months ended June 30, 2003, same station net
broadcasting revenue and station operating income increased 7.8%
and 16.3%, respectively, as compared to the comparable 2002
period.
Per share numbers were calculated based on 23,484,817 weighted
average shares for the six months ended June 30, 2003, and
23,463,884 for the comparable 2002 period.
Station Acquisitions
Since March 31, 2003, Salem has announced that it has entered into
or completed several radio stations acquisitions including:
-- The completion of the acquisition of WJGR-AM, WZNZ-AM, WZAZ-AM
and WBGB-FM, in Jacksonville, Florida, from Concord Media Group
Inc. for approximately $8.5 million.
-- The pending acquisition of WAMG-AM in Boston, Massachusetts,
from Mega Communications for approximately $8.6 million.
-- The pending acquisition of KKCS-AM in Colorado Springs,
Colorado, from Walton Stations - Colorado, Inc. for
approximately $1.5 million.
Third Quarter Outlook
Salem achieved same station revenue growth of 7% for July and
based on its most recent pacings, Salem expects third quarter same
station revenue growth in the high single digits.
For the third quarter of 2003, Salem is projecting net
broadcasting revenue of between $42.8 and $43.3 million. Net
income for the third quarter of 2003 is projected to be between
$0.06 and $0.07 per share. Salem is projecting station operating
income of between $15.0 and $15.5 million for the third quarter of
2003.
Third quarter 2003 guidance reflects the following:
-- Continued growth from Salem's contemporary Christian music
radio stations.
-- Continued softness at the company's network operations.
-- Start-up losses of approximately $0.3 million associated with
the acquisition of radio stations in the Jacksonville, Florida
market.
Additionally, for 2003 as a whole, the company expects corporate
expenses of approximately $16.0 million. Salem expects acquisition
and improvement related capital expenditures of approximately $7.0
million, and maintenance capital expenditures of approximately
$3.0 million.
Balance Sheet
As of June 30, 2003, the company had net debt of $312.0 million
and was in compliance with all of its covenants under the credit
facility and bond indentures. Salem's bank leverage ratio was 6.7
as of June 30, 2003 versus a compliance covenant of 7.0. Salem's
bond leverage ratio was 6.1 as of June 30, 2003 versus an
incurrence covenant of 7.0.
Salem Communications, headquartered in Camarillo, California, is
the leading radio broadcaster focused on religious and family-
themed programming. Upon the completion of all announced
transactions, the company will own and operate 92 radio stations,
in 36 radio markets, including 58 stations in the top 25 markets.
In addition to its radio properties, Salem owns the Salem Radio
Network, which syndicates talk, news and music programming to
approximately 1,600 affiliated radio stations throughout the
United States; Salem Radio Representatives, a national sales
force; Salem Web Network, leading Internet providers of Christian
focused content; and Salem Publishing, a leading producer of
Christian trade and consumer publications.
As reported in Troubled Company Reporter's July 24, 2003 edition,
Standard & Poor's Ratings Services placed its ratings on Salem
Communications Corp., including its 'B+' corporate credit rating,
on CreditWatch with negative implications due to a thinning
covenant cushion and modest liquidity.
Camarillo, Calif.-based radio operator Salem had approximately
$316.1 million of debt outstanding on March 31, 2003.
SEITEL: Patton Boggs Serves as Seitel Board's Special Counsel
-------------------------------------------------------------
Seitel, Inc., and its debtor-affiliates are seeking permission
from the U.S. Bankruptcy Court for the District of Delaware to
employ Patton Boggs LLP as Special Counsel to Seitel, Inc.'s Board
of Directors and Insurance Coverage Counsel to the Debtors.
The Debtors point out that Seitel is a public company with
thousands of public shareholders. The Debtors desire to retain and
employ Patton Boggs as special counsel for the Board in order to
advise the Board with respect to change of control issues and with
respect to fiduciary duties. Patton Boggs has the resources and
experience necessary to advise the Board on the matters for which
it is being retained, and is fully able to represent the Board as
special counsel.
Patton Boggs is not representing individual directors, but rather
Seitel's governing body. The Board has authorized, pursuant to
corporate resolution, the retention of independent counsel to
advise it concerning its duties. Independent counsel is especially
necessary here to ensure that the Debtors fulfill their duties to
all of their constituencies, including the Note Purchaser, other
unsecured creditors, secured creditors and equity holders. Each of
these constituents has competing interests, which must be
balanced. By ensuring that Seitel, through the Board, fulfills its
obligations to all its constituents, the bankruptcy estates and
their creditors benefit.
The Debtors further wish to employ Patton Boggs as special counsel
for the Debtors as to any and all disputes with the Debtors'
liability insurance carrier concerning the coverage and protection
afforded by the Debtors' liability insurance policies.
The Debtors will compensate Patton Boggs on an hourly basis.
Bruce H. White tells the Court that Patton Boggs hourly rates are:
partners $250 to $700
associates $180 to $305
paraprofessionals $ 70 to $150
Seitel, Inc., headquartered in Houston, Texas, markets its
proprietary seismic information/technology to more than 400
petroleum companies, licensing data from its library and creating
new seismic surveys under multi-client projects. The Company
filed for chapter 11 protection on July 21, 2003 (Bankr. Del. Case
No. 03-12227). Scott D. Cousins, Esq., at Greenberg Traurig LLP
represents the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed
$379,406,000 in total assets and $345,525,000 in total debts.
SIEBEL SYSTEMS: Appoints C. Scott Hartz to Board of Directors
-------------------------------------------------------------
Siebel Systems, Inc. (NASDAQ:SEBL), a leading provider of
eBusiness applications software, announced the appointment of C.
Scott Hartz to its board of directors. Mr. Hartz also will serve
on the company's audit committee.
From 1995 to January 2002, Mr. Hartz, 57, served as Chief
Executive Officer of PwC Consulting, one of the world's largest
consulting organizations, where he held various positions since
1970. Named as one of Consulting Magazine's "Top 10 Most
Influential Consultants" in 1999 and 2000, Mr. Hartz was
responsible for transforming PwC Consulting into a global leader
in eBusiness, e-markets, Internet services, customer relationship
management, consulting methodology, enterprise resource planning,
and data warehousing.
"Scott's breadth of experience advising Fortune 500 companies
worldwide makes him ideally suited to help us guide Siebel Systems
as we embark upon our second decade," said Thomas M. Siebel,
Chairman and CEO, Siebel Systems.
"Given the rapidly changing business environment that exists
today, adaptability is the key requirement for success," said
Hartz. "I look forward to working closely with the other members
of the board of directors to help Siebel Systems rise to the
challenges ahead."
In addition to his board appointment with Siebel Systems, Mr.
Hartz serves on The Wharton School's Graduate Executive Board and
is a member of the Japan Society, the U.S. Asia Foundation, and
The World Affairs Council. He serves on the board of directors of
publicly traded Erie Indemnity Company, which provides management
services to the member companies of the Erie Insurance Group. He
is also a managing member of Spire Capital Group, LLC, a merchant
bank based in New York City, where he focuses on the
commercialization of early stage technologies from well known
government and private research institutions.
Siebel Systems, Inc. (S&P, BB Corporate Credit and B+ Subordinated
Ratings), is a leading provider of eBusiness applications
software, enabling corporations to sell to, market to, and serve
customers across multiple channels and lines of business. With
more than 3,500 customer deployments worldwide, Siebel Systems
provides organizations with a proven set of industry-specific best
practices, CRM applications, and business processes, empowering
them to consistently deliver superior customer experiences and
establish more profitable customer relationships. Siebel Systems'
sales and service facilities are located in more than 28
countries.
SK GLOBAL: UST Convenes Organization Meeting to Form Committees
---------------------------------------------------------------
The United States Trustee for Region 2 calls for a meeting of SK
Global America, Inc.'s 20-largest unsecured creditors on
August 11, 2002 at 2:00 p.m. in The Office of the United States
Trustee, located at 80 Broad Street, 2nd Floor, New York.
The purpose of this meeting is to form an official committee of
unsecured creditors. Creditors interested in serving on a
committee should complete and return a statement indicating their
willingness to serve on an official committee.
Official creditors' committees, constituted under 11 U.S.C. Sec.
1102, ordinarily consist of the seven largest creditors who are
willing to serve on a committee. In some Chapter 11 cases, the
U.S. Trustee is persuaded to appoint multiple creditors'
committees.
Official committees have the right to employ legal and accounting
professionals and financial advisors, at the Debtor's expense.
They may investigate the Debtor's business and financial
affairs. Importantly, official committees serve as fiduciaries
to the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual Chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtor and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes that
reorganization of the Debtor is impossible, the Committee will
urge the Bankruptcy Court to convert the Chapter 11 case to a
liquidation proceeding.
Immediately following the U.S. Trustee's determinations about how
many official committees will be appointed and who will be
appointed to each committee, the newly formed committees will
convene their initial meeting. The first order of business is to
listen to the U.S. Trustee explain the powers and duties of the
committee as a whole and the members' individual
responsibilities. The Committee will generally elect a chairman.
Thereafter, the Committee typically conducts beauty pageants to
select their legal and financial advisors. (SK Global Bankruptcy
News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
SOLUTIA INC: Federal Judge Clemon Approves Consent Decree
---------------------------------------------------------
The Honorable U.W. Clemon, Senior Judge, United States District
Court for the Northern District of Alabama, approved a consent
decree among Solutia Inc. (NYSE: SOI), Pharmacia Corporation, the
U.S. Environmental Protection Agency and the U.S. Department of
Justice.
"We applaud Judge Clemon's diligent efforts to bring peace of mind
to the Anniston community. The consent decree paves the way for a
safe and effective cleanup of the area," said John Hunter,
chairman and chief executive officer of Solutia. "Most
importantly, the approved consent decree provides for an expedited
residential cleanup, which has been a top priority for Solutia and
the community."
Under the consent decree, Solutia is required to submit a work
plan for the cleanup of identified residential properties to
achieve EPA's safe environment clean up standard. EPA will review
the work plan, and then provide for a public comment period to
gather input from the community. In addition, the consent decree
outlines work that will lead to a comprehensive approach to the
cleanup of waterways and commercial properties.
The consent decree provides the framework for finishing the
remediation work that Solutia has already undertaken. To date,
Solutia has spent over $54 million on environmental efforts in and
around Anniston. The company has investigated more than 8,000
acres of land and many miles of waterways to determine the work
that needs to be done. In addition, more than 5,000 samples of
soil, water, sediment and fish have been gathered, and Solutia has
cleaned about 300 acres of land and more than a mile of drainage
ditches to safe standards.
In addition, the consent decree provides benefits to the Anniston
community beyond the cleanup of affected properties. Solutia will
spend $3.2 million over 12 years to fund education grants for
programs that benefit West Anniston children. EPA will perform
comprehensive health and environmental risk assessments, and
Solutia will provide grants to community groups for the retention
of independent technical experts to interpret and comment upon
work associated with PCB remediation. Finally, all such benefits
will be realized with the guidance of a Community Advisory Group
comprised of Anniston community members. "Solutia is committed to
doing what is right for the community and its residents," said
Hunter. "The approval of this consent decree is an important step
in moving us closer to that goal."
The approval of the consent decree impacts Solutia's second
quarter and full year financial results. Pursuant to the decree
and consistent with the accounting requirements for this type of
subsequent event, Solutia recorded an environmental charge of $27
million pretax, $17 million after tax, or 16 cents per share to
its second quarter results. Therefore, Solutia's loss for the
second quarter was $38 million, or 36 cents per share. Year-to-
date losses from continuing operations were $55 million, or 52
cents per share.
For more information on Solutia's cleanup efforts, or its economic
and community activities in Anniston, visit
http://www.solutia.com/anniston
Solutia -- http://www.Solutia.com-- uses world-class skills in
applied chemistry to create value-added solutions for customers,
whose products improve the lives of consumers every day. Solutia
is a world leader in performance films for laminated safety glass
and after-market applications; process development and scale-up
services for pharmaceutical fine chemicals; specialties such as
water treatment chemicals, heat transfer fluids and aviation
hydraulic fluid and an integrated family of nylon products
including high-performance polymers and fibers.
As reported in Troubled Company Reporter's Monday Edition,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Solutia Inc. to 'B-' from 'BB-,' citing increased
refinancing risk and continued weak operating performance. All
ratings were removed from CreditWatch where they were placed
April 25, 2003. The current outlook is negative.
SPECIAL METALS: Court Conditionally Okays Disclosure Statement
--------------------------------------------------------------
Special Metals Corporation (SMCXQ.PK) announced that the U.S.
Bankruptcy Court for the Eastern District of Kentucky has granted
approval of the Disclosure Statement for the proposed Plan of
Reorganization for the Company and its U.S. subsidiaries,
conditioned on making minor changes as stipulated by the
Bankruptcy Court. The Company expects that final approval will
occur later this week.
In addition, the Court approved the Debtor's motion to establish
balloting procedures for voting on the Plan of Reorganization. The
Company anticipates that the final court-approved Disclosure
Statement, the Plan of Reorganization, along with ballots for
those creditors that are eligible to vote on the Plan, will be
mailed by August 22, 2003. The confirmation hearing for the
Company's Plan of Reorganization has been scheduled for
September 25, 2003.
Separately, the Company announced that as a result of an
administrative error, the Bankruptcy Court distributed a mailing
last week to the Company's creditors erroneously indicating that
the bankruptcy case for the Company and its U.S. subsidiaries had
been converted from a Chapter 11 to a Chapter 7 proceeding. Upon
discovering the problem, the Bankruptcy Court promptly sent a
subsequent mailing indicating that the notice of conversion had
been sent in error and advised recipients to disregard the initial
notice. The Company is proceeding on the implementation of its
Plan of Reorganization, which is supported by its existing bank
group, and expects to have its Plan confirmed at the hearing on
September 25, 2003.
An important step forward in the reorganization has been completed
with the signing of a commitment letter with a financial
institution providing the exit financing necessary to emerge from
bankruptcy. The commitment provides for a $200 million revolving
credit facility and will be used to fund payments required upon
emergence, as well as provide liquidity for ongoing operations.
The motion to approve the payment required by signing the
commitment letter was approved by the Bankruptcy Court on Monday,
August 4, 2003.
Special Metals is the world's largest and most-diversified
producer of high-performance nickel-based alloys. Its specialty
metals are used in some of the world's most technically demanding
industries and applications, including: aerospace, power
generation, chemical processing, and oil exploration. Through its
10 U.S. and European production facilities and a global
distribution network, Special Metals supplies over 5,000 customers
and every major world market for high-performance nickel-based
alloys.
STORAGENETWORKS: To Liquidate Following Low Buy-Out Offers
----------------------------------------------------------
StorageNetworks Inc. will liquidate after it was unable to sell
the company at a high enough price, Bloomberg News reported.
Investors will get about $1.60 to $1.70 a share, the company said
in a statement on its web site, pushing the stock up as much as 19
percent.
The Waltham, Massachusetts-based company had been turning itself
into a software maker after its computer data-storage management
business failed to make a profit. In March, it hired investment
bankers to evaluate options, including a sale. The only offers to
buy the company were too low, StorageNetworks said, reported the
newswire. (ABI World, August 1, 2003)
STRUCTURED ASSET: Fitch Affirms Low-B Ratings on 3 Note Classes
---------------------------------------------------------------
Fitch Ratings has upgraded four classes, affirmed thirteen and
placed one on Rating Watch Negative of Structured Asset Mortgage
Investments, Inc. residential mortgage-backed certificates, as
follows:
Structured Asset Mortgage Investments, Inc., mortgage pass-through
certificates, series 2000-1, Group 1
-- Class IA1 affirmed at 'AAA'
-- Class IB1 affirmed at 'AA'
-- Class IB2 affirmed at 'A'
-- Class IB3 affirmed at 'BBB'
-- Class IB4 affirmed at 'BB'
-- Class IB5 affirmed at 'B'
Structured Asset Mortgage Investments, Inc., mortgage pass-through
certificates, series 2000-1, Group 2
-- Class IIA1 affirmed at 'AAA';
-- Class IIB1 affirmed at 'AAA';
-- Class IIB2 upgraded to 'AA+' from 'AA';
-- Class IIB3 upgraded to 'A+' from 'A';
-- Class IIB4 upgraded to 'BBB+' from 'BBB';
-- Class IIB5 affirmed at 'BB+'.
Structured Asset Mortgage Investments, Inc., mortgage pass-through
certificates, series 2000-1, Group 3 --Class IIIA1 affirmed at
'AAA';
-- Class IIIB1 affirmed at 'AAA';
-- Class IIIB2 upgraded to 'AA+' from 'AA';
-- Class IIIB3 affirmed at 'A';
-- Class IIIB4 affirmed at 'BBB';
-- Class IIIB5, rated 'BB', placed on Rating Watch
Negative.
These rating actions are being taken as a result of low
delinquencies and losses, as well as increased credit support.
TENET HEALTHCARE: Will Publish Second Quarter Results Tomorrow
--------------------------------------------------------------
Tenet Healthcare Corporation (NYSE:THC) will announce results for
the second quarter of calendar fiscal year 2003, ended June 30,
2003, on August 7, 2003. This is a revised date from the
previously expected release date of August 14.
The company will issue a press release the morning of August 7. To
discuss results in further detail, Tenet management will host a
conference call at 11 a.m. (EDT) the same day. All interested
parties are invited to participate in the conference call via
webcast.
In order to access the webcast, you will need a 56Kbps modem or
network Internet connection, Windows Media Player, a 16-bit sound
card and speakers or head phones. The webcast will be available
through our web site at www.tenethealth.com or through
StreetEvents at http://www.companyboardroom.com If you have never
tried to access a webcast, you may want to visit
http://www.companyboardroom.comand test your system on an
archived conference call.
Tenet Healthcare Corporation, through its subsidiaries, owns and
operates 114 acute care hospitals with 27,743 beds and numerous
related health care services. Tenet and its subsidiaries employ
approximately 116,500 people serving communities in 16 states.
Tenet's name reflects its core business philosophy: the importance
of shared values among partners -- including employees,
physicians, insurers and communities -- in providing a full
spectrum of health care. Tenet can be found on the World Wide Web
at http://www.tenethealth.com
As reported in Troubled Company Reporter's July 14, 2003 edition,
Standard & Poor's Ratings Services lowered its corporate credit
and senior unsecured debt ratings on health care service provider
Tenet Healthcare Corp. to a speculative-grade 'BB' rating from
'BBB-'. At the same time, the ratings were removed from
CreditWatch, where they had been placed June 23, 2003.
The outlook is negative. Tenet, based in Santa Barbara,
California, had about $4.1 billion of debt as of March 31, 2003.
U.S. STEEL: Red Ink Continued to Flow in 2003 Second Quarter
------------------------------------------------------------
United States Steel Corporation (NYSE: X) reported second quarter
2003 net income before extraordinary loss and cumulative effect of
accounting change of $3 million, or a one cent per diluted share
loss after preferred stock dividends, compared with a net loss
before extraordinary loss and cumulative effect of accounting
change of $33 million, or 35 cents per diluted share after
preferred stock dividends, in first quarter 2003. Net income was
$27 million, or 28 cents per diluted share, in the second quarter
of 2002.
The net loss for the second quarter of 2003 of $49 million, or 51
cents per share, included an extraordinary loss of $52 million net
of tax, or 50 cents per share, related to recognition of health
care obligations under the Coal Industry Retiree Health Benefit
Act of 1992, following the sale of U. S. Steel's coal mining
business in June 2003.
Second quarter 2003 income from operations before items not
allocated to segments (as reconciled to income from operations in
the supplemental statistics to this release) was $6 million, or $1
per ton, compared with a loss from operations before items not
allocated to segments of $19 million, or $5 per ton, in first
quarter 2003, and income from operations before items not
allocated to segments of $32 million, or $8 per ton, in second
quarter 2002. Including three items not allocated to segments,
total income from operations in second quarter 2003 was $42
million.
Compared to the first quarter of 2003, U. S. Steel's second
quarter domestic segment results increased as a result of seasonal
improvements from iron ore operations, the inclusion of income
from 42 days of operations of the acquired National Steel
facilities and a $17 million decrease in natural gas costs. These
were partially offset by costs of $38 million in the Flat-rolled
segment for scheduled repair outages at Gary Works. U. S. Steel
Kosice exceeded the record quarterly income achieved in the first
quarter due to increased shipments and average realized prices, as
well as favorable foreign exchange effects.
Compared to the second quarter of 2002, second quarter 2003
segment results declined primarily due to a $57 million increase
in pension and other post-retirement benefit costs, a $29 million
increase in domestic natural gas costs and the higher outage
spending. The record results at USSK, higher domestic sheet prices
and income from the addition of the National facilities provided a
partial offset.
Commenting on the acquisition of National Steel, U. S. Steel
Chairman and Chief Executive Officer Thomas J. Usher said, "The
acquisition of National Steel and the new labor agreement with the
United Steelworkers of America covering all our domestic
facilities mark the opening of a new chapter in the history of U.
S. Steel. We are extremely pleased with the progress to date in
integrating our new facilities and employees into U. S. Steel.
Near-term, our operating focus is on achieving savings from our
combined operating configuration, consolidating purchasing and raw
materials sourcing, optimizing steel transportation logistics, and
expanding U. S. Steel's comprehensive supply chain management
system to support customers from our new facilities."
In addition, U. S. Steel is aggressively realigning represented
and non-represented plant workforces. The Transition Assistance
Program for represented employees is underway, and eligible
employees will decide by mid- August whether they elect to retire.
In seeking to become more globally competitive, U. S. Steel has
also launched an aggressive domestic administrative cost reduction
program. This program was initiated in May with a 20 percent
reduction in executive management.
In total, savings from National operational synergies, workforce
reductions at both U. S. Steel and former National plants, and
administrative cost reduction programs are expected to exceed $400
million in annual repeatable cost savings. U. S. Steel expects to
realize significant savings in the fourth quarter of 2003 and
expects full realization by year-end 2004.
Usher added, "With this comprehensive program and lower overall
costs for depreciation and retiree benefits following the National
acquisition, we are committed to achieving a major reduction in
our cost structure and in building value for all of our
stakeholders."
In the second half of 2003, U. S. Steel will record a pre-tax
charge, broadly estimated at $500 million, in connection with the
planned workforce reductions under the Transition Assistance
Program for union employees, consisting primarily of cash
severance payments of approximately $115 million and the related
accounting remeasurement of pension and retiree health and life
plans.
Effective May 20, 2003, the operating results of Granite City
Works, Great Lakes Works, the Midwest finishing facility, ProCoil
and U. S. Steel's interest in Double G Coatings are included in
the Flat-rolled segment; and the operating results of Keewatin
taconite pellet operations and the Delray Connecting Railroad are
included in Other Businesses. Shipments from the newly acquired
National facilities added 624,000 tons to the Flat-rolled segment
in the second quarter.
During the second quarter, as part of the company's strategy to
sell non- core assets to help fund strategic acquisitions and
strengthen its balance sheet, U. S. Steel sold certain coal seam
gas interests in Alabama for net proceeds of $34 million and
completed the sale of its coal operations on June 30 for $50
million in cash at closing plus an expected future payment of $7
million for final inventories. Pre-tax income from these
transactions was $34 million and $13 million, respectively. Also
during the quarter, U. S. Steel recorded an $11 million pre-tax
impairment of a cost method investment. These three items, which
were not allocated to segment results, contributed income of $23
million, net of tax, or 22 cents per share.
Total liquidity as of June 30, 2003, was $1.25 billion, up almost
$100 million from March 31, 2003. During the second quarter of
2003, U. S. Steel issued $450 million of senior notes, expanded
its credit facilities, received $84 million for the asset sales
described above, and paid $872 million for the acquisition of
substantially all of National Steel's assets. At March 31, and
June 30, 2003, all credit lines were undrawn.
Looking ahead, shipments for the Flat-rolled segment are expected
to exceed 3.8 million tons in the third quarter. The third quarter
average realized price is expected to improve slightly from the
second quarter. Third quarter natural gas prices, while higher
than in last year's third quarter, are expected to be slightly
lower than in this year's second quarter. Also, costs in the
fourth quarter will be negatively impacted by approximately $35
million for several major planned outages. For full-year 2003,
Flat- rolled shipments are expected to approximate 13.0 million
net tons.
For the Tubular segment, third quarter shipments are projected to
be up moderately, and the average realized price is expected to
improve slightly from the second quarter. North American drilling
activity picked up during the second quarter in response to higher
energy prices, and continued improvements are anticipated during
the remainder of 2003. Shipments for full-year 2003 are expected
to be approximately 950,000 net tons. The new quench and temper
line at Lorain Tubular commenced operation early in the third
quarter, and should reach full production capability by the end of
the third quarter.
USSK third quarter shipments are expected to be consistent with
the second quarter of 2003. Shipments for the full year, from both
USSK and Sartid, are projected to be approximately 5.0 million net
tons, and the third quarter average realized price is expected to
decline modestly compared to second quarter 2003, reflecting
slightly softer market conditions. In late June, USSK started up
new continuous annealing and electrolytic tinning lines, which
will more than double USSK's total annual tin capability to
375,000 net tons. Full production capability should be reached in
early 2004.
Regarding Straightline, Usher said, "While sales continue to
increase and higher cost inventories are being reduced,
Straightline has not yet achieved the margins and volumes
necessary for profitability, and we are closely monitoring
progress. Straightline is implementing plans to further increase
contract sales and inventory turnover rates, and to further reduce
overhead and operating costs. As a result, we expect Straightline
results to improve in the second half."
United States Steel Corporation is engaged domestically in the
production, sale and transportation of steel mill products, coal,
coke and taconite pellets (iron ore); steel mill products
distribution; the management of mineral resources; the management
and development of real estate; and engineering and consulting
services and, through U. S. Steel Kosice (USSK) in the Slovak
Republic, in the production and sale of steel mill products and
coke primarily for the central and western European markets. As
mentioned in Note 3, effective June 30, 2003, U. S. Steel is no
longer involved in the production and sale of coal.
On May 20, 2003, U. S. Steel acquired substantially all the
integrated steelmaking assets of National Steel Corporation
(National). The aggregate purchase price was $1,357 million,
consisting of $817 million in cash and the assumption or
recognition of $540 million in liabilities. The $817 million in
cash reflects $844 million paid to National at closing and
transaction costs of $28 million, less an estimated working
capital adjustment of $55 million in accordance with the terms of
the Asset Purchase Agreement. The $55 million working capital
adjustment has been calculated and submitted to National and U. S.
Steel has recorded a receivable for this amount. Results of
operations for the second quarter and six months ended June 30,
2003, include the operations of National from May 20, 2003.
On June 30, 2003, U. S. Steel completed the sale of the mines and
related assets of U. S. Steel Mining Company, LLC to a newly
formed company, PinnOak Resources, LLC, which is not affiliated
with U. S. Steel. The gross proceeds from the sale are estimated
to be $57 million which resulted in a pretax gain of $13 million.
In addition, EITF 92-13, "Accounting for Estimated Payments in
Connection with the Coal Industry Retiree Health Benefit Act of
1992" requires that enterprises that no longer have operations in
the coal industry must account for their entire obligation related
to the multiemployer health care benefit plan created by the Act
as a loss in accordance with SFAS No. 5, "Accounting for
Contingencies." Accordingly, U. S. Steel recognized the present
value of these obligations in the amount of $85 million, resulting
in the recognition of an extraordinary loss of $52 million, net of
tax of $33 million.
* * *
As reported in Troubled Company Reporter's May 9, 2003 edition,
Standard & Poor's Ratings Services lowered its corporate credit
rating on integrated steel producer United States Steel Corp. to
'BB-' from 'BB' based on concerns about the firm's increased
financial risk.
Standard & Poor's said that it has removed its ratings on
Pittsburgh, Pennsylvania-based United States Steel from
CreditWatch, where they were placed with negative implications on
Jan. 9, 2003. The current outlook is negative. The company had
about $1.7 billion in lease-adjusted debt at March 31, 2003.
At the same time, Standard & Poor's said it has assigned its 'BB-'
rating to United States Steel Corp.'s proposed $350 million senior
notes due 2010.
VIALINK CO.: Receives $550,000 in Loan Proceeds from Shareholders
-----------------------------------------------------------------
The viaLink Company has received loan proceeds totaling $550,000
from certain existing stockholders. In exchange, the Company
executed promissory notes and issued warrants. For each increment
of $10,000 loaned to the Company warrants to purchase 50,000
shares were issued. The notes bear interest at an annual rate of
ten percent (10%) and mature upon the earlier of six months from
the issuance date or a triggering event as defined in the notes.
The warrants expire five (5) years from the date of issuance, and
the stock underlying the warrants is currently authorized but not
registered. The Company may obtain additional loan proceeds on the
same terms and conditions and in that event will similarly report
such receipt.
The viaLink Company (Nasdaq: VLNK) is the leading provider of data
synchronization and advanced e-commerce services to the retail
food industry. The viaLink Partner Package is a suite of services
that use synchronized data to give trading partners visibility
into product movement through the supply chain and enable
collaborative business processes.
In its Form 10-QSB filed for the quarter ended March 31, 2003,
viaLink reported:
"We provide subscription-based, business-to-business electronic
commerce services that enable food industry participants to more
efficiently manage their highly complex supply chain information.
Our services allow manufacturers, wholesalers, distributors, sales
agencies (such as food brokers) and retailers to communicate and
synchronize item, pricing and promotion information in a more
cost-effective and accessible way than has been possible using
traditional electronic and paper-based methods.
"Our strategy is to continue our investment in marketing and sales
activities, development of our viaLink services and customer
support services to facilitate our plan to penetrate the market
and build recurring revenues generated from subscriptions to our
viaLink services. Consequently, we resemble a development stage
company and will face many of the inherent risks and uncertainties
that development stage companies face. There can be no assurance,
however, that these efforts will be successful. Our failure to
successfully execute our strategy would have a material adverse
effect on our business, financial condition and results of
operations, including our viability as an enterprise. As a result
of the high level of expenditures for investment in technology
development, implementation, customer support services, and
selling and marketing expenses, we expect to incur losses in the
foreseeable future periods until such time, if ever, as the
recurring revenues from our viaLink services are sufficient to
cover the expenses.
"Our clients and customers range from small, rapidly growing
companies to large corporations in the consumer packaged goods and
retail industries and are geographically dispersed throughout the
United States.
"We reported a substantial loss from operations for the fiscal
years ended December 31, 2000, 2001 and 2002, and we expect to
incur losses for the fiscal year ending December 31, 2003. The
extent of these losses will depend primarily on the amount of
revenues generated from implementations of and subscriptions to
our viaLink services, which have not yet achieved significant
market acceptance or market penetration and the amount of expenses
incurred in generating these revenues. In order to achieve market
penetration and acceptance we expect to continue our expenditures
for development of our viaLink services. These expenses have
substantially exceeded our revenues.
"Our independent auditors have issued their Independent Auditors'
Report on the Company's consolidated financial statements for the
fiscal year ended December 31, 2002 with an explanatory paragraph
regarding the Company's ability to continue as a going concern. We
have generated net losses for the years ended December 31, 2000,
2001 and 2002 and have generated an accumulated deficit of $87.4
million as of March 31, 2003. We have incurred operating losses
and negative cash flow in the past and expect to incur operating
losses and negative cash flow during 2003. During 2001 and 2002 we
began to experience delays in signing small supplier customers
which were an important component of our expected implementation
revenues. We experienced these delays again in early 2003. The
signing of these suppliers is dependent upon the success of our
retailer customers' 'community development' activities. We
continue to pursue sales efforts with the small suppliers and
still believe that they will become subscribers to our services.
Due to these delays, we continue to focus our sales efforts on
leading customers, particularly retailers, each of which could
have a greater incremental effect on increasing subscription
revenues. An increase in the number of leading customers is
critical to generating positive cash flow from operations and
creating sales opportunities through 'community development'.
"The delay in generating revenues creates a need for us to obtain
additional capital in 2003 in order for us to execute our current
business plan successfully. The amount of capital will be
dependent upon (a) our services achieving market acceptance, (b)
the timing of additional customer signings, (c) our ability to
sustain current decreased levels of spending, and/or (d) the
amount of, if any, unanticipated expenditures. There can be no
assurance as to whether, when or the terms upon which any such
capital may be obtained. Any failure to obtain an adequate and
timely amount of additional capital on commercially reasonable
terms could have a material adverse effect on our business,
financial condition and results of operations, including our
ability to continue as a going concern."
WESTAR ENERGY: Will Sell Portion of ONEOK Inc. Share Holdings
-------------------------------------------------------------
ONEOK, Inc. (NYSE: OKE) has been informed by Westar Energy, Inc.
(NYSE: WR) and its wholly-owned subsidiary, Westar Industries,
Inc., that Westar plans to conduct a secondary offering to the
public of 9.5 million shares of ONEOK common stock. At least the
first $150 million of shares sold in the offering will represent
shares of ONEOK common stock issuable upon conversion of shares of
ONEOK $0.925 Series D Non-Cumulative Convertible Preferred Stock
owned by Westar. If the gross proceeds of the offering exceed
$150 million, Westar may also sell in the offering, to the extent
of the excess, all or a portion of the shares of ONEOK common
stock that it currently owns, excluding shares of ONEOK common
stock that ONEOK has agreed to purchase from Westar. Based on
today's $20.36 closing price on the New York Stock Exchange, total
proceeds from the offering would be approximately $193 million.
ONEOK will not receive any proceeds from the offering.
Upon closing of Westar's offering with gross proceeds in excess of
$150 million, ONEOK has agreed to repurchase $50 million of its
common shares from Westar at a price equal to the public offering
price in the secondary offering.
JPMorgan will be the sole underwriter for the offering and will be
granted an option by Westar to purchase up to an additional 1.425
million shares of ONEOK common stock to cover over-allotments, if
any.
A preliminary prospectus supplement related to the public offering
has been filed with the Securities and Exchange Commission.
Copies of the preliminary prospectus supplement related to the
offering and the underlying prospectus may be obtained from J.P.
Morgan Securities Inc., Chase Distribution & Support Service, 1
Chase Manhattan Plaza, Floor 5B, New York, NY 10081. Copies can
also be obtained by e-mail at Addressing.Services@jpmchase.com
ONEOK, Inc., is a diversified energy company involved primarily in
oil and gas production, natural gas processing, gathering, storage
and transmission in the mid-continent areas of the United States.
The company's energy marketing and trading operations provide
service to customers in most states. The company is the largest
natural gas distributor in Kansas and Oklahoma, and the third
largest in Texas, operating as Kansas Gas Service, Oklahoma
Natural Gas and Texas Gas Service, serving almost 2.0 million
customers. ONEOK is a Fortune 500 company. For information about
ONEOK, Inc. visit the Web site: http://www.oneok.com
Westar Energy, Inc. (NYSE: WR) is the largest electric utility in
Kansas and owns interests in monitored security and other
investments. Westar Energy provides electric service to about
653,000 customers in the state. Westar Energy has nearly 6,000
megawatts of electric generation capacity and operates and
coordinates more than 36,600 miles of electric distribution and
transmission lines. The company has total assets of approximately
$6.9 billion, including security company holdings through
ownership of Protection One, Inc. (NYSE: POI). Through its
ownership in ONEOK, Inc. (NYSE: OKE), a Tulsa, Okla.-based natural
gas company, Westar Energy has a 27.5 percent interest in one of
the largest natural gas distribution companies in the nation,
serving more than 1.9 million customers.
For more information about Westar Energy, visit http://www.wr.com
* * *
As reported in Troubled Company Reporter's April 2, 2003 edition,
Standard & Poor's Ratings Services said that its ratings on Westar
Energy Inc. (BB+/Developing/--) and subsidiary Kansas Gas &
Electric Co. (BB+/Developing/--) would not be affected by the
company's announcement of an annual loss of $793.4 million in
2002. The bulk of this charge had already been recorded in the
first quarter of 2002 and relates to valuation adjustments for the
impairment of goodwill and other intangible assets associated with
88%-owned Protection One Alarm Monitoring Inc., Westar Energy's
monitored security business.
The credit outlook is developing, indicating that ratings may be
raised, lowered, or affirmed.
WESTERN WIRELESS: Reports Improved Second Quarter Fin'l Results
---------------------------------------------------------------
Western Wireless Corporation (Nasdaq:WWCA), a leading provider of
wireless communications services to rural America, announced its
operating results for the quarter ended June 30, 2003.
Western Wireless reported consolidated total revenues of $359
million for the second quarter, a 24% increase over the second
quarter of 2002. Consolidated net income for the quarter was $40.3
million or $0.49 per diluted share. Consolidated Adjusted EBITDA
increased to $104 million for the quarter, an increase of 33% from
the second quarter of 2002.
"This summer has been a very exciting period for Western
Wireless," said John W. Stanton, Chairman and Chief Executive
Officer of Western Wireless. "We continue to demonstrate excellent
financial performance with strong revenue and Adjusted EBITDA
growth, we added another important chapter in our long
relationship with AT&T Wireless by signing a long-term GSM/GPRS
roaming agreement, and we took decisive steps to improve our
capital structure and reduce debt."
Stanton continued, "Internationally, we closed on the sale of our
Croatian investment, realizing a substantial gain, and took
another important step towards achieving our objective of reaching
positive Adjusted EBITDA for our international operations."
Domestic Results
-- Adjusted EBITDA for Western Wireless' domestic operations rose
to $105 million for the quarter, an increase of 14% over the
second quarter of 2002.
-- Free cash flow from domestic operations for the quarter was
$71.3 million, an increase of 16% from the second quarter of
2002. Year to date, free cash flow was $139 million, an
increase of 25% over the six months ended June 30, 2002.
-- Domestic net subscriber additions were 15,100 for the second
quarter. Churn was 2.4% for the quarter. Total subscribers at
the end of the quarter were 1,231,200.
-- Net income from domestic operations was $23 million for the
quarter.
Total service revenue (total revenues less equipment sales) for
the quarter was $229 million. Subscriber revenue per average
subscriber for the quarter was $47.37 per month, up 8.7% from the
second quarter of 2002. Total service revenue per average
subscriber for the quarter was $62.41 per month.
The average monthly cost of serving a subscriber (cost of service
plus general and administrative expenses) was $22.86 per
subscriber for the quarter, a slight decline from the second
quarter of 2002. On a per minute of use basis, the average monthly
cost of serving a subscriber was 4.3 cents, a 23% decline from the
second quarter of 2002. Cost per gross subscriber addition
determined by dividing the sum of sales and marketing costs and
cost of equipment sales, reduced by equipment sales, by the number
of gross subscriber additions for the quarter), was $395 for the
quarter. Western Wireless includes digital handset subsidies
incurred in retaining existing subscribers in its subscriber
acquisition costs. Retention costs for the quarter included in
CPGA were $68.
International Results
Total revenue for Western Wireless International's six
consolidated businesses was $119.5 million for the quarter, an
increase of 75% over the same period last year. Adjusted EBITDA
loss for our international segment for the quarter was $0.8
million, compared to a loss of $13.8 million for the second
quarter of 2002.
Net customer additions for the international consolidated
businesses totaled 65,700 for the quarter, bringing total
international consolidated customers to 902,100, an increase of
56% over the second quarter of 2002. WWI also had 165,700 fixed
line customers, primarily in its tele.ring operations in Austria.
Western Wireless Corporation, located in Bellevue, Wash., was
formed in 1994 through the merger of previously unrelated rural
wireless companies. Following the merger, Western Wireless
continued to invest in rural cellular licenses, acquired six PCS
licenses in the original auction of PCS spectrum in 1995 through
its VoiceStream subsidiary, and made its first international
investment in 1996. Western Wireless went public later in 1996 and
completed the spin-off of VoiceStream in 1999. Western Wireless
now serves over 1.2 million subscribers in 19 western states under
the Cellular One(R) and Western Wireless(R) brand names. Through
its subsidiaries and operating joint ventures, Western Wireless is
licensed to offer service in eight foreign countries.
As reported in Troubled Company Reporter's June 9, 2003 edition,
Standard & Poor's Ratings Services assigned its 'CCC' rating to
Western Wireless Corp.'s $100 million convertible subordinated
notes due June 15, 2023, issued under Rule 144A with registration
rights. The rating has been placed on CreditWatch with negative
implications. The company's 'B-' corporate credit and secured bank
loan ratings, as well as its 'CCC' subordinated debt rating,
remain on CreditWatch with negative implications.
WHEELING-PITTSBURGH: WHX Q2 Results Swing-Down to $4MM Net Loss
---------------------------------------------------------------
WHX Corporation (NYSE: WHX) reported a net loss of $4.1 million,
on sales of $83.5 million, for the second quarter of 2003 compared
to net income of $7.8 million, on sales of $109.2 million, in the
same period in 2002.
The 2003 results include a gain on the retirement of debt of $2.0
million compared to a gain of $11.2 million in the second quarter
of 2002. After deducting preferred dividend requirement, basic and
diluted loss per common share was $1.67 for the second quarter of
2003 compared with basic and diluted income per common share of
$.57 for the second quarter of 2002. Included in the 2002 results
is income from discontinued operations of $6.5 million, or $1.23
per diluted share.
As previously announced, a Chapter 11 Plan of Reorganization for
Wheeling-Pittsburgh Corporation and its debtor affiliates was
consummated on August 1, 2003. The POR had been confirmed by the
United States Bankruptcy Court for the Northern District of Ohio
on June 18, 2003. Among other things, as a result of the
consummation of the POR, each member of the WPC Group is no longer
a subsidiary of WHX Corporation. In addition, in connection with
the consummation of the POR, the Pension Benefit Guarantee
Corporation has agreed to withdraw its action to terminate the WHX
Pension Plan.
Second Quarter Operating Results
and Other Income/Expense
Sales in the second quarter of 2003 were $83.5 million compared
with $109.2 million in 2002. Sales decreased by $21.4 million at
the Precious Metal Segment and by $4.8 million at the Wire &
Tubing Segment. These sales declines are primarily related to the
closure of several facilities in 2002. Sales increased by $.6
million at the Engineered Materials Segment due to new products
and market share gains in this segment's fastener business, offset
by a sales decline in this segment's electro-galvanizing business.
For the second quarter of 2003, operating income was a loss of
$4.4 million, compared to a loss of $5.0 million in the second
quarter of 2002. Operating income from the Precious Metal segment
increased by $7.6 million from a loss of $7.8 million in the
second quarter of 2002 to a loss of $.2 million in the second
quarter of 2003. The 2002 operating results include a $10.7
million restructuring charge related to the closure of the
Fairfield, CT facility. Excluding this charge operating income
declined by $3.1 million. This decline is primarily attributable
to costs incurred in 2003 of $1.4 million related to the closure
of facilities, and to lower sales at the remaining operating units
reflecting weak U.S. industrial output. Operating income at the
Wire & Tubing segment declined by $2.1 million from $2.3 million
in 2002 to $0.2 million in 2003. The decrease in operating income
is due to increased raw material costs and declining sales prices
associated with this segment's refrigeration business, lower
margins in the stainless steel tubing markets, and costs incurred
in 2003 of $1.2 million related to the closure of certain
specialty wire facilities. Operating income at the Engineered
Materials segment decreased by $1.6 million from $4.5 million in
2002 to $2.9 million in 2003. The decrease in operating income is
due to a decline in sales in the construction and appliance
markets in this segment's electro-galvanizing business.
Unallocated corporate expenses increased from $4.0 million to $7.3
million. This increase is primarily related to increased pension
expense of $2.1 million and increased legal and professional fees
related to the PBGC action. The increased pension expense is
primarily related to a reduction in the discount rate and the
lowering of the assumed long-term rate of return on the WHX
Pension Plan assets from 9.25% to 8.5%.
Other income was $1.7 million in the second quarter of 2003
compared to expense of $1.6 million in 2002. Included in 2003 is
net investment income of $.7 million, an unrealized gain on short-
term investments of $2.6 million, loss on interest rate swap of
$0.2, and loss on disposal of assets of $.8 million.
Liquidity and Capital
At June 30, 2003, total liquidity, comprising cash, short-term
investments and funds available under bank credit arrangements,
totaled $102.7 million. At June 30, 2003, funds available under
credit arrangements totaled $10.7 million.
WHITE MOUNTAIN MINING: J. Phillips Wins Watershed Court Decision
----------------------------------------------------------------
United States Bankruptcy Judge Ronald G. Pearson ruled Friday in
favor of West Virginia coal businessman Joseph C. Phillips in a
claim he brought to establish the character of millions of dollars
he loaned to White Mountain Mining Co., L.L.C., a Raleigh County
coal company. The claim was disputed by Stephen M. Levenberg, a
self- described billionaire South African investor who indirectly
controls Congelton L.L.C., which owns one-half of the mining
venture.
Levenberg, representing The White Trust and Congelton L.L.C.,
hoped to transform a $7.5 million investment in a risky mining
venture into a risk-free investment with a fantastically high
return by filing for arbitration claiming actual damages of $107
million under the auspices of the International Arbitration
Association in London, England.
"All capital investment involved risk," said Joseph C. Phillips,
manager of White Mountain Mining Co., L.L.C. "Some investments are
riskier than others, and investments in coal mines are riskier
than most." Phillips noted that a number of factors, such as the
2001 flooding in Southern West Virginia and several mine roof
collapses, caused delays in the mines' operations that temporarily
affected its bottom line.
Phillips also said this ruling will allow White Mountain Mining to
file a plan of reorganization and emerge from Chapter 11. White
Mountain Mining is currently producing coal from the Pocahontas
No. 2 seam.
According to Phillips, the investor led by Levenberg sought to rid
itself of the risk associated with the investment while retaining
a claim to astronomical profits that rightly reward only those who
have assumed great risk.
Specifically, Phillips advanced to White Mountain more than $10.6
million in funds since February 2001. The advances were to be
repaid after the company began operations pursuant to a written
agreement with the investor. However, despite the fact that
"advances" of funds are treated routinely as loans, the investor
attempted to persuade the court that the funds were "capital
contributions" that were not to be repaid.
"The court's ruling of Friday confirms what our position has been
all along," said South Carolina attorney and Phillips' co-counsel,
Michael G. Sullivan. "Throughout this litigation, we have
maintained that Mr. Phillips lent these sums to White Mountain
Mining. The court order now confirms we were right in all aspects
of this case. The order is so comprehensive that it should resolve
all disputes between the parties."
Sullivan also noted that during an era in which investors have
increasingly used the tactic of turning to the courts to guarantee
their investments, this ruling is a watershed event. In addition,
Sullivan said this ruling holds great importance for those
companies that must deal with disgruntled investors.
WORLDCOM INC: MCI Names Anastasia Kelly as EVP & General Counsel
----------------------------------------------------------------
MCI (WCOEQ, MCWEQ) named Anastasia "Stasia" Kelly as executive
vice president, general counsel and corporate secretary, effective
immediately. As the former general counsel for Sears, Roebuck &
Co., and before that Fannie Mae, Kelly brings more than 23 years
of legal experience to MCI.
Kelly reports directly to Chairman and CEO Michael Capellas and
oversees the company's legal, regulatory and public policy
initiatives. She is based at MCI's corporate headquarters in
Ashburn, Va.
"Bringing on a highly-qualified and reputable executive like
Stasia shows that MCI is working hard to rebuild its management
team so that we are well positioned to compete upon emergence from
Chapter 11," said Michael D. Capellas, MCI chairman and CEO.
"Stasia's credibility among her peers and the legal community
really strengthens our overall management team. Having spent 15
years of her career in the Washington D.C. area, she will be
extremely helpful in leading our efforts in the regulatory and
public policy arena," said Capellas.
"MCI is a company built on a solid foundation, with tremendous
assets, a commitment to innovation and a competitive business
model," said Kelly. "I am confident that the new management team,
under Michael's leadership, is committed to doing all the right
things. This is an opportunity for me to play a part in the
largest corporate turnaround in the history of American business."
While at Sears, Roebuck & Co., Kelly developed the company's legal
strategy and was part of the Operating Committee charged with
crafting and executing against the business strategy for the $40
billion retail and financial services entity. Prior to arriving at
Sears in 1999, she was the senior vice president, general counsel
and corporate secretary of Fannie Mae. Her experience at Fannie
Mae tested her ability to maneuver in a regulated environment and
in the public policy arena.
Prior to her time at Fannie Mae, Kelly was a partner and associate
with the Washington D.C. law firm of Wilmer, Cutler & Pickering
LLP, where she represented a number of corporate clients in
transactions, as well as bankruptcy, and developed an expertise in
technology. She began her legal career at the Dallas law firm of
Carrington, Coleman, Sloman & Blumenthal in 1981.
She is a distinguished member of the Women's Bar Association of
Chicago and was awarded the Myra Blackwell Award for achievement
as a lawyer in 2001. Last year, she earned the National
Organization for Women Legal Education and Defense Fund Aiming
High Award. She sits on three boards of directors, including
Owens-Illinois, American Corporate Counsel Association and Equal
Justice Works. She is a graduate of the George Washington
University Law Center and Trinity College. She is a trustee for
Trinity College and sits on the Board of Trustees for the
Brookfield Zoo. Originally from Boston, Mass., Kelly spent 15
years of her career in the Washington D.C. area. She is married
and has twin teenage boys.
WorldCom, Inc. (WCOEQ, MCWEQ), which currently conducts business
under the MCI brand name, is a leading global communications
provider, delivering innovative, cost-effective, advanced
communications connectivity to businesses, governments and
consumers. With the industry's most expansive global IP backbone,
based on company-owned POPs, and wholly-owned data networks,
WorldCom develops the converged communications products and
services that are the foundation for commerce and communications
in today's market. For more information, go to http://www.mci.com
WORLDCOM INC: MCI Counters AT&T Objection to Chapter 11 Plan
------------------------------------------------------------
Preliminary review of MCI's (WCOEQ, MCWEQ) ongoing internal
analysis shows that its call termination practices comply with
legal and regulatory requirements and AT&T claims to the contrary
have been made solely for competitive gain, MCI said.
In a filing with the U.S. Bankruptcy Court for the Southern
District Court of New York, MCI said that a July 28 AT&T filing
objecting to the company's Plan of Reorganization is baseless and
designed to "delay and derail" MCI's reorganization efforts.
MCI's response is based on the company's analysis and a
preliminary review conducted by the law firm of Gibson, Dunn &
Crutcher LLP.
AT&T's motives for making these allegations are unmistakable, and
its filing is "a misuse of the bankruptcy process," MCI said. "We
fully expect that AT&T will escalate its efforts to attempt to
obstruct the Company's reorganization efforts, and urge that any
such tactics be viewed in the highly-charged competitive
environment evident in this case."
Because AT&T's allegations are "demonstrably false and do not bear
upon the Company's proposed plan of reorganization," the Court
should dismiss AT&T's objection, MCI said.
In its filing, MCI countered AT&T's specific legal claims:
* MCI's contract with Onvoy -- a provider of "least-cost routing"
services -- was "completely legal and commonplace" and there is
nothing even remotely illegal about Onvoy routing of domestic
traffic via Canada. In fact, MCI took specific contractual steps
to assure that no deception could take place, and AT&T has
publicly confirmed that it engages in the same types of
arrangements;
* MCI does not and has not itself routed traffic through Canada
(though there would be nothing illegal about such a practice if
it did), contrary to AT&T's false assertions;
* Claims by AT&T that MCI has avoided the costs of access charges
and that AT&T is not fairly compensated for its role in
terminating traffic both are false; and
* MCI has certain government contracts that require it to carry
classified traffic in a secure manner and none of that traffic
is or was routed through Onvoy. "AT&T's invocation of the
'national interest' is a transparent attempt to promote its
corporate interest in shutting down one of its competitors by
publishing malicious fabrications," MCI said.
MCI noted that, on several occasions, it has requested that AT&T
produce any documents, witnesses or other evidence to support its
allegations so that the company can fully investigate AT&T's
claims but AT&T has declined.
"That response underscores AT&T's true motivation here, which is
not to assure that any challenged improper practices are
corrected, but rather to delay and derail the company's
reorganization efforts," MCI said.
As the company has stated, it is working vigorously to conduct a
complete internal review and has pledged to its customers and the
public that it will do the right thing and ultimately let the
facts speak for themselves.
WorldCom, Inc. (WCOEQ, MCWEQ), which currently conducts business
under the MCI brand name, is a leading global communications
provider, delivering innovative, cost-effective, advanced
communications connectivity to businesses, governments and
consumers. With the industry's most expansive global IP backbone,
based on company-owned POPs, and wholly-owned data networks,
WorldCom develops the converged communications products and
services that are the foundation for commerce and communications
in today's market. For more information, go to http://www.mci.com
WORLDCOM INC: Wants Clearance for Metromedia Asset Exchange Deal
----------------------------------------------------------------
MCI WorldCom Network Services, Inc. and Metromedia Fiber Network
Services, Inc. are parties to various prepetition agreements
relating to the construction of fiber optic communications
systems:
1. A February 15, 2000 Joint Build Agreement which established
terms and conditions by which each party would participate
as either "lead company" or "participant" in the joint
projects;
2. A September 13, 2001 Letter of Understanding and a
December 14, 2001 clarification to the LOU that outline
certain scopes of work for joint construction projects; and
3. An October 1999 Construction and IRU Agreement pursuant to
which each party would pay to the other a $625 one-time fee
for each mile of fiber optic cable constructed by the
other.
Pursuant to the Agreements, MCI and Metromedia have constructed
various conduits and fiber optic cables. Each Scope of Work for
the joint construction projects states that a "participant" will
have no rights to the assets built until that "participant" makes
full payment for the assets to the "lead company."
Metromedia is currently a debtor in jointly administered chapter
11 cases pending before the U.S. Bankruptcy Court for the
Southern District of New York.
In view of each party's Chapter 11 cases, Adam P. Strochak, Esq.,
Weil, Gotshal & Manges LLP, Washington D.C., tells the Court that
Metromedia and MCI have been unable to complete the transactions
contemplated by the various Agreements. Neither MCI nor
Metromedia, as "participants," have made any payments to the
other, as "lead company," for the assets built pursuant to the
Scopes of Work. Accordingly, MCI and Metromedia have each retain
full title ownership of the assets they built as "lead company"
pursuant to the Scopes of Work. Each party is presently
occupying a portion of the assets.
Mr. Strochak reports that Metromedia owes MCI $989,631 and MCI
owes Metromedia $3,750,000 for fiber optic cable constructed
pursuant to the IRU Agreement. Both parties desire that, in lieu
of monetary payments, the obligations each party owes, as a
"participant", to the other party, as "lead company", under the
Joint Build Agreement, the LOU, and all of the Scopes of Work, as
well as the IRU Agreement, will be satisfied by the exchange of
certain assets so that no amounts will be owed by either party to
the other.
After several months of negotiations, MCI and Metromedia entered
into an asset exchange agreement to title to certain specified
fiber optic cable assets in mutual satisfaction of all amounts
owing to each other under the Agreements. According to Mr.
Strochak, the exchange of assets will complete the pending
transactions giving the Debtors complete control over the assets
they contemplated owning when they entered into the deal with
Metromedia. More importantly, the Debtors will accomplish the
transfers without making any direct, cash payment to Metromedia.
"The asset exchange provides a substantial benefit to the
Debtors' estates because it is unlikely that they ever would
recover full payment from [Metromedia] as a result of its Chapter
11 filing. Thus, by agreeing to exchange title to network
assets, the Debtors are able to mitigate the credit risk posed by
[Metromedia's] bankruptcy, while gaining legal title to the
assets they contemplated acquiring under the original
agreements," Mr. Strochak says.
Mr. Strochak also notes that the Exchange Agreement alleviates
the need for the Debtors to prosecute their claims against
Metromedia in its bankruptcy, or object to Metromedia's claims in
their own cases, therefore, reducing transaction costs and
facilitating an expeditious and efficient reorganization process.
The Exchange Agreement will remove a significant obstacle from
the continued business relationship between the Debtors and
Metromedia.
As approved by the Court, the Exchange Agreement provides that:
-- each party will convey to the other all their rights, title
and interest in and to the title assets, free and clear of
any and all liens and liabilities;
-- each party will convey to the other all of their beneficial
interest in and to the IRU assets, including without
limitation an exclusive, indefeasible right of use in the
IRU Assets, free and clear of any and all liens and
liabilities;
-- the value of the Title Assets and the IRU Assets to be
conveyed to MCI is $4,943,111 and the value of the Title
Assets and the IRU Assets to be conveyed to Metromedia is
$7,703,480. When combined with the amounts owing between
the parties under the IRU Agreement, the exchange results
in no payment due to or from either party;
-- the receiving party will inspect the Title Assets and the
IRU Assets to verify that:
(i) they have been installed and function properly for
their intended use; and
(ii) they meet the proper specifications;
-- the receiving party will construct its own access points to
access the Title Assets. The placement of access points
may be in any location provided such placement does not
unreasonably affect the other party's use of, or access to,
its own assets;
-- the receiving party will not assume any of the liabilities
or obligations of the other party, including:
(i) any liability for any federal, state or local taxes,
state or local property taxes or other taxes;
(ii) any liability or obligation arising out of any
litigation relating to the other party or the
Exchange Assets;
(iii) any other liabilities or obligations of the other
party accruing before the transfer;
-- each party will have no further rights of access to, and
each party will be responsible for all maintenance, repair
and upkeep of, the conduit routes of the Title Assets it
accepts;
-- the granting party, will be responsible for all required
maintenance, repair and upkeep of the fiber routes of the
Title Assets the other party accepts. The maintenance will
be at no charge to the other party;
-- the receiving party will have unrestricted access to the
fiber routes of the Title Assets at any of the access
points as necessary to fully utilize the assets;
-- the parties mutually indemnify each other against
liabilities arising from:
(a) breaches of the Agreement;
(b) violations of law;
(c) breaches of representations and warranties in the
Agreement; and
(d) negligent or willful acts or omissions in connection
with the performance of the Agreement; and
-- in the event of a default by either party with respect to
the exchange of assets contemplated by the Agreement, each
party may pursue specific performance. (Worldcom
Bankruptcy News, Issue No. 33; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
* Meetings, Conferences and Seminars
------------------------------------
September 18-21, 2003
AMERICAN BANKRUPTCY INSTITUTE
Southwest Bankruptcy Conference
The Venetian, Las Vegas, NV
Contact: 1-703-739-0800 or http://www.abiworld.org
September 12, 2003
AMERICAN BANKRUPTCY INSTITUTE
ABI/GULC "Views from the Bench"
Georgetown Univ. Law Center, Washington, DC
Contact: 1-703-739-0800 or http://www.abiworld.org
October 2-3, 2003
EUROFORUM INTERNATIONAL
European Securitisation
Hilton London Green Park
Contact: http://www.euro-legal.co.uk
October 10 and 11, 2003
AMERICAN BANKRUPTCY INSTITUTE
Symposium on 25th Anniversary of the Bankruptcy Code
Georgetown Univ. Law Center, Washington, DC
Contact: 1-703-739-0800 or http://www.abiworld.org
October 15-18, 2003
NATIONAL CONFERENCE OF BANKRUPTCY JUDGES
Seventy Sixth Annual Meeting
San Diego, CA
Contact: http://www.ncbj.org/
October 16-17, 2003
EUROFORUM INTERNATIONAL
Russian Corporate Bonds
Renaissance Hotel, Moscow
Contact: http://www.ef-international.co.uk
November 12-14, 2003
AMERICAN BANKRUPTCY INSTITUTE
Litigation Skills Symposium
Emory University, Atlanta, GA
Contact: 1-703-739-0800 or http://www.abiworld.org
December 1-2, 2003
RENAISSANCE AMERICAN MANAGEMENT, INC.
Distressed Investing
The Plaza Hotel, New York City, NY
Contact: 800-726-2524 or
http://renaissanceamerican.com
December 3-7, 2003
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
La Quinta, La Quinta, California
Contact: 1-703-739-0800 or http://www.abiworld.org
February 5-7, 2004
AMERICAN BANKRUPTCY INSTITUTE
Rocky Mountain Bankruptcy Conference
Westin Tabor Center, Denver, CO
Contact: 1-703-739-0800 or http://www.abiworld.org
March 5, 2004
AMERICAN BANKRUPTCY INSTITUTE
Bankruptcy Battleground West
The Century Plaza, Los Angeles, CA
Contact: 1-703-739-0800 or http://www.abiworld.org
April 15-18, 2004
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
J.W. Marriott, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
April 29-May 1, 2004
ALI-ABA
Partnerships, LLCs, and LLPs: Uniform Acts, Taxation,
Drafting, Securities, and Bankruptcy
Fairmont Hotel, New Orleans
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
May 3, 2004
AMERICAN BANKRUPTCY INSTITUTE
New York City Bankruptcy Conference
Millennium Broadway Conference Center, New York, NY
Contact: 1-703-739-0800 or http://www.abiworld.org
June 2-5, 2004
AMERICAN BANKRUPTCY INSTITUTE
Central States Bankruptcy Workshop
Grand Traverse Resort, Traverse City, MI
Contact: 1-703-739-0800 or http://www.abiworld.org
June 24-26,2004
AMERICAN BANKRUPTCY INSTITUTE
Hawaii Bankruptcy Workshop
Hyatt Regency Kauai, Kauai, Hawaii
Contact: 1-703-739-0800 or http://www.abiworld.org
July 15-18, 2004
AMERICAN BANKRUPTCY INSTITUTE
The Mount Washington Hotel
Bretton Woods, NH
Contact: 1-703-739-0800 or http://www.abiworld.org
July 28-31, 2004
AMERICAN BANKRUPTCY INSTITUTE
Southeast Bankruptcy Workshop
The Ritz-Carlton Reynolds Plantation, Lake Oconee, GA
Contact: 1-703-739-0800 or http://www.abiworld.org
September 18-21, 2004
AMERICAN BANKRUPTCY INSTITUTE
Southwest Bankruptcy Conference
The Bellagio, Las Vegas, NV
Contact: 1-703-739-0800 or http://www.abiworld.org
October 10-13, 2003
NATIONAL CONFERENCE OF BANKRUPTCY JUDGES
Seventy Seventh Annual Meeting
Nashville, TN
Contact: http://www.ncbj.org/
December 2-4, 2004
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Marriott's Camelback Inn, Scottsdale, AZ
Contact: 1-703-739-0800 or http://www.abiworld.org
April 28- May 1, 2005
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
J.W. Marriot, Washington, DC
Contact: 1-703-739-0800 or http://www.abiworld.org
July 14 -17, 2005
AMERICAN BANKRUPTCY INSTITUTE
Ocean Edge Resort, Brewster, MA
Contact: 1-703-739-0800 or http://www.abiworld.org
July 27- 30, 2005
AMERICAN BANKRUPTCY INSTITUTE
Southeast Bankruptcy Workshop
Kiawah Island Resort and Spa, Kiawah Island, SC
Contact: 1-703-739-0800 or http://www.abiworld.org
November 2-5, 2005
NATIONAL CONFERENCE OF BANKRUPTCY JUDGES
Seventy Eighth Annual Meeting
San Antonio, TX
Contact: http://www.ncbj.org/
December 1-3, 2005
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Hyatt Grand Champions Resort, Indian Wells, CA
Contact: 1-703-739-0800 or http://www.abiworld.org
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via
e-mail to conferences@bankrupt.com are encouraged.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR, is
provided by DebtTraders in New York. DebtTraders is a specialist
in global high yield securities, providing clients unparalleled
services in the identification, assessment, and sourcing of
attractive high yield debt investments. For more information on
institutional services, contact Scott Johnson at 1-212-247-5300.
To view our research and find out about private client accounts,
contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing
available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C.
de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A.
Chapman, Editors.
Copyright 2003. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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 ***