/raid1/www/Hosts/bankrupt/TCR_Public/031024.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, October 24, 2003, Vol. 7, No. 211
Headlines
ADELPHIA COMMS: Wants Plan-Filing Exclusivity Extended to Feb 17
AKORN INC: Arun K. Puri Living Trust Discloses 7.8% Equity Stake
AMC ENTERTAINMENT: Fiscal Q2 Conference Call Set for Wednesday
AMR CORP: Improved Results Spur S&P to Revise Outlook to Stable
ANC RENTAL: Court Grants Extension of MBIA Notes Until Oct. 31
ATLANTIC COAST: Reports Improved Third Quarter Financial Results
AVONDALE MILLS: S&P Places Low-B Ratings on Watch Negative
BERTHEL GROWTH: Shoos-Away Deloitte and Hires McGladrey & Pullen
BETHLEHEM STEEL: Urges Court to Clear United States Settlement
BEVERLY ENTERPRISES: Closes $115 Mill. 2.75% Conv. Note Offering
BIOAMERICA INC: Recurring Losses Raise Going Concern Uncertainty
BOB'S STORES INC: Case Summary & 20 Largest Unsecured Creditors
BUDGET GROUP: Committee Wants to Depose BRACII Representatives
BURLINGTON INDUSTRIES: Creditors Accept Wilbur Ross' Plan
CONE MILLS: Pushing with Sec. 363 Asset Sale to WL Ross & Co.
CORNERSTONE PROPANE: Taps Marcum & Kliegman to Replace Deloitte
COVANTA: Heber Debtors File 2nd Amended Plan of Reorganization
DVI INC: Inks LOI to Sell U.K. Assets to ING Lease for EUR133MM+
ELIZABETH ARDEN: Completes $105-Million Equity Public Offering
EMPI CORP: S&P Rates $175 Million Senior Secured Facility at B+
ENCOMPASS SERVICES: Claims Objection Deadline Extension Sought
ENRON: Selling 130-Megawatt Wind Assets in Calif. to FPL Energy
ENRON CORP: Pushing for Approval of Dabhol Tolling Agreement
EXIDE: Creditors' Committee Takes Action to Block Confirmation
FLEMING COMPANIES: PBGC Claims Deemed as Separately Filed
FLEXTRONICS INT'L: Second Quarter Results Show Sequential Growth
GOODYEAR TIRE: Will Restate 1998-2002 Financial Results
HAMLET GROUP INC: Case Summary & 20 Largest Unsecured Creditors
HEALTHTRAC INC: Co.'s Ability to Continue Operations Uncertain
HOVNANIAN: S&P Assigns BB Rating to $215 Million Senior Notes
HY-TEC TECHNOLOGY: Needs Fresh Funding to Continue Operations
INTERFACE INC: Third Quarter 2003 Net Loss Balloons to $13 Mill.
IT GROUP: Wants Plan-Filing Exclusivity Extended to Jan. 8, 2004
JPE INC: Ernst & Young Steps Down as Independent Accountants
KAISER ALUMINUM: Dec. 31 Fixed as Louisiana PI Claims Bar Date
KMART CORP: Sues Madison Industries to Recoup About $1 Million
LASON INC: Wins Favorable Court Ruling in Sale Proceeds Dispute
LORAL SPACE: Court Approves Agreements with DIRECTV and PanAmSat
LTV CORP: Judge Bodoh Approves Copperweld's Disclosure Statement
MCLEODUSA INC: Sept. 30 Working Capital Deficit Tops $70 Million
METALS USA: R. McCluskey Acquires 1,445 of Metals USA Shares
MIDWEST EXPRESS: Receives Proceeds from Financing Transaction
MIRANT CORP: Proposes Uniform Asset Abandonment Procedures
NATIONAL CENTURY: Court Clears Stipulation Settling Brea Dispute
NATIONAL STEEL: Court Confirms First Amended Plan of Liquidation
NOVA CHEMICALS: Third Quarter Net Loss Widens to $65 Million
OGLEBAY NORTON: Sept. 30 Working Capital Deficit Tops $42 Mill.
PACIFIC GAS: Names Thomas B. King SVP and Chief of Utility Ops.
PACIFIC GAS: Earns Court Approval of Hedging Transactions
PEABODY ENERGY: Files Shelf Registration Statement with SEC
PEGASUS COMMS: Unit Closes on $300 Million Term Loan Facility
PERKINELMER: Reports Improved Third Quarter Operating Results
PRIMUS TELECOMMS: Files Form S-3 for 3.75% Conv. Notes Offering
REDBACK NETWORKS: Secures Ableco's Commitment for $30MM Facility
REPRO MED SYSTEMS: Liquidity Issues Raise Going Concern Doubt
ROUGE INDUSTRIES: Case Summary & 30 Largest Unsecured Creditors
SATURN (SOLUTIONS): Continues Review of Strategic Alternatives
SILICON GRAPHICS: Annual Shareholders' Meeting Set for Dec. 2
SITEL CORP: Names Jorge A. Celaya CFO and Exec. Committee Member
SOCIETY EXPEDITIONS: Files Chapter 7 Petition in Washington
SOCIETY EXPEDITIONS: Chapter 7 Involuntary Case Summary
STEEL DYNAMICS: Third Quarter Results Reflect Slight Improvement
SUPERIOR TELECOM: Plan Confirmed & Eyes Nov. 5 Effective Date
TELENETICS CORP: Makes Pre-Payment Under Corlund Settlement Pact
TENET: Increased Bad Debt Expense to Impact 3rd Quarter Results
TENFOLD CORP: Will Hold Third-Quarter Conference Call on Wed.
TERAYON COMMS: Third-Quarter Results In Line Earnings Guidance
UNITED AIRLINES: Asks Court to Clarify McKinsey Engagement Order
WABASH NATIONAL: Third Quarter Net Loss Widens to $30 Million
WELLMAN INC: Third Quarter 2003 Results Sink into Red Ink
WESTPOINT STEVENS: Court Approves Lehman as Committee's Advisor
WILLIAM CARTER: S&P Keeps Watch Over Planned Shares Offering
WILLIAMS COS.: Makes Final Pricing for $241MM Cash Tender Offers
WORLDCOM INC: Wins Nod to Pull Plug on Prentiss Properties Lease
X10 WIRELESS TECH: Case Summary & 20 Largest Unsecured Creditors
XCEL ENERGY: Names Richard C. Kelly as New President and COO
XECHEM INT'L: Wiss & Company Steps Down as Independent Auditors
* FTI Inks Definitive Pact to Acquire KPMG Dispute Advisory Biz.
* SulmeyerKupetz Expands Operations to Silicon Valley
* BOOK REVIEW: Landmarks in Medicine - Laity Lectures
of the New York Academy of Medicine
*********
ADELPHIA COMMS: Wants Plan-Filing Exclusivity Extended to Feb 17
----------------------------------------------------------------
The Adelphia Communications Debtors ask the Court, pursuant to
Section 1121(b) of the Bankruptcy Code, to extend their Exclusive
Periods for:
(i) filing a plan of reorganization through February 17, 2004;
and
(ii) obtaining acceptances of that plan through April 20, 2004.
Shelley C. Chapman, Esq., at Willkie Farr & Gallagher LLP, in New
York, reports that the ACOM Debtors have actively been engaged in
numerous tasks incident to operating their businesses in Chapter
11 and forming the predicate for their eventual emergence. Most
importantly, the Debtors have:
* prepared a detailed analysis of claims and distributions
that will ultimately lay the foundation for a plan or plans
of reorganization;
* developed a long-range business plan, which has been shared
with the advisors to the various constituents;
* completed their analysis of intercompany claims, which
involved analysis of some seven million transactions
occurring after December 31, 1998;
* worked closely with the Constituents and their professionals
to keep all parties fully informed of the Debtors' finances
and efforts to formulate a business plan. Throughout the
postpetition period, the Constituents' professionals have
been given access to the Debtors' senior management. The
Constituents' advisors have also had open access to Debtors'
counsel and other advisors. The Debtors anticipate that
this open exchange among the Debtors and the Constituents
will continue;
* negotiated two amendments and the covenant addendum under
the Debtors' $1.5 billion debtor-in-possession financing
facility. Under the terms of the covenant addendum, certain
financial covenants were established;
* selected and appointed two additional independent directors
to Adelphia's Board of Directors;
* analyzed extensive and complex tax issues and Treasury
regulations related to the effect of cancellation of debt
income on consolidated tax groups;
* began to meet with potential exit financers;
* began mediation and settlement discussions relating to an
ongoing dispute with ML Media Partners, L.P. in the pending
adversary proceeding before the Court related to Century/ML
Cable Venture;
* filed two opposition briefs in response to ML Media's Motion
for an Order Dismissing Counterclaims, Striking Affirmative
Defenses and Granting Summary Judgment and a letter brief to
the Court on privilege issues raised by ML Media. The
Debtors also c2ontinued to litigate the merits of ML Media's
motion to dismiss and are awaiting a decision from the
Court;
* filed a motion and obtained an order rejecting the leverage
recapitalization agreement among Century/ML Cable Venture,
ML Media Partners, L.P., Century Communications Corporation,
Adelphia Communications Corporation, and Highland Holdings;
* assumed the day-to-day direct management responsibility for
the Tele-Media systems;
* analyzed the plan of reorganization of Adelphia Business
Solutions and the Debtors' claims in relation to the plan;
* filed Schedules of Liabilities and Statements of Financial
Affairs for each of the Debtors and prepared amendments
thereto as well as prepared and filed a motion setting a
deadline to file proofs of claim;
* continued to analyze executory contracts and leases to
determine whether such agreements should be assumed or
rejected by the various estates and obtained court orders
rejecting 19 leases and agreements; and
* continued to analyze potential dispositions of non-core
assets, engage in asset sales and notify parties in interest
of such sales. Since June 26, 2003, the Debtors have filed
12 notices of excess asset sales as well as filed a motion
and obtained an order to abandon certain assets.
Although the plan analysis and preliminary discussions with the
Constituents have progressed and the ACOM Debtors are taking
steps to address ongoing disputes and issues as they arise in
these cases, the ACO2M Debtors have much more to accomplish before
a plan or plans of reorganization can be filed.
In the next four months, Ms. Chapman tells the Court that the
ACOM Debtors hope to make substantial progress in negotiations
towards a plan of reorganization. While the ACOM Debtors intend
to proceed as expeditiously as possible, realistically, the
process will take a significant amount of time.
Ms. Chapman asserts that the requested exclusivity extensions
cannot be characterized as delaying the ACOM Debtors'
reorganization for any speculative purpose or to pressure
creditors to accept an unsatisfactory plan. Considering the
complex legal and financial issues that are present in these
cases and the sometimes strained dynamics among certain of the
Constituents, the ACOM Debtors have spent countless hours meeting
with representatives of the various constituencies and with other
interested parties to develop the foundation of an emergence
strategy designed to maximize distributable value.
Communication has been extensive and huge amounts of financial
data have been prepared and reviewed, but negotiation to
harmonize competing interests is only now commencing. It will be
a laborious endeavor. Thus, terminating the ACOM Debtors'
Exclusive Periods before the drafting of a plan of reorganization
has even begun would defeat the very purpose of Section 1121 --
to afford a Chapter 11 ACOM Debtors a meaningful and reasonable
opportunity to negotiate with creditors and equity holders and
propose a plan of reorganization.
On the other hand, Ms. Chapman relates that if the Court were to
deny the ACOM Debtors' request for an extension of the Exclusive
Periods, any party-in-interest then would be free to propose a
plan of reorganization for each of the ACOM Debtors. A chaotic
environment with no central focus would ensue. Conversely, an
extension of exclusivity would enable the ACOM Debtors to attempt
to harmonize the diverse and competing interests that exist and
to resolve conflicts in a reasoned and balanced manner.
* * *
The Court will convene a hearing on November 13, 2003 to consider
the Debtors' request. Accordingly, Judge Gerber extends the ACOM
Debtors' exclusive period to file a plan until the conclusion of
that hearing. (Adelphia Bankruptcy News, Issue No. 42; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
AKORN INC: Arun K. Puri Living Trust Discloses 7.8% Equity Stake
----------------------------------------------------------------
Arun K. Puri Living Trust holds 1,666,666 shares of the common
stock of Akorn, Inc. representing 7.8% of the outstanding common
stock of Akorn.
The Arun K. Puri Living Trust may be deemed to beneficially own
the 1,666,666 shares of common stock, no par value, of Akorn, Inc.
due to the following: (i) ownership of 1,000,000 shares of the
Company's Series A 6% Participating Convertible Preferred Stock,
par value $1.00 per share which is convertible into 1,333,333
shares of common stock, in accordance with the terms and
conditions of Akorn's Articles of Amendment to Articles of
Incorporation, subject to adjustment from time-to-time as provided
therein; and (ii) Warrants exercisable to purchase 333,333 shares
of common stock, at a purchase price of $1.00 per share, subject
to adjustment from time-to-time as provided in such Warrants
and in the Warrant Agreement between the Company and the Trust,
dated October 7, 2003. The Trust holds sole voting and
dispositive powers over the stock.
Akorn, Inc. manufactures and markets sterile specialty
pharmaceuticals, and markets and distributes an extensive line of
pharmaceuticals and ophthalmic surgical supplies and related
products. Additional information is available on the Company's Web
site at http://www.akorn.com
* * *
Going Concern Uncertainty
In Akorn's most recent Form 10-Q filed with SEC, the Company
reported:
"The [Company's] financial statements have been prepared on a
going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course
of business. Accordingly, the financial statements do not
include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.
The Company experienced losses from operations in 2002, 2001 and
2000 and has a working capital deficiency of $29.4 million as of
March 31, 2003. The Company also is in default under its
existing credit agreement and is a party to governmental
proceedings and potential claims by the Food and Drug
Administration that could have a material adverse effect on the
Company. Although the Company has entered into a Forbearance
Agreeement with its senior lenders, is working with the FDA to
favorably resolve such proceeding, has appointed a new interim
chief executive officer and implemented other management changes
and has taken steps to return to profitability, there is
substantial doubt about the Company's ability to continue as a
going concern. The Company's ability to continue as a going
concern is dependent upon its ability to (i) continue to finance
it current cash needs, (ii) continue to obtain extensions of the
Forbearance Agreement, (iii) successfully resolve the ongoing
governmental proceeding with the FDA and (iv) ultimately
refinance its senior bank debt and obtain new financing for
future operations and capital expenditures. If it is unable to
do so, it may be required to seek protection from its creditors
under the federal bankruptcy code.
"While there can be no guarantee that the Company will be able
to continue to generate sufficient revenues and cash flow from
operations to finance its current cash needs, the Company
generated positive cash flow from operations in 2002 and for the
period from January 1 through April 30, 2003. As of April 30,
2003, the Company had approximately $400,000 in cash and
equivalents and approximately $1.4 million of undrawn
availability under its second line of credit described below.
"There can also be no guarantee that the Company will
successfully resolve the ongoing governmental proceedings with
the FDA. However, the Company has submitted to the FDA and begun
to implement a plan for comprehensive corrective actions at its
Decatur, Illinois facility.
"Moreover, there can be no guarantee that the Company will be
successful in obtaining further extensions of the Forbearance
Agreement or in refinancing the senior debt and obtaining new
financing for future operations. However, the Company is current
on its interest payment obligations to its senior lenders,
management believes that the Company has a good relationship
with its senior lenders and, as required, the Company has
retained a consulting firm, submitted a restructuring plan and
engaged an investment banker to assist in raising additional
financing and explore other strategic alternatives for repaying
the senior bank debt. The Company has also added key management
personnel, including the appointment of a new interim chief
executive officer and vice president of operations, and
additional personnel in critical areas, such as quality
assurance. Management has reduced the Company's cost structure,
improved the Company's processes and systems and implemented
strict controls over capital spending. Management believes these
activities have improved the Company's profitability and cash
flow from operations and improve its prospects for refinancing
its senior debt and obtaining additional financing for future
operations.
"As a result of all of the factors cited in the preceeding
paragraphs, management of the Company believes that the Company
should be able to sustain its operations and continue as a going
concern. However, the ultimate outcome of this uncertainty
cannot be presently determined and, accordingly, there remains
substantial doubt as to whether the Company will be able to
continue as a going concern. Further, even if the Company's
efforts to raise additional financing and explore other
strategic alternatives result in a transaction that repays the
senior bank debt, there can be no assurance that the current
common stock will have any value following such a transaction.
In particular, if any new financing is obtained, it likely will
require the granting of rights, preferences or privileges senior
to those of the common stock and result in substantial dilution
of the existing ownership interests of the common stockholders."
AMC ENTERTAINMENT: Fiscal Q2 Conference Call Set for Wednesday
--------------------------------------------------------------
AMC Entertainment Inc. (AMEX: AEN) will conduct a conference call
and slide presentation to discuss fiscal 2004 second-quarter
results and certain forward-looking information at 9:00 a.m. CST
on Wednesday, October 29, 2003.
Internet access to the call and supporting slides will be
available through AMC's Web site http://www.amctheatres.com The
call can also be accessed by phone at (877) 307-8182, or (706)
634-8221 for international callers. Media and individuals will be
in a listen-only mode, and participants are requested to log in a
few minutes early.
A replay of the conference call will be available on the website
and by phone through Wednesday, November 12, 2003. The telephone
replay can be accessed by calling (800) 642-1687, or (706) 645-
9291 for international callers, and entering the conference ID
number 3322465.
AMC is scheduled to release earnings earlier in the day on
October 29, 2003.
AMC Entertainment Inc. (S&P, B Corporate Credit Rating, Positive),
is a leader in the theatrical exhibition industry. Through its
circuit of AMC Theatres, the Company operates 240 theatres with
3,532 screens in the United States, Canada, France, Hong Kong,
Japan, Portugal, Spain, Sweden and the United Kingdom. Its Common
Stock trades on the American Stock Exchange under the symbol AEN.
The Company, headquartered in Kansas City, Mo., has a Web site at
http://www.amctheatres.com
AMR CORP: Improved Results Spur S&P to Revise Outlook to Stable
---------------------------------------------------------------
Standard & Poor's Ratings Services revised the outlook on its
long-term ratings on AMR Corp. (B-/Stable/--) and its American
Airlines Inc. (B-/Stable/--) subsidiary to stable from negative.
AMR reported a net and pretax loss of $23 million before special
items for the third quarter ended Sept. 30, 2003, dramatically
better than the $741 million pretax loss on a comparable basis in
the same period of 2002, driven mostly by lower labor costs.
"The revision of AMR's outlook to stable reflects much improved
operating results and increased liquidity, with $2.8 billion of
unrestricted cash," said Standard & Poor's credit analyst Philip
Baggaley. "Still, the airline faces an industrywide difficult
revenue outlook and remains highly leveraged, with substantial
upcoming debt maturities and pension payments," the analyst
continued.
AMR saw about $400 million of savings from the $1.8 billion of
annualized concessions agreed by American Airlines employees in
April 2003, with savings expected to reach their full annual run
rate by the fourth quarter. American Airlines' operating cost per
available seat mile, excluding payments to regional affiliates and
special items, of 9.5 cents, is 9% below the figure for the third
quarter of 2002 on a comparable basis. Revenue per available seat
mile also improved, but remains weak in absolute terms, as is true
for most airlines in the current environment. The labor savings
are in addition to about $200 million of annual concessions from
lessors and suppliers and an ongoing program to lower other,
nonlabor costs by an eventual $2 billion annually (for a total of
about $4 billion of financial improvements), compared with pre-
Sept. 11, 2001, expenses. Management states that about $900
million of these additional $2 billion of nonlabor savings were
already reflected in 2002 results, and acknowledges that cost
inflation will offset part of the expected future savings. AMR's
balance sheet remains highly leveraged, with a consolidated total
of $21 billion of debt and leases, plus $6 billion of unfunded
pension and retiree medical obligations.
AMR's improving operating results and liquidity should enable it
to maintain credit quality consistent with its rating, despite
heavy financial obligations.
ANC RENTAL: Court Grants Extension of MBIA Notes Until Oct. 31
--------------------------------------------------------------
ANC Rental Corporation and its debtor-affiliates obtained the
Court's approval to extend the renewal period for the continued
release of funds from certain collection accounts to certain non-
debtor special purpose entities in an amount not to exceed
$1,800,000,000, through and including October 31, 2003 or the
closing of the Cerberus Sale.
The Debtors also obtained the Court's permission to pay MBIA
certain fees, including an administrative fee amounting to
$400,000 per month, which will be prorated in the event that the
Sale closes before October 31, 2003. (ANC Rental Bankruptcy News,
Issue No. 40; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ATLANTIC COAST: Reports Improved Third Quarter Financial Results
----------------------------------------------------------------
Atlantic Coast Airlines Holdings, Inc. (Nasdaq: ACAI), parent of
Atlantic Coast Airlines, reported -- based on accounting
principles generally accepted in the United States (GAAP) -- net
income of $21.3 million for the third quarter 2003 compared to net
income of $8.5 million for the third quarter 2002.
The company's results for third quarter 2002 included an aircraft
early retirement charge of $7.6 million (pre-tax) which negatively
impacted third quarter 2002 EPS by 10 cents.
During the third quarter 2003, ACA generated approximately 1.2
billion available seat miles (ASMs), an increase of 7.6 percent
over the same period last year. The company carried 2,206,540
passengers, an increase of 14.8 percent over the same period last
year. Load factor improved 5.7 points to 73.7 percent for the
third quarter compared to 68.0 percent in the third quarter 2002.
ACA currently operates as United Express and Delta Connection in
the Eastern and Midwestern United States as well as Canada. On
July 28, 2003, ACA announced plans to establish a new, independent
low-fare airline to be based at Washington Dulles International
Airport. The company has a fleet of 146 aircraft-including a total
of 118 regional jets-and offers over 840 daily departures, serving
84 destinations. ACA employs over 4,800 aviation professionals.
* * *
As reported in the Troubled Company Reporter's October 8, 2003
edition, Standard & Poor's Ratings Services placed its ratings on
Atlantic Coast Airlines Holdings Inc., including the 'B-'
corporate credit rating, on CreditWatch with developing
implications. The rating action followed the announcement by Mesa
Air Group Inc., another regional airline holding company, of an
unsolicited, all-stock offer to buy Atlantic Coast Airlines
Holdings.
AVONDALE MILLS: S&P Places Low-B Ratings on Watch Negative
----------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB' corporate
credit and its 'B+' subordinated debt ratings on textile
manufacturer and marketer Avondale Mills Inc. on CreditWatch with
negative implications. This means that the ratings could be
affirmed or lowered following the completion of Standard & Poor's
review.
Monroe, Georgia-based Avondale Mills had about $170 million of
total debt outstanding at May 30, 2003.
"The CreditWatch placement reflects Standard & Poor's heightened
concerns regarding the challenging industry conditions as well as
Avondale Mills' ability to continue to adjust its operating model
in response to the current environment," said credit analyst David
Kang. According to its recent 8-K filing, the company expects to
report sales of $591 million and a net loss of $7.7 million for
the fiscal year ended Aug. 29, 2003, versus sales of $660 million
and a net loss of $0.1 million the previous year. The decline in
sales and profitability is due to overall weak demand for textile
and apparel products as well as the shift in demand for lower
priced goods manufactured overseas.
In response, the company has focused on cost-saving initiatives to
improve its low-cost domestic manufacturing operations. Still,
Standard & Poor's is concerned that Avondale Mills' financial
performance will continue to be pressured by challenging business
conditions in the intermediate term. Standard & Poor's will meet
with management in the near term to discuss the company's
operating plans, financial policies, and strategies before
resolving the CreditWatch listing.
Avondale Mills is a leading domestic manufacturer and marketer of
cotton and cotton-blend indigo-dyed denim, piece-dyed sportswear
and workwear fabrics, and yarns.
BERTHEL GROWTH: Shoos-Away Deloitte and Hires McGladrey & Pullen
----------------------------------------------------------------
On October 13, 2003, Berthel Growth & Income Trust I notified
Deloitte & Touche that it would be dismissing Deloitte and
appointing a new independent certifying accountant for the current
fiscal year. The Trust has engaged McGladrey & Pullen, LLP as its
new independent certifying accountant for the current fiscal year.
The Audit Committee of the Board of Directors has approved these
changes.
The audit reports of Deloitte on the financial statements of the
Trust for the fiscal years ended December 31, 2002 and 2001
included an explanatory paragraph expressing substantial doubt
about the Trust's ability to continue as a going concern and an
explanatory paragraph with respect to the valuation of
investments.
BETHLEHEM STEEL: Urges Court to Clear United States Settlement
--------------------------------------------------------------
The United States of America alleged that the Bethlehem Steel
Debtors:
(a) as generator of a variety of regulated substances, are
obligated to contribute to the remediation of various
industrial sites subject to the Comprehensive
Environmental Response, Compensation and Liability Act;
and
(b) as the owner or operator of various facilities, have
failed to comply with various environmental statutes and
regulations pursuant to which those facilities are subject
including the Resource Conservation and Recovery Act and
the Clean Air Act.
According to Jeffrey L. Tanenbaum, Esq., at Weil, Gotshal &
Manges, LLP, the United States, on behalf of the U.S. Army, U.S.
Navy, U.S. Air Force, and General Services Administration, filed
Claim No. 3963 on September 25, 2002, relating to a Consent
Decree judgment entered in the United States District Court for
the District of Massachusetts on December 18, 1997, in Duffy
Brothers Construction Co., et al. v. American Airlines, Inc. et
al. The United States asserted liabilities against the Debtors
under the terms of that Decree.
The United States also filed a proof of claim on September 30,
2002, on behalf of the United States Environmental Protection
Agency; the Department of Commerce, on behalf of the National
Oceanic and Atmospheric Administration; and the Department of
Agriculture, on behalf of the United States Forest Service,
asserting liability against the Debtors, including liability for:
(a) the recovery of response costs incurred and to be incurred
by the EPA under the CERCLA in connection with these
Superfund sites:
-- the Breslube-Penn Superfund Site in Coraopolis,
Pennsylvania;
-- the Spectron Superfund Site in Elkton, Maryland;
-- the Conservation Chemical Company of Illinois, Inc.
Site in Gary, Indiana;
-- the PCB Treatment, Inc. Superfund Site, including one
facility in Kansas City, Kansas, and another facility
in Kansas City, Missouri;
-- the Missouri Electric Works Inc. Superfund Site in Cape
Girardeau, Missouri;
-- the Operating Industries, Inc. Superfund Site in
Monterey Park, California; and
-- the Waste Disposal, Inc. Superfund Site in Santa Fe
Springs, California;
(b) the response costs incurred and to be incurred by the
Forest Service under the CERCLA in connection with
Elkhorn Mine and Mill Site near Wise River, Montana;
(c) the natural resource damages under the CERCLA caused
by the releases of hazardous substances at the Debtors'
Lackawanna, New York facility;
(d) civil penalties for prepetition violations of the
RCRA, and its regulations promulgated, at the Bethlehem
Lukens Plate Division in Coatesville, Pennsylvania; and
(e) civil penalties for violations of the Clean Air Act and
its regulations promulgated, at the Debtors' Burns Harbor
facility in Porter County, Indiana.
The United States, on behalf of the EPA, has withdrawn its claim
alleging CERCLA liability against the Debtors relating to the
Missouri Electric Works Inc. Superfund Site. The United States,
on behalf of the NOAA, has withdrawn its CERCLA Natural Resource
Damages claim relating to the Debtors' former Lackawanna facility
in Lackawanna, New York.
The Settlement Agreement
The United States and the Debtors entered into an agreement that
compromises and settles the Claims.
Accordingly, the Debtors ask the Court to approve the Settlement
Agreement with the United States pursuant to Rule 9019 of the
Federal Rules of Bankruptcy Procedure and Sections 362 and 553 of
the Bankruptcy Code.
The salient terms of the Settlement Agreement are:
A. The United States will have a $325,000 total Allowed Secured
Claim, a $165,000 total Allowed Administrative Expense Claim
and a $3,409,354 total Allowed General Unsecured Claims
broken down by agency as:
(1) the EPA will have a $200,000 Allowed Secured Claim, a
$165,000 Allowed Administrative Expense Claim and a
$3,022,163 Allowed General Unsecured Claim;
(2) the U.S. Forest Service will have a $125,000 Allowed
Secured Claim and a $250,000 Allowed General Unsecured
Claim; and
(3) the United States Navy, the United States Army, the United
States Air Force, and the General Services Administration
will have a $137,191 Allowed General Unsecured Claim;
B. The United States is entitled to set off its $325,000 Allowed
Secured Claim against the amounts the United States has agreed
to pay the Debtors pursuant to a settlement agreement
entitled In re Fairfield Shipyard [sic.], pursuant to Section
553. The automatic stay will be modified to permit the
immediate set-off of the Claim;
C. Subject to a reservation of certain rights set forth in
the Settlement Agreement, the Debtors will receive from the
United States a covenant not to sue regarding the Claims
compromised and settled in the Settlement Agreement; and
D. The Debtors will receive contribution protection at particular
CERCLA sites listed in the Settlement Agreement.
Mr. Tanenbaum tells the Court that the terms and conditions of
the Settlement Agreement were reached after extensive arm's-
length negotiations between the Parties. The Settlement
Agreement settles tens of millions of dollars of asserted claims
against the Debtors on very favorable terms. The Settlement
Agreement resolves actual and potential disputes and controversies
that, if permitted to continue, could involve time-consuming and
expensive legal proceedings for the Debtors. In the Debtors'
assessment of the risk of litigation and analysis of the potential
claims and counterclaims among the Parties, they determined that
resolving the United States' Claims in accordance with the
Agreement is preferable and more beneficial than litigation.
Absent the Settlement Agreement, the Debtors would be forced to
litigate liability at the Sites with the risk that they would be
jointly and severally liable for the entire cleanup process.
Mr. Tanenbaum contends that the set-off of the United States'
Claims pursuant to the Settlement Agreement is appropriate.
Under a Settlement Agreement and Release among the Debtors, Port
Liberty Industrial Center Limited Partnership and the United
States, dated as of December 12, 2002, the United States agreed
to pay the Debtors $325,000 in settlement of the Debtors' Claim
for contribution pursuant to Sections 107 and 113 of the CERCLA
on account of the United States' ownership of the Bethlehem-
Fairfield Shipyard from 1941 through 1946 and arrangement for the
disposal of military equipment at Patapsco Scrap, a Bethlehem
subsidiary, after World War II. Because (i) the Claims resolved
pursuant to the Fairfield Settlement and the Settlement Agreement
arose prepetition, and (ii) the settlement amounts are currently
owing to and from the same parties acting in the same capacity,
Mr. Tanenbaum says, the amounts can properly be set off.
(Bethlehem Bankruptcy News, Issue No. 44; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
BEVERLY ENTERPRISES: Closes $115 Mill. 2.75% Conv. Note Offering
----------------------------------------------------------------
Beverly Enterprises, Inc. (NYSE:BEV) completed its previously
announced offering of $115 million aggregate principal amount of
2.75% Convertible Subordinated Notes due 2033, which includes $15
million principal amount issued upon the exercise in full by the
underwriters of their over-allotment option.
Beverly also closed the previously announced Senior Credit
Facility -- including a $75 million revolving line of credit and a
$135 million term loan. As a result of the sale of an additional
$15 million principal amount of Notes, Beverly reduced the $150
million term loan portion of the new senior credit facility to
$135 million.
The 2.75% Notes are general unsecured obligations subordinated in
right of payment to Beverly's existing and future senior
indebtedness. The Notes are convertible at the option of the
holder under certain circumstances prior to maturity into shares
of Beverly's common stock at an initial conversion price of $7.45
per share.
Beverly anticipates using the proceeds of these financings
primarily to pay existing indebtedness, including $180 million of
its 9% Senior Notes due 2006.
Parties may obtain a copy of the prospectus supplement relating to
the offering by contacting Lehman Brothers Inc., c/o ADP Financial
Services, Integrated Distribution Services, 1155 Long Island
Avenue, Edgewood, NY 11717, phone: 631-254-7106, fax: 631-254-
7268, e-mail: niokioh_wright@adp.com. All of the securities
offered have been sold.
Beverly Enterprises Inc. (S&P, BB- Corporate Credit Rating) and
its operating subsidiaries comprise a leading provider of
healthcare services to the elderly in the United States. They
operate 408 skilled nursing facilities, as well as 21 assisted
living centers, and 22 home care and hospice centers. Through
AEGIS Therapies, they also offer rehabilitation services on a
contract basis to nursing facilities operated by other care
providers.
BIOAMERICA INC: Recurring Losses Raise Going Concern Uncertainty
----------------------------------------------------------------
As of August 31, 2003, Bioamerica Inc. had cash and available-for-
sale securities in the amount of $342,263 and working capital of
$2,661,492. Cash and working capital totaling $287,748 and
$2,537,257, respectively, relates to the Lancer subsidiary.
Lancer's line of credit restricts Biomerica's ability to draw on
Lancer's resources and, as such, said cash, working capital and
equity are not available to Biomerica.
The Company has suffered substantial recurring losses from
operations over the last couple of years. The Company has funded
its operations through debt and equity financings, and may have to
do so in the future. ReadyScript operations were discontinued in
May 2001 and Allergy Immuno Technologies, Inc. was sold in May
2002. ReadyScript and Allergy Immuno Technologies were previously
contributors to the Company's losses. The Company has reduced
operating costs through certain cost reduction efforts and plans
to concentrate on its core business in Lancer and Biomerica to
increase sales. There can be no assurance that the Company will be
able to become profitable, generate positive cash flow from
operations or obtain the necessary equity or debt financing to
fund operations in the future. Should the Company be unable to
reduce costs adequately or should the Company be unable to secure
additional financing, the result for the Company could be the
inability to continue as a going concern.
The Company will continue to have limited cash resources. Although
the Company's management recognizes the imminent need to secure
additional financing there can be no assurance that the Company
will be successful in consummating any such transaction or, if the
Company does consummate such transaction, that the terms and
conditions of such financing will be on terms satisfactory to the
Company.
Bioamereica's independent certified public accountants have
concluded that these factors, among others, raise substantial
doubt as to the Company's ability to continue as a going concern
for a reasonable period of time, and have, therefore modified
their audit report on the Company's annual consolidated financial
statements as of and for the year ended May 31, 2003, in the form
of an explanatory paragraph describing the events that have given
rise to this uncertainty. The consolidated financial statements do
not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company
be unable to continue as a going concern.
BOB'S STORES INC: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Bob's Stores, Inc.
160 Corporate Court
Meriden, Connecticut 06450-8313
Tel: 302-777-6500
Bankruptcy Case No.: 03-13254
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Bob's Stores Center, Inc. 03-13255
Bob's H.C., Inc. 03-13256
Bob's Inc. 03-13257
Bob's Non-Connecticut Operating Co. 03-13258
Type of Business: The Debtor is a retail clothing chain.
Chapter 11 Petition Date: October 22, 2003
Court: District of Delaware
Judge: Peter J. Walsh
Debtors' Counsel: Adam Hiller, Esq.
David M. Fournier, Esq.
Pepper Hamilton
Suite 1600
1201 Market Street
PO Box 1709
Wilmington, DE 19899
Tel: 302-777-6500
Fax: 302-656-8865
-and-
Michael J. Pappone, Esq.
Goodwin Procter, LLP
Exchange Place
53 State Street
Boston, MA 02109
Tel: 617-570-1581
Total Assets: More than $100 Million
Total Debts: More than $100 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Horizon National Contract Cleaning Service $79,895
Provider
ADT Security Services Inc. Security Service Provider $35,230
AT&T Telephone Services $27,252
Connolly Consulting Rental Property Auditor $18,723
Assoc., Inc.
Dunbar Armored, Inc. Armored Car Services $15,775
Xerox Copier Rental $12,070
First Data Corporation Gift Card Program Provider $10,744
Coin Depot Corporation Armored Car Service $5,231
Loomis Fargo and Co. Armored Car Service $5,142
Telecheck Database Service Fee for $3,250
Check verification
Micro Media On line image provider $1,971
for accounts payable
invoices
Certergy Check Services, Check Authorization $1,971
Inc. Services
Aspect Loss Prevention Training Services for $1,457
software package
Krystal Kleer Water/Coffee Station $1,282
Provider
Verizon-Albany Telephone Services $1,102
Verizon-Worcester Telephone Services $849
Verizon-Boston Telephone Services $440
Certegy Payment Collections Services $86
BUDGET GROUP: Committee Wants to Depose BRACII Representatives
--------------------------------------------------------------
On October 9, 2003, the Official Committee of Unsecured Creditors
of the Budget Group Debtors started to depose Budget Rent-A-Car
International, Inc. and its representatives at the law office of
Ashby & Geddes, P.A. at 222 Delaware Avenue, 17th Floor in
Wilmington, Delaware. The Committee asked the BRACII personnel to
testify regarding:
(1) the value of any and all of BRACII's assets;
(2) intercompany transfers from BRACC to BRACII;
(3) BRACII's use of the funds transferred from BRACC to
BRACII;
(4) the books, records, ledgers or any other documents that
reflect BRACII's financial condition;
(5) BRACII's sales and profitability forecasts, projections
and budgets;
(6) the books, records, ledgers or any other documents that
reflect the financial condition of any BRACII subsidiary;
(7) customer complaints relating to rental vehicles,
including but not limited to complaints regarding the
safety and operation of the rented vehicles, the customer
service provided to customers, and vehicle cleanliness;
(8) BRACII's marketing, advertising, and promotion of Budget
Rent-A-Car, including but not limited to historical
expenditures on advertising and promotion, and the types
of advertising and promotion utilized by BRACII;
(9) brand awareness studies performed by BRACII or on
BRACII's behalf;
(10) BRACII's strategy for its selling process, including any
plans for marketing, advertising and promotion of
Budget Rent-A-Car;
(11) BRACII's long-term and short-term business plans,
strategic plans and product marketing plans, whether
prepared internally or by external consultants, including
but not limited to BRACII's perspective of business lines
based on geographic location, the nature of competition,
entry conditions, number and identity of rival rental
companies, strengths and weaknesses of rival rental
companies, market size and market share statistics;
(12) the services provided by BRACC to BRACII;
(13) the value of the Subsidiary Stock;
(14) the 1965 Trademark License Agreement, including its
termination;
(15) the 2002 Trademark License Agreement;
(16) the EMEA Asset Purchase Agreement;
(17) negotiations with Avis Europe in terms of the sale of
BRACII to Avis Europe;
(18) the value of trademark that is the subject of the 1965
Trademark License Agreement;
(19) the value of the trademark that is the subject of the
2002 Trademark License Agreement;
(20) license agreements involving trademarks that are not the
subject of either the 1965 Trademark License Agreement or
the 2002 Trademark License Agreement;
(21) license agreements involving patents and technology
utilized by BRACII;
(22) the products and services that are sold under the
trademarks of BRACII;
(23) valuations of BRACII's value in connection with the sale
of BRACII to Avis Europe or any other potential buyer;
(24) the patents and technology owned by BRACII before the
EMEA Asset Purchase Agreement;
(25) BRACII's operating expense allocation policies and
practices;
(26) BRACII's accounting policies and practices relating
foreign operations to United States Generally Accepted
Accounting Principles;
(27) the effective income tax rate for each jurisdiction
BRACII or its subsidiaries were taxed;
(28) BRACII's franchise network, including but not limited to,
the franchise offering materials or prospectus, the form
of the franchise agreement, and other agreements relating
to the franchise network;
(29) vehicle rental industry analysis; and
(30) brand loyalty surveys, including information regarding
customer perceptions of BRACII or Budget Rent-A-Car, and
customer perceptions of BRACII's competitors. (Budget
Group Bankruptcy News, Issue No. 27; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
BURLINGTON INDUSTRIES: Creditors Accept Wilbur Ross' Plan
---------------------------------------------------------
WL Ross & Co. LLC announced that creditors had voted
overwhelmingly in favor of its purchase of Burlington Industries
upon its reemergence from Chapter 11 reorganization now targeted
for November 10, subject to prior Bankruptcy Court approval and
named a new senior management team for Burlington going forward.
The management structure will consist of Wilbur L. Ross as
Chairman and Joseph L. Gorga as President and Chief Executive
Officer. Mr. Gorga (51) joined Burlington in 2002 as Executive
Vice President North American Operations. Previously he had been
General Manager for the automotive and elastic fabrics businesses
for Milliken and Company, one of the world's largest textile
concerns, as well as CEO of CMI Industries Inc. He also has served
previously as the Vice Chairman of the American Textile
Manufacturing Institute and Chairman of the National Textile
Association and is currently a Director of NTA.
The current Burlington senior management team will be leaving the
Company to pursue other opportunities, including George W.
Henderson, III, Chairman and CEO, John D.Englar, Senior Vice
President Corporate Development and Law, Charles E. Peters, Jr,
Senior Vice President and CFO, Judith J. Altman, Senior Vice
President Global Operations Support and CIO, Robert A. Wicker,
Vice President & General Counsel and James M. Guin, Vice President
Human Resources and Corporate Communications.
Mr. Ross also announced that Burlington's Nano-Tex LLC affiliate
has now had its stain repellent, NANO-CARE(R), accepted nationwide
for pants and shirts by Gap and Old Navy Stores and by Brooks
Brothers for a variety of programs, and NANO-DRY(R) enhanced
fabrics adopted by Nike, Inc. for Tiger Woods golf pants.
He added that Burlington has entered into a new licensing
arrangement with Kayser Roth Corporation, the leading U.S.
producer of footwear for a series of new items under the
Burlington BT label.
He continued, "With these encouraging developments and under Joe
Gorga's leadership, Burlington will enhance its already powerful
brand name and will continue to develop textile applications for
cutting edge technological innovations. He also will manage the
operations to make the Company more cost competitive."
Mr. Gorga said, "I am excited by the challenge of leading
Burlington back to success. Despite the fiercely competitive
nature of the global textile industry, the Nano-Tex progress and
Kayser Roth opportunity both suggest, positive momentum in that
direction already is building."
Mr. Gorga holds a BS in Textile Engineering from Philadelphia
University and an MS in Textile Engineering from the Institute of
Textile Technology in Charlottesville, Virginia. He and his wife,
Carolyn, have two children and reside in Greensboro, North
Carolina.
WL Ross & Co. sponsors global private equity and hedge fund
investments on behalf of major institutional investors and has
committed more than $2 billion of equity since its founding in
April, 2000.
With operations in the United States, Mexico and India and a
global manufacturing and product development network based in Hong
Kong, Burlington Industries is one of the world's most diversified
marketers and manufacturers of soft goods for apparel and interior
furnishings.
CONE MILLS: Pushing with Sec. 363 Asset Sale to WL Ross & Co.
-------------------------------------------------------------
Cone Mills Corporation moved forward with the process of a sale of
the corporation to WL Ross & Co. in accordance with Section 363 of
Chapter 11 of the U.S. Bankruptcy Code.
Cone Mills' Board of Directors formally approved the definitive
agreement with WL Ross & Co., which is subject to higher or better
offers, at a meeting held late last week.
Under the agreement, WL Ross & Co. will purchase substantially all
of the assets of Cone Mills for $46 million in cash and the
assumption of the company's outstanding Debtor-in-Possession loans
and selected other liabilities, for a total purchase price valued
in excess of $90 million. The agreement provides for a closing not
later than December 31, 2003. WL Ross & Co. would receive a $1.8
million breakup fee if a higher bid for the company is accepted.
Approval of the break-up fee and bidding procedures is subject to
Bankruptcy Court approval.
WL Ross & Co.'s agreement to purchase Cone Mills for $90 million
sets a floor for other bids and is subject to higher or better
offers. If any competing bids are received by a bidding deadline
to be established by the Bankruptcy Court, an auction will be held
involving the competing bidders. The bid process will be
coordinated by the company's Chief Restructuring Officer, Michael
D'Appolonia of Nightingale and Associates, LLC, and the company's
investment banker, Jefferies and Company.
John L. Bakane, Chief Executive Officer of Cone Mills, said, "For
many years, we have followed a strategy aimed at recapitalizing
the company and establishing access to lower cost denim
manufacturing capacity; the WL Ross and Co. proposal is consistent
with that strategy. With the infusion of resources from a sale, as
well as the steps we've taken to reconfigure our denim
manufacturing operations to increase their efficiency and cost
competitiveness, we believe we can meet the challenge presented by
the unprecedented and continuing onslaught of low-cost textile
imports, while also continuing to provide substantial
manufacturing employment opportunities in the U.S., particularly
in the Carolinas. We believe these actions will make Cone Mills a
strong and long-term partner for our customers."
"Our definitive agreement with WL Ross & Company is an important
step toward completing this process expeditiously within the
framework of Chapter 11," Mr. Bakane added. "Once we have an
approved transaction, we will be able to focus on recapitalizing
the company, accessing low-cost production, and ensuring that Cone
Mills remains a strong participant in the intensely competitive
global textile marketplace."
Founded in 1891, Cone Mills Corporation, headquartered in
Greensboro, NC, is the world's largest producer of denim fabrics
and one of the largest commission printers of home furnishings
fabrics in North America. Manufacturing facilities are located in
North Carolina and South Carolina, with a joint venture plant in
Coahuila Mexico. Visit http://www.cone.comfor more information on
the Company
CORNERSTONE PROPANE: Taps Marcum & Kliegman to Replace Deloitte
---------------------------------------------------------------
After approval from the Board of Directors of its general partner,
which approval was based on the recommendation of the Board's
Audit Committee, on October 13, 2003, Cornerstone Propane
Partners, L.P. terminated its auditor-client relationship with its
independent auditors, Deloitte & Touche LLP and engaged the
services of Marcum & Kliegman LLP to be the Partnership's
independent auditors for the fiscal year ended June 30, 2003.
As disclosed in the Partnership's Current Report to the SEC, filed
on May 23, 2002, Arthur Andersen LLP were the Partnership's
independent auditors for the Partnership's fiscal year ended June
30, 2001 and through the subsequent period ended May 16, 2002 on
which date the Partnership terminated its auditor-client
relationship with Arthur Andersen. The Partnership indicates that
its consolidated financial statements and independent auditor's
report of Arthur Andersen as of, and for, the fiscal year ended
June 30, 2001 should not be relied upon due to prior period
misstatements identified during the preparation of the
Partnership's June 30, 2002 consolidated financial statements.
In October 2001 Arthur Andersen issued a management letter to the
Partnership which concerned the following material weaknesses:
1. Inadequate monthly close process.
2. Lack of supporting records and documents.
On May 16, 2002, the Partnership selected Deloitte & Touche to be
the Partnership's independent auditors. Delotte & Touche's
independent auditor's report on the Partnership's consolidated
financial statements for the year ended June 30, 2002, contained a
disclaimer of opinion, a scope exception and two explanatory
paragraphs which read, in part, as follows:
"The accompanying 2002 consolidated financial statements include
adjustments related to prior periods which the Partnership has
included as prior period adjustments to partners' capital
(deficit) as described in Note 16 to the consolidated financial
statements. Because of the absence of significant accounting
records of the Partnership for 2001, it was not practicable to
extend our auditing procedures to enable us to form an opinion on
the accompanying 2002 consolidated statements of operations,
partners' capital (deficit), and cash flows. Furthermore, because
of such lack of records, we were unable to assess whether the
Partnership's accounting principles were applied on a basis
consistent with that of the preceding year.
Because of the matters discussed in the preceding paragraph, the
scope of our work was not sufficient to enable us to express, and
we do not express, an opinion on the results of operations,
changes in partners' capital (deficit) and cash flows of the
Partnership for the year ended June 30, 2002.
In our opinion, except for the effects of such adjustments, if
any, as might have been determined to be necessary had we been
able to perform sufficient auditing procedures regarding the
consistency of the accounting principles applied, the accompanying
consolidated balance sheet presents fairly, in all material
respects, the financial position of Cornerstone Propane Partners,
L.P. and Subsidiaries at June 30, 2002 in conformity with
accounting principles generally accepted in the United States of
America.
Effective July 1, 2001, the Partnership adopted SFAS No. 142,
Goodwill and Other Intangible Assets.
The Company's consolidated financial statements for the year ended
June 30, 2002 have been prepared assuming that the Partnership
will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Partnership's recurring net
losses, negative working capital, partners' capital deficiency and
default on debt obligations raise substantial doubt about its
ability to continue as a going concern. The consolidated financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
The Partnership's consolidated financial statements for the year
ended June 30, 2002 were not prepared pursuant to Regulation S-X.
No financial statements of the Partnership have been issued as of
or for any periods commencing on or after July 1, 2002."
Between May 16, 2002, and through October 17, 2003, the filing
date of the Company's Current Report to the SEC on Form 8-K, the
Partnership and Deloitte & Touche had disagreements over
accounting principles and practices, financial statement
disclosure and auditing scope and procedure on the following
matters:
1. The need to record the actual physical inventory of
customer propane tanks.
2. The need to record the differences between subsequent
actual bonus payments and the initial bonus accrual.
3. The characterization of unearned tank revenue.
4. Certain disclosures within the Partnership's consolidated
financial statements.
These disagreements were resolved to Deloitte & Touche's
satisfaction. The Audit Committee of the Board of Directors of
the Partnership discussed the subject matter of each of the
disagreements with Deloitte & Touche. The Partnership has
authorized Deloitte & Touche to respond fully to the inquiries of
Marcum & Kliegman LLP concerning the subject matter of each of the
disagreements.
In connection with its audit of the Partnership's June 30, 2002
consolidated financial statements, Deloitte & Touche issued a
management letter to the Partnership which described the following
reportable conditions in internal controls. The first three
reportable conditions were identified as material weaknesses.
A. The Partnership needs to implement a system to monitor and
record customer propane storage tanks.
B. The Partnership needs to implement internal controls to ensure
related party transactions are appropriately recorded and
disclosed in its external financial reporting.
C. The Partnership needs to implement procedures and controls to
review, monitor and maintain general ledger accounts.
D. The Partnership needs to verify proper approval and recording
of non-systematic journal entries.
E. The Partnership needs to implement a process to ensure
methodologies utilized to calculate estimates included in the
financial statements are consistent and reasonable.
F. The Partnership needs to increase the experience and depth of
its financial management and accounting personnel.
G. The Partnership's reporting process is highly decentralized.
The process is largely undocumented with individuals involved
having a limited understanding of certain parts of the process
and no individual understanding the whole process.
Consolidation of financial reporting responsibilities should
be considered.
As reported in Troubled Company Reporter's October 17, 2003
edition, the Partnership is seeking bidders for its assets. Based
on the indications of interest the Partnership has received to
date, the Partnership's management believes that it is unlikely
the holders of the Partnership's Units will receive any
distributions as a result of the sale of its assets, and any
subsequent liquidation or restructuring of the Partnership's
operations.
As reported in Troubled Company Reporter's June 10, 2003 edition,
Fitch Ratings withdrew rating coverage of Cornerstone Propane
Partners, L.P. and Cornerstone Propane, L.P. At the time of
withdrawal, the ratings were:
CNO -- $45 million outstanding senior notes 'D';
CPLP -- $365 million senior secured notes 'DD'.
Headquartered in Watsonville, California, CNO is a retail propane
master limited partnership for CPLP, an operating limited
partnership
COVANTA: Heber Debtors File 2nd Amended Plan of Reorganization
--------------------------------------------------------------
Just four days after filing their First Amended Plan, the Heber
Debtors delivered to the Court their Second Amended Joint Plan of
Reorganization on September 28, 2003.
A full-text copy of the Heber Debtors' Second Amended Plan is
available at no charge at:
http://bankrupt.com/misc/heber_debtors_2nd_amended_plan_of_reorg.p
df
The Second Amended Plan includes these modifications:
A. Geothermal Sale means either the sale of:
(a) all of the Geothermal Business to the Proposed Buyers
-- Caithness Heber Field I, LLC, Caithness Heber Field
II, LLC, Caithness Heber Geothermal I, LLC, Caithness
Heber Geothermal II, LLC, Caithness Mammoth, LLC,
Caithness SIGC GP, LLC and Caithness SIGC LP, LLC --
pursuant to the Purchase Agreement; or
(b) some or all of the Geothermal Business pursuant to an
Alternative Transaction, without prejudice to the
Proposed Buyers' rights under the Purchase Agreement.
B. Treatment of Claims and Equity Interests
Class 1: Allowed Priority Non-Tax Claims
No agreement will impose any obligation on the Reorganized
Heber Debtors beyond the payment of amounts calculated in
accordance with the Working Capital Adjustment.
Class 2H: Allowed GECC Secured Claims
No agreement will impose any obligation on the Reorganized
Heber Debtors beyond the payment of amounts calculated in
accordance with the Working Capital Adjustment.
Class 14: Equity Interests in Heber Debtors
Holders of Allowed Class 14 Equity Interests will not
receive any Distribution under the Heber Reorganization
Plan in respect of Class 14 Equity Interests, except any
Equity Interests will continue to be held by the Heber
Debtor or Reorganized Heber Debtor that originally held
that Equity Interests, which Equity Interests will
continue to be evidenced by the existing capital stock,
partnership interests or membership interests.
* * *
Overview of Heber's First Amended Plan
The Heber Debtors -- AMOR 14 Corporation, Covanta SIGC Energy,
Inc., Covanta SIGC Energy II, Inc., Heber Field Company, Heber
Geothermal Company and Second Imperial Geothermal Company, L.P.
-- filed their First Amended Joint Plan of Reorganization on
September 24, 2003.
A full-text copy of the Heber Debtors' First Amended Plan is
available at no charge at:
http://bankrupt.com/misc/heber_debtors_1st_amended_plan_of_reorg.p
df
According to Deborah M. Buell, Esq., at Clearly, Gottlieb, Steen
& Hamilton, in New York, the Heber Debtors' First Amended Joint
Plan of Reorganization generally provides for:
A. Implementation of the Geothermal Sale
The implementation of the Heber Reorganization Plan is
predicated upon the approval by the Court of the Geothermal
Sale and its consummation. The terms and conditions of the
Geothermal Sale will be deemed included as part of the
Heber Reorganization Plan for all purposes.
B. Authorization of Transfer of Equity Interests
On the Effective Date, the Debtor Sellers -- Covanta Energy
Americas, Inc., Covanta Heber Field Energy, Inc., Heber Field
Energy II, Inc., Heber Loan Partners, ERC Energy, Inc. and ERC
Energy II, Inc. -- are authorized to sell, convey, assign,
transfer and deliver their Equity Interests in SIGC One Sub,
SIGC Two Sub, HFC Project Company and HGC Project Company
without the need for further corporate action and in
accordance with the Purchase Agreement. Furthermore, Amor and
SIGC Project Company will reinstate their Equity Interests.
C. Cancellation of Existing Securities and Agreements
On the Effective Date, without the need for further action,
all agreements and other documents will be cancelled as to
those that evidence:
-- any Claims or rights of any holder of a Claim against
the applicable Heber Debtor, including all indentures
and notes evidencing that Claims; and
-- any options or warrants to purchase Equity Interests,
obligating the applicable Heber Debtor to issue,
transfer or sell Equity Interests or any other capital
stock of the applicable Heber Debtor.
However, the Reorganized Heber Debtors will remain obligated
with respect to the GECC Liens, Mechanics' liens and Permitted
Encumbrances, liens, security interests or encumbrances in
property of the Reorganized Heber Debtors that have been
granted pursuant to any executory contracts that have been
assumed except to the extent obligations have been satisfied
as of the Effective Date.
D. Board of Directors and Executive Officers
Each of the Heber Debtors' directors and officers will resign
from their positions on or prior to the Effective Date.
E. Deemed Consolidation of Heber Debtors for Plan Purposes Only
Subject to the occurrence of the Effective Date, the
Reorganized Heber Debtors will be deemed consolidated solely
for these purposes under the Heber Reorganization Plan::
(1) With respect to Class 14 Equity Interests, no
Distributions will be made under the Heber
Reorganization Plan on account of Equity Interests in
Amor and SIGC Project Company; and
(2) In some instances, Claims against more than one Heber
Debtor have been grouped together into a single Class
of Claims for distribution purposes.
F. Conversion to Limited Liability Company Status
Pursuant to the terms of the Purchase Agreement, at least one
business day prior to the Closing Date, Covanta and the
Sellers will have caused each of the Holding Companies,
Mammoth Geothermal Company and Pacific Geothermal Company to
convert to limited liability company status and will not have
elected to be taxed as a corporation after the conversion;
However, Covanta and the Sellers will have no obligation
unless the Buyers will have given adequate assurance that
Closing will occur.
G. Amended Organizational Documents
On the Effective Date, the Reorganized Heber Debtors, without
the need for any further corporate action, will adopt and, as
applicable, file their amended organizational documents with
the applicable Secretary of State. The amended organizational
documents will prohibit the issuance of nonvoting equity
securities, as required by Sections 1123(a) and (b) of the
Bankruptcy Code, subject to further amendment as permitted by
applicable law.
H. Settlements
Except to the extent the Court enters a separate order
providing for the approval, the Confirmation Order will
constitute an order:
(a) approving as a compromise and settlement pursuant to
Section 1123(b)(3)(A) of the Bankruptcy Code and
Bankruptcy Rule 9019, any settlement agreements entered
into by any Heber Debtor or any other Person as
contemplated in confirmation of the Heber
Reorganization Plan, and
(b) authorizing the Heber Debtors' execution and delivery
of all settlement agreements entered into or to be
entered into by any Heber Debtor or any other person as
contemplated by the Heber Reorganization Plan and all
related agreements, instruments or documents to which
any Heber Debtor is a party.
I. Payment of GECC Secured HGC/HFC Claims and Covanta Power
Pacific, Inc. Debt
On or prior to the Effective Date, the Debtor Sellers and
Covanta will have paid all GECC Secured HGC/HFC Claims. On or
prior to the Closing Date, Covanta will have repaid all
amounts outstanding under the Loan Agreement, dated as of
April 10, 1998, among Ogden Power Pacific, Inc. and Bayerische
Vereinsbank, AG, New York Branch and the lenders referred in
the Loan Agreement, as amended.
J. Classified Claims
The classification of Claims and Equity Interests is
summarized as:
Class Claims Status Voting Right
----- ------ ------ ------------
1 Allowed Priority Unimpaired Not entitled
Non-Tax Claims to Vote
2H-A Allowed GECC Unimpaired Not entitled
Secured SIGC Claims to Vote
2H-B Allowed GECC Unimpaired Not entitled
Secured HGC/HFC Claims to Vote
3H Allowed Heber Unimpaired Not entitled
Secured Claims to Vote
7 Allowed Unsecured Unimpaired Not entitled
Claims to Vote
8 Allowed Heber Unimpaired Not entitled
Intercompany Claims to Vote
9 Intercompany Claims Impaired Deemed to Reject
14 Equity Interests Impaired Deemed to Reject
in the Heber Debtors
With respect to each Heber Debtor, the designation of the
treatment to be accorded to each Class of Claims and Equity
Interests denominated in the Heber Reorganization Plan is
summarized as:
Class 1: Allowed Priority Non-Tax Claims
Each holder of an Allowed Class 1 Claim will receive, in
full settlement, release and discharge of its Class 1
Claim, either:
(1) Cash, on the Distribution Date, in an amount
equal to the Allowed Claim, or
(2) other less favorable terms as Covanta and the
holder of an Allowed Priority Non-Tax Claim
agree.
Class 2H: Allowed GECC Secured Claims
The holder of the Allowed Subclass 2H-A Claims will
retain, unaltered, the legal, equitable and contractual
rights, including, without limitation, any valid and
perfected Liens that secure the Allowed Claim. However,
the assets of the Heber Debtors subject to the GECC Liens
may be sold, subject to that GECC Liens, as part of the
Geothermal Sale contemplated by the Heber Reorganization
Plan.
Covanta will pay to each holder of an Allowed Subclass
2H-B Claim, in full settlement, release and discharge of
its Subclass 2H-B Claim, either:
(1) Cash, on the Effective Date, in an amount equal to
the Allowed Subclass 2H-B Claim, or
(2) other less favorable terms as Covanta and the
holder of an Allowed GECC Secured HGC/HFC Claim
agree.
Class 3H: Allowed Heber Secured Claims
On the Effective Date, the legal, equitable and contractual
rights of the holders of Allowed Class 3H Claims will be
reinstated in full satisfaction, release and discharge of
their Class 3H Claims and will remain unaltered, except as
the relevant Heber Debtor or, on or after the Effective
Date, Reorganized Heber Debtor, and the holders of Allowed
Class 3H Claims may otherwise agree or as the holders may
otherwise consent. No contractual provisions or applicable
law that would entitle the holder of an Allowed Class 3H
Claim to demand or receive payment of the Claim prior to
the stated maturity of that Claim, terminate any
contractual relationship or take other enforcement action
from and after the occurrence of a default that occurred
prior to the Effective Date will be enforceable against the
Reorganized Heber Debtors.
Any Heber Debtor may, at its election, make a Cash payment
to the holder of an Allowed Class 3H Claim equal to the
full amount of the holder's Allowed Class 3H Claim,
together with interest at the legal rate to the extent
required by law, in full settlement, release and discharge
of the Class 3H Claim.
Class 7: Allowed Unsecured Claims
On the Distribution Date, each holder of an Allowed Class 7
Claim will receive, in full settlement, release and
discharge of its Class 7 Claim, a Cash payment equal to the
full amount of its Allowed Class 7 Claim, together with
interest at the legal rate to the extent required by law.
Class 8: Heber Intercompany Claims
The legal, equitable and contractual rights of holders of
Heber Intercompany Claims in respect of their claim will
not be affected, altered or impaired under the Heber
Reorganization Plan.
Class 9: Intercompany Claims
On the Effective Date, all Intercompany Claims will be
cancelled, annulled and extinguished. Holders of these
Claims will receive no Distributions in respect of Class
9 Claims.
Class 14: Equity Interests in Heber Debtors
Holders of Allowed Class 14 Equity Interests will not
receive any Distribution under the Heber Reorganization
Plan in respect of Class 14 Equity Interests. (Covanta
Bankruptcy News, Issue No. 38; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
DVI INC: Inks LOI to Sell U.K. Assets to ING Lease for EUR133MM+
----------------------------------------------------------------
DVI, Inc. (OTC: DVIXQ) confirmed it has entered into a letter of
intent to sell certain loan contracts and the assets of the United
Kingdom branch of DVI Financial Services, Inc. as well as
substantially all of the assets of its European non-debtor
subsidiaries to ING Lease Holding N.V. Pursuant to the agreement,
ING has offered EUR133,700,000 plus VAT and any other equivalent
sales taxes, subject to certain adjustments.
A hearing on the sale is scheduled for November 5, 2003 at the
United States Bankruptcy Court for the District of Delaware.
"We are pleased to enter into the letter of intent with ING, as we
believe its offer represents the best possible value for the
assets in question," said Mark E. Toney, DVI CEO. "We continue to
work with the DIP lenders and the Creditors' Committee to
determine the best possible way to maximize the value of our U.S.
assets."
DVI also confirmed that Todd Neilson of Neilson Elggren, LLP has
been appointed by the Court to serve as examiner in the Company's
case. The Company said it is supporting the examiner and is fully
cooperating with the investigation.
The Company also said that Richard E. Miller, Executive Vice
President, DVI, Inc. and President, DVI Financial Services, Inc.
has resigned effective October 17, 2003 to pursue other interests.
His duties will be handled by other Company executives as the sale
process continues.
DVI filed for Chapter 11 protection on August 25, 2003.
ELIZABETH ARDEN: Completes $105-Million Equity Public Offering
--------------------------------------------------------------
Elizabeth Arden, Inc. (NASDAQ: RDEN), a global prestige fragrance
and beauty products company, closed a public offering of 5,750,000
shares of its common stock at $18.25 per share, including the
750,000 share over-allotment option granted by the selling
shareholder, Unilever, and exercised by the underwriters on
October 20, 2003.
The Company sold 3,666,667 shares in the offering, and Unilever
sold 2,083,333 shares. As previously stated, the offering will
result in net proceeds to the Company of approximately $62.8
million. The Company intends to use the net proceeds to redeem $56
million aggregate principal amount of its outstanding 11-3/4%
Senior Secured Notes due 2011 at a redemption price of 111.75% of
the principal amount.
The Company will not receive any of the net proceeds from the sale
of the shares by Unilever. Unilever converted approximately $25
million of aggregate liquidation preference of the Company's
Series D Convertible Preferred Stock into common stock, which it
sold in the offering. As a result, the Company's net income to
common shareholders will improve by approximately $2.0 million due
to the reduced accretion and dividend on the Series D Convertible
Preferred Stock in fiscal 2005.
Credit Suisse First Boston acted as the sole book running manager
for the offering. Morgan Stanley acted as a joint lead manager and
J. P. Morgan Securities Inc. and SunTrust Robinson Humphrey acted
as co-managers of the offering. Copies of the final prospectus
supplement and related prospectus may be obtained from Credit
Suisse First Boston LLC, Prospectus Department, One Madison
Avenue, New York, NY 10010 or by telephonic request at 212-325-
2580.
Elizabeth Arden (S&P, B Corporate Credit and CCC+ Senior Unsecured
Debt Ratings, Positive) is a global prestige fragrance and beauty
products company. The Company's portfolio of leading brands
includes the fragrance brands Red Door, Elizabeth Arden green tea,
5th Avenue, ardenbeauty, Elizabeth Taylor's White Diamonds,
Passion and Forever Elizabeth, White Shoulders, Geoffrey Beene's
Grey Flannel, Halston, Halston Z-14, Unbound, PS Fine Cologne for
Men, Design and Wings; the Elizabeth Arden skin care line,
including Ceramides and Eight Hour Cream; and the Elizabeth Arden
cosmetics line.
EMPI CORP: S&P Rates $175 Million Senior Secured Facility at B+
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' senior
secured debt rating to Empi Corp.'s proposed $175 million credit
facility. The facility consists of a five-year, $25 million
revolving credit facility and two term loans, one worth $25
million (maturing in 2008) and another worth $125 million
(maturing in 2009).
At the same time, Standard & Poor's assigned its 'B+' corporate
credit rating to the company. The outlook is stable. The proposed
debt constitutes a leveraged recapitalization of the company by
its equity sponsor, The Carlyle Group.
Pro forma for the transaction, total debt outstanding will be
approximately $150 million.
"The speculative-grade rating on Empi Corp. reflects the company's
niche position in orthopedic rehabilitation products and its
leveraged capital structure," said Standard & Poor's credit
analyst Jordan Grant.
St. Paul, Minnesota-based Empi manufactures orthopedic devices
that aid in rehabilitation, using both electric and mechanical
stimulation. The company has leading positions in both
transcutaneous electric nerve stimulation used for pain relief and
iontophoretic drug delivery (made through the skin). Empi also
manufactures spring-loaded orthotic braces, used to restore range
of motion to injured ligaments and tendons, and distributes
physical therapy equipment through its Rehab Medical Equip
catalog. Empi derives a measure of revenue predictability from its
relationships with physicians and physical therapists, from its
reputation for quality, and from its recurring consumable revenue
stream, which accounts for about 20% of sales.
Still, the company is focused in a niche industry, and has a
relatively small sales base. The majority of Empi's revenues are
derived from its electric stimulation equipment, and although much
of this technology has been used in physical therapy for decades,
it is still vulnerable to changes in technology and reimbursement.
Empi recently purchased its RME catalog business, which has
enabled the company to distribute a broad array of equipment used
in physical therapy clinics, but this segment contributes a
relatively small portion of sales.
Empi was privatized in a 1999 LBO carried out by its equity
sponsor, The Carlyle Group.
ENCOMPASS SERVICES: Claims Objection Deadline Extension Sought
--------------------------------------------------------------
Marcy E. Kurtz, Esq., at Bracewell & Patterson, LLP, in Houston,
Texas, tells the Court that the Encompass Services Debtors are in
the process of reviewing the nearly 4,000 proofs of claim that
have been filed in their bankruptcy cases to determine whether
these claims represent bona fide liabilities or should be
disallowed for any number of reasons.
Given the Debtors' limited number of employees performing a
myriad of duties besides reconciling the amounts of the proofs of
claim with the Debtors' books and records, negotiating with
creditors, and filing objections where necessary, Ms. Kurtz says,
the claims objection process is extremely time-consuming and the
volume of the proofs of claim filed in the Debtors' cases calls
for another 60-day extension of the deadline to file objections
to claims.
To date, Encompass' Disbursing Agent, Todd A. Matherne, already
filed seven omnibus objections to duplicate claims, one omnibus
objection to late-filed claims, and one omnibus objection to
duplicate claims of government entities, pursuant to which the
Court has entered orders disallowing 315 claims. Moreover, 23
individual claim objections are currently set for hearing.
According to Ms. Kurtz, the Disbursing Agent is in the process
of:
-- preparing objections to the senior and junior subordinated
note claims, claims for which buyers of the Debtors' assets
have assumed liability and claims that are covered by the
Debtors' insurance policies;
-- continuing to object to individual claims that it
determines are invalid; and
-- preparing additional omnibus objections to 120 late and
duplicative claims as well as responses to numerous
administrative claim applications.
Despite its efforts however, the Disbursing Agent still has over
1,100 proofs of claim, including but not limited to buyer assumed
liability and lease rejection claims, to review. These claims
assert over $200,000,000.
By this motion, the Disbursing Agent asks the Court to extend the
Claims Objection Deadline to January 7, 2004. (Encompass
Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
ENRON: Selling 130-Megawatt Wind Assets in Calif. to FPL Energy
---------------------------------------------------------------
FPL Energy, LLC, a subsidiary of FPL Group, Inc. (NYSE:FPL), has
entered into definitive purchase and sale agreements to acquire
130 megawatts (MW) of California wind power generation projects
from Enron for $80 million.
Under terms of the agreements, FPL Energy and certain FPL Energy
affiliates will purchase the assets of the 40-MW Cabazon and the
16-MW Green Power projects near Palm Springs and the 18-MW ZWHC
and the 7-MW Victory Garden Repower projects near Tehachapi. In
addition, the company has agreed to purchase Enron's 50 percent
ownership interest in the 77-MW Sky River and the 22-MW Victory
Garden Phase IV projects. FPL Energy currently owns 50 percent of
both Sky River and Victory Garden Phase IV projects.
Closing of the agreements is subject to acceptance at a bankruptcy
auction currently anticipated to occur in early December and
regulatory approvals. The agreements require, under certain
circumstances, that FPL Energy be paid a break-up fee of up to $3
million in the event it is not the confirmed buyer on all the
agreements.
"The addition of these wind projects will complement our existing
California assets and further strengthen our industry leading
position in wind," said Jim Robo, president of FPL Energy.
With the exception of Green Power Partners I LLC, all of these
projects sell 100 percent of their output to Southern California
Edison under long-term contracts. FPL Energy is targeting to close
the acquisition by early 2004.
FPL Energy is a leading unregulated wholesale generator of clean
energy, including natural gas, wind, solar, hydroelectric and
nuclear. It is the nation's leader in wind energy with 37 wind
facilities in operation in 14 states. FPL Energy has a generating
portfolio of more than 10,000 net megawatts in operation with more
than 2,000 megawatts coming from clean and renewable wind energy.
It is a subsidiary of FPL Group, one of the nation's largest
providers of electricity-related services with annual revenues of
more than $8 billion. FPL Group's principal subsidiary is Florida
Power & Light Company, one of the nation's largest electric
utilities, serving more than 4 million customer accounts in
Florida. Additional information is available on the Internet at
http://www.FPLEnergy.com http://www.FPLGroup.com and
http://www.FPL.com
ENRON CORP: Pushing for Approval of Dabhol Tolling Agreement
------------------------------------------------------------
Enron Corporation, Offshore Power Production C.V., Enron India
Holdings, Ltd. and Enron Mauritius Company ask the Court,
pursuant to Section 105(a) of the Bankruptcy Code and Rule 9019
of the Federal Rules of Bankruptcy Procedure, to approve:
(a) a tolling agreement the Debtors entered into with various
underwriters and insurers that preserves the claims and
defenses of the parties while negotiation towards a
definitive settlement of the claims and defenses continue
related to the Dabhol Power Company -- the Dabhol Policy
Tolling Agreement; and
(b) a tolling agreement the Debtors entered into with various
underwriters and insurers that preserves the claims and
defenses of the parties while negotiations towards a
definitive settlement of claims and defenses continue with
respect to certain Master Policies -- the Master Policy
Tolling Agreement.
Prior to the Petition Date, the Debtors, among other things, were
involved in a project to develop, finance, construct, own,
operate and maintain and electric power generating station and
related ancillary facilities and infrastructure near Dabhol in
the State of Maharashtra, India -- the Project. Indirectly,
Enron has interests in the Project through its debtor and non-
debtor subsidiaries -- the Companies -- including:
(a) the other Debtors,
(b) Atlantic Commercial Finance, Inc.,
(c) Travamark Two BV, and
(d) Atlantic India Holdings, Ltd.
Martin A. Sosland, Esq., at Weil, Gotshal & Manges LLP, in New
York, relates that Enron obtained political risk insurance in
respect of the Project from 20 underwriters. The Insurers issued
polices in respect of the Project under these policy numbers:
-- LP0003274,
-- LP0003278,
-- LP9902887,
-- LP9902947,
-- LP9802582, and
-- LP9802404.
Dabhol Policy Tolling Agreement
On August 12, 2002, Mr. Sosland informs the Court that Enron and
the Insurers began negotiations aimed at settling disputes
related to the validity of the claims under the Policies and the
Insurers' asserted rights with respect to these claims to avoid
the Policies from their inceptions. Since then, the Parties
entered into the Dabhol Policy Tolling Agreement whereby they
mutually agree to toll the time period for the prosecution or
adjustment of claims under the Policies related to the Project.
Among other things, the Dabhol Policy Tolling Agreement provides
that:
(a) The Insurers will not be required to take any further
steps in relation to handling or assessing of any claims
under the Policies, including:
(i) responding to Enron's letters dated September 12,
2002 and December 11, 2002;
(ii) making requests of the Companies for information or
documents;
(iii) raising or pursuing inquiries relating to
investigations involving the Companies; and
(iv) corresponding with the Companies in relation to
what constitutes a valid "proof of loss" or
submission of "proof of loss";
(b) The Insurers will not be required to continue to monitor
or consider:
(i) the context any Policies' validity, avoidance or
termination;
(ii) new or existing public information, which may be
relevant to the Policies; or
(iii) any relevant information or documentation already
in the Insurers' possession;
(c) The Companies will not provide, nor be required to
provide, any further information or documentation to the
Insurers in respect of claims that have been previously
made under the Policies; and
(d) None of the Companies or the Insurers will take any steps
to commence any suit or other legal proceedings against
the other in relation to the Policies.
Master Policy Tolling Agreement
Prior to the Petition Date, Enron, among other things, through
direct and indirect subsidiaries, was involved in investments to
develop, finance, construct, own, operate and maintain
electricity and gas generation and distribution facilities and
other infrastructure investments internationally. Enron obtained
political risk insurance in respect of the Investments from
certain underwriters. The Master Policy Insurers issued Master
covers under these Master Policies:
-- LP9802344,
-- LP9802345,
-- LP9902970,
-- LP9902981,
-- LP0003318, and
-- LP0003319 and specific policy declarations relating to 24
Investments.
On August 12, 2002, Ponderosa Assets LP filed an expropriation
claim with respect to one of the Investments, TGS, a gas pipeline
company in Argentina. Enron, Ponderosa and the Master Policy
Insurers began negotiations aimed at settling disputes related to
the validity of the claim under the Master Policies and the
Master Policy Insurers' asserted rights to avoid the Master
Policies from their inceptions and with respect to the claim.
Enron, Ponderosa and the Master Policy Insurers have been
involved in ongoing discussions to resolve or settle the Master
Policies Disputes. On June 11, 2003, Enron, Ponderosa and the
Master Policy Insurers entered into an agreement whereby they
mutually agreed to toll time periods related to the Master
Policies.
The salient terms of the Master Policy Tolling Agreement are:
(a) Master Policy Insurers will not be obliged to take any
further steps in relation to the handling or assessment
of any claims, or circumstances notified in connection
with any possible claims, under the Master Policies.
Among other things, Master Policy Insurers will not be
required to provide a response to the claim delivered by
Ponderosa under Declaration of Master Policies Nos.
LP9902970 and LP9902981, will not make or be obliged to
make further requests to Enron or Ponderosa for
information or documents, nor seek or be obliged to seek
that the Insured provide information or documents already
sought but not given, nor raise or pursue inquiries of
the Insured relating to any investigations to which the
Insured have been or may, in the future, be subject.
Master Policy Insurers will not correspond or be obliged
to correspond with the Insured further in relation to
what constitutes a valid proof of loss or submission of a
proof of loss;
(b) Master Policy Insurers will not be obliged to continue to
monitor or consider in the context of either the validity
of the Master Policies, avoidance or termination of the
Master Policies, or any claims, or otherwise in
connection with the Master Policies, any new or existing
publicly available information, which may be relevant to
the Master Policy disputes or issues mentioned, or any
information or documentation already in the Insurers'
possession, which may be relevant to these disputes or
issues;
(c) Master Policy Insurers' rights, if any, to avoid or
otherwise terminate the Master Policies, whether for
alleged misrepresentation, alleged nondisclosure or
otherwise, and their rights in respect of any and all
defenses to any claims, and any right to pursue claims
under the Master Policies, and all other rights
whatsoever, will in no way be prejudiced by the Master
Policy Tolling Agreement or by any forbearance by Master
Policy Insurers or the Insured in pursuing rights and
defenses;
(d) The Insured will not provide or be obliged to provide any
further information or documentation to the Master Policy
Insurers in respect of the claims that have been made
under the Master Policies. However, the Insured will use
all reasonable efforts to preserve all information and
documentation within their possession, custody or control
which is relevant to the Master Policies including,
without prejudice, their inception, cover and the claims
made under them in the same form in which it exists at the
date of the signing of the Master Policy Tolling
Agreement. Further, the Insured will continue to give
notice to the leading underwriters of any event, which the
Insured considers likely to give rise to a claim under the
Master Policies, provided that delay in the giving of
notice during the period the Master Policy Tolling
Agreement is in effect will not provide a basis for the
Master Policy Insurers to deny coverage for the claim to
the extent that the Insured would be otherwise entitled to
coverage. For the avoidance of doubt, nothing in the
Master Policy Tolling Agreement in any way affects the
relevant burdens of proof that arise or exist in
connection with any matter relating to the Master
Policies;
(e) The Insured's rights, if any, to coverage and to payment
of any claim made under the Master Policies, and all
other rights whatsoever, will in no way be prejudiced by
the agreement set out in the Master Policy Tolling
Agreement or by any forbearance thereunder by Master
Policy Insurers or the Insured in pursuing rights and
defenses; and
(f) Neither the Master Policy Insurers nor the Insured will
take any steps to commence any suit or other legal
proceedings against the other in relation to the Master
Policies prior to termination of the Master Policy Tolling
Agreement, except that the Insured may file objections to
the proofs of claim previously filed by the Master Policy
Insurers in the Court in the Debtors' Chapter 11 cases,
in which event the Insured will agree that the Master
Policy Insurers' time to respond to the objection will be
deferred until 60 days after the expiration of the Master
Policy Tolling Agreement.
Tolling Agreements Should be Approved
Mr. Sosland contends that that the Dabhol Policy Tolling
Agreement and the Master Policy Tolling Agreement is warranted
because:
(a) they allow the Debtors to negotiate settlement of the
Disputes;
(b) they are the product of arm's-length bargaining between
the parties;
(c) they will enable the claims and issues relating to the
Policies and the Master Policies to be resolved at a
later date without prejudice to any parties' rights; and
(d) they allow the Debtors to eliminate or avoid potential
unfavorable bargaining positions associated restrictive
time limits or additional operational risks and possible
litigation that may occur as a result of any adversarial
proceedings. (Enron Bankruptcy News, Issue No. 84;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
EXIDE: Creditors' Committee Takes Action to Block Confirmation
--------------------------------------------------------------
David M. Fournier, Esq., at Pepper Hamilton LLP, in Wilmington,
Delaware, representing the Unsecured Creditors' Committee,
complains that the investment funds and other investors
and other prepetition bank lenders have hijacked the Exide
Debtors' reorganization process. Through incentives to the
Debtors' management and the leverage that they wield through their
allegedly senior, secured position, the Prepetition Lenders have
been successful in forcing the Debtors to propose a reorganization
plan that provides the Lenders with a platform for earning a
return far in excess of their claims. Mr. Fournier states that
these massive returns will come at the expense of unsecured
creditors, many of whom, unlike the Prepetition Lenders who made
the voluntary business decision to invest in the Debtors, have
involuntarily had these Debtors thrust upon them through personal
injury and environmental claims.
Mr. Fournier relates that the scenario present in this case is
hardly unique. In a recent study, Valuation of Bankrupt Firms,
13-1 REV. OF FIN. STUD. 43, 65 n.33 (2000), the market value of
63 companies that had recently emerged from bankruptcy were
reviewed and compared with the implied values found in the
companies' cash flow forecasts contained in their reorganization
plans. Authors Stuart C. Gilson, Edith S. Hotchkiss & Richard S.
Ruback noted that investors who specialize in buying the bankrupt
companies' senior debt conspire to keep the values low so that
when a company emerges from bankruptcy proceedings they get most
of its value, including its stock. If the company has been
undervalued, the market will send its shares soaring -- and they
make out like bandits.
According to Mr. Fournier, the Prepetition Lenders have contorted
the process in many of the ways observed in the Academic Study.
This undervaluation is blatantly clear when viewed in light of
actual offers received from potential acquirers that place a much
higher value on the Debtors' total enterprise.
Mr. Fournier points out that the Prepetition Lenders, through
their support of the Plan, are no longer acting as true lenders
seeking recovery on their loan. Instead, they are acting as
speculative investors holding out for the types of returns that
equity investors would typically require. To generate these
equity style returns for the Prepetition Lenders, however, the
Debtors have proposed a Plan that is contrary to the provisions
of the Bankruptcy Code.
The Plan proposes to eliminate in excess of $2,000,000,000 in
claims, capitalize the Reorganized Debtors with a bare minimum
amount of debt, and issue virtually all of the equity in the
Reorganized Debtors to the Prepetition Lenders, with a
significant minority stake to be distributed to the Debtors'
management. To achieve this result, the Plan distorts the
bankruptcy process and unfairly discriminates in favor of the
Prepetition Lenders and Exide's Management.
Mr. Fournier argues that the Court should not confirm the
Debtors' Plan because:
A. The Debtors' attempt to force an inadequate and unfair
settlement of the Committee's Adversary Proceeding through the
Plan is impermissible.
Through the Plan, the Debtors attempted to force a
"settlement" of the Committee's Adversary Proceeding, contrary
to the Committee's desires and without any involvement from
the Committee. The Plan proposes to settle the Adversary
Proceeding for the minimal distribution to unsecured creditors
while granting the defendants -- the Prepetition Lenders --
extensive relief, including releases. The Debtors previously
told the Court that the settlement distribution to unsecured
creditors is $9,000,000, a substantial dollar figure in terms
of a proposed settlement. The actual compensation to
unsecured creditors, however, has a maximum value of
$8,500,000, and even that amount is overstated and subject to
serious reductions under the terms of the Plan. This amounts
to a transfer of at best 1% of the total value of the
Prepetition Lenders' claims to unsecured creditors. The
Committee believes that the likelihood of success on the
merits of the Adversary Proceeding exceeds this recovery by a
vast margin.
The Plan, in its rush to force confirmation, ignores the fact
that the Debtors are not a party to the Adversary Proceeding,
have previously waived all their rights to pursue, and have
failed to pursue the claims asserted in that proceeding. The
Committee, the only party properly authorized to pursue these
claims, cannot be cut out of the process because the
Prepetition Lenders hold significant leverage against the
Debtors or because the Management, many of whom are implicated
in the allegations in the Adversary Proceeding, want to be
finished with the Chapter 11 process. The fact that in
certain situations, a debtor is hopelessly conflicted and
cannot pursue legitimate claims, is the reason why courts like
the Third Circuit in its en banc Cybergenics opinion have
recognized the importance of a court's power to grant
derivative standing to Creditors' committees and trusts. To
gut this power by allowing the Debtors to simply settle the
litigation is illogical and unfair.
Mr. Fournier asserts that the Court should deny confirmation
because the Debtors do not have the standing or right to
settle the Adversary Proceeding through their Plan. The
consideration proposed in the Plan is insufficient to support
the settlement.
B. The Plan will pay the Prepetition Lenders more than 100% of
their claims while unsecured creditors may not even receive 1%
of their claims. By underestimating the enterprise value of
the Debtors and delivering nearly all the equity of the
Reorganized Debtors to the Prepetition Lenders, the Plan
provides the Prepetition Lenders a return significantly in
excess of the face amount of their debt. In addition, the
Plan gives the Prepetition Lenders, through the preferred
stock they will receive, a liquidation preference with
participation rights. Thus, in the event of a bankruptcy or
liquidation, the Prepetition Lenders would recover the full
amount of their claims plus interest before the new common
shareholders receive anything. Also, by retaining the
Debtors' Chapter 5 claims, the Reorganized Debtors will have
access to an additional pool of as much as $200,000,000 in
assets.
Since the Adversary Proceeding has not been resolved, the
Court cannot satisfy its independent duty to determine that
the Plan does not discriminate unfairly and is fair and
equitable, in accordance with Section 1129(b)(1) of the
Bankruptcy Code. Without knowing how to resolve the equitable
subordination, recharacterization and insider claims involved
in the Adversary Proceeding, the Court also cannot know
whether horizontal and vertical expectations among the
Debtors' creditors are being satisfied since it cannot
ascertain what type of priorities exist among the Prepetition
Lenders and the unsecured creditors.
The Prepetition Lenders will not be alone in reaping this
value. The Management, which negotiated the Plan with the
Prepetition Lenders, will receive 5% to 10% of the equity of
the Reorganized Debtors -- five to 10 times more equity than
the holders of more than $1,000,000,000 of unsecured claims.
As a result, the Plan violates the absolute priority rule
in Section 1129(b)(2), and the Plan is unconfirmable pursuant
to Section 1129(b)(1). Similarly, the Plan violates Section
1129(a)(7) and is unconfirmable pursuant to Section
1129(a)(1).
C. The distribution to unsecured creditors violates Sections
1123(a)(4), 1129(a)(1) and 1129(b)(1) because all unsecured
creditors are not receiving the same or similar distributions.
The Debtors split the unsecured creditors into two groups --
the general unsecured creditors and the senior noteholders.
Although segregated into separate subclasses, both of these
groups consist of unsecured creditors of the same priority,
and yet the Debtors' Plan provides for distributions to them
of totally different consideration that will necessarily
result in different recoveries for these groups. Under the
Plan, the general unsecured claims will divide a pool of cash
with a maximum value of $4,400,000. The senior noteholders,
on the other hand, will receive highly restricted common stock
in exchange for their claims.
The Debtors stated that they provided different consideration
to claims within the same class to avoid becoming a reporting
company, which means no information, including financial
information, will be publicly available. Unfortunately for
those unsecured creditors receiving common stock, this will
result in their stock being completely illiquid. On the other
hand, avoiding the reporting requirements effectively enables
the Prepetition Lenders to receive preferred stock pursuant to
the Plan to maximize their return through an eventual initial
public offering or sale of their interest. Moreover, the
preferred stock contains a number of features that ensure that
the Prepetition Lenders will have complete control over the
Reorganized Debtors. Through this control, the Prepetition
Lenders will control the timing of and cause the Debtors to
make an initial public offering or enter into a significant
transaction, including a sale of all or substantially all of
Reorganized Debtors.
The Debtors attempted to equalize the payments to the two
subclasses of unsecured creditors by creating a mechanism that
adjusts the percentage distribution to all unsecured creditors
as the dollar value of allowed claims changes. Thus, a change
in the value of the allowed claims in Class P4-A will trigger
an adjustment in the distribution to Class P4-B such that the
percentage distribution to that subclass is the same as the
percentage distribution to Class P4-A. As the General
Unsecured Claims in Class P4-A increase, the distribution to
that subclass will be split into smaller portions. The
Debtors' Plan, therefore, decreases the percentage
distribution and total payout to the Class P4-B creditors.
Similarly, if the Class P4-A claims were to decrease, which
increases the pro rata recoveries to claims in that subgroup,
the amount paid to Class P4-B increases in an amount
sufficient to equalize the percentage payout to both
subclasses.
The Committee illustrates these effects in a chart:
(Dollar amounts in millions)
______________________________________________________________
| | | | | |
| | Class | Estimated | Value of | %Recovery |
| | | Claims | Distribution | |
|____________|_______|___________|______________|______________|
| | | | | |
| Payout | P4-A | $322.6 | $4.4 | 1.4% |
| w/o change | P4-B | 300 | 4.1 | 1.4% |
| in claim |_______|___________|______________| |
| amounts | | | | |
| | Total | $622.6 | $8.5 | |
|____________|_______|___________|______________|______________|
| | | | | |
| Payout if | P4-A | $422.6 | $4.4 | 1.0% |
| P4-A | P4-B | 300 | 3.1 | 1.0% |
| claims |_______|___________|______________| |
| increase | | | | |
| increase | Total | $722.6 | $7.5 | |
|____________|_______|___________|______________|______________|
| | | | | |
| Payout if | P4-A | $222.6 | $3.6 | 1.6% |
| P4-A | P4-B | 300 | 4.9 | 1.6% |
| Claims |_______|___________|______________| |
| decrease | | | | |
| | Total | $522.6 | $8.5 | |
|____________|_______|___________|______________|______________|
D. The Plan contains improper releases and injunctions of claims
against third parties in violation of Sections 524(e), 1129(a)
and 1129(b)(1). The released parties do not provide any
consideration for the benefits they will receive.
E. The value generated by an orderly liquidation of the Debtors'
estates would provide significantly more value than the amount
of the Prepetition Lenders' claims. The Plan fails to provide
each of the unsecured creditors with "a value, as of the
effective date of the plan, that is not less than the amount
that the holder would so receive or retain if the debtor were
liquidated under Chapter 7." Thus, the Plan violates the
requirements of Section 1129(a)(7) and the absolute priority
rule contained in Section 1129(b)(2).
F. The Plan amounts to a usurpation by the Prepetition Lenders of
all of the value, current and future, of the Debtors. The
Plan was designed by the self-interested Exide Management with
the singular purpose of maximizing the benefits to the
Prepetition Lenders at the expense, and to the detriment, of
unsecured creditors. Consequently, the Plan does not carry
out the primary objective of the Bankruptcy Code to achieve
the highest and best value for a debtor's assets so that a
fair and equitable distribution may be made to creditors. The
Plan, therefore, has not been proposed in good faith as
required by Section 1129(a)(3). (Exide Bankruptcy News, Issue
No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900)
FLEMING COMPANIES: PBGC Claims Deemed as Separately Filed
---------------------------------------------------------
The Pension Benefit Guaranty Corporation is a U.S. government
corporation that administers the defined benefit pension plan
termination insurance program under Title IV of the Employee
Retirement Income Security Act of 1974. The PBGC asserts that
each of the Fleming Debtors is either a sponsor or a controlled
group member of a sponsor of five pension plans covered by Title
IV of the ERISA.
The PBGC intends to assert 15 separate claims against each of the
29 Debtors for alleged liability to the Pension Plans under 26
U.S.C. Section 419 and 29 U.S.C. Section 1082(c)(11),
1307(e)(12), 1362(a), (b) and (c). Literal compliance with the
Bar Date Order would require that the PBGC file 435 proofs of
claim. The PBGC says that filing 435 claim forms would
constitute a significant and unnecessary administrative burden to
itself, the Debtors, the Court and the Debtors' claims agent.
In view of this, the Debtors and the PBGC stipulate and agree
that notwithstanding the Bar Date Order or any provision of the
Bankruptcy Code, each proof of claim filed by the PBGC will be
deemed filed not only in that case but also in each of the other
Debtors' Chapter 11 cases. The Debtors and PBGC also agree that
the stipulation is intended solely for the purpose of
administrative convenience and will not affect the substantive
rights of the Debtors, the PBGC or any other parties-in-interest.
(Fleming Bankruptcy News, Issue No. 14; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
FLEXTRONICS INT'L: Second Quarter Results Show Sequential Growth
----------------------------------------------------------------
Flextronics (Nasdaq: FLEX) announced results for the quarter ended
September 30, 2003.
Net sales totaled $3.5 billion for the second quarter ended
September 30, 2003, reflecting a 13% sequential increase. Proforma
net income was $47.5 million or 9 cents per diluted share for the
quarter, which represents a sequential increase of 133% in
proforma net income. Including after-tax amortization expense of
$7.7 million and unusual charges of $139.9 million, we incurred a
net loss of $100.1 million on a GAAP basis, which is a 19-cent
loss on a diluted per share basis.
The unusual charges recorded in the second quarter ended
September 30, 2003 include a $95.2 million loss on the early
retirement of debt, relating to a refinancing that should reduce
annual interest expense by more than $43 million, which increases
earnings per share by 7 cents. Unusual charges also include after-
tax charges of $44.7 million, relating to our previously announced
restructuring plan, which we expect to complete by the end of our
fiscal year.
"The September quarter revenues and earnings were significantly
better on a sequential basis, which supports our belief that end
markets have improved," said Michael E. Marks, Chief Executive
Officer of Flextronics. "We have improved our capital structure,
lowered our interest expense and improved annual cash flow by
reducing high coupon interest payments. Cash flow is good and
spending is under control, as evidenced by the sequential
reduction of more than 6% in SG&A expenses."
Addressing the business outlook, Marks added, "We believe that
next year should show improvement in several areas. The industry
will be nearly finished with major restructurings, excess
equipment capacity should be substantially reduced, and demand
should be better. With the expected increase in profits from our
ODM, logistics, design and network services, we believe that
Flextronics is well positioned for growth in revenue and profits.
We are increasingly confident that our business is improving."
In terms of guidance, the Company indicated that the December
quarter should generate sales in the range of $3.6 - $3.9 billion
and proforma earnings of $0.13 - $0.15 per diluted share. This
represents an increase in the bottom end of our previous guidance
of two cents per share. Expectations for the March quarter reflect
a typical sequential decline in sales to a range of $3.0 - $3.3
billion, and a related typical decline in proforma earnings to a
range of $0.07 to $0.09 per diluted share. GAAP earnings are
expected to be lower than proforma earnings reflecting
approximately two cents per diluted share of quarterly
amortization expenses as well as further restructuring charges,
which we expect will range in the aggregate from $50 - $60
million, or a total of eight to ten cents per diluted share,
spread over the next few quarters. The actual timing of such
charges, and accordingly the actual difference between quarterly
proforma and GAAP earnings, has yet to be determined.
Headquartered in Singapore, Flextronics (S&P, BB+ Corporate
Credit Rating, Stable) is the leading Electronics Manufacturing
Services provider focused on delivering supply chain services to
technology companies. Flextronics provides design, engineering,
manufacturing, and logistics operations in 29 countries and five
continents. This global presence allows for supply chain
excellence through a network of facilities situated in key markets
and geographies that provide customers with the resources,
technology, and capacity to optimize their operations.
Flextronics' ability to provide end-to-end services that include
innovative product design, test solutions, manufacturing, IT
expertise, network services, and logistics has established the
Company as the leading EMS provider with revenues of $13.4 billion
in its fiscal year ended March 31, 2003. For more information,
visit http://www.flextronics.com
GOODYEAR TIRE: Will Restate 1998-2002 Financial Results
-------------------------------------------------------
The Goodyear Tire & Rubber Company (NYSE: GT) will restate its
financial results for the years 1998-2002 and for the first and
second quarters of 2003 to record adjustments primarily resulting
from the implementation of an enterprise resource planning
accounting system in 1999 and errors in inter-company billing
systems. These adjustments, which are being identified
and corrected by Goodyear, do not affect the company's net cash
position, and the restatement will not affect its access to credit
facilities.
Although the company is still reviewing the matter, the
adjustments are currently expected to decrease net income over the
restatement period by up to $100 million. It is expected that the
adjustments will result in an improvement in the net loss for the
first half of 2003. The improvement is attributable to certain
charges previously recognized during the first half of 2003 that
will be reflected in the restatement for prior years. A reduction
is anticipated in shareholders' equity as of June 30, 2003, of up
to $120 million, of which $20 million relates to periods prior to
1998.
Goodyear will continue its ongoing process of strengthening its
accounting procedures and is implementing further improvements to
its system of internal controls. The company remains fully
dedicated to providing timely and accurate financial reporting.
Goodyear detected the errors in the course of a review of various
accounts, including ERP-impacted balance sheet accounts. These
accounts were principally within the company's North American Tire
and Engineered Products businesses. The restatement will also
include adjustments for timing differences in other areas of the
company's business.
The company's decision to restate prior-period financial
statements was made by Goodyear management with the concurrence of
its Audit Committee and its independent auditors,
PricewaterhouseCoopers LLP.
Goodyear said it expects to report a net loss for the third
quarter of 2003 in the range of $90 million to $115 million (51
cents to 66 cents per share).
The company expects to report sales of about $3.9 billion for the
quarter.
The company said its third quarter results will reflect continued
strong performance in its businesses outside of North America.
Results for the North American Tire business reflect rising raw
material prices, a relatively weak truck market, stronger volume
in the branded passenger consumer tire business and a weakness in
the private label business.
The net loss will include net rationalization charges of
approximately $56 million before tax (27 cents per share) related
to a plant closing and employment reductions in North America and
Europe. These programs will result in employment reductions
totaling about 1,360 and approximate annualized cost savings of
$65 million.
Tax expense for foreign operations will be largely offset by the
benefit related to the settlement of prior years' tax liabilities.
The net loss will also include an impact from foreign currency
exchange of about $10 million and an estimated charge for
discontinued product liability of approximately $50 million.
Goodyear (Fitch B+ Senior Secured and B Senior Unsecured Debt
Ratings, Negative) is the world's largest tire company.
Headquartered in Akron, Ohio, the company manufactures tires,
engineered rubber products and chemicals in more than 85
facilities in 28 countries. It has marketing operations in almost
every country around the world. Goodyear employs about 92,000
people worldwide.
HAMLET GROUP INC: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Lead Debtor: The Hamlet Group, Inc.
2701 Alton Pkwy
Irvine, California 92606
Bankruptcy Case No.: 03-13237
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
H.H. of Maryland, Inc. 03-13238
H.H.K. of Virginia 03-13239
Type of Business: The Debtors are affiliates of Chi-Chi's Inc., an
operating subsidiary of Prandium and FRI-MRD
Corporation engaging in the restaurant business
Chapter 11 Petition Date: October 21, 2003
Court: District of Delaware
Judge: Charles G. Case II
Debtors' Counsel: Laura Davis Jones, Esq.
Bruce Grohsgal, Esq.
Pachulski Stang Ziehl Young and Jones
919 North Market Street
16th Floor
Wilmington, DE 19899-8705
Tel: 302-652-4100
Fax: 302-652-4400
Total Assets: $10 Million to $50 Million
Total Debts: $10 Million to $50 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Commair Mechanical Services Agreement $29,546
Services
Southern Fresh Products Trade Payable $25,745
SCE Utility Payable $21,576
Alsco American Linen Trade Payable $19,360
Agoura Village Center LLC Non-residential Real $15,925
Property Lease
L.A. Dept. of Water Utility Payable $15,719
4419 Van Nuys Building Non-residential Real $12,934
Property Lease
Southern California Gas Utility Payable $12,864
Co.
Reliance Standard Life Trade Payable $10,800
Ins Co
Sysco Food Services of Trade Payable $10,043
Los Angeles
Dunbar Armored Security, Agreement $9,392
Inc.
Southern Wine & Spirits Trade Payable $7,896
of CA
Ecolab Pest Elimination Services Agreement $7,539
Div.
Sara Lee Coffee & Tea Trade Payable $6,981
Infotel Inc. Services Agreement $6,783
Bimbo Bakeries USA Trade Payable $6,572
W. Myers Company, Inc. Services Agreement $5,120
A-Check Company, Inc. Services Agreement $4,338
La Mousse Trade Payable $3,765
Coca Cola Bottling Co. Trade Payable $3,095
of LA
HEALTHTRAC INC: Co.'s Ability to Continue Operations Uncertain
--------------------------------------------------------------
Healthtrac Inc. is primarily engaged in providing health
management designed to improve the quality of care while reducing
overall healthcare costs and the operation of a call center. The
Company provides health management services to health plans, self-
insured employers and government agencies via programs designed to
postpone disease and disability through preventive practices and
chronic disease self-management. Healthtrac operates one call
center through its subsidiary, NorthNet Telecommunications, Inc.,
doing business as NorthStar TeleSolutions. It operates two
segments: Healthcare and Call center.
The Company's financial statements have been prepared on the going
concern basis, which assumes the realization of assets and the
settlement of liabilities in the normal course of business. The
application of the going concern concept is dependent on the
Company's ability to generate future profitable operations and
receive continued financial support from its shareholders and from
external financing. The Company recognized income of $272,090 for
the three months ended August 31, 2003 and has an accumulated
deficit of $119,364,863 at August 31, 2003. For the period ended
August 31, 2003, the Company used $42,415 in cash to fund
operations, $26,545 to fund acquisitions of new equipment and
$8,762 to fund financing activities resulting in a decrease in
cash of $77,722. As at August 31, 2003, the Company has a working
capital deficiency of $1,869,297 including cash of $109,151.
Management projects that the Company will require additional cash
and working capital to fund planned operations and capital asset
additions for fiscal 2004 of approximately $500,000. There can be
no assurance that funds from external financings will be available
when required on an economical basis to the Company. The ability
of the Company to continue as a going concern and realize the
carrying value of its assets is dependent on the Company's ability
to increase its revenues by increasing its customer base and
reducing its operating costs so that the Company achieves
profitable operations. To date, subsequent to August 31, 2003, the
Company has raised $nil in external financings through common
share of private placements. If the Company is unable to obtain
sufficient funds for operations, it will be required to reduce
operations or divest assets.
Healthtrac's ability to continue as a going concern and to realize
the carrying value of its assets is dependent on its ability to
obtain additional financing to fund future operations and on its
ability to translate growth into profitable operations. The
outcome of these matters cannot be predicted with any certainty at
this time. Accordingly, its consolidated financial statements
contain note disclosures describing the circumstances that led
there to be doubt over the Company's ability to continue as a
going concern that states that the Company has a working capital
deficiency of $1,869,297 at August 31, 2003 and the Company has
suffered recurring losses from operations. These conditions raise
substantial doubt about the Company's ability to continue as a
going concern. The consolidated financial statements have been
prepared without any adjustments that would be necessary if
Healthtrac becomes unable to continue as a going concern and was
therefore required to realize upon its assets and discharge its
liabilities in other than the normal course of operations.
HOVNANIAN: S&P Assigns BB Rating to $215 Million Senior Notes
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' rating to
Hovnanian's recent $215 million 6.5% senior note offering.
Concurrently, all other ratings on Hovnanian and its affiliates
are affirmed. The outlook is stable. While the additional debt has
no impact on the company's current ratings, it could reduce
momentum for very near-term ratings improvement.
Red Bank, New Jersey-based Hovnanian offers a wide array of homes
ranging from entry-level, move-up, luxury, and active adult. The
company maintains a solid position in the Northeast as one of the
largest builders in New Jersey and eastern Pennsylvania. Further,
the company also operates in North Carolina, Washington D.C.,
Texas, California, and more recently, Arizona and Ohio. Hovnanian
has grown dramatically in recent years, partially due to several
builder acquisitions.
Standard & Poor's acknowledges that Hovnanian's growth has
resulted in a strengthened market position and improved geographic
diversity, while simultaneously enhancing solid profit margins and
materially improving financial measures.
The recent, attractively priced debt offering, while somewhat
opportunistic, does lengthen maturities modestly and reduces the
need for near-term bank line usage. Financial measures could
weaken temporarily, as management intends to use proceeds toward
future working capital. Leverage will increase from about 54% to
58%, excluding cash, and EBIT/interest coverage will reduce from
about 6.5x to just under 6.0x, due in part, to the dilutive impact
from $250 million in interim cash balances. However, gross profit
margins remain strong (25%) and management has stated it intends
to use excess cash flow during the next few quarters to reduce
leverage to the 50 to 55% range. Once this is achieved, and as
coverage measures gradually recover from the redeployment of cash
balances, Standard & Poor's will likely revisit the company's
outlook.
RATINGS LIST
Hovnanian Enterprises Inc./K. Hovnanian Enterprises Inc.
Rating Assigned
$215 million 6.5% senior notes due 2014 BB
Ratings Affirmed
Corporate credit BB/Stable
Unsecured debt BB
Subordinate debt B+
HY-TEC TECHNOLOGY: Needs Fresh Funding to Continue Operations
-------------------------------------------------------------
Hy-Tech Technology Group, Inc. was formed in 1992 as a supplier to
the information technology business. In January 31, 2003, the
Company completed a reverse acquisition into SRM Networks, an
Internet service provider, in which Hy- Tech was deemed the
"accounting acquirer". Hy-Tech has discontinued SRM Network's
Internet business. In connection with the transaction, SRM
Networks, Inc. changed its name to Hy-Tech Technology Group, Inc.
In May 2003, Martin Nielson assumed full time responsibilities as
CEO, brought new investors to the company, and is attempting to
transform Hy-Tech Technology Group, Inc. from a custom systems
builder and an authorized distributor of the world's leading
computer systems and components to a solutions provider offering
an expanding range of services and software to its customer base.
During the fiscal first quarter, the Company took steps necessary
to design this new business strategy and during the second quarter
the Company began to implement this strategy. This new business
strategy also seeks growth by acquisition as well as organic
growth.
During this period, a number of significant steps were taken to
prepare the Company for the launch of this new plan. Among these
steps were: construction of the details of the new plan,
restructuring of the personnel, including identifying new
additions to management, reduction of costs and writing off
unproductive assets, engagement of key professionals, including
investment banking teams, negotiating with sources of new
investment, identifying and negotiating with acquisition targets.
This plan is now being implemented and management expects that
over the course of the next few quarters, the plan should become
more evident as execution of portions of the expansion processes
commence.
However, the Company's net showing for the three and six months
ended August 31, 2003 was $623,072 loss, and $41,186 income,
respectively, compared to net loss of $252,142 and $639,237 for
the three and six months ended August 31, 2002.
At August 31, 2003, Hy-Tech had cash of $48,147, current assets of
$1,517,865 and current liabilities of $2,482,181. At August 31,
2003, it had negative working capital of $964,316, compared to
negative working capital of $2,416,010 as of May 31, 2003.
On April 29, 2003, Hy-Tech settled the claims of its primary
lender, SunTrust Bank pursuant to a Settlement Agreement for
aggregate payments of $1.5 million. Under the terms of the
Settlement Agreement, the Company delivered $1 million dollars to
SunTrust on April 29, 2003. This $1 million represented all of
the proceeds of the sale of a convertible debenture that was
issued to a private investor. The Company also agreed to pay the
balance owed to SunTrust in three installments. All of these
installments have been paid and SunTrust has released the Company
from all of its claims.
However, Hy-Tech is overdue with payments to numerous vendors.
Four of its vendors have pending litigation against the Company
for claims of approximately $430,000. One vendor who commenced
litigation with a claim of approximately $128,000 settled with the
Company for fifteen payments of $5,000 each, the first payment of
which has been made. Two vendors with aggregate claims of
approximately $229,000 have threatened to commence litigation.
Hy-Tech settled with one of these vendors for a total $36,000 in
periodic payments and is in the process of negotiating payment
terms with all of the vendors who have not agreed to terms.
Management believes that cash generated from operations will in
all likelihood be insufficient to fund the Company's ongoing
operations through the next twelve months. Although it has
received some equity and debt financing, efforts are underway to
secure additional financing to enable it to meet its obligations,
as execution of its business plan may require additional capital
to fund. Hy-Tech currently has certain financing agreements in
place for potential sources of financing but there can be no
assurance that it will be able to successfully raise such
additional funds or that such funds will be available on
acceptable terms. Funds raised through future equity financing
will likely be dilutive to its current shareholders. The
incurrence of indebtedness would result in an increase in the
Company's fixed obligations and could result in borrowing
covenants that would restrict its operations. There can be no
assurance that financing will be available in sufficient amounts
or on terms acceptable to the Company, if at all. If financing is
not available when required or is not available on acceptable
terms, management indicates that the Company may be unable to
develop or enhance its products or services. In addition, the
Company may be unable to take advantage of business opportunities
or respond to competitive pressures. Any of these events could
have a material and adverse effect on Hy-Tech's business, results
of operations and financial condition. Lack of additional funds
will materially affect Company business and may cause it to cease
operations. Consequently, shareholders could incur a loss of their
entire investment in the Company. Hy-Tech's financial statements
were prepared on the assumption that it will continue as a going
concern. The report of its independent accountants for the year
ended February 28, 2003 acknowledges that Hy-Tech has incurred
losses in each of the last two fiscal years and that it will
require additional funding to sustain its operations. These
conditions cause substantial doubt as to Hy-Tech's ability to
continue as a going concern.
INTERFACE INC: Third Quarter 2003 Net Loss Balloons to $13 Mill.
----------------------------------------------------------------
Interface, Inc. (Nasdaq: IFSIA), a worldwide interiors products
and services company, announced results for the third quarter
ended September 28, 2003.
Sales in the third quarter 2003 were $237.1 million, compared with
$231.3 million in the third quarter 2002. Operating income was
$8.0 million in the third quarter 2003, versus $7.5 million in the
third quarter 2002. Loss from continuing operations was $2.1
million, or $0.04 per share, in the third quarter 2003, compared
with a loss from continuing operations of $1.8 million, or $0.03
per share, in the third quarter 2002. Loss from discontinued
operations, including an $8.8 million after-tax loss on the
disposal of those operations, was $11.2 million in the third
quarter 2003, versus a loss from discontinued operations of $1.0
million in the same period a year ago. Net loss for the third
quarter 2003 was $13.4 million, or $0.27 per share, compared with
a third quarter 2002 net loss of $2.7 million, or $0.05 per
share.
"In the third quarter of 2003, we continued to make significant
improvements which strengthened our business," said Daniel T.
Hendrix, President and Chief Executive Officer. "We have focused
on generating top line momentum by remaining committed to our
market segmentation strategy, the results of which were evident
this quarter in revenue growth throughout most areas of our
business. In addition, we made efforts to streamline our
operations and improve our cost structure, resulting in a 7.1%
year-over-year increase in operating income during the third
quarter. Although many of our end markets have yet to recover
from the continued weakness in the economy, we have been taking
proactive measures to position our business for recovery."
Mr. Hendrix continued, "Our worldwide modular business performed
strongly this quarter, with an 8.7% year-over-year increase in
revenues primarily resulting from our ability to take share and
capitalize on opportunities in the corporate office, education and
healthcare markets. After returning to operating profitability in
the second quarter of this year, our broadloom business posted a
significant year-over-year increase in operating income in the
third quarter, largely as a result of our cost-cutting initiatives
and improvements in manufacturing efficiencies. Although our
fabrics business remained flat this quarter, we have completed the
restructuring initiatives that will fortify this business and
position it for sustained long-term growth."
For the first nine months of 2003, sales were $681.3 million,
compared with $691.8 million for the same period a year ago.
Operating income for the 2003 nine-month period was $8.3 million
(which includes $4.6 million of restructuring charges), versus
operating income of $31.2 million for the comparable 2002 nine-
month period. During the 2003 nine-month period, loss from
continuing operations was $15.1 million, or $0.30 per share,
compared with a loss from continuing operations of $0.4 million,
or $0.01 per share, in the same period a year ago. Net loss for
the 2003 nine-month period was $29.2 million, or $0.58 per share,
compared with a net loss of $57.5 million, or $1.15 per share, for
the first nine months of 2002. During the first nine months of
2002, the Company's implementation of SFAS No. 142 resulted in an
after-tax write-down of $55.4 million, or $1.11 per diluted share,
primarily related to the impairment of goodwill.
Patrick C. Lynch, Vice President and Chief Financial Officer of
Interface, commented, "As a result of the strategic initiatives we
implemented in the third quarter, our business is stronger and
more efficient. During the third quarter, we completed the sale
of Interface Architectural Resources, our raised/access flooring
business, which should improve our overall profitability and
enhance our free cash flow generation going forward. In addition,
we continued to strengthen our balance sheet by reducing debt by
$16.2 million during the third quarter."
Mr. Hendrix continued, "We are pleased to announce the addition of
a new member to our Board of Directors. Edward C. Callaway is
currently the Chairman of Crested Butte Mountain Resort, Inc. in
Colorado, and previously served as its President and Chief
Executive Officer from 1987 to 2002. In addition, Edward is
actively involved with The Considine Companies, a commercial real
estate development business based in Denver. Edward graduated
from Dartmouth College before earning a Masters Degree in
Accounting from New York University and a Masters of Business
Administration Degree from Stanford University. His wide array of
business and management expertise will provide an invaluable
contribution to our Board of Directors. Edward will join the
Board effective [Wednes]day, and is replacing Len Saulter, who is
retiring after more than 16 years of service as a director."
Mr. Hendrix concluded, "We are encouraged by our third quarter
results and we look forward to maintaining this positive momentum
into the final months of fiscal 2003. We remain committed to the
strategic priorities that will allow our business to prosper, such
as our market segmentation strategy, our ongoing cost management
initiatives, and our focus on generating free cash flow to reduce
debt."
Interface, Inc. (S&P, B Corporate Credit and Senior Unsecured Debt
Ratings, Negative Outlook) is a recognized leader in the worldwide
commercial interiors market, offering floorcoverings, fabrics and
interior architectural products. The Company is committed to the
goal of sustainability and doing business in ways that minimize
the impact on the environment while enhancing shareholder value.
The Company is the world's largest manufacturer of modular carpet
under the Interface, Heuga, Bentley and Prince Street brands, and
through its Bentley Mills and Prince Street brands, enjoys a
leading position in the high quality, designer-oriented segment of
the broadloom carpet market. The Company provides specialized
carpet replacement, installation, maintenance and reclamation
services through its Re:Source Americas service network. The
Company is a leading producer of interior fabrics and upholstery
products, which it markets under the Guilford of Maine, Stevens
Linen, Toltec, Intek, Chatham, Camborne and Glenside brands. In
addition, the Company provides specialized fabric services through
its TekSolutions business; produces carpets and textiles for
residential uses; and produces InterCell brand raised/access
flooring systems.
IT GROUP: Wants Plan-Filing Exclusivity Extended to Jan. 8, 2004
----------------------------------------------------------------
Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, in Wilmington, Delaware, informs the Court that the IT Group
Debtors, the Committee, and the Debtors' Prepetition Lenders are
currently involved in negotiations to resolve outstanding issues
between them. These issues include a consensual Chapter 11 plan
or plans for the Debtors. The Committee and the Debtors'
Prepetition Lenders have reached a settlement, which will be
incorporated as part of the Debtors' consensual Chapter 11 plan.
However, the Parties are still working on the final terms of the
consensual Chapter 11 plan.
"The Debtors should be given additional time to negotiate the
final terms of a Chapter 11 plan with the Committee and the
Prepetition Lenders without the distraction and expense of
competing plans filed by other parties-in-interest," Mr. Galardi
says.
Accordingly, the Debtors ask the Court to:
(a) extend the Debtors' Exclusive Periods by 90 days; and
(b) prohibit any party, other than the Committee, from
filing a competing plan or soliciting acceptances of any
competing plan during the extended Exclusive Periods.
Specifically, the Debtors ask Judge Walrath to further extend its
current Plan Proposal Period to January 8, 2004 and its
Solicitation Period to February 5, 2004.
Although certain issues remain unresolved, Mr. Galardi points out
that the Debtors have made substantial progress in their cases.
Absent an extension of the Exclusive Periods, a protracted and
contentious plan solicitation and confirmation process might
evolve, which would increase administrative expenses and decrease
recoveries to the Debtors' creditors, significantly delaying, if
not undermining, the Debtors' reorganization efforts.
Moreover, the extension of the Exclusive Periods will not
unfairly prejudice or pressure the Debtors' creditors. The
extension of the Exclusivity Periods with respect to all other
parties-in-interest is merely the exercise of prudent business
judgment and an attempt to have adequate time to finalize the
terms of a reorganization plan that provides for the equitable
distribution of the assets of the Debtors' estates to the holders
of valid claims against the Debtors' estates.
Mr. Galardi continues that in light of the complexity of the
Debtors' cases, the sale of substantially all of the Debtors'
assets, and the substantial progress demonstrated by the Debtors
in the prosecution of their bankruptcy cases, the extension
sought is modest.
Furthermore, nothing in the Debtors' request will alter the
Committee's rights to file Chapter 11 plans in the Debtors' cases
as provided in the Exclusivity Order.
Judge Walrath will consider the Debtors' request during the
hearing on November 6, 2003 at 3:00 p.m. By application of
Delaware Local Rule 9006-2, the Debtors' Exclusive Filing Period
is automatically extended until the conclusion of that hearing.
(IT Group Bankruptcy News, Issue No. 35; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
JPE INC: Ernst & Young Steps Down as Independent Accountants
------------------------------------------------------------
On October 15, 2003, Ernst & Young LLP resigned as independent
public accountants to JPE, Inc.
The report on the financial statements of the Company for the
fiscal year ended December 31, 2002 contains an expression of
substantial doubt regarding the Company's ability to continue as a
going concern.
JPE -- which does business as ASCET INC and ASC Exterior
Technologies -- makes parts for automakers, their suppliers, and
the aftermarket. Starboard Industries makes decorative exterior
trim products (side moldings and fascia trim), while Dayton Parts
makes springs and undercarriage replacement parts (brake,
suspension, and steering products) for the truck and trailer
aftermarket. GM and DaimlerChrysler account for 51% of JPE's
sales. The company has sold its Plastic Trim subsidiary to PTI
Acquisition, LLC. The estate of Heinz Prechter, the deceased
founder of global auto parts engineering firm ASC, owns 95% of
JPE.
KAISER ALUMINUM: Dec. 31 Fixed as Louisiana PI Claims Bar Date
--------------------------------------------------------------
As a result of continued discussion and a possible settlement
relating to the handling, method of compensation, and liquidation
of Louisiana Hearing Loss and Coal Tar Pitch Volatiles exposure
claims in connection with any plan or plans of reorganization,
the Kaiser Aluminum Debtors agreed to extend the deadline for
certain Louisiana Personal Injury Claimants to file Hearing Loss
and Coal Tar Exposure Claims to December 31, 2003.
Should the parties reach an agreement relating to the handling,
method of compensation, and liquidation of the Hearing Loss and
Coal Tar Exposure Claims in connection with any reorganization
plan, the parties stipulate that the Claims addressed by the
Agreement will no longer be subject to the December 31, 2003
General Bar Date. This is without prejudice to the Debtors' right
to later request for the establishment of one or more bar dates
with respect to the Claims. (Kaiser Bankruptcy News, Issue No. 33;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
KMART CORP: Sues Madison Industries to Recoup About $1 Million
--------------------------------------------------------------
John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher &
Flom, in Chicago, Illinois, tells the Court that the Kmart Debtors
and Madison Industries, Inc. had a business relationship before
the Petition Date. As part of that business relationship, Madison
owed the Debtors $931,27 in prepetition balances, which remain
due and owing to date.
Mr. Butler contends that the Prepetition Balances constitute
property of the Debtors' estate. Mr. Butler notes that these
Balances are not of inconsequential value or benefit to the
Debtors' estates. The Balances constitute a debt that is
matured, payable on demand or payable on order. Madison may not
offset the Balances under Section 553 of the Bankruptcy Code, Mr.
Butler asserts.
Thus, the Debtors ask the Court to direct Madison to turn over
and pay the Balances. (Kmart Bankruptcy News, Issue No. 63;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
LASON INC: Wins Favorable Court Ruling in Sale Proceeds Dispute
---------------------------------------------------------------
Lason, Inc. (LSSN), a leading provider of integrated information
and business process outsourcing solutions, today reported a
favorable ruling by the Bankruptcy Court for the District of
Delaware in a dispute over certain proceeds from the Company's
asset sales, which were executed during its previously confirmed
Plan of Reorganization.
The ruling by the Court awarded Lason $1.5 million of proceeds in
dispute, which had been set-aside in escrow. "We are very pleased
with the outcome in this matter and to have the additional funds
to further use as working capital and to invest in the business.
As important, however, this puts to rest the last major item we
had before the Court," stated Ronald D. Risher, President and
Chief Executive Officer.
Additionally, the Company stated that it expects net income for
the third quarter of this year to be a record since its emergence
from Chapter 11 on July 1, 2002, and would more than eliminate the
net loss recorded by the Company during the first six months of
this year. "We expect third quarter earnings to be extremely
strong, higher than any quarter since the third quarter of last
year. We experienced improved earnings performance despite, as
anticipated, lower sales levels as compared to earlier in the
year, through increased operational efficiencies, implementation
of certain costs reduction activities and a favorable mix of
service revenue," stated Mr. Risher.
LASON, Inc. -- http://www.lason.com-- enables organizations to
secure their decisions and their future by improving business
processes through outsourced services in industries that are data
and document-intensive, such as financial services and healthcare
where accuracy, privacy and security are top concerns. Our
customized solutions provide substantial and identifiable cost
savings. LASON's integrated suite of solutions utilizes the latest
technology surrounding data input, scanning, digital storage,
retrieval and delivery of sensitive data and documents to increase
the efficiency and effectiveness of back-office and administrative
functions.
To succeed in the outsourced services industry, one must help
clients dynamically improve business practices and generate
substantial cost savings. We accomplish this goal through the
continuous improvement of business processes, leveraging
technology and the expertise of our solution teams and seamlessly
integrating onshore and offshore resources. What truly sets LASON
apart as a trusted outsource partner is the company's unparalleled
focus on security and accuracy.
By entrusting LASON with their business processes involving
critical data and documents, organizations can speed up their
business cycles, and make more accurate, well-informed decisions.
LORAL SPACE: Court Approves Agreements with DIRECTV and PanAmSat
----------------------------------------------------------------
Loral Space & Communications (OTC Bulletin Board: LRLSQ),
announced that the U.S. Bankruptcy Court for the Southern District
of New York has authorized Loral subsidiary Space Systems/Loral to
execute an existing contract with DIRECTV, Inc., as amended, to
complete and deliver the DIRECTV 7S satellite.
The court also approved the binding authorizations to proceed
issued to SS/L for the construction of two satellites for DIRECTV
(DIRECTV 8 and DIRECTV 9S), and one satellite for PanAmSat
Corporation (Galaxy 16). PanAmSat also has an option to order an
in-orbit spare for one of its existing satellites from SS/L on
terms to be agreed upon.
The aggregate value of the three new awards is in excess of $320
million. DIRECTV will make advance payments of $25 million on each
of its two new satellite orders and PanAmSat will make an advance
payment of $25 million on its new satellite order, for a combined
non-refundable cash advance of $75 million. SS/L now has received
orders for a total of four satellites this year.
Also, EchoStar Communications Corporation sought to purchase the
nearly complete DIRECTV 7S, a transaction to which Loral was
opposed. DIRECTV agreed to increase the total contract value for
the construction of DIRECTV 7S by $25 million to approximately
$165 million.
Space Systems/Loral is a premier designer, manufacturer, and
integrator of powerful satellites and satellite systems. SS/L also
provides a range of related services that include mission control
operations and procurement of launch services. Based in Palo Alto,
Calif., the company has an international base of commercial and
governmental customers whose applications include broadband
digital communications, direct-to-home broadcast, defense
communications, environmental monitoring, and air traffic control.
SS/L is ISO 9001:2000 certified. For more information, visit
http://www.ssloral.com
Loral Space & Communications is a satellite communications
company. Through its Skynet subsidiary, it owns and operates a
global fleet of telecommunications satellites used by television
and cable networks to broadcast video entertainment programming,
and by communication service providers, resellers, corporate and
government customers for broadband data transmission, Internet
services and other value-added communications services. Loral also
is a world-class leader in the design and manufacture of
satellites and satellite systems through its Space Systems/Loral
subsidiary. For more information, visit Loral's web site at
http://www.loral.com
LTV CORP: Judge Bodoh Approves Copperweld's Disclosure Statement
----------------------------------------------------------------
U.S. Bankruptcy Court Judge Bodoh finds that the Copperweld
Debtors' Disclosure Statement contains adequate information for
creditors to make an informed judgment about the Plan.
Accordingly, the Court approves the Copperweld Debtors' Disclosure
Statement. Judge Bodoh overrules all objections that were not
resolved or withdrawn.
Judge Bodoh sets November 17, 2003, as the date for the
commencement of the hearing to consider confirmation of the
Copperweld Debtors' Plan. Any objections to confirmation must be
made in writing, state with particularity the basis and nature of
the objection, and be filed and served no later than 4:00 p.m.
Eastern Time on November 7, 2003. (LTV Bankruptcy News, Issue No.
56; Bankruptcy Creditors' Service, Inc., 609/392-00900)
MCLEODUSA INC: Sept. 30 Working Capital Deficit Tops $70 Million
----------------------------------------------------------------
McLeodUSA Incorporated (Nasdaq:MCLD), one of the nation's largest
independent, competitive telecommunications services providers,
reported financial and operating results for the quarter ended
September 30, 2003.
Total revenues for the quarter were $211.0 million with gross
margin of $93.6 million, or 44.4% of revenue. SG&A expenses for
the quarter were $80.0 million. EBITDA (earnings before interest,
taxes, depreciation and amortization) for the competitive
telecommunications business for the period was $13.6 million,
resulting in the sixth consecutive quarter of positive EBITDA.
Reported net loss for the quarter was $82.2 million, or a loss per
common share of $0.30.
McLeodUSA Incorporated's September 30, 2003 balance sheet shows
that its total current liabilities exceeded its total current
assets by about $70 million, while net capitalization dwindled to
about $570 million from $776 million nine months ago.
"For the third quarter, McLeodUSA delivered strong gross margin
and cost performance. In addition, we took a number of important
steps in the execution of our strategic plan for profitable
revenue growth, launching both Preferred Advantage(SM) Wireless
and our integrated access product. McLeodUSA now offers a complete
suite of competitive voice, data and Internet products to our
customers and prospects - all on one simple bill," said Chris A.
Davis, Chairman and Chief Executive Officer. "We are also very
pleased to have recruited two seasoned sales executives, Rich
Cremona and Rick Buyens, to join our executive team as we
realigned the sales organization to strengthen our focus on each
of our sales channels - strategic accounts, mid-markets and
wholesale. We believe these experienced sales leaders, our
expanded product set and this heightened channel focus better
position us to win in our marketplace."
For the quarter ended September 30, 2003, total Telco revenues of
$211.0 million compared to $222.6 million in the second quarter of
2003 and $243.5 million in the third quarter of 2002. As discussed
in the Company's second quarter 2003 earnings release, the decline
in third quarter revenues as compared with second quarter of 2003
was driven primarily by the impact of the most recent reduction in
access rates as mandated by the June 2001 FCC order. Excluding the
effect of the access rate reduction, third quarter revenues were
essentially flat with the second quarter. Compared with the third
quarter of 2002, revenue was down $32.5 million primarily driven
by fewer customers, of which approximately 50,000 resulted from
the Company's intentional drive to eliminate non-profitable
customers.
Gross margin for the third quarter 2003 was $93.6 million compared
to $94.5 million in the second quarter of 2003 and $89.4 million
in the third quarter of 2002. Cost performance in the third
quarter offset the effect of the access rate reduction, which
resulted in a reduction in gross margin of $8.4 million. Gross
margin as a percent of revenue improved to 44.4% versus 42.4% in
the second quarter of 2003 and 36.7% in the third quarter of 2002
as a result of the Company's ongoing network cost reduction
efforts.
Customer platform mix at the end of the third quarter 2003 was 62%
UNE-L, 6% resale and 32% UNE-M/P versus 58%, 7% and 35%,
respectively, at the end of the second quarter of 2003 and 46%,
17% and 37%, respectively, at the end of the third quarter 2002
reflecting continued migration of customers from resale to higher
margin platforms, as well as installation of new customers on-
switch. Customer turnover in the third quarter was 2.3% versus
2.4% in the second quarter of 2003 and 2.5% in the third quarter
of 2002.
SG&A expenses were $80.0 million in the third quarter of 2003
compared to $81.4 million in the second quarter of 2003 (excluding
a $7.9 million recovery of WorldCom pre-petition receivables that
were reserved in the second quarter of 2002) and $79.1 million in
the third quarter of 2002. Telco EBITDA in the third quarter of
2003 was $13.6 million versus $13.1 million in the second quarter
of 2003 (excluding the WorldCom recovery) and $10.3 million in the
third quarter of 2002.
Total Telco revenues, excluding discontinued operations, for the
nine months ended September 30, 2003 were $659.5 million versus
$757.4 million in the comparable 2002 period. Telco gross margin
for the nine-month period ending September 30, 2003 was $276.6
million in 2003 versus $278.6 million in 2002. Gross margin as a
percent of revenue for the nine-month period improved to 41.9%
from 36.8% in 2002. Telco EBITDA was $41.4 million for the nine-
month 2003 period versus $11.4 million in 2002. Net loss from
continuing operations for the 2003 nine-month period was $(239.1)
million versus net income of $480.7 million for the 2002
nine-month period. The 2002 net income from continuing operations
includes the impact of reorganization charges and the gain on the
cancellation of debt.
The Company ended the quarter with $57.3 million of cash on hand,
which included $9 million classified as restricted cash. The
restricted cash was received from Chubb Corporation pursuant to a
memorandum of understanding dated July 7, 2003, to settle the
CapRock securities litigation. The settlement agreement, which
received preliminary court approval on October 14, 2003, provides
for the payment of $11 million to plaintiffs, which would be
covered by a combination of the $9 million received from Chubb and
a portion of a rebate of insurance premiums previously paid to
another carrier. The $9 million has been included on the balance
sheet as restricted cash since the Company is required to place
these funds in escrow by October 27, 2003.
Total capital expenditures for the third quarter of 2003 were
$22.0 million and for the nine-month period ending September 30,
2003 were $58.8 million. The Company expects to spend
approximately $85 million in capex in 2003 and expects
expenditures in 2004 to be below that level depending on the
timing of the planned revenue growth during the year.
In the quarter, McLeodUSA realigned its sales organization
separating responsibility for strategic accounts,
mid-markets/residential and wholesale. Richard S. Cremona joined
the Company's leadership team as Executive Vice President of
Strategic Account Development, reporting to Chris Davis, Chairman
and CEO. Cremona is responsible for accelerating the Company's
efforts to attract Fortune 1000 and Private 400 enterprise
customers having multiple locations in McLeodUSA's 25-state
footprint. In addition, Richard J. Buyens joined the Company as
Executive Vice President - Sales, also reporting to Ms. Davis.
Buyens will lead the mid-markets field sales force and
telemarketing operation to profitably grow revenue and increase
market share with small to large businesses and residential
customers. The Carrier sales organization now reports to Steve
Gray, President, who is leading efforts to expand and grow sales
opportunities with wholesale customers.
As a result of slower than forecasted growth in Telco revenue and
therefore EBITDA, the Company sought and obtained approval from
its lender group of an amendment to two of its five financial
covenants in the credit agreement. The approved amendment includes
adjustments to the total debt to trailing four quarter EBITDA
leverage ratio and the trailing four quarter minimum revenue
covenants. The leverage ratio was amended to 13.0, 15.0, 13.5,
13.5, 11.0 and 8.5 starting in the third quarter of 2003 through
the fourth quarter of 2004, respectively, and the minimum revenue
covenant was amended to $850 million, $850 million, $875 million,
$900 million and $950 million starting in the fourth quarter of
2003 through the fourth quarter of 2004, respectively. In
addition, the Company offered and included in the amendment a
downward revision to the capital expenditure limits for 2003, 2004
and 2005 to $100 million, $100 million and $200 million
respectively, excluding any carryover provisions which were not
amended. The Company paid approximately $5.3 million in fees to
the lender group in connection with the approval of this
amendment. The Company has met all current financial covenants and
continues to have full access to the $110 million exit credit
facility and drew $40 million in the month of October 2003.
Other highlights in the quarter included:
-- Announced a multi-year wholesale agreement with AT&T Wireless
Services to offer wireless voice services to McLeodUSA business
customers. McLeodUSA's Preferred Advantage Wireless offering
rolled out to 8 states October 14, 2003 and is expected to be
available across McLeodUSA markets by December 1, 2003.
McLeodUSA now offers wireline and wireless local and long
distance voice services along with Internet and data services
in a combined offering. McLeodUSA customers receive a
comprehensive bundled offering with all services on one simple
bill.
-- Began selling Preferred Advantage Integrated Access, which
combines voice, data and Internet services over a single,
reliable high-speed connection. With this product McLeodUSA
customers are able to add single channel increments of
additional local service and high-speed Internet access at a
single price per voice or data channel.
-- Launched Preferred Advantage ADSL (Asymmetrical Digital
Subscriber Line), an integrated voice and broadband Internet
access solution that combines fast, always-on, cost effective
Internet access with local voice service. With the addition of
this product, McLeodUSA now offers a complete suite of DSL
services ranging from SDSL (Symmetrical Digital Subscriber
Line) and IDSL (ISDN DSL) for large and medium-sized
businesses, to ADSL for small businesses and residential
customers.
-- Signed a letter of agreement with Cisco Systems, Inc., to
enable McLeodUSA to offer managed telecommunications solutions
to businesses in McLeodUSA's markets. As part of the agreement,
McLeodUSA will offer Preferred Advantage Managed Data Services
for DSL, Frame Relay and Dedicated Internet Products with Cisco
as the primary customer premises equipment (CPE) provider. This
relationship will help McLeodUSA business customers increase
operational efficiency and decrease operating expenses.
McLeodUSA provides integrated communications services, including
local services, in 25 Midwest, Southwest, Northwest and Rocky
Mountain states. The Company is a facilities-based
telecommunications provider with, as of September 30, 2003, 38 ATM
switches, 44 voice switches, 604 collocations, 435 DSLAMs and
3,480 employees. As of April 16, 2002, Forstmann Little & Co.
became a 58% shareholder in the Company. Visit the Company's Web
site at http://www.mcleodusa.com
METALS USA: R. McCluskey Acquires 1,445 of Metals USA Shares
------------------------------------------------------------
Metals USA Vice-President, Robert J. McCluskey, discloses to the
Securities and Exchange Commission that he acquired an additional
1,445 shares of Metals USA Common Stock. As of October 8, 2003,
Mr. McCluskey's owned a total of 11,856 shares. (Metals USA
Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
MIDWEST EXPRESS: Receives Proceeds from Financing Transaction
-------------------------------------------------------------
Midwest Express Holdings, Inc. (NYSE: MEH) has received the
proceeds from completion of the first step of its previously
announced sale of convertible senior secured notes.
The receipt of $15.0 million from the sale of the notes was
subject to the company delivering security for the notes. This was
achieved by the company terminating its existing bank credit
facility by repaying certain indebtedness under the facility and
completing a transaction with Milwaukee County, Racine County and
the State of Wisconsin that resulted in Milwaukee County becoming
the guarantor on $14.2 million of industrial development re9venue
bonds.
The convertible senior secured notes sold to the investors have
not been registered under the Securities Act of 1933, as amended.
Accordingly, the securities may not be offered or sold in the
United States except pursuant to an effective registration
statement or an applicable exemption from the registration
requirements of the Securities Act. As part of the transaction,
the company will file a registration statement with the Securities
and Exchange Commission for purposes of registering the resale of
the shares of common stock issuable upon conversion of the
convertible senior secured notes to be sold in the private
placement.
Midwest Airlines features nonstop jet service to major
destinations throughout the United States. Skyway Airlines, Inc. -
- its wholly owned subsidiary -- operates Midwest Connect, which
offers connections to Midwest Airlines as well as point-to-point
service between select markets on regional jet and turboprop
aircraft. Together, the airlines offer service to 50 cities. More
information is available at http://www.midwestairlines.com
* * *
As reported in Troubled Company Reporter's August 26, 2003
edition, Midwest Express Holdings reached labor and aircraft
financing restructuring agreements with its unions and aircraft
lessors and lenders have been fully documented and finalized on
terms that the company had anticipated. The company expects these
restructuring measures to reduce costs by approximately $20
million annually going forward.
The negotiation of these agreements enabled the company to avert
the necessity of filing for reorganization under Chapter 11 of the
Bankruptcy Code. Outlining the next step for the company, Robert
S. Bahlman, Midwest's chief financial officer, noted, "Now we are
in a better position to secure additional financing to complete
our restructuring program."
MIRANT CORP: Proposes Uniform Asset Abandonment Procedures
----------------------------------------------------------
Mirant Corp., and its debtor-affiliates identified miscellaneous
assets that may be worthless, or of inconsequential value -- with
a book value of less than $50,000. The Debtors will try to sell
these unnecessary assets. However, if all efforts to sell fail,
Robin Phelan, Esq., at Haynes and Boone LLP, in Dallas, Texas,
contends that these assets should be abandoned. The abandonment
will eliminate unnecessary storage and expense costs.
The Debtors propose to follow these procedures in disposing
burdensome assets:
(a) The Debtors will give written notice, by facsimile or
overnight mail, of each proposed abandonment of assets to
(i) the Office of the United States Trustee, (ii) counsel
for the Committees, (iii) any entity that provides
financing authorized by the Bankruptcy Court, (iv) any
known holder of a lien, claim, encumbrance or interest
against the specific assets to be abandoned, and (v) any
party that has requested special notice;
(b) The Abandonment Notice will specify (i) the asset or
assets to be abandoned and the abandoning Debtor thereof,
(ii) the value of the abandoned assets as reflected on
the Debtors' books, or if no value is available, an
estimated value, which value in either case, will not
exceed $50,000, (iii) the cost of removal and disposal
of the assets to be abandoned, and (iv) the reasonable
efforts made by the Debtors to locate a purchaser of the
assets and the inability to locate any purchaser;
(c) If none of the Notice Parties serves the Debtors with a
written objection to the proposed transaction in a manner
so that it is actually received by the Debtors within
seven business days after the date the Debtors send the
Abandonment Notice or any objection is resolved, counsel
for the Debtors will submit to the Court a form of order
which contains findings that (i) the Abandonment
Notice Procedures have been satisfied, (ii) no objection
to the proposed abandonment was timely made or the
objection has been resolved, and (iii) the Debtors may
take all reasonable and necessary steps to abandon and
dispose of the assets described in the Abandonment
Notice, and pay costs associated therewith;
(d) Upon Court approval, the Debtors may take necessary
actions to abandon the assets and dispose of them without
further notice or Court order; and
(e) If the Debtors receive a written objection prior to the
expiration of the Notice Period, and the Debtors are
unable to resolve the objection, the Debtors will not
take any additional steps to abandon the assets, which
are the subject of the objection -- but may proceed to
abandon any other assets set forth in the Abandonment
Notice to which no objection was timely served -- without
first obtaining the Court's approval for the abandonment
of that specific asset with respect to which an objection
was timely served.
By this motion, the Debtors ask the Court to approve the
procedures to abandon and dispose of estate assets that are
burdensome and of inconsequential value.
According to Mr. Phelan, the proposed Abandonment Procedures
satisfies Section 554 of the Bankruptcy Code since sufficient
notice will be provided to the parties to protect the interests
of creditors and proper procedures will be established and
complied with. The Abandonment Procedures minimizes the expenses
associated with abandoning assets and preserving estate assets.
(Mirant Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
NATIONAL CENTURY: Court Clears Stipulation Settling Brea Dispute
----------------------------------------------------------------
In November 1994, pursuant to a certain Sale and Subservicing
Agreement, the National Century Financial Enterprises Debtors
purchased health care receivables from Brea Community Hospital
Corporation. The initial Sale and Subservicing Agreement was
entered into between Brea and NPF-PW, Inc. On May 18, 1995, the
agreement was assigned to NPF VI, Inc. National Premier Financial
Services, Inc. is also a party to the agreement. The Sale and
Subservicing Agreement has been amended six additional times.
However, the parties dispute the amount outstanding under the
Sale Agreements. The Debtors assert that the amount outstanding
is $18,000,000 while Brea asserts that the amount outstanding is
$2,500,000. Brea filed an adversary action for an accounting of
the outstanding balance on the Sale Agreements.
Brea also obtained separate financing from the Debtors
independent of the Sale Agreements. Brea and NPF-LL, Inc. are
parties to an Equipment Lease Agreement, dated April 14, 1999, as
amended. NPF-LL's interest in the NPF-LL Equipment Lease has
been pledged to The Provident Bank. The Debtors and Provident
assert that $1,300,000 remains due and owing on the NPF-LL
Equipment Lease.
Brea also obtained financing from NPF Capital, Inc. through two
mortgage loan transactions:
(1) On April 16, 2001, Brea and NPF Capital entered into a
mortgage loan transaction evidenced by a Loan and Security
Agreement dated April 16, 2001, a Cognovit Promissory Note
dated April 16, 2001, amended on June 30, 2002, and a Deed
of Trust dated April 16, 2001. The NPF Capital First
Mortgage Loan has been pledged to Provident. The Debtors
and Provident assert that $5,800,000 remain due and owing
under the NPF Capital First Mortgage Loan; and
(2) Brea and NPF Capital entered into a second mortgage loan
transaction for a line of credit evidenced by a Loan and
Security Agreement dated September 26, 2002, a Cognovit
Promissory Note dated September 26, 2002, and a Deed of
Trust dated September 26, 2002. The NPF Capital Second
Mortgage Loan has been pledged to Provident. The Debtors
and Provident assert that $200,000 remains due and owing
under the NPF Capital Second Mortgage Loan.
Certain of the mortgage documents evidencing the NPF Capital
First Mortgage Loan and the NPF Capital Second Mortgage Loan
include cross-collateralization language purportedly securing
Brea's obligations under the separate Sale Agreements and the
NPF-LL Equipment Lease with the real property encumbered by the
NPF Capital First Mortgage Loan and the NPF Capital Second
Mortgage Loan. Brea challenges the cross-collateralization
language as unenforceable.
On April 30, 2003, Brea filed a verified complaint against NPF
VI, NPF Capital, NPF-LL and Provident, seeking:
-- an accounting of the amounts outstanding under the Sale
Agreements;
-- relief for breach of contract against NPF VI for
termination of funding under the Sale Agreements; and
-- declaratory relief as to the asserted invalidity of the
cross-collateralization provisions in the NPF Capital First
Mortgage Loan and the NPF Capital Second Mortgage Loan.
On May 30, 2003, NPF VI, NPF-LL, NPF Capital and Provident filed
answers and counterclaims, including claims against Brea for
amounts due under the Sale Agreements, the NPF-LL Equipment
Lease, the NPF Capital First Mortgage Loan and the NPF Capital
Second Mortgage Loan.
The Debtors, Provident and Brea actively have engaged in arm's-
length settlement discussions since November 2002. As a result
of the Debtors' financial situation and inability to continue to
purchase receivables from Brea, Brea desires to seek a
replacement liquidity source. The parties have done their due
diligence regarding one another's claims and financial position,
and the parties have reached a settlement. Brea, for its part,
has secured a lender's commitment to provide financing for the
Settlement Amount and a small amount of working capital for its
business based on and in reliance on the terms of the settlement.
In a Court-approved Stipulation, the parties agree that:
(a) Brea will pay the Debtors $11,500,000, which will
constitute and be in full and final satisfaction of any
and all claims any of the Debtors or Provident have, or
may have, against any of the Brea Release Parties,
including, without limitation, any and all Claims arising
under or out of, in connection with, or otherwise relating
to the Sale Agreements, the NPF-LL Equipment Lease, the
NPF Capital First Mortgage Loan and the NPF Capital
Second Mortgage Loan;
(b) As of the Closing Date, each of the Sale Agreements, the
NPF-LL Equipment Lease, the NPF Capital First Mortgage
Loan and the NPF Capital Second Mortgage Loan will be
terminated and cancelled and of no force or effect, and
any and all agreements, documents and instruments pursuant
to which any interest in collateral was granted or 9
purported to be granted, created or perfected or purported
to be created, evidenced or perfected in connection with
any transaction arising under or out of, in connection
with or otherwise relating to the Sale Agreements, the
NPF-LL Equipment Lease, the NPF Capital First Mortgage
Loan and/or the NPF Capital Second Mortgage Loan or
Otherwise -- the Security and Mortgage Interests --
including, without limitation, any and all security
agreements, deeds of trust, mortgages, leases, pledge
agreements, assignments, financing statements and similar
agreements, documents and instruments will be terminated
and cancelled and will be of no force or effect, any and
all Security and Mortgage Interests are deemed to be
terminated and released. In the interest of clarity, the
Debtors and Brea; and Provident and Brea are terminating
their agreements, and any agreements, claims or interests
among the Debtors and Provident are preserved;
(c) Each of the Debtors and Provident will release, reconvey,
sell, transfer and assign any and all right, title and
interest in, and to, any and all of the assets and
property of Brea or the Brea Release Parties acquired, or
otherwise obtained, under, or in connection with any
transactions arising under or out of, or otherwise
relating to the Sale Agreements, the NPF-LL Equipment
Lease, the NPF Capital First Mortgage Loan and the NPF
Capital Second Mortgage Loan, including, without
limitation, any and all interests in Brea's real property,
equipment and other property, any and all promises to pay,
guarantees and pledges with respect to payment of
outstanding amounts on behalf of Brea, including, but not
limited to, obligations and commitments of Doctors
Community Healthcare Corporation, and any and all accounts
receivable or other payments collected by the Debtors
after the Closing Date -- the Assigned Property;
(e) The Debtors and Provident are authorized and directed to,
enter into any and all agreements, documents and
instruments and take any and all other reasonably
necessary and appropriate actions to effectuate the terms
of the Stipulation and Agreed Order, including, without
limitation, the authorization and execution of any and
all documents and instruments as may be requested to
effectuate or confirm:
(1) the release of any and all Claims against Brea and
the Brea Release Parties, including, without
limitation, any and all obligations of the Brea
Release Parties to the Debtors and Provident,
including, without limitation, any and all
obligations arising under or out of, in connection
with or otherwise relating to the Sale Agreements,
the NPF-LL Equipment Lease, the NPF Capital First
Mortgage Loan and the NPF Capital Second
Mortgage Loan;
(2) the release and reconveyance of any Security
and Mortgage Interests; and
(3) the release, reconveyance, sale, transfer and
assignment of any right, title and interest in,
and to, any of the Assigned Property.
The Debtors and Provident are also authorized and
directed to cause to be released liens held by or
benefiting JPMorgan Chase Bank or others as trustee
for or assignee of the Debtors, or any of them,
arising under or out of, in connection with or
otherwise relating to the Sale Agreements, the NPF-LL
Equipment Lease, the NPF Capital First Mortgage Loan
and the NPF Capital Second Mortgage Loan, with the
liens transferring to the proceeds. The Stipulation
and Agreed Order will provide conclusive proof of
authority to terminate any ownership or security
interests or liens of the Debtors, Provident, and
JPMorgan Chase Bank and any other trustee or assignee
of the Debtors, and Brea's ownership of good and
marketable title to the Assigned Property, free and
clear of all ownership or security interests and
liens, with liens transferring to the proceeds;
(f) Each of the Brea Release Parties will be authorized to
confirm:
(1) the release of any and all Claims against Brea and
the Brea Release Parties, including, without
limitation, any and all obligations of the Brea
Release Parties to the Debtors, Provident or
others as trustee or assignee of the Debtors,
including, without limitation, any and all
obligations arising under or out of, in connection
with or otherwise relating to the Sale Agreements,
the NPF-LL Equipment Lease, the NPF Capital First
Mortgage Loan and the NPF Capital Second Mortgage
Loan;
(2) the release and reconveyance of any Security and
Mortgage Interests; and
(3) the release, reconveyance, sale, transfer and
assignment of any right, title and interest in,
and to, any of the Assigned Property;
(g) The Stipulation and Agreed Order and any other agreement,
document or instrument executed or entered and delivered
by the Debtors, Provident, their trustees and assignees
or Brea in connection herewith will be binding upon, and
inure to the benefit of, the Debtors, Provident, their
trustees and assignees and Brea and their administrators,
successors, and assigns, and will be binding on all
parties asserting a lien, claim, or interest on or in
any assets of Brea or the Debtors' estates;
(h) The Debtors' release, reconveyance, sale, transfer and
assignment, as applicable, of the Assigned Property to
Brea is deemed to be an absolute transfer and true sale
under Section 363(f) of the Bankruptcy Code, and the
property is released, reconveyed, sold, transferred and
assigned to Brea free and clear of any and all liens,
security interests, claims or other interests created by,
in favor of or against the Debtors. Provident also agrees
that, upon payment of the Settlement Amount, its transfer
of any interest it has in the Assigned Property will also
be free and clear of all claims, liens, encumbrances and
other interests of any nature whatsoever, whether matured
or unmatured, liquidated or unliquidated, known or unknown
-- the Encumbrances. Any and all Encumbrances are
released, terminated and discharged. The Debtors and
Provident agree to act promptly in obtaining the release
of all Encumbrances. All Encumbrances will be released,
terminated and discharged as to the Assigned Property and
will attach to the proceeds paid by or on behalf of Brea
in the order of their priority, with the same validity,
force and effect which they now have against the Assigned
Property. The provision for the attachment of the
Encumbrances to the proceeds of the sale constitutes
adequate protection of JPMorgan Chase Bank's and
Provident's interest in the Assigned Property;
(i) Brea is deemed to be a "good faith purchaser" under
Section 363(m) and is deemed to be entitled to all the
protections of Section 363(m);
(j) Each of the Brea Release Parties is authorized, upon
Closing, to file termination statements with respect to
all Encumbrances;
(k) Brea and the Debtors exchange mutual releases. The
release of the Brea Release Parties by the NCFE Release
Parties does not include releases of guarantee or other
claims held by the Debtors or any other NCFE Release Party
against DCHC. For clarity, this provision fully releases
Brea and its officers and directors from obligations owed
or alleged to be owed by Brea to the NCFE Release Parties;
(l) Brea, the Debtors and Provident will take all reasonable
actions to have dismissed or vacated with prejudice any
and all causes of action, claims or defenses asserted by
or against Brea, including, without limitation, the
claims pending before the Court in:
(1) Adversary Proceeding No. 02-02526 -- as to Brea
only; and
(2) Adversary Proceeding No. 03-02205 -- dismissals
with prejudice by and as to all parties);
(m) Brea will inform the Debtors where to send any payments or
correspondence that the Debtors receive in The Huntington
National Bank lockbox accounts related to Brea's accounts
receivable. In addition, Brea will be responsible for
informing all third party payors as to where incoming
payments should be redirected. Any payments received by
the Debtors after consummation of the settlement will not
be property of the Debtors' estates and will be turned
over to Brea or its assignee.
Once the Settlement Amount is received by the Debtors, the
Debtors and Brea will direct The Huntington National Bank
to:
(1) terminate the lockbox agreements relating to the
Sale Agreements;
(2) remit all funds that are in Brea's Lockbox Accounts
as of October 1, 2003 to the credit and direction
of the Debtors and remit all funds and
correspondence received after October 1, 2003 to
Brea;
(3) terminate the zero balance agreement relating to
the Sale Agreements; and
(4) use reasonable efforts to provide Brea with
documents relating to account activity in the
Lockbox Accounts;
(n) The $11,500,000 Settlement Amount will be paid:
(1) $3,300,000 by wire transfer to the cash collateral
account of NPF Capital:
The Provident Bank
Cincinnati, Ohio
ABA # 042 000 424
Acct # 0368896
Acct Name: NPF Capital, Inc.
Cash Collateral Account
Attn.: Douglas J. Koo (513) 579-2335
(2) $4,200,000 by wire transfer to:
JP Morgan Chase
New York, New York
ABA # 021000012
Acct # 507951891
FFC: a/c 180380-1
Acct Name: NPF VI, Inc. Collection
(3) $4,000,000 by wire transfer to:
National City Bank
Cleveland, Ohio
ABA # 041000124
Acct # 685316306
Acct Name: NCFE for NPF Capital,
NPF-LL, NPF VI (Escrow)
(o) All disputes arising under or out of, in connection with
or otherwise relating to the Stipulation and Agreed Order
will be resolved in the United States Bankruptcy Court
hearing the Debtors' cases and all parties irrevocably
consent to the jurisdiction of the Bankruptcy Court to
resolve any disputes involving the Debtors; and
(p) Nothing in the Stipulation and Agreed Order prejudices or
impairs any claim:
-- by any Debtor or Debtors:
* against any other Debtor or Debtors, and
* against Provident; or
-- by Provident against any Debtor or Debtors.
Nothing in the Stipulation and Agreed Order will prejudice
or impair the interests, priorities or claims, if any, of
any of the Debtors or Provident in all or any of the
Settlement Amount. (National Century Bankruptcy News, Issue
No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900)
NATIONAL STEEL: Court Confirms First Amended Plan of Liquidation
----------------------------------------------------------------
National Steel announced that the United States Bankruptcy Court
for the Northern District of Illinois confirmed the First Amended
Joint Plan of Liquidation of National Steel Corporation and its
Affiliated Debtors and Debtors in Possession, as modified.
The Plan contemplates that all remaining assets will be disposed
of, all cash proceeds (net of expenses) will be distributed to
creditors, and that all administrative tasks required to complete
the wind-down of the debtors' estates and their ultimate
dissolution would be completed. In addition to providing for these
things, the Plan sets forth how net cash proceeds available for
distribution to various creditor constituencies will be allocated
and paid.
NOVA CHEMICALS: Third Quarter Net Loss Widens to $65 Million
------------------------------------------------------------
NOVA Chemicals Corporation (NYSE:NCX) (TSX:NCX) reported a net
loss to common shareholders of $65 million ($0.75 per share loss
diluted) for the third quarter of 2003.
Third quarter results were reduced $9 million from the effects of
a power disruption that shut down four sites in Ontario for about
10 days and $10 million from expenses associated with the
permanent closure of a polyethylene line in Ontario. In addition,
this was the first full quarter without earnings from the equity
interest in Methanex Corporation, which had generated $12 million
in the second quarter. Excluding these items, NOVA Chemicals'
operating performance improved over the second quarter.
Net income to common shareholders was $75 million ($0.79 per share
earnings diluted) in the second quarter of 2003. The results
included $117 million (after-tax) in unusual items, primarily
related to gains on the sale of assets. The net loss to common
shareholders was $12 million ($0.14 per share loss diluted) in the
third quarter of 2002.
"Operating performance actually improved slightly from the second
quarter and we saw clear month-over-month improvement in demand
and margins through the period, which began with a very weak
July," said Jeff Lipton, NOVA Chemicals' President and Chief
Executive Officer.
"We paid down another $150 million of debt, reducing our debt to
total capitalization for the fourth straight quarter," continued
Lipton. "At the end of the quarter, our debt to total
capitalization ratio was just under 38% and we had more than $250
million in cash.
"In addition, we announced the shutdown of our oldest, smallest
and highest-cost polyethylene production line. This will remove 8%
of NOVA Chemicals' polyethylene capacity and about 0.6% of total
North American industry capacity."
The Olefins/Polyolefins business reported a net loss of $8 million
in the third quarter, compared to a second quarter net loss of $5
million. Average polyethylene prices were lower, but were more
than offset by lower feedstock costs and higher ethylene selling
prices. Ethylene and polyethylene sales volumes were reduced,
partly as a result of the power disruption in August that reduced
production at our four Ontario plants. Results were reduced by
approximately $9 million due to this disruption.
The Styrenics business reported a net loss of $40 million in the
third quarter, compared to a second quarter net loss of $42
million. Average prices fell, but were largely offset by lower
feedstock costs. Polymer volumes were up from the second quarter,
particularly in Europe. The June explosion and fire at our
Bayport, Texas styrene monomer facility reduced third quarter
results by approximately $4 million.
Review of Operations
Olefins/Polyolefins
Third Quarter 2003
The Olefins/Polyolefins business reported a net loss of $8 million
in the third quarter, compared to a net loss of $5 million in the
previous quarter. The August power disruption, which caused the
temporary shutdown of four NOVA Chemicals plants in the Sarnia,
Ontario area, reduced third quarter results by approximately $9
million. Without the power disruption, the Olefins/Polyolefins
business would have had third quarter earnings of $1 million, or
$6 million higher than the second quarter.
Realized polyethylene prices fell from the second quarter, but
were more than offset by lower feedstock costs and higher ethylene
sales prices. Fixed costs increased $6 million (before-tax) due to
both planned maintenance and the power disruption.
Combined sales volumes for ethylene and polyethylene were down 8%
from the second quarter. Polyethylene sales volumes were up 1%,
but third party ethylene sales were down 19% due to the power
disruption and scheduled maintenance at NOVA Chemicals' E2
ethylene facility and at a customer's facilities in Alberta.
Seasonally lower sales volumes, combined with lower polyethylene
selling prices, reduced returns early in the summer. Margins
bottomed in July, before improving in August and September.
The net loss of $8 million in the third quarter of 2003 is down
from net income of $8 million in the third quarter of 2002
primarily due to the power disruption and higher feedstock costs,
which outpaced higher polyethylene prices.
Feedstocks and Ethylene
Average NYMEX natural gas prices were down 7% from the second
quarter and average WTI crude oil prices were up 4%.
Olefins/Polyolefins feedstock costs were down as the impact of
lower prices of second quarter crude oil purchases flowed through
cost of sales in the third quarter.
Our Joffre, Alberta ethane-based crackers averaged a cash-cost
advantage of approximately 4 cents per pound over similar U.S.
Gulf Coast (USGC) ethylene plants during the quarter. This is the
same as the advantage for the last six quarters, but remains lower
than our long-term historical average of 6 cents due to a weak
USGC ethane market.
Polyethylene
Third quarter weighted-average benchmark polyethylene prices were
down 3 cents per pound from the second quarter of 2003. NOVA
Chemicals' 5 cents per pound polyethylene price increase,
originally announced for Mar. 15, 2003, was implemented in the
low-density and linear low-density polyethylene markets on Sept.
1, 2003. In the high-density polyethylene market, the increase was
split, with 3 cents per pound implemented Sept. 1, 2003, and 2
cents per pound implemented Oct. 1, 2003. The high-density market
represents about one third of NOVA Chemicals' total polyethylene
sales.
Total polyethylene sales volumes for the third quarter were up 1%
from the second quarter of 2003 and were up 10% from the third
quarter of 2002. North American volumes were flat with the second
quarter; however, international volumes were up 18%. Sales to
China were up 48% from the second quarter, due to improving market
conditions.
Business Improvement Initiative
NOVA Chemicals announced the permanent shutdown of one of its two
SCLAIR polyethylene production lines at the St. Clair River Site,
in Corunna, Ontario. The A-Line shutdown will occur during the
second quarter of 2004 and will reduce linear low-density
polyethylene capacity by 275 million pounds per year.
Approximately 80% of the highest margin A-Line sales will be moved
to lower-cost production lines, including about 30% to the
Advanced SCLAIRTECH plant in Joffre, Alberta. The shutdown will
eliminate 8% of NOVA Chemicals' polyethylene capacity and about
0.6% of total North American polyethylene capacity. This
initiative will impact 60 positions and reduce fixed costs by $5
to $10 million per year. The asset write off, severance and other
costs associated with this action resulted in a before-tax charge
of $15 million ($10 million after-tax) in the third quarter of
2003.
Advanced SCLAIRTECH Technology Polyethylene
The Advanced SCLAIRTECH technology polyethylene plant continued to
step up production rates. A planned shutdown was completed, on
schedule, in September. Sales of Advanced SCLAIRTECH technology
resins were 140 million pounds in the third quarter, down from the
second quarter because of the September shutdown.
Implementation of announced price increases depends on many
factors, including feedstock costs, market conditions and the
supply/demand balance for each particular product. Successful
price increases are typically phased in over several months, vary
from grade-to-grade, and can be reduced in magnitude during the
implementation period. Benchmark price indices sometimes lag price
increase announcements due to the timing of publication.
Review of Operations
Styrenics
Third Quarter 2003
The Styrenics business reported a net loss of $40 million in the
third quarter, compared to a net loss of $42 million in the second
quarter of 2003. As anticipated, Styrenics' costs were reduced by
about $43 million (before-tax) as lower feedstock costs flowed
through in the third quarter. However, styrene monomer and polymer
prices fell, more than offsetting the benefit of lower feedstock
costs.
Total sales volume was up 15%. Styrenic polymer volume was up 14%
from the second quarter, with most of the improvement coming from
Europe. European volume increased sharply over a very weak second
quarter due to pickup in the construction and packaging markets
and inventory rebuilding. Third party styrene monomer sales volume
was up 17%.
The $21 million decline from the net loss of $19 million in the
third quarter of 2002 is primarily a result of higher feedstock
costs, which more than offset higher volumes and slightly higher
prices.
Styrene Monomer
The styrene monomer unit at Bayport resumed operation on Aug. 18,
2003, following a June 2003 explosion and fire in the ethylbenzene
manufacturing unit. The styrene monomer unit is currently
operating using shipments of ethylbenzene from NOVA Chemicals'
Sarnia, Ontario production facility and supplemental purchases of
ethylbenzene. Ethylbenzene unit repairs are underway and the
Bayport facility is expected to be fully operational early in
2004. The outage reduced NOVA Chemicals' third quarter earnings by
approximately $4 million (after-tax), due to higher costs
resulting from the purchase and shipment of ethylbenzene. We
expect to incur about $5 million (after-tax) in additional costs
in the fourth quarter.
As a result of the damage, and subsequent repair of the Bayport
ethylbenzene unit, NOVA Chemicals is delaying its previously
announced debottleneck of the plant. Originally scheduled to be
completed in the fourth quarter of 2004, the debottleneck and
turnaround will be delayed by approximately six months. The delay
will not have an impact on the previously announced long-term
styrene monomer supply contract with BASF Corporation. NOVA
Chemicals is able to fully supply BASF from existing production.
The USGC average styrene spot price rose to 31 cents per pound in
the third quarter, from 28 cents per pound in the second quarter.
Average third quarter benchmark contract styrene monomer pricing
was lower than the second quarter, averaging about 38 cents per
pound in July, before rising to about 41 cents per pound by the
end of the quarter. Benchmark benzene feedstock costs started the
quarter at $1.24 per gallon, before rising by 34 cents per gallon
for September. Third quarter 2003 average benchmark benzene costs
were lower than second quarter costs.
NOVA Chemicals announced a North American styrene contract price
increase of 4 cents per pound effective July 1, 2003. This
increase was partially realized on July 1, with the unrealized
portion reconfirmed for Aug. 1. A second increase of 4 cents per
pound was implemented effective Sept. 1, 2003.
In Europe, styrene contract prices were 30 cents per pound in the
third quarter, down from the second quarter price of 40 cents per
pound. The fourth quarter 2003 price settled at 34 cents per pound
in Europe, where the current practice is to settle industry-wide
styrene prices quarterly.
Solid Polystyrene (SPS)
Average North American SPS margins expanded slightly from the
second quarter as lower feedstock costs outpaced lower prices.
NOVA Chemicals' North American sales volumes fell 2% from the
second quarter due to continued customer destocking of inventory.
NOVA Chemicals' 4 cents per pound North American polystyrene price
increase originally announced for Apr. 1, 2003 was delayed under a
temporary voluntary allowance (TVA). On Sept. 1, 2003, 2 cents per
pound of this increase was implemented, without delay and without
price protection. NOVA Chemicals maintains the right to implement
the remaining 2 cents per pound increase at any time, without
notice.
Average European SPS prices fell in the third quarter, however
margins were flat as feedstock costs also dropped. Volume rose
considerably as the construction market showed normal seasonal
demand pickup following a very weak 2002 construction season. In
addition, customers began restocking inventories. NOVA Chemicals
announced European SPS price increases of 2.5 cents per pound
effective Aug. 1, 2003, 7.5 cents per pound effective Sept. 1,
2003 and 5 cents per pound effective Oct. 1, 2003.
Expandable Polystyrene (EPS)
NOVA Chemicals' third quarter average North American and European
EPS prices fell, but were more than offset by lower feedstock
costs.
North American sales volumes were seasonally lower in the third
quarter. NOVA Chemicals announced a North American EPS price
increase of 6 cents per pound effective Oct. 1, 2003.
European EPS volumes rose substantially as demand improved in the
construction and packaging markets from very weak second quarter
levels and customers restocked inventory. NOVA Chemicals announced
European EPS price increases of 2.5 cents per pound effective Aug.
1, 2003, 7.5 cents per pound effective Sept. 1, 2003 and 2.5 cents
per pound effective Oct. 1, 2003.
Implementation of announced price increases depends on many
factors, including feedstock costs, market conditions and the
supply/demand balance for each particular product. Successful
price increases are typically phased in over several months, vary
from grade-to-grade, and can be reduced in magnitude during the
implementation period. Benchmark price indices sometimes lag price
increase announcements due to the timing of publication.
NOVA Chemicals improved its debt to total capitalization ratio to
37.7% at Sept. 30, 2003 from 40.0% at June 30, 2003. Debt
decreased with the repayment of the $150 million, 7% debentures
maturing Aug. 15, 2026. Cash on hand at Sept. 30, 2003 was $252
million.
NOVA Chemicals' funds from operations were $4 million for the
third quarter of 2003, down $8 million from the second quarter of
2003.
Operating working capital decreased by $13 million in the third
quarter of 2003. Increases in working capital requirements, due to
production interruptions at the Sarnia, Ontario manufacturing
sites that resulted from the August power disruption in the
midwestern and northeastern U.S. and in Eastern Canada, were more
than offset by decreases in inventory in the Styrenics business.
NOVA Chemicals assesses its progress in managing working capital
through a Cash Flow Cycle Time (CFCT) measure. CFCT measures
working capital from operations in terms of the number of days
sales (calculated as working capital from operations divided by
average daily sales). This metric helps determine what portion of
working capital changes result from factors other than price
movements. CFCT was 28 days as of Sept. 30, 2003, compared to 27
days as of June 30, 2003.
Capital expenditures were $35 million in the third quarter of
2003, compared to $29 million in the second quarter of 2003. NOVA
Chemicals expects total capital spending of approximately $125
million in 2003.
Financing
NOVA Chemicals has a revolving credit facility of $300 million,
expiring Apr. 1, 2006. On Sept. 23, 2003, NOVA Chemicals amended
the revolving credit facility to relax the Minimum EBITDA to
Interest covenant for the third and fourth quarters of 2003, from
1.75 and 2 times, respectively, to 1.25 times for both the third
and fourth quarters. NOVA Chemicals' actual EBITDA to Interest for
the third quarter was 1.51 times. All other covenants are
unchanged. NOVA Chemicals' third quarter results and financial
position were within the amended financial covenants.
As of Oct. 22, 2003, NOVA Chemicals had no borrowings under its
credit facility, except for operating letters of credit of $44
million.
On Aug. 15, 2003, all $150 million of the 7% debentures maturing
Aug. 15, 2026 were redeemed at par in accordance with the terms of
the offering. The redemption was made from available cash.
During the third quarter of 2003, NOVA Chemicals continued to
utilize its $195 million maximum accounts receivable
securitization program. As of Sept. 30, 2003, the total
receivables sold under this program was $170 million, compared to
$177 million as of June 30, 2003.
FIFO Impact
NOVA Chemicals uses the first-in, first-out method of valuing
inventory. Most of our competitors use the last-in, first-out
method. Because we use FIFO, a portion of the second quarter
feedstock purchases flowed through the income statement in the
third quarter. Natural gas, crude oil and benzene prices in the
third quarter were less volatile than the previous two quarters
and as a result, we have estimated that net income would have been
$6 million higher in the third quarter had NOVA Chemicals followed
the LIFO method of accounting.
Benchmark benzene prices rose $0.34 per gallon during the quarter
and ended the third quarter at $1.58 per gallon. Benchmark WTI
crude oil ended the second quarter at $30.52 per barrel and ended
the third quarter at $28.31 per barrel. Benchmark Alberta natural
gas prices ended the second quarter at $5.12 U.S. per mmBTU and
ended the third quarter at $4.46 U.S. per mmBTU.
Outstanding Hedge Positions
NOVA Chemicals maintains a hedging program to manage its feedstock
costs. Natural gas and crude oil hedge positions had an estimated
fair-market value of negative $5 million. There was no material
impact on earnings from positions realized in the third quarter.
Supplemental Earnings Measures
In addition to providing earnings measures in accordance with
Canadian Generally Accepted Accounting Principles (GAAP), NOVA
Chemicals presents certain supplemental earnings measures. These
are earnings before interest, taxes, depreciation and amortization
(EBITDA), and net income (loss) to common shareholders before
unusual items. These measures do not have any standardized meaning
prescribed by GAAP and are therefore unlikely to be comparable to
similar measures presented by other companies.
Due to new U.S. Securities and Exchange Commission (SEC) rules,
certain items will no longer be excluded when presenting non-GAAP
financial measures. EBITDA will no longer exclude restructuring
charges and net income or loss to common shareholders before
unusual items will also not exclude restructuring charges and
certain other items previously considered unusual in nature. Prior
periods have been restated to reflect these new determinations.
NOVA Chemicals' share price on the New York Stock Exchange (NYSE)
increased to U.S. $20.30 at Sept. 30, 2003 from U.S. $19.04 at
June 30, 2003. NOVA Chemicals' total return to shareholders was 7%
for the quarter ending Sept. 30, 2003 on the NYSE and the Toronto
Stock Exchange (TSX). Peer chemical companies' share values
increased 3% on average and the S&P Chemicals Index increased 2%.
Total return for the S&P/TSX Composite Index (formerly TSE 300)
was 7% and total return for the S&P 500 was 3%. As of Oct. 21,
2003, NOVA Chemicals' share price was U.S. $xx, up/down compared
with Sept. 30, 2003. The S&P Chemicals Index was up/down x% in the
same period.
In the third quarter, about 69% of trading in NOVA Chemicals'
shares took place on the TSX and 31% of trading took place on the
NYSE. Approximately 0.4% of the outstanding float is traded daily.
This level of liquidity is comparable to the liquidity of NOVA
Chemicals' peers.
NOVA Chemicals (S&P, BB+ Long-Term Corporate Credit Rating,
Positive) is a focused, commodity chemical company producing
olefins/polyolefins and styrenics at 18 locations in the United
States, Canada, France, the Netherlands and the United Kingdom.
NOVA Chemicals Corporation shares trade on the Toronto and New
York exchanges under the trading symbol NCX. Visit NOVA Chemicals
on the Internet at http://www.novachemicals.com
OGLEBAY NORTON: Sept. 30 Working Capital Deficit Tops $42 Mill.
---------------------------------------------------------------
Oglebay Norton Company (Nasdaq: OGLE) reports its results for the
third quarter and first nine months ending on September 30, 2003.
Results include:
- Revenues for the quarter were $121.5 million compared to
$123.7 million in the year-earlier period. Revenues for the
nine-month period were $300.9 million compared to $298.6
million in the prior-year nine-month period.
- Operating income for the quarter was $6.0 million compared
to operating income of $14.5 million in the third quarter of
2002. For the 2003 nine-month period, the company reported
an operating loss of $2.4 million compared to operating
income of $31.5 million for the 2002 nine-month period.
Results for the 2003 nine-month period include a $13.1
million asset impairment charge taken in the second quarter
to reduce the net book value of the Performance Minerals
segment's Specialty Minerals operation.
- Net income for the quarter, including an income tax benefit
of $5.2 million, primarily from a reversal of 1999 tax-year
reserves, was $325,000, or $0.06 per diluted share. That
compares to net income of $2.0 million, or $0.40 per diluted
share, for the third quarter last year. Net loss for the
nine months, including the impact of the second-quarter 2003
asset impairment charge and the $1.4 million after-tax
cumulative effect charge for asset retirement obligations,
was $23.3 million, or $4.57 per share, compared to net
income of $74,000, or $0.01 per share, for the same period
last year.
- Earnings before interest, taxes, depreciation and
amortization (EBITDA) were $18.8 million compared to $24.7
million in the third quarter 2002. EBITDA for the nine-month
period was $39.3 million compared to $55.8 million in the
year-earlier nine-month period.
At September 30, 2003, Oglebay Norton's balance sheet shows that
its total current liabilities outweighed its total current assets
by about $42 million.
Oglebay Norton President and Chief Executive Officer Michael D.
Lundin commented: "We took two critical steps during the third
quarter that are intended to help us reach our goal of
restructuring our debt and better positioning us for the future.
First, we entered into agreements with our bank group and senior
secured note holders to amend the company's credit agreements.
These amended agreements provide us with relief on restrictive
covenants, restore our ability to draw on our credit facility to
fund operations, and enable us to focus on a longer-term
restructuring plan. Second, as part of this restructuring,
management announced its intention to focus on a smaller set of
core businesses -- our limestone and limestone fillers operations.
We believe these operations offer the most significant business
development opportunities. As part of that decision, management
announced its intention to sell the company's lime and mica
operations."
Commenting on the third quarter results, Lundin said, "Revenues
for the quarter were down slightly, primarily reflecting continued
weak demand for limestone and shipping services from our Great
Lakes Minerals segment. This decrease was partially offset by
increases in sales from our Performance Minerals and Global Stone
segments. The decrease in the company's operating income for the
quarter reflects lower income from the Great Lakes Minerals
segment, as well as increased general, administrative and selling
expenses."
The increase in general, administrative and selling expenses for
the quarter and the year to date is a result of higher retirement
costs, legal and consulting fees related to operational
restructuring and negotiations with the company's senior secured
lenders and bad debt reserves. Legal and consulting fees totaled
$1.7 million for the quarter and $2.6 million for the first nine
months of 2003.
The Great Lakes Minerals segment's revenues for the quarter
decreased to $52.0 million from $58.5 million in the third quarter
2002. Excluding the addition of Erie Sand & Gravel, the segment's
revenue declined 21% quarter over quarter. The decrease was
primarily due to lower limestone shipments from the segment's
quarries and decreased shipments on the segment's fleet resulting
from reduced demand. Operating income for the third quarter
decreased to $3.3 million in 2003 from $8.5 million in the prior
year. The decrease in operating income was primarily a result of
reduced revenues and the effect of lower volumes on gross margin.
The Global Stone segment's revenues for the quarter were $45.8
million, up from $43.1 million in the 2002 third quarter. The
increase in revenues and operating income is attributable to
strong demand for all product lines. Operating income in the
quarter was $5.1 million compared to $4.5 million in last year's
third quarter.
The Performance Minerals segment's revenues for the quarter were
$25.4 million compared to $23.2 million in the same period last
year. The increase in revenues reflects increased demand for frac
sand from oil service companies in the California market.
Operating income for the quarter was down slightly to $3.5 million
due to higher FAS 143 reclamation costs.
Lundin added: "We continue to identify and implement measures to
contain costs, increase productivity and improve working capital
efficiency, especially inventory management. Some of the measures
we have taken have improved our cash position but have had a
negative effect on operating income."
Lundin concluded: "Obtaining the support of our senior lenders to
amend the company's credit agreements last month has given us the
opportunity to now move forward with our business plans. We are
actively seeking buyers for certain company assets and continue to
develop restructuring alternatives with our financial advisors. We
are encouraged by the options we have identified that would enable
us to restructure our debt and execute our business plan. Ideally,
we would hope to find a solution that creates value for all
stakeholders. We believe such a resolution is possible, but it is,
of course, only one of several possible outcomes."
Oglebay Norton Company (S&P, D Corporate Credit Rating), a
Cleveland, Ohio-based company, provides essential minerals and
aggregates to a broad range of markets, from building materials
and home improvement to the environmental, energy and
metallurgical industries. The company's Web site is located at
http://www.oglebaynorton.com
PACIFIC GAS: Names Thomas B. King SVP and Chief of Utility Ops.
---------------------------------------------------------------
Pacific Gas and Electric Company announced the election of Thomas
B. King, 41, as Senior Vice President and Chief of Utility
Operations.
King will direct the utility's operations for gas and electric
transmission and distribution, customer service, customer revenue
transactions, general services, internet services, business
development, and rates and account services. In assuming his new
title and responsibilities, King follows James K. Randolph, 59,
who is retiring from Pacific Gas and Electric Company after more
than 30 years of service.
"Tom King's depth of executive management experience in the energy
business makes him an exceptional new addition to the utility's
senior management team as we look forward to exiting Chapter 11
and continuing the company's solid utility operations," said
Gordon R. Smith, President and Chief Executive Officer of Pacific
Gas and Electric Company.
King joined PG&E Corporation in 1998 as President and Chief
Operating Officer of PG&E Gas Transmission. In late 2002, he was
chosen as President of PG&E National Energy Group as that unit
prepared for its restructuring. Most recently, King has been
Senior Vice President of PG&E Corporation, based in San Francisco.
Prior to joining PG&E Corporation, King held several senior
executive positions at major firms in the wholesale natural gas
industry, including Kinder Morgan Energy Partners, where he was
President and Chief Operating Officer. King earned a bachelor's
degree in business administration from Louisiana State University
and is a graduate of University of Michigan's Executive Management
Program.
Randolph, Senior Vice President and Chief of Utility Operations,
joined Pacific Gas and Electric Company in 1970, became an officer
in 1991 and assumed his current responsibilities in 1997. His
officer posts included leading the Generation business unit and
the Distribution and Customer Service business unit.
"During his career, Jim distinguished himself as a top contributor
to the success of our utility operations and a valued colleague on
our management team," said Gordon Smith. "Over his three decades
of rising responsibility within the company, Jim's leadership has
been a major part of Pacific Gas and Electric Company's success in
continuing to deliver solid operational results for our
customers."
PG&E Corporation Chairman, Chief Executive Officer and President
Robert D. Glynn, Jr., said, "Throughout his career, Jim fostered
the development of talented individuals and unselfishly encouraged
them toward opportunities elsewhere in the company. In this, he
is clearly 'best-in-class.' We thank him for his hard work and
wish him well in his retirement." Glynn added, "Tom King's
talents and experience make him ideally suited to take on this
leadership role."
King will assume his new responsibilities beginning November 1,
2003.
PACIFIC GAS: Earns Court Approval of Hedging Transactions
---------------------------------------------------------
Pacific Gas and Electric Company obtained the Court's authority to
enter into certain interest rate hedging transactions in
connection with the financing under the Settlement Plan and to
incur secured debt in relation to the Settlement Plan.
Judge Montali further rules that:
(a) The automatic stay is lifted to the extent necessary to
allow each of PG&E's hedge counterparties to exercise
their rights and remedies under the Hedge Agreements.
Subject to the $90,000,000 Liability Limit, PG&E and any
applicable hedge counterparty may demand and receive
immediate payment of, inter alia, collateral calls and
termination payments in accordance with the Hedge
Agreement provisions;
(b) The security interests and liens granted in the collateral
to be posted to the applicable Hedge Counterparties under
the Hedge Agreements will not be:
-- subject to any lien or security interest which is
avoided and preserved for the benefit of PG&E's estate
under Section 551 of the Bankruptcy Code; or
-- subordinated to or made pari passu with any other lien
or security interest under Bankruptcy Code Section
364(c) or (d) unless otherwise agreed to in writing, in
advance by the applicable Hedge Counterparties;
(c) The applicable Hedge Counterparties will not be required
to file or record financing statements, mortgages, notices
of lien or similar instruments in any jurisdiction or take
any other action to validate and perfect the security
interests and liens granted to them;
(d) Unless all obligations and indebtedness owing to the
applicable Hedge Counterparties will be paid in full, PG&E
will not seek -- it will constitute an Additional
Termination Event if PG&E seeks -- or if there is entered,
an order dismissing PG&E's Chapter 11 case;
(e) The reversal or modification of the Order will not affect:
-- the validity of any obligation, indebtedness or
liability incurred by PG&E to any Hedge Counterparty
under any Hedge Agreement whom the Court has determined
is extending credit to PG&E in good faith pursuant to
Section 364(e); or
-- the validity and enforceability of any lien or priority
authorized or created or pursuant to the Hedge
Agreements with respect to any obligations,
indebtedness or liability; and
(f) PG&E's obligations under the Order and the Interest Rate
Hedges will not be discharged by the confirmation of a
reorganization plan. Pursuant to Section 1141(d)(4), PG&E
has waived the discharge of its obligations by virtue of
the confirmation of a Plan. (Pacific Gas Bankruptcy News,
Issue No. 64; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
PEABODY ENERGY: Files Shelf Registration Statement with SEC
-----------------------------------------------------------
Peabody Energy has filed a shelf registration statement with the
Securities and Exchange Commission.
Under the registration, Peabody may offer and sell from time to
time unsecured debt securities consisting of notes, debentures,
and other debt securities; common stock; preferred stock;
warrants; and/or units; totaling a maximum of $1.25 billion.
Related proceeds would be used for general corporate purposes
including repayment of other debt, capital expenditures, possible
acquisitions and any other purposes that may be stated in any
prospectus supplement.
In addition, Lehman Brothers Merchant Banking Partners II L.P.,
may offer up to 10.3 million shares of the company's common stock
through transactions that may include underwritten offerings. The
Lehman Merchant Banking Fund has reduced its holdings through
planned secondary offerings since April 2002. If the Lehman
Merchant Banking Fund offers the maximum shares under this
registration, this would complete its planned exit strategy.
Peabody Energy (NYSE: BTU) (Fitch, BB+ Credit Facility and BB
Senior Unsecured Debt Ratings, Positive Outlook) is the world's
largest private-sector coal company, with 2002 sales of 198
million tons of coal and $2.7 billion in revenues. Its coal
products fuel more than 9 percent of all U.S. electricity
generation and more than 2 percent of worldwide electricity
generation.
PEGASUS COMMS: Unit Closes on $300 Million Term Loan Facility
-------------------------------------------------------------
Pegasus Communications Corporation's (NASDAQ:PGTV) subsidiary,
Pegasus Media & Communications, Inc., has closed on a new $300
million term loan facility.
Proceeds from the new term loan were used to prepay amounts
outstanding under PM&C's existing revolving credit and term loan
facilities that were scheduled to mature in 2004 and 2005 and for
working capital and general corporate purposes. The new term loan
amortizes at the rate of 1% per year and matures on July 31, 2006.
After giving effect to the new financing, PM&C's debt amortization
will be $750,000 for the remainder of 2003, $3 million in 2004,
$96.3 million in 2005 and $293.3 million in 2006. Banc of America
Securities LLC served as sole lead arranger of the new term loan
facility.
Pegasus Communications Corporation -- http://www.pgtv.com--
provides digital satellite television to rural households
throughout the United States. We are the 10th largest pay
television company in the United States. Pegasus also owns and/or
operates television stations affiliated with CBS, FOX, UPN, and
The WB networks.
At June 30, 2003, the Company's balance sheet shows that its total
current liabilities outweighed its total current assets by about
$60 million.
As previously reported in Troubled Company Reporter, Standard &
Poor's Ratings Services lowered its corporate credit rating on
satellite TV provider Pegasus Communications Corp., and its
related entities, to 'CCC+' from 'B' based on increased concerns
about the adequacy of its liquidity.
In addition, Standard & Poor's removed the rating from CreditWatch
where it was placed on May 16, 2002. The outlook is negative. Bala
Cynwyd, Pennsylvania-based Pegasus had total debt outstanding of
approximately $1.3 billion at September 30, 2002.
PERKINELMER: Reports Improved Third Quarter Operating Results
-------------------------------------------------------------
PerkinElmer, Inc. (NYSE: PKI) announced third quarter 2003 GAAP
earnings per share from continuing operations of $.11 on revenue
of $367.1 million, compared to GAAP earnings per share from
continuing operations of $.08 and revenue of $366.0 million in the
third quarter of 2002. Earnings per share excluding intangibles
amortization were $.15 for the third quarter of 2003, which exceed
by $.01 the Thomson First Call(TM) consensus earnings per share
estimate of $.14, which also excludes intangibles amortization.
Amortization of intangibles for the quarter was $7.0 million, or
$.04 per share.
Revenue from continuing operations for the third quarter of 2003
was $367.1 million, slightly above 2002, with revenue growth in
Optoelectronics and Life and Analytical Sciences of 4% and 1%,
respectively, offset by a 10% decline in Fluid Sciences' revenue
during the quarter.
GAAP operating margins during the third quarter of 2003 doubled to
9.2% from 4.6% for the same period of 2002. Third quarter 2003
operating margins, excluding intangibles amortization, were 11.2%
compared to 6.5% for the third quarter of 2002. This margin
expansion compared to the 2002 quarter was driven by benefits we
derived from the integration of Life and Analytical Sciences, and
other productivity initiatives across the Company.
"We were pleased with the benefits of our cost productivity
initiatives, which are reflected in our lower SG&A and higher
gross margins," said Gregory L. Summe, Chairman and CEO of the
Company. "We believe that our improved cost structure as well as
investments in new products positions the Company well."
The Company generated operating cash flow of $28.7 million in the
third quarter of 2003 and $89.6 million for the first nine months
of 2003. This compares with operating cash flow of $70.9 million
and $55.5 million for the third quarter and first nine months of
2002, respectively. Third quarter 2003 operating cash flow
includes a $10 million benefit due to increased sales of
receivables under our accounts receivable securitization program.
The Company paid down $20 million of its long-term debt during the
third quarter, and has reduced long-term debt by $50 million year
to date. As previously announced, during the third quarter of
2003, the Company retired its remaining zero coupon convertible
debentures, which contributed to a $177 million gross debt
reduction since the second quarter of 2003.
"We remained focused on driving strong cash flow and improving our
working capital turns as this both strengthens our balance sheet
and forces greater rigor and quality in our processes," added
Summe.
Net income for the third quarter of 2002 comprised $.08 earnings
per share from continuing operations and a loss of $.02 per share
from discontinued operations. Third quarter 2002 results included
$.03 per share resulting from the effects of two discrete events,
a gain from the retirement of debt partially offset by certain
divestiture-related costs.
Financial overview by reporting segment:
Life and Analytical Sciences reported revenue of $235.1 million
for the third quarter of 2003, up 1% from $232.9 million for the
third quarter of 2002. Revenue growth in reagents, consumables and
service was partially offset by declines in instruments sales
compared to the third quarter of 2002.
By market segment, the Company experienced growth in revenue
during the third quarter in the environmental and chemical
markets, due to strong market acceptance of our recently
introduced new products into these end markets. Sales into the
biopharma markets were down compared to the third quarter of 2002,
however, we believe the end market demand appears to be improving,
particularly for the Company's high-end instruments. Genetic
screening revenue during the third quarter of 2003 was down
compared to the same period of 2002, due to the timing of certain
customer order patterns compared to the same period of 2002. We
believe that genetic screening revenues continue to track to
double-digit growth for the full year 2003.
The segment's GAAP operating profit for the third quarter of 2003
was $21.3 million versus $9.6 million in the same period of 2002.
As a percentage of sales, operating profit for the third quarter
of 2003 and 2002 was 9.1% and 4.1%, respectively. This 500 basis
point increase in operating margin reflects the benefits from the
Life and Analytical Sciences integration, cost productivity
actions across the business and a shift in product mix to higher
margin products. The results for the third quarters of 2003 and
2002 include intangibles amortization of $6.5 million and $6.6
million, respectively. Operating margins excluding intangibles
amortization, were 11.8% and 6.9%, for the third quarters of 2003
and 2002, respectively.
Optoelectronics reported revenue of $88.1 million for the third
quarter of 2003, an increase of 4% from revenue of $84.3 million
for the third quarter of 2002. Growth in revenue from imaging and
specialty lighting was offset by lower sensors revenue during the
third quarter of 2003 compared to the same period of 2002. Both
biotech and medical imaging revenues grew double-digits during the
quarter. The segment's GAAP operating profit was $10.9 million for
the third quarter of 2003, versus an operating profit of $6.2
million for the comparable period in 2002. As a percentage of
sales, operating profit for the third quarters of 2003 and 2002
was 12.3% and 7.3%, respectively. Operating margins excluding
intangibles amortization, were 12.7% and 7.7%, for the third
quarters of 2003 and 2002, respectively.
Fluid Sciences reported revenue of $43.9 million for the third
quarter of 2003, representing a decline of 10% compared to revenue
of $48.8 million for the third quarter of 2002, largely
attributable to continued softness in the aerospace and
semiconductor end markets. Despite lower revenue quarter over
quarter, the segment's GAAP operating profit for the third quarter
of 2003 increased to $5.6 million versus $5.4 million in the third
quarter of 2002. As a percentage of sales, operating profit for
the third quarter of 2003 and 2002 was 12.8% and 11.2%,
respectively. Operating margins excluding intangibles
amortization, were 13.3% and 11.6%, for the third quarter of 2003
and 2002, respectively.
"We are entering the fourth quarter with good momentum on
improving our cost position, driving cash flow, fueling our new
product pipeline, and expanding the service business to improve
our customers' productivity," added Summe. "We believe we are on
track to achieve the upper end of our original guidance for full
year 2003 earnings per share of between $.37 to $.43 on a GAAP
basis, and between $.52 to $.58 per share excluding $.15 per share
of intangibles amortization," concluded Summe.
PerkinElmer, Inc. (S&P, BB+ Corporate Credit and Senior Unsecured
Note Ratings, Stable) is a global technology leader focused in the
following businesses - Life and Analytical Sciences,
Optoelectronics and Fluid Sciences. Combining operational
excellence and technology expertise with an intimate understanding
of our customers' needs, PerkinElmer provides products and
services in health sciences and other advanced technology markets
that require innovation, precision and reliability. The Company
serves customers in more than 125 countries, and is a component of
the S&P 500 Index. Additional information is available through
http://www.perkinelmer.com
PRIMUS TELECOMMS: Files Form S-3 for 3.75% Conv. Notes Offering
---------------------------------------------------------------
PRIMUS Telecommunications Group, Incorporated (Nasdaq:PRTL), a
global telecommunications services provider offering an integrated
portfolio of voice, Internet, data and hosting services, has filed
a Form S-3 resale registration statement to satisfy certain of its
obligations under a registration rights agreement that PRIMUS
entered into in connection with its recent private placement of
$132 million in aggregate principal amount of 3.75% convertible
senior notes due September 15, 2010.
Upon being declared effective by the Securities and Exchange
Commission, the resale registration statement will allow selling
security holders to resell publicly the convertible senior notes
and the common stock issuable upon their conversion, subject to
the satisfaction by selling security holders of the prospectus
delivery requirements of the Securities Act of 1933, as amended,
in connection with any such resales.
A written prospectus, when available, meeting the requirements of
Section 10 of the Securities Act of 1933, as amended, may be
obtained from PRIMUS at 1700 Old Meadow Road, Suite 300, McLean,
Virginia 22102, Attention: Senior Vice President - Corporate
Finance.
The resale registration statement relating to these securities has
been filed with the Securities and Exchange Commission but has not
yet become effective. These securities may not be sold, nor may
offers to buy be accepted, prior to the time the resale
registration statement becomes effective.
PRIMUS Telecommunications Group, Incorporated (NASDAQ: PRTL) --
whose June 30, 2003 balance sheet shows a total shareholders'
equity deficit of about $127 million -- is a global facilities-
based telecommunications services provider offering international
and domestic voice, Internet, data and hosting services to
business and residential retail customers and other carriers
located primarily in the United States, Canada, Australia, the
United Kingdom and western Europe. PRIMUS provides services over
its global network of owned and leased transmission facilities,
including approximately 250 points-of-presence throughout the
world, ownership interests in over 23 undersea fiber optic cable
systems, 19 carrier-grade international gateway and domestic
switches, and a variety of operating relationships that allow it
to deliver traffic worldwide. PRIMUS also has deployed a global
state-of-the-art broadband fiber optic ATM+IP network and data
centers to offer customers Internet, data, hosting and e-commerce
services. Founded in 1994, Primus is based in McLean, VA.
REDBACK NETWORKS: Secures Ableco's Commitment for $30MM Facility
----------------------------------------------------------------
Redback Networks Inc. (Redback) (Nasdaq:RBAK), a leading provider
of advanced telecommunications networking equipment, entered into
a commitment letter with Ableco Finance LLC for a Senior Secured
Credit Facility for borrowings up to $30 million.
The commitment letter provides that borrowings under the Credit
Facility would be secured by substantially all of Redback's assets
and would bear interest at prime rate plus 3.5% per year.
Execution of the actual Credit Facility is subject to a number of
conditions precedent, including completion of a due diligence
review satisfactory to Ableco and the negotiation and execution of
definitive agreements and certain third party consents. The Credit
Facility would be available to Redback in connection with the
completion of its previously announced out-of-court
recapitalization plan or an in-court plan of reorganization. The
proceeds of the Credit Facility, if completed, would be used for,
among other things, Redback's ongoing working capital requirements
and general corporate purposes.
Redback also announced that, on October 15, 2003, it received a
decision from Nasdaq's Listing Qualifications Panel that allows
Redback to remain listed on the Nasdaq National Market until at
least November 4, 2003, in order to allow Redback to obtain
stockholder approval of its proposed approximately 73.39:1 reverse
stock split. If Redback secures stockholder approval of the
reverse stock split by November 4, 2003, the Company will be given
a further extension, until December 12, 2003, to effect the split
and demonstrate a closing bid price of at least $1.00 per share.
Redback must maintain a bid price above $1.00 per share for at
least ten consecutive trading days, at which time it will have
regained compliance with the Nasdaq National Market's continued
listing requirements. As previously announced, Redback has
scheduled a meeting of its stockholders for October 30, 2003, to
vote on the reverse stock split and other matters relating to the
financial restructuring.
Redback's offer to exchange shares of its common stock for all of
its outstanding 5% Convertible Subordinated Notes due 2007 in
connection with its proposed out-of-court financial restructuring
will expire at 12:00 midnight, New York City time, on October 30,
2003, unless extended. The terms and conditions of the exchange
offer and other important information are contained in Redback's
Prospectus/Disclosure Statement dated October 10, 2003.
Separately, Redback has mailed a Proxy/Prospectus/Disclosure
Statement dated October 10, 2003 to its stockholders in connection
with the special meeting to approve certain matters related to the
proposed financial restructuring. Stockholders and noteholders may
obtain additional copies of these disclosure documents by
contacting The Altman Group, the information agent for the
financial restructuring, at 800-467-0671, or at the Securities and
Exchange Commission's Web site at http://www.sec.gov Noteholders
may request additional copies of the Letter of Transmittal for the
exchange offer by contacting The Altman Group.
Redback Networks -- whose Sept. 30, 2003 balance sheet shows a
total shareholders' equity deficit of about $79 million -- enables
carriers and service providers to build profitable next-generation
broadband networks. The company's User Intelligent Networks(TM)
product portfolio includes the industry-leading SMS(TM) family of
subscriber management systems, and the SmartEdge(R) Router and
Service Gateway platforms, as well as a comprehensive User-to-
Network operating system software, and a set of network
provisioning and management software.
Founded in 1996 and headquartered in San Jose, Calif., with sales
and technical support centers located worldwide, Redback Networks
maintains a growing and global customer base of more than 500
carriers and service providers, including major local exchange
carriers (LECs), inter-exchange carriers (IXCs), PTTs and service
providers.
REPRO MED SYSTEMS: Liquidity Issues Raise Going Concern Doubt
-------------------------------------------------------------
Repro Med Systems Inc. incurred a net loss of $100,381 during the
six months ended August 31, 2003 and has a negative equity
position of $43,195 at August 31, 2003. The Company seeks to raise
additional capital or financing, to improve their liquidity. These
factors create substantial doubt as to the Company's ability to
continue as a going concern.
In March, 2003, the Company negotiated with the landlord of its
Chester, New York, facility to utilize $27,500 of its security
deposit (held by the landlord) to pay March and April, 2003, rent.
The agreement provides for replenishment within 90 days. As of
October 20, 2003, the security deposit had not been repaid.
As of August 31, 2003, the Company had an outstanding balance of
$199,461 on its bank line of credit. The line agreement officially
ended on June 30, 2001 but was verbally renewed by the bank
through June 30, 2003. The loan is currently due.
The Company continues to pursue capital investment through debt or
equity to increase its marketing and sales, and to enhance its
existing products, as well as new line additions.
ROUGE INDUSTRIES: Case Summary & 30 Largest Unsecured Creditors
---------------------------------------------------------------
Lead Debtor: Rouge Industries, Inc.
3001 Miller Road
Dearborn, Michigan 48121
Bankruptcy Case No.: 03-13272
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Rouge Steel Company 03-13273
QS Steel Inc. 03-13274
Eveleth Taconite Company 03-13275
Type of Business: The Debtor is an integrated producer of flat-
rolled steel.
Chapter 11 Petition Date: October 23, 2003
Court: District of Delaware
Judge: Mary F. Walrath
Debtors' Counsel: Donna L. Harris, Esq.
Robert J. Dehney, Esq.
Morris, Nichols, Arsht & Tunnell
1201 N. Market Street
P.O. Box 1347
Wilmington, DE 19899
Tel: 302-658-9200
Fax: 302-658-3989
Total Assets: $558,131,000
Total Debts: $558,131,000
Debtors' 30 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Ford Motor Co. - Allen Trade $35,116,062
Allen Park Clay Mine
Ramona Earl
17005 Oakwood Boulevard
Allen Park, MI 48101
Tel: 313-390-3209
Fax: 313-248-5085
USS Raw Materials Trade $8,503,510
Dave Hutchinson
600 Grant St. Room 2382
Pittsburgh, PA 15219
Tel: 412-433-3672
Fax: 412-433-3624
City of Dearborn Taxes $4,147,033
4500 Maple, Third Floor
Dearborn, MI 48126
Tel: 313-943-2045
Fax: 313-943-2469
Edw. C. Levy Co. Trade $2,542,714
8800 Dix Avenue
Detroit, MI 48209
Tel: 313-429-2215
Fax: 313-849-9440
Spartan Steel Coating Trade $2,271,265
1860 Nadeau Road
Monroe, MI 48162
Tel: 313-289-5400
Fax: 313-289-5401
Liverpool Coil Processing Trade $1,759,760
Inc.
880 Steel Drive
Valley City, OH 44280
Tel: 330-558-2600
Fax: 216-273-8561
Interlake Steamship Lines Trade $1,638,222
PO Box 70703
Cleveland, OH 44190
Tel: 330-659-1408
Fax: 330-659-1445
Praxair, Inc. Trade $1,602,470
300 Great lakes Avenue
PO Box 29006
Ecorse, MI 48229-0008
Tel: 313-849-4215
Fax: 313-849-4330
CMS Energy Utility $1,269,711
Fairlane Plaza
330 Town Center Drive
Suite 1000
Dearborn, MI 48126
Tel: 313-436-8283
Fax: 313-436-9322
Medina Blanking, Inc. Trade $1,075,488
5580 Wegman Drive
Valley City, OH 44280
Tel: 330-558-2317
Fax: 330-558-2349
Vesuvius USA Trade $985,753
1404 Newton Drive
Champaign, IL 61821
Tel: 217-351-5000
Fax: 734-284-7922
E.S.M. Inc. Trade $956,572
University Corporate Center
300 Corporate Parkway 216 N
Amherst, NY 14226
Tel: 716-446-8800
Fax: 716-446-8897
Voss Industries Inc. Trade $936,259
19451 Sherwood
Detroit, MI 48234
Tel: 313-368-1400
Fax: 313-368-1404
Resco Products, Inc. Trade $776,087
Brenda Rava
2 Penn Center West
Suite 430
Pittsburgh, PA 15276-0102
Tel: 412-494-4491
Fax: 412-294-1080
Minteq International Inc. Trade $736,965
PO Box 204
Old Bridge, NJ 08857
Tel: 734-516-5863
Fax: 440-930-4974
Worthington Steel Trade $687,064
350 Lawton Avenue
Monroe, OH 45050
Tel: 513-539-9291
Fax: 513-539-8152
Motion Industries Trade $625,966
Charles Stemple
12717 Prospect Drive
Dearborn, MI 48126
Tel: 313-581-5540
Fax: 313-581-6094
Ferrous Environmental Trade $603,070
Recycling
4401 Wyoming
Dearborn, MI 48126
Tel: 313-584-8210
Fax: 313-584-8221
Shiloh Corporation Trade $590,336
402 Ninth Averoad
Mansfield, OH 44905
Tel: 419-525-2315
Fax: 419-522-2275
Comprehensive Logistics Trade $585,000
650 N. meridian Road
PO Box 6127
Youngstown, OH 44501
Tel: 1-800-734-0372
Fax: 330-799-2305
Warren Fab & Mach Corp. Trade $583,249
3240 Mahoning Avenue
PO Box 1032
Warren, OH 44482
Tel: 330-847-0596
Fax: 330-847-7774
Canadian Steamship Lines Trade $560,163
759 Square Victoria
Montreal, QC H2Y 2K3
Tel: 514-288-0231
Fax: 514-982-3848
Chase Nedrow Mfg. Trade $415,824
PO Box 930313
Wixom, MI 48293-0313
Tel: 248-669-9886
Fax: 248-669-3433
Perot Systems Trade $394,159
3001 Miller Road
Dearborn, MI 48121
Tel: 313-317-6366
Fax: 313-317-8839
National Galvanizing Inc. Trade $393,145
1500 Telb
Monroe, MI 48162
Tel: 313-243-1882
Fax: 734-243-2308
Stollberg Inc. Trade $383,382
Manfred beck
PO Box 368
Niagra Falls, NY 14302
Tel: 716-278-1630
Fax: 716-284-8753
Noble Metal Processing Trade $351,975
20530 Hoover
Detroit, MI 48205
Tel: 313-839-0104
Fax: 313-839-0062
Monarch Electric Trade $340,298
Apparatus Service, Inc.
Colleen dungs
31301 Maily Drive
Madison Heights, MI 48071
Tel: 248-526-3062
Fax: 248-526-3033
Metro Industrial Trade $335,251
Contracting
13040 Capital
Oak Park, MI 48237
Tel: 248-398-7222
Fax: 248-398-0005
Double Eagle Steel Trade $313,413
Coating Co.
3000 Miller Road
Dearborn, MI 48120
Tel: 313-203-9800
Fax: 313-203-9821
SATURN (SOLUTIONS): Continues Review of Strategic Alternatives
--------------------------------------------------------------
Saturn (Solutions) Inc., has not filed its financial statements
for the fiscal year ended May 31, 2003 within the prescribed time
limit or mailed such statements to its shareholders. In light of
Saturn's previously-announced financial condition, certain
technical issues have arisen with respect to the audit of the
annual financial statements. Saturn expects that this matter will
be settled shortly and that it will be able to issue financial
statements by mid-December.
Given that the deadline has passed for filing the financial
statements for the fiscal year ended May 31, 2003, Saturn
announces that the provincial securities commissions have granted
Saturn's request for a management cease trade order until such
time as the financial statements are issued. Accordingly, Saturn
shareholders are permitted to continue trading Saturn's shares
while only Saturn's insiders and management are subject to a cease
trade order. In order to obtain the lifting of the management
cease trade order, it will be necessary for Saturn to file the
annual financial statements and to mail them to its shareholders.
Should the financial statements not be issued by December 18,
2003, a general cease trade order may be imposed against Saturn by
the provincial securities commissions.
Saturn's previously-announced assessment of strategic alternatives
available to the Company is continuing. These alternatives may
include an equity investment in Saturn, merger, partnership, joint
venture, sale, or a combination thereof. An announcement on the
outcome of the strategic review process will be made in due
course. However, Saturn undertakes no obligation to make any
announcement regarding its consideration of strategic alternatives
until an agreement, if any, has been signed or a decision not to
proceed with strategic alternatives is made.
Saturn further announces that following Saturn's application, the
Irish courts have appointed a liquidator for Saturn Fulfilment
Services Limited, the Company's wholly-owned Irish subsidiary.
Saturn applied for the appointment of a liquidator in light of the
insolvency of its Irish subsidiary. Among the factors which led to
this development were: the departure from Ireland of several of
Saturn's major customers; a general decline in the Irish market; a
gain in strength of the Euro against the pound in late 2002 and
the first half of 2003, which undermined Saturn's efforts to
generate profitable new business in the United Kingdom; Saturn's
inability in July 2003 to resell inventory of a customer in
default to the Company; the loss of a major customer in August
2003; and an increase in rent at Saturn's main facilities in
Dublin. The financial impact on Saturn of the appointment of a
liquidator for Saturn Fulfilment Services cannot be determined at
this time.
According to Saturn's CEO George Hurlburt, "While the developments
in Ireland are a disappointment, management is encouraged by the
progress made by Saturn's North American operations. In
particular, our operations based in Utah continue to grow.
Saturn's Board of Directors and management continue to explore
every means of improving Saturn's financial condition".
SILICON GRAPHICS: Annual Shareholders' Meeting Set for Dec. 2
-------------------------------------------------------------
The Annual Meeting of Stockholders of Silicon Graphics, Inc. will
be held on Tuesday, December 2, 2003 at 2:00 p.m., local time, in
the Ballroom of the Hyatt Rickeys, 4219 El Camino Real, Palo Alto,
California, for the following purposes:
1. To elect three Class II directors of the Company to serve for
three-year terms.
2. To approve an increase in the number of shares reserved for
issuance under the 1998 Employee Stock Purchase Plan.
3. To approve the issuance of up to (no number supplied)
additional shares of common stock in connection with the
Company's refinancing or repayment of its 5.25% Senior
Convertible Notes due 2004.
4. To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
common stock from 500,000,000 to 750,000,000.
5. To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending June 25,
2004.
6. To consider any other business that may properly come before
the meeting.
The close of business on October 8, 2003 is the record date for
notice and voting.
SGI, also known as Silicon Graphics, Inc. -- whose June 28, 2003
balance sheet shows a total shareholders' equity deficit of about
$178 million -- is the world's leader in high-performance
computing, visualization and storage. SGI's vision is to provide
technology that enables the most significant scientific and
creative breakthroughs of the 21st century. Whether it's sharing
images to aid in brain surgery, finding oil more efficiently,
studying global climate or enabling the transition from analog to
digital broadcasting, SGI is dedicated to addressing the next
class of challenges for scientific, engineering and creative
users. SGI was named on FORTUNE magazine's 2003 list of "Top 100
Companies to Work For." With offices worldwide, the company is
headquartered in Mountain View, Calif., and can be found on the
Web at http://www.sgi.com
SITEL CORP: Names Jorge A. Celaya CFO and Exec. Committee Member
----------------------------------------------------------------
SITEL Corporation (NYSE: SWW), a leading global provider of
outsourced customer support services, announced that Jorge A.
Celaya has been named SITEL's Executive Vice President, Chief
Financial Officer and member of the Executive Committee.
Mr. Celaya joins SITEL from Schlumberger where he has served in a
variety of financial management roles in various Schlumberger
groups across the United States, Europe and Latin America, gaining
a global business perspective and vast knowledge of corporate
matters and international operations.
Mr. Celaya served as Chief Financial Officer for NPTest, Inc., a
semiconductor capital equipment manufacturer and unit of
Schlumberger. In that role he was responsible for all financial
matters, while also preparing the unit for an initial public
offering.
Prior to NPTest, Inc., Mr. Celaya was Vice President Finance,
Schlumberger Network Solutions, a global technology services,
communications and IT outsourcing business. As the business
unit's chief financial executive, he led the group to significant
growth and financial performance. Mr. Celaya joined Schlumberger
Network Solutions having previously held controller and treasurer
positions in Schlumberger.
"SITEL is an exciting company with a great track record of
executing for its clients and growing at a tremendous pace," said
Celaya. "I look forward to leveraging my experience in helping
the company to continue its growth and improve its profitability."
Commenting on the appointment of Mr. Jorge Celaya, Jim Lynch,
Chairman and CEO of SITEL said, "We are delighted to have Jorge
join our team. His leadership expertise in managing a variety of
strategic financial initiatives as well as performing many
tactical finance functions on an international basis will be
integral to our global growth."
The Company's Executive Committee has five members. Other members
are Jim Lynch, Dale Saville (EVP, Corporate Development), Bill
Fairfield (Director, EVP, Business Development), and Robert Scott
Moncrieff (EVP, Marketing and Account Development).
SITEL, a leading global provider of contact center services,
empowers companies to grow by optimizing contact center
performance and unlocking customer potential. SITEL designs,
implements and operates multi-channel contact centers to enhance
company performance and growth. SITEL manages more than 1.5
million customer contacts per day via the telephone, web, e-mail,
fax and traditional mail. SITEL employees operate contact centers
in 22 countries, offering services in 25 languages and dialects.
Please visit SITEL's Web site at http://www.sitel.comfor further
information.
* * *
As previously reported, Moody's Investors Service lowered the
ratings of Sitel Corporation. The outlook is negative.
* $100 million 9.25% senior subordinated notes, due 2006 to
Caa2 from B3
* Senior unsecured issuer rating to Caa1 from B2
* Senior implied rating to B3 from B1
SOCIETY EXPEDITIONS: Files Chapter 7 Petition in Washington
-----------------------------------------------------------
On Friday, October 3, 2003 creditors of Society Expeditions Cruise
Line filed an involuntary Chapter 7 bankruptcy petition in the
U.S. Bankruptcy Court for the Western District of Washington (Case
Number 0322896).
Patrician Cruises, Ltd., a UK corporation and the major creditor,
states that the current bankruptcy filing in the United States
will be supplemented with ancillary involuntary insolvency filings
in Bremen, Germany and Hamilton, Bermuda, against the other
remaining Society Expeditions companies.
The claims have arisen over the past two years from the failure of
Society Expeditions to meet its required vessel charter and
commission payments for the new "World Discoverer," a luxury
expedition cruise vessel. As a result the ship, which was owned by
Patrician Cruises, was seized by the Bank in June of 2003 and is
now owned by an affiliate of the Sembawang Shipyard Pte Ltd of
Singapore, previously a major creditor of the vessel.
In an interview with the major US-controlled shareholder of
Society Expeditions, it was stated that the current financial
crisis was the result of poor sales after the events of 9/11 and
the failure of the current management team, led by Heiko Klein, to
compensate. Klein, a German national representing the other
shareholder, and his executive team have not been able to maintain
sufficient sales levels, particularly in the US market, to cover
the current financial requirements of the company.
The US-controlled shareholder believes that over the last 30 years
Society Expeditions has built a reputation of high quality/high
value expedition cruising throughout the world. It is their intent
to reorganize the company under new management and to return the
company to its core US customer base. Meaningful discussions over
a reorganization plan between the company's two shareholders have
been stymied over the last few months by Heiko Klein and the
current management.
SOCIETY EXPEDITIONS: Chapter 7 Involuntary Case Summary
-------------------------------------------------------
Alleged Debtor: Society Expeditions Inc.
2001 Western Avenue #300
Seattle, Washington 98121
Involuntary Petition Date: October 3, 2003
Case Number: 03-22896
Chapter: 7
Court: Western District of Judge: Karen A. Overstreet
Washington (Seattle)
Petitioners: Patrician Cruises Limited
c/o Bruce E Fischer
10230 E Riverside Drive
Bothell, WA 98011-3709
Adventure Expeditions & Travel LLC
c/o Bruce E. Fischer
10230 E Riverside Drive
Bothell, WA 98011-3709
TerraSolve Inc.
c/o Bruce E Fischer
10230 E. Riverside Drive
Bothell, WA 98011-3709
Amount of Claim: $8,845,393
STEEL DYNAMICS: Third Quarter Results Reflect Slight Improvement
----------------------------------------------------------------
Steel Dynamics, Inc. (Nasdaq: STLD) (S&P, BB- Corporate Credit
Rating, Stable) announced third quarter earnings of $9.2 million,
or $.19 per diluted share, compared to earnings of $5.4 million,
or $.11 per diluted share, in the second quarter of 2003. Net
income in the year-ago quarter was $29.1 million, or $.61 per
diluted share. Net sales for the third quarter of 2003 increased
16 percent to $254 million, compared to $219 million in the second
quarter of 2003. Sales increased six percent as compared to $241
million recorded in the third quarter of 2002.
SDI's shipments and production volume grew as a result of our
continued strength in the flat-roll steel markets and increased
penetration of the structural steel market. Third quarter
consolidated shipments were 745,000 tons, 14 percent higher than
the second quarter of 2003, and 25 percent higher than the third
quarter of 2002. Structural steel shipments increased sequentially
each month, reaching a total of 130,000 tons for the third
quarter. Third quarter production of 787,000 tons by SDI's steel
operations rose 23% compared to the third quarter of last year. In
August the Flat Roll Division achieved a new monthly hot-band
production record.
"We believe market conditions have begun to improve," said Keith
Busse, president and chief executive officer. "Our Flat Roll
Division's third quarter shipments improved from the second
quarter and our order book for the fourth quarter is stronger. In
addition, our construction-related businesses are also seeing
stronger demand. While part of our recent volume growth is
attributable to gains in market share, there appears to be a
gradual pick-up in the level of building project activity in the
markets we serve.
"As we previously announced, the Structural and Rail Division
achieved its first operating profit in the month of August after
just over one year of operation. After achieving even stronger
results in September, the division is expected to continue to make
positive progress in the fourth quarter," Busse said.
In the third quarter, SDI's average consolidated selling price per
ton was $341 per ton which was $6 per ton higher than the second
quarter and $62 per ton lower than the third quarter of 2002.
Third quarter scrap costs increased approximately $3 per ton,
compared to the second quarter of 2003, and increased
approximately $11 per ton from the third quarter of 2002. This
resulted in a slight increase in overall margins when compared to
the second quarter's results.
"Recent steel-scrap price increases are expected to result in a
fourth quarter scrap-cost increase of approximately $12 per ton.
We believe higher selling prices will more than offset the effect
of higher scrap costs during the fourth quarter, thereby slightly
increasing our margins," Busse said.
In the third quarter Steel Dynamics made progress on four growth
projects which are expected to generate increased volume of steel
shipments and enrich the company's product mix throughout the next
year:
- Most significant is the new Bar Products Division mini-mill
in Pittsboro, Indiana, which will add an estimated 500,000
to 600,000 tons in annual capacity. After receiving its
construction permit early in September, facility
modifications and construction began which will allow the
mill to produce a wide range of bar products, including
special-bar-quality steel, merchant shapes and rebar. SBQ
production is expected to begin in the first quarter of
2004 and merchant shape production is expected to follow in
the second quarter.
- Following its start-up in mid-July, SDI's newly acquired
Jeffersonville, Indiana, galvanizing facility has ramped up
production, allowing SDI to diversify its cold-rolled,
galvanized steel production to include lighter gauges,
thereby gaining entry into a variety of new construction
materials markets.
- Installation of the Flat Roll Division's new paint line was
completed and production tests began in mid-October.
Painted coils are expected to begin shipping before the end
of the year. SDI has had numerous conversations with
potential customers for painted products and customer
acceptance of these new products is expected to be rapid.
- At the Structural and Rail Division, rail production trials
are expected to begin in late October, later than
previously expected due to the need for modification of
rolling equipment and control software. Initial shipments
of rail for evaluation by railroad customers are planned
before the end of the year.
"As these new products are added to our product portfolio and as
steel-market conditions are expected to improve with a
strengthening economy, we are optimistic about 2004 and believe
there is an opportunity for a substantial improvement in Steel
Dynamics' earnings in the coming year," Busse concluded.
SUPERIOR TELECOM: Plan Confirmed & Eyes Nov. 5 Effective Date
-------------------------------------------------------------
Superior TeleCom Inc. (OTC: SRTOQ.OB) announced that the U.S.
Bankruptcy Court confirmed its Plan of Reorganization at a hearing
on Wednesday, October 22, 2003. The Company is scheduled to have
its reorganization completed and expects to emerge from Chapter 11
on or about November 5, 2003.
The Plan of Reorganization received overwhelming support from the
holders of the Company's Senior Secured Debt and its Senior
Subordinated Notes as well as from its general unsecured
creditors.
Pursuant to the Plan of Reorganization, a newly formed company,
Superior Essex Inc., will become the parent and holding company
for the principal existing operating subsidiaries, including
Superior Essex Communications, LLC (formerly Superior
Telecommunications Inc.) which comprises the Company's
communications wire and cable operations, and Essex Group, Inc.
which comprises the Company's OEM (magnet wire) operations. The
corporate headquarters for Superior Essex Inc. will be in Atlanta,
Georgia.
Also, as previously reported, approximately $1.1 billion in debt
will be eliminated under the Plan of Reorganization. The Company
estimates that its total debt upon emergence and after funding
substantially all reorganization expenses, will be approximately
$200-$210 million.
As part of its new capital structure, the Company announced that
it had received a $120 million revolving credit exit financing
facility commitment from Fleet Capital Corporation and GE Capital.
This facility will be used to refinance the Company's interim DIP
financing facility (with a current balance of approximately $30
million); fund all reorganization expenses; and provide funding
availability for future operating and working capital
requirements. The Company estimates that it will have more than
$50 million in excess availability under this facility at closing.
Steven S. Elbaum, Chairman of the Board of Directors, stated:
"the Board is pleased that Superior's Plan of Reorganization has
been approved and confirmed. Superior is now positioned to emerge
from Chapter 11 as a financially strengthened competitor, having
completed its reorganization efficiently and within a relatively
short period."
David S. Aldridge, Chief Financial and Restructuring Officer,
stated "we are extremely pleased with the outcome of our financial
restructuring that was initiated in March of 2003. The final
Reorganization Plan achieves our principal goal of establishing a
capital structure that will support prosperity and growth of our
market leading businesses in a strengthening economic environment.
We completed the restructuring on a time line consistent with our
original expectations and operated our businesses in a manner that
allowed us to meet our customer commitments and maintain our
number one market positions in our core communications and magnet
wire markets. We are extremely appreciative of the support of our
customers, vendors and suppliers through this process. We place
great value in these relationships and are pleased to be emerging
with a substantially strengthened capital structure and a strong
liquidity position that should be more than sufficient to support
the Company's operations and our long-term customer and supplier
commitments.
"Finally, and most important, we have a dedicated, talented and
skilled employee workforce who are truly the ones to be
congratulated for positioning our business for a bright and
profitable future."
About Superior Essex Inc.
(successor to Superior TeleCom Inc.)
Superior Essex Inc. is one of the largest North American wire and
cable manufacturers and among the largest wire and cable
manufacturers in the world. Superior manufactures a broad
portfolio of wire and cable products with primary applications in
the communications and original equipment manufacturer (OEM)
markets. The Company is a leading manufacturer and supplier of
communications wire and cable products to telephone companies,
distributors and system integrators and magnet wire for motors,
transformers, generators and electrical controls. Additional
information can be found on the Company's web site at
http://www.superioressex.com/
Superior TeleCom Inc., filed for chapter 11 protection on March 3,
2003 (Bankr. Del. Case No. 03-10607). Laura Davis Jones, Esq.,
and Michael Seidl, Esq., James I. Stang, Esq., and Curtis A. Hehn,
Esq. at Pachulski, Stang, Ziehl Young Jones & Weintraub represent
the Debtors in their restructuring efforts. When the Debtors
filed for protection from its creditors, it listed $861,716,000 in
total assets and $1,415,745,000 in total debts.
TELENETICS CORP: Makes Pre-Payment Under Corlund Settlement Pact
----------------------------------------------------------------
On September 30, 2003 Telenetics Corporation prepaid the final
installment payment of $212,386 called for under its Settlement
Agreement with Corlund Electronics. As a result of this payment,
Telenetics has recognized a gain of approximately $1.7 million.
On October 13, 2003, in conjunction with the final payment,
Telenetics and Corlund's assignee, CMA Business Credit Services,
have executed an amendment to the Settlement Agreement that
entitles Telenetics to purchase over the next six months all
remaining inventory held by CMA that is related to the manufacture
of Telenetics products at an aggregate below-market fixed total
price of $640,000, $160,000 of which was purchased at a closing on
October 14, 2003.
Based in Lake Forest, Telenetics designs, manufactures and
distributes wired and wireless data communications products for
customers worldwide. Telenetics offers a wide range of industrial
grade modems and wireless products, systems and services for
connecting its customers to end-point devices such as meters,
remote terminal units, traffic and industrial controllers and
remote sensors.
Telenetics also provides high-speed communications products for
complex data networks used by financial institutions, air traffic
control systems and public and private wireless network operators.
Additional information is available at http://www.telenetics.com
As reported in Troubled Company Reporter's April 23, 2003 edition,
the Company's auditors Haskell & White LLP stated in its report
for the period December 31, 2002: "The [Company's] consolidated
financial statements have been prepared assuming that the Company
will continue as a going concern. . . . [T]he Company has
suffered recurring losses from operations, has used cash in
operations on a recurring basis, has an accumulated deficit, and
is involved in a dispute with a significant contract manufacturer
that, among other things, raise substantial doubt about its
ability to continue as a going concern. Management's plans in
regard to these matters. The consolidated financial statements do
not include any adjustments that might result from the outcome of
this uncertainty."
TENET: Increased Bad Debt Expense to Impact 3rd Quarter Results
---------------------------------------------------------------
Tenet Healthcare Corporation (NYSE: THC) expected its financial
results for the third quarter ended Sept. 30, 2003 to be
significantly below analysts' current consensus expectations of
$0.20 per share.
The company said that the primary driver of these adverse results
was a significant deterioration in accounts receivable performance
and a resulting increase in bad debt expense. It expects bad debt
expense in the quarter to exceed its budgeted estimates by
approximately $240 million to $290 million, comprised primarily of
an additional charge of approximately $200 million to $225 million
for writing down accounts receivable to estimated net realizable
value. The company also expects to record a pre-tax asset
impairment charge of approximately $100 million in discontinued
operations in the quarter related to previously announced asset
sales. The company expects an approximately $250 million pre-tax
gain to be recorded in discontinued operations upon the closing of
other previously announced asset sales on or about year end. The
company is still in the process of closing its books for the third
quarter and plans to announce complete results for the quarter on
Tues., Nov. 11.
"While we continue to work diligently to address the many
challenges facing Tenet, we also are contending with the rising
costs of treating uninsured patients," said Trevor Fetter,
president and chief executive officer. "For the third quarter, the
company is facing substantially greater levels of uncollectible
receivables than it had assumed in prior earnings guidance. We are
taking immediate action to manage and mitigate the steep increase
in bad debt. Despite these actions, we expect future earnings to
be impacted by this trend."
The company anticipates bad debt expense to be approximately $500
million to $550 million, or approximately 15 percent to 17 percent
of net operating revenue, in the third quarter, which includes the
above mentioned additional charge of approximately $200 million to
$225 million, or approximately 6 percent to 7 percent of net
operating revenue, for writing down accounts receivable to
estimated net realizable value. The additional charge for writing
down accounts receivable to estimated net realizable value
consists of two components: 1) the effect of reevaluating the
continued application of historical collection patterns for both
self-pay and managed care accounts receivable in light of recent
trends, and 2) the effect of accelerating the write-down of self-
pay accounts. The company had previously assumed bad debt expense
of approximately $260 million, or approximately 8 percent of
budgeted net operating revenue, in its prior guidance.
The company said it no longer expects to achieve prior guidance of
earnings per share from continuing operations in the range of
$0.40 to $0.50 for the second half of 2003. Likewise, performance
for the 12-month period ending June 30, 2004 is expected to fall
significantly below the previously anticipated range of $0.80 to
$1.00 per share. Given the number of factors, both industry-wide
and company-specific, that are now impacting the company's
business, management is discontinuing earnings guidance at this
time.
The company's methodology for evaluating the collectability of its
accounts receivable and determining estimated net realizable value
will continue to be reviewed quarterly and adjusted for ongoing
changes in the market environment. As a result, the company may
incur additional future charges related to these trends.
Based upon the preliminary results, the company believes it is
likely that it will slightly exceed the 2.5 times leverage ratio
covenant governing its $1.5 billion bank credit agreement for the
third quarter ended Sept. 30, 2003. The credit line is undrawn at
this time and is currently utilized only for the provision of
approximately $200 million of letters of credit. The company is
working with its bank group to amend the agreement to terms with
which the company will be in compliance. The company currently has
approximately $200 million in available cash, and is in compliance
with all other covenants in its bank credit agreement and all
indentures for its public debt.
"Historically, Tenet has had very strong relationships with its
key banks," said Stephen D. Farber, chief financial officer. "We
expect to work productively with them to resolve this issue."
Drivers of Increasing Bad Debt Expense
The increase in bad debt expense experienced in the third quarter
resulted primarily from an adverse change in the company's
business mix as admissions of uninsured patients grew at an
escalating rate. The company expects to report same-facility
admissions growth of approximately 1.6 percent in the third
quarter, compared with growth of 4.6 percent in the year-ago
quarter.
"Although admissions to our hospitals continue to grow at solid
rates, increasingly more of that growth is coming from uninsured
patients," said Fetter. "Additionally, many of these patients are
being admitted through the emergency department and require high
acuity treatment, which is more costly to provide and results in
above-average billings, which are the least collectible of all
accounts."
The company believes these new trends are due to a combination of
broad economic factors, including higher unemployment rates,
increasing numbers of people who are uninsured, and the increasing
burden of co-payments to be made by patients rather than insurers.
"The sharp escalation in these recent trends makes it very
difficult to forecast future bad debt expense and financial
performance in general," said Farber. "We are taking what we
believe to be prudent steps in both adjusting our valuation of
current receivables to the estimated net realizable value and
refining our approach to estimating the collectibility of future
receivables."
Impact of Self-Pay Accounts on Bad Debt Expense
Tenet writes down all self-pay accounts receivable, including
accounts receivable related to the co-payments and deductibles due
from patients with insurance, to estimated net realizable value as
they age over the course of 120 days. These accounts are turned
over to Tenet's in-house collection agency at 120 days. The
estimated net realizable value of these accounts is based on
individual hospitals' collection trends.
In writing down these receivables to estimated net realizable
value, the company historically had employed a methodology that
utilized gradual write-downs that escalated toward the end of the
120-day period. Given the speed and severity of the new trends in
self-pay accounts, the company is moving to a straight-line write-
down methodology to arrive at estimated net realizable value. This
change to accelerate the write-off of bad debts will account for
approximately 45 percent of the additional bad debt charge in the
third quarter.
Historically, the in-house collection agency has collected
approximately 17 cents for every dollar of self-pay accounts
receivable assigned to it for collections. Actual collections on
these types of accounts receivable now are being collected at a
rate of approximately 12 cents on the dollar. Our process has been
changed to reflect an increased weighting on the past 12 months of
collection experience in determining estimated net realizable
value for self-pay accounts. Writing down the company's self-pay
receivables balance to this new, lower expected collection rate
accounts for approximately 35 percent of the additional bad debt
charge in the third quarter.
Impact of Managed Care Accounts on Bad Debt Expense
The remaining approximately 20 percent of the additional bad debt
charge expected in the third quarter relates to changes in
collectibility of managed care accounts receivable. The company
continues to experience significant payment pressure from managed
care companies. This has been exacerbated by disputes between
certain managed care companies in California and certain of the
company's subsidiaries concerning substantial blocks of their past
billings. The company continues to aggressively pursue collection
of these accounts using all means at its disposal, including
arbitration and litigation.
Strategies to Manage New Bad Debt Trends
The company is taking multiple actions to address the rapid growth
in uninsured patients. These initiatives include conducting
detailed reviews of intake procedures in hospitals facing the
greatest pressures, and enhancing and updating intake best
practices for all of its hospitals. The company had successfully
implemented similar best practices in 1999 when facing increased
bad debt expense at that time. The company also is developing
hospital-specific reports detailing collection rates by type of
payor to help the hospital management teams better identify areas
of vulnerability and opportunities for improvement.
Over the longer term, several other initiatives the company has
previously announced should also help address this emerging
challenge. For example, the company's innovative "Compact with the
Uninsured," a plan to offer managed care-style discounts to
uninsured patients, would enable the company to offer lower rates
to needy patients, who today are charged full gross charges.
Currently, those accounts are often written down as bad debt
expense. Implementation of the plan is awaiting approval by the
government.
In addition, the company's implementation of its previously
announced three-year plan to consolidate billing and collection
activities in regional business offices is on track and is
expected to improve receivables performance once fully executed.
The company's previously announced initiative to standardize
patient accounting systems also will allow Tenet to quickly obtain
better operations data at a consolidated level, providing
management the tools it needs to more quickly identify and address
business mix shifts.
Third-Quarter Earnings Announcement
The company plans to announce complete results for its third
quarter on Tues., Nov. 11, issuing a press release before the
market opens and hosting a live audio webcast to discuss results
in greater detail at 11:00 a.m. EST. All interested investors are
invited to participate in the webcast via a link on the company's
Web site http://www.tenethealth.comor via
http://www.companyboardroom.com
Tenet Healthcare Corporation, through its subsidiaries, owns and
operates 113 acute care hospitals with 27,674 beds and numerous
related health care services. Tenet and its subsidiaries employ
approximately 114,061 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
At June 30, 2003, Tenet Healthcare's balance sheet shows a total
shareholders' equity deficit of about $5.5 billion.
TENFOLD CORP: Will Hold Third-Quarter Conference Call on Wed.
-------------------------------------------------------------
TenFold(R) Corporation (OTC Bulletin Board: TENF), provider of the
EnterpriseTenFold(TM) platform for building and implementing
enterprise applications, will host a conference call Wednesday,
October 29, 2003 to review its Q3 2003 financial results.
The conference call will begin at 4:30 p.m. ET on Wednesday,
October 29, 2003, and is available by dialing (888) 324-9429 or
(630) 395-0045 for international calls. The conference title is
"TenFold Q3 Results," the passcode is "TenFold." Telephone
replays of the conference call will be available from four hours
after the call through November 12, 2003. To access the telephone
replay, dial (800) 262-5125 or (402) 220-9716 for international
calls. The passcode is "3333" and the call leader is "Dr. Nancy
Harvey."
TenFold (OTC Bulletin Board: TENF) -- whose June 30, 2003 balance
sheet shows a total shareholders' equity deficit of about $12
million -- licenses its breakthrough, patented technology for
applications development, the Universal Application platform, to
organizations that face the daunting task of replacing legacy
applications or building new applications systems. Unlike
traditional approaches, where business and technology requirements
create difficult IT bottlenecks, Universal Application technology
lets a small, primarily non-technical, business team design,
build, deploy, maintain, and upgrade new or replacement
applications with extraordinary speed and limited demand on scarce
IT resources. For more information, visit http://www.10fold.com
TERAYON COMMS: Third-Quarter Results In Line Earnings Guidance
--------------------------------------------------------------
Terayon Communication Systems, Inc. (Nasdaq: TERN), a leading
innovator of intelligent broadband access, announced financial
results in line with its previously-raised guidance for the third
quarter ended September 30, 2003.
Revenues for the third quarter of 2003 were $37.6 million, an
increase of 54% compared to $24.5 million for the third quarter of
2002, and an increase of 23% from $30.6 million for the second
quarter of 2003. Net loss for the third quarter of 2003 was $7.2
million, or $0.10 per share, which compares to a net loss of $16.0
million, or $0.22 per share, for the third quarter of 2002 and a
net loss of $13.1 million, or $0.18 per share, for the second
quarter of 2003.
"We are pleased with our performance this quarter, as cable
operators continue to validate the economic and performance
advantages of our DOCSIS 2.0 and digital video solutions in the
face of increasing competition from telecom and satellite
offerings," said Zaki Rakib, Terayon's Chief Executive Officer.
"The growing need for cable operators to offer competitive
services such as high-speed data access, High Definition TV
(HDTV), and Video on Demand creates bandwidth management
challenges that they are addressing using Terayon solutions such
as the DOCSIS 2.0 BW CMTS, DOCSIS 2.0 cable modems, and the DM
6400 Network CherryPicker. We are encouraged by an improving trend
in cable operator capital spending and believe that we are well
positioned for revenue growth in the fourth quarter due to our
industry leading solutions and our continued focus on operational
execution."
Included in non-operating income for the third quarter of 2003 is
a non-recurring gain of approximately $1.3 million, or $0.02 per
share, due to the sale of the Company's telco Miniplex product
line and the reversal of a liability related to an overseas
government R&D grant.
Terayon ended the third quarter with $149.4 million in cash, cash
equivalents and short-term investments, and $65.1 million in
convertible debt due in 2007. Accounts receivable days sales
outstanding for the third quarter of 2003 was 71 days, compared
with 70 days reported for the quarter ended June 30, 2003.
For the fourth quarter of 2003, Terayon expects to report revenue
in the range of $40 million to $43 million and anticipates a net
loss in the range of $0.07 to $0.09 per share.
Terayon Communication Systems, Inc. (S&P, B- Corporate Credit and
CCC Subordinated Debt Ratings, Negative) provides innovative
broadband systems and solutions for the delivery of advanced,
carrier-class voice, data and video services that are deployed by
the world's leading cable television operators. Terayon,
headquartered in Santa Clara, California, has sales and support
offices worldwide, and is traded on the NASDAQ under the symbol
TERN. Terayon is on the Web at http://www.terayon.com
UNITED AIRLINES: Asks Court to Clarify McKinsey Engagement Order
----------------------------------------------------------------
The United Airlines Debtors ask Judge Wedoff to clarify the order
authorizing them to employ McKinsey & Company.
James H.M. Sprayregen, Esq., at Kirkland & Ellis, relates that
the Debtors contemplate engaging McKinsey to provide services for
business operations that do not involve these Chapter 11 cases.
The Debtors do not believe that it is necessary or appropriate,
or that the spirit of the Order required, that they must seek
Court approval of these ordinary course services.
As drafted, however, Mr. Sprayregen says, the Consulting Services
Agreement could be interpreted to require the Debtors to obtain
Committee or Court approval for any McKinsey services, regardless
of whether they are ordinary course or professional. Therefore,
the Debtors ask the Court to amend and restate the Consulting
Services Agreement to include language that carves out a role for
McKinsey to act as a "Professional," within the meaning of
Section 327 of the Bankruptcy Code.
Committee Objects
On behalf of the Official Committee of Unsecured Creditors,
Daphnee Surpris, Esq., at Sonnenschein, Nath & Rosenthal,
contends that the Debtors are seeking to eliminate any Creditors'
Committee, Fee Review Committee or Court supervision of that
portion of McKinsey's work that the Debtors, "in their sole
discretion", consider ordinary course.
Ms. Surpris argues that the Order prescribes a process for the
Debtors to consult and negotiate with the Committee on future
expansions of the McKinsey work, identifying scope, duration and
cost. Only if the Committee objects must the expansion be
brought to the Court for determination. "The mechanism in the
Order has worked well. There is nothing to 'clarify' and no need
to disrupt the procedures in place," Ms. Surpris says.
Ms. Surpris further states that the Debtors have not provided
information as to the scope of services, duration and cost of the
ordinary course McKinsey engagement. "It appears that the
Debtors want to be the sole arbiter of when McKinsey is acting
pursuant to its Section 327 retention and when it is not," she
says.
Ms. Surpris reminds the Court that McKinsey has filed two fee
applications and has been paid over $7,000,000 to date. The
heavily negotiated implementing Order should not be disturbed.
(United Airlines Bankruptcy News, Issue No. 29; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WABASH NATIONAL: Third Quarter Net Loss Widens to $30 Million
-------------------------------------------------------------
Wabash National Corporation (NYSE: WNC) announced results for the
three and nine month periods ended September 30, 2003. Net sales
for the third quarter were $215 million compared to $241 million
for the same period last year. Net loss for the third quarter was
$30 million compared to a net loss of $8.3 million for the same
period last year. Diluted loss per share was $1.16 for the quarter
compared to a loss of $0.37 per share for the 2002 quarter. For
the nine months ended September 30, 2003, net sales were $668
million and a net loss of $55 million compared to net sales of
$614 million and a net loss of $45 million for the same period
last year. Diluted loss per share for the nine months ended
September 30, 2003 and 2002 was $2.19 and $1.98, respectively.
Commenting on the quarter, William P. Greubel, President and Chief
Executive Officer, stated, "The achievements accomplished during
the quarter are quite remarkable and provide a foundation for a
successful and sustainable business. The following are just some
of the significant highlights from the quarter:
- We launched our sales and marketing initiatives targeted at
the mid-size fleet segment of the trailer industry. Our
net orders during the third quarter increased approximately
32% over the same period a year ago while net orders for
the U.S. trailer industry increased approximately 20%
during the same time period;
- We closed twelve of our factory owned branch locations to
better focus on our product and service offerings in more
profitable markets;
- We sold $125 million of 3-1/4% senior unsecured convertible
notes, proceeds from which were used to refinance a portion
of the Company's outstanding indebtedness;
- We sold certain assets of our rental and leasing business
and wholesale aftermarket parts business with total
consideration of approximately $60 million which was used
to reduce the Company's outstanding indebtedness;
- We completed a new three year $222 million bank credit
facility which served to finalize the refinancing of
substantially all of the Company's outstanding indebtedness
and which reduced our average cost of debt from over 10% to
less than 4%;
- We anticipate completing the sale of our remaining non-core
assets with the planned sale of a majority of our finance
portfolio for approximately $12 million;
- We are approaching our goal of $100 million reduction in
indebtedness during 2003. Debt is down $70 million. With
the planned sale of our finance portfolio, and further
working capital reductions, we expect to successfully
achieve our goal; and
- We continue to show month over month improvement in our
drive to continuously improve our safety, quality and on-
time delivery while reducing our costs. We believe we have
now become one of the lowest cost producers within the
trailer industry.
There has been a great deal of hard work and outstanding
achievements by our associates, yet there remains more to be done.
Industry forecasts for the next several years are very
encouraging. We have positioned the Company to take advantage of
this industry recovery and believe we can be debt free during this
time frame while accomplishing record earnings and cash flow
levels."
Wabash National Corporation designs, manufactures, and markets
standard and customized truck trailers under the Wabash(TM) brand
name. The Company is one of the world's largest manufacturers of
truck trailers and a leading manufacturer of composite trailers.
The Company's wholly owned subsidiary, Wabash National Trailer
Centers, is one of the leading retail distributors of new and used
trailers and aftermarket parts throughout the U.S. and Canada.
As reported in Troubled Company Reporter's April 16, 2003 edition,
Wabash National completed the amendment of its credit facilities,
which includes its revolving line of credit, its senior notes, its
receivables facility and its lease facility. The amendment revises
certain of the Company's financial covenants and adjusts downward
the required monthly principal payments during 2003.
In another previous report, the Company said it was not prepared
to predict that first quarter results, or any other future
periods, would achieve net income, and did not expect to announce
further results before the first quarter would be completed, given
the softness in demand and other factors.
The Company remains in a highly liquidity-constrained environment,
and even though its bank lenders have waived current covenant
defaults, there is no certainty that the Company will be able to
successfully negotiate modified financial covenants to enable it
to achieve compliance going forward, or that, even if it does, its
liquidity position will be materially more secure.
At September 30, 2003, Wabash National's balance sheet shows that
its total shareholders' equity has further shrunk to about $20
million from about $74 million nine months ago.
WELLMAN INC: Third Quarter 2003 Results Sink into Red Ink
---------------------------------------------------------
Wellman, Inc. (NYSE: WLM) reported a net loss from continuing
operations for the quarter ended September 30, 2003 of $4.6
million, or $0.15 per diluted share. The net loss from continuing
operations includes certain costs listed in Table II totaling $3.1
million, or $0.10 per diluted share. After giving effect to the
preferred stock accretion of $2.9 million, or $0.09 per diluted
share, the net loss available to common stockholders was $7.5
million, or $0.24 per diluted share. This compares to net earnings
from continuing operations of $4.7 million, or $0.15 per diluted
share, and net earnings of $4.5 million, or $0.14 per diluted
share, for the same period in 2002.
Net earnings from continuing operations for the first nine months
of 2003 was $1.4 million, or $0.04 per diluted share, compared to
net earnings (loss) from continuing operations of $23.1 million,
or $0.72 per diluted share, for the same period in 2002. These
results include certain costs listed in Table II totaling $6.7
million, or $0.21 per diluted share, for the nine months ended
September 30, 2003 and $1.8 million, or $0.06 per diluted share,
for the comparable period in 2002. After deducting the loss from
discontinued operations, the effect of a change in accounting
principle and preferred stock accretion, the net loss available to
common stockholders was $1.5 million, or $0.05 per diluted share,
for the first nine months of 2003 and $197.7 million, or $6.17 per
diluted share, for the same period in 2002.
Tom Duff, Chairman and CEO, stated, "The disappointing results for
the quarter were primarily the result of increases in raw material
costs and extremely competitive conditions in the NAFTA PET resins
market. These market conditions resulted from the recent PET
capacity increases that we discussed last quarter combined with an
unexpected drop in demand in the third quarter related to the poor
weather in the Eastern United States. We expect the market to
remain competitive in the fourth quarter of 2003. Anticipated
higher capacity utilization should result in improved margins in
our domestic PET resins business in 2004."
Wellman, Inc. (S&P, BB+ Corporate Credit Rating, Negative)
manufactures and markets high-quality polyester products,
including PermaClear(R) and EcoClear(R) brand PET (polyethylene
terephthalate) packaging resins and Fortrel(R) brand polyester
fibers. The world's largest PET plastic recycler, Wellman utilizes
a significant amount of recycled raw materials in its
manufacturing operations.
WESTPOINT STEVENS: Court Approves Lehman as Committee's Advisor
---------------------------------------------------------------
U.S. Bankruptcy Court Judge Drain permits the Official Creditors'
Committee (appointed in the Westpoint Debtors' chapter 11
proceedings) to retain Lehman Brothers Inc., as its financial
advisor nunc pro tunc to July 30, 2003, subject to these
additional provisions:
(a) The United States Trustee retains all rights to object to
Lehman's interim and final fee applications, on all
grounds including, but not limited to, the reasonableness
standard provided for in Section 330 of the Bankruptcy
Code;
(b) Lehman's request for payment of indemnity pursuant
to the Letter Agreement will be made by application --
interim or final -- and will be subject to review by the
Court to ensure that payment conforms to the terms of the
Letter Agreement and is reasonable based upon the
circumstances of the litigation or settlement, provided,
however, that in no event will Lehman be indemnified for
its own bad faith, self-dealing, breach of fiduciary duty,
gross negligence or willful misconduct; and
(c) In no event will Lehman be indemnified for a claim that a
Court determines by final order to have arisen out of
Lehman's own bad faith, self-dealing, breach of fiduciary
duty, gross negligence, or willful misconduct.
* * *
Lehman, in its capacity as financial advisor to the Committee,
will:
(a) review and analyze WestPoint's business, operations,
properties, financial condition and prospects and
financial projections;
(b) evaluate WestPoint's debt capacity in light of its
projected cash flows;
(c) provide advice regarding the restructuring of WestPoint's
existing indebtedness and assist in the determination of
an appropriate capital structure;
(d) give a valuation analysis of WestPoint and its assets on a
going concern basis, including preparation of expert
testimony relating to valuation;
(e) attend meetings and assist in negotiations with the
Debtors with respect to any proposed reorganization plan;
(f) advise the Committee on the timing, nature, terms and
value of any new securities, other consideration or other
inducements to be offered pursuant to a restructuring;
(g) assist the Committee in assessing strategic options,
including the sale of the Debtors' businesses, and pre-
confirmation and exit debt equity financing;
(h) provide testimony, as necessary, in any court proceeding;
and
(i) provide the Committee with other appropriate general
restructuring advice.
Lehman will be compensated in this manner:
(a) The Debtors will pay a cash retainer fee equal to $75,000
per month for the first six months, the retainer will be
reduced to $50,000 per month after that. The first
monthly retainer will be payable upon the execution of the
Lehman Engagement Letter, and subsequent monthly retainers
will be payable every first day of each month;
(b) In consideration of Lehman as exclusive financial advisor
to the Committee, the Debtors will pay $100,000 due upon
the Effective Date of the Debtors' Plan; and
(c) The Debtors will also pay all reasonable fees,
disbursements and out-of-pocket expenses incurred by
Lehman. (WestPoint Bankruptcy News, Issue No. 10;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
WILLIAM CARTER: S&P Keeps Watch Over Planned Shares Offering
------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB-' corporate
credit rating, 'BB' senior secured bank loan rating, and 'B'
subordinated debt rating on children's wear manufacturer The
William Carter Co. on CreditWatch with positive implications.
Total debt was $292 million at July 5, 2003.
"The CreditWatch listing reflects Atlanta, Georgia-based Carter's
plan to use the net proceeds from a proposed $100 million IPO of
common stock by its parent company, Carter's Inc., to redeem a
portion of its 10.875% subordinated notes due 2011," said Standard
& Poor's credit analyst Lori Harris. The offering consists of
6,250,000 shares, with 4,687,500 shares to be offered by the
company and the remaining 1,562,500 shares to be offered by a
selling shareholder.
Following completion of the transaction, Standard & Poor's
estimates that operating lease-adjusted total debt to EBITDA will
be under 3x for 2003, down from about 4x at year-end 2002.
Before resolving the CreditWatch, Standard & Poor's will meet with
management in the near term to discuss the company's operating
plans, financial policies, and strategies.
WILLIAMS COS.: Makes Final Pricing for $241MM Cash Tender Offers
----------------------------------------------------------------
Williams (NYSE: WMB) announced the consideration to be paid in its
previously announced cash tender offers and consent solicitations
for approximately $241 million of its outstanding notes, including
approximately $27 million of 9.875 percent debentures due 2020,
originally issued by Transco Energy Company; $106 million of
various tranches of Series B Medium Term Notes due 2003-2022,
originally issued by MAPCO, Inc.; and $108 million in three series
of debentures, due 2012-2021, issued by Williams under a 1990
indenture.
The total consideration for each security includes a consent
payment of $30 per $1,000 principal amount for all notes properly
tendered and not withdrawn on or prior to Oct. 20, 2003. The
tender offer consideration, which is payable with respect to any
notes tendered (and not later withdrawn) after Oct. 20, 2003, and
prior to the scheduled expiration of the tender offers on Nov. 6,
2003, will exclude the $30 consent payment. Payment for all of
the notes accepted in these tender offers is expected to occur on
Nov. 10, 2003, and will include accrued and unpaid interest up to
but not including the settlement date.
Williams has retained Lehman Brothers Inc. to serve as the lead
dealer manager, Banc of America Securities LLC, Citigroup Global
Markets Inc. and J. P. Morgan Securities Inc. to serve as co-
dealer managers, and D.F. King & Co. Inc. to serve as the
information agent for the tender offer.
Requests for documents may be directed to D.F. King & Co. Inc. by
telephone at (800) 431-9643 or (212) 269-5550 or in writing at 48
Wall Street, 22nd Floor, New York, NY 10005. Questions regarding
the tender offer may be directed to Lehman Brothers, at (800) 438-
3242 or (212) 528-7581.
Williams, through its subsidiaries, primarily finds, produces,
gathers, processes and transports natural gas. Williams' gas
wells, pipelines and midstream facilities are concentrated in the
Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard. More
information is available at http://www.williams.com
As reported in Troubled Company Reporter's October 16, 2003
edition, Fitch Ratings affirmed The Williams Companies, Inc.'s
outstanding senior unsecured notes and debentures at 'B+'. Also
affirmed are outstanding credit ratings for WMB's wholly-owned
subsidiaries Northwest Pipeline Corp., Transcontinental Gas Pipe
Line Corp., and Williams Production RMT Co. The Rating Outlook for
each entity has been revised to Positive from Stable. Details of
the securities affected are listed below.
The following is a summary of outstanding ratings affected by the
action:
The Williams Companies, Inc.
-- Senior unsecured notes and debentures 'B+';
-- Feline PACs 'B+';
-- Senior secured debt 'BB';
-- Junior subordinated convertible debentures. 'B-'.
Williams Production RMT Co.
-- Senior secured term loan B 'BB+'.
Northwest Pipeline Corp.
-- Senior unsecured notes and debentures 'BB'.
Transcontinental Gas Pipe Line Corp.
-- Senior unsecured notes and debentures 'BB'.
WORLDCOM INC: Wins Nod to Pull Plug on Prentiss Properties Lease
----------------------------------------------------------------
With the Court's permission, the Worldcom Debtors will reject an
unexpired non-residential real property lease with Prentiss
Properties Acquisition Partners, LP.
The Debtors lease from Prentiss Properties 106,576 square feet of
space from the first through the seventh floors of a building
located at 8521 Leesburg Pike in Vienna, Virginia. The Debtors
pay $226,153 monthly rent, inclusive of certain pass through
charges. The Lease expires by its terms on April 30, 2005.
The Debtors use the Premises to house their sales and
administrative staff. However, the Debtors have since relocated
their staff to a variety of locations in the surrounding areas,
including at 1133 19th Street in Washington, D.C. and 1945 Old
Gallows Road in Vienna, Virginia. Presently, the Premises
constitutes excess space and is no longer needed.
The Debtors rejected the Lease effective as of August 15, 2003 --
the Surrender Date. Pursuant to a Lease Termination Agreement,
the Parties agree that:
(a) The Debtors surrender the Premises in broom clean
condition, free and clear of all debris, business and
personal files, any and all signage installed by or for
MCI Telecommunications Corporation at or within the Fedora
Building, the satellite dish, and any antennas located on
the roof of the building. MCI will also repair any damage
caused by the removal, normal wear and tear excepted;
(b) Certain items of furniture, fixtures and equipment located
at the Premises, the building and the parking facilities
and owned by MCI -- the Personal Property -- will be sold
to Prentiss Properties clear of all liens for $40,000;
(c) Prentiss Properties will retain these claims:
-- a $6,956 allowed general unsecured prepetition claim;
and
-- an $800,000 allowed general unsecured damage claim.
The Retained Claims will receive the treatment afforded to
general unsecured claims under a confirmed reorganization
plan for MCI;
(d) Prentiss Properties waives any and all claims and causes
of action, other than the Retained Claims, against the
Debtors;
(e) All proofs of claim or interests other than the Retained
Claim for $6,956 previously filed by Prentiss Properties
or on its behalf, in any of the Debtors' Chapter 11 cases
with respect to amounts or other obligations owed or to be
owed pursuant to the Lease are dismissed and expunged with
prejudice;
(f) The Debtors waive all obligations any and all claims and
causes of action against Prentiss Properties arising
pursuant to the Lease;
(g) Power Solutions LLC holds an $18,617 mechanics' lien on
the Lease. Upon the sale of certain property by the
Debtors to Prentiss Properties, Power Solutions' lien will
attach to the net proceeds of the sale with the same
validity, priority, force and effect the lien had on the
property immediately before the sale;
(h) The Debtors' real estate consultant, Hilco Real Estate,
LLC and its joint venture partners, will be entitled to a
fee equal to the greater of:
(i) $5,000, and
(ii) the cash equivalent of an amount equal to 10% of the
value of the pro rata distribution payable pursuant
to a confirmed reorganization plan for the Debtors
to a holder of a general unsecured claim for
$1,944,609; and
(i) The Debtors will be solely responsible for Hilco's
compensation. The Debtors agree to indemnify and hold
Prentiss Properties harmless from any claims for
compensation made by Hilco. (Worldcom Bankruptcy News,
Issue No. 40; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
X10 WIRELESS TECH: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: X10 Wireless Technology, Inc.
19823 58th Place South
Kent, Washington 98032
aka X10.com, Inc.
Bankruptcy Case No.: 03-23561
Type of Business: A Well-known Internet Pop-Up Advertiser, the
Debtor offers an integrated suite of affordable
hardware and software products that provide
powerful and affordable wireless solutions for
homes and small businesses.
Chapter 11 Petition Date: October 21, 2003
Court: Western District of Washington (Seattle)
Judge: Samuel J. Steiner
Debtor's Counsel: Mary Jo Heston, Esq.
Lane Powell Spears Lubersky LLP
1420 5th Avenue #4100
Seattle, WA 98101
Tel: 206-223-7000
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $10 Million to $50 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Advertisement Banners.com Trade Debt $3,876,000
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Sheppard, Mullin, Richter Trade Debt $667,411
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Microsoft Corp. (MSN) Trade Debt $459,264
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Yahoo! Trade Debt $346,128
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Overture Services, Inc. Trade Debt $95,047
American Online, Inc. Trade Debt $55,413
Weather Channel Trade Debt $50,367
Interactive
Fed Ex Trade Debt $39,930
Foxnews.com Trade Debt $40,886
Google, Inc. Trade Debt $68,984
Matrix Global Services Inc. Trade Debt $74,200
Mirror Image Internet Trade Debt $36,000
eBay, Inc. - Advertising Trade Debt $48,907
Webshots Trade Debt $26,477
Performics, Inc. Trade Debt $22,153
Washington Post Trade Debt $25,638
Cable Wireless & Internet Trade Debt $22,720
Service
Commission Junction Trade Debt $21,369
Corlution Trade Debt $23,000
Level 3 Trade Debt $21,106
XCEL ENERGY: Names Richard C. Kelly as New President and COO
------------------------------------------------------------
Xcel Energy (NYSE:XEL) named Richard C. Kelly, 57, president and
chief operating officer, positions that had been held by Wayne H.
Brunetti, the company's chairman and chief executive officer.
Kelly previously was vice president and chief financial officer.
Benjamin G.S. Fowke III, 45, previously vice president and
treasurer, was named to replace Kelly as CFO. He retains the role
of treasurer.
Brunetti said Kelly would direct the company's renewed emphasis on
fundamental utility services and products. "We will focus on
generating and delivering energy, satisfying our customers,
delivering returns to shareholders and protecting the
environment."
Brunetti added that Kelly "earned the respect of investors, the
financial community and regulators while leading the company over
a rough road of financial challenges" in connection with the
bankruptcy of subsidiary NRG Energy.
"We are about to put that episode behind us, and Dick's talents
will be directed toward achieving greater operational success
across the business," Brunetti said.
Kelly said he is looking forward to serving in a broader
leadership role. "I envision greater stability in this business.
Our services are vital to growing communities, and I'm
enthusiastic about prospects for building successfully upon our
expertise as low-cost energy providers."
Kelly was named CFO in August 2002 after serving as president of
Xcel Energy Enterprises. Earlier he held a variety of increasingly
responsible finance positions. He has a bachelor of science degree
in accounting and master of business administration degree from
Regis University.
He attended the University of Colorado's Executive Education
Conference and the University of Michigan's Public Utility
Executive Program. He is a board member of the Minneapolis
Downtown Council, a past president of the Arvada, Colo., Optimist
Club, and a past director of the Ronald McDonald House and Denver
Metro Chamber of Commerce.
Brunetti described Fowke as "an experienced financial professional
with an outstanding record of achievement."
Before being named vice president and treasurer in November 2002,
Fowke was vice president and CFO of Energy Markets, where he was
responsible for financial operations of the company's commodities
trading and marketing business unit. He has more than 20 years
experience in the energy industry. He is a cum laude graduate of
Towson University, where he received a bachelor of science degree
in finance/accounting. He obtained his CPA in 1982.
Xcel Energy is a major U.S. electricity and natural gas company
with regulated operations in 11 Western and Midwestern states.
Xcel Energy provides a comprehensive portfolio of energy-related
products and services to 3.3 million electricity customers and 1.7
million natural gas customers through its regulated operating
companies. In terms of customers, it is the fourth-largest
combination natural gas and electricity company in the nation.
Company headquarters are located in Minneapolis. More information
is available at http://www.xcelenergy.com
XECHEM INT'L: Wiss & Company Steps Down as Independent Auditors
---------------------------------------------------------------
On October 4, 2003, Xechem International, Inc. received a letter
from Wiss & Company, LLP, the Company's independent public
accountants, dated September 30, 2003. In the letter, Wiss
informed the Company that it had decided to discontinue providing
audit services to SEC clients and was exiting this practice area.
The Company had engaged Wiss on December 13, 2002.
In its letter, Wiss stated that its decision was based on a
variety of business factors, including the recent rash of
legislative changes enacted following the passing of the Sarbanes-
Oxley Act of 2002.
The Company has not yet selected replacement independent public
accountants for Wiss; however, it is presently interviewing
candidates. The Company will file an additional Form 8-K with the
SEC to announce the Company's new independent public accountants
as soon as such replacement is selected.
Wiss' reports on the Company's consolidated financial statements
for the past year, which is the only year for which it provided
accounting services during its recent engagement, contained a
statement that there were doubts about the ability of the Company
to continue as a going concern.
* FTI Inks Definitive Pact to Acquire KPMG Dispute Advisory Biz.
----------------------------------------------------------------
FTI Consulting, Inc. (NYSE: FCN), the premier national provider of
turnaround, bankruptcy and litigation-related consulting services,
reported results for the third quarter ended September 30, 2003.
Results from continuing operations for the quarter include the
contribution from its August 31, 2002 acquisition of the domestic
Business Recovery Services Division of PricewaterhouseCoopers,
which was included for one month in the 2002 third quarter
results. Continuing operations exclude the results of the
company's discontinued SEA practice group, which was sold on
August 31, 2003.
FTI also announced that it has entered into a definitive agreement
with KPMG LLP, the U.S. accounting and tax firm, to acquire
substantially all of KPMG's domestic Dispute Advisory Services
(DAS) business for approximately $89.1 million in cash, and has
also completed the acquisition of Ten Eyck Associates, a financial
consulting group that specializes in Securities and Exchange
Commission-related issues.
Third Quarter Results from Continuing Operations
For the quarter, revenues from continuing operations were $83.6
million, an increase of 49.6 percent compared with $55.9 million
for the comparable period in 2002. Revenues from continuing
operations increased 13.9 percent compared with pro forma revenues
from continuing operations of $73.4 million for the quarter ended
September 30, 2002, assuming the August 31, 2002 acquisition of
BRS had been effective for the entire third quarter of 2002.
Income from continuing operations grew 84.1 percent to $15.1
million from $8.2 million in the comparable quarter last year, and
earnings from continuing operations per share grew 50.0 percent to
$0.36 on a diluted basis compared with $0.24 for the comparable
period in the prior year, and increased 260.0 percent compared
with $0.10 earnings from continuing operations per diluted share
on a pro forma basis for the third quarter of 2002. Earnings per
share for the third quarter of 2003 includes the effect of the
reversal of previously accrued but unpaid incentive compensation
of $2.1 million, or $0.03 per share. This compensation is not
expected to be paid as a result of lower than anticipated
earnings. Including the results of the discontinued operations,
discussed below, earnings per share on a diluted basis were also
$0.36.
Cash flow provided by operations was $29.3 million compared with
$15.4 million in the third quarter of the prior year. Earnings
from continuing operations before interest, taxes, depreciation
and amortization of property and equipment, which is included in
selling, general and administrative expenses, and amortization of
other intangible assets, which is reflected as a separate line
item in the company's consolidated statements of income (EBITDA),
were $28.5 million compared with $16.5 million in the prior year,
an increase of 72.7 percent. Although EBITDA is not a measure of
financial condition or performance determined in accordance with
Generally Accepted Accounting Principles, the company believes
that the use of EBITDA as a supplemental financial measure is
indicative of the company's capacity to service debt and thereby
provides additional useful information to investors regarding the
company's financial condition and results of operations.
At September 30, 2003, FTI had cash and cash equivalents of
approximately $133.4 million. Total long-term debt at
September 30, 2003 was $20.9 million, and no amounts were
outstanding under the company's $100 million revolving line of
credit.
Utilization of billable personnel was approximately 78 percent for
the quarter. Average rate per hour for the quarter was $362. Total
and billable headcounts at September 30, 2003 were 750 and 568,
respectively.
Nine Month Results from Continuing Operations
For the nine months, revenues from continuing operations increased
109.2 percent to $279.5 million compared with $133.6 million in
the prior year. Revenues from continuing operations increased 15.3
percent compared with pro forma revenues from continuing
operations of $242.5 million for the nine months ended September
30, 2002, assuming the August 31, 2002 acquisition of BRS had
occurred at the beginning of 2002. Income from continuing
operations was $52.1 million, an increase of 170.0 percent over
$19.3 million in the prior year. Earnings from continuing
operations per diluted share were $1.25 compared with earnings
from continuing operations per diluted share of $0.59 for the 2002
period, or a 111.9 percent increase, and increased 54.3 percent
compared with $0.81 earnings from continuing operations per
diluted share on a pro forma basis for the nine months ended
September 30, 2002.
EBITDA increased by 154.2 percent to $97.6 million for the first
nine months of 2003, compared with $38.4 million in the first nine
months of 2002. Cash flow provided by operations for the nine
months was $83.1 million compared with $28.4 million in the prior
year.
Discontinued Operations
Discontinued operations include the results of the company's
discontinued SEA practice group, which was sold on August 31,
2003. Loss from operations of discontinued operations, net of
income taxes, amounted to $267,000, or $0.01 per share, for the
third quarter of 2003 compared with income from operations, net of
income taxes, of $656,000, or $0.02 per share, for the third
quarter of 2002. Income from operations of discontinued operations
was $1.6 million, or $0.04 per share, for the first nine months of
2003 compared with $2.9 million, or $0.09 per share, for the first
nine months of 2002. Net gain from sale of discontinued operations
in the third quarter of 2003 of $304,000, or $0.01 per share,
primarily represents a refinement of the estimated taxes to be
incurred in connection with the sale of SEA as compared to the
amount estimated and recorded at June 30, 2003.
Acquisition of Dispute Advisory Services
(DAS) Business of KPMG
The DAS business assists clients in the analysis and resolution of
all phases of complex claims and disputes in a variety of forums,
including litigation, arbitration, mediation, and other forms of
dispute resolution. Located in 14 cities across the United States,
10 of which are in the same cities as FTI, approximately 26 KPMG
partners, 125 other billable professionals, plus support staff are
expected to join FTI. The DAS business has not been historically
operated by KPMG as a separate reporting unit of its forensic
accounting and litigation support practice unit and has not been
separately accounted for financial reporting purposes. KPMG has
advised FTI that for the trailing 12 months ended September 30,
2003, the unaudited revenues associated with the 26 DAS partners
were approximately $74.0 million. Annual direct compensation and
other costs associated with the transferred DAS partners and
billable staff are expected to total approximately $43.5 million
subsequent to the acquisition by FTI. Selling, general and
administrative expenses are estimated at approximately $12.5
million, resulting in pro forma income from operations of
approximately $18.0 million prior to one-time integration costs.
The purchase will be financed by FTI with a combination of cash on
hand, existing credit lines and/or new credit facilities, and does
not include any working capital. Because FTI is not acquiring the
net working capital of DAS, the initial working capital, estimated
at approximately $14.0 million, is expected to be provided by FTI
and reflected as a use of cash in operating activities for FTI's
financial reporting purposes during the first three to four months
after the acquisition is completed. Consummation of the
acquisition is subject to certain closing conditions, including
the expiration of early termination of applicable Hart-Scott-
Rodino waiting periods, the receipt of certain third-party
consents and other customary conditions to closing. Although there
can be no assurance that the transaction will be consummated, FTI
and KPMG expect to close before the end of October 2003. FTI and
KPMG will also enter into a transition services agreement to
provide for the orderly transfer of DAS personnel from KPMG to FTI
offices. The 26 DAS partners and two other members of the DAS
leadership group will enter into five-year employment agreements
and become senior managing directors of FTI Consulting.
Pending Acquisition of Lexecon
The pending acquisition of the assets of Lexecon Inc. has been
granted early termination of Hart-Scott-Rodino waiting periods,
and a vote by the shareholders of its parent, Nextera Enterprises,
has been scheduled for November 14, 2003. In connection with the
asset purchase agreement, Knowledge Universe, Inc. and Nextera
Enterprises Holdings, Inc. entered into a voting agreement in
which they agreed to vote shares representing approximately 71
percent of the voting power of Nextera in favor of the
transactions contemplated by the purchase agreement. Subject to a
favorable vote by such shareholders, the acquisition of Lexecon is
expected to occur on November 30, 2003. The Lexecon acquisition,
as previously reported, is expected to add approximately 200
employees. For the trailing 12 months ended June 30, 2003, Lexecon
had preliminary unaudited annual revenues exceeding $72.0 million
and pro forma EBITDA on a separate company basis of approximately
$15.0 million.
Outlook for the Fourth Quarter of 2003
Absent any significant impact from the two potential acquisitions
(Lexecon and DAS), FTI believes that revenues for the fourth
quarter of 2003 are anticipated to range from $82.0 million to
$84.0 million. Earnings per diluted share are anticipated to range
from $0.30 to $0.33. Utilization of billable personnel is
anticipated to be approximately 80 percent, average rate per hour
is expected to approximate the third quarter level of $362 per
hour, and billable headcount is anticipated to range from 560 to
570.
In addition, the combined contribution to earnings per share in
the fourth quarter of 2003 of the two potential acquisitions is
expected to range from an additional $0.02 to $0.03 if such
acquisitions are completed before the end of November 2003.
Outlook for 2004
Absent any significant impact from the two potential acquisitions
or a resumption of higher levels of restructuring activity before
early 2005, FTI believes that revenues for 2004 are anticipated to
continue at the run rate for the third and fourth quarters of 2003
and to range from $320.0 million to $340.0 million. Earnings per
diluted share are anticipated to range from $1.30 to $1.35.
Utilization of billable personnel is anticipated to be
approximately 80 percent, average rate per hour is expected to be
approximately the same as 2003, and billable headcount is
anticipated to average at about current levels before
acquisitions.
In addition, the combined contribution to earnings per share in
2004 of the two potential acquisitions is expected to range from
an additional $0.29 to $0.37 if such acquisitions are completed by
year-end 2003.
FTI has not yet completed its quarter-by-quarter outlook for 2004,
but presently anticipates that results would reflect the company's
historical seasonal pattern, with third quarter results the lowest
of the year.
Management Comments
President and chief operating officer, Stewart Kahn, said, "The
results for the quarter were not up to expectations, but they did
represent a considerable achievement for FTI personnel compared to
the third quarter of the prior year. We are continuing to address
the slowdown in the restructuring market by repositioning our
resources for other assignments and our active acquisition
program. Although the restructuring market in 2004 is expected to
continue to reflect the slowdown that we are currently
experiencing, the other aspects of FTI's business, including
forensic accounting, investigative services, electronic evidence
and economic consulting are expected to offset a substantial part
of the decline in restructuring volume. Given the recent increase
in the volume of debt originations, we expect a resumption of
higher levels of restructuring activity beginning either late in
2004 or early 2005.
"Although there can be no assurance of the timing or certainty of
acquisitions, the acquisition of Ten Eyck Associates, which we
have just completed, and the DAS and Lexecon acquisitions that are
pending, would significantly change the balance of our services
portfolio from approximately 70 percent restructuring to less than
40 percent, and are expected to absorb resources on complementary
assignments. The DAS group, led by Roger Carlile, will become part
of our overall forensic accounting and fraud investigation
practice and will dramatically increase the scope and depth of our
expertise, as well as our geographic presence. The DAS group also
substantially adds to our experience in intellectual property
matters, and in a number of industries including healthcare,
construction and aerospace and defense," Kahn added.
Jack Dunn, chairman and chief executive officer said, "Over the
last 90 days, we have worked hard not only to diversify our
company, but to establish an array of services that can be offered
with distinction to our many clients. This work represents a large
step in our strategy to establish a franchise as a leader in
providing financial consulting services as a preferred alternative
in the post Sarbanes-Oxley world. We believe the additions of Ten
Eyck, Lexecon and the DAS practice to our existing group of great
professionals will set the stage for our performance for many
years to come."
Share Repurchase Program
FTI's Board of Directors has approved a share repurchase program
under which the company may purchase, from time to time, up to $50
million of the company's common shares over the next 12 months.
The shares may be purchased through open market or privately
negotiated transactions and will be funded with a combination of
cash on hand, existing credit lines and/or new credit facilities.
FTI Consulting is a multi-disciplined consulting firm with leading
practices in the areas of turnaround, bankruptcy and litigation-
related consulting services. Modern corporations, as well as those
who advise and invest in them, face growing challenges on every
front. From a proliferation of "bet-the-company" litigation to
increasingly complicated relationships with lenders and investors
in an ever-changing global economy, U.S. companies are turning
more and more to outside experts and consultants to meet these
complex issues. FTI is dedicated to helping corporations, their
advisors, lawyers, lenders and investors meet these challenges by
providing a broad array of the highest quality professional
practices from a single source.
* SulmeyerKupetz Expands Operations to Silicon Valley
-----------------------------------------------------
SulmeyerKupetz -- http://www.sulmeyerlaw.com-- a Los Angeles-
based law firm specializing in bankruptcy, business
reorganizations, litigation and commercial collections, has opened
an office in Northern California in response to the increased
demand for its services in technology and other distressed
business sectors. In addition, the firm has hired area bankruptcy
veteran, Christopher Alliotts, as counsel to support the efforts
in this new office.
"SulmeyerKupetz has counseled hundreds of technology companies on
restructuring and exit strategies over its 50-year history, and we
feel strongly that the time is right to establish a more visible
presence in Silicon Valley, the technology hub," said Alan Tippie,
president and managing partner of SulmeyerKupetz. "Coming on the
heels of the firm's recent move to larger Los Angeles offices,
this latest expansion continues what is an exciting period of
growth for our firm. Christopher Alliotts' experience in the
region and working on insolvency and related matters will serve
the firm well as we continue to develop our practice in this
competitive marketplace."
SulmeyerKupetz's Northern California office will be located in
Redwood Shores, a central location for the firm to handle business
throughout the Bay Area, from San Francisco to San Jose to Oakland
and beyond. Backed by the resources of the Los Angeles
headquarters, the Silicon Valley office will work closely with
senior partner, David Kupetz, who will be actively involved in
growing the newly established outpost.
"Despite some reports that the worst days of the current economic
cycle are behind us, many Silicon Valley businesses are still in
need of restructuring and insolvency representation," said
Alliotts, who has more than a decade of experience in the
bankruptcy and insolvency arena, most recently with Cupertino-
based bankruptcy boutique Murray & Murray. "The commitment and
wide range of expertise of the SulmeyerKupetz team will enable us
to make an immediate impact in providing quality representation to
such clients."
SulmeyerKupetz is a Los Angeles-based law firm that specializes in
bankruptcy, business reorganizations, litigation and commercial
collections. Established in 1952, SulmeyerKupetz has vast
experience representing a variety of clients in all aspects of
insolvency proceedings, including out-of-court debt
restructurings, negotiation and implementation of complex Chapter
11 plans, debtor-in-possession financing, acquisitions and asset
sales for distressed businesses, and bankruptcy litigation. The
firm represents both secured and unsecured creditors, lessors,
creditors' committees, debtors, governmental entities, trustees
and receivers. The firm also serves as local counsel on cases
being managed outside of California. For more information, please
access the company's Web site -- http://www.sulmeyerlaw.com
SulmeyerKupetz is located at 555 Twin Dolphin Drive, Suite 560,
Redwood Shores, California 94065. Its main office number is 650-
620-4576.
* BOOK REVIEW: Landmarks in Medicine - Laity Lectures
of the New York Academy of Medicine
-----------------------------------------------------
Introduction by James Alexander Miller, M.D.
Publisher: Beard Books
Softcover: 355 pages
List Price: $34.95
Review by Henry Berry
Order your own personal copy today at
http://www.amazon.com/exec/obidos/ASIN/1587980770/internetbankrupt
As the subtitle points out, the seven lectures reproduced in this
collection are meant especially for general readers with an
interest in medicine, including its history and the cultural
context it works within. James Miller, president of the New York
Academy of Medicine which sponsored the lectures, states in his
brief "Introduction" that this leading medical organization "has
long recognized as an obligation the interpretation of the
progress of medical knowledge to the public." The lectures
collected here succeed admirably in fulfilling this obligation.
The authors are all doctors, most specialists in different areas
of medicine. Lewis Gregory Cole, whose lecture is "X-ray Within
the Memory of Man," is a consulting roentgenologist at New York's
Fifth Avenue Hospital. Harrison Stanford Martland is a professor
of forensic medicine at New York University College of Medicine.
Many readers will undoubtedly find his lecture titled "Dr. Watson
and Mr. Sherlock Holmes" the most engrossing one. Other doctor-
authors are more involved in academic areas of medicine and
teaching. Reginald Burbank is the chairman of the Section of
Historical and Cultural Medicine at the New York Academy of
Medicine. He lectured on "Medicine and the Progress of
Civilization." Raymond Pearl, whose selection is "The Search for
Longevity," is a professor of biology at Johns Hopkins University.
The authors' high professional standing and involvement in
specialized areas do not get in the way of their aim to speak to a
general audience. They are all skilled writers and effective
communicators. As the titles of some of the lectures noted in the
previous paragraph indicate, the seven selections of "Landmarks in
Medicine" focus on the human-interest side of medicine rather than
the scientific or technological. Even the two with titles which
seem to suggest concern with technical aspects of medicine show
when read to take up the human-interest nature of these topics.
"The Meaning of Medical Research", by Dr. Alfred E. Cohn of the
Rockefeller Institute for Medical Research, is not so much about
methods, techniques, and equipment of medical research, but is
mostly about the interinvolvement of medical research, the
perennial concern of individuals with keeping and recovering good
health, and social concerns and pressures of the day. "The meaning
of medical research must regard these various social and personal
aspects," Cohn writes. In this essay, the doctor does answer the
questions of what is studied in medical research and how it is
studied. And he answers the related question of who does the
research. But his discussion of these questions leads to the final
and most significant question "for what reason does the study take
place?" His answer is "to understand the mechanisms at play and to
be concerned with their alleviation and cure." By "mechanisms,"
Cohn means the natural--i. e., biological--causes of disease and
illness. The lay person may take it for granted that medical
research is always principally concerned with finding cures for
medical problems. But as Cohn goes into in part of his lecture,
competition for government grants or professional or public
notoriety, the lure of novel experimentation, or research mainly
to justify a university or government agency can, and often do,
distract medical researchers and their associates from what Cohn
specifies should be the constant purpose of medical research. Such
purpose gives medicine meaning to humankind.
The second lecture with a title sounding as if it might be about a
technical feature of medicine, "X-ray Within the Memory of Man,"
is a historical perspective on the beginnings of the use of x-ray
in medicine. Its author Lewis Cole was a pioneer in the
development of x-rays in the late 1800s and early1900s. He mostly
talks about the development of x-ray within his memory. In doing
so, he also covers the work of other pioneers, notably William
Konrad Roentgen and Thomas Edison. Roentgen was a "pure scientist"
who discovered x-rays almost by accident and at first resented the
application of his discovery to practical uses such as medical
diagnosis. Edison, the prodigious inventor who was interested only
in the practical application of scientific discoveries, and his
co-worker Clarence Dally enthusiastically investigated the
practical possibilities of the discoveries in the new field of
radiation. Dally became so committed to his work in this field
that he shortly developed an illness and died. At the time, no on
knew about the dangers of prolonged exposure to x-rays. But
sensing some connection between his co-worker's untimely death and
his work with x-rays, Edison stopped his own investigations.
Cole himself became involved in work with x-rays during his
internship at Roosevelt Hospital in New York City in 1898 and
1899. His contribution to this important field was in the area of
interpretation of what were at the time primitive x-rays and
diagnosis of ailments such as tuberculosis and kidney stones. Cole
writes in such a way that the reader feels she or he is right with
him in the steps he makes in improving the use of x-rays. He adds
drama and human interest to the origins of this important medical
technology. The lecture "Dr. Watson and Mr. Sherlock Holmes" uses
the popular mystery stories of Arthur Conan Doyle to explore the
role of medicine in solving crimes, particularly murder. In some
cases, medical tests are required to figure out if a crime was
even committed. This lecture in particular demonstrates the
fundamental role played by medicine in nearly all major areas of
society throughout history. The seven collected lectures have
broad appeal. All of them are informative and educational in an
engaging way. Each is on an always interesting topic taken up by a
professional in the field of medicine obviously skilled in
communicating to the general reader. The authors seem almost mind
readers in picking out the most fascinating aspects of their
subjects which will appeal to the lay readers who are their
intended audience. While meant mainly for lay persons, the
lectures will appeal as well to doctors, nurses, and other
professionals in the field of medicine for putting their work in a
broader social context and bringing more clearly to mind the
interests, as well as the stake, of the public in medicine.
*********
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., Fairless Hills, Pennsylvania,
USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L.
Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P.
Villavelez and Peter A. Chapman, Editors.
Copyright 2003. All rights reserved. ISSN: 1520-9474.
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