/raid1/www/Hosts/bankrupt/TCR_Public/040129.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, January 29, 2004, Vol. 8, No. 20
Headlines
ADELPHIA BUSINESS: Court Expunges 23 Claims Totaling $32 Million
ADELPHIA COMMS: Rigases Wants More Time to File Proofs of Claim
AEP INDUSTRIES: Elects Richard Davis to Co.'s Board of Directors
AFFINITY GROUP: S&P Rates Credit & Sr. Sub. Note Ratings at B-/B+
AMAZON.COM INC: Makes Partial Redemption of 4.75% Conv. Sub. Notes
AMERCO: Bank of Montreal Takes Steps to Block Plan Confirmation
AMERICAN AIRLINES: Fitch Affirms Junk Sr. Unsecured Debt Rating
ARCHIBALD CANDY: Files for Chapter 11 Protection in Illinois
ARCHIBALD CANDY: Case Summary & 20 Largest Unsecured Creditors
ARMOR HOLDINGS: Comfortable with High End of Prior Q4 Guidance
ART FOUR HICKORY: Wants Nod to Hire M. Bruce Peele as Attorneys
AVAYA INC: Q1 2004 Operations Results Enter Positive Territory
BAY VIEW CAPITAL: Re-Adopts Going Concern Accounting Basis
BEAUTYCO INC: UST Schedules Section 341(a) Meeting for Feb. 4
BRIDGESPAN INC: Files for Chapter 11 Protection in California
BRIDGESPAN INC: Case Summary & 40 Largest Unsecured Creditors
BUFFETS INC: S&P Puts Low-B Corp. Credit Rating on Watch Negative
CABLE & WIRELESS: All Claims Due on February 11, 2004
CAFE NACIONAL LLC: Involuntary Chapter 11 Case Summary
CANWEST GLOBAL: Proposes Two New Interim Nominees to Board
CAPITAL CITY: First Creditors' Meeting Scheduled for February 18
COLE NATIONAL: S&P Revises Implications to Positive on Merger News
COLLINS & AIKMAN: Launches Syndication of $100MM Credit Facility
COPPERWELD CORP: Names Dale B. Mikus as Chief Financial Officer
DEX MEDIA: Launches Discount Debt Offering to Raise $250 Million
DEX MEDIA INC: S&P Rates $250 Million Add-On Discount Notes at B
DII IND.: Gets Final OK to Continue Using Cash Management System
DLJ COMM'L: Fitch Cuts Junk Rating on Class B-8 Notes to D Level
ENCOMPASS SERVICES: Court Disallows Summers Group's $8.8MM Claim
ENRON CORP: Earns Approval of Cash VI Structure Settlement Pact
EXIDE TECHNOLOGIES: Hires E. Joachimsthaler as Expert Witness
EXTREME NETWORKS: Will Present at Thomas Weisel Conference on Wed.
FEDERAL-MOGUL: Wants Nod to Modify & Allow 127 Reconciled Claims
FLEMING: Local 881 Wants Payment of $9MM in Wages and Benefits
FLEMING COS.: Files First Amended Plan and Disclosure Statement
FLEXTRONICS INT'L: Third-Quarter Results Reflect Solid Growth
FOREST OIL: S&P Keeps Watch Negative After 2003 Reserve Write-Down
FRISBY TECHNOLOGIES: Wins 'Judgment Order' in Outlast Litigation
GAP INC: Board Declares Quarterly Dividend Payable on March 15
GAP INC: Provides Financial Reporting Schedule for Year 2004
GENERAL MEDIA: Commences Soliciting Acceptances of Proposed Plan
GREAT WESTERN: US Trustee Appoints Official Creditors' Committee
GUESS? INC: SEC Declares Registration Statement Effective
GREAT LAKES AVIATION: Reports 22.7% Increase in December Traffic
HANGER ORTHOPEDIC: Acquires Rehab Designs of America Corporation
HL&P CAPITAL: Fitch Withdraws Preferred Rating After Redemption
I2 TECHNOLOGIES: Dec. 31 Net Capital Deficit Narrows to $255 Mil.
IMC GLOBAL: Moves Q4 Conference Call Date to February 5, 2004
IMC GLOBAL: S&P Puts Ratings on Watch Positive After Merger News
IMPATH: Sues James Weisberger for Misappropriating Trade Secrets
INTEGRATED HEALTH: Wants Court to Delay Entry of Final Decree
INVESTMENT CO.: Compass Bank Wins Order to Release Liens on Land
IRON MOUNTAIN: Calling $20MM of 8-1/8% Senior Notes for Redemption
IT GROUP: Provides Liquidation Analysis Under Chapter 11 Plan
J. CREW GROUP: Names Tracy Gardner EVP of Merchandising & Planning
LAIDLAW: Expects New Shares to Trade on NYSE Starting Feb. 10
LEGACY HOTELS: December Working Capital Deficit Tops C$72 Million
MAGELLAN HEALTH: Enters Pact Capping St. Paul's Claim at $5 Mil.
MANITOWOC CO.: Will Publish Q4 and Full-Year Results on Wednesday
MIRANT CORP: Court Fixes March 12, 2003 as MAEC Claims Bar Date
NATIONAL BENEVOLENT: Fitch Further Drops Debt Rating to 'DD'
NDCHEALTH CORP: Appoints James W. FitzGibbons as VP for Finance
NORTHWEST AIRLINES: S&P Rates $300M Senior Unsecured Notes at B-
NRG ENERGY: Hires PennEnergy Inc. and Prosperus Inc. as Brokers
OWENS CORNING: Asks Court to Disallow Hechinger's $5.5MM Claim
OWENS-ILLINOIS: Fourth-Quarter 2003 Net Loss Hits $1 Billion Mark
PACIFIC ENERGY: Reports Improved Fourth-Quarter 2003 Performance
PARMALAT: Cayman Court Appoints Ernst & Young as Liquidator
PEABODY ENERGY: Declares Quarterly Dividend Payable on March 3
PERKINELMER INC: James C. Mullen Elected to Board of Directors
PERRYVILLE ENERGY: Files Chapter 11 Petition to Effect Asset Sale
PERRYVILLE ENERGY: Case Summary & 20 Largest Unsecured Creditors
PETRO STOPPING: Extends Pending Offer and Consent Solicitation
PHILIP SERVICES: Rejection & Admin. Claims Bar Date is Friday
PICCADILLY CAFETERIAS: Court Fixes March 10 as Claims Bar Date
PLASTECH ENGINEERED: S&P Assigns BB- Credit & Bank Loan Ratings
PRECISION SAMPLING: Case Summary & 20 Largest Unsecured Creditors
QWEST: Inks Multi-Year Contract with Principal Financial Group
RELIANCE: RIC Wins Nod for Release Pact with Kaiser Aluminum
REUNION INDUSTRIES: Atlas Partners Arranges $4.2 Million Mortgage
SANGUINE CORP: Hires HJ & Associates to Replace Tanner + Company
SOLUTIA INC: Gets Go-Signal to Pull Plug on Crescent Agreements
SR TELECOM: Obtains $4.4 Million First Orders for New Product
TARRA INVESTMENTS: Case Summary & 20 Largest Unsecured Creditors
TAYLOR CAPITAL: Fiscal Year 2003 Results Enter Positive Territory
TERAYON COMMUNICATION: Fourth-Quarter Net Loss Narrows to $6 Mil.
THREE FLAGS-OAKS: Case Summary and Largest Unsecured Creditor
TRITON CDO IV: S&P Places Class B Notes' Rating on Watch Negative
TV AZTECA: Denies Any Wrongdoing as Charged in Various Lawsuits
UAL CORP: Reports $476 Million in Net Loss for Fourth Quarter
UNITED AIRLINES: Retired Flight Attendants Blast Benefit Cuts
UNIVERSAL GUARDIAN: Forms New Non-Lethal Security Products Unit
US AIRWAYS: Will Publish Q4 and FY 2003 Results Next Friday
U.S. STEEL: Will Distribute Common Stock Dividend by March 10
VOLUME SERVICES: Initiates Redemption of Remaining 11-1/4% Notes
W.R. GRACE: December 31 Net Capital Deficit Shrinks to $170 Mill.
WALKING COMPANY: Big Dog Agrees to Acquire Company for $15-Mil.+
WICKES INC: Wants Schedule-Filing Deadline Moved Until April 5
ZI CORPORATION: Secures US$1 Million Short-Term Credit Facility
* Kirkpatrick & Lockhart in L.A. Hires Jeryl A. Bowers as Partner
* Weil Gotshal Launches Book on Strategies for Creditors & Lessors
*********
ADELPHIA BUSINESS: Court Expunges 23 Claims Totaling $32 Million
----------------------------------------------------------------
The Adelphia Business Solutions Debtors object to 23 proofs of
claim aggregating $31,918,040 because they wholly, or in some
cases partially, constitute claims against ACOM, and not the ABIZ
Debtors:
Claim Claim Scheduled ABIZ
Claimant No. Amounts Amounts Payable
-------- ----- ------- --------- -------
180 Connect, Inc. 37100 $2,046,858 $0 $0
Abovenet Communications 94200 447,566 0 0
Analytical Management 35100 861,907 0 0
Analytical Management 35200 861,907 0 0
Baltimore Gas 125300 320,254 0 12,162
Cable Constructors 36600 11,523,206 15,467 0
CK Engineering, LLC 24900 295,734 0 0
CSGT Systems, Inc. 129600 8,039,116 4,348 0
Foundry Parcel Six 126100 1,341,929 0 0
Foundry Parcel Six 126200 201,289 0 0
Hart, Larry, et al. 73500 1,381,121 0 0
Mellon Bank NA 129900 73,430 0 0
Merritt River 84000 302,704 0 0
Merritt River 84100 302,704 0 0
Metropolitan Life 44100 777,719 0 0
Multilink In 85000 183,645 0 0
NCI 148000 228,743 0 0
Playhouse Square 93100 990,554 0 0
Sunset Enter 45700 129,446 0 0
Trillium Property LLC 119500 801,432 0 0
Universal Map 40500 105,417 0 0
Utility Consultants 51200 159,703 11,563 0
Utility Network 16600 541,656 0 0
Judy G.Z. Liu, Esq., at Weil, Gotshal & Manges LLP, in New York,
relates that ACOM is the ABIZ Debtors' former corporate parent.
Subsequent to the ABIZ Debtors' Petition Dates, ACOM and certain
of its subsidiaries filed their own Chapter 11 cases.
In December 2000, ABIZ sold to ACOM certain network and
telecommunications assets, including property, contracts, and
leases of real and personal property in six markets spanning four
states. In October 2001, ABIZ sold to ACOM certain network and
telecommunications assets, including property, contracts, and
leases of real and personal property in eight markets spanning
Virginia and several Northeastern states.
According to Ms. Liu, the 23 proofs of claim relate to Sale
Assets sold to ACOM in the Sales or relate to ACOM markets, and
not ABIZ markets, and thus the claims are improperly filed
against ABIZ. ABIZ neither owns nor uses the Sale Assets sold to
ACOM in the Sales.
Thus, ABIZ asks the Court to disallow and expunge the proofs of
claim to the extent that they are claims against ACOM. (Adelphia
Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
ADELPHIA COMMS: Rigases Wants More Time to File Proofs of Claim
---------------------------------------------------------------
The Rigas Family Entities -- John J. Rigas, Michael J. Rigas,
Timothy J. Rigas, James P. Rigas, Ellen K. Rigas Venetis, Peter
L. Venetis, Michael C. Mulcahey, Cablevision Business Services,
Inc., Dobaire Designs, Wending Creek Farms, Inc. and Eleni
Interiors, Inc. -- ask the Court to extend the time for them to
file proofs of claim against the Adelphia Communications Debtors
until a date that is not earlier than 30 days after entry of a
verdict in the criminal action pending before the United States
District Court for the Southern District of New York. Trial in
the Criminal Case is scheduled to begin on February 23, 2004, and
is expected to last 10 weeks.
Lawrence G. McMichael, Esq., at Dilworth Paxson LLP, in
Philadelphia, Pennsylvania, asserts that the Bar Date should be
extended because the subject matter of the claims against the
Debtors the Rigas Family Entities hold may overlap with the
issues raised in the Criminal Case. Therefore, if the Rigas
Family Entities file their proofs of claim before the trial of
the Criminal Case, they risk creating an opportunity for the
prosecution to argue that the defendants in that case waived
their Fifth Amendment rights against self-incrimination.
Clearly, no criminal defendant should be forced to choose between
his Fifth Amendment rights and his right to preserve his claims
against a debtor in bankruptcy. The inequity of forcing that
choice is particularly acute, where the extension sought is not
lengthy and the Debtors will not be prejudiced by the delay in
filing these claims.
In In re Pioneer Investment Svcs. Co., 507 U.S. 380(1983), the
Supreme Court approved a number of factors to be considered in
determining whether a request for an extension of time to file a
tardy proof of claim should be granted. Among other things, the
Court found that a finding of "excusable neglect" is an equitable
determination, "taking account of all relevant circumstances
surrounding the party's omission [to act]." Factors to be
included in this equitable determination are "the danger of
prejudice to the debtor, the length of the delay and its
potential impact on judicial proceedings, the reason for the
delay, including whether it was in the reasonable control of the
movant, and whether the movant acted in good faith."
There can be no doubt that the Rigas Family Entities can easily
meet the first and second Pioneer factors -- the danger of
prejudice to the Debtors and the potential impact of the delay on
judicial proceedings, Mr. McMichael says. As they have admitted
in pleadings filed with the Court, the ACOM Debtors are months
away from even drafting their plan of reorganization and do not
anticipate filing their schedules of assets until at least
March 1, 2004. Granting a brief extension of time to allow the
Rigas Family Entities to file their proofs of claim after the
Criminal Case is concluded could, therefore, pose no conceivable
disadvantage to the ACOM Debtors or otherwise impair the
efficient administration of their estates.
Moreover, it is clear that the remaining two Pioneer factors are
also easily met. The need for the extension arises as a result
of the pendency of the Criminal Case -- a factor completely out
of the Rigas Family Entities' control. Further, the Rigas Family
Entities are seeking the extension in good faith, and not simply
for the sake of delay; rather, they seek the extension to protect
against any possible prejudice to their constitutional rights in
the Criminal Case. (Adelphia Bankruptcy News, Issue No. 49;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
AEP INDUSTRIES: Elects Richard Davis to Co.'s Board of Directors
----------------------------------------------------------------
AEP Industries Inc. (Nasdaq: AEPI) announced that Richard E. Davis
has joined its board of directors.
Since 1988, Mr. Davis has served as Chief Financial Officer of
Glatt Air Techniques, Inc., a leading supplier of solids
processing technology to pharmaceutical research and development
and manufacturing organizations. Glatt Air Techniques is a member
of the international Glatt Group of Companies.
Mr. Davis has been appointed to fill a vacancy created by the
resignation of Lawrence R. Noll from the Company's board of
directors. Mr. Noll will remain with the Company and continue to
serve in his current capacity as Vice President and Controller.
While the board remains at its current size of ten members, the
appointment of Davis increases the total number of independent
directors to eight. The only members of management who currently
serve on the board of directors are J. Brendan Barba, Chairman,
President and Chief Executive Officer and Paul M. Feeney,
Executive Vice President, Finance and Chief Financial Officer.
"AEP is committed to employing best practices and continuing to
advance its corporate governance standards. By decreasing the
representation of the senior management team and increasing the
percentage of independent directors on our board, we further
enhance our corporate governance practices," commented Brendan
Barba, Chairman and Chief Executive Officer of AEP Industries.
"We are pleased to welcome Dick as a new board member. Dick is a
seasoned executive and financial expert who will provide valuable
guidance in AEP's continued strategic development and financial
oversight."
Mr. Davis will serve the remainder of Mr. Noll's board term, which
is set to expire at the Company's next annual shareholder meeting
scheduled for April 13, 2004. Mr. Davis will be a nominee for
reelection at that meeting. Mr. Davis has also been appointed a
member of the audit committee of the board.
Mr. Davis is a CPA and holds an MBA from the Professional School
of Accounting, Rutgers Graduate School of Business. Prior to
assuming his present position with Glatt Air Techniques, Mr. Davis
was CFO and held senior financial management positions at various
public companies.
AEP Industries Inc. (S&P, BB- Corporate Credit Rating, Negative
Outlook) manufactures, markets, and distributes an extensive range
of plastic packaging products for the food/beverage, industrial
and agricultural markets. The Company has operations in ten
countries throughout North America, Europe and Australasia.
AFFINITY GROUP: S&P Rates Credit & Sr. Sub. Note Ratings at B-/B+
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' rating to
Affinity Group Inc.'s proposed $190 million senior subordinated
notes due 2012. Proceeds from the offering will be used to tender
Affinity Group Holding Inc.'s $100 million notes, to pay other
existing debt, and to issue a $75 million special dividend to
shareholders. Of the $75 million special dividend, $15 million
will be deposited into a controlled dividend account,
distributable upon satisfaction of a leverage test, which will be
conducted three times a year.
At the same time, Standard & Poor's lowered its corporate credit
rating on Affinity Group to 'B+' from 'BB-' due to flat operating
performance and increased financial risk from the pending debt-
financed special dividend. The outlook is stable. Pro forma for
the debt offering, Englewood, Colorado-based RV club operator and
RV accessory retailer had total debt of about $315 million
outstanding on Sept. 30, 2003.
"Acquisitions undertaken several years ago gave the company a
sizeable presence in the RV accessory retail market. Although
complementary, the transactions increased financial risk because
of the significant increase in debt levels without material gains
in cash flow," said Standard & Poor's credit analyst Andy Liu. For
the nine months ended Sept. 30, 2003, revenues decreased by 3.8%
due to lower sales at Affinity's Camping World stores. Despite the
revenue softness, profitability remained stable during 2003
largely due to the somewhat steady performance of Affinity Group's
membership services business segment. "The company has been a
consistent generator of positive discretionary cash flow; however,
increasing capital expenditure and working capital needs resulting
from the company's growing retail operations could diminish the
magnitude of future discretionary cash flow," added Mr. Liu.
AMAZON.COM INC: Makes Partial Redemption of 4.75% Conv. Sub. Notes
------------------------------------------------------------------
Amazon.com, Inc. (Nasdaq:AMZN) announced that on February 26,
2004, it will redeem $150 million in principal amount of its
outstanding 4.75% Convertible Subordinated Notes due 2009. The
CUSIP numbers for the Notes are 023135AD8 and 023135AF3.
The Notes will be redeemed at a redemption price of 102.375% of
the principal amount at maturity, plus accrued and unpaid interest
from February 1 through February 25, 2004. The Notes to be
redeemed will be selected by lot in accordance with the procedures
of The Depository Trust Company, the registered holder of the
Notes. After completion of the redemption of $150 million in
principal amount of the Notes, there will be approximately $900
million aggregate principal amount of Notes outstanding.
The right to convert the Notes to be redeemed into common stock of
Amazon.com will expire on February 25, 2004. The current
conversion price for the Notes is $78.0275.
Copies of the notice of redemption may be obtained from The Bank
of New York, the trustee and paying agent for the Notes, by
calling Bondholder Relations at 1-800-254-2826.
Amazon.com, a Fortune 500 company based in Seattle, opened its
virtual doors on the World Wide Web in July 1995 and today offers
Earth's Biggest Selection. Amazon.com seeks to be Earth's most
customer-centric company, where customers can find and discover
anything they might want to buy online, and endeavors to offer its
customers the lowest possible prices. Amazon.com and sellers list
millions of unique new and used items in categories such as health
and personal care, jewelry and watches, gourmet food, sporting
goods, apparel and accessories, books, music, DVDs, electronics
and office, kids and baby and home and garden.
At September 30, 2003, Amazon.com's balance sheet shows a total
shareholders' equity deficit of about $1.1 billion.
AMERCO: Bank of Montreal Takes Steps to Block Plan Confirmation
---------------------------------------------------------------
Jennifer A. Smith, Esq., at Lionel Sawyer & Collins, in Reno,
Nevada, relates that Bank of Montreal, as administrative agent
for certain lenders, acts as agent for various participants under
a synthetic lease facility with AREC and with U-Haul
International, Inc., under which AREC is jointly and severally
liable to the participants for $149,000,000. The BMO Facility is
secured by mortgages against certain real property and related
collateral, some of which are owned by AREC and some by U-Haul.
Amerco also unconditionally guaranteed AREC's and U-Haul's
obligations under the BMO Facility pursuant to an unsecured,
absolute guaranty of payment.
Consequently, BMO and the BMO Facility participants hold three
distinct, liquidated and fully matured claims in the AMERCO
Debtors' cases:
* a secured claim against AREC, to the extent of value of
the BMO Facility collateral that is actually owned and
pledged to BMO, by AREC;
* an unsecured deficiency claim against AREC to the extent
that, and for the amount by which, AREC's indebtedness
under the BMO Facility exceeds the value of the BMO
Facility collateral owned, and pledged to BMO, by AREC; and
* a fixed, liquidated unsecured claim against Amerco for the
full amount of the BMO Facility indebtedness, because
Amerco's obligations under its guaranty of the BMO Facility
matured upon the occurrence of certain defaults thereunder
prior to Amerco's bankruptcy filing.
Although BMO acknowledges that it is entitled to only one
satisfaction of the BMO Facility debt, each of the BMO Claims
must receive independent treatment under the Plan that comports
with the Bankruptcy Code's confirmation requirements. Under the
Plan, Ms. Smith notes, the AREC Deficiency Claim is unimpaired
and would be paid in cash, in full as a Class 5 Other Unsecured
Claim. As a result, the Plan's treatment of the AREC Deficiency
Claim is proper under the Bankruptcy Code and BMO and the
Participants have no objection. However, because the Debtors'
proposed treatments for the AREC Secured Claim and the Amerco
Guaranty Claim do not satisfy the cram-down provisions of Section
1129 and contravene other Bankruptcy code provisions, Ms. Smith
asserts that the Debtors' Plan in its current form cannot be
confirmed.
The AREC Secured Claim
In the Debtors' best-case scenario, the BMO Facility debt would
be paid and satisfied in full from the proceeds of a contemplated
sale-leaseback transaction between the Debtors and W.P. Carey.
BMO anticipates voting to accept the Plan conditioned on the
approval and consummation of the Carey Sale Transaction and the
Plan provisions requiring the Debtors to satisfy the BMO Claims
in full from the proceeds of the transaction. However, Ms. Smith
points out that the Debtors have not made consummation of the
transaction a condition to confirmation. Instead, the Debtors
propose various alternative treatments of the AREC Secured Claim
from which the Debtors can choose in their sole discretion if the
Carey Sale Transaction does not close, each of which is
unacceptable to BMO.
Under one alternative, AREC would satisfy BMO's AREC Secured
Claim by imposing a restated synthetic lease agreement on BMO.
"Because this treatment purports to unilaterally restructure the
obligations of U-Haul, a non-debtor, it violates Section 524(e)
of the Bankruptcy Code -- that provision bars debtors from using
the bankruptcy process to restructure or alter the liabilities of
a non-filed affiliate -- and therefore, also violates Section
1129(a)(1)," Ms. Smith remarks. Moreover, the proposed treatment
does not meet the fair and equitable requirements of Section
1129. Thus, the Court should not confirm the Plan.
As a second alternative, the Debtors propose to surrender, and to
cause U-Haul to surrender, to BMO all of AREC's and U-Haul's
right, title and interest in and to both the AREC and the U-Haul
properties in full satisfaction of the BMO Claims. According to
Ms. Smith, this alternative also includes a "forced sale"
provision under which BMO would be required to pay cash to AREC
if it is determined that the value of the BMO Collateral exceeds
the BMO Facility debt. This treatment also violates Section
524(e) because U-Haul has no independent right under the BMO
Facility agreements or otherwise to force BMO to accept a
surrender of the collateral it pledged to BMO in satisfaction and
discharge of its obligations under the BMO Facility agreements.
In addition, Ms. Smith argues that the forced sale provision also
violates Section 1129(b) of the Bankruptcy Code because it does
not provide BMO with the "indubitable equivalent" of its secured
claim. AREC has no basis in law or equity to force BMO to pay
additional money to the Debtors, and effectively bring the loan-
to-value ration to 1:1, to obtain its collateral. This second
alternative is not "completely compensatory" and does not
guarantee BMO the return of the principal amount of the AREC
Secured Claim and thus, does not comply with applicable Ninth
Circuit precedent.
As a third alternative, the Debtors indicate that they will
provide BMO with other treatment respecting the AREC Secured
Claim that complies with Section 1129(b). However, the
Bankruptcy Code requires that a plan "specify the treatment of
any class of claims or interests that is impaired under the
plan." Only after the debtor proposes a treatment, and the class
rejects it, would a court then determine whether the treatment
complies with Section 1129(b). In Amerco's case, the Debtors'
failure to identify with particularity the proposed treatment of
the AREC Secured Claim ignores Section 1123(a)(3)'s express
requirements.
The Amerco Guaranty Claim
The Debtors' proposed alternative treatments of the Amerco
Guaranty Claim likewise are unconfirmable. The Amerco Guaranty
Claim is a fully liquidated, matured, unsecured claim, a fact
which the Debtors have steadfastly ignored in structuring their
Plan. Because the Plan contemplates payment to Amerco's equity
interest holders, Amerco must provide to BMO, on account of the
liquidated Amerco Guaranty Claim, "property of a value . . .
equal to the allowed amount of such claim." "The Plan does not
provide this," Ms. Smith says. Instead, if the Debtors opt to
impose an alternative treatment that contemplates AREC's
continued ownership of the BMO Collateral, the Debtors simply
propose to reinstate the Amerco Guaranty. However, the
reinstated guaranty does not constitute an interest in property.
Nor would the value of the guaranty equal the present value of
the Amerco Guaranty Claim -- the reinstated guaranty in fact
would have considerably less value than even the original Amerco
Guaranty, because the reinstated guaranty would be structurally
subordinate to substantial debt at the AREC level that did not
exist prior to these proceedings. For these reasons, Amerco's
proposed reinstatement of the Amerco Guaranty is not fair and
equitable under Section 1129(b).
Under the Plan's other alternative, the Debtors specify no
treatment for the Amerco Guaranty Claim whatsoever. Amerco
apparently believes that AREC's and U-Haul's return of the BMO
Collateral will eliminate BMO's rights with respect to the Amerco
Guaranty Claim. Yet, because the Debtors elected not to seek
substantial consolidation of their estates, Amerco cannot rely on
AREC's plan treatment of the BMO Facility indebtedness. Instead,
since Amerco is independently liable for payment of the debt, it
must provide for separate treatment of the Amerco Guaranty Claim
under the Plan unless and until AREC pays the BMO Facility
obligations in full. Without this, Ms. Smith asserts that the
Plan cannot be confirmed.
Furthermore, the proposed treatments of the Amerco Guaranty Claim
unfairly discriminate against BMO. The Plan provides for about
25% cash payment to Amerco's other unsecured creditors on the
Plan's Effective Date, with the remainder to be paid under the
New Term Loan B Notes, which have a five-year maturity and are
secured by a second lien on substantially all of the Debtors'
assets. Meanwhile, BMO would have to either:
(i) wait seven years for the uncertain payment of the vast
majority of the principal amount of their claims pursuant
to the reinstated lease agreement; or
(ii) depend on the uncertainties of the market in seeking
to liquidate the BMO Collateral upon its return if the
Plan were confirmed.
The Debtors articulated no basis for the discrimination, which
places a disproportionate risk of non-payment on BMO and the
Participants and is unnecessary to Plan confirmation. Under
governing Ninth Circuit precedent, this disparate treatment of
the Amerco Guaranty Claim versus the claims of Amerco's other
unsecured creditors is unfairly discriminatory under Section
1129(b), making the Plan unconfirmable.
Headquartered in Reno, Nevada, AMERCO's principal operation is U-
Haul International, renting its fleet of 96,000 trucks, 87,000
trailers, and 20,000 tow dollies to do-it-yourself movers through
over 1,000 company-owned centers and 15,000 independent dealers
located throughout the United States and Canada. The Company
filed for chapter 11 protection on June 20, 2003 (Bankr. Nev. Case
No. 03-52103). Craig D. Hansen, Esq., Jordan A. Kroop, Esq.,
Thomas J. Salerno, Esq., and Carey L. Herbert, Esq., at Squire,
Sanders & Dempsey LLP, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $1,042,777,000 in total assets and
$884,062,000 in liabilities. (AMERCO Bankruptcy News, Issue No.
18; Bankruptcy Creditors' Service, Inc., 215/945-7000)
AMERICAN AIRLINES: Fitch Affirms Junk Sr. Unsecured Debt Rating
---------------------------------------------------------------
Fitch Ratings has affirmed the senior unsecured debt ratings of
AMR Corp. and its principal operating subsidiary American
Airlines, Inc. at 'CCC+', and has revised the Rating Outlook to
'Stable' from 'Negative'.
The ratings reflect continuing concerns over very high debt levels
relative to cash flow, the heavy fixed cash obligations faced by
the company over the next three years, and a liquidity position
that remains somewhat weak by industry standards. While the
financial turnaround rolled out by American in the spring of 2003
is clearly paying off in terms of improved operating performance,
the carrier remains exposed to a litany of risks that could put
pressure on liquidity and slow the process of balance sheet repair
in 2004. In particular, substantial debt and capital lease
maturities (over $800 million this year and at least $1.5 billion
in 2005) and required funding of defined benefit pension plans
(about $600 million this year) will offset much of the improvement
in cash flow from operations that AMR is positioned to report this
year.
Improved liquidity and access to the capital markets are primary
management objectives as the industry revenue environment
continues to recover modestly. This may ultimately drive the
company to issue new debt, slowing the reduction in leverage that
is the key to a reconstruction of the airline's balance sheet.
Moreover, a total of 80 regional jets now on firm order must be
financed over the next three years. This will impede the company's
ability to de-lever even as it benefits from a much more
competitive cost structure and a potential return to modest
profitability in 2004.
Following three years of large operating losses and the 2001
acquisition of TWA, AMR's total consolidated balance sheet debt
and capital lease obligations grew from $6.3 billion at the end of
2000 to $14.0 billion at the end of the third quarter of 2003.
Most of the company's available unencumbered assets (including
owned, Section 1110-eligible aircraft) have already been pledged
as collateral in secured debt transactions. With the exception of
American Eagle, AMR's regional airline unit, most non-core assets
have already been monetized. AMR's improved year-end 2003 cash
balance ($2.6 billion in unrestricted cash and short-term
investments as of December 31) reflected the impact of last year's
asset sales--including the sale of stakes in computer reservations
company Worldspan, as well as online travel companies Orbitz and
Hotwire.
While AMR's balance sheet can be strengthened only incrementally
this year, the airline's operating profile and cost structure have
been transformed in a fundamental way over the past nine months.
Indeed, lower labor costs established in the new set of collective
bargaining agreements ratified by unionized employees last spring
helped the carrier report a 12% year-over-year reduction in
operating cost per available seat mile during the fourth quarter
of 2003. With an estimated $1.8 billion in annual labor cost
savings locked in, and over $2 billion more in annual savings
related to strategic initiatives, American's unit costs are now at
the low end of the U.S. network airline peer group. American
reported the best operating margin among the major network
carriers in the fourth quarter (2.5%, excluding special items). A
pre-tax loss margin of 2% (excluding special items) in the fourth
quarter was only marginally worse than Continental's adjusted pre-
tax loss margin. This places American at the top of the network
airline group in terms of profitability and operating cash flow
generation, and clearly demonstrates the competitive impact of the
labor and strategic cost-saving initiatives implemented in 2003.
American's unit revenue performance has shown signs of steady
improvement in the months since air travel demand bottomed out in
April of last year. For the fourth quarter, passenger revenue per
available seat mile increased by 6% over the year-earlier period--
driven by a 3% increase in passenger yields. Domestic yields
remain very weak in the face of large increases in scheduled
capacity planned by the rapidly growing low-cost carriers. Even
with a radically transformed cost structure, American faces stiff
fare competition from low-cost rivals such as JetBlue, AirTran,
Southwest and America West in city pair markets that have
historically generated good yield characteristics. The start-up of
transcontinental service by America West on routes between Los
Angeles and San Francisco to New York and Boston represents a
direct competitive threat to American in historically profitable
markets. With total industry available seat mile capacity likely
to grow by as much as 10% this year, prospects for significant
improvements in unit revenue appear limited.
On the cost side, the primary risk relates to persistently high
jet fuel prices and the inability of American to effectively hedge
against fuel price increases beyond the first quarter of this
year. The company expects to pay an average of 91 cents per gallon
for jet fuel in the first quarter, with only 21% of exposure
hedged. All hedge positions after the end of the quarter have been
unwound, and opportunities to layer on attractive hedges are
limited in light of steadily high spot prices. Based on recent
fuel consumption patterns, AMR's monthly pre-tax income would be
changed by $2.4 million for each one-cent change in the spot price
of jet fuel.
This rating was assigned by Fitch as a service to users of its
ratings and is based on public information.
ARCHIBALD CANDY: Files for Chapter 11 Protection in Illinois
------------------------------------------------------------
Archibald Candy Corporation, parent of Fannie May and Fanny Farmer
Candy, commenced voluntary bankruptcy proceedings under Chapter 11
of the United States Bankruptcy Code.
The petition was filed in the United States Bankruptcy Court in
Chicago, Illinois and reflects Assets of between $ 50 and $100
million and Liabilities in excess of $100 million at the time of
the filing.
The filing for Archibald will not affect its Canadian subsidiary,
Archibald Candy (Canada) Corporation, which will continue to sell
the Laura Secord brand in Canada.
Archibald previously announced the closing of its Chicago
manufacturing plant and the phased closing of its 238 Fannie May
and Fanny Farmer retail stores. The retail stores will be
gradually closed. Some will remain open for several weeks to
complete final sales of product inventories.
Archibald has negotiated with the representatives of its union
employees regarding the effects of the decision to cease
operations. One union has ratified a settlement agreement with the
Company and another union agreement is pending ratification.
On January 14, Archibald also announced that it had reached a
preliminary agreement to sell its Fannie May and Fanny Farmer
brands, intellectual property and 31 company-owned retail stores.
Archibald has entered into a new credit facility of $13.5 million
with LaSalle Bank, which will be used to fund wind-down operations
and complete the sale of assets.
Jim Ross, Chief Restructuring Officer for Archibald, said, "A
combination of factors have posed financial challenges for
Archibald Candy Corporation for a number of years. The decision to
sell the Fannie May and Fanny Farmer brands provided the best
opportunity to ensure their survival under new ownership. The
filing of Chapter 11 today is necessary in order to assure
fairness to all financial stakeholders."
The case has been assigned to the Honorable Bruce W. Black, and
the case number is 04-B03200.
ARCHIBALD CANDY: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Lead Debtor: Archibald Candy Corporation
1137 Jackson Boulevard
Chicago, Illinois 60607
Bankruptcy Case No.: 04-03200
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Laura Secord Holdings Corp. 04-03201
Type of Business: The Debtor owns a candy shop in Chicago. Its
boxed candies (Fannie May, Fanny Farmer, and
its Canadian brand, Laura Secord) are sold
through company-operated stores and other
retailers in 17 states.
See http://fanniemay.com/
Chapter 11 Petition Date: January 28, 2004
Court: Northern District of Illinois (Chicago)
Judge: Bruce W. Black
Debtor's Counsel: John P. Sieger, Esq.
Jenner & Block LLC
One IBM Plaza
Chicago, IL 60611
Tel: 312-222-9350
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $50 Million to $100 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
United Parcel Service Trade Debt $980,825
1400 South Jefferson St.
Chicago, IL 60607-5189
Blommer Chocolate Company Trade Debt $856,444
600 West Kinzie St.
Chicago, IL 60610
Jeffries & Company Trade Debt $637,190
11100 Santa Monica Blvd.
Los Angeles, CA 90025
Superior Nut and Candy Trade Debt $465,890
1111 West 40th Street
Chicago, IL 60609
XPEDX Trade Debt $317,834
180 Exchange Blvd.
Glendale Heights, IL 60139
Arandell Corp. Trade Debt $312,558
N82 W13118 Leon Rd.
Menornonee Falls, WI 53051
Merckens Chocolate Trade Debt $269,555
(ADM Cocoa)
12500 West Carmen Avenue
Milwaukee, WI 53225-6199
Arabosi Trade Debt $222,946
Graph-Pak Corporation Trade Debt $139,872
Creative Resource, Inc. Trade Debt $137,053
Thompson Candy Company Trade Debt $136,305
John B. Sanfilippo & Son, Trade Debt $132,066
Inc.
SW Worldview, Inc. Trade Debt $111,039
Transparent Container Co. Trade Debt $102,954
Inc.
Nestle Confectionery Trade Debt $92,416
Jelly Belly Candy Company Trade Debt $84,424
Vue-Craft Products Ltd. Trade Debt $78,922
Dellias Pecans Trade Debt $69,986
T.M. Duche Nut Trade Debt $69,426
United Packaging Co. Trade Debt $66,590
ARMOR HOLDINGS: Comfortable with High End of Prior Q4 Guidance
--------------------------------------------------------------
Armor Holdings, Inc. (NYSE: AH), a leading manufacturer and
distributor of security products and vehicle armor systems, said
that it is comfortable with the high end of its prior earnings
guidance for the fourth quarter of fiscal 2003.
Further, the Company has initiated preliminary guidance for the
full fiscal year and the first quarter of 2004. As previously
announced, the company will hold a teleconference at 4:30 PM
(Eastern) today to discuss its strategy and outlook for fiscal
2004 for each operating division.
Robert Schiller, President and Chief Operating Officer, commented,
"We are pleased with both the operational and strategic direction
of our business. In 2004, we are anticipating strong internal
rates of growth for both sales and earnings. Further, while it
remains somewhat premature to issue quantitative guidance for
fiscal 2005, we remain optimistic about our capabilities and
opportunities. We are confident in our ability to combine organic
growth with the potential for additional, accretive acquisitions
in our core markets to continue to deliver significant value to
our shareholders."
Strategy
Armor Holdings, Inc.'s strategy is to leverage its leading market
position and research and development capability to grow its
business into three areas: aerospace and defense, law enforcement
and the commercial armored vehicle market.
Armor Holdings management believes that the Company is well
positioned to continue to see organic growth in each division. In
particular, the Company expects to capitalize on the US military's
ongoing transformation to a well-protected, highly mobile force
structure through both vehicle and personnel armoring systems.
Further, the Company expects to increase penetration of its wide
range of branded law enforcement equipment in both domestic and
international markets.
To support its organic growth expectations, Armor Holdings, Inc.
plans increased spending for Research and Development. The
Company noted that its R&D budget for 2004, including funded
research programs, is expected to reach $13-$14 million. This
includes enhanced blast and ballistic solutions for ground combat
systems, as well as the funded development of the next generation
Small Arms Protective Insert system for military personnel and the
Air Warrior program, a survivability ensemble for future Army
flight crews.
Guidance
Armor Holdings, Inc. expressed comfort with the high end of its
prior earnings guidance for the fourth quarter of fiscal 2003.
The Company expects its consolidated revenue for the 12 months
ended December 31, 2003 to be in a range between $360 million and
$370 million. 2003 revenue is expected to be segmented between
the Products Division ($197-$201 million), the Mobile Security
Division ($155-$159 million) and Simula ($8-$10 million), which
was acquired on December 9, 2003.
For the full fiscal year of 2004, the Company believes that
revenues are likely to range between $620 and $640 million and
expects diluted earnings per share to be in the range of $1.50 to
$1.60. This forecast includes an after-tax, per share forecast
for merger, integration and non-recurring charges of approximately
$0.10 per share for the full year.
For the first quarter of fiscal 2004, the Company currently
expects to report consolidated revenues between $135 and $145
million and diluted earnings per share in the range of $0.36 to
$0.38 per share. This forecast includes an after-tax, per share
forecast for merger, integration and non-recurring charges of
approximately $0.01-$0.03 per share.
Armor Holdings (S&P, BB Corporate Credit Rating, Stable), included
in FORBES magazine's list of "200 Best Small Companies" in 2002,
and a member of the S&P Smallcap 600 Index, is a leading
manufacturer of security products for law enforcement personnel
around the world through its Armor Holdings Products division and
is one of the world's largest and most experienced passenger
vehicle armoring manufacturers through its Mobile Security
division. Armor Holdings Products manufactures and sells a broad
range of high quality branded law enforcement equipment. Such
products include ballistic resistant vests and tactical armor,
less-lethal munitions, safety holsters, batons, anti-riot products
and a variety of crime scene related equipment, including narcotic
identification kits. Armor Holdings Mobile Security, through its
commercial business, armors a variety of vehicles, including
limousines, sedans, sport utility vehicles, and money transport
vehicles, to protect against varying degrees of ballistic and
blast threats. Through its military program, it is the prime
contractor to the U.S. Military for the supply of armoring and
blast protection for High Mobility Multi-purpose Wheeled Vehicles,
commonly known as HMMWVs.
ART FOUR HICKORY: Wants Nod to Hire M. Bruce Peele as Attorneys
---------------------------------------------------------------
Art Four Hickory Corporation is asking for permission from the
U.S. Bankruptcy Court for the Northern District Of Texas, Dallas
Division, to retain M. Bruce Peele, Esq., as its Counsel.
The Debtor tells the Court that it requires the services of Mr.
Peele to:
a. assist in complying with the Bankruptcy Code provisions
as it reorganizes its affairs;
b. assist in formulating a plan of reorganization and
disclosure statement;
c. review and prosecute, to the extent required, avoidance
actions and/or objections to claims; and
d. review and prosecute, to the extent required, claims
against co-obligors, seek injunctive relief, and
determine Debtor's ownership interest in various assets.
Mr. Peele assures the Court that he does not hold or represent any
interest adverse to the Debtor and that he is a disinterested
person within the meaning of Section 101(13) of the Bankruptcy
Code.
Mr. Peele's hourly billing rate is $230. His associate bills at
$190 per hour and paraprofessionals at $50 per hour.
Headquartered in Dallas, Texas, Art Four Hickory Corporation filed
for chapter 11 protection on January 3, 2004 (Bankr. N.D. Tex.
Case No. 04-30104). M. Bruce Peele, Esq., in Plano, Texas,
represents the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it estimated
debts and assets of over $10 million each.
AVAYA INC: Q1 2004 Operations Results Enter Positive Territory
--------------------------------------------------------------
Avaya Inc., (NYSE: AV) a leading global provider of communications
networks and services for businesses, reported first fiscal
quarter income from continuing operations of $30 million or
earnings of seven cents per diluted share for the first quarter of
fiscal 2004.
These results compare to a loss of $125 million or a loss of 34
cents per diluted share from continuing operations in the first
quarter of fiscal 2003.
First fiscal quarter 2004 revenues of $971 million increased three
percent over revenues of $946 million in the year ago period.
The company said including results from discontinued operations,
net income for the first quarter of fiscal 2004 was $10 million or
earnings of two cents per diluted share, compared to a net loss of
$121 million or a loss of 33 cents in the same period last year.
Avaya said continuing operations includes all its operations
except its Connectivity Solutions segment and the parts of the
Expanets, Inc. businesses it is in the process of divesting, which
are included as discontinued operations.
In Oct. 2003, Avaya announced it was selling its Connectivity
Solutions segment to CommScope,Inc. Avaya expects the sale to
conclude in the second quarter of fiscal 2004. Avaya acquired
substantially all the assets and assumed certain liabilities of
Expanets, Inc., a telecommunications reseller, in Nov. 2003. The
company is in the process of divesting the portions of the
Expanets businesses that distribute non-Avaya offerings. Avaya
expects to conclude the divestiture by the end of the second
fiscal quarter and integrate approximately 800 former Expanets
employees into its operations.
Avaya said first fiscal quarter 2004 revenues were essentially
unchanged from revenues in the fourth fiscal quarter of 2003 which
reflected a seasonal revenue ramp-up associated with the end of
the company's fiscal year. Avaya noted IP line shipments and IP
revenues increased globally from the fourth quarter across large
and small customers.
Gross margin in the quarter increased substantially. Improvements
from the company's contract manufacturers provided roughly half of
the benefit. Cost savings, Expanets, product and channel mix and
stable discount levels also positively affected margins. Selling,
general and administrative expenses increased from the fourth
quarter primarily due to incremental Expanets expenses. Expanets,
overall, however, was only marginally dilutive to the company's
earnings from continuing operations.
CEO Comments
"Avaya delivered its third profitable quarter in a row through our
rigorous financial discipline and focus on operational
excellence," said Don Peterson, chairman and CEO, Avaya. "The
increase in revenues we saw this quarter compared to last year
reflects what we believe is the beginning of a rebound in capital
spending. Our customers are increasingly turning to IP telephony
to deliver real improvements in business value. They are
responding to Avaya's ability to retain their investment and add
the benefits of IP telephony, while enjoying the same confidence
they've always had in their voice communications."
Outlook For Second Fiscal Quarter 2004
As it completes the integration of Expanets in the second fiscal
quarter, the company expects operating income for the second
fiscal quarter to be roughly the same as operating income for the
first fiscal quarter.
Business Highlights In The Quarter
Since the end of the last quarter Avaya has made a number of key
announcements, and took additional steps to focus on its core
enterprise business and enhance its market offers:
Avaya introduced a new portfolio of products that includes a new
generation of market-leading software applications, media servers
and gateways for small, medium and large enterprises, and a full
range of desktop and wireless IP telephones. The new products
increase the security of IP communications, simplify the
management of converged networks, and enable enterprises to meet
the needs of increasingly mobile end users.
Avaya and Polycom, Inc. announced they will collaborate to develop
and market new IP-telephony-enabled video solutions to make
desktop and group video communication as simple as a phone call.
Avaya also plans to sell and service Polycom products globally --
significantly expanding the companies' existing strategic reseller
relationship in North America that includes more than 10,000 video
implementations.
Avaya will construct an IP telephony system and call center for
China's Industrial Bank Co. Ltd. Industrial Bank chose to adopt
Avaya's contact center solutions to improve service quality and
reduce costs across 20 branches nationwide.
United Overseas Bank Limited chose Avaya to develop a multimedia
integrated Contact Center for its Singapore operations. The bank
will use Avaya Interaction Center, a multimedia-enabled platform
to provide consistent personalization, routing, and management of
customer interactions across all communication channels, including
inbound and outbound voice and email.
Avaya IP Office - Small Office Edition, which the company
introduced in Dec. 2003, is designed for up to 28 users and
provides smaller firms with the types of business features - such
as built-in firewall for network security, Internet access,
wireless connectivity, advanced messaging capabilities, and three-
way calling - that are usually available only with larger, more
complex systems. The converged voice and data business
communications features are encompassed in one compact unit that
enables businesses to manage their communications from a laptop or
personal computer.
In Oct. 2003, Avaya agreed to acquire substantially all of the
assets and assume certain liabilities of Expanets, Inc., one of
the largest resellers of Avaya's products in the United States.
The acquisition, which closed on Nov. 25, allows Avaya to continue
to provide quality sales and service support for Expanets'
customers and grow its small and mid-sized business. Also in
Oct., the company agreed to sell its Connectivity Solutions
segment, a world leader in structured cabling for businesses and
telecommunications service providers, to CommScope, Inc. The
sale will allow Avaya to focus on providing communications
networks and services to businesses.
Avaya and Extreme Networks Inc. entered into a multiyear,
multimillion-dollar strategic alliance to jointly develop and
market converged communications solutions. Under the agreement
Avaya will also resell Extreme Networks' data networking products
and will provide comprehensive planning, design, implementation
and management services support through Avaya Global Services.
This relationship will provide businesses around the world with
one of the broadest arrays of converged technologies and services
in the industry.
Avaya Inc. (S&P, B+ Corporate Credit Rating) designs, builds and
manages communications networks for more than 1 million businesses
worldwide, including 90 percent of the FORTUNE 500(R). Focused on
businesses large to small, Avaya is a world leader in secure and
reliable Internet Protocol telephony systems and communications
software applications and services. Driving the convergence of
voice and data communications with business applications -- and
distinguished by comprehensive worldwide services -- Avaya helps
customers leverage existing and new networks to achieve superior
business results. For more information visit the Avaya Web site
at http://www.avaya.com/
BAY VIEW CAPITAL: Re-Adopts Going Concern Accounting Basis
----------------------------------------------------------
Bay View Capital Corporation reported fourth quarter earnings and
announced that it has discontinued its use of the liquidation
basis of accounting and re-adopted the going concern basis of
accounting effective October 1, 2003.
From September 30, 2002 through September 30, 2003, the Company
reported its results under the liquidation basis of accounting
because the Company had adopted a Plan of Dissolution and
Stockholder Liquidity in October 2002, pursuant to which the
Company would sell all of its assets, pay all of its liabilities,
then distribute the proceeds to the Company's stockholders and
then dissolve. As previously announced during the fourth quarter,
the Company's Board of Directors amended the Plan to become a
plan of partial liquidation under which the Company will complete
the liquidation of the assets and satisfaction of the liabilities
of Bay View Bank, N.A., remaining after the Bank's September 30,
2003 dissolution, distribute the proceeds to its stockholders
through a series of cash distributions, and continue to operate
its auto finance subsidiary, Bay View Acceptance Corporation, on
an ongoing basis. In accordance with the amended plan, the
Company made an initial cash distribution of $4.00 per share to
its stockholders on December 30, 2003 as further described below.
Fourth Quarter Results
The Company reported a fourth quarter 2003 net loss of $0.9
million, or $0.01 per diluted share, and stockholders' equity of
$155.8 million, or $2.37 per outstanding share at December 31,
2003. On December 30, 2003, the Company distributed $263.2
million, or $4.00 per share in cash, to common stockholders and,
on December 31, 2003, redeemed $63.5 million, or approximately
74%, of the 9.76% Cumulative Capital Securities (NYSE: BVS) issued
by its Bay View Capital I Trust. For the third quarter of 2003,
the Company reported, under the liquidation basis of accounting,
net assets in liquidation of $409.8 million, or $6.36 in net
assets in liquidation per outstanding share, and a loss from
operations of $1.0 million.
While the Company completed significant elements of its plan of
partial liquidation, it continues to hold certain of the assets
and liabilities remaining from the dissolution of the Bank. At
December 31, 2003, these assets included the auto lease portfolio
of $66.7 million, $12.1 million of franchise and business loans,
$5.9 million of asset-backed securities, and $5.0 million of
foreclosed real estate. The Company's remaining liabilities
included $22.0 million of the Bay View Capital I Trust, 9.76%
Cumulative Capital Securities, net of the Company's ownership in
the trust, and a $16.1 million financing secured by the cashflow
from the remaining auto leases.
In the course of resolving these remaining assets and liabilities
during 2004 and 2005, the Company currently anticipates making
additional cash distributions of approximately $1.45 per share to
common stockholders through a series of six quarterly
distributions beginning in the second quarter of 2004 and
continuing through the third quarter of 2005. The Company
believes that the first five of these distributions will be
approximately $0.25 per share with the sixth distribution
approximating $0.20 per share. The Company currently anticipates
redeeming the remaining $22 million of the Bay View Capital I
Trust, 9.76% Cumulative Capital Securities by mid-2004.
At December 31, 2003, the Company's total assets were $364 million
compared to $555 million at September 30, 2003 and $876 million at
December 31, 2002. At December 31, 2003, cash and cash
equivalents totaled $43.8 million including restricted cash of
$32.2 million. Borrowings increased to $179.1 million at December
31, 2003 from $109.3 million at September 30, 2003 as BVAC
utilized its warehouse line of credit.
During the quarter, the Company completed the sale of
approximately $18.9 million of franchise and business loans and
received $3.3 million of loan repayments from its liquidating loan
portfolio. Additionally, BVAC sold $4.7 million of installment
contracts and received repayments of $21.6 million during the
quarter. At December 31, 2003, the net carrying value of the
Company's remaining investment in loans to be liquidated was
reduced to $12.1 million from $34.0 million at September 30, 2003.
Total nonperforming assets, net of mark-to-market valuation
adjustments, declined to $7.1 million at December 31, 2003 from
$11.5 million at September 30, 2003. Total loans delinquent 60
days or more declined to $748 thousand at December 31, 2003 from
$1.5 million at September 30, 2003.
At December 31, 2003, the Company had deferred tax assets of
approximately $16.5 million, including net deferred tax assets of
$38.0 million less a valuation allowance of $21.5 million. The
related federal tax net operating loss carryforwards and other
deferred tax items were approximately $85 million. "The Company's
deferred tax assets were one of the key factors in our decision to
adopt the partial liquidation strategy and continue operating BVAC
on an on-going basis," stated Robert B. Goldstein, the Company's
Chairman. "This substantial asset provides the Company with an
opportunity to reduce future tax payments by as much as $38
million."
Bay View Acceptance Corporation
BVAC, a wholly-owned subsidiary of the Company, is a Southern
California-based auto finance company engaged in the indirect
financing of automobile purchases by individuals. BVAC currently
acquires auto installment contracts from over 7,000 manufacturer-
franchised and independent auto dealers in 24 states. It has
positioned itself in the market as a premium priced lender for
well-qualified borrowers seeking extended financing terms and
higher advances than those generally offered by traditional
lenders. This strategy has enabled BVAC to establish a loyal
dealership network by satisfying a unique niche within the
indirect auto finance arena which is not dominated by large
commercial banks and captive finance companies. The Company
entered the auto finance business in 1996 through its acquisition
of CTL, Inc., the parent company of California Thrift & Loan.
California Thrift and Loan and its predecessor companies began its
auto finance operations in 1973. Since the liquidation of the
Bank, BVAC has operated as an independent finance company, rather
than a portfolio-lending unit of the Bank, purchasing auto
installment contracts for sale or securitization. BVAC has a
$250 million revolving warehouse credit facility to fund its
purchases of contracts. BVAC is the Company's only remaining
operating subsidiary.
BVAC is continuing a geographic expansion plan that was initiated
in late 2002. From its established presence in 17 states,
primarily in the West, Midwest and Florida, BVAC entered seven new
Mid-Atlantic states in 2003. In 2004, BVAC plans to enter nine
additional states primarily in New England, as well as Oklahoma.
Historically, BVAC has aligned itself with smaller, franchised and
independent dealers. In recent years, the industry has
experienced intense merger and acquisition activity which has led
to the emergence of large, regional and national automobile
dealership organizations, causing BVAC to lose production volume
from its existing dealer base. In response, BVAC began a campaign
to establish relationships with these regional and national dealer
organizations during 2003 and has now signed agreements with five
of these organizations representing 370 dealership stores. During
2004, BVAC will continue to pursue this strategy.
BVAC's fourth quarter 2003 net income was $586 thousand compared
to net income of $391 thousand for the third quarter of 2003.
This increase was primarily the result of an increase in net
interest income. During the second half of 2003, BVAC acquired
higher-yielding installment contracts by exercising options to
redeem its 1999-LJ-1 and 2000-LJ-1 Auto Trust Automobile
Receivable Backed Certificates.
BVAC purchased $67.4 million of auto installment contracts during
the fourth quarter of 2003, compared to $66.9 million for the
prior quarter. Fourth quarter purchase volume consisted of 2,292
contracts with a weighted average contract rate of 8.03% and a
weighted average FICO score of 735; third quarter purchase volume
consisted of 2,316 contracts with a weighted average contract rate
of 8.12% and a weighted average FICO score of 734. While fourth
quarter purchases were in line with the forecast, they remained
soft. Incentive financing from auto manufacturers continues to be
widely available on new vehicles and continues to adversely affect
BVAC's production volumes. However, BVAC has chosen to remain
focused on credit quality rather than production volume and as a
result, the quality and performance of the BVAC loan portfolio
remains sound. At December 31, 2003, BVAC was servicing 30,800
installment contracts representing $563 million compared to 32,000
installment contracts representing $573 million at September 30,
2003.
Other
As discussed above, the Company was using the liquidation basis of
accounting during the period of September 30, 2002 through
September 30, 2003. For reporting periods prior to September 30,
2002 and subsequent to September 30, 2003, the Company's
consolidated financial statements are presented on a going concern
basis of accounting. The Company is providing herein:
Financial Condition/Net Assets: a Consolidated Statement of
Financial Condition as of December 31, 2003 and a Consolidated
Statement of Net Assets (Liquidation Basis) as of December 31,
2002
Results of Operations/Change in Net Assets:
2003: a Consolidated Statement of Changes in Net Assets in
Liquidation (Liquidation Basis) for the nine-month
period ended September 30, 2003 and a Consolidated
Statement of Operations and Comprehensive Income
(Loss) for the three-month period ended December 31,
2003
2002: a Consolidated Statement of Operations and
Comprehensive Income (Loss) for the nine-month period
ended September 30, 2002 (Going Concern Basis) and a
Consolidated Statement of Changes in Net Assets in
Liquidation (Liquidation Basis) for the three-month
period ended December 31, 2002.
Bay View Capital Corporation is a financial services company
headquartered in San Mateo, California and is listed on the NYSE:
BVC. For more information, visit http://www.bayviewcapital.com/
BEAUTYCO INC: UST Schedules Section 341(a) Meeting for Feb. 4
-------------------------------------------------------------
The United States Trustee will convene a meeting of Beautyco,
Inc.'s creditors on February 4, 2004, 1:30 p.m., at Room B04, 224
South Boulder Avenue, Tulsa, Oklahoma 74103. This is the first
meeting of creditors required under 11 U.S.C. Sec. 341(a) in all
bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Oklahoma City, Oklahoma, Beautyco, Inc. --
http://www.beautyco.com/-- one of the leading retailers of
professional beauty supplies in the United States, filed for
chapter 11 protection on December 31, 2003 (Bankr. N.D. Okla. Case
No. 03-07621). Neal Tomlins, Esq., and Ronald E. Goins, Esq., at
Tomlins & Goins, represent the Debtor in their restructuring
efforts. When the Company filed for protection from their
creditors, it listed:
Total Assets Total Debts
------------ -----------
Beautyco, Inc. $3,309,400 $8,703,200
Beautyco Investments, Ltd. $5,250,000 $50,000
BRIDGESPAN INC: Files for Chapter 11 Protection in California
-------------------------------------------------------------
BridgeSpan, Inc., a Delaware corporation, filed a voluntary
petition for reorganization under Chapter 11 of Title 11 of the
U.S. Bankruptcy Code with the U.S. Bankruptcy court in the
Northern District of California (San Jose) in order to facilitate
a restructuring of its business.
BridgeSpan Title Company, a California corporation, today filed a
voluntary petition for reorganization under Chapter 11 of Title 11
of the U.S. Bankruptcy code with the U.S. Bankruptcy Court in the
Northern District of California (San Jose) in order to facilitate
a restructuring of its business.
BridgeSpan Corp., a Texas corporation, filed a voluntary petition
for liquidation under Chapter 7 of Title 11 of the U.S. Bankruptcy
code with the U.S. Bankruptcy Court in the Northern District of
California (San Jose) in order to facilitate a previously
announced orderly shut down of its business. It's parent,
BridgeSpan, Inc., had initiated sales negotiations, but was unable
to complete them due to adversary actions by one of its title
insurance underwriters.
BridgeSpan, Inc. is a leading provider of mortgage processing
solutions for lenders and settlement services providers. The
company introduced the industry's first electronic mortgage
technology platform, and is believed to have processed more
electronic mortgages than the rest of the industry combined.
BRIDGESPAN INC: Case Summary & 40 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: BridgeSpan Inc.
2465 Latham Street, 2nd Floor
Mountain View, California 94040
Tel: 650-349-3330
Bankruptcy Case No.: 04-50492
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
BridgeSpan Title Company 04-50491
Type of Business: The Debtor provides mortgage closing solutions
and national settlement services to major
lenders. Recognized as a leader in mortgage
process engineering and technology innovation,
It provides closing solutions which
fundamentally transform lender's business
processes benefiting lenders, consumers and
others in the mortgage closing experience.
See http://www.bridgespan.com/
Chapter 11 Petition Date: January 26, 2004
Court: Northern District of California (San Jose)
Judge: Marilyn Morgan
Debtor's Counsel: Penn Ayers Butler, Esq.
Law Offices of Brooks and Raub
721 Colorado Avenue #101
Palo Alto, California 94303-3913
Tel: 650-321-1400
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
A. BridgeSpan, Inc.'s 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Old Republic Title Company Trade Debt $2,155,928
350 California Street,
Ste 1200
San Francisco, CA 94104-1402
Hall Stonebriar Two Assoc. Landlord $725,645
2591 Dallas Pkwy
6801 Gaylord Prky, Ste 406
Frisco, TX 75034
Rambus, Inc. Landlord $435,576
Latham Street Property
4440 El Camino Real
Los Altos, CA 94022
First Insurance Funding Co. Business Insurance $101,554
Financing
I O S Capital Equipment Lease $102,009
Xerox Equipment Lease $49,750
Fontana Company Landlord $49,344
ESTIPS, Inc. Sub Lease Tennant $42,500
The Insource Group, Inc. Contract Labor $41,974
Joe Evans Employee $14,700
American Express Business Equipment Lease $14,484
IT Convergence IT Consulting $12,600
American Express Travel Expenses $12,025
Infinisource, COBRA COBRA Administrator $11,098
Compliance
Cable & Wireless Web Provider $10,517
BOKA Powell Architect $9,823
Martine Kelly Employee Payroll $9,230
Liability
OFSI Equipment Lease $7,310
Invesmart 401K Trustee $5,845
CDW Computer Equipment $5,532
B. BridgeSpan Title Company's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Bowman et al. v. BridgeSpan Pending Claims $4,267,395
Class Action Law Suit
c/o James Mathias
Piper Rudnick
6225 Smith Avenue
Baltimore, MD 21209-3600
Amiscope Properties Landlord (Former $319,592
RE: Chatsworth Property Property)
8730 Wilshire Blvd, Ste 300
Beverly Hills, CA 90211
Oak Grove Partners Landlord (Former $186,048
Property-Subleased)
Stewart Title Insurance Corp Trade Debt $149,160
Data Trace Trade Debt $117,853
BridgeSpan Inc Alloc. (Trust $59,000
Acct, Admin)
Stanley Properties, LTD. Landlord (Former $50,760
Property-Subleased)
BridgeSpan Corp. Intercompany $45,000
Allocation
(Internal Proc)
Title Premium Over Pending Claims $33,400
Collection refunds due to
various Borrowers
Old Republic Title Audit
Issue
BridgeSpan Corp.
Willis & Company Landlord (Former $32,304
Property-Subleased)
Property Insight Trade Debt $28,264
Old Republic Title Company Trade Debt $22,863
DataQuick Trade Debt $20,464
Contract Cancellation
5/03
Title Court Services, Inc. Trade Debt $10,950
Stoel Rives LLP Legal Fees $10,934
Print, Inc. Equipment Lease $7,464
CB Richard Ellis Commission to $5,850
sublease property
All Counties Courier Trade Debt $1,366
Zang Recording Services Trade Debt $839
Title Tax, Inc. Trade Debt $793
BUFFETS INC: S&P Puts Low-B Corp. Credit Rating on Watch Negative
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings for
restaurant company Buffets Inc., including the 'B+' corporate
credit rating, on CreditWatch with negative implications. Eagan,
Minnesota-based Buffets had $392 million of debt outstanding as of
Dec. 17, 2003.
"The CreditWatch listing follows Buffets' announcement of a
refinancing that adds about $85 million of incremental debt to the
company's capital structure," said Standard & Poor's credit
analyst Robert Lichtenstein. The refinancing includes the offering
of $100 million senior discount notes at the holding company and
an amended $310 million senior secured credit facility at the
operating company. Proceeds from the offering, along with cash,
will be used to refinance its term loan under its existing credit
facility, repurchase $50 million of its senior subordinated notes
and/or repay bank indebtedness, redeem Buffets Holdings' series A
senior subordinated and series B junior subordinated notes, and
make a distribution to stockholders.
Upon successful completion of the planned refinancing, Standard &
Poor's will review the transaction and the company's financial
policy. Standard & Poor's will also assign ratings to the new $100
million senior discount notes and the $310 million amended senior
secured credit facility upon review of documentation.
CABLE & WIRELESS: All Claims Due on February 11, 2004
-----------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware fixes
February 21, 2004, at 4:00 p.m. Eastern Time, as the deadline for
creditors owed money by Cable & Wireless USA, Inc., and its
debtor-affiliates, to file their proofs of claim with the Debtors'
Claims Agent. If delivered by mail, claim forms must be sent to:
Cable & Wireless USA, Inc.
Claims Processing
PO Box 5283
FDR Station
New York, NY 10150-5283
If delivered by hand or overnight courier, to:
Cable & Wireless USA, Inc.
Claims Processing
c/o Bankruptcy Services, LLC
757 Third Avenue, 3rd Floor
New York, NY 10017
Cable & Wireless USA, Inc., along with its debtor-affiliates, is a
provider of Internet access services, Internet backbone services,
domain name registration services, web page design services,
Internet hosting services, and telecommunications-related
services. The company filed for Chapter 11 relief on
December 8, 2003, (Bankr. Del. Case No. 03-13711). Curtis A. Hehn,
Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young
Jones & Weintraub, represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they disclosed estimated assets and debts of:
Estimated Assets Estimated Debts
---------------- ---------------
Cable & Wireless USA, Inc. $50M to $100M more than $100M
Cable & Wireless USA of $0 to $50,000 $0 to $50,000
Virginia, Inc.
Cable & Wireless Internet more than $100M more than $100M
Services, Inc.
Exodus Communications Real $0 to $50,000 $50M to $100M
Property I, LLC
Exodus Communications Real $10M to $50M $50M to $100M
Property Managers I, LLC
Exodus Communications Real $0 to $50,000 $50M to $100M
Property I, LP.
CAFE NACIONAL LLC: Involuntary Chapter 11 Case Summary
------------------------------------------------------
Alleged Debtor: Cafe Nacional, LLC
60 Thompson Street
New York, New York
Involuntary Petition Date: January 27, 2004
Case Number: 04-10500
Chapter: 11
Court: District of Delaware Judge: Robert D. Drain
Petitioners' Counsel: Eugene Paul Cimini, Jr.
Jaspan Schlesinger Hoffman, LLP
300 Garden City Plaza
Garden City, NY 11530
Tel: 516-746-8000
Fax: 516-393-8282
Petitioners: The London Meat Co., Inc.
56 Little West 12th Street
New York, NY 10014
Down East Seafood
402 West 13th Street
New York, NY 10014
- and -
Seacrest Linen Supply Co., Inc.
P.O. Box 102
Brooklyn, NY 11225
Total Amount of Claim: $37,069
CANWEST GLOBAL: Proposes Two New Interim Nominees to Board
----------------------------------------------------------
CanWest Global Communications Corp. announced that two additional
nominees will be proposed for election to the Board at the annual
meeting to be held on January 29, 2004. The nominees are Thomas
C. Strike, the Chief Operating Officer (Corporate) of CanWest and
Richard C. Camilleri, Chief Operating Officer (Operations). They
are expected to serve as directors on an interim basis to replace
Lord Black of Crossharbour and David Radler, who recently decided
not to stand for re-election to the Board.
CanWest has been informed that the controlling shareholder will
support the election of these nominees. The Board intends to
consider the longer term replacements for the departing board
members and, in that context, the appropriate size of the Board.
CanWest Global Communications Corp. (NYSE: CWG; TSE: CGS.S and
CGS.A) -- http://www.canwestglobal.com-- (S&P, B+ Long-Term
Corporate Credit and Senior Unsecured Ratings, Stable) is an
international media company. Canada's largest publisher of daily
newspapers, CanWest owns, operates and/or holds substantial
interests in newspapers, conventional television, out-of-home
advertising, specialty cable channels, websites, and radio
stations and networks in Canada, New Zealand, Australia, Ireland
and the United Kingdom. The Company's program production and
distribution division operate in several countries throughout the
world.
CAPITAL CITY: First Creditors' Meeting Scheduled for February 18
----------------------------------------------------------------
The United States Trustee will convene a meeting of Capital City
Enterprises, Inc.'s creditors on February 18, 2004, 1:00 p.m., at
600 Las Vegas Blvd South, Room 550, Las Vegas, Nevada 89101.
This is the first meeting of creditors required under 11 U.S.C.
Sec. 341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Las Vegas, Nevada, Capital City Enterprises,
Inc., filed for chapter 11 protection on January 15, 2004 (Bankr.
Nev. Case No. 04-10433). Robert C. Lepome, Esq., represent the
Debtor in its restructuring efforts. When the Company filed for
protection from its creditors, it listed $28,459,620 in total
assets and $17,004,000 in total debts.
COLE NATIONAL: S&P Revises Implications to Positive on Merger News
------------------------------------------------------------------
Standard & Poor's Ratings Services revised its CreditWatch
implications on the ratings for Cole National Group Inc.
(including the 'BB-' corporate credit rating) to positive from
developing. The CreditWatch revision follows the announcement that
Cole National Corp., the parent of Cole National Group, and
unrated Luxottica Group S.p.A. have entered into a definitive
merger agreement.
Under this agreement, Luxottica Group will acquire all of the
outstanding shares of Cole National for a cash purchase price of
about $401 million and will assume about $287 million of debt.
If Cole National's debt remains outstanding after the transaction
closes, its ratings will reflect the creditworthiness of the
acquiring company. "Based on preliminary analysis, it appears that
the credit quality of Luxottica and Cole National combined will be
at least as strong, if not stronger, than Cole National alone,"
said Standard & Poor's credit analyst Ana Lai. The future credit
rating will depend on Standard & Poor's ability to obtain adequate
financial and operating information on Cole National and
Luxottica.
Luxottica is the world leader in the design, manufacture,
marketing, and distribution of eyeglass frames. It also owns
LensCrafters, the largest retail optical chain in North America,
the Bausch & Lomb sunglass business, and Sunglass Hut
International. For fiscal 2002, Luxottica posted sales for fiscal
2002 of more than A?3.0 billion.
COLLINS & AIKMAN: Launches Syndication of $100MM Credit Facility
----------------------------------------------------------------
Collins & Aikman Corporation (NYSE: CKC) launched syndication of a
$100 million Tranche A-1 Credit Linked Deposit Facility available
for revolving credit loans and letters of credit under its
existing credit agreement to enhance its financial flexibility and
capacity to efficiently manage short-term fluctuations in working
capital and other cash flows.
Although there can be no assurance, the Company currently expects
to be able to complete this transaction by early-February.
Collins & Aikman Corporation (S&P, B+ Corporate Credit Rating,
Negative), a Fortune 500 company, is a global leader in cockpit
modules and automotive floor and acoustic systems and a leading
supplier of instrument panels, automotive fabric, plastic-based
trim, and convertible top systems. The Company's current
operations span the globe through 15 countries, more than 100
facilities and over 25,000 employees who are committed to
achieving total excellence. Collins & Aikman's high-quality
products combine superior design, styling and manufacturing
capabilities with NVH "quiet" technologies that are among the most
effective in the industry. Information about Collins & Aikman is
available on the Internet at http://www.collinsaikman.com/
COPPERWELD CORP: Names Dale B. Mikus as Chief Financial Officer
---------------------------------------------------------------
Copperweld Corporation announced that Dale B. Mikus has joined the
company as Vice President and Chief Financial Officer.
Mr. Mikus replaces James R. Smith, who served as interim Chief
Financial Officer during the company's restructuring process.
Copperweld emerged from bankruptcy as a stand-alone company on
December 18, 2003.
"Dale Mikus is an excellent fit for the new Copperweld," said
Dennis McGlone, Copperweld's President and Chief Operating
Officer. "His extensive experience in corporate finance and
accounting, as well as his background in public accounting,
auditing and business advisory services will provide the practical
knowledge to help us grow our businesses and operate successfully
as a stand-alone company in the months and years ahead."
Mr. Mikus has nearly twenty years of experience in finance and
accounting. Prior to joining Copperweld, he served as Vice
President - Finance and Chief Accounting Officer for Dresser,
Inc., a $1.5 billion corporation based in Dallas, Texas. While
with Dresser, he completed a leverage recapitalization buyout
transaction, restructured the company's corporate finance
department and was responsible for completing several strategic
acquisitions. From 1998 to 2001, Mr. Mikus had served as Vice
President and Chief Financial Officer of Dresser Equipment Group,
a Halliburton Company, where he was responsible for the company's
financial and accounting activities. He began his career with
Dresser Industries as Manager - Corporate Accounting in 1997.
Prior to joining Dresser, Mr. Mikus had worked in the Dallas and
Pittsburgh offices of PriceWaterhouse LLP. During his career with
PriceWaterhouse, he planned, managed, supervised and performed
audits and business advisory services for a wide range of clients
from multi-national corporations to small, not-for-profit
organizations.
Mr. Mikus holds a BSBA degree in accounting from Robert Morris
University. He is a Certified Public Accountant and a member of
the American Institute of Certified Public Accountants and the
Pennsylvania Institute of Certified Public Accountants.
Copperweld is the largest producer of steel tubular products in
North America and the largest producer of bimetallic products in
the world. They operate 11 tubular products plants and two
bimetallics plants and employ 2,300 people in North America and
the United Kingdom.
DEX MEDIA: Launches Discount Debt Offering to Raise $250 Million
----------------------------------------------------------------
Dex Media, Inc., launched an offer of its Discount Notes, which it
expects will yield gross proceeds of approximately $250 million.
The notes are being offered to qualified institutional buyers
under Rule 144A and outside the United States in compliance with
Regulation S under the Securities Act of 1933, as amended. The
notes being offered by Dex Media are not registered under the
Securities Act of 1933, as amended, and may not be offered or sold
in the United States absent registration or an applicable
exemption from registration requirements. The proceeds from the
offering will be used to pay a dividend to Dex Media's equity
holders.
Dex Media, Inc. (S&P, BB- Corporate Credit Rating, Negative
Outlook) is the parent company of Dex Media East LLC and Dex Media
West LLC. Dex Media, Inc., through its subsidiaries, provides
local and national advertisers with industry-leading directory,
Internet and direct marketing solutions. The official, exclusive
publisher for Qwest Communications International Inc., Dex Media
published 271 directories in Arizona, Colorado, Idaho, Iowa,
Minnesota, Montana, Nebraska, New Mexico (including El Paso,
Texas), North Dakota, Oregon, South Dakota, Utah, Washington and
Wyoming in 2002. As the world's largest privately-owned incumbent
directory publisher, Dex Media produces and distributes 45 million
print directories, and CD ROMs. Its Internet directory,
qwestdex.com, receives more than 85 million annual searches.
DEX MEDIA INC: S&P Rates $250 Million Add-On Discount Notes at B
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' senior
unsecured debt rating to Dex Media Inc.'s planned $250 million
(gross proceeds) 9% discount notes due 2013, which is an add-on to
the company's outstanding discount notes that were issued in
November 2003. Proceeds will be used to pay another dividend to
the company's equity holders--The Carlyle Group and affiliates and
Welsh, Carson, Anderson & Stowe and affiliates. In November, Dex
Media paid a $750 million dividend.
In addition, Standard & Poor's affirmed its 'BB-' corporate credit
and 'B' senior unsecured debt ratings on the company. At the same
time, Standard & Poor's affirmed its 'BB-' corporate credit and
senior secured debt and 'B' senior unsecured and subordinated debt
ratings on Dex Media's operating subsidiaries Dex Media East LLC
and Dex Media West LLC. The outlooks for all three companies is
negative.
Through its operating subsidiaries, the Denver, Colorado-
headquartered Dex Media is the nation's fourth largest telephone
directory publisher. The company has about $6.3 billion of pro
forma consolidated debt outstanding.
"The ratings reflect Dex Media's substantial consolidated debt
levels and meaningful debt amortization schedules at the operating
companies. In addition, Dex Media's dividends to its equity
holders reflect a change in the company's financial strategy and
increases the financial risk of Dex Media, Dex East and Dex West,"
said Standard & Poor's credit analyst Donald Wong. This also
heightens the uncertainty over what type of capital structure Dex
Media's equity holders would like to maintain in the intermediate
term. The company also faces mature industry conditions and
revenue concentrations in its major metropolitan markets. Dex
Media's relatively stable revenues and EBITDA, compared to other
media companies, temper these factors. Also, with modest capital
expenditure requirements, free operating cash flow generation is
healthy and fairly predictable.
DII IND.: Gets Final OK to Continue Using Cash Management System
----------------------------------------------------------------
The DII Industries, LLC, and Kellogg, Brown & Root Debtors
obtained final approval from the U.S. Bankruptcy Court to continue
using their existing integrated cash management system.
DII Industries, LLC maintains a highly centralized treasury
finance function that covers all the Debtors and their
subsidiaries and affiliates. The Debtors operate an integrated
cash management system that relies heavily on intercompany
accounting and the movement of funds from one company to another.
The Cash Management System handles over $100,000,000 of
intercompany transactions per month. The Cash Management System
is an integrated, centralized network of over 450 bank accounts
worldwide that facilitate the timely and efficient collection,
concentration, management and disbursement of funds used by the
Debtors, their subsidiaries and affiliates. The Cash Management
System also processes over $1,000,000,000 of third-party payments
or third-party collections on a worldwide basis per month.
Although the Cash Management System includes numerous accounts,
the System has a logical structure that allows for efficient,
centralized control of the Debtors' cash flows. In the normal
course of business, nearly all the Debtors' domestic funds flow
into and out of the accounts of the parent company, DII
Industries, and the Debtors' cash is consolidated in a central
concentration account maintained by DII Industries at Citibank,
N.A. The DII Citibank Master Account is used to centralize the
cash management and short-term investments for the Debtors and
their affiliates.
The Cash Management System also includes both Internet-based
applications, CitiDirect and Wachovia Connection, and offline
systems, which include CitiBanking, Hexagon, ABN AMRO On-Line
Services, Chase Link, WorldLink and Citicash Manager. Currently,
the CitiBanking application is operating on a local area network
with 29 individual users and the remaining electronic banking
systems operate as stand-alone systems. These systems
facilitate, on a monthly basis, the worldwide processing of over
60,000 individual payments of all types and over 5,000 individual
receipts of all types. The Debtors believe the Bank Accounts
maintained in the United States are held at financially stable
financial institutions.
The Cash Management System operates entirely between the Debtors
and their subsidiary entities. Halliburton Company, the indirect
parent of the Debtors, maintains its own cash management system as
a stand-alone account structure outside of the Cash Management
System. Halliburton's cash management system interfaces with the
Debtors' Cash Management System through the DII Citibank Master
Account. On a daily basis, cash balances in excess of daily needs
are invested with Halliburton Energy Services, Inc., a direct
subsidiary of Halliburton, in accordance with the Debtors'
investment guidelines. With the exception of this relationship
with HESI, the Cash Management System interacts with the Debtors
and their affiliates who are, directly or indirectly, wholly owned
or partially owned subsidiaries of DII Industries.
Collection and Deposit Accounts
The Debtors and their affiliates' revenues are primarily
generated from industrial construction and maintenance-related
contractual agreements and their primary sources of cash receipts
are from checks, Automated Clearing House and wire transfers
resulting from these agreements. The majority of the domestic
revenue checks received -- over 80% -- are deposited in a lockbox
account at JPMorgan Chase Bank. The JPMorgan Chase lockbox
receipts are wired on a daily basis to the DII Citibank Master
Account. The Debtors also receive domestic funds via wire
transfer and ACH credit directly in various accounts that are also
transferred into the DII Citibank Master Account. The "Citibank
KBR Wire Receipt Accounts" collect majority of the wire funds
transfers.
On the disbursement side, the Cash Management System is primarily
centralized domestically using the DII Citibank Master Account.
Funds are swept from the DII Citibank Master Account into
numerous disbursement accounts that are used for various
purposes, including payroll, general and project management.
Disbursements are made by check, wire transfer or via ACH debits.
The initiation of third party payments is handled by the
transaction center in Houston, Texas for substantially all
payments originating from bank accounts residing in the United
States. A small number of payments, all by check, are made from
local project offices throughout the United States. The majority
of these domestic paper-based disbursements are handled primarily
through Citibank Delaware-controlled disbursement accounts,
including a Master Controlled Disbursement Account. The CDA
accounts are funded automatically from the DII Citibank Master
Account on an as-needed basis.
The disbursement accounts with Wachovia Bank National Association,
formerly known as First Union National Bank, are funded via wire
transfer from the DII Citibank Master Account to the "KBR, Inc.
Wachovia Master Account." The Debtors and their affiliates
maintain separate accounts payable disbursement accounts at
Wachovia Bank, making both ACH and check payments.
The Debtors and their affiliates also have numerous special
purpose standalone demand deposit accounts at various financial
institutions. The Debtors maintain accounts for offshore
payroll, construction projects, local project disbursements,
insurance, joint ventures and other special purpose accounts.
The stand-alone accounts are funded through wire transfers from
various Kellogg Brown & Root, Inc.-affiliated bank accounts on an
as-needed basis. Through the use of lockbox accounts and
depository accounts for receipts and zero-balance, controlled
disbursement and special purpose accounts for disbursements --
all of which are connected through a main master concentration
account -- the Cash Management System allows the Debtors to
manage their cash needs effectively.
The Cash Management System also allows the Debtors to consolidate
and invest excess cash that remains in the System each evening.
The particular investments used by the Debtors are in accordance
with the terms of their longstanding investment guidelines.
Offshore excess funds, that are not invested with HESI, are also
invested in accordance with the terms of the Investment
Guidelines.
International Cash Management System
The Debtors and their affiliates have substantial international
operations, which receive and disburse funds in U.S. Dollars and
foreign currencies. The Debtors and their affiliates currently
use several means to manage cash in those foreign locations,
which include cash pooling and zero balance sweeps, or a
combination of both. On a monthly basis, the accounts supporting
international operations held by the Debtors and their affiliates
process over 40,000 payments and receipts. The Debtors' Cash
Management System is fully integrated with their foreign
affiliates' cash management systems and relies heavily on
intercompany accounting and intercompany movement of funds.
In a notional pool, balances in individual accounts are
maintained and the aggregate balance is the "pool" balance across
all accounts. For zero balance sweeps, balances in individual
accounts are transferred to a concentration account and the
resulting account balance is brought to zero on a daily basis.
The Debtors and their wholly owned affiliates are currently
operating 13 pools. At this time, the Cash Management System is
responsible for managing these pooling structures:
AUD - Australian Dollar with Citibank Limited;
CAD - Canadian Dollar with HSBC Bank Canada;
GBP - Pound Sterling with Citibank, N.A.;
GBP - Pound Sterling with HSBC Bank plc;
KWD - Kuwait Dinar with National Bank of Kuwait;
MXN - Mexican Peso with Banamex;
SGD - Singapore Dollar with Citibank, N.A.;
USD - U.S. Dollar with Citibank N.A. London;
USD - U.S. Dollar with Citibank N.A. New York;
USD - U.S. Dollar with Citibank N.A. Singapore;
USD - U.S. Dollar with Citibank N.A. Singapore;
USD - U.S. Dollar with HSBC Bank plc; and
USD - U.S. Dollar with the National Bank of Kuwait.
Under the notional pool arrangements, the Debtors granted the
financial institutions, a right to set off among the accounts
that participate in the notional pool. This feature is critical
to the functioning of the pool. It is important for the financial
institutions to have assurance that this component of the pooling
can be used after the Petition Date and that prepetition use is
not subject to claw back. The financial institutions also require
assurance that the pooling agreements are valid and enforceable
against the Debtors.
The Debtors and their affiliates are currently using Georgetown
Finance Limited and Laurel Financial Services B.V. as funding
companies, to manage the off-shore accounts. The initiation of
the third party payments from accounts residing outside the
United States is handled by the transaction center in Leatherhead,
United Kingdom for the majority -- over 75% -- of the payments.
Third party payments not made from the transaction center in
Leatherhead, United Kingdom are made from project offices located
across a wide number of locations around the world.
The Debtors' global treasury department manages and enters into
spot foreign exchange transactions for funding the cash pools.
Effective September 1, 2003, the Debtors and their affiliates
were undertaking currency trades in the spot market with these
banks:
* ABN AMRO Bank N.V.;
* American Express Bank Ltd.;
* Australia & New Zealand Banking Group Ltd.;
* Banco ABN AMRO Real S.A.;
* Banco do Brasil;
* Bank of Montreal;
* Citibank, N.A.;
* Credit Suisse First Boston;
* Danske Bank A/S;
* HSBC Bank USA;
* JPMorgan Chase Bank;
* Merrill Lynch International Bank, Ltd.;
* Nordea Bank Finland PLC;
* Standard Chartered Bank; and
* The Royal Bank of Scotland plc.
Foreign currency requirements are bought and sold by KBR or its
affiliates. Excess foreign currencies offshore are converted to
U.S. dollars and repatriated back to the Debtors through the DII
Citibank Maser Account.
Headquartered in Houston, Texas, Kellogg, Brown & Root is engaged
in the engineering and construction business, providing a wide
range of services to energy and industrial customers and
government entities in over 100 countries. DII has no business
operations. The Company filed for chapter 11 protection on
December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N.
Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at
Kirkpatrick & Lockhart LLP, represent the Debtors in their
restructuring efforts. (DII & KBR Bankruptcy News, Issue No. 4;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
DLJ COMM'L: Fitch Cuts Junk Rating on Class B-8 Notes to D Level
----------------------------------------------------------------
DLJ Commercial Mortgage Corp. commercial mortgage pass-through
certificates, series 2000-CKP1, is downgraded as follows:
-- $6.5 million class B-8 to 'D' from 'C'.
The remaining classes are affirmed as follows:
-- $146.4 million class A-1A 'AAA';
-- $789.4 million class A-1B 'AAA';
-- Interest only class S 'AAA';
-- $51.6 million class A-2 'AA';
-- $58.0 million class A-3 'A';
-- $16.1 million class A-4 'A-';
-- $16.1 million class B-1 'BBB+';
-- $25.8 million class B-2 'BBB';
-- $12.9 million class B-3 'BBB-';
-- $33.9 million class B-4 'BB+';
-- $17.7 million class B-5 'BB';
-- $9.7 million class B-6 'B+';
-- $9.7 million class B-7 'CC'.
Classes B-9 and C have been reduced to zero due to realized loss.
The downgrade is the result of realized losses in the amount of
$12.1 million that were applied to classes B-9 and B-8 at the
January 2003 distribution. The cumulative amount of losses to date
is $32.2 million.
The loss was due to the disposition of two loans, The Genesis and
Big Kmart - Chicago, which had outstanding loan balances of $16.7
million and $9.3 million, respectively. The Genesis loan was
collateralized by two multifamily properties located in Dallas,
Texas that were real estate owned and resulted in an $8.2 million
loss. The Big Kmart - Chicago loan was secured by a single-tenant
retail property in Chicago, Illinois. Kmart rejected the lease at
this location. The special servicer negotiated a discounted payoff
of the loan that caused a $4 million loss to the trust.
ENCOMPASS SERVICES: Court Disallows Summers Group's $8.8MM Claim
----------------------------------------------------------------
"Twenty claims filed in the [Encompass Services] Debtors' Chapter
11 cases are duplicative and should be expunged," Marcy E. Kurtz,
Esq., at Bracewell & Patterson, LLP, in Houston, Texas, reports.
Based on the Debtors' books and records, the Claims are
duplicative of other proofs of claim, and thus, must be
eliminated to reduce the risk of multiple recoveries. Each
Claimant is entitled to one surviving claim, which will remain in
the Debtors' claims registry.
The Duplicative Claims include:
Duplicate Surviving
Claimant Amount Claim Claim
-------- ------ --------- ---------
Powell Lane Plaza $186,180 4765 4434
Maria dejesus Pena 50,000 1668 3820
Perry Boggs 150,000 4812 4591
Tony Taylor 150,000 4835 4371
Cedrick Moore 250,000 4546 3181
Summers Group Inc. 8,853,607 3314 2404
GECC 27,227 3873 4414
28,325 3236 3741
Transport Int'l. Pool Inc. 140,000 4320 4732
George Hayden 483,596 2381 2767
Except with respect Thomas Chambers' Claim No. 3309, Judge
Greendyke disallows all Duplicative Claims in their entirety.
(Encompass Bankruptcy News, Issue No. 23; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ENRON CORP: Earns Approval of Cash VI Structure Settlement Pact
---------------------------------------------------------------
Prior to the Petition Date, Enron Capital & Trade Resources
International Corporation, a wholly owned Enron North America
subsidiary, utilized its expertise in the energy business to,
among other things, trade financial power, physical and financial
gas, liquids and coal as well as other financial pulp and paper.
On April 1, 1996, ECTRIC entered into a financially settled
electricity derivative agreement with British Energy Generation
Limited, a wholly owned subsidiary of British Energy Plc. On
June 19, 1998, pursuant to a novation agreement, ECTRIC assigned
all its rights and obligations under the Derivative Contract to
Enron Capital & Trade Europe Finance LLC, its wholly owned non-
debtor subsidiary.
Under the terms of the Contract, BEGL and ECTEF were obligated to
make payments to each other calculated by reference to a specific
pricing index based on a specific market for the trading of
electricity in England and Wales or, in the absence of the index,
on a mutually agreed basis.
Martin A. Sosland, Esq., at Weil, Gotshal & Manges LLP, in New
York, relates that pursuant to an Assignment Agreement, on
June 26, 1998, ECTEF assigned its rights to receive any
Difference Payments under the Contract to Enron Cash Company No.
6 LLC. On that same day, ECTEF, CashCo, ECTRIC, State Street
Bank and Trust Company of Connecticut, National Association --
the Trustee -- and Barclays Bank PLC entered into a Contractual
Asset Sale Agreement pursuant to which, among other things,
CashCo transferred all its rights to the Difference Payments and
to certain monies received by it in respect of the Difference
Payments to the Contractual Asset Securitization Holding Trust
VI. ECTRIC, CashCo, the Trustee and ECTEF also entered into a
Services Agreement pursuant to which ECTRIC agreed to be the
Servicer of the Contract.
Furthermore, Mr. Sosland relates that on June 26, 1998:
(a) The Trust and ECTRIC entered into four monthly-settled
financial swap agreements with the Trustee including a
commodity swap, PPI swap, currency swap and interest
swap to eliminate cash flow volatility;
(b) The Trust borrowed funds from Barclays to finance its
purchase of the Contractual Asset from CashCo and to
purchase the Swap Agreements, as evidenced by certain
promissory notes issued by the Trust to Barclays. The
Contractual Asset provides the cash flow to the Trust
to service its obligations under the Note and the Swap
Agreements; and
(c) Enron Corporation guaranteed to the Trustee and to
Barclays the payment and performance of all obligations
of ECTEF, CashCo and ECTRIC under the Operative
Documents, pursuant to the Performance Guaranty.
The arrangements established pursuant to the Assignment
Agreement, the Sale Agreement, the Service Agreement, the Swap
Agreements, the Notes and the Guaranty, including the rights,
obligations and liabilities of the Parties constitute the Cash VI
Transactions.
Claim Against British Energy Group
On November 28, 2002, Mr. Sosland relates, the board of directors
of BE plc publicly announced that it was seeking to negotiate and
implement a restructuring of the financial obligations of its
group companies, including BEGL, to avoid an English insolvency
proceeding. On December 9, 2002, ECTEF and ECTRIC sent a notice
to BEGL terminating the Contract and alleging its default. On
February 7, 2003, ECTEF and ECTRIC notified BEGL that the amount
of ECTEF's claim against BEGL under the Contract was
GBP78,000,000. Consequently, on February 13, 2003, BEGL notified
ECTEF that it was initiating arbitration proceedings with respect
to the Claim.
On February 14, 2003, ECTEF and other creditors of the British
Energy Group entered into a standstill agreement and non-binding
heads of terms containing an agreement in principle to a proposed
restructuring of the British Energy Group and the compromise and
settlement of the claims of the creditors. The Court had
approved the Standstill Agreement and the Heads of Terms pursuant
to which, ECTEF was authorized to enter into definitive
restructuring agreements with the British Energy Group on the
terms contemplated by the Standstill Agreement and the Heads of
Terms.
On September 30, 2003, ECTEF and other creditors of the British
Energy Group entered into an agreement, effective October 31,
2003, with the British Energy Group, pursuant to which such
creditors agreed, among other things, to release their claims
against the British Energy Group upon the consummation of the
proposed restructuring in exchange for a portion of new bonds and
ordinary shares to be issued as part of the restructuring of the
British Energy Group. Among other things, the Creditor
Restructuring Agreement permits ECTRIC and other creditors to
transfer their claims against BE plc under the Creditor
Restructuring Agreement and the other related agreements without
BE plc's prior consent, subject to certain terms and conditions.
If the restructuring of the British Energy Group does not occur,
ECTEF's claim against BEGL will revert to being unliquidated and
the standstill period will terminate.
Settlement with Barclays and the Trustee
Mr. Sosland notes that the commencement of these bankruptcy cases
constituted an event of default under the Guaranty and certain
other Operative Documents. On February 14, 2002, Barclays asked
the Court to remove ECTRIC as Servicer of the Contract alleging
defaults under the Service Agreement.
BEGL has made no Difference Payments under the Contract since
November 2002. The Trustee had made no distributions out of the
Trust since November 25, 2002, at which time the Trustee held
GBP12,800,000 in certain accounts established by the Trustee
pursuant to the Sale Agreement. On November 25, 2002, the
Trustee terminated the Swap Agreements, alleging ECTRIC's default
thereunder.
According to Mr. Sosland, the Parties then engaged in extensive,
arm's-length and good faith negotiations concerning the rights of
Barclays and ECTRIC to receive payments from the Trustee pursuant
to the Sale Agreement, the Notes and the Swap Agreements. The
Sale Agreement does not contemplate the possibility of an early
termination of the Contract or the Swap Agreements. The Parties
were unable to resolve their disputes relating to the Sale
Agreement by referring to the Sale Agreements' provisions
regarding the order or priority of payments to be made by the
Trustee.
Except as provided in the Settlement Agreement, the Parties
agreed to release all claims, obligations and liabilities of each
of the other Parties arising under or relating to the Operative
Documents and the Cash VI Transaction, conditioned upon:
(a) the distribution by the Trustee of all cash amounts held
by the Trust, first to the Trustee, in satisfaction of
the Parties' obligations to reimburse the Trustee's
expenses, then to each of Barclays and ECTRIC, in agreed
proportions, in partial payment of the obligations of the
Trustee under the Notes and the Swap Agreements;
(b) the assignment to each of Barclays and ECTRIC of its
share of ECTEF's claim against BE plc under the Contract,
the Standstill Agreement and the Creditor Restructuring
Agreement; and
(c) the assignment to each of Barclays and ECTRIC of its
share of the Trust's rights in and to the Trust Estate.
The Parties acknowledge and agree that the compromise and
settlement reflected in the Settlement Agreement constitutes the
exchange of reasonably equivalent value between the Parties to
settle the matters among them relating to the Operative
Agreements and the Cash VI Transactions and is both reasonable
and fair to all the Parties.
The Settlement Agreement
The Parties desire to compromise and settle all issues regarding
the Cash VI Transaction. Through a Settlement Agreement, the
parties agree on these terms:
A. Pro Rata Shares
At Closing:
(i) half of all amounts held in the accounts of the Trust as
of November 25, 2002 -- about GBP12,813,474 -- after
reimbursement of the Trustee's expenses, will be
distributed to each of ECTRIC and Barclays;
(ii) all amounts that were paid into any Operative Account
after November 25, 2002 and that remain in the account
at Closing will be paid:
-- 62.5% to Barclays, and
-- 37.5% to ECTRIC; and
(iii) all amounts or assets received after Closing by any
Party from BEGL or any other third party with respect to
the Contract or the other Operative documents, other
than the Pro Rata Share amounts, will be held in trust
for ECTRIC or Barclays, to the extent of each other's
interest therein, and promptly distributed to ECTRIC or
Barclays in accordance with their respective Pro Rata
Shares.
B. Trustee Payments
The Trustee and the Trust Institution acknowledge and agree
that the entire amount of all fees, expenses and
indemnification amounts due and owing to it under the
Declaration of Trust and other Operative Documents is $1,754
and that upon the Trustee's receipt of this amount, none of
the Parties or the Trust will have any further obligations to
the Trustee or the Trust Institution under the Declaration of
Trust or otherwise with respect to payment obligations.
C. Trustee Assignment
The Trustee will assign and transfer all of its interests in
and to the Trust Estate to Barclays and ECTRIC, to each in
proportion with its Pro Rata Share, by executing and
delivering to each of Barclays and ECTRIC an assignment
agreement.
D. ECTEF Assignment
ECTEF will assign all of its rights, privileges, duties and
obligations under the Contract, the Creditor Restructuring
Agreement and the Standstill Agreement to Barclays and
ECTRIC, to each in proportion with its Pro Rata Share, by
executing and delivering an assignment agreement.
E. Adherence Agreement
Barclays and ECTRIC will each execute and deliver an
Adherence Agreement, pursuant to which each of them agree to
be bound by the terms of the Creditor Restructuring Agreement
and the Standstill Agreement to the same extent as ECTEF, in
ECTEF's place and stead.
F. Withdrawal of Claims
Barclays will withdraw with prejudice, by filing a notice of
withdrawal:
-- Barclay's Objection to the Debtors' Motion to Apply
Certain Orders to ECTRIC's case; and
-- Barclay's Motion to Compel ECTRIC to assume or reject the
service Contract.
G. Proofs of Claim
Each proof of claim filed by or on behalf of Barclays or the
Trustee against any Debtor in connection with the Cash VI
Transactions, including Claim Nos. 10907, 10908, 10812 and
10813 will be deemed irrevocably withdrawn, with prejudice,
and expunged in their entirety.
H. Termination of Documents
Upon the Closing:
(a) the Operative Documents will each be terminated and of no
further force and effect, and all liens and security
interests granted thereunder will automatically terminate
and be released, and none of the Parties will have any
further obligation whatsoever under the Operative
Documents;
(b) all accrued and unpaid interest, outstanding principal
and all other amounts under the Operative Documents will
be deemed paid in full; and
(c) the Final Retirement Date will have occurred and all
obligations of the Trustee with respect to the Trust will
terminate in accordance with the terms of the Declaration
of Trust.
I. Mutual Release
From and after the Closing, except as provided otherwise by
the Settlement Agreement, each of the Parties, for and on
behalf of itself and its Indemnified Parties, releases,
acquits and forever discharges each other from any and all
claims, demands, liabilities and causes of action of any and
every kind, character or nature, which the Parties may have
or claim to have against each other solely from the Cash VI
Transactions.
Accordingly, pursuant to Rule 9019 of the Federal Rules of
Bankruptcy Procedure, the Debtors sought and obtained Court
approval of the Settlement Agreement.
Mr. Sosland contends that the Debtors made a wise decision in
entering into the Settlement Agreement because:
(a) without it, the Parties would require extensive judicial
intervention to resolve their disputes, which has
uncertain results as to the favorable resolution for the
estates;
(b) a litigation would be costly, time-consuming and
distracting to management and employees; and
(c) it resolves numerous complicated issues arising from the
Cash VI Structure. (Enron Bankruptcy News, Issue No. 96;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
EXIDE TECHNOLOGIES: Hires E. Joachimsthaler as Expert Witness
-------------------------------------------------------------
The Exide Technologies Debtors seek to employ, nunc pro tunc to
September 5, 2003, Erich Joachimsthaler, Ph.D., from
VivaldiPartners, as an expert witness in connection with the
litigation on EnerSys, Inc.'s opposition to the Debtors' rejection
of several executory contracts. The Debtors chose Dr.
Joachimsthaler as their expert witness due to his extensive
experience with trademark matters including branding and trademark
confusion issues.
VivaldiPartners informed the Debtors that it does not represent
any other entity having an adverse interest to them in connection
with the Litigation. Compensation will be payable to
VivaldiPartners on behalf of Mr. Joachimsthaler's services on an
hourly basis, plus reimbursement of actual, necessary expenses
and other charges he incurred and those other professionals at
VivaldiPartners who provide him assistance. Mr. Joachimsthaler's
current hourly rate is $500 per hour and the rate of the other
employees who may be involved with assisting him range from $150
to $350 per hour. The hourly rates are subject to periodic
adjustments to reflect economic and other conditions. The hourly
rates are VivaldiPartner's standard hourly rates for work of this
nature. These rates are set at a level designed to fairly
compensate VivaldiPartners for the work performed and to cover
fixed and routine overhead expenses. The fees and charges will
be consistent with the fees and charges incurred in connection
with non-bankruptcy matters.
Mr. Joachimsthaler and other VivaldiPartners professionals will:
(a) render to the Debtors any advice or expert opinion that
may be required to assist in the Litigation;
(b) provide information relevant to the Trademark Issue; and
(c) perform all other service for the Debtors that may be
necessary and proper in furtherance of the matters for
which he is being employed.
VivaldiPartners will inform the Debtors if another firm
consultant has been engaged in an unrelated matter that may be
adverse to the Debtors. In no event will VivaldiPartners use or
disclose any confidential information obtained from the Debtors
or from other related parties in the unrelated engagement.
VivaldiPartners does not have any agreement with any other person
for the sharing of compensation it will be receiving in
connection with services rendered.
Headquartered in Princeton, New Jersey, Exide Technologies is the
world-wide leading manufacturer and distributor of lead acid
batteries and other related electrical energy storage products.
The Company filed for chapter 11 protection on April 14, 2002
(Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and
Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors
in their restructuring efforts. On April 14, 2002, the Debtors
listed $2,073,238,000 in assets and $2,524,448,000 in debts.
(Exide Bankruptcy News, Issue No. 39; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
EXTREME NETWORKS: Will Present at Thomas Weisel Conference on Wed.
------------------------------------------------------------------
Extreme Networks, Inc., (Nasdaq: EXTR), announced participation in
the following upcoming event with the financial community:
Thomas Weisel Partners Technology Conference
San Francisco, CA
Wednesday, Feb. 4, 2004
11:30 a.m. Local Event Time
Speaker: Gordon Stitt, President and CEO
Interested parties can view these events on the Internet by
visiting:
http://www.extremenetworks.com/aboutus/investor/calendar.asp/
Extreme Networks (S&P, B Corporate Credit & CCC+ Conv. Sub. Note
Ratings, Stable) delivers the most effective applications and
services infrastructure by creating networks that are faster,
simpler and more cost-effective. Headquartered in Santa Clara,
Calif., Extreme Networks markets its network switching solutions
in more than 50 countries. For more information, visit
http://www.extremenetworks.com/
FEDERAL-MOGUL: Wants Nod to Modify & Allow 127 Reconciled Claims
----------------------------------------------------------------
James O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones &
Weintraub P.C., in Wilmington, Delaware, relates that since the
March 3, 2003 General Bar Date, the Federal-Mogul Debtors have
undertaken an effort to review each filed proof of claim --
checking each claim against their books and records, and their
schedules of assets and liabilities. As a result, the Debtors
were able to identify a number of claims that mistakenly assert
"priority" or "secured" status, an incorrect claim amount, or a
claim against the wrong debtor. The claims may fall into one or
more of these categories.
The Debtors have attempted to contact the claimants in an effort
to mutually resolve by stipulation the apparent discrepancy and
avoid formal objection to the allowance of the claims. The
Debtors' efforts to stipulate with claimants as to the
classification and amount of disputed claims have proven
successful in maintaining good business relations with their
creditors and avoiding unnecessary legal expense of objecting to
-- and potentially litigating -- the disputed claims.
Mr. O'Neill tells the Court that the Debtors have agreed with the
claimants to modify and allow 127 claims. To memorialize the
agreement, the Debtors have negotiated and are prepared to enter
into stipulations with the claimants to modify the Reconciled
Claims.
By this motion, the Debtors ask the Court to modify and allow the
127 Reconciled Claims in accordance with the Debtors'
categorization of the Claims. 7
Mr. O'Neill asserts that the Debtors' estates will greatly
benefit if the Court fixes and allows the Reconciled Claims.
Specifically, the Debtors will benefit from reductions amounting
to:
(1) $4,232,566 in the collective claim amounts asserted in the
Reconciled Claims; and
(2) $509,213 in the reclassified claims from priority or
secured status to general unsecured status.
The Debtors can also determine the extent of liability for the
claims for purposes of formulating their plan, tabulating votes
and making distributions with respect to the Reconciled Claims
under a confirmed plan. By allowing the Reconciled Claims, the
claimants will warrant by stipulation that they will not file any
further amendments to the Reconciled Claims and will release each
of the Debtors and their successors, assigns and estates, from
any and all claims, liabilities, debts, causes of action or other
obligations arising from, related to or in connection with the
Reconciled Claims. The fixing of the claims also significantly
reduces the Debtors' attendant cost and uncertainty of filing,
and prosecuting, a formal objection to the Reconciled Claims
A. Improper Claim Classification
The Debtors identified 19 claims mistakenly asserting priority or
secured status. The Debtors and the claimants agreed to modify
these claims as general unsecured non-priority claims. The
Reconciled Claims total $276,030.
B. Improper Claim Classification and Wrong Debtor Case
The Debtors want eight claims -- asserting improper
classification and which have been erroneously filed against the
wrong Debtor -- modified and reclassified as general unsecured
non-priority claims. The Claims will also be modified to reflect
the correct Debtor case. The modification will result in
reclassifying claims aggregating $233,183 from priority or
secured status to general unsecured status.
C. Incorrect Claim Amount and Improper Claim Classification
The Debtors object to the amounts asserted by 32 claims that are,
in some instances, improperly classified as priority claims. The
Debtors and claimants agreed to reduce and allow the amount of
the Reconciled Claims from $3,344,115 to $2,745,163.
D. Wrong Debtor and Incorrect Claim Amount
The Debtors note that 61 claims assert disputable amounts and are
erroneously filed against the wrong Debtor case. The Debtors and
the affected claimants have agreed (a) to reduce the stated
claims from $10,895,209 to $2,748,163 and (b) to modify the
claims to reflect the correct Debtor case.
E. Multiple Claim Modifications
The Debtors reconciled four claims asserting $152,528 in the
aggregate. The Claims were improperly classified as asserting
priority or secured status, and were erroneously filed against a
Debtor entity that is not liable to the claims. Accordingly, the
Debtors and the claimants agreed to:
-- reduce and allow the claims for $66,494;
-- reclassify the claims as general unsecured non-priority
claims; and
-- modify the claims to reflect the correct Debtor case.
F. Multiple Claim Modifications due to Reclamation
The Debtors reconciled three claims aggregating $589,779. The
Reconciled Claims are those in which:
(a) the claimant included in the asserted amount an amount
properly attributable to a reclamation claim; and
(b) the Debtors disagreed with the claim amount, or with the
Debtor case asserted, with respect to the non-Reclamation
Claim Amount.
The Debtors and the Claimants have agreed to:
(i) reduce and allow the non-Reclamation portion of the
Reconciled Claims from $589,779 to $497,849, and
(ii) modify the claims to reflect the correct Debtor case or
cases.
Headquartered in Southfield, Michigan, Federal-Mogul Corporation
-- http://www.federal-mogul.com/-- is one of the world's largest
automotive parts companies with worldwide revenue of some $6
billion. The Company filed for chapter 11 protection on October
1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq.,
James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin
Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang,
Ziehl, Young, Jones & Weintraub, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
its creditors, they listed $ 10.15 billion in assets and $ 8.86
billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No.
49; Bankruptcy Creditors' Service, Inc., 215/945-7000)
FLEMING: Local 881 Wants Payment of $9MM in Wages and Benefits
--------------------------------------------------------------
Local 881 United Food and Commercial Workers Union is the
collective bargaining representative for a bargaining unit of
employees at a retail grocery store operated by Debtor Fleming
Companies, Inc. in Bourbonnais, Illinois.
The Bourbonnais store remained open until June 22, 2003.
During the time that Fleming continued to operate the Bourbonnais
store after the Petition Date, Fleming incurred obligations in the
form of vacation pay benefits owed to employees under the
Collective Bargaining Unit with Local 881. These obligations
remain unsatisfied.
Upon the closing of the Bourbonnais store, Fleming became
obligated under the Collective Bargaining Agreement to continue
to make sufficient contributions to the health insurance plan
covering its employees to insure coverage for one month following
the closing. Fleming did not make this contribution.
Local 881 asserts at least $9,213.75 in damages due to Fleming's
failure to make the required contributions to the health
insurance plan, plus the costs of any unreimbursed medical
expenses which otherwise would have been covered under the
employees' health insurance plan. Local 881 also asserts at
least $6,283.13 in damages for Fleming's failure to pay vacation
pay earned on and after April 1, 2003 and until June 22, 2003.
The obligations owed to Local 881 constitute actual and necessary
costs and expenses of preserving the estate and should be paid
immediately as administrative expenses.
Headquartered in Lewisville, Texas, Fleming Companies, Inc. --
http://www.fleming.com/-- is the largest multi-tier distributor
of consumer package goods in the United States. The Company filed
for chapter 11 protection on April 1, 2003 (Bankr. Del. Case No.
03-10945). Richard L. Wynne, Esq., Bennett L. Spiegel, Esq.,
Shirley Cho, Esq., and Marjon Ghasemi, Esq., at Kirkland & Ellis,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from its creditors, they listed
$4,220,500,000 in assets and $3,547,900,000 in liabilities.
(Fleming Bankruptcy News, Issue No. 22; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
FLEMING COS.: Files First Amended Plan and Disclosure Statement
---------------------------------------------------------------
The First Amended Plan provides for the valuation of the
Reorganized Fleming Companies Debtors. The reorganized value for
Core-Mark Newco was determined based on two valuation
methodologies. To determine the equity value for Core-Mark Newco,
an estimate for long-term debt at the Effective Date was
subtracted from the reorganized value.
The two primary methodologies used to determine the reorganized
enterprise value of Core-Mark Newco were:
(i) an analysis of the transaction value as a multiple of
various operating statistics for selected public
merger and acquisition transactions involving
companies that are similar to Core-Mark Newco, which
calculated multiples were then applied to the
operating metrics of Core-Mark Newco; and
(ii) a calculation of the present value of the free cash
flows under the Debtors' financial projections,
including assumptions for a terminal value.
Both methodologies rely on the Financial Projections for Core-
Mark Newco, which were prepared by management with the assistance
of AP Services LLC. A third methodology was considered, based on
an analysis of public market value as a multiple of various
operating statistics for selected public companies that are
similar to Core-Mark Newco. However, the methodology was not
used because it was concluded that there were no appropriate
publicly traded comparable companies on which to base a meaningful
analysis.
Based on the two methods, the estimated reorganized enterprise
value for Core-Mark Newco at the Effective Date is $275,000,000
to $325,000,000, with $300,000,000 used as the midpoint estimate.
The Official Committee of Unsecured Creditors has not yet agreed
to this valuation.
Treatment of Reclamation Claims
Under the First Amended Plan, the Debtors indicate that the
Reclamation Claims are no more than general unsecured claims
against their estates. For purposes of their Liquidation
Analysis, the Debtors depicted the Reclamation Claims, net of
set-offs and defenses, as Administrative Claims even though they
do not believe that the Reclamation Claims should be treated as
Administrative Claims.
If the Debtors are correct in their position regarding the
priority of the Reclamation Claims, the Reclamation Claims will
be no more than general unsecured claims and the amount allocated
for these Claims will be available to pay other Claims. Likewise,
if the Debtors reach a consensual resolution with the Reclamation
Claimants, some portion of the allocated amounts will likely be
available to pay other Claims.
Tranche B Loan
On the Effective Date, the Debtors propose to borrow up to
$60,000,000 under a term credit facility with a consortium of
lenders. The Tranche B Loan will be in the form of funded
borrowings or letters of credit. All obligations under the
Tranche B Loan will be secured by second priority security
interests in and liens on substantially all present and future
assets of Core-Mark Newco, other than those assets transferred to
the Post-Confirmation Trust, including accounts receivable,
general intangibles, inventory, equipment, fixtures and real
property, and products and proceeds thereof. The Tranche B
Loan will be junior to the Exit Financing Facility.
Rights Offering Alternative
To fund the Debtors' obligations under the Plan, the Debtors,
among other things, may, in the alternative to the Tranche B
Loan, offer Holders of Class 6 Claims the opportunity to
purchase, for cash, additional equity in the Reorganized Debtors'
businesses. This opportunity will be in the form of a Rights
Offering whereby all Holders of Class 6 Claim that are listed on
the Rights Participation Schedule will be entitled to exercise
their right to purchase shares of Preferred Stock in Core-Mark
Newco, up to the amount of each Holder's Rights Participation
Claim Amount listed on the Rights Participation Schedule. The
terms and conditions of the Rights Offering and a description of
the Preferred Stock are outlined in an Equity Commitment Letter.
Post-Confirmation Trust
On the Effective Date or as soon as practicable thereafter, Core-
Mark Newco will form a Post-Confirmation Trust to administer
certain of its post-confirmation responsibilities under the Plan,
including, but not necessarily limited to, those responsibilities
associated with the pursuit and collection of the Litigation
Claims and Causes of Action. The Post-Confirmation Trust will be
funded with certain cash on hand and proceeds from the Exit
Financing Facility and the Tranche B Loan or the Rights Offering.
In addition, the Post-Confirmation Trust will have available the
proceeds from the prosecution of Causes of Action. To the extent
necessary, Core-Mark Newco will enter into a post-confirmation
funding agreement with the Post-Confirmation Trust to assure that
the Post-Confirmation Trust has appropriate funds to carry out
its duties and responsibilities.
Environmental Liabilities
The Debtors further amend the Plan to provide that nothing in the
Plan discharges, releases or precludes any environmental
liability that is not a Claim. Furthermore, nothing in the Plan
discharges, releases or precludes any environmental claim of the
United States that arises on or after the Confirmation Date or
releases any Reorganized Debtor from liability under environmental
law as the owner or operator of property that the Reorganized
Debtor owns or operates after the Confirmation Date. In addition,
nothing in the Plan releases or precludes any environmental
liability to the United States as to any Person or Entity other
than the Debtors or Reorganized Debtors.
A black-lined copy of the Amended Plan is available at no extra
charge at:
http://bankrupt.com/misc/chapter_11_plan_blacklined.pdf
A black-lined copy of the Amended Disclosure Statement is
available at no extra charge at:
http://bankrupt.com/misc/blacklined_disclosure_statement.pdf
Headquartered in Lewisville, Texas, Fleming Companies, Inc. --
http://www.fleming.com/-- is the largest multi-tier distributor
of consumer package goods in the United States. The Company filed
for chapter 11 protection on April 1, 2003 (Bankr. Del. Case No.
03-10945). Richard L. Wynne, Esq., Bennett L. Spiegel, Esq.,
Shirley Cho, Esq., and Marjon Ghasemi, Esq., at Kirkland & Ellis,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from its creditors, they listed
$4,220,500,000 in assets and $3,547,900,000 in liabilities.
(Fleming Bankruptcy News, Issue No. 23; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
FLEXTRONICS INT'L: Third-Quarter Results Reflect Solid Growth
-------------------------------------------------------------
Flextronics (Nasdaq: FLEX) announced results for the quarter ended
December 31, 2003.
Net sales in the quarter reached a record of $4.15 billion, which
represents a sequential increase of $649.1 million, or 18.5% over
the September quarter, and a year-over-year increase of $300.8
million, or 7.8% over the December 2002 quarter.
Proforma net income was $93.9 million, or $0.17 per diluted share
for the quarter, which represents a sequential increase of $46.4
million, or 97.6% over the September quarter, and a year-over-year
increase of $27.8 million, or 41.9% over the December 2002
quarter. Including after-tax amortization expense of $8.6 million,
previously announced restructuring costs of $49.5 million, and
litigation settlement costs of $14.4 million, net income in the
December quarter of 2003 was $21.4 million on a GAAP basis, or
$0.04 per diluted share, as compared to a net loss of $6.5
million, or a $0.01 loss per share in the December quarter of
2002.
The quarterly results reflect a number of financial milestones,
including record inventory turns of 13 times, a cash conversion
cycle of 14 days and selling, general and administrative expense
of 2.9% of sales. In addition, proforma cash flow from operations
was $356 million, which excludes approximately $68 million of
payments for restructuring and other charges.
"As we begin to realize the earnings leverage imbedded in our
business, our financial results will continue to improve. For
instance, during the December 2003 quarter, year-over-year
revenues increased 8%, while proforma net income increased 42%.
The improved operating results are what we expected to begin to
see as we emerge from the technology downturn. While we are
pleased that our margins, overall profitability, return on
invested tangible capital, and many other financial metrics have
improved this quarter, we continue to be completely focused on
driving additional improvements in our operating performance. As
demand trends further improve, we expect utilization rates will
improve, pricing will increase, our higher value-add supply chain
services will grow, as will our ODM services. All of this,
combined with further operating leverage, should result in
increasing margins," said Michael E. Marks, Chief Executive
Officer of Flextronics.
Addressing the business outlook, Marks added, "Clearly, business
conditions have improved and we executed well this quarter, which
resulted in Flextronics achieving many financial milestones that
we will continue to build on next year. We believe that next year
should show improvement in several areas. Major restructurings in
the industry should be nearly completed, excess equipment capacity
should be substantially reduced, and demand should continue to
improve. With the expected increase in profits from most of our
business units, we are increasingly confident that Flextronics is
nicely positioned for growth in revenue, margins and profits."
Marks concluded, "Last week's announcement regarding our
discussions with Nortel Networks has the potential to be a major
transformational event for Flextronics in many ways. As currently
being discussed, it has the potential to be the largest program
award in the history of the EMS industry, with revenues exceeding
$2 billion per year for Flextronics. Not only would this program
use all of our end-to-end supply chain services, it would also
have a major and immediate impact on diversifying our product mix
and would make Flextronics the undisputed leading EMS provider of
high-end telecom infrastructure products."
The Company provided guidance that excludes the Nortel
discussions, as it does not forecast the contribution of new
programs until definitive agreements are in place. The Company
has increased its expectations for the March 2004 quarter by 10%
for sales and 20% for proforma earnings per share, to a range of
$3.4 to $3.6 billion and $0.09 to $0.11, respectively. In
addition, the Company indicated that both revenues and proforma
earnings per share for the June, September, and December 2004
quarters are expected to exceed the existing First Call consensus
estimates by approximately 10%. GAAP earnings are expected to be
lower than proforma earnings by approximately $0.02 per diluted
share reflecting quarterly amortization expense, as well as the
completion of previously announced restructuring plans, which are
expected to result in a charge in the March 2004 quarter of
approximately $35 million, or approximately $0.06 per diluted
share.
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/
FOREST OIL: S&P Keeps Watch Negative After 2003 Reserve Write-Down
------------------------------------------------------------------
Standard & Poor's Rating Services placed its 'BB' corporate credit
rating on Forest Oil Corp. on CreditWatch with negative
implications.
The Denver, Colorado-based company had approximately $750 million
in total debt outstanding as of Sept. 30, 2003.
The CreditWatch listing follows the company's announcement that
the company will record a year-end 2003 reserve write-down
totaling about 74 million barrels of oil equivalent or 444 billion
cubic feet equivalent, which is more than 28% of total 2002 proved
reserves (260 mmboe/1,559 bcfe). Adjusting for acquisitions
completed in 2003, year-end reserves are expected to total
approximately 1,300 bcfe, or 217 mmboe, down nearly 17% over 2002.
"Although we anticipated downward revisions related to Redoubt
Shoal, the magnitude of those revisions (nearly 1.5 times greater
than expected), coupled with the announcement of additional write-
offs aggregating 150 bcfe to be taken throughout the company's
portfolio of properties, significantly weakens the credit profile
and will likely lead to a ratings downgrade," said Standard &
Poor's credit analyst Kimberly Stokes.
Standard & Poor's also said that reserve revisions could further
affect future availability under the company's bank credit
facility, which is governed by a borrowing base. However, despite
the probable reduction in borrowing capacity, Forest has adequate
liquidity to meet near-term obligations.
The CreditWatch will be resolved in the near term, following
Standard & Poor's review of Forest's credit profile.
"The review will focus on the effect of the reserve revisions in
the company's ability to reach significantly lower leverage
targets, while reining in costs, which are substantially high
relative to peers," said Ms. Stokes.
FRISBY TECHNOLOGIES: Wins 'Judgment Order' in Outlast Litigation
----------------------------------------------------------------
Frisby Technologies, Inc. (Pink Sheets: FRIZQ), announced that its
Motion for Partial Summary Judgment on Non-Infringement in its
outstanding litigation with OUTLAST Technologies, Inc., was
granted on January 14th, 2004 by United States Magistrate Judge
B.N. Boland.
The Company has been operating under Chapter 11 (Reorganization)
of the Federal Bankruptcy Code since January 16th, 2003. Since
that time Frisby has made significant cost and strategic changes
to improve its focus and profitability. Frisby also sold certain
assets to Carl Freudenberg, KG in June 2003 and is still
considering letters of intent to purchase the remaining assets
from potential investor-owners.
According to Chief Restructuring Officer Mark Gillis, "The Company
is very pleased with the decision and we believe that this clears
the air surrounding a key concern of potential investors and
creates a positive path for a final disposition in the bankruptcy
case."
Frisby Technologies is a leader in the development of temperature
balancing materials for the apparel, footwear, sporting goods, and
home furnishings industries. For more information, contact Mark
Gillis at 336-998-6652.
GAP INC: Board Declares Quarterly Dividend Payable on March 15
--------------------------------------------------------------
Gap Inc. (NYSE: GPS) announced that its Board of Directors voted a
quarterly dividend of $0.0222 per share payable on March 15, 2004,
to shareholders of record at the close of business on February 27,
2004.
Gap Inc. (Fitch, BB- Senior Unsecured Debt Rating, Stable Outlook)
is a leading international specialty retailer offering clothing,
accessories and personal care products for men, women, children
and babies under the Gap, Banana Republic and Old Navy brand
names. Fiscal 2002 sales were $14.5 billion. As of November 1,
2003, Gap Inc. operated 4,210 store concepts (3,075 store
locations) in the United States, the United Kingdom, Canada,
France, Japan and Germany. In the United States, customers also
may shop the company's online stores at http://www.gap.com/
http://www.BananaRepublic.com/and http://www.oldnavy.com/
GAP INC: Provides Financial Reporting Schedule for Year 2004
------------------------------------------------------------
Gap Inc. (NYSE: GPS) announced its expected financial release
schedule for calendar year 2004:
Fourth Quarter Earnings 2003 February 26, 2004
February Sales March 4, 2004
March Sales April 8, 2004
April Sales May 6, 2004
First Quarter Earnings 2004 May 20, 2004
May Sales June 3, 2004
June Sales July 8, 2004
July Sales August 5, 2004
Second Quarter Earnings 2004 August 19, 2004
August Sales September 2, 2004
September Sales October 7, 2004
October Sales November 4, 2004
Third Quarter Earnings 2004 November 18, 2004
November Sales December 2, 2004
Monthly Sales
Gap Inc. will release monthly sales results prior to market open
according to the schedule above. In conjunction with the release,
the company hosts a monthly sales recording on 800-GAP-NEWS, which
provides a recap of the previous month's sales results.
International callers may call 706-634-4421. The listen-only
recording will be available at approximately 9:00 a.m. Eastern
time after monthly sales results are issued.
Quarterly Earnings
Gap Inc. will report quarterly earnings results after market close
according to the schedule above. In conjunction with the release,
the company hosts a Webcast presentation and conference call at
5:00 p.m. Eastern time that is open to the general public. The
Webcast and conference call can be accessed at 800-374-0168 or
706-634-0994 for International callers. An archived recording of
the event will be available for four weeks after the conference
call on 800-GAP-NEWS or 706-634-4421 for International callers,
and gapinc.com.
Media Resources
Visit gapinc.com to access sales and earnings results as well as
other Gap Inc. press releases. Interested parties may also
register to receive email notification of newly released company
announcements. Gap Inc.'s online press room provides general
company information, business updates, brand press kits and more.
Gap Inc. reserves the right to change reporting dates and times.
Gap Inc. Copyright Information
Gap Inc.'s conference calls and Webcasts are simultaneously
recorded on behalf of Gap Inc. and consist of copyrighted
material. They may not be re-recorded, reproduced, retransmitted,
rebroadcast or downloaded without Gap Inc.'s express written
permission. Your participation represents your consent to these
terms and conditions, which are governed under California law.
Your participation on the call also constitutes your consent to
having any comments or statements you make appear on any
transcript or broadcast of this call.
Gap Inc. (Fitch, BB- Senior Unsecured Debt Rating, Stable Outlook)
is a leading international specialty retailer offering clothing,
accessories and personal care products for men, women, children
and babies under the Gap, Banana Republic and Old Navy brand
names. Fiscal 2002 sales were $14.5 billion. As of
November 1, 2003, Gap Inc. operated 4,210 store concepts (3,075
store locations) in the United States, the United Kingdom,
Canada, France, Japan and Germany. In the United States, customers
also may shop the company's online stores at http://www.gap.com/
http://www.BananaRepublic.com/and http://www.oldnavy.com/
GENERAL MEDIA: Commences Soliciting Acceptances of Proposed Plan
----------------------------------------------------------------
General Media, Inc., the publisher of Penthouse magazine, together
with eight of its direct and indirect subsidiaries, has begun
mailing the court-approved disclosure statement relating to the
Company's Plan of Reorganization to creditors along with ballots
for them to vote on the Plan.
If confirmed, the Plan would deleverage the Company's balance
sheet, restore liquidity, and enhance the Company's competitive
position in the marketplace. In addition to Penthouse magazine,
the Company publishes other magazines and is engaged in other
media and entertainment businesses.
As previously announced, the Plan results from discussions with
the holders of approximately 89% of the Company's 15% Senior Notes
due 2004 and its Official Committee of Unsecured Creditors. Under
the Plan, holders of the Company's Senior Notes would exchange
them for 1 million shares of common stock of the reorganized
Company, representing 100% of the new common equity, plus new Term
Loan Notes of up to $27 million. The new Term Loan Notes will bear
interest at 13% per annum, payable in kind for the first three
years of their seven-year term, and be secured by a first priority
lien on all the reorganized company's assets, subordinate only to
a lien granted to a lender under an exit financing facility of up
to $15 million.
General unsecured creditors, whose claims aggregate approximately
$10-12 million, will share pro rata in $2 million in cash and $3
million principal amount of new Term Loan Notes.
General Media, Inc. is a 99.5 per cent owned subsidiary of
Penthouse International, Inc. (OTCBB: PHSL.OB), which has not
filed for bankruptcy protection. No distribution on account of
equity is proposed under the Plan. In connection with the Plan,
the Company will enter into a ten-year agreement providing for
Company founder Robert C. Guccione to continue providing his
services as publisher emeritus of Penthouse magazine.
"We are pleased that we have been able to take this important step
toward ensuring the continued publication of Penthouse for many
years," commented Robert C. Guccione, Chairman and Chief Executive
Officer of General Media, Inc. and founder of Penthouse magazine.
The Court has scheduled a hearing for February 26, 2004 to
consider confirmation of the Plan of Reorganization. A copy of the
proposed Plan of Reorganization and the related Disclosure
Statement is posted on the website of the Bankruptcy Court,
http://www.nysb.uscourts.gov/
GREAT WESTERN: US Trustee Appoints Official Creditors' Committee
----------------------------------------------------------------
The United States Trustee for Region 8 appointed a three-member
Official Committee of Unsecured Creditors in Great Western Coal,
Inc.'s Chapter 11 cases:
1. Dyno Nobel, Inc.
Attn: Brent L. Pehrson
11th Floor Crossroads Tower
Salt Lake City, Utah 84144
Tel: 801-364-4800
Fax: 801-519-5627
2. Baker Hughes, Inc.
Baker Huges Mining Tool
Attn: Christopher Ryan
3900 Essex Lane, #1200
Houston Texas 77027
Tel: 713-439-8771
Fax: 713-439-8778
3. Cook Tire, Inc.
Attn: Ted Cook
Box 970
London Kentucky 40743
Tel: 606-864-7721
Fax: 606-864-7981
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtors'
expense. They may investigate the Debtors' business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtors is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
Headquartered in Coalgood, Kentucky, Great Western Coal, Inc., a
coal mining company, filed for chapter 11 protection on December
10, 2003 (Bankr. E.D. Ky. Case No. 03-61955). Robert Gregory
Lathram, Esq., represents the Debtor in its restructuring efforts.
When the Company filed for protection from its creditors, it
listed $1,596,725 in total assets and $10,148,184 in total debts.
GUESS? INC: SEC Declares Registration Statement Effective
---------------------------------------------------------
Guess?, Inc. (NYSE: GES) announced that the Securities and
Exchange Commission has declared its Registration Statement on
Form S-3 (File No. 333-111895) effective as of January 26, 2004,
registering the sale of up to 5,700,000 shares of the Company's
common stock on behalf of Paul and Maurice Marciano.
Messrs. Marciano are the Company's Co-Chief Executive Officers,
Co-Chairmen and majority shareholders.
As announced on January 13, 2004, the offering will not increase
the number of the Company's outstanding shares or dilute ownership
of the Company's existing shareholders. The Company will not
receive any proceeds from any sale of shares by the selling
shareholders.
Messrs. Marciano have indicated that the purpose of the offering
is for investment portfolio diversification and to increase the
availability of the Company's common stock. They intend to sell
from time-to-time in open market transactions in compliance with
the Company's securities trading policies, and at this time do not
intend to sell in an underwritten offering. Together, Messrs.
Marciano currently own approximately 67.9% of the Company's stock.
If all of the registered shares were sold, their combined holdings
would be reduced to approximately 54.9% of the Company's common
stock.
Guess?, Inc. (S&P, BB- Corporate Credit Rating, Negative) designs,
markets, distributes and licenses one of the world's leading
lifestyle collections of contemporary apparel, accessories and
related consumer products.
GREAT LAKES AVIATION: Reports 22.7% Increase in December Traffic
----------------------------------------------------------------
Great Lakes Aviation, Ltd. (OTC Bulletin Board: GLUX) announced
preliminary passenger traffic results for the month of December.
Scheduled service generated 12,889,000 revenue passenger miles
(RPM's), a 22.7 percent increase from the same month last year.
Available seat miles (ASM's) decreased 2.4 percent to 29,085,000.
As a result, load factor increased 9.0 points to 44.3 percent.
Passengers carried increased 13.4 percent to 44,322 when compared
with December 2002.
For the twelve months ending December 31, 2003 compared to the
same twelve month period in 2002, revenue passenger miles (RPM's)
decreased 7.2 percent to 124,410,000 while available seat miles
(ASM's) decreased 8.4 percent to 329,135,000, resulting in a load
factor of 37.8 percent for the year 2003 compared to 37.3 percent
for the same twelve month period in 2002. The company carried
446,528 revenue passengers for the twelve month period ending
December 31, 2003, a 11.4 percent decrease on a year over year
basis.
As of January 3, 2004, Great Lakes is providing scheduled
passenger service at 41 airports in eleven states with a fleet of
Embraer EMB-120 Brasilias and Raytheon/Beech 1900D Regional
Airliners. A total of 194 weekday flights are scheduled at three
hubs, with 184 flights at Denver, 4 flights at Minneapolis/St.
Paul, and 6 flights at Phoenix. All scheduled flights are
operated under the Great Lakes Airlines marketing identity in
conjunction with code-share agreements with United Airlines and
Frontier Airlines at their Denver hub.
Additional information is available on the company Web site that
may be accessed at http://www.greatlakesav.com/
* * *
Going Concern Uncertainty
On February 28, 2003, the Company discontinued all operations at
its Chicago O'Hare hub along with corresponding service to the
subsidized communities of Manistee, Ironwood and Iron Mountain,
Michigan and Oshkosh, Wisconsin after the United States Department
of Transportation elected to select a carrier to provide EAS to a
different hub for all points except Oshkosh. At Oshkosh the
community's eligibility for subsidy was terminated.
In April 2003, the Company began negotiations with United to
modify and extend the existing code share agreement beyond its
current expiration date of April 30, 2004. During the negotiation
process, United filed a preemptive motion in the bankruptcy court
to reject the code share agreement. On July 11, 2003 the Company
and United signed a Memorandum of Understanding outlining the
terms of the proposed amendment to the code share agreement. On
July 18, 2003, United withdrew its bankruptcy court motion to
reject the code share agreement. Also effective on that date, the
Company and United amended their code share agreement, formalizing
the terms under which the two companies will operate in the
future.
Pursuant to the amendment to the code share agreement, the Company
granted United rights to enter five Denver hub markets for which
the Company previously had exclusivity rights. In exchange for
releasing exclusivity with respect to those markets, previous
restrictions placed on the Company regarding code sharing and
frequent flier program participation at the Denver hub with other
major carriers was removed. The Company and United also agreed on
a payment structure for amounts the Company owes United.
Subject to the Company's compliance with the code share agreement,
as amended, as of December 31, 2005, United has agreed to extend
the term of the code share agreement through April 30, 2007.
United may elect to assume or reject the amended code share
agreement in connection with its ongoing bankruptcy proceedings.
Due to significant losses in 2001 and 2002, at December 31, 2002,
the Company had exhausted its outside sources of working capital
and funds and was in arrears in payments to all the institutions
providing leases or debt financing for the Company's aircraft. On
December 31, 2002 and during the first four months of 2003, the
Company restructured its financing agreements with Raytheon
Aircraft Credit Corporation and certain other institutions
providing financing for the Company's aircraft. The effect of
these restructurings was to reduce the Company's total debt and
lease obligations owing to these creditors and to reduce the
amount of the Company's scheduled monthly debt and lease payments.
The restructuring with Raytheon also provided for the return of
seven surplus aircraft not used in current operations to Raytheon
during the course of 2003.
During 2003, the Company, due to the effects of reduced traffic
and correspondingly reduced revenue during the Iraq War, has been
unable to generate sufficient cash flow to service the Company's
restructured debt and lease payment obligations as required by the
Raytheon and other restructuring agreements. As of June 30, 2003
the Company was approximately $4.9 million, or 75%, in arrears in
respect of such rescheduled payments for the six months ending
June 30, 2003 and in default on substantially all of the Company's
agreements with the institutions providing financing for the
Company's aircraft.
There are significant uncertainties regarding the Company's
ability to achieve the necessary cash flow to meet the payments
required under the Raytheon and other restructuring agreements due
to a variety of factors beyond the Company's control, including
the outcome of United's reorganization in bankruptcy, the
evolution of United's continuing code share relationship with the
Company; reduced passenger demand as a result of general economic
conditions, public health concerns, security concerns and foreign
conflicts; volatility of fuel prices; and the amount of Essential
Air Service funding and financial support available from the U.S.
government.
Ultimately, the Company must generate sufficient revenue and cash
flow to meet the Company's obligations as currently structured,
obtain additional outside financing or renegotiate the Company's
restructured agreements with its creditors in order to set a level
of payments that can be reasonably serviced with the cash flows
generated by the Company under current market conditions. The
Company is engaged in on-going negotiations with Raytheon and its
other creditors with respect to its default under the terms of its
debt and lease agreements with these institutions.
The Company's auditors have included in their report dated
March 17, 2003 on the Company's financial statements for the year
ended December 31, 2002 an explanatory paragraph to the effect
that substantial doubt exists regarding the Company's ability to
continue as a going concern due to the Company's recurring losses
from operations and the fact that the Company has liabilities in
excess of assets at December 31, 2002.
HANGER ORTHOPEDIC: Acquires Rehab Designs of America Corporation
----------------------------------------------------------------
Hanger Orthopedic Group, Inc. (NYSE: HGR) acquired Rehab Designs
of America Corporation with 19 patient care centers in Missouri,
Kansas, Wisconsin, Colorado, and Texas. Net sales for fiscal year
2003 were approximately $16.5 million.
Chairman and CEO, Ivan R. Sabel stated, "This acquisition further
strengthens our presence in several key markets and brings us
additional highly skilled, dedicated personnel. These practices
when added to our existing high quality clinical capabilities will
enhance our ability in delivering professional, clinically
excellent O&P services to our patients and referral sources. We
will continue to work diligently on additional acquisitions that
further solidify our national presence and are accretive to
earnings."
Hanger Orthopedic Group, Inc. (S&P, B+ Corporate Credit Rating),
headquartered in Bethesda, Maryland, is the world's premier
provider of orthotic and prosthetic patient-care services. Hanger
is the market leader in the United States, owning and operating
591 patient-care centers in 44 states and the District of
Columbia, with 3,139 employees including 875 certified
practitioners. Hanger is organized into two business segments:
patient-care, which consists of nationwide orthotic and prosthetic
practice centers, and distribution, which consists of distribution
centers managing the supply chain of orthotic and prosthetic
componentry to Hanger and third party patient-care centers. In
addition, Hanger operates the largest orthotic and prosthetic
managed care network in the country.
HL&P CAPITAL: Fitch Withdraws Preferred Rating After Redemption
---------------------------------------------------------------
Fitch Ratings has withdrawn the 'BB+' rating and Negative Rating
Outlook for HL&P Capital Trust I's $250 million 8.125% trust
preferred securities. The rating withdrawal reflects the full
redemption of these securities on Jan. 20, 2004. HL&P Capital
Trust is a Delaware statutory trust created by CenterPoint Energy,
Inc. (CNP; 'BBB-' senior unsecured, Negative Outlook) for the sole
purpose of issuing the securities and purchasing junior
subordinated debentures issued by CNP.
I2 TECHNOLOGIES: Dec. 31 Net Capital Deficit Narrows to $255 Mil.
-----------------------------------------------------------------
i2 Technologies, Inc. (OTC:ITWO), a leading provider of end-to-end
supply chain management solutions, announced results for the
fourth quarter and fiscal year 2003.
i2's license revenue rose four percent sequentially in the fourth
quarter to $14.8 million. This compares to $14.2 million of
license revenues in the third quarter of 2003 and $21.8 million in
the fourth quarter of 2002.
Development services revenue, included in the contract revenue
line of the income statement, grew 29 percent sequentially,
reaching $6.7 million in the fourth quarter. This compares to $5.2
million in the prior quarter and $4.8 million in the fourth
quarter of 2002.
"We are seeing signs that sales pipelines are beginning to
rebuild, but have also felt the lingering effects of the re-
audits," said Sanjiv Sidhu, i2 chairman and CEO. "With sales
cycles averaging nine to 12 months, I believe these effects are
likely to remain for the next few quarters as we work to convert
sales pipelines into bookings, and then bookings into revenue."
Total fourth quarter revenues were $98 million, as compared to
$117.3 million in the third quarter of 2003 and $168.9 million in
the fourth quarter of 2002. The majority of the decrease in total
revenues from those reported in the third quarter is due to a
$17.1 million decrease in the amount of deferred contract revenue
recognized in the quarter.
Total costs and operating expenses for the fourth quarter of 2003
were $99.6 million, including approximately $2.5 million for legal
fees related to the SEC investigation and the class action lawsuit
and approximately $0.8 million of expenses related to the deferred
contract revenue recognized as part of the contract revenue line
of the income statement. This compares to $103.3 million in total
costs and operating expenses in the third quarter of 2003 and
$148.8 million in the fourth quarter of 2002. Operating loss for
the fourth quarter of 2003 totaled $1.9 million.
The company reported a net loss of $7.0 million or $0.02 loss per
share for the fourth quarter. This compares to net income of $7.1
million, or $0.02 earnings per share in the third quarter of 2003
and net income of $15.8 million, or $0.03 earnings per share, for
the fourth quarter of 2002.
Fiscal Year 2003 Results
License revenues for the fiscal year 2003 were $65.4 million, down
26 percent from the prior year. Development services revenues for
2003, included in the contract revenue line of the income
statement, totaled $26.8 million as compared to $13.2 million for
2002.
Total revenues for 2003 were $494.9 million, as compared to $908.4
million for 2002.
For the full year 2003, the company reported net income of $42.5
million, or diluted earnings per share of $0.09 as compared to a
net loss of $898.9 million, or $2.10 loss per basic and diluted
share, for 2002.
Cash use in the fourth quarter totaled $27.6 million. The Company
ended the year with $309.4 million in total cash and investments.
At December 31, 2003, the Company's balance sheet shows a total
shareholders' equity deficit of about $255 million.
Highlights for the Fourth Quarter and Fiscal Year 2003:
New customers during the year came from all regions and a variety
of verticals, including The Brick Warehouse Corporation, Canada's
largest retailer of furniture, mattresses, appliances and home
electronics and Hitachi Global Storage Technologies, a global
provider of storage products for desktop computers, high-
performance servers and mobile devices.
Current customers turning to i2 to drive additional value from
their closed-loop supply chain initiatives included Airbus and
Rockwell Collins in Aerospace and Defense; Woolworths Ltd., Del
Monte Foods, Dole Food Company, and PSS World Medical in Consumer
Goods and Retail; Mitsubishi, Hitachi, and NEC in High Tech.
Additionally, Industrial companies Cummins, Inc. and Krones, and
Metals leaders JFE Steel and International Steel also chose i2
during the year.
Approximately 40 customers went live with i2 Solutions during the
fourth quarter, totaling 178 companies in 2003. Companies included
Del Monte Foods; Meidi-Ya Co, Ltd., Toshiba, Krones AG, EWK, LSG
Sky Chefs and Heinz Wattie's Limited.
A leading provider of end-to-end supply chain management
solutions, i2 designs and delivers software that helps customers
optimize and synchronize activities involved in successfully
managing supply and demand. i2 has more than 1,000 customers
worldwide--many of which are market leaders--including seven of
the Fortune global top 10. Founded in 1988 with a commitment to
customer success, i2 remains focused on delivering value by
implementing solutions designed to provide a rapid return on
investment. Learn more at http://www.i2.com/
IMC GLOBAL: Moves Q4 Conference Call Date to February 5, 2004
-------------------------------------------------------------
IMC Global Inc. (NYSE: IGL) rescheduled the date to release its
2003 fourth quarter and full-year results and hold a conference
call to Thursday, February 5 from Thursday, January 29 as a result
of its announcement today of a definitive agreement to combine
with Cargill Crop Nutrition to create a new, publicly traded
company.
Details regarding the conference call on February 5 will be
announced shortly.
With 2002 revenues of $2.1 billion, IMC Global (S&P, B+ Corporate
Credit Rating, Stable) is the world's largest producer and
marketer of concentrated phosphates and potash crop nutrients for
the agricultural industry and a leading global provider of feed
ingredients for the animal nutrition industry. For more
information, visit IMC Global's Web site at
http://www.imcglobal.com/
IMC GLOBAL: S&P Puts Ratings on Watch Positive After Merger News
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B+' corporate
credit rating and other ratings for IMC Global Inc. on CreditWatch
with positive implications, citing the company's announcement of a
definitive merger agreement to combine with Cargill Inc.'s Cargill
Crop Nutrition business.
Lake Forest, Illinois-based IMC Global is one of the largest
global producers of phosphate and potash crop nutrients for the
agricultural industry and has about $2.1 billion of debt
outstanding.
"The CreditWatch placement reflects the likely improvement to
credit quality if the merger between IMC Global and Cargill Crop
Nutrition is consummated essentially as planned," said Standard &
Poor's credit analyst Peter Kelly.
Based on preliminary information, the new company is expected to
benefit from a stronger financial profile with increased financial
flexibility, and potential synergistic opportunities including a
lower cost of capital, an enhanced platform for worldwide growth
through the combination of IMC Global's domestic business with
Cargill Crop Nutrition's more international franchise, and an
overall stronger business position. The proposed combination will
result in a new, publicly traded company, with Cargill receiving
66.5% of the outstanding shares of the new company. IMC Global
shareholders will own 33.5% of the outstanding shares of the new
company. The new company will have sales of about $4.1 billion,
total assets of about $5.4 billion, and total debt of about $2.2
billion.
Resolution of the CreditWatch will follow a review of the business
prospects and financial profile of the new company, potential
benefits that may be derived from the proposed ownership
structure, as well as management's financial policies and
operational strategies. The merger, expected to be completed in
the summer of 2004, is subject to regulatory approvals as well as
IMC Global's shareholder approval.
IMPATH: Sues James Weisberger for Misappropriating Trade Secrets
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Bio-Reference Laboratories, Inc., announced that IMPATH, INC, as a
debtor-in-possession, has commenced an adversary proceeding in
Bankruptcy Court in the Southern District of New York against
James Weisberger M.D., Vice President, Assistant Chief Medical
Officer and Director of Hematopathology at Bio-Reference
Laboratories, alleging that Dr. Weisberger has, among other
things, misappropriated certain of IMPATH's alleged trade secrets
and unlawfully solicited former IMPATH employees to commence
employment with Bio-Reference.
Bio-Reference Laboratories was not named as a party to the suit.
Bio-Reference and Dr. Weisberger have stated that the allegations
are utterly baseless and totally without merit. The suit will be
fully contested in court. Bio-Reference has been committed to
building the foremost hematopathology laboratory in the industry
for some time and will continue to do so in the future.
The Company is the largest independent regional clinical
laboratory in the Northeast and has major market positions in
physician offices, nursing homes and correctional institutions.
The Company is a full service clinical laboratory with specialty
capability, especially in the areas of genomics, oncology,
correctional health, and complimentary medicine. PSIMedica, a
business unit of the Company, is a clinical knowledge management
organization offering an array of information solutions for
reducing healthcare costs and improving quality performance that
are based on a flexible, scalable software analytical engine that
utilizes all available source information, including claims data,
enrollment data, prescription data and laboratory data. The
Company provides a comprehensive connectivity solution to
physicians which includes disease management, laboratory reporting
and ordering, as well as claims and eligibility processing through
CareEvolve, its web-based healthcare portal.
Headquartered in New York, New York, Impath Inc., together with
its subsidiaries, is in the business of improving outcomes for
cancer patients by providing patient-specific diagnostic and
prognostic services to pathologists and oncologists, providing
products and services to biotechnology and pharmaceutical
companies, and licensing software to hospitals, laboratories, and
academic medical centers. The Company filed for chapter 11
protection on September 28, 2003 (Bankr. S.D.N.Y. Case No. 03-
16113). George A. Davis, Esq., at Weil, Gotshal & Manges, LLP
represents the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed
$192,883,742 in total assets and $127,335,423 in total debts.
INTEGRATED HEALTH: Wants Court to Delay Entry of Final Decree
-------------------------------------------------------------
The IHS Liquidating LLC asks the Court to further:
(a) delay the automatic entry of a final decree closing these
cases until June 8, 2004; and
(b) extend the date for filing a final report and accounting
to the earlier of May 5, 2004 or 15 days before the
hearing on any motion to close these cases.
Alfred Villoch, III, Esq., at Young Conaway Stargatt & Taylor, in
Wilmington, Delaware, relates that since the Effective Date, IHS
Liquidating begun the process of reviewing claim objections that
were filed by the Integrated Health Services Debtors but have not
been fully prosecuted. In addition, IHS Liquidating is reviewing
certain other claims in order to determine whether to file
additional objections. At this time, there remain many disputed
claims. The resolution of these claims will likely require
numerous hearings and substantial preparation by IHS Liquidating.
IHS Liquidating seeks a delay in entry of a final decree to
ensure that they have a full opportunity to continue to prosecute
or resolve the pending claim objections and other matters, Mr.
Villoch says. Furthermore, IHS Liquidating seeks to extend the
date for filing the final report and accounting because the
jurisdiction of the Court may still be necessary while the claims
administration process is ongoing.
Mr. Villoch maintains that delaying entry of a final decree will
help ensure that distributions are made under the Plan only to
those actual creditors, and in amounts, as are appropriate.
Moreover, since the claims administration process has not come to
a conclusion, a final report and accounting will not be accurate.
The Court will convene a hearing on January 28, 2004 to consider
the Debtors' request. By application of Del.Bankr.LR 9006-2, the
deadline for filing a final report and accounting is
automatically extended through the conclusion of that hearing.
Headquartered in Owings Mills, Maryland, Integrated Health
Services, Inc. -- http://www.ihs-inc.com/-- IHS operates local
and regional networks that provide post-acute care from 1,500
locations in 47 states. The Company filed for chapter 11
protection on February 2, 2000 (Bankr. Del. Case No. 00-00389).
Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D.
Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP,
represent the Debtors in their restructuring efforts. On
September 30, 1999, the Debtors listed $3,595,614,000 in
consolidated assets and $4,123,876,000 in consolidated debts.
(Integrated Health Bankruptcy News, Issue No. 70; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
INVESTMENT CO.: Compass Bank Wins Order to Release Liens on Land
----------------------------------------------------------------
Compass Bank appealed to the United States Bankruptcy Appellate
Panel for the Tenth Circuit from an order entered by the United
States Bankruptcy Court for the District of New Mexico, granting
Investment Company of the Southwest's Emergency Motion to Compel
Compass to Grant Releases. The Debtor, a real estate developer,
owes Compass more than $2 million, secured by most, if not all, of
the Debtor's assets.
Compass brought an action against the Debtor and its principals in
New Mexico State Court seeking to foreclose its security interests
against the Debtor's property. Compass obtained a State Court
Judgment against the Debtor. The state court, on August 26, 2002,
found the Debtor to be in default on its debts to Compass in an
amount exceeding $2.1 million, plus post-judgment interest and
fees. The state court ordered Compass' mortgages on eight
different categories of properties to be foreclosed. Compass
filed its State Court Judgment in several New Mexico counties,
thus creating a lien against the properties, including one of
Debtor's primary assets, a parcel of land which has been divided
into 70 plus lots, known as "Woodland Hills."
On November 6, 2002, prior to the foreclosure on all of the
properties subject to the State Court Judgment, the Debtor filed
its Chapter 11 petition. Twenty days later, Compass moved for
relief by filing a Stay Lift Motion, seeking permission to
"complete the foreclosure sale authorized pursuant to the" State
Court Judgment. The Debtor opposed the Stay Lift Motion, claiming
Compass is adequately protected because the Debtor has over $2.5
million in equity in the property securing Compass's liens.
Alternatively, the Debtor offered to make adequate protection
payments to Compass.
After an evidentiary hearing on the Stay Lift Motion, the
bankruptcy court entered an order mandating that the Debtor pay
Compass $15,000 per month to adequately protect the lender's lien
and established deadlines for the Debtor to file a disclosure
statement and plan. In addition, the bankruptcy court stated:
"Within 15 days of the date of entry of this Order, the
Movant and Debtor in Possession shall . . . meet and
negotiate reasonably in good faith release prices on all
assets secured to Compass Bank, in order to permit
liquidation of sufficient assets of the Debtor within a
reasonable time frame to pay Compass Bank's claim. If
the parties are unable to arrive at release prices, the
Court shall make the decision with respect to release
prices."
The Debtor filed a proposed Disclosure Statement and Chapter 11
Plan, to which Compass objected. Compass says the Disclosure
Statement contemplates that Debtor will establish release prices
associated with each parcel of collateral that Compass Bank that
will result in Compass Bank receiving only the release amount in
connection with the sale of the parcel. Further, says Compass, to
the extent that funds in excess of the release prices are not paid
to Compass but are distributed instead to other creditors or to
Debtor's principals, this is a violation of the absolute priority
rule under which the junior classes receive distributions while
senior creditors remain unpaid. The Disclosure Statement fails to
disclose this violation, claims Compass.
Since Compass's judgment lien cannot be set aside, to provide less
than full payment to Compass from the sales of real property, in
effect, sets aside the Compass judgment and releases real property
from the operation of the judgment.
After filing its Disclosure Statement and Plan, the Debtor filed a
Motion to Compel Compliance with the Court Order To Set Release
Prices, claiming that Compass has refused to negotiate release
prices as required by the Stay Lift Motion. During the course of
hearings on this First Motion to Compel, the Debtor filed its
Emergency Motion to Compel Compass to Grant Releases. The Debtor
argued that it could not wait until a final hearing on the First
Motion to Compel to determine the release prices because it had
cash buyers for three of the Woodland Hills lots, and a buyer who
wishes to purchase another lot on credit terms, at prices ranging
from $28,000 to $32,000 per lot. The Debtor claimed that Compass
Bank has refused to issue a release of its mortgage and judgment
unless it is paid not less than 90 percent of the net sales
proceeds of the cash sale, and it has refused to issue releases at
all for any extended term contract sales. The Debtor claimed, as
well, that it was marketing and planning to sell the various
properties in the ordinary course of its business; therefore,
court approval of the sales was not anticipated.
The Debtor therefore asked the bankruptcy court for the relief
sought by the Emergency Motion: that the Court would require
Compass Bank to grant releases of the three lots which are the
subject of the pending sales at the release price of approximately
$14,000 per lot.
The bankruptcy court entered a Release Order granting the
Emergency Motion. Compass was ordered to issue releases of its
lien interests on three Woodland Hills lots in exchange for
$14,685 per lot. On the fourth lot, the one proposed for credit
sale, the court stated, among other things, that Compass was
required to release its lien interest on the lot, but the releases
would not be delivered to the purchaser until $14,685 was
delivered to Compass.
The bankruptcy court also said that the Debtor was entitled to
keep whatever excess sale proceeds existed after paying Compass
the release price and any costs of sale. In setting these release
prices, said the bankruptcy court, the court has taken into
consideration that the Bank is receiving adequate protection for
its secured interests; therefore, Debtor should be free to use all
the estate assets, including encumbered properties, as it deems
best for the estate, consistent with its fiduciary obligations to
the creditors and other parties in interest.
Compass Bank thereupon is appealing the bankruptcy court's Release
Order granting the Debtor's Emergency Motion.
Per Curiam Opinion Examines Bankruptcy Court's
Authority to Enter the Release Order
Compass claims by its appeal that the bankruptcy court erred in
entering the Release Order - the Ruling on Debtor's Emergency
Motion to Compel Compass to Grant Releases, writes the Court in
its Per Curiam Opinion.
"We agree," states the Court, "and hereby vacate the Release Order
because the bankruptcy court lacked authority to enter it.
"Our decision is based on two points: First, the Release Order
approves the sale of property of the estate free and clear of
Compass's undisputed lien interests therein without satisfying
[those interests] 11 U.S.C. section 363(f); and Second, the
Release Order establishes the Debtor's treatment of Compass's
claim without affording it the protections of the Chapter 11
confirmation process." The Court then discusses each of these
points.
First, the Release Order authorizes the Debtor to sell the
Woodland Hills lots (Known Lots) described in its Emergency Motion
(also designated as the Second Motion to Compel). The Release
Order also authorized the Debtor to sell other Woodland Hill lots,
the exact ones still unknown (Unknown Lots). Both categories of
lots, under authority of the Release Order, would be sold free and
clear of Compass's undisputed lien interests in such property.
In bankruptcy, all sales free and clear of a lien interest must
comply with section 363(f), which provides the trustee may sell
property in the non-ordinary course of business sales or in the
ordinary course of business sales, free and clear of any interest
in such property of an entity other than the estate, only if:
(1) applicable nonbankruptcy law permits sale of such property;
(2) such entity consents;
(3) such interest is a lien and the price at which such property
is to be sold is greater that the aggregate value of all liens
on such property;
(4) such interest is in bona fide dispute; or
(5) such entity could be compelled, in a legal or equitable
proceeding, to accept a money satisfaction of such interest.
11 U.S.C. section 363 (f).
Outside of the confirmation of a Chapter 11 plan of
reorganization, section 363(f), which is applicable to debtors in
possession as well as to trustees, is the sole authority for the
sale of property of the estate free and clear of liens, whether
such sale is in the ordinary course of the debtor's business or
not. 11 U.S.C. section 1107(a). The record, however, shows that
section 363(f) was not pled, argued or considered in conjunction
with the bankruptcy court's entry of the Release Order, asserts
the Per Curiam Opinion. Given such failure to consider this
controlling section, coupled with examination of the relief
granted, continues the Opinion, makes it apparent that the Release
Order was entered in violation of section 363(f).
Section 363(f) expressly states that a free and clear sale only
may occur if a showing thereunder is made in connection with a
particular property. See the five conditions to be satisfied set
forth above. For example, section 363(f)(1) states that property
of the estate may be sold free and clear of any interest only if
applicable law allows such a sale. We are unaware, says the
Opinion, of any nonbankruptcy law allowing the sale of any real
property securing a lien to be sold free and clear of that lien in
exchange for the lien holder's payment of less than all of the net
sale proceeds..
Second, in addition to violating section 363(f), the Release Order
should be vacated because it establishes the Debtor's treatment of
Compass Bank's claim without affording Compass the protections of
the plan confirmation process to which it is entitled under
Chapter 11. As a secured creditor whose claim appears to be
impaired, Compass has the right to vote on a plan, which in the
Debtor-real estate developer's case would deal exclusively with
the Debtor's use of Compass's collateral. 11 U.S.C. section
1129(a)(7-8). The Debtor's proposed plan could only be appr4oved
as to Compass's dissenting vote if it was found fair and equitable
under section 1129(b)(1-2)(A). The context in which the Release
Order was made essentially precludes any meaningful application of
the cram down provisions of section 1129(b).
Therefore, for the reasons stated in this Opinion, asserts the
Court, the bankruptcy court's Release Order is vacated.
IRON MOUNTAIN: Calling $20MM of 8-1/8% Senior Notes for Redemption
------------------------------------------------------------------
Iron Mountain Incorporated (NYSE: IRM), the leader in records and
information management services, announced that Iron Mountain
Canada Corporation, a wholly-owned subsidiary of Iron Mountain
Incorporated, will redeem the remaining $20.0 million of aggregate
principal amount of its 8-1/8% Senior Notes due 2008 in accordance
with the Indenture governing the Notes.
The redemption date for the Notes will be February 2, 2004, at a
redemption price of $1,040.63 for each $1,000 principal amount of
Notes redeemed, plus accrued and unpaid interest to February 2,
2004.
Iron Mountain Incorporated (S&P, BB- Corporate Credit Rating,
Stable) is the world's trusted partner for outsourced records and
information management services. Founded in 1951, the Company has
grown to service more than 150,000 customer accounts throughout
the United States, Canada, Europe and Latin America. Iron Mountain
offers records management services for both physical and digital
media, disaster recovery support services and consulting services
-- services that help businesses save money and manage risks
associated with legal and regulatory compliance, protection of
vital information, and business continuity challenges. For more
information, visit http://www.ironmountain.com/
IT GROUP: Provides Liquidation Analysis Under Chapter 11 Plan
-------------------------------------------------------------
According to Jeffrey M. Schlerf, Esq., at The Bayard Firm PA, in
Wilmington, Delaware, representing The IT Group Debtors in these
bankruptcy proceedings, the Liquidation Analysis under the Joint
Plan presents a "side-by-side" comparison between the recoveries
for the secured creditors and general unsecured creditors in a
hypothetical liquidation under Chapter 7 of the Bankruptcy Code
versus the treatment accorded the creditors under the Plan.
The Liquidation Analysis assumes that, since the Debtors are
conducting limited operations and the majority of their assets
have been sold, there will not be a materially different result
between the date the analysis was prepared and the time that a
conversion to a Chapter 7 liquidation would take place.
Underlying the Liquidation Analysis are a number of estimates and
assumptions that, although developed and considered reasonable,
are inherently subject to significant economic and competitive
uncertainties, miscellaneous factors beyond the Debtors' control,
and variances in the sequence and timing of decisions to
liquidate.
"Accordingly, there can be no assurance that the values reflected
in the Liquidation Analysis would be realized if the Debtors
were, in fact, to undergo a liquidation, and actual results could
vary materially from those shown," Mr. Schlerf explains.
In preparing the Liquidation Analysis, the Official Committee of
Unsecured Creditors reviewed the Debtors' cash balances and
values held in the stock of The Shaw Group Inc. For conservative
purposes and consistency, the potential recoveries from avoidance
actions or other estate causes of action are not included in the
Chapter 7 or Chapter 11 recovery estimates. The Committee also
reviewed various classes of claims against the Debtors through
their books and records and the proofs of claim asserted against
them.
A comparison of a Chapter 7 and Chapter 11 liquidation of the
Debtors shows that:
(a) Asset recoveries are assumed to be the same in both
Chapter 7 and Chapter 11:
-- $50,000,000 of cash;
-- Shaw stock value; and
-- no recoveries for causes of action in either scenario.
(b) Creditor distribution flow is different between Chapter 7
and Chapter 11. Under Chapter 7, the order of
Distribution Flow is:
(1) Other Secured Creditors
(2) Chapter 7 Administrative Claims
(3) Secured Portion of Bank Debt
(4) Bank Litigation Fees
(5) Chapter 11 Administrative Claims
(6) Priority Claims
(7) General Unsecured Claims
Under a Chapter 11 Distribution Flow, all claims are paid
-- excluding Chapter 7 Trustee Fees and Bank Litigation
Fees -- before remaining proceeds are distributed to
Prepetition Lenders and Unsecured Creditors.
Other primary differences include:
-- Chapter 7 Trustee fees of 3% are included in a Chapter 7
scenario;
-- It is assumed in Chapter 7 that 80% of the assets available
for distribution represent proceeds of the secured lenders'
collateral. This assumption would need to be greater than
90% for the Liquidation Analysis to present a better result
to secured lenders in Chapter 7 as opposed to Chapter 11;
-- A Chapter 7 Trustee would incur significant litigation fees
and other costs collectively estimated at $3,000,000 to
resolve lien issues;
-- Unsecured claims in Chapter 7 are significantly increased
by the deficiency claim of the Prepetition Lenders;
-- The $265,000,000 subordinated long-term debt on account
of the Old Notes will receive no distribution under Chapter
7, because the subordination provisions in respect of the
secured lender claims are assumed to be enforced;
-- The Chapter 11 Plan provides for a $1,000,000 cash payment
to satisfy $200,000,000 of unsecured environmental claims.
These environmental claims further dilute the recovery for
unsecured creditors in the Chapter 7 scenario; and
-- It is assumed that the Chapter 7 distribution would take
place two years after the Chapter 11 distribution. This
assumed discount is based on a prime rate of 4% per year
per the Federal Reserve Statistical Release at January 7,
2004.
All in all, Mr. Schlerf says that estimated recovery under
Chapter 7 for Secured Lenders is 10.2%, and 0.5% for General
Unsecured Creditors. Under Chapter 11, Secured Lenders will get
10.9% of their Claims while General Unsecured Creditors get 1.4%.
A copy of the Liquidation Analysis is available at no extra
charge at:
http://bankrupt.com/misc/itgroup_liquidation_analysis.pdf
Headquartered in Monroeville, Pennsylvania, The IT Group, Inc. --
http://www.theitgroup.com/-- together with its 92 direct and
indirect subsidiaries, is a leading provider of diversified,
value-added services in the areas of consulting, engineering and
construction, remediation, and facilities management. The Company
filed for chapter 11 protection on January 16, 2002 (Bankr. Del.
Case No. 02-10118). David S. Kurtz, Esq., at Skadden Arps Slate
Meagher & Flom, represents the Debtors in their restructuring
efforts. On September 30, 2001, the Debtors listed $1,344,800,000
in assets and 1,086,500,000 in debts. (IT Group Bankruptcy News,
Issue No. 40; Bankruptcy Creditors' Service, Inc., 215/945-7000)
J. CREW GROUP: Names Tracy Gardner EVP of Merchandising & Planning
------------------------------------------------------------------
J.Crew Group, Inc. announced that Tracy Gardner has been appointed
Executive Vice President of Merchandising, Planning & Production,
effective in early March. She will report to Millard Drexler,
Chairman and CEO.
Ms. Gardner (39) joins J.Crew with extensive leadership experience
in merchandising. Prior to joining J.Crew, Ms. Gardner was Senior
Vice President of Men's and Women's Merchandising for GAP brand.
Ms. Gardner began her career in fashion merchandising at Neiman
Marcus and Saks Fifth Avenue. She later served for four years at
Lands' End, first as a Divisional Merchandise Manager and
ultimately as General Merchandise Manager of Adult Apparel. Ms.
Gardner subsequently served as Vice President of both Men's and
Women's Merchandising at Banana Republic.
J.Crew President Jeff Pfeifle stated, "We welcome Tracy to our
leadership team and look forward to working with her in what
promises to be an exciting period at J.Crew."
Separately, the company has announced that Scott Gilbertson has
resigned as Chief Operating Officer, effective January 31st. He
is expected to return to Texas Pacific Group, J.Crew's majority
shareholder.
J.Crew Group, Inc., whose November 1, 2003 net capital deficit
amounts to $442 Million, is a leading retailer of men's and
women's apparel, shoes and accessories. As of August 2, 2003, the
Company operated 155 retail stores, the J.Crew catalog business,
jcrew.com, and 42 factory outlet stores.
LAIDLAW: Expects New Shares to Trade on NYSE Starting Feb. 10
-------------------------------------------------------------
Laidlaw International, Inc. (OTC Bulletin Board:LALW)(TSX:BUS)
today announced it has applied to list its common shares on the
New York Stock Exchange (NYSE). The company anticipates that
trading on the NYSE will begin on Tuesday, February 10, 2004,
under the trading symbol "LI". The common stock will continue to
also trade on the Toronto Stock Exchange (TSX) under the symbol
"BUS".
"We are pleased to be joining the New York Stock Exchange, the
world's largest equities market," said Kevin Benson, president and
chief executive officer of Laidlaw International. "Listing Laidlaw
International's common stock on this exchange is an important step
in our long-term plans to build recognition for our Company and
value and convenience for our shareholders."
"We are proud to welcome Laidlaw International to the New York
Stock Exchange," said John A. Thain, NYSE chief executive officer.
"Laidlaw International is an outstanding addition to our world-
class family of listed companies. We look forward to the company's
first day of trading and to building an outstanding partnership
with Laidlaw International and its shareholders."
Laidlaw International, Inc. is a holding company for North
America's largest providers of school and inter-city bus
transport, public transit, patient transportation and emergency
department management services. Trades of the company's shares are
currently posted on the OTC Bulletin Board (OTCBB:LALW).
Additionally, the company's shares trade on the Toronto Stock
Exchange (TSX:BUS). For more information, visit the Company's Web
site at http://www.laidlaw.com/
LEGACY HOTELS: December Working Capital Deficit Tops C$72 Million
-----------------------------------------------------------------
Legacy Hotels Real Estate Investment Trust (TSX: LGY.UN) announced
its unaudited financial results for the three months and year
ended December 31, 2003. All amounts are in Canadian dollars
unless otherwise indicated.
Legacy expects to release its 2003 annual report in March and will
hold its annual general meeting at 10:00 am Eastern Time on
April 22, 2004 at The Fairmont Royal York in Toronto.
"This last year was undoubtedly one of the most difficult years in
the Canadian hotel industry. Much of our reduced performance
resulted from external factors, including a weak U.S. economy,
airline industry problems, and most notably, the considerable
impact of severe acute respiratory syndrome," commented Neil J.
Labatte, Legacy's President and Chief Executive Officer.
"Despite the challenging operating environment, improving demand
trends continued to build through the fourth quarter. When
compared to 2002, portfolio-wide occupancy was down 2.5 points in
October, 0.8 points in November and continued to improve, down
only 0.7 points in December," said Mr. Labatte. "The fourth
quarter is traditionally a lower earnings period for Legacy,
however, we are encouraged by the improving trends, which point to
the anticipated strong recovery in the lodging sector in 2004."
Three Months Ended December 31, 2003
Fourth quarter revenues increased $18.5 million or 11.6% to $178.9
million. The full period inclusion of The Fairmont Washington,
D.C. and the acquisition of The Fairmont Olympic Hotel, Seattle in
August 2003 contributed $23.5 million in revenues during the
quarter compared to $2.6 million in the prior period. Quebec City
and Toronto remained a challenge through the quarter as the
lingering effect of SARS and the overall decline in international
travel impacted these markets.
Revenues at Fairmont Le Chateau Frontenac were down approximately
15% compared to 2002 due to softness in the U.S. and international
tour segments. Revenues at our three Toronto hotels were down
approximately 5% from the prior year, showing significant
improvement over the prior two quarters. Occupancies in the city
have largely returned to 2002 levels, however, rates within the
market remain under pressure. Also, Fairmont The Queen Elizabeth
showed considerable growth this quarter following the substantial
completion of its renovation program in May 2003.
Hotel EBITDA declined $0.7 million to $26.8 million. Hotel EBITDA
margin, defined as hotel EBITDA as a percentage of revenues, was
15.0% compared with 17.2% in the fourth quarter of 2002. EBITDA
and margins were negatively impacted by performance in Toronto and
Quebec City. Legacy's fourth quarter margins are typically lower
due to the seasonality of travel demand and the fixed nature of
its operating costs.
The call premium totaling $9.8 million pertaining to Legacy's debt
refinancing contributed to a fourth quarter net loss of $9.2
million or $0.12 diluted net loss per unit compared to diluted net
income per unit of $0.04 in 2002. Net income was also impacted by
increased financing and amortization costs related to the recent
hotel acquisitions. Distributable loss per unit for the period was
$0.11 per unit compared to distributable income of $0.02 per unit
in the prior period. The debt call premium reduced net income and
distributable income by $0.09 per unit in the quarter.
Revenue per available room for the comparable portfolio decreased
4.9% to $91.86 for the fourth quarter. While performance remained
below the prior year's levels, overall demand throughout the
portfolio continued to strengthen with occupancy down only 1.3
points. Average daily rate for the quarter declined 2.8%.
Including recently acquired properties, RevPAR was $97.42 during
the quarter due to higher ADR generated at our U.S. properties.
At the comparable Fairmont managed properties, RevPAR was down
5.6% to $102.21 as a result of a 4.4% decrease in ADR. At The
Fairmont Royal York, RevPAR remained approximately 10% below
historical levels given ADR declines. RevPAR at Fairmont Le
Chfteau Frontenac also fell approximately 20% during the quarter,
primarily due to occupancy declines resulting from fewer U.S. and
international guests. Including the recently acquired properties,
RevPAR at the Fairmont managed properties was $108.89 during the
quarter.
At the Delta managed properties, RevPAR of $75.00 was down 3.2%
due to a 2.1 point decrease in occupancy. Legacy's two Delta
properties in Toronto had RevPAR declines of approximately 8%.
Year Ended December 31, 2003
Revenues increased $16.3 million or 2.5% to $663.9 million for the
year ended December 31, 2003 with the three recent acquisitions
contributing $89.3 million in revenues in 2003 compared to $14.2
million in the prior year. The decrease in revenues through the
balance of the portfolio is reflective of reduced travel volumes
in most major Canadian cities, most notably in Toronto and Quebec
City. Hotel EBITDA decreased $31.4 million or 21.5% to $114.6
million. Weaker operating performance was most notable in the
second and third quarters of 2003.
Net loss for the year was $8.4 million and the diluted net loss
per unit was $0.21 compared to a diluted net income per unit of
$0.50 in 2002. Distributable loss per unit for the year was $0.02
per unit compared to distributable income of $0.57 per unit in
2002. Income distributed to unit holders of $0.185 per unit was
$0.205 higher than distributable income as calculated under the
Declaration of Trust. These amounts were financed primarily
through cash on hand and drawings on our bank facilities.
For the year ended December 31, 2003, RevPAR for the comparable
portfolio decreased 11.8% to $99.47. RevPAR was impacted by
declines in occupancy and ADR of 5.7 points and 3.8%,
respectively. Including the recently acquired properties, RevPAR
for the portfolio was $105.88 for the year.
At the Fairmont comparable properties, RevPAR was $110.13,
representing a 14.3% decrease compared to the prior year. Weak
second and third quarter performance throughout most major
Canadian cities, most notably Toronto and Quebec City, impacted
RevPAR performance. Renovation disruptions at Fairmont The Queen
Elizabeth also negatively impacted RevPAR prior to completion late
in the second quarter. Including recently acquired properties,
RevPAR at the Fairmont managed properties was $118.03 during the
year. At the Delta properties, RevPAR of $82.11 was down 5.9%. The
decline is primarily attributable to lower second and third
quarter RevPAR performance at Legacy's two Delta managed
properties in Toronto.
Trust Developments
On December 15, 2003, Legacy announced the closing of a
transaction consisting of mortgage and bank financing and the full
repayment of outstanding debentures. The call premium of $9.8
million relating to the debenture repayment was expensed in the
fourth quarter.
Capital expenditures during the quarter totalled $11.4 million.
Profit-enhancing projects underway included ongoing refurbishments
at Delta Ottawa Hotel & Suites. For the year, Legacy invested a
total of $58.1 million in its properties. Following the completion
of several significant capital projects over the past three years,
Legacy anticipates investing approximately $45 million in its
properties in 2004. Attractive returns on the capital invested are
anticipated once the properties realize the full benefit of these
improvements, which typically occurs two to three years after
completion.
Outlook
"Existing bookings for our group business for 2004 exceed our
relative booking levels this time last year for 2003. Importantly,
the 2003 booking levels at this time last year did not anticipate
the considerable cancellations which occurred during early 2003,"
commented Mr. Labatte. "While it is still early in the recovery,
our preliminary expectations are that occupancies in 2004 will
return to levels realized in 2002 and there is potential for
modest rate increases over 2002 levels across all customer
segments."
Continued Mr. Labatte, "We recognize the importance of
distributions to our unit holders. Given our anticipated reduced
earnings performance in 2003, distributions were suspended
following the first quarter. Our objective continues to be to
provide our unit holders with an appropriate level of
distributions as soon as operating performance permits."
Legacy will host a conference call today at 1:30 p.m. Eastern Time
to discuss these results. Please dial 416-695-5806 or 1-800-273-
9672 to access the call. You will be required to identify yourself
and the organization on whose behalf you are participating. A
recording of this call will be made available beginning at 4:30
p.m. on January 27, 2004 through to February 3, 2004. To access
the recording please dial 416-695-5800 or 1-800-408-3053 and
use the reservation number 1518834.
A live audio webcast of the conference call will be available via
Legacy's Web site at http://www.legacyhotels.ca/ An archived
recording of the webcast will remain available on the Web site
until the following earnings conference call.
Legacy is Canada's premier hotel real estate investment trust with
24 luxury and first-class hotels and resorts with over 10,000
guestrooms located in Canada and the United States. The portfolio
includes landmark properties such as Fairmont Le Chateau
Frontenac, The Fairmont Royal York, The Fairmont Empress and The
Fairmont Olympic Hotel, Seattle.
Legacy Hotels Real Estate Investment Trust's December 31, 2003,
balance sheet discloses a working capital deficit of about
CDN$72.3 million.
MAGELLAN HEALTH: Enters Pact Capping St. Paul's Claim at $5 Mil.
----------------------------------------------------------------
Magellan Health Services, Inc. and St. Paul Fire and Marine
Insurance Company, as successor to American Continental Insurance
Company, are parties to a Healthcare System Liability Insurance
Policy effective June 17, 1997 to June 17, 2000.
On February 25, 2002, American Continental commenced a
declaratory judgment action relating to the Policy against
Magellan, and, among other parties, certain other Debtors, in the
United States District Court for the District of Maryland, Case
Number RDB 02 CV 599.
On June 27, 2003, St. Paul filed proofs of claim, in connection
with the Maryland Action and the Policy, against the Debtors.
The Claims assert that St. Paul has certain claims against the
Debtors in an unliquidated amount.
On August 18, 2003, the Debtors objected to the Claims, on the
basis that, inter alia, the Debtors believe that they don't owe
St. Paul any money but, in fact, it is St. Paul who owes them
money.
To allow the Debtors to make a preliminary estimate of the total
unsecured liabilities to be treated under the Plan, St. Paul and
the Debtors agreed to cap the ultimate aggregate amount that the
Claims may be allowed for in accordance with the terms and
conditions of a stipulation, which the Court approved.
The salient terms of the Stipulation are:
(1) Under no circumstances will the Claims be allowed in an
aggregate amount in excess of $5,000,000, and under no
circumstances will any of the Claims be allowed as
anything other than a prepetition general unsecured claim;
and
(2) The Stipulation will not affect the Claims and is without
prejudice to, and will in no way affect, the rights of the
Parties with respect to the Claims, including, without
limitation, with respect to the Objection.
Magellan Health Services is headquartered in Columbia, Maryland,
and is the leading behavioral managed healthcare organization in
the United States. Its customers include health plans,
corporations and government agencies. The Company filed for
chapter 11 protection on March 11, 2003, and confirmed its Third
Amended Plan on October 8, 2003. Under the Third Amended Plan,
nearly $600 million of debt will drop from the Company's balance
sheet and Onex Corporation will invest more than $100 million in
new equity. (Magellan Bankruptcy News, Issue No. 22; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
MANITOWOC CO.: Will Publish Q4 and Full-Year Results on Wednesday
-----------------------------------------------------------------
The Manitowoc Company, Inc. (NYSE: MTW) will announce its fourth-
quarter and full-year 2003 financial results on Wednesday,
February 4, after the market closes, and will broadcast its
conference call live over the Internet at 9:00 a.m., Eastern Time,
on February 5.
Those who wish to listen to the conference call should visit the
investor relations section of the company's Web site at
http://www.manitowoc.com/at least 15 minutes prior to the event's
broadcast. Then, follow the instructions provided to assure that
the necessary audio applications are downloaded and installed.
These programs can be obtained at no charge to the user. In
addition, interested parties can access an archived version of the
call, also located on the investor relations section of
Manitowoc's Web site.
The Manitowoc Company, Inc. (S&P, BB- Corporate Credit Rating,
Stable Outlook) is one of the world's largest providers of lifting
equipment for the global construction industry, including lattice-
boom cranes, tower cranes, mobile telescopic cranes, and boom
trucks. As a leading manufacturer of ice-cube machines,
ice/beverage dispensers, and commercial refrigeration equipment,
the company offers the broadest line of cold-focused equipment in
the foodservice industry. In addition, the company is a leading
provider of shipbuilding, ship repair, and conversion services for
government, military, and commercial customers throughout the
maritime industry.
MIRANT CORP: Court Fixes March 12, 2003 as MAEC Claims Bar Date
---------------------------------------------------------------
The Mirant Debtors obtained approval from the U.S. Bankruptcy
Court, establishing March 12, 2004 as the last day for all MAEC
Debtors' creditors to file a claim.
Judge Lynn rules that the Bar Date applies to all known and
unknown creditors, subject to these exceptions:
A. Co-Debtor or Sureties
The Court establishes April 11, 2004 as the last day by which
parties, including the Debtors, could file claims of
co-debtors, sureties or guarantors under Section 501(b) of the
Bankruptcy Code.
B. Non-Debtor Parties to Rejected Executory Contracts or
Unexpired Leases
The Court establishes the later of either the Bar Date or 30
calendar days after the entry of an order approving the
rejection of an executory contract or lease, as the last day
for filing claims arising out of the rejection of an executory
contract or unexpired lease.
C. Entities Asserting Claims Arising from the Recovery of a
Voidable Transfer
The Court establishes the later of either the Bar Date or the
first business day that is at least 30 calendar days after the
mailing of the notice of entry of any order approving the
avoidance of the transfer, as the Bar Date for filing claims
arising out of a voidable transfer.
D. Entities Asserting Claims Arising from the Assessment of
Certain Taxes
The Court establishes the later of either the Bar Date or the
first business day that is at least 30 calendar days after the
date the relevant tax claim arises, as the bar date for filing
claims arising from the assessment of certain taxes described
in Section 502(i).
E. Governmental Units
Pursuant to Bankruptcy Rule 3003(c)(1), the bar date for
filing proofs of claim by governmental units is May 17, 2004
at 5:00 p.m. Prevailing Eastern Time.
F. Creditors Holding Claims that Were Reduced by Amendments to
the Debtors' Schedules
As the Debtors proposed, if an amendment to the Schedules
reduces the liquidated amount of a scheduled claim, or
reclassifies a scheduled, undisputed, liquidated, non-
contingent claim as disputed, unliquidated, or contingent,
the affected claimant may file a proof of claim on the later
of the Bar Date or the first business day that is at least
30 calendar days after the mailing of the notice of the
amendment in accordance with Bankruptcy Rule 1009, but only
to the extent the proof of claim does not exceed the amount
scheduled for the claim before the amendment. Creditors not be
entitled to an extension of the Bar Date if a Schedule
amendment increases the scheduled amount of an undisputed,
liquidated, non-contingent claim.
G. Holders of Administrative Claims
As the Debtors proposed, neither the Bar Date nor any other
deadline proposed applies to requests for payment of
administrative expenses arising in the MAEC Debtors' cases
under Sections 503, 507(a)(1), 507(b), 330(a), 331 or 364 of
the Bankruptcy Code. An administrative claims bar date will be
established as part of any confirmation order entered in these
cases.
These entities need not file a proof of claim against the MAEC
Debtors' estates:
(a) any person or entity that has already properly filed,
with the Clerk of the United States Bankruptcy Court for
the Northern District of Texas, a proof of claim against
the MAEC Debtors using a claim form which substantially
conforms to Official Form No. 10;
(b) any person or entity whose claim has been paid by the
MAEC Debtors;
(c) any directors, officers or employees of the MAEC Debtors
as of the MAEC Debtors' Petition Date that have or may
have claims against the MAEC Debtors for indemnification,
contribution, subrogation or reimbursement;
(d) a Debtor having a claim against a MAEC Debtor;
(e) any direct or indirect non-debtor subsidiary of a MAEC
Debtor having a claim against a MAEC Debtor; and
(f) any professional whose retention in these Chapter 11
cases has been approved by the Court.
In filing proofs of claim, creditors must follow these procedural
requirements:
1. Claims filed before the entry of the Order Establishing a Bar
Date
Any claim that was filed with the Clerk of the United States
Bankruptcy Court for the Northern District of Texas before the
entry of the Bar Date Order, that substantially conforms to the
Official Form No. 10, will be deemed properly filed, subject to
the right of the Debtors or any other party-in-interest to
object to the allowance thereof.
2. Transfers of Claims
If timely filed claim is transferred, the transferee must both:
(i) file a notice of transfer of the claim with the Claims
Agent, in accordance with Bankruptcy Rule 3001(e), by
forwarding the notice to the Claims Agent; and
(ii) serve a copy of the notice of transfer on the Debtors'
counsel.
3. Form of Proof of Claim
Due to the size and complexity of these Chapter 11 cases,
with the assistance of the Claims Agent, Bankruptcy Services,
LLC, the Debtors will prepare a proof of claim form tailored
to conform to these cases, based on Official Form 10.
Substantive modifications to the Official Form include:
(a) adding a list of both of the Debtors, their case numbers,
and their respective trade names and former names;
(b) providing room for BSI to add the name and address of
each creditor;
(c) allowing the creditor to correct any incorrect
information contained in the name and address portion;
(d) adding additional categories to the "Basis of Claim"
section; and
(e) certain instructions.
The Debtors ask the Court to approve the Proof of Claim and
the substantive modifications to Official Form 10.
4. Substance of Proof of Claim
Proofs of claim against the MAEC Debtors' estates be:
(a) written in the English language;
(b) denominated in lawful currency of the United States as of
the MAEC Debtors' Petition Date; and
(c) supported by evidence in accordance with the requirements
of applicable laws and rules.
5. Place and Time for Filing Proofs of Claim
Proofs of claim must be filed so that they are actually
received by BSI, on or before the Bar Date (or alternative
deadline for filing special claims), by 5:00 p.m. Prevailing
Eastern Time.
6. No Prejudice Regarding Claim Objections
Notwithstanding the fact that the MAEC Debtors have scheduled
a claim as liquidated and undisputed, the Debtors will not be
precluded from objecting to any claim, whether scheduled or
not.
If the creditors fail to timely or properly file a proof of claim
in accordance with the Bar Date Order, this should be grounds for
disallowance of the claim, render the creditor ineligible for
distributions under any confirmed Chapter 11 plan of
reorganization and render the claimant bound by the terms of any
confirmed plan of reorganization. (Mirant Bankruptcy News, Issue
No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000)
NATIONAL BENEVOLENT: Fitch Further Drops Debt Rating to 'DD'
------------------------------------------------------------
Fitch Ratings has downgraded to 'DD' from 'DDD' the rating on
National Benevolent Association's $149 million of outstanding
debt. Entities rated in this category have defaulted on some or
all of their obligations. 'DD' credits are generally undergoing a
formal reorganization or liquidation process and are likely to
satisfy a higher portion of their outstanding obligations.
However, potential recovery values are highly speculative and
cannot be estimated with any precision. The bonds are removed from
Rating Watch Negative.
The rating downgrade is based on Fitch's belief that an agreement
between NBA and its creditors is unlikely due to substantial
differences in opinions regarding the restructuring of the
organization. The existing creditors have demanded increasing
fees, reducing expenses, and hiring a third party professional
manager. According to a recent press release, the NBA does not
agree with these terms and believes 'these demands are
inconsistent with industry trends and the competitive nature of
the industry in NBA's markets and throughout the country.'
NBA continues to seek a restructuring that includes a significant
reduction in debt. Fitch believes that should there be a
negotiation with bondholders, it will most likely mirror the
settlement with Bank of America (65% of the contested termination
payment). In addition, Fitch believes that the ongoing
disagreements with creditors will continue to negatively impact
the marketing and occupancy of the NBA's facilities. Although it
has not happened yet, Fitch still believes bankruptcy is a likely
option.
The NBA had a second payment default on Jan. 2, 2004 after its
first default on Dec. 1, 2003. The interest due ($455,000) has
been paid subsequently from the debt service reserve funds, which
currently has a total balance of $13.5 million, down from just
under $14 million. Several creditors including KBC Bank and First
Bank have filed lawsuits against NBA regarding the amounts due
under the respective agreements. KBC's collection action totals
$63.5 million in principal and interest due on outstanding debt
and First Bank's collection action against NBA totals $7.3 million
($1 million relating to an expired revolving line of credit and
$6.3 million for draws upon letters of credit).
Headquartered in St. Louis, MO NBA provides services to the
elderly, children, and the developmentally disabled. The NBA was
created in 1887 and currently operates 94 facilities and programs.
The obligated group includes 22 operating facilities located in 13
states that care for approximately 9,000 individuals, accounting
for the vast majority of consolidated financial operations.
Outstanding Debt
-- $9,650,000 Jacksonville Health Facilities Authority Industrial
Development revenue bonds (NBA--Cypress Village Florida
Project), series 2000A;
-- $10,080,000 Colorado Health Facilities Authority revenue bonds
(NBA--Village at Skyline Project), series 2000C;
-- $9,390,000 Colorado Health facilities Authority revenue Bonds
(NBA-Village at Skyline Project), series 1999A;
-- $3,980,000 Oklahoma County Industrial Authority health care
revenue bonds (NBA - Oklahoma Christian Home Project), series
1999;
-- $2,695,000 Health and Educational Facilities Authority of the
State of Missouri Health Facilities refunding and improvement
revenue bonds (NBA - Central Office Project), series 1999;
-- $15,145,000 Colorado Health Facilities Authority Health
Facilities revenue bonds (NBA - Village at Skyline Project),
series 1998B;
-- $10,715,000 Colorado Health Facilities Authority Health
Facilities refunding revenue bonds (NBA - Multi-state Issue),
series 1998A
-- $5,935,000 Iowa Finance Authority Health Facilities revenue
bonds (NBA - Ramsey Home Project), Series 1997
-- $2,235,000 Oklahoma County Industrial Authority health care
refunding revenue bonds (NBA - Oklahoma Christian Home
Project), series 1997;
-- $2,160,000 Health and Educational Facilities Authority of the
State of Missouri Health Facilities revenue bonds (NBA -
Woodhaven Learning Center Project), series 1996A;
-- $625,000 Colorado Health Facilities Authority tax-exempt health
facilities revenue bonds (NBA - Colorado Christian Home
Project), series 1996A;
-- $2,650,000 Illinois Development Finance Authority Health
Facilities revenue bonds (NBA - Barton W. Stone Christian Home
Project), Series 1996 --$4,485,000 Colorado Health Facilities
Authority Health Facilities Authority tax-exempt health
facilities revenue bonds (NBA - Village at Skyline Project),
series 1995A;
-- $4,655,000 Jacksonville (FL) Health Facilities Authority
industrial development revenue bonds (NBA - Cypress Village
Florida Project), series 1994;
-- $3,645,000 Health and Educational Facilities Authority of the
State of Missouri health facilities revenue bonds (NBA - Lenoir
Retirement Community Project), series 1994;
-- $8,015,000 Jacksonville (FL) Health Facilities Authority
Industrial Development revenue bonds (NBA - Cypress Village
Florida Project), series 1993;
-- $23,950,000 Jacksonville (FL) Health Facilities Authority
revenue refunding bonds (NBA - Cypress Village Florida
Project), series 1992;
-- $22,590,000 City of Indianapolis, Indiana Economic Development
refunding and improvement revenue bonds (NBA - Robin Run
Village Project), series 1992;
-- $4,485,000 Industrial Development Authority of Cass County,
Missouri industrial revenue refunding bonds (NBA - Foxwood
Springs Living Center Project), series 1992;
-- $1,850,000 Bexar County (TX) Health Facilities Development
Corp. Tax-exempt health facilities revenue bonds (NBA - Patriot
Heights Project), series 1992B.
NDCHEALTH CORP: Appoints James W. FitzGibbons as VP for Finance
---------------------------------------------------------------
NDCHealth Corporation (NYSE: NDC) appointed James W. FitzGibbons
as vice president - finance.
In this role, Mr. FitzGibbons will be responsible for broad
support of NDCHealth's corporate-wide financial administration and
will serve as the chief accounting officer for the company. He
will report to Randolph Hutto, chief financial officer, NDCHealth.
FitzGibbons brings to NDCHealth more than 12 years of executive
and senior management experience in finance and auditing. Prior to
joining NDCHealth, he was vice president, controller at McKesson
Corporation's Information Solutions business, where he was
responsible for various aspects of accounting and financial
reporting for the Information Solutions business unit. Prior to
that, for four years FitzGibbons held a number of financial
management positions with Per-Se Technologies, Inc., each with
increasing responsibility. In his last role there, he served as
vice president, controller and chief accounting officer.
Mr. FitzGibbons also spent five years in auditing with Arthur
Andersen.
"I am really pleased to have Jim join our senior management team,"
said Hutto. "With his background at companies such as McKesson, he
possesses solid skills and expertise in managing the financial
aspects of a company in the business of bringing technology
innovations to healthcare. Our entire finance team is certain to
benefit from his knowledge and experience."
Mr. FitzGibbons received his bachelor of science degree in
accounting from the University of Alabama.
David Shenk, formerly controller and chief accounting officer, has
assumed a new role as senior vice president - planning and
analysis, reporting to the chief financial officer.
NDCHealth (S&P, BB- Corporate Credit Rating, Stable) is a leading
provider of health information solutions to pharmacy, hospital,
physician, pharmaceutical and payer business. For more
information, visit http://www.ndchealth.com/
NORTHWEST AIRLINES: S&P Rates $300M Senior Unsecured Notes at B-
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' rating to
Northwest Airlines Inc.'s $300 million 10% senior unsecured notes
due 2009, and affirmed other ratings on Northwest Airlines Inc.
and parent Northwest Airlines Corp. (both rated B+/Negative/--).
The notes and other senior unsecured debt of both entities are
rated lower than their corporate credit ratings because a high
proportion of secured debt and leases places unsecured creditors
in an essentially subordinated position. The notes are guaranteed
by Northwest Airlines Corp.
"Ratings on Northwest Airlines Inc. are based on the consolidated
credit quality of parent Northwest Airlines Corp., whose corporate
credit rating reflects a weak airline industry revenue
environment, substantial debt and pension obligations, and a need
to lower its labor costs," said Standard & Poor's credit analyst
Philip Baggaley. "However, the company's credit profile benefits
from substantial liquidity, with $2.76 billion of unrestricted
cash (the largest amount, relative to the company's size, of any
large U.S. airline, excepting Southwest Airlines Co.), and ongoing
cost-cutting efforts," the credit analyst continued.
Northwest Airlines Corp. reported a fourth-quarter 2003 net loss
of $122 million before various special gains (earnings of $322
million including those items, the largest of which was a gain on
the initial public offering of a regional airline affiliate). This
was an improvement on the net loss of $178 million, before special
items, in the fourth quarter of 2002. Northwest's revenue
performance improved more, year over year, than those of most
other large U.S. airlines, buoyed by improving demand and
favorable foreign currency changes (strengthening of the yen and
euro against the dollar) on Pacific and Atlantic routes. Still,
like other airlines, Northwest was hurt by high fuel prices and
needs to lower its labor costs to restore profitability and
maintain competitive with low-cost carriers.
Ratings could be lowered if the nascent recovery in earnings and
cash flow generation falters due to renewed industrywide revenue
weakness or the company's inability to reduce operating costs.
NRG ENERGY: Hires PennEnergy Inc. and Prosperus Inc. as Brokers
---------------------------------------------------------------
Pursuant to Section 328 of the Bankruptcy Code, the NRG Energy
Debtors seek the Court's authority to employ and compensate
PennEnergy, Inc., and Prosperus, Inc., as brokers, effective as of
the Petition Date.
Scott J. Davido, Esq., NRG Energy, Inc. Senior Vice President,
relates that the services of PennEnergy and Prosperus are deemed
necessary to enable the Debtors to maximize the value of their
estates and to consummate the sale of certain assets.
Furthermore, PennEnergy and Prosperus are well qualified and able
to represent the Debtors in a cost-effective, efficient and
timely manner.
To recall, in September 2002, the Debtors engaged the services of
various marketing brokers in an effort to obtain the best
possible price for certain Sale Assets. The Sale Assets are
related to a purchase agreement between the Debtors and General
Electric Energy Products France SNC and General Electric Power
Systems Inc. The Debtors and its various brokers implemented
several measures to locate a buyer for the Sale Assets. The
Marketing Campaign generated communications of interest from 11
different buyers. On May 17, 2003, NRG received a formal offer
to purchase the Sale Assets from Beijing Guohua Electric Power
Corporation for $80,422,700. The only other bidder presented a
written proposal for a significantly lower purchase price of
$50,000,000, followed by a second bid for $58,000,000.
Mr. Davido recounts that PennEnergy and Prosperus provided key
services to the Debtors before and after the Petition Date in
connection with procuring a buyer for the Sale Assets. In
particular, PennEnergy:
(a) provided advertising in leading industry publications
including Power Engineering and Oil & Gas Journal;
(b) provided representation and marketing of the Sale Assets
at leading industry trade shows including Power-Gen
International, Power-Gen Europe, Power-Gen Asia, Power-Gen
Middle East and Latin America Power. PennEnergy's
marketing efforts at these events included graphic
displays, advertising inserts in delegate bags,
advertising in show guides, and private meetings with
prospective buyers;
(c) broadcasted extensive HTML, rich format emails promoting
the Sale Assets to more than 50,000 pre-qualified buyers
of power generation equipment;
(d) listed the Sale Assets and provided additional marketing
services through PennEnergy's online Equipment Exchange at
http://www.globalequipmentexchange.com/including its
proprietary Global Equipment Trace System; and
(e) aggressively pursued numerous prospective buyers from more
than 100 leads generated through PennEnergy's GET! System,
advertising and conference marketing activities including
frequent trips to Minneapolis, Europe, and the Middle East
to meet with prospective buyers deemed qualified to
purchase the Sale Assets.
Once a buyer was identified, PennEnergy:
(a) organized and facilitated all meetings between Beijing
Guohua and the Debtors;
(b) participated in the inspection of the gas turbines in the
Rotterdam storage facility; and
(c) provided necessary and significant input related to
commercial terms and to resolution of technical challenges
related to the sale of the Sale Assets.
On the other hand, Prosperous:
(a) contacted PennEnergy through PennEnergy's GET! System
relative to the need for a GE Frame 9FA power island for
its client, Sichuan Bashu Power Development Company;
(b) located Beijing Guohua as an alternative buyer from its
office in Beijing;
(c) managed all communications among Beijing Guohua,
PennEnergy, and the Debtors, including the negotiations
related to commercial terms, assignments, and technical
issues;
(d) participated in all meetings between Beijing Guohua and
the Debtors; and
(e) provided significant input related to commercial terms and
to the resolution of technical challenges related to the
sale of the Sale Assets.
Both PennEnergy and Prosperus informed the Debtors that they:
-- have no connection with the Debtors, its creditors or
other parties-in-interest in the Chapter 11 case;
-- do not hold any interest adverse to the Debtors' estate;
and
-- believe they are "disinterested persons" as defined
within Section 101(14) of the Bankruptcy Code.
Both PennEnergy and Prosperus will conduct ongoing reviews of
their files to ensure that no conflicts or other disqualifying
circumstances exist or arise. If any new facts or circumstances
are discovered, PennEnergy and Prosperus will supplement their
disclosures to the Court.
Other than with their partners and employees, PennEnergy and
Prosperus agreed not to share with any person or firm the
compensation to be paid for professional services rendered in
connection with these cases.
Mr. Davido notes that PennEnergy and Prosperus are not owed any
amounts with respect to their prepetition fees and expenses.
PennEnergy was one of the firms engaged by the Debtor on a
success fee basis to provide marketing and brokerage services for
its GE Frame 9FA power island. PennEnergy's engagement by the
Debtors included a success fee, which is 3% of the gross price
received by or on behalf of the Debtors for the sale of the Sale
Assets to any prospective buyer introduced by PennEnergy and
accepted by the Debtors.
On February 7, 2003, PennEnergy entered into a co-broker
agreement with Prosperus because of Prosperus' ability to
introduce prospective Chinese buyers previously unknown to
PennEnergy. Under the terms of the co-broker agreement,
Prosperus is entitled to receive 1/3 of any success fee amounts
received by PennEnergy from the Debtors.
* * *
Judge Beatty authorizes the Debtors to employ PennEnergy and
Prosperus as of the Petition Date as its marketing and sales
brokers. PennEnergy will be compensated $1,416,105 out of the
sale proceeds at closing. Prosperus will also be compensated
$708,053 out of the sale proceeds at closing in accordance with
the brokerage retention arrangements. (NRG Energy Bankruptcy News,
Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000)
OWENS CORNING: Asks Court to Disallow Hechinger's $5.5MM Claim
--------------------------------------------------------------
On January 14, 2002, Hechinger Investment Company of Delaware,
Inc. filed its proof of claim for $5,576,539.
Hechinger filed a petition under Chapter 11 of the Bankruptcy
Code on June 11, 1999. On June 5, 2001, Hechinger filed a
complaint against Owens Corning to avoid preferential transfers
in the Delaware Bankruptcy Court. Because the Complaint
referenced payments between March 13, 1999 and June 11, 1999, the
preference cause of action was stayed as a result of Owens
Corning's Chapter 11 filing. After dismissing the complaint,
Hechinger filed a proof of claim in Owens Corning's Chapter 11
proceedings.
Owens Corning objects to the proof of claim on the grounds that
it has complete defenses to the claim under Sections 547(c)(1),
(2), and (4) of the Bankruptcy Code.
Raymond H. Lemisch, Esq., at Adelman Lavine Gold and Levin PC, in
Wilmington, Delaware, informs the Court that the analysis
references each of the alleged preferential transfers making up
Hechinger's proof of claim and applies ordinary course of
business and subsequent new value analyses with respect to each
payment. The combination of ordinary course of business and new
value defenses results in a zero balance.
Section 547(c)(2) provides that a transfer may not be avoided as
a preferential payment to the extent that the transfer was:
(1) in payment of a debt incurred by Debtor Owens Corning in
the ordinary course of business or financial affairs of
Debtor Owens Corning in the transferee;
(2) made in the ordinary course of business or financial
affairs of Debtor Owens Corning in the transferee; and
(3) made according to ordinary business terms.
It was in the ordinary course of business for both Owens Corning
and Hechinger for Owens Corning to make deliveries of products to
Hechinger and for Hechinger to pay for those deliveries, Mr.
Lemisch contends.
Hechinger and Owens Corning had a substantial history of
dealings. It was not unusual or "idiosyncratic" for payments to
be either 10 days early or 10 days late. Section 547(c)(4)
provides that a preference may not be avoided "to the extent that
after such transfers, such creditor gave new value to or for the
benefit of the Debtor (A) not secured by an otherwise unavoidable
security interest; and (B) on account of which new value the
Debtor did not make an otherwise unavoidable transfer to or for
the benefit of such creditor."
Owens Corning's preference analysis discloses that in the 90-day
period prior to the filing, Owens Corning delivered goods with a
value of $4,470,000 to Hechinger. Of that amount, Owens Corning
should be credited $2,450,590 "on account of which new value the
Debtor did not make an otherwise unavoidable transfer to or for
the benefit of Hechinger."
Accordingly, the Debtors ask Judge Fitzgerald to disallow and
expunge the Hechinger Claim in its entirety. (Owens Corning
Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
OWENS-ILLINOIS: Fourth-Quarter 2003 Net Loss Hits $1 Billion Mark
-----------------------------------------------------------------
Owens-Illinois, Inc., (NYSE: OI) reported a fourth quarter 2003
net loss of $1,071.1 million, or $7.33 per share compared with
fourth quarter 2002 net earnings of $50.3 million, or $0.30 per
share (diluted).
The fourth quarter 2003 net loss included: 1) a charge of $450.0
million ($292.5 million after tax) to increase the reserve for
estimated future asbestos-related costs, 2) goodwill impairment
charges of $720.0 million ($720.0 million after tax) discussed
below, 3) capacity curtailment charges of $44.0 million ($36.9
million after tax) for the permanent closure of the Milton,
Ontario, and Perth, Australia, glass container factories, 4) an
impairment charge of $43.0 million ($30.1 million after tax) for
the write-down of Plastics Packaging assets in the Asia Pacific
region, and 5) a charge of $3.9 million ($2.4 million after tax)
for an additional loss on the previously announced sale of certain
closures assets. The combined after-tax effect of these fourth
quarter charges is a reduction of $7.37 in earnings per share.
Exclusive of these charges, fourth quarter earnings per share were
$0.04. Earnings per share for the fourth quarter 2002, exclusive
of finance fee write-offs, were $0.32.
Higher natural gas costs, continued pricing pressure in the
Company's plastics businesses, lower pension income, higher
interest expense, and the partial idling of glass production
capacity in the United States to reduce inventories were the
principal factors affecting operating results in the fourth
quarter of 2003.
Thomas L. Young, Owens-Illinois co-Chief Executive Officer and
Chief Financial Officer said, "In view of the difficult operating
environment we faced throughout 2003, adversely affecting earnings
per share performance, we focused our efforts at year end on
capacity rationalization and improved working capital management.
As a result, we were able to affect debt reduction in the fourth
quarter by approximately $80 million. We plan to continue and
intensify those efforts in 2004 while at the same time improving
our earnings performance and seeking enhanced shareholder value
through global packaging consolidation and restructuring
initiatives."
Business Review
Fourth quarter 2003 net sales were $1.505 billion compared with
$1.360 billion in the fourth quarter of 2002. On a consolidated
basis, EBIT for the fourth quarter of 2003, including unusual
charges of $1,260.9 million, amounted to a loss of $1,119.2
million compared with EBIT of $182.9 million for the fourth
quarter of 2002. The following discussion of operations is
presented on a segment reporting basis.
Glass Containers Segment
The Glass Containers segment reported fourth quarter net sales of
$1.066 billion, up 11.2% from $959.0 million in the fourth quarter
of 2002. Segment EBIT was $140.7 million for the fourth quarter of
2003 compared with $159.5 million for the fourth quarter of 2002.
EBIT margins in the fourth quarter of 2003 were 13.2% compared
with 16.6% in the fourth quarter of 2002. Lower pension income of
$10.0 million and higher energy costs of $15.4 million contributed
to the reduction in Segment EBIT and EBIT margins.
Fourth quarter 2003 net sales for the North American glass
container operations were about equal to net sales in the fourth
quarter 2002 while EBIT declined approximately 45%. Contributing
to the lower fourth quarter EBIT results were higher energy costs,
slightly lower unit shipments, and extended Thanksgiving and
Christmas shutdowns in the United States to reduce inventory. The
combination of the two extended shutdowns reduced unit inventory
levels by approximately 11% in the United States and had a
positive impact on cash flow of approximately $15 million in the
fourth quarter.
In the European glass container operations, sales and EBIT
increased by approximately 21% and 28%, respectively. These
improvements were mainly due to higher selling prices (principally
in Italy and the United Kingdom), higher unit shipments, improved
labor productivity, favorable currency translation rates, and
continuing cost reduction initiatives at the Company's operations
in Italy. Partially offsetting these improvements were higher
energy costs throughout the region.
Fourth quarter 2003 net sales in the Asia Pacific glass container
operations increased approximately 18% compared with fourth
quarter 2002 net sales. The increase in net sales was due
primarily to stronger currency translation rates, partially offset
by a less favorable product mix and lower unit shipments. Fourth
quarter 2003 EBIT for Asia Pacific glass container operations
declined approximately 7% compared with fourth quarter 2002. Lower
unit shipments, less favorable product mix and higher freight and
warehousing costs were partially offset by favorable currency
translation rates.
In the South American glass container operations, fourth quarter
2003 sales were up approximately 20% and EBIT increased
approximately 15% compared with the fourth quarter of 2002. The
sales increase reflects higher unit shipments principally in
Venezuela and Colombia, improved pricing, and favorable currency
translation. The EBIT improvement principally resulted from
improved pricing and manufacturing performance, along with higher
unit shipments.
Plastics Packaging Segment
In the fourth quarter 2003, the Plastics Packaging segment
reported net sales of $438.1 million compared with $401.1 million
in the fourth quarter of 2002. Higher unit shipments, resin pass-
through price increases of approximately $17 million, and
favorable currency translation rates substantially offset lower
selling prices and the absence of sales from the recently divested
closures assets. Segment EBIT for the fourth quarter 2003 was
$26.6 million compared with $40.3 million in the fourth quarter
2002. The principal factors contributing to the EBIT decline were
lower selling prices, higher warehousing and delivery costs, and
an approximate $2 million reduction in pension income.
Other Retained Costs
Other Retained costs were $8.7 million higher for the fourth
quarter of 2003 compared with the fourth quarter of 2002,
principally due to the write-off of software initiatives which
will not be pursued and accelerated amortization of information
system assets scheduled for replacement in 2004.
Interest Expense
Interest expense increased to $121.1 million in the fourth quarter
of 2003 compared with $112.2 million for the fourth quarter of
2002. Included in the $112.2 million of interest in the fourth
quarter of 2002 is a charge of $4.5 million for the early write-
off of finance fees which was reclassified from extraordinary
items as required by FAS No. 145. Excluding the $4.5 million
additional interest expense in 2002, fourth quarter 2003 interest
expense increased $13.4 million compared with the fourth quarter
of 2002. Higher interest rates on the Company's fixed rate debt
accounted for $11.3 million of the increase and the remaining $2.1
million relates to higher debt levels. The higher interest rates
in 2003 were mainly due to the issuance of $625 million of fixed
rate notes during the fourth quarter of 2002 and $900 million of
fixed rate notes in May 2003. The proceeds from the notes were
used to repay lower-cost variable rate debt borrowed under the
Company's bank credit agreement. Lower interest rates on the
Company's remaining variable rate debt partially offset the
increase.
Consolidated debt at year-end 2003 was $5,425.5 million compared
with $5,346.2 million at year-end 2002, an increase of $79.3
million for the year. However, during the fourth quarter of 2003,
consolidated debt declined by approximately $80 million
principally due to inventory reductions and reduced capital
spending. During the fourth quarter 2002, consolidated debt
declined approximately $40 million.
Goodwill Impairment
During the fourth quarter of 2003, the Company completed its
annual impairment test of goodwill using business enterprise
values, and determined that a write-down of goodwill was required.
As a result, the Company recorded non-cash charges of $720.0
million ($720.0 million after tax) principally related to a $670
million goodwill impairment in the consumer products reporting
unit of the Plastics Packaging segment. Competitive pricing
pressure has continued to negatively affect projected cash flows
in the Company's plastic containers business which caused declines
in enterprise value. The balance of the impairment charge was a
$50 million write-down of the Company's equity investment in a
soda ash mining operation resulting from excess industry capacity.
Asbestos-related Costs
The charge of $450.0 million ($292.5 million after tax) represents
an increase of the reserve for estimated future asbestos-related
costs and results from a recently completed comprehensive review
of the Company's asbestos-related liabilities. The adjustment
increases the reserve for asbestos-related costs to $803.7 million
as of December 31, 2003, which the Company believes is sufficient
to provide for estimated indemnity payments and legal fees arising
from asbestos personal injury lawsuits and claims pending and
expected to be filed in the next several years. Asbestos-related
cash payments for 2003 were $199.0 million, a reduction of $22.1
million, or 10%, from 2002 while fourth quarter 2003 payments were
$41.8 million compared with $53.7 million in the fourth quarter of
2002. As of December 31, 2003, the number of asbestos-related
lawsuits and claims pending against the Company was approximately
29,000, up from approximately 24,000 pending claims at
December 31, 2002. In the second quarter of 2003, the Company
received approximately 7,000 new claims and lawsuits that had been
filed in advance of the effective date of the recently-enacted
Mississippi tort reform law. The Company believes that
approximately 60% of those filings are cases with exposure dates
after the Company's 1958 exit from the business for which the
Company takes the position that it has no liability. The Company
anticipates that cash flows from operations and other sources will
be sufficient to meet its asbestos-related obligations on a short-
term and long-term basis. The Company expects to conduct a
comprehensive review of its asbestos-related liabilities and costs
on an annual basis.
Liquidity Improvement Initiatives
Sale of Certain Closures Assets
During the fourth quarter 2003, the Company closed on the sale of
assets related to the production of plastic trigger sprayers and
plastic finger pumps to Continental Sprayers International, Inc.,
headquartered in St. Peters, Missouri. Included in the sale were
manufacturing facilities in Bridgeport, Conn., and El Paso, Texas,
in addition to related production assets at the Erie, Pa., plant.
Net cash proceeds from the sale of approximately $50 million,
including liquidation of related working capital, were used to
reduce debt.
Capacity Utilization Review
In addition to the previously announced permanent closure of its
glass container factories in Hayward, Calif.; Milton, Ontario; and
Perth, Australia, the Company took extended shutdowns at its
United States glass factories during both the Thanksgiving and
Christmas holidays, which reduced unit inventory levels by
approximately 11% and had a positive effect on cash flow of
approximately $15 million.
Additionally, as previously announced, the Company has retained
advisors to conduct a strategic review of certain of its blow-
molded plastics operations in North America, South America and
Europe. The review is aimed at exploring all options in
maximizing investor value.
Full Year Results
For the full year 2003, the Company reported a net loss of
$990.8 million, or $6.89 per share, compared with a 2002 net loss
of $460.2 million, or $3.29 per share. The net loss in 2003
included: 1) the fourth quarter charges previously discussed, 2)
a loss of $37.4 million ($37.4 million after tax) from the sale of
long-term notes receivable, 3) additional interest charges of
$16.8 million ($10.7 million after tax) for early retirement of
debt, principally note repurchase premiums, 4) a charge of $37.4
million ($23.4 million after tax) for the estimated loss on the
sale of certain closures assets, and 5) a charge of $28.5 million
($17.8 million after tax) for the permanent closure of the Hayward
glass container factory. The combination of these charges reduced
2003 net earnings by $7.97 per share. Exclusive of these charges,
2003 earnings per share were $1.08.
The net loss in 2002 included: 1) additional charges of $15.4
million ($9.6 million after tax) for early retirement of debt, and
2) a charge of $475.0 million ($308.8 million after tax) to
increase the reserve for estimated future asbestos-related costs.
The combined after-tax effect of these charges was a reduction in
earnings per share of $2.16. Also in 2002 the Company recorded a
charge for the change in method of accounting for goodwill of
$460.0 million ($460.0 million after tax), or $3.14 per share.
Exclusive of these charges, 2002 earnings per share were $2.01.
Net sales for 2003 were $6.059 billion compared with $5.640
billion in 2002, an increase of 7.4%. On a consolidated basis,
EBIT for 2003, including charges of $1,364.2 million, amounted to
a loss of $620.7 million compared with EBIT of $414.2 million in
2002 which included a charge of $475.0 million for asbestos-
related costs.
The Glass Containers segment reported 2003 net sales of $4,182.9
million, up 7.9% from $3,875.2 million a year ago, and segment
EBIT of $659.4 million for the full year 2003 compared with $709.0
million in 2002. Higher energy costs, modestly lower worldwide
unit shipments, extended Thanksgiving and Christmas shutdowns at
its factories in the United States to reduce inventory, higher
warehousing and distribution costs, and lower pension income were
partially offset by continued strong performance in Europe and
favorable currency translation rates.
The Plastics Packaging segment reported full year 2003 net sales
of $1,876.1 million compared with net sales of $1,765.2 million in
2002. Higher unit sales volumes, resin cost pass-through price
increases of approximately $85 million, and favorable currency
exchange rates were partially offset by lower selling prices in
most of the segment's businesses, reduced sales within the
Company's advanced technology systems business as a major customer
discontinued production in the United States and relocated that
production to Singapore, a less favorable product mix and the
absence of sales from the recently divested closures assets. Full
year 2003 segment EBIT was $170.7 million compared with $258.2
million in 2002. The principal factors contributing to the
reduced segment EBIT results were lower selling prices in most of
the segment's businesses, reduced sales within the Company's
advanced technology systems businesses discussed above, along with
lower pension income. Partially offsetting these factors were
higher unit shipments in nearly all of the segment's businesses.
Other retained costs were $8.6 million higher for the full year
2003 compared with full year 2002, principally due to the write-
off of software initiatives which will not be pursued and
accelerated amortization of information system assets scheduled
for replacement in 2004.
Capital Expenditures
Capital spending for the full year 2003 amounted to $431.5
million, a reduction of $64.5 million, or 13%, from the full year
2002.
Effective Tax Rate
Excluding the effects of the previously discussed charges in both
years, the Company's effective tax rate for the full year 2003 is
29.0% compared with 30.1% in 2002. The lower effective tax rate
in 2003 is principally due to a change in Italian laws, including
a rate decrease that was enacted late in the fourth quarter.
Outlook
For the year 2004, the Company expects earnings to be in the range
of $1.35 to $1.40 per share. Lower pension income of $0.18 per
share is expected to be offset by operational improvements and
lower interest expense. Based on projected Libor rates, the
Company expects to realize approximately $0.09 per share in
interest savings from its ongoing program to swap up to $1.2
billion of its fixed rate debt into floating rate debt and from
the recent re-pricing of its Senior Secured Credit Agreement.
The Company is currently undertaking several liquidity improvement
initiatives on a company-wide basis including reduction of base
capital spending through enhanced capital efficiency, improved
working capital management, and reduced operating expenses through
various measures including globalization of procurement activities
and benefit plan redesign. Following completion of the first
phase of this review by the end of the current quarter, the
Company may adjust its earnings outlook.
Owens-Illinois (Fitch, BB- Bank Debt and Senior Unsecured Note
Ratings, Stable) is the largest manufacturer of glass containers
in North America, South America, Australia and New Zealand, and
one of the largest in Europe. O-I also is a worldwide
manufacturer of plastics packaging with operations in North
America, South America, Europe, Australia and New Zealand.
Plastics packaging products manufactured by O-I include consumer
products (blow molded containers, injection molded closures and
dispensing systems) and prescription containers.
Copies of Owens-Illinois news releases are available at the Owens-
Illinois Web site at http://www.o-i.com/
PACIFIC ENERGY: Reports Improved Fourth-Quarter 2003 Performance
----------------------------------------------------------------
Pacific Energy Partners, L.P. (NYSE:PPX) announced net income for
the three months ended December 31, 2003, of $7.6 million, or
$0.30 per basic and diluted limited partner unit, compared to $6.4
million, or $0.30 per basic and diluted limited partner unit, in
the corresponding period of 2002. The results of operations for
the fourth quarter of 2003 reflect the operating results of the
Pacific Terminals storage and terminaling system assets, which
were acquired on July 31, 2003, as well as improved financial
performance of our Rocky Mountain pipelines. The income generated
by Pacific Terminals was partially offset by lower volumes and
revenue from our West Coast pipelines.
For the twelve months ended December 31, 2003, net income was
$26.2 million, or $1.15 per basic limited partner unit ($1.14 per
diluted limited partner unit), compared to $33.6 million in the
corresponding period of 2002. The Partnership completed its
initial public offering in July 2002; therefore there is no
comparable per unit calculation for 2002. The additional income
generated by the Pacific Terminals storage and terminaling system
assets and the Rocky Mountain pipeline assets acquired March 1,
2002 was more than offset by a combination of lower West Coast
pipeline volumes, and increased expenses. The increased expenses
include increased depreciation expense resulting from the
acquisitions completed in 2002 and 2003, increased general and
administrative expense reflecting our growth and becoming a public
company in July 2002, and increased interest expense associated
with our post-IPO capital structure.
On January 20, 2004, the Partnership declared a quarterly cash
distribution for the fourth quarter of 2003 of $0.4875 per unit.
The distribution will be paid on February 13, 2003, to unitholders
of record as of January 30, 2004. Distributable cash flow for the
three months ended December 31, 2003 was $12.6 million; weighted
average units outstanding were 24.9 million.
"We are very pleased with our first full year as a public company,
including the acquisition and successful integration of the
Pacific Terminals storage and terminaling system assets. These
assets, which were acquired in July 2003, have made a significant
contribution to our revenue and income in the short time since we
completed the acquisition," said Irvin Toole, Jr., President and
CEO. "In December 2003, we completed the refurbishment of a
450,000 barrel tank, increasing Pacific Terminals' leasable
storage capacity to 6.7 million barrels, and we continue to work
on other improvements including the refurbishment of a 76,000
barrel tank that will further increase our leasable capacity."
Mr. Toole added, "We are also undertaking a $3 million expansion
of our pipelines serving Salt Lake City by establishing a new
delivery connection from Frontier Pipeline to the partnership's
Salt Lake City Core System. This connecting facility will increase
delivery capacity to Salt Lake City refineries by approximately
9,000 barrels per day. Existing pipelines into Salt Lake City are
currently prorated, or limited by capacity, during the summer
season. We are committed to keeping pace with growing demand for
crude oil in this region and believe this new connection will be
placed in service in May 2004."
Mr. Toole continued, "We expect net income for 2004 to be in the
range of $1.30 to $1.40 per limited partner unit, and we are
forecasting net income for the first quarter of 2004 to be in the
range of $0.26 to $0.30 per unit. Revenue is typically lower in
the first quarter due to reduced throughput on our West Coast and
Rocky Mountain pipelines. The reduced throughput is a result of
normal refinery maintenance at the Los Angeles Basin refineries
and lower winter season refining runs at Rocky Mountain area
refineries. In addition, as previously reported, Shell Oil Company
announced that it will close its Bakersfield, California refinery
by October 1, 2004. When the refinery shuts down, the crude oil it
currently refines is expected to be redistributed to refineries in
the Los Angeles Basin as well as those in Northern California.
Although there is no assurance as to how the volumes will be
redistributed or the timing of the Bakersfield refinery shutdown,
based on historical refinery crude oil demand and patterns of
distribution, we believe that this closure will result in a net
increase in volumes shipped on the Partnership's pipelines
beginning in the fourth quarter of 2004."
OPERATING RESULTS BY SEGMENT
WEST COAST OPERATIONS
Operating income was $11.9 million for the three months ended
December 31, 2003 compared to $9.1 million in the corresponding
period in 2002. This 31% increase was primarily due to the income
earned by Pacific Terminals, which acquired the EPTC storage and
terminaling assets on July 31, 2003, but was partially offset by
lower revenues due to reduced pipeline volumes. Pipeline volumes
for the three months ended December 31, 2003 were nine percent
lower compared to the corresponding period in 2002 due to
increased light crude oil refinery runs at the Bakersfield area
refineries, maintenance downtime on certain outer continental
shelf production facilities, and expected OCS and San Joaquin
Valley production declines, all of which combined to reduce the
volume of crude oil available for delivery to refineries in the
Los Angeles Basin. Refinery maintenance downtime also reduced
pipeline volumes.
For the twelve months ended December 31, 2003, West Coast
operating income was $42.7 million compared to $38.3 million in
the corresponding period in 2002. Five months of income from our
Pacific Terminals storage and terminaling assets contributed to
this increase in operating income. Lower pipeline operating
expenses also contributed to the improvement; however, volumes on
the West Coast pipelines were seven percent lower for the year as
a result of the reasons discussed above in addition to refinery
maintenance during the early part of the year.
ROCKY MOUNTAIN OPERATIONS
Operating income was $3.5 million for the three months ended
December 31, 2003, compared to $4.4 million in the corresponding
period in 2002. During the fourth quarter of 2003, Frontier
Pipeline Company, which is 22.22% owned by a subsidiary of the
Partnership, settled two tariff rate related matters, reducing the
Partnership's share of Frontier's income by $0.4 million. Refinery
maintenance in the fourth quarter of 2003 impacted crude runs in
the Salt Lake City area and resulted in lower volumes transported
on AREPI and Frontier, but this impact was offset by increased
Western Corridor volumes. Major maintenance expenses were greater
in 2003's fourth quarter.
For the twelve months ended December 31, 2003, operating income
was $14.2 million compared to $13.5 million in the corresponding
period in 2002. The 2002 period included only ten months of
results for the Western Corridor and Salt Lake City Core systems,
which were acquired on March 1, 2002. In addition, the 2002 period
included significant transition costs that were partly offset in
2003 by higher major maintenance expense. Refinery maintenance,
particularly in the first part of 2003, resulted in reduced
throughput to Salt Lake City through our various systems.
CAPITAL EXPENDITURES
Capital expenditures were $10.8 million for the twelve months
ended December 31, 2003, of which $2.1 million was for sustaining
capital projects. Profit generating capital expenditures totaled
$8.3 million, including $5.3 million for the Pier 400 project.
Pier 400 is a deep-water petroleum import terminal at the Port of
Los Angeles that the Partnership is in the early stages of
developing. Transition capital expenditures, principally for the
Pacific Terminals storage and terminaling system assets, were $0.4
million. During 2004, we expect capital expenditures to total
approximately $16 million, including up to $5 million for Pier
400, $7 million for other profit generating capital projects, $1
million for transition capital projects and $3 million for
sustaining capital projects.
Pacific Energy Partners, L.P. (Moody's, Ba2 Corporate Credit
Rating) is a Delaware limited partnership headquartered in Long
Beach, California. Pacific Energy Partners is engaged principally
in the business of gathering, transporting, storing and
distributing crude oil and other related products in California
and the Rocky Mountain region. Pacific Energy Partners generates
revenues primarily by charging tariff rates for transporting crude
oil on its pipelines and by leasing capacity in its storage
facilities. Pacific Energy Partners also buys, blends and sells
crude oil, activities that are complimentary to its pipeline
transportation business.
PARMALAT: Cayman Court Appoints Ernst & Young as Liquidator
-----------------------------------------------------------
The Grand Court of the Cayman Islands appoints James Cleaver and
Gordon I. MacRae at Ernst & Young Restructuring Ltd. to serve as
Joint Provisional Liquidators for Parmalat Capital Finance
Limited, Food Holdings Limited and Dairy Holdings Limited after
winding up petitions were filed against the finance companies by
a group of creditors.
As Provisional Liquidators, Ernst & Young will have the power to:
(i) locate, protect, secure and take into their possession
and control all assets and property to which Parmalat
Capital is or appears to be entitled;
(ii) locate, protect, secure and take into their possession
and control the books, papers and records of Parmalat
Capital including the accounting and statutory records;
(iii) carry out investigations as they may consider
appropriate into the promotion, formation, business,
dealings, affairs or property of Parmalat Capital,
including without limitation applying for relief under
Section 127 of the Companies Law or an equivalent in
any other jurisdiction;
(iv) do any acts or things they consider to be necessary or
desirable to protect Parmalat Capital's assets and
property;
(v) take any actions as may be necessary or desirable to
obtain the recognition of the appointment of the JPLs
in any other relevant jurisdiction and make
applications to the courts of such jurisdictions for
that purpose;
(vi) retain and employ, barristers, solicitors or attorneys
or other agents or professional persons as the JPLs
consider appropriate for the purpose of advising or
assisting in the execution of their powers;
(vii) render and pay invoices out of Parmalat Capital's
assets for their own remuneration at their usual and
customary rates together with all costs, charges and
expenses of their attorneys and all other agents,
managers, accountants, or other persons that the JPLs
may employ; and
(viii) exercise powers without further sanction to the Cayman
Court as are set out in Section 109(a) to (g) of the
Companies Law.
Judge Henderson of the Grand Cayman Court rules that no
disposition of Parmalat Capital's property by or with the
authority of the JPLs in either case in the carrying out of their
duties and functions will be avoided by virtue of Section 156 of
the Companies Law.
Discharge of Appointment
Parmalat Capital Finance has the liberty to apply to the Cayman
Court to discharge the appointment of the JPLs on 48 hours'
notice to:
(1) Dairy Holdings and Food Holdings' attorneys, Walkers, at
Walker House, Mary Street, PO Box 265 GT, George Town,
Grand Cayman, Cayman Islands; and
(2) the JPLs at Ernst & Young Restructuring Ltd., 4th Floor,
Bermuda House, Dr. Roy's Drive, George Town, Grand Cayman,
Cayman Islands.
Guy Locke, Esq., at Walkers, represents the JPLs before the
Cayman Court.
Cayman Court Imposes Injunction
Pursuant to Section 99 of the Companies Law, alternatively,
pursuant to the inherent jurisdiction of the Court, Judge
Henderson enjoins all creditors and interested parties from
prosecuting actions, lawsuits and other proceedings against
Parmalat Capital without further Court order. No future action,
lawsuit or proceeding will be commenced against Parmalat Capital
without obtaining leave from the Court. (Parmalat Bankruptcy News,
Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PEABODY ENERGY: Declares Quarterly Dividend Payable on March 3
--------------------------------------------------------------
The board of directors of Peabody Energy declared a regular
quarterly dividend on its common stock of $0.125 per share. The
dividend is payable on March 3, 2004, to holders of record on
Feb. 10, 2004.
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.
PERKINELMER INC: James C. Mullen Elected to Board of Directors
--------------------------------------------------------------
PerkinElmer, Inc. (NYSE:PKI) announced that James C. Mullen, CEO
of Biogen Idec Inc., has been elected to the company's board of
directors.
"We are very pleased to have Jim as a distinguished member of our
board," said Gregory L. Summe, Chairman and Chief Executive
Officer of PerkinElmer. "He has played a vital leadership role in
the success of Biogen Idec, and his insight and expertise will be
invaluable as we continue to grow our position as one of the
world's leading health sciences companies."
Mr. Mullen was formerly Chairman of the Board and Chief Executive
Officer of Biogen. He was named Chairman of the Board of Directors
in July 2002, after being named President and Chief Executive
Officer of Biogen in June 2000. Mr. Mullen joined Biogen in 1989
as Director, Facilities and Engineering. He was named Vice
President, Operations, in 2002. From 1996 to 1999, Mr. Mullen
served as Vice President, International, with responsibility for
building all Biogen operations outside North America.
From 1984 to 1988, Mr. Mullen held various positions at SmithKline
Beecham Corporation (now GlaxoSmithKline plc). He holds a B.S. in
Chemical Engineering from Rensselaer Polytechnic Institute and an
M.B.A. from Villanova University.
Mr. Mullen serves on the Board of Trustees of Rensselaer
Polytechnic Institute, the Board of Directors of the Biotechnology
Industry Organization (BIO) and is co-chair of Cambridge Family
and Children's Service Capital Campaign Steering Committee.
PerkinElmer, Inc. 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/
As previously reported, Fitch Ratings affirmed PerkinElmer, Inc.'s
'BB+' senior secured debt rating, 'BB+' bank loan rating, and
'BB-' senior subordinated debt rating. The ratings apply to
approximately $570 million in senior secured and senior
subordinated debt. The Rating Outlook is Stable.
PERRYVILLE ENERGY: Files Chapter 11 Petition to Effect Asset Sale
-----------------------------------------------------------------
Cleco Corp. (NYSE:CNL)(PCX:CNL) announced its subsidiary,
Perryville Energy Partners LLC, has reached an agreement to sell
its 718-megawatt power plant to a subsidiary of Entergy Corp.
As part of the sales process, the project companies, PEP and
Perryville Energy Holdings LLC, filed voluntary petitions for
protection under Chapter 11 of the U.S. Bankruptcy Code.
Neither Cleco Corp. nor any of its other subsidiaries were
included in the filings made Wednesday.
The agreement calls for PEP, which owns the plant, to sell the
facility to Entergy Louisiana, Inc. for approximately $170
million. It is anticipated the sale proceeds will be sufficient to
repay senior lenders and all current obligations of the Perryville
subsidiaries. The agreement is subject to the approvals of
regulators and the bankruptcy court.
"After careful consideration, it was determined the only way to
facilitate the orderly sale of the Perryville plant was through
this voluntary filing by our subsidiaries," Cleco President and
CEO David Eppler said.
In addition, Entergy signed a contract to buy the plant's output
while the sales agreement is pending. The power contract also is
subject to regulatory and bankruptcy court approvals.
The two Perryville subsidiaries expect to ask the bankruptcy court
for expedited action on various motions, including one involving
procedures for solicitation of higher or better offers for the
plant, a requirement under the bankruptcy code.
As a result of the July 14, 2003, bankruptcy filing of its tolling
agreement counterparty and the counterparty's parent company,
Mirant Corp., PEP was in default on its approximately $133 million
loan.
Today's filings were prompted by the inability of the Perryville
subsidiaries and their lenders to reach an agreement on the terms
under which the lenders would consent to the sale of the plant to
Entergy.
"Clearly, we would have preferred to sell the Perryville plant
without bankruptcy court intervention, but it's sometimes
difficult to reach an agreement between multiple parties outside
of a courtroom," Eppler said. "Today's action in no way affects
our electric utility, Cleco Power, or its customers. Cleco
Corporation remains a financially sound company. Part of our
strategy has been to reduce our exposure to the less stable
wholesale energy business, and we're hopeful this process will
help us achieve that goal."
The filings were made in the U.S. Bankruptcy Court for the Western
District of Louisiana, Alexandria division.
The sale, expected to be completed by December 2004, is contingent
upon obtaining necessary approvals from state and federal
regulators and the bankruptcy court, a final inspection by
Entergy, and satisfaction of other customary closing conditions.
The plant, located in Perryville, La., consists of a combined-
cycle unit and a simple-cycle unit.
Existing management will continue to operate the facility through
the closing of the sale.
Cleco Corp. is an energy services company headquartered in
Pineville, La. It operates a regulated electric utility that
serves 260,000 customers across Louisiana. Cleco also operates a
wholesale energy business that has approximately 2,100 megawatts
of generating capacity, including the Perryville plant. For more
information about Cleco, visit http://www.cleco.com/
PERRYVILLE ENERGY: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Lead Debtor: Perryville Energy Partners, LLC
2030 Donahue Ferry Road
Pineville, Louisiana 71360-5226
Bankruptcy Case No.: 04-80110
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Perryville Energy Holdings, LLC 04-80109
Type of Business: The Debtor owns an Electric Power Plant and it
operates a regulated electric utility services.
Chapter 11 Petition Date: January 28, 2004
Court: Western District of Louisiana (Alexandria)
Debtors' Counsel: David S. Rubin, Esq.
Kantrow, Spaht, Weaver & Blitzer (APLC)
P. O. Box 2997
Baton Rouge, LA 70821-2997
Tel: 504-383-4703
Fax: 225-343-0630
Estimated Assets: More than $100 Million
Estimated Debts: More than $100 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
General Electric Long Term Service $325,332
International Agreements CCGT
4200 Wildwood Parkway and Single Peaking
Units
Entergy Corporation Transmission Services $190,521
Chadbourne and Parke, LLP Legal services - $125,684
Trade debt
Burns & McDonell Retainage claim $97,822
Henwood Trade Debt $35,000
Price Waterhouse Accounting services $19,192
- trade debt
Ecolochem Trade Debt $13,785
GE Power Systems Trade Debt $12,057
Gardere Wynne Sewell LLP Legal services - $6,136
trade debt
R&S Supply Trade Debt $3,941
Red Ball Oxygen Co., Inc. Trade Debt $3,942
The Cajun Company, Inc. Trade Debt $2,919
Arkansas Industrial Trade Debt $2,109
Machinery
Monroe Welding Supply, Inc. Trade Debt $2,084
R.W. Beck, Inc. Trade Debt $1,930
LA Dept Environ Quality Account - Trade Debt $1,116
Texas Gas Transmission, LLC Trade Debt $1,100
John H. Carter Co. Trade Debt $1,099
Payne Mechanical Services, Trade Debt $1,086
Inc.
Network USA Trade Debt $990
PETRO STOPPING: Extends Pending Offer and Consent Solicitation
--------------------------------------------------------------
Petro Stopping Centers Holdings L.P. and Petro Holdings Financial
Corporation announce an extension of the pending offer and consent
solicitation with respect to all of their outstanding $113,370,000
aggregate principal amount at maturity senior discount notes due
2008 (CUSIP No. 71646DAE2 and ISIN No. US71646DAE22).
Petro Warrant Holdings Corporation also announces the extension of
the consent solicitation with respect to all of its outstanding
warrants (CUSIP No. 716457114, ISIN No. 7164571140).
The expiration date for the offer and each consent solicitation
has been extended from 5:00 p.m. New York City time on Jan. 27,
2004, to 5:00 p.m. New York City time on Feb. 3, 2004, unless
further extended. As of 5:00 p.m. Jan. 27, 2004, the Issuers had
received tenders from holders of approximately $107,945,000
(95.2%) principal amount at maturity of the Existing Notes and
Petro Warrant Holdings Corporation had received consents from
holders of approximately 53.1% of its outstanding warrants.
The offer and each consent solicitation continue to be subject to
certain conditions, including the refinancing condition and the
general conditions which are further detailed in the Offering
Memorandum and Consent Solicitation Statement dated Aug. 19, 2003,
as amended and superceded by the Amended Offering memorandum and
Consent Solicitation dated Dec. 10, 2003, and as further
supplemented on Jan. 8, 2004, and Jan. 12, 2004.
Informational documents relating to the offer will only be
distributed to eligible investors who complete and return, or have
completed and returned, an Eligibility Letter that has already
been sent to investors. If you would like to receive this
Eligibility Letter, please contact Global Bondholders Services,
the information agent for the offer and consent solicitation, at
212-430-3774 or 866-470-4200 (U.S. toll free).
The New Notes to be issued to holders of Existing Notes electing
the New Note Option will not be registered under the Securities
Act of 1933, as amended, and will only be offered in the United
States to qualified institutional buyers or institutional
accredited investors in private transactions in reliance upon an
exemption from registration under the Securities Act and outside
the United States to persons other than U.S. persons in off-shore
transactions in reliance upon Regulation S under the Securities
Act.
As previously reported, Standard & Poor's Ratings Services'
ratings for Petro Stopping Centers L.P. (operating company) and
Petro Stopping Centers Holdings L.P. (holding company), including
the 'B' corporate credit rating, remain on CreditWatch with
negative implications.
Upon successful completion of the planned refinancing, Standard &
Poor's will affirm the 'B' corporate credit rating on the company
and the outlook will be negative.
PHILIP SERVICES: Rejection & Admin. Claims Bar Date is Friday
-------------------------------------------------------------
On December 10, 2003, the U.S. Bankruptcy Court for the Southern
District of Texas confirmed the Second Amended and Restated Joint
Chapter 11 Plan of Philip Services and its debtor-affiliates.
The Plan was declared effective on December 31, 2003.
After the confirmation of the Plan, all remaining executory
contracts or unexpired leases not assumed or administered are
deemed rejected. Claims arising from these rejection must be
filed with the Debtors' Claims Agent before 4:30 p.m. Eastern Time
on Friday. Claims must be sent to:
Logan & Company
Attn: Philip Services Claims Processing Department
546 Valley Road
Upper Montclair, New Jersey 07043
Copies must also be served on the Debtors' lawyers:
Porter & Hedges, LLP
700 Louisiana
Suite 3500
Houston, Texas 77002
Attn: Robert E. Richards, Esq.
John F. Higgins, Esq.
James Matthew Vaughn, Esq.
-and-
Sonnenschein Nath & Rosenthal LLP
1221 Avenue of the Americas
New York, NY 10020
Attn: Peter D. Wolfson, Esq.
-and-
Sonnenschein Nath & Rosenthal LLP
800 Sears Tower
Chicago, IL 60606
Attn: Robert E. Richards, Esq.
The Court also sets Friday as the deadline for the filing of all
administrative claims not covered by any previous administrative
bar date order, pursuant to Section 503 of the Bankruptcy Code.
Claims must be filed with the Bankruptcy Court, with copies sent
to the Debtors' lawyers.
Philip Services Corporation, a holding company which owns directly
or indirectly a series of industrial and metals services companies
that operate throughout North America, filed for chapter 11
protection with its debtor-affiliates on June 2, 2003 (Bankr. S.D.
Tex. Case No. 03-37718). Robert E. Richards, Esq., John F.
Higgins, Esq., and James Matthew Vaughn, Esq., at Porter & Hedges
LLP, and Peter D. Wolfson, Esq., Robert E. Richards, Esq., at
Sonnenschein Nath & Rosenthal LLP, represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $613,423,000 in total assets and
$686,039,000 in total debts.
PICCADILLY CAFETERIAS: Court Fixes March 10 as Claims Bar Date
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida
establishes March 10, 2004, as the deadline for creditors owed
money by Piccadilly Cafeterias, Inc., to file their proofs of
claim or interest against the Debtor or be forever barred from
asserting their claims.
Creditors must file written proofs of claim. Forms may be
delivered or mailed to:
United States Bankruptcy Court
Attn: Piccadilly Cafeterias, Inc. Claims Administrator
51 S.W. 1st Avenue, Room 1517
Miami, Florida 33130
The Court has authorized the Debtor to retain a third-party claims
agent to process all proofs of claim or interest filed with the
Bankruptcy Court. Interested parties may obtain a copy of their
claim, request a proof of claim form or review the claims register
for Piccadilly Cafeteria's cases, by contacting Bankruptcy
Management Corporation, 1330 East Franklin Avenue, El Segundo,
California 90245-4306; Telephone: (888) 909-0100. The Clerk of the
Bankruptcy Court will also maintain an updated copy of the claims
register.
Piccadilly Cafeterias filed for Chapter 11 relief on October 29,
2003, (Bankr. S.D. Fl. Case No. 03-27976). Paul Steven Singerman,
Esq., and Jordi Guso, Esq., at Berger Singerman, P.A. represent
the Debtor in its restructuring efforts.
PLASTECH ENGINEERED: S&P Assigns BB- Credit & Bank Loan Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to Dearborn, Michigan-based Plastech Engineered
Products Inc. At the same time, Standard & Poor's assigned its
senior secured 'BB-' bank loan rating and its recovery rating of
'4' to Plastech's proposed $465 million of first-priority senior
secured credit facilities, indicating an expected marginal
recovery (25%-50%) of principal in the event of a default.
Standard & Poor's also assigned its senior secured 'B' debt rating
and a recovery rating of '5' to Plastech's proposed $50 million
senior second-lien bullet term loan due 2011, which indicate the
expectation of a negligible recovery (25% or less) of principal in
the event of a default.
The senior first-lien credit facilities consist of a $100 million
revolving credit facility due 2009, a $75 million term loan A due
2009, and a $290 million term loan B due 2010. These credit
facilities will be secured by a first-priority perfected security
interest in substantially all the assets of Plastech and its
subsidiaries and a first-priority pledge of the capital stock of
Plastech's subsidiaries.
Standard & Poor's ratings on the company's senior second-lien
secured term loan incorporate the fact that the lenders will have
a second lien on the company's assets.
Proceeds will be used to finance the acquisition of LDM
Technologies Inc., refinance substantially all existing
indebtedness of Plastech and LDM, provide working capital
financing, and for other general corporate purposes. Pro forma
total debt outstanding for the combined company at close of the
transaction will be about $442 million.
Plastech is a privately held, major producer of plastic interior
and exterior trim components for the automotive industry.
"The company will be challenged in the near-to-intermediate term
by the uncertain outlook for automotive production volumes,
continuing pricing pressure from manufacturers, and the long-term
market share decline of the U.S. automakers," said Standard &
Poor's credit analyst Nancy Messer. "Additional concerns stem from
the narrow scope of the company's product offerings and the
execution risk of integrating the operations of LDM with those of
Plastech. Mitigating these concerns are several positive business
characteristics of Plastech that support its sales levels and
growth potential."
PRECISION SAMPLING: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Precision Sampling & Molding Inc.
aka Maltas Inc.
425 South 38th Avenue
Saint Charles, Illinois 60174
Bankruptcy Case No.: 04-02790
Type of Business: The Debtor is a custom injection molder
specializing in short runs and product testing.
Chapter 11 Petition Date: January 26, 2004
Court: Northern District of Illinois (Chicago)
Judge: Bruce W. Black
Debtor's Counsel: Robert R. Benjamin, Esq.
Benjamin Berneman Brom Ltd.
205 West Randolph Suite 2110
Chicago, IL 60606
Tel: 312-444-1996
Total Assets: $1,429,830
Total Debts: $3,539,751
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Seaquist Closures Goods or services $186,247
M. Holland Company Goods or services $122,213
Orion Life Systems, Inc. Promissory Note $121,582
Novatac, Inc. Goods or services $47,283
Lamantia Plastics, Inc. Goods or services $38,204
Xerox Capital Services Lease of copier $23,584
Badger Color Goods or services $19,890
CitiCapital Installment loan for $16,277
2000 GMAC
Ashland Distributors Co. Goods or services $15,514
Clariant Corp. Goods or services $15,500
Labor Network, Inc. Goods or services $15,139
City of St. Charles Utility Bill $15,036
Triangle Polymers, Inc. Goods or services $15,024
First USA Bank, NA Goods or services $14,679
Mike Winter, Manager Rent for 405 S. 38th $11,200
New Ventures, LLC Avenue
Weiss & Company LLP Accounting services $10,795
Kent H. Landsberg, Co. Goods or services $10,592
Sentry Insurance Insurance $10,180
Apex Plastic Finishing Co. Goods or services $8,470
Mako Mold Company Goods or services $8,460
QWEST: Inks Multi-Year Contract with Principal Financial Group
--------------------------------------------------------------
Qwest Communications International Inc. (NYSE: Q) announced a
multi-year contract with The Principal Financial Group, a leading
diversified financial services company, for high-speed network
services.
The agreement provides The Principal with the capability to meet
customers' financial service needs faster. From processing banking
transactions and managing online brokerage services to developing
insurance and retirement planning solutions for businesses, using
Qwest's high-speed, nationwide network Principal employees can now
send and receive pertinent financial information over fiber optic
cables that are large enough to transmit more than 4.9 million,
five paragraph e-mails in one second.
"At The Principal, we uphold a reputation for stability and
impeccable customer service. In turn, we sought a communications
provider that would provide us with the same treatment," said
Randall Nyberg, director of information services of The Principal
Financial Group. "We chose Qwest because their team understands
our needs and will meet our demand for growth."
"With Qwest's continued Spirit of Service and top-notch
performance record, our team is able to give The Principal a
reliable and secure networking solution," said Clifford S. Holtz,
executive vice president of Qwest business markets group. "We know
it's important to The Principal to provide their customers with
timely financial information and we are committed to helping them
meet their customers' requests."
Qwest's network communication solutions allow customers to
transport critical information over Qwest's reliable, high-speed
and self-healing, nationwide network that helps minimize downtime
and improve overall network performance. The Qwest self-healing
network service offers the highest degree of enhanced network
reliability and is designed to automatically detect a service
failure anywhere within the system and reconfigure itself to
ensure a continuous flow of information between locations.
The Principal Financial Group(R) is a leader in offering
businesses, individuals and institutional clients a wide range of
financial products and services, including retirement and
investment services, life and health insurance and mortgage
banking through its diverse family of financial services
companies.
Qwest Communications International Inc. (NYSE: Q) is a leading
provider of voice, video and data services to more than 25 million
customers. The company's 47,000 employees are committed to the
"Spirit of Service" and providing world-class services that exceed
customers' expectations for quality, value and reliability. For
more information, please visit the Qwest Web site at
http://www.qwest.com/
At March 31, 2003, Qwest Communications's balance sheet shows a
total shareholders' equity deficit of about $2.6 billion.
RELIANCE: RIC Wins Nod for Release Pact with Kaiser Aluminum
------------------------------------------------------------
U.S. Bankruptcy Court Justice Judith Fitzgerald of the Bankruptcy
Court for the District of Delaware lifts the automatic stay
imposed in Kaiser's Chapter 11 proceedings, to the extent
necessary, to permit Reliance Insurance Company and Kaiser to
effectuate the release of the $2,000,000 Letter of Credit.
* * *
Backgrounder
RIC issued various retrospective premium and deductible
reimbursement, claims-based insurance policies primarily
providing Kaiser with environmental liability protection.
RIC asked Kaiser, as security under two of the Policies and any
subsequent extensions or renewals, in respect of either
retrospective premium rating or payments within the policy
deductible, for a Letter of Credit as collateral. Kaiser
originally issued the Letter of Credit in 1994 for $3,000,000.
The Letter of Credit, which was renewed under Kaiser's
postpetition credit facility, has a $2,000,000 current balance
and will expire on March 31, 2004.
The Policies, for which the Letters of Credit had originally been
issued, have either expired or been cancelled. Accordingly, RIC
and Kaiser began negotiations to release the Letter of Credit.
However, initial negotiations resulted in an impasse. In June
2003, RIC offered to release the Letter of Credit in exchange for
Kaiser's release and indemnification of RIC from the obligation
and liabilities under the Policies.
Following a comprehensive review, Kaiser concluded that releasing
RIC from obligations under the Policies would have no effect
because the Policies are each claim-based for which coverage has
lapsed or expired. Furthermore, no open claims existed under the
Policies and no claims could be brought. Although RIC insures
Kaiser for certain occurrence-based coverage related to
commercial umbrella liability for October 1997 through October
2000, the Release will not affect that coverage. Accordingly,
RIC and Kaiser agreed to enter into the Release.
The principal terms of the Release are:
(a) RIC will release the Letter of Credit to Kaiser and
will take all steps necessary to effectuate the release;
(b) Kaiser will indemnify and hold RIC harmless from and
against all liabilities under:
-- the operation or existence of the Policies;
-- the payment, adjustment, settlement or denial of claims
under the Policies; and
-- any breach of any conditions, terms, provisions or
endorsements of the Policies; and
(c) No failure or delay on the part of RIC or Kaiser in
exercising any right, power or remedy under the terms
of the Release will operate as a waiver of the Release,
nor will any single or partial exercise of any right
preclude any other. Any waiver of any provision of the
Release, and any consent to any departure by RIC or
Kaiser from the terms of any provisions of the Release,
will be effective only in the specific instance, and will
be valid for the specific given purpose. (Reliance
Bankruptcy News, Issue No. 45; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
REUNION INDUSTRIES: Atlas Partners Arranges $4.2 Million Mortgage
-----------------------------------------------------------------
Reunion Industries, Inc. (Amex:RUN) announced in December that it
was successful in refinancing its existing bank loan facilities
and restructuring its 13% senior notes.
The new credit facility for up to $25.0 million is with Congress
Financial Corporation and replaced the Company's revolving credit
and term loan facilities with Bank of America. Reunion also
entered into $5.2 million of new loan facilities through a $4.2
million first mortgage term loan, with a private capital fund and
arranged by Atlas Partners, LLC, secured by real estate, and a
$1.0 million increase in an existing subordinated note payable.
Based in Chicago, Atlas Partners -- http://www.atlaspartners.com/
-- is a real estate consulting company specializing in process
management. We were created specifically to address the commercial
real estate problems faced by asset-based lenders, turnaround
management consultants, bankruptcy and workout attorneys and
corporations with restructuring needs.
Based in Pittsburgh, Reunion -- http://www.reunionindustries.com/
-- manufactures and markets a broad range of metal and plastic
products and parts, including seamless steel pressure vessels,
fluid power cylinders, leaf springs, high volume precision
plastics products and thermoset compounds and provides engineered
plastics services.
At September 30, 2003, Reunion's balance sheet liabilities exceed
assets by more than $34.2 million.
SANGUINE CORP: Hires HJ & Associates to Replace Tanner + Company
----------------------------------------------------------------
On December 11, 2003, upon approval of Sanguine Corporation's
Board of Directors, the Company appointed H J & Associates as
Sanguine's independent auditors and dismissed Tanner + Company.
The report of Tanner + Company on the financial statements for the
fiscal years ended December 31, 2002 and 2001 contained an
explanatory paragraph as to Sanguine's ability to continue as a
going concern.
Sanguine Corporation is a public company (OTC BB: SGNC) based in
Pasadena, California, whose primary focus is the development of
PHER-O2, a perfluorocarbon emulsion with oxygen carrying
properties that has immediate applications as an intravenous
supplement to red blood cell function. The broad-based medical
applications of PHER-O2 have strong market potential. Sanguine is
a well-established organization with experts in the field of
synthetic blood chemistry and development. Dr. Thomas C. Drees was
a leader in the creation of Fluosol(R), the only synthetic blood
supplement approved to date for human use by the United States
Food and Drug Administration. The FDA approved Fluosol for
angioplasty use only in 1989 but Fluosol was withdrawn from the
market in 1994 because of the difficulty of storing it frozen and
then bringing it to ambient temperature prior to use. Of the
approximately 15,000 uses per year for the three full years it was
on the market, fully 50% of Fluosol use was for "off label"
adaptation to transfusions other than angioplasty. Sanguine's
immediate goal is to accelerate development and test of the Red
Blood Cell supplement PHER-O2, ultimately leading to FDA approval.
To assist in achieving this goal, a Medical Advisory Board
composed of scientists and physicians has been established to
advise Sanguine management on medical and scientific issues. These
include new product research, development, test, and applications
of PFC emulsions.
SOLUTIA INC: Gets Go-Signal to Pull Plug on Crescent Agreements
---------------------------------------------------------------
Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher LLP, in New
York, tells the Court that in 1995, the Solutia Debtors entered
into a series of agreements with Crescent Industrial Chemicals
Limited and Zimmer AG relating to a plant that Crescent planned to
build in Pakistan that would manufacture acrylic staple fiber
using the Debtors' proprietary process. Among other things, the
Debtors agreed to provide technical training and know-how
concerning manufacturing techniques to Zimmer, the company that
was to construct Crescent's plant, and to subscribe to Crescent's
shares of a $2,000,000 maximum par value.
Mr. Reilly explains that as a result of political instabilities
in the region following the execution of the Crescent agreements
and difficulties obtaining financing, Crescent's construction
project has been stalled since 1998. Whereas the original
contracts contemplated that the plant would be completed in late
1999 or early 2000, the Debtors understand that it is, at this
time, only partially built and the bulk of the machinery and
equipment necessary for the plant to operate has been held in the
custody of Pakistani customs authorities for the last four to
five years.
Because of the time lag, even if Crescent's problems with the
project were resolved, the Debtors no longer have adequate
resources to perform its obligations under the Crescent
Agreements. The Debtors no longer employ individuals who
possess the know-how to be provided to Zimmer to construct the
Crescent plant. Thus, it would be burdensome and not financially
beneficial for the Debtors to proceed under the Crescent
Agreements. In addition, given the structure of the agreements
and the lack of progress towards plant construction, the Debtors
do not believe that the agreements can be assigned for value.
Accordingly, the Debtors sought and obtained the Court's
authority to reject the Crescent agreements. (Solutia Bankruptcy
News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
SR TELECOM: Obtains $4.4 Million First Orders for New Product
-------------------------------------------------------------
SR Telecom(TM) Inc. (TSX: SRX; Nasdaq: SRXA) launched its next
generation SR500-ip point-to-multipoint fixed wireless access
system and announced that it has secured the first orders valued
at $4.4 million.
The orders come from a major incumbent carrier in Southeast Asia,
which will use the SR500-ip for the expansion of its extensive
rural telecommunications infrastructure. Upon the successful
deployment of the initial systems, the Company expects the
expansion program will generate revenues in excess of $100 million
over three years. The SR500-ip delivers broadband Internet access
and more than twice the voice capacity of the predecessor product
within the service provider's existing radio spectrum. It will
allow this service provider's existing network of more than
150,000 subscriber lines to be doubled using the same number of
base stations. Deliveries are scheduled to commence in the second
quarter of 2004.
SR500-ip integrates broadband Internet access and carrier-class
voice in a cost-efficient network that can be deployed quickly and
maintained centrally in rural communities. The new system builds
upon the universally recognized strengths of the Company's SR500
platform, which include field-proven performance, the flexibility
to be tailored to specific customer requirements and the
robustness to be deployed in the harshest of environments.
SR500-ip networks can also integrate existing SR500 outstations,
giving carriers the ability to maximize revenue from existing
assets while expanding network reach and service depth.
"This is one of the major projects we have been focused on
securing," said Pierre St-Arnaud, SR Telecom's President and CEO.
"It is extremely rewarding that the quality of this new product
has been immediately recognized by one of our largest customers.
This project requires a new solution that can provide increased
capacity, greater effective bandwidth and absolutely reliable
performance to succeed, and this is what we are delivering.
"Another key feature of SR500-ip is its backward compatibility
with our SR500 product, which will provide us with huge
opportunities in our installed customer base for many years to
come. With SR500-ip's capability to double the capacity of a given
network, our customer base can now offer the most advanced
services to more people in remote areas.
"I am also very proud of the efforts of our R&D team. Throughout
our history we have earned a leadership position in the industry
by providing products that meet the evolving needs of our
customers. With the successful launch of SR500-ip, we are writing
the next chapter in that history," Mr. St-Arnaud concluded.
What is SR500-ip?
SR500-ip is an integrated wireless solution specifically designed
to enable operators to deliver carrier-class voice and broadband
Internet services. Setting the industry standard, SR500-ip is the
highest capacity point-to-multipoint wireless system available
today for operators serving remote areas. Using a hybrid airlink,
SR500-ip provides an upgrade path for operators using the SR500,
the industry's most widely deployed and reliable point-to-
multipoint wireless system, with over 1 million lines installed in
85 countries worldwide.
SR500-ip operates in the 1.3 to 2.7 GHz, 3.5 GHz and 10.5 GHz
frequency bands.
SR TELECOM (S&P, B+ Corporate Credit and Senior Unsecured Debt
Ratings) is a world leader and innovator in Fixed Wireless Access
technology, which links end-users to networks using wireless
transmissions. SR Telecom's field-proven solutions include
equipment, network planning, project management, installation and
maintenance services. The Company offers the industry's broadest
portfolio of fixed wireless products, designed to enable carriers
and service providers to rapidly deploy high-quality voice, high-
speed data and broadband applications. These products, which are
used in over 110 countries, are among the most advanced and
reliable available today.
TARRA INVESTMENTS: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Tarra Investments International LLC
4200 North River Road
Schiller Park, Illinois 60176
Bankruptcy Case No.: 04-02790
Type of Business: The Debtor owns a first class, all suite hotel,
convenient to busy O'Hare International
Airport. The hotel is in a prime location for
easy access to one of the most dynamic cities
in the world. The hotel offers a range of
amenities.
Chapter 11 Petition Date: January 26, 2004
Court: Northern District of Illinois (Chicago)
Judge: Jacqueline P. Cox
Debtor's Counsel: Arthur G. Simon, Esq.
Dannen Crane Heyman & Simon
135 South Lasalle Street Room 1540
Chicago, IL 60603
Tel: 312-641-6777
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $10 Million to $50 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Amalgamated Bank $360,000
One W. Monroe St.
Chicago, IL 60602
Choice Hotels $300,000
10750 Columbia Pike
Silver Spring, MD 20901
Dahl & Bonadies $20,000
American Hotel Register $19,000
Sheridan & Pearlman $18,000
Matocha & Associates $16,000
Nicor $4,827
Normandle Co. $4,500
On Command $4,388
Guest Distribution $2,439
Galileo Int'l. $2,326
Rozovics & Wojcicki $2,320
Safemark Systems $1,953
Clear Channel Airports $1,790
Cimco Communications $1,723
Ghirardelli Chocolate $1,712
Comcast $1,682
Tracy Richardson $1,500
Quality Inn $1,352
e-Hotel Rates $990
TAYLOR CAPITAL: Fiscal Year 2003 Results Enter Positive Territory
-----------------------------------------------------------------
Taylor Capital Group, Inc. (Nasdaq: TAYC), the holding company for
Cole Taylor Bank, reported net income for the year ended
December 31, 2003 of $18.7 million, or $1.61 per diluted common
share, compared to a net loss of $41.4 million during 2002, or
$6.12 per diluted common share.
The net loss reported in 2002 was the result of a charge of $61.9
million in connection with the settlement of litigation associated
with the Company's acquisition of the Bank in 1997. Without the
net $61.9 million litigation settlement charge, the Company would
have recorded net income of $20.5 million, or $2.32 per diluted
common share, in 2002.
Net income was lower in 2003 than the comparable period in 2002,
exclusive of the litigation settlement charge. Reduced earnings
in 2003 were primarily a result of decreased net interest income
and noninterest income. The decline in diluted earnings per share
was also a result of an increase in the number of common shares
outstanding. In October 2002, the Company issued 2,587,500
additional shares in an initial public offering.
Net income for the fourth quarter of 2003 was $2.5 million, or
$0.17 per diluted common share, as compared to $3.9 million, or
$0.35 per diluted common share in the fourth quarter of 2002. As
anticipated, the fourth quarter of 2003 included a $3.5 million
pretax charge related to the abandonment of a leased facility.
"Net interest margin compression has continued to work against the
positive impact of our growth in earning assets. Commercial
loans, our core strategic assets, increased 15% as our business
banking relationship managers continued to add new core customers.
The Bank's focused commercial banking strategy produced commercial
loan growth that more than offset the run-off of indirect consumer
and mortgage-related loans, products we chose to de-emphasize,"
said Jeffrey W. Taylor, Chairman of Taylor Capital Group and Cole
Taylor Bank.
Net Interest Income
During 2003, net interest income was $96.7 million compared to
$101.3 million during 2002, a decrease of $4.6 million, or 4.5%.
Net interest income declined despite an increase in earning assets
because of compression in the net interest margin. The tax
equivalent net interest margin during 2003 was 4.01% compared to
4.44% in 2002. The continued low interest rate environment has
had a negative impact on the Company's net interest margin. The
volume of the Company's interest-earning assets that have repriced
lower has exceeded the volume of the Company's interest-bearing
liabilities that have repriced. In addition, the amount by which
the asset yield declined was greater than the rate decrease on the
liabilities. The $45.0 million of 9.75% junior subordinated
debentures issued by the Company in October 2002 also negatively
impacted the 2003 tax equivalent net interest margin by
approximately 17 basis points as compared to 2002. The decline in
net interest margin was partly offset by an increase in average
earning assets of $127 million, or 5.5%, during 2003. Most of the
increase in interest-earning assets was a result of higher average
commercial loan balances.
"We believe national and local economic conditions have improved
over the last quarter and that the financial wherewithal of our
borrowing customers will expand with the economic rebound," said
Bruce W. Taylor, President of Cole Taylor Bank.
During the fourth quarter of 2003, net interest income was $23.5
million, which was $1.5 million, or 5.8%, lower than during the
fourth quarter of 2002. The tax equivalent net interest margin for
the fourth quarter of 2003 was 3.89% compared to 4.27% in the
fourth quarter of 2002. Average earning assets during the period
were $2.44 billion, compared to $2.36 billion in the prior year
quarter, an increase of 3.4%.
The provision for loan losses was $9.2 million for the year ended
December 31, 2003 as compared to $9.9 million during 2002. The
provision for loan losses was $2.7 million during the fourth
quarter of 2003 compared to $2.5 million during the same quarter
of 2002. The Company's ratio of the allowance for loan losses to
total loans was 1.75% at December 31, 2003 compared to 1.81% at
December 31, 2002. Net charge offs totaled $9.0 million, or 0.47%
of average total loans, for the year ended December 31, 2003, an
increase of $2.0 million over net charge offs of $6.9 million, or
0.39%, in 2002. The Company's allowance for loan losses to
nonperforming loans was 150.79% at December 31, 2003, compared to
186.62% at December 31, 2002. Total nonperforming loans were
$22.8 million at December 31, 2003, an increase of $4.5 million
over nonperforming loans of $18.3 million at December 31, 2002.
Noninterest Income
Noninterest income for the year ended December 31, 2003 was $19.0
million, a decrease of $2.9 million, or 13.4%, compared to
noninterest income of $22.0 million for 2002. Noninterest income
during 2002 included a $2.1 million gain recorded on the sale of
investment securities. Reduced trust and mortgage banking fees,
as a result of the Company's exit from certain fiduciary trust and
mortgage banking lines of business in late 2002, also contributed
to the lower level of noninterest income.
During the fourth quarter of 2003, noninterest income was $4.9
million, an increase of $413,000, or 9.1%, compared to the $4.5
million of noninterest income during the fourth quarter of 2002.
Noninterest Expense
Noninterest expense for the year ended December 31, 2003 was
$79.2 million, a decrease of $63.9 million when compared to $143.2
million of expense in 2002. The Company recorded a $61.9 million
charge in 2002 in connection with the settlement of litigation
concerning the acquisition of the Bank in 1997. Excluding the
litigation settlement charge in 2002, noninterest expense for 2003
would have decreased $2.0 million, or 2.5%, as compared to 2002.
Lower net legal fees and salaries and benefits expense contributed
to the decrease in noninterest expense in 2003. The decline in
net legal fees of $3.2 million in 2003 was primarily due to the
receipt in the first quarter of 2003 of a $2.1 million insurance
reimbursement of legal fees associated with the litigation against
the Company that was settled in October 2002. The decline in
salaries and benefits of $2.7 million was due to lower incentive
compensation and less severance recognized in 2003 than in 2002.
These declines in noninterest expense were partially offset by a
$3.5 million charge related to the abandonment of a leased
facility. During the fourth quarter of 2003, the Company
completed the transition of its corporate, operational and
administrative departments into a centrally located corporate
center. In addition, corporate insurance costs increased $1.4
million in 2003 as a result of market-driven forces and becoming a
public-traded company.
During the fourth quarter of 2003, noninterest expense was $22.5
million, an increase of $1.5 million, or 7.2%, as compared to the
$21.0 million of expense during the fourth quarter of 2002. The
increase in the quarterly comparison was primarily due to the
$3.5 million charge related to the abandonment of a leased
facility, partially offset by a $1.4 million decrease in
compensation expense.
Income tax expense was $8.6 million for the year ended
December 31, 2003, resulting in an effective tax rate of 31%. For
2002, income tax expense was $11.7 million. Despite a net loss in
2002, the Company recorded income tax expense primarily because it
did not recognize any income tax benefit for financial reporting
purposes with respect to the litigation settlement charge. The
effective tax rate in 2003 was impacted by the recognition of a
$1.0 million income tax benefit relating to a prior year's
expenses unrelated to the litigation settlement.
Balance Sheet
Total assets of the Company were $2.60 billion at December 31,
2003, compared to $2.54 billion at December 31, 2002. At
December 31, 2003, total loans were $1.96 billion, total deposits
were $2.01 billion, and stockholders' equity was $176.5 million.
In comparison, at December 31, 2002, total loans were $1.88
billion, total deposits were $1.96 billion, and stockholders'
equity was $168.7 million.
Taylor Capital Group, Inc. (Fitch, B/C Individual and BB+
Preferred Share Ratings, Stable Outlook) is a bank holding company
headquartered in Rosemont, Illinois, a suburb of Chicago. The
Company derives virtually all of its revenue from its subsidiary,
Cole Taylor Bank, which presently operates 10 banking centers
throughout the Chicago metropolitan area.
TERAYON COMMUNICATION: Fourth-Quarter Net Loss Narrows to $6 Mil.
-----------------------------------------------------------------
Terayon Communication Systems, Inc. (Nasdaq: TERN), the leading
innovator of intelligent broadband access, announced financial
results in line with its previous guidance for the fourth quarter
and year ended December 31, 2003.
Revenue for the fourth quarter of 2003 was $43.0 million, a 70%
increase compared to $25.3 million for the same quarter a year
ago, and a 14% increase compared to $37.6 million for the third
quarter of 2003. Revenue for the twelve months ended December 31,
2003 was $133.5 million, a 3% increase compared to $129.4 million
for the twelve months ended December 31, 2002.
Net loss for the fourth quarter of 2003 was $6.0 million, or $0.08
per share, compared to a net loss of $20.5 million, or $0.28 per
share, for the same quarter a year ago and a net loss of $7.2
million, or $0.10 per share, for the third quarter of 2003. Net
loss for the twelve months ended December 31, 2003 was $50.4
million, or $0.68 per share, compared to a net loss for the twelve
months ended December 31, 2002 of $44.2 million, or $0.61 per
share.
"2003 was a critical year of transition and milestone achievements
for Terayon," said Zaki Rakib, Terayon's Chief Executive Officer.
"We successfully completed the company migration from proprietary,
baseline access products to standards-based and intelligent access
products that lead the market, enabling broadband providers to
deliver faster speeds and new services like voice and video
conferencing through more economical, efficient networks. Further,
we have begun to execute on our plan to expand the market
applicability of intelligent access products as evidenced by our
selection by FOX Network for its broadcast high definition
distribution system for its affiliates nationwide beginning in
2004."
2003 Company Highlights
In 2003, Terayon successfully transitioned from proprietary S-
CDMA-based CMTSs and modems to DOCSIS(R) 2.0 standards-based
products, and now is firmly established as the technology leader
with the industry's only complete, end-to-end DOCSIS 2.0 cable
data system. After receiving DOCSIS 2.0 qualification at the end
of 2002, Terayon captured approximately 13% market share in the
worldwide CMTS market during 2003 with the Terayon BW 3000 DOCSIS
2.0-qualified CMTS product line. Terayon's cable modem business
has grown to #3 market share in North America as measured and
reported by Kinetic Strategies for the third quarter of 2003,
rising from the #5 position in the same quarter a year ago.
Terayon's digital video business successfully capitalized on the
increasing demand for HDTV and digital ad insertion, with video
revenues in the second half of 2003 growing 70% over the first
half of 2003. The focus on operational execution enabled these
significant milestones while also improving gross margin
performance, lowering operating expenses and maintaining the focus
on superior customer service and support.
"Cable operators are responding to customer needs and competitive
pressures by offering more bandwidth-intensive services such as
faster high-speed data access, voice over the Internet (VoIP),
HDTV and Video on Demand in response to consumer and enterprise
requirements and increasing competition from telecom and satellite
operators," continued Rakib. "Our goals for 2004 include: (1)
capitalizing on our technology leadership and the opportunities
created by these favorable market conditions to increase share
across our CMTS, Subscriber and Digital Video businesses, (2)
leveraging our best-of-breed digital video processing product line
into other vertical markets including satellite, broadcast and
telecom, and (3) achieving sustainable profitability through a
combination of revenue growth, operational efficiencies, expense
management and strategic partnerships."
As of December 31, 2003, Terayon had $138.6 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 fourth quarter of 2003 was 62 days, compared
with 71 days reported for the quarter ended September 30, 2003.
Restructuring Activities
Terayon announced its plans to reduce operating expenses and
realign resources during the first quarter of 2004. This action
is designed to advance the company towards sustainable
profitability while retaining the resources necessary to drive
innovation to capitalize on the growing market need for
intelligent broadband access solutions. Related actions include:
(1) a reduction in workforce of approximately 17%, or 70
employees, (2) the consolidation of certain facilities, (3) the
write-down of related facility assets, and (4) a reduction in
targeted areas of discretionary spending. The effect of these
actions is expected to yield annualized operating savings of
approximately $10 million to $12 million. Terayon expects to
record a charge of approximately $5 million to $7 million in the
quarter ending March 31, 2004 as a result of these actions.
"As we announced in December 2003, we are targeting profitability
beginning in the second quarter of 2004. The steps we are taking
now provide us with a clearer path towards this objective by
lowering our breakeven revenue point, re-sequencing our R&D
pipeline to better align with customer timing requirements, and
improving our overall efficiency by streamlining the organization
and bolstering core processes," said Doug Sabella, Terayon's
Chief Operating Officer. "Now that we have introduced our
CableLabs-certified, low cost IM6130 modem chip into production
and established market acceptance of our Terayon BW 3000 DOCSIS
2.0-qualified CMTS product line, we are able to free up and re-
deploy certain engineering and technical resources. We remain
committed to our position as technology leader and innovator in
the broadband access space, and to our reputation for unparalleled
customer service and support."
Business Outlook
For the first quarter of 2004, Terayon expects to report revenue
in the range of $39 million to $42 million and a net loss in the
range of $0.07 to $0.09 per share, excluding the effects of the
estimated $5 million to $7 million charge. Including the effects
of the estimated charge, the net loss is expected to be in the
range of $0.14 to $0.18 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/
THREE FLAGS-OAKS: Case Summary and Largest Unsecured Creditor
-------------------------------------------------------------
Debtor: Three Flags-Oaks, LLC
c/o Solomon J. Jaskiel, Esq.
275 Madison Avenue, 11th Floor
New York, New York 10016
Bankruptcy Case No.: 04-40200
Type of Business: The Debtor owns and manages real estate
business.
Chapter 11 Petition Date: January 27, 2004
Court: Southern District of New York (Manhattan)
Judge: Allan L. Gropper
Debtor's Counsel: Solomon J. Jaskiel, Esq.
Klein & Solomon, LLP
275 Madison Avenue, 11th Floor
New York, NY 10016
Tel: 212-370-5900
Total Assets: $1,584,000
Total Debts: $1,310,000
Debtor's Largest Unsecured Creditor:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Three Flags Apartment Corp. Purchase Money loan $1,310,000
90 Madison Avenue
Montgomery, Alabama 36107
TRITON CDO IV: S&P Places Class B Notes' Rating on Watch Negative
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on the class
A and B notes issued by Triton CDO IV Ltd., a high-yield arbitrage
CBO transaction managed by Triton Partners LLC, on CreditWatch
with negative implications.
The CreditWatch placements reflect factors that have negatively
affected the credit enhancement available to support the class A
and B notes since the transaction was originated in December 1999.
These factors include continuing par erosion of the collateral
pool securing the rated notes and a negative migration in the
overall credit quality of the assets within the collateral pool.
Since the rating on the class B notes was lowered July 30, 2003,
approximately $4.5 million in new asset defaults have occurred.
According to the most recent monthly report (Dec. 15, 2003), the
class A/B overcollateralization ratio is at 105.3%, versus its
minimum required ratio of 121.0%. However, following the
redemption of $26.982 million to the class A notes on the Dec. 23,
2003 payment date (mandated by the failure of the transaction's
class A overcollateralization ratio), the class A/B ratio
increased to 106.71%.
The credit quality of the collateral pool has also deteriorated
somewhat since the previous rating action. As per the most recent
monthly report (Dec. 15, 2003), approximately 23.70% of the assets
in the portfolio currently come from obligors with Standard &
Poor's ratings of 'CCC+' or below. Furthermore, the transaction is
not in compliance with Standard & Poor's Trading Model test, a
measure of the overall credit quality within the portfolio to
support the rating on a given tranche issued by the CDO.
RATINGS PLACED ON CREDITWATCH NEGATIVE
Triton CDO IV Ltd.
Rating
To From
Class A A/Watch Neg A
Class B B/Watch Neg B
TRANSACTION INFORMATION
Issuer: Triton CDO IV Ltd.
Co-issuer: Triton CDO IV Funding Corp.
Current manager: Triton Partners LLC
Underwriter: Prudential Securities Inc.
Trustee: JPMorganChase Bank
Transaction type: Cash flow arbitrage high-yield CBO
TRANCHE INFORMATION INITIAL LAST ACTION CURRENT*
Date (MM/YYYY) 2/2000 7/2003 1/2004
Class A Note Rtg. AAA A A/Watch Neg
Class A Note Bal $169.00mm $101.872mm $74.889mm
Class B Note Rtg. AA- B B/Watch Neg
Class B Note Bal $26.750mm $26.750mm $26.750mm
Class A/B OC Ratio 126.8% 105.6% 106.71%
Class A OC Ratio Min 121.0% 121.0% 121.0%
PORTFOLIO BENCHMARKS CURRENT
S&P Wtd. Avg. Rtg.(excl. defaulted) B
S&P Default Measure(excl. defaulted) 4.58%
S&P Variability Measure (excl. defaulted) 2.57%
S&P Correlation Measure (excl. defaulted) 1.19
Wtd. Avg. Coupon (excl. defaulted) 10.23%
Wtd. Avg. Spread (excl. defaulted) 3.55%
Oblig. Rtd. 'BBB-' and Above 5.98%
Oblig. Rtd. 'BB-' and Above 28.75%
Oblig. Rtd. 'B-' and Above 76.30%
Oblig. Rtd. in 'CCC' Range 12.20%
Oblig. Rtd. 'CC', 'SD' or 'D' 11.50%
Obligors on Watch Neg (excl. defaulted) 0.97%
S&P RATED OC (ROC) CURRENT*
Class A Notes 98.43% (A/Watch Neg)
Class B Notes 96.57% (B/Watch Neg)
* Following $26.982 million mandatory redemption
on Dec. 23, 2003 pay date.
TV AZTECA: Denies Any Wrongdoing as Charged in Various Lawsuits
---------------------------------------------------------------
TV Azteca, S.A. de C.V. (NYSE: TZA) (BMV: TVAZTCA), one of the two
largest producers of Spanish-language television programming in
the world, announced that several shareholder lawsuits have been
filed against the Company in the U.S. District Court of the
Southern District of New York. The Company denies any wrongdoing
and intends to vigorously defend these actions.
Within the next several weeks, it is expected that those lawsuits
will be consolidated into a single shareholder class action
against the Company. Thereafter, the court must appoint a lead
plaintiff. Notice will be given to all shareholders to enable them
to request lead plaintiff status. That process of selecting a lead
plaintiff in the United States may take several months.
Thereafter, it is customary that an amended consolidated complaint
will be filed by the newly appointed lead plaintiff.
The Company then must either move to dismiss the complaint, or
answer. If the Company moves to dismiss, all discovery is stayed
pending the courts decision on the motion. Decision on any motion
to dismiss would likely not be issued for a period of six to nine
months after a consolidated complaint is filed.
If the motion to dismiss is denied, the case will proceed to
discovery and trial, if necessary.
Those actions have been assigned to, and will be heard by, Judge
Sprizzo in the Southern District of New York.
All questions regarding these actions should be directed to the
Company's litigation counsel in the United States, for purposes of
these proceedings, Richard A. Spehr, Esq., Mayer, Brown, Rowe &
Maw LLP, 1675 Broadway, New York, New York 10019, (212) 262-1910.
TV Azteca is one of the two largest producers of Spanish-language
television programming in the world, operating two national
television networks in Mexico, Azteca 13 and Azteca 7, through
more than 300 owned and operated stations across the country. TV
Azteca affiliates include Azteca America Network, a new broadcast
television network focused on the rapidly growing US Hispanic
market, and Todito.com, an Internet portal for North American
Spanish speakers.
As previously reported, Fitch Ratings assigned a 'B+' senior
unsecured rating to TV Azteca S.A. de C.V. The Rating Outlook is
Stable.
The rating applies to $125 million 10.375% senior notes due 2004,
$300 million 10.5% senior notes due 2007, and $122 million of
long-term loans.
TV Azteca's ratings are based on the company's solid business
position, strong cash flow from its Mexican TV broadcasting
business, leveraged financial position, near term liquidity and
refinancing needs, and the indirect burden of debt at parent
company Azteca Holdings in the form of associated dividend
required to service this debt.
UAL CORP: Reports $476 Million in Net Loss for Fourth Quarter
-------------------------------------------------------------
UAL Corporation (OTC Bulletin Board: UALAQ), the holding company
whose primary subsidiary is United Airlines, reported its fourth-
quarter and full year financial results for 2003, demonstrating
significant progress in the restructuring of the company.
Because of the work the company completed in the last year, UAL
remains on track to exit from bankruptcy protection in the first
half of 2004 poised to compete for the long term.
UAL's fourth-quarter operating loss was $135 million, a strong
improvement of $859 million over fourth-quarter results last year,
which reflects the company's continued success in the pursuit of
lower costs and improved revenue. UAL reported a net loss of $476
million, or a loss per basic share of $4.33, which includes $225
million in special and reorganization items. The majority of
reorganization charges resulted from non-cash items caused by the
rejection of aircraft. Excluding the special and reorganization
items, UAL's net loss for the fourth quarter totaled $251 million,
or a loss per basic share of $2.30.
"Through relentless hard work, creative problem solving and
dedication to our customers, we are building a dramatically
different company - a much more competitive, cost-effective and
customer-focused airline," said Glenn Tilton, chairman, president
and chief executive officer. "We would not have been able to
achieve so much this year without the total focus and commitment
of all United employees, pulling together to meet the challenges.
Our work is not done yet. We have made significant progress on
restructuring this company, and we will continue to make the tough
decisions to successfully exit from Chapter 11 in the first half
of this year."
Tilton said that in the fourth quarter United:
-- Increased passenger unit revenue 10% compared to last year,
an improvement that outperformed the industry;
-- Reduced unit costs by 17%. Excluding fuel and special
charges, unit costs dipped by 20%;
-- Improved earnings from operations by $859 million over the
same quarter a year ago; and
-- Announced and started selling tickets on Ted, United's low-
fare operation, which begins flying to leisure destinations
on Feb.12.
The company also maintained a strong cash balance during a
seasonally weak quarter. UAL ended the quarter with a cash balance
of $2.4 billion, including $679 million in restricted cash.
UAL's loss for the full year 2003, including special and
reorganization items, totals $2.8 billion, or a loss of $27.36 per
basic share. Excluding special and reorganization items of $1.1
billion, UAL's loss for the full year totals $1.7 billion, or a
loss of $16.80 per basic share, a $1.5 billion improvement over
2002.
Financial Results Continue Improvement
UAL's fourth-quarter 2003 operating revenues were $3.6 billion, up
4% compared to fourth quarter 2002. Load factor increased 5 points
to 76.9% as traffic declined 1% on a 7% decrease in capacity.
Passenger unit revenue was 10% higher on a 3% yield increase. The
unit revenue improvement was among the best in the industry. The
improvement was driven by United's aggressive marketing and sales
activities, restructured business fares, enhanced inventory
management and route and capacity adjustments.
Total operating expenses for the quarter were $3.8 billion, down
16% from the same quarter last year. United's mainline unit cost
decreased 17%. Excluding fuel and special charges, mainline unit
cost decreased 20% year-over-year, among the best cost
improvements in the industry.
Salaries and related costs decreased $539 million or 30% for the
quarter. This amount reflects the reduction in wages, changes in
benefits and work rules, and productivity improvement associated
with United's new six-year collective bargaining agreements
(CBAs). While capacity was down for the quarter, productivity
(available seat miles divided by manpower) was up 16% for the
quarter year-over-year.
Aircraft rent decreased $95 million or 43% compared to fourth
quarter 2002. United negotiated reduced lease amounts on some of
its aircraft and is still in negotiations with respect to a large
number of aircraft in its fleet.
Average fuel price for the quarter was 95.5 cents per gallon, up
more than 10% year-over-year.
Aircraft maintenance, which includes primarily maintenance
outsourcing and maintenance materials, increased $41 million or
31% year-over-year. However, overall maintenance costs are down
significantly from fourth quarter last year due to the company's
ability to outsource maintenance.
During the fourth quarter of 2003, UAL sold its investment in
Hotwire, a leading discount travel web site, for cash proceeds of
approximately $85 million and recognized a gain of $81 million. In
connection with the initial public offering of Orbitz, Inc., UAL's
subsidiary, United Airlines, recognized a gain of $77 million as a
result of the issuance of additional shares by Orbitz and the sale
of a portion of its investment in Orbitz.
The company had an effective tax rate of zero for the fourth
quarter, which makes UAL's pre-tax loss the same as its net loss.
The company currently anticipates that the Bankruptcy Court may
rule on issues relating to its municipal bonds within the next
month. Depending on the outcome of this ruling, the company's
fourth quarter and full year financial results could change. In
this event, the changes would be reflected in the company's
financial statements filed with the Securities and Exchange
Commission in the Form 10-K on or before March 15, 2004.
Significant Progress Achieved in Restructuring Efforts
Throughout 2003, UAL has continued to take significant steps to
successfully implement the restructuring of the company into a
much more competitive enterprise with a business model that will
be sustainable for the long term. The following significant
achievements are key steps in the transformation of the company:
-- Consensually reached six-year labor agreements, which
result in negotiated average annual cost savings of $2.5
billion through wage and benefit reductions and industry-
leading productivity improvements.
-- Utilized the Section 1110 process to significantly reduce
aircraft ownership costs.
- Significantly reduced aircraft rent, depreciation and
interest; on track to achieve average annual cash
savings of $900 million.
-- Through our Business Transformation Office assessed every
aspect of the business with the goal of increasing
profitability through maintenance productivity, airport
productivity, strategic sourcing, business fare
restructuring, ticketing policy changes and other
initiatives.
- In 2003, achieved $1.2 billion of profit improvements
compared to a goal of $1.0 billion.
- On track to achieve goal of $1.4 billion in profit
improvements in 2004, including $100 million in cost
savings attributable to implementing the recommendations
of a 2003 best practices study.
Reducing expenses and improving revenue will continue to be key
components of the company's strengthened business plan. UAL has
announced that it will seek to modify its retiree medical benefits
under Section 1114 of the U.S. Bankruptcy Code, which UAL has said
is necessary for a successful reorganization plan.
In December, the capital markets endorsed UAL's restructuring
progress and business plan when JPMorgan and Citigroup agreed to
back $2.0 billion in exit financing for the company. The two banks
will each underwrite $200 million of the $400 million non-
guaranteed portion of the facility and $800 million of the
guaranteed portion, which requires the backing of a loan guarantee
from the Air Transportation Stabilization Board (ATSB). On
December 18, 2003, UAL completed and submitted to the ATSB an
updated proposal for the federal loan guarantee.
Operational Performance Among the Best in UAL History
Employees in 2003 turned in one of the best full-year operational
performances in the company's history. Despite recent operational
challenges including severe winter weather in the U.S., as well as
the problems presented to airline operations earlier in 2003,
United recorded its best-ever performance in on-time departures
this year. The company had its second-best year ever for both
departure completion and arrivals on-time within 14 minutes.
-- Departures on-time zero was 73.2% for the year and 67.6%
for the fourth quarter.
-- Departure completion of all flights was 99.0%.
-- Arrivals on-time :14 was 83.4%.
UAL also has been instrumental in recent agreements with the
Federal Aviation Administration (FAA) to help reduce congestion
and delays at O'Hare International Airport in Chicago. In
addition, pioneering efforts by UAL operations personnel and
pilots resulted in FAA approval of new landing procedures that
promise to improve arrival and departure timing at San Francisco
International Airport during periods of lower visibility.
The company has also succeeded in reaching an agreement with the
Metropolitan Washington Airport Authority to permit facilities
improvements at Dulles International Airport (IAD) in Washington,
D.C. That agreement reinforces United's commitment to Dulles and
supports the continuation of the current level of high quality
United Express service at that airport. United remains committed
to the Washington Dulles hub. The company will continue to provide
competitive fares and a full schedule of flights for United and
United Express customers in the Washington area and the spoke
cities served to and from IAD.
Outlook
System booked load factor for February and March is ahead of last
year. Domestic booked load factor is about the same as last year
while international markets are considerably above last year,
which was depressed by Iraq war concerns. Capacity for 2004 is
expected to be up about 5% compared to 2003.
December Monthly Operating Report
UAL today also filed with the United States Bankruptcy Court its
Monthly Operating Report for December. The company reported
operating revenues of $1.2 billion and expenses of $1.4 billion
for a net loss of $272 million, including $155 million in special
and reorganization items, partially offset by a $77 million gain
on the sale of a portion of its investment in Orbitz.
News releases and other information about United Airlines can be
found at the company's Web site at http://www.united.com/
UNITED AIRLINES: Retired Flight Attendants Blast Benefit Cuts
-------------------------------------------------------------
Retired United Airlines flight attendants, represented by the
Association of Flight Attendants-CWA, AFL-CIO, will be informing
passengers about United's attempt to hurt retirees by drastically
increasing the cost of retiree health benefits. Flight attendants
will be picketing and leafleting from 11:30 a.m. until 1:30 p.m.
outside of the Wings Club Monthly Flyer Luncheon where United CEO
Glenn Tilton will be the guest speaker. The luncheon will be held
at the Yale Club, 50 Vanderbilt Ave. in Manhattan.
United management signed a letter of agreement in May 2003 to
ensure that flight attendants retiring before July 1, 2003 would
have access to health care benefits that were less costly and more
comprehensive than those that would be in place for flight
attendants who retire after that date. Based on that agreement,
over 2,500 flight attendants retired before the July 1 deadline.
The flight attendants will be making a major announcement at
Chicago O'Hare Airport on Feb 2. On that same day, current United
employees and retired flight attendants will also be leafleting
and picketing at airports and public landmarks around the world.
Specific details about the press conference and local events will
be distributed later this week.
AFA has received hundreds of calls from retirees asking if
anything can be done through the courts to help protect them. All
say they cannot afford the massive financial hit they will take
after United forces them to pay hundreds of dollars per month of
their already modest pensions just to continue health insurance.
AFA's leaders are reviewing a number of legal options with the
union's attorneys.
More than 46,000 flight attendants, including the 21,000 flight
attendants at United, join together to form AFA, the world's
largest flight attendant union. AFA is part of the 700,000 member
strong Communications Workers of America, AFL-CIO. Visit
http://www.unitedafa.org/for more information on the
organization.
UNIVERSAL GUARDIAN: Forms New Non-Lethal Security Products Unit
---------------------------------------------------------------
Universal Guardian Holdings Inc. (OTCBB:UGHO), a homeland security
and defense technology company, announced the formation and launch
of a new non-lethal technology subsidiary.
Shield Defense Corp., the new subsidiary, plans to introduce a
series of non-lethal products over the next few months that can
effectively incapacitate assailants from zero to more than 300
feet. Shield Defense Corp. has appointed Dennis Cole as president
due to his background as a former chief of police, sheriff's
captain, SWAT commander and an internationally recognized non-
lethal and chemical agents expert. The company plans to leverage
professional user credibility for release to the private security
and consumer markets.
"Shield Defense Corporation non-lethal weapons provide safe,
accurate and effective alternatives to deadly force to subdue
assailants in a number of sensitive environments, ranging from
airplanes and airline terminals, homes or autos, crowded shopping
centers, to checkpoints in Iraq," said Michael Skellern, chairman
and CEO of Universal Guardian. "A lethal weapon in an airplane or
automatic weapon in a crowded airport or shopping center is a
prescription for disaster."
President Dennis Cole stated, "Professional and consumer markets
are increasingly demanding more effective methods to defuse civil
unrest and subdue criminals without causing permanent injury to
law enforcement personnel, innocent bystanders, homeowners, or
criminals." Cole also remarked, "With more than 5 million police
officers worldwide and over 120 million households in the United
States alone, the potential market for Shield Defense non-lethal
products is well defined and very sizeable."
Shield Defense Corp., a wholly-owned subsidiary of Universal
Guardian Holdings, Inc., designs and produces non-lethal weapons
and projectiles that are designed for use in environments where
mobility, accuracy, and dependability are paramount, and meet
existing consumer, homeland security, military and law enforcement
use of force requirements. Shield Defense non-lethal weapons will
provide military commanders with a variety of offensive and
defensive options to address appropriate threat conditions in
today's growing security and terrorist environment.
Universal Guardian Holdings Inc., and its subsidiary corporations
provide products, systems, and services to mitigate security and
terrorist threats worldwide. From integrated and intelligence,
surveillance, reconnaissance systems and interoperable command and
control platforms to non-lethal weapons, UGHO companies cover a
wide range of security applications and markets, merging cost-
effective technology and ease of use, to secure entire threat
environments. The U.S. Navy assigned its non-lethal projectile
patent to UGHO.
Further information is available on the company's Web site at
http://www.universalguardian.com/
* * *
Going Concern Uncertainty
As reported in Troubled Company Reporter's January 12, 2004
edition, Universal Guardian Holdings Inc. incurred a net loss
since its inception, as of September 30, 2003, had a working
capital deficit, is in default on certain notes payable and is
involved in certain litigation. In addition, the Company was
notified by the U.S. Navy's prime-contractor that the task orders
had been terminated, to cease all work and to submit final
invoices for the Company, its subcontractors, equipment and
related expenses. This notification will significantly impact
future revenue. These matters raise substantial doubt about the
Company's ability to continue as a going concern.
US AIRWAYS: Will Publish Q4 and FY 2003 Results Next Friday
-----------------------------------------------------------
US Airways (Nasdaq: UAIR) will announce its fourth quarter and
full year 2003 results on Friday, Feb. 6, 2004.
A conference call will be held with analysts from the investment
community. The media and other interested parties are invited to
listen via a special Webcast on US Airways' Web site at
usairways.com.
Date: Feb. 6, 2004
Where: http://investor.usairways.com/medialist.cfm/
Time: 11 a.m., Eastern time
Participants must log on at least five minutes prior to the call
to register. An archive of the conference call also will be
available at usairways.com for one year from completion of the
call. A telephone replay of the call will be available through 11
a.m., Eastern time, Feb. 9, 2004, by calling 973-341-3080, PIN
4430419.
The Webcast must be accessed using Real Player, which can be
installed on your computer through the US Airways Web site by
following the instructions shown on the Presentations page (URL
listed above). The download is free and should take approximately
10 minutes.
U.S. STEEL: Will Distribute Common Stock Dividend by March 10
-------------------------------------------------------------
United States Steel Corporation's Board of Directors declared a
dividend of 5 cents per share on U. S. Steel (NYSE: X) Common
Stock.
The dividend is payable March 10, 2004, to stockholders of record
at the close of business February 18, 2004. The directors also
declared a dividend of $0.875 per share on United States Steel
Corporation's 7% Series B Mandatory Convertible Preferred Shares.
This dividend is payable March 15, 2004, to stockholders of record
at the close of business March 1, 2004.
United States Steel Corporation (S&P, BB- Corporate Credit Rating,
Negative) is engaged domestically in the production, sale and
transportation of steel mill products, coke and taconite pellets
(iron ore); steel mill products distribution; the management of
mineral resources; the management and development of real estate;
engineering and consulting services; and, through U. S. Steel
Kosice in the Slovak Republic and U. S. Steel Balkan, d.o.o. in
Serbia, in the production and sale of steel mill products and coke
primarily for the central and western European markets. As
mentioned in Note 5, effective June 30, 2003, U. S. Steel is no
longer involved in the mining, processing and sale of coal.
For more information about U.S. Steel visit
http://www.ussteel.com/
VOLUME SERVICES: Initiates Redemption of Remaining 11-1/4% Notes
----------------------------------------------------------------
Volume Services America Holdings, Inc. (AMEX: CVP) (TSX:CVP.UN)
announced that Volume Services America, Inc., its wholly-owned
subsidiary, has initiated a redemption of all of VSA's remaining
outstanding $12,250,000 principal amount of 11-1/4% Senior
Subordinated Notes due 2009.
The Notes are being redeemed in accordance with the terms of the
Indenture governing the Notes dated March 4, 1999 in exchange for
a cash payment of approximately $12,939,000, plus accrued and
unpaid interest.
All Notes will be redeemed on March 1, 2004 at a redemption price
of 105.625% of the principal amount of the Notes, together with
accrued and unpaid interest to March 1, 2004. On or before
March 1, 2004, the Notes should be presented to Wells Fargo Bank
Minnesota, N.A., as paying agent for the redemption, at the
address set forth in the Notice of Redemption dated January 27,
2004 sent to all registered holders. Interest on the Notes will
cease to accrue on and after March 1, 2004 and the only remaining
right of holders of the Notes will be to receive payment of the
redemption price upon surrender to the paying agent, plus accrued
and unpaid interest up to, but not including, March 1, 2004.
The transaction is being funded from the proceeds of VSA Holdings'
initial public offering of Income Deposit Securities which closed
on December 10, 2003. VSA Holdings filed a registration statement
with the Securities and Exchange Commission related to its initial
public offering of 16,785,450 IDSs on December 4, 2003.
Centerplate, the tradename for Volume Services America Holdings,
Inc.'s operating businesses, is a leading provider of catering,
concessions, merchandise and facilities management services for
sports facilities, convention centers and other entertainment
venues. Visit the company online at http://www.centerplate.com/
* * *
As previously reported, Moody's Investors Service withdrew all its
ratings for Volume Services, Inc.
Withdrawn Ratings
- B1 $184 million secured Bank Loan rating
- B3 $100 million 11.25% senior subordinated notes
(2009) rating
- B1 Senior implied rating, and
- B2 Long-term issuer rating.
W.R. GRACE: December 31 Net Capital Deficit Shrinks to $170 Mill.
-----------------------------------------------------------------
W. R. Grace & Co. (NYSE:GRA) reported that 2003 fourth quarter
sales totaled $511.3 million compared with $454.7 million in the
prior year quarter, an increase of 12.4%.
Revenue from improved volume and product mix and from acquisitions
accounted for about half of the increase, with the remainder
attributable to favorable currency translation effects from a
weaker U.S. dollar. Grace reported a fourth quarter net loss of
$36.5 million, or $0.56 per share, compared with a net loss of
$25.5 million, or $0.39 per share, in the fourth quarter of 2002.
The 2003 fourth quarter loss includes pre-tax charges totaling
$100.0 million to adjust Grace's estimated liability for
pre-Chapter 11 contingencies as follows:
1) a $50.0 million charge to adjust Grace's estimated
liability for claims by the EPA for recovery of
environmental clean-up costs around Libby, Montana;
2) a $20.0 million charge for other environmental exposures
identified as part of Grace's evaluation of Chapter 11
claims; and
3) a $30.0 million charge for new asbestos-related property
damage claims received as part of the Chapter 11 claims
solicitation process.
Pre-tax income from core operations in the fourth quarter of 2003
was $51.3 million compared with $37.5 million in the fourth
quarter of 2002, a 36.8% increase, reflecting continued business
improvement in the second half of 2003 from successful
productivity initiatives and improving economic conditions. "I am
very pleased with our fourth quarter and second half operating
results," said Grace's Chairman and Chief Executive Officer Paul
J. Norris. "We completely reversed disappointing operating
performance in the first half of 2003. We are also making progress
in the evaluation of our Chapter 11 claims, which has resulted in
the adjustment of certain liability estimates in the fourth
quarter."
For the full year 2003, Grace reported sales of $1,980.5 million,
an 8.8% increase over 2002. Currency translation accounted for 5.3
percentage points of the increase. Grace reported a net loss for
the full year ended December 31, 2003 of $42.2 million or $0.64
per share, compared with net income of $22.1 million, or $0.34 per
share, for 2002. The 2003 net loss includes a $152.5 million pre-
tax increase in Grace's estimated cost to resolve pre-Chapter 11
contingent liabilities and $14.8 million of Chapter 11-related
expenses. Pre-tax income from core operations was $148.7 million
in 2003, compared with $180.8 million in 2002. Full year pre-tax
operating margin was 7.5%, about 2.4 percentage points lower than
last year. The decrease in 2003 operating profit and margins was
principally caused by higher costs for pensions, certain raw
materials and natural gas. Unfavorable regional and product sales
mix, particularly in the first half of 2003, also contributed to
the decrease.
CORE OPERATIONS
Davison Chemicals
Catalyst and Silica Products
Fourth quarter sales for the Davison Chemicals segment were $272.2
million, up 15.2% from the prior year quarter. Excluding the
effects of favorable currency translation, sales were up 8.6% for
the quarter. Sales of catalyst products, which include refining
catalysts, polyolefin catalysts and other chemical catalysts, were
$190.7 million, up 12.2% compared with the prior year quarter.
About two-thirds of the percentage increase resulted from improved
product mix factors, with the remainder attributable to favorable
currency effects. Sales of silica products were $81.5 million, up
22.9% compared with the fourth quarter of 2002, with currency
effects of the stronger Euro contributing about 12.3 percentage
points of the increase. Additional improvement was attributable to
growth programs in digital printing and separations applications,
and from higher sales of adsorbents and precipitated silica
products.
Operating income of the Davison Chemicals segment for the fourth
quarter was $38.8 million, 28.5% higher than the 2002 fourth
quarter; operating margin was 14.3%, higher than the prior year
quarter by 1.5 percentage points. The increase in operating income
was driven primarily by sales of silica products in North America
and Europe, and by catalyst sales in Asia Pacific. Fourth quarter
operating margin was enhanced by productivity gains and effective
cost management.
Full year 2003 sales for the Davison Chemicals segment were
$1,039.9 million, up 10.7% from 2002 (excluding favorable currency
translation impacts, sales were up 4.5%). Full year 2003 operating
income was $118.9 million, compared with $129.4 million for the
prior year, an 8.1% decrease. Operating results for 2003 reflect a
sluggish U.S. economy, especially in the first half of the year,
and higher utilities, raw materials and other manufacturing costs
over the course of the year. Second half comparisons were
considerably better as the U.S. economy strengthened and
manufacturing costs were reduced.
Performance Chemicals
Construction Chemicals, Building Materials,
and Sealants and Coatings
Fourth quarter sales for the Performance Chemicals segment were
$239.1 million, up 9.5% from the prior year quarter. Favorable
currency translation accounted for 6.0 percentage points of the
increase. Sales of specialty construction chemicals, which include
concrete admixtures, cement additives and masonry products, were
$123.2 million, up 17.0% versus the year-ago quarter (10.2%
excluding favorable currency translation impacts). Sales were up
in all geographic regions reflecting the success of new product
programs and sales initiatives in key economies worldwide, as well
as increased U.S. construction activity. In addition, revenues
from Grace's acquisition in Germany (completed October 1, 2003)
accounted for about one-third of the fourth quarter sales
increase. Sales of specialty building materials, which include
waterproofing and fire protection products, were $52.9 million, up
0.6% compared with the fourth quarter of 2002 (down 2.3% excluding
favorable currency translation impacts). The fourth quarter
results reflect strong sales of waterproofing materials,
particularly underlayments for residential re-roofing, offset by
continuing weak sales in fire protection products caused by slow
U.S. commercial construction activity and changes in building
codes. Sales of specialty sealants and coatings, which include
container sealants, coatings and polymers, were $63.0 million, up
4.1% compared with the fourth quarter of 2002 (down 3.1% excluding
favorable currency translation impacts). Higher sales in coatings
and closure sealants, particularly outside North America, were
more than offset by lower volume in can sealants.
Operating income for the Performance Chemicals segment was $31.4
million, compared with $21.9 million in the prior year quarter, a
43.4% increase. Operating margin of 13.1% was 3.1 percentage
points higher than 2002 fourth quarter margin. Improved operating
income and margins reflected increased sales volume in specialty
construction chemicals and the success of cost containment
programs across the business segment.
Full year 2003 sales of the Performance Chemicals segment were
$940.6 million, up 6.8% from 2002 (excluding currency translation
impacts, sales were up 2.4%). Full year 2003 operating income was
$107.9 million, 9.2% higher than 2002, reflecting a strong second
half in sales and cost control, which offset a weak first half
caused by slow commercial construction activity and weather-
related delays of projects in the U.S.
Corporate Costs
Fourth quarter corporate costs related to core operations were
$18.9 million, a $4.3 million increase from the prior year
quarter. The increase is primarily attributable to added costs for
pension benefits to account for negative equity market returns in
2000-2002, and to higher director and officer liability insurance
premiums.
CASH FLOW AND LIQUIDITY
Grace's cash flow provided by operating activities was $110.8
million for the full year 2003, compared with $195.5 million for
the comparable period of 2002. The year-over-year decrease in
operating cash flow reflects $48.5 million of pension plan
contributions and $44.7 million of working capital effects. Full
year 2003 pre-tax income from core operations before depreciation
and amortization was $251.6 million, 8.7% lower than 2002. These
results reflect the lower income from core operations as described
above. Cash used for investing activities was $109.1 million
during 2003, primarily for capacity expansion, investments in new
products and markets, and capital replacements.
At December 31, 2003, Grace had available liquidity in the form of
cash ($309.2 million), net cash value of life insurance ($90.8
million) and unused credit under its debtor-in-possession facility
($215.9 million). Grace believes that these sources and amounts of
liquidity are sufficient to support its strategic initiatives and
Chapter 11 proceedings for the foreseeable future.
At December 31, 2003, Grace's balance sheet shows a total
shareholders' equity deficit of about $170 million.
ADJUSTMENTS TO RESERVES FOR CONTINGENT LIABILITIES
The fourth quarter includes an aggregate $100.0 million pre-tax
charge to adjust Grace's reserves for the following contingent
liabilities:
1) Environmental Risks, Vermiculite Mining - Grace recorded a
$50.0 million increase in its estimated liability for
environmental clean-up related to previously operated
vermiculite mining and processing sites near Libby, Montana.
Based on a previous ruling by the U.S. District Court of
Montana, Grace is required to reimburse the U.S. government for
all appropriate costs expended for clean-up activities. Grace
has appealed the Court's ruling. The change in estimate
reflected in the fourth quarter is based on the most recent EPA
public comments about clean-up costs, discussions of spending
forecasts with EPA representatives and analysis of other
information made available by the EPA. As a result of the
charge, Grace's total estimated liability for Libby-related
reimbursable costs is $160.0 million at December 31, 2003.
However, EPA cost estimates have increased substantially over
the course of this clean-up. Consequently, Grace's estimate may
change materially as more information becomes available about
EPA's incurred clean-up costs and the cost of future clean-up
spending plans, that would be reimbursable by Grace. The
payment of any amounts for this matter will be subject to
Grace's Chapter 11 proceedings.
2) Environmental Risks, Other Than Vermiculite Mining - Grace
recorded a $20.0 million increase in its estimated liability
for other environmental risks identified and measured as part
of the Chapter 11 claims review process. After these charges,
Grace's total estimated liability for environmental clean-up
costs, other than those related to vermiculite mining and
processing, is $150.0 million.
3) Asbestos-Related Property Damage - Grace recorded a $30.0
million increase in its estimated liability for asbestos-
related litigation to account for the estimated cost of
resolving new asbestos-related property damage claims received
through the Chapter 11 claims solicitation process. The
increase resulted from a review of more than 4,000 new claims
submitted prior to the March 31, 2003 claims bar date. Each
claim is unique as to property, product in question, legal
status of claimant, potential cost of remediation, and other
factors. Such claims were reviewed in detail by Grace,
categorized into claims with sufficient information to be
evaluated or claims that required additional information and,
where sufficient information existed, the cost of resolution
was estimated. Grace's revised estimate of liability does not
include any amounts for approximately 200 claims for which
sufficient information was not available to evaluate potential
liability. The ultimate cost of resolving asbestos-related
property damage claims will be determined through the Chapter
11 process and such cost could be materially different from
Grace's current estimate.
CHAPTER 11 PROCEEDINGS
On April 2, 2001 Grace and 61 of its United States subsidiaries
and affiliates, including its primary U.S. operating subsidiary W.
R. Grace & Co.-Conn., filed voluntary petitions for reorganization
under Chapter 11 of the United States Bankruptcy Code in the
United States Bankruptcy Court for the District of Delaware.
Grace's non-U.S. subsidiaries and certain of its U.S. subsidiaries
were not a part of the Filing. Since the Filing, all motions
necessary to conduct normal business activities have been approved
by the Bankruptcy Court.
Most of Grace's noncore liabilities and contingencies (including
asbestos-related litigation, environmental remediation claims, tax
disputes and other potential obligations), are subject to
compromise under the Chapter 11 process. The Chapter 11
proceedings, including litigation and the claims resolution
process, could result in allowable claims that differ materially
from recorded amounts. Grace will adjust its estimates of
allowable claims as facts come to light during the Chapter 11
process that justify a change, and as Chapter 11 proceedings
establish court-accepted measures of Grace's noncore liabilities.
See Grace's recent Securities and Exchange Commission filings for
discussion of noncore liabilities and contingencies.
The Bankruptcy Court had established a bar date of March 31, 2003
for claims of general unsecured creditors, asbestos property
damage claims and medical monitoring claims related to asbestos.
The bar date did not apply to asbestos-related bodily injury
claims or claims related to Zonolite(R) Attic Insulation, which
will be dealt with separately. Approximately 15,000 claims were
submitted by the bar date for all debtor entities. No change in
recorded amounts are considered necessary at this time for
liabilities to lenders, trade creditors or employees, or for tax
and general litigation.
Grace is a leading global supplier of catalyst and silica
products, specialty construction chemicals, building materials,
and sealants and coatings. With annual sales of approximately $2
billion, Grace has over 6,000 employees and operations in nearly
40 countries. For more information, visit Grace's Web site at
http://www.grace.com/
WALKING COMPANY: Big Dog Agrees to Acquire Company for $15-Mil.+
----------------------------------------------------------------
Big Dog Holdings, Inc. (Nasdaq:BDOG) agreed to acquire The Walking
Company for cash, debt and equity securities in excess of $15
million.
The Walking Company is the leading specialty retailer of high-
quality, technically designed comfort walkwear & accessories that
features quality brands such as Ecco, Mephisto, Dansko,
Birkenstock and Merrell. The Company markets the collections of
products through more than 70 retail store locations with total
annual sales of $65 million.
The Walking Company was founded in 1991 and grew rapidly from a
base of 20 stores in 1995 to over 100 stores in 2003. As a result
of their rapid expansion, The Walking Company made certain real
estate and merchandising missteps and eventually declared
bankruptcy last summer. The bankruptcy process allowed The Walking
Company to shed their non-performing stores and liquidate excess
and obsolete inventory. The current enterprise is now wholly re-
focused on its core business of operating specialty stores in
premium malls selling the best brands in the comfort shoe
category.
"Big Dogs has been looking for the right acquisition opportunity
for years," comments Big Dogs CEO Andrew Feshbach. "We are excited
about The Walking Company's retail concept and niche and its
future growth prospects. Further, we believe we can achieve
substantial operating leverage and cost savings by more fully
utilizing Big Dog's' systems and distribution infrastructure and
experienced management team. In addition, we believe there are
excellent future growth opportunities for The Walking Company once
we have fully absorbed their operations."
David Wolf, Sr. Vice President of Sales and Marketing, comments,
"We are very impressed with the growth opportunity in the premium
comfort walkwear market. Key brands are growing rapidly, fueled by
the growing demographics of the comfort walkwear customer and the
acceptance, awareness and interest in this type of product.
Further, we believe there are substantial opportunities to improve
the brand image and perception of The Walking Company retail
stores."
Big Dog Holdings, Inc. develops, markets and retails a branded,
lifestyle collection of unique, high-quality, popularly priced
consumer products, including active wear, casual sportswear,
accessories and gifts. The BIG DOGS brand image is one of quality,
fun and a sense of humor. The BIG DOGS brand is designed to appeal
to people of all ages and demographics, particularly baby boomers
and their kids, big and tall customers, and pet owners. In
addition to its 194 retail stores, Big Dogs markets its products
through its catalog, better wholesale accounts and Internet sales.
WICKES INC: Wants Schedule-Filing Deadline Moved Until April 5
--------------------------------------------------------------
Wickes, Inc., seeks permission from the U.S. Bankruptcy Court for
the Northern District of Illinois, Eastern Division, to extend the
time period within which it must file with the Court:
a) schedule of assets and liabilities;
b) statement of financial affairs;
c) schedule of current income and expenditures;
d) statement of executory contracts and unexpired leases;
and
e) list of equity security holders.
The Debtor reports it has thousands of creditors. Given the size
and complexity of its business and the fact that certain
prepetition transactions have not yet been processed, the Debtor
has not had the opportunity to gather the necessary information to
prepare and file its Schedules and Statements.
The Debtor tells the Court that it has commenced the task of
gathering the necessary information to prepare and finalize what
will be voluminous Schedules and Statements, it believes that the
15-day automatic extension of time to file such Schedules and
Statements provided by Bankruptcy Rule 1007(c) will not be
sufficient to complete the Schedules and Statements.
At this time, the Debtor estimates that an extension until
April 5, 2004, provides enough time to complete these financial
disclosure documents.
Headquartered in Vernon Hills, Illinois, Wickes Inc. --
http://www.wickes.com/-- is a retailer and manufacturer of
building materials, catering to residential and commercial
building professionals, repairs and remodeling contractors and
project do-it-yourself consumers. The Company filed for chapter
11 protection on January 20, 2004 (Bankr. N.D. Ill. Case No.
04-02221). Richard M. Bendix Jr., Esq., at Schwartz Cooper
Greenberger & Krauss, represents the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed $155,453,000 in total assets and $168,199,000
in total debts.
ZI CORPORATION: Secures US$1 Million Short-Term Credit Facility
---------------------------------------------------------------
Zi Corporation (Nasdaq:ZICA) (TSX:ZIC), a leading provider of
intelligent interface solutions, entered into an agreement with an
affiliate of a Canadian registered securities dealer to borrow
US$1 million under a short term credit facility secured by five
million shares of the 29.75 million shares of Magic Lantern Group,
Inc. (AMEX:GML) owned by Zi.
Under a fiscal agency agreement signed with the affiliate, Zi
issued 400,000 options to purchase common shares of Zi at CDN
$3.25. Proceeds of the financing were used to meet certain
obligations due on December 31, 2003, and for working capital
purposes.
Zi Corporation -- http://www.zicorp.com/-- is a technology
company that delivers intelligent interface solutions to enhance
the user experience of wireless and consumer technologies. The
company's intelligent predictive text interfaces, eZiTap(TM) and
eZiText, allow users to personalize the device and simplify text
entry providing consumers with easy interaction for short
messaging, e-mail, e-commerce, Web browsing and similar
applications in almost any written language. eZiNet(TM), Zi's new
client/network based data indexing and retrieval solution,
increases the usability for data-centric devices by reducing the
number of key strokes required to access multiple types of data
resident on a device, a network or both. Zi supports its strategic
partners and customers from offices in Asia, Europe and North
America. A publicly traded company, Zi Corporation is listed on
the Nasdaq National Market and the Toronto Stock Exchange.
At March 31, 2003, Zi Corporation's balance sheet shows a working
capital deficit of about $2 million.
* Kirkpatrick & Lockhart in L.A. Hires Jeryl A. Bowers as Partner
-----------------------------------------------------------------
Kirkpatrick & Lockhart LLP announced that Jeryl A. Bowers, a
leading corporate and securities attorney, has joined K&L's Los
Angeles office as a partner.
Mr. Bowers comes to K&L from his previous position as Vice
President, Secretary & General Counsel to MediaLive International
Holdings, Inc.
Bowers concentrates his practice in securities, mergers and
acquisitions and other corporate matters. He has negotiated
agreements for private equity financings, joint venture
agreements, employment agreements, technology agreements and
distribution agreements. His corporate practice has included
helping to craft a buyout agreement for PetsMart.com Inc., which
allowed the shareholders and employees to receive significant
value for their stock, as well as handling venture capital
financing and M&A work for the company. Bowers assisted with the
establishment of MediaLive International's corporate governance
structure and took on a wide variety of general legal issues, from
licensing intellectual property to real estate transactions, to
the management of litigation.
Bowers received his Bachelor of Arts degree in Philosophy from
Howard University in 1990 and his Juris Doctor in 1993 from the
University of Chicago Law School, where he was managing editor of
the law review. His appointments have included board membership
with the American Corporate Counsel Association and associate
board membership with the Rehabilitation Institute of Chicago.
Bowers has also been named one of the "Best Corporate Attorneys
Under 40" by the Corporate Board Member Magazine.
"Jeryl brings a perspective drawn from both law firm and corporate
law department experiences that we expect will significantly
benefit our Southern California and firmwide corporate practice,"
according to Paul W. Sweeney, Jr., Administrative Partner of K&L's
Los Angeles office
Kirkpatrick & Lockhart serves a dynamic and growing clientele in
regional, national and international markets that includes
representation of over half of the Fortune 100. Currently more
than 700 lawyers strong, K&L's practice embraces three major
areas-litigation, corporate and regulatory-and related fields.
For more information, please visit http://www.kl.com/
Kirkpatrick & Lockhart's Los Angeles office serves a wide variety
of industries, including financial services, manufacturing,
professional services, retailing, food services, entertainment and
technology, among others. Since opening in January 2000, the Los
Angeles office has more than doubled its attorney staff to include
18 partners and 17 associates. Resident expertise includes
banking, corporate and securities, distribution and franchising,
employment and labor, entertainment, commercial litigation and
alternative dispute resolution, merger and acquisition, real
estate, securities enforcement, toxic tort and product liability,
as well as other areas of business law.
* Weil Gotshal Launches Book on Strategies for Creditors & Lessors
------------------------------------------------------------------
A lawyer at Weil, Gotshal & Manges LLP has co-authored a new
edition of a book that provides creative new strategies for
creditors and lessors in bankruptcy proceedings.
Christopher R. Mirick, an attorney in the Business Finance and
Restructuring Department of Weil Gotshal's Boston office, wrote
the new edition of Strategies for Creditors in Bankruptcy
Proceedings with Lynn M. LoPucki, a UCLA Law School professor.
Now available from Aspen Publishers --
http://www.aspenpublishers.com/-- the book has 17 chapters
focused on the various scenarios faced by unsecured and secured
creditors and lessors when dealing with financially troubled
debtors, both out-of-court and in cases under Chapters 7, 11 and
13 of the U.S. Bankruptcy Code. Drawing on statutory analysis,
relevant case law, empirical studies and practical experience, the
book provides essential information to help lawyers and clients
understand the nuances and dynamics of creditor strategy.
"Creditors should be planning for their debtor's bankruptcy from
the start of the business relationship," said co-author Mirick.
"Even if this advanced planning is not done, however, once the
debtor encounters financial difficulty or files for bankruptcy,
numerous opportunities are available to creditors to improve their
return. Too often, creditors simply accept pennies on the dollar
instead of using perfectly legal tactics to gain a strategic
advantage."
Prof. LoPucki said, "This is a book for creditors and their
lawyers who are often faced with perplexing developments in a
case, or are trying to plan ahead and anticipate new developments.
Our goal is to provide solutions, not just present textbook
guidance. Put simply, the right strategy ensures a better result
for the creditor."
Unlike other books that merely interpret the law, Strategies for
Creditors in Bankruptcy Proceedings hones in on specific problems
faced by creditors during liquidation, reorganization and debt
adjustment, and presents strategies for addressing these problems.
Among the topics covered in the book are the strategic use of
involuntary bankruptcy petitions; bankruptcy-proofing the debtor
corporation; segmenting loans, and using interest rate swaps, to
enhance the return on loans post- petition; and using co-signers
and guarantors to minimize bankruptcy risks and enhance the
likelihood of repayment.
Christopher R. Mirick is a lawyer in the Business Finance and
Restructuring Department of Weil, Gotshal & Manges LLP's Boston
office. His practice focuses on bankruptcy law and business
reorganizations. He received his B.A., summa cum laude, from
Amherst College and his J.D., magna cum laude, from Harvard Law
School.
Lynn M. LoPucki is the Security Pacific Bank Professor of Law at
the UCLA Law School. He has taught bankruptcy law at the law
schools of Cornell University, Harvard University, the University
of Pennsylvania and the University of Wisconsin. Before entering
teaching, he was a bankruptcy practitioner and member of the panel
of trustees in the Northern District of Florida.
Weil, Gotshal & Manges LLP is an international law firm of over
1,100 attorneys, including approximately 300 partners. Weil
Gotshal is headquartered in New York, with offices in Austin,
Boston, Brussels, Budapest, Dallas, Frankfurt, Houston, London,
Miami, Munich, Paris, Prague, Silicon Valley, Singapore, Warsaw
and Washington, D.C.
*********
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.
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 2004. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***