/raid1/www/Hosts/bankrupt/TCR_Public/040510.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, May 10, 2004, Vol. 8, No. 91
Headlines
ADELPHIA COMMS: Decides to Abandon Most Preference Actions
AIR CANADA: Court Authorizes Canadian Pension Contributions
ALPHA NATURAL: S&P Assigns B Corporate Rating with Stable Outlook
APPLICA INC: Incurs First-Quarter Loss of $4.5 Million
AQUATIC CELLULOSE: Recurring Losses Raise Going Concern Doubt
ARCHIBALD CANDY: Engages Paragon to Advise on Laura Secord Sale
ARGENT SECURITIES: Fitch Rates $14.5MM Class M-10 Notes at BB+
ARMKEL: Church & Dwight Acquisition Prompts S&P's Positive Watch
ASP VENTURES: Auditors Express Going Concern Doubt
ATA: Will Take a Non-Operating Charge Relating to Bond Exchange
BIOGAN INT'L: Turns to Zwaig Consulting for Financial Advice
BLUE MOUNTAIN: Case Summary & 11 Largest Unsecured Creditors
BROOKFIELD FURNITURE: Case Summary & Largest Unsecured Creditors
CALPINE CORP: First Quarter Net Loss Increases to $71.2 Million
CANADA PAYPHONE: Says It'll Propose a Plan No Later than June 17
CAREMARK RX: Reports 40% Net Revenue Increase in First Quarter
COMDIAL CORPORATION: Majority Stockholders Back Refinancing Deals
COMMERCE ONE: Stockholders' Deficit Climbs to $5.5MM at March 31
COMPUVAC SYSTEMS: Case Summary & 19 Largest Unsecured Creditors
CONSECO: Low-Rated Reorganized Company Reports 1st Quarter Results
CRESECENT REAL: Posts $18.6 Million Net Loss for First Quarter
ECLIPSE PROPERTIES: Signs-Up Everett Gaskins as Attorneys
ENERGY CORP: S&P Withdraws Junk Corporate & Sub. Debt Ratings
ENRON CORP: Asks Court to Extend Removal Period Until Sept. 6
ELECTROPURE INC: Auditors Express Doubt in Going Concern Ability
EQUITY INNS: First Quarter 2004 Net Loss Widens to $4.1 Million
EXIDE TECHNOLOGIES: Court Okays Technical Modification to Plan
FEDERAL-MOGUL: U.S. and U.K. Debtors to Honor Pension Plans
FINOVA GROUP: Releases Selected Financial Projections
FIRST VIRTUAL: Appoints 3 New Executives to Senior Management Team
FLEMING COMPANIES: Wants to Assume Oregon NL Distribution Lease
FOAMEX INT'L: March 28 Balance Sheet Insolvent by $205.3 Million
FONIX CORP.: Shareholder Deficit Disappears
GADZOOKS INC: April 2004 Store Sales Decrease by 13.3% to $12.5MM
GT DATA: Squar Milner Resigns as Independent Accountant
HARKEN ENERGY: Issues 50,000 Series J Convertible Preferred Stock
HAWK CORP: S&P Revises Outlook to Positive on Improved Performance
HEALTH CARE REIT: Releases Improved First Quarter Results
HOMESTORE: March 31 Shareholder Deficit Balloons to $2.5 Million
INT'L TRUST: Replaces Auditor Randy Simpson with Malone & Bailey
JUNIPER NETWORKS: S&P Affirms Ratings & Alters Outlook to Positive
MANAGEMENT BY INNOVATION: Case Summary & Largest Unsec. Creditors
MERRILL LYNCH: Fitch Assigns Low-B Ratings to 6 2004-MKB1 Classes
MIRANT CORP: Court Approves Mobile Energy Termination Agreement
MSX INTERNATIONAL: Returns to Profitability in First Quarter 2004
NATIONAL CENTURY: Agrees to Settle NMC Accounts Receivable Dispute
NEW BRITISH: Section 341(a) Meeting Slated for May 26, 2004
NOT JUST ANOTHER: Case Summary & 10 Largest Unsecured Creditors
NUEVO ENERGY: First Quarter Net Income Drops to $7.2 Million
OMNE STAFFING: Looks to Bederson & Company for Financial Advice
PARMALAT GROUP: Commissioner Administers Parma Football Club
PEABODY ENERGY: Re-Elects Four Directors in Annual Meeting
PEAK SPEED COMM: Case Summary & 20 Largest Unsecured Creditors
PHARMANETICS INC: Stock Now Trading on the OTC Bulletin Board
RF MICRO: S&P Affirms B+ Rating & Changes Outlook to Stable
SBA COMMS: Reports Improved Revenues & Profits for First Quarter
SELAS: Says Cash Enough to Meet Operating Needs through Apr. 2005
SPECTRUM PHARMA: Resumes Trading on NASDAQ National Market
SPIEGEL GROUP: Wants Until September 7 to File Chapter 11 Plan
SPIEGEL GROUP: April 2004 Sales Down by 10% to $104.4 Million
STALLION USA LLC: Voluntary Chapter 11 Case Summary
STELCO INC: Posts $563 Million Net Loss for the Full Year 2003
TARGETED RETURN: S&P Assigns BB- Rating to Series HY-2004-1 Notes
TEXAS PETROCHEM: Exits Bankruptcy with New $130 Million Financing
TRICOM: Net Capital Deficit Widens to $77.3 Million at March 31
TWODAYS PROPERTIES: Redmond & Nazar Serves as Insolvency Counsel
UNITED AIRLINES: Retired Pilots Apply to Retain Gordian Group
UNUMPROVIDENT CORP: S&P Cuts Senior Debt Ratings to BB+ from BBB-
UNUMPROVIDENT CORPORATION: Fitch Ratings Remain on Negative Watch
URBAN EQUITY INC: Case Summary & 9 Largest Unsecured Creditors
US AIRWAYS: Insolvent Carrier Hints at Chapter 22 Filing
USG CORP: Wants to Expand Scope of PwC's Employment as Consultants
US MOTELS AIRPORT: Case Summary & 20 Largest Unsecured Creditors
UTEX INDUSTRIES: Wants to Pay $20,000 Prepetition Trade Claims
VANTAGEMED: Net Capital Deficit Widens to $1.17M at March 31, 2004
WEIRTON: Affiliates Ask Court to Extend Lease Decision Period
WILSONS THE LEATHER: April Store Sales Decrease to $17.9 Million
WORLDCOM INC: Fitch Withdraws D Ratings Following Bankruptcy Exit
WRENN ASSOCIATES: Section 341(a) Meeting Scheduled for May 19
* CPAs to Launch Nat'l Financial Literacy Initiative on May 17
* BOND PRICING: For the week of May 10 - 14, 2004
*********
ADELPHIA COMMS: Decides to Abandon Most Preference Actions
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The Adelphia Communications (ACOM) Debtors determined that in
light of the anticipated recoveries for unsecured creditors as
contemplated by the Plan and the business sensitivities associated
with pursuing certain of the Potential Preference Actions against
third parties with whom they wish to continue doing business, the
costs associated with pursuing these Potential Preference Actions
far outweigh any potential benefit to their estates that might
otherwise result from bringing the actions.
Accordingly, the ACOM Debtors seek the Court's authority to
abandon certain Potential Preference Actions.
Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, LLP,
relates that the ACOM Debtors initiated the process of analyzing
potential preferential transfers with the filing of their
Statements of Financial Affairs on July 31, 2003. These
Statements included a schedule of each payment made within the
one-year period before the Petition Date to "insiders," as the
term is defined under Section 101 of the Bankruptcy Code, and, in
the case of "non-insiders," the 90-day prepetition period.
Since that time, the ACOM Debtors participated in weekly
meetings, during which their counsel assisted in analyzing and
answering questions they posed relative to the Preference
Analysis. In addition, the ACOM Debtors' counsel, including
Boies, Schiller & Flexner, LLP, met with counsel to the Official
Committee of Equity Security Holders and counsel to the Official
Committee of Unsecured Creditors to formulate and agree to a
definitive course of action and an allocation of responsibility
with respect to pursuing and abandoning a broad spectrum of
avoidance actions, including those covered by the Preference
Analysis.
The parties agreed to these courses of action:
(1) The ACOM Debtors will seek Court approval to abandon the
Potential Preference Actions;
(2) The ACOM Debtors' counsel will analyze, and potentially
bring, certain preference actions related to transfers
made by or for the benefit of the Holding Company Debtor
Group. The Holding Company Debtors are:
(a) ACC Holdings II, LLC
(b) ACC Operations, Inc.
(c) Adelphia Communications Corporation
(d) Adelphia GP Holdings, LLC
(e) Adelphia Western New York Holdings, LLC
(f) FrontierVision Holdings, LLC
(g) FrontierVision Partners, L.P.
(h) Montgomery Cablevision, Inc.
(3) Boies will analyze and consider amending the complaint
filed against the Rigas family to add additional parties
and additional causes of action, including, but not
limited to, preference actions against the Rigases;
(4) The Creditors Committee's counsel will analyze fraudulent
conveyances claims relating to potentially suspect asset
acquisitions; and
(5) The counsel to the Equity Committee will conduct certain
related research.
To facilitate the Preference Analysis, the ACOM Debtors developed
certain criteria to sort through around 7,500 transfers made
during the Preference Period. First, potential preferential
transfers were divided into two categories:
(1) transfers made by or for the benefit of the Holding
Company Debtor Group; and
(2) transfers made by or for the benefit of the balance of the
ACOM Debtors.
Based on the Debtors' calculations to date, there were
approximately $33,736,730 of transfers made by the Holding
Company Debtor Group and $1,644,399,746 of transfers made by the
Operating Subsidiaries Group during the Preference Period.
Within the Holding Company Debtor Group and the Operating
Subsidiaries Group, the vast majority of transfers were divided
into these sub-categories:
(1) transfers related to contracts that the ACOM Debtors
intend to assume, including franchise and pole attachment
agreements and other agreements related to their core
businesses;
(2) transfers related to investment and cash management
activities that are not covered by the Creditors
Committee's action brought against certain prepetition
lenders;
(3) transfers made to taxing authorities;
(4) transfers made to legal, financial and other
professionals;
(5) transfers related to human resources services;
(6) other ordinary course of business payments; and
(7) transfers made to non-insider third-parties where the
aggregate amount transferred to any third party in the
Preference Period was less than $100,000.
The ACOM Debtors specifically seek to abandon the Potential
Preference Actions in these categories:
(1) Intended Assumption Category;
(2) Taxing Authorities Category;
(3) HR Category;
(4) Ordinary Course Category;
(5) De Minimis Category; and
(6) the vast majority of transfers made by or on behalf of the
Debtors within the Operating Subsidiaries Group.
Categories of Potential Preference Actions related to transfers
made by or on behalf of the ACOM Debtors in the Operating
Subsidiary Group and the Holding Company Debtor Group that the
ACOM Debtors are continuing to investigate, and to the extent
they exist, intend either to preserve through tolling agreements
or to prosecute by filing complaints are:
(1) transfers to certain contract parties and parties with
whom the ACOM Debtors transacted business in the
Preference Period;
(2) transfers related to claims that the ACOM Debtors
contemplate settling;
(3) transfers related to investment and cash management
activities that are not covered by the Creditors
Committee's complaint against certain prepetition lenders;
(4) transfers made to professionals;
(5) transfers made to Insiders;
(6) transfers made by one ACOM Debtor to another ACOM Debtor;
(7) certain fraudulent conveyance actions; and
(8) any other avoidance action not specifically addressed,
including, without limitation, any avoidance action
relating to any adversary proceeding pending as of
April 21, 2004.
Based on the anticipated recoveries contemplated by the Plan for
unsecured creditors of the Operating Subsidiaries Group and the
legal standard required to determine whether a transfer
constitutes a preference, there can be no certainty that the
estates would be able to successfully prosecute the Potential
Preference Actions against the ACOM Debtors' transferees in the
Operating Subsidiaries Group during the Preference Period. The
legal standard provides that the transfer would enable that
creditor to receive more than it would receive if:
(1) the case were under Chapter 7;
(2) the transfer had not been made; and
(3) the creditor received payment of the debt.
Ms. Chapman points out that even if the legal standard could be
met, the net benefit to the estate in successfully recovering the
transfers would be de minimis given the offsetting increase in
asserted claims that will be compensated via distribution of 100%
of the allowed amount of the claim.
Moreover, the nature of certain of the Potential Preference
Actions in each of the Categories obviates the need for the ACOM
Debtors in either the Holding Company Debtor Group or the
Operating Subsidiaries Group, as applicable, to pursue the
Potential Preference Actions:
(A) Intended Assumption Category
The ACOM Debtors in both the Holding Company Debtor Group
and the Operating Subsidiaries Group determined that they
likely will assume certain contracts, including franchise
and pole attachment agreements, and other agreements
related to their core businesses. Upon the assumption of
these contracts, it is well established that the
Preference Actions can no longer be pursued.
(B) Taxing Authorities Category
The ACOM Debtors in both the Holding Company Debtor Group
and the Operating Subsidiaries Group made numerous
payments to various taxing authorities during the
Preference Period. Pursuant to the Plan, were the ACOM
Debtors to recover the transfers from the transferees, the
transferees would have Priority Tax Claims, which,
pursuant to the Plan, would be fully paid in cash.
(C) HR Category
The ACOM Debtors in both the Holding Company Debtor Group
and the Operating Subsidiaries Group made numerous
transfers to entities during the Preference Period that
provided the ACOM Debtors' employees with certain employee
related services, including health insurance, 401K
services and other benefits. Any attempt to recover these
transfers would likely have an adverse impact on necessary
HR benefits provided to the ACOM Debtors' employees.
(D) Ordinary Course Category
The ACOM Debtors in both the Holding Company Debtor Group
and the Operating Subsidiaries Group made certain
transfers that a court likely would determine to have been
made in the ordinary course of business, within the
meaning of Section 547(c)(2)(B) of the Bankruptcy Code.
The transfers include, but are not limited to, monthly
rent payments.
(E) De Minimis Category
The ACOM Debtors in both the Holding Company Debtor
Group and the Operating Subsidiaries Group made numerous
transfers to non-Insider third-parties during the
Preference Period totaling $100,000 or less. The cost of
pursuing the actions would likely exceed any benefit to be
realized by the ACOM Debtors' estates for doing so.
Rather than expend their time, resources and funds in pursuing
Potential Preference Actions, which would yield no material
benefit to their estates, the ACOM Debtors determined that
abandoning the Potential Preference Actions is appropriate for
their estates and stakeholders. In addition, since many of the
entities of the preference actions to be abandoned continue to
provide the ACOM Debtors with valuable services, the ACOM Debtors
determined that abandoning the Potential Preference Actions would
help avoid damage to those relationships. (Adelphia Bankruptcy
News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
AIR CANADA: Court Authorizes Canadian Pension Contributions
-----------------------------------------------------------
At Air Canada's request, Mr. Justice Farley modifies the
Initial CCAA Order so the company may remit contributions into
each of its Canadian defined benefit registered pension plans.
Ashley John Taylor, Esq., at Stikeman Elliott, LLP, in Toronto,
Ontario, explains that the current service contributions to the
Canadian registered pension plans for the first quarter 2004 were
due on April 30, 2004. The Initial CCAA Order precludes the
Applicants from making contributions to their pension plans
without CCAA Court approval.
Headquartered in Saint-Laurent, Quebec Canada, Air Canada --
http://www.aircanada.ca/-- represents Canada's only major
domestic and international network airline, providing scheduled
and charter air transportation for passengers and cargo. The
Company filed for CCAA protection on April 1, 2003 (Ontario
Superior Court of Justice, Case No. 03-4932) and Section 304
petition with the U.S. Bankruptcy Court for the Southern District
of New York (Case No. 03-11971). Matthew A. Feldman, Esq., and
Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the
Debtors' U.S. Counsel. When the Debtors filed for protection from
its creditors, they listed C$7,816,000,000 in assets and
C$9,704,000,000 in liabilities. (Air Canada Bankruptcy News, Issue
No. 34; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ALPHA NATURAL: S&P Assigns B Corporate Rating with Stable Outlook
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to Abingdon, Virginia-based Alpha Natural Resources
LLC. The outlook is stable.
In addition, Standard & Poor's assigned its 'B' bank loan rating
and its recovery rating of '3' to the company's proposed $175
million secured revolving credit facility maturing in 2009. The
'B' rating, which is the same as the corporate credit rating, and
the '3' recovery rating indicate a meaningful recovery (50% to
80%) of principal in the event of a default.
Standard & Poor's also assigned its 'CCC+' rating to the company's
proposed $200 million senior unsecured notes maturing in 2012.
Alpha will use the proceeds from the senior note offering to
refinance existing debt and distribute $110 million to management
and its equity owners, First Reserve Corp. and Affiliates of
American Metals & Coal International.
"The ratings on Alpha reflect its modest market position,
aggressive financial profile, thin free cash flow, an acquisitive
growth strategy, high cost profile, and a concentration in the
difficult operating environment of Central Appalachia," said
Standard & Poor's credit analyst Dominick D'Ascoli. Somewhat
offsetting these negative factors are Alpha's diverse mining
operations, large percentage of high-margin compliance and
metallurgical coal reserves, limited postretirement obligations,
and currently favorable coal industry conditions.
Compared with some of its peers, Alpha, with 326 million tons of
coal reserves, is a relatively small coal producer, producing less
than 20 million tons in 2003. Since the company's inception in
2002, Alpha has acquired four companies with operations primarily
in the Central Appalachia coal region. The majority of the
company's production (80% in 2003) is from underground mines,
which are more costly and fraught with a higher degree of
operational risks in comparison to surface mines. With the
majority of the company's coal reserves located in the difficult
operating environment of Central Appalachia, Standard & Poor's
expects Alpha's unit costs to gradually increase from an already-
high $30.67 per ton in 2003.
The outlook is stable. Alpha's low legacy liabilities and
favorable coal characteristics should enable the company to remain
profitable. However, free cash flow will remain thin, and the
difficult operating environment could result in higher debt
levels.
APPLICA INC: Incurs First-Quarter Loss of $4.5 Million
------------------------------------------------------
Applica Incorporated (NYSE: APN) announced that first-quarter
sales for 2004 were $132.5 million, an increase of 9.3% from the
same period in 2003. The increase was largely the result of growth
in sales of Black & Decker(R) branded products benefiting from
better point-of-sale of such products, as well as retailers
beginning the year at lower inventory levels.
Applica reported a loss for the 2004 first quarter of $4.5
million, or $0.19 per diluted share, compared with earnings of
$19.6 million, or $0.83 per diluted share, for the 2003 first
quarter. The first-quarter 2003 earnings included $37.5 million
($22.5 million, net of tax) of equity in the net earnings of a
joint venture in which Applica owned a 50% interest.
Applica's gross profit margin decreased to 28.3% in the three-
month period ended March 31, 2004 as compared to 30.5% for the
same period in 2003. The gross profit margin decrease was
primarily attributed to manufacturing retrenchment, higher raw
material costs, higher inbound freight costs and start-up costs
related to the Home Cafe(TM) single-cup brewing system.
At March 31, 2004, total debt as a percentage of total
capitalization was 30.6%, with total debt of $103.2 million and
shareholders' equity of $233.8 million. The Company's book value
per share was $9.80 at March 31, 2004. Capital expenditures for
the first three months ended March 31, 2004 and 2003 were $4.3
million and $6.3 million, respectively.
Harry D. Schulman, Applica's President and Chief Executive
Officer, commented, "Business is off to an excellent start as we
are excited about our top line growth in the quarter. We are
confident that our business will gain momentum throughout the
year. Two new products launched this week, the Home Cafe(TM)
single-cup brewing system and the Tide(TM) Buzz(TM) ultrasonic
stain removal system, both co-developed with The Procter & Gamble
Company, should contribute to exceptional growth."
Applica Incorporated and its subsidiaries (S&P, B Corporate Credit
Rating, Negative Outlook) are manufacturers, marketers and
distributors of a broad range of branded and private-label small
electric consumer goods. The Company manufactures and distributes
small household appliances, pest control products, home
environment products, pet care products and professional personal
care products. Applica markets products under licensed brand
names, such as Black & Decker(R), its own brand names, such as
Windmere(R), LitterMaid(R) and Applica(R), and other private-label
brand names. Applica's customers include mass merchandisers,
specialty retailers and appliance distributors primarily in North
America, Latin America and the Caribbean. The Company operates
manufacturing facilities in China and Mexico. Applica also
manufactures products for other consumer products companies.
Additional information regarding the Company is available at
http://www.applicainc.com/
AQUATIC CELLULOSE: Recurring Losses Raise Going Concern Doubt
-------------------------------------------------------------
Aquatic Cellulose International Corp. is incorporated under the
laws of the State of Nevada. The Company's current mission is to
reorganize the business of the company to shift from the
underwater wood business to that of oil & gas by acquiring long-
term, producing oil and natural gas property assets. In addition,
the Company will seek to acquire the TigeroLynk(TM) large scale
manipulator technology, formerly known as the ATH technology, as a
wholly owned subsidiary. The Company would then seek to develop
the opportunities for the technology in multiple industry sectors
( - Oil & Gas - Harbor & Waterway Remediation - Military - Mining
& Construction ). In June 2003, the Company signed a Memorandum of
Understanding with Legacy Systems Corp. to merge the public
Company with the Tiger-Lynk robotic technology, patented and owned
by Gary Ackles, former Company CEO. During September 2003, the
Company signed a Memorandum of Understanding, followed in December
2003, by a Letter of Intent with Century Resources Inc. of
Houston, Texas, for the acquisition of Century by the Company.
These two agreements with Century negate and preclude all other
agreements between Legacy, Century and the Company and outline the
intent to amalgamate Century and the TigerLynk technology with the
Company.
Aquatic Cellulose International Corporation has experienced
recurring losses, has a working capital deficiency of $1,926,834
and an accumulated deficit of $7,306,949 as of August 31, 2003 and
during the fiscal year ended May 31, 2003 ceased its underwater
timber harvesting operations due to the lack of financing and
working capital. These factors, among others, raise substantial
doubt as to its ability to continue as a going concern.
Management plans to obtain sufficient working capital from
external financing to meet the Company's liabilities and
commitments as they become payable over the next twelve months.
The Company plans to obtain the approval of its shareholders to
increase the total number of authorized shares to allow for
conversion of debentures and sell additional common shares for
cash. As of August 31, 2003, the Company did not have any firm
commitments to obtain adequate financing, however subsequently the
Company and its convertible debenture holders agreed to an
additional funding of $900,000 based on a new repayment
arrangement. There can be no assurance that management's plans
will be successful. Failure to obtain sufficient working capital
from external financing will cause the Company to curtail its
operations.
ARCHIBALD CANDY: Engages Paragon to Advise on Laura Secord Sale
---------------------------------------------------------------
Archibald Candy Corporation announced that it has commenced a
process to sell Laura Secord, one of Canada's leading marketers
and retailers of boxed chocolates, scooped ice cream and other
confectionery items.
Jim Ross, Archibald's Chief Restructuring Officer, said, "We're
proud of our association with Laura Secord during the past five
years. We believe the company is well positioned for continued
growth and success. Laura Secord is known for its quality product
and strong brand name. It also has extremely loyal customers, a
solid management team, and dedicated personnel. It has taken
significant steps that will enable it to thrive and to realize its
full potential as a stand-alone business. With these achievements
in place, the time is right to enable Laura Secord to maximize its
potential under new ownership while securing a full and fair price
for our financial stakeholders. We're committed to a process that
will achieve these goals."
Archibald has engaged Paragon Capital Partners, LLC, an investment
banking firm based in New York, to advise on and assist in the
sale of Laura Secord. Recently, Paragon advised in the sale of
Archibald's Fannie May and Fanny Farmer businesses to Alpine
Confections Inc. for US$38.9 million.
Tim Weichel, President of Laura Secord, said, "We welcome this
sale process, we're excited about the opportunity it presents, and
we face our future with confidence. The steps we've taken in
anticipation of this process will significantly enhance the
company's position and prospects. We've strengthened our senior
and mid-level management teams, secured a source of supply with
Ganong Bros. Ltd., appointed and transitioned to Spectrum Supply
Chain Solutions as our logistics services provider, and resumed
direct control of our distribution and information technology
functions. These and other strengths will enable us to develop and
implement the strategies that will build our business and create
value."
The potential sale of Laura Secord had been explored during 2003.
Archibald was pleased with the interest expressed by a wide range
of qualified buyers. However, events surrounding Archibald during
that process made it difficult to proceed towards an agreement.
Since then, matters have been clarified with Archibald's Chapter
11 filing, the securing of Laura Secord's supply agreement, and
other strategic and operational initiatives which have enabled
Laura Secord to operate as an increasingly stand-alone business.
This announcement represents the latest restructuring measure
undertaken by Archibald in the United States in recent months.
These measures include initiating Chapter 11 proceedings, selling
its Fannie May and Fanny Farmer businesses, ending production at
its Chicago manufacturing plant, closing its U.S. retail stores,
and entering into settlement agreements with its unions for the
benefit of former employees.
Founded in 1913, Laura Secord operates 166 retail shops,
distributes its products in more than 2,000 third party retail
outlets across Canada and has 1,600 employees. Laura Secord's
business is conducted by Archibald Candy (Canada) Corporation, a
wholly-owned subsidiary of Laura Secord Holdings Corporation,
which is a wholly-owned subsidiary of Archibald. Archibald Candy
(Canada) Corporation is not a direct party to Archibald's U.S.
bankruptcy proceeding.
ARGENT SECURITIES: Fitch Rates $14.5MM Class M-10 Notes at BB+
--------------------------------------------------------------
Argent Securities Inc.'s (ARSI) certificates, series 2004-W7, are
rated by Fitch Ratings as follows:
--$780 million classes A-1, A-2, A-3, A-4, A-5 'AAA';
--$40 million class M-1 'AA+';
--$32.5 million class M-2 'AA';
--$20 million class M-3 'AA-';
--$10 million class M-4 'A+';
--$28 million class M-5 'A-';
--$12.5 million class M-6 'A-';
--$11 million non-offered class M-7 'BBB+';
--$10 million non-offered class M-8 'BBB';
--$12 million non-offered class M-9 'BBB-';
--$14.5 million non-offered class M-10 'BB+'.
Credit enhancement for the 'AAA' rated class A certificates
reflects the 19.05% subordination provided by classes M-1, M-2, M-
3, M-4, M-5, M-6, M-7, M-8, M-9, M-10, monthly excess interest and
initial overcollateralization (OC) of 2.95%. Credit enhancement
for the 'AA+' rated class M-1 certificates reflects the 15.05%
subordination provided by classes M-2, M-3, M-4, M-5, M-6, M-7, M-
8, M-9, M-10, monthly excess interest and initial OC. Credit
enhancement for the 'AA' rated class M-2 certificates reflects the
11.80% subordination provided by classes M-3, M-4, M-5, M-6, M-7,
M-8, M-9, M-10, monthly excess interest and initial OC. Credit
enhancement for the 'AA-' rated class M-3 certificates reflects
the 9.80% subordination provided by classes M-4, M-5, M-6, M-7, M-
8, M-9, M-10, monthly excess interest and initial OC. Credit
enhancement for the 'A+' rated class M-4 certificates reflects the
8.80% subordination provided by class M-5, M-6, M-7, M-8, M-9, M-
10, monthly excess interest and initial OC. Credit enhancement for
the 'A-' rated classes M-5 and M-6 certificates reflects the 4.75%
subordination provided by class M-7, M-8, M-9, M-10, monthly
excess interest and initial OC. Credit enhancement for the non-
offered 'BBB+' rated class M-7 certificates reflects the 3.65%
subordination provided by class M-8, M-9, M-10, monthly excess
interest and initial OC. Credit enhancement for the non-offered
'BBB' rated class M-8 certificates reflects the 2.65%
subordination provided by class M-9, M-10, monthly excess interest
and initial OC. Credit enhancement for the non-offered 'BBB-'
rated class M-9 certificates reflects the 1.45% subordination
provided by class M-10, monthly excess interest and initial OC.
Credit enhancement for the non-offered 'BB+' rated class M-10
certificates reflects the monthly excess interest and initial OC.
In addition, the ratings reflect the integrity of the
transaction's legal structure as well as the capabilities of
Ameriquest Mortgage Company as Master servicer. Deutsche Bank
National Trust Company will act as trustee.
The mortgage pool consists of closed-end, first lien subprime
mortgage loans that may or may not conform to Freddie Mac and
Fannie Mae loan limits. As of the cut-off date (May 1, 2004), the
mortgage loans have an aggregate balance of $1,000,000,254. The
weighted average loan rate is approximately 7.04%. The weighted
average remaining term to maturity (WAM) is 354 months. The
average cut-off date principal balance of the mortgage loans is
approximately $177,305. The weighted average original loan-to-
value ratio (OLTV) is 84.46% and the weighted average Fair, Isaac
& Co. (FICO) score was 612. The properties are primarily located
in California (32.50%), Florida (8.47%) and Illinois (7.84%).
Approximately 92.81% of the loans were originated or acquired by
Argent Mortgage Company, LLC (Argent), and 7.19% of the loans
originated or acquired by Olympus Mortgage Company. Both mortgage
companies are subsidiaries of Ameriquest Mortgage Company, a
specialty finance company engaged in the business of originating,
purchasing and selling retail and wholesale subprime mortgage
loans. Both Argent and Olympus focus primarily on wholesale
subprime mortgage loans.
ARMKEL: Church & Dwight Acquisition Prompts S&P's Positive Watch
----------------------------------------------------------------
Standard & Poor's Ratings Services placed the ratings on personal
care product manufacturer Armkel LLC on CreditWatch with positive
implications. This follows the announcement that Church & Dwight
Co. Inc. (BB/Stable/--) will purchase the remaining 50% interest
in the company that it does not already own from Kelso & Company
for $254 million.
The ratings on Princeton, New Jersey-based Church & Dwight are
affirmed. The transaction, which is subject to customary closing
conditions, is expected to be completed on or about May 30, 2004.
Armkel had about $370 million of funded debt as of Dec. 31, 2003,
and Church & Dwight had about $400 million.
"Standard & Poor's believes that upon completion of the planned
transaction, Armkel's ratings will be raised to be in line with
Church & Dwight's," said Standard & Poor's credit analyst Patrick
Jeffrey. In the near term, Standard & Poor's expects that this
transaction will increase leverage for the combined entity.
However, Church & Dwight has been operating the Armkel joint
venture since acquiring a 50% interest in 2001. As a result,
integration risk is expected to be minimal after closing.
Moreover, the improved business profile of the consolidated entity
should largely offset the increase in debt. Furthermore, the
operating stability and cash-generating ability of the combined
company should help reduce debt leverage in the intermediate term.
Church & Dwight manufactures and markets a wide range of personal
care, household products, and specialty products, primarily under
the Arm & Hammer brand name.
Armkel manufactures and markets a variety of personal care and
specialty items, including Trojan condoms, Nair depilatories, and
First Response pregnancy/ovulation test kits.
ASP VENTURES: Auditors Express Going Concern Doubt
--------------------------------------------------
As of December 31, 2003, ASP Ventures Corporation had no
significant assets. Management believes that the Company has
sufficient resources to meet the anticipated needs of the
Company's operations through at least the calendar year ending
December 31, 2004 though there can be no assurances to that
effect, as the Company has no revenues and its need for capital
may change dramatically if it acquires an interest in a business
opportunity during that period. Further, the Company has no plans
to raise additional capital through private placements or public
registration of its securities until a merger or acquisition
candidate is identified though it may rely on loans from
shareholders for capital and the issuance of equity, as required,
to ensure its ability to maintain its continuous disclosure
requirements.
The Company has no current plans for the purchase or sale of any
plant or equipment.
The Company has no current plans to engage any employees.
The Company's audit expressed substantial doubt as to the
Company's ability to continue as a going concern as a result of
recurring losses, lack of revenue-generating activities and an
accumulated deficit of $1,211,428 as of December 31, 2003. The
Company's ability to continue as a going concern is subject to the
ability of the Company to realize a profit and /or obtain funding
from outside sources. Management's plan to address the Company's
ability to continue as a going concern, include: (1) obtaining
funding from private placement sources; (2) obtaining additional
funding from the sale of the Company's securities;
(3) establishing revenues from a suitable business opportunity;
and (4) obtaining loans and grants from various financial
institutions, where possible. Although management believes that it
will be able to obtain the necessary funding to allow the Company
to remain a going concern through the methods discussed above,
there can be no assurances that such methods will prove
successful.
ATA: Will Take a Non-Operating Charge Relating to Bond Exchange
---------------------------------------------------------------
ATA Holdings Corp., parent Company of ATA Airlines, Inc. (Nasdaq:
ATAH), announced a non-operating charge to earnings of
approximately $27 million associated with its bond exchange in the
first quarter of 2004. The charge relates specifically to the
accounting for the cash consideration paid at closing of the
exchange and the incremental notes issued during the exchange.
In announcing the charge, David Wing, Executive Vice President and
Chief Financial Officer said, "The costs, economics and cash flows
of the exchange transactions are unchanged and unaffected. Only
the timing of when certain costs will be expensed is affected.
Recognizing these charges this quarter instead of deferring them,
of course, means future expenses will be less."
As previously announced, on January 30, 2004, ATA Holdings Corp.
successfully completed offers to exchange newly issued Senior
Notes due 2009 and cash consideration for its 10-1/2 percent
Senior Notes due 2004 and newly issued Senior Notes due 2010 and
cash consideration for its 9-5/8 percent Senior Notes due 2005. In
completing the Exchange Offers, the Company accepted all Existing
Notes tendered for exchange, issuing $163,064,000 in aggregate
principal amount of 2009 Notes and delivering $15,885,476 in cash
(which amount included accrued interest) in exchange for
$155,310,000 in aggregate principal amount of 2004 Notes tendered
and issuing $110,233,000 in aggregate principal amount of 2010
Notes and delivering $6,524,721 in cash (which amount included
accrued interest) in exchange for $104,995,000 in aggregate
principal amount of 2005 Notes tendered, pursuant to the terms of
the Exchange Offers. In addition to the New Notes issued,
$19,690,000 in aggregate principal amount of the 2004 Notes and
$20,005,000 in aggregate principal amount of the 2005 Notes remain
outstanding after the completion of the Exchange Offers.
The Company and its auditors, Ernst & Young, had initially
determined the transaction should be accounted for as a "troubled
debt restructuring." These determinations were based on
conclusions of the Company and Ernst & Young that the
restructuring resulted from financial difficulties experienced by
the Company, and that bondholders had granted concessions to the
Company in the exchange. These criteria are specified in Financial
Accounting Standards Board (FASB) Emerging Issues Task Force Issue
No. 02-4 "Determining Whether a Debtor's Modification or Exchange
of Debt Instruments is Within the Scope of FASB Statement No. 15,"
which provides interpretive guidance on FASB Statement No. 15,
"Accounting by Debtors and Creditors for Troubled Debt
Restructurings" (FAS 15). Following FAS 15, the Company would have
recorded the cash consideration paid at closing and the
incremental notes issued at closing on the balance sheet as a bond
discount to be amortized to expense ratably over the term of the
New Notes.
The Company, with assistance of Ernst & Young, voluntarily sought,
prior to the announcement of its first quarter results,
confirmation of its planned accounting from the Securities and
Exchange Commission (SEC). Last May 5, the SEC informed the
Company that it interprets the accounting guidance differently,
and concluded the transaction is not a "troubled debt
restructuring." As a result of the SEC's determination, ATA
Holdings Corp. will report a non-operating charge of approximately
$27 million associated with the bond exchange, accounting for it
as an extinguishment of debt.
About ATA Holdings
Now celebrating its 31st year of operation, ATA is the nation's
10th largest passenger carrier (based on revenue passenger miles)
and one of the largest low-fare carriers in the nation. ATA has
the youngest, most fuel- efficient fleet among the major scheduled
carriers, featuring the new Boeing 737-800 and 757-300 aircraft.
The airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations. Stock of the parent
company is traded on the Nasdaq Stock Exchange under the symbol
"ATAH." To learn more about the company, visit the web site at
http://www.ata.com/
* * *
As reported in the Troubled Company Reporter's February 6, 2004
edition, Standard & Poor's Ratings Services revised the
implications of its CreditWatch review on ATA Holdings Corp. and
subsidiary ATA Airlines Inc. to positive from developing. The
corporate credit rating on both entities is 'CCC'. The ratings
were initially placed on CreditWatch March 18, 2003, and
subsequently lowered to current levels July 29, 2003.
At the same time, 'CC' ratings were assigned to ATA Holdings
Corp.'s $163.1 million 13% senior notes due 2009 and $110.2
million of 12-1/8% senior notes due 2010, exchange offers for
outstanding notes. Standard & Poor's placed the ratings on these
notes on CreditWatch with positive implications.
"The revised CreditWatch implication reflects the company's
Jan. 30, 2004, completion of exchange offers for $260.3 million of
notes due in 2004 and 2005," said Standard & Poor's credit analyst
Betsy Snyder. "The successful conclusion of the exchange offers,
which were voluntary for bondholders, plus other actions to defer
near-term cash obligations, should alleviate somewhat ATA's
liquidity problems," the analyst continued. ATA received the
consent of the Air Transportation Stabilization Board pursuant to
its government-guaranteed loan. In addition, ATA completed a
restructuring of various aircraft operating leases, with a portion
of the payments rescheduled until later in the terms of the
leases. Standard & Poor's will review the effect of the debt
restructuring on ATA's financial profile to resolve the
CreditWatch.
BIOGAN INT'L: Turns to Zwaig Consulting for Financial Advice
------------------------------------------------------------
Biogan International, Inc., asks the U.S. Bankruptcy Court for the
District of Delaware for approval to employ Zwaig Consulting,
Inc., as its financial advisor in its chapter 11 case.
Zwaig Consulting has been advising the Debtor since March 2004
with respect to the various restructuring and other strategic
transactions potentially available to it. The firm has been
particularly instrumental in assisting the company in preparing a
liquidation analysis and comparing that analysis to the value
stakeholders would receive in the proposed sale to HMZ Metals,
Inc.
The Debtor expects Zwaig Consulting to:
a) review of annual and interim financial statements,
projections and income tax returns for HMZ, its investee
company, Biogan, Biogan International (BVI) Inc., GaoFeng
Mining Company Limited, an investee company of Biogan BVI,
and Guangxi Metals Co., Ltd., which is an equity
investment of Biogan BVI;
b) review key operating agreements such as the Cooperative
Joint Venture Contract for GGM and mining permits of
GaoFeng;
c) appraise the capital assets of Biogan BVI including
reserves;
d) compare various other financial and non-financial
information as considered to be appropriate;
e) analyze publicly available information to the extent
available and considered relevant; and
f) prepare other analyses as considered to be appropriate;
Zwaig Consulting's customary hourly rates for the persons most
likely to be engaged in this matter are:
Professional Designation Hourly Rate
------------ ----------- ------------
Melanie Russel Snr. Valuation Specialist C$300
Robert Cumming Snr. Restructuring Specialist C$350
Junior staff C$100-C$290
Other senior specialists required
for taxation, jurisdictional or
per review purposes C$300-C$400
Headquartered in Toronto, Ontario, Canada, Biogan International,
Inc., explores, selects, smelts and sells mineral products and by-
products. The Company filed for chapter 11 protection on April
15, 2004 (Bankr. Del. Case No. 04-11156). Michael R. Nestor,
Esq., at Young Conaway Stargatt & Taylor represent the Debtor in
its restructuring efforts. When the Company filed for protection
from its creditors, it listed $9,038,612 in total assets and
$8,280,792 in total debts.
BLUE MOUNTAIN: Case Summary & 11 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Village At Blue Mountain Beach LLC
P.O. Box 1566
Santa Rosa Beach, Florida 32459-1566
Bankruptcy Case No.: 04-31040
Chapter 11 Petition Date: April 22, 2004
Court: Northern District of Florida (Pensacola)
Judge: William S. Shulman
Debtor's Counsel: Daniel C. Perri, Esq.
4 Eleventh Avenue, Suite 1
Shalimar, FL 32579
Tel: 850-651-301
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
------ --------------- ------------
Utility Solutions Group Construction services $321,000
1567 State Highway 63 North
DeFuniak Springs, FL 32453
Watson Watson Rutland, Architectural $225,000
Architects services
Morris Gary Andrews & Legal services $60,000
Talmadge
Matthews & Hawkins Legal services $33,000
Gustin, Cauthern & Tucker Surveying services $32,000
HDR Engineering Engineering services $30,000
Robert McGill, Esq. Legal services $25,000
Blue Mountain Beach Condo Trade debt $15,000
Owners Assoc.
Quarles & Brady Legal services $6,500
The Evans Group $5,000
Newsouth Communication $4,800
BROOKFIELD FURNITURE: Case Summary & Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Brookfield Furniture Store, LLC
273 Federal Road
Brookfield, Connecticut 06883
Bankruptcy Case No.: 04-50520
Type of Business: The debtor sells furniture manufactured by
Drexel Heritage Furniture Industries, Inc.
Chapter 11 Petition Date: April 22, 2004
Court: District of Connecticut (Bridgeport)
Judge: Alan H.W. Shiff
Debtor's Counsel: Ira B. Charmoy, Esq.
Law Offices of Ira B. Charmoy, LLC
Heritage Square
1700 Post Road, Suite D-3, P.O. Box 745
Fairfield, CT 06824
Tel: 203-254-9393
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
------ --------------- ------------
MGM Transport Trade Debt $31,428
Garcia Imports Trade Debt $22,313
Maitland Smith Trade Debt $16,884
Nextmedia Outdoor Advertising $16,815
Castillian Imports Trade Debt $15,649
Crystal Clear Trade Debt $10,440
John Richard Trade Debt $7,576
Lamar Advertising Advertising services $7,560
Curry & Co. Trade Debt $5,706
Glenwood Design Trade Debt $5,506
Comcast Trade Debt $5,168
Northern Fine Art Trade Debt $4,850
Wildwood Lamps Trade Debt $3,760
Wildwood Accents Trade Debt $3,738
Preferred Building Trade Debt $3,706
The Big Fish Trade Debt $2,929
Housatonic Pub services $2,908
Oriental Accents Trade Debt $2,714
Connecticut Light & Power Utilities $2,410
Somerset Studio $1,620
CALPINE CORP: First Quarter Net Loss Increases to $71.2 Million
---------------------------------------------------------------
Calpine Corporation (NYSE: CPN), one of North America's leading
power companies, announced financial and operating results for the
three months ended March 31, 2004.
For the three months ended March 31, 2004, the company reported a
loss per share of $0.17, or $71.2 million of net loss, compared to
a loss per share of $0.14, or $52.0 million of net loss for the
quarter ended March 31, 2003. The results for the first quarter of
2004 include gains of approximately $0.06 per share from the sale
of the Lost Pines 1 Power Project and $0.01 per share from foreign
currency transactions. These gains were partially offset by losses
of $0.03 per share from the expensing of deferred financing costs
in connection with refinancing activities, and $0.01 per share due
to amortization of the DIG Issue C20 mark-to-market gain
recognized in the fourth quarter of 2003 as a cumulative effect of
a change in accounting principle. Revenue for the quarter declined
by 6% from the first quarter in 2003 due to netting approximately
$370 million of sales of purchased power for hedging and
optimization with purchased power expense in the quarter ended
March 31, 2004. This was due to the adoption on October 1, 2003,
on a prospective basis, of new accounting rules related to
presentation of non-trading derivative activity. Without this
netting, revenue would have grown by approximately 11%.
"Calpine turned in another quarter of solid plant performance. Our
clean, fuel-efficient power plants achieved a high average
availability factor of 92% during the quarter. And, through
productivity enhancements and economies of scale, Calpine
continued to lower plant operating costs," stated Peter
Cartwright, chief executive officer and president. "During the
quarter, however, earnings were primarily impacted by low spark
spreads brought about by mild weather in several major markets.
"On the refinancing front, Calpine completed its $2.4 billion
Calpine Generating Company offering. With this transaction,
Calpine has successfully refinanced and extended the debt
maturities on $6.7 billion of debt. In addition, Calpine continued
to strengthen its contractual portfolio through the execution of
new long-term power sales agreements, and we are currently
evaluating nearly 20,000 megawatts of additional contract
opportunities.
"Competition continues to create opportunities for customers and
the environment to benefit from modern, clean low-cost power
resources. During the first quarter, we remained very active on
the regulatory front. To build a robust competitive market, we
must create fair, open and transparent markets. Calpine remains
committed to the competitive power market and to creating
long-term value for our customers and investors."
2004 First Quarter Results
Calpine recorded a net loss of $71.2 million for the first quarter
of 2004, compared to a net loss of $52.0 million for the same
period last year. During the three months ended March 31, 2004,
gross profit decreased by $44.6 million, or 27%, to $120.5
million, compared to the first quarter last year. This decrease is
the result of lower spark spreads realized during the quarter and
additional costs associated with new power plants coming on line.
For the first quarter of 2004, Calpine generated 21.1 million
megawatt-hours, which equated to a capacity factor of 50.3% and
realized an average spark spread of $21.05 per megawatt-hour. For
the same period in 2003, Calpine generated 19.1 million megawatt-
hours, which equated to a capacity factor of 55.2% and realized an
average spark spread of $23.09 per megawatt-hour. Additional power
plant costs include a $15.6 million increase in depreciation
expense, a $13.9 million increase in plant operating expense and a
$7.6 million increase in transmission purchase expense. Also, in
the first quarter of 2004, financial results were affected by a
$96.2 million increase in interest expense and distributions on
trust preferred securities due to higher debt balances, and by the
expensing of deferred financing costs in connection with
refinancings. We recorded $8.8 million of amortization expense
in other cost of revenue in the first quarter of 2004 related to
the DIG Issue C20 mark-to-market gain recognized in the fourth
quarter of 2003.
2004 Earnings Guidance
The company is reaffirming its breakeven GAAP earnings guidance
for the year ending Dec. 31, 2004. The company is also reaffirming
that EBITDA, as adjusted, is anticipated to be approximately $1.7
billion for 2004.
About Calpine
Calpine Corporation (S&P, CCC+ Senior Unsecured Convertible Note
and B Second Priority Senior Secured Note Ratings, Negative
Outlook), celebrating its 20th year in power in 2004, is a
leading North American power company dedicated to providing
electric power to customers from clean, efficient, natural gas-
fired and geothermal power facilities. The company generates power
at plants it owns or leases in 21 states in the United States,
three provinces in Canada and in the United Kingdom. Calpine is
also the world's largest producer of renewable geothermal energy,
and owns or controls approximately one trillion cubic feet
equivalent of proved natural gas reserves in the United States and
Canada. For more information about Calpine, visit
http://www.calpine.com/
CANADA PAYPHONE: Says It'll Propose a Plan No Later than June 17
----------------------------------------------------------------
Subsequent to previous press releases announcing the decision to
file a Notice of Intention to make a proposal for the benefit of
its creditors under the Bankruptcy and Insolvency Act (Canada),
the Company has requested for an extension of 45 days, which was
granted by the registrar of the Superior court on May 5, 2004. The
Company now plans to file its restructuring plan proposal no later
than June 17, 2004 and a creditors meeting will be scheduled
within 21 days of the filing of the proposal.
Canada Payphone Corporation is listed on the TSX Venture Exchange
as CPY.
CAREMARK RX: Reports 40% Net Revenue Increase in First Quarter
--------------------------------------------------------------
Caremark Rx, Inc. (NYSE: CMX) reported diluted earnings per share
of $0.29 for the first quarter of 2004. The financial results
included integration and other related expenses of $10.4 million
($6.2 million net of taxes) related to the company's recently
completed acquisition of AdvancePCS. Excluding these expenses,
diluted earnings per share for the quarter were $0.32 representing
an increase of 33% from the first quarter of 2003.
Caremark completed its acquisition of AdvancePCS on March 24,
2004. Therefore, the first quarter Caremark results include the
results of AdvancePCS' operations from March 24 through March 31,
2004.
Based on the current results and the expectation of achieving
previously forecasted synergies of $125 million by the end of
2004, one quarter earlier than expected, Caremark is raising full-
year 2004 guidance for diluted earnings per share, excluding
integration and other related expenses, to a range of $1.37 to
$1.39. The company's previous guidance was in the range of $1.35
to $1.37 per share.
Operating Results of Legacy Caremark
Caremark's revenues during the first quarter of 2004, excluding
the results of AdvancePCS from March 24 to March 31, 2004,
increased 18% over the first quarter of 2003 to $2.6 billion.
Caremark EBITDA during the quarter, excluding AdvancePCS,
increased 31% to $165.1 million, excluding integration and other
related expenses, producing an EBITDA margin of 6.4% compared with
5.8% for the same period in the prior year. Caremark diluted
earnings per share, excluding AdvancePCS and integration and other
related expenses were $0.32.
Consolidated Operating Results
During the first quarter of 2004, Caremark reported net revenues
of $3.0 billion, a 40% increase over the first quarter of 2003.
These revenues included $465.1 million of legacy AdvancePCS
revenues during the quarter. Mail revenues were $1.4 billion, a
28% increase over the same period in the prior year. Mail
prescriptions totaled 7.1 million during the first quarter, a
growth rate of 20% over the first quarter of 2003. Retail revenues
were $1.6 billion, an increase of 51% over the comparable period
of 2003. Retail claims totaled 34.3 million during the first
quarter, representing a 54% increase over the first quarter of
2003.
EBITDA (earnings from continuing operations before interest,
taxes, depreciation and amortization) for the first quarter of
2004, excluding integration and other related expenses, was $174.4
million, an increase of 38% over the first quarter of 2003. EBITDA
included $9.3 million for AdvancePCS during the quarter. As a
result of the strong performance, operating cash flow for the
first quarter of 2004 was $203.0 million compared with $137.7
million in the same period last year, an increase of 47%. At March
31, 2004, net debt was $246.9 million reflecting the cash paid for
AdvancePCS (net of cash acquired), the retirement of 98% of the
outstanding AdvancePCS 8 1/2% Senior Notes and net reduction of
debt under Caremark's credit facilities.
Capital expenditures totaled $12.9 million for the quarter, down
from $18.1 million in the first quarter of 2003.
Operating Results of Legacy AdvancePCS
During the first quarter of 2004, legacy AdvancePCS recorded full
quarter revenues, including retail copayments, of $5.1 billion, an
increase of 10% over the first quarter of 2003. Legacy AdvancePCS
EBITDA for the quarter was $96.4 million, excluding $2.6 million
of integration expenses, a decrease of $2.1 million compared with
the first quarter of 2003. In management's opinion, this is not
indicative of the ongoing EBITDA run rate for legacy AdvancePCS.
Legacy AdvancePCS EBITDA was adversely impacted by adjustments
recognized in the quarter for revisions to estimated net
realizable values for receivables, settlements of amounts due to
and due from customers and payroll taxes on stock options
exercised shortly before the close of the acquisition. EBITDA was
positively impacted by adjustments to certain liabilities and
inventory investment buys that were higher than normal. The total
of the above items reduced legacy AdvancePCS EBITDA by
approximately $19 million for the first quarter. The company does
not expect similar adjustments of this magnitude to recur in
future statements of operations.
Outlook and Acquisition Integration
Caremark's integration planning efforts that began in November
2003 are now being executed. "Throughout the integration process,
our primary focus has been, and will continue to be, to benefit
our customers and their plan participants with no disruptions and
improved services," said Mac Crawford, Chairman, President and
Chief Executive Officer of Caremark. "We are also very pleased
with the outlook for synergies with the AdvancePCS transaction."
Based on current projections, Caremark expects 2004 consolidated
net revenue to total $25 to $26 billion. Quarterly diluted
earnings per share for 2004 before integration and other related
expenses are expected to be $0.29 to $0.30 in the second quarter,
$0.34 to $0.35 in the third quarter and $0.41 to $0.42 in the
fourth quarter. Therefore, diluted earnings per share excluding
integration and other related expenses for the full-year are
expected to be in the range of $1.37 to $1.39. Caremark's 2004
earnings expectations are based, in part, on the following
assumptions:
-- The company now expects to achieve the previously estimated
$125 million in pre-tax synergies in the remaining three
quarters of 2004, one quarter earlier than originally
projected.
-- Stock option expense associated with stock options granted to
AdvancePCS employees prior to the acquisition is expected to
total approximately $23 million in 2004, or approximately
$9 million, $7 million and $6 million in the last three
quarters of the year, respectively.
-- Amortization expense related to identifiable intangible assets
acquired in the transaction is currently estimated to total
approximately $38 million in 2004, or approximately $12.5
million per remaining quarter in 2004. The company expects the
valuation of the identifiable intangible assets associated with
the transaction and the estimate of 2004 amortization expense
to be completed by the end of the second quarter.
-- Depreciation expense is expected to total approximately $25 to
$26 million per remaining quarter in 2004.
-- Net interest expense is expected to total $35 to $40 million in
2004.
-- The company's effective accounting tax rate is expected to
decrease slightly beginning in the second quarter to 39.8%.
However, the cash tax rate will continue to be significantly
lower until all of the company's tax net operating loss
carryforwards are fully utilized.
In addition, Caremark's guidance includes implementation costs
associated with the Federal Employee Program that selected
Caremark to administer its mail service benefit. While this
contract begins January 1, 2005, Caremark will incur incremental
expenses related to this contract during 2004. These incremental
costs are expected to have a negative impact on 2004 earnings of
approximately $0.02 per diluted share and are expected to be
incurred during the third and fourth quarters.
The company also will be required to expense certain ongoing
integration costs as they are incurred. Since the acquisition of
AdvancePCS closed on March 24, 2004, and the integration is in
process, these expenses have not yet been quantified and therefore
are not included in the company's earnings per share expectations
given above.
"The synergies we expect to achieve in 2004 from the acquisition
make us comfortable raising our previously established guidance
for diluted earnings per share for 2004 to the range of $1.37 to
$1.39, excluding the impact of integration and other related
expenses," said Mr. Crawford.
"Also, we now believe that the synergies ultimately to be realized
in the transaction will total approximately $250 million annually
which will be achieved over the next several years," said
Crawford. "With the first quarter off to a strong start and
increased earnings expected for the remainder of 2004, Caremark is
delivering strong value for our shareholders as we remain focused
on continuing to be the premier health management solutions
provider."
About Caremark Rx, Inc.
Caremark Rx, Inc. is a leading pharmaceutical services company,
providing through its affiliates comprehensive drug benefit
services to over 2,000 health plan sponsors and their plan
participants throughout the U.S. Caremark's clients include
corporate health plans, managed care organizations, insurance
companies, unions, government agencies and other funded benefit
plans. The company operates a national retail pharmacy network
with over 55,000 participating pharmacies, seven mail service
pharmacies, the industry's only FDA-regulated repackaging plant
and 23 specialty pharmacies for delivery of advanced medications
to individuals with chronic or genetic diseases and disorders.
As reported in the Troubled Company Reporter's February 16, 2004
edition, Standard & Poor's Ratings Services said that its ratings
on Nashville, Tennessee-based pharmacy benefit manager Caremark
Rx.Inc. remained on CreditWatch with positive implications. These
include the company's 'BBB-' long-term corporate credit and senior
secured debt ratings as well as the 'BB+' rating on its $450
million in 7.375% senior secured notes. The ratings were
originally placed on CreditWatch on Sept. 3, 2003, following the
company's announcement that it intended to acquire its rival,
AdvancePCS, in a $6 billion transaction funded mostly by stock.
AdvancePCS' ratings also remain on CreditWatch with positive
implications, including its 'BB+' corporate credit and senior
secured debt ratings as well as its 'BB' senior unsecured debt
ratings.
COMDIAL CORPORATION: Majority Stockholders Back Refinancing Deals
-----------------------------------------------------------------
An Information Statement has been mailed on, or about, April 2,
2004 to the stockholders of record of Comdial Corporation at the
close of business on March 3, 2004.
The Information Statement was provided to inform of the adoption
of resolutions by written consent of the holders of a majority of
the outstanding shares of the Company's voting common stock, par
value $.01 per share.
The resolutions adopted by the Majority Stockholders approve of
the private placement bridge financing transaction that was
initially entered into by the Company on February 17, 2004 and
that was subsequently amended to expand the offering based on
greater than expected interest on the part of investors.
Further, the Majority Stockholders also approved agreements
entered into between the Company and the holders of certain senior
subordinated secured convertible promissory notes issued in
connection with a private placement that occurred in 2002, which
agreements extend the maturity date of the Senior Notes and enable
the conversion of the Senior Notes at the option of the holders
into common stock at a price that may be less than the then-
current market value of the stock.
Stockholder approval was required because the expansion of the
bridge financing transaction and the amendment to the Senior Notes
would each result in the issuance of securities convertible into
common stock in excess of 20% of the total outstanding common
stock of the Company at a price that may be less than the greater
of book or market value of the common stock. The Nasdaq
Marketplace Rules require the approval of a majority of the
holders of the issued and outstanding common stock prior to the
sale or issuance of securities convertible into common stock equal
to 20% or more of a company's then-outstanding shares at a price
less than the greater of book or market value. Although the
Company is not currently listed on the Nasdaq National Market or
the Nasdaq SmallCap Market exchanges (and is therefore not subject
to Nasdaq's listing requirements), the Company agreed to comply
with the Nasdaq Marketplace Rules in the Bridge Financing and the
Senior Notes Amendment.
The Board of Directors of the Company previously authorized the
Company to enter into a private placement bridge financing
transaction including investments of up to $4 million and an over-
allotment of $2 million. The Board also approved the subsequent
expansion of the transaction as described above. Pursuant to such
approval, the Company has obtained a total of $9 million in
investment proceeds in exchange for 8% subordinated convertible
promissory notes and warrants to acquire up to 1.8 million shares
of common stock. The Bridge Notes and the Bridge Warrants,
collectively, could result in the issuance of up to 4,462,722
shares of common stock. Pursuant to the amendment to the Senior
Notes, the Senior Notes could be converted into a maximum of
3,939,882 shares. None of the foregoing securities may be
converted into common stock in accordance with the Stockholder
Resolutions until the date that is at least 20 days after the date
the Information Statement was first mailed to stockholders
of record, in accordance with Regulation 14C of the Securities
Exchange Act of 1934.
As of the close of business on the Record Date, Comdial had an
aggregate of 8,974,338 shares of common stock outstanding and no
shares of Preferred Stock outstanding. Each outstanding share of
common stock is entitled to one vote per share. The affirmative
consent of the holders of a majority of the issued and outstanding
shares of the Company's common stock was necessary to approve the
Stockholder Resolutions in the absence of a meeting of
stockholders. The Majority Stockholders own approximately 66% of
the outstanding shares of the company's common stock. The
requisite stockholder approvals of the Stockholder Resolutions was
obtained on February 26, 2004 by the execution of the Majority
Stockholders' written consents in favor thereof.
About Comdial
Comdial -- whose December 31, 2003 balance sheet shows a
stockholders' equity deficit of $5,399,000 -- is a converged voice
and data communications solutions provider with over 25 years of
long-standing success as a leading brand. Focused on superior
customer service and reliable communications solutions, we are
dedicated to producing best-in-class small- to mid-sized
enterprise communications products. Through innovative technology
and flexibility, we are unmatched at providing comprehensive
Internet Protocol (IP) communications solutions tailored to meet
each customer's evolving business needs. For more information
about Comdial and its communications solutions, visit its web site
at http://www.comdial.com/
COMMERCE ONE: Stockholders' Deficit Climbs to $5.5MM at March 31
----------------------------------------------------------------
Commerce One, Inc. (Nasdaq:CMRC) announced financial results for
the quarter ended March 31, 2004.
Revenues for the current quarter totaled $2.7 million as compared
with $13.1 million for the corresponding quarter in 2003 and $9.1
million for the quarter ended December 31, 2003.
The net loss on a GAAP basis for the current quarter was $8.4
million, or $0.28 per share, as compared to a net loss of $29.3
million, or $1.00 per share, for the corresponding quarter ended
March 31, 2003, and $2.9 million, or $0.09 per share, for the
quarter ended December 31, 2003.
As of March 31, 2004, total cash and cash equivalents were $10
million of which approximately $1.2 million was encumbered.
At March 31, 2004, Commerce One, Inc. records total stockholders'
deficit of $5,540,000 compared to a deficit of $3,028,000 at
December 31, 2003.
Quarterly Highlights
The following milestones were completed or announced during the
first quarter of 2004:
-- The Company previously announced that it was considering the
sale of its Supplier Relationship Management (SRM) applications
assets. The Company today announced that it is no longer
actively pursuing the sale of these applications. The Company
believes that there are promising synergies between the SRM
applications and the Conductor technology, including the
ability to enable customers to create composite SRM
applications. The Company plans to focus its sales efforts on
both Conductor and SRM opportunities. Mark Pecoraro, General
Manager and Senior Vice President, SRM Division, will lead the
Company's SRM sales and development opportunities. Mark
Pecoraro brings more than 17 years of leadership experience in
enterprise applications, infrastructure software, technical
services and global business operations.
-- The Company added two seasoned industry veterans to the
executive team to focus on growing revenue opportunities for
the Conductor platform and leveraging the assets and domain
expertise of the SRM business.
Wain Beard, senior vice president of worldwide sales, brings
more than 25 years experience in the technology field. His
responsibilities include sales, professional services, and
channel teams.
Edward Mueller, brings more than 20 years experience in
marketing business-to-business computer software solutions. As
senior vice president of marketing of Commerce One, Mueller is
responsible for driving marketing strategy, product marketing,
product management, and marketing communications programs.
-- The Company also announced that, during the second quarter,
Ruesch, a leading financial institution specializing in
international B2B payment solutions, purchased Commerce One
Conductor to help automate several business processes. Also
during the second quarter, the Company established a
relationship with GridNode who will act as a partner to provide
Conductor as a gateway to customers who work with the
RosettaNet standard in the high tech industry.
-- During the fourth quarter of 2003, the Company executed an
agreement with ComVest for $5.0 million in financing which was
received in full on or before January 2, 2004.
"We feel optimistic about our prospects going forward. We believe
that retaining the SRM business will create value for the company
and for its customers and believe that there is promising synergy
between the SRM applications and the Conductor platform," said
Commerce One Chairman and CEO Mark Hoffman. "We made key additions
to our executive team and have begun to expand our sales and
marketing teams to help take advantage of the opportunities we are
seeing for both Conductor and SRM."
About Commerce One
From its initial roots in Internet-based software applications,
Commerce One has consistently been at the forefront of delivering
advanced technologies that help global businesses collaborate with
their partners, customers and suppliers over the Internet.
Commerce One has defined many of the open standards and protocols
established for business networks today and our global customer
base includes leaders in a wide range of industries. The Commerce
One Conductor platform and industry-specific Process Accelerators
represent the next generation of business process management
solutions that enable enterprises to optimize their existing
technology investments and enhance functionality of existing
applications and processes. For more information, go to
http://www.commerceone.com/
COMPUVAC SYSTEMS: Case Summary & 19 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Compuvac Systems, Inc.
780 Apex Road
Sarasota, Florida 34240
Bankruptcy Case No.: 04-08869
Type of Business: The Debtor manufactures High Vacuum Systems.
See http://www.compuvacsystems.com/
Chapter 11 Petition Date: May 3, 2004
Court: Middle District of Florida (Tampa)
Judge: Thomas E. Baynes Jr.
Debtor's Counsel: James D. Jackman, Esq.
5008 Manatee Avenue West, Suite 1A
Bradenton, FL 34209
Tel: 941-747-9191
Total Assets: $1,259,680
Total Debts: $1,769,632
Debtor's 19 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Dontech Incorporated $230,000
Sierra Applied Sciences $143,396
Advanced Energy Indus. $101,248
NSA Scientific LL $91,037
Aerzen USA Corp. $59,135
Vacutron Tech Corp. $59,075
Pintura Electrostatica $55,800
William Kleiber $50,395
Frank Warchol $49,788
Rexel Mader Motors $47,094
Holland & Knight LLP $41,366
IGC Polycold Systems $37,952
Subrata Mukerji $30,000
The Eddy Co. $28,326
Logic All Solutions $26,729
Michael Warchol $22,255
Barnes Walker $20,926
Card Merrill Cullis et al. $16,426
Inficon Inc. $14,960
CONSECO: Low-Rated Reorganized Company Reports 1st Quarter Results
------------------------------------------------------------------
Conseco, Inc. (NYSE:CNO) reported financial results for the
quarter ended March 31, 2004. 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"). Accordingly, our financial results for
periods following our emergence from bankruptcy are not comparable
to our results prior to emergence. Activity of the company for
periods after September 1, 2003 is included in the post-bankruptcy
or "successor company" financial statements. Activity of the
company for periods prior to September 1, 2003 is included in the
pre-bankruptcy or "predecessor company" financial statements.
Operating results
For the quarter ended March 31, 2004 Conseco reported net income
(after dividends on convertible exchangeable preferred stock) of
$49.9 million, or 50 cents per diluted common share. Results for
the quarter included net after-tax gains of $12.9 million from
realized investment gains.
As previously reported, the predecessor company reported a net
loss for the quarter ended March 31, 2003 of $19.0 million.
Earnings in our Bankers Life and Conseco Insurance Group segments
were below our original expectations due, in part, to decreases in
net investment income. Although the book value of our total
investments increased, net investment income decreased by
approximately $9.0 million between the fourth quarter of 2003 and
the first quarter of 2004 primarily due to prevailing market rates
of interest and prepayments in our mortgage-backed securities
portfolio. First quarter net investment income was reduced by
approximately $6.2 million of premium amortization associated with
prepayments on fixed maturity investments (primarily mortgage-
backed securities), which had been marked to market, as required
by "fresh start" accounting, at prices above par. Investment
purchases during the first quarter were at average yields of
5.05%. The average portfolio yield on our fixed maturity portfolio
was 5.55% at December 31, 2003 and 5.53% at March 31, 2004.
Pre-tax results in our Conseco Insurance Group segment included
adverse life mortality experience of approximately $4.4 million
from higher than expected death claims.
Pre-tax results in our Corporate Operations segment included
severance expense of $4.4 million and a credit agreement charge of
$2.0 million.
Earnings Guidance and Outlook
Conseco reaffirmed guidance at the low end of its previously
reported range of $175 million to $200 million of expected net
income applicable to common stock for the 12 months beginning
October 1, 2003. Our earnings guidance is based on numerous
assumptions and factors. If they prove incorrect, our actual
earnings could differ materially from our estimates. Our guidance
excludes any impact from realized investment gains (losses) and
the proposed refinancing of our current capital structure
described in our Form S-1 Registration Statement initially filed
on January 29, 2004.
Comments from CEO Bill Shea
"In spite of the pressure on our first quarter operating results
from the lower interest rate environment and unfavorable
mortality, we were generally pleased with our other key operating
metrics. We are continuing to focus on the business fundamentals
that will drive our long-term value as an enterprise -- cash flow,
statutory capital, asset quality and operational excellence. It is
no coincidence that these fundamentals are also the key to our
primary short-term goal, which is to achieve higher ratings for
our insurance companies. Once again this quarter, we made more
progress on the following statutory-basis measures:
-- Combined statutory earnings (before realized investment
gains and before interest expense paid to the parent company
on surplus notes) (a non-GAAP measure) were an estimated
$54.8 million in 1Q04, up 12 percent over 1Q03.
-- Combined Company Action Level risk-based capital (RBC) ratio
(a non-GAAP measure) was an estimated 297% at March 31,
2004, up from 287% at year-end 2003, and 166% at March 31,
2003.
"Our new annualized premium sales of supplemental health and life
products for the first quarter were generally in line with our
operating plan and totaled approximately $52 million at Bankers
Life and $20 million at Conseco Insurance Group. First-year
annuity deposits for the quarter were $176 million and $6 million
at Bankers Life and Conseco Insurance Group, respectively.
"Our other major goals for 2004 continue to be:
-- Expanding our career agent segment (Bankers Life) into new
geographic markets. During the first quarter 2004, Bankers
added six branches to its network and is on track to meet
its goal of approximately 170 branches nationwide by year-
end 2004.
-- Further reducing operating expenses and improving the
efficiency of our operations across all business functions.
Operating expenses for the quarter were in line with our
plan and we believe we are still on track to meet our 2004
goal of at least a $20 million reduction in our core
operating expense levels.
-- 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. Also, we believe that the recently announced
order from the Florida Insurance Department protects the
policyholders of our Conseco Senior Health subsidiary while
providing the subsidiary with the ability to mitigate its
losses and enhance its ability to pay future claims.
-- Consolidating and streamlining our back-office systems to
reduce complexity and improve customer service. We've begun
to eliminate niche processing systems, moving toward a
simpler, more customer-responsive organization.
"We are also announcing that the expected grant described in our
prospectus of approximately 3 million options to our officers will
have an exercise price equal to the higher of $21.00 per share or
the fair market value on the date of the grant.
"We've come a long way since our emergence from Chapter 11 less
than eight months ago. Our roadmap is clear. Our goal is to become
a premier insurance company serving middle-income Americans
throughout their working careers and retirement. We believe we can
achieve that goal by capitalizing on what we believe to be our key
advantages:
-- A valuable franchise uniquely focused on the growing senior
and middle-income markets
-- A diverse and relevant product portfolio
-- A diverse distribution network
-- A strong balance sheet
"As managers and associates, we recognize that we have an
opportunity to recreate a viable and valuable company with which
all of us can be proud to be associated. Execution is the key, and
we plan on getting it done."
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/
* * *
As reported in the Troubled Company Reporter's April 21, 2004
edition, Standard & Poor's Ratings Services placed its 'B-'
counterparty credit, 'B-' senior debt, and 'CCC-' preferred stock
ratings on Conseco Inc. on CreditWatch with positive implications.
At the same time, Standard & Poor's placed its 'BB-' counterparty
credit ratings and financial strength ratings on Bankers Life &
Casualty Co., Colonial Penn Life Insurance Co., Conseco Insurance
Co., Conseco Health Insurance Co., Conseco Life Insurance Co., and
Conseco Life Insurance Co. of NY on CreditWatch with positive
implications.
"The CreditWatch reflects the expected issuance by Conseco Inc. of
$1 billion of new common equity by early May 2004," said Standard
& Poor's credit analyst Jon Reichert. Not affected by this
CreditWatch action are the ratings on Conseco Senior Health
Insurance Co., which remain on CreditWatch negative where they
were placed Nov. 19, 2003.
"Proceeds from the common equity issuance, in conjunction with
proceeds from an expected $500 million issuance of mandatory
convertible preferred stock and $900 million of new bank debt, are
expected to be used to refinance the existing $1.3 billion of
outstanding bank debt, redeem the outstanding $900 million of
convertible exchangeable preferred stock, and make a capital
contribution to the insurance subsidiaries," Mr. Reichert
added. "Because of this recapitalization, Conseco Inc. is expected
to have a capital structure with less onerous debt service
payments than currently exists, allowing for greater fixed-charge
coverage that should be supportive of higher ratings at the
holding company as well as at the insurance subsidiaries." If the
ratings are upgraded, it is expected that the senior debt rating
on Conseco Inc. will go no higher than 'BB-', the preferred stock
rating will go no higher than 'B-', and the financial strength
will go no higher than 'BB+'.
CRESECENT REAL: Posts $18.6 Million Net Loss for First Quarter
--------------------------------------------------------------
Crescent Real Estate Equities Company (NYSE:CEI) announced results
for the first quarter 2004.
Funds from operations before impairment charges related to real
estate assets - diluted ("FFO") for the three months ended March
31, 2004 was $27.5 million, or $.23 per share and equivalent unit.
These compare to FFO of $41.4 million or $.35 per share and
equivalent unit, for the three months ended March 31, 2003. Funds
from operations is a supplemental non-GAAP financial measurement
used in the real estate industry to measure and compare the
operating performance of real estate companies, although these
companies may calculate funds from operations in different ways.
Crescent reports FFO before taking into account impairment charges
required by GAAP which are related to its real estate assets. A
reconciliation of Crescent's FFO before and after such impairments
to GAAP net income is included in the Company's financial
statements accompanying this press release and in the First
Quarter 2004 Supplemental Operating and Financial Data located on
the Company's website.
Net loss available to common shareholders for the three months
ended March 31, 2004 was ($18.6) million, or ($.19) per share
(diluted). This compares to a net loss of ($19.3) million, or
($.19) per share (diluted), for the three months ended March 31,
2003.
According to John C. Goff, Vice Chairman and Chief Executive
Officer, "Our first quarter FFO of $.23 per share was above our
expectations of $.20 to $.22 per share due primarily to timing of
residential activity. We continue to see 2004 as a year of
stabilization during which we are positioning our office portfolio
for improving market fundamentals. While job growth numbers are
making better headlines these days for the nation as well as in
our markets, we believe it will take several quarters for this
trend to have a meaningful impact on office demand."
On April 16, 2004, Crescent announced that its Board of Trust
Managers had declared cash dividends of $.375 per share for
Common, $.421875 per share for Series A Convertible Preferred, and
$.59375 per share for Series B Redeemable Preferred. The dividends
are payable May 14, 2004, to shareholders of record on April 30,
2004.
Business Sector Review
Office Sector (66% of Gross Book Value of Real Estate Assets as of
March 31, 2004)
Operating Results
Office property same-store net operating income ("NOI") declined
3.6% for the three months ended March 31, 2004 from the same
period in 2003 for the 26.1 million square feet of office property
space owned during both periods, excluding properties held for
sale. Average occupancy for these same-store properties for the
three months ended March 31, 2004 was 85.8% compared to 86.0% for
the same period in 2003. Crescent's overall office portfolio,
excluding properties held for sale, was 88.0% leased and 86.4%
occupied as of March 31, 2004. During the three months ended March
31, 2004 and 2003, Crescent received $1.3 million and $2.0
million, respectively, of lease termination fees. Crescent's
policy is to exclude lease termination fees from its same-store
NOI calculation.
The Company leased 1.3 million net rentable square feet during the
three months ended March 31, 2004, of which 657,000 square feet
were renewed or re-leased. The weighted average full service
rental rate (which includes expense reimbursements) decreased
16.2% from the expiring rates for the leases of the renewed or re-
leased space. All of these leases have commenced or will commence
within the next twelve months. Tenant improvements related to
these leases were $1.69 per square foot per year and leasing costs
were $0.88 per square foot per year.
Denny Alberts, President and Chief Operating Officer, commented,
"As expected, our total office occupancy, excluding properties
held for sale, has remained relatively constant, improving
slightly from 86.1% at the end of last year to 86.4% at the end of
the first quarter of this year. The decline in the weighted
average full-service rental rate that we saw this quarter was
largely driven by two renewals in the Austin and Denver markets.
If we exclude these leases, the overall weighted average full
service rental rate decline for renewed and re-leased leases would
have been in line with the 10% decline in 2003.
"As of the beginning of 2004, we had 5.4 million gross square feet
of leases scheduled to expire. To date, 82% of that expiring space
has been addressed - 74% by signed leases and 8% by leases in
negotiation. For the signed leases that are scheduled to commence
during the remainder of this year, we are expecting a 3% to 5%
decline in the weighted average full service rental rate."
Acquisitions
During the first quarter, Crescent completed the intended
acquisition of the Hughes Center office portfolio in Las Vegas,
acquiring the five remaining office properties and seven leased
retail parcels. With these acquisitions, the Company has acquired
seven office properties totaling 1.0 million square feet and nine
leased retail parcels for a gross purchase price of $214 million,
$119 million of which was paid in cash and $95 million in net
assumed debt. On March 1, 2004, Crescent also acquired two
undeveloped land parcels within the Hughes Center for $10 million,
of which approximately $2 million was paid in cash and
approximately $8 million was financed.
On March 31, 2004, Crescent entered the Orange County, California
office market by acquiring Dupont Centre, a 250,000 square-foot
Class A office property located in the John Wayne Airport
submarket, for approximately $54 million.
Dispositions
On April 13, 2004, Crescent sold Liberty Plaza, a 219,000-square-
foot Class A office property located in North Dallas. The sale
generated net proceeds to Crescent of approximately $11 million
which were used to pay down the Company's revolving credit
facility.
On March 23, 2004, Crescent sold 1800 West Loop South, a 400,000-
square-foot Class A office property located in the West
Loop/Galleria submarket in Houston. The sale generated net
proceeds of approximately $28 million to Crescent, which were used
to pay down the Company's revolving credit facility.
Resort and Residential Development Sector (23% of Gross Book Value
of Real Estate Assets as of March 31, 2004)
Destination Resort Properties
Same-store NOI for Crescent's five resort properties declined 4%
for the three months ended March 31, 2004 from the same period in
2003. The average daily rate increased 4% and revenue per
available room remained flat for the three months ended March 31,
2004 compared to the same period in 2003. Weighted average
occupancy was 69% for the three months ended March 31, 2004
compared to 71% for the three months ended March 31, 2003.
On April 21, 2004, Crescent entered into agreements with the Ritz-
Carlton Hotel Company, L.L.C. to develop the first Ritz-Carlton
hotel and condominium project in Texas, with development to
commence upon reaching an acceptable level of pre-sales for the
residences. The site for the project is a 3.4-acre Crescent-owned
land parcel located adjacent to The Crescentr office, retail and
hotel complex in Dallas. The proposed 21-story Ritz-Carlton,
Dallas, would include approximately 216 hotel rooms and 70
residences. Ground breaking is currently targeted for the first
quarter of 2005. Consistent with its other development projects,
Crescent will consider bringing in a joint-venture partner.
Upscale Residential Development Properties
Crescent's overall residential investment generated $6.2 million
in FFO for the three months ended March 31, 2004. This compares to
$5.3 million in FFO generated for the three months ended March 31,
2003.
Investment Sector (11% of Gross Book Value of Real Estate Assets
as of March 31, 2004)
Business-Class Hotel Properties
Same-store NOI for Crescent's four business-class hotel properties
decreased 26% for the three months ended March 31, 2004 from the
same period in 2003. The average daily rate decreased 1% and
revenue per available room decreased 13% for the three months
ended March 31, 2004 compared to the same period in 2003. Weighted
average occupancy was 67% for the three months ended March 31,
2004 compared to 75% for the three months ended March 31, 2003.
The decline in NOI is primarily due to changes in convention
business patterns, which resulted in lower revenues to offset
fixed expenses.
Temperature-Controlled Properties Investment
Crescent's investment in temperature-controlled properties
generated $4.9 million in FFO for the three months ended March 31,
2004. This compares to $7.0 million of FFO generated for the three
months ended March 31, 2003. The decline in FFO is primarily due
to an increase in interest expense associated with the Morgan
Stanley financing completed in February 2004 and a decrease in
rental payments received impacted by tenant start-up costs
associated with preparing warehouses for new customer business.
Balance Sheet Review
Equity Issuance
On January 15, 2004, Crescent issued 3.4 million additional shares
of its 6.75% Series A convertible cumulative preferred shares in a
public offering. The shares were issued at $21.98 per share,
resulting in a current yield of 7.68%, excluding dividends accrued
on the shares up to the issuance date. Net proceeds to Crescent
totaled $71 million.
Financing
On February 5, 2004, Crescent and Vornado Realty Trust announced
that AmeriCold Realty Corporation, the entity through which
Crescent and Vornado hold their 40% and 60% interests,
respectively, in the temperature-controlled properties, completed
a $254 million mortgage financing with Morgan Stanley Mortgage
Capital Inc. that is secured by 21 of its owned and 7 of its
leased temperature-controlled properties. The five-year loan bears
interest at LIBOR plus 295 (with a LIBOR floor of 1.5% with
respect to $54 million of the loan) and requires principal
payments of $5 million annually. As a result of the financing,
Crescent received a $90 million distribution from the partnership.
Earnings Outlook
Crescent addresses earnings guidance in its earnings conference
calls and provides documentation of its quarterly supplemental
operating and financial data reports. Refer to the following
paragraphs for details about accessing today's conference call,
presentation, and supplemental operating and financial data
report.
Changes In Statistical Reporting Methods
Beginning in the first quarter of 2004, the Company implemented
two changes in office segment statistical reporting methods.
First, to more appropriately reflect occupancy trends in
continuing operations, the Company now excludes properties held
for sale from occupancy and same-store statistics as noted. In
addition, the Company's same-store statistics now include 100% of
operations for all consolidated and unconsolidated joint-venture
properties, rather than its prorata share of joint-venture
properties as in previous disclosures.
Supplemental Operating And Financial Data
Crescent's first quarter supplemental operating and financial data
report is available on the Company's website (www.crescent.com) in
the investor relations section. To request a hard copy, please
call the Company's investor relations department at (817) 321-
2180.
About The Company
Crescent Real Estate Equities Company (NYSE:CEI) is one of the
largest publicly held real estate investment trusts in the nation.
Through its subsidiaries and joint ventures, Crescent owns and
manages a portfolio of more than 75 premier office properties
totaling more than 30 million square feet, located primarily in
the Southwestern United States, with major concentrations in
Dallas, Houston, Austin, Denver, Miami and Las Vegas. In addition,
the Company has investments in world-class resorts and spas and
upscale residential developments.
* * *
As previously reported in Troubled Company Reporter, Standard &
Poor's affirmed its ratings on Crescent Real Estate Equities
Co., and Crescent Real Estate Equities L.P., and removed them
from CreditWatch, where they were placed on Jan. 23, 2002. The
outlook remains negative.
Ratings Affirmed And Removed From CreditWatch
Issue To From
Crescent Real Estate Equities Co.
Corporate credit rating BB BB/Watch Neg
$200 million 6-3/4%
preferred stock B B/Watch Neg
$1.5 billion mixed shelf prelim B/B+ prelim B/B+/Watch Neg
Crescent Real Estate Equities L.P.
Corporate credit rating BB BB/Watch Neg
$150 million 6 5/8% senior
unsecured notes due 2002 B+ B+/Watch Neg
$250 million 7 1/8% senior
unsecured notes due 2007 B+ B+/Watch Neg
ECLIPSE PROPERTIES: Signs-Up Everett Gaskins as Attorneys
---------------------------------------------------------
Eclipse Properties, LLC asks for permission from the U.S.
Bankruptcy Court for the Eastern District of North Carolina,
Raleigh Division, to employ Everett, Gaskins, Hancock & Stevens,
LLP as its attorney in its chapter 11 proceeding.
William P. Janvier, Esq., will be the principal attorney to
represent the Debtor. The Debtor expects Everett Gaskins to:
a) prepare on behalf of the Debtor necessary applications,
complaints, answers, orders, reports, motions, notices,
plan or reorganization, disclosure statement and other
papers necessary in its reorganization case;
b) perform all necessary legal services in connection with
the Debtor's reorganization, including Court appearances,
research, opinions and consultations on reorganization
options, directions and strategy; and
c) perform all other legal services for the Debtor which may
be necessary in its chapter 11 case.
Mr. Janvier will be paid in his current hourly rate of $240 per
hour.
Headquartered in Raleigh, North Carolina, Eclipse Properties, LLC
filed for chapter 11 protection on April 14, 2004 (Bankr. E.D.
N.C. Case No. 04-01415). William P. Janvier, Esq., at Everett
Gaskins Hancock & Stevens represent the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed $10,750,000 in total assets and
$8,437,447 in total debts.
ENERGY CORP: S&P Withdraws Junk Corporate & Sub. Debt Ratings
-------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its ratings on
independent oil and gas exploration and production company Energy
Corp. of America. In addition, the ratings on the company's senior
subordinated notes due 2007 were also withdrawn. Standard & Poor's
most recent corporate credit and subordinate ratings were 'CC' and
'C', respectively, reflecting the ratings downgrade on Jan.
28, 2004. The ratings before withdrawal reflected the company's
announcement that it was in default under the indenture for its
senior subordinated notes as an indirect adverse legal judgment.
ENRON CORP: Asks Court to Extend Removal Period Until Sept. 6
-------------------------------------------------------------
The Enron Corporation Debtors ask the Court, pursuant to Section
105(a) of the Bankruptcy Code and Rule 9006(b) of the Federal
Rules of Bankruptcy Procedure, to extend the Removal Period for
the First Debtors to September 6, 2004 and for each Subsequent
Debtor to an additional 90 days from its deadline.
Since the Petition date, the Debtors and their personnel and
professionals have been working diligently to administer these
Chapter 11 cases and to address a vast number of administrative
and business issues while, at the same time, operating their
business to maximize asset values and arranging for the sale of
certain of the Debtors' assets. As a result, the Debtors have
not completed their evaluation of the merits of removing certain
actions and require additional time to do so.
Melanie Gray, Esq., at Weil, Gotshal & Manges, LLP, in New York,
relates that the right to remove civil actions is a valuable
right that the Debtors do not want to lose inadvertently.
Ms. Gray explains that the size and complexity of the Debtors'
businesses, the Debtors' employee relationships, corporate
structure and financial arrangement place heavy demands on the
Debtors' management and personnel in an ideal environment. The
Chapter 11 cases have exacerbated these demands, complicating
operational issues and adding a layer of complexity by reason of
the Chapter 11 matters. The Debtors are in the process of
finalizing their review of all of their records to determine
whether they need or should remove any claims or civil causes of
action pending in other courts. (Enron Bankruptcy News, Issue No.
107; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ELECTROPURE INC: Auditors Express Doubt in Going Concern Ability
----------------------------------------------------------------
At January 31, 2004, ElectroPure Inc. had a working capital
deficit of $2,221,041. This represents a working capital decrease
of $287,608 compared to that reported at October 31, 2003. The
primary component of the decrease is a $400,000 increase in
current notes payable, offset by a reduction in accounts payable
and an increase in accounts receivables.
The Company's primary source of working capital has been from
short-term loans. Between November 2003 and December 2003, the
Company borrowed a total of $300,000 from Mr. Anthony Frank, a
major shareholder, at an 8% annual interest rate. On January 20,
2004, the Company borrowed $100,000 from an unaffiliated lender at
an annual interest rate of 15%.
In the opinion of management, available funds, funds anticipated
to be realized on the sale of securities to, or short term loans
from, its major shareholder, refinancing of the Company's
building, and proceeds to be realized from the sale of EDI
products currently on order, are expected to satisfy ElectroPure's
working capital requirements through August 2004. Its independent
auditors have included an explanatory paragraph in their report on
the financial statements for the year ended October 31, 2003 which
raises substantial doubt about ElectroPure's ability to continue
as a going concern.
The Company is in the process of refinancing the mortgage on its
Laguna Hills facility with a commercial mortgage lender in order
to utilize a portion of the equity in the building as working
capital. In addition, the Company is negotiating with a second
lender for up to $400,000 in loan proceeds to be secured by a
second deed of trust on the building. No assurances can be given
that either such financings will be concluded on terms acceptable
to the Company, or at all.
EQUITY INNS: First Quarter 2004 Net Loss Widens to $4.1 Million
---------------------------------------------------------------
Equity Inns, Inc. (NYSE:ENN), a hotel real estate investment trust
(REIT), announced its results for the first quarter ended March
31, 2004.
Net loss to common shareholders for the first quarter 2004 was
$4.1 million, or $0.10 per diluted share, compared to a net loss
of $1.7 million, or $0.04 per diluted share, in the first quarter
2003. The Company reported a net loss from continuing operations
for the first quarter 2004 of $1.8 million, as compared to a net
loss from continuing operations of $1.4 million in the prior year
quarter. Net loss to common shareholders and net loss from
continuing operations in the first quarter 2003 included a $2.3
million deferred income tax benefit. At year end 2003, the Company
discontinued recording a deferred income tax benefit.
Financial Highlights for the First Quarter 2004
Adjusted funds from operations (AFFO) for the first quarter 2004
increased 18% to $5.6 million, or $0.13 per diluted share, versus
AFFO of $4.6 million, or $0.11 per diluted share, for the first
quarter 2003. Equity Inns' first quarter AFFO increase stems
primarily from hotel revenue increases and hotel operating profit
increases compared to the prior-year period. There are no
differences between AFFO and FFO for the first quarter 2004.
Adjusted EBITDA was $14.6 million in the first quarter 2004 versus
$14.1 million in the same period last year.
First quarter 2004 hotel room revenue was $51.9 million, an
increase of 4.4% from $49.7 million in the first quarter 2003. The
improvement was principally driven by a hotel portfolio revenue
per available room (RevPAR) increase of 2.4%. The Company also
benefited from approximately $500,000 in additional revenue due to
the leap year effect, as well as approximately $635,000 in
incremental revenue through the completion of two acquisitions in
the first quarter 2004. The revenue improvement primarily resulted
from a 60 basis point gain in the Company's occupancy rate to
63.2%, and the average daily rate (ADR) growing 1.5% to $77.89,
compared to $76.73 in the first quarter 2003. Equity Inns' RevPAR
improved throughout the quarter. RevPAR declined 0.2% from a year
ago in January, before climbing 0.5% and 6.2% in February and
March, respectively, compared to the same periods a year-ago.
Phillip H. McNeill, Sr., Chief Executive Officer, stated, "We are
pleased to have delivered solid first quarter results that
exceeded our own expectations. During the industry slowdown the
past three years, we sought to strategically increase occupancy
share in our individual hotel markets while maintaining our RevPAR
premiums. We believed that by concentrating on occupancy, we could
minimize our downside during challenging economic times, while
positioning our hotels to grow ADR as the economy recovers. We
were gratified to see that with improved industry conditions in
the first quarter, we were able to not only increase RevPAR,
occupancy and ADR, but also raise ADR to a level higher than the
first quarter 2000, which was an industry peak prior to the latest
industry downturn."
Mr. McNeill added, "Most of our brands delivered flat to increased
RevPAR trends in the first quarter. Our Marriott Courtyards
increased RevPAR by 11.1%, while our Homewood Suites, Holiday Inns
and Comfort Inns all had RevPAR growth in excess of 6% for the
quarter over the first quarter 2003. Furthermore, Equity Inns'
AmeriSuites increased its ADR 3.3% but resulted in a RevPAR
decline of less than 1%. The ADR improvement was driven primarily
by the brand's ongoing effort to capture new leisure business
through both an intensified sales effort and selective selling via
discounted Internet channels. According to Smith Travel Research,
we achieved a 14% RevPAR premium over our competitors year-to-
date."
While Equity Inns' positive RevPAR performance for the quarter was
the primary driver of its AFFO results, it was offset by a $1.1
million increase in the Company's hotel operating expenses. The
increase in quarterly operating expenses stemmed primarily from
approximately $590,000 in payroll and related benefits, $285,000
in incremental expenses related to new acquisitions, $200,000 in
related franchise fees and $150,000 in utility costs, which were
partially offset by an approximately $300,000 reduction in
insurance premiums and real estate taxes.
As compared to the same quarter of the prior year, total hotel
revenue increased $2.3 million and the gross operating margin
increased 20 basis points to 37.2% versus 37.0%. GOP margin is
defined as hotel revenues minus hotel operating costs, before
property taxes, insurance and management fees, divided by hotel
revenues.
Howard A. Silver, President and Chief Operating Officer, stated,
"We are pleased that Equity Inns' focus on driving hotel
performance and controlling our expenses enabled us to improve our
sales and GOP margin in the first quarter. While Smith Travel
Research first quarter data shows that the overall industry
experienced higher increases in RevPAR (+7.7%) than Equity Inns,
this was expected, as our diverse hotel portfolio enabled us to
outperform the industry through the latest downturn. Thus, the
industry is up against easier comparisons than Equity Inns for
this year. This does not, however, suggest that we are complacent
with our results. We will continue to pursue strategic
acquisitions that update our portfolio with quality assets. In
addition, we will focus on driving hotel performance, while
continuing to bear down on costs to further enhance our margins."
Capital Structure
On March 31, 2004, Equity Inns had $347.8 million of long-term
debt outstanding, which included $69.5 million drawn under its
$110 million line of credit. The weighted average rate and life of
the Company's debt was 7.5% and five years, respectively. The
total debt represented 37.1% of the cost of hotels. Fixed rate
debt, including interest rate swaps, amounted to 91% of total
debt.
Mr. Silver stated, "Our total debt-to-hotel costs remains near a
five-year low, despite the completion of two acquisitions in the
first quarter 2004. We will remain vigilant in maintaining the
right capital structure, which affords us the ability to add new
hotels to the Company's portfolio and preserve our strong balance
sheet."
Dividend
The level of Equity Inns' common dividend will continue to be
determined by the operating results of each quarter, economic
conditions, capital requirements, and other operating trends. For
the first quarter 2004, Equity Inns paid a $0.13 common dividend
per share and $0.546875 preferred dividend per share. The cash
available for distribution (CAD) payout ratio was 86% for the
twelve-month period ending March 31, 2004.
Additional First Quarter Events
-- Equity Inns awarded three management contracts to Innkeepers
Hospitality for the management of three Residence Inns in
Princeton, New Jersey; Tinton Falls, New Jersey; and
Burlington, Vermont. Additionally, the Company awarded a
Holiday Inn management contract in Winston-Salem, North
Carolina to Wright Hospitality. Awarding management contracts
of these four hotels to two of Equity Inns' current management
companies with a strong operating history should have long-term
positive benefits.
-- Equity Inns completed the purchase of a Marriott Courtyard
Hotel in Tallahassee, Florida, and a Residence Inn in Tampa,
Florida, which were part of the group of acquisitions from the
McKibbon Group, Inc. previously announced in October 2003. Both
of these hotels are less than five years old.
-- Equity Inns signed a definitive agreement to acquire five
additional Marriott properties from McKibbon Hotel Group, Inc.
The properties include two Marriott Courtyards in Asheville,
North Carolina, and Athens, Georgia, and three Residence Inns
by Marriott in Chattanooga, Tennessee; Knoxville, Tennessee;
and Savannah, Georgia. These properties have an average age of
seven years.
-- Equity Inns divested three exterior corridor hotels: two
Hampton Inns in Florida and one Comfort Inn in Texas. These
hotels have an average age of 17 years.
Recent Events
-- On April 7, 2004, the Company issued 2.4 million shares of
common stock, resulting in net proceeds of approximately $21.4
million. The proceeds will be used to fund $16 million in
previously announced acquisitions, with the remainder used to
reduce debt on the Company's $110 million line of credit.
-- On April 29, 2004, Equity Inns completed the acquisitions of a
Residence Inn in Tallahassee, Florida, and a Marriott Courtyard
in Gainesville, Florida, which were the final two of four
acquisitions previously announced in October 2003.
Mr. Silver concluded, "We have been focused on upgrading our hotel
portfolio by simultaneously acquiring and divesting hotels that
will drive our portfolio mix toward newer, higher-end properties
in growing markets. Year-to-date, we have closed four of the nine
acquisitions that we have announced since October 2003 and are on
track to complete all these transactions before the end of the
second quarter, as expected. We are actively evaluating additional
properties than can further improve our mix, though we will
proceed in a disciplined manner that will enable us to maintain a
strong capital structure."
2004 Guidance
Based upon expectations for improvement in the upscale and mid-
scale lodging sectors, recent acquisitions and divestitures, along
with planned expense increases for this year, the Company now
expects 2004 EBITDA will be in the range of $73 million to $77
million and RevPAR increases will be in the range of 2.0% to 4.5%.
The Company is currently anticipating 2004 capital expenditures of
approximately $17 million. Anticipated increases in expenses will
be mainly driven by costs associated with payroll and benefits,
technological improvements and new brand related standards at the
hotel level.
As a result of these assumptions, management expects 2004 AFFO to
be in the range of $0.76 to $0.85 per diluted share, and net loss
per share to be in the range of ($0.11) to $0.00. While the
announced acquisitions are expected to be accretive to AFFO on a
full-year pro forma basis, given the timing of completing these
transactions before the end of the second quarter, management
estimates that these acquisitions will have minimal effect on 2004
AFFO.
In addition, Equity Inns expects that its remaining 2004 quarterly
results will contribute to full year AFFO in the following manner:
33% in the second quarter, 36% in the third quarter and 17% in the
fourth quarter. As such, AFFO is expected to be in the range of
$0.25 to $0.28 in the second quarter 2004.
About Equity Inns
Equity Inns, Inc. (S&P, B+ Corporate Credit Rating, Negative) is a
self-advised REIT that focuses on the upscale extended stay, all-
suite and midscale limited-service segments of the hotel industry.
The company owns 94 hotels with 12,100 rooms located in 34 states.
For more information about Equity Inns, visit the company's Web
site at http://www.equityinns.com
EXIDE TECHNOLOGIES: Court Okays Technical Modification to Plan
--------------------------------------------------------------
At the conclusion of the April 16, 2004 Confirmation Hearing, the
Court indicated that the Joint Reorganization Plan of the Exide
Technologies Debtors and the Official Committee of Unsecured
Creditors would be confirmed subject to the submission of an
appropriate order addressing certain resolutions of objections to
the Joint Plan and incorporating the rulings of the Court with
respect to the Joint Plan.
The Debtors and the Committee ask the Court to approve a technical
amendment to the Joint Plan and the Plan Supplement for the Joint
Plan.
James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones
& Weintraub, P.C., in Wilmington, Delaware, states that the
modifications to the Joint Plan and Plan Supplement relate to the
establishment and operation of a reserve for potential payment of
disputed claims in Class P4 comprised of authorized but not
issued New Exide Common Stock and New Exide Warrants and their
proceeds.
The Joint Plan is amended to add this provision as Article VIII,
Section D of the Joint Plan:
"As specified in Article VIII.A.6 hereof, prior to the
Effective Date, the Creditors Committee shall establish, and
the Debtors shall implement, an appropriate and reasonable
reserve for potential payment of Disputed Claims in Class P4
comprised of authorized but not issued New Exide Common
Stock and New Exide Warrants and in each case the proceeds
thereof, if any. To the extent the reserved shares of New
Exide Common Stock and New Exide Warrants are insufficient
to provide for a Pro Rata distribution to any Holder of a
Disputed Claim as it becomes an Allowed Claim, the Company
may issue additional shares of New Exide Common Stock and
New Exide Warrants (each such additional distribution, an
"Additional Class P4 Distribution) such that such Holder
receives a distribution constituting the same Pro Rata
recovery as other Holders of Allowed Claims in Class P4,
taking into consideration the Noteholder Distribution
Settlement. . . ."
Mr. O'Neill assures the Court that the proposed Technical
Amendment does not alter the classification of the claims of the
Joint Plan. Thus, the Joint Plan does not implicate the
classification rules of Section 1122 of the Bankruptcy Code.
The Debtors and the Committee believe that the proposed Technical
Amendment is non-material, and that no additional solicitation is
required as a result of the requested modifications.
EnerSys Objects
Thomas G. Whalen, Jr., Esq., at Sevens & Lee, in Wilmington,
Delaware, points out that the second sentence of the proposed new
language of Article VIII, Section D of the Joint Plan, states
that if additional shares or warrants are needed to insure pro
rata distribution, they "may" be issued. EnerSys, Inc., believes
that the amendment should state that, under the circumstances,
additional shares and warrants "shall" be issued unless
alternative compensation acceptable to the holder of the
applicable claim is provided. Any other resolution leaves open
the possibility that holders of Disputed Class P4 Claims would
not receive pro rata distributions.
Accordingly, EnerSys asks the Court to deny approval of the
Technical Amendment unless the language added is modified.
* * *
After due deliberation, Judge Carey approves the Technical
Amendment to the Joint Plan and Plan Supplement, as modified on
the record.
Headquartered in Princeton, New Jersey, Exide Technologies is the
world-wide leading manufacturer and distributor of lead acid
batteries and other related electrical energy storage products.
The Company filed for chapter 11 protection on April 14, 2002
(Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and
Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors
in their restructuring efforts. On April 14, 2002, the Debtors
listed $2,073,238,000 in assets and $2,524,448,000 in debts.
(Exide Bankruptcy News, Issue No. 46; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
FEDERAL-MOGUL: U.S. and U.K. Debtors to Honor Pension Plans
-----------------------------------------------------------
The U.S. and U.K. Debtors of Federal-Mogul Corporation have
numerous defined benefit and contribution savings and pension
plans. On and after the Effective Date, the U.S. Debtors will
continue to perform their obligations under the Plans.
Pension Plans of the U.S. Debtors
The U.S. Debtors provide certain of their employees with a
defined benefit pension plan under the Federal-Mogul Corporation
Pension Plan. Pursuant to Pension Plan, a benefit is payable to
the employee or other designated beneficiary on the employee's
retirement from the company, total and permanent disability, or
death. The U.S. Defined Benefit Plan's assets have a market
value of $651 million as of December 31, 2003. Based on current
actuarial analyses and the Debtors' business plans, the Debtors
anticipate that the funding requirements for the U.S. Defined
Benefit Plan will be $54.5 million for 2004, $130.2 million for
2005, $97.5 million for 2006, and $22.5 million for 2007.
As of January 1, 2002, the Debtors estimated that there were
16,230 active employees of the U.S. Debtors who are participants
in the U.S. Defined Benefit Plan, as well as 7,500 retirees
receiving benefits from the plan. There are an additional
110,700 persons who are not active employees of the U.S. Debtors
and not presently receiving benefits under the U.S. Defined
Benefit Plan that are eligible to receive benefits thereunder in
the future.
Pension Plans of the U.K. Debtors
The U.K. Debtors provide two defined benefit plans for eligible
employees:
-- the T&N Pension Plan or the T&N Retirement Benefits Scheme;
and
-- the FM Ignition Pension Plan or Champion Pension Scheme.
The T&N Pension Plan is the larger of the U.K. defined benefit
plans, with assets having a current market value of
GBP996.4 million as of February 29, 2004. Membership in the T&N
Pension Plan is available to all permanent employees of companies
previously part of the T&N group. The anticipated cost of the
T&N Retirement Benefits Scheme for 2004 is GBP7.5 million.
Future costs beyond 2004 are subject to re-evaluation by the plan
actuary and agreement between the company and the trustee.
As of December 31, 2003, the Debtors estimate that there are
2,600 active employees of the U.K. Debtors participating in the
T&N Pension Plan, as well as 20,570 retirees receiving benefits
from the scheme. In addition, there are 14,820 persons who are
not active employees of the U.K. Debtors not presently receiving
benefits under the T&N Pension Plan that are eligible to receive
benefits thereunder in the future.
Membership in the FM Ignition Pension Plan is closed to new
members. Current active members are employees who joined the FM
Ignition Pension Plan when it was open prior to May 1997. As of
January 31, 2004, there are 303 active employees of the U.K.
Debtors participating in the FM Ignition Pension Plan, as well as
531 retirees receiving benefits from the scheme. In addition,
there are 438 persons who are not active employees of the U.K.
Debtors not presently receiving benefits under the FM Ignition
Pension Plan that are eligible to receive benefits in the future.
The U.K. Debtors also operate one defined contribution pension
plan, the Champion Automotive Retirement Benefits Plan or the
U.K. Defined Contribution Plan, for certain of their employees.
Membership in the U.K. Defined Contribution Plan is limited to
employees of Federal-Mogul Ignition (UK) Limited who joined
Federal-Mogul (UK) Ignition Limited after closure of the FM
Ignition Pension Plan. The maximum matching company contribution
is 6% to 12% and generally is twice the particular employee's
contribution. As of January 5, 2004, there are 77 active
employees of the U.K. Debtors participating in the U.K. Defined
Contribution Plan, as well as 65 persons who are not active
employees of the U.K. Debtors not presently receiving benefits
under the U.K. Defined Contribution Plan that are eligible to
receive benefits in the future.
Headquartered in Southfield, Michigan, Federal-Mogul Corporation -
- http://www.federal-mogul.com/-- is one of the world's largest
automotive parts companies with worldwide revenue of some $6
billion. The Company filed for chapter 11 protection on October
1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq.,
James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin
Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang,
Ziehl, Young, Jones & Weintraub, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
its creditors, they listed $10.15 billion in assets and $8.86
billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No.
54; Bankruptcy Creditors' Service, Inc., 215/945-7000)
FINOVA GROUP: Releases Selected Financial Projections
-----------------------------------------------------
The FINOVA Group Inc. (OTC: FNVG) is releasing the selected
financial projections below to provide additional information
about FINOVA's remaining portfolio and projected payments on its
$3 billion aggregate principal amount of 7.5% Senior Notes Due
November 2009, with Contingent Interest Due 2016.
FINOVA cautions investors that the facts and assumptions
underlying the projections will change, and those changes may
cause significant positive or negative differences to the
projected results. Many of the facts and assumptions are beyond
the control of FINOVA and/or its customers. FINOVA anticipates
that there will be differences between the projections and
FINOVA's actual results, so investors should not place undue
reliance on the projections. The projections should be read in
conjunction with the audited financial statements and the notes
thereto, prepared in accordance with generally accepted accounting
principles, contained in FINOVA's Annual Report on Form 10-K for
the fiscal year ended December 31, 2003 and its Quarterly Report
on Form 10-Q for the quarter ended March 31, 2004 both filed with
the Securities and Exchange Commission.
The financial projections are derived from management's estimates
of future cash flows to be collected from FINOVA's portfolio of
assets. The cash flow estimates assume, among other things, that
the asset portfolios are collected in an orderly fashion over time
and do not represent estimated recoverable amounts if FINOVA were
to undergo a short-term asset liquidation. Management believes a
short-term liquidation would have a material negative impact on
FINOVA's ability to recover amounts recorded in FINOVA's audited
financial statements and in the projections.
FINOVA's process of developing the projections included an
assessment of its portfolio on a transaction-by-transaction basis.
Estimates of payments to holders of Senior Notes were based on
information and assumptions as of the date each asset was assessed
concerning general economic conditions, specific market segments,
the financial condition of FINOVA's customers, an assessment of
the underlying collateral and management's estimation as to the
ultimate outcome of individual transactions. In addition,
management made assumptions concerning the customers' ability to
obtain full refinancing of balloon obligations or residuals at
maturity. As a result, some of the projected results assume FINOVA
will incur refinancing discounts for certain transactions. In
other cases, FINOVA assumed full repayment of contractual
balances, including numerous instances of recoveries or
collections in excess of asset values reflected in FINOVA's
audited financial statements. The projections anticipate
individual asset sales and prepayments that FINOVA is both
currently discussing with customers and believes are likely to
occur. The projections do not assume any bulk asset sales or more
speculative prepayments. Asset sales or prepayments may or may not
occur as projected.
The projections extend through the principal maturity date of the
Senior Notes, which are due in November 2009. The Senior Notes are
reflected on FINOVA's balance sheet net of an unamortized fresh-
start discount. FINOVA is obligated to pay the full principal
amount outstanding on the Senior Notes. The projections indicate
no principal repayments beyond year-end 2007.
Although the projections anticipate receipt of cash flows through
November 2009, there can be no assurance that sufficient cash
flows will continue through that date to cover scheduled interest
payments on the Senior Notes and operating expenses. FINOVA's
actual cash collections on its portfolio have generally occurred
faster than anticipated. The projections currently forecast that
sufficient cash flow will be generated to cover interest payments
on the Senior Notes as well as operating expenses through November
2009. The projections, however, do not forecast the availability
of sufficient assets to fully repay the remaining principal of the
Senior Notes due at maturity. Moreover, if the portfolio
liquidation occurs faster than projected, FINOVA's portfolio may
not generate sufficient funds to cover operating expenses and
interest payments before the Senior Notes mature in November 2009.
Experiencing a shortfall in cash to cover operating expenses could
adversely interfere with the ability to continue the liquidation
of the remaining portfolio in an orderly fashion. As has
previously occurred, portfolio runoff may accelerate due to asset
sales, prepayments and other factors. Based on past experience,
FINOVA expects that substantial portions of the runoff may
actually occur faster than reflected in the projections, but as
noted above, the projections do not contemplate the sale or
prepayment of most assets, even if FINOVA may be attempting to
sell or negotiate prepayments for some of those assets.
The projections anticipate that the transportation portfolio will
comprise an increasing percentage of FINOVA's portfolio over time.
FINOVA has a significant number of aircraft that are off-lease,
and the projections anticipate that additional aircraft will be
returned to FINOVA as leases expire or as certain operators cease
making payments. FINOVA expects to scrap many of those aircraft,
but also assumes it will park and maintain some aircraft for sale
or re-lease at a later date. While the current inactive market for
aircraft makes it difficult to predict, FINOVA believes that the
values ultimately realized under this liquidation strategy will
significantly exceed the values FINOVA would realize if it were to
liquidate those aircraft today. Projected recoveries may differ
from recorded amounts, and actual realization will be
significantly impacted by the future used aircraft market, which
is difficult to predict.
The process of estimating future cash flows from aircraft is
particularly difficult and subjective, as it requires FINOVA to
estimate future demand, lease rates and scrap values for assets
for which there is currently little or no demand. In addition, the
current state of the aircraft industry continues to include
significant excess capacity for both new and used aircraft and
lack of demand for certain classes and configurations of aircraft
within our portfolio. Management considered these factors when
determining anticipated useful lives, scrap values and its
assessment of FINOVA's ability to lease or sell its aircraft.
The projections assume that FINOVA will pay virtually no income
taxes during the projection period. FINOVA has substantial net
operating loss carryforwards and other tax attributes that are
expected to offset its taxable income, including income related to
the reversal of deferred tax liabilities. The projections do not
assume any additional cash benefit from unused net operating loss
carryforwards at the end of the projection period.
FINOVA's critical accounting polices are detailed in the Annual
and 10-Q Reports. Accounting rules permit valuation allowances
established on financing assets after implementation of fresh-
start reporting to be increased or decreased as facts and
assumptions change. However, many financing assets were previously
marked down for impairments that existed at the time fresh- start
reporting was implemented in 2001. These marked down values became
FINOVA's new cost basis in those assets, and accounting rules do
not permit the carrying value of these assets to be increased
above that fresh-start cost basis, even if subsequent facts and
assumptions result in a projected increase in value, which has
occurred for certain assets included in the projections. As a
result, in those instances the projections include collections in
excess of the carrying amounts reflected in the financial
statements.
Impairments of other financial assets (before and after
implementation of fresh-start reporting) were marked down directly
against the assets' carrying amount. Accounting rules permit
further markdowns if changes in facts and assumptions result in
additional impairment; however, most of these assets (with certain
exceptions) may not be marked up in the financial statements, even
if subsequent facts and assumptions result in a projected increase
in value, which has occurred for certain assets included in the
projections. As a result, in those instances the projections
include collections in excess of carrying amounts reflected in the
financial statements.
The projections were prepared for management's internal use and
were not prepared with a view to compliance with the published
guidelines of the Securities and Exchange Commission or the
American Institute of Certified Public Accountants regarding
projections or forecasts. FINOVA's auditors have not assisted with
the preparation of, nor have they applied testing procedures to,
the projections. Accordingly, the auditors do not express an
opinion or any other form of assurance regarding the projections.
Although the projections are presented with numerical specificity,
as indicated elsewhere in this release, they are based on various
estimates and assumptions which may not be realized and are
inherently subject to significant business, economic and other
uncertainties, many of which are beyond the control of FINOVA.
FINOVA's actual results for the projected periods will vary from
the projections and such variations are likely to be material,
with an increased likelihood of greater variations the further out
the projected period. The projections are, therefore, not
representations by FINOVA of its future performance. The release
of these projections should not be regarded as an indication that
FINOVA considers them to be a reliable prediction of future
events, and investors should not rely on them for that purpose.
FINOVA does not intend, and assumes no responsibility, to update
the projections to reflect actual results or changes in
assumptions or other factors that could affect the projections,
including changes in the underlying facts and assumptions used to
prepare the projections.
FIRST VIRTUAL: Appoints 3 New Executives to Senior Management Team
------------------------------------------------------------------
First Virtual Communications, Inc. (Nasdaq: FVCX), a premier
provider of infrastructure and solutions for real-time, rich media
communications, announced the appointments of three new executives
to its senior management team, adding expertise in the areas of
sales, marketing and corporate finance.
Mr. Keith A. Zaky, an industry veteran with 20 years of global
sales and executive management experience, has been appointed to
the position of vice president of worldwide sales. Mr. Duncan H.
Campbell, a 20-year marketing veteran of Hewlett-Packard, has
joined the organization as vice president of marketing, and Mr.
Andrew P. Morrison, previously vice president of finance and
corporate controller for Critical Path, Inc., has been appointed
to the position of corporate controller.
Jonathan Morgan, president and CEO of First Virtual
Communications, commented, "These three individuals represent
excellent performance in their areas of expertise. We believe
Keith's proven track record in sales and operations will provide
the leadership we need to deliver increased revenue and strategic
partnerships, and will help us reach our objectives and capitalize
on emerging opportunities. Further, I am certain that Duncan has
the ability to strengthen our market position and global reach for
growth over the long term, and Andrew's sound financial operations
background makes him an ideal choice for corporate controller."
Mr. Zaky was previously executive vice president of worldwide
field operations at Persistence Software, an 11-year-old, publicly
traded infrastructure software company. Prior to Persistence, Mr.
Zaky served with Octel Communications Corporation, a world leader
in voice processing from 1985 to 1997, in a number of sales
management and executive-level capacities, including western
region general manager for the service provider market. In July
1997, Octel was acquired by Lucent Technologies, at which point
Mr. Zaky served as vice president, general manager, Asia Pacific
region for Lucent, Octel Messaging Division, establishing a
regional headquarters in Singapore and helping to grow Octel's
presence throughout Asia until 2000. He served on both Lucent,
Asia Pacific and Lucent, China executive boards from 1997-2000.
Mr. Campbell joined Hewlett-Packard in 1980 as a product line
manager, then held several worldwide director positions for the
networking, software and systems divisions within HP over two
decades. He also served as worldwide director of marketing for
Silicon Graphics from 1994 to 1995. Most recently, he served as
worldwide marketing manager for channels, alliances and partners
for HP. Mr. Campbell holds an MBA from the University of
Pennsylvania, Wharton Graduate School and a Bachelor of Science
degree in chemistry from the University of California, San Diego.
The newly appointed corporate controller, Mr. Morrison, joins
First Virtual from Critical Path, Inc., where he held various
financial positions since May 2000, most recently vice president,
finance, and corporate controller. Previously, Mr. Morrison worked
for PricewaterhouseCoopers, LLP. Mr. Morrison is a certified
public accountant and holds a Bachelor of Science degree in
finance and accounting from Boston College.
Mr. Zaky, Mr. Campbell and Mr. Morrison can be contacted at First
Virtual headquarters, 3200 Bridge Parkway, Suite 202, Redwood
City, CA 94065-1169, phone: 650-801-6500 or 800-728-6337.
About First Virtual Communications
First Virtual Communications is a premier provider of
infrastructure and solutions for real time rich media
communications. Headquartered in Redwood City, California, the
Company also has operations in Europe and Asia. More information
about the company can be found at http://www.fvc.com/
* * *
As reported in the Troubled Company Reporter's May 4, 2004
edition, First Virtual Communications, Inc. (NASDAQ:FVCX)
announced that its Audit Committee is in the process of reviewing
certain irregular sales transactions. Most of the transactions
currently under review involve its sales operations in China. The
Company has made personnel changes in China as a result of these
transactions.
This investigation was initiated as a result of the Company
becoming aware of several of these transactions, and subsequently
notifying its Audit Committee and its independent auditors. The
Audit Committee has engaged independent counsel to conduct the
investigation which is in its early stages.
The Company's auditors will not be able to complete their review
of the financial results for the three months ended March 31, 2004
until the investigation is completed and the Company will not be
able to release its first quarter financial results on May 4, as
previously scheduled. The effect of the irregular sales
transactions on the unaudited interim results for the quarter
ended March 31, 2004 and on previously issued annual and quarterly
financial statements, if any, has not been determined, and it is
not known whether the Company will be required to restate prior
period financial statements. Since the investigation will not be
completed by the May 17, 2004 deadline for the filing of the
Company's Quarterly Report on Form 10-Q, the Company will not be
able to file this Form 10-Q on a timely basis.
FLEMING COMPANIES: Wants to Assume Oregon NL Distribution Lease
---------------------------------------------------------------
The Fleming Companies, Inc. Debtors seek the Court's authority to
assume a lease agreement between NL Properties and Core-Mark
International, Inc., dated December 15, 1993, for premises located
in Milwaukie, Oregon, for use as a distribution facility. The
current lease will expire on June 30, 2004, but was amended on
January 12, 2004, to extend the term until July 31, 2009. The
amendment also provides for a reduction in the monthly base rent
for the period from July 1, 2004, through June 30, 2005, as well
as two rent abatements. In exchange for the extension of the
lease term, the base rent reduction and the abatements, Core-Mark
agreed to assume the lease effective as of April 30, 2004. Core-
Mark has no outstanding payment due under the lease agreement.
Christopher J. Lhulier, Esq., at Pachulski Stang Ziehl Young
Jones & Weintraub PC in Wilmington, Delaware, explains that
continued use of the premises as a distribution facility is
necessary to the operation of Core-Mark's business. Furthermore,
the lease terms are more favorable than the terms that would be
available "through an alternative transaction."
If the lease is not assumed, the lease will expire on June 30,
2004, and Core-Mark would be forced to expend substantial time
and resources to locate and negotiate for an alternative
distribution facility, which may prove difficult due to the time
constraints. Moreover, because Core-Mark uses this premises as a
distribution facility, Core-Mark would incur extremely high costs
to remove and transfer to another location all of its products,
racking and shelving.
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. 32; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
FOAMEX INT'L: March 28 Balance Sheet Insolvent by $205.3 Million
----------------------------------------------------------------
Foamex International Inc. (NASDAQ: FMXI), the leading manufacturer
of flexible polyurethane and advanced polymer foam products in
North America, announced its 2004 first quarter results.
Sales & Gross Profit
Net sales for the first quarter of 2004 were $313.6 million, down
4% from $328.2 million in the first quarter of 2003. Gross profit
in the first quarter of 2004 was $39.8 million, up 30% from $30.5
million in the first quarter of 2003. Gross profit margin for the
first quarter of 2004 was 12.7%, up from 9.3% in the first quarter
of 2003, and the fifth consecutive quarter of gross profit margin
recovery. The gross profit margin improvement reflects lower
overall plant operating costs and a better mix of value-added
products.
Earnings
Net loss for the first quarter of 2004 was $2.1 million, or $0.09
per diluted share, compared with a net loss of $10.4 million, or
$0.43 per diluted share in the first quarter of 2003.
Income from operations was $13.2 million for the first quarter of
2004, up 37% from $9.6 million in the first quarter of 2003.
Selling, general and administrative expenses for the first quarter
of 2004 were $26.0 million versus $20.9 million in the first
quarter of 2003. The quarter's SG&A expenses include a charge of
$3.7 million related to the bankruptcy of a major customer.
Interest and debt issuance expense for the first quarter of 2004
was $18.6 million, a decrease from $19.1 million in the first
quarter 2003, primarily due to lower amortization of debt issuance
cost.
Commenting on the results, Tom Chorman, Foamex's President and
Chief Executive Officer, said: "We are encouraged with the
improvement we have seen in several areas this quarter,
particularly since we absorbed a significant charge associated
with the bankruptcy of a major bedding customer. Our continued
focus on developing more consumer oriented products, improving our
supply chain efficiency and overall cost management is showing
positive results, as Foamex recorded its fifth consecutive quarter
of gross profit margin improvement. While we still face difficult
marketplace challenges, I remain confident that as the year
progresses, Foamex will continue to show improved operating
performance."
At March 28, 2004, Foamex International Inc.'s balance sheet shows
a shareholders' deficit of $205.3 million compared to a deficit of
$203.1 million as of December 28, 2003
Business Segment Performance
Foam Products
Foam Products net sales for the first quarter of 2004 were $134.4
million, up 14% from $118.2 million in the first quarter of 2003
due primarily to higher volumes of value-added products. Income
from operations for the first quarter of 2004 was $16.3 million,
up 135% from $6.9 million in the first quarter of 2003. The
increase primarily reflects the effect of higher volume, improved
product mix and improved operating efficiency.
Automotive Products
Automotive Products net sales for the first quarter of 2004 were
$94.0 million, down 22% from $121.1 million in the first quarter
of 2003. The decrease is primarily the result of customer sourcing
actions. Income from operations for the first quarter of 2004 was
$5.0 million, down 47% from $9.4 million in the first quarter of
2003, primarily due to the effect of lower volume.
Carpet Cushion Products
Carpet Cushion Products net sales for the first quarter of 2004
were $46.1 million, down 6% from $49.1 million in the first
quarter of 2003 due to lower volume. Income from operations in the
first quarter of 2004 was $1.3 million as compared to a loss of
$0.6 million in the first quarter of 2003, due to the continued
benefit from plant consolidations and efficiency improvements
implemented over the past year, and lower material costs.
Technical Products
Technical Products net sales for the first quarter of 2004 were
$31.1 million, down 4% from $32.4 million in the first quarter of
2003, due to a higher mix of lower priced products which offset a
3% unit volume gain. Income from operations for the first quarter
of 2004 was $8.9 million, the same as the first quarter of 2003.
About Foamex International Inc.
Foamex, headquartered in Linwood, PA, is the world's leading
producer of comfort cushioning for bedding, furniture, carpet
cushion and automotive markets. The Company also manufactures
high-performance polymers for diverse applications in the
industrial, aerospace, defense, electronics and computer
industries. For more information visit the Foamex web site at
http://www.foamex.com.
FONIX CORP.: Shareholder Deficit Disappears
-------------------------------------------
Fonix Corp. (OTC BB: FNIX), an industry leader in delivering
conversational speech solutions to consumer systems and devices
for everyday use through its Fonix Speech Group, and a provider of
telephone and data services through its new subsidiaries LecStar
Telecom Inc. and LecStar DataNet, announces financial results for
the quarter ended March 31, 2004.
Fonix revenues were $1,925,000 for the quarter ended March 31,
2004 compared to $590,000 for the same period in 2003. Operating
expenses, exclusive of non-cash amortization of $593,000,
decreased by $822,000 from $3,952,000 in the first quarter of 2003
to $3,130,000 in the first quarter of 2004. Net loss was
$2,342,000 ($0.08 per common share) for the first quarter in 2004
compared to $4,270,000 ($0.30 per common share) for the same
period in 2003. The first quarter results reflect the
consolidation of the LecStar operations from March 1 through March
31, 2004 and the Fonix Speech Group for the entire quarter.
During the quarter ended March 31, 2004, the company reduced
accrued payroll and other compensation-related expenses by
$2,241,000 and accounts payable by $752,000. As a result of the
acquisition of LecStar and equity financing completed during the
quarter ended March 31, 2004, shareholder equity at March 31, 2004
is $6,245,000 compared to a shareholder deficit of $10,397,000 at
Dec. 31, 2003.
"Our financial results for the first quarter primarily reflect the
synergy of our combined business operations," said Thomas A.
Murdock, Fonix chairman and CEO. "We expect further improvement in
revenue and cost management as we leverage the operating
advantages of both LecStar and the Fonix Speech Group."
"We are encouraged by the results of the restructuring and
redirection of our business model," said Roger D. Dudley, Fonix
executive vice president and CFO. "Our improving operations
provide a solid base for future growth. By significantly reducing
combined operating expenses, less non-cash amortization, by 21
percent, we believe the company will continue to improve its
operating margin on increasing revenue."
The consolidated pro forma Fonix revenue including LecStar revenue
for the full quarter ended March 31, 2004 was $5,029,000.
Consolidated pro forma operating expenses, exclusive of non-cash
amortization of $593,000, were $6,114,000. Pro forma net loss was
$3,842,000 ($0.10 per common share).
About Fonix
Fonix Corp. is an industry leader in delivering conversational
speech solutions to consumer systems and devices for everyday use.
Manufacturers and developers incorporate Fonix's award-winning
technology to provide their customers with an easy, convenient,
and reliable user experience. Fonix currently offers voice
technology for mobile/wireless devices; computer telephony
systems; game consoles, toys and appliances; the assistive market
and automobiles. Fonix recently acquired LecStar Telecom Inc., a
rapidly growing Atlanta-based regional provider of integrated
communications services to businesses and consumers. LecStar
offers a full array of wireline voice, data, long distance and
Internet services to business and residential customers throughout
BellSouth's Southeastern operating territory. LecStar's solid
customer base offers a unique direct marketing and distribution
channel for Fonix speech technologies and solutions.
GADZOOKS INC: April 2004 Store Sales Decrease by 13.3% to $12.5MM
-----------------------------------------------------------------
Gadzooks, Inc. (OTC Pink Sheets: GADZQ) announced sales results
for the four weeks of fiscal April ended May 1, 2004. Comparable
store sales for the 252 stores that the Company currently intends
to retain and operate decreased 13.3 percent from fiscal April
2003. Fiscal April sales for the continuing stores totaled $12.5
million. Total sales for fiscal April were $12.6 million including
the results of liquidating stores.
Comparable store sales for the continuing stores declined 9.0
percent for the 13 weeks of the first quarter ended May 1, 2004.
First quarter sales for the continuing stores totaled $42.9
million. Total sales for the first quarter were $55.9 million
including the results of liquidating stores.
"We are satisfied with our above-plan results for April and the
first quarter of 2004," said Carol Greer, President and Chief
Merchandising Officer. "For the quarter, sales of junior
merchandise in the average store increased almost 52%, while
average store junior inventories were up only 23%. We continue to
be very encouraged by our progress in growing our share of the
junior market and increasing the productivity of our inventories."
Greer continued, "Our April comparable store sales results were
negatively impacted by anniversarying our men's product
liquidation that began in mid- April last year. Since the men's
liquidation in the prior year ran through June, we expect our
comparable store sales comparisons to be challenging until we
reach July and begin to anniversary our initial months as a
juniors-only store."
About Gadzooks
Headquartered in Carrollton, Texas, Gadzooks, Inc.
-- http://www.gadzooks.com/-- is a specialty retailer of casual
clothing, accessories and shoes for 16-22 year-old females. The
Company filed for chapter 11 protection on February 3, 2004
(Bankr. N.D. Tex. Case No. 04-31486). Charles R. Gibbs, Esq., and
Keith Miles Aurzada, Esq., at Akin Gump Strauss Hauer & Feld, LLP
represent the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed
$84,570,641 in total assets and $42,519,551 in total debts.
GT DATA: Squar Milner Resigns as Independent Accountant
-------------------------------------------------------
By letter dated January 12, 2004, Squar, Milner, Reehl &
Williamson, LLP of Newport Beach, California, informed GT Data
Corporation that Squar Milner had resigned as the accountant for
the Company.
Squar Milner had been serving as the independent accountant for
the Company engaged as the principal accountant to audit the
Company's financial statements. The report of Squar Milner dated
February 20, 2003, with respect to its audit of the consolidated
balance sheet of GT Data as of December 31, 2002, and the related
consolidated statements of operations, stockholders' deficit and
cash flows for each of the years in the two-year period then
ended, stated that certain factors listed in the report raised
substantial doubt about GT Data's ability to continue as a going
concern.
HARKEN ENERGY: Issues 50,000 Series J Convertible Preferred Stock
-----------------------------------------------------------------
Harken Energy Corporation (Amex: HEC) announced that on April 28,
2004 it issued an aggregate of 50,000 shares of its Series J
Convertible Preferred Stock and approximately 2.9 million warrants
to purchase Harken common stock to Alexandra Global Master Fund
Ltd. in exchange for $5,000,000 in cash.
The Series J Preferred has a liquidation value of $100 per share,
is non-voting and is convertible at the holders' option into
common stock at a conversion price of $0.87 per share, subject to
adjustments in certain circumstances. The J Preferred rank senior
to Harken's common stock and pari passu with other issues of
preferred shares by Harken. The warrants issued with the Series J
Preferred have a term of one (1) year and a strike price of $0.98
per share. The terms of the J Preferred and warrants are discussed
in further detail in Harken's Form 8-K and exhibits filed with the
Securities and Exchange Commission on April 29, 2004.
Harken anticipates using the proceeds from the private placement
of the J Preferred and warrants to expand and accelerate portions
of Harken's drilling objectives previously announced as part of
Harken's 2004 capital expenditure plan.
* * *
As reported in Troubled Company Reporter's December 17, 2003
edition, Harken Energy Corporation (Amex: HEC) sold the majority
of its oil and gas properties located in the Panhandle region of
Texas. The purchasers agreed to pay approximately $7 Million in
cash for the Panhandle assets.
Harken repaid all outstanding bank debt, approximately $4 Million,
with a portion of the Panhandle asset sales proceeds.
In another previous report, Harken Energy Corporation retained
Petrie Parkman & Co., Inc., to evaluate its domestic oil and gas
assets and to make recommendations to maximize their value.
Harken's domestic assets currently consist of its productive
properties and prospects along the Gulf Coast of Texas and
Louisiana, as well as the Panhandle region of Texas.
Harken's management spent the last few months actively
restructuring the liability side of its balance sheet and
examining and taking action on its cost structure. While Harken is
still burdened with significant long-term debt, the Company has
effectively dealt with most of its short-term debt without causing
excessive dilution.
HAWK CORP: S&P Revises Outlook to Positive on Improved Performance
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit and other ratings on Cleveland, Ohio-based Hawk Corp. At
the same time, the outlook was revised to positive from stable.
At March 31, 2004, the specialty components manufacturer had total
debt (including the present value of operating leases) of
approximately $109 million.
"The outlook revision reflects improved financial performance
resulting from the recovery of some of Hawk's end-markets,
particularly heavy-duty trucking and construction," said
Standard & Poor's credit analyst Heather Henyon. "In addition,
the company is focusing on its two core segments, friction
products and precision components, in order to improve operating
performance and generate cost savings that will be used to reduce
debt."
Hawk designs, engineers, manufactures, and markets specialty
components made principally from powdered metals for use in
aerospace, industrial, and commercial markets.
Hawk is beginning to benefit from improvement of some of its end-
markets and the general economic recovery in the U.S. However,
products targeting the aerospace and lawn and garden markets
continue to experience sales declines, which the company is
mitigating through greater focus on the aftermarket. Hawk expects
to generate positive free cash flow in 2004, which will be used to
fund increased capital expenditures (about $16 million) as the
company invests in new technology programs and its global
facilities.
In addition, the company announced plans to relocate its Brook
Park, Ohio-based friction products facility to Tulsa, Oklahoma,
divest itself of its motor business segment; and realign its
performance racing segment. Annual cost savings from these
activities should enable the company to continue to reduce debt
further
"If operating and financial performance continue to improve and
the company improves the term structure of its capital structure
through refinancing the 2006 maturities, ratings could be raised,"
Ms. Henyon said.
HEALTH CARE REIT: Releases Improved First Quarter Results
---------------------------------------------------------
Health Care REIT, Inc. (NYSE:HCN) announced operating results for
its first quarter ended March 31, 2004. We continue to meet our
financial and operational expectations.
"We were pleased with our operating results for the quarter,"
commented George L. Chapman, chief executive officer of Health
Care REIT, Inc. "Our $87.3 million of new investments during the
first quarter supports our net investment target of $200 million
this year. We are well positioned for growth given our solid
balance sheet, increased line of credit and our high quality $2
billion portfolio with improving property-level payment coverage
ratios."
As previously announced, the Board of Directors declared a
dividend for the quarter ended March 31, 2004 of $0.60 per share
as compared to $0.585 per share for the same period in 2003. The
dividend is a one and one-half cent increase from the dividend
paid for the fourth quarter of 2003 and represents the 132nd
consecutive dividend payment. The dividend will be payable May 20,
2004 to stockholders of record on April 30, 2004.
Net income available to common stockholders totaled $18.7 million,
or $0.36 per diluted share, for the first quarter of 2004,
compared with $16.5 million, or $0.41 per diluted share, for the
same period in 2003. Funds from operations totaled $35.8 million,
or $0.70 per diluted share, for the first quarter of 2004,
compared with $28.1 million, or $0.69 per diluted share, for the
same period in 2003.
We had a total outstanding debt balance of $1.0 billion at March
31, 2004, as compared with $740.8 million at March 31, 2003, and
stockholders' equity of $1.2 billion, which represents a debt to
total book capitalization ratio of 47 percent. The debt to total
market capitalization at March 31, 2004 was 32 percent. Our
coverage ratio of EBITDA to interest was 3.11 to 1.00 for the
three months ended March 31, 2004.
Portfolio Update. Two assisted living facilities stabilized during
the quarter. We ended the quarter with 11 assisted living
facilities remaining in fill-up, representing six percent of
revenues. Only two facilities, representing one percent of
revenues, have occupancy of less than 50 percent. One facility
opened in the third quarter of 2003 after completion of
construction and the other facility was a new acquisition last
quarter.
As previously announced, Doctors Community Health Care Corporation
and its subsidiaries filed for Chapter 11 bankruptcy protection on
November 20, 2002. Pursuant to procedures approved by the
bankruptcy court, the assets of Doctors were the subject of an
auction held on December 10 through December 16, 2003. At the
conclusion of that auction, the debtors' independent director
declared certain members of Doctors' management the winning
bidder. Their bid contemplated a reorganization of Doctors and its
subsidiaries with new equity and debt capitalization. Pursuant to
the plan of reorganization, we entered into mortgage financings
totaling $22.2 million with the reorganized Doctors.
Straight-line Rent. We recorded $6.7 million of straight-line rent
for the quarter. Straight-line rent includes $601,000 in cash
payments outside the normal monthly rental payments for the three-
month period.
Outlook for 2004. We are confirming our 2004 guidance and expect
to report net income available to common stockholders in the range
of $1.68 to $1.73 per diluted share, and FFO in the range of $2.99
to $3.04 per diluted share. The guidance assumes no change in our
forecast for net investments of $200 million. Additionally, we
plan to manage the company to maintain investment grade status
with a capital structure consistent with our current profile.
Please see Exhibit 14 for a reconciliation of the outlook for net
income and FFO.
Health Care REIT, Inc. (Fitch, BB+ Outstanding Preferred Share
Rating, Positive Outlook), with headquarters in Toledo, Ohio, is a
real estate investment trust that invests in health care
facilities, primarily skilled nursing and assisted living
facilities. For more information on Health Care REIT, Inc., via
facsimile at no cost, dial 1-800-PRO-INFO and enter the company
code - HCN. More information is available on the Internet at
http://www.hcreit.com/
HOMESTORE: March 31 Shareholder Deficit Balloons to $2.5 Million
----------------------------------------------------------------
Homestore, Inc. (Nasdaq: HOMS), the leading provider of real
estate media and technology solutions, reported financial results
for the first quarter ended March 31, 2004. Total revenue for the
first quarter was $56.1 million, compared to $54.9 million in the
fourth quarter of 2003. The gross margin improved to 75 percent
from 74 percent in the previous quarter.
Homestore also reported that the net loss for the first quarter
was $(5.1) million, or $(0.04) per share, compared to a net loss
of $(12.1) million, or $(0.10) per share, for the fourth quarter
of 2003. Results for the fourth quarter included a restructuring
charge of $4.1 million and an impairment charge of $1.8 million.
Earnings before interest, restructuring charges and certain other
non-cash expenses, principally stock-based charges, depreciation,
and amortization, referred to by the company as "EBITDA," was
$602,000 in the first quarter, compared to a loss of $(770,000) in
the fourth quarter of 2003. The improvement in EBITDA was
primarily due to increases in the Company's revenue. The Company
has historically reported income (loss) from operations because
management uses it to monitor and assess the Company's performance
and believes it is helpful to investors in understanding the
Company's business. Starting with 2004's first quarter results,
the Company will refer to income from operations as EBITDA. No
changes to the calculation were made, so EBITDA is comparable to
income from operations in prior periods.
At March 31, 2004, Homestore had $41.1 million in cash and short-
term investments available to fund operations, an increase of $5.5
million from the previous quarter. The first quarter represents
the first quarter in the Company's history that resulted in
positive cash flow from operations in its consolidated statements
of cash flows.
"We achieved several milestones in our first quarter, including
our first year-over-year quarterly revenue growth, positive
EBITDA, and positive cash flows from operations," said Mike Long,
Homestore's chief executive officer. "While our investment and
repositioning efforts are ongoing, I believe these results
demonstrate the significant value our solutions offer the real
estate industry, and early returns on the investments the Company
has made over the last two years."
At March 31, 2004, Homestore, Inc., records a total stockholders'
equity deficit of $2,455,000 compared to a deficit of $328,000 at
December 31, 2003
Year-Over-Year Quarterly Results
Revenue for the first quarter totaled $56.1 million, versus $54.9
million for the first quarter of 2003. The year-over-year increase
in revenue is due to increases in the Company's Media Services
segment of $1.7 million and Software segment of $0.2 million,
offset by a $0.6 million decrease in revenue in the Print segment.
The net loss for the quarter was $(5.1) million, or $(0.04) per
share, compared to net income of $87.2 million, or $0.72 per
share, in the first quarter of 2003. Net income for the first
quarter of 2003 included a $104.1 million one-time gain related to
the settlement of the AOL distribution agreement.
Update On Settlement Of Shareholder Class Action Lawsuit
In October 2003, Homestore announced a preliminary court approval
of the settlement agreement between Homestore and The California
State Teachers' Retirement System (CalSTRS) related to the
consolidated shareholder class action lawsuit. On March 16, 2004,
the Court issued its "Order Granting Motion for Final Approval of
Partial Class Settlement and Directing Renotice of the Class." The
Order directed that an abbreviated class notice be published and
extended the deadline for class members to opt out or submit
claims until May 31, 2004.
As a part of the settlement, Homestore agreed to pay $13.0 million
in cash and issue 20.0 million new shares of common stock valued
at $50.6 million as of August 12, 2003. In October 2003, Homestore
placed $10.0 million in escrow upon preliminary approval by the
U.S. District Court, and the final $3.0 million was put in escrow
in April 2004. Following final judicial approval of the
settlement, the $13.0 million and 20.0 million shares of newly
issued common stock will be distributed to the class by the Court.
Additional information regarding the settlement agreement is
included in documents Homestore files from time to time with the
Securities and Exchange Commission.
About the Company
Homestore, Inc. (Nasdaq:HOMS) is the leading provider of real
estate media and technology solutions. The Company operates the
number one network of home and real estate Web sites including
flagship site REALTOR.comr, the official Web site of the National
Association of REALTORSr and HomeBuilder.com(TM), the official new
homes site of the National Association of Home Builders. Homestore
also operates RENTNETr, an apartments, corporate housing and self-
storage resource and Senior Housing Netr, a comprehensive resource
for seniors, as well as Homestore.comr, a home information
resource. Homestore's print businesses are Homestorer Plans and
Publications and Welcome Wagonr. Homestore's professional software
divisions include Computers for Tracts(TM), Top Producerr Systems
and WyldFyre(TM) Technologies. For more information, go to
http://ir.homestore.com/
INT'L TRUST: Replaces Auditor Randy Simpson with Malone & Bailey
----------------------------------------------------------------
On March 19, 2004, International Trust and Financial Systems
terminated the client-auditor relationship between Randy Simpson,
C.P.A., PC and the Company.
Simpson's reports on the Company's financial statements for the
year ended December 31, 2002 raised substantial doubt about its
ability to continue as a going concern.
The decision to change accountants was recommended by the
Company's Board of Directors.
On March 19, 2004 the Company engaged Malone & Bailey, P.C.,
certified public accountants, as its independent accountants to
report on the Company's balance sheet as of December 31, 2003, and
the related combined statements of income, stockholders' equity
and cash flows for the year then ended. The decision to appoint
Malone & Bailey was approved by the Company's Board of Directors.
JUNIPER NETWORKS: S&P Affirms Ratings & Alters Outlook to Positive
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating and other ratings on Juniper Networks Inc. and
revised the outlook to positive from stable, reflecting a
broadening business base and improving operating
performance.
"The ratings on Mountain View, California-based Juniper Networks
Inc. continue to reflect the challenges of a rapidly evolving and
highly competitive industry, as well as the company's good niche
position as a supplier of high-performance data networking
equipment and its ample operational liquidity," said Standard &
Poor's credit analyst Bruce Hyman.
Juniper Networks supplies routers and related networking
products, which perform the message management and message
transfer roles in the Internet and other networks. It had debt and
capitalized operating leases of $694 million at March 31, 2004.
The company had focused its efforts on the highest-performance
"backbone" router market, principally for service providers,
competing against industry leader Cisco Systems Inc. Service
providers have been a growing market for Juniper's products as
they transition their networks towards Internet Protocol (IP)
communications, although Juniper has not had a major presence with
enterprise customers, historically the major consumers of IP
equipment. Juniper has been broadening its IP product range, to
serve the carriers' network access market, while continuing to
introduce high-performance products to sustain carriers' interest
and demonstrate continued technological capabilities. Juniper
Networks has also introduced products for the wireless and cable
industries.
MANAGEMENT BY INNOVATION: Case Summary & Largest Unsec. Creditors
-----------------------------------------------------------------
Debtor: Management By Innovation, Inc.
1415 South State Road 15-A
Deland, Florida 32720
Bankruptcy Case No.: 04-04986
Type of Business: The Debtor owns and operates a direct mail
advertising business.
Chapter 11 Petition Date: April 30, 2004
Court: Middle District of Florida (Orlando)
Judge: Karen S. Jennemann
Debtor's Counsel: Peter N. Hill, Esq.
Wolff Hill McFarlin & Herron PA
1851 West Colonial Drive
Orlando, FL 32804
Tel: 407-648-0058
Fax: 407-648-0681
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
------ --------------- ------------
Heidelberg Print Finance Am. 2 Heidelberg $374,486
PO Box 198332 Digimaster B&W
Atlanta, GA 30384-8332 Printers
2 Heidelberg High
Capacity Stacker
Finishers (FL)
Xpedx Goods/Services $280,897
PO Box 120978
Dallas, TX 75312-0978
Citicapital 1995 Komori $276,293
Wasco Funding Corp. Lithrone 20"x26"
PO Box 9576 four color offset
Uniondale, NY 11555-9576 press, s/n 1223
equipped with PQC
console, Komorimatic
dampening
SouthTrust Bank Blanket lien $275,648
PO Box 830716 including accounts
Birmingham, AL 35283 receivable and
inventory
Orix Credit Alliance, Inc. Komori L426III 696 $172,251
20" x 26" 4 Color
Lithrone Sheet Fed
Press (FL) S/N 346
Creo Financial Services CreoScilex $163,437
Trendsetter 3230
w/ Brisque Impose
DFE External Drim
Platesetter
UPS 1000VA NA for
Brisques
Iris IPROOF System
Pinnacle Bank The North 155 feet of $156,065
that part of the
Southeast 1/4 of the
Northeast 1/4 of the
Southwest 1/4 of
Section 20,
Township 17 South,
Range 30 East
Orix Credit Alliance, Inc. Komori L426III 696 $141,494
20" x 26" 4 Color
Lithrone Sheet Fed
Press (FL)
Autumn House Realty Commercial Lease $129,504
Creo Financial Services CreoScitex Lotem $120,177
400V PS/M 7.0 DFE
External Drum
Platesetter
UPS 1000VA North
America (NJ)
Mac Paper Goods/Services $75,748
American Express Bus Finance Hoshimoto press $74,538
Newenhouse, Carl Loan $72,758
Innovative Equipment Goods/Services $68,044
CIT Technology 1 Dell PowerEdge $60,145
6450 with multiple
accessories
1 Dell PowerEdge
1550 with multiple
accessories
1 MS MBL Exchange
Service Upgrade
MacGilvray, Joe Loan $56,663
Katz, George Loan $55,677
Heidelburg USA Goods/Services $53,560
R.L.Polk Goods/Services $49,116
Xerox Special Info Sys Goods/Services $43,755
MERRILL LYNCH: Fitch Assigns Low-B Ratings to 6 2004-MKB1 Classes
-----------------------------------------------------------------
Merrill Lynch Mortgage Trust 2004-MKB1, commercial mortgage pass-
through certificates are rated by Fitch as follows:
--$52,161,616 Class A-1, 'AAA';
--$379,800,000 Class A-2, 'AAA';
--$65,000,000 Class A-3, 'AAA';
--$169,657,000 Class A-4, 'AAA';
--$163,804,000 Class A-1A, 'AAA';
--$979,850,322 Class XC*, 'AAA';
--$952,193,000 Class XP*, 'AAA';
--$26,946,000 Class B, 'AA';
--$11,023,000 Class C, 'AA-';
--$25,721,000 Class D, 'A';
--$11,024,000 Class E, 'A-';
--$13,473,000 Class F, 'BBB+';
--$12,248,000 Class G, 'BBB';
--$11,023,000 Class H, 'BBB-';
--$3,675,000 Class J, 'BB+';
--$4,899,000 Class K, 'BB';
--$4,899,000 Class L, 'BB-';
--$4,899,000 Class M, 'B+';
--$2,450,000 Class N, 'B';
--$3,674,000 Class P, 'B-';
--$13,473,705 Class Q, 'NR';
* Interest only.
Class Q is not rated by Fitch Ratings. Classes A-1, A-2, A-3, A-4,
B, C, D, E, and XP are offered publicly, while classes A-1A, F, G,
H, J, K, L, M, N, P, Q, and XC 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 72 fixed rate loans having an aggregate
principal balance of approximately $979,850,322, as of the cutoff
date.
MIRANT CORP: Court Approves Mobile Energy Termination Agreement
---------------------------------------------------------------
In 1994, the Scott Paper Company sold an energy complex located
in Mobile, Alabama to Mobile Energy Services Holdings, Inc., a
subsidiary of The Southern Company. The Energy Complex was
transferred in 1995 by MESH to Mobile Energy Services Company,
LLC, which at the time was owned 99% by MESH and 1% by Mirant
Services, LLC. Mirant Services transferred its 1% interest in
MESC to MESH in late 2000, and MESC become wholly owned by MESH.
Ian T. Peck, Esq., at Haynes and Boone, LLP, in Dallas, Texas,
relates that after its acquisition by MESC, the Energy Complex
was operated and maintained by Mirant Services pursuant to a
"Facility Operations and Maintenance Agreement," dated as of
December 12, 1994, executed by Mirant Services and MESC. Mirant
Services continued to operate the Energy Complex through March
2001, when a new operator was put into place.
In 1995, MESC issued about $255,000,000 of publicly traded bonds
and reissued $85,000,000 of tax exempt bonds secured by various
of its assets.
According to Mr. Peck, the transaction documents relating to
MESC's acquisition of the Energy Complex were structured so that
MESC had separate energy services agreements with a tissue mill
and pulp mill owed by Scott and a paper mill owned by S.D. Warren
Alabama, LLC, which had been a Scott subsidiary but was sold in
late 1994 to a third party.
In 1995, Kimberly-Clark Corporation acquired Scott. In 1998,
Kimberly-Clark advised MESC that it was closing its pulp mill
effective September 1, 1999. The pulp mill accounted for about
50% of MESC's revenues and 80% or more of its fuel. On
January 14, 1999, MESC and MESH filed for bankruptcy in the
United States Bankruptcy Court for the Southern District of
Alabama.
Following MESC's and MESH's bankruptcy filings, Mr. Peck informs
the Court that Mirant Corporation worked with the bondholders of
MESH and MESC to try to maximize the value of those entities to
the bondholders. On February 9, 2000, Mirant Services, Mirant
Corp., MESC and MESH entered into a "MESC Cogeneration
Development Agreement" pursuant to which Mirant Services and
Mirant Corp. were to provide assistance to MESC in developing a
cogeneration project on site and were to provide MESC a turbine
for the project. In exchange, MESC:
(i) granted certain releases to Southern, Mirant Services and
Mirant Corp.; and
(ii) agreed to indemnify Southern, Mirant Services and Mirant
Corp. and their affiliates against certain losses or
costs they might incur relating to MESC.
Among the obligations for which MESC indemnified the Mirant
Entities were:
(1) a guaranty provided by Southern to the owners of the
pulp, paper and tissue mills of MESC's obligations to
each mill owner under separate environmental indemnity
agreements that MESC has with each of the three mill
owners, which guaranty is capped at $15,000,000 in 1994,
escalating at the Producer Price Index; and
(2) obligations under an agreement with the tree mill owners
under which Southern is required to fund an account for
$2,000,000 to be used to pay for maintenance services
under certain circumstances.
In addition, in the first amendment to the Development Agreement,
MESC and MESH agreed to indemnify Southern from certain adverse
income tax consequences resulting from the occurrence of certain
specified events, as specified in a "Tax Indemnification
Agreement" dated September 2, 2000.
In the Spring of 2000, Southern announced its intent to spin off
Mirant Corp. In connection with that spin off, all business
activities being conducted by Mirant Corp. and its subsidiaries
were intended to be spun off from Southern as a stand alone
business. However, having Mirant own MESH and MESC raised
certain regulatory concerns under the Public Utility Holding
Company Act of 1935. Consequently, Southern, which was already
subject to the PUHCA, continued to own MESC and MESH after its
spin off of Mirant Corp. and an agreement was reached whereby
Mirant Corp. incurred certain indemnity obligations to Southern
relating to MESC and MESH.
Mr. Peck reports that the MESH and MESC plans of reorganization
were confirmed on or about September 23, 2003. Under those
plans, the ownership of Southern of MESC and MESH was terminated
upon the Effective Date of those plans. Unless waived by the
applicable parties, occurrence of the Effective Date was
predicated upon, among other things, execution by MESC, MESH,
Mirant Corp., Mirant Services, Southern and others of the
Intercreditor Agreement. The Court already granted the Debtors'
request to enter into the Intercreditor Agreement on December 23,
2003.
After its ownership in MESC and MESH was terminated, Southern
continued to have the indemnity obligations to the mill owners
that pre-dated the plans. Moreover, under the indemnity
arrangement instituted when Southern spun off Mirant Corp.,
Mirant Corp. allegedly has an obligation to indemnify Southern
for any payments that Southern might become required to make
under its obligations to the mill owners, which obligations could
run into the millions of dollars.
Mr. Peck notes that nowhere in the Intercreditor Agreement or in
any other document or order did Mirant Corp. or any of its
affiliates admit that it has any indemnity obligations to
Southern. Furthermore, at no time has Mirant or any of its
affiliate assumed the agreement to indemnify Southern. Those
relationships between Mirant Corp. and Southern remained
unaffected by the Intercreditor Agreement, the documents executed
concurrently therewith, and the confirmed plans of MESC and MESH.
Nevertheless, Mirant Corp. and Mirant Services are informed that
Southern contends that those indemnity obligations of Mirant
Corp. and Mirant Services to Southern are enforceable
obligations.
Mr. Peck informs Judge Lynn that part of the consideration Mirant
Corp. received under the Development Agreement was that MESC
granted to Southern and to Mirant Corp. a priming lien on MESC's
assets to secure the indemnity obligations that MESC incurred in
favor of Southern and Mirant Corp. as consideration for the
obligations incurred by Mirant Corp. in the Development
Agreement.
Prior to the confirmation of the MESC and MESH plans, the priming
liens had been effectuated through a Court order. However, under
the plans, the bondholders were to retain a $1,000,000 claim
secured by the same assets "as secure the indemnity obligations"
[sic.] to Southern and Mirant Corp. The relative priority of the
liens and security interests in the assets of MESC as between the
bondholders and Southern and Mirant Corp. was governed by the
Intercreditor Agreement.
Under the Intercreditor Agreement, a "Collateral Agent" was
appointed for the "Indemnified Parties." Pursuant to certain
collateral documentation, MESC granted liens and security
interests in its assets to the Collateral Agent, and the
Intercreditor Agreement governed the obligations of the
Collateral Agent and the rights, obligations and relative
priorities of the Indemnified Parties and the Senior Secured
Parties relating to the collateral.
By operation of the Intercreditor Agreement and the collateral
documentation granting liens and security interests in the assets
of MESC to the Collateral agent, Mirant Corp. and Mirant Services
became the beneficiaries of liens and security interests in the
assets of MESC granted to a Collateral Agent to secure the
obligation of MESC to indemnify Mirant Corp. and Mirant Services
under the Development Agreement, including for:
(a) any liability arising out of the cancellation of third
party contracts due to the termination of the O&M
Agreement; and
(b) claims, demands, losses, liabilities and expenses
incurred by Mirant Services relating to the "MESC
Retention and Severance Program."
In addition, as one of the "Indemnified Parties," Southern was
the beneficiary of liens and security interests in the assets of
MESC to secure the obligation of MESC to indemnify Southern for
the Mill Owner Claims. In the event that Mirant Corp. and Mirant
Services were to be required to honor the obligation to indemnify
Southern and make any payment on account of claims by the mill
owners against Southern, Mirant Corp. and Mirant Services would
be subrogated to the rights of Southern against MESC and the
security.
The one affirmative obligation that Mirant Corp. and Mirant
Services incurred under the Intercreditor Agreement was to
indemnify the Collateral Agent for "any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever
that may at any time be imposed on, incurred by or asserted
against the Collateral Agent" but only to the extent of the
interests of Mirant Corp. and Mirant Services in the "Shared
Collateral."
The Omnibus Release
The current owners of MESH and MESC have negotiated a sale of the
Energy Complex to the Buyer. It is a condition to the sale that
MESC's assets, including the Energy Complex, be free and clear of
the liens in favor of the parties to the Intercreditor Agreement.
To accomplish that release of liens, it was also necessary to
terminate certain agreements relating to the Energy Complex and
to obtain releases of certain claims. Accordingly, the Buyer
asked Mirant Corp. and Mirant Services to enter into the Omnibus
Release whereby Mirant Corp. and Mirant Services will:
(i) release their liens in the assets of MESC;
(ii) obtain certain releases from the Collateral Agent,
Kimberly-Clark, S.D. Warren Company, S.D. Warren Alabama,
doing business as "Sappi Fine Paper North America," MESC
and MESH;
(iii) grant certain releases to the Collateral Agent,
Kimberly-Clark, S.D. Warrant Company, S.D. Warren
Alabama, MESC and MESH; and
(iv) terminate certain agreements to which Mirant Corp. or
Mirant Services are parties, provided that certain
obligations of MESC to indemnify Mirant Corp. or Mirant
Services will survive the execution of the Omnibus
Release, albeit as unsecured indemnity obligations.
Mirant Corp. and Mirant Services neither give releases to, nor
receive releases from Southern, Southern Services or their
affiliates. In addition, Southern will obtain releases from the
Mill Owners of any claims under the Environmental Guaranty and
the Mill Owner Maintenance Reserve Account Agreement, which
removes the exposure Mirant Corp. and Mirant Services may have to
an obligation to indemnify Southern. The Buyer will acknowledge
the lack of claims against Mirant Corp. and Mirant Services in an
"Acknowledgment of No Claim" relating to the Energy Complex, MESH
and MESC.
Upon Mirant Corp. and Mirant Services' behest, the Court
authorizes them to enter into the Omnibus Release pursuant to
Rule 9019 of the Federal Rules of Bankruptcy Procedure.
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. 32; Bankruptcy Creditors' Service, Inc., 215/945-7000)
MSX INTERNATIONAL: Returns to Profitability in First Quarter 2004
-----------------------------------------------------------------
MSX International, a global provider of technical business
services, announced net income of $394 thousand on sales totaling
$167.3 million for the first fiscal quarter of 2004, which ended
April 4, 2004. In comparison, in the first quarter of 2003 the
company recorded a net loss of $(3.6) million on net sales
totaling $183.4 million. Due to a restructuring program
implemented in the second half of 2003, first quarter 2004
operating income increased to $9.3 million. This reflects a $6.3
million improvement compared to operating income of $3.0 million
in the same period one year ago.
Frederick K. Minturn, executive vice president and chief financial
officer, observed, "Our first quarter results highlight the impact
of our actions last year to align our cost structure with current
sales volumes. We are pleased to report profitability in the first
quarter, which is consistent with our plans for the balance of
2004. Our improving financials are the result of some very
dedicated people, who continue to deliver exceptional services to
our customers."
Gross profit of $20.6 million in the first quarter was equal to
the first quarter of 2003, despite the 8.7% decline in net sales
from the earlier period. The impact of lower revenues was offset
by reductions in cost of sales totaling approximately $4.2
million. In addition, selling, general and administrative expenses
decreased $4.8 million compared to the first fiscal quarter one
year ago. Our interest expense totaled $7.8 million in first
quarter 2004, a $1.1 million increase from the prior year due
primarily to the refinancing of our senior secured debt in August
2003. Net income also reflects a $1.1 million provision for income
taxes.
MSX International will host a conference call at 2:00 p.m. EDT
today, May 10, to review these results. To listen to the call,
dial 212-346-6540 and provide reservation number 21193956. A
replay of the call will be available beginning at 4:00 p.m. EDT
Monday, May 10, at 800-633-8284 (Domestic) or 402-977-9140
(International), with the same reservation number.
About MSX International
MSX International (S&P, B Corporate Credit Rating, Negative),
headquartered in Warren, Mich., is a global provider of technical
business services. The company combines innovative people,
standardized processes and today's technologies to deliver a
collaborative, competitive advantage. MSX International has over
6,100 employees in 25 countries. Visit the company's Web site at
http://www.msxi.com/
NATIONAL CENTURY: Agrees to Settle NMC Accounts Receivable Dispute
------------------------------------------------------------------
In July 1998, the National Century Financial Enterprises, Inc.
Debtors financed Home Medical of America, Inc., an entity
substantially all of the equity of which was owned by the founders
of the Debtors, in its acquisition of certain home health care
agencies from National Medical Care, Inc. The Debtors purchased
accounts receivable from these newly acquired businesses.
However, Matthew A. Kairis, Esq., at Jones Day Reavis & Pogue, in
Columbus, Ohio, relates, certain disputes arose over the accounts
receivable on:
* NMC's representations and warranties regarding the accounts
receivable in connection with the sale of its businesses;
and
* HMA's and the Debtors' alleged collection of accounts
receivable that had not been purchased from NMC.
In December 1998, HMA did not make the final $10,000,000 payment
due to NMC in connection with the acquisition. NMC claimed that
the Debtors guaranteed this payment and that the Debtors are
liable for various other obligations, including their alleged
failure to remit the proceeds of non-purchased receivables.
On March 17, 2000, NMC commenced a lawsuit against HMA, Home
Care Concepts of America, Inc., Chartwell Caregivers of New York,
Inc., Craig Porter, the Debtors and certain other parties in the
Commonwealth of Massachusetts, Middlesex Superior Court. NMC and
the Debtors each asserted claims and counterclaims in the NMC
Litigation for tens of millions of dollars. After discovery and
briefing on summary judgment were completed, the NMC Litigation
was stayed because of the Debtors' bankruptcy filing.
In the NMC Litigation, the HMA Entities assert direct claims
against NMC, including claims for misrepresentation of the amount
of accounts receivable. The Debtors' claims are intertwined with
the HMA Entities' claims as the subsequent purchaser of the
accounts receivable from the HMA Entities. In addition, the
Debtors allege that the HMA Entities purchased certain accounts
receivable from NMC, the proceeds of which total $1.4 million and
are held by NMC in an account at Bank of America.
NMC has asserted claims against HMA for its failure to make the
final $10 million payment and to satisfy other obligations due as
part of the acquisition and against the Debtors on account of
their alleged guarantee of that final payment and the other
acquisition obligations. NMC also asserted that HMA and the
Debtors collected non-purchased accounts receivable allegedly
owned by NMC, including but not limited to $5.9 million of funds
collected and retained by the Debtors from intradialytic
parenteral nutrition accounts. Prior to the Petition Date, the
Debtors interplead $5.9 million in the NMC Litigation on account
of the IDPN accounts.
In February 2003, NMC sought to modify the automatic stay to
continue the Massachusetts Action. In May 2003, the Court
modified the automatic stay for the limited purpose of allowing
the pending summary judgment motions to be decided by the
Massachusetts court. In September 2003, the Massachusetts court
denied all pending summary judgment motions. In December 2003,
NMC filed a further motion for modification of the stay to
continue the NMC Litigation. In February 2004, the NCFE Debtors
objected to NMC's request.
NMC filed Claim Nos. 621-624 and 861-862 in these cases, in the
aggregate amount of $150,000,000. On January 14, 2004, the
Debtors objected to the NMC Proofs of Claim.
On February 2, 2004, NMC asked the Court to temporarily allow its
claims for voting purposes pursuant to Rule 3018 of the Federal
Rules of Bankruptcy Procedure. On February 9, NMC asked the
Court to abstain from hearing the Debtors' Objection and Motion
to Disallow Claims. The Debtors objected to NMC's request. On
February 12, 2004, NMC filed its objection to the confirmation of
the NCFE Plan.
Consequently, the Debtors and NMC agreed to resolve all their
disputes, including:
* the NMC Litigation and all other pending litigation between
the parties;
* the treatment of the NMC Proofs of Claim;
* the Stay Modification Motion, the Rule 3018 Motion, the
Abstention Motion and the Plan Objection; and
* any and all other claims or assertions of any nature between
or among NMC and the Debtors.
The HMA Entities are not a party to the settlement agreement
between the Debtors and NMC.
The Debtors sought and obtained the Court's authority to enter
into the Settlement Agreement with NMC.
The principal terms of the Settlement Agreement:
A. Distribution of Cash
NMC will transfer $600,000 to an escrow agent, to be released
to the Debtors on the earlier of:
(a) 91 days from the date on which a resolution of the
disputes between NMC and the HMA Entities is
consummated -- the Deadline Date -- or
(b) 120 days after the Effective Date, subject to the
condition precedent that, as of the Deadline Date, the
Debtors have not filed or participated in the filing of
an involuntary bankruptcy petition against the HMA
Entities.
B. Waiver and Release of Claims
NMC will withdraw and release its claims against the Debtors,
and the Debtors will execute a stipulation dismissing their
claims in the NMC Litigation and releasing their claims, other
than those under the Settlement Agreement.
The Stipulation will:
(a) resolve the NMC Litigation;
(b) extinguish all claims the Debtors have or could have
against the Interplead Funds;
(c) release all other claims of the Debtors against NMC and
Bruce Bloomstrom arising in connection with the NMC
Litigation, including but not limited to claims and
causes of action under Chapter 5 of the Bankruptcy
Code.
C. Covenants Relating to the HMA Entities
At any time prior to or on the Deadline Date, the Debtors will
not file or participate in an involuntary bankruptcy filing of
the HMA Entities. The Debtors will not assume, fund, pursue
through subrogation or otherwise litigate any claim that the
HMA Entities could have asserted against NMC in the NMC
Litigation. If the Debtors acquire ownership or control of
the HMA Entities while the NMC Litigation remains pending, the
Debtors will agree, on the HMA Entities' behalf, to a
dismissal of the NMC Litigation with prejudice, and NMC will
agree to a dismissal of its claims against the HMA Entities in
the NMC Litigation with prejudice.
D. Withdrawal of Pending Motions
The Settlement Agreement will resolve the Rule 3018 Motion,
the Abstention Motion, the NMC Claim and the Debtors'
Objection, and the NMC Stay Modification Motion.
E. Modification of the Automatic Stay
The automatic stay will be modified to the extent necessary to
permit the parties to seek to obtain entry of the stipulation
dismissing the NMC Litigation and to permit NMC to otherwise
continue to prosecute the NMC Litigation against all parties
except the Debtors.
F. Transfer of Liens to Proceeds
Liens against the Debtors' claims against NMC, including
attorney liens, will transfer to the proceeds of NMC's payment
to the Debtors.
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. 39;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
NEW BRITISH: Section 341(a) Meeting Slated for May 26, 2004
-----------------------------------------------------------
The United States Trustee will convene a meeting of New British
Woods Associates' creditors at 10:00 a.m., on May 26, 2004 in USBA
Meeting Room, Room 610 at, Two Hanover Square, 434 Fayetteville
St. Mall, Raleigh, North Carolina. This is the first meeting of
creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy
cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Jacksonville, Florida, New British Woods
Associates, is engaged in the business of operating an apartment
complex located in Durham County. The Company filed for chapter 11
protection on April 23, 2004 (Bankr. E.D.N.C. Case No.
04-01556). Trawick H. Stubbs, Esq., at Stubbs & Perdue represents
the Debtors in their restructuring efforts. When the Company
filed for protection from its creditors, it listed both estimated
debts and assets of over $10 million.
NOT JUST ANOTHER: Case Summary & 10 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Not Just Another Convenient Store, Inc.
P.O. Box 1227
Dacula, Georgia 30019
Bankruptcy Case No.: 04-67073
Chapter 11 Petition Date: April 30, 2004
Court: Northern District of Georgia (Atlanta)
Judge: Mary Grace Diehl
Debtor's Counsel: George M. Geeslin, Esq.
Suite 875, 3355 Lenox Road
Atlanta, GA 30326-1357
Tel: 404-841-3464
Fax: 404-816-1108
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $500,000 to $1 Million
Debtor's 10 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Lenox Property Investment $28,148
DeKalb Petroleum, Inc. $20,506
Gwinnett Co Tax Commissioner $13,952
Internal Revenue Service Payroll taxes $12,361
Eby-Brown Company $4,563
Core-Mark International $2,274
City of Buford $88
Wisconsin State Bank $80
Georgia Dept. of Revenue sales tax Unknown
Gwinnett Co Tax Commissioner inventory and Unknown
business tax
NUEVO ENERGY: First Quarter Net Income Drops to $7.2 Million
------------------------------------------------------------
Nuevo Energy Company (NYSE:NEV) reported income from continuing
operations for the first quarter 2004 of $7.2 million, or $0.35
per diluted share versus $12.7 million, or $0.65 per diluted share
in the year ago period.
The decline in income from continuing operations in the first
quarter 2004 versus the year ago period primarily reflects an
after-tax derivative loss of $3.4 million ($0.16 per diluted
share) and an after-tax loss on early extinguishment of debt of
$1.5 million ($0.07 per diluted share). The derivative loss is
attributable to losses on three-way crude oil derivative contracts
(with price ceilings of $31.00 per barrel) which are marked-to-
market through net income for the duration of the crude oil
contracts at a currently robust crude oil price strip. The loss on
early extinguishment of debt is due to the redemption of the
remaining $75.0 million of 9 1/2% Notes.
Net income was $7.1 million, or $0.35 per diluted share in the
first quarter 2004, compared to $25.7 million, or $1.33 per
diluted share in the first quarter 2003. The decline in net income
in the first quarter 2004 versus the year ago period reflects the
aforementioned items as well as income from discontinued
operations of $4.6 million ($0.24 per diluted share) and the
cumulative effect of a change in accounting principle of $8.5
million ($0.44 per diluted share) which were reported in the first
quarter 2003.
Net cash provided by operating activities was $15.9 million in the
first quarter 2004 compared to $47.1 million in the same period in
2003 due to working capital changes related to the timing of crude
oil liftings and payments in our Congo operations, and the annual
settlement of certain crude oil derivative contracts made in the
first quarter 2004. Discretionary cash flow, a non-GAAP financial
measure, was $43.0 million in the first quarter 2004 compared to
$44.3 million in the first quarter 2003 which included $4.5
million of discretionary cash flow from discontinued operations.
Production and Prices
Total production from continuing operations decreased 3% to 47.4
thousand barrels of oil equivalent (MBOE) per day in the first
quarter 2004 compared to 48.7 MBOE per day in the year ago period.
Production from our discontinued operations was 3.3 MBOE per day
in the first quarter 2003. Crude oil production of 41.6 thousand
barrels (MBbls) per day declined slightly from 42.1 MBbls per day
in the comparable period in 2003. The realized crude oil price
increased 9% to $23.83 per barrel in the first quarter 2004 versus
$21.83 per barrel in the year ago period. Included in the realized
crude oil prices are hedging losses of $4.44 per barrel in the
first quarter 2004 and $3.68 per barrel in the comparable period a
year ago.
Nuevo's first quarter 2004 natural gas production decreased 11% to
35.2 million cubic feet (MMcf) per day from 39.4 MMcf per day in
the first quarter 2003 due to a decline in production at the Pitas
Point Field, offshore California and a decline in production from
a prolific well in the Pakenham Field, West Texas which was placed
on production in the first quarter 2003. Nuevo's realized natural
gas price was relatively flat at $4.26 per thousand cubic feet
(Mcf) in the first quarter 2004 compared to $4.32 per Mcf in the
year ago period. Included in the realized natural gas price is a
hedging loss of $0.09 per Mcf in the first quarter 2004 and $0.48
per Mcf in the comparable period a year ago.
Costs and Expenses
Total costs and expenses in the first quarter 2004 were $72.5
million versus $65.3 million in the year ago period primarily
impacted by higher lease operating expense (LOE). LOE was $44.8
million in the first quarter 2004 compared to $39.3 million in the
year ago period. Excluding the natural gas cost and the increased
natural gas volume, lease operating expense was $31.4 million in
the first quarter 2004 versus $27.5 million in the comparable
period in 2003 due to the timing of well workovers offshore
California. Natural gas is used to generate steam which in turn
facilitates production of heavy oil onshore California. General
and administrative (G&A) costs increased to $7.8 million in the
first quarter 2004 versus $6.7 million in the same period in 2003
due to legal expenses and merger-related costs. DD&A increased to
$18.7 million in the first quarter 2004 compared to $17.4 million
in the year ago period due to the Unocal contingent payment buyout
in April 2004. The DD&A expense averaged $4.33 per barrel oil
equivalent (BOE) in the first quarter 2004 compared to $3.97 per
BOE in the year ago period. Interest expense declined 55% to $4.2
million in the first quarter 2004 compared to $9.3 million in the
first quarter 2003 due to the redemption of $259.6 million of our
9 1/2% Notes.
Balance Sheet
At March 31, 2004, total debt outstanding was $318.3 million
versus $355.0 million at year-end 2003. (Both periods include a
long-term liability to unconsolidated affiliate of $115.0
million.) At the end of the first quarter 2004, Nuevo's debt to
capital ratio, as defined in our credit agreement, declined to 34%
compared to 38% at year-end 2003. The fixed charge coverage ratio
improved to 5.4 times for the four quarters ending March 31, 2004
versus 5.0 times at year-end 2003.
Capital Expenditures
Capital expenditures in the first quarter 2004 were $11.4 million
compared to $16.9 million in the first quarter 2003.
About Nuevo Energy Company
Nuevo Energy Company is a Houston, Texas-based company primarily
engaged in the acquisition, exploitation, development, exploration
and production of crude oil and natural gas. Nuevo's producing
properties are located onshore and offshore California and in West
Texas. Nuevo is the largest independent producer of crude oil and
natural gas in California. To learn more about Nuevo, please refer
to the Company's internet site at http://www.nuevoenergy.com/
* * *
As reported in the Troubled Company Reporter's February 17, 2004
edition, Fitch Ratings has placed the debt ratings of Nuevo Energy
on Watch Positive following the announcement that Plains
Exploration & Production Company will acquire Nuevo. Currently,
Fitch rates Nuevo's senior subordinated debt 'B' and its trust
convertible securities 'B-'.
Plains anticipates issuing 37.4 million shares to Nuevo
shareholders and assuming $234 million of net debt and $115
million of Trust Convertible Securities. The transaction is
expected to close in the second quarter of 2004. The rationale for
the Watch Positive includes the size of the new entity, which will
approach 489 million barrels of oil equivalent from Nuevo's
current size of just over 200 million barrels. Proved developed
reserves will represent more than 70% of the total and 83% of the
total will be oil. Additionally, the new entity will have more
exploitation opportunities than existed for Nuevo on a stand-alone
basis.
OMNE STAFFING: Looks to Bederson & Company for Financial Advice
---------------------------------------------------------------
Omne Staffing, Inc., and its debtor-affiliates ask permission from
the U.S. Bankruptcy Court for the District Of New Jersey to employ
Bederson & Company, LLP as their financial advisors.
The Debtors tell the Court that they desire to retain Bederson to:
a. prepare the Debtors' financial information including, but
not limited to, Schedules, Monthly Operating Reports,
Statements of Financial Affairs and such other documents
that the Debtors are required to file under the Bankruptcy
Code;
b. provide advice on the Debtors' activities regarding cash
expenditures, receivable collections, asset sales and
projected cash requirements;
c. review, analyze and critique the Debtors' business plan
and financial projections, including underlying
assumptions to determine whether same are reasonable;
d. review of the Debtors' business expenses and provide
recommendations, if necessary, with respect to expense
reduction;
e. investigate what should be undertaken with respect to
prepetition acts, conduct, property, liabilities and
financial condition of the Debtors, their management and
creditors, including the operation of their business, and,
as appropriate, avoidance actions;
f. review and analysis of proposed transactions for which the
Debtors may seek Court approval;
g. assist with the preparation of a liquidation analysis; and
h. provide testimony, if necessary, in connection with
confirmation of a plan of reorganization or liquidation or
other contested matters.
Bederson current hourly rates are:
Designation Professional Billing Rate
----------- ------------ ------------
Senior Partner Edward P. Bond $375 per hour
Partners Timothy J. King $330 per hour
Dermott O'Neil $330 per hour
Matthew Schwartz $330 per hour
Managers Armondo Lopez $245 per hour
Anthony Cecil $200 per hour
Stephen Max $190 per hour
Joseph Puskas $190 per hour
Jay Lindenberg $190 per hour
Senior Accountants Robert Parnes $175 per hour
Harold Parnes $175 per hour
Joseph Sullivan $175 per hour
Anthony Busichio $175 per hour
Joan Forscher $175 per hour
Eugene Boohoff $175 per hour
Para Professionals Carol Popola $95 per hour
Lionel Parnes $95 per hour
Fabian Ochoa $70 per hour
Headquartered in ranford, New Jersey, Omne Staffing, Inc., filed
for chapter 11 protection on April 9, 2004 (Bankr. D. N.J. Case
No. 04-22316). John K. Sherwood, Esq., at Lowenstein Sandler
represents the Debtors in their restructuring efforts. When the
Company filed for protection from their creditors, they listed
both estimated debts and assets of over $10 million.
PARMALAT GROUP: Commissioner Administers Parma Football Club
------------------------------------------------------------
Parmalat Finanziaria SpA, in | Parmalat Finanziaria SpA in
Extraordinary Administration, | Amministrazione Straordinaria
communicates that its | comunica che la controllata
subsidiary Parma Associazione | Parma Associazione Calcio SpA
Calcio SpA, on 21 April 2004 | ha presentato in data 21
applied for insolvency status | aprile 2004 la richiesta di
to the Civil Court of Parma. | stato di insolvenza presso il
The Court accepted the | Tribunale Civile di Parma.
application and declared Parma | Il Tribunale ha accolto in
Associazione Calcio SpA | data odierna la richiesta
insolvent. | dichiarando lo stato di
| insolvenza del Parma
Parma Associazione Calcio | Associazione Calcio SpA.
SpA, under Legislative Decree |
no. 347 of 23 December 2003, by | Parma Associazione Calcio
decree of the Minister of | SpA, ai sensi del Decreto
[Productive Activities], was | Legge n. 347 del 23 dicembre
put under Extraordinary | 2003, con Decreto del
Administration on 23 April 2004 | Ministro delle Attivita
and Dr. Enrico Bondi was named | Produttive era stata ammessa
Extraordinary Commissioner of | in data 23 aprile 2004
the abovementioned company. | all'Amministrazione
| Straordinaria e il Dr. Enrico
| Bondi era stato nominato
| Commissario Straordinario
| della suddetta Societa.
For Sale
The soccer club is among the assets to be sold under Parmalat's
recovery plan outlined by Commissioner Bondi in March 2004.
Leading sports newspaper, Gazzetta dello Sport, valued the club
at EUR50,000,000, according to Reuters.
Creditor protection is expected to enhance the club's chances of
being sold, as this would mean it could reclaim assets
confiscated from it last month. Italy's tax collector, Agenzie
delle, had earlier confiscated assets belonging to the club for
failure to pay taxes amounting to EUR54,000,000.
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. 15; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PEABODY ENERGY: Re-Elects Four Directors in Annual Meeting
----------------------------------------------------------
Peabody Energy has announced the re-election of four members of
its board of directors, for three-year terms expiring in 2007, at
the company's annual meeting of stockholders held in St. Louis
Thursday.
Re-elected directors include William A. Coley, former President of
Duke Power; Irl F. Engelhardt, Chairman and Chief Executive
Officer of Peabody Energy; William C. Rusnack, former President
and Chief Executive Officer of Premcor, Inc.; and Alan H.
Washkowitz, Managing Director of Lehman Brothers Inc.
Peabody Energy Board Of Directors
B. R. (Bobby) Brown served as Chairman, President and Chief
Executive Officer of Consol Energy Inc. and its predecessor
companies from 1977 - 1999. He also was Senior Vice President of
DuPont, Consol's controlling shareholder, from 1982 - 1992. Mr.
Brown's experience includes Senior Vice President at Conoco and
President and Chief Executive Officer of Remington Arms Co., Inc.
He is currently a director of Remington Arms and Delta Trust Bank
and is a former director of PNC Bank and Carnegie Mellon
University. Mr. Brown is an inductee in the West Virginia Mining
Hall of Fame and a recipient of the Distinguished Service Award
from the National Mining Association.
William A. Coley served as President of Duke Power and retired in
February 2003 after a 37-year career with the organization. He was
named Senior Vice President of Customer Operations and elected to
the Duke Power board of directors in 1990, named President of the
Associated Enterprises Group in 1994 and elected President in
1997. Mr. Coley graduated from the Georgia Institute of Technology
with a bachelor's degree in electrical engineering. Mr. Coley is a
registered professional engineer in North Carolina and South
Carolina. He is a member of the North Carolina Economic
Development Board and co-chair of the Governor's Business Council
for Fiscal Reform. He has served as trustee of Queens University
of Charlotte and Union Theological Seminary in Richmond, Va. He is
also a director of CT Communications, Inc., SouthTrust Corporation
and British Energy plc.
Irl F. Engelhardt is Chairman and Chief Executive Officer of
Peabody Energy. He joined the company in 1979 after a decade of
management consulting experience and held various officer-level
positions prior to being named Chief Executive Officer in December
1990. His business experience includes: Group Executive and
Director of Hanson Industries; Co-Chief Executive Officer of The
Energy Group; Chairman of Cornerstone Construction and Materials;
Chairman of Suburban Propane; Chairman of Citizens Power; and
Chairman of Peabody Resources Limited (Australia). He received a
bachelor of science degree in accounting from the University of
Illinois in 1968 and a master's in business administration from
Southern Illinois University in 1971. Among a number of industry
leadership positions, he is Chairman of the Center for Energy and
Economic Development, Co-Chairman of the Coal-Based Generation
Stakeholders Group and the National Mining Association's
Sustainable Development Committee and Health Reform Committee and
a member of The Business Roundtable and the Conservation Fund's
Corporate Council. Mr. Engelhardt is also a Director of U.S. Bank
N.A. in St. Louis and serves on the board of a number of civic
organizations.
Dr. Henry Givens is President of Harris-Stowe State College. He
began his career in education as a teacher in the Webster Groves
School District, was named principal of the nation's first
prototype magnet school and assistant to the superintendent of
schools. He was the first African-American to serve as Assistant
Commissioner of Education in Missouri, holding the post for five
years. Dr. Givens earned his bachelor's degree at Lincoln
University, his master's degree at the University of Illinois and
his doctorate at Saint Louis University. He has participated in
post-doctoral studies in higher education administration at
Harvard University and has been recognized with dozens of
national, state and local awards, including two honorary
doctorates of Humane Letters from Lincoln University and St. Louis
University. He is affiliated with numerous educational
organizations and honor societies.
William E. (Wilber) James is a Founding Partner of RockPort
Capital Partners LLC, a venture fund specializing in energy and
environmental technology and advanced materials. He is also
Chairman of RockPort Group, an international oil trading and
investment banking company. Prior to joining RockPort, Mr. James
co-founded and served as Chairman and Chief Executive Officer of
Citizens Power LLC, a leading power marketer. Previously, Mr.
James was a co-founder of the non-profit Citizens Energy
Corporation and served as Chairman and Chief Executive Officer of
Citizens Corporation, its for-profit subsidiary, from 1987 to
1996. Mr. James holds a bachelor of arts degree from Colorado
College. He serves on the board of directors of the African
Wildlife Foundation, the National Peace Corps Association's
Advisory Council and the Cape Ann Historical Association.
Robert B. Karn III is a financial consultant and former managing
partner in financial and economic consulting with Arthur Andersen
in St. Louis. Before retiring from Andersen five years ago, Mr.
Karn served in a variety of accounting, audit and financial roles
over a 33-year career, including Managing Partner in charge of the
global coal mining practice from 1981 through 1998. He is a
Certified Public Accountant and has led a number of civic
organizations. Mr. Karn serves on the board of directors of
Natural Resource Partners, a coal-oriented master limited
partnership that trades on the New York Stock Exchange.
Henry (Jack) E. Lentz is an Advisory Director for Lehman Brothers
Inc. He joined Lehman Brothers in 1971 and became a Managing
Director in 1976. In 1988, Mr. Lentz left Lehman Brothers to serve
as Vice Chairman of Wasserstein Perella Group, Inc. In 1993, he
returned to Lehman as a Managing Director and served as head of
the firm's worldwide energy practice. In 1996, he joined the
Merchant Banking Group as a Principal and in 2003 became a
consultant to the Merchant Banking Group. Mr. Lentz is currently a
director of Rowan Companies, Inc. and Curbo Ceramics, Inc. Mr.
Lentz holds an MBA from the Wharton School of Business at the
University of Pennsylvania.
William C. Rusnack is the former President and Chief Executive
Officer of Premcor Inc. Prior to joining Premcor in April 1998,
Mr. Rusnack was President of ARCO Products Company, the refining
and marketing division of Atlantic Richfield Company. During his
31-year career at ARCO, he was also President of ARCO
Transportation Company and Vice President of Corporate Planning.
Mr. Rusnack is a member of the American Petroleum Institute as
well as a member of the Dean's Advisory Council of the Graduate
School of Business at the University of Chicago and the National
Council of the Olin School of Business at Washington University in
St. Louis. He serves on a number of civic and corporate boards,
including Sempra Energy, The Urban League of Metropolitan St.
Louis, the St. Louis Science Center and the St. Louis Opera
Theatre. He holds a bachelor of science in general chemistry from
Indiana University of Pennsylvania and an MBA from the University
of Chicago.
Dr. James R. Schlesinger served as U.S. Secretary of Energy, U.S.
Secretary of Defense and Central Intelligence Agency (CIA)
Director. He is currently Chairman of the Board of Trustees of the
MITRE Corporation and serves as Counselor to the Center for
Strategic and International Studies. Dr. Schlesinger was U.S.
Secretary of Energy from 1977 to 1979. He held senior executive
positions for three U.S. Presidents, serving as Chairman of the
U.S. Atomic Energy Commission from 1971 to 1973, Director of the
Central Intelligence Agency in 1973 and Secretary of Defense from
1973 to 1975. Prior positions include Assistant Director of the
Office of Management and Budget, Director of Strategic Studies at
the Rand Corporation, Associate Professor of Economics at the
University of Virginia and Board of Governors of the Federal
Reserve System. Dr. Schlesinger holds bachelor of arts, master's
and doctoral degrees from Harvard University. He is a trustee at
the Atlantic Council, Center for Global Energy Studies; a fellow
of the National Academy of Public Administration; and a member of
the American Academy of Diplomacy.
Dr. Blanche M. Touhill is Chancellor Emeritus and Professor
Emeritus at the University of Missouri - St. Louis. Dr. Touhill
began her career in education at Queens College, City University
of New York, before joining UMSL as an assistant professor. Dr.
Touhill was named Vice Chancellor for Academic Affairs in 1987 and
assumed the responsibilities of Interim Chancellor in 1990. She
was named Chancellor in 1991. Dr. Touhill holds bachelor's and
doctoral degrees in history and a master's degree in geography
from St. Louis University. Dr. Touhill has served on a number of
civic and corporate boards, including Trans World Airlines, Delta
Dental, the Urban League of St. Louis, Civic Progress and the
Missouri Botanical Gardens. In 1997, she was named the St. Louis
Citizen of the Year.
Sandra A. Van Trease is President and Chief Executive Officer of
UNICARE, one of the fastest-growing segments of Wellpoint Health
Networks, Inc. Wellpoint is a large health insurance company,
based in California, which last year purchased RightCHOICE Managed
Care, Inc. Ms. Van Trease held the positions of President and
Chief Operating Officer and previously Executive Vice President
and Chief Financial Officer of RightCHOICE. Prior to joining
RightCHOICE in 1994, she was a Senior Audit Manager with Price
Waterhouse. She is a Certified Public Accountant and Certified
Management Accountant. Ms. Van Trease serves on the boards of a
number of civic organizations in the St. Louis area and on U.S.
Bancorp's St. Louis board of directors.
Alan H. Washkowitz is a Managing Director of Lehman Brothers Inc.
and part of the firm's Merchant Banking Group, with responsibility
for the oversight of Lehman Brothers Merchant Banking Partners II
L.P. Mr. Washkowitz joined Kuhn Loeb & Co. in 1968 and became a
general partner of Lehman Brothers in 1978 when Kuhn Loeb & Co.
was acquired. Prior to joining the Merchant Banking Group, Mr.
Washkowitz headed Lehman Brothers' Financial Restructuring Group.
He is currently a director of CP Kelco Inc., L-3 Communications
Corporation and K&F Industries, Inc. Mr. Washkowitz holds an MBA
from Harvard University and a Juris Doctorate from Columbia
University.
About Peabody Energy
Peabody Energy (NYSE: BTU) is the world's largest private-sector
coal company, with 2003 sales of 203 million tons of coal and $2.8
billion in revenues. Its coal products fuel more than 10 percent
of all U.S. electricity and more than 2.5 percent of worldwide
electricity.
As reported in the Troubled Company Reporter's March 22, 2004
edition, Fitch Ratings has assigned a 'BB' rating to Peabody
Energy's (BTU) new $250 million senior unsecured notes due 2016.
At the same time Fitch affirms Peabody's 'BB+' rating on the
revolving credit facility and bank term loan and the 'BB' rating
on its $450 million senior unsecured notes due 2013. The Rating
Outlook remains Positive.
Also, as previously reported, Standard & Poor's Ratings Services
affirmed all its ratings on Peabody Energy Corp. and assigned its
'BB-' rating to the company's $200 million senior unsecured notes
due 2016. In addition, Standard & Poor's assigned its '1' recovery
rating to Peabody's $1.3 billion senior secured credit facility.
This and the existing 'BB+' rating on the credit facility (which
is one notch higher than the corporate credit rating) indicate a
high expectation of full recovery of principal in the event of a
default.
"The ratings on St. Louis, Mo.-based Peabody Energy Corp. reflect
its aggressive financial leverage, including its significant debt-
like liabilities," said Standard & Poor's credit analyst Thomas
Watters. "The ratings also reflect the company's leading market
position; its substantial, diversified reserve base; and
contractual coal sales."
PEAK SPEED COMM: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Peak Speed Communications, Inc.
1625 Airport Road
P.O. Box 5019
Breckenridge, Colorado 80424
Bankruptcy Case No.: 04-19246
Type of Business: The Debtor provides Netbeam and other fixed
wireless broadband providers with state of the
cell site and customer deployment equipment and
services. See http://www.peakspeed.com/
Chapter 11 Petition Date: May 3, 2004
Court: District of Colorado (Denver)
Judge: A. Bruce Campbell
Debtor's Counsel: Duncan E. Barber, Esq.
Bleging Shapiro & Burrus LLP
4582 South Ulster Street Parkway, Suite 1650
Denver, CO 80237
Tel: 720-488-0220
Fax: 720-488-7711
Estimated Assets: $500,000 to $1 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
First United Bank $585,000
8095 E. Belleview Avenue
Englewood, CO 80111
Qwest Settlement NB $155,000
Internal Revenue Service $125,000
Kutner Miller Kearns Trade payable $75,000
Ford Credit Trade payable $34,700
JPL Services LLC Trade payable $34,032
United Professional Trade payable $22,250
Management
Sender & Wasserman Trade payable $20,665
Qwest Trade payable $20,151
Time Warner Telecom Trade payable $19,167
Qwest Trade payable $19,118
Qwest Trade payable $18,538
Qwest Trade payable $15,972
Bank One Trade payable $14,000
Qwest Trade payable $13,321
Advanced Wireless Solutions, Trade payable $12,112
Qwest Trade payable $12,082
DragonWave, Inc. Trade payable $12,077
Inc.
OCRM Trade payable $10,077
GMAC #1008 Trade payable $9,300
PHARMANETICS INC: Stock Now Trading on the OTC Bulletin Board
-------------------------------------------------------------
PharmaNetics, Inc. (NASDAQ-SmallCap: PHAR) announced that it has
been notified by NASDAQ that, as a result of its failure to meet
the stockholders' equity, market value of securities or minimum
net income listing requirements, the common stock will be delisted
from the NASDAQ SmallCap Market on May 13, 2004.
PharmaNetics' common stock continues trading on the OTC Bulletin
Board under the same PHAR trading symbol, without interruption,
following the delisting.
PharmaNetics, Inc. conceived the term "theranostics," defining an
emerging field of medicine that enables physicians to monitor the
effect of antithrombotic agents in patients being treated for
angina, myocardial infarction (heart attack), stroke, and
pulmonary and arterial emboli. PharmaNetics formerly developed,
manufactured and marketed rapid turnaround diagnostics to assess
blood clot formation and dissolution. PharmaNetics tests are based
on its proprietary, dry chemistry Thrombolytic Assessment System.
* * *
As reported in the Troubled Company Reporter's April 23, 2004
edition, PharmaNetics, Inc. (NASDAQ-SmallCap: PHAR) announced that
its 2003 financial statements contain a going concern
qualification from the Company's auditors. At December 31, 2003,
the Company's cash and cash equivalents totaled $8.5 million,
which the Company believes is sufficient to finance its legal
proceedings against Aventis Pharmaceuticals.
RF MICRO: S&P Affirms B+ Rating & Changes Outlook to Stable
-----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating and other ratings on Greensboro, North Carolina-
based RF Micro Devices Inc. (RFMD), and revised the ratings
outlook to stable from negative.
"The action recognized improving business conditions and a growing
business base, resulting in improved profitability and stronger
debt-protection measures. The ratings continue to reflect the
company's relatively concentrated revenue base, high debt levels,
and rapid technology and marketplace evolution, as well as its
good position in its niche market and strong customer
relationships," said Standard & Poor's credit analyst Bruce Hyman.
RFMD supplies power amplifiers for cellular phones--about 40% of
sales--and other semiconductors for wireless handsets, principally
for global system for mobile communications (GSM) technology. The
company has about a 50% share of the cellphone power amplifier
market, and has been gaining share in the industry. Additional
served markets include cellular base stations, wireless local-area
networks (LANs) and Bluetooth short-range radio, totaling about 6%
of sales. The majority of products are based on gallium-arsenide
(GaAs) technology, manufactured in-house, while the company uses
foundries to manufacture its non-GaAs products. Customer
concentration is high, with Nokia Corp. about 30% of revenues,
although this concentration has improved from the 45% range
several quarters ago; two other customers were each above 10% of
sales in the March quarter. Technology changes in the cellphone
industry are quite rapid, potentially challenging the company's
R&D resources.
Revenues declined 15% sequentially in March, a mix of normal
seasonality and the company's still-high reliance on Nokia, whose
cell phones lost some market share in the quarter. Still, sales
were 18% above prior-year results. RFMD has been gaining power
amplifier market share, and is investing in wireless LAN and
Bluetooth technologies, intending to capture share in those spaces
as well. EBITDA was about $28 million in the quarter, 17% of
sales. Still, profitability has varied substantially in recent
quarters, with single-digit margins in the year-ago period.
SBA COMMS: Reports Improved Revenues & Profits for First Quarter
----------------------------------------------------------------
SBA Communications Corporation (Nasdaq: SBAC) reported results for
the first quarter ended March 31, 2004. Highlights of the results
include:
* Site leasing revenue and gross profit growth of 9% and 17%,
respectively
* Site leasing gross profit margin of 70%
* Adjusted EBITDA growth of 14%
* $145.8 million of high-yield debt redemption/repurchases
year-to-date
* Increased 2004 guidance for cash flow from operating
activities
Operating Results
Total revenues in the first quarter of 2004 were $57.3 million,
compared to $51.7 million in the year earlier period. Site leasing
revenue of $33.9 million and site leasing gross profit (tower cash
flow) of $23.7 million were up 9.3% and 16.9%, respectively, over
the year earlier period. Same tower revenue and site leasing gross
profit growth on the 3,022 towers owned at March 31, 2003 and 2004
were 10% and 15%, respectively. Site leasing gross profit margin
in the first quarter was a record 70.0%, a 110 basis point
sequential improvement over the fourth quarter of 2003 and a 460
basis point improvement over the first quarter of 2003. Site
leasing contributed 97.1% of the Company's gross profit in the
first quarter of 2004.
Site development revenues were $23.4 million compared to $20.7
million in the year earlier period. Site development gross profit
margin was 3.0% in the first quarter, compared to 9.6% in the year
earlier period. As a result of the Company's periodic review of
the services business segment, its strategic benefits and minimum
profitability targets, the Company has decided to sell its
services business in the western portion of the United States. In
the first quarter, this portion of the services segment produced
$6.5 million of site development revenue and $150 thousand of site
development gross profit.
Selling, general and administrative expenses were $7.3 million in
the first quarter, compared to $8.2 million in the year earlier
period. Net loss from continuing operations for the first quarter
was ($48.0) million or ($.86) per share, compared to ($32.8)
million or ($.64) per share in the year earlier period. Net loss
in the first quarter of 2004 was ($47.9) million, or ($.86) per
share, compared to a net loss of ($33.8) million, or ($.66) per
share, in the year earlier period. The Company's refinancing
activities contributed materially to the first quarter net loss.
Excluding $22.2 million of charges relating to the write-off of
deferred financing fees and extinguishment of debt, first quarter
2004 net loss per share from continuing operations was ($.46) and
net loss per share was ($.46). Adjusted EBITDA was $17.2 million,
compared to $15.1 million in the year earlier period, or a 13.8%
increase. Adjusted EBITDA margin was 30.1%, a 100 basis point
improvement over the prior quarter.
Net cash interest expense and non-cash interest expense, was $13.7
million and $7.3 million, respectively, in the first quarter of
2004, compared to $17.0 million and $5.1 million in the year
earlier period.
Cash provided by operating activities for the three months ended
March 31, 2004 was $2.5 million, compared to a use of cash of $4.8
million for the three months ended March 31, 2003. First quarter
2004 results included a $15.2 million benefit from the conversion
of a short-term investment into cash.
Investing Activities
During the quarter, SBA sold 10 towers, ending the quarter with
3,083 towers. Excluding 51 towers which were held for sale, SBA
owned, as of March 31, 2004, 3,032 towers in continuing
operations. Capital expenditures for the first quarter were $2.0
million, down from $6.1 million in the year earlier period.
Financing Activities and Liquidity
SBA ended the first quarter with $275 million outstanding under
its $400 million senior credit facility, $282.5 million of 93/4%
senior discount notes, $339.1 million of 10 1/4% senior notes, and
net debt of $867.2 million. Debt amounts as of March 31, 2004
exclude approximately $4.4 million of deferred gain from a
termination of a derivative in 2002. In the first quarter, SBA
repurchased and/or redeemed the remaining $65.7 million in
principal amount of its 12% senior discount notes, and repurchased
$67.3 million of its 10 1/4% senior notes. The Company paid cash
of $61.9 million plus accrued interest and issued 1.5 million
shares of its Class A common stock. Cash payments were funded
through the December issuance of 9 3/4% senior discount notes by
the Company and SBA Telecommunications, Inc. as co-issuers and the
January refinancing of its senior credit facility. Liquidity at
March 31, 2004 was $59.3 million, consisting of $29.5 million of
cash and restricted cash, and $29.8 million of additional
availability under the senior credit facility.
Since March 31, 2004, the Company has repurchased in open market
purchases an additional $12.8 million principal amount of its 10
1/4% senior notes, reducing the amount outstanding to $326.3
million. The Company paid cash of $12.6 million plus accrued
interest.
"We were very pleased with our first quarter results in the
leasing segment of our business," commented Jeffrey A. Stoops,
President and Chief Executive Officer. "Our customers were and
continue to be very active. In terms of leasing activity, it was
our most productive quarter in almost two years, and we ended the
quarter with the highest backlog of pending leases in eighteen
months. We believe the leasing environment will continue to be
strong throughout 2004. As a result of first quarter results and
pending activity, we are raising our full year 2004 site leasing
revenue and site leasing gross profit guidance.
"Our cash flow profile continued to improve in the quarter, driven
primarily by our actions to retire our high-yield indebtedness and
reduce our average cost of debt. As a result of these and other
activities, we have also increased our full year 2004 guidance for
cash flow from operating activities. We intend to pursue
additional debt retirement or refinancing opportunities to
accelerate our expected organic growth in future cash flows."
Outlook
The Company has provided its Second Quarter 2004 and updated its
Full Year 2004 Outlook for anticipated results from continuing
operations. The Full Year 2004 Outlook has been increased in the
areas of site leasing revenue, site leasing gross profit, Adjusted
EBITDA and cash flow from operating activities. The Full Year 2004
Outlook has been decreased in the areas of site development
revenue and total revenues to reflect the Company's decision to
exit its services business in the western portion of the United
States, and in net cash interest expense to reflect the positive
impact of the Company's high-yield debt retirement, repurchases
and senior credit facility refinancing activity.
About SBA Communications
SBA is a leading independent owner and operator of wireless
communications infrastructure in the United States. SBA generates
revenue from two primary businesses - site leasing and site
development services. The primary focus of the Company is the
leasing of antenna space on its multi-tenant towers to a variety
of wireless service providers under long-term lease contracts.
Since it was founded in 1989, SBA has participated in the
development of over 25,000 antenna sites in the United States.
For more information about SBA, go to http://www.sbasite.com/
* * *
As reported in the Troubled Company Reporter's March 9, 2004
edition, Standard & Poor's Ratings Services raised its corporate
credit rating on Boca Raton, Florida-based wireless tower operator
SBA Communications Corp. to 'CCC+' from 'CCC'. The senior
unsecured debt rating, which was raised to 'CCC-' from 'CC',
remains two notches below the corporate credit rating due to the
material amount of priority obligations relative to the estimated
asset value. These ratings were removed from CreditWatch, where
they were placed with positive implications on Jan. 23, 2004. The
ratings outlook is stable.
"The upgrades are based on improved liquidity prospects as the
result of the company refinancing its old credit facility with the
$400 million bank credit facility," explained Standard & Poor's
credit analyst Michael Tsao. "Without the refinancing, the company
faced significant debt amortization in each of the years during
the 2004-2007 time period. However, with minimal amortization on
the new bank facility, the risk of SBA Communications having a
liquidity issue before 2008 has been substantially lessened."
Nonetheless, ratings on SBA Communications still reflect its
substantial leverage, which is a consequence of its past expansion
activities. During the 1999-2001 time frame, the company incurred
more than $650 million of debt to finance the acquisition and
building of about 3,500 towers, based on the expectation that
growth in wireless services would strongly bolster demand for
limited tower space. However, as wireless carriers scaled back
their capital spending beginning in 2001, largely in response to
market conditions, SBA Communications was unable to grow EBITDA
fast enough and reduce leverage despite trimming expenses and
selling more than 780 towers in 2003. At Dec. 31, 2003, leverage
was an aggressive 13x debt to annualized EBITDA (12.7x after
adjusting for operating leases).
SELAS: Says Cash Enough to Meet Operating Needs through Apr. 2005
-----------------------------------------------------------------
Selas Corporation of America is an international firm with
operations and sales that engages in the design, development,
engineering and manufacturing of micro-miniature components,
systems and molded plastic parts primarily for the hearing
instrument, electronics, telecommunications, computer and medical
equipment industries. The Company, headquartered in Arden Hills,
Minnesota has facilities in California, Singapore, and Germany,
and operates directly or through subsidiaries. Within discontinued
operations, the Company has facilities in Pennsylvania and Japan.
The Company is a Pennsylvania corporation that was funded in 1930.
The Company did not meet certain covenants during all quarters of
2003, for which it obtained waivers from the bank. At December 31,
2003, Selas was in compliance with all covenants of the amended
agreement.
Selas believes that the amended credit facility combined with
funds expected to be generated from operations, the available
borrowing capacity through its revolving credit loan facilities,
the potential sale of certain assets, curtailment of the dividend
payment and control of capital spending will be sufficient to meet
its anticipated cash requirements for operating needs through
April 1, 2005.
However, the Company's ability to pay the principal and interest
on its indebtedness as it comes due will depend upon current and
future performance. Performance is affected by general economic
conditions and by financial, competitive, political, business and
other factors. Many of these factors are beyond Selas' control.
If, however, the Company does not generate sufficient cash or
complete such financings on a timely basis, it may be required to
seek additional financing or sell equity on terms, which may not
be as favorable as it could have otherwise obtained. No assurance
can be given that any refinancing, additional borrowing or sale of
equity will be possible when needed, or that Selas will be able to
negotiate acceptable terms. In addition, access to capital is
affected by prevailing conditions in the financial and equity
capital markets, as well as the Company's financial condition.
FINANCIAL HIGHLIGHTS
For the Year Ended December 31
2003 2002
Sales, net $ 36,202,000 $ 34,975,000
============ ============
Loss from continuing operations,
net of income tax (3,961,000) (1,582,000)
Loss from discontinued
operations, net of income tax (1,013,000) (10,544,000)
------------ ------------
Net loss before change in accounting
principle (4,974,000) (12,126,000)
------------ ------------
Cumulative effect of change in
accounting principle(b) -- (9,428,000)
------------ ------------
Net loss $ (4,974,000) $(21,554,000)
============ ============
Working capital $ 1,948,000 $ 5,821,000
Total assets $ 35,064,000 $ 63,765,000
Total shareholders' equity $ 12,436,000 $ 16,616,000
The Company has 401 shareholders.
SPECTRUM PHARMA: Resumes Trading on NASDAQ National Market
----------------------------------------------------------
Spectrum Pharmaceuticals, Inc. (Nasdaq: SPPI) announced that its
application for listing on the NASDAQ National Market System (NMS)
has been approved. The Company's Common Stock, which currently
trades on the NASDAQ SmallCap Market, will be eligible for trading
on NASDAQ NMS, with the change expected to be effective on Friday,
May 7, 2004. The Company's ticker symbol will remain SPPI.
"Return to NASDAQ National Market was one of Spectrum's stated
goals for 2004, and I am pleased to learn from NASDAQ that our
application has been approved," said Rajesh C. Shrotriya, M.D.,
Chairman, Chief Executive Officer and President of Spectrum. "We
believe this is another important achievement for Spectrum,
especially in light of how far we have come as a company in the
past 20 months -- from a position where we had hardly any cash,
negative working capital and faced a possible NASDAQ delisting, to
one where we have three anti-cancer drugs in late-stage clinical
development, with one in phase 3 and two in phase 2, three
Abbreviated New Drug Applications for generic drugs under review
by the FDA, a stronger cash position of more than $45 million in
cash and equivalents, and now a NASDAQ National Market Listing.
This listing requires fulfillment of more stringent listing
requirements than the SmallCap market, including a minimum bid
price, minimum market capitalization, certain shareholders equity,
required minimum number of market makers, etc. We believe that a
National Market listing will enhance our visibility among
brokerage firms and institutional investors, as this listing is a
regulatory requirement for many of them. An expanded and more
diverse investor base is an important part of our strategy to
deliver shareholder value."
About Spectrum Pharmaceuticals
Spectrum Pharmaceuticals is an oncology-focused pharmaceutical
company engaged in the business of acquiring, developing and
commercializing proprietary drug products which have a primary
focus on the treatment of cancer and related disorders, as well as
generic drug products in various indications. The Company's lead
drug, satraplatin, is a phase 3 oral, anti-cancer drug being co-
developed with GPC Biotech AG, and has been granted fast-track
status by the United States Food and Drug Administration (FDA).
Elsamitrucin, a phase 2 drug, will initially target non-Hodgkin's
lymphoma. EOquin(TM), a phase 2 drug, is being studied in the
treatment of superficial bladder cancer. In addition, the Company
has filed with the FDA three Abbreviated New Drug Applications for
the generic drugs ciprofloxacin, carboplatin and fluconazole. For
additional information, including SEC filings, visit the Company's
web site at http://www.spectrumpharm.com/
* * *
The report of Spectrum Pharmaceuticals' independent public
accountants, Arthur Andersen LLP, for the For the fiscal year
ended December 31, 2003, contains this paragraph:
"The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 1 to the financial statements, the Company has suffered
recurring losses from operations and has a net capital deficiency
that raise substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are
also described in Note 1. The financial statements do not include
any adjustments relating to recoverability and classification of
asset carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to
continue as a going concern."
SPIEGEL GROUP: Wants Until September 7 to File Chapter 11 Plan
--------------------------------------------------------------
The Spiegel Group Debtors ask the Court to further extend their
exclusive periods to:
(i) file a Chapter 11 plan through and including September 7,
2004; and
(ii) solicit acceptances for that plan through and including
November 8, 2004.
James L. Garrity, Jr., Esq., at Shearman & Sterling, LLP, in New
York, notes that the Debtors have taken substantial steps to
reduce costs and improve operations throughout their three
Merchant Divisions and support subsidiaries. Throughout the
Chapter 11 process, the Debtors have examined their restructuring
alternatives to maximize creditors' recoveries, and have
regularly consulted with the Creditors Committee. Spiegel,
Inc.'s Restructuring Committee, which is composed of two
independent directors and Spiegel's Acting Chief Executive
Officer, has played an active role in the formulation of
potential exit strategies. The members of the Restructuring
Committee have participated in several meetings and
teleconferences with the Creditors Committee with respect to
these strategies.
Regarding the next steps in formulating a plan of reorganization,
the Debtors have announced that they have instructed their
investment bankers, Miller Buckfire Lewis Ying & Co., to solicit
parties who may be interested in acquiring the Eddie Bauer
business. With respect to the Newport News business, the Debtors
have entered into an asset sale transaction with Pangea
Acquisition 8 Limited and an auction and sale hearing for the
Newport News business are presently scheduled on May 11, 2004.
Mr. Garrity also informs the Court that the Debtors are in
preliminary negotiations with a party interested in purchasing
the Spiegel Catalog business. The Debtors cautioned that there
can be no assurance that any purchase transaction with Spiegel
Catalog, Inc., will occur. The Debtors also stated that
sufficient uncertainty exists as to whether a potential buyer
would assume the majority of the current Spiegel Catalog work
force. Therefore, the Debtors are in the process of
rationalizing the Spiegel Catalog business in the event a
purchase transaction, if any, should be negotiated with an
interested party and then approved by the Court, and to minimize
the ongoing operating losses of the Spiegel Catalog business.
These rationalization efforts include the lay-off of around 200
employees at Spiegel Catalog and Spiegel, which takes place over
the two-month period beginning April 20, 2004.
Given the size and complexity of their Chapter 11 cases and the
business and restructuring matters that must be resolved, as well
as the constructive steps that they have taken to date, the
Debtors require additional time to create and build acceptance
for a plan, Mr. Garrity says.
The Debtors have continued take the necessary steps to permit
them to begin the process of formulating a reorganization plan.
Although significant progress has been made, much work remains to
be done. The Creditors Committee has indicated its consent to
the proposed extension of the Exclusive Periods because the
extension would allow the Debtors to complete the Eddie Bauer
marketing and sale process, while simultaneously developing a
consensual plan of reorganization, without being potentially
distracted by alternative plans of reorganization being filed by
other parties-in-interest.
Mr. Garrity contends that the requested extension will not harm
creditors but rather maximize the value of the Debtors' estates
for the benefit of creditors and other stakeholders. An
extension of the Exclusive Periods would enable the Debtors to
harmonize the multitude of diverse and competing interests in a
reasoned and well-balanced manner.
The Court will convene a hearing on May 11, 2004 to consider the
Debtors' request. Accordingly, in a bridge order, Judge
Blackshear extends the Debtors' Exclusive Plan Proposal Period to
May 12, 2004.
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. 24;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
SPIEGEL GROUP: April 2004 Sales Down by 10% to $104.4 Million
-------------------------------------------------------------
The Spiegel Group reported net sales of $104.4 million for the
four weeks ended May 1, 2004, a 10 percent decrease compared to
net sales of $115.6 million for the four weeks ended April 26,
2003.
For the 17 weeks ended May 1, 2004, total sales declined 19
percent to $426.8 million from $529.2 million in the same period
last year.
The company also reported that comparable-store sales for its
Eddie Bauer division decreased 1 percent for the four-week period
and 2 percent for the 17-week period ended May 1, 2004, compared
to the same periods last year.
The Group's net sales from retail and outlet stores fell 15
percent for the month compared to the same period last year,
primarily due to the impact of store closings. The company
operated 435 stores at the end of April 2004 compared to 556
stores at the end of April 2003. Most of the store closings
resulted from actions taken as part of the company's ongoing
reorganization process.
The Group's direct net sales (catalog and e-commerce) decreased 4
percent for the month compared to the same period last year,
reflecting lower sales for Eddie Bauer and Spiegel Catalog, offset
somewhat by sales growth for Newport News. The sales increase for
Newport News was primarily driven by higher customer response to
its catalog mailings.
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.
STALLION USA LLC: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Stallion USA LLC
P.O. Box 292674
Los Angeles, California 90029
Bankruptcy Case No.: 04-08167
Chapter 11 Petition Date: April 23, 2004
Court: Middle District of Florida (Tampa)
Judge: Thomas E. Baynes Jr.
Debtor's Counsel: Bruce M. Harlan, Esq.
2963 Gulf To Bay Boulevard, Suite 265
Clearwater, FL 33759
Tel: 727-725-7444
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $500,000 to $1 Million
The Debtor did not file a list of its 20-largest creditors.
STELCO INC: Posts $563 Million Net Loss for the Full Year 2003
--------------------------------------------------------------
Stelco Inc. (TSX:STE) released its 2003 Annual consolidated
audited financial statements and its first quarter 2004 unaudited
consolidated financial statements together with Management's
Discussion and Analysis, disclosure which assists readers to
understand the Corporation's financial results and condition.
On January 29, 2004, Stelco Inc. obtained an order from the
Superior Court of Justice providing creditor protection under the
Companies' Creditors Arrangement Act (CCAA). On the same day,
Stelco also obtained ancillary protection in the U.S. pursuant to
an order made under Section 304 of the U.S. Bankruptcy Code. The
Canadian order granting protection covers Stelco Inc. and its
subsidiaries, Stelpipe Ltd., Stelwire Ltd., CHT Steel Company
Inc., and Welland Pipe Ltd. as Applicants. Other subsidiaries,
including Alta Steel Ltd., Norambar Inc., and Stelfil Lt‚e are not
Applicants in the proceedings.
For the year ended December 31, 2003, Stelco reported a net loss
of $563 million ($5.61 per common share) compared with restated
net earnings of $1 million ($0.09 loss per common share) for the
year ended December 31, 2002.
In respect to the fourth quarter 2003, the net loss was $395
million ($ 3.89 per common share) on production of 1,329,000 semi
finished tons and shipments of 1,273,000 tons. This compares to
fourth quarter 2002 (restated) net earnings of $20 million ($0.17
per common share) on production of 1,205,000 tons and shipments of
1,083,000 tons.
In fourth quarter 2003, the Corporation recorded two significant
non-cash items: $87 million pre-tax charge to write off the
remaining net book value of the plate mill assets and a $304
million future income tax asset valuation allowance, reflecting
the probability that, under the Corporation's existing cost
structure, these future income tax assets will not be utilized.
As a result of a change in accounting policy with respect to blast
furnace relines in 2003, the 2002 Financial Statements have been
restated as necessary to make them comparative to the Financial
Statements issued in 2003.
Cash usage for the year 2003 amounted to $114 million and, as a
result, the Corporation's net short-term debt increased from $78
million to $192 million.
Major elements of the cash usage were:
- Cash losses before working capital changes - $69 million.
- Capital spending - $33 million.
- Long-term debt repayments - $52 million.
Partly offsetting the above was $52 million provided by working
capital changes with the two main contributing factors being a
$188 million reduction in inventory and a $115 million reduction
in accounts payable and accrued. The significant reduction in
accounts payable was mainly due to suppliers reducing or
eliminating credit terms as a result of the Corporation's
deteriorating financial condition.
As at December 31, 2003, net liquidity on a consolidated basis was
$163 million, consisting of $355 million of available lines of
credit plus $23 million of cash and cash equivalents, less $215
million of line of credit drawings.
Stelco Inc. on a parent company basis, had net liquidity of $125
million based on $325 million of the $350 million credit facility
being available. The $25 million reduction in credit availability
was caused by $10 million of issued letters of credit and $15
million arising from insufficient eligible collateral caused by
low year end accounts receivable. Subsequent to the year-end 2003,
eligible collateral increased, reinstating the $15 million.
First Quarter 2004
Stelco Inc. also reported a net loss of $36 million ($0.36 per
common share) in first quarter 2004 compared with a loss of $44
million ($0.46 per common share) in first quarter 2003. Included
in the first quarter loss is $23 million related to accounting for
"Reorganization items" as a result of the January 29, 2004 filing
under CCAA, primarily consisting of an adjustment of the
convertible debenture balance to the anticipated claim amount and
professional fees. Production in the first quarter 2004 was
1,366,000 semi-finished tons, up from the 1,329,000 tons for the
previous quarter and 1,301,000 tons for the same period in 2003,
primarily due to improved market demand, consolidation in the U.S.
steel industry, and increased shipments to the automotive sector.
On a consolidated basis, cash usage in the first quarter 2004
amounted to $31 million bringing net short-term debt to $223
million. This included a reclassification of $16 million related
to the refinancing of the bank debt at Norambar Inc. (formerly
Stelco McMaster). The balance was mainly associated with the
entities in protection under CCAA consisting of $4 million cash
usage from operating activities (including working capital), $10
million for a Directors' and Officers' Trust, and $3 million of
capital spending. Working capital (included in the $4 million cash
usage from operating activities) used $27 million of cash in the
first quarter 2004 with notable items being $106 million increase
in accounts receivable due to higher sales that were partly offset
by a $65 million increase in accounts payable as the Corporation
began to restore trade credit after its filing for CCAA.
At March 31, 2004, the Corporation's consolidated net liquidity
was $243 million compared with $163 million as at December 31,
2003. The main change in available credit was the $75 million DIP
facility acquired as part of the Corporation's CCAA filing. The
net liquidity of the CCAA applicants at March 31, 2004, was $196
million, compared with $126 million as at December 31, 2003.
As a result of the restructuring under CCAA, the Corporation has
and will continue to record reorganization and restructuring items
directly associated with the restructuring. These "reorganization
and restructuring items" represent revenues, expenses, assets and
liabilities that can be directly associated with the
reorganization and restructuring of the business under CCAA, and
do not relate to the normal operating activities of the
Corporation.
Courtney Pratt, President and Chief Executive Officer, stated,
"The results for 2003 show clearly that the company had no choice
but to seek protection under the Companies' Creditors Arrangement
Act (CCAA). That does not mean, however, that Stelco can't emerge
as a viable and competitive entity through this process."
He also stated, "The Board and the newly constituted management
group are committed to a successful restructuring. The elements of
a restructuring plan will be determined through discussions to be
held with all stakeholders. We intend to deal with these groups in
a fair and responsible manner and regret the impact the Court-
supervised restructuring has had on all constituencies. A
successful restructuring offers the prospect of greater benefit
than any other available alternative. We believe Stelco can emerge
as a strong industry player. We recognize that everyone will be
contributing to the restructuring through concessions and
compromises that will be necessary. Perhaps shareholders will feel
the impact of the restructuring most. Like many restructurings,
shareholders of Stelco are unlikely to receive any real value for
their shares at the end of the day."
Stelco Inc. is a large, diversified steel producer. Stelco is
involved in all major segments of the steel industry through its
integrated steel business, mini-mills, and manufactured products
businesses. Consolidated net sales in 2003 were $2.7 billion.
To learn more about Stelco and its businesses, visit its Web site
at http://www.stelco.ca/
TARGETED RETURN: S&P Assigns BB- Rating to Series HY-2004-1 Notes
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' rating to
Targeted Return Index Securities Trust (TRAINS) Series HY-2004-1's
$799.8 million certificates.
The rating reflects the average credit quality of the underlying
securities, which consist of 86 high-yield corporate bonds, and
the 'A+' rating of the borrower under the securities-lending
agreement, Lehman Brothers Inc.
Interest and principal distributions to the certificateholders
will be made in the amounts received by the trust from the
underlying securities.
The final scheduled distribution date is Aug. 1, 2015.
TEXAS PETROCHEM: Exits Bankruptcy with New $130 Million Financing
-----------------------------------------------------------------
Texas Petrochemicals LP (TPC) announced that it has closed on its
new $130 million exit financing package, and therefore, has
emerged from bankruptcy.
The company's new financing package consists of the following:
1) the sale of $20 million in new common equity provided by a
group comprised of Castlerigg Master Investments, Ltd., an
affiliate of Sandell Asset Management Corp., RCG Carpathia
Master Fund, Ltd., an affiliate of Ramius Capital Group, LLC
and unsecured creditors that elected to participate in a
rights offering provided in the plan of reorganization;
2) the issuance of $60 million in new 7.25 percent Senior
Secured Convertible Notes due in 2009, which were purchased
by the Sandell and Ramius funds and unsecured creditors
electing to participate in the rights offering; and
3) a $50 million revolving credit facility provided by LaSalle
Business Credit, Inc. and Congress Financial Corporation.
The initial common stock ownership of the reorganized TPC, after
the closing of the above financings and prior to any conversion of
the Convertible Notes, will be approximately 20 percent by
Sandell/Ramius and 80 percent by the previous unsecured creditors
of TPC. Sandell/Ramius will hold approximately 63 percent of the
Convertible Notes initially and the previous unsecured creditors
will hold 37 percent. The Convertible Notes are exercisable at the
option of the holder, at any time, on the basis of approximately
107 new common shares for each $1,000 face amount of Convertible
Notes held. Over the next several months, the company will
endeavor to register the common stock and Convertible Notes with
the Securities and Exchange Commission and list the common stock
for trading with the NASDAQ National Market System.
All pre petition bankruptcy obligations will be satisfied in
conjunction with the closing, after which the Company will have
approximately $32 million available under the new revolving credit
facility for general corporate purposes.
"We are extremely pleased to have finalized our financial
restructuring, which combined with our repositioning of the
company to focus on our butadiene and specialty chemicals
businesses, positions us to resume our leadership position in the
C4 chemicals industry," said Carl Stutts, president and CEO of
TPC. "Our strong businesses and sound capital structure give us
significant financial flexibility. We look forward to continuing
to strengthen our valued customer and supplier relationships."
The company is a producer of quality C4 chemical products widely
used as chemical building blocks for synthetic rubber, nylon
carpets, adhesives, catalysts and additives used in high-
performance polymers. The company has manufacturing facilities in
the industrial corridor adjacent to the Houston Ship Channel and
operates product terminals in Baytown, Texas and Lake Charles,
Louisiana. For more information about the company's products and
services, visit the Company online at http://www.txpetrochem.com/
TRICOM: Net Capital Deficit Widens to $77.3 Million at March 31
---------------------------------------------------------------
Tricom, S.A. (NYSE: TDR) announced consolidated unaudited
financial results for the first quarter ended March 31, 2004.
Results of Continuing Operations
Continuing operations consist of the Company's local service, long
distance, mobile, cable television and broadband data transmission
and Internet services in the Dominican Republic, as well as the
Company's wholesale and retail international long distance
operations in the U.S. The Company's financial results continue to
be significantly affected by currency devaluation despite the
growth and improved performance of certain of its key business
segments. During the 2004 first quarter, the average value of the
Dominican peso with respect to the U.S. dollar declined by
approximately 103 percent from the same period last year and by 26
percent from the 2003 fourth quarter.
"During the first quarter, the Company took steps to improve its
financial and operating position in the face of continuing
difficult market conditions, marked by currency devaluation," said
Carl Carlson, chief executive officer. "We took measures to
strategically streamline our expenses and preserve cash, providing
us with additional financial flexibility throughout our
restructuring process. We have been greatly encouraged by the
response and the support we have received from our key
constituents, including our employees, customers and suppliers
since the announcement of our restructuring process. During the
first quarter, we invested prudently in our key growth drivers and
improved our customer base by continuing to expand our presence
within the postpaid and corporate market segments. Despite a
difficult operating environment, we had a strong quarter in terms
of net line additions. Going forward, we will continue to work
aggressively to execute on our strategy for long-term success",
said Carlson.
Operating revenues from continuing operations totaled $43.3
million for the 2004 first quarter, a 23.6 percent decrease from
the 2003 first quarter. Adjusted EBITDA totaled $11.0 million for
the 2004 first quarter, compared to Adjusted EBITDA of $17.6
million for the same period last year.
First quarter long distance revenues decreased by 13.3 percent to
$21.5 million, primarily as a result of lower international long
distance traffic, derived from the Company's U.S.-based wholesale
and retail operations, coupled with the impact of currency
devaluation on outbound international and domestic long distance
revenues generated in the Dominican Republic.
Domestic telephony revenues totaled $11.7 million in the 2004
first quarter, a 31 percent decrease from the 2003 first quarter.
The decrease in domestic telephony revenues was primarily the
result of the decline in value of the Dominican peso. At March 31,
2004, the Company had approximately 147,000 lines in service, a
0.6 percent decrease from lines in service at March 31, 2003.
Total lines in service at the end of the 2004 first quarter grew
by approximately 2.1 percent on a sequential basis, due to
intensified sales efforts. Net line additions for the quarter
totaled approximately 3,000, the highest reported quarterly growth
since the 2002 second quarter.
Mobile revenues decreased by 32 percent to $6.3 million in the
2004 first quarter from the 2003 first quarter primarily as result
of currency devaluation and the effect of a previously announced
change in mobile revenue recognition. Beginning in the 2003 second
quarter, the Company began to account for mobile revenues net of
sales commission fees. Mobile subscribers at March 31, 2004,
totaled approximately 276,000, a 36 percent decrease from mobile
subscribers at March 31, 2003. As previously announced, the
Company reduced the period in which a mobile prepaid customer can
receive incoming calls without generating outgoing calls. As a
result, the Company identified and voluntarily disconnected
approximately 190,000 mobile subscribers during the 2004 first
quarter that had not utilized the Company's services for an
extended period of time. The decline in the Company's mobile
subscriber base was offset in part by a higher number of postpaid
mobile subscribers during the 2004 first quarter, which grew 6
percent from December 31, 2003.
Cable revenues totaled $2.6 million in the 2004 first quarter, a
34.5 percent decrease from the same period last year. The decrease
is primarily the result of currency devaluation affecting the
conversion of Dominican peso-generated cable revenues into U.S.
dollars, together with a lower average subscriber base. To offset
the impact of currency devaluation on cable revenues, the Company
instituted price increases for cable services that were too recent
to have a significant impact on the 2004 first quarter results. At
March 31, 2004, cable subscribers totaled approximately 60,000, a
12.6 percent decrease from cable subscribers at March 31, 2003.
The decline in cable subscribers is primarily attributable to a
weak economic environment.
Data and Internet revenues totaled $1.1 million in the 2004 first
quarter, representing a 27.8 percent year-over-year decrease. The
decrease in data and Internet revenues resulted primarily from
currency devaluation, partially offset by a year-over-year
increase in data and Internet subscribers. At March 31, 2004, data
and Internet access accounts totaled approximately 14,000,
representing a 35.7 percent increase from data and Internet
subscribers at March 31, 2003.
Consolidated operating costs and expenses from continuing
operations totaled $52.7 million in the 2004 first quarter
compared to $58.9 million in the 2003 first quarter. The decrease
in 2004 first quarter operating costs and expenses is primarily
the result of lower selling, general and administrative (SG&A)
expenses and depreciation and amortization charges, offset in part
by approximately $2.1 million in restructuring costs and other
non-recurring expenses related to the Company's financial
restructuring initiatives.
SG&A expenses declined by 30.4 percent to $12.9 million in the
2004 first quarter, primarily due to continuing expense reduction
efforts and operating efficiencies, as well as lower Dominican
peso-denominated expenses resulting from currency devaluation.
Cost of sales and services decreased by 2.2 percent to $21.0
million during the 2004 first quarter, primarily due to the
decline in the volume of international long distance minutes, as
well as lower cable programming fees resulting from contract
renegotiations. The decrease was offset by increased transport and
access charges due to higher domestic interconnection rates during
the 2004 first quarter. Interconnection rates in the Dominican
Republic are established in Dominican pesos but subject to change
semiannually based on the U.S. dollar exchange rate variation.
Interest expense totaled approximately $15.4 million in both the
2004 and 2003 first quarters. The Company suspended interest
payments on its unsecured debt obligations beginning in October 1,
2003. During the 2004 first quarter the Company recorded $1.4
million in foreign currency exchange gain compared to a foreign
currency exchange gain of approximately $767,000 during the 2003
first quarter.
In the 2003 first quarter, the Company recognized $1.8 million in
losses from discontinued operations in Central America. The
Company will continue to report losses from discontinued
operations in the periods they occur. Net loss from continuing
operations totaled $23.3 million, or $0.36 per share for the 2004
first quarter, compared to a net loss from continuing operations
of $19.0 million, or $0.29 per share during 2003 first quarter.
Liquidity and Capital Resources
Total debt, including capital leases and commercial paper,
amounted to $453.7 million at March 31, 2004, compared to $449.5
million at December 31, 2003. The increase in total debt at March
31, 2004 is largely due to the reclassification of $5.4 million
related to an early lease cancellation previously accounted for as
an accrued expense at December 31, 2003. Total debt included $200
million principal amount of 11-3/8% Senior Notes due in September
2004, approximately $34.7 million of secured debt and
approximately $219.0 million of unsecured bank and other debt. At
March 31, 2004, the Company had approximately $7.4 million of cash
on hand. For the three-months ended March 31, 2004 the Company's
net cash provided by operating activities totaled approximately
$5.6 million, compared to net cash used in operating activities of
$427,000 for the year-ago period. Capital expenditures totaled
$766,000 during the 2004 first quarter, representing an
approximate 84.2 percent decrease from the same period last year.
On February 19, 2004, the Company announced the sale of its
Central American trunking assets for a purchase price of
approximately $12.5 million payable in stages. The estimated net
proceeds of the sale to be received by the Company, totaling
approximately $9 million, will be used to fund the Company's
short-term working capital requirements, providing it with the
financial flexibility to pursue a financial restructuring of its
balance sheet. As part of its ongoing strategy to streamline its
operations, reduce costs and improve its financial and liquidity
position, the Company continues to evaluate potential divestments
of other under-performing or non-strategic assets.
As of March 31, 2004, Tricom S.A.'s balance sheet shows a
stockholders' equity deficit of $77,330,008 compared to a defit of
$53,980,779 at December 31, 2003.
Financial Restructuring Update
As previously announced, the Company is continuing negotiations
with its secured and unsecured lenders, which include an ad hoc
committee of holders of its 11-3/8% Senior Notes due 2004,
regarding an agreement on a consensual financial restructuring of
its balance sheet. Although there is no assurance that such an
agreement will occur, the Company is optimistic that these
negotiations will lead to a consensual agreement in the near term.
The Company's future results and its ability to continue
operations will depend on the successful conclusion of the
restructuring of its indebtedness.
Since these negotiations are ongoing, the treatment of the
Company's existing secured and unsecured creditors, as well as the
interest of its existing shareholders, is uncertain at this time.
However, the financial restructuring could possibly result in the
conversion of at least all or a substantial portion of the
Company's outstanding 11-3/8% Senior Notes and unsecured
commercial bank debt into equity in a manner that would reduce
substantially, or eliminate, the value of the Company's current
equity. Accordingly, investors in the Company's debt and equity
securities may be substantially diluted or lose all or
substantially all of their investment in the Company's securities.
About TRICOM
Tricom, S.A. is a full service communications services provider in
the Dominican Republic. We offer local, long distance, mobile,
cable television and broadband data transmission and Internet
services. Through Tricom USA, we are one of the few Latin American
based long distance carriers that is licensed by the U.S. Federal
Communications Commission to own and operate switching facilities
in the United States. Through our subsidiary, TCN Dominicana,
S.A., we are the largest cable television operator in the
Dominican Republic based on our number of subscribers and homes
passed. For more information about Tricom, please visit
http://www.tricom.net/
TWODAYS PROPERTIES: Redmond & Nazar Serves as Insolvency Counsel
----------------------------------------------------------------
TwoDays Properties, LLC and its debtor-affiliates ask the U.S.
bankruptcy Court for the District of Kansas for permission to
engage Redmond & Nazar, LLP as their counsel in their chapter 11
proceedings.
The Debtors report that Redmond & Nazar has extensive experience
in Chapter 11 cases and is familiar with their business and
financial affairs.
Redmond & Nazar is expected to:
a) advise the Debtors of its rights, powers and duties as a
Debtors-in-Possession, including those with respect to the
continued operation and management of its business and
property;
b) advise the Debtors concerning and assisting in the
negotiation and documentation of financing agreements,
cash collateral orders and related transactions;
c) investigate into the nature and validity of liens asserted
against the property of the Debtors, and advising the
Debtors concerning the enforceability of said liens;
d) investigate and advise the Debtors concerning and taking
such action as may be necessary to collect income and
assets in accordance with applicable law, and recover
property for the benefit of the Debtors' estates;
e) prepare on behalf of the Debtors such applications,
motions, pleadings, orders, notices, schedules and other
documents as may be necessary and appropriate, and
reviewing the financial and other reports to be filed
herein;
f) advise the Debtors concerning and preparing responses to
applications, motions, pleadings, notices and other
documents which may be filed and served herein;
g) counsel the Debtors in connection with the formulation,
negotiation and promulgation of plan or plans of
reorganization and related documents; and
h) perform such other legal services for and on behalf of the
Debtors as may be necessary or appropriate in the
administration of the cases.
The hourly rates of Redmond & Nazar professionals who will perform
the majority of services in this retention are:
Professional's Names Billing Rate
-------------------- ------------
Edward J. Nazar $240 per hour
Martin R. Ufford $185 per hour
W. Thomas Gilman $185 per hour
Mary Patricia Hesse $170 per hour
Susan Saidian $160 per hour
Karen Pickens $145 per hour
TwoDays Properties LLC is a Wichita, Kansas based management and
real estate company, which owns the real estate under 12
restaurants, and in turn leases all 12 to the operating companies.
The Company filed for chapter 11 protection on April 8, 2004
(Bankr. D. Kans. Case No. 04-11792). Edward J. Nazar, Esq., at
Redmond & Nazar LLP and Douglas S. Draper, Esq., at Heller,
Draper, Hayden, Patrick & Horn, LLC represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed both estimated debts and assets of
over $10 million.
UNITED AIRLINES: Retired Pilots Apply to Retain Gordian Group
-------------------------------------------------------------
The Retired Pilots Committee seeks the Court's authority to
retain Gordian Group, LLC, as financial consultants. Frank
Cummings, Esq., at LeBoeuf, Lamb, Greene & MacRae, explains that
the Pilots Committee needs consultants with financial expertise
to determine whether the cost savings proposed by the United
Airlines Inc. Debtors are necessary for a successful
reorganization.
Mr. Cummings asserts that the Pilots Committee needs its own
financial consultant and cannot share FTI Consulting with the
Retired Salaried & Management Employees Committee. The Retiree
Committee has indicated that it reserves the exclusive right to
access FTI. Sharing financial consultants would become
unworkable if the Retirees and the Pilots take conflicting
positions during the Section 1114 process. The Court also has
not entered a joint retention order authorizing the Pilots to
engage FTI.
Mr. Cummings also notes that the Retiree Committee controls the
direction of FTI's efforts. The Retiree Committee assigned all
of FTI's current projects. It will oversee FTI's preparation of
expert reports and conduct the examination of any FTI consultant
that takes the witness stand. Also, there is not enough time for
the Pilots Committee to wait-and-see if FTI has the resources to
accommodate both the Retirees and the Pilots before the legal
deadlines.
The Debtors have multiple advisors that will be prepared for the
Section 1114 negotiations and hearings. It is only fair that the
Pilots have an equal opportunity to make their case and be heard
in negotiations. As a result, the Pilots Committee cannot
adequately represent its constituency unless it retains Gordian
as financial consultants. Without Gordian, about 5,800 retirees
represented by the Pilots Committee will be prejudiced.
Gordian, headquartered in New York City, is an entrepreneurial
investment bank and financial advisory firm that specializes in
complex capital raising, M&A activities, distressed financial
restructurings and creditor advisory services. Gordian, founded
in 1988, is an affiliate of Allied Capital Corporation.
Gordian's professionals have experience with Section 1114
proceedings, and can analyze and evaluate complex business
structures, financial documents and business plans.
As financial consultants, Gordian will:
(1) assist the Pilots Committee on proposed modifications to
the Pilots' insurance-related benefits;
(2) analyze the Debtors' financial plans, projections and
business models, and their assumptions;
(3) confer with the Debtors on their financial condition and
business plans;
(4) evaluate the Debtors' historic, current and projected
revenue, liabilities, assets and cash flow;
(5) value the Chapter 11 cost-saving initiatives proposed by
the Debtors;
(6) attend negotiating sessions;
(7) prepare expert reports;
(8) prepare and provide expert testimony during any Section
1114 hearings;
(9) assist with the preparation of any pre-hearing,
post-hearing or appellate motions, briefs or other
materials; and
(10) perform any other services the Pilots Committee deems
necessary.
Gordian's customary hourly rates are:
Partners $650
Vice Presidents 500
Associates 400 - 250
Analysts 200
Paraprofessionals 150
Debtors Object
Despite the Court's admonishment to the Section 1114 Committees
to share professionals, the Pilots Committee wants to retain
Gordian, even though the Retiree Committee has already retained
FTI Consulting. According to James H.M. Sprayregen, Esq., at
Kirkland & Ellis, the Pilots Committee "offers no legitimate
explanation as to why FTI cannot serve the interests of both
committees." Gordian will simply burden the Debtors and their
estate with additional inquiries, requests for documents,
meetings and costs.
Mr. Sprayregen emphasizes that there is no current conflict and
one may never arise. In other words, the Pilots Committee speaks
only in the abstract and hypothetical. Another financial advisor
would be "a costly and wasteful response to these speculative
concerns." The Court can easily solve the Pilots' lack of an
advisor-client relationship. The Court can approve a retention
application with broadened terms.
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. 46; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
UNUMPROVIDENT CORP: S&P Cuts Senior Debt Ratings to BB+ from BBB-
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its counterparty credit
and senior debt ratings on UnumProvident Corp. to 'BB+' from
'BBB-'.
At the same time, Standard & Poor's lowered its counterparty
credit and financial strength ratings on UnumProvident's insurance
operating subsidiaries to 'BBB+' from 'A-'. The outlook is stable.
"The ratings actions reflect concerns about the consistency of
risk controls and valuation practices," said Standard & Poor's
credit analyst Rodney Clark. "These issues have led to significant
reserve charges and asset impairments in the past several
quarters, including the $856 million of intangible impairments and
$111 million reserve strengthening announced in the company's
first quarter earnings announcement."
These factors have also contributed to marginal operating
performance in the company's largest line of business, U.S. group
disability insurance. Somewhat offsetting these factors are strong
operating company capital adequacy following several recent
capital initiatives, substantial scale and market penetration in
the group and individual disability insurance areas, and improved
investment risk profile.
The outlook reflects the effects of strengthened capital adequacy,
improved investment risk, and corrective measures taken to limit
the downside on the closed block of individual disability income
and to improve profitability on U.S. group disability insurance.
Despite those measures, profit growth in 2004 is expected to be
modest, with consolidated pretax operating margins of about 10%
before one-time items, and modestly negative GAAP net income for
the full year including special charges. Fixed-charge coverage is
expected to improve to about 5x by 2005. As the company executes
its turnaround plan U.S. group and individual sales are expected
to decrease by more than 10%, partially offset by a modest growth
in the company's Colonial segment and solid double-digit growth in
the U.K.
UNUMPROVIDENT CORPORATION: Fitch Ratings Remain on Negative Watch
-----------------------------------------------------------------
UnumProvident Corporation (UNM) and its subsidiary insurance
companies ratings remain unaffected by UNM's announcement of
first-quarter 2004 operating results and plans to restructure the
reporting of its pre-1995 individual disability income insurance
(old block) business, according to Fitch Ratings. The ratings
remain on Rating Watch Negative, where they were placed on Feb. 5,
2004, following UNM's fourth quarter $286 million after tax charge
to boost reserves in its group long-term disability (LTD)
business. As detailed in the press release issued on that date,
Fitch will resolve the Rating Watch status after the completion of
a detailed reserve study. The rating action affects approximately
$2.8 billion of debt outstanding.
Key elements of the restructure include creating a separate
reporting segment for the old block resulting in the write down of
$856 million of GAAP intangible assets, strengthening reserves in
this segment by approximately $110 million, securing an excess of
loss reinsurance arrangement to mitigate the impact of future
negative reserve development, and raising $300 million of hybrid
equity capital. Fitch believes the restructuring has been
structured in a way that minimizes the impact on the company's
capital, leverage, and earnings going forward. Accordingly, Fitch
is not taking any rating actions.
The old block consists of business written prior to 1995 and is in
run-off as no new policies are being written. Despite a low GAAP
return-on-equity, the business is profitable and has generated
positive cash flow. As part of the segmentation, UNM allocated
certain intangibles to the new segment resulting in the write-off
of $207 million of goodwill, $367 million of value of business
acquired (VOBA), and $282 million of deferred acquisition cost
(DAC) for a total charge of $856 million incurred in the first
quarter of 2004.
At the same time, UNM has added a level of loss deterioration
protection on the old block of business with an excess of loss
reinsurance arrangement with Berkshire Hathaway. Berkshire will
assume 66% of losses in excess of $7.9 billion, up to an aggregate
limit of $2.5 billion over time. To offset the statutory capital
impact of the reinsurance transaction, UNM has arranged for a $300
million mandatory convertible security offering in a private
placement. The proceeds will be used to reduce holding company
debt to maintain leverage ratios, increase holding company
liquidity and restore statutory risk-based capital to the pre-
segmentation levels.
Fitch intends to resolve UNM's Rating Watch in the next four-to-
six weeks. UNM's ratings remain on Rating Watch Negative pending a
review of their reserves under Fitch's model. If reserves are
determined by Fitch to be deficient by a meaningful level, it is
likely that all ratings will be downgraded. If reserves are
determined to be adequate, it is likely to result in an
affirmation of all ratings and removal from watch status.
Based in Chattanooga, Tennessee, UnumProvident Corp. is the
Nation's largest provider of group and individual disability
insurance. UNM reported total assets of $50.5 billion and
shareholders' equity of $7.2 billion at March 31, 2004.
UnumProvident Corp.
-- Senior debt 'BBB-' Rating Watch Negative
Provident Financing Trust I
-- Preferred stock 'BB+' Rating Watch Negative
UnumProvident Group members:
-- Insurer financial strength 'A-' Rating Watch Negative
Group members are:
-- Unum Life Insurance Company of America;
-- Provident Life & Accident Insurance Company;
-- Provident Life and Casualty Insurance Company;
-- The Paul Revere Life Insurance Company;
-- First Unum Life Insurance Company;
-- Colonial Life & Accident Insurance Company;
-- Paul Revere Variable Annuity Insurance Co.
URBAN EQUITY INC: Case Summary & 9 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Urban Equity, Inc.
18810 Place Antibes
Lutz, Florida 33558-5341
Bankruptcy Case No.: 04-08712
Type of Business: The Debtor is a Real Estate Developer.
See http://www.urbanequity.com/
Chapter 11 Petition Date: April 30, 2004
Court: Middle District of Florida (Tampa)
Judge: Thomas E. Baynes Jr.
Debtor's Counsel: Michael C. Markham, Esq.
Ruppel & Burns PA
911 Chestnut Street
Clearwater, FL 33756
Tel: 717-461-1818
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 9 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
DBR Services $2,359
FDN Communications $1,561
DR Associates, Inc. $1,350
John R. Beach & Associates Inc. $645
Worldwide Express $573
Tri S. Pest Control $157
Zeno Office Solutions, Inc. $125
Verizon Florida, Inc. $32
First Premier Bank $2
US AIRWAYS: Insolvent Carrier Hints at Chapter 22 Filing
--------------------------------------------------------
US Airways, Inc., emerged from bankruptcy protection in March 2003
and has continued to incur losses from operations. For the
quarter ending March 31, 2004, USAir reports a $181 million net
loss. That loss wipes-out all shareholder equity in the carrier
and the company's Mar. 31 balance sheet now shows a $64 million
shareholder deficit. At the parent company level, US Airways
Group, Inc.'s Mar. 31 balance sheet shows $30 million in
shareholder equity.
In a regulatory filing with the Securities and Exchange Commission
on May 8, 2004, Anita P. Beier, US Airways' Chief Accounting
Officer, explains that the primary factors contributing to these
losses include the continued downward pressure on industry pricing
and significant increases in fuel prices. The pressure on
industry pricing is resulting from the rapid growth of low-fare
low-cost airlines, the increasing transparency of fares available
through internet sources and other changes in fare structures
which result in lower fares for many business and leisure
travelers.
Possible Chapter 22
Given the Company's continued operating losses, the Company is
pursuing a transformation plan to further reduce cost per
available seat mile to levels competitive with low-cost carriers
such as America West and JetBlue. Key elements of this plan
include changes in marketing and distribution techniques; employee
compensation, benefits and work rules; and airline scheduling and
operations. The Company expects to begin implementation of the
actions needed to achieve the cost reductions by mid-year 2004.
However, since the plan will require changes in the Company's
collective bargaining agreements, there can be no assurance that
the plan can be achieved. While the Company's preference is to
complete its transformation on a consensual basis, failure to
achieve the above-described competitive cost structure will force
the Company to reexamine its strategic options, including but not
limited to asset sales or a judicial restructuring.
Regional Jet Financing
A key component to the Company's strategy is the increased usage
of regional jets. The Company uses regional jets to fly into low-
density markets where large-jet flying is not economical as well
as to replace turbo-props with regional jets to better meet
customer preferences. In May 2003, US Airways Group entered into
agreements to purchase a total of 170 regional jets from
Bombardier, Inc., and Empresa Brasileira de Aeronautica S.A.
The Company secured financing commitments from General Electric
and from the respective airframe manufacturers for approximately
85% to 90% of these jets. These commitments are subject to certain
credit standards or financial tests. Among the applicable credit
standards under the aircraft financing commitments is the
requirement that US Airways Group or US Airways maintains a
minimum corporate credit rating of "B-" by Standard & Poor's or
"B3" by Moody's Investor Service, as well as customary conditions
precedent.
On April 30, 2004, US Airways and GE agreed to certain changes in
their regional jet financing agreement. These changes provided new
conditions precedent for financing for scheduled aircraft
deliveries through September 30, 2004. The new conditions
precedent replace an existing no material adverse change (MAC)
condition precedent with: (i) a no MAC since April 30, 2004
condition precedent; (ii) certain specific financial tests, and
(iii) other conditions precedent. The financial tests include, but
are not limited to, compliance with financial covenants in the
ATSB Loan concerning fixed charge ratios and ratios of
indebtedness to earnings before interest, debt, and aircraft rent
(EBITDAR), as well as minimum EBITDAR requirements for the
Company. GE's financing commitment with respect to regional jets
through September 30, 2004 is also conditioned on US Airways being
permitted under its ATSB Loan to use its regional jets financed by
GE utilizing mortgage debt as cross-collateral for other
obligations of US Airways to GE. In addition, the April 30, 2004
amendment contains a provision for financing regional jet
deliveries beyond September 30, 2004 subject to revised conditions
precedent based on the successful implementation of US Airways'
transformation plan and the expected financial performance of the
restructured Company, both in a manner acceptable to GE.
Credit Rating Downgrades
On May 5, 2004, S&P downgraded US Airways Group's and US Airways'
corporate credit ratings to CCC+. As a result of the downgrade,
GE, Embraer and Bombardier have the right to discontinue financing
the Company's regional jet purchases, unless US Airways is able to
meet alternative minimum financial tests. US Airways is not yet
able to determine whether it meets these tests. US Airways does
not presently have alternative sources of financing regional jet
purchases nor does it have the ability to purchase regional jets
without financing. The Company is in negotiations with GE and the
aircraft manufacturers to amend or waive the credit rating
condition precedent, as well as the alternative minimum financial
tests (if necessary). If US Airways is unable to meet the
alternative minimum financial tests or the Company is not
successful in obtaining such waivers or amendments, US Airways
would be required to pay cancellation fees and/or liquidated
damages of up to $90 million for the remainder of 2004 and $21
million in 2005 if US Airways is unable to obtain financing for
the regional jet aircraft scheduled to be delivered during those
periods.
In the event that US Airways is unable to obtain financing, it
will likely be unable to execute its regional jet business plan,
which would in turn likely have a material adverse effect on the
Company's future liquidity, results of operations (i.e., revenue
contribution from regional jet operations) and financial
condition.
As previously reported in the Troubled Company Reporter, KPMG has
expressed doubt, since emerging from bankruptcy just over a year
ago, about USAir's ability to continue as a going concern.
USG CORP: Wants to Expand Scope of PwC's Employment as Consultants
------------------------------------------------------------------
The USG Corporation Debtors seek the Court's authority to expand
their employment of PricewaterhouseCoopers, LLP, as their Special
Sarbanes-Oxley Consultant, in connection with their Chapter 11
cases.
The Debtors relate that PwC is currently providing them with
certain non-professional vendor services regarding internal
information technology. Because these vendor services do not
constitute professional services, they are not included in the
scope of PwC's employment.
Pursuant to the terms of PwC's current engagement as Special
Sarbanes-Oxley Consultants, PwC has assisted the Debtors in
complying with the requirements of the Sarbanes-Oxley Act of
2002. It is anticipated that PwC will continue to provide the
Debtors with a wide range of services to ensure compliance with
the S-O Act. Among other measures that they are taking, the
Debtors have developed an internal "whistle-blower" program
called "My Safe Workplace," which sets forth certain procedures
for the reporting and investigation of any suspected incidents of
fraud, violations of USG policy or other improprieties within
USG. The Debtors believe that the My Safe Workplace program,
along with USG's other programs and policies regarding workplace
ethics and fraud prevention and investigation, constitute best
corporate practices along the lines of the S-O Act. These
programs and policies require that reports of fraud, violations
of the Debtors' internal policies and other improprieties within
USG be investigated.
Therefore, the Debtors want to engage PwC to perform certain
aspects of these investigations as the need for those services
may arise from time to time. Because reports of impropriety
require immediate action and skilled investigation, the Debtors
believe that expanding the scope of PwC's employment to permit it
to address these incidents as they may arise and without delay is
appropriate.
The specific forensic auditing services that PwC may perform
include:
(a) interviewing USG employees or individuals outside the
company;
(b) reviewing written and electronic documents;
(c) analyzing data for evidence relevant to matters under
investigation; and
(d) documenting the results of PwC's findings and
recommendations.
In addition to the forensic auditing services, the Debtors
anticipate that PwC will perform certain internal auditing
services to assess internal controls, including controls
contained within and surrounding the Debtors' internal
information technology systems, and to test the effectiveness of
and identify gaps in their internal controls.
The specific internal auditing services that PwC will perform
include:
(a) interviewing USG employees in business units being
audited;
(b) reviewing written and electronic documents;
(c) analyzing electronic data;
(d) documenting and assessing configurable information systems
controls;
(e) documenting business process flows and related controls;
(f) developing and performing tests of controls;
(g) evaluating the efficiency and effectiveness of controls;
(h) identifying control gaps and weaknesses; and
(i) documenting the results of PwC's work, findings, and
recommendations.
The Debtors maintain that PwC is particularly well suited to
provide the types of services they require. PwC has a vast
domestic and international accounting and consulting practice
and has extensive experience in providing S-O Act-related
services as well as forensic accounting and internal auditing
services. PwC is the world's largest professional services
organization, employing 125,000 people in 142 countries. PwC's
service offerings include audit, assurance and business advisory
services, merger and acquisition services, corporate finance and
recovery services, human resource services, and global tax
services. PwC's global reach, combined with its depth of
resources, knowledge and experience, allows it to deliver top
quality service to their clients.
The team of PwC professionals who will be providing forensic
services to the Debtors are part of PwC's Chicago Corporate
Investigations and Forensic Services practice. Professionals who
will be providing internal auditing services to USG are part of
PwC's Chicago Systems and Process Assurance and Internal Auditing
Services practices.
PwC has notably provided professional services to the Debtors in
the past and thus is familiar with the Debtors' structure and
operations.
PwC will charge the Debtors for its services on an hourly basis
in accordance with its hourly rates in effect on the date
services are rendered:
(A) Internal Auditing
Partner $400
Senior Manager 310
Manager 260
Senior Associate 205
Associate 132
(B) Forensic Auditing
Partner 578
Director 510
Manager 413
Senior Associate 290
Associate 203
Paraprofessional Staff 105
Administrative 75
The Debtors will also reimburse PwC for actual and necessary out-
of-pocket expenses.
Dina M. Norris, a partner at PwC, assures the Court that the firm
does not have any connection with the Debtors, their creditors,
the U.S. Trustee or any other party with an actual or potential
interest in these Chapter 11 cases.
Headquartered in Chicago, Illinois, USG Corporation --
http://www.usg.com/-- through its subsidiaries, is a leading
manufacturer and distributor of building materials producing a
wide range of products for use in new residential, new
nonresidential and repair and remodel construction, as well as
products used in certain industrial processes. The Company filed
for chapter 11 protection on June 25, 2001 (Bankr. Del. Case Nos.
01-02094). David G. Heiman, Esq., at Jones, Day, Reavis & Pogue
and Paul E. Harner, Esq., at Jones, Day, Reavis & Pogue represent
the Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $3,252,000,000 in
assets and $2,739,000,000 in debts. (USG Bankruptcy News, Issue
No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000)
US MOTELS AIRPORT: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: U.S. Motels Airport, Inc.
620 Federal Boulevard
Denver, Colorado 80204-3209
Bankruptcy Case No.: 04-19261
Chapter 11 Petition Date: May 3, 2004
Court: District of Colorado (Denver)
Judge: Howard R. Tallman
Debtor's Counsels: Jeffrey Weinman, Esq.
Weinman & Associates, P.C.
William A. Richey, Esq.
730 17th Street, Suite 240
Denver, CO 80202
Tel: 303-572-1010
Total Assets: $21,988
Total Debts: $3,119,773
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
CIT $750,000
1 Cit Dr.
Livingston, NJ 07039-5703
Xcel Energy $150,000
Arthur J. Gallagher & Co. $85,565
Nobel/Sysco $35,484
Katzson Brothers, Inc. $32,426
Flink Supply $29,620
Pinnacol Assurance $19,808
Fireman's Fund Insurance Company $12,059
Thyssenkrupp Elevator $10,000
The Trane Company $9,858
Coca Cola $9,156
Mountain State $8,104
Waste Water Management $7,728
Wausau Insurance Companies $5,283
Yoder Lawn Service $4,168
Qwest Communication $4,076
R&S Sales & Services, Inc. $3,329
Denver Water $3,094
Citicorp Vendor Finance, Inc. $3,000
Royal Cup Coffee $2,487
UTEX INDUSTRIES: Wants to Pay $20,000 Prepetition Trade Claims
--------------------------------------------------------------
Utex Industries, Inc., asks the U.S. Bankruptcy Court for the
Southern District of Texas, Houston Division, for its stamp of
approval to pay the prepetition trade claims of its critical
vendors.
The Debtors point out that a fundamental aspect of it efforts to
minimize disruption during this case is the ability to maintain
its relationships with the important parties that supply goods and
provide services and customers who have entered into prepaid
contracts.
Because these relationships are critical to the continued
operation of the Company's business during and after the chapter
11 case, the Debtor requests authority to pay in full all non-
contingent, liquidated, undisputed unsecured prepetition
operational claims, including claims of trade suppliers and
vendors, and customers who have prepaid the Debtor for goods and
services not yet provided, in the ordinary course of business.
As of the Petition Date, the Debtor estimates that outstanding
Trade Claims total less than $20,000, including Trade Claims paid
by checks that were issued prior to the Petition Date, but have
not yet cleared through the Debtor's bank account.
Unless it is authorized to pay the Trade Claims, its Trade
Creditors may well reconsider the favorable terms generally
available to the Debtor and critical to its smooth operations. The
Debtor submits that such a result should be avoided, because it
needs continued and uninterrupted service from these creditors to
efficiently operate its business. The Debtor is also concerned
that if it were not able to honor all prepaid orders it may lose a
substantial amount of its customer base.
Headquartered in Houston, Texas, Utex Industries, Inc.
-- http://www.utexind.com/-- has been in the fluid sealing
industry since 1940. It has expanded its market base to include:
oil and gas, petrochemical, pulp and paper, power generation,
fossil and nuclear fuel, agriculture, municipalities and a variety
of other industries. The Company filed for chapter 11 protection
on March 26, 2004 (Bankr. S.D. Tex. Case No.
04-34427). William A. Wood III, Esq., at Bracewell & Patterson,
LLP represent the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed over
$10 million in estimated assets and over $100 million in estimated
debts.
VANTAGEMED: Net Capital Deficit Widens to $1.17M at March 31, 2004
------------------------------------------------------------------
VantageMed Corporation (OTC Bulletin Board: VMDC.OB) announced
financial results for the quarter ended March 31, 2004. Total
revenues for the quarter ended March 31, 2004 were $5.1 million
compared to $5.3 million for the quarter ended March 31, 2003.
Net loss before interest, taxes, depreciation and amortization
(EBITDA) totaled $574,000 for the quarter ended March 31, 2004.
This compares to an EBITDA loss of $722,000 for the year ago
quarter ended March 31, 2003. We present EBITDA because we believe
it provides an alternative measure by which to evaluate our
performance. EBITDA is not a measurement defined by GAAP and
should not be considered an alternative to, or more meaningful
than, information presented in accordance with GAAP.
VantageMed reported a net loss of $706,000, or $0.08 per basic and
diluted share, for the quarter ended March 31, 2004 compared to a
net loss of $965,000, or $0.11 per basic and diluted share, for
the year ago quarter ended March 31, 2003. The improvement in net
loss is a direct result of continued cost reduction efforts and
operational efficiencies.
At March 31, 2004, VantageMed Corporation's balance sheet shows a
total stockholders' deficit of $1,172,000 compared to a deficit of
$483,000 at December 31, 2003.
Richard M. Brooks, Chairman and Chief Executive Officer,
commented, "We are pleased with our sales and marketing efforts as
we have seen a continued strong demand for our RidgeMark product.
In the first quarter, we signed 65 RidgeMark orders as compared to
11 from a year ago, which shows continued acceptance of the
RidgeMark product in the marketplace. Installations of these
systems have not happened as quickly as we would have liked, thus
increasing our backlog and delaying revenue to future periods. We
have made recent key hires in our client services organization,
including a new Vice President of Client Services, Jeff Schuett
and are expecting improved delivery capabilities in future
periods."
About VantageMed
VantageMed is a provider of healthcare information systems and
services distributed to over 12,000 customer sites nationally. Our
suite of software products and services automates administrative,
financial, clinical and management functions for physicians and
other healthcare providers and provider organizations.
WEIRTON: Affiliates Ask Court to Extend Lease Decision Period
-------------------------------------------------------------
Debtors FW Holdings, Inc., and Weirton Venture Holdings
Corporation ask the Court to extend through the confirmation of a
Chapter 11 plan the deadline for them to assume or reject all of
their unexpired non-residential real property leases, including,
but not limited to, the MABCO Lease.
To recall, FW Holdings and Weirton Venture recently filed for
Chapter 11 protection. Pursuant to Section 365(d)(4) of the
Bankruptcy Code, FW Holdings and Weirton Venture have 60 days
from their Petition Date to assume or reject their Unexpired
Leases. Unless the statutory time period is extended, the Leases
not assumed on or before the deadline are deemed rejected.
FW Holdings is a party to a sales/leaseback transaction with
MABCO Steam Company, LLC, relating to a Foster Wheeler Steam
Generation Facility. The FW Facility was originally owned by
Weirton and was transferred to FW Holdings on October 26, 2001,
which in turn, transferred the FW Facility to MABCO on the same
day.
MABCO members provided Weirton with certain trade debt
concessions and some cash, and MABCO agreed to lease the FW
Facility back to FW Holdings pursuant to that certain Lease
Agreement dated as of October 26, 2001. FW Holdings, Weirton and
MABCO are parties to several additional agreements relating to
the MABCO Transaction.
In February 2004, FW Holdings filed a complaint against MABCO.
FW Holdings wants the Court to:
(a) declare the MABCO Transaction and MABCO Agreements to be a
disguised financing and not a true lease transaction; and
(b) direct MABCO to turnover the property that is the subject
of the MABCO Lease.
Mark E. Freedlander, Esq., at McGuireWoods, in Pittsburgh,
Pennsylvania, relates that the assumption and assignment of the
MABCO Lease and the other MABCO Agreements are subject to and
conditioned on the closing of the sale transaction to the Buyer
and related terms and conditions of the Assignment Agreement.
Mr. Freedlander argues that the effect of assuming any Lease at
this time would unfairly elevate the obligations from prepetition
unsecured claims to administrative priority expense claims to the
prejudice of all non-Lessor creditors of FW Holdings and Weirton
Venture's estates if the Lease is ultimately rejected.
In the alternative, if FW Holdings and Weirton Venture rejected
any Lease at this time, they could lose facilities that they need
as a reorganized debtor. Furthermore, the assumption of MABCO
Lease by FW Holdings at this time would preclude FW Holding's
right to pursue the MABCO Suit.
Mr. Freedlander contends that extending the lease decision period
will not prejudice any lessor under any of the Leases because all
of their rights are preserved. Similarly, it will not constitute
an admission by any Debtor that any Lease, including the MABCO
Lease, is a true lease. FW Holdings and Weirton Venture's rights
with respect to the characterization of the Leases, including the
MABCO Lease, are expressly reserved.
In the event that the Closing of the Sale Transaction does not
occur, FW Holdings and Weirton Venture will determine which of
the properties they would need for reorganization and which they
do not as part of formulating a business plan. Because FW
Holdings and Weirton Venture have not yet determined which
properties they need and the Leases represent only a portion of
their real property interests, they cannot determine at this time
whether they will need to assume or reject the Leases. An
extension of the lease decision period will allow FW Holdings and
Weirton Venture the opportunity to study and determine which
properties they will need for a successful reorganization.
FW Holdings and Weirton Venture do not want to forfeit the Leases
as a result of the "deemed rejected" provision of Section
365(d)(4) of the Bankruptcy Code or, in the alternative, assume
the Leases and incur a substantial, unnecessary administrative
obligation in the event that the Sale Transaction does not close
and FW Holdings and Weirton Venture are otherwise forced to
liquidate their assets.
Moreover, because their overall reorganization structure may
significantly impact whether the Leases are necessary to their
ongoing business, FW Holdings and Weirton Venture believe that it
would be imprudent to make a final assumption or rejection
decision outside of the plan of reorganization process, or at
least until they know whether the Closing of the Sale Transaction
will occur.
The Court will convene a hearing on May 25, 2004 at 2:00 p.m.,
prevailing Eastern Time, to consider FW Holdings and Weirton
Venture's request. Accordingly, Judge Friend extends FW Holdings
and Weirton Venture's lease decision period until the conclusion
of that hearing. (Weirton Bankruptcy News, Issue No. 25;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
WILSONS THE LEATHER: April Store Sales Decrease to $17.9 Million
----------------------------------------------------------------
Wilsons The Leather Experts Inc. (Nasdaq:WLSN) reported sales of
$17.9 million for the four weeks ended May 1, 2004, compared to
$21.5 million for the four weeks ended May 3, 2003. Year-to-date
sales have increased 2.6% to $97.8 million compared to $95.3
million for the same period last year. Sales for the month of
April and the current fiscal year included approximately $0.7
million and $20.8 million, respectively, in liquidation sales
resulting from the transfer of inventory to an independent
liquidator in conjunction with the previously announced closing of
approximately 111 stores.
Comparable store sales decreased 3.5% for the four weeks ended May
1, 2004; this decrease compares to a 1.0% decrease in comparable
store sales for the four weeks ended May 3, 2003. Year-to-date
comparable stores sales have decreased 2.0% compared to flat
comparable store sales for the same period last year. Comparable
store sales for the month and year to date do not include sales
from the stores that are being liquidated, as the liquidation sale
in these stores began on January 23, 2004.
Commenting on these results, Joel Waller, Chief Executive Officer
said, "Sales in our mall-based stores have been negatively
impacted by reduced levels of new and clearance merchandise. While
this negatively impacted comparable store sales, our margin rate
was positively impacted."
Mr. Waller continued, "We have completed the liquidation sales in
the 111 stores that we are closing. In addition, we have made
positive progress with respect to our refinancing of the 11 1/4%
Senior Notes and look forward to continuing our efforts to drive
our business forward."
About Wilsons Leather
Wilsons Leather is the leading specialty retailer of leather
outerwear, accessories and apparel in the United States. As of May
1, 2004, Wilsons Leather operated 458 stores located in 45 states
and the District of Columbia, including 334 mall stores, 107
outlet stores and 17 airport stores. The Company, which regularly
supplements its permanent mall stores with seasonal stores during
its peak selling season from October through January, operated 229
seasonal stores in 2003.
As reported in the Troubled Company Reporter's April 20, 2004
edition, Wilsons The Leather Experts Inc. (Nasdaq:WLSN) announced
that it entered into an agreement to amend its revolving credit
facility.
The revolving credit facility, which is provided by GE Capital,
CIT, Wells Fargo, and LaSalle, has been amended to waive defaults
under previous EBITDA covenants, reset financial covenants for
future time periods and, remove the April 15, 2004 deadline to
amend, refund, renew, extend, or refinance its 11 1/4% Senior
Notes.
WORLDCOM INC: Fitch Withdraws D Ratings Following Bankruptcy Exit
-----------------------------------------------------------------
Fitch Ratings has withdrawn the following ratings of Worldcom,
Inc. and its subsidiaries.
Worldcom, Inc.
--Senior Unsecured 'D' Withdrawn;
--Preferred Stock 'D' Withdrawn;
--Quarterly Income Preferred Securities 'D' Withdrawn.
Intermedia Communications, Inc.
--Senior Unsecured 'D' Withdrawn;
--Preferred Stock 'D' Withdrawn.
Worldcom, Inc. has emerged from bankruptcy protection and has been
renamed MCI, Inc. and the debt underlying the ratings ceases to
exist.
WRENN ASSOCIATES: Section 341(a) Meeting Scheduled for May 19
-------------------------------------------------------------
The United States Trustee will convene a meeting of Wren
Associates, Inc.'s creditors at 2:00 p.m., on May 19, 2004, in
Room 122 at the Norris Cotton Federal Building, 275 Chestnut
Street, First Floor, Manchester, New Hampshire 03101. This is the
first meeting of creditors required under 11 U.S.C. Sec. 341(a) in
all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Merrimack, New Hampshire, Wrenn Associates, Inc.
-- http://www.wrenn.com/-- is a construction management firm.
The Company filed for chapter 11 protection on
April 16, 2004 (Bankr. D. N.H. Case No. 04-11408). William S.
Gannon, Esq., represents the Debtor in its restructuring efforts.
When the Company filed for protection from its creditors, it
listed $4,037,000 in total assets and $7,778,494 in total debts.
* CPAs to Launch Nat'l Financial Literacy Initiative on May 17
--------------------------------------------------------------
WHAT: The American Institute of Certified Public Accountants
(AICPA) to announce 360 Degrees of Financial Literacy, a
national public education campaign.
WHO: The Honorable David M. Walker, Comptroller General of the
United States and Head of the General Accounting Office
S. Scott Voynich, Chairman of the American Institute of
CPAs Barry C. Melancon, President and CEO of the American
Institute of CPAs
WHEN: Monday, May 17, 2004 - 9:30 am to 10:30 am EDT
-- 9:00 a.m. EDT - Breakfast Buffet
-- 9:30 a.m. EDT - Remarks by S. Voynich, B. Melancon,
and D. Walker
-- 10:00 a.m. EDT - Q & A
WHERE: The National Press Club
529 14th Street, N.W.
13th Floor
Washington, D.C.
Via Interactive Videoconference - New York
Intellispace
1156 6th Avenue
5th Floor (Entrance on 45th Street)
New York, N.Y.
WHY: Americans' need for increased personal financial literacy,
illustrated by high bankruptcy rates and credit card debt,
a low savings rate, and inadequate planning for retirement,
education and health care, is linked to the economic
challenges facing our nation.
* BOND PRICING: For the week of May 10 - 14, 2004
-------------------------------------------------
Issuer Coupon Maturity Price
------ ------ -------- -----
Adelphia Comm 3.250% 05/01/21 55
Adelphia Comm 6.000% 02/15/06 55
American & Foreign Power 5.000% 03/01/30 69
Atlas Air 9.250% 04/15/08 50
Best Buy 0.684% 06/27/21 74
Burlington Northern 3.200% 01/01/45 54
Burlington Northern 3.800% 01/01/20 74
Calpine Corp. 7.750% 04/15/09 70
Calpine Corp. 7.875% 04/01/08 71
Calpine Corp. 8.500% 02/15/11 71
Calpine Corp. 8.625% 08/15/10 71
Coastal Corp. 7.420% 02/15/37 75
Comcast Corp. 2.000% 10/15/29 39
Cummins Engine 5.650% 03/01/98 74
Dan River 12.750% 04/15/09 26
Delta Air Lines 2.875% 02/18/24 68
Delta Air Lines 7.900% 12/15/09 58
Delta Air Lines 8.000% 06/03/23 66
Delta Air Lines 8.300% 12/15/29 51
Delta Air Lines 9.000% 05/15/16 55
Delta Air Lines 9.250% 03/15/22 55
Delta Air Lines 9.750% 05/15/21 56
Delta Air Lines 10.125% 05/15/10 60
Delta Air Lines 10.375% 02/01/11 62
Delta Air Lines 10.375% 12/15/22 58
Elwood Energy 8.159% 07/05/26 68
Exide Corp. 10.000% 04/15/05 20
Finova Group 7.500% 11/15/09 60
Foamex L.P. 9.875% 06/15/07 70
General Physics 6.000% 06/30/04 52
Goodyear Tire 7.000% 03/15/28 75
Inland Fiber 9.625% 11/15/07 52
Level 3 Communications 6.000% 09/15/09 52
Level 3 Communications 9.125% 05/01/08 72
Level 3 Communications 11.250% 03/15/10 73
Liberty Media 3.750% 02/15/30 68
Mirant Corp. 5.750% 07/15/07 59
Motorola Inc. 5.220% 10/01/97 73
National Steel Corp. 8.375% 08/01/06 5
Northern Pacific Railway 3.000% 01/01/47 52
Universal Health Services 0.426% 06/23/20 59
US West CAP 6.875% 07/15/28 75
*********
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.
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related conferences are encouraged. Send announcements to
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Each Friday's edition of the TCR includes a review about a book of
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available at your local bookstore or through Amazon.com. Go to
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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, Rizande B. Delos Santos, Paulo
Jose A. Solana, Jazel P. Laureno, 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
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