/raid1/www/Hosts/bankrupt/TCR_Public/040315.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, March 15, 2004, Vol. 8, No. 52
Headlines
ADELPHIA COMMS: Section 341(a) Meeting Will Continue on June 30
ALBANIL DYESTUFF: Case Summary & 20 Largest Unsecured Creditors
ALLEGHENY ENERGY: Fitch Assigns BB- Rating to New Bank Facilities
ALLEGHENY ENERGY: Full-Year 2003 Net Loss Narrows to $355 Million
AMERICAN BILTRITE: 2003 Results Stung by Congoleum Bankruptcy
AMERICAN HOSPITALITY: Taps Hanify & King as Bankruptcy Counsel
A-PLUS GALVANIZING: Case Summary & 20 Largest Unsecured Creditors
ARMSTRONG: Southwest Recreational's Bankruptcy Delays Discovery
BANC OF AMERICA: Fitch Takes Rating Actions on Series 2004-1 Notes
BEACON HILL CBO: S&P Places 5 Note Ratings on Watch Negative
BEAR STEARNS: S&P Hatchets Series 2000-WF2 Note Ratings
BINGHAM CANYON: Brings-In Chisholm Bierwolf as New Auditor
BOWATER INC: S&P Assigns BB Rating to $250M Senior Unsecured Debt
BOYD GAMING: Private Capital Reports 9.9% Equity Stake
CABLE & WIRELESS: Fitch Affirms Low-B Level Corp. Credit Ratings
CALPINE CORP: Commences New Offerings to Refinance CCFC II Debt
CASCADES INC: Continues to Develop its U.S. Tissue Business
CELSMER: Case Summary & 12 Largest Unsecured Creditors
CHASE COMM'L: S&P Cuts Ser. 2001-1 Ratings on Interest Shortfalls
COLLINS & AIKMAN: Records Reduced FY 2003 Net Loss of $59 Million
CONGOLEUM CORPORATION: Sales Fell & Losses Narrowed in 2003
CONMACO/RECTOR: Case Summary & 20 Largest Unsecured Creditors
CONSECO INC: Reorganized Company Publishes 2003 Financial Results
CORBAN COMM INC: Case Summary & 35 Largest Unsecured Creditors
COVENTRY HEALTH: FMR Corp., et al., Disclose 5.011% Equity Stake
DENBURY RESOURCES: S&P Affirms Rating & Revises Outlook to Stable
DIAMETRICS MEDICAL: December 2003 Deficit Tops $5.9 Million
DOANE PET CARE: Reports 2003 Losses & Senior Bank Loan Amendment
DOW CORNING: Commercial Creditors Want Their 24% Cash Distribution
DT INDUSTRIES: Mulls Possible Sale as Lenders Won't Waive Defaults
ELIZABETH ARDEN: Reports Improved Sales & Income for Q4 2004
ENRON CORP: Asks Clearance for Pacific Gas Settlement Agreement
ENRON CORP: Proposes Settlement of CASH V Investors' Claims
FALCON PRODUCTS: First Quarter Net Loss Balloons to $12 Million
FLEMING: Wants Go-Ahead to Advance More Defense Costs to Insiders
GAP INC: Fitch Places BB- Senior Unsecured Debt on Watch Positive
GENERAL MEDIA: PET Capital Offers to Pay All Creditors in Full
GENESCO INC: S&P Rates $175 Million Sr. Secured Facilities at BB-
GENTEK INC: Files Final Chapter 11 Report
GLOBALSTAR: FCC Approves Operating License Transfer
GO WEST INDUSTRIES: Voluntary Chapter 11 Case Summary
HALLIBURTON: Sets the Record Straight on KBR's Govt. Contracts
HORNBECK OFFSHORE: S&P Places B+ Credit Rating on Watch Positive
IMPATH INC: Enters Into National Agreement With Humana
JAMES MARTIN INC: Case Summary & 20 Largest Unsecured Creditors
JPS INDUSTRIES: First Quarter Net Loss Decreases to $200,000
KEYSTONE: Granted Interim Relief from Certain CBA Provisions
KMART CORP: Asks Court for Declaratory Judgment Against MSO IP
LIBERTY MEDIA: Reschedules Today's Conference Call to 11:00 A.M.
LIBERTY VILLAGE: Voluntary Chapter 11 Case Summary
LIGHTEN UP: Gives Auditor the Boot & Hires Madsen as New Auditor
MARJAN INC: Case Summary & 2 Largest Unsecured Creditors
MASSEY ENERGY: S&P Puts BB-Rated Corp. Credit Rating on Watch Neg.
MCWATTERS MINING: Sells Portion of Kiena Royalties to Wesdome Gold
MILACRON INC: Talking to New Lenders to Avert Bond Default
MILACRON INC: S&P Maintains Junk Credit Rating on Watch Negative
MILLENNIUM CAPITAL: Cuts Off Professional Ties with Grant Thornton
MILLENNIUM CHEMICALS: Increases Price for Vinyl Acetate Monomer
MILLENNIUM CHEMICALS: CFO to Speak at Lehman Brothers Conference
MIRANT CORP: Asks Okay to Expand McDermott's Retention Scope
NATIONAL CENTURY: Confirmation Hearing is Adjourned to April 14
NATIONAL STEEL: Agrees to Settle General Foods' Admin. Claim
NET PERCEPTIONS: Obsidian Still Committed to Pursuing Acquisition
NEW HORIZONS: Adjusts 2003 Allowance for Doubtful Accounts
NORTEL NETWORKS: Delays Filing of 2003 Annual Financial Statements
NORTEL NETWORKS: S&P Places B Long-Term Rating on Watch Negative
NORTEL NETWORKS: S&P Watches B-Rated Pass-Through Certificates
NRG ENERGY: Names Robert Flexon as Chief Financial Officer
OAKWOOD HOMES: Plan Confirmation Hearing Begins Tomorrow in Del.
OWENS CORNING: Unsecured Panel Turns to NERA for Asbestos Advice
PACIFIC GAS: Responds to S&P's Expected Investment Grade Ratings
PARMALAT GROUP: Gets Okay to Honor U.S. Insurance Obligations
PARMALAT GROUP: US Debtors Have Until May 10 to File Schedules
PEP BOYS: S&P Revises Outlook to Stable over Equity Offering News
PG&E NATIONAL: Sets Up Sale & Bidding Procedures for GNTC Unit
PRESIDENT CASINOS: Evaluating Strategic Options for Biloxi Units
REPTRON: Newly Reorganized Company Posts Q4 and FY 2003 Results
RG BARRY: Secures Funds for March & Keeps Negotiating for More
RURAL CELLULAR: S&P Assigns Low-B Senior Debt & Bank Loan Ratings
SILVERLEAF RESORTS: Senior Lender Agrees to Extend Loan Agreement
SLATER STEEL: TSX Will Knock Common Shares Off Exchange
SOTHEBY'S HOLDINGS: FY 2003 Net Loss Narrows to $26.5 Million
SOUTHWEST RECREATIONAL: Gets Nod to Hire Trumbull as Claims Agent
SPIEGEL GROUP: Gets Nod to Assume AT&T Executory Contracts
SUNCREST: Engages Chisholm Bierwolf as Auditor After Firm's Merger
SUPRA TELECOM: Retains Babcock Group as Financial Advisor
TENET HEALTHCARE: S&P Lowers Corporate Credit Rating to B
TFM SA: Banks Agree to Waive Financial Covenant Compliance
TOM THUMB FOOD: Voluntary Chapter 7 Case Summary
TOYS "R" US: S&P Maintains Low-B Trust Rating on Watch Negative
TRICO MARINE: S&P Drops Issuer Credit & Debt Ratings to Junk Level
TRIMEDIA ENTERTAINMENT: Must Raise More Funds to Continue Ops.
TRI STAR LAND DEVT: Voluntary Chapter 11 Case Summary
UNITED AIRLINES: US Trustee Appoints Ross Silverman as Examiner
US ENERGY: RMG I Unit Acquires Hi-Pro Coalbed Methane Assets
VERITAS DGC: Closes Sale of Additional Convertible Senior Notes
WEIRTON STEEL: Asks Court Nod to Terminate Retiree Benefits
WEIRTON: Noteholders Hire John Correnti to Help Formulate Plan
WILL COUNTY, IL: Fitch Drops Revenue Bonds Rating to Junk Level
ZOLTEK COMPANIES: Signs Agreement for Additional Financing
* Mark Ellenberg to Join the American College of Bankruptcy
* Illinois CPA Society's 2004 Reinsurance Conference Set for April
* NY Insurance Department Taps Cybersettle(R) to Expedite Claims
* BOND PRICING: For the week of March 15 - 19, 2004
*********
ADELPHIA COMMS: Section 341(a) Meeting Will Continue on June 30
---------------------------------------------------------------
The meeting of creditors owed money by the Adelphia Communications
Debtors, required to be held in all bankruptcy cases under 11
U.S.C. Sec. 341(a), will continue on June 30, 2004, at 2:00 p.m.
at the Office of the United States Trustee for Region 2, located
at 80 Broad Street, Second Floor, New York, New York 10004.
All creditors are invited, but not required, to attend. This
Official Meeting of Creditors offers the one opportunity in a
bankruptcy proceeding for creditors to question a responsible
office of the Debtors under oath without resorting to formal
discovery tools. (Adelphia Bankruptcy News, Issue No. 53;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ALBANIL DYESTUFF: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Albanil Dyestuff Corporation
aka The ADI Group USA
20 Linden Avenue
Jersey City, NJ 07305
Bankruptcy Case No.: 04-18222
Type of Business: The Debtor is a manufacturer and worldwide
supplier of dyestuffs and colorants. See
http://theadigroupusa.com/
Chapter 11 Petition Date: March 10, 2004
Court: District of New Jersey (Newark)
Judge: Rosemary Gambardella
Debtor's Counsels: Morris S. Bauer, Esq.
Sheryll S. Tahiri, Esq.
Ravin Greenberg PC
101 Eisenhower Parkway
Roseland, NJ 07068-1028
Tel: 973-226-1500
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Sinochem Ningbo Imp & Exp Corp. $238,062
Qingdao Double-Peach Special TY/Chemical $142,982
Dynamic Industries, Ltd. $104,066
Atul Americas, Inc. $102,360
Town End (Leeds) plc $74,767
Organic Pigments Corporation $58,298
Eastern Color & Chemical Co., Inc. $54,317
Trade Group Corporation $47,781
Hellmann Worldwide Logistics, Inc. $47,537
China Tianjin Tianshun Chemical $43,656
Jevic Transportation Inc. $40,719
Arctic Fox Corporation $39,866
C.H. Patrick & Company, Inc. $38,108
Chroma Chemical Corp. $34,272
T&T Industries Corp. $32,629
Anar International $32,380
Independent Chemical Corp. $29,885
Vilmax S.A. $29,089
Delsi Corporation $28,710
Kessler Trucking Company $22,030
ALLEGHENY ENERGY: Fitch Assigns BB- Rating to New Bank Facilities
-----------------------------------------------------------------
Fitch Ratings has assigned new ratings to Allegheny Energy Supply
Company LLC's bank refinancing facilities, as follows: 'BB-' to
the $750 million senior secured facility, consisting of pro rata
shares of the $650 million Secured Term Loan B and the $100
million new Springdale Facility; and 'BB-' to the $500 million
Secured Term Loan C. Both B and C Loans share in a first priority
lien on substantially all the assets of AE Supply, while the New
Springdale Facility has a first lien on the Springdale asset only.
Fitch has also upgraded the ratings of Allegheny Energy Supply
Statutory Trust 2001 A-Notes to 'BB-' from 'B+' to reflect the
change of security to a first priority lien security from the
existing second lien on AE Supply Assets. AE Supply's senior
unsecured notes are affirmed at 'B-'. The B Loan has a seven-year
final maturity while the C Loan's final maturity of 7.25 years,
and both have minimal scheduled amortization in the interim. Also,
the new debt enables the company to reduce interest expense. As a
result of the material reduction of liquidity risk at AE Supply,
AE Supply's ratings are removed from Rating Watch Negative and
assigned a Stable Rating Outlook.
At the same time, Allegheny Energy, Inc., parent of AE Supply,
obtained a $200 million unsecured revolving credit facility and
$100 million unsecured term loan, with three-year final
maturities. These facilities replace the prior $330 million bank
credit facility maturing in 2005. As a consequence of all of the
developments noted above, and the expectation that AYE will file
audited annual financial statements for the year ended Dec. 31,
2003 (Form 10-K) this week, concluding a long process to resolve
financial accounting issues, Fitch expects to review the ratings
of AYE and other AYE subsidiaries within the next few days.
The following existing ratings are affirmed and Outlook changed to
Stable from Rating Watch Negative:
Allegheny Energy Supply Company LLC
--Senior unsecured notes affirmed at 'B-'.
Allegheny Generating Company
--Senior unsecured debentures affirmed at 'B-'.
The following ratings are affirmed:
Allegheny Energy Supply Company LLC
--Pollution control bonds (MBIA-Insured) 'AAA'.
Allegheny Energy Inc. is a registered utility holding company
whose principal regulated utility subsidiaries are Monongahela
Power, Potomac Edison and West Penn Power. AE Supply, Allegheny
Energy's principal non-utility subsidiary, develops, acquires,
owns and operates generating plants and markets electricity and
other energy products.
ALLEGHENY ENERGY: Full-Year 2003 Net Loss Narrows to $355 Million
-----------------------------------------------------------------
Allegheny Energy, Inc. (NYSE: AYE) announced financial results for
the fourth quarter and full-year 2003 and filed its annual report
on Form 10-K with the Securities and Exchange Commission.
For the fourth quarter of 2003, Allegheny reported a consolidated
net loss of $13.7 million, or $0.11 per share, compared to a
consolidated net loss of $281.8 million, or $2.23 per share, for
the fourth quarter of 2002. For the year ended 2003, Allegheny
reported a consolidated net loss of $355 million, or $2.80 per
share, compared to a consolidated net loss of $632.7 million, or
$5.04 per share, for the same period in 2002.
Consolidated income before income taxes and minority interest was
$3.3 million for the fourth quarter of 2003, compared to a
consolidated loss before income taxes and minority interest of
$483.6 million for the same period in 2002.
Paul J. Evanson, Chairman and CEO, said, "With the filing of our
10-K on a timely basis and the refinancing of our debt earlier
this week, Allegheny has achieved two significant milestones on
the road to financial recovery. As a result, we received a clean
audit opinion from our independent public accountants on our 2003
financial statements."
"For the balance of 2004, we can concentrate on further reducing
leverage and building a high-performance organization. I am
optimistic that we can succeed in rebuilding Allegheny," added Mr.
Evanson.
Allegheny's consolidated income before income taxes and minority
interest improved by $486.9 million for the fourth quarter of
2003, compared to the same period in 2002, and the factors
contributing to the results included:
-- Net losses on energy trading decreased by $277.4 million,
compared to the fourth quarter of 2002, primarily due to
reduced trading activities in the Western United States energy
markets, which Allegheny exited in 2003, and the termination or
sale of speculative energy trading positions held in other
national energy markets. Allegheny recorded a net trading loss
of $0.9 million for the fourth quarter of 2003, compared to a
loss of $278.3 million for the same period in 2002.
-- Non-recurring charges for the fourth quarter of 2002 for a
suspended generation project ($192.0 million), the sales of
Alliance Energy Services and Fellon-McCord ($31.5 million) and
the relocation of trading operations from New York City to
Monroeville, Pa. ($25.1 million).
-- Interest charges increased by $43.7 million, compared to the
same period in 2002, primarily due to an increase in debt
outstanding, including debt associated with a refinancing in
February 2003 and the issuance of convertible trust preferred
securities in July 2003.
Fourth quarter of 2003 net results were also affected by an income
tax expense of $15.0 million, compared to an income tax benefit of
$192.9 million for the fourth quarter of 2002. The 2003 expense
included charges relating to changes in estimates of the deferred
tax impact of regulatory depreciation and other matters.
Fourth-Quarter Results by Segment
Delivery and Services: The Delivery and Services segment reported
net income of $29.0 million for the fourth quarter of 2003,
compared to net income of $42.2 million for the fourth quarter of
2002. Income before taxes was $60.4 million for the fourth quarter
of 2003, compared to income before taxes of $49.7 million for the
fourth quarter of 2002. The increase in income before taxes of
$10.7 million compared to the prior year was primarily due to a
non-recurring loss on the sales of Alliance Energy Services and
Fellon-McCord of approximately $31.5 million in 2002. This year-
to-year benefit was partially offset by an increase of
approximately $22.4 million in insurance, taxes (other than income
taxes) and other operating expenses.
Generation and Marketing: The Generation and Marketing segment
reported a net loss of $42.7 million for the fourth quarter of
2003, compared to a net loss of $324.0 million for the comparable
period in 2002. The loss before income taxes and minority interest
was $57.2 million for the fourth quarter of 2003, compared to the
loss before income taxes and minority interest of $533.3 million
for the fourth quarter of 2002. The decrease in losses before
income taxes and minority interest of $476.1 million was primarily
due to reduced energy trading losses of $277.4 million as
described above and lower operations expense in 2003 due to the
non-recurring fourth quarter 2002 charges for a suspended
generation project and the relocation of the trading operations as
described above, as well as lower workforce reduction costs,
salaries and outside services. Partially offsetting these items
was an increase in interest expense for the segment of $40.8
million compared to the same period in 2002. The previously
announced outage at Hatfield's Ferry Power Station Unit No. 2 in
November 2003 reduced results for the segment by approximately
$14.4 million related to net revenue losses and repair costs.
Allegheny expects the unit to return to service in May 2004.
Year-End Financial Results
The consolidated loss before the cumulative effect of accounting
changes was $334.2 million, or $2.64 per share, for the year ended
2003, compared to a consolidated loss before the cumulative effect
of accounting changes of $502.2 million, or $4.00 per share, for
the same period in 2002. The attached financial tables include a
summary of results.
Allegheny Energy
Allegheny Energy is an integrated energy company with a portfolio
of businesses, including Allegheny Energy Supply, which owns and
operates electric generating facilities, and Allegheny Power,
which delivers low-cost, reliable electric and natural gas service
to about four million people in Pennsylvania, West Virginia,
Maryland, Virginia and Ohio. More information about Allegheny
Energy is available at http://www.alleghenyenergy.com/
* * *
As reported in the Troubled Company Reporter's February 19, 2004,
edition, Standard & Poor's Ratings Services revised its outlook on
Allegheny Energy Inc. and its subsidiaries to stable from negative
with the pending refinancing of its bank loans, which alleviates
concerns associated with near-term refinancing risk.
At the same time, Standard & Poor's assigned its 'B' rating and a
recovery rating of '2' to the $1.3 billion secured credit facility
at Allegheny's generation subsidiary, Allegheny Energy Supply.
S&P's B rating suggests that Allegheny is vulnerable to non-
payment but the Company currently has the capacity to meet its
financial commitments. Adverse business, financial, or economic
conditions would likely impair Allegheny's capacity or willingness
to meet its financial commitment on the obligation. The
'2' recovery rating indicates Standard & Poor's expectation that
holders of the bank loan can expect substantial (80% to 100%)
recovery of principal in the event of a default.
AMERICAN BILTRITE: 2003 Results Stung by Congoleum Bankruptcy
-------------------------------------------------------------
American Biltrite Inc. (AMEX:ABL) reported its results for 2003.
Net sales for the year ended December 31, 2003 were $416.6
million, down 4.1% from $434.5 million in 2002. The net loss from
continuing operations for 2003 was $6.8 million, including a $3.7
million charge by its 55% owned consolidated subsidiary Congoleum
Corporation (AMEX:CGM) to resolve asbestos claims through a pre-
packaged plan of reorganization. The net loss from continuing
operations for 2002 was $6.8 million, which included a $16.8
million asbestos related charge by Congoleum. The net loss in 2003
was $14.2 million or $4.11 per share compared with a loss of $16.7
million or $4.84 per share in 2002.
On December 31, 2003 Congoleum filed a voluntary petition with the
United States Bankruptcy Court for the District of New Jersey
(Case No. 03-51524) seeking relief under Chapter 11 of the United
States Bankruptcy Code, as a means to resolve claims asserted
against it related to the use of asbestos in its products decades
ago. During 2003, Congoleum obtained the asbestos claimant votes
necessary for approval of a proposed pre-packaged Chapter 11 plan
of reorganization and in January 2004 filed its pre-packaged plan
of reorganization and disclosure statement with the court.
Congoleum is seeking confirmation of the plan as promptly as
possible. If approved by the bankruptcy court in its current form,
the plan would leave non-asbestos creditors unimpaired and would
resolve all pending and future asbestos claims against Congoleum.
Roger S. Marcus, Chairman of the Board, commented "2003 was an
extraordinarily difficult year for American Biltrite due to the
shutdown of our Janus wood flooring operation and the Congoleum
situation, both of which had a major negative effect on our bottom
line. In the case of Janus, the business is closed and the only
remaining task is to sell the real estate, which we expect to do
by mid-2004, using the proceeds to reduce debt. Congoleum
continues to make progress with its pre-packaged plan of
reorganization, which has now been filed with the court. We are
optimistic the plan will be confirmed in 2004."
Mr. Marcus continued "Results at our remaining operations were
slightly profitable in the face of a very difficult economic
environment. K&M Associates, our jewelry business, was solidly
profitable. Although K&M's sales and profits were below 2002
levels, the operation made considerable progress in further
expanding its sales base. The Tape division's profitability was
essentially flat on a modest sales increase, and the Canadian
division swung to a loss in 2003 on lower sales, as both of these
operations faced very challenging combinations of soft demand and
competitive pressures."
American Biltrite owns 55% of the outstanding common stock of
Congoleum. Generally accepted accounting principles require that
American Biltrite recognize 100% of Congoleum's results if its
cumulative losses are in excess of Congoleum's equity. Because of
Congoleum's deficit equity position, American Biltrite's
consolidated results in 2003 include the $6.8 million loss
reported by Congoleum during that period. However, Congoleum is
separately financed and American Biltrite neither guarantees nor
is otherwise obligated for any of Congoleum's debts. American
Biltrite has no recorded value at risk or economic obligation
related to the cumulative $25.8 million of Congoleum losses it has
recorded in excess of its investment in Congoleum. Furthermore,
American Biltrite's lending agreements require that its investment
in Congoleum be accounted for under the equity method of
accounting and not consolidated. Had the Company been permitted by
generally accepted accounting principles to account for its
investment in Congoleum under the equity method, its net loss for
2003 would have been reduced by $6.8 million, and its consolidated
equity at December 31, 2003 increased by $25.8 million.
AMERICAN HOSPITALITY: Taps Hanify & King as Bankruptcy Counsel
--------------------------------------------------------------
American Hospitality Concepts, Inc., and its debtor-affiliates
want to employ Hanify & King, Professional Corporation as their
counsel in their bankruptcy proceedings.
The Debtors tell the U.S. Bankruptcy Court for the District of
Massachusetts, Eastern Division, that Hanify & King has
substantial experience and extensive knowledge and is well
qualified to represent them in their chapter 11 cases.
Hanify & King will:
a) advise the Debtors with respect to its rights, powers and
duties as debtors-in-possession in the continued conduct
of their Chapter 11 is and the management of their assets;
b) advise the Debtors with respect to any plan proposed by
the Debtors and any other matters relevant to the
formulation and negotiation of a plan or plans of
reorganization in these cases;
c) represent the Debtors at all hearings and matters
pertaining to their affairs as debtors and debtors-in-
possession;
d) prepare on the Debtors' behalf all necessary and
appropriate applications, motions, answers, orders,
reports, and other pleadings and other documents, and
review all financial and other reports filed in these
chapter 11 cases;
e) review and analyze the nature and validity of any liens
asserted against the Debtors' property and advise the
Debtors concerning the enforceability of such liens;
f) advise the Debtors regarding their ability to initiate
actions to collect and recover property for the benefit of
the estate;
g) advise and assist the Debtors in connection with any
potential property dispositions;
h) advise the Debtors concerning executory contract and
unexpired lease assumptions, assignments and rejections
and lease restructurings and recharacterizations;
i) review and analyze various claims of the Debtors'
creditors and the treatment of such claims and the
preparation, filing or prosecution of any objections
thereto;
j) commence and conduct any and all litigation necessary or
appropriate to assert rights held by the Debtors, protect
assets of the Debtors' Chapter 11 estates or otherwise
further the goal of completing the Debtors' successful
reorganization other than with respect to matters to which
the Debtors retains special counsel; and
k) perform all other legal services and provide all other
necessary legal advice to the Debtors as debtors-in-
possession which may be necessary herein.
The Debtors employs Hanify & King under a general retainer at its
standard hourly rates. As of the Petition Date, Hanify & King held
an unapplied retainer in the sum of $75,000. The Debtors however
did not disclose the firm's current hourly rates.
Headquartered in Braintree, Massachusetts, American Hospitality
Concepts, Inc. -- http://www.groundround.com/-- runs the Ground
Round Grill & Bar chain, a pioneer in the casual-dining segment
that offers a variety of American standards and ethnic
specialties. The Company filed for chapter 11 protection on
February 19, 2004 (Bankr. D. Mass. Case No. 04-11240).
Harold B. Murphy, Esq., at Hanify & King, P.C., represents the
Debtors in their restructuring efforts. When the Company filed
for protection from their creditors, they listed over $1 million
in estimated assets and over $10 million in estimated debts.
A-PLUS GALVANIZING: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: A-Plus Galvanizing Inc.
P.O. Box 2717
Salina, Kansas 67402
Bankruptcy Case No.: 04-10599
Type of Business: The Debtor runs a galvanizing facility that
operates the largest no-lead zinc kettle.
See http://www.aplusgalv.com/
Chapter 11 Petition Date: February 16, 2004
Court: District of Kansas (Wichita)
Judge: Robert E. Nugent
Debtor's Counsel: Edward J. Nazar, Esq.
Redmond & Nazar LLP
900 OW Garvey Building
200 West Douglas
Wichita, KS 67202-3089
Tel: 316-262-8361
Total Assets: $11,360,757
Total Debts: $14,636,715
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Bank of New York IRB's Building and $8,220,000
911 Washington Ave. 3rd Fl. Land
St. Louis, MO 63101
Kansas Venture Capital Inc. Series B Bonds $3,000,000
6700 Antioch Plaza Ste 460 Value of Collateral:
Overland Park, KS 66204 $2,553,734
PRM Steel Service Inc. $465,797
P.O. Box 920
228 E. Ave. A
Salina, KS 67402
Allco Enterprises Inc. Sulpheric Recovery $434,985
P.O. Box 230879
Portland, OR 97223
ABCO Leasing Inc. Water Pre-treatment $297,459
22232 17th Ave SE No. 204 System
Bothell, WA 98021
Salina Steel Supply $143,924
Summit Leasing $101,987
Teck Cominco Metals LTD $88,878
Saline County Treasurer $54,983
Summit Leasing $44,800
Teck Cominco Metals Ltd. $26,715
ONEOK Energy Marketing Co. $24,391
American Institute of Steel $20,528
Co.
Marilyn Q Mai Stone $18,782
Brenntag Southwest Inc. $14,141
Bennington State Bank 941 Payroll Taxes $14,029
Hedman and Associates $13,000
Trans America Life Companies $10,664
American Galvanizers Assoc. $10,405
Midwest Quality Associates $9,718
ARMSTRONG: Southwest Recreational's Bankruptcy Delays Discovery
---------------------------------------------------------------
Southwest Recreational Industries, Inc. asks the Court to postpone
certain scheduled depositions and extend its time to answer
document discovery requests by 60 days.
Mark Minuti, Esq., at Saul Ewing LLP in Wilmington, Delaware,
explains that SRI filed a claim in Armstrong Holdings, Inc.'s
Chapter 11 cases on which litigation and discovery matters are
currently pending.
On February 13, 2004, SRI filed for Chapter 11 petition before the
United States Bankruptcy Court for the Northern District of
Georgia (Bankr. Case No. 04-40656). SRI continues to operate its
business and manage its properties as a debtor-in-possession.
SRI's entry into bankruptcy was more accelerated than SRI
previously expected. At this time, SRI is operating without DIP
financing and has only a limited agreement with its lenders to use
cash collateral for the next two weeks.
As a result of SRI's bankruptcy filing, SRI has laid off a
substantial number of employees and is presently fully focused on
keeping the company in a form whereby it may be sold on an
expedited basis for the benefit of its creditors.
Alston & Bird LLP is currently SRI's bankruptcy counsel. However,
A&B only learned recently that it would transition from proposed
local counsel for SRI to lead counsel in the bankruptcy case. At
this time, A&B and SRI have focused all of their attention on
obtaining permission to pay SRI's employees for their ongoing
work, and to use the cash collateral so that SRI may avert
disaster.
The role of Kaye Scholer LLP, SRI's previous bankruptcy counsel,
has been severely curtailed and Kaye Scholer is in the process of
transitioning the majority of SRI's current litigation matters to
A&B. Currently, it is not known whether Kaye Scholer will retain
the Armstrong World litigation matter. The Georgia Bankruptcy
Court has limited Kaye Scholer's fees to $25,000 for all
transitional matters. Therefore, Kaye Scholer is not in a
position in the short term to continue the Armstrong World
Industries litigation.
A&B, while aware of the Armstrong World Industries litigation,
only learned immediately before the hearings on SRI's first-day
motions of certain scheduled depositions and the related deadlines
contained in the prior Stipulation and Order governing various
discovery-related matters. At that time, A&B immediately
contacted the Debtors' counsel to seek a consensual continuation
of those depositions and the various deadlines by 60 days, but the
Debtors' counsel would not agree and stated that they intended to
move forward with the depositions and discovery.
Without a protective order on those depositions and a 60-day
extension, it will be fundamentally unfair to SRI and its
creditors at a time when SRI is focused on the most basic
functions of operating under Chapter 11. Furthermore, SRI's
bankruptcy and its limited funding, including a limitation on the
amounts to be expended as attorney's fees, might allow the parties
to "take a fresh look" at this litigation to determine if a
settlement can be reach.
* * *
Judge Fitzgerald holds that the pursuit of the objection
litigation by Armstrong World Industries and Nitram Liquidators to
the claims asserted is not subject to the automatic stay as a
result of the commencement of SRI's Chapter 11 case. Judge
Fitzgerald extends the discovery dates to mid-April 2004.
Judge Fitzgerald cautions the parties that no new fact discovery
is permitted, but that any trial witness identified by a party on
or before April 6, 2004, may be deposed before April 12, 2004 if
the witness has not previously been deposed and has not otherwise
been identified before April 6.
Headquartered in Lancaster, Pennsylvania, Armstrong World
Industries, Inc. -- http://www.armstrong.com/-- the major
operating subsidiary of Armstrong Holdings, Inc., designs,
manufactures and sells interior finishings, most notably floor
coverings and ceiling systems, around the world. The Company
filed for chapter 11 protection on December 6, 2000 (Bankr. Del.
Case No. 00-04469). Stephen Karotkin, Esq., Weil, Gotshal &
Manges LLP and Russell C. Silberglied, Esq., at Richards, Layton &
Finger, P.A., represent the Debtors in in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they listed $4,032,200,000 in total assets and
$3,296,900,000 in liabilities. (Armstrong Bankruptcy News, Issue
No. 57; Bankruptcy Creditors' Service, Inc., 215/945-7000)
BANC OF AMERICA: Fitch Takes Rating Actions on Series 2004-1 Notes
------------------------------------------------------------------
Banc of America Commercial Mortgage Inc., series 2004-1,
commercial mortgage pass-through certificates are rated by Fitch
Ratings as follows:
--$84,601,018 class A-1 'AAA';
--296,858,979 class A-1A 'AAA';
--$128,044,055 class A-2 'AAA';
--$100,065,758 class A-3 'AAA';
--$521,853,980 class A-4 'AAA';
--$1,327,183,332 class XC* 'AAA';
--$1,286,431,519 class XP* 'AAA';
--$31,520,604 class B 'AA';
--$13,271,833 class C 'AA-';
--$29,861,625 class D 'A';
--$13,271,833 class E 'A-';
--$18,248,771 class F 'BBB+';
--$11,612,854 class G 'BBB';
--$19,907,750 class H 'BBB-';
--$6,635,917 class J 'BB+';
--$6,635,917 class K 'BB';
--$8,294,896 class L 'BB-';
--$8,294,896 class M 'B+';
--$3,317,958 class N 'B';
--$3,317,958 class O 'B-';
--$21,566,730 class P 'NR'.
* Notional Amount and Interest Only
Classes A-1, A-2, A-3, A-4, XP, B, C, D and E are offered
publicly, while classes A-1A, XC, F, G, H, J, K, L, M, N, O and P
are privately placed pursuant to rule 144A of the Securities Act
of 1933. The certificates represent beneficial ownership interest
in the trust, primary assets of which are 113 fixed-rate loans
having an aggregate principal balance of approximately
$1,327,183,333, as of the cutoff date.
BEACON HILL CBO: S&P Places 5 Note Ratings on Watch Negative
------------------------------------------------------------
Standard & Poor's Ratings Services places its ratings on the class
A-1, A-2, B, C-1 and C-2 notes issued by Beacon Hill CBO II Ltd.,
a CDO of ABS and other structured securities managed by Beacon
Hill Asset Management LLC, on CreditWatch with negative
implications.
The CreditWatch placements reflect factors that have negatively
affected the credit enhancement available to support the notes.
These factors include a negative migration in the credit quality
of the performing assets in the pool.
Standard & Poor's noted that securities worth $85.5 million, or
26.46% of the performing collateral, come from obligors whose
ratings are in the non-investment-grade range (below 'BBB-').
Although the deal paid down $29.9 million to class A-1 and A-2
noteholders in the February payment period, the paydown does not
help offset the impact of the deterioration in the credit quality
of the collateral. Standard & Poor's noted that securities worth
$29.38 million, or 9.08% of the performing collateral, come from
obligors whose ratings are in the 'CCC' range. Of this, $20.88
million worth of securities come from obligors that are backed by
manufactured housing loans. When the deal was reviewed in June
2003, the 'CCC' bucked was at $13.0 million.
Standard & Poor's will be reviewing the results of the current
cash flow runs generated for Beacon Hill CBO II Ltd. to determine
the level of future defaults the rated classes can withstand under
various stressed default timing and interest rate scenarios, while
still paying all of the interest and principal due on the notes.
The results of these cash flow runs will be compared with the
projected default performance of the performing assets in the
collateral pool to determine whether the ratings currently
assigned to the notes remain consistent with the credit
enhancement available.
RATINGS PLACED ON CREDITWATCH NEGATIVE
Beacon Hill CBO II Ltd.
Rating
Class To From Current Balance (Mil. $)
A-1 AA+/Watch Neg AA+ 144.94
A-2 AA+/Watch Neg AA+ 133.20
B A+/Watch Neg A+ 14.00
C-1 BB/Watch Neg BB 13.00
C-2 BB/Watch Neg BB 12.00
TRANSACTION INFORMATION
Issuer: Beacon Hill CDO II Ltd.
Current manager: Beacon Hill Asset Management
Underwriter: Banc of America Securities LLC
Trustee: JPMorganChase Bank
Transaction type: CDO of ABS
TRANCHE INITIAL CURRENT
INFORMATION REPORT ACTION
Date (MM/YYYY) 11/30/01 03/2004
Class A-1 note rtg. AAA AA+/Watch Neg
Class A-1 note balance $160.50mm $144.94mm
Class A-2 note rtg. AAA AA+/Watch Neg
Class A-2 note balance $160.50mm $133.20mm
Class B note rtg. AA A+/Watch Neg
Class B note balance $14.00mm $14.00mm
Class C-1 note rtg. BBB BB/Watch Neg
Class C-1 note balance $13.00mm $13.00mm
Class C-2 note rtg. BBB BB/Watch Neg
Class C-2 note balance $12.00mm $12.00mm
PORTFOLIO BENCHMARKS CURRENT
S&P Wtd. Avg. Rtg. BBB-
S&P Default Measure 1.18%
S&P Variability Measure 1.46%
S&P Correlation Measure 1.54
Wtd. Avg. Coupon 7.73%
Wtd. Avg. Spread 1.76%
Oblig. Rtd. 'BBB-' and above 73.54%
Oblig. Rtd. 'BB-' and above 87.06%
Oblig. Rtd. 'B-' and above 90.92%
Oblig. Rtd. in 'CCC' range 9.08%
Oblig. Rtd. 'CC', 'SD' or 'D' 1.22%
Obligors on Watch Neg 3.51%
S&P RATED OC (ROC) CURRENT
Class A-1 Notes 101.39%
Class A-2 Notes 101.39%
Class B-1 Notes 101.09%
Class C-1 Notes 96.39%
Class C-2 Notes 96.39%
BEAR STEARNS: S&P Hatchets Series 2000-WF2 Note Ratings
-------------------------------------------------------
Standard & Poor's Ratings Services lowers its ratings on six
classes of Bear Stearns Commercial Mortgage Securities Inc.'s
series 2000-WF2 commercial mortgage pass-through certificates. At
the same time, ratings are affirmed on nine other classes from the
same transaction.
The rating on class M is lowered to 'D' from 'B-' due to interest
shortfalls resulting from Appraisal Subordinated Entitlement
Reduction Amounts that may occur for an extended time period. The
other lowered ratings reflect deteriorating credit fundamentals
associated with the specially serviced and watchlist loans. The
affirmed ratings reflect credit enhancement levels that adequately
support the ratings under various stress scenarios.
There are three loans with the special servicer, GMAC Commercial
Mortgage Corp., which have an aggregate balance of $19.9 million
(2% of the pool). All three specially serviced loans are
delinquent. The remaining loans in the pool are current. Details
regarding the specially serviced loans follow below:
-- A $9.4 million loan secured by a 71,648-square-foot (sq.
ft.) suburban office property in Campbell, Calif. The loan
is over 90 days delinquent and was transferred to special
servicing Aug. 12, 2003 after two large tenants vacated.
While some of the vacant space has been leased, the rental
rates are significantly below previous levels due to the
poor market conditions in the Silicon Valley area.
Additionally, near-term lease expirations threaten to
deteriorate the property's performance further. The
Dec. 31, 2002 net cash flow debt service coverage ratio
was 1.11x and Oct. 3, 2003 occupancy was 75%. An appraisal
reduction amount (ARA) was placed for $5.9 million on
Feb. 9, 2004, indicating that significant losses are
likely. The resultant ASER will cause interest shortfalls
to the class M certificates through disposition of the
asset.
-- A $6.6 million loan secured by a 183,927-sq.-ft.-anchored
shopping center in Miami, Fla. The loan is 60 to 90 days
delinquent and was transferred to GMACCM Feb. 5, 2004
after BJ's Wholesale Club (112,896 sq. ft., 61%) vacated.
BJ's continues to make rental payments under a lease
expiring in April 30, 2007. Additionally, the second-
largest tenant (40,000 sq. ft., 22%) at the center has a
Aug. 31, 2004 lease expiration and has not yet renewed.
Limited information is available due to the loan's recent
transfer to GMACCM.
-- A loan $3.9 million secured by a 1,041-unit self-storage
facility located in Boynton Beach, Fla. The loan is 30 to
60 days delinquent and was transferred to special
servicing Feb. 28, 2003. The borrower is currently
disputing the application of escrows with the master
servicer, Wells Fargo Commercial Mortgage Servicing, and
is only making principal and interest payments at the
advice of legal counsel. An Aug. 11, 2003 appraisal valued
the property at $4.5 million. Foreclosure will occur if
the escrow situation is not resolved.
Wells Fargo reported a watchlist of 12 loans with an aggregate
principal balance of $97.8 million (12%). The third-largest loan
in the pool ($29.1 million) is secured by a theme shopping mall in
Salt Lake City, Utah with more than 80 distinct tenants. The
property has historically suffered from poor occupancy, which
directly impacts financial performance. Sept. 30, 2003 DSCR and
occupancy were 0.83x and 70%, respectively.
The 10th-largest loan ($16.5 million) is also on the watchlist.
The six building, 66,122-sq.-ft.-asset experienced vacancy issues
in 2002, but was able to lease the vacated space. HealthSouth
occupies 13,218 sq. ft. (20%) with a lease expiration of April 30,
2009 and plans to occupy the space despite its bankruptcy.
As of Feb. 17, 2004, Wells Fargo reported that the trust
collateral consisted of 145 loans with an outstanding principal
balance of $798.8 million, down from $838.5 million at issuance.
Wells Fargo provided year-end 2002 financial information for 92%
of the pool. Standard & Poor's calculated the DSCR for the current
pool at 1.52x, unchanged since issuance. The current top 10 loans
have an aggregate outstanding balance of $287.9 million (36%). The
weighted average DSCR for the top 10 loans was also relatively
flat at 1.45x, down slightly from 1.49x at issuance. Because mid-
year analysis is not required, only 9% of the pool reported
mid-year 2003 data, which is insufficient for an accurate pool
analysis.
Geographic concentrations in excess of 10% of the pool exist in
California (34%) and Florida (11%). The remaining collateral is
located in 32 other states and the District of Columbia. Property
type concentrations include retail (27%), office (24%), industrial
(17%), manufactured housing (14%), and multifamily (11%), with the
balance of the loans secured by self-storage, hotel, mixed-use,
and specialty properties.
Standard & Poor's stressed various loans in its analysis and the
resultant credit enhancement levels adequately support the rating
actions.
RATINGS LOWERED
Bear Stearns Commercial Mortgage Securities Inc.
Commercial mortgage pass-through certs series 2000-WF2
Rating
Class To From Credit Enhancement (%)
H BB BB+ 3.67
I BB- BB 2.89
J B+ BB- 2.10
K B- B+ 1.84
L CCC B 1.31
M D B- 1.05
RATINGS AFFIRMED
Bear Stearns Commercial Mortgage Securities Inc.
Commercial mortgage pass-through certs series 2000-WF2
Class Rating Credit Enhancement (%)
A-1 AAA 17.32
A-2 AAA 17.32
B AA 13.78
C A 10.50
D A- 9.45
E BBB 6.56
F BBB- 5.64
G BBB- 5.51
X AAA N.A.
BINGHAM CANYON: Brings-In Chisholm Bierwolf as New Auditor
----------------------------------------------------------
On February 12, 2004, Bingham Canyon Corporation's independent
auditors, Chisholm & Associates, Certified Public Accountants,
informed Bingham that on February 9, 2004, that firm had merged
its operations into Chisholm, Bierwolf & Nilson, LLC. Chisholm &
Associates had audited Bingham's financials statements for the
past two fiscal years ended December 31, 2002 and 2001, and its
reports for each of those two fiscal years were modified as to the
uncertainty of Bingham Canyon Corporation's ability to continue as
a going concern. The Company's Board of Directors approved the
change in auditors.
Bingham Canyon is a development stage company with no assets. The
company has experienced losses from inception and has primarily
financed its operations through the sale of their common stock.
For the nine month period ended September 30, 2003, it had no cash
on hand and total current liabilities of $27,000. These
liabilities are for legal and accounting fees incurred during 1999
which were paid on our behalf by a related party.
At September 30, 2004, the company's total stockholders' equity
deficit tops $27,000.
BOWATER INC: S&P Assigns BB Rating to $250M Senior Unsecured Debt
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigns its 'BB' senior
unsecured debt rating to newsprint producer Bowater, Inc.'s
proposed $250 million floating rate senior unsecured notes due
2010. All other ratings were affirmed. The corporate credit rating
is 'BB/Stable/--'.
"Proceeds from the new notes are expected to be used to repay
balances under the company's revolving credit facility, a $100
million term loan, and other debt," said Standard & Poor's credit
analyst Pamela Rice.
The ratings reflect Bowater's high debt burden, caused by three
years of weak earnings and elevated capital spending and prospects
for modest--although improving--cash-flow generation in the near
term. These factors outweigh the company's leading market
positions in cyclical newsprint, pulp, and coated groundwood
paper, substantial operating leverage, and valuable timberland
holdings.
Bowater, headquartered in Greenville, S.C., is North America's
second-largest maker of newsprint and is a major market pulp
producer. The company also manufactures coated papers used for
magazines; catalogs; direct mail; and advertising inserts; and
produces lumber. Although Bowater has a diverse product mix, its
major paper grades continue to experience low--albeit rising--
prices and demand, causing weak operating earnings and negative
free cash flow.
BOYD GAMING: Private Capital Reports 9.9% Equity Stake
------------------------------------------------------
Private Capital Management, L.P., Bruce S. Sherman and Gregg J.
Powers beneficially own 6,379,100 shares of the common stock of
Boyd Gaming Corporation, representing 9.9% of the outstanding
common stock of Boyd Gaming. The three parties share voting and
dispositive powers over the stock held.
Bruce S. Sherman is CEO of Private Capital Management and Gregg J.
Powers is President of Private Capital Management. In these
capacities, Messrs. Sherman and Powers exercise shared dispositive
and shared voting power with respect to shares held by Private
Capital Management's clients and managed by Private Capital
Management. Messrs. Sherman and Powers disclaim beneficial
ownership for the shares held by Private Capital Management's
clients and disclaim the existence of a group.
* * *
As reported in the Feb. 12, 2004, issue of the Troubled Company
Reporter, Standard & Poor's Ratings Services affirmed its 'BB'
corporate credit and 'B+' subordinated debt ratings for Boyd
Gaming Corp. Concurrently, the ratings were removed from
CreditWatch where they were placed on Feb. 9, 2004.
These rating actions clarify Standard & Poor's intention in its
press release dated Feb. 9, 2004. In that press release, both the
corporate credit and subordinated debt ratings of Boyd were placed
on CreditWatch with negative implications. "Given Standard &
Poor's expectation to affirm the corporate credit rating, those
ratings should not have been placed on CreditWatch," said Standard
& Poor's credit analyst Michael Scerbo. "However, the company's
'BB+' senior secured and 'BB-' senior unsecured debt ratings
remain on CreditWatch with negative implications given the
uncertainty about the final capital structure and the possible
impact on notching," Mr. Scerbo added. The outlook is stable. Pro
forma for its merger with Coast Casinos Inc., Boyd Gaming is
expected to have approximately $2.3 billion debt outstanding.
Standard & Poor's expects that Boyd's more diverse portfolio of
gaming assets will continue to generate a relatively steady source
of cash flow, despite the intensely competitive conditions in many
of the markets it operates. Still its pro forma credit measures
provide little room for deterioration within the current rating
and/or outlook.
CABLE & WIRELESS: Fitch Affirms Low-B Level Corp. Credit Ratings
----------------------------------------------------------------
Fitch Ratings, the international rating agency, has affirmed Cable
and Wireless plc's 'BB+' Long-term and 'B' Short-term ratings. The
Outlook is Negative. The rating reflects a balanced assessment of
the financial strength provided by the national telcos business,
the group's continuing significant net cash position, and the
potential impact of the continuing cash outflow in the former C&W
Global business.
While management have taken significant steps to refocus the
group, including a withdrawal from the US and emphasis on
improving margins in the important UK market, a turnaround in its
underperforming assets is far from assured. The company faces
significant challenges to improve profitability in the UK, the
company's single largest market by revenues, and the national
telcos face ongoing pressure from market liberalisation and
competition.
Senior management has been fundamentally renewed over the past 15
months. Richard Lapthorne was appointed as non-Executive Chairman
in January 2003, while Graham Wallace was replaced by Francesco
Caio as Chief Executive in April 2003. Also in April 2003 Kevin
Loosemore was appointed to the newly-created position of Chief
Operating Officer, while Charles Herlinger joined the group as CFO
in December 2003. These, along with a number of other executive
and non-executive appointments, have been instrumental in
assessing and implementing change at the company.
At the time of the preliminary results announcement in June 2003,
the company announced the results of its strategic review. The key
conclusions of this were to restructure and drive performance of
the UK operations, to withdraw from the US, and to build on and
add to the company's positions in national telcos. Results of the
group are no longer segmented under C&W Regional and C&W Global,
and are now reported along geographic lines.
The closing of the Savvis Communications transaction concludes the
C&W group's strategic withdrawal from the US market and
demonstrates the sound progress that the new leadership of the
group is making in attempting to secure the long-term future of
the C&W group.
Nevertheless, the group's portfolio of national businesses is
increasingly facing competition as governments seek to liberalise
and develop effective markets. Additionally, the group's market
position in the UK has yet to be stabilised and a coherent
strategy has yet to be articulated for this market.
Fitch views the progress that management is making in resolving
the challenges that the group faced when they were appointed,
positively, and the agency continues to take some comfort from the
strong net cash balances being reported by the company and these
factors support the rating.
CALPINE CORP: Commences New Offerings to Refinance CCFC II Debt
---------------------------------------------------------------
Calpine Corporation's (NYSE: CPN) wholly owned subsidiary Calpine
Generating Company, LLC (CalGen), formerly Calpine Construction
Finance Company II, LLC (CCFC II), has commenced new offerings of
approximately $2.4 billion in several tranches of secured
institutional term loans and secured notes. The final principal
amounts, pricing, relative priorities and the respective maturity
dates of the offerings will be determined by market conditions.
CalGen intends to use the net proceeds from the offerings to
refinance amounts outstanding under the $2.5 billion CCFC II
credit facility, which matures in November 2004, and to pay fees
and transaction costs associated with the refinancing. Current
outstanding indebtedness and letters of credit under the CCFC II
credit facility total approximately $2.3 billion. CalGen also
expects to establish a $200 million, three-year revolving credit
facility, which is expected to be used for, among other things,
the costs to complete CalGen's power generation facilities that
are still under construction.
CalGen and its wholly owned subsidiaries will own 14 power
generating facilities located throughout the United States, 11 of
which are in commercial operation and three of which are in
advanced stages of construction. The term loans, secured notes
and revolving credit facility described above will in each case be
secured, through a combination of direct and indirect stock
pledges and asset liens, by CalGen's power generating facilities
and related assets, and the lenders' recourse will be limited to
such security. None of the indebtedness will be guaranteed by
Calpine Corporation.
The secured institutional term loans will be placed in the
institutional term loan market. The secured notes will be offered
in a private placement under Rule 144A, have not been registered
under the Securities Act of 1933, and may not be offered in the
United States absent registration or an applicable exemption from
registration requirements.
Calpine Corporation (S&P, CCC+ Senior Unsecured Convertible Note
and B Second Priority Senior Secured Note Ratings, Negative
Outlook) is a leading North American power company dedicated to
providing electric power to wholesale and industrial customers
from clean, efficient, natural gas-fired and geothermal power
facilities. The company was founded in 1984 and is publicly traded
on the New York Stock Exchange under the symbol CPN. For more
information about Calpine, visit http://www.calpine.com/
CASCADES INC: Continues to Develop its U.S. Tissue Business
-----------------------------------------------------------
Cascades Inc. (CAS-TSX) acquired a tissue mill which includes a
paper machine, converting lines and a de-inking pulp mill located
in Memphis, Tennessee. These assets are presently idle. The de-
inking pulp mill was previously owned or operated by American
Tissue or affiliates thereof. The tissue paper machine and
converting lines were previously owned by a trustee on behalf of
GE Commercial & Industrial Finance.
This acquisition will increase Cascades' tissue capacity by
approximately 40,000 short tons per year or 8%. The start-up of
the tissue machine will be dictated by market demand. The
converting lines which are expected to start-up gradually later
this year will produce bathroom tissue and paper napkins.
According to Ms. Suzanne Blanchet, President and Chief Executive
Officer of Cascades' Tissue Group: "This new acquisition
represents a great opportunity for us to secure good assets at a
fair price but more importantly, it is in line with our current
development strategy. This investment of approximately US$11.5
million will enhance our presence in the southern United States,
further strengthening our ability to serve North American
customers coast to coast in the retail as well as the commercial
and industrial markets."
Cascades Inc. is a leader in the manufacturing of packaging
products, tissue paper and specialized fine papers.
Internationally, Cascades employs 15,000 people and operates close
to 150 modern and versatile operating units located in Canada, the
United States, France, England, Germany and Sweden. Cascades
recycles more than two million tons of paper and board annually,
supplying the majority of its fibre requirements. Leading edge de-
inking technology, sustained research and development, and 40
years in recycling are all distinctive strengths that enable
Cascades to manufacture innovative value-added products. Cascades'
common shares are traded on the Toronto Stock Exchange under the
ticker symbol CAS.
Standard & Poor's Ratings Services revised its outlook on
diversified paper and packaging producer Cascades Inc. to negative
from stable. At the same time, the 'BB+' long-term corporate
credit rating and 'BBB-' senior secured bank loan rating were
affirmed.
"The outlook revision stems from concerns that Cascades is
unlikely to improve its credit profile in the near term and
remains vulnerable to further weakening if challenging conditions
persist," said Standard & Poor's credit analyst Clement Ma.
CELSMER: Case Summary & 12 Largest Unsecured Creditors
------------------------------------------------------
Debtor: CELSMER, A General Partnership
1512 Highlands Pines Court
Reno, Nevada 89502
Bankruptcy Case No.: 04-50662
Chapter 11 Petition Date: March 11, 2004
Court: District of Nevada (Reno)
Judge: Gregg W. Zive
Debtor's Counsel: Stephen R. Harris, Esq.
Belding, Harris & Petroni, Ltd.
417 West Plumb Lane
Reno, NV 89509
Tel: 775-786-7600
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 12 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Clothier, Gene Money loaned $2,203,573
1582 Parkway Loop SB
Tuetin, CA 92790
Pinnacle Towers, Inc. Goods/Services $41,548
American Tower Corporation Goods/Services $18,069
Bravard Tower Communications Goods/Services $3,389
Highpoints Group Goods/Services $2,790
G & R Radio Communications Goods/Services $1,908
Equity Office Goods/Services $1,701
Howard, Glenn Goods/Services $1,642
Wireless Services, Inc. Goods/Services $1,605
Kevin Howard Goods/Services $776
Rose Beedle/Gem Electronics Goods/Services $599
JPC Goods/Services $411
CHASE COMM'L: S&P Cuts Ser. 2001-1 Ratings on Interest Shortfalls
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowers its ratings on six
classes of Chase Commercial Mortgage Securities Corp.'s pass-
through certificates series 2000-1. Concurrently, the ratings on
eight classes from the same transaction are affirmed.
The lowered ratings reflect ongoing interest shortfalls that are
expected to continue into the near future. The remaining
downgrades primarily reflect anticipated losses related to the
five specially serviced assets. The affirmed ratings reflect
appropriate levels of credit enhancement for the respective
ratings.
As of Feb. 18, 2004, the trust collateral consisted of 91 loans
with an aggregate outstanding principal balance of $675.3 million,
down from $697.1 million at issuance. The master servicer, GEMSA
Loan Services, provided full-year 2002 net cash flow debt service
coverage (DSC) figures for 99.6% of the pool. Based on this
information, Standard & Poor's calculated a weighted-average DSC
of 1.30x (which excludes two defeased loans), up from 1.29x at
issuance. Additionally, Standard & Poor's received 2003 year-to-
date financial data for 97.4% of the trust collateral (primarily
through the third quarter 2003). Analysis of this data yields a
weighted average YTD DSC of 1.22x. The trust has not experienced
any losses to date, but has five loans with appraisal reduction
amounts aggregating to $24.4 million (3.6%).
The top 10 loans have an aggregate outstanding balance of $265.2
million (39.3%) and reported a 2002 weighted average DSC of 1.38x,
up from 1.27x at issuance. Partial-year 2003 financial data was
available for all of the top 10 loans, and the weighted-average
DSC is now 1.26x. As part of its surveillance review, Standard &
Poor's reviewed recent property inspections for assets underlying
the top 10 loans. All of the properties that secure the top 10
loans were characterized as "excellent" or "good." The two largest
loans in the trust are specially serviced and four of the other
top 10 loans are on GEMSA's watchlist.
There are six loans with an aggregate outstanding balance of
$123.3 million (18.3%) that are with the special servicer, Lennar
Partners Inc. The largest loan in the trust is secured by a
396,000-sq.-ft. retail property in Pembroke Pines, Fla. that has
an outstanding balance of $41.4 million (6.1%) and $900,000 in
outstanding servicer advances. Kmart, which occupied 31.0% of
property, rejected this lease in bankruptcy court and vacated the
premises in April 2003. The property is currently 56.0% occupied.
The second-largest loan in the portfolio has an outstanding
balance of $41.4 million (6.1%), $2.6 million in additional
servicer advances, and is secured by a 224,000-sq.-ft. office
building in Santa Clara, Calif. This property is over 40.0% vacant
and several of the remaining tenants have leases that expire
within the next 18 months. Boutique hotels in San Francisco secure
two of the other specially serviced assets. The borrower for both
of these hotels is the Kimpton Group, a boutique hotel operator
with a strong San Francisco presence. The Juliana Hotel consists
of 107 rooms with a principal balance of $12.3 million and $1.4
million in outstanding advances, while the Clarion Bedford Hotel
(renamed Hotel Cosmo) consists of 144 rooms and has an
outstanding balance of $8.9 million along with $1.3 million in
outstanding advances. Both of these properties failed to find a
buyer despite extensive marketing efforts, and the borrower is now
negotiating a deed-in-lieu of foreclosure for both assets. The
smallest specially serviced asset, a 272-unit, multifamily
property in Columbus, Ohio, has an outstanding balance of $8.2
million and $700,000 in outstanding servicer advances. Despite a
98.5% occupancy in 2002, the DSC for this asset was only 0.79x and
this figure has not improved during 2003. All five assets have
corresponding ARAs, and Standard & Poor's expects losses on all
five of these loans.
Additionally, a 244-unit multifamily complex in Atlanta, Ga. is 30
days delinquent. This property was built in 1967 and has an
outstanding balance of $11.1 million. The DSC for this asset has
decreased to 0.99x through the third quarter 2003 from 1.25x in
2002 despite a marginal increase in occupancy. The borrower has
expressed difficulty in meeting its monthly debt service
obligation, and the master servicer transferred this asset to
the special servicer on Feb. 20, 2004.
GEMSA's watchlist consists of 18 loans with an aggregate
outstanding balance of $168.0 million (24.9%), and includes four
of the top 10 loans in the trust collateral. The fourth-largest
loan has an outstanding balance of $38.7 million (5.7%) and is
secured by a 560,000-sq.-ft. office building in lower Manhattan
that is 86.0% occupied. One tenant that occupied 12.5% of the
space recently terminated its lease while another tenant that also
occupies 12.5% may do the same. The borrower has requested a
modification of the loan agreement in order to convert the
property into a residential building; this request is currently
under review. The fifth- and sixth-largest loans are also on the
watchlist, and have outstanding balances of $23.9 million (3.5%)
and $20.3 million (3.0%), respectively. Both loans are secured by
a portfolio of office and industrial properties in Orange County,
Calif. that are cross-collateralized and cross-defaulted with each
other. These loans appear on the watchlist because one asset among
the portfolio of properties that secures each loan has lease
expirations greater than 30.0% within the next year. However,
these loans reported 2002 DSCs of 1.38x and 1.11x, respectively,
and the DSCs through the third quarter 2003 for both properties
have increased from these levels. The 10th-largest loan in the
pool has an outstanding principal balance of $13.0 million (1.9%)
and is secured by a 312-unit multifamily property in Flowood,
Miss. Several units were damaged during a flood in April 2003
resulting in a 0.98x DSC through third quarter 2003. The units
have been repaired and the borrower has increased rental rates by
$10 on all units. The balance of assets appears on the watchlist
primarily due to lease expirations or DSC issues.
The trust collateral is located across 23 states and only Texas
(24.7%) and Ohio (14.5%) are home to more than 10.0% of the pool
balance. Property concentrations are found in multifamily (30.3%),
retail (29.0%), and office (25.7%) assets.
Standard & Poor's stressed the specially serviced loans and the
loans that appear on the watchlist, when appropriate, in its
analysis. The resultant credit enhancement levels support the
lowered and affirmed ratings.
RATINGS LOWERED
Chase Commercial Mortgage Securities Corp.
Commercial mortgage pass-through certs series 2000-1
Rating
Class To From Credit Enhancement (%)
G BB- BB 6.71
H B BB- 5.94
I B- B+ 5.03
J D CCC+ 3.35
K D CCC 2.84
L D CCC 2.32
RATINGS AFFIRMED
Chase Commercial Mortgage Securities Corp.
Commercial mortgage pass-through certs series 2000-1
Class Rating Credit Enhancement (%)
A-1 AAA 27.35
A-2 AAA 27.35
B AA 21.94
C A 17.03
D A- 15.48
E BBB 11.87
F BBB- 10.32
X AAA -
COLLINS & AIKMAN: Records Reduced FY 2003 Net Loss of $59 Million
-----------------------------------------------------------------
Collins & Aikman Corporation (C&A) (NYSE: CKC) reported results
for fourth quarter and year ended December 31, 2003.
The company reported record fourth quarter 2003 net sales of
$1.013 billion compared to $963 million in the fourth quarter of
2002, a 5% increase which mainly reflects sales from companies
acquired in January 2003 along with improved currency impact. The
company reported a loss of 14 cents per share from continuing
operations in the fourth quarter of 2003, which included after-tax
charges for restructuring and long-lived asset impairments of
$16.7 million (or 20 cents per share). In the comparable 2002
quarter, the company had a loss of 4 cents per share, which
included after-tax charges for restructuring and long-lived asset
impairments of $13.0 million (or 16 cents per share).
Commenting on the company's fourth quarter operating results,
David A. Stockman, C&A Chairman and CEO, stated, "We are pleased
with the solid improvement in EBITDA performance, excluding
restructuring and impairment charges. For the second consecutive
quarter our results were up significantly from the prior year on a
comparable basis. Additionally, the restructuring program that
began in the third quarter is resulting in significant fixed cost
savings as indicated by our year-over-year decline in selling,
general and administrative expenses."
The fourth quarter 2003 pre-tax restructuring charge of $13.8
million included costs associated with the previously announced
third quarter restructuring actions that would reduce the
company's salaried workforce by almost 800 or 15%. This
restructuring initiative and related actions are expected to
reduce the company's fixed-cost structure by $80 million per year.
For the full-year 2003, the company reported sales of $3.98
billion compared to $3.89 billion for 2002. The company also
reported a net loss available to common shareholders from
continuing operations of $59.1 million or 71 cents per share,
which included $49.9 million (or 60 cents per share) of after-tax
charges for restructuring and long-lived asset impairments. For
the comparable 2002 period, the net loss available to common
shareholders from continuing operations was $87.6 million or $1.15
per share, which included after-tax charges for restructuring and
long-lived asset impairments of $40.9 million (or 53 cents per
share).
C&A's net debt, including outstandings under an off-balance sheet
accounts receivable facility, was $1.346 billion at December 31,
2003.
Net Business Wins and Other Accomplishments
During the fourth quarter 2003, Collins & Aikman continued to
achieve solid marketing progress by adding $200 million of annual
newly booked business, bringing the year-to-date total to over
$900 million in annualized revenues incepting with model year
2005. These figures are net of business being transitioned to
other suppliers.
Wins for the quarter included one of the largest fabric contracts
the company has received in recent history -- a contract to supply
seat fabric to a North American OEM for multiple unnamed models.
Wins also included numerous instrument panel, carpet and acoustic,
and interior trim programs. In particular, the company recently
secured contracts to supply instrument panels and center consoles
for multiple derivatives of a new crossover type vehicle.
EBITDA Discussion
EBITDA was $69.4 million for the fourth quarter of 2003, which was
reduced by charges of $13.8 million for restructuring and $7.3
million for the impairment of long-lived assets. The fourth
quarter 2002 EBITDA was $68.2 million, which was reduced by
charges of $4.8 million for restructuring and $9.3 million for the
impairment of long-lived assets. A reconciliation of our EBITDA, a
non-GAAP financial measure, to U.S. GAAP loss from continuing
operations, our most comparable GAAP figure, is set out in the
attached EBITDA reconciliation schedule. The company believes that
EBITDA is a meaningful measure of performance as it is commonly
utilized in the industry to analyze operating performance. EBITDA
should not be construed as income from operations, net income
(loss) or cash flow from operating activities as determined by
generally accepted accounting principles. Other companies may
calculate EBITDA differently.
Completion of Previously Announced
Audit Committee Inquiry
The company's Audit Committee inquiry into certain assertions made
by two former executives and related matters has been completed.
The Audit Committee's inquiry extended into the following areas:
(1) assertions regarding the company's accounting for revenue
and tooling,
(2) a comprehensive review of related party transactions and
(3) certain corporate governance procedures.
The primary findings of the Audit Committee include that
(1) it did not become aware of any events that would
necessitate a restatement of any previously issued
financial statements and
(2) that all related party transactions had a legitimate
business purpose, were negotiated fairly, and were
intended to advance the interests of the company and not
to benefit the related parties at the company's expense.
The Audit Committee, however, has made certain corporate
governance and disclosure recommendations concerning related party
transactions.
The company intends to file amended Quarterly Reports on Form 10-Q
for the quarters ended June 30, 2003 and September 30, 2003, to
reflect the conclusion of the Audit Committee's inquiry and its
recommendations, but, as indicated above, no restatement of any
previously issued financial statements is required or being made.
The 2003 Form 10-K is expected to include audited financial
statements and the required CEO and CFO certifications under
Sarbanes-Oxley.
The members of the company's Audit Committee are Robert C. Clark,
the former Dean of the Harvard Law School, Marshall A. Cohen,
counsel at Cassels Brock and Blackwell, a Canadian law firm, and
former Senator Warren B. Rudman. The Audit Committee was advised
by Davis Polk & Wardwell and an accounting expert, Alex Arcady, a
retired partner from Ernst & Young LLP.
Commenting upon the completion of the Audit Committee's work,
which began in August 2003, Mr. Stockman said, "The company is
deeply grateful to the members of the Audit Committee and its
advisors for their tireless work in examining these matters."
2004 Outlook
We estimate net sales for the full year 2004 will be $4 billion to
$4.05 billion based on a 16.2 million NAFTA vehicle build and we
expect operating income to be in the $225 million to $240 million
range for 2004. EBITDA is expected to be in the $355 million to
$370 million range. We anticipate that in 2004 net earnings will
range between a breakeven and 10 cents per common share. All of
these numbers exclude the impacts of any future restructuring or
impairment charges. Capital spending is expected to be in the $145
million to $155 million range for 2004.
FASB Interpretation No. 46
The company is currently evaluating whether the recently revised
FASB Interpretation No. 46, "Consolidation of Variable Interest
Entities," applies to certain of the company's previously-
disclosed operating leases with a related party. The financial
information contained in this release has been presented on the
basis that FIN 46 is not applicable in this instance, but the
company's Annual Report on Form 10-K will reflect its ultimate
conclusion on this issue. Management believes that, if FIN 46 is
applicable, the resulting implementation will not have a material
effect on the company's financial statements.
About the Company
Collins & Aikman Corporation is a leading global supplier of
automotive interior components and systems, including: instrument
panels, cockpit modules, flooring and acoustic systems, automotive
fabric, and interior trim, as well as exterior trim and
convertible roof systems. The company's current operations include
15 countries, more than 100 facilities and nearly 24,000
employees. Information about Collins & Aikman is available on the
Internet at http://www.collinsaikman.com/
* * *
As reported in the Troubled Company Reporter's February 20, 2004
edition, Standard & Poor's Ratings Services assigned its 'B+'
rating to Troy, Michigan-based Collins & Aikman Products Co.'s new
$185 million senior secured tranche A-1 term loan, guaranteed by
parent Collins & Aikman Corp. (B+/Negative/--), and assigned a '3'
recovery rating to the facility.
The 'B+' rating is at the same level as the parent's corporate
credit rating; this and the '3' recovery rating indicate a
meaningful (50%-80%) expectation of recovery of principal in the
event of a default. The corporate credit and other ratings of
Collins & Aikman were affirmed. The rating outlook is negative.
"The ratings on Collins & Aikman reflect its exposure to the
highly competitive and cyclical automotive supply industry and a
weak financial profile, partially mitigated by strong market
positions for its products," said Standard & Poor's credit analyst
Martin King.
CONGOLEUM CORPORATION: Sales Fell & Losses Narrowed in 2003
-----------------------------------------------------------
Congoleum Corporation (AMEX:CGM) reported its financial results
for year ended December 31, 2003. Sales for the year ended
December 31, 2003 were $220.7 million, a decrease of 7.0% compared
to the $237.2 million reported in 2002. The net loss for 2003 was
$6.8 million, which included a previously announced $3.7 million
pre-tax charge for asbestos liabilities, compared with a loss of
$29.8 million in 2002. The 2002 loss included a $17.3 million
charge for asbestos liabilities and a $10.5 million non-cash
goodwill impairment charge. The net loss per share in 2003 was
$.82, compared to $3.60 in 2002.
Roger S. Marcus, Chairman of the Board, commented "There are five
major factors that caused our disappointing performance in 2003.
First, due to delays in finalizing our pre-packaged reorganization
plan, we recorded a $3.7 million asbestos-related charge for the
legal fees and other costs to complete the reorganization process.
Second, further declines in the manufactured housing industry from
2002 resulted in $4 million less sales and a substantial loss of
profit contribution. Third, we experienced substantial increases
in difficult to control costs for medical and pension benefits,
energy, and insurance; these costs increased an aggregate $3.5
million over 2002. Fourth, sales of tile to the home center
channel dropped sharply in 2003 due to the previously announced
loss of a major chain's business. Finally, both Congoleum and its
largest customer reduced inventories significantly during 2003,
which hurt gross margin and manufacturing efficiency."
Mr. Marcus continued "We took a number of steps during 2003 to
mitigate these factors and improve both profitability and
liquidity in 2004. We reduced our workforce by 146 people or 14%,
for a savings of over $7 million, the majority of which will be
realized in 2004. We instituted manufacturing waste reduction
initiatives saving $3.5 million and took steps to cut operating
expenses by $3 million, also with the bulk of the savings to be
achieved in 2004. Finally, we instituted a 3% price increase in
the fourth quarter of 2003 to help offset inflation in benefits,
energy, and certain raw materials."
"Based on the actions we have taken to reduce our cost structure,
we are optimistic that our results in 2004 will be significantly
better than 2003. Our reorganization is now progressing on
schedule and we believe we have made adequate provision for the
cost of its completion. It appears the manufactured housing market
may have at last bottomed out, and any growth in that industry
would further help our 2004 performance. Finally, we are
developing a major new sheet product, to be introduced in the
second half of 2004, which we believe will be the best in the
industry."
During 2003, Congoleum elected to pursue a pre-packaged bankruptcy
proceeding as a means to resolve claims asserted against it
related to the use of asbestos in its products decades ago and
obtained the asbestos claimant votes necessary for approval of its
proposed plan of reorganization. On December 31, 2003, Congoleum
Corporation filed a voluntary petition with the United States
Bankruptcy Court for the District of New Jersey (Case No. 03-
51524) seeking relief under Chapter 11 of the United States
Bankruptcy Code. The Bankruptcy Court has issued a final financing
order approving its Debtor-in-Possession revolving credit
facility. The court has also authorized Congoleum to pay its
suppliers in the ordinary course of business for amounts owed on
account of goods and services supplied prior to the bankruptcy
filing. Congoleum has filed its plan of reorganization and
disclosure statement with the court and is seeking confirmation of
the plan as promptly as possible.
Congoleum Corporation is a leading manufacturer of resilient
flooring, serving both residential and commercial markets. Its
sheet, tile and plank products are available in a wide variety of
designs and colors, and are used in remodeling, manufactured
housing, new construction and commercial applications. The
Congoleum brand name is recognized and trusted by consumers as
representing a company that has been supplying attractive and
durable flooring products for over a century. Congoleum is a 55%
owned subsidiary of American Biltrite Inc. (AMEX:ABL).
CONMACO/RECTOR: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Conmaco/Rector L.P.
1602 Engineers Road
Belle Chasse, Louisiana 70037
Bankruptcy Case No.: 04-11248
Type of Business: The Debtor's sell and rent new and used
construction and industrial equipment, primarily
cranes and specialized lift equipment,
complementary parts and related merchandise to a
wide variety of construction and industrial
customers. See http://www.conmaco.com/
Chapter 11 Petition Date: February 27, 2004
Court: Eastern District of Louisiana (New Orleans)
Judge: Jerry A. Brown
Debtor's Counsels: Stewart F. Peck, Esq.
Christopher T. Caplinger, Esq.
Lugenbuhl, Wheaton, Peck, Rankin & Hubbard, LC
601 Poydras Street, Suite 2775
New Orleans, LA 70130
Tel: 504-568-1990
Fax: 504-529-7418
- and -
Richard W. Ward, Esq.
2527 Fairmont Street
Dallas, TX 75201
Tel: 214-220-2402
Fax: 214-871-2682
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $10 Million to $50 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
American Crane Corp. $980,944
4751 Collections Center Drive
Chicago, IL 60693
Hydralift Amclyde $117,648
Crocker Crane Company $46,500
Gulf States Engineering Co. $20,947
Allied BRG & Supply $16,374
Masthead Hose & Supply $11,982
Pipkins Investigation Co. $10,550
Skillet & Sons, Inc. $10,019
B&B Hose & Rubber Co. $9,985
Terex Corp. $9,800
Specialized Carriers $9,535
Keith's Diesel & Comp. Svc. $8,080
Automotive Rentals $8,021
Scot Forge Co. $7,829
Craft Industrial $7,600
Sharp and Company $6,000
Payne & Blanchard LLP $5,709
Stony's Trucking Co. $5,354
Four Seasons Equipment, Inc. $5,159
Adams & Reese $5,070
CONSECO INC: Reorganized Company Publishes 2003 Financial Results
-----------------------------------------------------------------
Conseco, Inc. (NYSE:CNO) reported financial results for the
quarter and year ended December 31, 2003. The company emerged from
Chapter 11 bankruptcy on September 10, 2003. Results for periods
following our emergence from Chapter 11 reflect fresh-start
accounting adjustments as required by generally accepted
accounting principles ("GAAP").
Operating results
For the quarter ended December 31, 2003 Conseco reported net
income (after dividends on convertible exchangeable preferred
stock) of $49.6 million, or 49 cents per diluted common share.
Results for the quarter included net after-tax gains of $0.8
million from realized investment gains and venture capital losses.
For the four months ended December 31, 2003 net income (after
dividends on convertible exchangeable preferred stock) totaled
$68.5 million, or 67 cents per diluted share. Results for the
four-month period included net after-tax gains of $3.4 million
from realized investment gains and venture capital losses.
As previously reported, the predecessor company reported net
income for the eight months ended August 31, 2003 of $2,201.7
million, which included a gain related to the company's emergence
from bankruptcy of $2,130.5 million.
Earnings Guidance and Outlook
Conseco reaffirmed its previously reported guidance of expected
net income applicable to common stock for the 12 months beginning
October 1, 2003 of $175 million to $200 million. Our earnings
guidance assumes that market conditions for our investment
portfolio do not differ significantly in future periods from
current conditions. If investment market conditions change and we
realize investment gains or losses, our actual earnings could
differ materially from our estimates. Our earnings guidance is
based on numerous other assumptions and factors. If they prove
incorrect, our actual earnings could differ materially from our
estimates (see note on forward-looking statements below). Our
guidance excludes any impact from the proposed refinancing of our
current capital structure described in our Form S-1 Registration
Statement filed on January 29, 2004.
Comments from CEO Bill Shea
"We are continuing to build the foundation for sustainable growth
by focusing on the factors that are most important in achieving
our number one business objective - improved ratings for our
insurance companies:
-- Combined statutory earnings (loss) (a non-GAAP measure)
totaled $286.1 million and $(465.0) million in 2003 and 2002,
respectively. Included in such earnings (loss) are net
realized capital gains (losses), net of income taxes, of
$32.8 million and $(516.1) million in 2003 and 2002,
respectively. The 2003 statutory results included several
positive income items resulting from the sale of the General
Motors Building in the third quarter, as well as expense
reductions and other operating improvements.
-- Combined statutory capital and surplus (a non-GAAP measure)
at December 31, 2003, was $1.5 billion, up from $1.1 billion
at year-end 2002.
-- Combined risk-based capital (RBC) ratio (a non-GAAP measure)
was 287% at December 31, 2003, up from 166% at year-end 2002.
"Our new annualized premium sales of supplemental health and life
products for the fourth quarter were in line with our operating
plan and totaled $43 million at Bankers Life and $29 million at
Conseco Insurance Group. First year annuity deposits for the
quarter were $190 million and $5 million at Bankers Life and
Conseco Insurance Group, respectively.
"Despite low ratings and our decisions to discontinue or curtail
sales in certain products in order to conserve capital coming out
of bankruptcy, collected premiums in our core products have been
relatively stable.
"Our other major goals for 2004 are to reduce our capital cost,
strengthen our balance sheet and improve our execution on the
basics of our business by:
-- Further reducing operating expenses and improving the
efficiency of our operations across all business functions.
-- Continuing our focus on the acquired blocks of long-term care
business in the Other Business in Run-off segment. This
business performed within our expectations for the quarter,
thanks to the work of the team we have dedicated to managing
its runoff.
-- Consolidating and streamlining our back-office systems to
reduce complexity, lower our costs and improve customer
service.
-- Expanding our career agent segment (Bankers Life) into new
geographic markets.
"Throughout Conseco, our 4,350 managers and associates are
stepping forward to take part in these and other key initiatives
designed to make Conseco leaner, more focused, more competitive,
and more responsive to the marketplace. In the process, we're also
trying to make Conseco a great place to work. We are beginning to
build the path that leads to greater employee engagement, then to
greater customer engagement and then to better Conseco business
outcomes. We have much to do, but I am proud of our people and our
progress to date."
About Conseco
Conseco, Inc.'s insurance companies help protect working American
families and seniors from financial adversity: Medicare
supplement, long-term care, cancer, heart/stroke and accident
policies protect people against major unplanned expenses;
annuities and life insurance products help people plan for their
financial future. For more information, visit Conseco's web site
at http://www.conseco.com/
CORBAN COMM INC: Case Summary & 35 Largest Unsecured Creditors
--------------------------------------------------------------
Lead Debtor: Corban Communications, Inc.
901 Jupiter Road
Plano, Texas 75074
Bankruptcy Case No.: 04-32972
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Colorado 4-19 Network, Inc. 04-32974
Type of Business: The Debtor is a carrier-neutral network
services provider with products such as, Point
to Point Interconnect and Transport for TDM
and IP networks. See http://corbancom.com/
Chapter 11 Petition Date: March 11, 2004
Court: Northern District of Texas (Dallas)
Judge: Steven A. Felsenthal
Debtors' Counsel: Judith Weaver Ross, Esq.
Baker Botts LLP
2001 Ross Avenue
Dallas, TX 75201-2980
Tel: 214-953-6605
Fax: 214-661-4605
Estimated Assets Estimated Debts
---------------- ---------------
Corban Communications, Inc. $10 M to $50 M $10 M to $50 M
Colorado 4-19 Network, Inc. $10 M to $50 M $1 M to $10 M
A. Corban Communications, Inc.'s 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
SBC Trade Debt $260,270
Southwestern Bell
P.O. Box 650502
Dallas, TX 75265-0502
Electric Lightwave, Inc. Trade Debt $112,224
Dallas County Tax $63,563
Thompson & Knight Legal $56,272
Guardian Life Insurance Co. Group Insurance $52,636
Westgate Condominum Assoc. Electrical and $45,044
Association Fees
AT & T Trade Debt $40,931
Strawberry Square Dev Corpra Rent $36,625
Voyager Fleet Systems Gasoline $35,660
Lend Lease BSF-III Rent $33,047
Dennis Trescott Rent $29,263
Texas Moving Co. Inc. Trade Debt $27,798
770 "L" Street Investment Rent $26,181
Group
Telecom, Inc. Trade Debt $23,388
Global Crossing Trade Debt $23,089
Heyburn Partnership Rent $19,870
TXU Electric $19,422
UUNET Trade Debt $19,102
TrizecHahn Rent $18,393
Sixth & Virginia Properties Rent $17,269
B. Colorado 4-19 Network, Inc.'s 15 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
360 Networks (USA) Inc. Trade Debt $244,721
Qwest Trade Debt $167,778
Level 3 Communications, LLC Trade Debt $120,281
Touch America Trade Debt $91,126
Nortel Networks, Inc. Trade Debt $54,142
Telmar Network Tech. Trade Debt $24,172
Sprint Local Trade Debt $7,989
Telecommunication
Michael Jewett Trade Debt $6,080
AT & T Trade Debt $5,400
Electric Lightwave Trade Debt $4,426
Sunbelt Telecommunications, Trade Debt $2,803
Inc.
PICS Telecom Corp. Trade Debt $1,432
Shook, Hardy & Bacon LLP Trade Debt $946
Director of Revenue Tax $45
Secretary of State-Iowa Tax $30
COVENTRY HEALTH: FMR Corp., et al., Disclose 5.011% Equity Stake
----------------------------------------------------------------
FMR Corp., Edward C. Johnson 3d and Abigail P. Johnson
beneficially own 3,010,550 shares of the common stock of Coventry
Health Care, Inc., representing 5.011% of the outstanding common
stock of Coventry Health Care.
FMR Corp. has sole power to vote, or to direct the voting of,
854,650 shares of the stock and the three, FMR, Mr. Johnson and
Ms. Johnson hold sole dispositive powers over the entire amount of
stock held.
Coventry Health Care (A.M. Best, bb+ Senior Unsecured Debt Rating)
is a managed health care company based in Bethesda, Maryland
operating health plans and insurance companies under the names
Altius Health Plans, Coventry Health Care, Coventry Health and
Life, Carelink Health Plans, Group Health Plan, HealthAmerica,
HealthAssurance, HealthCare USA, PersonalCare, SouthCare, Southern
Health and WellPath. The Company provides a full range of managed
care products and services, including HMO, PPO, POS,
Medicare+Choice, Medicaid, and Network Rental to 3.1 million
members in a broad cross section of employer and government-funded
groups in 14 markets throughout the Midwest, Mid-Atlantic and
Southeast United States. More information is available on the
Internet at http://www.cvty.com/
DENBURY RESOURCES: S&P Affirms Rating & Revises Outlook to Stable
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirms its 'BB-' corporate
credit rating on Denbury Resources Inc. and revised its outlook on
the company to positive from stable.
As of Dec. 31, 2003, Dallas, Texas-based Denbury had about $300
million in outstanding debt.
"The positive outlook reflects expectations that ratings could be
raised in the next one to three years if Denbury continues to
exhibit meaningful production increases from the company's
tertiary recovery play in Mississippi," said Standard & Poor's
credit analyst Steven Nocar.
"Simultaneous with these production increases, Denbury must
continue to operate with similar or lower leverage than in the
past," continued Mr. Nocar.
Standard & Poor's also said that it assumes that Denbury will
maintain its disciplined financial policies, which includes
financing acquisitions in a manner that preserves its moderating
leverage.
In recent years, Denbury has been able to achieve strong rates of
return on investment and production increases in its tertiary
operations in Mississippi and the company is eyeing increasing its
capital allocation there.
Standard & Poor's views as positive the company's decision to hire
Credit Suisse First Boston to assist in the sale of its short-
lived, lower-returning assets in the Gulf of Mexico, with proceeds
likely being used to retire debt in the short term.
Over the long term, Standard & Poor's expects that Denbury will
acquire and develop additional fields in Mississippi for its
tertiary operations. Standard & Poor's views this potential asset
swap as prudent as Denbury ultimately is likely to have stronger
rates of return and equivalent or lower debt leverage.
DIAMETRICS MEDICAL: December 2003 Deficit Tops $5.9 Million
-----------------------------------------------------------
Diametrics Medical, Inc. (OTCBB:DMED) announced operating results
for the fourth quarter and year ended December 31, 2003. The
fourth quarter was the first quarter of operations without the
intermittent blood testing business that was sold on September 29,
2003. Continuing operations consist of the continuous blood and
tissue monitoring business.
Net revenue from continuing operations for the fourth quarter of
2003 totaled $864,000 compared with $465,000 for the fourth
quarter last year. The Company's net loss from continuing
operations was $2,613,000 for the fourth quarter compared with a
$2,005,000 net loss for the same period last year. Discontinued
operations of the Company's intermittent testing business showed a
net loss of $1,161,000 for the fourth quarter of 2002 resulting in
an aggregate net loss of $3,166,000 for that quarter. The 86%
increase in fourth quarter revenue over the prior year reflects
the impact of selling through a direct sales force and key
distributors after termination of the Company's exclusive
distribution agreement with Philips Medical Systems on November 1,
2002. The increased net loss from continuing operations resulted
from increases in various costs and expenses as the Company
restructured its operations in 2003 to focus exclusively on the
continuous monitoring business.
For the year ended December 31, 2003, revenue from continuing
operations was $3,083,000 compared with $6,370,000 for the year
ended December 31, 2002. The net loss before discontinued
operations was $8,240,000 in 2003 and $5,667,000 in 2002. The net
loss attributable to common shareholders for 2003 was $9,438,000,
or $.35 per share, after a non-cash deemed dividend on the
Company's Series E preferred stock. The deemed dividend resulted
from a beneficial conversion feature of that offering. The net
loss attributable to common shareholders for 2002 was $7,531,000,
or $.28 per share.
"Significant changes have occurred at Diametrics Medical, Inc.
during the past year and I am pleased with the progress we have
made," remarked David B. Kaysen, President and CEO. "We sold the
intermittent blood testing business in September 2003 and are now
focused on reinvigorating the continuous monitoring business. Our
fourth quarter results show improvement as we focus on this
business," he went on to say. "Our short-term challenges are
clear. We need to raise additional funds by mid 2004 to assure
continued operations. At the same time we need to gain market
acceptance and finalize sales of both systems and sensors at an
accelerated rate. We believe we are up to the challenge."
At December 31, 2003, Diametrics Medical Inc.'s balance sheet
shows a shareholders' equity deficit of $5,870,576
About The Company
Diametrics Medical, Inc. develops, manufactures and distributes
blood and tissue monitoring systems that provide continuous
diagnostic information at the point-of-patient care. The Company
believes that use of its systems will result in more timely
decisions by providing accurate and continuous test results at the
patient's bedside, thereby reducing the time spent in critical
care settings.
DOANE PET CARE: Reports 2003 Losses & Senior Bank Loan Amendment
----------------------------------------------------------------
Doane Pet Care Company reported results for its fourth quarter and
fiscal year ended January 3, 2004.
Quarterly Results
For the fourth quarter of fiscal 2003, the Company's net sales
increased 11.8% to $275.7 million from $246.6 million in the
fourth quarter of fiscal 2002. This increase was primarily due to
sales volume growth and the favorable currency exchange rate
between the dollar and the Euro. The 2003 fourth quarter sales
volume growth also benefited from an extra week when compared to
the 2002 fourth quarter. Excluding only the foreign currency
exchange rate impact from fiscal 2003, net sales increased 7.1%;
whereas, excluding only the benefit of an extra week from fiscal
2003, net sales increased 5.7%. Excluding both the positive impact
of foreign currency exchange rate and the extra week, net sales
increased 1.0%.
The Company reported a net loss of $32.5 million for its 2003
fourth quarter compared to a net loss of $1.1 million for the 2002
fourth quarter. The Company's performance in the 2003 fourth
quarter was adversely impacted by significantly higher commodity
and natural gas costs. The 2003 fourth quarter net loss was
moderated by SFAS 133 fair value accounting for the Company's
commodity derivative instruments, which resulted in a $3.6 million
reduction in cost of goods sold in the 2003 period compared to an
$8.2 million increase in cost of goods sold in the 2002 period, or
an $11.8 million period-over- period favorable impact on operating
results.
The 2003 fourth quarter performance was also impacted by certain
charges including $7.2 million in other operating expenses,
primarily resulting from non-cash asset impairments related to the
consolidation of the Company's European manufacturing operations
and the divestiture of its Russian joint venture. In addition, the
Company incurred $19.0 million of non-cash income tax expense,
principally to reflect the uncertainty concerning the Company's
ability to realize net operating loss carryforwards.
Net cash provided by operating activities was $22.0 million for
the 2003 fourth quarter compared to $7.4 million for the 2002
fourth quarter. This increase was primarily due to a favorable
change in working capital, partially offset by the decline in net
income (loss) as a result of higher commodity and natural gas
costs. The favorable change in working capital was primarily due
to reaching improved payment terms with certain customers.
Adjusted EBITDA was $15.8 million in the 2003 fourth quarter
compared to $29.3 million recorded in the 2002 fourth quarter,
primarily due to higher commodity and natural gas costs in the
2003 period.
The Company believes cash flows from operating activities is the
most directly comparable GAAP financial measure to the non-GAAP
Adjusted EBITDA liquidity measure typically reported in its
earnings releases. The calculation of Adjusted EBITDA is explained
below in the section titled "Adjusted EBITDA Supplemental
Information."
Doug Cahill, the Company's President and CEO, said, "We had a
solid year in terms of top-line growth and our manufacturing and
customer satisfaction teams met or exceeded our performance
targets for the year. Moreover, while reported results were
impacted by significantly higher commodity and natural gas costs
as well as non-cash charges, we were able to post strong operating
cash flow due in part to our negotiating improved payment terms
with certain customers. However, despite this strong operating
performance, we were unable to offset the impact of the higher
commodity and natural gas costs.
As a result, in January 2004, we implemented a broad price
increase of approximately 7.5% to 9.5% for most of our domestic
products. In addition, we have reached cost-sharing arrangements
for 2004 that in the aggregate will enable us to pass through to
our domestic customers approximately half of future commodity
movements, whether up or down. This will allow us to better manage
our financial performance while protecting our customers' brands
as we move through the commodity market cycles."
Year to Date Results
For the full year fiscal 2003, the Company's net sales increased
14.3%, to $1,013.9 million from $887.3 million in fiscal 2002. The
fiscal 2003 sales increase was primarily due to sales volume
growth and the favorable currency exchange rate between the dollar
and the Euro. Fiscal 2003 sales volume growth also benefited from
an extra week in the 2003 fiscal period compared to the 2002
period. Excluding only the foreign currency exchange rate impact
from fiscal 2003, net sales increased 9.5%; whereas, excluding
only the benefit of the extra week of sales from fiscal 2003, net
sales increased 12.6%. Excluding both the positive impact of
foreign currency exchange rate and the extra week, net sales
increased 7.8%.
The Company reported a net loss of $54.4 million for fiscal 2003
compared to net income of $15.3 million for fiscal 2002. The
positive benefit on performance from higher sales volume in fiscal
2003 was more than offset by higher commodity and natural gas
costs. Fiscal 2003 results also included a non-cash charge of
$12.1 million associated with the Company's debt refinancing in
addition to the $7.2 million primarily for non-cash asset
impairment charges discussed above. In addition, the Company
incurred non- cash income tax expense of $23.6 million,
principally to reflect the uncertainty concerning the Company's
ability to realize net operating loss carryforwards.
Net cash provided by operating activities was $55.7 million for
fiscal 2003 compared to $78.8 million for fiscal 2002. This
decrease was primarily due to the impact of higher commodity and
natural gas costs on net income (loss), partially offset by
favorable changes in working capital. The favorable working
capital change resulted from improved payment terms with certain
customers in fiscal 2003.
Adjusted EBITDA was $80.8 million for fiscal 2003 compared to
$108.2 million in fiscal 2002. Higher sales volume in fiscal 2003
was more than offset by higher commodity and natural gas costs, as
discussed above.
Senior Credit Facility Amendment
On March 9, 2004, the Company completed an amendment to its
existing senior credit facility to, among other things, extend the
maturity of the existing revolving credit facility from March 31,
2005 to December 29, 2005; simplify its financial covenants to
include only minimum consolidated Adjusted EBITDA, a senior
secured leverage test and capital expenditure limits; reduce the
borrowing capacity under the revolving credit facility from $60
million to $50 million; waive the non-compliance with financial
covenants as of the end of fiscal 2003; and to increase the
interest rates on all facilities by 25 basis points as of March 9,
2004, an additional 25 basis points on all facilities on September
30, 2004, and a final 100 basis points on all facilities on March
31, 2005.
Doane Pet Care's lending consortium is comprised of:
Lender Commitment
------ ----------
JPMorgan Chase Bank $4,857,143.50
Banc of America Strategic Solutions, Inc. 3,488,095.17
Bank of America, N.A. 83,333.33
Harris Trust & Savings Bank 5,714,285.71
Firstrust Bank 2,142,857.00
Fleet National Bank 5,142,857.00
General Electric Capital Corporation 4,285,714.23
Archimedes Funding III, Ltd. 904,761.83
Nemean CLO, Ltd. 2,666,666.67
Master Senior Floating Rate Trust 3,571,428.50
Oak Hill Credit Partners III, Limited 4,285,714.23
Addison CDO, Limited 1,852,590.45
Delano Company 1,149,128.73
Royalton Company 569,709.32
U.S. Bank National Association 5,714,285.83
Van Kampen CLO I, Limited 522,921.63
Van Kampen Senior Income Trust 1,524,253.43
Van Kampen Senior Loan Fund 1,524,253.43
--------------
Total $50,000,000.00
2004 Outlook
Cahill said, "The greatest challenge we face in 2004 will continue
to be the uncertainty surrounding commodity costs. We will
continue to monitor and respond to escalating commodities markets.
For example, because of continued increases in commodity costs, we
are announcing an additional price increase that will take effect
during the second quarter of fiscal 2004. Further increases in
commodity costs may necessitate additional price increases.
Additionally, in 2004 our major goals are to:
- with the exception of medical and natural gas costs, keep
flat as a percent of our sales, manufacturing, packaging,
promotion and distribution, and selling, general and
administrative costs;
- maintain our working capital at lower than historical levels;
- keep capital expenditures flat at $25 million, with
approximately $10 million to $12 million required for
maintenance of business and the remainder required for
customer requirements, cost reduction projects and planned
expansions; and
- consolidate the European operations spending $5 million for
severance and installation expenses to generate annualized
savings estimated to be $3 million to $4 million as a result
of lower labor and administrative costs and other operating
efficiencies.
However, due to the instability in the commodities markets, the
Company does not believe it is prudent to provide further guidance
on cash flow from operating activities or Adjusted EBITDA levels.
Nonetheless, we remain cautious in our outlook for both top-line
growth and bottom-line performance. It is much too early in the
U.S. growing season to estimate crop yields for soybeans and corn.
Moreover, the BSE case reported in the U.S. late last year has
resulted in uncertainty in our sales outlook for 2004 because of
the current prohibition on all pet food exported from the U.S. to
Mexico as a result of this BSE case. Sales to Mexico approximate
3.5% of our total sales and we are cautiously optimistic that
trade will resume in April; however, a prolonged delay could
impact our 2004 results."
About the Company
Doane Pet Care Company, based in Brentwood, Tennessee, is the
largest manufacturer of private label pet food and the second
largest manufacturer of dry pet food overall in the United States.
The Company sells to approximately 600 customers around the world
and serves many of the top pet food retailers in the United
States, Europe and Japan. The Company offers its customers a full
range of pet food products for both dogs and cats, including dry,
semi- moist, wet, treats and dog biscuits.
* * *
As reported in the Troubled Company Reporter's November 6, 2003
edition, Standard & Poor's Ratings Services lowered its corporate
creditand senior secured debt ratings on pet food manufacturer
Doane Pet Care Co. to 'B-' from 'B'. Standard & Poor's also
lowered the senior unsecured and subordinated debt ratings on
Doane to 'CCC' from 'CCC+'.
The outlook is negative.
The downgrade follows Doane's recent announcement after its 2003
third-quarter financial results that, due to substantially higher
than expected commodity costs, which continue to increase at
unprecedented rates, management will not forecast 2003 fourth-
quarter and full-year adjusted EBITDA and operating cash flows.
While Doane met its third-quarter bank financial covenants,
pricing flexibility remained limited and raw material costs have
soared higher despite the company's past hedging efforts. Standard
& Poor's is very concerned about Doane's ability to improve its
financial performance and cash flows in the near term sufficiently
to meet its credit facility's financial covenants in the fourth
quarter of 2003.
DOW CORNING: Commercial Creditors Want Their 24% Cash Distribution
------------------------------------------------------------------
Dow Corning Corporation will be better off paying its commercial
creditors now, the Company's Official Committee of Unsecured
Creditors tells Judge Hood, because those claims accrue interest
at 6.28% compounded annually, which is well above prevailing
market rates.
Dow Corning owes its commercial creditors more than $1 billion and
commercial creditors have now waited nearly nine years for
payment. Judge Spector confirmed the company's Plan of
Reorganization more than four years ago. That plan earmarks
$315.6 million of cash, returning a 24% dividend, plus a basket of
new notes for the balance due and accrued post-petition interest,
to satisfy those claims. The Official Committee says Class 4 and
other similarly-situated unsecured creditors have waited long
enough for the cash. The wait is especially painful, Michael S.
Flynn, Esq., at Davis Polk & Wardwell relates, because Dow Corning
is wildly solvent and sits on more than $1 billion of cash and
marketable securities.
Dow Corning -- http://www.dowcorning.com-- provides performance-
enhancing solutions to serve the diverse needs of more than 25,000
customers worldwide. A global leader in silicon-based technology
and innovation, offering more than 7,000 products and services,
Dow Corning is equally owned by The Dow Chemical Company (NYSE:
DOW) and Corning, Incorporated (NYSE: GLW). More than half of
Dow Corning's annual sales are outside the United States.
Dow Corning filed for chapter 11 protection on May 15, 1995
(Bankr. E.D. Mich. Case No. 95-20512), to resolve silicone
implant-related tort liability. Judge Spector confirmed Dow
Corning's Plan of Reorganization in the bankruptcy court nearly
four years ago. Judge Hood in the U.S. District Court for the
Eastern District of Michigan now presides over Dow Corning's
chapter 11 cases. Four appeals from the Dow Corning's bankruptcy
cases remain to be resolved in the District Court or by the United
States Court of Appeals for the Sixth Circuit.
DT INDUSTRIES: Mulls Possible Sale as Lenders Won't Waive Defaults
------------------------------------------------------------------
DT Industries, Inc. (Nasdaq: DTII), an engineering-driven
designer, manufacturer and integrator of automated systems and
related equipment used to assemble, test or package industrial and
consumer products, has completed the sale of substantially all of
the assets of its Packaging Systems division to Nova Packaging
Systems, Inc. and Swiftpack Automation UK Limited. The Company
used the net cash proceeds from the sale of approximately $10.46
million to reduce outstanding debt under its senior credit
facility.
As previously reported, the Company is currently in default under
its senior credit facility due to its failure to make principal
payments of approximately $2.7 million due on December 31, 2003
(which payments have since been made) and is currently in
violation of minimum net worth and EBITDA covenants under the
credit facility. The Company has requested a forbearance agreement
from its senior lenders for these defaults, but its senior lenders
have neither waived the defaults nor issued a forbearance from
accelerating payment under the credit facility. The credit
facility matures on July 2, 2004 and, to date, the Company's
senior lenders have not indicated a willingness to extend the
facility beyond that date and the Company and its senior lenders
have been unable to agree upon the terms of any third-party
financing to replace the credit facility.
With this in mind, the Company has engaged the services of
Houlihan, Lokey, Howard & Zukin as an advisor to explore the sale
of the Company, its remaining businesses (Detroit Tool and
Engineering Company and DT Assembly and Test) and/or a
recapitalization of the Company. Pending any such transaction, the
Company intends to continue operating its remaining businesses,
engage in further discussions with its senior lenders to extend
the senior credit facility and explore refinancing alternatives to
replace the credit facility.
On March 4, 2004, the Company reached a settlement with the
Securities and Exchange Commission of the previously disclosed
investigation of the accounting practices at its former Kalish and
Sencorp facilities that led to the restatements of the Company's
consolidated financial statements for fiscal years 1997, 1998 and
1999 and the first three quarters of fiscal 2000, as well as the
issues at the Company's former Assembly Machines, Inc. facility
that led to the accounting adjustments to the Company's previously
reported audited consolidated financial results for the fiscal
years 2001, 2000 and 1999 and the first three quarters of fiscal
2002. Pursuant to the settlement, and without admitting or denying
the Commission's allegations, the Company consented to the entry
of an administrative cease- and-desist order requiring it to cease
and desist from committing or causing any violations of certain
reporting, record-keeping and internal control provisions of the
federal securities laws. The settlement did not include a finding
of any violations of the anti-fraud provisions of the federal
securities laws by the Company and did not require the payment of
a monetary penalty or fine. The Commission also filed a complaint
in the United States District Court for the Western District of
Missouri against four former employees of Sencorp, Kalish and
Assembly Machines, Inc. alleging violations of certain provisions
of the federal securities laws in connection with the foregoing.
ELIZABETH ARDEN: Reports Improved Sales & Income for Q4 2004
------------------------------------------------------------
Elizabeth Arden, Inc. (NASDAQ: RDEN), a global prestige fragrance
and beauty products company, reported results for the fourth
quarter and fiscal year ended January 31, 2004.
FOURTH QUARTER RESULTS
Net sales for the fourth quarter of fiscal 2004 rose 26% to $213.9
million compared with $169.8 million for the same period of the
prior fiscal year. Excluding the impact of foreign currency
translation, net sales increased 20.5%.
The increase in net sales was driven by the success of new product
launches, including the skin care products Ceramide Plump Perfect,
Overnight Success and the latest Elizabeth Arden fragrance Red
Door Revealed, increased market share of prestige fragrances in
U.S. mass retail and favorable foreign currency translation. In
addition, the net sales increase reflects a shift in promotional
and innovation activities between the Company's third and fourth
fiscal quarters as compared to the prior year. Gross margin
expanded to 44.2% from 40.0% reflecting improved leveraging of
supply chain and distribution costs and promotional activities.
Income from operations, excluding restructuring charges related to
the consolidation of its U.S. distribution facilities, increased
to $25.1 million from $8.8 million in the comparable period last
year.
Fourth quarter net income increased to $11.3 million, or $0.39 per
fully diluted share, compared with a net loss attributable to
common shareholders of $0.4 million, or $0.02 per share, for the
prior year period. The results for the fourth quarter of fiscal
2004 exclude debt extinguishment charges associated with
refinancing activities as well as restructuring charges, net of
related tax benefits. On a reported basis for the quarter, net
loss attributable to common shareholders was $11.6 million, or
$0.48 per share. During the fourth quarter of fiscal 2004, the
Company completed a new issue of $225.0 million aggregate
principal amount of 7 3/4% Senior Subordinated Notes due 2014,
redeemed $151.2 million aggregate principal amount of its 11 3/4%
Notes and $40.0 million aggregate principal amount of its 10 3/8%
Notes, and called for redemption the remaining $84.3 million
aggregate principal amount of its 10 3/8% Notes, which were
redeemed in February 2004. As a result of its improved balance
sheet, the Company and its banks amended the Company's revolving
credit facility in March 2004 resulting in lower borrowing costs.
FISCAL 2004 RESULTS
Net sales for the fiscal year increased 8.3% to $814.4 million,
compared with net sales of $752.0 million in fiscal 2003,
exceeding the Company's previous estimate for net sales between
$790 million to $805 million. Excluding the impact of foreign
currency translation, net sales increased 4.3%. Cash flow from
operations increased 60.1% to $45.8 million due to higher
earnings, lower interest expense and strong working capital
management.
Full year net income increased 34.6% to $24.5 million, or $0.97
per fully diluted share, compared with $18.2 million, or $0.78 per
fully diluted share, for the prior fiscal year, representing 24.4%
growth on a per share basis. The results for fiscal 2004 exclude
the non-cash charge for the accelerated accretion associated with
the conversion of the Series D Convertible Preferred Stock owned
by Unilever, which was converted to common stock and sold in an
equity offering in October 2003, and the debt extinguishment and
restructuring charges discussed above. This exceeds the Company's
previously provided guidance of $0.90 to $0.95 per fully diluted
share. On a reported basis, net loss attributable to common
shareholders for fiscal 2004 was $20.1 million or $1.02 per share.
E. Scott Beattie, Chairman and Chief Executive Officer of
Elizabeth Arden, Inc., commented, "This was a tremendous year for
the Company, despite a slow first half. Our new product innovation
performed extremely well, with the Elizabeth Arden skin care and
color lines posting double-digit growth and our Red Door fragrance
brand exhibiting sales growth in excess of 25%. We also continued
to increase the market share of prestige fragrances in the U.S.
mass retail market, and our international business finished
strongly. On the financial side, our working capital initiatives
and the refinancing of our balance sheet enabled us to retire
virtually all of our high cost debt, which should generate
significant interest expense savings in fiscal 2005. This allows
us to continue to reinvest in our brand portfolio and strongly
positions us for additional growth opportunities."
Mr. Beattie continued, "Operationally we have successfully closed
and migrated our distribution facilities to one facility in
Roanoke, Virginia and completed the conversion of all our IT
systems to a single platform. We expect operational savings from
the facility consolidation this fiscal year of approximately $2
million to $4 million and approximately $4 million to $6 million a
year thereafter."
OUTLOOK
The Company currently anticipates net sales for fiscal 2005 to
increase 8% to 10%, assuming current exchange rates, and earnings
per fully diluted share to increase 22% to 24%. With respect to
the first quarter of fiscal 2005, the Company expects net sales
growth in the high single digits and diluted earnings per share to
improve by $0.35 to $0.40 on a per share basis over the first
quarter of the prior year. The earnings per share estimates
exclude charges the Company will incur in its first quarter of
fiscal 2005 of $3.8 million related to the early extinguishment of
debt for the final redemption of $84.3 million aggregate principal
amount of the 10 3/8% Senior Notes on February 12, 2004, and of
approximately $1.3 million to $1.5 million related to the
consolidation of its U.S. distribution facilities.
Mr. Beattie concluded, "As we start fiscal 2005, we are encouraged
with the very positive retail sell-through trends in both the U.S.
and internationally. We are confident that our initiatives will
further grow the prestige fragrance category in mass retail and
are also very excited about our new products for this year. The
launch of our new fragrance, Elizabeth Arden Provocative Woman,
supported by television advertising featuring Catherine Zeta
Jones, is scheduled to occur in the U.S. next month and globally
in the fall. We are well positioned and are looking forward to
another strong year."
Elizabeth Arden (S&P, B- Senior Subordinated Debt and B+ Corporate
Credit Ratings, Stable Outlook) is a global prestige fragrance and
beauty products company. The Company's portfolio of leading brands
includes the fragrance brands Red Door, Red Door Revealed,
Elizabeth Arden green tea, 5th Avenue, ardenbeauty, Elizabeth
Taylor's White Diamonds, Passion, Forever Elizabeth and Gardenia,
White Shoulders, Geoffrey Beene's Grey Flannel, Halston, Halston
Z-14, Unbound, PS Fine Cologne for Men, Design and Wings; the
Elizabeth Arden skin care lines, including Ceramide and Eight Hour
Cream; and the Elizabeth Arden cosmetics line.
ENRON CORP: Asks Clearance for Pacific Gas Settlement Agreement
---------------------------------------------------------------
Pursuant to Rule 9019 of the Federal Rules of Bankruptcy
Procedure, Enron Energy Marketing Corporation, Enron Energy
Services, Inc., Enron North America Corporation and Enron Power
Marketing, Inc. ask the Court to approve their Settlement
Agreement and Limited Mutual Release with Pacific Gas and
Electric Company.
Prior to April 6, 2001, the Enron Parties and Enron Corporation
entered into numerous transactions with Pacific Gas involving
electric power and natural gas. Since April 6, 2001, the Enron
Parties have filed proofs of claim in the Pacific Gas bankruptcy
case and have asserted certain rights of setoff and recoupment
with respect to the claims.
Wholesale Claims
As of April 6, 2001, the agreements between the Enron Parties and
Pacific Gas included:
(i) Enron Canada Corporation and Pacific Gas were parties to
a Master Gas Purchase and Sale Agreement;
(ii) ENA and Pacific Gas were parties to an Enfolio Firm
General Terms and Conditions and Confirmation and an ISDA
Master Agreement; and
(iii) EPMI and Pacific Gas were parties to a Master Power
Purchase and Sale Agreement.
Elizabeth Page Smith, Esq., at LeBoeuf, Lamb, Greene & MacRae,
LLP, in New York, relates that the Master Purchase Agreement
contains a "triangular" netting provision. The Master Purchase
Agreement provides that the Non-Defaulting Party, at its option
and in its discretion, may set off against any termination
payment due from it any amounts due from the Defaulting Party
under any other agreement, including any natural gas purchase and
sale agreement between EPMI's affiliates and Pacific Gas. The
ISDA is specifically excluded from this triangular netting.
On April 9, 2001, as a result of Pacific Gas' bankruptcy filing,
and pursuant to Sections 556 and 560 of the Bankruptcy Code,
Enron Canada terminated the Canadian Gas Agreement, ENA
terminated the US Gas Agreement and the ISDA, and EPMI terminated
the Master Purchase Agreement. On April 24, 2001, the Enron
Entities sent a letter to Pacific Gas setting forth the
calculations of the termination payments due on account of the
termination of the US Gas Agreement, the Canadian Gas Agreement
the ISD and the Master Purchase Agreement. The April 24 Letter
states that these termination payments were due:
(i) $24,138,011 due to ENA from Pacific Gas on the US Gas
Agreement;
(ii) $74,190,183 due to ENA from Pacific Gas on the ISDA;
(iii) $24,209,249 due to Enron Canada from Pacific Gas on the
Canadian Gas Agreement; and
(iv) $82,256,219 due to Pacific Gas from EPMI on the Master
Purchase Agreement.
In the April 24 Letter, Ms. Smith informs the Court that EPMI
stated that it was exercising its rights under the Master
Purchase Agreement to set off amounts it owed Pacific Gas under
the Master Purchase Agreement against amounts Pacific Gas owed
ENA and Enron Canada for natural gas sales pursuant to the US Gas
Agreement and the Canadian Gas Agreement.
Pacific Gas disputed the calculation of the termination payment
due under the Master Purchase Agreement. By an April 30, 2001
letter, Pacific Gas advised EPMI of its contention that the
termination value was $140,452,840. Pacific Gas also disputed
the calculation of the termination payment due under the ISDA,
contending that its liability was no more than $63,000,000.
Pacific Gas did not dispute the termination values for the US Gas
Agreement or the Canadian Gas Agreement. In addition, Pacific
Gas also challenged EPMI's right to set off the amount due from
EPMI under the Master Purchase Agreement against the amounts due
from Pacific Gas to ENA and Enron Canada.
On September 5, 2001, Enron Canada, ENA and EPMI each filed a
proof of claim against Pacific Gas. Enron filed a claim seeking
$22,054,852 for amounts due under the Canadian Gas Agreement.
ENA filed a claim seeking $74,190,183 under the ISDA and
$24,138,011 under the US Gas Agreement. EPMI filed a claim
seeking:
(i) an unliquidated amount estimated at approximately
$30,000,000 for power sold into the energy markets
operated by the California Power Exchange Corporation and
the California Independent System Operator Corporation
for which EPMI had not been paid -- the PX/ISO Claim;
(ii) an unliquidated amount estimated at $33,800,00 for
underscheduling penalty revenues;
(iii) $186,000 for power sold under certain block forward
contracts; and
(iv) not less than $133,777,021 for the loss of certain
collateral posted by EPMI with the PX.
Pacific Gas' Bankruptcy Court subsequently entered orders
disallowing portions of EPMI's claim, leaving only the PX/ISO
Claim.
DA Credits Retail Claim
On September 5, 2001, Ms. Smith reports that EEM and EES filed
claims against Pacific Gas based on Pacific Gas' non-payment of
unpaid credit balances accrued and owing prior to April 6, 2001,
arising from the provision of retail electric power by EEM and
EES to end-use customers located in Pacific Gas' service
territory. EEM claims Pacific Gas owes $164,029,419 on account
of unpaid credit balances and EES claims $239,920,010 is due.
Ms. Smith explains that EES' and EEM's claims relate to the
restructuring of California's electric industry, which resulted
from the enactment of Assembly Bill 1890. The principal goal of
the restructuring provided under AB 1890 was to enable electric
power to be purchased from suppliers other than the franchised
local utility through what came to be called the "Direct Access
Program." As part of the Direct Access Program, EEM and EES each
executed an "Energy Service Provider Service Agreement" in a form
approved by the CPUC governing the business relationship between
Pacific Gas and EEM and EES, with respect to those activities.
Under AB 1890, customers who do not elect to purchase electric
energy from an ESP continue to receive fully "bundled" service
from a utility at a tariff rate that was "frozen" until March 31,
2002.
As part of the Direct Access Program, the CPUC, in decision No.
97-08-056, determined that, since nearly all wholesale energy
procurement transactions under the Direct Access Program were
intended to take place through the PX, direct access accounts
would receive credits for the purpose of removing from their
bundled utility bill the cost of power purchased by the utility,
since they were purchasing their power instead from an ESP while
still receiving transmission and distribution service from the
utility.
In June 2000, Ms. Smith relates that the cost of energy Pacific
Gas purchased from the PX began to increase dramatically,
resulting in proportional increases in the amount of the DA
Credits reflected on EEM's and EES' direct access customers'
bills. Ultimately, the amount of the DA Credit exceeded the
amount of the Frozen Tariff Rate charges due Pacific Gas in
connection with EEM's and EES' direct access customers and thus
resulted in large cumulative credit balances being carried
forward. EES and EEM contended that under CPUC Decision No. 99-
06-058, Pacific Gas was obligated either to pay these cumulative
unpaid credit balances in the form of cash or credit them against
future charges. However, Pacific Gas refused to pay these credit
balances and in December 2000 filed a pleading at the CPUC
stating that it was suspending its policy of paying these credit
balances.
Because of the prospect that the DA Credits would continue to
accrue and remain unpaid by Pacific Gas, in an effort to mitigate
their damages resulting from this situation, in January 2001, EEM
and EES returned their direct access customers to bundled utility
service from Pacific Gas, which had the effect of minimizing
further DA Credits from accruing for those accounts. Also in
January 2001, EES and EEM filed complaints with the CPUC to
obtain an order directing Pacific Gas to pay the accrued DA
Credits.
In July 2001, Ms. Smith tells Judge Gonzalez, EES and EEM
accepted the return of their former direct access customers from
bundled utility service back to direct access. As a result, EES
and EEM began to incur obligations to Pacific Gas for
transmission and distribution services provided by Pacific Gas.
EES and EEM contended that they could recoup the accrued DA
Credits against their liability for the ongoing transmission and
distribution charges. Pacific Gas disputed this contention and
demanded that EES and EEM pay the transmission and distribution
charges.
Subsequently, EES and EEM commenced an additional proceeding at
the CPUC in August 2001 to resolve the billing dispute.
Simultaneously, EES and EEM filed a motion in the Pacific Gas
Bankruptcy Court for relief from the automatic stay to the extent
the stay might be construed to apply to this dispute. The rules
of the CPUC required EES and EEM to deposit into an escrow
account at the CPUC the amount of the disputed charges and EES
and EEM therefore deposited the amount of the accrued
transmission and distribution charges on a monthly basis.
Eventually, the sum on deposit in the CPUC escrow account reached
approximately $22,000,000.
Pacific Gas contends that the transmission and distribution
charges, which accrued after July 2001 and which are unpaid,
total approximately $38,000,000 and that EES and EEM failed to
deposit into the CPUC escrow the full amount of such charges.
CRS Retail Claim
Prior to the bar date in these cases, certain of EES' and EEM's
customers filed claims in EES' and EEM's bankruptcy cases seeking
reimbursement of certain CPUC imposed surcharges for which the
customers assert they are liable on account of the switch of
these customers to bundled utility service in January 2001. On
November 7, 2002, the CPUC issued Decision 02-11-022 imposing
cost responsibility surcharges on persons that received bundled
utility service in 2001. The purpose of these surcharges is to
spread the cost of paying for the power purchased by the State of
California on behalf of the utilities during the period of the
energy crisis. As a result of this decision, the EEM and EES
customers that were switched from direct access to bundled
utility service in 2001 may be liable for the surcharges. As of
February 2003, the total amount of the Customer Surcharges Claims
filed by EEM and EES customers within Pacific Gas service
territory seeking reimbursement of surcharges was approximately
$73,393,160 and $437,590,461.
EEM and EES dispute any liability to their customers for the
surcharges imposed by the CPUC and intend to contest vigorously
the Customer Surcharges Claims. Nonetheless, to the extent the
Customer Surcharges Claims are allowed in EEM's or EES'
bankruptcy cases, EEM and EES assert the amount of claims against
Pacific Gas as additional damages resulting from its failure to
pay the DA Credits. Accordingly, on February 17, 2003, EEM and
EES each filed an amended proof of claim in Pacific Gas' case
asserting the amount of the Customer Surcharges Claims against
Pacific Gas as additional damages resulting from its failure to
pay the DA Credits.
Pacific Gas' Claim against the Enron Parties
On October 15, 2002, Pacific Gas filed numerous proofs of claim
against the Enron Parties and Enron Corp:
(i) Against EEM:
-- Claim No. 12547 for at least $1,984,163 on account of
terminated gas transactions under a Gas Transmission
Service Agreement;
-- Claim No. 12574 for at least $16,969,631 on account of
transmission and distribution charges under the EEM
ESP Agreement;
-- Claim No. 12580 for at least $34,354 on account of
charges under the EEM ESP Agreement;
-- Claim No. 12581 for at least $4,027 for gas storage and
transmission services under a Core Gas Aggregation
Service Agreement;
-- Claim No. 12932 for an amount to be determined arising
out of acts in western energy markets resulting in
overcharges; and
-- Claim No. 22698 in an amount to be determined related
to erroneous metering data.
(ii) Against EES:
-- Claim No. 12562 for at least $20,637,887 on account of
transmission and distribution charges under the EES
ESP Agreement;
-- Claim No. 12563 for an amount to be determined arising
out of acts in western energy markets resulting in
overcharges;
-- Claim No. 12575 for at least $981,293 on account of
terminated gas transactions under a Gas Transmission
Service Agreement;
-- Claim No. 12577 for at least $466,180 for gas storage
and transmission services under a Core Gas Aggregation
Service Agreement;
-- Claim No. 12579 for at least $11,763 on account of
charges under the EES ESP Agreement;
-- Claim No. 12939 for an amount to be determined on
account of certain refund proceedings pending at the
Federal Energy Regulatory Commission; and
-- Claim No. 22699 in an amount to be determined related
to erroneous metering data.
(iii) Against EPMI:
-- Claim No. 12573 for at least $86,353,173 on account of
terminated electricity transactions under the Master
Purchase Agreement;
-- Claim No. 12937 for at least $62,494,044 on account of
the FERC refund proceedings;
-- Claim No. 13361 in an amount to be determined arising
out of acts in western energy markets resulting in
overcharges; and
-- Claim No. 22700 in an amount to be determined related
to erroneous metering data.
(iv) Against ENA:
-- Claim No. 12578 for at least $10,578,303 for
terminated gas transactions pursuant to a Gas
Transmission Service Agreement; and
-- Claim No. 12948 in an amount to be determined arising
out of acts in western energy markets resulting in
overcharges.
(v) Against Enron Corp.:
-- Claim No. 12931 in an amount to be determined on
account of the FERC refund proceedings;
-- Claim No. 12935 for at least $10,739,398 on account of
a guarantee of obligations of ENA;
-- Claim No. 12936 for at least $22,097,124 on account of
a guarantee of obligations of EES;
-- Claim No. 12938 for at least $45,000,000 on account of
a guarantee of obligations of EPMI; and
-- Claim No. 12576 in an amount to be determined arising
out of acts in western energy markets resulting in
overcharges.
Pacific Gas' Objections to the Enron Claims
According to Ms. Smith, Pacific Gas objected to the Enron Claims
on numerous grounds including allowability, amount, timeliness
and other potential defenses.
Pacific Gas contended that ENA and Enron Canada had each effected
a triangular setoff of the amounts due to them by Pacific Gas
against the amounts due from EPMI to Pacific Gas under the Master
Purchase Agreement. Pacific Gas asserted that ENA's and Enron
Canada's claims should be reduced by the amount so setoff.
Pacific Gas also objected to ENA's claim for the termination
payment due on account of the early termination of the ISDA on
the ground that ENA had improperly calculated the termination
payment. Pacific Gas contended that the amount due was no more
than approximately $63,000,000, not the approximately $74,200,000
sought by ENA. Finally, Pacific Gas contended that ENA's claims
were subject to a setoff in the amount of at least $10,578,303
for terminated gas transactions pursuant to a Gas Transmission
Service Agreement.
Pacific Gas objected to EEM's claim to the extent the claim was
duplicative of a claim filed by one of EEM's customers, Novellus
Systems, Inc., for $4,500,000. The Pacific Gas Bankruptcy Court
sustained the objection, although it did not make a determination
regarding the proper holder of the claim or the allowed amount
thereof. Pacific Gas also objected to the claims filed by EEM
and EES on the ground that the DA Credits may be subject to
adjustment as a result of certain proceedings pending at the
FERC, the CPUC and certain courts, and therefore that the amount
of the claims might be reduced. The Pacific Gas Bankruptcy Court
overruled the objection to the extent it was based on proceedings
before the FERC and ruled that any claims based on DA Credits
that either (i) arose on or after December 28, 2000, or (ii) are
the subject of litigation before a court or the CPUC constitute
"disputed" claims whose allowance is subject to further
proceedings before the CPUC or the applicable court. The
implication of this ruling was that any litigation regarding the
allowance of EES' and EEM's claims for the unpaid DA Credits
would be subject to adjudication by the CPUC in the proceedings
commenced by the CPUC Complaints.
Pacific Gas raised a number of defenses in the CPUC Complaint
proceedings. Pacific Gas argued, among other things, that under
the applicable tariffs and CPUC decisions, the DA Credits were
not due and owing, that the trading practices or other actions of
the Enron Parties increased the prices used to calculate the DA
Credits and that the DA Credits were subject to adjustment to the
extent the FERC adjusted the relevant market clearing prices.
Pacific Gas objected to the CRS Claims on the ground that they
were untimely and should be disallowed. Pacific Gas reserved any
other objections it might have to those claims. The Pacific Gas
Bankruptcy Court has not yet ruled on this objection.
The Settlement Agreement
After two years of negotiations between the parties, the Enron
Entities and Pacific Gas agree to resolve the Enron Claims and
certain Pacific Gas Claims. Under the terms of the proposed
Settlement Agreement, the parties agree that:
(a) EES and EEM will be allowed a general unsecured claim
against Pacific Gas for $229,000,0000, subject to
potential reduction if duplicative claims are filed
against Pacific Gas prior to the effective date of the
Settlement Agreement and are allowed by the Pacific Gas
Bankruptcy Court;
(b) ENA and Enron Canada will be allowed a general unsecured
claim against Pacific Gas for $86,000,000, subject to a
potential reduction of approximately $1,000,000 if a
duplicative claim filed by a third party is not withdrawn
or disallowed;
(c) Pacific Gas will waive any rights of offset or recoupment
against each of the allowed claims;
(d) The Enron Parties' allowed claims will bear interest at
the rate of 4.19% per annum, compounded annually, from
April 6, 2001 through the date of payment;
(e) Pacific Gas will cooperate with EES and EEM in obtaining
the return to EES and EEM of approximately $22,000,000 on
deposit in an escrow account at the California Public
Utilities Commission;
(f) EES and EEM will retain the right to assert that Pacific
Gas is liable to them to the extent that EES and EEM are
found liable to their former customers for certain
surcharges imposed by the CPUC, subject to any defenses
that Pacific Gas may have to the Claims, including with
respect to the timeliness of the filings of claims by EES
and EEM, and provided that Pacific Gas' potential
liability to EES and EEM for the Claims is capped at
$30,000,000;
(g) Pacific Gas will give a broad release to EES and EEM,
including a release of any claims related to EES' or
EEM's activities in the California energy markets, and
will give a more limited release to Enron Canada, ENA,
EPMI and Enron Corp.; and
(h) The Enron Parties and Enron Canada will give a broad
release to Pacific Gas, with each of the parties'
releases subject to certain expressly Reserved Matters,
including a reservation of EPMI's claim against Pacific
Gas for amounts due on account of power sold by EPMI in
the California energy markets.
Ms. Smith asserts that the Settlement Agreement should be
approved because:
(1) it provides a net recovery to the Enron Parties
potentially in excess of $375,000,000, the bulk of which
is payable in cash on the Effective Date of the Pacific
Gas Plan -- contemplated to be on March 31, 2004;
(2) the Enron Parties will be released from claims Pacific
Gas asserted, which is about $73,000,000, plus additional
unliquidated amounts;
(3) continued litigation with Pacific Gas over the DA Credits
exposes the estates to a great deal of risk;
(4) even if the Enron Parties completely prevailed in
litigation of the Enron Claims, Pacific Gas' claimed
offset rights would delay any distribution and might
significantly reduce the ultimate recovery;
(5) given the size of the claims as allowed, the complexity
of the claims being resolved, the additional attorneys
fees and expenses that would be incurred in pursuing the
claims, and the attendant delay, any additional amount
obtained as a result of litigation of the claims would
likely be a net recovery for creditors that is smaller
than the amount obtained through the Settlement
Agreement;
(6) it resolves multiple claims filed in each other's
bankruptcy cases, as well as certain other legal
proceedings and claims between the parties, including the
non-debtor Enron Canada; and
(7) it was a product of lengthy and vigorous arm's-length
negotiations between the parties. (Enron Bankruptcy News,
Issue No. 101; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
ENRON CORP: Proposes Settlement of CASH V Investors' Claims
-----------------------------------------------------------
Prior to the Petition Date, Enron Power Marketing, Inc., and
Virginia Electric and Power Company entered into a Power Purchase
Agreement whereby EPMI provided electricity capacity and
scheduled electricity to Virginal Electric in return for monthly
payments -- the Capacity Payments. EPMI's right to future
receivables under the Power Purchase Contract was monetized
through these series of transactions:
* On June 30, 1997, EPMI sold the right to the Capacity
Payments to Enron Cash Company No. 5, pursuant to an
assignment agreement in return for a cash payment of
approximately $131,000,000. Also on June 30, 1997, CashCo
5, pursuant to a contractual asset sale agreement,
transferred an asset equal to the Purchase Price to the
Contractual Asset Securitization Holding Trust V in return
for a cash payment of an amount equal to the Purchase Price
from the Trust. In turn, the Trust paid EPMI a purchase
price to enter into an interest rate swap agreement with
the Trustee to eliminate cash flow volatility.
* To fund the purchase of the Contractual Asset from CashCo 5
and to purchase the Swap, the Trust issued to a syndicate
of lenders led by Barclays Bank PLC two tranches of notes
amounting to $67,856,938 and $59,152,619, and certificates
of beneficial ownership amounting to $3,928,131. EPMI is
the servicer of the CashCo 5 Sale Agreement and Barclays
acts as the administrative agent. The Capacity Payments
service the debt incurred by issuing the Notes.
* Pursuant to the Performance Guaranty, dated as of June 30,
1997, Enron guaranteed to the Cash V Investors, Barclays,
as Administrative Agent and Master Swap Counterparty, and
the Trustee the payment and performance of all obligations
of EPMI and CashCo 5 under the Operative Documents.
Martin A. Sosland, Esq., at Weil, Gotshal & Manges LLP, in New
York, reports that Virginia Electric failed to make Capacity
Payments under the Power Purchase Contract and EPMI has a claim
against it for the unpaid amounts.
However, Mr. Sosland notes that the commencement of the Chapter
11 cases constituted an event of default under the Guaranty and
certain other Operative Documents.
Barclays asserted a prepetition claim against EPMI and Enron for
$68,590,538, plus all costs and allowable interest, based on
EPMI's alleged default of the CashCo 5 Sale Agreement and related
Service Agreement. EPMI denies the allegations.
The parties desire to compromise and settle all issues regarding
the CASH V Structure through a settlement agreement.
Accordingly, the parties engaged in extensive, arm's-length and
good faith negotiations and discussions.
Consequently, Enron, EPMI, CashCo 5, Barclays, in its capacity as
a Purchaser and as agent and master swap counterparty, the CASH V
Investors -- Credit Lyonnais New York Branch, Bank of Nova
Scotia, Bayerische Landesbank Girozentrale, Mizohu Global Ltd.,
KBC Bank NV, UFJ Bank Limited, Metropolitan Life Insurance
Company, Texas Life Insurance Company, Principal Life Insurance
Company -- and State Street Bank and Trust Company of New York,
National Association agree on these terms and conditions:
A. Settlement Payments
On the Closing Date, the Trustee will cause to be paid to
Barclays, in its capacity as Administrative Agent for
distribution to each of the CASH V Investors its pro rata
share of:
(1) the amount currently on deposit in the Distribution
Account established pursuant to the Sale Agreement, which
amount is approximately $69,000; and
(2) the amount currently held in the Collection Account
established pursuant to the Sale Agreement, which amount
is about $41,700.
EPMI agrees that all amounts received from Virginia Power
after the Closing Date in connection with the Virginia Power
Claim will be deposited in an account EPMI will establish.
In addition, EPMI will cause to be paid all payments received
in connection with the Virginia Power Claim in this manner:
(a) Enron will be reimbursed for up to $1,000,000 of
reasonable out-of-pocket costs incurred in connection with
its prosecution of the Virginia Power Claim;
(b) The next $2,600,000 of recoveries will be split between
EPMI and the CASH V Investors, with EPMI receiving 20% of
the amount recovered and the CASH V Investors receiving
80% of the amount;
(c) The next $10,000,000 in recoveries will be shared equally
between EPMI and CASH V Investors;
(d) Any recovery greater than $12,600,000 but less than
$32,600,000 will be split between EPMI and the CASH V
Investors with EPMI receiving 60% of the amount recovered
and the CASH V Investors receiving 40% of that amount; and
(e) Any recovery greater than or equal to $32,600,000 will be
split between EPMI and CASH V Investors, with EPMI
receiving 75% of the amount recovered and the CASH V
Investors receiving 25% of the amount.
B. Mutual Release
Each of the parties releases, acquits and forever discharges
each other from any and all claims, demands, liabilities and
causes of action at any and every kind, character or nature
whatsoever, in law or in equity, asserter or unasserted,
which the Parties may have or claim to have against each
other now, or which may later arise, solely from the CASH V
Transactions.
C. Proofs of Claim
The Parties acknowledge and agree that Claim Nos. 10909 and
10910 filed against Enron and EPMI by or on behalf of any
of the CASH V Investors, the CASH V Trust and the other
holders of Notes and Certificates in the amount as filed will
not be released, discharged or otherwise waived; provided,
however, that the Filed Claims are subject to reduction to
the extent payments are made pursuant to the Settlement
Agreement, and are further subject to Enron's and EPMI's
right to dispute the claims; provided further, that any
proofs of claim in excess of the amount will be deemed
immediately expunged without any further Court order. The
Filed Claims with respect to Enron may be amended to reflect
amounts due under the Swap and any amended Filed Clam will
remain subject to Enron's right to dispute it in all respects.
D. Cooperation/Virginia Power Claim
The Parties agree that EPMI will use its commercially
reasonable efforts to prosecute the Virginia Power Claim;
provided, however, that any settlement, resolution or other
agreement between EPMI and Virginia Power will require the
approval of the "Majority Purchasers," which approval will
not be unreasonably withheld or delayed; provided further,
however, that if amounts to be received by EPMI in connection
with the Virginia Power Settlement exceed $20,000,000, the
approval will not be required. Each of the CASH V Investors
agrees to cooperate, at no cost to the CASH V Investor, to
the extent reasonably requested by EPMI and will not
interfere with EPMI's prosecution of its claims against
Virginia Power.
Mr. Sosland points out that the settlement is fair and reasonable
because absent the Settlement Agreement, the Parties would
require extensive judicial intervention to resolve their disputes
and it is uncertain which of the Parties would emerge with a
favorable and successful resolution of its claims. The
Litigation would be costly, time consuming and distracting to
management and employees alike. The Debtors believe that the
Settlement Agreement is a very favorable development for their
cases as it resolves numerous complicated issues arising from the
CASH V Transactions, including the parties' inability to agree on
a strategy to realize the value of the Virginia Power Claims.
Pursuant to Rule 9019 of the Federal Rules of Bankruptcy
Procedure, the Debtors ask the Court to approve the Settlement
Agreement and authorize Enron and EPMI to enter into and
implement the Settlement Agreement. (Enron Bankruptcy News, Issue
No. 101; Bankruptcy Creditors' Service, Inc., 215/945-7000)
FALCON PRODUCTS: First Quarter Net Loss Balloons to $12 Million
---------------------------------------------------------------
Falcon Products, Inc. (NYSE: FCP), a leading manufacturer of
commercial furniture, announced sales and operating results for
its first quarter ended January 31, 2004.
Net sales for the first quarter of fiscal 2004 were $49.9 million,
a 23% decrease from $65.1 million for the first quarter of 2003.
The Company reported a net loss for the quarter of $12.2 million,
or $1.33 per diluted share, compared with a net loss of $0.3
million, or $0.03 per diluted share, in the first quarter of 2003.
The first quarter 2004 results include charges related to the
closing of the Company's Canton, Mississippi facility, the write-
off of deferred debt issuance costs and the recording of a
deferred tax valuation allowance. These charges totaled $7.1
million, or $0.78 per share.
Franklin A. Jacobs, Chairman and Chief Executive Officer, stated,
"This quarter was one of transition for the company. We closed the
Canton facility and relocated production to Morristown.
Additionally, we restructured our financing package. The changes
in manufacturing facilities and dislodged production capacity
negatively impacted the company's revenues and EBITDA during the
quarter and required the company to obtain a waiver of certain
covenants from its banks and to amend certain covenants for future
quarters. During this process, the banks understood the issues
facing the company and were very cooperative and the company fully
expects to meet its revised covenants. We are now prepared to move
forward and show substantial improvements in sales and operating
results in the second quarter of this year. We expect sales in the
second quarter that are comparable to last year with improved
EBITDA."
A weak hospitality market impacted sales in the quarter. This is
reflective of major purchasing decisions being postponed over the
holidays waiting for the new budget year. Orders in January and
February have strengthened significantly and will be reflected in
stronger second quarter sales. The food service sales decreased
because of the successful completion of the Boston Market project
in the first quarter of 2003. The balance of the food service
business continued to grow. The contract office market was down
slightly with flat orders year over year.
David L. Morley, President and Chief Operating Officer stated, "We
accomplished several difficult tasks during the quarter. We closed
the Canton facility, staged the raw materials in Eastern Europe to
fully execute the wood frame strategy, expanded production of our
outsource partners in Europe and the U.S. and increased imports
from China. In the next 90 days we expect to see the benefits of
these actions."
The company has restated its banking facility as a current
liability. As our results reflect the actions taken and
profitability improves, management expects that the banking
facility should be reclassified as long term.
Furthermore, the company was preliminarily notified by the New
York Stock Exchange of a pending rule change on eligibility for
continued listing. The exchange expects to formally notify all
companies impacted by the change after March 15, 2004. In the
event of such a formal notification, the company will diligently
work with the exchange on a remediation plan.
Mr. Jacobs continued, "The difficult steps have been taken at this
point. The cost reduction activities are ahead of schedule.
Savings from key initiatives are tracking with our plan. The
company is totally focused on execution in the second quarter. We
will see the impact of these actions in the current quarter."
Falcon Products, Inc. is the leader in the commercial furniture
markets it serves, with well-known brands, the largest
manufacturing base and the largest sales force. Falcon and its
subsidiaries design, manufacture and market products for the
hospitality and lodging, food service, office, healthcare and
education segments of the commercial furniture market. Falcon,
headquartered in St. Louis, Missouri, currently operates 8
manufacturing facilities throughout the world and has
approximately 2,100 employees.
* * *
As reported in the Troubled Company Reporter's January 8, 2004
edition, Standard & Poor's Ratings Services lowered its corporate
credit rating on furniture maker Falcon Products Inc. to 'B-'
from 'B', and lowered its subordinated debt rating to 'CCC' from
'CCC+'. The ratings were removed from CreditWatch, where they
were placed Nov. 4, 2003. The outlook is negative.
The downgrade on St. Louis, Missouri-based Falcon Products Inc.
reflects weak profitability resulting from the continued softness
within the furniture segments the company serves. Moreover, the
company has high debt leverage, and difficult market conditions
have continued to weaken credit measures.
FLEMING: Wants Go-Ahead to Advance More Defense Costs to Insiders
-----------------------------------------------------------------
The Fleming Debtors ask Judge Walrath for permission to advance
additional defense expenses to certain of their current and
former directors and officers under a Management Liability and
Company Reimbursement Insurance Policy issued by Greenwich to the
Debtors.
The Debtors make the request at the Directors and Officers'
behest because:
-- Greenwich has refused to reimburse the fees and costs that
the directors and officers will incur in preparing and
bringing such request;
-- ultimately the Debtors may be required to reimburse the
directors and officers for the expenses the directors and
officers may incur in making the request; and
-- most significantly, the Debtors believe that advancing
additional defense costs is appropriate and necessary.
The defense expenses for which the directors and officers seek
reimbursement arise out of several securities and derivative
lawsuits filed against Fleming and certain of its Directors and
Officers beginning in September 2002, and in connection with a
formal investigation order by the United States Securities &
Exchange Commission on February 13, 2003. The Directors and
Officers previously sought and obtained in June 2003 an order
lifting the stay, to the extent it was applicable, and
authorizing Greenwich to advance up to $2.5 million of defense
expenses to the Directors and Officers.
However, each of the Directors and Officers has incurred, and
will continue to incur, defense expenses in connection with the
pending litigation and the SEC investigation. The Debtors
believe that Greenwich has advanced defense expenses to the point
that those advances now approach and may, in fact, exceed the
$2.5 million limit contained in the June 2003 Order. Greenwich
will not advance further defense costs without another Court
order.
Accordingly, the Debtors propose to advance an additional $5
million, for a total of up to half of Greenwich's $15 million
first-layer policy, and 7.5% of the total $100 million D&O
liability coverage maintained by the Debtors. The Directors and
Officers reserve the right to subsequently request additional
funds.
The Defendant Directors and Officers
The request is brought to obtain payment on behalf of the
Debtors':
(1) current directors:
Herbert Baum
Kenneth Duberstein
Archie Dykes
Carol Hallett
Robert Hamada
Edward Joullian III
Alice Peterson;
(2) former director Guy Oborn;
(3) current General Counsel Carlos Hernandez; and
(4) former officers:
Mark Hansen
Neal Rider
Mark Shapiro
Thomas Dahlen
Stephen Davis; and
William Marquard.
The Suits and SEC Investigation
Two derivative actions have been filed on Fleming's behalf
seeking damages from various of Fleming's directors and officers
for alleged violations of securities laws. The derivative
actions have been, or are in the process of being,
administratively closed or dismissed without prejudice. Various
parties to these and other actions have asked the Judicial Panel
on Multi-district Litigation to consolidate the litigation by and
against Fleming, then consisting of 14 separately filed cases, in
a single court. In June 2003, the Judicial Panel issued an order
directing that all of those actions be transferred to the United
States District Court for the Eastern District of Texas,
Texarkana Division, for coordinated or consolidated pre-trial
proceedings.
In February 2003, a class action captioned "Massachusetts State
Carpenters Pension Fund, et al. v. Fleming Companies, Inc., et
al." was filed before the 160th District Court for the Northern
District of Texas, Dallas Division, naming Fleming, various of
Fleming's Directors and Officers, Lehman Brothers Inc., Deutsche
Bank Securities Inc., Wachovia Securities, Morgan Stanley & Co.,
Inc., and Deloitte & Touche, LLP as defendants. The plaintiffs
sought damages under the various federal and Texas securities
acts. In April 2003, an identical action -- except for the
elimination of Fleming as a defendant -- was brought before the
Eastern District of Texas, Texarkana Division, which was later
consolidated with the Fleming securities litigation already
pending. Meanwhile, the U.S. District Court for the Northern
District of Texas denied the plaintiffs' request to dismiss a
derivative action without prejudice and that action was
transferred to the Eastern District of Texas where it, too, was
consolidated with the pending litigation.
On June 27, 2003, 80 individual plaintiffs filed an action
against various present and former directors and officers of
Fleming and Deloitte & Touche. The action styled "Rick Fetterman
et al. v. Mark Hansen et al." remains pending before the U.S.
District Court for the Northern District of Texas, Dallas
Division. The plaintiffs sought damages for alleged violations
of federal and state securities statutes. The Judicial Panel
transferred the case to the Eastern District of Texas as a "tag-
along" case and it has been consolidated with the other pending
cases.
On August 28, 2003, 63 individual plaintiffs commenced an action
styled "Christopher L. Doucet et al. v. Mark Hansen et al." in
the Northern District of Texas. The plaintiffs sought damages
for alleged violations of the Exchange Act and certain Louisiana
securities statutes, and brought actions based on theories of
fraud, misrepresentation and conspiracy. A "tag-along" notice
has been filed with the Judicial Panel, but the case has not yet
been transferred to the Eastern District of Texas for
consolidated or coordinated pre-trial proceedings.
On November 13, 2002, the SEC initiated an informal inquiry
related to Fleming's vendor trade practices, the presentation of
second-quarter 2001 adjusted earnings per share data in Fleming's
second-quarter 2001 and 2002 earnings press releases, Fleming's
accounting for drop-ship sales transactions with an unaffiliated
vendor in Fleming's discontinued retail operations, and its
calculation of comparable store sales in its discontinued retail
operations. On February 13, 2003, the SEC converted the inquiry
into a formal investigation and instituted an investigation into
certain activities on the part of Fleming and its management.
The investigation is ongoing.
Disputes with Greenwich
The Management Liability and Company Reimbursement Insurance
Policy provides coverage to Fleming for the period from
February 5, 2002 to February 5, 2003, with an aggregate limit of
liability of $15 million, inclusive of "Defense Expenses." There
is a pending dispute with Greenwich concerning the nature and
extent of coverage under the policy.
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. 27; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
GAP INC: Fitch Places BB- Senior Unsecured Debt on Watch Positive
-----------------------------------------------------------------
Fitch Ratings has placed The Gap, Inc.'s 'BB-' senior unsecured
debt rating on Rating Watch Positive. Approximately $2.8 billion
of debt is affected by this action. The rating action reflects
Gap's improved financial results for the fiscal year ended January
31, 2004 and acknowledges Gap's turnaround in its comparable store
sales performance. Profitability has improved as Gap has better
executed its merchandising strategy and minimized markdowns, and
there has been a considerable improvement in the company's credit
profile with the significant slowdown in store expansion.
As of Jan. 31, 2004, Gap's unrestricted cash on hand totaled $3.3
billion and restricted cash (to support letters of credit) totaled
$1.35 billion. This compares to a debt burden totaling $2.8
billion at Jan. 31, 2004. In addition, the company's $750 million
secured revolving credit facility remains undrawn.
Fitch will review the prospects for further improvements in
profitability, expansion plans and the potential uses of the
company's high cash balances. In addition, Fitch will weigh the
sustainability of Gap's turnaround in the increasingly competitive
retail/apparel sector. Fitch expects the Rating Watch Positive
status to be resolved following a review of Gap in the next
several weeks.
As of Jan. 31, 2004, Gap, operating under its Gap, Old Navy and
Banana Republic brands, had 3,022 store locations amounting to
36.5 million square feet of retail space. Gap US operated 1,389
stores, Gap International 358 stores, Banana Republic (including
Canada) 435 and Old Navy (including Canada) 840 stores.
This rating was initiated by Fitch as a service to users of its
ratings. The rating is based primarily on public information.
GENERAL MEDIA: PET Capital Offers to Pay All Creditors in Full
--------------------------------------------------------------
PET Capital Partners LLC, an affiliate of Marc Bell Capital
Partners LLC and the holder, with its related entities, of
approximately 89% of the Senior Notes of General Media, Inc., the
publisher of Penthouse magazine announced the filing of a Plan of
Reorganization with United States Bankruptcy Court for the
Southern District of New York. The Plan, which is intended to
provide the Company's creditors with an alternative to the plan
recently filed by the Company, offers payment in full for all
creditor classes.
Under the Plan, holders of the Company's Senior Notes would
exchange them for one million shares of common stock of the
reorganized Company, representing 100% of the new common equity,
plus new Term Loan Notes of up to $30 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 $30 million. General unsecured
creditors, whose claims aggregate between $10 and $12 million,
will be paid in full. The holders of the Company's Preferred Stock
would exchange their shares for Secured Subordinated Notes of up
to $13.5 million. The new Secured Subordinated Notes will bear
interest at 15% per annum, payable in kind for the first three
years of their eight-year term and will be secured by a lien on
all the reorganized Company's assets, subordinate only to the Exit
Financing Facility and the new Term Loan Notes.
The Plan does not provide for any distribution to the holders of
General Media, Inc. common stock, 99.5% of which is owned by
Penthouse International, Inc. (OTC Bulletin Board: PHSL.OB), an
entity that has not filed for bankruptcy protection.
PET Capital Gives CEO the Boot
The Plan does not provide for a continuing role for the Company's
founder, Robert C. Guccione.
"We believe that our Plan is substantially superior to the plan
proposed by the Company in that it offers a guaranteed payment to
the Preferred Stockholders as well as payment-in-full to the
Company's other secured and unsecured creditors," said Marc Bell,
Managing Partner of Marc Bell Capital Partners LLC. "In our view,
the Company's directors have a fiduciary duty to support our Plan
which is in the best interest of all the Company's constituents."
As previously announced by the Company, it filed a voluntary
Chapter 11 petition on August 12, 2003. An affiliate of PET
Capital Partners has provided the Company a $7 million debtor-in-
possession credit facility in order to continue normal operations
throughout the restructuring period. A previous Plan of
Reorganization, which would have provided that management and
ownership be transferred to PET Capital Partners, was withdrawn by
the Company on the eve of its confirmation in favor of a new plan
supported by other investors, led by Dr. Luis Enrique Molina G.
Shortly before the Company withdrew its original plan, these new
investors purchased the townhouse Mr. Guccione uses as his
residence, reportedly for $24 million -- the very day he was to be
evicted. They then provided Mr. Guccione with a one-dollar per
year lease. The two plans now seem destined to compete for
creditors' support and Bankruptcy Court approval.
Marc Bell Capital Partners LLC
Marc Bell Capital Partners is a private investment firm based in
Boca Raton, Florida. The firm invests in distressed assets and
commercial real estate in the form of acquisitions,
recapitalizations, leveraged buyouts, debt restructurings, special
situation financing and Chapter 11 reorganizations including
debtor-in-possession and exit financing.
GENESCO INC: S&P Rates $175 Million Sr. Secured Facilities at BB-
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigns its 'BB-' bank loan
rating, along with a recovery rating of '3', to Genesco Inc.'s
proposed $175 million senior secured credit facilities. The loan
is rated at the same level as the corporate credit rating on the
company; this and the '3' recovery rating indicate expectations
for a meaningful (50%-80%) recovery of principal in the event
of a default.
At the same time, Standard & Poor's affirmed its outstanding
ratings on Genesco, including the 'BB-' corporate credit rating.
The affirmation follows the company's mostly debt-financed
acquisition of Hat World, a specialty retailer of branded and
licensed headwear, for about $165 million. The acquisition will be
funded with about $100 million in borrowings from the term loan,
availability under the revolving credit facility, and cash on
hand, which amounted to about $82 million as of Jan. 31, 2004.
Although the acquisition of Hat World would somewhat diversify
Genesco's sources of earnings, the business risk of the combined
entity remains high due to the narrow product focus and aggressive
growth of the headwear retailing business. However, the operating
performance of Hat World has been positive and is expected to be
accretive to Genesco's earnings in fiscal 2005. In addition, Hat
World would provide additional growth opportunities to Genesco,
given that the growth rate at the company's Journeys division is
decelerating.
Pro forma for the acquisition, Genesco's financial profile is
expected to deteriorate, reflecting a material increase in debt
leverage and the higher debt service burden related to this
acquisition. Pro forma for the transaction, total debt to EBITDA
is expected to increase to about 4.4x, (which is weak for the
current rating) from about 4.0x in 2003. In addition, increased
capital spending and working capital requirements are expected to
diminish free cash flow generation.
"The speculative-grade ratings on Genesco Inc. continue to reflect
high business risk stemming from the company's participation in
the competitive footwear retailing industry, its aggressive growth
strategy, and high debt leverage," said Standard & Poor's credit
analyst Ana Lai. Following a few years of positive operating
performance, results softened in 2003, with consolidated same-
store sales declining 2%. In this period, same-store sales at
Genesco's core concept, Journeys, declined 1% due to product mix
changes, resulting in lower average price points. Lack of positive
sales leverage and increased promotions led to margin
deterioration, with operating margins contracting to 17% in 2003,
from 18.5% a year ago.
GENTEK INC: Files Final Chapter 11 Report
-----------------------------------------
Mark J. Connor, GenTek, Inc. Vice-President for Corporate
Development and Investor Relations, relates that:
(1) No Chapter 11 trustee or examiner was appointed in the
Debtors' Cases. Hence, no fees were incurred for a
trustee or trustee's counsel;
(2) The Debtors' reorganization plan was confirmed by the
Court on October 7, 2003. The Plan became effective in
accordance with its terms on November 10, 2003;
(3) The Chapter 11 cases of the 31 subsidiary Debtors were
closed by the Court on January 20, 2004. GenTek's
Chapter 11 case, the parent company, remains open pending
further Court order;
(4) On November 10, 2003, and within the time periods
contemplated by the Plan, the Debtors made the required
payments to the holders of allowed administrative,
priority and secured claims. The payment of certain
disputed administrative, priority and secured claims will
be made at the time as the claims are allowed;
(5) On November 10, 2003, the Debtors issued a combination of
cash and new debt and equity securities to the Secured
Lenders, and new common stock and warrants to their
bondholders;
(6) Preparations are being made to initiate distributions to
the holders of allowed unsecured claims, which
distributions are due on May 10, 2003, unless the date is
extended by the Court. The deadline for objecting to
unsecured claims expired on March 9, 2004. A number of
previously filed objections remain pending before the
Court; and
(7) The statutory two-year period within which avoidance
actions may be pursued in the Debtors' cases will not
expire until October 2004. Pending such expiration, the
Debtors have the right to commence avoidance actions. In
addition, under the Debtors' Plan, a preference litigation
trust was created to pursue preference actions against
certain creditors. The trust will have the right to
commence preference actions until the expiration of the
statutory period.
Mr. Connor discloses that the estates incurred these chapter 11
restructuring costs:
Type of Payment Amount of Payment
--------------- -----------------
Attorneys for Debtors-in-Possession (fees)
Skadden, Arps, Slate, Meagher, & Flom, LLP $11,015,613
The Bayard Firm 533,873
Babst, Calland, Clements & Zomnir, PC 1,339,853
O'Melveny & Myers, LLP 578,936
ThorntonGroutFinnigan, LLP 30,372
Saul Ewing, LLP 241,504
Blake, Cassels & Graydon, LLP 583,178
Attorneys for Debtors-in-Possession (expenses)
Skadden, Arps, Slate, Meagher, & Flom, LLP 615,323
The Bayard Firm 23,126
Babst, Calland, Clements & Zomnir, PC 141,899
O'Melveny & Myers, LLP 52,320
ThorntonGroutFinnigan, LLP 2,360
Saul Ewing, LLP 8,177
Blake, Cassels & Graydon, LLP 25,730
Other Advisors to Debtors-in-Possession (fees)
Lazard Freres & Co., LLC 2,900,000
Deloitte & Touche, LLP (US) 2,124,701
Deloitte & Touche, LLP (Canada) 356,256
KPMG, LLP 79,710
Other Advisors to Debtors-in-Possession (expenses)
Lazard Freres & Co., LLC 26,368
Deloitte & Touche, LLP (US) 33,322
Deloitte & Touche, LLP (Canada) 15,842
KPMG, LLP 0
Attorneys for Creditors Committee (fees)
Stroock & Stroock & Lavan, LLP 1,441,094
Morris, Nichols, Arsht & Tunnell 71,697
Attorneys for Creditors Committee (expenses)
Stroock & Stroock & Lavan, LLP 41,542
Morris, Nichols, Arsht & Tunnell 17,442
Other Advisors for Creditors Committee (fees)
Chanin Capital Partners, LLC 1,810,383
Other Advisors for Creditors Committee (expenses)
Chanin Capital Partners, LLC 52,830
Expenses for Creditors Committee Members 75
Expenses for Indenture Trustee 73,230
U.S. Trustee's Fees 790,500
Other Fees or Expenses:
Payments to Secured Lender Professionals 4,495,961
Claims Agent 1,452,806
Substantial Contribution (Obermeyer) 159,496
-----------------
TOTAL $30,835,445
=================
Mr. Connor informs the Court that some payments reflect the
equivalent U.S. dollars of Canadian dollar fees and expenses.
Additionally, Chanin Capital Partners, LLC's fee amount includes
a $252,588 deferred fee, which is subject to possible adjustment
upon completion of the claims resolution process. (GenTek
Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
GLOBALSTAR: FCC Approves Operating License Transfer
---------------------------------------------------
Globalstar, the world's most widely-used handheld satellite phone
service, announced that the U.S. Federal Communications Commission
(FCC) has formally approved a request to have control of
Globalstar's operating licenses and regulatory authorizations
transferred to a new Globalstar operating company that is
majority-owned by Thermo Capital Partners.
In early December 2003, Thermo agreed to acquire Globalstar's
operating and marketing assets, subject to certain conditions
including approval for the transfer of control of these FCC
licenses and authorizations. FCC approval was a major condition to
be met under this agreement, and with today's announcement, the
formal acquisition of Globalstar by Thermo is a step closer to its
conclusion. The last major condition to the transaction is the
approval by the Bankruptcy Court of the Settlement Agreement among
Globalstar, Globalstar's Creditors' Committee, Thermo and QUALCOMM
Incorporated. A hearing on the settlement is scheduled for March
31, and, if approved, Globalstar anticipates that the Thermo
acquisition will be completed soon thereafter.
"The conclusion of this long restructuring process is now at
hand," said Tony Navarra, president of Globalstar. "With the
completion of this acquisition by Thermo, we expect to begin a
new, accelerated phase of expansion and growth for our business."
Globalstar offers satellite telecommunications services, for both
voice and data, from virtually anywhere in over 100 countries
around the world. For more information, visit Globalstar's web
site at http://www.globalstar.com/
GO WEST INDUSTRIES: Voluntary Chapter 11 Case Summary
-----------------------------------------------------
Debtor: Go West Industries, Inc.
P.O. Box 911420
St. George, Utah 84791
Bankruptcy Case No.: 04-22754
Type of Business: The Debtor operates five hotel locations in
Utah. See http://www.gowestinns.com/
Chapter 11 Petition Date: February 25, 2004
Court: District of Utah (Salt Lake City)
Judge: Glen E. Clark
Debtor's Counsel: Thomas D. Neeleman, Esq.
#9 Exchange Place, Suite 417
Salt Lake City, UT 84111
Tel: 801-359-6800
Fax: 801-359-6803
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20-largest creditors.
HALLIBURTON: Sets the Record Straight on KBR's Govt. Contracts
--------------------------------------------------------------
Halliburton (NYSE:HAL) strongly responded to incomplete
information presented to Congressional Democrats regarding KBR's
work on government contracts in the Middle East. On March 10,
Congressman Henry Waxman, Ranking Minority Member of the House
Government Reform Committee, published a memorandum to the
Democratic Members of the Committee, reporting on alleged "new
information about Halliburton Contracts."
"We are disappointed, once again, that selective portions of audit
reports have been released publicly even before KBR and the Army
have made final reviews of the information," said Randy Harl,
president and chief executive officer, KBR. "Releases of partial
reports are inappropriate because the true and complete story
cannot be conveyed."
In fact, the release of these reports could violate established
Federal Policy.
"Once again, we have not been given a chance to respond to
accusations before they are released publicly. We believe that
every point in Mr. Waxman's letter has a reasonable explanation or
could be refuted outright."
For example, the facts show that KBR delivered fuel to Iraq at the
best value, the best price, and the best terms and in ways
completely consistent with government procurement policies. KBR's
client, the US Army Corps of Engineers, provided approval and
direction for KBR to continue this important work so the people of
Iraq would have fuel for transportation, cooking and heating. The
points in Mr. Waxman's memo state that a round trip for fuel
transportation can be completed in two-and-a-half days. The facts
show that, on average, a round trip to Baghdad generally takes up
to five times as long to complete, due to threat and security
conditions. Therefore, actual transportation costs are higher than
represented in Mr. Waxman's letter.
"A call to Halliburton would have provided context to the
discussion," added Harl.
Similarly, Mr. Waxman quotes a number that changed in cost
estimates for a task order. The facts show that the scope of this
task order was reduced, and costs were lowered accordingly.
"Of course, cost estimates change because the scope of work
requirements are dynamic and ever changing and it would be
inappropriate for anyone to imply otherwise," said Harl.
In addition, a comment was made about the food services estimates
and costs. A closer examination of KBR's response to the DCAA
audit would show that KBR disclosed that vendors were terminated
by KBR for default. Without all of the facts, it is inappropriate
to criticize KBR.
Representatives of DCAA were present when the format and
compliance schedule was agreed to with KBR's client. At that
meeting, all parties agreed that the task orders need to be
completed and provided to the government in a timely manner. KBR
is ahead of that schedule and we have completed the first analysis
for this report, having delivered it this week.
"This is an important piece of information that was left out of
the letter from Mr. Waxman," stated Harl.
"We can take criticism when it is justified because we are our
harshest critics," explained Harl. "It's the only way to improve.
Criticism is not failure. We pledged to cooperate and we have
fully cooperated with the DCAA and all of the regulatory agencies
overseeing our contracts.
"Oversight of the public's money is important -- especially during
times of war," Harl added. "You must supply the best services and
value at the best price possible often under pressure. That is why
we at Halliburton are especially troubled when the regulatory
processes created to ensure public confidence in the procurement
system are bypassed for a few sensational headlines.
"All contractors involved in the effort freeing the Iraqi people
are, of course, subject to oversight," cautioned Harl. All
government entities and government contractors need to review
their performance, learn from the experience and look for areas of
improvement.
Halliburton continues to be a good steward of taxpayer money
during Operation Iraqi Freedom, just as the company has been for
the past 60 years of military support.
"We are proud of our work in the Middle East today," Harl stated.
"Our very talented team of employees is making a difference in the
lives of U.S. soldiers, making them feel a little closer to home.
"We will continue to support the soldiers even though the price
for this mission is the cost of having to defend ourselves at
home," concluded Harl.
For more than 60 years, during both Democrat and Republican
administrations, Halliburton has a record of service to the
defense of the United States. We built war ships for the Navy in
World War II, and we recently supported troops in Somalia, Rwanda
and Haiti. In the first Gulf War, we helped bring half the oil
wells under control in Kuwait. Halliburton employees are prepared
to meet the challenge regardless of the difficulties and risks
involved.
Halliburton, founded in 1919, is one of the world's largest
providers of products and services to the petroleum and energy
industries. The company serves its customers with a broad range of
products and services through its Energy Services and Engineering
and Construction Groups. The company's World Wide Web site can be
accessed at http://www.halliburton.com/
HORNBECK OFFSHORE: S&P Places B+ Credit Rating on Watch Positive
----------------------------------------------------------------
Standard & Poor's Ratings Services places its 'B+' corporate
credit rating on Hornbeck Offshore Services Inc. on CreditWatch
with positive implications.
The rating action follows Hornbeck's filing of a form S-1 in which
it states plans to issue 6 million shares of common stock
amounting to roughly $104 million through an IPO.
Net proceeds are expected to be about $77 million and will be used
to partially fund the construction of ocean-going double-hulled
tank barges, retrofit existing vessels, possible acquisitions, new
vessel construction, and for general corporate purposes, including
the repayment of debt on Hornbeck's revolving credit facility.
"Projected proceeds from the planned IPO should provide adequate
funding for the two announced new tank-barges currently being
constructed and provide further liquidity for debt repayment or
additional fleet enhancements," said Standard & Poor's credit
analyst Paul Harvey.
In addition, the IPO will help reduce Hornbeck's aggressive debt
leverage and potentially repay outstanding bank debt.
Standard & Poor's also said that the extent of any positive rating
action will depend upon an analysis of Hornbeck's planned uses of
the proceeds and their impact on earnings and cash flow, at a time
when contract renewal risk remains a concern.
"A rating upgrade is likely only if the expected benefits from the
use of proceeds exceeds the risk that contracted revenues could
decline as contract renewals take place over the near to medium
term," said Mr. Harvey.
Standard & Poor's will resolve the CreditWatch listing after
further consultation with Hornbeck's management and the successful
completion of the IPO.
IMPATH INC: Enters Into National Agreement With Humana
------------------------------------------------------
IMPATH Inc. (OTC: IMPHQ.PK) has entered into a multi-year Provider
Participation Agreement with Humana Inc. (NYSE: HUM) that adds
IMPATH to Humana's nationwide network of physicians, hospitals and
other healthcare professionals.
Under the agreement, IMPATH will provide its full suite of cancer
diagnostic and prognostic services to members of all of Humana's
commercial and government-sponsored health plans including its
Medicare Advantage offerings. Specific terms of the agreement were
not disclosed.
"After serving members of Humana's national PPO network, called
the ChoiceCare Network, for several years, we are very pleased to
be expanding our in-network relationship to now include all of
Humana's medical membership," said Carter Eckert, Chairman and
Chief Executive Officer of IMPATH. "Under this national contract,
Humana members and contracted physician providers will now have
greater access to IMPATH's comprehensive cancer diagnostic and
prognostic services, permitting IMPATH to continue to fulfill its
goal of improving the lives of cancer patients."
"Humana is well aware of the value of specialized analyses to
facilitate more effective disease management and better patient
care. The inclusion of IMPATH in our network of providers is
consistent with Humana's commitment to offer our members access to
high-quality healthcare services," said Freda Hogan, Director of
National Contracting for Humana Inc.
About Humana
Humana Inc., headquartered in Louisville, Kentucky, is one of the
nation's largest publicly traded health benefits companies, with
approximately 6.8 million medical members located primarily in 18
states and Puerto Rico. Humana offers coordinated health insurance
coverage and related services -- through traditional and Internet-
based plans -- to employer groups, government-sponsored plans and
individuals. More information regarding Humana is available via
the Internet at http://www.humana.com/
About IMPATH
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.
JAMES MARTIN INC: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: James J. Martin, Inc.
844 North Lenola Road, Unit 4
Moorestown, New Jersey 08057
Bankruptcy Case No.: 04-18367
Chapter 11 Petition Date: February 11, 2004
Court: District of New Jersey (Camden)
Debtor's Counsel: Arthur Abramowitz, Esq.
Cozen O'Connor
Libertyview Building, Suite 300
457 Haddonfield Road
Cherry Hill, NJ 08002
Tel: 856-910-5000
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
NJ Carpenters Fund $742,814
PO Box 7818
Edison, NJ 08818-7818
Internal Revenue Service 941 Payroll Taxes $637,497
57 Haddonfield Road 2002
Cherry Hill, NJ 08002
George F. Kempf Supply Co. Trade debt $231,837
The W.M. Moyer Company Trade debt $137,547
NJ Department of Labor Unemployment/ $136,831
Disability-2003
NJ Building Laborers $129,736
Statewide Benefit Fund
Transportation Insurance Trade debt $97,000
Company
NJ Tapers Local #1976 $92,783
DC #711
Philadelphia Plasterers $84,005
Local #8
Specialty Products & Trade debt $76,347
Insulation Co.
Trico Credit Corp. Trade debt $55,147
M&J Ceilings, Inc. Trade debt $46,074
Manning Materials Trade debt $37,996
Corporation
District Counsil #21 $23,819
Appalachian Insulation Trade debt $21,632
Grabber Northeast Trade debt $15,061
Construction Products
Marjam Supply Company Trade debt $11,790
Dubell Lumber Co. Trade debt $10,148
NJ Division of Taxation NJ GIT-February $9,170
2004
Bell Supply Trade debt $8,712
JPS INDUSTRIES: First Quarter Net Loss Decreases to $200,000
------------------------------------------------------------
JPS Industries, Inc. (Nasdaq: JPST) announced results for the
first quarter ended January 31, 2004.
For the first quarter of fiscal 2004, JPS reported a net loss of
$0.2 million, or $(0.02) per diluted share, on sales of $31.2
million compared with a net loss of $0.6 million, or $(0.06) per
diluted share, on sales of $28.8 million in the first quarter of
fiscal 2003. For the quarter, sales increased 8.3%, while
operating income was $22,000 compared with a net loss of $0.8
million in the first quarter of fiscal 2003.
Michael L. Fulbright, JPS's chairman, president and chief
executive officer, stated, "We are pleased that the improvement in
our operating results continue a trend that began in middle of
2003. Revenue line growth coupled with strong cost controls
allowed each of our businesses, Stevens(R) Roofing, Stevens(R)
Urethane and JPS Glass to improve their operating results over the
prior year. These results can be attributed to market share growth
countering continued lackluster demand in the commercial
construction and electronics markets and an overall improvement in
our manufacturing operations that offset ongoing price pressures.
Overall, this represents a solid performance in what can best be
described as very challenging market and economic conditions."
Commenting further, Charles R. Tutterow, JPS's executive vice
president and chief financial officer stated, "As we previously
announced, the Company's stock began trading on The Nasdaq
SmallCap Market effective March 9, 2004, and we are pleased to be
able to provide this market continuity for our shareholders."
In conclusion, Mr. Fulbright stated, "We expect the trend of
gradual improvement to continue; however, uncertainty in some
markets and forward visibility in all markets remain at such
levels as to make quarterly forecast an impractical exercise. That
said, we are confident that our solid market positions, our
competitive cost structures and our solid balance sheet give us
much flexibility and leverage to take advantage of any overall
market strengthening and other growth opportunities as they appear
in each of our businesses."
JPS Industries, Inc. is a major U.S. manufacturer of extruded
urethanes, polypropylenes and mechanically formed glass substrates
for specialty industrial applications. JPS specialty industrial
products are used in a wide range of applications, including:
printed electronic circuit boards; advanced composite materials;
aerospace components; filtration and insulation products; surf
boards; construction substrates; high performance glass laminates
for security and transportation applications; plasma display
screens; athletic shoes; commercial and institutional roofing;
reservoir covers; and medical, automotive and industrial
components. Headquartered in Greenville, South Carolina, the
Company operates manufacturing locations in Slater, South
Carolina; Westfield, North Carolina; and Easthampton,
Massachusetts.
* * *
As reported in Troubled Company Reporter's February 2, 2004
Edition, the Company expects that in 2004 its required pension
contributions will be $7.4 million absent legislative changes in
funding rules and again expect cash flow from operations to cover
the vast majority of the obligation.
The Company has obtained waivers for the violations of certain
covenants related to its credit agreement and have extended the
maturity of the credit facility to November 1, 2004.
KEYSTONE: Granted Interim Relief from Certain CBA Provisions
------------------------------------------------------------
Keystone Consolidated Industries, Inc. (OTC Bulletin Board: KESN)
announced that the U.S. Bankruptcy Court for the Eastern District
of Wisconsin in Milwaukee on March 9, 2004 granted the Company's
request for interim relief from certain provisions under the
Company's Collective Bargaining Agreement with the Independent
Steelworkers Alliance ("ISWA"), which represents substantially all
of the Company's hourly active employees at its Peoria facilities.
The interim relief granted relates primarily to obligations to
provide medical benefits for current employees and retirees
represented by the ISWA. The interim relief will take effect
today, March 15, 2004 and continue for a period of 6 months. The
Company was also granted interim relief from certain other retiree
medical benefit obligations related to certain discontinued
operations for a period of 2 months.
The relief granted was part of a compromise reached with
representatives of the ISWA, with the support and endorsement of
the unsecured creditors' committee. As part of this compromise,
the Company agreed to allow the ISWA to continue to represent the
retirees and agreed to begin negotiations on permanent relief from
certain provisions of the collective bargaining agreement and
retiree medical benefit obligations. In addition, the ISWA
officials promised that the union would continue to work without
slowdowns or other "house actions" that could adversely affect
production.
The Company will seek final approval from the Bankruptcy Court of
the previously announced $60 million Debtor in Possession
financing agreements today, March 15, 2004. If the final Debtor in
Possession agreements are approved, the funds available pursuant
thereto together with the cost savings resulting from the interim
relief granted by the Court is anticipated to provide sufficient
liquidity for the Company to continue to operate under the
protection of Chapter 11 of the U.S. Bankruptcy Code while the
Company works to develop a comprehensive plan of reorganization.
A key to any comprehensive plan of reorganization for Keystone
will include achieving substantial permanent relief from the
current provisions of the collective bargaining agreement and
retiree medical benefit obligations. Keystone will work closely
with representatives of the ISWA in an effort to negotiate the
necessary modifications to the collective bargaining agreement
through consensual agreement in connection with the Company's plan
to obtain the necessary permanent relief under the applicable
provisions of Chapter 11 of the U.S. Bankruptcy Code. The Company
believes the successful achievement of the necessary permanent
relief from the current provisions of the collective bargaining
agreement, combined with the additional restructuring of certain
indebtedness of the Company, should enable Keystone to emerge from
the reorganization process as a well financed, cost-competitive
producer. The Company has not set a date to emerge from Chapter
11, but intends to move through the process as quickly as
possible.
Keystone Consolidated Industries, Inc. is headquartered in Dallas,
Texas. The company is a leading manufacturer and distributor of
fencing and wire products, wire rod, industrial wire, nails and
construction products for the agricultural, industrial,
construction, original equipment markets and the retail consumer.
Keystone's common stock is traded on the OTC Bulletin Board
(Symbol: KESN). Additional details concerning court orders
granting the interim relief may be found at http://www.kccllc.com/
as well as up to date information concerning the case, copies of
our court filings and orders issued by the court.
KMART CORP: Asks Court for Declaratory Judgment Against MSO IP
--------------------------------------------------------------
In June 2001, the Kmart Corporation Debtors entered into a seven-
year license agreement with MSO IP Holdings, Inc. In the
Agreement, MSO licensed to the Debtors the right to utilize the
trademark "Martha Stewart Everyday" in connection with the
manufacture and sale of products in four different categories
-- Home Products, Garden Products, Housewares Products and
Seasonal Products.
A. William Urquhart, Esq., at Quinn, Emanuel, Urquhart, Oliver &
Hedges, LLP, in Los Angeles, California, relates that shortly
after the Petition Date, the Debtors sought to assume the
Agreement. In the course of the assumption proceedings, the
Debtors informed the Court that the Agreement was critical to
their restructuring efforts. In their pleadings, the Debtors
argued that the merchandizing of quality name-brand products like
"Martha Stewart Everyday" is a core element of their mission and
future success. At the assumption hearing, the Debtors stated
that the agreements with their brand partners, including Martha
Stewart, were "one of the cornerstone of Kmart's reorganization"
and that "assumption of these agreements [was] critical." The
Court authorized the Debtors to assume the Agreement on March 20,
2002.
A year later, the Debtors' reorganization plan was approved and
they emerged as a stronger, more efficient business operation on
May 6, 2003 -- much earlier than industry analysts had
anticipated. As part of the Debtors' reorganization, they
committed to focus attention on promoting business in their well-
performing stores, while closing a number of other inefficient,
often-redundant stores. The renewed focus has been successful
thus far, and promised to improve the Debtors' strength and
competitiveness. Current projections show that 68% of all
American households will shop in a Kmart store this year.
Royalty Structure
Pursuant to the Agreement, the Debtors agreed to pay MSO certain
royalties based on sales. The Agreement sets forth guaranteed
royalty amounts as of each January 31 for each of the four
product categories, as well as a guaranteed royalty amount in the
Aggregate. By design, the Aggregate guaranteed royalty for each
year was greater than the sum of the guaranteed royalties for the
four product categories.
After the Debtors calculate and pay MSO royalties based on sales
of relevant products, the Debtors are obligated to determine
whether there are any shortfalls in achieving the minimum
guaranteed royalties. The Debtors must then pay any shortfall to
MSO.
Advertising Provision
Pursuant to the Agreement, the Debtors further agree to continue
purchasing advertising, whether or not for Licensed Products, in
Martha Stewart Living media properties at 2001 expenditure
levels. The Agreement does not define "Martha Stewart Living
media properties" and does not list the 2001 expenditures.
Historically, the Debtors engaged in two types of advertising --
print advertising and television advertising.
During the contract year ending January 31, 2004, the Debtors
fell short in three of the four Product minimum royalties, and
fell short of the Aggregate minimum royalty. The Debtors are
prepared to pay MSO the difference between royalties based on
sales of relevant products during the year ending January 31,
2004 and the combined category minimums, plus the difference
between the resulting number and the guaranteed Aggregate minimum
royalty.
However, MSO demands that the Debtors should pay the sum of:
(1) the difference between the actual royalty based on sales
of relevant products and the Aggregate minimum royalty;
plus
(2) the difference between the actual royalty based on sales
of relevant products and the minimum guaranteed royalty
for each of the four Product categories.
Instead of accepting from the Debtors the difference between the
royalties on sales and the Aggregate minimum royalty, MSO
demanded that the Debtors pay the shortfall on the Aggregate
minimum royalty added to the $4,000,000 shortfall from the
guaranteed royalties in each of the Product categories. In
effect, MSO is demanding that the Debtors pay it both.
Mr. Urquhart contends that MSO's demand is unreasonable,
constitutes impermissible double counting, and was not the intent
of the parties. Under MSO's position, if the Debtors had made
absolutely zero sales of any relevant products in the year ending
January 31, 2004, then the Debtors would owe MSO the shortfall
from the Aggregate minimum royalty, added to the shortfall from
each of the four Product categories which would close to double
the minimum guaranteed royalty. Neither the assumed Agreement
nor the parties contemplated such a windfall to MSO. By
contrast, the Debtors' position is reasonable and gives meaning
to all the terms of the relevant royalty provision. Under the
Debtors' interpretation, they first make up the shortfall, if
any, in each product category, and then make up the difference
between the resulting number and the Aggregate minimum royalty.
In addition to misconstruing the royalty provision, MSO is also
insisting that the Debtors incur annual advertising expenditures
in Martha Stewart Living media properties far in excess of those
that the Agreement contemplates. MSO maintains that the Debtors
should also include in the 2001 expenditure levels both amounts
that the Debtors spent on commercials on CBS' The Early Show in
2001 and amounts spent for Kmart commercials and separate
commercials for unaffiliated parties on a network broadcast of
the Martha Stewart Network Holiday Primetime Special. However,
neither CBS' The Early Show nor the network broadcast of the
Holiday Special are Martha Stewart Living media properties.
Therefore, these amounts should not be included in the 2001
expenditure levels.
Mr. Urquhart argues that MSO is victimizing the Debtors by
forcing them to pay excessive royalties and advertising dollars
based on an untenable interpretation of the Agreement, which the
Court order assumed and which has been a cornerstone of the
Debtors' restructuring process.
Accordingly, the Debtors ask the Court for a declaratory judgment
against MSO:
(a) for all damages, including general, special, incidental,
consequential, and lost profit damages, and all interests,
in an amount to be determined at trial;
(b) for the Debtors' attorneys' fees and costs incurred in
their Complaint;
(c) stating that the Debtors are only obliged to pay to MSO
the difference between the royalties based on the sales
and the Aggregate minimum royalty as provided in the
Agreement; and
(d) stating that the Debtors' interpretation of the
advertising provision at issue controls. (Kmart Bankruptcy
News, Issue No. 70; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
LIBERTY MEDIA: Reschedules Today's Conference Call to 11:00 A.M.
----------------------------------------------------------------
Liberty Media Corporation (NYSE: L/LMC.B) has rescheduled its
Fourth Quarter Supplemental Financial Information conference call.
Liberty Media will still release Fourth Quarter 2003 Supplemental
Financial Information today, March 15, 2004. However the call will
be at 11:00 a.m. ET instead of 4:00 p.m. Robert Bennett, Liberty
Media's President and CEO, will host the call.
Please call Premiere Conferencing at (913) 981-4901 at least 10
minutes prior to the call so that we can start promptly at 4:00
p.m. (ET). Please note this number has changed. You will need to
be on a touch-tone telephone to ask questions. The conference
administrator will give you instructions on how to use the polling
feature. Questions will be registered automatically and queued in
the proper sequence.
Replays of the conference call can be accessed from 2:00 p.m. (ET)
on March 15, 2004 through 5:00 p.m. (ET) March 22, 2004, by
dialing (719) 457-0820 plus the pass code 566114#.
In addition, the Fourth Quarter Supplemental Financial Information
conference call will be broadcast live via the Internet. All
interested persons should visit the Liberty Media web site at
http://www.libertymedia.com/investor_relations/default.htmto
register for the web cast. Links to the press release and replays
of the call will also be available on the Liberty Media web site.
The conference call and related materials will be archived on the
web site for one year.
* * *
As reported in the Troubled Company reporter's February 9, 2004
edition, Liberty Media Corporation's auditors, KPMG PLC, of
London, England, on May 26, 2003, issued a "going concern" notice
in its Auditors Report of that date. KPMG cited recurring losses,
a net shareholders deficit and financial restructuring as
contributing causes.
LIBERTY VILLAGE: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: Liberty Village Associates Limited Partnership
111 Fulton Street, 4th Floor
New York, New York 10038
Bankruptcy Case No.: 04-11627
Type of Business: The Debtor is affiliated with Lake Diamond
Associates, LLC who filed chapter 11 petition
on February 24, 2004 and owns a Private golf
course located in Ocala Florida.
Chapter 11 Petition Date: March 11, 2004
Court: Southern District of New York (Manhattan)
Debtor's Counsel: Schuyler G. Carroll, Esq.
Arent Fox PLLC
1675 Broadway, 25th Floor
New York, NY 10019
Tel: 212-484-3955
Fax: 212-484-3990
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $10 Million to $50 Million
The Debtor did not file a list of it's 20-largest creditors.
LIGHTEN UP: Gives Auditor the Boot & Hires Madsen as New Auditor
----------------------------------------------------------------
On February 11, 2004, management of Lighten Up Enterprises
International, Inc. met with Madsen & Associates, Certified Public
Accountants, in Salt Lake City, Utah, for the purpose of
determining whether Madsen & Associates, would be interested in
becoming the Company's new independent auditors. After such
meeting, the Board of Directors decided to dismiss Sellers &
Andersen and retain Madsen & Associates as the Company's
independent auditors. The Board of Directors notified Sellers &
Andersen of the Board's decision to change auditors on February
11, 2004.
During the two years ended December 31, 2002 and during the
subsequent quarterly periods of 2003, the reports of prior
auditors did not contain any adverse opinion or disclaimer of
opinion and were not qualified or modified as to audit scope or
accounting principles. However, the reports of prior auditors
expressed that there was substantial doubt about the Company's
ability to continue as a going concern.
MARJAN INC: Case Summary & 2 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: Marjan Inc.
HCR Box 81
Sublette, Kansas 67877
Bankruptcy Case No.: 04-20482
Chapter 11 Petition Date: February 17, 2004
Court: District of Kansas
Judge: Robert D. Berger
Debtor's Counsel: Richard Showalter, Esq.
1122 Southwest 10th Street
Topeka, KS 66604
Tel: 875-357-6868
Total Assets: $92,302
Total Debts: $1,399,230
Debtor's 2 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Western State Bank $1,318,786
Box 1198
Garden City, KS 67846
Sublette Co-op $80,444
MASSEY ENERGY: S&P Puts BB-Rated Corp. Credit Rating on Watch Neg.
------------------------------------------------------------------
Standard & Poor's Rating Services places its ratings on Richmond,
Virginia-based Massey Energy Co., including the 'BB' corporate
credit rating, on CreditWatch with negative implications.
"Despite favorable coal markets and the expected higher average
realized prices Massey has contracted for 2004, the company's
financial performance may not improve to a level commensurate with
the existing rating," said Standard & Poor's credit analyst
Dominick D'Ascoli. In addition, Standard & Poor's is concerned
about Massey's liquidity levels, which are expected to decline
further during the first half of 2004.
For the fiscal year ending Dec. 31, 2003, total debt to EBITDA was
a very aggressive 6.3x, including capitalized operating leases,
and excluding EBITDA from Appalachian Synfuel LLC, which is
expected to cease operations in 2007, when the benefit of deferred
tax credits expires and the facility is no longer profitable.
Despite the higher average realizations Massey has contracted for
2004, financial metrics will still be subpar for the existing
rating, even if the company achieves its intended production
targets of 45 million-47 million tons in 2004. Furthermore, cost
containment continues to remain a pivotal aspect to the rating,
and given Massey's track record and the issues surrounding Central
Appalachia coal mining, the ability to maintain costs at stated
targets of $28 per ton is uncertain.
Also, Massey's liquidity of $206 million on Jan. 29, 2004, is
lower than Standard & Poor's October 2003 expectations. Even if
Massey meets its operating parameters, which should translate into
positive free cash flow in 2004, it will continue to be free cash
flow negative in the first half of 2004. The resulting liquidity
level would reduce the company's cushion and ability to cope with
operating and other unforeseen disruptions.
Standard & Poor's expects to resolve its CreditWatch within the
next several weeks. In resolving its CreditWatch, Standard &
Poor's will focus in depth on appropriate liquidity levels, cost
containment, ability to reach targeted production levels and the
outlook for 2005.
MCWATTERS MINING: Sells Portion of Kiena Royalties to Wesdome Gold
------------------------------------------------------------------
McWatters Mining Inc. (TSX: MWA) has agreed to sell part of its
Kiena Mine Royalties to Wesdome Gold Mines Inc. for a cash
consideration of $700,000. A formal agreement is scheduled to be
executed no later than March 31, 2004.
Pursuant to the agreement, the 4% net smelter return royalty
("NSR") on existing resources to be processed from the Kiena
property and the 2.0% NSR on any new resources found on the Kiena
property will be replaced with a 2.5% NSR on all resources to be
processed from the Kiena property.
Wesdome had agreed to pay $1.50 per tonne of ore processed from
any source for the first 5 million tonnes with $1.00 per tonne
payable on ore processed from any source thereafter. Wesdome will
now pay $1.00 per tonne of ore processed from any source. Wesdome
will still pay $1 million if, as and when the Kiena mill
effectively resumes commercial production, and still has a first
right of refusal on any of McWatters's royalty interests.
This transaction will allow McWatters to continue the sale
process of a partial or total interest in its Sigma-Lamaque
Mining Complex. McWatters will also examine all other possible
alternatives that could lead to a resumption of operations at the
Sigma-Lamaque Complex.
* * *
As reported in the Feb. 16, 2004, issue of the Troubled Company
Reporter, McWatters Mining Inc. obtained, from the Quebec Superior
Court, a time extension, until March 31, 2004, to submit a
proposal to its creditors under the Bankruptcy and Insolvency Act.
This extension will allow the Company to continue the sale
process of a partial or total interest in its Sigma-Lamaque
Mining Complex. McWatters will also examine all other possible
alternatives that could lead to a resumption of the Sigma-Lamaque
Complex.
MILACRON INC: Talking to New Lenders to Avert Bond Default
----------------------------------------------------------
Milacron Inc. (NYSE: MZ), a leading supplier of plastics
processing equipment and supplies and industrial fluids, has been
in discussions regarding debt restructuring solutions with a
number of potential new lenders and investors, as well as an ad
hoc committee of certain current holders of its 8-3/8% Senior
Notes due March 15, 2004 and its 7-5/8% Eurobonds due April 15,
2005 and disclosed details of its proposal to the ad hoc
bondholder committee.
Under Milacron's proposal, holders of US Notes and Eurobonds would
have exchanged their US Notes and Eurobonds for $160 million in
aggregate principal amount of 9% Senior Secured Notes due 2009 and
34.8 million shares of Milacron common stock with rights to
receive further shares of Milacron common stock depending on the
future trading price of that stock. The Contingent Value Rights
would have entitled the holders thereof to receive up to 21.5
million additional shares of Milacron common stock. Each of the
34.8 million Contingent Value Rights would have conferred on the
holder thereof the right to receive from Milacron a number of
shares of Milacron common stock on April 15, 2005 with a market
value equal to the amount by which the actual share price of
Milacron common stock on such date is less than $2.38. The number
of shares issuable per Contingent Value Right would have been
limited to a maximum of 0.62 shares of Milacron common stock, with
no additional shares issued if the share price on April 15, 2005
was greater than $2.38. Milacron would have had the option to
settle the Contingent Value Rights in either cash or shares of
Milacron common stock. The proposal also would have provided for
aggregate cash payments to bondholders of $25 million (reduced by
principal payments that would have been made to holders that did
not participate in the exchange for all outstanding US Notes and
Eurobonds).
The ad hoc bondholder committee indicated that the bondholders
would not accept Milacron's proposal. Nevertheless, the company
noted that it was in discussions with representatives of the ad
hoc bondholder committee and is continuing to negotiate with
various potential new lenders and investors with respect to both
its short- and long-term financing options.
On March 12, 2004, the company's accounts receivable liquidity
facility, with $30 million currently utilized, is due to mature.
On March 15, 2004, $115 million in principal amount of the US
Notes and approximately $54 million of the company's indebtedness
under its revolving credit facility are due to mature.
As Milacron does not have sufficient cash to satisfy its March 15,
2004 debt maturities, it can make no assurances that it will reach
an agreement with the ad hoc bondholder committee or enter into a
transaction with any new lenders or investors to provide the
necessary funds by that date. The company also has EUR 115 million
in bonds that mature on April 15, 2005.
First incorporated in 1884, Milacron is a leading global supplier
of plastics-processing technologies and industrial fluids, with
about 3,500 employees and major manufacturing facilities in North
America, Europe and Asia. For further information, visit
www.milacron.com or call the toll-free investor line: 800-909-MILA
(800-909-6452).
MILACRON INC: S&P Maintains Junk Credit Rating on Watch Negative
----------------------------------------------------------------
Standard & Poor's Ratings Services said that its 'CCC' corporate
credit and its other ratings on Milacron Inc. remain on
CreditWatch where they were originally placed Feb. 12, 2004, but
the implications were revised to negative from developing.
As Standard & Poor's has indicated previously, ratings would be
lowered further to 'D', if the various mid-March maturities
including the $115 million in principal amount of the company's
senior notes and indebtedness under its revolving credit facility
are not paid or if actions to reduce debt involve exchanges that
Standard & Poor's considers a constructive default.
"We believe that given the company's recent offer to bondholders
and subsequent rejection by the bondholders, it now appears less
likely that Milacron will be successful in meeting debt maturities
without impairing creditors," said Standard & Poor's credit
analyst Robert Schulz.
The company's accounts receivable facility matures March 12,
2004, with about $30 million drawn, while Milacron's bank
revolving credit facility and $115 million 8.375% public notes
mature March 15, 2004. The company also has an April 2005, ?115
million maturity. Cash was $93 million (about 40% in the U.S.) at
Dec. 30, 2003.
Total debt was about $323 million at Dec. 31, 2003, for
Cincinnati, Ohio-based Milacron, a leader in the plastics
machinery sector.
MILLENNIUM CAPITAL: Cuts Off Professional Ties with Grant Thornton
------------------------------------------------------------------
On February 6, 2004, the Board of Directors of Millennium Venture
Capital Holdings Ltd. dismissed Grant Thornton, LLP, the Company's
independent auditors. Grant Thornton, LLP audited the Company's
consolidated financial statements for the Company's most recent
fiscal year ended December 31, 2002.
The report of Grant Thornton, LLP accompanying the audit for our
most recent fiscal year ended December 31, 2002 contained a
modification with regards to the entity's ability to continue as a
going concern.
On February 13, 2004, the Board of Directors of the Company
appointed Amisano Hansen as the Company's new independent
accountants.
Millennium Venture's total stockholders' equity deficit at Sept.
30, 2004, tops $13,000.
Millennium Capital Ventures Holdings, Inc. was incorporated in the
State of Delaware on June 2, 2000, to serve as a vehicle to effect
a merger, exchange of capital stock, asset acquisition or other
business combination with a domestic or foreign private business.
MILLENNIUM CHEMICALS: Increases Price for Vinyl Acetate Monomer
---------------------------------------------------------------
Millennium Chemicals (NYSE:MCH) announced the following price
increases for vinyl acetate monomer (VAM)
Effective April 1st, 2004 or as contracts allow:
US & Canada: US $0.06/lb with a $0.02/lb TVA
Central & South America: US $125/metric ton
Africa & the Middle East & Turkey: US $125/metric ton
Asia: US $50/metric ton
Europe (T2 material): Euro 50/metric ton
Millennium Chemicals -- http://www.millenniumchem.com/-- is a
major international chemicals company, with leading market
positions in a broad range of commodity, industrial, performance
and specialty chemicals.
Millennium Chemicals is:
-- The second-largest producer of TiO2 in the world, the largest
merchant seller of titanium tetrachloride and a major
producer of zirconia, silica gel and cadmium/based pigments;
-- The second-largest producer of acetic acid and vinyl acetate
monomer in North America;
-- A leading producer of terpene-based fragrance and flavor
chemicals; and,
-- Through its 29.5% interest in Equistar Chemicals, LP, a
partner in the second-largest producer of ethylene and third-
largest producer of polyethylene in North America, and a
leading producer of performance polymers, oxygenated
chemicals, aromatics and specialty petrochemicals.
* * *
As previously reported, Standard & Poor's Ratings Services
assigned its 'BB-' rating to Millennium Chemicals Inc.'s $125
million convertible debentures due 2023, based on preliminary
terms and conditions.
At the same time, Standard & Poor's affirmed its 'BB-/Stable/--'
corporate credit rating on Millennium Chemicals Inc. and raised
the ratings on the existing $150 million revolving credit facility
to 'BB' from 'BB-', to recognize the benefits of a pending
amendment (subject to the successful sale of at least $110 million
of long-term notes) that will improve lenders prospects for full
recovery in the event of a default. Hunt Valley, Maryland-based
Millennium, with about $1.6 billion of annual sales and
approximately $1.3 billion of outstanding debt (excluding
adjustments to capitalize operating leases), is primarily engaged
in the production of commodity chemicals. The outlook is stable.
MILLENNIUM CHEMICALS: CFO to Speak at Lehman Brothers Conference
----------------------------------------------------------------
Millennium Chemicals (NYSE:MCH) announced that John E. Lushefski,
Executive Vice President and Chief Financial Officer, will address
analysts at the following event:
Analyst
Conference: Lehman Brothers 2004 High Yield Bond and
Syndicated Loan Conference in Orlando,
Florida; Tuesday, March 23, 2004, at 7:30
a.m. Eastern Standard Time
Presentation: The slides will be available at the time
of the presentation and afterwards at
http://www.millenniumchem.com/
and click on Investor Relations
Related
Disclosures: Reconciliations of non-GAAP financial
measures to GAAP financial measures and
any other applicable disclosures
(including the slides) will be available
at the time of the presentation and
afterwards at
http://www.millenniumchem.com/
and click on Investor Relations
Millennium Chemicals (website: www.millenniumchem.com) is a major
international chemicals company, with leading market positions in
a broad range of commodity, industrial, performance and specialty
chemicals.
Millennium Chemicals is:
-- The second-largest producer of TiO2 in the world, the
largest merchant seller of titanium tetrachloride and a
major producer of zirconia, silica gel and cadmium/based
pigments;
-- The second-largest producer of acetic acid and vinyl
acetate monomer in North America;
-- A leading producer of terpene-based fragrance and flavor
chemicals; and,
-- Through its 29.5% interest in Equistar Chemicals, LP, a
partner in the second-largest producer of ethylene and
third-largest producer of polyethylene in North America,
and a leading producer of performance polymers, oxygenated
chemicals, aromatics and specialty petrochemicals.
* * *
As previously reported, Standard & Poor's Ratings Services
assigned its 'BB-' rating to Millennium Chemicals Inc.'s $125
million convertible debentures due 2023, based on preliminary
terms and conditions.
At the same time, Standard & Poor's affirmed its 'BB-/Stable/--'
corporate credit rating on Millennium Chemicals Inc. and raised
the ratings on the existing $150 million revolving credit facility
to 'BB' from 'BB-', to recognize the benefits of a pending
amendment (subject to the successful sale of at least $110 million
of long-term notes) that will improve lenders prospects for full
recovery in the event of a default. Hunt Valley, Maryland-based
Millennium, with about $1.6 billion of annual sales and
approximately $1.3 billion of outstanding debt (excluding
adjustments to capitalize operating leases), is primarily engaged
in the production of commodity chemicals. The outlook is stable.
MIRANT CORP: Asks Okay to Expand McDermott's Retention Scope
------------------------------------------------------------
Ian T. Peck, Esq., at Haynes and Boone LLP, in Dallas, Texas,
recalls that on October 24, 2003, the Mirant Corp. Debtors
supplemented their request to employ McDermott Will & Emery LLP to
expand the scope of its representation as special counsel
effective as of the Petition Date. To date, the Debtors' request
remains pending before the Court.
As part of their postpetition operations and in conjunction with
the development of their new business plan, as well as carrying
out their duties as debtors-in-possession, the Debtors have been
analyzing several of their business lines regulated by the U.S.
Federal Communications Commission, the New England ISO and
NEPOOL.
After carefully reviewing the various outside professionals
available to assist the Debtors with respect to these projects,
the Debtors selected McDermott to serve as their special counsel
on these matters. The Debtors and McDermott agreed that the
additional services will relate to:
* Effecting pro forma and other license transfers with the
FCC to reflect the bankruptcy status of the Debtors;
* Filings, notifications, waivers and other submissions with
the FCC in connection with wireless license construction,
renewal and outstanding audits;
* Performing additional tasks as necessary to secure and
verify FCC licenses held by or to perfect pending
applications on the Debtors' behalf;
* Advising the Debtors on FCC regulatory issues in connection
with third party leases or antenna sites on the Debtors'
property; and
* Advising the Debtors on local commercial market issues
before the New England ISO and NEPOOL related to market or
cost-of-service issues involving the Kendall and Canal
Plants.
According to Mr. Peck, McDermott has been rendering some of the
Expanded Services since November 1, 2003 and has incurred about
$55,000 in fees between November 1, 2003 and February 13, 2004.
The FCC Licenses
Mr. Peck explains that at the end of October 2003, it was
critical for the Debtors to employ and retain qualified counsel
to prepare FCC license transfer of control applications on an
expedited basis. The FCC licenses are essential to the Debtors'
plant operations because they permit the Debtors to operate their
radio communications system upon which their employees depend to
ensure plant safety. The legal work required was also time-
sensitive due to potential liability for fines arising out of the
alleged unauthorized transfer of control upon the commencement of
the Debtors' Chapter 11 cases. There was, and still is, an
urgency to this matter due to recent notices that some of the
licenses will be cancelled by the FCC in the next 30 days unless
the Debtors respond to inquiries by the FCC on the status of
these licenses.
Mr. Peck informs the Court that in November 2003, the Debtors
experienced the loss of a certain member of their legal
department. That in-house attorney was tasked with the
maintenance of the FCC licenses and requested and authorized
McDermott to begin working on the FCC licenses. At that time, it
was unclear to McDermott that the services were not within the
scope of its previously authorized employment. Sometime after
the "hand-over" of this matter, members of the Debtors' legal
department realized that McDermott was rendering services that
exceeded its authority, brought the matter to the attention of
outside counsel and a second supplemental application was
prepared.
During the period November 1, 2003 through January 31, 2004,
McDermott:
(1) advised Mirant concerning the steps necessary to bring
its FCC licenses to compliance;
(2) prepared FCC applications;
(3) advised Mirant concerning FCC issues with respect to the
lease of wireless antenna sites on company property; and
(4) incurred $26,017 in fees and expenses.
Mr. Peck points out that Mirant has no legal expertise in FCC
matters and worked with McDermott in the past on similar matters.
To lose this expertise because of an inability to properly
compensate the firm could cause unnecessary delays, create
inefficiencies and threaten penalties that would not otherwise
exist.
New England ISO Matters
The Debtors needed to seek outside advice related to the New
England ISO as they develop their business plan and strategy with
respect to their New England assets. In particular, one
important issue is whether the Debtors can enter into a contract
with a form of cost-based rate recovery in New England.
McDermott has particular experience and contacts with the New
England ISO that were deemed important to evaluate the Debtors'
strategy options and McDermott was authorized to proceed to
render the necessary legal services. Latham & Watkins was
advising on the general, FERC-regulatory matters related to this
project. Once again, there was miscommunication in the "hand
over" of the matter. The Debtors' legal department devoted some
time to coordinate and assess whether the New England ISO and
FERC matters overlapped. The Debtors determined there was some
overlap, and limited McDermott's representation in this area to
local representation with the New England ISO. The Debtors
believe that McDermott's work on this matter will not be
significant, but will be targeted to representing the Debtors
before the New England ISO as they continue to develop and pursue
their strategies.
During the period December 1, 2003 through January 31, 2004,
McDermott:
(1) advised regarding local commercial issues related to the
New England ISO and NEPOOL; and
(2) advised on market cost of service issues related to the
Kendall and Canal plants.
Thus, McDermott incurred $26,812 in fees and expenses.
Accordingly, the Debtors ask the Court to authorize the expanded
services McDermott provided to the Debtors, nunc pro tunc to
November 1, 2003.
Paul J. Pantano, Jr., Esq., a partner at McDermott, Will & Emery,
assures the Court that since it was first employed, the firm
continues to be a "disinterested person" as the term is defined
in Section 101(14) of the Bankruptcy Code. Moreover, McDermott
agrees to be compensated on an hourly basis. The firm's current
hourly rates for attorneys and professionals range from $140 to
$695.
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- together with its direct and indirect
subsidiaries, generate, sell and deliver electricity in North
America, the Philippines and the Caribbean. The Company filed for
chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-
46590). Thomas E. Lauria, Esq., at White & Case LLP represent the
Debtors in their restructuring efforts. When the Company filed
for protection from their creditors, they listed $20,574,000,000
in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News,
Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000)
NATIONAL CENTURY: Confirmation Hearing is Adjourned to April 14
---------------------------------------------------------------
At the National Century Debtors' request, the Court continues the
hearing to consider confirmation of the Debtors' Fourth Amended
Liquidation Plan, as it may be modified, to April 14, 2004 at 9:30
a.m. The Confirmation Hearing will continue on April 15 and 16,
2004, if necessary.
Headquartered in Dublin, Ohio, National Century Financial
Enterprises, Inc. -- http://www.ncfe.com/-- is the market leader
in healthcare finance focused on providing medical accounts
receivable financing to middle market healthcare providers. The
Company filed for Chapter 11 protection on November 18, 2002
(Bankr. D. Ohio Case No. 02-65235). Paul E. Harner, Esq., Jones,
Day, Reavis & Pogue represents the Debtors in their restructuring
efforts. (National Century Bankruptcy News, Issue No. 35;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
NATIONAL STEEL: Agrees to Settle General Foods' Admin. Claim
------------------------------------------------------------
On March 25, 1988, General Foods Credit Investors No. 1
Corporation entered into a Trust Agreement with Wilmington Trust
Company, which provided for Wilmington's acquisition of the M/V
George A. Stinson vessel from Skar-Ore Steamship Corporation for
General Foods' benefit. The Trust Agreement further provides
that General Foods may take actions in lieu of Wilmington.
Contemporaneously with the sale and purchase of the Vessel:
* Wilmington chartered the Vessel to Stinson, Inc. under a
Bareboat Charter Party; and
* Stinson, in turn, time-chartered the Vessel to National
Steel Corporation, pursuant to a Time Charter.
In connection with the transaction, Stinson executed a security
agreement in favor of Wilmington. The Security Agreement
provides Wilmington with, among other things, a first priority
lien and security interest. The Security Agreement also provides
that Wilmington may exercise rights and powers under the Time
Charter in place of Stinson upon the occurrence of an Event of
Default under the Charter.
In addition, National Steel executed, among other things, an
absolute unconditional guaranty in favor of General Foods and
Wilmington pursuant to which National Steel has guaranteed
Stinson's obligations under the Charter.
On October 20, 1995, General Foods sold and assigned to GATX
Third Aircraft Corporation, a wholly owned subsidiary of GATX
Financial Corporation, all of General Foods' present and future
right, title in and interest in, to and under the Trust
Agreement, and all of General Foods' present and future
obligations under the Transaction Documents to which it is a
party.
GATX has been in constant communication with the Debtors
concerning the status of their bankruptcy cases and, more
significantly, the Debtors' intent with respect to the Vessel.
During the pendency of their Chapter 11 cases, the Debtors have
made timely payments under the Time Charter directly to GATX.
Where a lapse has occurred, such as the Debtors' failure to
maintain insurance coverage in August 2003, GATX has been
vigilant in bringing such defaults to the Debtors' attention.
The insurance default was immediately cured by the Debtors.
On September 22, 2003, the Debtors sought to reject the Time
Charter for the Vessel. GATX objected to the effective rejection
date proposed by the Debtors.
On September 29, 2003, the Court heard the parties' arguments
concerning the effective date of rejection. The Court granted
the Debtors' request but declined to rule on the effective date
of rejection. Rather, the Court deemed that the order would be
without prejudice to GATX's right to file an administrative or
other claim in the Debtors' bankruptcy case with respect to
payments due subsequent to September 22, 2003.
On September 30, 2003, a $1,677,949 semi-annual payment became
due and payable under the terms of the Time Charter and the
Charter. This payment was not made by either the Debtors or
Stinson. Accordingly, on October 3, 2003, Wilmington, at the
direction of GATX, sent a notice of event of default to Stinson
due to its failure to make the scheduled payment.
Throughout the postpetition period, GATX repeatedly communicated
its willingness to accept return of the Vessel to the Debtors.
The Vessel is a valuable asset for GATX, which, if properly
marketed, could fetch significant rental value. The Debtors,
however, refused to return the Vessel claiming that they also
believed the Time Charter was valuable to them and capable of
producing income for their estates.
At numerous times, GATX expressed concern regarding the
$1,680,000 semi-annual charter payment, particularly in light of
Stinson's alleged precarious financial situation. The Debtors
reassured GATX that their estates would have sufficient funds to
cover administrative expenses incurred as a result of the
Debtors' postpetition usage and retention of the Vessel. In
fact, throughout their Chapter 11 cases, the Debtors have made
timely payments under the Time Charter and have even cured an
outstanding default. Based on the Debtors' representations that
they would pay GATX for the postpetition usage of the Vessel
along with their practice of meeting obligations under the Time
Charter, GATX forbore from filing a request to compel assumption
or rejection of the Time Charter and continued to patiently wait
for the Debtors' disposition of the Time Charter.
At the time the Debtors' rejection of the Time Charter was
authorized by the Court, they now assert, in direct contravention
to their previous assurance to GATX, that they are not obligated
to pay GATX any administrative expense claim for the postpetition
usage of the Vessel. GATX asserts that the Debtors have misled
it to its great detriment and, therefore, should not be allowed
to benefit from their misrepresentations. GATX contends that the
Court should not condone such actions by the Debtors and that the
Debtors should be estopped from their assertions of not being
obligated to pay GATX's administrative expense claim.
GATX notes that the use of the Vessel was beneficial to the
Debtors' estates. Importantly, the Debtors received the
opportunity to market the Time Charter and misrepresented to GATX
that it would be paid for the postpetition use of the Vessel.
Accordingly, GATX asks the Court to allow its administrative
expense claim for $1,677,949.
GATX Seeks Summary Judgment
GATX also asks the Court to enter a summary judgment as to the
allowance of its Administrative Claim on the grounds that the
pleadings filed show that there is no genuine issue of any
material fact, and that GATX is entitled to summary judgment as a
matter of law.
Creditors' Representative Files Cross-Motion
The Unsecured Creditors' Representative, as successor to the
Creditors Committee under the Debtors' First Amended Liquidation
Plan, asks the Court:
-- for a partial summary judgment on the issue of whether the
Time Charter between Stinson, Inc. and the Debtors was a
personal property lease; and
-- to deny GATX's request for Summary Judgment.
The Representative believes that no genuine issue of material
fact exists with respect to the issue of whether the Time Charter
between Stinson, Inc. and the Debtors was a personal property
lease, and that the Committee is entitled to judgment as a matter
of law that the Time Charter was not a personal property lease
within the meaning of Section 365(d)(10) of the Bankruptcy Code.
Accordingly, the standards of Section 503(b)(1) apply to
determining GATX's rights to an administrative priority for its
$1,677,949 claim against the Debtors.
* * *
By reason of a settlement between GATX and the Debtors, Judge
Squires rules that the currently pending summary judgment
requests are mooted and the hearing set for March 15, 2004 is
cancelled. (National Steel Bankruptcy News, Issue No. 43;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
NET PERCEPTIONS: Obsidian Still Committed to Pursuing Acquisition
-----------------------------------------------------------------
Obsidian Enterprises, Inc. (OTC Bulletin Board: OBDE) released a
statement by its Chairman Timothy S. Durham:
We were disappointed in the lack of balance in the Press
Release issued by Net Perceptions (Nasdaq: NETP) on March 10,
2004.
The Board stated that 'officers and directors of Obsidian
would own approximately 70% of Obsidian's common stock, on a
fully diluted basis.' In fact, a substantial portion of those
shares are owned by Obsidian Capital Partners, not our
officers or directors, and we anticipate distributing those
shares to the members of Obsidian Capital Partners within the
next 60 days.
The Release focused on a comment on liquidity by Candlewood
but failed to consider our announced intention, following the
consummation of the transaction with Net Perceptions, to
apply for listing on the Nasdaq Small Cap Market, and the
increased number of shares that would be issued to the
shareholders of Net Perceptions and available for trading.
The bulk of the shares distributed to the partners of
Obsidian Capital Partners would also be available for
trading. As we have previously indicated, while we believe
that we will satisfy the conditions for initial inclusion,
Nasdaq exercises discretion in determining whether to
include a security in its markets. Nasdaq may not approve
our listing application.
Again, the Release noted our 'high level of debt' but did not
mention that the transaction would have the effect of
significantly increasing the equity base of Obsidian and
reducing the level of debt.
The Board referred to one condition to our exchange offer
(related to the sale of Net Perceptions' patent portfolio)
but failed to mention the three conditions which we have
identified as significant, two of which (the poison pill and
the Section 203 conditions) are totally within the Board's
control. If the plan of liquidation is not approved, we are
prepared to waive the condition affected by the patent
portfolio sale to the extent of actions taken by Net
Perceptions to date.
Obsidian remains committed to pursuing the acquisition of Net
Perceptions and urges shareholders to vote AGAINST the plan
of liquidation.
Obsidian filed a Registration Statement on Form S-4 and a Tender
Offer Statement with the Securities and Exchange Commission on
December 15, 2003 and an amendment to each on December 17, 2003.
The amended offer is scheduled to expire at 5:00 PM, New York City
time, on March 17, 2004, unless the offer is extended. The offer
is subject to certain conditions, including that:
-- Net Perceptions takes appropriate action to cause its
poison pill to not be applicable to the offer;
-- we are satisfied that Section 203 of the Delaware General
Corporation Law will not be applicable to the contemplated
second-step merger;
-- stockholders tender at least 51% of the outstanding shares of
common stock of Net Perceptions; and
-- Net Perceptions not take any further action in connection
with the liquidation or dissolution of Net Perceptions.
The Exchange Agent for the exchange offer is StockTrans, Inc., 44
West Lancaster Avenue, Ardmore, Pennsylvania 19003. The
Information Agent for the exchange offer is Innisfree M&A
Incorporated, 501 Madison Avenue, 20th Floor, New York, New York
10022.
Obsidian is a holding company headquartered in Indianapolis,
Indiana. It conducts business through its subsidiaries: Pyramid
Coach, Inc., a leading provider of corporate and celebrity
entertainer coach leases; United Trailers, Inc., and its division,
Southwest Trailers, manufacturers of steel-framed cargo, racing
ATV and specialty trailers; U.S. Rubber Reclaiming, Inc., a butyl-
rubber reclaiming operation; and Danzer Industries, Inc., a
manufacturer of service and utility truck bodies and steel-framed
cargo trailers.
NEW HORIZONS: Adjusts 2003 Allowance for Doubtful Accounts
----------------------------------------------------------
New Horizons Worldwide, Inc. (Nasdaq: NEWH) adjusted its allowance
for doubtful accounts as of December 31, 2003 due to concern with
the company's ability to collect a receivable from one of the
company's former courseware fulfillment vendors. The net impact of
the adjustment is a reduction in the previously released
preliminary fourth quarter and 2003 net income of $357,000 or
$0.04 per diluted share. As a result, net loss for the fourth
quarter of 2003, which includes income from discontinued
operations of $249,000, was $185,000, or $0.02 per diluted share.
Net income for 2003, was $1.0 million, or $0.10 per diluted share.
This adjustment does not affect the company's previously released
cash flows.
Prior to the adjustment, the company had placed a reserve of
approximately $800,000 against a receivable of approximately $1.4
million from the courseware fulfillment vendor. Accordingly, the
remaining $600,000 was believed to be collectable. However,
subsequent to the company's previous 2003 earnings announcement on
February 18, 2004, the company learned that the former courseware
fulfillment vendor's financial position had further deteriorated.
Therefore, the company decided to reserve the entire account
receivable. Although all amounts due from the courseware
fulfillment vendor have been fully reserved, the company intends
to vigorously pursue collection of all amounts due.
The company's financial results for the fourth quarter of 2003 did
not meet its "adjusted EBITDA" requirement in its bank agreement.
The company requested and received a waiver of this covenant
violation.
Thomas J. Bresnan, president and chief executive officer, stated,
"Even with this adjustment, we achieved profitability of $0.10 per
share in 2003 - a dramatic improvement over 2002. We also
generated over $12 million in cash flow from operations in 2003,
which enabled us to pay down our debt by over $6 million. As a
result, we are encouraged by our improving financial condition."
About New Horizons
Anaheim, California-based New Horizons Computer Learning Centers
was named the world's largest independent IT training company by
IDC in 2003. New Horizons is a subsidiary of New Horizons
Worldwide, Inc. (Nasdaq: NEWH). Through its Integrated Learning
offering, New Horizons provides solutions-based computer training
choices with a wide variety of tools and resources that reinforce
the learning experience. With more than 250 centers in 50
countries, New Horizons sets the pace for innovative training
programs that meet the changing needs of the industry. Featuring
the largest sales force in the IT training industry, New Horizons
has over 1,700 account executives, 2,000 instructors and 1,900
classrooms. Visit the company at http://www.newhorizons.com/
NORTEL NETWORKS: Delays Filing of 2003 Annual Financial Statements
------------------------------------------------------------------
Nortel Networks Corporation (NYSE:NT) (TSX:NT) will need to delay
the filing of the annual reports on Form 10-K for the year ended
December 31, 2003 of it and its principal operating subsidiary
Nortel Networks Limited with the U.S. Securities and Exchange
Commission, which include their annual financial statements for
2003.
As previously announced, the Nortel Networks Audit Committee is
undertaking an independent review of the circumstances leading to
the restatement of Nortel Networks financial statements which was
announced in October 2003. As a result of the work done to date,
Nortel Networks is re-examining the establishment, timing of,
support for and release to income of certain accruals and
provisions in prior periods. Nortel Networks believes it is
likely that it will need to revise its previously announced
unaudited results for the year ended December 31, 2003 and the
results reported in certain of its quarterly reports for 2003,
and to restate its previously filed financial results for one or
more earlier periods. Nortel Networks cannot predict at this time
when such review will be completed given the volume and
complexity of the work involved.
Nortel Networks is committed to accuracy and transparency in its
financial reporting and is determined to complete this process as
promptly as possible.
Potential Impacts
Once the delay in filing the 2003 Form 10-K extends beyond March
30, 2004, the Company and NNL will not be in compliance with
their obligations to deliver to relevant parties their SEC
filings under their public debt indentures and certain of their
support and credit facilities.
Approximately US$1.8 billion of notes of NNL (or its
subsidiaries) and US$1.8 billion of convertible debt securities
of the Company are outstanding under the indentures. The delay in
filing the 2003 Form 10-K will not result in an automatic default
and acceleration of such long-term debt. The trustee under any of
such public debt indentures or the holders of at least 25% of the
outstanding principal amount of any series of debt securities
issued under the indentures will not have the right to accelerate
the maturity of such debt securities unless the Company or NNL,
as the case may be, fails to file and deliver its 2003 Form 10-K
within 90 days after the above mentioned holders have given
notice of such default to the Company or NNL. The Company
believes that the public debt securities will not become due and
payable as a result of a restatement and the related delay in
filing the 2003 Form 10-K. However, if an acceleration of the
Company's and NNL's debt securities were to occur, the Company
and NNL may be unable to meet their respective payment
obligations with respect to the related indebtedness. In such
case, the Company and NNL would seek alternative financing
sources to satisfy such obligations.
Export Development Canada ("EDC") will have the right, once such
delay in filing extends beyond March 30, 2004, to terminate its
commitments under the performance-related support facility
providing for up to US$300 million of committed support and
US$450 million of uncommitted support and to exercise certain
rights against collateral under NNL's security documents if the
underlying instruments or performance bonds become due, or
require that NNL cash collateralize all existing support. As at
December 31, 2003, there was approximately US$334 million of
outstanding support under this facility. NNL will request a
temporary waiver from EDC to permit continued access to the
facility while Nortel Networks completes its filing obligations.
There can be no assurance that NNL will receive such a waiver.
The lenders under the five-year credit facilities of NNL and
certain of its subsidiaries, which are presently undrawn, will
also have the right to terminate their commitments if NNL does
not file its 2003 Form 10-K by April 29, 2004 or if EDC exercises
rights against collateral or requires cash collateralization in
an aggregate amount equal to or greater than US$100 million or if
the holders of any of the public debt securities of NNL in an
outstanding principal amount exceeding US$100 million accelerate
the payment of such debt securities.
Holders of the Company's prepaid forward purchase contracts
originally issued in June 2002 will not have the option to elect
early settlement of such contracts until the 2003 Form 10-K is
filed with the SEC.
The financial results of NNL are fully consolidated into the
Company's results. NNL's financial statements for the applicable
periods will also be restated upon any restatement of the
Company's financial statements. NNL's preferred shares are
publicly traded in Canada.
Nortel Networks (S&P, B Corporate Credit Rating, Stable) is an
industry leader and innovator focused on transforming how the
world communicates and exchanges information. The Company is
supplying its service provider and enterprise customers with
communications technology and infrastructure to enable value-added
IP data, voice and multimedia services spanning Wireless Networks,
Wireline Networks, Enterprise Networks, and Optical Networks. As a
global company, Nortel Networks does business in more than 150
countries. More information about Nortel Networks can be found on
the Web at http://www.nortelnetworks.com/
Nortel Networks, the Nortel Networks logo, the Globemark and
Business Without Boundaries are trademarks of Nortel Networks.
NORTEL NETWORKS: S&P Places B Long-Term Rating on Watch Negative
----------------------------------------------------------------
Standard & Poor's Rating Services placed its 'B' long-term
corporate credit, senior secured debt, and other ratings on
telecom equipment supplier, Brampton, Ontario-based Nortel
Networks Ltd. on CreditWatch with negative implications.
"The CreditWatch placement follows the announcement by parent
Nortel Networks Corp. that it, and Nortel Networks Ltd.
(collectively Nortel Networks), will need to delay the filing of
its Form 10-K for the year-ended Dec. 31, 2003, with the U.S.
Securities and Exchange Commission," said Standard & Poor's credit
analyst Joe Morin. In addition, Nortel Networks will likely have
to revise its previously reported unaudited results for the year-
ended Dec. 31, 2003, and might have to restate previously filed
financial results.
As a result, Nortel Networks will not likely be in compliance with
the requirements under its public indentures, Export Development
Canada (EDC) support facility, and its credit facilities to
deliver their SEC filings. The inability of Nortel Networks to
meet these requirements results in near-term uncertainties.
Failure to meet SEC filings within the allowable cure periods
under the indentures or credit facilities could result in a
lowering of the ratings. Inability to obtain a temporary waiver
from EDC could result in additional uncertainties, which in turn
could result in a lowering of the ratings. Finally, the ratings
could also be lowered if Nortel Networks further revises, or
restates financials results, which result in a materially weakened
financial profile.
Nortel Networks maintains a solid cash balance of US$4.0 billion
as at Dec. 31, 2003.
NORTEL NETWORKS: S&P Watches B-Rated Pass-Through Certificates
--------------------------------------------------------------
Standard & Poor's Ratings Services places its 'B' credit rating on
Nortel Networks Lease Pass-Through Trust certificates on
CreditWatch with negative implications.
The rating on the pass-through trust certificates is dependent
upon the 'B' corporate credit rating assigned to Nortel Networks
Ltd. (Nortel), which was placed on CreditWatch with negative
implications March 11, 2003.
The rating on the pass-through trust certificates reflects
security interests in five single-tenant, office/R&D buildings
leased to Nortel. Nortel guarantees the payment and performance of
all obligations of the tenant under the leases.
NRG ENERGY: Names Robert Flexon as Chief Financial Officer
----------------------------------------------------------
NRG Energy, Inc. (OTCBB:NRGE) announced financial and operating
results for the fiscal year 2003, which encompasses both periods
prior and subsequent to its emergence from Chapter 11 on December
5, 2003.
"Our 2003 operating results, stripped of all the bankruptcy
adjustments, indicate that we are on track," said David Crane,
NRG's new President and Chief Executive Officer. "Now we can
continue our effort to position NRG to take advantage of the fact
that we are the first company in our sector to address
comprehensively our long-term balance sheet issues."
Highlights
-- $6 billion of debt and other liabilities eliminated upon
emergence from bankruptcy;
-- $2.7 billion of debt refinanced at competitive rates with
extended maturities;
-- $1.2 billion in total liquidity at year end;
-- $824 million in asset dispositions in 2003 ($196 million in
cash; $628 million in consolidated debt eliminated);
-- Fresh Start accounting implemented on December 5, 2003;
-- The unfavorable Connecticut Light and Power contract expired
on December 31, 2003;
-- Robert Flexon to join the Company as Chief Financial Officer;
and
-- NRG stock expected to begin trading on the New York Stock
Exchange on March 25 (NYSE: NRG).
2003 Year-End Financial Results - A Summary
NRG's 2003 financial results were significantly affected by the
implementation of the Chapter 11 Plan of Reorganization (POR) on
December 5, 2003. The POR has resulted in a new capital structure,
satisfaction or disposition of various types of pre-bankruptcy
claims against NRG, and rejection of some unfavorable contracts.
Also, during the course of NRG's reorganization, the Company put
in place a new management team and a new Board of Directors.
Upon emergence from bankruptcy, NRG adopted Fresh Start
accounting, at which time NRG's reorganization value was allocated
to the assets and liabilities based on their respective fair
values. An independent financial advisor estimated NRG's
reorganization equity value ranged from $2.2 billion to $2.6
billion. NRG used a reorganized equity value of approximately $2.4
billion, as a midpoint fair valuation of the ownership distributed
to the new equity owners. This value is consistent with the voting
creditors and Bankruptcy Court's approval of the POR.
The net impact of the Fresh Start accounting and other bankruptcy
related adjustments to the balance sheet was a pre-reorganization
income item of $3.9 billion, resulting in net income of $2.8
billion being reported for the period prior to reorganization -
January 1 through December 5, 2003. This net income result is not
comparable to post-emergence NRG's actual or potential operating
performance.
Given the impact of Fresh Start accounting on GAAP earnings in
2003, the Company believes its adjusted EBITDA may provide a
better indication of operating performance. In that regard, the
Company's full year 2003 adjusted EBITDA was $570 million. The
Company's 2003 adjusted EBITDA includes a full year loss of $183
million from the CL&P contract. In addition, NRG recorded $117
million of equity earnings in 2003 from its West Coast Power
Partnership, primarily related to West Coast Power's power sales
agreement with the California Department of Water Resources
(CDWR). The CDWR contract, which expires on December 31, 2004, was
recorded at NRG's partnership level as a result of Fresh Start
accounting. Accordingly, there will be a substantial reduction to
the Company's 2004 earnings due to amortization of this intangible
asset to expense.
NRG created a disputed claims reserve as part of bankruptcy
emergence, which will be used to make distributions to holders of
disputed claims in our bankruptcy as and when their claims are
resolved. Based on the claims processed to date, the Company
continues to believe that sufficient funds have been provided to
cover the expected claims.
The receivable from Xcel Energy is the result of a settlement
agreement and is an important part of NRG's POR. Under the terms
of the POR, Xcel Energy is to make three payments to NRG and its
creditors during the first four months of 2004. The first and
second payments totaling $288 million were made in February 2004.
The final payment of $352 million is scheduled to be made on April
30, 2004. Of the $640 million in aggregate, the Company is
obligated to pay $515 million to the prepetition creditors. There
is also a $25 million distribution to creditors as part of the
POR, provided the Company meets certain liquidity requirements and
that payment would be required to be made in October 2004.
The Fresh Start accounting adjustments will have a significant
impact on the Reorganized NRG's subsequent financial statements
for fiscal year 2004 and beyond. As stated previously, the
revaluation of West Coast Power's CDWR contract under Fresh Start
accounting will have a substantial negative net impact on 2004
earnings due to contract amortization. Thereafter, for 2005 and
beyond, the net impact of Fresh Start accounting on earnings will
be positive due to the impact of reduced depreciation charges
against the written down property, plant, and equipment and
amortization of out-of-the-money contracts.
Liquidity
NRG's corporate liquidity, as of March 3, 2004, remains strong at
almost $1.4 billion.
As the Company has no acquisitions planned at present and very
limited construction activities, and as its corporate debt
maturities during 2004 amount to less than $10 million, the
expected principal uses for liquidity are maintenance capital
expenditures and additional credit support for marketing and
hedging.
Financing Activity
NRG completed a $2.7 billion financing on December 23, 2003. The
financing consisted of $1.25 billion of 8 percent second priority
senior secured notes due 2013 and a $1.45 billion credit facility
that included a $1.2 billion senior secured term loan facility due
2010 and an unfunded $250 million revolving credit facility. On
January 28, 2004 NRG completed an additional tranche of second
priority notes in the amount of $475 million and reduced the
credit facility by a similar amount. Proceeds from the financings
were used to pay off $1.7 billion of debt associated with several
of NRG's subsidiaries, fund a $250 million letter of credit
facility, and distribute $500 million in cash to NRG's creditors
under the POR. As a result of these transactions, NRG's corporate
borrowings currently consist of 71 percent fixed rate instruments
and 29 percent floating rate instruments, with a weighted average
cost of debt of approximately 7.25 percent.
Operations-Focused Wholesale Power Generation Company
NRG's operational focus during 2003 and 2004 year-to-date has
been, and continues to be on availability, safety, environmental
stewardship, hedging and fuel procurement, and non-strategic asset
disposition.
Hedging and Fuel Procurement Highlights
The Company has taken advantage of the current high gas price
environment and its post-emergence liquidity to hedge forward a
material position of its northeastern coal-fired generation for
2004. NRG has hedged over 90 percent of its estimated coal needs
for the remainder of 2004.
In New York and NEPOOL, NRG has contracted sales for 500 MW of
baseload coal generation for the remainder of 2004. The Company
also sold 700 MW (maximum) of load following contracts as a part
of the New Jersey BGS auction and the Maryland Standard Offer
Service RFP.
Asset Dispositions
The Company made substantial progress in 2003 in divesting noncore
assets. During 2003, NRG sold or transferred its ownership
interests in the following assets: ECKG (Czech Republic);
Killingholme (UK); Langage (UK); Kondapalli (India); Cahua/Energia
Pacasmayo (Peru); Brazos Valley (TX); Mustang (TX); Timber Energy
(FL); various NEO landfill gas projects; and certain turbine
equipment. As the result of these asset dispositions the Company
received approximately $196 million in cash proceeds and
eliminated approximately $628 million in consolidated debt. The
Company's efforts to rationalize its portfolio at fair value
continue.
Business Update
With respect to NRG's operating performance in 2004 year-to-date,
the Company has benefited from the cold weather spike in January
and the gas price volatility in the Northeast. The balance of the
Company's generating portfolio has performed largely in line with
expectations.
On December 31, 2003, the Company's unfavorable standard offer
service contract with Connecticut Light & Power terminated. The
Independent System Operator - New England (ISO-NE) has classified
NRG's Connecticut plants as required to maintain the reliability
of the grid system in Connecticut. As such, the Company has filed
at the Federal Energy Regulatory Commission (FERC) for a proposed
reliability-must-run agreement for Devon units 11-14, Middletown
Station, and Montville Station that would fairly compensate it for
maintaining its plants in Connecticut. In addition, NRG is
supporting FERC's efforts to implement a locational capacity
market in the ISO-NE market.
CFO Appointed
NRG has appointed Robert Flexon to be Executive Vice President and
Chief Financial Officer effective March 29, 2004. Mr. Flexon comes
to NRG after four years with Hercules, Inc., a specialty chemicals
company, where he served as Vice President, Corporate Development
& Work Process and prior to that, Vice President, Business
Analysis & Controller. Mr. Flexon also held various financial
management positions, including General Auditor, during his 13
years with Atlantic Richfield Company and began his career with
the former Coopers & Lybrand public accounting firm.
"Bob's experience in successfully facing the challenges of the
chemical industry, his technical expertise in accounting, his
strong work ethic and integrity, make him the perfect fit for the
CFO position at NRG," said David Crane.
NYSE listing
NRG has been cleared to list its common stock on the New York
Stock Exchange and, assuming it finalizes all the listing
requirements, will begin trading on March 25, 2004 under the
symbol NRG. The Company considers a listing on the NYSE to be an
important step in its plan to rebuild investor recognition of NRG
and enhance value and convenience for its shareholders.
Future Events
The Company intends to report its first quarter 2004 unaudited
financial results on May 11. NRG's Annual Shareholder Meeting will
be held on June 8, 2004.
About NRG
NRG Energy, Inc. owns and operates a diverse portfolio of power-
generating facilities, primarily in the United States. Its
operations include baseload, intermediate, peaking, and
cogeneration facilities, thermal energy production and energy
resource recovery facilities.
OAKWOOD HOMES: Plan Confirmation Hearing Begins Tomorrow in Del.
----------------------------------------------------------------
On February 6, 2004, the U.S. Bankruptcy Court for the District of
Delaware approved the Disclosure Statement prepared by Oakwood
Homes Corporation and its debtor-subsidiaries to explain their
Second Amended Joint Consolidated Plan of Reorganization. The
Court found that the Disclosure Statement contains the right kind
and amount of information, pursuant to Sec. 1125 of the Bankruptcy
Code, giving creditors sufficient information to vote in favor of
or in opposition to the Debtors' Plan.
The Honorable Peter J. Walsh will convene a hearing to consider
the confirmation of the Debtors' Plan tomorrow at 11:00 a.m.
Eastern Time, in Wilmington.
Oakwood Homes Corporation and its subsidiaries are engaged in
the production, sale, financing and insuring of manufactured
housing throughout the U.S. The Debtors filed for chapter 11
protection on November 15, 2002 (Bankr. Del. Case No. 02-13396).
Robert J. Dehney, Esq., Derek C. Abbott, Esq., at Morris, Nichols,
Arsht & Tunnell and C. Richard Rayburn, Esq., and Alfred F.
Durham, Esq., at Rayburn Cooper & Durham, P.A., represent the
Debtors in their restructuring efforts. When the Company filed
for protection from its creditors, it listed $842,085,000 in total
assets and $705,441,000 in total debts.
OWENS CORNING: Unsecured Panel Turns to NERA for Asbestos Advice
----------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
Chapter 11 cases of Owens Corning and its debtor-affiliates seeks
the Court's authority to retain National Economic Research
Associates, Inc. as asbestos claims consultant, nunc pro tunc to
January 9, 2004, pursuant to Sections 1103(a) and 328(a) of the
Bankruptcy Code.
The Commercial Committee previously engaged Letitia Chambers of
Chambers Associates, now known as Navigant Consulting, to provide
asbestos claims estimation advice and services. Ms. Chambers
left Navigant Consulting to take on a high position with the
government of New Mexico. Because of Ms. Chamber's new
employment, the Commercial Committee determined that it is
desirable to supplement Navigant Consulting with the services of
National Economic Research.
William H. Sudell, Jr., Esq., at Morris, Nichols, Arsht &
Tunnell, in Wilmington, Delaware, informs the Court that the
Commercial Committee selected National Economic Research as an
asbestos claims consultant because of its extensive and diverse
experience, knowledge and reputation in the field of economics,
including in the asbestos claims field, and because the
Commercial Committee believes that National Economic Research is
well-qualified to provide the asbestos claims consulting services
and expertise that are required by the Commercial Committee in
these Chapter 11 cases. National Economic Research's experience
includes providing consulting services, advice and expert
testimony on asbestos claims issues in the bankruptcy proceedings
of:
(1) Babcock & Wilcox Co., et al.,
(2) National Gypsum Company,
(3) Combustion Engineering, Inc., and
(4) Dow Corning.
National Economic Research provides expert services regarding the
exposure to, and the identification and treatment of, asbestos
claims. National Economic Research is expected to help the
Commercial Committee by:
(1) estimating costs associated with liquidating future
asbestos claims;
(2) estimating the costs under a plan resolving the claims;
(3) developing claims procedures to be used in financial
models of payments and assets of a claims resolution
trust;
(4) testifying before the Court, if necessary; and
(5) performing any other necessary services as the Commercial
Committee or the Commercial Committee's counsel may
request from time to time with respect to any asbestos-
related issue.
National Economic Research will use all reasonable efforts to
coordinate any services performed at the Commercial Committee's
request with the services of the Commercial Committee's other
advisors and counsel, as appropriate, and to avoid duplication of
effort.
National Economic Research will be compensated on an hourly basis
for the services provided. The current hourly rates of the
firm's professionals are:
Senior Vice President $525
Vice President 400
Consultant 300
National Economic Research includes in its hourly rates:
(1) direct labor costs,
(2) fringe benefits,
(3) overhead, and
(4) fees.
Hourly rates do not include out-of-pocket expenses like travel,
long distance telephone calls, messenger service, express mail,
bulk mailing, photocopies or entertainment. Any expenses are
billed at costs in addition to the hourly rate. This
compensation arrangement is consistent with and typical of the
arrangements entered into by National Economic Research regarding
the provision of similar services for clients like the Commercial
Committee.
Frederick C. Dunbar, National Economic Research's Senior Vice
President, assures the Court that National Economic Research is a
"disinterested person" within the meaning of Section 101(14) of
the Bankruptcy Code and as required by Section 328 of the
Bankruptcy Code, and holds no interest adverse to the Debtors and
their estates for the matters for which National Economic
Research is to be retained.
Mr. Dunbar discloses that National Economic Research was retained
by Owens Corning to estimate asbestos exposure in a retention
that ended in June 1999, prior to Owens Corning's Petition Date.
Dr. Denise Martin handled the retention.
National Economic Research was also retained by Owens Corning in
May 2002 for a confidential retention, which did not involve
asbestos-related issues, but addressed market share analysis
issues. That retention was also handled by Dr. Martin. That
retention has ended.
Mr. Dunbar reports that he did not work on those retentions nor
did he obtain any knowledge of the specifics of those retentions.
Mr. Dunbar further assures the Court that comprehensive non-
disclosure procedures are in place to create a "firewall" between
him and Dr. Martin, which ensures that no information obtained by
Dr. Martin from those retentions has been shared or will be
shared with him or any National Economic Research professional
who works with him on these Chapter 11 cases.
In March 2002, Dr. Marion Stewart of National Economic Research
was approached by certain members of the Owens Corning Bank Group
to evaluate certain patents in these Chapter 11 cases. However,
neither Dr. Stewart nor National Economic Research were
ultimately retained for that assignment, and therefore, National
Economic Research did no work for the Owens Corning Bank Group
regarding patents or related issues.
In the past, certain defendant tobacco companies in cases in
which Owens Corning was a plaintiff and which involved asbestos-
related issues retained National Economic Research. Mr. Paul
Hinton and Mr. Dunbar handled those confidential retentions.
Those retentions have since ended.
In addition, Mr. Dunbar appeared in numerous cases, proceedings
and transactions that involve many different professionals,
including attorneys and financial consultants who may represent
claimants and parties-in-interest in the Debtors' Chapter 11
cases. Mr. Dunbar also performed in the past, consulting
services for various attorneys and law firms who may be involved
in these proceedings.
Mr. Dunbar promises the Court that National Economic Research
will conduct an ongoing review of its files to ensure that no
conflicts or other disqualifying circumstances exist or arise.
If any new facts or relationships are discovered, National
Economic Research will supplement its disclosure with the Court.
Headquartered in Toledo, Ohio, Owens Corning
-- http://www.owenscorning.com/-- manufactures fiberglass
insulation, roofing materials, vinyl windows and siding, patio
doors, rain gutters and downspouts. The Company filed for chapter
11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837).
Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom
represents the Debtors in their restructuring efforts. On Jun 30,
2001, the Debtors listed $6,875,000,000 in assets and
$8,281,000,000 in debts. (Owens Corning Bankruptcy News, Issue No.
69; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PACIFIC GAS: Responds to S&P's Expected Investment Grade Ratings
----------------------------------------------------------------
Pacific Gas and Electric Company issued the following statement
after Standard & Poor's Rating Services announced that it expects
the company's corporate credit rating and its senior secured debt
rating to be at investment grade levels upon the company's
emergence from Chapter 11. Specifically, S&P anticipated the
corporate credit rating will be BBB- and the senior secured debt
rating will be BBB:
"Investment grade credit ratings are a requirement of the plan of
reorganization, and key to the company's ability to successfully
complete the financings necessary to emerge from Chapter 11. S&P's
announcement brings us closer to reaching that milestone.
"Pacific Gas and Electric Company's plan of reorganization will
allow it to exit Chapter 11 as an investment grade company, to pay
in full or otherwise fully satisfy all valid creditor claims, and
to do so without raising customers' rates. In fact, the company
was recently able to lower customers' electric rates by
approximately $800 million, with the average bundled rate
decreasing by eight percent.
"Obtaining investment grade credit levels is the best and most
efficient way for the company to purchase energy for its customers
and invest billions of dollars in new infrastructure to keep
California's economy moving."
Earlier this week, Pacific Gas and Electric Company announced it
had secured commitments for $2.9 billion in credit facilities to
support its working capital needs and to refinance certain
obligations related to pollution control bonds. Part of the funds
from those agreements also may be used to pay a portion of the
company's creditor claims on the effective date of the plan of
reorganization, which is the earliest date that draws on the
facilities may be made.
PARMALAT GROUP: Gets Okay to Honor U.S. Insurance Obligations
-------------------------------------------------------------
The U.S. Parmalat Debtors maintain various insurance programs
through several different insurance carriers in connection with
the operation of their business.
Workers' Compensation Programs
Under the laws of the various states in which they operate, the
U.S. Debtors are required to maintain workers' compensation
policies and programs to provide their employees with workers'
compensation coverage for claims arising from or related to their
employment with the Debtors. The U.S. Debtors currently maintain
a workers' compensation policy with Zurich Insurance Company,
which covers their statutory obligations in each of the states in
which they operate.
Pursuant to the Workers' Compensation Program, before each policy
year, which begins in June, Zurich estimates the number and
amount of workers' compensation claims it expects the U.S.
Debtors to have to pay during the course of that year. The U.S.
Debtors are required to make a monthly payment to Zurich
consisting of a percentage of the estimated losses for Workers'
Compensation Claims -- Loss Pick -- plus a premium, which
includes a component calculated as a percentage of payroll, as
well as taxes, surcharges, stop loss charges, and related fees.
Twenty percent of the Loss Pick and annual Premium for the policy
year is paid in the first monthly installment and the remaining
80% of the Loss Pick and annual Premium is paid in equal
installments over the next 11 months.
For each settled Workers' Compensation Claim, Zurich pays the
full amount of the settlement to the individual claimant and
charges the U.S. Debtors' account for the settlement amount. An
audit is performed each December wherein the amount of the actual
workers' compensation losses in the policy year is compared
against the Loss Pick for that year. If the Loss Pick exceeds
actual claims paid, Zurich returns the difference to the U.S.
Debtors. If the actual losses exceed the Loss Pick, the Debtors
must reimburse Zurich for the difference between the actual
losses and the Loss Pick.
The Debtors are not required, however, to reimburse Zurich for
actual losses above $250,000 per Workers' Compensation Claim.
While Zurich is responsible for losses above $250,000 per
Workers' Compensation Claim, Zurich will only pay any Workers'
Compensation Claim up to $1,000,000.
For a Workers' Compensation Claim above $1,000,000, the U.S.
Debtors rely on their excess liability insurance. After the
audit, the annual Premium may also be adjusted upwards or
downwards -- and the compensation paid to or from Zurich
accordingly -- based on the Debtors' actual payroll during that
period.
The aggregate annual payments to Zurich with respect to the
Workers' Compensation Program for the period of June 1, 2003
through May 31, 2004 are $2,275,000 for the Loss Pick and
$1,777,000 for the Premium. As of the Petition Date, there were
125 Workers' Compensation Claims pending against the U.S. Debtors
arising out of injuries allegedly incurred by employees during
the course of their employment. Because the Workers'
Compensation Claims are not processed instantaneously and the
audit has not yet been completed, the Debtors cannot determine
with certainty the amount of prepetition Workers' Compensation
Claims outstanding or whether they will owe prepetition
obligations to Zurich under the Workers' Compensation Program.
Out of an abundance of caution, the Debtors seek the Court's
authority to pay prepetition obligations due under the Workers'
Compensation Program. The payment of the prepetition Workers'
Compensation Claims is essential to the continued operation of
their businesses under the laws of the various states in which
they operate.
The Debtors also seek permission to maintain and continue
prepetition practices with respect to the Workers' Compensation
Programs, including, among other things, allowing workers'
compensation claimants, to the extent they hold valid Claims, to
proceed with their claims under the Workers' Compensation
Program.
Automobile Liability Insurance Program
Zurich also provides automobile liability insurance for the
vehicles, which the U.S. Debtors' own and their employees
operate. The Automobile Liability Insurance Program policy
operates in nearly an identical manner to the Workers'
Compensation Program.
Each month, the U.S. Debtors pay a Loss Pick based on estimated
claims and a Premium, which is based on the number of "power
units" -- moving vehicles -- they own and operate, as well as
taxes, surcharges, stop loss charges, and other fees. During the
policy year, Zurich pays all automobile liability claims covered
under the Automobile Liability Insurance and charges the Debtors'
account. After an audit at the end of the policy year, the U.S.
Debtors and Zurich perform an accounting to determine whether the
Debtors overpaid or underpaid based on actual losses covered.
Like the Workers' Compensation Program, the Automobile Liability
Insurance Program is designed so that the U.S. Debtors ultimately
pay the first $250,000 of any claim covered by the Automobile
Liability Insurance Program but are not responsible for the
payment of claims above $250,000. The excess liability insurance
covers claims for liability above $1,000,000.
The aggregate annual payments to Zurich under the Automobile
Liability Insurance Program for the policy year June 1, 2003
through May 31, 2004 are $878,000 for the Loss Pick and $605,000
for Premiums. However, the U.S. Debtors cannot determine before
all claims being processed and the audit being completed whether
they will owe Zurich prepetition obligations or whether they are
entitled to a reimbursement.
Out of an abundance of caution, the Debtors also seek Judge
Drain's permission to pay any prepetition obligations due under
the Automobile Liability Insurance Program and to maintain and
continue prepetition practices with respect to the Automobile
Liability Insurance Program.
Additional Insurance Programs
The U.S. Debtors maintain additional insurance programs,
including an excess liability policy, for which they do not
believe they owe prepetition obligations. The U.S. Debtors also
want to continue and maintain all existing policies. To the
extent they discover that they owe prepetition obligations with
respect to an insurance policy, the Debtors seek the Court's
permission to pay, in their sole discretion, the prepetition
obligations.
Insurance Brokers
In most cases, the Debtors are billed for their Insurance
Programs by an insurance broker, usually Marsh, Inc., rather than
directly by the Insurance Company. By this motion, the Debtors
also seek the Court's authority to pay all prepetition amounts
due under the Insurance Programs to the Insurance Companies and
the Insurance Brokers.
Gary T. Holtzer, Esq., at Weil, Gotshal & Manges LLP, in New
York, tells the Court that the nature of the U.S. Debtors'
business and the extent of their operations makes it essential
for them to maintain their Insurance Programs on an ongoing and
uninterrupted basis. The non-payment of any premiums under any
of the Insurance Programs could result in one or more of the
Insurance Companies declining to renew insurance policies or
refusing to enter into new insurance agreements with the U.S.
Debtors in the future. If the Insurance Programs lapse without
renewal, the U.S. Debtors could be exposed to substantial
liability for personal or property damages to the detriment of
all parties-in-interest.
* * *
Judge Drain authorizes the Debtors to maintain their Insurance
Programs and, in their sole discretion, pay related obligations.
To the extent any Insurance Program or related agreement is
deemed an executory contract within the meaning of Section 365 of
the Bankruptcy Code, Judge Drain clarifies that any payments made
does not constitute the postpetition assumption of those
Insurance Programs or related agreements under Section 365.
Headquartered in Wallington, New Jersey, Parmalat USA Corporation
-- http://www.parmalatusa.com/-- generates more than 7 billion
euros in annual revenue. The Parmalat Group's 40-some brand
product line includes milk, yogurt, cheese, butter, cakes and
cookies, breads, pizza, snack foods and vegetable sauces, soups
and juices and employs over 36,000 workers in 139 plants located
in 31 countries on six continents. The Company filed for chapter
11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-
11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at
Weil Gotshal & Manges LLP represent the Debtors in their
restructuring efforts. On June 30, 2003, the Debtors listed
EUR2,001,818,912 in assets and EUR1,061,786,417 in debts.
(Parmalat Bankruptcy News, Issue No. 6; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PARMALAT GROUP: US Debtors Have Until May 10 to File Schedules
--------------------------------------------------------------
Pursuant to Section 521 of the Bankruptcy Code and Rule 1007 of
the Federal Rules of Bankruptcy Procedure, the U.S. Parmalat
Debtors are required to file their schedules of assets and
liabilities, schedules of current income and expenditures,
schedules of executory contracts and unexpired leases, and
statements of financial affairs within 15 days after the Petition
Date. Due to the complexity and diversity of their operations,
the Debtors anticipate that they will be unable to complete their
Schedules and Statements in the time required under Bankruptcy
Rule 1007(c).
To prepare the Schedules and Statements, Gary T. Holtzer, Esq.,
at Weil, Gotshal & Manges LLP, in New York, explains that the
U.S. Debtors must compile information from books, records, and
documents relating to a multitude of transactions at several
locations in the United States, Canada, and Italy. The
collection of the necessary information will require a heavy
expenditure of time and effort on the part of the Debtors and
their employees.
"While the Debtors, with the help of their professional advisors,
are mobilizing their employees to work diligently and
expeditiously on the preparation of the Schedules and Statements,
resources are strained. Unavoidably, the primary focus thus far
has been on getting these cases filed and reacting to the trauma
of filing," Mr. Holtzer says.
At the present time, the U.S. Debtors anticipate that they will
require at least 60 additional days to complete their Schedules
and Statements. At the Debtors' request, the Court extends their
deadline to file the Schedules and Statements to May 10, 2004.
Headquartered in Wallington, New Jersey, Parmalat USA Corporation
-- http://www.parmalatusa.com/-- generates more than 7 billion
euros in annual revenue. The Parmalat Group's 40-some brand
product line includes milk, yogurt, cheese, butter, cakes and
cookies, breads, pizza, snack foods and vegetable sauces, soups
and juices and employs over 36,000 workers in 139 plants located
in 31 countries on six continents. The Company filed for chapter
11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-
11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at
Weil Gotshal & Manges LLP represent the Debtors in their
restructuring efforts. On June 30, 2003, the Debtors listed
EUR2,001,818,912 in assets and EUR1,061,786,417 in debts.
(Parmalat Bankruptcy News, Issue No. 6; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PEP BOYS: S&P Revises Outlook to Stable over Equity Offering News
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Pep
Boys-Manny, Moe & Jack to stable from negative. Ratings on the
company, including the 'BB-' corporate credit rating, were
affirmed.
The rating action follows the company's announcement of an equity
offering (about $100 million), which will be used to reduce debt
and upgrade stores. Moreover, management's initiatives are
beginning to take hold, evidenced by the company's improved
operating performance in the fourth quarter of 2003.
"The ratings on Pep Boys reflect the risks of operating in the
highly competitive and consolidating auto parts retail segment,
the company's challenge in expanding its service segment, the need
to invest capital in its store base, and significant debt
maturities," said Standard & Poor's credit analyst Robert
Lichtenstein. "These risks are somewhat mitigated by the company's
leading and diversified market position in the auto parts retail
sector and its moderate leverage for the rating."
Pep Boys has been shifting its sales mix away from the do-it-
yourself market in favor of the do-it-for-me market. Standard &
Poor's believes that by having service bays and larger stores than
competitors such as AutoZone Inc., the company holds a significant
advantage in leveraging its national store base to expand its
service business. However, Pep Boys continues to face challenges
in promoting its operations in the service sector, compared with
its traditional do-it-yourself services.
Operating performance started to show improvement in the second
half of 2003, after being somewhat inconsistent over the past
several years. Same-store sales increased 14% in the fourth
quarter and 2.2% in the third quarter of 2003, following declines
since the fourth quarter of 2002. Progress resulted from
management's new advertising and merchandising strategies,
including the introduction of new products, better inventory
management, and improved tire sales. Still, Pep Boys took charges
of more than $100 million to close stores, write down inventory
and technology systems, and reduce overhead, as well as for
pension adjustments. Moreover, the company faces challenges in
improving its merchandising and technology systems, remodeling its
existing store base, and managing the labor component of its
service business.
PG&E NATIONAL: Sets Up Sale & Bidding Procedures for GNTC Unit
--------------------------------------------------------------
National Energy & Gas Transmission, Inc. (formerly PG&E National
Energy Group Inc.) and TransCanada Corporation (Toronto: TRP)
(NYSE: TRP) agreed for TransCanada to acquire Gas Transmission
Northwest Corporation (GTN) for US$1.703 billion, including US$500
million of assumed debt and subject to typical closing
adjustments.
To maximize the likelihood of competitive bidding that will
result in the highest and best offer, National Energy & Gas
Transmission, Inc. required TransCanada American Investments,
Ltd. to subject its proposal to these bidding procedures:
A. Qualification as Bidder
NEG, after consultation with the Official Committee of
Unsecured Creditors for NEG and the ET Debtors, and the
Official Noteholders Committee, will determine whether any
potential bidder that wants to make a bid for the Shares or
for a superior transaction is a "Qualified Bidder." For a
Potential Bidder to be considered eligible as a Qualified
Bidder, it must provide NEG with:
(a) An executed confidentiality agreement in form and
substance satisfactory to NEG, which, in the aggregate,
is no less favorable to NEG than the confidentiality
agreement executed by TransCanada, as determined by NEG
after consultation with the Official Committees;
(b) Current audited financial statements of the Potential
Bidder or, if the Potential Bidder is an entity formed for
the purpose of acquiring the Shares or engaging in a
superior transaction -- an "Acquisition Entity" -- current
audited financial statements of the equity holders of the
Potential Bidder or other form of financial disclosure
acceptable to NEG and the Official Committees and their
advisors demonstrating the Potential Bidder's ability to
close a proposed transaction;
(c) A written statement that the Potential Bidder agrees to be
bound by the terms and conditions of the Bidding
Procedures; and
(d) If the Potential Bidder is an Acquisition Entity, a
written commitment of the equity holders of the Potential
Bidder to be responsible for the Potential Bidder's
obligations in connection with the transaction.
The Potential Bidder also must establish that it has the
ability to consummate its proposed transaction within the
timeframe contemplated for consummation of the Purchase
Agreement.
TransCanada is, and at all times will be deemed to be, a
Qualified Bidder.
B. Bid Requirements
(a) NEG, after consultation with the Official Committees, will
determine whether a bid qualifies as a "Qualified
Competing Bid". To constitute a Qualified Competing Bid,
the bid must:
(i) be a written irrevocable offer from a Qualified
Bidder containing written evidence of a commitment
for financing or other evidence of an ability to
consummate the transaction, satisfactory to NEG in
consultation with the Official Committees, subject
to no conditions other than those set forth in the
Purchase Agreement;
(ii) be for the acquisition of all of the Shares in a
single transaction;
(iii) not be materially more burdensome or conditional
than the terms of the Purchase Agreement;
(iv) not request or entitle the bidder to any
termination or break-up fee, expense reimbursement
or similar type of payment; and
(v) must acknowledge and represent that the bidder:
-- has had an opportunity to conduct any and all
due diligence regarding the Acquired Companies'
businesses and assets prior to making its offer;
-- has relied solely upon its own independent
review, investigation and inspection of any
documents and the Acquired Companies' assets in
making its bid; and
-- did not rely on any written or oral statements,
representations, promises, warranties or
guaranties whatsoever, whether express, implied,
by operation of law or otherwise, regarding the
Shares or proposed transaction, or the
completeness of any information or the auction,
except as expressly stated in the Bidding
Procedures;
(b) All bids must include clean and black-lined versions of
the revised Purchase Agreement and the revised Deposit
Agreement, with:
(i) the clean versions being duly executed originals of
the revised Purchase Agreement and revised Deposit
Agreement, signed by an individual authorized to
bind the Qualified Bidder; and
(ii) the black-lined versions showing all proposed
changes from the Purchase Agreement and Deposit
Agreement;
(c) Deposit
Each bid must be accompanied by a $24,060,000 deposit. If
a bidder submits a bid that is chosen as the highest or
otherwise best bid pursuant to the Bidding Procedures,
then upon the execution of the revised Purchase Agreement
and the revised Deposit Agreement by NEG, the Winning
Bidder's Deposit will be deposited by JPMorgan Chase Bank,
as the escrow agent, into an escrow account as required by
that party's agreements;
(d) Bid Deadline and Submission
Bids must be received by 12:00 noon EST on the date that
is 30 days after approval of the Bidding Procedures, by:
(i) Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, New York
Attn: Matthew A. Feldman, Esq.
Paul V. Shalhoub, Esq.
(ii) Whiteford, Taylor & Preston, L.L.P
Seven Saint Paul Street
Baltimore, Maryland 21202-1626
Attn: Paul M. Nussbaum, Esq.
Martin T. Fletcher, Esq.
(iii) National Energy & Gas Transmission, Inc.
7600 Wisconsin Avenue
Bethesda, Maryland 20814
Attn: Sanford L. Hartman, Esq.
(iv) The counsel to the Official Committees:
-- Linowes and Blocher LLP
7200 Wisconsin Avenue, Suite 800
Bethesda, Maryland 20814
Attn: Bradford F. Englander, Esq.
-- Kaye Scholer LLP
425 Park Avenue
New York, New York 10022
Attn: Ana Alfonso, Esq.
-- Klee, Tuchin, Bogdanoff & Stern, LLP
2121 Avenue of the Stars, Suite 3300
Los Angeles, California 90067
Attn: Lee Bogdanoff, Esq.
-- Shapiro Sher Guinot & Sandler
36 South Charles St., Suite 2000
Baltimore, Maryland 21201
Attn. Joel I. Sher, Esq.
(v) The Office of the United States Trustee
Suite 600, 6305 Ivy Lane
Greenbelt, Maryland 20770
Attn: John L. Daugherty, Esq.
(vi) TransCanada Corporation,
TransCanada PipeLines Tower
450 First Street, S.W.
Calgary, Alberta T2P5H1
Attn: Albrecht W.A. Bellstedt, Q.C.
(vii) Mayer, Brown, Rowe & Maw LLP
190 South LaSalle Street
Chicago, Illinois 60603
Attn: Marc F. Sperber, Esq.,
Counsel to TransCanada
(viii) Lazard Freres & Co.
30 Rockefeller Plaza
New York, New York 10020
Attn: J. Blake O'Dowd
Peter J. Marquis,
Financial Advisors to Sellers
(e) No Conditions
No bid may be subject to financing, due diligence or any
other material condition or material contingency less
favorable to NEG than those contained in the Purchase
Agreement as of the date of the auction, as determined by
NEG in its reasonable discretion after consultation with
the Official Committees;
(f) Initial Overbid
The value of an initial overbid, as reasonably determined
by NEG in consultation with the Official Committees, must
exceed the Base Purchase Price in the Purchase Agreement
by at least $50,000,000. The excess represents an amount
equal to the amount of the break-up fee, plus the maximum
amount of the expense reimbursement, plus $15,000,000;
(g) Qualified Competing Bid
Only a bid submitted by a Qualified Bidder that meets each
set forth requirement in the Bidding Procedures will be
considered a "Qualified Competing Bid";
(h) Bankruptcy Court Approval
All bids, including that of TransCanada -- whether through
the Purchase Agreement or otherwise -- will be subject to
the approval of the Bankruptcy Court.
C. Due Diligence
(a) Diligence and Confidentiality Agreement
Any Qualified Bidder must deliver to the Sellers -- unless
previously delivered -- an executed confidentiality
agreement in form and substance satisfactory to the
Sellers, which, in the aggregate, is no less favorable to
the Sellers than the confidentiality agreement executed
by TransCanada PipeLines as determined by the Sellers in
their reasonable discretion after consultation with the
Official Committees. Qualified Bidders will be provided
with a Confidential Information Memorandum. The Sellers
have also established a "data room" containing "due
diligence" information and documents related to the
Acquired Companies' businesses and assets. The Sellers
will afford each Qualified Bidder access to the data room.
The Sellers will designate an employee or other
representative to coordinate all reasonable requests for
additional information and due diligence access from
Qualified Bidders. Additional due diligence will not be
permitted after the Bid Deadline. None of the Sellers,
their affiliates or any of their representatives are
obligated to furnish any information to any person except
a Qualified Bidder.
Any Qualified Bidder who desires to conduct due diligence
should contact Andrew Curtis at Lazard, 30 Rockefeller
Center, New York, New York 10020, (212) 632-6000,
financial advisors to the Sellers, for the due diligence
procedures;
D. Auction
(a) Determination of Qualifying Competing Bids
Promptly after the Bid Deadline, NEG will, after
consultation with the Official Committees:
(i) evaluate all bids, if any, received; and
(ii) determine which bids, if any, constitute Qualified
Competing Bids.
NEG will provide TransCanada with copies of all Qualified
Competing Bids at least two business days before the
Auction date;
(b) Auction Date and Time
If any Qualified Competing Bids are submitted before the
Bid Deadline, then NEG will conduct an Auction, at a date
and time to be scheduled by the Court, at the offices of
Willkie Farr & Gallagher LLP in New York. Only the
authorized representatives of each of the Qualified
Bidders that has submitted a Qualified Competing Bid, the
Official Committees, TransCanada and NEG will be permitted
to attend the Auction. Only TransCanada and the Qualified
Bidders that have submitted a Qualified Competing Bid will
be entitled to make further bids for the Shares at the
Auction.
During the course of the Auction, NEG will inform each
participant which Qualified Competing Bid reflects, in
NEG's view, upon consultation with the Official
Committees, the highest or otherwise best offer. To the
extent that that bid has been determined to be the
highest or otherwise best offer entirely or in part
because of the addition, deletion or modification of a
provision or provisions in the Purchase Agreement or
Deposit Agreement, or, if applicable, in the Qualified
Competing Bid, other than an increase in the cash purchase
price, NEG will provide notice to each participant of the
value reasonably ascribed by NEG to any added, deleted or
modified provision or provisions;
(c) Adjournment of Auction
The Auction may be adjourned as NEG deems appropriate.
Reasonable notice of the adjournment and the time and
place for the resumption of the Auction will be given to
TransCanada, all Qualified Bidders that have submitted a
Qualified Competing Bid and the Committees;
(d) Subsequent Bids
NEG will not consider any subsequent bid in the Auction
unless the bid exceeds the previous highest bid by at
least $10,000,000 in value.
(e) Subsequent Bids by TransCanada
TransCanada will have the right to include the amount of
the Break-up Fee and the maximum amount of the Expense
Reimbursement in the amount of any subsequent bid that
they make in the Auction and, in the event TransCanada is
the Winning Bidder as a result of a subsequent bid made at
the Auction, TransCanada will be entitled to credit the
amount of the Break-up Fee and the maximum amount of the
Expense Reimbursement against the Purchase Price payable
at Closing;
(f) Other Terms
All Qualified Competing Bids, the Auction, and the Bidding
Procedures are subject to additional terms and conditions
as are announced by NEG, in consultation with the Official
Committees, not inconsistent with the Bidding Procedures.
At the conclusion of the Auction:
(i) the Winning Bid will be the bid made pursuant to
the Bidding Procedures that represents, in NEG's
sole discretion, upon consultation of the Official
Committees, the highest or otherwise best offer;
and
(ii) Before the approval of the Purchase Agreement, NEG
will announce their intention to either:
-- pursue a transaction with the Winning Bidder at
the Auction, and announce the identity of the
Winning Bidder; or
-- in lieu of pursuing a transaction with the
Winning Bidder, pursue and seek confirmation and
consummation of a stand-alone reorganization
plan that does not contemplate a sale to the
Winning Bidder, or in the event that a Plan for
or involving NEG has been confirmed and
consummated, not proceed with a sale to the
Winning Bidder;
(g) Irrevocability of Certain Bids
The Winning Bid will remain irrevocable in accordance with
the terms of the purchase agreement executed by the
Winning Bidder. The next highest or otherwise best bid
will be irrevocable until the earlier of:
(i) 60 days after approval of the Purchase Agreement
approving the Winning Bid;
(ii) closing of the sale to the Winning Bidder or the
Back-up Bidder; and
(iii) the date as NEG affirm in writing that, in lieu of
pursuing the sale under the Purchase Agreement or
other alternative transaction:
-- NEG intends to pursue and seek confirmation of a
stand-alone reorganization plan for or involving
NEG that does not contemplate a sale to the
Winning Bidder; or
-- in the event that a Plan for or involving NEG
has been confirmed and consummated, not proceed
with a sale to the Winning Bidder;
(h) Retention of Deposit
The Winning Bidder's Deposit will be held and disbursed by
the JPMorgan Chase in accordance with the terms of the
purchase agreement executed by the Winning Bidder. The
Back-up Bidder's Deposit will be held until the earlier
of:
(i) 60 days after approval of the Purchase Agreement
approving the Winning Bid;
(ii) closing of the sale to the Winning Bidder or the
Back-up Bidder; and
(iii) the date as NEG affirm in writing that, in lieu of
pursuing the sale under the Purchase Agreement or
other alternative transaction:
-- NEG intends to pursue and seek confirmation of a
stand-alone reorganization plan for or involving
NEG that does not contemplate a sale to the
Winning Bidder; or
-- in the event that a Plan for or involving NEG
has been confirmed and consummated, not proceed
with a sale to the Winning Bidder;
(i) Failure to Close
If the Winning Bidder fails to consummate the transaction
in accordance with the terms of the purchase agreement
executed by the Winning Bidder by the closing date
contemplated in the purchase agreement agreed to by the
parties for any reason, NEG will:
(i) retain the Winning Bidder's Deposit, except in the
case of TransCanada, whose rights to any deposit
will be governed by the Deposit Agreement;
(ii) maintain the right to pursue all available
remedies, whether legal or equitable available to
it; and
(iii) upon consultation with the Official Committees, be
free to consummate the proposed transaction with
the Back-up Bidder at the highest price bid by the
Back-up Bidder at the Auction. If the Back-up
Bidder is unable to consummate the transaction at
that price, NEG may consummate the transaction
with the next highest bidder at the Auction,
without the need for an additional hearing or Court
authorization;
(j) Non-Conforming Bids
NEG will have the right to entertain any bid that does not
conform to one or more of the specified requirements and
deem that bid a Qualified Competing Bid. However, the
Non-Conforming Bid must be irrevocable in accordance with
the terms of the Bidding Procedures and satisfy that:
(i) the Deposit must be made in the specified amount;
(ii) the Initial Overbid must meet the minimum
requirement;
(iii) any subsequent bid must meet the specified
requirements; and
(iv) the Non-Conforming Bid must be structured as a
single transaction for all of the Shares or other
equity interests, or all or substantially all of
the assets of the Acquired Companies. For the
avoidance of doubt, NEG will provide notice with
respect to Non-Conforming Bids.
E. Expenses
Any bidders presenting bids will bear their own expenses in
connection with the proposed sale, whether or not the sale is
ultimately approved, in accordance with the terms of the
purchase agreement. TransCanada may recover expenses in
accordance with the provisions of the Purchase Agreement.
F. Conflict
Any conflict between the terms and provisions of the Bidding
Procedures and any purchase agreement -- including the
Purchase Agreement -- executed by NEG and a Qualified Bidder
will be resolved in favor of the approved Bidding Procedures.
The proposed Bidding Procedures authorizes NEG to transfer to its
affiliates ownership of certain entities that own the assets to
be conveyed under the Purchase Agreement and the assets
themselves, with the written prior consent of TransCanada or the
Winning Bidder other than TransCanada. The provision allows NEG
to structure a sale transaction in a way that maximizes the value
of the sale to a Purchaser, and therefore, maximizes the price
that the Purchaser will pay for the assets.
NEG believes that the Bidding Procedures are fair and reasonable,
and are not likely to dissuade any serious potential alternative
buyer from bidding on the Shares.
Right of First Refusal
Pursuant to the Joint Operations and Development Agreement, dated
as of July 19, 2002, between Gasoducto Bajanorte, S. de R.L. de
C.V. and North Baja, GBN has a right of first refusal over the
sale of the equity interests in the North Baja Pipeline.
The proposed Bidding Procedures acknowledge the North Baja ROFR.
Specifically, as part of the JODA, GBN has a 30-day right of
first refusal over the sale of interests in the North Baja
Pipeline, beginning when GBN is notified of its right. On the
first business day after the approval of the Sale, the Winning
Bidder will be required to deliver notice to NEG allocating a
portion of the Base Purchase Price to the total enterprise value
of the North Baja Pipeline. The Stock Purchase Agreement
contemplates the exercise of GBN's right to purchase NEG's
interest in the North Baja Pipeline at the allocated price and on
the terms NEG negotiated with TransCanada.
GBN will have a 30-day period following receipt of the notice to
exercise or decline to purchase the equity interests in the North
Baja Pipeline. Upon the earlier to occur of (i) all Closing
conditions with respect to the sale of the equity in GTNC --
without the North Baja Pipeline -- having been met and (ii) GBN's
exercise of the North Baja ROFR, the equity interests in the
North Baja Pipeline and certain debt owed by the North Baja
Pipeline to GTNC will be spun-off from GTNC to NEG. NEG will
subsequently pursue two separate sale transactions:
* one with respect to the sale of the equity in GTNC --
without the North Baja Pipeline -- to TransCanada; and
* the other with respect to the sale of the equity in the
North Baja Pipeline to GBN.
If the transaction with GBN does not close or is terminated,
TransCanada will remain obligated to purchase the North Baja
Pipeline until November 20, 2004.
Other than the North Baja ROFR, NEG is not aware of the existence
of any Liens or Encumbrances relating to the equity interests in
the North Baja Pipeline.
Headquartered in Bethesda, Maryland, PG&E National Energy Group,
Inc. -- http://www.pge.com/-- develops, builds, owns and operates
electric generating and natural gas pipeline facilities and
provides energy trading, marketing and risk-management services.
The Company filed for Chapter 11 protection on July 8, 2003
(Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq.,
Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at
Willkie Farr & Gallagher represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $7,613,000,000 in assets and
$9,062,000,000 in debts. (PG&E National Bankruptcy News, Issue No.
17; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PRESIDENT CASINOS: Evaluating Strategic Options for Biloxi Units
----------------------------------------------------------------
President Casinos, Inc. (OTC:PREZ), in a consensual agreement with
certain Bondholders, has filed the necessary papers with the
Bankruptcy Court whereby it will undertake a process to evaluate
the strategic alternatives for its Biloxi subsidiaries, President
Broadwater Hotel, LLC, President Riverboat Casino-Mississippi and
Vegas Vegas, Inc. which may include a sale, joint venture or
refinancing. Pursuant to this process, the Biloxi Subsidiaries
have retained Innovation Capital Holding, LLC to assist the
Company in reviewing its alternatives and evaluating prospective
transaction proposals.
John S. Aylsworth, President and Chief Operating Officer said,
"This property is one of the largest aggregated gaming/resort
development opportunities in the United States, capable of
multiple casino/resort projects. The property has unobstructed
access to the Gulf, and for decades the Broadwater name has had
high recognition value in the Southeast."
President Casinos, Inc. -- whose November 30, 2003 balance sheet
shows a total shareholders' equity deficit of about $52 million --
owns and operates dockside gaming facilities in Biloxi,
Mississippi and downtown St. Louis, Missouri, north of the Gateway
Arch.
REPTRON: Newly Reorganized Company Posts Q4 and FY 2003 Results
---------------------------------------------------------------
Reptron Electronics, Inc. (OTC Bulletin Board: REPTQ), an
electronics manufacturing services company, reported financial
results for its fourth quarter and fiscal year ended December 31,
2003.
As previously reported, Reptron sold certain identified assets of
its electronic components distribution division on June 13, 2003.
Additionally, the Company sold certain assets of its memory module
division on October 27, 2003. The 2003 results have been adjusted
to reflect the remaining operations while segregating and
summarizing the electronic components distribution and memory
module divisions as discontinued operations.
Reptron filed a voluntary petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code on October 28, 2003. The
Plan of Reorganization was confirmed by the U.S. Bankruptcy Court
on January 14, 2004 and became effective on February 4, 2004
allowing the Company to emerge from bankruptcy. Expenses incurred
through the reorganization process have been segregated and
summarized as Reorganization Costs.
Reptron recorded fourth quarter 2003 net sales from continuing
operations of $36.9 million, an 8.8% decline from the same period
a year ago. The Company incurred a pro forma fourth quarter 2003
loss from continuing operations totaling $436,000, or $0.07 per
fully diluted share, prior to certain charges associated with
goodwill impairment, reorganization costs and inventory write-
downs. This compares to a $2.0 million loss from continuing
operations, or $0.31 per fully diluted share, in the same period a
year ago. During the fourth quarter of 2003, the Company recorded
charges associated with goodwill impairment, reorganization costs
and inventory write-downs totaling $12.6 million resulting in a
fourth quarter 2003 net loss from continuing operations inclusive
of these charges of $13 million, or $2.03 per fully diluted share.
Reptron generated $4.6 million in cash from operations in the
fourth quarter, 2003 which was used primarily to further reduce
debt.
For the twelve months ended December 31, 2003, net sales from
continuing operations totaled $150.1 million, a 9.1% decrease from
the 2002 fiscal year. The Company recorded a pro forma loss from
continuing operations in the 2003 fiscal year totaling $4.2
million, or $0.65 per fully diluted share, prior to the charges
associated with goodwill impairment, reorganization costs and
inventory write-downs. This compares to a $12.1 million pro forma
loss from continuing operations, or $1.88 per fully diluted share,
during the 2002 fiscal year. Reptron recorded a loss from
continuing operations in the 2003 fiscal year totaling $16.7
million, or $2.61 per fully diluted share, including the effect of
the previously mentioned charges.
Reptron also incurred a net loss from discontinued operations
totaling $24.3 million, or $3.79 per fully diluted share, during
the 2003 fiscal year compared to a net loss from discontinued
operations of $14.1 million, or $2.20 per fully diluted share in
the 2002 fiscal year. The 2003 loss from discontinued operations
includes the effect of the impairment of long-lived assets and
goodwill and increases in inventory reserves, which non-cash
charges totaled $16.1 million. Reptron generated $13.9 million in
cash from operations during the 2003 fiscal year.
"Reptron Electronics has experienced a significant transformation
during 2003," stated Paul J. Plante, Reptron's President and Chief
Executive Officer. Plante continued, "The Company entered 2003
with several divisions, each impacted by tough industry
conditions. We exited the year with a single focus as an
electronic manufacturing services provider encouraged by signs of
an improving economy. Reptron will have strengthened its balance
sheet by reducing debt by approximately $75 million through
divestitures, reorganization and improvements in our cash
conversion cycle."
Plante concluded, "I am humbled by the support we have received
during this transformation period. We are committed to maximizing
future growth opportunities for the benefit of all who have
provided Reptron this support".
About Reptron
Reptron Electronics, Inc. is a leading electronics manufacturing
services company providing engineering services, electronics
manufacturing services and display integration services. Reptron
Manufacturing Services offers full electronics manufacturing
services including complex circuit board assembly, complete supply
chain services and manufacturing engineering services to OEMs in a
wide variety of industries. Reptron Display and System Integration
provides value-added display design engineering and system
integration services to OEMs. Got to http://www.reptron.com/
RG BARRY: Secures Funds for March & Keeps Negotiating for More
--------------------------------------------------------------
R.G. Barry Corporation (NYSE: RGB) has received a commitment from
its current lender to advance the Company additional funds in
March 2004, in an amount which the Company expects to be
sufficient to meet its financing requirements for operations
during the remainder of the month. Negotiations are continuing
with several lenders to secure the Company's financing
requirements for the remainder of 2004.
R.G. Barry Corporation also reported today that Gordon Zacks, 71,
has announced his decision to retire as President and Chief
Executive Officer of the Company, effective immediately. Mr. Zacks
will relinquish his day-to-day responsibilities but will continue
as Senior Chairman of the Board.
"Gordon Zacks has devoted 50 years of his life to building R.G.
Barry Corporation, and for the past 24 years he has provided
direction and leadership as our Company's Chief Executive
Officer," said Edward M. Stan, speaking on behalf of the Company's
Board of Directors. "We thank him for his innumerable
contributions, and we are pleased that he will continue to provide
his unique vision as a director and the Company's Senior Chairman
of the Board."
Thomas M. Von Lehman, 54, has been named the Company's interim
President and CEO. Mr. Von Lehman joins R.G. Barry from The
Meridian Group, an investment banking and corporate renewal
consulting firm currently engaged by the Company to provide
consulting services in regard to R.G. Barry's financing
requirements and operational success.
"Tom and The Meridian Group have been working with our senior
management for the past few months. Their mission has been to
secure financing for 2004, assess our business model, recommend
changes to our business model and work with our management to
build a transition plan to move R.G. Barry forward," Senior
Chairman Zacks said. "As a corporate renewal specialist with
extensive senior management experience, Tom is highly qualified to
lead a turnaround of our Company. I will assist and support him in
any way he believes will be helpful. My objective is to see R.G.
Barry returned to financial health."
R.G. Barry Corporation has entered into a six-month employment
agreement with Von Lehman. Pursuant to that agreement, the Company
is granting him stock options to purchase up to 100,000 shares of
the Company with a second grant of an additional 50,000 if the
Company and Von Lehman agree to a three-month extension of the
employment agreement beyond the initial six-month term. The stock
options will have an exercise price equal to the market price of
the shares on the date of grant and will have a two-year term. The
stock options vest at the end of each employment period unless
certain events occur prior to that time.
RURAL CELLULAR: S&P Assigns Low-B Senior Debt & Bank Loan Ratings
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigns its 'B-' rating to
Rural Cellular Corp.'s aggregate $510 million senior secured
floating notes due 2010 and senior secured notes due 2012, issued
under Rule 144A with registration rights. A recovery rating of '2'
also was assigned to these note issues, indicating an expectation
for a substantial recovery of principal in the event of a default.
In addition, a 'B+' bank loan rating, along with a recovery
rating of '1', was assigned to the company's new $60 million
secured credit facility, based on preliminary documentation. The
ratings on the facility indicate the expectation for full recovery
of principal in the event of a default. The $510 million of notes
will have a second lien on the collateral securing the new bank
facility. Proceeds of the new notes will be used to repay bank
debt, and the 'B-' rating on the current $585 million bank
facility will be withdrawn at that time.
Simultaneously, Standard & Poor's affirmed its existing ratings on
Rural Cellular, including the 'B-' corporate credit rating. The
outlook is stable.
Alexandria, Minnesota-based Rural Cellular provides wireless voice
services to more than 745,000 subscribers in rural markets
covering the Midwest, Northeast, South, and Northwest regions of
the U.S. Pro forma for the new notes (as of Dec. 31, 2003), total
debt outstanding was about $1.3 billion; including preferred
stock, the total is about $1.8 billion.
"The ratings on Rural Cellular reflect slower industry growth and
minimal expected decline in debt leverage over the near term due
to increased capital expenditures to support next-generation
network outlays and an increased level of preferred stock due to
nonpayment of cash dividends on the 11.375% senior exchangeable
preferred issue," said Standard & Poor's credit analyst Rosemarie
Kalinowski. "In addition, roaming revenue, which comprises about
26% of total revenue, is expected to be significantly lower in
2004 due to the Oregon asset swap with AT&T Wireless Services
(AWE) and lower roaming yield. These factors should be partially
mitigated by the increase in minutes of use (MOU) upon further
buildout of Rural Cellular's network overlays. Uncertainty exists
as to the impact of the Cingular Wireless LLC and AWE merger on
roaming revenue, but Rural Cellular is somewhat better positioned
than its peers due to the more rural nature of its service area
and its diversified mix of roaming partners. The company has
roaming agreements in place with the majority of its partners
through 2007."
Growth in service revenue, which totaled $355 million in 2003, is
dependent upon rolling out new next-generation services and
increased marketing to leverage its local sales presence, as
number portability is implemented in the majority of its service
area in May 2004. Although universal service funding represents
less than 5% of total revenue, it provides another source that
mitigates overall projected slower subscriber growth. In 2003,
service revenue increased about 11% due to increased monthly
average revenue per unit (ARPU), net customer additions of about
12,000, and universal service fund support payments of about $9
million. Roaming revenue increased about 7.5% due to higher MOU,
offsetting declines in roaming yield. Standard & Poor's expects
future service revenue growth to be more moderate, in the mid
single-digit area, because of slower subscriber growth.
Capital expenditures were about $54 million in 2003, but are
anticipated to be materially higher in 2004 due to the network
overlays for global system for mobile communications/general
packet radio service and code division multiple access
technologies, which are essential for service revenue and roaming
revenue growth. The company generated minimal free cash flow of
about $90 million in 2003, but this metric is expected to decline
through at least 2005 due to higher capital expenditures. Over the
past three quarters, Rural Cellular did not pay cash dividends on
its 11.375% senior exchangeable preferred stock, which is
mandatorily redeemable in May 2010. Under the existing bank
facility, the company has the ability to use up to $100 million
for preferred stock purchases. A restructuring of the preferred
stock will be required to reduce overall debt leverage, which was
about 7.5x in 2003. Excluding the preferred stock, this metric is
in the 5.5x area.
SILVERLEAF RESORTS: Senior Lender Agrees to Extend Loan Agreement
-----------------------------------------------------------------
Silverleaf Resorts, Inc. (OTC:SVLF) announced that one of the
Company's senior lenders agreed to amend a secured receivables
facility to extend the maturity date to February 28, 2006 and to
convert the facility to a term loan. The Company previously
announced in December 2003 that it would be necessary to either
amend or replace this senior loan facility in order to avoid a
payment default when it matured in August 2004. The current
balance on the facility is approximately $16 million.
The Company also announced that it is replacing a non-revolving
inventory loan maturing in March 2007 with a new revolving
inventory loan agreement with one of its other senior lenders
which will also mature in March 2007. As previously announced, the
Company completed amendments of its credit facilities with its
other senior lenders in December 2003 to extend the maturity date
of those agreements through March 31, 2007.
Based in Dallas, Texas, Silverleaf Resorts, Inc. currently owns
and operates 12 timeshare resorts in various stages of
development. Silverleaf Resorts offer a wide array of country
club-like amenities, such as golf, swimming, horseback riding,
boating, and many organized activities for children and adults.
Silverleaf has an ownership base of over 110,000.
SLATER STEEL: TSX Will Knock Common Shares Off Exchange
-------------------------------------------------------
Slater Steel Inc. (SSI) announced that the Toronto Stock Exchange
(TSX) has accepted notice of the Company's request to delist its
common shares from trading on the TSX. The common shares will be
delisted effective at the close of business on Friday, March 19,
2004.
The Company and its subsidiaries sought creditor protection under
applicable Canadian and U.S. legislation on June 2, 2003 and have
announced either the wind down and orderly realization or the sale
of its remaining assets. In press releases, Slater has stated on
six occasions -- October 7, 2003, November 20, 2003, December 19,
2003, January 7, 2004, February 23, 2004 and March 8, 2004 -- that
it does not expect that shareholders will receive any value from
the insolvency proceedings.
Slater Steel is a mini mill producer of specialty steel products.
SOTHEBY'S HOLDINGS: FY 2003 Net Loss Narrows to $26.5 Million
-------------------------------------------------------------
Sotheby's Holdings, Inc. (NYSE: BID; LSE: STBA), the parent
company of Sotheby's worldwide auction businesses and art-related
financing activities announced results for the fourth quarter and
full year ended December 31, 2003.
For the quarter ended December 31, 2003, the Company reported
total revenues from continuing operations of $136.9 million,
compared to $116.9 million in the corresponding period in 2002 for
an increase of $20.0 million, or 17%, due to a very strong fall
selling season. The Company's net income from continuing
operations for the fourth quarter of 2003 was $17.6 million, or
$0.28 per diluted share, compared to a net loss from continuing
operations for the fourth quarter of 2002 of ($7.2) million, or
($0.12) per diluted share, partially due to the substantial
reduction in employee retention costs and antitrust related
special charges over the period. During the fourth quarter of
2003, the Company recorded pre-tax charges of $0.9 million,
primarily due to antitrust related special charges. During the
same period of 2002, the Company recorded pre-tax charges of $29.6
million, or ($0.34) per diluted share, related to antitrust
related special charges ($21.9 million), employee retention costs
($4.3 million) and net restructuring charges ($3.5 million).
Excluding these items, the Company would have recorded adjusted
net income from continuing operations of $18.1* million, or $0.29*
per diluted share, in the fourth quarter of 2003, as compared to
adjusted net income from continuing operations of $13.6* million,
or $0.22* per diluted share, in the same period in 2002, an
increase of 33%.
"We are delighted with our fourth quarter results, which are the
best since 1999 and are up significantly compared to last year in
adjusted operating income (up 52%)* and net income (up 33%)* (both
from continuing operations). Sotheby's today enjoys the very best
expertise, creativity and professionalism in the art world, which
will be reflected in our results, both in the first quarter and we
expect into the second quarter of 2004 as well," said William F.
Ruprecht, President and Chief Executive Officer of Sotheby's
Holdings, Inc.
For the year ended December 31, 2003, the Company reported total
revenues from continuing operations of $319.6 million, compared to
$310.5 million for the previous year, an improvement of $9.1
million or 3%. Net loss from continuing operations for the full
year 2003 was ($26.5) million, or ($0.43) per diluted share,
compared to a net loss of ($59.5) million, or ($0.97) per diluted
share for 2002, primarily due to the significant reduction in
employee retention costs and antitrust related special charges
over the year. 2003 results include pre-tax charges of $16.6
million, or ($0.19) per diluted share, which consist of employee
retention costs of $8.5 million, net restructuring charges of $5.0
million and antitrust related special charges of $3.1 million.
Excluding these charges, the Company's adjusted net loss from
continuing operations for the full year 2003 would have been
($14.8)* million or ($0.24)* per diluted share. Included in the
full year 2002 results are pre-tax charges of $65.6 million, which
consist of antitrust related special charges of $41.0 million,
employee retention costs of $22.6 million and net restructuring
charges of $2.0 million. Excluding these pre-tax charges, adjusted
net loss from continuing operations for the full year 2002 would
have been ($8.9)* million, or ($0.14)* per diluted share.
Aggregate Auction Sales (hammer price plus buyer's premium) rose
15% in the fourth quarter of 2003 to $792.9 million, and was $1.69
billion for the year ended December 31, 2003, a 5% decline
compared to prior year. Mr. Ruprecht noted, however, that
Sotheby's continued focus is on profitability and not sales or any
market share level, particularly at the low end of the market.
Discontinued Real Estate Operations
As announced last month, Cendant Corporation, which is primarily a
provider of travel and residential real estate services, acquired
the domestic brokerage operations of Sotheby's International
Realty and also entered into a license agreement of up to 100
years where Cendant licenses the Sotheby's International Realty
brand in exchange for an ongoing licensing fee to Sotheby's. The
total cash purchase price paid by Cendant for the company- owned
real estate brokerage operations as well as the license agreement
was approximately $100 million. "We are extremely happy with the
outcome of this transaction for Sotheby's and its shareholders and
with our long term strategic alliance with this outstanding
partner, which we expect will extend and grow our world-renowned
brand," commented Mr. Ruprecht.
Long Term Refinancing
On March 4th, Sotheby's entered into a new three year senior
secured credit agreement with GE Commercial Finance Corporate
Lending providing for borrowings of up to $200 million, of which
$100 million is currently committed and the remainder is in the
process of being offered to an international syndicate of lenders.
Because of decreased liquidity needs as a result of the receipt of
proceeds from the sale of the Company's domestic real estate
brokerage business described above, the Company may ultimately
decide to limit the aggregate amount committed for borrowings
under the GE Commercial Finance Credit Agreement to an amount that
is less than $200 million. "This new credit agreement dramatically
expands our financing capabilities and is indicative of the
growing strength and momentum of our organization," commented Mr.
Ruprecht.
Option Exchange Program
On March 1st, Sotheby's launched an option exchange offer to
employees holding certain underwater stock options to exchange
those options for either cash or restricted stock, depending on
the size of the employee's holding. If all eligible participants
accept the offer, the cost of the program in 2004 will be
approximately $8 million, of which approximately $2 million will
be a cash expense, and the overhang of all current outstanding
stock options (vested and unvested, at all exercise prices) as a
proportion of common shares outstanding will be reduced from
approximately 22% to approximately 13%. "We view this program to
be of great value to those employees who hold underwater stock
options which have failed to deliver value as well as to our
shareholders with the reduction in overhang," commented Mr.
Ruprecht.
Year to Date 2004 Sales
"We are very pleased with our sale results for the year so far,
highlighted by the exceptional private sale of the Forbes
Collection of Faberge," said Mr. Ruprecht. Last month, Sotheby's
sold the Forbes Collection, which included nine fabled Imperial
Easter Eggs and other objects that had a low pre-sale auction
estimate in excess of $90 million, to Mr. Victor Vekselberg, a
Russian industrialist, for an undisclosed sum. "We were very
excited at the prospect of an extraordinary auction and
magnificent pre- sale exhibition, but we knew that this remarkable
offer and the return of the Faberge Imperial Easter Eggs to Russia
had to be taken very seriously. We, along with the Forbes family,
are delighted with the outcome," continued Mr. Ruprecht.
In January, Sotheby's had a strong Americana week with a sales
total of $13.6 million, soundly above its high estimate of $12.4
million. Our Old Masters Paintings sale in New York performed
extremely well, leading the market with a total of $31.2 million,
well within its pre-sale low and high estimates of $25.6 million
and $36.3 million, respectively. The highlight of the sale was
Hendrick Avercamp's A Winter Scene which garnered $8.7 million,
well above its $4/$6 million presale estimate, and a record for
the artist at auction.
Our February London sales also brought strong results. The
Impressionist, Modern, German and Surrealist Art sales in London
achieved approximately $75.4 million (41.2 million pounds) and was
highlighted by eight lots selling over 1 million pounds and the
sale of Edgar Degas' sculpture Petite Danseuse de Quatorze Ans for
$9.2 million (5.0 million pounds) which was the highest price
achieved in the London sales of Impressionist and Modern Art that
week. In the Contemporary Art sales, Sotheby's led the competition
by 70% with an exceptional two days of sales totaling $35.1
million, well above its pre-sale estimate of $22.9/$30.6 million.
The evening sale of Contemporary Art (total of $27.0 million)
acquired the record of being the highest total ever for a
Contemporary sale in Europe, and was 93% sold.
Second Quarter Sales
Looking ahead to the second quarter, on May 5th in New York,
Sotheby's is holding a remarkable single owner sale of 44
paintings belonging to the Greentree Foundation from the
collection of Mr. and Mrs. John Hay Whitney which is expected to
achieve in excess of $140 million. The centerpiece of this sale is
Pablo Picasso's Garcon a la Pipe (Boy with a Pipe), which is
considered to be one of the most beautiful and powerful pictures
from the artist's "Rose Period" and was painted when he was only
24 years old. The picture is expected to garner in excess of $70
million. Other exceptional highlights of the sale are works by
Edouard Manet, Edgar Degas, Claude Monet, Sir Alfred J. Munnings
and John Singer Sargent.
In London, the renowned library formed by the first and second
earls of Macclesfield before 1750 will be sold in a series of
sales beginning in March 2004 and are expected to achieve $18
million (10 million pounds) in aggregate.
In April and November 2004, Sotheby's New York will offer for sale
an extraordinary collection of over 800 books and letters from the
Collection of Maurice F. Neville, the finest collection of Modern
Literature to appear on the market in over twenty five years. It
includes a remarkable array of inscribed first editions, letters
and manuscripts of such authors as F. Scott Fitzgerald, Dylan
Thomas, Jack Kerouac and arguably, the best collection of Ernest
Hemingway material in private hands, as well as an extensive
selection of detective literature and mystery writers, including
inscribed books, letters and manuscripts of Sir Arthur Conan
Doyle, Dashiell Hammet, Raymond Chandler and Ian Fleming, among
others. The collection is estimated to bring between $5/$7
million.
Through the end of April, Sotheby's will be offering for Private
Sale eleven works of art in an unprecedented exhibition at the
exclusive Isleworth Country Club in Widermere, Florida entitled,
"Monumental Masterpieces of Modern Sculpture." This $20 million
private offering features some of the best sculpture cast in the
20th century by artists including August Rodin, Jean DuBuffet,
Fernando Botero, Henry Moore, Joan Mirs and Salvador Dali.
On June 10 and 11, in New York, Sotheby's will auction Property
from the Estate of Katharine Hepburn. The sale is expected to
fetch approximately $1 million and comprises furniture, paintings
and decorations from her homes, a selection of the clothing and
accessories that epitomized her iconic sense of style, photographs
and personal items as well as her own paintings and sketches.
At the end of June, in Paris, Sotheby's will offer for sale 18th
Century Furniture and Works of Art, Old Master and
Impressionist/Modern Paintings, Silver and Vertu from The Franco
Cesari Collection. This sale is estimated to bring euro 7/euro 10
million and is the first sale at Sotheby's Paris to include
Impressionist and Modern Art. Highlights of the collection include
works by Gustave Caillebotte and Camille Pissarro.
About Sotheby's Holdings, Inc.
Sotheby's Holdings, Inc. (S&P, B Corporate Credit Rating,
Developing) is the parent company of Sotheby's worldwide auction
businesses and art-related financing activities. The Company
operates in 34 countries, with principal salesrooms located in New
York and London. The Company also regularly conducts auctions in
13 other salesrooms around the world, including Australia, Hong
Kong, France, Italy, the Netherlands, Switzerland and Singapore.
Sotheby's Holdings, Inc. is listed on the New York Stock Exchange
and the London Stock Exchange.
SOUTHWEST RECREATIONAL: Gets Nod to Hire Trumbull as Claims Agent
-----------------------------------------=-----------------------
Southwest Recreational Industries, Inc., and its debtor-affiliates
sought and obtained approval from the Northern District of
Georgia, Rome Division, to appoint The Trumbull Group, LLC, as
their claims, noticing and balloting agent in these Chapter 11
case.
The numerous potential creditors and other parties in interest
involved in the Debtors' Chapter 11 cases, which may well impose
heavy administrative and other burdens on the Court and the Office
of the Clerk of the Court. To relieve the Clerk's Office of these
burdens, the Debtors engage Trumbull as their Claims, Noticing and
Balloting Agent.
The Debtors anticipate that Trumbull will:
a) prepare and serve required notices in these Chapter 11
cases, including:
i) a notice of the commencement of these Chapter 11
cases and the initial meeting of creditors under
Section 341(a) of the Bankruptcy Code;
ii) a notice of the claims bar date;
iii) notices of objections to claims;
iv) notices of any hearings on a disclosure statement and
confirmation of a plan or plans of reorganization;
and
v) such other miscellaneous notices as the Debtor or
Court may deem necessary or appropriate for an
orderly administration of these Chapter 11 cases.
b) within five business days after the service of a
particular notice, file with the Clerk's Office a
certificate or affidavit of service that includes;
i) a copy of the notice served,
ii) an alphabetical list of persons on whom the notice
was served, along with their address, and
iii) the date and manner of service;
c) maintain copies of all proofs of claim and proofs of
interest filed in these cases;
d) maintain official claims registers in these cases by
docketing all proofs of claim and proofs of interest in a
claims database that includes the following information
for each such claim or interest asserted:
i) the name and address of the claimant or interest
holder and any agent thereof, if the proof of claim
or proof of interest was filed by an agent;
ii) the date the proof of claim or proof of interest was
received by Trumbull and/or the Court;
iii) the claim number assigned to the proof of claim or
proof of interest; and
iv) the asserted amount and classification of the claim;
e) implement necessary security measures to ensure the
completeness and integrity of the claims registers;
f) transmit to the Clerk's Office a copy of the claims
registers on a weekly basis, unless requested by the
Clerk's Office on a more or less frequent basis;
g) maintain an up-to-date mailing list for all entities that
have filed proofs of claim or proofs of interest and make
such list available upon request to the Clerk's Office or
any party in interest;
h) provide access to the public for examination of the proofs
of claim or proofs of interest filed in these cases
without charge during regular business hours;
i) record all transfers of claims pursuant to Fed. R. Bankr.
P. 3001(e) and provide notice of such transfers as
required by Rule 3001(e), if directed to do so by the
Court;
j) comply with applicable federal, state, municipal and local
statues, ordinances, rules, regulations, orders and other
requirements;
k) provide temporary employees to process claims, as
necessary;
l) promptly comply with such further conditions and
requirements as the Clerk's Office or the Court may at any
time prescribe; and
m) provide such other claims processing, noticing, balloting,
and relating administrative services as may be requested
from time to time by the Debtors.
Lorenzo Mendizabal, President of Trumbull reports that his firm's
rates are:
Claims Management $65 per hour
Administrative Support $50 per hour
Assistant Case Manager/
Data Specialist $65 - $80 per hour
Case Manager $110 - $125 per hour
Automation Consultant $140 - $160 per hour
Sr. Automation Consultant $165 - $185 per hour
Consultant $175 - $225 per hour
Sr. Consultant $230 - $300 per hour
Headquartered in Leander, Texas, Southwest Recreational
Industries, Inc. -- http://www.srisports.com/-- designs,
manufactures, builds and installs stadium and arena running tracks
for schools, colleges, universities, and sport centers. The
company filed for chapter 11 protection on February 13, 2004
(Bankr. N.D. Ga. Case No. 04-40656). Jennifer Meir
Meyerowitz, Esq., Mark I. Duedall, Esq., and Matthew W. Levin,
Esq., at Alston & Bird, LLP represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, they listed $101,919,000 in total assets and
$88,052,000 in total debts.
SPIEGEL GROUP: Gets Nod to Assume AT&T Executory Contracts
----------------------------------------------------------
An essential component of the Spiegel Group Debtors tri-channel
direct marketing business is over-the-phone customer service for
inbound sales, customer satisfaction and Internet support. The
Debtors provide these services to customers from regional call
centers, which are staffed and equipped to receive and respond to
customer calls. AT&T Corp. furnishes these call centers with the
necessary voice and data telecommunications support to enable the
Debtors to provide these services pursuant to two agreements
between AT&T and the Debtors -- a Master Agreement dated
December 8, 2000 and a separate service order attachment
effective as of June 7, 2001.
James L. Garrity, Jr., Esq., at Shearman & Sterling LLP, in New
York, relates that the Master Agreement sets forth the basic
terms and conditions of the business arrangement between AT&T and
the Debtors, and the Original Voice/Data Attachment sets forth
the terms and conditions of the specific services that AT&T
provides to the Debtors, like toll-free services and
international satellite services. The Original Voice/Data
Attachment also sets the rates for each of the individual
services provided to the Debtors and provides for a minimum
annual revenue commitment of $20,700,000 from the Debtors. The
Original Voice/Data Attachment is scheduled to terminate in
accordance with its terms in July 2004.
Mr. Garrity notes that in 2003, the Debtors experienced a
significant reduction in the call volume to their call centers
causing them to fall short of the MARC. AT&T asserts that this
shortfall has resulted in a $1,170,000 penalty. In addition,
prior to the Petition Date, the Debtors did not make certain
payments under the Original Voice/Data Attachment, and AT&T has
asserted a $2,800,000 prepetition claim under the agreement.
Accordingly, AT&T has timely filed proofs of claim in the
Debtors' Chapter 11 cases aggregating $3,500,000.
The Debtors determined that call centers are significantly less
expensive to operate in Canada because of, among other things,
the favorable exchange rate between the U.S. dollar and the
Canadian dollar, significantly lower labor costs and more
favorable lease rates. Therefore, the Debtors closed certain
call centers in the U.S. and opened call centers in St. John, New
Brunswick and Sydney, Nova Scotia.
Mr. Garrity informs the Court that as both part of this
relocation process and in response to anticipated call volume,
the Debtors sought an alternative voice and data
telecommunications arrangement that would both coincide with the
new locale of the call centers and be more favorable financially.
In this regard, the Debtors contacted numerous telecommunications
providers to obtain competitive pricing options, including MCI,
Sprint, Sprint Canada, Global Crossing, Broadwing, Aliant, and
Allstream -- formerly AT&T of Canada. After conducting due
diligence, the Debtors determined that AT&T provided high quality
telecommunications services, especially between the U.S. and
Canada, at competitive rates. Thus, after arm's-length
negotiations, the Debtors and AT&T agreed that the Debtors would
assume the AT&T Contracts as modified.
The modifications to the Original Voice/Data Attachment are set
forth in three separate attachments to the Master Agreement:
(i) a modified Voice/Data Services Attachment;
(ii) the North American Voice Services Attachment; and
(iii) the Voice/Data Services Addendum.
The Modified Voice/Data Attachment provides for an extension of
the term of the Original Voice/Data Attachment until July 2006
and reduces the MARC from $20,700,000 to $6,000,000. In
addition, the Modified Voice/Data Attachment reduces the rates
applied to the services provided by AT&T, provides for a free
month of relay services amounting to $130,000 in savings to the
Debtors, and allows the Debtors to maintain certain credits
accrued under the original agreement. Under the terms of the
Voice Services Attachment, AT&T agrees to furnish the Debtors
with voice services:
* between points in the U.S. and points in Canada;
* between points in Canada; and
* between points in Canada and points in the rest of the world
under the terms of the Master Agreement and the Modified
Voice/Data Attachment.
Furthermore, under the terms of the Voice/Data Addendum, AT&T
agrees to reduce the MARC to $3,500,000 in the event that Newport
News, Inc. is sold or divested.
Mr. Garrity states that as part of the arrangement, AT&T has also
agreed to waive all of its prepetition claims against the Debtors
and cure costs that otherwise would be associated with the
assumption of the AT&T Contracts as modified. In addition, the
Debtors have agreed to pay the Allowed Administrative Claim to
AT&T without further delay. The Debtors and AT&T also agreed
that any additional postpetition amounts incurred by the Debtors
for the services provided after December 31, 2003 pursuant to the
AT&T Contracts as modified would be paid for in the normal course
of business between the parties.
With the assistance of their professionals and in the exercise of
their considered business judgment, the Debtors have determined
to assume the AT&T Contracts as modified. The Debtors carefully
considered numerous alternative arrangements with other
telecommunications service providers. Based on this due
diligence, the Debtors determined that the modifications to the
AT&T Contracts along with the Debtors' agreement to pay the
Allowed Administrative Claim and AT&T's agreement to waive all of
its prepetition claims and cure costs is the best of all
available alternatives.
Accordingly, the Debtors sought and obtained the Court's
authority to assume the AT&T Contracts as modified.
Headquartered in Downers Grove, Illinois, Spiegel, Inc.
-- http://www.spiegel.com/-- is a leading international general
merchandise and specialty retailer that offers apparel, home
furnishings and other merchandise through catalogs, e-commerce
sites and approximately 560 retail stores. The Company filed for
Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No.
03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq.,
at Shearman & Sterling represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $1,737,474,862 in assets and
1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 21;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
SUNCREST: Engages Chisholm Bierwolf as Auditor After Firm's Merger
------------------------------------------------------------------
On February 12, 2004, Suncrest Global Energy Corpooration's
independent auditors, Chisholm & Associates, Certified Public
Accountants, informed the Company that on February 9, 2004, that
firm had merged its operations into Chisholm, Bierwolf & Nilson,
LLC. Chisholm & Associates had audited the Company's financials
statements for the past two fiscal years ended June 30, 2003 and
2002 and its reports for each of the two fiscal years were
modified as to the uncertainty of Suncrest Global Energy Corp.'s
ability to continue as a going concern. Suncrest's Board of
Directors approved the change in auditors.
Suncrest Global is a development stage company with no recorded
revenues in the past two fiscal years. The company owns a mini oil
refinery located in Green River, Utah that it is in the process of
restoring to operational status. A mini refinery uses a scaled
down, low cost refining and recycling process which processes
crude oil or recycles waste oils. Suncrest's business plan is to
restore its mini refinery's operations, then develop a
manufacturing and marketing plan to sell a turnkey mini refinery
or waste oil refinery to prospective customers.
SUPRA TELECOM: Retains Babcock Group as Financial Advisor
---------------------------------------------------------
Supra Telecommunications & Information Systems, Inc. announced
that The United States Bankruptcy Court for the Southern District
of Florida has approved its request for retention of The Babcock
Group LLC as its exclusive financial advisor.
In its capacity as exclusive financial advisor to the company, The
Babcock Group will entertain any and all expressions of interest
on the part of potential strategic and financial buyers or
investors including an infusion of equity capital, the provision
of debt financing, and/or assumption of indebtedness or
liabilities as well as the sale of its business or assets.
Supra Telecom CEO Russ Lambert commented, "We are confident that
The Babcock Group will play an important role in moving Supra
forward to a favorable conclusion of the bankruptcy process and we
are pleased the court supported the process. Supra is now poised
to join with a business partner or be purchased by a larger player
and continue growing."
Supra Telecom provides local, long distance, and internet services
to consumers and small businesses throughout the state of Florida.
Founded in 1996, the company has built a base of over 260,000
access lines generating over $150 million in annual revenue. The
company grew its revenue base by 21% and achieved positive EBITDA
during 2003. Supra Telecom has also established itself as a
facilities-based CLEC with the deployment of switches and
collocation equipment in 22 BellSouth central offices in Florida.
Any parties interested in a transaction concerning Supra Telecom
are encouraged to contact The Babcock Group directly by calling
(800)495-5228 or via email at supra@babcockgroup.com.
The Babcock Group is a private investment firm providing a
comprehensive array of financial advisory services to middle-
market companies. The principals of The Babcock Group have
originated and executed more than $100 billion of financing and
strategic transactions during their tenure on Wall Street. They
are dedicated to bringing their breadth and depth of experience to
bear to the benefit of middle-market companies. With a portfolio
of capabilities that includes Financial Advisory, Mergers &
Acquisitions, Private Placements of Debt & Equity, Restructuring &
Turnaround, Principal Investments, Valuation Services, and
Research, The Babcock Group offers one- stop shopping for its
clients seeking sophisticated strategic and financial advice.
Miami-based Supra Telecom is a competitive local exchange carrier
offering local, long distance and internet access
telecommunication services to homes and small business customers
in Florida. The Debtor filed for Chapter 11 relief on October 23,
2002 (Bankr. S.D. Fl. Case No. 02-41250). Kevin S. Neiman, Esq.
represents the Debtor in its bankruptcy cases.
TENET HEALTHCARE: S&P Lowers Corporate Credit Rating to B
---------------------------------------------------------
Standard & Poor's Ratings Services lowers the corporate credit and
senior secured bank loan ratings on health care service provider
Tenet Healthcare Corp. to 'B' from 'B+', after the company
announced the completion of its expected bank amendment. Tenet's
unsecured notes are lowered to 'B-' from 'B+'. The bank loan is
rated the same as the corporate credit rating. The ratings are
removed from CreditWatch, where they were placed Jan. 28,
2004. The outlook is negative.
The unsecured notes are lowered two notches, and are now rated one
notch below the corporate credit rating. The two-notch downgrade
reflects the structural subordination of the unsecured debt as a
result of a guarantee now provided by certain subsidiaries for the
credit facility as part of this latest bank amendment. The grant
of subsidiary stock as security, though considered weak compared
with a guarantee of hard collateral, still disadvantages unsecured
creditors relative to bank creditors.
Tenet, based in Santa Barbara, Calif., had about $4.0 billion of
debt as of Sept. 30, 2003.
"The lower ratings reflect Standard & Poor's reduced confidence in
Tenet's prospects for operating performance and cash flow over the
next year," said credit analyst David Peknay. "The expectations
now incorporate probable credit protection measures commensurate
with a lower rating."
Debt to EBITDA may approximate 5.0x by late 2004, a dramatic
increase from 2.4x as of Sept. 30, 2003. Moreover, the success of
the company's intention to sell a large number of poorly
performing hospitals is unclear. Should the sales not be
accomplished, the potential for meaningful operating improvement
may be further limited.
Tenet announced in January 2004 that it intends to sell 27
hospitals that cumulatively generated poor margins. This
highlights the magnitude of the company's underlying difficulties
and the fact that its asset quality is worse than Standard &
Poor's previously believed. Although the divestiture of these
assets will leave a more profitable core of 69 hospitals, their
performance is uncertain given extensive difficulties such as an
adverse rebasing of the company's managed-care contracts, growing
bad debt, and margins that are the lowest of any of its peers.
Moreover, the company remains burdened with significant litigation
and investigations. With deteriorated cash flow and weakened
liquidity, Tenet now has less ability to absorb adverse judgments
or settlements.
TFM SA: Banks Agree to Waive Financial Covenant Compliance
----------------------------------------------------------
Grupo Transportacion Ferroviaria Mexicana, SA. de C.V. and its
subsidiaries ("TFM") are pleased to announce that effective
Wednesday, March 10, 2004, it has received a waiver from the banks
which participate in the Credit Agreement of the Term Loan and
U.S. Commercial Paper Program. TFM is now waived from the
financial covenants under such Agreement for the three months
ended December 31, 2003.
TFM continues to work with such banks for the completion of the
refinancing of the U.S. Commercial Paper maturing in September
2004, and will provide further information in the near future.
* * *
As reported in the Troubled Company Reporter's March 4, 2004
edition, Standard & Poor's Ratings Services placed its 'B' long-
term corporate credit rating on TFM S.A. de C.V. on CreditWatch
with negative implications.
The CreditWatch listing reflects Standard & Poor's concerns about
TFM's inability to meet certain financial covenants under its term
loan facility and CP program. "Although the company is currently
negotiating with its lenders to obtain waivers, Standard & Poor's
is concerned about the potential impact of this event on TFM's
financial profile," said Standard & Poor's credit analyst Juan P.
Becerra.
TOM THUMB FOOD: Voluntary Chapter 7 Case Summary
------------------------------------------------
Debtor: Tom Thumb Food Markets Inc.
110 East 17th Street
Hastings, MN 55033
Bankruptcy Case No.: 4-31406
Type of Business: The Debtor owns a retail, gas and food
convenience store chain.
Chapter 11 Petition Date: March 9, 2004
Court: District of Minnesota
Judge: Dennis D. O'Brien
Debtor's Counsel: Michael F. McGrath, Esq.
Ravich, Meyer, Kirkman, McGrath & Nauman PA
80 South 8th Street, Suite 4545
Minneapolis, MN 55402
Tel: 612-332-8511
Fax: 612-332-8302
Total Assets: $13,379,960
Total Debts: $17,064,916
TOYS "R" US: S&P Maintains Low-B Trust Rating on Watch Negative
---------------------------------------------------------------
Standard & Poor's Ratings Services lowers its rating on Corporate
Backed Trust Certificates Toys "R" Us Debenture-Backed Series
2001-31 Trust (CBTC 2001-31) to 'BB' from 'BB+'. The rating
remains on CreditWatch with negative implications, where it was
placed Jan. 14, 2004.
The lowered rating follows the March 10, 2004 lowering of the
corporate credit, bank loan, and senior unsecured ratings on Toys
"R" Us Inc.
CBTC 2001-31 is a swap-independent synthetic transaction that is
weak-linked to the underlying securities, Toys "R" Us Inc.'s 8.75%
debentures due Sept. 1, 2021. The lowered rating reflects the
current credit quality of the underlying securities.
LOWERED AND REMAIN ON CREDITWATCH NEGATIVE
Corporate Backed Trust Certificates Toys "R" Us Debenture-Backed
Series 2001-31 Trust $13 million Toys "R" Us debenture-backed
series 2001-31
Rating
Class To From
A-1 BB/Watch Neg BB+/Watch Neg
TRICO MARINE: S&P Drops Issuer Credit & Debt Ratings to Junk Level
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its issuer credit and
senior unsecured ratings on Trico Marine Services Inc. to 'CCC+'
and 'CCC-', from 'B-' and 'CCC', respectively, and removed them
from CreditWatch with negative implications, where they were
placed on Nov. 24, 2003 following the announcement that Trico
would likely violate covenants under its U.S. bank credit
facility. The outlook is negative.
"The rating actions reflect reduced expectations for liquidity and
earnings in the near term," noted Standard & Poor's credit analyst
Paul B. Harvey. "Trico is estimated to currently have about $66
million of liquidity versus roughly $50 million of expenses and
$11.4 million of debt amortization on its NOK 800 million
(currently about $113.2 million) credit facility. Poor operating
conditions in its Gulf of Mexico and North Sea markets have led to
fourth-quarter 2003 and expected first-quarter 2004 EBITDA that is
well-below expectations, and could be a harbinger of future 2004
results," he continued.
Based on current market conditions, absent an unexpected large
increase in day rates, Trico will likely struggle to maintain the
necessary level of liquidity to fund operating expenses and
interest payments through 2005.
Current market conditions for Trico are yielding near break-even
operating earnings, with no significant improvement in the near
term. Absent improved conditions, projected EBITDA could provide
enough funding for Trico to struggle through 2004, but would leave
the company in a very weak position entering 2005.
The negative outlook reflects Trico's constrained liquidity at a
time of poor operating conditions with no material improvement
expected in the near term. Absent a refinancing of its debt, asset
sales, or an equity infusion, Trico's ability to continue to fund
expected expenses is in jeopardy.
TRIMEDIA ENTERTAINMENT: Must Raise More Funds to Continue Ops.
--------------------------------------------------------------
Trimedia Entertainment Group, Inc., is a multimedia entertainment
company with a focus on developing entertainment content. The
Company develops, produces and distributes a broad range of music,
motion picture and other filmed entertainment content through its
following operating subsidiaries:
* Ruffnation Music, Inc.;
* Metropolitan Recording Inc.;
* Ruffnation Films LLC; and
* Snipes Production LLC.
The Company presently does not have sufficient cash to implement
its business plan. It has experienced this lack of liquidity
throughout Fiscal 2003, causing it to be unable to produce any
additional feature films. Management believes that Trimedia needs
to raise or otherwise obtain at least $7,500,000 in additional
financing in order to satisfy its existing obligations and
implement its business plan. If successful in obtaining such
financing, the Company may require an additional nine to twelve
months in order to complete production of additional feature films
for release and distribution. Accordingly, in order to generate
revenues in Fiscal 2004, the Company may need to rely on other
sources of revenue such as acquiring the rights to distribute and
exploit feature films and other entertainment content produced by
third parties. If unsuccessful in obtaining additional financing,
Trimedia Entertainment Group will not be able to implement its
business plan.
The nature of Trimedia's business is such that significant cash
outlays are required to produce and acquire films, television
programs, music soundtracks and albums. However, Net Revenues from
these projects are earned over an extended period of time after
their completion or acquisition. Accordingly, the Company will
require a significant amount of cash to fund its present
operations and to continue to grow business. As operations grow,
financing requirements are expected to grow proportionately and
the Company projects the continued use of cash in operating
activities for the foreseeable future. Therefore Trimedia is
dependent on continued access to external sources of financing.
Its current financing strategy is to sell its equity securities to
raise a substantial amount of working capital. The Company also
plans to leverage investment in film and music productions through
operating credit facilities, co-ventures and single-purpose
production financing. It plans to obtain financing commitments,
including, in some cases, foreign distribution commitments, to
cover, on average, at least 50% of the budgeted third-party costs
of a project before commencing production. The Company plans to
outsource required services and functions whenever possible. It
further plans to use independent contractors and producers,
consultants and professionals to provide those services necessary
to operate the corporate and business operations in an effort to
avoid build up of overhead infrastructures, to maintain a flexible
organization and financial structure for productions and ventures
and to be responsive to business opportunities worldwide.
Accordingly, once Trimedia raises at least $7,500,000 in
additional financing, management believes that the net proceeds
from that financing together with cash flow from operations,
including the Company's share of future film production under the
Charles Street co-venture with Sony, will be available to meet
known operational cash requirements. In addition, management
believes that its improved liquidity position will enable it to
qualify for new lines of credit on an as-needed basis.
However, matter discussed raise substantial doubt about Trimedia
Entertainment Group's ability to continue as a going concern. It
will need to raise significant additional funding in order to
satisfy its existing obligations and to fully implement its
business plan. There can be no assurances that such funding will
be available on terms acceptable to the Company or at all. If
unable to generate sufficient funds, particularly at least
$7,500,000, then the Company indicates that it may be forced to
cease or substantially curtail operations.
TRI STAR LAND DEVT: Voluntary Chapter 11 Case Summary
-----------------------------------------------------
Debtor: Tri Star Land Development Company, LLC
218 Bass Lane
Benton, Kentucky 42025
Bankruptcy Case No.: 04-50340
Chapter 11 Petition Date: March 11, 2004
Court: Western District of Kentucky (Paducah)
Debtor's Counsel: M. Greg Rains, Esq.
517 Broadway Suite 100
P.O. Box 958
Paducah, KY 42002-0958
Tel: 270-442-7006
Fax: 270-442-7902
Estimated Assets: $0 to $50,000
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20-largest creditors.
UNITED AIRLINES: US Trustee Appoints Ross Silverman as Examiner
---------------------------------------------------------------
Ira Bodenstein, United States Trustee for Region 11, sought and
obtained Judge Wedoff's permission to appoint Ross Okun Silverman
as examiner for United Airlines Inc.'s Chapter 11 cases. Mr.
Bodenstein states that he consulted with counsel to the Debtors,
the Official Committee of Unsecured Creditors, the Association of
Flight Attendants and the International Association of Machinists
and Aerospace Workers, AFL-CIO, on the appointment before making
the selection and filing the request.
Mr. Silverman is an equity partner at Katten Muchin Zavis
Rosenman. Kathryn Gleason, trial attorney for the U.S. Trustee,
assures the Court that Mr. Silverman is a disinterested person.
Mr. Silverman has no connection with the Court or the U.S.
Trustee, which would render the approval of the appointment
improper.
Mr. Silverman will be paid $475 per hour for his services and
reimbursed for customary out-of-pocket expenses.
In a sworn affidavit, Mr. Silverman attests that he is not
insider of the Debtors. He does not hold directly any claim
against or equity security in the Debtors. However, he is not
aware if any mutual fund, 401(k) or similar plan, in which he is
an investor, may hold a claim against or equity security in the
Debtors.
Mr. Silverman also ascertains that Katten Muchin does not
currently represent and was not, as of the Petition Date,
representing the Debtors or their union in any matter. Katten
Muchin, however, provides general corporate and other services to
Integres Global Logistics, LLC, an entity in which one of the
Debtors has a non-controlling, minority equity interest.
Over the past five years, Katten Muchin has represented the
Debtors in various matters. These representations have
concluded.
Mr. Silverman reports that other attorneys at Katten Muchin
currently represent UAL creditors in matters relating to the
Debtors' Chapter 11 cases:
(a) Societe Nationale d'Etude et de Construction de Moteurs
D'Aviation, a guarantor or holder of UAL debt with respect
to 14 aircraft in the Debtors' fleet, 10 of which are
leased by the Debtors and four of which are owned by the
Debtors;
(b) HypoVereinsbank, Bayerische Hypo-und Vereinsbank AG,
London Branch, Bayerische Hypo-und Vereinsbank AG, Tokyo
Branch, and HypoVereinsbank Luxembourg Societe Anonyme,
holders of UAL debt with respect to 12 aircraft in the
Debtors' fleet, eight of which are leased by the Debtors
and four of which are owned by the Debtors;
(c) Michael Lewis Company, a supplier to the Debtors of food
and beverage products throughout the Debtors' system
pursuant to numerous contracts;
(d) United Center Joint Venture, a party to a Naming Rights
Agreement with the Debtors, which includes a suite license
at the United Center in Chicago, Illinois;
(e) The Chicago Blackhawks hockey team in connection with the
claims relating to charter flight services provided by the
Debtors;
(f) Benjamin Franklin Associates, the owner of a hotel near
the San Francisco airport that the Debtors occupied for
many years as the hotel's only customer; and
(g) A group of 26 former, high level UAL employees in a
dispute regarding the purported termination by the
Debtors' of the supplemental retirement plans. In
accordance with an understanding reached with the U.S.
Trustee, Katten Muchin will withdraw from representing
these individuals and transition the matter to another law
firm.
Mr. Silverman also assures the Court that Katten Muchin will
establish an ethical wall to assure that no information
concerning the firm's representation to UAL creditors and Mr.
Silverman's engagement as examiner will be leaked.
AFA's Statement
CHICAGO, Illinois -- February 27, 2004 -- Bankruptcy court
Judge Eugene Wedoff approved the appointment of Ross O. Silverman
as the examiner to investigate United's plan to change retiree
medical benefits for workers who retired before July 1, 2003.
United Airlines flight attendants, represented by the
Association of Flight Attendants-CWA, AFL-CIO, and supported by
the International Association of Machinists and Aircraft
Mechanics Fraternal Association in court, contend [that] United
intentionally misled thousands of workers into ending their
careers or retiring early, defrauding them out of their
retirement benefits.
The bio of Ross O. Silverman on his law firm website,
Katten, Muchin, Zavis, and Rosenman explains that he
"concentrates his practice on white collar criminal defense,
insurance fraud related litigation, and civil as well as criminal
tax litigation. Before joining the Firm, Mr. Silverman was a
Trial Attorney for the Criminal Section of the Tax Division at
the United States Justice Department for two and a half years and
an Assistant United States Attorney in Chicago for four years."
"We are encouraged with the appointment of Mr. Silverman and
the experience he brings to this important investigation," said
United Master Executive Council President Greg Davidowitch. "The
thousands of employees who have sacrificed billions of dollars
annually to see United succeed deserve to know whether their
concessions were made in good faith. We look forward to working
with Mr. Silverman and his team to thoroughly examine the facts
of this issue."
The court requires that Mr. Silverman report his findings to
the bankruptcy court by March 19. The scope of the investigation
aims to determine if United decided to use the bankruptcy code to
pursue changes to retiree medical benefits prior to July 1, 2003.
This date was significant because United established it as the
deadline by which an employee would have to retire to secure less
costly and more comprehensive medical benefits. United had not
notified retirees that it intended to use the bankruptcy code to
pursue changes to these benefits prior to that date. These
changes would force retirees to pay hundreds of dollars more per
month of their modest pensions just to continue reduced health
insurance.
Headquartered in Chicago, Illinois, UAL Corporation
-- http://www.united.com/-- through United Air Lines, Inc., is
the holding company for United Airlines -- the world's second
largest air carrier. the Company filed for chapter 11 protection
on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James
H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman,
Esq., and Steven R. Kotarba, Esq., at KIRKLAND & ELLIS represent
the Debtors in their restructuring efforts. When the Company
filed for protection from their creditors, they listed
$24,190,000,000 in assets and $22,787,000,000 in debts. (United
Airlines Bankruptcy News, Issue No. 41; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
US ENERGY: RMG I Unit Acquires Hi-Pro Coalbed Methane Assets
------------------------------------------------------------
On January 30, 2004, RMG I, LLC, a wholly-owned subsidiary of
Rocky Mountain Gas, Inc., purchased coalbed methane properties
from Hi-Pro Production, LLC for $6,800,000. RMG is a majority-
owned subsidiary of U.S. Energy, and a subsidiary of Crested
Corporation.
The purchased properties (all located in the Wyoming Powder River
Basin) include 247 completed wells; 138 wells now are producing
approximately 6.0 million cubic feet of gas per day, or
approximately 3.2 MMCFD net to RMG I, and 40,120 undeveloped fee
acres. As a result of the purchase, RMG succeeds Hi-Pro as the
contract operator for 89% of the wells. RMG I owns an average 58%
working interest in the producing wells and a 100% working
interest in all of the undeveloped acreage.
The transaction was structured as an asset purchase, with RMG I as
the purchaser, in connection with the establishment of a mezzanine
credit facility for up to $25,000,000 of secured loans to acquire
and develop more coalbed methane properties. RMG will utilize RMG
I for future acquisitions (none presently under contract or
agreement in principle). A substantial portion of the cash
consideration paid to Hi-Pro was funded with the initial advance
on the credit facility.
RMG negotiated the purchase based on the $7,113,000 present value,
discounted 10%, of gas reserves recoverable (and the estimated
future net revenues to be derived) from, the proved reserves in
the Hi-Pro properties, as stated in a reserve report as of
November 1, 2003 prepared by Netherland Sewell and Associates,
Inc. ("NSAI," Houston, Texas), independent petroleum engineers.
The $6,800,000 purchase price reflects a deduction, negotiated by
the parties, to account for the decrease in gas production from
November 2003 (compared to the origianl estimate in NSAI's report)
due to the impact on production of deferred maintenance on the
properties and the expected cost of such maintenance work after
closing.
Net production from the purchase properties is hedged (fixed
price) at $4.15 to $4.53 (net of gathering, marketing and
transmission fees) for 2.0 Mmcf/Day in 2004 and $3.53 to $3.91
(net of gathering, marketing and transmission fees) for 1.0
Mmcf/Day in 2005.
The purchase price of $6,800,000 was paid:
* $ 776,655.91 cash by RMG.
* $ 588,344.09 Net revenues from November 1, 2003 to
December 31, 2003 retained by Hi-Pro. (1)
* $ 500,000.00 by US Energy's 30 day promissory note
(secured by 166,667 restricted shares of US Energy's
common stock, valued at $3.00 per share).
* $ 600,000.00 by 200,000 restricted shares of US Energy's
common stock (valued at $3.00 per share). (2)
* $ 700,000.00 by 233,333 restricted shares of RMG common
stock (valued at $3.00 per share). (3)
* $ 3,635,000.00 cash, loaned to RMG under the credit
facility agreement. (4)
* $ 6,800,000.00
(1) RMG paid November 2003 through January 2004
operating costs at closing. Net revenues from the
purchased properties for January 2004 will be
credited to RMG I's obligations under the credit
facility agreement.
(2) US Energy has agreed to file a resale registration
statement with the SEC to cover public resale of
these 200,000 shares.
(3) From November 1, 2004 to November 1, 2006, the RMG
shares shall be convertible at Hi-Pro's sole
election into restricted shares of common stock of
US Energy. The number of US Energy shares to be
issued to Hi-Pro shall equal (A) the number of RMG
shares to be converted, multiplied by $3.00 per
share, divided by (B) the average closing sale
price of the shares of US Energy for the 10 trading
days prior to notice of conversion. The conversion
right is exercisable cumulatively, as to at least
16,666 RMG shares per conversion.
* * *
In a Form 10-Q filed with the Securities and Exchange Commission,
U.S. Energy Corp., reported:
"The [Company's] condensed financial statements have been prepared
in conformity with accounting principles generally accepted in the
United States of America, which contemplate continuation of the
Company as a going concern. We have sustained substantial losses
from operations in recent years, and such losses have continued
through September 30, 2003. In addition, we have used, rather than
provided, cash in our operations.
"In view of the matters described in the preceding paragraph,
recoverability of a major portion of the recorded asset amounts
shown in the condensed consolidated accompanying balance sheet is
dependent upon continued operations of the Company, which in turn
is dependent upon our ability to meet our financing requirements
on a continuing basis, to maintain present financing, and to
succeed in our future operations.
"On August 1, 2003, we received a Judgment entered by the United
States District Court of Colorado wherein we were awarded a
Judgment of $20,044,180 in the Nukem case. If collection of this
Judgment is successful, it would provide significant working
capital to the Company.
"We also continue to pursue several items that will help us meet
our future cash needs. We are currently working with several
different sources, including both strategic and financial
investors, in order to raise sufficient capital to finance our
continuing operations. Although there is no assurance that funding
will be available, we believe that our current business plan, if
successfully funded, will significantly improve our operating
results and cash flow in the future."
VERITAS DGC: Closes Sale of Additional Convertible Senior Notes
---------------------------------------------------------------
Veritas DGC Inc. (NYSE & TSX: VTS) sold $30 million of additional
Floating Rate Convertible Senior Notes Due 2024, adding to the
$125 million it sold on March 3, 2004 Deutsche Bank Securities
Inc., as the initial purchaser, exercised its full purchase option
in connection with the offering. The additional convertible notes
have the same terms as those sold on March 3, 2004.
The Company used the net proceeds from the sale of the additional
convertible notes to prepay a portion of amounts outstanding
under its existing bank credit facility. After this prepayment
and the prepayment made in connection with the original sale of
convertible notes, Veritas has $52 million of borrowings
outstanding under its bank credit facility with a current
weighted average interest rate of approximately 6.6% and $155
million of convertible notes outstanding with a current interest
rate of 0.37%.
The convertible notes were sold only to qualified institutional
buyers in accordance with Rule 144A under the Securities Act of
1933, as amended. The convertible notes and the underlying common
stock issuable upon conversion have not been registered under the
Securities Act or any applicable state securities laws and may
not be offered or sold in the United States absent registration
or an applicable exemption from such registration requirements.
This announcement is neither an offer to sell nor a solicitation
of an offer to buy any of these securities.
* * *
As previously reported, Standard & Poor's Ratings Services
affirmed its ratings on Veritas DGC Inc. (BB+\Negative\--)
following the company's announcement that it will refinance a
large portion of its secured debt by issuing new unsecured
convertible notes. The outlook remains negative, S&P says.
WEIRTON STEEL: Asks Court Nod to Terminate Retiree Benefits
-----------------------------------------------------------
Weirton Steel Corporation and its debtor-affiliates currently
provide retiree medical and life insurance benefits to
approximately 10,000 retired employees, retired employees'
spouses, and certain retired employees' dependents. As of
December 31, 2002, the present value of the Debtors' projected
future costs of Retiree Benefits was approximately $356,000,000.
Mark E. Freedlander, Esq., at McGuireWoods, in Pittsburgh,
Pennsylvania, relates that the Debtors maintain:
(a) medical benefits for Retirees under age 65 pursuant to
Plan 512: Program of Hospital, Physicians' Services and
Major Medical Expense Benefits for Eligible Pensioners and
Surviving Spouses;
(b) medical benefits for Retirees over age 65 pursuant to Plan
513: Program of Hospital, Physicians' Services and
Optional Major Medical Expense Benefits for Eligible
Pensioners and Surviving Spouses; and
(c) life insurance for Retirees pursuant to Plan 517: Life
Insurance for Eligible Hourly and Salaried Employees,
Dependents and Pensioners of Weirton Steel Corporation.
Weirton paid Retiree Benefits of approximately $30,700,000 in
calendar year 2002 and approximately $36,000,000 in calendar
2003.
Pursuant to Section 1114 of the Bankruptcy Code, the Debtors seek
the Court's authority to immediately terminate their obligation
to pay Retiree Benefits in anticipation of the proposed sale of
their assets, or alternatively in connection with their winddown
and liquidation in the event that a sale does not soon occur.
The Debtors have offered to assist the Retirees, until the time
of closing on the contemplated sale of substantially all of their
assets, by:
(a) providing the Retirees the opportunity to elect to receive
continuation coverage benefits consistent with Part 6 of
Title I of ERISA and Internal Revenue Code Section 4980B
group health plan coverage that is substantially similar
to the coverage provided by the Company to similarly
situated non-COBRA beneficiaries;
(b) establishing premium costs for COBRA in accordance with
applicable law and regulations, with 100% of the premiums
to be paid by the Retirees. The Debtors contemplate that
that COBRA programs will, as a matter of law, be eligible
for Health Coverage Tax Credit and the Debtors will
facilitate premium reimbursement under HCTC on an advance
basis for those COBRA participants whom are HCTC eligible
and whom elect to do so;
(c) for those Retirees between the ages of 55 and 65 who are
receiving a benefit from the Pension Benefit Guaranty
Corporation and are not Medicare eligible, and do not
elect COBRA coverage, using best efforts to assist the
Retirees' participation in a state-of-residence HCTC
qualified medical plan.
Mr. Freedlander asserts the Debtors' proposal fulfills the
requirements of Section 1114(f).
On February 20, 2004, the Debtors sent correspondence to the
authorized representative of the Retirees explaining the Debtors'
changed circumstances compelling the need to immediately
terminate the Retiree Benefits.
Mr. Freedlander also points out that the Proposal:
(a) provides the modifications to Retiree Benefits that are
necessary to permit the Debtors to operate as a going
concern through the projected date of a closing on a
Court-authorized sale;
(b) suggests that the Debtors will attempt to provide all
relevant and available information necessary to evaluate
the proposal and satisfy Section 1114(f)(1)(B); and
(c) provides that the Debtors are available at any reasonable
time prior to the hearing that will be scheduled on the
request, to discuss with the authorized representatives
of the Retirees, in good faith, the necessary
modifications and effects of the modifications.
However, Mr. Freedlander says, the Retirees refuse to accept the
Debtors' proposal without good cause. As of March 1, 2004, the
Retirees have received the full amount of their benefits during
these Chapter 11 cases, at a cost to the estate of approximately
$3,000,000 per month. However, the Debtors can no longer afford
Retiree Benefits, even on a limited basis. Furthermore, given
the imminence of either a sale or liquidation, in either of which
case Retiree Benefits will no longer be available, interim
modification of benefits will only confuse an already difficult
set of circumstances.
Ultimately, Mr. Freedlander says, the proposed modification is
necessary to permit the Debtors' Reorganization, assures that all
affected parties are treated fairly and equitably, and is clearly
favored by the balance of the equities. (Weirton Bankruptcy News,
Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000)
WEIRTON: Noteholders Hire John Correnti to Help Formulate Plan
--------------------------------------------------------------
The Informal Committee of Senior Secured Noteholders of Weirton
Steel Corporation has retained International Steel Associates,
Inc. and its principal, John Correnti, the former CEO of Nucor
Steel and CEO of Birmingham Steel, to advise the Committee in its
efforts to recapitalize and restructure Weirton Steel.
Weirton Steel filed its Chapter 11 case on May 19, 2003. On Monday
of this week, the U.S. Bankruptcy court for the Northern District
of West Virginia ruled that the indenture trustee of the Senior
Secured Noteholders may credit bid for Weirton and also lowered
the bid amount required for other investors to top the
International Steel Group, Inc. ("ISG") bid for Weirton. In
addition, on Monday the Independent Steelworkers Union, Weirton's
primary labor union, confirmed to the Bankruptcy Court that it is
prepared to negotiate with all potential bidders for Weirton's
assets.
The Committee believes the recent increase in worldwide steel
prices has provided an immediate opportunity for improvement in
the company's liquidity situation, and, at the same time,
brightened the company's long-term prospects, particularly in view
of the substantial reductions that can be made to the company's
cost structure. Accordingly, the Committee also feels that it will
be able to submit an offer, which will better serve Weirton and
its creditors than ISG's bid. Key elements of the Committee's
proposal would include having Weirton Steel remain independent and
based in Weirton, West Virginia.
WILL COUNTY, IL: Fitch Drops Revenue Bonds Rating to Junk Level
---------------------------------------------------------------
Fitch Ratings downgrades the $14.5 million Will County, IL student
housing revenue bonds rating (Joliet Junior College (JJC) Project)
to 'CC' from 'B-'. The bonds are removed from Rating Watch
Negative. The 'CC' rating reflects Fitch's opinion that default of
some kind appears probable.
The bonds financed construction of a privately managed 296-bed
student residence on JJC's campus. Neither JJC nor its fundraising
foundation is responsible for making debt service payments.
Foundation Housing, LLC owns the project in a structure typical of
off-balance-sheet student housing transactions.
Project financial results indicate further financial
deterioration, resulting in the downgrade. Without prompt,
substantial improvement, Fitch believes that the project is likely
to default, perhaps resulting in a bankruptcy filing, no later
than the end of 2005 based on the limited amount of information
available. Information comes primarily from the disclosure filings
of the LLC.
Fitch downgraded the bonds to 'B-' on Oct. 1, 2003. On Sept. 2,
2003, $178,000 of the bonds' debt service reserve fund (DSRF) was
drawn to meet a bond interest payment. The draw was attributed to
weak financial performance during the project's first year of
operations when several negative events, including significantly
escalated expenses, a fire, incidents of crime, and payment
delinquencies by residents, affected operations. In addition, the
project's 90.2% occupancy level was too low to meet previously
projected expenses, including an unprojected property tax
liability under appeal.
On Nov. 30, 2003, the LLC reported that occupancy was 81.1%. To
make a March 1, 2004 bond interest payment, an additional $485,525
of the DSRF was utilized, which was apparently the entirety of the
payment. This draw left the reported balance in the fund at
$682,719. Gross debt service escalates to $1.16 million through
2010. At this rate of depletion, Fitch estimates that the DSRF
would be exhausted at some point in 2005, resulting in payment
default on the bonds.
ZOLTEK COMPANIES: Signs Agreement for Additional Financing
----------------------------------------------------------
Zoltek Companies, Inc. (Nasdaq: ZOLT) has entered into a
definitive agreement for the private placement of $5.75 million
aggregate principal amount of 6% convertible debentures due
September 2006. The debentures will be convertible into shares of
Zoltek's common stock at a price of $6.25 per share. In addition,
the Company agreed to issue to the debenture investors warrants to
purchase an amount of shares of the Company's common stock equal
to 25% of the number of shares issuable upon conversion of the
debentures, at an exercise price of $7.25 per share.
The agreement is an element of the Company's previously announced
plans to enhance its liquidity and access capital resources in
support of its developing carbon fiber manufacturing business.
Closing of the private placement is subject to various conditions
and currently is expected to occur in late March 2004.
Zoltek is an applied technology and materials company. Zoltek's
Carbon Fiber Business Unit is primarily focused on the
manufacturing and application of carbon fibers used as
reinforcement material in composites, oxidized acrylic fibers for
heat/fire barrier applications and aircraft brakes, and composite
design and engineering to support the Company's materials
business. Zoltek's Hungarian- based Specialty Products Business
Unit manufactures and markets acrylic fibers, nylon products and
industrial materials.
* * *
Liquidity and Capital Resources
In its latest Form 10-Q filed with the Securities and Exchange
Commission, Zoltek reported:
The Company intends for the primary source of liquidity to be cash
flow from operating activities. However, the Company has realized
a cash use from operating activities in each of the last three
fiscal years. As a result, the Company has executed refinancing
arrangements and made borrowings under credit facilities,
supplemented with long-term debt financing utilizing the
equity in the Company's real estate properties, to maintain
adequate liquidity to support the Company's operating and capital
activities.
Management will seek to fund its near-term operations from
continued sale of excess inventory and continued aggressive
management of the Company's working capital, as well as possible
additional borrowings, private equity and debt financing. However,
management can make no assurances that these objectives will be
sufficient to fund near-term liquidity needs.
As of December 31, 2003, the Company was not in compliance with
essentially all financial covenants requirements included in the
credit facility with its bank. The subordinated convertible
debentures contain certain cross-default provisions related to the
Company's other debt agreements. The covenant non-compliances
under the Company's senior U.S. credit facility at September 30,
2003 and December 31, 2003 resulted in the possibility of a
default event being declared by the subordinated convertible
debenture holders, which would result in that debt being
immediately due and payable. As a result of some 2004 refinancing
transactions, the Company obtained waivers of the covenant non-
compliance in the loan agreement as of December 31, 2003.
* Mark Ellenberg to Join the American College of Bankruptcy
-----------------------------------------------------------
Cadwalader Partner Being Recognized for Professional Excellence
and Contributions to the Fields of Bankruptcy and Insolvency
Cadwalader, Wickersham & Taft LLP announced that Washington DC
partner Mark Ellenberg will be admitted to the membership of the
American College of Bankruptcy, an honorary professional and
educational association of bankruptcy and insolvency
professionals. Mr. Ellenberg, one of 43 new Fellows in the
Fifteenth Class (2004), will be inducted at a ceremony to be held
at the Great Hall of the Supreme Court of the United States on
March 19, 2004.
There are 43 inductees from the United States and abroad being
inducted as the Fifteenth Class of College Fellows. Nominees for
Fellows are extended an invitation to join based on a record of
achievement reflecting the highest standards of professionalism.
The College now has 607 Fellows, each selected by a Board of
Regents from among recommendations of the Circuit Admissions
Council in each federal judicial circuit and specially appointed
Committees for Judicial and International Fellows. Criteria for
selection include: the highest professional qualifications,
ethical standards, character, integrity, professional expertise
and leadership in contributing to the enhancement of bankruptcy
and insolvency law and practice; sustained evidence of
scholarship, teaching, lecturing or writing on bankruptcy or
insolvency; and commitment to elevate knowledge and understanding
of the profession and public respect for the practice.
The American College of Bankruptcy is an honorary professional and
educational association of bankruptcy and insolvency
professionals. The College plays an important role in sustaining
professional excellence in this rapidly expanding field. College
Fellows include commercial and consumer bankruptcy attorneys,
insolvency accountants, corporate turnaround and renewal
specialists, law professors, judges, government officials and
others involved in the bankruptcy and insolvency community.
Cadwalader, Wickersham & Taft LLP, established in 1792, is one of
the world's leading international law firms, with offices in New
York, Charlotte, Washington and London. Cadwalader serves a
diverse client base, including many of the world's top financial
institutions, undertaking business in more than 50 countries in
six continents. The firm offers legal expertise in securitization,
structured finance, mergers and acquisitions, corporate finance,
real estate, environmental, insolvency, litigation, health care,
banking, project finance, insurance and reinsurance, tax, and
private client matters. More information about Cadwalader can be
found at http://www.cadwalader.com/
* Illinois CPA Society's 2004 Reinsurance Conference Set for April
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The reinsurance industry is constantly being faced with complex
risks and challenges. Discuss the latest cases, rulings and
legislative issues impacting today's reinsurance marketplace at
the Illinois CPA Society's 2004 Reinsurance Conference on Tuesday,
April 20th at the UBS Conference Center in Chicago, IL.
Receive an overview on how insolvency proceedings can affect you
and your client. Discuss how the rising global reinsurance market
is impacting current U.S. regulation standards. Understand how
Alternative Risk Transfer (ART) can assist in the implementation
of corporate risk management programs. Through a mock arbitration,
explore the pros and cons of ART from a panel of industry experts.
This information-packed conference will provide practical
strategies to help you maintain a competitive edge.
This program will commence at 8:30 a.m. and adjourn at 1:30 p.m.
Cost for this program is $150 for Illinois CPA Society members and
$190 for non-members. Attendees will earn 4 hours of CPE credit.
For more information or to register, visit www.icpas.org or call
the Illinois CPA Society at (312) 993-0393 or (800) 993-0393
(within Illinois).
The Illinois CPA Society is a state professional association
representing 23,000 accounting, finance and business professionals
throughout Illinois and worldwide. During its 100 years of
existence, the Society has advanced the highest ethical,
professional and financial standards and has been a leader on
behalf of the profession.
* NY Insurance Department Taps Cybersettle(R) to Expedite Claims
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Cybersettle, the world's leading online settlement company, has
been contracted by the New York State Insurance Department
Liquidation Bureau to accelerate the resolution of claims filed
with insurance companies currently under its supervision.
The Liquidation Bureau acts on behalf of the Superintendent of
Insurance as Receiver when an insurance carrier experiencing
financial difficulty is placed under his supervision for
rehabilitation or liquidation. The process includes the settlement
of outstanding claims brought against the carrier by New York
State residents.
"The Liquidation Bureau is tasked with claims management for
multiple insurance carriers. It should be commended for its
foresight and leadership for employing the latest online
technology to help streamline its claims process," said
Cybersettle President and CEO Charles Brofman. "Cybersettle will
help alleviate backlog and free up administrative time and money
that can be invested elsewhere," Brofman added, noting that the
New York Liquidation Bureau is the first receiver to implement the
technology.
Cybersettle's patented system is regularly used by more than
100,000 attorneys and 10,000 claims adjusters representing over
1,900 claims offices worldwide to improve claims processing and
efficiency. The New York City Office of The Comptroller also
recently announced Cybersettle's participation in an innovative
pilot project to expedite the resolution of claims and lawsuits
filed against the City.
Cybersettle provides a secure place online where parties can
settle their disputes confidentially by comparing offers and
demands in the blind. For claims filed against insurance companies
under State control, Liquidation Bureau claims professionals will
enter offers -- which cannot be seen by the opposition or an
opposing attorney -- into Cybersettle. Claimants' attorneys can
then submit corresponding demands -- which cannot be viewed by the
Liquidation Bureau's staff - through Cybersettle. If a demand and
offer overlap, a settlement is reached and Cybersettle will inform
both parties.
Established in 1998, Cybersettle,(R) the world's number one online
settlement company, facilitates high-speed, confidential claim
settlements by sharing and matching monetary offers and demands
via secure web technology. To date, Cybersettle has facilitated
some 85,000 transactions representing more than a half billion
dollars in settlements.
Cybersettle(R) is the official and exclusive online settlement
tool of the Association of Trial Lawyers of America (ATLA) and a
strategic partner of the New York State Trial Lawyers Association
(NYSTLA).
* BOND PRICING: For the week of March 15 - 19, 2004
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Issuer Coupon Maturity Price
------ ------ -------- -----
Adelphia Communications 3.250% 05/01/21 37
Adelphia Communications 6.000% 02/15/06 37
American & Foreign Power 5.000% 03/01/30 70
Best Buy 0.684% 06/27/21 72
Burlington Northern 3.200% 01/01/45 59
Calpine Corp. 7.750% 04/15/09 74
Comcast Corp. 2.000% 10/15/29 41
Cummins Engine 5.650% 03/01/98 75
Cox Communications Inc. 2.000% 11/15/29 36
Delta Air Lines 7.900% 12/15/09 71
Delta Air Lines 8.300% 12/15/29 61
Delta Air Lines 9.000% 05/15/16 65
Delta Air Lines 9.250% 03/15/22 64
Delta Air Lines 9.750% 05/15/21 65
Delta Air Lines 10.125% 05/15/10 74
Delta Air Lines 10.375% 12/15/22 67
Elwood Energy 8.159% 07/05/26 70
Federal-Mogul 7.500% 01/15/09 26
Fibermark Inc. 10.750% 04/15/11 65
Finova Group 7.500% 11/15/09 64
Foamex L.P. 9.875% 06/15/07 73
Inland Fiber 9.625% 11/15/07 57
Level 3 Communications 6.000% 09/15/09 61
Liberty Media 3.750% 02/15/30 70
Mirant Corp. 2.500% 06/15/21 60
Northern Pacific Railway 3.000% 01/01/47 57
RCN Corporation 10.000% 10/15/07 52
Select Notes 5.700% 06/15/33 75
Universal Health Services 0.426% 06/23/20 60
Werner Holdings 10.000% 11/15/07 74
*********
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, Rizande B.
Delos Santos, Paulo Jose A. Solana, Aileen M. Quijano 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 ***